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


 
          PPACA IMPLEMENTATION: UPDATES FROM CMS AND GAO

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 31, 2014

                               __________

                           Serial No. 113-170
                           
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           



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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             JOHN A. YARMUTH, Kentucky
H. MORGAN GRIFFITH, Virginia
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Ohio
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina

                                 7_____

              Subcommittee on Oversight and Investigations

                        TIM MURPHY, Pennsylvania
                                 Chairman
MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
  Vice Chairman                        Ranking Member
MARSHA BLACKBURN, Tennessee          BRUCE L. BRALEY, Iowa
PHIL GINGREY, Georgia                BEN RAY LUJAN, New Mexico
STEVE SCALISE, Louisiana             JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi            G.K. BUTTERFIELD, North Carolina
PETE OLSON, Texas                    KATHY CASTOR, Florida
CORY GARDNER, Colorado               PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
BILL JOHNSON, Ohio                   JOHN A. YARMUTH, Kentucky
BILLY LONG, Missouri                 GENE GREEN, Texas
RENEE L. ELLMERS, North Carolina     JOHN D. DINGELL, Michigan (ex 
JOE BARTON, Texas                        officio)
FRED UPTON, Michigan (ex officio)    HENRY A. WAXMAN, California (ex 
                                         officio)

                                  (ii)
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Tim Murphy, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     3
Hon. Diana DeGette, a Representative in Congress from the State 
  of Colorado, opening statement.................................     4
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     6
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     7
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................    85
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, prepared statement....................    86

                               Witnesses

Andrew Slavitt, Principal Deputy Administrator, Centers for 
  Medicare and Medicaid Services.................................     9
    Prepared statement...........................................    11
    Answers to submitted questions...............................    90
William T. Woods, Director, Acquisition and Sourcing Management, 
  Government Accountability Office...............................    60
    Prepared statement...........................................    63
    Answers to submitted questions...............................    95

                           Submitted Material

Democratic Staff Report of July 2014, ``Benefits of the Health 
  Care Reform Law,'' Democratic Committee Members' Districts, \1\ 
  submitted by Ms. DeGette.......................................     5
Democratic Staff Report of July 2014, ``Benefits of the Health 
  Care Reform Law,'' Republican Committee Members' Districts, \1\ 
  submitted by Ms. DeGette.......................................     5
Article of July 17, 2014, ``Health Care Coverage under the 
  Affordable Care Act-A Progress Report,'' by David Blumenthal 
  and Sara R. Collins, The New England Journal of Medicine, 
  submitted by Mr. Green.........................................    37
Article of July 23, 2014, ``Health Refom and Changes in Health 
  Insurance Coverage in 2014,'' by Benjamin D. Sommers, Thomas 
  Musco, Kenneth Finegold, Munira Z. Gunja, Amy Burke, and Audrey 
  M. McDowell, The New England Journal of Medicine, submitted by 
  Mr. Green......................................................    44
Majority memorandum, submitted by Mr. Murphy.....................    87

----------
\1\ The fact sheets have been retained in committee files and 
  also are available at  http://docs.house.gov/Committee/
  Calendar/ByEvent.aspx?EventID=
  102587.


             PPACA IMPLEMENTATION: UPDATES FROM CMS AND GAO

                              ----------                              


                        THURSDAY, JULY 31, 2014

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:19 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Tim Murphy 
(chairman of the subcommittee) presiding.
    Members present: Representatives Murphy, Burgess, 
Blackburn, Gingrey, Harper, Gardner, Griffith, Johnson, 
Ellmers, DeGette, Braley, Schakowsky, Castor, Tonko, Yarmuth, 
Green, and Waxman (ex officio).
    Staff present: Mike Bloomquist, General Counsel; Sean 
Bonyun, Communications Director; Matt Bravo, Professional Staff 
Member; Leighton Brown, Press Assistant; Karen Christian, Chief 
Counsel, Oversight and Investigations; Noelle Clemente, Press 
Secretary; Brad Grantz, Policy Coordinator, Oversight and 
Investigations; Brittany Havens, Legislative Clerk; Sean Hayes, 
Deputy Chief Counsel, Oversight and Investigations; Emily 
Newman, Counsel, Oversight and Investigations; Jean Woodrow, 
Director of Information Technology; Phil Barnett, Democratic 
Staff Director; Peter Bodner, Democratic Counsel; Brian Cohen, 
Democratic Staff Director, Oversight and Investigations, and 
Senior Policy Advisor; Lisa Goldman, Democratic Counsel; 
Elizabeth Letter, Democratic Press Secretary; Karen Lightfoot, 
Democratic Communications Director and Senior Policy Advisor; 
and Matt Siegler, Democratic Counsel.

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

    Mr. Murphy. Good morning. I convene this hearing of the 
Subcommittee on Oversight and Investigations to review the 
implementation of the Patient Protection and Affordable Care 
Act. Our first witness this morning, Mr. Andy Slavitt, the 
Principle Deputy Administrator at the Centers for Medicare and 
Medicaid Services. This is Mr. Slavitt's first testimony as a 
CMS employee, but not his first appearance before this 
subcommittee. Some of you may recall that Mr. Slavitt appeared 
before us last October to testify on behalf of one of the 
contractors who built the Healthcare.gov site. So welcome back.
    Our ongoing concern about Healthcare.gov is one of the 
reasons that we are holding this hearing today. Exactly 1 year 
ago this week, members of this committee will remember that we 
heard from CMS Administrator Tavenner who told us that 
Healthcare.gov would be ready on October 1. We were told that 
it would work, everything we be fine. And later, we found out 
that that wasn't quite the same thing. In fact, the contractors 
told us the same thing, that it would be working.
    Our reviews of the Web site were brushed aside. But we know 
how our fears of a massive flop were well-founded. The rollout 
of the Affordable Care Act was an unmitigated disaster. I think 
everybody agrees with that.
    So, Mr. Slavitt, we are hoping to hear from you today 
candidly and honestly about how things are progressing. And, 
frankly, we hope we hear with the same candor from you as an 
administration official that we heard last fall when you 
testified on behalf of QSSI, the company that built the hub for 
Healthcare.gov.
    Mr. Slavitt's new role also comes at an opportune time for 
the administration to address the systemic problems that led to 
the Healthcare.gov disaster. After Mr. Slavitt's testimony, we 
will hear from William Woods with the Government Accountability 
Office. Today, the GAO has released a review of the failed 
October 1 launch of Healthcare.gov, confirming what this 
committee learned during its own review of the Web site, the 
administration didn't have the expertise, couldn't meet 
deadlines and didn't have the leadership or organizational 
skills to manage this massive undertaking. And GAO also has 
given us a price tag for this boondoggle, a broken Web site 
that the President promised would be as easy to use any an 
ecommerce site, cost the taxpayers nearly $1 billion. That took 
a lot of taxpayers' money from their hard-earned paychecks to 
come up with that 1 billion, and many taxpayers aren't happy 
about that.
    We will also hear from the GAO that these costs are still 
going up. Some of my colleagues may whine and complain that we 
are spending too much time examining the failed Web site 
launch. I am not surprised. They don't want to talk about it. 
But the reality is these problems are still playing out, and 
may impact this fall's open enrollment period.
    We still do not know if the administration has a system in 
place capable of handling inconsistencies, inaccurate 
subsidies, web security, or whether CMS will ever put in place 
a functioning payment system.
    We will ask today about the Healthcare.gov contracts and 
the GAO report. But as we head into open enrollment this fall, 
patients and families need to know how this law will affect 
them because, each day, the ACA is making our healthcare system 
more expensive, fragmented, and restrictive.
    Earlier this summer, insurers were required to notify the 
administration plans for premium rates in 2015. We hope that 
witnesses today will provide information on the rates that have 
been submitted, when the public will know them with enough time 
to plan for their purchase, and whether the public will ever 
see $2,500 in savings that the President promised.
    Speaking of promises, we also want to know if Americans 
will be able to keep their doctor and if they were able to keep 
their plan if they liked it. Earlier this year, this committee 
heard testimony from representatives of the insurance industry 
who noted that the requirements in the healthcare law required 
the cancellation of millions of policies. We hope to hear 
whether the administration predicts widespread cancellations 
and uncertainty again this fall.
    And it is not only individual plans that we are concerned 
about. Last week, the IRS finally began releasing information 
related to the enforcement of the employer mandate. This may be 
surprising to many. The administration has after all delayed 
this several times. But it certainly raises questions about 
what will happen when one of the law's most controversial 
pieces finally goes into effect.
    Finally, I remain concerned about the overall impact of 
this law. Millions of Americans had their health insurance 
cancelled because of the law only to find that the plans they 
are now forced to buy are much more expensive in premiums, 
copays, deductibles or all the above. Some people may qualify 
for subsidies and others do not. At the same time, the law's 
massive cost and destructive impact on the economy will 
continue to be felt for years.
    I again thank both the witnesses for testifying.
    [The prepared statement of Mr. Murphy follows:]

                 Prepared statement of Hon. Tim Murphy

    Our first witness this morning is Mr. Andy Slavitt, the 
Principal Deputy Administrator at the Centers for Medicare and 
Medicaid Services. This is Mr. Slavitt's first testimony as a 
CMS employee, but not his first appearance before this 
subcommittee--some of you may recall that Mr. Slavitt appeared 
before us last October to testify on behalf of one of the 
contractors who built HealthCare.gov.
    Our ongoing concern about HealthCare.gov is one of the 
reasons that we are holding this hearing today. Exactly 1 year 
ago this week, members of this committee will remember that we 
heard from CMS Administrator Tavenner, who told us that 
HealthCare.gov would be ready on October 1. The contractors 
told us the same thing. Our reviews of the Web site were 
brushed aside, but we know how our fears of a massive flop were 
well-founded. The roll-out of the Affordable Care Act was an 
unmitigated disaster. So, Mr. Slavitt, we hope to hear from you 
today about how things are progressing--and frankly, we hope to 
hear the same candor from you as an administration official 
that we heard last fall when you testified on behalf of QSSI, 
the company that built the hub for HealthCare.gov.
    Mr. Slavitt's new role also comes at an opportune time for 
the administration to address the systemic problems that led to 
the HealthCare.gov disaster. After Mr. Slavitt's testimony we 
will hear from William Woods with the Government Accountability 
Office. Today, the GAO has released a review of the failed 
October 1st launch of HealthCare.gov confirming what this 
committee learned during its own review of the Web site: The 
administration didn't have the expertise, couldn't meet 
deadlines, and didn't have the leadership or organizational 
skills to manage this massive undertaking. And GAO also has 
given us a price tag for this boondoggle. A broken Web site 
that the President promised would be as easy to use as any e-
commerce site cost the taxpayers nearly $1 billion. And we'll 
also hear from GAO that these costs are still going up.
    Some of my colleagues may whine that we're spending too 
much time examining the failed Web site's launch. I'm not 
surprised they don't walk to talk about it, but the reality is 
these problems are still playing out and may impact this fall's 
open enrollment period. We still do not know if the 
administration has a system is in place capable of handling 
inconsistencies, inaccurate subsidies, or whether CMS will ever 
put in place a functioning payments system.
    We will ask today about HealthCare.gov contracts and the 
GAO report, but as we head into open enrollment this fall, 
patients and families need to know how this law will affect 
them because each day, the ACA is making our health care system 
more expensive, fragmented, and restrictive. Earlier this 
summer, insurers were required to notify the administration of 
plans for premium rates in 2015. We hope the witness today will 
provide information on the rates that have been submitted, when 
the public will know them with enough time to plan for their 
purchase, and whether the public will ever see the $2,500 in 
savings that the President promised.
    Speaking of promises, we also want to know if Americans 
were able to keep their doctor and if they were able to keep 
their plan if they liked it. Earlier this year, this committee 
heard testimony from representatives of the insurance industry 
who noted that the requirements in the health care law required 
the cancellation of millions of policies, and we hope to hear 
whether the administration predicts widespread cancellations 
and uncertainty again this fall.
    And it is not only individual plans that we are concerned 
about. Last week the IRS finally began releasing information 
related to the enforcement of the employer mandate. This may be 
surprising to many--the administration after all has delayed 
this several times--but it certainly raises questions about 
what will happen when one of the law's most controversial 
pieces finally goes into effect.
    Finally, I remain concerned about the overall impact of 
this law. Millions of Americans had their health insurance 
cancelled because of the law, only to find that the plans they 
are now forced to buy are much more expensive. Some people may 
qualify for subsidies, others do not. At the same time, the 
law's massive cost and disruptive impact on the economy will 
continue to be felt for years. I again thank both the witnesses 
for testifying and now recognize the ranking member for 5 
minutes.

    Mr. Murphy. And now recognize the ranking member for 5 
minutes.

 OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Ms. DeGette. Thank you so much, Mr. Chairman. Well, I have 
got to say, I don't really think we could go on August recess 
without having another hearing on the Affordable Care Act, 
because this is now the twelfth one we have had in the last 10 
years. As I have been saying the last couple years, the ACA 
Oversight is a really important topic, but I would feel a whole 
lot better if we were actually doing oversight on what is 
happening now with the ACA instead of just rehashing old issues 
over and over again.
    You are right. We will stipulate the rollout of the ACA was 
an unmitigated disaster. But I guess I would like to know how 
long we are going to keep beating this drum? Because when you 
look at what has happened since the unmitigated disaster of the 
rollout, things are actually improving. And just about every 
prediction that was made about the law has turned out to be 
wrong once we got going. So I think we should spend our time 
trying to figure out how to make the law work even better for 
the millions of Americans who are now enrolling and getting 
health insurance.
    So in the last year, we had hearings where the majority 
insisted that Americans would be hit by insurance rate shock. 
Instead, the majority of new enrollees in ACA coverage are 
paying less than $100 a month. The majority insisted that the 
broken Healthcare.gov Web site would never be fixed, but thank 
goodness it was. And millions of Americans used it to sign up 
for coverage. They insisted that many Americans would not pay 
for coverage once they signed up. But the insurers all came in 
here and told us that was not correct that people in fact were 
paying. They insisted that 2015 premiums would skyrocket. But 
again, that is proving not to be true. In fact, in many cases, 
enrollees will be able to reduce their premiums next year. They 
insisted that Americans did not want or need health insurance 
coverage. But over 20 million Americans have received coverage 
under the ACA, and the un-insurance rate has dropped 
precipitously since January. The vast majority of new enrollees 
are happy with their plans.
    Now, these are important facts, Mr. Chairman. And in the 
interest of making the hearing as fact-based as possible, I 
want to talk about some fact sheets released earlier today by 
the Energy and Commerce Democratic staff on the benefits of the 
Affordable Care Act in every congressional district in the 
country. I would ask unanimous consent to enter the fact sheets 
for each committee member into the record, Mr. Chairman.
    Mr. Murphy. Without objection, so ordered. \1\
---------------------------------------------------------------------------
    \1\ The fact sheets have been retained in committee files and also 
are available at  http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=102587.
---------------------------------------------------------------------------
    Ms. DeGette. Thank you. And I just want to talk about some 
of the benefits of the law in my home State of Colorado.
    In Colorado, there are 240,000 State residents who were 
previously uninsured but who now have quality affordable health 
coverage because of the Affordable Care Act. In Colorado, our 
uninsured State residents has declined by about a third. Almost 
2.1 million people in Colorado, including 460,000 children and 
860,000 women, now have health insurance that covers 
preventative services without any copayments or deductibles. 
Fifty thousand young adults in Colorado retained health 
coverage through their parent's plans. More than 40,000 seniors 
have received Medicare Part D drug discounts worth $118 
million. 1.8 people in Colorado are protected by ACA provisions 
that prevent insurance companies from spending more than 20 
percent of their premiums on profits and administrative 
overhead. Because of these protections, over 210,000 
individuals in the State received approximately $41.7 million 
in insurance company rebates. Up to 294,000 children in 
Colorado with preexisting health conditions can no longer be 
denied coverage by insurers.
    So even if you disagree with the law, it is important to 
note that the ACA is helping our constituents. I hope we can 
end these relentless attacks and we can help more constituents 
obtain coverage under the law.
    We should look at the example for Medicare Part D. I can 
attest to it, because I was here. Many Democrats, including me, 
did not vote for the law and had real concerns about how it was 
implemented. But we still had town hall meetings and other 
events so that our seniors got coverage that cut their drug 
costs. I hope we can work, as we look into the next year, in a 
bipartisan way to make the ACA even better, instead of trying 
to find ways to undermine and repeal it.
    Now, I appreciate the witnesses coming today. I know GAO 
has some important insights into CMS contracting for 
Healthcare.gov. And anything we can do to improve that 
contracting is good for me. I hope CMS has learned from the Web 
site's flawed launch. And I want to know the plan to make sure 
they do better moving forward.
    And I want to welcome you, Mr. Slavitt. You are new to CMS. 
You will have primary responsibility for the Web site. So I 
hope you can tell us what you plan to do in 2015.
    Thank you, Mr. Chairman.
    Mr. Murphy. The gentlelady's time has expired. I now 
recognize Dr. Burgess for 5 minutes.

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

    Mr. Burgess. I thank the chairman for the recognition, 
thank Mr. Slavitt for joining us here again at our 
subcommittee.
    You know, throughout the development and the rollout of 
Healthcare.gov, this subcommittee had repeated assurances that 
the systems were and would be ready to go, and that the 
implantation was on track. At a hearing in September, literally 
days before the October 1 launch of Healthcare.gov, we had 
repeated assurances from the then director of the Center for 
Consumer Information and Insurance Oversight, Mr. Gary Cohen. 
He said unambiguously that on October 1, Americans would be 
able to go online, would be able to see premium net of subsidy, 
and would be able to sign up. We all know now that those 
assertions were fact-challenged.
    The Center for Medicare and Medicaid Services undertook 
this mammoth project without effectively planning for its 
development or its oversight. This has led to hundreds of 
millions of taxpayer dollars being wasted. Again, Gary Cohen 
and other HHS officials told us time and again that the Web 
site was working. That was factually incorrect. It was not 
working. And it still may not be working, because the back-end 
systems, those systems that are responsible for actually paying 
providers, have not been built.
    Consumers may believe the Web site is fixed because some of 
the frontend problems have been addresses. But there is no way 
to verify inaccuracies about things like citizenship and income 
level, or insure that the correct subsidies are being paid for 
insurance premiums.
    Thanks to this investigation, we now have definitive proof 
that the Department of Health and Human Services was fully 
aware that these systems were not ready for prime time. Their 
own contracting documents show that they only expected 65 
percent of the Federal exchange to be ready on October 1. And 
then, of course, we are continuously reminded that the promises 
made by the administration simply could not be kept because the 
groundwork had not been done and the Web site was not prepared. 
We are all still wondering what happened to the promised $2,500 
in premium savings that every family in America could look 
forward to. We are all wondering what happened to the ability 
for people to keep their doctors. We are all wondering what 
happened to the ability for people to be able to keep their 
insurance plan.
    Now, Mr. Slavitt, Mr. Cohen also was asked at his last 
appearance here in January about the issue on the risk 
corridors and risk sharing. The question came up about what if 
there is not enough money in the risk corridor to actually 
cover the premium shortfalls that the insurance companies are 
experiencing. And would he look to--that was Mr. Cohen--would 
he look to supplementing those funds from general revenue of 
the Treasury of the United States. He couldn't answer the 
question. I asked him if he could provide us with a legal 
memorandum upon which he relied to obtain the ability to get 
funding from other sources if the internal funding was not 
enough to cover the cost of the risk corridors. That was 
January. I am still waiting. I would like to know if I am going 
to receive an answer to that question. And if so, when that 
answer might be forthcoming.
    The fact of the matter is, both the Department of Health 
and Human Services and the White House failed to heed internal 
and external warnings about the lack of readiness of the 
exchanges. Now, we have the General Accountability Office 
report. And it is astonishing to see that after all the money 
has been spent, not all of it wisely, the Agency continues to 
ignore recommendations and continues to pump money into what 
may be a futile effort.
    We are well on track to sink over $1 billion into the 
development of this Web site. We have very little to show for 
our money. I am eager for the testimony of the witnesses today. 
I thank the chairman for the recognition. I will yield back the 
time.
    Mr. Murphy. The gentleman yields back. I now recognize the 
ranking member of the full committee, Mr. Waxman, for 5 
minutes.

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

    Mr. Waxman. Thank you very much, Mr. Chairman.
    This is the twelfth hearing this committee has held on the 
Affordable Care Act since enrollment began in October 2013. 
These hearings, if you look at them, all have one purpose: to 
undermine the Affordable Care Act regardless of the facts. The 
hearings have misled the public and I think squandered 
taxpayers' dollars. In fact, the Affordable Care Act is a 
historic success. It has made comprehensive healthcare reform a 
reality for the American people. More than 8 million people 
have signed up for private health insurance plans through the 
Federal and State marketplaces, exceeding CBO's enrollment 
estimates by over a million people.
    An additional 6.7 million individuals have enrolled in 
Medicaid or the CHIP program as of May of this year. Three 
million young adults under the age 26 have enrolled in their 
parent's health insurance plans. And the fact sheets the 
Democrats put out from our staff reveal that in my district 
alone, if I can be parochial, 17,000 residents who were 
previously uninsured now have quality affordable health 
coverage because of the Affordable Care Act.
    So I am giving some perspective that the law has been a 
success. It is accomplishing what Congress and President Obama 
intended. Instead, we have another hearing of this committee, 
or another subcommittee of this full committee, trying to say 
how the Affordable Care Act has problems and did things wrong 
and presumably should lead us to the conclusion it should be 
repealed.
    Well, in a lawsuit, there is a word called stipulate. We 
can stipulate to what the GAO has reported. And they have 
reported some things that for which we ought to be concerned. 
Because despite the success of the law, the initial rollout of 
Healthcare.gov had serious flaws. And I'm glad we are going to 
hear from GAO, the Government Accountability Office, on their 
investigation of Healthcare.gov contracting. We should always 
try to learn from mistakes, not dwell on them but learn from 
them. And I am glad that Mr. Slavitt is here to tell us what 
the administration has learned and what is being changed as a 
result.
    I have had experience with flawed contracts. I was the 
chairman of the Oversight Committee. And we released a report 
that identified nearly 200 contracts worth over a trillion 
dollars that involved significant waste, fraud, abuse, or 
mismanagement. The FBI had a contract to create a virtual case 
file system that had to be cancelled after spending over $100 
million. The Department of Homeland Security's contract to 
build a high-tech border fence--that was supposed to keep out 
all these immigrants, and we are still having problems--that 
fence had to be canceled after wasting a billion dollars. The 
Coast Guard had a multibillion-dollar deep water contract to 
build boats that would not float.
    My point is not to excuse the Healthcare.gov problems, but 
to put them in context. With the exception of Tom Davis, 
Congressional Republicans showed little interest in these 
enormous wastes of taxpayers' dollars when George W. Bush was 
President. I think we should care about waste, fraud. and abuse 
no matter who is President. And I am proud that Healthcare.gov 
was fixed quickly. Not as quickly as I would have liked, but 
fixed nevertheless and in time to help millions of Americans 
enroll for insurance coverage.
    But I want to learn what went wrong so CMS can do a better 
job for the next time, not the way the Republicans handle this, 
see we told you so. There are problems, we told you there would 
be problems. OK. And then their conclusion is, repeal it so 
they can replace it. But they have never given us a 
replacement. Well, people are getting insurance who couldn't 
get it in the past because they had preexisting medical 
conditions. People are finding that their insurance can't be 
canceled on them after they have paid just because they got 
sick. Women are not discriminated against. People who couldn't 
afford it can now get insurance because we give them tax breaks 
in order to pay for it.
    So I am eager to learn what the Agency is doing so 
enrollment in 2015 goes more smoothly. We have unequivocal 
proof that healthcare reform is a success. We now need to make 
the 2015 enrollment period as smooth as possible so we can 
build on the success. Let us go toward trying to make things 
better, not dwell on things that were wrong, especially if you 
learned the lessons and fixed the problems.
    Mr. Murphy. The gentleman's time has expired. Just a 
message to members and to our folks giving testimony today: We 
are expecting votes around 10:30, 11:00--10:25, 10:40, I should 
say. And so we are going to try to go through this. I will have 
a quick gavel and ask all members really to stick with their 5 
minutes as we go through this, or I will really bang it hard. 
And then we will move forward. If we need to be interrupted by 
votes, we will come back right after votes to complete things.
    So now I would like to introduce the witness on the first 
panel for today's hearing. Mr. Andy Slavitt is the Principal 
Deputy Administrator for the Centers for Medicare and Medicaid 
Services. In his new role, he will be responsible for agency 
wide policy and operational program coordination as part of a 
new management structure that comes in response to lessons 
learned from the rollout of Healthcare.gov and recommendations 
put forth to the secretary.
    I will now swear in the witness. Are you aware that the 
committee is holding an investigative hearing, and when doing 
so has the practice of taking testimony under oath? Do you have 
any objections to testify under oath?
    Mr. Slavitt. No, I don't.
    Mr. Murphy. And the Chair advises you that under the rules 
of the House and rules of the committee, you are entitled to be 
advised by counsel. Do you desire to be advised by counsel 
during today's testimony?
    In that case, would you please rise, raise your right hand? 
I will swear you in.
    [Witness sworn.]
    Mr. Murphy. Thank you. The witness answered the 
affirmative, so you are now under oath and subject to the 
penalties set forth in Title XVIII, Section 1001 of the United 
States Code. You may now give a 5-minute summary of your 
written statement, Mr. Slavitt.

 STATEMENT OF ANDREW SLAVITT, PRINCIPAL DEPUTY ADMINISTRATOR, 
           CENTERS FOR MEDICARE AND MEDICAID SERVICES

    Mr. Slavitt. Good morning, Chairman Murphy, Ranking Member 
DeGette, and members of the subcommittee. I am Andy Slavitt, 
Principal Deputy Administrator of CMS.
    I joined CMS 3 weeks ago from the private sector where I 
spent the last 20 years principally working with physicians, 
hospitals, health plans, and employers on solutions to problems 
of healthcare cost, quality, and access. In the private sector, 
I both started my own healthcare technology business and run 
larger scale health services organization with more than 30,000 
employees.
    In late October of last year, I began my involvement with 
the Affordable Care Act implementation when I joined a group of 
people helping the CMS team on the turnaround effort of the 
health insurance marketplace. I am very pleased to appear 
before you today. And before answering your questions, I will 
briefly walk you through some of the progress of the Affordable 
Care Act to date and talk about our priorities for the coming 
period.
    There is growing evidence that suggests that the Affordable 
Care Act is making a difference in the lives of millions of 
Americans. In the first full year, millions of Americans 
selected a private insurance plan through the State or Federal 
health exchange marketplace, and millions more have retained 
coverage on their parents' policies or have qualified for 
Medicaid or CHIP.
    In addition, we are seeing historically low growth in 
overall health spending, which has continued into 2014. This is 
good news for consumers with the typical premium paid for a 
policy purchased in the marketplace under $100, and good news 
for taxpayers as the recent Medicare Trust Fund report shows. 
And, importantly, this success is not being achieved by 
Government policy alone, but in partnership with the private 
sector as insurers grow by competing to provide better access 
to quality affordable services.
    Now, as we move into our second year of marketplace 
implementation, we must build on the progress that is underway 
and heed the lessons of the last year. Let me outline for you 
our highest priorities. First, we are focused on increasing the 
value consumers get when they come to the marketplace. This 
means continuing to improve the information, plan options and 
affordability of the shopping experience.
    Second, we have critical technical and operational 
priorities. We must continually add automation. That has begun 
with critical releases this summer and will continue this year 
and in following years. While the consumer facing Web site is 
of course live, we are adding functionality to allow consumers 
to easily renew their coverage. Whether on the consumer-facing 
side or the back end, our technology improvements will be more 
continuous and more incremental. We have a very strong sense of 
our critical path. Our software releases so far have been on 
time, and we are managing these deliverables daily.
    Third, let me address our management priorities to improve 
execution. As part of the turnaround team, I experienced 
firsthand the challenges of the first year of marketplace 
implementation. And at CMS, I am now helping to oversee a 
series of changes to improve the management of the marketplace. 
As Secretary Burwell announced in June, we have created clear, 
top-down accountability. We have also improved the management 
end of, and communication with, our key contractor with better 
defined requirements, metrics driven contract reviews, and 
requirements for skinning the game. We have expanded our 
testing protocols and built more testing into the schedule.
    Even as we address the major concerns from last year, new 
ones will emerge. And our management structure and team must 
surface and address issues in a disciplined manner, just as we 
did during the turnaround.
    This coming year will be one of visible and continued 
improvement, but not perfection. We are in the early stages of 
a program newly serving millions of consumers and are still 
learning about the best ways to support their unique needs. And 
we are setting up and testing new processes and new 
technologies along the way.
    From my experience at this stage, businesses begin to see 
how closely their design matches the battle tested needs of the 
market. Good organizations focus, prioritize, and learn and 
continuously improve their operations and the services they 
provide. It is not always easy, but we understand what we need 
to do and are making the right progress to have a successful 
open enrollment, and continue to deliver on the promise of the 
Affordable Care Act to improve healthcare access, cost and 
quality for all Americans.
    Thanks, and I look forward to your questions.
    [The prepared statement of Mr. Slavitt follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Murphy. Thank you. I appreciate your comments and 
appreciate your candor here before, because my very first job 
when I was a young man was mucking out horse stalls. And I felt 
like the difference between--but what I got to do was I got to 
ride the horses. So it was a nice reward. The difference 
between that job and this job is I don't get to ride the horses 
anymore. So I appreciate your honesty and candor in this. And I 
want to ask you some questions on those lines. You may recall 
that a year ago, Congress was told repeatedly the 
Healthcare.gov Web site was fine, it was ready. The months, 
days and weeks leading up to it, everything was ready to go. 
And the President said it would mirror the public's experience 
with other Web sites. So we have to ask, will Healthcare.gov be 
fully ready this fall?
    Mr. Slavitt. Thank you, Chairman. So I obviously wasn't 
here last year. It does sound like, certainly from the GAO 
report that I have seen, that a couple of things happened. 
First, the technology build was certainly bigger and more 
complicated than people expected. And I think the scope 
expanded because of that. And, secondly, as the GAO pointed 
out, there were some significant issues with the management of 
the project.
    Mr. Murphy. But for the future? Because you said it 
wouldn't be perfection. So are there going to be hiccups this 
fall, too?
    Mr. Slavitt. I am sorry?
    Mr. Murphy. Are there going to be some hiccups in the Web 
site implementation this fall?
    Mr. Slavitt. I think this year, we are in a vastly 
different situation. For one, we have a Web site that is 
already up and live and running.
    Mr. Murphy. Yes.
    Mr. Slavitt. We are adding continued improvements. And we 
are adding them in a much less risky fashion. We are doing 
releases frequently over the course of the summer, putting 
things live into production. We have built in a big testing 
window. So, you know, everybody will remain on their toes and 
nervous. Everybody knows what they need to do.
    Mr. Murphy. But I----
    Mr. Slavitt. But we are expecting to have a good open 
enrollment.
    Mr. Murphy. But the GAO said there were still significant 
risks for the next open enrollment period. So you are saying 
everything is going to be fine and ready?
    Mr. Slavitt. I think our job is to manage those risks, 
understand those risks, surface them and----
    Mr. Murphy. I don't want to take out my shovel. I just want 
to know--because if there is going to be problems, I would much 
rather you just tell the committee, ``Look, we anticipate these 
problems, here is the actions we are taking to move forward.'' 
I think the whole committee would appreciate that so we don't 
have to get caught up in this guess game.
    Mr. Slavitt. Yes. Sure. Well, I expect that it won't be 
perfect with serving millions of people.
    Mr. Murphy. OK.
    Mr. Slavitt. There are certainly difficult situations. 
People are--many of them are enrolling in insurance for the 
first time. It is a bumpy process at times. I think we have got 
a committed team of people though that by and large are doing a 
very good job, but there will clearly be bumps.
    Mr. Murphy. Any anticipation how many more people you will 
be enrolling in the fall, or how many will be enrolling for the 
first time?
    Mr. Slavitt. I don't know that.
    Mr. Murphy. Do you know in terms of your review of this, so 
far of those who have enrolled how many of those have enrolled 
for the first time?
    Mr. Slavitt. I have only seen the media reports, which I 
can't pull a number. But it was, I think, far greater than a 
half. But I have only seen that in the media.
    Mr. Murphy. When Secretary Sebelius was here before, I 
asked her a series of questions. I will repeat those to you. 
But I asked her how many were new. How many were people who 
previously had insurance and got a pink slip and was 
discontinued. How many were people who were newly eligible 
because of Medicaid. And of all those who signed up, how many 
were paying the same, less, or more.
    Mr. Slavitt. Um-hum.
    Mr. Murphy. And she said really the Web site has no way--
there is no way of knowing any of those things. Would you agree 
that is true?
    Mr. Slavitt. Yes. I think that data is not yet known by us. 
I think we are getting a bead on what premiums people are 
paying. So that is good. We have a sense that there is good 
affordability offered to----
    Mr. Murphy. But when we see these numbers on how many 
people signed up--10 million, 11 million, whatever it is--
compared to the 45 million for which there was a need for 
health insurance, we really still don't know how many of that 
original 40, 45 million are served new by this.
    Mr. Slavitt. So the Administrator has a chart in her 
office, which she calls her prettiest picture, and it is a 
graph of the uninsured rate over time. And it shows a drop to 
13 percent----
    Mr. Murphy. So is that specifically reviewed by your office 
or by HHS to specifically look at people who are uninsured 
before and now are insured? Because you just told me that you 
can't really determine that, and Secretary Sebelius told me 
there was no way of knowing that.
    Mr. Slavitt. Yes. There is no way to determine that from 
the Web site.
    Mr. Murphy. OK.
    Mr. Slavitt. We do know the uninsured rate from the recent 
Gallup Report is down to 13 percent.
    Mr. Murphy. Have you tried to sign up for one of the plans 
on the Web site?
    Mr. Slavitt. I have--now that I am a Federal employee, I am 
in the FEHBP Blue Cross plan.
    Mr. Murphy. So you don't have to be in the Affordable Care 
Act yourself?
    Mr. Slavitt. I am a Federal employee.
    Mr. Murphy. Yes, well OK. And I am just curious, have you 
also reviewed with people if they have tried to access their 
physicians? The plan allows an initial visit and some other 
preventative care--not as much preventative care as I would 
like. But have you surveyed persons to find out if they have 
been able to see their physicians for follow-up appointments, 
their costs for example--to review their costs, their payment 
levels, their copay, their deductibles, have you reviewed any 
of those things? And----
    Mr. Slavitt. I will have to get back to you on that. I 
don't think we have any hard data, but I can certainly look and 
try to follow-up.
    Mr. Murphy. Thank you. I will keep track of time here. And, 
Ms. DeGette, you are recognized for 5 minutes.
    Ms. DeGette. Thank you, Mr. Chairman.
    So I agree that it is important to make the Federal 
exchange Web site, and also the States, work as well for 
people. And I am sure, Mr. Slavitt, you agree with that too, 
don't you?
    Mr. Slavitt. Yes, I do.
    Ms. DeGette. And we want to make it as easy as we can for 
people to enroll. And especially as we reenroll in the 2015 
plans, is that correct?
    Mr. Slavitt. That is correct, Congresswoman.
    Ms. DeGette. Now--up till now, even despite the admitted 
problems with the Web site, 8 million people enrolled in the 
marketplaces, is that correct?
    Mr. Slavitt. Correct.
    Ms. DeGette. And about 6.7 million enrolled in the Medicaid 
expansion, is that right?
    Mr. Slavitt. That is right.
    Ms. DeGette. So, obviously, people were able to utilize 
those Web sites to get health insurance, is that right?
    Mr. Slavitt. That is correct.
    Ms. DeGette. Now, I was looking at the part of the GAO 
report, and the GAO made five recommendations in the report. 
Are you aware of that?
    Mr. Slavitt. Yes, I am.
    Ms. DeGette. And what is your opinion of those 
recommendations?
    Mr. Slavitt. We agree with most of those recommendations.
    Ms. DeGette. Which ones done you agree with?
    Mr. Slavitt. I think the only thing in the GAO report that 
I think needs a little further clarification--it is not that I 
don't necessarily agree with it, it is the characterization of 
the Accenture contract. And I think it was characterized as 
ballooning in cost when in fact I think the Accenture contract 
was--there was an initial contract before the work was 
completely scoped----
    Ms. DeGette. OK. Let me stop you, because that was one of 
their findings. But that wasn't one of their recommendations.
    Mr. Slavitt. Correct.
    Ms. DeGette. Their recommendations----
    Mr. Slavitt. So I agree with all their recommendations.
    Ms. DeGette. You agree with all five of their 
recommendations. And what steps are you taking to implement 
those recommendations?
    Mr. Slavitt. So we are doing a number of things. First of 
all, in the contracting front, it is very clear now who can 
give work to Accenture, how work gets approved, how that 
contract gets managed and, frankly, importantly, Accenture has 
skin in the game to make sure that they deliver. Again, I 
wasn't here last year, so I can't speak precisely to how the 
project was managed. But I can tell you that, now, there is 
daily intensive management of the project. The risks and issues 
and concerns are also surfaced and dealt with. We have built 
early warning indicators, and there is an accountability 
difference that I think is very significant.
    Ms. DeGette. Are you looking at the interoperability issues 
as well? That was one of the problems we had before.
    Mr. Slavitt. There are, as you point out, Congresswoman, 
many different pieces of this project in order to go well. And 
so the coordination and the systems integration is something 
that I think was missing last year. And it is in place this 
year.
    Ms. DeGette. Now, are you doing anything that goes beyond 
the recommendations in this GAO report, Mr. Slavitt?
    Mr. Slavitt. Yes. Well, fortunately or unfortunately, the 
GAO report wasn't news to the people at CMS. I think the people 
at CMS, who worked awfully hard but lived through that 
nightmare, don't want to go through that again. So I think 
actions were underway well before seeing this report. And I 
think they fall into the categories that I have talked about: 
contracting reform, technical and managerial oversight, focused 
and disciplined project management.
    Ms. DeGette. Now, we keep hearing about how expensive the 
cost overruns and everything else in setting up Healthcare.gov 
were. Just as an aside, Mr. Chairman, I would like to know how 
much this lawsuit against the President is going to cost. But 
be that as it may, Mr. Slavitt, I want to ask you do you think 
we are going to be protected from cost overruns for the 2015 
enrollment period?
    Mr. Slavitt. So again, I wasn't here last year. But the two 
things that went wrong last year, one of them actually was 
simply the inability for anybody, and quite reasonably so--and 
this happens in the private sector--to estimate how big this 
project is and how complex it is. We have got a better handle 
on that now. I don't expect those overruns.
    Secondly, to the point of the GAO report, the contractor 
wasn't managed tightly with clear deliverables and 
requirements. That has been put to bed as well. So those two 
things are in much, much better shape.
    Ms. DeGette. And were you aware--one last question. Were 
you aware that the uninsured rate in this country dropped 25 
percent after the implementation of Healthcare.gov and the full 
implementation of the ACA?
    Mr. Slavitt. Yes. Yes, Congresswoman, that sounds right.
    Ms. DeGette. Thank you. I will yield back, Mr. Chairman.
    Mr. Murphy. I will recognize Mr. Harper for 5 minutes.
    Mr. Harper. Thank you, Mr. Chairman. And thank you for 
being here today. And I have a couple of questions I would like 
to ask.
    First of all, who is performing the role of systems 
integrator now? Who is doing that?
    Mr. Slavitt. Optum. The firm is Optum.
    Mr. Harper. OK. I am sorry.
    Mr. Slavitt. My prior company.
    Mr. Harper. And so who has that role now?
    Mr. Slavitt. Optum. The firm Optum does.
    Mr. Harper. OK.
    Mr. Slavitt. Plays that role.
    Mr. Harper. I got you. Yes. Some questions I would like to 
ask about some reports. Early this summer, we learned that 
there were nearly 4 million inconsistencies in the applications 
submitted via Healthcare.gov. Those inconsistencies are 
primarily for citizenship status or income. The failure to 
calculate these properly could mean that millions of Americans 
could have to pay back incorrectly calculated subsidies. So 
earlier this summer, it was reported that there were millions 
of these. First of all, how did this happen? And can't the Web 
site check for accuracy?
    Mr. Slavitt. Sure. So I appreciate the question. 
Inconsistencies occur because of the changes that occur in 
peoples' lives. And people end up having more current 
information than Government databases. So we ran last year, 
during open enrollment, hundreds of millions of checks against 
Government databases to check on income and citizenship status 
and so forth. And in some occasions where people particularly 
are in low-wage jobs, they are in seasonal work and other kinds 
of circumstances, their income is unpredictable. Or in other 
cases, they haven't file taxes before because they haven't made 
enough money. So what happens when that happens--and just to 
give you a perspective on this, for a typical family of four, 
there are 21 records searched through our automated process. If 
even one of those records turns up not to be a match because of 
income or some other thing, we have to pursue documentation. 
And we do indeed pursue documentation to try to ensure that 
these people are in fact telling the truth. And we have done 
that----
    Mr. Harper. How----
    Mr. Slavitt. I am sorry?
    Mr. Harper. How could a person on the form be a citizen or 
not be a citizen? Is that something that you can verify?
    Mr. Slavitt. There is documentation status. There is--
whether it is a naturalization status and so forth. Those are 
sometimes not as current in the Government database as what the 
individual resident has in fact in their life.
    Mr. Harper. So, in an application--one application could 
have multiple inconsistencies, correct?
    Mr. Slavitt. That is correct.
    Mr. Harper. And do you have a number of how many Americans 
were affected by this problem?
    Mr. Slavitt. So I think there were a couple of million 
people who had inconsistent information that needed to be 
matched of some form or another. About--I would say roughly 
half of those are income changes. So these are people who will 
have to come back to the Web site--and we are urging people to 
do that--and make some adjustment, because it will spill out of 
course on their tax form. Of the other half, we have cleared, 
as of July 1, 425,000 inconsistencies. And greater than 90 
percent of those are indeed in favor of the individual consumer 
who had more up-to-date information than we did.
    Mr. Harper. You know, and this is obviously something we 
want to make sure doesn't continue. So what assurances can you 
give us today that we won't see these problems during the next 
enrollment period?
    Mr. Slavitt. Well, I think what we are learning is that a 
certain amount of these data discrepancy problems are going to 
be a fact of life.
    Mr. Harper. Yes.
    Mr. Slavitt. Because of the fact that we have people who do 
have variations--high variations in their income levels. And so 
that is going to occur in coming years. What is going to be 
different next year is we have now just released software that 
allows us to get at those inconsistencies much more quickly. 
What is important though is that people who we reach out to and 
we need additional documentation from, get in touch with us and 
get them back to us.
    Mr. Harper. Thank you, sir. And I will yield back.
    Mr. Murphy. Mr. Tonko for 5 minutes?
    Mr. Tonko. Thank you, Mr. Chair. Mr. Slavitt, welcome.
    And you earlier went through some national stats. And I 
have received information on my district who have been waiting 
to get info. And in the 20th Congressional District in New 
York, 11,000 residents who were previously uninsured now have 
quality, affordable health coverage because of the ACA. The 
number of uninsured residents in my district has declined by 
some 23 percent. 214,000 individuals in the district, including 
137,000 women and 54,000 children now have health insurance 
that covers preventative services without any copays, 
coinsurance, or deductible. And 262,000 individuals in my 
district now have insurance that cannot place annual or 
lifetime limits on their coverage. And up to 37,000--37,000 
children in my district with pre-existing conditions can no 
longer be denied coverage for health insurance purposes.
    I think that is a tremendous bit of improvement. We 
obviously want to continue to grow those numbers. But it is 
comforting to know that that kind of success is coming the way 
of our district.
    And so, Mr. Slavitt, part of the promise of creating the 
one-stop marketplaces was the ability to shop for health plans 
side-by-side and then apply in an apples to apples comparison. 
While the Federal Healthcare.gov site has done a good job in 
this regard in displaying the premiums and deductibles of 
various plans, it has been more difficult to assess differences 
in health plan networks or whether a particular doctor is in-
network for a given plan. Could you tell us what CMS is doing 
to make it easier for consumers to access this information in 
advance of the upcoming open enrollment period?
    Mr. Slavitt. Thank you, Congressman. So you are indeed 
correct. And, in fact, in the last year, I believe the typical 
consumer had dozens--several dozens of options to choose from 
in health insurance. And our job is to try to continue to grow 
that. But as you point out, we have to make the information 
people are looking for more readily apparent and more easy to 
see. So we are asking the insurance companies this year to put 
direct links to the provider directory that fits the individual 
plan. But I would also just ask consumers to do, and I would 
ask if you would talk to people in your district, is that those 
directories that the insurance companies keep, they are not 
always up to date. They try to keep them up to date. But it is 
always good to call the insurance company or to check with 
your--if there is a physician that you want to see to make sure 
that they are in the network, because this is really important 
information for people to choose from.
    Mr. Tonko. OK. And in terms of allowing a consumer for 
example to search only for plans in which their doctor is 
covered, could----
    Mr. Slavitt. We don't have that ability. That is the kind 
of thing that might come in future years.
    Mr. Tonko. What kind of obstacles stand in the way of that 
happening?
    Mr. Slavitt. You know, I think one of the lessons learned 
from this project is to take disciplined incremental steps to 
making progress, not trying to do too much. And, you know, our 
schedule is pretty much filled with things that are important 
to make sure we are executing well. And I think those are the 
kinds of innovations that I could really see us getting excited 
about adding in future years. But it didn't make the cut this 
year.
    Mr. Tonko. Um-hum. And if I could just ask you a quick 
question about the Medicare Trust Fund? The trustee's report, 
as you know, came out on Monday. And they are talking about the 
fund being secure through 2030. That is 13 years longer than 
was projected in 2009 when the ACA was passed. The report noted 
that these changes may be due to the cost saving provisions of 
the ACA. Do you believe that to be correct?
    Mr. Slavitt. Well, I am not going to hold myself out as an 
expert, but it sounds logical.
    Mr. Tonko. And in fact, since passage of the ACA, the 
Medicare costs have grown at or near record lows, is that not 
correct?
    Mr. Slavitt. That is correct.
    Mr. Tonko. So would you anticipate any continuing or 
additional benefits coming via Medicare?
    Mr. Slavitt. Yes, I would.
    Mr. Tonko. OK. Well, we appreciate the leadership that you 
have born with the ACA. And we thank you for the improvements. 
And I know on behalf of the district that I represent, the 
numbers are very encouraging. I share them with you here this 
morning, and we are going to continue to work to further 
improve so that one of these fundamental rights, the affordable 
and accessible quality healthcare for all, is continued. So--
and strengthened.
    So with that, I yield back. And thank you, Mr. Chair.
    Mr. Murphy. The gentleman's time has expired. Now, I 
recognize Mr. Griffith for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. I do appreciate 
that. Mr. Slavitt, thank you for being here this morning.
    You have indicated and testified that you were previously 
employed by Optum/QSSI, is that correct?
    Mr. Slavitt. That is correct.
    Mr. Griffith. And I think I heard you say in your opening 
statement that you left their employee approximately three 
weeks ago, is that also correct?
    Mr. Slavitt. A little longer than that. Yes, that is 
correct.
    Mr. Griffith. A little longer, how long?
    Mr. Slavitt. I could get you the exact date.
    Mr. Griffith. Well, I don't need the exact date. Four--
between 3 and 4 weeks?
    Mr. Slavitt. Yes, yes, yes. You are--something in that 
nature.
    Mr. Griffith. OK.
    Mr. Slavitt. Yes.
    Mr. Griffith. Here is the question. You now work for CMS.
    Mr. Slavitt. Um-hum.
    Mr. Griffith. And from what I understand, you are a very 
talented individual. And that is a good thing for CMS. But if I 
understood your testimony as well, you have indicated that your 
previous employer is managing the Web site as the systems 
integrator, is that correct?
    Mr. Slavitt. Um-hum. That is correct.
    Mr. Griffith. OK. So then the natural question, as an 
oversight committee is, how are you able to manage your former 
employer? And doesn't this create a conflict of interest?
    Mr. Slavitt. Sure. Thank you for the question. So, 
Congressman, there is, as you know, an ethics pledge that I 
signed. And along with that, disposed of all of my stock 
basically that I had had in the company.
    Mr. Griffith. I----
    Mr. Slavitt. It is completely clear. I recused myself.
    Mr. Griffith. You disposed of all of your stock? You said 
basically.
    Mr. Slavitt. Yes, all of--yes.
    Mr. Griffith. OK.
    Mr. Slavitt. I am--yes, I am not trying to qualify that.
    Mr. Griffith. I didn't think you were, but I wanted to make 
sure on the record that you are saying you got rid of all of 
your stocks.
    Mr. Slavitt. OK. Thank you. Yes, I got rid of all my stock 
and any other ties, as appropriate. I have signed--and I am not 
qualifying with as appropriate--as was appropriate. So now as a 
public servant, I have a very clear set of rules to follow. I 
have this ethics pledge. And then within that ethics pledge, I 
have a limited waiver which allows me, for the purposes of 
health reform implementation only on the Web site, to be able 
to interact with all of the contractors, including Optum, as it 
solely benefits the implementation of the project. And so I do 
that and exercise that very carefully and very prudently. But 
that is a publicly available waiver that I can make sure to get 
to you, if you would like.
    Mr. Griffith. If you would, that would be great.
    Mr. Slavitt. OK.
    Mr. Griffith. And then I would like to talk about that 
waiver process. Because normally, in my experience, when you 
move from the private sector into the public sector, there is 
usually some kind of a period of not dealing with your former 
employer. That is usually a year or more. And if you could 
explain that process, how they came to this? And you said it 
was a limited waiver. We can certainly look at that later. But 
if you could explain that process, I'd appreciate it.
    Mr. Slavitt. Yes. So it is I think a 15-page document, 
which is--and I can get you the details. But----
    Mr. Griffith. I would appreciate that.
    Mr. Slavitt. But it is a--2 years is the waiver. And I 
think the only exception--I am sorry, 2 years is the agreement 
not to communicate with my old employer. And then there is this 
narrow exception for interaction relative to this 
implementation process.
    Mr. Griffith. All right. And I appreciate that. Let me ask 
you some questions about your former employer, because Optum/
QSSI is a subdivision or is a subsidiary of UnitedHealth Group, 
isn't that correct?
    Mr. Slavitt. That is correct.
    Mr. Griffith. And in their 4/17 quarter 1 of this year 
earnings call, the UnitedHealth Group President and CEO, Steven 
J. Helmsley, recognized employees and said that, you know, we 
try to move our employees around in different divisions of the 
company. And so I am a little concerned about how much of a 
firewall is built between Optum/QSSI and UnitedHealth Group, 
because UnitedHealth Group is participating in some of the 
exchanges and in the Federal exchange. And so we have a 
situation where again there is an appearance of a conflict or 
in-propriety because if you are shifting folks around, I said 
to one of my staffers this morning, what do they have a machine 
like they did on Men in Black and they zap their memories and 
they remember nothing that they saw? Because it would appear 
that the folks at QSSI who then report to UnitedHealth Group--
and, in fact, Larry Renfrow is--has an office--a title or a hat 
in both companies. And if that is the case, aren't they able 
then to gain information on competitors by participating in the 
process and in all these meetings, and then get an advantage 
over their competitors in the healthcare Web sites?
    Mr. Slavitt. So let me clarify two things.
    Mr. Griffith. OK. Please.
    Mr. Slavitt. First, nobody on the Healthcare.gov project is 
permitted to go back and to go outside of the project and 
transfer into United Healthcare. That is expressly prohibited. 
Secondly, just an important clarification, because it is a 
little bit confusing: United Healthcare and UnitedHealth Group 
are two different things. So UnitedHealth Group is a parent 
company that has two divisions.
    Mr. Griffith. Right.
    Mr. Slavitt. One is called Optum. One is United Healthcare. 
And so I don't want anybody to have the impression that Optum 
is a part of this insurance company. It is actually a sister 
company, a separately run entity----
    Mr. Griffith. Well, but it is a wholly un-subsidiary, is 
it----
    Mr. Slavitt. Correct. Correct.
    Mr. Griffith. OK. All right.
    Mr. Murphy. The gentleman's time has expired.
    Mr. Griffith. Thank you. I will have some follow-up 
questions and will present for answers after the meeting. OK. 
Thank you.
    Mr. Murphy. Thank you. I now recognize Ms. Castor for 5 
minutes.
    Ms. Castor. Thank you, Mr. Chairman. Good morning.
    Throughout the country, everyone is seeing the benefits of 
the Affordable Care Act. And as of today, Americans who are 
interested can access new fact sheets that provide statistics 
based upon each congressional district. So I encourage you to 
go to the Democratic Web site of the Energy and Commerce 
Committee and--or call your member, and we can provide those.
    Now, I want to share some facts about the benefits of the 
law in my Florida district in the Tampa Bay area. There are 
over 24,000 individuals in my district who were previously 
uninsured but now have quality, affordable health coverage 
because of the Affordable Care Act. The number of uninsured in 
my district has declined by 15 percent. Now, that could have 
been higher if the Republican controlled legislature and our 
Governor would have expanded Medicaid in Florida. In fact, 
almost a million additional residents, Floridians, could have 
health insurance. That is 43,000 of my neighbors in the Tampa 
Bay area who could have been covered, but they remain uninsured 
because Florida refused to expand Medicaid. But over 40,000 
people in my district were able to purchase coverage through 
the new health insurance marketplace, and nearly 10,000 young 
adults were able to retain coverage through their parent's 
plans. 43,000 of my older neighbors received Medicare Part D 
prescription drug discounts worth $8.2 million. I mean, that is 
a great shot in the arm and terrific money back into their 
pockets.
    So as we plan for the second year of open enrollment, we 
all want to make sure that we don't have the computer problems 
that we had last go around. So I want to ask you some questions 
about premiums, especially for the 2015 period. Now, open 
enrollment begins in November, is that correct?
    Mr. Slavitt. Correct.
    Ms. Castor. November----
    Mr. Slavitt. 15.
    Ms. Castor. 15.
    Mr. Slavitt. Yes.
    Ms. Castor. So folks need to at some point--when will the 
Web site be ready to compare plans?
    Mr. Slavitt. So we are going to be sending out notices to 
people starting in October to come back to the Web site, update 
their information and letting them know that on November 15, 
they will be able to either, if they choose, come back to the 
Web site, shop for a plan, compare premiums and choose the plan 
they want, or as happens with Medicare Part D, Medicare 
Advantage, and most employers, if they choose to do nothing, 
they will be able to automatically reenroll if their existing 
plan is offered.
    Ms. Castor. OK. And the deadline is in February----
    Mr. Slavitt. February 15.
    Ms. Castor. February 15 of 2015.
    Mr. Slavitt. 2015.
    Ms. Castor. Now, Republicans have predicted that premiums 
would skyrocket for the next go around, increasing by as much 
as 50 percent. But we can now test those numbers because the 
new rates are rolling out across the country. Are there any 
signs of the out-of-control rate increases that the Republicans 
have predicted?
    Mr. Slavitt. So far, the rate increases that have been 
publicly available from Rhode Island, Washington, and Delaware 
have all been in the mid-single digits. California, I believe, 
is going to come out with their numbers today. So I think that 
will be closely watched, because of the size of the State. 
Colorado's, I believe, have been very steady by and large. So 
while this isn't going to be true for every single individual 
in every single county in America, by and large the early 
results look positive--very positive.
    Ms. Castor. Great. And is it accurate to say that there are 
more choices in the marketplace this go around, or will it 
depend upon the State?
    Mr. Slavitt. There will be more choices this year than last 
year.
    Ms. Castor. So what does competition tend to do when you 
have--when consumers have more choices?
    Mr. Slavitt. Better prices, better value, better services.
    Ms. Castor. Does that mean that if you have greater 
competition that puts pressure on the insurance companies to 
keep their premiums low?
    Mr. Slavitt. I think this is one of those win-win 
situations where the private sector can grow by actually 
providing more value to consumers. And that appears to be what 
is happening.
    Ms. Castor. And what else helps keep premiums low under the 
Affordable Care Act?
    Mr. Slavitt. Well, certainly, the preventive visits do. The 
ability for people to qualify for tax credits. You know, I 
think there is a whole host of things that----
    Ms. Castor. You know, one of my favorite ones--what we did 
in the Affordable Care Act is the 80/20 rule, the medical loss 
ratio that says when a consumer purchases a policy, they have 
to get something meaningful. And insurance companies can't 
spend too much on profits and administrative costs. And when 
they do, they have to rebate the money back to consumers. And 
for my--because I represent the State of Florida, we are really 
happy that our consumers are going to receive $42 million back 
this summer. I have already heard from many of our--my 
neighbors. And sometimes those rebates go back to the employer. 
So you do need to keep an eye, isn't that right?
    Mr. Slavitt. Yes. In fact, the numbers that I have seen are 
that something like $9 billion has been returned to and saved 
by consumers in that process.
    Ms. Castor. That has been very important in this day and 
age. Thank you very much.
    Mr. Murphy. The gentlelady's time has expired. I now 
recognize Mr. Johnson for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman. Mr. Slavitt, it is 
good to see you today. You and I have had chances to interact 
before, and I appreciate you being with us. I agree with Mr. 
Griffith, based on your background, it looks like CMS is going 
to be the beneficiary of your experience and background.
    Mr. Slavitt. Thank you.
    Mr. Johnson. You have talked about your many years in the 
private sector. Could you give a very quick summary of your 
years of experience and expertise and what it primarily focused 
on?
    Mr. Slavitt. Sure. So I started my own health information 
technology company back in the '90s. It was a small business 
that ended up serving consumers. I ended up selling that 
business. I worked with Optum for a number of years. I oversaw 
the health information technology business and grew that. I 
worked very closely on building lots of industry wide 
capabilities around things like revenue cycle management, 
population health management. I worked closely with hospitals, 
with physician groups, with health insurance plans, State 
Governments, all really focused on quality, cost and access 
issues.
    Mr. Johnson. OK. And to summarize, I think when you were 
responding to Mr. Griffith's questions, you led the team that 
basically made Healthcare.gov usable in October, correct?
    Mr. Slavitt. That is correct.
    Mr. Johnson. OK. So I want to ask you, you have all of 
those years of experience and expertise in information 
technology, specifically in the healthcare arena. How much 
should Healthcare.gov have cost?
    Mr. Slavitt. That is a really good question, and I am not 
sure I know the answer to it. It is not unusual for large-scale 
health projects--for example, I can think of big projects from 
Kaiser Permanente when they installed electronic medical 
records--to cost a couple billion dollars to put in place. It 
is hard to know what the benchmark is to build a consumer 
facing Web site and set of back-end systems to connect to 50 
States, to Medicaid plans, to insurance companies. So I am not 
quite sure.
    Mr. Johnson. Well, let me help you a little bit. Because I 
don't know if you remember or not, but my background is a 30-
year information technology professional.
    Mr. Slavitt. Yes. I do.
    Mr. Johnson. So I have been through the lessons learned and 
the trial by error of trying to project costs of complex IT 
systems like this. The GAO says that we spent nearly a billion 
dollars on this, with the cost climbing. Do you believe that 
taxpayers have received a good return on their investment thus 
far?
    Mr. Slavitt. Congressman, I think two things happened. And 
it is hard to know how much fits into each category. The one 
thing that happened is, clearly, this was a more complex 
project and needed a lot more work than people expected. And 
for that part, I think----
    Mr. Johnson. And that goes without--yes. And see, that goes 
back to the genesis of some of the questions that we got into 
the last time you and I were here. If you have a firm set of 
requirements, and if you have a systematic life cycle design 
process, it is much easier to project those costs.
    Mr. Slavitt. Right. Yes.
    Mr. Johnson. I know when I was doing large-scale program 
management on large IT systems, the industry general rule was 
that in the life cycle of a complex system, that the 
implementation part--the design, the building, the 
implementation part is only about 25 percent of the cost--the 
life cycle cost of a system. The rest of the cost is in 
maintenance, operations and further on down the road. So if 
this thing has already cost the taxpayers a billion dollars or 
more to get to where we are today, we can reasonably expect 
that this is going to cost billions, billions more over the 
life cycle of this thing, correct?
    Mr. Slavitt. Yes, I couldn't put an estimate on that.
    Mr. Johnson. But you do agree with the concept in general 
that maintenance and operation costs a heck of a lot more 
overtime than the initial implementation does, right?
    Mr. Slavitt. I do think there will be an ongoing operating 
cost. I don't know that it will be greater. I think that I have 
to look, and I would have to look at the budget request, which 
I don't have with me.
    Mr. Johnson. OK. Well, the budget request has nothing to do 
with how much it is going to cost.
    Mr. Slavitt. To do----
    Mr. Johnson. You understand how the industry works.
    Mr. Slavitt. Yes.
    Mr. Johnson. You understand the life cycle of software 
development. You understand that. But I appreciate it that you 
don't really want to answer that question.
    Mr. Slavitt. I don't know the answer.
    Mr. Johnson. The GAO says ultimately more money was spent 
to get less capability. Do you agree with that?
    Mr. Slavitt. I think there were clear inefficiencies----
    Mr. Johnson. Because a lot of it is still not working.
    Mr. Slavitt. I think there were clear inefficiencies in how 
this was managed. I think, didn't it also say, Congressman, 
that in the real world, it is not always possible to know your 
scope going in. In an ideal world, you can. But I think the 
estimates proved that they need to do more work in the----
    Mr. Johnson. Thank you, Mr. Chairman. And I agree that it 
is not always possible to know the scope, but it is possible to 
fence the scope and, therefore, knowing that what you are going 
to pay for is what you are going to get, which is clearly not 
what happened here.
    Mr. Murphy. Thank you. The gentleman's----
    Mr. Johnson. Thank you, Mr. Chairman.
    Mr. Murphy. The gentleman's time has expired. I again 
remind members, please keep it in the timeframe, because we are 
expecting votes in a few minutes. And I want to be fair to 
everybody. Mr. Yarmuth, you are recognized for 5 minutes.
    Mr. Yarmuth. Thank you very much, Mr. Chairman. Mr. 
Slavitt, thank you for your testimony and your work.
    I want to talk about some of the things that have happened 
in Kentucky since we are actually doing an update, and I am 
very proud of the experience we have had so far in my State. 
But there was actually some pretty astounding news earlier this 
week regarding the trustees of Medicare coming from them about 
the prospects for viability of the Medicare trust fund. Are you 
familiar with that information?
    Mr. Slavitt. Yes, I am, Congressman.
    Mr. Yarmuth. Could you tell us what has happened? Because, 
as I recall, when we passed the Affordable Care Act in 2010, at 
that time the trustees were projecting the trust fund would be 
insolvent by 2017.
    Mr. Slavitt. I believe, if I am not mistaken, that in 
summary the projection is the trust fund life expectancy was 
extended to 2030.
    Mr. Yarmuth. 2030. So that is pretty astounding that in 4 
years the projection extended the life--the viability of 
Medicare by 13 years. And there was also some really 
fascinating and I think impressive data about pro-beneficiary 
expenditures that they essentially were flat year to year, 
there is no increase when historically they have been running 
at somewhere between 5 and 10 percent annually, is that 
correct?
    Mr. Slavitt. That is correct.
    Mr. Yarmuth. All right. Thank you. So one of the things 
that I know we have spent a lot of time talking about, people 
who have signed up for insurance in the private insurance 
market under the Affordable Care Act. But this is data that has 
come about from the Commissioner of Medicaid in Kentucky. And I 
think this is so impressive. If you look at the top map, that 
is the 120 counties of Kentucky, color coded by the percentage 
of uninsured citizens in those counties prior to the ACA.
    [Chart.]
    Mr. Yarmuth. And red and orange--which are most of the 
counties in Kentucky, I think all but probably a dozen--were 
rates of 17 to 20 percent, and then more than 20 percent. The 
bottom map is the current situation. And it is staggering to me 
because--the green is under 13, is under 11 percent, 8 to 11 
percent, and blues, 5 to 8 percent, and the dark blue, less 
than 5 percent--we have counties in Appalachia, southeastern 
Kentucky, that went from having the highest uninsured rate in 
the State, over 20 percent, to the lowest uninsured rate, under 
5 percent. And that to me is a staggering accomplishment. In 
Kentucky, we essentially have insured about half of the 
previously uninsured population of the Commonwealth, in a State 
that has very poor health historically and currently, and 
people who are in desperately in need of healthcare. And what 
is even more important, I think, than that is that the report 
of the commissioner of Medicaid in Kentucky talked about how 
preventive service utilization has increased dramatically to 
almost 16 percent. An annual dental visit, which they weren't 
doing before. Adult preventive services increased by almost 37 
percent, breast cancer screening by 20 percent, colorectal 
cancer screening by--up by 16 percent. Very, very important 
health measures that I think will pay off for the Commonwealth 
economically but also for the life of these citizens going 
forward.
    And also what is, I think, very important to note is how 
much reimbursements went up for providers in the Commonwealth, 
totals of--let us see. Reimbursements from now--those now 
covered under Medicaid expansion went up by $284 million in 
just the first 6 months. So, many of those hospitals and 
doctors and other providers who were providing uncompensated 
care for Kentucky residents are now being compensated. And that 
also is a great benefit to the taxpayers and the treasury of 
the Commonwealth.
    So I just mention those things because it is very clear to 
me that States that embrace the Affordable Care Act and are 
committed to making it work are having very, very positive 
experiences. The adverse experiences are coming in States where 
the administrations of those States, the governments decided in 
some cases just not to participate in, and other cases to try 
and sabotage the law.
    So I thank you for your work and for the information you 
brought to us today. I yield back.
    Mr. Slavitt. Thank you.
    Mr. Murphy. The gentleman yields back. Dr. Gingrey, you are 
recognized for 5 minutes.
    Mr. Gingrey. Mr. Slavitt, one of the members earlier asked 
or made the comment that because of the medical loss ratio--I 
think maybe they were talking about the State of Florida--how 
much money was returned to the consumer of health insurance 
through the plans. Let me start out by specifically asking you 
this, because this has also been reported: If an individual 
ended up receiving an incorrect subsidy that they were not 
entitled to, what will be done to rectify this issue? 
Specifically, will they be sent additional funding if the 
subsidy was too low? Or will they need to pay back the money if 
the subsidy was too high? And when will consumers know if they 
owe the Government more money?
    Mr. Slavitt. Yes. Thank you for the question, Congressman. 
So if individuals have changes in their income, the best advice 
is they should come back to the Web site and update that 
information so that their tax credit and premium can be 
updated. For those adjustments that are not made, when it comes 
to tax time, they will either receive a refund or they will 
have additional money that they will owe.
    Mr. Gingrey. Well, I think we need to get some specific 
answers on questions like that, because this pay and chase 
model, as we know in past, absolutely in regard to let us say 
paying Medicare claims that were fraudulent, and then you have 
to go chase them down to try and get them back, you never do. 
You are aware of this GAO report that came out--well, I guess 
today. And it states that in January, CMS awarded a new company 
a contract to continue work on the Federal marketplace for $91 
million, right?
    Mr. Slavitt. Correct.
    Mr. Gingrey. GAO says in the report that the cost now has 
ballooned to more than $175 million, is that correct?
    Mr. Slavitt. That is what the report says, yes.
    Mr. Gingrey. Yes. Right. And the investigation of course 
ended a few months ago. Do you know if the cost--this estimated 
cost of 91 million that is now 175 million that is in the 
report, has it gone up even further since the report?
    Mr. Slavitt. No. I think the estimate of the total 
contract--and again, this is not what has been paid, this is 
what is being budgeted--is about 170 million. That is correct.
    Mr. Gingrey. You know, that is a pretty big error, 91 
million versus 175 million--how is it you can offer a contract 
for $91 million and have it grow that much over such a short 
period of time?
    Mr. Slavitt. So I think the proper characterization of that 
contract is that the scope of the contract was completed after 
the initial contract was awarded. So I wouldn't characterize 
the cost as ballooning. I would actually characterize it as the 
proper scope with the contractor, Accenture, was determined 
after they got going. And the reason for that, if you don't 
mind me saying, is because Accenture needed to be brought in in 
an urgent situation to take over for a contractor that was 
leaving. And so they agreed to an initial amount. And this was 
before my time. And then agreed that they would come back after 
they got started, started the transition from CGI. And then 
they would come to terms with how much the scope ought to be.
    Mr. Gingrey. Mr. Slavitt, in my remaining time, let me ask 
you this. You have been with CMS now for what, 3 weeks?
    Mr. Slavitt. Three weeks.
    Mr. Gingrey. And you are the number two guy there, right?
    Mr. Slavitt. Correct.
    Mr. Gingrey. You know, when--back in 2009/2010 timeframe 
when we marked up this Bill, a lot of us on this side of the 
aisle felt like that if the American people were going to have 
this Affordable Care Act--un-Affordable Care Act forced down 
their throat, that members of Congress and members of the 
administration, the President, cabinet members, political 
appointees like yourself--you are not a career bureaucrat----
    Mr. Slavitt. That is correct.
    Mr. Gingrey. You have been appointed by the President to 
come into this important position. We felt, and still feel--
many of us still feel that you ought to eat your own dog food. 
And members of Congress, I think it is appropriate, we are 
doing that. We had to come off the Federal Employee Health 
Benefit Plan and get on the DC health link. And yet you members 
of the administration, the President and his family really 
ought to be doing the same thing. If--I know you worked in IT. 
But let us just say if you worked for Ford Motor Company, would 
you drive a Chevrolet? I kind of doubt it.
    Mr. Slavitt. I would hope not.
    Mr. Gingrey. I think you probably would drive a Ford.
    Mr. Slavitt. I would----
    Mr. Gingrey. But what do you think about that in these 
remaining few seconds? Respond to me. Do you think it would be 
appropriate as a show of good faith to the American people that 
you guys and gals that are running this show that forced it 
upon us would be in the same plan that the American people have 
to be in?
    Mr. Slavitt. My understanding is that the President and his 
family are on the exchange. I don't know this for a fact. But 
that is my understanding. And if it is determined that the rest 
of us should be on the exchange, I would happily do that.
    Mr. Gingrey. Well, if you--if that is true, please let me 
know. And I know we are limited in time. And I yield back, Mr. 
Chairman.
    Mr. Slavitt. OK.
    Mr. Murphy. I thank the gentleman to yield back. I now 
recognize Mr. Green for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. And to my good friend 
and colleague from Georgia--who I am going to miss--I not only 
drive Chevys, but I am also on the plan. We had to buy ours 
through our exchange. And so--but I want to thank the chairman 
and ranking member and our witness for testifying.
    For decades, the United States has had the highest rate of 
uninsured in the industrialized world. This drives up costs and 
puts families at risk of bankruptcy when they get sick. The 
main reason is why we have a health sick system rather than a 
healthcare system, because millions of Americans can't get the 
care they need outside the emergency room. In our own district 
in Texas, a very urban district, the Affordable Care Act's 
enabled almost 20,000 people previously uninsured to get 
quality, affordable coverage. Overall, the insurance rate in 
our district has fallen by 8 percent. Fifty-two thousand people 
in the district would have had access to coverage if Texas had 
expanded Medicaid, and hopefully we will still get to that.
    Earlier this month, the New England Journal of Medicine--
not Fox News, not a left- or right-wing Internet site, but the 
New England Journal of Medicine--released two reports on 
coverage under the ACA. And I would like to read a quote from 
them: ``With continuing enrollment . . . the numbers of 
Americans gaining insurance for the first time--or insurance 
that is better in quality or more affordable than their 
previous policy--will total in the tens of millions.''
    And, Mr. Chairman, I would like to ask unanimous consent to 
place that article in the record.
    Mr. Murphy. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
            
    Mr. Green. Thank you.
    Mr. Slavitt, are you familiar with these reports?
    Mr. Slavitt. Yes, at the high level.
    Mr. Green. Earlier this week, the Gallup Poll released 
their own latest total numbers of Americans having insurance. 
Are you familiar with that survey?
    Mr. Slavitt. Yes, I am, Congressman.
    Mr. Green. The--similar, the Urban Institute and 
Commonwealth Fund conducted surveys. Can you discuss that also?
    Mr. Slavitt. I am familiar with those two, yes.
    Mr. Green. OK. Would you agree that the findings of both 
Gallup and the New England Journal of Medicine are consistent 
with the millions of Americans signing up for healthcare?
    Mr. Slavitt. They are consistent, very encouraging.
    Mr. Green. OK. At this point, the only thing keeping 
millions more Americans from signing up for the coverage is the 
refusal of Republican Governors and State legislatures to 
expand Medicaid. If they did, another 5 million Americans would 
be eligible for insurance.
    Mr. Chairman, I think the Affordable Care Act, obviously, 
coming out of the chute, it was a problem. But it has been 
fixed. And hopefully we will see in the renewals it happen. But 
it is working, although a lot of us had tough times in October 
into mid-November who supported it.
    Mr. Slavitt, what is CMS doing to address the execution of 
the technology lessons learned from the first enrollment 
section?
    Mr. Slavitt. Well, Congressman, I got to this project when 
it was beginning the turnaround stage at the end of October. 
And I think what we are doing now is essentially carrying 
over--just as we did in the turnaround. There is no magic to 
it. It is basic blocking and tackling. It is good 
communication. It is, quite frankly, a lot of the 
recommendations that have come out of the GAO report and making 
sure that we have precise requirements. It is daily management. 
It is senior level accountability that goes all the way up to 
the secretary.
    Mr. Green. You know, I advocated in Texas, having served a 
lot of years in the State legislature, is that we should have 
had a Texas plan that we could have done. Some States had good 
examples of their plan, some not. Could you talk about that? 
Like, I know the State of Maryland and some other States had 
problems. And I don't know if they are fixed or not. But were 
they similar to what we had on a national scale for our States 
that didn't have a State plan?
    Mr. Slavitt. In terms of the challenges, or just in terms 
of what they got done in their State?
    Mr. Green. Yes. Were they on a smaller scale, having the 
same challenges that we were?
    Mr. Slavitt. I think it is probably safe to conclude at 
this point, towards the end of 2014, that it was the rare 
State, and maybe Kentucky's one of them, that didn't 
underestimate how difficult this would be, given all of the 
complexities of tying into Medicaid, tying into insurance 
companies, offering a consumer Web site. In the first year of 
any new program, in my experience, whether it is public sector 
or private sector, it is sometimes bumpy. The same is going to 
be true in the second year. But those problems become more and 
more minor, and we get better all the time.
    Mr. Green. To the best of your knowledge, for example if a 
State wanted to create their own plan now, there is nothing in 
the law that would prohibit them from approaching CMS or HHS, 
either that or expanding in Medicaid coverage?
    Mr. Slavitt. That is correct.
    Mr. Green. OK. Thank you, Mr. Chairman. I will yield back 
my time.
    Mr. Murphy. The gentleman yields back. I now recognize Dr. 
Burgess for 5 minutes.
    Mr. Burgess. Again, thank you, Mr. Slavitt, for being here. 
You heard my comments during the opening statement about the 
memorandum that Mr. Cohen suggested that I might have. And I 
again just want to underscore that that is important to me. And 
even though Mr. Cohen is no longer at CMS, I would very much 
like to see that.
    Mr. Slavitt. It is my understanding that we have just 
recently sent it. So if you don't receive it, I will follow-up 
with your office and make sure that you have it.
    Mr. Burgess. All right. Very well. You know, and it is kind 
of--I was just thinking it has been almost a year ago, really 
right now, that your boss, Marilyn Tavenner, was here. And we 
talked about some things about the upcoming launch of 
Healthcare.gov. But of course, that was just a little less than 
a month after the unilateral decision by the President to delay 
the employer mandate. Now, I remember asking Ms. Tavenner about 
how--was she involved in that decision. And she asserted that 
she was not. I asked her how she found out about it. And she 
said her chief of staff told her, which I found rather 
astonishing. If my chief of staff came and gave me information 
like that, I mean I would be curious as to where that came 
from. And she seemed to lack curiosity about how that decision 
was reached. But let me ask you this, we are a year later. The 
employer mandate is now supposed to kick in about a week and a 
half after Election Day in November. Is it your understanding 
that the employer mandate will in fact be enacted in November, 
or can we expect a further delay of that?
    Mr. Slavitt. So I am still working my way around the 
Federal Government, trying to understand how it all works.
    Mr. Burgess. Good luck.
    Mr. Slavitt. Thank you. My understanding--and you could 
please correct me if I am wrong--is that that is an IRS and 
Treasury area of responsibility. So I haven't been exposed to 
that so much yet.
    Mr. Burgess. My personal belief is that we will never see 
the employer mandate. I have no inside information, obviously. 
I am not speaking for the committee. I am just speaking for 
myself. When you look at the disruption that was caused in the 
individual market, October, November, December of last year, 
and remind yourself that that was only 15 percent of the 
insurance market that had that convulsion, had that happened to 
the entire--both the large group market, the small group 
market, the individual market all at once, it would have been 
pretty disruptive.
    Now, you heard Mr. Gingrey talk about members of Congress 
and members of the administration should take the same thing 
people have to take. I agree with that. In fact, I did not take 
the BC Exchange that was offered to Members of Congress and 
their staff. I said, ``Look, I'll do what other people in my 
district have to do.'' I went to Healthcare.gov, bought a 
bronze plan off the Web site. The biggest mess I have ever been 
involved in in my life. But I finally got through. It took 
about three and a half months to do so. Now, I am wondering 
what my rate is going to be next year. I have got the most 
expensive health insurance policy I have ever had, an enormous 
deductible. But what can I look forward to in the next 
insurance year? You talked about you wanted a successful open 
enrollment. Is it going to be successful? What are the rates 
going to look like?
    Mr. Slavitt. Yes. So I think we are at a stage now where--
and indeed, this is one of our high measures for success, 
making sure that there are enough choices and enough 
affordability. And, of course, each State is going through 
their own process and going through rate reviews. We have seen 
some States publicly now come out with their rates. I believe 
Rhode Island, Washington. California today is going to have I 
think an announcement with what their rates are. I couldn't 
tell you, Congressman, about Texas, because I don't know. But 
generally speaking, what we have seen are rates that are in not 
the double digit increased levels but in the mid-single digit 
levels. That is not going to necessarily be the case in every 
county in America, but that seems to be what is happening on 
average.
    Mr. Burgess. But still, I mean, you mentioned that in three 
or four States. We have got a long way to go before renewal 
rates across the country are in evidence.
    Mr. Slavitt. No question. No question.
    Mr. Burgess. I mean, you are the Principle Deputy 
Administrator. Do you have any responsibility or involvement in 
the renewal or the rate filings?
    Mr. Slavitt. I think these rate filings get reviewed and 
approved, you know, at the State level. There is a process. And 
I think it is in the mid-process. I believe right now that 
the----
    Mr. Burgess. Let me just interrupt you, because my time is 
running up. Do you receive interim reports or updates on what 
those State filings are?
    Mr. Slavitt. I think there has been an initial submission, 
and I have seen a high-level report. But this is not yet final 
information.
    Mr. Burgess. And is your office going to make those rate 
filings public information? Will we have the availability to 
access that?
    Mr. Slavitt. When they become final, absolutely. 
Absolutely.
    Mr. Burgess. Again, as a Healthcare.gov member from the 
State of Texas of the Federal fallback, I would very much like 
to know what my renewal rates are for next year.
    Mr. Slavitt. Of course.
    Mr. Burgess. Thank you, Mr. Chairman. I will yield back.
    Mr. Murphy. The gentleman's time has expired. I recognize 
Ms. Schakowsky for 5 minutes.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    I just wanted to tell you, Mr. Slavitt, I don't know if 
your office and your position is actually in charge, but we 
have gotten tremendous cooperation from CMS when we have had 
constituent issues. And, you know, clearly, it comes out. 
Consumers get confused, have a lot of questions, have some 
problems. I get irritated sometimes. On the other side, I feel 
like there is an embracing of these problems rather than a 
constituent service attitude to fix the problems. And when we 
have tried, we have had good success. And so I just wanted to 
tell you I appreciate that.
    I also just wanted to say that the minority staff has done 
a district by district, the benefits of the healthcare reform 
law in all the districts in the country. And it is just 
wonderful to see how the number of people that in my district, 
283,000 people in my district, including 51,000 children and 
120,000 women now have health insurance that covers preventive 
services without any copays, coinsurance, or deductibles. 
Needless to say, that is huge.
    Mr. Slavitt. Very good news.
    Ms. Schakowsky. And up to 36,000 children in my district 
with preexisting conditions can no longer be denied coverage by 
health insurers. It is just lots and lots of good news, 
including the new Medicaid enrollees that are now being 
covered.
    But I did have a question. So we are talking somewhat about 
the States that have expanded Medicaid and have not. Twenty-six 
States, the District of Columbia, have expanded Medicaid 
coverage under the Affordable Care Act. And in those States, 
Medicaid is seeing great success. Enrollment has increased 
substantially, and the percentage of the population without 
insurance has declined dramatically. And I am asking you, Mr. 
Slavitt, if you have seen studies that compare the decline in 
the number of uninsured in States that did and did not expand 
Medicaid?
    Mr. Slavitt. Yes, I have seen those studies.
    Ms. Schakowsky. And can you tell me what you found?
    Mr. Slavitt. The States that have expanded Medicaid--and I 
will have to get back to you on the exact figure--have seen 
significantly lower rates of uninsured than those States that 
did not expand Medicaid.
    Ms. Schakowsky. But we have seen a decline in any case in 
most--isn't it in all States?
    Mr. Slavitt. Declined in any case, and a bigger decline in 
States that have expanded Medicaid.
    Ms. Schakowsky. And have you seen the estimates about the 
number of Americans that would receive healthcare coverage if 
all 50 States expanded Medicaid? Do you know the size of this 
estimate?
    Mr. Slavitt. I believe that it is an additional 5 million, 
if I am not mistaken.
    Ms. Schakowsky. All right. Thank you. And if that is the 
case, and I believe you that it is, this is really an appalling 
number, 5 million Americans who would receive healthcare 
coverage if Republican Governors and State legislatures took 
the simple step of expanding Medicaid. It is obviously good for 
people when more people have health insurance.
    But, Mr. Slavitt, what about healthcare providers? How does 
the Medicaid expansion help them?
    Mr. Slavitt. So my information is anecdotal. But it appears 
that if there's a dramatic reduction, or a significant 
reduction in uncompensated care, it appears that this has been 
a very good thing for providers.
    Ms. Schakowsky. And this committee has spent the last 3 
years looking for some Affordable Care Act-related scandal. And 
despite all their concern, they have systematically ignored an 
ongoing healthcare tragedy: the dereliction of duty by 
Republican Governors around the country who refuse to expand 
Medicaid. For those who have not been following this closely, 
the Affordable Care Act provides 100 percent Federal funding 
for the first 3 years for the States to expand Medicaid 
coverage to millions of low-income Americans, right?
    Mr. Slavitt. That is correct.
    Ms. Schakowsky. And yet for some reason, Republican 
Governors in dozens of States have refused to expand coverage 
to low-income insured individuals in their States, correct?
    Mr. Slavitt. That is correct.
    Ms. Schakowsky. Well, this to me is a real scandal. The 
expansion doesn't cost States a dime. It provides quality 
affordable coverage for millions of Americans working hard just 
to get by. Yet some Republican Governors and State legislatures 
are deliberately refusing to provide coverage to millions of 
uninsured Americans.
    And, Mr. Chairman, that it seems to me is an issue this 
subcommittee really should look into. And I yield back.
    Mr. Murphy. The gentlelady yields back. I now recognize 
Mrs. Blackburn for 5 minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman. And thank you for 
being with us today. Overseeing this implementation, getting to 
the bottom of a lot of the questions, I think is very 
important, and continuing to do our due diligence. And I know 
that several people have mentioned the New England Journal of 
Medicine article from last week, the health reform and changes 
in health insurance coverage. And my friends across the aisle 
have wanted to tout that as being something to prove their 
point.
    I think that it is important though to go in here and look 
at how the authors came to the conclusion that 5.2 percent more 
had insurance, that there was a decline in those without 
insurance from September 2013 to June of 2014. And then the 
authors mention the limitations of their study. They said that 
the study did not distinguish between persons enrolling for the 
first time and those who were changing their enrollment. And I 
really wonder how many of those that had to buy more expensive 
policies, new policies that were Obamacare compliant? How did 
that affect that number?
    And the authors measured improvement and access to care by 
asking two questions. First, did the survey participants 
identify a personal doctor? And, second, did the survey 
participants report difficulty paying medical bills? Well, it 
seems to me a more important outcome measure would be whether a 
person was actually able to see the doctor. Because in our 
district, we hear from people they can't get access to the 
doctor. They have got access to the queue, because they have 
got a card. They can't get access to the doctor.
    So while my colleagues across the aisle talk about how many 
people have insurance, I would like to remind everyone that 
having an insurance card is not the same as having medical 
care. And I continue to hear from people in Tennessee who lost 
their health plan. They liked it. They can't keep it. I hear 
from people that have not been able to keep their doctor 
because of the narrow networks in Obamacare. I hear from people 
who go to the doctor and need a test, but can't get the test 
because their copays and their coinsurance are too high. They 
can't afford it. This stuff is too expensive to afford.
    And, finally, we are hearing from some of our Tennessee 
insurance carriers, they are going to have a 19 percent 
increase in the health insurance premiums in 2015. So it is 
kind of like adding insult to injury. You have got this stuff. 
You can't use it because it is too expensive to afford. The 
copays are too high. You have an insurance card, but you can't 
get in to see the doctor and you are having to wait. I don't 
understand why my colleagues across the aisle continue to 
defend this thing.
    But, today, we are shifting our focus to oversight and the 
way that taxpayer dollars--I remind everyone, taxpayer dollars 
are paying for this. And the people don't like it. On January 
1, 2014, HHS certified to Congress that the American health 
benefit exchanges, the marketplace, were verifying their 
applicants for advanced payments of the tax credits. Cost share 
and reductions were indeed eligible. However, the GAO secret 
shopper investigation found that 11 out of 12 secret shoppers 
were able to obtain health insurance and qualify for premium 
tax credits using fictitious identities and fraudulent 
documents. Now, let me, for the benefit of my colleagues, talk 
a little bit about what a secret shopper program does.
    When I had my marketing business, we would run secret 
shopper programs for malls and shopping centers and chambers of 
commerce. You would identify where your problems are. And then 
you get in there and you clean them up. The problem is the 
system allows fraud. If you have got 11 out of 12 that 
something is wrong, Mr. Slavitt, that is a failing grade. There 
had been over 30 delays in implementation. The President has 
made multiple unilateral changes. And, you know, we are here to 
learn about the contracting practices that took place at CMS 
with the botched implementation of this law. We are looking at 
the GAO study. This thing is not much better.
    Let us talk about this contract. So January, CMS awarded a 
contract to a new company to continue work on the Federal 
marketplace. It was a $91 million contract, correct?
    Mr. Slavitt. Correct.
    Mrs. Blackburn. OK. Now, GAO says that cost has ballooned 
to more than $175 million, is that correct?
    Mr. Murphy. You can answer that question.
    Mr. Slavitt. That is what the report says. I don't agree 
with that characterization, but it is what the report says.
    Mrs. Blackburn. OK. Thank you. I will submit the rest of my 
questions. I yield back.
    Mr. Murphy. Thank you. Now, we have just been called to 
vote. We will go through Mrs. Ellmers' questions, and then we 
will take a break and come back for the second part.
    Mrs. Ellmers, you are recognized for 5 minutes.
    Mrs. Ellmers. Thank you, Mr. Chairman. And thank you for 
being with us, Mr. Slavitt.
    I would like to go back to a little bit of the discussion 
you had with my colleague from Ohio, Mr. Johnson. I know you 
had made some comments there at the end where you pointed out 
that, in the real world, things are much more realistic. And 
that ideologically, many times things seem like they are going 
to be better than they are. I would say to you, sir, that that 
is exactly why I ended up running for office, being a nurse, 
because I did see--and my husband, as a doctor, saw that the 
plan that was going forward was not going to be realistic. And 
I think we have learned over time that that is the case, and 
that there were many promises made that have not been kept--
well intended, but not true for the American people. So I do 
share with you that same sentiment but realize, too, that that 
is why we feel so strongly about this issue, that the American 
people do need to see what can be realistic and achieved in 
good healthcare in this country, and good healthcare coverage.
    You did also have an exchange with Mr. Johnson on the cost 
of Healthcare.gov, and what it should have cost. You 
reluctantly did not answer the question of the cost being a 
billion dollars, is a billion dollars too much for the 
implementation thus far?
    Mr. Slavitt. So thank you, Congresswoman. I have not seen a 
study yet which looks at what the appropriate cost for building 
the entire Healthcare.gov system should be. But, of course, I 
do acknowledge that our colleagues at the GAO pointed out that 
there were absolutely inefficiencies and waste in the way the 
contract was managed. So at the very least, we know there was 
some. I would hesitate to say though that it was entirely 
waste, because there was a really significant set of systems 
built. And I think those systems have significant long-term 
value for the country.
    Mrs. Ellmers. You know, there again, it gets back to that 
same issue of what is realistic, what is achievable. And, you 
know, simply throwing money at it, and then looking back in 
hindsight to determine what did work and didn't, I think we all 
are learning from this experience. So that, of course, has 
value. I don't know how you measure it. But the American 
taxpayers are still on the hook for this. And that is again why 
we are taking the approach we are, which is, when is it going 
to be enough? When are we going to achieve the goals at a cost 
effective measure?
    I want to look into some of the issues with security 
breaches. Are you aware at this time of any problems that the 
Web sites--from the building of the Web site, and that there 
are still concerns? Are you aware of any right now?
    Mr. Slavitt. So there have been no successful malicious 
attacks. And, certainly to the best of my knowledge, no one's 
individual data has ever been compromised from the 
Healthcare.gov Web site.
    Mrs. Ellmers. So to the best of your knowledge, and just 
based on the answer that you gave, you are not seeing that 
there were any related information breaches in Healthcare.gov 
or traveling through the Federal exchanges that you would 
consider a security breach?
    Mr. Slavitt. We have not seen any malicious attacks that 
have been successful. And we have not seen anybody's personal 
information in any way get compromised.
    Mrs. Ellmers. What is the definition of a successful 
breach?
    Mr. Slavitt. Well, I am not trying to be cagy, just that 
nobody has successfully penetrated the security system to the 
best of my knowledge, Congresswoman.
    Mrs. Ellmers. Are you aware of any companies building, 
operating, or otherwise working on Federal exchanges, obtaining 
access to information that they should not have? Anyone who is 
outside of the system or working on--that have?
    Mr. Slavitt. Not to my knowledge.
    Mrs. Ellmers. And information on enrollees or applicants, 
none there as well?
    Mr. Slavitt. No, not to my knowledge.
    Mrs. Ellmers. Are you aware of any changes to site 
protocols or standards to address breaches to accessed 
information?
    Mr. Slavitt. I think it is fair to say that the security 
team does continuous monitoring and makes changes and puts in 
new patches as new--different security things have been found 
out about in the industry and so forth. So there is a 
continuous monitoring----
    Mrs. Ellmers. Can we obtain that information over time, any 
of the changes and updates that may have taken place for the 
committee?
    Mr. Slavitt. Sure. Let me figure out what I can share. I 
obviously don't want all of the things that our security team 
does to be well understood by the wrong people. But I want to 
make sure to get you the information you need.
    Mrs. Ellmers. OK. Thank you. Thank you, Mr. Chairman. I 
yield back.
    Mr. Murphy. Thank you. They have called votes.
    Mr. Slavitt, we thank you for your testimony. Members will 
have a few days to get other questions to you. And we would 
appreciate a quick, thorough, and honest response.
    Mrs. DeGette. Mr. Chairman, can I move to strike the last 
word, just very briefly?
    Mr. Murphy. Sure.
    Mrs. DeGette. I just want to--Dr. Burgess had mentioned 
earlier that HHS didn't respond to the committee's request for 
an analysis of its legal authority to make payments in 
connection with the risk corridors program. I have just been 
told that HSS did respond to the request and provided a 
response to the committee on Jun 18, 2014. And in the response, 
they also included a legal analysis. So I wanted to clarify the 
record. And I wanted to also make sure that if Dr. Burgess, or 
you or the committee staff did not receive that, we will get 
another copy to you.
    Mr. Murphy. Dr. Burgess?
    Mr. Burgess. Well, in fact, I did not receive it. But I 
would be anxious to look at it and see if it answers the 
question as it was asked. And, Mr. Chairman, if I could have 
the indulgence of one brief follow-up with Mr. Slavitt?
    Mr. Murphy. Yes, very brief.
    Mr. Burgess. Mr. Slavitt, we have heard a lot of discussion 
about the fact that when this thing went live, the back-end 
part of the system was not built. Is it now built and available 
and ready to use, the part that pays providers?
    Mr. Slavitt. So the part that pays the issuers, issuers are 
getting paid today.
    Mr. Burgess. How about the doctors and hospitals?
    Mr. Slavitt. The doctors and hospitals get paid by the 
health plans, not by the exchange--not by the marketplace.
    Mr. Burgess. OK. So the back-end part of the system is up 
and fully functional?
    Mr. Slavitt. No, no, no. The back-end part of the system is 
going through continuous releases. Today, we are paying the 
issuers on an estimated basis. There will be a coming release 
this year where--by the end of this year--where they will begin 
to get paid at a policy level basis. And then next year, 
continued automation will occur to tie everything into the back 
end of CMS' systems.
    Mr. Burgess. OK. Mr. Chairman, it just begs the question. 
Have the right people been paid the right amount of money? 
These are taxpayer dollars that are----
    Mr. Slavitt. I will follow-up----
    Mr. Murphy. What we will do is we will follow-up with some 
questions to you.
    Mr. Slavitt. Yes. I will be happy to follow-up.
    Mr. Murphy. Mr. Woods, we will probably reconvene--our 
votes will probably take us to 11:30. So this will be in a 
brief recess until 11:30. And we will be back. Thank you very 
much.
    [Recess.]
    Mr. Murphy. This reconvenes the Subcommittee on Oversight 
and Investigations. I would now like to introduce the witness 
on the second panel for today's hearing. Mr. William T. Woods 
is the Director with the Acquisition and Sourcing Management 
Team at the Government Accountability Office. He provides 
overall direction for GAO's review of contracting activities at 
defense and civilian agencies.
    I will now swear in the witness. Are you aware that this 
committee is holding an investigative hearing, and when doing 
so has the practice of taking testimony under oath? Do you have 
any objections to testifying under oath?
    Mr. Woods. None whatsoever.
    Mr. Murphy. The Chair then advised you that under the rules 
of the House and the rules of the committee, you are entitled 
to be advised by counsel. Do you desire to be advised by 
counsel during your testimony today?
    Mr. Woods. No, I do not.
    [Witness sworn.]
    Mr. Murphy. Thank you. You are now under oath and subject 
to the penalties set forth in Title XVIII, Section 1001 of the 
United States Code. You may now give a 5-minute summary of your 
written statement.

   STATEMENT OF WILLIAM T. WOODS, DIRECTOR, ACQUISITION AND 
     SOURCING MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Woods. Thank you, Mr. Chairman, Ranking Member DeGette. 
It is a pleasure to be here this afternoon to talk to you about 
Healthcare.gov and the work that we have done looking into that 
system.
    When the Web site was launched in October of last year, 
there were, of course, a number of problems. We got a lot of 
requests from the Congress to review what happened and why. 
Those requests came from both the House and the Senate, from 
both sides of the aisle. We got requests from committee chairs, 
from ranking members, from individual senators, individual 
congressmen across the board. And what we decided to do was to 
combine all of those requests and conduct a body of work that 
addressed all of the issues that were raised in those various 
requests. We have a number of engagements underway to address 
all of those issues.
    The one that we will be talking about today is contracts. 
But let me just mention, we have one that is nearing completion 
on privacy and security concerns with respect to the Web site. 
And we also have a report that is on-track for issuance later 
this year on information technology management. That report 
will look at the use of best practices in the development of 
this information technology system.
    But I am going to be talking today about our first report 
that was publicly released yesterday. And that is on the 
contracting aspects of Healthcare.gov. And I am going to be 
talking about our three objectives. The first thing we reviewed 
was the acquisition planning by CMS for the Web site. Secondly, 
we looked at the oversight of the cost schedule and performance 
of that system. And then, thirdly, we looked at a range of 
contractor performance issues with respect to Healthcare.gov.
    We focused on the largest task orders and contracts that 
were involved here. Our report mentions that CMS had spent 
about $840 million for development of the system. And that was 
through March. Obviously, the spending has continued, and that 
number is likely higher today. But as of the time that we 
completed our work, it was $840 million.
    And we focused on the largest. We reviewed in depth two 
task orders and one contract. Just briefly, those task orders 
are, one, first to CGI Federal for development of the federally 
facilitated marketplace. That is basically the Web site itself, 
as well as some back office systems that support the enrollment 
process, the financial management process, plan management, et 
cetera.
    We also looked at a task order awarded to QSSI. And that is 
for the data hub. The data hub is a system that interfaces with 
other agencies. There are roles that other Federal agencies 
need to play to make this system work: the Internal Revenue 
Service, the Department of Homeland Security to verify 
immigration status, et cetera. So lots of agencies have a role 
here. And the data hub system is that system that allows for 
communication among all of those agencies.
    And then the third contract that we looked at is one with 
Accenture. That was awarded on a sole source basis by CMS in 
January of this year for continued development of that 
federally facilitated marketplace.
    Before I get to our specific findings, I just wanted to 
make an observation that there really are some common threads 
that run through all of the work that we did here. And those 
threads are first of all complexity. This was an enormously 
complex undertaking. As I said, there were lots of Federal 
agencies involved, a number of States involved, industry 
partners, healthcare plans. Lots of players. There were also 
lots of systems that had to interact with each other. And that 
added to the complexity. Another thread that runs through--and 
you will see that when we get to the findings in a moment--is 
the pressure of deadlines. The Affordable Care Act itself set 
January 1, 2014, as the date when the enrollment took effect. 
The Department of Health and Human Services backed up from that 
January deadline and set an October 1, 2013, time for when the 
system needed to be ready to go, when they could throw the 
switch, the go-live date, that sort of thing. They needed to 
have things in place by October 1 of 2013. And that drove a lot 
of the decisions that were made by CMS. And then the third 
thread that runs through all of our findings is the changing 
requirements. Things were constantly evolving, which made it 
difficult not only for CMS personnel to keep things on track 
but also for the contractors to keep up with those changes. 
Some of those were anticipated changes, things they knew going 
in they did not yet know. But others were--they were learning 
as they went along.
    Let me get into the specific findings in the three areas 
that I mentioned. In the area of----
    Mr. Murphy. Could you summarize, because you are already a 
couple minutes over? We want to ask you a number of questions, 
so if you could just summarize your final findings.
    Mr. Woods. Certainly. Yes.
    Mr. Murphy. Thank you.
    Mr. Woods. In the area of planning, our bottom line 
assessment is simple yet sobering. And that is that CMS began 
and undertook the development of the Healthcare.gov system 
without adequate planning, despite facing a number of 
challenges that increased both the level of risk and the need 
for oversight.
    In the oversight area, we saw increasing costs across the 
instruments that we looked at. Both of the task orders 
experienced cost increases, and the new contract awarded to 
Accenture also saw cost increases. Those cost increases were 
due to a number of factors. As I said, some requirements were 
unknown at the time they awarded these instruments. When those 
costs became known, when those requirements became known, the 
costs increased. The cost schedule and performance issues were 
exacerbated by inconsistent and sometimes absent oversight.
    And then in the third area about contractor performance, we 
saw primarily in the CGI Federal task order an increasing sense 
of frustration on the part of CMS with the contractor's 
inability to be able to comply with contract requirements and 
meet deliverable schedules. That frustration grew to the point 
where they decided not to renew the contract with CGI and 
instead to move to a different solution, which is to award the 
contract to Accenture.
    So those are our three findings. We have a series of 
recommendations to address some of the issues. And I would be 
delighted to get into the specifics of that as the hearing goes 
forward.
    [The prepared statement of Mr. Woods follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
                
    Mr. Murphy. Thank you, Mr. Woods. We appreciate your 
thoroughness and your candidness.
    So as you described things like inconsistent or absent 
oversight, you said oversight weaknesses, a lack of adherence 
to planning requirements compounded by acquisition planning 
challenges. And when Mr. Slavitt testified earlier, he said 
fortunately or unfortunately, the GAO report wasn't news. So as 
you are going through this, with regard to the oversight, did 
people within CMS know that these problems were brewing?
    Mr. Woods. We saw some indication that the problems were 
known, particularly with the CGI issues that I mentioned 
earlier. That was well documented, what their concerns were. 
Other aspects, though, Mr. Chairman, were not quite as visible. 
And let me point out one area. We found a number of instances--
and our count was about 40--where changes were being made to 
the contract requirements at the direction of people that did 
not have the authority to do that.
    Mr. Murphy. Within CMS----
    Mr. Woods. Within CMS. These were largely----
    Mr. Murphy. When you say did not have the authority, you 
mean they had not discussed these with Mr. Cohen or Ms. 
Tavenner?
    Mr. Woods. Well, the only person within CMS that has 
authority to change the contract in a manner that increases the 
Government's obligations is the contracting officer.
    Mr. Murphy. Who was?
    Mr. Woods. I am sorry?
    Mr. Murphy. And who was that?
    Mr. Woods. I don't have the name right at my finger----
    Mr. Murphy. But what I am wondering here is do you know 
if--so what--the problems with the Web site--it took longer to 
develop it. The security wasn't a question. People had problems 
signing up, and with inconsistent or absent oversight. So I am 
wondering in some case, you are saying there was actions taken 
without authorization. Several dozen of these, I believe, that 
you documented.
    Mr. Woods. That is correct.
    Mr. Murphy. So people were making change orders, and that 
was leaving some problems. But there was also absent oversight. 
So some people in charge were not meeting, were not paying 
attention, were not monitoring this contract? Or they were 
monitoring some things and making the wrong decisions? Was it 
both, or one or the other?
    Mr. Woods. A combination of things. There are a number of 
people with different roles to play. As I mentioned, there is a 
contracting officer. But there was also, on the program side, a 
governance board review process. And that process was designed 
to provide high level management oversight. And what we found 
there was that that process simply did not work as intended.
    Mr. Murphy. Now, we also had heard that there was a 
McKinsey Report commissioned by then Secretary Sebelius which 
made it pretty clear they weren't going to meet their 
deadlines. Did they know within CMS that these deadlines 
couldn't be met, and that under the pressure which you had 
listed such as the January 1 deadline, or the complexity of 
this, did they know that this really wasn't ready for prime 
time?
    Mr. Woods. We found some indication in the files that we 
reviewed that in the spring timeframe, the spring of 2013, that 
estimates were made that the federally facilitated marketplace 
would only be 65 percent complete by the October 1 deadline.
    Mr. Murphy. So they knew then in the spring. Did they know 
that in August and September?
    Mr. Woods. The state of knowledge continued to progress 
from the spring through the end of the summer. And they became 
increasingly concerned that the deadline would not be met. One 
of the principal oversight functions and processes that we saw, 
and that we were very concerned about, is there was supposed to 
be, according to the original schedule, an operational 
readiness review conducted in the spring of 2013. That 
operational readiness review was moved from the spring to the 
fall, to September of 2013, just weeks before----
    Mr. Murphy. And when they did that review, did they know it 
wasn't going to work?
    Mr. Woods. Well, as I said, there was some indication in 
the files that they thought only 65 percent would be complete.
    Mr. Murphy. So when Ms. Tavenner----
    Mr. Woods. The purpose of that operational readiness review 
is to either confirm that the system will work or find out what 
is wrong.
    Mr. Murphy. So when----
    Mr. Woods. So that there is enough time to fix it.
    Mr. Murphy. So when Ms. Tavenner came before this 
committee, or more specifically when Mr. Cohen came before this 
committee within days of the launch, and he said everything was 
going to be fine by October 1, what you are saying to this 
committee is there was ample evidence to say that was not true?
    Mr. Woods. We saw some indication that there was 
progressively increasing knowledge that there were problems in 
meeting that launch date.
    Mr. Murphy. OK. And did Mr. Cohen know that?
    Mr. Woods. I don't know that.
    Mr. Murphy. But either through lack of oversight, he should 
have known it, or he knew it and reported to this committee 
under oath that everything was fine, and August 1, it was going 
to be ready for launch? What you are telling us, there was 
ample evidence in what is reviewed that people within HHS knew 
it was not ready, and people under oath told this committee 
something entirely different?
    Mr. Woods. Yes. I don't know what specific individuals knew 
or did not know. But we saw evidence in the files that we 
reviewed that there was a knowledge within the Agency that the 
operational readiness was in jeopardy.
    Mr. Murphy. Thank you. I am over time. I will now turn to 
Ms. DeGette for 5 minutes.
    Ms. DeGette. Well, this is an important issue. So you are 
saying people within the Agency knew that the Web site was not 
ready, correct? Yes or no?
    Mr. Woods. We did--we saw evidence in the files----
    Ms. DeGette. You saw yes that people--do you think that 
people in the Agency knew that the Web site would collapse on 
October 1, yes or no?
    Mr. Woods. I can't speak to that particular 
characterization.
    Ms. DeGette. You don't have any--do you have indication 
from the files that people in the Agency knew that the Web site 
would not work on October 1?
    Mr. Woods. Yes, we saw that. Yes.
    Ms. DeGette. Can you produce that to this committee, 
please?
    Mr. Woods. There was a series----
    Ms. DeGette. No, can you produce it----
    Mr. Woods. Absolutely, ma'am. Yes.
    Ms. DeGette. Thank you.
    Mr. Woods. Yes, ma'am.
    Ms. DeGette. Now, my next question, because Ms. Tavenner 
and Mr. Cohen did come in here and testify under oath several 
days before, as the chairman has said, that the Web site would 
work. Do you have evidence in your files that Mr. Cohen or Ms. 
Tavenner knew that this Web site would not work, yes or no?
    Mr. Woods. No, I cannot speak to the knowledge of any 
individual.
    Ms. DeGette. Thank you. Now, in your opening statement, you 
talked about some provisions the GAO was coming up with to 
strengthen the Web site for--some recommendations for privacy 
and security concerns, is that correct?
    Mr. Woods. Well, this particular report that we are 
speaking to today just deals with the contracting aspect----
    Ms. DeGette. Right. But you talked about----
    Mr. Woods. Not----
    Ms. DeGette. But----
    Mr. Woods. Not for security and privacy. That----
    Ms. DeGette. OK. So you are not looking at privacy and 
security?
    Mr. Woods. Other teams within GAO are looking at----
    Ms. DeGette. Are looking----
    Mr. Woods. At that work----
    Ms. DeGette. Are you aware of any security breaches in the 
Web sites, yes or no?
    Mr. Woods. No, I am not.
    Ms. DeGette. OK. Now, the GAO made five recommendations you 
reference in your opening statement to CMS to avoid the 
mistakes that you had identified, is that correct?
    Mr. Woods. Yes.
    Ms. DeGette. And I just want to go through those 
recommendations, because you said we should. And I think it is 
important to know. The recommendations I think are good 
recommendations, but they are a little vague. And so I am going 
to ask you about each one of them if you have specific details. 
But then also, I am going to ask you, Mr. Woods, to supplement 
your testimony and provide to this committee, and to CMS, 
specific details on each one of them. Because I think it is 
important for the CMS to actually be able to implement these 
recommendations. And our last witness said he agreed with the 
recommendations, and he did want to implement them.
    The first recommendation is that CMS should take steps to 
assess the causes of the increase in cost of the continued 
development of Healthcare.gov and the delays in functionality 
of the Web site, and develop a plan to mitigate those costs and 
delays. Can you briefly give us a little more detail on what 
steps the GAO believes CMS should take to make those 
assessments?
    Mr. Woods. Certainly. We did see cost increases in the 
Accenture contract, the current contract----
    Ms. DeGette. So what steps do you think CMS can take to 
rectify these problems?
    Mr. Woods. We think that they need to step back and 
identify the causes, the reasons why costs continue to 
increase, in that particular contract.
    Ms. DeGette. OK. And do you have any thoughts what should 
be included in a mitigation plan?
    Mr. Woods. They need to make sure that costs are under 
control, and that the schedule can be met.
    Ms. DeGette. Yes. I think those two things are key. Now, 
the next thing the GAO recommends is that quality assurance 
surveillance plans and other oversight documents are collected 
and used to monitor contract performance. How can those 
documents be effectively used to monitor performance?
    Mr. Woods. The quality assurance surveillance plan is a 
standard document that is required in most efforts of this size 
that provides a roadmap for how the Agency--any agency--is 
going to oversee the contractor's performance.
    Ms. DeGette. Right. Does the GAO have thoughts on how it 
can be used to do that?
    Mr. Woods. Yes, it----
    Ms. DeGette. OK. If you can give us that information, that 
would be great.
    Mr. Woods. Certainly.
    Ms. DeGette. I want to go through your other 
recommendations briefly while I still have time.
    Mr. Woods. Certainly.
    Ms. DeGette. The GAO also recommends that CMS formalize 
existing guidance of the responsibilities of personnel assigned 
oversight duties. So as I understand it, the roles and 
responsibilities were spelled out in some way. How would 
formalizing existing guidance prevent confusion about the 
responsibilities and authority going forward?
    Mr. Woods. This gets to the issue of unauthorized 
individuals making changes.
    Ms. DeGette. OK. Great.
    Mr. Woods. And when they learned of that, there was 
internal guidance provided to all of the people that--but that 
has not been institutionalized. It has not been made part of 
the permanent guidance at----
    Ms. DeGette. OK. OK. So they already have a way they are 
doing it? That just needs to be formalized?
    Mr. Woods. It needs to take the next step.
    Ms. DeGette. Perfect. Now, the next thing, you recommend 
giving staff direction on acquisition strategies and developing 
a process to ensure that acquisition strategies are completed 
on time. Can you flesh that out a little bit for us?
    Mr. Woods. That was a very important deficiency that we 
identified, is that there were a number of steps that CMS took 
to expedite the rollout of Healthcare.gov.
    Ms. DeGette. Yes.
    Mr. Woods. But each of those individual steps added risk to 
the process. And the purpose of the plan, of the acquisition 
strategy, is to first of all identify those risks to be able to 
come up with a plan to address them. And we found that that 
acquisition strategy was not prepared.
    Ms. DeGette. Right. So does GAO have some ideas what this 
process could look like if done appropriately?
    Mr. Woods. The process is already in place.
    Ms. DeGette. OK.
    Mr. Woods. The regulations at HHS are very clear.
    Ms. DeGette. OK.
    Mr. Woods. In fact, there is a template. It just wasn't 
done in this particular case.
    Ms. DeGette. Oh, great. So they just need to follow the 
existing way. Perfect.
    Mr. Woods. Exactly.
    Ms. DeGette. Last, you recommended ensuring that 
information technology projects adhere to the requirements for 
governance board approvals before proceeding with development. 
What exactly does that mean? What governing board are you 
referring to? What are the requirements? And why did the board 
approval process fail the first time around with 
Healthcare.gov?
    Mr. Woods. Yes. The Agency had a system in place that 
provided for an oversight board to review the progress of the 
system. The problem that we found is that those governance 
board meetings were held with incomplete information, and that 
decisions were not made as we would have expected to either 
approve, disapprove, or make modifications in the----
    Ms. DeGette. So what you are saying is once again, this was 
a failure to follow the existing rules that they had?
    Mr. Woods. There was a process in place. They did not 
follow it.
    Ms. DeGette. Thank you. Thanks for your indulgence, Mr. 
Chairman.
    Mr. Murphy. Yes. I now recognize Mrs. Ellmers from North 
Carolina for 5 minutes.
    Mrs. Ellmers. Thank you, Mr. Chairman. Thank you, Mr. 
Woods, for being with us today. And as I am sitting here 
listening to your report findings, I am incredibly amazed by 
the inefficiency that went forward with a plan of action that 
was in place. And I keep coming up with the same question of 
why? Why were these steps taken? Why was action taken the way 
that it was? Why were there unauthorized individuals making 
decisions? But I think one of the most glaring questions that I 
have, based on your findings, is that--and you use the word 
that they expedite, they took measures to expedite the rollout, 
that that added risk, obviously. And that was a failed 
strategy, essentially. Why in your opinion, based on your 
findings, did they stay with that October 1 rollout date when 
they knew, based on what I am listening to, that it was not 
going to be accurate and successful, and that it would be a 
failure?
    Mr. Woods. Well, the law itself, the Affordable Care Act, 
set a hard deadline of January 1, 2014.
    Mrs. Ellmers. Um-hum.
    Mr. Woods. And they needed to have some period where 
consumers could determine their eligibility, look at plan 
availability and make decisions about what plans they wanted to 
choose by that January 1 date.
    Mrs. Ellmers. Um-hum. So they stuck with the October 1 date 
knowing that their time was running out, so now, this is me 
just again trying to process why they would go forward with 
something that obviously was not put together well, and the 
steps were taken--it wasn't an efficient system. And yet they 
were moving forward. So based on your knowledge, they had to go 
forward with that October 1 date so that they could have the 
enrollee numbers that they were looking for by January 1, 
regardless of the fact that it wasn't going to work?
    Mr. Woods. That has been CMS' position is that they needed 
to stick with that October 1----
    Mrs. Ellmers. So they had to stick to that date, because 
they needed those numbers of individuals signing up 
essentially, yes?
    Mr. Woods. Well, they needed to comply--to have a system in 
place by January 1 in order to comply with the Affordable Care 
Act.
    Mrs. Ellmers. Right. OK. So I am going to go back to some 
of the questions also on the tech surge--when the tech surge 
was implemented. To the best of our knowledge, and based on 
your report findings, we understand that there was a, again, 
tech surge in October to fix the site after Healthcare.gov's 
failed October 1 launch. Based on your investigation, what 
actions did CMS take in October to fix the site?
    Mr. Woods. In October, they continued to work with CGI 
Federal.
    Mrs. Ellmers. Um-hum.
    Mr. Woods. But the level of frustration reached the point 
in November of 2013 where they sent yet another letter 
detailing the shortcomings of the contractor, asking for a 
corrective action plan. CGI responded to that, and clearly 
disagreed with CMS' assessment at that point.
    Mrs. Ellmers. OK. So they were disagreeing with it. So was 
CGI--I mean, because there were other contractors involved, 
too, is that correct?
    Mr. Woods. There were many other contractors involved.
    Mrs. Ellmers. Yes.
    Mr. Woods. Correct.
    Mrs. Ellmers. OK. But particularly, it was CGI that is 
where the frustration was--where the disconnect was?
    Mr. Woods. They were responsible for the heart of the 
system, if you will.
    Mrs. Ellmers. OK.
    Mr. Woods. And that is where most of the dollars were in 
terms of contract expenditures.
    Mrs. Ellmers. Um-hum. So to that point, based on the fact 
that CGI was the main contractor for that, were there other 
contracts--was their contract extended? Were there any new 
issued contracts based on the frustration that CMS had?
    Mr. Woods. The CGI contract had been extended earlier until 
February of 2014.
    Mrs. Ellmers. And that was before October 1?
    Mr. Woods. I believe that was before October----
    Mrs. Ellmers. OK. So it was already extended before October 
1?
    Mr. Woods. That is correct.
    Mrs. Ellmers. OK. Then to that point, were there any other 
contractors that were selected, knowing that CGI was not 
necessarily doing what was necessary for the repair of the Web 
site?
    Mr. Woods. The only contract that I am aware of is the new 
one to Accenture to continue with development of the federally 
facilitated marketplace.
    Mrs. Ellmers. Accenture. And can you refresh my memory on 
when that actually took place, when that new contract went 
forward?
    Mr. Woods. That was January of 2014.
    Mrs. Ellmers. That was January. OK. Well, Mr. Chairman, I 
have gone over on my time, and I apologize. Thank you. Thank 
you, Mr. Woods.
    Mr. Murphy. Thank you. I now am going to recognize the 
gentleman from Virginia, Mr. Griffith, for 5 minutes.
    Mr. Griffith. Thank you so much for being here today. I 
appreciate it very much.
    The report indicates that CMS did not engage in effective 
planning or oversight. What do you recommend they do in the 
future to make sure they have proper planning and oversight, 
because they apparently dropped the ball?
    Mr. Woods. They have the tools in place.
    Mr. Griffith. OK.
    Mr. Woods. One of the primary tools is a strategic plan. An 
acquisition strategy is what it is called. There is actually a 
template in the HHS' regulations for each of the areas that 
need to be addressed. And fundamentally, it is a tool designed 
to identify the risks that the Agency is undertaking, and to be 
able to come up with a plan to be able to mitigate those risks. 
But they did not follow it. So the tools are there. They did 
not use the tools that were there.
    Mr. Griffith. Now, I might ask you an open-ended question 
because I think it is important that we get this perspective 
from time to time. And that would be out of the report, what 
have we not asked you about that we probably should have asked 
you about, or the people watching this at home, something that 
they ought to know about your report that you haven't already 
covered in your testimony here today?
    Mr. Woods. Well, one thing that comes to mind is the next 
enrollment period.
    Mr. Griffith. Um-hum.
    Mr. Woods. I think people are wondering, are we going to 
experience similar problems, or are we in better shape? And 
that is why we have one of our recommendations that is focused 
on the current contract with Accenture where we have seen some 
cost growth, and we think the Agency needs to make an 
assessment of why that cost growth has occurred, whether they 
are in fact on schedule, and whether there are any risks to the 
2015 enrollment period.
    Mr. Griffith. And my hearing is not as good as it should 
be. You are talking about the cost growth--what was that phrase 
you used?
    Mr. Woods. Cost increases. We----
    Mr. Griffith. OK.
    Mr. Woods. And we have somewhat of a disagreement with the 
Agency about the term ``cost growth.'' And that is why I am 
reluctant to use it. Their position is that any cost increase 
since about April of this year is totally based on new 
requirements, so it is unfair to call that cost growth. Our 
position is that when you look--before that, when they 
initially awarded that contract at an estimated value of $91 
million, and now it is at 175--that the Agency needs to make an 
assessment about why those costs increased from the 91 to the 
175.
    Mr. Griffith. What----
    Mr. Woods. And let me just add that may not--that is not 
the end of it. That contract continues in place today. Our 
numbers are dated in terms of, you know, we completed our audit 
work a couple of months ago. So costs on that particular 
contract are almost certainly higher today than they were at 
the time that we completed our audit work. And we think the 
Agency needs to make an assessment about why costs continue to 
grow.
    Mr. Griffith. Well, I think they do, as well. And I 
appreciate you raising that point. And it is kind of 
interesting, it would seem to me some of those new requirements 
are probably because it didn't work the first time around, 
wouldn't you agree?
    Mr. Woods. There are enhancements to the system.
    Mr. Griffith. Um-hum.
    Mr. Woods. They are constantly changing and trying to make 
improvements to the system. The ones that--early on, I think 
you are right that those are related to the inability of the 
system to function as intended originally. But the Agency tells 
us the more recent cost increases are due to enhancements.
    Mr. Griffith. All right. Well, I appreciate that. And I 
appreciate your testimony here today. And I am happy to yield 
my last 55 seconds to whomever might want it.
    Mrs. Ellmers. I will----
    Mr. Griffith. Mrs. Ellmers?
    Mrs. Ellmers. Thank you. Thank you. I do have one follow-up 
question. And it has to do with the conversation you were just 
having with my colleague. When we were talking about the cost 
increases, you had mentioned that enhancements are what has 
been cited as the reasoning. My question for you is, did CMS 
get congressional approval for the additional funding or 
spending, I guess I should say?
    Mr. Woods. Yes. I am not aware of what that process was at 
all.
    Mrs. Ellmers. So to your knowledge, and based on the 
report, you did not see any effort put forward to come to 
Congress for additional funding for spending?
    Mr. Woods. I can't speak to that. We didn't see it, but 
that wasn't part of our review.
    Mrs. Ellmers. OK. Thank you, Mr. Woods. And thank you to my 
colleague for yielding.
    Mr. Murphy. Thank you. I am going to do a second round with 
Ms. DeGette and I. So just as a follow-up here, are you saying 
that CMS is not analyzing why the contract with Accenture is 
growing in cost?
    Mr. Woods. We don't think that they have done that fully 
yet.
    Mr. Murphy. This original contract, which was a cost plus 
contract, who signed that contract? Who is responsible for 
that?
    Mr. Woods. Those contracts are signed by the contracting 
officer. And as I said, I don't have that name in front of me.
    Mr. Murphy. Do those have to be approved by Mr. Cohen and 
Ms. Tavenner?
    Mr. Woods. I don't know.
    Mr. Murphy. Do you know, in their chain?
    Mr. Woods. I don't know.
    Mr. Murphy. Is that something that your study encompassed 
to find that paper trail or look at that?
    Mr. Woods. We did not review that, no.
    Mr. Murphy. Well, let me ask you too. You talked about the 
pressure of deadlines, the January 1, 2014. But a number of 
delays were put into place, the employer mandate or the 
retirement issue, enforcement of canceled plans, individual 
mandate to the shop plan. Should the rollout have been delayed 
as well?
    Mr. Woods. I am not sure about that. But your observation 
about delays is accurate. When they realized that they would 
not be able to be fully functional by October 1, they did make 
some tradeoffs and pushed projects that they thought they were 
initially going to be able to complete by October 1, pushed 
that off into the future. And the small business program that 
you mentioned is one of them. The financial management module 
was also pushed off until a later date.
    Mr. Murphy. But none of those delays caused a delay in the 
Web site? Many of things that are mentioned, they didn't cause 
a delay in the Web site readiness? These several dozen other 
changes internally which were one of the factors in delay in 
the Web site readiness, though, am I correct?
    Mr. Woods. Well, the Web site was launched. I am not sure--

    Mr. Murphy. Well, you had said a number of decisions made 
during I guess this 2013 to 2012, were part of the complexity 
that--you mentioned a couple things. One, there wasn't proper 
oversight of the contract. And the second thing, a number of 
internal changes were made by someone who didn't have the 
authority to make those changes.
    Mr. Woods. That is correct.
    Mr. Murphy. So do you know, or can you find out for us, in 
terms of, if someone is making these changes, who approved the 
decision for them to these changes, or who gave that person the 
authority to be in that position to make those changes? Do you 
have that information?
    Mr. Woods. There are a number of people working with the 
contractors on a day-to-day basis. And the 40 instances of 
changes, or direction to the contractor, were made by multiple 
individuals. Some of these were technical people, as I said, 
working side-by-side with the contractor. Some of them were 
more senior officials. All of the changes though ultimately 
were ratified by the person with authority to do that, and that 
is the contracting officer.
    Mr. Murphy. But what, did it go to the level of Ms. 
Tavenner or Mr. Cohen?
    Mr. Woods. I don't know.
    Mr. Murphy. Is that something your records could reveal? 
This is a follow-up to what Ms. DeGette was asking as well. We 
need to know if your records show, or if you can find out for 
us--I don't think--you have an excellent investigation. But it 
is very important to know this, if they knew or should have 
known in terms of approving these changes, or being aware that 
the Web site wasn't ready, or--well, just let me ask that part. 
Do you have any information on those?
    Mr. Woods. Well, as I said, we will certainly review our 
materials and provide an answer to that question.
    Mr. Murphy. Because it comes to this point, this committee, 
members of each side of the aisle has different points of view 
on issues with regard to healthcare reform. That is fine. That 
is part of what makes our Nation great. People have differences 
of opinion, they move forward on that. But there are certain 
standards within a committee that I think we should be unified 
in understanding that if someone comes before this committee 
under oath and claims that something is ready to roll out on 
October 1, that everybody should be able to sign up, knowing 
full well that it is not, it is either incompetence, it is 
dereliction of duty, it is sloppiness, it is lack of 
supervision oversight, or it is perjury to this committee. It 
is perjury in terms of making a claim they know is not true, or 
making the claim they have no business of making. The only 
answers to questions like is the Web site ready October 1 are 
yes, no or I don't know. Anything beyond that, when the claim 
was made by Mr. Cohen to this committee under oath that October 
1, everybody would be ready to sign up, it is clear from your 
investigation and your testimony that people within the 
agencies knew it was not ready. So any information you could 
provide us that tells us if they knew and made false claims to 
this committee, or if they didn't know and made false claims to 
this committee, it is important for the integrity of this 
committee to let us know. And if you could submit that 
information to this committee, I would be grateful, your papers 
and other reviews of that.
    Ms. DeGette, you are recognized for 5 minutes.
    Ms. DeGette. Thank you very much, Mr. Chairman. And, Mr. 
Woods, I can understand why the Chairman is concerned about 
this, based on your testimony today. So I want you to think 
very clearly about what your investigation found and what you 
have testified to this committee today when I asked you these 
questions, because I don't want the record to be confused. And 
I don't want a misimpression to be left.
    Are you aware of either Ms. Tavenner or Mr. Cohen coming 
before this task committee and lying about whether they knew 
that the Web site was not ready?
    Mr. Woods. No, I cannot speak to that. I don't know.
    Ms. DeGette. You don't know. Do you know whether Ms. 
Tavenner or Mr. Cohen personally knew that the Web site was not 
ready, yes or no?
    Mr. Woods. No, I do not know.
    Ms. DeGette. You don't know that. Do you know whether Ms. 
Tavenner or Mr. Cohen specifically approved those changes?
    Mr. Woods. No, I do not know.
    Ms. DeGette. You don't know that either.
    Mr. Woods. No.
    Ms. DeGette. Do you know who within the Agency did approve 
those changes?
    Mr. Woods. Ultimately, those changes were ratified and 
approved by the contracting officer.
    Ms. DeGette. The contracting officer. So you could give us 
that information, who that was?
    Mr. Woods. Absolutely. Yes.
    Ms. DeGette. Thank you very--I just think--and I know the 
Chairman agrees. We don't want to loosely be throwing around 
allegations of perjury or anything else when we know--and we 
don't want to put words in your mouth either. So I think we are 
clear on that.
    There is one more thing I wanted to clarify about your 
testimony today. Your first recommendation that in your report 
on this topic, as we discussed, was take immediate steps to 
assess the causes or continued FFM cost growth and delayed 
system functionality, and develop a mitigation plan designed to 
ensure timely and successful system performance. Is that right?
    Mr. Woods. That is correct.
    Ms. DeGette. And that is the one you are concerned about 
CMS following as they look at implementation of the 2015 
program, is that correct?
    Mr. Woods. The effort that is underway by Accenture is to 
move the development forward to be ready for the 2015----
    Ms. DeGette. Right. And that relates to that 
recommendation?
    Mr. Woods. Yes, it does.
    Ms. DeGette. OK.
    Mr. Woods. We think----
    Ms. DeGette. And----
    Mr. Woods. We----
    Ms. DeGette. What?
    Mr. Woods. We think that CMS needs to make that assessment 
in order to ensure itself it is on track for that enrollment 
period.
    Ms. DeGette. Right. For next year. Right.
    Mr. Woods. Right.
    Ms. DeGette. Now, you were sitting here I believe when we 
heard the testimony of the previous witness, is that correct?
    Mr. Woods. Yes, I was.
    Ms. DeGette. Mr. Slavitt. And I specifically asked Mr. 
Slavitt if he had reviewed the five recommendations GAO had 
made. Do you remember hearing that?
    Mr. Woods. Yes.
    Ms. DeGette. And do you remember hearing Mr. Slavitt say 
that CMS agrees with all five of the recommendations? Do you 
remember hearing that?
    Mr. Woods. I remember hearing that, yes.
    Ms. DeGette. OK. So I would just--you know, sometimes I 
like to have both the Agency witness and the GAO so that they 
can answer each other's issues. But I just want the record to 
be clear that Mr. Slavitt has said that they recognize this 
recommendation, they intend to comply with it. And I think, Mr. 
Chairman, we should follow-up and make sure that happens. Thank 
you. And I yield back the balance of my time.
    Mr. Murphy. OK. Thank you. I now recognize Dr. Burgess for 
5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman. Mr. Woods, thank you 
for being here. And let me just commend the Government 
Accountability Office on great work. This has not been easy, 
and I appreciate how difficult it has been to be here today. 
And I appreciate your forbearance.
    Now, along the lines of what Ms. DeGette was just asking 
you, do you know whether or not the Center for Medicare and 
Medicaid Services is adopting your recommendations right now?
    Mr. Woods. What they told us is that they fully agreed with 
four of our recommendations, and they partially concurred with 
our fifth recommendation.
    Mr. Burgess. Have you any evidence that you can point to 
that shows that in fact they are taking steps to comply with 
four of those recommendations?
    Mr. Woods. We have seen some indication----
    Mr. Burgess. Well, you have their assurances, but is there 
anything that you can point to in data and fact that they are 
taking those recommendations?
    Mr. Woods. What they told us is that they are providing 
additional training in certain areas that they plan to 
implement those recommendations. We are hopeful that they do. 
We have a normal regular process for following-up with agencies 
to make sure that if they tell us that they are going to 
implement recommendations that they in fact do so.
    Mr. Burgess. OK.
    Mr. Woods. So that process will continue at GAO.
    Mr. Burgess. Well, and I look forward to the follow-up 
hearing we have about that implementation.
    Now, you know, a lot was written in August of 2012 about 
CMS' or HHS' lack of production on rulemaking as it related to 
the essential health benefit. And, in fact, that rulemaking was 
delayed. The rule actually came out about a week after Election 
Day that year. I don't know if you recall that. In your work, 
was there any evidence that that delay was politically 
motivated? Or am I just being overly sensitive and overly 
cynical by the rule coming out a few days after Election Day 
2012?
    Mr. Woods. We found no indication of that, sir.
    Mr. Burgess. So your inference is I am being overly 
cynical?
    Mr. Woods. We found nothing to point us in that direction.
    Mr. Burgess. Well, let me just point out to you, why--on 
this committee, it has come up several times today. I mean, Mr. 
Cohen was here. I think it was about 10 or 11 days before 
October 1. And I asked him a very direct, very specific 
question. In fact, I tried to do a John Dingell and said yes or 
no, the Web site will be ready on October 1? He gave me what I 
presumed to have been a well-rehearsed and studied answer, 
because he repeated it verbatim twice. And it essentially said 
on October 1, consumers will be able to go online, see premium 
net of subsidy, and make their purchase. Now, as we know, that 
didn't actually turn out to be the case. So it is a valid 
question to ask. He must have known that 10 days before the 
launch date, because it sounds like from your report that it 
was pretty clear that things weren't going well. Am I wrong 
about that?
    Mr. Woods. I simply can't speak to what he knew or didn't 
know at any particular point in time.
    Mr. Burgess. Well----
    Mr. Woods. But I can say that we found indications in the 
documents that we reviewed that the system was projected to be 
only 65 percent complete by that October 1 deadline.
    Mr. Burgess. If you had been sitting here and asked that 
question, and reminded that you were under oath, would you have 
answered it the same way Mr. Cohen did?
    Mr. Woods. I can't really respond to----
    Mr. Burgess. Well, let me ask you this, because you have 
got written in your report, as the October 1, 2013, deadline 
for establishing enrollment through the Web site neared, CMS 
identified significant performance issues involving the FFM, 
the Facilitated Federal Marketplace, contractor. But the Agency 
took over only limited steps. Can you provide for the committee 
what correspondence, what evidence, what documents you relied 
upon to come to that conclusion, to make that statement?
    Mr. Woods. Absolutely. We can summarize what led us to that 
conclusion. And we would be happy to do that.
    Mr. Burgess. As a part of making this statement, did you 
have access to internal emails within the Center for Consumer 
Information and Insurance Oversight at CMS?
    Mr. Woods. We reviewed lots of documents, contract 
documents, emails, memos. So we had very good access to lots of 
information from CMS.
    Mr. Burgess. And I appreciate that. I would simply ask that 
that access be made available to this committee, the documents, 
the emails, the transcripts that you have, would make that 
available to our subcommittee, for the staff----
    Ms. DeGette. Mr. Chairman, I believe we already have that 
information in this subcommittee.
    Mr. Murphy. Well, let us find out.
    Ms. DeGette. It has been produced already.
    Mr. Burgess. Again, I would ask that we be certain that you 
have produced the information the subcommittee staff is asking 
for.
    Mr. Woods. We would be happy to work with the committee on 
that.
    Mr. Burgess. And let me just ask you one last thing. In 
your opinion, is the Web site--open enrollment period this time 
is going to be much shorter than last time--in your opinion, 
are they going to be ready for the second open enrollment 
period?
    Mr. Woods. I am not in a position to make that judgment. 
That is why we had the recommendation that we did is that we 
think CMS needs to make that assessment of cost and schedule to 
make sure that they are on track.
    Mr. Burgess. Because there is the possibility they would 
not be able to meet that?
    Mr. Woods. We said in the report that the risk is that 
there could be some impact on the 2015 enrollment period, and 
that is why we had the recommendation that we did.
    Mr. Burgess. OK. And I thank you for your answers.
    Mr. Murphy. The gentleman's time has expired.
    Mr. Burgess. And I thank you for being here. I yield back.
    Mr. Murphy. Thank you. I ask unanimous consent that the 
member's written opening statements be introduced into the 
record. And without objection, the documents will be entered 
into the record.
    Mr. Woods, I want to thank you for your thorough and candid 
GAO report. All this committee requests is honesty, 
thoroughness, and details. And GAO's reputation as a 
nonpartisan investigative report organization is based on that 
ability to honestly and thoroughly provide the truth to a 
candid world. So we appreciate that.
    Members will have several questions for follow-up. We do 
ask that you respond to them in a quick manner. We also ask 
your commitment that you will share your work with our majority 
and minority staffs, so they can also review them with you and 
get other details.
    So in conclusion, I would like to thank all the witnesses 
and members that participated in today's hearing. In remind 
members they have 10 business days to submit questions for the 
record.
    And with that, I adjourn this hearing.
    [Whereupon, at 12:53 p.m., the subcommittee was adjourned.]
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