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S. HRG. 112–766 

THE AFFORDABLE CARE ACT: THE IMPACT OF 

HEALTH INSURANCE REFORM ON HEALTH 

CARE CONSUMERS 

HEARING 

OF THE

COMMITTEE ON HEALTH, EDUCATION, 

LABOR, AND PENSIONS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

ON

EXAMINING THE AFFORDABLE CARE ACT, FOCUSING ON THE IMPACT 

OF HEALTH INSURANCE REFORM ON HEALTH CARE CONSUMERS 

JANUARY 27, 2011 

Printed for the use of the Committee on Health, Education, Labor, and Pensions 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys/ 
COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS 

TOM HARKIN, Iowa, Chairman 

BARBARA A. MIKULSKI, Maryland 

JEFF BINGAMAN, New Mexico 

PATTY MURRAY, Washington 

JACK REED, Rhode Island 

BERNARD SANDERS (I), Vermont 

ROBERT P. CASEY, JR., Pennsylvania 

KAY R. HAGAN, North Carolina 

JEFF MERKLEY, Oregon 

AL FRANKEN, Minnesota 

MICHAEL F. BENNET, Colorado 

RICHARD BLUMENTHAL, Connecticut 

MICHAEL B. ENZI, Wyoming 

LAMAR ALEXANDER, Tennessee 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

RAND PAUL, Kentucky 

ORRIN G. HATCH, Utah 

JOHN MCCAIN, Arizona 

PAT ROBERTS, Kansas 

LISA MURKOWSKI, Alaska 

MARK KIRK, Illinois 

DANIEL SMITH, Staff Director 

PAMELA SMITH, Deputy Staff Director 

FRANK MACCHIAROLA, Republican Staff Director and Chief Counsel 

(II) 
C O N T E N T S 

STATEMENTS 

THURSDAY, JANUARY 27, 2011 

Page 

COMMITTEE MEMBERS

Harkin, Hon. Tom, Chairman, Committee on Health, Education, Labor, and 

Pensions, opening statement ............................................................................... 1 

Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming, opening 

statement .............................................................................................................. 3 

McCain, Hon. John, a U.S. Senator from the State of Arizona, statement ........ 14 

Franken, Hon. Al, a U.S. Senator from the State of Minnesota, statement ....... 16 

Bingaman, Hon. Jeff, a U.S. Senator from the State of New Mexico, statement ...................................................................................................................... 18 

Bennet, Hon. Michael F., a U.S. Senator from the State of Colorado, statement ...................................................................................................................... 19 

Roberts, Hon. Pat, a U.S. Senator from the State of Kansas, statement ........... 21 

Reed, Hon. Jack, a U.S. Senator from the State of Rhode Island, statement .... 23 

Burr, Hon. Richard, a U.S. Senator from the State of North Carolina, statement ...................................................................................................................... 25 

Sanders, Hon. Bernard, a U.S. Senator from the State of Vermont, statement 27 

Hagan, Hon. Kay R., a U.S. Senator from the State of North Carolina, 

statement .............................................................................................................. 29 

Murray, Hon. Patty, a U.S. Senator from the State of Washington, statement 31 

Mikulski, Hon. Barbara, a U.S. Senator from the State of Maryland, prepared 

statement .............................................................................................................. 62 

WITNESS—PANEL I 

Sebelius, Hon. Kathleen, Secretary, U.S. Department of Health and Human 

Services, Washington, DC ................................................................................... 6 

Prepared statement .......................................................................................... 8 

WITNESSES—PANEL II 

Grasshoff, Lisa, Houston, TX .................................................................................. 34 

Prepared statement .......................................................................................... 36 

Schlichting, Emily, Omaha, NE ............................................................................. 38 

Prepared statement .......................................................................................... 40 

Koller, Christopher, Health Insurance Commissioner, State of Rhode Island, 

Providence, RI ...................................................................................................... 41 

Prepared statement .......................................................................................... 44 

Olivo, Joe, President, Perfect Printing, Inc., Moorestown, NJ ............................. 48 

Prepared statement .......................................................................................... 49 

ADDITIONAL MATERIAL 

Statements, articles, publications, letters, etc.: 

Response by Secretary Sebelius to questions of: 

Senator Enzi .............................................................................................. 63 

Senator Alexander ..................................................................................... 75 

Senator Roberts ......................................................................................... 80 

Senator Hatch ............................................................................................ 82 

(III) 

(1) 

THE AFFORDABLE CARE ACT: THE IMPACT 

OF HEALTH INSURANCE REFORM ON 

HEALTH CARE CONSUMERS 

THURSDAY, JANUARY 27, 2011 

U.S. SENATE, 

COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS, 

Washington, DC. 

The committee met, pursuant to notice, at 10 a.m. in Room SD– 

430, Dirksen Senate Office Building, Hon. Tom Harkin, chairman 

of the committee, presiding. 

Present: Senators Harkin, Bingaman, Murray, Reed, Sanders, 

Hagan, Franken, Bennet, Enzi, Burr, Isakson, McCain, and Roberts. 

OPENING STATEMENT OF SENATOR HARKIN

The CHAIRMAN. The Senate Committee on Health, Education, 

Labor, and Pensions will please come to order. 

Today we meet for the first in a series of hearings that this committee will hold on The Affordable Care Act; hearings that will 

focus not on the politics of Health Care Reform nor on the rhetoric 

that surrounds it, but rather on the tangible, positive impact that 

reform is having on Americans’ lives. I think we can all agree that 

what this debate needs is more light and less heat. 

To that end, today’s hearing will focus on the benefits of health 

reform that Americans are experiencing right now; specifically, the 

bundle of significant consumer protections that went into effect last 

September, known as the Patient’s Bill of Rights. These protections 

are a historic, long-awaited improvement in the quality and scope 

of health coverage for all Americans. Every American who pays a 

health insurance premium is now protected against some of the 

most egregious and abusive practices of the health insurance industry. 

Put another way, thanks to health reform Americans now have 

protections that every Senator on this dais has had for many years. 

Before the Affordable Care Act, nearly 102 million Americans 

were in health insurance policies with lifetime limits; and it was 

estimated that as many as 20,000 people annually could be denied 

coverage for care due to those limits. 

And, surprisingly, people in danger of hitting a lifetime limit are 

seriously ill, and their benefits run out just when they need them 

the most. 

The Affordable Care Act permanently eliminates all lifetime limits and phases out annual limits by 2014, providing economic and 
2 

health security for those who need coverage the most at critical 

times. 

One of those folks, Lisa Grasshoff, is here today and will talk a 

bit later about how the act’s ban on lifetime limits has helped her 

care for her son and strengthen her family’s financial future. 

As I’m sure the Secretary will discuss in her testimony, last week 

the Department of Health and Human Services released an important report analyzing preexisting health conditions. The report’s 

findings are striking; up to 129 million nonelderly Americans have 

a preexisting condition, and millions more are likely to develop 

such a condition over the next 8 years. Before the Affordable Care 

Act these Americans faced denial of coverage, restriction of health 

benefits, or higher premiums as a result of their preexisting condition. Their ability to take a new job, start their own business or 

make other important life changes was limited. They were, in effect, locked into their original insurance coverage. 

Because of health reform, insurance companies are now prohibited from restricting or denying coverage to children under 19 because of a preexisting condition, and in 2014 this protection will be 

extended to all Americans. 

Between now and 2014, the law establishes an insurance plan in 

every State tailored specifically to adults with preexisting conditions who are currently uninsurable, offering coverage at standard 

market rates; thousands of people have enrolled and received coverage of life-saving services like chemotherapy. 

Another element of the Patient’s Bill of Rights is a requirement 

for every insurance plan to cover evidence-based preventive services that will head off many illnesses, addressing them in the 

nurse’s office rather than in the emergency room. 

The cost of preventable disease consumes 75 percent of health 

care spending annually; dollars that could be used to build roads, 

improve schools, create jobs. 

The prevention investments in the law are down payments on 

the long-term project of transforming our current sick care system 

into a genuine health care system; and first dollar coverage of preventive services like mammograms and immunizations are a vital 

part of that. 

Before the Affordable Care Act millions of young adults went 

without health insurance because their jobs didn’t offer it or because they were ineligible for coverage on their parent’s policy. 

These young people, starting a new job or a new business—folks 

who don’t have a lot of money—had to largely fend for themselves 

in a chaotic, unregulated market for individual coverage that 

charges high premiums for only modest benefits. 

Now health reform allows these young people—more than 2 million of them—to stay on their parent’s policy until age 26; this reform relieves young people of the burden of high health insurance 

costs. 

We will learn more about this from one of our witnesses today, 

Emily Schlichting, a University of Nebraska student. 

Finally, the Affordable Care Act puts an end to one of the most 

outrageous insurance company abuses, that’s cancelling insurance 

coverage right when someone gets sick, and sometimes based on 

technical paperwork error; for example, a California insurer, using 
3 

computer programs, had a dedicated program to cancel policies of 

pregnant women and the chronically ill only because they submitted expensive claims. 

Another insurance company started a fraud investigation into 

anyone who submitted a claim reaching a certain cost level, looking 

for reasons to cancel the policy; insurance companies were also paying bonuses to employees based on how many policies they canceled, and therefore, how much money they saved the company. 

Health reform puts an end to that sorry state of affairs. 

So, today we’ll hear from public officials at both the State and 

Federal levels charged with implementing and overseeing the Affordable Care Act, as well as private citizens who will talk about 

how this has affected them. 

Our first panel, of course, we welcome Secretary of Health and 

Human Services, Kathleen Sebelius to her first hearing of this New 

Congress. 

In addition to expertly implementing the private insurance market reforms for folks, today I want to applaud the Secretary for her 

relentless and effective work in eliminating the waste, fraud and 

abuse in Medicare and Medicaid. 

This week the department reported that it had recovered more 

than $4 billion from perpetrators of fraud last year; the highest annual recovery ever. 

Thank you very much, Madam Secretary. 

The department released new rules authorized by the Affordable 

Care Act, giving it even more effective tools to detect and combat 

fraud. 

Our second panel is comprised of Rhode Island Insurance Commissioner, Chris Koller, and three nongovernment witnesses, Lisa 

Grasshoff, Joe Olivo and Emily Schlichting. 

As always, I am very pleased to be joined by our committee’s 

Ranking Member, Senator Mike Enzi. 

And, before I turn for an opening statement from Senator Enzi, 

one administrative matter: I request that the record remain open 

for 10 days from today for statements to be submitted to the 

record. 

Senator Enzi. 

STATEMENT OF SENATOR ENZI

Senator ENZI. Thank you, Mr. Chairman. I appreciate the Secretary being here today. I was very pleased at the State of the 

Union, that the President mentioned that there are flaws in the 

Health Care bill that need fixing. He specifically mentioned tort reform. Of course, a year and a half ago at the American Medical Association Convention, he promised that the Health Care bill would 

have tort reform and a permanent doc fix; neither of those things 

wound up in there. 

Now, today’s hearing is designed as another marketing tool for 

the health care plan. I don’t think we can fault the millions that 

have been spent on the marketing—it’s been voluminous, but it’s 

the policy that’s flawed, not the marketing plan. 

It’s easy to pick a few paragraphs out of a 2,700-page law to find 

a few provisions that are popular. 
4 

Apparently, the purpose of the hearing today is to identify those 

few issues in the new law that enjoy support; and that’s often from 

both sides of the aisle. 

Now, usually, a hearing is to seek solutions. Unfortunately, the 

reality is that Americans won’t have the luxury of only abiding by 

their favorite paragraphs of the new law; Americans will be forced 

to comply with the entire law. That means, as a direct result of the 

new law, millions of Americans will see their health insurance premiums increase. Plans like Blue Shield of California have already 

announced premium increases of 59 percent; a portion of which 

they directly attribute to the mandates in the new law. 

As a result of the new law, children in many States are not able 

to get child-only health plans. I recently got a letter from a disabled veteran in Wyoming. He wrote to me that because of the new 

law he can’t get health insurance for his kids. He gets his health 

insurance care from the VA So, he doesn’t need a family policy, he 

needs a policy for his two kids; but because of drafting errors in 

the new law, he’s out of luck. 

No health insurance plans in Wyoming are writing new childonly policies. I’ve asked my staff to look into this, and they found 

that to be the case in at least 19 other States. Because of the new 

law, kids are not able to get health insurance. 

Another problem with the new law is that millions of seniors on 

Medicare will see their out-of-pocket costs go up and benefits go 

down, because more than $500 billion was cut from Medicare and 

used to pay for a new entitlement program. 

Because of the new law employers across the country will be 

forced to lay off workers and reduce wages as their health care 

costs continue to increase as a result of all the new taxes in the 

law that will increase their health care costs. 

The new law also forces 16 million Americans into the Medicaid 

Program; one of the worst health care programs in the country, 

that provides some of the lowest-quality care; while at the same 

time, forcing cash-strapped States to pay an additional $20 billion 

over the next 10 years to expand the program. 

This is the reality that we face as a result of the new health care 

law; nothing in the testimony we will hear today is going to change 

it. That’s why survey after survey shows that the American people 

reject the policy set forth in this new law. We recognize there are 

individuals who will benefit from a few of the provisions in the law; 

and, in fact, many of those provisions do enjoy bipartisan support. 

There are many Senators, both Democrat and Republican, that 

support policies, like prohibiting rescissions and making it easier 

for parents to cover their children on their plans up to age 26. We 

could have easily enacted a bill last year that would have provided 

those protections; unfortunately, that’s not what was done with the 

new health care law. 

Instead, the new law will force Americans to buy the type of 

health insurance that Washington thinks they should have. Employers will be required to offer health insurance or pay $52 billion 

in new taxes. 

Americans will not have the luxury of picking which parts of the 

new law apply to them, but instead will have to comply with the 
5 

2,700 pages in new mandates, taxes, and limitations on their freedoms. And that doesn’t even count the pages of new regulation. 

There is a sign on the side of a building in Worland, WY that 

says: As regulations grow, freedoms die. 

Madam Secretary, you have the unfortunate task of writing the 

hundreds of thousands of pages of regulations to implement an unpopular health care law that the American people reject. With each 

page you publish, you will be limiting the freedoms of everyday 

Americans; for example, the freedom of individuals to choose 

whether to spend their hard-earned dollars to pay their mortgage 

or to pay their health insurance premiums has vanished. 

The Government now says: Americans have to pick health insurance. If you don’t have health insurance, you’re breaking the law, 

and you’ll have to pay a fine. 

Businesses that have more than 51 employees will not have the 

freedom to decide whether to increase an employee’s pay or buy 

their employee health insurance. The new law says: If you don’t 

provide health insurance you have to pay $52 billion in new taxes. 

The freedoms of businesses to make decisions about how to run 

their companies are disappearing. Americans who wish to pay 

lower health insurance premiums by picking a plan that has a 

higher deductible will no longer have this freedom. The new law 

decrees that Washington knows best. 

The Administration will soon be publishing regulations capping 

the amount of out-of-pocket costs and limiting the deductible 

amount small businesses can offer their employees. 

Madam Secretary, I don’t envy you your job, and I do appreciate, 

though, that you’re here today, and that you have been working on 

those regulations, and meeting a lot of the deadlines; and we will 

have the opportunity to ask some tough questions about the new 

law. 

I do believe this is your first time to appear before this committee since your nomination hearing roughly 2 years ago; and to 

perform proper oversight, this committee will need to hear more 

from you; and I will ask you to reaffirm that commitment today. 

I’m glad this committee will finally have the opportunity to ask 

you questions about the implementation of the new health care law 

which impacts 1⁄6 of our Nation’s economy. And, of course, I’m always interested in the donut-hole provision where PhRMA, by paying 50 percent of the cost to get people through the donut hole will 

then get 95 percent from taxpayers once Seniors are through the 

donut hole because we no longer give incentives for people to go to 

generics. 

I have people from Wyoming talking to me about Medicare Advantage because their rates have gone up so much, or have completely been eliminated that they’re losing a part of what they consider to be health care and—invaluable health care—and there’s 

some animosity toward the AARP because they helped to do that, 

and they are the ones supplying the Medigap policy, which these 

people say they can’t afford. 

I believe that we can and should do better. I intend to focus on 

ways to eliminate the provisions in this new law that limit our 

basic freedoms. In their place I will work to enact reforms that will 
6 

focus on increasing consumer choices and decreasing health care 

costs. 

We must make health care more affordable for both consumers 

and the Federal taxpayer. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Enzi. 

Again, we have an exceptional group of witnesses today. I’d like 

to thank all of you for taking the time and energy for being here. 

On our first panel, of course, is Secretary of Health and Human 

Services, Kathleen Sebelius; and we welcome her here, again, as 

Senator Enzi said, for her first appearance before this committee. 

Secretary Sebelius was a leading voice involved during the passage of the Affordable Care Act. She is responsible for implementing many of the key provisions; and of course, we all know 

that prior to joining the Cabinet, Secretary Sebelius served first as 

the Kansas Insurance Commissioner; so she has a great deal of 

knowledge in that area; and then later, of course, as the Honorable 

Governor of the State of Kansas, where she worked to expand access to quality affordable health care, and fought to protect consumers. 

So, Madam Secretary, thank you for your hard work. Thank you 

for sharing your knowledge with the committee today. I commend 

you for your work on this important issue; your statement will be 

made a part of the record in its entirety. Please proceed as you so 

desire. 

STATEMENT OF HON. KATHLEEN SEBELIUS, SECRETARY, 

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, 

WASHINGTON, DC 

Secretary SEBELIUS. Thank you very much, Mr. Chairman. It’s 

nice to have a chance to visit with the HELP Committee on this 

important issue, and I want to thank Chairman Harkin, and Senator Enzi, and members of the committee for the opportunity to 

discuss the implementation of the Affordable Care Act, and talk a 

little bit about the enormous difference it’s already making in the 

lives of Americans since it was passed. 

As you know, in the framework of the bill, over the last 10 

months, our department has worked closely with two other departments; with Treasury and Secretary Tim Geithner and with Labor 

and Secretary Hilda L. Solis. But, we’ve also been working very 

closely with governors across the country; with my former colleagues, State insurance commissioners, with health care providers, doctors and nurses, with consumer advocates, employers 

and other stake-holders, to deliver the key benefits that have already become available to the people of America. 

We’ve met deadlines, we’ve established strong, working partnerships and begun laying the groundwork for the additional reforms 

that take place in the years to come; and in that time, I’ve had the 

chance to see the new law through the eyes of people it helps every 

day. 

Mr. Chairman, you’ve already referenced the new Patient’s Bill 

of Rights. And because of the enactment of those provisions, millions of Americans don’t have to worry about losing their health insurance when they need it most; many of the worst abuses of the 
7 

insurance industry, like unfair and arbitrary rescission practices 

and lifetime dollar limits on benefits have now been brought to an 

end. 

In addition, the new law begins to free as many as 129 million 

Americans with preexisting health conditions from the fear of discrimination by insurance companies. 

Starting this year, it did prevent insurers from denying coverage 

to children because of a disability or illness; and in 2014 all Americans will be free from discrimination by companies based on their 

health status. 

The law is also beginning to slow down the rising health insurance cost for families and small business owners; the new resources 

for States to review questionable premium hikes; the new regulations that limit the amount of premium dollars that insurers can 

spend on marketing and CEO bonuses. 

Beginning in 2014 individuals, families, and small businesses 

will be able to pool their purchasing power and negotiate lower 

rates in new health insurance exchanges, which many States are 

already working on, to design and implement. 

I’ve also seen how the new law is impacting America’s business 

owners. Over 5,000 businesses, State and local governments, and 

unions are already using new funds to help maintain coverage for 

a very vulnerable population—folks between the age of 55 and 64 

and their families, the so-called early retirees. Around 4 million 

small business owners are now eligible for tax credits to help them 

provide insurance for their employees. Thanks to the new law, seniors and those Americans with disabilities enjoy a stronger and 

more sustainable Medicare. 

We’ve sent over 3 million checks to those who fell into the donut 

hole last year, and they’ve received a one-time $250 rebate check. 

This year, for those who reach the donut hole coverage in 2011, 

they will begin to receive a 50 percent discount on the covered 

name-brand prescription drugs; and over time, that donut hole 

closes altogether. 

Medicare beneficiaries are now receiving critical preventive services and an annual wellness visit which has been added to their 

guaranteed benefits. 

So, in addition to giving Americans more control over their 

health care, the new law is strengthening our economy; just recently, the Congressional Budget Office reiterated their numbers, 

that the new law will reduce the Federal deficit by $230 billion 

over the next decade, and over a trillion dollars in the following 

decade. 

Now, on Tuesday night, President Obama laid out a vision for 

how America can win the future by building a foundation for longterm growth that allows families and business owners to thrive. 

Improving our health care system is vital to making that vision 

a reality; and the Affordable Care Act is an essential component to 

this goal. 

By freeing families from the worst insurance company abuses, 

freeing entrepreneurs to start new businesses without worrying 

about losing their coverage, and freeing all of us from the burden 

of skyrocketing health care costs that make it hard for families to 
8 

pay their bills, the law allows American companies to compete and 

allows the Federal Government to bring down the deficit. 

Since March of last year our department has focused on working 

with Congress and our partners across the country to implement 

the law quickly and effectively. 

In the coming months, I look forward to working with all of you 

to continue those efforts and to make sure that Americans can take 

full advantage of all that the law has to offer. 

Again, I thank you for this opportunity, and look forward to our 

discussion. 

[The prepared statement of Secretary Sebelius follows:] 

PREPARED STATEMENT OF KATHLEEN SEBELIUS

SUMMARY

Over the last 10 months, the Department of Health and Human Services has 

worked closely with the Departments of Treasury and Labor; Governors and State 

insurance commissioners; doctors, nurses and other health care providers; consumer 

advocates; employers; insurers; and other stakeholders to deliver many of the law’s 

key benefits to the American people. 

We’ve established a Patients’ Bill of Rights to protect families from many of the 

worst insurance abuses including rescissions and lifetime dollar limits on care. 

We’ve also begun to free as many as 129 million Americans from discrimination 

based on preexisting conditions. Today, it’s illegal to deny coverage to children because of a preexisting health condition. In 2014, discrimination based on any individual’s health history will be outlawed. 

The law is bringing down premiums for consumers by limiting the amount of premiums insurers may spend on administrative costs and by giving States resources 

to beef up their rate review processes. In 2014, State-based Exchanges will bring 

down premiums further by giving individuals and small business owners the ability 

to pool their purchasing power to negotiate lower premiums. 

There are other benefits for America’s businesses as well. Over 5,000 businesses, 

State and local governments and unions are using funds from the Affordable Care 

Act to maintain coverage for pre-Medicare retirees and their families. Around 4 million small businesses may be eligible for a tax credit to help them provide health 

insurance for their employees. 

Thanks to the law, seniors are gaining a stronger and more sustainable Medicare. Over 3 million seniors have already received one-time $250 donut-hole rebate 

checks. This year, seniors in the donut hole will receive 50 percent discounts on covered brand name prescription drugs, and others will have access to many important 

preventive care services for free. 

The law is a key part of the Administration’s effort to win the future by out-innovating, out-educating and out-building the rest of the world. It gives Americans 

more freedom in their health care choices, from greater freedom to change jobs or 

start a business without worry that they’ll lose coverage to greater freedom from 

skyrocketing premiums. It also puts our budget on a more sustainable path by lowering the deficit by $230 billion over the next decade and by over $1 trillion by the end of the following decade. 

Since March of last year, our Department has focused on working with Congress 

and our partners across the country to implement this law quickly and effectively. 

In the coming months, we look forward to working with all of you to continue that 

work and make sure that Americans can take full advantage of all that the law has 

to offer. 

Chairman Harkin, Ranking Member Enzi, and members of the committee, thank 

you for the opportunity to discuss our department’s implementation of the Affordable Care Act and the enormous difference it has made in the lives of Americans 

since it was passed. 

Over the last 10 months, our department has worked closely with the Departments of Treasury and Labor, with Governors and State Insurance Commissioners, 

with doctors, nurses, other health care providers, consumer advocates, employers, 

insurers, and other stakeholders to deliver many of the law’s key benefits to the 

American people: from establishing a new Patients’ Bill of Rights that protects fami-
9 

lies from the worst insurance company abuses, to sending more than 3 million $250 

checks to seniors and other beneficiaries in the Medicare Part D coverage gap, from 

making health insurance tax credits available to up to 4 million small businesses, 

to new reforms that keep premiums down by bringing transparency and accountability to our health insurance markets. 

We have met deadlines, established strong working partnerships, and begun laying the groundwork for reforms that will take effect in the years to come. 

In the last year, I’ve also gotten the chance to see this new law through the eyes 

of the people it helps every day. From the people I’ve talked to around the country, 

and the letters I get every day, I’ve learned firsthand how the law is giving Americans more freedom in their health care choices and more security in their coverage. 

It’s making a difference for people like Ralph Byrd from Phoenix. His twins have 

a condition called Spinal Muscular Atrophy that requires expensive treatments and 

a constant need for care. Ralph had health insurance but worried that the cost of 

care for his children would quickly reach the lifetime dollar limit on his plan. 

Thanks to the new law, Ralph’s family and countless others no longer have to 

worry about losing their health insurance when they need it most. In September, 

the Patients’ Bill of Rights began to put an end to the worst abuses of the insurance 

industry, including the imposition of lifetime limits. It also put an end to unfair and 

arbitrary rescission practices and began to phase out annual dollar limits. It puts 

an end under most plans to outrageous fees you could be charged for going to the 

nearest emergency room. It allows parents to keep their children on family plans 

in most cases up to age 26. 

By holding insurers accountable, the new law frees Americans from the worry 

that their benefits will be unfairly taken away or capped. It has given millions of 

families peace of mind. 

At the same time, the new law begins to free Americans from the cruel practice 

of discrimination based on preexisting conditions. 

In September, I met Gail O’Brien from Keene, NH. The previous March, Gail, who 

was uninsured, was diagnosed with non-Hodgkins Lymphoma. When she tried to get 

coverage she was declined because of her condition or offered coverage at an 

unaffordable rate. She faced the kind of decision that, unfortunately, millions of 

other Americans have faced over the last few years. Should she pay for health care 

or pay for her son’s college education? Thanks to the new law, Gail was able to get 

coverage through the Preexisting Condition Insurance Plan created in each State by 

the new law. As a result, she has been able to get her treatments and is responding 

very well. 

Today, Gail is just one of thousands of Americans who had previously been locked 

out of the health insurance market but now have coverage thanks to the new law. 

Even more significant, insurers are no longer allowed to deny coverage to children 

because of a preexisting health condition. In 2014, any kind of discrimination based 

on your health history will be outlawed. That’s a day we will all celebrate. 

Almost every family in America will benefit from this protection. According to a 

report our department released last week, as many as 129 million Americans—or 

nearly one in two people under the age of 65—may have a health condition that 

makes them vulnerable to insurance company discrimination today. Things as big 

as being a cancer survivor or as small as treating high blood pressure were enough 

to catch insurers’ attention. And we know that they did not hesitate to use this 

power. 

The new law is freeing these 129 million Americans from the worry that if they 

change jobs, retire, get divorced, or otherwise need individual market insurance, 

they’ll be shut out of health insurance or denied the coverage they need. 

We also need to make sure that coverage is affordable for individuals, families, 

and businesses. Already, provisions of the Affordable Care Act are helping to keep 

premium increases down by demanding transparency and accountability from the 

insurance industry. For too long, it has been a common occurrence for someone to 

open up their mail and find a 25 percent premium increase from their insurer with 

little explanation and no recourse. 

That’s changing under the new health care law. States are our frontline defense 

to prevent unreasonable premium increases. As a former State insurance commissioner, I am pleased by the State-focused approach the law takes to premium review. We are providing States with resources to help them beef up their rate review 

processes, including the ability to hire actuaries to perform the necessary analysis 

of rate proposals. In 2010, we provided the first round of what will eventually be 

$250 million in funding to strengthen States’ ability to review and reject unreasonable rate hikes. Over the last year, States from California to Connecticut have 

shown that vigorous oversight can be very effective at stopping unjustified premium 

increases. We also have proposed a system for transparency and consistent, reviews 
10 

of any premium increase over 10 percent in 2011 to identify any that are unreasonable. 

In addition, for the first time, insurers will be held accountable for the way they 

spend consumer premiums. The new medical loss ratio regulations released last 

year implement the statutory requirement that insurers spend 80 to 85 percent of 

premium dollars on health care and quality improvement efforts instead of marketing and CEO bonuses. Those who don’t meet the standard will have two choices: 

reduce premiums or send rebates to their customers. We are already seeing indications that these policies are causing insurance companies to think twice about their 

premium increases and, in some cases, reducing the size of their annual updates. 

This is just the start of how the law will keep down premiums. In 2014, individuals, families, and many small businesses will be eligible for tax credits to help 

them afford health coverage purchased through the new Exchanges. They’ll be able 

to pool their resources in new State-based health Exchanges to negotiate lower 

rates. We estimate that a family of four earning $55,000 a year will save nearly 

$6,000 each year as a result of these tax credits. A single mother with an income 

of $33,000 will save nearly $10,000, putting coverage within reach for the first time 

for these vulnerable families. The nonpartisan Congressional Budget Office estimates that small businesses will be able to purchase coverage in the Exchanges at 

a significant savings than what they are paying now, because of the larger risk 

pools and streamlined administrative costs. Large employers are also benefiting. 

Creation of State-based health insurance Exchanges is a central component of the 

Affordable Care Act and a concept that has a long history of bipartisan support. 

Under the act, States have until 2014 to establish Exchanges for their citizens. As 

part of our partnership with the States, we are again providing resources to help 

them get these Exchanges up and running on time. We have provided Exchange 

Planning Grants to 48 States plus the District of Columbia and just last week we 

announced the availability of funds for States to begin the work to establish Exchanges. We will continue to work closely with governors, State regulators, and legislators to provide them with information and resources to complete this critical 

work on time. 

The law also invests in improving Americans’ access to care through $11 billion 

in funding for community health centers to increase services, improve facilities and 

train and support more health care professionals to work in the areas they are needed most. 

I’ve also seen how the new law is helping America’s businesses. Under the new 

law, more than 5,000 businesses, local governments, and unions have signed up for 

a new program that helps them maintain coverage for retired workers who are not 

yet eligible for Medicare. 

The California Public Employees Retiree System for example reports that by factoring the new program into its 2011 health plans, it was able to provide approximately $200 million in premium savings to 115,000 early retirees and their families. 

We have also notified more than 4 million small businesses and non-profits that 

they may be eligible for a tax credit this year to help them provide health insurance 

for their employees. We have already seen these credits working. After years of 

dropping coverage, we have seen the trend start to reverse thanks to the law. 

For example, Blue Cross Blue Shield of Kansas City recently reported that after 

letting local businesses know about the new tax credit, they enrolled more than 

9,000 new members covered by 400 new employers, more than a third of which had 

not previously offered coverage. On behalf of the Business Round Table, Hewitt analyzed the cost containment policies in the law and found that large employers could 

save up to $3,000 per employee by 2019. Thanks to the new law, America’s businesses are getting more freedom from soaring costs that made it hard for them to 

compete and keep their best employees. 

The Affordable Care Act is also making Medicare stronger and more sustainable. 

Last week, we sent out our three millionth $250 rebate check to help seniors and 

other beneficiaries who reached the Medicare Part D prescription drug benefit gap 

in 2010. Several of these seniors have written to me to say how helpful these checks 

were, including one couple from Minnesota who stapled their receipt to the card, 

showing how they spent the money at their local WalMart. 

This year, seniors are getting more benefits. Those who reach the donut hole will 

receive a 50 percent discount on covered brand-name drugs while in the donut hole, 

the first step toward closing the donut hole by the end of the decade. Medicare beneficiaries will be eligible to receive recommended preventive services such as mammograms and most cancer screenings at no additional charge as well as free annual 

wellness visits. 

In addition to giving Americans more control over their health care, the new law 

is strengthening our economy. More than 1 million new private sector jobs have 
11 

been created since the law passed and the health sector is one of the fastest growing 

parts of our economy. The Congressional Budget Office has said that the law will 

reduce our Federal deficit by $230 billion over the next decade and by over $1 trillion by the end of the following decade. 

I have personally seen the difference this law will make and in just a few minutes, you’ll hear more about how the law is making it easier for Americans to get 

the health care they need. This law is not just words on a page to be debated. There 

are names and faces that go along with this law. We are moving forward with real 

rights and reforms that are improving people’s lives every day. 

That’s why last week’s vote in the House to repeal this law was unfortunate. At 

a time when there is so much more important work to be done to rebuild our economy, we can’t afford to take these benefits away from families, bring back all the 

worst practices of the insurance industry, raise premiums for families, increase 

health costs for businesses, and add $1 trillion to the deficit by the end of the next 

decade. 

Since March of last year, our department has focused on working with Congress 

and our partners across the country to implement this law quickly and effectively. 

In the coming months, I look forward to working with all of you to continue that 

work and make sure that Americans can take full advantage of all that the law has 

to offer. Thank you for your time. 

The CHAIRMAN. Thank you, Madam Secretary. 

We’ll start our round of questions per agreement between the 

Ranking Member and myself earlier on; the order will be, The 

Chair, Ranking Member and then Senators in order of appearance; 

and my staff has written this, so it will be Senator McCain, Senator Franken, Senator Bingaman, Senator Bennet, Senator Roberts, Senator Reed, Senator Burr, Senator Isakson, Senator Sanders in that order. 

Madam Secretary, getting to this child-only issue, could you describe the new protections that the Health Reform bill provides to 

children in the private market, and how that differs from the status quo before the Affordable Care Act was passed? 

Secretary SEBELIUS. Mr. Chairman, before the Affordable Care 

Act, what a number of companies did is offer child-only policies, 

but eliminated any child with a preexisting health condition. So, 

the parents who really desperately needed coverage for their children with anything from asthma to diabetes to a cancer survivor, 

were blocked from getting coverage. 

The Affordable Care Act says that if you are going to offer childonly policies that it must be open to all children. No longer can you 

only offer policies to children who don’t have a health condition 

that may require them to have health insurance—what we have 

found companies doing is—some companies may be changing the 

kind of policy offerings. What most companies are doing are keeping in place their coverage for children like those referred to by 

Senator Enzi, and are selecting whether or not to offer policies 

going forward, prospective policies. 

A number of States have taken action—I think 19 or 20 so far— 

to say companies who want to offer policies to children must offer 

them across the board, feeling that the discrimination against children with preexisting health conditions is the worst of all worries 

for parents; and particularly when you have a sick child, to not be 

able to find affordable coverage is just untenable. 

Children are also eligible for the new high-risk insurance pools 

that are run in States across the country, in addition to the private 

health market. 
12 

The CHAIRMAN. So, it’s kind of the same situation that we experience in other areas of insurance, that, if you’re really healthy you 

can get a health insurance plan. 

Secretary SEBELIUS. If you promise not to get sick. 

The CHAIRMAN. That’s right. And if you have no preexisting conditions. 

One other thing that I wanted to just ask is: The first dollar coverage for proven cost-effective, preventive services. As you know, 

that’s something that I worked very hard on with others to get into 

this bill. Senator Burr was also very active on that, to focus on preventive measures. So that has also started. 

I just wanted to again ask you how the act’s mandated coverage 

of these services are affecting Americans’ health, and basically, 

how the provision is being implemented on the preventive end right 

now. How’s that being implemented right now? 

Secretary SEBELIUS. Mister Chairman, I know that prevention efforts are an area where you have spent a lot of time and energy 

over the years, and one that I think has the potential of yielding 

huge results in terms of not only lowering overall health costs—as 

you say, 75 cents of every dollar is spent on chronic diseases, most 

of which are preventable—but also on a healthier population, a 

healthier workforce. So the new law has a couple of provisions: 

Medicare beneficiaries now have eligibility for mammograms and 

cancer screenings, a variety of preventive coverage without co-pays; 

and that’s a big step forward in terms of taking down a cost barrier. In new plans offered, beginning after January 1, 2011, the private insurers will also offer preventive services that are covering 

a wide range of care without co-pays, to encourage, again, people 

to have regular checkups, get screenings, find problems much before they get to be acute issues, and deal with them in a much 

more cost-effective and, frankly, life-saving strategy before people 

get acutely ill and spend that time in hospitals, or in a condition 

where their lifespan is reduced and their health costs skyrocket. 

The CHAIRMAN. Just very simply, do you feel that the department has the wherewithal to implement this right now; in other 

words, to really implement these provisions? 

Secretary SEBELIUS. We are finding that, yes, as we go forward 

we are moving ahead and those policies are becoming effective. 

The CHAIRMAN. I appreciate that. Thank you, Madam Secretary. 

Secretary SEBELIUS. Yes. 

The CHAIRMAN. Senator Enzi. 

Senator ENZI. Thank you, Mr. Chairman. 

I want to go back to the child-only plans question a little bit, because we did take a look and found that there are at least 20 

States where you can’t buy child-only insurance anymore. If they 

already have it, they can keep it, but there’s not any new policies 

being issued, and consequently, they’re getting out of that market. 

So, for parents like the disabled veteran in Wyoming that I mentioned in my opening statement, who needs to buy a plan, it’s absolutely devastating. The outcome’s unfortunately predictable as a result of the drafting; which allows a person to buy a policy on their 

way to the emergency room, and so there’s some incorrect drafting 

and incorrect implementation. 
13 

Do you have any specific steps that you’re going to take to fix the 

problem in those 20 States? Does Congress need to change the law? 

Secretary SEBELIUS. Senator, we have done a lot of outreach with 

insurers across the country, and while there was an initial flurry 

of announcements, many insurance companies are reconsidering 

their initial plans to leave the marketplace. 

I would suggest it was, in some cases, a pretty cynical notion 

that you would only insure as a health insurer, children without 

a preexisting health condition and keep those policies in place. 

Parent’s coverage is often available to many of the children who 

had child-only policies. We are finding that a lot of children are 

being insured again, through their parent’s coverage, which has 

now been extended, as you know, to the age of 26, which has been 

a huge boom to a lot of families. 

A number of children are also eligible for CHIP coverage and the 

new high-risk plan; so there are a variety of strategies in place to 

make sure that children have coverage. And we are continuing to 

work closely with insurance companies to help rethink the strategies between now and 2014. In 2014 there won’t any longer be any 

barriers for anyone with a preexisting condition to have coverage. 

The child-only provisions kicked in, initially, this year. 

Senator ENZI. So, you’re saying there’s no need for changes. 

Secretary SEBELIUS. Senator, we will continue to look at the situation, particularly in States like Wyoming, if all the companies 

have moved out. I think it’s untenable for parents not to have coverage, but I would suggest—I would hope that we could call on the 

companies who have made ample profits selling child-only policies 

to children who were not ill or had any preexisting condition to reconsider their efforts to leave the market; and a whole series of 

companies have, indeed, done that. 

Senator ENZI. I would hope that we could make a fix in the law 

as well, so that people don’t just buy their insurance on their way 

to the emergency room. 

Yesterday, before the House Budget Committee, your Department’s Chief Medicare Actuary, Richard Foster, testified that the 

new health care law will not hold down health care costs, and will 

not allow everyone to keep their current coverage. 

Specifically when asked about the claim that the law reduces 

costs, Mr. Foster described it as false more so than true. Regarding 

the claim that people would be allowed to keep their current coverage, Mr. Foster described that claim as not true in all cases. 

Is Mr. Foster wrong in his analysis? What information do you 

have to counter the detailed analysis he’s done of the new law? 

Secretary SEBELIUS. Senator, I have not had a chance to thoroughly analyze Mr. Foster’s testimony. I know in the past when he 

has testified about the quarter of a trillion dollars in deficit reduction, he has speculated that if, indeed, the law is changed somewhere in the next 10 years, and if, indeed, Congress does not implement the law as is, then the quarter of a trillion dollars savings 

would not be realized. 

We are standing by the Congressional Budget Office analysis, 

your Budget Office analysis, which has had a series of numbers 

about not only the impact on families, and says that costs will go 
14 

down, the impact on individual business owners’ premiums, which 

say that costs will go down, but also the impact on the deficit. 

And the Congressional Budget Office again says that costs will 

go down. 

Senator ENZI. You and I know that the Congressional Budget Office is limited by what documents we give them to make their analysis on. The doc fix alone creates a substantial loss, but they 

weren’t allowed to consider that in the analysis. 

Now, in your testimony you noted the new laws strengthen the 

economy. 

Oh, my time has expired. I will be submitting some questions if 

we don’t go additional rounds. 

The CHAIRMAN. OK, thank you. Thank you, Senator. 

Senator McCain. 

STATEMENT OF SENATOR MCCAIN

Senator MCCAIN. Thank you, Mr. Chairman. 

Madam Secretary, the President said on Tuesday night, that he 

is in favor of repealing the 1099 Small Business tax increase from 

the Health Reform Law, and also believes that medical malpractice 

should be an issue that we should be addressing; do you agree with 

the President? 

Secretary SEBELIUS. Yes, sir. 

Senator MCCAIN. Would you submit, perhaps for the record, 

some idea of what the parameters of medical malpractice reform 

might be—suggestions that the department might have? 

Secretary SEBELIUS. Senator, as you know, the department has 

had authority for—— 

Senator MCCAIN. The question is, would you submit for the 

record—— 

Secretary SEBELIUS. Would I submit them? Sure. 

Senator MCCAIN. Thank you, very much, since we tried repeatedly over a year to get something addressing this issue in the 

2,700-page health reform document, some action on what most experts agree contributes sometimes 20, 30 percent to the additional 

costs of health care. 

You have granted over 700 waivers. Now, for employers and 

union plans from the, ‘‘annual benefit limit restrictions and health 

reform bill,’’ why not make those permanent? 

Secretary SEBELIUS. Senator, the goal of the law in the area of 

the annual limit benefit granted our department the discretion to 

look at situations which would cause, not only market disruption, 

but a dramatic increase in premiums; and what we have done, on 

a case-by-case basis, is receive information particularly about the 

so-called mini-med plans that are employer-based coverage 

throughout the country, and grant waivers where the employer indicated that there would be—— 

Senator MCCAIN. I understand—— 

Secretary SEBELIUS [continuing]. An enormous rate increase. 

Senator MCCAIN [continuing]. How it works. I’m asking why you 

wouldn’t want to make them permanent. 

Secretary SEBELIUS. That isn’t—— 

Senator MCCAIN. I appreciate if you would make your answers 

short. 
15 

Secretary SEBELIUS. Why wouldn’t we want to make them permanent? 

Senator MCCAIN. Yes. 

Secretary SEBELIUS. We’re taking a look at the marketplace; they 

have assured us that they can gradually phase into—— 

Senator MCCAIN. They have assured you. 

Secretary SEBELIUS [continuing]. The annual limit that—— 

Senator MCCAIN. They’ve assured you of that. 

Secretary SEBELIUS. That’s my understanding yes, sir. 

Senator MCCAIN. Thank you. As you know, the States are having 

great difficulty with their budgets, and there’s some conversations 

about some States even having to go into some kind of bankruptcy, 

etc; and there are a number of States that have great difficulty in 

complying with the act, as you know. 

In my home State of Arizona, we are facing a serious budget crisis. Our governor has written you a letter asking for a waiver. 

She’s asking for your assistance in providing Arizona with a waiver 

from the maintenance of effort requirements of the Patient Protection and Affordable Care Act. 

She goes on to say: 

‘‘I’m respectfully requesting that Arizona be allowed to reduce its Medicaid eligibility for certain nondisabled adults in 

order to preserve its underlying Medicaid Program.’’ 

Would you give serious consideration to the governor, and I’m 

sure other governors’ request that States be able to exercise the 

flexibility that they need to meet their compelling budget requirements, and probably know best in the view of many of us, how to 

provide the best health care at the least possible cost for our constituents? 

Secretary SEBELIUS. Senator, we’re working very closely with 

governors across the country. I just received, yesterday, Governor 

Brewer’s request, which we are taking a very careful look at; and 

also taking a very careful look at the law. 

I can tell you that we are actively working with States around 

the country, with new governors, particularly, about the flexibility 

that they have; many of them aren’t aware of the wide range of 

flexibility that they have to have cost savings in their Medicaid 

Programs; and we are actively working to provide teams of folks to 

go through the potential cost savings that other States have already implemented. 

Senator MCCAIN. I’m told that you have given a full waiver to 

three States; is that correct? 

Secretary SEBELIUS. Not of the maintenance of effort, no, sir. 

Senator MCCAIN. I see, but you—— 

Secretary SEBELIUS. That has not ever even been raised before. 

Senator MCCAIN. I see. Thank you. 

Again, Senator Enzi raised this, but something we all knew 

about CBO, garbage in, garbage out; but the person who we give 

the responsibilities, Medicare’s independent economic expert, said 

that both assertions, that the cost will be brought down and let 

people keep their current health insurance, if they like it, he 

strongly disagrees. 
16 

I, of course, disagree, since there’s 300,000 citizens in my State 

on Medicare Advantage, and there’s no doubt that their benefits 

under that program will be significantly changed, if not eliminated. 

I see my time has expired. 

I look forward, Madam Secretary, on this issue of medical malpractice reform. The President told the American people Tuesday 

night that he recognizes that this is an issue that needs to be addressed. 

We’re going to find out whether the trial lawyers run this place 

or whether the American people, and affordable health care is 

reachable for them, because without medical malpractice reform it 

makes that issue, if not impossible, certainly extremely difficult; 

and we look forward to hearing your proposals as to how we can 

implement such as has been implemented in the State of Texas. 

I thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

All right, next we’ll turn to Senator Franken. 

STATEMENT OF SENATOR FRANKEN

Senator FRANKEN. Thank you, Mr. Chairman. Speaking of the 

State of Texas, just to pick up from Senator McCain, my understanding is that the State of Texas order has this pretty dramatic 

tort reform. Health care there is much, much more expensive than 

it is in my State of Minnesota; is that correct? 

Secretary SEBELIUS. I think that is correct, Senator. 

Senator FRANKEN. I want to address the Ranking Member who 

said that there’s just like a few paragraphs that people like in the 

bill, and that’s what we keep talking about. 

That is what I heard from the Ranking Member. I think if you 

go back and look at your opening statement, you’ll see that, that 

that’s what you said was in the marketing. 

One of those paragraphs I would think that people do like, is getting rid of preexisting conditions as a reason to discriminate 

against a child or a patient; right? That’s pretty popular; isn’t it? 

Secretary SEBELIUS. I think it’s very popular with the American 

public, yes, sir. 

Senator FRANKEN. OK, and then the Ranking Member talked 

about the ability to buy a policy on the way to the emergency room. 

Now, I’ve heard that, and what that is about is, well, if you have 

a preexisting condition you don’t have to buy a policy until you get 

sick; that’s what that characterization is; isn’t it? I mean, is that 

your understanding of it? 

Secretary SEBELIUS. I think that’s what the Senator is referring 

to; that you could opt in and out of the market and only purchase 

coverage when you were sick. 

Senator FRANKEN. So, isn’t that the reason for the mandate? So, 

in other words, when I hear my friends who are opposed to this reform say, ‘‘Well, we really like the nondiscrimination against people 

with preexisting conditions, but then you can buy a health policy 

on the way to the emergency room’’; well, that’s why you have the 

mandate, isn’t it? 

Secretary SEBELIUS. The idea is to have a stable insurance pool, 

and to pool risk. As a former regulator, that’s important to have 

folks who have coverage; and some use it and some are not using 
17 

it simultaneously. It would be like buying car insurance after 

you’ve had the wreck. 

Senator FRANKEN. Right. So, if you think of health care reform 

as a three-legged stool—tell me if you agree with this analysis: 

First leg is, you can’t discriminate against people with a preexisting condition; and I hear everyone say that they want that; 

the second part is that since that means that you could buy an insurance policy on the way to the emergency room, you need a mandate, so that everyone has insurance, so you can’t buy an insurance 

policy on the way to the emergency room, everyone would have it; 

right? 

The third part is subsidizing; people can’t afford it, and that’s 

why we have a sliding scale up to 400 percent of poverty; isn’t that 

correct? Isn’t that a good analysis of what comprehensive health 

care reform is? 

Secretary SEBELIUS. I think if you look at the parts of the market 

that don’t function very well right now—for individuals buying coverage and for a lot of the small business owners—that having a 

much larger purchasing pool, having more people involved, eliminating the preexisting condition limitation, and then having everybody in, is certainly the way to stabilize the private insurance market. 

As you know, that was a discussion that the insurers had; and 

since this plan is built around the private insurers’ market, it 

adopts that strategy. You can get rid of the preexisting condition 

if everyone is in the pool. 

Senator FRANKEN. Exactly. OK, so I think this is really a discussion about a comprehensive health care reform, and not just cherry 

picking certain paragraphs. 

I wanted to ask you about the medical loss ratio and the implementation of that. As you know, I fought for that, which basically 

says that insurance companies that have large group policies have 

to use 85 percent of the premiums that they get on actual health 

care; 15 percent can go to marketing and administration and profits, and 80 percent if it’s an individual or a small group. 

Can you tell me a little bit about the implementation of this provision? 

Secretary SEBELIUS. Senator, the provision has just been outlined. As you know, the Congress in the Affordable Care Act, directed the Nation’s insurance commissioners, who are elected and 

appointed across the country, and who regulate the private market, 

to recommend a policy to us about the medical loss ratio provision, 

which you’ve just outlined. 

They had a unanimous recommendation about what were the 

categories of health costs that should be included as medical costs, 

what should be outside, and how it should be implemented. We 

turned around and adopted their recommendations, and that is, 

really, the policy that’s in place. 

This year, for 2011, data will be collected by our department 

about companies meeting that ratio. At the end of the day, companies who fail to meet the ratio will owe their policy holders a rebate; but the rebates do not start until 2012, until data has been 

collected. 

Senator FRANKEN. Thank you. My time is finished. 
18 

Thank you, Mr. Chair. 

The CHAIRMAN. Thank you. 

Senator Bingaman. 

STATEMENT OF SENATOR BINGAMAN

Senator BINGAMAN. Thank you very much. 

Madam Secretary, thank you for being here. 

Let me ask about an issue that is a little bit off the subject of 

your direct testimony here, but it is a very important part of the 

bill that I would like to see us move ahead with; it relates to implementation of the workforce provisions that are contained in title V. 

A central part of the reform, as I saw it, was creation of a new 

independent and nonpartisan national workforce commission; this 

is something which is not under your department directly; it’s an 

independent commission. It’s tasked with providing Congress and 

the Administration with clear information and guidance on how to 

align our Federal resources to meet the health care workforce 

needs of the Nation. 

It’s based on recommendations that the Council on Medicine 

Education made, and modeled after MEPAC, which, of course, provides us with expert guidance on Medicare payment issues; it had 

strong support, I believe, bipartisan support when we included it 

in the bill. 

It’s my understanding that the commission members were selected by GAO; Dr. Peter Buerhaus is the chair. The commission 

may provide a report as early as October 1, but the commission 

cannot begin its work until it gets funding to do its work. 

The appropriations bill that came out of the Labor HHS Subcommittee and that we tried to pass on the Senate floor, included 

$3 million for operation of the commission; it’s unclear, now, what 

the funding status is. 

I wanted to just flag this issue for you. I know, this is not your 

responsibility directly, but I think it is very important. 

A very important part of health care reform, is dealing with the 

problem of how to channel Federal funds most effectively to meet 

our health care workforce needs. 

I don’t know if you are familiar with the issue. If you have any 

comments you’d like to make, I’d be glad to hear those. 

Secretary SEBELIUS. Senator, I think that the issue of the health 

care workforce is an enormous issue. 

Whether or not we had passed an Affordable Care Act, it’s an 

issue that’s been looming on the horizon, and frankly, ignored for 

decades. Where are the providers that we need for the future? 

What’s the pipeline? How do we get there in an expedited fashion; 

and what’s an accurate snapshot? 

The Workforce Commission—I have seen the members’ names 

and bios, and it’s a stellar group and one that we look forward to 

working with. 

The Health Care Act also expanded the National Health Service 

Corps, which allows, in exchange for scholarship and loan payment, 

providers to serve in underserved areas, which is a significant step 

forward; it increases—thanks to the Prevention and Wellness 

Fund, there was a $250 million investment, and again, additional 
19 

primary care providers, which will train about 16,000 new providers over the course of the next 5 years. 

We have, as part of the act, some nurse-led community health 

centers, increasing nurse practitioners and providers. But I think 

that the challenge of making sure that all Americans have access 

to health care providers, and particularly, primary care, gerontology, mental health providers; if we’re shifting to a wellness system, we need the providers on the ground who are able to deliver 

that care. 

That’s certainly part of the effort that you all have begun with 

the Affordable Care Act, and accelerated what has been a longstanding challenge, but one that we are paying very careful attention to; and, the President has, as a high, personal priority, to 

make sure we have the workforce needed by the American public. 

Senator BINGAMAN. Could I just ask that you maybe have someone on your staff look into the issue of how we can get the—— 

Secretary SEBELIUS. Yes, sir. 

Senator BINGAMAN [continuing]. The funding for this commission 

to do its work? As I say, I think they’re ready—up and ready to 

go. They obviously need some staff to assist them, and they need 

to pay that staff; so it’s not a substantial amount of money, but I 

do think it’s a very important task that we’ve given them. 

If you could look into that, I’d sure appreciate it. 

Thank you. 

Secretary SEBELIUS. I’d be glad to. 

The CHAIRMAN. Thank you, Senator. 

Senator Bennet. 

STATEMENT OF SENATOR BENNET

Senator BENNET. Thank you, Mr. Chairman, and I’d like to 

thank you and the Ranking Member for holding this hearing. 

Madam Secretary, thanks for coming back. 

If I had to sum up the last 2 years of my town hall meetings in 

Colorado on this issue, what I would say is that people are saying: 

We hated the system as it existed, the health insurance system, 

and we also believe deeply in your capacity—my capacity, not 

yours—to make it even worse than it is now. I think the rancor on 

the debate on health care didn’t do much to create a level of confidence in all this. 

One of the things that I talked about was that, when people said, 

‘‘We don’t believe government can do a good job here; look at what 

government has done before,’’ I said, ‘‘You have a point.’’ 

At the heart of this reform, in many ways, is an attempt, a rare 

attempt to actually change the incentive structures so that we can 

deliver higher quality at a lower cost; something that we historically, have not done, but something we have to do, not just for the 

health of our citizens, but for the quality of the care that we’ve got 

and so that we don’t bankrupt the United States of America. 

One of the things I learned during the health care debate was 

that, because of the way the incentive structure worked, one out of 

every five Medicare beneficiaries that went to the hospital were readmitted within a month for conditions that were completely preventable. 
20 

Medicare, as a result was spending $17 billion a year on these 

hospital re-admissions that could have been prevented. 

It’s one of the reasons why I work so hard on something called 

the Community Base Care Transitions Program. This innovative 

model ensures that each Medicare beneficiary, at risk of being readmitted, is assigned a code to make sure that they go in and out 

of the hospital, nursing home, and even their own home, and that 

they do the follow-up care and take their medications. 

This practice known as transitional care, has shown a reduction 

of up to 50 percent in places with high re-admission rates; and I’m 

very proud that this was homegrown in the State of Colorado based 

on work in Mesa County and Denver. 

Madam Secretary, I just wanted to ask whether you’re seeing 

this across the country. Are people starting to think about how we 

change the delivery model to create higher quality at a lower price; 

and what can we do to accelerate that work? 

Secretary SEBELIUS. Senator, I think that’s a great question. The 

earlier discussion really focused on some of the insurance market 

changes, but I think the underlying health costs and the amount 

that is spent on things that may not lend themselves to the health 

of anyone, are areas that providers and employers and others are 

eager to work on. 

And, in the case of this coordinated care strategy, when someone 

leaves the hospital, we know it works; it’s in pockets around the 

country, but never really taken to scale. It’s better for patients; it’s 

better for their families; it’s better for their health, and certainly 

lowers costs of unnecessary re-admission. 

So, having an opportunity to employ those best practices across 

the country, deploy those tactics, that bundled care, the medical 

home model, which we know is again very successful—the kind of 

early intervention. 

A lot of those strategies are incorporated into the Affordable Care 

Act, and give direction to our agencies to implement those across 

the board; and I think that will be very good for the American 

public’s health and for our health care costs. 

Senator BENNET. I agree, and I will say I think it’s been lost in 

the debate, which is why I raise it here today; and, the providers 

in my State that are working on these things, and in many ways 

have some of the most forward-leaning approaches to this, are really excited about the possibilities here. 

And, that really brings me to my second point, which is that 

we’ve heard discussion on both sides today and throughout the debate about the CBO numbers; does this really save money; is it 

going to save money over time? 

I think the honest answer to that question is, it depends on how 

well we execute. You know, it depends on how well you execute it. 

It depends on how well the States execute it, and it’s one of the 

reasons why I worked with Senator Hagan and Senator Warner on 

a fail-safe amendment that would have said: 

‘‘Look, if we don’t save the money that we are committed to 

save, that we have said we would save, that we will look at it 

again as a Congress and make sure we have those savings, because we want to keep faith to the American people who rea-
21 

sonably are saying: ‘We’re not sure what to believe; we’re not 

sure which side, you know, is right’.’’ 

And since it’s a projection, we don’t really know. 

My own view is that if we put more of these transitional care 

models in, we may save even more money than we’ve talked about. 

So, I wonder whether you’d be willing to work with me, and Senator Hagan, and Senator Warner, and other members of the committee, to see whether we might be able to write a piece of legislation that could give the American people confidence, that when we 

say we’re going to save the money, we mean we’re going to save 

the money? 

Secretary SEBELIUS. I’d be delighted to do that. 

Senator BENNET. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Bennet. 

Senator Roberts. 

STATEMENT OF SENATOR ROBERTS

Senator ROBERTS. It seems to me that you might want to ask 

Richard Foster to join that group, to save a lot of talking back and 

forth. 

Madam Secretary, thank you for coming. 

I should inform my colleagues that the Secretary and I go back 

quite a ways, from a family standpoint, and also from serving at 

the same time with the Distinguished Secretary when she was 

Governor of Kansas. I worked for her father-in-law when he was 

in the Congress, and worked with her husband, Gary, who is now 

a very prominent judge, when he was a rather rowdy student—— 

Secretary SEBELIUS. Just say he was younger. 

[Laughter.] 

Senator Roberts [continuing]. When he was younger at Kansas 

State University, home of the ever optimistic and fighting and losing wildcats. 

Secretary SEBELIUS. I wore my purple for you. 

Senator ROBERTS. Thank you. 

[Laughter.] 

I appreciate that. Thank you. 

We have a mutual friend who has a preexisting condition that we 

all know about, and—Rudy Brodesco called and indicated that he 

would like to talk with you. He talked with me for about an hour, 

so I transferred him over to your office, so then you can—— 

Secretary SEBELIUS. Thank you. 

Senator Roberts [continuing]. You can visit with him. 

I understand that Dr. Berwick is back, that he has not 

parachuted in, that he is going to be recommended by the President, or has been recommended by the President to again be the 

Head of CMS; is that correct? 

Secretary SEBELIUS. He’s been re-nominated, yes, sir. 

Senator ROBERTS. He’s been re-nominated. Good, I hope that in 

the Finance Committee we can take enough time to really get at 

some of the challenges that we face. 
22 

Dr. Berwick has, unfortunately, been tagged with the title of The 

Chief Rationer, with all of the regulations that are pouring out of 

your department. 

I understand a couple of weeks ago that some boxes were moved 

and he is now in charge of oversight of the regulations. Obviously, 

they would have to finally be approved by you, but historically, it 

was in the Secretary’s Office; now it’s under Dr. Berwick; is that 

correct? 

Secretary SEBELIUS. The office of? 

Senator ROBERTS. Of CMS. 

Secretary SEBELIUS. Yes. Yes, sir. 

Senator ROBERTS. So, that’s a recent development. I don’t know 

if that gives me pause or what. 

But at any rate—— 

Secretary SEBELIUS. Senator, we did that to maximize, I think, 

efficiencies. It was going to be an independent office; and once we 

looked at overhead costs of duplicating everything, from front office 

help to legal staff, it was seen—— 

Senator ROBERTS. I got it. 

Secretary SEBELIUS [continuing]. As an expedited way to maximize and leverage our assets. 

Senator ROBERTS. Maximizing Dr. Berwick does give me pause. 

But at any rate, let’s go on to another subject. 

As former Governor of Kansas I know you are very well aware 

that we have 83 Critical Access Hospitals out in our State, the 

most of any State, fully two-thirds of our hospitals. You also know 

that the Critical Access Hospitals are not part of the 5-year exemption from the IPAB review—that’s the what, Independent—— 

Secretary SEBELIUS. Payment Advisory Board. 

Senator ROBERTS [continuing]. Payment Advisory Board, yes, 

very independent, to say the least. 

I’m not happy with that. I think we abrogated our responsibility 

as individual members to set the Medicare reimbursement rates as 

best we know them, but that is a battle that we lost in the health 

care reform, and so we have IPAB. 

But the Critical Access Hospitals, of which there are many in 

Wyoming, many in Iowa, many everywhere here, are not part of 

that 5-year exemption from the IPAB review. 

Should the IPAB recommend reductions that take funds away 

from these rural community hospitals, I can assure you Congress 

will act. It’s a rather Byzantine-kind of way to do it, but you got 

to get 60 votes. I’m sure the House would do it. Then if you did 

it, the President would veto it. Then you got to come back and 

override the veto with 67 votes. In the meantime, 83 Critical Access Hospitals—Abilene is a good example—Ellsworth—you know 

these folks and they know you. 

So, my question is: Would you support such a recommendation 

to at least include the 83 Critical Access Hospitals? 

I don’t know why this happened, and Max Baucus doesn’t either. 

Pardon me for interrupting you. But even on reconciliation I tried 

an amendment that would at least make them consistent with 

other hospitals. 
23 

That was during the time that, you know—all those in favor, say 

aye, aye; all those opposed, say no; and there was a resounding no. 

And that’s the way it went. 

So, you know, what do you think? 

Secretary SEBELIUS. I share your belief that Critical Access Hospitals are incredibly important in States across the country; and I 

would just say that I’m committed to working with you to take a 

look at what the gap is, and what can be done about it, short-term. 

I think it’s important that those hospitals not be jeopardized, or 

the care they deliver be cut off from citizens around the country, 

including in Kansas. 

Senator ROBERTS. Most of us were very pleased to hear about the 

President issuing an Executive order in applying the principles: 

That each agency is directed to use the best available techniques, 

to quantify anticipated present and future benefits and costs as accurately as possible. 

But, as we later found out, each agency, as they put up the yardstick to figure out the cost-benefit ratio or situation with any regulation, there’s more language; and it says—and this is the part that 

I have the most concern: Also to be considered are values that are 

difficult or impossible to quantify, including equity, human dignity, 

fairness and distributive impacts. 

Are you anticipating you will be able to determine which regulations, including the ones recently released from the health care regulations that HHS would fall under this exemption? Are you exempt; are you not exempt; are the regulations your Department 

oversees exempt—where are we, here? 

Secretary SEBELIUS. We certainly don’t consider HHS exempt 

from the—directed by the President; and we’ve already launched a 

process to examine the whole host of regulations with the parameters that he outlined. So, no, we are definitely not exempt from 

that regulatory review. 

The CHAIRMAN. Thank you, Senator. 

Senator ROBERTS. I have a list that I’d like to share with her— 

not now, but I will send you a list. And I look forward to working 

with you. 

Thank you. 

Secretary SEBELIUS. Thank you, sir. 

The CHAIRMAN. Thank you, Senator. 

Senator Reed. 

STATEMENT OF SENATOR REED

Senator REED. Thank you, Madam Secretary. Thank you, Mr. 

Chairman. 

Recalling some of the discussions in the health care debate, one 

of the issues around the elimination of preexisting conditions exclusions in health insurance policies was the need to have, frankly, 

mandatory coverage; and that, I think, was an issue that was 

pushed very aggressively by the insurance industry. 

Secretary SEBELIUS. That’s correct. 

Senator REED. In fact, their view, basically, was that if we provide this benefit, which could be, frankly, the most popular aspect 

of the health care reform, that is, if you have the resources, you 

can buy insurance, regardless of your health care condition. 
24 

It was, again, just to sort of put it in context, it was as much 

the insistence of the insurance industry than it is any sort of policy-making here in Washington, that mandatory coverage has to be 

part of it now. 

Secretary SEBELIUS. I think, Senator, it was brought to the table 

by the insurance industry, by the Association of Health Insurance 

Plans, and others, to guard against an adversely-selected marketplace if only the sick are in an insurance pool that’s immediately 

unaffordable. 

Senator REED. So, looking at—sort of turning it around and at 

the logic of this is that, this provision, which people say, ‘‘Oh, we 

really like that’’—I don’t know if you’ve seen the polling data, but 

I would assume it’s in the 1980s or 1990s percent; you’ve got to 

keep this—would, frankly, require that this universal approach to 

coverage through private markets has to be maintained also; is 

that your view? 

Secretary SEBELIUS. To have viable, private market, you—— 

Senator REED. Right. 

Secretary SEBELIUS [continuing]. You have to have a pool of 

sharing the risk, yes, sir. 

Senator REED. There has been lots of discussion about what’s 

popular. We’ll keep what’s popular, we’ll eliminate what’s unpopular. Popularity is in the eye of the beholder. 

But in order to have a comprehensive system where everyone can 

receive coverage, can buy it through the private markets with assistance, if necessary, then you have to have, essentially, the 

framework that you’ve set up, the interchanges and the requirements to participate fully. 

Secretary SEBELIUS. It’s part of a market strategy that keeps a 

market solvent. 

Senator REED. One of the issues that I thought Senator Enzi 

brought up is very important, is the issue of these child-only plans. 

There are some States where there is either actual departure of 

companies with these policies or threatened departures; and I’m 

wondering if there’s anything the States can do. 

I know we passed significant reform, but you are a former insurance commissioner. Up until the passage of this act, most of the action of insurance health care and otherwise was at the State level. 

The other aspect of this question would be: What about the 40 

States where—some, I know, don’t have these child-only policies, 

but have done things to ensure that children are protected? 

Secretary SEBELIUS. Senator, you’re absolutely right. Again, the 

Affordable Care Act doesn’t change the fact that States have the 

leadership position in this framework; so whether it’s setting up 

the insurance exchanges or the high-risk pool, or regulating their 

marketplace, it is a State-based strategy, and we’re working closely 

with those State regulators. 

Many States since the passage of the Affordable Care Act—and 

many of them before, had taken action to say that it will—if you 

want to sell insurance in our State, you must offer policies across 

the board. 

A number of States have actually passed that legislation since 

the Affordable Care Act and the companies threatening to leave the 

marketplace feeling that that is a very discriminatory position for 
25 

insurance companies to take. So that is, indeed, being contemplated. 

As I said earlier to Senator Enzi, there also are a number of companies who immediately said that they would likely not stay in the 

market, who have reconsidered that position, and, indeed, are very 

much in the market. 

Senator REED. Madam Secretary, again, thank you. I think 

you’ve been given one of the most challenging assignments in 

Washington, and you have been working tirelessly to get it done, 

and I appreciate very, very much what you and your colleagues 

have been doing. And I anticipate that the challenges will continue 

to appear along the road. 

But, thank you, so much. 

Secretary SEBELIUS. Thank you. 

The CHAIRMAN. Thank you, Senator Reed. 

Senator Burr. 

STATEMENT OF SENATOR BURR

Senator BURR. Welcome, Secretary. 

Secretary SEBELIUS. Thank you, Senator. 

Senator BURR. Madam Secretary, if I heard you correctly, when 

Senator Enzi asked you a question about CMS’s projections, and 

specifically, they were that this would bend the cost curve of $251 

billion, and that the national health spending would increase $311 

billion, and I heard you say, I think, that you disagreed with the 

analysis that came out of CMS. 

Secretary SEBELIUS. Again, Richard Foster—— 

Senator BURR. Richard Foster. 

Secretary SEBELIUS. Yes, is an independent actuary. 

Senator BURR. Let me ask you, what’s the Administration’s position on fixing the SGR? 

Secretary SEBELIUS. The President has said, since elected he 

would like to see a permanent fix of the SGR. 

Senator BURR. You used, to make your case to Senator Enzi, 

CBO. Now, CBO says in their estimates they failed to take into account $250 billion that would be necessary to fix SGR. 

So, if the President’s commitment is to fix SGR, then, in fact, 

that eats up all the savings you’ve talked about; is that correct? All 

the savings that come from health care reform will be eaten up by 

the addition of a fixed SGR—just by your numbers. 

Secretary SEBELIUS. It would cost $200, yes; I don’t know what 

the cost is, but—— 

Senator BURR. OK. The Health Care Reform bill creates a new 

tax on medical devices. Would you be supportive of repealing that 

tax? 

Secretary SEBELIUS. No, sir. 

Senator BURR. Let me ask you: Does that not fly in the face of 

what the President said Tuesday night to Congress, and to the 

country, where he talked about winning the future, and out-innovating the rest of the world; does that not make us uncompetitive 

and force innovation out of the country by taxing innovation? 

Secretary SEBELIUS. I think that there are taxes on a lot of innovative products that actually don’t deter the innovation from moving forward. 
26 

I don’t necessarily think that you have to remove all tax payments. As you know—— 

Senator BURR. No, I’m talking about—— 

Secretary SEBELIUS [continuing]. The medical device, equipment, 

initially the Congress looked at a significantly higher tax, and in 

the course of discussion and input, they decided to significantly 

lower that tax and to not impede progress. 

Senator BURR. But this is a new tax on medical devices that are 

being used by patients, which is one of the contributing reasons 

that the Chief Actuary says, health care cost is going to go up, because we’ve begun to increase the cost, not just of the delivery, if 

we fix SGR, but the actual cost of the products that are in the 

health care system. 

So, let me ask you: NIH has just talked about a new program 

where NIH is going to get involved, in some degree, in drug development; is that something you’re supportive of? 

Secretary SEBELIUS. Senator, they have been involved in accelerating drug development. 

Senator BURR. They’ve been involved in research, of promising 

compounds and—— 

Secretary SEBELIUS. That’s true. 

Senator BURR [continuing]. Directions. But, I sense a distinct difference between that and drug development, which is something 

that the private sector, or academia has been engaged in almost 

100 percent. 

Secretary SEBELIUS. Senator, I know that you come from a State, 

as does Senator Hagan, who has a lot of knowledge and expertise 

in drug development. I think what Dr. Collins has identified is that 

there are still way too many promising ideas that die somewhere 

on the vine between the microscope and the marketplace, and is 

trying to mobilize Sherpa teams, activities, any incentives that can 

make sure that we can actually get the patients those breakthrough drug developments; and too many of them never make it 

to the market. 

Senator BURR. Clearly, I think that will have a cost involved in 

it, but it will also have a cost on the private sector’s inability to 

chase those promising things if we choose to do it as a government. 

Madam Secretary, I think we can all agree that there are many 

things, that if we sat down today, we could tick off in this bill that 

we could all support. 

We could eliminate preexisting conditions. We could make sure 

that every State had a risk pool. We could agree that children 

should stay on their parent’s health care plan until age 26. 

Now, I lived it. I’m a Federal employee. I’m a participant in the 

largest employer in the country. My kids were kicked off of my insurance at 22. 

I guess I would ask you, for those members that were here until 

this plan was passed, that are critical of the private sector having 

their insurance that limited children’s inclusion to 22 or 23 or 24, 

but not 26, are they hypocritical in questioning that, when they 

had the opportunity to change the OPM guidelines and change the 

largest employer in the country to age 26 before this massive 

health care reform plan was passed? 
27 

Secretary SEBELIUS. Senator, I don’t think it was hypercritical. 

I think it’s an unfortunate oversight, and we found that the contracts precluded us from changing as rapidly as some of the private 

market plans could change; but that change will be made, and Federal employees across the country, including Members of Congress, 

can look forward to keeping their children on their plan. 

Senator BURR. In conclusion, Mr. Chairman, we have over a 

thousand employers who have applied for a waiver. Fifty-seven 

hundred-plus have been approved; 50-plus have been denied. In addition to that, CMS estimates that in the grandfather regulation, 

it’s estimated, your own estimates, 80 percent of small business 

could lose their grandfather status. 

I’m not sure what happened to, if you like it you get to keep it. 

But you said, ‘‘Americans will have more control over their health 

care.’’ 

My conclusion, after reading the plan numerous times, what 

we’ve done is, the Federal Government has more control over 

health care, not the American people. 

I thank the Chair. 

The CHAIRMAN. I thank the Senator. 

Senator Isakson is gone. 

Senator Sanders. 

STATEMENT OF SENATOR SANDERS

Senator SANDERS. Thank you very much, Mr. Chairman. 

Madam Secretary, thank you for being here; thank you for the 

excellent work that you’ve been doing under very difficult circumstances. 

Just two lines of thought that I want to pursue: In the Health 

Care Reform bill, some of us, including Senator Harkin and many 

other people on this committee, worked very hard to expand community health centers, because we believed that one of the great 

crises in this country, and one of the reasons that 45,000 Americans die every single year, is they don’t have access to health care; 

and, in fact, some of those people even have health insurance. 

So, we saw a crisis in primary health care. As a result of this 

legislation, we doubled the number of community health centers, 

opening up an opportunity for 20 million more Americans to get 

good quality health care, dental care, mental health counseling and 

low-cost prescription drugs. 

Can you give us, maybe an update as to how progress is coming 

along in terms of the community health center program? 

Secretary SEBELIUS. Certainly, Senator, and again, I applaud 

your leadership on this issue. It’s an incredibly important framework for health care improvements across the country; and I try to 

visit health centers every trip I make, and they are impressive 

neighborhood community organizations, delivering high-quality, 

lower cost care to millions of Americans. 

We are working very quickly to implement the strategy that’s 

laid out over the next 5 years. The first step was to put money in 

the pipeline for important improvements and additional services, 

additional dental care and mental health care. 

We’re putting out the new access point, grant proposals that will 

be released this year and over the next several years. Also an im-
28 

portant feature of the community planning proposals is going out 

the door in 2011; so those communities which haven’t quite gotten 

the wherewithal to actually make the full-blown proposal will have 

an opportunity to bring together providers and community groups. 

But, certainly that footprint of community health centers expanding across the country, and new sites; so it will be both new access 

sites and mobile sites connected to existing health centers, whether 

that be in schools or vans or other—— 

Senator SANDERS. I should tell you, Madam Secretary, that in 

Vermont we’re making real, real success; and if you’re really nice 

to us in the next couple of years, and you grant a few more requests, every part of the State of Vermont, every county, every area 

in the State of Vermont will enable its people to have access to 

community health centers, which we think is a real step forward. 

Would you be in agreement with a study, coming out of George 

Washington University, which says that the investment that we 

made, in fact, is going to save substantially more money than we 

spend, because we’re going to keep people out of emergency rooms; 

we’re going to let them get to a doctor when they should; not get 

very sick and end up in a hospital at great cost. 

Secretary SEBELIUS. I haven’t seen the study, but I certainly 

have seen that practice in place. In fact, some of the most creative 

and, I think, beneficial work going on around the country is health 

care—community health centers working in collaboration, with 

community hospitals—— 

Senator SANDERS. Right. 

Secretary SEBELIUS [continuing]. Appropriately, sort of reassigning folks to care—— 

Senator SANDERS. Other than utilizing—— 

Secretary SEBELIUS [continuing]. That is preventive care. 

Senator Sanders [continuing]. An emergency room. 

Secretary SEBELIUS. You bet, you bet. 

Senator SANDERS. All right, let me switch gear, and pick up on 

a point that Senator McCain made a moment ago; and I’m sorry 

he’s not here. As you may know, the State of Vermont is giving serious thought to moving forward toward a Medicare-for-all-singlepayer program. Our approach and our request for a waiver may be 

a little bit different than Arizona’s. We do not want to throw people 

off of health insurance; we want to make sure that every person 

in our State is covered. 

We believe that that approach—and there was a study that just 

came out by Dr. Hsiao, who you may know is an economist at Harvard, who developed the health care program in Taiwan. 

We believe that we can save many, many hundreds of millions 

of dollars through a Medicare-for-all-single-payer program. I know 

that we have to work on that waiver legislatively; that’s not something that you can give us on your own. 

But, would you be prepared to work with us, as we walk down 

that road, saying that in a federalist nation—we have 50 different 

States—that maybe the Nation can learn from what Vermont or 

other States are doing with increased flexibility? 

Secretary SEBELIUS. Senator, I was appreciative of the meeting 

that you attended with your newly elected governor, and applaud 

the work that Vermont has done. 
29 

States across the country often have been well ahead of the Federal Government in terms of creative health strategies, to expand 

coverage to citizens, and we very much encourage the kind of flexibility, the State-based approaches which this bill is built around; 

and I look forward to working with you. 

Senator SANDERS. All right. Our goal there is to maintain the 

high standards of the national legislation, but to give States flexibility to show how, in their particular areas, they may be able to 

do it better at a more cost-effective way; so we’d appreciate working 

with you. 

Secretary SEBELIUS. Sure. 

Senator SANDERS. With that, Mr. Chairman, I thank you, very 

much. 

The CHAIRMAN. Thanks, Senator. 

Senator Hagan. 

STATEMENT OF SENATOR HAGAN

Senator HAGAN. Thank you, Mr. Chairman. 

Madam Secretary, I, too, want to thank you for all the hard work 

you’ve put in to date, and for being here today. 

But I also am pleased with the partnership that the Department 

of Health and Human Services is forming in North Carolina, especially with our State insurance commissioner, as they are moving 

forward to establishing the exchange. 

I also wanted to talk for just a minute about having the young 

adults on the parent’s policies until they’re age 26. 

The State of North Carolina actually has done that for years for 

State employees, if the students were still in school. I know that 

when I switched and became a Federal employee that my children 

had to find health insurance. 

I have one son and one daughter; and it was incredibly more expensive for the young woman to buy health insurance than it was 

for the man. 

So, I’m very pleased that when you think of two young people 

going out into the workforce, getting the same pay, the young 

woman was drastically affected, in a different way, month to 

month, because of her higher increase in just purchasing health insurance. So, I’m pleased that that has been changed. 

In your testimony you mentioned that the new benefit impacting 

hundreds of thousands of families from across the country, allowing 

these young children to remain on their parent’s insurance until 

age 26; and we do have about 37,000 of them that continue to be 

insured under their parent’s health plans. 

I know that in the next panel we’ll be hearing about the impact 

of this new benefit; but, I understand that it is so popular that 

Congress extended that benefit to military families last year. 

And, with that, I’m wondering if you could elaborate on the impact of this benefit; and how many adult children do you know that 

might be participating across the country; and could you provide 

some thoughts on what would happen if this benefit happened to 

be repealed? 

Secretary SEBELIUS. Senator, I think the situation you describe 

in North Carolina was in place in, again, a number of States, but 

often was tied to school, full-time school. 
30 

So if kids aged out of their policy at 22 and were not in school, 

they, again, lost their coverage. So this is impacting lots of families 

at lots of different ages, in a very beneficial way; and, again, I 

think, is a great illustration of putting back together a larger pool 

of folks and bringing them back into the marketplace, because the 

number of young Americans was the second-highest category of uninsured Americans. 

The highest was those 55 to 64 who often were really priced out 

of the market; but young Americans were the second-highest category of uninsured in this country. So, this family strategy, I think, 

goes a long way. 

I can’t give you exact numbers today. We’d be happy to try and 

collect those for you—but, I think clearly, this is impacting millions 

of young adults around the country in a very positive way, and allows those young adults to think about being an entrepreneur, or 

start their own business, or strategies that, again, were impeding 

their ability to really launch into a professional career if it did not 

come attached with health insurance. 

And, like you, Senator, I had two 20-somethings who lost their 

coverage once they got out of school. We were lucky, because both 

my boys were healthy, but they had friends who were not so lucky 

and not so healthy, who had a terrible time finding and purchasing 

health insurance. 

Senator HAGAN. On a whole, young adults are typically very 

healthy individuals. So, really, that’s helped from an actuarial 

standpoint to have more of those on policies. 

But also in your testimony, you mentioned the preexisting condition insurance plans. The Inclusive Health is running the North 

Carolina plan, and has currently right now, over about 800 participants to date, which I understand is one of the highest in the country; however, I know that one of their challenges has been raising 

the awareness and getting those who are uninsured enrolled. 

My question is: Could you talk about some of the challenges that 

States are having in getting people enrolled, and some of the other 

efforts that they are making to raise awareness among the uninsured population; and does HHS offer guidance to States on ways 

to increase this awareness? 

Secretary SEBELIUS. Great question, Senator. I think one of the 

challenges is, as you say, that a lot of people weren’t aware that 

these even existed; so we are certainly trying to help amplify that 

message, that in every State in the country there is now a new option for adults who still are locked out of the market with a preexisting health condition and we’ll continue to do that. 

We’ve also done a lot, in conjunction with States, of outreach to 

disease groups, to faith-based communities, to community leaders, 

to again, make them aware that these are new. 

In many States the benefits just became available late this fall, 

so we’re talking about the early couple of startup months, but, we 

don’t miss an opportunity to remind people that this is one of the 

benefits of the new Affordable Care Act that did not exist before, 

and actually, because the rates are pegged to market rates, can be 

a much more affordable option for those who have been uninsured 

for the last 6 months. 
31 

Senator HAGAN. I will say, in North Carolina we had put that 

in place earlier, although it is still like a pretty expensive policy. 

Secretary SEBELIUS. Right, right. 

Senator HAGAN. Thank you, Madam Secretary. 

Secretary SEBELIUS. Yes. 

The CHAIRMAN. Thank you, Senator. 

Senator Murray. 

STATEMENT OF SENATOR MURRAY

Senator MURRAY. Thank you, very much, Mr. Chairman for having this hearing. 

Madam Secretary, thank you for the tremendous job you and all 

the folks at HHS are doing, implementing this law and helping 

families get access, as we had envisioned. 

I know you have another panel, so I’m just going to ask one question and go back to your testimony. 

You talked about the new resources that the Affordable Care Act 

is now providing to States to help prevent unreasonable premium 

increases, and you mentioned that grants have already started 

going out to our States to help strengthen their ability to review 

and reject unreasonable rate hikes. 

Can you talk a little bit about how this will make the process of 

premium increases more transparent for all health care consumers? 

Secretary SEBELIUS. Certainly, Senator. This is another area 

where the bill that you all helped to put in place contemplates that 

States are the leaders in the health insurance market, and States 

are the regulators of their own health insurance market, but also 

recognizes that often those resources are not adequate to do a robust job of rate review; particularly in tough budget times a lot of 

States have cut back. 

So, there are additional resources available and taken advantage 

of, I think, by virtually every State in the country to increase and 

enhance the oversight provided by those State regulators. 

What we are doing right now with healthcare.gov is publicizing 

rates. For the first time, consumers can go on a Web site and get 

an overview of what rates are being charged by what plans in their 

particular jurisdiction; but two other important pieces of information: How many people are denied at that rate, what percentage 

are not offered a policy at that rate, and how many times the rate 

deviates from that. So, that, again, is available and updated on a 

regular basis. 

Insurance commissioners are also committed to now, on Web 

sites, and their plans making the rate-review process far more 

transparent; asking for underlying actuarial information from companies, holding hearings, having available to the public what has 

often been a very opaque, very misunderstood system—much more 

transparency, much more openness, much more oversight. 

And, the combination of consumers being able to pick and choose, 

finally, line up plans side by side and choose what’s best for them, 

and a much more rigorous review, has already yielded results 

where excessive rates have been turned down and new rates have 

been submitted that are far less impactful on the consumers with 

those policies. 
32 

Senator MURRAY. I applaud you on that, because we always hear 

about how competition is what drives the cost down. Without transparency, it’s pretty hard to know how you can impact healthcare 

costs. But, I think this open, transparent way that people can now 

view insurance policies is what we envisioned helping to bring 

those costs down. 

So, I really appreciate your work on that. 

Secretary SEBELIUS. One could argue that you could get more information on the toaster you bought than the health insurance plan 

for yourselves and your families; and we’re trying to work very 

closely with our partners at the State level and give a very transparent, very open system. 

Just lining the prices up side by side really does begin to change 

strategies of companies. They don’t want to be the top price in the 

marketplace. So, that, in and of itself, has been very helpful. 

Senator MURRAY. Great. Thank you, very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Madam Secretary, thank you very much for your appearance 

here, and for your answering questions in great order. 

As I said we’ll leave the record open for 10 days; some Senators 

may want to submit some questions in writing. 

But, again, I want to personally also thank you for your great 

leadership in all areas of health care and human services, but especially in the area of implementation of the Affordable Care Act. 

Secretary SEBELIUS. Thank you, Mr. Chairman. I look forward to 

working with you and the committee. 

The CHAIRMAN. Thank you, Madam Secretary. 

Next, we’ll call our second panel. 

I thank this panel for being here; I know that some of you came 

a great distance, and I appreciate your patience in sitting through 

the testimony; I hope that it was informative for you as it was for 

us up here. 

On our second panel, from left to right we have Ms. Lisa 

Grasshoff; she works for the Paragon Hemophilia Solutions in 

Houston, TX, a home-health company focusing on those with bleeding disorders. Ms. Grasshoff ’s experience with bleeding disorders is 

personal, as her son, Joshua, suffers from two of these diseases, 

Hemophilia-A and Type III von Willebrand Disease. She’s accompanied today by another member of the bleeding disorder community, Ms. Tammy Davenport; is that correct? 

Thank you for being here and for sharing your stories. 

Emily Schlichting, a junior at the University of Nebraska, our 

neighbor to the west, majoring in political science and communications. Ms. Schlichting suffers from a chronic autoimmune disease 

called Behcet’s Syndrome. She knows firsthand the anxiety of obtaining health insurance while suffering from a dangerous disease. 

We thank you for being here, and we look forward to hearing 

your story. 

I will yield to Senator Reed for the purpose of introducing Commissioner Koller. 

Senator REED. Thank you very much, Mr. Chairman. I’m just delighted to be able to welcome Chris Koller to the panel. He is offi-
33 

cially, the first Health Insurance Commissioner for the State of 

Rhode Island. 

He was appointed by a Republican governor; reappointed by an 

independent governor, and unusually supported by the Democratic 

Delegation of Rhode Island. So, he’s managed to bring everybody 

to the table. 

Before Chris became the first Health Care Insurance Commissioner, he was instrumental in setting up the Neighborhood Health 

Plan of Rhode Island, which is a safety net insurance plan, which 

not only is effective in providing care, but it’s also recognized as 

providing excellent care; it’s the bulwark of our Medicaid Program 

in the State of Rhode Island. So, he comes to this task with extraordinary skill. 

He’s a graduate of Dartmouth College, and holds a Master’s Degree in Management and Religion from Yale University, and in a 

given day, he needs both theology and management to get things 

done. 

I just say personally, I’ve had the privilege of knowing Chris, and 

being a friend. There’s no one with more intelligence, integrity and 

dedication—and selfless dedication than Chris Koller. So I’m just 

honored that I could introduce him, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator Reed. I’m also 

aware of the travails that you went through to get here. I was following your travels yesterday, and my staff kept advising me, because of the weather, you were unable to take your flight; and as 

I understand, it took you 10 hours on the train to get here; so we 

really appreciate your diligence and effort to be here. 

Last, we have Mr. Olivo? 

Mr. OLIVO. Olivo. 

The CHAIRMAN. Our final witness is Mr. Joe Olivo. Mr. Olivo is 

the president and co-owner of a burgeoning printing business, Perfect Printing. 

Mr. Olivo co-owns the company along with his wife, mother and 

two brothers in New Jersey. He has grown his business from 10 

employees to 45 employees. 

Boy, I wish we could do that all over the country. 

Thank you very much for coming, Mr. Olivo. 

So, again, as you know, we’ll take all your testimonies as they 

are written in order, and they will be submitted to the record in 

their entirety. 

I’d just like to ask, as we go through, if each of you will just sum 

up in a few minutes—I don’t have a distinct cutoff time, but, 5 

minutes or so, what it is that you want us to know. 

I know I always say this to, a lot of times to witnesses who have 

come a long distance and all of a sudden, Senators have disappeared. I assure you that their staffs are here. I can assure you 

of that. And, I can say this, there’s an old saying around here that 

Senators are a constitutional impediment to the smooth functioning 

of staff. 

[Laughter.] 

So, our staffs do a lot of the work, so I want to assure you that 

your testimony and your being here is being well-noted and supported. 

We’ll start with Ms. Grasshoff. Welcome, and, please proceed. 
34 

STATEMENT OF LISA GRASSHOFF, HOUSTON, TX 

Ms. GRASSHOFF. Thank you. Good afternoon, Mr. Chairman, Senator Enzi and fellow Senate committee members. 

Thank you for inviting me to share my story about the positive 

impact the Affordable Care Act has had on my family. It is both 

an honor and a privilege to have the opportunity to address this 

committee and have my voice heard. 

Again, my name is Lisa Grasshoff and I live in Houston, TX, 

with my husband, Danny and our 20-year-old son. Danny and I 

have been married for 36 years and after 17 years of marriage, we 

were blessed with the birth of our only child, Joshua. Surrounded 

by many family and friends, Joshua was born 5 weeks pre-mature, 

and immediately I noticed that my baby was bruised above his eye 

and had numerous bruises on his body, which didn’t make any 

sense because he was born by C–Section. 

After extensive testing, Joshua was diagnosed with moderate Hemophilia A, or Factor VIII deficiency, which is an inherited genetic 

blood-clotting disorder. 

Just to tell you a little bit about Joshua: He’s an only child and 

the only grandchild on both sides of our family; and he’s not 

spoiled, of course. 

So, you know, obviously he became the focus of our world; and, 

therefore Hemophilia bleeding disorders was often a topic of conversation. We began trying to put the pieces together to figure out 

how and why did this happen, because we had no family history 

that we were aware of. 

Thus, began my journey—my 20-year journey into the bleeding 

disorders community, which is where it all began. 

Hemophilia is a very rare and chronic bleeding disorder that affects about 20,000 people in the United States, most of which are 

male. People with bleeding disorders require life-long treatment 

with high-cost clotting factor therapies, which replace the missing 

or deficient blood protein that allows our blood to clot. 

Proper treatment, which must be administered intravenously, 

can prevent debilitating injury and life-threatening internal bleeding episodes. A lot of these episodes can occur spontaneously without trauma. 

Factor replacement therapy is very expensive, in excess of $300,000 annually just to sustain the normal clotting process that 

most people take for granted; and that is without any hospitalization or any trauma-induced injury whatsoever. And $300,000 a 

year is unbelievable. 

Our community population is relatively small, and therefore, 

there’s a limited number of pharmaceutical companies that produce 

factor. Our costs will never decrease for factor; and we pay for it 

per unit. Our cost will only increase. Currently, an infusion for my son, Joshua, runs about $8,000 to 

the insurance company. That’s a lot of money. There’s not even a 

remote possibility that a generic medication will ever become available, like becomes available for so many other meds. 

In order for everyone to truly understand why I’m here today, it’s 

important that you really understand my family’s story for the last 

20 years, and how important the Affordable Care Act is for my 

family, as well as the bleeding disorders community in general. 
35 

In March 1994, at the age of three, Joshua suffered a life-threatening abdominal bleed. It came on again, spontaneously. He had 17 

bleeding ulcers in his stomach for no reason. The doctors at the 

Houston Medical Center had never seen that before. 

He required a 7-week hospital stay, two surgeries, numerous 

blood infusion, blood transfusions, massive doses of factor replacement, to stop the bleeding. During that time he literally coded 

three times; and by, coded, I mean he died and they had to bring 

him back to life. That was one of the worst times of my family and 

friends’ life. It was very, very frightening. Aside from that, our hospital bill was in excess of $800,000. And I had a $1 million policy. However, the medication expense didn’t 

stop when we left the hospital. Because they could not explain why 

he had the abdominal bleed, we had to continue treating him 

prophilactically to hopefully prevent future bleeds. Therefore, he 

had to receive factor replacement on a daily basis for the next 4 

years, every day of his life, and, every other day until he was 10 

years old. 

Currently, today Joshua treats prophlactically three times a 

week. So, again, we still have the costs. And this, again, was in 

1994. 

Unfortunately, Joshua continued to bleed spontaneously, whether 

it was his mouth or whatever, and we couldn’t seem to get the 

bleeding under control, so we underwent further family genetic 

testing in 1995, and that’s when he received a second diagnosis of 

Type III von Willebrand Disease, which, again, he is missing the 

complete von Willebrand protein. 

The von Willebrand protein works in conjunction with the factor 

VIII protein to form a clot. Joshua has no von Willebrand protein 

and 4 percent factor VIII protein, which is considered moderate Hemophilia. And, they have to work together; and without having one 

factor, the other one doesn’t work. 

But, also at the same time, my husband and I received the diagnosis of mild von Willebrand Disease. We had no idea that we had 

von Willebrand Disease. It was quite a shock—quite a shock, because we had never had any symptoms of having that disease. 

When Joshua was 16 he had a spontaneous head bleed the day 

before Thanksgiving. It’s another day in my life that I’ll never forget. It started with a really bad headache that we thought were migraines, because he also suffered from migraine headaches. 

Long story short, I took him to the ER almost immediately, and 

they did a CT Scan, and he was having a brain hemorrhage. He 

was air lifted to the medical center, because I had taken him to an 

outlying Houston hospital; and from that point forward his life has 

changed. 

Since that time he has had three more brain hemorrhages, and 

the reason he continues to take factor three times a week currently 

is to prevent the head bleeds, hopefully prevent the head bleeds; 

and fortunately, we have done that. 

Now, that affected his life in school, because he missed so much 

school. 

The treatment for von Willebrand Disease is different than Hemophilia. It requires a different type of factor; and by the time that 

Josh was 7 years old in 1998, we had maxed out three insurance 
36 

policies that had a million dollar cap, because the medication is so 

very expensive. 

But to sustain our son’s life, what do you—you know, that’s a nobrainer. You do what you have to do. 

And, during that period, when I maxed out my policy, fortunately, at that time in 1991 you could afford to have two health 

insurance policies because the premiums were so low; so therefore, 

Joshua switched over to his father’s policy. We maxed that policy 

out. 

My husband had to change jobs because of the insurance; took 

a lower-paying job. We maxed out that policy. Again, he had to 

take a lower-paying job, as I did as well. 

And, you know, we work for health insurance, that’s what we 

work for. And because my husband has had to change jobs so often, 

and we know how that looks on a resume, and the fact that he’s 

57 years old, and he is currently unemployed—he was laid off in 

June 2009. He is working a couple of part-time jobs now, but he 

has not been able to find full-time employment; and, you know, it’s 

hard. 

The preexisting condition, the elimination of the preexisting condition is totally awesome for us. I mean, it will make a world of 

difference. 

The Affordable Care Act prohibits insurance companies from limiting how much they will pay for Joshua’s lifetime, and will phase 

out annual caps over the next few years. And the fact that he can 

stay on our plan until he is 26 is phenomenal. That should give 

him enough time to become financially independent and get his college education, and find his passion in life. 

But, more importantly, my husband and I now have peace of 

mind knowing that Joshua will continue to have coverage because 

of his bleeding disorder. Having access to affordable health care 

and quality medical care, will help him lead a full and active life. 

His future is much brighter today than before the enactment of 

the Affordable Care Act; and for that I am very grateful. He now 

has the opportunity to reach his economical potential without 

health insurance rules dictating his choice of profession. His hopes 

and dreams are now without restriction. 

Thank you very much for inviting me and listening to my story. 

[The prepared statement of Ms. Grasshoff follows:] 

PREPARED STATEMENT OF LISA GRASSHOFF

SUMMARY

My name is Lisa Grasshoff and my husband and I have a wonderful son, Joshua, 

who has moderate Hemophilia A, or Factor VIII deficiency, an inherited genetic 

blood clotting disorder. 

After Joshua was diagnosed with Hemophilia A as a baby, I began learning everything I could about blood disorders and how to treat Joshua’s particular condition. 

Joshua’s disorder requires life-long treatment with high-cost clotting factor therapies. Factor replacement therapy is very expensive; in excess of $300,000 annually. 

Plus, there are a limited number of pharmaceutical companies producing factor, so 

we are not able to purchase a generic drug. 

When Joshua was 3, he suffered a life-threatening abdominal bleed that required 

a 7-week hospital stay, complete with numerous surgeries, blood transfusions and 

factor therapies. Our hospital bill was in excess of $800,000. But the expenses did 

not stop there, as Joshua still needs treatments several times a week. 

Not long after, Joshua was diagnosed with type III von Willebrand disease, which 

means he is also deficient in the von Willebrand protein needed to form a clot. This 
37 

disease requires additional treatments. Both of Joshua’s conditions forced him to 

max out on three insurance policies, each with a $1,000,000 lifetime cap, at age 7. 

My husband, Danny, had no choice but to change jobs, reducing our income by 40 

percent, just to obtain health insurance for our family. Since Danny was laid off due 

to budget cuts, we now receive our insurance through my employer. 

Thanks to the Affordable Care Act, our insurance company is prohibited from limiting how much care they will pay for during Joshua’s lifetime, and annual caps are 

phased out over the next few years. The new law also allows Joshua to stay on our 

plan until he is old enough to become financially independent. More importantly, 

though, Danny and I now have peace of mind knowing that Joshua will not be denied coverage because of his bleeding disorder. Having access to affordable insurance coverage, and quality medical care will help him lead a full and active life. The 

future for Joshua is much brighter today thanks to the enactment of the Affordable 

Care Act, and for that I am very grateful. 

Good afternoon, Mr. Chairman and fellow Senate Committee members. 

Thank you for inviting me to share my story about the positive impact the Affordable Care Act has had on my family. It is both an honor and a privilege to have 

the opportunity to address this committee and have my voice heard. 

My name is Lisa Grasshoff and I live in Houston, TX with my husband, Danny, 

and our 20-year-old son. Danny and I have been married for 36 years and after 17 

years of marriage, we were blessed with the birth of our only child, Joshua. Surrounded by family and friends, Joshua was born 5 weeks pre-mature. Immediately, 

I noticed that my baby was bruised above his eye and had several other bruises on 

his body, which did not make sense because he was delivered by C-section. After 

extensive testing, Joshua was diagnosed with moderate Hemophilia A, or Factor 

VIII deficiency, which is an inherited genetic blood clotting disorder. 

Joshua is an only child and the only grandchild on both sides of our family. So 

of course, he became the focus for all of us and Hemophilia was often discussed. We 

began trying to put the pieces of the puzzle together; we just wanted answers . . . 

why and how did this happen? Many other questions came to mind and thus, began 

my 20-year journey in the bleeding disorders community. 

Hemophilia is a rare and chronic bleeding disorder affecting about 20,000 people 

in the United States, most of who are male. People with bleeding disorders require 

life-long treatment with high-cost clotting factor therapies, which replace the missing or deficient blood proteins that allow blood to clot. Proper treatment, which 

must be administered intravenously, can prevent debilitating injury and life-threatening internal bleeding episodes. 

Factor replacement therapy is very expensive; in excess of $300,000 annually just 

to sustain the normal clotting process that most people take for granted. Our community population is small; therefore, there are a limited number of pharmaceutical 

companies producing factor. Our costs will never decrease, only increase. A generic 

medication is not even a remote possibility for factor, as it is for many other drugs. 

In March 1994, at the age of 3, Joshua suffered a life-threatening abdominal bleed 

that required a 7-week hospital stay. He required two surgeries, numerous blood 

transfusions, and massive doses of factor replacement to stop the bleeding in his 

stomach. His hospital bill was in excess of $800,000. However, the medication expense did not stop there . . . he required factor replacement daily for the next 4 

years and every other day until he was 10 years old. Today Joshua treats three 

times a week to prevent bleeds. 

Upon further family genetic testing in 1995, Joshua received a second diagnosis— 

type III von Willebrand disease which means he is not only deficient in factor VIII, 

but he does not have the von Willebrand protein needed to form a clot. Both blood 

proteins must work together in order for the clotting process to be complete. Danny 

and I received the diagnosis of mild von Willebrand disease at this time as well. 

Treatment for von Willebrand disease requires a different type of factor than hemophilia. Our choices are very limited, factor replacement is more expensive, and 

this placed more pressure on our need for the elimination of annual and lifetime 

caps. By 1998, Joshua maxed out three insurance policies with each having a 

$1,000,000 lifetime cap. In order to obtain health insurance coverage for our family, 

Danny had no choice, but to change jobs making less money; therefore, reducing our 

income by 40 percent, yet our bills remained the same. On that same note, due to 

budget cuts at his company, he was laid off in June 2009, and to date is still not 

employed full-time. However, I have health insurance through my employer and we 

do not have to worry about maxing out another policy nor will we have to be concerned about a preexisting clause when Danny does find full-time employment. 
38 

The Affordable Care Act prohibits insurance companies from limiting how much 

they will pay for during Joshua’s lifetime, and will phase out annual caps over the 

next few years. The new law also allows Joshua to stay on our plan until he is 26 

and old enough to become financially independent. More importantly, though, 

Danny and I now have peace of mind knowing that Joshua will not be denied coverage because of his bleeding disorder. Having access to affordable insurance coverage, and quality medical care, will help him lead a full and active life. 

The future for Joshua is much brighter today than before the enactment of the 

Affordable Care Act and for that I am very grateful. He has the opportunity to reach 

his economic potential without health insurance rules dictating his choice of profession. His hopes and dreams are now without restriction. 

Thank you for your time. I will be happy to answer any questions. 

The CHAIRMAN. Thank you very much, Ms. Grasshoff, for coming 

this great distance, and for sharing your story. I think it’s a very 

poignant one, and right to the point of what we’re talking about. 

Ms. GRASSHOFF. Thank you. 

The CHAIRMAN. Ms. Schlichting, my neighbor from the West, welcome, and please tell us your story. 

STATEMENT OF EMILY SCHLICHTING, OMAHA, NE 

Ms. SCHLICHTING. Good morning, everyone. 

My name is Emily Schlichting. I’m 21 years old and I live in Lincoln, NE, and I’m a junior at the University of Nebraska. I’m here 

today because my life has drastically changed for the better thanks 

to the Affordable Care Act. I’d like to share with you just how that 

reform has affected my life. 

I’ll start, I guess, at the beginning, so that would be a good place. 

The summer before my senior year of high school, when I was 

17, I began experiencing a lot of really odd symptoms, which my 

doctors couldn’t pinpoint. 

My symptoms started as open ulcers that would get painfully 

and dangerously infected. It intensified in the next coming years to 

include high-grade fevers, swollen joints. I’d get these large, calcified lumps on my legs called Erythema nodosum, which hurt a lot; 

and just a lot of other symptoms that never really fit together. 

After about 2 years of visiting multiple specialists, receiving 

MRIs and CT Scans, topped off by a week-long stay in the hospital 

my freshman year of college, I was finally diagnosed with Behcet’s 

Syndrome, which is a rare autoimmune condition. It’s similar to 

vasculitis. 

As you can imagine, that’s kind of a lot to have dropped on your 

head, having barely moved out of your parent’s house at the age 

of 18. 

But, despite going through all of that, I consider myself extremely lucky because my parents have amazing health insurance. 

And my condition, because of that insurance, was completely covered when I got sick. 

I think something that really needs to be stressed here is that 

being sick is hard enough in and of itself. You know, like I was 18 

years old, and all of a sudden I had swollen joints like an 80-yearold man. I was taking medicine that made 2⁄3 of my hair fall out, 

and I couldn’t go out on the weekends, because it hurt to get out 

of bed and walk to, like a party or over to a friend’s house. 

So I didn’t have to worry about where my care was coming from 

while I was dealing with all that other stuff because of my parent’s 

insurance. 
39 

However, when I did start to get my body under control, it became very clear to me that just because I had good health care 

under my parent’s plan, didn’t mean that I wasn’t going to need 

to worry about where my care was coming from because I was soon 

to be off that plan. 

When you’re chronically ill, young, and your health care is tied 

directly to your employment, your job prospects become a lot more 

limited than you might imagine. Suddenly, taking a few years off 

to work at a nonprofit before I go to graduate or law school was 

no longer an option because a lot of those jobs don’t offer great 

comprehensive insurance plans. 

Beyond that, I could never drop off of an insurance plan because 

if I did, given the condition that I’ve been diagnosed with, it would 

have been almost impossible for me to get back on a plan. 

Paying for my own health care would pretty much bankrupt me. 

I see, regularly, two rheumatologists, an ophthalmologist, a dermatologist, an internist and a couple other specialists for my condition because it’s very rare and there’s no one doctor that specializes 

in it. 

Add to that medicine and preventive tests that I have to get all 

the time, whether it’s a blood test for the kidney transplant medicine that I take every morning or just general checkups, it’s really 

expensive. 

And that’s when things are going well. 

So, the passage of the Affordable Care Act has made all of those 

issues go away for me. The dependent coverage clause has been a— 

it’s a godsend. I mean, I can stay on my mother’s insurance until 

I’m 26, which, hopefully I won’t have to, and I’ll be on my own feet 

and providing myself with insurance. But having that security, I 

mean, I don’t think there are words to describe how important that 

is. 

But, it gives me buffer time to figure out what career I want to 

pursue, and to work for a couple years to gain experience in that 

field before I go back to graduate or law school. Having the time 

to gain that experience is invaluable to me. 

One of the things that struck me the most is how unfair it felt 

that I was being pushed into grad school to stay on an insurance 

plan, or, you know, forced to pay a really high COBRA fee, or 

forced to go uncovered and then not ever have insurance because 

of something that I couldn’t control happening to me. 

I believe that allowing young people to stay on their parent’s insurance gives us a new freedom to work toward our goals without 

being uncovered. But, even more important than that is the fact 

that the Patient’s Bill of Rights makes it so that I can’t be denied 

coverage for a disease that I can’t control having. 

I can’t put into words for you how scary it is to think about being 

25 and bankrupt and sick. So, I’ll just let you take my word for it, 

that it’s absolutely terrifying. 

I can tell you over and over how much health reform has positively affected my life, but I’m not the only young American that 

has been affected by this law. I’m one of millions and millions of 

young Americans who have been helped by this bill, whether 

through the dependent coverage clause or the Patient’s Bill of 

Rights or a combination of both, like me. 
40 

I think a lot of the issue is that health care is something that’s 

really easy not to think about when you’re young and you’re 

healthy. But eventually, we all get old, and most of us get sick. 

And when that happens, health care matters more than anything 

else; and I can testify to that because I’ve lived it. 

Most people my age don’t think about health on a daily basis, 

and to be honest, I’m kind of jealous of them that they don’t have 

to. But, that also means that my generation doesn’t fully appreciate 

just how much this bill works for them. 

We are one of the first generations that’s given access to free lifetime preventive treatments and care that will prevent life-threatening illnesses before they start. I think that Senator Hagan made 

a great point. You know, we need to make sure that young Americans know these things are out there, and that’s why it is so important that you’re holding hearings like this, and that groups like 

Campus Progress and Young Invincibles, who I’ve worked with, are 

getting the word out, because in order for us to win the future, as 

President Obama so artfully said on Tuesday, we need to have a 

generation of Americans who are healthy enough to do so. 

This legislation makes that a reality. 

And for those reasons I’m personally, and as a member of this 

country, extremely grateful that it was passed. 

Thank you. 

[The prepared statement of Ms. Schlichting follows:] 

PREPARED STATEMENT OF EMILY SCHLICHTING

SUMMARY

At 19, after 2 years of unexplained symptoms, she was diagnosed with a chronic, 

autoimmune disease called Behcet’s Syndrome. The disease affects the veins and 

can cause rheumatoid arthritis, as well as episodic flare-ups that cause open sores 

in the mouth, eyes, nose and throughout the body. Although Emily was covered due 

to her parent’s insurance, it soon became apparent that health insurance would be 

a dominant issue in her life. The last few years have found Emily reconsidering 

what she can and will do with her life, a decision that’s been influenced by her need 

to maintain health insurance. The political science and communications major at 

University of Nebraska has public service and non-profit ambitions, but knows the 

challenges posed by those jobs, which tend to not offer the best benefits. For Emily, 

being uncovered is not an option, so her choice was to go stay in school as long as 

she could to stay on her parent’s insurance or try to find a job to start immediately 

after graduation. Now, thanks for the Affordable Care Act, Emily can stay on her 

parent’s insurance until she’s 26 and can seek the non-profit work she thinks will 

best serve her career aspirations. 

Good morning, everyone. My name is Emily Schlichting. I’m 21 years old and live 

in Lincoln, NE. I am here today because my life has drastically changed for the better thanks to the Affordable Care Act. I would like to share with you just how 

health care reform has impacted my life. 

The summer before my senior year of high school, when I was 17, I began experiencing a lot of odd symptoms, and none of my doctors could figure out what was 

causing them. My symptoms started as open ulcers that would get painfully and 

dangerously infected, and over the next 2 years intensified to include high-grade fevers, mysterious raised lumps on my legs, and swollen joints. After 2 years of visiting multiple specialists, receiving MRI’s and CAT scans, which was topped off by 

a week-long stay in the hospital during my first semester of college, I was finally 

diagnosed with Behcet’s Disease, a rare auto-immune condition. As you can imagine, 

this was a lot to deal with as a young 18-year-old barely out of my parents’ house. 

However, despite all that, I consider myself one of the lucky ones because my parents have amazing health insurance. My condition, because of that insurance, was 

completely covered. Being sick is hard enough in and of itself. Luckily, I didn’t have 
41 

to worry about where my care was coming from or who was paying for it while also 

trying to adapt to a disease that has changed almost everything about my life. But 

when I did start to get my body under control, I realized that just because I had 

good health care under my parents didn’t mean that being chronically ill at a young 

age was not going to impact my life. 

When your health care is tied directly to your employment, your career opportunities become a lot more limited than you’d imagine. Suddenly, taking a few years 

off to work at a non-profit before graduate or law school was not an option because 

I would have dropped off my parents’ insurance plan. Beyond that, I had to be extremely careful not to ever drop off an insurance plan because I have a preexisting 

condition, which meant if I dropped off I would likely not be able to get back on 

insurance. Paying for my own health care out-of-pocket would bankrupt me. I regularly see two rheumatologists, an opthamologist, a dermatologist, an internist and 

other specialists for my condition. And that’s when things are going well. 

But, thankfully, with the passage of the Patient Protection and Affordable Care 

Act last spring, none of that is an issue anymore. The dependent coverage clause 

has been a godsend for me; it allows me to stay on my parent’s insurance until I’m 

26; it gives me that buffer time to figure out what career I want to pursue, and 

work for a couple years to gain experience and valuable job skills. Then if I want 

to go to law school or grad school I will be better qualified and better prepared for 

a future career. Gaining that experience is something that is invaluable to me. I 

believe that allowing young people to stay on their parent’s insurance gives us new 

freedom to work toward our goals without going uncovered. But even more important than that is the fact that the Patient’s Bill of Rights makes it so that I can’t 

be denied insurance simply because I have a disease I can’t control. And that . . . 

it’s changed my life in so many ways. I can’t put into words how scary the idea of 

being sick and bankrupt at 25 is, so you’ll have to trust me on this one. It’s terrifying. 

I can tell you over and over how much health reform has positively impacted my 

life, but I’m not the only young American that has been positively impacted by this 

legislation. I’m one example of millions and millions of young Americans who have 

been helped by this bill, whether through the Dependent Care clause or the Patient’s Bill of Rights or the combination of the two, like me. Health care is something that is easy not to care about when you’re young and you’re healthy. But 

someday, all of us are not going to be young, and in my case, sooner, not so healthy. 

When that happens, health care becomes something that matters almost more than 

anything else. Most people my age don’t think about their health on a daily basis 

(and I’m honestly a bit jealous of that). However, that also means that my generation cannot fully appreciate just how much this bill does for them. We are one of 

the first generations that will be given free access to preventive, life saving tests 

and treatments that can stop fatal illnesses before they start. Young people are the 

future of this country and we are the most affected by reform—we’re the generation 

that is the most uninsured. We need the Affordable Care Act because it is literally 

an investment in the future of this country. This law is important. It’s really important. 

Thank you. 

The CHAIRMAN. Thank you very much for a very poignant and 

passionate presentation. 

Thank you for being here. 

Mr. Koller, welcome. Please proceed. 

STATEMENT OF CHRISTOPHER KOLLER, HEALTH INSURANCE 

COMMISSIONER STATE OF RHODE ISLAND, PROVIDENCE, RI 

Mr. KOLLER. Thank you. Chairman Harkin, Ranking Member 

Enzi and members of the committee, thanks for the opportunity to 

speak on this important topic. 

I think my job here is to sort of give a view from the States— 

to speak from an implementation standpoint. I find that following 

this testimony that I’ve heard, it’s just like my job at work; you listen to passionate stories and you end up having to work the machinery and enforce the rules behind the scenes. 

So, it’s hearing the testimony like this that gives us the fuel to 

do our work in the States. I’m going to talk about two things: A 
42 

review of how the States have implemented the Consumer Protection portions of the Affordable Care Act, and then try to talk a little bit about what the effects have been, at least in Rhode Island. 

As Senator Reed so graciously said in his introduction, the office 

was created in 2004. What I want to emphasize is that in creating 

it, the Rhode Island Legislature gave it a broader charge than 

other kinds of insurance. They asked the office to look at, in addition to solvency in consumer protection, fair treatment of providers, 

and looking at the system as a whole and how to improve it. 

I think that reflects what we’ve heard today, which is that health 

insurance is fundamentally different from other kinds of insurance. 

We don’t ask our auto insurance to pay for our preventive health; 

to pay for our routine maintenance; and if you can’t afford it, you 

simply walk. 

We don’t want to see that option for the kind of patients that 

we’ve talked about today; and I think the legislature recognized 

that in creating the Office of the Health Insurance Commissioner. 

So, I want to speak to two things: How we’ve implemented the 

consumer protections, first. 

Secretary Sebelius gave you an overview of the consumer protections, and when I begin, I want to say that I speak as an insurance 

commissioner. I am a member of the National Association of Insurance Commissioners; what I say here reflects my experience, of one 

insurance commissioner’s experience. I’m proud of the NAIC’s 

work, but what I say is not the official position of the NAIC. 

As a rule, regulators have worked really hard to view this as an 

implementation task. We have a job to do; and we’ve been looking 

at what we have to do to implement these rules. It’s nonpartisan. 

It’s just what we got to do, given the laws that are out there. 

When we’ve done this, what we’ve tried to do is look at the process that we have in place, existing; notably, our process of reviewing forms as they come in; the subscriber contracts. 

How do we have to change the subscriber contracts to comply 

with the new Federal rules? 

That has really been pretty easy. That’s been modifying our 

check list. 

Of a greater challenge has been refining the appeals process, 

working on implementing PCIP within our local laws, and doing 

rate review. I’m particularly doing this with tight State budgets. 

The resources that have been provided to the States, particularly 

for myself, we have a small office, have been greatly appreciated. 

They allow us to jump start important work. 

And where my—you asked for punch lines. So, my takeaway on 

implementation is that the guidelines and standards for the Affordable Care Act have to come from the Federal Government; they 

should be marked by clarity, consistency, constancy and sensitivity 

to local markets. Those processes haven’t worked flawlessly to date, 

but I think that the Office of Consumer Information Insurance 

Oversight, the States, have been marked by mutually respectful 

competent and well-intentioned efforts that are meant to adhere to 

the statute, to implement it as it’s intended. 

I think Secretary Sebelius and her staff have shown admirable 

flexibility in working with these States to adjust to their local conditions and deal with transition issues as they go through. 
43 

But, implementation enforcement is up to the States. We are 

closer to the consumers, the providers, and the health plans. We 

can work more effectively through a series of relationships that we 

have; and I think that was the wisdom in the act that you passed, 

to leave that flexibility and that enforcement to the States. 

Second, in terms of the effects of consumer protection, Senator 

Murray talked about rate review. This is something that we have 

worked really hard with in Rhode Island. We have a comprehensive 

rate-review process. The insurers have to come up with their rate 

factors that they’re going to use. They have to be reviewed publically, posted on the Web site. I collect testimony before I make a 

decision on what the rates can be, going forward. 

The effect of this is to increase the accountability in the insurers, 

to have some stability, and to shift the focus of the conversation 

from how can I shift costs, how can I get rid of sick employees or 

sick enrolls, and how do we address the underlying costs to the system. 

That’s why we’ve been able to do—in Rhode Island, we’ve actually taken some of Senator Bennet’s ideas from Colorado. Yesterday 

I had a conversation with commercial insurers about, how do we 

take the Colorado ideas around re-admission rates and put those 

things forward in our delivery system? 

We can only do that because I have the authority of rate review. 

It means that when I speak they have to take into consideration 

what I say. The second point is, State variation and regulation. 

Rhode Island has to take relatively small steps to do this. 

We had a lot of these measures in place. That is not going to be 

the same for our other States. We took a lot of grief doing this 

going forward. It’s taken time. We have to be persistent. 

We have to communicate consistently with our State offices, to 

help them understand what’s going on. 

But, as a result businesses, like Mr. Olivo’s, have a stable market; they understand what’s driving their costs; they have a choice 

of products with consistent rules for pricing. I can’t emphasize how 

important that is, to change the rules for pricing from, how do I 

get rid of my high risk, how do I find someone who knows somebody who can get me a special deal, to focus on the underlying 

costs. 

We know what drives health insurance costs for folks. We just 

have to decide if we want to be fair and allow people to be part 

of the insurance pool or not. That’s what these rules put in place. 

So, I’ll just finish by urging you to keep, not only the individuals 

in mind, but the idea that we are creating a consistent set of rules, 

implemented at the State level, with flexibility, so that we can get 

at improving our underlying health system and allowing individuals to go forward with confidence in the way that we’ve heard 

about today; not to worry about, is health care going to bankrupt 

them going forward. 

I believe that we did not get this right at the first. 

I think we’re going to have to make corrections going forward, 

but I think the trajectory is the right way to do it. 

We continue to look forward to implementing the measures of the 

act going forward. 

Thank you. 
44 

[The prepared statement of Mr. Koller follows:] 

PREPARED STATEMENT OF CHRISTOPHER F. KOLLER

SUMMARY

1. IMPLEMENTATION OF CONSUMER PROTECTIONS

• Guidance and standards for the ACA has to come from the Federal Government. It should be marked by clarity, consistency, constancy and sensitivity to local 

markets. While that process has not worked flawlessly to date, it has been marked 

by professionalism on the part of States and Federal agencies and fidelity to the 

statute. 

• ACA wisely left implementation and enforcement of these reforms to the States. 

We are closer to consumers, providers and health plans and can work more effectively than a Federal agency. States are working hard with limited resources to put 

these protections into place. In the wake of tight State budgets, the rate review and 

consumer assistance grants provided to States as a part of ACA have been greatly 

appreciated and the money wisely spent. 

2. EFFECTIVENESS OF CONSUMER PROTECTIONS

• In Rhode Island we have in place a comprehensive health insurance rate review 

process that requires health insurers file the rate factors they anticipate they will 

use in all lines of business the coming year. These are posted publicly, analyzed, 

compared and debated before my Office renders a decision, which insurers have the 

option of appealing. 

• Rhode Island has had to take relatively small steps to implement these consumer protections—our legislature has concurred with the Congress and previously 

had in place an appeals process, dependent coverage to age 25, and the disallowance 

of rescission language. Looking ahead we already have adjusted community rating 

in the small group market, as required by ACA and very limited allowance of preexisting conditions. 

• These reforms have made our health insurance market more stable, our pricing 

rules less susceptible to special deals that merely shift costs and reward the connected, and our vulnerable citizens more protected in the market. Small businesses 

in particular now know exactly the short- and long-term steps that must be taken 

to reduce the rate of increase in their premiums. 

• You are less likely to hear from people who have benefited individually from 

these protections and from the more stable, accountable system of private sector 

commercial health insurance that is resulting. But I urge you to keep them in 

mind—because this is what you have created with the Affordable Care Act. I have 

no doubt that in statute and regulation we did not get everything right, and we will 

have to make corrections as we proceed. However, I am also certain that the trajectory of the ACA is the right one for citizens and we in Rhode Island look forward 

to the benefits it will continue to bring. 

CONSUMER PROTECTIONS IN THE AFFORDABLE CARE ACT

Chairman Harkin, Ranking Member Enzi and members of the committee. Thank 

you for the opportunity to testify on this important topic. My name is Christopher 

F. Koller and I am the Health Insurance Commissioner for the State of Rhode Island. My testimony will be divided into two parts: 

• A review of the process for implementing the consumer protection portions of 

the Affordable Care Act in States in general and Rhode Island in particular. 

• An assessment of the effects to date of their implementation, and future implications. 

By way of background: The Office of the Health Insurance Commissioner was created by statute in 2004. It is a cabinet level post and encompasses all aspects of 

commercial health insurance oversight in the State. We have a four-fold statutory 

charge which is broader than that given for the oversight of other types of insurance: 

i. Guarding the solvency of insurers; 

ii. Protecting the interests of consumers; 

iii. Ensuring fair treatment of health care providers; and 

iv. Seeing the health care system as a whole and directing insurers towards policies that promote system improvement. 
45 

This broad charge reflects the belief of the Rhode Island legislature that health 

insurance is fundamentally different in nature and social value from other types of 

insurance such as life or property and casualty. To the best of my knowledge there 

are no other insurance commissioners focused solely on health insurance in the 

country. 

I am the first commissioner and assumed the post in 2005. Since then, our Office 

has focused on enforcing existing statutes, establishing a consistent, fair and transparent rate oversight system, and setting standards for health plan actions to improve the underlying performance of Rhode Island health care delivery system. I 

will speak of these activities in more depth later. 

1. IMPLEMENTATION OF CONSUMER PROTECTIONS

Secretary Sebelius has given you an overview of consumer protections in the ACA. 

I believe my role is to speak to the experience of their implementation. As I begin, 

I want to note that my testimony reflects the experience of an insurance commissioner. While I participate actively in the National Association of Insurance Commissioners and am proud of their service in the States, and to Congress as it debated the ACA, nothing I say should be construed as an official position of NAIC. 

As a rule, regulators found it most appropriate to view this as an implementation 

task, not a set of public policy questions—we have had a job to do. Thus, a priority 

of State insurance regulators has been on the measures—given existing State statute—a State must have in place to meet the statutory deadlines imposed in the 

ACA, many of which centered on commercial policies issued on or after October 1. 

The following have been the broad areas of enhanced consumer protections we have 

addressed: 

1. First dollar coverage of preventive care benefits; 

2. Elimination of lifetime and (in certain cases) annual limits; 

3. Coverage of dependent children up to age 26; 

4. Elimination of preexisting conditions exclusions for children; 

5. Elimination of rescissions in individual coverage; 

6. A process for consumers to appeal insurance company denials; 

7. Disclosure by health plans of justification for rate hikes; 

8. Development of minimum medical loss ratio standards; and 

9. Develop preexisting condition insurance plans (varies by State). 

In implementing these measures, regulators have relied wherever possible primarily on existing activities to review and approve health plan subscriber contracts 

(‘‘forms’’) and other consumer disclosures. In effect, we are modifying our checklists 

of what contracts must contain and permissible language. While this is not a nominal task, in our experience it has not been overly taxing. We have been greatly 

aided by the collaborative work of NAIC and good faith efforts by the Division of 

Consumer Insurance and Information Oversight to communicate continually to 

States what is needed and by when. 

Efforts that involve changing processes other than forms review—such as refining 

the appeals process, developing medical loss ratio standards and implementing the 

PCIP statute—have been more varied by State and somewhat more challenging. In 

the wake of tight State budgets, the rate review and consumer assistance grants 

provided to States as a part of ACA have been greatly appreciated and the money 

wisely spent. 

My message on implementation to date of consumer protections can be summarized with the following points: 

• Guidance and standards for the ACA has to come from the Federal Government. It should be marked by clarity, consistency, constancy and sensitivity to local 

markets. While that process has not worked flawlessly to date, it has been marked 

by professionalism on the part of States and Federal agencies and fidelity to the 

statute. 

• ACA wisely left implementation and enforcement of these reforms to the States. 

We are closer to consumers, providers and health plans and can work more effectively than a Federal agency. States are working hard with limited resources to put 

these protections into place. 

2. EFFECTIVENESS OF CONSUMER PROTECTIONS

You have heard from individual consumers who can speak more powerfully to the 

effects of the ACA than I could. I would like to speak to two systemic effects of the 

act: the importance of rate oversight and State level variation. 

In Rhode Island we have in place a comprehensive health insurance rate review 

process that requires health insurers to file the rate factors they anticipate they will 
46 

use in all lines of business the coming year. These are posted publicly, analyzed, 

compared and debated before my Office renders a decision, which insurers have the 

option of appealing. The effect is to increase accountability, and to shift the focus 

of the conversation from ‘‘how can I cost shift to improve my rate,’’ to ‘‘what is driving underlying health care inflation and how can it be addressed.’’ A sample of recent rate review analysis is enclosed in my testimony. 

As a result, businesses in Rhode Island now have a public agency asking health 

insurers and providers the hard questions of what has to be done to reduce system 

costs, not merely shift them. Rhode Island is systematically investing in primary 

care, in health information technology and in provider payment reform, and 

leveraging the opportunities provided in those areas through the ACA and ARRA. 

In the case of the increased consumer protections in ACA, having this rate process 

in place meant that health plans in RI had to state publicly how their costs would 

be effected by these changes in benefit levels and subject them to public scrutiny 

and analysis. OHIC could then make final, plan-specific decisions, and Rhode Islanders could be assured they were implemented systematically. 

My second point is on State level variation in regulation. Rhode Island has had 

to take relatively small steps to implement these consumer protections—our legislature has concurred with the Congress and previously had in place an appeals process, dependent coverage to age 25, and the disallowance of rescission language. 

Looking ahead we already have adjusted community rating in the small group market, as required by ACA and very limited allowance of preexisting conditions. 

These reforms have been implemented steadily over the past decade. They have 

not always been easy—particularly as the rules for pricing have become more transparent and defined—and have required patience, persistence and continual oversight. But they have made our health insurance market more stable, our pricing 

rules less susceptible to special deals that merely shift costs and reward the connected, and our vulnerable citizens more protected in the market. Small businesses 

in particular now know exactly the short- and long-term steps that must be taken 

to reduce the rate of increase in their premiums. 

I should caution that even as the efforts of OCIIO to work flexibly with States 

continues, Members of Congress will hear from constituents about the implementation of ACA. Indeed, any adverse event experienced by anyone in the commercial 

insurance market will be attributed to the act, regardless of its true origin. You are 

less likely to hear from people who have benefited individually from these protections and from the more stable, accountable system of private sector commercial 

health insurance that is resulting. But I urge you to keep them in mind—because 

this is what you have created with the Affordable Care Act. I have no doubt that 

in statute and regulation we did not get everything right, and we will have to make 

corrections as we proceed. However, I am also certain that the trajectory of the ACA 

is the right one for citizens and we in Rhode Island look forward to the benefits 

it will continue to bring. 
47 

Analysis: Projected increases in hospital inpatient and outpatient costs drive most 

of the rate factor increases requested by all three health insurers. Projected administrative cost increases are relatively large drivers for Tufts, while profit and reserve 

increases are significant for United and BCBSRI. 

The CHAIRMAN. Thank you very much, Mr. Koller, and again, 

thank you for your tremendous efforts in getting here from Rhode 

Island yesterday. 

Mr. Olivo, welcome, and please proceed. 
48 

STATEMENT OF JOE OLIVO, PRESIDENT, 

PERFECT PRINTING, INC., MOORESTOWN, NJ 

Mr. OLIVO. Good morning. Thank you, Chairman, and thank you 

to the committee for not only the opportunity but the honor to 

speak to you today. 

I’d like to share with you my early experiences with the health 

care law, how it’s already begun affecting my company, and some 

of the things I expect to see as the plan is fully implemented. 

I’m the president and co-owner of Perfect Printing. The business 

was started in 1979. I co-own the company along with my wife, my 

two brothers and my mother. I have been running the company for 

the past 23 years. We’ve been very fortunate; we’ve been able to 

grow the company to a high of 54 employees prior to the economic 

downturn where we had to downsize; but we currently have 45 employees. 

One of the main concerns I have with the health care law is how 

it’s going to affect the coverage, the current coverage that I offer 

to my employees. I’m able to pay 100 percent of the premium cost 

for my employees, and 56 percent toward their dependent costs. 

The reason we’ve been able to do this is by the use of a high deductible health savings accounts plans. Now, I know during the 

lead up to the passage of this legislation, we heard numerous 

times, and my employees heard numerous times that they would 

be able to keep the health care that they had. 

Within 30 days of the passage of the legislation I received a letter from my insurance carrier that our plan would no longer be offered. It’s my understanding that because of the preventive care 

portion of how it’s treated with high deductibles, it was no longer 

in compliance with the health care law. So, as far as I’m concerned, 

that has proven to be untrue. 

Another area of concern for me is the tax credits that have been 

promised to small business in order in which to pay for this. Now 

45 employees were certainly larger than a lot of small businesses, 

but I don’t think anyone would describe my company as a large 

company. There are zero dollars in tax credits available to our company. 

I’ve had conversations with other fellow small-business owners; 

I was speaking a couple of weeks ago to the owner of a three-employee bridal shop that had spoken with her accountant. She is not 

eligible for any dollars in tax credits. So, I don’t anticipate that 

being of assistance to my business or to my employees. 

A third area which is of great concern to me is compliance with 

the 1099 law. This law, as you know, requires me to submit a report for every vendor that I spend accumulated expenses of $600 

or more per year. Simply put, I do not have the systems in place 

to monitor this. This will require myself as a business owner, monitoring this and waste my time monitoring receipts and keeping 

track of this. To put it in perspective of a small-business owner, in 

a good year my profits are 3 cents on every dollar earned. 

Every time there’s a new legislation, a regulation from Washington like this, a good portion, if not all of that, comes out of the 

profit of my business. It affects my ability to give my employees 

raises and pay for future benefits. 
49 

Then there’s the issue of whether I should even decide to grow 

my business at the—we are 45 employees; if I go over the 50 employee threshold, where we were just 2 years ago, it’s my understanding that I’m mandated to provide insurance, or I would have 

to face a penalty for not providing that insurance. 

It’s also my understanding that I could possibly be penalized 

even if I do provide insurance. So, I find the ironic part about this 

portion of the law is that what it’s supposed to encourage or mandate employers to provide insurance, I guess when you look at the 

cost of the penalty that is currently in the legislation versus what 

I pay for premiums, is actually an incentive for me not to provide 

insurance for my employees. 

These are the issues that I know that are currently affecting my 

business. 

It’s the unknown that’s even more of a concern. To put it in perspective of myself and a lot of small-business owners, when I decide 

to grow the business and invest funds and take a loan out, I have 

to know cost certainty, because I put my house on the line; I put 

my family’s house on the line; I put all my personal assets on the 

line. I cannot afford to be wrong with my assumptions. 

So, when you have a health care law like this with so much unknown—and I challenge anyone to say, ‘‘Well, here’s what your 

health costs will be 2 years from now,’’ it causes me to be much 

more hesitant to invest my money. 

I think you’re seeing the accumulative effect of this in why small 

business is not participating in the growth of the economy. 

So, I’ll leave you with this: My story is personal; it is by no 

means unique; there are hundreds of thousands, if not millions of 

small-business owners going through the same issues that I am 

right now. 

Thank you. 

[The prepared statement of Mr. Olivo follows:] 

PREPARED STATEMENT OF JOE OLIVO

SUMMARY

1. Welcome Remarks 

a. Share experiences & additional consequences. 

2. Background 

a. Company description/size. 

b. Health insurance background. 

c. State of New Jersey. 

3. Inability to Continue Existing Coverage 

a. Currently offer plan that pays 100 percent premium. 

b. Offer additional plans. 

c. High deductible plans have controlled cost increases. 

d. High deductible plans create better decisions. 

e. Existing Coverage No Longer Offered. 

i. Due to preventative care mandate. 

f. Cannot keep our existing coverage. 

4. Non-Eligibility for Tax Credits 

a. Temporary, to narrowly limited and of marginal assistance to most owners 

that I know. 

5. Effects of 1099 Compliance 

a. $600 or more. 

b. Huge burden, no system currently in place. 

c. Significant drain on already limited resources. 
50 

i. Cannot hire consultants or additional employees. 

d. In the context of a small business owner. 

i. Small profit. 

ii. Lack of time. 

6. Negative Consequences of Going Over 50 Employees 

a. Threat of penalties if I exceed the 50 employee mark. 

b. Actually an incentive not to provide insurance as the penalty is less than 

the current premiums that I pay. 

7. Consequences of Cost Uncertainty Due to the Law 

a. Hesitancy to invest because personal assets are on the line. 

8. Concluding Remarks 

a. Personal but not unique. 

b. Economy cannot prosper for all by stifling a main engine of growth. 

Good morning. I’d like to thank the committee for the opportunity and honor of 

allowing me to present my testimony today. My name is Joe Olivo and I own a small 

business. I appreciate the willingness to have an open discussion about some of the 

concerns that I, along with many of my fellow small business owners, face because 

of the new healthcare law. I would like to share with you my early experiences with 

the law, how it is already affecting my business and what additional consequences 

I expect to see as the regulations are fully put into place. 

I am the president and co-owner of Perfect Printing. I own the company along 

with my wife, my mother and two brothers. My parents started the company as a 

literal ‘‘mom and pop’’ copy center in 1979 and I have been actively running the 

company for the past 23 years. We have been fortunate in that we were able to grow 

the company to a high of 54 employees prior to having to downsize during the recent 

economic downturn. We currently have 45 full-time and part-time employees. 

One area I am certain will have a profound effect on my business is the new, expanded 1099 reporting requirement in this law. As you may know, the law now requires that I submit to the IRS a report of any transaction adding up to over $600 

in business in a year. This is a huge requirement and I do not have any sort of 

system in place to account for it. Just to give you a couple of examples, I have drivers and sales people that fill up for gas. Based on a quick calculation, I estimate 

they have probably gotten over $600 in gas at 8 to 10 filling stations. I will now 

have to track down who the gas station owners are, get the proper information and 

submit to them a form of how much we spent with each business entity. Another 

example is the salesperson or owner who frequently travels. Can you imagine trying 

to submit paperwork to the various airlines, hotels, rental car agencies and restaurants that you visit over the course of a year? I will most certainly have to purchase some sort of software program and waste my resources calculating and collating receipts for purchases of thousands of items. I think it is very important to 

keep in mind the huge costs that additional regulatory burdens place on small businesses like mine. My business, like most small businesses operate with a very tight 

profit margin and with little extra money to spare on purchases that do not directly 

affect the profitability of the company. In a good year, our profit is 3 cents on every 

dollar earned. Many years it is less than that. When additional regulations, like 

those contained in the healthcare law, are instituted the cost to comply with this 

usually comes out of the profit portion. I do not have the luxury of simply creating 

new revenue or cutting additional expenses in order to afford the costs to comply. 

Besides the cost there is the issue of the availability of time. As a small business 

owner, I have to make decisions daily as to what issues can be attended to by the 

end of the day and which ones will have to be pushed off to the next day simply 

because I run out of time. My business can’t afford the luxury of hiring an HR or 

accounting consultant, or a new employee to fill out all of the new government paperwork that is required by this law. Simply put, if this part of the legislation is 

not rescinded this will impair by ability to grow my business and the same would 

apply to the millions of other small businesses in this country. 

A key issue for any employer is how and when to grow their business. Our company is on the cusp of the 50 employee threshold, at which I would be legally bound 

to offer my employees insurance or pay a penalty if I do not. Besides being ridiculously complex, it is my understanding that, at the 50 employees or greater mark, 

I could possibly be penalized even if I do offer insurance to my employees and one 

or more of them decide to take a government-subsidized plan. I am still in the process of trying to compute the exact ramifications of this portion of the law. This being 

said, in the event I do hit that 50 employee threshold, based on my current pre-
51 

miums it may actually be less expensive for me to not provide any health insurance 

and just pay the penalties. Ironically, the part of the law that mandates that I must 

now provide insurance is actually providing the perverse incentive for me not to provide any insurance at all. This would not only be more expensive to the Federal 

Government but it would mean that my employees would lose the administrative 

support that I offer them with their health insurance. 

One of the main concerns I have with the law is how it will affect the current 

healthcare coverage that I already offer to my employees. We currently offer a plan 

where the company pays for 100 percent of our employees’ insurance premium and 

pays 56 percent toward family coverage. We are also able to offer our employees additional plans that offer lower deductibles at a higher premium cost. Compared to 

a lot of our competitors we think this is quite substantial. We have only been able 

to do this by offering a high deductible plan with a health savings account. We 

began offering this plan 6 years ago and it has been a tremendous tool toward slowing the rate of the escalating healthcare premiums that we face, especially since we 

are located in New Jersey. New Jersey is a guaranteed access, community-rated 

State with heavily mandated policies. We have seen double-digit percentage increases to our annual premiums going back to 1993. I estimate our average premium increase for the past 17 years is around 20 percent each year. The high deductible plans have allowed us to continue to pay for our employees’ premiums. 

With the savings to the company from offering these plans, we have been able to 

contribute to the employees’ health savings accounts while encouraging the employees to do the same. I have seen how these plans encourage healthier lifestyle choices 

and make everyone more accountable and aware of how they spend their healthcare 

dollars. While I would not say high-deductible accounts are the sole answer to the 

crisis of rising healthcare costs, it has been a very effective tool for my company. 

During the debate leading up to the passage of the legislation, I heard numerous 

times that my employees would be able to keep the same plan they currently have. 

Unfortunately, within less than 30 days of the law’s passage, I received a letter from 

our insurance carrier notifying us that our plan would no longer be available at the 

end of the current term. The reason for this is that the preventative care portion 

of the plan did not meet the requirements of the new law. The promise that my 

employees would be able to keep their existing health insurance has proven to not 

be true. After 20-plus years of voluntarily providing coverage for my employees, 

much of it at my own cost, I am now finding out this coverage is no longer acceptable according to the government. 

A final area of concern to me is the tax credits that were promised to small business in order to help them pay for health insurance. This point was made over and 

over during the debate and even persuaded some of my fellow small business owners to mute their criticism of the plan in the hopes that maybe the legislation would 

be a net benefit to their companies. The problem with the tax credit is that it depends on the government’s definition of small. I checked the tax credits that I am 

eligible for and I come up with a big fat zero. Now at 45 employees there are certainly smaller businesses out there but I don’t think anyone would consider us a 

big business. I have learned from fellow business owners with much smaller companies that the tax credit is so narrow and so limited that it would provide marginal 

assistance to a very low percentage of small businesses that are out there. For example, an 18-person business who pays, on average, $38,000, doesn’t get anything 

either. Beyond this, the credit is temporary and, as I referenced earlier, the year 

over year increases in healthcare costs certainly aren’t. 

While those issues that I have mentioned are the known items that will affect my 

ability to grow my business, it is the uncertainty that causes concern as well. Questions such as: 

What portions of the legislation are applicable to my company? 

What are the exact ramifications if I go over 50 employees? 

What taxes, fines and penalties will I be exposed to? How much will they be? 

Will I need to hire outside consultants or new employees in order to see that I 

am in compliance with the new laws? 

What is the definition of a part-time employee? 

You should understand that when I make the decision to invest in my business 

and try to grow it further, I cannot afford to be wrong in my calculations. Like most 

small business owners, I put my home and a good deal of my personal savings on 

the line when I make these investments. When there is so much uncertainty regarding the costs that will be required of me to comply with these new laws, it makes 

me much more hesitant to invest and causes me to take much less risk in those 

investments that I do wish to proceed with. 
52 

My story is very personal but it is not unique. There are hundreds of thousands, 

possibly millions of small businesses owners that are facing these same issues. How 

can we make the economy prosper for all when we are stifling one of the main engines of growth? Thank you for the opportunity to testify today. I look forward to 

answering your questions. 

The CHAIRMAN. Thank you, Mr. Olivo. 

Thank you, very much. Again, we’ll start with 5-minute rounds. 

First, Ms. Grasshoff, again, thank you very much for telling the 

story about your son, Joshua. 

You mentioned that your husband was forced to change jobs, to 

take one that paid less money; and so were you. I’m just curious 

about how that affected your family’s financial security; and obviously, you have to be looking forward to your own retirement years 

and that type of thing. 

I just wondered how that might have affected your own personal 

financial security. 

Ms. GRASSHOFF. It affected it tremendously. It reduced our income by approximately 40 percent, but yet our bills didn’t decrease 

by 40 percent; and I’m just speaking of the necessities: The groceries, the gasoline, you know, utility bills. 

It really took away from any outside activities that we would do 

as a family, such as, going to the matinee movies. We had to be 

very, very frugal. 

You do what you have to do. The health insurance was the most 

important thing. 

The CHAIRMAN. Now, is Joshua aware of the health care law and 

how it’s going to affect him? 

Ms. GRASSHOFF. Yes, sir. He absolutely is aware of it. 

The CHAIRMAN. So, this is just giving him a little bit more security that he can go ahead and do things in his own life? 

Ms. GRASSHOFF. Yes, yes, it is. It has given him a lot more security, because he sees that it’s given his dad and I the security and 

the peace of mind, knowing that he will be covered on a health care 

plan until he is 26. 

Unfortunately, he’s not yet been able to start college, due to some 

medical issues; and he’s looking forward to starting college. This 

gives him a little more time to decide. 

He might go to school for a year and then want to be a rock musician or what have you. 

The CHAIRMAN. Horrors. 

Ms. GRASSHOFF. But it gives him security, and, his dad and I security, knowing that he will have coverage. 

The CHAIRMAN. Or like Ms. Schlichting, maybe he might want to 

go to work for a nonprofit or do something generously—— 

Ms. GRASSHOFF. He very well could. I would love for him to follow in my footsteps. 

The CHAIRMAN. Ms. Schlichting, I was reading the press release 

that happened to be in the Omaha World Herald about your appearance here. 

You were quoted as saying, ‘‘It’s not just middle-aged families 

who are affected by the reform,’’ Schlichting said, ‘‘It’s about America’s young people.’’ 

Ms. GRASSHOFF. Absolutely. 

The CHAIRMAN. The largest group of uninsured Americans. So, 

Ms. Schlichting, I think you put a finger on it. Not too many people 
53 

think about the young people that are affected by this; and I think 

you give evidence of what it means to young people. 

Ms. SCHLICHTING. I would definitely agree with that; and that’s 

something that I see a lot, just like at home, with my friends and 

the girls I live with in my sorority. I remember when this law was 

passed, standing in the kitchen at breakfast, being like extremely 

excited; and no one else around me had any idea what it meant, 

and how big of a deal it was; and I think it is because, as has been 

touched upon earlier, young people are, by and large, very, very 

healthy. 

They’re a healthy demographic, which is wonderful; but as my 

existence proves, that’s not the case for everyone. 

There are young people who get sick. There are young people 

who get really sick. Giving this security to them at that age that 

gives them stability at a young age so they can go on and do productive things with their lives, I think it’s wonderful; it’s great. 

The CHAIRMAN. I think you put your finger on it; when you’re 

young, if you haven’t had an illness, like you have, young people 

never think they’re ever going to get sick, or they might—— 

Ms. SCHLICHTING. Oh, yes, not at all. I mean, yes, that’s definitely something amongst all my friends there. It’s another part of 

why it is hard to be ill as a young person, because your peers really 

can’t relate to you. 

Like, I can’t tell you how many times I’ve been called like, oh, 

‘‘You’re acting like an old woman,’’ and because I’m like swollen 

joints and don’t want to go out that night, kind of a thing, and 

when—you get used to it and you deal with it. But, yes, it’s definitely something that I would say most young Americans don’t 

have flying on their radar. 

The CHAIRMAN. Right. 

Mr. Olivo—I’m going to skip over Mr. Koller here just briefly, 

but, Mr. Olivo, by 2014 every State will have an insurance exchange; a one-stop shop for small businesses like yours that can 

pool their purchasing power to get the same leverage on insurance 

rates that large corporations have. 

Now, as I’ve looked at that, and as I’ve discussed it with small 

businesses, their first question to me was, why do we have to wait 

until 2014? If we’d have had that now it would be a lot better. It 

just had to do with the way that legislation is done around here, 

I guess and compromises that are made. 

I just wonder, have you looked down the road at how that might 

affect you in 2014 and your employees; what that exchange system 

might mean to you in 2014? 

Mr. OLIVO. I’ve looked into it because I have no way of knowing 

what the costs are going to be. My concern with any exchange is 

that it’s set up as a true competitive exchange. 

My understanding with the law is that the policies being offered 

will still be very heavy in mandates, and preventive care items that 

don’t really open up to true, it’s not a truly competitive product I’ll 

be buying. That was one of the things we have with high deductible 

HSA plans for my employees that fit our demographic of our company, and I was able to provide a plan that was best for them. 

With the exchanges, I’m not sure it’s going to be when it’s—I’m 

from New Jersey where we have one of the most heavily regulated 
54 

insurance systems in the Nation, very heavily mandated, and we 

have, I believe it’s in the top three of insurance premiums in the 

country. 

I’m not very optimistic that a heavily-regulated mandated insurance exchange will be of benefit to me. 

The CHAIRMAN. Well, again, companies will have to come on the 

exchange and compete for business. 

Plus the fact, as you know, we also are mandating that, I think 

the Secretary testified to that earlier, that as of January 1 of this 

year, insurance companies have to put 80 to 85 percent of each premium dollar on health care quality improvement. So, they have to 

start meeting that threshold right away. 

It seems to me in that regard, that, coupled with the number of 

exchanges out there, even though there are mandates, for example 

on the prevention side, the reason we mandate on the prevention 

side, is because we know, from all the evidence, that an ounce of 

prevention is worth a pound of cure. If we put more in the front 

end, it’s going to save more in the back end. I mean, everybody understands that. 

We’re trying to move to a system whereby people get more up 

front interventions early on so they don’t get in the system later 

on. That’s why we have that entered on the wellness and the prevention end of it. 

We were hoping, and I don’t know, we’ll have to wait and see, 

but I was hoping that, as we pass this, that we might have some 

really true competition now out there, and these health insurance 

policies that come on the exchange will be transparent; people will 

know what they are. 

Your business might be on the exchange with others that can 

join together and actually get lower costs but higher quality; because everyone’s going to be competing for your dollar. Right now, 

I don’t know that that’s really true, right now in the present system that we have. 

If you have any response on that, I don’t know. 

Mr. OLIVO. Yes. I mean, I like the opportunity of buying out of 

State. Once again, from my perspective as a business owner in New 

Jersey, I’ve been running it since 1988. 

In 1993 our State went to a guaranteed access community rated 

insurance policy; and the politicians in my State have been promising for the last 18 years that our premiums would go down as a 

result; not 1 year has our premiums gone down. 

The CHAIRMAN. Thank you, very much. I went way over my time, 

and I apologize. 

Senator ENZI. Thank you, Mr. Chairman. I thank the panel for 

their testimony. I’m going to concentrate on trying to figure out 

what we need to do to eliminate unintended consequences of the 

new law. 

I appreciate Mr. Koller’s comments. Thank you, Mr. Koller. I appreciate that you have a brother in Greybill, WY, so you must have 

a little understanding of our rural area. 

But, I will be asking, in writing, for you to list out those fixes 

that you see as being needed; and I appreciate that you mentioned 

that. 
55 

One of the comments that I get from people in Wyoming is that 

there’s this new high-risk pool; but they can’t get in the high-risk 

pool unless they go without insurance for 6 months; and they can’t 

afford to go without insurance for 6 months because they have 

problems similar to what we’ve heard about today. 

I want to get a little bit of clarity on some of these things. 

Mr. Olivo, you said that the 1099s—and as the accountant in the 

Senate, and I’m now joined by Senator Johnson, who’s also an accountant, so we’ll have an accountants’ caucus—I am familiar with 

the 1099s. 

I wondered if you had any evaluation on what the potential cost 

is for you on those 1099s, with the equipment and things that you 

might have to put in or hire a person. I know it’s early for you to 

do an evaluation on that, but do you have one? 

Mr. OLIVO. I don’t have an exact dollar cost, but just to give you 

an idea from my perspective, I can’t afford to hire an HR consultant or an accounting consultant; that’s going to come right out of 

my profits. So, I’m going to have to do it myself, as a business 

owner, or assign someone internally that’s going to take away their 

productivity. 

Just to give you an idea: My trip down here, I took a train, I took 

a cab, I stayed in a hotel. I have to monitor, did I go over $600 

staying in Marriott Hotels this year? Is it franchise-owned? Is it 

corporate-owned? Try to track down who the owners are, send 

them the proper documentations. It’s just a logistical nightmare 

that I can’t imagine even having to do. 

Senator ENZI. I really appreciate that, and I know that the purpose of it, supposedly, was to find $16.9 billion in fraud that people 

are doing; and as an accountant, I can’t figure out exactly how 

that’s going to do that; but my calculations of cost, to find that 

$16.9 billion for the Federal Government, it’s going to cost individual businesses about $25 billion to collect the information. 

That’s not cost-effective. 

I noticed in your testimony that you obviously have looked at the 

2,700 pages, and I appreciate—or whatever of them you were able 

to go through. I know as a small businessman—and I was in the 

shoe business for years and years—that it’s difficult to keep up 

with the Federal Government; but I appreciate that, in your testimony, you had the five questions in there that are pertinent for a 

small business, because we don’t look at these things from a smallbusiness perspective very often. 

I wondered if you wanted to enlarge on those just a little bit or 

mention them? I will be checking on all of those answers for you, 

and appreciate that you were able to list them out so concisely. 

Now, in this job market that’s been decimated and shed millions 

of jobs, you spoke about the health reform law making you think 

twice about hiring new employees. 

We know that almost 2⁄3 of jobs come from small businesses, so 

if we’re going to see our economy recover, it’s the small businesses 

that will lead the way. 

But, as you point out, the health reform law created a very large 

tax penalty for small companies that can’t afford to provide health 

insurance for their employees. So, can you expand a bit on your 
56 

concerns about hiring new employees as a result of the health care 

reform law? 

Mr. OLIVO. Certainly. Just to give you an idea when there’s uncertainty—and some of the questions I had put in, is: Just what 

portions of the legislation are applicable to my company; exactly 

what happens if I go over 50 employees; if I have a part-timer; if 

he’s 30 hours or 20 hours? All these questions add up to costs. 

When I invest in my business, when I hire new employees, I take 

a loan, and that payment is fixed. I have to pay that loan every 

month. The bank doesn’t want to hear, ‘‘Well, I’m sorry, I made a 

little mistake in my calculations; I can’t afford it this month.’’ 

When you have all this uncertainty and all this unknown, it just 

creates a much bigger cushion, of which I chose not to invest. It 

affects, not just my business; it affects my employees. I can’t give 

the amount of raises I want to give. We haven’t had a raise in our 

company in 2 years. And, it makes it that much more difficult to 

grow the business. 

Senator ENZI. I can certainly understand that and appreciate it. 

You were asked the question a little bit earlier about the exchange creating pooling that will bring down your costs. 

The way I understand the exchange is, there will be a place on 

the Internet that you can go to, and you can put in the different 

criteria of your business, and you will be shown the list of companies that will be able to sell you insurance, because they will meet 

the Federal minimum standard. 

I don’t see how that’s going to drive down the health care costs 

for small businesses. But, I’ve had a bill that will allow small businesses to actually pool their purchasing power across State lines to 

buy less-expensive coverage, and the CBO said that would slash 

premiums. 

Do you think the costs of your health insurance will decrease if 

you are able to get into this exchange? 

Mr. OLIVO. As the exchange is currently set up, I’m not optimistic. I’m a little leery of it because it’s not true competition when 

it’s a mandated product. 

We’ve had the same thing in New Jersey for the past 19 years. 

It was supposed to be that there’s a lot of heavy mandates and preventive care costs, and I have not seen—my average premium increase in the last 10 years has been 20 percent; and it ranges from 

12 percent to 49 percent on any given year. 

So, I’m just leery. I’ve seen what mandates have done to our 

State insurance costs, and I’m just a little leery when I see the 

same type of thing on a Federal level. 

Senator ENZI. I appreciate that, and I would mention that in the 

HELP Committee bill, Senator Harkin and I had an amendment 

that would have allowed for some flexibility for incentives, which 

could have provided for some preventive care; I did notice that that 

was accepted by the committee; I did notice that after the August 

recess, when the bill was actually printed, that part of it was no 

longer in there. So, pieces of that amendment were deleted. 

Thank you very much for your testimony. I will have more questions for all of you in writing and hope that you’ll answer them. 

Thank you. 

The CHAIRMAN. Thank you, Senator Enzi. 
57 

Senator Reed and then Senator Franken. 

Senator REED. Thank you very much, Mr. Chairman. 

I, too, want to thank Commissioner Koller for braving the elements to come down here. You left out the dogsled. 

[Laughter.] 

Train, but the dogsled was the final thing. 

Commissioner Koller, one of the issues we’ve been talking about 

is ensuring that this system covers everyone in the State; and from 

your perspective as Commissioner, how important do you think 

that is, in terms of both delivering effective and cost-effective 

health care service? 

Commissioner KOLLER. Thank you, Senator Reed. In our State, 

we have seen our rate of uninsured, the percentage of people uninsured in the last 6 years, go from 6 percent to about 14 percent. 

That is completely an effect of the economic downturn, which, as 

you know, and have worked hard with us, affected Rhode Island 

particularly severely. 

It is not a result of increasing health care costs; that certainly 

has contributed to it. But, those people who are uninsured, we still 

pay for. 

When I look at a rate—and this is the benefit of a comprehensive 

rate review—when I get a rate request, an annual estimated inflation of 12 percent, and then about 4 to 5 points of that is the hospital; and then when I go and I ask the health insurers what’s that 

about, they say, ‘‘Well, we’ve got to pay the hospitals 9 percent 

more in price increases’’; 1 percent for utilization, but 9 percent in 

price increases. 

I ask, ‘‘What’s that come from?’’ They say, ‘‘That’s from the number of uninsured.’’ The hospitals have not gotten paid for their uninsured, so they’re looking for commercial insurers to make up the 

bill; and, so, we pay for the costs of the uninsured. I also think we 

pay, long-term with poor public health. 

You and Senator Sanders, have been strong advocates for community health centers; for having comprehensive primary care. 

That has to be the point of entry for this. 

Uninsured people are not getting good primary care. It’s not clear 

that commercially insured people are getting good primary care. 

That is what has to be our focus. 

Senator REED. In effect, one consequence of not covering everyone is that the uninsured will get health care, but expensively, 

through hospitals, and that has shifted, as you point out as Commissioner, directly to private insurance companies, who, in turn, 

recoup that from their customers. 

These 20 percent, as Mr. Olivo pointed out, these 20 percent, 40 

percent increases every year are in many respects traceable exactly 

back to the fact that we’ve got a whole group of people who have 

no coverage but still get care. 

Commissioner KOLLER. Yes. And if you look at who the uninsured are, by and large, they are working, single adults who, if 

they could afford health insurance, would buy it; but they are making an economic calculation based on their circumstances, to go 

bare. 
58 

Why are they doing it? Because affordable health insurance isn’t 

available; and because they’re given the option to opt out, absent 

a mandate. 

Those are exactly the working uninsured, who comprise the majority of the uninsured, are exactly the folks we want in the pool 

to make it work. 

Senator REED. One of the other things that we’ve got to do is not 

simply sort of fund this system; it’s to reform the delivery of health 

care. 

In your capacity at the Neighborhood Health Plan of Rhode Island, and in your capacity as Commissioner you’ve got a unique 

perspective: You’ve actually run an HMO health insurance company and now you regulate them. 

What are some of the delivery improvements that you’ve seen already in Rhode Island; and will they be promoted by national 

health care reform or accelerated? Are there other things that are 

going to be possible? 

Commissioner KOLLER. The most important thing that I feel that 

we’ve done in Rhode Island in the commercial health insurance 

market, is to say to health insurers, if you want to work in this 

State, if you want to get the rate increases that you’re seeking, you 

have to put more money into primary care. Primary care is the 

only part of our delivery system where the more we have, the lower 

our costs are and the better our health is. 

Yet we systemically pay it less over time, led primarily by the 

historical way that we’ve determined rates within Medicare. 

We have told the commercial and health insurers that we spent 

6 percent of our insurance premiums on primary care—only 6 percent. If you look at other countries, it’s 15, 20, 25. There’s no way 

that we’re going to deliver you lower costs if we don’t—over the 

long-term—put more money in primary care. 

I think the other thing is to change the way the hospitals get 

paid. It is not in the hospital’s financial interest to reduce their readmission rate. That is money in the bank. So when you go to 

health in hospitals and you say, 20 percent of your Medicare patients are being re-admitted, they say, ‘‘Yes, I know, and for me to 

work on that is financial suicide.’’ So, we have to change the way 

that we pay them. 

There are absolutely things within the Affordable Care Act. The 

investments in community health centers, in the National Health 

Service Corps, in patient centers, Malcomb Home Demos within 

Medicare, changing the way that hospitals get paid. We need that 

kind of Federal leadership so that we can tell the commercial 

health insurers, Do the same thing in the States. 

That’s how we get at the underlying costs. 

Senator REED. Again, I thank you. My time’s expired. 

I thank the Chairman and Ranking Member. This has been a 

very informative hearing; and I particularly want to thank you, 

Chris, for joining us; and to all the witnesses, for your firsthand 

testimony. 

And, go, go, Cuskers? Is that the right term? 

Ms. SCHLICHTING. Go, Big Red. 

Senator REED. Go, Big Red, OK. All right, take care. 
59 

The CHAIRMAN. Big Red. I just want to clear up one thing, if you 

don’t mind: 

Mr. Koller, you said that 6 percent went to primary care; is that 

6 percent of the premium dollar? 

Mr. KOLLER. Six percent of the premium dollar goes, actually, it’s 

even less than the premium dollar, because it’s 6 percent of medical expenses. So, it’s 6 percent of the 80 or 85 or 80 percent goes 

to primary care over time, and yet—it has to be absolutely at the 

core of any kind of delivery system reform. 

I would say, Senator Enzi, to your point: My brother and I have 

spirited conversations about the difference between Rhode Island 

and Wyoming, and the fact that you can fit the entire State of 

Rhode Island into one of the counties up there. But I have this 

healthy respect for the importance of flexibility in terms of how 

States implement this. 

They recognize, in Wyoming, and any place, the importance of 

primary care. 

That doesn’t change. That’s not something that we can be flexible 

about. 

The CHAIRMAN. Senator Franken. 

Senator FRANKEN. Thank you, Mr. Chairman. 

Thank you, all of you, for your testimony; Ms. Grasshoff for your 

testimony about your son, Joshua; Ms. Schlichting, for speaking 

about the importance of what we’re doing in terms of not discriminating against people with preexisting conditions; Ms. Grasshoff 

about the importance of lifetime caps. 

Commissioner Koller, Rhode Island can fit into most States— 

counties, OK? 

[Laughter.] 

So, give it up about Wyoming. 

Mr. Olivo, thank you for your testimony. My dad worked for a 

great printing company for 30 years, in Minneapolis, Johnson 

Printing, as a printing salesman. We got our health insurance 

through Johnson Printing. We got great health insurance for our 

family. 

Your testimony about the 1099s, both here and in your written 

testimony, this is why I’ve co-sponsored an amendment or bill to 

actually get rid of that burden; and I think we will. 

So, thank you, and thank you for contributing to our understanding of that. 

Now, you wrote in your written testimony, that your health care 

insurance premiums increased by an average of 20 percent a year 

over the last 17 years; is that right? 

Mr. OLIVO. That’s correct, and what I mean by that, is, for renewing the same type of policy, it would typically come in, on the 

average, around 20 percent over a 10-year period. 

Senator FRANKEN. OK. Over a 10-year period. 

Mr. OLIVO. Annually. 

Senator FRANKEN. Annually, OK, that’s what I was looking at. 

That happened when there was no health care reform at that 

point. 

Now, what if I told you that monthly premiums for 

Massachusetts’s businesses, after they passed their health care reform, which mandates the same stuff that this mandates, that the 
60 

average monthly premiums rose, on an average of 6.9 percent from 

2006 to 2007, and by 5 percent from 2007 to 2008? Would that be 

better than the 20 percent that you’re—— 

Mr. OLIVO. From simple economics, that would be better, certainly. 

Senator FRANKEN. OK. That’s what happened. 

What if I told you that in Massachusetts, after they imposed the 

mandate that a percentage of Massachusetts employers who offer 

health insurance to employees, has increased to 76 percent from 70 

percent, while during the same period, nationally, it declined from 

68 percent to 60 percent during the same period; might that give 

you some hope? 

Mr. OLIVO. Once again, coming from New Jersey where I’ve 

heard these tale of mandates and for 18, 19 years, saying, we’re 

going to mandate and legislate—we’re going to legislate our way toward lower premiums, I haven’t seen it happen in my experience 

where that’s to be the case. 

Senator FRANKEN. But, the Massachusetts mandate is almost exactly, precisely what the national mandate is. 

And, do you understand for someone like Ms. Schlichting, if there 

wasn’t a mandate, that it would be impossible to provide protection 

for people with preexisting conditions because then only people 

with preexisting conditions would get health care? There would be 

no reason to get health care until you got sick; right? 

Mr. OLIVO. I certainly understand that. From my point of view— 

and keeping in mind I’m a small business owner who pays 100 percent of my employees’ premiums. 

Senator FRANKEN. Right. 

Mr. OLIVO. I’m worried about telling my employees, I can’t afford 

your position anymore because of the new health care law. So, I’m 

well aware and I understand the problems. I’m just concerned for 

my own employees right now. 

Senator FRANKEN. I’m sorry. I’m sorry. Why do you provide 

health insurance, you’re not mandated to do so, for your employees? 

Mr. OLIVO. Like any other expense, I look at it as an investment. 

I’ve chosen to invest in my employees this way; I think it’s a good 

investment. I wouldn’t presume to tell another business owner how 

they should invest. I would definitely say, by choosing to do this, 

it has affected my business’ ability to grow, because I choose to 

forego other investments that could grow my capital, because I’ve 

chosen to do this for my employees. 

Senator FRANKEN. But, you feel it’s better for your business. 

Mr. OLIVO. For me, personally, it is. 

Senator FRANKEN. OK. 

Mr. OLIVO. I think it’s good business for me. 

Senator FRANKEN. OK. So, now, suddenly, when there was a penalty that you’d have to pay if you dropped them, why would that 

incentivize you more to drop them than you’ve had before? That 

doesn’t quite add up to me. 

Mr. OLIVO. My competition begins doing it, and that’s a very real 

possibility; and they all of a sudden have a less-expensive expense 

structure and are gaining profitability, where I don’t have it. It’s 

natural capitalization at work—it’s something where I can’t ignore 
61 

because it will negatively affect my company’s ability to have my 

employees further prosper. 

Senator FRANKEN. I understand. And, you’re aware in Massachusetts there is a penalty, and it very much parallels this bill, and 

yet, contrary to the rest of the country, since Massachusetts has 

adopted its mandate, more companies, more employers are insuring 

their employees in complete opposition to the rate in which it goes 

in the rest of the country, which is less companies have—a lower 

percentage of which have been insuring their employees in a way 

that would then mean that you don’t have to compete; you’d have 

to compete against fewer companies that weren’t insuring their employees. 

So, it would help your competitive advantage, considering that 

you’re already someone who does the right thing; and I applaud 

you for that. 

Mr. OLIVO. I’ve read things about Massachusetts that aren’t 

working out well. I live in New Jersey, I don’t know enough about 

Massachusetts to really comment on it; I could just say as a smallbusiness owner, with the way this legislation is set up right now, 

I only see rising cost to my company. I don’t see where I’m going 

to gain lesser expense. 

Whether that may happen and time bears it out, that could be. 

I just don’t see it. 

Senator FRANKEN. OK. 

Thank you, really all of you, for coming today. My time has expired. 

The CHAIRMAN. Thank you very much, Senator. 

I thank, again, all of our panelists who are here, for their very 

personal and poignant testimonies, for their professional testimonies, and also how this is affecting small businesses, who are 

really the people that employ most Americans. 

I agree that we’re going to do something about the 1099. I’ve said 

many times before on this Health Reform bill, these are not the 

Ten Commandments written in stone; it’s the law; it’s the law 

that’s in effect. Laws get changed. We modify things as time and 

circumstances, and as information comes to us. 

I’ve often referred to the Health Care Reform bill as a starter 

home. It’s got a pretty good foundation; it’s got a pretty good roof, 

but maybe there are some other things that need to be filled in and 

built into it. 

That’s why sessions like this are, I think, important for us to 

hear from people about some of the good things, or maybe some of 

the questions that people have that we should be paying attention 

to, as we move ahead, as we probably modify, change things as we 

move into the future. 

Again, I thank you all very much for being here, and thanks for 

your excellent testimony. 

If there’s no other business, the committee will stand adjourned. 

[Additional material follows.] 
62 

ADDITIONAL MATERIAL 

PREPARED STATEMENT OF SENATOR MIKULSKI

Chairman Harkin, I thank you for organizing today’s hearing 

that focuses on the consumer protections in the Affordable Care 

Act. I support the health care reform law and I am proud of the 

benefits that this law gives to Americans. 

The Marylanders I hear from every day tell me this law helps 

them and their families. Health care reform saves lives and saves 

money. It puts more dollars in families’ pockets and not into insurance company’s profits. 

While this law is not perfect, it gets a lot of things right. It ends 

gender discrimination so that a woman isn’t charged 30 to 40 percent more in health insurance premiums simply for being a woman. 

It holds insurance companies accountable for spending money on 

quality health care instead of padding their bottom lines. Companies must now spend at least 80 percent of premiums on health 

care services such as mammograms and prescription drugs. 

Insurance companies can no longer deny insurance coverage because someone has a preexisting condition like asthma. In eight 

States, being a victim of domestic violence was considered a preexisting condition. This law puts a stop to that. Insurance companies can no longer abuse women after they have been abused by 

their husbands. 

Moms and Dads can breathe a sigh of relief because their child, 

who has leukemia, can no longer be denied health insurance coverage based on a preexisting condition. Additionally, insurers can 

no longer place a cap on lifetime limits and say it costs too much 

to treat a child with cancer. 

Today we are going to hear from Americans who are benefiting 

from the health reform law. We will hear how Lisa Grasshoff ’s son, 

who has von Willebrand’s disease, will no longer have to worry 

about exceeding lifetime limits. Lisa’s insurer must now pay for her 

son’s hemophilia care instead of denying coverage when her family 

hits the lifetime limit, which can happen pretty fast when you get 

really sick. 

I have also heard from parents in my own State of Maryland, 

like a woman who wrote to me named Maryanne. She has kids who 

are 22 and 24 years old. The Affordable Care Act lets children and 

young adults stay on their parents’ health insurance until they are 

26. Without these protections, people like Maryanne’s kids would 

be without health insurance. Health care reform reduces the fear 

families have about providing medical care to their loved ones. 

Maryanne told me ‘‘It’s taken America too long to finally do something about health care reform. Please do not allow it to become 

undone.’’ 

I am proud of what we accomplished in health reform. Health 

care reform saves and strengthens Medicare. It ends the punitive 

practices of insurance companies. It provides universal access to 

health insurance. I am particularly proud that this law will also 

improve the quality of our health care and that we made significant investments in preventive care and public health. 

I thank the witnesses for being here today and look forward to 

hearing from all of them. 
63 

RESPONSES TO QUESTIONS OF SENATOR ENZI, SENATOR ALEXANDER, 

SENATOR ROBERTS AND SENATOR HATCH BY SECRETARY SEBELIUS

SENATOR ENZI

OVERSIGHT

Question 1. Congress has an obligation to conduct oversight of Federal agencies, 

to ensure there is transparency in our government and that Federal dollars are used 

as Congress intended. In order to fulfill this duty, my office and other congressional 

offices have written a number of letters to you asking for information on issues regarding health care reform implementation and other issues of importance at your 

agency. The answers we have received, however, are often very late and they rarely 

adequately address the issue in question. 

For example, a letter from 30 Senators asking about your plans for setting up 

high-risk pools was sent last year on June 22, yet we did not receive a response 

until September 22d—a full 85 days beyond the date a response was requested. In 

nearly every other case, HHS was late in responding or in some instances may have 

ignored the request. 

We need to have a better flow of information and better response rate from the 

Department. During your confirmation hearing in 2009, I believe you personally 

committed to being responsive to Senators from both parties. What do you plan on 

doing to ensure that HHS is responding to congressional requests in a more accurate, thorough and timely manner? 

Listed below are information requests that HHS either has not answered, or provided an incomplete response. When can I expect a response to the outstanding letters and who on your staff will be responsible for meeting that commitment so that 

my staff can speak to them? 

Date Sent Letter Description Deadline Status 

1/11/2010 ........... The committee sent a letter to Secretary Sebelius 

regarding the failure to disclose a $400,000 

contract with HHS consultant and MIT Professor 

Dr. Gruber. Dr. Gruber has been one of the 

Administration’s foremost sources of economic 

analysis in support of their health care proposals.

19-Jan-10 .......... Incomplete response received 

156 days past date requested. 

3/26/2010 ........... The committee sent a letter requesting information 

relating to non-confirmed appointees serving 

under the HELP Committee’s jurisdiction. Information requested includes a list of consultants 

hired since Jan. 20, 2009, a list of all non 

-career Senior Executive Service (SES) and 

Schedule C appointees, and quarterly updates.

8-Apr-10 ............ No response; currently 307 

days past date requested 

(As of February 9, 2011). 

4/22/2010 ........... Senators Enzi, Burr and Coburn sent a letter to 

Secretary Sebelius requesting information on 

what HHS is doing to address the AIDS Drug 

Assistance Program (ADAP) waiting lists, if 

statutory authority is needed to provide greater 

flexibility, and whether remaining stimulus 

funds will be used to help minimize ADAP waiting lists.

14-May-10 ......... Insufficient response received 

53 days past date requested. 

4/26/2010 ........... An oversight letter was sent to HRSA, which administers the Ryan White program, to express 

concern over a February 2010 regulation that 

rescinded the 24 month cap on emergency 

housing assistance. The letter requested documentation on the Administration’s reasoning for 

rescinding the program cap as well as information detailing the amount of funding awarded 

for emergency housing between 2000 and 2009.

15-May-10 ......... Insufficient response received 

69 days past date requested. 
64 

Date Sent Letter Description Deadline Status 

5/27/2010 ........... A letter was sent to Secretary Sebelius relating to 

the mailer sent by the Centers for Medicare and 

Medicaid Services to 40 million seniors touting 

the benefits of health care reform. The letter 

requests more information on who reviewed the 

new mailer as well as its cost to taxpayers.

11-Jun-10 .......... Response received 28 days 

past date requested. 

6/22/2010 ........... Senator Enzi and 30 other GOP Senators sent a 

letter to Secretary Sebelius asking about how 

the funding for the high risk pool program will 

work, and what will happen when it runs out.

30-Jun-10 .......... Incomplete response received 

85 days past date requested. 

7/22/2010 ........... Senators Enzi and Grassley sent a letter to 

Secretary Sebelius asking for an analysis of the 

Administration’s claim that certain health 

insurance reforms would lead to a cumulative 

increase in health insurance premiums of likely 

less than 1 percent. The letter requests actuarial studies conducted by HHS and poses several questions about the reasoning and methodology they used to arrive at their estimate.

6-Aug-10 ........... Response received 49 days 

past date requested. 

7/29/2010 ........... Senator Enzi and other HELP Republicans sent a 

letter requesting information about the $25 

million reallocation of funds for Ryan White 

ADAP waiting lists.

16-Aug-10 ......... Response received 85 days 

past date requested. 

7/29/2010 ........... An oversight letter was sent to Secretary Sebelius 

requesting information on HRSA’s ability to 

effectively oversee programs under its jurisdiction and the additional $250 million of funding 

received under the new health care reform law. 

There are allegations that 25 percent of all 

HRSA program grantees are on restrictive draw 

down plans.

12-Aug-10 ......... Response received 95 days 

past date requested. 

Answer 1. I take Congressional oversight very seriously and it is key to informed 

policymaking by the legislative branch. I have directed my staff to be forthcoming 

and as helpful as possible to Congress. I have stressed that we need to be prompt 

and timely in our responses, but we do want to make sure that we provide you with 

accurate information. Sometimes that process can require additional time and effort 

on the part of our staff. As far as I am aware, we have provided you with accurate 

and complete information. However, I will take a look at the requests you have 

identified and make sure that we have followed up appropriately. 

JOBS

Question 2. In your testimony, you noted that the new law is strengthening the 

economy. Please specifically identify what new jobs you believe the new health care 

law has created? 

Answer 2. The Affordable Care Act includes tax credits to help make health care 

affordable for working families. Small businesses can begin claiming tax credits to 

help provide insurance to their employees this year. All told, the Affordable Care 

Act includes the largest middle-class tax cut for health care in American history. 

The law lowers costs for American businesses—especially small businesses—who are 

struggling to remain profitable and competitive under the status quo. The independent Congressional Budget Office confirmed that the law would lower health insurance premiums by up to 2 percent for small businesses and 3 percent for large 

businesses, and the Business Roundtable estimated that provisions to help bend the 

health care cost curve like those in the law could save $3,000 per person in health 

costs by 2019. Additionally, independent experts predict that the new law will create 

jobs—estimated at more than 250,000 per year. 

Question 3. In recent testimony before the House Budget Committee, CBO Director Elmendorf indicated that CBO estimates that the new health care law will reduce the number of full-time workers by 800,000 by the time the law is fully implemented. Do you disagree with the CBO analysis, and if so, what data do you possess 

that supports this belief? 
65 

Answer 3. The CBO report says, 

‘‘The Congressional Budget Office (CBO) estimates that the legislation, on 

net, will reduce the amount of labor used in the economy by a small amount— 

roughly half a percent—primarily by reducing the amount of labor that workers 

choose to supply. That net effect reflects changes in incentives in the labor market that operate in both directions: Some provisions of the legislation will discourage people from working more hours or entering the workforce, and other 

provisions will encourage them to work more. Moreover, many people will be 

unaffected by those provisions and will face the same incentives regarding work 

as they do under current law.’’ 

Question 4. Has the Department or the Office of Management and Budget calculated how many agents and brokers will likely lose their jobs as a result of the 

new insurance regulations proposed by your department? 

Answer 4. None of the Affordable Care Act regulations take away Americans’ ability to continue to buy coverage through an agent or broker. The medical loss ratio 

(MLR) rule, however, does ensure consumers are receiving value for their premiums 

by requiring insurance companies offering coverage in the individual market to 

spend at least 80 cents of every dollar on medical claims and quality improvement 

activities, not on administrative expenses like overhead and salaries. Insurers also 

have to report how much of their premium dollars are spent on agent and broker 

commissions. Separating broker fees and insurance premiums enables consumers to 

see exactly what percentage of their premiums is going toward their health care, 

and protects them from being charged higher premiums to cover an excessive share 

of non-health care expenses. 

Question 5. According to the Congressional Budget Office, ‘‘Requiring employers 

to offer health insurance—or pay a fee if they do not—is likely to reduce employment.’’ Do you dispute the validity of this analysis? How do you believe employers 

will respond to the $52 billion in new taxes on employers imposed by the new health 

care law? 

Answer 5. The Affordable Care Act makes American businesses more competitive 

by reforming our broken health care system, taking steps to control health care 

costs, and helping to eliminate the ‘‘hidden tax’’ that drives up the price of employer-based health insurance to cover the cost of care for the uninsured. The law 

also ensures that Americans who work for employers that do not offer coverage still 

have access to affordable, high-quality health insurance. In fact the Congressional 

Budget Office emphasizes that the Affordable Care Act will ‘‘encourage other workers to take jobs that better match their skills, because they would not have to stay 

in less desirable jobs solely to maintain their health insurance.’’ Further, independent experts predict that the new law will create jobs—estimated at more than 

250,000 per year. 

COSTS

Question 6. In your testimony, you estimate that a family of four earning $55,000 

a year will save nearly $6,000 each year as a result of the tax credits. What percentage of Americans will actually be eligible for these tax credits? 

Answer 6. The Congressional Budget Office estimates that in 2019, 19 million 

Americans will receive tax credits to purchase coverage in the Exchanges. 

Question 7. Your testimony suggested the medical loss ratio regulation will increase value for consumers. But most consumers are more concerned about health 

care costs. Do you have any independent empirical analysis that demonstrates that 

the medical loss ratio regulation will lower costs? 

Answer 7. The MLR regulation is designed to ensure that consumers are getting 

value for their health care dollar. The regulation was issued late last year, but we 

are already seeing indications that this provision, in conjunction with the Affordable 

Care Act’s rate review provision, is causing insurance companies to think twice 

about their premium increases and, in some cases, reducing the size of their annual 

premium increases. For example, for the second time in a year we have seen insurers in California reduce or delay planned rate increases. 

Question 8. Please identify any independent empirical analysis that you are aware 

of that demonstrates that the rate review regulation will lower health care costs? 

Answer 8. Disclosing proposed rate increases, along with the insurer’s justification, will shed light on industry pricing practices that some experts believe have led 

to unnecessarily high prices. This unprecedented new transparency in the health insurance market will promote competition, encourage insurers to do more to control 
66 

health care costs and discourage insurers from charging rates which are unjustified. 

Importantly, we know rate review works. For example, Connecticut regulators recently rejected a proposed 20 percent rate increase after their review found that 

such an increase would be excessive. 

CONSEQUENCES OF THE NEW LAW

Question 9. In the preexisting condition exclusion interim final rule, the Administration notes: 

‘‘There are two main categories of children who are most likely to be directly 

affected by these interim final regulations: First, children who have a preexisting condition and who are uninsured; second, children who are covered by 

individual insurance with a rider excluding coverage for a preexisting condition 

or a preexisting condition exclusion period. For the latter category, obtaining 

coverage for the preexisting condition may require terminating the child’s existing policy and beginning a new one.’’ 

The regulation also estimates there are 90,000 children in the latter category. 

Of these 90,000 children the Department estimates will benefit from the new law, 

how many live in 1 of the 20 States in which there are no carriers selling new child 

only health plans? How can parents of these children consider terminating the 

child’s existing policy if they live in 1 of the 20 States in which there are no new 

child-only policies available? 

Answer 9. In March 2010, the insurance industry said they wanted to make discriminating against children with preexisting conditions a thing of the past. Several 

months later, they reneged on their commitment and unfortunately, some insurance 

companies made the unfortunate decision to stop selling child-only insurance policies. We stand ready to work with States and private insurers to facilitate their 

ability to offer child-only health care policies. Already we have offered to work with 

States and private plans to have special open seasons and have advised them of 

other options available to limit adverse selection, such as adjusting rates for health 

status or permitting child-only rates to be different from rates for dependent children, consistent with State law. We hope that insurers in the affected States will 

examine all of the flexibility available to them to continue to offer child-only policies 

and reconsider their decision not to offer child-only policies. 

Additionally, CCIIO will continue its work to ensure that Preexisting Condition 

Insurance Plans (PCIPs) in all States offer viable coverage for children. The PCIP 

program includes coverage of pediatric benefits, prescription drugs, and inpatient, 

outpatient, and mental health services. In States where the Federal Government 

runs the PCIP program, one way uninsured children with preexisting conditions can 

qualify for PCIP is if they are offered a commercial insurance policy at a premium 

at least twice as expensive as what they would pay in PCIP in lieu of a denial of 

coverage by an insurer. 

Question 10. In your testimony, you mention 5,000 unions, local governments, and 

businesses have signed up for the early retiree reinsurance program. Please provide 

a detailed accounting of who these entities are, which have filed claims, how many 

claims have been paid and how much of the original $5 billion allocated for the program has already been spent? 

Answer 10. HHS has administered the Early Retiree Reinsurance Program 

(ERRP) with a great deal of transparency, and all of this information is publicly 

available on our Web site. On March 31, we published a report announcing that the 

program has provided more than 1,300 employers across all 50 States with nearly 

$1.8 billion in reimbursements. The report details reimbursements received by each 

participating plan sponsor, and is available here: http://cciio.cms.gov/resources/ 

files/errplprogresslreportl3l31l11.pdf. 

A March 2, 2010 report providing additional information can be found here: 

http://www.healthcare.gov/center/reports/retirement03022011a.pdf. 

In addition, the ERRP page of healthcare.gov contains a searchable list of approved plan sponsors by State. The page is directly linked here: http:// 

www.healthcare.gov/law/provisions/retirement. 

Question 11. Please provide the most recently collected enrollment data by State 

for the new high-risk pool program authorized in PPACA, including the 23 States 

in which the Federal Government has contracted with the Government Employees 

Health Association (GEHA) to run the program. 
67 

1 [Note: We should have updated numbers soon.] 

Answer 11. Based on data reported as of February 1, 2011, PCIP had 12,437 

members. Of these, 8,762 were enrolled in State-run PCIPs and 3,675 were enrolled 

in the federally run PCIP.1

Question 12. Please provide a detailed accounting of how the Department has spent the $5 billion allocated for the new high-risk pool program, separately identifying the amounts provided to each State and the funds spent on advertising. 

Answer 12. This is still being determined. 

Question 13. How many entities have applied for waivers from the annual benefit 

limit requirement? How many of the applications were accepted by HHS? How 

many of the applications were denied by HHS? Please also provide a list of all of 

the names of the entities that have applied for waivers and the current status of 

their applications. 

Answer 13. As of April 1, 2011 a total of 1,168 annual limit waiver applications 

had been granted. As of February 19, 2011, 79 applicants were initially denied. Applicants that were denied a waiver were informed of their ability to seek a reconsideration of CCIIO’s determination. Some applicants that have asked for reconsideration have been subsequently approved. An updated list of approved applications by 

plan type can be found on CCIIO’s Web site here: http://cciio.cms.gov/resources/ 

files/approvedlapplicationslforlwaiver.html. 

Question 14. Please describe the process that the Department has used to determine whether to grant a waiver from the annual benefit limit requirement. As part 

of this answer, please identify the criteria that are used to assess the merits of the 

request, as well as the policies and procedures that are used by your staff to make 

waiver determinations. Please identify which individuals within the Department are 

responsible for making these determinations, the role the HHS General Counsel in 

reviewing these decisions, and any processes that are being used to ensure that the 

waivers are issued in a manner that is consistent with the policies and procedures 

described above. 

Answer 14. Information on the waiver process is available in our guidance, here: 

http://cciio.cms.gov/resources/files/ociiol2010-1l20100903l508.pdf. 

Question 15. Have any entities or health plans been issued waivers exempting 

them from any requirements included in PPACA (other than the waivers that have 

been issued exempting plans from meeting the annual benefit limits)? Does HHS 

intend to issue waivers exempting any entities from any other requirements included in PPACA? 

Answer 15. As you note, as of April 1, 2011, 1,168 group health plans or health 

insurance issuers had received 1-year waivers from the restricted annual limits provision, consistent with the Secretary’s responsibilities under the statute. 

The Affordable Care Act permits an adjustment to the Medical Loss Ratio (MLR) 

standard for a State’s individual health insurance market for up to 3 years if it is 

determined that applying the 80 percent MLR standard ‘‘may destabilize the individual market in such State.’’ In order to qualify for this adjustment, a State must 

demonstrate that requiring insurers in its individual market to meet the 80 percent 

MLR has a reasonable likelihood of destabilizing the State’s individual insurance 

market and could result in fewer choices for consumers. Under this standard, HHS 

accepted the Maine Bureau of Insurance request for an adjustment to 65 percent 

for 2011 and 2012. HHS will allow the adjustment to continue through 2013, as 

Maine requested, if the State provides additional data at the end of 2012 to support 

a third year of the adjustment to 65 percent. 

PREVENTION FUND

Question 16. The new health care law established a Prevention and Public Health 

Fund (PPHF), which will provide $15 billion over the next 10 years for prevention, 

wellness and public health activities. Recent HHS press releases indicated that $500 

million was allocated from this fund last year for these activities and $750 million 

will be spent this year. 

Please provide a detailed accounting of how these funds have been spent. As part 

of your answer, please provide the names of all entities that have received funds, 

the amounts they received, the stated purpose for which the funds are to be used 

and the agencies within HHS that actually dispersed the funds. 

Answer 16. Attached please find spreadsheets that display a detailed accounting 

of how HHS obligated the $500 million from the FY 2010 Prevention and Public 
68 

2 [Note: These charts may be found in the attached pdf documents]. 

Health Fund (PPHF). The financial information displayed represents the most current available as of March 2011. The attached spreadsheets are organized based 

upon the agencies that awarded the funds 2: 

• HRSA: 1 summary spreadsheet, 5 program-specific spreadsheets showing obligations of PPHF funds. 

• CDC: 1 spreadsheet showing obligations for PPHF-funded programs by grant 

mechanism (data pulled between 12–1–2010 and 2–9–2011), 1 spreadsheet that describes the program funded by each grant mechanism. 

• OS: 2 spreadsheets—1 displays ASPA and ASPE programs, 1 displays OASH 

programs funded with the PPHF. 

• SAMHSA: 1 spreadsheet showing all awards under the Primary and Behavioral 

Health Integration program. 

• AHRQ: 1 spreadsheet showing PPHF funds obligated for the U.S. Preventive 

Services Task Force and Healthy Weight Practice-Based Research Networks. 

As of March 23, 2011, HHS has not obligated any of the proposed $750 million 

from the FY 2011 Prevention and Public Health Fund. 

Question 17. Please describe the process that the Department has used to determine the eligibility of an entity to receive funds from the PPHF. As part of this answer, please identify the criteria that are used to assess applications, the policies 

and procedures used to determine eligibility and the amount of funding to be provided to an entity, and whether the process used to make determinations was a 

competitive one. Please also identify. Please identify which individuals within the 

Department are responsible for making these determinations, how input from stakeholders is collected and used in this process, the role the HHS General Counsel in 

reviewing these determinations, and any processes that are being used to ensure 

that all determinations are made in a manner that is consistent with the policies 

and procedures described above. 

Answer 17. The Affordable Care Act states that the purpose of the Prevention and 

Public Health Fund is for an ‘‘expanded and sustained national investment in prevention and public health programs that will improve health and help restrain the 

rate of growth in private and public sector health care costs.’’ The resources from 

the Fund serve as a funding source for many existing HHS programs and new programs that meet this purpose, and the Fund does not have its own eligibility criteria. Generally, across the range of HHS programs funded with Prevention and 

Public Health Fund resources, grants supported by the Fund are available to universities, States and local governments, professional health organizations, tribal organizations, community and faith-based organizations. 

Each agency’s program has its own eligibility requirements, and the funding opportunity announcements (FOAs) for each program, which are posted on the respective operating division’s Web site and on grants.gov, describe in full detail the purpose of the award, eligibility requirements, estimated award amount(s), application 

deadline, and method of selection. As with other HHS grant programs, applications 

that meet the eligibility requirements and are responsive to the FOA are reviewed 

and scored by an objective review panel based on the criteria published in the FOA. 

The review panels are comprised of experts knowledgeable in the relevant field. Applications for awards that support research are reviewed for both scientific merit 

and programmatic conformance. Awards are made according to rank score, additional published criteria, if any, and the availability of funds. After all selections 

have been made, organizations whose applications were reviewed but not funded 

will be notified of their status. An application will remain active for 1 year from 

the date of notification. 

HHS General Counsel reviews all funding opportunity announcements related to 

programs supported by the Prevention and Public Health Fund and ensures that all 

awardee determinations comply with standard HHS policies and procedures as well 

as the laws governing grant authority. 

Question 18. As you prepare to spend the $750 million allocated for distribution 

this year, please identify the criteria that will be used to determine the most effective prevention and public health activities to fund, how funding will be distributed 

among prevention and public health activities, and whether geographic and demographic characteristics were used to determine program funding. 

Answer 18. The Prevention and Public Health Fund offers HHS the opportunity 

to fund the best evidence-based interventions. The Affordable Care Act authorizes 

the award of funds to programs that provide for an expanded and sustained national 
69 

investment in prevention and public health improvement. We have engaged in a 

constructive dialogue within the Administration and Congress on specific, highimpact investments that can make a difference in the health of Americans. By investing in State and local public health infrastructure and community efforts to implement proven prevention programs, we can make a significant impact on the leading causes of death. 

Because of the Prevention and Public Health Fund, businesses, schools and other 

educational institutions, State and local governments, and non-profits have received 

the much-needed financial investment for programs such as tobacco cessation, obesity prevention, and increasing the primary care and public health workforce. In 

several cases, geographic and/or demographic characteristics were used to determine 

program funding based on population size, burden of disease, and ability to reduce 

health disparities and/or achieve positive health outcomes. 

For fiscal year 2011, building on the initial investment of fiscal year 2010, new 

funds are dedicated to expanding on four critical priorities: 

1. Community Prevention ($298 million): The initiative supports community prevention activities that we know will work to reduce health care costs and promote 

health and wellness. 

• Community and State Prevention ($222 million). Implement the Community 

Transformation Grant program and strengthen other programs to support 

State and community initiatives to use evidence-based interventions to prevent heart attacks, strokes, cancer and other conditions by reducing tobacco 

use, preventing obesity, and reducing health disparities. Launch a consolidated chronic disease prevention grant program. • Tobacco Prevention ($60 million). Implement anti-tobacco media campaigns 

which are proven to work to reduce tobacco use, telephone-based tobacco cessation services, and outreach programs targeting vulnerable populations, consistent with HHS’ Tobacco Control Strategic Action Plan. • Obesity Prevention and Fitness ($16 million). Advance activities to improve 

nutrition and increase physical activity to promote healthy lifestyles and reduce obesity-related conditions and costs. These activities will support the 

First Lady’s ‘‘Let’s Move!’’ initiative and help implement recommendations of 

the President’s Childhood Obesity Task Force. 

2. Clinical Prevention ($182 million): The initiative supports clinical preventive 

services that we know will work to reduce health care costs and promote health and 

wellness. 

• Access to Critical Wellness and Preventive Health Services ($112 million). Increase awareness of new preventive benefits made available by the Affordable 

Care Act. Expand immunization services and activities. Strengthen employer 

participation in wellness programs. • Behavioral Health Screening and Integration with Primary Health ($70 million). Assist communities with the coordination and integration of primary 

care services into publicly funded community mental health and other community-based behavioral health settings. Expand suicide prevention activities 

and screenings for substance use disorders. 

3. Public Health Infrastructure and Training ($137 million): The allocation 

strengthens State and local capacity to prepare health departments to meet 21st 

century challenges. 

• Public Health Infrastructure ($40 million). Support State, local, and tribal 

public health infrastructure to advance health promotion and disease prevention through improved information technology, workforce training, and policy 

development. 

• Public Health Workforce ($45 million). Support training of public health providers to advance preventive medicine, health promotion and disease prevention, epidemiology, and improve the access to and quality of health services 

in medically underserved communities. 

• Public Health Capacity ($52 million). Build State and local capacity to prevent, detect, and respond to infectious disease outbreaks through improved 

epidemiology and laboratory capacity. Increase investments in programs that 

prevent healthcare associated infections. 

4. Research and Tracking ($133 million): The initiative supports the Affordable 

Care Act’s expansion of coverage for community and clinical preventive services by 

increasing resources for research and evaluation of preventive services. 

• Health Care Surveillance and Planning ($84 million). Fund data collection 

and analysis to monitor the impact of the Affordable Care Act on the health 
70 

of Americans. Boost the collection and analysis of environmental hazards data 

to protect the health of communities. 

• Prevention Research ($49 million). Strengthen the CDC-facilitated Community Guide by supporting the Task Force on Community Preventive Services’ 

efforts to identify and disseminate evidence-based recommendations on important public health challenges to inform practitioners, educators, and other decisionmakers. Expand the development of recommendations for clinical preventive services, with enhanced transparency and public involvement in the 

processes of the U.S. Preventive Services Task Force. Fund cross cutting public health research studies. 

Question 19. Please describe how, on an ongoing basis, the Department will inform the public and Congress about how the PPHF funds are used. 

Answer 19. Information will be publicly available on an ongoing basis which will 

detail how the PPHF funds are used. As is our usual practice, as grants are awarded, HHS will relay that information via press releases and fact sheets on the various agencies’ Web sites, www.hhs.gov and/or www.healthcare.gov. Information regarding the State-by-State breakdown of the fiscal year 2010 PPHF funds is already 

available on the Web site as is information regarding the categories of fiscal year 

2011 PPHF dollars. For more information, visit http://www.healthcare.gov/news/ 

factsheets/prevention02092011a.html and http://www.healthcare.gov/news/factsheets/prevention02092011b.html. 

Interested parties may also contact Grants Management Specialists in the various 

Operating Divisions to formally request this information. In addition, there are useful Web sites that provide additional information. For example, the Computer Retrieval of Information on Scientific Projects (CRISP) (http://crisp.cit.nih.gov) is a 

public Web site that shows funded grants from CDC’s IMPAC II grants management system. 

Question 20. Please describe how the Department will measure the efficacy of the 

programs funded under Section 4002, specifically with regard to improving the 

health outcomes of specific individuals and reducing health care expenditures. 

Answer 20. Recipients of grants funded with Prevention and Public Health Fund 

resources are expected to achieve the stated outcomes of the grant. Awardees will 

develop evaluation plans to ensure performance monitoring and tracking of overall 

progress on outcome objectives as well as specific progress on activities designed to 

address the core objectives of the respective program. In addition, PPHF resources 

are available for healthcare surveillance and statistics activities, which will track 

the impact of the ACA, such as changes in the health care system and local, State, 

and national trends over time. HHS plans to use measures such as: percentage of 

adults who smoke cigarettes, percentage of adults with a healthy weight, percentage 

of children with a healthy weight, percentage of infants born at a low-birth weight, 

percentage of people receiving seasonal influenza vaccine in the last 12 months, and 

percentage of people who have a specific source of ongoing medical care, among others. 

COMMUNITY LIVING ASSISTANCE SERVICES AND SUPPORTS ACT (CLASS ACT)

Question 21. The CLASS Act was passed as part of the Patient Protection and 

Affordable Care Act of 2010. On January 5, you sent a letter to Congress stating 

that the CLASS Act programs would be moved to the Administration on Aging 

(AOA). The following questions concern that move and the overall implementation 

of the CLASS Act. 

Is the Administration on Aging (AOA) receiving funds to administer the program? 

Are Federal funds being transferred from other previously appropriated programs, 

such as Own Your Future and the National Long-Term Care Clearinghouse, to finance the administrative costs of the CLASS Act? Please list any programs whose 

funding has been shifted to implement the CLASS Act, and for each fiscal year. 

Please specify whether these are mandatory or discretionary funds. Please also list 

the statutory authority for the use of these funds for the implementation of the 

CLASS Act. 

Answer 21. The President’s fiscal year 2012 Budget requests $120 million in administrative funding for the CLASS program, including significant investments for 

the development of a national IT system and education and outreach to potential 

participants and employers. The requested funds will be used to bridge the period 

between fiscal year 2011 when funding is covered under the Health Reform Implementation Fund authorized by Section 1005 of P.L. 111–152 and the point at which 

administrative funding can be drawn statutorily from premiums received. 
71 

For fiscal year 2010 and fiscal year 2011, no AOA funding is being used to administer CLASS. The program’s expenses are being funded entirely by the Health Reform Implementation Fund. No funding has been transferred from other programs. 

Question 22. Is there expected to be an advertising and/or outreach campaign for 

the CLASS Act programs? If so, what is the 10-year budget for the advertising/outreach campaigns? How will the monies be spent? Where will the Department of 

Health and Human Services (HHS) find the money for the campaign? Please specify 

whether these are mandatory or discretionary funds. Please also list the statutory 

authority for the use of these funds for the implementation of the CLASS Act. 

Answer 22. The CLASS Act is designed to help Americans prepare for their financial future by offering insurance that will help pay for an individual’s future longterm care needs. The CLASS program is required by law to maintain solvency over 

20 and 75 years. The Department of Health and Human Services (HHS) will ensure 

CLASS meets these statutory requirements, and no taxpayer funds will be used for 

payment of benefits. Outreach and education will be crucial components of achieving 

the goals of the CLASS program for two reasons. First, surveys show widespread 

misunderstanding about the nature of long-term care costs and the extent to which 

Medicare pays for these services and supports. Outreach and education will provide 

Americans with information they need to plan responsibly for their own future. Second, an informed public is more likely to recognize the benefits that CLASS provides 

and choose to participate in the program, boosting participation and improving the 

fiscal solvency of the program. 

The President’s fiscal year 2012 Budget requests $120 million in discretionary appropriations to fund outreach, education and administration. This funding will be 

spent pursuant to Title 32 of the Public Health Service Act. 

Question 23. Recently, I was informed that HHS intends to contract with outside 

groups, Knowledge Networks and Thompson Reuters, to conduct a study and surveys on who is purchasing long-term care insurance and related products. Were 

these contracts put out for competitive bid? Will you please supply copies of the contracts? 

Answer 23. The Department of Health and Human Services (HHS) will develop 

CLASS to meet the program’s statutory requirements for solvency over 20 and 75 

years, and no taxpayer funds will be used for the payment of benefits. HHS is conducting research to increase our understanding of Americans’ attitudes, opinions 

and knowledge of the risks of needing long-term care and their likely need for services. The information will be used to support development of the CLASS benefit. The 

contracts to Thompson Reuters and Knowledge Networks were awarded pursuant 

to Federal Acquisition Regulations. The Thompson Reuters contract was awarded 

through the Department’s competitive indefinite delivery/indefinite quantity (ID/IQ) 

task order contract mechanism. The contract to Knowledge Networks was awarded 

through the GSA Mission Oriented Business Integrated Services (MOBIS) Schedule 

(Survey Services 874–3). Copies of these contracts are attached. 

Question 24. If surveys were used by these outside groups on behalf of a study 

undertaken for HHS, Federal law requires that the surveys of more than 10 individuals must be approved by the Office of Management and Budget. Please supply copies of the OMB approval of these surveys and copies of all surveys used. 

Answer 24. All surveys that will be conducted to support CLASS program development will undergo review by OMB, as required under the Paperwork Reduction Act 

(PRA). All information collection requests (ICRs) submitted by agencies for OMB approval under the PRA can be found at http://www.reginfo.gov/public/do/ 

PRASearch. OMB has reviewed and approved one survey that contained questions 

related to the CLASS Act. These questions added to HHS/CDC’s National Health 

Interview Survey (approved by OMB on December 13, 2010) can be found at: http:// 

www.reginfo.gov/public/do/PRAViewDocument?reflnbr=201009-0920-002. 

Question 25. In adhering to the President’s commitment to transparency and abiding by government contract regulations, please list all studies that have been submitted to OMB for approval in the last 180 days. Include the estimated cost of the 

study, the source of the funding, as well as the organization in charge of its administration. 

Answer 25. No studies have been submitted to OMB for approval. 

Question 26. The SCAN Foundation has actively advocated for passage of the 

CLASS Act and has awarded grants to help implement the program. In fulfilling 

Congress’ obligation to conduct routine oversight please describe the Department’s 

and AOA’s relationship and communication with the Foundation. Does AOA receive 
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any funding or resources from the SCAN Foundation? If so, please provide a breakdown for each fiscal year. Is SCAN or any of its employees or representatives currently under contract or serve as a consultant to HHS? 

Answer 26. The SCAN Foundation operates independently and does not fund any 

HHS activities. HHS officials and staff meet with representatives from a range of 

outside organizations on numerous aging and long-term care issues; SCAN is among 

those organizations. No employees of the SCAN Foundation are under contract with 

or serve as a consultant to HHS related to the CLASS Act. 

Question 27. Has the Department or AOA hired any staff for the purposes of running the CLASS Act programs? Please list any employees or contractors hired for 

purposes of the CLASS Act and their roles in implementing the CLASS Act. How 

many full-time employees does HHS or AOA anticipate hiring for the implementation of the CLASS Act programs? Will employees of other Federal agencies be used 

for the implementation of the CLASS Act programs? 

Answer 27. Yes, currently the CLASS program has a team of 12 full-time staff. 

The staff includes program specialists and IT professionals. The fiscal year 2012 

budget request discusses the Administration on Aging’s plans to have approximately 

22 full-time equivalents or FTEs working on the CLASS program in fiscal year 

2011. The fiscal year 2012 budget requests an appropriation to support 40 FTEs in 

fiscal year 2012. 

Question 28. Has the Department of AOA hired an actuary for the CLASS Act? 

Pursuant to Section 3203 of the CLASS Act, you shall develop at least three actuarially sound benefit plans as alternatives for the CLASS Independence Benefit Plan. 

Have you consulted with the three actuaries, and if so, who are the actuaries? Is 

the actuary for the Centers of Medicare and Medicaid Services (CMS) one of the 

three actuaries? When will the three alternatives be shared with Congressional 

Oversight Committees? When will the final decision be made with respect to which 

actuarial plan alternative will be the basis for the CLASS Act implementation? Will 

you require that each of the actuarial analyses contain a 75-year analysis? 

Answer 28. Yes. AOA/CLASS has hired an actuary, Robert Yee, who has over 30 

years of actuarial and executive experience, including at the largest provider of private long-term care insurance in the country. Robust actuarial estimates will be crucial components of achieving the goals of the CLASS program. The statute requires 

the development of three benefit plans. The methods and assumptions that underlie 

these plans must be certified by the CMS Actuary. 

Question 29. What discussions have taken place between HHS/AOA and the Department of Treasury regarding the establishment of enrollment mechanisms for 

collecting CLASS Act program premiums? 

Answer 29. We have had conversations with the Department of Treasury for advice on how to establish IT systems for accurate and streamlined collection of premiums. The CLASS program is working on mechanisms for employers and individuals to pay premiums into the program, including through third-party payroll processors. 

Question 30. What discussions have taken place with States and related entities 

and the private sector in the establishment of the eligibility assessments pursuant 

to Section 3205 of the CLASS Act? 

Answer 30. We have not discussed CLASS eligibility assessment issues with 

States. However, we are conducting research on eligibility assessments currently 

used in the private long-term care insurance market, and examining closely the assessment procedures used by State insurance and Medicaid programs. 

Question 31. When will the first premiums be collected pursuant to the CLASS 

Act programs? Will the collection of premiums begin prior to the establishment of 

the CLASS Independence Benefit Plan? Will the collection of premiums begin prior 

to the establishment of enrollment mechanisms for all entities and individuals? 

What regulations need to be finalized before premiums collection commences? 

Answer 31. The Department will announce the CLASS plan by October 2012, 

after considering the recommendation of the CLASS Independence Advisory Council. 

Enrollment and premium collection will not begin until a benefit plan, enrollment 

mechanisms, and information systems are established. 

Question 32. Recently, you gave a speech to the Kaiser Family Foundation concerning the CLASS Act. You claimed that the CLASS Act has loopholes and that 

it only offers two options for setting premiums and ‘‘[n]either of these options is appealing.’’ What loopholes need to be fixed? Will these require legislative changes? 
73 

What other options are you considering for premiums? Will these premium issues 

require legislative changes? 

Answer 32. We are not seeking legislative changes. As I said in my speech at the 

Kaiser Family Foundation, we are taking advantage of the flexibility allowed us in 

the statute to structure premiums in order to keep CLASS solvent. 

For example, I will use the flexibility the law allows to ensure that there are not 

loopholes in the law that allow people to enroll in the program and then strategically skip payments yet remain enrolled. 

Question 33. In recent years, the Federal Government’s own long-term care insurance programs experienced a serious spike in cost of premiums to those enrolling 

in the program. How can you ensure that no premium spikes will occur with those 

enrolling in CLASS Act programs? Will enrollees in CLASS Act programs be given 

the opportunity to receive a refund if premium spikes are too high? 

Answer 33. We are looking at options for indexing premiums so that they will rise 

along with benefits. The indexing system would have to be completely transparent. 

That way people can plan ahead without being surprised by sudden large rate increases. 

GENERAL

Question 34. States are having a difficult time balancing their budgets due to restrictive Medicaid maintenance of effort (MOE) requirements. You recently recommended different strategies for States, such as purchasing drugs more efficiently, 

but many of these strategies have already been employed by States over the past 

few years to rein in spending. 

How are States supposed to implement new and innovative approaches in the 

short term AND long term when they are heavily restricted by the current MOE 

requirements? 

Answer 34. As a former Governor, I know the difficult budget pressures facing 

States. The Administration has a strong track record on our partnership with States 

during difficult economic times. Working with Congress, we increased Federal support for Medicaid, supporting increased enrollment at the same time when State 

Medicaid resources were down. Working again with Congress, we extended the Children’s Health Insurance Program (CHIP) to secure funding into the future. As a result, in 2009, even though Medicaid enrollment rose because of the recession, State 

spending in Medicaid declined by 10 percent. 

There are a number of steps States can take to reduce costs and squeeze waste, 

fraud and abuse from their programs. On February 3, 2011, I sent a letter to all 

Governors laying out a broad array of options already available to them to reduce 

their spending and balance their budgets, as well as new ideas that can be accomplished through existing options or waivers. States have many choices they can 

make including limits on some benefits, changes in cost sharing, and greater use 

of managed care. A copy of the letter can be found at: http://www.hhs.gov/news/ 

press/2011pres/01/20110203c.html. 

Medicaid cost issues largely reflect the cost issues facing our health care system 

as a whole. Like other payers, States can save considerable dollars by focusing on 

improving the safety and quality of care. Efforts to reduce and eliminate unnecessary hospital readmissions are a great example. Preventing one readmission of a 

disabled adult with Medicaid can save enough money to cover three adults without 

disabilities for an entire year. 

On February 25, 2011, CMS also sent a letter to State Medicaid directors clarifying situations in which the maintenance of effort provision does not apply. (Please 

visit the CMS Web site for a copy of the letter to States: http://www.cms.gov/smdl/ 

downloads/SMD11001.pdf.) CMS intends to continue to work with Governors on 

further exploring existing flexibility and options to improve Medicaid’s performance. 

CMS recently created the Medicaid State Technical Advisory Teams (M–STAT) that 

are responsible for working directly with States to address steps they can take to 

improve efficiency in their programs and develop effective cost containment strategies. 

We are also exploring options such as those that will be proposed by the National 

Governor’s Association. We continue to work closely with States on innovative approaches to improve the quality and efficiency of care provided to high-cost beneficiaries, such as those eligible for both Medicare and Medicaid (dual eligibles). 

Question 35. Medicare Actuary Richard Foster recently wrote that an additional 

5 million or more early retirees may be added to the Medicaid rolls in 2014 if current adjusted gross income definitions are maintained. This represents an increase 

of 25 percent over initial projections. 
74 

How are States expected to respond to these future increases in costs when the Federal Government is already facing a $14 trillion national debt and major flexibility is not allowed for the States by the Federal Government? 

Answer 35. I recognize the challenge that the current fiscal environment has 

posed for State budgets including the increased enrollment in Medicaid, which is designed to serve more people during downturns, as people lose jobs and their jobbased coverage. By providing new Medicaid coverage through the Affordable Care 

Act, we are reducing the costs and inefficiencies resulting from the lack of insurance 

that plague our health system, and raise costs for all Americans and businesses in 

all States. 

The Federal Government will pay 100 percent of the Medicaid cost for the first 

3 years for newly eligible adults. After that, the Federal Government will pay at 

least 90 percent of the cost of the expansion. By greatly increasing the number of 

people with health insurance, the Affordable Care Act will also help States save 

money on other safety net programs and uncompensated care. Many services that 

States currently provide for the uninsured and pay for on their own—like mental 

health care and hospital treatment—will be matched by Federal Medicaid funds. 

As Secretary, I am committed to working closely with States to minimize potential 

financial and administrative burdens of implementing the Affordable Care Act. For 

example, some States have calculated that overall they will not bear any new costs 

under the law. CMS recently issued a final rule to provide States with a 90 percent 

enhanced match on investments in their IT systems for the design and implementation of changes to their Medicaid eligibility systems and we are committed to drive 

down the overall costs of these investments through shared technology. 

Question 36. While implementing $500 billion in Medicare payment cuts, please 

identify how the new health care bill will specifically decrease costs for patients as 

competition decreases and the Federal Government takes a larger role in managing 

health care in the United States? 

Answer 36. The Affordable Care Act contains numerous new provisions that are 

specifically directed at reducing the cost of care. 

For example, the Affordable Care Act supports ambitious new efforts to reduce 

fraud and waste in the health care system. New authorities in the Affordable Care 

Act offer additional front-end protections to keep those who commit fraud out of 

Federal health care programs, as well as new tools for deterring wasteful and fiscally abusive practices, promptly identifying and addressing fraudulent payment 

issues, and ensuring the integrity of our programs. 

Another example is the Center for Medicare and Medicaid Innovation. This new 

cross-cutting resource for improving care access and coordination for Medicare, Medicaid, and CHIP beneficiaries will test and study the most promising innovative payment and service delivery models. In doing so, the Innovation Center will work collaboratively with relevant Federal agencies and clinical and analytical experts, as 

well as local, national and regional providers, States and beneficiary organizations 

to identify and promote systems changes that could improve quality and outcomes 

for patients while containing or reducing costs. 

The Affordable Care Act also established a Federal Coordinated Health Care Office to improve coordination of the care provided to beneficiaries eligible for both 

Medicare and Medicaid, also known as dual eligibles. This population consists of the 

most vulnerable and chronically ill beneficiaries, who represent 15 percent of enrollees and 39 percent of Medicaid expenditures and 16 percent of enrollees and 27 percent of Medicare expenditures. These individuals experience many challenges obtaining care under the current system. Dual eligibles need to navigate two separate 

systems: Medicare for primary coverage of basic health care services (e.g., preventive, primary, acute, and post-acute care) and prescription drugs, and Medicaid for 

wraparound coverage, including coverage of long-term care supports and services, 

and help with Medicare premiums and cost-sharing. The Federal Coordinated 

Health Care Office will work to better streamline care for dual eligibles and partner 

with States to introduce new integrated care delivery models that ensure they receive full access to the items and services that will result in better health care outcomes and lower overall costs, while reducing duplicative or wasteful care. 

Other cost-saving innovations in Medicare and Medicaid include programs to reduce unnecessary hospital readmissions, reduce and eliminate healthcare-acquired 

conditions, and initiate shifts in our payment systems that, in the long run, will reward quality of care over quantity of care. 

Finally, the Affordable Care Act will reduce premiums by an estimated 14–20 percent for Americans who buy health insurance on their own in the new competitive 

insurance Exchanges. Beginning in 2014, the law will allow individuals, families, 

and small business owners to pool their purchasing power through new State-based 
75 

Exchanges. Millions will qualify for tax credits to help them buy coverage through 

the Exchanges. Under the new law, it is estimated that a family of four making 

about $33,000 could save nearly $10,000 in premiums, beginning in 2014, if they 

purchase coverage in the Exchange. A family of four making $56,000 could save up 

to $6,000 each year, by purchasing Exchange coverage. The Affordable Care Act has 

brought real change to the health insurance marketplace that has immediately benefited thousands of Americans, and will improve coverage and provide real savings 

for millions more. 

Question 37. In December 2010, it was announced that Ohio State University would receive a $100 million grant for its Radiation Oncology Center, pursuant to 

a provision in the new health care law. Please identify all of the hospital systems 

that applied for this grant and the process that was used to determine the winner. 

Please also identify which individuals within the Department who were responsible 

for making this determination and describe the role of the HHS General Counsel 

in reviewing this decision. 

Answer 37. Section 10502 of Affordable Care Act provided for a single grant for up to $100 million for debt services on, or direct construction or renovation of, a 

health care facility that provides research, inpatient tertiary care, or outpatient clinical services. Eligibility for this award was limited to institutions of higher education with an academic health center at a public research university in the United 

States that contained the State’s sole academic medical and dental school. The funding opportunity was announced August 18, under Announcement Number: HRSA– 

11–126. 

Potential applicants were invited to ask the Agency questions about the program 

guidance and application requirements. HRSA staff, after consultation with the Office of the General Counsel, responded to questions via email, telephone, and conference calls, with the questions and answers then posted on the HRSA Web site 

as Frequently Asked Questions for all potential applicants to see. 

Eleven applications were received for funding under the Infrastructure to Expand 

Access to Care funding opportunity announcement, four of which were determined 

by the Agency as not having met the programmatic eligibility requirements. The remaining seven applications were deemed eligible. 

An external Objective Review Committee was established to evaluate the eligible 

applications. The review committee was staffed with non-Federal persons free of 

conflicts of interest with expertise in the areas of: health care administration within 

an institution of higher education; health facility construction and design; and capital finance. After the committee discussed and evaluated each application on its 

own merit and based on what was in the application alone, each member of the Review Committee independently scored that application. A Federal grants office determined a rank order based on the committee scores. Consistent with HRSA’s grant 

practices, the applicant with the highest score, the Ohio State University, was 

awarded the grant. 

SENATOR ALEXANDER

Question 1. As a former Governor, I am deeply concerned with the Medicaid expansion in the new health law. Tennessee’s previous Governor Bredesen, a Democrat, has called it ‘‘the mother of all unfunded mandates’’ and estimated that it will 

cost Tennessee an additional $1.1 billion for 2014–19, and that is even with the Federal Government paying 100 percent of the expansion population from 2014–16. 

The new law also mandates that Medicaid primary care physicians be reimbursed 

at 100 percent of Medicare rates in 2013–14, for which the Federal Government will 

pay for those 2 years. But this creates a funding cliff for 2015. To keep doctors in 

their programs, States will either be forced to continue to pay Medicaid primary 

care physicians 100 percent of Medicare rates, or these physicians will effectively 

see a 40–50 percent cut in 2015. According to the TennCare director, the requirement to increase provider reimbursement to 100 percent of Medicare would cost 

Tennessee roughly an additional $324 million per year. 

How are States going to shoulder these additional burdens in the current budget 

crises most of them are experiencing? Is the Administration considering any kind 

of flexibility options to offer to States in order to avoid being crushed by all the 

mandates and maintenance of effort requirements? 

Answer 1. As a former Governor, I know the difficult budget pressures facing 

States. The Administration has a strong track record on our partnership with States 

during difficult economic times. Working with Congress, we increased Federal support for Medicaid, supporting increased enrollment at the same time when State 

Medicaid resources were down. Working again with Congress, we extended the Children’s Health Insurance Program (CHIP) to secure funding into the future. 
76 

TennCare relies on private managed care companies to provide care to a Medicaid 

population—a group that often has special needs and higher costs. Just 5 percent 

of Medicaid beneficiaries account for more than half (55 percent) of all spending. By 

contrast, 50 percent of beneficiaries—those with the lowest costs—account for only 

5 percent of spending. To truly get a handle on growing Medicaid costs and to improve health status overall, we need to help States find ways to better care for these 

high cost enrollees, people who often have multiple chronic conditions or other special health care needs. 

The Affordable Care Act includes a number of provisions to help improve care 

while lowering costs, such as a Medicaid health home State plan option and new 

authorities through the Innovation Center that will enable States to design and test 

new care management and care coordination strategies in both managed care and 

fee-for-service contexts. 

There are a number of steps States can take to reduce costs and squeeze waste, 

fraud and abuse from their programs. I recently sent a letter to all Governors laying 

out a broad array of options already available to them to reduce their spending and 

balance their budgets, as well as new ideas that can be accomplished through existing options or waivers. States have many choices they can make including limits 

on some benefits, changes in cost sharing, and greater use of managed care. States 

can also save considerable dollars by focusing on improving the safety and quality 

of care. I intend to work with Governors on exploring existing flexibility and options. 

Question 2. One of the problems with the Medicaid expansion is that there is an 

access problem for patients in the program being unable to see a doctor willing to 

treat them. There are varying reports on providers not willing to see Medicaid patients, like the 2006 report from the Center for Studying Health System Change 

Only stating that about half of U.S. physicians accept new Medicaid patients. 

Even the CMS chief actuary stated in an analysis done in April, ‘‘. . . it is reasonable to expect that a significant portion of the increased demand for Medicaid would 

be difficult to meet, particularly over the first few years.’’ 

By adding 16–18 million more people into the program, what is your Administration doing to address access issues for all these new beneficiaries? 

Answer 2. As Secretary, I am committed to ensuring access for Medicaid beneficiaries. A good first step is a provision in the Affordable Care Act that provides 

a federally funded boost in payment rates to primary care physicians for 2 years, 

which will ensure that such providers have a strong incentive to serve program 

beneficiaries. The Affordable Care Act also takes important and significant steps to 

boost the number of primary care providers, including new bonus payments for primary care in Medicare and new residency slot allowances. 

In addition, the newly formed Medicaid and CHIP Payment and Access Commission (MACPAC) will also play an important role by providing research and analysis 

on provider payment rates and access in the Medicaid program. We anticipate working closely with them as we do with MEDPAC. 

Question 3. Has HHS done an analysis of how many providers are not seeing new 

or any Medicaid patients? If not, can your department look into this and get back 

to me? 

Answer 3. Ensuring access to care is a key goal of this Administration, especially 

as we look ahead to coverage expansions in 2014. In fact, we are currently undertaking rulemaking to help CMS better ensure that Medicaid beneficiaries can access 

high quality care in a timely manner. We expect to have proposed regulations available for public comment in the spring and would welcome input in this area. 

CMS does not currently track rates of provider participation in the Medicaid program. However, in their March 2011 Report to Congress (http://www.macpac.gov/ 

reports), the Medicaid and CHIP Payment and Access Commission (MACPAC) provided selected surveys examining provider participation in Medicaid and CHIP that 

may be informative in understanding current provider participation rates. 

Question 4. In your testimony, you mention tax credits as a way that the law will 

keep down premiums. I realize that people who receive the tax credits or subsidies 

will pay less out of their own pocket for premiums, but are you saying that these 

tax credits/subsidies will bring down the underlying premiums and or the underlying cost of health care? 

Answer 4. The Congressional Budget Office (CBO) produced estimates of the impact of the Affordable Care Act on premiums, even without the impact of the tax 

credits. For people purchasing non-group coverage through the Exchanges, it estimated savings of 7 to 10 percent resulting from the increase in the size of the insurance pool as well as the nature of the new enrollees, many of whom, in light of the 

premium tax credits and the individual responsibility provisions, are likely to be rel-
77 

atively younger, healthier at any given age, and/or have lower expected utilization 

of health services. An additional 7 to 10 percent savings would result from providing 

the same set of services to the same group of enrollees—primarily because of the 

new rules in the market such as eliminating insurance underwriting. CBO also 

credits some of the savings to increased choices and competition. Together, these 

savings range from 14 to 20 percent. 

Question 5. According to estimates from Senate Finance minority tax staff last 

year, only 7 percent of Americans would qualify for subsidies and would see these 

cost savings. What about everyone else? Even CBO has said premiums for families 

buying coverage on the individual market would see premiums increase by $2,100 

a year. Blue Shield of CA had increases as high as 59 percent—some of that is directly attributable to the new health care law. 

Answer 5. The vast majority of Americans who have health insurance get coverage through their employer, and that will not change when the Affordable Care 

Act is fully implemented. The Congressional Budget Office (CBO) estimates that 

premiums for small businesses will be up to 2 percent lower and premiums for large 

business will be up to 3 percent lower because of key reforms in the Affordable Care 

Act. And longer term reforms in the law will reduce the ‘‘hidden tax’’ that drives 

up the price of employer-based health insurance to cover the cost of care for the uninsured. 

For Americans that purchase insurance in the individual market, Exchanges will 

bring transparency and fairness to a broken system, and significant tax credits will 

be available to offset the costs of coverage. Even without factoring in the impact of 

the tax credits, CBO estimates that the cost of comparable coverage in the Exchange 

will be 14 to 20 percent lower than they would be without the Affordable Care Act. 

This translates to savings of an estimated $2,300 per year for families. CBO also 

assumed that individuals and families would have, on average, coverage that is 

more comprehensive than what they have now, meaning that the savings would be 

offset by higher premiums due to better coverage. It is important to note that this 

benefit enhancement is largely a choice, not a requirement. 

Question 6. You state in your testimony that the new law ‘‘is bringing down premiums for consumers by limiting the amount of premiums insurers may spend on 

administrative costs and by giving States resources to beef up their review process.’’ 

How do you square this statement with recent news articles that some insurers 

are raising premiums as a result of the new law? 

Answer 6. The Affordable Care Act holds insurers accountable and will help bring 

down premiums. It ensures every significant health insurance rate increase will undergo a thorough review and provides $250 million in grants to States to bolster 

their rate review process. For the first time, insurers will be held accountable for 

the way they spend consumer premiums. The new medical loss ratio regulations released last year implement the statutory requirement that insurers spend at least 

80 or 85 percent, depending on the market, of premium dollars on health care and 

quality improvement efforts instead of marketing and CEO bonuses. Those insurers 

who don’t meet the standard will have two choices: reduce premiums or send rebates to their customers. There is growing evidence that these provisions are resulting in reductions in premium increases or withdrawal of rate increases. 

Question 7. PPACA requires insurers to establish a medical loss ratio (MLR) for 

80 percent for individuals and 85 percent for group coverage plans. Has HHS done 

premium impact analysis based on this change? If so, what were your results? 

Answer 7. HHS anticipates that the transparency and standardization of MLR reporting in the interim final regulation will help consumers to ensure that they receive good value for their premium dollars. Additionally, the inclusion of activities 

that improve quality in calculating the MLR could help to increase the level of investment in and implementation of effective quality improvement activities, which 

could result in improved quality outcomes and lead to a healthier population. The 

department estimates that issuers’ total one-time administrative costs related to the 

MLR reporting, record retention, and rebate payment and notification requirements 

represent less than 0.02 percent of their total premiums for accident and health coverage, and their total annual ongoing administrative costs related to these requirements represent less than 0.01 percent of their total premiums for accident and 

health coverage. Executive Order 12866 also requires consideration of the ‘‘distributive impacts’’ and ‘‘equity’’ of a regulation. As described in the regulatory impact 

analysis (RIA) for the MLR regulation this regulatory action will help ensure that 

issuers spend at least a specified portion of premium income on reimbursement for 

clinical services and quality improving activities and will result in a decrease in the 

proportion of health insurance premiums spent on administration and profit. It will 
78 

require issuers to pay rebates to consumers if this standard is not met. Although 

we are unable to quantify benefits, the transfers (rebates from issuers to consumers) 

could be substantial—estimated monetized rebates of $0.6 billion to $1.4 billion annually. 

Question 8. On June 18, 2010, I sent a letter to the then Centers for Medicare 

& Medicaid Services (CMS) Acting Administrator Marilyn Tavenner in reference to 

a request made by the American College of Radiology, the American Society of 

Radiologic Technologists and the American Registry of Radiologic Technologists in 

regard to the adjustment in supervision levels for Radiologist Practitioner Assistants and Registered Radiologist Assistants. What action has been taken in reference 

to my inquiry? 

Answer 8. We appreciate your interest in CMS’s policies regarding supervision 

levels for services performed by radiology practitioner assistants (RPAs) and registered radiologist assistants (RRAs). Currently, RPAs and RRAs may not bill Medicare separately for services that they provide. However, these services can be covered and paid under the diagnostic testing benefit category, as long as the appropriate level of supervision is provided by a qualified physician. 

CMS carefully assigns physician supervision levels for diagnostic testing services, 

based in large part upon the judgment of our physician clinical advisors. At this 

time, CMS does not intend to make a change in the physician supervision requirements for services provided by RPAs and RRAs. However, our medical staff reviews 

these requirements on an ongoing basis. We are happy to continue to work with you 

and your staff on this issue. 

Question 9a. I have had several constituents complain about the 2011 Physician 

Fee Schedule final rule policy requiring physician or qualified non-physician (NPP) 

signatures on requisitions for laboratory tests reimbursed under the clinical laboratory fee schedule. This rule recently adopted by the Centers for Medicare & Medicaid Services (CMS) could adversely affect patient care. 

Why is CMS now requiring that doctors sign both the medical chart with the doctor’s order and the requisition form for the lab test? What led CMS to conclude that 

one signature from the physician was not enough? 

Answer 9a. The action taken in the CY 2011 Physician Fee Schedule final rule 

to require a physician’s or qualified non-physician practitioner’s (NPP) signature on 

laboratory requisitions followed earlier efforts in CY 2009 and CY 2010 to address 

the confusion that existed about when a signature was required and for what services. The requirement was also intended to respond to numerous stakeholder comments urging a consistent policy across Medicare benefits, since physician signatures are required for other types of diagnostic services. At the same time, CMS believed that it would not increase the burden on physicians because it was the agency’s understanding that, in most instances, physicians are annotating the patient’s 

medical record with either a signature or an initial (the ‘‘order’’), as well as providing a signature on the paperwork that is provided to the clinical diagnostic laboratory that identifies the test or tests to be performed for a patient (the ‘‘requisition’’) as a matter of course. Further, CMS recognized that some practitioners use 

the patient’s medical record as the order for laboratory services and the policy would 

not require such practitioners to also submit requisitions. 

Because of concerns that some physicians, NPPs, and clinical diagnostic laboratories are not aware of, or do not understand, this policy, CMS focused its efforts 

in the first quarter of 2011 on developing educational and outreach materials to 

educate those affected by this policy. However, after further input from the laboratory community, CMS has decided to focus its resources for the remainder of 2011 

on changing the regulation that requires signatures on laboratory requisitions because of concerns that physicians, NPPs, and clinical diagnostic laboratories are 

having difficulty complying with this policy. 

Question 9b. Is CMS concerned that this could further increase the cost of care 

by having to have the doctor present twice? (Once to examine the patient and again 

when the test is administered; even though the test could be conducted hours or 

even a day later). 

Answer 9b. The policy does not require the physician to be present when the test 

is performed. In fact, CMS believed that the policy would not increase the burden 

on physicians because it was the agency’s understanding that, in most instances, 

physicians are annotating the patient’s medical record with either a signature or an 

initial (the ‘‘order’’), as well as providing a signature on the paperwork that is provided to the clinical diagnostic laboratory that identifies the test or tests to be performed for a patient (the ‘‘requisition’’) as a matter of course. Further, CMS recognized that some practitioners use the patient’s medical record as the order for lab-
79 

oratory services and the policy would not require such practitioners to also submit 

requisitions. 

Question 9c. Did CMS consult with any providers to engage them on the discussion for this rule? If so, what was their response? If not, why didn’t they? 

Answer 9c. Yes. As mentioned above, CMS engaged in notice and comment rulemaking to address the confusion that existed about when a signature was required 

and for what services in CY 2009 and CY 2010 before finalizing a policy in the CY 

2011 Physician Fee Schedule final rule. The requirement was intended to respond 

to numerous stakeholder comments urging a consistent policy across Medicare benefits, since physician signatures are required for other types of diagnostic services. 

However, after further input from the laboratory community, CMS has decided to 

focus its resources for the remainder of 2011 on changing the regulation that requires signatures on laboratory requisitions because of concerns that physicians, 

NPPs, and clinical diagnostic laboratories are having difficulty complying with this 

policy. 

Question 10. Why was meaningful tort reform left out of the 2010 Patient Protection and Affordable Care Act? Medical costs in our country are rising steadily and 

this is threatening access to services. Using Texas as a case study, it is fair to extrapolate that tort reform leads to cost saving and increases access. Additionally, a 

CQ Today article that ran on January 24, 2011, cites a Congressional Budget Office Estimate that medical malpractice reform could save $54 billion over 10 years. 

Why did PPACA choose to ignore this? 

Answer 10. As the President noted in his State of the Union Address, the Administration strongly supports efforts to reduce health care costs, including considering 

ideas to rein in frivolous medical malpractice lawsuits. I agree that our medical liability system needs to be examined, to ensure that it improves the quality of care 

and patient safety, compensates patients in a fair and timely manner if they are 

harmed through medical negligence, reduces medical liability premiums and the 

costs associated with defensive medicine, and weeds out frivolous lawsuits. 

As you know, prior to the enactment of the Affordable Care Act, the Administra- tion established a $25 million initiative to support efforts by States and health systems to develop, implement, and evaluate patient safety and medical liability reforms. This is the most ambitious effort to date by HHS to support and evaluate 

our medical liability system and patient safety reforms. It is also the largest government investment connecting medical liability to improving quality and avoiding 

harm rather than just negligence and punishment. Building on that effort, the President’s fiscal year 2012 Budget includes $250 million in grants to States to reform their medical liability laws. The Department of 

Justice, in consultation with the HHS, will administer this program. The goal of 

these reforms would be to fairly compensate patients who are harmed by negligence, 

reduce providers’ insurance premiums, weed out frivolous lawsuits, improve the 

quality of health care and patient safety, and reduce medical costs associated with 

‘‘defensive medicine.’’ States could propose reforms to their medical malpractice system through various approaches, such as health courts, safe harbors, early disclosure and offer, or other legal reforms. 

Question 11. My office often meets with Nurses, Physicians Assistants and Tech 

Assistants. What is HHS/CMS doing to help work these professionals into the delivery system? Specifically, What is being done to evaluate on a national level how 

many responsibilities these professionals are capable of handling, in relation to their 

training levels? 

What is being done on a national level to make sure these professionals are being 

used to their full capacity? 

Tennessee has many rural and underserved populations. By maximizing the professionals mentioned above, we could increase access to care and lower costs. It is 

important for me to learn what initiatives the Secretary is taking to working these 

individuals into the delivery system, and to make sure there are qualified and certified professionals to deliver services in their care area. 

Answer 11. The Administration believes that strengthening and growing the 

health care workforce is critical to reforming the Nation’s health care system. Workforce initiatives funded by the Affordable Care Act include a strong focus on nurse 

practitioners and physician assistants. For instance, with $30 million in Affordable 

Care Act funding, 600 new physician assistants will be fully trained by 2015. With 

$31 million in Affordable Care Act funding, 600 new nurse practitioners and nurse 

mid-wives will be fully trained by 2015. In addition, the President’s fiscal year 2012 

budget proposes to begin a 5-year effort to fund the training of an additional 4,000 

new primary care providers, including primary care physicians, nurse practitioners 
80 

and physician assistants. The Administration recognizes that these providers are an 

essential component in the health care delivery system. We also support the development of inter-professional training and of team-based care models, like medical 

homes, which involve health professionals practicing to the full extent of their training. To inform Federal, State and private sector workforce planning in the future, 

the President’s budget also would enhance the efforts of the Health Resources and 

Services Administration’s National Center for Health Workforce Analysis to collect 

and analyze data on the health care workforce supply, demand and capacity. 

In addition to creating new training opportunities for nurse practitioners and physician assistants, the Affordable Care Act also invests in encouraging the placement 

of these providers in underserved areas. About half of National Health Service 

Corps clinicians, including physicians, advanced practice nurses, and physician assistants, work in Health Resources and Services Administration-supported health 

centers, which have a long record of success providing affordable, cost-effective, high 

quality preventive and primary care services to some of our Nation’s most vulnerable individuals. The Affordable Care Act provided $11 billion to bolster and expand 

Community Health Centers and $1.5 billion for the National Health Service Corps 

over the next 5 years. In addition, the Affordable Care Act provided $15 million to 

fund nurse-managed clinics, which provide primary care and wellness services to 

underserved and vulnerable populations, and are managed by advanced practice 

nurses, including nurse practitioners. 

Question 12. Tennessee has many Veterans. My office has been hearing that for 

many of them, their local VA clinics or other government treatment centers is out 

of network for their carrier. Is this something into which your department is looking 

in coordination with the Department of Veterans Affairs to make sure our Veterans 

have access to care? 

Answer 12. 38 U.S.C. §1729 provides VA the statutory authority to collect its 

billed charges or an amount a third party payer demonstrates it pays to non-governmental providers in the same geographic area for the same care and services. Federal law does not require third party payers to enter into agreements with VA. However, VA has found there are many benefits to entering into agreements with third 

party payers. Formal agreements have been established with several third party 

payers conducting business in Tennessee. Collectively, the third party payers with 

whom VA has entered into agreements, according to the 2010 Atlantic Information 

Systems Directory of Health Plans, covers over 80 percent of people enrolled in 

health insurance plans in the State. The third party payers doing business in Tennessee, with whom VA has formal agreements include: BlueCross BlueShield of Tennessee, Aetna, CIGNA, Great-West Healthcare, and United Healthcare. Moreover, 

VA has a legislative proposal in the fiscal year 2012 budget that would amend 38 

U.S.C. §1729 to make VA a statutory participating provider with all health plans 

whether or not an agreement is in place with a health insurer or third party payer, 

thus preventing the effect of excluding coverage or limiting payment of charges for 

care. 

The VA cannot bill Medicare or Medicaid. 

SENATOR ROBERTS

Question 1. I was pleased to learn of President Obama’s commitment through Executive order to require that Federal agencies ensure that regulations protect our 

safety, health and environment while promoting economic growth. 

Based on that commitment I have 2 questions: first, are you at the stage where 

you can tell us what regulations HHS is planning to scrub or repeal because of this 

Executive order and what is the timeline for complying? 

Answer 1. The President’s Executive order requires each agency, including HHS, 

to conduct a retrospective review of existing significant regulations to identify those 

that can be modified, streamlined, harmonized with others, or eliminated in order 

to increase flexibility and reduce burdens and costs on the regulated community. 

Under that Order, the President directed agencies to develop a plan and submit that 

plan to OMB by May 18, 2011. The plan will include a preliminary list of regulations HHS will review pursuant to the Executive order over the next 2 years. 

OIRA has notified the agencies that it will be working closely with them as they 

develop their respective plans to meet the May 18, 2011, deadline. HHS is actively 

engaged in that process and will have a draft plan to OIRA by the end of April. 

We expect to submit the final HHS plan by the May 18 deadline. 

Question 2. We have heard many suggestions from health providers in Kansas— 

people from Kansas you have worked with and know—and we would be happy to 
81 

work with you to address their concerns. I think the example of the impact of regulations on the child-only market is a good one. 

So my second question is, realistically, what are the chances based on the President’s commitment that PPACA regulations will be changed or repealed? 

Answer 2. HHS is committed to meeting both the spirit and intent of the President’s Executive order. As the President sets forth, the retrospective review process 

will be an ongoing one—undertaken as part of a culture of regulatory review and 

revision. 

Question 3. The Executive order says: 

‘‘In applying these principles, each agency is directed to use the best available 

techniques to quantify anticipated present and future benefits and costs as accurately as possible. Where appropriate and permitted by law, each agency may 

consider (and discuss qualitatively)’’ 

and this is the part where I have the most concern, ‘‘values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.’’ 

Are you anticipating you will be able to determine which regulations, including 

recently released health reform regulations, HHS believes would fall under this exemption? 

Answer 3. Along with every regulation, HHS submits a regulatory impact analysis 

that includes a discussion of costs and benefits of the regulation. However, determining the costs and benefits of a regulation over time can be tricky and difficult 

when it comes to assessing the impact of a regulation on the health and well-being 

of individuals over the long term. We do not read the President’s Executive order 

to permit an exemption to the quantitative cost/benefit requirement. Rather, we believe the President permits agencies to discuss qualitative factors that are difficult 

or impossible to measure in quantitative terms, but which are nevertheless important in assessing the value of the regulation in improving the health and well-being 

of the American people. 

Question 4. Beyond the 180 days with which your Agency would now have to provide a preliminary plan for the Executive order, what is the HHS timeline for complying with the intent of this Executive order and creating ‘‘a more cost-effective, 

transparent and smart regulatory system.’’ In short, how long is this expected to 

take, and when can Americans expect to see results? 

Answer 4. Consistent with the President’s directive, we expect that the process 

will not simply be a one-time exercise, but rather an ongoing process of review and 

change. The effort is to create a culture of review and revision, where existing regulations are routinely modified, streamlined, or eliminated where appropriate to 

achieve a better regulatory framework. We expect that the American people will see 

certain initial results within the next year. But we also expect to produce results 

year after year as these reviews become institutionalized as part of the review and 

revision process. 

Question 5. Madam Secretary, as the former Governor of Kansas you are well 

aware that Kansas has 83 Critical Access Hospitals (CAHs)—the most of any State 

and fully 2⁄3 of our hospitals. And you also know that CAHs are not part of the 5- 

year exemption from IPAB review that other hospitals were given in health reform. 

Should IPAB recommend reductions that take funds away from these rural community hospitals I can assure you Congress will act, but would you support such a recommendation? 

Answer 5. The Independent Payment Advisory Board is one of the key features 

of the Affordable Care Act that will set our system on a path to sustainability in 

the long run. The statute establishing the IPAB specifies that the Board recommend 

proposals that would ‘‘protect and improve Medicare beneficiaries’ access to necessary and evidence-based items and services, including in rural and frontier areas.’’ 

In my experience, many of America’s rural areas continue to be on the cutting edge, 

leading change and improvement in health care. I’m happy to talk to you or your 

staff about ways to ensure that critical access hospitals can continue to provide essential services in many rural areas of the country. 

Question 6. It has recently been brought to my attention that there is a regulation 

related to the dialysis transition adjuster that I have been told, based on CMS inaccurate estimates, has resulted in underpayments for dialysis treatments. Is this one 

of the regulations CMS and HHS are considering revising? 

Answer 6. When adopting a new payment system under Medicare, CMS is often 

statutorily required to ensure that aggregate payments (with the exception of any 
82 

applicable inflation update) are the same as those under the previous payment system. In this case, we were required to ensure that payments under the new ESRD 

prospective payment system (PPS) were, in aggregate, 98 percent of the total payments that would have been made under the previous basic case-adjusted composite 

payment system. In order to meet this requirement, we applied a transition budget 

neutrality adjustment factor of 3.1 percent to ESRD payments in the calendar year 

(CY 2011) ESRD PPS final rule. 

As described in the final rule, CMS’ calculation of this factor was based on the 

best available data to estimate payments during the transition period. At the same 

time, we acknowledged that the adjustment may not reflect actual choices made by 

the ESRD facilities regarding opting out of the ESRD PPS transition. However, we 

noted that the adjustment would be updated each year of the transition (CY 2012 

and CY 2013) to reflect actual data on providers electing to opt-out of the transition. 

We recently issued an interim final rule (76 Fed. Reg. 18930, April 6, 2011), in 

which we revised the ESRD transition budget-neutrality adjustment finalized in the 

CY 2011 ESRD Prospective Payments System final rule for renal dialysis services 

furnished April 1, 2011 through December 31, 2011, to reflect the actual election 

decisions of ESRD facilities for participating in the ESRD PPS transition. 

Question 7. If CMS and the Department are unwilling or unable to exhibit the 

flexibility necessary to fix something as straight-forward as the dialysis transition 

adjuster then how can this committee and the American people be confident that 

the Department has the wherewithal to implement something as daunting and complex as the Affordable Care Act? 

Answer 7. As we noted in our response to the previous question, we have already 

updated the dialysis transition adjuster in response to reasonable concerns from the 

dialysis provider industry. Additionally, CMS and the Department share your concerns and implementing the Affordable Care Act in a timely and transparent way 

is a high priority for the Administration. We have aggressively moved forward on 

a number of provisions that are already providing seniors with meaningful benefits. 

The Administration and HHS remain committed to a transparent implementation 

process that includes feedback from stakeholders. For example, CMS has specifically 

requested comments on portions of the regulation implementing the Affordable Care 

Act provisions to counter fraud in the Medicare and Medicaid programs. Feedback, 

both from the notice and comment process and other outreach efforts, will continue 

to be a critical part of the Administration’s implementation efforts. 

Question 8. Madam Secretary, Dr. Berwick was renominated to be the CMS Administrator by the President. As a representative of your Department are you and 

your Administration committed to allowing or encouraging Dr. Berwick to testify before the relevant committees and answering all of the questions and concerns of the 

Members of the Senate during this nomination process? I think this is of particular 

importance considering the reorganization of OCIIO under CMS. 

Answer 8. Across the Department, we are all focused on implementing the Affordable Care Act and bringing real benefits to all Americans. We are committed to our 

mission of ensuring access to and providing efficient, high-quality health care to our 

beneficiaries, and will continue to work with Congress in a bipartisan fashion to 

achieve this core goal. 

Dr. Berwick has already testified before Congress and is fully committed to meeting with individual Senators to address all of their questions and any areas of concern. 

SENATOR HATCH

Question 1. Currently the Institute of Medicine (IOM) is reviewing and will soon 

issue a list of specific mandatory benefits to meet the Patient Protection and Affordable Care Act’s (PPACA) essential health benefits requirement. In general, when 

these mandates are implemented in 2014, will individuals living in States, like 

Utah, with fewer benefit mandates see an increase in premiums as a result of adding benefits that were previously not required to be covered? 

Answer 1. The IOM will not be making recommendations on specific benefits or 

services. As they state on their Web site: 

‘‘The IOM will not define specific service elements of the benefit package. Instead, the IOM will review how insurers determine covered benefits and medical necessity and will provide guidance on the policy principles and criteria for 

the Secretary to take into account when examining QHPs for appropriate balance among categories of care; the health care needs of diverse segments of the 

population; and nondiscrimination based on age, disability, or expected length 
83 

of life. Additionally, the IOM may offer advice on criteria and a process for periodically reviewing and updating the benefits package.’’ 

Question 2. Actuarial analysis by the Council for Affordable Health Insurance has 

found that individual benefit mandates, on average, increase premiums by between 

1 and 3 percent. If the new benefit mandates coming out of the IOM exceed the 

number of benefits mandated in Utah, PPACA will force Utah constituents to pay 

higher premiums for benefits they may not need or want. To that end, can you confirm that States with few benefit mandates will see increases in premiums as a result of the essential health benefits requirement under PPACA? 

Answer 2. As noted above, the IOM is not making recommendations on specific 

services. The Affordable Care Act defines essential health benefits to, 

‘‘include at least the following general categories and the items and services 

covered within the categories: ambulatory patient services; emergency services; 

hospitalization; maternity and newborn care; mental health and substance use 

disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive 

and wellness services and chronic disease management; and pediatric services, 

including oral and vision care.’’ 

Question 3. Can you also confirm that as U.S. Preventive Services Task Force 

(USPSTF) continues to approve new A and B recommendations for preventive 

health benefits premiums will also continue to increase if the preventive benefit recommended is not already mandated or covered by a plan? 

Answer 3. Too many Americans don’t get the preventive health care they need to 

stay healthy, avoid or delay the onset of disease, lead productive lives, and reduce 

health care costs. Cost-sharing (including copays, co-insurance and deductibles) reduces the likelihood that preventive services will be used. The Affordable Care Act 

is already helping to make wellness and prevention services affordable and accessible to individuals by requiring most health plans to cover preventive services and 

by eliminating cost-sharing. High-quality preventive care helps Americans stay 

healthy, avoid or delay the onset of disease, lead productive lives, and reduce costs. 

And yet, despite the proven benefits of preventive health services, too many Americans go without needed preventive care because of financial barriers. Even families 

with insurance may be deterred by copayments and deductibles from getting cancer 

screenings, immunizations for their children and themselves, and well-baby checkups that they need to keep their families healthy. 

Question 4. I was surprised by the announcement made by HHS on January 26, 

2011, that a total of 948 waivers have been granted from the annual benefit limits 

established under PPACA. This waiver process obviously stands in stark contrast 

to the Administration’s claims about the value of PPACA in reducing costs and making health care more affordable. What is concerning about the announcement is the 

lack of transparency about the waiver process. If the new requirements under 

PPACA were meant to reduce costs and make health care more affordable and accessible, then why do these organizations need waivers to continue to keep costs 

down and provide access to insurance? 

Answer 4. The Affordable Care Act is designed to provide Americans with affordable, high-quality coverage options—while ensuring that those who like their current coverage can keep it. Unfortunately, today, limited benefit plans, or ‘‘mini-med’’ 

plans are often the only type of insurance offered to some workers. In 2014, the Affordable Care Act will end most mini-med plans when Americans will have better 

access to affordable, comprehensive health insurance plans that cannot use high 

deductibles or annual limits to limit benefits. In the meantime, the law requires insurers to phase out the use of annual dollar limits on benefits. In 2011, most plans 

can impose an annual limit of no less than $750,000. 

Mini-med plans have lower limits than allowed under the Affordable Care Act. 

While mini-med plans do not provide security in the event of serious illness or accident, they are unfortunately the only option that some employers offer. In order to 

protect coverage for these workers, regulations allow these plans to apply for temporary waivers from rules restricting the size of annual limits to some group health 

plans and health insurance issuers. 

Waivers only last for 1 year and are only available if the plan certifies that a 

waiver is necessary to prevent either a large increase in premiums or a significant 

decrease in access to coverage. In addition, enrollees must be informed that their 

plan does not meet the requirements of the Affordable Care Act. No other provision 

of the Affordable Care Act is affected by these waivers: they only apply to the annual limit policy. 
84 

Question 5. As States are facing a $175 billion collective budget shortfall, we must 

provide them with the flexibility to find responsible ways to continue serving beneficiaries and to fulfill their constitutional requirements to balance their budgets. I 

appreciate your acknowledgement of the difficult budget circumstances States are 

facing, but I have heard from many States that your February 3, 2011, letter fails 

to provide the level of assistance that States desperately need. As you know, dozens 

of governors have asked for relief from the maintenance of effort (MOE) requirements in the Patient Protection and Affordable Care Act (PPACA) in order to responsibly manage their programs and even to make common-sense modernizations 

to their eligibility determination procedures. As you know, your waiver authority 

under Section 1115 of the Social Security Act allows you to waive certain provisions 

in Section 1902 of the Social Security Act. The MOE requirements included in the 

PPACA are in section 1902. I understand that you plan to look at each State’s individual circumstances and specific budgetary pressures, however knowing that there 

is a $175 billion collective State budget shortfall, do you anticipate granting any 

Section 1115 waivers from MOE restrictions for States to allow them greater flexibility in balancing their budgets? 

Answer 5. HHS understands the challenges States are facing and we’re ready to 

offer new approaches, listen to new ideas and conduct business with States in ways 

that are responsive to the severity and immediacy of these challenges. CMS recently 

sent a detailed letter to State Medicaid directors on February 25, 2011, clarifying 

situations in which the Affordable Care Act maintenance of effort provision does not 

apply. (Please visit the CMS Web site for a copy of the letter to States: http:// 

www.cms.gov/smdl/downloads/SMD11001.pdf.) Specifically, in States that have or 

project budget deficits, the Affordable Care Act MOE requirements do not apply to 

certain adult populations, but the ARRA MOE does continue to apply through June 

2011. The letter also provides additional information about the treatment of premiums and clarifies that the MOE provision in the Affordable Care Act also does 

not require a State to request that the Secretary continue a demonstration under 

section 1115 upon its expiration. 

The new MOE guidance helps States in three ways. First, it serves as a reminder 

to States that are experiencing budget deficits of the ACA provision allowing them 

to seek an exemption from the ACA MOE requirement for certain adult populations 

(above 133 percent FPL). Second, it clarifies that States with 1115 waiver demonstration programs may allow those waivers to expire at the end of their waiver 

approval period without violating MOE. Third, it notes that some States may be 

able to increase premiums paid by Medicaid or CHIP beneficiaries. 

We’re also taking a number of steps to help States implement changes that will 

bring efficiencies to their Medicaid programs and improve the quality of care provided. CMS recently created the Medicaid State Technical Advisory Teams (M– 

STAT) that are responsible for offering States technical support and fast-track ways 

for them to implement new initiatives—particularly those targeted at ending the 

fragmented care provided to people dually eligible for Medicaid and Medicare that 

comprise a significant amount of Medicaid costs, lowering pharmacy costs and improving program integrity. These steps will strengthen the program over the long 

run, improve the quality and outcomes of care, and help States run more efficient 

Medicaid programs. 

We look forward to continuing to work with States. 
85 

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Health Resources and Services Administration 

Prevention Fund Awards 

Nurse Managed Health Clinics 

FY 2010 Prevention and Public Health Fund 

Health Resources and Services Administration 

Nurse Managed Health Clinics 

Purpose: To provide federal funding to support the development and operation of Nurse· Managed 

Health Clinics (NMHC) to: 1) improve access to primary health care, disease prevention and health 

promotion in medically underserved areas (including enhancements of outreach strategies); 2) enhance 

nursing practice by increasing the number of structured clinical teaching sites for undergraduate and 

graduate nursing students; and 3) enhance electronic processes for establishing effective patient and 

workforce data collection systems. Under this program, the focus would support the training and practice 

development site for nurse practitioners to build the capacity of primary care provider workforce. 

Awardees City State Award Amount 

The Regents of the University of California, San San Francisco CA $1,497,320 

Francisco 

University of Colorado, Denver Aurora CO $1,498,206 

University of Mississippi Medical Center Jackson MS $1,500,000 

Regents of the Univ of Michigan Ann Arbor MI $1,498,577 

East Tennessee State University Johnson City TN $1,400,998 

Tides Center· Women's Community Clinic San Francisco CA $1,459,366 

Fair Haven Community Health Clinic, Inc. New Haven CT $1,500,000 

St. Mary's Health Wagon, Inc. Clinchco VA $1,493,634 

University of Illinois at Chicago I The Board of Chicago IL $1,499,995 

Trustees of the University oflllinois 

The University of Texas Medical Branch at Galveston Galveston TX $1,500,000 

Total, Nurse Managed Health Clinics Grants $14,848,096 

Other Grant Expenses $1,300 

Total, Nurse Managed Health Clinics $14,849,396 
89 

Health Resources and Services Administration 

Prevention Fund Awards 

Primary Care Residency Expan 

FY 2010 Prevention and Public Health Fund 

Health Resources and Services Administration 

Primary Care Residency Expansion 

Pnrpose: To increase the number of residents trained in primary care specialty - family medicine, general 

internal and general pediatric medicine. Funding may only be used to increase the enrollment in an 

accredited primary care residency program through resident stipend support 

Awardees City State Award Amount 

Regents of the University of Colorado Aurora CO $1,920,000 

Variety Children's Hospital dba Miami Children's Hospital Doral FL $2,861,568 

Meharry Medical College Nashville TN $2,880,000 

University of Connecticut Health Center Farmington CT $1,890,723 

University of Rochester Rochester NY $1,887,125 

Board of Trustees of Southern Illinois University Springfield IL $1,869,763 

University of Florida Gainesville FL $1,920,000 

Swedish Covenant Hospital Chicago IL $960,000 

Carilion Medical Center Roanoke VA $1,920,000 

The Reading Hospital and Medical Center . Reading PA $2,880,000 

Children's Hospital & Research Center at Oakland Oakland CA $3,840,000 

Providence St Peter Hospital Olympia WA $960,000 

UMDNJ - Robert Wood Johnson Medical School New Brunswick NJ $960,000 

Albert Einstein Healthcare Network Philadelphia PA $1,920,000 

University of Arkansas for Medical Sciences Little Rock AR $1,520,001 

University of Arkansas for Medical Sciences-Cancer Little Rock AR $1,520,001 

Research Center 

Yellowstone City & County Health Department/Riverstone Billings MT $960,003 

Health 

University of Arkansas for Medical Sciences-Cancer Little Rock AR $759,999 

Research Center 

The Regents of the University of Michigan Ann Arbor MI $960,000 

University of Arkansas Little Rock AR $759,999 

The University of Texas Southwestern Medical Center at Dallas TX $1,920,000 

Dallas 

University of Colorado Denver Aurora CO $1,920,000 

The Regents of the University of California, San Francisco San Francisco CA $1,920,000 

Regents of the University of California Davis CA $1,920,000 

The Regents of the University of California, Los Angeles Los Angeles CA $1,920,000 

University of Medicine and Dentistry of New Jersey Stratford NJ $1,920,000 

Univ. of Mass. Medical School Worcester MA $960,000 

The Regents of the University of California, San Francisco San Francisco CA $1,920,000 

Children'S Hospital of Pittsburgh ofthe UPMC Health Pittsburgh PA $1,920,000 

System 

The Ohio State University Columbus OH $3,840,000 
90 

Health Resources and Services Administration 

Prevention Fund Awards 

Primary Care Residency Expan 

Awardees City 

Boston Medical Center Boston 

Idaho State University Pocatello 

Community Hospitals Foundation Indianapolis 

Curators, University of Missouri on behalfofUMKC Kansas City 

Central Iowa Hospital Corporation Des Moines 

Texas Tech Univ Health Sciences Center Lubbock 

Community Health of Central Washington Yakima 

Newark Beth Israel Medical Center Newark 

Baystate Medical Center Springfield 

Virginia Commonwealth University Richmond 

Variety Children's Hospital dba Miami Children's Hospital Doral 

The Family Medicine Residency of Idaho, Inc, Boise 

Board of Regents, University of Nevada, Reno Reno 

Children's National Medical Center Washington 

Tulane University, School of Medicine New Orleans 

Baylor College of Medicine Houston 

Catholic Healthcare West / Sl. Mary Medical Center Long Beach 

Baylor Research Institute Dallas 

Mount Auburn Hospital Cambridge 

The Family Medicine Residency of Idaho, Inc. Boise 

Cincinnati Children'S Hospital Medical Center Cincinnati 

Crozer-Chester Medical Center Upland 

UPMC Presbyterian Shadyside Pittsburgh 

Montefiore Medical Center Bronx 

Freeman Oak Hill Health System Joplin 

Texas Tech University Health Sciences Center Lubbock 

Newark Beth Israel Medical Center Ne",.,.rk 

Spectrum Health Hospitals Grand Rapids 

Regents of the University ofCalitbrnia San Francisco 

Cooper Health System D/B/A Cooper University Hospital Camden 

Group Health Cooperative Seattle 

Medical University of South Carolina Charleston 

Danbury Hospital Danbury 

Kingsbrook Jewish Medical Center Brooklyn 

Richmond Medical Center Staten Island 

Johns Hopkins University Baltimore 

The University of Illinois at Chicago Chicago 

Bronx-Lebanon Hosp Ctr Bronx 

Cooper Health System D/B/A Cooper University Hospital Camden 

Marshfield Clinic Research Foundation Marshfield 

Bronx-Lebanon Hasp Ctr Bronx 

Sisters of Charity Hospital Buffalo 

Hennepin Healthcare System, Inc./Hennepin County Minneapolis 

Medical Center 

Louisiana State University Health Science Center New Orleans 

Curators, University of Missouri on behalf ofUMKe Kansas City 

State Award Amount 

MA $3,840,000 

ID $960,000 

IN $960,000 

MO $1,920,000 

IA $1,920,000 

TX $960,000 

WA $1,920,000 

NJ $1,920,000 

MA $3,840,000 

VA $1,585,520 

FL $1,907,712 

ID $960,000 

NV $960,000 

DC $3,840,000 

LA $2,472,964 

TX $1,920,000 

CA $1,920,000 

TX $960,000 

MA $2,879,998 

lD $960,000 

OH $1,872,024 

PA $1,920,000 

PA $960,000 

NY $1,490,111 

MO $1,907,712 

TX $1,920,001 

NJ $1,920,000 

MI $3,490,659 

CA $1,920,000 

NJ $1,920,000 

WA $960,000 

SC $1,920,000 

CT $3,360,000 

NY $2,880,000 

NY $2,880,000 

MD $3,839,998 

IL $1,920,000 

NY $2,880,000 

NJ $1,920,000 

WI $1,920,000 

NY $2,880,000 

NY $1,912,499 

MN $1,918,827 

LA $3,120,000 

MO $1,920,000 
91 

Health Resources and Services Administration 

Prevention Fund Awards 

Primary Care Residency Expan 

Awardees City 

Regents ofUniversily of Cali fomi a La Jolla 

Marshfield Clinic Research Foundation Marshfield 

Daystate Medical Center Springfield 

University of North Carolina at Chapel Hill Chapel Hill 

St. Elizabeth Medical Center Utica 

New Hanover Regional Medical Center Wilmington 

University of Pennsylvania Philadelphia 

Subtotal, Primary Care Residency Expansion Grants 

Other Grant Expenses 

Total, Primary Care Residency Expansion 

Health Resources and Services Administration 

Prevention Fund Awards 

Healthy Weight 

FY 2010 Prevention and Public Health Fund 

Health Resources and Services Administration 

Healthy Weight Collaborative 

State Award Amount 

CA $2,880,000 

WI $1,920,000 

MA $2,880,000 

NC $3,715,684 

NY $1,920,000 

NC $1,795,571 

PA $2,777,757 

$167,356,219 

$1,452,283 

$168,808,502 

Purpose: To create and manage a new Prevention Center for Healthy Weight to address 

obesity in children and families. The center will launch the Healthy Weight Collaborative to 

share evidence-based and promising community-based and clinical interventions in preventing 

and treating obesity. 

Awardees City State A ward Amount 

National Initiative for Children's Healthcare Quality Boston MA $4,983,638 

Total, Healthy Weight Collaborative Grants $4,983,638 

Other Grant Expenses $16,362 

Total, Healthy Weight Collaborative $5,000,000 
92 

Health Resources and Services Administration 

Prevention Fund Awards 

Physician Assistant Training 

FY 2010 Prevention and Public Health Fund 

Health Resources and Services Administration 

Physician Assistant Training 

Purpose: To increase student enrollment in primary care physician assistant programs and graduates 

planning to practice primary care specialties. 

Awardees City State Award Amount 

Lincoln Memorial University Harrogate TN $1,900,800 

Miami Dade College Medical Center Campus Miami FL $641,520 

Shenandoah University Winchester VA $1,069,200 

University of Nebraska Medical Center Omaha NE $924,000 

The University of Toledo Health Science Campus Toledo OH $1,009,880 

Pace University New York NY $660,000 

Duke University Medical Center Durham NC $1,320,000 

University of Utah Salt Lake City UT $704,000 

Union College Lincoln NE $792,000 

University of New Mexicio Health Sciences Center Albuquerque NM $204,239 

Desales University Center Valley PA $704,000 

Riverside Community College DistrictIMoreno Valley Moreno Valley CA $2,1l7,808 

Campus 

Methodist University, Inc. Fayetteville NC $1,188,000 

University of Colorado Denver Aurora CO $855,360 

Grand Valley State University Grand Rapids MI $1,791,720 

University of Washington Seattle WA $1,980,000 

University ofTexax - Pan American Edinburg TX $1,980,000 

Samuel Merritt College Oakland CA $1,232,000 

State of Colorado for Red Rocks Community College Lakewood CO $399,495 

Chatham University Pittsburgh PA $880,000 

King's College Wilkes Barre PA $990,000 

LeMoyne College Syracuse NY $1,056,000 

New York Institute of Technology Old Westbury NY $855,360 

University of New England Biddeford ME $990,000 

The Research Foundation of SUNY Albany NY $2,046,528 

University of Southern California Los Angeles CA $704,000 

Marywood University Scranton PA $704,000 

The Univ of Oklahoma Health Sciences Center Oklahoma City OK $418,171 

Total, Physician Assistant Training Grants 530,118,081 
93 

Health Resources and Services Administration 

Prevention Fund Awards 

State Health Care Workforce Dvl 

Health Resources and Services Administration 

State Health Workforce Development Grants 

Purpose: To enable State partnerships (I) to complete comprehensive health care workforce development 

planning and (2) to implement those plans or carry out activities as defined by the State application in order to 

address current and projected workforce demands within the State. 

Awardees City State Award Amount 

Virginia State Department of Health Richmond VA $1,935,137 

Univ of Wisconsin - Madison Madison WI $150,000 

NJ Department of Labor and Workforce Trenton NJ $150,000 

District of Columbia Department of Employment Services Washington DC $149,250 

Idaho Department of Labor Boise ID $150,000 

University of North Dakota Grand Forks NO $150,000 

MN Department of Employment and Economic Development Saint Paul MN $149,599 

Maryland Governor's Workforce Investment Board Baltimore MD $150,000 

State of Ohio - Department of Health Columbus OH $150,000 

Wyoming Department of Workforce Services Cheyenne WY $149,396 

Nevada Dept of Employment, Training, and Rehabilitation Carson City NV $149,999 

Montana State University Bozeman MT $150,000 

Connecticut Employment & Training Commission Wethersfield CT $150,000 

North Carolina Department of Commerce Division of Raleigh NC $144,595 

Workforce Development 

Colorado Department of Public Health and Environment Denver CO $150,000 

University of Vermont Burlington VT $131,786 

New Mexico Department of Labor Albuquerque NM $150,000 

Hawaii Department of Labor and Industrial Relations Honolulu HI $150,000 

New York State Department of Labor Albany NY $150,000 

California Department of Employment Development Sacramento CA $150,000 

Alaska Department of Labor and Workforce Development, Juneau AK $150,000 

ESD 

Commonwealth Corporation Boston MA $149,271 

South Carolina Department of Employment and Workforce Columbia SC $114,604 

Kansas Department of Commerce Topeka KS $150,000 

Pennsylvania Department of Labor & Industry Harrisburg PA $150,000 

Maine Jobs Council Augusta ME $150,000 

Total, State Health Workforce Development Grants 55,623,637 
94 

Health Resources and Services Administration 

Prevention Fund Awards 

Nurse Practitioner Traineeships 

FY 2010 Prevention and Public Health Fund 

Health Resources and Services Administration 

Nurse Practioner Traineeships 

Purpose: To provide financial support through traineeships for registered nurses enrolled in advanced 

education nursing programs to prepare nurse practitioners, clinical nurse specialists, nurse-midwives, nurse 

anesthetists, nurse administrators, nurse educators, public health nurses and nurses in other specialties 

determined by the Secretary to require advanced education. 

Awardees City State Award Amount 

Case Western Reserve Uniy Cleveland OH $1,425,600 

UnivofUtah Salt Lake City UT $1,425,600 

Western Univ of Health Sciences Pomona CA $1,056,000 

Univ of Oklahoma Health Sciences Center Oklahoma City OK $807,840 

Florida State University Tallahassee FL $1,425,600 

East Tennessee State University Johnson City TN $1,425,600 

Univ of Illinois at Chicago !The Board of Trustees of the Chicago IL $1,425,600 

University of Illinois 

West Virginia University Rsch Corp Morgantown WV $950,400 

Shenandoah Univ Winchester VA $1,188,000 

Uniy of Massachusettes Medical School Worcester MA $760,816 

Univ of Detroit Mercy Detroit MI $760,320 

Pace Uniy New York NY $1,425,600 

Wayne State University Detroit MI $1,320,000 

Oregon Health & Science University Portland OR $1,283,040 

Michigan State Univ East Lansing MI $1,425,600 

Trustees ofthe Univ of Pennsylvania Philadelphia PA $950,400 

College of St. Scholastica Duluth MN $J,330,560 

Georgia State Univ Research Foundation, Inc. Atlanta GA $831,600 

The University of Michigan-Flint Flint MI $1,425,600 

Univ of Texas Health Science Center at San Antonio San Antonio TX $1,425,600 

Rutgers, The State University Newark NJ $807,840 

University of Miami Miami FL $704,000 

Duke Univ School of Nursing Durham NC $1,276,000 

The Pennsylvania State Univ University Park PA $1,335,840 

Daemen College AMHERST NY $1,425,600 

Medical Univ of South Carolina Charleston SC $1,425,600 

Total, Nurse Practioner Traineeship Grants $31,044,256 
95 

Health Resources and Services Administration 

Prevention Fund Awards 

Nutritionl Physical Activity 

F¥ 2010 Prevention and Public Health Fund 

Health Resources and Services Administration 

Nutrition, Physical Activity, & Screen Time Standards 

Purpose: To identifY content and strategies to assist States and selected Territories, child care providers and early 

educators, as well as families of young children, in preventing childhood obesity. 

Awardees City State Award Amount 

University of Colorado HSC Aurora CO $249,000 

Total, Nutrition, Physical Activity, and Screen Time Stds Grants $249,000 

Other Grant Costs $6,000 

Total, Nutrition, Physical Activity, and Screen Time Stds $255,000 
96 

Health Resources and Services Administration 

Prevention Fund Awards 

Public Health Training Centers 

FY 2010 Prevention and Pnblic Health Fund 

Health Resources and Services Administration 

Public Health Training Centers 

Purpose: To improve the Nation's public health system by strengthening the technical, scientific, managerial, 

and leadership competence of the current and future public health workforce. A public health training center 

plans, develops, operates, and evaluates projects that are in furtherance of the goals established by the 

Secretary in the areas of preventive medicine, health promotion and disease prevention, or improving access 

to and quality of health services in medically underserved communities. 

Organi7.ation Name City State Total 

University of South Florida Tampa FL $650,000 

UMDNJ-School of Public Health New Brunswick NJ $647,654 

The Research Foundation of SUNY Albany NY $649,921 

INDIANA UNIVERSITY Indianapolis IN $129,267 

University of Puerto Rico Medical Sciences Campus San Juan PR $650,000 

University of Kentucky Research Foundation Lexington KY $647,307 

The Regents of the University of California Berkeley CA $649,819 

The University of Georgia Athens GA $630,032 

Arizona Board of Regents Tucson AZ $647,637 

The Univ of Texas Health Science Center at Houston Houston TX $649,801 

Trustees of Boston University, BUMC Boston MA $649,977 

Eastern Virginia Medical School Norfolk VA $488,360 

University of Colorado Denver Aurora CO $649,497 

Trustees of Dartmouth College Hanover NH $618,734 

East Tennessee State Univ Johnson City TN $650,000 

Regents of the University of California, Los Angeles Los Angeles CA $650,000 

Univ of Pittsburgh Pittsburgh PA $649,994 

University of Washington Seattle WA $650,000 

The University of Oklahoma Health Sciences Center Oklahoma City OK $649,750 

Board of Regents of the University of Wisconsin System Madison WI $628,480 

University of South Carolina Columbia SC $650,000 

Emory University Atlanta GA $650,000 

The Regents of the Univ of Michigan Ann Arbor MI $650,000 

Univ of North Carolina at Chapel Hill Chapel Hill NC $643,004 

Total, Public Health Training Centers $14,829,234 
97 

GRANT 

MECHANISM 

Infrastructure 

ELC 

EIP 

ARRA evaluation 

(BRFSSI 

ARRAMedi. 

CPPW 

HIV Lab 

HIVTe.tin. 

HlV PlanDine 

Quitline 

Tobacco Media 

National Strategy 

Health Care 

SurveiUance 

Community Guide 

Workforce 

HHS Centers for Disease Control and Prevention 

FY 2010 Prevention and Public Health Fund Programs 

Funded Program and Purpose 

Public Healtb Infrastrueiure (CDC: 55(} million). Support State, local, and Tribal public health 

infrastructure such as information technology and data systems, workforce training, and regulation 

and ooliev develooment. 

Epidemiology and Laboratory Capacity Grants (CDC': $20 million). Support State and local 

capacity to prevent. detect, and respond to infectious disease outbreaks. 

Communities Putting Prevention to Work (CDC: $44 mUUoD). Award quality, unfunded awards 

to communities and States to implement evidence-based interventions to address tobacco and 

obesity. Support related evaluation and media activities. 

HIV/AIDS (CDC: 530 million). The HHS allocation supports the National HIVIAIDS Strategy by 

investing in HIV/AIDS prevention attivities, including increased testing. 

Tobacco Quitlines (CDC: $5 million). Fund telephone-based tobacco cessation services. 

National Media Campaign on Tobacco Use (CDC: $10 million). Execute a media campaign 

targeting negative health consequences of tobacco use for youth and adults using traditional and 

social media strategies. Traditional (print, TV, radio, billboard) and social media strategies. 

National Prevention Strategy (CDC: $0.1 million). Support CDC's development ofthe National 

Prevention Strategy. 

Health Care Sun-eillance (CDC: $19.9 million). Support the col1cetion of baseline data through 

National Health Interview Survey, the National Ambulatory Medical Care Survey (NAMCS), and 

the National HosDitai Ambulatorv Medical Care Survey iNHAMChlCommunity Preventive Services Task Force (CDC: $S million). Strengthen CDC's Community 

Guide by supporting the Task Force on Community Preventive Services in completing more 

systematic reviews and in increasing and evaluating the recommendations. The Community Guide 

and the Task Force recommendations inform policymakers, practitioners, and other decision makers. 

Public Health Workforce (CDC: $8 millIon). Expand CDC public health workforce programs to 

increase the number of fellows trained and placed in public health positions, 

HHS Office of the Secretary 

Assistant Secretary for Public Affairs; Assistant Secretary for Planning and Evaluation 

Prevention Fund Expenditures 

(WHOLE DOLLARS) 

Total Available [n Appropration Transfer $9,220,000 

Obligation Total in FY 2010 $9,107,056 

Lapse (Unobligated) -$112,944 
98 

FY 2010 Prevention and Public Health Fund Obligations, Office of the Assistant Secretary of Health 

(OASH) 

Categories of Expenditures 

Personnel Compensation 

Personnel Benefits 

Travel 

Contracts 

Cooperative agreement with the Association For 

Prevention Teaching and Research 

Total 

165,931.47 

59,829.65 

13,650.27 

660,000.00 

899,411.39 

925,000.00 

925,000,00 

165,931.47 

59,829.65 

13,650,27 

854,585.01 2,439,585,01 

138,000.00 138,000,00 

992,585.01 2,816,996.40 

• Tobacco Cessation (OASH: $0,9 million). Implement tobacco cessation activities, such as reducing tobacco use 

among low social economic status women of childbearing age, reducing the impact of tobacco use on their 

children, and other outreach efforts. 

• President's Council on Fitness Sports and Nutrition (OASH $.9 million): DASH coordinates all obesity activities. 

Activities include the let's Move Ambassador Program; the President's Active lifestyle Awards Program; the Youth 

Empowerment Program, and support for a leadership Development Series for the Council. 

• Strategic Planning (OPHS: $1 mil/Ion). Supports strategiC planning within the Office of Public Health and 

Science, such as support for the National Prevention, Health Promotion, and Public Health Council and Advisory 

Group in section 4001 of the Affordable Care Act. 
99 

FY 2010 Prevention and Public Health Fund 

Substance Abuse and Mental Health Services Administration 

Primary and Behavioral Health Care Integration (PBHCI) 

Purpose: To improve the overall wellness and physical health status of people with serious mental illnesses by making 

available coordinated primary care services in community mental health and other community-based behavioral 

health settings. 

Awardees City State Award Amount 

Grants 

Alaska Island Community Services Wrangell AK $296,836 

Community Mental Health Affiliates, Inc. New Britain CT $496,863 

Asian Community Mental Health Board Oakland CA $496,863 

County of San Mateo San Mateo CA $496,307 

Glenn County Health Services Agency Willows CA $496,863 

Tarzana Treatment Centers, Inc. Tarzana CA $496,862 

Apalachee Center, Inc. Tallahassee FL $496,863 

Coastal Behavioral Healthcare, Inc. Sarasota FL $496,863 

Community Rehab Center (CRC), Inc. Jacksonville FL $496,862 

Lakeside Behavioral Healthcare, Inc, Orlando FL $448,343 

LifeStream Behavioral Center Leesburg FL $496,862 

Miami Behavioral Health Center, Inc. Miami FL $496,863 

Cobb County Community Services Board Smyrna GA $496,825 

Heritage Behavioral Health Center, Inc. Decator IL $496,863 

Trilogy, Inc. Chicago IL $421,263 

Adult and Child Mental Health Center, Inc. Indianapolis IN $495,189 

Community Health link, Inc. Worcester MA $460,690 

Family Services, Inc. Gaithersburg MD $490,868 

Community Health and Counseling Services Bangor ME $496,820 

Washtenaw Community Health Organization Ypsilanti MI $496,862 

Catholic Charities, Diocese or Trenton Trenton NJ $496,862 

Bronx Lebanon Hospital Center Bronx NY $496,135 

Postgraduate Center for Mental Health New York NY $496,372 

St. Barnabas Hospital Bronx NY $496,863 

Greater Cincinnati Behavioral Health Services Cincinnati OH $492,51 I 

North Oklahoma County Mental Health Center Oklahoma City OK $496,863 

Horizon House, Inc. Philadelphia PA $481,562 

Kent Center for Human and Organizational Development Warwick RI $496,636 

South Carolina Department of Mental Health Columbia SC $471,654 

Austin Travis County MHlMR Center Austin TX $494,900 

Weber Human Services Ogden UT $496,862 

Asian Counseling and Referral Services Seattle WA $496,863 

Downtown Emergency Services Center Seattle WA $482,394 

Prestera Center for Mental Health Services, Inc. Huntington WV $438,513 

Subtotal, PBHCI Grants $16,403,620 

Technical Assistance Contract 

National Council for Community Behavioral Healthcare Washington DC $3,596,380 

Subtotal, PBHCI Technical Assistance Contracts $3,596,380 

Total Primary and Behavioral Health Care Intel!"ration $20,000 000 
100 

FY 2010 Prevention and Public Health Fund 

Agency for Healthcare Research and Quality 

Purpose: U.S. Preventive Services Task Force (USPSTF): Increase evidence reviews of the Task Force; improve the transparency 

and public involvement in the processes of the Task Force; and increase communication support (translation of products and 

outreach) for the Task Force, 

Awardees City 

Contracts State Award Amount 

ABT Associates. Inc. (Specialized Communications for USPSTF) Cambridge MA $4,000,000 

Oregon Evidence-based Practice Center (EPC) for USPSTF Reviews Portland OR $1,010,937 

Total USPSTF 55,010,937 

Purpose: Healthy Weight Practlce·Based Research Networks: Fund practice-based research to identify and test models linking 

clinical and community based prevention to address obesity in practice settings. 

Awardees City 

9!!!!!:!£! 

Colorado Practice-based Research Network (PBRN)- Healthy Weight Denver 

Total, Healthy Wei2ht PBRN 

Health Resources and Services Administration 

Prevention Fund by Object Class Expenditure 

(WHOLE DOLLARS) 

Total Available In Appropration Transfer 

Obligation Total in FY 2010 

Lapse (Unobligated) 

State Award Amount 

CO $489,063 

5489,063 

$270,655,000 

$270,654,469 

-$531 
101 

DHMS/PSC/BAS/n»! 

Park'lawn Building, Room 5C-18 

5600 Fisher:! Lane 

if" 

t:~..uu. 

:::-~toIMcI! 

Rockville 20851 '.; 

11. O&IWRVI'QIU'I)BtJPlWo\o :a. ::::",aDCK. 

~_K1tIIJI.U 

, ot:!1ce of ·tbe Bect1,t'ary-': .:, ~ L:os=------4DHHS/psciw/MH ' 

Office of the Secretary Parklawn Bldg.;' Room SC-16 . 

200 InCkJpen.dehce Ave~ S.W. 5600 Fiahel:a Lane 

~a3.hinljJton DC ,zQ"2Dl' :CkV,i.l1~ 20~5i 

I'ACIUTY .1~.PAVM!M'I'1M.I.1II!!~IW, 

-'-.....,.,~--1 

B;NOWLEDGE .N~, INC •• ·1368146 . FM~,' . . :'", 

. 1<NOW~DGE ~ •. .INC.,,·,' . 1350 

:"'1-~50 If:ILI.OW·,RD·~'l'& 102 '~Jt'~,. 

',CA 

ONLO PARK',!)4025?-516 

"o!'-:.' , , 5liOO FISHERS .~ 

~~'e'~N BUIJli[ING 

~~1~':~~6851 

ax ID Number: 94-3314617 

~UNS Number: 048410489 

For any que~tions 'rs'1.!11rding this contract please f"1 fr e ~ contact: Ke in McGowan 

~t 301.443.0708 or Kevin.McGowan.pl!Ic.bhs.gov. , . 

payment qne.s"tions shall .be referred to the finance offic .!II 301-443-302 • 

Project: Of"tic.r ilIlU Technical POe for this' ordur i • Run er McKay at:202 6':10-6443. 

~pr. Yr.: 2010 CAN: 1999AS9 Object Class; 25106 

Fontinued ..• . 

(UHRflWn. IIJd'orAllM:hAdcIIIon.SIreefI .. ~ 

U, ACCOUtrlI'N3;ANDAI'I'ItOI'ft .... 11ON OAT" 

2010-1999AS9-25106 

;l' .• 
102 

Survey on Long-Term Care Awareness ~nd Planning 

Attached SOW is hereby incorporated in its 

entirety. 

n I.INTi>RlCE 

Vendor quote dated September 29, 2010 is hereby in orpor te by referenc . 

900 PROJECT OFFICER AUTHORITY 

1,474,240.00 

The Project Officer listed above is hereby designa ed to mo itor the per ormance of 

this order on behalf of th~ G~verprnent. The proje t Off ce will p,ravid :00 

supervisory or instructional assistance to Contrac or pe so ne1. The Pr ject 

Officer t s function is primarily to provide the Con racto w th working d tao The 

Project Officer is not empowered to make any cammi trnents n r authorized to make any 

changes which affect prices, terms, or delivery 8.S speci 1e on this ord r. Any such 

proposed ·changes shall be brought to the immediate atten io of the Orde ing Officer 

for action. The acceptance of any change by the ·C:mtrac or without spec fic 

approval and writt·en consent of the ordering Offic r wil b at the Cant actor's own 

risk. 

929 INVOICE INFORMATION/CLAUSES INCORPORATED BY REFER NC 

1. INVOICE INFORMATION 

IN ADDITION TO THE INFORMATION REQUIRED BY 52.232- 5 (PR MP PAYMENT), Y UR INVOICE 

MUST CONTAIN THE FOLLOWING: TAX IDENTIFICATION NUM ER (E PL ¥ER' S IDEMTI ICATION 

NUMBER) OR SOCIAL SECURITY NUMBER. 

2. CLAUSES INCORPORATED BY REFERENCE (FAR 52.252- ) (FEB 19 B) 

Continued ... 

32a. QUANTITY IN CO!.UMN 21 HAS BEEN 

.. RECEIVEO ~ INSPeCTED 

ACCEPTED. AND CONFORMS TO THE CONTRACT. EXCEPT AS 

~ NOTED 

32b. SIGNATURE OF AUTHORIZED OO\IERNMENT REPRESENTATIVE I 32Co OATE 

32 •. MAILING ADDRESS OF AUTHORIZED GOVERNMENT REPRESENTATIVE 

j:M VOUCHER NUMBER 3S. AMOUNT VERIFIED 

LJP"RTLo\L OFIHAL. 

28 SlRACCOUNTNUMSER 3SiI. SIR VOUCHER NUMBER 110. PAID BY 

.. 111 I CERTIFY THIS ACCOUNT IS CORRECT AND PROPER FOR PAYMENT 

.. 1b SIGNATURE AND TmE OF CERTIFYING OFFICER 

32d. PRINTED NAMe AND TITLE OF AUTHORIZED GOVERNMENT REPRESENTAllVE 

32f TELEPHONE NUMBER OF AUTHORIZED GOVERN"-ENT REPRESENT"TIVE 

32g. E·MAIl OF AUTHORIZED GOVERNMeNT REPRESENTATive 

~ PAYMENT 

:::J COMPLETE [...IPARTlAL 

42.1. RECEIVCDBY CPnnIJ 

"2b.RECEIVEOAT~ 

42c. DATE REC"O (Y'f1AMtlXl) 

1

37 CHECK NUMBER 

o FINAL 

142d. TOTAL CONTAINERS 

t1"ANDAROFOIIM t44t(RIY.~MCK 
103 

EFeR£NCE NO. OF oocuMem BEING,CONTINUED 

CONTINUATION SHEET S-lOF-0098W/.HHSP233201000693G 

KNOWLEDGE NETWORKS, INC. 1368146 

IAI 'SUf'PLIES/SERVICEa : QUANTrTY !UNfT i UNIT PRICE AMOUNT 

IB) (el 1(0) (El IF) 

ITHIS CONTRACT II'!'CORPORATES ONE OR MORE CLAUSES BY REf'ERE~CE .. WITH THE SAME FORCE AND 

EFFECT AS IF THEY WERE GIVEN IN' FULL TEXT. UPON REQUEST, TilE CONTRACTING OFFICER 

WILL MAKE THEIR FULL TEXT AVAILABLE. ALSO, THE FULL TEX~ or A CLAUSE MAY BE 

;ACCESSED ELECTRONICALLY AT THIS ADDRESS: HTTPS:/fWWW.ACQUISITION.GOV/FAR 

FEDERAL ACQUISITION REGULATION (48" ~FR CHAPTER 1) CLAUSES 

FAR 52.246-4, Inspection of Services' Fixed Price (AUG 1996) 

IFAR 52.217-8 Option to exte~d s~rvices * 30 days t'~NOV 1999) 

IFAR 52.232-33 PAYMENT BY ELECTRONIC FUNDS TRANSF~R - CE~TRAL CONTRACTOR 

:REGISTRATION (OCT 2003) 

52.224-2 PRIVACY ACT (APR 1984) 

ICLAOSE INCORPO~TED BY·FOLL TEXT (52.212-5) 

:Contract Terms and Condi.tions Required to Implemetit Statutes or E~ecutive QrdeJ;s 

'Commercial Items (Jul 2010) 

(a) The Contractor shall comply with the follow{nlg Federal Acquisition ReguTation 

(FAR) clauses, which are incorporated in this con~ract by reference, to implement 

provisions of law or Executive orders applicable to acquisitions of comm~rcial 

items: 

:(1) 52.222-50, Combating Trafficking in Persons (~eb 200~)) !(22 U.S.C. 71p4 (g». 

[1 Alternate I (Aug 2007) of 52.222-50 (22 U.S.q. 7104~gn. 

'!(2) 52.233-3, Protest After Award (AUG 1996) (31 u.s.c. lJ55~). 

(3) 52.233-4, Applicable Law for Breach of Contraqt Clai~ <PCT 2004) (Pup. L. 

1108-77, 108-78). 

(b) The Contractor shall comply w:Lth the FAR clauses in t:hl.~ paragraph (p) that the 

Contractl.ng Offl.cer has l.ndicated as bel.ng l.ncorporated tn Fhl.s contract by 

I

reference to l.mplement prOV1.81.0nS of law or Executl.ve orHera: appll.cable to 

acqtnSl.tlons of commercial l.tems: 1 

(Contractl.ng Offl.cer check as approprl.ate.] I 

I[] (1) 52.203-6, Restrl.ctions on Subcontractor ~ales t~ the Government (Sept 

12006), w~th Alternate I (Oct 1995) (41 U.S.C. 253~ and lip UrS.C. 2402). 

;[] (2) 52.203-13, Contractor Code of Business E~hics and Conduct (Apr ~010) (pub. 

!L. 110-252, Title VI, Chapter 1 (41 U.S.C. 251 no~e». 

If] (3) S2. 203-15, Whistleblower Protections und~r the tunefican Recoverr and 

jReinvestment Act of 2009 (June 2010) (Section 155~ of Pu~. ~. 111-5). (Applies to 

icontracts funded by the American Recovery and Rei~vestment Act of 2009. II J (4) 52.204-1(), Reporting Executive compensat~on and' First-Tier Subcpntract 

jAwards (Jul 2010) (Pub. L. 109-282) {31 U.S.C. 61ql note 

I[ J (5) 52.204-11, American Recovery and Reinvestlrnent Att-Reporting Regpirements 

!continued 

I 

20 

OPIIONAI.FOAMSM(+88} 

'AA("" 

-~"'" CFR} $3.11C 
104 

20 

NAIfE OF OFFEROR ~ ~CTOR 

KNOWLEDGE NETWORKS, INC. 13 6814 6 

ITEM NO 

(A) 

8UPPL1ES/SEFtVICES 

(B) 

IOUANTlTY UNIT ur.IITF'RICE 

'(e) (D) (E) "'""'" (F) 

'(Jul 2010) (Pub. L. 111-5). 

C 1 (6) 52.217-8 Option to extend services (Nov ~1999) 

[J (7) 52.219-3, Notice of Tota.l HUB Zone Set-A3ide (Jan 1999) (15 U.S.t. 657a) '. 

[J (8) 52.219-4, Notice of Price Evaluation Preference for HUB Zone Small Business 

Concerns (JULY 2005) (if the offeror elects to waive the preference, it shall 5-0 

indicate in its offer) (15 U.S.C. 657a). 

t"] (9) [Res"erved] 

I I (10) (il 52 ;219-6, Notice of Total Small Business Set-Aside (June 2003) (15 

U.S.C. 644.). 

[J (ii) Alternate I (Oct 1995) of 52.219-6. 

[] (iii) Alternate II (Mar 2004) of 52.219-6. 

l) (11) (il 52.219-7, Notice of Partial Small Business: Set-Aside (-Junei 2003) (15 

:U.S.C. 644). . 

I[ J (ii) Alternat@ r (Oct 1995) of 52.219-7. 

[] (iii) Alternat@ II (Mar 2004) of 52.219-7. 

'[ J (12) 52.219-8, utilization of Small Business IConcerits (May 2004) (lp U.S.C. 

637 (d) (2) .nd (3». 

[J (13) (i) 52.219-9. Small Business Subco.ntracting P1oi'n (Apr 2008) (1~ u.s. C.: 

'637 (d) (4) . 

,[-.J (ii) Alternate I (Oct 200U of 52 •. :219-9. 

l.J (iii) Alterna'te II (Oct 2001) of 52.219-9. 

[J (14) 52.219-14. Limitations on Subcontracting (Dec 1996) (IS U.S.C. 

;637(.) (14)). , 

:{ J (15) 52.219-16, Liquidated Damages-Subcontractinq Plan: (Jan 1999) (::1.5 ·U.S.C. 

637 (d) (4) (F) (i)) • , 

r J (l6) (i) 52.219-23, Notice of Price Evaluatiqn Adjustment for Small: 

Disadvantaged Business Concerns (OCT 2008) (10 U.~.C. 2323)· (if the offe~or elects 

'to waive the adjustment, it shall so indicate in its off~r) I. 

[] (ii) Alternate I (June 2003) of 52.219-23. 

i[] (17) 52.219-25, Small Disadvantaged Business :Partic~pat-ion 

lProgram-Disadvantaged Status and Reporting (Apr 20,08) (P~" 1. 103-355, section 

:7102, and 10 U.S.C. 2323). 

i[] (18) 52.219-26, Small Disadvantaged Business :partic~pat.ion Program- Incentive 

ISubcontractinq (Oct 2000) (Pllb. L. 103-355, secti~n 7102; and 10 U.S.C. 2323). 

[] (19) 52.219-27 r Notice of Total service-Disapled vet:errn-Owned Smal~ Business 

I~e~-A~~~~ (~~~2~~~~~' (~~s~· !~:~d 6~:~~. Business Pr,ogram Rep~egentation (Apr 2009) 

(15 U.S.C. 632(a) (2)). 

,[Xl (21) 52.222-3, Convict Labor (June 2003) (£,0. 11755~. 

I[X] (22) 52.222-19, Child Labor-Cooperation with 'Authoriti~s and Remedi~5 (Jul 

!2010) (E.O. 13126). 

~[XJ (23) 52.222-21, Prohibition of segregated Faqilitie$ (Feb 19991. 

[Xl (24) 52.222-26, Equal Opportunity (Mar 2001) i{E.O • .!12~6). 

i[ 1 (25) 52.222-35, Equal Opportunity for SpeciJa1 Dis.bl~d Veteran.3, iVeterans of 

,the Vietnam Era, and Other Eligible veterans (Sep~ 2006) (3~ U.S.C. 4212p. 

j[ J (26) 52.222-36, Affirmative Action for WorkeJs with Dil:iabilities (Jfn 1998) (29 

!u.s.C. 793). I 

!Continued ••. 

OPTIONAL I"ORM W(....s) 

SIIQIIIOI"IICIIlyOM 

FARf4&CFR)53.1tO 
105 

PAGI!. 

5' 20 

NAMEOF OI'fERMM CoNrRACTOf'l 

KNOWLEDGE NETWORKS, INC. 1368146 

ITEI.INo. 

(A) 

SUPf'lIESlSERVlCES CUANTITY UNIT, UNIT PRICF ~"."" (S) (e) (D)! (E) (F) 

[1 (27) 52.222-37, Employment Reports on Special Disabled! Veterans, Vet:erans of 

the Vietnam Era, and Other Eligible Veterans (Sept 2006) (3~ U.S.C. 4212.). 

[] (28) 52.222-54, Employment Eligib~lity Verification (J):\N 2009). (Executive 

.Order 12989). (Not applicable to the acquisition of commerc~ally available 

off-the-shelf itema or certain other types· of commercial items as prescribed in 

22.1803.) , 

r·J (29) (i) 52.·223-9, Estimate of Percentage of Recovered: Material Content for 

EPA?Designated Items (May 200B) (42 U.S.C. 6962 (c):{3) (A) (ii)). (Not appl,icable to 

the· acquisition of corrunercially available .off-the-shelf tte~s.) 

[J (ii) Alternat.e I (May 200B) of 52.223-9 (42 U.S.C. ~962(i) (2) (C)). (Not 

·applicable to the acquisition of commercially available off-the-shelf items.) 

["] (30) 52.223-15, Energy Efficiency in Energy-consuming Products (DgC· 2007) (42 

U.S.C. 8259b). 

[) (31) (i) 52.223-16, IE:EE 1680 Standard for the Environtnental Assessment of 

Personal Computer Products (DEC 2007) (E.O. 13423). 

[1 (ii) Alternate I (DEC 2007) of 52.223-16. 

I J (32) 52.225-1, BUy American Act-Supplies (Feb 2009) (4j1. U.S.C. 10a-~Od). 

[) (33) (il 52.22~-3" 8uy Amer.ican .Act-Fre~ Tract.e Agre~me~ts-Israeli Tirade Act 

~~~~e n!~:~) p~~~ ~.:.s ~~~-~~~-~~~~7!~ ~~:~~~6~j.~~8~~~;: i~9r~~t\0!=~!97°~;;-!:3~':~~'. 110·-138).'· " 

:[!)1 (ii) Alternate I (Jan 2004) of 52.225-3~ 

(iii) Alternate II (Jan 2004) of 52.225-3. 

[J (34) 52.225-5, Trade Agreements (AUG 2009) (19 u.S.t. 2501. et seq.', 19 U.S.C. 

·3301 note). 

:[xj (35) 52.225-13, Restrictions on Certain Foreign Purchases (June 200,~) (E.C.?s, 

proclamations, and statutes administered by the Office of F'breign Assetsl Control of 

the Department of the Treasury). : 

.[ J (36) 52.226-4, Notice of Disaster or Emergency Area' Set-Aside (Nov:2007) (42 

p.S.c. 5150). . : 

:r] (37) 52.226-5, Restrictions on Subcontracting Outsiiie T:lisaster or Emergency 

Area (Nov 2007) (42 U.S.C. 5150). " ' 

:[] (38) 52.232-29, Terms for Financing of Purchases of· CO¥mtercial Item~ (Feb 2002) 

1(41 U.S.c. 255(£), 10 U.S.C. 2307(f». ' 

(J (39) 52.232-30, Installment Payments for C0lllI'l1erCial Items (Oct 1995'1) (41 U.S.C. 

:~~~ (f~~O~O 5~ :~;~~3~~O;~~~~t by Electronic Funds iransfe+"-central contrabtor , . I 

iRegistration (Oct 2003) (31 U.S.C. 3332). i .[ 1 (41) 52.232-34, Payment by Electronic Funds 'Uransfer-Oj:her than Cenitral 

!Contractor Registration (May 1999) (31 U.S.C. 333~). : 

I

[) (42) 52.232-36, Payment by Third Party (Feb 2010) (31 p.S.c. 3332).: 

,[] (43) 52.239-1, Privacy or Security SafeguardS (Aug f99~) (5 U.S.C. !S52a). 

i[ J (44) (i) 52.247-64, Preference for privately I,Owned V.SL-F1ag conunerpial Vessels 

!(Feb 2006) (46 U.S.C. Appx. 124l(b) and 10 U.S.C. 12631 ). ' 

~[J (ii) Alternate I (Apr 2003) of 52.247-64. : : 

(c) The Contractor shall comply with the FAR clau~es in thii3 paragraph (pl, 

applicable to commercial services, that the Contr~cting (lfflLcer has indirated as 

continued ... I i 

! 

OPTIOHALFORM33fI(4-Oel 

tIpansoNdIlVGSA 

fAR:(<IICFRj53..no 
106 

PAGE,·, OF, 

"6 20 

NAME 0.- OFFEROR: OR CONTAACToR 

KNOWLEDGE NETWORKS, INC. 1368146 

IfEMNO 

(AI 

SUPPLIEiSlRAViCES QUANTITY. UNIT UNIT P~E ~oo~ 

(BI (e) '(D) (E) (F) 

;being incorporated in this cont,ract by reference to impl~meht provisions of law or 

Executive orders applicable to acquis'itions of cOIT\Illercial items: 

:rContraeting Officer check .as appropriate. J 

!( J (1) 52.222-41, Service Contract Act of 19-65 (Nov 2007) (41 U.S.C. 351, et 

"seq. j. 

[1 (2) 52.222-42, statement of Equivalent RateB for Fe(:leral Hires (May 1989) (29 

,U.S.C. 206 and 41 U.S.C .. 351, et seq.). 

'if ) (3) 52.222-43, Fair Labor Standards Act and Service COlltract Act-Price 

rdjU5tmsnt (Multiple Year and Option Contracts) "(s:ep 2009) '(29 U.S.C. 20.6 and 41 . 

:U.S.C. 351, et seq.). 

I[] (4) 52.222-44, Fair Labor Standards Act and Service Contract Act-Price 

lAdjustment (Sep 2009) (29 U.S.C. 206 and 41 U.S.C.~ 351, et seq.). 

I

[ 1 (5) 52.222-51, Exemption from Application of !the se*,vihe Contract Act to 

Contracts for Maintenance, Calibration, or Repair !of Certain Equipment-Rlequirements 

:(NOV 2007) (41 351, et seq.) ~ I 

jr] (6) 52.222-53, Exemption from Application of :the setvice Contrac.t A~t to 

,Contracts for Certain ser~ice.s-Requirements (Feb 2:009) (41 ~.S.C. 351, e~ s~q~). 

II ) (7) 52.226-6, Promotlng Excess Food Donation Ito Nonprofit Organizations (Mar 

12009) (Pub. L. 110-247). 

'[] (8)- 52.237-11', Accepting and Dispensing of .s].Coin (Sept 2008.) (31 U.S·.C'; 

iS112(p) (1»). ., '. 

: (d) Comptroller General Examination of Record. The Cont+actor shall comply with the 

Iprovisions of this paragraph (d) if this contract ~as aw.rd~d using othe;r than 

fsealed hid, is in exees::; of the simplified acquis~tion tnreShold, and does not 

:contain the clause at 52.215-2, Audit and RecordS~Negotiatibn. 

(1) The Comptroller General of the United States, lor an authorized repre~entative of 

'the Comptroller General, shall have access to and ,right to ~xamine any of the 

,Contractor?s dir.ectly pertinent records involving itransa~tions related tp this 

Icon tract . . 

(2) The Contractor shall make available at its offices at all reasonable' times, the 

I

recordS, materials, and other evidence for examination, audit, or reproduction, 

until 3 years after final payment under this cont~act or, for any shorter, period 

I

specified in FAR Subpart 4.7, Co~tractor Records ~etention,. of ~he other! clau5es of 

this contract. If this contract lS completely or ~qrtially terml.nated, the records 

relating to the work terminated shall be made ava~lable for 3 years atte~ any 

Iresulting final termination settlement. R~cord5 r~lating' to: I 

!ap~e~ls under the dispute5 clause or to lltigatio~ or th~ s~ttlement of ~laims 

iarlSl.ng under or relating to this contract shall ~e made: av~ilab1e until! such 

jappealS, litigation, or claims are finally resolV€id.' ' 

1

(3) As us~d in this clause, records include bOOkS,;, docum~. nt~, accounting:, procedures 

and pract~ces, and other data, reg<:lrdless of type land re9ar~iless of form'. This does 

inot require the Contractor to create or maintain ~y rec4>rd:, that the Con:tractor does 

i

not maintain in the ordinary course of business o~ pursu~nt! to a provisipn of law. 

I(e) (1) Notwithstanding the requirements of the cl~uses in pj:lragraphs (ah (b), (e), 

land (d) of this clause, the Contractor is not req~ired t~ ftOW down any rA~ clause, 

:other than those in this paragraph (e) (1) in a su~contra?t for commercia~ l.tems. 

l

onless otherwise indicated below, the extent of t~e flow down shall be as required 

Continued .•• 

OPTIOHo\L~W(4-III) -" FAR (-48 CFR) ... 5S.110 
107 

SECTION A: STATEMENT OF WORK 

1.0 TITLE 

Survey on Long-Term Care Awareness and Planning 

1.1 PURPOSE 

The purpose is to collect questionnaire responses from a sample of the American 

public about their attitudes, experiences, opinions and actions related to long-term 

care services. This will be accomplished by using Knowledge Networks’ nationwide 

online panel (KnowledgePanel) as a platform for fielding interactive chats, online 

town hall meetings, and an online questionnaire. This is one of three inter-related 
108 

task orders intended to assist in the implementation of provisions of the Affordable 

Care Act (ACA) related to long-term care financing and awareness. Development of 

the questionnaire, and the OMB clearance package, and analysis of the data will 

be completed by two other contractors through related task orders. 

1.2 BACKGROUND 

Successful implementation of the new ACA provisions will require a well-developed understanding of how the American public assesses their possible future need 

for long-term care. The ACA includes the development of a new voluntary insurance 

program for long-term care as well as a national awareness campaign. In order to 

obtain sufficient enrollment in the new insurance program, consumer preferences 

will need to be understood and to some extent accommodated. Results from these 

task orders will be used to develop educational and marketing materials as well as 

to inform the design of the insurance program. 

Knowledge Networks has been selected for the project based on their national, 

probability-based survey panel. The panel was constructed using dual-frame sample 

recruitment that includes both random digit dialing and address-based sampling. 

Knowledge Networks panel provides a statistically valid representation of the American public and includes many difficult to reach populations. 

Using Knowledge Networks is a less costly method for obtaining consumer input 

than other survey methods. This method has several advantages for this particular 

data collection effort as follows: 

• all responses are gathered on-line, reducing both administrative costs and the 

amount of time necessary to collect the data; 

• respondents that do not have computers or internet access are provided these 

as a part of their participation agreement; 

• using a proprietary panel (that uses address and phone-based sampling) avoids 

the problem of reaching the increasing share of the population without a telephone land line; and, 

• extensive demographic and socio-economic data have already been collected on 

the entire sample allowing questionnaires to focus solely on areas of interest. 

In addition, Knowledge Network offers the opportunity to gather consumer input 

in a variety of forms including small interactive chats that resemble focus groups, 

online town hall meetings and questionnaire responses from a national sample of 

adults. The use of a variety of methods to collect consumer input through one contract vehicle allows for a more effective and flexible collection of data that can 

change as conditions or requirements change. 

The contractor for this project must be willing to coordinate with the contractors 

selected for the task orders entitled ‘‘Development of a Survey on Long-Term Care 

Awareness and Planning’’ and ‘‘Development and Testing of Long-Term Care Awareness Materials.’’ It is anticipated that each of the three contractors will designate 

a liaison that will be responsible for coordinating with the other contractors. 

1.3 SPECIFIC TASKS 

Task 1.0 Post-Award Logistics 

Subtask 1.1: Post-Award Meeting 

Within two (2) weeks of award, staff from Knowledge NetWorks and other relevant staff (including the liaisons for the other task orders) shall meet with the 

ASPE task order officers to discuss the objectives of the contract and any related 

project issues. The Government anticipates a joint post-award meeting for all three 

task orders. Specific topics to be discussed include, but are not limited to: the objectives of the project, major deliverables, work schedule, questionnaire testing, and 

contract coordination. 

Subtask 1.2: Work Plan 

Knowledge Networks shall develop a work plan that will guide the activities of 

the project. The work plan, which will reflect the results of the post-award meeting 

(Sub-task 1.1), will serve as a blueprint for their approach to carrying out project 

activities and specific timelines for the project tasks. The draft work plan will include a process for communicating with the other task order liaisons. The draft 

work plan shall be submitted to the task order officers for review two (2) weeks 

after the post-award meeting. The work plan shall be considered final upon approval 

of the task order officers. 
109 

Task 2.0 Interactive Chats 

Knowledge Networks shall convene three sets of interactive chats featuring moderated on-line discussions and manage all logistics and chat technologies. Each chat 

will feature informal, moderated, online discussions during which consumers will be 

offered the opportunity to respond to prototype educational/marketing materials. 

The number of chats will be determined as a result of work on a preliminary market 

segmentation framework completed under a separate task order. For budget purposes, the contractor should assume three (3) sets of chats. Each set will consist of 

chats with three (3) distinct groups, each with no more than nine (9) participants 

for a grand total of nine (9) chats with 81 total participants. Respondents will be 

selected based on the preliminary market segmentation framework. The task order 

officers will approve the final selection of the chat participants within each market 

segment as described in the framework. 

Knowledge Networks shall provide prototype awareness materials (also developed 

in a separate contract) to each participant. The materials will be the subject of a 

facilitated discussion that allows each chat participant to offer their own written 

and/or verbal comments and see the written and/or verbal responses of other participants. Participants will be asked to comment on any aspect of the materials. Knowledge Networks will provide a technical moderator for the chat. A content moderator 

representing another ASPE contractor shall moderate the sessions and stimulate 

conversation as necessary. Knowledge Networks shall keep a record of the comments offered during the sessions. Knowledge Networks shall also provide technical 

assistance to the task order officers to help facilitate the interactive chats in an online fashion. The timing of the chats is as follows: 

Sub-Task 2.1: First Set 

Knowledge Networks, in conjunction with the ASPE task order officers, will determine the timing of the first set of interactive chats. The government anticipates it 

will take place no more than thirty-six (36) weeks from contract award. A record 

of the online session shall be provided to the task order officers no later than 2 

weeks after completion of the chat. 

Sub-Task 2.2: Second Set 

Knowledge Networks, in conjunction with the ASPE task order officers, will determine the timing of the second set of interactive chats. The government anticipates 

it will take place no more than forty-two (42) weeks from contract award. A record 

of the online session shall be provided to the task order officers no later than 2 

weeks after completion of the chat. 

Sub-Task 2.3: Third Set 

Knowledge Networks, in conjunction with the ASPE task order officers, will determine the timing of the third set of interactive chats. The government anticipates 

it will take place no more than forty-eight (48) weeks from contract award. A record 

of the online session shall be provided to the task order officers no later than 2 

weeks after completion of the chat. 

Task 3.0 Online Town Hall Meetings 

Knowledge Networks shall convene six online town hall meetings. The town hall 

meetings will feature a presentation by a moderator (provided through a separate 

contract) followed by informal discussions and instant polling of participants. 

Participants will be offered the opportunity to respond to prototype educational/ 

marketing materials, to raise questions and to offer responses to instant polls. Each 

town hall meeting will consist of no more than 100 participants. Respondents will 

be selected based on the preliminary market segmentation framework. The task 

order officers will work with Knowledge Networks to align the selection of the participants with each market segment. Knowledge Networks shall provide a technical 

moderator to manage all technical aspects of the meetings. Knowledge Networks 

shall provide prototype awareness materials (provided by the task order officers) to 

each meeting participant. 

The government anticipates that the online town hall meetings shall be convened 

between 50–70 weeks after award of the contract. The task order officers shall work 

with Knowledge Networks on the scheduling of the meetings. A record of the town 

hall meetings shall be provided to the task order officers no later than 2 weeks after 

completion of each meeting. 

Task 4.0 Attitudes and Opinions Questionnaire 
110 

Sub-Task 4.1: Pretest 

Knowledge Networks shall arrange for a questionnaire pretest with no more than 

25 cases. This pretest will allow for examining questionnaire length, possible coding 

or respondent answering problems and for testing response data delivery. Data from 

the pretest shall be provided to the government. The pretest shall be completed no 

later than sixty (60) weeks after contract award. 

Sub-Task 4.2: Data Collection 

Knowledge Networks shall invite panel participants between the ages of 40 and 

70 to respond to the questionnaire. The sample shall be large enough to obtain 

18,000 responses. The government anticipates that the questionnaire will take 40 

minutes to complete. Knowledge Networks will inform the task order officers of any 

problems that arise during data collection. Collection of data shall occur within 

eighty (80) weeks after contract award. 

Sub-Task 4.3: Data Delivery 

Questionnaire response data shall be provided to the task order officers and the 

ASPE contractor no later than eighty-four (84) weeks after contract award. These 

files should at least be delivered as flat ASCII files and preferably as SAS data files. 

Task 5.0 Evaluation Processes Memo 

Knowledge Networks shall provide a short memo that discusses the administration of the interactive discussions and questionnaire in the above tasks (Tasks 2– 

4). The purpose of the memo is to describe issues or problems that should be taken 

into consideration when analyzing the data. Of particular concern are issues that 

arose in the testing of consumer materials. Knowledge Networks shall note any 

logistical problems or other limitations in the data to be used for this purpose. The 

memo shall be delivered to the ASPE task order officers within eighty-four (84) 

weeks of contract award. 

2.0 PERIOD OF PERFORMANCE/DELIVERABLES 

2.1 PERIOD OF PERFORMANCE 

The period of performance shall be 86 weeks from the date of award. 

2.2 PLACE OF PERFORMANCE 

All work performed under this task order shall be accomplished at the Contractor’s facility. 

2.3 DELIVERABLE SCHEDULE 

The Contractor shall deliver the following items in accordance with the schedule 

set forth below: 

Task Deliverable Date Due # of Copies to TOO 

Task 1 ....................... Post-Award Logistics 

1: Post-Award Meeting .............

1.2: Work Plan ..........................

Week 2.

Week 4 ............................

1 electronically 

1 electronically 

Task 2 ....................... Interactive Chats 

2.1: First Set ............................

2.2: Second Set ........................

2.3: Third Set ...........................

Week 36.

Week 42 ..........................

Week 48 ..........................

1 electronically 

1 electronically 

1 electronically 

Task 3 ....................... Town Hall Meetings ...................... Weeks 50–70 .................. 1 electronically 

Task 4 ....................... Survey of Attitudes and Opinions 

4.1: Pretest ...............................

4.2: Data Collection .................

4.3: Data Delivery .....................

Week 60.

Week 80 ..........................

Week 84 ...........................

1 electronically 

1 electronically 

1 electronically 

Task 5 ....................... Evaluation Processes Memo ......... Weeks 86 ......................... 1 electronically 
111 

2.4 PERFORMANCE REQUIREMENTS 

The Performance Requirements Summary (PRS) below lists requirements that the 

Government will evaluate. The absence of any task order requirement from the PRS 

shall not detract from its enforceability nor limit the rights or remedies of the Government under any other provision of the task order, including the clauses entitled 

‘‘Inspection of Services’’ and ‘‘Default.’’ 

Required Services/ Tasks Performance Standards Method of Surveillance 

(Quality of Assurance) 

Standard to be Met/ 

Allowable Deviation Deduction 

Customer satisfaction.Contractor adheres to 

guidance provided 

by task order, officer.

Task order officer will 

work closely with 

contractor.

Contractor provides 

consumer response 

data to task order 

officers in a timely 

fashion.

Up to 2 percent of 

fixed fee. 

Task 3—CenterActive Chats.Contractor successfully 

recruits sufficient 

number of participants for inter-active chats and ensures smooth operation of communication technology.

Task order officers will 

participate in all 

chats.

Each chat must have 

at least nine participants. Operation of 

technology must not 

present an obstacle 

to obtaining consumer input.

Up to 1 percent of 

fixed fee. 

Task 4—Town 

Hall Meetings.

Contractor will recruit 

sufficient number of 

participants for each 

town hall meeting 

and ensure smooth 

operation of communication technology.

Task order officer will 

participate in each 

town hall meeting.

Each town hall meeting 

should have at least 

80 participants. Operation of communications technology 

must not present an 

obstacle to obtaining 

consumer input.

Up to 2 percent of 

fixed fee. 

Task 5—Questionnaire.Contractor will recruit a 

sufficient sample of 

panel members to 

obtain desired number of questionnaire 

responses and data 

is submitted in a 

timely fashion.

Task order officers will 

work closely with 

contractor.

Questionnaire response 

data should be provided to the task 

order officers not 

later than 3 weeks 

after questionnaire 

responses have been 

submitted.

Up to 2 percent of 

fixed fee. 

3.0 GOVERNMENT FURNISHED PROPERTY/INFORMATION 

3.1 GOVERNMENT FURNISHED PROPERTY/INFORMATION 

The government will provide: 

• prototype educational/marketing materials to be tested; and, 

• an OMB approved questionnaire 

4.0 TASK ORDER ADMINISTRATION DATA 

4.1 AUTHORIZATION OF GOVERNMENT PERSONNEL 

Notwithstanding the Contractor’s responsibility for total management during the 

performance of this task order, the administration of the Task order will require 

maximum coordination between the Government and the Contractor. The following 

individuals will be the Government’s points of contact during the performance of 

this task order: 

1. Contract Specialist 

All order administration shall be performed by: 

Kevin McGowan 

Contract Specialist 

Division of Acquisition Management 

Parklawn Building, Room 5–101 
112 

5600 Fishers Lane 

Rockville, MD 20857 

(301) 443–0708 

Kevin.McGowan@psc.hhs.gov 

2. Contracting Officer 

The PSC Contracting Officer is the only individual authorized to modify this 

order. The Contracting Officer responsible for administrative and contractual issues 

concerning this task order is: 

(To be determined upon award.) 

3. Contracting Officers’ Technical Representative Appointment 

and Authority 

The name and address of the COTR assigned to this project is: 

(To be determined upon award.) 

(a) Performance of work under this task order must be subject to the technical 

direction of the Contracting Officers’ Technical Representative identified above, or 

a representative designated in writing. The term ‘‘technical direction’’ includes, 

without limitation, direction to the contractor that directs or redirects the labor effort, shifts the work between work areas or locations, fills in details and otherwise 

serves to ensure that tasks outlined in the work statement are accomplished satisfactorily. 

(b) Technical direction must be within the scope of the specification(s)/work statement. 

The Contracting Officers’ Technical Representative does not have authority to 

issue technical direction that: 

(1) Constitutes a change of assignment or additional work outside the specification(s)/statement of work; 

(2) Constitutes a change as defined in the clause entitled ‘‘Changes’’; 

(3) In any manner causes an increase or decrease in the task order price, or the 

time required for task order performance; 

(4) Changes any of the terms, conditions, or specification(s)/work statement of the 

task order; 

(5) Interferes with the Contractor’s right to perform under the terms and conditions of the task order; or 

(6) Directs, supervises or otherwise controls the actions of the contractor’s employees. 

(c) Technical direction may be oral or in writing. The Contracting Officers’ Technical Representative shall confirm oral direction in writing within 5 work days, with 

a copy to the Contracting Officer. 

(d) The contractor shall proceed promptly with performance resulting from the 

technical direction issued by the Contracting Officers’ Technical Representative. If, 

in the opinion of the contractor, any direction of the Contracting Officers’ Technical 

Representative, or his/her designee, falls within the limitations in (c), above, the 

contractor shall immediately notify the Contracting Officer no later than the beginning of the next Government work day. 

(e) Failure of the contractor and the Contracting Officer to agree that technical 

direction is within the scope of the task order shall be subject to the terms of the 

clause entitled ‘‘Disputes.’’ 

4.2 HHSAR 352.242–70 KEY PERSONNEL (JAN 2006) 

The key personnel specified in this task order are considered to be essential to 

work performance. At least 30 days prior to diverting any of the specified individuals to other programs or contracts (or as soon as possible, if an individual must 

be replaced, for example, as a result of leaving the employ of the Contractor), the 

Contractor shall notify the Contracting Officer and shall submit comprehensive justification for the diversion or replacement request (including proposed substitutions 

for key personnel) to permit evaluation by the Government of the impact on performance under this task order. The Contractor shall not divert or otherwise replace 

any key personnel without the written consent of the Contracting Officer. The Government may modify the task order to add or delete key personnel at the request 

of the Contractor or Government. 

(End of clause) 

The individuals cited below are key personnel: 
113 

NamelllllllTitle 

(To be entered upon award.) 

4.3 INVOICE SUBMISSION 

1. The Contractor shall submit one original monthly invoice complete with all required back-up documentation to the Contract Specialist, Kevin McGowan, at 

Kevin.McGowan@psc.hhs.gov or sent by U.S. mail and addressed as follows: 

DHHS/Program Support Center 

Division of Acquisition Management 

Attn: Matthew Gormley 

Parklawn Building, Room 5–101 

Rockville, MD 20857 

One complete copy of each invoice with backup documentation shall be emailed 

to the COTR. 

Three hard copies of all invoices with all required back-up documentation shall 

be sent directly to the Finance Office for payment or an electronic copy of all invoices with all back-up documentation may be e-mailed to 

psclinvoices@psc.hhs.gov. It is the responsibility of the Contractor to verity that the 

Finance Office has received their invoice. Calls concerning contract payment shall 

be directed to the general help-line number on (301) 443–6766. The address for the 

Finance Office responsible for payment is: 

DHHS/Program Support Center 

Financial Management Services/DFO 

Commercial Payments Section 

Parklawn Building, Room 16A–12 

5600 Fishers Lane 

Rockville, MD 20857 

Telephone Number: 301–443–6766 

2. The Contractor agrees to include the following information on its invoice: 

a. Contractor’s name, invoice number and date; 

b. Contract Number and Task Order Number; 

c. Employee name and title (labor category); the loaded hourly rate; number of 

hours used during the month; number of hours remaining for the task order period; 

dollar amount billed for the month; cumulative dollar amount billed to date for the 

task order period; the balance remaining for the task order period; 

d. Payment terms; 

e. Tax identification number; 

f. Signature of an authorized official certifying the voucher to be correct and proper for payment; 

g. Contractor’s complete remittance or check mailing address; and 

h. COTR’s name and telephone number. 

5.0 OBSERVANCE OF FEDERAL HOLIDAYS 

No services or deliveries shall be performed on Federal property on Saturdays, 

Sundays or Federal legal holidays as shown below: 

Government holidays are: 

1 New Year’s Day—January 1st 

2. Martin Luther King’s Birthday—Third Monday in January 

3. President’s Day—Third Monday in February 

4. Memorial Day—Last Monday in May 

5. Independence Day—July 4th 

6. Labor Day—First Monday in September 

7. Columbus Day—Second Monday in October 

8. Veteran’s Day—November 11th 

9. Thanksgiving Day—Fourth Thursday in November 

10. Christmas Day—December 25th 

6.0 TASK ORDER TYPE 

The Government anticipates award of a Firm Fixed Price Task Order. 

Note: Cancellation costs will not be incorporated into this Non-Severable Task 

Order. 
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7.0 SPECIAL TASK ORDER REQUIREMENTS 

7.1 HHS Section 508 Accessibility Standards Notice (September 2009) 

Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d) requires Federal 

agencies to purchase electronic and information technologies (EIT) that meet specific 

accessibility standards. This law helps to ensure that Federal employees with disabilities have access to, and use of, the information and data they need to do their 

jobs. Furthermore, this law ensures that members of the public with disabilities 

have the ability to access government information and services. 

There are three regulations addressing the requirements detailed in Section 508. 

The Section 508 technical and functional standards are codified at 36 CFR Part 

1194 and may be accessed through the Access Board’s Web site at http:// 

www.access-board.gov. The second regulation issued to implement Section 508 is the 

Federal Acquisition Regulation (FAR). FAR Part 39.2 requires that agency acquisitions of Electronic and Information Technology (EIT) comply with the Access Board’s 

standards. The entire FAR is found at Chapter 1 of the Code of Federal Register 

(CFR) Title 48, located at http://www.acquisition.gov. The FAR rule implementing 

Section 508 can be found at http://www.section508.gov. The third applicable regulation is the HHS Acquisition Regulation (HHSAR). 

Regardless of format, all Web content or communications materials produced for 

publication on or delivery via HHS Web sites—including text, audio or video—must 

conform to applicable Section 508 standards to allow Federal employees and members of the public with disabilities to access information that is comparable to information provided to persons without disabilities. All contractors (including subcontractors) or consultants responsible for preparing or posting content intended for 

use on an HHS-funded or HHS-managed Web site must comply with applicable Section 508 accessibility standards, and where applicable, those set forth in the referenced policy or standards documents below. Remediation of any materials that do 

not comply with the applicable provisions of 36 CFR Part 1194 as set forth in the 

SOW or PWS, shall be the responsibility of the contractor or consultant retained to 

produce the Web-suitable content or communications material. 

The following Section 508 provisions apply to the content or communications material identified in this SOW—PWS: Access Board Final Rule 36 CFR Part 

1194.22(a)–(p). 

7.2 Requirements Regarding Permission to Disclose or Publish Findings 

Prior to Delivery Order End Date 

The contractor and any consultants or subcontractors agree not to release or disclose, verbally or in writing, information pertaining to the results or findings of 

work (including data collection, analyses, draft or final papers and reports) for the 

period of this delivery order without obtaining prior written approval of the Task 

Order Officer. The contractor must request approval in advance (minimum 21 days 

prior to release) and in writing, specifying: who or what is generating the request 

for advance information; when and how project results/information will be released; 

and what information would be released. Failure to receive response from the Task 

Order Officer does not constitute approval for releasing information. 

7.3 Food And Beverage—Unallowable Costs 

Food and beverage costs, unless part of per diem expenses paid in accordance with 

the Federal Travel Regulations, are unallowable costs to this task order. 

7.4 Contractor Performance Evaluation 

During the life of this order, the Contractor’s performance will be evaluated on 

an interim and final basis pursuant to FAR Subpart 42.15. The evaluation will be 

conducted utilizing the National Institutes of Health Contractor Performance System (CPS). The Contractor shall register in the CPS. The CPS may be accessed by 

the Contractor at https://cpsContractor.nih.gov. 

7.5 Travel 

The Contractor will be reimbursed for travel to provide support at a Government 

site or other site as may be specified and approved by the COTR under this effort. 

All travel shall be approved, by the COTR, prior to commencement of travel. The 

contractor shall be reimbursed for actual allowable, allocable, and reasonable travel 

costs incurred during performance of this effort in accordance with the Federal 

Travel Regulations in effect on date of travel. 

The Contractor shall provide supporting documentation and a detailed breakdown 

of incurred travel costs with each invoice. 
115 

8.0 CONTRACT CLAUSES/PROVISIONS 

In addition to applicable terms and conditions of the Offeror’s GSA MOBIS contract, the following Federal Acquisition Regulation and Health & Human Services 

Acquisition Regulation Provisions/Clauses apply to this acquisition: 

HHSAR 352.239–73 Electronic Information Technology Accessibility 

(Oct 2009) 

(a) Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d), as amended 

by the Workforce Investment Act of 1998, and the Architectural and Transportation 

Barriers Compliance Board Electronic and Information (EIT) Accessibility Standards (36 CFR Part 1194), require that, unless an exception applies, all EIT products 

and services developed, acquired, maintained, or used by any Federal department 

or agency permit— 

(1) Federal employees with disabilities to have access to and use information and 

data that is comparable to the access and use of information and data by Federal 

employees who are not individuals with disabilities; and 

(2) Members of the public with disabilities seeking information or services from 

a Federal agency to have access to and use of information and data that is comparable to the access and use of information and data by members of the public who 

are not individuals with disabilities. 

(b) Accordingly, any vendor submitting a proposal/quotation/bid in response to this 

solicitation must demonstrate compliance with the established EIT accessibility 

standards. Information about Section 508 is available at www.section508.gov. The 

complete text of Section 508 Final Provisions can be accessed at www.access- board.gov/sec508/provisions. (c) The Section 508 accessibility standards applicable to this solicitation are identified in the Statement of Work/Specification/Performance Work Statement. In order 

to facilitate the Government’s evaluation to determine whether EIT products and 

services proposed meet applicable Section 508 accessibility standards, offerors must 

prepare an HHS Section 508 Product Assessment Template, in accordance with its 

completion instructions, and provide a binding statement of conformance. The purpose of the template is to assist HHS acquisition and program officials in determining that EIT products and services proposed support applicable Section 508 accessibility standards. The template allows vendors or developers to self-evaluate 

their products or services and document in detail how they do or do not conform 

to a specific Section 508 accessibility standard. Instructions for preparing the HHS 

Section 508 Evaluation Template may be found under Section 508 policy on the 

HHS Office on Disability Web site www.hhs.gov/od. 

(d) Respondents to this solicitation must also provide any additional detailed information necessary for determining applicable Section 508 accessibility standards 

conformance, as well as for documenting EIT products or services that are incidental 

to the project, which would constitute an exception to Section 508 requirements. If 

a vendor claims its products or services, including EIT deliverables such as electronic documents and reports, meet applicable Section 508 accessibility standards in 

its completed HHS Section 508 Product Assessment Template, and it is later determined by the Government—i.e., after award of a contract/order; that products or 

services delivered do not conform to the described accessibility standards in the 

Product Assessment Template, remediation of the products or services to the level 

of conformance specified in the vendor’s Product Assessment Template will be the 

responsibility of the Contractor and at its expense. (end of provision) 

FAR 52.252–2 Clauses Incorporated by Reference (FEB 1998) 

This task order incorporates one or more clauses by reference, with the same force 

and effect as if they were given in full text. Upon request, the Contracting Officer 

will make their full text available. Also, a full text of a clause may be accessed electronically at these addresses: FAR—http://www.acqnet.gov/far and HHSAR— 

http://www.hhs.gov/oamp/policies/hssar.doc. 

a. FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) 

CONTRACT CLAUSES 

FAR Clause No. Title and Date 

1. 52.204–7 .......................................................... Central Contractor Registration (Apr 2008) 
116 

FAR Clause No. Title and Date 

2. 52.212–4 .......................................................... Contract Terms And Conditions—Commercial Items (Mar 2009), Alternate I (Oct 2008) 

3. 52.227–14 ........................................................ Rights In Data—General (Dec 2007) 
117 

Contract Number: HHSP23320100022WI 

Task Order Number: HHSP23337001T 

SECTION C. STATEMENT OF WORK 

Title 

Development and Testing of Long-term Care Awareness Materials 

I. Purpose 

This task order is one of three inter-related task orders intended to assist in the 

implementation of provisions of the Affordable Care Act (ACA) related to long-term 

care financing and awareness. The two related task orders are: (1) Development of 

a Survey on Long-Term Care Awareness and Planning and (2) Survey of Long-Term 

Care Awareness and Planning. 

The purpose of this task order is to develop a set of consumer-oriented long-term 

care awareness materials. The Department’s current set of materials, designed as 

part of the National Clearinghouse for Long-Term Care Information (Clearing-
118 

1Kemper, Komisar, Alecxih. Long-Term Care Over an Uncertain Future: What Can Current 

Retirees Expect? Inquiry—Excellus Health Plans; Winter 2005/2006; 42, 4 2Lee, Thompson. Long-term Care: Support for Family Caregivers. Long-Term Care Financing 

Project Issue Brief March 2004; Georgetown University. 3Kemper, et al. 343. 

4Shirk, Cynthia. Trading Places: Real Choice Systems Change Grants and the Movement to 

Community-Based Long-Term Supports Issue Brief National Health Policy Forum No. 822, May 

2007. 5MetLife Mature Market Institute. MetLife Market Survey of Nursing Home and Assisted Living Costs. October 2008. 6 Johnson, Mermin, Uccello. When the Nest Egg Cracks: Financial Consequences of Health 

Problems, Martial Status Changes, and Job Layoffs at Older Ages. 7Lake Research Partnership and American Viewpoint. Survey of California Voters 40 and 

Older on Long-Term Care. April 2010. 8Mathematica Policy Research, Inc. Shoring Up the Infrastructure for Long-Term Care: What 

Do Vulnerable Adults Know About Their Options. Issue Brief July 2004. 9MetLife Mature Market Institute. MetLife Long-Term Care IQ Removing Myths, Reinforcing 

Realities. September 2009. 10Minnesota Department of Human Services. Aging Initiative: Project 2030 Baby Boomer 

Market Research Report June 1997. 

house), targets a broad 20-year (50–70) age bracket. The new materials will focus 

on different segments of the population in an effort to increase the salience of the 

materials. Also, the current materials were developed and tested nearly 10 years 

ago. A number of changes are necessary to bring them up to date with current planning options as well as changes in the relative level of long-term care awareness. 

The new materials are intended for use in a variety of Clearinghouse initiatives including educating consumers about a new Federal long-term care insurance program. This task order is limited to: (a) identifying this relevant target market (i.e., 

segments of the population), (b) analysis of consumer responses, and, (c) revision 

and design of the educational materials. The logistics for the interactive discussions 

will be coordinated by Knowledge Networks in a separate contract. 

II. Background 

Approximately 70 percent of Americans 65 years of age can expect to experience 

some level of long-term care need before they die.1 Long-term care refers to a wide 

variety of services and supports used by persons who are unable to perform activities of daily living, such as bathing or dressing, because of a disability. Such services can be provided informally, by family members or neighbors, or through a network of formal long-term care service providers. However, the vast majority of such 

care is provided by informal (unpaid) caregivers. Over 78 percent of persons receiving long-term care rely solely on some form of informal care while 8 percent rely 

solely on formal, or paid, care.2 For those without informal caregivers, or for those 

whose needs cannot be met by informal caregivers alone, there are a variety of formal long-term care service providers. 

The type of formal long-term care with which consumers are most familiar is 

nursing home care. Approximately 35 percent of those using long-term care services 

will use some nursing home care, and 5 percent of long-term care users spend more 

than 5 years in such a facility.3 Increasingly, consumers are voicing a preference 

for remaining in their home for as long as possible. For some time, public policy at 

both the State and Federal levels has been moving towards expanding communitybased options for persons needing long-term care.4

Long-term care services are expensive. A semi-private room in a nursing home 

costs an average of $191 a day and home care services cost an average of $20 an 

hour in 2008.5 The onset of chronic illness and the associated need for long-term 

care services can threaten the security of retirement finances. Johnson, et al. found 

that the onset of disability presented ‘‘a special financing challenge’’ for older adults. 

They estimate that spells of nursing home use can reduce household wealth by 60 

percent for unmarried women.6

In spite of the number of people who will need such care and the significant 

threat to retirement finances that the high costs of care represent, most Americans 

are unaware of how much long-term care costs or who routinely pays for such services. In numerous surveys conducted over the last 10 years, a majority of respondents were unable to correctly identify who pays for long-term care or to correctly 

estimate the cost of such services. One of the most misunderstood aspects of longterm care financing is the role of Medicare. Several surveys report that more than 

half of pre-retiree respondents think that Medicare pays for custodial long-term 

care.7 8 Other studies assume that private health insurance or other public programs will pay.9 10
119 

11Long-Term Care Financing Strategy Group. Index of the Long-Term Care Uninsured. Washington, DC: Long-Term Care Financing Strategy Group; 2005. 12Georgetown University Long-Term Care Financing Project. National Spending for LongTerm Care Fact Sheet. February, 2007. 13Schwartz, Barry, The Paradox of Choice: Why More is Less. Harpers Collins. New York, NY, 

2004. 14Thaler, Richard and Cass Sunstein, Nudge: Improving Decisions About Health, Wealth and 

Happiness. Penguin Books: New York, NY, 2008. 

In addition, while many believe that private long-term care insurance plays a 

major role in financing long-term care, this has not been the case. Long-term care 

insurance has not achieved any significant penetration among retirees and pre-retirees due in part to this lack of awareness. The Long-Term Care Financing Strategy 

Group estimated in 2005 that about 8 million long-term care insurance policies were 

in force or about one in six people over age 65 with an income over $20,000.11 Policy 

sales in recent years have remained virtually flat. Consumers that are uninsured 

for long-term care and unprepared for its associated cost often end up on Medicaid. 

Medicaid is the largest payer of long-term care services in the country.12 The sheer 

size of the baby boom generation poses a major challenge to State and the Federal 

Governments to sustaining current access to publicly funded long-term care. 

In 2005, Congress acted to increase consumer awareness of long-term care by establishing The National Clearinghouse for Long-Term Care Information (Clearinghouse) in the Deficit Reduction Act of 2005 (DRA). Section 6021(d) of the DRA appropriated $15 million in funding for the Clearinghouse. The goal was to make consumers more aware of the need to plan ahead and to offer information and tools 

to assist them in planning. The premise behind the Clearinghouse is that preparing 

consumers for long-term care may reduce dependence on Medicaid and other public 

sources of financing. Over the last 4 years, ASPE has had a major role in administering this effort in coordination with CMS, the Administration on Aging, the National Governors Association, and individual State governors. The two major components of the Clearinghouse are as follows: 

(1) National Clearinghouse Web site.—The Administration on Aging (AoA) hosts 

a Web site (www.longtermcare.gov) that provides consumers with information about 

how to plan for long-term care. The Web site contains information on public coverage such as Medicare and Medicaid as well as private financing alternatives such 

as reverse mortgages and long-term care insurance. Consumers can obtain general 

information about long-term care as well as links to State-specific resources such 

as local area agencies on aging or State divisions of insurance. 

(2) State-Based Long-Term Care Awareness Campaigns.—State-based awareness 

campaigns combine State and Federal resources to reach out directly to consumers. 

Over the last 4 years, 16 States have launched campaigns, reaching over 20 million 

households. Each State campaign featured a letter from the Governor, a State-specific informational brochure and included a number of State-specific activities designed to take advantage of local messaging opportunities. Consumers are asked to 

respond to the mailings by requesting more information by mail, phone or through 

the internet. The response to these campaigns has exceeded expectations; while direct mail campaigns define success as response rates over 1 percent, these State 

campaigns have had rates from a low of about 4 percent to a high of over 21 percent. 

Much of the consumer material on the Web site and in the State campaigns was 

designed and tested several years ago. In an effort to improve the quality of the 

campaign materials, a Technical Expert Panel (TEP) was convened last year to obtain input from a variety of experts with perspectives in social marketing, private 

insurance marketing, and non-profit communications. The TEP provided a review 

of the materials and made three major recommendations. They are: 

A. Segment the target market.—The TEP felt that the age span in our target market was too broad to reach with a single set of materials. They noted, for example, 

that younger persons did not like the suggestion that they do crossword puzzles to 

keep their minds active or receiving information about programs and options for 

which they are decades away from using, such as reverse mortgages. They recommended targeting narrower age groups with greater homogeneity to ensure our 

messaging remains salient. 

B. Reduce the number of calls to action.—The TEP felt that the materials contained too many calls to action (9 to 12), even for the segments for which the messaging was relevant. Based on the findings of research by Barry Schwartz,13 and 

Richard Thaler and Cass Sunstein,14 the TEP noted that people are often over-
120 

whelmed if there are too many options or suggestions, even if they are sympathetic 

to the overall message. 

C. Simplify the message.—The TEP also concluded that we were asking too much 

of the target market with materials that were too long and too complex. They suggested that we do not try to provide a complete education on the topic but just make 

an appeal for a limited set of relevant action steps. 

The impetus for this new work stems from an extension of Clearinghouse funding 

via the recently passed Patient Protection and Affordable Care Act. The Clearinghouse was extended and funded for an additional 5 years during which new materials will be needed to continue to increase consumer awareness about long-term 

care. This project will mainly serve to revise the awareness materials in accordance 

with the recommendations of the TEP. The contractor will review the Department’s 

current materials, develop a marketing strategy focused on narrower age groups and 

other segments of the population, design separate materials for each segment, and 

analyze survey and focus group information in order to make revisions. The collection of information through the survey, the focus groups and other means will be 

done via a separate ASPE contract with Knowledge Networks. 

III. Project Summary 

Key Goal: The key goals for this task order are to: (1) develop a market segmentation framework for better communicating with the American public about long-term 

care by focusing on narrower age groups and other segments, (2) develop materials 

focused on narrower market segments, and (3) test and refine the new materials to 

reflect the preferences of each market segment. 

Study Design: After a market segmentation framework is developed, consumer 

awareness materials will be developed for each segment. These materials will be 

tested in small interactive chats and larger town hall meetings. The data will be 

collected by Knowledge Networks through a separate task order, will be analyzed 

in this task order and will be used to revise the materials after each phase to better 

reflect market segment preferences. 

Major Deliverable: This task order has two major deliverables: (1) a market segmentation framework that is focused on specific age groups and other segments and 

(2) a series of associated consumer awareness materials related to long-term care. 

The materials will include educational information on long-term care as well as calls 

to action for individual planning. 

Contractor Coordination: The contractor for this project must be willing to coordinate with Knowledge Networks as well as the contractor selected for the task order 

entitled ‘‘Development of a Survey on Long-Term Care Awareness and Planning.’’ 

It is anticipated that each of the three contractors will designate a liaison that will 

be responsible for coordinating with the other contractors. 

IV. Sample Research Questions 

• What are the different segments of our target market population? What information sources are trusted for issues related to retirement and long-term care? 

• What kind of information do consumers need to better understand the risks and 

costs associated with needing long-term care services? 

• Are there differences in how segments of the American public use and receive 

information related to planning for the future in general and long-term care specifically? Are some forms of information and/or media better suited to specific segments? 

V. Specification of Tasks 

Task 1.0 Post-Award Meeting 

Within two (2) weeks of award, the contractor and other relevant staff (including 

the liaisons for the other task orders) shall meet with the ASPE task order officers 

to discuss the objectives of the task order and any related issues. The Government 

anticipates a joint post-award meeting for all three task orders. Specific topics to 

be discussed include, but are not limited to, purpose and goals of the task order, 

scope of work, timetable, format of deliverables, and dissemination of findings. The 

contractor shall prepare a brief memorandum summarizing issues discussed at the 

post-award meeting. The memorandum is due one (1) week following the meeting 

(see Appendix A for the Schedule of Deliverables). 

Task 2.0 Work Plan 

The contractor shall develop a work plan that will guide their activities. The work 

plan, which will reflect the results of the Post-Award Meeting (Task 1), will serve 

as a blueprint for the contractor’s approach to carrying out task order activities and 

shall include: 
121 

• A strategy for segmenting the target market by extent of readiness for longterm care awareness and planning; • A process for communicating with the other task order liaisons; • Potential members of the Technical Expert Panel and date of meeting; • A timeline for the development of new segment-specific consumer materials; • A strategy and timeline for testing new materials with consumers; and, • A delivery schedule. 

For each task, the work plan shall describe the approach the contractor shall 

take, personnel assignments, and target date for completion of specific tasks. The 

work plan shall be modified as needed as the task order progresses at the discretion 

of the task order officers. The draft work plan shall be submitted to the task order 

officers for review within five (5) weeks of contract award. A revised work plan, addressing comments from the task order officers, shall be submitted two (2) weeks 

later and be considered final upon approval of the task order officers. 

Task 3.0 Establish Technical Expert Panel 

The contractor shall provide the task order officers with a prioritized list of fifteen 

(15) candidates with expertise in market segmentation, advertising and designing 

materials for baby boomers and/or general long-term care and retirement research 

to serve on a Technical Expert Panel (TEP). The TEP will provide substantive advice regarding technical decisions, review major reports and documents, and be consulted individually and/or collectively throughout the course of the task order (see 

Task 7, Task 8, Subtask 10.1, and Subtask 12.2). The contractor shall form a TEP 

of eight (8) experts from the original list of 15 based on consultations and feedback 

from the task order officers. Non-government members of the TEP will receive an 

honorarium of $1,000 and the contractor shall reimburse experts for travel expenses 

related to their participation. For purposes of bidding, the contractor shall assume 

that there will be at least six non-local experts who will need to travel to Washington, DC for the TEP meeting. The list of potential members of the TEP shall be 

submitted to the task order officers eight (8) weeks following contract award. The 

contractor shall secure agreements for participation from TEP members twelve (12) 

weeks following contract award. 

Task 4.0 Literature Review 

The contractor shall conduct a review of the literature and materials in the following three areas: 

• Survey research related to the attitudes, opinions and interests of the target 

population around long-term care in general, and long-term care financing/planning 

in particular. Of particular interest are surveys of ‘‘buyers and non-buyers’’ of longterm care insurance and surveys related to consumer assessment of long-term care 

risk. • Evaluations of major public awareness or social marketing campaigns that have 

focused on a similar target market and been conducted in the last 7 years. The review shall identify lessons learned or findings that might be useful to the current 

project. Of particular interest are evaluations of campaigns related to long-term care 

or to other financial planning-type activities such as advanced care planning or estate planning. The goal of the review is to take advantage of the lessons from previous public campaigns that have been evaluated. 

• Current messages and media related to long-term care in general and long-term 

care financing specifically. The contractor shall identify messages from news organizations, public entities and private industry to members of the target market. It 

should identify, to the extent possible, existing competing and complementary messages from the major long term-care insurers, advocacy organizations and government agencies. The contractor should use the scan to identify opportunities for new 

messages such as information gaps or other ongoing activities that can be utilized. 

Of particular interest is the range of motivational appeals, assumptions about target 

market financial and issue knowledge, and use of various forms of media. 

The draft literature review shall be completed no later than fourteen (14) weeks 

from award of the contract. The contractor shall submit a final literature review 

within 2 weeks of receiving comments from the Government. 

Task 5.0 Preliminary Market Segmentation Framework 

Using the review of literature (Task 4), the contractor shall propose a preliminary 

conceptual framework for segmenting population aged 40–70 into smaller subgroups. The purpose of the segmentation is to allow for the development of messages 

and calls to action that are more relevant to members of each sub-group. The Government anticipates that the initial segmentation factor will be age because longterm care planning changes over the life span. In addition to age, the contractor 
122 

shall consider a wide range of demographic and other variables including attitudes, 

opinions, and interests before recommending a segmentation strategy. The contractor shall present more than one approach to segment the market and should 

outline the advantages and disadvantages of each approach. The proposed segmentation should be large enough to represent a significant portion of the total target market while small enough to allow for the design of awareness messages and 

calls to action with a high degree of salience to each segment. The applicability of 

existing segmentation systems such as Nielsen/PRIZM (consumer lifestyle segmentation) and work by Jeremy Pincus of Forbes Consulting should be considered 

as part of the development process. 

The preliminary market segmentation framework shall be completed no later than 

eighteen (18) weeks from award of the contract. The Government anticipates that 

the preliminary framework will be adjusted as data become available from the complementary long-term care awareness projects and will be finalized in Subtask 12.1. 

Task 6.0 Marketing Materials Memo 

After development of the market segmentation framework (Task 5), the contractor 

shall draft a memo outlining preliminary content for long-term care planning for 

each segment. The Government anticipates that content for each segment will combine the following four elements: 

• Information/knowledge: information and/or data that encourage each segment to 

consider a call to action. For example, does the target market need to know how 

to compute compound interest in order to buy long-term care insurance? Information 

for each segment should be included based on how it engages the target market in 

a call for action. This element should include information on risk, types of providers 

and cost of care. 

• Call to action: suggested planning actions for each segment, restricted to the 

three most significant steps that members of the segment can take now. This element is largely dependent on age. For example, the oldest segment may be asked 

to learn about reverse mortgages whereas the youngest one will not. 

• Motivational appeal: the rationale the target market could consider adopting for 

answering a call to action. For example individuals used to exerting control over 

their lives may respond positively to the suggestion that they need to consider longterm care planning to ensure continued control as they require services. 

• Delivery: the medium or method used for delivering content. Segments may 

have different preferred media for information about long-term care. For example, 

the Department’s logo on a direct mail piece may provide issue validation for some 

segments. Other segments may prefer to receive information through social networking or from peer issue leaders. Content delivery may vary for each market segment but should be held together by similar themes and/or designs. 

The contractor shall submit the memo no later than twenty-two (22) weeks from 

award of contract. The memo shall be considered final upon approval of the task 

order officers. 

Task 7.0 Technical Expert Panel (TEP) 

The contractor shall be responsible for making arrangements to convene one inperson meeting of the TEP in Washington, DC. The main purpose of the TEP is to 

provide feedback on the marketing materials memo (Task 6). However, during the 

meeting the TEP will also review the literature review (Task 4) and the preliminary 

market segmentation framework (Task 5). 

Arrangements for the meeting will include preparing the agenda, compiling necessary materials, making logistical arrangements, taking minutes, and summarizing 

proceedings. Agendas and meeting materials shall be submitted to the task order 

officers twenty-three (23) weeks after contract award for distribution to TEP members. The TEP meeting shall take place no later than twenty-five (25) weeks after 

contract award. The contractor shall submit a summary that outlines the TEP comments and makes recommendations regarding the need to revise the marketing materials memo no later than twenty-seven (27) weeks after contract award. 

Task 8.0 Development of Draft Marketing Materials 

Building on the recommendations and comments from the TEP (Task 7), the contractor shall develop new marketing materials. The contractor must have the capability to create and reproduce prototype marketing materials for the various marketing segments as identified in Task 5. The materials shall be developed so that 

they can be reproduced both in electronic and hard versions. The draft marketing 

materials shall be developed within thirty-three (33) weeks after contract award. 

The task order officers may seek feedback and comments from selected members of 

the TEP. 
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Task 9.0 Interactive Chats 

The contractor shall moderate three (3) sets of three (3) interactive chats with 

members of the market segments identified in Task 5. The interactive chats will be 

convened by Knowledge Networks using members of their KnowledgePanel®. The 

purpose of these chats is to solicit reactions, opinions and ideas related to the draft 

marketing materials as developed in Task 8. Following each set of chats, the materials will be revised for testing in the next set of chats. 

Participants will provide feedback on the content of the materials and suggest 

ways for improvement. For budget estimation purposes, the contractor should assume nine (9) interactive chats with no more than nine (9) participants in each chat. 

Subtask 9.1: First Set 

The contractor shall work with Knowledge Networks and the task order officers 

to schedule the first of three (3) sets of three (3) interactive chats with members 

of the market segments identified in Task 5. Participants will review the draft materials and provide reactions/comments. The contractor shall moderate the discussions and provide discussion topics when necessary. The contractor shall submit a 

discussion outline for ensuring that all chats cover the same topics. The discussion 

outline shall be considered final upon approval of the task order officers and shall 

be submitted two (2) weeks prior to the chat. 

The initial interactive chat shall be conducted no later than thirty-six (36) weeks 

after contract award. The contractor shall submit a short memo summarizing the 

discussion and recommending changes to the draft materials. The memo shall be 

submitted no later than thirty-eight (38) weeks after contract award and shall be 

considered final upon approval of the task order officers. The contractor shall then 

revise the materials based on the feedback from the initial chats. The materials 

should be revised no later than forty (40) weeks from contract award. 

Subtask 9.2: Second Set 

Using the newly revised materials from Subtask 9.1, the contractor shall again 

work with Knowledge Networks and the ASPE task order officers to convene a second set of three (3) interactive chats with members of each market segment as identified in Task 5. Participants in each chat will review the revised draft materials 

and provide reactions/comments. The contractor shall moderate the discussions and 

provide discussion topics when necessary. The contractor shall submit a discussion 

outline for ensuring that all chats cover the same topics. The discussion outline 

shall be considered final upon approval of the task order officers and shall be submitted two (2) weeks prior to the chat. 

The second set of interactive chats shall be conducted no later than forty-two (42) 

weeks after contract award. The contractor shall submit a short memo summarizing 

the discussion and recommendations for changes to the draft materials. The memo 

shall be submitted no later than forty-four (44) weeks after contract award and shall 

be considered final upon approval of the task order officers. The contractor shall 

then revise the materials based on the feedback from the second set of interactive 

chats. The materials should be revised no later than forty-six (46) weeks from contract award. 

Subtask 9.3: Third Set 

Using the newly revised materials from Subtask 9.2, the contractor shall again 

work with Knowledge Networks and the ASPE task order officers to convene a third 

set of interactive chats with members of each market segment as identified in Task 

5. Participants in each chat will review the revised draft materials and provide reactions/comments. The contractor shall moderate the discussions and provide discussion topics when necessary. The contractor shall submit a discussion outline for ensuring that all chats cover the same topics. The discussion outline shall be considered final upon approval of the task order officers and shall be submitted two (2) 

weeks prior to the chat. 

The third set of interactive chats shall be conducted no later than forty-eight (48) 

weeks after contract award. The contractor shall then revise the materials based on 

the feedback from the participants. The materials should be revised no later than 

fifty (50) weeks from contract award. These revised draft marketing materials shall 

be considered final upon approval of the task order officers. 

Task 10.0 Interactive Town Hall Meetings 

The contractor shall moderate on-line interactive town hall meetings on the materials developed in Subtask 9.3. The interactive town halls will be convened by 
124 

Knowledge Networks using members of their KnowledgePanel®. The number of 

town hall meetings will be determined as a result of the preliminary market segmentation framework completed under Task 5. For budget purposes, the contractor 

should assume six (6) town hall meetings. The Government anticipates that the online town hall meetings shall be convened between 50–70 weeks after award of the 

contract. 

Subtask 10.1: Town Hall Content 

The town hall meetings will feature a presentation by a moderator followed by 

informal discussion and instant polling. The presentation shall consist of a description and display of the marketing materials that were developed in Subtask 9.3. The 

presentation should provide several opportunities for open discussion and instant 

polling related to the materials. Participants will (a) respond to prototype educational/marketing materials, (b) raise questions and (c) offer responses to instant 

polls. The contractor shall develop a presentation for each segment that displays the 

educational materials and polls participants. The presentations shall be developed 

three (3) weeks before the scheduled town hall meetings. The contractor shall revise 

the presentations reflecting input and edits from the task order officers and other 

reviewers designated by the task order officers. 

Subtask 10.2: Town Hall Meetings 

Each town hall meeting will consist of no more than one hundred (100) participants. Respondents will be selected based on the preliminary market segmentation 

framework. The contractor shall work with the task order officers and Knowledge 

Networks to align the selection of the participants with each market segment. The 

timing of the town hall meetings shall be coordinated between the task order officers, the contractor and Knowledge Networks. 

Task 11.0 Analysis of Town Hall Meetings 

Using a recording provided by Knowledge Networks, the contractor shall analyze 

consumer reactions from the town hall meetings. The contractor shall prepare a report that synthesizes how members of each market segment reacted to the revised 

materials. The report shall include recommendations for changing the consumer materials in accordance with the findings. Analysis of the town hall meetings shall be 

submitted no later than eight (8) weeks after the last town hall meeting and shall 

be considered final upon approval of the task order officers. 

Task 12.0 Final Deliverables 

Subtask 12.1: Final Market Segmentation Framework 

The contractor shall finalize the preliminary market segmentation framework developed in Task 5. The final framework shall incorporate any new information that 

has become available via this project, or other complementary long-term care awareness projects, since the conclusion of Task 5. Of particular interest will be the comments and recommendations of the preliminary framework by the TEP (Task 7). 

The final market segmentation framework shall be submitted to the task order 

officers no later than seventy (70) weeks from contract award. The contractor shall 

make any recommended changes to the framework (as determined by the task order 

officers) within two (2) weeks. 

Subtask 12.2: Final Revised Materials 

The contractor shall revise the final draft materials (from Subtask 9.3) for each 

segment (Task 5) based on the analysis of the town hall meetings (Task 11) and 

any feedback from the task order officers and any members of the TEP (Task 3) (as 

solicited by the task order officers). These materials are not intended to be the final 

‘‘publicly distributed’’ materials; rather, they are intended to be the final materials 

(both in terms of content and camera-ready ‘‘look and feel’’) for this task order. It 

is expected that the materials will be revised, as necessary, when they are to be 

distributed to the public during future awareness efforts. 

The final revised materials shall be submitted to the task order officers no later 

than seventy-four (74) weeks from the contract award. The contractor shall make 

any recommended changes to the materials (as determined by the task order officers) within four (4) weeks. 
125 

Subtask 12.3: Draft Task Order Summary 

The contractor shall submit a draft task order summary that includes an overview 

of all activities with timelines. The draft summary should be no more than twenty 

(20) pages and, in addition to the overview, should contain detailed summaries of 

the following: 

• the literature review; 

• the materials redesign process; and 

• the interactive discussions (chats and town hall). 

The draft task order summary shall be submitted to the task order officers no 

later than seventy-eight (78) weeks from the contract award. 

Subtask 12.4: Final Task Order Summary 

The contractor shall submit a revised task order summary that incorporates comments and edits from the task order officers no later than eighty-two (82) weeks 

after contract award. The final market segmentation framework (Subtask 12.1) and 

the final revised materials (Xeroxed copies of Subtask 12.2) shall be added to the 

end of the final task order summary as appendices for purposes of governmental 

archiving. The entire task order summary will be considered final upon approval of 

the task order officers. 

Task 13.0 Monthly Progress Reports and Interim Meetings 

Subtask 13.1: Monthly Progress Reports 

The contractor shall submit monthly administrative progress reports outlining all 

work accomplished during the previous month. At a minimum, such reports shall 

cover the following items: 

• discussion of the progress in accomplishing the tasks in this task order; 

• activities anticipated during the upcoming reporting period; and 

• statement of actual costs incurred by task relative to budgeted costs per task. 

Monthly reports are due the first week of every month following the approval of 

the work plan and shall be sent by the contractor directly to the task order officers 

via e-mail. 

Subtask 13.2: Interim Meetings 

The contractor and task order officers shall also have interim meetings (in-person 

or via teleconference) as deemed necessary, but no fewer than two, by the task order 

officers to discuss issues that need input or approval. It is expected that the two 

mandatory interim meetings shall be scheduled to update HHS and other Federal 

Government officials on the (1) development of materials before the interactive chats 

and (2) the preliminary analysis from the town hall meetings. The timing of these 

meetings shall be determined by the task order officers. 

SECTION D. CONTRACT CLAUSES 

Section 508 Compliance 

The final report deliverable must comply with the Department of Health and 

Human Services Section 508 Compliance Requirements. 

This language is applicable to Statements of Work (SOW) generated by the Department of Health and Human Services (HHS) that require a contractor or consultant to (1) produce content in any format that could be placed on a Departmentowned or Department-funded Web site; or (2) write, create or produce any communications materials intended for public or internal use; to include reports, documents, charts, posters, presentations (such as Microsoft PowerPoint) or video material that could be placed on a Department-owned or Department-funded Web site. 

Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d) requires Federal 

agencies to purchase electronic and information technologies (EIT) that meet specific 

accessibility standards. This law helps to ensure that Federal employees with disabilities have access to, and use of, the information and data they need to do their 

jobs. Furthermore, this law ensures that members of the public with disabilities 

have the ability to access Government information and services. 

There are three regulations addressing the requirements detailed in Section 508. 

The Section 508 technical and functional standards are codified at 36 CFR Part 

1194 and may be accessed through the Access Board’s Web site at http:// 

www.access-board.gov. The second regulation issued to implement Section 508 is the 

Federal Acquisition Regulation (FAR). FAR Part 39.2 requires that agency acquisi-
126 

tions of Electronic and Information Technology (EIT) comply with the Access Board’s 

standards. The entire FAR is found at Chapter 1 of the Code of Federal Register 

(CFR) Title 48, located at http://www.acquisition.gov. The FAR rule implementing 

Section 508 can be found at http://www.section508.gov. The third applicable regulation is the HHS Acquisition Regulation (HHSAR). 

Regardless of format, all Web content or communications materials produced for 

publication on or delivery via HHS Web sites—including text, audio or video—must 

conform to applicable Section 508 standards to allow Federal employees and members of the public with disabilities to access information that is comparable to information provided to persons without disabilities. All contractors (including subcontractors) or consultants responsible for preparing or posting content intended for 

use on an HHS-funded or HHS-managed Web site must comply with applicable Section 508 accessibility standards, and where applicable, those set forth in the referenced policy or standards documents below. Remediation of any materials that do 

not comply with the applicable provisions of 36 CFR Part 1194 as set forth in the 

SOW or PWS, shall be the responsibility of the contractor or consultant retained to 

produce the Web-suitable content or communications material. 

The following Section 508 provisions apply to the content or communications material identified in this SOW or PWS: Access Board Final Rule ‘‘36 CFR 1194.22(a)- 

(p).’’ 

SECTION E. CONTRACT DOCUMENTS 

E.1. Schedule of Deliverables 

Task Deliverable Date Due in Weeks 

Task 1 ............................... Post Award Meeting ...................................................................

Post Award Summary ................................................................

Week 2 

Week 3 

Task 2 ............................... Work Plan ...................................................................................

Revised Work Plan .....................................................................

Week 5 

Week 7 

Task 3 ............................... Establish Technical Expert Panel .............................................. Week 8 

Task 4 ............................... Literature Review ....................................................................... Week 14 

Task 5 ............................... Preliminary Market Segmentation Framework ........................... Week 18 

Task 6 ............................... Marketing Materials Memo ........................................................ Week 22 

Task 7 ............................... Technical Expert Panel ..............................................................

Summary of TEP Meeting ..........................................................

Week 25 

Week 27 

Task 8 ............................... Development of Marketing Materials ........................................ Week 33 

Task 9 ............................... Interactive Chats 

Subtask 9.1: 

Discussion Outline ................................................................

Initial Interactive Chats ........................................................

Initial Interactive Chat Memo ...............................................

Revised Materials ..................................................................

Subtask 9.2: 

Discussion Outline ................................................................

Second Interactive Chats ......................................................

Second Interactive Chat Memo .............................................

Revised Materials ..................................................................

Subtask 9.3: 

Discussion Outline ................................................................

Third Interactive Chats .........................................................

Revised Materials ..................................................................

Week 34 

Week 36 

Week 38 

Week 40 

Week 40 

Week 42 

Week 44 

Week 46 

Week 46 

Week 48 

Week 50 

Task 10 ............................. Interactive Town Hall Meetings 

Subtask 10.1: Town Hall Content .........................................

Subtask 10.2: Town Hall Meetings .......................................

3 Weeks before Subtask 10.2 

Weeks 50–70 

Task 11 ............................. Analysis of Town Hall Meetings ................................................ 8 Weeks after Subtask 10.2 

Task 12 ............................. Final Deliverables 

Subtask 12.1: Final Market Segmentation Framework .........

Subtask 12.2: Final Redesigned Marketing Materials .........

Subtask 12.3: Draft Task Order Summary ...........................

Subtask 12.4: Final Task Order Summary ............................

Week 70 

Week 74 

Week 78 

Week 82 

Task 13 ............................. Monthly Progress Reports and Interim Meetings 

Subtask 13.1: Monthly Progress Reports ..............................

Subtask 13.2: Interim Meetings ...........................................

Monthly 

As Needed 
127 

E.2. Quality Assurance Surveillance Plan 

Required Services/tasks Performance Standards Method of Surveillance 

(Quality Assurance) 

Standard to be Met/Allowable 

Deviation 

Task 5 Market Segmentation Framework.Contractor develops a clear 

market segmentation 

framework that links development and analysis of response data to research 

questions.

Task order officers will work 

closely with contractor.

Market Segmentation framework is completed in a 

timely fashion so as to 

guide subsequent tasks. 

Task 6 Development of 

Marketing Materials.

Contractor develops draft marketing materials from information gathered in earlier 

tasks.

Task order officers will work 

with contractor (and any 

subcontractors) on the development.

Draft marketing materials are 

ready for dissemination to 

the Technical Expert Panel 

on deadline outlined in 

contract. 

Task 9 Interactive 

Chats.

Contractor moderates the different sets of interactive 

chats and analyzes the information that comes from 

them.

Task order officers will work 

closely with contractor and 

review transcripts of all 

chats.

Revisions to the draft marketing materials are made 

after each set of interactive 

chats. 

Task 11 Analysis of 

Town Hall Meetings.

Contractor analyzes the information that comes from the 

different sets of interactive 

town hall meetings.

Task order officers will work 

closely with contractor.

A set of revised draft marketing materials for each 

identified market segment 

are produced. 

Task 12 Final 

Deliverables.

Contractor develops a final 

market segmentation 

framework and a final set 

of marketing materials for 

all the identified segments 

and produces a final report.

Task order officers will review 

drafts of all Final 

Deliverables.

Contractor delivers the three 

distinct final deliverables to 

the task order officer on 

schedule and of acceptable 

quality. 

Task 12 Monthly 

Progress Reports.

Contractor keeps task order 

officers informed as to unforeseen problems and/or 

necessary changes to work 

plan.

Task order officers will attend 

all monthly and interim 

meetings and review all 

progress reports.

Contractor informs task order 

officers of issues that impact schedule of 

deliverables or costs associated with the contract. 

E.3. Travel Costs 

Travel costs, shall be included in the Firm Fixed Price and will be evaluated in 

accordance with Federal per diem rates and Federal Travel Regulation (FTR). All 

travel shall be approved, by the COTR, prior to commencement of travel. 

E.4. Rights in Data—Advance Approval for Dissemination of Project Information Prior to Contract Completion 

The Contractor (including any subcontractors or consultants) agrees not to disclose, verbally or in writing, information pertaining to the results or findings of 

work (including data base files, analyses, draft or final papers and reports) for the 

period of an individual delivery order under this contract without obtaining prior 

written approval of the task order officers. The Contractor must request approval 

in advance (minimum 21 days prior to release) and in writing, specifying: who or 

what is generating the request for advance information; when and how project results/information would be released; and what information would be released. Failure to receive response to the task order officers does not constitute approval for 

releasing information. 

E.5. Specifications for the Delivery of Digital Copies of Reports 

In addition to the printed copies required under the contract, digital copies of the 

reports shall be delivered on media readable by Windows 9x programs. The text, tables, and any charts or other graphics shall be organized and formatted as described 

in the following paragraphs. 

Text may be formatted in any of the commonly available word processing programs marketed by the IBM®, Corel®, or Microsoft® corporations. Lengthy documents (greater than 500 Kb) should be divided into several parts and a separate 

file should be provided for each part. Lengthy files (greater than 200 Kb) should be 

avoided if possible. 

The title page, table of contents, and other front matter shall be in a separate 

file. File names should contain consecutive numbers that correspond to the numerical labels used in the printed version. For example, Chapter 4, Figure 2 can be ren-
128 

dered as C4F2.gif. Suffixes shall be those used by the software manufacturer or follow the usual industry conventions, e.g., doc, wpd, xls, gif, jpg, etc. Where compatibility with earlier versions of the software is in doubt, files shall be delivered in 

the penultimate version of the software. 

Tables and tabular material shall not be converted into graphical images, but be 

included with the word processing files or delivered as spreadsheet files. 

Graphic figures such as bar and line charts, diagrams, and other drawings shall 

be delivered in the GIF (Graphics Interchange Format) or the JPEG (Joint Photographic Experts Group) format. Even though the graphical elements may have been 

merged with the text to form a single file for printing purposes, each graphical 

image (figure) shall be delivered as a separate file and must not be embedded in 

a word processing, spreadsheet, slide show or other composite file. 

Questions regarding the interpretation of these specifications may be directed to 

Brian Sinclair-James, ASPE Coordinator of Information Dissemination, at (202) 

401-6127. 

SECTION F. CONTRACT ADMINISTRATION 

F.1. Invoicing and Payment 

One original voucher complete with all required back-up documentation shall be 

submitted to the Contract Specialist and addressed to: 

Division of Acquisition Management, SAS/PSC 

Parklawn Building, Room 5C-18 

5600 Fishers Lane 

Rockville, MD 20857 

Contract Number: HHSP23320100022WI 

Task Order Number: HHSP23337001T 

One copy of the voucher with copies of all required back-up documentation shall 

be emailed to PSClEAPPROVAL.CPMT@PSC.HHS.GOV or they may be submitted 

to: 

PSC/FMS/DFO Commercial Payments Section 

Parklawn Building, Room 16A-12 

5600 Fishers Lane 

Rockville, MD 20857 

The contractor shall list the COTR name and phone number on the face page of 

the voucher. 

One copy of the voucher with copies of all required back-up documentation shall 

be emailed to the COTR (the cover page of all invoices must show the Contract 

Number, and the Government COTR’s name and telephone number) or they may 

be submitted to: 

Office of the Assistant Secretary for Planning and Evaluation 

U.S. Dept. of Health and Human Services 

Attn: Hunter McKay and Sam Shipley 

Hubert H. Humphrey Bld., Room 424E 

200 Independence Ave. SW 

Washington, DC 20201 

(202) 690-6443 

All calls concerning contract payments shall be directed to the general help line 

for contract payments on (301) 443-6766. 

F.2. Contracting Officer’s Technical Representative (COTR) Appointment 

and Authority 

(a) Performance of work under this contract must be subject to the technical direction of the COTR identified above, or a representative designated in writing. The 

term ‘‘technical direction’’ includes, without limitation, direction to the Contractor 

that directs or redirects the labor effort, shifts the work between work areas or locations, fills in details and otherwise serves to ensure that tasks outlined in the work 

statement are accomplished satisfactorily. 

(b) Technical direction must be within the scope of the specification(s)/work statement. 

(c) The COTR does not have authority to issue technical direction that: 

(1) Constitutes a change of assignment or additional work outside the specification(s)/Statement of Work; 

(2) Constitutes a change as defined in the clause entitled ‘‘Changes’’; 

(3) In any manner causes an increase or decrease in the Contract Price, or the 

time required for Contract Performance; 
129 

(4) Changes any of the terms, conditions, or specification(s)/Work Statement of 

the Contract; 

(5) Interferes with the Contractor’s right to perform under the terms and conditions of the Contract; or 

(6) Directs, supervises, or otherwise controls the actions of the Contractor’s 

employees. 

(d) Technical direction may be oral or in writing. The COTR shall confirm oral 

direction in writing within 5 work days, with a copy to the Contracting Officer. 

(e) The Contractor shall proceed promptly with performance resulting from the 

technical direction issued by the COTR. If, in the opinion of the Contractor, any direction of the COTR, or his/her designee, falls within the limitations in (c), above, 

the Contractor shall immediately notify the Contracting Officer no later than the 

beginning of the next Government work day. 

(f) Failure of the Contractor and the Contracting Officer to agree that technical 

direction is within the scope of the Contract shall be subject to the terms of the 

clause entitled ‘‘Disputes.’’ 

F.3. Contracting Officer’s Technical Representative (COTR) 

The COTR is responsible for the technical requirements covered by this Contract, 

as contemplated by Section F.2., hereof, will be designated by separate correspondence. 

F.4. Contracting Officer 

Contracting Officer (CO): The CO has the overall responsibility for the administration of this Contract. The CO is the only person authorized to take actions on behalf 

of the Government to: amend, modify, or deviate from the Contract terms, conditions, requirements, specifications, details and/or delivery schedules; make final decisions on disputed deductions from Contract payments for non-performance or unsatisfactory performance; terminate the Contract for convenience or default; issue 

final decisions regarding Contract questions or matters under dispute. Delegation 

of other responsibilities may be made to authorized representatives. 

[Whereupon, at 12 p.m., the hearing was adjourned.] 

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