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78–384—PDF 2012

S. HRG. 112–704 

PRESIDENT’S FISCAL YEAR 2013 

HEALTH CARE PROPOSALS 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

FEBRUARY 15, 2012 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

TOM COBURN, Oklahoma 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

RUSSELL SULLIVAN, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 3 

ADMINISTRATION WITNESS 

Sebelius, Hon. Kathleen, Secretary, Department of Health and Human Services, Washington, DC ........................................................................................... 5 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 31 

Coburn, Hon. Tom: 

Letter from Alabama Hospital Association et al. to President Obama, 

dated January 18, 2012 ................................................................................ 33 

Grassley, Hon. Chuck: 

Letter from Senator Grassley and Chairman Issa to Hon. Carolyn Lerner, 

dated February 15, 2012 .............................................................................. 35 

Hatch, Hon. Orrin G.: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 38 

Rockefeller, Hon. John D., IV: 

Prepared statement .......................................................................................... 41 

Sebelius, Hon. Kathleen: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 45 

Responses to questions from committee members ......................................... 53 

COMMUNICATION

Center for Fiscal Equity .......................................................................................... 113 

(III) 

(1) 

PRESIDENT’S FISCAL YEAR 2013 

HEALTH CARE PROPOSALS 

WEDNESDAY, FEBRUARY 15, 2012 

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. 

The hearing was convened, pursuant to notice, at 10:40 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Bingaman, Wyden, Menendez, Carper, Cardin, 

Hatch, Grassley, Snowe, Crapo, Roberts, Enzi, Cornyn, Coburn, 

and Thune. 

Also present: Democratic Staff: David Schwartz, Chief Health 

Counsel; Matt Kazan, Professional Staff; Tony Clapsis, Professional 

Staff; Callan Smith, Research Assistant; and David Sklar, Health 

Fellow. Republican Staff: Brendan Dunn, Special Counsel; and 

Stephanie Carlton, Health Policy Advisor. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The committee will come to order. 

President Dwight Eisenhower once said, ‘‘Unless we progress, we 

regress.’’ Since passing the Affordable Care Act, we have made tremendous progress on the health care front. Health reform is saving 

millions of Americans money, giving them more choices and better 

access to their doctors. Prescription drugs are cheaper for seniors. 

In fact, 3.6 million Medicare beneficiaries saved more than $2 billion last year, and that is because health care reform closes the 

prescription drug donut hole. 

To date, 2.5 million young adults, many facing a difficult job 

market, have been able to stay on their parents’ coverage. Forty 

thousand Americans who were denied insurance due to a preexisting health condition have been able to obtain coverage through 

State-based high-risk pools. 

Vera Uzelac from Billings, MT can tell you just how health care 

reform has helped her. Like most seniors, Vera lives on a fixed income and has to be conscious of every penny she spends to get by. 

Before health reform, Vera was forced to pay as much as $85 a 

month for one prescription, but now Vera is saving at least $20 

every month on medications she needs, which frees up money for 

groceries and other necessities. 

Or take Sheila Lopach from Helena, MT, whose 24-year-old 

daughter is in school and had no health coverage. Thanks to health 

reform, young adults across the country like Sheila’s daughter can 

2 

stay on their parents’ insurance coverage, and parents like Sheila 

can worry a little bit less. 

Just as health reform reduced costs for individuals and businesses, the law reduced government costs, most notably through 

Medicare. The health reform law also provided the biggest deficit 

reduction in more than a decade. According to our nonpartisan 

scorekeeper, the Congressional Budget Office, the law will reduce 

deficits by $143 billion in its first 10 years and by more than $1 

trillion in the decade that follows. We need to continue this 

progress. I look forward to hearing from Health and Human Services Secretary Kathleen Sebelius today about how the President’s 

budget will do that. 

Today nearly 48 million Americans are enrolled in Medicare. As 

the Baby Boom generation retires, the number of seniors eligible 

for Medicare will increase rapidly. Over the next decade, 18 million 

additional Americans will enroll in Medicare. We need to ensure 

that these beneficiaries and future generations receive the benefits 

that Medicare guarantees. 

To strengthen Medicare, we need to continue lowering costs. We 

need to spend our precious health care dollars more wisely and efficiently. If we do, we will lower premiums for seniors enrolled in 

Medicare today and keep the program strong for generations to 

come. 

This is the path health care reform took, and we are already seeing results. Two weeks ago, CBO released a report showing that 

over the next 10 years the cost-per-beneficiary will average just 1 

percent a year more than the rate of inflation. 

This is significantly better than the last 20 years. From 1985 to 

2007, these costs grew 5 percent faster than inflation—not 1 percent, 5 percent. This is major progress, but of course we can do 

more. If per capita health care costs were to slow by 1 percentage 

point over 10 years, the Federal Government would save $800 billion. 

Secretary Sebelius, we provided you with the tools in the Affordable Care Act to continue to lower costs and bend the cost curve. 

When doctors and hospitals do not talk to each other, patients receive the same tests twice. That is why health reform improves 

communication and coordination among providers. Expensive diseases can be better managed if they are caught early, so health reform provides free preventive care. 

Criminals try to rip off taxpayers. Health reform provides law 

enforcement new tools and resources to protect Medicare and Medicaid from fraud. I am pleased to hear that the administration’s 

anti-fraud efforts have recovered more than $4 billion just last 

year. 

We know that some of the best ideas do not come out of Washington: they come from our own communities. That is why health 

reform created the Medicare and Medicaid Innovation Center to leverage these good ideas and partner with the private sector. 

Secretary Sebelius, I am pleased to see that you are enlisting private sector partners. The recent innovation challenge has sparked 

thousands of ideas from the best providers our system has to offer, 

including some from my home State of Montana. 

3 

Never before has the need to reign in out-of-control health care 

costs been higher. Never before has a consensus for action been 

stronger. Madam Secretary, I urge you to continue to use these 

tools provided by the Health Reform Act. 

The goals and responsibilities of your Department are broader 

than health care. Our Nation must revisit the ways we prevent 

poverty. Our economy has continued to recover, and I am pleased 

to see that the budget reflects that positive growth. But our work 

is far from complete. The human service programs we will work on 

this year present significant opportunities to build upon the 

strengths of the American family. We must find the best and most 

effective ways to help families in economic crisis. 

Temporary Assistance to Needy Families must be maintained for 

the well-being of children and families facing dire circumstances. I 

was pleased to work with Senator Hatch and the many child welfare champions on this committee to reauthorize the Safe and Stable Families program last year. We should consider the lessons we 

learned and the principles that guided us during that process as 

we work to reform the entire child welfare system. 

So let us improve these human service programs. Let us work together to strengthen Medicare and Medicaid. Let us make our 

health care system more efficient. Let us build on the health reform law. Let us heed President Eisenhower’s warning that, unless 

we progress, we regress. 

[The prepared statement of Chairman Baucus appears in the appendix.] 

The CHAIRMAN. Senator Hatch? 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Well, thank you, Mr. Chairman. It is a pleasure 

to work with you on this committee, and all of the other members 

of the committee. I want to thank you for scheduling this hearing 

today. 

Secretary Sebelius, thank you for taking the time to be with us. 

We have a lot to talk about, since it has been over 300 days since 

you have testified before this committee which oversees much of 

your budget. 

I suspect it comes as no surprise that our list of questions is 

long. The question that American taxpayers are asking is how the 

President proposes to balance the budget and how he intends to get 

our Nation’s debt and entitlement spending under control. 

After all, he promised when he was elected that he would cut the 

deficit in half by the end of his first term. Yet, with a fourth 

straight trillion-dollar deficit under the Nation’s belt, the expiration date on that election-year promise has long passed. 

I think many Americans would be willing to cut the President 

some slack if he demonstrated any willingness to lead us out of our 

debt crisis. But, with this budget, he again demonstrates that he 

would rather pursue his own political gain over fiscal stability. The 

budget completely fails to address the gathering storm of our entitlement crisis. 

But do not take my word for it. Just look at what everyone from 

the Washington Post to the Wall Street Journal is saying about this 

4 

budget. We have a special chart here. According to the Washington 

Post, the budget begins with ‘‘a broken promise and omits all kinds 

of painful decisions.’’ 

The assessment of Business Week is equally grim: ‘‘The budget 

does little to restrain growth in government’s huge health benefit 

programs.’’ The Wall Street Journal, I think, hits it on the head, 

concluding that ‘‘it is a brilliant piece of misdirection. Voters need 

to suspend disbelief for another 9 months.’’ 

At the same time that the President cuts the defense budget and 

complains about the lack of spending on infrastructure, his budget 

ignores that entitlement spending is crowding out these priorities. 

Medicare, Medicaid, and Social Security will increase as a percentage of GDP from 9.7 percent to 11.2 percent over the next 10 years. 

Federal Medicaid spending as a percentage of GDP will increase 

from 1.6 percent to 2.1 percent over the next decade. That is an astonishing 30-percent increase in the Federal portion of the program. Mandatory health spending under the President’s budget actually increases by $72 billion, since the modest $366 billion in savings over 10 years are wiped away by an undefined $438 billion 

proposal to fix the physician payment formula. 

I wish you could say that this budget contains smoke and mirrors, but it does not. It is, rather, a transparent abdication of any 

responsibility to fix the entitlement spending crisis. Medicare remains on a path toward bankruptcy, and with it senior impoverishment. Under the President’s baseline estimates, Medicare and 

Medicaid are projected to spend $11.1 trillion over the next 10 

years. This level of spending is simply not sustainable. 

According to the 2011 Medicare Trustees Report, the Hospital In- surance Trust Fund has $8.3 trillion in unfunded liabilities and is 

expected to be insolvent by 2024. Real choices, difficult choices are 

necessary, but the President refused to make them in his health 

law, and he refuses to make them now. 

Astonishingly, the President’s comprehensive health law failed to 

address the sustainable growth rate formula which is used to determine payments for physicians, despite cutting $529 billion from 

the Medicare program. 

With respect to Medicaid, the budget baseline proposes spending 

$4.37 trillion on the program over the next 10 years. This amount 

includes the health law’s new spending on the largest expansion of 

the Medicaid program since it was created in 1965. Furthermore, 

the budget fails to respond to repeated requests from Governors for 

any real flexibility to implement solutions that might work for 

their citizens. 

For the third year in a row, the President’s budget proposes increased spending while failing to propose a financially responsible 

long-term authorization of the Temporary Assistance to Needy 

Families program, which will expire at the end of this month. 

In his health law, the President famously promised to bend the 

cost curve with respect to health expenditures. He failed to do so 

with that law. With this budget, he has failed again. Over the next 

10 years, total mandatory spending for Medicare and Medicaid will 

exceed $11 trillion. 

Now, we have another example, as shown on the chart. The 

President’s budget would only reduce that amount by $366 billion 

5 

over 10 years. That is a trifling reduction of 3.6 percent over the 

next decade. Over the 75-year window, it translates into a rounding 

error, a reduction of one-half of 1 percent. 

As insignificant as these spending reductions are, it has become 

clear that the President is not serious about achieving even them. 

He has suggested that, unless Congress adopts his tax schemes for 

wealth redistribution, any adjustment to entitlement spending is 

off limits. 

The President’s reelection advisors in Chicago might think that 

it is politically advantageous to hold entitlement reform hostage to 

his class warfare proposals, but it is fiscally irresponsible. 

Again, thank you, Mr. Chairman. Secretary Sebelius, I look forward to a fruitful dialogue and look forward to chatting with you. 

The CHAIRMAN. Thank you very much, Senator. 

[The prepared statement of Senator Hatch appears in the appendix.] 

The CHAIRMAN. I would now like to turn to our honored guest 

and witness, Secretary Sebelius. 

Madam Secretary, you know the drill. Your statement is automatically included in the record, and I urge you to tell us what you 

want. Be candid, be direct, and take your time. Not too much. 

[Laughter.] 

I want to give you enough time so that you can say what you 

want to say. 

STATEMENT OF HON. KATHLEEN SEBELIUS, SECRETARY, DEPARTMENT OF HEALTH AND HUMAN SERVICES, WASHINGTON, DC 

Secretary SEBELIUS. Well, thank you very much, Chairman Baucus, Senator Hatch, and members of the committee. I look forward 

to the opportunity to discuss the President’s 2013 budget for the 

Department of Health and Human Services. 

Our budget helps to create an American economy that is built to 

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

that will lead to tomorrow’s treatments and cures, and promoting 

opportunity for America’s children and families so everyone has a 

fair shot to reach their full potential. 

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

long term to make sure the programs that millions of Americans 

rely on will be there for generations to come. 

Now, I look forward to our dialogue and answering questions 

about the budget, but first I want to just share some of the highlights. Over the last 2 years we have worked diligently to deliver 

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

Thanks to that law, more than 2.5 million additional young Americans are already getting coverage through their parents’ health 

plans. More than 25 million seniors have taken advantage of free 

recommended preventive services under Medicare, and small business owners are getting tax breaks on their health care bills to 

allow them to hire more employees. 

This year we will continue to build on those important efforts by 

continuing to support States as they work to establish affordable 

insurance exchanges by 2014. Once these competitive marketplaces 

6 

are in place, they will ensure that all Americans have access to 

quality, affordable health coverage. 

Because we know that a 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 the parts of the country where they are needed 

the most. 

It also invests in expanding the network of community health 

centers. Together with the 2012 resources, our budget will create 

more than 240 new access points for patient care along with thousands of new jobs. Altogether, health centers will provide access to 

quality care for 21 million Americans, 300,000 more than were 

served last year. 

This budget also continues our administration’s commitment to 

improving the quality and safety of care by spending health dollars 

more wisely. This means increasing our investments in health information technology and improving care for those who rely on both 

Medicare and Medicaid, the so-called dually eligible. 

It also means funding the first-of-its-kind CMS Innovation Center, which is supporting and partnering with physicians, nurses, 

hospitals, and others who have accepted the challenge to develop 

a new, sustainable health care system. 

In addition, the 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 payoff possible for our research dollars. 

This administration also recognizes that, in order for our country 

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

too many young children have their futures short-changed because 

they start school too far behind and never catch up. 

We know that high-quality early education programs put children on a path to school success and to a lifetime of opportunity. 

High-quality early education does not just lead to higher test scores 

and graduation rates, 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 children in federally funded childcare assistance 

programs. 

Our investments will also support critical reforms in both Head 

Start and childcare 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 childcare quality initiative that allows 

States to invest directly in programs and teachers so that individual childcare programs do a better job of meeting the needs of 

children and their families. 

Investing in health care, cutting-edge medical research, early 

childhood education, and other priorities that will help us create an 

American economy built to last requires resources. That means we 

7 

have to set priorities, make difficult trade-offs, and ensure that we 

use every dollar wisely. 

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

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

waste, fraud, and abuse in our health care system. 

Now, over the last 3 years, every dollar we have put into health care fraud and abuse control has returned more than $7, a pretty 

good investment. Last year alone, those efforts recovered more than 

$4 billion for American taxpayers. 

Our budget will build on those efforts by giving law enforcement 

the technology and data to spot perpetrators early and prevent payments based on fraud from going out in the first place. The budget 

reflects the careful review we gave to 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 and tight budget times did not require them. The budget also contains more than $360 billion in health savings over 10 years, most of which come from reforms to Medicare 

and Medicaid. These are significant, but they are carefully crafted 

to protect beneficiaries. For example, we propose significant savings in Medicare by reducing drug costs, a plan that will put 

money back in the pockets of Medicare beneficiaries. 

Our budget makes smart investments where they make the biggest impact and ensures millions of Americans will have access to 

the health care they need. It funds cutting-edge biomedical research, invests in our youngest children so they achieve their fullest potential, and it puts us all on a path to a stronger, healthier, 

and more prosperous America for the future. 

Thank you again, Mr. Chairman and Senator Hatch. I look forward to our conversation. 

[The prepared statement of Secretary Sebelius appears in the appendix.] 

The CHAIRMAN. Thank you, Madam Secretary. 

I would like to talk to you about two subjects. One is, how well 

is the innovation center doing? I noticed there are ideas like health 

coaches and expanding medical homes. I tend to believe that the 

innovation center and the funding for it is a good way to move us 

toward more efficient systems, but could you speak on just how 

that is progressing and what is working with the innovation center, 

what is not working, and what could be done to make it work better? 

Secretary SEBELIUS. Well, thank you, Mr. Chairman. I think the 

innovation center is one of the great initiatives funded as part of 

the Affordable Care Act. It is really the research and development 

arm of our major health care initiatives. 

In that way, about one-tenth of 1 percent of our overall health 

care spending is dedicated to finding the best new ideas that improve quality and lower costs, and they are in pockets around the 

country, but not taken to scale. So, medical homes for Medicare patients is a strategy that is tried someplace, and we are trying to 

improve it. 

The Accountable Care Organizations are pioneers who are really 

way ahead of their time in coordinating care with doctors and hosVerDate Nov 24 2008 20:20 Feb 12, 2013 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 R:\DOCS\78384.000 TIMD
8 

pitals, with the kind of bundled payment strategy that makes sure 

when a patient is dismissed from a hospital that he or she is not 

on their own to figure out strategies of how that care can be improved and to prevent an unnecessary readmission. 

We have some very exciting projects under way with States 

around the better care/better cost outcomes for the dually eligible, 

those Americans who qualify for both Medicare because of their age 

or disabilities, but also Medicaid because of their income, a fastgrowing population but one that I think has significant care challenges. 

So we are very excited about the investments made so far and 

about the strategies rolled out, and we think they have enormous 

potential, not only to reduce the costs and improve care in government programs, but to reduce costs and improve care for private 

sector payers. 

Our Partnership for Patients is a great example. Reducing 

hospital-acquired infections, reducing preventable readmissions, 

not only helps the government programs, but certainly helps all our 

private sector partners, which is why we have more than 3,000 hospitals, as well as a lot of major employers, who are thrilled with 

this initiative and eager to step up and help us figure it out. 

The CHAIRMAN. I appreciate that. I just urge you to maybe quantify results so that we know we are being efficient with the various 

innovations. 

Turning now to exchanges. I see you asked for more money for 

the exchanges that go into effect in 2014. How many States do you 

think will have exchanges operating by themselves, how many not? 

What are some of the worries? What is some of the good news, but 

what are some of your concerns about the exchanges? The other 

question tied to that is, how many employers do you think are 

going to drop coverage to the exchanges because it is cheaper for 

them to pay a penalty than it is to provide health insurance, thinking, well, the exchange is there; that will take care of it. 

Secretary SEBELIUS. Well, Mr. Chairman, we are actively working with States across the country and have engaged, I think, 48 

States in a variety of programs, from planning grants, to implementation grants, strategies that they are putting in place a step 

at a time. 

Right now, I think it is impossible to tell you exactly how many 

States will have a State-based exchange, how many States will be 

in a so-called partnership effort where they will begin by running 

parts of the program at the State level—the Federal program—in 

their build toward a fully functional State exchange sometime after 

2014. 

What I am confident about is that we will begin enrolling individuals across the country in exchange programs in the fall of 2013 

so that they can be fully covered by 2014. I think States are in a 

variety of conditions of engagement at this point. 

In terms of dropping coverage, again, the only real-life example 

we have in terms of this sort of framework being in place is the 

State of Massachusetts, which has a very similar structure for employers, a penalty if people do not carry insurance, and the availability of an exchange. 

9 

We found in the State of Massachusetts that actually covered increased, it did not decrease, when the exchanges were fully functional. I think if you talk to business leaders, they will tell you that 

providing affordable insurance coverage is not only a cost factor, 

but it is a way to keep and maintain the best possible employees, 

to recruit employees. 

It is a strategy that employers are eager to engage in, but often 

cannot afford. So having a structure, particularly for smaller employers, I think will encourage them to stay in the marketplace. We 

are already seeing a number of small employers who left the marketplace take advantage of the tax credits available for employee 

coverage, and I think that is an encouraging sign. 

So we have asked for additional resources, and that is really to 

focus on the functions of the Federal exchange, which we will be 

setting up. Many of those are one-time expenditures for an infrastructure and IT system. 

The CHAIRMAN. I appreciate that. Thank you very much. 

Senator Hatch? 

Senator HATCH. Well, thank you, Mr. Chairman. 

Secretary Sebelius, we are glad to have you here and are pleased 

that you are with us. 

Now, regarding the contraceptive mandate, I am going to ask you 

questions that I think require only a ‘‘yes’’ or ‘‘no’’ answer, and we 

will get through this more quickly, and hopefully I will not have 

to do it in subsequent rounds. 

Regarding the contraceptive mandate that has raised such significant religious freedom concerns, I want to make crystal clear 

what mandate is actually enforced today. Now, those religious freedom concerns have been directed at the amendments to the interim 

final rule issued last August. Last Friday you finalized those rules, 

as I understand it. I have that final rule right here. It states that 

you finalized those very same controversial proposed regulations 

‘‘without change.’’ Is that correct? 

Secretary SEBELIUS. We finalized the IFR with an additional 

delay period for those religious employers who find objection to offering contraception, and there they will have a year delay in implementation so we can work out a strategy where they can abide 

by their religious freedom and the women employed in those institutions will have contraception. 

Senator HATCH. Yes. My point is, it is still the same directive but 

subject to having a year hopefully where you can negotiate the 

changes that might need to be made. Is that fair? 

Secretary SEBELIUS. The waiver language is as it appeared in the 

original rule in August, with the exception that religious employers 

will not purchase, will not provide, and will not offer, if they object, 

contraceptives directly to their employers. But the employees in 

those religiously based facilities will have access to that care with 

no additional co-pays or no co-insurance. 

Senator HATCH. I have a copy of it here. It says, ‘‘These regulations finalized without change; interim final regulations authorizing the exemption of group health plans and group health insurance coverage sponsored by certain religious employers from having 

to cover certain preventive health services under provisions of the 

Patient Protection and Affordable Care Act.’’ 

10 

Then also it states in here, in other words, we are currently operating under the same language that was objected to by some in the 

religious community. It also says, ‘‘The departments have determined that it is appropriate to finalize, without change, these 

amended interim final regulations authorizing the exemption of 

group health plans and health insurance coverage,’’ et cetera. 

Secretary SEBELIUS. Senator Hatch, we announced that we will 

be promulgating an additional rule dealing with the religious employers who currently do not offer contraceptive coverage because 

of religious beliefs and that that rule will be in place and effective 

by August of 2013, when the IFR would apply across the board. 

Senator HATCH. All right. 

In his statement on Friday addressing the supposed compromise 

on this mandate, President Obama said, ‘‘From the very beginning 

of this process I spoke directly to various Catholic officials.’’ 

Now, prior to Friday, February 10, did you consult with any individual Catholic bishop or the U.S. Conference of Catholic Bishops 

about this so-called compromise? 

Secretary SEBELIUS. I did not speak to the Catholic bishops. 

Senator HATCH. All right. That is all I wanted to know. 

To your knowledge, prior to Friday, February 10, did anyone in 

the administration—anyone in the administration—consult with 

any individual Catholic bishop or the USCCB about that so-called 

compromise, to your knowledge? 

Secretary SEBELIUS. I know that the President has spoken to the 

bishops on several occasions, yes. 

Senator HATCH. Was it about that so-called compromise? 

Secretary SEBELIUS. I—I—— 

Senator HATCH. You do not know? 

Secretary SEBELIUS. I really do not know. 

Senator HATCH. All right. 

Are you aware of any consultation, prior to Friday, February 10, 

by anyone in the administration, the President’s reelection campaign, or the Democratic National Committee, with any person affiliated with Planned Parenthood of America, NARAL, or the 

ACLU about the so-called compromise? 

Secretary SEBELIUS. Again, Senator, I know numerous conversations were had with religious leaders, with employers, with insurers, and with stakeholders. 

Senator HATCH. And with these groups as well? 

Secretary SEBELIUS. Pardon me? 

Senator HATCH. With these groups as well? 

Secretary SEBELIUS. I assume some of those groups were talked 

to. I really have no idea if anybody in the administration talked to 

anyone. 

Senator HATCH. All right. 

I wrote you last July that your proposed contraceptive mandate 

would be ‘‘an affront to the natural rights to life, religious liberty, 

and personal conscience.’’ I note for the record that your response 

to my letter completely ignored this issue. 

Last October, 27 Senators joined me in writing you again, asking 

for any analysis requested or obtained by HHS regarding these religious liberty issues. The response from your Department completely ignored our request. There were 27 of us who asked for it. 

11 

The President’s Chief of Staff and Press Secretary have since 

claimed that this mandate is consistent with the First Amendment, 

and the final rule you issued last Friday states that it is consistent 

with the First Amendment and the Religious Freedom Restoration 

Act, which is the bill that I brought to the Congress. 

Let me just ask you again, did HHS conduct or request any analysis of the constitutional or statutory religious freedom issues? 

Secretary SEBELIUS. Senator, I think—— 

Senator HATCH. If you know. 

Secretary SEBELIUS [continuing]. What you heard was the President talk about two important principles, the availability of preventive health services—— 

Senator HATCH. No. My question was—— 

Secretary SEBELIUS [continuing]. To women and religious freedom. 

Senator HATCH. My question is a simple question. Did you or 

anybody at HHS conduct or request any analysis of the constitutional or statutory religious freedom issues? That is a simple question. 

Secretary SEBELIUS. Well, we certainly had our legal department 

look at a whole host of legal issues and I—— 

Senator HATCH. Did you ask the Justice Department? 

Secretary SEBELIUS. I did not. No, sir. 

Senator HATCH. All right. All right. That is all I want to get. 

Well, my time is up. Next, will be Senator Bingaman. 

Senator BINGAMAN. Thank you, Mr. Chairman. 

Madam Secretary, thank you for being here. Let me just say for 

the record I appreciate the reasonable position that you have arrived at with regard to contraceptive services. I think it adequately 

protects religious liberty and at the same time protects the right 

of women to obtain contraceptive services when they choose to. So, 

that is a different perspective than the one Senator Hatch was expressing. 

Let me ask you about a provision in the Affordable Care Act that 

relates to our workforce, our health care workforce. We put a provision in there that I felt was very important. It created a new, independent, and nonpartisan National Workforce Commission. The 

commission is tasked to provide Congress and the administration 

with information and guidance on how we can align our Federal resources to meet the health care workforce needs of the Nation. 

This resulted from the recommendation by the Institute of Medicine and was modeled after MedPAC, this commission is. The commission was strongly supported by Senator Baucus, Senator Murray, myself, and many others. It is my understanding that commission members were selected by the GAO in September of 2010, 

which is nearly 18 months ago, but they have not been able to 

work because they have not had any funding. 

Now, I think there is some provision in this budget to provide 

initial funding, and I just wondered if you could give us an update 

as to what can be expected. Is this commission going to be allowed 

to proceed to do its work, and when? 

Secretary SEBELIUS. Well, Senator, I share your interest in the 

work of, not only this commission, but the necessary work that 

needs to be done looking at the entire health care workforce. 

12 

Whether or not we had an Affordable Care Act, we have some 

workforce challenges as America ages, and, as we look at a misalignment of where the health care providers are and where the 

people are, it does not often match. So we have been working on 

this from day one. 

As you know, the Recovery Act provided some resources, the Affordable Care Act continued those resources: more training, more 

graduate medical education, more shifts in focus. We are eager to 

have the appropriations to get the commission up and running. We 

think that is an important advisory group and an important piece 

of the puzzle. 

We have been using internal resources with our planning and 

evaluation staff, our Agency on Health Resources Service Administration, which deals a lot with the workforce issue, with CMS, to 

look at all the levers we currently have and all the analysis we can 

do about what is projected to be needed in the future and what 

ways we have it moving in that direction. But I am hopeful that 

we can work with Congress to get the commission fully funded and 

operational. 

Senator BINGAMAN. Well, I will continue to communicate with 

you on this. I think this is a very low-cost item in the broad perspective of our health care delivery system, but I think it is an important one. 

Let me ask about the health insurance exchanges that Senator 

Baucus asked you about. One concern I have had is that, in our 

zeal to be sure that States can do whatever they want by way of 

establishing these health insurance exchanges—or do it the way 

they want, I should say—I am concerned that the underlying IT 

systems that are being developed State by State by State are not 

going to be able to communicate with each other. They will not 

have the common elements that they need to really have good information for us nationally on what is going on here. 

I know our State is spending a big chunk of the money that you 

have provided in the planning grant to work on an IT system. I 

know every State in the country is spending a big chunk of the 

money that is being provided to them, working on the IT system. 

Is there something that you are doing to ensure that we do not just 

have everyone inventing the wheel in every State of the Union 

here? 

Secretary SEBELIUS. Yes, Senator. I think your concern is wellplaced and well-founded. We did early on release some early innovator grants specifically for IT systems so that States who were 

frankly already well under way creating a health-wide IT system 

could actually move ahead of the pack and share what they were 

learning with other States to sort of reduce the reinvention of the 

wheel over and over again. 

We also have resources going to States so that they can look at 

a more comprehensive approach for consumer ease and availability 

so a consumer does not have to figure out where he or she might 

fit if they are Medicare-eligible, if their kids are eligible for the 

children’s insurance program, if someone is eligible for the exchange or a tax credit for the exchange, but that the system indeed 

encourages that. 

13 

So there was some, again, early IT money to look at a more comprehensive approach. We are certainly gathering States on a regular basis to share with one another what are the templates, what 

are the effective strategies, what is already in place, what this 

looks like, to try to minimize people having to start all over again 

and to accelerate their progress toward an effective exchange IT 

system that works. 

Senator HATCH. Senator Cornyn? 

Senator CORNYN. Thank you, Madam Secretary. We are having 

a little bit of a shuffling here, but we will get through this. 

I note that the rate of uninsured in the country was at 17.1 percent in 2011, which is up about 7 percent over 2010, and even more 

than that from 2008. One of the reasons given for the increased 

number of uninsured is the number of individuals losing employerprovided coverage. 

The Congressional Budget Office originally estimated that only 

some 7 percent of employees would lose their employer-provided 

coverage as the health insurance exchanges were implemented in 

2010. McKinsey, the business consulting group, has estimated that 

at minimum somewhere on the order of 30 percent of employees 

would lose their employer-provided coverage, and it could well be 

as high as 50 to 60 percent. 

Indeed, I think it is easy to see why that is true, because the financial incentives for an employer would create a reason for them 

to drop their employee coverage and to then require those individual employees to seek their coverage in the health insurance exchanges. 

Of course, the employer-provided coverage is subsidized as a 

fringe benefit by the employer, not by the American taxpayer. But 

once they go into the exchanges, those individuals will be eligible 

for taxpayer-provided subsidies in the exchanges. 

Can you tell us how the President’s budget deals with this issue 

and how we are going to be able to afford to provide taxpayerprovided subsidies for this 50 or 60 percent of employees who are 

now provided with employer coverage? 

Secretary SEBELIUS. Well, Senator, I think a couple of things. 

The economy certainly has a lot to do with employer coverage being 

lost, but I would also suggest that every analysis that I have read 

suggests that the extremely high cost and often lack of choice for 

small employers is also a driver in this marketplace where people 

are dropping coverage, particularly in the small marketplace. Large 

employers are keeping their coverage, small employers and individuals are often dropping coverage, and then people in the recession 

have lost coverage. 

So the availability of State-based insurance exchanges in every 

part of the country, with competition—and by every Congressional 

Budget Office and every analyst’s estimate—significantly lowers 

premiums based on a reduction of administrative overhead, prenegotiation, and kind of an active purchaser role, which, I think, 

again means that people will be coming back into the marketplace. 

I cannot speculate on what it is that people are looking at. What 

we know on the ground is that the only State with a fully operational exchange with a very similar framework is the State of 

Massachusetts. Employers did not drop coverage in that State. 

14 

They did not choose to exit the marketplace. In fact, more came 

into the marketplace. They have a higher rate of employer coverage 

right now than they did prior to the exchanges being set up, with 

a very similar kind of framework with a penalty and a tax subsidy. 

Finally, Senator, the issue of subsidies—employer coverage is 

subsidized by American taxpayers. They are part of a business expense. It is why some individuals are, in this current market, not 

in as advantageous a situation. Again, with an exchange, individuals, entrepreneurs, those who set up their own business operations, would be able to participate in a much larger pool, with 

much more competitive rates once the insurance exchanges are 

operational. 

Senator CORNYN. Madam Secretary, it seems to me that the economics for the employer are pretty clear, that rather than provide 

whatever the figure is, a $10,000, $8,000, $6,000 insurance policy 

for an employee, that it is cheaper for the employer to drop that 

coverage and to force the employee then to go to the insurance exchange. They save much more than the tax deduction. That is an 

out-of-pocket cost. 

So it seems to me that the administration has grossly underestimated the number of employers that will drop their employees 

from coverage, and indeed costs will explode far beyond the 7 percent that CBO projected on the bill. 

Thus, it seems to me impossible for the President to keep his 

promise that, if you like what you have you can keep it, because 

the way the so-called Affordable Care Act, which I think in truth 

will become the unaffordable care act, is structured, it provides the 

incentives to drop people and cause them to lose their employerprovided coverage. 

Secretary SEBELIUS. Well, Senator, right now I would just say 

the market is entirely voluntary, and what we find is that employers find it to be an enormous benefit to have affordable, robust 

health coverage for their employees. 

One of the issues I hear from small business owners constantly 

is they are frustrated by having their best employees go down the 

street or around the corner or down the block, because that is by 

far the most important benefit. 

So I think there are issues above and beyond cost, and I think, 

if the system is more cost-effective, if we are successful in changing 

some of the delivery system costs, lowering overall costs for both 

private sector and public sector, there is enormous benefit that lies 

ahead with full implementation of the ACA. 

Senator HATCH. Senator Wyden is next, but he has graciously 

agreed to allow Senator Roberts to ask one question so he can get 

to his Agriculture Committee, and then we will go to Senator 

Wyden immediately following, then Senator Coburn after that. 

Senator ROBERTS. I thank the ranking member or the vice chair. 

I apologize to my colleagues for breaking ranks; I think you are accustomed to that anyway. 

Madam Secretary—nice to see you, Kathleen. 

You have been to Children’s Mercy. You have been a strong supporter when you were Governor. I really appreciate that. In Kansas 

City, they received the Children’s Hospital Graduate Medical Education funding. I think a large percentage—I believe the number 

15 

that was quoted to me was 80 percent—of the doctors in this hospital that trains with these dollars stays in the surrounding area, 

which is obviously a very good thing. 

My question is, the recipient hospitals are training more than 

5,600 full-time equivalent residents per year. If we do not adequately fund this program, how on earth are we going to fill the 

gap that that creates in the pediatric workforce pipeline? I am a 

little worried about the funding level there for this program, which 

I think is exceedingly important. 

Secretary SEBELIUS. Well, Senator, you are absolutely right. I 

think that children’s hospitals, not only in the Kansas City area 

but around the country, do not only a great job on training pediatric residents, but on care delivery. 

As we look at, again, the workforce of the future, I think the 

focus in our Department is on trying to maintain residency slots as 

much as possible, and training for primary care, which clearly includes pediatrics. In a better budget time, I think these numbers 

would be significantly higher. 

We are trying to balance how to drive more dollars in teaching 

hospitals to primary care, gerontology, pediatrics, and look at all 

the sources of the levers. So you are right, the funding is not what 

we wish it would be, but we are going to continue to work with hospitals like Children’s Mercy to make sure that they can do the 

great job that they are doing. 

Senator ROBERTS. I look forward to working with you on that. 

Secretary SEBELIUS. Thank you. 

Senator ROBERTS. Mr. Chairman, thank you. I apologize again to 

my fellow colleagues. 

Senator HATCH. Thank you, Senator Roberts. 

One thing I would just like to establish. When can we expect an 

answer to our letter that the 28 of us wrote to you with regard to 

legal analysis on this freedom of religion issue? Can you answer 

that letter? 

Secretary SEBELIUS. Senator, I do not know where the letter is 

at this point in clearance. 

Senator HATCH. Well, we will get you one. 

Secretary SEBELIUS. But I will try to respond as rapidly as we 

possibly can. 

Senator HATCH. If you will do that, I would be very grateful. 

Secretary SEBELIUS. Yes. Certainly. 

Senator HATCH. Senator Wyden? 

Senator WYDEN. Thank you, Mr. Chairman. Welcome, Madam 

Secretary. 

Madam Secretary, as you know, in our part of the country we 

have a lot of good-quality Medicare Advantage plans. You have 

plans, for example, like Group Health in Seattle, that are so popular. All the single-payer folks always tell me, whatever you do, 

just make sure you protect Group Health. 

So I was particularly interested in the numbers you all have put 

together that indicate that in the last year—and this is countrywide, not just in the Pacific Northwest—Medicare Advantage enrollment has increased 10 percent, while premiums have fallen 

about 7 percent. 

16 

Now, this is particularly noteworthy, given all the predictions 

that came up during health reform. What do you think is behind 

a trend that indisputably seems pretty encouraging? 

Secretary SEBELIUS. Well, I think, Senator, it is very encouraging. The 7 percent is—again, the decrease in premiums is a national average. In some places it is significantly higher. And over 

and above that, I think we are at 99.7 percent of Medicare beneficiaries who have a choice. There are only a very few isolated 

areas where there is not currently a Medicare Advantage plan in 

operation. 

So I think it is a combination of strategies that were really part 

of the Affordable Care Act to negotiate for health benefits and look 

very carefully at pricing strategies, indicating to individuals for the 

first time we have a quality rating system. And what we are seeing 

is beneficiaries beginning to make substantial changes on their 

own based on the quality of those plans. In this case I think competition is paying off. 

But with an announcement that the Medicare Advantage plans 

on average were being paid about 12 percent more than fee-forservice Medicare with no resulting health benefits, I think the market is adjusting to the notion that that payment strategy is coming 

down. 

Senator WYDEN. Let me ask you about one other area, Madam 

Secretary. I always like to do the positive news first. This other 

area is not so positive, and it is the question of drug shortages. 

Yesterday I talked to a father of a 3-year-old in Oregon, and the 

3-year-old has leukemia. The family cannot get their leukemia drug 

through their insurer. 

Now, the Finance Committee held an important hearing on this 

topic. Chairman Baucus and Senator Hatch have been very interested in this drug shortage issue. We were told that, in effect, when 

the government sees that there is a drug shortage—this was the 

testimony we heard in the Finance Committee—it usually takes a 

year or longer in order to get the drug out again. 

That is too late for many parents. These parents, like the family 

I talked to yesterday, say the government ought to have resolved 

this yesterday, and why can the government not fix this and stop 

playing catch-up ball? 

The President issued an executive order on this last fall, and my 

question to you is: What specifically since then has changed so that 

the government is going to get out in front of this urgent problem? 

I am not the only member of the Senate who is hearing from parents. 

I want to know what I can tell that parent when I call him back 

tonight. I said I was going to call him back tonight and say that 

I spoke to the government’s point person on this issue. What can 

we tell that parent tonight that the government is doing to get out 

in front of this urgent issue? 

Secretary SEBELIUS. Well, the good news for the parents of the 

child with leukemia is that the FDA did announce yesterday that 

they feel that in the next 2 weeks the leukemia drug shortage will 

indeed be resolved. People were afraid they were going to run out 

of the drug in 2 weeks. It is resolved because what we can do at 

the FDA is accelerate alternatives if we have notification. 

17 

What we know is that, since the executive order that the President issued in October, there have been over 200 shortages that actually have been averted. Because the FDA was notified, they can 

look for alternative sources of the drugs, they can expedite manufacturing lines in other areas. This really is, though, Senator, unfortunately a bit of a market glitch where the market capacity for 

drugs has not increased. There are pipeline increases that are 2 

and 3 years off, but currently we have the same manufacturing capacity and drug marketers choosing which line of drug to produce 

at which time. 

The earlier we are notified—and you have a bill pending in both 

the House and the Senate that we would be eager to work with you 

on. We have done as much as we can administratively, but a mandatory notification of drugs that appear to be getting to a shortage 

gives us then the ability to put our team into gear, and we can be 

fairly effective in at least finding alternative strategies, trying to 

ramp up other lines, putting pressure on groups, looking in Europe 

and Asia for an alternative. But if we do not know that it is coming, there is almost nothing the government can do. 

Senator WYDEN. Mr. Chairman, I know my time has expired. I 

would only say, Madam Secretary, I do not think notification alone 

is going to do it. I think this is a question of what kind of incentives we need to get to manufacturers. I think it is a question of 

the grey market. Just notifying people about what everybody already knows, I just do not think that is going to do it. The chairman has been gracious in terms of his time. I will continue this 

with you because—— 

Secretary SEBELIUS. Well, Senator, we would love to work with 

you on this. I would say that notification is a huge piece of it. It 

may be one of the few pieces that we at the government can control. Again, looking at the market, which we have done extensively, 

the manufacturing capacity needs to be increased, and a number 

of the major pharmaceutical companies are in the process of doing 

that. They are just a bit behind the demand. 

Senator WYDEN. I think the government has been behind. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Coburn? 

Senator COBURN. Thank you, Madam Secretary. I appreciate 

your being here. 

I have two areas that I want to discuss with you. One, in your testimony you talked about saving $7 for every $1 you put into 

fraud prevention. You came up with a number of $4 billion. The 

outside estimates, as well as GAO, estimate improper payments to 

be over $59 billion a year, and fraud in Medicaid and Medicare 

somewhere close to $100 billion a year. So we are at 4 percent. My question is, you all signed a contract for $77 million on a 

cost-plus basis with three firms that have never done what you are 

asking them to do. At the same time, another firm that has done 

this for 70 percent of all the insurance companies in this country 

in terms of predictive payment and whether or not to pay or whether to look, offered to do this for free for the government. 

Now, I understand the government cannot take free services, but 

it is concerning to me that we would go with three contractors that 

have absolutely no experience to set up something that could imVerDate Nov 24 2008 20:20 Feb 12, 2013 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 R:\DOCS\78384.000 TIMD
18 

mediately save us billions of dollars and not contract with the one 

firm that actually has real experience in doing that. Can you explain that to me? 

Secretary SEBELIUS. Senator, I have to confess, I am not aware 

of the contracting negotiations or who bid, or what the decision 

was. I would be very pleased to get that answer to you in detail 

and have Dr. Peter Budetti, who is the first person at Medicare 

and Medicaid to ever focus on fraud—we have a senior leader who 

is charged with doing that, building the predictive modeling, but I 

will get you a very detailed answer. 

Senator COBURN. I understand that. We have had him in front 

of our committee, and his answers were not satisfactory on that as 

well. So the question is, we have a cost-plus contract, $77 million, 

getting ready to expire—we are going to renew it—on the performance criteria for you all to effectively manage what you are doing. 

You chose somebody who has never done it before and refused to 

use the company that offered to do it for free, which was IBM, 

which has the vast experience in this world in terms of predictive 

modeling. To me, it makes no sense. It is no wonder that the people 

in this country do not have any confidence in us when we do not 

have the common sense to utilize things that are available to us. 

The second point that I want to go to is, in the Affordable Care 

Act there was a nice little trick that enhances Massachusetts to the 

tune of $3.5 billion over the next 10 years at the expense of 48 

other States by what they did with a trick with one hospital, one 

rural hospital, converting one hospital in the most expensive place 

to live in Massachusetts to a rural hospital, thereby upgrading the 

wage valuations for the rest of the hospitals in Massachusetts. 

You all had the opportunity to either do that or not do that. Why 

is it that you have decided that we should go ahead and do that 

and decrease the reimbursements? For the members of this committee, it is going to cost you $280 million a year for your hospitals, 

because that is going to be going to Massachusetts on the basis of 

one gimmick in the Affordable Care Act. 

Secretary SEBELIUS. I am sorry, Senator. I am trying to get the 

details of the Act. When you say we had the ability to do it or not 

do it, I am trying to understand what it is that—— 

Senator COBURN. You had the ability to grant that waiver or not 

grant that waiver back to a rural hospital status. You did not have 

to. You could have said, no, that will disrupt the payments to the 

rest of the hospitals throughout the country. But you chose to do 

it anyway. 

So the question is—we are going to take $3.5 billion out of the 

hospitals from all the rest of the States and transfer it to the 

highest-cost State there is, and on the evaluations in the future, in 

terms of the labor wage rates, we are going to protect Massachusetts on the basis of that, and every other State is going to have 

a different determination because of how we are going to value 

their inputs in the future. 

The question is, why should one State have the advantage over 

all the rest of the States for reimbursements that are markedly 

higher than for everybody else, and all the other hospitals have to 

pay for it throughout the country? 

19 

Secretary SEBELIUS. Well, again, Senator, I will take a look at 

that specific provision. I know that part of the requirements of the 

Affordable Care Act are two different studies on wage analysis that 

will be—one is under way. I think the second one is about to be 

started. We are directed to not only report back to Congress, but 

to actually reevaluate the entire CMS wage basis based on that 

market analysis. So, this will be part of that overall look. If it was 

directed as part of the Affordable Care Act, it is not something our 

Department executed, it was part of the legal requirements. But let 

me make sure I understand what you are talking about. 

Senator COBURN. Well, the way I read it, you had the opportunity as to whether you were going to grant them rural status or 

not, and you chose to do that. 

Secretary SEBELIUS. If it was directed as part of the Affordable 

Care Act, we did not. 

Senator COBURN. No. Well, you—— 

Secretary SEBELIUS. I need to—— 

Senator COBURN. Certain delegations have written to you, asking 

to make sure you maintain what your decision was, so you obviously had a decision or they would not be writing to you. I have 

a copy. I would be happy to put the letter in the record. I know 

you know what it is, and I would ask that this be part of the 

record. 

The CHAIRMAN. Without objection. 

[The letter appears in the appendix on p. 33.] 

Senator COBURN. But the point is, when we advantage certain 

people through legislation, that is exactly what America is sick of, 

this insider trading, the real insider trading, where we cheat the 

hospitals of 48 other States to advantage one group. It is inappropriate, it is not fair, and it does not do anything in the long run 

for the better aspects of medicine. 

I yield back. 

The CHAIRMAN. Senator Menendez? 

Senator MENENDEZ. Thank you, Mr. Chairman. Thank you, 

Madam Secretary, for your service. 

I have three questions, so I would like to put the questions out 

there first and then see your responses. They all deal with elements of the Affordable Care Act, which I supported. Some of these 

are particularly of great interest to me and to many people in the 

country who would advantage themselves on what these provisions 

in the Act would do. 

One is, in the law we ensured all qualified health plans would 

include behavioral health services as part of the essential health 

benefits package. Among the universe of those who would receive 

those benefits, of course, are those who have families in the autism 

spectrum. New Jersey has the highest autism rate in the Nation, 

unfortunately, so I have heard these stories very vividly. Yet, they 

are unable to access vital behavioral health services. 

Even in States with an autism coverage mandate, there are a 

number of exemptions that lead people to fall through the cracks. 

The language in the law, the Affordable Care Act, is specifically designed to address their needs and ensure that all qualified health 

plans will provide the benefits so many families need. 

20 

I am concerned that HHS’s recent bulletin on the essential 

health benefits package refers to States using a benchmark plan as 

the basis for the essential health benefits package, but, because of 

the current patchwork of State autism coverage requirements and 

exemptions, I know I am not alone in the serious concerns that the 

benchmarking plan is insufficient to ensure that behavioral health 

coverage would be available on all qualified health plans, as the 

law dictates it should be. 

So one, can you please explain what steps HHS is going to take 

to ensure plans will provide behavioral health services, as required 

by the law, and how will the process move forward on finalizing the 

essential health benefits rule? That is my first question. 

The second question is with reference to a provision of the law 

that I previously introduced called The Mothers Act. It focuses on 

the devastating disease of postpartum depression. The language in 

the law required that HHS submit a report to Congress specifically 

addressing the benefits associated with screening for postpartum 

depression, and this report is supposed to be due within 2 years 

after enactment, which would be March 23. 

So I would like to get a sense of how that report is coming along, 

when we can expect to see it, if you know what the report is going 

to say, what findings does it have as it relates to this issue. 

Lastly, New Jersey currently has an 1115 demonstration waiver 

application pending before CMS. These waivers can be comprehensive. They involve major structural changes to a State’s Medicaid 

program, affecting hundreds of thousands of the State’s most vulnerable residents. 

New Jersey’s application was submitted in September of last 

year, and rumor has it that it may be approved as soon as this 

weekend. I say ‘‘rumor’’ because this entire process—I have to be 

honest with you—goes on behind closed doors without public notice, 

certainly without public input. My understanding is the law requires a process that is more transparent, and the rules on that 

have not been finalized. 

I have to say, as a member of the committee with jurisdiction 

over the Medicaid program and as a Senator, it is more than frustrating to be shut out of a discussion affecting not only Medicaid 

beneficiaries in my State, but institutional providers such as hospitals, skilled nursing facilities, and home health care providers. 

So, if the law was meant to be transparent, and a member of the 

Finance Committee and a U.S. Senator cannot get information 

about the process, which is what we are constantly being told by 

CMS, something is wrong with that process. 

Secretary SEBELIUS. Well, Senator, let me see if I can address 

your concerns. The essential health benefit model that we chose to 

adopt is the so-called benchmark model, which would allow a State 

to use a popular employer coverage or State employee coverage or 

the Federal employee coverage existing as a benchmark. 

But all of the rules of the ACA apply, including the 10 categories 

of mandatory coverage, so none of that is waived as you look at a 

benchmark for a particular State. I would say that we tried to balance affordability with comprehensive coverage in order to get a 

State up and running. 

21 

What we found, looking at the models across the country, is that 

there was very little variation in the actual coverage. There was a 

lot of variation in cost-sharing. That seemed to be the most significant in the categories. 

But the anti-discrimination, the ability of a plan to weight one 

category and so disadvantage behavioral health and say we are 

looking at 9 of the 10, but we are going to be very skimpy on behavioral health, those rules all are imposed on top of the benchmark strategy. 

So we will be working very closely with States to make sure 

that—as you know, behavioral health is one of those critical categories of care that is an underlying premise for what has to be in 

every essential health benefit, but we need to make sure that is in 

place, not only in New Jersey, but around the country. 

But we wanted to kind of take advantage of plans that were in 

the market, were purchased, were priced, and could be up and running as we start this process. We will continually reevaluate and 

make sure that there are not benefits that are being overlooked or 

skipped along the way. 

The Mothers Act provisions are definitely under way at the National Institute of Mental Health, looking at postpartum depression 

studies. They have 60 different grants on the issue, two program 

announcements, and we will be reporting back. 

I cannot tell you right now what exactly that is going to say, because I have not seen the draft of the report, but we will make 

sure, Senator, to get you the various clinical research that has been 

going on, the risk factors, the neuroscience that they are taking a 

look at, and make sure that your concerns about this very important area are addressed when we come back with this study. 

The CHAIRMAN. Senator Snowe? 

Senator MENENDEZ. Can I get the third answer? 

The CHAIRMAN. Yes. All right. We are a little over time here. Go 

ahead. Finish. 

Senator MENENDEZ. My questions were within time. The answers 

are—— 

The CHAIRMAN. But still. I am not going to get into that debate. 

But anyway, go ahead. Finish it. Finish it, Madam Secretary. 

Secretary SEBELIUS. Again, you are absolutely right that new 

rules, when they are in place, will require a far more robust process with 1115 waivers, having, at the State level, an opportunity 

for comment. The current rule really is the Governor and the State 

negotiates with our Department. We are not, by practice and statute, able to share those negotiations. 

The Governor’s office could share. But as far as I know, there is 

no imminent—I, in fact, speak to the Governor this afternoon. 

There is not any imminent waiver decision. But I understand what 

you are saying. We hope to get to the point where this is a much 

more transparent process in the very near future. 

The CHAIRMAN. Thank you. 

Senator Snowe? 

Senator SNOWE. Yes. Thank you, Mr. Chairman. Welcome, 

Madam Secretary. 

22 

The first question I have is in two areas, one in LIHEAP, the 

low-income home energy assistance program, and the other in the 

Medicaid program. 

First of all, I was just truly surprised and disappointed that the 

President’s proposed budget for the next year advances another 

major reduction in low-income fuel assistance by almost half a billion dollars in addition to the proposed cut last year that was almost $1.2 billion—$2.2 billion actually, and the Congress restored 

$1 billion of that. I mean, this is historically low assistance for the 

needy population, certainly in cold weather States. I mean, the 

New York Times did a front-page story just a couple of weeks ago 

on the dire, desperate circumstances so many people face, including 

in this instance where the individual offered his car as collateral 

to pay for assistance. Maine has gone, during the President’s administration, from $80 million to a proposed $32 million with this additional cut. I just do 

not understand it, given the significant increase in the price of oil, 

which is now close to $3.80; for propane, it is over $4. The average 

person requires an average of 850 gallons. That is devastating. 

In fact, I talked to one woman. She and her husband both lost 

their jobs; they have three children. One child contracted pneumonia because they had no heat in their house. Why is the President proposing cuts in this program when there were $7 billion in 

cuts in discretionary spending in the final omnibus bill, yet $1.2 

billion of that $7 billion ended up being in the low-income fuel assistance program? 

Secretary SEBELIUS. Well, Senator, I understand your concerns, 

and certainly the States where heating oil is the primary heat, it 

is particularly dire. I would say this budget is half a billion dollars 

above the President’s request in last year’s budget. I know that is 

not much solace as you look back on the last several years. Again, 

in a better budget time this request would be far more substantial, 

but it is an increase over what was requested last year, and I do 

understand your concerns. 

Senator SNOWE. Well, I appreciate that. But in your budget of $70 billion, I would hope that we could find a place for people who 

earn $16,000 and have to pay $2,500 to $3,000 for an oil bill. I am 

just telling you, the circumstances are horrific, and I would hope 

that the President and you could find someplace—I mean, really, 

this program has really taken a heavy hit. 

On the second question on Medicaid—and I know this has been 

much discussed—many States, including mine, are wrestling with 

some major challenges. When we were debating the health care bill 

here in the Finance Committee, Senator Grassley and I were able 

to include some flexibility in the maintenance of effort to bring it 

down for parents and childless adults, down to 133 percent of the 

poverty level. 

Maine happens to have one of the top 5 most generous programs 

in the country for parents. The point is, as you know, States are 

grappling with deficits. That is what our amendment was all about, 

to give them flexibility in the event of budget deficits. That has 

been Maine’s circumstance. 

You had written to the Governors back in February of last year 

that you were committed to responsiveness and flexibility to expeVerDate Nov 24 2008 20:20 Feb 12, 2013 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 R:\DOCS\78384.000 TIMD
23 

dite review of State proposals to address some of these problems 

in Medicaid. 

In addition, the Medicaid Director, Cindy Mann, had suggested 

in your Department ‘‘reductions in eligibility solely for budgetary 

purposes would not be experimental, pilot, or demonstration projects.’’ There is obviously a concern what authority you have and 

what you do not. I think the point here is, we want to avoid reductions in eligibility and to continue with the eligible population having coverage, but to also avert Hobson’s choices. 

Like in Maine, for example, eliminating optional benefits like 

waiting lists for those who are developmentally disabled. What can 

you offer to States like Maine so that we would avert and avoid 

those types of choices, but address some of the budgetary issues 

that they are facing that could provide short-term savings now? 

Secretary SEBELIUS. Well, Senator, I had a conversation with 

your Governor, I think, in the last 2 weeks about this very issue. 

We, again, made it clear to him what was within the State’s discretion, and some of the provisions that you have just outlined. 

Senator SNOWE. Right. 

Secretary SEBELIUS. The adults down to 133 percent—that is a 

choice they could make right away. We volunteered to send a team 

in to look at their other choices. We did not have a lot of paper 

from the Governor about what exactly was the proposal but committed to doing whatever we could to look at ways that, not only 

they could make immediate changes in areas where they had administrative flexibility and we would identify them a category at a 

time, but then look at ways that hopefully we could help reduce the 

costs in categories where we do not have a lot of flexibility. But we 

are waiting to get some responsiveness, and we are doing that with 

States across the country. 

Senator SNOWE. Good. Well, I think it would be helpful if we 

could, going forward, find models that work. I know the areas you 

identified, about five areas, to the National Governors Association, 

where they could find short-term savings. 

But I am just wondering if we could go beyond that and figure 

out what can work within the constraints. Even with the constraints of maintenance of effort, continuing with the eligible population, are there ways and models and demonstration programs 

that could be used effectively to actually work to achieve savings 

and help deliver these programs and services more efficiently? 

Secretary SEBELIUS. And we are eager to do that. Dan Crippen, 

the new head of the National Governors Association, the former 

head of the Congressional Budget Office, was in my office yesterday, and we talked about the fact that there was a new class of 

Governors in 2010, 19 new Governors. While I met with, I think, 

each and every one of them, a number of them are facing lots of 

incoming, and it is very difficult. 

What we want to do is go back around and have those conversations in great detail. We have lots of Governors now participating 

in this effort on dual-eligibles, which is one of the most expensive 

populations that any State has in their Medicaid budget. Frankly, 

moms and kids are fairly inexpensive to cover. Disabled, elderly, 

poor with multiple chronic diseases are often very, very challenging, not only in terms of care, but in terms of costs. So we are 

24 

working closely, and we want to get those good strategies and ideas 

to everybody. I would be happy to work with your office and keep 

you updated. 

Senator SNOWE. Yes. And if there is anything that we can do to 

help in that process—— 

Secretary SEBELIUS. Yes. Thank you. 

Senator SNOWE. Because I think then it sort of becomes a winwin. It becomes collaborative rather than adversarial—— 

Secretary SEBELIUS. Yes. 

Senator SNOWE [continuing]. Making some tough choices that affect people. 

Secretary SEBELIUS. You bet. 

Senator SNOWE. Thank you. 

Senator HATCH. Senator Grassley? 

Senator GRASSLEY. I only have a couple of questions. Before I do 

that, I want to associate myself with the remarks made by my colleagues about the so-called contraceptive rule. I think you got it 

very wrong on the first try and you have a lot more work to do. 

My first question deals with whistleblowers. Of course, I have 

made the point that I would not be able to perform my constitutional oversight of the executive branch without Federal whistleblowers. They shed light on matters that affect public safety and 

the public purse, and oftentimes risk losing their jobs. They expose 

incompetence and promote reform that leads to better government. 

Their perspective has done a lot of good. 

The FDA faces accusations that it monitored nine FDA scientists’ 

personal e-mail accounts. However, the Health and Human Services Office of Inspector General concluded that the employees did 

not leak genuinely confidential classified information. 

Instead, it looks like FDA monitored these accounts because 

whistleblowers were talking to the Office of Special Counsel, and 

in the case of Congress some of the e-mails of people on my staff 

came up, showed up. So I am very concerned about this. FDA’s retaliation is shocking, it may be unlawful, and it should not be tolerated. 

I am committed to getting to the bottom of it. That is why, today, 

Chairman Issa and I are sending a letter to the U.S. Office of Special Counsel to launch an investigation into the facts and circumstances surrounding e-mail monitoring. I would ask permission 

to put that letter in the record, Mr. Chairman. 

Senator HATCH. Without objection. 

[The letter appears in the appendix on p. 35.] 

Senator GRASSLEY. So here is my question. Do you agree that 

searching through employees’ personal e-mails is all right just because they contacted the Special Counsel or Congress, and would 

you agree that that would be unacceptable? 

Secretary SEBELIUS. Senator, I certainly share your concerns 

about the potential retaliation against any whistleblower and feel 

that government employees need to have whistleblowers protections. 

On the other hand, I think the FDA needs to have protections 

around proprietary information. As you know, this case is in litigation. 

25 

Senator GRASSLEY. We are talking about personal e-mails, 

though, here. Is it all right? 

Secretary SEBELIUS. Senator—— 

Senator GRASSLEY. Go ahead. 

Secretary SEBELIUS. It is my understanding, and I again cannot 

really discuss a lot with the litigation, but my understanding is 

there was some monitoring of office e-mails, and screen shots may 

have appeared that accessed a personal e-mail. There was no monitoring of personal e-mails that had anything to do with anything 

outside of the office space. That is something that Federal employees throughout government are put on notice about, that their emails can be monitored. 

Senator GRASSLEY. Well, let me lead into this question then. 

Now, FDA may have the right to monitor e-mails sent from government computers. But if the evidence shows that the FDA captured 

e-mails that were not sent from a government computer, then do 

you agree that that would be inappropriate? 

Secretary SEBELIUS. Again, Senator, this is in litigation, and I 

really do not want to speculate. 

Senator GRASSLEY. All right. 

Secretary SEBELIUS. I do know that employees are put on notice 

that their government e-mails will be monitored. 

Senator GRASSLEY. Could I get this sort of a commitment from 

you: would you commit to ensuring that the FDA fully cooperates 

with the Special Counsel’s investigation? 

Secretary SEBELIUS. To the extent that they can while litigation 

is under way. I assume they will listen to the Justice Department 

about what they can and cannot do. But yes, sir. I think that everyone shares your concern about inappropriate and certainly any 

kind of retaliation against whistleblowers. I also think that you 

would share our concern that the release of proprietary information 

that may disadvantage companies, which is how this incident came 

to light, is also of concern. 

Senator GRASSLEY. All right. 

For years now I have been working on the Physicians Payment 

Sunshine Act which was included in the health reform bill 2 years 

ago. I want to emphasize, 2 years ago. I am disappointed that CMS 

is taking so long to issue the sunshine regulations. The proposed 

regulations were 2 months late. 

Last week, the Office of Management and Budget said the law 

would not be fully implemented until—can you believe it?—December 2014. In the absence of final guidance, companies cannot prepare to comply with the law. CMS does not seem to be taking this 

seriously or working to implement the law with any sense of urgency. 

Your agency has implemented many other provisions of the 

health care reform law already. Just think of all the ones you have 

already put out. The longer you delay the provision, the longer consumers will have to wait to learn about financial relationships between their doctors and drug and medical device companies. How 

can you wait until December 2014 to issue a final regulation when 

the law requires companies to begin reporting information in 

March 2013? 

26 

Secretary SEBELIUS. Senator, I just wanted to clarify. The final 

rule, as you know, has been finalized and is out and available. We 

are talking about a time table for reporting. This is a balancing act. 

I again share your concerns that consumers have the information 

about relationships that may influence their provider’s decision. 

A lot of health care providers are very concerned that additional 

reporting requirements may indeed impede their ability to practice 

medicine, so we are trying to have a balance between the public 

right to know and the provider’s sensitivities. 

Senator GRASSLEY. Let me correct you. The final rule cannot be 

out because the comment period ends Friday of this week, or Friday of next week. 

Secretary SEBELIUS. I apologize, Senator. We are talking about— 

I am thinking of the rule that may apply to NIH scientists and reporters dealing with sunshine. But I will get you an updated time 

table. I apologize. 

Senator GRASSLEY. All right. But we need to have the companies 

know what this is a long time before March of 2013. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Cardin? 

Senator CARDIN. Thank you, Mr. Chairman. Madam Secretary, it 

is a pleasure to have you before our committee. I appreciate the 

way that you are moving forward to implement the Affordable Care 

Act. 

You sometimes get inconsistent messages from my colleagues in 

Congress, but I can tell you—— 

Secretary SEBELIUS. Never. [Laughter.] 

Senator CARDIN [continuing]. As I travel through Maryland, I 

run into people who are affected every day in a positive way by 

what we did. Seniors now see a light at the end of the tunnel on 

the coverage gap for their prescription drugs. There just was a family last night that dealt with keeping their children on their policies at age 26. I can tell you, we have opened and expanded clinics 

in Maryland that are now covering prenatal care and dental care 

where they did not have that coverage before the initiatives within 

the Affordable Care Act. So I want to start off by just saying 

‘‘thank you.’’ 

I understand there is frustration that regulations and implementations are not moving as rapidly as some members would like to 

see. It would be nice if we gave you the budget supports you need, 

particularly at CMS, in order to be able to implement those programs. I am going to work with you to achieve that. 

I want to at least concur in the comments of Senator Wyden on 

the shortage of drugs. That is unacceptable in America, that these 

drugs are not available. I certainly understand your need for notification, but there are manufacturers that are not being totally 

forthcoming on these issues, and we have to make sure that the 

supplies are available. I think we have a responsibility to act. I 

hope that we will find a way, consistent with the philosophy of our 

country, to make sure that those types of shortages do not exist in 

the United States. 

I want to talk about the FDA budget. Of course, you mentioned 

the FDA. Their budget only gets a modest increase under the President’s numbers. But more disturbing to me is the NIH budget. The 

27 

National Institutes of Health are frozen in the budget that you 

have submitted. 

We rely on NIH to give us the answers to a lot of the medical 

mysteries that are out there and to provide the foundation for research that is important for innovation and job growth in America. 

I have been to NIH many times and have talked to the scientists 

who are working there, and I know the number of opportunities 

that are there that are not being moved forward because of the limited resources. 

So I would have hoped that we would have seen from the administration a greater priority for the NIH budget, and I wanted to 

give you an opportunity to respond as to the priority that NIH is 

receiving under this administration. 

Secretary SEBELIUS. Well, thank you, Senator. I do share your 

feeling that one of the most significant areas for not only the prosperity of our Nation, but really the world, is the ongoing biomedical 

research going on at the NIH. I am struck by, not only how important it is in this country, but around the world. 

What I can tell you is that NIH, as one of our largest agency 

budgets, is always difficult to look at. While a number of our agencies have cuts in this year’s budget, the NIH budget is, as you say, 

kind of held harmless. Having said that, Dr. Collins, I think, has 

done an extraordinary job adjusting resources so that we will continue the progress. This budget supports a 7.7-percent increase in 

new grants, so there will be 672 new research grants as part of this 

budget. 

The Cures Acceleration Network and the Center for Translational Science, which are two high priorities of Dr. Collins, which help, 

again, accelerate not only strategies within government, but leverage our private partners toward cures and toward disease outcomes 

that are positive, have fairly significant increases in this budget. 

So, while it is a level funding, it is focusing resources on areas with 

the most promise. 

Senator CARDIN. And I appreciate that. I look forward to working 

with you. I think that is a good point, that we need to set priorities 

within NIH. I agree with you. I want to make sure Senator Carper 

has an opportunity. I know we have a vote on. 

But let me just raise the issue of post-acute care. You have a 

large cut in Medicare in your budget, I think some $50 billion. 

Post-acute care has already sustained substantial reductions in recent efforts. I know that there is concern that we target fraud and 

abuse and waste. I would just urge us to be more surgical as we 

look for savings rather than using across-the-board issues that 

could jeopardize access to post-acute care. 

Secretary SEBELIUS. We would love to work with you on that 

issue. Thank you, Senator. 

Senator CARDIN. Thank you, Mr. Chairman. 

Senator HATCH. Senator Carper? 

Senator CARPER. Mr. Chairman? All right, Senator Hatch. 

Senator HATCH. Just a humble servant here. [Laughter.] 

Senator CARPER. Madam Secretary, welcome. I just want to 

thank you for a couple of things. One, Accountable Care Organizations. We all know that we have to move away from fee-for-service 

to a more coordinated care approach. They will put out some draft 

28 

regulations on Accountable Care Organizations. We heard that 

from a lot of people, and you did as well. 

I just want to commend you and your team for responding to 

those comments and helping to create an environment where we 

are going to see a lot of these Accountable Care Organizations established, including, I hope, in Delaware. 

We had Jonathan Blum who was up and met with our bunch of 

hospital and provider folks a week or two ago. He did a very nice 

job. And we are encouraged and excited about that. As you know, 

one of the things we focus on, as you do, is how to get better results 

for less money or better results for the same amount of money. 

As we try to figure out how to save money everywhere in government, to the extent that we can find ineffective, inefficient spending, whether it is these improper payments or just fraud, we want 

to go after that. I am told that you all may have announced, even 

yesterday I think you may have announced, a record level of health 

care recoveries totaling over $4 billion for 2011. That is up from almost nothing just a few years ago. So, thank you so much to everybody who is working hard to make that happen. 

I worked, along with some of my colleagues, Senator Harkin and 

Senator Murkowski, on menu labeling to make sure that, when 

people go into a chain restaurant across this country, they will actually know, not just the item being served and the price, but they 

will actually know calories and a lot of other information about the 

items being served. I understand that you all are pretty well along 

the way in terms of us being able to have that information going 

in to restaurants. So, we thank you for that too. 

I do have a question in all this. My question is, can you just take a moment and explain how some of the additional $1 billion in 

funding that the President requested for CMS will be allocated 

within the agency to support innovative initiatives, such as ACOs? 

For example, will the CMS Innovation Center receive any additional support to expand upon the ACO model and other health delivery system reforms? Is that a fair question? 

Secretary SEBELIUS. It is certainly a fair question. But let me answer it kind of in two parts. The Innovation Center initiatives are 

really a separate line of funding. As I explained to an earlier question, we see it as our kind of R&D operation around health care 

innovation throughout the country. We have had enormously enthusiastic response from providers, from private payers, from insurers. We have a number of programs under way, and we are 

going to continue to find new ways to support that. 

The billion-dollar request in the administrative side of the CMS budget has about $800 million dedicated to setting up the infrastructure for the Federal exchange program. A lot of it is 1-time 

costs for outreach efforts and IT efforts and the build that will be 

required to have that up and running. About $200 billion is dedicated to ongoing enhancements of Medicare and Medicaid service 

operations. Both programs, as you know, have increasing enrollment, and we want to make sure that we continue to fund them. 

With that said, Senator, because I know this is a concern of 

yours just in terms of overhead costs, I can report to you that, if 

this request is fully funded, the CMS administrative costs will still 

be less than 3 percent, even with the billion-dollar increase of our 

29 

overall program expenditure. I think that compares favorably with 

any private sector overhead costs for a major insurance company. 

Senator CARPER. All right. Good. Thanks. 

The other thing I wanted to mention, just very briefly, is, we had 

a hearing in the subcommittee I chair on Federal financial management, and we looked into the use of the prescribing of these socalled psychotropic drugs, mind-altering drugs, for children. We 

looked especially at foster care children who are in the Medicaid 

program. 

Secretary SEBELIUS. Yes. 

Senator CARPER. And we found that there were kids under the 

age of 1 who were receiving more than one of these psychotropic 

drugs. We had a little boy who was like 12 who was one of our witnesses, and he had been taking five or six of these drugs. They 

made sort of like a cocktail for him, and it was just really screwing 

up his life. 

What he really needed was for somebody to love him and to take 

him into their home and just make sure he had nurture and care, 

and he finally got that and he does not take any kind of medicine 

now. But this is something that is of great interest to us. We started looking at it, the idea of better results for less money. Are we 

wasting money in Medicaid? What we found out is just, we are not 

using best practices. 

I just want to put that out. You have a lot of things to say grace 

over, but that is something we are working on, and your folks are 

working on it as well, and basically reaching out to the States and 

saying, all right, let us see if we cannot figure out what is working 

in some of the States to deal with kids with these problems and 

what is not. 

Senator HATCH. Senator, I have to get to a vote, so I need to 

gavel this down. See how easy this has been for you today? I think 

we should do this once every month. [Laughter.] 

Secretary SEBELIUS. Really? [Laughter.] 

Senator HATCH. Really. You run such a huge agency. The one 

thing I would like to just say is, if you could, we have given copies 

of our letter, and your letter which we felt was unresponsive. If you 

could answer that by the end of this month, we would be very appreciative. Have your folks answer that and be responsive. I would 

really appreciate it. 

With that, is it all right if I gavel—— 

Senator CARPER. Madam Secretary, I am just going to ask, I will 

submit a follow-up question in writing on the issue of the foster 

children and psychotropic drugs. 

Secretary SEBELIUS. Absolutely. It is something we would love. 

Commissioner Samuels and our Assistant Secretary are very eager 

to continue pursuing this issue. 

Senator CARPER. Thank you. 

Thanks, Mr. Chairman. 

Senator HATCH. Thank you, Madam Secretary. 

Secretary SEBELIUS. Thank you. 

Senator HATCH. Thank you for being here. 

Secretary SEBELIUS. Thank you, Senator Hatch. 

Senator HATCH. With that, we will recess until further notice. 

[Whereupon, at 12:15 p.m., the hearing was concluded.] 

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