[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                       PPACA PULSE CHECK: PART 2 

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 10, 2013

                               __________

                           Serial No. 113-80



      Printed for the use of the Committee on Energy and Commerce

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky               FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois               BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania        ANNA G. ESHOO, California
GREG WALDEN, Oregon                  ELIOT L. ENGEL, New York
LEE TERRY, Nebraska                  GENE GREEN, Texas
MIKE ROGERS, Michigan                DIANA DeGETTE, Colorado
TIM MURPHY, Pennsylvania             LOIS CAPPS, California
MICHAEL C. BURGESS, Texas            MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee          JANICE D. SCHAKOWSKY, Illinois
  Vice Chairman                      JIM MATHESON, Utah
PHIL GINGREY, Georgia                G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana             JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   DONNA M. CHRISTENSEN, Virgin 
GREGG HARPER, Mississippi            Islands
LEONARD LANCE, New Jersey            KATHY CASTOR, Florida
BILL CASSIDY, Louisiana              JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky              JERRY McNERNEY, California
PETE OLSON, Texas                    BRUCE L. BRALEY, Iowa
DAVID B. McKINLEY, West Virginia     PETER WELCH, Vermont
CORY GARDNER, Colorado               BEN RAY LUJAN, New Mexico
MIKE POMPEO, Kansas                  PAUL TONKO, New York
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Ohio
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina

                                 ______

                         Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan                LOIS CAPPS, California
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          JIM MATHESON, Utah
PHIL GINGREY, Georgia                GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            JOHN BARROW, Georgia
BILL CASSIDY, Louisiana              DONNA M. CHRISTENSEN, Virgin 
BRETT GUTHRIE, Kentucky                  Islands
H. MORGAN GRIFFITH, Virginia         KATHY CASTOR, Florida
GUS M. BILIRAKIS, Florida            JOHN P. SARBANES, Maryland
RENEE L. ELLMERS, North Carolina     HENRY A. WAXMAN, California (ex 
JOE BARTON, Texas                        officio)
FRED UPTON, Michigan (ex officio)

                                  (ii)



                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     2
Hon. Phil Gingrey, a Representative in Congress from the State of 
  Georgia, opening statement.....................................     3
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     4
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     5
Hon. Tim Murphy, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     6
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     7
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................    14
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   119

                               Witnesses

W. Brett Graham, Managing Partner, Leavitt Partners..............    18
    Prepared statement...........................................    20
    Answers to submitted questions...............................   121
Antoinette Kraus, Executive Director, Pennsylvania Health Access 
  Network........................................................    30
    Prepared statement...........................................    32
Edward A. Lenz, Senior Counsel, American Staffing Association, on 
  Behalf of the Employers for Flexibility in Health Care 
  Coalition......................................................    38
    Prepared statement...........................................    40
    Answers to submitted questions...............................   125
Cheryl Campbell, Senior Vice President, CGI Federal, Inc.........    51
    Prepared statement...........................................    53
    Answers to submitted questions...............................   129
John Lau, Program Director, Serco, Inc...........................    57
    Prepared statement...........................................    59
    Answers to submitted questions...............................   152
Lynn Spellecy, Corporate Counsel, Equifax Workforce Solutions....    76
    Prepared statement...........................................    78
    Answers to submitted questions...............................   157
Michael Finkel, Executive Vice President for Program Delivery, 
  Quality Software Services, Inc.................................    92
    Prepared statement...........................................    94
    Answers to submitted questions...............................   160

                           Submitted Material

Democratic memorandum, dated September 10, 2013, ``Re: Committee 
  Investigation of Affordable Care Act Contractors,'' submitted 
  by Mr. Waxman..................................................     9
Letter of August 30, 2013, from Mr. Waxman to Mr. Upton, 
  submitted by Mr. Butterfield...................................    16


                       PPACA PULSE CHECK: PART 2

                              ----------                              


                      TUESDAY, SEPTEMBER 10, 2013

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:15 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Joe Pitts 
(chairman of the subcommittee) presiding.
    Members present: Representatives Pitts, Burgess, Murphy, 
Blackburn, Gingrey, Lance, Cassidy, Guthrie, Griffith, 
Bilirakis, Ellmers, Pallone, Dingell, Matheson, Green, 
Butterfield, Christensen, Castor, Sarbanes, DeGette, and Waxman 
(ex officio).
    Staff present: Clay Alspach, Chief Counsel, Health; Matt 
Bravo, Professional Staff Member; Karen Christian, Chief 
Counsel, Oversight and Investigations; Noelle Clemente, Press 
Secretary; Paul Edattel, Professional Staff Member, Health; 
Julie Goon, Health Policy Advisor; Brad Grantz, Policy 
Coordinator, Oversight and Investigations; Sydne Harwick, 
Legislative Clerk; Sean Hayes, Counsel, Oversight and 
Investigations; Katie Novaria, Professional Staff Member, 
Health; Andrew Powaleny, Deputy Press Secretary; Heidi Stirrup, 
Health Policy Coordinator; Ziky Ababiya, Democratic Staff 
Assistant; Brian Cohen, Democratic Staff Director, Oversight 
and Investigations, and Senior Policy Advisor; Hannah Green, 
Democratic Staff Assistant; Elizabeth Letter, Democratic 
Assistant Press Secretary; Karen Lightfoot, Democratic 
Communications Director and Senior Policy Advisor; Karen 
Nelson, Democratic Deputy Committee Staff Director, Health; 
Stephen Salsbury, Democratic Special Assistant; and Matt 
Siegler, Democratic Counsel.
    Mr. Pitts. This subcommittee will come to order. The Chair 
will recognize himself for an opening statement.

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    On August 1st, CMS Administrator Marilyn Tavenner testified 
before the full committee on implementation of the Affordable 
Care Act. She assured us that despite numerous delays, 
including a one-year delay of the employee choice provision of 
the SHOP exchanges, the employer mandate, and verification of 
eligibility for insurance subsidies, that the exchanges would 
be ready on October 1st to begin enrolling Americans in new 
health plans and that implementation of the law's other 
provisions was on track.
    Since that hearing, we have learned of several troubling 
developments. On August 13, The New York Times reported that it 
had discovered a delay in the implementation of the law's out-
of-pocket caps buried in a list of 137 frequently Asked 
questions posted on the Department of Labor's Web site on 
February 20, 2013. On August 27, CMS announced that instead of 
finalizing contracts with health plans set to participate in 
exchanges between September 5 and September 9, as had been 
expected, final contracts would not be signed until mid-
September.
    The Affordable Care Act's implementation involves a litany 
of Federal and State agencies, and my constituents are 
understandably confused about what is happening with the 
exchanges, enrollment and premiums. Considering the 
administration's track record on deadlines and delays, 
reassurances from CMS officials are not comforting.
    In our previous hearing, Administrator Tavenner also made 
an extraordinary remark that she had only heard of ``isolated 
incidents'' of the ACA having burdensome or negative impact on 
Americans.
    I would briefly like to share the experiences of some of my 
constituents who are being harmed by the law. In April of this 
year, Eastern Lancaster County School District and Penn Manor 
School District in Lancaster, Pennsylvania, both announced that 
they were outsourcing some employees to avoid the costs of 
complying with the ACA's employer mandate. Elanco will 
outsource approximately 90 food service workers and classroom 
aides, and Penn Manor is shifting more than 95 special-
education classroom aides off its payroll. The affected 
employees work over 30 hours a week, thus triggering the 
employer mandate, and the school districts simply cannot afford 
to pay for the additional expenses of covering these 
individuals.
    Dairy farmers in my district, members of the Mt. Joy 
Farmers Cooperative Association, which is affiliated with 
Dairylea Cooperative, currently enjoy a negotiated plan 
characterized by a low-risk pool and shared savings. As of 
January 1, 2014, they will lose this unique risk pool and be 
forced on to the exchanges.
    A father from my district wrote me, distraught, about his 
daughter's work hours being cut to 28 hours a week, because her 
employer could not absorb the cost of providing her with health 
insurance. He is among dozens of people who have told me that 
their hours have been cut, and they have been moved from full-
time to part-time as a direct result of the ACA. Dozens more 
have expressed shock at the staggering premium increases they 
that face in 2014. These are not isolated incidents.
    With that, I would like to welcome all of our witnesses 
here today, and I look forward to their testimony.
    [The prepared statement of Mr. Pitts follows:]

               Prepared statement of Hon. Joseph R. Pitts

    The subcommittee will come to order.
    The Chair will recognize himself for an opening statement.
    On August 1, CMS Administrator Marilyn Tavenner testified 
before the full committee on implementation of the Affordable 
Care Act.
    She assured us that despite numerous delays--including one-
year delays of the "employee choice'' provision of the SHOP 
exchanges, the employer mandate, and verification of 
eligibility for insurance subsidies--that the exchanges would 
be ready on October 1 to begin enrolling Americans in new 
health plans and that implementation of the law's other 
provisions was on track.
    Since that hearing, we have learned of several troubling 
developments.
    On August 13, The New York Times reported that it had 
discovered a delay in the implementation of the law's out-of-
pocket caps--buried in a list of 137 Frequently Asked Questions 
posted on the Department of Labor's Web site on February 20, 
2013.
    On August 27, CMS announced that instead of finalizing 
contracts with health plans set to participate in exchanges 
between September 5 and September 9--as had been expected--
final contracts would not be signed until mid-September.
    Obamacare's implementation involves a litany of Federal and 
State agencies.
    My constituents are understandably confused about what is 
happening with the exchanges, enrollment, and premiums.
    Considering the administration's track record on deadlines 
and delays, reassurances from CMS officials are not comforting.
    In our previous hearing, Administrator Tavenner also made 
an extraordinary remark that she had only heard of ``isolated 
incidents'' of the ACA having burdensome or negative impact on 
Americans.
    I would briefly like to share the experiences of some of my 
constituents who are being harmed by the law.
    In April of this year, Eastern Lancaster County (Elanco) 
School District and Penn Manor School District in Lancaster, 
PA, both announced that they were ``outsourcing'' some 
employees to avoid the costs of complying with the ACA's 
employer mandate.
    Elanco will outsource approximately 90 food service workers 
and classroom aides, and Penn Manor is shifting more than 95 
special-education classroom aides off its payroll. The affected 
employees work over 30 hours a week, thus triggering the 
employer mandate, and the school districts simply cannot afford 
to pay for the additional expenses of covering these 
individuals.
    Dairy farmers in my district, members of the Mt. Joy 
Farmer's Cooperative Association, which is affiliated with 
Dairylea Cooperative, currently enjoy a negotiated plan 
characterized by a low-risk pool and shared savings. As of 
January 1, 2014, they will lose this unique risk pool and be 
forced on to the exchanges.
    A father from my district wrote me, distraught, about his 
daughter's work hours being cut to 28 hours a week, because her 
employer could not absorb the cost of providing her with health 
insurance. He is among dozens of people who have told me that 
their hours have been cut, and they have been moved from full-
time to part-time as a direct result of the ACA.
    Dozens more have expressed shock at the staggering premium 
increases they face in 2014.
    These are not ``isolated incidents.''
    I would like to welcome all of our witnesses here today, 
and I look forward to their testimony.
    I yield back.

    Mr. Pitts. I yield the balance of my time to the gentleman 
from Georgia, Dr. Gingrey.

  OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. Gingrey. Thank you, Mr. Chairman.
    We are now 3 weeks from the beginning of open enrollment 
for Obamacare exchanges. It is fitting that we have before us 
today the vendors who are charged with running the exchanges. 
While I am sure that these companies are working as best they 
can to meet the deadlines, the reality is that most were 
awarded contracts within the past few months and the complex 
system has yet to be fully tested. How can taxpayers expect to 
feel secure with their personal information in the exchange 
when they have not had adequate security checks to determine 
its effectiveness.
    Mr. Chairman, Obamacare will saddle taxpayers with higher 
premiums, fewer choices and the potential for employment 
disruption. We must work to ensure that our citizens will not 
face fraud and identity theft from the law as well, and with 
that, I yield back and I thank you for the time.
    Mr. Pitts. The Chair thanks the gentleman.
    At this time I would like to request unanimous consent for 
Representative DeGette to participate in the subcommittee 
hearing. Without objection, so ordered.
    And the Chair recognizes the ranking member, Mr. Pallone, 
for 5 minutes for an opening statement.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Chairman Pitts, and a special 
thanks to our witnesses for taking the time to be here today. I 
know you are right in the middle of gearing up for the October 
1st start of open enrollment for the health care exchanges and 
that your time is valuable.
    I must say that I am extremely troubled by the Republicans' 
repeated tactics to try to slow the progress of all those 
individuals and organizations working so hard to implement the 
Affordable Care Act. In particular, the oversight letter that 
committee Republicans sent to 51 groups, primarily community 
organizations that receive grants to serve as navigators to 
help the uninsured sign up for benefits under the ACA I think 
is despicable. This is an egregious abuse of the committee 
process and an attempt by Republicans to intimidate community 
organizations and overwhelm them with information requests at a 
critical period so that they don't implement the program.
    I have been working with organizations in my district such 
as the Food Bank of Monmouth in Ocean County, who have taken on 
the responsibility of being navigators for the community and 
make sure that they know their rights under the committee 
rules, but even more so, I am encouraging them to remain 
committed to the critical work they are doing and not be 
detracted from their laudable goals of helping uninsured people 
gain coverage.
    It is time that the Republicans stop trying to obstruct the 
law. Health care reform is undeniably moving forward. It is 
hypocritical that Republicans are holding this hearing today so 
say that the health exchanges are not ready and that the 
administration doesn't have enough staff or resources when the 
Republicans are the ones who refuse to adequately fund the law 
and are out advocating for it to be defunded. But despite this, 
I think what we will hear today from our witnesses is that the 
contractors, community organizations and States are ready for 
October 1st.
    It is going to be a challenge, that is for sure. Will the 
rollout be flawless? No. Will there likely be some hiccups 
along the way as with any major program rollout? Yes. But these 
groups have been working day and night to make sure that they 
are ready for enrollment so that Americans can start receiving 
the benefits of health insurance, and starting October 1st, 
millions of people will gain access to health care coverage 
they didn't have before. Individuals in every State will have 
access to a health exchange where they can select coverage from 
an array of qualified health plans. Every health plan will 
offer essential health benefits including preventative services 
such as screenings and vaccines, mental health services, trips 
to the emergency room, outpatient care, care before and after 
your baby is born, prescription drugs, lab tests and pediatric 
services including dental care and vision care for kids.
    Now, one area where more progress is needed is State 
expansion of Medicaid. An important tool included in the ACA 
was the strengthening of Medicaid by allowing States to expand 
coverage to individuals and families who did not previously 
qualify for the program but also did not have the resources to 
access affordable, quality care through the private insurance 
market. Not only is this beneficial for low-income Americans, 
it is an advantageous fiscal arrangement for States, and I am 
disappointed that a number of States still have not chosen to 
expand Medicaid coverage, and anticipate we will hear from Ms. 
Kraus from the Pennsylvania Health Access Network today about 
how the continued refusal of States to accept Federal funding 
and expand Medicaid will hurt low-income families as well as 
State economies.
    So implementing the ACA is a huge undertaking. It involves 
the coordination of a number of complicated provisions. We 
can't expect everything to go perfectly but we can support the 
administration, the contractors, the community partners and the 
States in their efforts so that the American people can access 
health care as intended on October 1st and receive the 
assistance they need to sign up for health insurance. I just 
hope that my Republican colleagues will realize this and stop 
trying to impede the law and those working to implement it.
    I yield back, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the vice chair of the subcommittee, Dr. Burgess, 5 
minutes for opening statement.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. I thank the chairman for yielding, and let me 
just say in reply to my friend from New Jersey that it is the 
oversight function of this committee and its subcommittees that 
really has been one of the cherished functions in the Congress 
in the United States, and certainly under both Democratic and 
Republican committee leadership, the oversight function is one 
that other Members of Congress look to. They look to the 
oversight function of this committee. So now we are in a new 
situations where self-attestation is going to be the launch 
word for people who show up and sign up for benefits. Why we 
wouldn't have questions about the vast sums of money that have 
been pushed out the door relatively hostility to these 
navigator groups? Why wouldn't we have questions as to their 
credentials, as to their ability to provide what they've been 
required to provide, and why wouldn't we have questions that 
other Members of Congress would like answered as well. So 
really, it is the function of this committee to provide that 
oversight function, and I for one, Mr. Chairman, am grateful 
that those letters did go out, and certainly in support of the 
fact that we are trying to simply get the information that the 
administration for whatever reason does not want to give to the 
Congress.
    Mr. Pallone. Would the gentleman yield?
    Mr. Burgess. No, I will not. I have got some things to say. 
If I have time at the end, you may be welcome to it.
    We have 3 weeks, 3 short weeks, 21 days, ready or not, 
October 1st, the health exchanges including the Federally 
Facilitated Marketplaces run by the Obama administration will 
open while the White House, Treasury and Health and Human 
Services continue to report that everything will be ready, 
everything is fine. We have only seen missed deadlines, delays 
and really an overall lack of information.
    The most significant function for the operation of the 
exchanges as it turns out is not in the hands of the 
administration but has been outsourced. It has been contracted 
to organizations, and many of those witnesses are before us 
today and we appreciate your participation. The Federal hub 
will be the centerpiece of the exchanges, coordinating data 
from other five Federal agencies, millions of individuals, 
hundreds of insurance carriers and in all 50 States. Not 
surprisingly, the complexity involving coordinating the 
exchange has led several States, notably Oregon and California, 
to indicate that they will likely need to delay access to their 
online marketplaces. States have begun making contingency plans 
but the administration continues the same refrain: we will be 
ready.
    Instead of communicating with Congress, the administration 
has decided just to open the door to eligibility errors and 
fraud and inappropriate payments by removing verification 
requirements and allowing consumers to simply use self-
attestation. Because the agency is silent, because Health and 
Human Services will not speak on this, we must go to the 
source--the contractors who have to live in a world. Your world 
is comprised of contingencies and possibilities, deadlines and 
an ever-shifting environment. You know you deal with 
contingencies all the time.
    The President's health care law continues to create more 
chaos, more uncertainty for Americans. Since the administration 
won't admit the enormity and complexity of the task they have 
undertaken, we have our witnesses today, and I hope that we 
will hear from them, from these people who are actually 
preparing the systems will be able to tell us the real status 
of the implementation of the Affordable Care Act.
    Let me then yield to the chairman of the Oversight 
Subcommittee, Mr. Murphy.

   OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Murphy. Thank you very much, Doctor.
    You know, it is kind of a preposterous thing the gentleman 
from New Jersey says, as if the Oversight and Investigations 
Committee has no business having oversight and investigation.
    When we had multiple hearings, we heard from people from 
the administration that everything was fine for business 
rollout, only to say well, it wasn't ready and they had to slip 
in little unknown statements they were going to delay it for a 
year. They said the exchanges actually were supposed to start 
their training August 1. They didn't even start hiring until 
lately. Also, we saw the administration had to waive some of 
the rules for caps on copayments and deductible. Labor has to 
take out full-page expensive ads to get the attention of CMS, 
who wasn't talking to them. Treasury came before us and said 
they haven't heard any concerns from individuals. And by law 
and by design, the way the bill was written, the navigators 
have to be people who are inexperienced with selling insurance 
by law.
    So we have every right to ask questions on behalf of the 
American people. That is what oversight is supposed to do. 
Quite frankly, I am puzzled by people who are trying to say 
that we are trying to delay this. No, I think the delays have 
been there because the administration, even though they have 
had a few years to do this, simply is not ready to bring this 
forward upon the American people. So we will continue to ask 
questions about how this program is going. If everything is 
fine, people will have nothing to be afraid of, but quite 
frankly, I think we have a lot to be afraid of, and that is why 
things aren't fine. Thank you.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the ranking member of the full committee, Mr. 
Waxman, 5 minutes for an opening statement.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you, Mr. Chairman.
    It is an interesting example today of the Republicans 
ignoring their own oversight findings. They started this 
investigation in August. They did interviews. They got 
documents. They learned that the contractors were doing 
everything right and they were on target to meet the deadlines. 
Rather than talk about that, they are attacking the law which 
they have attacked from the very beginning. They want to 
portray health reform as an impossibly complex, inevitably 
doomed enterprise, and that is what we are hearing again today.
    We have four private-sector contractors who are actually in 
the trenches with the administration implementing this law. 
Today's witnesses are not political. They will tell us that the 
administration is making steady, step-by-step progress. Their 
testimony will deflate the overheated Republican rhetoric of a 
coming health care apocalypse.
    Last month, the committee launched an extensive 
investigation into these contractors. They peppered them with 
questions and they scoured the documents for signs of 
impropriety. What they found can be summarized in one word: 
nothing. The facts don't measure up to their doom-and-gloom 
talk. That is why they have said virtually nothing about their 
own investigation.
    To fill this void, the Democratic staff is releasing a 
supplemental memo outlining what we learned from the oversight 
investigation. The key findings are as follows. One, the 
contractors and CMS have numerous systems in place to secure 
the privacy of consumer information; two, the contractors are 
on track to complete their remaining tasks by October 1; three, 
CMS's management of the program is sound; and four, these 
contractors are creating thousands of jobs throughout the 
country.
    In my view, the timing of the committee's investigation is 
under suspicion. Burdensome demands came during the most 
critical phase of these contractors' work. The committee is 
taking the same approach in its investigation of the health 
care navigators. But having launched the investigation and 
received extensive responses, we should not ignore what we have 
learned. That is why I ask unanimous consent that this 
memorandum that I referred to be made part of the record.
    Mr. Pitts. Without objection, so ordered.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Waxman. I want to make just a couple of points before I 
yield. Inevitably, there will be some glitches and hiccups in 
implementation of this law, and I expect every time they find 
any hiccup, the Republicans here in Washington will make a hue 
and cry about it. I believe we should keep our eyes on the 
bigger picture: problems that arise will be fixed, and we are 
on a steady path to offering every American quality, affordable 
health coverage and making our health care system more 
sensible, efficient and fair.
    It is also important to remember that most of the 
implementation problems are likely to come from Republican 
State leaders who are openly obstructing the goals of the law. 
Antoinette Kraus of Pennsylvania Health Action has firsthand 
knowledge of what this senseless intransigence means to the 
hardworking Americans caught in the middle.
    I am now going to yield 2 minutes to my colleague and 
friend, Mr. Butterfield.

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Butterfield. Thank you very much, Mr. Waxman, for 
yielding time. Mr. Waxman, I want to associate myself 
completely with your statement and that of Mr. Pallone.
    Mr. Chairman, I am absolutely outraged that the chairmen of 
the full committee and Subcommittees on Health and Oversight as 
well as other Republican members of this committee sent a 3-
page investigatory letter to 51 grant recipients demanding that 
they answer questions giving them only 2 weeks to provide 
detailed descriptions of the anticipated scope of wrong, among 
other very specific questions, to provide all documentation and 
communications related to their grant. My question to my staff 
and to you, my friends: how can 15 members of this committee 
simply get together and send a letter without committee action? 
Wasn't the vast majority of the information being sought by 
Chairmen Upton and Pitts and Murphy included in the navigator's 
application to CMS?
    These grant recipients only received word they were 
selected to receive the grant on August 15th. Might I remind my 
colleagues that the marketplace goes live on October 1st, less 
than one month away? The majority is forcing these recipients 
away from their important work of getting ready on October 1st 
and diverting their limited resources to entertain its fishing 
expedition. Yes, that is what I am calling it, a fishing 
expedition, that will surely come back empty-handed. There is 
no evidence of any kind that any navigator grantees have 
misappropriated or misused grant funds in any way whatsoever. 
This is a gross misuse of the company's investigative authority 
and just another way this majority is attempting to derail the 
Affordable Care Act.
    I am outraged by your actions. I want you to tell me when 
these letters came back what you have discovered. I believe you 
will come back empty-handed.
    Thank you. I yield back to Mr. Waxman.
    Mr. Waxman. I yield back my time.
    Mr. Pitts. The Chair thanks the gentleman.
    That concludes the----
    Mr. Butterfield. May I ask unanimous consent to include in 
the record a copy of Mr. Waxman's letter dated August 30th? Mr. 
Waxman's letter to Mr. Upton dated August 30th, may I include 
this in the record?
    Mr. Pitts. Without objection, so ordered.
    Mr. Butterfield. Thank you, Mr. Chairman.
    [The information follows:]

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    Mr. Pitts. All right. We have one panel, seven witnesses 
today. First, we have Mr. Brett Graham, Partner and Director of 
exchange Programs, Leavitt Partners. We have Ms. Antoinette 
Kraus, Director of Pennsylvania Health Access Network; Mr. 
Edward Lenz, Senior Counsel, American Staffing Association, 
testifying on behalf of the Employers for Flexibility in Health 
Care Coalition; Ms. Cheryl Campbell, Senior Vice President of 
CGI Federal; Mr. John Lau, Program Director of Serco; Ms. Lynn 
Spellecy, Corporate Counsel, Equifax Workforce Solutions; and 
Mr. Michael Finkel, Executive Vice President of Program 
Delivery, QSSI.
    Thank you for coming today. You have 5 minutes to summary 
your testimony. Your written testimony will be placed in the 
record.
    At this point I will recognize Mr. Graham for 5 minutes for 
his summary.

   STATEMENTS OF W. BRETT GRAHAM, MANAGING PARTNER, LEAVITT 
 PARTNERS; ANTOINETTE KRAUS, EXECUTIVE DIRECTOR, PENNSYLVANIA 
HEALTH ACCESS NETWORK; EDWARD A. LENZ, SENIOR COUNSEL, AMERICAN 
     STAFFING ASSOCIATION, ON BEHALF OF THE EMPLOYERS FOR 
 FLEXIBILITY IN HEALTH CARE COALITION; CHERYL CAMPBELL, SENIOR 
VICE PRESIDENT, CGI FEDERAL, INC.; JOHN LAU, PROGRAM DIRECTOR, 
    SERCO, INC.; LYNN SPELLECY, CORPORATE COUNSEL, EQUIFAX 
    WORKFORCE SOLUTIONS; AND MICHAEL FINKEL, EXECUTIVE VICE 
PRESIDENT FOR PROGRAM DELIVERY, QUALITY SOFTWARE SERVICES, INC.

                  STATEMENT OF W. BRETT GRAHAM

    Mr. Graham. Good morning, Chairman Pitts, members of the 
subcommittee. Thank you for the opportunity to testify today 
about the ACA as well as State readiness around State health 
insurance exchanges. I am the Managing Director of Leavitt 
Partners Center for Health Care Intelligence around health 
insurance exchanges. We advise clients on the health insurance 
exchange landscape. Several of my colleagues have been very 
involved in both the design and development of insurance 
exchanges both in the private sector as well as publicly. 
Leavitt Partners has also been very involved in advising 
clients on implementation and being ready for that 
implementation.
    First, let me say that it has been very impressive all the 
work that States have done to be ready for the open enrollment 
season, which is just 3 weeks away. What they have done has 
been impressive. That being said, today where we stand, there 
is not a single State that is completely ready for open 
enrollment 3 weeks away. In an ideal world, States would be 
well into their outreach and education campaigns with all of 
the exchange operations and functionality fully tested and 
completed. In the current situation, however, uncertainty and 
doubt still surrounds how functional these systems will be on 
October 1st.
    The bottom line is that while Leavitt Partners believes 
that a very baseline functionality of State-based exchanges 
will be up and running on October 1st, it can be expected that 
most, if not all, exchanges will experience a rocky enrollment 
period as they work to overcome both known and unanticipated 
challenges that arise. Today I would like to focus on four 
critical challenges that States are facing as they work towards 
implementation in the short term.
    The first challenge States are facing is the complexity of 
an exchange's architecture itself. The establishment of these 
health insurance exchanges is one of the most aggressive and 
complex IT projects the Federal Government has ever undertaken, 
certainly in the health care space. Coupling the complexity of 
these challenges with the informational delays has clearly 
strained States' capacity to complete their exchanges both on 
time and as originally scoped. In fact, as States are making 
final preparations for open enrollment, many have had to de-
scope the capabilities they planned in order to be up and 
running on October 1st. While this is the right thing to do 
from a management perspective, it will certainly have an impact 
on consumers as they go to the exchanges.
    The second challenge that is facing States is data 
verification and integration with the Federal Data Services 
Hub. Our surveillance of the exchange landscape shows that 
while some States have completed testing, others are working 
through the final testing phases despite still being in the 
building stage of development. This is problematic. Several 
States have expressed to us concern about using the Federal 
Data Services hub and where possible are planning to use their 
own data resources for verification.
    The third challenge is privacy and security. In addition to 
integration challenges, there are also serious concerns 
regarding security of the hub's data. The Office of the 
Inspector General recently stated that any additional delays in 
completing the security authorization package would result in 
an incomplete assessment of system risks and needed security 
controls.
    The fourth challenge should not be underestimated. It is 
achieving optimal enrollment. Because of the compressed 
timeline, States have not been able to devote the necessary 
resources to outreach and education. Tens of thousands of 
consumers, if not hundreds of thousands of consumers, will come 
to these exchanges with little or no prior exposure to health 
insurance coverage. They will need comprehensive assistance to 
be able to make these very important decisions. A lack of 
information and a high potential for misinformation will 
increase the likelihood for error, increase the possibility 
consumers will select suboptimal products and possibly result 
in a delayed enrollment.
    In conclusion, Mr. Chairman, let me restate that although 
Leavitt Partners believes that baseline functionality of State-
based exchanges will be up and running in 3 weeks, it can be 
expected that due to the challenges associated with, number 
one, the complexity of the IT exchange infrastructure and 
architecture, number two, the Federal Data Services Hub, three, 
privacy and security, and finally, four, the necessary 
arrangements and outreach associated with achieving optimal 
enrollment. Very few States will have a comprehensive working 
exchange on October 1st. This will result in a rocky enrollment 
period. Thank you.
    [The prepared statement of Mr. Graham follows:]

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    Mr. Pitts. The Chair thanks the gentleman and recognizes 
Ms. Kraus 5 minutes for an opening statement.

                 STATEMENT OF ANTOINETTE KRAUS

    Ms. Kraus. Mr. Chairman and members of the committee, thank 
you for the opportunity to speak on the implementation of the 
Affordable Care Act in Pennsylvania.
    I am the Director of the Pennsylvania Health Access 
Network. We are a statewide coalition representing over 60 
organizations and 1 million Pennsylvanian consumers. Some of 
our partners include local health centers, physician groups, 
churches, retiree associations and community groups. Our 
mission is to make sure every Pennsylvanian has access to 
quality, affordable health care. In my work, I meet people from 
all walks of life: working moms and dads, retirees, young 
adults, laid-off workers and small business owners. They come 
from different backgrounds and live in different places, but 
their fears and anxieties over health care are the same: How do 
I find coverage? Can I afford to keep it? What do I do now that 
I have been denied because of a preexisting condition? 
Thankfully, we have the opportunity to address these fears and 
relieve the anxiety that so many of our neighbors, and your 
constituents, live with daily. We can do that by moving forward 
to fully implement the Affordable Care Act in Pennsylvania.
    We can often get caught up in talking about the mechanics 
of implementing this law, but we should never lose sight of 
what this means for working families. Already in Pennsylvania, 
the Affordable Care Act has brought 177,000 children with 
preexisting conditions freedom from no longer being denied 
coverage; a boost for the bottom line of 160,000 small 
businesses, who are eligible for tax credits; stability for 
91,000 young adults who have been able to stay covered on their 
parents' insurance; and soon in just 21 days, all 
Pennsylvanians will enjoy the freedom and feel the security 
that comes from knowing that affordable health care is within 
reach no matter where you work, how much you earn or if you 
have been sick in the past.
    I want to tell you about two of these folks. Karen and Gary 
Capanello, they live in Waterford, which is a small town in 
Erie County. Karen and Gary own their own small business, a 
commercial cleaning company. For the last 2 years, Karen and 
Gary have been uninsured. The couple makes too much to qualify 
for Medicaid but nowhere near enough to afford the prices 
charged to people with preexisting conditions. Gary has heart 
problems and Karen has a torn tendon in her foot. Karen worries 
every day about Gary and all the things he is forced to put 
off. She is scared that if the couple continues to delay 
treatment, they might not be around to see their youngest son 
Tony graduate from high school. That is a fear no mom should 
have, especially one who works as hard as Karen. Thankfully, 
Karen and Gary won't have to live with fear much longer. On 
October 1st, they will be able to start looking for coverage in 
the Health Insurance Marketplace. They will choose from the 
same plans as all of you. They will have quality options that 
will cover the services Karen needs to fix her foot and the 
preventative care Gary needs to keep his heart healthy.
    We are less than a month away from the day the door opens 
to 1.2 million Pennsylvanians who are sitting where Karen and 
Gary are today on the outside of our health care system looking 
it, hoping, praying, waiting to get in and to get the care they 
need. The Affordable Care Act opened that door. Political 
posturing, partisanship and delays threaten to keep it slammed 
shut.
    Unfortunately, in Pennsylvania, we have seen our Governor, 
Tom Corbett, work to block 1.2 million uninsured Pennsylvanians 
from feeling the full benefit of the Affordable Care Act. While 
the new law gave each State the flexibility and tools to create 
a marketplace that fosters real competition, offers family and 
small businesses the best quality choices and ensures rates are 
reasonable, Pennsylvania, like several other States, chose to 
reject this opportunity and relinquish its responsibilities to 
the Federal Government. Instead of working in the best interest 
of our Commonwealth, Pennsylvania officials have been slow to 
implement the Affordable Care Act, delaying and defaulting on 
key provisions of the law.
    I want to be very clear about what it is at stake for 
Pennsylvania and its decision over Medicaid expansion. The 
choice Governor Corbett and State House leaders make will 
determine whether or not our Commonwealth brings in $43 billion 
in new Federal funding over the next decade, whether or not we 
create up to 40,000 family-sustaining jobs, whether we continue 
to burden taxpayers with $1 billion in uncompensated care, and 
whether or not we leave 400,000 Pennsylvanians shut out from 
getting affordable coverage. Too many hardworking 
Pennsylvanians are forced to gamble every day with their lives 
and their likelihoods. They are counting down the days until 
they can sign up for coverage in the marketplace and they are 
praying that Governor Corbett will move forward with Medicaid 
expansion. They are looking forward to secure coverage no 
matter what the economic situation is.
    There is a fundamental opportunity in the Affordable Care 
Act: the chance to make our future secure, the chance for us 
and working families and small business owners to be in 
control. We know there will be bumps along the way as there 
always are with any new major piece of legislation. Medicare 
and Social Security didn't enjoy a perfect rollout. There were 
challenges, tweaks and changes along the way but we worked 
together to make those laws work for the American people. That 
is what we need to do today.
    The Affordable Care Act has already made the lives of 
millions of Pennsylvanians better, and if we get out of the way 
and let it work, this will open the door to stable, quality, 
affordable health care for 1.2 million of our uninsured 
neighbors. Too many lives and too many likelihoods are on the 
line to keep that door shut.
    Thank you for allowing me today, and I look forward to your 
questions.
    [The prepared statement of Ms. Kraus follows:]

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    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes Mr. Lenz 5 minutes for your opening statement.

                  STATEMENT OF EDWARD A. LENZ

    Mr. Lenz. Good morning, Mr. Chairman and members of the 
subcommittee. I am Senior Counsel of the American Staffing 
Association, which is a founding member of the Employers for 
Flexibility in Health Care Coalition, which is called E-FLEX, 
and I am appearing today on behalf of the coalition.
    E-FLEX represents leading trade associations and businesses 
in the retail, restaurant, hospitality, construction, temporary 
staffing, supermarket and other service-related industries. It 
also represents employer-sponsored health plans that insure 
millions of American workers. The coalition strongly supports 
employer-sponsored coverage, and we have been working to ensure 
that it remains a vibrant and competitive option under the ACA. 
Our members employ a major portion of the U.S. workforce each 
year, upwards of 30 million people. We offer flexible work 
opportunities, and the jobs we create are leading the jobs 
recovery.
    But the high turnover rates and the fluctuating work 
schedules of our employees pose unique challenges in offering 
ACA-compliant health coverage, and we have been working with 
the administration to address those challenges in a way that 
does not impose unnecessary operational complexity that could 
disrupt our workforces or the labor markets. To that end, 
proposed regulations issued earlier in the year would a look-
back measurement period to determine the full-time status of 
so-called variable-hour employees for purposes of offering 
coverage, but offering coverage is only part of the equation.
    Many other issues affecting employers, which are integrally 
related to the employer mandate and the offer of coverage, have 
not been resolved, for example, the processes for determining 
employee eligibility for premium tax assistance and the 
employer reporting requirements, and for that reason, E-FLEX 
members supported the administration's 1-year delay in 
enforcement of the employer mandate.
    As you know, the administration issued proposed employer 
reporting rules just last week. We have not fully evaluated the 
proposal but our initial reaction is that they do not take the 
holistic approach that we have been urging that takes into 
account all of the processes affecting employers' coverage 
obligations, especially the process for determining eligibility 
for subsidies and the interaction between employers, health 
insurance exchanges and the multiple Federal agencies involved 
in making those determinations. Given that our members' 
software and other systems must be in place by January 1st of 
this coming year to start tracking employees' hours in order to 
get ready for 2015, the absence of final reporting rules 
creates major uncertainty for employers as they head into the 
coming year.
    I would like to touch briefly on three other major issues 
of concern to E-FLEX. First is the definition of full-time 
employee under the ACA. Full-time, as you know, is defined as 
30 hours per week. It is below what most employers consider to 
be full time, and unfortunately, it is creating perverse 
economic incentives to reduce employee hours. We think that 
increasing hours to 35 or 40 would benefit employees by 
increasing their take-home pay, allowing employers to offer 
better coverage, allowing for more flexible employee work 
schedules, and interestingly, also because of how the Medicaid 
and ACA tax credit eligibility rules work, increasing the hours 
would actually allow more lower-income employees to be eligible 
for those benefits.
    The 30-hour definition is already having an adverse impact 
in the market. We see that. And once those changes occur, 
employees won't be able to recapture the lost wages, the 
flexible hours or the better benefits that they might otherwise 
have had. So we strongly encourage Congress to act now to bring 
the definition of full-time employee more in line with current 
workforce practices.
    Another key issue is the definition of large employer. The 
ACA defines a large employer as one having 50 or more full-time 
employees including full-time-equivalent employees. Full-time 
equivalence, the inclusion of full-time equivalence, greatly 
expands the scope of the law to cover many smaller businesses, 
and our concern is that this will stifle their ability to 
manage their workforces and in some cases may even discourage 
them from expanding their businesses or offering health 
coverage.
    Finally, we remain concerned about the law's requirement 
that large employers enroll full-time employees into coverage 
automatically if an employee does not make an election. We 
think it is inappropriate to enroll employees in coverage they 
didn't select and may not want or need. It would impose a major 
administrative employer on employers and would result in 
unexpected and certainly undesired payroll deductions for many 
employees.
    We greatly appreciate the opportunity to present the views 
of E-FLEX and we look forward to continuing to work with you 
and the administration to resolve the many outstanding issues 
that remain to be addressed. Thank you.
    [The prepared statement of Mr. Lenz follows:]

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    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes Ms. Campbell 5 minutes for an opening statement.

                  STATEMENT OF CHERYL CAMPBELL

    Ms. Campbell. Good morning, Chairman Pitts, Congressman 
Pallone, members of the committee. Thank you very much for the 
opportunity to appear before you today. My name is Cheryl 
Campbell. I am the Senior Vice President at CGI Federal, a 
company that has provided information technology services to 
the Federal Government for more than 36 years. In my role, I 
lead CGI Federal's Health and Compliance Business Unit. I am 
responsible for all projects at the Department of Health and 
Human Services and several other Federal agencies. It is my 
pleasure to appear today to discuss CGI Federal's role as the 
contractor designing and developing the IT application known as 
the Federally Facilitated Marketplace, which I will call the 
marketplace. This application is one of several components 
being developed that will allow citizens, health insurance 
issuers, CMS and many States to participate in the marketplace 
for health insurance mandated by the Patient Protection and 
Affordable Care Act.
    CMS conducted a competitive procurement, and on September 
30, 2011, selected CGI Federal to design and develop the 
marketplace consistent with requirements established by CMS. At 
the time of contract award, most of these requirements were not 
fully defined. For that reason, the contract was issued as a 
cost reimbursement-type contract, and the project's original 
scope was defined broadly. During the course of performance, 
CMS has modified the contract on several occasions generally in 
response to more detailed requirements.
    CGI Federal's scope of work includes the following three 
work streams: architecting and developing a marketplace that 
may be used by any State that opts out of building and 
operating its own; second, designing an IT solution that is 
adaptable and modular to accommodate the implementation of 
additional functional requirements and services; and third, 
participating in a collaborative environment and relationship 
in support of coordination between CMS and its primary 
partners.
    When open enrollment begins on October 1, 2013, the 
marketplace will have three key functions to assist citizens in 
comparing, selecting and enrolling in qualified health plans. 
First, eligibility and enrollment, which serves as the front 
door for consumers to determine eligibility for and enroll in a 
qualified plan; second, plan management which serves as the 
entry point for health insurers to submit their plans for CMS 
certification as qualified health plans; and third, financial 
management, which allows CMS to manage financial transactions 
with issuers.
    The IT solution developed by CGI Federal has been 
structured to support CMS as it provides pre-implementation 
models to the States. The Federally Facilitated Marketplace, 
the State Partnership Marketplace and the State-Based 
Marketplace. To date, the marketplace implementation has 
achieved all of its key milestones from the initial 
architecture review in October 2011 to project baseline review 
in March 2012, and most recently, the operational readiness 
review in September 2013. Additionally, in April 2013, health 
insurers began submitting their plans to the system for review 
by CMS. Starting in August 2013, consumers were able to go into 
the system and register their counts. At this time, CGI Federal 
is confident that it will deliver the functionality that CMS 
has directed to enable qualified individuals to begin enrolling 
in coverage when the initial enrollment period begins in 
October 1, 2013.
    Moving forward, CGI Federal is confident in its ability to 
deliver successfully on its contract and remains committed to 
the success of the marketplace as a mechanism for providing 
health insurance coverage by the statutory deadline of January 
1, 2014.
    I appreciate the opportunity to appear before you today and 
would be pleased to answer any questions that you may have. 
Thank you.
    [The prepared statement of Ms. Campbell follows:]

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    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes Mr. Lau 5 minutes for an opening statement.

                     STATEMENT OF JOHN LAU

    Mr. Lau. Good morning, Mr. Chairman, Congressman Pallone, 
other members of the subcommittee. My name is John Lau. I 
represent Serco Inc., and I am the Program Director for CMS 
contract. Thank you for the opportunity to appear today to 
discuss Serco's role in this program. For the next several 
minutes, I will provide you with an overview of Serco, my 
background, the contract we have been awarded, and the status 
of our work to date.
    Serco is a U.S. company based in Reston, Virginia, and we 
employ over 8,000 Americans across 45 States. We provide 
professional, technology and management services, primarily to 
the U.S. government and our customers include every branch of 
the U.S. military, numerous Federal civilian agencies, and the 
intelligence community. We are a wholly owned subsidiary of 
Serco Group PLC headquartered in the U.K. However, Serco Inc. 
maintains a separate board of directors and separate management 
under the terms of a special security agreement with the 
Department of Defense.
    Serco has decades of award-winning experience in 
government-related records management and processing support 
programs. Examples of this experience include processing large 
volumes of visa applications for the Department of State, 
patent application processing and classification for the U.S. 
Commerce's Patent and Trademark Office, records management and 
application and petition processing for the Department of 
Homeland Security, and records management services at the U.S. 
Citizenship and Immigration Services National Benefits Center. 
Personally, I have over 30 years of experience specializing in 
implementation and management of large Health and Human 
Services programs such as Medicaid and other public assistance 
programs. I have been responsible for overseeing eligibility 
and enrollment support programs for up to 30 million citizens 
involving 50 million or more transactions per year, and those 
experiences include the California State Children's Health 
Insurance Program, the Texas Eligibility Support System for 
Medicaid, Children's Health Insurance Program, food stamps, and 
at the time, Temporary Assistance for Needy Families. This 
experience gives me the confidence to say that our team is 
dedicated and equipped to deliver on our contractual 
commitments.
    Under the CMS contract, which was awarded to us on July 1, 
we will provide support services in the determination of 
eligibility for the Federally Facilitated Marketplace and the 
State-Based Marketplace for the eligibility support tasks under 
the Affordable Care Act. The contract tasks include intake, 
routing, review, troubleshooting of applications submitted for 
enrollment into a qualified health plan, and for insurance 
affordable programs including but not limited to advanced 
payment of premium tax credits, cost-sharing reductions, 
Medicaid Children's Health Insurance Program, and the Basic 
Health Program were applicable beginning on October 1, 2013. It 
includes 10 base tasks and potentially three optional tasks, 
and in my written testimony, I have a lot more detail on those 
tasks, which I think it is best in the interest of time to 
review there.
    The funded base year of the contract totals $114 million, 
and our role is to support a process that is as efficient, 
accurate and protective of personal privacy as is 
technologically possible. I will just in full disclosure, there 
are two pending modifications to our contract, which may change 
some of the scope that we currently have. However, we are 
prepared to manage the estimated 6.2 million paper applications 
representing about 30 percent of the total applications 
projected to be received between October 1st and March 31, 
2014. We don't do recruitment of Americans to submit 
applications nor are we involved in eligibility or enrollment 
decisions.
    We are on schedule to deliver all requirements for our 
contract, and I look forward and am happy to answer any 
questions you might have.
    [The prepared statement of Mr. Lau follows:]

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    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes Ms. Spellecy 5 minutes for an opening statement.

                   STATEMENT OF LYNN SPELLECY

    Ms. Spellecy. Good morning, Chairman Pitts, Congressman 
Pallone and distinguished member of the subcommittee. My name 
is Lynn Spellecy, and I serve as Senior Director and Corporate 
Counsel for Equifax Workforce Solutions. In that role, I am the 
primary attorney responsible for the day-to-day legal 
operations of the business unit, and I provide guidance, advice 
and legal support. I appreciate the opportunity today to 
provide information related to the income verification services 
that Equifax Workforce Solutions will be providing to CMS to 
assist them in their benefit eligibility determination 
requirements under the Affordable Care Act.
    Equifax Workforce Solutions is a wholly owned subsidiary of 
Equifax Incorporated. Workforce Solutions provides employers 
with various human resources-related services. We serve 
employer clients by providing services like unemployment claims 
management, W-2 processing, I-9 management and similar other 
functions.
    One of the largest parts of our business is providing 
income verification on behalf of employers. Workforce Solutions 
responds to requests for employment and income information on 
behalf of our employer clients so that the employers do not 
have to devote resources to answering the phone and dealing 
with these requests, which typically come from lenders, social 
services agencies and any other entity that has the need to 
verify a consumer's employment or income information.
    In order to provide this service for our employer clients, 
our clients send us a data feed every time they process their 
payroll so every couple of weeks usually. This feed contains 
information regarding their employees' salary information and 
employment history. We take that information and store it in a 
database that we call The Work Number. We then accept requests 
from verifier clients--the lenders, social services agencies 
and others mentioned previously--and provide consumer 
employment and income information in response to those verifier 
requests. The Work Number is a consumer recording database that 
is regulated by the Consumer Financial Protection Bureau and is 
subject to the Federal Fair Credit Reporting Act. Therefore, we 
credential all of our verifier clients to be sure that the 
entity making the request is entitled to receive the 
information that they are requesting. Subject to Federal laws, 
we make sure that the verifier client has a permissible purpose 
to access the data, and we require that the verifier obtain 
consumer consent before we release income information.
    By providing automated access to employment and income 
information, we alleviate the need for employers to have human 
resources staff verifying income when their employees are 
seeking a loan, for example. On the verification side, we can 
give verifiers the information so that they can process loans 
more quickly and reliably. Similarly, the process benefits 
consumers because consumers can obtain more ready access to 
credit and to the services for which they have applied without 
the delays caused by having to manually obtain pay stubs and 
provide them to lenders and others.
    Our contract with CMS is to provide the same services we 
provide to thousands of other social services agencies and 
lenders every day. In late November, CMS issued a request for 
proposals to provide automated income and employment 
verification to the CMS hub in order to enable CMS to make its 
determination of consumer eligibility for tax credits and then 
programs like Medicaid and CHIP. We responded to that RFP, and 
we were notified at the end of March of this year that we had 
won the RFP. We entered into a contract with CMS at the 
beginning of April. The contract is a 1-year contract renewable 
for up to 5 years. We will be doing verification similar to 
what we provide to other clients. CMS will provide us with 
information from a consumer who has requested qualification for 
Medicaid, CHIP or a tax subsidy or reduced cost sharing. CMS 
will obtain the consumer's consent to have their employment and 
income information verified. In response to CMS's request, we 
will provide CMS with income and employment information that we 
have stored in The Work Number database. CMS will use that 
information to enable a determination as to whether that 
individual is eligible for CHIP, Medicaid and a tax subsidy or 
reduced cost sharing.
    Equifax Workforce Solutions is prepared to provide income 
verifications to CMS. We operate in a closely regulated 
environment in accordance with Federal law, and consumers 
provide their written consent to CMS before we verify their 
income. The configuration between Equifax Workforce Solutions 
and the CMS data hub has been tested, and we stand by our 
commitment to maintain the highest standards for information 
security and consumer data privacy.
    Thank you for the opportunity to testify, and I welcome 
your questions.
    [The prepared statement of Ms. Spellecy follows:]

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    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes Mr. Finkel 5 minutes for his opening statement.

                  STATEMENT OF MICHAEL FINKEL

    Mr. Finkel. Good morning, Chairman Pitts, Ranking Member 
Pallone and members of the subcommittee. My name is Michael 
Finkel, and I am the Executive Vice President for Program 
Delivery at QSSI. My role is to ensure successful project 
delivery and implementation. I have worked in the IT field for 
17 years, and manage the delivery of numerous government 
programs.
    QSSI is a leading systems integrator that designs and 
builds custom IT systems, and we have been working with CMS 
since 2006. Currently, QSSI is one of several contractors 
developing systems at the direction of CMS that will support 
Health Insurance Marketplaces, commonly known as exchanges. 
While we do various work with CMS in this area, today I will 
focus on QSSI's role in developing the Data Services Hub on 
behalf of CMS.
    Our job is to write the software code based on CMS approved 
specifications for the Data Services Hub. We expect the Data 
Services Hub will be ready for CMS to operate as planned on 
October 1st. In simple terms, the Data Services Hub will 
transfer data. It will facilitate the process of verifying 
applicant information by routing queries and responses between 
given marketplaces and various data sources. The Data Services 
Hub itself will not determine consumer eligibility, it will not 
determine which health plans are available in the marketplace, 
and it will not handle personal medical records.
    Here is how it will work. A consumer will go to the Health 
Insurance Marketplace web portal to fill out enrollment forms 
and select health insurance plan. Certain information the 
consumer provides to the marketplace such as citizenship will 
have to be verified. The marketplace will direct a query to 
external information sources such as government databases. 
Those queries will be funneled through the Data Services Hub. 
Once the requested information is sent back, eligible consumers 
can then enroll in one of the available plans. The enrollment 
data, such as name, address and premium amount will be 
transferred through the Data Services Hub from the originating 
marketplace to the health plan chosen by the consumer.
    It is important to keep in mind that CMS owns and will 
operate the hub. It is housed in the CMS secure cloud hosted at 
the Terremark Data Center. We are developing the hub within 
CMS's environment where it will remain.
    Let me address the status of this work. I can report that 
our delivery milestones for the Data Services Hub are being met 
on time. We have completed software coding for the Data 
Services Hub for all functionality required for October 1st. We 
are continuing performance and integration testing. We have 
connected to the Data Services Hub to the databases at the key 
Federal agencies that will be used for verifying information. 
We have connected the Data Services Hub to the system that will 
transfer data to and from health plan issuers. We expect that 
data services functionality planned for October 1st to be 
ready.
    Finally, let me turn to data security. As I said earlier, 
the Data Services Hub is located in the CMS secure cloud. CMS 
and its information security contractors will continually 
monitor the Data Services Hub. Government regulations require 
CMS to follow National Institute of Standards and Technology's 
security guidelines applicable to the Data Services Hub. The 
design and development of the Data Services Hub complies with 
these standards.
    Additionally, the Data Services Hub has recently undergone 
an independent security risk assessment by CMS's security 
assessment contractor, the Mitre Corporation. Our understanding 
is that that assessment did not identify any issues that would 
prevent CMS from launching the Data Services Hub on October 
1st. Once in production, CMS will enforce additional security 
controls to protect systems including controlling access and 
changes to the system. The Data Services Hub will continually 
be monitored by CMS and its information security contractors.
    Thank you for the opportunity to testify today. I will be 
happy to answer any questions you might have.
    [The prepared statement of Mr. Finkel follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Pitts. The Chair thanks the gentleman and thanks all 
the witnesses for your testimony, and we will now begin 
questioning and answering. I will begin the questioning, and 
recognize myself 5 minutes for that purpose.
    Mr. Graham, in your testimony, you included a chart, and we 
will put it up on the screen, which displays the sheer 
complexity of the exchange, enrollment and subsidy eligibility 
process, and I would like to walk through this chart to help 
our constituents as to what they will face interacting with the 
exchange and what happens to the data provided on the 
application.
    Mr. Graham. Sure.
    Mr. Pitts. I have a series of questions I would like to ask 
you. My constituents may apply for enrollment through a paper 
application. Is that correct?
    Mr. Graham. Yes.
    Mr. Pitts. She could also apply online. Is that correct?
    Mr. Graham. Correct.
    Mr. Pitts. It is also possible to apply by phone. Is that 
correct?
    Mr. Graham. Correct.
    Mr. Pitts. A navigator or an in-person consumer could also 
be involved. Is that correct?
    Mr. Graham. That is correct.
    Mr. Pitts. And so the navigators and others will have 
access to personal information included on the application such 
as Social Security number, date of birth, address and household 
income. Is that correct?
    Mr. Graham. That is my understanding.
    Mr. Pitts. There would have to be a check on whether an 
individual is eligible for Medicaid, and the application 
information would then need to be transferred to the State. Is 
that correct?
    Mr. Graham. That is correct.
    Mr. Pitts. The Federal Data Services Hub will have to route 
information to several agencies as well. Is that correct?
    Mr. Graham. That is correct.
    Mr. Pitts. A check will occur with Homeland Security to 
verify residency as well. Is that correct?
    Mr. Graham. That is correct.
    Mr. Pitts. The Social Security Administration will have to 
verify citizenship. Is that correct?
    Mr. Graham. Yes.
    Mr. Pitts. The IRS will also check prior-year income. Is 
that right?
    Mr. Graham. Yes.
    Mr. Pitts. If household income doesn't match, CMS will 
check income verification with a private contractor. Is that 
correct?
    Mr. Graham. Yes.
    Mr. Pitts. If the private contractor does not have data on 
file, CMS claims they will conduct an audit to check for 
eligibility. Is that right?
    Mr. Graham. Yes.
    Mr. Pitts. Individuals with affordable employer-sponsored 
coverage are not eligible for a subsidy. There may have to be a 
phone call to an applicant's employer to verify this. Is that 
correct?
    Mr. Graham. There would be verification needed, yes.
    Mr. Pitts. The exchange interface will show approved plan 
options upon the entering of application information. Is that 
correct?
    Mr. Graham. Correct.
    Mr. Pitts. Then the beneficiary premium will have to be 
calculated correctly after the household income and size is 
considered. Is that correct?
    Mr. Graham. Yes.
    Mr. Pitts. Paper documentation verifying information on the 
application may or may not be asked of the beneficiary. Is that 
correct?
    Mr. Graham. Correct.
    Mr. Pitts. Treasury will be responsible for making sure 
payment is then sent to the plan. Is that right?
    Mr. Graham. Correct.
    Mr. Pitts. Based on the application's information, cost-
sharing subsidies will be calculated based on actuarial value 
and payments will then be sent to plans accordingly. Is that 
correct?
    Mr. Graham. Correct.
    Mr. Pitts. Overpayments and underpayments of subsidies will 
be dealt with during a reconciliation process, both for the 
plan. Is that correct?
    Mr. Graham. Correct. There will be a reconciliation process 
afterwards.
    Mr. Pitts. Is there a similar reconciliation process for 
the beneficiary?
    Mr. Graham. The beneficiary? What do you mean by that?
    Mr. Pitts. The tax credits for the individual.
    Mr. Graham. So if an individual receives too many tax 
credits because they have reported incorrect or their income 
status changes throughout the year, there would be a 
reconciliation process.
    Mr. Pitts. And what happens if there is incorrect 
information?
    Mr. Graham. So it is projected that if an individual 
receives too much subsidy based upon either the information 
they submit or the change in income throughout the year, then 
they would owe the repayment of whatever additional subsidy 
they receive throughout the year.
    Mr. Pitts. Would that clawback come back from the insurance 
companies or from the individual's income?
    Mr. Graham. It would come from the individual's income. 
They would owe it.
    Mr. Pitts. Well, now, I don't have much time left. I have 
just gone through 20 steps of the complexities associated with 
the ACA exchange enrollment. I am a little skeptical the system 
can actually function as advertised on October 1st, given the 
myriad of missed deadlines by the administration, and I am 
afraid this Rube Goldberg experiment will not end well. 
Trillions of taxpayer dollars are at stake, and it is our duty 
to watch this closely as we approach open enrollment.
    I wish I could go further but my time is up, and I will 
yield to the ranking member 5 minutes for questions.
    Mr. Pallone. Mr. Chairman, because I didn't have time 
before, I just wanted to respond to this notion that on the 
Republican part that somehow this letter that was sent out to 
navigators including the Food Bank of Monmouth in Ocean County 
in my district was somehow an appropriate oversight function, 
which I don't think it is. First of all, you should understand, 
and I can use the Food Bank as an example, that they have just 
begun the process of trying to sign up people who are uninsured 
that happen to come to the Food Bank, and normally when we have 
oversight functions, it is after the program has actually been 
implemented, not before it even begins. My concern is that this 
letter is solely designed to cause delay and to basically take 
resources away from the outreach effort of an organization like 
the Food Bank, and there has been no evidence that there has 
been any mishandling of these funds, particularly since most of 
the funds haven't even been used.
    So when I say that that oversight function is 
inappropriate, it is because it is not consistent with what we 
usually do in the committee. We don't usually start oversight 
and ask a myriad of questions before the program has even begun 
and before there is any indication that there is any kind of 
misuse of funds. So that is why I say strictly a delaying 
tactic and trying to intimidate these organizations such as the 
Food Bank from actually trying to sign up the uninsured.
    I wanted to ask two questions. We hear all this over-the-
top criticism of the ACA and the implementation process from my 
Republican colleagues, and as a supplemental memo the staff 
released today shows the contractors here today are working 
hard to do a good job. But I just wanted to down the line and 
ask the contractors whether they agree or disagree with my 
characterization, and I will start from the left. Granting that 
there may be hiccups and unanticipated issues, are you on track 
to deliver on your contract and have things up and running, or 
is this whole implementation effort doomed to failure? I know 
you have sort of answered this so maybe I will just ask yes or 
no whether you are on track to deliver and have things up and 
running or you think it is hopeful. If you could just answer 
quickly, I will run down the line starting with Mr. Graham.
    Mr. Graham. So Leavitt Partners is not----
    Mr. Pallone. You are not involved. OK. Ms. Kraus?
    Ms. Kraus. We are not a contractor.
    Mr. Pallone. OK. Then let us start with the contractors.
    Ms. Campbell. So I am the first one on the contractor side. 
The answer would be yes, we are prepared.
    Mr. Pallone. OK.
    Mr. Lau. Yes, Serco is prepared.
    Ms. Spellecy. Equifax Workforce Solutions is prepared.
    Mr. Finkel. QSSI is on schedule.
    Mr. Pallone. All right. Thank you so much.
    And this is the reality. It simply doesn't match up with my 
Republican colleagues' over-the-top rhetoric. Those working to 
implement this law are doing difficult but important work. Not 
everything is going to go perfectly but we have an obligation 
to work together to make this law work for the American people, 
and obviously those who are the contractors are not having a 
problem in terms of getting up and running.
    So I want to ask a second question of Ms. Kraus, if I 
could. My Republican colleagues seem intent on using this 
hearing to argue that the Affordable Care Act is not ready to 
be implemented. They are looking for the smallest missed 
deadline, using any indication of difficulty of this task to 
argue that implementation is failing, and I think again we need 
to put this in perspective. Whatever implementation hiccups or 
glitches we see from here, the negative effects will be 
nothing, in my opinion, compared to the harm governors around 
this Nation are doing to their citizens by rejecting the ACA's 
Medicaid expansion. So Ms. Kraus, can you put this in 
perspective for us? What can you tell us about the very harm 
your State's decision not to expand Medicaid is going to have 
and how does that compare to, say, a week's delay in testing IT 
readiness?
    Ms. Kraus. Thank you. So just to put it in perspective, so 
on October 1st, there will be approximately 400,000 
Pennsylvanians that will not have access to health insurance. 
They will not be able to get tax credits on the exchange. They 
can't qualify for health insurance now. So they are going to 
continue to be forced to go to Pennsylvania's emergency rooms. 
Hospitals as part of the Affordable Care Act are facing cuts in 
uncompensated care, and in Pennsylvania, hospitals face about 
$1 billion a year in uncompensated care costs, and they are 
still going to have to pay for that. In addition, you know, the 
economic benefits to Pennsylvania by accepting Federal funding 
is huge. We are looking at, you know, $3 billion a year in 
increased economic activity. Our own independent fiscal office, 
which is a nonpartisan group, looked at it. We are looking at, 
you know, being able to create 40,000 jobs in Pennsylvania each 
year alone from Medicaid dollars and, you know, Pennsylvania 
taxpayers are going to continue to have to shoulder the costs 
of uncompensated care and paying for folks that end up in the 
emergency room. So as we look forward to October 1st, this is 
going to cause a big problem for 400,000 Pennsylvanians.
    In terms of IT infrastructure, we have 1.2 million 
uninsured in Pennsylvania, about 1.1 million will qualify for 
the exchange, and Medicaid expansion, if we go down that road, 
these are folks that have been uninsured, you know, for a long 
time, have been shut out of the market because they have a 
preexisting condition, and these folks are just counting down 
the days until October 1st. Their survival counts on it. Right 
now they have to choose between, you know, feeding their family 
or figuring how to pay medical bills. We hear all the time from 
clients who, you know, have ended up in the emergency room. 
They don't have health insurance. They have huge bills. They 
don't know how they are going to pay them and they don't know 
where they are going to turn next. So on October 1st, they will 
be able to start the process of making sure they have financial 
security and nothing like this happens.
    Mr. Burgess. [Presiding] Great. Let us wrap it up there. 
The gentleman's time is expired and now recognize myself for 5 
minutes for questions.
    Mr. Lau, your contract was awarded on July 1st of this 
year. Is that correct?
    Mr. Lau. Yes, Congressman.
    Mr. Burgess. So on July 2nd, things changed, didn't they, 
as far as the employer mandate was concerned?
    Mr. Lau. Correct, yes.
    Mr. Burgess. So were you prepared for that contingency? Was 
this something that had been discussed as you were tendering 
that contract?
    Mr. Lau. Well, at that stage, we were prepared because we 
hadn't--we were just really getting started then. So there was 
not a change of course that was required.
    Mr. Burgess. Had you been to the White House and talked to 
the administration about some of these changes that they were 
contemplating?
    Mr. Lau. No, Congressman.
    Mr. Burgess. Ms. Campbell, let me ask you, at any point 
have you or CGI been to the White House to discuss the 
potential changes that were coming to the Affordable Care Act, 
the contingency plans that they were laying?
    Ms. Campbell. No, sir, we have not.
    Mr. Burgess. And Mr. Lenz, how about yourself?
    Mr. Lenz. Well, we are not contractors, sir, so we have had 
discussions with the administration with respect to the 
employer mandate but not with respect to implementation of the 
infrastructure.
    Mr. Burgess. But in regards to the employer mandate, what 
were those discussions?
    Mr. Lenz. Well, our group in particular had tremendous 
concern about implementation and specifically around the 
definition of who is a full-time employee, given the unique 
nature of our workforce--lots of people that come and go. Their 
work patterns are unpredictable and uncertain, and at least in 
that respect, the administration acknowledged that that posed 
significant problems, not just for employers but also for the 
administration of the program. So we were able to agree on a 
look-back rule. The administration was accommodating in that 
respect. But as I noted in my opening remarks, it is not the 
whole--it doesn't answer all of the questions. We still have 
lots of questions relating to reporting, how the premium tax 
credits will be administered and so on.
    Mr. Burgess. These meetings at the White House, when did 
they occur?
    Mr. Lenz. Well, they were--I wouldn't say they were at the 
White House. They were with the agencies that are responsible 
for the development of the rules, primarily treasury.
    Mr. Burgess. Did you talk to them during the month of June?
    Mr. Lenz. I can't recall whether we actually spoke to them 
in June. We had several meetings with them.
    Mr. Burgess. Mr. Lau, let me go back to you. Your contract 
is a cost-plus arrangement. Is that correct?
    Mr. Lau. That is correct.
    Mr. Burgess. And because of the changes that have occurred, 
well, if I am doing the arithmetic correctly, this will 
represent about 10 percent of your business. Is that correct?
    Mr. Lau. The employer postponement? Is that what you are--
--
    Mr. Burgess. No, no, just your contract.
    Mr. Lau. Oh, with this--I don't know the exact percentage 
for Serco. You may well be correct.
    Mr. Burgess. You record a cost, or your contract price was 
$114 million.
    Mr. Lau. Base year, yes, sir.
    Mr. Burgess. And your annual revenues are about $1.2 
billion?
    Mr. Lau. That is close to 10 percent, yes, sir.
    Mr. Burgess. So this is a big deal for you all?
    Mr. Lau. It is certainly a big deal, yes.
    Mr. Burgess. And, I mean, does it concern you that as you--
I mean, you are working through a highly complex set of 
circumstances. Does it concern you that things seem to be 
changing?
    Mr. Lau. I think that things generally tend to change in 
complex programs like this. I have been doing these for 30 
years. The company itself has lots of experience, and the one 
thing we know is that change is a constant, and sometimes the 
pace of that change increases as you get closer to the 
deadline.
    Mr. Burgess. See, and this is what----
    Mr. Lau. We are prepared to accommodate and adjust to 
whatever changes.
    Mr. Burgess. But look, at the committee level, we invite 
members of the administration in. We expect to get answers to 
our questions, and the question about contingency plans, and 
what are you doing to deal with the complexity of this program, 
really, we get no answers, so your responses today are really 
the first that we have heard that the administration is in fact 
or the agency is in fact considering the fact that things may 
not be exactly as they think.
    Mr. Graham, let me just ask you a question because you used 
a word that I had actually used in questioning Mr. Cohen from 
the Office of Consumer Information and Insurance Oversight. You 
used the word ``de-scoping.'' Is that something that you have 
encountered in your study of this?
    Mr. Graham. Yes. In fact, many of the State-Based exchanges 
have been very public in their intent. Some of the earliest 
ones were messaging their plan to de-scope as early as April, 
so it is the right thing for them to do, given where they are.
    Mr. Burgess. Yes, I don't disagree with that, but again, 
Mr. Cohen, in response to a direct question at the end of 
April, said no de-scoping, no delay.
    My time is expired. Let me recognize Mr. Green for 5 
minutes for questions, please.
    Mr. Green. Thank you, Mr. Chairman.
    I appreciate our panel being here today because of our 
oversight effort on the law now, and coming from Texas, it is 
really important because we have a national plan. Our State 
decided not to participate.
    One of the things I want to talk about is, the Affordable 
Care Act sets important nationwide standards on insurance plans 
and makes financial assistance available to those who need it, 
but the law preserves the State's primary role in regulating 
your insurance markets. The law was designed to be a floor and 
not a ceiling for consumer protections in the insurance market. 
It encourages States to set up their own health insurance 
marketplaces and tailor rules and regulations for them.
    But many States, including my own, have decided to turn 
over control of their health insurance marketplace to the 
Federal Government. Handing the keys to the Federal Government 
seems to be a strange way to be pro-States' rights, but that is 
their option. In contrast, States like Maryland and California 
have been running their own marketplaces and working to 
implement the law and have driven down insurance premiums, 
expanded options for small businesses and helped simplify cost 
sharing and deductibles.
    Ms. Kraus, what benefits can States realize by taking a 
more active parting implementation and setting up their own 
marketplaces, and how would things look in your State if they 
were taking a more active role?
    Ms. Kraus. Thank you, and like Texas, Pennsylvania has 
decided to default to the Federal Government. In doing that, we 
have given up a lot of flexibility and we have really been slow 
to move forward. For example, we were the 40th State to submit 
our plans to integrate our IT. We submitted it after the 
deadline was passed, so that is slowing up the process in 
Pennsylvania. We have seen other States go above the Affordable 
Care Act standards. Oregon, for example, went above the 
requirements of the ACA in terms of rate review. This year they 
brought in $69 million from waste, fraud and abuse at looking 
at insurance plans in the marketplace in 2014. Other States 
have done things to strengthen their essential health benefits 
package. We defaulted to a larger small group plan. States 
have, you know, defined rehabilitative services, providing, you 
know, consumers with greater protection with disabilities. So 
we have really passed up the ability to be innovative and 
creative and really craft a marketplace that would work best 
for Pennsylvania.
    Mr. Green. I want to ask you about fraud and subsidies. We 
have heard this the last few weeks--in fact, the House may be 
voting tomorrow on it--about a particularly offensive attack we 
heard recently on health reform that the health insurance 
subsidies will be rife with fraud. Marketplaces will have 
robust verification of consumers' income before they receive 
any financial assistance, and the IRS will make sure no one 
receives excess subsidies when taxes are filed at the end of 
the year. There are penalties for perjury for lying to get 
these benefits, and the ACA even added new penalties for 
providing false information on the application. And yet we 
still hear what I consider slander of the hardworking people 
who get a little help from these programs are really just 
fraudsters trying to get benefits they aren't eligible for.
    Ms. Kraus, you worked with many folks who might need a 
little assistance from these important public programs. These 
people, are they just people looking for a free lunch or are 
they actually willing to commit fraud to get it?
    Ms. Kraus. No. I mean, look, the majority of folks that 
would qualify in Pennsylvania for Medicaid expansion, about 80 
percent of them have one full-time worker in a job. They are 
just trying to get health insurance to protect them and their 
family. I think you pointed out, HHS has been very clear in 
setting up guidelines on protection against fraud and penalties 
for navigators that choose to not have security standards in 
place. If we look at how folks apply for health insurance 
today, you have to hand over an array of your health history, 
very private data. An insurance company can decide whether or 
not you have health insurance. Going forward, it is income, it 
is age and geographic location. So, you know, to me, that is a 
lot safer than handing over very personal, detailed health 
insurance records.
    Mr. Green. Well, as we know, October 1st, States like 
Pennsylvania and Texas, we are going to have a national plan 
with no State input. I am not familiar with Pennsylvania law 
but I know as a former State legislator in Texas, we tried to 
get, for example, 80 percent of the premium by statute. Does 
Pennsylvania have anything on a State level that requires a 
certain amount of premium to go back to benefits like the 
Affordable Care Act does?
    Ms. Kraus. No, we don't, so the Affordable Care Act 
actually makes sure that, you know, Pennsylvania consumers are 
protected, and I think in Pennsylvania, the average 
Pennsylvania consumer saw about $200 in a rebate this year from 
refunds from insurance companies that did not spend 80 percent 
on actual care.
    Mr. Green. Well, I appreciate that because that is one of 
the things I hear from employers, particularly small 
businesses, by going to their exchanges and they can starting 
October 1st but they will be able to make sure that at least 80 
percent of their premium dollar will come back to benefits.
    Ms. Kraus. Correct.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Burgess. The gentleman yields back his time. The Chair 
now recognizes the gentlelady from Tennessee 5 minutes for 
questions, please.
    Mrs. Blackburn. Thank you, Mr. Chairman, and thank you all 
for being here and for your testimony and allowing us to do the 
due diligence that our constituents expect from us.
    Mr. Lenz, I would like to come to you, if I may, sir.
    Mr. Lenz. Yes, ma'am.
    Mrs. Blackburn. We have all been in our districts for 5 
weeks, and I have to tell you, not a single day went by that I 
did not hear from employers or employees and hearing about 
changes, reductions in benefits, uncertainty, confusion, and 
you know, they say, well, the employer mandate, that delay for 
a year still doesn't take away that underlying requirement. We 
know that it is still there and it is going to be affecting 
jobs and job creators. All these mandates seem to just have a 
crushing effect. I met this morning with a group of business 
leaders from another State, and when I said our goal is to 
delay, defund, repeal, replace Obamacare and find something 
workable, they broke into applause because in their State, just 
like in mine, it is a huge problem.
    So what I would like for you to do is take just a few 
seconds and expand on your testimony and kind of connect for us 
how the Obamacare requirements on employers are causing the job 
market to contract and not to grow.
    Mr. Lenz. Well, thank you, Ms. Blackburn. We do represent a 
specific group of employers and a specific concern in regard to 
what we sometimes refer to as variable-hour employees, that is, 
temporary, part-time employees who work patterns are 
intermittent, unpredictable, short term and so on. They present 
unique challenges under the statute. We certainly recognize 
that there is general concern on the part of employers about 
implementation, and we have addressed some of that in our own 
testimony, but I would have to confine my comments to the 
unique circumstances of our particular workforce, and there are 
lots of them. As I pointed out, there are upwards of 30 million 
employees that are in that category, and so we have made some 
progress, I think. We recognize that it is the law and that we 
are compelled to comply with it but we still have major 
concerns about implementation, the timing of it, and as you 
pointed out, the fact that the employer mandate has been 
delayed a year does not mean that we don't have to be ready 
now. In fact, we had to be ready yesterday and 6 months ago, 
and we weren't and couldn't in large because rules weren't out 
that we could rely on, in particular, regarding the reporting 
rules. Now, they just came out last week and we are scrambling 
to look at them and to digest them. We were somewhat 
disappointed to see that some of the suggestions that we had 
urged that had not been adopted for various reasons, and we 
understand that there is lots of complexity associated with it, 
but it doesn't relieve the fact that we have major concerns 
about implementation on January 1st of this coming year, not 
2015, because all these software programs have to be in place, 
up and running, so that employers can begin to track hours now 
in order to know who they have to offer coverage to on January 
1, 2015. So this has been an ongoing problem in trying to get 
certainty and answers as to how we need to operate in order to 
comply.
    Mrs. Blackburn. Thank you.
    Mr. Lau, I want to talk with you a minute about Serco. You 
know, you are talking about the data you have got to start 
holding now in order to be ready on January 1, 2015, and then 
as you look at the amount of information on your employees. 
Well, one of the main problems that we hear about from our 
constituents, the main concern is the lack of privacy that they 
are going to have, and their lack of faith that people are 
going to be able to protect that personally identifying 
information and the fear that some of that could be used 
against them. So what kind of provisions are you putting in 
place?
    Mr. Lau. Well, Serco has a very comprehensive privacy and 
security program beginning with security of the facility, 
thorough background checks on each and every employee that will 
work there, compartmentalization of the roles and functions of 
the employees, role-based security so that employees can only 
see certain parts of an applicant's record. We deal with no 
personal health information. None of that is there. It is PII 
mostly. We also have extensive training, a cultural background 
to instill in all of our workers respect for the information 
and the fact that it represents very personal information of 
people and citizens. In addition, there are a number of 
technological components as well in compliance with Federal 
information security standards and NIST standards and things 
like that so there are firewalls and other preventions. So the 
networks are not accessible to the Internet. They are point-to-
point networks and so there is just layer after layer of 
security in place.
    Mrs. Blackburn. Thank you. Yield back.
    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes the gentlelady from the Virgin Islands, Dr. 
Christensen, for 5 minutes for questions.
    Mrs. Christensen. Thank you, Mr. Chairman, and thank the 
panelists for being here this morning.
    I want to focus on some of the concerns that Mr. 
Butterfield raised earlier. Mr. Graham, in your testimony you 
described consumer outreach as being very important. As a 
matter of fact, it is one of your four key areas of concern. By 
consumer outreach, I assume you mean advertising, public events 
and the navigator program and similar efforts to inform the 
public about their new insurance options in the exchange. Is 
that correct?
    Mr. Graham. That is correct. When I say outreach, I mean 
just going out in the community and making consumers aware of 
their choices so that they might make the optimal choices for 
themselves.
    Mrs. Christensen. And is it also important to make sure 
that the largest number of young people and healthy people are 
also engaged, taking advantage of the exchange so that the cost 
might be lower?
    Mr. Graham. One of the changes that the ACA brought about 
was clearly how risk pools would be created, and as the risk 
pools are created, certainly, as with any insurance product, it 
is necessary to have a broad spectrum of individuals in that 
pool. And so if the exchanges were not able to attract those 
individuals, there would be problems in subsequent years.
    Mrs. Christensen. And so you would agree that States that 
are not doing the consumer outreach and education are likely to 
see higher costs than those who are more active?
    Mr. Graham. Well, when you say higher costs, higher costs 
overall or higher costs----
    Mrs. Christensen. Of the premiums.
    Mr. Graham. Of the premium? So they run the risk of having 
not attracted the right risk pool or everyone into that risk 
pool and so having premiums be higher in subsequent years.
    Mrs. Christensen. And Ms. Kraus, you agree also? I am sure 
that consumer education efforts are important to make this law 
work properly?
    Ms. Kraus. Yes, correct.
    Mrs. Christensen. You know, it is good to see that 
witnesses invited by both Democrats and Republicans agreeing on 
something this important. I think it is unfortunate that the 
Republicans are attacking the HHS for investing in efforts to 
inform the public, and it is even more unfortunate that they 
are working to undermine the civic and community groups that 
are going to be doing some of that consumer outreach, and I 
hope we can agree, just as President Bush did with Medicare 
Part D, a robust consumer outreach and education campaign for 
these new insurance options is important, and we should all get 
behind it.
    I remember when we passed Medicare Part D. It was not the 
Democrats' version of the bill. It created a donut hole that 
didn't treat the territories equitably, and yet I went out 
across my community to do outreach to ensure that people 
understood the bill and engaged our foundation in doing a lot 
of outreach across the country. And, you know, I think that is 
that the we ought to go instead of trying to undermine the law 
and unfund the law that is already helping individuals across 
the country.
    Ms. Kraus, I was in Pittsburgh about 2 weeks ago at a 
women's conference and heard firsthand and personal the issues 
of health disparities and lack of insurance in that community, 
and it is extremely unfortunate that Medicaid expansion is not 
going to be accepted even, as you have said, when it creates 
jobs, helps the economy in Pittsburgh and of course provides 
services to many--this is a women's conference who are 
uninsured in the area.
    I think, you know, that really was the question that I 
wanted to ask, Mr. Chairman, and I will yield back the balance 
of my time.
    Mr. Pitts. The Chair thanks the gentlelady and recognizes 
the gentleman from New Jersey, Mr. Lance, 5 minutes for 
questions.
    Mr. Lance. Thank you, Mr. Chairman, and good morning to the 
panel.
    Mr. Graham, as I understand it, under the law, States will 
be responsible for accepting application transfers from an 
exchange where Medicaid eligibility needs to be determined. 
There has been some systems testing of such transfers where in 
fact Medicaid eligibility is valid. However, testing has not 
been completed for cases where Medicaid eligibility cannot be 
determined for various reasons including an incomplete file. 
From your perspective, Mr. Graham, has there been sufficient 
testing with the States, and if not, what are some of the 
financial risks to the States?
    Mr. Graham. So the question about has there been sufficient 
testing, one of the key things here is that it is different in 
every State so that some States are further along in testing, 
and certainly more testing would be more beneficial. The risks 
of not having testing completed or if something doesn't work as 
plan is really delay: delay for the consumer and delay for 
enrollment. So in those instances where things cannot be done 
in an automated or electronic way, then physical documents have 
to be faxed in or brought in in some form or fashion and 
interaction has to occur with the consumer that delays the 
actual process to be able to become enrolled. So the risk is 
delay.
    Mr. Lance. And can you estimate how long that delay might 
be?
    Mr. Graham. We know that HHS is required to be able to 
actually, in instances where it goes to a manual system or has 
information brought in, it has a 90-day review period. So that 
is what the law requires. I can't estimate in terms of how long 
things might go out should there be challenges in Medicaid and 
HHS.
    Mr. Lance. It would be my suspicion at least that it will 
be longer than 90 days. Do you share that suspicion?
    Mr. Graham. I think delays tend to be longer than we 
originally expect.
    Mr. Lance. Can you tell us, perhaps you don't know this, 
which States have done a good jobs so far in this regard and 
which States need to do a better job?
    Mr. Graham. I would be happy do that offline for you in 
terms of getting into specifics with States.
    Mr. Lance. Thank you, Mr. Chairman, and am willing to yield 
my time to anyone who would like it. Dr. Burgess?
    Mrs. Blackburn. If the gentleman would yield?
    Mr. Lance. Whatever time the gentlelady would like.
    Mrs. Blackburn. Just a couple of minutes. Adding to your 
question, which I think was a great one on detailing the 
States, and you said you would talk with the Congressman 
offline. I wish that you would submit that in writing so that 
it could be put into the record of the committee, and I yield 
back to Mr. Lance.
    Mr. Lance. Thank you. Is there any other member on our side 
who would like----
    Mr. Pitts. If the gentleman would yield?
    Mr. Lance. Absolutely. I certainly will, Mr. Chairman.
    Mr. Pitts. Mr. Lenz, I had another question. In my opening 
statement, I mentioned that Eastern Lancaster County School 
District, Penn Manor School District in Lancaster, Pa., both 
announced that they were outsourcing some employees to avoid 
the cost of complying with the ACA's employer mandate. The 
school districts simply cannot afford to pay for the additional 
expenses covering these individuals. Are you hearing similar 
stories or anecdotes like these from members of your coalition 
due to the ACA?
    Mr. Lenz. Yes, we are hearing questions being raised as to 
whether businesses or entities that would otherwise be subject 
to the ACA would try to outsource some of their workers in 
order to avoid the rules. It is not clear how that is actually 
going to play out because the responsibility for employer 
coverage is going to be determined based on common law employer 
rules. So it really ultimately will be a legal question as to 
who the responsible employer is. We have addressed that at 
great length to our members of the American Staffing 
Association. I am not speaking on behalf of E-FLEX now but 
temporary staffing firms are in the business of supplying 
employees to other businesses that require temporary help or 
other contract help, and so there are questions in those so-
called third-party employment relationships who is the actual 
employer. Our view is, if the temporary staffing firm, for 
example, is offering or providing compliant health care 
coverage, it shouldn't ultimately matter who technically the 
common-law employer is as long as the arrangement is not being 
used to circumvent the law. But those are technical questions. 
In some cases they raise thorny issues but they remain to be 
addressed as we go along.
    Mr. Pitts. Thank you. The gentleman's time is expired. The 
Chair now recognizes the gentlelady from Florida, Ms. Castor, 5 
minutes for questions.
    Ms. Castor. Thank you, Mr. Chairman, and thank you to the 
panel. This is an important time in the enrollment, or in the 
implementation of the Affordable Care Act, particularly with 
the online marketplaces about to come online in the open 
enrollment period that will run October to March. In my home 
State of Florida, it is particularly important. The U.S. Census 
Bureau reported over the last couple of weeks that 25 percent 
of the population in the State of Florida is uninsured. That is 
about 3.8 million individuals. Now, most people have insurance, 
and if you have insurance, you want other people to have 
insurance because otherwise you are going to--part of your 
copayment and premiums is going to go to subsidize folks who do 
not have insurance, and if you have insurance today, you have 
already seen the benefits of the Affordable Care Act. In 
essence, you have new rights. You cannot be discriminated 
against for preexisting conditions. You cannot be kicked off 
your policy if you get sick. In the greater Tampa Bay area, we 
already have almost 50,000 young adults who have been able to 
stay on their parents' policies. That is very positive. Over 
200,000 small businesses in the State of Florida are eligible 
for the new tax credits. That is very meaningful in a State 
that has so many mom-and-pop small businesses.
    One of my favorites for folks who have insurance today is 
the fact that just in the greater Tampa Bay area, over $47 
million has come back into the pockets of families due to the 
new requirements that 80 to 85 percent of your premiums and 
copays have to go to health insurance. So rebates have come 
back to about a million people just in my greater community.
    But what concerns me now is that we are not all working 
together to address the flaws and improve the Affordable Care 
Act. Instead, we continue to run into obstruction. Last month, 
Ranking Member Waxman and the Democrats on this committee 
released an analysis describing 10 ways that Republicans have 
acted to undermine and obstruct the Affordable Care Act. That 
in addition to the 40 repeal votes that have taken up precious 
time here in the House this session. That is a waste of time. 
We have got to be working together on this. And then when you 
look across at the States, Republicans Governors, including 
mine, some have refused to take the Medicare expansion in the 
State of Florida. That means that our hard-earned tax dollars 
that Floridians have paid are most going to come back to our 
State, $50 billion over the next 10 years. That is not smart. 
That is not in the public interest.
    But I wanted to highlight to my colleagues today the one 
that takes the cake, the one that wins the ideology over the 
public interest award, and that is the fact that in the State 
of Florida, the Republican legislature passed a law to actually 
remove State oversight and regulation of insurance companies 
and their rates. When Secretary Sebelius was in Florida a few 
weeks ago, she said she knew of no other State that had gone 
this far. The States still have the authority to negotiate and 
regulate insurance rates. So in this effort to elevate ideology 
and obstruction over the best interests of my neighbors, they 
now have taken the cops off the beat to regulate insurance 
rates. I want to know if anyone on this panel thinks that that 
is in the best interest of our businesses and consumers. I 
didn't think so. I haven't heard of anyone outside of the 
Republican legislature and our Governor, even if they don't 
like Obamacare and the Affordable Care Act, that thinks it is 
reasonable for the State to put insurance companies in charge 
of where the rates go. I really think it is a shame, and like I 
said before, if you have insurance, you want other folks to 
have insurance.
    Ms. Kraus, I would like to ask your perspective on these 
Republican efforts to undermine the law. What kind of impact 
are they having on the implementation in your State? I can tell 
you in my State, it is very problematic.
    Ms. Kraus. Yes, I mean, I just to emphasize this again and 
really hit this home. Medicaid expansion is huge, and when we 
have 400,000 people with health insurance, and that affects 
every single person. It affects, as you said, the folks that 
have health insurance, we are paying for that, and we are going 
to continue to have to pay for that. Like Florida, 
Pennsylvania's tax dollars are going to be thrown out the 
window to pay for health insurance coverage in other States. We 
are an island of no amongst other States. Our neighbors, New 
Jersey, Ohio, Maryland, they are all moving forward with 
Medicaid expansion.
    Ms. Castor. Thank you, and I yield back.
    Mr. Pitts. The Chair thanks the gentlelady. The Chair now 
recognizes the gentleman from Louisiana, Dr. Cassidy, 5 minutes 
for questions.
    Mr. Cassidy. Thank you, Mr. Chairman.
    Mr. Graham, earlier there was a question suggesting the 
possibility of fraud in this arrangement where there wouldn't 
be income verification was merely a straw horse--straw man. I 
understand that under the earned income tax credit, it is 
estimated that 21 to 25 percent of the payments are fraudulent, 
and that is when they totally integrated hub with the IRS. Now, 
are you as comfortable that in States like California where it 
is going to be self-attestation with no verification by the IRS 
that the level of fraud will be less, or what is your 
perspective as to what is going to happen?
    Mr. Graham. I am not an expert to project on what the fraud 
may or may not be. I will just say that in areas where the 
systems testing hasn't been completed or hasn't done to the 
full extent that it was originally intended to or needed, that 
the potential for fraud exists.
    Mr. Cassidy. And knowing that we are all sinners and fall 
short of the glory of God, it seems reasonable that there could 
be some fraud?
    Mr. Graham. That is a reasonable expectation.
    Mr. Cassidy. I mean, it is almost laughable to say that 
there won't be, and there is going to be a trillion dollars 
spent on the health insurance exchanges over the next 10 years. 
The Federal taxpayers are about to get whacked.
    Ms. Campbell, you mentioned that everything is kind of 
going well as regards a baseline, but it is my understanding 
that the systems have not included foreign-language support, 
and yet I have already read that the hope to get the big 
numbers, the young men who currently are not insurance but will 
theoretically pay three times the market rate in order to 
participate in the exchange, will rely on people who are 
minorities, many of whom will not have English as a primary 
language. So that said, is it true--I mean, you tell me, I 
don't know--are the exchanges robust in terms of their ability 
to support folks for whom English is not a primary language?
    Ms. Campbell. So Spanish is part of the rollout for 
implementation.
    Mr. Cassidy. But is it ready? Is the Spanish--put it this 
way. If I was a primary Spanish speaker, would I be able to log 
on and have a seamless experience as regards my ability to 
interface with the forum?
    Ms. Campbell. For the online application, yes.
    Mr. Cassidy. And what about Vietnamese?
    Ms. Campbell. I don't have an answer for that but I can get 
back to you.
    Mr. Cassidy. That would be great. Chinese, Mandarin?
    Ms. Campbell. I have an answer for the Spanish version. I 
can get back to you with the other dialects.
    Mr. Cassidy. OK. So for these other folks who perhaps are 
not currently insured in Orange County, which I gather Orange 
County has the greatest concentration of Vietnamese outside of 
Vietnam may not be quite ready. Now, granted, a lot of those 
folks speak English, but still I am a little interested.
    Mr. Lenz, I have heard the President's health care law 
described as one of the most significant anti-growth policies 
that have been passed by Congress. I am proud to say I voted 
against it. And that we continue to see a declining 
unemployment rate but only because people are dropping out of 
the job market. The total number of jobs is actually terrible. 
It is just that people are no longer looking for work.
    Now, you described something along those lines. The 
businesses that you represent, do you say that they are 
encouraged to grow by this law or perhaps they are otherwise 
encouraged?
    Mr. Lenz. Well, it is almost cliche to say that businesses 
don't respond well to uncertainty and higher costs have an 
impact on hiring. Those are just basic business truths. I think 
our members believe that. I think we are particularly concerned 
about the definition of full-time employee as we mentioned. The 
30-hour definition we think is not working well and is having 
perverse economic impacts already.
    Mr. Cassidy. And if I may interrupt, also, when I speak to 
small business owners, she will tell me that she is spending so 
much thinking about this law, she is not actually thinking 
about how to expand her business. She is trying not to run 
afoul of the Federal Government as opposed to where do I next 
open up. Is that a fair statement?
    Mr. Lenz. Well, let me just say on behalf of the American 
Staffing Association, which represents temporary staffing 
companies, the great majority of which are small business 
owners, we have lots of employees that come and go but most of 
them are small businesses by anybody's reckoning. There is 
tremendous anxiety about enforcement, very much confusion 
because of the complexity.
    Mr. Cassidy. So it is fair to say, if they are confused, 
conflicted, whatever, then it is fair to say that they are not 
thinking as much about expanding their business?
    Mr. Lenz. I think that is a fair statement.
    Mr. Cassidy. Lastly, let me just make the point, Ms. Kraus, 
you have been very wonderful about how Pennsylvania is going to 
benefit from this, but let me just say that Pennsylvania's 
small group market has a projected 27 percent increase in their 
premiums, that Pennsylvania's individual market, one insurer 
predicted an average increase of 30 percent in the individual 
market, males facing premium increases of 11 to 63 percent. 
Heck, it doesn't seem as good for the law in Pennsylvania if 
you are that male getting a 63 percent in your premium.
    Ms. Kraus. Well, I mean, I think a couple of things. First, 
when we talk about small businesses, we have to remember that 
small businesses with 50 or fewer employees are exempt from 
having to offer health insurance coverage, and I think when you 
go out----
    Mr. Cassidy. So your only salvation is that you are exempt?
    Ms. Kraus. No, but I think when you go out and talk to 
small businesses, a large concern is, you know, the cost of 
health insurance. We have seen health insurance costs rise 
astronomically over and over for years before the Affordable 
Care Act, and for the first time in history, insurance rates 
have slowed, and this year they only grew by 4 percent. So I 
think this is going to start to help small business owners that 
can now pull their power together and get coverage that is 
offered----
    Mr. Cassidy. Based on what the insurers say, it seems more 
an article of faith. It is a hope. It doesn't seem to be what 
the insurers are saying.
    I am out of time. I yield back. Thank you.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the ranking member of the full committee, Mr. 
Dingell, for 5 minutes for questions.
    Mr. Dingell. Thank you, Mr. Chairman, for holding this 
hearing, and thank you to our witnesses.
    First of all, I welcome the opportunity to hear from our 
witnesses today about the progress of ACA implementation. One 
misconception that seems to be a big one is the data hub. These 
questions are for Mr. Finkel of Quality Software Services Inc. 
Mr. Finkel, these are yes or no questions. QSSI has a contract 
with CMS to work on what is known as the data hub. Is that 
correct? Yes or no.
    Mr. Finkel. Yes.
    Mr. Dingell. Now, Mr. Finkel, we have heard from some that 
the data hub will be this new government database with personal 
medical information. Is this an accurate characterization of 
the program? Yes or no.
    Mr. Finkel. No.
    Mr. Dingell. Would you submit for the record what is a 
correct representation of the circumstances, please?
    Mr. Finkel. Yes.
    Mr. Dingell. All right. Now, instead, is it fair to say the 
data hub is technological tool to help facilitate the transfer 
of data between government agencies? Yes or no.
    Mr. Finkel. Yes.
    Mr. Dingell. Now, will data hub handle personal medical 
records at all? Yes or no.
    Mr. Finkel. No.
    Mr. Dingell. Mr. Finkel, will the data hub be up and 
running 3 weeks from today on October 1? Yes or no.
    Mr. Finkel. Yes.
    Mr. Dingell. Could you please submit for the record a 
summary of the functions of data hub that may relate to an 
earlier question I asked? Could you do that for me, please, 
sir?
    Mr. Finkel. We will work with the committee on that.
    Mr. Dingell. Very good. Work with me. This committee might 
not be quite as helpful.
    The next questions are for Mr. Lau of Serco. Mr. Lau, does 
Serco have experience in handling applications and records 
management for government agencies? Yes or no.
    Mr. Lau. Yes.
    Mr. Dingell. CBO has estimated that 6.2 million paper 
applications will be submitted between October 1, 2013, and 
March 31, 2014. Does Serco have the capability to handle this 
large amount of paper application? Yes or no.
    Mr. Lau. Yes.
    Mr. Dingell. Now, Mr. Lau, how many people has Serco hired 
to work on this CMS contract?
    Mr. Lau. To date, 1,200. The plan is for about 2,000 by 
October 1st.
    Mr. Dingell. Now, if you want to submit for the record, it 
would be appreciated.
    Now these questions are for Ms. Spellecy of Equifax. Ms. 
Spellecy, will Equifax get prior consent from a consumer before 
conducting an income verification report on that individual? 
Yes or no.
    Ms. Spellecy. CMS will obtain the consent first, yes.
    Mr. Dingell. Thank you. Now, does this practice go above 
and beyond what is required of Equifax under the Fair Credit 
Reporting Act? Yes or no.
    Ms. Spellecy. Yes.
    Mr. Dingell. Now, has Equifax done testing of your income 
verification systems with data hub and the State exchanges? Yes 
or no.
    Ms. Spellecy. Yes. Now, will income verification services 
provided by Equifax be ready in 3 weeks when the marketplaces 
are open or rather are available for open enrollment? Yes or 
no.
    Ms. Spellecy. Yes.
    Mr. Dingell. Now, I want to thank you all for your 
testimony. This is a critical time in our history. The American 
people are counting on us. When I was back home in Michigan 
just recently, my constituents weren't asking me political 
questions about the Affordable Care Act. They wanted to know 
where and how to sign up for quality, affordable health care 
that will help their families and their small businesses. We 
have only 3 weeks before the marketplaces open. The time for 
political games is over, and it is time for this body, the 
Congress, and the Senate, to quit playing games. It is also 
time for us to understand that we have to work together. The 
law is the law, and ACA is the law of the land, and frankly, we 
should all be working together to ensure that implementation 
goes smoothly as possible in the interest of seeing to it that 
we don't waste hundreds of millions or perhaps billions of 
dollars that has been spent so that and that we don't dissipate 
our opportunities to see to it that the American people can get 
a chance to see to it that health care is a matter of right, 
not a privilege just for those who are well-to-do, and I would 
observe that working men and women need this legislation. It is 
something which will help them to live a better quality of life 
and will improve medical care all across the board. I would 
also note that it is saving money for everybody in sight, and 
if we will just give it a chance and work together, I believe 
the country will be better off for it. I thank you, Mr. 
Chairman.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentleman from Virginia, Mr. Griffith, 5 minutes 
for questions.
    Mr. Griffith. Thank you, Mr. Chairman, and I appreciate it 
very much. I appreciate all the witnesses being here. As you 
might gather, Mr. Dingell and I do not agree on this point 
although I respect him greatly and appreciate his contributions 
over the many decades to this committee, and obviously whenever 
you have a law on the books, it is Congress's obligation to 
review it and make sure it makes sense, and each Congress has a 
separate obligation to do that, and we come to somewhat 
different conclusions.
    Mr. Lenz, I noticed with some interest on your summary of 
major points, your very last point, you said it would impose a 
major administrative burden on employers and result--referring 
to the large employer auto-enroll requirement--and result in an 
unexpected payroll deduction for many employees who do not want 
it or need coverage. Am I to assume that you are referring to 
perhaps the husband whose wife has a much better plan with her 
employer and now he is going to be automatically enrolled, 
albeit his wife has a better plan and already has a family plan 
for them and their children? Is that the type of thing you are 
referencing?
    Mr. Lenz. That would be one example.
    Mr. Griffith. And would another example be the one that a 
constituent came to me with last year or a similar situation 
where a student, full-time enrolled in college, also held a 
full-time job and through the Affordable Care Act was forced 
off of their parents' plan because they were eligible through 
their employer and then they ended up having to spend more 
money because obviously being part of a family plan with their 
parents, it was free, but now because they were doing what I 
hope my kids will have the fortitude to do, carry a full-time 
load at school and a full-time job, it ended up costing them 
several thousand dollars a year. Would that be another example 
of that kind of a problem that this Act is just not ready for?
    Mr. Lenz. Yes, sir.
    Mr. Griffith. And I would ask the gentleman also, I noticed 
on page 5 of your testimony, you indicate that the 1-year delay 
of the employer requirements means employers will not have 
penalty exposure until 2015 but they must still have their 
information technology and human resources systems in place by 
January 1, 2014, in order to track employees' hours of service 
in 2014 and comply with the ACA coverage obligations on January 
1, 2015, but I would ask you, Mr. Lenz, has your organization 
taken into consideration what happens if the courts determine 
that the President didn't have the authority--and I ask this 
question because I can't find where in the bill the President 
has the authority to delay the employer mandate. If a court 
finds oh, let us say, next September that the President didn't 
have that authority, you all have got the records, aren't your 
employers then responsible for going back in and reimbursing 
the costs of that health insurance to their employees that they 
thought they weren't mandated to provide but now they are if 
they hadn't provided something that would have been in 
compliance with ACA as of January 1, 2014?
    Mr. Lenz. Well, that would be quite a conundrum.
    Mr. Griffith. And isn't it a possibility, understanding 
that there is nothing directly authorizing the President to 
delay the employer mandate and recognizing that we do live in a 
litigious society?
    Mr. Lenz. We do indeed, sir.
    Mr. Griffith. And so this conundrum could be a great 
detriment to many employees in the United States, and isn't it 
also just one of the thousands of examples out there of why you 
are concerned about employers not knowing what the rules are 
and what they have to do and what is coming next as a part of 
this Act?
    Mr. Lenz. There are multiple opportunities for unforeseen 
consequences here.
    Mr. Griffith. There are indeed. There are indeed.
    I would go back to Mr. Graham. I was reminded when you were 
talking about the fraud--and I know you don't want to get on 
record as to what percentages are fraud or whether it will be 
more or less, and I understand that, but a friend of mine once 
explained to me, and I thought it made good sense, that locks 
are just there to help keep the honest men and women honest, 
and that that is why you have locks because if there is 
somebody who really wants to get into your house or get into 
your car, they are going to figure out a way to get in. And so 
doesn't it cause you some concern that we don't have proper 
locks in place on fraud when it comes to this particular Act 
and the various requirements that you say what your income is 
or don't say what your income is?
    Mr. Graham. When I ride my bicycle to work, I lock it up.
    Mr. Griffith. Yes, sir. I appreciate your answer.
    Mr. Chairman, unless somebody wants my last 30 seconds, I 
yield back.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentleman from Florida, Mr. Bilirakis, 5 minutes 
for questions.
    Mr. Bilirakis. Thank you so much. Thanks for holding this 
hearing. I apologize for being late. I was at the other 
hearing.
    A question for Mr. Lau. Did CMS, in any of your 
conversations, state why they waited until July to issue the 
contract?
    Mr. Lau. No, it was a competitive procurement, so I am not 
sure what----
    Mr. Bilirakis. Well, did they not know that paper 
processing was required when the exchanges would go online? Do 
you usually get contracts affecting 6.2 million people 3 months 
before it occurs?
    Mr. Lau. Well, this one was certainly more challenging that 
most in that regard in time spent.
    Mr. Bilirakis. Thank you.
    A question for Ms. Campbell. Ms. Campbell, can you talk 
about CGI's role in the exchange? Do you make all final 
decisions for yourself and the subcontractors?
    Ms. Campbell. I would be happy to discuss the role of CGI 
as our role on the exchanges. For us, I would like to equate it 
to sort of the face of the exchange. This is where an 
individual will be able to go into a portal, sign up, actually 
put in a profile, peruse the database or peruse the system to 
determine which plan is of interest to themselves. They will 
also be able to determine their eligibility through a series of 
questions, and then they will make their selection, and that is 
the portal that CGI is developing for the marketplace, or for 
the exchange.
    Mr. Bilirakis. Next question. Ms. Campbell, who is 
ultimately considered the integrator, or quarterback, for 
making sure the exchange works properly?
    Ms. Campbell. That would be CMS.
    Mr. Bilirakis. Thank you.
    Next question for Mr. Finkel. Will QSSI be offering the 
Data Services Hub after open enrollment on October 1st through 
2014?
    Mr. Finkel. No. As I stated, CMS will be operating the Data 
Services Hub once it goes live.
    Mr. Bilirakis. Another question. According to the Inspector 
General Office's report, it says that CMS's Chief Information 
Officers expects to make a security authorization on September 
30th. Is it responsible to make this decision so late in the 
process? The original timeline, as I understand, was September 
4th, the decision would be made. Can you comment on that?
    Mr. Finkel. I cannot comment on CMS and what they will 
approve and when. I can tell you that the Data Services Hub has 
gone through a security risk assessment that was completed on 
August 30th and we have no reason to believe why CMS cannot 
sign off on the Data Services Hub.
    Mr. Bilirakis. OK. Thank you very much, Mr. Chairman. I 
appreciate it. I yield back.
    Mr. Pitts. The Chair thanks the gentleman. That concludes 
the first round of questions. We will have one follow-up on 
each side. So Dr. Burgess, you have 5 minutes for follow-up.
    Mr. Burgess. Thank you, Mr. Chairman.
    Ms. Campbell, let me just ask you, in your testimony you 
referenced that your company has achieved all its milestones 
and the last one you referenced was the operational readiness 
review in September of 2013. Do I understand that correctly?
    Ms. Campbell. That is correct.
    Mr. Burgess. Is that something you can make available to 
the subcommittee?
    Ms. Campbell. I can make available our report that we 
submitted to CMS.
    Mr. Burgess. Can you make that--have you made it available 
to the committee?
    Ms. Campbell. We have not made that available to the 
committee.
    Mr. Burgess. Well, then I would ask that if you would make 
that available to the committee. Mr. Chairman, when staff gets 
that, I would appreciate the opportunity to review it.
    Mr. Graham, we talked just a little bit about de-scoping, 
and the reason this is important, and I am not just picking on 
this, but look, February 1st with the elysian fields of 
Obamacare still 11 months away, the window for application to 
the Federal preexisting program closed, and it closed rather 
suddenly without warning to the people who had been trying to 
go six months without health insurance to age into the program. 
So for almost a full year, the promise of coverage for 
preexisting conditions has been an empty, hollow promise. The 
caps on out-of-pocket expenditures was very quietly delayed for 
a year. Apparently the press picked it up here in the past 
month but it was something that actually happened much earlier 
in the year. Of course, we have had the discussions about the 
employer mandate being delayed. There have been other pieces of 
this apparatus that have sort of fallen into the barrage on the 
way to October 1st and January 1st. When you all talk together, 
when all of the smart minds who are in charge of the outsourced 
implementation, when you get together, are there things that 
you talk about and speculate about that may be the next to go 
or the next shoe to drop as far as the pieces of the Affordable 
Care Act that may go by the wayside?
    Mr. Graham. With respect to the de-scoping, when we look at 
what capabilities each of the State-based exchanges will have 
and which ones will be live on October 1 and those that are 
not, how long they will take to come up, we project that as in 
many IT implementations, it will be 3 or 6 months for many of 
those things to go.
    With respect to the law itself, there is a lot of talk 
about where that is. I don't know that I am the best to comment 
on that.
    Mr. Burgess. You are all I have got. You know, as we look 
at this group assembled in front of us, you are an impressive 
group, and there are some impressive contracts that go with the 
work that you sell to the Federal Government, and with all 
respect to the ranking member of the subcommittee, I mean, a 
local Meals on Wheels outfit being able to do what you all are 
doing and it has taken you months to do and hundreds of 
millions of dollars in some cases, is it really responsible to 
expect that some community organization is going to be able to 
accomplish what you all have been tasked to accomplish? I mean, 
anybody is free to answer that question. I should do like 
Chairman Dingell; I need a yes or no. I got no answer, so Mr. 
Chairman, I am going to assume that it is a no.
    Let me yield back the balance of my time in the interest of 
other members of the committee. If someone wants to claim it, 
they may do so.
    Mr. Pitts. Thank you. The Chair recognizes the ranking 
member for follow-up.
    Mr. Pallone. Thank you. I am glad Dr. Burgess brought up 
the navigators or, in my cases, the food bank issue. You know, 
again, I want to ask a question of Ms. Kraus, but I disagree 
totally in terms of who should be a navigator. I mean, I 
mentioned the Food Bank of Monmouth in Ocean County, which is 
one of a number of organizations or nonprofits in New Jersey 
that, you know, received a grant to act as a navigator and now 
has been subject to these what I consider intimidation tactics 
by the Republicans on the committee, but I totally disagree 
with Dr. Burgess.
    The Food Bank of Monmouth in Ocean County, which I am very 
familiar with in my district, took on this responsibility 
because they just get I don't know how many hundreds or 
thousands of people that come to the food bank on a regular 
basis and obviously a lot of them are uninsured and a lot of 
them are probably people who may be afraid to even admit that 
they are uninsured or go to a place to try to find insurance. 
And so I think they are an excellent organization that would 
actually be charged with trying to deal with the uninsured and 
navigate them so that they get insurance, and I think that the 
whole purpose of these grants is to try to find somebody who 
can play that role in a significant way, even if they don't 
have extensive background doing that. I commend them for taking 
on the role.
    But Ms. Kraus, my concern is that they may be intimidated, 
that resources are being taken away because they have to answer 
all these questions at the same time that there is no evidence 
of any wrongdoing or any predicate for this kind of time-
consuming and burdensome investigation that the GOP on this 
committee are going about, and, you know, these are small 
community-based groups. The timing, I think, was very 
suspicious, imposing a burden on these groups before the 
October 1st rollout. It is only a few weeks away.
    So can you offer some perspective on the importance of 
these navigators and the impact on implementation of the law if 
the Republicans ' intimidation disrupts their efforts? I am not 
asking you to say they are being intimidated but I know that 
some have already suggested that they might just not proceed 
because of the questions and all the paperwork.
    Ms. Kraus. Yes, I mean, look, 75 percent of those that are 
eligible for coverage have no idea that this is coming. The 
majority of them have never had access to health care before so 
a fundamental piece of the Affordable Care Act was to place 
community organizations in these local communities to help 
folks that might need a little extra help. They are not 
building IT infrastructure; they are there to help people kind 
of walk through the process and understand what health 
insurance means. In Pennsylvania, there are community 
organizations that have been helping folks for year: the 
Federally Qualified Health Centers, which folks walk into their 
office every day and they help them enroll in public assistance 
programs. So we are not reinventing new community 
organizations, and we need to be assisting these organizations 
to make sure they have their resources and the tools they need 
to reach constituents where they are and make sure they take 
advantage of the Affordable Care Act.
    Mr. Pallone. I appreciate that. And the other thing that I 
would point out, you know, New Jersey is another State where 
the Governor, wrongly, in my opinion, decided not to set up a 
State exchange, and the outreach efforts for those State are 
very limited. The fact of the matter is, if you didn't set up 
your own State exchange, a lot of the Federal dollars that 
would have gone to help you do that in terms of outreach are 
just not made available, and so it is particularly important 
that these community organizations be out there in this time 
period trying to sign people up, and I just--again, I know I am 
beating a dead horse here but I just feel that it was very 
wrong on the part of the Republicans on this committee to use 
these kind of tactics right now when we are really trying to 
sign people up, and these are community-based organizations 
that really have no ax to grind, they are trying to help 
people.
    Thank you very much. Thank you, Mr. Chairman.
    Mr. Pitts. That concludes the questioning. I would like to 
thank the witnesses for your testimony, for answering all the 
questions. There may be follow-up questions. We will ask that 
you please respond promptly as members submit those. I remind 
members they have 10 business days to submit questions for the 
record, and those questions should be submitted by the close of 
business on Tuesday, September 24th. Very important hearing, 
very important information. Thank you for your courtesy and 
your patience.
    Without objection, the subcommittee is adjourned.
    [Whereupon, at 12:22 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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