[Senate Hearing 113-]
[From the U.S. Government Publishing Office]



 
  DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND 
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2014

                              ----------                              


                       WEDNESDAY, APRIL 24, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:05 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Tom Harkin (chairman) presiding.
    Present: Senators Harkin, Pryor, Shaheen, Merkley, Moran, 
Cochran, Alexander, Johanns, and Boozman.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                        Office of the Secretary

STATEMENT OF HON. KATHLEEN SEBELIUS, SECRETARY


                OPENING STATEMENT OF SENATOR TOM HARKIN


    Senator Harkin. The Subcommittee on Labor, Health and Human 
Services, and Education will please come to order.
    Madam Secretary, welcome back to the subcommittee. I want 
to start by commending you for the outstanding work you're 
doing to implement the Affordable Care Act (ACA) since 
President Obama signed it into law 3 years ago.
    Since 2010, some 6.3 million seniors have received more 
than $6.1 billion in discounts on their prescription drugs. 
Last year, almost 40,000 seniors in my State of Iowa saved an 
average of $650 each.
    More than 3.1 million young adults are staying on their 
parents' insurance from graduation to age 26.
    But most important of all, 105 million Americans have 
received a free preventative screening or service because of 
the Affordable Care Act.
    Your Department is carrying out these reforms with great 
skill, and I thank you for your leadership.
    More work remains, of course. The President's budget 
request for fiscal year 2014 includes additional funding at the 
Centers for Medicare and Medicaid Services (CMS) for operating 
the marketplaces that will allow consumers and small businesses 
to compare private health plans.
    As chairman of both this subcommittee and the Health, 
Education, Labor, and Pensions (HELP) Committee, the 
authorizing committee, I'm determined to do everything I can to 
help this effort succeed.
    However, Madam Secretary, I am beyond upset--beyond upset--
that the administration helped pay for the Affordable Care Act 
in fiscal year 2013 by raiding the Prevention and Public Health 
Fund.
    Madam Secretary, maybe you just don't know how angry I am 
about this. This is a 20-year effort--a 20-year effort--I 
fought to get more focus on prevention and wellness. And the 
ACA provided the opportunity to change.
    I have been saying for over 20 years, we don't have a 
healthcare system in America; we have a sick care system. If 
you get sick, you get care, and we're good at it. We have great 
surgeons and great doctors. Once you're sick, you get great 
care in America.
    But where we have failed, where we have failed miserably, 
is keeping people healthy, preventing disease and illness in 
the first place. Every study, all the studies, all these years, 
show the payback on prevention is incredibly high.
    And yet, we cut it. We cut it. And like clueless dodos, we 
wonder why healthcare is going through the roof.
    So when the Affordable Care Act was being developed here, 
some of us, I included, saw it not just as a way to pay bills. 
How do we pay the bills more? How do we do it more efficiently 
and more effectively? But how do we reduce chronic diseases 
through prevention and wellness programs?
    In other words, we need a change. To begin this change, we 
should think about having a true healthcare system in America 
where we support people from the earliest times of life, in 
every aspect, not just in a clinical setting, that's important, 
but in our workplaces, in our schools, in our communities. So 
we have a regime of wellness and prevention in this country.
    The prevention fund is working, children are being 
immunized, people are quitting smoking, communities are 
fighting chronic diseases, more people are being screened for 
hepatitis C.
    Robbing prevention when we know these efforts can improve 
people's health and lower healthcare costs goes against the 
very mission of healthcare reform.
    Raiding the prevention fund to just figure out how we pay 
the bills and how we setup a structure, just perpetuates--
perpetuates--our unique, costly American sick care system.
    I'm sorry to say that this administration just doesn't seem 
to get it. They just don't seem to get it.
    First of all, there was a $5 billion raid last year on the 
prevention fund. This year, it's another $332 million raid on 
the prevention fund.
    And, Madam Secretary, I read your statement last night. 
Great statement, as far as it goes. It doesn't even mention 
prevention. It doesn't even mention it. Only in mental health, 
a little bit of mental health, and the Infectious Disease 
Surveillance Program, which the Centers for Disease Control and 
Prevention (CDC) has been doing for over 50 years.
    It's sort of like the prevention fund and what we did in 
prevention is sort of an afterthought, maybe? It was not in 
your statement. Is that indicative of the administration's 
approach? That it's just an afterthought? It can be raided? It 
can be done away with?
    Well, we are going to do another bill this year. I'm 
hopeful that we can get it through, and I hope that we can 
allocate the money as we've done in the past. But this strikes 
right at the heart of trying to change this system.
    On other matters, the President's proposed budget does some 
good things. It increases key priorities like childcare and 
Head Start, National Institutes of Health (NIH). I'm especially 
interested in how the Department of Health and Human Services 
(HHS) and the Department of Education plan to work together on 
the President's Early Childhood Education Initiative, because 
both HHS and Education have parts of that. And we need to know 
more how that's going to work, in terms of how we allocate 
funds on this committee.
    So, Madam Secretary, I look forward to hearing your 
testimony. But first, I yield to Senator Moran for any opening 
remarks he may wish to make.


                    STATEMENT OF SENATOR JERRY MORAN


    Senator Moran. Mr. Chairman, thank you very much.
    Madam Secretary, welcome to the subcommittee.
    I was reminiscing, at least in my own mind, that the first 
time you and I served in public office together was 1989, in 
which I, as a freshman member of the Kansas Senate, was 
assigned to be on the Indian Gaming Committee. And you and I 
spent a number of years in front of a Federal judge negotiating 
Indian gaming compacts in Kansas.
    At least I would have never envisioned the circumstance in 
which we find ourselves this morning.
    It's a pleasure to see you again, and welcome back to the 
subcommittee.
    Obviously, a difficult economic environment. Congress 
struggling with difficult budget decisions.
    The concern that I have with the Department of Health and 
Human Services budget is the 10.5 percent, $6.9 billion above 
current spending levels. Specifically, the budget includes a 
significant $1.5 billion request to set up health exchanges, 
insurance exchanges.
    I'm concerned that we still don't yet know the full cost of 
the Affordable Care Act.
    Last week, the Department announced it would transfer 
fiscal year 2013 funding from the prevention fund that Senator 
Harkin described to fill some of the gaps in the health 
insurance exchange implementation. This decision takes public 
health dollars and workforce development funding supported by 
the prevention fund and diverts it toward what I believe to be 
the administration's political priority, implementing the 
exchanges.
    In fiscal year 2014, the taxpayer is handed another 
unexpected bill for the 33 States, including our own home 
State, that have declined to set up exchanges. It turns out 
that the blank check that was available for States to set up 
their own State-based exchanges does not extend to the 
federally implemented exchanges in the 33 States that did not 
implement a State exchange.
    The administration struggles to find funding to implement 
the Affordable Care Act. It's critical that we don't continue 
the haphazard ``rob Peter to pay Paul'' strategy. We need to 
set funding priorities to ensure balance and increased 
certainty across all aspects of our Nation's healthcare system.
    One of my priorities in Congress has always been to ensure 
that Americans have access to quality, affordable healthcare in 
whatever setting, whatever place in the country they live. 
Therefore, as a Senator from Kansas, I have a significant 
emphasis on rural. And I'm concerned with the proposals within 
the Department's budget that would disproportionately affect 
Kansas and other rural States, jeopardizing healthcare access 
and threatening the survival of small towns.
    In particular, the issues--when you transfer money from the 
prevention fund to fund the exchanges--rural healthcare is 
affected in a number of ways, including rural access to 
emergency devices; rural hospital flexibility grants; section 
317 immunization program; the critical hospital program, that I 
will mention again; the continued attack on critical access 
hospitals; a reduction in the percentage of cost-based 
reimbursement; the mileage issue.
    And so I raise genuine concerns with an issue that I know 
that you're very familiar with--the rural aspect of 
transferring funds from the prevention fund to set up 
exchanges.
    I'm also interested in hearing, and I'll ask a question 
about the legality of transferring money from the prevention 
fund, by what authority is that possible?
    Again, the President's 2014 budget cuts Medicare 
reimbursement to critical access hospital programs, eliminates 
the designation for hospitals that are fewer than 10 miles from 
another hospital.
    And if that's an appropriate decision, I don't know how 
it's appropriate retroactively. It cuts funding to the programs 
I just outlined in large part because of the transfer from the 
prevention plan.
    I look forward to working with you to ensure that these 
proposals do not adversely affect healthcare access or any 
American.
    Finally, as we continue to work within a limited budgetary 
environment, funding should be targeted to programs that we 
know show proven results. And therefore, I'm pleased to see the 
Department has requested an additional $471 million increase in 
the National Institutes of Health, the focal point of our 
Nation's medical research capacity.
    In the last 30 years, biomedical research has yielded 
significant scientific discoveries that have extended life, 
reduced illness, lowered healthcare costs, and driven economic 
growth. The NIH, to me, is one of those great programs that 
whether you come from the perspective of being the caring 
person who wants to make certain that everyone has access to 
the latest technologies and lifesaving advances, or you want to 
make sure that we save every penny that we can, medical 
research does both.
    And I am pleased to see that the administration's budget 
request increases the funding for NIH. I believe we need to 
continue that Federal commitment to advancing that research. I 
worry that if there's any break in that pattern that we will 
lose those who are committed to scientific research on our 
behalf.


                           PREPARED STATEMENT


    And we want to remain a global leader. We don't want people 
who are considering to pursue a career in medical research to 
decide that the funding is on again, off again.
    So thank you, Madam Secretary, for your presence here. I 
look forward to our conversation.
    Mr. Chairman, I'm committed to working with you to find 
fiscally responsible ways to address our critical Nation's 
needs regarding healthcare.
    [The statement follows:]

               Prepared Statement of Senator Jerry Moran

    Thank you, Mr. Chairman.
    Thank you, Secretary Sebelius, for appearing today to discuss the 
fiscal year 2014 budget request.
    In this difficult economic environment, Congress is struggling with 
difficult budget decisions. I am concerned that the Department of 
Health and Human Services' discretionary budget request is 10.5 
percent, or $6.9 billion, above current spending levels. Specifically, 
the budget includes a significant $1.5 billion request to set up health 
insurance exchanges. I am concerned, as I am sure many on this 
subcommittee are, that we still do not know the true costs or effects 
of the Affordable Care Act.
    Last week it was announced that the Department would transfer 
fiscal year 2013 funding from the Prevention Fund to fill some of the 
gap for health insurance exchange implementation. This decision takes 
public health dollars and workforce development funding supported by 
the Prevention Fund and diverts it towards the Administration's 
political priority. In fiscal year 2014, the taxpayer is handed another 
unexpected bill for the 33 States, including our home State of Kansas, 
that have declined to setup exchanges. It turns out that the blank 
check available for States to set up their own State-based exchange 
does not extend to the federally implemented Exchanges in the 33 States 
that did not.
    As the Administration scrambles to find funding to implement the 
Affordable Care Act, it is critical that it does not continue to use a 
haphazard ``rob-Peter-to-pay-Paul'' strategy. We need to set funding 
priorities to ensure balance and increase certainty across all aspects 
of our Nation's healthcare system. One of my priorities in Congress is 
to ensure all Americans have access to quality, affordable healthcare 
in whatever setting they may live. Therefore, I am very concerned with 
proposals within the Department's budget that would disproportionately 
affect Kansas and other rural States, jeopardizing their healthcare 
access and threatening the survival of small towns. I think it is 
critically important that Washington recognize that healthcare access 
is essential to the survival and success of rural communities across 
the country.
    The President's fiscal year 2014 budget seeks to cut Medicare 
reimbursements to the Critical Access Hospital program and eliminate 
their designation for hospitals that are fewer than 10 miles from 
another hospital. Cuts are proposed to rural hospital flexibility 
grants, critical breast and cervical cancer screenings, and the 
foundation of our Nation's immunization program, the 317 immunization 
program. Madam Secretary, as a former Kansas Governor, you understand 
the unique nature of medical care in rural communities. I look forward 
to working with you on these proposals to ensure we do not adversely 
affect healthcare access for any American.
    Finally, as we continue to work within a limited budgetary 
environment, funding should be targeted to programs that show proven 
and effective results. Therefore, I am pleased to see that the 
Department has requested a $471 million increase for the National 
Institutes of Health, the focal point of our Nation's medical research 
capacity. In the last 30 years, biomedical research has yielded 
significant scientific discoveries that have extended life, reduced 
illness, lowered healthcare costs, and driven economic growth. I 
believe we need to continue our Federal commitment to advancing medical 
research to make tomorrow's breakthroughs in health possible and 
strengthening our Nation's position as a global leader in medical 
innovation.
    Mr. Chairman, I am committed to working with you to develop a 
fiscally responsible budget that addresses the critical needs of our 
Nation.
    Thank you.

    Senator Harkin. Thank you very much, Senator Moran.
    Kathleen Sebelius became the 21st Secretary of the 
Department of Health and Human Services on April 29, 2009. In 
2003, she was elected Governor of Kansas, served in that 
capacity until her appointment by President Obama as Secretary.
    Prior to election as Governor, she has served as the Kansas 
State insurance commissioner. A graduate of Trinity Washington 
University and the University of Kansas.
    I believe this will make the Secretary's sixth appearance 
before this subcommittee since her appointment. And we welcome 
you again.
    Madam Secretary, your statement in its entirety will be 
made a part of the record, and please proceed as you so desire.

              SUMMARY STATEMENT OF HON. KATHLEEN SEBELIUS

    Secretary Sebelius. Thank you, Chairman Harkin and Ranking 
Member Moran.
    It has been awhile since 1989 and the Indian gaming debate.
    And it's good to see the Governor, Senator, Secretary 
Alexander.
    And I really appreciate the opportunity to discuss the 
President's 2014 budget for the Department of Health and Human 
Services.
    This budget supports the overall goals of the President's 
budget by strengthening our economy and promoting middle class 
job growth. It ensures that the American people will continue 
to benefit from the Affordable Care Act. It provides much 
needed support for mental health services and takes steps to 
address the ongoing strategy of gun violence.
    It strengthens education for our children during their 
critical early years, to help ensure they can succeed in a 21st 
century economy.
    It secures America's leadership in health innovation, so 
that we remain a magnet for the jobs of the future, and we help 
to reduce the deficit in a balanced, sustainable way.
    I look forward to answering your questions about the 
budget. But first, I'd like to briefly cover a few of the 
highlights.
    The Affordable Care Act, as Chairman Harkin recognized, is 
already benefiting millions of Americans. And our budget makes 
sure we can continue to implement the law.
    By supporting the creation of new health insurance 
marketplaces, the budget will ensure that, starting next 
January, Americans in every State will be able to get quality 
health insurance at an affordable price.
    Our budget also addresses another issue that's been on all 
of our minds recently, mental health services and the ongoing 
epidemic of gun violence. While we know that the vast majority 
of Americans who struggle with mental illness are not violent, 
recent tragedies have reminded us of the staggering toll that 
untreated mental illness can take on our society.
    And that's why our budget proposes a major new investment 
to help ensure that students and young adults get the mental 
healthcare they need, including training 5,000 additional 
mental health professionals to join our behavioral health 
workforce.
    Our budget also supports the President's call to provide 
every child in America with access to high-quality learning 
services. It proposes additional investments in a new Early 
Head Start childcare partnership, and it provides additional 
support to raise the quality of childcare programs and to 
promote evidence-based home visiting for new parents.
    Together, these investments will create long-lasting 
positive outcomes for families and provide huge returns for the 
children and society at large.
    And our budget also ensures that America remains a world 
leader in health innovation. We make significant new 
investments in the NIH that will lead to new cures and 
treatments, and help create good jobs throughout the country. 
It provides further support for the development and use of 
compatible electronic health record systems that improve care 
coordination. And it includes funding to ensure that our Nation 
can respond effectively to chemical, biological, and nuclear 
threats.
    I also want to especially thank the committee members for 
your support of our efforts to provide a safe environment for 
our unaccompanied children who enter our country. As you know, 
we've seen a growing number of children coming into the country 
without any parents or guardians. And our budget includes 
additional funds to help ensure an estimated 26,000 
unaccompanied children are safe and healthy.
    Even as our budget invests in these critical areas, it also 
helps reduce the long-term deficit by making sure that programs 
like Medicare are put on a stable fiscal trajectory. Medicare 
spending per beneficiary grew last year at just 0.4 percent 
thanks in part to the $800 billion in savings already 
incorporated into the Affordable Care Act. And the President's 
2014 budget would achieve even more savings.
    For example, the budget will allow low-income Medicare 
beneficiaries to get their prescription drugs at the lower 
Medicaid rates, resulting in savings of more than $120 billion 
over the next 10 years.
    In total, this budget would generate an additional $371 
billion in Medicare savings over the next decade on top of the 
savings already in the Affordable Care Act.
    To that same end, our budget also aggressively reduces 
waste across our Department. It includes an increase in 
mandatory funding for our healthcare fraud and abuse control 
program, an initiative that saved taxpayers nearly $8 for every 
$1 we spent last year. And it supports additional efforts to 
reduce improper payments in Medicare, Medicaid, and Children's 
Health Insurance Program (CHIP), and to strengthen our Office 
of Inspector General.

                           PREPARED STATEMENT

    This all adds up to a budget guided by this 
administration's north star of a thriving middle class. It will 
promote job growth and keep our economy strong in years to come 
while also helping to reduce the long-term deficit.
    I'm sure many of you have questions, and I'm happy to take 
those now.
    Thank you very much, again, Mr. Chairman.
    [The statement follows:]

           Prepared Statement of Secretary Kathleen Sebelius

    Chairman Harkin, Ranking Member Moran, and members of the 
committee, thank you for the invitation to discuss the President's 
fiscal year 2014 budget for the U.S. Department of Health and Human 
Services.
    This budget for the Department of Health and Human Services (HHS) 
provides critical investments in health care, disease prevention, 
social services, and scientific research in order to create healthier 
and safer families, stronger communities, and a thriving America. While 
it invests in areas that are critical to our long-term prosperity, the 
budget also helps tackle our deficit with legislative proposals that 
would save an estimated net $361.1 billion over 10 years. The budget 
totals $967.3 billion in outlays and proposes $80.1 billion in 
discretionary budget authority. With this funding HHS will continue to 
improve health care and expand coverage, create opportunity and give 
kids the chance to succeed, protect vulnerable populations, promote 
science and innovation, protect the nation's public health and national 
security, and focus on responsible stewardship of taxpayer dollars.

              IMPROVING HEALTH CARE AND EXPANDING COVERAGE

    Expanding Health Insurance Coverage.--Implementation of the 
Exchanges, also referred to as Marketplaces, will improve access to 
insurance coverage for more than 25 million Americans. Marketplaces 
make purchasing private health insurance easier by providing eligible 
consumers and small businesses with one-stop-shopping where they can 
compare plans. New premium tax credits and the increased transparency 
and competition in the Marketplaces will improve affordability of 
private coverage. Fiscal year 2014 is the first coverage year for plans 
purchased through the Marketplaces; open enrollment begins October 1, 
2013 for the coverage year beginning January 1, 2014. The budget 
supports operations in the Federal Marketplaces, as well as oversight 
of and assistance to State-based Marketplaces.
    Beginning in 2014, consumers will benefit from a number of new 
protections in the private health insurance market. Most health 
insurers will no longer be allowed to charge more or deny coverage to 
people because of pre-existing conditions. These new protections will 
also prohibit most health insurers from putting annual dollar limits on 
benefits and from varying premiums based on gender or any factor other 
than age, tobacco use, family size, or geography. In addition, new 
plans in the individual and small group market will be required to 
cover a comprehensive package of items and services known as Essential 
Health Benefits, which must include items and services within benefit 
10 categories. Finally, most individuals choosing to participate in 
clinical trials will generally not face limits in health insurance 
coverage for routine patient costs. This protection applies to all 
clinical trials that treat cancer or other life-threatening diseases.
    Expanding Access to Care through Health Centers.--The fiscal year 
2014 budget includes $3.8 billion for the Health Centers program, 
including $2.2 billion in mandatory funding provided through the 
Affordable Care Act Community Health Center Fund. In fiscal year 2014, 
23 million patients will receive health care through more than 8,900 
sites in medically underserved communities throughout the Nation. The 
budget funds new health center sites for the provision of preventive 
health care services, expanding outreach and care to approximately 1.5 
million additional patients.
    Improving Patient Safety.--HHS is committed to improving patient 
safety and reducing the risks and harm to patients. The budget includes 
$63 million for patient safety research at the Agency for Healthcare 
Research and Quality (AHRQ). This research focuses on the risks of harm 
inherent in the delivery of health care, which helps us understand the 
factors that can contribute to adverse events and how to prevent them. 
In fiscal year 2014, AHRQ will fund projects on improving team 
performance, provider training, and coordination, as well as 
establishing cultures conducive to patient safety in health care 
organizations. This research will help the medical community reduce 
errors and improve patient safety.

              INCREASING ACCESS TO MENTAL HEALTH SERVICES

    The fiscal year 2014 budget includes over $1 billion for mental 
health programs at the Substance Abuse and Mental Health Services 
Administration (SAMSHA), including the $460 million for the Community 
Mental Health Services Block Grant. This block grant provides States 
flexible funding to maintain community based mental health services for 
children and adults with serious mental illnesses, including 
rehabilitation, supported housing, and employment opportunities. The 
budget also proposes funding within the block grant to encourage States 
to build provider capacity to bill public and private insurance. This 
will support States in an effective transition in the first year of the 
Affordable Care Act, which will include expanded coverage for mental 
health and substance abuse treatment services.
    Expand Prevention and Treatment for Youth and Families.--While the 
vast majority of Americans with a mental illness are not violent, and 
are in fact more likely to be the victims of violence, recent tragedies 
have brought to light a hidden crisis in America's mental health 
system. The budget addresses these issues by investing $130 million to 
help teachers and other adults recognize signs of mental illness in 
students and refer them to help if needed, support innovative State-
based programs to improve mental health outcomes for young people ages 
16-25, and train 5,000 more mental health professionals with a focus on 
serving students and young adults.

                 HELPING FAMILIES AND CHILDREN SUCCEED

    In his State of the Union Address, the President proposed a series 
of new investments to create a continuum of high-quality early learning 
services for children beginning at birth through age five. As part of 
this initiative, HHS and the Department of Education are working 
together to make universal, high-quality preschool available to 4-year 
olds from low- and moderate-income families through a partnership with 
States, expand the availability of high-quality care for infants and 
toddlers, and increase highly-effective, voluntary home visiting 
programs to provide health, social, and education supports to low-
income families. Specifically, the fiscal year 2014 HHS budget 
includes:
    Early Head Start--Child Care Partnerships.--The budget proposes 
$1.4 billion in fiscal year 2014 for new Early Head Start--Child Care 
Partnerships that will expand the availability of early learning 
programs that meet the highest standards of quality for infants and 
toddlers, serving children from birth through age 3. In addition to the 
new Partnerships, the budget provides $222 million above fiscal year 
2012 to strengthen services for children currently enrolled in the 
program, avoid further enrollment reductions, and support the Head 
Start Designation Renewal System. Together, these investments total 
$9.6 billion, an increase of $1.7 billion over fiscal year 2012.
    Child Care Quality Fund.--The request includes an additional $700 
million above fiscal year 2012 to expand early learning opportunities. 
Within this total, $200 million will help states raise the bar on 
quality by strengthening health and safety measures in child care 
settings, supporting professional development for providers, and 
promoting transparency and consumer education to help parents make 
informed child care choices. In addition to this funding, the budget 
provides $500 million above fiscal year 2012 to serve 1.4 million 
children, approximately 100,000 more than would otherwise be served.
    Home Visiting.--The budget extends and expands this voluntary 
evidence-based program that has shown to be critical in improving 
maternal and child health outcomes in the early years, leaving long-
lasting, positive impacts on parenting skills; children's cognitive, 
language, and social-emotional development; and school readiness. The 
Budget proposes a long-term $15 billion investment beginning in fiscal 
year 2015.
    Unaccompanied Alien Children.--I would like to thank the Congress 
for providing an additional $248 million for the refugee appropriation 
in fiscal year 2013 to accommodate the increased number of 
unaccompanied alien children (UAC) while maintaining services for 
refugees. While sequestration and the across-the-board rescission still 
leave a shortfall, we are taking necessary action to ensure we can 
accommodate all UAC arrivals without reducing essential refugee 
services. The fiscal year 2014 budget request includes $1.1 billion, an 
increase of $355 million over fiscal year 2012, to accommodate 26,000 
UAC while maintaining services for refugees. HHS has kept Congress 
informed about the continuing UAC increase and looks forward to working 
with Congress to ensure both UAC and refugees are served.

                   PROTECTING VULNERABLE POPULATIONS

    Addressing the Unique Needs of Communities.--The Administration for 
Community Living (ACL) was formed in April 2012 as a single agency 
designed to help more people with disabilities and older adults have 
the option to live in their homes and participate fully in their 
communities. The fiscal year 2014 budget reflects the creation of ACL 
by bringing together the resources for the Administration on Aging, the 
Office on Disability, and the Administration on Intellectual and 
Developmental Disabilities, into a consolidated request. This newly 
organized agency works across HHS to harmonize efforts to promote 
community living, which can both save Federal funds and allow people to 
choose to live with dignity in the communities they call home. ACL's 
Lifespan Respite Care program, as an example, focuses on providing a 
testbed for needed infrastructure changes and on filling gaps in 
service by putting in place coordinated systems of accessible, 
community-based respite care services for family caregivers of children 
and adults with special needs.
    Ryan White.--The budget includes $2.4 billion for the Ryan White 
HIV/AIDS program to continue its critical role in support of patients 
across the HIV/AIDS continuum, by linking patients to care, prescribing 
and improving adherence to antiretroviral medicine, and achieving viral 
suppression. Included in this total is $943 million for the AIDS Drug 
Assistance Program (ADAP), an increase of $10 million over fiscal year 
2012 to provide life-saving and life-extending medications to 218,900 
individuals. This investment will allow ADAP to serve an additional 
1,600 people living with HIV/AIDS relative to the estimated number of 
clients served in fiscal year 2012.

                    PROMOTING SCIENCE AND INNOVATION

    Advancing Scientific Knowledge.--The fiscal year 2014 budget 
includes $31.3 billion for the National Institutes of Health (NIH), an 
increase of $471 million over the fiscal year 2012 level, reflecting 
the Administration's priority to invest in innovative biomedical and 
behavioral research that spurs economic growth while advancing medical 
science. In fiscal year 2014, NIH will focus on investing in today's 
basic research for tomorrow's breakthroughs, advancing translational 
sciences, and recruiting and retaining diverse scientific talent and 
creativity. Investment in NIH also helps drive the biotechnology sector 
and assure the Nation's place as a leader in science and technology.
    Alzheimer's Disease Initiatives.--The Department continues to 
implement the National Plan to Address Alzheimer's Disease, as required 
by the National Alzheimer's Project Act. In fiscal year 2014, the 
budget includes a $100 million initiative targeted to expanding 
research, education, and outreach on Alzheimer's disease, and to 
improving patient, family, and caregiver support. Included in this 
initiative is $80 million within the NIH budget to be devoted to 
speeding drug development and testing new therapies. Also, the 
Prevention and Public Health Fund (Prevention Fund) allocation includes 
$20 million for the Alzheimer's Disease Initiative. Of this, ACL will 
use $15 million to strengthen state and local dementia intervention 
capabilities and for outreach to inform those who care for individuals 
with Alzheimer's disease about resources available to help them. HRSA 
will use the other $5 million to expand efforts to provide training to 
healthcare providers on Alzheimer's disease and related dementias.

      PROTECTING THE NATION'S PUBLIC HEALTH AND NATIONAL SECURITY

    Project BioShield and Advanced Development.--In fiscal year 2014, 
HHS will continue to support the development and procurement of medical 
countermeasures (MCMs) against chemical, biological, radiological, and 
nuclear (CBRN) threats. This funding includes $415 million to support 
advanced research and development of MCMs through the Biomedical 
Advanced Research and Development Authority. Additionally, the Budget 
includes $250 million as the first installment of a multi-year 
commitment to support Project BioShield, aimed to facilitate the 
procurement of these MCMs for the Strategic National Stockpile. 
Together, these efforts will enhance the nation's ability to acquire 
MCMs that will be vital to mitigating or preventing the effects of CBRN 
threats.
    Infectious Disease Surveillance Modernization.--The budget invests 
$40 million to modernize CDC's surveillance technology and methods to 
better detect and track infectious disease. This investment will allow 
CDC to retool its national surveillance systems and detect and respond 
to emerging health threats in a timely manner. CDC's infectious disease 
surveillance technologies are becoming increasingly outdated and 
threaten the basic public health mission of the agency. In an effort to 
keep up with advances, CDC is making substantial investments in 
bioinformatics, database development, data warehousing, and analytics. 
This initiative requires strategic and sustained investment in the 
following areas: pathogen identification and detection using genomics, 
adaptation of new diagnostics, state assistance and coordination, 
enhanced and integrated sustainable laboratory systems, and tool 
development to support prediction and modeling for early disease 
detection.

        FOCUSING ON RESPONSIBLE STEWARDSHIP OF TAXPAYER DOLLARS

    Contributing to Deficit Reduction While Maintaining Promises to All 
Americans.--The budget makes the investments the nation needs right now 
while reducing the deficit in the long term and ensuring the programs 
that millions of Americans rely on will be there for generations to 
come.
    The budget maintains ongoing investments in areas most central to 
advancing the HHS mission while making reductions to lower priority 
areas, reducing duplication, and increasing administrative 
efficiencies. Overall, the fiscal year 2014 budget includes nearly $2.3 
billion in discretionary terminations and reductions.
    Combating Fraud, Waste, and Abuse in Health Care.--The fiscal year 
2014 budget makes continuing to cut fraud, waste, and abuse a top 
Administration priority. In addition to the $311 million in base 
discretionary Health Care Fraud and Abuse Control (HCFAC) funding, the 
budget invests $329 million in new mandatory funding in fiscal year 
2014 to ensure that HHS and the Department of Justice (DOJ) have the 
resources they need to conduct critical program integrity activities. 
Starting in fiscal year 2015, the budget proposes all new HCFAC 
investments be mandatory, consistent with levels in the Budget Control 
Act. This investment supports fraud prevention initiatives like the 
Fraud Prevention System and provider screening; reducing improper 
payments in Medicare, Medicaid and CHIP; and HHS-Department of Justice 
Health Care Fraud Prevention and Enforcement Action Team initiatives, 
including the Medicare Strike Force teams and the Fraud Prevention 
Partnership between the Federal government, private insurers, and other 
key stakeholders.
    From 1997 to 2012, HCFAC programs have returned over $23.0 billion 
to the Medicare Trust Funds, and the current 3-year return-on-
investment of 7.9 to 1 is the highest in the history of the HCFAC 
program. The budget's 10-year HCFAC investment yields a conservative 
estimate of $6.7 billion in Medicare and Medicaid savings.
    The budget includes $389 million in discretionary and mandatory 
funding for the Office of Inspector General (OIG), an increase of $101 
million above the fiscal year 2012 level. A portion of this increase in 
funded through the additional mandatory HCFAC investment, which is a 
top priority in this budget. This increase will enable OIG to expand 
Program Integrity efforts for the Health Care Fraud Prevention and 
Enforcement Action Team and improper payments, and also enhance 
investigative efforts focused on civil fraud, oversight of grants, and 
the operation of Affordable Care Act programs.
    The budget also includes $82 million for the Office of Medicare 
Hearings and Appeals (OMHA), an increase of $10 million from fiscal 
year 2012, to address OMHA's adjudicatory capacity and staffing levels 
and maintain quality and accuracy of its decisions. The increase allows 
OMHA to establish a new field office in the Central time zone supported 
by additional Administrative Law Judge teams, attorneys, and 
operational staff.

              PERFORMANCE, EVALUATIONS, AND EFFECTIVENESS

    Assessing the Impact of Health Insurance Coverage Expansions on 
Safety Net Programs.--The budget includes $3 million to the Assistant 
Secretary for Planning and Evaluation to evaluate the impact of health 
insurance coverage and benefit expansions among beneficiaries of HHS 
direct service programs. This request supports the continuation of 
research and evaluation studies, collection of data, and assessments of 
the costs, benefits and impacts of policies and programs under 
consideration by HHS or the Congress.
    Improving the Use of Evidence-Based Interventions.--The budget 
includes proposals to improve the use of evidence-based interventions 
in SAMHSA's Mental Health Block Grant to ensure that Federal resources 
are invested in strategies that work. This proposal will require States 
to target resources, through their formula grant allocations, to 
evidence-based interventions.
    The budget will also substantially increase support for the 
National Registry of Evidence-based Programs and Practices. This 
searchable online system supports States, communities, and tribes in 
identifying and implementing evidence-based mental health and substance 
abuse prevention and treatment interventions. Additional funding will 
be used to ensure the registry includes cutting edge innovations that 
work.
    Thank you for the opportunity to testify. I will be happy to answer 
any questions you may have.

    Senator Harkin. Thank you, Madam Secretary. We'll start 
rounds of questions.
    Well, since you didn't mention it in your statement, in 
your written statement nor in your verbal statement, I hope you 
don't mind if I start talking about prevention.
    Secretary Sebelius. Yes, sir.

            RACIAL AND ETHNIC APPROACHES TO COMMUNITY HEALTH

    Senator Harkin. I'm deeply concerned by the President's 
plan to eliminate the Racial and Ethnic Approaches to Community 
Health (REACH) program. That's the Racial and Ethnic Approaches 
to Community Health program. African-Americans and Latinos are 
nearly twice as likely to have diabetes than are non-Hispanic 
whites in this country. A shocking 18.7 percent of all African-
Americans aged 20 years or older have diabetes, according to 
the American Diabetes Association.
    These disparities are desperately important as we think 
about how to improve the health of this country and bend the 
cost curve. Clearly, we have to work with the leaders of these 
communities if we're to have an impact.
    REACH has been very successful in doing that. From 2001 to 
2009, physical activity rates among minority populations in 
REACH communities increased from 7 percent to 12 percent. It 
may not sound like a lot, but compare that to a U.S. average in 
the general population of 2 percent to 5 percent.
    So in the places where REACH is working, physical activity 
grew at two to three times the rate it grew elsewhere in the 
country. This is a staggering success.
    So I have to ask, if the administration is truly concerned 
about bending the cost curve on healthcare, why would you 
eliminate a program doing such important and successful work?
    Secretary Sebelius. Mr. Chairman, I, first of all, want to 
applaud your incredible leadership and tenacity on prevention. 
You have been trying to change the focus of the health system, 
as you say, for well over two decades and have been uniquely 
focused on this initiative, and have been successful in 
creating, for the first time ever, an ongoing stream of funding 
in the Prevention Fund. And that's a huge step forward.
    I think there's no question that this budget represents 
some very difficult decisions. But in the case of the Health 
Disparity Initiative, what we feel very strongly, and I think 
has been proven by data throughout the country, is that 
connecting minority communities with a health home and ongoing 
insurance benefits may be the single most successful way to 
make sure that preventive benefits are available to every 
family, to every person, day in and day out.
    And so we are, as you suggested, focusing some of the 
Prevention Fund dollars on not building the exchanges but on 
the outreach and education efforts to make sure, particularly 
in the most vulnerable minority communities in the most 
underserved communities, that they have access to the 
prevention benefits, which are now by law part of insurance 
coverage.
    And we feel that those efforts, combined with our ongoing 
work on obesity initiatives led by the First Lady, and a number 
initiatives with the President's Physical Fitness and Nutrition 
Council, that we are changing school eating patterns, changing 
food desserts, driving down obesity rates, and focusing on 
tobacco. We feel that those efforts will be enormously 
successful.
    Senator Harkin. REACH was funded at $54 million in fiscal 
year 2012, $54 million in fiscal year 2012. There were $13 
million in our bill, $40 million from the prevention fund. I 
don't know what fiscal year 2013 is yet. We'll get that later 
this week.
    But in the fiscal year 2014 budget request, the total is 
zero. Nothing from us. Nothing from the prevention fund for a 
uniquely targeted prevention program that over the last several 
years has proven to work.
    I ask again, why are we zeroing out this program?
    Secretary Sebelius. Again, Mr. Chairman, I think this 
budget reflects difficult choices, and we are focusing an 
enormous amount of effort on reaching people and connecting 
them not just with a one-time program or one-time effort but 
with ongoing healthcare and preventive benefits, which has been 
proven to be enormously important in maintaining and continuing 
good health.
    Senator Harkin. Well, let's see, your budget is--how much 
here was it this last year? How much was your budget, total HHS 
budget last year--this year, fiscal year 2013?
    Secretary Sebelius. Discretionary and mandatory, or just 
discretionary? The total outlays are $967 billion.
    Senator Harkin. $967 billion?
    Secretary Sebelius. Mandatory, $886 billion; discretionary, 
$80 billion.
    Senator Harkin. Got it. $967 billion and yet we have to 
take $54 million from the REACH program out of $967 billion.
    Well, I'm sorry. When I look at that, and I look at the 
other invasions of the prevention fund, again, I get back to 
where I started. This administration doesn't get it. We just 
keep trying to think about how we pay today's bills. How do we 
get people covered if they're sick today? That's important. But 
if that's all we're going to do, we're looking at the next 30, 
40 years going after the same chronic diseases we've had in the 
last 40 or 50 years.
    I'm sorry, I just can't buy that out of $967 billion, that 
$54 million has to come--I'm just talking about one program, 
the REACH program. I'm not talking about all the other 
prevention funds that are being invaded.
    But, again, I don't know what the will of this committee 
will be. But I can tell you that, as far as this chairman is 
concerned, this is not good, to take that money for the REACH 
program out of that pot. So we'll have some say about that when 
we move ahead.
    Secretary Sebelius. Mr. Chairman, again, I know another 
priority of yours is the Community Transformation Grant.
    Senator Harkin. That's exactly right.
    Secretary Sebelius. And there is a lot of duplication 
between REACH efforts and Community Transformation efforts, 
which are focused on many of the same disease prevention 
initiatives. And the Fund does continue the Community 
Transformation Grant program, not only in 2013, but in 2014 it 
maintains the level of funding and continues those efforts 
focused on prevention of chronic diseases for the minority 
communities that the REACH program did focus on.
    Senator Harkin. Well, I'm more than willing to take a look 
at that. If there is some duplication, that's fine. Let's 
straighten that out.
    But it's just one prevention program that's been uniquely 
successful.
    Well, I'll take a look at it.
    Senator Moran.

                   AFFORDABLE CARE ACT IMPLEMENTATION

    Senator Moran. Mr. Chairman, thank you.
    I'm going to first start with the question that I indicated 
I would raise, which is the authority by which you can transfer 
the funds to pay for the federally created exchanges.
    Under the Affordable Care Act authorization, the prevention 
fund can be used for ``programs authorized by the Public Health 
Service Act for prevention wellness and public health 
activities, including prevention research and health 
screenings, such as the Community Transformation Grant program, 
the Education and Outreach Campaign for Preventive Benefits, 
and immunization programs.''
    Health insurance exchanges are not authorized under the 
Public Service Act, nor do they fit any of the listed criteria. 
What authority does the Department use to move prevention fund 
dollars to health insurance exchanges?
    Secretary Sebelius. Well, again, Senator, I think I would 
disagree with the characterization of your interpretation of 
section 4002 of the Act.
    We are not using prevention dollars for building the 
marketplaces for the hub, or for the information technology 
(IT) for the call center. What we are doing is focusing some 
resources from the prevention fund on education and outreach to 
make sure that eligible individuals understand what benefits 
they are entitled to receive and how to actually enroll, so 
that they can get ongoing prevention coverage. So we think it 
fits very well in the education and outreach campaign regarding 
preventive benefits.
    Every insurance policy sold in the marketplaces in every 
State in the country will have preventive benefits available 
with no copays and no insurance. That's a huge step forward, 
and that is what these funds will be designed to do--education 
and outreach in States around the country for, as you 
suggested, the marketplaces that the Federal Government will be 
operating.
    Senator Moran. So the President's budget request does not 
take money from the prevention fund to create the exchange, 
only to provide money necessary to educate people about the 
exchange.
    Secretary Sebelius. It will be for education and outreach, 
yes, sir.
    Senator Moran. How then does the President's budget address 
the issue of the 33 States that have, at least at this point, 
decided not to create a State exchange?
    Secretary Sebelius. Well, again, that math is a little 
wrong. We have 31 States and the District of Columbia who are 
either engaged in some kind of partnership or fully running 
their own exchanges. So the characterization that there are 33 
States who have sort of given this over to the Federal 
Government is not quite accurate.
    Having said that----
    Senator Moran. So the number is what, 20-something?
    Secretary Sebelius. Well, there are 32 entities: 31 States 
and District.
    Senator Moran. Eighteen?
    Secretary Sebelius. Yes.
    So in the States where we are operating the marketplace, 
and for the Federal hub, which is a connector that every State 
will use, we have used the previously allocated administrative 
budget to actually build that infrastructure, and that is paid 
for.
    We had $1 billion in original administrative costs 
dedicated to the exchange moving forward. States have 
additional funding sources, if they are operating their own 
exchange, they can draw that funding down.
    But our administrative costs have gone to not only the 
Department of Labor, and the Department of Treasury, but for 
HHS to build the infrastructure that we need for the Federal 
hub, for the IT center, for the call center.
    Senator Moran. So while I assume the expectation was that 
most, if not all, States would create a State exchange, and 
that hasn't happened--apparently, 18 is the number of States 
that have not--your ability to fund, and create a fund to 
create a federally created exchange, exists within existing 
dollars within your appropriated budget?
    Secretary Sebelius. Well, as you know, and the chairman 
knows, we did ask for additional resources for 2013. There was 
an anomaly submitted by the administration.
    Most of that funding would have been for education and 
outreach, and for the call center. We did not receive any 
additional funding from the continuing resolution, so we are 
still operating at the 2012 level with the original $1 billion, 
which was allocated for administrative overhead.
    Senator Moran. What is the expected cost to create the 
Federal exchanges--instead of the State exchanges?
    Secretary Sebelius. Well, the budget before you requests an 
additional $1.5 billion. I think the good news is that when the 
Affordable Care Act was passed, the Congressional Budget Office 
(CBO) suggested that the administrative overhead should be in 
the $10 billion range, as they projected the costs out.
    We received $1 billion in funding with the law, and we are 
requesting, at this point, an additional $1.5 billion.
    Senator Moran. My time has expired. I assume we'll have 
additional rounds.
    Senator Harkin. Yes.
    Senator Moran. Thank you, Secretary.
    Senator Harkin. In order of appearance, we have Senator 
Alexander, Senator Pryor, Senator Cochran.
    Senator Alexander.
    Senator Alexander. Madam Secretary, welcome. It's good to 
see you.

                          AFFORDABLE CARE ACT

    Where did the definition that a full-time worker is someone 
who works more than 30 hours come from? I can't find it in the 
Fair Labor Standards Act. It sounds more like France than the 
United States.
    Secretary Sebelius. I assume it was the definition. As you 
know, the regs were written by HHS, the Department of Labor and 
Treasury. It was a tri-Department initiative. And if you're 
asking me exactly what the nexus of the 30-hour----
    Senator Alexander. Well, I just wonder why, you know, 
typically, I mean basically the basic----
    Secretary Sebelius. It's in the statute. It's in the 
Affordable Care Act.
    Senator Alexander. It's in the Affordable Care Act.
    Secretary Sebelius. That's what I was told by my experts.
    Senator Alexander. Well, I wonder where Senator Harkin got 
it, or whoever wrote it in the United States.
    Normally, we think of a full-time workweek as a 40-hour 
workweek. And I was wondering about the rationale for that, 
because don't you think that the 30--the rule that says that if 
you work 30 hours, you could be considered a part-time worker, 
is in some cases becoming a disincentive for full-time 
employment, as some companies look at the healthcare law and 
say one way we can avoid it is to have more part-time workers. 
And so we have workers across the country who are going from 
full time at 40 hours to part time at 30 hours. And so they 
have not only no insurance, but no full-time job.
    Secretary Sebelius. Well, I am hoping that that will not be 
a decision employers make. I think that when the law was 
written, there was great care taken to try and capture what is 
a snapshot of the small employer marketplace.
    Any employer with less than 50 full-time equivalent 
employees is totally exempt from any aspect of the law, except 
for the fact that he or she may have the opportunity for the 
first time ever to buy affordable coverage in a larger pool 
without having to join an association or be a member.
    I think that as people get more familiar with what the 
rules are and are not, we're likely to see the kind of input 
that at least I had heard for the couple of years before this 
law was passed. Certainly, as Governor, I heard each and every 
day from farm families and small-business owners that they had 
no access to affordable health coverage.
    They felt disadvantaged in competing with their larger 
competitors, because they couldn't offer the benefits that 
large competitors----
    Senator Alexander. I was really just asking where the 30-
hour came from.
    Secretary Sebelius. It's in the law.
    Senator Alexander. It's in the law. But it seems to me to 
be providing a disincentive for full-time employment.
    But I have a different sort of question I'd like to ask you 
to comment on. Under the new healthcare law, one of the things 
that can happen is a problem for those on Medicaid, which some 
people call ``churning.''
    It usually affects those who make between 138 percent of 
the poverty level and 150 percent. And through basically no 
fault of their own, they might be going back and forth from the 
exchanges to the Medicaid program based upon their changing 
income.
    And it has been suggested that one way to provide more 
certainty for those lower income working people would be a plan 
that would help them own their own insurance, so that as they 
went back and forth from different income levels, their lives 
would be simpler, which would be good for them.
    Arkansas has made an interesting proposal, which you've 
seen to have approved in concept--a lot of people are 
watching--that incorporates some different ideas.
    And Governor Haslam of Tennessee has watched that very 
closely. I know he's talked with you about what he calls his 
Tennessee plan for using the money that would be otherwise 
available for many of those Medicaid recipients.
    I try to follow the rule that there can only be one 
Governor of Tennessee at a time, and I'm not it right now. But 
I would be interested. I don't want to interfere with your 
discussions with Governor Haslam, is what I'm trying to say, 
and I hope they continue and I hope they're successful.
    But I wonder if there's anything you might say about the 
general idea of the Arkansas plan and the Tennessee proposal 
that Governor Haslam has made and any report that you might 
have on its status.
    Secretary Sebelius. Well, Senator, I think you're 
absolutely correct that I have been in close touch with 
Governor Haslam. I think we've had a couple of meetings in 
person and several phone conversations in the last couple of 
months.
    I think he is evaluating whether or not expansion of 
Medicaid is beneficial for Tennessee, looking at all the cost 
estimates and looking at the health benefits for individuals. 
And he has asked for a lot of information that we've been 
providing him.
    We are waiting to receive the specific proposal from 
Arkansas. But, certainly, we're in very close touch with 
Governor Beebe, as well as Governor Kasich in Ohio and Governor 
Scott in Florida and some others, around the notion that 
Medicaid dollars could be potentially used to purchase coverage 
from a company offering coverage on the exchange, and, as you 
say, kind of eliminating people going back and forth.
    As you know, and I'm sure that Tennessee has a similar 
situation to Kansas--most of the Medicaid program is offered 
right now by managed care companies. Their contracts are 
already there. Those companies will be providing benefits on 
the exchange.
    So we are working around sort of premium assistance plans. 
There is more flexibility in the original Medicaid law for cost 
sharing, for a different kind of benefit package for those 
above 100 percent of poverty.
    And I think Governors are very intrigued by creating a 
format where, particularly for the higher income low-income 
workers there would be a package that looked very similar to 
what's in the private market and have the ability, if someone's 
wages continue to rise, that they would stay with that plan.
    So we're waiting to receive the specific proposal from 
Arkansas. We've made it clear that we would be open to some 
waivers from States looking at this kind of interpretation and 
are interested.
    And I have told Governor Haslam that very clearly. So I 
think he's waiting to see exactly what Arkansas submits.
    But as I shared with you, the Arkansas bill did pass, both 
the House and the Senate, by a three-fourths vote. And they 
will now submit a proposal to Medicaid.
    Senator Alexander. Thanks, Madam Secretary.
    Thanks, Mr. Chairman.
    Senator Harkin. I will say to my friend in Tennessee, he 
asked where I got this, so I had to check with my staff. And 
the Secretary was right, refreshing my memory on this. We 
obviously checked with the Department of Labor, trying to 
figure out who is a full-time employee.
    And as the Secretary said, quite correctly, that the 
snapshot was taken at that time. What do employers, writ large, 
what do they use as a cutoff for employee benefits, for who is 
a full-time employee and who is not? And it came in at, 
basically, 30 hours. So that's what was written in.
    So that's kind of where it came from. That's what employers 
were using at that time to decide whether someone was a full-
time employee or not.
    Senator Alexander. Thank you.
    Senator Harkin. That's all I can figure out.
    Okay, Senator Pryor.
    Senator Pryor. Thank you, Mr. Chairman.
    And thank you, Secretary Sebelius, for being here. We 
appreciate your service very much.
    I want to follow up on Senator Alexander's question. I want 
to say thank you. Thank you for working with Governor Beebe.

                 CHILDREN'S GRADUATE MEDICAL EDUCATION

    I know that you all have a good working relationship, and 
he signed an important bill into law yesterday. I'm sure 
there's a lot more work to be done.
    But I want to say thank you for your help, because you are 
innovative, and were trying to get to yes. We appreciate that 
very much. It's going to make a huge difference for the people 
in my State.
    Second thing I want to talk about is pediatrician graduate 
medical education. I think what a lot of people don't 
completely understand is that a very large portion of our 
funding for training of physicians across the country comes 
through Medicare. Not much of that is for pediatrics though. 
But nonetheless, a very high percentage of doctors get their 
training through funding in Medicare.
    I would like to visit with you about the pediatric graduate 
medical education provision as we are looking to recruit more 
primary care physicians, and for ways to train more doctors and 
get more doctors in the field. States are under tremendous 
budget restraints and constraints. How do you think we can 
train enough pediatric care physicians to meet the needs that 
we have in this country?
    Secretary Sebelius. Well, Senator, first of all, I want to 
say that I was pleased to work with my old colleague Mike 
Beebe. And not only has he been very innovative about Medicaid 
expansion ideas, but we are doing some really exciting work in 
Arkansas around sort of an all-payer transformation of the 
whole healthcare system. And Arkansas has been a real leader in 
that effort.
    In terms of the children's graduate medical education, 
certainly, training pediatricians in the future and the whole 
workforce issue is of critical importance. What this budget 
reflects is funding for the direct costs of the medical 
education and not the indirect costs, which often are up to 40 
percent on top of the original costs.
    We think it's critical to keep those slots in pediatrics 
and, in fact, have done some work to shift additional slots 
used for specialty care into primary care, geriatric care, and 
pediatric care.
    But the budget, as I said, does reflect the direct costs. 
And we are hopeful that the same number of resident slots will 
be available going into the future.

                      AREA HEALTH EDUCATION CENTER

    Senator Pryor. Thank you. I think that many of my 
colleagues here would share that same concern, not just about 
pediatric slots, but general educational slots, to try to make 
sure that we train and equip the very best physicians we can.
    And, hopefully, a lot of them will end up in rural America. 
As you know, depending on how you count it, about 20 percent of 
the Nation's population is in rural America, but only 9 percent 
of the doctors. So the challenge there continues.
    Let me ask about the Area Health Education Center (AHEC) 
program. As we discussed a moment ago, Arkansas is in a process 
of a big expansion of private healthcare in our State. AHEC is 
a program that for years has worked in Arkansas, and it has 
worked very well. I'm concerned that through the President's 
budget that we may be jeopardizing or at least stunting some of 
that progress that we're seeing in my State through AHECs.
    So are we going to continue the AHEC funding?
    Secretary Sebelius. Senator, I'm not sure I can directly 
answer that question, but I'd love to come back to you and 
respond in writing with some details.
    [The information follows:]

    The fiscal year 2014 President's budget prioritizes allocating 
Federal resources to training programs that directly increase the 
number of primary care providers. Given the lean fiscal climate, HRSA 
had to make difficult choices regarding program funding levels. While 
HRSA has made longstanding investments in these activities to enhance 
health professions training since 1972, they do not directly increase 
the supply of providers. Given the most AHEC programs have been in 
place for many years and have State and local support, it is 
anticipated that the AHEC program grantees will continue much of their 
efforts relying on these other funding sources.

    Senator Pryor. Okay, that'd be great.

                       CRITICAL ACCESS HOSPITALS

    With regard to rural hospitals, critical access care 
hospitals, there have been some changes for those hospitals. 
When I talk to rural hospitals in my State, they tell me that 
budgets are tight, and that some of the changes in Medicare are 
making them even tighter. And then you throw the sequester on 
top of that. And now we're talking about a 1-percent cut here 
in the President's fiscal year 2014 budget.
    Critical access care hospitals really impact rural America. 
And I would like to get your thoughts on how we can help these 
hospitals.
    I know they're working on efficiencies. They're trying to 
do all they can. But how can we help these hospitals keep their 
doors open?
    Secretary Sebelius. Well, Senator, as Ranking Member Moran 
already suggested, coming from Kansas, we do like to refer to 
your State as ``Ar-Kansas'' as much as possible.
    I am fully aware of how critical hospitals are to a 
community. If you close a school, if you close a hospital, you 
close a town. Nobody wants to live without a healthcare 
facility. So it's something that I take very seriously.
    This budget submission is the same as it was in 2013, which 
reflects that critical access hospitals would be paid at 100 
percent of cost, not paid more than 100 percent, but it 
reflects that they would have their cost fully reimbursed. And 
we felt that that was an appropriate way to deal with making 
sure that they did keep their doors open and had the ability to 
serve patients in their communities.
    Senator Pryor. Thank you, Mr. Chairman.
    Senator Harkin. Thank you, Senator Pryor.
    Now Senator Cochran, and Senator Boozman, and then Senator 
Johanns.
    Senator Cochran.
    Senator Cochran. Mr. Chairman, Madam Secretary, thank you 
very much.

                       CRITICAL ACCESS HOSPITALS

    Because Arkansas and Mississippi have a lot in common, 
except football prowess--that kind of goes back and forth--but 
we have a large number of poor people living in our States. And 
many of them have benefited from Department of Health and Human 
Services' sensitivity to the challenges that many of our small-
town hospitals face in our two States.
    And they're worried now, though, about how these new 
regulations or new programs might affect them in an adverse 
way.
    So I refer to a letter that our delegation sent to your 
office, wondering if you could let us know what your plans are 
for critical access hospitals, and whether or not certain 
payments of reimbursement of cost will reflect the fact that 
some of these in the Mississippi River Delta region may not be 
able to keep their emergency rooms open as they are now and 
available to people who need medical attention.
    What concerns can you address today that will be good news 
for them that it isn't going to have as bad a consequence as 
many down there fear?
    Secretary Sebelius. Well, I think, Senator, a couple of 
things, hopefully, will give you some assurances.
    First of all, as I suggested to Senator Pryor, the budget 
request before this committee has 100 percent of costs for 
critical access hospitals, recognizing that keeping the doors 
open in small communities is really essential. So it does 
reduce from 101 percent to 100 percent, but it is a full 
reimbursement for cost.
    Secondly, the debate that is underway in many States around 
the country has caught the attention of hospitals. In 
anticipation of full implementation of the Affordable Care Act, 
whether it's people who will be enrolled in private health 
plans in marketplaces in a State like Mississippi, or if, 
indeed, the Mississippi Governor chose to expand Medicaid, 
hospitals would be looking at a dramatic reduction in 
uncompensated care that right now is threatening, certainly, 
the lowest margin hospital.
    Hospitals deliver care if somebody comes through the door. 
But if that person does not have either health insurance or an 
ability to self-pay the bill, that really adds to the 
hospital's bad debt. And we see that all over the country, 
which is why, I think, hospital executives and leaders have 
been so engaged in the discussions in State legislatures and 
also in communities about expansion of affordable health 
coverage--knowing that their bottom line will be dramatically 
and positively impacted by that change starting in 2014.

                       OFFICE OF MINORITY HEALTH

    Senator Cochran. Our State advises me that partnership 
grants from the Office of Minority Health are going to be done 
away with under the new budget request submitted by the 
Department. Is that true or not?
    Secretary Sebelius. We have eliminated some of the grants 
that come directly through the Office of Minority Health but 
have increased funding through some of our other programs in 
the area of health disparities.
    So there's an overall increase in the budget in those 
programs and grants that will go into communities, but not 
funded directly through the Office of Minority Health.
    Senator Cochran. Thank you, Mr. Chairman.
    Senator Harkin. Thank you, Senator Cochran.
    Senator Boozman.
    Senator Boozman. Thank you, Mr. Chairman.
    And thank you for being here. We really do appreciate your 
hard work. You've got a big job to do.

              SMALL BUSINESSES AND THE AFFORDABLE CARE ACT

    I hear a lot from Arkansas businesses that have perhaps 75 
employees. Their concern is competing with the business that 
has 49. One group is under the mandate's increased costs. The 
other doesn't have those costs--that makes for a difficult 
situation.
    And again, America, Arkansas, Kansas, wherever, is made up 
of those kinds of, you know--so I guess what I tell them--the 
other thing is, isn't that an incentive for those that are a 
little over the 49 to downsize?
    And again the question I would ask is: What do we tell 
those employers that are losing hours or perhaps losing jobs as 
a result of that?
    Secretary Sebelius. Well, Senator, I have heard those same 
concerns expressed by folks and, again, heard over and over 
again, the snapshot of the current market prior to the 
Affordable Care Act being implemented. What I hear is that 
small-business owners are paying about 20 percent more than 
their large competitors for exactly the same benefit package.
    What we know is about 94 percent of employers who have 50 
or more employees are offering health coverage, because it's 
the best recruitment and retention package they can have for 
their employees. But they still lose employees to the big guys 
who have more leverage in the marketplace.
    So I think the law is attempting to capture what the 
snapshot of the market was and to put together a larger 
negotiated pool of benefits, so small employers can finally 
have the leverage that some of their large competitors have 
enjoyed for years.
    What we saw in Massachusetts, which is the only State with 
a fully functional marketplace that's been in place, was a lot 
of the same business fears were expressed before they got up 
and running. They have a similar employer responsibility 
provision, a similar penalty. And the fear that was expressed 
was lots of employers would just drop coverage, drop out of the 
market.
    What has happened is just the opposite. More employers 
right now in Massachusetts offer coverage than before. The 
small market has actually increased. And so we are hopeful that 
with affordable comparative rates, with competitive choices in 
a shopped plan, that those small employers will now have some 
choices to make for their employees.
    Senator Boozman. I'd like to see kind of the white paper, 
the research or your data to back it up.
    You've got a situation in Washington State that is thinking 
about shifting a lot of employees into the exchange. Is that 
something that you intended? Evidently, when they----
    Secretary Sebelius. In Washington State?

                          AFFORDABLE CARE ACT

    Senator Boozman. Yes, considering moving some State 
employees into the healthcare exchanges. This will shift 
healthcare costs from the State to the Federal Government. If 
others follow suit, this could cost the Federal Government 
billions. That's what the Associated Press (AP) is reporting. 
So that's something you need to look into, if you're not aware 
of.
    Secretary Sebelius. Well, that's certainly something we'll 
look into. I've had many communications with the new Governor 
of Washington State, and I'm unaware of any conversation or 
decision----
    Senator Boozman. Well, let me read the first--again, this 
is an AP article. This is Olympia, Washington. ``In a move that 
would capitalize on provisions under President Obama's 
healthcare law, but could cost the Federal Government millions 
of dollars, Washington State lawmakers have found a creative 
way to pass a large chunk of their healthcare expenditures 
along to Washington, DC--analysts say others are likely to 
follow suit.''
    So again, that's something that is being considered.
    Evidently, as they do their white papers, their analysis, 
they're finding that it's, perhaps, to their advantage to do as 
the employers with a little bit higher, the 51 as opposed to 
49.
    My last question is that the President said the healthcare 
law would bring down premiums by $2,500 for the typical family. 
What year can Arkansas families expect to see that savings?
    Secretary Sebelius. Well, Senator, what we're seeing, prior 
to the full implementation, is actually one of the slowest 
growth trends over the last 3 years in private benefits. And I 
think that's due to a couple of things.
    It's due to more rigorous insurance commissioner oversight. 
And a lot of commissioners both asked for and got new 
authorities from their legislatures, hired actuaries, and are 
doing much more intensive rate reviews at the commissioner 
level.
    We have in place, thanks to the law, the so-called 80/20 
rule, where insurance companies for the first time have to make 
sure that 80 percent of their dollars collected are for health-
related costs, not for overhead costs. And we saw last year 
about $2 billion sent back to consumers around the country.
    So some of those Arkansas families got checks last year to 
lower their benefit costs, because their companies didn't meet 
that ratio.
    And the third step will be: The new marketplaces will 
provide families competitive choices, for the first time ever 
and if you're below 400 percent of poverty, the ability to get 
an accelerated tax credit as an assistant to purchase that 
without the overhead and administrative costs that a lot of 
companies added on.
    And it wasn't President Obama. It was really the 
Congressional Budget Office who looked at that implementation, 
looked at both what competition can do, what transparency can 
do, what the new rules could do, and what the subsidy would do 
for families, and made that $2,500 estimate.
    But as you know, the markets aren't up and running. That 
will be next year, and we'll report back to the committee.
    Senator Boozman. Thank you, Mr. Chairman.
    Senator Johanns. Mr. Chairman, thank you.
    Good to see you again.
    Secretary Sebelius. Nice to see you, sir.
    Senator Johanns. Do you prefer to be called Governor or 
Secretary?
    Secretary Sebelius. Either works. You missed Senator 
Alexander. He has three titles. But you only have two, Governor 
and Senator. Oh, that's right. You were Secretary. I'm so 
sorry. You are Governor, Secretary, Senator, too.
    Senator Johanns. That's right. Let me, if I might----
    Secretary Sebelius. Probably a diplomat, I don't know.
    Senator Johanns. No, never a diplomat. I've never been 
accused of being diplomatic.

                   AFFORDABLE CARE ACT AND EMPLOYERS

    CBO in a recent report, actually in February, estimated 
that 7 million people are expected to lose their employer-
provided coverage due to the healthcare law. This estimate, as 
you know, continues to grow. CBO estimated 4 million in its 
August report.
    CBO also estimated that the worst case is that as many as 
20 million Americans could lose their employer-provided 
coverage under the healthcare law.
    I think CBO is simply recognizing the reality of one of the 
features of this healthcare law. That reality very simply is 
this: That an employer looks at the cost of the healthcare 
plan, looks at the cost of the penalty, and makes a decision.
    Now you and I can recognize that there's maybe a 
competitive advantage, in terms of recruiting employees, to 
provide them a healthcare plan versus paying the penalty and 
sending them to the exchange.
    But I think the reality of what Senator Boozman was saying, 
and what the CBO is saying, is that the promise--if you like 
your healthcare coverage, you're going to get to keep it; we 
can almost all quote that word for word--it's not fulfilled 
under this law.
    And people who did like their healthcare coverage, who 
wanted to keep their healthcare coverage, they might have 
argued that it was costly and they wished that it was less 
costly, but having said that, they liked their coverage, wanted 
to keep their coverage. These people aren't going to be given 
that option.
    What can you do, your Department do, to this phenomena that 
CBO recognizes is occurring and could get a lot worse, 20 
million, I mean, just the impact on the subsidies would be 
rather breathtaking. So how do you stem that tide?
    Secretary Sebelius. Well, Senator, a couple of things.
    First of all, I think that it is correct that CBO did 
adjust the baseline. I think what is incorrect is the 
assumption that meant people would lose their employer 
coverage.
    They were really adjusting the baseline based on the 
Supreme Court decision that made Medicaid expansion voluntary. 
And they readjusted, suggesting that some of the people who 
were in States where a Governor chose not to expand Medicaid 
would be coming into the exchange at above 100 percent of 
poverty. And that was the basic baseline adjustment.
    So fewer States would have the full expansion. More States 
would have people in the exchange based on the Governor's 
decision not to expand.
    I think also that if you look at the 155 million people or 
so who are currently provided employer coverage, or are 
dependents of someone who is provided employer coverage, as you 
know, that market was totally voluntary. And the part of the 
market that worked the least well for both employers and often 
employees was the small group market. That is certainly the 
case for the entrepreneurs or self-employed or family business 
folks who were shopping in and out. Coverage for that 
population, over a 10-year period prior to the Affordable Care 
Act, has gotten more and more expensive and fewer and fewer 
people were covered.
    So that is the segment of the market that will be most 
affected by the new marketplaces. Most large employer plans are 
grandfathered in. Most medium employer plans are grandfathered 
in. The new market benchmark captures the most popular employer 
plan in the marketplace, allows a State to set the benchmarks 
and the flexibilities.
    As Senator Harkin said, with 30 hours, we have tried to 
actually capture the snapshot of what was going on in the 
market, and allow States to make a lot of choices that fit--
what fits Nebraska may not be the same as what works in Iowa or 
in California. So it is a very State-based choice.
    And we're hopeful that choice will be reflected in more 
affordable coverage, but the snapshot is what's going on in the 
business community right now in those States.
    Senator Johanns. I'm out of time, which is always one of 
the challenges in a hearing like this.
    But there has been a tremendous amount of disagreement 
about this law from day 1. And I cannot emphasize enough, Madam 
Secretary, how much I disagree with what you just said.
    I don't think that accurately reflects what CBO is getting 
at. People are going to lose their insurance. They already are.
    The other thing that I would tell you, just by defining a 
plan and forcing everybody to offer that plan, the thought that 
you're somehow going to impact the price of that plan really 
doesn't make one wit of economic sense to me.
    The problem these small businesses are having is that they 
are trying to insure a very small pool. But what small 
businesses are now doing, if they're at 48 people or 49, they 
just tell me, ``Look, I'm not going to go over 50. I don't want 
to deal with this healthcare mess.''
    The other thing that I think is going to happen is the 
economics of a large employer taking people off a healthcare 
plan are huge. It's huge. And I think it will happen.
    And I think once the dam breaks, it's going to be a mess. 
And there isn't anything you will be able to do about that. And 
I am just convinced it's going to happen.
    The economics are just too big for that not to happen at 
some point, but we can continue this discussion.
    Now, I'm way out of time. Thank you for your indulgence.
    Senator Harkin. Did you have a response?
    Secretary Sebelius. I think I heard the Senator.

                   PREVENTION AND PUBLIC HEALTH FUND

    Senator Harkin. Okay, we'll start a second round.
    Again, Madam Secretary, we know this. More than 75 percent 
of our Nation's health costs come from chronic diseases, many 
of which are preventable. That's part of the prevention title. 
That's why we have it there.
    A lot of people focus on prevention as just being in the 
doctor's office. That's one part of it, the clinical setting. 
But it must be done in a broader setting in our society--
communities, workplace, schools.
    If we are really going to get ahead of this curve, we have 
to make it easier for Americans to make healthy choices. I've 
always said, ``In America, it's easy to be unhealthy and hard 
to be healthy.''
    Why shouldn't that change? Why shouldn't it be easy to be 
healthy and harder to be unhealthy?
    So anyway, we put in all the things like smoking cessation, 
diabetes prevention, wellness programs in the workplace. The 
Trust for America's Health has had a lot of reports in the past 
showing the return on investment to be 5- or 6-to-1.
    So again, I'm back to where I started: The President's 
request for the prevention fund in fiscal year 2014.
    Now, here is what's interesting. In the budget, there is 
money in the fund for things like newborn screening, cancer 
screening, birth defects prevention, things I think we can all 
agree on. At the same time, the budget proposes to cut these 
programs in the base Labor-HHS bill.
    For example, the budget includes $28.5 million in the fund 
for newborn screening. Everyone will say, well, that's great. 
But the budget cuts $28.5 million from newborn screening in the 
base bill, our bill.
    So there's no increase. We're just swapping it from one 
account to the other.
    That was not the purpose of the prevention fund, to allow 
money to be just swapped out. It was to increase over and above 
what we have been doing for prevention.
    We have the same situation with funding for teen pregnancy 
prevention, poison control centers, and other programs.
    So, again, what's the thought behind this idea of swapping 
it out rather than having an increase, which is what was 
supposed to be in the prevention fund?
    Secretary Sebelius. Well, Senator, I think that what we are 
in the process of trying to evaluate as we move into calendar 
year 2014, with the full implementation of the Affordable Care 
Act, is what assets will now be part of an individual's health 
insurance plan that won't need to be duplicated by special 
programs either in the base budget or special programs in the 
prevention fund.
    So screenings will become more routinely part of a family's 
healthcare. Prevention activities that deal with cancer 
detection and colon cancer screening, even some of the smoking 
cessation efforts, will be actually funded through private 
health insurance and through the Medicaid program in ways that 
currently are not available to a lot of people.
    So I think what we are trying to reflect in 2014 is, yes, 
these initiatives are important moving forward, focusing 
prevention funds on activities that are known to have proven 
success. But also recognizing that what's not reflected in the 
budget is that, for millions of Americans, they will actually 
have access to prevention benefits as part of their insurance 
package that they do not have now and so don't need to draw 
down those Federal funds or program dollars at the State level.
    Again, I agree with you that trying to get to the 
underlying causes of chronic disease are the best ways to save 
dollars in the long run. So we've tried to make sure that the 
smoking programs are not only included but ramped up through 
various efforts, and that community transformation efforts 
focusing on chronic disease management and prevention actually 
continue forward.
    Senator Harkin. Well, again, I would just say I would like 
to see that happen before you start cutting the money. I'm not 
certain that it's going to happen just like that overnight in 
2014. Maybe 2015, maybe 2016, maybe 2017. Okay, when that 
happens--well, I'm not going to be here, but it seems to me, 
when that happens, then we can talk about shifting it over to 
where people have it on their insurance exchange. But that's 
not going to happen in 2014.
    So we'll take another look at that.

          ADMINISTRATION FOR COMMUNITY LIVING AND THE DISABLED

    Let me just also say that, again, the fiscal year 2014 
budget is the first for the Administration for Community Living 
(ACL). You created this, the ACL, bringing together programs to 
provide services to people with disabilities and older 
Americans.
    I am all for it. I think it's a great idea. I think what 
you've done is commendable. But now that it is formed, I am not 
certain exactly how it's going to carry out the mission to 
promote the independence of persons with disabilities as well 
as older Americans.
    So, again, I just want to know briefly--I guess, I've gone 
over my time, too--how you're going to get this agency really 
moving to fill in all those gaps, so to speak.
    Secretary Sebelius. Well, first of all, Mr. Chairman, I 
want to recognize your incredible leadership on behalf of 
Americans with disabilities.
    That's been part of your career achievements and, 
certainly, a voice that will be terribly missed when you leave 
the United States Senate.
    We were really pleased to work with you to establish what 
we think is a model that can be incredibly effective moving 
forward.
    Senator Harkin. I agree.
    Secretary Sebelius. And it was to take our various 
disparate disability programs, and the Administration on Aging, 
and put them under one umbrella. And actually, what is very 
exciting is it kind of models the best practices that are going 
on in States around the country.
    So ACL just had a first anniversary. It's now been an 
entity for a year. And in visiting with the leadership, with 
not only Administrator Kathy Greenlee, but certainly Henry 
Claypool, and others representing the disability community, 
they are very enthusiastic about the opportunity to build a 
real network of services and supports at the community level, 
because whether you're thinking about someone aging in place or 
someone from the disability community being fully productive in 
the community, a lot of the individual needs are fairly 
similar--transportation needs, supportive housing needs, access 
to mobile medical services, the medical home model.
    So the combination of these two important communities 
doesn't mean that we're going to have a one-size-fits-all 
package of services. But it does mean, I think, that we 
leverage services and supports that were operating in silos.
    We have some real administrative efficiencies. And we 
actually are encouraging and creating at the State level a 
network of community services that I think can more effectively 
serve people from the disability community, but also that we 
take advantage of the money follows the person and we continue 
with our Olmstead efforts to get people out of a restrictive 
setting and into the community.
    But that doesn't work very well unless you have support 
services in the community. And I think that is the exciting 
thing about ACL, and that's really what's happening on the 
ground.
    Senator Harkin. Well, good for you. I think it was a great 
idea, and I commend your leadership in pulling this together 
and starting this entity. And I look forward to working with 
you to----
    Secretary Sebelius. Thank you.
    Senator Harkin [continuing]. Invigorate it and keep it 
strong.
    Senator Moran.
    Senator Moran. Chairman, thank you.

                          MARKETPLACE FUNDING

    Madam Secretary, just a few follow-ups. I want to try to 
ask them briefly in hopes that I can get through three or four 
things in 5 minutes.
    Your response to my question, your response that the 
Department requested $1.5 billion for exchanges was not 
answering the question I was asking.
    What is the amount necessary for the Federal Government to 
pay for the federally created exchanges in States that did not 
create an exchange?
    So I think what you were telling me is that it's $1.5 
billion for exchanges, generally. But what do you estimate the 
cost to be to solve the problem where States have decided not 
to create a State exchange?
    Secretary Sebelius. Well, again, Senator, it's some of the 
same. Part of what those dollars are for is the set up and 
original operation of the Federal hub, which is the data system 
that will verify income levels and provide the tax credit and 
enrollment information. And that will be for every State in the 
country, whether they're operating their own exchange or not.
    For the States where HHS is operating at least one part or 
all of the exchange, some of those dollars are used for that. 
And the dollars that come from the Federal Government will also 
begin to be replaced by user fees, so that in every State in 
the country, whether it's the federally operated market or a 
State-operated market, insurers who are providing plans on that 
marketplace will pay a fee. And those fees will make the market 
self-supporting.
    But I can get you a more detailed breakdown in writing.
    Senator Moran. That would be fine. We can follow up on this 
topic.
    I think what I'm asking you is: What is the unexpected cost 
as a result of States not operating State exchanges?
    Secretary Sebelius. We always assumed, Senator, that we 
would operate some exchanges. What we can tell you, and try to 
get those numbers nailed down, is what additional costs there 
are. But we were always going to have to build the hub.
    Senator Moran. Okay.
    Secretary Sebelius. We were always going to build a portion 
of the infrastructure. And the cost estimates have differed.
    We weren't ever sure, as the deadlines passed, how many 
States would be in or out, and now we finally know.

                   AFFORDABLE CARE ACT AND EMPLOYERS

    Senator Moran. In response to Senator Alexander's question, 
and I don't know that there's a question for you in this, but 
you indicated that you hope employers don't do what Senator 
Alexander was suggesting.
    I just would indicate to you that it seems to me, and 
Senator Boozman pointed this out, it's a Washington Post 
article this morning in which the State of Washington is 
looking for ways to have more part-time employees and get their 
employees out of the--get the State out of the requirement of 
providing insurance for them.
    But that's happening in the private sector as well. The 
interesting thing to me is it's now expanding to the public 
sector, the State of Washington.
    But those conversations are occurring all the time. I mean, 
the anecdotes in Kansas of people who are either trying to get 
below 50 full-time equivalent employees or to have more of 
their employees be part-time is really prevalent. Again, 
anecdotes of a small business who is closing a couple of their 
businesses so that they fit that criteria, I think it's out 
there.

                       CRITICAL ACCESS HOSPITALS

    I wanted to ask you about rural healthcare again. You are 
supportive of the President's budget request in reducing the 
101 percent to 100 percent of cost base reimbursement for 
critical-access hospitals?
    Secretary Sebelius. That is our budget proposal, yes, sir.
    Senator Moran. And you are supportive of the change in the 
mileage limitation from 20--well, for the hospitals that have 
been granted a waiver and are less than 10 miles apart, you 
believe they should not receive the reimbursement as a critical 
access hospital?
    Secretary Sebelius. Yes, that is the proposal, again, that 
was made last year and this year.
    Senator Moran. We have a number of examples, many of which 
you are aware of. There are a number of critical access 
hospitals that would meet the criteria that you're now 
creating.
    And while I said in my opening remarks, I can see that 
being prospective, how do you take away the critical access 
hospital designation for both hospitals, which in my view means 
that neither succeed. I can't remember who you were responding 
to, but you indicated in response to this issue--maybe it was 
Senator Cochran--was that they're already getting 100 percent 
of costs.
    But the reality is that not all costs are included in the 
calculation of costs. There's a definition of what costs are, 
and you get, presumably, 100-percent reimbursement of those 
costs. But they're not all costs of the hospital.
    At least according to the National Rural Health 
Association, 41 percent of all critical access hospitals are in 
the red now. There's less access to capital for small 
hospitals. They treat older, poorer, and sicker patients. And 
in addition to their specific and unique needs, they represent 
such a very small portion of any money spent on healthcare, so 
when you reduce the payments to critical access hospitals, it 
doesn't have a significant corresponding impact on the overall 
budget.
    And so I was interested in any response you want to make to 
that? How do you explain to two hospitals who would now no 
longer be eligible to be critical access hospitals that neither 
one of them are going to be designated as a critical access 
hospital, presumably losing the status and closing both 
hospitals?
    Secretary Sebelius. Senator, I will share with you that I 
had a similar conversation in a budget briefing the other day. 
And frankly, I would love to work with you on that aspect of 
this proposal, to really drill down a little bit in terms of 
how it impacts people. If they got a designation being 10 miles 
apart, how far away are they from the next critical access 
hospital, the typical is 35 miles. How did this 10-mile 
structure occur? But I would love to continue that discussion.
    Senator Moran. Great. I would guess that as Governor, you 
granted some hospital waivers--in days gone by, Governors got 
to grant exemptions to 35 miles. I would not be surprised that 
you granted a number of those exceptions.
    Secretary Sebelius. That could be.
    Senator Moran. That could be.

           AFFORDABLE CARE ACT IMPLEMENTATION AND ENROLLMENT

    I've run out of time. I just wanted to--I didn't know 
whether you ever had the opportunity to respond to Senator 
Baucus on the train-wreck comment.
    Anything that you would respond to what was at least 
reported about Senator Baucus's description of implementation?
    Secretary Sebelius. Well, I think the Senator was 
describing a situation where he felt far too few people were 
aware of the benefits that they were going to be entitled to 
receive, and there wasn't enough outreach and education going 
on, which I would agree is a challenge.
    And it's one of the reasons that, again, we made what is a 
very difficult decision to use some of the prevention funding 
when we were not given additional resources for education and 
outreach. We will use some of the prevention funding so that 
there will be now navigators on the ground in States around the 
country to begin to educate folks, community groups, and 
others.
    We know that worked on Part D when Medicare expanded the 
program. In Part D, there was a series of steps taken that 
we're watching very closely. One of them was on-the-ground help 
and assistance. We did not have the funding in our budget. We 
did not get a 2013 budget, so we made a very tough choice.
    But I think that's what the Senator was expressing, is that 
too few people know what's happening, and he is not sure that 
anybody will be able to enroll. And that's what we are trying 
to get out ahead of and address.
    Senator Moran. Madam Secretary, thank you, and I look 
forward to working with you on critical access hospitals.
    Senator Harkin. Madam Secretary, I'm sorry. I have to go 
over to the floor, so I'm going to turn the gavel over to 
Senator Moran.
    In order, it would be Senator Boozman and Senator Shaheen. 
And then more people are showing up.
    But thank you very much for your testimony.
    Senator Moran. Now that you're leaving, Mr. Chairman, 
members are showing up.
    Senator Harkin. That's right.
    Thank you, Madam Secretary, for your forthrightness and 
your answers to our questions. You exhibit an encyclopedic 
knowledge of our healthcare system, and we appreciate that.
    I sent a letter to the Inspector General of the Department 
of Health and Human Services, Daniel Levinson, in which he sent 
his response. I would like to submit both letters to be 
included in the record.
                                                     April 17, 2013
Hon. Daniel R. Levinson
Inspector General, Department of Health and Human Services
Washington, DC.
    Dear Inspector General Levinson: Thank you for your leadership of 
the Office of Inspector General (OIG) and your efforts to promote the 
efficiency, effectiveness and integrity of the Department of Health and 
Human Services programs and activities. Your office plays a critical 
role in ensuring the taxpayer resources are spent in the most efficient 
and effective manner possible.
    To that end, I am interested in receiving your view of the greatest 
threats and vulnerabilities to the discretionary programs and 
activities of the Department of Health and Human Services. I would also 
like you to provide the status of recommendations from the OIG's work 
for each of the past 4 years and discuss any recurring issues within 
the Department that need to be addressed by the Department. I am 
particularly interested in seeing the results of your oversight over 
programs funded through the American Recovery and Reinvestment Act of 
2009. Lastly, I would like to receive specific information about the 
impact of sequestration on the OIG's staffing and work in the current 
fiscal year. I will make your response to these issues a part of the 
hearing record for the April 24, 2013, hearing with Secretary Sebelius.
    Thanks again for your leadership of the OIG and for the role you 
play in making sure that resources provided to the Department are spent 
as intended.
            Sincerely,
                                         Tom Harkin
                                                   Chairman
                           Subcommittee on Labor, Health and Human 
                     Services, and Education, and Related Agencies.
                                 ______
                                 
                                                        May 1, 2013
Hon. Tom Harkin
Chairman, Subcommittee on Labor, Health and Human
    Services, Education and Related Agencies
Washington, DC.
    Dear Mr. Chairman: I am writing in response to your April 17, 2013, 
letter requesting that the Office of Inspector General (OIG) report on 
the greatest threats and vulnerabilities to the discretionary programs 
of the Department of Health and Human Services (HHS or the Department), 
provide status of recommendations for each of the past 4 years and 
discuss recurring issues, provide the results of our oversight of 
programs funded through the American Recovery and Reinvestment Act of 
2009 (ARRA or Recovery Act), and provide information on the impact of 
sequestration on OIG.

             VULNERABILITIES IN HHS DISCRETIONARY PROGRAMS

    OIG has identified numerous threats, vulnerabilities, and 
management challenges for HHS related to the Department's discretionary 
programs. In summary, here are five of the most important challenges 
for HHS:
            1. Effectively Administer Grants and Contracts
    HHS is the largest Federal grant-maker and the third largest 
Federal contracting agency. Effective management of these outlays must 
be a priority. OIG has identified vulnerabilities in HHS's oversight of 
grantees, particularly with respect to deficiencies in grantees' 
internal controls, financial stability, organizational structures, 
procurement and property management policies, and personnel policies 
and procedures. OIG has also identified vulnerabilities in HHS's 
internal oversight of its contract funding to avoid Antideficiency Act 
violations, on the basis of problems identified with certain contracts 
at the National Institutes of Health (NIH).
            2. Protect the Security and Integrity of Data, Systems, and 
                    Technology
    As reliance on information technology and data grows, so do the 
challenges and importance of ensuring the security and integrity of 
systems and data. Through our annual audits, we have identified 
vulnerabilities in HHS's information security controls. These include 
deficiencies in computer inventory management, logical access controls 
(e.g., weak passwords); outdated software, and patch management that 
could allow unauthorized access to HHS systems and sensitive data. HHS 
should heighten its management focus on strengthening information 
security across the Department to minimize threats to the systems.
            3. Reduce and Report Improper Payments
    HHS should make every reasonable effort to ensure that vital 
Federal dollars are spent for their intended purposes and in accordance 
with program requirements. In fiscal year (FY) 2012, the Department 
reported $64.8 billion in improper payments across eight programs 
deemed as high risk by the Office of Management and Budget. Medicare 
and Medicaid programs accounted for the vast majority of these improper 
payments. Foster Care, Head Start, and the Child Care Development Fund 
(CCDF), run by the Administration for Children and Families (ACF), 
accounted for about $0.5 billion of those improper payments.
    The positive news is that Head Start's improper payment rate was 
less than 1 percent, and HHS met its error rate reduction goals for 
Head Start and CCDF. The challenge remains for HHS to meet error rate 
reduction goals for Foster Care and to further lower CCDF's improper 
payment rate from 7.9 percent. In addition, HHS did not meet its 
requirement to report an improper payment rate for the ninth high-risk 
program, Temporary Assistance for Needy Families, citing limitations in 
its authority to require States to provide the requisite information.
            4. Prevent, Prepare for, and Respond to Public Health 
                    Emergencies
    HHS is integral to preventing, preparing for, and responding to 
public health emergencies resulting from a wide spectrum of natural and 
man-made disasters. HHS needs to continue its focus on fulfilling this 
responsibility effectively and implement the specific management 
improvements that OIG has identified to avoid a threat to public 
safety. In recent years, OIG has recommended management improvements in 
planning, coordination, and communication during pandemic influenza and 
hurricanes. Most recently, OIG reviewed local public health 
preparedness for radiological and nuclear incidents and found 
vulnerabilities in the Centers for Disease Control & Prevention's (CDC) 
guidance and coordination with other entities involved in preparedness 
and response.
            5. Effectively Manage Public Health Programs and Oversight 
                    of Food, Drugs, and Devices
    Effective oversight and management of public health resources is 
essential to ensure that vulnerable populations receive the full 
benefit of public health programs. Vulnerabilities in the oversight of 
certain public health programs hinder them from meeting their missions 
effectively. For example, CDC needs to continue its efforts to work 
with State health officials and medical organizations and change its 
vaccine ordering and inventory systems to address problems OIG 
identified with providers inappropriately storing vaccines. OIG has 
also recommended that the Health Resources and Services Administration 
(HRSA) strengthen its oversight of community health centers' provision 
of required primary care services. In addition, HRSA should strengthen 
oversight of the 340B Drug Discount Program, including improving the 
accuracy and reliability of program data to address deficiencies we 
have identified.
    Through the Food and Drug Administration (FDA), HHS also plays a 
critical role in protecting public health by overseeing the safety of 
food, drugs, and medical devices. With respect to food safety, OlG has 
found that FDA conducts infrequent inspections of food facilities and 
has not ensured that States conduct adequate inspections; food 
facilities and dietary supplement manufacturers too often fail to 
comply with registration and recordkeeping requirements; and 
improvements are needed to ensure efficient and effective food safety 
recalls. OIG has also raised concerns about FDA's followup on adverse 
events involving medical devices and about the transparency of FDA's 
process for reviewing and approving devices. Finally, FDA needs to 
strengthen its Risk Evaluation and Mitigation Strategies, a program for 
monitoring drugs with known or potential risks that may outweigh the 
drugs' benefits.

                     STATUS OF OIG RECOMMENDATIONS

    Additionally, you asked for the status of OIG recommendations to 
HHS for each of the past 4 years. Here are the counts of 
recommendations that OIG has made to HHS, along with implementation 
status.\1\
---------------------------------------------------------------------------
    \1\ These are recommendations stemming from OIG audit and 
evaluation reports and memoranda to HHS. These include recommendations 
to CMS related to Medicare and Medicaid. The unit of analysis is 
recommendations, not reports; a single report may include several 
recommendations.

----------------------------------------------------------------------------------------------------------------
                                                          Recommendations     Implemented or
                     Calendar Year                        Made to HHS that    Closed to Date     Still Open to
                                                                Year               \2\              Date \3\
----------------------------------------------------------------------------------------------------------------
2009...................................................                216                117                 99
2010...................................................                393                234                159
2011...................................................                445                161                284
2012...................................................                454                 57                397
      Cumulative Totals................................              1,508                569                939
----------------------------------------------------------------------------------------------------------------
\2\ OIG may close a recommendation if an alternative action has addressed the underlying issue or a change has
  superseded or made the recommendation moot.
\3\ This figure includes some recommended actions with which HHS has disagreed, but that OlG continues to
  recommend.

                            RECURRING ISSUES

    With respect to the HHS discretionary programs, the recurring 
issues include those discussed above as top management challenges and 
vulnerabilities. With respect to the Medicare and Medicaid programs, we 
have identified additional recurring issues related to improper 
payments, contractor oversight, and the availability and quality of 
program data.
Medicare and Medicaid Improper Payments
    Despite departmental efforts to reduce improper payments, they 
persist in many Medicare and Medicaid program areas. For example, 
Medicare improper payments to skilled nursing facilities totaled more 
than a billion dollars in 2009. Skilled nursing facilities frequently 
billed for more intensive services than were provided or needed by 
beneficiaries. In another example, OIG identified hundreds of millions 
of dollars in improper Medicaid payments for personal care services 
across several States. OIG also found that home health agencies 
submitted 22 percent of claims in error because services were 
unnecessary or claims were coded inaccurately, resulting in $432 
million in Medicare improper payments. For FY 2012, HHS reported 
improper payments totaling more than $64 billion in the Medicare and 
Medicaid programs.

Medicare and Medicaid Contractor Oversight
    OIG reviews have uncovered recurring issues that hinder the 
successful performance and oversight of Medicare and Medicaid 
contractors. Examples include limited results from contractors' 
proactive data analysis to detect improper payments and fraud; 
contractors' difficulties in obtaining from Centers for Medicare & 
Medicaid Services (CMS) the data needed for fraud detection; inaccurate 
and inconsistent data reported by contractors; limited use by CMS of 
contractor-reported fraud and abuse; and lack of identification and 
resolution of program vulnerabilities. OIG's recommendations to CMS 
include: oversee contractors' proactive identification of fraud, 
provide contractors timely access to data during times of contractor 
transitions, improve accuracy of contractor-reported fraud data, 
include more quantitative results in contractors' performance 
evaluations, ensure vulnerabilities identified by contractors are 
tracked and promptly resolved, and improve contractor overpayment 
identification and collection of overpayments.

Utility of Medicaid Claims Data for Oversight
    The Medicaid Statistical Information System is currently the only 
national system containing Medicaid claims information. However, we 
have found that the system is not an effective tool for program 
integrity purposes because it does not contain all the data elements 
needed to help identify fraud, waste, and abuse. In addition, the 
system does not always contain data that is accurate and up to date. 
Without a reliable system containing Medicaid claims data, the 
detection of fraud, waste, and abuse in the program is difficult. CMS 
is taking steps to improve the Medicaid Statistical Information System, 
and we will continue to monitor its progress.

                  OVERSIGHT OF PROGRAMS FUNDED BY ARRA

    Your letter asked about OIG's oversight of programs funded by ARRA. 
OIG has conducted significant work to oversee the programs funded 
through ARRA, such as the more than 200 ARRA-related audits and 
evaluations issued over the last 3 years. These included numerous 
preaward and post-award reviews of ARRA applicants.
    For example, of 83 Early Head Start program grant applicants that 
OIG assessed, 75 had problems with financial stability; inadequate 
systems to manage and account for Federal funds; and inadequate 
organizational structures, procurement and property management 
procedures, and personnel policies and procedures. Using our findings, 
ACF awarded $15 million in ARRA funds to the 8 applicants who had no 
deficiencies; did not award $31 million requested by 15 of the 75 
deficient applicants; and attached conditions to the $126 million 
awarded to 60 of the 75 applicants to require that they receive 
increased ACF oversight, training, and technical assistance. OIG 
recommended and HHS implemented front-end controls to mitigate 
grantees' risks and better protect these funds.
    With respect to post-award reviews of ARRA grantees, OIG identified 
instances when grantees claimed unallowable costs, indicating that 
better oversight was needed. For example, OIG performed a series of 
audits to assess the financial capability of HRSA's community health 
centers receiving ARRA funds to account for and manage Federal funds. 
The assessments identified problems with inventory, cash management, 
and financial systems controls. In response, HRSA has increased its 
efforts in monitoring, assisting grantees, and ensuring program 
integrity.
    OIG also focused on the ARRA provisions encouraging the use of 
Electronic Health Records (EHR) by health care professionals and 
establishing protections against medical identity theft. In early 
assessments of CMS oversight of the Medicare and Medicaid EHR incentive 
programs, we identified obstacles to effectively overseeing the $13.7 
billion in incentive funds to health care professionals. We recommended 
that CMS and the National Coordinator for Health Information Technology 
(ONC) help ensure the integrity of EHR incentive payments. We also 
identified the number of identity breaches requiring notification under 
ARRA and recommended improvements in CMS's oversight of the 
notification process.
    In addition, OIG investigated complaints related to programs 
affected by ARRA. OIG received hundreds of complaints alleging 
inappropriate use of ARRA funds, which resulted in more than 50 
investigations.
    ARRA established the Recovery Accountability and Transparency Board 
(RATB), consisting of 12 Inspectors General, including the HHS 
Inspector General, to coordinate and conduct oversight of Recovery Act 
funds; prevent fraud, waste, and abuse; and promote accountability and 
transparency. At the request of RATB, OIG completed a series of reviews 
to assess the Department's process, oversight, and effectiveness in 
performing data-quality reviews of information reported by recipients 
of ARRA funds. OIG found that the Department had designed an adequate 
process for performing limited data-quality reviews that identify 
material omissions and significant errors in recipient-reported ARRA 
information. In another RATB-requested review, OIG reviewed the 
staffing, training, and qualifications of Department personnel 
responsible for overseeing ARRA funds. HHS OIG and other OIGs concluded 
that staffing qualifications at the largest Federal agencies, including 
HHS, were inadequate.

                     IMPACT OF SEQUESTRATION ON OIG

    Finally, your letter asked for specific information about the 
impact of sequestration on OIG's staffing and work. Sequestration, in 
addition to pre-existing expirations of OIG funding streams, puts OIG's 
ability to oversee HHS programs at risk. Before sequestration was 
enacted, OIG had implemented a hiring freeze and offered a buyout for 
voluntary separation, and we are on pace to downsize by hundreds of 
positions. Since FY 2012, OIG has reduced our staff by 160 positions. 
Additionally, before sequestration was enacted, OIG reduced non-pay 
budgets across the agency.
    Sequestration ups the ante and further impacts the agency. With 
sequestration, OIG will continue our hiring freeze and staff 
reductions. Our funding levels and trajectory necessitate a 20-percent 
reduction in staff from our FY 2012 level. We will be unable to retain 
talent needed to oversee the nation's expanding health care system or 
upgrade aging data systems and implement new technologies critical to 
our mission. The FY 2014 HHS OIG budget request would restore funding 
to OIG and enable us to further invest in our mission to meet the 
substantial challenges that lie ahead.
    Thank you for your continued interest in our work. If you have any 
questions, please contact me or your staff may contact Chris Hinkle, 
Director of Congressional and Regulatory Affairs.
            Sincerely,
                                 Daniel R. Levinson
                                          Inspector General
                           Department of Health and Human Services.

    Senator Harkin. Thank you for your leadership on so many of 
these vital issues. I have some more questions I'll submit for 
the record.
    Senator Moran [presiding]. Senator Boozman.
    Senator Boozman. Thank you, Senator Moran.

                 RESIDENCY AND FOREIGN MEDICAL STUDENTS

    I'd like to get your comments on a few things that aren't 
concerned with the Affordable Care Act but really about just 
good governance.
    I think Senator Pryor mentioned the concern about the slots 
for people in the specialties. Right now, we're in a situation 
in the residency programs where we have a lot of foreign 
medical students. They're filling those slots.
    To me, it really makes no sense, in the sense that if we're 
going to train foreign medical students, we should have the 
ability to allow them to stay once we subsidize their 
education. And that's a real problem.
    I think we all agree. Maybe we can argue about the extent 
of the problem, but residency problems are a real problem. 
Since we have more students going to medical school now, we 
haven't increased the residency programs.
    We do have a lot of foreign students. It would make sense 
to make it such that there were an easy way, if they choose to 
stay in the United States and practice, for that mechanism.
    Can you comment on that?
    Secretary Sebelius. Well, Senator, I think that's one of 
the components of the President's proposal, and the Senate 
bipartisan proposal on immigration reform. It really is an 
immigration issue to increase the number of visas for highly 
skilled, highly trained workers, particularly those workers in 
critical areas who were, as you say, educated in the United 
States.
    I think sometimes called a component of the program of 
``staple the green card to your diploma,'' and that is one of 
the components of the bill that will come before the Senate.
    Senator Boozman. I understand, right. And I don't mean to 
interrupt. But again, in this case, we really do have a 
critical situation.
    Secretary Sebelius. I agree.

                       RECOVERY AUDIT CONTRACTORS

    Senator Boozman. We are adding all of these patients into 
the system, and it makes sense. If that can be done, on the 
context of the other, if the other doesn't get done, it's 
something that we simply have to address as a standalone or 
whatever.
    But I think where you can really help is by really 
illustrating the extent of the problem. I don't think most 
Members of Congress understand that. I know our providers do. I 
know that our hospitals do.
    The other thing is the Recovery Audit Contractor (RAC) 
audits, and I believe very much that we need to have 
accountability on things. When you have a situation, though, 
where 70 percent of the audit is overturned, that's not a good 
situation.
    So I would really encourage you to look at that again. 
Nobody hammers harder on waste and fraud, and we all agree that 
there is a tremendous amount of waste and fraud in the system. 
But I would appreciate it if you look at it and make sure that 
we're not spending an inordinate amount of time on people who 
are trying to get it right as opposed to the bad actors.
    I was visiting with a lady at a medical center recently, 
her analogy was like one of the kids in the family acting out 
and you spank all of them. And I think we've got some of that 
going on.

                        SUSTAINABLE GROWTH RATE

    The last thing that I'd like for you to comment on is 
Sustainable Growth Rate (SGR). And I'm a former optometrist, 
former provider. I know that we are not going to cut providers 
by 20 percent, 30 percent, whatever we're up to now, but they 
don't know that.
    Healthcare is 17 percent, 18 percent of the economy. It's a 
huge deal. We've essentially frozen those offices that some of 
them are doing well, but they can't plan, they can't do that 
with that hanging over. And it's going to take leadership from 
all of us to come up with a plan.
    But we talk a lot about the economy and the importance of 
growing the economy, providing economic opportunity. But that 
is one of the things that truly is a wet blanket that's hanging 
over us.
    Secretary Sebelius. Well, Senator, let me tell you, I'd be 
happy to follow up on the RAC issue that you raised and any 
specific example. I mean, your case of a 70-percent overturn, 
that's always helpful, just so we can drill down on a case and 
use that as an example. So I would appreciate getting that.
    In terms of the residency program, again, we are focusing 
on a whole array of workforce issues, because with or without 
the Affordable Care Act, the aging of the population and the 
demands on providers is different and if we're really----
    Senator Boozman. And the aging of providers.
    Secretary Sebelius. You bet. The aging of providers.
    So we have a whole series of workforce initiatives underway 
and take that very seriously. We can't, at the Department of 
Health and Human Services change the visa situation.
    But finally, on the SGR, I don't think there is any bigger 
single threat to Medicare than the constant threat that 
Medicare providers will be cut, year in and year out. Far too 
much time and energy is spent.
    The President's budget every year since I've been appointed 
Secretary has included a long-term fix for the SGR. This budget 
does the same.
    We think that a transition period for a couple of years, 
which gets rid of the looming threat, and then actually working 
with Congress on a more pay-for-performance strategy moving 
forward, is the best transition underway. And that's what's 
incorporated into this budget.
    But I couldn't agree more. We would love to work with you 
and other Members in Congress to get rid of this yearly kind of 
kabuki dance that takes providers' time, scares patients, and 
is really not very beneficial to the notion that healthcare 
needs to be planned for in the future.
    And particularly for small provider offices, what we hear 
is that people are taking out loans and they don't have any 
idea if they're going to have a payment the following week or 
the following month. And last year, we actually had to 
implement pay cuts. So we have seen this up close and personal, 
and actually gone over the edge a few times.
    So I'd love to work with you on that.
    Senator Boozman. Thank you, Madam Secretary.
    Secretary Sebelius. Sure.
    Senator Moran. Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    I'm a new member of this committee, and it's very nice for 
my first hearing to be here with you, Secretary Sebelius, and 
very much appreciate the work that you're doing and that you're 
at the helm of the Department of Health and Human Services at 
this critical time, as we change our healthcare system in this 
country. So thank you very much for all of the work that you 
are doing.

          OUTREACH TO SMALL BUSINESSES AND AFFORDABLE CARE ACT

    I want to follow up a little bit on the issues that Senator 
Moran raised about how we educate people in this country about 
what's available to them through the new healthcare law, 
particularly small businesses who I'm hearing a lot from in New 
Hampshire as they're trying to figure out just how they comply 
with all of the new requirements of the law.
    And I wonder if you could talk about to what extent you're 
cooperating with the Small Business Administration, the 
Internal Revenue Service (IRS), the Department of Labor, all of 
the other agencies within Government that are also involved in 
trying to implement the law.
    Secretary Sebelius. Well, Senator, we have had extensive 
collaboration, particularly with the Small Business 
Administration in terms of outreach. They have a very effective 
and active network. Their number one issue from their employer 
base for years has been affordable healthcare. That is the 
biggest challenge that small-business owners face.
    So our regional offices around the country, as well as a 
whole army of folks from HHS, are doing a lot of joint 
presentations. We have done trainings for Small Business 
Administration employees at their request, so they can actually 
give information, hold business meetings. We're using their 
networks of newsletters and outreach. And I think those efforts 
will ramp up as we get closer to open enrollment in October of 
this year.
    Senator Shaheen. Well, I would urge you to do whatever you 
can to make sure that we are aware here of those efforts, 
because we can also help in our home State----
    Secretary Sebelius. You bet.
    Senator Shaheen [continuing]. To educate people.
    Secretary Sebelius. Yes.

              ENROLLMENT AND OUTREACH FOR THE MARKETPLACES

    Senator Shaheen. One of the other issues that was raised 
with me recently by some folks who were involved in 
implementing the Massachusetts healthcare law was the extent to 
which those people who had been uninsured had never been part 
of the healthcare system, had no idea how to navigate the 
system, and the challenges of trying to provide assistance to 
them as they were being brought into health insurance coverage.
    So are you anticipating that? And is there funding in the 
budget to do things like help lines and all of the assistance 
that we'll need to provide to people who have no idea how to 
operate in a healthcare system that gives them health 
insurance?
    Secretary Sebelius. Well, I think you've just given a 
snapshot of some of the challenges that we know are very real 
and that we will face--everything from language barriers, to 
cultural competency, to a lack of familiarity with terminology.
    You can't make choices unless you actually understand the 
system. So we will have a variety of assistance available on 
the ground, help from trained individuals who come from 
community groups and advocacy groups and neighborhood groups. 
And those grant applications are out in States around the 
country, the so-called navigators. We will use our Federal 
employees at a variety of points of contact in health centers, 
hospitals, in housing units, and in programs where they have 
contact with individuals, and, again, with training and 
materials.
    We are trying to create the easiest, most consumer friendly 
Web site to use in multiple languages with a help line that 
will pop up when you're shopping online. If a consumer wants to 
pick up the phone and call along the way to get questions 
answered, our help line will make sure that's available.
    We have up to 150 languages that people anticipate will be 
necessary. We are kind of mirroring what we know comes in 
through the Medicare line, as well as recognizing that a lot of 
people are going to need help actually filling out forms and 
answering questions.
    Many States will have agents and brokers involved, and that 
really is a kind of marketplace-by-marketplace decision.
    So I think we're anticipating a lot of challenges. We will 
have a lot of educating during the summertime and then, 
hopefully, a motivation to enroll period.
    But you're right, if you've never dealt with health 
insurance before, if you don't know what it is that you're 
looking for, it's pretty difficult to make a decision.
    Senator Shaheen. Thank you. My time has expired, but 
hopefully, I can do another round in a few minutes.
    Senator Moran. Senator Merkley.
    Senator Merkley. Thank you very much, Mr. Chair.
    And thank you, Madam Secretary. Wonderful to have you here. 
And there are so many programs you have responsibility for that 
touch lives of folks in so many different ways. So I'll just 
pick out a few to ask about.

                     COMMUNITY SERVICES BLOCK GRANT

    One is the Community Services Block Grants. These block 
grants, I do a lot of town halls, one in each county each year, 
so I've done more than 160. And beforehand, I hold a meeting 
with the city and county leaders. And inevitably, they raise 
the flexibility of block grants, and they use them in so many 
different ways in different parts of my State.
    I believe that the President's request is $350 million, if 
the numbers I have are right. And the fiscal year 2013 enacted 
amount was $682 million, so roughly a 50-percent decrease in 
those block grants.
    If those numbers are right, I just wanted to get your 
thinking about it, because I see communities advocating all the 
time for the huge amount of flexibility to address vital needs 
and the value of that.
    Secretary Sebelius. Well, Senator, I think there's no 
question that those programs play a critical role in delivering 
services at the local level. I think this budget reflects some 
very difficult choices in a tough budget time, and we're trying 
to balance needs across a wide array of services, as you say.
    So in a different budget year, we would certainly not 
suggest or recommend a reduction in the Community Services 
Block Grant, but that was a choice that was made for this 
year's budget.
    Senator Merkley. And I very much appreciate the challenge 
and pressures and choices that you're wrestling with as you 
prepare your budget. It doesn't sound like there was any 
particular critique of the program, feeling it didn't work well 
or anything of that nature.
    Secretary Sebelius. It was not. Unfortunately, most of our 
service areas were cut back. We are looking at a 2012 baseline. 
And I would say, the only sort of plus-up areas were areas 
where we actually have new authorities, new challenges. And 
we're trying to, again, allocate resources as strategically as 
possible.

                             BREASTFEEDING

    Senator Merkley. Second one I want to turn to, under the 
Affordable Care Act, the issue of reasonable break time for 
nursing mothers. This is a provision based on a law that we 
adopted in Oregon when I was Speaker that worked incredibly 
well, because, essentially, it asked businesses to provide both 
the privacy and flexibility and break time for mothers to 
continue to express breast milk for their small children.
    The result was happier mothers, less sick time, healthier 
children, and actually good health effects. Senator Coburn has 
really emphasized more positive health for the women as well.
    So it's one of those things that doesn't cost much, and 
actually the businesses are very happy, because they have both 
less sick time and higher morale.
    So the Department of Labor has responsibility for enforcing 
it, but there's also a role for HHS. And I believe that the 
Administration for Children and Families is putting up a Web 
site on breastfeeding. And also, there is a role for the 
Centers for Disease Control in the hospitals promoting 
breastfeeding budget proposal.
    This is a case where a little bit of education and working 
with hospitals to change long-ingrained habits like giving 
mothers a kind of an implied encouragement to not breastfeed by 
free samples and so on and so forth, and making sure staff can 
help mothers through the first couple of days of breastfeeding, 
to get them going on this.
    Is there enough money in that program to kind of do the 
work that is necessary, given the great value that stems from 
it?
    Secretary Sebelius. Well, Senator, first of all, I share 
your strong commitment that not only does this have tremendous 
health value, but it has proven to be enormously effective in 
terms of bonding mothers and children together. And as the new 
grandmother of an 8-month-old who is the beneficiary of 
breastfeeding, I can tell you, it has been great to have this 
opportunity for my daughter-in-law to go back to work but have 
a place set aside.
    And two things have happened in addition to what you're 
saying. We will focus on it. We have a lot of agencies who feel 
that it has enormous benefits.
    We also had a surgeon general implement a call to action 
around breastfeeding, and a very high profile rollout of all of 
the health impacts. And we are working closely with hospitals, 
for instance, to discourage the free gifts of formula that is 
sort of a cease and desist, and really working, as you say, 
with new mothers.
    The Affordable Care Act, as you know, also has recommended 
a set of preventive benefits, specifically for women's health 
that the Institute of Medicine recommended to us. And one them 
is lactation help and support for new mothers, and that will 
now be part of every new health plan available with no copays, 
no co-insurance.
    And I think, again, it reflects the fact that we're trying 
to address this issue at the public education level through our 
Administration for Children and Families and CDC, through 
private insurance now covering support and help, and certainly 
working with hospital leaders on what they can do to make sure 
that new mothers get off to the best possible start, and know 
how beneficial this can be.
    Senator Merkley. Thank you very much.
    Secretary Sebelius. Sure.

                        317 IMMUNIZATION PROGRAM

    Senator Moran. We will try, as I heard Senator Shaheen say 
that she'd like another round of questions, we have votes in 
about 15 minutes. And so if we can rapidly have one more round, 
Madam Secretary, we should conclude by noon.
    And I'm interested in doing that because I have a couple of 
questions.
    First of all, let me talk about immunization, the 317 
immunization program. The budget recommends a $61.3 million 
reduction. The budget justification indicates that that's 
possible because immunizations will be covered for more people 
under private healthcare and under the Affordable Care Act 
public insurance programs.
    I would point out to you, and you would know this as a 
Kansan, that the 317 immunization program is more than just 
vaccines. It's infrastructure and trained workforce for our 
public health departments across our State and others. And I 
want to make certain that any reduction in that 317 program 
would not deter the quality and availability of the 
infrastructure in public health.
    Secretary Sebelius. That's certainly our intent, Senator.
    Senator Moran. And then let me raise one or two more.

             OFFICE OF MEDICARE HEARINGS AND APPEALS' CASES

    Senator Boozman, I'd like to just again accentuate what he 
said about the workload increase that the Office of Medicare 
Hearings and Appeals workload increased 247 percent from fiscal 
year 2006 to 2013. We've had an aging population, more Medicare 
recipients.
    But I am concerned, as Senator Boozman indicated--his 
question was more on the side of the Finance Committee, but I 
also am concerned that this increase may be due to overzealous 
audits that are occurring through the Recovery Audit Program.
    And here's at least the facts that I've been told. Over 
half the cases that are sent to the Office of Medicare Hearings 
and Appeals are overturned, and the remaining 37 percent were 
overturned by the Department, which suggests that there's lots 
of allegations, cases filed. They are appealed, and the 
hospital or provider is found not to be committing fraud or 
abuse.
    And the point I make, and perhaps it goes back to the 
critical access hospital issue, but to hospitals and other 
providers generally, we've got a lot of people in healthcare 
who are out there spending time, money, and effort in regard to 
these audits that ultimately the provider is, in many 
instances, determined to be successful.
    We need to figure out to have a threshold by which the case 
not brought in the first place.
    Secretary Sebelius. Well, Senator, I think there are two 
issues. You're absolutely right that the number of Medicare 
beneficiaries has increased fairly dramatically since the last 
time we had any increase in resources for that office. So we 
will continue to ask for resources to try and get rid of the 
backlog.
    Having said that, I think there are also a category of 
cases that deal with the difference of inpatient and outpatient 
coding that apply across the board that we are actually working 
to solve administratively. I also think that we should, at 
least, prospectively, help with some of those issues where 
there are issues and challenges and overturned by the Medicare 
board and----
    Senator Moran. Inadvertent errors.
    Secretary Sebelius. We are fixing it on the front-end, but 
I hear you.
    Senator Moran. Good.

                       EARLY LEARNING INITIATIVE

    And finally, Secretary Duncan was before us last week. We 
haven't spent any time, I think we talked all about healthcare 
today, on the education, in particular the pre-kindergarten 
proposal that's in the budget. I don't yet fully understand 
what happens at Department of Education, and then what happens 
at your Department with regard to Head Start; how they come 
together in this new proposal. Unfortunately, I don't have time 
in the remaining few minutes to have you explain that to me.
    But I wanted to point out to you that Secretary Duncan 
stated that the Head Start teachers' ``. . . qualifications are 
too low to be what is really needed for quality early 
education.'' Can you discuss how pre-kindergarten programs 
would affect Head Start, and how we're making certain that we 
have quality programs at Head Start?
    Secretary Sebelius. Well, just in a snapshot, what the 
President is putting forth is a 10-year infrastructure that 
would actually be birth to 5. And the notion would be that the 
children under the age of 4 would be primarily in settings and 
programs more funded by HHS, childcare settings, Early Head 
Start, Head Start. And this anticipates 4-year-olds and 5-year-
olds would be in pre-K and kindergarten more under the umbrella 
of the Department of Education, expanding the access to pre-K 
and then working with States on full-day kindergarten.
    Senator Moran. Would the programs under the Department of 
Education be administered by the local school district?
    Secretary Sebelius. Yes. And I think the President has 
outlined a State-Federal partnership where the funding would go 
to the State level who chooses to expand into a universal 
access to pre-K.
    Many States are choosing to do that well ahead of the 
Federal Government, and there would be some increased funding 
in our budget for both Early Head Start-childcare partnerships 
to raise both quality and increase the slots available to 
children who are less than 200 percent of poverty. It would 
also increase the evidence-based home visitation program, which 
has proven to be a very effective early start to successful 
parenting, reducing violence, getting kids off to good language 
starts.
    So those are the pieces that are in our budget. The pieces 
in education really deal with 4- and 5-year-olds, and really 
very much in a State partnership. This wouldn't be triggered 
unless a State chose to actually take advantage of the 
partnership.
    Senator Moran. Thank you. That was helpful.
    Senator Shaheen.

                             SEQUESTRATION

    Senator Shaheen. Thank you. As I know you're well aware, 
sequestration went into effect about 6 weeks ago on March 1st. 
And I understand that your office has been in touch with the 
Office of Management and Budget (OMB) about how the cuts will 
be implemented for various programs.
    And we've been told that OMB has instructed agencies to 
develop a plan by the end of April, and then each grantee will 
be called by their funding agency.
    On Friday, I got a letter from New Hampshire's Commissioner 
of Health and Human Services, Nick Toumpas, who was very 
concerned and frustrated, I think is fair to say, about the 
lack of guidance that he has received about how to implement 
the sequester cuts.
    And he's very concerned that because the instructions have 
taken awhile and still are not totally there, that he's going 
to have to implement those cuts in the last 2 months of the 
fiscal year.
    So I wonder if you could tell what information you all have 
received about the timeline on the cuts, and what further 
instruction might be available? And can you work with us to try 
and help Commissioner Toumpas as he figures out how to deal 
with this?
    Secretary Sebelius. Well, Senator, let me just start by 
saying, we'd be happy to work with you and have whoever needs 
to get in touch with the commissioner.
    This is a little bit of a catch-22, because what we're 
trying to do, as you would appreciate as a former Governor, is 
give States some flexibility as they look program-by-program, 
and not impose a one-size-fits-all, ``you must do this in a 
Head Start program, you cannot do this in a childcare 
program.''
    Having said that, we are communicating with them pretty 
clearly what the budget reductions look like, and as you know, 
we were given no flexibility program-by-program, department-by-
department. So we can communicate the numbers. We can 
communicate our goal is really mission first, so maximizing the 
dollars that are available for services and looking first to 
any kind of administrative cost that could be cut, any kind of 
travel, any kind of training, any reduction in overhead costs, 
and keeping as many service dollars as possible available, is 
sort of where we're going.
    But we'd be glad to work further with the commissioner.
    Senator Shaheen. Thank you very much.
    And let me just be clear, I think sequestration is 
outrageous. We need to fix it. This Congress needs to act, and 
it's totally unacceptable that we haven't done that.
    Secretary Sebelius. I appreciate that.
    Senator Shaheen. So I appreciate the bind that this puts 
you and all the other agencies in.
    Secretary Sebelius. It's about $15.5 billion out of our 
budget for 7 months of a fiscal year, and $11 million of that 
comes directly out of Medicare----
    Senator Shaheen. Right.
    Secretary Sebelius [continuing]. Services.

                      DIABETES PREVENTION PROGRAM

    Senator Shaheen. One of the chronic illnesses that I've 
been very concerned about is diabetes. I have a personal 
connection to that. My oldest granddaughter has Type I. And so 
I've seen very directly both the costs in dollars and the 
personal toll that diabetes takes on families.
    And one of the programs that I think has been very 
successful is the Diabetes Prevention Program. And looking at 
the budget, it appears that it eliminates the previous funding 
for this program and consolidates it into a larger category of 
diabetes funding.
    Is that a correct interpretation? And can you talk a little 
bit about how you're approaching, addressing diabetes in the 
budget?
    Secretary Sebelius. Well, I think, Senator, diabetes is 
clearly one of the chronic disease conditions that is getting 
more attention both at the prevention level and, certainly, at 
the management level. And it's been missing, I'd say, in both 
of those.
    The budget for 2014 includes the same amount of dollars for 
diabetes as we had in the 2012 budget. But what we do see is a 
new coordinated chronic disease funding opportunity. We're not 
combining the programs, but we're, again, allowing States the 
flexibility and the opportunity to identify ways that they 
would use the funding to fill in the gaps that they may have in 
the State, which might be different from another State.
    We've heard it from a lot of State health officers and 
others that this is a welcome change, that they won't have to 
fill out five different applications for five different disease 
programs, and really can tailor the Federal dollars to the 
chronic disease initiatives that they find most effective.
    So while there's a coordinated funding application, there 
will be line items for specific disease funding in the budget.
    We're just trying to simplify, really at the administrative 
level, and allow States to, frankly, be a little more 
strategic, because if they can apply some attention to 
coordinating what are often comorbidities--it may not be, 
certainly, the case in your granddaughter, but a lot of 
diabetic patients also have a series of other issues like 
having high blood pressure. They may be obese. They have a 
series of things.
    And having the opportunity to really focus some dollars on 
all of those conditions simultaneously we think is a step 
forward.
    Senator Shaheen. Well, thank you. I look forward to seeing 
that work----
    Secretary Sebelius. Sure.
    Senator Shaheen [continuing]. As we go forward.

                          ARTIFICIAL PANCREAS

    My time is up, but I just wanted to also say how pleased I 
was that the Food and Drug Administration (FDA) finally issued 
the guidance on the artificial pancreas and hope they will 
continue to move that, because that offers tremendous hope for 
diabetes patients.
    Senator Moran. Secretary Sebelius, unless you say something 
that causes me to have some level of outrage, the final 
questions will be provided by Senator Merkley.
    Secretary Sebelius. I'll do my best not to do that, Senator 
Moran.

                             BREASTFEEDING

    Senator Merkley. Thank you. Thank you very much.
    Before going to another topic, I just wanted to go back a 
moment to the promoting breastfeeding line, because I had this 
information handed to me.
    In the CDC, it was dropped from 2012 from $7 million, which 
is a modest amount, to $2.5 million. And I just want to again 
kind of anchor my concern that this is one of those prevention 
high win--win for the babies, win for the mothers, win for the 
workplace--that merits attention. And I don't think there was 
an advocacy group that is there in the same way there is for 
any particular disease or so on and so forth. And I want to 
make sure that when we have an incredibly effective tool that 
we draw attention to it even if there isn't an organized 
advocacy side to this.
    Secretary Sebelius. Well, again, Senator, I think some of 
the changes in the 2014 budget reflect the fact that the CDC's 
focus and attention may have been on a number of pregnant women 
and patients who did not have health insurance, did not have 
access to their own benefits.
    And with the full implementation of the ACA coming online 
in 2014, we hope that that will reduce the number of people who 
need to rely on just Government services for that kind of help 
and support.
    But certainly, I take this issue very, very seriously.
    Senator Merkley. And if I understand right, this is really 
about folks who work to leverage the capability of hospitals 
and clinics to then work with the women themselves, so that it 
is a highly leveraged education training.
    I may not have it quite right, but I just want to flag it 
as something that----
    Secretary Sebelius. Thank you. Okay.
    Senator Merkley [continuing]. Merits attention.

                        ASSETS FOR INDEPENDENCE

    I want to turn for a moment to the Assets for Independence 
program, AFI. This is often called IDAs, Individual Development 
Accounts.
    This is essentially strategies where folks with low to 
moderate incomes save money and receive matching grants to 
engage in the three pathways toward middle class, one being 
education, one being small business, and one being 
homeownership.
    And it's a very small amount of money at this point. Your 
request is $20 million.
    I just want to note that a ``for example'' is that we spend 
$80 billion-plus in the home mortgage interest deduction to 
promote homeownership, but almost none of that goes to lower 
income families buying starter homes, because their interest 
does exceed their standard deduction and, therefore, there's no 
actual boost, if you will, to assist them.
    So those who need the most help to actually become 
homeowners only get the help through something like the IDA 
program. And $20 million is a tiny drop in the bucket. And 
that's split between folks launching small businesses, going 
back to school. Again, three major pathways into the middle 
class.
    The reason I wanted to raise this is this is really a 
strategy that gets people started in homeownership which has a 
huge impact on the success of families. Children have higher 
graduation rates from high school. Families take more of an 
interest of the community that they live in, because they now 
have a stake in it. The equity they build becomes powerful 
equity for them to be able to strengthen their family in other 
ways and assist their children going to college.
    So I just wanted to flag that program as one which has very 
little funding but is a very powerful--what's been a very 
powerful bipartisan strategy.
    Secretary Sebelius. Well, I'd love to have an opportunity 
follow up with you and your staff on that program, and see what 
we could do to make sure we maximize the limited funding that 
is available.

           CENTERS FOR DISEASE CONTROL AND PREVENTION BUDGET

    Senator Merkley. As I was looking at, for example, the line 
items within the CDC, do you have the flexibility to move money 
between line items, or are these pretty well locked in by what 
we do at the appropriations level?
    Secretary Sebelius. I think the CDC director has some 
ability, some flexibility, but my guess is not very much.

                          OLDER AMERICANS ACT

    Senator Merkley. Okay.
    Well, I want to use my last minute just to flag, if you 
will, that the Older Americans Act program, we have an 
increase--substantial increase--over the 2-year period from 
2012 to 2014 in a population of 10,000 folks a day surpassing 
the age of 60, plus growth in the cost of the goods that they 
face in those programs.
    That program, the Older Americans Act, has been flat funded 
despite the growth in population and the growth in inflation.
    So are we going to be able to find ways to deliver similar 
services with the funding flat while the number of folks and 
inflation are eating away at it?
    Secretary Sebelius. Well, I think there's no question that 
there's a higher demand on services with an aging population.
    I shared with Senator Harkin, we are really pleased with 
the additional community assets that we think we can leverage 
with the creation of the Administration on Community Living, a 
lot of the support services that older Americans need, and also 
those in the disability community need at the community level. 
So we're trying to be as strategic as we possibly can about the 
transportation, food needs, medical needs, supportive housing, 
that are really essential to a wide variety of populations.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Merkley. You have an incredibly difficult and 
challenging task, and I thank you for your dedication to public 
service and for you extensive knowledge and work with these 
programs.
    Secretary Sebelius. Thank you.
    Senator Moran. Madam Secretary, thank you for your 
testimony and for answering our questions for the last 2 hours. 
We're appreciative of your presence here.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

               Questions Submitted by Senator Tom Harkin

                  REDUCING HEALTHCARE FRAUD AND ABUSE

    Question. Secretary Sebelius, I know you share my disappointment 
about the lack of any additional funding the past 2 years for 
eliminating waste, fraud, and abuse in Medicare and Medicaid. This is 
an area where we know we can find savings. In your testimony you say 
the return on investment is $7.90 for every $1 invested.
    The Budget Control Act included cap adjustments that encouraged 
Congress to increase this funding by $569 million over the past 2 
years--an amount that would have saved taxpayers more than $4 billion. 
Madam Secretary, can you give this subcommittee an idea of what has 
been lost over the last 2 years, by not taking advantage of the 
additional funding in the Budget Control Act?
    Answer. The lack of additional Health Care Fraud and Abuse Control 
(HCFAC) funding as envisioned by the 2011 Budget Control Act has set 
back our Medicare, Medicaid and Children's Health Insurance Program 
(CHIP) efforts to combat fraud, waste, and abuse in the following ways:
  --Strike Forces.--HHS and Department of Justice (DOJ) cannot expand 
        beyond the existing nine Medicare Fraud Strike Forces. Our data 
        show that there are other geographic areas where healthcare 
        fraud is high. The lack of funding increases means there remain 
        areas with high incidents of Medicare fraud that we are unable 
        to target in partnership with DOJ. Since its inception, Strike 
        Forces have been responsible for over 1,023 defendants pleading 
        guilty or being convicted of fraud, and have charged defendants 
        in cases where over $4.6 billion was billed to the Medicare 
        program.
  --DOJ Civil Cases.--DOJ cannot hire additional attorneys and 
        personnel who support civil healthcare fraud investigations. 
        Civil healthcare fraud settlements are the main source of 
        returns to the Medicare Trust Fund and to Federal agencies 
        which have been harmed by fraudsters. In fiscal year 2012, 
        these efforts returned over $4.2 billion to the Medicare Trust 
        Fund, Federal agencies, and others, and the 3-year average 
        return on investment was $7.90 to every $1 spent on healthcare 
        fraud efforts. The lack of increases means that DOJ has fewer 
        attorneys and can take on fewer cases of suspected healthcare 
        fraud.
  --OIG Staffing.--Our Office of Inspector General (OIG) has been hit 
        most directly by the absence of these investments. Since the 
        beginning of 2012, OIG has lost over 160 people due to a hiring 
        freeze as well as Voluntary Early Retirement Authority and 
        Voluntary Separation Incentive Payments. The reduced staffing 
        levels for OIG mean less resources for:
    --Making recommendations to save money and improve programs;
    --Investigating instances of fraud and abuse; and
    --Identifying overpayments for collection.
  --CMS Prevention.--Reduced funding has limited CMS's ability to 
        accelerate new initiatives aimed at preventing fraud, waste, 
        and abuse in Medicare, Medicaid, and CHIP. Specifically, the 
        lack of increases means:
    --CMS has not been able to integrate the Fraud Prevention System 
            (FPS) and Automated Provider Screening system.
    --Starting in fiscal year 2014, CMS will be hampered in its ability 
            to maintain the current level of antifraud, waste and abuse 
            activities, and expand upon its current predictive 
            analytics initiatives like the FPS.
    --Medicaid program integrity efforts have been delayed, including 
            updating Federal Medicaid claims systems and developing and 
            implementing Web-based tools for enhanced oversight; which 
            leaves CMS's ability to fight Medicaid fraud, waste, and 
            abuse limited by outdated systems, incomplete data, and 
            inadequate tools.

                  BREAST AND CERVICAL CANCER SCREENING

    Question. I was pleased to see the proposal to expand flexibility 
in the Breast and Cervical Cancer Screening program so that 10 States 
can spend more of their grants on education and outreach. With the 
expansion of coverage in the Affordable Care Act, we all expect that 
more women will have access to these important screenings but it might 
take some work to get them through the door. My question is: Why only 
10 States? Wouldn't all States benefit from this added flexibility?
    Answer. The National Breast/Cervical Cancer Early Detection Program 
(NBCCEDP) authorization allows HHS to waive for up to five States the 
requirement that at least 60 percent of program funds be used to 
provide direct screening services and up to 40 percent of funds be used 
for screening promotion practices such as outreach and education. 
Recent modeling estimates show that increased insurance coverage 
provided by the Affordable Care Act (ACA) would increase the number of 
women covered by private insurance or Medicaid and therefore, decrease 
the number of women eligible to receive screening services through the 
NBCCEDP. However, estimates also show that there will continue to be 
some women who remain uninsured and in need of services provided by the 
program. CDC believes expanded flexibility is necessary, but that in 
the early phase of ACA implementation, States will likely continue to 
need resources to provide screenings and other clinical services.

                   SECTION 340B DRUG DISCOUNT PROGRAM

    Question. The Affordable Care Act requires that HHS post a secure 
Internet Web site file containing the ceiling prices of 340B covered 
outpatient drugs. This is a critical program integrity provision, 
ensuring that eligible entities like clinics and safety net hospitals 
can see if they are being overcharged for the drugs that they purchase. 
But it is also a cost-efficient means of doing program integrity--a 
small investment in transparency will allow participants in the system 
to conduct their own oversight and identify problems that HHS can then 
follow up on. When is HRSA going to post this file to its Web site?
    Answer. HRSA is proposing a modest user fee in order to pursue 
regulations to define these requirements and provide the necessary 
funding to implement this requirement. The posting of the Web site is 
dependent, in part, on the final regulation being published and the 
availability of resources.

                      PREVENTIVE SERVICES BILLING

    Question. As you know, I am a long-time proponent of expanding 
access to preventive services as a way of reducing healthcare costs. I 
am interested in hearing more about the initiative in the President's 
budget to build the capacity of public health and community-based 
organizations to bill insurers for these services.
    In particular, I'm concerned that moves toward managed care and 
restricted networks of providers will limit the reach of these vital 
services. If the President's budget wants to increase the billing 
capacity of more local organizations, can I take that as a commitment 
to allowing preventive service reimbursement to the widest range of 
providers? How does HHS expect to ensure that community-based providers 
are reimbursed under Accountable Care Organizations?
    Answer. The President's budget contained proposals to increase the 
billing capacity of more local organizations that have traditionally 
delivered a variety of preventive services. Increased billing capacity, 
combined with an increase in the insured population thanks to the 
Affordable Care Act may allow such local organizations to be reimbursed 
for delivering these services. The President's budget supports the 
infrastructure that enables these types of organizations to seek 
reimbursement; however, it is important to note that public and private 
payers have their own rules relating to coverage of individual services 
and inclusion of providers in their networks.
    CMS is implementing the Medicare Shared Savings Program (Shared 
Savings Program) to facilitate coordination and cooperation among 
providers to improve the quality of care for Medicare Fee-For-Service 
(FFS) beneficiaries and reduce unnecessary costs. Eligible providers, 
hospitals, and suppliers may participate in the Shared Savings Program 
by creating or participating in an Accountable Care Organization (ACO).
    Healthcare providers participating in ACOs are paid for services 
furnished to Medicare beneficiaries on a fee-for-service basis, like 
traditional Medicare. But, providers in the Shared Savings Program ACO 
are eligible for additional Medicare payments for improving the quality 
and coordination of care their assigned beneficiary population receives 
while reducing the rate of growth in Medicare expenditures and 
providing efficient, cost-effective care.
    Examples of ACO participants are a group practice, an acute care 
hospital, a pharmacy, a solo practice, a federally qualified health 
center, a critical access hospital, a rural health center, and other 
entities that are Medicare-enrolled and bill Medicare for services. 
Roughly half of all ACOs participating in the Shared Savings Program 
are physician-led organizations that serve fewer than 10,000 
beneficiaries. Approximately 20 percent of ACOs include community 
health centers, rural health clinics and critical access hospitals that 
serve low-income and rural communities.
    With respect to preventive services, a key way for ACOs to 
accomplish the objectives of reducing the rate of growth in Medicare 
expenditures and providing efficient, cost-effective care is to 
encourage beneficiaries assigned to them to take advantage of Medicare 
covered preventive services such as annual flu shots. Additionally, 
some of the key quality measures to assess performance of ACOs are 
preventive health quality measures. For example, influenza 
immunization, tobacco use assessment, mammography screening, and 
depression screening are quality measures that ACOs are required to 
report in the Shared Savings Program.
    When the Affordable Care Act's coverage expansions begin in 2014, 
the uninsured population who often rely on community health providers 
will decrease significantly. By the end of 2014, the number of 
uninsured people is expected to decrease by 14 million people, 
according to the Congressional Budget Office (May 2013). Many of these 
previously uninsured populations may be eligible to enroll in Medicaid 
or in qualified health plans (QHPs) offered in the Marketplaces. With 
an expansion in insurance coverage community health providers may be 
able to seek reimbursement for covered services for which they 
previously could not bill because the individuals were uninsured. To 
this end, CMS has issued rules requiring QHPs offered in the 
Marketplace to include a sufficient number and geographic distribution 
of essential community providers (ECPs) in their network to ensure 
reasonable and timely access to a broad range of such providers for 
low-income, medically underserved individuals . . .  As part of CMS's 
ongoing technical assistance efforts to ECPs, CMS recently sent a 
letter with frequently asked questions (FAQs) to these providers about 
their potential role in the Marketplaces. These FAQs are available at 
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/ecp-
faq-20130513.pdf.

                  U.S. PREVENTIVE SERVICES TASK FORCE

    Question. As you know, the work of the U.S. Preventive Services 
Task Force (USPSTF) is central to the preventive benefits covered under 
the Affordable Care Act. Preventive services that receive an A or B 
recommendation from the Task Force will be covered by Medicare and new 
insurance plans without any cost sharing. Preventive services receiving 
less than an A or B recommendation are not required to be covered by 
the health plans offered through the State and Federal healthcare 
exchanges.
    For the past several years, the Department has received funding 
from this subcommittee and the Prevention Fund to increase the 
transparency of the Task Force's work, as well as to increase the 
number of its evidence reviews and recommendations. Yet I continue to 
be concerned about the consequences of delays on those at high risk of 
certain diseases. For example, lung cancer is the number one cancer 
killer of men and women in the United States, yet the USPTSF has not 
updated its recommendation on lung cancer screening since 2004, despite 
new evidence from NIH's National Lung Screening Trial (NLST).
    Can you provide an update of the Task Force's efforts to improve 
transparency as well as increase the number of its recommendations? 
Please include an update on lung cancer in your response.
    Answer. Over the last 2 years, the United States Preventive 
Services Task Force (USPSTF) has expanded its efforts to engage 
stakeholders and the public in every step throughout its recommendation 
making process. This expansion was a direct response to the need for a 
more open and transparent process regarding the USPSTF's 
recommendations. The public, including scientists, health 
professionals, business and industry, health advocates, families and 
individuals, can nominate new members to serve on the Task Force and 
propose new topics for consideration. All draft research plans, 
evidence reports, and recommendation statements are made available for 
public comment.
    In an additional effort to increase the public's understanding of 
the Task Force, USPSTF has produced a series of materials explaining 
its mission, composition, and process, including an introductory slide 
show ``USPSTF 101'' and two short videos. The USPSTF also produces 
plain language fact sheets for each of its draft and final 
recommendations to help consumers understand what each recommendation 
means for them. These materials complement the comprehensive USPSTF 
procedure manual that remains available to the public on the USPSTF Web 
site.
    AHRQ has also invested significantly in ensuring that the USPSTF 
has the evidence it needs in order to make its recommendations. In 
fiscal year 2011 and again in fiscal year 2012, AHRQ commissioned 15 
systematic evidence reviews on topics prioritized by the USPSTF which 
will lead to updated and new recommendations in the years to come.
    The USPSTF postponed updating its 2004 recommendation on screening 
for lung cancer in order to incorporate the findings of the National 
Lung Screening Trial (NLST), published in 2011. In the fall of 2011, 
the USPSTF posted a draft research plan for public comment and expanded 
the scope of its planned review to meet the demands of healthcare 
professionals and the public for additional information. While focusing 
on the timeliness of this recommendation, the Task Force is committed 
to following its processes so that its recommendations will be valuable 
to clinicians and their patients. On average, the USPSTF requires 
between 30 and 36 months to complete a systematic, rigorous review of 
evidence and publish a final recommendation statement. Despite the size 
and complexity of this topic, due to the efforts of its members the 
USPSTF is significantly ahead of its own schedule. The Task Force 
anticipates posting its draft recommendation statement for public 
comment late this summer.

                           PROJECT BIOSHIELD

    Question. The BioShield Special Reserve Fund (SRF) was designed to 
incentivize biopharmaceutical companies to develop and manufacture 
medical countermeasures for national security threats by providing a 
substantial guaranteed market for these products, many of which have no 
commercial market. As you know, the SRF previously was funded through 
an advance appropriation of $5.6 billion over 10 years and your 
Department is projecting that these funds will be spent by the end of 
fiscal year 2013. PAHPA reauthorization, which passed in March, 
authorized a new advance for the SRF of $2.8 billion over 5 years. 
However, the President requested an annual appropriation of $250 
million for this program along with new multiyear contracting 
authority. How can the President's request provide the same kind of 
market guarantee and certainty that is needed to attract and retain 
industry partners going forward?
    Secretary Sebelius, please provide an analysis of how your 
Department derived the budget request of $250 million for fiscal year 
2014. Please include estimated costs for new acquisitions for the 
stockpile, as well as any possible options on existing contracts that 
may be exercised in fiscal year 2014.
    Answer. The Department agrees that providing industry with a clear 
indication of long-term support of medical countermeasure development 
is important to the success of Project BioShield. The budget explicitly 
states the fiscal year 2014 request represents a multiyear renewed 
commitment to Project BioShield. Additionally, as an added incentive, 
the fiscal year 2014 President's budget proposes language to provide 
BARDA with the authority to modify the standard government-wide 
authority for multiyear contracting (41 U.S.C. 3903). The modified 
language included in the fiscal year 2014 President's budget authorizes 
BARDA to enter into an ``incrementally funded'', multiyear contract for 
up to 10 years. Additionally, the language modifies the existing 
authority's requirement of set-aside contract termination costs by 
allowing BARDA to repurpose any unused termination costs to pay 
contract invoices in subsequent years. This differs from traditional 
multiyear contracting authority, which specifies termination costs can 
be used for that purpose alone. These modifications allow BARDA to 
effectively utilize multiyear contracting authority to engage in long-
term contracts with companies that develop medical countermeasures.
    Based on MCM development and procurement across multiple years and 
relevant PHEMCE priorities, BARDA determined that $250 million was 
needed for procurements in fiscal year 2014. This funding request will 
support the replenishment of modified vaccinia Ankara (MVA) vaccine 
(smallpox), vendor-managed inventory (VMI) costs for an antineutropenia 
cytokine acquisition to treat acute radiation syndrome, and a new 
BioShield award for artificial skin to treat thermal burn patients.

                     CHILD CARE QUALITY INITIATIVE

    Question. The budget request includes an approximately $155 million 
increase in discretionary funding for the Child Care and Development 
Block Grant (CCDBG). This would be used for competitive grants to 
States to improve the quality of child care programs. Over the last 
decade the number of children served through the Child Care and 
Development Fund has decreased from about 1.74 million to 1.4 million. 
As I know you agree, we need to improve both access to and the quality 
of early childhood care and education, for which the CCDBG plays a 
critical role. How will these new competitive grants under the CCDBG 
help achieve that goal? Further, how will they work in conjunction with 
proposed investments in new Early Head Start/Child Care Partnerships 
and other early childhood care and education initiatives included in 
the President's budget to do the same?
    Answer. Improving access to child care is an important role of the 
Child Care and Development Block Grant (CCDBG), but equally important 
is ensuring that low-income children supported by tax-payer dollars are 
in safe settings that promote their healthy development and school 
readiness. For millions of children, child care is the primary 
preschool setting and yet many child care teachers and programs do not 
have access to the training, assistance, and support they need. Child 
care should be a place that engages children's minds, sparks their 
curiosity, and begins to develop their cognitive, language, and social 
skills. Child care is more than a work support for parents, and while 
it is important to focus on the number of families receiving 
assistance, investing in high-quality child care is a key opportunity 
to give our most vulnerable children the support they need to reach 
their full potential and lay the foundation for future prosperity.
    The proposals included in the fiscal year 2014 budget reflect the 
Administration's commitment to providing access to high-quality child 
care to more low-income families. Included in the fiscal year 2014 
proposals is an increase of $500 million in mandatory funding. This 
increase would support 100,000 child care subsidies and help maintain 
access for low-income working families.
    To complement this investment in preserving and expanding access, 
the fiscal year 2014 President's budget request for the Child Care and 
Development Block Grant (CCDBG) includes an additional $200 million in 
discretionary funding for an initiative that would provide competitive 
grants to help States raise the bar on quality for child care statewide 
through improved regulation, monitoring, and transparency for parents, 
along with efforts to enhance the continuity of care. This proposal to 
raise the quality of child care would be aimed at helping children 
already in the CCDBG population, not expanding the overall population.
    The budget also requests $1.4 billion to create Early Head Start/
Child Care Partnerships that will help accomplish the dual objectives 
of expanding access and improving the quality of care, by supporting 
States and communities in expanding the availability of early learning 
programs that meet the highest standards of quality for infants and 
toddlers, serving children from birth through age 3. Funds will be 
competitively awarded to new and existing Early Head Start programs 
that will partner with child care providers that serve a high number of 
children with child care subsidies. The proposed $200 million child 
care quality initiative would support systemic reform of policies at 
the State level that will support and strengthen the community-level 
Early Head Start/Child Care Partnerships.
    The proposed competitive grants to improve child care quality and 
the new Early Head Start/Child Care Partnerships are part of the 
President's Plan for Early Education for All Americans, a series of new 
investments that will create a continuum of high-quality early learning 
services for children beginning at birth and through age 5. The 
President's Plan also includes a mandatory initiative that would 
provide high-quality preschool for all 4-year-olds in low- and 
moderate-income families through a new Federal-State partnership at the 
Department of Education and additional mandatory funding to extend and 
expand current Federal investment in voluntary home visiting programs.
                                 ______
                                 
              Questions Submitted by Senator Patty Murray

                EARLY HEAD START/CHILD CARE PARTNERSHIP

    Question. As you know, I strongly support the Administration's goal 
of expanding access to high-quality early learning opportunities. Your 
budget calls for a new Early Head Start/Child Care Partnership 
competitive grant. What type of entities would be eligible to apply for 
those grants? How will this program provide a pathway toward raising 
child care quality and access?
    Answer. As part of President Obama's Early Education Plan, we would 
expand high quality early learning by approximately 110,000 full-day 
full-year high-quality Early Head Start slots through the Early Head 
Start--Child Care Partnerships. All entities currently eligible to 
apply for Early Head Start including State, local and tribal 
governments, not for profit and for profit organizations and other 
community based organizations would be eligible to apply for this 
competitive grant program. These partnerships will provide a pathway 
for improving child care access and quality as Early Head Start 
grantees will partner with center-based and family child care providers 
who agree to meet Early Head Start Program Performance Standards and 
provide comprehensive, high-quality services to infants and toddlers 
from low-income families.

                          HEAD START RESEARCH

    Question. Some have suggested reducing or eliminating Head Start, a 
program serving about a million of our most at-risk children and 
families because of a misinterpretation of the Impact Study and the 
conflicting results shown when the children were in third grade. In 
fact, some of the best lasting impacts of a two-generational 
intervention like Head Start, including those elements that stabilize 
families and teach kids how to persevere, are shown by researchers to 
be present later in life. Can you please speak to the research that has 
been done on Head Start? What are the short-, mid-, and long-range 
outcomes? Did the Head Start Impact Study not find statistically 
significant differences between the Head Start group and the control 
group on every measure of children's preschool experiences? One report 
that is often under the radar is the 2010 report out of Maryland's 
Montgomery County Public Schools--showing that students who went to 
full-day Head Start pre-K needed only half the special education 
services as their fellow kindergartners. Given our recent bad practice 
of cutting indiscriminately, rather than wisely investing in what works 
and produces a good return on investment, the study estimated a savings 
of $10,100 per child for each child who went to full day Head Start. 
What other such savings is the Department aware of?
    Answer. The 1998 reauthorization of the Head Start Act required the 
Secretary of Health and Human Services to study the program's impact on 
children and families. In 2000, the Department commissioned the first 
large-scale randomized control trial of the national Head Start program 
from an independent contractor: The Head Start Impact Study. A report 
of interim findings was submitted to Congress in 2005 and a final 
report with findings through children's first grade year was provided 
to Congress in January 2010. The third grade study was not required by 
Congress but was undertaken by ACF in order to understand longer term 
impacts on children and families. This report, presenting findings 
through third grade, was completed in December 2012.
    The Head Start Impact Study includes a nationally representative 
sample, including programs at all levels of quality; employs a 
randomized design; and examines all domains of children's development 
and achievement as well as parenting through third grade. It examines 
the average impact of providing children access to one program year of 
Head Start at age 3 or age 4. It compares children randomly assigned to 
receive Head Start in 2002 to children who were denied Head Start but 
could--and often did--attend other early childhood programs. The study 
is unique from other studies of early care and education in that it 
includes a nationally representative sample, a randomized control 
design, and examines a comprehensive set of outcomes for children and 
families through third grade.
    The study indeed found that that there were statistically 
significant differences between the Head Start group and the control 
group on every measure of children's preschool experiences measured in 
this study. These effects were found both for the 4-year-old cohort and 
for the 3-year-old cohort during the year in which they were admitted 
to Head Start. The measures that were examined included, but were not 
limited to, teacher qualifications, including their training and 
education; classroom literacy and math instructional activities; 
classroom teacher-child ratios; the nature of teacher-child 
interactions; and global measures of the care environment as measured 
by research based observation tools.
    Looking at impacts on child and family well-being in the short and 
longer term, the study found that there were initial positive impacts 
of Head Start, for both age cohorts and across domains of development, 
but by the end of first grade and again at third grade there were very 
few impacts found for either cohort in any of the four outcome domains 
examined: Cognitive, social-emotional, health and parenting practices. 
The few impacts that were found did not show a clear pattern of 
favorable or unfavorable impacts for children.
    While the Head Start Impact Study cannot speak to impacts beyond 
third grade, the Advisory Committee on Head Start Research and 
Evaluation's final report reflects on the interpretation of this and 
other studies of Head Start and the implications of the body of 
evidence on Head Start for longer term outcomes. Further, one possible 
explanation for the perceived ``fade out'' of effects of early 
childhood programs may be that children who did not attend early 
childhood programs ``catch up'' to their peers later in elementary 
school. The committee concluded that both the Head Start and Early Head 
Start impact studies show immediate impacts on child and family well-
being, and that while those immediate impacts do not persist into 
elementary school in the two impact studies conducted by HHS, the 
broader literature suggests that longer term impacts might still be 
found in adulthood. To support this conclusion, the committee cited 
both evidence from nonexperimental longitudinal studies of Head Start 
that have found beneficial effects into adulthood, as well as studies 
of other early childhood intervention programs that have found long-
term impacts in adulthood despite diminished or no impacts during 
earlier follow-ups.
    Regarding your question on the savings of full-day Head Start 
versus other options, we do not have rigorous studies that can speak to 
the benefits of providing access to full-day Head Start. However, we do 
have research from quasi-experimental studies (Currie and Thomas, 1995; 
Garces, Thomas and Currie, 2002; Ludwig and Miller 2007) that suggest 
that the long-term benefits of Head Start have outweighed the costs for 
cohorts of children, with a benefit-cost ratio as large as 7-to-1.

                             SEQUESTRATION

    Question. How has sequestration impacted LIHEAP, Head Start, Early 
Head Start and child care beneficiaries? Besides the immediate effects 
on families, what are the wider-reaching effects of cutting these 
programs on communities?
    Answer. Like almost all programs at HHS, sequestration reduced 
funding for LIHEAP, Head Start, and Child Care under the Child Care and 
Development Block Grant by approximately 5 percent. HHS is working with 
States and grantees as they make decisions about how to administer 
programs in light of the reduced funding level, and in many cases, the 
full impact of sequestration will not be known until the fiscal year 
has ended.
    In the case of Head Start, the impact of reduced funding is being 
felt across the Nation, with community and faith-based organizations, 
small businesses, local governments and school systems facing potential 
layoffs for teachers, teacher assistants, and other staff who work in 
Head Start programs. Services for children and families are being 
disrupted, with some Head Start centers shortening their service days, 
closing their classrooms early this school year, or reopening their 
programs later in the fall.
    We expect that some programs are choosing not to fill openings as 
children age out of the program, and reducing the number of children 
and classrooms through attrition. Working families participating in 
Head Start rely on a regular school calendar in planning their work 
schedules, and early closures could impact parents' ability to retain 
jobs.
    Question. Because the sequester impacts every program and activity 
the same amount, can you describe how cuts will impact CDC grants to 
State and local communities, NIH-funded research, Community Health 
Centers, the National Health Service Corps, and AHRQ Institutional 
Training Grants? Will some communities be hit harder than others, and 
in what areas?
    Answer. The cuts mandated by sequestration will have a significant 
impact on States and local communities across the country, leading to 
lower investment in public health system and biomedical research. 
Because the law mandates that most programs be reduced proportionately, 
programs that serve vulnerable and underserved populations will see 
decreased funding, impacting communities across the country.
    At the Centers for Disease Control and Prevention (CDC), the cuts 
will result in less funding to State and local communities and research 
institutions, leading to reduced technical assistance and surveillance 
activities within States. For example, each State's funding for HIV 
testing will also be cut, which could result in increased future HIV 
transmissions, costs in healthcare and leave vulnerable communities at 
risk.
    The National Institutes of Health (NIH) sequester was applied 
evenly across all programs, projects, and activities (PPAs), which are 
primarily the Institutes and Centers. This affects every area of 
medical research. Approximately 700 fewer research project grants 
(RPGs) will be awarded compared to fiscal year 2012 and existing grants 
will be reduced by 4.7 percent, on average. These cuts will delay 
medical research progress in all disease areas and the development of 
more effective treatments for common and rare diseases affecting 
millions of Americans. In addition, while patients currently 
participating in research protocols at the NIH Clinical Center will 
continue to receive care, about 750 fewer new patients are anticipated 
to be admitted to the Clinical Center for the remainder of the fiscal 
year due to these reductions.
    Approximately 176 fewer awards for loan repayment and scholarships 
will be provided to National Health Service Corps (NHSC) clinicians who 
are integral to building healthy communities by providing primary 
healthcare services in federally designated Health Professional 
Shortage Areas throughout the Nation.
    In the case of the impacts of sequestration on Institutional 
Training Grants funded by the Agency for Healthcare Research and 
Quality (AHRQ), Congress funds AHRQ using Public Health Service Act 
authority that is not reduced by this sequester, so no reductions were 
taken to these grants.
    Question. Unlike premium assistance subsidies, cost-sharing 
subsidies are not provided to individual taxpayers, but paid directly 
to insurers. As such, they appear to be subject to sequestration. How 
will sequestration affect the ability to protect lower income people 
from high out-of-pocket costs at the point of service, as intended by 
the Affordable Care Act?
    Answer. We share your concern about the potential adverse impacts 
of the payment cuts mandated by sequestration, both with regard to low-
income individuals, and more broadly across all government programs. 
That is why the Administration has indicated that we stand ready to 
work with Congress on balanced approaches to replace sequestration to 
avoid its adverse impacts.

                          REPRODUCTIVE HEALTH

    Question. Accessible and affordable family planning services have 
helped reduce the rates of unintended pregnancy and abortion in the 
United States. CDC has even included family planning on its list of the 
top 10 most valuable public-health achievements of the 20th century--
along with childhood vaccinations and fluoridation of drinking water. 
More recently, a panel of women's health experts convened by the 
Institute of Medicine agreed that family planning is basic preventive 
healthcare for women that should be covered at no extra cost in the new 
health system. Do you agree that family planning improves public 
health, and if so, how?
    Answer. Yes, family planning is an integral component in public 
health and healthcare service delivery. As you have indicated, family 
planning has had a significant impact in improving the public's health, 
from allowing women the ability to safely space their pregnancies--
improving their children's physical and cognitive development, 
improving access to screening for diseases and cancers of the 
reproductive tract to increasing access to other related preventive 
health screening. Ensuring access to preventive health services, 
including family planning, as the Institute of Medicine's 2011 Report 
on Clinical Preventive Services for Women recommended, is of great 
benefit to the health of men and women of all ages.
    Family planning clinicians provide information, counseling and 
clinical services to women and men of reproductive age to ultimately 
assist in maintaining healthy reproductive lives. Ensuring healthy 
fertility is a process that requires regular preventive health 
screening, physical activity and all of the body's systems to be 
healthy. Couples seeking pregnancy can do many things to ensure that 
they have the best chances to achieve a pregnancy. Family planning 
providers and clinics are ideal for providing regular preventive health 
screening and other related services to help begin a healthy family. A 
mother who is physically active, routinely screened for or adequately 
managing chronic disease is most likely to have a healthy pregnancy 
with lower risks resulting in a safer delivery and healthier baby. 
These outcomes are not just felt by the new or growing family but are 
shared by the community, State and Nation as a whole. Prenatal care, 
healthy birth weights and other benefits of family planning and 
planning a pregnancy are associated with reduced risk of future chronic 
disease, improved educational and economic attainment, fewer behavioral 
problems and other positive developmental outcomes. Being a strong 
proponent of access to family planning services is a necessity for 
helping to ensure the strong, supportive and sustained development of 
our youth, families, and communities of this Nation.
    Question. Studies show that every $1 invested in family planning 
services saves nearly $4 in government healthcare expenditures. How 
will increased access to affordable birth control affect healthcare 
costs overall under the Affordable Care Act?
    Under the Administration's no-cost birth control policy, 
religiously affiliated organizations like charities, universities, and 
hospitals will not have to pay or refer for contraceptive coverage. Is 
it your opinion that private employers that are not religiously 
affiliated should not be able to refuse this coverage for their 
employees?
    Answer. Ultimately access to affordable birth control under the 
Affordable Care Act will lower healthcare costs, in part, by reducing 
unintended pregnancies. This factor is pointed out by the findings from 
the Institute of Medicine's 2011 report entitled ``Clinical Preventive 
Services for Women: Closing the Gaps,'' specifically the recommendation 
that a ``fuller range of contraceptive education, counseling, methods 
and services so that women can better avoid unwanted pregnancies and 
space their pregnancies to promote optimal birth outcomes,'' is needed. 
Through the provision of contraception with no cost sharing, access to 
a broad range of contraceptive options will improve, especially to the 
more effective and longer acting forms of contraception (Intrauterine 
Device, Intrauterine System, and implants), and equally as important, 
the consistent use of contraceptive methods will also increase. 
Ensuring the health of women and their families was one of the many 
reasons HHS adopted these recommendations as part of the guidelines for 
women's preventive services under the ACA.
    We know that unintended pregnancies occur at alarming rates; 
approximately half of the pregnancies in the United States are 
unintended (Unintended pregnancy in the United States: incidence and 
disparities, 2006, 2011; 84(5)). We also know that pregnancies which 
are not planned may result in a delay of prenatal care as well as 
slower adoption of healthy behaviors such as being physically active, 
quitting tobacco use, taking dietary supplements like folic acid, and 
screening for and the management of chronic diseases. All of these 
elements increase the risk of physical and cognitive impairments, 
resulting in elevated healthcare and other costs at birth and later in 
life. In addition, there are also large ethnic, age and income 
disparities in women who experience unintended pregnancy. Poorer women 
are more likely to have an unintended pregnancy and thus need to rely 
on Federal and State assistance to cover the costs of prenatal care and 
the births (Unintended pregnancy in the United States: incidence and 
disparities, 2006, 2011; 84(5)). It is estimated that the total public 
expenditure for births resulting from unintended pregnancies in the 
United States was $11.1 billion ($6.5 billion Federal and $4.6 billion 
State expenditures) in 2006 (Sonfield, 2011, 43(12)).
    In addition, family planning services provided at publicly funded 
family planning clinics are of significant social and financial value. 
While access to these services helped women avoid 1.48 million 
unintended pregnancies, about a third (450,000) of the unintended 
pregnancies prevented were among Medicaid enrollees (Gold. RB, 2009). 
The services provided at publicly funded clinics saved the Federal and 
State governments an estimated $5.1 billion, of which Title X-supported 
clinics accounted for $3.4 billion (Contraceptive Needs and Services, 
2008 Update, 2010). The ratio of every $1 invested in family planning 
services saving approximately $4 in government healthcare expenditures 
is the result of the investments in family planning (Contraceptive 
Needs and Services, 2008 Update, 2010).

            Questions Submitted by Senator Mary L. Landrieu

          TOPIC 1: SENIOR COMMUNITY SERVICE EMPLOYMENT PROGRAM

    Question. Numerous studies and news reports have documented the re-
employment struggles of out-of-work older Americans. For example, the 
General Accountability Office found in a 2012 study (GAO 12-445) that 
the unemployment rate for older adults increased by 145 percent during 
the recession and that it took unemployed older workers, on average, 35 
weeks to return to the workforce, much longer than for younger 
jobseekers. Despite this growing need, the Administration has proposed 
a drastic cut to the only Federal program designed to help older 
workers from Louisiana and across the country return to the workforce. 
Two hundred fewer Louisianans will get service if this proposed cut was 
enacted.
    Can you explain the Administration's rationale for targeting this 
older adult employment program that the GAO (12-445) noted ``has done a 
reasonably good job at accomplishing its goals''?
    Answer. As in prior years, the budget proposes to transfer the 
Senior Community Service Employment Program (SCSEP) to ACL in order to 
strengthen the integration of SCSEP with the other supports provided by 
ACL's existing Aging Services programs and ACL's service network 
connections. The budget does propose to reduce funding for the program 
based on attrition, and to prioritize funding to serve those with the 
greatest need. The Administration is also concerned about the growth in 
unemployed older workers, and wants to improve the ability of the 
existing workforce system to meet the needs of these individuals. The 
budget proposes to retain $25 million at the Department of Labor to 
pilot and evaluate potential low-cost structural changes to the 
workforce system that will improve outcomes for seniors. In particular, 
DOL is interested in testing two policy changes that the GAO recommends 
in the report that you cited (GAO 12-445): (1) developing job search 
assistance programs that address skill deficiencies common among 
seniors; and (2) changing the performance measures to eliminate the 
disincentives to place older workers in part-time employment.
    We believe that this dual strategy will allow ACL to provide 
improved and integrated support to the most vulnerable seniors, while 
also improving the services that seniors receive through the broader 
workforce system.
    Funds will continue to be used to provide formula grants to States 
and competitive grants to national organizations. This funding will 
also provide necessary administrative support, monitoring, and 
technical assistance.

                       TOPIC 2: PROSTHETIC AUDITS

    Question. In September 2011, immediately following the release of 
the OIG Report entitled ``Questionable Billing Practices in Orthotics 
and Prosthetics,'' CMS's DME MAC contractors issued a ``Dear 
Physician'' letter that announced new documentation requirements for 
orthotic and prosthetic devices provided to Medicare beneficiaries. It 
also adopted a ``zero tolerance'' policy, so that if there was any 
imperfection in the claim submission, no matter how immaterial, payment 
of the claim should be denied. In the past, when the preponderance of 
evidence indicated that there was no fraud or abuse present, the claim 
would be approved. I am hearing from my constituents that small 
prosthetics businesses which provide care to seniors who need 
prostheses, are having as many as 90 percent of their claims denied for 
minor technicalities or paperwork that hasn't been completed by 
physicians. In the meantime, small prosthetics businesses are carrying 
hundreds of thousands of dollars' of legitimate, but unreimbursed 
costs--or limiting the number of seniors they care for under Medicare--
or are going out of business altogether. In light of this crisis, I 
would like to ask the following questions:
    What is CMS's policy to ensure that RACs and other anti-fraud 
activities, while necessarily rigorous, do not place undue and/or 
counterproductive burdens on providers?
    Answer. CMS strives to reduce audit burden on providers. The 
Medicare Administrative Contractors (MACs) process claims and follow a 
process known as Progressive Corrective Action (PCA). The PCA process 
starts with the MAC reviewing a small number of claims on a pre-payment 
basis to determine if any of the claims would have been paid 
improperly. Based on the results of those reviews, if a provider has a 
high improper payment rate, the MAC increases the number of medical 
reviews for that provider and performs educational activities in an 
effort to improve their compliance with CMS policies. Conversely, if 
the PCA process shows the provider consistently bills correctly, the 
MAC suspend the reviews and focuses on other priorities.
    The Recovery Auditors review claims mostly on a post-payment basis. 
The CMS has implemented several measures to ease provider burden and to 
ensure accurate RAC decisions. First, all new areas to be reviewed are 
approved by CMS before the Recovery Auditors can begin review. Second, 
the Recovery Auditors lose their contingency fee if their decision is 
overturned at any level of appeal. Third, CMS has limited the number of 
additional documentation requests a Recovery Auditor can send to a 
provider. On April 3, 2013, CMS created a separate additional 
documentation request limit category for prosthetists/orthotists. 
Recovery Auditors can request a maximum of 10 medical records per 
prosthetist/orthotist every 45 days. Before, Recovery Auditors could 
request up to 10 percent of their records.
    Question. What policies does CMS employ to ensure that providers 
that are suspected of fraud are the primary targets of the audits?
    Answer. Payment made for the furnishing of an item that does not 
meet one or more of Medicare's coverage, coding and payment rules is an 
improper payment. It is important to keep in mind that all fraud is 
considered to be improper payments, but not all improper payments are 
fraud. In 2011, the Department of Health and Human Services Office of 
Inspector General (OIG) released a report that found that there was a 
significant amount of improper payment for lower limb prosthetics. 
Since the publication of the report, the Durable Medical Equipment 
Medicare Administrative Contractors (DME MACs) have begun reviewing 
these claims as recommended by the OIG. CMS also offers a range of 
educational materials through online manuals and Web sites to assist 
prosthetists and orthotists, providers and suppliers with Medicare 
policies, billing procedures and required documentation. If the DME MAC 
suspects that the supplier is participating in fraud, they are required 
to refer the case to CMS's Zone Program Integrity Contractor who is 
responsible for investigating potential fraud.
    Question. Does CMS have any policies in place that take into 
account longstanding Medicare providers with a history of dedication to 
high-quality integrity, without documented or suspected fraudulent 
activity? Is it appropriate for Medicare to subject them to the same 
level of scrutiny, payment delay, and payment denial as high-risk 
providers?
    Answer. The Medicare Administrative Contractors process claims and 
follow a process known as Progressive Corrective Action. As explained 
in chapter 3, section 3.7.1 of CMS's Program Integrity Manual, CMS's 
contractors ``shall ensure that actions imposed upon Medicare providers 
or suppliers for failure to meet Medicare rules, regulations and other 
requirements are appropriate given the level of non-compliance.'' The 
manual offers examples of ``minor,'' ``moderate,'' and ``major'' 
concerns and discusses the type of corrective action appropriate for 
each.
    Question. What length of time does CMS believe it is appropriate to 
withhold payment to prosthetics providers for minor documentation 
technicalities, or for documentation failures that are the 
responsibility of the physician, not the prosthetics provider?
    Answer. Payment made for the furnishing of an item that does not 
meet one or more of Medicare's coverage, coding and payment rules is an 
improper payment. Section 1833(e) of the Social Security Act states 
that ``[n]o payment shall be made to any provider of services or other 
person [under Medicare Part B] . . . unless there has been furnished 
such information as may be necessary in order to determine the amounts 
due such provider or other person . . . .'' Documentation is essential 
to meet the requirement in the statute. Chapter 3, section 3.3.1.1 of 
CMS's Program Integrity Manual discusses the timeframe for certain 
medical review activities.
    In regard to prepayment review, this section states, in part, that 
when one of CMS's Medicare Administrative Contractors (MACs) ``receives 
requested documentation for prepayment review within 45 calendar days, 
the MAC shall . . . within 60 calendar days of receiving the requested 
documentation . . . make and document the review determination.''
    Question. Where providers have the financial and legal resources to 
appeal RAC payment denials to the Administrative Law Judge level, those 
RAC determinations are overturned at a very high rate--in some cases, 
more than 80 percent of the time. At what point does CMS examine RAC 
determinations--including costs to the agency--that are consistently 
being overturned upon appeal?
    Answer. Through oversight to ensure Recovery Auditors make accurate 
improper payment decisions, CMS continually strives to reduce the 
appeal rate, which, in turn, decreases provider burden and 
administrative costs. The fiscal year 2011 Recovery Audit Report to 
Congress reported that more than 90 percent of Recovery Audit 
overpayment determinations were not appealed, and that just 2.9 percent 
of all Recovery Auditor overpayment determinations were overturned on 
appeal.
    CMS has multiple layers of oversight and incentives to ensure 
Recovery Auditors make accurate payment decisions. Every month, for 
example, CMS, through an independent review contractor, reviews a 
random sample of claims from each Recovery Auditor to determine an 
accuracy rate representing how often the Recovery Auditors accurately 
determine overpayments or underpayments. The Recovery Auditors' 
accuracy scores are consistently above 90 percent. The CMS reports 
appeal statistics in the annual Report to Congress and on its Web site 
at: www.cms.gov/rac. Moreover, Recovery Auditors are required to return 
any contingency fee if an improper payment is overturned.
    Question. Manufacturer records show practitioners have retreated to 
less advanced, less costly, less functional artificial limbs and 
components, reflecting aversion to risk of nonpayment. Has CMS measured 
the impact of contractor actions on patient care in prosthetics since 
August 2011, including how delivery times may have slowed in the face 
of these new requirements? Is Medicare satisfied to see the program 
reducing the level of care provided to Medicare amputee beneficiaries?
    Answer. Medicare beneficiaries are receiving high-quality 
prosthetics and orthotics that help them live active and healthy lives, 
and CMS continues to ensure they have access to appropriate prosthetics 
and orthotics. In 2011, the HHS Office of Inspector General Daniel R. 
Levinson released a report that there was a significant amount of 
improper payment for lower limb prosthetics. CMS is working to educate 
providers and suppliers on Medicare coverage and documentation 
requirements for lower limb prosthetics to reduce the level of improper 
payments. In addition, CMS is developing a clinical template in 
consultation with prosthetic and orthotic suppliers to assist providers 
in complying with Medicare coverage policies. There is no data 
available to CMS to suggest any access to care issues.
    Question. The current ``all or nothing'' approach to audits, where 
a minor paperwork flaw may block the entire payment on a $35,000 
prosthetic limb, seems inequitable and unnecessarily punitive to small 
businesses that are providing necessary, high-quality services to 
disabled senior citizens. In other settings, CMS has limited its audit/
claw back to the specific challenged codes/components, while paying for 
those codes/components which are not contested. Why hasn't a similar 
policy been implemented for O&P?
    Answer. In 2009, the U.S. Court of Appeals issued a decision in 
Hays v. Sebelius, 589 F.3d 1279 (D.C. Cir. 2009) regarding the 
application of the least costly alternative. The Court of Appeals held 
that the Medicare coverage decision is binary: An item or service is 
either reasonable and necessary, in which case it may be covered at the 
statutory rate, or it is unreasonable or unnecessary, in which case it 
may not be covered at all. Similarly, if a supplier bills for a level 3 
prosthetic but the beneficiary only qualified for a level 1 prosthetic, 
the review contractor cannot simply reduce the payment to the level 1 
payment amount; the review contractor must issue a full denial.

                  TOPIC 3: CENTER FOR DISEASE CONTROL

    Question. In December, the Administration released the Action Plan 
for Children in Adversity to help increase coordination between 7 
agencies and 30 offices on international programs working with 
children.
    What is the Center for Disease Control doing to ensure that there 
is an implementation plan in place by the required 180 days? What, if 
any, challenges do you see in meeting the Action Plan's objectives of 
providing strong beginnings for children, a family for every child, and 
protect children from abuse, exploitation, violence, and neglect?
    Answer. CDC is currently coordinating input across agencies and 
offices to ensure that an implementation plan will be in place by the 
required 180 days. CDC's implementation plan is comprised of activities 
that address all three of the Action Plan's objectives, and includes 
programs that aid in healthy physical and emotional development, as 
well as data collection activities addressing sustainable approaches to 
reducing sexual, emotional, and physical violence against girls and 
boys. Three main challenges for CDC include: (1) supporting the 
objectives of the Action Plan in non-PEPFAR countries; (2) addressing 
populations of children living outside family care, such as street 
children and those in institutions; and (3) lack of dedicated 
appropriations for implementation of the Action Plan.
    Question. The Action Plan places a strong emphasis on the use of 
evidenced-based research and data to achieve measurable outcomes. What 
role do you anticipate CDC being able to play in meeting this 
objective?
    Answer. The foundation of CDC's work is scientific excellence, 
putting into place public health programs based on the highest quality 
research and data. Regarding children in adversity, CDC emphasizes the 
fact that exposure to childhood adversity has been linked with serious 
long-term emotional and health effects, including risk for HIV. Thus, 
CDC can provide technical expertise and scientific leadership for the 
Action Plan. For example, CDC has been providing technical assistance 
to countries to conduct national Violence Against Children Surveys 
(VACS), with support from PEPFAR, the CDC Foundation, UNICEF, and the 
Together for Girls Public Private Partnership. Once completed, 
countries conducting the VACS link these data to evidence-based 
National Action Plans to create and evaluate violence prevention 
efforts and to assist victims and their families. Demand for these 
surveys, along with CDC technical assistance to meet this demand, is 
strong and growing. CDC is able to play a major role in meeting these 
requests under the leadership of CDC's PEPFAR activities.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin

                        CONGENITAL HEART DISEASE

    Question. Congenital heart disease (CHD) is among the most 
prevalent birth defects in the United States and a leading cause of 
birth defect-associated infant mortality. With medical advancements, 
more people with congenital heart defects are living into adulthood, 
but our Nation has not had a population-surveillance system that 
captures adults living with CHD. The healthcare reform law authorizes 
the CDC to expand surveillance and track the epidemiology of CHD across 
the life-course, with an emphasis on adults. The Consolidated 
Appropriations Act of 2012 provided the CDC with $2 million in new 
funding for enhanced CHD surveillance across the lifespan.
    CDC is making commendable efforts to close the knowledge gap in 
adult congenital heart disease by using this funding for three grants 
to pilot adolescent and adult surveillance. I also appreciate CDC's 
efforts to use expert consultation to develop ongoing research 
priorities through the Expert Meeting convened in the fall of 2013. 
Moving forward, how does the CDC plan to implement the outcomes from 
the expert meeting? Further, how does CDC plan to use CHD surveillance 
funds in fiscal year 2013? If additional money is appropriated for CHD 
surveillance in fiscal year 2014, how would that funding be utilized?
    Answer. The expert meeting provided helpful input from 50 
participants representing diverse specialties, priorities, and 
perspectives: Physicians, surgeons, epidemiologists, public health 
officials, advocates, and patients. The summary of input from the 
meeting has been submitted for publication in a peer-reviewed journal 
so that it is accessible to all expert meeting participants, other HHS 
operating divisions, and other stakeholders. CDC used this summary to 
guide its strategic plan revision, which will guide future work as 
resources permit.
    In fiscal year 2013, CDC will use CHD resources to:
  --Fund the second year of the three CHD surveillance cooperative 
        agreements to pilot innovative methods for CHD surveillance 
        among adolescents and adults. The grantees are Emory University 
        (Atlanta, GA), the New York State Department of Health, and the 
        Massachusetts Department of Health. Grantees will link data 
        from multiple existing sources, and will begin submitting de-
        identified surveillance data to CDC in year two.
  --Support intramural public health science on CHDs that will form an 
        evidence base about the health and economic costs of CHDs. 
        Projected topics include estimating hospital costs across the 
        lifespan for those with CHDs, the role of insurance type and 
        demographic factors in survival of those with CHDs, and 
        estimating the total number of individuals in the United States 
        living with CHDs.
    In fiscal year 2014, CDC will continue these efforts. CDC could 
enhance these activities in fiscal year 2014 by:
  --Funding additional sites for CHD surveillance among adolescents and 
        adults, and potentially add a research component to better 
        identify the factors associated with improved longer term 
        outcomes.
  --Linking existing birth defects surveillance data to other available 
        datasets to evaluate longer term outcomes, including medical 
        care use and survival. This model has been successfully piloted 
        in one State, and could be implemented in additional States to 
        provide more complete evidence.
  --Collaborating on research opportunities with the National Heart, 
        Lung, and Blood Institute to improve outcomes for CHD 
        survivors.
    Question. The CDC is in position to move beyond primary detection 
to addressing the life-long needs of those living with congenital heart 
disease. What does the CDC propose for further addressing this public 
health burden of congenital heart defects across the life-span?
    Answer. CDC has identified several areas for further addressing CHD 
burden across the lifespan:
  --Expand and modernize surveillance practices to provide prevalence 
        estimates across the life span and to collect longitudinal data 
        on health outcomes and services use that could identify 
        opportunities to improve longer term outcomes for those with 
        CHDs.
  --Expand current research efforts to identify modifiable causes of 
        CHDs to increase capacity to prevent CHDs.
  --Identify current barriers impacting access to care which might 
        contribute to existing disparities in survival, and explore 
        opportunities to reduce or eliminate barriers.
  --To better address the lifelong needs of those with CHDs, partner 
        with the National Heart, Lung, and Blood Institute to follow up 
        on a cohort of individuals with CHDs to understand their longer 
        term outcomes.
  --To better understand the impact on families, conduct a family 
        survey to assess out of pocket and nonmedical costs, loss of 
        work time, impact on siblings, and other consequences to 
        pinpoint opportunities to mitigate the adverse effects for 
        families.
    Question. Recent data suggest that the number of infant deaths 
related to CHD is decreasing, and successful intervention in infancy 
and childhood is resulting in an adult population of congenital heart 
disease survivors. How are you systematically responding to this new 
population of survivors reaching adolescence, adulthood and advanced 
age? How are you utilizing adult congenital heart disease research 
experts in these efforts?
    Answer. With newborn screening for critical CHDs, survival is 
expected to improve. CDC is actively preparing ways to assess and 
address the needs of the population of CHD survivors. CDC is funding 
three pilot surveillance programs to track CHDs among adolescents and 
adults, and better understand the needs of the population. The grantees 
are Emory University (Atlanta, Georgia), the New York State Department 
of Health, and the Massachusetts Department of Health. New methods are 
being tested in order to develop the most successful approaches for 
this surveillance. We will pool data across the sites to develop more 
robust estimates of the prevalence of CHDs among adolescents and 
adults, and will examine characteristics of those with CHDs. We will 
use this data to inform our current understanding of the national 
prevalence of CHDs across the lifespan.
    CDC is engaging researchers with expertise in both pediatric and 
adult congenital CHDs. For the pilot CHD surveillance programs among 
adolescents and adults, CDC has established an External Guidance 
Committee to provide this input to both CDC and the grantees. This 
committee includes individuals with expertise in adult CHD research. In 
addition, each of the three grantees has included researchers with this 
expertise as part of their key personnel.

                   PREVENTION AND PUBLIC HEALTH FUND

    Question. Smoking causes nearly one in every five deaths in the 
United States and costs the country about $193 billion each year in 
healthcare expenses and lost productivity. An estimated 43.8 million 
American adults smoke cigarettes and about 3,800 young people under the 
age of 18 smoke their first cigarette every day. Congress created the 
Prevention and Public Health Fund, a dedicated funding stream for 
crucial investments in prevention for a healthier America, to begin 
addressing these challenges. The Fund represents a rare opportunity to 
reverse decades of increasing healthcare costs attributable to ever-
growing rates of obesity, chronic disease, and other preventable 
illness.
    Please summarize investments made through the Prevention and Public 
Health Fund to promote tobacco prevention and control. What measurable 
economic and health benefits have resulted from those investments? A 
portion of the fund went toward the Centers for Disease Control and 
Prevention Tips from Former Smokers campaign. Please summarize the 
status of this initiative and health and economic benefits of this 
campaign. If Prevention and Public Health Fund dollars are reallocated 
toward non-public health prevention initiatives, how would that 
reallocation of funds impact investments in tobacco control and 
prevention and the returns on those investments?
    Answer. Since the enactment of the Prevention and Public Health 
Fund in fiscal year 2010 through fiscal year 2013, HHS has invested 
approximately $229 million in tobacco activities predominately within 
the Centers for Disease Control and Prevention (CDC), and some 
additional resources within the Office of the Secretary.
    From fiscal year 2010 through fiscal year 2013, the Prevention Fund 
has supported a range of strategic programs to reduce tobacco use, 
support cessation efforts, and to prevent the initiation of tobacco 
use. Funds have supported: Tobacco media activities within the office 
of the Assistant Secretary of Public Affairs in fiscal year 2011 and 
fiscal year 2012 to execute innovating local, regional, and national 
health marketing campaigns, develop effective outreach strategies to 
target audience groups, and to develop and promote educational tools; 
efforts within the office of the Assistant Secretary for Health in 
fiscal year 2010 to coordinate and implement tobacco cessation 
activities consistent with the HHS Tobacco Control Strategic Action 
Plan and to fund projects focused on cessation services in partnership 
with other HHS agencies; and, CDC tobacco prevention and control 
programs that aim to reduce initiation and the prevalence of tobacco 
use. Specifically, CDC has supported a nationwide media campaign to 
increase awareness of the risks of smoking and to encourage smokers to 
quit. In addition CDC has supported and enhanced the capacity of State 
telephone tobacco quit line services. These activities were initiated 
in fiscal year 2010 and continue to be supported in fiscal year 2013.
    Research has shown that well-designed tobacco education media 
campaigns with adequate reach prevent initiation, increase cessation 
and reduce tobacco use. Evidence reviews of tobacco education media 
campaigns have found that advertisements that employ strong imagery and 
personal testimonials showing the negative health consequences of 
smoking are especially effective in motivating smokers to quit. The CDC 
TIPS from Former Smokers (TIPS) is a nation-wide education campaign 
that was launched during several months in 2012 profiling individuals 
living with the effects of smoking related disease. The intent of the 
campaign was primarily to encourage smokers between the ages 18 through 
54 years to quit smoking by increasing awareness of the health risks 
caused by smoking, and to raise awareness about services through the 
CDC quit lines and the National Cancer Institute (NCI) smoking 
cessation Web site. As a result, the CDC quit line received more than 
365 thousand calls during the campaign which reflected a 132-percent 
increase from a comparable period of time in 2012, and visits to the 
NCI smoking cessation site also increased significantly. The fiscal 
year 2013 allocation of the Prevention Fund supports the TIPS campaign 
in fiscal year 2013.
    HHS continues to support tobacco cessation and prevention efforts 
not only with resources from the Prevention Fund but with base 
resources appropriated to agencies across HHS as well. The fiscal year 
2014 budget includes $95 million from the Prevention Fund to CDC, in 
addition to CDC base resources, to continue tobacco prevention efforts.

                             MENTAL HEALTH

    Question. According to USDA, 50 million people live in rural 
America. This rural population is disproportionately affected by mental 
health disorders, with higher levels of depression, domestic violence, 
and child abuse, compared to their urban peers.
    Unfortunately many families in rural American find themselves cut 
off from mental health services because of geographic and cultural 
barriers. As of January 2013, there are 3,800 Mental Health 
Professional Shortage Areas nationwide, as defined by HRSA. More than 
85 percent of MHPSAs are located in rural areas. As a result of the 
scarcity of mental health professionals, primary care providers in 
rural communities typically have a larger role in mental healthcare 
than their urban peers.
    Studies have shown that stigma is a significant concern for many in 
rural America. People suffering from a mental disorder are less likely 
to seek treatment if they fear being recognized.
    Recognizing this stark data, what steps is the agency taking to 
increase the mental health workforce in rural settings?
    Answer. HRSA is implementing a variety of projects to increase 
mental and behavioral health providers, place such providers in rural 
and underserved communities, and increase the primary healthcare 
workforce.
    HRSA is increasing the number of mental and behavioral health 
providers through the Graduate Psychology Education program and the 
Mental and Behavioral Health Education and Training program. The 
Graduate Psychology Education program supports doctoral-level 
psychology education. The Mental and Behavioral Health Education and 
Training program increases the number of behavioral health 
professionals at the masters and doctoral-level through support for 
clinical training (internships, field placements) required for 
practice. Both programs include an emphasis on vulnerable and 
underserved populations, such as rural populations, older adults, 
children and adolescents, victims of abuse, veterans, military 
personnel and their families.
    HRSA is also supporting the placement of behavioral and mental 
health professionals through the National Health Service Corps. The 
Corps has increased the number of behavioral and mental health 
providers that it supports over the past 5 years. In fact, nearly one 
in three clinicians in the Corps (2,919 as of September 2012) is a 
behavioral and mental health practitioner, which includes 
psychiatrists, health service psychologists, clinical social workers, 
licensed professional counselors, marriage and family therapists, and 
psychiatric nurse specialists. The distribution of all NHSC clinicians 
across the country is generally even between rural and urban areas. 
Rural: 45 percent. Urban: 55 percent.
    HRSA is also increasing the ability of the primary healthcare 
workforce to address mental and behavioral health needs by partnering 
with SAMHSA on the Center for Integrated Health Solutions (CIHS). The 
Center is a national training and technical assistance resource center 
which promotes integrated primary and behavioral health services to 
address the needs of individuals with mental health and substance use 
conditions, whether seen in specialty behavioral health or primary care 
provider settings. CIHS has formulated trainings for health center 
primary care providers, many of whom serve in rural areas, around the 
topic of providing mental health services.
    Question. What steps is HRSA taking to better integrate mental 
health and primary healthcare in rural hospitals and FQHCs?
    Answer. Today, more than 1,200 health centers operate nearly 9,000 
service delivery sites that provide care in every U.S. State, the 
District of Columbia, Puerto Rico, the U.S. Virgin Islands, and the 
Pacific Basin. Nearly half of all health centers serve rural 
populations. In 2011, 70 percent of health centers in rural areas 
offered behavioral health services to their patients in addition to 
serving as a key access point for primary care. Also in 2011, over 1 
million people across the Nation received behavioral health treatment 
at health centers. This represents a 35-percent increase in patients 
seeking behavioral health treatment at health centers since 2009.
    While not a required service, HRSA actively encourages health 
centers to provide mental health and substance abuse services, such as 
Screening, Brief Intervention and Referral to Treatment (SBIRT) 
services. Another example of integrating mental and primary healthcare 
at health centers is the use of tele-behavioral health which is used to 
enhance outreach and education.
    HRSA's Rural Workforce Development Program supports the development 
of rural health networks that focus on activities relating to the 
recruitment and retention of primary and allied healthcare providers, 
including mental and behavioral health providers, in rural communities. 
For example, one grantee is currently implementing a training program 
in which students may complete their clinical programs in psychology, 
social work, or counseling in the community health center setting in 
the rural area. This innovative program has the potential to be 
replicable at a regional and State level.
    Question. What ideas does HRSA propose for further addressing the 
scarcity of mental providers in rural settings?
    Answer. In fiscal year 2014, HRSA will partner with SAMHSA to 
support a $50 million initiative, included in SAMHSA's fiscal year 2014 
budget request, to expand the behavioral health workforce as part of 
the President's plan to prevent gun violence. The initiative will 
include $35 million to expand the Mental and Behavioral Health 
Education and Training program by supporting training for masters level 
social workers, psychologists and marriage and family therapists as 
well as behavioral health paraprofessionals. Applicants will be asked 
to focus on vulnerable and underserved populations, such as rural 
populations, older adults, children and adolescents, victims of abuse, 
veterans, military personnel, and their families.

                              ORAL HEALTH

    Question. According to HRSA, 108 million Americans today lack 
access to dental coverage. In fact, many people with dental coverage 
lack access to dental care. The U.S. has roughly 141,800 working 
dentists and 174,100 dental hygienists. However according to HRSA data, 
there are 4,230 dental health professional shortage areas nationwide 
with 49 million people living in them.
    More than 16 million children in the United States go without 
seeing a dentist each year. Particularly vulnerable are children living 
in rural areas. Although the Children's Health Insurance Program (CHIP) 
provides comprehensive oral health coverage, dental care is the 
greatest unmet health need among children. More concerning, many 
dentists refuse to treat Medicaid beneficiaries, citing low 
reimbursement rates and administrative burdens.
    In 2009, HRSA embarked on an Oral Health Initiative, which included 
a series of Institute of Medicine reports. Based on this work, what 
concrete steps has the agency taken to implement the recommendations 
from the initiative to close the coverage gap?
    Answer. HRSA is addressing many of the recommendations by 
supporting training programs to increase the oral health workforce.
  --The Training in General, Pediatric and Public Health Dentistry 
        program builds on the recommendation to increase access to oral 
        health services by increasing the oral health workforce. The 
        program supports schools and universities' financial assistance 
        programs for oral health students and dental residents, as well 
        as loan repayment programs for full-time faculty.
  --The State Oral Health Workforce Improvement Grant program addresses 
        the initiative's recommendation for greater coordination with 
        States to improve core oral health services. The program 
        provides grants to support States in their efforts to develop 
        and implement innovative programs (including programs that 
        integrate oral health services in primary care settings) to 
        address their dental workforce in underserved areas.
    In fiscal year 2011, these programs combined trained over 2,700 
oral health students, including over 600 primary care dental residents. 
Data showed that the training of pre- and post-doctoral oral health 
students 1 out of every 2 sites used for clinical training were located 
in medically underserved communities or dental health professional 
shortage areas. Also, a total of 175 faculty members were trained 
through the faculty development activities within these two programs.
    Question. Even in States with the highest Medicaid reimbursement 
rates. Children enrolled in Medicaid are not getting adequate oral 
healthcare. Has the agency looked at expanding the number of mid-level 
professionals to provide care in underserved areas as an option for 
addressing this need? Please explain.
    Answer. HRSA does not have a position on the use of mid-level 
professionals, such as alternative oral health providers. However, a 
number of HRSA programs do include activities related to a variety of 
alternative oral health providers within State licensure laws.
  --For example, the State Oral Health Workforce grant program 
        currently funds ten States for activities related to dental 
        therapist, dental hygienist with expanded functions or less 
        restrictive supervision requirements, medical providers, 
        community oral health coordinators, and expanded-function 
        dental auxiliaries.
  --Among HRSA's Training in General, Pediatric, and Public Health 
        Dentistry and Dental Hygiene programs, six dental residency 
        programs have incorporated training medical residents and 
        primary care providers into their dental residencies' 
        curricula.
  --In Minnesota, a collaboration between a nonprofit dental clinic and 
        two academic institutions provides clinical rotations for 25 
        dental hygiene trainees, including 20 trained on a Restorative 
        Expanded Functions clinical curriculum, and five on an Advanced 
        Dental Hygiene (Advanced Dental Therapists) curriculum.
                                 ______
                                 
                Question Submitted by Senator Jon Tester

    Question. The Area Health Education Consortium (AHEC) programs are 
a cornerstone of the development, recruitment and retention of a full 
range of much needed healthcare professionals--from physicians to the 
whole range of ancillary service positions upon which facilities and 
providers rely in order to provide quality care to their patients, 
especially in rural and frontier communities. It has become clear that 
the best option is to develop talent from those who want to learn or 
hone their healthcare professional skills at a program in the State, 
serving Montanans while developing skills in their chosen profession. 
Without the AHEC program in Montana we would not have a new Family 
Medicine Residency program starting in Missoula this summer which will 
train 10 new physicians each year. We would lose the mentorship of the 
Health Occupation Students of American programs and the scholarships 
given to high school seniors who plan to pursue a career in health 
professions at a Montana institute of higher education. We'd also lose 
the MedStart Camps that encourage current sophomore and junior high 
school students who come from disadvantaged backgrounds, low-income 
families, rural areas, minorities, or will be first in their family to 
attend college to pursue a career in a healthcare field. The Federal 
AHEC investment in Montana was $826,112 last year; this money goes a 
long way in the small, close-knit communities across the State.
    The need for diverse, well-prepared and supported primary 
healthcare providers and related ancillary services is ever-increasing, 
and the AHEC program is a vital element in the development, recruitment 
and retention of healthcare professionals. Given the increasing need--
due to ACA implementation--of healthcare professionals, especially 
primary care providers--what is the rationale for proposing the 
elimination in the HHS fiscal year 2014 budget of the Area Health 
Education Consortium (AHEC) Program which has a long and successful 
history of recruiting, training, and retaining primary care providers 
and other health professionals to work in rural, frontier, and other 
underserved communities throughout the U.S.?
    The AHEC Program plays a key role in meeting numerous HHS/HRSA 
strategic priorities including: (1) Inter-professional Education and 
Practice (the new national Inter professional Education Coordinating 
Center is housed at the Minnesota AHEC and University of MN); (2) 
Veterans' Mental health: AHECs are training 10,000+ community-based 
providers re: PTSD/Substance Abuse/behavioral health issues throughout 
the country for returning Veterans; (3) The development of Community 
Health Workers and Patient Navigators: NAO and the AHEC network are 
taking the lead on CHW/navigator training, curriculum development, and 
are developing a national advisory board to create some standardization 
of the profession. AHEC funding is important to maintaining this vital 
program; (4) Diversity in the health professions: AHECs throughout the 
country are engaged in exposing underrepresented minorities to the 
health professions and are working diligently to increase the diversity 
of the health professions; and (5) Linking Public Health to Primary 
Care: Medical school-based AHECs are working to ensure that health 
professions students are developing connectivity to public health 
schools in order to enhance the public health knowledge and skill base. 
Taken together, how can you rationalize eliminating the AHEC Program 
that is so clearly aligned with key HHS/HRSA objectives and how with 
HHS/HRSA continue to meet these critical objectives in the absence of 
the AHEC Program?
    With a fiscal year 2011 investment of $34 million, AHECs leveraged 
six- to seven-times that much money from local and other sources to 
create and share robust training and mentorship programs. Without the 
Federal investment, local resources are insufficient, and therefore the 
recruitment, training, and retaining of health professionals in 
underserved areas does not occur. Why would you propose eliminating 
such a program that generates jobs, creates vital healthcare access 
enhancements, and is a proven return on investment?
    Answer. The fiscal year 2014 President's budget prioritizes 
allocating Federal resources to training programs that directly 
increase the number of primary care providers. Given the lean fiscal 
climate, HRSA had to make difficult choices regarding program funding 
levels. While HRSA has made longstanding investments in these 
activities to enhance health professions training since 1972, they do 
not directly increase the supply of providers. Given that most AHEC 
programs have been in place for many years and have State and local 
support, it is anticipated that the AHEC Program grantees will continue 
much of their efforts relying on these other funding sources.
                                 ______
                                 
               Questions Submitted by Senator Jerry Moran

                   PUBLIC HEALTH AND PREVENTION FUND

    Question. Madam Secretary, a portion of the Prevention and Public 
Health Fund (Prevention Fund) is being used to backfill the 
implementation of the health insurance exchanges. I have been concerned 
that the Administration creates budgets that rely on these Prevention 
Fund dollars to backfill critical public health programs. This fear has 
now been realized with your decision to remove Prevention Fund funding 
for public health programs in favor of implementing the Affordable Care 
Act. Under your revised Prevention Fund distribution that allocates 
funding to health insurance exchanges, the CDC loses $357 million in 
fiscal year 2013, including significant cuts to the 317 Immunization 
Program and surveillance programs. In fact, had it not been for 
additional funding being transferred with your 1 percent transfer 
authority, CDC would have a $440.3 million reduction in fiscal year 
2013. Could you explain why you made such a significant reduction to 
critical public health programs in order to fund your other priorities?
    Answer. The purpose of the Prevention and Public Health Fund is to 
provide for expanded and sustained national investment in prevention 
and public health programs to improve health and help restrain the rate 
of growth in private and public sector healthcare costs. Assisting 
Americans in gaining affordable healthcare aligns with the purpose of 
the Prevention Fund, which may be used for prevention, wellness, and 
public health activities. Implementing the health insurance marketplace 
is the Administration's top public health activity which has a great 
potential to improve prevention and public health in the next year by 
enabling individuals to enroll in coverage through private health 
insurance and have greater access to primary and preventive care. For 
example, the Navigator program, in the federally facilitated 
marketplaces, is intended to help increase access to coverage, 
including by assisting with eligibility determinations and enrollment 
into the marketplace. Various other activities funded by the Prevention 
Fund help Americans get the information they need by building awareness 
and sharing information. These activities include the education and 
outreach campaign regarding preventive services as well as funding for 
tobacco prevention like the media campaign and quitlines. Just as 
quitlines help smokers navigate tobacco cessation, Navigators help 
consumers navigate the health insurance marketplace. Increasing access 
to care and in particular preventive services is a component of our 
national efforts to restrain the cost of healthcare by encouraging 
healthier lifestyles, which is a key intent of the Prevention Fund. One 
of the proven ways to improve health outcomes is to improve access to 
insurance coverage. Not only does it provide security and peace of 
mind, but several studies have shown that health insurance coverage 
improves health outcomes. For example:
  --In a 2008 study, the Urban Institute noted that the absence of 
        health insurance creates a range of consequences, including 
        lower quality of life, increased morbidity and mortality, and 
        higher financial burdens.
  --A 2009 study in the American Journal of Public Health found that a 
        lack of insurance is associated with mortality and that the 
        uninsured are more likely to go without needed care than the 
        insured. It also found that the chronically ill uninsured are 
        also less likely to have a usual source of medical care, 
        decreasing their likelihood of receiving preventive and primary 
        care.
  --A study by the Institute of Medicine showed that working-age 
        Americans without health insurance are more likely to: Receive 
        too little medical care and receive it too late; Be sicker and 
        die sooner; Receive poorer care when they are in the hospital 
        even for acute situations like a motor vehicle crash.
    In addition to funding the marketplaces, the fiscal year 2013 
allocation also continues other important public health and evidence 
based programs such as tobacco prevention and the Community 
Transformation Grant program. In recognition that some key prevention 
and public health activities should be continued in fiscal year 2013, 
HHS is providing additional base resources for specific programs within 
CDC and SAMHSA through the use of transfer authority within the 
Department. The fiscal year 2013 allocation totaling $949 million, 
after accounting for sequestration reductions, reflects a broad and 
strategic portfolio of activities that supports the Administration's 
highest prevention and public health priorities.
    Question. Over the past 3 years, the Prevention Fund has been used 
to supplant budget authority throughout the Department's budget. As we 
have seen with the fiscal year 2013 Prevention Fund allocation, your 
proposed distributions in the budget request are not always followed. 
By making last minute changes to the Prevention Fund's allocations, 
program funding becomes uncertain. After learning of the significant 
changes to this distribution of the Prevention Fund in fiscal year 
2013, how can Congress rely, with any certainty, on the Department 
funding Prevention Fund programs at the level proposed in the fiscal 
year 2014 request?
    Answer. The Prevention Fund allocation is developed following the 
annual Federal budget process. HHS considers comments, stakeholder 
input, and current priorities in developing a yearly strategy for these 
resources. This year presented circumstances which resulted in HHS 
revising the initial allocation developed for fiscal year 2013. The 
fiscal year 2013 President's budget presented a planned allocation for 
resources totaling $1.25 billion. After the budget was released, the 
Middle Class Tax Relief and Job Creation Act of 2012 reduced this 
funding to $1 billion. The Prevention Fund was then further reduced by 
$51 million in sequestration reductions. As a result of these changes 
in law and because the fiscal year 2013 appropriation did not provide 
the resources requested by the Administration for implementation of the 
health insurance marketplace to fully enable individuals to access 
affordable health insurance coverage, the Department is leveraging and 
reallocating existing resources from multiple sources to provide short 
term and immediate funding for these efforts.

       CENTERS FOR MEDICARE AND MEDICAID SERVICES (CMS) EXCHANGE

    Question. Madam Secretary, some States, for example our home State 
of Kansas, have decided against setting up a new State-based exchange. 
If a State elects not to establish an exchange, under law, the 
Affordable Care Act requires that Centers for Medicare and Medicaid 
Services (CMS) must establish a federally facilitated exchange in that 
State. Are these Federal exchanges on track to begin enrollment on 
October 1, 2013?
    Answer. Yes, we are on track to begin open enrollment on October 1, 
2013.
    Question. How much discretionary funding will the Department have 
spent to implement exchanges through fiscal year 2013?
    Answer. In fiscal year 2011 and fiscal year 2012, HHS spent 
approximately $33 million and $290 million in discretionary funding on 
marketplace activities, respectively. In fiscal year 2013, HHS is 
planning to spend approximately $879 million in discretionary funding. 
These totals are from multiple discretionary sources, including CMS 
Program Management, General Departmental Management, the Nonrecurring 
Expenses Fund, and the Secretary's Transfer Authority.
    Question. The Affordable Care Act provided ``such sums as 
necessary'' language to set up State-based exchanges. How much money 
have you used thus far under that authority?
    Answer. As of April 5, CMS has awarded $3.84 billion in planning 
grants, early innovator grants, and establishment grants for State-
based marketplaces under the authority provided by section 1311 of the 
Affordable Care Act.
    Question. CMS issued Establishment grants to 37 States as planning 
money to set up exchanges. How many of the States that received this 
award established a State-based exchange?
    Of the States that received an Establishment grant that did not 
decide to establish a State-based exchange, how much money was spent?
    Answer. CMS has awarded 49 States and the District of Columbia a 
planning grant under the authority of section 1311 of the Affordable 
Care Act. To date, CMS has conditionally approved 17 States and the 
District of Columbia to operate marketplaces in 2014, and an additional 
7 States are conditionally approved as State Partnership Marketplaces. 
Lastly, another 7 States are managing plan management functions.
    In addition to the planning grants, grant funding appropriated in 
section 1311 of the Affordable Care Act is available to States for 
their costs related to ``establishment'' of marketplaces. States may 
apply for Level 1 and Level 2 establishment grants. States may also 
seek approval of a State-based marketplace in future years, and grant 
funds must be awarded by December 31, 2014. A comprehensive list of 
grant awards by State is available here: http://www.cms.gov/cciio/
resources/marketplace-grants/index.html

                               NAVIGATORS

    Question. The Department designated $54 million in Prevention and 
Public Health Fund dollars for ``navigators,'' a program whose stated 
objective is to help consumers understand health insurance options 
under the health insurance exchanges created pursuant to the Affordable 
Care Act. Could you please provide further information to the committee 
regarding the following:
    Will the $54 million in Prevention and Public Health Fund be the 
only source of funding for navigators in fiscal year 2013? If there 
will be other sources of funding, please provide details.
    Answer. In fiscal year 2013, the Navigator program in federally 
facilitated marketplaces is primarily funded from the Prevention and 
Public Health Fund. However, CMS spent about $750,000 out of Program 
Management for a support contract to assist in administering the grants 
in February.
    Question. Neither the fiscal year 2013 nor fiscal year 2014 budget 
requests allocate Prevention Fund dollars to the navigator program. 
While the fiscal year 2013 budget proposal did not request Navigator 
funding from the Prevention Fund, in the end, Prevention Fund dollars 
were used. Do you expect fund this program in fiscal year 2014 through 
the Prevention Fund?
    Answer. The fiscal year 2014 President's budget does not allocate 
funding from the Prevention Fund to CMS for the Health Insurance 
Marketplace. While the health insurance marketplaces are set to be 
operational in fiscal year 2014, it is critical we invest now in 
outreach activities that will increase awareness and enrollment.
    Question. How many navigator employees and/or contractors do you 
expect to hire with the $54 million?
    Answer. In the federally facilitated Marketplace, including 
Partnership Marketplace States, CMS may award grants to private and 
public entities and self-employed individuals within those States to 
perform Navigator duties. We are not hiring any employees or 
contractors.
    Question. How many navigator employees and/or contractors will be 
maintained once exchanges are in operation on October 2013?
    Answer. In the federally facilitated marketplace, including 
Partnership Marketplace States, CMS may award grants to private and 
public entities and self-employed individuals within those States to 
perform Navigator duties. We are not hiring any employees or 
contractors.

                           PROJECT BIOSHIELD

    Question. Madam Secretary, while a commercial market for medical 
countermeasures is small, Federal investments in biodefense have proven 
fruitful and are critical to the continuing defense of our Nation. The 
Project BioShield Act resulted in the procurement and stockpiling of 
nine medical countermeasures in its first 7 years. Given current 
funding challenges, what steps are you taking to make sure that 
innovations in medical countermeasures continue?
    Answer. Since the development and procurement of MCMs is an 
inherently risky endeavor, BARDA remains focused on keeping sufficient 
incentives in place for its industry partners. This effort includes an 
HHS intra-agency multiyear budgeting practice driven by the long-lead 
time necessary for MCM development and acquisition. Large 
pharmaceutical companies (e.g., Amgen, GlaxoSmithKline, etc.) are now 
joining the biodefense MCM sector, using long-range budget planning 
routinely as a good business management practice. Venture capital 
investors, which fund many small biotech companies in the biodefense 
sector, may choose to support biotech companies in a different sector 
that has a better benefit-to-risk profile than biodefense. These 
circumstances support the critical need to ensure a long-term funding 
commitment is maintained with annual appropriations in the future. 
Maintaining the progress that has been achieved in the recent years 
requires Congress's continued support for these future activities.
    Question. What steps are you taking to make sure that the Project 
BioShield Special Reserve Fund is available for the next 5 years to 
give confidence to companies that are developing and delivering 
essential medicines to our national stockpile to use in the event of an 
emergency?
    Answer. The Department agrees that providing industry with a clear 
indication of long-term support of medical countermeasure development 
is important to the success of Project BioShield. The budget explicitly 
states the fiscal year 2014 request represents a multiyear renewed 
commitment to Project BioShield. Additionally, as an added incentive, 
the fiscal year 2014 President's budget proposes language to provide 
BARDA with the authority to modify the standard government-wide 
authority for multiyear contracting (41 U.S.C. 3903). The modified 
language included in the fiscal year 2014 President's budget authorizes 
BARDA to enter into an ``incrementally funded'', multiyear contract for 
up to 10 years. Additionally, the language modifies the existing 
authority's requirement of set-aside contract termination costs by 
allowing BARDA to repurpose any un-used termination costs to pay 
contract invoices in subsequent years. This differs from traditional 
multiyear contracting authority, which specifies termination costs can 
be used for that purpose alone. These modifications allow BARDA to 
effectively utilize multiyear contracting authority to engage in long-
term contracts with companies that develop medical countermeasures.

                               HEAD START

    Question. How is the Department working to improve quality of 
services to provide better outcomes for Head Start and Early Head Start 
children?
    Answer. HHS is committed to ensuring program excellence for the 
families and children we serve and has put in place a number of reforms 
and improvements to further improve the programs' quality.
Designation Renewal System
    This Designation Renewal System is the largest reform that has 
taken place in Head Start's history. By laying out quality benchmarks 
and requiring any program that falls short on those benchmarks to 
compete for continued funding we ensure that the children Head Start 
serves will get the best early education that each of their communities 
can offer. We have already conducted competitions in more than 100 
communities and notified more than 100 additional grantees that they 
will be required to compete.

CLASS
    The Office of Head Start is now using a valid reliable research 
based tool to assess the quality of Head Start classrooms across the 
country. The Classroom Assessment Scoring System (CLASS) was developed 
based on years of research by experts at the University of Virginia and 
assesses the quality of teacher-child interactions, the thing that 
matters most in the quality of early childhood classrooms. We are using 
CLASS in Training and Technical Assistance, programs are using it for 
professional development of their teaching staff and we are also using 
it in for accountability. As part of the Designation Renewal System, 
agencies that score below a minimum threshold or in the lowest 10 
percent of all Head Start programs reviewed in the same monitoring year 
which received a CLASS evaluation during their on-site Federal 
monitoring review for any domain are required to compete for continued 
funding. We believe using CLASS throughout Head Start will continue to 
strengthen the most critical elements of quality.

School Readiness
    Head Start programs are required to establish goals for enhancing 
the school readiness of children, including school readiness goals that 
are aligned with Head Start Child Development and Early Learning 
Framework, and State Early Learning Standards as appropriate. We also 
require that programs assess how children are progressing, and 
regularly analyze that data to better support each child's individual 
progress in the classroom and collectively to make program improvement 
decisions about necessary changes to curriculum or teacher training.

Training and Technical Assistance (T/TA)
    We have strengthened our Training and Technical Assistance System 
to better support program improvement. The system consists of three 
components: Direct funding to grantees; State, Migrant and Seasonal 
Head Start (MSHS), and American Indian and Alaskan Native (AIAN) 
Centers; and National Centers. The State T/TA System provides Head 
Start programs access to professional development providers at the 
State, tribal, and local level. Six National Centers work together to 
provide Head Start grantees with consistent information and ``best 
practices'' from OHS across all service areas.
    Question. Will the increase in Head Start funding in fiscal year 
2014 reflect more full-day service?
    Answer. The President's budget request for fiscal year 2014 does 
reflect more full-day service. The expansion for the Early Head Start/
Child Care Partnerships would expand high-quality early learning by 
approximately 110,000 full-day, full-year, high-quality Early Head 
Start slots.

                      STRATEGIC NATIONAL STOCKPILE

    Question. The budget proposes to reduce funding for the Strategic 
National Stockpile by $38.2 million. This reduction could result in 
fewer people receiving treatment during an influenza pandemic and fewer 
people receiving post-exposure treatment following exposure to anthrax. 
The proposed reduction is more than an efficiency cut; it affects our 
capability to respond in the event of a terrorist attack. At this 
proposed funding level, are you concerned in the Federal Government's 
ability to adequately respond should there be a bioterrorist attack or 
disease epidemic?
    Answer. The Public Health Emergency Medical Countermeasures 
Enterprise (PHEMCE) is responsible for defining and prioritizing 
requirements for public health emergency Medical Countermeasures (MCMs) 
and establishing deployment and use strategies for SNS products. 
Furthermore, the PHEMCE formulates and maintains an intra-agency 5-year 
budget plan that takes into consideration requirements and lifecycle 
costs of SNS products throughout HHS. Timely procurement of new and 
replacement MCMs is necessary to achieve established PHEMCE goals and 
protect the public from health security threats. CDC coordinates with 
PHEMCE to prioritize and identify which expiring products need to be 
replaced to maintain current capabilities with available funding.

                       CRITICAL ACCESS HOSPITALS

    Question. As a follow up to our discussion about Critical Access 
Hospitals during the hearing, I ask for further details on the 
following:
    How did the Department come up with the 10-mile limit and how many 
hospitals will be at risk of losing their designation based on your 
proposal? If these facilities lose their designation pursuant to this 
policy, do you think their survival will be jeopardized?
    Answer. The Critical Access Hospital (CAH) program was created in 
1997 through the Balanced Budget Act with the intent to ensure 
beneficiaries in rural communities had access to inpatient hospital and 
emergency care. This proposal would limit CAH designation to those 
facilities that are located more than 10 miles away from the nearest 
hospital and would ensure that only hospitals whose communities depend 
upon them for emergency and basic inpatient care receive the generous 
cost-based reimbursement afforded to CAHs. A distance restriction is 
already in place for most CAHs (which generally must be at least 35 
miles from the nearest hospital or 15 miles in the case of mountainous 
terrain); however, there are some CAHs that qualified under the 
``Necessary Provider'' rule that, before 2006, allowed States to waive 
the distance requirement.
    In general, if a facility does not meet the minimum distance 
requirement, it will have the option to meet the conditions of 
participation and convert into a certified Medicare hospital. The 
facility would no longer be paid under the cost-based reimbursement 
structure and would instead be paid under the same system as other 
Medicare hospitals. Accordingly, there would be program savings as well 
as beneficiary savings since the outpatient cost-sharing for 
beneficiaries would no longer be based on the higher CAH payment 
structure for the CAHs affected by this proposal.
    Question. How will the fiscal year 2014 proposal affect a 10-mile 
area where there are two facilities that are already designated as 
Critical Access Hospitals?
    Answer. As stated in response to the previous question, in general, 
if a facility does not meet the minimum distance requirement, it will 
have the option to meet the conditions of participation and convert 
into a certified Medicare hospital. The facility would not have to 
close down; however, since the Critical Access Hospital (CAH) was not 
the sole provider of inpatient care, it would no longer receive the 
generous cost-based reimbursement as a CAH and would instead be paid as 
a Medicare hospital the Medicare rate that other hospitals receive. In 
the case of two CAHs within 10 miles of one another, if both continued 
to operate as an independent Medicare acute care hospital, then neither 
could continue to be paid as a CAH.
    Question. How will the fiscal year 2014 proposal affect Critical 
Access Hospitals located across State lines, but within a 10-mile 
radius of each other?
    Answer. The driving distance between a CAH and a certified 
Medicare-participating hospital is already taken into account under 
current law, but under current law, the distance requirement is longer 
than 10 miles. Neither the distance requirement under current law nor 
under this proposal take the existence of State lines into account 
since the controlling factor is distance from another CAH or hospital. 
The purpose of the CAH program is to ensure access in rural communities 
that depend upon these facilities for emergency and basic inpatient 
care. The generous cost-based reimbursement system is reserved for 
those facilities that are the sole provider of inpatient hospital care 
for the community. In areas where there are two or more hospitals 
serving the same community, Medicare payment would be made at the same 
rate that is paid to other hospitals.
    Question. How will the fiscal year 2014 proposal affect Critical 
Access Hospitals when they are located within 10 miles of a Veterans 
Affairs-run hospital or Indian Health Service operated hospital?
    Answer. This requirement for CAH certification pertains to the 
distance between a given facility and a CAH or Medicare-participating 
hospital. If the facility does not meet the minimum distance 
requirement, it would be given the opportunity to meet the conditions 
of participation and to convert into a certified Medicare hospital.
    Question. In addition to the impact that this proposal will have on 
Critical Access Hospitals, I am concerned with the unintended 
consequences this proposal will have in the larger rural health 
delivery system. For example, if a Critical Access Hospital loses this 
designation and becomes a normal, subsection D hospital, other 
facilities with alternative Medicare designations, such as Medicare 
Dependant or Sole Community Hospital status might lose their status and 
all of the sudden multiple hospitals in one rural area are faced with 
massive Medicare cuts. Has your office considered these ripple effects?
    Answer. CMS has determined that this proposal would not adversely 
affect the larger rural health delivery system, including Medicare 
Dependent hospitals and Sole Community hospitals. These hospitals face 
different certification criteria from Critical Access Hospitals. This 
proposal was designed with the intent to reserve the cost-based 
reimbursement system for those CAHs that are truly the sole provider of 
inpatient hospital care and preserve beneficiary access in rural areas.
    Question. Are you concerned about how these proposals regarding 
Critical Access Hospitals will affect access to healthcare for 
Americans living in rural communities?
    Answer. This proposal preserves beneficiary access while promoting 
payment efficiency. CMS does not expect any significant adverse impact 
on rural access to care as a result of these proposals. These proposals 
represent targeted reductions in cost-based reimbursement only to those 
CAHs that are not the sole providers in their communities. These 
proposals were crafted with the needs of rural areas in mind. 
Specifically, these proposals ensure that the basic cost-based 
reimbursement structure for CAHs is preserved, and that only hospitals 
that are the sole source of emergency and basic inpatient care for 
their communities maintain CAH status. Current CAHs that do not meet 
the distance criteria could convert to a Medicare-participating 
hospital and be paid under the same system as other Medicare-
participating hospitals.

                       RURAL HEALTHCARE WORKFORCE

    Question. Madam Secretary, approximately 16 percent of Americans 
live in rural communities, yet only 9 percent of the Nation's 
physicians practice in rural areas. In the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003, Congress redistributed 
3,000 residency slots among the Nation's hospitals in an effort to 
train more residents to practice in primary care and in rural areas. 
However, the National Institute on Minority Health and Health 
Disparities released a report in January that stated this effort did 
not meet its objective. Out of the 304 hospitals receiving additional 
positions, only 12 were rural, and they received fewer than 3 percent 
of all positions redistributed. What is your response to this 
conclusion of this report and how is the Department working to address 
the shortfall of physicians serving in our rural communities?
    Answer. We recognize the need to invest in the workforce to improve 
the healthcare system, particularly in rural and underserved 
communities facing shortages. CMS understands that ensuring an adequate 
supply of physicians is crucial to the success of the Affordable Care 
Act. New payment reforms, like Accountable Care Organizations and other 
models to promote coordination can play a role in addressing a shortage 
of physicians by encouraging a team approach to medicine. By using the 
skills of other practitioners, like nurse practitioners and 
pharmacists, this approach allows physicians to more efficiently use 
their time. A number of provisions in the Affordable Care Act are 
designed to strengthen the healthcare workforce, such as Medicare 
payment bonuses for primary care providers and providers in underserved 
areas and investments in health professional training programs to 
increase supply. In addition, the Health Care Innovation Awards are 
also testing ideas to strengthen the primary care workforce. For 
example, in Michigan, the Michigan Public Health Institute received an 
award to integrate community health workers into primary care teams in 
order to coach patients on self-management and encourage regular 
primary care visits.
    Section 422 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) required the Secretary to develop and 
implement a process to redistribute resident slots from hospitals that 
were not fully utilizing those slots to hospitals that needed the 
resident slots in order to expand or create new programs or pay for the 
residents already in existence above their historical funding cap. The 
movement of slots from hospitals where they were not utilized to 
hospitals that can fill the positions has resulted in Medicare funding 
additional positions--approximately 2,600 indirect medical education 
slots and 3,060 direct medical education slots. The redistribution 
process allowed the creation of 73 new residency programs in rural 
areas and in areas with fewer than 1 million people.
    Section 5503 of the Affordable Care Act also required a 
redistribution of resident slots from hospitals that were not fully 
utilizing the slots. This section required that not less than 75 
percent of the redistributed slots must be in a primary care or general 
surgery residency. The Affordable Care Act set priorities for certain 
areas, including whether the resident-to-population ratio is low, the 
ratio of the population living in a health professional shortage area 
to the total population of the State is high, and hospitals located in 
a rural area. In 2011, CMS redistributed approximately 620 indirect 
medical education slots and 720 direct medical education slots to 58 
hospitals. As per the statutory priorities, a portion of the 
redistributed slots went to rural hospitals and hospitals in States 
where there is a high proportion of the population living in a health 
professional shortage area.
    CMS is working closely with its partner agencies across HHS, 
including the Health Resources and Services Administration (HRSA), to 
ensure an adequate pipeline of primary care providers is supported. We 
recognize that a range of responses is needed to address workforce 
shortages in various geographic areas and among primary care 
physicians. We will continue to carefully monitor access to ensure our 
policies continue to lower costs while maintaining access to quality 
services. I look forward to working with you to address this issue.

         FACE-TO-FACE PHYSICIAN ENCOUNTER MEDICARE HOME HEALTH

    Question. The Affordable Care Act added a new face-to-face 
physician encounter requirement for Medicare home health services. As 
this rule's documentation requirements have evolved, further 
administrative burdens have been imposed on physicians, increasing 
operations costs for home health agencies. Has the Department reviewed 
any of the administrative requirements around this face-to-face 
requirement to determine efficiencies within this process?
    Answer. Yes. The Affordable Care Act did add a requirement that, 
prior to certifying a patient's eligibility for home health, the 
certifying physician (or non-physician practitioner) must have a face-
to-face visit and must document the encounter. CMS does not require a 
specific form, or format, for the documentation of this face-to-face 
encounter. CMS allows the face-to-face encounter to be documented as 
part of the certification or as a signed addendum to the certification. 
This approval allows flexibility for the clinical findings from the 
encounter to be dictated by the physician to one of his or her support 
personnel, or to allow the documentation to be generated by the 
physician's electronic medical record software.
    Certifying physicians also have the option of using existing 
documentation, such as a discharge summary or referral or an acute/
post-acute physician's documentation of a face-to-face encounter that 
occurred in the acute/post-acute care facility, as his or her face-to-
face encounter documentation. Such documentation is acceptable as long 
as those documents meet all the requirements for the face-to-face 
documentation, and the certifying physician signs that documentation 
provided to him/her. This approval demonstrates that the certifying 
physician is using that discharge summary, referral, or acute/post-
acute care physician's documentation as his or her documentation of the 
face-to-face encounter.
    Question. For example, would having a single form allowing 
physicians to document the face-to-face encounter on the plan of care 
documentation be a feasible option?
    Answer. Yes. CMS understands that some physicians use a single form 
for both the certification of eligibility and the plan of care. CMS 
does not require a specific form, or format, for the documentation of 
the face-to-face encounter. Documenting the face-to-face encounter can 
be part of the certifying physician's certification of a patient's 
eligibility for home health services. Whether the face-to-face 
encounter documentation is on the certification form itself or is an 
addendum to it, it must be separate and distinct. So long as the 
following content requirements are met, such documentation would meet 
the face-to-face documentation requirements: (1) titled as the face-to-
face encounter; (2) the patient's name; (3) date of the encounter; (4) 
how the patient's clinical condition as seen during the encounter 
supports homebound status and the need for skilled services; (5) the 
certifying physician's signature (original signature, a faxed copy, 
copy of original document with signature or electronic signature--but 
not stamped signature); and (6) the date of the certifying physician's 
signature.

                        PEDIATRIC DENTAL BENEFIT

    Question. Madam Secretary, it has been brought to my attention that 
the Department is treating medical plans and stand-alone dental plans 
differently inside and outside of the health insurance exchanges. 
Specifically, it is my understanding that inside the exchange there is 
no requirement for an individual or small group to purchase pediatric 
dental coverage and medical carriers have the option of offering 
medical-only plans. However, outside the exchange, in the private 
market, all individuals, including adults without dependents, must 
purchase pediatric dental coverage and it must be provided by their 
medical carrier unless the medical carrier receives ``reasonable 
assurance'' that the individual has purchased coverage from an 
``exchange-certified stand-alone dental plan.'' A main principle in the 
President's remarks during healthcare reform debate was that if an 
individual liked the coverage he or she had, he or she could keep it. 
How is that principle being followed when over 45,000 children who have 
stand-alone dental coverage in Kansas today may not have that option in 
2014 when health insurance exchanges are operational?
    Answer. Several provisions of the Affordable Care Act affect the 
coverage of pediatric dental essential benefits. Section 1302 of the 
Affordable Care Act generally requires issuers in the individual and 
small group markets inside and outside the marketplaces to offer all 
essential health benefits. Essential health benefits requirements apply 
to health insurance issuers, which must offer certain benefits--they 
are not requirements for individuals or families to obtain coverage for 
a particular benefit. Section 1302(d)(4)(F) of the Affordable Care Act, 
however, expressly permits issuers to omit pediatric dental coverage 
from a plan offered in the marketplace if there is a stand-alone dental 
plan offering the pediatric dental essential benefit in that 
marketplace. This authority does not apply outside the marketplace. 
Thus, the different issuer requirements in the Affordable Care Act lead 
to different consumer experiences inside and outside of the 
marketplace.
    In the essential health benefits final rule, CMS specified that an 
issuer outside the marketplace would not be found to be noncompliant 
with the requirement to offer essential health benefits even if the 
issuer did not itself offer pediatric dental benefits as long as the 
issuer is reasonably assured that the applicant has obtained the 
pediatric dental essential health benefit through a marketplace-
certified stand-alone dental plan.
    Question. Furthermore, why are adults without dependents required 
to purchase pediatric dental in the private market while adults 
purchasing through the exchanges have no such requirement?
    Answer. As discussed in the previous question and explained in 
further detail the Essential Health Benefits Final Rule at 78 FR 12853, 
the Affordable Care Act does not require adults purchasing policies 
subject to the essential health benefit (EHB) requirements outside the 
marketplace to purchase pediatric dental coverage. Rather, because 
essential health benefits requirements are requirements on what issuers 
must offer, the rule provided that issuers offering coverage in the 
individual and small group markets outside the marketplace must be 
reasonably assured that an individual has purchased a marketplace-
certified pediatric dental plan in order to offer a health plan that 
does not include the pediatric dental essential health benefits.
    The Affordable Care Act does not provide for the exclusion of a 
pediatric dental EHB outside of the Marketplace as it does in section 
1302(b)(4)(F) of the Affordable Care Act for QHPs. Therefore, 
individuals enrolling in health insurance coverage not offered through 
the marketplace must be offered the full ten EHB categories, including 
the pediatric dental benefit. However, in cases in which an individual 
has purchased stand-alone pediatric dental coverage offered by a 
marketplace-certified stand-alone dental plan outside the marketplace, 
that individual would already be covered by the same pediatric dental 
benefit that is a part of EHB. When an issuer is reasonably assured 
that an individual has obtained such coverage through a marketplace-
certified stand-alone dental plan offered outside the marketplace, the 
issuer would not be found non-compliant with EHB requirements if the 
issuer offers that individual a policy that, when combined with the 
marketplace-certified stand-alone dental plan, ensures full coverage of 
EHB.

                       MEDICARE PART D EFFICIENCY

    Question. In its final call letter for calendar year 2014, CMS 
expresses concerns with mail order pharmacy automatic refill programs. 
This call letter states that Medicare Part D sponsors should require 
their network pharmacies, retail and mail, to obtain beneficiary 
consent to deliver a prescription, new or refill, prior to each 
delivery. Additionally, CMS recommends that plan sponsors require 
network pharmacies to implement this consent requirement for the 
remainder of 2013. In particular, CMS acknowledges medication waste in 
these auto-ship programs: ``Shipment of unwanted medications is not 
only wasteful, but also a source of significant beneficiary aggravation 
and a financial imposition that can negatively affect enrollee 
satisfaction with the plan. Supporting this idea, we received a number 
of comments that indicate beneficiaries return large quantities of 
unneeded medications to community pharmacies for take-back programs 
because they were unable to stop auto-ship refill programs.'' 
Additionally, CMS is concerned with Part D plans offering incentives 
for mail order of 30-day medication supplies. The call letter contains 
the following sentence: ``Finally, we are concerned that the practice 
of plans offering powerful incentives such as $0 or other very low cost 
sharing for 30-day supplies at mail-service, without offering the same 
cost sharing at their retail network, is driving purchasing behavior 
for beneficiaries for whom mail-service may not be a good option.'' Are 
HHS and CMS studying the cost impact to the Medicare Part D program 
related to such mail order pharmacy automatic refill programs?
    Answer. Mail order programs are an important and convenient way for 
Medicare beneficiaries to receive maintenance medications; that being 
said, CMS has determined the ``beneficiary consent'' requirement is a 
simple step to ensure the medication is needed before incurring any 
expense or waste. As CMS has indicated in 2014 Call Letter, there are 
concerns with the cost impact of some mail order practices on the Part 
D program, beneficiaries, and the pharmacy industry. Although CMS is 
unable to differentiate prescription refills that were generated by a 
mail order auto-fill program from other mail order refills directly 
initiated by a beneficiary, CMS will continue to review mail order 
practices to ensure these practices conform to the requirements to not 
increase costs to the program.
    Question. If so, could you please detail the issues and results of 
this analysis? Also, could you detail the improvements that CMS 
recommends to address these issues?
    Answer. CMS is continuing to look at available data and work with 
various stakeholders to ensure mail order is used in both an effective 
and efficient manner. Reducing both cost and waste continues to be a 
significant policy goal for CMS and for the Part D program. While mail 
order can help achieve these goals, CMS wants to ensure that incentives 
are aligned to benefit the Part D program and the beneficiaries it 
serves. As noted in the previous question, the 2014 Call Letter 
requires that beneficiaries provide consent before prescriptions are 
delivered to them. CMS believes this significant will help reduce 
unnecessary cost and waste to beneficiaries and the Part D program.
    Question. CMS notes its final call letter for calendar year 2014 
that it is scrutinizing costs related to Medicare Part D plans with 
preferred networks, ``comparing these to costs in the non-preferred 
networks, as well as to costs in PDPs without preferred networks.'' CMS 
goes on to state the following: ``We are concerned because our initial 
results suggest that aggregate unit costs weighted by utilization (for 
the top 25 brand and top 25 generic drugs) may be higher in preferred 
networks than in non-preferred networks in some plans. Combined with 
lower cost sharing, we believe these higher unit costs may violate the 
requirement not to increase payments to such plans.'' To address this 
concern, CMS suggests the following: ``We strongly believe that 
including any pharmacy that can meet the terms and conditions of the 
preferred arrangements in the sponsor's preferred network is the best 
way to encourage price competition and lower costs in the Part D 
program. Doing so would also likely mitigate some beneficiary 
disruption and travel costs, especially in rural areas.'' Could you 
please provide an update of CMS's efforts to address this cost concern?
    Answer. CMS is continuing to investigate policy options to both 
ensure that preferred pharmacy costs do not increase payments to Part D 
sponsors and to encourage price competition and lower costs by 
increasing pharmacy participation in preferred pharmacy networks.

            MEDICARE BENEFICIARY ACCESS TO MEDICAL SUPPLIES

    Question. I understand that certain pharmacies will be prohibited 
beginning July 1, 2013 from providing home delivery of diabetic testing 
supplies (DTS) to homebound Medicare beneficiaries as well as 
beneficiaries in long-term care and assisted living facilities. Is this 
prohibition a decision that CMS made pursuant to its regulatory 
authority?
    Answer. In the November 2, 2010 final rule, ``Medicare Program; 
Payment Policies Under the Physician Fee Schedule and Other Revisions 
to Part B for CY 2011'' (CMS-1503-FC), at section 414.402, CMS codified 
the definitions of mail order item and non-mail order item. Mail order 
item means any item (for example, diabetic testing supplies) shipped or 
delivered to the beneficiary's home, regardless of the method of 
delivery, and non-mail order item means any item (for example, diabetic 
testing supplies) that a beneficiary or caregiver picks up in person at 
a local pharmacy or supplier storefront. As discussed in the preamble 
of this rule, CMS concluded it was necessary to revise the definition 
of mail order to make a clear distinction between mail order and non-
mail order. CMS received several comments on the proposed rule 
advocating that local deliveries be excluded from the definition of 
mail order item. CMS considered these comments carefully; however, CMS 
concluded that such an exception is not warranted because contract 
suppliers will be required to deliver these items to any beneficiary 
regardless of where they live. In addition, local pharmacies may 
continue to provide these items to their walk-in customers.
    Question. If implemented, I am concerned this policy will cause 
disruption in the care provided to some of the frailest of Medicare 
patients. Many Medicare Part B beneficiaries, who are in need of DTS, 
are homebound and may not have a caregiver available to pick up DTS 
from the local pharmacy. In addition, many beneficiaries in long-term 
care and assisted living simply cannot make a trip to the local 
pharmacy, and many cannot navigate the complexities of ordering 
supplies via the mail. Community pharmacies in Kansas and across the 
country play an important role in delivering DTS to patients in their 
homes. For example, in the community setting, a survey found that 91 
percent of all pharmacies make some form of home delivery of DTS in a 
given month. The survey also found that 45 percent of all small 
community pharmacies deliver diabetes testing supplies to assisted 
living facilities. Could you tell me what particular pharmacies are 
subject to this new prohibition?
    Answer. All pharmacies are subject to the new definitions of ``mail 
order'' and ``non-mail order''.
    Question. A recent report conducted by the Office of Inspector 
General found that certain mail order suppliers were home delivering 
DTS to a wide geographic area while billing at the higher retail rate. 
Are you concerned that this new CMS home delivery prohibition will 
disproportionately impact rural Medicare beneficiaries and the 
community pharmacies that serve them when it appears CMS intended this 
policy to address the mail-order suppliers that were home-delivering 
DTS for higher rates?
    Answer. CMS does not have any concerns that this policy will 
disproportionately impact rural beneficiaries as they will have the 
same access to mail-order contract suppliers as all other 
beneficiaries, and may continue to obtain these items at their local 
pharmacy on a walk-in basis.
                                 ______
                                 
            Questions Submitted by Senator Richard C. Shelby

  CENTER FOR MEDICARE AND MEDICAID SERVICES HEALTH INSURANCE EXCHANGES

    Question. The fiscal year 2013 budget requested approximately $1 
billion to implement health insurance exchanges. However, after 
transfers from the Prevention and Public Health Fund, the Secretary's 
transfer authority, the Implementation Fund, and the Non-Recurring 
Expense Fund combined with $315 million from the Center for Medicare 
and Medicaid Services' (CMS) base operations, insurance exchanges will 
receive approximately $1.57 billion in fiscal year 2013. Madam 
Secretary, why did you allocate significantly more funds than requested 
in the fiscal year 2013 budget for health insurance exchanges?
    Answer. The current operating plan level for fiscal year 2013 
represents updated estimates and our work to best meet these needs 
through the resources available to the Department.
    Question. The Affordable Care Act authorization provided ``such 
sums as necessary'' to implement State-based health insurance 
exchanges. However, it is my understanding that this unlimited 
authority cannot be used to fund the 33 States that did not choose to 
setup a State-based exchange. How much funding is necessary to 
implement the federally run exchanges in States that did not setup 
their own exchange?
    Answer. The fiscal year 2014 President's budget requests $1.5 
billion for costs related to marketplaces including operations of a 
federally facilitated marketplace in each State that will not have its 
own marketplace by January 1, 2014, oversight of State-based and 
Partnership Marketplaces, and to carry out the Secretary's duties on 
behalf of all marketplaces, such as operation of a data services hub.
    Question. How much of the fiscal year 2014 CMS discretionary 
request is required for the activities related to implementing the 
federally run exchange in the States that are not setting up a State-
based exchange?
    Answer. The fiscal year 2014 request of $1.5 billion reflects 
funding needed to operate the federally facilitated marketplace (FFM) 
for activities such as certification of qualified health plans, 
consumer outreach and education, eligibility, and the operations of the 
Small Business Health Option Program. In addition, the budget includes 
funding for CMS's marketplace responsibilities outside of the FFM, 
including the data services hub, State Marketplace oversight, and 
payment management functions.

                   PREVENTION AND PUBLIC HEALTH FUND

    Question. The Prevention and Public Health Fund (Prevention Fund) 
was authorized under the Affordable Care Act to fund prevention, 
wellness, and public health activities. Since the Prevention Funds' 
establishment, I have raised concerns that this has been a $1 billion 
slush fund for the Administration to use for any purpose. In fiscal 
year 2013, the Administration used the Prevention Fund as an offset 
within its budget request. Last week, the Department announced it would 
use $453.8 million from the Prevention Fund to implement health 
insurance exchanges. Madam Secretary, I have questions about how last 
week's decision adversely affects public health funding at the Centers 
for Disease Control and public health workforce development at the 
Health Resources and Services Administration. Because the 
Administration has used the Prevention Fund to supplant budget 
authority throughout the Department, programs that now rely on 
Prevention Fund dollars to remain level-funded will be reduced. Madam 
Secretary, the fiscal year 2014 budget again supplants budget authority 
throughout the Department. As we develop a fiscal year 2014 Labor/HHS 
Appropriations bill, how can we be sure that you would allocate funding 
as reflected in the request since your proposal in fiscal year 2013 is 
so drastically different than how funding was actually distributed?
    Answer. The Prevention Fund allocation is developed following the 
annual Federal budget process. HHS considers comments, stakeholder 
input, and current priorities in developing a yearly strategy for these 
resources. This year presented circumstances which resulted in HHS 
revising the initial allocation developed for fiscal year 2013. The 
fiscal year 2013 President's budget presented a planned allocation for 
the resources totaling $1.25 billion. After the budget was released, 
the Middle Class Tax Relief and Job Creation Act of 2012 reduced this 
funding to $1 billion. The Prevention Fund was then further reduced by 
$51 million in sequestration reductions. As a result of these changes 
in law and because the fiscal year 2013 appropriation did not provide 
the resources requested by the Administration for implementation of the 
health insurance marketplace to fully enable individuals to access 
affordable healthcare, the Department is leveraging and reallocating 
existing resources from multiple sources to provide short term and 
immediate funding for these efforts. In recognition that some key 
prevention and public health activities should be continued at resource 
levels higher than can be provided through the Prevention Fund alone in 
fiscal year 2013, HHS is providing additional base resources for 
specific programs within CDC and SAMHSA through the use of transfer 
authority within the Department.
    Question. The fiscal year 2014 budget continues to supplant budget 
authority. For example, a long-standing program at the Health Resources 
and Services Administration, Poison Control Centers, is proposed to be 
entirely funded out of the Prevention Fund. Why does the fiscal year 
2014 request continue to supplant budget authority?
    Answer. The Prevention Fund allocation is determined as part of the 
annual budget process. In this tight fiscal environment, HHS had to 
make difficult decisions within the discretionary budget to prioritize 
funding for programs that are critical to advance the Departments 
mission while also reducing cost to meet our overall fiscal goals. The 
budget presents total program levels, including the Prevention Fund, at 
levels that support the policies presented by the Administration. In 
order to sustain funding for programs HHS considers key to promoting 
prevention and improving public health outcomes, Prevention Fund 
resources were used to support some activities in which funding could 
not be maintained through base resources alone.

        CENTERS FOR DISEASE CONTROL AND PREVENTION PREPAREDNESS

    Question. The budget request reduces funding for public health 
preparedness and response by $47.5 million. These reductions could 
impede communities' ability to distribute vaccines, test for biological 
and chemical agents, and coordinate disaster response. Why is 
preparedness not a priority for this Administration?
    Answer. Preparedness remains a top priority for the Administration, 
and Centers for Disease Control and Prevention (CDC) seeks to balance 
public health preparedness and capabilities to address existing health 
threats. State and local governments have leveraged over a decade of 
Federal grants to build emergency preparedness capabilities, and the 
fiscal year 2014 budget builds upon those investments by better 
targeting ongoing funding and reducing administrative burden to 
grantees.
    For example, CDC supports State and local health departments 
through the Public Health Emergency Preparedness Cooperative Agreement 
(PHEP). Massachusetts used PHEP funding to enhance its emergency 
preparedness and response capabilities, including redundant 
communication systems and planning initiatives, such as trainings, 
drills, and exercises. These preparedness and response capabilities 
were tested during the April 15th Boston Marathon bombing. Within 10 
minutes of the explosions and throughout the event, the Health and 
Homeland Alert Network provided emergent information quickly and 
consistently to all hospitals in the Commonwealth. Massachusetts 
activated its Emergency Operations Center, tested fatality and 
volunteer management procedures, and effectively used WebEOC (crisis 
information management system) to manage and track the response. This 
improved health security is a direct result of PHEP investments and 
capability improvement efforts across the Nation.
    The PHEP also supports the laboratory response network, which is an 
integrated network of State and local public health, Federal, military, 
and international laboratories that can respond quickly to 
bioterrorism, chemical terrorism and other public health emergencies.

                      STRATEGIC NATIONAL STOCKPILE

    Question. The Strategic National Stockpile (SNS), a program within 
the Centers for Disease Control (CDC), is the national repository of 
life-saving medical countermeasures that will be essential in the event 
of a large-scale public health emergency. The SNS manages the 
procurement, storage, and transportation of medical supplies, and 
monitors the shelf-life of pharmaceuticals to ensure that they are kept 
within U.S. Food and Drug Administration limits. The SNS is a vital 
part of the medical countermeasure enterprise along with the Project 
BioShield's Special Reserve Fund and the Biomedical Advanced Research 
and Development Authority (BARDA). How does the CDC plan to work with 
BARDA to maintain the products secured through Project BioShield and 
the Special Reserve Fund over the last 10 years, including planning for 
and coordinating budget needs over the next 5 years to replenish 
expired countermeasures and ensure procurement of new products as they 
become ready for licensure and the SNS?
    Answer. The Public Health Emergency Medical Countermeasures 
Enterprise (PHEMCE) is responsible for defining and prioritizing 
requirements for public health emergency Medical Countermeasures (MCMs) 
and establishing deployment and use strategies for SNS products. 
Furthermore, the PHEMCE formulates and maintains an intra-agency 5-year 
budget plan that takes into consideration requirements and lifecycle 
costs of SNS products throughout HHS. Timely procurement of new and 
replacement MCMs is necessary to achieve established PHEMCE goals and 
protect the public from health security threats. CDC coordinates with 
PHEMCE to prioritize and identify which expiring products need to be 
replaced to maintain current capabilities with available funding.

             CHILDREN'S HOSPITAL GRADUATE MEDICAL EDUCATION

    Question. The Children's Hospitals Graduate Medical Education 
Program supports the training of residents and fellows and increases 
the supply of primary care and pediatric medical and surgical 
subspecialties. Nationwide, freestanding children's hospitals have 
trained 49 percent of all pediatric residents and 51 percent of all 
pediatric specialists. Research has indicated that there is a 
significant shortage of pediatric subspecialists, resulting in children 
with serious illnesses being forced to travel long distances, or 
experience long wait periods, to see a pediatric specialist. The 
President's budget proposes to decrease funding for training pediatric 
residency positions $177 million below fiscal year 2012. Meanwhile, the 
budget proposes again to begin a new Pediatric Specialty Loan Repayment 
program to repay medical school loans. It seems illogical that we would 
allocate funding to repay loans of physicians but reduce the funding to 
train physicians. Why is training pediatric physicians not a priority 
for the Administration when there continues to be work shortages for 
pediatric physicians?
    Answer. HRSA investments in the primary care workforce include 
general pediatrics through the National Health Service Corps, the 
Primary Care Residency Expansion initiative, the Primary Care Training 
and Enhancement Program, and the Teaching Health Center GME Program.
    While the CHGME program has supported pediatric training at many 
facilities across the country, HRSA is working within the context of a 
budget that requires tough choices. A challenging budget environment 
required a closer examination of how resources are spent and difficult 
choices. The fiscal year 2014 President's budget provides $88 million 
to fund the direct medical education portion of the CHGME payment. This 
funding supports expenses that directly support the residents and 
faculty so that training in pediatric care can continue, but does not 
provide funding for the indirect graduate medical education costs.
    The proposal in the President's budget to reduce Medicare Graduate 
Medical Education payments is narrowly targeted and unlikely to 
adversely affect patient access to care. It is important to note that 
this proposal would not reduce the number of graduate medical education 
slots supported by Medicare, nor would it reduce the payments CMS makes 
to support the direct costs of graduate medical education, such as 
residents' salary and benefits. Rather, the proposal is limited to 
indirect graduate medical education (IME) payments, which support the 
higher costs associated with providing patient care in a teaching 
hospital. Independent analyses by MedPAC have concluded that IME 
payments are significantly higher than is empirically justified--the 
proposed 10 percent reduction to IME in the President's budget would 
only partially correct this discrepancy.
    Note that in addition to the reduction to IME, the President's 
budget proposal would also allow the Secretary to set new standards for 
teaching hospitals to encourage primary care and high-quality care 
delivery. These requirements will help ensure that the teaching 
hospitals train a medical workforce that can fully meet patients' needs 
in the years and decades to come.

                     AREA HEALTH EDUCATION CENTERS

    Question. The Area Health Education Centers (AHEC) program has a 
40-year record of success. Last year, AHECs trained over 476,000 
healthcare professionals and 26.4 percent of those were physicians. 
AHECs work collaboratively with 120 medical schools and 600 nursing/
allied health schools to improve the health of rural and underserved 
communities. Given AHECs critical role in developing and retaining a 
healthcare workforce to work with rural and underserved individuals and 
communities throughout the Nation, why is the AHEC program not a higher 
priority for the Department?
    Answer. The fiscal year 2014 President's budget prioritizes 
allocating Federal resources to training programs that directly 
increase the number of primary care providers. Given the lean fiscal 
climate, HRSA had to make difficult choices regarding program funding 
levels. While HRSA has made longstanding investments in these 
activities to enhance health professions training since 1972, they do 
not directly increase the supply of providers. Given that most AHEC 
programs have been in place for many years and have State and local 
support, it is anticipated that the AHEC Program grantees will continue 
much of their efforts relying on these other funding sources.

                               HEAD START

    Question. The budget proposes a $1.43 billion increase for a new 
Early Head Start/Child Care Partnership Initiative. According to the 
budget request, the program's goal is to expand access to 110,000 
infants and toddlers nationwide. I believe it is critical that these 
children not only have access to Federal care programs, but that these 
programs are high-quality early learning development programs that do 
not create duplication within early child care programs. How do we 
ensure that this program does not duplicate current services provided 
through the Early Head Start program?
    Answer. Currently fewer than 5 percent of infants and toddlers 
living below the poverty line receive Early Head Start services. As 
part of President Obama's Early Education Plan, we would expand high-
quality early learning to over 100,000 infants and toddlers through the 
Early Head Start/Child Care Partnerships. These partnerships will build 
on the strengths of Early Head Start and child care. Instead of 
duplicating efforts, HHS will purposefully use the existing 
infrastructure of child care centers and homes in partnership with 
Early Head Start to improve access and quality so that more of our 
Nation's most vulnerable infants and toddlers will receive the high 
quality, comprehensive full day full year services they need.

       TOLL-FREE DEPARTMENT OF HEALTH AND HUMAN SERVICES HOTLINES

    Question. Can you please list, by agency, the hotlines currently 
funded by the Department of Health and Human Services with the amount 
funded in fiscal year 2012 and the funding request for fiscal year 
2014?
    Answer. The Department of Health and Human Services is charged with 
protecting the health of all Americans and providing essential human 
services, and a big part of achieving our mission is making sure that 
information on HHS program services is readily available to the public. 
One of the most effective ways of making that information available is 
through the use of hotlines. The HHS Information and Hotline Directory, 
located at www.hhs.gov/about/referlst.html, lists more than 100 of the 
Department's hotlines, including the National Suicide Prevention 
Lifeline (1-800-273-TALK), the Medicare Help Line (1-800-MEDICARE), the 
Health Care Fraud Hotline (1-800-HHS-TIPS), and the Alzheimer's disease 
Education and Referral Center (1-800-438-4380). Spending on individual 
hotlines is embedded in Agency operating budgets, and is not tracked as 
a separate category.

                   COMPETITIVE VERSUS FORMULA FUNDING

    Question. We need to ensure that our entire Nation, not just 
population-rich, urban areas, is reaping the benefits of Federal 
healthcare programs. There are numerous consolidations and reductions 
in the budget that eliminate formula funded grants which will result in 
the redirection of critical Federal funds from smaller, rural States to 
urban areas. In addition, the majority of new programs proposed within 
the Department would be distributed on a competitive basis. Madam 
Secretary, how do we make certain that programs that are deemed 
competitive actually allow all States to compete on a level playing 
field?
    Answer. The Department of Health and Human Services places high 
premium on the integrity of its grants application and award process. 
The process is founded on the requirements for grant application and 
award as reflected in the Federal Grant and Cooperative Agreement Act 
of 1977, regulations, OMB's Uniform Administrative Requirements for 
Grants and Cooperative Agreements and HHS's own grants policies. The 
process is objective, transparent, and designed to foster a fair, 
``level playing field'' for competition.
    HHS generally classifies its financial assistance programs in two 
major categories of grants--competitive and formula. Formula grants are 
noncompetitive programs stemming from congressional authorizing 
legislation that directs HHS to make awards to recipients (usually 
States) who meet specific eligibility criteria based on a predetermined 
formula. HHS is required to make these awards if the recipient (usually 
a State) submits an acceptable plan or an application that meets 
statutory and regulatory eligibility, and compliance requirements for 
the program. Competitive grants are awarded on a competitive basis, 
during which HHS exercises judgment in selecting the recipient and 
determining the amount of the award. Competitive grants may be further 
categorized by purpose--such as grants for research, training, 
services, and construction. Awards are made following a fair and 
transparent competitive process. While competitive grantees are 
typically States and tribes, a wide array of applicants are eligible to 
apply, including: States, local governments, private for profit and 
nonprofit organizations, universities, and hospitals.
    HHS regulations and policies outline the key steps HHS Operating 
Divisions must take to ensure all eligible applicants have: The ability 
to find funding opportunities, understand the objective criteria under 
which their application is judged, and undergo an unbiased objective 
review based on the technical merits of their proposal. The competitive 
process for competitive grants begins with a widespread and nationwide 
funding opportunity announcement or a formal call for applications via 
the Grants.gov Web site, Catalog of Federal Domestic Assistance Web 
site, the HHS Forecast Web site, and other sources. The announcement 
gives ample time for applicants to complete and submit their 
application, thus, maximizing the number of applicants who will 
respond. It is a carefully crafted technical document which describes 
all components of a complete application as well as criteria for 
reviewing scoring each application. As needed, HHS provides technical 
assistance to applicants to ensure a full understanding of the 
application process, as well as the programmatic requirements 
associated with implementing the grant.
    Once the applications are received by HHS, they are screened for 
completeness before being subjected to an objective review process. The 
objective review process involves a thorough and consistent examination 
of applications based on an unbiased evaluation of scientific or 
technical merit. The review is performed by experts and is essential to 
ensuring selection of applications that best meet the needs of the 
program consistent with the established criteria in funding opportunity 
announcement. It provides assurance to applicants and the public that 
the evaluation and selection process was impartial and fair, thus 
leveling the playing field for all who submitted applications. Scored 
applications are rank ordered and presented to the approving official, 
who in turn will select the award-winning applications. HHS's describes 
its grant application, review and award process in its Grants Policy 
Statement and in its NIH Grants Policy Statement, both of which are 
available to the public via the Internet.

            NATIONAL INSTITUTES OF HEALTH--BRAIN INITIATIVE

    Question. The National Institutes of Health (NIH) is collaborating 
with both Federal partners and private institutions on a new initiative 
to map the human brain. This is a very exciting proposal that could 
revolutionize the field of neuroscience and advance therapies for 
numerous diseases, including Alzheimer's and Parkinson's. While I 
understand that the specifics of this proposal are still being 
developed, there was very limited information provided in the budget 
justification outlining future costs for this proposal. In fiscal year 
2014, the NIH proposes $40 million for the initiative, but there was no 
information on potential future costs or timeframe. Can you provide 
details on what the 10-year budget picture may entail, both for the 
initiative overall, and NIH's share?
    Answer. It will be imperative that cost estimates be strongly 
informed by a rigorous scientific planning process. To achieve these 
aims, NIH has charged a high level advisory group with developing such 
a plan, which is to include timetables, milestones, and cost estimates. 
As part of this process, members will consult the scientific community, 
patient advocates, and the general public to ensure that this plan is 
informed by stakeholder input. Final recommendations are anticipated in 
the summer of 2014. This plan will be publicly available and widely 
shared with the both the public and with BRAIN Initiative partners.
    Question. As the lead institution, do you foresee NIH's funding 
role being increased in future years?
    Answer. Yes. It is anticipated that as the BRAIN Initiative gains 
momentum, additional funds will be needed to support promising areas of 
research. The pace at which NIH's role might grow in future years will 
depend on the relative competing priorities and the overall 
availability of funds at that time.

                         SUPPORT CLINICAL TRIAL

    Question. The University of Alabama at Birmingham (UAB) recently 
received a letter from the Office for Human Research Protections (OHRP) 
about the SUPPORT clinical trial, a research study of premature infants 
and supplemental oxygen. In the letter, OHRP determined that UAB should 
have informed parents of an increased risk of death of their infant by 
participating in the study.
    Could you please provide the specific scientific data that existed 
at the start of the study that shows this increased risk?
    Answer. At the time the SUPPORT study began, substantial 
information was available on possible risks of increased mortality at 
lower oxygen levels. In 2003, an international group of over 30 experts 
began a collaboration around improving the understanding of neonatal 
oxygenation through well-designed clinical trials. One output of this 
nascent collaboration was a 2003 commentary in Pediatrics (Cole et al., 
Resolving Our Uncertainty About Oxygen Therapy, Pediatrics 
2003;112:1415), which discussed many aspects of what such studies 
should involve. They noted, for example, that a large sample would be 
needed to ``exclude smaller, important differences in outcomes such as 
mortality and disability to address real concerns about the safety of 
lower oxygen tensions.'' This information, and other similar concerns, 
is more fully described in the letter dated June 4, 2013, from OHRP to 
the University of Alabama, which can be found on OHRP's web site at 
http://www.hhs.gov/ohrp/detrm_letrs/YR13/jun13a.pdf.
    Question. If no such data existed, could you please explain why it 
would be scientifically credible or ethical to explain unknown risks of 
a study?
    Answer. At the time the SUPPORT study began, substantial 
information was available on possible risks of increased mortality at 
lower oxygen levels.
    Question. What is the process for appealing the findings of OHRP? 
Is there a mechanism for having an independent review of OHRP actions 
especially when they are so universally called into question as in this 
case? (Please see, for example, editorials and correspondence in the 
New England Journal of Medicine and The Hastings Center Bioethics 
Forum.)
    Answer. OHRP's compliance oversight procedures state that an 
institution or complainant may request that the Director of OHRP 
reconsider any determinations resulting from a for-cause compliance 
oversight evaluation, http://www.hhs.gov/ohrp/compliance/evaluation/
index.html. OHRP has no recollection of any such requests for 
reconsideration from an institution against which OHRP made a 
determination of noncompliance. Historically, OHRP has received such 
requests only from complainants concerned that OHRP did not agree with 
their allegations of noncompliance. If such complainants are 
unsatisfied with the response of the OHRP Director, OHRP informs them 
that they may communicate with the Principal Deputy Assistant Secretary 
for Health and the Assistant Secretary for Health and ask them to 
review the matter.

                        MEDICAL COUNTERMEASURES

    Question. Madam Secretary, given that there is little to no 
commercial market for lifesaving medical countermeasures, it is 
imperative that the government invest in the research, development, and 
procurement of these lifesaving products. What progress has the 
Department made over the past decade in terms of medical countermeasure 
procurement?
    Answer. Originally, Project BioShield's funding of $5.6 billion was 
expected to be a sufficient incentive to bring large, fully integrated 
pharmaceutical companies into the biodefense market space. 
Unfortunately, a limitation on these funds was that, with minor 
exceptions, they could not be used to pay MCM vendors until a product 
was delivered to the SNS, thereby placing the majority of risk on the 
private sector. Over the past 9 years, HHS has developed additional 
tools to foster its relationship with these partners to address this 
concern. This development has included the establishment of BARDA, the 
provision of ARD funding, and the expansion of authorities under 
Project BioShield--most notably the introduction of milestone payments 
in contracts.
    Due to the work of the past nine plus years, the Special Reserve 
Fund has resulted in HHS's creation of a robust development pipeline 
containing more than 80 medical countermeasure candidates for chemical, 
biological, radiological, and nuclear threats. This development has 
resulted in the delivery of 11 new medical countermeasures (MCMs) to 
the Strategic National Stockpile (accessible by Emergency Usage 
Authorization) and the FDA licensure of two of these MCMs.
    More recently, per recommendations from the Secretary's Review of 
the Public Health Emergency Medical Counter Measure Enterprise (PHEMCE) 
following the 2009 H1N1 pandemic, came the establishment of Centers of 
Innovation for the Advanced Development and Manufacturing (CIADM). 
These public-private partnerships allow BARDA to pair large established 
pharmaceutical companies with smaller firms. These pairings mitigate 
the scientific and manufacturing risks associated with MCM development 
by providing the necessary expertise to bring promising technologies to 
the marketplace. Additionally, the PHEMCE Review recommended the 
establishment of a MCM Strategic Investor, an independent nonprofit 
entity, which uses HHS funding to support capital investments in 
private companies with promising technologies. By providing critical 
capital in exchange for a strategic role in the management of these 
small firms, HHS is able to mitigate the financial and management risk 
that some small firms face, thereby increasing the probability of 
successful technologies and products.
    Since the development and procurement of MCMs is an inherently 
risky endeavor, BARDA remains focused on keeping sufficient incentives 
in place for its industry partners. This effort includes an HHS intra-
agency multiyear budgeting practice driven by the long-lead time 
necessary for MCM development and acquisition. Large pharmaceutical 
companies are now joining the biodefense MCM sector, using long-range 
budget planning routinely as a good business management practice. 
Venture capital investors, which fund many small biotech companies in 
the biodefense sector, may choose to support biotech companies in a 
different sector that has a better benefit-to-risk profile than 
biodefense. These circumstances support the critical need to ensure a 
long-term funding commitment is maintained with annual appropriations 
in the future. Maintaining the progress that has been achieved in the 
recent years requires Congress's continued support for these future 
activities.
    Question. How will this progress be affected by proposed funding 
cuts in fiscal year 2014?
    Answer. The fiscal year 2014 President's budget requests funding 
for BARDA across three categories: Advanced Research and Development 
(ARD), Pandemic Influenza and Project BioShield. Based on MCM 
development and procurement across multiple years and relevant PHEMCE 
priorities, BARDA determined that $250 million was needed for 
procurements in fiscal year 2014. This funding request will support the 
replenishment of modified vaccinia Ankara (MVA) vaccine (smallpox), 
vendor-managed inventory (VMI) costs for an antineutropenia cytokine 
acquisition to treat acute radiation syndrome, and a new BioShield 
award for artificial skin to treat thermal burn patients. The fiscal 
year 2014 President's budget also explicitly commits to a renewed 
multiyear funding commitment supporting the procurement of MCMs via 
Project BioShield for the Strategic National Stockpile (SNS). BARDA 
expects that at least 12 new MCMs in the present advanced development 
pipeline will mature sufficiently from fiscal year 2014-2018 for 
consideration of procurement under Project BioShield. Moving forward, 
BARDA will continue to support the development and procurement of new 
MCMs, substantially improving the Nation's preparedness.
    For future funding of BioShield, the fiscal year 2014 President's 
budget requests $250 million available until expended. HHS requests no-
year funding to maximize the flexibility and provide stability to align 
with the original BioShield appropriation.
    Question. How will the proposed reduction in funding to Project 
BioShield Special Reserve Fund and the Biomedical Advanced Research and 
Development Authority (BARDA) affect the Nation's preparedness?
    Answer. The fiscal year 2014 President's budget requests funding 
for BARDA across three categories: Advanced Research and Development 
(ARD), Pandemic Influenza and Project BioShield. Based on MCM 
development and procurement across multiple years and relevant PHEMCE 
priorities, BARDA determined that $250 million was needed for 
procurements in fiscal year 2014. This funding request will support the 
replenishment of modified vaccinia Ankara (MVA) vaccine (smallpox), 
vendor-managed inventory (VMI) costs for an anti-neutropenia cytokine 
acquisition to treat acute radiation syndrome, and a new BioShield 
award for artificial skin to treat thermal burn patients. The fiscal 
year 2014 President's budget also explicitly commits to a renewed 
multiyear funding commitment supporting the procurement of MCMs via 
Project BioShield for the Strategic National Stockpile (SNS). BARDA 
expects that at least 12 new MCMs in the present advanced development 
pipeline will mature sufficiently from fiscal year 2014-2018 for 
consideration of procurement under Project BioShield. Moving forward, 
BARDA will continue to support the development and procurement of new 
MCMs, substantially improving the Nation's preparedness.
    For future funding of BioShield, the fiscal year 2014 President's 
budget requests $250 million available until expended. HHS requests no-
year funding to maximize the flexibility and provide stability to align 
with the original BioShield appropriation.
    Question. It is my understanding that the $250 million request for 
the BioShield Special Reserve Fund was based on BARDA's assessment of 
which products will be ready for procurement in 2014. To better 
understand this, please provide details on the Department's 5-year 
biodefense spend plan--including the National Institute of Allergy and 
Infectious Diseases, BARDA's advanced development program, Special 
Reserve Fund procurements and the Strategic National Stockpile's 
maintenance.
    Answer. The Pandemic and All-Hazards Preparedness Reauthorization 
Act of 2013 (PAHPRA) requires HHS to produce a multiyear budget for 
medical countermeasure programs across the Department. Agencies within 
HHS are currently collaborating to compile and submit budget data for 
investments for fiscal years 2013-2018 consistent with this 
requirement.

   TEMPORARY ASSISTANCE FOR NEEDY FAMILIES-WORKFORCE INVESTMENT ACT 
                             COLLABORATION

    Question. In 2012, the Government Accountability Office released a 
report that stated, ``HHS is collaborating with Labor to conduct an 
evaluation to better understand policies, practices, and service 
delivery strategies that lead to better alignment of the Workforce 
Investment Act (WIA) and Temporary Assistance for Needy Families 
(TANF).'' Can you update the Subcommittee on the findings so far and 
when you expect the report to be released? In particular, please cite 
examples of State and local practices that may be models for other 
areas to follow and how WIA-TANF duplication can be reduced?
    Answer. The ACF project underway to analyze coordination between 
Temporary Assistance to Needy Families (TANF) programs and services 
funded by the Workforce Investment Act (WIA) is a descriptive, 
qualitative study of the practices in place in 11 sites in 8 States 
that were identified as having a moderate to high degree of 
coordination between TANF and WIA programs. Based on a preliminary 
analysis, the study has begun to identify practices that are in use to 
varying degrees across the sites. The practices are suggestive of 
strategies that may increase coordination and reduce the duplication of 
services between the TANF and WIA programs. However, given the scope of 
the study the findings cannot be conclusive about which practices lead 
to the best results. Data from field observations are still being 
analyzed. ACF expects to release a report in early 2014.
    The following are practices that appear to promote coordination of 
common services across the two programs:
  --Possible benefits of co-location of TANF and WIA services: Shared 
        physical space with a common entry may support communication 
        and shared knowledge across staff as well as integration of job 
        search, job readiness, and job development services.
  --Possible benefits when the same entity is both the one-stop 
        operator and the TANF employment services provider: 
        Coordination between the TANF and WIA programs was supported in 
        existing environments of service coordination, specifically 
        where WIA and Wagner-Peyser employment services are already 
        integrated within a one-stop.
  --Administrative and staffing practices: Integrating management 
        structures over both programs within the one-stop and aligning 
        job classifications and pay scales across the two programs may 
        improve coordination. In addition, a couple of sites use 
        specialized positions--such as a TANF mentor--at the local 
        level to support knowledge across programs.
  --Many of the sites either conducted a systematic series of trainings 
        during the transition to integrate services or conduct ongoing 
        cross-training of all staff to build rapport across staff and 
        lessen anxiety of the organizational changes. Embedded within 
        this training is a shared focus on employment across the two 
        programs.
  --Sites have also adopted shared procedures and tools. For example, 
        some sites used prerequisites for training and the selection of 
        training and education programs from eligible provider lists 
        created in the WIA program to guide training for TANF 
        recipients. Sites also link and use common data across the 
        programs.
  --Specific to the delivery of services common to customers across 
        both programs, sites have created shared responsibility for 
        core services in one-stops. In a few sites, both WIA and TANF 
        staff help with entry processes, staffing resource rooms, and 
        facilitating job readiness workshops. Some sites have gone 
        farther to integrate staff functions such as career counseling 
        and job development and placement to serve customers across the 
        two programs.
                                 ______
                                 
             Questions Submitted by Senator Lamar Alexander

               PATIENT PROTECTION AND AFFORDABLE CARE ACT

    Question. Have you done any analysis to determine the cumulative 
impact upon premiums of all the new mandates, taxes, and fees being 
imposed upon health plans operating in the new health insurance 
exchanges? If so, please provide the total cost. If not, please explain 
why.
    Answer. We do not have an aggregate estimate of the impact on 
premiums at this time. It will be up to issuers to determine how to set 
their premiums. We expect that the marketplace will be competitive, and 
we will evaluate premium information once we receive the qualified 
health plan certification packages from issuers.
    Question. Please detail your legal authority to use Prevention and 
Public Health funds to pay for implementation of the new health law, 
including the new navigator grant program and implementation of the 
health insurance exchanges.
    Answer. The purpose of the Prevention and Public Health Fund is to 
provide for expanded and sustained national investment in prevention 
and public health programs to improve health and help restrain the rate 
of growth in private and public sector healthcare costs. In fiscal year 
2013 CMS will invest resources from the Prevention Fund to assist 
Americans in gaining affordable healthcare coverage which aligns with 
the purpose of the Prevention Fund which may be used for prevention, 
wellness, and public health activities. Specific activities will 
include consumer engagement and education, eligibility support 
including support for appeals, assistance with enrollment, and the 
Navigator program to help individuals understand options available and 
enroll in health insurance. Implementing the health insurance 
marketplace is the Administration's top public health activity which 
has a large potential to improve prevention in the next year by 
enabling individuals to enroll in coverage through private health 
insurance and have greater access to primary and preventive care. 
Increasing access to care and in particular preventive services is a 
component of our national efforts to restrain the cost of healthcare 
and ensure more Americans can lead healthy lives, which is a key intent 
of the Prevention Fund.
    Question. In your agency's recent budget, the outlays for the 
Federal Pre-existing Condition Insurance Program are projected to be 
greater than the amount of money left in the fund. Please detail how 
your agency will fill this shortfall so that those enrolled do not lose 
access to insurance before 2014.
    Answer. CMS has been monitoring PCIP enrollment and spending 
closely and has made necessary adjustments to the program to ensure 
responsible management of the one-time appropriation of $5 billion. To 
date, CMS has made program modifications to control spending, including 
a change in provider networks used by the federally-operated PCIP, 
reducing both its negotiated and out-of-network payment rate for 
providers; negotiation of additional discounts on reimbursement rates 
with targeted hospitals that were treating a disproportionate number of 
PCIP enrollees; a change in coverage of specialty drugs to require 
dispensing by only those pharmacies and providers that were most cost 
effective; and a consolidation of three benefit plan options into one, 
increasing the maximum out-of-pocket limit from $4,000 to $6,250 for 
in-network services.
    CMS published an interim final rule that sets the facility and 
provider payments rates in the federally operated PCIP for most claims 
at 100 percent of Medicare rates and prohibits balance billing from 
facilities and providers who accept claims payments from the federally 
operated PCIP to protect PCIP enrollees from high out-of-pocket costs, 
effective June 15, 2013. CMS also finalized a revised contract terms 
with the State-operated PCIP to work within a fixed contract amount for 
the remaining months of the program. CMS is making these changes to 
maintain coverage for the over 100,000 members with pre-existing 
conditions through December 31, 2013 when people enrolled in PCIP can 
obtain coverage from a qualified health plan offered through the health 
insurance marketplaces beginning on January 1, 2014.
    Question. When are insurance plans due to the Health Insurance 
Oversight System (HIOS)? And when are rate increases made public?
    Answer. HIOS began accepting submissions on April 1, 2013 and plans 
to continue accepting submissions until April 30, 2013. On October 1, 
2013, individuals and families will be able to log on to Healthcare.gov 
to request an eligibility determination and view a variety of plans 
available to them and see premium quotes for their unique situation 
based on their preferences. Premiums charged to consumers will vary for 
a variety of reasons including the type of plan chosen (individual or 
family), the level of coverage chosen (i.e. silver, gold), any premium 
tax credits that the consumer may be eligible for and any other 
allowable rating factor such as age, geography, and smoking status.
    Question. For States in which the Federal Government is responsible 
for plan management, when will the rates submitted be made public? And 
what will the health insurance plans in those States look like?
    Answer. On October 1, 2013, individuals and families in federally 
facilitated Marketplace States will be able to log on to Healthcare.gov 
to request an eligibility determination and view a variety of plans 
available to them and see premium quotes for their unique situation 
based on their preferences. Premiums charged to consumers will vary for 
a variety of reasons including the type of plan chosen (individual or 
family), the level of coverage chosen (i.e. silver, gold), any premium 
tax credits that the consumer may be eligible for and any other 
allowable rating factor such as age, geography and smoking status. 
Plans offered through the federally facilitated marketplaces will 
provide essential health benefits, will meet specified levels of 
coverage (e.g. bronze, silver, gold, platinum and catastrophic), and 
provide protection from high out of pocket costs through the 
limitations on out of pocket expenses. While all plans will provide 
these basic benefits and protections, issuers were given flexibility to 
design quality plans and we will know more about the exact plan 
offerings once the federally facilitated marketplace completes 
certification of plans later this year.
    Question. Will you accept public comments on qualified health 
plans? If so, how long will the comment period be open? If not, please 
explain why.
    Answer. While the certification of QHPs is not open to public 
comment due to proprietary and market constraints, the regulations that 
defined the criteria for QHPs were open to public comment for 108 days 
and received over 2,000 comments. All certified QHPs will provide 
essential health benefits, follow established limits on cost-sharing 
(like deductibles, copayments, and out-of-pocket maximum amounts), and 
meet other requirements as detailed in the marketplace establishment 
regulation.

         MEDICARE DURABLE MEDICAL EQUIPMENT COMPETITIVE BIDDING

    Question. In the fiscal year 2014 budget request, you estimate that 
the Medicare Durable Medical Equipment (DME) Competitive Bidding 
program is expected to save the government $25.8 billion over 10 years 
and to save beneficiaries $17.2 billion over 10 years. This savings may 
not be realized if there are problems with implementing the program, as 
appears to be the case with the State of Tennessee. Medicare awarded 
contracts to DME suppliers not licensed in Tennessee to serve Medicare 
beneficiaries in Tennessee, despite a clear requirement in the CMS 
``Request for Bids'' that, ``every supplier location is responsible for 
having all applicable license(s) for each state in which it provides 
services.''
    When preparing for the Medicare Durable Medical Equipment 
Competitive Bidding Program Round 2 bidding, did the National Supplier 
Clearinghouse provide incorrect information to CMS regarding the 
Tennessee license requirements for durable medical equipment suppliers 
when CMS?
    Answer. In preparing for Round 2 and the national mail-order 
competition, the National Supplier Clearinghouse (NSC) conducted an 
intensive and exhaustive process to verify licensure requirements 
nationwide and works regularly with the States to maintain the latest 
requirements and interpretations. State requirements can be complex and 
subject to change or re-interpretation, so this task can be 
challenging. The NSC also provided an upgraded licensure guide on its 
Web site to assist suppliers in determining applicable State licensure 
requirements. The NSC's licensure database reflected accurate but 
incomplete information for Tennessee during the time of bidding.
    Question. What procedures did CMS, or the National Supplier 
Clearinghouse, use to verify that suppliers bidding for contracts to 
supply Medicare beneficiaries in the State of Tennessee were licensed 
by the State to do business in Tennessee?
    Answer. Each supplier is responsible for obtaining the correct 
licensure and providing licensure documentation to the NSC. CMS 
conducts an in-depth review of each bidder to determine its licensure 
status. This process involves checking bidder enrollment records and, 
if necessary, seeking additional information from bidders and verifying 
information directly with the State.
    Question. If the National Supplier Clearinghouse provided incorrect 
information regarding Tennessee requirements, are there any penalties 
CMS can impose? If so, will CMS enforce those penalties?
    Answer. As stated earlier, State licensure can be complex and 
subject to change or re-interpretation. The NSC works diligently to 
maintain a guide of the most complete and current State licensure 
requirements through activities such as quarterly outreach to State 
licensing agencies. CMS will remain mindful of the importance of 
accuracy and completeness as well as the challenging nature of this 
work in evaluating the NSC's performance.
    Question. To submit a Round 2 bid, was it a requirement to have a 
State license in the State in which the company submitted a bid to 
supply products?
    Answer. The request for bids requires bidders to meet all State 
licensure requirements for the applicable product categories and for 
every State in a competitive bidding area. However, each supplier 
location is not required to have licenses for every State in the 
competitive bidding area as long as each State has a bidding location 
licensed for the product category. Suppliers are evaluated based on 
State licensure requirements in place at the time of bidding.
    Question. How many Medicare competitive bid contract winners for 
the State of Tennessee are actually not licensed by the State? Please 
itemize by company and which contracts they won by CBA and product 
category.
    Answer. CMS is in the process of evaluating the situation and does 
not have a final count of suppliers at this time. Once CMS completes 
the investigation, CMS will take corrective action as appropriate, 
including potentially voiding the contracts.
    Question. Will there be enough licensed companies able to serve 
Medicare beneficiaries when Medicare switches to competitive bid 
winners on July 1 if the unlicensed companies decline to get a license?
    Answer. Yes. Even assuming corrective action is taken on all the 
suppliers CMS is currently investigating, given the large number of 
remaining suppliers, plus grandfathered suppliers, CMS is confident 
that beneficiaries will continue to have access to a wide variety of 
quality items and services in the State. In addition, CMS may consider 
making new awards to qualified and licensed suppliers in the future. 
CMS will continue to examine this issue and closely monitor the 
situation in the State.
    Question. What is your plan of action to address this State license 
issue and ensure Medicare beneficiaries in Tennessee are able to get 
durable medical supplies when the competitive bidding program is 
enforced starting July 1?
    Answer. Even assuming corrective action is taken on all the 
suppliers CMS is currently investigating, given the large number of 
remaining suppliers, plus grandfathered suppliers, CMS is confident 
that beneficiaries will continue to have access to a wide variety of 
quality items and services in the State on July 1. In addition, CMS may 
consider making new awards to qualified and licensed suppliers in the 
future. CMS will continue to examine this issue and closely monitor the 
situation in the State.
    Question. If there are not enough companies licensed by July 1 to 
fulfill demand, how long will it take to assign new companies contracts 
to fulfill need? How will you determine who wins that business?
    Answer. CMS will award additional contracts if necessary using the 
process established through regulations. This process requires offering 
contracts to qualified suppliers with bids above the winning range 
starting with the supplier that had the lowest composite bid above the 
pivotal bid for the applicable product category.
    Question. What burden are you placing on the State of Tennessee to 
rely on them to go through the licensing process for multiple suppliers 
on a rushed timeframe to make the July 1 deadline?
    Answer. CMS has been in communication with the State of Tennessee 
regarding this issue to ensure that CMS and the contract suppliers are 
responsive to Tennessee's licensure requirements. Suppliers are 
responsible for obtaining the appropriate State licenses and CMS is 
investigating suppliers that may not have had the correct State license 
in Tennessee to determine if corrective action is necessary.
    Question. Are companies that bid without a license subject to 
penalties or other consequences?
    Answer. If a contract supplier does not have all applicable State 
licenses, CMS may take one of many corrective actions, including 
voiding their contract. Each supplier is responsible for obtaining the 
appropriate State license.
    Question. Are there any other States with contract winners that do 
not have a State license? Please list out the States and the number of 
winners not licensed by the State. Please itemize by company and which 
contracts they won by CBA and product category.
    Answer. State licensure requirements change periodically and can 
sometimes be re-interpreted by the State. CMS will investigate any 
issues raised regarding contract suppliers that may not have the 
correct licensure.
    Question. Suppliers properly licensed by the State of Tennessee may 
have faced unfair competition from unlicensed businesses that were 
awarded contracts. Please explain why you think the competition for 
Tennessee was fair and reasonable in light of this mistake.
    Answer. All bidders were required to meet supplier standards, 
financial standards, quality standards, accreditation requirements, 
bona fide bid requirements, and other rules. CMS is investigating 
suppliers in Tennessee that may not have the appropriate license and, 
if needed, may consider offering additional contracts to suppliers who 
hold the appropriate State licenses.

                          SUBCOMMITTEE RECESS

    Senator Moran. And at this time, we will conclude the 
hearing of this Labor-HHS Subcommittee of the Senate 
Appropriations Committee.
    The record will stay open for 7 days for other statements 
or questions for the record.
    Thank you very much. Thank you, Senator Merkley.
    [Whereupon, at 12:05 p.m., Wednesday, April 24, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
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