[Senate Hearing 112-]
[From the U.S. Government Publishing Office]



 
  DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND 
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2013

                              ----------                              


                        WEDNESDAY, MARCH 7, 2012

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:05 a.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Tom Harkin (chairman) presiding.
    Present: Senators Harkin, Kohl, Landrieu, Pryor, Mikulski, 
Brown, Shelby, Alexander, Johnson, Graham, and Moran.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                        Office of the Secretary

STATEMENT OF HON. KATHLEEN SEBELIUS, SECRETARY

                OPENING STATEMENT OF SENATOR TOM HARKIN

    Senator Harkin. The Appropriations Subcommittee on Labor, 
Health and Human Services, and Education, and Related Agencies 
will come to order.
    Madam Secretary, welcome back to the subcommittee. I want 
to start by commending you for the outstanding work you are 
doing to implement the Affordable Care Act (ACA) since 
President Obama signed it into law almost 2 years ago.
    Some 3.6 million seniors--more than 42,000 in my State of 
Iowa--got discounts on their prescription drugs last year. Two-
and-a-half million young adults are staying on their parents' 
insurance from graduation to age 26. I just ran into a family 
in Iowa where a student got off the family insurance, and then 
lost their job. That person came back on the family's 
insurance, went back to school again, took the college 
insurance, got out of school, came back on their family's 
insurance. And so it was a great comfort to this family to know 
that their child would not be without insurance coverage and 
they got insurance at the family rate.
    Most important of all, 54 million Americans received a free 
preventative screening service in 2011 all because of ACA. And 
I believe this is the right track for healthcare in America. 
You know how strongly I feel about prevention and wellness.
    Your Department is carrying out these reforms with great 
skill and dedication, and I commend you for your leadership.
    More work remains, of course. Fiscal year 2013 is a key 
year for implementing ACA because it ends just 3 months before 
health insurance exchanges will open their doors in the States. 
On that day, we will fulfill a promise to bring affordable 
healthcare to 30 million uninsured Americans.
    The President's budget request for fiscal year 2013 
includes additional funding at Centers for Medicare & Medicaid 
Services (CMS) for creating these exchanges. As the chairman of 
this subcommittee and also of the authorizing committee, I am 
determined to help you finish the job. Reforming healthcare is 
not only the right thing to do, it will save taxpayers money 
and reduce the deficit and again move us more toward a real 
healthcare system rather than a sick care system.
    The President's proposed budget also includes increases for 
key priorities like child care, Head Start, and rooting out 
fraud, waste, and abuse in Medicare and Medicaid.
    However, there were two areas in which I was disappointed. 
One area is, of course, the cuts in the budget for the 
prevention fund. The prevention fund is something that was 
worked out in great detail, and all the different compromises 
were made when we passed the ACA. And then the President 
requested a cut of $4.5 billion, which was then folded in the 
recent agreement by the Congress for a $5 billion cut in the 
prevention fund, again penny wise, pound foolish. We will just 
take funding away from prevention, but boy, when you get sick, 
we will take care of you later on and it will cost us a lot 
more money. I do not know when we are going to learn that our 
mothers were right. An ounce of prevention is worth a pound of 
cure. And that is true in healthcare. But no. Take money out of 
the prevention fund.
    The other part where I am disappointed is the lack of any 
additional funding for eliminating fraud and waste in 
healthcare. I chaired a hearing on this topic last February. 
Every $1 that CMS spends on reducing fraud and waste returns $7 
to the U.S. Treasury in real dollars. The Budget Control Act of 
2011 included a cap adjustment that encouraged the Congress to 
increase this funding by $270 million, an amount that would 
have saved taxpayers well over $1 billion. Yet, in conference 
at the insistence of the House majority, they refused any 
additional funding for this whatsoever in last year's bill. 
Again, penny wise and pound foolish.
    I am pleased that the President has once again requested an 
increase for eliminating healthcare waste and abuse in this 
year's budget. And I would like to discuss this topic more with 
you later.
    Some other provisions in the President's budget meanwhile 
are cause for concern. Once again, the President has proposed a 
nearly 50 percent cut to the Community Services Block Grants. 
This funding is critically important for community initiatives 
that provide a safety net for millions of low-income people 
across the country. The Congress rejected that cut last year. I 
expect it will do so again this year.
    But overall, I believe the President's budget is a good 
start.

                           PREPARED STATEMENT

    Madam Secretary, again, I commend you for your great 
leadership in these areas and especially what you are doing to 
implement ACA, and I look forward to hearing your testimony.
    First, before I yield to the ranking member, Senator 
Shelby, for his opening remarks, I have received a statement 
from the full committee chairman, Senator Inouye. His statement 
will be inserted into the record at this point.
    [The statement follows:]
            prepared statement of chairman daniel k. inouye
    Mr. Chairman, thank you for chairing this hearing to review the 
President's fiscal year 2013 budget for the Department of Health and 
Human Services.
    I would like to extend a warm aloha to Secretary of Health and 
Human Services, Kathleen Sebelius. These are challenging fiscal times, 
but I look forward to continuing to work with her to support critical 
investments in healthcare, disease prevention, social services, and 
scientific research.

    Senator Harkin. Senator Shelby.

                 STATEMENT OF SENATOR RICHARD C. SHELBY

    Senator Shelby.  Thank you, Mr. Chairman.
    Secretary Sebelius, thank you for appearing today to 
discuss the fiscal year 2013 Department of Health and Human 
Services (HHS) budget.
    We are living in difficult times. America's gross debt has 
increased more than $5 trillion during President Obama's first 
3 years in office, and the fiscal year 2013 budget request does 
nothing to curb spending or put our country on a fiscally 
sustainable path. In fact, the administration has built the 
fiscal year 2013 budget based, I believe, on the flawed 
philosophy of spend now, pay later. But as the turmoil in 
Greece is verifying, at some point the bill must be paid.
    One of the key fiscal challenges facing the Federal 
Government is healthcare spending. In the last 20 years, total 
funding for HHS has tripled. Since 2001, the HHS's 
discretionary appropriation has increased by 45 percent. The 
President's answer to control health spending, the Affordable 
Care Act (ACA) that Senator Harkin referenced, continues to 
grow our Nation's deficit, and its bills are piling up.
    In the fiscal year 2013, the budget requests a $1 billion 
increase in discretionary dollars for the Centers for Medicare 
& Medicaid Services to continue implementation of ACA 
activities. This is in addition to the $15.4 billion in 
mandatory funding ACA directly appropriated since fiscal year 
2011. By combining discretionary and mandatory funding streams, 
the majority of ACA circumvents the yearly appropriations 
process that is crucial to providing transparency and oversight 
to funding decisions.
    As we attempt to rein in Federal spending, it is clear that 
a comprehensive view to fund the healthcare programs is 
necessary. Instead of using budgetary smoke and mirrors, I 
believe we should examine all sources of funding, discretionary 
and mandatory, before the Appropriations Committee here 
determines an appropriate level of discretionary funding. Many 
programs advertise their baseline reduction when, in fact, they 
are recipients of significant mandatory funding from ACA. 
Agencies and programs I believe should no longer deceive the 
American taxpayer by arguing that spending is reduced when they 
also receive mandatory funding from ACA that supplements and, 
in many cases, greatly increases their spending level.
    It is also critical here that our subcommittee carefully 
consider the effects of ACA's mandatory funding on important 
healthcare programs that may not be able to continue if the act 
is not repealed. The administration has used ACA's mandatory 
spending, which is not subject to a vote by the Congress every 
year, to backfill key and discretionary programs. The 
administration then diverts discretionary dollars to fund new 
programs. If ACA is repealed, many important programs like 
community health centers and the section 317 immunization 
program at the Centers for Disease Control will be in jeopardy 
because their base funding provided by the Department of Labor, 
HHS appropriations has been so significantly reduced.
    I believe it is time to stop deceptive budgeting. We should 
be looking at the resources programs need for the fiscal year 
and not necessarily their long-enjoyed funding history. The 
Congress should carefully review programs to ensure funding is 
targeted to those that are the most successful and achieve the 
best results.

                           PREPARED STATEMENT

    That is why I am disappointed that the administration has 
cut funding for the National Institutes of Health (NIH). In the 
last 30 years, biomedical research has yielded significant 
scientific discoveries that have extended life, reduced 
illness, and cut healthcare costs considerably. Secretary 
Sebelius, your budget request, I believe, abandons our Nation's 
commitment to advancing medical research. In fact, the request 
does not keep pace with biomedical research inflation, and as a 
result, in inflationary adjusted dollars, NIH is nearly 20 
percent below where they were just 10 years ago. Our Nation's 
leading researchers will never find a cure, I believe, for the 
debilitating diseases that affect us without a commitment to 
advancing medical research. I believe it is critical to invest 
in biomedical research to ensure the United States continues to 
make progress toward medical discoveries that improve our lives 
and make treatment more effective and lower overall healthcare 
costs.
    I look forward to hearing from you this morning, but these 
are some of the concerns that I think we should look at.
    [The statement follows:]
            Prepared Statement of Senator Richard C. Shelby
    Secretary Sebelius, thank you for appearing today to discuss the 
Department of Health and Human Services (HHS) fiscal year 2013 budget.
    We are living in difficult times. America's gross debt has 
increased more than $5 trillion during President Obama's first 3 years 
in office, and the fiscal year 2013 budget request does nothing to curb 
spending or put our country on a fiscally sustainable path.
    In fact, the administration has built the 2013 budget based on the 
flawed philosophy of spend now, pay later. But as the turmoil in Greece 
is verifying, at some point the bill must be paid.
    One of the key fiscal challenges facing the Federal Government is 
healthcare spending. In the last 20 years, total funding for HHS has 
tripled. Since 2001, the Department's discretionary appropriation has 
increased by 45 percent.
    The President's answer to control health spending, the Affordable 
Care Act (ACA), continues to grow our Nation's deficit, and its bills 
are piling up.
    In fiscal year 2013, the budget requests a $1 billion increase in 
discretionary dollars for the Centers for Medicare & Medicaid Services 
to continue implementation of ACA activities. This is in addition to 
the $15.4 billion in mandatory funding the ACA directly appropriated 
since fiscal year 2011. By combining discretionary and mandatory 
funding streams, the majority of ACA circumvents the yearly 
appropriations process that is crucial to providing transparency to 
funding decisions.
    As we attempt to rein in Federal spending, it is clear that a 
comprehensive view to fund healthcare programs is necessary.
    Instead of using budgetary smoke and mirrors, we should examine all 
sources of funding--discretionary and mandatory--before the 
Appropriations Committee determines an appropriate level of 
discretionary funding. Many programs advertise their baseline 
reduction, when, in fact, they are recipients of significant mandatory 
funding from ACA. Agencies and programs should no longer deceive the 
American taxpayer by arguing their spending is reduced when they also 
receive mandatory funding from ACA that supplements and, in many cases, 
greatly increases their spending level.
    It is also critical that our subcommittee carefully consider the 
effects of the ACA's mandatory funding on important healthcare programs 
that may not be able to continue when the act is repealed. The 
administration has used the ACA's mandatory spending, which is not 
subject to a vote by the Congress every year, to backfill key 
discretionary programs. The administration then diverts discretionary 
dollars to fund new programs.
    When ACA is repealed, many important programs like community health 
centers and the section 317 immunization program at the Centers for 
Disease Control will be in jeopardy because their base funding provided 
by the Labor, Health and Human Services, and Education, and Related 
Agencies appropriations bill has been so significantly reduced.
    It is time to stop deceptive budgeting. We should be looking at the 
resources programs need for this fiscal year and not necessarily their 
long-enjoyed funding history. The Congress should carefully review 
programs to ensure funding is targeted to those that are the most 
successful and achieve the best results.
    That is why I am disappointed that the administration has cut 
funding for the National Institutes of Health (NIH).
    In the last 30 years, biomedical research has yielded significant 
scientific discoveries that have extended life, reduced illness, and 
cut healthcare costs considerably. Secretary Sebelius, your budget 
request abandons our Nation's commitment to advancing medical research. 
In fact, the request does not keep pace with biomedical research 
inflation and as a result, in inflationary adjusted dollars, the NIH is 
nearly 20 percent below where they were 10 years ago.
    Our Nation's leading researchers will never find a cure for the 
debilitating diseases that affect us without a commitment to advancing 
medical research. It is critical to invest in biomedical research to 
ensure the United States continues to make progress towards medical 
discoveries that improve lives, make treatment more effective, and 
lower overall healthcare costs.
    Mr. Chairman, I look forward to working with you this year to craft 
a bill that balances the needs of our healthcare system within our 
country's fiscal restraints.

    Senator Shelby.  Thank you, Mr. Chairman.
    Senator Harkin.  Thank you very much, Senator Shelby.
    Kathleen Sebelius became the 21st Secretary of the 
Department of Health and Human Services on April 29, 2009. In 
2003, she was elected Governor of Kansas and served in that 
capacity until her appointment by President Obama as the 
Secretary. Prior to her election as Governor, she served as the 
Kansas State Insurance Commissioner. She is a graduate of 
Trinity Washington University and the University of Kansas.
    My notes tell me this will make the Secretary's fifth 
appearance before this subcommittee since her appointment. You 
have always been forthright with us, Madam Secretary. We 
appreciate your being here. Your statement will be made a part 
of the record in its entirety, and please proceed as you so 
desire.

                 SUMMARY STATEMENT OF KATHLEEN SEBELIUS

    Secretary Sebelius. Well, thank you, Chairman Harkin and 
Ranking Member Shelby, and members of the subcommittee. A 
little shout-out to my home State senator, Senator Moran. And I 
appreciate the invitation to discuss the President's fiscal 
year 2013 budget for HHS.
    Our budget helps create an American economy built to last 
by strengthening our Nation's healthcare, supporting research 
that will lead to tomorrow's cures, and promoting opportunities 
for America's children and families so everyone has a fair shot 
to reach his or her potential. It makes the investments we need 
right now, while reducing the deficit in the long term, to make 
sure that the programs that millions of Americans rely on will 
be there for generations to come.
    I look forward to our discussion and answering your 
questions about the budget. But first, I would like to just 
share some of the highlights that fall under the jurisdiction 
of this subcommittee, which oversees almost $70 billion of our 
Department's nearly $77 billion discretionary budget.

                           HEALTHCARE REFORM

    Over the last 2 years, as the chairman said, we have worked 
to deliver the benefits of ACA to the American people. Thanks 
to the law, more than 2.5 million additional young Americans 
are already getting coverage through their parents' health 
plans. More than 25 million seniors across the country have 
taken advantage of the free recommended preventive services 
under Medicare. And small business owners are getting tax 
breaks on their health bills that allow them to hire more 
employees.
    This year, we will build on that progress by continuing to 
support States as they work to establish affordable insurance 
exchanges by 2014. Once these competitive marketplaces are in 
place, they will ensure that all Americans have access to 
quality, affordable health coverage.
    Because we know that a lack of insurance is not the only 
obstacle to care, our budget also invests in the healthcare 
workforce. This budget supports training more than 7,100 
primary care providers and placing them where they are needed 
most.
    It also invests in America's network of community health 
centers. Together with the 2012 resources, our budget will 
create more than 240 new access points for patient care, along 
with thousands of new jobs. Altogether, health centers will 
provide access to quality care for 21 million people, 300,000 
more than were served last year.
    This budget also continues our administration's commitment 
to improving the quality and safety of care by spending health 
dollars more wisely. It means investing in health information 
technology. It also means funding the first-of-its-kind Center 
for Medicare and Medicaid Innovation which is partnering with 
physicians, nurses, hospital administrators, private payers, 
and others who have accepted the challenge to develop a new, 
sustainable healthcare system.
    In addition, our budget ensures that 21st century America 
will continue to lead the world in biomedical research by 
maintaining funding for NIH.

                   HEALTHCARE WASTE, FRAUD, AND ABUSE

    At the same time, the budget recognizes the need to set 
priorities, making difficult tradeoffs and ensure we use every 
$1 wisely. That starts with support for President Obama's 
historic push to stamp out waste, fraud, and abuse in the 
healthcare system. Over the last 3 years, every $1 we have put 
into healthcare fraud and abuse control has returned more than 
$7 to taxpayers. Last year alone, these efforts recovered more 
than $4 billion. And just last week, our administration 
arrested the alleged head of the largest individual Medicare 
and Medicaid fraud operation in history. Our budget builds on 
those efforts by giving law enforcement the technology and data 
to spot perpetrators early and prevent payments based on fraud 
from going out in the first place.
    The budget also contains more than $360 billion in health 
savings over 10 years, most of which comes from reforms to 
Medicare and Medicaid. These are significant, but they are 
carefully crafted to protect beneficiaries. For example, we 
propose significant savings in Medicare by reducing drug costs, 
a plan that both puts money back in the Medicare Trust Fund and 
puts money back in the pockets of Medicare beneficiaries.

                           PREPARED STATEMENT

    The budget makes smart investments where they will have the 
greatest impact, and it puts us all on a path to build a 
stronger, healthier, more prosperous America for the future.
    Again, thank you, Mr. Chairman and members of the 
subcommittee, and I look forward to this discussion.
    [The statement follows:]
                Prepared Statement of Kathleen Sebelius
    Chairman Harkin, Ranking Member Shelby, and members of the 
subcommittee, thank you for the invitation to discuss the President's 
fiscal year 2013 budget for the Department of Health and Human Services 
(HHS).
    The budget for HHS invests in healthcare, disease prevention, 
social services, and scientific research. HHS makes investments where 
they will have the greatest impact, build on the efforts of our 
partners, and lead to meaningful gains in health and opportunity for 
the American people.
    The President's fiscal year 2013 budget for HHS includes a 
reduction in discretionary funding for ongoing activities and 
legislative proposals that would save an estimated $350.2 billion over 
10 years. The budget totals $940.9 billion in outlays and proposes 
$76.7 billion in discretionary budget authority, including $69.6 
billion under the purview of this subcommittee. This funding will 
enable HHS to:
  --strengthen healthcare;
  --support American families;
  --advance scientific knowledge and innovation;
  --strengthen the Nation's health and human service infrastructure and 
        workforce;
  --increase efficiency, transparency, and accountability of HHS 
        programs; and
  --complete the implementation of the American Recovery and 
        Reinvestment Act.
                         strengthen healthcare
    Delivering Benefits of the Affordable Care Act (ACA) to the 
American People.--The ACA expands access to affordable health coverage 
to millions of Americans, increases consumer protections to ensure 
individuals have coverage when they need it most, and slows increases 
in health costs. Effective implementation of the ACA is central to the 
improved fiscal outlook and well-being of the Nation. The Centers for 
Medicare & Medicaid Services (CMS) is requesting an additional $1 
billion in discretionary funding to continue implementing the ACA, 
including Affordable Insurance Exchanges, and to help keep up with the 
growth in the Medicare population.
    Expand and Improve Health Insurance Coverage.--Beginning in 2014, 
Affordable Insurance Exchanges will provide improved access to 
insurance coverage for millions of Americans. Exchanges will make 
purchasing private health insurance easier by providing eligible 
individuals and small businesses with one-stop shopping where they can 
compare benefit plans. New premium tax credits and reductions in cost-
sharing will help ensure that eligible individuals can afford to pay 
for the cost of private coverage through Exchanges. Fiscal year 2013 
will be a critical year for building the infrastructure and initiating 
the many business operations critical to enabling Exchanges to begin 
operation on January 1, 2014. The expansion of health insurance 
coverage for millions of low-income individuals, who were previously 
not eligible for coverage, also begins in 2014. CMS has worked closely 
with States to ensure they are prepared to meet the 2014 deadline and 
will continue this outreach in fiscal year 2013.
    Many important private market reforms have already gone into 
effect, providing new rights and benefits to consumers that are 
designed to put them in charge of their own healthcare. The ACA's 
Patient's Bill of Rights allows young adults to stay on their parents' 
plans until age 26 and ensures that consumers receive the care they 
need when they get sick and need it most by prohibiting rescissions and 
lifetime dollar limits on coverage for care, and beginning to phase out 
annual dollar limits. The new market reforms also guarantee independent 
reviews of coverage disputes. Temporary programs like the Early Retiree 
Reinsurance Plan and the Pre-Existing Condition Insurance Plan are 
supporting affordable coverage for individuals who often face 
difficulties obtaining private insurance in the current marketplace. 
Additionally, rate review and medical loss ratio (MLR) provisions helps 
ensure that healthcare premiums are kept reasonable and affordable year 
after year. The already operational rate review provision gives States 
additional resources to determine if a proposed healthcare premium 
increase is unreasonable and, in many cases, help enable State 
authorities to deny an unreasonable rate increase. HHS reviews large 
proposed increases in States that do not have effective rate review 
programs. The MLR provisions guarantee that, starting in 2011, 
insurance companies use at least 80 percent or 85 percent of premium 
revenue, depending on the market, to provide or improve healthcare for 
their customers or give them a rebate.
    Strengthen the Delivery System.--ACA established a Center for 
Medicare and Medicaid Innovation. The Innovation Center is tasked with 
developing, testing, and--for those that prove successful--expanding 
innovative payment and delivery system models to improve quality of 
care and reduce costs in Medicare, Medicaid, and the Children's Health 
Insurance Program. Since the Innovation Center began operations it has 
undertaken an ambitious agenda encompassing patient safety, 
coordination of care among multiple providers, and enhanced primary 
care. These projects can serve as crucial stepping stones towards a 
higher-quality, more-efficient healthcare system.
    Ensuring Access to Quality Care for Vulnerable Populations.--Health 
centers are a key component of the Nation's healthcare safety net. The 
President's budget includes a total of $3 billion, including an 
increase of $300 million from mandatory funds under the ACA, to the 
health centers program. This investment will provide Americans in 
underserved areas--both rural and urban--with access to comprehensive 
primary and preventive healthcare services. Together with 2012 
resources, HHS' budget will create more than 240 new access points for 
patient care. Overall, HHS' investment in health centers will provide 
access to quality care for 21 million people, an increase of 300,000 
additional patients over fiscal year 2012. The budget also promotes a 
policy of steady and sustainable health center growth by distributing 
ACA resources over the long-term. This policy safeguards resources for 
new and existing health centers to continue services and ensures a 
smooth transition as health centers increase their capacity to provide 
care as access to insurance coverage expands.
    Improving Healthcare Quality and Patient Safety.--ACA directed HHS 
to develop a national strategy to improve healthcare services delivery, 
patient health outcomes, and population health. In fiscal year 2011, 
HHS released the National Strategy for Quality Improvement in Health 
Care, which highlights three broad aims:
  --better care;
  --healthy people and communities; and
  --affordable care.
    Since publishing the National Strategy for Quality Improvement in 
Health Care, HHS has focused on gathering additional input from private 
partners and aligning new and existing HHS activities with the 
strategy. HHS will enhance the strategy by incorporating input from 
stakeholders and developing metrics to measure progress toward 
achieving the strategy's aims and priorities. Already, the strategy is 
serving as a blueprint for quality improvement activities across the 
country.
    Investing in Innovation.--HHS is committed to advancing the use of 
health information technology (IT). The budget includes $66 million, an 
increase of $5 million, for the Office of the National Coordinator for 
Health Information Technology (ONC) to accelerate the adoption of 
health IT and promote electronic health records (EHRs) as tools to 
improve both the health of individuals and the healthcare system as a 
whole. The increase will allow ONC to provide more assistance to 
healthcare providers as they become meaningful users of health IT. 
Furthermore, through the Health Information Technology for Economic and 
Clinical Health Act provisions of the American Recovery and 
Reinvestment Act, CMS is providing hospitals and medical professionals 
who participate in Medicare and Medicaid with substantial incentive 
payments for the adoption and meaningful use of EHRs. As of February 1, 
2012, CMS had made incentive payments to more than 23,600 providers who 
have met the objectives for meaningful use in the Medicare EHR 
Incentive program and more than 19,600 providers who have adopted, 
implemented, or upgraded EHRs, or met meaningful use objectives in the 
Medicaid EHR Incentive program. By encouraging providers to modernize 
their systems, this investment will improve the quality of care and 
protect patient safety.
                       support american families
    Healthy Development of Children and Families.--HHS oversees many 
programs that support children and families. The fiscal year 2013 
budget request invests in early education, recognizing the role high-
quality early education programs can play in preparing children for 
school success.
    Investing in Education by Supporting an Early Learning Reform 
Agenda.--The fiscal year 2013 budget supports critical reforms in Head 
Start and a child care quality initiative that, when taken together 
with the Race to the Top--Early Learning Challenge, are key elements of 
the administration's broader education reform agenda designed to 
improve our Nation's competitiveness by helping every child enter 
school ready for success.
    On November 8, 2011, the President announced important new steps to 
improve the quality of services and accountability at Head Start 
centers across the country. The budget requests more than $8 billion 
for Head Start programs, an increase of $85 million more than fiscal 
year 2012, to maintain services for the 962,000 children currently 
participating in the program. This investment will also provide 
resources to effectively implement new regulations that require 
grantees that do not meet high-quality benchmarks to compete for 
continued funding, introducing an unprecedented level of accountability 
into the Head Start program. By directing taxpayer dollars to programs 
that offer high-quality Head Start services, this robust, open 
competition for Head Start funding will help to ensure that Head Start 
programs provide the best available early education services to our 
most vulnerable children.
    The budget includes $300 million for a new child care quality 
initiative that States would use to invest directly in programs and 
teachers so that individual child care programs can do a better job of 
meeting the early learning and care needs of children and families. The 
funds would also support efforts to measure the quality of individual 
child care programs through a rating system or another system of 
quality indicators, and to clearly communicate program-specific 
information to parents so they can make informed choices for their 
families. These investments are consistent with the broader 
reauthorization principles outlined in the budget, which encompass a 
reform agenda that would help transform the Nation's child care system 
to one that is focused on continuous quality improvement and provides 
more low-income children access to high-quality early education 
settings that support children's learning, development, and success in 
school.
    Keeping America Healthy.--The President's budget includes resources 
necessary to enhance clinical and community prevention, support 
research, develop the public health workforce, control infectious 
diseases, and invest in prevention and management of chronic diseases 
and conditions.
    Tobacco Prevention Activities.--Tobacco use kills an estimated 
443,000 people in the United States each year. Despite progress in 
reducing tobacco use, 1 in 5 high school students and adults continue 
to smoke, costing our Nation $96 billion in medical costs and $97 
billion in lost productivity each year. The budget includes $586 
million in funding from the Centers for Disease Control and Prevention 
(CDC), the National Institutes of Health (NIH), and the Substance Abuse 
and Mental Health Services Administration (SAMHSA) to further help 
reduce smoking among teens and adults and support research on 
preventing tobacco use, understanding the basic science of the 
consequences of tobacco use, and improving treatments for tobacco-
related illnesses. HHS is striving to reduce adults' annual cigarette 
consumption in the United States from 1,281 cigarettes per capita to 
1,062 cigarettes per capita by 2013.
    Million Hearts Initiative.--The Million Hearts Initiative is a 
national public-private initiative aimed at preventing 1 million heart 
attacks and strokes over 5 years, from 2012 to 2017. It seeks to reduce 
the number of people who need treatment and improve the quality of 
treatment that is available. It focuses on increasing the number of 
Americans who have their high blood pressure and high cholesterol under 
control, reducing the number of people who smoke, and reducing the 
average intake of sodium and trans fats. To achieve this overall goal, 
the initiative will promote medication management and support a network 
of EHR registries to track blood pressure and cholesterol control, 
along with many other public-private collaborations. In fiscal year 
2013, the budget requests $5 million for CDC to achieve measurable 
outcomes in these areas.
    Preventing Teen Pregnancy.--The budget includes $105 million for 
the Office of the Assistant Secretary for Health for teen pregnancy 
prevention programs. These programs will support community-based 
efforts to reduce teen pregnancy using evidence-based models and 
promising programs needing further evaluation. The budget also includes 
$15 million in funding for CDC teen pregnancy prevention activities to 
reduce the number of unintended pregnancies through science-based 
prevention approaches. Additionally, the budget would repurpose 
unobligated funds to create a new teen pregnancy prevention program 
specifically targeted to youth in foster care, who are at particularly 
high risk of becoming teen parents.
    Protect Vulnerable Populations.--HHS is committed to ensuring that 
vulnerable populations continue to receive critical services during 
this period of economic uncertainty. For example, the Administration 
for Children and Families (ACF) budget requests includes a $7 million 
increase in funding for the Family Violence Prevention programs in 
order to expand shelter capacity and services and to support higher 
call volume to the domestic violence hotline.
    Preventing and Treating HIV/AIDS.--The fiscal year 2013 budget 
includes $3.3 billion for domestic HIV/AIDS activities to increase the 
availability of treatment to people living with HIV/AIDS in the United 
States, improve adherence to medications, and support prevention 
programs in States and communities. This total investment includes $1 
billion, an increase of $67 million, to increase access to life-saving 
treatments through the AIDS Drug Assistance program, and $236 million, 
an increase of $20 million, to support care provided by HIV clinics 
across the country.
    This total also includes $826 million for CDC's domestic HIV/AIDS 
prevention activities, an increase of $40 million more than fiscal year 
2012, to support grants to health departments to reduce new HIV 
infections, identify previously unrecognized HIV infections, and 
improve health outcomes. In addition, funds will support research, 
surveillance, evaluation, and implementation of high-impact prevention 
programs among HIV-affected populations. In fiscal year 2013, CDC will 
award grants to 69 State and local health departments to implement HIV/
AIDS prevention programs according to a revised funding algorithm 
instituted in fiscal year 2012, which better aligns the distribution of 
prevention resources with the disease burden rather than with 
historical AIDS data. CDC will also support up to 36 jurisdictions for 
an expanded testing initiative to focus on groups at highest risk for 
acquiring HIV such as men who have sex with men, African Americans, and 
injection drug users.
    Refugee Transitional and Medical Services.--The budget requests 
$805 million to provide time-limited cash and medical assistance to 
newly arrived refugees, helping them become self-sufficient as quickly 
as possible, and to provide shelter for unaccompanied alien children 
until they can be placed with relatives or other sponsors, repatriated 
to their home countries, or receive relief under U.S. immigration law. 
Additional funding will primarily cover rising medical costs--many 
refugees have spent their lives in camps where medical care is limited 
or nonexistent--and serve the growing number of unaccompanied alien 
children made eligible for benefits under the Trafficking Victims 
Protection Reauthorization Act of 2008.
    Elder Justice.--The budget includes $43 million for the 
Administration on Aging (AOA) to address the growing problem of elder 
abuse, neglect, and exploitation which affects more than 5 million 
seniors annually. Research indicates that older victims of even modest 
forms of abuse have dramatically higher morbidity and mortality rates 
than nonabused older people. To combat this abuse, the budget provides 
$8 million for newly authorized Adult Protective Services Demonstration 
grants, along with $9 million in ongoing funding for State grants to 
raise awareness of elder abuse and neglect and for resource centers and 
related activities that support nationwide elder rights activities. The 
budget also includes $17 million for the Long-term Care Ombudsman 
Program to improve the quality of care for the residents of long-term 
care facilities by resolving complaints on behalf of residents.
    Keeping People in Communities.--Part of HHS' strategic plan 
includes enabling seniors to remain in their own homes with a high-
quality of life for as long as possible through the provision of home 
and community-based services, including supports for family caregivers. 
Some seniors, if unable to remain independent in the community, will be 
forced to move into a nursing home at a significant potential cost to 
Medicaid. The budget includes $1.4 billion in AOA to help seniors stay 
in their homes through home and community-based supportive services, 
senior nutrition programs, and Caregiver Support programs. The budget 
also proposes to transfer the Senior Community Service Employment 
program from the Department of Labor (DOL) to the AOA. This move 
provides greater alignment with the agencies that provide supportive 
services.
    Community Services Programs.--The budget includes $400 million for 
community services programs. This funding level includes $350 million 
for the Community Services Block Grant (CSBG), and proposes to use a 
system of standards and competition to target the funds to high-
performing agencies that are most successful in meeting community 
needs. In support of the Healthy Food Financing Initiative, $10 million 
is available to fund community development corporations to eliminate 
food deserts by improving access to grocery stores, farmers' markets, 
and other venues for healthy, affordable groceries. Additionally, $20 
million is requested for the Community Economic Development program to 
sponsor enterprises providing employment, training, and business 
development opportunities for low-income Americans.
    Vulnerable Youth.--The ACFs' budget includes an additional $5 
million as part of a cross-agency effort to identify and test new ways 
to strengthen services for disconnected youth--14- to 24-year-olds who 
are neither working nor in school. This $5 million will be utilized in 
close cooperation with an additional $5 million requested by the 
Department of Education and $10 million from DOL. In addition to the 
funding request, the administration proposes a general provision in the 
appropriations act to support a limited number of ``performance 
partnerships'' that would provide States and localities with enhanced 
flexibility in determining how services are structured in return for 
strong accountability for results.
    Reduce Foodborne Illness.--The budget reflects the administration's 
commitment to transforming our Nation's food safety system into one 
that is stronger and that reduces foodborne illness and includes an 
increase of $17 million above fiscal year 2012 to support CDC's role in 
implementing the Food Safety and Modernization Act. HHS will continue 
to modernize and implement a prevention-focused domestic and import 
safety system. Collaboratively, the Federal Drug Administrative (FDA) 
and CDC are working to decrease the rate of Salmonella Enteritidis 
illness in the population from 2.6 cases per 100,000 to 2.1 cases per 
100,000 by December 2013. In fiscal year 2013, CDC will enhance 
surveillance systems and designate five Integrated Food Safety Centers 
of Excellence at State health departments.
              advance scientific knowledge and innovation
    Biomedical and Behavioral Research.--The fiscal year 2013 budget 
maintains funding for the NIH at the fiscal year 2012 level of $30.9 
billion, reflecting the administration's priority to invest in 
innovative biomedical and behavioral research that spurs economic 
growth while advancing medical science to improve health. NIH is 
generating discoveries that are opening new avenues for disease 
treatment and prevention and revolutionizing patient care. In fiscal 
year 2013, NIH will seek to take advantage of such discoveries by 
investing in basic research on the fundamental causes and mechanisms of 
disease, accelerating discovery through new technologies, advancing 
translational sciences, and encouraging new investigators and new 
ideas.
    National Center for Advancing Translational Sciences (NCATS).--In 
fiscal year 2013, NIH will continue to implement NCATS, established in 
fiscal year 2012, in order to re-engineer the process of translating 
scientific discoveries into new medical products. Working closely with 
partners in the regulatory, academic, nonprofit, and private sectors 
while not duplicating work going on in the private sector, NCATS will 
strive to identify innovative solutions to overcome hurdles that slow 
the development of effective treatments and cures. A total of $639 
million is proposed for NCATS in fiscal year 2013, including $50 
million for the Cures Acceleration Network.
    Medical Countermeasure Development.--The HHS Medical Countermeasure 
Enterprise includes initiatives across the Department covering the 
spectrum of medical countermeasure development, from early biological 
research to stockpiling of approved products. The fiscal year 2013 
budget includes $547 million for the Biomedical Advanced Research and 
Development Authority, an increase of $132 million more than fiscal 
year 2012, to develop and improve next-generation medical 
countermeasures (MCM) in response to potential chemical, biological, 
radiological, and nuclear threats. The budget also provides $50 million 
to establish a strategic investment corporation that would function as 
a public-private venture capital fund providing companies developing 
MCMs with the necessary financial capital and business acumen to 
improve the chances of successful development of new MCM technologies 
and products. Together, these investments will provide HHS with new 
tools to enhance the success of medical countermeasure development.
    Enhancing Healthcare Decisionmaking.--The HHS budget includes $599 
million for research that compares the risk, benefits, and 
effectiveness of different medical treatments and strategies, including 
healthcare delivery, medical devices, and drugs, including $78 million 
from the Patient-Centered Outcomes Research Trust Fund (PCORTF) 
established by the ACA. Evidence generated through this research is 
intended to help patients make informed healthcare decisions that best 
meet their needs. This level of funding will primarily support research 
conducted by NIH, core research activities within the Agency for 
Healthcare Research and Quality, and data capacity activities within 
the Office of the Assistant Secretary. Resources from PCORTF will 
support comparative clinical effectiveness research dissemination, 
improved research infrastructure, and training of patient-centered 
outcomes researchers. HHS core research will be coordinated to 
complement projects supported through PCORTF and through the 
independent Patient-Centered Outcomes Research Institute.
  strengthen the nation's health and human service infrastructure and 
                               work force
    Investing in Infrastructure.--A strong health workforce is key to 
ensuring that more Americans can get the quality care they need to stay 
healthy. The budget includes $677 million, an increase of $49 million 
more than fiscal year 2012, within Health Resources and Services 
Administration (HRSA) to expand the capacity and improve the training 
and distribution of primary care, dental, and pediatric health 
providers. The budget will support the placement of more than 7,100 
primary care providers in underserved areas and begin investments that 
expand the capacity of institutions to train 2,800 additional primary 
care providers more than 5 years.
    The fiscal year 2013 budget also supports State and local capacity 
for core public health functions. Within the Prevention Fund 
allocation, CDC will invest $20 million in new activities to coordinate 
with public health laboratories to improve efficiency through proven 
models, such as regionalizing testing in multi-State laboratories. To 
ensure an effective public health workforce, the budget requests $61 
million, of which $25 million is through the Prevention Fund, for the 
CDC public health workforce to increase the number of trained public 
health professionals in the field. CDC's experiential fellowships and 
training programs create a prepared and sustainable health workforce to 
meet emerging public health challenges. In addition, the budget 
requests $40 million in the Prevention Fund to maintain support for 
CDC's Public Health Infrastructure program. This program will assist 
health departments in meeting national public health standards and will 
increase the capacity and ability of health departments in areas such 
as information technology and data systems, workforce training, and 
regulation and policy development.
increase efficiency, transparency, and accountability of the department 
                 of health and human services programs
    Living Within Our Means.--HHS is committed to improving the 
Nation's health and well-being while simultaneously contributing to 
deficit reduction. The fiscal year 2013 discretionary request 
demonstrates this commitment by maintaining ongoing investments in 
areas most central to advancing the HHS mission while making reductions 
to lower-priority areas, reducing duplication, and increasing 
administrative efficiencies. Overall, the fiscal year 2013 request 
includes more than $2.1 billion in terminations and reductions to fund 
initiatives while achieving savings in a constrained fiscal 
environment. Many of these reductions, such as the $177 million cut to 
the Children's Hospital Graduate Medical Education Payment program, the 
$327 million cut to CSBG, and the $452 million cut to the Low Income 
Home Energy Assistance Program (LIHEAP) were very difficult to make but 
are necessitated by the current fiscal environment.
    Regarding LIHEAP, the administration proposes to adjust funding for 
expected winter fuel costs and to target funds to those most in need. 
The request is $3 billion, $452 million below the fiscal year 2012 
level and $450 million more than both fiscal year 2008 and fiscal year 
2012 request. With constrained resources, the budget targets assistance 
where it is needed most. The request targets $2.8 billion in base 
grants using the State allocation the Congress enacted for fiscal year 
2012. The request also includes $200 million in contingency funds, 
which will be used to address the needs of households reliant on home 
delivered fuels (heating oil and propane) should expected price trends 
be realized, as well as other energy-related emergencies.
    In September 2011, the administration detailed a plan for economic 
growth and deficit reduction. The fiscal year 2013 budget follows this 
blueprint in its legislative proposals, presenting a package of health 
savings proposals that would save more than $360 billion more than 10 
years, with almost all of these savings coming from Medicare and 
Medicaid. Medicare proposals would encourage high-quality, efficient 
care, increase the availability of generic drugs and biologics, and 
implement structural reforms to encourage beneficiaries to seek value 
in their healthcare choices. The budget also seeks to make Medicaid 
more flexible, efficient, and accountable while strengthening Medicaid 
program integrity. Together, the fiscal year 2013 discretionary budget 
request and these legislative proposals allow HHS to support the 
administration's challenging yet complementary goals of investing in 
the future and establishing a sustainable fiscal outlook.
    Program Integrity and Oversight.--The fiscal year 2013 budget 
continues to make program integrity a top priority. The budget includes 
$610 million in discretionary funding for Health Care Fraud and Abuse 
Control (HCFAC), the full amount authorized under the Budget Control 
Act of 2011 (BCA). The budget also proposes to fully fund discretionary 
program integrity initiatives at $581 million in fiscal year 2012, 
consistent with the BCA. The discretionary investment supports the 
continued reduction of the Medicare fee-for-service improper payment 
rate; investments in prevention-focused, data-driven initiatives like 
predictive modeling; and HHS-Department of Justice Health Care Fraud 
Prevention and Enforcement Action Team (HEAT) initiatives, including 
Medicare Strike Force teams and fighting pharmaceutical fraud.
    From 1997 to 2011, HCFAC programs have returned more than $20.6 
billion to the Medicare Trust Funds, and the current 3-year return-on-
investment of $7.2 recovered for every $1 appropriated is the highest 
in the history of the HCFAC program. Last year these efforts recovered 
more than $4 billion. The budget proposes a 10-year discretionary 
investment yielding a conservative estimate of $11.3 billion in 
Medicare and Medicaid savings and 16 program integrity proposals to 
build on the ACA's comprehensive fraud fighting authorities for savings 
of an additional $3.6 billion over 10 years.
    Additionally, the budget includes funding increases for significant 
oversight activities. The request includes $84 million for the Office 
of Medicare Hearings and Appeals, an increase of $12 million, to 
continue to process the increasing number of administrative law judge 
appeals within the statutory 90-day timeframe while maintaining the 
quality and accuracy of its decisions. The budget also includes $370 
million in discretionary and mandatory funding for the Office of 
Inspector General (OIG), a 4-percent increase from fiscal year 2012. 
This increase will enable OIG to expand CMS Program Integrity efforts 
in areas such as HEAT, improper payments, and focus on investigative 
efforts on civil fraud, oversight of grants, and the operation of new 
ACA programs.
    Additionally, Durable Medical Equipment (DME) Competitive Bidding 
is providing competitive pricing, while continuing to ensure access to 
quality medical equipment from accredited suppliers, which will save 
Medicare $25.7 billion over 10 years and help millions of Medicare 
beneficiaries save $17.1 billion in out-of-pocket costs over 10 years. 
The budget proposes to extend some of the efficiencies of DME 
Competitive Bidding to Medicaid by limiting Federal reimbursement on 
certain DME services to what Medicare would have paid in the same State 
for the same services. This proposal is expected to save Medicaid $3 
billion over 10 years.
    Consolidate and Improve Activities Related to Prevention and 
Behavioral Health.--The budget includes $500 million within SAMHSA for 
new, expanded, and refocused substance abuse prevention and mental 
health promotion grants to States and tribes. To maximize the 
efficiency and effectiveness of its resources, SAMHSA will use 
competitive grants to identify and test innovative prevention practices 
and will leverage State and tribal investments to foster widespread 
implementation of evidence-based prevention strategies.
    The budget also consolidates funding for initiatives aimed at 
addressing chronic disease prevention. Chronic diseases and injuries 
represent the major causes of morbidity, disability, and premature 
death and heavily contribute to the growth in healthcare costs. The 
budget aims to improve the health of individuals by focusing on 
prevention of chronic diseases and injuries rather than focusing solely 
on treating conditions that could have been prevented. Specifically, 
the budget allocates $379 million, an increase of $129 million more 
than fiscal year 2012, to a new integrated grant program in CDC that 
refocuses disease-specific grants into a comprehensive program that 
will enable health departments to implement the most effective 
strategies to address these leading causes of death. Because many 
inter-related chronic disease conditions share common risk factors, the 
new program will improve health outcomes by coordinating the 
interventions that can reduce the burden of chronic disease.

    Senator Harkin.  Thank you very much, Madam Secretary.
    Madam Secretary, I am going to yield my opening position to 
Senator Mikulski who has to go chair another hearing here very 
shortly.

                STATEMENT OF SENATOR BARBARA A. MIKULSKI

    Senator Mikulski.  Thank you very much, Mr. Chairman, for 
yielding.
    Senator Inouye is indisposed this morning and I am going to 
chair the Department of Defense appropriations hearing. So it 
is really the day of shooting straight.
    I am only 4 foot 11, so you cannot see me, but you have 
certainly been able to hear me.
    Secretary Sebelius. I can see you.

                      IMPROVING HEALTHCARE QUALITY

    Senator Mikulski.  Let me get right to my question, Madam 
Secretary.
    I want to thank you for the great job you are doing. I want 
to thank you for your respect of implementing the laws that the 
Congress passes, your respect for the Constitution and all of 
its amendments, and also creating the sense of your agencies 
working with the Congress. My work with Dr. Margaret Hamburg on 
the Prescription Drug User Fee Act (PDUFA), the way she has 
reached out in her agency to the business community has really 
been I think a model of how to work to keep our people safe and 
yet to not shackle them with unnecessary regulation.
    Let me get to my question on quality. When we worked on 
ACA, Senator Harkin, of course, was one of the leaders on the 
bill and on prevention. I worked with him on that. And I worked 
on the quality initiatives. The goal was two things: one, not 
only to improve access, but by improving quality, we could save 
lives and save money. We have the home of Dr. Pronovost at 
Hopkins, the famous Pronovost checklist.
    My question to you is, ``How are we training the cadre of 
scientists and physicians in the area of quality medical 
delivery services?'' I have been advised by the School of 
Public Health and Dr. Pronovost himself that there is this 
whole body of knowledge that could be taught at great schools 
of medicine and public health where it would not be just a few 
leaders like Pronovost, but we would be training people in the 
science of healthcare delivery and developing it so they would 
be in communities, they would become hospital administrators, 
et cetera. Would you look at all of your programs to see how we 
could encourage that?
    Secretary Sebelius.  I would be delighted to work with you 
on that, Senator Mikulski.
    I can tell you that what is happening now is very exciting 
for the next generation of providers and administrators because 
I think for the first time across this country, there is a 
focus and highlight on real changes, transformations in the 
delivery system, and a lot of that is focused on taking the 
best practices which exist in pockets--and certainly the 
checklist is a great example of that--but bringing them to 
scale and having every health system in the country adopt some 
of these practices in a much more timely fashion. So through 
our Innovation Center and through the Partnership for Patients, 
which now has engaged more than 5,000 partners, private 
employers, payers, and hospital systems, we are actually 
capturing the quality programs and----
    Senator Mikulski.  But you are going to need people to do 
this.
    Secretary Sebelius. You bet.
    Senator Mikulski.  And just as we have skilled surgeons, 
those who do the hands-on medicine, for those to advise those 
in the practice of medicine, hospital administrators, Governors 
looking at how to handle an increasing, burgeoning Medicaid 
costs. So would you look at that and respond to me?
    Secretary Sebelius. Yes, I would.

                     CHILD CARE QUALITY INITIATIVES

    Senator Mikulski.  My second and last question will be 
child care quality initiatives. I chair the subcommittee on 
Children and Families. We have had extensive hearings on 
reauthorizing the Child Care Development Block Grant. We have 
bipartisan cooperation. I cannot say enough about Senator 
Burr's work, how we are working together.
    My question goes, as we look forward to access, there is 
also child safety and child quality. There has been a recent 
story on ``Nightline'' that our current laws are inadequate in 
terms of background checks and so on. So we want to increase 
access, keep it affordable. But my God, when you go to a day 
care center, you have got to make sure that the people who are 
the day care providers, number one that it is a safe 
environment and also their education and training. Could you 
comment? Have you seen the ``Dateline'' story?
    Secretary Sebelius. I have not seen the ``Dateline'' story, 
but I have read the clips about it.
    Senator Mikulski.  You know what I mean.
    Secretary Sebelius. Absolutely.
    Senator Mikulski.  I know of your work as Governor and 
child advocate, do you have any comments or would you like to 
respond in writing because we hope to reauthorize this program, 
and we are looking to advice and guidance from the Department.
    Secretary Sebelius. Well, we very much are eager to work 
with you, and I think you have articulated very well the 
principles around which we think reauthorization should occur, 
not only making sure that there are additional slots for 
families, knowing that child care is really one of the work-
friendly programs--you cannot go to work if your children are 
not in a safe and secure place--but also knowing that way too 
many parents either do not have a way to understand what is 
going on in the system and do not have the confidence that any 
place they put their child is a high-quality care system. So 
improving quality and getting that information into the hands 
of parents, sort of the rating system, so parents really can 
make the best choice for themselves and their children is an 
effort that is underway, as you know, and we think has to be 
part of the framework for reauthorization.
    Senator Mikulski.  Madam Secretary, my time is up, and 
Senator Harkin has been gracious. What we are looking at is how 
we can improve that background check without adding more cost 
and more regulation and, second, really how we get to the 
training of these child care workers and how they have perhaps 
a career ladder like we have done in nursing, CNA, licensed 
practical nurse, so they see a career.
    Secretary Sebelius. And, Senator, just so you know a little 
bit about my history, I went to the legislature in Kansas when 
my children were 2 and 5, and this became an issue that was 
near and dear to my heart and has been ever since. That was a 
very long time ago, but child care was something I was living 
at the time, so it became one of my causes. And I very much 
look forward to working with you.
    Senator Harkin.  Thank you, Senator Mikulski.
    Thank you, Madam Secretary.
    Senator Shelby.

                              NIH FUNDING

    Senator Shelby.  Thank you.
    Madam Secretary, the 2013 budget proposal, with the Public 
Health Service Act evaluation tap increase included, reduces 
NIH's budget by $215 million below fiscal year 2012. How will 
NIH maintain its scientific rigor and innovation when the 
budget request does not keep pace with the biomedical inflation 
rate? Do we not have a problem here?
    Secretary Sebelius. Well, Senator, I first of all share 
your belief that continuing to make sure that America leads the 
world in biomedical research is a critical priority for the 
future, and we look forward to working with the Congress around 
the tap issue as we move forward.
    Having said that, I can tell you that Dr. Collins has 
allocated resources within NIH's budget, which is currently 
funded at the level that it was funded last year, and made sure 
that we continue to fund new grants. His report is that the 
fiscal year 2013 budget level will allow him to increase the 
grants by about 7.7 percent. An additional 672 new grants will 
be funded. He is also very appreciative of the notion that 
working with the Congress, the National Center for 
Translational Sciences was funded, and he is moving ahead on 
that. There are new resources where he feels is an enormously 
promising area to recapture and refocus some of the energy, as 
well as the Cures Acceleration Network has additional 
resources. So this budget not only reflects our desire to make 
sure that we continue to fund new scientific discoveries but 
also to focus the resources on the areas that are the most 
promising strategies for the future.

                       HEALTH INSURANCE EXCHANGES

    Senator Shelby.  In another area, the fiscal year 2013 
budget proposal includes $864 million for the implementation of 
the new health insurance exchanges. HHS has already received $1 
billion in ACA for the implementation activities and will 
receive a little more than $1 billion more in mandatory funding 
for the exchange in 2013. Why is it necessary to appropriate an 
additional $864 million for exchanges?
    Secretary Sebelius. Senator, the request before this 
subcommittee for the additional resources for the Centers for 
Medicare & Medicaid Services (CMS) reflects the fact that we 
anticipate that the first $1 billion funding that was included 
in ACA in 2010 will be fully spent by the end of fiscal year 
2012. The good news is we are spending significantly under what 
was estimated by the Congressional Budget Office (CBO) which 
estimated, at the time of passage, that we would need about $1 
billion a year to implement this. So here we are looking at the 
end of 2012, and the first $1 billion will be spent in the 2\1/
2\ years since implementation.
    What we are requesting with the $800 million for new 
resources is basically a one-time cost to build the framework 
for the Federal exchange which will be run out of CMS. We are 
not clear at this point how many States will actually opt to 
run their own State-based exchanges, how many States will be in 
a so-called partnership where the Federal exchange will run 
part of the program and they will run part and how many will 
fully run. But we need an infrastructure, an IT system, an 
outreach system, an enrollment system. So this is the request 
for 2013 which again is not an ongoing request, but it is 
basically to build that framework for the federally funded 
exchanges.

                     ANTIDEFICIENCY ACT VIOLATIONS

    Senator Shelby.  Madam Secretary, in the area of 
Antideficiency Act violations, a lot of us are concerned about 
the series of Antideficiency Act violations by your Department 
and the lack of a corrective action to address these unlawful 
funding practices.
    Last July, you notified us that the Department had 47 
violations that amounted to more than $1.4 billion in illegal 
funding practices. At a time when the Department is receiving a 
historically high level of funding, I believe it is critical 
that you follow the letter of the law here.
    Clearly, there are significant weaknesses over there. Are 
you following the recommendations of the Office of Inspector 
General (OIG), or are you trying to just ignore those past 
violations and move to a clean slate? What is going on?
    Secretary Sebelius. Well, Senator, as we notified the 
committees in July, we were made aware that there were 47 
contracts that were improperly funded dating back to 2002. I 
would say the positive news about that is that the contracts 
were not structured properly according to the Antideficiency 
Act, but the monies were all appropriately spent. They were not 
overspent.
    Having said that, we took this violation very seriously. We 
self-reported it. We have engaged in a really robust activity 
at the Department working with the OIG, as well as working with 
GAO, on everything from changing policies and procedures. We 
have trained 12,000 staff members on how this has to be done. 
We have gone back through the corrections and we would be 
delighted to give you in writing the full report on what has 
occurred so far and how seriously we take this. We do take it 
very, very seriously.
    Senator Shelby.  Thank you.

                        IMPACT OF SEQUESTRATION

    Senator Harkin.  Thank you, Senator Shelby.
    Here is the order I have. I will ask the next round of 
questions for 5 minutes and then Senators Alexander, Brown, 
Johnson, Landrieu, Moran, Kohl, and Graham will speak.
    Madam Secretary, next January we are facing a possible 
sequestration to reduce the national debt. I applaud the 
President for presenting a fair and responsible budget to help 
avert this outcome except in the areas I noted in my opening 
statement. It is critical for this subcommittee to understand 
the potential impact of this possible sequestration. CBO 
estimated that most non-defense discretionary programs would 
face a cut of up to 7.8 percent. Others, such as the Center on 
Budget and Policy Priorities, think the cut could be even 
larger. But for the sake of discussion, we will go with CBO's 
number of 7.8 percent.
    My question. Have you looked at this? Could you give us 
some idea of what would be the impact of a 7.8-percent cut to 
programs like Head Start, the Child Care and Development Block 
Grant that you and Senator Mikulski were discussing, AIDS Drug 
Assistance Program, senior nutrition, all the other areas? What 
would be the impact of that 7.8-percent cut?
    Secretary Sebelius. Well, Mr. Chairman, as you well know, 
within our Department the application of sequestration becomes 
even more complicated. We have some programs that would be 
fully shielded from any cuts. We have some programs which are 
limited to a 2-percent cut, which means that there would be an 
even harsher application of sequestration across the board on 
our programs.
    So we think if it were a close to 8-percent cut, we would 
lose about 1 million slots in both Head Start and Child Care. I 
am sorry. Not 1 million. One hundred thousand slots in Head 
Start and Child Care. About 75,000 children would lose their 
places in Head Start and about 25,000 in Child Care.
    We have about 17 million meals that would not be delivered 
to seniors relying on congregate meals and home delivery.
    The AIDS Drug Assistance program would have to reduce its 
caseload by more than 12,000 people who are currently receiving 
antiretroviral drugs.
    And the NIH budget, which I know is a concern to members of 
this subcommittee, would lose about $2.5 billion. NIH is 40 
percent of our budget. They would take a huge hit, and we think 
that research project grants would decline by--about 2,300 
grants would be discontinued. More than one-quarter of the 
number estimated for fiscal year 2012 would be gone, and that 
would be about one-third of a reduction. One-third of the 
programs that we are estimating for fiscal year 2013 would 
cease to exist.
    So it would have a huge impact across our Department and 
particularly for the areas that are not shielded and therefore 
would take an even more significant hit.
    Senator Harkin.  Well, thank you, Madam Secretary. I am 
going to be asking that same question when the Secretaries of 
Labor and Education and the NIH Director are up here also. We 
have heard a lot from the defense community about what would 
happen to their portion of national security if they had a 7.8-
percent cut. I think it is important for the American people to 
know about the rest of our national security because as 
President Truman once said so eloquently so many years ago, he 
said our national security is not measured just in tanks and 
guns alone but also in the health, welfare, and education of 
our people.
    Secretary Sebelius. And as you know, these programs affect 
real people every day and are often life and death issues.

                   HEALTHCARE FRAUD, WASTE, AND ABUSE

    Senator Harkin.  Exactly. Well, thank you.
    Last, could you address the fraud and waste issue that I 
mentioned in my opening statement? We had that Budget Control 
Act cap adjustment that allowed a $270 million increase, but 
when we got to conference, my friends on the other side of the 
aisle said no, and so we did not get that. What does that mean 
in terms of not returning money to the taxpayers?
    Secretary Sebelius. Well, over the last 3 years, as I said, 
Mr. Chairman, we have been able to return about $7 for every $1 
invested. So a $270 million cut is significant. We know that 
our OIG had plans for the use of those resources to further 
expand some of our footprint on the ground to new strike forces 
in new cities, and those will have to be on hold. And we would 
love to work with you in a full funding for this program, which 
I think is an absolute win-win situation to stop people from 
stealing health dollars, taxpayer dollars, to continue to build 
our data analytic system so that we can do far more prevention 
on the front end and to have the boots on the ground to go 
after the perpetrators who we think are committing these 
outrageous acts of fraud and stop them quickly on the ground.
    Senator Harkin.  Thank you, Madam Secretary.
    Senator Alexander.

                                MEDICAID

    Senator Alexander. Thanks, Madam Secretary. Welcome. Thank 
you for coming.
    I have just two preliminary comments and then a question.
    Senator Mikulski mentioned Prescription Drug User Fee Act 
(PDUFA), and I wondered if we could not pause for a moment of 
bipartisan cooperation. We have four authorizing laws that 
establish fees for prescription drugs, medical devices, 
biosimilar drugs, and generic drugs, and we call them PDUFA, 
Medical Device User Fee Act, Biosimilar User Fee Act, and 
Generic Drug User Fee Act. And I wonder if we could have a 
prize for an elegant replacement for all of those ridiculous 
names that we just throw around up here.
    Secretary Sebelius. I have to say it took me most of the 
last 3 years to learn what people were even talking about when 
they would mention those to me. So I am all for it.
    Senator Alexander. Good. Well, I will work with the 
chairman and we will see what we can do about that.
    I wanted to mention simply to you--and I will write you a 
letter about this--the Tennessee Poison Control Center. It is a 
very small program located at Vanderbilt University, but when 
kids get in trouble at home, they can telephone this poison 
control center and the parent gets talked through what to do 
about it rather than their going to the emergency room. It is 
80 percent paid for by State and local funding. The Federal 
Government has a share of it. It saves about $11 million a 
year, people think, in emergency room costs. And I just wanted 
to call it to your attention and you do not need to respond to 
it now. But I think it is worth noting the importance of it.
    I wanted to just ask you a question in sort of a Governor-
to-Governor way. You were a Governor. I was a Governor. We have 
these wistful--or at least I do--thoughts of those days as if 
they were trouble-free and everything was great, which is not 
exactly true, but it was a wonderful experience.
    And I am worried that the new healthcare law has created a 
situation where we are 1 budget year away from a ticking time 
bomb in the States for Governors as they seek to comply with 
the Federal requirements for expansion of Medicaid and then 
Federal requirements for paying doctors who want to serve 
people who get Medicaid. I know our former Governor, a 
Democrat, Governor Bredesen, called that the mother of all 
unfunded mandates. He estimated that it will cost Tennessee an 
additional $1.1 billion between 2014 and 2019. The Federal 
Government helps with that for a while, but then it is fully a 
State responsibility.
    And then we add to that by a Federal requirement that 
doctors be reimbursed, providers be reimbursed for seeing 
Medicaid patients, which needs to happen otherwise it is a 
ticket to a bus that does not run. So people need to be able to 
see a doctor. But that adds another $324 million a year to our 
State. And we are already in a situation where rising 
healthcare costs are squeezing money out of our State budgets 
that otherwise would be spent for higher education.
    Now, this is not something new with President Obama. This 
has been going on for 30 years. I used to deal with it in 
Tennessee almost every year. I imagine you dealt with it as 
Governor of Kansas. You get down to the end of the budget 
process and you have got money either for Medicaid or the 
University of Kansas, the University of Tennessee, and it is a 
very difficult choice. And the healthcare costs keep going like 
this. And as a result in Tennessee last year, there was a 16-
percent increase in State Medicaid spending, a 15-percent 
decrease in State support for higher education. That is not a 
Washington cut. That is a real cut. And so tuition goes up at 
the universities and quality goes down.
    So as I said, this is not new. I first suggested to 
President Reagan a long time ago that we have a swap, that the 
Federal Government take all the Medicaid and the States take 
all of elementary and secondary education. Former Senator 
Kassebaum from Kansas came up with a similar idea in the 1980s 
because of this combination of Federal controls and State 
spending.
    Do we not have to do something to give States more 
flexibility in dealing with Federal Medicaid mandates in order 
to avoid exporting fiscal instability from Washington to State 
capitals that has the primary effect of squeezing down the 
quality of public higher education and raising tuition for the 
students who go there? And if that is a problem and it is going 
to start in the next budget year, 2014, can you suggest 
anything that we could do to make it easier?
    Secretary Sebelius. Well, Senator, I did deal as you did 
with these budget challenges at the State level, and I have 
dealt actively since I came to this position with my colleagues 
around the country who are coping with this.
    I will provide you in writing with some of this analysis, 
but just to give you a little snapshot. At least in the last 3 
years, State share of spending on Medicaid is actually reduced 
nationally. Their overall budget share that they were spending 
on Medicaid in 2007 was higher than it was in 2010, which is 
the last full year that we have. Per capita costs for Medicaid 
have dropped in that period of time. They were above $2,200 a 
person. They are now down below $1,800 a person for the 
Medicaid budgets on average. And the overall State expenditures 
have dropped during that period of time. Some of that was 
clearly helped by the Federal resources that were put in as 
part of the American Recovery and Reinvestment Act, but the 
State picture is actually different.
    The final thing that I asked our folks to do in terms of 
just analysis is look at underlying healthcare costs, which are 
continuing to rise, compared to higher education costs. And 
actually higher education costs are now up 63 percent in the 
last decade. And healthcare spending is up about 40 percent. So 
you are absolutely right. This is an ongoing challenge. It is 
one that people are coping with.
    I would tell you that the Medicaid expansion that is on the 
horizon for 2014 is some pretty good news for States, and it is 
not only fully paid for by the Federal Government for the first 
4 years, but the Federal share stays for the newly insured 
population between 100 and at the lowest 90 percent by the time 
the decade ends, so that the largest share that the State will 
pay in that period of time for millions of newly insured folks 
is a 10 percent match.
    Having said that, States now absorb enormous amounts of 
costs for uncompensated care where people are coming into 
community hospitals, are in the workforce, and States are 
paying a share of that cost out of taxpayer dollars. So on 
balance, I think this is an opportunity to not only have a 
payment system under a lot of folks, get them in a healthier 
condition, but also I think States--ironically those who have 
the lowest-insured population are the biggest winners in some 
ways that have had not very generous Medicaid systems and have 
the most people that will actually become fully insured as part 
of this program.
    We are also paying careful attention to the provider issue. 
As you say, there is a requirement that doctors who take care 
of Medicaid patients will be paid at the Medicare rate for the 
first 2 years fully out of Federal dollars. It is not a State 
mandate. It is fully out of Federal dollars. We know that it is 
not a long-term strategy. We look forward to working with the 
Congress on a long-term strategy, but again, there is no 
mandate beyond those 2 years and there is no mandated State 
funding beyond those 2 years.
    Senator Alexander. Mr. Chairman, I am out of time and I 
would welcome that information.
    Secretary Sebelius. I would be happy to provide it.
    [The information follows:]

    Medicaid spending in 2010 was estimated to be approximately 15.8 
percent of State general fund spending but was 17.4 percent in 2006.
    Numerous experts agree that States will actually realize a net 
savings from the provisions of the Affordable Care Act. States and 
local governments are estimated to save $70-80 billion in State-funded 
health coverage or uncompensated care. A subsequent Urban Institute 
analysis estimates that the costs to States from the Medicaid expansion 
will be more than fully offset by other effects of the legislation, for 
net savings to States of $92 to $129 billion from 2014 to 2019.

    Senator Alexander. Nevertheless, our former Governor says 
these mandates are $1.2 billion over 5 years in increased costs 
just for the expansion and $324 million a year for the Medicaid 
reimbursement requirement.
    Senator Harkin.  Thank you.
    Senator Brown.

                         PRIMARY CARE WORKFORCE

    Senator Brown. Thank you, Mr. Chairman.
    I note from the Secretary's comments that in those States 
where there was not a lot of support, at least from their 
elected officials, for ACA, those are the ones, because they 
are the poorer States, that tend to get the most. It is an 
interesting irony.
    First of all, thank you, Madam Secretary. Thank you for 
last week for coming to Ohio, and the support you have shown 
for Project One really means a lot for my State. Thank you for 
that.
    Thank you too for what you did, what CMS did, and what 
Federal Drug Administration (FDA) did on the progesterone 
issue, that pharmaceutical, the P7 to 17P, the progesterone 
that saved a huge--that have prevented a huge number of preterm 
births, resulted in tens and tens of thousands of babies born 
healthy instead of born with all kinds of illnesses and 
disabilities. And the work that you did, stepping up, having 
the FDA telling local compounders and local doctors and 
hospitals not to--to resist the cease and desist order and then 
the work that Mr. Berwick did at CMS in encouraging--in going 
to the States so that more and more States are using the 
progesterone at much less cost to taxpayers and to insurers 
than they are the KV Pharmaceuticals Makena. It has made a huge 
difference in public health.
    I want to talk about a couple other programs that are 
involved in preterm birth rates. The Community Health Access 
Program in Mansfield, my hometown, trains community health 
workers to address the health needs of at-risk pregnant women, 
low-income White and African-American women in two different 
ZIP codes, and Richland County sort of invented this program. 
The local officials did, local doctors, local foundations, and 
dropped the low-birth-weight baby rate from twice the national 
average to below the national average. And using that program, 
the Community Health Access program, as a model, we added the 
community health workers to the list of disciplines on which 
area health education centers should focus. I mean, that was 
the good news.
    Also, the good news is the program of the maternal, infant, 
and early childhood home visiting program which has made a huge 
difference in after the babies are born, making sure they get 
the proper services--well, starting with prenatal care up 
through early education for children. Now, that is the good 
news.
    The good news also is that the budget includes $400 million 
for the maternal and infant home visiting programs. The bad 
news is that health education centers are zeroed out in this 
year's budget, funded at $27 million in fiscal year 2012. It 
means increasing shortages of primary care providers especially 
in those rural and underserved areas.
    My question is what will happen to the number of primary 
care workers if these programs are eliminated. How do we make 
up for this? I mean, it clearly saves large amounts of money 
when people get to the doctor, get proper nutrition, get 
prenatal care the way they should and babies are born healthy 
instead of born with all kinds of illness and disabilities. 
What is going to happen to the number of primary care workers? 
What do we do about this with these cuts?
    Secretary Sebelius. Well, Senator, we are trying to focus 
as many resources throughout the Department as we have on 
increasing the primary care workforce, and that is everything 
from shifting graduate medical education slots to new funding 
for the National Health Service Corps for primary care 
providers has been tripled in the last 3 years, and we want to 
continue that effort. We are looking at all the strategies that 
we have, payment rates to encourage primary care choices for 
medical students, and a series of activities. So we certainly 
share your concern around that.
    I know that you and I have talked before about your 
Mansfield, Ohio success program, and I wanted to bring to your 
attention that we have recently launched an initiative we are 
calling Strong Start under the Center for Medicare and Medicaid 
Innovation that will be working with the March of Dimes, with 
the American College of Ob-Gyns, with providers across this 
country around a focus on births that occur 39 weeks and 
beyond, knowing that there is a huge health difference between 
preterm babies and post-term babies and that appropriate 
prenatal care, maternal information, encouraging hospitals to 
reduce the number of voluntary preterm deliveries that they are 
willing to engage in and adopting some of the best practices 
that you have in Ohio. I would love to get you some information 
about this program because actually there may be some ways to 
take what you have learned in Mansfield and make sure that we 
can not only spread it in Ohio but in various other parts of 
the country. But it is an initiative we think is not only 
hugely important to reduce long-term health costs, but good for 
moms, good for babies, good for the long-term community 
survival. So we are really looking at how to bring this program 
to scale throughout the country.
    Senator Brown. Thank you.
    Mr. Chairman, I will only make a comment, if I could, not 
another question. A comment.
    First of all, thank you for that. The Mansfield program has 
already spread to a couple other Ohio cities.
    I will make one comment about--you had mentioned Graduate 
Medical Education (GME) slots. A subset of that--and this is 
not a question, just a comment, if you would--is children's 
GME. Every administration in both parties cuts back this 
program after we began it. I first introduced it in the House 
in 1998, I think, after a visit to Akron Children's Hospital. 
We need a unique way, a separate way of funding graduate 
medical education for children because it does not fit in, 
obviously, the Medicare funding stream that creates money for 
GME. Every year a President cuts it or eliminates it. We need 
to get it back up at least to the level of $250 or $300 
million, which it has been many of the last few years. Chairman 
Harkin has been very helpful to that in the past. Many of my 
Republican colleagues too. It was a very bipartisan effort in 
the House when I first started it. And we will figure out a way 
to do that. I know you do not oppose it, but I know you know 
that we will restore it and come up with the money. And I 
appreciate that shift of responsibility every year.
    But thank you, Mr. Chairman.
    Senator Harkin.  Thank you, Senator Brown.
    Senator Johnson.

                       HEALTHCARE COST ESTIMATES

    Senator Johnson. Thanks, Mr. Chairman.
    Madam Secretary, welcome.
    I would like to concentrate on the cost estimates of the 
healthcare law because that is what I was concentrating on last 
year and there has certainly been new information to surface 
since then.
    So I would like to first start out by just pointing out 
that when they passed Medicare back in 1965, they estimated it 
out 25 years and said it would cost $12 billion in 1990. In 
fact, it ended up costing $109 billion, nine times the original 
cost estimate. So I do not have a great deal of faith in some 
of these estimated numbers, and I certainly do not have faith 
in the estimates for Obamacare.
    In the President's fiscal year 2013 budget just released, 
he has increased the mandatory outlays for health insurance 
exchanges by $111 billion from $367 billion in his last year's 
budget to $478 billion. Is that correct?
    Secretary Sebelius. Yes, Sir.
    Senator Johnson. The Community Living Assistance Services 
and Support program (CLASS Act)--I think we end up recognizing 
that that was not going to work out. That was not going to be 
financially solvent. So that was $86 billion of the claimed 
$143 billion of deficit reduction in the first 10 years. 
Correct?
    Secretary Sebelius. The original estimate, yes.
    Senator Johnson. Right. And the original estimate for 
deficit reduction in the first 10 years was $143 billion. 
Correct?
    Secretary Sebelius. Yes.
    Senator Johnson. So now we have reduced that $143 billion 
by $86 billion by not getting revenue from the CLASS Act and 
now $111 billion because we have increased the mandatory cost 
of the exchanges. Correct?
    Secretary Sebelius. I am assuming the numbers are correct. 
I am sorry. I do not have them.
    Senator Johnson. They are.
    So when you add those together, that is $197 billion added 
to the first 10-year cost estimate of Obamacare. So now we are, 
instead of saving $143 billion, adding $54 billion to our 
deficit. Correct?
    Secretary Sebelius. Sir----
    Senator Johnson. We will submit that for the record. That 
is basically true. So instead of saving $143 billion by this 
administration's own figures and budget, we are now adding $54 
billion to our deficit in the first 10 years. To me that would 
be the first broken promise.
    It is true that the President said that by enacting this 
healthcare law, every family would save $2,500 per year in 
their family insurance plan. Correct?
    Secretary Sebelius. He said that once the exchanges are up 
and running and you have an affordable marketplace, the 
insurance estimates were that the rates would go down by about 
$2,500, yes. That has not occurred yet clearly.
    Senator Johnson. The Kaiser Family Foundation has already 
released a study saying that the average cost for family 
healthcare plans is up $2,200. Correct?
    Secretary Sebelius. Again, there is no new marketplace yet 
for insurance policies.
    Senator Johnson. But the cost is already up. I mean, we are 
already different by $4,700. It is going to be hard to get us 
down to $2,500 as cost savings. I would consider that broken 
promise number two.
    It is also true that President Obama very famously said, 
``If you like your doctor, you will be able to keep your 
doctor. Period. If you like your healthcare plan, you will be 
able to keep your healthcare plan. Period.'' No one will take 
it away no matter what.
    Now, we have granted quite a few waivers, about 1,200 to 
1,700 waivers on about 4 million Americans. Correct?
    Secretary Sebelius. I have no idea what waivers you are 
talking about.
    Senator Johnson. Those are waivers----
    Secretary Sebelius. Doctors and health plans? Is that----
    Senator Johnson. Just waivers from having to implement 
portions of the healthcare law that probably would have forced 
those workers off their employer-sponsored care.
    Secretary Sebelius. Again, I would be happy to answer these 
questions, but I have no idea what waivers you are talking 
about.
    Senator Johnson. The waivers that HHS has granted to 
employers.
    Secretary Sebelius. To do what?
    Senator Johnson. Not having to implement sections of the 
healthcare law.
    Secretary Sebelius. There have been waivers granted to 
employers, yes.
    Senator Johnson. And had those waivers not been granted, 
chances are those employees probably would have lost their 
employer-sponsored care. Correct?
    Secretary Sebelius. I have no idea. I mean, I am happy to 
answer those one at a time and look at the waivers and see 
what----
    Senator Johnson. Unfortunately, I am pretty short on time.
    The CBO alone estimated that 1 million people would lose 
their employer-sponsored care. Now, I think that is a wildly 
underestimated figure. The McKinsey Group has surveyed 
employers and said that 30 to 50 percent of employers plan on 
dropping coverage as soon as the healthcare law is implemented. 
Douglas Elmendorf I think has even admitted that that is 
credible evidence for him to retake a look at that estimate.
    The decision an employer is going to have is pretty linear. 
They can pay $15,000 for a family plan or pay the $2,000 
penalty, and they are not exposing their employees to financial 
risk. They are making them eligible for $10,000 subsidies if 
they make a $64,000 household income.
    Are you sure that only 1 million people--only 1 million 
people--will lose their employer-sponsored care? Last year you 
said there are 180 million to get coverage through their 
exchanges. Are you certain that only 1 million people are at 
risk of losing their employer-sponsored care and get put in 
those exchanges?
    Secretary Sebelius. Sir, you are quoting a CBO number. All 
we have to go on is what has happened in Massachusetts where 
actually more people have coverage today with the exchange, 
with a very similar framework, than did before. They have not 
lost employer coverage. More employers have come back into the 
market. So the practical application of a State-based exchange 
on the ground with similar penalties and a similar framework is 
employer coverage rose. It did not decrease.
    Senator Johnson. It is not similar because those employees 
lose coverage for 6 months before they are eligible for the 
exchanges, and there are not these types of subsidies that 
create a huge incentive for employers to drop coverage and make 
their employees eligible.
    Bottom line here. The cost of this healthcare law is so 
uncertain. Do you not think we maybe ought to put the brakes on 
it? You know, Nancy Pelosi said we have to pass this law to 
figure out what is in it. What I do not want to see is we have 
to implement it to figure how it is going to bust a hole in our 
already horribly broken budget.
    Secretary Sebelius. Well, I would just say, Senator, the 
statistics you gave on the rising healthcare costs for families 
and small business owners that Kaiser put out recently is the 
very reason that we desperately need a new insurance market. 
The private insurance market is basically on a death spiral 
where younger and healthier people are dropping out, where 
small employers who cannot afford to pay 18 percent more than 
their large employers are dropping out.
    Doing nothing is really not an option. We now have 50 
million uninsured in this country, and that number has gone up 
year in and year out, and the costs continue to rise. So a new 
market with competition putting people in a larger pool, making 
companies compete on the basis of price and quality, not who 
can lock out folks with a pre-existing condition or drop them 
out or drive them out of the market is desperately needed by 
millions and millions of Americans, which was part of the 
driving force of passing the healthcare law.
    Senator Johnson. Madam Secretary, if 50 percent of 
employees lose their coverage, that will cost us $500 billion a 
year, not $95 billion.
    Thank you, Mr. Chairman.
    Senator Harkin.  Thank you.
    Senator Kohl.

                           PHYSICIAN PAYMENTS

    Senator Kohl. Thank you, Mr. Chairman.
    Madam Secretary, I would like to ask you about 
implementation of the Physician Payments Sunshine Act which, as 
you know, is a law that I worked on with Senator Grassley. The 
Physician Payments Sunshine Act requires transparency that will 
help prevent conflicts of interest, while at the same time 
highlighting the legitimate and necessary relationships between 
doctors and industry.
    In my State of Wisconsin, the Milwaukee Journal Sentinel 
wrote a series of reports on problems that arise when consumers 
do not know these payments are exchanging hands. And recently 
leading national newspapers published editorials supporting the 
Physician Payments Sunshine Act. Industry and consumer groups 
alike are calling for CMS to act on this piece of legislation.
    With all of this support, I would like to ask you what the 
delay that has occurred is all about.
    Secretary Sebelius. Well, Senator, we share your interest 
in making sure that this act is fully realized and think it is 
a very important issue for consumers to know exactly what is 
going on.
    We had a proposed rule in December 2011. The comment period 
closed on February 17. So about 3 weeks ago. We are working 
with comments and stakeholders and we fully intend to publish a 
final rule later this year so our collection of data can begin 
before the end of 2012. And we would be eager to work with you 
on full implementation.
    Senator Kohl. Could I request that you make a strong effort 
to push up that implementation time to no later than the first 
half of this year?
    Secretary Sebelius. Well, as I say, we have got the 
comments in and, again, we will work aggressively to get this 
in place. But the comment period closed on February 17, and we 
are doing outreach to stakeholders and others reviewing the 
comments and we will make every effort to get it published as 
soon as possible and get data collection beginning this year.
    Senator Kohl. Thank you very much.
    Senator Harkin.  Senator Kohl, thank you.
    Senator Graham.

                      AFFORDABLE CARE ACT WAIVERS

    Senator Graham. Thank you, Mr. Chairman.
    Thank you, Madam Secretary, for coming over.
    Very quickly about the waivers. As I understand it, there 
have been, oh, several million people covered by a waiver from 
your Department basically saying to the healthcare entity we 
are going to waive the requirements in Obamacare for your 
organization. Do you know how many people have received that 
waiver?
    Secretary Sebelius. Senator, again, there are a variety of 
different provisions of the law where we were given some 
administrative authority. So people in the so-called mini-med 
plans who had some kind of health coverage but not a robust 
plan--a number of those employers were given waivers knowing 
that the mini-meds cease to exist in--I can get you in writing 
the numbers and the different categories, but I do not know off 
the top of my head.
    Senator Graham. I would appreciate that.
    What percentage of those plans are union plans?
    Secretary Sebelius. I can tell you in the waivers that we 
have given, the union waivers were, I think, the fourth-lowest 
category. Private employers were number one. City and State 
governments were number two. I think the education system was 
number three, and then I think union plans were in the fourth 
category.
    Senator Graham. Okay. So city and State governments. Union 
plans were four.
    What I would like from you is a detailed analysis of the 
number of waivers given, the number of plans affected, the 
number of people within those plans, and what percentage of 
those plans happen to be union plans.
    Secretary Sebelius. I would be glad to do that.
    [The information follows:]

    Starting in 2014, the Affordable Care Act bans annual 
dollar limits on coverage of essential health benefits. Until 
then, annual limits are restricted under the Department of 
Health and Human Services (HHS) regulations published in June 
2010.
    For plan years starting between September 23, 2010 and 
September 22, 2011, plans generally may not impose an annual 
dollar limit on coverage of essential benefits such as 
hospital, physician, and pharmacy benefits of less than 
$750,000. The minimum annual dollar limit is $1.25 million for 
plan years starting on or after September 23, 2011, and $2 
million for plan years starting between September 23, 2012 and 
January 1, 2014. For plans issued or renewed beginning January 
1, 2014, all annual dollar limits on coverage of essential 
health benefits will be prohibited.
    A small number of workers and individuals currently have 
access to only limited-benefit, or ``mini-med'', plans with 
lower annual limits than are generally permitted by law and 
which provide very limited protection from high healthcare 
costs. Estimates by employers and insurers indicate that 
requiring mini-med plans to comply with the new rules could 
cause mini-med premiums to increase significantly. This 
increase in premiums could force employers to drop coverage 
leaving some workers without even the minimal insurance 
coverage they have today.
    In order to protect coverage for employees in mini-med 
plans until more affordable and more valuable coverage is 
available in 2014, the law and regulations issued on annual 
limits allow HHS to grant temporary waivers from this one 
provision of the law (PHS Act, section 2711(a)(2)) if 
compliance with annual-limit requirements would result in a 
significant decrease in access to benefits or a significant 
increase in premiums. Plans that have received such waivers 
must comply with all other provisions of the law, and, as a 
condition of the waiver, were required to alert consumers that 
the plan has restrictive coverage and includes low annual 
limits. Additionally, these waivers are temporary and after 
2014, no waivers of the annual limit provision are allowed.
    The following chart breaks out approved waiver applicants 
by type. Please note that the annual limit waiver data is 
publicly available at http://cciio.cms.gov/resources/files/
approved_application_for_waiver.html and includes: applicant 
information, denials, reconsiderations, and health 
reimbursement arrangements.

------------------------------------------------------------------------
                                                               Number of
                        Type of Plan                            Waivers
------------------------------------------------------------------------
Self-Insured employers......................................         722
Multi-Employer plans........................................         417
Non-Taft Hartley union plans................................          34
Health insurance issuers....................................          50
State-Mandated policies.....................................           5
Association plans...........................................           3
------------------------------------------------------------------------

                            MEDICAID FUNDING

    Senator Graham. I appreciate that.
    Now, Medicaid. You know this program well. In South 
Carolina, as I understand it, if the Medicaid eligibility is 
expanded and implemented in 2014 as envisioned by Obama 
healthcare, my State will be required to come up with close to 
$1 billion of new State funding over a 6- or 7-year period. 
That is pretty true throughout the country. Is it not?
    Secretary Sebelius. No, Senator, it actually is not. And I 
had some of this discussion with Senator Alexander, and I 
continue to have it with Governors. The way the law is 
constructed, actually the first number of years of the plan is 
fully federally funded, 100 percent Federal funding.
    Senator Graham. How many years of Federal funding?
    Secretary Sebelius. There are 4 years where it is 100 
percent, and the Federal funding then goes from 100 to the 
lowest in a decade that the Federal Government contributes is 
90 percent of the----
    Senator Graham. What about the next decade?
    Secretary Sebelius. The next decade is not described in 
this bill, but what you are talking about is the budget window. 
What I keep hearing about is this concern that somehow in the 
next several years there will be $1 billion in South Carolina 
taxpayer money and that----
    Senator Graham. I guess my concern is that we are expanding 
Government healthcare programs, to me, that need to be 
reformed, not expanded. And you may not hear this when you talk 
to Governors, but I sure hear it from Democrats and 
Republicans. They are worried to death about Medicaid expansion 
as proposed in Obamacare.
    So I have got a simple proposition. Would you allow a State 
to opt out of Medicaid expansion if they chose to under Obama 
healthcare?
    Secretary Sebelius. Senator, what we have supported from 
the beginning and actually asked that it be accelerated is if a 
State has a proposal to cover the same number of people, to 
provide health coverage, and has a different methodology for 
doing that, we would be eager to take a look at that and work 
with them around that.
    Senator Graham. Well, but my question is would you allow a 
State to just simply opt out because they have responsibility 
for their citizens. The only way they can opt out is to do it 
the way you approve of. Is that right?
    Secretary Sebelius. Well, Senator, as you know, I do not 
even have the authority. Right now, the law provides for us to 
give an accelerated option to a State plan.
    Senator Graham. What if the Congress said to all the States 
if you want to stay in Obama healthcare Medicaid expansion, you 
can, but if you want out because you think it is going to 
bankrupt your State, you have that option. Would you oppose 
that?
    Secretary Sebelius. I would, Senator, without an 
alternative for what happens to those folks. Would they be 
eligible for the exchange which would be a more expensive 
strategy?

                           MEDICARE SOLVENCY

    Senator Graham. Well, I guess what I am saying is that 
Medicare and Medicaid are really Federal Government programs. 
Do you think Medicare is in a world of hurt financially?
    Secretary Sebelius. I think that the long-term solvency of 
Medicare is a topic that needs to absolutely be discussed.
    Senator Graham. Would you agree that Medicare and Medicaid 
have grown in unsustainable ways, and without serious reform, 
those two programs alone are going to bankrupt the country? And 
I guess my concern is before you add another Government program 
where you subsidize the private sector with a Government plan, 
I would like to fix the two that are going to bankrupt the 
country. And do you have a plan to save Medicare from 
insolvency?
    Secretary Sebelius. Well, as you know, Senator, in ACA, we 
began----
    Senator Graham. Does President Obama--and I will end this. 
My time is up. Does President Obama in his budget or anywhere 
else have a plan that would adjust the age for eligibility, 
means test for higher incomes in terms of premium subsidies? Is 
there a plan the President has come up with in the last 3 years 
to save Medicare from bankruptcy?
    Secretary Sebelius. Has he proposed a means test or raising 
the age? No, Sir.
    Senator Graham. Has he proposed a plan to save Medicare 
from bankruptcy?
    Secretary Sebelius. He has proposed certainly a plan that 
adds seriously to the life of Medicare. This budget continues 
that effort, and we are eager to work on an even longer-term 
strategy.
    Senator Graham. Finally, if Paul Ryan comes up with a plan 
to make Medicare more sustainable and fiscally sound over the 
next 75 years, would you at least applaud him for trying?
    Secretary Sebelius. Well, I think that what I have seen so 
far, Senator, from Congressman Ryan is really blowing up the 
program as we know it, not sustaining it. But I would be eager 
to engage in any conversations about protecting beneficiaries, 
fulfilling our commitment to long-term health benefits, and 
finding a sustainable way moving forward.
    Senator Graham. Thank you.
    Senator Harkin.  Senator Pryor.

                          HEALTHCARE EXCHANGES

    Senator Pryor. Thank you, Mr. Chairman.
    I wish that Senator Johnson were still here because I think 
that if I understand correctly, Madam Secretary, the CBO at 
some point this month is going to update the healthcare 
baseline and give us some updated numbers about healthcare. So 
that will be helpful. But I would like to see those when they 
come out and maybe visit with you further about that.
    Let me, though, jump into something that you mentioned a 
few moments ago in answering Senator Graham's questions about 
healthcare exchanges. I would like to get an update from you on 
where you are, as the Federal Government, but also where the 
States are in terms of setting up the exchanges. Where are they 
in that process?
    Secretary Sebelius. Well, Senator, every State in the 
country, I think with the exception of two, have actually drawn 
down a planning grant. A number are moving ahead with the next 
level of implementation. We have laid out a strategy and are 
working actively with States around the country around 
basically a choice of three pathways. Either the State fully 
runs their insurance exchange and will be up and going and we 
will certify them for activity somewhere in 2013. A State can, 
on the other hand, engage in a so-called partnership program 
where the Federal Government will run pieces of the program and 
they will run other pieces. And the final is that they decide 
that they are fully not going to engage and that the Federal 
exchange will take care of the exchange activities in their 
State.
    And States are in a variety of activities. A number have 
legislation pending this year. Some are issuing executive 
orders. So we will know more definitively by the end of this 
calendar year where exactly are the host of States because 
there are a lot kind of in that middle space where they are 
trying to figure out if they are going to be fully up and 
running or in a partnership.
    Senator Pryor. My impression is that the exchange part of 
healthcare reform is very important because it could--at least 
in theory--make health insurance much more available to many 
more people and hopefully you would get a better value for the 
dollars you spend on healthcare. So I would encourage you to 
keep pushing and keep trying that.
    Secretary Sebelius. We definitely are.

                             MEDICARE FRAUD

    Senator Pryor. And also one other thing that Senator Graham 
asked about was Medicare and the sustainability of Medicare. I 
know that one of the things you have been working on is trying 
to come up with a better way to quantify the amount of real 
fraud in Medicare. And I think everybody in this room wants to 
do that and wants to know exactly how much fraud there is and 
how we can identify it and stop it better than we have in the 
past. So, as I understand it, you are working on some new 
measures on fraud. What is your timetable for trying to have 
these new fraud measures in place so we will have a better 
sense of how much actual fraud is in the system?
    Secretary Sebelius. Well, I think, thanks to the resources 
that we were given as part of ACA, which actually is the 
toughest anti-fraud legislation ever passed in this country, we 
have some new data analytic tools. Part of that led to this 
takedown of the Texas doctor who allegedly committed about $375 
million worth of fraud with home health agencies. But part of 
it is a predictive analytic system that finally catches us up 
with the private sector. A lot of that is in place now.
    Senator Pryor. It is really great.
    Secretary Sebelius. We did not have it 2 years ago and it 
is now there. We brought the billing systems into one place. We 
can now watch what is happening in one spot and share it with 
law enforcement.
    Senator Pryor. And it is in real time now?
    Secretary Sebelius. You bet. You bet.
    Senator Pryor. That was one of the problems before.
    Secretary Sebelius. It did not exist. There were 12 
different billing systems with Medicare. So it was almost 
impossible to track what was actually happening real time.
    Senator Pryor. I would love it if some of your folks could 
come into our office.
    Secretary Sebelius. We would be glad to do that.
    Senator Pryor. You do not have to do it. I know you have 
got staff who can brief my staff and me.
    Secretary Sebelius. Now, Dr. Peter Budetti is the head of 
that unit, and we have never had an administrator at CMS who 
has actually been in charge of anti-fraud activity.

                           HEALTH PROFESSIONS

    Senator Pryor. Let me just make two really closing comments 
because I am going to run out of time here.
    We have a program in Arkansas, the Arkansas Area Health 
Education Centers (AHEC) program. It works very well in our 
State. We have eight of these little regional offices. They are 
pretty much satellites of our medical school. They do a lot of 
training. They provide lots of important healthcare in eight 
different places around the State that people would not have 
access to otherwise.
    I am concerned that when I look at the President's budget, 
we are looking at cuts there, and I am afraid about cutting 
those programs. I do not know about every other State, but our 
program works very, very well. It is really a key component of 
trying to provide better healthcare all across the State, and 
obviously, like some other States here, we have some poverty 
issues and some real challenges in rural Arkansas trying to get 
healthcare providers, specialists and even primary care 
physicians, nurses, and dentists to some places in our State. I 
would hope you would look at Arkansas because we have an AHEC 
program that works very well. In fact, Senator Tom Coburn--
medical doctor--is a product of that. He actually went through 
the Arkansas AHEC in western Arkansas.
    And the last thing I wanted to say is just thank you for 
helping with a Bureau of Health Professions issue. I want to 
thank you all for working very diligently to help correct a 
provider shortage designation in Lepanto, Arkansas, which again 
is one of these communities that just has almost no access to 
healthcare and you have paved the way for them to get a 
physician there in rural Arkansas. So thank you for doing that.
    Secretary Sebelius. Good. Glad it worked.
    Senator Harkin.  Senator Moran.

                       CRITICAL ACCESS HOSPITALS

    Senator Moran. Mr. Chairman, thank you.
    Secretary, nice to see you. Glad our paths have crossed 
this morning.
    Just a couple of questions. First of all, I assume that you 
had a role to play in the President's budget, and I wanted to 
raise with you or at least ask you to assure me that the cuts 
in the critical access hospital program you think are 
appropriate or necessary. The President's budget has a couple 
of proposals. One is a mileage restriction. Depending upon what 
that mile might turn out to be, it affects from a small number 
to a large number of critical access hospitals in Kansas, and 
then a reduction in the so-called 101 percent of costs to 100 
percent of costs. And I think we would agree that the word 
``cost'' does not cover the cost.
    As you know, in our State, those critical access hospitals 
in many ways determine the future of a community, and the 
absence of their presence, no physicians, and the citizens 
reluctantly decide they no longer can call home home.
    I wanted your thoughts on the reductions in spending 
related to critical access hospitals.
    Secretary Sebelius. Well, Senator, you and I have talked 
about this in the past, and I do share your concerns about 
access to healthcare particularly in rural areas and know how 
important that is to community survival. I do think that in a 
better budget time, this would not have been recommended, but I 
think that the framework of a possible 10-mile differential, if 
there is another hospital within a 10-mile radius, then it is 
unlikely that that is a critical access hospital because there 
is another choice in a relatively close space.
    And making sure that 100 percent of payment is paid--it is 
not reduced below 100 percent. It is 100 percent. I think 
working on then the definition of what that cost means is a 
secondary issue, and I would be glad to work with you on that. 
But paying 100 percent I think is very important.
    Senator Moran. Well, I would agree that if we actually paid 
100 percent of actual costs, that is a different story than 
paying 101 percent of something less than costs or paying 100 
percent of something less than costs. And so the definition of 
what is actual costs needs attention, and the percentage would 
become much less important if actual costs were actually 
covered.
    I assume that the mileage change, if enacted, would be 
retroactive, would be current, and so hospitals that currently 
receive a critical access hospital designation would lose that. 
I would indicate that one of the things that has troubled me 
from the very beginning of this conversation about the mileage 
restriction is you can have two critical access hospitals 
within 10 miles, 25 miles, 20 miles, whatever that number is. 
Both of them then are affected by the change, and you lose the 
designation for both hospitals to be a critical access 
hospital, which very well may eliminate access anyplace within 
that region. And so this being prospective, taking into account 
the consequences to two hospitals in the same radius, I think 
this needs to receive greater thought than just a strict 
mileage requirement.
    Secretary Sebelius. Well, and again, we would be happy to 
work with you on that issue because that certainly is not the 
intent. As you say, applied arbitrarily, what you described 
could happen, but we will be glad to work with you on that.

                              NIH FUNDING

    Senator Moran. I welcome that.
    The other topic I wanted to raise was NIH funding. The 
President's budget is a continuation of the current levels of 
funding. Budgeting is about priorities. And I understood from 
your testimony but from a conversation that you had with 
Senator Shelby, NIH indicates that--or at least the 
administration indicates that through new grant management 
policies, more can be done with less, I think is the summary of 
what is being suggested.
    But I notice that, for example, the CMS budget goes up $1 
billion while the budget for NIH is held constant. And if there 
is more bang with the buck, more able to do more with less, I 
wonder why that is not applicable elsewhere and why it seems to 
be directed toward NIH. I worry when there is not a consistent 
availability of money at NIH, that we begin to lose the 
infrastructure, the commitment of young people to research and 
to science wanting to pursue that career and know that they 
have a place to go to work. I think NIH is critical in our 
global competitiveness, and ultimately in saving healthcare 
costs that the chairman talks about, preventive medicine, NIH 
has a significant component to play in finding the cures and 
treatments that in the long run save dollars. So in that sense, 
for the quality of life and for the economics, NIH is something 
that is very important, and while other items within your 
budget received increases, NIH did not. And those priorities--I 
would welcome your thoughts on that.
    Before I run out of time 37 seconds ago, I have invited the 
Acting Administrator of CMS to Kansas, and I would ask you to 
help me accomplish that goal. Since I have been in the Congress 
now for 15 years, I have invited every CMS Administrator to 
come to our State. Over the years, two have accepted that 
invitation. And I certainly would welcome the opportunity to 
have Ms. Tavenner with us in Kansas and get a feel for how we 
deliver healthcare in our State and to meet with providers and 
patients. And if you can encourage your Acting CMS 
Administrator to join your Senator in your home State, I would 
appreciate that very much.
    Secretary Sebelius. I will certainly follow up on that with 
Marilyn. I know she is eager to get out and about and around 
the country. So I did not know that invitation was pending.
    Let me just, if I can, Mr. Chairman, briefly address the 
NIH situation, which again we share this priority.
    I would say that the requests for the new resources at CMS 
are, one, due to the growing needs in both the Medicare program 
with the baby boomers coming in. There are about $200 million 
dedicated to Medicare and Medicaid issues, and the $800 million 
is, again, basically a one-time cost for infrastructure.
    I do think the NIH budget with a new opportunity for 
clinical and translational science awards, which has an 
additional budget allocation with Dr. Collins able to allocate 
just under an 8-percent increase in new grants, about 670 new 
grants--we are trying to drive the resources toward just what 
you describe which is the most strategic way to keep not only 
young people involved and engaged but keep the acceleration of 
promising breakthroughs on the horizon. And he feels that this 
is a budget that does accomplish those goals.
    Senator Moran. Thank you, Madam Secretary. I will submit a 
question to you in writing related to Part D preferred network 
plans. If you could respond to the subcommittee, have the 
Department respond to the subcommittee, I would appreciate it.
    Secretary Sebelius. Sure.
    Senator Moran. Thank you, Mr. Chairman.
    Senator Harkin.  Senator Landrieu.

                           HEALTHCARE REFORM

    Senator Landrieu. Thank you, Madam Secretary. And I want to 
commend you for your tenacity and your focus on helping stand 
up a major reform, very few reforms of its nature in our 
Nation's history, as we try to press forward on the dream and 
goal of every American, being able to access affordable 
healthcare. It has been tried by many Presidents--Democrats and 
Republicans--in the past, and President Obama, with your 
leadership and with our help, despite organized and ferocious 
and in some cases vicious opposition from the other side, are 
actually beginning to implement the opportunity for every 
person, regardless of whether they come from a rural area, a 
suburban area, or an urban area, whether they are white, black, 
Hispanic, Asian, whether they have a full-time job or a part-
time job, whether they have a pre-existing condition, a birth 
defect that they were born with, an accident that they get 
into, that they actually would not have to go bankrupt or die 
on the side of the road, that they would actually have quality 
care. It is quite remarkable.
    There are only a few countries in the world that have 
achieved that, some at great expense. Others are struggling 
with it. There are only a handful of countries that are trying 
to be as sophisticated in their private-public partnership. And 
as you know, we are not doing that by running government 
programs. We are doing it in an attempt to work with the 
private sector to provide this kind of care.
    And the numbers that you gave to Senator Alexander were 
particularly telling, that the cost per person seems to be 
coming down. Opportunities for new affordable insurance are 
showing themselves because I am personally a little tired of 
Republican Governors out there whining that the reasons that 
they have to cut higher education is because of the increase in 
spending for healthcare. Part of the reasons that their budgets 
are shrinking is because they are giving tax cuts they cannot 
afford. They are giving tax credits to corporations that should 
be paying taxes in their State.
    The second point that I want to make, Mr. Chairman, is that 
it is not just the Federal Government's responsibility to 
provide healthcare services to our citizens. It is a 
responsibility of the State, the Federal Government, and local 
government. When did this become a complete Federal problem? So 
State Governors need to man up and woman up and do their job to 
provide funding necessary to help kids that are born with 
defects, birth defects, to help their people that get into car 
accidents and lose their legs, their arms, their eyes, their 
ears, lose their hearing, and stop whining.
    Now, if they can come up with a better plan, if the 
Republicans--which they have not in 3 or 4 years or 5 years to 
fix this, then I will listen. Until then, we are going to 
implement the plan that we passed.

                 CHILD WELFARE AND ADOPTION ASSISTANCE

    Now, my question, which is a small part of your budget, but 
as you know, it is my focus. Your entire budget, which is $16.2 
billion, does a tremendous amount of good to help families in 
America. I guess we have about 150 million families. We have 
300 people, 2 people per family. I am just roughly estimating--
125 million families. You do a lot in this budget for their 
health, for helping them with day care so many of our families 
can go to work, providing good healthcare.
    A small number of our families, as you know, are very, very 
fragile and in critical situations, and we have tried with this 
subcommittee to give you some special funds to help keep these 
families together and particularly help children that get 
separated from their families. We call them orphans, children 
in foster care. They only represent one-half of percent of all 
the children in America are in foster care.
    So I just want to point you to your Child Welfare and 
Adoption Assistance program of about $362 million, the Chafee 
program $45 million for training of foster youth, the $39 
billion for adoption incentives, and the $63 million for 
promoting safe and stable families. We have worked across the 
aisle here for many years. While we do fight about healthcare, 
we really do not fight about adoption and foster care.
    And I just want to ask you and bring to your attention that 
your Department, prior to you getting there but continuing 
under your good leadership, has increased the number of 
adoptions from 14,000 in 1990 to 52,000 this year. That is an 
incredible----
    Secretary Sebelius. That is a big jump.
    Senator Landrieu. It is a big jump, Madam Secretary, and I 
want to thank you. A lot of this work was done by the Clinton 
administration. This was a big priority for President Clinton 
and First Lady Hillary Clinton. But I think that is a real 
testimony, Mr. Chairman, to your leadership as well. We have 
increased domestic adoptions from 14,000 a year to 52,000 a 
year.
    My question would be could you look more closely at these 
numbers that I have shared with you and see if you can more 
strategically align them with the goal of bringing this number 
up, Madam Secretary, from 52,000 to about 100,000. We have got 
to double it. That is the number of children that are available 
for adoption, but we are not connecting them well enough to a 
home. We are either failing to keep them with their birth 
families or we are not connecting them to be adopted. And you 
have got some resources in here specifically programmed by the 
Congress. So could you comment on that?
    And I want to thank you for your appointment of George 
Sheldon who seems to be a real expert in this area and has been 
working closely with us on it.
    Secretary Sebelius. Well, Senator, I would be remiss if I 
did not recognize your incredible leadership and tenacity 
around these issues looking out for kids who often do not have 
a champion, and you certainly have been one.
    We have a request before the Congress in this budget to 
increase spending by $250 million in the foster care and 
permanency area, $2.8 billion over 10 years. And it would be a 
new initiative to incentivize all kinds of improvements in 
foster care, requiring child support payments to be used in the 
best interest of the child rather than offset State and Federal 
welfare costs that often can be conflicting.
    So we agree that resources need to be increased and we need 
to do a better job targeting those strategic resources to make 
sure that these programs are enhanced, and we would really look 
forward to working with you who have thought about this for a 
long time and have some, I think, very good ideas about how to 
improve the well-being of our children in foster care, the 
transitioning issues, I know, you know, the huge step to 
provide healthcare to the kids aging out of foster care, the 
same way that other kids can be on their parents' plan. These 
are our children. So carrying them on a healthcare plan.
    We have a new proposal, Senator, that I will make you aware 
of which really deals with the reallocation of the State 
funding which currently is not accessed around abstinence-only 
education. A number of States have just said we are not going 
to take those resources. We would like to reallocate those 
funds and focus on pregnancy prevention in foster youth where 
the data is pretty alarming in terms of how many young girls 
end up becoming pregnant. So there are some strategies across 
our budget that I think focus some new resources.
    Senator Landrieu. Well, I would only say, Mr. Chairman, you 
have been very generous, but you are both in an excellent 
position to focus on this because really focusing on the needs 
of foster children, particularly helping them stay in the 
schools that give them the stability. And, Mr. Chairman, as the 
chairman of the Education Committee, I think there can be a 
tremendous amount of--there is a lot of interest of Senators on 
both parties, and I think we can make advancements.
    But remember that the best support for a child is a good 
parent. You know, we can give all the government services we 
want, but if we could just help these children get into the 
arms of a loving, responsible adult, either to the mother that 
they were born to with help and support or to an aunt or a kin 
or a relative or to someone in the community, that is the best 
prevention of pregnancy and jail and mental illness is to have 
a good, loving parent. So if we could just focus our efforts, 
build on this great, extraordinary work--we have doubled the 
number of children finding forever-homes--I would be grateful 
and so will the children.
    Secretary Sebelius. I look forward to working with you.

                     COMMUNITY TRANFORMATION GRANTS

    Senator Harkin.  Thank you very much, Senator Landrieu. And 
I join the Secretary in thanking you for your great leadership 
in all the years you have been here in this area. I think you 
have provided just sort of a beacon for the rest of us to 
follow in how we are going to address this issue of our foster 
kids and kids that just have a tough life and making sure that 
they just have a little bit more gentle care and loving care. 
So I thank you for your great leadership in that area.
    Madam Secretary, I am going to start a second round, but I 
guess I am going to be the only one.
    The one other thing I want to cover with you is something 
near and dear to my heart that I have worked on for a long 
time. I put it in ACA as part of the prevention and wellness 
program, and it was called Community Transformation Grants. 
This was based upon earmarking things that we had done in the 
past and looking at what the community has done. We had some 
tests around the country to see how communities could come to 
join together, such as getting grocery stores, YMCAs or YWCAs, 
schools, businesses to figure what they could do in a 
community-based setting to provide for healthier lifestyles. 
And that is why it was called a Community Transformation Grant.
    In fiscal year 2011, $145 million was allocated to this 
Community Transformation Grant. The CDC announced a competition 
that, for most of the country would require statewide programs. 
For example, in Iowa, Dubuque or Des Moines could not apply on 
their own; they had to be part of a statewide application. 
Well, that is not what we intended. As I look at the guidance 
put out by CDC, to be eligible, grantees had to serve either a 
city of 400,000 or more or a State. So in most States, YMCA or 
community health centers could not even apply directly. Grants 
were for $1 per capita.
    I often cite the Trust for America's Health. They did a 
very thorough study on this, and they found that investments in 
prevention could produce savings within 5 years based upon 
spending of $10 per person.
    So we can take that $145 million and just sort of spread it 
around, but I am not certain it is going to have that much of 
an impact unless it is targeted. So that is why we wanted it to 
be community-based programs.
    Also, the CDC said funding must be used on a minimum of 
three goals, reducing obesity by 5 percent, reducing smoking 
rates by 5 percent, increased access to preventative services 
by 5 percent. Now, again, maybe States are equipped to do all 
that, but in a lot of cases, community groups have just one 
focus. The CDC is now making them focus on the three specific 
goals.
    Well, that is not what we intended. So in our Senate bill 
last year, we got language in there to continue the program 
your Department designed but requiring that all new funds be 
used to support community-based programs. As I said earlier, 
because of the opposition by the Republicans on the Senate side 
and the House Republicans, we were not able to get the bill 
through. However, the language is there in the Senate bill.
    What I would like to seek from you is a commitment that the 
$81 million increase that we had this year. I want to make sure 
that all new funding is in accordance with the language we put 
in the Senate bill. I cannot do anything about the $145 
million. It is already out there. And I just wanted to know 
your sentiments on that.
    Secretary Sebelius. Well, Senator, Mr. Chairman, I 
certainly share your belief, although you have been at this a 
lot longer than I have, that the ounce of prevention is 
probably 10 pounds of cure. I mean, it is a strategy that we 
have to engage in. We think Community Transformation Grants can 
be a critical part of that testing strategies. As you know, 
there are some set-asides for rural communities and tribal 
communities to make sure that there is a representation in 
rural and frontier areas as well as larger communities and 
statewide programs.
    So 61 States and communities had received awards in 2011, 
and I know your interest in broadening the applicability. We 
will work with your office around the framework for moving 
forward. There are some issues around how many folks can really 
move the needle, but we would be eager to work with your office 
around what the next steps are.
    Senator Harkin.  Well, I appreciate that. Take a look at 
the language that we put in. I would love to work with you on 
it. This is something that we have been doing for a long time 
on this subcommittee, and we funded, as I said through the 
earmarking process, and some have failed, some have not. We 
kind of know what works, and it is on a community basis, not on 
a statewide basis. And certainly I never intended that it would 
only go to cities of 400,000 or more. Sometimes the smaller 
community can have a bigger impact just because they are 
smaller, people know each other, they can get together better 
in a smaller community sometimes. So a community of 40,000-
50,000 can make great strides even better than perhaps a large 
metropolitan area. And then the idea of $1 per person might 
have some effect, but certainly not the kind of impact that a 
larger amount in more targeted areas would have. So I look 
forward to working with you on that.

                              NIH FUNDING

    Last, I wanted to bring up the issue of community health 
centers, again something that we worked very hard on in ACA. 
Senator Sanders was also one of the leaders in that area on the 
authorizing committee. But we wanted to increase the number of 
community health centers prior to 2014. We wanted to get as 
many out there as possible. Yet, the President's budget 
proposed to hold back $280 million of the $300 million increase 
for fiscal year 2013. That is the budget we are working on.
    Now, I know all about the funding cliff that is out there 
in 2015, but that funding cliff was about $3.6 billion. Our 
intention on putting this money in there was to get as many 
community health centers up and running prior to 2014. It was 
not to smooth it out.
    So again, I am hopeful that we can use all of the 
additional $300 million to get as many centers up and running 
as possible before January 2014. We can worry about and take 
care of that funding cliff sometime later, but the most 
important thing is to get them up and running.
    Secretary Sebelius. Well, again, Mr. Chairman, I think your 
interest and passion in this area is not only well known but 
one that we share. Community Health Centers have been a 
resounding success, high-quality, lower-cost, preventive and 
primary care, often taking care of needs well beyond healthcare 
that impact people's health and well-being. As you know, the 
budget does anticipate an additional 200 sites be funded with 
the resources that we have requested, but we would again work 
with your subcommittee. I think there is a great deal of 
concern about the out-years and the cliff and how to make sure 
that we do not end up in a situation where having opened a lot 
of sites, we cannot staff them, we cannot fund them. So we 
would be eager to work with you around the best strategy to get 
people the desperately needed care.
    Senator Harkin.  Well, thank you, Madam Secretary. Just 
tell OMB I am not in favor of what they are trying to do. All 
right?
    Secretary Sebelius. I would be happy to convey that 
message.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Harkin. Madam Secretary, thank you. Do you have 
anything else that you want to add for the record?
    Secretary Sebelius. No, Sir.
    Senator Harkin. Thank you very much.
    Secretary Sebelius. Thank you.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
                Question Submitted by Senator Tom Harkin
               national health service corps and title x
    Question. To receive title X funding, a clinic is required to prove 
to Health Resources and Services Administration (HRSA) that they either 
provide or have in place referral agreements to provide comprehensive 
primary care services. Yet the Guttmacher Institute has shown that the 
biggest hurdle for title X clinics that want to participate in the 
National Health Service Corps (NHSC) is proving that they provide or 
have referral agreements to provide comprehensive primary care 
services. If HRSA is certain the clinics provide those services in one 
ongoing grant program and audits them regularly to ensure compliance, 
why would good standing in that program not be sufficient proof of 
those services for another HRSA program?
    Clinics that only receive title X funding provide the only primary 
care many low-income women receive, and they are plagued by the same 
workforce shortages as other clinics. Obstetrician/gynecologist and 
nurse midwife are two eligible categories for health professionals who 
participate in the NHSC. Furthermore, like other NHSC-eligible 
entities, clinics with only title X funding are required to serve 
anyone who walks through the door--women and men--in their communities 
regardless of income at free or reduced cost. What plans does the 
Department have to ensure that HRSA programs have a common definition 
for what constitutes providing comprehensive primary care services?
    Answer. The NHSC has taken steps through its refined policy to 
better inform sites of the program's definition of comprehensive 
primary care so that the site approval process is open and transparent. 
The program recognizes that many women, as well as men, use women's 
health clinics as their primary care provider because it meets their 
healthcare needs or may be the only provider in their community.
    The NHSC has published a new version of its Site Reference Guide, 
which defines comprehensive primary care as, ``the delivery of 
preventive, acute, and chronic primary health services in an NHSC-
approved specialty. NHSC-approved primary care specialties are adult, 
family, internal medicine, general pediatric, geriatrics, general 
psychiatry, mental and behavioral health, women's health, and 
obstetrics/gynecology. Comprehensive primary care is a continuum of 
care not focused or limited to gender, age, organ system, a particular 
illness, or categorical population (e.g. developmentally disabled or 
those with cancer). Comprehensive primary care should provide care for 
the whole person on an ongoing basis.''

                                 ______
                                 
            Questions Submitted by Senator Daniel K. Inouye
                       native hawaiian healthcare
    Question. I appreciate that under your leadership the budget 
request for the Health Resources and Services Administration (HRSA) 
continues to support the Native Hawaiian Health Care Program, which 
improves the health status of Native Hawaiians by making health 
education, health promotion, and disease prevention services available 
through the support of the Native Hawaiian Health Care Systems. As you 
may be aware in 2010, the Department of Health and Human Services (HHS) 
consultation policy as related to American Indians and Alaska Natives 
was revised and the new formal consultation policy eliminated Native 
Hawaiians and their health organizations (NHOs). It is my 
understanding, that since that time Native Hawaiians and their NHOs 
have asked HHS to re-establish a separate formal consultation policy 
for Native Hawaiians. Native Hawaiians have among the highest morbidity 
rates of any ethnic or racial population for major chronic diseases, 
and consultation with the Native Hawaiian community could help to 
tailor HHS policies, programs, and priorities to improve health 
outcomes. Please describe the best path forward for HHS and the Native 
Hawaiian community to engage on health issues of concern. Is the 
reissuance of an HHS consultation policy for Native Hawaiians and their 
health organizations possible?
    Answer. HRSA understands the importance of supporting the Native 
Hawaiian Health Care Program, and will review existing relationships 
and partnerships with the Native Hawaiian community to determine the 
appropriate steps for moving forward, including the consideration of 
revised policies.
    Question. The Native Hawaiian Health Care Improvement Act (42 
U.S.C. 11701) is the major Federal statute providing for a 
comprehensive approach to improving the health and well-being of the 
indigenous peoples of Hawaii. The act states that the Secretary of HHS 
provide the President with a progress report on meeting the Federal 
policy of ``improving the health of Native Hawaiians to the highest 
possible level.'' The President, in turn, transmits the report to us in 
the Congress. When can my office anticipate receiving a copy of that 
report?
    Answer. HHS is committed to addressing the health needs and well-
being of Asian American, Native Hawaiian, and Pacific Islander (AANHPI) 
populations. The Affordable Care Act (ACA) has mobilized HHS efforts 
and has served as the underlying framework for the development of the 
HHS AANHPI Agency Plan. The HHS plan illustrates measurable objectives 
that the Department will pursue to raise the visibility of AANHPI 
health issues, healthcare and human services disparities. This plan is 
meant to elevate AANHPI issues across the Department under the 
leadership of the Assistant Secretary for Health. I am pleased to 
provide a copy of the agency plan to your office which outlines, in 
detail, the components and accomplishments related our current work on 
improving data collection.
    The plan includes four overall-arching health goals to improve the 
well-being of AANHPIs. These goals include how the Department will 
carry out its plan to prevent, treat and control Hepatitis B infections 
in AANHPI communities, work to improve reporting of data, foster 
workforce diversity by developing workforce pipelines for AAs and 
NHPIs, and address some of the key health issues that specifically 
impact NH and PI populations. The plan also addresses a wide-ranging 
set of issues, including breast and cervical cancer, diabetes and 
tuberculosis, prevention, surveillance and response, communicable 
diseases in the Pacific jurisdictions, laboratory testing, 
environmental issues, and vaccinations.
    Our efforts to better serve Native Hawaiian populations and 
identify and understand health disparities will be enhanced through the 
efforts outlined in goal two. Detailed data is a fundamental step in 
identifying which populations are most at risk and what specific 
interventions are most effective in attaining improved healthcare 
quality for specific populations. HHS will continue to increase the 
capacity to collect more reliable health data for AANHPI populations to 
better understand the need of these growing populations. Efforts to 
improve data collection include:
  --Substance Abuse and Mental Health Services Administration:
    --Enhance the quality of data collected within Substance Abuse and 
            Mental Health Services Administration's (SAMHSA) National 
            Survey on Drug Use & Health (NSDUH) for AANHPI populations.
  --Centers for Disease Control and Prevention:
    --The fiscal year 2013 budget includes $161,833,000 for health 
            statistics, an increase of $23,150,000 more than the fiscal 
            year 2012 level to accomplish many of the activities 
            described below.
    --Continue oversampling of Asian Americans in the National Center 
            for Health Statistics' (NCHS) National Health Interview 
            Survey (NHIS).
    --Include an oversampling of Asian Americans in the 2011-2014 
            National Health and Nutrition Examination Survey (NHANES).
    --Implementation of section 4302 of ACA regarding data collection 
            on race, ethnicity, sex, primary language, and disability 
            status. This will provide an opportunity to obtain 
            disaggregated data on AA, NH, and PI communities.
    --Develop improved tools for accessing and analyzing vital 
            statistics and survey data for small populations.
    We look forward to improving our data collection, reporting and 
disaggregation of race, ethnicity, and primary language data related to 
the AANHPI community and to provide you with additional data related to 
the health objectives outlined in the Native Hawaiian Health Care 
Improvement Act. We look forward to including this information in the 
annual AANHPI Agency Plan end of year report.
 aligning hawaii's prepaid health care act and the affordable care act
    Question. Hawaii has traditionally experienced a much lower rate of 
uninsured individuals due to the landmark State law, the Prepaid Health 
Care Act (PHCA), which requires employers to provide healthcare 
coverage to full-time employees. As the State works to implement 
elements of ACA, questions have arisen regarding the ability for 
Hawaii's law to interact with the ACA in a manner that would allow 
Hawaii residents maximum benefits. Will there be further guidance from 
HHS, specific to Hawaii's healthcare environment, on how the Prepaid 
Health Care Act can work in conjunction with the requirements of the 
ACA? Is it HHS' desire for Hawaii to maintain the requirements of the 
PHCA?
    Answer. HHS is committed to working with the State of Hawaii 
regarding the coordination of the PHCA and ACA. HHS also works with our 
Federal partners in ACA implementation, such as the Department of the 
Treasury and the Department of Labor, on these issues, as necessary. 
Conversations about specific interactions have already begun.
                      compact of free association
    Question. In 1986, the United States entered into Compacts of Free 
Association with the Federated States of Micronesia and the Republic of 
the Marshall Islands. In 1994, the United States entered into a similar 
relationship with the Republic of Palau. The Compacts set forth the 
bilateral terms for government, economic, and security relations 
between the United States and the Freely Associated States (FAS), and 
the laws approving the Compact set forth the U.S. policy context and 
interpretation for Compacts. Section 141 of the Compact provides that 
certain FAS citizens ``may be admitted to, lawfully engage in 
occupations, and establish residence as a nonimmigrant in the United 
States and its territories.'' However, the Congress also stated, in 
section 104(e)(1), that ``it is not the intent of Congress to cause any 
adverse consequences for an affected jurisdiction.'' It is estimated 
that affected areas of the United States are spending upwards of $200 
million annually for healthcare, education, and other services for FAS 
migrants, including high-cost treatments such as dialysis and 
chemotherapy. These costs are increasing annually. Public health 
officials are particularly concerned about the rate of certain diseases 
such as tuberculosis and Hansen's disease, which have high incidence 
rates in Micronesia and among recent Compact migrants.
    House Report 112-331 directs the Department of the Interior to 
``meet regularly with officials from the Freely Associated States, 
other Federal agencies and affected jurisdictions, and develop and 
implement a comprehensive plan to mitigate the costs of Compact 
migration.'' Please provide an update on the work of agencies within 
HHS on this interagency working group. How best can HHS assist States 
and territories in meeting the health and social service needs of 
Compact migrants?
    HHS/Office of Assistant Secretary for Health (OASH), Region IX 
assists States and territories in meeting the health and social service 
needs of Compact migrants by managing the following activities:
  --The OASH, Region IX office is coordinating with other HHS Operating 
        Divisions (OPDIVS) on Pacific health issues; providing guidance 
        on strategies and policy development that promote Pacific 
        health and reduce health disparities; and participating in 
        meetings of the Workgroup on Asian, Native Hawaiian, and 
        Pacific Islander issues (WANHPII) and Insular Areas HHS Policy 
        Group (IHHSPG).
  --The OASH, Region IX office is developing relationships with 
        Micronesian Chief Executives Summit (MCES) policy leaders to 
        advocate for increased health awareness, environmental health 
        issues, and health disparities reduction; ensuring health and 
        environmental health issues are elevated on the MCES agenda; 
        and participating in semiannual MCES meetings to promote status 
        of health and environmental health issues.
  --The OASH, Region IX office is improving the capacity to secure 
        grants, and strengthen grant management and financial 
        accountability capacity in the Pacific by increasing grant 
        awareness by making knowledge of Federal grant funding 
        opportunities more readily available to U.S. Associated Pacific 
        Islands (USAPI) health departments and communities.
  --The OASH, Region IX office is promoting awareness of 
        noncommunicable diseases (NCDs) crisis and Federal, 
        nongovernmental organization (NGO) and international assistance 
        for programs and policy development to prevent NCDs.
    --HHS Region 9 (RIX) is collecting NCD plans and promising 
            practices from all the Pacific jurisdictions, report is 
            forthcoming.
    --NCD program funding from CDC's consolidated grant program 
            addresses diabetes prevention and treatment, tobacco 
            control, and behavioral risk.
    --The Pacific Chronic Disease Coalition, a PIHOA affiliate, has 
            been extremely active in supporting the development of NCD 
            prevention programs in all of the USAPI.
  --The OASH, Region IX office is assisting Pacific health departments 
        in addressing current, emerging, and emergency health issues 
        including MDR-TB, Hansen's disease and dengue fever 
        coordinating with CDC, HRSA, Department of Defense (DOD), World 
        Health Organization, Pacific Regional Office (WHO/WPRO) and 
        Secretariat for the Pacific Community (SPC), and DOI.
  --The OASH, Region IX office is involved in conversations with States 
        and territories receiving Compact migrants, clarifying the 
        circumstances in which Medicaid can be used to pay for 
        emergency services. Although Compact migrants are not eligible 
        for Medicaid, certain emergency services can be covered under 
        the Medicaid program at the regular Federal Medical Assistance 
        Percentage (FMAP).
  --The OASH, Region IX office is increasing the collection, accuracy, 
        and utilization for health services of Maternal-Child Health 
        (MCH) data in the USAPIs. In collaboration with HRSA's Title V 
        MCH grant program, and in conjunction with WHO/WPRO, SPC and 
        PIHOA data strengthening/HIT, there are efforts to determine 
        weaknesses and revisions in current data collection, analysis, 
        and utilization for health planning and service delivery.
  --The OASH, Region IX office is providing technical assistance to the 
        USAPI nursing programs, including the Robert Wood Johnson (RWJ) 
        Pacific PIN nursing grant, to enhance the capacity and quality 
        of USAPI nursing programs.
  --The OASH, Region IX office is fostering recognition of the 
        behavioral/mental health disparities in Pacific populations and 
        creating resource linkages with potential resources SAMHSA, 
        HRSA, CDC, Veterans Affairs, DOD, HI & Pacific M/DOH, NGOs 
        including faith-based organizations, WHO/WPRO, and SPC.
  --The OASH, Region IX office is assisting USAPI health profession 
        programs in incorporating emergency response content into their 
        curricula. Coordinating with WPRO/WHO, CDC, ASPR, Medical 
        Reserve Corps (MRC), HRSA, DOD, and the Red Cross regarding 
        trainings and emergency prep curricula for health professions 
        programs and assisting in establishing contacts to aid them in 
        providing relevant trainings to nursing personnel and nursing 
        programs.
  --The OASH, Region IX office is collaborating with Office of Minority 
        Health Resource Center (OMHRC), HRSA, CDC, SAMHSA, WHO/WPRO, 
        SPC, PIHOA, DOI, and Telecommunications and Information Policy 
        Group (TIPG)/Pan-Pacific Education and Communication 
        Experiments by Satellite (PEACESAT) on training opportunities 
        for enhancing data, surveillance programs, and the combined 
        utilization of HIT and tele-health to enhance service delivery 
        and accessibility, to enhance capacity in data collection/
        analysis/surveillance that leads to better health services 
        planning and service delivery.
  --The OASH, Region IX office is assisting in enhancement of the RIX 
        Medical Reserve Corps program in the Pacific, collaborating 
        with RIX MRC consultant to develop and strengthen MRC units in 
        the Pacific.
    HHS/HRSA and CDC assists States and territories in meeting the 
health and social service needs of Compact migrants and Hansen's 
disease by managing the following activities:
  --HRSA's National Hansen's Disease Program (NHDP) offers assistance 
        in selected aspects of HD control, such as training and 
        technical assistance in the Republic of the Marshall Islands 
        (RMI). NHDP intends to collaborate with other agencies such as 
        CDC and WHO to assist in HD awareness and training and 
        participate in activities similar to the meeting with WHO and 
        others in Majuro in 2010, and the HD training workshop at NHDP 
        headquarters in Baton Rouge. NHDP initiated preliminary 
        training via video teleconference through PEACESAT in 
        collaboration with HHS Region IX.
  --CDC provides technical assistance for the public-health related 
        aspects of HD, including development and evaluation of 
        surveillance systems, epidemiologic support such as outbreak 
        and cluster investigation, and case reporting. The CDC notifies 
        state and territorial health departments and the NHDP of 
        patient immigration into the United States, facilitating 
        patient care. In addition, the CDC is providing direct 
        assistance for capacity development of the RMI TB Control 
        Program.
                      hiv/aids prevention funding
    Question. The fiscal year 2013 President's budget request includes 
an increase of $40.231 million more than fiscal year 2012 level for 
Domestic HIV/AIDS Prevention and Research. The increase provides 
additional funding to achieve the goals of the National HIV/AIDS 
Prevention Strategy. What measures will HHS use to assess the impact of 
the funding priority and will the funds targeted for State and local 
programs be prioritized to states and localities most impacted by 
previous shortfalls?
    Answer. CDC aligns its HIV program priorities with the National 
HIV/AIDS Strategy (NHAS). The agency uses data from national HIV 
surveillance, behavioral surveillance, and program monitoring systems 
to assess progress toward achieving NHAS goals, as well as its own HIV 
prevention plans' impact objectives. These measurements, which are 
listed on page 80 of CDC's proposed budget for fiscal year 2013, are as 
follows:
Prevent New HIV Infections
    By 2015, reduce the annual number of new HIV infections by 25 
percent--NHAS goal.
    By 2015, reduce the HIV transmission rate by 30 percent--NHAS goal.
    By 2015, increase the percentage of people living with HIV who know 
their serostatus to 90 percent--NHAS goal.
    Increase the percentage of people diagnosed with HIV infection at 
earlier stages of disease (not Stage 3: AIDS)--2013 target: 47.5 
percent.
    Increase the proportion of adolescents (grades 9-12) who abstain 
from sexual intercourse or use condoms if currently sexually active--
2013 target: 86.9 percent.
Increase Linkage to and Impact of Prevention and Care Services With 
        People Living With HIV/AIDS
    By 2015, increase the percentage of persons diagnosed with HIV who 
are linked to clinical care to 85 percent--NHAS goal.
    Increase the percentage of HIV-infected persons in publicly funded 
counseling and testing sites who were referred to partner services--
2013 target: 73.5 percent.
    Increase the percentage of HIV-infected persons in CDC-funded 
counseling and testing sites who were referred to HIV prevention 
services--2013 target: 68 percent.
    Increase the number of States that report all CD4 and viral load 
values for HIV surveillance purposes--2013 target: 36.
    Increase the number of States with mature, name-based HIV 
surveillance systems--2013 target: 50.
    Reduce the number of new AIDS cases among adults and adolescents 
per 100,000--2013 target: 12.7.
    CDC actively monitors and publicly reports on these national 
objectives each year as data are available. In addition, CDC's Division 
of HIV/AIDS Prevention aligns its program priorities with the 
principles of high-impact prevention, which represent the scientific 
foundation for its HIV prevention efforts. More information is 
available at: http://www.cdc.gov/hiv/strategy/hihp/.
    In order to monitor progress at the State and local level, CDC asks 
grantees to submit semi-annual progress reports that describe the 
implementation of HIV prevention program activities, and identify 
barriers and challenges to meeting programmatic objectives. CDC also 
uses site visits and conference calls with grantees, and its own 
surveillance and monitoring systems, to monitor grantee performance and 
develop plans for further improve performance, which involves the 
provision of capacity building, training, or other technical 
assistance.
    CDC would use the increased funding requested for fiscal year 2013 
to address priorities in NHAS. Specifically, CDC would increase HIV 
Adolescent and School Health funding over the fiscal year 2012 level 
for cooperative agreements to States, cities, territories, and tribes. 
This would enable HIV priority areas to develop and implement health 
policies, programs, and practices, as well as improve HIV and sex 
education efforts across the country. CDC would also restore funding to 
several national NGOs that provided professional development and 
technical assistance to State and local education agencies, health 
agency partners, and other organizations working in school health.
    Of the increase proposed for HIV Prevention by Health Departments 
and National Programs to Identify and Reach Highest-Risk Populations, 
CDC would award $22 million directly to State and local health 
departments. The increased funds are expected to improve the capacity 
of jurisdictions to conduct core HIV surveillance activities, and 
improve the use of surveillance and other programmatic data to improve 
HIV testing, retention, and re-engagement in medical care activities. 
Through its recent funding opportunity announcements, CDC emphasized 
the importance of aligning resources to better match the geographic 
burden of the HIV epidemic throughout the United States. This resulted 
in an equitable approach to CDC's HIV funding; additional funding for 
CDC would reflect a continuation of this approach. It is likely that a 
proportion of jurisdictions that experienced decreases in HIV funding 
would be recipients of these increased funds for HIV surveillance and 
prevention; however, CDC will prioritize the distribution of increased 
resources according to the burden of HIV.
                       viral hepatitis screening
    Question. The Congress enacted $10 million under ACA in fiscal year 
2012 for viral hepatitis screening. Please provide an overview of how 
the funds were utilized. Additionally, please provide an overview of 
how local and State health departments are participating in the 
formation and implementation of the national viral hepatitis strategy.
    Answer. In fiscal year 2012, CDC will use the increase provided for 
viral hepatitis to increase the proportion of persons with chronic 
viral hepatitis who are aware of their infection and who are referred 
to medical care. CDC is planning projects that involve direct provision 
of screening for at risk populations, evaluation of testing activities, 
and public and provider education to raise awareness of the need for 
viral hepatitis screening and provide the skills to do so. 
Specifically, CDC will provide resources to organizations to increase 
testing for at risk populations in multiple settings including 
federally Qualified Health Centers, local health department clinics 
(e.g., STD clinics or HIV/AIDS settings), correctional settings, 
intravenous drug use treatment centers, and community-based 
organizations. The resources will target efforts to reach persons at 
highest risk for severe hepatitis C virus (HCV)-related morbidity and 
mortality, communities experiencing health disparities related to 
hepatitis B (e.g., foreign born populations and their children) and 
hepatitis C (African Americans and current and former incarcerated 
populations), and young persons at risk for HCV-related to drug use. 
CDC will support a public awareness campaign for HCV, currently under 
development, and expand it to address chronic hepatitis B virus (HBV)--
targeted to those populations most at risk for chronic HBV infection. 
CDC will also develop and disseminate education and training materials 
targeting public health and private sector healthcare professionals. 
These materials will build capacity to assess, test, and medically 
manage chronic HCV and HBV infection.
    HHS invited partners from State and local health departments, 
including HIV and STD directors and Adult Viral Hepatitis Prevention 
Coordinators (AVHPC), to participate in the development of Combatting 
the Silent Epidemic of Viral Hepatitis: Action Plan for the Prevention, 
Care, and Treatment of Viral Hepatitis (Action Plan). In particular, 
health department representatives participated in two community 
engagement meetings held by HHS on June 29, 2010, and September 21, 
2010, with health departments constituting a significant percentage of 
the participants at both meetings. At the first meeting, participants 
had the opportunity to comment on issue areas proposed by HHS, propose 
additional areas, suggest particular issues that HHS should address, 
and identify ways to make the Action Plan as meaningful and useful as 
possible. Input from that engagement session strongly influenced and 
helped to shape the draft of the Action Plan. After developing the 
first draft of the Action Plan, HHS held the second meeting to solicit 
feedback about its contents. Health department representatives and 
other viral hepatitis stakeholders offered suggestions to strengthen, 
improve, and focus elements of the Action Plan. This feedback was a 
vital component in development of the final version of the Action Plan.
    HHS and CDC will continue to work closely with state and local 
health departments to achieve the goals set forth by the Action Plan. 
The Action Plan recognizes the important role health departments must 
play in coordinating local efforts to advance viral hepatitis 
prevention and control activities. Numerous action steps in the Action 
Plan specifically mention AVHPC and other health department staff.
                    tuberculosis in high-risk areas
    Question. Senate Report 112-084 requested that the CDC ``review the 
epidemiology of TB in States and territories with more than double the 
average rate of TB cases.'' Please provide a status update on CDC's 
findings.
    Answer. CDC analyzes and reports tuberculosis (TB) cases and rates 
annually. Jurisdictions with case rates that are more than twice the 
national average rate of 3.4 cases per 100,000 (provisional 2011 data) 
include Alaska (9.3), Hawaii (8.95), and the District of Columbia 
(8.9). Territories with more than twice the average national rate 
include the Commonwealth of the Northern Mariana Islands (67.3), Guam 
(55.3), Federated States of Micronesia, (136.7), the Republic of the 
Marshall Islands (227.7), and Palau (47.7).
            children's hospitals graduate medical education
    Question. The President's budget for fiscal year 2013 proposes $88 
million to fund the Children's Hospitals Graduate Medical Education 
(CHGME) program. CHGME was funded at a level of $267.8 million in 2012. 
Even at CHGME's current annual funding level, children's hospitals 
struggle to train enough pediatricians and pediatric specialists to 
keep up with the growing demand. CHGME funds support graduate medical 
training at freestanding children's hospitals all over the United 
States. The importance of this program is especially acute in my home 
State where our CHGME recipient hospital--Kapiolani Medical Center for 
Women and Children--is the only tertiary children's hospital for the 
entire State of Hawaii and Pacific Basin. Kapiolani currently trains 6 
to 10 pediatric residents per year and of the those trained, more than 
30 percent choose to continue to practice in Hawaii after their 
residency. I am concerned that the proposed level of funding does not 
adequately support the gains we have made in pediatric health and 
ensuring access to care. If CHGME is not adequately funded, who will 
train these providers and support the future primary care workforce for 
our Nation's children?
    Answer. We recognize the vital role that children's hospitals and 
pediatric providers play in providing quality health care to our 
Nation's children.
    The fiscal year 2013 CHGME funding level continues to support 
direct costs for training pediatric residents at independent children's 
hospitals. This payment provides support for resident salaries, 
expenditures related to stipends and fringe benefits for residents, 
salaries and fringe benefits of supervising faculty, cost associated 
with providing the GME training program, and allocated institutional 
overhead costs.
    The fiscal year 2013 budget retains the incentive to maintain total 
resident levels. The administration recognizes that research has 
indicated that there is a significant shortage of pediatric 
subspecialists, resulting in children with serious illnesses being 
forced to travel long distances--or wait long periods--to see a 
pediatric specialist. In response to these shortages, the fiscal year 
2013 President's budget includes $5 million to implement the Pediatric 
Specialty Loan Repayment (PSLR) program that was authorized in ACA. 
Under this program, loan repayment agreements will be authorized for 
pediatric specialists who agree to work in underserved areas.
    While both the CHGME Payment and the PSLR programs support the 
pediatric medical workforce, the focus of each is different. The CHGME 
Payment Program serves the purpose of providing residency training in 
Children's Hospitals through the payments made to Children's Hospitals, 
while the PSLR program is designed to assist pediatric specialists more 
directly and increase the number of pediatric specialists in 
underserved areas.

                                 ______
                                 
                Questions Submitted by Senator Herb Kohl
    Question. Secretary Sebelius, more than a year ago I wrote to you 
with Senator Snowe to express strong concern about proposed regulations 
that your Department has drafted regarding the Genetic Information 
Nondiscrimination Act (GINA). We raised two concerns. First, the 
proposed rule extends to private long-term care insurance the 
prohibition under GINA of the use of genetic information. This 
extension occurred despite clear congressional intent and history to 
exclude GINA in long-term care. Second, we objected to the proposed 
GINA expansion because a rule barring the use of genetic information 
would effectively cripple the long-term care insurance industry and 
leave millions without access to coverage.
    Given that Federal efforts to expand long-term care coverage have 
stalled and the administration's decision not to implement the 
Community Living Assistance and Support Services (CLASS) program, this 
proposed expansion comes at a particularly precarious time for the 
long-term care industry. As we are relying on private industry to 
accelerate its efforts and provide more coverage, the Federal 
Government should not inappropriately stymie these efforts.
    Will you assure that the Department of Health and Human Services 
(HHS) will eliminate its expansion of GINA to long-term care insurance 
and continue to allow private long-term care insurers to use genetic 
information in the final rule, as the Congress intended?
    Answer. I appreciate your concerns with the Department's proposed 
rule, which would prohibit long-term care insurers from using genetic 
information for underwriting purposes. A final rule to implement the 
GINA protections has been developed and is currently under review as 
part of a larger omnibus Health Insurance Portability and 
Accountability Act (HIPAA) privacy and security rule. As the rule has 
not yet been published, the Department is not in a position to discuss 
the final policies. However, be assured that in developing the final 
rule, the Department has been carefully considering the views expressed 
in response to the proposed rule and the potential impact of the 
proposed rule on the long-term care market.
    Question. I would like to follow up with you on an issue I raised 
in a November 15, 2011 letter I sent to CMS Administrator Berwick along 
with Senators Schumer, Gillibrand, Casey, and Klobuchar regarding the 
viability of farmer cooperative-provided health insurance plans under 
the Affordable Care Act (ACA). As you know, dairy cooperatives have a 
long history of providing their members with high-quality, low-cost 
coverage that is specially tailored to the needs of farmers. These 
plans are very important to me as I helped secure funding to create 
such plans in my home state of Wisconsin.
    As you know, under ACA, only individuals who purchase insurance 
through the State Exchanges qualify for the advanced premium tax 
credit. Unfortunately, this creates a financial incentive for thousands 
of lower-income farmer cooperative members to leave their cooperative-
offered plan for the Exchange, which, in turn, would leave the farmer 
cooperative risk pool severely degraded. This outcome would inevitably 
lead to higher prices for remaining farmer coop members and is 
ultimately likely to lead to an elimination of dairy cooperative-
sponsored coverage. This would be an unfortunate, and unintended, 
outcome of ACA, given the important and trusted role that dairy 
cooperatives play in the lives of their members.
    My colleagues and I have been pursuing, along with other groups, 
including some representatives of organized labor, a proposal to allow 
for section 1334 of ACA to serve as a mechanism by which nonprofit 
insurance providers like farmer cooperatives and Taft-Hartley plans, 
could offer their coverage through the multi-state exchanges, thus 
allowing for their lower-income members to avail themselves of the 
advanced premium tax credit. This approach could benefit both interests 
by providing continued access for cooperative-offered plans and the 
Taft-Hartley plans while staying within the construct of ACA.
    I want to see these efficient, successful, and popular plans 
continue and ask that you address the issue as soon as possible. Will 
you look into this important issue and help find a regulatory solution 
for this unintended problem?
    Answer. The Department is considering options to address these 
concerns. The administration is fully supportive of farmers receiving 
coverage through these farmer-owned cooperatives and intends to take 
feasible actions to preserve these organizations as health insurance 
options for American farmers. Farmers who do not receive such coverage 
will have access to Exchanges to obtain coverage through a qualified 
health plan, and may be eligible for premium tax credits and reduced 
cost-sharing of out of pocket costs. Eligibility for such benefits may 
depend upon the nature of the coverage available through a farmer-owned 
cooperative, and the farmer's income.
    Question. I have been in contact with you and the Food and Drug 
Administration (FDA) about the FDA's proposed rule to improve pregnancy 
drug labeling. As you know, an estimated 75 percent of pregnant women 
use between four to six prescriptions or over-the-counter drugs during 
their pregnancy. Since 1997, the FDA's Pregnancy Labeling Task Force 
has worked on updating the pregnancy labeling system and FDA issued 
proposed rule with revised labeling guidelines in 2008.
    In my previous inquiries, you have told me that the drug labeling 
rule is a priority for the FDA. But the proposed rule has been 
lingering since 2008. As of today, in March 2012, FDA has not yet 
issued a final rule governing the labeling of drugs for women during 
pregnancy. Is FDA planning on issuing the FDA pregnancy rule in 2012? 
Since this pregnancy rule is a priority for FDA, can you commit to 
finalizing the rule in 2012?
    Answer. FDA is committed to finalizing a rule that will improve 
drug labeling for women who are pregnant, and we are diligently working 
to issue this important rule. Because of the complexity of this rule 
and the time required to review and finalize this rule, it is not 
possible to say whether the final rule will publish during 2012.
    However, we want to emphasize that, in addition to finalizing the 
pregnancy and lactation rule, FDA has other important and ongoing 
projects related to the health of pregnant and lactating women. The 
Maternal Health Team and other offices in the Center for Drug 
Evaluation and Research are developing regulations, guidance documents, 
and procedures related to the use of medicines during pregnancy and 
lactation. For example, on April 30-May 1, 2012, FDA is holding a 
``Public Workshop on Developing Animal Models of Pregnancy to Address 
Medical Countermeasures for Influenza.''
    In addition, FDA has issued five scientific guidances relating to 
pregnancy and lactation that support women's health:
  --Integration of Study Results to Assess Concerns about Human 
        Reproductive and Developmental Toxicities;
  --Establishing Pregnancy Exposure Registries;
  --Pharmacokinetics During Pregnancy and Lactation;
  --Evaluating the Risks of Drug Exposure in Human Pregnancies; and
  --Clinical Lactation Studies-Study Design, Data Analysis, and 
        Recommendations for Labeling.

                                 ______
                                 
              Questions Submitted by Senator Patty Murray
                    title x family planning program
    Question. Federally funded family planning health centers are 
facing increased demand, with more than 4 in 5 centers reporting an 
increase in clients who are uninsured and more than two-thirds 
reporting a decrease in the proportion of clients able to pay the full 
fee for their services. Not surprisingly but of great concern--1 in 4 
women now report having put off a gynecological or birth control visit 
to save money in the past year. As the rates of uninsured steadily 
climb and many families lack access to basic healthcare services, these 
health centers struggle--with severely limited funding--to meet the 
ever increasing unmet need.
    What role do you see title X playing in an environment where 
increased need and increased costs are stretching women's health 
centers resources thin, consequently making it difficult for American 
families to access their most basic healthcare services?
    Answer. The Title X Family Planning program continues to play a 
critical role in ensuring access to high-quality, client-centered, and 
affordable primary and preventive health services to millions of 
uninsured and underinsured men, women, and adolescents at more than 
4,000 health centers across the United States, including federally 
qualified health centers, free-standing clinics, hospitals, and State 
and local health departments. Title X-funded services include 
contraceptive counseling and related services, physical exams, 
screening and treatment for sexually transmitted infections, HIV 
testing, clinical breast exams, and cervical cancer screening. In 2010, 
90 percent of clients had incomes at or below 200 percent of the 
Federal Poverty Level.
    In addition to supporting basic healthcare services for about 5 
million individuals, the title X program also provides support for the 
family planning infrastructure across the Nation, including critical 
support for training and salaries for reproductive health providers. 
The Title X program also has had a long history of establishing the 
rules governing the delivery of high-quality family planning services 
in clinic settings--a role the program will continue to play. The 
Department of Health and Human Services (HHS) also anticipates that 
title X centers will remain critical sources of care for vulnerable 
populations who are uninsured as well as individuals who will be newly 
insured or Medicaid eligible under the Affordable Care Act (ACA). These 
centers will play an important role in achieving a key goal of ACA--
improving access to affordable preventive healthcare.
    While resources have been stretched thin, HHS fully anticipates 
that the program will continue to provide services through a broad 
range of community-based providers as well as leverage multiple sources 
of Federal and State funding, including Medicaid, state family planning 
dollars where available, the Maternal and Child Health Block Grant, and 
the Social Services Block grant. Although difficult to predict, it is 
possible that after the full implementation of the ACA, the payer mix 
will change at some family planning centers to include a greater share 
of funding from private insurance and Medicaid. The ACA requires that 
most private insurance cover certain contraceptive services with no 
cost-sharing. As demand continues to increase, title X sites will 
continue to support high-quality services delivered by experienced 
clinicians and a solid infrastructure able to address the needs of 
women, men, and vulnerable populations.
                             contraception
    Question. According to the Guttmacher Institute, in 2006 only about 
one-half of the women who needed or wanted publicly funded family 
planning were able to receive those services, so won't requiring 
insurance plans to cover contraception help fill a public health gap 
that publicly funded family planning funding streams are not able to 
meet?
    Answer. Before ACA, too many Americans didn't get the preventive 
healthcare they need to stay healthy, avoid or delay the onset of 
disease, lead productive lives, and reduce healthcare costs. An 
estimated 20.4 million women are currently receiving expanded 
preventive services without cost-sharing because of ACA.
    On average, a woman uses contraception for 30 years of her life, 
with the average cost of contraception at $50 per month.
    By eliminating cost-sharing requirements for certain preventive 
services under most plans, ACA is improving access to these services. 
The guidelines for women's preventive services ensure that women have 
access to a comprehensive set of preventive services and fill the gaps 
in current preventive services guidelines for women's health. This 
means that most women will no longer have to pay often burdensome co-
payments, co-insurance, and deductibles in order to access necessary 
preventive services such as contraception, breastfeeding support, and 
domestic violence screening. By removing coverage barriers, these 
guidelines will help improve access to comprehensive quality healthcare 
for all American women.
    Question. Opponents of insurance plans being required to coverage 
contraception claim that contraception does not actually lower 
healthcare costs in the long-term, but doesn't every $1 spent on family 
planning services stand to save $4 in pregnancy related healthcare?
    Answer. Actuaries and experts agree that covering contraception 
actually saves money for insurance companies. The cost of contraception 
coverage is low and tends to be more than offset by the savings that 
result from improved health and fewer unplanned pregnancies. For 
example:
  --A study by the National Business Group on Health estimated that it 
        would cost employers 15-17 percent more not to provide 
        contraceptive coverage in employee health plans than to provide 
        such coverage, after accounting for both the direct medical 
        costs of pregnancy and indirect costs such as employee absence 
        and reduced productivity.
  --When contraceptive coverage was added to the Federal Employees 
        Health Benefits Program, premiums did not increase.
  --Fifteen States including Pennsylvania have family planning 
        demonstration programs under Medicaid that have significantly 
        expanded coverage of these services without increasing State or 
        Federal costs.
    national institute for occupational safety and health's spokane 
                          research laboratory
    Question. As you know, the work conducted at the National Institute 
for Occupational Safety and Health's (NIOSH) Spokane Research 
Laboratory is vital to maintaining and improving the health and safety 
of workers in industries including metal and nonmetal mining throughout 
the Western United States. Over the last 3 years, the Spokane Research 
Laboratory has undergone internal reorganization that could lead to the 
Laboratory's closure, which would greatly impact the health and safety 
of Western United States miners. As one of NIOSH's lowest-cost 
laboratories, the work done at the Spokane Research Laboratory is also 
conducted at a value to taxpayers.
    What plans do you have to continue the critical work of Western 
United States mine health and safety research at the Spokane Research 
Laboratory?
    Answer. NIOSH continues to address the priority needs of all coal, 
metal, and nonmetal mineworkers, including those working at mines 
located in the Western United States through its national mining safety 
and health research program. The Office of Mine Safety and Health 
Research (OMSHR) maintains staff in Spokane, Washington and Pittsburgh, 
Pennsylvania who are assigned to the full range of projects in their 
research portfolio, and OMSHR plans to continue serving the needs of 
all of its customers and stakeholders through the work of staff at both 
the Spokane and Pittsburgh campuses.
    Question. Will you provide me with the Spokane Research 
Laboratory's fiscal year 2009-2013 budget allocations for staff/
personnel, including full-time equivalent employee levels; and 
facilities maintenance and construction?
    Answer.

----------------------------------------------------------------------------------------------------------------
                                    Fiscal year     Fiscal year     Fiscal year     Fiscal year     Fiscal year
          NIOSH Spokane                2009            2010            2011            2012            2013
----------------------------------------------------------------------------------------------------------------
FTE.............................              50              50              45              38              36
Personnel costs.................      $5,384,634      $5,444,656      $4,926,490      $4,142,030      $3,942,030
Facilities maintenance/                 $601,335        $480,330        $689,559  \1\ $2,607,462        $757,462
 construction costs.............
----------------------------------------------------------------------------------------------------------------
\1\ Fiscal year 2012 includes one-time funding ($1.85 million) to install a new fire suppression system in the
  Spokane facility.

    The CDC's Web site states that its mission is to: ``. . . 
collaborate to create the expertise, information, and tools that people 
and communities need to protect their health,'' and that this mission 
is to be accomplished by working with partners to ``. . . detect and 
investigate health problems, and conduct research to enhance 
prevention.'' The CDC follows this mission statement with a pledge to 
the American people that includes a commitment to: ``base all public 
health decisions on the highest quality scientific data, openly and 
objectively derived.''
    Question. How does the CDC plan to fulfill its mission and maintain 
their pledge to the American people to ``base all public health 
decisions on the highest quality scientific data'' within the area of 
workplace safety if they have eliminated funding for the Education and 
Research Centers and the National Occupational Research Agenda's 
Agricultural, Forestry, and Fishing Programs?
    Answer. The fiscal year 2013 budget eliminates the Education and 
Research Centers and the Agricultural, Forestry, and Fishing Sector of 
the National Occupational Research Agenda because in a resource-
constrained environment, these programs are a lower priority relative 
to other CDC programs.
    When NIOSH's Education and Research Centers were originally created 
almost 40 years ago, there were a limited number of academic programs 
focusing on industrial hygiene, occupational health nursing, 
occupational medicine, and occupational safety. Now, many schools of 
public health include coursework and many have specializations in these 
areas. CDC will continue to provide technical assistance to the 
Education and Research Centers despite the proposed elimination of 
grant funding.
    The Agricultural, Forestry and Fishing Sector, when compared to 
other CDC programs, is considered lower-priority in terms of CDC's core 
mission and its ability to have a national impact on improved health 
outcomes. In fiscal year 2013, CDC will focus on other sectors of 
research within the National Occupational Research Agenda to promote 
widespread adoption of improved workplace safety and health practices 
based on research findings.

                                 ______
                                 
            Questions Submitted by Senator Mary L. Landrieu
                               exchanges
    Question. As you said in your testimony, fiscal year 2013 will be a 
critical year for building the infrastructure and initiating the many 
business operations that are vital for the exchanges to begin operating 
in 2014.
    I understand that your agency has been working hard to build out 
the Federal exchanges in States that have officially declared that they 
are not intending to partner with Federal Government on this issue. As 
you know, Louisiana is one of these States.
    I want to stress to you how important it is to me, and to the 
people of Louisiana, that we have a strong exchange in our State. I 
stand by ready to assist you in creating a high-functioning Federal 
exchange in Louisiana.
    In the absence of partnership from State government, it will be 
very important to work with other stakeholders in Louisiana, such as 
consumer groups and providers, to ensure that the Federal exchange is 
as robust as possible.
    My question is: what plans does HHS have for engaging with 
nongovernment stakeholders and advocates within the States, 
particularly in States where the State government declines to partner 
with the Federal Government on this important issue?
    Answer. HHS is working diligently with our Federal and State 
partners to ensure Affordable Insurance Exchanges are available to all 
Americans by January 2014. Much of the needed infrastructure work will 
occur in 2012, and beginning in 2013, major business processes will 
become operational in anticipation of open enrollment in October 2013.
    HHS is committed to the successful implementation of the Federally 
Facilitated Exchanges (FFEs). The FFEs will coordinate with many State 
experts, including State Medicaid Agencies related to eligibility for 
insurance affordability programs, State Departments of Insurance 
related to certification and oversight of qualified health plans, and 
the State Governor's offices for intergovernmental affairs. The FFEs 
will also coordinate with nongovernment stakeholders such as the 
insurance community--beyond those offering qualified health plans--when 
operating Reinsurance and Risk Adjustment, and consumer groups who can 
help us understand each State's unique characteristics and challenges. 
We will provide more information about our plans to engage 
nongovernment stakeholders once we have a complete understanding of 
which States plan to implement their own Affordable Insurance Exchanges 
and which States plan to participate in the FFEs.
                             health centers
    Question. Last August, the Health Resources and Services 
Administration (HRSA) announced the winners of the New Access Point 
grant. There were a total of 67 awards announced throughout the 
country.
    I was very concerned that not a single applicant from Louisiana was 
chosen to receive the award, despite the demonstrated competency of 
many of the applicants and the clearly established need for community 
health services throughout our state. The absence of additional New 
Access Point grantees in our State leaves many of our non-federally 
qualified health centers (FQHCs) without the resources they need to 
meet the needs of their community.
    The President's fiscal year 2013 request includes $3 billion for 
health centers, including an additional $300 million in mandatory money 
from the Affordable Care Act (ACA). You say that this money will 
provide 240 New Access Points.
    I will work to help ensure you receive the money your agency needs 
to fund these New Access Points, and I urge you to carefully consider 
all qualified applications from all States, particularly those that did 
not receive any awards in fiscal year 2012.
    Answer. As you know, the funding for fiscal year 2011 Health Center 
New Access Points was extremely competitive. In fiscal year 2011, HHS 
received 810 applications and funded 67 grants. In fiscal year 2012, 
HHS anticipates that up to $145 million will be available to support 
approximately 220 new access points grants. The funding will support 
the fiscal year 2011 approved but unfunded applications following the 
rank order list consistent with statutory health center requirements to 
make awards for fiscal year 2012. The fiscal year 2011 applicants will 
be required to submit information in March to verify continued 
eligibility for a New Access Point award. HHS anticipates making awards 
in June or July 2012. In addition, HHS anticipates awarding $20 million 
to support Beacon Communities long-term improvements in quality of 
care, health outcomes and cost efficiencies; $43 million for technical 
assistance to enhance the operations and performance of health centers, 
and $5 million for HIV/AIDS services to support enhanced HIV/AIDS 
treatment.
    In fiscal year 2013, the budget includes $19 million to establish 
approximately 25 new access points. These grants will support new full-
time service delivery sites for the provision of comprehensive primary 
and preventive healthcare services to approximately 150,000 additional 
people.
                           nih--idea program
    Question. The National Center for Research Resources (NCRR), an 
institute within the National Institutes of Health (NIH), houses a 
program called the Institutional Development Award (IDeA program).
    The IDeA program funds research in states that are traditionally 
underrepresented within the NIH, including Louisiana.
    In the fiscal year 2012 HHS budget, the Congress increased the 
funding for the IDeA program by $46 million. However, for the fiscal 
year 2013 budget year, the President proposes a $48 million decrease. 
It appears that this money is being taken away in order to help fund 
the new National Center for Advancing Translational Sciences (NCATS).
    At a time when NIH budgets are flat, and when the most heavily 
funded States will continue to be funded as they always have, why would 
the administration propose reducing the one pot of money that is 
specifically designed for States that have traditionally been 
underfunded?
    Answer. For fiscal year 2012, the IDeA program was provided with a 
21-percent increase in the congressional appropriation, or 
approximately $50 million, in funding over fiscal year 2011, while most 
other NIH programs were held relatively flat. For fiscal year 2013, the 
budget proposes $225 million for the IDeA program, about the same as 
the fiscal year 2011 level, and approximately $50 million below fiscal 
year 2012. The IDeA program is valued by NIH and gives many 
investigators at less research-intensive institutions an opportunity to 
contribute to biomedical research. Within a constrained budget 
environment, NIH believes that the IDeA program should not be treated 
differently than most other programs in the fiscal year 2013 NIH budget 
which are flat with fiscal year 2011. With regard to NCATS, the fiscal 
year 2013 budget requests an increase because of the need for 
innovative solutions to the bottlenecks currently in the development 
pipeline that hinders the movement of basic research findings into new 
diagnostics and therapeutics for patients. The request for IDeA is made 
in the context of the total NIH budget and not as a particular offset 
to any one program or line item.
               low-income home energy assistance program
    Question. I was dismayed to see that the budget again asks for 
another cut to Low-Income Home Energy Assistance Program (LIHEAP). 
Because of the way the LIHEAP law is written, warm weather States, 
growth States, and States experiencing high-energy prices don't receive 
a fair share of the funding except for that portion of Base grant 
appropriations more than the $2 billion mark.
    With an estimated 825,000 living in poverty, Louisiana has the 
second-highest poverty rate in the nation. Although 75,000 households 
were helped by LIHEAP in 2011, it is possible that only about 52,000 
can be reached under the fiscal year 2013 budget request. High summer 
temperatures are life-threatening especially to the at-risk populations 
we expect LIHEAP to help, and last summer was one of the hottest on 
record.
    I am concerned that further reducing LIHEAP imperils Louisiana 
households with seniors, disabled, and preschoolers. I believe the core 
of this program needs to be much better funded if these most vulnerable 
of children and families are to be given a fair shot at their 
potential.
    Please provide the subcommittee with the latest-available State-by-
State estimates of the LIHEAP-eligible populations that cannot be met 
at the requested funding level. I recognize that such estimates are 
inherently imprecise, but believe they would nonetheless greatly help 
our decisionmaking and understanding.
    Answer. I understand your concern about the responsiveness of 
LIHEAP to cooling costs in States like Louisiana. While the Congress 
did not provide contingency funds in fiscal year 2012, the fiscal year 
2013 President's budget does include $200 million giving us the ability 
to respond to weather or other emergencies.
    The impact of the fiscal year 2013 request level on the number of 
LIHEAP-eligible households unserved by the program depend on a number 
of factors including the impact of the economy on the number of poor 
households, and State-level decisions on eligibility and payment 
levels. The number of households served is also affected by 
contributions from other sources including utility companies and good 
neighbor funds. For example, in fiscal year 2008, the most recent year 
where we have complete data, there were roughly 33.5 million LIHEAP 
eligible households. With an appropriation of $2.57 billion, the 
program served an estimated 5.4 million households with heating 
assistance and an estimated 500,000 households with cooling 
assistance.\1\ The most recent data, from special tabulations of the 
Census Bureau's 2010 American Community Survey which is based on a 
national sample of households, indicates that the number of LIHEAP-
eligible households increased to 37.1 million in fiscal year 2010. 
Preliminary fiscal year 2010 program data shows that with an 
appropriation of $5.1 billion, the program provided heating assistance 
to 7.4 million households, cooling assistance to 900,000 households, 
and crisis assistance (both heating and cooling) to 2.3 million 
households. The fiscal year 2013 President's budget includes $3.02 
billion for LIHEAP, a 17-percent increase more than fiscal year 2008 
enacted and last year's budget request. Unfortunately, there are too 
many variables to estimate how the additional funding will affect the 
percentage of eligible households receiving LIHEAP in fiscal year 2013.
---------------------------------------------------------------------------
    \1\ See the following link for State-level information: http://
www.acf.hhs.gov/programs/ocs/liheap/publications/
FY08_congressional_state_data.html#TableIII2
---------------------------------------------------------------------------
                      school-based health centers
    Question. School-based health centers (SBHCs), a program that you 
have voiced your support for on numerous occasions, was not funded in 
the administration's fiscal year 2013 budget.
    Understanding that SBHCs are a vital safety net provider for our 
school-aged children across the country and a federally authorized 
program, can you please inform the subcommittee of your plans for 
funding the SBHC authorization for the 2014 fiscal year?
    In addition, would you offer some examples on how the 
administration will support community health centers looking to form 
partnerships with school districts and local health departments that 
currently operate SBHCs within the service area of the community health 
center?
    Answer. ACA appropriated $200 million from fiscal year 2010-2013 to 
address capital needs, including new construction, alteration/
renovations and equipment-only projects, to improve delivery and 
support expansion of services at school-based health centers. While 
funds have only been provided for the capital grants, experience has 
demonstrated that capital funding can significantly expand service 
delivery. In addition, SBHCs may apply for the Community Health Center 
New Access Point funding to support new healthcare service delivery 
sites, if they meet the health center program eligibility criteria. 
HRSA will continue to offer technical assistance to communities 
interested in developing partnerships and formal affiliations that 
support the provision of primary healthcare to underserved populations, 
including school-aged children. Priorities for the fiscal year 2014 
budget are in the preliminary stages of development. Programs with 
existing authorizations will be given appropriate consideration in the 
context of the total agency budget formulation process, including the 
SBHC program.
  centers for disease control and preventions chronic disease program 
                             consolidation
    Question. Would you please tell me specifically how the Coordinated 
Chronic Disease Prevention and Health Promotion program will be 
structured and how the funding for the components of the consolidation 
will operate?
    Answer. The budget includes $379 million, an increase of $129 
million more than fiscal year 2012, for the Coordinated Chronic Disease 
Prevention program. This program consolidates disease-specific chronic 
disease funding into a comprehensive program to address the leading 
chronic disease causes of death and disability, including heart disease 
and stroke. Because many inter-related chronic disease conditions share 
common risk factors, the new programs will improve health outcomes by 
coordinating the interventions that can reduce the burden of disease 
and disability. Programmatic activities that advance prevention and 
control of each disease will focus on epidemiology and surveillance, 
environmental interventions that promote healthful behaviors, work with 
the healthcare system to more effectively deliver quality clinical and 
other preventive services, and community-clinical supports for 
lifestyle interventions for those living with or at high risk of 
developing chronic conditions.
    The proposed structure and funding for the Coordinate Chronic 
Disease Prevention and Health Promotion program will be operationalized 
through a new 5-year cooperative agreement cycle. Funding will be 
allocated to States, tribes, and territories on a formula and 
competitive basis. Approximately one-third of grant funding will be 
formula based and the remaining two-thirds will be allocated 
competitively.
    Specific components of the proposed fiscal year 2013 program 
include:
  --Core, formula-based awards of approximately $82 million to State, 
        tribal, and territorial health departments based on population 
        size and chronic disease burden. Allocations for States will be 
        based on a combination of population and poverty level. Poverty 
        and chronic disease are closely related factors. This proposed 
        allocation methodology is similar to the allocation formula 
        used for the fiscal year 2011 Coordinated Chronic Disease grant 
        program. The proposed formula-based allocation methodology for 
        eligible tribal entities and territorial health departments 
        will include a base amount and an increment based on population 
        size. Core formula-based funding will build and strengthen 
        State health department capacity and expertise to effectively 
        prevent chronic disease and promote health. This capacity and 
        expertise includes:
    --Ensuring that every State has a strong foundation to support 
            chronic disease prevention and health promotion;
    --Maximize the reach of categorical chronic disease programs in 
            States by leveraging shared basic services; and
    --Provide leadership and expertise to work in a coordinated manner 
            across chronic disease conditions and risk factors to most 
            effectively meet population health needs, particularly for 
            populations with the greatest health disparities.
  --Competitive awards of approximately $16 million to State, tribal, 
        and territorial health departments for specific chronic disease 
        prevention and health promotion interventions, including:
    --Strategies that support and reinforce healthful behaviors and 
            expand access to healthy choices;
    --Health systems interventions to improve the delivery and use of 
            clinical and other preventive services, such as blood 
            pressure control, appropriate aspirin use, and cancer 
            screenings; and
    --Community-clinical linkage enhancement to better support chronic 
            disease self-management.
  --The remaining funding will support:
    --Competitive awards to national organizations, national networks, 
            and other entities to disseminate best practices and 
            effective interventions; and
    --CDC's national chronic disease subject matter expertise; 
            technical assistance to grantees; national program 
            surveillance; evaluation and research activities; and 
            program leadership.

                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin
                        congenital heart disease
    Question. Congenital heart disease (CHD) is one of the most 
prevalent birth defects in the United States and a leading cause of 
birth defect-associated infant mortality. Due to medical advancements 
more individuals with congenital heart defects are living into 
adulthood, unfortunately, our Nation has lacked a population-
surveillance system across the life-course for CHD. The healthcare 
reform law included a provision, which I authored, that authorizes the 
Centers for Disease Control and Prevention (CDC) to expand surveillance 
and track the epidemiology of CHD across the life-course, with an 
emphasis on adults. The Consolidated Appropriations Act of 2012 
provided the CDC with $2 million in new funding for enhanced CHD 
surveillance. Please describe how CDC is using this funding. It is my 
understanding that some funding will go toward pilot projects and an 
interdisciplinary expert meeting. Please summarize the status of these 
initiatives and how they will advance CHD surveillance and improve our 
understanding of CHD and the disease's prevalence across subgroups 
(including age and race/ethnicity). If additional money is appropriated 
for CHD surveillance in fiscal year 2013, how would that funding be 
utilized?
    Answer. In fiscal year 2012, CDC plans to provide support through 
cooperative agreements for CHD surveillance activities and to support a 
meeting of experts on CHDs across the lifespan. CDC developed a new 
funding opportunity announcement for CHD surveillance focused on 
adolescents and adults, which is planned for publication in May 2012. 
The purpose is to provide support through cooperative agreements for 
the development of robust, population-based estimates of the prevalence 
of CHDs focusing on adolescents and adults and better understand the 
survival, healthcare utilization, and longer-term outcomes of 
adolescents and adults affected by CHDs. CDC anticipates funding 3 to 4 
pilot sites. This is planned as a 3-year cooperative agreement, and 
preliminary data is anticipated after 2 years of funding.
    Also, CDC plans to support a meeting of experts on CHDs across the 
lifespan. This meeting will provide critical input to assist CDC in 
developing a public health research agenda for CHDs, and improve CDC's 
capacity to have a measurable public health impact on the lives of 
those with CHDs.
    For the CHD expert meeting, CDC has formed a steering committee and 
developed a draft invitation list. The steering committee includes CDC 
and the National Institutes of Health (NIH) representatives, pediatric 
cardiologists, and adult CHD specialists. The steering committee has 
developed a list of potential invitees including pediatric 
cardiologists, adult CHD specialists, epidemiologists, economists, 
health services researchers, and other areas of expertise to guide the 
development of a prioritized public health research agenda for CHDs. 
The meeting is tentatively scheduled for September 10-11, 2012 and will 
be held at CDC's main campus in Atlanta, Georgia.
    If additional funding is available in fiscal year 2013, CDC would 
provide supplements to existing pilot sites and enhance other ongoing 
activities based on the CHDs public health research agenda formulated 
by the CHD steering committee.
    Question. There continue to be higher rates of mortality and 
serious disability at all ages among people with congenital heart 
disease compared to the general population. Could you please describe 
current efforts at Agency for Healthcare Research and Quality (AHRQ) 
and NIH to better understand healthcare utilization and treatment 
outcomes for congenital heart disease across the life-span?
    Answer. AHRQ's research related to congenital heart disease focuses 
mainly on pediatric issues. This includes supporting the Children's 
Health Insurance Program Reauthorization Act (CHIPRA) Pediatric Quality 
Measures Program. While AHRQ has not yet developed specific measures of 
the quality of care for children with heart disease, congenital heart 
disease is a major birth defect and a major cause of infant morbidity 
and mortality. Therefore its care can be significantly impacted by 
various measures, including those that will track:
  --global pediatric patient safety;
  --child hospital readmissions;
  --neonatal costs, quality, and outcomes;
  --neonatal and pediatric intensive care unit quality and outcomes;
  --patient-reported outcomes and inpatient experiences of care; and
  --identification of, and coordination of care for children with 
        special healthcare needs.
    AHRQ is also developing and supporting its Healthcare Cost and 
Utilization Project (HCUP), most notably the Kids' Inpatient Database 
(KID). KID is a unique and powerful database of hospital inpatient 
stays for children. It was specifically designed to permit researchers 
to study a broad range of conditions and procedures related to child 
health issues. KID includes data on volumes, costs, and charges of 
inpatient pediatric cardiac care. Researchers and policymakers can use 
KID to identify, track, and analyze national trends in healthcare 
utilization, access, charges, quality, and outcomes. For example, 
researchers at Children's Hospital Boston used KID data to examine 
factors associated with increased resource utilization for children 
with congenital heart disease. Furthermore, AHRQ is developing 
Pediatric and Inpatient Quality Indicators that include measures of 
procedure volume and risk-adjusted mortality following pediatric 
cardiac surgery. It is also supporting a contract on the prevention of 
Staph aureus infections in cardiac surgical patients, including adult 
survivors of congenital heart disease.
    Within NIH, the National Heart, Lung, and Blood Institute (NHLBI) 
has made a significant investment in answering these important 
questions through support of targeted programs as well as a large 
portfolio of investigator-initiated grants. The Bench to Bassinet (B2B) 
program supports an extensive collaboration among multidisciplinary 
investigators to improve outcomes for patients with congenital heart 
disease.\1\ Its longest-standing component is the Pediatric Heart 
Network (PHN) which conducts multicenter research in congenital heart 
disease.\2\
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    \1\ http://www.benchtobassinet.org/
    \2\ http://www.pediatricheartnetwork.com/
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    A major focus of PHN studies has been on the short- and long-term 
outcomes of medical and surgical interventions. One trial found that 
the initial surgical strategy typically used for infants with only a 
single functional heart-pumping chamber may improve short-term, but not 
intermediate-term, outcomes. The wealth of data obtained in this 
surgical study also allowed us to examine the considerable variation in 
medical care practice that existed across the 15 major academic centers 
that participated. Further analysis of this information is expected to 
shed light on how such variations affect outcomes and costs. Another 
PHN trial found that a commonly prescribed drug, enalapril, had no 
effect on outcomes. A follow-up study is now assessing whether this 
result has altered prescribing patterns in North America. An ongoing 
follow-up of a cohort of adolescents who have undergone staged surgical 
repair for single ventricle physiology is enabling us to examine the 
critical transition from pediatric to adult care. This transition has 
proven challenging for many who have serious CHD; appropriate care in 
adulthood is essential to optimizing their independence and function.
    Another B2B component is a consortium studying the genetic 
underpinnings of congenital heart disease outcomes. In the initial 15 
months, it has recruited some 3,000 children and adults (more than 20 
percent are older than 18 years of age), along with many of their 
parents, to study both genetic causes of congenital heart disease and 
genetic contributions to treatment outcomes. Tetralogy of Fallot (a 
``blue-baby'' defect), for instance, can result from at least 6 
different genetic mutations. Once we know how the mutations influence 
outcomes, we will be able to risk-stratify patients for more- or less-
intensive treatment and to offer personalized therapies.
    NHLBI is funding the Pumps for Kids, Infants, and Neonates 
(PumpKIN) program to design, develop, test, and make available to 
infants and young children a number of advanced circulatory support 
devices for congenital and acquired cardiovascular disease resulting in 
heart failure.\3\ Currently, very few options exist for these 
vulnerable heart failure patients. The program includes two small 
implantable ventricular assist devices based on the latest technologies 
and two advanced integrated and compact extracorporeal membrane 
oxygenator systems. They have been designed to address troublesome 
shortcomings of circulatory support devices for children such as 
reliability, biocompatibility, infection, thrombosis, and size. The 
four devices are in their last phases of bench-testing, with clinical 
trials expected to begin in October 2013. In contrast to older adults, 
for whom these devices may be definitive therapy, these devices are 
used in children as bridges to transplantation. The shortage of 
appropriate hearts for transplantation into children requires that 
better devices be available to support patients until a donor heart is 
available.
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    \3\ http://public.nhlbi.nih.gov/newsroom/home/
GetPressRelease.aspx?id=2689
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    NHLBI also funds a number of grants that address common issues 
faced by children and adults with congenital heart disease, such as 
exercise capacity, problems with neurological function and learning, 
and overall quality of life. These investments are aimed to ensure a 
brighter future for people of all ages with congenital heart disease.
            children's hospitals graduate medical education
    Question. The administration proposes cutting the Children's 
Hospitals Graduate Medical Education (CHGME) program by two-thirds to 
$88 million in fiscal year 2013. As you know, this program supports 
training of pediatric providers at two freestanding children's 
hospitals in Illinois--Children's Memorial and La Rabida Children's 
Hospital--and approximately 50 others around the country. The CHGME 
recipient hospitals train more than 5,600 full-time equivalent 
residents annually.
    I am concerned by the proposed cut to CHGME funding. Through 
Medicaid and the Children's Health Insurance Program, we've expanded 
the number of children with insurance coverage in the United States. I 
view this as a great success, however we must ensure we have an 
adequate supply of physicians to care for these children.
    Already, there are significant shortages in several pediatric 
subspecialties, including neurology, developmental-behavioral medicine, 
general surgery, and pulmonology, that are affecting patient care. A 
survey last year by the National Association of Children's Hospitals 
and Related Institutions found wait times of more than 10 weeks to see 
a pediatric endocrinologist, and 9 weeks for a pediatric neurologist.
    Is the administration concerned that reducing CHGME funding will 
worsen the shortage of pediatric subspecialists and affect children's 
access to care by general pediatricians?
    Answer. We recognize the vital role that children's hospitals and 
pediatric providers play in providing quality healthcare to our 
Nation's children. The fiscal year 2013 CHGME funding level continues 
to support direct costs for training pediatric residents at independent 
children's hospitals. This payment provides support for resident 
salaries, expenditures related to stipends and fringe benefits for 
residents, salaries and fringe benefits of supervising faculty, cost 
associated with providing the GME training program, and allocated 
institutional overhead costs.
    The fiscal year 2013 budget retains the incentive to maintain total 
resident levels. The administration recognizes that research has 
indicated that there is a significant shortage of pediatric 
subspecialists, resulting in children with serious illnesses being 
forced to travel long distances--or wait long periods--to see a 
pediatric specialist. In response to these shortages, the fiscal year 
2013 President's budget includes $5 million to implement the Pediatric 
Specialty Loan Repayment (PSLR) program that was authorized in the 
Affordable Care Act (ACA). Under this program, loan repayment 
agreements will be authorized for pediatric specialists who agree to 
work in underserved areas.
    While both the CHGME Payment and the PSLR programs support the 
pediatric medical workforce, the focus of each is different. The CHGME 
Payment Program serves the purpose of providing residency training in 
Children's Hospitals through the payments made to Children's Hospitals, 
while the PSLR program is designed to assist pediatric specialists more 
directly and increase the number of pediatric specialists in 
underserved areas.
                    section 317 immunization program
    Question. The Section 317 Immunization Program helps to ensure high 
immunization coverage levels and low incidence of vaccine preventable 
diseases by supporting state and local immunization programs in 
planning, developing, and maintaining a public health infrastructure. 
The administration's budget proposes a $58 million cut to the section 
317 program. Will this reduction impact the agency's ability to 
purchase grants or operational support for health departments? How do 
you see the role the section 317 program evolving with the 
implementation of ACA? The President's budget proposes transferring $72 
million from the Prevention and Public Health Fund to the section 317 
program. How would those funds be used?
    Answer. The fiscal year 2013 budget request includes funds for 
vaccine purchase to continue outreach to the hardest-to-serve 
populations, and critical immunization operations and infrastructure 
that supports national, State, and local efforts to implement an 
evidence-based, comprehensive immunization program. The request also 
specifically directs $25 million toward continuation of the billables 
project, which allows public health departments to vaccinate and bill 
for fully insured individuals in order to maintain section 317 vaccines 
for the most financially vulnerable and respond to time-urgent vaccine 
demands, such as outbreak response. The fiscal year 2013 budget will 
sustain the national immunization program vaccine purchase and 
immunization infrastructure. The budget does not continue funding for 
one-time enhancements planned for fiscal year 2012 to modernize the 
immunization infrastructure through funding to the grantees for 
improving immunization health IT systems and vaccine coverage among 
school-age children and adults; expansion of the evidence base for 
immunization programs and policy; and enhancements to national provider 
education and public awareness activities to support vaccination across 
the lifespan.
    ACA requires new health plans to cover routinely recommended 
vaccines without cost-sharing when provided by an in-network provider. 
As these health insurance reforms expand prevention services to more 
Americans, the size of the population currently served by section 317 
vaccine is expected to decrease in size, specifically underinsured 
children. The Section 317 Immunization Program will continue to have a 
critical role in:
  --providing vaccines to meet the needs of uninsured adults and 
        responding to urgent vaccine needs such as outbreak response; 
        and
  --ensuring the necessary infrastructure is in place to support the 
        Nation's immunization system for both routine vaccination as 
        well as managing vaccine shortages and other emergency 
        response.
This critical infrastructure serves both the public (e.g., Vaccines For 
Children Program and Section 317) and private sectors. Insurance 
coverage alone will not provide the immunization infrastructure 
necessary to ensure a strong evidence base for national vaccine 
programs and policy, quality assurance for immunization services, and 
high-vaccination coverage rates across the lifespan.

                                 ______
                                 
                Questions Submitted by Senator Jack Reed
                      section 317 (immunizations)
    Question. The Centers for Disease Control (CDC), in its fiscal year 
2011 report to the Congress on the Section 317 Immunization Program 
estimated that approximately $1.72 billion is necessary to fulfill the 
goals of adequately immunizing uninsured and underinsured children, 
adolescents, and adults. Indeed, vaccination programs have been proven 
to be one of the most cost-effective approaches to reducing disease and 
future healthcare costs, a critical goal of the Congress. However, the 
fiscal year 2013 budget proposal contains a nearly 10-percent cut to 
this program. While millions more uninsured and underinsured 
individuals will receive free vaccinations beginning in 2014, how does 
this funding level ensure the cost-effective immunization programs 
currently in place are maintained during the intervening years?
    Answer. The fiscal year 2013 budget request includes funds for 
vaccine purchase to continue outreach to the hardest-to-serve 
populations, and critical immunization operations and infrastructure 
that supports national, State, and local efforts to implement an 
evidence-based, comprehensive immunization program. The request also 
specifically directs $25 million toward continuation of the billables 
project, which allows public health departments to vaccinate and bill 
for fully insured individuals in order to maintain section 317 vaccines 
for the most financially vulnerable and respond to time-urgent vaccine 
demands, such as outbreak response. The fiscal year 2013 budget will 
sustain the national immunization program vaccine purchase and 
immunization infrastructure. The budget does not continue funding for 
one-time enhancements planned for fiscal year 2012 to modernize the 
immunization infrastructure through funding to the grantees for 
improving immunization health IT systems and vaccine coverage among 
school-age children and adults; expansion of the evidence base for 
immunization programs and policy; and enhancements to national provider 
education and public awareness activities to support vaccination across 
the lifespan.
                       lead poisoning prevention
    Question. The Advisory Committee on Childhood Lead Poisoning 
Prevention (ACCLPP) recently recommended reducing the blood lead level 
in children from 10ug/dL to 5 ug/dL when greater medical monitoring is 
necessary, along with enhanced lead education for family members and 
more comprehensive investigations of the child's environment. What is 
CDC's plan for implementing this recommendation?
    Answer. The ACCLPP recommendations are currently being reviewed and 
evaluated by U.S. Department of Health and Human Services (HHS). The 
process of carefully reviewing ACCLPP's recommendations and deciding 
whether or not to concur with them may take several months to complete.
    Question. In fiscal year 2012, the Congress requested the CDC and 
Health Resources and Services Administration (HRSA) work together to 
expand healthy housing activities as part of its Home Visiting Programs 
and provide greater incentives for States to implement programs that 
already include these activities. What action has been taken to respond 
to this request?
    Answer. CDC and HRSA are working to identify possible solutions for 
integrating childhood lead poisoning prevention activities into routine 
services of HRSA's early childhood Home Visiting Program.
                healthy home and community environments
    Question. The fiscal year 2013 budget proposes a consolidation of 
the CDC Healthy Homes and Lead Poisoning Prevention Program and the 
Asthma Control Program even though the two programs are distinctly 
different in their mission and activities. Grantees of the Healthy 
Homes and Lead Poisoning Prevention Program reduce injuries at home, 
make aging in place a real option for our seniors, prevent radon-caused 
lung cancer and carbon monoxide poisoning, and sustain efforts to 
prevent and treat childhood lead poisoning. The Asthma Control Program 
provides grantees with resources to offer workforce and professional 
development for asthma prevention and care and self-management, and 
help improve asthma management in schools, child care centers, and 
homes. Given the distinctions in these activities, how does CDC plan to 
consolidate these programs into one while ensuring we don't lose any 
ground on our lead poisoning prevention and asthma care efforts?
    Answer. The fiscal year 2013 budget proposes a new program--Healthy 
Home and Community Environments--that will incorporate the National 
Asthma Control Program (NACP) and the Healthy Homes/Lead Poisoning 
Prevention Program (HHLPPP). The fiscal year 2013 request for the 
Healthy Homes and Community Environments program is $27.3 million.
    The Healthy Home and Community Environments program is a new, 
multi-faceted approach to address healthy homes and community 
environments through surveillance, partnerships, and implementation of 
science-based interventions to address the health impact of 
environmental exposures in the home and to reduce the burden of disease 
through comprehensive asthma control. This integrated approach aims to 
control asthma and mitigate health hazards in homes and communities 
such as air pollution, lead poisoning hazards, second-hand smoke, 
asthma triggers, radon, mold, unsafe drinking water, and the absence of 
smoke and carbon monoxide detectors.
                     title vii (health professions)
    Question. The administration's fiscal year 2013 request proposes 
eliminating the Title VII Health Careers Opportunity Program (HCOP), 
and suggests that ``other federally funded health workforce development 
programs will continue to promote training of individuals from 
disadvantaged backgrounds.'' Can you please provide specific examples 
of Federal programs other than HCOP that prepare underrepresented 
minorities to become more competitive applicants to health professions 
schools? If the program is eliminated, where could aspiring health 
professionals find the HCOP-offered academic, financial, and mentorship 
opportunities designed to build a more diverse healthcare workforce 
commensurate with the Nation's needs?
    Answer. The President's budget prioritizes funding activities that 
have a more direct impact on expanding the primary care workforce by 
supporting students who have committed to and are training as health 
professionals. Investments initiated in the fiscal year 2013 budget 
will train an additional 2,800 primary care providers over the next 5 
years.
    Other federally funded health workforce development workforce 
programs will continue to promote training of individuals from 
disadvantaged backgrounds and increase the likelihood that 
disadvantaged students are able to attend health professions programs 
through recruitment activities and scholarship opportunities. For 
example, the fiscal year 2013 budget includes $22.9 million for the 
Centers of Excellence program to recruit, train, and retain 
underrepresented minority students and faculty in healthcare fields to 
increase the supply and quality of underrepresented minorities in the 
health professions. In addition, the fiscal year 2013 budget includes 
$47.5 million for the Scholarships for Disadvantaged Students Program 
which provides grants to health professions and nursing schools for use 
in awarding scholarships to financially needy students from 
disadvantaged backgrounds. This program aims to increase the diversity 
of the health professions workforce as well as to increase the number 
of primary care providers working in medically underserved areas. The 
Affordable Care Act also provided $85 million in funding for 
demonstration projects to address health profession workforce needs.
    Increasing the diversity of the health professions workforce is an 
area of focus for HRSA's health professions programs and for the most 
recent academic year, 58 percent of the graduates from HRSA-funded 
programs were disadvantaged and/or underrepresented minorities (URM). 
Similarly, the proportion of NHSC Scholarship Program participants who 
are underrepresented minorities exceeds the average national enrollment 
rates for URMs in health professions disciplines. Other examples of 
programs that support diversity in the health professions workforce are 
the Primary Care Training and Enhancement and the Nursing Workforce 
Diversity programs. Grantees in the Primary Care Training and 
Enhancement program must put a plan in place to increase the number of 
diverse health professionals and must document their progress. Grantees 
under the Nursing Workforce Diversity program work to increase 
educational opportunities for disadvantaged individuals pursuing 
nursing degrees.
                        state cancer registries
    Question. Given the fact that pediatric cancers are typically fast-
growing and require prompt treatment, the Committee has provided 
funding to assist States with improving data collection and 
facilitating early case capture of pediatric cancers. This funding has 
enabled researchers in nine States to more rapidly report childhood 
cancer occurrences, reoccurrences, and treatments provided to State 
cancer registries, and 35 States with supplemental registry 
infrastructure funding. What is the range of technology that States 
have implemented designed to improve childhood cancer surveillance and 
facilitate early case capture?
    Answer. Through CDCs National Program of Cancer Registries (NPCR), 
the Caroline Pryce Walker Conquer Childhood Cancer Act supports 
pediatric cancer research, including early case capture. Representing 
96 percent of the population, data from NPCR are vital to understanding 
the Nation's cancer burden and are fundamental to cancer prevention and 
control efforts at the national, State, and local level.
    CDC received funding to support pediatric cancer research in fiscal 
year 2010 and fiscal year 2011. Fiscal year 2010 resources were used to 
support supplemental grants to 35 cancer registries with existing 
electronic reporting activities to expand their work. During fiscal 
year 2011, CDC allocated funding to specific State projects, where 
resources could be concentrated to develop comprehensive approaches to 
pediatric cancer rapid reporting by healthcare providers. CDC awarded 
funding to seven States.
    The seven States funded by CDC to facilitate early case capture of 
pediatric cancers are building upon existing cancer registry 
infrastructure and implementing a number of innovative technological 
approaches to rapid reporting. Some of these include:
  --Electronic pathology reporting, which provides real-time, automated 
        reporting to State central cancer registries from various 
        sources, such as hospital pathology laboratories; in-State and 
        out-of-State independent pathology laboratories; and large, 
        out-of-State children's hospitals.
  --Electronic reporting from State Health Information Exchanges.
  --Using Electronic Health Record data.
  --Using electronic reporting of diagnostic imaging to capture cancer 
        cases that do not have a pathology report, such as clinically 
        diagnosed brain tumors.
  --Using web-based technology to capture hospital discharge data to 
        ensure that reported information is complete.
    As a result of these technological advancements to improve 
reporting speeds and facilitate data access, researchers will be able 
to use more timely cancer data--improving research on pediatric cancer 
trends, risk factors, and treatments. Finally, CDC is working to 
identify technological methods to streamline data access for 
researchers by facilitating data linkages and assisting researchers in 
managing the process to access cancer registry data.

                                 ______
                                 
               Questions Submitted by Senator Mark Pryor
    Question. I appreciate the tough decisions your Department has to 
make as we work to achieve a budget which begins to get our national 
debt under control. However, I am concerned about the cuts recommended 
to the Low-Income Home Energy Assistance Program (LIHEAP). The 
administration's recommendation of $3 billion represents a 40-percent 
cut since fiscal year 2010. Since only $400 million of this will go 
into the Tier 2/Tier 3 formulas, the low-income citizens of warm 
weather and growth States will see a marked decrease in their ability 
to get help.
    Unfortunately, America's most vulnerable citizens are concentrated 
in warm weather States, where they face the growing danger of high 
summer temperatures. Arkansas's poverty rate of 18.8 percent is the 
third highest in the Nation. Under the fiscal year 2013 budget request 
for LIHEAP, it appears that one-third fewer households will be able to 
receive assistance from LIHEAP this year as compared to 2011.
    At a time when LIHEAP is needed the most, I am concerned that this 
program is proposed to be cut again, and that Americans with little 
recourse should be denied access to LIHEAP. How can we work together to 
ensure that the needs of this segment of the population are met?
    Answer. The Department of Health and Human Services (HHS) is 
committed to improving the Nation's health and well-being while 
simultaneously contributing to deficit reduction. To do this, HHS makes 
investments where they will have the greatest impact and lead to 
meaningful gains in health and opportunity for the American people.
    Our fiscal year 2013 budget request includes a number of 
investments which support America's most vulnerable citizens. The 
budget supports critical reforms in Head Start and a Child Care 
Initiative that, when taken together with the Race to the Top Early 
Learning Challenge, are key elements of the administration's broader 
education reform agenda. The budget also includes additional funds to 
provide incentives to States to improve outcomes for children in foster 
care and for children at risk of foster care placement.
    The request for LIHEAP is $3.02 billion, $452 million less than the 
fiscal year 2012 enacted level, but $450 million (17 percent) above 
both fiscal year 2008 and the 2012 request. The fiscal year 2013 
request targets $2.8 billion in base grants using the State allocation 
the Congress enacted for fiscal year 2012. The request also includes 
$200 million in contingency funds, which will be used to target energy 
or weather-related emergencies.
    Questions. It has come to my attention that there are concerns that 
some high-cost, low-volume radiopharmaceuticals may not be receiving 
adequate reimbursement under Medicare in the outpatient setting. It is 
my understanding that today many of these diagnostic drugs are bundled 
into a payment that may only capture a fraction of their cost. Average 
Sales Price (ASP) data submitted on a voluntary basis by companies 
manufacturing radiopharmaceuticals indicates that current Medicare 
reimbursement for these radiopharmaceuticals is likely below hospital 
acquisition costs. Has Centers for Medicare & Medicaid Services (CMS) 
re-evaluated ambulatory payment classifications (APC) payment rates for 
nuclear medicine procedures or its mean cost data for the 
radiopharmaceuticals in relation to ASP data? If the new sales data is 
at odds with CMS calculated costs and the agency believes the 
discrepancy should be addressed in a fiscally responsible manner, does 
CMS have the authority to unbundle and pay separately for diagnostic 
radiopharmaceuticals?
    Answer. The Medicare outpatient prospective payment system (OPPS), 
like other Medicare prospective payment systems, relies on the concept 
of averaging, where the payment may be more or less than the estimated 
cost of providing a service or bundle of services for a particular 
patient, but with the exception of outlier cases, the payment is 
adequate to ensure access to appropriate care. Packaging payment for 
multiple interrelated services into a single payment creates incentives 
for providers to furnish services in the most efficient way by enabling 
hospitals to manage their resources with maximum flexibility, thereby 
encouraging long-term cost containment.
    In the calendar year 2008 OPPS rule, CMS finalized a policy to 
treat diagnostic radiopharmaceuticals differently, for payment 
purposes, than therapeutic radiopharmaceuticals, as part of a broader 
packaging policy under the OPPS. For calendar year 2008 through 
calendar year 2012, we packaged payment for all diagnostic 
radiopharmaceuticals into the major procedure that it was performed 
with, most commonly nuclear medicine scan procedures. We finalized this 
policy because we view diagnostic radiopharmaceuticals as functioning 
effectively as supplies that enable the provision of an independent 
service and are always ancillary and supportive to an independent 
service, rather than serving as a therapeutic modality.
    While we package the cost of diagnostic radiopharmaceuticals into 
payment for the nuclear medicine scan as a single diagnostic modality, 
the OPPS makes separate payment for both therapeutic 
radiopharmaceuticals and brachytherapy sources as a distinct 
therapeutic modality.
    For the calendar year 2012 OPPS, we continue to package payment for 
nonpass-through diagnostic radiopharmaceuticals into payment for their 
associated nuclear medicine procedures. We have established claims 
processing edits (called procedure-to-radiolabeled product edits) 
requiring the presence of a radiopharmaceutical or other radiolabeled 
product HCPCS code, including brachytherapy sources and therapeutic 
radiopharmaceuticals, when a separately payable nuclear medicine 
procedure is present on a claim. This enables hospital's reported 
charges for diagnostic radiopharmaceuticals to be incorporated into the 
annual APC payment rate setting calculations, and provides assurance 
that the claims information we use in rate setting are accurate and 
reflects the associated cost of the single diagnostic modality. We 
evaluate these claims processing edits every quarter to ensure that 
they are up to date.
    We incorporate the line-item estimated cost for diagnostic 
radiopharmaceuticals in our claims data as a reasonable and accurate 
approximation of average acquisition and handling costs for diagnostic 
radiopharmaceuticals. We therefore use these estimated costs to 
establish payment rates for the separately payable product with which 
the diagnostic radiopharmaceutical is packaged. We evaluate and 
establish these APC payment rates on a yearly basis, to reflect changes 
in service costs as well as practice patterns.
    We also note that, in the event that the diagnostic 
radiopharmaceuticals packaged into the primary procedure's payment are 
sufficiently costly, the separately payable major procedure would be 
eligible for an OPPS outlier payment, mitigating any impact from 
extreme costs associated with providing the major procedure.
    While the statute allows us the authority to pay separately for 
these procedures, we believe that the APC payments associated with the 
primary procedures reflect the costs commonly associated with providing 
the procedures as well as support the right incentives in the OPPS 
system for efficiency. Unbundling these procedures would give providers 
no reason to exercise financial prudence when providing the primary 
procedure, along with any associated packaged items. Similarly, 
removing the incentive through packaging, of making cost-efficient 
decisions, could have an adverse effect on the beneficiary, since they 
would pay a 20-percent coinsurance for those items.

                                 ______
                                 
            Questions Submitted by Senator Richard C. Shelby
                            obesity funding
    Question. More than one-third of U.S. adults are obese. The Deep 
South has the highest obesity rate in the country, with 6 out of 7 
States having an obese population higher than 30 percent. The two most 
obese States in the Nation, Alabama and Mississippi, both have obesity 
rates more than 32 percent, yet do not receive any obesity prevention 
funding from the Centers of Disease Control (CDC). Why do public health 
dollars not track with burden?
    Answer. In 2008, CDC released a funding opportunity announcement 
for the State-Based Nutrition and Physical Activity Program to Prevent 
Obesity and Other Chronic Diseases. The purpose of this program is to 
improve healthful eating and physical activity to prevent and control 
obesity and other chronic diseases by building and sustaining statewide 
capacity and to implement population-based strategies and 
interventions. The program currently funds 25 States to address the 
problems of obesity and other chronic diseases through statewide 
efforts coordinated with multiple partners.
    State-based nutrition and physical activity (obesity) grants were 
awarded using a competitive process. Applications were reviewed for 
responsiveness to the eligibility criteria in the Funding Opportunity 
Announcement (FOA) and underwent an objective review. Applications were 
scored against the criteria identified and not against one another. For 
each application, objective review comments were presented to a panel 
and a vote took place by the panel to determine if the application was 
approved, disapproved, or deferred. Approved applications were then 
rank ordered by score and funding decisions made based on the 
availability of funding, with preference given for States that had 
higher obesity prevalence rates, provided there was adequate 
justification to fund out of rank order. Neither Alabama nor 
Mississippi met the criteria for funding out of rank order.
    CDC is continuing work to improve the effectiveness of obesity 
related grant programs (nutrition, physical activity and obesity, 
diabetes, heart disease and stroke, cancer and arthritis) by 
strengthening coordination and collaboration across individual 
categorical programs; better defining the range of targeted science-
based interventions and activities that will accelerate health 
improvements; and working with State grantees to identify efficiencies 
and improve the effectiveness of program investments.
    Regardless of whether a State receives funding or not, CDC provides 
technical assistance to all States.
    CDC continues to develop and disseminate tools and resources for 
funded and nonfunded entities to inform the development and 
implementation of State and local strategies to improve healthful 
eating and physical activity to prevent and control obesity.
centers for medicare & medicaid services demos/center for medicare and 
                          medicaid innovation
    Question. The Center for Medicare and Medicaid Innovation (CMMI) 
was established in the Affordable Care Act to ``test payment and 
services delivery models to reduce program expenditures'' under 
Medicare and Medicaid. The law appropriated $10 billion to fund these 
new models. At a time when the Nation's healthcare entitlement programs 
are facing severe financial strain, I am concerned that funds are being 
expended by CMMI with little to no value provided and further threaten 
the entitlement programs' solvency. Have you received estimates from 
the Centers for Medicare & Medicaid Services (CMS) Office of the 
Actuary that demonstrate that any program developed by CMMI is 
generating lower Medicare spending?
    Answer. During the development of initiatives under the authority 
of section 1115A(f) of the Social Security Act (ACA section 3021), the 
Innovation Center works closely with the CMS Office of the Actuary to 
develop potential models, ensure the potential model will accurately 
test the changes in the delivery of care, and project the expected 
financial implications of the model. The Innovation Center prepares 
estimates of the financial impact of the proposed initiatives, as well 
as an analysis of their potential impact on the quality of health and 
healthcare among beneficiaries, an examination of current costs of the 
targeted healthcare service, an analysis of the potential savings, and 
a review of the prior research that supports testing the initiative. 
The Office of the Actuary has participated in reviewing these savings 
estimates and in some cases produced estimates.
    Question. While the Innovation Center typically works closely with 
the Office of the Actuary during the development of models, the 
statutorily mandated certification of savings by the Chief Actuary does 
not occur in the design phase, but rather in the testing phase to 
determine whether modification or termination of the testing of a model 
is needed and after the conclusion of the demonstration to inform 
whether there should be expansion or wide-scale adoption of the 
initiative. To date, none of the Innovation Center models have been in 
the testing phase long enough to generate sufficient data for the Chief 
Actuary to make such determinations. We believe that the Innovation 
Center's evidence-based approach to innovation will result in reducing 
healthcare costs while improving quality.
    Secretary Sebelius, can you provide specific measures that are 
being used to evaluate the impact of the CMMI initiatives on reducing 
Medicare spending or improving the quality of care?
    Answer. An evaluation of the model's performance is planned for 
each model tested by the Innovation Center. The evaluation is intended 
to determine the model's impact on spending, quality of care delivered, 
and patient health outcomes and experiences. The Innovation Center will 
align its relevant performance measures to those from the Department of 
Health and Human Services National Strategy for Quality Improvement in 
Health Care, as well as measures used for other CMS programs, such as 
those used for the Physician Quality Reporting System and the Medicare 
Shared Savings Program.
    All participating providers will be required to work with an 
independent evaluator to track and provide agreed-upon data as needed 
for the evaluation. As applicable, these data will be merged with 
administrative claims data collected by CMS to allow assessment of 
performance on topics such as clinical quality performance, patient 
functional status, and financial outcomes. The Innovation Center 
anticipates using multiple cycles of data collection due to the 
changing nature of the approaches used by participants in response to 
rapid-cycle feedback. Particular care will be taken to identify the 
effect of each reform in the context of other interventions.
    For example, when evaluating participants in the Comprehensive 
Primary Care initiative, the Innovation Center will review several 
types of quality and patient experience measures. These measures will 
include the following domains:
  --patient and caregiver experience;
  --care coordination and transitions;
  --preventive health;
  --practice transformation; and
  --at-risk populations.
    Question. The Congressional Budget Office (CBO) issued a report in 
January on the ``Lessons from Medicare's Demonstration Projects.'' The 
report found that most programs have not reduced Medicare spending. In 
nearly every program, spending was either unchanged or increased 
relative to the spending that would have occurred in the absence of the 
program. In light of this track record, why should we continue to 
invest billions of dollars into CMMI?
    Answer. We know that reforming our healthcare payment and delivery 
system won't be easy. That doesn't make it any less necessary.
    Before the Innovation Center develops a new model for testing, it 
conducts a thorough review of similar programs' past performance. This 
allows us to build on models that have been successful, while avoiding 
those that have not. When models are in their testing phase, the 
Innovation Center conducts continuous and rigorous evaluation, to 
determine the impact that models are having, both on health 
expenditures and on quality of care. Models that are working will be 
eligible for expansion, while those that are not will be either 
modified or terminated.
    We note that CBO's report also included lessons for the design of 
Medicare demonstrations that may increase a demonstration's odds of 
success. These include the timely collection of clinical data, a focus 
on care transitions, the use of team-based care, and targeted low-cost 
interventions. Much of the Innovation Center's work embodies these 
areas of focus, and all Innovation Center demonstrations emphasize 
rapid evaluation and ongoing data collection.
    The Innovation Center is tasked with testing new and innovative 
payment and delivery models. By definition, such models are unproven. 
While we select models with high potential to improve quality and 
reduce costs, it is likely that some will prove successful, and others 
may not. The only way we can find out is by testing and rigorously 
evaluating them. However, the one thing we cannot afford is to choose 
not try new approaches, simply because they might fail. This would 
ensure that we are left with an outdated and unaffordable healthcare 
system, which misses opportunities to provide patients with high-
quality, affordable care.
           centers for medicare & medicaid services exchange
    Question. Secretary Sebelius, some States, for example Alabama, 
have decided against setting up a new State-based exchange. If a State 
elects not to establish an exchange, under law, CMS must establish a 
federally facilitated exchange in that State. Is the Federal exchange 
on track to begin January 1, 2014, as advertised?
    Answer. Yes. CMS is currently working to implement a federally 
facilitated Exchange, including important business functions such as 
eligibility and enrollment, plan management, and consumer outreach. In 
addition, contracts have been awarded to build the information 
technology systems essential to exchange operations.
    Question. The budget proposes a significant 50-percent reduction in 
State High-Risk Pool funding with the expectation that States will 
transition to operational exchanges. In light of the fact that some 
States are not setting up an exchange, can you elaborate on how the 
transition from high-risk pools to exchanges is going?
    Answer. The fiscal year 2013 President's budget request provides 
sufficient funding to States as they begin scaling down activities in 
their existing State High-Risk Pools and enrollees are transitioned to 
Affordable Insurance Exchanges in 2014.
    HHS is working diligently with our Federal and State partners to 
ensure exchanges are available to all Americans by January 2014. Much 
of the needed infrastructure work will occur in 2012, and beginning in 
2013, major business processes will become operational in anticipation 
of open enrollment in the exchanges in October 2013. We continue to 
work with States to ensure that they are ready to begin exchange 
operations in 2014 to maintain coverage for State High-Risk Pool 
enrollees.
             children's hospital graduate medical education
    Question. The Children's Hospitals Graduate Medical Education 
(CHGME) program supports the training of residents and fellows and 
increases the supply of primary care and pediatric medical and surgical 
subspecialties. Nationwide, freestanding children's hospitals have 
trained 49 percent of all pediatric residents and 51 percent of all 
pediatric specialists. The President's budget proposes to decrease 
funding for training pediatric residency positions $177 million less 
than fiscal year 2012. Meanwhile, the budget proposes to begin a new 
Pediatric Specialty Loan Repayment (PSLR) program to repay medical 
school loans. It seems illogical that we would allocate funding to 
repay loans of physicians but reduce the funding to train physicians. 
What is the rationale behind this decision?
    Answer. We recognize the vital role that children's hospitals and 
pediatric providers play in providing quality healthcare to our 
Nation's children. The fiscal year 2013 CHGME funding level continues 
to support direct costs for training pediatric residents at independent 
children's hospitals. This payment provides support for resident 
salaries, expenditures related to stipends and fringe benefits for 
residents, salaries and fringe benefits of supervising faculty, cost 
associated with providing the GME training program, and allocated 
institutional overhead costs.
    The fiscal year 2013 budget retains the incentive to maintain total 
resident levels. The administration recognizes that research has 
indicated that there is a significant shortage of pediatric 
subspecialists, resulting in children with serious illnesses being 
forced to travel long distances--or wait long periods--to see a 
pediatric specialist. In response to these shortages, the fiscal year 
2013 President's budget includes $5 million to implement the PSLR 
program that was authorized in the Affordable Care Act (ACA). Under 
this program, loan repayment agreements will be authorized for 
pediatric specialists who agree to work in underserved areas.
    While both the CHGME payment and the PSLR programs support the 
pediatric medical workforce, the focus of each is different. The CHGME 
Payment Program serves the purpose of providing residency training in 
Children's Hospitals through the payments made to Children's Hospitals, 
while the PSLR program is designed to assist pediatric specialists more 
directly and increase the number of pediatric specialists in 
underserved areas.
                         lobbying restrictions
    Question. Secretary Sebelius, I am concerned about the Department's 
implementation of a longstanding Federal prohibition on lobbying with 
Federal tax dollars. Yesterday you testified before the House Labor, 
Health and Human Services, and Education, and Related Agencies 
Appropriations Subcommittee that you believe it is both legal and 
appropriate for grantees to lobby local governments.
    I believe the interpretation is clear--Federal funds cannot be used 
to change policies at the Federal, State, or local level. However, I 
have several examples of Federal funds being used to secure bill 
sponsors, draft legislation, and lobby for tax increases. How will you 
clarify this misinterpretation by agencies within the Department, and 
what steps will you take to ensure a full investigation occurs 
regarding any Federal tax dollars that were misused for lobbying 
activities?
    Answer. HHS is committed to ensuring the proper use of appropriated 
funds, and to ensuring awardees' compliance with all applicable 
regulations and statutes related to lobbying activities, including 
Office of Management and Budget (OMB) Circular A-122: Cost Principles 
for Non-Profit Organizations; OMB Circular A-87: Cost Principles for 
State, Local, and Indian Tribal Governments; and our own policy 
regarding lobbying activities.
    HHS awardees are informed about the Federal laws relating to use of 
Federal funds, including applicable anti-lobbying provisions. Not only 
are the restrictions noted within HHS funding opportunity 
announcements, the lobbying prohibition is also included within the 
terms and conditions to which each awardee agrees prior to receiving 
Federal funds. In addition, HHS staff monitor the use of Federal funds 
by awardees using tools such as on-site review and risk mitigation 
plans.
    Applicable lobbying restrictions do not prohibit awardees from all 
interactions with policymakers or the public. Federal law allows many 
activities that are not considered lobbying and that community awardees 
may decide to pursue. For example, awardees may use funds to 
disseminate information about public health programs and science-based 
solutions and to implement specific programs, such as evidence-based 
educational materials and media on the health effects of increasing 
physical activity or decreasing exposure to secondhand smoke.
    At HHS, we are committed to fulfilling the mandates from the 
Congress to empower communities to pursue high-quality, science-based 
programs that make a real difference in the health of Americans. We 
take our responsibility as stewards of taxpayer dollars very seriously, 
and we are committed to enabling awardees' success and to ensuring that 
Federal funds are used efficiently and appropriately.
                          healthcare premiums
    Question. Secretary Sebelius, we have repeatedly heard from this 
administration and the President that health insurance premiums will be 
lowered by the end of the President's first term. In February 2008 
President Obama stated: ``We're going to work with you to lower your 
premiums by $2,500 per family per year. And we will not wait 20 years 
from now to do it or 10 years from now to do it. We will do it by the 
end of my first term as President.'' However, yesterday you testified 
before the House Labor, Health and Human Services, and Education, and 
Related Agencies Appropriations Subcommittee that health insurance 
premiums could not be lowered by $2,500 until the exchanges come online 
in 2014. Madam Secretary, is it possible that premiums will be lowered 
by the end of this year or is this an abandoned campaign promise?
    Answer. ACA contains market reforms that will reduce premium costs 
for the same level of benefits. Most of the market reforms that will 
impact premium costs, such as exchanges, will not be in place until 
2014. Until the exchanges are implemented, consumers have limited 
ability to compare across options to get the best value for their 
premium dollars, and health insurance issuers have less incentive to 
compete. We may not realize premium decreases until such time as 
exchanges and other market reforms are fully operational.
                        duplication and overlap
    Question. The Government Accountability Office (GAO) released a 
report in February that stated, ``HHS is collaborating with Labor to 
conduct an evaluation to better understand policies, practices, and 
service delivery strategies that lead to better alignment of the 
Workforce Investment Act (WIA) and Temporary Assistance for Needy 
Families (TANF).'' Can you provide further information on this 
collaboration, including examples of State and local practices that may 
be models for other areas to follow and how WIA-TANF duplication can be 
reduced?
    Answer. The Administration for Children and Families (ACF) remains 
committed to bringing about better alignment of Federal investments in 
job training, improved models for delivering quality services across 
programs at lower costs, and providing relevant information to 
workforce and social service communities. In order to address GAO's 
recommendation for developing and disseminating information on State 
and local efforts and initiatives to increase administrative 
efficiencies, both Departments are exploring a variety of efforts aimed 
at addressing the challenges, strategies, incentives, and results for 
States and localities to undertake such initiatives, including 
developing joint administrative guidance, technical assistance and 
outreach, leveraging research resources and other collaborative 
efforts. Some examples of these efforts include:
  --A partnership between ACF and the Employment and Training 
        Administration (ETA) encouraged workforce and human service 
        agencies to co-enroll youth in WIA and TANF programs and 
        leverage TANF funds to cover subsidized wages for youth, thus 
        promoting effective and efficient leveraging of Federal 
        resources to expand summer employment opportunities for 2010.
  --For program year 2012, ETA has consulted with multiple 
        stakeholders, including ACF and other agencies, to redesign 
        ETA's plan guidance related to WIA submissions.
  --The Career Pathways Technical Assistance Initiative grants, led by 
        an interagency work group consisting of staff from ACF, ETA and 
        the Department of Education's Office for Vocational and Adult 
        Education, leverages the latest research and best practices to 
        help grantees in the workforce and human services agencies form 
        partnerships to improve employment and training outcomes for 
        low-skilled individuals.
  --Ongoing monthly meetings of the Departments of Labor, Health and 
        Human Services Research Working Group allows for sharing of 
        current research, helps to identify gaps and to explore 
        additional areas for potential collaboration.
  --To gain a better understanding of the TANF-WIA integration that a 
        number of States have implemented, ACF and ETA jointly plan to 
        develop an approach to identify existing promising WIA and TANF 
        linkages.
    Question. In February, the Government Accountability Office (GAO) 
released a report on duplication, fragmentation, and cost-saving 
opportunities in the Federal Government. The report noted that there 
are several areas where the Department of Health and Human Services 
(HHS) may be duplicating work with other Federal agencies. In 
particular, GAO found that the National Institutes of Health (NIH), 
Department of Defense (DOD), and the Veterans Administration (VA) each 
lack comprehensive information on health research funded by other 
agencies, which means that duplication may sometimes go undetected. 
Secretary Sebelius, what are you doing to ensure that HHS is improving 
the ability of agency officials to identify possibly duplication?
    Answer. HHS continues to work with other Federal agencies and the 
Congress to address areas of duplication identified by GAO. To date, 
HHS has addressed or partially addressed a number of the actions 
recommended by GAO. For example, HHS has been working with the VA and 
HUD to better coordinate the collection, analysis, and reporting of 
homelessness data. HHS is also collaborating with the Department of 
Labor (DOL) to promote administrative efficiencies within employment 
and training programs. In addition, the fiscal year 2013 budget 
proposes to transfer the Senior Community Service Employment Program 
from DOL to HHS to further reduce duplication of efforts.
    NIH efforts to address duplication include resources to examine 
details of existing funding when evaluating overlap such as access to 
an Electronic Research Administration (eRA) module called QVR (for 
Query/View/Report). QVR provides extensive data about funded grant and 
unfunded grant applications. NIH makes the QVR resource available to 
other Federal agencies, contingent upon acceptance of the formal data 
access agreement. In fact, the VA currently uses the NIH eRA system for 
some of their applications. DOD staff may request access to QVR and may 
also obtain training in the use of QVR.
    NIH is also an acceptable grant processing site under the Grants 
Management Line of Business (GMLoB) Initiative and is available to DOD. 
HHS will continue to work with other Federal agencies and the Congress 
to address areas of duplication identified by GAO.
    Question. GAO found the Federal investment in early learning and 
child care is fragmented, with overlapping goals and activities. For 
example, five programs within HHS and the Department of Education (ED) 
provide school readiness services to low-income children. These similar 
programs in different agencies create added administrative costs and 
confusion. What steps are you taking to identify and minimize 
unwarranted overlap in early learning and child care programs?
    Answer. Cross-program coordination to ensure that children have 
access to high-quality early learning and child care programs has been 
a priority and key focus for the administration. Over the last 3 years, 
ACF has developed and implemented an integrated early childhood unit 
under the leadership of the Office of the Deputy Assistant Secretary 
for Early Childhood Development, which has become the focal point 
within HHS for early childhood activities at the Federal level. Within 
this structure, the administration has taken several steps to improve 
coordination between the Office of Child Care (OCC) and Office of Head 
Start (OHS), such establishing the National Center on Child Care 
Professional Systems and Workforce Initiatives funded by both OCC and 
OHS, implementing the Early Head Start for Family Child Care 
Demonstration Project jointly coordinated by OCC and OHS, and issuing 
joint guidance on aligning eligibility policies across Head Start and 
child care programs
    The administration has many interagency and interdepartmental 
efforts to coordinate federally funded early care and education 
programs:
      State Advisory Councils on Early Childhood Education and Care. 
        The Improving Head Start for School Readiness Act of 2007 
        required that the Governor of each participating State 
        designate or establish a council to serve as the State Advisory 
        Council on Early Childhood Education and Care for children from 
        birth to school entry. The State Advisory Councils will lead 
        the development or enhancement of a high-quality, comprehensive 
        system of early childhood education and care that ensures 
        statewide coordination and collaboration, while addressing how 
        best to prevent duplicative services among the wide range of 
        early childhood programs and services in the State, including 
        child care, Head Start, Individuals with Disabilities Education 
        Act preschool and infants and families programs, and pre-
        kindergarten programs and services. ACF awarded $100 million of 
        American Recovery and Reinvestment Act (ARRA) funding for State 
        Advisory Councils to 45 States, the District of Columbia, 
        Puerto Rico, Virgin Islands, and American Samoa.
      Early Learning Interagency Policy Boar. The Secretaries of ED and 
        HHS established the Early Learning Interagency Policy Board to 
        improve the quality of early learning programs and outcomes for 
        young children; increase the coordination of research, 
        technical assistance and data systems; and advance the 
        effectiveness of the early learning workforce among the major 
        federally funded early learning programs across ED and HHS.
      ACF/Child and Adult Care Food Program (CACFP) Workgroup. Convened 
        by OMB, the ACF/CACFP Workgroup brings together staff from the 
        Food and Nutrition Services, OCC, and OHS to discuss possible 
        collaboration around the CACFP. The workgroup has identified 
        the following areas of collaboration:
    --sharing the National Disqualified List;
    --publishing joint information memorandums on collaboration at the 
            State and local level; and
    --improving tribal participation in CACFP.
    In addition, the administration's Race to the Top--Early Learning 
Challenge grants, administered jointly by ED and HHS--are designed to 
foster innovation and integration within early education programs 
within a State. In 2011, nine States were awarded Early Learning 
Challenge Grants and in April 2012, the two departments announced that 
five additional States were eligible for such grants. While each State 
has its own areas of focus, all States are working to improve early 
education in all settings so that more high need children are receiving 
high-quality early education services. States are focusing on workforce 
training, early learning standards, developing data systems to track 
children's progress, and engaging families to promote academic success 
for children. And, all States are working on these areas across all 
types of early learning programs, including public pre-K, Head Start, 
privately funded preschool, and child care (such as child care centers 
and family day care homes).
    Finally, several of the Child Care Development Fund (CCDF) 
principles for reauthorization included in the President's budget 
request would streamline Federal, State, and local early care and 
education programs. For example, the budget proposal supports promoting 
continuity of care for children and quality improvement for child care 
providers.

                                 ______
                                 
              Questions Submitted by Senator Thad Cochran
              elimination of preventive health block grant
    Question. I am concerned about the elimination of the Preventive 
Health and Health Services Block Grant. The block grant gives States 
the autonomy and flexibility to solve State problems and address 
community level needs, while still being held accountable for 
demonstrating the local, State, and national impact of this investment. 
Eliminating this source of flexible funding would jeopardize important 
public health programs already strained by tightening budgets. I am 
concerned that states without capacity will be disproportionately 
affected by the elimination of this formula grant. Additionally, I am 
concerned that your budget proposes to fill the need for the block 
grant with competitive programs funded by the Affordable Care Act. 
Secretary Sebelius, how are you proposing States address community 
health needs to keep their citizens healthy and safe without the 
Prevent Block Grant?
    Answer. Through Centers for Disease Control and Prevention's (CDC) 
existing and expanding activities, there is substantial funding to 
State health departments to address community health needs. The 
activities currently supported by the Preventive Health and Health 
Services Block Grant may be more effectively and efficiently 
implemented through the new Coordinated Chronic Disease Prevention and 
Health Promotion Grant. The budget includes $379 million, an increase 
of $129 million more than fiscal year 2012, for the Coordinated Chronic 
Disease Prevention and Health Promotion Program. This program 
consolidates disease-specific chronic disease funding into a 
comprehensive program to address the leading chronic disease causes of 
death and disability, including heart disease and stroke, obesity, 
diabetes, arthritis and the primary preventable causes of cancer, 
tobacco use, poor nutrition, and physical inactivity. Because many 
inter-related chronic diseases and conditions share common risk 
factors, this program will improve health outcomes by coordinating 
interventions that benefit multiple chronic diseases. As a result, the 
program will gain efficiencies in cross-cutting areas such as 
epidemiology and surveillance, supporting healthful behaviors and 
chronic disease self-management, and improving effective delivery of 
clinical and other preventive services. At the end of the fiscal year, 
CDC will report on the funding spent on prevention and control of 
specific diseases. At the end of the 5-year program, CDC will report on 
improvements in outcomes specific to each disease as well as cross-
cutting outcomes.
                       teen pregnancy prevention
    Question. Teen and unplanned pregnancy costs taxpayers billions of 
dollars every year, and contributes to a cycle of poor outcomes that 
affect the long-term strength of our workforce. The Mississippi 
Economic Council released a report in January that the State's high 
teen childbearing rate was a hindrance to having an educated and 
competitive workforce. They recommend reducing teen pregnancy as a part 
of improving economic development. Do you have the resources you need 
to spearhead a successful effort to reduce teen and unplanned 
pregnancy?
    Answer. Teen mothers and their children are more likely to face a 
range of challenges and adverse conditions when it comes to the health 
and economic security of themselves and their children. That is why my 
strategic plan for the Department identifies reducing rates of teen 
pregnancy as a priority.\1\ HHS is making investments in strategies 
that give children and youth a positive start in life and is committed 
to supporting both evidence-based programs and innovative approaches 
for children and youth in order to positively impact a range of 
important social outcomes, such as child maltreatment, school 
readiness, teen pregnancy prevention, sexually transmitted infections, 
and delinquency.
---------------------------------------------------------------------------
    \1\ http://www.hhs.gov/secretary/about/priorities/
youth_futures.html
---------------------------------------------------------------------------
    The budget proposes to use unobligated Abstinence Education funds 
from the Title V State Abstinence Education Grant Program for a new 
initiative to address pregnancy prevention among youth in foster care, 
who have an estimated 50 percent teen pregnancy rate. The new 
initiative will not reduce the amount available to States for 
Abstinence Education. Each year, some States choose not to draw down 
their allotment of Title V Abstinence Education funds. Instead of 
lapsing, these funds will be redirected to help youth in the foster 
care system avoid pregnancy.
    Beginning in fiscal year 2010, under the Teen Pregnancy Prevention 
Program, the Office of Adolescent Health has provided $75 million in 
grant funds to States, non-profit organizations, school districts, 
universities, and other organizations to replicate models that have 
been rigorously evaluated and shown to be effective at reducing teen 
pregnancies, sexually transmitted infections, or other associated 
sexual risk behaviors. An additional $25 million in grant funding also 
supports research and demonstration projects to develop and test 
additional models and innovative strategies to prevent teen pregnancy, 
so that evidence base continues to expand and refine. This program 
supports 102 grant projects in 36 States and the District of Columbia.
    Through the Personal Responsibility Education Program (PREP), 
authorized by the Affordable Care Act, the Administration for Children 
and Families provides $55 million in formula grants to States to 
support evidence-based program models or to substantially incorporate 
elements of effective prevention programs while including three of six 
adult preparation subjects mandated by the Congress. To date, 45 States 
as well as DC, Puerto Rico, the Virgin Islands, and the Federated 
States of Micronesia had accepted PREP funds. In addition, 16 PREP 
grants were awarded to tribes and tribal organizations in the summer of 
2011. The PREP program also includes $10 million in competitive PREP 
Innovative Strategies cooperative agreement research and demonstration 
grants to develop and test additional models and innovative strategies. 
The PREP Innovative Strategies program awarded 13 grants through the 
joint funding announcement with OAH. Both programs target groups with 
high teen pregnancy rates. In addition, the Affordable Care Act gives 
States the option of expanding eligibility for Medicaid family planning 
services without having to go through the Federal waiver process. 
Despite these substantial investments much work remains in reaching 
adolescents given there are an estimated 47 million persons ages 10-19 
of age in the United States. Increased training for the multiple 
professionals who touch the lives of young people, media campaigns, and 
well-coordinated care services at the community level can all help 
ensure healthy, productive and hopeful young persons.

                                 ______
                                 
             Questions Submitted by Senator Lamar Alexander
         patient protection and affordable care act regulations
    Question. Please provide a schedule of when you expect upcoming 
healthcare regulations will be published. Senior administration staff 
previously indicated that many of the interim final rules will be 
reissued as final rules. Is this true? If so, please include the dates 
you expect the interim final rules will be reissued as final rules as 
part of the schedule mentioned above.
    In December, the administration published a ``bulletin'' on 
essential health benefits--the mandates that all new health plans sold 
to individuals and small businesses will be required to provide in 2014 
and beyond. The ``bulletin'' fails to answer basic questions from 
States and employers.
  --When will you provide the details regarding benefit mandates and 
        the other new insurance rules, so that we can know how much 
        premiums will be raised and how much Federal costs will 
        increase?
  --The ``bulletin'' tells States they must choose among four options 
        before September 2012. Will a rule be finalized before the 
        September 2012 deadline the ``bulletin'' places on States?
  --How can States be expected to implement a ``bulletin'' which has no 
        force of law?
    Answer. Centers for Medicare & Medicaid Services (CMS) issued a 
bulletin on December 16, 2011 and has gathered input. CMS will take 
public input into consideration and then issue a Notice of Proposed 
Rulemaking. The bulletin announced CMS's intended regulatory approach 
for defining the essential health benefits, based on a State-selected 
benchmark plan. States will need to make their selection and submit 
their essential health benefits benchmark to U.S. Department of Health 
and Human Services (HHS) in the third quarter of 2012 for coverage year 
2014.
         patient protection and affordable care act accounting
    Question. The new healthcare law appropriates ``such sums as may be 
necessary'' to implement the State-based health insurance exchanges. 
Your budget estimates spending $1.087 billion in mandatory money for 
fiscal year 2013.
    How much will the Department have spent on health insurance 
exchanges since the time the healthcare bill was signed into law until 
2014 when the exchanges are supposed to be fully operational?
    Answer. Our current baseline for Exchange Planning and 
Establishment Grants estimates that we will obligate approximately $2.5 
billion from when the law was enacted until fiscal year 2014 and that 
we will outlay $2 billion during that timeframe.
    Question. In addition to this mandatory money for State-based 
health insurance exchanges, the President's 2013 budget requests an 
additional $864 million for the Federal exchange and other exchange 
activities. How will this money specifically be spent and how will the 
Federal exchange differ in functionality from the web portal HHS has 
already implemented?
    Answer. As with the State-based exchanges, fiscal year 2013 is the 
year many operations of the federally facilitated exchange begin, as 
CMS will need to be prepared for open enrollment on October 1, 2013, 
the first day of fiscal year 2014. The majority of the $864 million 
request for CMS's exchange work is related to operations and management 
of the federally facilitated exchange with some funding to support the 
Secretary's duties on behalf of all exchanges. Specifically, $574.5 
million of the total will be used for exchange operations and 
management including eligibility and enrollment functions, certifying 
health insurance plans as qualified to be sold through the exchange, as 
well as oversight of plans and State-based exchanges. The additional 
$289.5 million will be used for consumer education and outreach 
activities, such as a call center, to help consumers understand their 
new options under the Affordable Care Act (ACA) and to fund navigators 
and in-person enrollment assistance to facilitate the enrollment 
process.
    Healthcare.gov is a useful tool for providing information on 
potential sources of insurance available to individuals today, and HHS 
can leverage its capabilities for presenting information to assist 
consumers in comparing across plans in exchanges. The federally 
facilitated exchange will go beyond what is available through 
Healthcare.gov by certifying that the plans offered meet certain 
standards of quality and benefits. The federally facilitated exchange 
will also perform eligibility determinations, enroll individuals into 
plans, and provide for in-person or call center support to answer 
questions about available coverage.
    The healthcare law included a $1 billion implementation fund. In 
order for the Congress to better evaluate the administration's request 
for additional funds for implementation activities, please provide an 
accounting of how the monies provided pursuant to the new healthcare 
law have been expended. As part of your answer, please include a 
comprehensive breakdown of spending by department and subsidiary 
administrative units, as well as by function.
    Answer. The following table displays the spending from the Health 
Insurance Reform Implementation Fund as of February 29, 2012, by 
agency:

------------------------------------------------------------------------
              Organization                  Obligations       Outlays
------------------------------------------------------------------------
Internal Revenue Service................    $213,264,945    $154,181,697
Office of Personnel Management..........       2,938,850       1,442,102
Department of Labor.....................       3,055,102       2,958,880
Department of Health and Human Services.     251,742,492
                                         --------------------134,917,483
                                         -------------------------------
      Total, Health Reform                   471,001,389     293,500,162
       Implementation Fund..............
------------------------------------------------------------------------

    HHS uses these funds to implement Medicare and Medicaid changes 
required in the ACA, including closing the Part D coverage gap and 
developing new value-based purchasing models for Medicare providers. 
HHS has also used these funds to plan and prepare for the establishment 
of State-based and federally facilitated exchanges as required in the 
ACA.
    The Office of Personnel Management (OPM) uses funding to plan for 
implementing and overseeing the establishment of at least two Multi-
State Plan Options to be offered on each State health insurance 
exchange beginning in 2014, and allowing tribes and tribal 
organizations to purchase Federal health and life insurance for their 
employees.
    The Department of the Treasury uses funding to implement multiple 
tax changes from the ACA, including the Small Business Tax Credit, 
expanded adoption credit, excise tax on indoor tanning services, 
charitable hospital requirements, plan for exchanges, and a number of 
other revenue provisions.
    The Department of Labor uses funds to conduct compliance 
assistance; modify or develop IT systems that support data collection, 
reporting, policy and research; and develop infrastructure for the 
newly required Multiple Entity Welfare Arrangements reporting and 
registration within ACA.
    Of the $251,742,492 obligated by HHS to date, approximately 13 
percent has paid for personnel, 84 percent has supported contractual 
services, and 3 percent has been obligated for rent, supplies, or other 
miscellaneous services.
    Question. The HHS budget calls for 76,341 employees in fiscal year 
2013. This is an increase of nearly 1,400 employees over the fiscal 
year 2012 level. How many of these employees will be hired to implement 
the new healthcare law?
    Answer. At the Centers for Medicare & Medicaid Service (CMS), the 
President's budget requests an increase of 136 full-time equivalents 
more than the fiscal year 2012 appropriated level to enable CMS to 
address the needs of a growing Medicare population, as well as oversee 
expanded responsibilities from legislation passed in recent years.
    Question. How many staff members are currently working at the 
Center for Consumer Information and Insurance Oversight (CCIIO)? Please 
provide numbers for both full-time and part-time staff separately.
    Answer. As of March 10, 2012, CCIIO has approximately 261 employees 
on-board. 258 employees are considered full-time, and 3 employees are 
considered part-time. This staff is supported by a combination of 
discretionary funds and mandatory ACA funding.
    Question. How many staff do you expect will be working at CCIIO at 
the end of fiscal year 2012? How many staff do you expect will be 
working at CCIIO at the end of fiscal year 2013?
    Answer. By the end of fiscal year 2012, CMS expects to use 450 FTEs 
on CCIIO-related activities. This staffing level will grow to a 
projected 710 FTEs by the end of fiscal year 2013 as CMS brings the 
exchanges online and implements consumer protections and other reforms.
                centers of excellence in early childhood
    Question. In the 2007, the Congress authorized the establishment of 
Centers of Excellence in Early Childhood for the purpose of evaluating 
the success of Head Start and other early childhood programs funded by 
the Federal Government. However, minimal funding has been allocated to 
support these Centers. At the same time, the Federal Government 
continues to fund more and more programs focused on early education. 
The President's fiscal year 2013 budget further requests additional 
funding, through Race to the Top, for an Early Learning Challenge Fund.
    Rather than just adding to the duplicative list of funding silos 
for early education, wouldn't this money be better spent in support of 
the Head Start Centers of Excellence so that we can figure out what is 
working and what is not working?
    Answer. The Departments of Health and Human Services and Education 
have been working collaboratively reduce and prevent silos and 
duplication of efforts between our two Departments, to develop the 
infrastructure and models to maximize the use of Federal dollars at the 
State, and local levels and to build accountability into all Federal 
funds. Both the Race to the Top--Early Learning Challenge and the Head 
Start Centers of Excellence in Early Childhood are examples of our 
efforts. However, these efforts have very different goals. There are 10 
Head Start Centers of Excellence that serve as models for other 
individual programs. This funding has provided an excellent opportunity 
to showcase these Head Start programs so that other early childhood 
programs may benefit from their best practices. In contrast, the Race 
to the Top--Early Learning Challenge provides grants to States that 
target broad systems of reform across all early childhood programs, 
including building the infrastructure in States to better manage 
funding and minimize duplication of efforts. The goal of Race to the 
Top and our other interagency work is to provide greater continuity 
between schools, child care programs, Head Start programs, and State-
funded pre-kindergarten programs.
                                 co-ops
    Question. The Department of Health and Human Services issued rules 
governing the grants for the Consumer Oriented and Operated Plan (CO-
OP) program on July 20, 2010. On February 21, 2012, the Department 
released the identities of the first eight grants/loans recipients.\1\ 
One of the grant recipients was the Common Ground Healthcare 
Cooperative of Wisconsin, which is an organization affiliated with the 
liberal activist group Industrial Areas Foundation. Common Ground was 
reportedly formed in August 2011, just 3 months prior to applying for 
the taxpayer money, and will receive $56,416,000.
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    \1\ http://www.jsonline.com/business/nonprofit-health-insurer-
lands-Federal-loan-rm49ho7-139863553.html
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    What criteria were used to select CO-OP grant recipients? 
Specifically what criteria were used to assess their experience in 
providing health insurance and benefits?
    Answer. CO-OP loan applications are subject to rigorous review and 
vetting by CMS' independent contractors, and by a review committee in 
CMS, which is separate from the CMS group responsible for administering 
the CO-OP program. CMS and these experts evaluate applicants based on 
their financial models and business plan, the applicant's ability to 
meet the regulatory standards and milestones for development, the 
likely long-term sustainability of the plan, adherence to the health 
policy goal of consumer operation and orientation, and the likelihood 
of loan repayment. The awards are also subject to legal review. Each 
CO-OP must be licensed as a health insurance issuer in each State in 
which it offers a health insurance plan. In addition, CO-OPs must meet 
the same requirements that other health insurance issuers must meet in 
each State. All CO-OPs are selected based on their viability and 
potential for success, as evidenced in their detailed business plans, 
financial plans, and actuarial projections.
    Question. Is it true that the HHS rules regarding CO-OPs projected 
a 35-40 percent default rate?
    Answer. The regulatory impact analysis in the CO-OP proposed rule 
(76 FR 43237) included an estimate of a technical default rate but 
incorrectly described it as an estimate of a non-repayment rate.
    The default rate is not an estimate of insolvencies. The rules did 
not estimate insolvencies.
    Because of Federal accounting rules, the default estimate includes 
loan recipients that CMS expects will fully repay the loan and at all 
times will be compliant with their loan agreement and Federal law. For 
example, the Affordable Care Act, in section 1322, requires the 
repayment of loans, but repayment terms ``must take into consideration 
any appropriate State reserve requirements, solvency regulations, and 
requisite surplus note arrangements.'' The statute envisions occasions, 
such as when a loan recipient must keep additional State-mandated 
insurance reserve requirements, when it is in the best interest of the 
consumer, loan recipient, and the State regulator for Department to 
change the loan repayment terms. This is one of many examples in which 
a loan recipient may be considered a default and included in the 
default rate estimated in the rules but is not in financial distress.
    Given the high bar to receiving funds, the detailed monitoring and 
oversight by CMS, and the concurrent oversight by State insurance 
regulators, we expect a high percentage of CO-OP loans to be repaid in 
full.
    All CO-OP loans must be repaid with interest and loans will only be 
made to private, nonprofit entities that demonstrate a high probability 
of becoming financially viable. In addition, as described in the 
Funding Opportunity Announcement, CMS has built in a strong monitoring 
process to ensure that CO-OPs are meeting development milestones 
according to prescribed timetables. Loan recipients are subject to 
strict monitoring, audits, and reporting requirements for the length of 
the loan repayment period plus 10 years. To ensure strong financial 
management, CO-OPs are required to submit quarterly financial 
statements, including cash flow data, receive site visits by CMS staff, 
and undergo annual external audits, in order to promote sustainability 
and capacity to repay loans. This monitoring is concurrent with ongoing 
financial and operational monitoring by State insurance regulators. In 
addition, CMS will use all remedies available in law or equity to 
collect unpaid loans.
                            exchange grants
    Question. Patient Protection and Affordable Care Act (PPACA) 
section 1311(a) enables the Secretary of HHS to make planning and 
establishment grants each year to the States. The law specifies that 
the Secretary shall determine the amount to be made available to 
States, but it does not specify how the Secretary should make the 
determination. So far HHS has spent nearly $1 billion on exchange 
grants, but it is not clear how these monies are being used.
    Please identify all recipients of the planning and establishment 
grants and explain the criteria you used to determine how much to award 
to each grantee. As part of your answer, please include the total 
amounts each grantee received and identify how each grantee has 
indicated they will spend these funds.
    Answer. States are required to submit detailed budgets as part of 
their grant applications. These budgets must outline the costs for each 
of the exchange core areas on which they will be working under the 
grant (e.g., IT systems, outreach and education, etc.) including 
administrative and overhead costs. These budgets are carefully reviewed 
and negotiated with the State before each award is made to ensure they 
represent a valid cost estimate to perform activities required under 
the grant.
    Question. In general, States used Planning Grant funding to perform 
such activities as insurance market analysis and stakeholder outreach 
to provide the information necessary to make initial policy decisions 
about how an exchange could best serve their residents. Many States are 
using Level I Establishment grants to begin work on their eligibility 
systems and other IT systems, to develop consumer assistance functions, 
and to implement the plan management infrastructure necessary to 
certify qualified health plans. The State of Rhode Island has a Level 
II Establishment Grant for work to establish all core functions of a 
State-based exchange. For a complete list of States that have been 
awarded Establishment Grants, the specific activities they are 
performing under those grants, and the amounts that have been awarded, 
please see: http://www.healthcare.gov/news/factsheets/2011/05/
exchanges05232011a.html.
    Please also describe the process for selecting grantees, 
identifying whether this was a competitive process, and if so, what 
criteria were used to evaluate grant applications.
    Answer. The funding provided under section 1311 of the Affordable 
Care Act is available to fund activities of any State for activities 
necessary to establish an exchange. All grant applications are subject 
to objective review by programmatic experts to ensure that requirements 
outlined in the funding opportunity announcement are satisfied.
                            prevention fund
    Question. Recently enacted legislation to extend unemployment 
insurance, payroll tax provisions and delay a scheduled reduction in 
Medicare payments to physicians was paid for in part by a $5 billion 
reduction in the prevention fund. In addition, the President's budget 
also called for a $5 billion reduction in this fund. In light of the 
bipartisan interest in reducing the monies allocated to this fund, we 
would request that you provide the following information to help us 
assess the effectiveness of the expenditures authorized under the fund.
    Please describe how the programs funded under section 4002 of PPACA 
are being measured to determine their efficacy. As part of your answer, 
please indicate whether and how each program is evaluated to determine 
how it improves health outcomes for identified individuals and reduces 
healthcare expenditures.
    Answer. HHS strives to ensure that programs funded by the 
Prevention and Public Health Fund (PPHF) are making the greatest health 
impacts. Within the programs, the Department assigns a trained project 
officer to monitor and advise each grantee. Project officers provide 
ongoing consultation and oversight to grantees regarding program 
performance.
    Project officers also conduct site visits in order to objectively 
validate information and actively resolve challenges that a grantee is 
facing in order to ensure that the goals of the project are achieved.
    Programmatic performance measures also have been developed for each 
PPHF funded program at three levels:
  --performance milestones for start-up;
  --short-term impact; and
  --long-term objectives.
All PPHF funded programs report twice a year regarding the status of 
established milestones and measures.
    HHS leaders regularly review these performance data to ensure that 
programs are on track and accountable for the outcomes associated with 
each investment.
                      chronic disease coordination
    Question. Less than 4 cents of every healthcare $1 is spent on 
prevention, yet chronic diseases account for 70 percent of deaths and a 
huge healthcare cost burden. The CDC budget proposes the consolidation 
of several existing categorical programs into a single coordinated 
program. Can you explain what efficiencies you hope to gain from this 
proposal and what assurances you can give to those who are concerned 
about losing the identity of disease specific funding streams?
    Answer. The budget includes $379 million, an increase of $129 
million more than fiscal year 2012, for the Coordinated Chronic Disease 
Prevention and Health Promotion Program. This program consolidates 
disease-specific chronic disease funding into a comprehensive program 
to address the leading chronic disease causes of death and disability, 
including heart disease and stroke, obesity, diabetes, arthritis and 
the primary preventable causes of cancer, tobacco use, poor nutrition, 
and physical inactivity. Because many inter-related chronic diseases 
and conditions share common risk factors, this program will improve 
health outcomes by coordinating interventions that benefit multiple 
chronic diseases. As a result, the program will gain efficiencies in 
cross-cutting areas such as epidemiology and surveillance, supporting 
healthful behaviors and chronic disease self-management, and improving 
effective delivery of clinical and other preventive services. At the 
end of the fiscal year, CDC will report on the funding spent on 
prevention and control of specific diseases. CDC will also report 
annually on improvements in outcomes specific to each disease as well 
as cross-cutting outcomes.
                       environmental health/lead
    Question. While CDC has prevented approximately 100,000 children 
from being poisoned by lead each year through the Healthy Homes and 
Lead Poisoning Prevention Program, in fiscal year 2012 funding was not 
included for the program. The Committee noted that $350 million will be 
spent by HHS to conduct home visiting programs in fiscal year 2012 
through the Maternal, Infant, and Early Childhood Home Visiting 
Program; this funding appropriated by the Patient Protection and 
Affordable Care Act, is $100 million more than the fiscal year 2011 
level. The subcommittee further stated that it intends the Health 
Resources and Services Administration and CDC to work together to 
ensure that activities previously funded through Healthy Homes will be 
fully incorporated into the Home Visiting Program. How has the 
Department worked to support this legislative intent?
    In fiscal year 2013 again the Healthy Homes and Lead Poisoning 
Prevention Program was again consolidated and slated for potential 
elimination. How is the administration going to ensure that the 
Nation's most vulnerable children are tested for lead poisoning and 
ensure that if those children test positive that treatment and 
environmental remediation services are provided?
    Answer. CDC and HRSA are working to identify possible solutions for 
incorporating childhood lead poisoning prevention activities into 
routine services of HRSA's early childhood Home Visiting Program.
    The fiscal year 2013 President's budget proposes a new program--
Healthy Home and Community Environments--that will incorporate CDC's 
National Asthma Control Program (NACP) and the Healthy Homes/Lead 
Poisoning Prevention Program (HHLPPP). The fiscal year 2013 request for 
the Healthy Home and Community Environments program is $27.3 million.
    The Healthy Home and Community Environments program is a new, 
multi-faceted approach to address healthy homes and community 
environments through surveillance, partnerships, and implementation of 
science-based interventions to address the health impact of 
environmental exposures in the home and to reduce the burden of disease 
through comprehensive asthma control. This integrated approach aims to 
control asthma and mitigate health hazards in homes and communities 
such as air pollution, lead poisoning hazards, second-hand smoke, 
asthma triggers, radon, mold, unsafe drinking water, and the absence of 
smoke and carbon monoxide detectors.
    Question. Given the drastic cuts to CDC's Lead Poisoning Prevention 
Program that could essentially end all State cooperative agreements, 
what are your proposed strategies moving forward to ensure that the 
essential services (emergency response to children with lead poisoning, 
home inspections that include environmental health components, 
surveillance, etc.) provided by State and local health departments to 
vulnerable children are not lost?
    Answer. With fiscal year 2012 funding, CDC's Healthy Homes and Lead 
Poisoning Prevention Program will continue to provide lead expertise 
and analysis at the national level and remain a valuable resource to 
State and local agencies by providing the following:
      Surveillance Support.--Provide software and technical assistance 
        to support the Healthy Homes and Lead Poisoning Surveillance 
        System (HHLPSS), which gathers information related to lead and 
        other health hazards in homes.
      Epidemiological Support.--Maintain staff to provide expertise and 
        epidemiological support in response to a lead poisoning 
        outbreak.
      Subject-Matter Expert Support.--Maintain the Advisory Committee 
        on Childhood Lead Poisoning Prevention (ACCLPP). The ACCLPP 
        advises and guides the Secretary and Assistant Secretary of HHS 
        and the Director of CDC regarding new scientific knowledge and 
        technical developments and their practical implications for 
        childhood lead poisoning prevention efforts.
                              section 317
    Question. CDC takes one of the largest hits in the budget request, 
and especially concerning is the proposed reduction in the section 317 
immunization program. A report from CDC estimates that this program is 
underfunded by hundreds of millions of dollars. Vaccination programs 
have been proven to be some of the most cost-effective approaches to 
preventing disease and reducing healthcare costs, and the children's 
vaccine programs are estimated to be a 10:1 savings as one example. The 
section 317 program provides the infrastructure for the Vaccines for 
Children program, which has been a huge success.
    What is the rationale for cutting this program by $58 million or 
close to 10 percent when we are still 1 to 2 years away from expanded 
coverage? Will this reduction cut purchase grants or operational 
support for health departments?
    Answer. The fiscal year 2013 budget includes funds for vaccine 
purchase to continue outreach to the hardest-to-serve populations, and 
critical immunization operations and infrastructure that supports 
national, State, and local efforts to implement an evidence-based, 
comprehensive immunization program. The request also specifically 
directs $25 million toward continuation of the billables project, which 
allows public health departments to vaccinate and bill for fully 
insured individuals in order to maintain section 317 vaccines for the 
most financially vulnerable and respond to time-urgent vaccine demands, 
such as outbreak response. The fiscal year 2013 budget will sustain the 
national immunization program vaccine purchase and immunization 
infrastructure. The budget does not continue funding for one-time 
enhancements planned for fiscal year 2012 to modernize the immunization 
infrastructure through funding to the grantees for improving 
immunization health IT systems and vaccine coverage among school-age 
children and adults; expansion of the evidence base for immunization 
programs and policy; and enhancements to national provider education 
and public awareness activities to support vaccination across the 
lifespan.
    Question. How do you see the role of the section 317 program 
evolving along with implementation of the Affordable Care Act?
    Answer. The Affordable Care Act requires new health plans to cover 
routinely-recommended vaccines without cost-sharing when provided by an 
in-network provider. As these health insurance reforms expand 
prevention services to more Americans, the size of the population 
currently served by section 317 vaccine is expected to decrease in 
size, specifically underinsured children. The Section 317 Immunization 
Program will continue to have a critical role in providing vaccines to 
meet the needs of uninsured adults and responding to urgent vaccine 
needs such as outbreak response, and ensuring the necessary 
infrastructure is in place to support the Nation's immunization system 
for both routine vaccination as well as managing vaccine shortages and 
other emergency response. This critical infrastructure serves both the 
public (e.g., Vaccines For Children Program and Section 317) and 
private sectors. Insurance coverage alone will not provide the 
immunization infrastructure necessary to ensure a strong evidence base 
for national vaccine programs and policy, quality assurance for 
immunization services, and high vaccination coverage rates across the 
lifespan.
    Question. In 2012, $190 million from the Prevention and Public 
Health Fund will be transferred to the section 317 immunization 
program. How will these funds be used and will those activities 
continue in 2013 at the same level of support?
    Answer. In fiscal year 2012, PPHF will meet the needs of the 
Section 317 Immunization Program, as well as provide one-time resources 
for infrastructure enhancements in health IT, planning and 
implementation of public health billing systems, adult vaccination, and 
capacity for vaccinating school-age children. The fiscal year 2013 
budget directs $25 million toward continued progress in the billables 
project, but eliminates these other one-time enhancements.

                                 ______
                                 
               Questions Submitted by Senator Ron Johnson
    Question. In the Massachusetts Health Insurance Exchange, I 
understand there is a 6-month period between when an employer drops 
coverage and when an employee is eligible for participation in the 
exchange. Is there any similar provision in Obamacare?
    Answer. In Massachusetts, an individual is not eligible for 
subsidized coverage if offered employer-sponsored insurance within the 
last 6 months. The employer offer must meet certain benchmarks and the 
Board can waive the 6-month requirement (956 CMR 3.05). There is no 
similar 6-month waiting period in the Affordable Care Act.
    Question. In the various analyses conducted by the Department of 
Health and Human Services (HHS) or the Centers for Medicare & Medicaid 
Services on employer behavior related to employer sponsored insurance, 
is this significant difference in policy taken into account?
    Answer. The Affordable Care Act does not include the same 
requirements as the Massachusetts law, and the Department has not 
examined the differences. Congressional Budget Office (CBO) and the 
Joint Committee on Taxation recently released updated estimates of the 
potential impact of the Affordable Care Act on coverage. The report 
shows that the Affordable Care Act is estimated to reduce the number of 
nonelderly people without health insurance by 30 million to 33 million 
in 2016 and subsequent years.
    Question. Are other differences in the Massachusetts model taken 
into account? If so, which ones. If not, why not?
    Answer. HHS is charged with implementing the Affordable Care Act 
and not a State law. Estimates of the impact reflect analysis of the 
Federal law only.
    Question. How much will HHS spend on health insurance exchanges, in 
total, from the time the healthcare bill was signed into law until 2014 
when the exchanges are supposed to be fully operational?
    Answer. Our current baseline for Exchange Planning and 
Establishment Grants estimates that we will obligate approximately $2.5 
billion from when the law was enacted until fiscal year 2014 and that 
we will outlay $2 billion during that timeframe.
    Through the end of fiscal year 2011, HHS had obligated 
approximately $100 million to implement the federally facilitated 
exchange as well as carry out the Secretary's responsibilities on 
behalf of all exchanges. The fiscal year 2013 President's budget 
requests an additional $864 million for the Department's exchange-
related responsibilities to prepare for the opening of exchanges in 
January 2014.
    Question. Please describe a realistic timeline for HHS to establish 
Essential Health Benefits, Health Information Exchanges, and State and 
Federal Insurance Exchanges?
    Answer. The establishment of the exchanges is a complex and 
resource-intensive process. We believe it is realistic to have an 
exchange operating in every State in time for open enrollment beginning 
on October 1, 2013, for plan year 2014. The Department is currently 
working to provide additional information on Essential Health Benefits 
in the coming months, so that States and health insurance issuers have 
information available to prepare for plan year 2014.
    The State Health Information Exchange (HIE) program promotes 
innovative approaches to the secure exchange of health information 
within and across States and ensures that healthcare providers and 
hospitals meet national standards and meaningful use requirements. 
Fifty-six States, eligible territories, and qualified State Designated 
Entities received awards under this program. In fiscal year 2011, all 
recipients received approval of their implementation plans for 
achieving statewide health information exchange. Recipients are 
currently continuing to execute these plans and improve health 
information exchange in their localities.
    Question. How does HHS plan on addressing the low income 
individuals who will frequently alternate between insurance through an 
exchange and Medicaid?
    Answer. HHS recognizes the potential for movement of individuals 
between the exchange and Medicaid. Our goal is to ensure the accuracy 
of eligibility determinations to achieve a seamless transition 
experience for individuals with changes in circumstances that cause 
their program eligibility to change between the exchange and Medicaid. 
To this end, the verification and eligibility determination processes 
for exchanges will be designed to parallel and integrate with those in 
Medicaid and Children's Health Insurance Program (CHIP). The exchange 
will coordinate with Medicaid and CHIP to ensure that an applicant 
experiences a seamless eligibility and enrollment process regardless of 
where he or she submits an application.
    To the extent that individual's circumstances change, section 
155.330 of the exchange proposed rule establishes standards for 
eligibility redeterminations during a benefit year. Exchanges must 
redetermine eligibility if they receive and verify information either 
reported by an enrollee or through electronic data matching. In an 
effort to identify changes quickly, this section proposes to require 
enrollees to report changes in circumstances that affect eligibility 
within 30 days of such a change.
    Question. If HHS does not have a plan for these individuals, why 
not?
    Answer. HHS recognizes the potential for movement of individuals 
between the exchange and Medicaid. Our goal is to ensure the accuracy 
of eligibility determinations to achieve a seamless transition 
experience for individuals with changes in circumstances that cause 
their program eligibility to change between the exchange and Medicaid. 
To this end, the verification and eligibility determination processes 
for exchanges will be designed to parallel and integrate with those in 
Medicaid and CHIP. The exchange will coordinate with Medicaid and CHIP 
to ensure that an applicant experiences a seamless eligibility and 
enrollment process regardless of where he or she submits an 
application.
    To the extent that individual's circumstances change, section 
155.330 of the exchange proposed rule establishes standards for 
eligibility redeterminations during a benefit year. Exchanges must 
redetermine eligibility if they receive and verify information either 
reported by an enrollee or through electronic data matching. In an 
effort to identify changes quickly, this section proposes to require 
enrollees to report changes in circumstances that affect eligibility 
within 30 days of such a change.
    Question. What funding does HHS plan on using to establish State-
level exchanges for the States that refuse to establish their own 
exchange?
    Answer. In fiscal year 2012, CMS will use a combination of 
administrative funding and the Implementation Fund for Exchanges. In 
fiscal year 2013, the President's budget requests additional funding in 
the CMS Program Management account for programmatic and administrative 
activities necessary to prepare for exchange open enrollment beginning 
October 1, 2013. CMS anticipates collecting user fees in fiscal year 
2014 to begin offsetting some of the operational costs of the federally 
facilitated exchange.
    Question. Please describe the HHS Federal exchange model, also 
describe how will it be different from an inter-State exchange?
    Answer. Specific details about the federally facilitated exchange 
will be released through guidance to States and other stakeholders in 
the coming months. Although there are opportunities for States to 
participate in the federally facilitated exchange, such as through a 
Partnership Exchange, the ultimate responsibility for operations will 
remain with the Federal Government. An inter-State exchange would share 
functions, such as a call center and financial management, across 
states in a manner similar to the federally facilitated exchange, but 
in this case the States involved are responsible for the exchange 
operations.
    Question. In addition to this mandatory money for State-based 
health insurance exchanges, the President's 2013 budget requests an 
additional $864 million for the Federal exchange and other exchange 
activities. How will this money specifically be spent and how will the 
Federal exchange differ in functionality from the web portal HHS has 
already implemented?
    Answer. As with the State-based exchanges, fiscal year 2013 is the 
year many operations of the federally facilitated exchange begin, as 
CMS will need to be prepared for open enrollment on October 1, 2013, 
the first day of fiscal year 2014. The majority of the $864 million 
request for CMS' exchange work is related to operations and management 
of the federally facilitated exchange with some funding to support the 
Secretary's duties on behalf of all exchanges. Specifically, $574.5 
million of the total will be used for exchange operations and 
management including eligibility and enrollment functions, certifying 
health insurance plans as qualified to be sold through the exchange, as 
well as oversight of plans and State-based exchanges. The additional 
$289.5 million will be used for consumer education and outreach 
activities, such as a call center, to help consumers understand their 
new options under the Affordable Care Act and to fund navigators and 
in-person enrollment assistance to facilitate the enrollment process.
    Healthcare.gov is a useful tool for providing information on 
potential sources of insurance available to individuals today, and HHS 
can leverage its capabilities for presenting information to assist 
consumers in comparing across plans in exchanges. The federally 
facilitated exchange will go beyond what is available through 
Healthcare.gov by certifying that the plans offered meet certain 
standards of quality and benefits. The federally facilitated exchange 
will also perform eligibility determinations, enroll individuals into 
plans, and provide for in-person or call center support to answer 
questions about available coverage.
    Question. How does HHS plan on integrating the necessary private 
information needed from the Internal Revenue Service (IRS), HHS, 
Department of Homeland Security (DHS), Social Security, and patient 
medical records while ensuring that the data is up-to-date and remains 
private?
    Answer. Protecting the privacy and confidentiality of personal 
health information is among our highest priorities. The Department has 
a long and successful history of doing so in the Medicare program. The 
minimum functions that an exchange must perform do not require or 
necessitate the collection of medical records of individuals who 
purchase coverage through the exchange. In response to concerns 
regarding privacy of personal health information of individuals 
enrolling in exchanges and Medicaid, the final exchange rule will 
address privacy and security standards for personally identifiable 
information that exchanges must establish and follow in more depth than 
previously discussed.
    Section 1413 of the Affordable Care Act outlines a series of data 
exchanges through secure interfaces that will facilitate eligibility 
determinations for enrollment in a qualified health plan (QHP) in the 
exchange and insurance affordability programs in a timely manner. To 
assist in these operations HHS has contracted for support in building a 
data services hub that will provide critical IT functions to every 
exchange. The hub will act as a single interface point for exchanges to 
Federal agency partners, minimizing the burden on states in exchanging 
information with Federal agencies. The hub will enable a streamlined, 
secure, and interactive customer experience that will maximize 
automation and real-time adjudication to the extent possible while 
protecting privacy and personally identifiable information.
    Question. What database will be established to handle this data?
    Answer. HHS is not establishing a database to facilitate 
eligibility determinations. Data will not be held by HHS. Instead, as 
described above HHS, through the data services hub will facilitate the 
exchange of data between Federal agencies and exchanges necessary to 
determine eligibility for enrollment in a QHP through the exchange and 
for insurance affordability programs.
    Question. What progress has been made and what portion of the 
budget has been allocated to ensure this integration and confidential 
data are protected?
    Answer. Protecting the privacy and confidentiality of data is among 
our highest priorities. In response to concerns regarding privacy of 
personal health information of individuals enrolling in exchanges and 
Medicaid, the final exchange rule will address privacy and security 
standards for personally identifiable information that exchanges must 
establish and follow in more depth than previously discussed.
    As we implement exchanges working with our State partners we will 
use the provisions of the final regulation along with other applicable 
statutes to ensure the privacy and confidentiality of data.
    Question. The healthcare law included a $1 billion implementation 
fund. In order for the Congress to better evaluate the administration's 
request for additional funds for implementation activities, please 
provide an accounting of how the monies provided pursuant to the new 
healthcare law have been expended. As part of your answer, please 
include a comprehensive breakdown of spending by department and 
subsidiary administrative units, as well as by function.
    Answer. The following table displays the spending from the Health 
Insurance Reform Implementation Fund as of February 29, 2012, by 
agency:

------------------------------------------------------------------------
              Organization                  Obligations       Outlays
------------------------------------------------------------------------
Internal Revenue Service................    $213,264,945    $154,181,697
Office of Personnel Management..........       2,938,850       1,442,102
Department of Labor.....................       3,055,102       2,958,880
Department of Health and Human Services.     251,742,492
                                         --------------------134,917,483
                                         -------------------------------
      Total, Health Reform                   471,001,389     293,500,162
       Implementation Fund..............
------------------------------------------------------------------------

    HHS uses these funds to implement Medicare and Medicaid changes 
required in the ACA, including closing the Part D coverage gap and 
developing new value-based purchasing models for Medicare providers. 
HHS has also used these funds to plan and prepare for the establishment 
of State-based and federally facilitated exchanges as required in the 
ACA.
    The Office of Personnel Management uses funding to plan for 
implementing and overseeing the establishment of at least two Multi-
State Plan Options to be offered on each State health insurance 
exchange beginning in 2014, and allowing tribes and tribal 
organizations to purchase Federal health and life insurance for their 
employees.
    The Department of the Treasury uses funding to implement multiple 
tax changes from the Affordable Care Act, including the Small Business 
Tax Credit, expanded adoption credit, W-2 changes for loan forgiveness, 
excise tax on indoor tanning services, charitable hospital 
requirements, and plan for exchanges.
    The Department of Labor uses funds to conduct compliance 
assistance; modify or develop IT systems that support data collection, 
reporting, policy, and research; and develop infrastructure for the 
newly required Multiple Entity Welfare Arrangements reporting and 
registration within the Affordable Care Act.
    Of the $251,742,492 obligated by HHS to date, approximately 13 
percent has paid for personnel, 84 percent has supported contractual 
services, and 3 percent has been obligated for rent, supplies, or other 
miscellaneous services.
    Question. The Department of Health and Human Services Budget (HHS 
budget) calls for 76,341 employees in fiscal year 2013. This is an 
increase of nearly 1,400 employees over the fiscal year 2012 level. How 
many of these employees will have responsibilities covered under the 
new healthcare law?
    Answer. The fiscal year 2013 President's budget requests an 
increase of 136 FTEs more than the fiscal year 2012 appropriated level 
for ACA related activities.
    Question. How many staff members are currently working at the 
Center for Consumer Information and Insurance Oversight (CCIIO)? Please 
provide numbers for both full-time and part-time staff separately. How 
many staff do you expect will be working at CCIIO at the end of fiscal 
year 2012? How many staff do you expect will be working at CCIIO at the 
end of fiscal year 2013?
    Answer. As of March 10, 2012, CCIIO has approximately 261 employees 
on-board. 258 employees are considered full-time, and 3 employees are 
considered part-time. This staff is supported by a combination of 
discretionary funds and mandatory ACA funding. By the end of fiscal 
year 2012, CMS expects to consume 450 FTEs on CCIIO-related activities. 
This staffing level will grow to a projected 710 FTEs by the end of 
fiscal year 2013 as we bring the exchanges online.
    Question. How does HHS account for the $111 billion increase in 
mandatory spending for health insurance exchange tax credit between 
fiscal year 2014-2021? Please provide a full itemized breakdown.
    Answer. Premium tax credits for individuals enrolled in qualified 
health plans are under the jurisdiction of the Department of the 
Treasury, so HHS did not provide the estimates of the tax credits in 
the President's budget referenced in the question.
    HHS understands from the Department of the Treasury that 
approximately one-half of the $111 billion increase for premium tax 
credits related to exchanges results from legislative changes enacted 
in 2011, primarily Public Law 112-56, which changed the definition of 
modified-adjusted gross income to include certain Social Security 
income. This legislative change resulted in shifting individuals 
previously eligible for Medicaid into the exchange premium tax credits. 
The remaining difference is attributable to technical changes to 
Treasury's revenue estimating model that are designed to improve its 
overall accuracy. Those changes impact all income tax modeling and were 
not implemented just for purposes of calculating the cost of the 
premium tax credit. One example of the technical changes involves the 
projection of the distribution of income, which resulted in the 
composition of families projected to claim premium tax credits being 
somewhat older and lower-income than previously projected. These 
changes do not reflect fundamental changes in assumptions regarding 
utilization of premium tax credits or the cost of providing coverage 
for a given person in the exchanges.
    Question. Please describe how the programs funded under section 
4002 of PPACA are being measured to determine their efficacy. As part 
of your answer, please indicate whether and how each program is 
evaluated to determine how it improves health outcomes for identified 
individuals and reduces healthcare expenditures.
    Answer. HHS strives to ensure that programs funded by PPHF are 
making the greatest health impacts. Within the programs, the Department 
assigns a trained project officer to monitor and advise each grantee. 
Project officers provide ongoing consultation and oversight to grantees 
regarding program performance.
    Project officers also conduct site visits in order to objectively 
validate information and actively resolve challenges that a grantee is 
facing in order to ensure that the goals of the project are achieved.
    Programmatic performance measures also have been developed for each 
PPHF funded program at three levels:
  --performance milestones for start-up;
  --short-term impact; and
  --long-term objectives.
All PPHF-funded programs report twice a year regarding the status of 
established milestones and measures.
    HHS leaders regularly review these performance data to ensure that 
programs are on track and accountable for the outcomes associated with 
each investment.

                                 ______
                                 
               Question Submitted by Senator Jerry Moran
            medicare part d preferred network pharmacy plans
    Question. Last year, Centers for Medicare & Medicaid Services (CMS) 
allowed insurers to partner with large chain drug retailers to launch a 
preferred network Part D pharmacy plan. Similar plans were rolled out 
at the end of 2011. These plans can offer prescription drugs to 
Medicare beneficiaries at significantly reduced prices compared to 
other Part D plans.
    It is important that these preferred network plans, and all Part D 
plans, are accurately marketed to Medicare beneficiaries so they are 
able to fully understand the features of the various plans and the 
benefits and drawbacks of signing up for one plan compared to another.
    Many seniors get their medications and related counsel from a 
trusted pharmacist in their community. The preferred pharmacies in the 
preferred network plans, Part D agents and brokers, and representatives 
of the Senior Health Insurance Information Program should disclose to 
Medicare beneficiaries that the beneficiaries may have to go to a 
specific preferred pharmacy provider to access the most reduced drug 
costs advertised by such plans.
    If Part D plans are not accurately marketed, pharmacy access for 
rural Americans could be jeopardized. If a Part D plan limits Medicare 
beneficiaries to only a small number of pharmacy providers to get the 
most reduced drug prices, it is important that this information be 
clearly disclosed to them. Additionally, it is important that the 
Medicare Plan Finder contain obvious information for beneficiaries 
regarding such pharmacy provider options as well as costs.
    What actions is CMS taking to ensure accurate marketing and full 
disclosure of Part D preferred network plans for the 2013 plan year?
    Answer. An increasing number of Part D plans offer cost-sharing 
differentials between preferred and nonpreferred network pharmacies. It 
is important to ensure that beneficiaries understand whether preferred 
cost sharing is available at individual pharmacies. Specifically, 
confusion may arise if beneficiaries do not select a pharmacy when they 
compare Part D plans using the Medicare Plan Finder. Therefore, we are 
currently working to change the Plan Finder to require each beneficiary 
to select a pharmacy in his/her plan's network for purposes of 
providing cost estimates that reflect the selected pharmacy's preferred 
or nonpreferred status in the plan's network. We believe this change 
will eliminate the possibility that a beneficiary will obtain cost 
estimates and plan selections based on preferred pharmacy cost sharing 
when that beneficiary does not intend to use pharmacies in the 
preferred pharmacy network. The selection of a particular pharmacy in 
Plan Finder for this purpose has no bearing on the beneficiary's 
ability to fill prescriptions at any network pharmacy.

                          SUBCOMMITTEE RECESS

    Senator Harkin.  Thank you, Madam Secretary.
    The record will stay open for 1 week for additional input 
from members of this subcommittee.
    The subcommittee will stand in recess.
    [Whereupon, at 11:45 a.m., Wednesday, March 7, the 
subcommittee was recessed, to reconvene at 10:30 a.m., 
Wednesday, March 14.]
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