    [Senate Hearing 114-156]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-156

                         PRESIDENT'S FISCAL YEAR 2016
                             HEALTH CARE PROPOSALS

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

                                    HEARING

                                   before the

                              COMMITTEE ON FINANCE
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                FEBRUARY 4, 2015

                                   __________

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                Printed for the use of the Committee on Finance
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                              COMMITTEE ON FINANCE

                         ORRIN G. HATCH, Utah, Chairman

    CHUCK GRASSLEY, Iowa                 RON WYDEN, Oregon
    MIKE CRAPO, Idaho                    CHARLES E. SCHUMER, New York
    PAT ROBERTS, Kansas                  DEBBIE STABENOW, Michigan
    MICHAEL B. ENZI, Wyoming             MARIA CANTWELL, Washington
    JOHN CORNYN, Texas                   BILL NELSON, Florida
    JOHN THUNE, South Dakota             ROBERT MENENDEZ, New Jersey
    RICHARD BURR, North Carolina         THOMAS R. CARPER, Delaware
    JOHNNY ISAKSON, Georgia              BENJAMIN L. CARDIN, Maryland
    ROB PORTMAN, Ohio                    SHERROD BROWN, Ohio
    PATRICK J. TOOMEY, Pennsylvania      MICHAEL F. BENNET, Colorado
    DANIEL COATS, Indiana                ROBERT P. CASEY, Jr., Pennsylvania
    DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
    TIM SCOTT, South Carolina

                         Chris Campbell, Staff Director

                  Joshua Sheinkman, Democratic Staff Director

                                      (ii)

                                C O N T E N T S

                                   __________

                               OPENING STATEMENTS

                                                                       Page
    Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman,
      Committee on Finance...........................................     1
    Wyden, Hon. Ron, a U.S. Senator from Oregon......................     3

                             ADMINISTRATION WITNESS

    Burwell, Hon. Sylvia Mathews, Secretary, Department of Health and
      Human Services, Washington, DC.................................     6

                   ALPHABETICAL LISTING AND APPENDIX MATERIAL

    Brown, Hon. Sherrod:
        Letters from State Governors in support of the CHIP Program..    51
    Burwell, Hon. Sylvia Mathews:
        Testimony....................................................     6
        Prepared statement...........................................   171
        Responses to questions from committee members................   177
    Cantwell, Hon. Maria:
        ``U.S. to Overhaul Medicare Payments to Doctors, Hospitals,''
          by Alexander Wayne, Bloomberg, January 26, 2015............   256
    Hatch, Hon. Orrin G.:
        Opening statement............................................     1
        Prepared statement...........................................   257
    Wyden, Hon. Ron:
        Opening statement............................................     3
        Prepared statement...........................................   259

                                 Communication

    Association for Community Affiliated Plans (ACAP)................   261

                                     (iii)

                         PRESIDENT'S FISCAL YEAR 2016
                             HEALTH CARE PROPOSALS

                                  ----------

                          WEDNESDAY, FEBRUARY 4, 2015

                                           U.S. Senate,
                                          Committee on Finance,
                                                        Washington, DC.
        The hearing was convened, pursuant to notice, at 10:04
    a.m., in room SD-215, Dirksen Senate Office Building, Hon.
    Orrin G. Hatch (chairman of the committee) presiding.
        Present: Senators Grassley, Crapo, Roberts, Cornyn, Thune,
    Burr, Isakson, Portman, Toomey, Coats, Heller, Scott, Wyden,
    Schumer, Stabenow, Cantwell, Nelson, Menendez, Carper, Cardin,
    Brown, Bennet, Casey, and Warner.
        Also present: Republican Staff: Chris Campbell, Staff
    Director; Kimberly Brandt, Chief Healthcare Investigative
    Counsel; and Jay Khosla, Chief Health Counsel and Policy
    Director. Democratic Staff: Joshua Sheinkman, Staff Director;
    Jocelyn Moore, Deputy Staff Director; Michael Evans, General
    Counsel; Laura Berntsen, Senior Advisor for Health and Human
    Services; Elizabeth Jurinka, Chief Health Advisor; Matt Kazan,
    Health Policy Advisor; and Juan Machado, Professional Staff
    Member.

     OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
                  UTAH, CHAIRMAN, COMMITTEE ON FINANCE

        The Chairman. The committee will come to order.
        Good morning. It is a pleasure to welcome everyone to
    today's hearing on the fiscal year 2016 budget for the
    Department of Health and Human Services, HHS.
        I want to thank you, Secretary Burwell, for being here with
    us today. This is your first hearing before the committee since
    being confirmed, so welcome back in your official capacity. I
    told you when we were talking at your confirmation hearing that
    the job you now have would be a thankless one and that you were
    undertaking an enormous responsibility. At that time we also
    discussed three main areas that I encouraged you to focus on
    during your time at HHS: responsiveness, accountability, and
    independence.
        I would like to talk more about each of these areas today.
    Let us start with responsiveness. During your confirmation
    hearing, I raised the importance of being responsive to
    Congress, and to this committee in particular. You assured me
    that this would be a top priority of yours as well and that
    under your watch we would see a marked improvement.
        In the past year, this committee has written at least 20
    letters to HHS or CMS, asking questions about serious issues
    such as fraud prevention, hacking of the HealthCare.gov
    website, Medicaid expansion, and many others.
        I understand that we have now received answers to nearly
    every one of those outstanding letters just in time for your
    appearance here today, with the last two responses coming just
    last week. This is a great improvement over what it has been in
    the past, and I appreciate the efforts being made to provide
    these answers to us.
        However, I hope that it will not require calling you to
    testify before the committee to ensure more timely responses
    going forward. If it does, then I suppose we will have to look
    forward to seeing you for a hearing every 30 to 60 days, and
    you do not want that. And they get worse over time! [Laughter.]
        Thank you for continuing to make this a priority. Good
    communication between HHS and this committee is paramount to a
    good working relationship, and you understand that, I know
    that.
        Now, let us talk about accountability. One of the big
    issues we discussed at your confirmation hearing was the
    absolute need for fiscal accountability given the huge breadth
    and scope of HHS's programs and budget. Overseeing them
    requires constant vigilance and effective management.
        When looking at the size of the budget for HHS for this
    coming fiscal year, we see just how big your job really is. In
    fact, the expression ``too big to fail'' does not really apply
    here, as the HHS budget is so big one would argue that it is
    destined to fail.
        The HHS budget for fiscal year 2016 is just over a trillion
    dollars. In real terms, if HHS were a country and its budget
    was its GDP, it would be the 16th-largest economy in the whole
    world. I think you have that chart over there that shows, where
    the red arrow is, you would be the 16th-largest economy in the
    world.
        To put it in a more American context, the total budget of
    HHS is more than double that of Walmart and five times more
    than Apple. My concern is that the savings and efficiencies in
    the overall HHS budget are very small when compared to the
    overall spending. The President's proposed budget would save
    just under $250 billion over the next decade, which sounds like
    a lot, but that is only 3.8 percent of total Medicare and
    Medicaid spending.
        More accountability is critical here to ensure that these
    programs have sufficient resources to continue to provide
    benefits for years to come. On the policy front, the
    administration needs to be up-front with Congress about their
    contingency plans if the King v. Burwell case is not decided in
    its favor.
        Depending upon what happens in the Supreme Court in late
    June, HHS could have to figure out how to provide services for
    millions of Americans who are currently receiving tax subsidies
    that enable them to pay for health insurance. I can only assume
    that the agency has a plan in place for dealing with this
    possibility. Now, Secretary Burwell, I hope you will share that
    with us today.
        That brings me to independence. For some time now, I have
    been concerned about the amount of influence HHS and the
    administration have over the operations and policies impacting
    the entitlement programs, certainly those run by CMS.
        The budget released this week indicates that spending on
    just Medicare and Medicaid is expected to exceed $11 trillion
    over the next decade. In fact, CMS accounts for 35 percent of
    the total HHS budget. These are astonishing numbers. They also
    reinforce for me something that I have long believed.
        It is time to start talking about making CMS an independent
    agency apart from HHS. Nearly 20 years ago, Congress passed,
    and the President signed into law, the Social Security
    Independence and Program Improvements Act of 1994. That law
    separated the Social Security Administration from HHS and made
    it an independent agency.
        At that time, SSA was the largest operating division within
    HHS and accounted for about 51 percent of HHS's total staff,
    and more than half of HHS's total annual budget. Now, I intend
    to introduce legislation to move CMS out of HHS. Whether or not
    CMS becomes an independent agency is something to consider
    going forward, but the accountability and transparency problems
    we currently see in CMS programs cannot wait.
        I hope that we can work together in the coming months on
    both the Affordable Care Act and entitlement issues to create
    situations and solutions that work for all Americans.
        Finally, I want to note that, while there is much in the
    President's budget with which I disagree, there are areas where
    I think we can find common ground. For example, I appreciate
    the provision in the budget that addresses the issue of over-
    reliance on congregate care facilities or group homes for
    children and youth in foster care. For years I have been
    working to call attention to the deplorable conditions in many
    of these group homes.
        Recent research indicates that these group homes are
    unsafe, expensive, and too often contribute to profoundly
    negative outcomes for the children and youth who are placed in
    them. So I look forward to working with the administration to
    end the over-reliance on group homes.
        Secretary Burwell, I look forward to your testimony today
    and to working with you to ensure that our most vulnerable
    citizens get the care they deserve. And I do appreciate how
    difficult your job is and appreciate the openness with which
    you have considered it with Senator Wyden, myself, and others
    on this committee.
        [The prepared statement of Chairman Hatch appears in the
    appendix.]
        The Chairman. Senator Wyden?

                 OPENING STATEMENT OF HON. RON WYDEN,
                       A U.S. SENATOR FROM OREGON

        Senator Wyden. Thank you, Mr. Chairman.
        Secretary Burwell, let me start by saying that my
    assessment is that you have set a new bar for Cabinet
    Secretaries in terms of reaching out and trying to be
    responsive. I hear about it with respect to citizens.
    Apparently, you are in virtually every corner of the country
    and taking your family. I can only imagine the challenge of
    that.
        You are getting back to Senators. I hear Senators of both
    political parties, conservative, liberal, saying the Secretary
    actually got back to me. I mean, it is such a quaint idea that
    somebody would actually do that. Also, I understand you have
    discussions either coming or already begun with Governors. My
    sense is that you have really set a new bar in terms of
    reaching out, and it is obviously very, very welcome.
        Now, too many people in America, including millions in our
    country and in my home State, feel like they are falling
    behind. They just feel like, as the economy picks up steam,
    they are not getting ahead. It is our job to make sure that
    does not happen, and the Finance Committee has played a big
    role in this. It is almost like we are having a triple header
    this week. We had Mr. Koskinen in yesterday, you, and then
    Secretary Lew tomorrow.
        The budget obviously articulates the priorities of today,
    but it also talks a lot about what our priorities are for the
    future, and we are looking forward to having you lay out how
    the proposal would strengthen Health and Human Services
    programs, promote economic mobility, and assist our middle-
    class families.
        I do want to take a minute just to talk about where I
    believe American health care has been, and then talk briefly
    about where it is going. This year marks the 50th anniversary
    of Medicare and Medicaid, and a lot has taken place since those
    programs were created. The Congress came together to create the
    CHIP program, the program, of course, for children, and it has
    reauthorized it three times. The Congress has improved and
    expanded Medicare and Medicaid.
        The Affordable Care Act makes access to high-quality care
    wider than ever. What I think is particularly important is, it
    has signaled that America is not willing to go back to the days
    when health care was for the healthy and wealthy. That is the
    way it was when you could go out and clobber the people with a
    preexisting condition.
        Obviously, the job is not done, and so there is a twofold
    challenge, in my view: first, protect the progress that has
    been made, and second, clear the way for more progress in the
    future. For Medicare, that means guaranteeing that the
    program's benefits fully meet the needs of this era's seniors,
    and the demands on Medicare are clearly very different than
    they were 50 years ago.
        The big-ticket Medicare costs of 2015 are no longer things
    like kidney stones and broken ankles. They are chronic
    conditions like cancer, diabetes, and Alzheimer's, and those
    conditions are tougher and they are more costly to treat.
        The HHS budget, in my view, begins to acknowledge that
    reality, but clearly there is a lot more to do. Treating
    chronic disease, in my view, is the future of the Medicare
    program. So what is needed is a road map to efficient and
    effective care for chronic disease that boldly moves away from
    the outdated fee-for-service model. Patients and providers told
    this committee last summer about the need to address chronic
    care in a different way. There is bipartisan support for this
    in Congress, and I look forward to working with you and the
    administration to make that a reality.
        Now, I was also thinking about the announcement last week
    about precision medicine, because this too helps to provide
    something of a road map for the future. Medical professionals
    understand that a treatment will often affect Susan in a
    different way than it affects George. And with the right
    research, it is going to be possible to learn what drives those
    differences and how to tailor treatments to fit an individual
    patient's needs.
        The precision medicine initiative that is in the
    President's budget follows an innovative test program that was
    really created in this committee. It was part of our
    discussions. I do not see Senator Carper here. He has been very
    interested in that issue. But we have another big challenge,
    and the next step will be to design a payment system for this
    innovative field, precision medicine, that can do so much in
    the future for patients and for taxpayers.
        The President's budget proposal also continues progress
    made by the Affordable Care Act to reward the quality of care
    rather than the quantity. The Congress can do even more by
    passing bipartisan, bicameral legislation to improve the way
    Medicare pays physicians, and Chairman Hatch obviously had a
    lot to do with putting that proposal together.
        The President's proposal also takes a vital step by
    including 4 years of funding for CHIP. There are more than 10
    million kids in America who get health insurance through CHIP,
    including more than 75,000 in Oregon. A child who starts life
    with quality health insurance has a better shot at a successful
    middle-class life than a child who does not. Renewing CHIP, in
    my view, is a no-brainer. Families and State agencies across
    the country are waiting for the Congress to step up and act on
    CHIP.
        There are also steps that Congress can take to help
    guarantee that our health programs remain strong for
    generations to come. They are lifelines for countless
    Americans, and, as a result, millions of families will never
    have to choose between paying for a loved one's care and
    sending kids to college. Millions of Americans will grow up
    with access to quality care that keeps them healthy and out of
    the emergency rooms whenever possible.
        Of course it is important to remember that the Department
    of Health and Human Services does a lot more than oversee
    Medicare, Medicaid, and CHIP. No department plays a bigger role
    in America's safety net. This committee has a long history of
    working on a bipartisan basis on policies to strengthen our
    Federal child welfare programs for vulnerable kids.
        Just 5 months ago, the Congress enacted the Preventing Sex
    Trafficking and Strengthening Families Act. The Department is
    helping turn this bill from a piece of paper signed by the
    President into new tools that will help States move more
    vulnerable kids out of harm's way and into safer and permanent
    homes.
        The President's budget proposal shows that it is possible
    to build on this momentum by expanding programs that keep kids
    and families together and healthy, with a special focus on
    getting involved early with vulnerable families. This includes
    programs like home visiting, which is especially important for
    first-time parents.
        So, in effect, we are talking about multi-generational
    supports, and those can prevent the long-term costs associated
    with homelessness, abuse, neglect, and foster care. So we are
    talking about the people who are trying to get ahead in a tough
    economy and have just not seen the recovery make it to their
    neighborhood.
        Thank you for joining us here today. We have a lot of
    opportunities, in my view, for working in a bipartisan fashion,
    and I will have some questions, but I do want to wrap this up
    by saying that, having been in public life and having worked
    with a number of Secretaries, I think, at the end of the day,
    there can be big differences of opinion. But the only way you
    really make progress is by reaching out, and you have surely
    met that test. Thank you. I look forward to working with you.
        Thank you, Chairman Hatch.
        The Chairman. Well, thank you, Senator.
        [The prepared statement of Senator Wyden appears in the
    appendix.]
        The Chairman. Our witness today is Department of Health and
    Human Services Secretary Sylvia Mathews Burwell. Secretary
    Burwell has been leading the Department of Health and Human
    Services since June of 2014. Ms. Burwell has a long history of
    public-sector service, including most recently serving as
    Director of the Office of Management and Budget under President
    Obama.
        In the Clinton administration, Ms. Burwell served as Deputy
    Director of OMB, Deputy Chief of Staff to the President, Chief
    of Staff to the Treasury Secretary, and Staff Director at the
    National Economic Council, all of which are very important
    positions. She also has extensive private-sector experience,
    including serving as the president of the Walmart Foundation,
    and before that as the president of the Global Development
    Program at the Bill and Melinda Gates Foundation.
        Ms. Burwell received her AB from Harvard University and a
    BA from Oxford University, where she was a Rhodes Scholar. So
    we are honored to have you here and want to thank you for being
    here today. You can proceed with your opening statement.

    STATEMENT OF HON. SYLVIA MATHEWS BURWELL, SECRETARY, DEPARTMENT
              OF HEALTH AND HUMAN SERVICES, WASHINGTON, DC

        Secretary Burwell. Thank you. Thank you, Chairman Hatch,
    Ranking Member Wyden, and members of the committee, for having
    me here today. I want to thank you for the opportunity to
    discuss the President's budget for Health and Human Services.
        I believe firmly that we all share common interests, and
    therefore we have a number of opportunities to find common
    ground, from preventing and treating substance abuse, to
    advancing the promise of precision medicine, to building an
    innovation economy and strengthening the American middle class.
        The budget before you makes critical investments in health
    care, science, innovation, and human services. It maintains our
    responsible stewardship of the taxpayer dollar. It strengthens
    our work, together with the Congress, to prepare our Nation for
    key challenges at home and abroad.
        For HHS, it proposes $83.8 billion in discretionary budget
    authority, and this is a $4.8-billion increase that will allow
    our Department to deliver impact today and lay a strong
    foundation for our Nation for tomorrow. It is a fiscally
    responsible budget which, in tandem with accompanying
    legislative proposals, would save taxpayers an estimated $250
    billion over the next decade.
        In addition, it is projected to continue slowing the growth
    in Medicare. It could secure $423 billion in Medicare savings
    as we build a better, smarter health delivery system. In terms
    of providing all Americans with access to quality, affordable
    health care, it builds upon our historic progress in reducing
    the number of uninsured and improving coverage for families who
    already had insurance. It extends CHIP for 4 years, it covers
    newly eligible adults in the 28 States plus DC that have
    expanded Medicaid, and it improves access to health care for
    Native Americans.
        To support communities throughout the country, including
    under-served communities, it invests $4.2 billion in health
    centers and $14.2 billion to bolster our Nation's health care
    workforce. It supports more than 15,000 National Health Service
    Corps clinicians, serving nearly 60 million patients in high-
    need areas. With the funding streams ending in 2016, millions
    stand to lose primary care services and providers if we are not
    able to take action.
        To advance our common interest in building a better,
    smarter, and healthier delivery system, it supports
    improvements to the way care is delivered, providers are paid,
    and information is distributed. On an issue for which there is
    bipartisan agreement, it replaces Medicare's flawed Sustainable
    Growth Rate formula and supports a long-term policy solution to
    fix the SGR.
        The administration supports the type of bipartisan,
    bicameral efforts the Congress undertook last year. To advance
    our shared vision for leading the world in science and
    innovation, it increases funding for NIH by $1 billion to
    advance biomedical research and behavioral research, among
    other priorities.
        In addition, it invests $215 million for the Precision
    Medicine Initiative, a new cross-departmental effort focused on
    developing treatments, diagnostics, and preventative strategies
    tailored to the individual genetic characteristics of
    individual patients.
        To further our common interests in providing Americans with
    the building blocks of healthy and productive lives, this
    budget outlines an ambitious plan to make affordable, quality
    child care available to working and middle-class families with
    young children. It supports evidence-based interventions to
    protect youth in foster care, and it invests to help older
    Americans live with dignity in their homes and communities, and
    to protect them from identity theft.
        To keep Americans healthy, the budget strengthens our
    public health infrastructure, with $975 million for domestic
    and international preparedness, including critical funds to
    implement the global health security agenda and its core
    strategies of prevention, detection, and response.
        It also invests in behavioral health services and substance
    abuse prevention. It includes more than $99 million in new
    funding to combat prescription opioid and heroin abuse
    dependency and overdose.
        Finally, as we look to leave our Department stronger, the
    budget invests in our shared priorities of addressing waste,
    fraud, and abuse, initiatives that are projected to yield $22
    billion in gross savings for Medicare and Medicaid across the
    next decade. We are also addressing our Medicare appeals
    backlog with a variety of approaches.
        Taken together, this budget advances our broader goals of
    making a 21st-century workforce, providing Americans with the
    building blocks of healthy and productive lives, and delivering
    impact that allows everyone to share in the prosperity of a
    growing America.
        As I close, I want to assure you that I am personally
    committed to responding quickly and thoughtfully to concerns
    and communications from members of Congress. We have made
    progress, and we can do more.
        I also want to just take a moment to thank the employees of
    HHS for their work on combating Ebola, for the work that they
    did assisting the unaccompanied children at the border, and for
    the commitment they show day in and day out, helping their
    fellow Americans obtain those building blocks of healthy and
    productive lives. I look forward to working closely with you to
    advance our common interests for the American people.
        Thank you. And with that, I am happy to take your
    questions.
        The Chairman. Well, thank you, Ms. Burwell.
        [The prepared statement of Secretary Burwell appears in the
    appendix.]
        The Chairman. As you know, the Supreme Court will soon
    decide the legality of IRS regulations that extend health
    insurance subsidies to individuals in States with Federal
    exchanges in the King v. Burwell case. The legislation itself,
    the Affordable Care Act, talks only about these exchanges being
    created in the States, so it is an important opinion. In my
    opinion, the regulations violate the Constitution's separation
    of powers by exceeding the executive branch's regulatory
    authority, but we will find out what the Court says soon
    enough.
        At yesterday's Ways and Means hearing, Treasury Secretary
    Lew repeatedly refused to say whether the administration has a
    contingency plan if the Supreme Court rules against the
    administration. Secretary Burwell, does the administration have
    a contingency plan in case the Court invalidates premium tax
    credits and penalties in States with a Federal exchange? If you
    could say ``yes'' or ``no,'' I would be happy.
        Secretary Burwell. Senator, right now what we believe is
    that the position that we hold, and that the Justice Department
    will represent for us in front of the Supreme Court, is the
    correct position. We believe that, both in terms of the spirit
    of the law and the intent of Congress, as well as the letter of
    the law. The Justice Department will make that argument.
        In terms of what we believe and what we see happening, the
    idea that tax credits would be provided by the Congress for
    individuals in, say, the State of New York but not the State of
    New Jersey, is something that we do not believe that the
    Congress intended in any way, and we believe the letter of the
    law supports that.
        The Chairman. There is a lot of indication that the
    Congress did intend that so that it would force the States to
    have to form the State exchanges rather than have the Federal
    Government do it for them. So it is a big issue, and the
    language is unambiguous, at least in my opinion. So I do not
    know what the Court is going to do, nor do I want to overly
    speculate on it. But assuming that the Court does find that the
    language is unambiguous and that only State exchanges can be
    formed, do you have a contingency plan?
        Secretary Burwell. Right now, Mr. Chairman, what I am
    focused on--I think everyone here knows that February 15th is
    the end of open enrollment. And in terms of providing quality,
    affordable access to health care, my deep focus right now is
    ensuring--later today we will announce that there are 7.5
    million people who have come in through the Federal
    marketplace, in addition to the 2.4 million who have come in
    through the State exchanges. Large majorities of those people
    are receiving the financial assistance that is being provided.
    Right now my focus is on completing and implementing the law,
    which we believe is the law. That is where my focus----
        The Chairman. Then the answer must be ``no,'' you do not
    have a contingency plan. That is all I am asking.
        Secretary Burwell. Right now what I am focused on is the
    open enrollment.
        The Chairman. So that means you do not have a contingency
    plan. I would suggest that the administration ought to get one
    just in case. It is something that seems to me you are going to
    have to have because the possibility that millions of people
    will need coverage when this law runs out is important.
        Well, let me ask you this. Has your Department communicated
    with insurers who participated in HealthCare.gov to plan for
    the possibility that the subsidies could become illegal? Have
    you made plans there?
        Secretary Burwell. What we continue to do is work with the
    insurance providers to implement the Affordable Care Act. We
    are working very closely with them as part of this open
    enrollment. One of our deep focuses has been the consumer. As
    part of that focus with the consumer, we have been working very
    closely with the insurers on making sure that we are focused on
    everything from how open enrollment works to providing tax----
        The Chairman. But including this--I am more concerned about
    this issue right now. I am limiting my comments to this issue.
    I am sure you are working with the various States in every way
    you possibly can, but again, are you planning for anything if
    the Court decides the other way?
        Secretary Burwell. Senator, right now we are focused deeply
    on those issues that I have articulated.
        The Chairman. All right. All right. Well, I have to say the
    insurers, to my knowledge, have not been given any guidance
    about what to do if the Supreme Court invalidates subsidies
    paid to them. So it is something I would hope that you will get
    on top of, just as a contingency plan, to make sure that you
    can handle these matters.
        Now, Secretary Burwell, the ACA included more than $100
    billion in appropriations. Over $1 billion of that money went
    to States that willfully and negligently spent Federal funds
    for development of a failed State exchange.
        In your May 14, 2014 confirmation hearing before this
    committee, I asked you if these States would be required to
    reimburse the taxpayers. You said, ``Where the Federal
    Government and taxpayers had funds misused, we need to use the
    full extent of the law to get those funds back,'' and I agree
    with you.
        Has HHS recovered any of these funds, and do I have your
    commitment that you will take action on behalf of the American
    taxpayers to collect from the States the money that was, in the
    opinion of almost everybody, so negligently misspent?
        Secretary Burwell. At this point we have not received any
    of the funds. With regard to the funds, they are made in
    contracts, and we issue those to the States and then the States
    issue the contracts, so our grant-making to the States is the
    part that we have control over.
        As part of that, though, a number of the States actually
    are taking action, both in Oregon as well as in Maryland.
    Efforts are being made in terms of the follow-up. The question
    of what the Federal Government can get back in terms of those
    funds is about whether or not, in the grant-making, that things
    were done that were not in line with the terms of the grant.
        Right now, our Inspector General at HHS is looking into
    these issues to see if there are places where they think that
    has happened.
        The Chairman. All right. My time is up.
        Senator Wyden?
        Senator Wyden. Thank you. Thank you, Mr. Chairman.
        Obviously, Madam Secretary, we are in tax filing season,
    and there are lots of issues with respect to the premiums and
    the credits. And obviously, Secretary Lew and Commissioner
    Koskinen play a key role. But you all are involved as well. I
    just have a couple of questions here.
        Do you have any sense at this point of how many people
    might be entitled to a refund under the law, because that is
    certainly one possibility, and how many people might owe
    something? Do you have any sense of numbers there? Because that
    is what I am being asked.
        Secretary Burwell. We do have a sense that over three-
    quarters of people will just check a box. Those who have
    existing insurance in terms of when they file, three-quarters
    of people will just check a box.
        With regard to the other category, the one that you are
    referring to, which is those who have been in the marketplace
    and whether or not they have under-paid or over-paid with
    regard to the subsidies that they have received, we do not have
    a sense, because this is the first time through. We have
    consulted with our colleagues at the IRS, and, because it is
    the first time through, I am sure both Commissioner Koskinen as
    well as Secretary Lew have spoken to that.
        Senator Wyden. What are you all doing to make sure that
    this is consumer-friendly for people who are going to have to
    wrestle with these issues?
        Secretary Burwell. We have worked together--the Department
    of Health and Human Services, the Treasury Department, and the
    IRS--to make sure that we are getting information out as much
    and as quickly as possible. With regard to those who will be
    filing in the category that you were just describing, 91
    percent of those filers use some type of software to file.
        So within the software, it is incorporated just as
    everything else is incorporated, and we have worked to do that.
    We have been working with the tax filing organizations, whether
    that is at the end of the H&R Blocks or down to the Volunteer
    Income Tax Assistance Centers that I think many of you know,
    which are those centers that help lower-income people.
        So we are in close communication. Secretary Lew and I have
    done calls with the VITA centers, Secretary Lew has done calls
    with the tax preparers, and we are in constant communication,
    because we want to make sure that the questions they are
    getting, we understand, so that we can provide help in
    answering those if we can.
        Senator Wyden. Let me move on to the chronic care issue,
    which, as you and I have talked about, I think is the future of
    Medicare. I look back at the days when I was director of the
    Gray Panthers, and we talked about broken ankles. Nobody is
    talking about a broken ankle now being something that drives
    Medicare's future. It is about diabetes and cancer. And you all
    run a number of programs that hope to, for the future, address
    the concerns of the chronically ill.
        When can we expect to see some of those results? I know
    that you have programs that you would like to see look at a
    variety of different conditions. The challenge, of course, is
    you have this horribly fragmented delivery system, and that is
    one of the things legislators on this committee are trying to
    change, and trying to change in a bipartisan way.
        But tell me about the programs you all operate that target
    the chronically ill, which I think is going to be the future
    great challenge of American health care.
        Secretary Burwell. With regard to the chronically ill and
    the things that we do at the Department, it actually cuts
    across various parts of the entire Department. There is the
    work that we are doing as a payer in Medicare and Medicaid, and
    we are working on innovation in that space. We are working on
    innovation with the States through the State innovation model
    grants, where we are granting money to a number of different
    States to try innovations in terms of some of those things. In
    the Medicare space, we see the work that we are doing in the
    Innovation Center.
        With regard to when we will know--as you all know, the
    legislation gave us conditions that said you cannot decrease
    quality or increase price--we are measuring those as we go
    forward. I would also mention that in these areas of chronic
    care, there is also the work that the CDC is doing. And some of
    this is about prevention, and we think for some of these
    conditions such as diabetes, heart disease, and some of those,
    it is about prevention. CDC plays an important, strong role as
    we go forward with that.
        Senator Wyden. Let me ask you about the Precision Medicine
    Initiative and, again, what we are looking at for the future. I
    think this too is a key part of the future of Americans' health
    care. I think for families to have confidence that, when a
    loved one gets sick, their treatment is going to be targeted
    and precise based on their genetic make-up, this is pretty
    important. This is about as important as it gets for a family.
        But if we are going to tap the potential of precision
    medicine, the big payers--and your Department runs several of
    those programs--Medicare and Medicaid and private insurers, are
    going to need to pay for it. I know you are just getting
    started in this area, but what progress are we making in terms
    of setting up payment systems? That is what this committee
    tried to do in the Affordable Care Act: to make sure that you
    can actually get paid for tests and innovation and these kinds
    of services that really help patients.
        Secretary Burwell. I think that the question of payment
    also gets to the announcement that I made last week. For the
    first time, we as a government are committing that we have set
    a goal for ourselves to change the way that we are paying in
    Medicare. We have set the goal that we will have alternative
    payments, payments that are based on value instead of volume.
        We have set the goal for 2016 of 30 percent of those
    payments, and by 2018 of 50 percent of those payments. As part
    of our moving forward to alternative approaches to payment, I
    think that is where we are going to try to bring in some of
    that innovation.
        The other thing that I think is important as we consider
    cost in this space is that this type of an approach to medicine
    hopefully can work for the individual, because you can treat in
    ways that may not be as costly, as you were talking about in
    your earlier question.
        Senator Wyden. Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Senator Grassley?
        Senator Grassley. Thank you, Madam Secretary, for
    appearing. More importantly, I appreciate very much the
    frequent phone calls; you call me and give me updates.
        I only have one subject, one question at the end, but I
    have a lead-in, so be patient, please. I am concerned about the
    recent failure of CoOpportunity, a co-op created through the
    Affordable Care Act operating in Iowa and Nebraska.
    CoOpportunity was one of 23 co-ops formed under that law, and
    the Federal Government loaned money to them through CMS.
        As I understand it, CMS played a significant role in
    overseeing the co-ops, including having ultimate authority over
    setting the rules. CoOpportunity was very successful in
    attracting beneficiar-ies and had the second-most covered lives
    of all the 23 co-ops. It was even more successful than they had
    anticipated.
        In the summer, it became obvious to CoOpportunity and the
    Iowa Insurance Commissioner that CoOpportunity would need
    additional loans from CMS to stay in business. Both the Iowa
    Insurance Commissioner and CoOpportunity frequently inquired
    with CMS about their capital position and the need for
    certainty ahead of open enrollment, as it was clear that a
    liquidity crisis was developing. CMS knew CoOpportunity was
    going to be in trouble if it did not get loans.
        CoOpportunity was allowed to be in Iowa and the Nebraska
    marketplace when it opened on November 15th. CMS finally let
    CoOpportunity know that no further loans would be coming, right
    before Christmas, and the Iowa Insurance Commissioner was
    forced to take over CoOpportunity December 24th.
        I am concerned about CMS's role as a regulator of
    CoOpportunity, and then of all co-ops. There was about $2
    billion of taxpayer money loaned that depends on the success of
    the co-ops for the Federal Government to get its money back,
    but CMS did not distinguish itself in its actions with
    CoOpportunity.
        I will have more questions for you for the record regarding
    CMS's action, but my question for you today is on behalf of
    Shane and Betty Bush, Milford, IA, just as an example of some
    people who have real problems because of CoOpportunity's
    bankruptcy. They paid their premiums and renewed their coverage
    with
    CoOpportunity, as they expected it to be there for them in
    2014.
        Unfortunately, Shane Bush had emergency surgery January
    3rd. Fortunately, Mr. Bush is recovering, but the care was not
    inexpensive. The Bushes have already hit their out-of-pocket
    maximums for CoOpportunity. With CoOpportunity being
    liquidated, the Bushes will have to find new coverage, and that
    next insurer will not have to recognize the money already spent
    by the Bushes in 2015. With additional expenses certain this
    year, the Bushes will be out of thousands of dollars they have
    already spent in 2015.
        Madam Secretary, the Bushes cannot afford to pay out-of-
    pocket premiums for two different plans. They are in this
    situation, as I see it, because CMS ignored the warnings from
    Iowa and CoOpportunity, allowing CoOpportunity to go back on
    the marketplace. Now folks in Iowa and Nebraska like the Bushes
    face financial consequences because of CMS's foot-dragging.
        I intend to ask you further about what CMS was doing and
    why, but what I want to ask you today is what responsibility
    you think your Department and CMS have to people like the
    Bushes. I think they had about 100,000 people whom they were
    doing business with.
        Secretary Burwell. With regard to the issue of the
    consumer, that is our number-one priority as we work with the
    State Insurance Department in Iowa, as we work through this.
    And so the consumer is the number-one priority, and we are
    thinking through what authorities we have and what we can do to
    help support all of those consumers like the family that you
    have just described.
        As we have worked through this, I think as you know,
    Director Tavenner has been in touch, and we look forward to
    responding to the questions that you have sent us in your
    letter, and any others that you add to that list. But we are
    focused on the consumer.
        One of the things that has happened through the evolution
    of this, the co-op process, is from the legislation that was
    passed and the amount, there were many, many rescissions in
    terms of the amounts of money that we had to do additional
    support. So at that point in time, it came down to a very
    limited amount. There were rescissions; sequestration took
    additional dollars; ATRA* took dollars out of these funds. We
    are concerned. Right now our focus is deeply on the consumer,
    so we look forward to working with the State of Iowa, which has
    the main authority over this, to figure out ways that we can
    help those consumers.
    ---------------------------------------------------------------------------
        * The American Taxpayer Relief Act of 2012.
    ---------------------------------------------------------------------------
        Senator Grassley. Thank you, Madam Secretary.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Senator Stabenow?
        Senator Stabenow. Thank you very much, Mr. Chairman.
        Welcome, Madam Secretary, and thank you very much for the
    hard work of you and your staff on a complicated, critically
    important set of issues. I think we need to first underscore
    the good news. The latest CBO projections show that more and
    more people are finding full-time work. We want to make sure
    that it is work where you can work one job and be able to care
    for your family, that they are getting access to affordable
    health care.
        We know that fewer Americans are going into bankruptcy
    because of medical crises. That is important. Tax credits are
    helping people afford coverage. People who have insurance are
    able to get new opportunities to get preventative care and
    vaccinations, wellness visits. And frankly, folks who have been
    paying into health care for a long time are finally guaranteed
    they are getting what they are paying for, and they cannot get
    dropped if they get sick, and they can find insurance coverage
    for a preexisting condition, and so on, and so on. So, all good
    news.
        I would say that, because of the importance of health care
    to the people of Michigan, as somebody who was around and
    deeply involved in the debate on the affordability of health
    care and being involved as one of the chief supporters of what
    I call the affordability tax credits--in fact, at the time, the
    chairman introduced me as Senator Affordability, which I carry
    as a badge of honor.
        But I would say, just for the record, that the
    affordability tax credits are working as we drafted them, as we
    intended them for all Americans, not just some Americans. And
    if in fact they went away or the entire bill, the law was
    repealed--we have now seen a bill introduced here in the Senate
    that has been brought immediately to the floor with, I believe
    we have 47 Republican co-sponsors so far. This would be serious
    for families in terms of no longer having access to the
    protections of affordable health care and access to health
    care.
        What I would like to ask you about, though, is one piece of
    that that unfortunately went from being a part of the
    comprehensive plan to being optional State by State, which has
    undermined seniors' and families' ability to be able to get
    affordable health care, and that is Medicaid.
        When we put all this together, we assumed--and we know that
    80 percent of the money in Medicaid is low-income seniors in
    nursing homes, so we are talking about seniors in nursing
    homes--that low-income seniors in nursing homes and their
    families would be able to get the help under Medicaid that they
    need. In Michigan, more than 500,000 people have enrolled in
    the Healthy Michigan plan. I congratulate our Governor and
    others who put that together. We still have time to go on this.
        So, when I look around this panel, we have 11 States
    represented in the Finance Committee that still have not
    provided access for low-income seniors to nursing home care, or
    to families and children, through the expansion of Medicaid.
        I wonder if you might speak to what is happening to
    families and the costs even to States, and certainly our
    hospitals. I know in Michigan folks were talking about the
    number of people coming to the emergency room, getting care the
    most expensive way possible, rather than getting it through a
    doctor and so on in a way that is better for them and contains
    costs.
        Could you talk about what is happening because States are
    not giving access to families and seniors to health care
    through Medicaid?
        Secretary Burwell. I think the impacts of Medicaid
    expansion have to do both with the individual as well as
    economic impacts. In terms of the individual impact, in terms
    of the health and financial security, yesterday when we had
    folks at the White House who had written the President, there
    was a woman who actually went onto the marketplace, because she
    thought she would pay a fee. She went onto the marketplace,
    found out actually she was not in the marketplace but was
    Medicaid-eligible. She went in to see a doctor, had never had a
    history of breast cancer in her family, ended up actually
    having a mammogram because it is part of what is covered, and
    found out that she had breast cancer. So that is for the
    individual, for the individual in terms of that financial
    security, the ability to pay for and have health care. So that
    is for the individual.
        Economically, what we see is, in the States that have
    expanded Medicaid, there are fewer rural hospital closings, an
    issue that is affecting a number of States across the country.
    That has to do with the reduction in indigent care costs, and
    that is what we do see in those States. We see anecdotal
    evidence in terms of what is happening in communities where
    more of the care is being paid for. So there are benefits on
    the individual side in terms of financial and health security,
    and then with regard to the States themselves, they are seeing
    those benefits I just mentioned.
        Senator Stabenow. So it is a major rural health issue.
        Secretary Burwell. It is a rural health issue, but it is
    also happening in urban hospitals, because generally, in some
    urban areas, there is one hospital--not always--but there is
    often the one hospital that tends to take care of that indigent
    care. So the economics of that entity can be dramatically
    affected. We know those are the direct impacts. The indirect
    impacts are for everyone else in terms of premiums. When there
    is less indigent care, there is less pressure on premiums for
    those who are even in an employer-based system.
        The Chairman. Senator Schumer? Thank you, Senator Stabenow.
        Senator Schumer. Thank you. Thank you, Mr. Chairman. Thanks
    for holding the hearing. And I want to thank you, Madam
    Secretary, for the great job you do. You are a star.
        First, ACA, despite all the naysaying, has some huge
    successes. Health-care spending growth has decreased
    significantly. That is huge in terms of not just health care
    itself, but our budget: $600 billion dollars less through 2020.
    The uninsured level is the lowest in decades: 9.5 million
    insured in my State of New York. We have really done a good
    job. I salute our State. Our health exchange, the New York
    State of Health, has signed up 2 million people for low-cost
    health coverage. Eighty percent of those enrolled said they
    were previously uninsured, so it is great.
        Now I have--and I appreciate the emphasis you have put on
    research, early learning, and your support for CHIP. I am now
    sitting in the seat where Senator Rockefeller sat for a long
    time, and I am mindful of CHIP all the time.
        I have two questions for you. The first is on graduate
    medical education, a place where I oppose the administration
    strongly and vehemently, and I cannot even understand your
    logic here. The President's budget says Medicare payments to
    teaching hospitals for costs of Indirect Medical Education
    exceeded the actual patient care costs, and they want to
    correct this imbalance by reducing the IME payments by 10
    percent. That is an enormous cut: $16.3 billion.
        Now, your budget proposal recognized that we have a
    physician shortage, and we do. If we are going to insure more
    people, we need physicians. It is one of the places that ACA
    did not really do the job in terms of filling the gap of new
    physicians that we need, and it sort of adds insult to injury
    to now cut the payments to teaching hospitals. They are just
    not going to teach as many medical students and make them
    doctors if you are going to cut this.
        I believe that current funding levels are critically
    important to maintaining a state-of-the-art environment, not
    only training doctors but training the best doctors. We do not
    need a majority of our doctors to be trained overseas, but that
    would be the direction in which you are headed. So it seems to
    me counterproductive to attempt to train more physicians by
    cutting teaching hospitals that train them. How do you
    reconcile that?
        Secretary Burwell. With regard to the issue of making sure
    that we have enough care in the country and the specific GME
    area, what we are trying to do is make sure that we balance the
    needs, and our proposal also targets funding, and additional
    funding, for those who go into primary care and specialties
    where we have shortages.
        The proposal that we are trying to craft and come forward
    with is a proposal that affords us the opportunity to have
    fiscal responsibility and keep the slots, but there is the
    question of the payment of the slots, indirect versus direct
    costs, and then we add additional funds that would help do
    targeted efforts.
        In addition, with regard to the broader issue, and in terms
    of some of the things we do do, the National Health Service
    Corps is a place where there are large investments in the
    budget to try to make sure that we are supplementing primary
    care. We have also proposed the extension of the Medicaid
    primary care funding, so we are trying to make sure that we are
    working on the health resources.
        Senator Schumer. Well, I think you are robbing Peter to pay
    Paul. I certainly believe in the programs you have mentioned.
    They have been around for a while. They have not filled our
    need. What we have proposed, a bunch of us, and it has
    bipartisan support, is to increase the number of slots and
    allocate half of that increase to primary care. It seems to me
    a much better and tested way to go than say, well, we are
    relying on these new programs which have never filled the gap.
    Having said that, I just wanted you to know I am vehemently
    opposed to that proposal, and I hope the administration would
    reconsider, if you have not understood my language until now.
        Secretary Burwell. I look forward to working with you.
        Senator Schumer. On Ebola, I want to thank you. The CDC has
    done a great job. We knock government all the time, and, if you
    read the media the first few weeks, you would think everyone
    was going to get Ebola. The number of cases here in America has
    been, thankfully, few. The number of cases in the three hot-
    spot countries has declined. That just did not happen by magic;
    it happened by great work at the Federal, State, and local
    levels.
        In New York, our hospitals did an amazing job. Forty-seven
    percent of the people who flew into this country from the three
    Ebola countries landed at Kennedy Airport, and our city, State,
    and Federal Governments all got together and made sure that we
    did not have the situation that we had initially in Dallas. So
    I thank you for that and for the good job you do.
        But can you just tell us--I know we have put some money in,
    and I worked very hard to have a provision, with the help of
    many of my colleagues, that our hospitals in and around the
    country would get reimbursed for the huge outlays they have had
    to make. Many of them had to create anti-contamination rooms,
    they had to buy equipment, they had to do training. Can you
    provide us with how you plan to ensure that the Ebola treatment
    centers--I care especially about the ones in New York--receive
    appropriate reimbursement?
        Secretary Burwell. We are working to have those funds
    reimbursed. We are working to have a contractor that will help
    us do that reimbursement on a hospital-by-hospital basis. In
    addition, States and communities will receive other funding for
    the preventative work that they did, so there are special funds
    for the treatment hospitals like Bellevue, which did a
    tremendous job in New York, and the others that did treat
    patients around the country.
        We look forward to continuing to work on this, and we are
    very appreciative of the funds and want to move them as quickly
    as we possibly can to get reimbursement to those treatment
    hospitals and to help those hospitals that got ready and
    prepared.
        Senator Schumer. Thank you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you.
        Senator Roberts?
        Senator Roberts. Well, thank you, Mr. Chairman.
        And, Madam Secretary, let me echo the sentiments of many
    members to thank you for the job that you are doing.
        During your confirmation hearing, we talked a lot about the
    Affordable Care Act's Independent Payment Advisory Board. The
    acronym is IPAB. Sort of reminds me of Pablum that people do
    not want to eat. So anyway, IPAB.
        You said, and I will paraphrase here, that you were hopeful
    IPAB never needs to be used; it can only be triggered in the
    window when you will serve as Secretary. Your estimate said it
    will never be activated. You were hopeful that we can make sure
    that IPAB never gets triggered, and we all agree.
        But here we are again with a budget request where you are
    acting to expand this authority to find savings. How can you
    explain how you went from hoping it never had to be used to now
    doubling down on IPAB and expanding the savings it must find?
        Secretary Burwell. What we are trying to do is get to the
    core of what IPAB was about, which is making sure that we can
    work together to continue to keep the costs down in Medicare
    and in the entitlement space. We are working to do that with
    our proposals.
        We have seen, just in the period from 2010, our Medicare
    spending is $116 billion below what it was predicted to be. On
    a go-forward basis, that is why we have the proposals in our
    budget, to keep moving that out. The proposals that we have in
    our budget extend the life of the trust fund by 5 years.
        Our objective is to actually put in place specific policies
    that will continue to move out that time frame, and we are
    hopeful that we can work with the Congress to get those
    policies enacted, to continue the entitlement savings. We have
    some savings from the last years in terms of what we are
    seeing, but we want to continue on a path to tight and
    contained growth with regard to that spending.
        Senator Roberts. Well, I think everybody wants to contain
    the growth, but I do not want rationing. I am very worried
    about the Independent Payment Advisory Board, the CMS
    Innovation Center, the U.S. Preventative Services Task Force,
    and the Patient-Centered Outcomes Research Institute, all well-
    intended. I have labeled them The Four Horsemen of Regulatory
    Apocalypse because of all the rationing.
        Now, wait a minute. You are depending a lot on something
    called a RAC, and that is a Recovery Audit Contractor. I must
    tell you that when the contractors ride into town in western
    Kansas, the doors shut and everybody hopes that nobody, no RAC
    person, comes and knocks on the door. I think they put hospital
    administrators on the rack, if you will.
        I appreciate that you have included a number of proposals
    in the budget to help address the appeals process, because you
    go into a hospital, and they have a choice. You either pay the
    fine--and contractors get gold stars if you have fines--and
    then you say that is savings with regards to Medicare. It is
    also rationing.
        So here is the point. CMS presented a settlement offer, and
    over 2,000 hospitals entered the process. Chief Administrative
    Law Judge Griswold noted that, as of July last year, there were
    800,000 pending appeals. My question to you: if all of these
    hospitals would complete the settlement process, how many
    claims would potentially be cleared from the backlog? Are we
    even making a dent?
        Secretary Burwell. The issue is one that I think many of
    you on the committee know is one that I am deeply concerned
    about, which is why we have reached out and talked about this
    issue, certainly before today. With regard to how many will
    come through settlement, they will not all be cleared out that
    way.
        The strategic approach we are taking is threefold to
    address what I agree is an extremely important issue. It is an
    issue about balancing those who are not--it is about program
    integrity, because there are people who are not doing things
    that we as taxpayers would pay for.
        Senator Roberts. I understand that.
        Secretary Burwell. At the same time, in dealing with the
    concerns that you have articulated in terms of how it feels and
    how the process is used, we are using three strategies. The
    first is to use administrative tools like the one you
    articulated. The second is, there is funding needed so we can
    clear out the backlog. Judge Griswold and others can process
    those. But it is a specialized person that we need to do that.
        And then the third is, there are legislative proposals that
    we believe will extend our ability to both get rid of the
    backlog and prevent it in the future. We have had
    conversations, especially with this committee--and we
    appreciate those conversations--and we have included the seven
    proposals in our budget so that we could be specific in working
    with you all on how we can do that, because, to be honest, it
    is going to take all three for us to get rid of that backlog.
        Senator Roberts. I appreciate your response. I am not sure
    that I am following you on all of the details in terms of the
    specifics, and we would like to do that. I know you are
    extremely busy, but we will make that inquiry. I just have to
    tell you that when you have RAC contractors racing around to
    the rural health care delivery system, they are not very
    welcome. It seems to me they do not trust the hospital
    administrator or the doctors, or the whole delivery system. In
    return, these rural folks do not have any trust in government,
    and that is not a good thing. So, let us work together to see
    if we cannot get a better situation.
        Secretary Burwell. I would like to do that and would like
    to have follow-up with you on this issue.
        Senator Roberts. Thank you.
        The Chairman. Thank you, Senator.
        Senator Cornyn?
        Senator Cornyn. Good morning, Madam Secretary. On December
    17th, a number of Senators sent a letter to you and to
    Secretary Lew about the King v. Burwell case, and I would like
    to follow up on Senator Hatch's questions because you did not
    answer a single one of them about the contingency plans and
    notices to people who might lose their taxpayer subsidies for
    their health care.
        Let me just start by asking, has HHS taken steps to inform
    all current Federal exchange enrollees about the King suit and
    how a ruling against the administration might affect them?
        Secretary Burwell. We have not, Senator. We believe that we
    are implementing the law as it is intended to be implemented,
    and as we do that, that is what we were talking about with the
    consumers who are entering into the marketplace.
        Senator Cornyn. And my question is, if the administration
    loses, have you taken steps to advise Federal enrollees about
    the consequences that may apply to them as a result of the
    administration losing that lawsuit?
        Secretary Burwell. Right now, as I mentioned with the
    chairman, what we are focused on is what we believe is our
    responsibility: to implement the law as fully as we can, to
    focus on the consumer experience, and we are working for that
    February 15th deadline.
        Senator Cornyn. And that is not an answer to my question,
    Madam Secretary. You are a highly intelligent, charming person,
    but you refuse to answer our questions and that, to me, does
    not strike me as trying to work with Congress but rather
    contempt of Congress's oversight responsibilities. So let me
    just ask you, if the administration loses the King v. Burwell
    case, do you plan to ask Congress for additional legislation?
        Secretary Burwell. With regard to that question, we are now
    at a stage where even oral arguments have not been made,
    Senator, in terms of the case.
        Senator Cornyn. And that is not my question. My question
    is, if you lose, are you going to come to Congress and ask for
    additional legislation?
        Secretary Burwell. With regard to the issue of legislation
    and the Affordable Care Act in its entirety, what we have
    always said and what we continue to say is, with regard to
    things that will improve the Act, we are open, whether that is
    the recent vote for veterans--and I know that members of this
    committee actually have bills that have to do with our
    firefighters and that would enact into law what we have done
    through administrative actions. We will work with the Congress.
    How we will judge what we work on with the Congress is, does it
    increase access, affordability, and----
        Senator Cornyn. Madam Secretary, you are not answering my
    question. My question is, if the administration loses the King
    v. Burwell case, do you intend to come to Congress and ask for
    additional legislation to address that decision by the Supreme
    Court?
        Secretary Burwell. Senator, we believe that the position we
    hold is the correct position, and----
        Senator Cornyn. And my question is, if you lose, if the
    Supreme Court disagrees with you, will you come to Congress and
    ask for additional legislation?
        Secretary Burwell. Senator, what we know right now is, it
    would be devastating, the effect, in terms of loss of premium,
    loss of individuals. What we are focused on right now, though,
    is implementing the law that we have before us, and that is our
    focus for now.
        Senator Cornyn. So you are going to ignore the Supreme
    Court decision in July. So let me ask you this. Since you will
    not answer my question about a legislative solution, do you
    believe that your agency has authority to make an
    administrative fix to the law?
        Secretary Burwell. Senator, as I have said, what I have
    focused on is, right now, the current implementation of the
    law. That is a question in terms of----
        Senator Cornyn. And what I am focusing on is, if the
    administration loses--and so far you have refused to answer my
    question, and notwithstanding your earlier statements that you
    want to cooperate with Congress and this committee and you
    respect our constitutional oversight responsibilities, what I
    do not understand is why you continue to refuse to answer the
    question.
        So let me ask it again. If the administration loses in the
    King v. Burwell case, do you believe you already have the
    authority to make an administrative fix, or will you come to
    Congress and ask for additional legislation?
        Secretary Burwell. Senator, I am focused right now on
    implementation. With regard to those questions, we believe that
    we are right in implementing the law and that the law will
    stand.
        Senator Cornyn. I am asking, if you are wrong, if the
    Supreme Court disagrees with you--if five members of the
    Supreme Court disagree with you--do you believe you have
    authority to issue an administrative fix, or do you think you
    need additional legislation?
        Secretary Burwell. And with regard to the answer to that,
    Senator, what I am saying is, what I have been focusing on is
    implementation, not on that question.
        Senator Cornyn. Mr. Chairman, Secretary Burwell is a
    charming person, and she is obviously intelligent, but these
    hearings are absolutely no use to us if the witnesses refuse to
    answer straightforward questions, which this witness has
    repeatedly done. I am not sure exactly what the proper solution
    is to this, Mr. Chairman, but I would like to visit with you
    about that, because it seems to me that this administration
    continues to parade witnesses in front of committees like this
    one and to deny us a straightforward answer to a
    straightforward question. That is just unacceptable.
        The Chairman. Yes. Well, Senator Wyden would like to
    comment on this whole matter.
        Senator Wyden. Mr. Chairman, I just want to make clear what
    I think today is all about. Today is about the HHS budget, this
    multi-billion-dollar budget that involves millions of
    Americans. That is the topic at hand. I am very interested in
    working with my colleagues on the other side of the aisle on
    health policy. I have shown that plenty of times, and so have
    my fellow Democrats. But I think the idea this morning that we
    are going to ask a witness to speculate about a court case, to
    speculate about something hypothetical, and in effect have a
    big debate about something, I think misses the point of the
    challenge at hand.
        The challenge at hand is about the budget, and I hope that
    we can figure out a way over the course of the morning--we have
    plenty of colleagues who still want to ask questions--to talk
    about the topic that was scheduled, and that is the budget, and
    not talk about hypotheticals, about something else. By the way,
    this is not the Department of Justice's budget, this is the
    Department of Health and Human Services'. I hope we can stay on
    the budget and not get into some recitation about a parade of
    hypotheticals and speculations. Thank you, Mr. Chairman.
        Senator Cornyn. Mr. Chairman, if I can just respond to the
    ranking member. It is the same question you have asked, Mr.
    Chairman. We are not limited as Senators to what the topic of
    the hearing is. We can ask questions, any questions we want,
    about the agency that this witness is responsible for
    administering.
        To come here and repeatedly refuse to answer the questions
    strikes me as nothing less than contempt of our oversight
    responsibility, and it is a very, very serious matter. I am
    just really, frankly, shocked that this witness would take that
    position. I just find it unacceptable.
        Senator Wyden. Mr. Chairman, just to continue this briefly,
    to say that this witness is handling this committee with
    contempt misses what members on both sides of the aisle have
    been talking about for weeks. This official at HHS has reached
    out to this committee, the people of this country, in an
    unprecedented way, and I think arguing that because she will
    not talk about hypotheticals, speculate about a court case,
    means that she is handling this Congress with contempt, I just
    think is way off-base.
        The Chairman. Well, both Senators are entitled to their
    opinion.
        Let me just ask this question. Have you made any
    recommendations, as the premier department that handles all
    these matters that are so important to the administration, as
    to how they would handle it if, as Senator Cornyn has raised,
    the case goes against the administration or against the
    Affordable Care Act?
        Secretary Burwell. Senator, with regard to where I am now
    on the issues that I am focusing on, whether it is Ebola, the
    measles, or----
        The Chairman. No, wait, wait, wait, wait, wait.
        Secretary Burwell. I am focused right now on
    implementation.
        The Chairman. We got that point.
        Secretary Burwell. So----
        The Chairman. Look, wait a minute. These are not stupid
    people up here, and you are not stupid either. Why don't you
    just say that it is up to the President and the Justice
    Department, and that would get you off the hook, it seems to
    me.
        Secretary Burwell. Right now----
        The Chairman. It does not solve the problem, because you
    should be recommending what should be done, because that is a
    serious problem.
        Secretary Burwell. With regard to, as you are clearly
    articulating, the Justice Department is the next step----
        The Chairman. Well, why don't you say that?
        Secretary Burwell [continuing]. In terms of what the
    administration is doing. The Justice Department will represent
    us.
        The Chairman. I get tired of bailing out you Democrats all
    the time, you know? [Laughter.]
        That was supposed to be humorous. I did not think it was.
    [Laughter.] I thought I was being quite funny. But I have this
    subtle sense of humor that sometimes does not come across.
        Senator Wyden. Mr. Chairman, just to wrap this up, I do not
    think the Secretary needs any bailing out. We have something
    called a Judiciary Committee where they can have discussions
    about speculative matters involving the Supreme Court.
        The Chairman. I think----
        Senator Wyden. I just hope we can handle the budget today.
        The Chairman. Well, let me just say I think Senator Cornyn
    is certainly within his rights. I think his comments are
    accurate comments. Ms. Burwell just continues to answer that
    she is not focused on this. I understand that. Then tell us who
    is focused on it, because it is an important thing that can
    just throw you into all kinds of turmoil, and we are concerned
    about it. It is a legitimate concern of this committee. To make
    a long story short, I think Senator Cornyn raised a very, very
    important issue, as have I.
        We will now go to--who is next? Let us go to Senator Coats.
        Senator Coats. Well, first of all, I want to second what
    our members have said, Madam Secretary, that your engagement
    and accessibility have set a new standard, and I think we all
    appreciate that. I do not know when you sleep, but I know how
    active you have been and will continue to be.
        Secondly, though, I wanted to second what the chairman and
    Senator Cornyn and others have said, not to ask you the
    question again, because I think I know what you are going to
    say, but to say that we all know that this health care proposal
    enacted in 2010 has been one of the most impactful pieces of
    legislation ever enacted by this Congress, by any Congress, and
    it affects tens of millions of Americans directly in terms of
    their health care, which goes right to the essence of who we
    are as human beings.
        Clearly, there is a collision, potentially, coming with the
    Supreme Court decision. It is probably not likely, given the
    President's very clear admonitions about how he will not accept
    any piece of legislation that modifies this in any significant
    way through a repeal and replacement, but there is a potential
    collision coming, and it would be irresponsible for the
    administration not to have a plan to address that, should the
    decision not come down the way you would like.
        I do not have a question here, it is just a statement
    affirming that it would cause great chaos and be totally, I
    think, irresponsible. Somebody ought to be looking at, what do
    we do if, and that is what the question here is.
        Now, I want to thank you personally for your engagement
    with our current Governor, Governor Pence, whom I was with this
    morning. He wanted me to pass on his thanks also to you for 2
    years, almost 2 years, of engagement over a request for a
    waiver for the State of Indiana. Our former Governor, Governor
    Daniels, put into place something called the Healthy Indiana
    plan, and it was innovative, it was creative, it has been
    proven to provide health care for a number of Hoosiers.
        Governor Pence wanted to expand that, and there are 350,000
    Hoosiers who will benefit--at minimum--from your agreement to
    work with us and come to a conclusion. There are some really
    innovative reforms here on traditional Medicaid, and I think
    some of them are the first ever.
        So I think it is important for our State to be responsible
    in playing this out the best we can to prove that these
    innovative solutions can be a benefit to all Medicaid
    recipients. In that regard, I would just like to have your
    assessment of some of the first-of-a-kind proposals that you
    have agreed to that hopefully will prove their worth and can be
    duplicated perhaps in other States or throughout the system:
    the co-pays and the patient participation; the patient option
    to choose a plan if it better meets their family needs; the
    contribution to the so-called Power Plan, which is a
    modification of health savings accounts; and the State's
    referral process to every individual who applies for job
    training and job searching through State sources.
        It is all combined in this new plan, and we are pretty
    excited about it, but I would like to get your thoughts on it
    here, I think for the benefit of the members of the committee
    and for others who are looking at ways to provide better
    access, better health care at lower cost.
        Secretary Burwell. I am pleased that we were able to come
    to agreement and work with the Governor, and I was happy to do
    that. One of the first things I did when I became Secretary was
    meet with the National Governors Association to express my
    willingness to work on a State-by-State basis to use the waiver
    process to do two things: one, to do agreements that would be,
    on a State-by-State basis, what a State needs in terms of
    continuation, and moving on building on the Healthy Indiana
    plan for Indiana. In other States, Utah, Tennessee, there are
    other approaches that are important to those States.
        The second thing is that I think what you are reflecting
    is, waivers are a means by which we can try and we can test
    things to find out if they are things that work and then move
    to how we would scale them as a Nation if they do work.
        We are looking forward to working with the Governor as he
    moves to implement, and we tried to make sure that he could
    implement quickly as soon as we reached agreement, and we look
    forward to finding out, what are the kinds of things that we
    can do better in Medicaid as a program? That effort in the
    waivers is accompanied and complemented by something that the
    National Governors Association asked us to do, which is State
    innovation model grants.
        And so, at the time that we are trying things, we are also
    doing innovation in terms of payment models and helping the
    States through financing the States to do that, and a number of
    States have received grants. There is a first round and a
    second round.
        Senator Coats. Well, I know our Governor in our State and
    those who have participated in this, including the health care
    providers and their participation and contributions to the
    program. We have a lot at stake here, and we hope to be able to
    deliver to you innovative, successful solutions. Thank you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Senator Cardin?
        Senator Cardin. Well, thank you very much, Mr. Chairman.
    Secretary Burwell, it is a pleasure to have you before our
    committee, and thank you very much for your leadership and
    service to our country in this very important role under
    challenging circumstances.
        I want to talk, first, about an issue that I am working on
    with Senator Blunt dealing with community mental health
    services. There is a challenge for people who are suffering
    from severe depression or anxiety disorder getting the type of
    help they need in a community setting. If they go to their
    primary care physician, as many of them do, there is lack of
    capacity in that office to deal with their needs. If they go to
    an emergency room, it is a very inefficient way and most likely
    inadequate to take care of their needs.
        There have been some demonstration programs dealing with a
    collaborative care model, where the primary care person can get
    help from a mental health specialist so that you use better
    community services to keep people healthy in their community--
    less costly, better services. There are obstacles in the way
    under Medicare and Medicaid for this collaborative care model,
    and I just would welcome your thoughts on how we can work
    together to try to expand these opportunities, removing those
    obstacles and offering incentives for a collaborative care
    model that will provide better services at less cost for people
    who have mental illness.
        Secretary Burwell. So the issue of behavioral health and
    the payment for behavioral health is one of the tools that we
    think we have. And working to make sure that payment occurs in
    a way that is equitable with payment for other types of care is
    something that we are working on, and certainly we would
    welcome the opportunity to have a conversation with you, having
    had conversations with Senator Stabenow as well as Senator
    Blunt. So I would love to continue those conversations.
        I think, as you know and have mentioned, we are also
    focused on how we can do more community-based care. That
    actually touches also upon the delivery system reform, which we
    had a little bit of a conversation about earlier, so that we
    are creating home health systems and that there is
    communication between physicians, because that is sometimes one
    of the missing links in behavioral health.
        Senator Cardin. Well, we would be interested as to what you
    can do under your authority, but if you need congressional help
    particularly, let us know what obstacles need to be addressed
    by Congress and how we can expedite the implementation of
    better collaborative care models in our community. I appreciate
    that.
        As you know, I have a particular interest in NIH funding. I
    was pleased to see that the President's budget did increase NIH
    funding by about $1 billion. I would like to see a larger
    number. The returns are incredible from what we invest, and I
    think this is a bipartisan interest.
        One of the centers, the Institute of Minority Health and
    Health Disparities, is one that I take pride in that Congress
    created under the Affordable Care Act. They received a slight
    increase, from $259 million to $281 million. Can you just share
    with us your commitment to NIH funding, but specifically how
    you see the Institute of Minority Health and Health Disparities
    functioning under your leadership?
        Secretary Burwell. The issue of minority health disparities
    cuts across actually the entire Department, and NIH has been an
    important part of that effort. With regard to minority health
    disparities, they are great in our country, and there are a
    number of ways that we believe we should address them.
        Working through NIH with regard to how we think about
    research, and the research on the science that is creating
    these disparities, is how I think about that particular piece,
    as well as NIH's role in making sure that we have minorities
    who are part of the system, both in terms of physicians who are
    practicing in a clinical setting, but actually researchers who
    are part of the process who come from these communities.
        At the same time, we are focused deeply on probably the
    most important thing we can do to reduce these disparities,
    which is addressing the disparity in coverage. That is
    something I think you know that we focus on as well.
        Senator Cardin. Absolutely. If you could keep me informed
    on the progress, not only at the National Institute but at the
    different offices for minority health, I would appreciate that.
        Lastly, let me just put on your radar screen pediatric
    dental coverage. We have been watching its implementation.
    Quite frankly, it has been more seamless than what we
    originally were concerned about. There are more universal
    policies that are being offered that handle pediatric dental
    coverage rather than stand-alone plans. As you know, in
    Maryland, with the loss of Deamonte Driver in 2007, it has been
    a particular issue, pediatric dental care.
        So I would just urge you to monitor how the private market
    is working on offering coverage for pediatric dental. Since it
    is a required coverage, we want to make sure that in fact it is
    being taken advantage of by those who have gotten coverage
    through the exchanges.
        Secretary Burwell. Thank you, and we will. I had the
    opportunity actually, as I was out traveling the country, to
    meet with a woman who took her child to the dentist for the
    first time as part of coverage.
        Senator Cardin. Thank you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Senator Cantwell?
        Senator Cantwell. Thank you, Mr. Chairman.
        Secretary Burwell, thank you so much. I read a Bloomberg
    article that I would like to enter into the record, and the
    headline was: ``U.S. to Overhaul Medicare Payments to Doctors,
    Hospitals.'' So that was music to my ears. And then the first
    paragraph or so said, ``The Obama administration makes historic
    changes to how the U.S. pays its health care bills, aiming to
    curtail the costly habit of paying hospitals and doctors
    without regard to quality or effectiveness.'' Then it goes on
    to say it ``. . . will tie billions of dollars in payments to
    how their patients fare.'' So actually all that was a quote
    from that news article I want to enter.
        [The article appears in the appendix on p. 256.]
        Senator Cantwell. So first of all, that is music to our
    ears in the Pacific Northwest and any State that already is
    making its way down the system of more efficient care that is
    focused on the patient. The fact that the administration is
    setting this goal of 30 percent of traditional Medicare
    payments to alternative payment models by 2016 is just a
    terrific goal, and 50 percent by 2018. As you know, we worked
    very closely on the Medicare value-based modifier as a way to
    make sure that we are focusing on quality, not on quantity.
        So my question is, in the details of that 30 percent, one
    of the things that we have had discussions about here is, what
    does the incentive look like? I want to make sure that we are
    not setting a big goal of having 30 percent shift over to that,
    but having the incentives be so small that we are not really
    changing behavior.
        So people have talked about things like 4 percent, or a
    bonus, or penalty caps, but we want to see good behavior being
    rewarded and bad behavior being discouraged. So what can you
    tell me about, within the 30 percent, how aggressive we can be?
        Secretary Burwell. I think that there are a number of
    different things that can help us get there, and some of those
    are about incentives and some of those are about approaches:
    bundled payments as a type of approach in terms of how we go
    about doing it. There are things like the value-based approach
    where you are rewarding good behavior, and, for those who do
    not have that behavior, they will take a hit for doing that.
        I think there are tools like that that are being used. We
    are seeing that the private sector and the providers are moving
    towards this care because it is better quality care and more
    affordable for them. And we have received help and support, and
    there has been legislation, about helping us as we are doing
    Accountable Care Organizations.
        There are some places where we may need additional
    flexibilities as we are learning about what people react to
    with regard to incentives. So that is a place specifically
    where I think we would like to work with the Congress to make
    sure that we are able to do that.
        The other thing I would just say is that the pressures in
    the private sector right now, they are also helping us, because
    private-sector payers are moving in this direction, whether it
    is Boeing that is partially in Seattle and how they are
    negotiating their payments--those examples are making a
    difference to us.
        Senator Cantwell. So you think the incentives could be more
    than just a few percent?
        Secretary Burwell. I think the question of exactly what the
    numbers are depends on which incentives you are using and how,
    so I think the details here matter for a number of the
    institutions. So I think it is a balance.
        Senator Cantwell. Well, what I am saying is if, by 2016,
    you can say that 30 percent of traditional Medicare payments
    are at an alternative model, but they are only shifting 1 or 2
    percent, that is not interesting to us because we are already
    there. We are efficient, and we are penalized all the time for
    our level of efficiency.
        So we want the country to move as fast as possible to that
    new model. It saves money, it is better care for the patients,
    and we do not want to lose doctors in the Northwest just
    because they get paid less because they are more efficient.
        We hope that behind the 30-percent number are incentives
    that really move people. Some of the previous discussions we
    have had here of the Camp-Baucus bill--basically you are going
    to move at a glacial pace. Even though you could say you had 30
    percent in the new system, they would be moving so slowly you
    are really just continuing to reward bad behavior.
        Secretary Burwell. There is a secondary goal that I do not
    think is covered in the article and that we have not had the
    opportunity to discuss, and that is that any payer--so there
    are really, we think, two classes of folks: folks who are
    moving at the non-glacial pace, and those will be those who are
    moving to full alternative payment models.
        Then we also set a second goal, and that is about how the
    percentage of any payment that anyone is doing would move to 85
    and 90 percent over time. So we actually have set up goals that
    are trying to encourage the speed in a larger group, but
    accounting for the fact that there are those--and this will
    probably be a conversation in rural areas and other places
    where people are slower to move.
        Senator Cantwell. Well, I look forward to discussing that
    with you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Senator Brown, you are up.
        Senator Brown. Yes. Thank you, Mr. Chairman. And thank you,
    Madam Secretary, for your focus on implementing the Affordable
    Care Act and what it has meant to the literally hundreds and
    hundreds of thousands of people in my State and your State of
    West Virginia, your original home State of West Virginia.
        I want to talk to you about the Children's Health Insurance
    Program. I have spoken with Chairman Hatch about this and
    Ranking Member Wyden. Chairman Hatch was one of the small
    number of authors of this bill in 1997. We know what it has
    meant. The uninsured rate among children in 1997 was 14
    percent; today it is 7 percent. We know other things about
    CHIP. We have modernized it. It works in its present form very
    well today.
        In my State it covers 130,000 children. Most of them are
    sons and daughters of working parents, but they fall in a place
    where they just were not getting health care because those
    parents do not have insurance and do not have the income to
    make those decisions to send their children to a family doctor
    for preventive care, and other things.
        I have several letters here, Mr. Chairman, if I could enter
    them in the record, and I ask unanimous consent to do that.
        The Chairman. Without objection.
        [The letters appear in the appendix beginning on p. 51.]
        Senator Brown. Thank you. These are letters from 40
    Governors, including my Republican Governor John Kasich. Forty
    Governors, both parties, have written to this committee to
    stress how critical the current CHIP program is to their States
    and the need to extend funding now rather than later.
        Senator Casey and Senator Stabenow on this committee have
    been particularly helpful in this effort. The majority of State
    legislatures, as we know, finished their sessions within the
    first few months of the year. Twenty States will adjourn in
    just 3 months. More than half will have adjourned by June 1st
    of this year. Congress needs to act swiftly to avoid any
    disruption in children's coverage.
        As you know, this bill, this law, is authorized up through
    2019, but the funding runs out in September. That is the push
    and the urgency for State legislatures. Just comment on, if you
    would, the impact on States if we do not extend the funding of
    the new CHIP, the current CHIP the way we do it now, if we do
    not extend that funding soon.
        Secretary Burwell. I would just reflect on my former role
    as the head of OMB, as one trying to manage a situation where
    you did not have predictability of funding, whether that was in
    the form of a shut-down or another form. In terms of trying to
    manage against that, it is very difficult to manage, especially
    in the space of health care where there are contracts and
    providers that must be paid.
        So the urgency, what you are articulating from a management
    perspective for the States, is extremely important. And I think
    that is what is reflected in the letters that you have in your
    hand. In terms of the conversations with the States, the States
    need to have this predictability, and it is an important source
    that they depend on in terms of providing health care for their
    populations, especially for their vulnerable children.
        Senator Brown. Thank you.
        There are few things that this committee works on, a few
    important major things, that have had the history of
    bipartisanship that CHIP has. Again, 40 of the 50 Governors
    support it. A number of people here have voted on this
    legislation. Some have been around as long as I have and voted
    on it in 1997. A number of them have voted for reauthorization.
    It has passed this body's House and Senate overwhelmingly.
        Let me shift to a second issue in my last minute and a
    half: the Medicaid primary care parity provision in this year's
    budget. A study published in the New England Journal of
    Medicine found that parity in payment over the past 2 years has
    led to an increase in appointments for Medicaid patients.
        Unfortunately, the provision that authorized this parity in
    payment between Medicaid and Medicare expired a month or so ago
    at the end of 2014. Senator Murray and I introduced the
    Insuring Access to Primary Care for Women and Children Act,
    which would have extended this payment parity for 2 more years.
    We were not able to enact that so far. Can you comment on the
    importance of this provision in the President's fiscal year
    2016 budget proposal?
        Secretary Burwell. As you are reflecting, we have included
    it in the President's budget, because we think it is important.
    It comes down to one of the issues that we discussed a little
    bit earlier, which is this question of provision of primary
    care.
        As we expand the number of people who are covered, making
    sure that we translate access to actual care and better health
    and wellness is what we are aiming to do. We believe that this
    is a provision, based on the analytics that we have seen, that
    can help us move forward on making sure that there is enough
    care, and appropriate care.
        Senator Brown. Is there a way to use the success of this
    provision to help guide future conversations and policy
    decisions around Medicaid payment reform in the future?
        Secretary Burwell. I think all of these pieces and parts--
    and whether it is the results that we see here in terms of
    having people become a part of the system of providing that
    care, and knowing that many people in Medicaid self-report that
    they have quality care that is accessible and makes a
    difference to them, that kind of step in terms of this
    provision, as well as the kinds of things that Mr. Coats was
    mentioning in terms of some of the reforms we are doing--I
    think it is an important program. It is a cost-effective
    program. We need to continue to look for the ways to make it
    more effective, both in terms of the quality and the cost.
        Senator Brown. Thank you, Madam Secretary.
        Thank you, Mr. Chairman, very much.
        The Chairman. Thank you, Senator.
        Senator Heller?
        Senator Heller. Mr. Chairman, thank you. I appreciate the
    opportunity to have this discussion. I want to thank, also, the
    Secretary for being here.
        But I do want to raise a point of order, listening to the
    discussion that you had with the ranking member and also with
    Senator Cornyn. I guess I am a little confused. Again, as a
    newer member of this panel, am I limited in the scope of
    questions that I can ask witnesses?
        The Chairman. No, there is no limitation. There may be some
    questions raised from time to time, but no limitation.
        Senator Heller. It was my understanding that if it is a
    speculative question, based on the ranking member's comments,
    that speculative questions are for the Judiciary Committee or
    for some other committee other than this.
        The Chairman. I think these questions were proper for this
    committee.
        Senator Wyden. Mr. Chairman, just on this point, I think it
    is somewhat ironic that Senators file a brief challenging the
    law on what I consider to be completely unfounded grounds, and
    then demand that the Secretary explain how she plans to avert
    the disaster that will occur if their brief is successful, if
    they win. Now, we can sit here and debate, because I am like a
    lawyer in name only. I was director of the Gray Panthers, so I
    do not pretend to be a good lawyer. But I do think that we have
    a huge challenge in terms of getting on top of this budget.
        The Senator from Nevada is a thoughtful person, and I am
    really looking forward to working with him in a bipartisan way
    on these issues. I just hope this morning--what a quaint idea--
    that we will focus on the topic at hand, which is the budget.
    We can keep speculating and have this parade of hypotheticals.
    As the chairman noted, we do not bar people from asking
    questions, but I do think there is a little irony, as I noted
    there.
        The Chairman. Well, let me just add that these questions
    are legitimate because they affect this Department more than
    any other Department, and I was asking whether there are any
    contingency plans. I mean, that is a normal question.
        Senator Heller. Mr. Chairman, I agree with you.
        The Chairman. And I understand that you may not have any
    control over this at all in this administration.
        Senator Heller, I will add a minute and a half to your
    time.
        Senator Heller. Thank you. I agree with you. I agree with
    your questioning, and I also agree with Senator Cornyn's
    questioning. The reason I bring it up is, we are going to have
    Treasury Secretary Lew in front of us tomorrow, and if economic
    models and interest rates are not all speculative, I just want
    to make sure that I am not limited to the kind of questions
    that I can ask the Treasury Secretary. But I will go forward.
        Madam Secretary, I want to talk a little bit about the
    Medicare backstop. You received a letter last week from Senator
    Rubio, if you will recall that particular letter that came to
    your office. I also sent a letter to your predecessor on the
    same issues. As you are probably aware, the budget proposal
    would reduce the bad debt payment from 65 percent to 25
    percent.
        Now, in Nevada we have 38 community hospitals. They handle
    almost 250,000 annual admissions. There have been more than 2.7
    million outpatients just last year. I am particularly concerned
    for America's, and in particular Nevada's, rural hospitals,
    many of which already operate on a very thin margin in order to
    provide care to these patients.
        So I guess, given the issue, I am troubled by the
    administration's continued effort to significantly cut bad debt
    payments. I am also concerned this will have a very real impact
    on Nevada's hospitals and our senior population. If you would,
    please, could you share your justification for this particular
    policy?
        Secretary Burwell. Senator, I care deeply about rural
    America and these issues of rural hospitals. As I am sure you
    can imagine, every time I have meetings, these are some of the
    questions I ask. Overall in the budget, in terms of how we
    support rural America in the areas of health care, there are a
    number of investments, and whether that is the community health
    centers, which disproportionately help rural America, or our
    investments in health care providers for rural America, there
    are a number of things that support that.
        With regard to this specific question of this provision, as
    we work to do something that I think you and others have said
    is a priority--which is long-term change in terms of structural
    reforms to entitlements so that we work on that long-term
    deficit--what we have tried to do is put together a balanced
    approach that both has effects on beneficiaries and has effects
    on providers.
        When we make the decisions and choices about what we
    include, we try to do that on an analytical basis. In this
    case, we are trying to be parallel to what is happening in the
    private sector in terms of how they treat this issue. So we are
    working to make sure that we are appropriately supporting rural
    communities, a very important thing, the health care in those
    communities and the economics of that.
        But this is an issue that is a part of our broader approach
    to making sure that we are addressing the long-term entitlement
    issues, which we look forward to working on with the Congress.
    If there are ideas, approaches, and specific policy changes
    that others believe are better than ours with regard to the
    package we have, we look forward to hearing those specifics.
        Senator Heller. Thanks for the answer. I would suggest that
    there is probably a real problem in some of the rural hospitals
    outside of the State of Nevada, but I just want to go on
    record, Mr. Chairman, that I do vehemently oppose these cuts. I
    do not think it is an issue that is going to go away anytime
    soon. So I remain concerned, but I hope that we can continue
    the conversation at a future time.
        Secretary Burwell. And I would welcome the alternatives and
    ideas about how we should address these long-term entitlement
    issues.
        Senator Heller. Thank you. Thank you.
        I have one quick question, and that has to do with the
    projected savings in your budget. Last year you projected over
    $414 billion over the next 10 years in savings, but this year
    it has been reduced to $250 billion. Can you explain why the
    proposed savings are so much less this year than compared to
    last year?
        Secretary Burwell. Two reasons. One is that some of the
    savings, as we go year-by-year, we are getting some of the
    savings in terms of the previous year, but it is also because
    we have proposals in our budget. One of the proposals on the
    mandatory side, which we net out so the number is a net number
    instead of a gross number--the gross number still is $423
    billion--but we decided that we would put in place investments.
        Those investments are mainly in the area of early learning
    and the idea of child care, and the idea that for working
    Americans and people who are up to about 200 percent of
    poverty, that it is almost $10,000 a year to have your child
    cared for. If you have a child who is between zero and 3 and
    you are in that income bracket, we believe we want to encourage
    work and we want to encourage family. So by helping with this
    child care issue, that is where the bulk of some of those
    investments is made, so we made a choice.
        The Chairman. All right. Thank you, Senator.
        Senator Heller. Thank you.
        The Chairman. Senator Bennet?
        Senator Bennet. Thank you very much, Mr. Chairman. Thanks
    for holding the hearing.
        Madam Secretary, thank you for your responsiveness over the
    last years. I appreciate very much the focus that precision
    medicine has in this budget and in the President's address to
    the Congress. In my home State, the University of Colorado
    launched a large-scale effort last year across six hospitals,
    including our children's hospital, around precision medicine. I
    think we ought to do more to encourage the development of life-
    saving therapies and ensure that they come to market. They are
    important to both patients and the broader economy.
        Senators Hatch, Burr, and I worked on expediting the
    approval of these types of breakthrough therapies at FDA in
    2012. Since 2012, this pathway has now successfully led, Mr.
    Chairman, to 19 new breakthrough approvals, and 55 more are in
    the pathway. So I wonder whether you could talk about why this
    is receiving the emphasis it is in the budget and what the NIH
    and FDA plan to do to collaborate with universities and the
    private sector to help spur the development of these
    breakthrough therapies or precision medicines.
        Secretary Burwell. So in terms of the why and the emphasis
    on it, as you are saying, there is a lot of energy and effort
    that is already underway in the private sector. In terms of the
    why, I think it is for two fundamental reasons. First, we
    believe it can dramatically change how we provide health care
    to individuals in this country.
        The second reason is that we believe that this type of
    innovation and this type of cutting-edge research should be
    here at home, it should be in the United States, and that we
    should make the commitment and make the funding available to
    make sure we are supporting this research, because we believe
    that is part of keeping our economy an innovation economy.
        With regard to how the FDA and the NIH are going to work
    together on these issues and work with the private sector,
    first I want to express appreciation for the support that we
    have received in terms of those FDA numbers that you have
    given. We are moving to try to move things through faster. You
    see that 19 and the 55 coming. NIH and FDA are both going to be
    working together and working with the private sector.
        One of the things it will mean to get the precision
    medicine to work and be right is that data and information from
    those entities in Colorado will be incorporated in the
    thinking, and so it is going to take close partnerships. The
    million-person study that we are talking about, we will be
    working on closely with the institutes. We are actually getting
    input on how we structure it up front, so organizations like
    those that you talked about in Colorado, we look forward to
    hearing from.
        Senator Bennet. I think I should make two important points
    just to quickly respond to that, then I have one other
    question. It proves, I think--to the people around here who
    say, all is lost all the time, we cannot improve anything, it
    is a disaster at the FDA--that has been the go-to place for
    people who want to innovate, both in the agency and outside the
    agency. We ought to be doing more of that as we think about
    what we are doing going forward.
        Second, as you point out, this is about keeping American
    jobs here and American innovation here and driving an economy
    that is actually lifting the middle class. That was why we got
    into that work to begin with, and it is actually working. So it
    is a reminder that sometimes we can actually move beyond
    rhetoric and accomplish something in a bipartisan way that has
    meaningful results.
        Last week, Senator Grassley and I, along with a number of
    our colleagues on the Finance Committee--Senators Nelson,
    Portman, and Brown--introduced the ACE Kids Act of 2015. This
    bill would improve how Medicaid coordinates care for our
    Nation's sickest children and seeks to reduce the burden on
    families who often have to travel across State lines for their
    children's care.
        As you know, children who have complex medical conditions
    make up roughly 6 percent of the children in Medicaid but
    account for up to 40 percent of the program's costs. This issue
    is especially challenging given that Medicaid is largely a
    State-run program and these children often need highly
    dedicated care in multiple States where certain specialists
    live.
        Given HHS's recent focus on alternative payment models and
    the move away from fee-for-service, I just wanted to ask you
    whether you had had a chance to look at that legislation,
    whether your staff might be able to work with us to provide the
    necessary technical assistance to get this bill over the finish
    line.
        Secretary Burwell. We look forward to working with you to
    understand how we can address that issue that I think you are
    articulating, which is, because Medicaid is State-based, how do
    we make sure that that care is both high-quality and affordable
    across State lines?
        Senator Bennet. Thank you. Thank you, Madam Secretary.
        Thank you, Mr. Chairman.
        The Chairman. Well, thank you, Senator Bennet.
        Senator Scott?
        Senator Scott. Thank you, sir. I appreciate it very much.
        Madam Secretary, it is good to see you again. I certainly
    enjoyed talking to you yesterday as well, and I do appreciate
    your responsiveness to the questions from Senators. You have
    certainly established a positive reputation as it relates to
    getting back with us. It is obvious that you care about having
    a healthy relationship with Senators, and I hope my comments do
    nothing to take away from that.
        I will say that every dollar that we spend that we do not
    have is taking money from a youngster, a young person who
    cannot afford a lobbyist, a young person who cannot afford to
    bear that burden, taking her future earnings without her
    permission to use today and leaving her with a bill that is
    utterly burdensome and a system that is broken as well.
        When I think about Obamacare, I think about the fact that
    it started off in 2009 at a cost of around $900 billion in the
    estimate. CBO then changed that estimate to $1.8 trillion. Then
    recently we have seen it go back down to about $1.35 trillion
    by year 2025. It started with about 45 to 47 million Americans
    uninsured. By the year 2024, according to CBO's estimates, we
    will still have 31 million Americans uninsured after spending
    $1.3 trillion at least, maybe $1.8 trillion, or maybe they will
    change the estimate again.
        At the same time, we are squeezing the health care
    providers to a place where they simply cannot afford to provide
    care to some of the patients who desperately need the
    assistance. So having a card on the front end but having no one
    to take care of you on the back end does not seem like
    progress, as well as still having 31 million Americans
    uninsured.
        One of the reasons why I think you have had so many
    questions about what happens in the King v. Burwell case is
    because, when you look at the actual law itself and the
    construction of the law from a financial perspective, with 31
    or so changes to the law, delays to the law, we find ourselves
    unprepared for a future that obviously is coming, it seems like
    to me.
        A couple of questions. I would like to go back to the King
    v. Burwell question. You are a brilliant woman, without any
    question. You have served very well. I think I voted for you
    when you were up for OMB, so I have a lot of confidence in your
    capabilities.
        I remember the conversation that we had in the office. You
    were on the MetLife board of directors. I cannot imagine a
    member of a board talking to your CEO and asking him a question
    about the possible scenario, maybe a probable scenario, that
    there may be something that happens that will require the
    company to be prepared for an outcome, a legal outcome, and the
    answer is, ``I do not have a plan.'' I just do not see that as
    a realistic outcome. The question I have heard over and over
    again is simply, is there a contingency plan--not what is the
    plan, but is there a plan?
        Secretary Burwell. Senator, with regard to--and I think we
    have been through this--right now in terms of this issue of
    planning for a hypothetical for which there have not even been
    oral arguments in front of the Supreme Court, what we are
    spending time on, and what I am spending my time doing is
    focusing on what I believe I am responsible for, which is
    implementing the law that you all have given us as I understand
    it. That is where, right now, my time is focused.
        Senator Scott. So you have no margin at all to spend any
    time focused on a probable outcome that could impact the
    delivery system of health care in America? You have no time for
    a contingency plan whatsoever?
        Secretary Burwell. Right now, with regard to the issue of a
    probable outcome, as I think I have said, I think we believe
    that the position that we hold is a position that both
    represents the letter of the law, for one--and I will let the
    Justice Department articulate the reasoning around that--and we
    recently wrote in the brief that we filed with regard to the
    letter of the law, that certainly in the spirit of the law, the
    idea that the U.S. Congress gave tax breaks to people in New
    York but not people in New Jersey or other States is untenable.
    We believe that in terms of the issue--you used the word
    ``probable.'' We believe that we are in a position that is the
    right position.
        Senator Scott. So section 1401 of the law specified that
    people may receive a premium tax credit if they enroll through
    an exchange established by the State under section 1311. So you
    believe that there is no likelihood that the actual letters in
    the law will have weight in the Supreme Court?
        Secretary Burwell. With regard to the issue of the specific
    arguments around the letter of the law, I am not a lawyer, and
    I will defer to my colleagues at the Justice Department with
    regard to the specifics of that, and we have filed a brief.
        Senator Scott. So, no contingency plan.
        Secretary Burwell. As I have said, right now what I am
    focused on is what is before us now in terms of the most
    important responsibility, to implement the law in a way that
    serves the consumer. Between now and February 15th, that is my
    deep focus.
        Senator Scott. Thank you.
        The Chairman. Thank you, Senator.
        Senator Casey, at last you are next.
        Senator Casey. Mr. Chairman, thank you very much. Secretary
    Burwell, we are honored you are with us today. Let me say at
    the outset that I have been in State government and the Federal
    Government now for what I guess is about 18 years. I know
    competence and integrity when I see it; I think you have
    demonstrated that in this job, and I think you have
    demonstrated that today.
        I want to start with a list, and I will try to do these
    quickly, because there is a lot to be positive about, not just
    in your statement and in the budget presentation, but also the
    impact of the ACA and other policies. Let me do this very
    quickly, and then I will raise a point of contention. But I do
    want to ask you about Medicaid--a couple of questions about
    Medicaid.
        First of all, with regard to the newly insured since ACA,
    just a staggering number of Americans now are covered. I do not
    have the exact number, but we are into the double-figure
    millions, and that is significant. Next, the President's
    proposal to extend funding for the Children's Health Insurance
    Program for an additional 4 years: I was heartened and
    encouraged by the proposal.
        Just to give you a sense of what my State of Pennsylvania
    has, right now we have, as of January, 147,464 children
    enrolled. Our program is a little more than 20 years old, but I
    do not know what we would do without the program. So Senator
    Brown and others who have raised this issue repeatedly as I
    have, we are heartened, and we just hope that your commitment
    to it, the administration's commitment to CHIP, will be shared
    by people in both parties.
        I noted in another document the donut hole savings since
    2010--meaning seniors who have to pay out of their own pocket
    when they hit a prescription drug gap--the reversal of that has
    meant savings of $11.5 billion, affecting more than 8 million
    seniors. Eight in 10 customers in the Federal marketplace are
    getting coverage for a hundred bucks when you factor in the tax
    credit.
        Next, funding for the National Institutes of Health: I
    appreciate your commitment to increase funding for that, and I
    believe that it should be bipartisan here, and I hope it will
    continue to be. Early learning: I do not have time to go into
    that, but I would like to note a great commitment by the
    administration. Hospital readmissions are going down, literally
    saving lives. According to your testimony, if you look at 2010
    to 2013, hospital readmission reductions saved 50,000 lives and
    $12 billion in health spending.
        Child care: the commitment there is great. We will not have
    time to go into that. Head Start, Early Head Start, home
    visiting, rooting out waste and fraud--there is a long list of
    positive investments, and I think we should not only celebrate
    or note those achievements and commitments that I itemized, but
    we should fight very hard here to support funding and any other
    legislation to reach those goals.
        I wanted to ask you, though, about Medicaid. The way I look
    at Medicaid is, it is really the program for long-term care for
    seniors, children, and individuals with disabilities. So
    instead of thinking of the program, I try to think about who
    gets the benefit of a great program. I am unalterably opposed
    to any block-granting of Medicaid. It is a really bad idea, but
    worse than that, it would be harmful to people.
        I wanted to ask you, in light of this debate about what
    happens to Medicaid, what happens to the--in our State, by one
    estimate--about a quarter of a million seniors who depend upon
    Medicaid for long-term care? What happens to those seniors?
    What happens to the children in this country--by one estimate,
    more than 30 million kids--if we go in the direction of block-
    granting Medicaid?
        Secretary Burwell. We believe that a block grant is
    something that is harmful to those individuals because one of
    two things happens: it is either harmful to the individuals or
    harmful to the States in terms of if we have an economic
    downturn, a change in the way care is provided.
        What will happen is, without the flexibility to respond to
    that, the beneficiaries will suffer. That is where the cuts
    will go in terms of meeting the numbers. Either that will
    happen, or it will go onto the State's balance sheet, so we
    believe that is not a good approach to doing this.
        As you know, we are working with States on waivers and
    innovative approaches, but we believe that that is an approach
    that--the reason we do not like that approach is because of the
    damage it can do to beneficiaries, as well as to States,
    potentially.
        Senator Casey. Well, I appreciate that. I know my time is
    running out. I will raise two issues and do most of it by
    asking for written follow-up.
        One is, children's hospital graduate medical education. We
    have three hospitals that have been very dramatically impacted:
    the Children's Hospital of Philadelphia, the Children's
    Hospital in Pittsburgh, and St. Christopher's in Philadelphia.
    I have a basic disagreement with the administration on this. We
    still have the program in place. I was hoping for a much more
    significant commitment beyond the $100 million. I think we are
    getting great results for our kids because of that program, and
    we will talk more about it.
        I will submit a question on that, as well as, now that I am
    out of time, the proposal regarding treatment foster care, also
    known as therapeutic foster care, for giving foster parents the
    kind of specialized training that they need to take care of
    kids who have particular challenges. But I will do that by way
    of a written question. But thank you for your testimony. Thanks
    for being here and for your service.
        [The questions appear in the appendix.]
        Secretary Burwell. Thank you.
        The Chairman. Thank you, Senator.
        Senator Menendez?
        Senator Menendez. Thank you, Mr. Chairman.
        Thank you, Madam Secretary, for your service. I would like
    to, in a very short period of time, see if we can cover four
    topics: (1) the challenge of Medicaid enrollment in New Jersey;
    (2) IP protections on biologics; (3) autism coverage; and (4)
    the 2-midnight rule. First of all, before we go to that, I just
    want to highlight a couple of key components of the President's
    budget proposal that I believe are critically important for the
    health and well-being of the most, in my view, important part
    of the American population, and that is children.
        These are the home visiting program and the CHIP program.
    His budget calls for a very welcome $15 billion investment in
    voluntary evidence-based home visiting, which has proven highly
    successful in helping pregnant women, new mothers, and their
    babies.
        The budget also calls for a full extension of the CHIP
    program, which has proven unmatched in extending health care to
    children throughout the country. I strongly support these
    programs, and I hope the committee works to extend them as soon
    as possible. I look forward to working with you on that.
        On the Medicaid enrollment question, there is a serious and
    ongoing issue in New Jersey of an estimated 44,000 Medicaid
    applications backlogged and still waiting to be processed. Now,
    I believe you were in New Jersey recently. You may have heard
    about this issue firsthand. Because of the backlog, people in
    the State are either unsure of their coverage or are foregoing
    care. It seems to me fundamentally wrong that if people are
    eligible, that they are prevented from getting the health care
    while their eligibility is being determined.
        So when I have asked this question before, I was told that
    CMS was considering measures to address it, both carrot and
    stick approaches. Has CMS taken any administrative actions to
    push States to clear their backlogs, and what about measures to
    require States with significant application backlogs to provide
    applicants with at least provisional coverage until their
    application is fully completed, which is what a judge in
    California ordered to be done?
        Secretary Burwell. Senator, I will have to go back and
    check, because my knowledge of the number--my understanding is,
    we are at a much lower space from the 44,000. That is something
    that I want to go check on, because my understanding is, with
    regard to our 2014 backlog, that we are almost through that
    backlog.
        I want to come back on that specific issue because it
    relates to the second part of your question. The work-around
    that we have done with the State of New Jersey in using the
    Federal marketplace to process things--and it is a flat file--
    is the technology we are using to do that. We are through that,
    and we are very close to full automation on the front end for
    2015. So I think I need to make sure that our numbers----
        Senator Menendez. Well, I hope that is the case. It would
    be welcome news.
        Secretary Burwell. Yes. If our numbers are----
        Senator Menendez. But that is not my understanding----
        Secretary Burwell. And so I want to go and make sure.
        Senator Menendez [continuing]. In dealing with different
    entities on the ground. All right.
        New Jersey is home to some of the world's leading medical
    researchers, who work every day to advance innovative biologic
    therapies to combat disease and illness. In order to guarantee
    that progress that often provides for both cost savings and
    life-saving, life-enhancing drugs, we need intellectual
    property protections.
        I have difficulty in understanding how the administration
    calls for a reduction in the patent protection for innovative,
    complex biologics from 12 years to 7. When your fellow Cabinet
    member, the U.S. Trade Ambassador, was here, he was telling me
    that they are fighting robustly to keep the 12-year patent
    exclusivity on the biologics prevailing in trade agreements.
        So I do not know how he does that if we domestically are
    seeking to undermine that, so have you been engaged with the
    Trade Department on this particular question?
        Secretary Burwell. Yes. And my understanding is that it is
    not yet settled with regard to where we will be in TPP.
        Senator Menendez. No, I understand that. But the question
    is, if you come here and say we should reduce it from 12 to 7,
    and he is negotiating with countries saying we should retain it
    at 12, isn't that a fundamental flaw in our bargaining
    position?
        Secretary Burwell. With regard to the specifics, this is
    something I will follow up on with the U.S. Trade
    Representative. The administration's position is that we
    believe, as reflected in our budget, that we should go to 7.
        Senator Menendez. All right. Well, that is something that
    we would have a real problem with.
        Finally, autism coverage. When you were in your
    confirmation hearing, we talked about this. I would like to
    know--I am hearing from families who come to realize that their
    plans lack or restrict these benefits, which is not what the
    law calls for. I want to know whether HHS is doing everything
    to ensure all critical autism services, including applied
    behavior analysis, are in all qualified health plans. I keep
    hearing from families that that is not the case.
        And secondly, on the 2-midnight rule, I just want to say
    this is something that Congress voted to delay for a period of
    time as a result of last year's SGR bill. I do not get a sense
    that much has been done with CMS and the hospitals, physicians,
    and Medicare recovery contractors once the delay is lifted, in
    terms of dealing with this question. Maybe you can inform the
    committee.
        Secretary Burwell. With regard to the 2-midnight rule, what
    we would like to do is actually work with the Congress to make
    sure that we can improve on that. The issue of medical
    judgment, which is one that has been raised with us in terms of
    the problems around that rule, is something we would like to
    have a conversation about. As you stated, there are statutory
    concerns, in terms of what we are doing. I think what we would
    like to do is have the conversation so that we can move forward
    and do it in a way that reflects medical judgment.
        With regard to the autism issue, I just wanted to touch on
    that briefly. What CMS has done is moved to have definitions
    that will make it clearer, and hopefully that will help. I
    think, as you know, the States are implementing the essential
    health benefits and quality benefits. So the step we believe we
    could take and did take was to try to get clearer definitions
    with regard to those issues in autism.
        Senator Menendez. Mr. Chairman, on the 2-midnight rule, I
    will just point out that the extension that the Congress passed
    ends at the end of next month. So unless we have the
    wherewithal to figure out a way of moving forward, we are going
    to have a problem again.
        Thank you, Mr. Chairman.
        The Chairman. Senator Portman? Let me see, is that right?
    Senator Portman--all right.
        Senator Portman. Thank you, Mr. Chairman. I appreciate it.
        And, Madam Secretary, thank you for being here. Because my
    colleague, Mr. Menendez, just talked about the 2-midnight rule,
    I have to say that I share his concern over it. And look, I
    spent time with rural hospitals back home, spent time with some
    urban hospitals, and they just do not get it. It penalizes some
    of our beneficiaries.
        We have to come up with a common-sense way to address
    hospital inpatient and observation stays. You are creating, by
    promulgation of these rules--you are incentivizing behavior
    that is actually going to cost us more in the end, so I hope
    you will work with us on that.
        I want to talk about three other things if I could,
    quickly. One is substance abuse, the second is Medicare
    Advantage, and the final one is the budget, since that is what
    we are here to talk about.
        With regard to Medicare Advantage, I have a strong concern
    about the way in which there is a bias in the current way we
    are evaluating the program. A little background on this:
    yesterday I sent a letter to CMS, which was copied to you as
    well. Senator Nelson and I, who is on this committee, co-
    authored it, and we got 40 of our colleagues to sign up,
    including 21 members of this committee on a bipartisan basis.
        We made the very simple point that Medicare Advantage is
    working. In Ohio, 38 percent of seniors are on it. More than 20
    percent of those seniors, by the way, are either dual-eligibles
    or other low-income seniors, so-called special needs cases. Our
    satisfaction rate is 85 percent, so people like this program.
    It provides them a comprehensive health care program,
    integrated care, disease management that everybody talks about,
    and this has been shown to lower costs and improve patient
    care.
        So Medicare Advantage is something that is working in my
    State, and seniors like it, and yet CMS has this way that they
    are evaluating the various health care programs that has a bias
    with regard to our Medicare Advantage plans, in part because we
    do take care of so many dual-eligibles and low-income seniors.
        CMS claimed recently that it has taken steps toward
    recognizing this problem through a Request for Information
    analysis from MA plans that demonstrates this bias. So I would
    want to bring this to your attention, but also ask you if you
    have any thoughts today, quickly, on what are the agency's
    plans for releasing the results of that analysis so we can see
    it, so it is transparent, and for implementing a solution to
    this problem.
        Secretary Burwell. With regard to--we agree Medicare
    Advantage is working. We believe that the changes that have
    been put in place over a period of time have been effective, as
    you are reflecting, whether it is the fact that 99 percent of
    beneficiaries have access, or that the percentage of 4-star
    plans has gone up to 67 percent, or that we have seen an
    increase in the number of people enrolled. So we agree the
    program is working.
        With regard to the specific----
        Senator Portman. Let me just say if I could, just for a
    second, that people understand what you are talking about. If
    you get a rating that has too few stars, then the plan can go
    out of business. That happened in Ohio. We had a plan that was
    serving a lot of low-income seniors that was actually run out
    of business by this evaluation, so it is very important to get
    the evaluation right. Sorry.
        Secretary Burwell. It is important to get the evaluation
    right. We appreciate the Congress's support in giving us money
    to do studies on the question of the socioeconomic impact of
    these measures. We are working through that, through the
    analysis we have been given, and there are two places that that
    is focused: one is Medicare Advantage and the other is
    readmission.
        But we know we cannot wait on that analysis, so we are
    continuing, through CMS's regulatory process, to look at the
    issues you have raised with regard to, how does the population
    you serve impact these ratings?
        Senator Portman. All right.
        With regard to substance abuse, thank you for your
    willingness to put in the budget a comprehensive look at what
    is a growing problem in my State and around the country, which
    is opiate addiction. Prescription drugs less so, now more
    heroin, which is less expensive and causing a huge problem.
        The number-one cause of death in Ohio today is heroin
    overdoses. It has now surpassed traffic accidents. The
    comprehensive strategy has to include prevention, it has to
    include treatment, it has to include recovery, and it has to
    include some new and innovative medical interventions to try to
    deal with the treatment and recovery side. So I thank you for
    that.
        As you know, Senator Whitehouse and I have proposed
    legislation to address these issues in a comprehensive way. We
    would like to work with you on that. We would love your help on
    that to try to get some more co-sponsors and try to get that to
    the floor, but I think this is a problem that for too long we
    have kind of swept under the rug, and it is time to deal with
    it in a comprehensive way.
        Secretary Burwell. I appreciate your leadership and have
    publicly recognized that leadership as part of our thought that
    this is a place where there is bipartisan energy to do this,
    not just with the Congress but also with Governors as well. So,
    I look forward to working with you on the areas you outlined.
    Those are the areas that we believe are the right strategic
    approach.
        Senator Portman. Well, and I do think HHS has a unique role
    to play in terms of best practices and research.
        The final question is just on the budget. We have very
    little time left, but the obvious problem in our budget is
    health care. I remember when I left OMB, maybe when you left
    OMB, you had the same reaction. People said, what is the
    problem with the budget? Is it the tax system? Is it the wars
    overseas? Honestly, it is health care. Health care is driving
    these long-term projections that are simply unsustainable.
        So I would say what I have told you before in your
    nomination hearings and so on: we are looking for help. I mean,
    Congress is hesitant to take on some of these issues because
    they are controversial, politically difficult. I look at your
    budget again and I think, you have taken health care costs over
    the next 10 years from increasing 105 percent, so more than a
    doubling, down to 99 percent, and you are taking credit for
    that.
        When I look at the changes, frankly, a lot of them are not
    sustainable in my view, because they are cutting providers more
    in a way that has not been sustainable in the past. I think it
    would drive some providers away from providing Medicare
    coverage because of the way you do it.
        So my only question is, when are we going to get serious
    about this? How do we get serious about it? If we do not,
    obviously we are not going to be able to deal with this
    historic level of debt we have. It has presented the economy,
    as you know, within the next 10 years, based on the
    Congressional Budget Office, with levels we have not seen since
    World War II.
        Secretary Burwell. With regard to the issue, I think we
    have put out proposals that we believe are a way of dealing
    with it in specific terms. Whether it is the proposal on
    Medicare Advantage and how we are implementing certain rules or
    some of the other things that your colleagues have raised on
    this side--some of our colleagues raised other concerns with
    our proposals. So we are proposing things that we believe, put
    together, create a balanced approach that does things on the
    provider side and does things on the other side.
        Senator Portman. My time has expired, and we have others
    who need to talk----
        Secretary Burwell. What we would like to do----
        Senator Portman [continuing]. But let me just make the
    obvious point, which is, we are still seeing under your budget
    a doubling of health care costs--and by the way, driven by a
    lot of things, but one is Obamacare--and significant increases
    in health care costs through that, about 62 percent of it,
    according to CBO. So these are issues that we are making worse,
    not better, by adding more entitlements that I hope we will get
    serious about addressing.
        Secretary Burwell. I do think it is important though to
    reflect that, in terms of Medicare cost growth on a per capita
    basis, it has been almost nearly flat in the past few years.
        Senator Portman. And why do you think that is? Sorry, Mr.
    Chairman. Just give me one second.
        Secretary Burwell. I think that there are a number of
    reasons. And this, though, gets to the point of the out-years.
    We as a Nation have a baby boom generation coming through. The
    number of people who are going to be on Medicare is going to be
    larger. As a Nation, we are going to have to make a decision
    about how we feel about that during the time in which that
    group of people has to pass through.
        I think we are just going to have to make a decision about,
    what are we willing to do and how are we willing to think about
    that in terms of the choices that we make? Those choices come
    in the form of those people and the commitments that we have
    made, which I think both sides of the aisle believe that we
    should make good on, versus other changes.
        Senator Portman. Let me just--I know I am out of time. Let
    me just make the point here, again, that the Congressional
    Budget Office says--not Republicans, this is not me saying
    this--the main driver of that cost reduction in Medicare is
    Medicare Part D.
        Where we allow competition, where we have transparency,
    where you have insurance companies competing for the business
    of our seniors, that is not the Obamacare model--which again,
    if you look at the analysis, Obamacare is responsible for 62
    percent of the growth in Federal health care spending, and the
    age of the population, which you just talked about, the aging
    of the population is the reason for 21 percent. So we have to
    get serious about looking at what is actually working.
        When Marilyn Tavenner, CMS Administrator, was before this
    committee, she said the actual costs on Part D are now 40
    percent less than the original estimates, and this analysis by
    the agency responsible for the Federal budget shows that Part D
    is by far the main reason we have seen this reduction in
    Medicare spending. So my time has expired, but I look forward
    to continuing the conversation.
        Secretary Burwell. Thank you.
        Senator Thune [presiding]. Thank you, Senator Portman.
        Senator Isakson?
        Senator Isakson. Thank you, Senator Thune. And you were
    doing great, so I did not mind you taking the time. I would
    just put a little asterisk in there. Long-term entitlement
    reform is really one of the keys to getting the macro problem
    solved. I mean, the longer we wait in doing that, the worse it
    is going to be in terms of the debt in the out-years, and I
    appreciate your focus on that.
        I want to take my 5 minutes to talk about the 10 minutes of
    your time I took last year. I had the benefit of being on the
    HELP Committee and the Finance Committee. Your confirmation
    came up, so I got two bites at the apple, and I used all 10
    minutes to hold your feet to the fire on the Port of Savannah
    and getting it as a continuing project in the budget, until we
    finalized what had been a 16-year effort.
        I want to publicly thank you for doing everything that you
    said you would do last year and acknowledge that, in this
    year's budget submitted by the President, it is a continuing
    project funded at $21 million for fiscal years 2015 and 2016.
    We thank you very much for that.
        Secretary Burwell. Thank you. Thank you, Senator.
        Senator Isakson. Now, back to the subject at hand. As
    chairman of the Veterans Committee, I had a town hall meeting
    at the VA yesterday. There were four of us: the ranking members
    of the House and Senate and the chairs of the House and Senate.
    We spent 3 hours with over 400 employees of the VA, and we were
    on a nationally televised hook-up with every VA office in the
    country--340,000 employees in veterans' health care.
        We found out yesterday morning, just as we were walking
    into that meeting, that the President's budget would portend
    that some of the Veterans Choice appropriations that were
    approved in the authorization last year might be moved if the
    utilization of Veterans Choice was not as great as it appeared
    it was going to be.
        That really bothered me a lot, because we spent a lot of
    time last year debating the Veterans Choice Act, which would
    give veterans who live more than 40 miles from a VA facility,
    or veterans who could not get an appointment within 30 days, a
    chance to go to the private sector to a Medicare-approved
    physician and get the treatment that they needed. We have only
    had 1 month where that bill has been in effect, and that was
    the month of December, where we have the numbers.
        In the month of December, of the 8.5 million veterans who
    received Veterans Choice cards, 150,000 actually inquired about
    an appointment. That is not enough evidence to tell you if it
    is going to be over-utilized or under-utilized, but I want to
    make sure the administration does not assume for some misguided
    reason that Veterans Choice is not going to be what it was
    expected to be when we passed it last year.
        It is our one chance to see to it that we keep the promise
    to our veterans, we keep the veterans' health services from
    becoming such a huge organization that it is totally
    mismanaged, or totally under-managed. And by the way, Secretary
    McDonald is doing a phenomenal job. He is applying business
    practices, he is serving without pay, he is doing everything
    you would ever ask a public servant to do. But if the
    administration is considering proposing cuts in Veterans Choice
    in the 2-year window that we appropriated last year, we are
    going to have some serious problems.
        Secretary Burwell. In terms of the VA budget and those VA
    issues, I would let Secretary McDonald speak to them. With
    regard to our interaction with VA, we continue to work on the
    areas and issues where we can. One of the most important places
    for us is in the mental health space, and we continue to work
    with VA.
        The other place that is very important, and it does get to
    the care issue, is in the Office of the National Coordinator
    for Electronic Medical Records, because that is an important
    part of making sure that our veterans get the care they need,
    when they need it, where they need it, with the information
    they need. So those are the two places we interact, but I hear
    the point and will make sure that I share it with Secretary
    McDonald and others in the administration.
        Senator Isakson. And we want to acknowledge to the
    President our appreciation that he signed the Clay Hunt
    Veterans Suicide Prevention bill yesterday. It is the single
    biggest problem facing us, and the VA is doing a good job of
    trying to get their arms around it. We have to stay the course
    and keep to the task.
        Secretary Burwell. Which is where we interact in terms of
    our substance abuse and mental health efforts in HHS, in terms
    of working on mental health issues and supporting the VA and
    our veterans in trying to work through those issues and make
    sure they have the care, the prevention, and the treatment that
    they need.
        Senator Isakson. One last question, Mr. Chairman, if I can.
    In your proposal, you talk about adopting the bicameral
    agreement from last year and repealing and replacing the
    Sustainable Growth Rate. Is that correct?
        Secretary Burwell. What we have said is, we support this
    effort of moving forward. It is in our budget. We proposed both
    not letting the cuts occur as well as reforms in our budget. We
    are hopeful that this can be a bipartisan effort that will
    occur this year.
        Senator Isakson. If I read the budget right, you assume the
    cost of repealing and replacing the SGR at $44 billion? The
    estimate out of CBO was $177 billion. What is the difference?
        Secretary Burwell. What the difference is, is there are two
    parts. When we assumed not doing the cuts, we built that into
    our baseline, so it is paid for in that way. There are also
    reforms that have been proposed, and the legislation that you
    are referring to actually has costs, and that is the number
    that you are seeing. That $44 billion is the number you are
    seeing in terms of the improvements, and some of those have
    costs, but in terms of the overall improvements, which is the
    bigger part, which is the cliff, that is in our baseline.
        Senator Isakson. Well, thank you for your service and your
    time.
        Secretary Burwell. Thank you.
        Senator Thune. Thank you, Senator Isakson.
        Secretary Burwell, a couple quick questions here. We have
    nine Indian tribes in my home State of South Dakota, so we have
    thousands of American Indians who depend on IHS in my State. My
    staff works regularly with the Office of Congressional Affairs,
    and previously officials from the Great Plains office, but
    unfortunately we are finding it difficult to get timely
    responses to our inquiries.
        In fact, a recent example that comes to mind is the
    response I received last week from the IHS to a letter that we
    mailed 11 months ago. Additionally, my staff was recently
    prohibited from visiting an IHS facility without clearance,
    which took weeks to obtain from headquarters, which I believe
    is another example of just a lack of transparency and
    responsiveness.
        I am wondering if you could speak to why the regional
    office has been instructed to not engage in even providing
    basic information to my staff or why my staff has been unable
    to visit IHS facilities without prior clearance from
    headquarters.
        Secretary Burwell. Senator, these are both examples that, I
    apologize, I do not know about. I will look into them and get
    back to you. I am hopeful--I think you know in the budget there
    are a number of proposals that we have with regard to IHS that
    are important, and I apologize that I do not know each of your
    tribes and whether they fall under direct support or not.
        But there are a number of proposals for the tribes that do
    receive direct support that I think are extremely important to
    making sure we provide appropriate care, so I want to look into
    these issues. I know your leadership on this issue, and I am
    hopeful that we can work together, because I think there are
    some very important things to do with regard to the quality of
    care and providing that care and not cannibalizing the care
    that we are providing. I will not go into that; I know you are
    familiar with the----
        Senator Thune. All right. Well, I appreciate that. I wanted
    to hear you commit to ensuring that the communication improves
    and that these inquiries get responded to in a more timely way.
        Secretary Burwell. I will follow up on both of those
    things.
        Senator Thune. The other thing I wanted to mention with
    regard to IHS is that, what we hear from providers who
    participate in the IHS Purchased/Referred Care program is that
    there is a frustration with the time and significant cost it
    takes to process claims.
        So, as a result of that, last fall my staff convened a
    working group in South Dakota that included IHS, private
    providers, and tribal representatives to discuss ways that we
    could improve that claims administration process. As a result
    of that meeting, we have a commitment from the stakeholders to
    continue to discuss this issue in follow-up meetings.
        But one particular area of improvement that was suggested
    was to use electronic mechanisms to exchange information in the
    processes, in the claims and payment processes. So in the PRC
    program, claims are still being mailed in paper form back and
    forth. It seems that the focus to move providers and payers to
    electronic health records should include the IHS and their
    relationship with private providers.
        So is that something that you agree with? I mean, using a
    paper claims process seems to be very antiquated, inefficient,
    and ought to be changed. So would you commit to working with us
    and with other stakeholders on a way that we can achieve some
    program efficiencies that might include and incorporate
    electronic records?
        Secretary Burwell. Yes, and we would like to hear what you
    are hearing. When I met with the Secretary's Tribal Advisory
    Committee about these issues, one of the things that they are
    raising is, as we push to have electronic medical records in
    the tribes, the question of their ability to do that and on
    what time table.
        We would welcome the conversation, because I think it will
    help with the issue you are talking about in terms of our
    claims processing. They have expressed some concerns, but this
    is a place where, let us see what we can do to move the ball
    forward, including ways to think about assisting and helping
    them with moving towards the electronic medical records,
    because it will help with the other issues.
        Senator Thune. All right.
        Secretary Burwell. And the other thing is, though, this
    does also get to predictability and funding.
        Senator Thune. Right.
        Secretary Burwell. Which gets to some of the other issues
    in the budget in terms of those payments of claims.
        Senator Thune. Right. A final point. The world of tele-
    health, digital medicine, has grown by leaps and bounds in the
    last few years, but it seems like the regulatory regime that
    sort of governs that, particularly related to payment and use
    of tele-health, has not kept pace. So the question is, what can
    HHS do to evaluate the current regulatory environment and make
    changes to catch up and keep up?
        We have seen a lot of pioneering work done in my State with
    the use of tele-medicine, but it is very, very hard to deal
    with all the payment issues and some of the bureaucratic
    regulatory issues that seem very outdated relative to the
    technology that I think would be incredibly effective in
    meeting health care needs, particularly in rural areas.
        Secretary Burwell. So, one, I continue to work on these
    issues and have made some progress, but I think you are right
    in terms of, there is this place where we can continue to make
    progress.
        I think one of the ways to do that is to make this a part
    of the conversation on delivery system reform, because it is a
    way that we can provide greater quality care and a more
    efficient way of doing it. So, I think we need to make it a
    part of that.
        I think the other thing is how we have the conversation
    with those who are not as supportive of changes in this space
    in terms of using tele-health as care. So those are the two
    things. I think having it sit within delivery system reform is
    important, and then the second thing is how we can work
    together with those who oppose greater speed with regard to
    moving it forward.
        Senator Thune. Yes. All right. My time is up. Thank you,
    Madam Secretary.
        Senator Carper?
        Secretary Burwell. Thank you.
        Senator Carper. Thank you, Mr. Chairman.
        Madam Secretary, great to see you. Thanks for your
    leadership and your service in so many different roles for our
    country. I am concerned. I am sorry I could not be here
    earlier; we got bounced back and forth between three different
    hearings, all of which are really terrific and important
    hearings.
        I am concerned about the funding cliff that is faced by our
    federally qualified community health centers. We know it is a
    steep cliff. I understand from the President's budget that he
    calls for addressing the funding cliff with a multi-year
    solution to provide stable and maybe more predictable funding
    to these essential health centers.
        Could you just talk about the effects of our failing to
    address this funding cliff? I want to ask if we can count on
    the administration's commitment, your commitment, to working
    with us to make sure that health care centers receive
    sufficient funding to continue their investments in care and
    service to meet the needs of our communities.
        Secretary Burwell. With regard to our budget, we actually
    both address the funding cliff but also address that we believe
    that there are greater needs. Our budget actually funds 75 new
    health centers, and those are generally for under-served
    communities, often rural but not always, around the country. So
    our commitment is to address the funding cliff which we think
    would have a very detrimental effect on those health centers.
        I have traveled around the country, seen the folks who are
    being served by those centers, and it is a very important part
    of serving communities around the country, in terms of millions
    who are receiving their care at these centers, and so a cliff
    would mean a dramatic change for them.
        Senator Carper. Thank you. Thanks very much.
        From my earlier conversations, past conversations, you know
    I am a big supporter of your ongoing efforts to move our
    country's health care system away from volume-based toward
    value-based payment for care. Your announcement last week to
    push forward with the ambitious goal of moving, I think, nearly
    all Medicare payments into these value-based arrangements by, I
    think, 2018 helps, I think, solidify this promising future.
        Delaware, as you know, is right beside you, and we are
    grateful that our State has received a State innovation model
    grant so that we can design and test payment and service
    delivery models. Providers in my little State are, even at this
    moment, rightly concerned about the financial implications of a
    transition to value-based payment models, but they are actively
    working together with State officials and across payers to
    figure out how to make this shift.
        Here is my question. Would you please discuss with us some
    of the improvements in health care outcomes as well as cost
    savings that may have already been realized in the last few
    years due to value-based Medicare reimbursements and the
    demonstration of new payment arrangements in various States?
        Secretary Burwell. With regard to value-based payments, we
    are starting to move forward, and we see that there are
    providers who are receiving the benefits and rewards of those,
    and there are also those providers who are in the bottom part
    of what they are doing who are receiving the payment cuts, and
    so we are starting to see that.
        With regard to some of the models that we are using, the
    alternative payment models, one of the things that we are
    seeing is how Accountable Care Organizations are working, and
    we are already seeing the actual financial savings in that, up
    into the hundreds of millions of dollars, in terms of what we
    think we can do there.
        One of the things we want to do is continue--and this is
    something that our budget talks about--making sure that we have
    the flexibility so that, as we go, we learn and we incorporate
    the things that they believe will be the right incentives.
        We discussed this with Senator Cantwell when she was here,
    in terms of making sure we have the right incentives to keep
    people moving on that path and addressing the various kinds of
    issues. As you said, they are moving, but there are concerns
    that get raised.
        Senator Carper. All right. Thank you.
        Another issue that Tom Coburn and I, a former colleague
    from Oklahoma, have talked with you and your predecessors about
    ad nauseam is the improper payments. It has been on the high-
    risk list for the GAO, the Government Accountability Office,
    forever, and it remains there.
        A number of years ago we--Dr. Coburn and I, in the Bush
    administration and then in the Obama administration--focused,
    focused, focused on this with GAO and started to see that
    number being driven down, which is good. It is over $100
    billion a year, as you know, government-wide.
        This last round, we have seen some reduction in improper
    payments in a variety of parts of our government, but not in
    Medicare. In fact, we saw a bump-up in Medicare, and it
    concerns me. If you could, just talk about that. Should we be
    concerned? Are you concerned? What can you do, your Department
    do, what can we do to help reverse that and get it headed back
    down?
        Secretary Burwell. There are a number of things that we can
    do, I think, to do that. Within Medicare, in terms of A, B, C,
    and D, the different parts of Medicare, we see actually some of
    it continuing on the right path and some of it not, so there
    are places within Medicare that we think are directionally
    correct in terms of that continuing downward trend on the issue
    of doing better on our program integrity.
        I think in our budget, we propose funding that we think is
    important to continuing these efforts. I think we also need to
    work through efforts--and we have talked a little bit here
    today about some of the rules and some of the regulations here
    that are statutorily on hold for reasons that people have
    raised issues with.
        But I think what we need to do is work through those
    concerns so that we can continue on the path, in terms of
    making sure we are recovering those improper payments. We have
    seen, I think as you know, some record returns in terms of the
    issues specifically around fraud, an 8 to 1 return and a record
    year in 2013 in terms of what we are getting in. We want to
    continue working on that, and we do not want to be in a pay-
    and-chase mode, but a more preventative mode. So those are some
    of the things we are doing. The budget focuses on this
    specifically in terms of some of the funding that we have asked
    for.
        Senator Carper. Good. Well, I think we agree it is
    important to continue our efforts, and we want to be helpful.
    Let us know how we can do that. Thank you.
        Secretary Burwell. Thank you.
        Senator Carper. And again, thanks for your service.
        Secretary Burwell. Thank you.
        Senator Isakson [presiding]. Secretary Burwell, I think
    Senator Wyden has an additional question, if you do not mind.
        Senator Wyden. Thank you, Senator Isakson. Two questions,
    just very briefly. It has been a long morning, and you have
    been very patient.
        Madam Secretary, Senator Isakson and I, and colleagues on
    both sides, have taken a special interest in Alzheimer's. As
    you know, Alzheimer's is just hitting millions of American
    families like a wrecking ball. What we see is families just
    really being in agony because they cannot even pay for the kind
    of care that they want their loved one to have.
        My question is, I think it is understood that the fight
    against Alzheimer's now has scores of private entities,
    companies, researchers, and others, and there are some public
    institutions obviously involved as well. Your Department holds
    a couple of pieces of the puzzle. The research area is one.
    Certainly we have been talking about chronic disease and how we
    are going to come up with a coordinated system of caring for
    those with chronic disease, of which Alzheimer's is right up at
    the top.
        But there is one question that I get asked all the time,
    and it really is what I wanted to touch on today, and maybe we
    are just going to begin to have this discussion. But whose job,
    in your view, is it to try to put together a game plan to beat
    Alzheimer's? We have this array of private and public parties,
    people who are working very hard and mean well. Is there any
    discussion that you know of that even focuses on who might be,
    or the group of people who would be tasked with coming up with
    a plan to beat this horrible scourge that is taking such a toll
    on our families?
        Secretary Burwell. With regard to the question of beating
    it, I think you know that in this budget we have almost $3.2
    billion committed to these issues, and, as you said, we are a
    payer. The largest portion of that is in what we pay in
    Medicare in terms of paying for the care that you mentioned. We
    are the researcher, in terms of how we add to the research, and
    we have increases in that that you see in NIH.
        I think the question of beating it--we actually need to
    make progress on the research and understanding the science so
    that we can work toward that. We need to make sure that we are
    helping families afford the care that they are seeking.
        Then the third element actually is about how people
    actually go through this process and whether you are the
    individual who is suffering or the caregiver. That falls under
    the Administration for Community Living. So this question of
    beating it, I think, has three fundamental elements to it:
    research, pay for care, as well as how you handle it.
        One of the things that I think is important is that the
    Administration for Community Living--and I should mention there
    are also other elements of HHS that have small bits, but those
    are the main ones. I think one of the places where we can focus
    this year is in the White House Conference on Aging and using
    that as an opportunity to bring together some of these pieces.
    Within our budget, what you see is the energy that is leading
    up to the increase in NIH and the increase in the ACL.
        Senator Wyden. Let us do this. I know this question caught
    you cold. You and I talk about a lot of stuff. I have not asked
    that particular question before. I want to continue this. Maybe
    the White House Conference on Aging is the place to do it, but
    it just seems to me that this is something that has to be put
    that way. How do you put in place a game plan to beat it?
        One last question if I might, Mr. Chairman, very quickly,
    and it deals with something else that this committee is tasked
    with and is very important, and that is foster care. Now, as
    you know, Madam Secretary, the big foster care program, I guess
    it is called title IV-E, does not kick in until a child is
    removed from their home. And I think you all are talking now
    about some approaches to really come up with preventive
    services for kids who are candidates for foster care but are
    not quite there.
        Senator Isakson has been incredibly patient. Why don't you
    give me a brief answer, if you could, in terms of how this
    might work for an individual kid? In other words, you have a
    real kid, and you want to get that child, he or she, preventive
    services. How do you do it?
        Secretary Burwell. So right now, the question of getting
    that child preventative services, what would happen at the
    point at which the child is near removal, they would just end
    up being removed. And what we can do is get in and provide the
    support to the States and communities in providing services so
    their parents, their existing family before they are removed,
    could get some support.
        Maybe that is respite care because the child has certain
    issues, maybe that is other services that the child needs. But
    what happens is, in the system now, too often the answer is,
    just move the child versus, can we understand the underlying
    causes?
        So what we want to do is create the flexibility that
    funding can be used to try to address causes and things that
    could help keep the child safely in the existing setting. We
    believe that can be better for the child. We want to do it
    always in a safe way, but we believe we need some flexibility
    to be able to do that in terms of how our funding can currently
    be used.
        Senator Wyden. Senator Isakson, you are going to wrap up.
        Senator Isakson. Thank you, Senator Wyden. Thank you very
    much, Secretary Burwell, for your appearance today. I want to
    thank all the Senators who appeared and questioned today. It
    has been a good hearing, I think, and a long one. Thanks for
    your patience.
        Any questions for the record should be submitted no later
    than Wednesday, February 11th.
        This hearing stands adjourned.
        [Whereupon, at 12:35 p.m., the hearing was concluded.]

                                A P P E N D I X

                  Additional Material Submitted for the Record

                                  ----------

                   Letters Submitted by Hon. Sherrod Brown,
                            a U.S. Senator From Ohio

            Office of the Governor                          State Capitol
                                             Montgomery, Alabama 36130

            Robert Bentley                                  (334) 242-7100
            Governor                                    Fax: (334) 242-3282

                                State of Alabama

                                November 6, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    Committee on Energy and Commerce    Committee on Finance
    2125 Rayburn House Office Building  219 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    The Honorable Henry A. Waxman       The Honorable Orrin G. Hatch
    Ranking Member                      Ranking Member
    Committee on Energy and Commerce    Committee on Finance
    2125 Rayburn House Office Building  219 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    Dear Chairman Upton, Chairman Wyden, Ranking Member Waxman and Ranking
    Member Hatch:

    Thank you for seeking governors' input on the Children's Health
    Insurance Program (CHIP). This important state-federal partnership
    provides access to vital health care services for many Alabama
    children, and I encourage Congress to act soon to extend CHIP for four
    years.
    CHIP in Alabama
    As of June 2014, Alabama had 86,218 people enrolled in CHIP: 57,872
    were emailed in ALL Kids (Alabama's separate CHIP) and 28,346 were
    enrolled in the Medicaid portion of CHIP. Among Alabama's CHIP
    enrollees, 58 percent are 12 or younger and 42 percent are 13 to 18
    years of age. Also, 49 percent are white, 25 percent are black and 26
    percent are Hispanic or have other racial or ethnic backgrounds. In
    addition, 33 percent of our enrollees are in families with incomes of
    100 to 141 percent of the federal poverty level, 43 percent are in
    families with incomes of 142 to 200 percent of the poverty level and 24
    percent are in families with incomes of 201 to 312 percent of the
    poverty level.
    Changes to CHIP as a Result of the Patient Protection and Affordable
            Care Act (PPACA)
    Alabama's CHIP, at the federal government's direction, moved about
    23,000 children to Medicaid on January 1, 2014. Medicaid provides the
    children with health care, but the care is funded by CHIP. Also,
    Alabama has built a new eligibility system to meet requirements of
    PPACA. The system has a rules-based engine for determining eligibility
    for both Medicaid and CHIP based on modified adjusted gross incomes.
    The system also interacts with the federally facilitated Market place,
    the Internal Revenue Service and the Federal Data Hub. In addition,
    Alabama's CHIP erased a three-month waiting period to comply with
    PPACA.
    Unique Benefits in Alabama's CHIP
    Alabama's CHIP provides nutritional counseling and extra primary care
    office visits for obese children. Also, Alabama's CHIP generally has
    lower copays than other insurance plans.
    CHIP Extension
    Congress should extend CHIP funding for four years to provide health
    care for many of our children. I ask that Congress act soon. We have
    started budgeting for the 2016 fiscal year, and CHIP's funding
    uncertainty complicates that task. The uncertainty of CHIP funding is
    also stressful for parents trying to make sure their children have
    health insurance.

    Alabama does not have precise estimates of the number of children who
    would be uninsured without CHIP, but the number likely would be large.
    Many CHIP enrollees could have access to health insurance through a
    parent's employer, but the coverage almost certainly would cost more
    and might be unaffordable. Also, family coverage for policies bought on
    the Marketplace likely would be out of reach for many CHIP families.
    People cannot qualify for tax credits to lower the cost of Marketplace
    policies if single coverage available through an employer would cost
    9.5 percent or less of household income. The tax credits are
    unavailable even if family coverage through an employer would cost 20
    percent or more of household income. Without CHIP, many of our children
    will be uninsured.
    Unspent Allotments
    Unspent federal allotments have not been a problem for Alabama. The
    funding formula, however, may need to be adjusted to ensure that
    Alabama and other states have adequate allotments to cover CHIP
    spending. Without carryover funds from 2010, funding provided to
    Alabama in the 2011 fiscal year would not have covered costs.
    Uninsured Rate
    Before CHIP, the uninsured rate for children in Alabama was 15 percent.
    In 2013, the uninsured rate for children in Alabama was 8.2 percent.
    That rate could fall even further if the Federal Medical Assistance
    Percentage for CHIP is raised by 23 percentage points as called for by
    PPACA starting in the 2016 fiscal year.

    CHIP is successful. It was started to give kids access to health
    insurance. There is still a need for it. Through CHIP, Congress has
    provided routine care and life-saving care for our children. I ask you
    to extend CHIP funding for four years, and to do it soon. Thank you for
    giving me the chance to comment on this vital program. Please contact
    my office if we may assist you further.

    Robert Bentley
    Governor

                                     ______

                              The State of ALASKA

                             GOVERNOR SEAN PARNELL

                    Department of Health and Social Services

                           office of the commissioner
                                                              Anchorage
                                               3601 C Street, Suite 902
                                           Anchorage, Alaska 99503-5923
                                                     Main: 907.269.7800
                                                      Fax: 907.269.0060

                                                                 Juneau
                                             350 Main Street, Suite 404
                                              Juneau, Alaska 99801-1149
                                                     Main: 907.465.3030

    October 23, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    Committee on Energy and Commerce    Committee on Finance
    United State House of
    Representatives                     United States Senate
    2125 Rayburn House Office Building  221 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    The Honorable Henry Waxman          The Honorable Orrin Hatch
    Ranking Member                      Ranking Member
    Committee on Energy and Commerce    Committee on Finance
    United State House of
    Representatives                     United States Senate
    2204 Rayburn House Office Building  104 Hart Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    Dear Congressmen Upton and Waxman and Senators Wyden and Hatch,

    In response to your letter to Governor Sean Parnell, dated July 29,
    2014, regarding Children's Health Insurance Program (CHIP) funding and
    additional information that would be helpful as you work through the
    funding extension process, please find the following response to your
    questions:

    1.  How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state (e.g.
        income, health status, demographics)?

         We had 10,725 children enrolled on the last day of the quarter
            ending September 30, 2013.

         Our eligibility standards for the program are:

         - Ages 0-5: 160-203 percent of the federal poverty level
         - Ages 6-18: 125-203 percent of the federal poverty level

         At the State level, the Medicaid agency has demonstrated
            improvement in children's quality of care as shown through the
            15 children's quality measures.

    2.  What changes has your state made to its CHIP program as a result of
        the Patient Protection and Affordable Care Act? How has the
        implementation of PPACA impacted the way your state administers
        CHIP?

         There have been no substantive changes, with the exception of
            those due to modified adjusted gross income (MAGI) and the
            conversion to Survey of Income and Program Participation (SIPP)
            plus one percent standards required under the PPACA.

         The MAGI SIPP conversion requirements are a direct impact of
            PPACA, as the law requires us to include income disregarded
            under prior law.

    3.  To the extent the following information is readily available and
        you believe it is relevant, please describe the services and or
        benefits and or cost sharing currently provided in your state under
        CHIP that are not comparably available through your state's
        exchange or through the majority of employer sponsored health plans
        in your state.

         The early periodic screening diagnosis and treatment (EPSDT)
            comprehensive child coverage is available to all children
            enrolled in Medicaid in Alaska. Therefore, the coverage
            available to the CHIP population is much more comprehensive
            that the coverage which is available in the Health Insurance
            Marketplace. Additionally, there is no cost sharing in Alaska's
            CHIP program. Some services that CHIP provides that private
            insurance may not are:

         - Inpatient and outpatient behavioral health services
         - Vision exams and corrective lenses
         - Hearing exams and hearing aids
         - Physical and occupational therapy
         - Services for speech, hearing and language disorders
         - Durable Medical Equipment

    4.  Do you recommend that CHIP funding be extended? If so, for how
        long, and for budgeting and planning purposes, under what timeframe
        should Congress act upon an extension? If you do not believe CHIP
        funding should be extended, what coverage (if any) do you believe
        CHIP enrollees in your state would be able to obtain? How many
        children covered by CHIP do you estimate would become uninsured in
        the absence of CHIP?

         The State of Alaska recommends that CHIP funding be extended at
            least through September 30, 2019 to match the maintenance of
            eligibility requirements (MOE) under the PPACA.

         Alaska is an M-CHIP state. We do not have a free-standing CHIP
            program, so the 10,725 enrolled children will have coverage
            through September 30, 2019.

    5.  In spite of the restructuring and retargeting of allotments that
        occurred in 2009, some CHIP funding remains unspent. Do you believe
        the annual allotments your state has received starting in 2009 have
        been sufficient and the formula is working appropriately? Do you
        believe there is a need for Congress to further address the issue
        of unspent allotments?

         Yes, the CHIPRA federal funding allotment formulas and
            methodologies have worked well for Alaska.

         States have two years to spend their allotments so the Fiscal
            Year 2015 allotment could go out through September 30, 2016. If
            Congress does not extend CHIP funding, the unspent allotments
            should be addressed.

    6.  Over the past number of years, States have worked to reduce the
        number of uninsured children, and Medicaid and CHIP have been a
        critical component to that effort. Do you believe there are federal
        policies that could help states do an even better job in enrolling
        eligible children? What other policy changes, if any, would help
        improve enrollment of eligible children, reduce the number of the
        uninsured, and improve health outcomes for children in your state?

         Yes, the federal government could assist in enrolling eligible
            children by continuing to support the express lane eligibility
            provision between child health and social/human service
            programs, and by working to standardize the basic eligibility
            requirements across all programs.

         The quality improvement work under the CHIPRA children's quality
            demonstration grants has been very helpful to Alaska Medicaid/
            CHIP programs. We would recommend the continuation of the
            children's quality improvement work.

    The State of Alaska supports the CHIP program, as it gives much needed
    coverage to approximately three million children nationwide. As state
    earlier, the CHIP program in Alaska allows children to receive coverage
    for services that private health insurance and the Exchange may not
    cover.

    If you need any additional information please feel free to contact me.

    Sincerely, William J. Streur
    Commissioner
    Alaska Department of Health and Social Services

                                State of Arizona

    Janice K. Brewer                                        Executive
    Office
        Governor

                               November 13, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    U.S. House of Representatives       U.S. Senate
     Committee on Energy & Commerce     Committee on Finance
    2125 Rayburn House Office Building  219 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    The Honorable Henry Waxman          The Honorable Orrin Hatch
    Ranking Member                      Ranking Member
    U.S. House of Representatives       U.S. Senate
    Committee on Energy & Commerce      Committee on Finance
    2322A Rayburn House Office Building 219 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    Dear Chairman Upton:

    This letter serves as Arizona's reply to your correspondence dated July
    29, 2014 regarding the Children's Health Insurance Program (CHIP).
    KidsCare is Arizona's CHIP program.

      1.  How many individuals are served by your state's CHIP program'?
            What are the characteristics of CHIP enrollees in your state
            (e.g. income, health status, demographics)?

          AZ Reply: KidsCare serves children in households between 133% of
            the federal poverty level (FPL) to 200% FPL. Parents have a
            monthly premium requirement that is assessed on a sliding seal
            based on income. In general, KidsCare members are healthier
            than the average Medicaid enrollee, with a per-member per-month
            cost of $206.

          As part of the Arizona's effort to address the fiscal challenges
            associated with the Great Recession, the State froze enrollment
            to KidsCare in January 2010. To mitigate the impact of that
            enrollment freeze, Arizona had 1115 demonstration authority
            that allowed temporary KidsCare enrollment funded by political
            subdivisions. Under that demonstration, KidsCare enrollment
            reached 46,761 by the end of 2013 before federal authority
            expired. Subsequently, most enrolled children were transitioned
            to Medicaid, white 14,000 were transitioned to the Federally
            Facilitated Marketplace (Marketplace). Arizona does not have
            data on the Marketplace take up rate of those 14,000. The State
            agreed to provide data on the 14,000 to MACPAC (Medicaid and
            CHIP Payment and Access Commission) to match with Marketplace
            enrollment data, but the Marketplace declined MACPAC's request.
            Currently, there are 1,945 children enrolled in KidsCare.

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act (PPACA)? How
            has the implementation of PPACA impacted the way your state
            administers CHIP?

          AZ Reply: Arizona has not made any changes to its KidsCare
            program as a result of PPACA.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and/or
            benefits and/or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

          AZ Reply: Arizona provides the full Medicaid benefit package to
            KidsCare members. The State selected its state employee benefit
            package as the benchmark for Marketplace coverage. Those
            benefits align fairly closely to the Medicaid benefits package.
            The Primary difference for children is non-emergency medical
            transportation, which is not offered in the Marketplace. There
            also are some family supports and other behavioral health
            services that may not be offered on the Marketplace.

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP funding should be extended, what coverage (if any)
            do you believe CHIP enrollees in your state would be able to
            obtain? How many children covered by CHIP do you estimate would
            become uninsured in the absence of CHIP?

          AZ Reply: Arizona led the nation in the percentage of children
            who enrolled in health care through the Marketplace with 21% of
            enrollees under age 18 (compared to the national average of
            6%). KidsCare has been a incredible success in Arizona and
            served many families well. While there may be some differences
            between the Marketplace and KidsCare, especially related to
            out-of-pocket expenses and cost sharing, there is no reason to
            believe that a Marketplace option cannot be structured to meet
            the needs of children in this income range.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

          AZ Reply: Although Arizona's example presents some unique issues,
            it exemplifies the dynamic nature of health care. A five or six
            year formula struggles to address shifting state needs. In one
            instance, Arizona had an unspent allotment and just a couple of
            years later, Arizona required an increase. Ideally, the formula
            allows for greater flexibility to keep pace with state needs.

      6.  Over the past number of years, States have worked to reduce the
            number of uninsured children. And Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children? What other policy changes, if
            any, would help improve enrollment of eligible children, reduce
            the number of uninsured, and improve health outcomes for
            children in your state?

          AZ Reply: Arizona has had tremendous success in enrolling
            eligible individuals through its public/private partnership
            that allows community organizations, providers, faith-based
            groups and others to be part of the application assistance
            team. These groups are trained by the State for use of the
            actual eligibility online system, know as Health-e-Arizona
            Plus. Over 100 organizations have agreements with the State as
            application assisters. Through those organizations, the State
            has trained over 2,000 non-State employees to provide
            application assistance in the community representing
            organizations all across the State. Moving away from a
            government-run model to one that is partnership focused has
            been a success.

    Sincerely,

    Janice K. Brewer
    Governor

    CC: Senator John McCain
        Senator Jeff Flake
        Representative Ann Kirkpatrick
        Representative Ron Barber
        Representative Raul Grijalva
        Representative Paul Gosar
        Representative Matt Salmon
        Representative David Schweikert
        Representative Ed Pastor
        Representative Trent Franks
        Representative Kyrsten Sinema
                                     ______

                     ARKANSAS DEPARTMENT OF HUMAN SERVICES

                          Division of Medical Services

             P.O. Box 1437, Slot S401  Little Rock, AR 72203-1437

                        501-682-8292  Fax: 501-682-1197

    October 20, 2014

    Fred Upton, Chairman
    House Committee on Energy and Commerce

    Henry A. Waxman, Ranking Member
    House Committee on Energy and Commerce

    Ron Wyden, Chairman
    Senate Finance Committee

    Orrin G. Hatch, Ranking Member
    Senate Finance Committee

    Congress of the United States
    Washington, DC 20515

    Dear Chairmen Upton and Wyden; Members Waxman and Hatch:

    In response to your July 29, 2014 request for information from
    governors regarding the Children's Health Insurance Program (CHIP), I
    welcome this opportunity to provide information on Arkansas's
    successful CHIP program (ARKids-B and Unborn Child programs) and my
    thoughts regarding the future of the CHIP program.

    The ARKids First program began in Arkansas in 1997. At that time, 22%
    of children in Arkansas lacked health coverage. ARKids First is made up
    of two programs. ARKids-A is traditional Medicaid for children and
    offers low-income families a comprehensive package of benefits. ARKids-
    B is funded by Title XXI (CHIP) and offers a similar benefit for
    families with higher incomes. The ARKids First program has played an
    important role in significantly dropping the percentage of children
    without access to coverage. Currently, 80,400 children in Arkansas are
    provided health coverage through the ARKids-B and Unborn Child programs
    of which the majority of children covered are in the ARKids-B program.

    The passage of the Patient Protection and Affordable Care Act (PPACA)
    has led to changes in the administration of the ARKids-B program.
    Specifically, Arkansas converted the state's existing income
    eligibility standards as required by the PPACA to a Modified Adjusted
    Gross Income (MAGI) equivalent standard. Additionally, as required by
    PPACA, Arkansas has transferred children ages six through eighteen with
    incomes above 100% of the federal poverty level (FPL) up to and
    including 133% FPL from the ARKids-B program into the ARKids-A program.

    ARKids-B provides coverage for vision and dental services. These
    benefits have historically not been covered through the majority of
    employer sponsored health plans. In the Arkansas Health Insurance
    Marketplace, pediatric dental services are not required to be offered
    as a part of the package of benefits along with the other essential
    health benefits, if a stand-alone pediatric dental plan is offered on
    the Marketplace.

    As previously mentioned, the CHIP program has worked well in Arkansas.
    The annual allotments have been adequate and the funding formula is
    working appropriately. Thus, we do not believe there is a need for
    Congress to address the issue of unspent allotments. Continuing to
    provide coverage for children in Arkansas is imperative. Thus far, our
    experience with the CHIP program in Arkansas has been overwhelmingly
    positive and successful and has led to a dramatic reduction in the
    percentage of uninsured children. Whether coverage remains to be
    provided through continued funding of CHIP or via an alternate
    mechanism (e.g. providing coverage through the Marketplace), ensuring
    that our state's children do not lose access to coverage is critical.

    Thank you for the opportunity to comment on Arkansas's experience with
    the CHIP program and to provide input on this important policy debate.

    Sincerely,

    Dawn Stehle
    Medicaid Director
                                     ______

                              State of California

                        HEALTH AND HUMAN SERVICES AGENCY

     Aging  Child Support Services  Community Services and Development
                             Developmental Services

     Emergency Medical Services Authority  Health Care Services  Managed
                          Health Care  Public Health

     Rehabilitation  Social Services  State Hospitals  Statewide Health
                            Planning and Development

    EDMUND G. BROWN JR.
                            DIANA S. DOOLEY

    GOVERNOR
                                SECRETARY

    October 30, 2014

    The Honorable Fred Upton, Chairman
    House Committee on Energy and Commerce
    2183 Rayburn House Office Building
    Washington, DC 20515

    The Honorable Ron Wyden, Chairman
    Senate Finance Committee
    221 Dirksen Senate Office Building
    Washington, DC 20510

    The Honorable Orrin G. Hatch, Ranking Member
    Senate Finance Committee
    104 Hart Senate Office Building
    Washington, DC 20510

    The Honorable Henry A. Waxman, Ranking Member
    House Committee on Energy and Commerce
    2204 Rayburn House Office Building
    Washington, DC 20515

    Dear Members of the United States Congress:

    I strongly encourage Congress to act early and extend the Children's
    Health Insurance Program (CHIP) funding to the states beyond federal
    fiscal year 2015. Since California's enactment of this program in 1997,
    we have valued and relied upon federal CHIP funding to provide
    comprehensive, affordable health care, mental health, and substance use
    treatment coverage for children and pregnant women to ensure the best
    possible health care outcomes for children and infants.

    By providing coverage for low to moderate income children and pregnant
    women through CHIP, cost-sharing is significantly lower than through
    other subsidized coverage, such as through California's state-based
    health benefit exchange, or private health plans. This ensures that
    cost-sharing requirements for these children and pregnant women is not
    an access barrier to care. Together, CHIP and Medi-Cal, California's
    Medicaid program, have cut the rate of uninsured children in California
    by half--from 10.3 percent in 2001 to 5.1 percent in 2011, according to
    the California Health Interview Survey by the University of California,
    Los Angeles, Center for Health Policy Research.

    If federal CHIP funds are not renewed for Federal Fiscal Year 2015,
    California could lose upwards of $533 million annually. Renewal of
    federal CHIP funding is extraordinarily important to California's
    fiscal stability and the ability to continue to offer cost-effective,
    affordable coverage for children and pregnant women. California makes
    every effort to maximize its federal CHIP allotments and fully expects
    to do the same with the enhanced federal matching rate as part of CHIP
    renewal. The enhanced federal CHIP funding supports a 23-percentage
    point increase (also known as the ``CHIP bump'') in the federal match
    rate for California. This is an important investment in children's
    health care. The loss of such funding would put gains in children and
    infants' health coverage at risk.

    California recommends early approval of the extension of this funding
    to ensure no lapse in the California State Fiscal Year (FY) 2015/16
    budgeting process for these important programs. CHIP renewal would
    encourage health coverage enrollment and positive health outcomes for
    children by generating permanent efficiencies in enrollment and renewal
    simplification processes, as well as improvements in the quality of
    pediatric health care delivery.

    Enclosed with this letter are California's responses to questions
    outlined in your letter dated July 29, 2014. If you have additional
    questions or would like to discuss the responses further, please
    contact Mr. Toby Douglas, Director, California Department of Health
    Care Services.

    Sincerely,

    Diana S. Dooley
    Secretary

    Enclosure
                                     ______

                                   attachment
    California is pleased to provide the following information to the
    Congressional committees with Jurisdiction over the Children's Health
    Insurance Program (CHIP) regarding the extension of funding for CHIP
    beyond Federal Fiscal Year (FY) 2015.
    California Background:
    California has a robust CHIP program that is administered by the
    Department of Health Care Services (DHCS), the single state Medicaid
    agency (known as Medi-Cal in California). Prior to January 1, 2013, the
    Managed Risk Medical Insurance Board (MRMIB), a state board separate
    from DHCS, administered the largest component of California's CHIP,
    previously known as the Healthy Families Program (HFP). HFP was
    transitioned to DHCS throughout Calendar Year 2013. Under this
    transition, children previously eligible for HFP, under a standalone
    CHIP, became Medi-Cal eligible under a new Medicaid expansion coverage
    group, known as the Optional Targeted Low Income Children's Program
    (OTLICP). The other transitioned CHIP programs now administered by OHCS
    are as follows:

     The Medi-Cal Access Program, (previously known as the Access for
        Infants and Mothers Program [AIM]) which provides comprehensive
        medically necessary services to pregnant women who are above the
        Medi-Cal income standard, up to and including 322 percent of the
        federal poverty level (FPL). Additionally, those infants born to
        women enrolled in the Medi-Cal Access Program with incomes above
        266 percent (the OTLICP upper income limit) and up to and including
        322 percent are also covered under this program for up to their
        first two years of life.

     The County Children's Health Initiative Matching (C-CHIP) Program,
        historically funded solely by local county and federal funds in
        three counties (San Francisco, San Mateo, and Santa Clara) that
        voluntarily chose to operate a C-CHIP program, offers comprehensive
        coverage to CHIP-eligible children who are above the applicable
        Medi-Cal/CHIP limits up to and including 322 percent. Today, as a
        result of the ACA maintenance of effort eligibility requirements,
        state and local county funds are used as the non-federal share to
        draw down unused federal State CHIP/Social Security Act Title XXI
        funds for CHIP-eligible children in these three counties.
    How many individuals does your state's CHIP serve?
    As of August 30, 2014, there are approximately 1,257,500 low-income
    children and pregnant women enrolled under California's CHIP programs
    in which Title XXI funds are used to support medically necessary
    health, mental health, and substance use disorder services. The CHIP
    funded programs are:

     Medicaid Expansion for Low-Income Children and Pregnant Women
     Optional Targeted Low Income Children's Program
     Medi-Cal Access Program for Pregnant Women and Infants
     County Children's Health Initiative Matching Program

    What are the characteristics of CHIP enrollees in your state (e.g.
    income, health status, demographics)?

    The following charts provide a summary of demographic characteristics
    of CHIP enrollees in California.

                     Chart 1: Medicaid Expansion Population
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
    Children under the age of 19          Pregnant Women (Unborn Option)
     FPL income level:                    FPL income level above 60
      - Children 1-6 up to and including   percent up to and including 208
     142 percent                           percent
      - Children 6-19 up to and            Pregnancy-related covered
     including 133 percent                 services
     Full scope Medi-Cal coverage
    ------------------------------------------------------------------------

                            Chart 2A: CHIP Population
    ------------------------------------------------------------------------
                                                      Medi-Cal Access Infant-
    OTLICP  (Children under                               Linked Program
          age 19 above       Medi-Cal Access Program    (Children under 2,
      traditional Medicaid       (Pregnant Women)         born to mothers
         income levels)                                enrolled in Medi-Cal
                                                          Access Program)
    ------------------------------------------------------------------------
    FPL Income level         FPL Income level         FPL Income level
     Infants 0-1 above 208   Above 208 percent and   Income above 266
     percent up to and        up to and including      percent up to and
     including 266 percent    322 percent              including 322 percent
     1-6 above 142 percent
     up to and including
     266 percent
     6-19 above 133
     percent up to and
     including 266 percent
    ------------------------------------------------------------------------
     Subject to premiums     No maternity            Enrolled in share-of-
     when FPL >150 percent    insurance or have        cost Medi-Cal
     not to exceed the 5      health insurance with    Subject to premiums
     percent limit on their   a high (over $500)       based on income and
     monthly income           maternity-only           household size
      - $13 per child up to   deductible                - $13 per child up
     a maximum of $39 per     Total cost for          to a maximum of $39
     month for households     enrollment = 1.5         per month for
     with three or more       percent of family's      households with three
     children                 adjusted annual          or more children
      - No copayments on      household income after   Native American/
     covered services         applying standard        Alaskan Indian
     Native American/        deduction                Exemption
     Alaskan Indian
     Exemption
    ------------------------------------------------------------------------

                    Chart 2B: CHIP Population County Operated
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
    Santa Clara, San Francisco and San       Children under age 19
     Mateo.                                  FPL Income level
                                              Above 266 percent and up to
                                              and including 322 percent
                                              Uninsured, or enrolled in
                                              share-of-cost Medi-Cal or Medi-
                                              Cal  Access Infants Program
                                              Subject to premiums based on
                                              income and household size
    ------------------------------------------------------------------------
    Santa Clara............................   $4 to $21 per child monthly
                                              premium with maximum cost of
                                              $63 per family per month
                                              No copayments for
                                              preventative services
                                              $5 to $15 copayments for
                                              other medical, dental and
                                              vision services
                                              Maximum of $250 in copayments
                                              per family in a Benefit Year,
                                              does not include copayments
                                              for dental and vision services
    ------------------------------------------------------------------------
    San Francisco..........................   $48 to $189 annual premium
                                              based on household income and
                                              family size
                                              $5 and $10 copayments for
                                              most services
    ------------------------------------------------------------------------
    San Mateo..............................   $0 to $90 quarterly premium
                                              based on family income
                                              No copayment for check-ups,
                                              immunizations, annual dental
                                              exams, and other preventative
                                              services
                                              $5 to $15 copayments for most
                                              services
    ------------------------------------------------------------------------

    What changes has your state made to its CHIP program as a result of the
    Patient Protection and Affordable Care Act (PPACA)?

    To ensure achievement of the overall purpose of the PPACA, California
    began with the enactment of Assembly Bill 1296 (Bonilla, Chapter 641,
    Statutes of 2011), which among other things required the development of
    a standardized single, accessible application form and renewal
    procedures for state insurance affordability programs.

    Additionally, California transitioned the State's separate CHIP
    programs for children and pregnant women and their infants to DHCS
    administration, beginning in 2013. This has effectively resulted in the
    integration of the standalone CHIP and the Medicaid expansion under the
    Medi-Cal program. The goals in the transition of children and pregnant
    women to Medi-Cal under DHCS are to provide a uniform approach for
    potential beneficiaries applying for and obtaining health care coverage
    under applicable insurance affordability programs, to streamline
    eligibility and enrollment processes, and to broadly simplify coverage
    options for individuals under Medi-Cal and California's state-based
    health benefit exchange.

    How has the implementation of the PPACA impacted the way your state
    administers CHIP?

    As indicated above, the implementation of PPACA set in motion the
    creation of a Medicaid expansion for children by moving from a
    standalone CHIP to the movement of CHIP-eligible children under the
    Medi-Cal program. This integration has allowed California the ability
    to apply Medicaid cost sharing principles to CHIP-eligible children and
    to make available to these children the expanded benefit package of
    Medi-Cal as described in the response on covered benefits. California
    also expanded coverage to children between the ages of 6 to 19 years of
    age with family income up to 133 percent.

    Specifically, PPACA has influenced the way in which California
    administers CHIP-funded programs in the following ways:

       Implemented the use of streamlined eligibility processes and
            coverage options for children and adults seeking coverage under
            insurance affordability programs, including CHIP, using a
            federally-approved, single streamlined application.

       Established a ``no wrong door'' approach for enrollment.
            Individuals are first assessed for no-cost coverage under Medi-
            Cal/CHIP using one intake process before moving to programs
            that require cost-sharing or advanced premium tax credits. This
            approach allows consumers to obtain health insurance at the
            lowest cost with a streamlined application and provides the
            option for families with children to shop, compare, and select
            coverage under one health plan if available in their county of
            residence.

       Provided additional benefits and lowered costs for children at
            certain income levels.

       Gained overall administrative efficiencies and oversight, including
            more consistency in health plan contracting processes while
            increasing plan accountability for providing high-quality
            services to children.

       Provides the opportunity to standardize the existing administrative
            appeals process for consumers for initial eligibility or
            enrollment determinations and redeterminations for insurance
            affordability programs both Medicaid and CHIP funded, with
            procedures and timelines for hearings with the appeals entity
            with continuing eligibility for beneficiaries during the
            appeals process.

       Achieved operational efficiencies by consolidating administrative
            resources under one state agency

    To the extent the following information is readily available and you
    believe It is relevant, please describe the services and or benefits
    and or cost sharing currently provided in your state under CHIP that
    are not comparably available through your state's exchange or through
    the majority of employer sponsored health plans in your state.
    Benefits
    All children enrolled in the Medi-Cal program funded with Title XXI and
    Title XIX receive the same Medi-Cal benefits and use the same health
    care delivery systems. Through Medi-Cal, CHIP-eligible children have
    access to a more comprehensive coverage package at a lower cost to
    families than that which is available through private or state exchange
    coverage. Given the incorporation of CHIP-eligible children as a
    coverage group under the state plan, the funded services includes the
    comprehensive Early Periodic Screening, Diagnosis, and Treatment
    (EPSDT) benefit which also has a more liberal standard for medical
    necessity and has been considered the gold standard for publically
    financed programs. Additionally, these children also receive dental and
    vision benefits, mental health, and substance use disorder services.
    Comparatively, children enrolled through Covered California or
    employer-sponsored health plans receive the required ten essential
    health benefits but have higher out-of-pocket expenditures.

    Pregnant women in the Medi-Cal Access Program receive the minimum
    essential health benefits from their health plan, which also includes
    the following services:

       Physician and Professional Services
       Mental health and substance use disorder services including
            behavioral health treatment
       Preventative and wellness services; and chronic disease management
       Maternity services
       Hospital care
       Prescription drugs
       Non-emergency medical transportation services
       Skilled Nursing Facility Services (91+ days) offered to pregnant
            women until the end of the woman's postpartum period if
            medically necessary
       Pediatric services for income-eligible children including oral and
            vision care
    Cost-Sharing
    Previously, families whose children enrolled in HFP paid a monthly
    premium amount based on income and family size with the state's program
    administrative vendor tracking the payments and cost sharing
    requirements. Families' premiums fluctuated based on a change in income
    level, much like Covered California coverage that is based on family
    size. Cost-sharing for the OTLICP under Medi-Cal is based upon a flat
    monthly rate established in state law. The state monitors the process
    for payment of premiums and cost-sharing. As a result of the change to
    premiums for children under Medi-Cal, families receive either a lower
    monthly premium or none at all. Medi-Cal does not require co-payments
    for children under the age of 19. These policies ensure that premiums,
    co-payments, and deductibles are not a barrier for children and
    pregnant women to access care. Retaining CHIP funding is critical for
    achieving affordable, comprehensive coverage for low-income children
    and their families.

    The total cost-sharing for women enrolled in the Medi-Cal Access
    Program is 1.5 percent of the family's adjusted annual household income
    after applying the standard deduction. The cost sharing amount for
    pregnancy and post-partum can be divided into 12 monthly installments,
    but enrollees may choose to pay the entire 1.5 percent cost in one
    single payment including a $50 discount.

    Covered California, which is California's state-based health benefit
    exchange, offers health plans with four major metal tiers: Bronze,
    Silver, Gold, and Platinum. Each health plan provides minimum essential
    coverage, but they differ in the cost sharing. Marketplaces also must
    make available minimum coverage plans, also referred to as catastrophic
    coverage plans, to people under age 30, as well as to individuals who
    are exempt from the mandate to purchase coverage because they have an
    affordability or hardship exemption. A minimum coverage plan covers
    minimum essential coverage, but only after out-of-pocket cost sharing
    reaches a high deductible that will match the level of the PPACNs
    required out-of-pocket maximum. Out-of-pocket costs for Covered
    California plans typically include:

       Coinsurance
       Co-payments or similar charges
       Deductibles

    In spite of the restructuring and retargeting of allotments that
    occurred in 2009, some CHIP funding remains unspent. Do you believe the
    annual allotments your state has received starting in 2009 have been
    sufficient and the formula is working appropriately?

    California believes the annual allotments received were sufficient.
    Since Federal Fiscal Years (FFY) 2011, California's CHIP expenditures
    have been approximately equal to California's annual allocation.
    However, current estimates of FFY 2015 and beyond show expenditures
    depleting the annual allocation and all available prior year
    allotments. California believes that the current safeguards for
    redistribution and contingency funding will be sufficient to meet our
    future funding.

    California's CHIP expenditures have averaged $1.24 billion in federal
    funds annually since 2006 and estimate an increase. in children covered
    with the implementation of PPACA. FFY 2014 expenditures are exceeded
    $1.4 billion in federal funds.

    Without reauthorization, California will have several fiscal barriers:

      1.  Four of California's CHIP programs would lose $145 million in
            federal funding annually:
         a. Medi-Cal Access Program (Pregnant Women Unborn Option Coverage)
         b. Medi-Cal's Expansion Program for the Unborn Child Option
         c. Medi-Cal Access. Infant-linked Program
         d. C-CHIP
      2.  The remaining California CHIP programs would require coverage
            under Title XIX at a tower Federal Financial Participation and
            California would lose an additional $38 million in federal
            funds annually.

    Additionally, the proposed PPACA Enhanced Funding for Children would
    enhance the CHIP federal matching rate by 23 percentage points
    beginning in October 2015. This enhancement would provide California
    with an additional $578 million in federal funds annually. However, an
    increase in the current allocation level would be required to maintain
    this enhanced level of funding through FY 2019.

    Do you believe there is a need for Congress to further address the
    issue of unspent allotments?

    No, California believes states are in a better position to address the
    issue of unspent allotments. The current process provides State's with
    the flexibility necessary given changes in health care and the economy
    which impact our expenditures.
                                     ______

                               STATE OF COLORADO

                             office of the governor

                               136 State Capitol

                             Denver, Colorado 80203

                              Phone (303) 866-2471

                               Fax (303) 866-2003

                              John W. Hickenlooper
                                    Governor

                                October 31, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
     Chairman                           Chairman
    House Energy & Commerce Committee   Senate Finance Committee

    The Honorable Henry Waxman          The Honorable Orrin Hatch
    Ranking Member                      Ranking Member
    House Energy & Commerce Committee   Senate Finance Committee

    Dear Congressmen:

    We are grateful for the opportunity to respond to your letter regarding
    continued federal funding for the Children's Health Insurance Program
    (CHIP), dated July 29, 2014.

    As detailed in the enclosed pages, Colorado's CHIP program--known
    locally as the Child Health Plan Plus (CHP+)--is a critical component
    of Colorado's commitment to ensure access to affordable and
    comprehensive health insurance coverage. We are proud to have made
    substantial progress in reducing the number of uninsured children in
    Colorado in recent years, and CHP+ continues to be a key driver of that
    success.

    In light of ongoing changes to the coverage landscape due to both state
    and federal health reforms, we strongly encourage Congress to continue
    funding CHIP through 2019. We believe that this continued funding
    period best aligns with existing CHIP policy and will provide states
    the opportunity to analyze data and evaluate long-term coverage
    strategies that ensure individuals and families continue to have access
    to coverage and access to care.

    We would be happy to provide you with any additional information about
    Colorado's CHIP program. Should you have any further questions, please
    reach out to our Washington, D.C. Liaison, Jena Griswold, at
    202.624.5278 or jena.griswold@
    state.co.us.

    Regards,

    John W. Hickenlooper,
    Governor

    1.  How many individuals are served by your state's CHIP program? What
            are the characteristics of CHIP enrollees in your state (e.g.
            income, health status, demographics).

    Colorado's CHIP program, the Colorado Child Health Plan Plus (CHP+),
    serves over 112,000 children and nearly 3,000 pregnant women living
    between 133% and 250% FPL--roughly $31,000 to $58,000 for a family of
    four, as detailed below. CHP+ is an HMO-model program administered by
    the Colorado Department of Health Care Policy and Financing, which also
    administers Colorado Medicaid and is the state's single state Medicaid
    agency. Core demographics for our CHP+ population are as follows: \1\
    ---------------------------------------------------------------------------
        \1\ Colorado Department of Health Care Policy and Financing, 2014.

                Distinct Clients FY 2013-14  July 2013-June 2014
    ------------------------------------------------------------------------
                         Population                        Distinct Clients
    ------------------------------------------------------------------------
    Children............................................             112,395
    Prenatal............................................               2,853
    ------------------------------------------------------------------------
        Total...........................................             115,248
    ------------------------------------------------------------------------

                FY 2013-14 Distinct Client Ethnicity Distribution
    ------------------------------------------------------------------------
                    Race                   Children    Prenatal      Total
    ------------------------------------------------------------------------
    American Indian.....................      1.82%       1.37%       1.81%
    Asian...............................      2.71%       2.75%       2.71%
    Black...............................      5.64%       5.46%       5.63%
    Native Hawaiian/Pacific Islander....      0.44%       0.33%       0.43%
    Other...............................      7.68%       9.85%       7.73%
    Other--White........................     32.40%      49.83%      32.84%
    Spanish American....................     31.80%      21.30%      31.54%
    Unknown.............................     17.52%       9.11%      17.31%
    ------------------------------------------------------------------------

                FY 2013-14 Distinct Client Distribution by Income
    ------------------------------------------------------------------------
                     FPL                   Children    Prenatal      Total
    ------------------------------------------------------------------------
    0%-100% FPL \2\.....................      7.97%      17.06%       8.17%
    101%-150% FPL \1\...................     22.67%      12.68%      22.45%
    151%-200% FPL.......................     34.47%      19.63%      34.14%
    201%-205% FPL.......................      4.47%       8.31%       4.55%
    206%-250% FPL.......................     22.60%      37.29%      22.92%
    Blank...............................      7.83%       5.02%       7.77%
    ------------------------------------------------------------------------
        Total...........................    100.00%     100.00%     100.00%
    ------------------------------------------------------------------------

    ---------------------------------------------------------------------------
        \2\ Colorado expanded Medicaid to all individuals with incomes 0-
    133% FPL in January 2014, and began to use the Modified Adjusted Gross
    Income (MAGI) eligibility determination criteria in October 2013. Some
    individuals in the 0-133% FPL income range are listed here because the
    time period shown partially predates our MAGI implementation.
    Additional detail can be found in the response to Question 2.
    ---------------------------------------------------------------------------
    Although our actuaries have access to beneficiaries' encounter data for
    rate setting purposes, Colorado does not directly collect information
    on CHP+ enrollees' health status. A sample of CHP+ beneficiaries' data
    provided by Colorado Access (the largest of our CHP+ carriers, with
    37,000 members) indicates that 83 percent of the CHP+ insured
    population visited a primary care provider in the last year.
    Additionally, CHP+ children report better general health than uninsured
    and Medicaid populations, but worse health than commercially insured
    populations, as illustrated in the following table:

                  Self-Reported Health Status by Insurance Type, Children Ages 0-18, Colorado, 2013 \3\
    ----------------------------------------------------------------------------------------------------------------
                                                                                              Commercial
                                                                         CHP+      Medicaid    Insurance   Uninsured
    ----------------------------------------------------------------------------------------------------------------
                                                  General Health Status
    ----------------------------------------------------------------------------------------------------------------
    Excellent/Very Good/Good........................................      97.0%       90.6%       98.1%       95.2%
    Fair/Poor.......................................................       3.0%        9.4%        1.9%        4.8%
    ----------------------------------------------------------------------------------------------------------------
                                                   Oral Health Status
    ----------------------------------------------------------------------------------------------------------------
    Excellent/Very Good/Good........................................      87.2%       93.6%       95.7%       84.2%
    Fair/Poor.......................................................      12.8%        6.4%        4.3%       15.8%
    ----------------------------------------------------------------------------------------------------------------
                                                  Mental Health Status
    ----------------------------------------------------------------------------------------------------------------
    Less than 8 poor mental health days.............................      88.6%       87.5%       94.7%       87.5%
    8 or more poor mental health days...............................      11.4%       12.5%        5.3%       12.5%
    ----------------------------------------------------------------------------------------------------------------

    ---------------------------------------------------------------------------
        \3\ Colorado Health Institute analysis of the 2013 Colorado Health
    Access Survey, 2014.
    ---------------------------------------------------------------------------
    2.  What changes has your state made to its CHIP program as a result of
            the Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?
    Colorado has taken a measured, bipartisan approach to implementing the
    Patient Protection and Affordable Care Act (ACA). In doing so, we have
    built upon foundations that predate the ACA and passed bipartisan
    legislation that enabled us to expand Medicaid to 133% FPL and
    establish a state-based health insurance marketplace, Connect for
    Health Colorado (C4HC).\4\ Pursuant to the ACA, HCPF began using
    Modified Adjusted Gross Income (MAGI) methodology to calculate
    eligibility for both Medicaid and CHP+. As part of that rule
    implementation, both programs use a 5 percent ``income disregard'' to
    assist families whose income is close to the eligibility cutoff under
    MAGI methodology. As such, we determine CHP+ eligibility for children
    and pregnant women if their income is less than 260% FPL.
    ---------------------------------------------------------------------------
        \4\  Senate Bill 13-200 and Senate Bill 11-200, respectively.
    Senate Bill 13-200 codified in pertinent part at 25.5-4-402.3; Senate
    Bill 11-200 codified at 10-22-101, et seq.

    The following table provides an overview of coverage options for
    Coloradans at or below 400% FPL, as of January 2014: \5\
    ---------------------------------------------------------------------------
        \5\ Source: Colorado Health Institute, 2014.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    We have also taken steps to limit the impact of ``churn'' across
    various coverage programs to help improve continuity of care for
    Colorado individuals and families. For example, in March 2014, Colorado
    began providing twelve months of continuous eligibility for children in
    Medicaid and CHP+, even if the family experiences a change in
    circumstances that effect eligibility. This policy helps prevent lapses
    in continuity of care and is in place for 28 CHIP programs
    nationwide.\6\ Although this was authorized by state law that predates
    the enactment or implementation of the Patient Protection and
    Affordable Care Act (ACA), implementation of the ACA resulted in
    changes to our financial models that enabled us to implement 12-month
    continuous eligibility for children.\7\
    ---------------------------------------------------------------------------
        \6\ Kaiser Family Foundation, State Health Facts. Accessed October
    20, 2014. Available at: http://kff.org/medicaid/state-indicator/12-mo-
    continuous-eligibilitymedichip/.
        \7\ Colorado Health Care Affordability Act, House Bill 09-1293,
    codified in pertinent part at Colo. Rev. Stat. Sec. 25.5-4-402.3.
    ---------------------------------------------------------------------------
    3.  To the extent the following is readily available and you believe it
            is relevant, please describe the services and or benefits and
            or cost sharing currently provided in your state under CHIP
            that are not comparably available through your state's exchange
            or through the majority of employer sponsored health plans in
            your state.
    Colorado strives to improve continuity of care, to align benefits
    across Medicaid, CHP+, and qualified health plans (QHPs) purchased
    through C4HC, and to ensure our system works seamlessly for families
    and children. While CHP+ and private market individual insurance
    coverage have very similar benefits, cost sharing differs
    significantly. Specifically, average annual cost sharing in a QHP can
    be roughly four times cost sharing for CHP+, even after cost sharing
    reduction subsidies are accounted for.\8\ Additionally, although both
    CHP+ and QHPs establish an out-of-pocket maximum, Colorado's CHP+
    program establishes this maximum at 5 percent of the enrollee's income.
    In contrast, the out-of-pocket maximum for QHPs is a fixed dollar
    amount adjusted for low-income populations, which could be as high as
    $5,200 for some CHP+ families. For additional information on
    differences in benefits and cost sharing based on analysis conducted by
    Wakely Consulting Group, please see Appendix A.
    ---------------------------------------------------------------------------
        \8\ Wakely Consulting Group, ``Comparison of Benefits and Cost
    Sharing in Children's Health Insurance Programs to Qualified Health
    Plans,'' July 2014.

    Colorado's CHP+ program has been a successful safety net coverage
    program since its inception. As a testament to its success, in 2012,
    advocates successfully lobbied to gain access to CHP+ for dependent
    children of state employees.
    4.  Do you recommend that CHIP funding be extended? If so, for how long
            and for budgeting and planning purposes, under what timeframe
            should congress act upon an extension? If you do not believe
            CHIP funding should be extended, what coverage (if any) do you
            believe CHIP enrollees in your state would be able to obtain?
            How many covered children by CHIP do you estimate would become
            uninsured in the absence of CHIP?

    We appreciate Congress' desire to assess whether federal CHIP funding
    should be renewed in light of new coverage options provided by the ACA.
    At the same time, we are still implementing key provisions of the ACA
    that may have significant market impacts over time and alter the value
    proposition for maintaining the CHP+ program. Ultimately, our goal is
    to continue reducing the number of uninsured Colorado children while
    ensuring that coverage options remain affordable for low-income
    populations.

    At this time, Colorado recommends CHIP funding be reauthorized for
    another four years to align with CHIP's existing maintenance of effort
    requirements. Given the current coverage opportunities available to our
    CHP+ population and our commitment to maintain market stability as we
    implement the ACA, we firmly believe that discontinuing federal CHIP
    funding in any less than four years would eliminate CHP+ as a coverage
    option for Colorado families and create a significant financial
    hardship for low-income Coloradans.

    In addition to providing alignment with existing CHIP policy, a four-
    year funding reauthorization will enable states to monitor coverage
    trends and engage stakeholders around coverage alternatives to CHIP in
    the event Congress determines the CHIP program should not be
    reauthorized in the future. Any long-term changes to CHIP at the
    federal level are likely to necessitate program, policy, and
    legislative changes at the state level for which states must be given
    the opportunity to prepare.
    5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?
    Since restructuring of the allotments occurred, Colorado has not
    utilized the full annual allotment of CHIP funding. Current funding
    levels have enabled us to achieve our CHP+ goal of providing coverage
    to pregnant women and children, and the funding that remains in
    Colorado's allotment provides a critical safety net for the CHP+
    program, as it would provide a short-term funding source should
    Congress fail to reauthorize CHIP funding in 2015.
    6.  Over the past number of years, States have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            enrolling eligible children? What other policy changes, if any,
            would help improve enrollment of eligible children, reduce the
            number of the uninsured, and improve health outcomes for
            children in your state?
    Implementation of the ACA has enabled Colorado to provide coverage
    options for nearly all children in our state. We are also proud to have
    received over $157 million in CHIPRA performance bonuses since 2010 for
    our efforts to insure Colorado kids. However, to continue reducing the
    uninsured rate and maintaining continuity of coverage and care among
    children in our state, we need to align eligibility and enrollment
    policies across a broader range of social services.

    Last year, Colorado launched Colorado PEAK--the Program Eligibility and
    Application Kit--an online portal allowing consumers streamlined access
    to and application for a variety of state benefits and services. By the
    end of 2014, up to 20 programs will participate in PEAK, including
    child care, nutrition, and energy assistance programs. To better serve
    families in need, Congress should work with federal agencies and
    willing states to align eligibility, enrollment, and renewal policies
    across social support programs, including Medicaid, SNAP, TANF,
    National School Nutrition Programs, the Child Care Subsidy Program, and
    others. This would reduce the administrative burden on each program
    and, more importantly, provide a simpler and more holistic approach for
    families.
                                     ______

                    APPENDIX A: COLORADO CHP+/QHP BENEFIT &
                            COST SHARING COMPARISON

     Excerpt from ``Comparison of Benefits and Cost Sharing in Children's
         Health Insurance Programs to Qualified Health Plans,'' Wakely
                        Consulting Group, July 2014 \9\
    ---------------------------------------------------------------------------

        \9\ Full report available at: http://www.wakely.com/wp-content/
    uploads/2014/07/FINAL-CHIP-vs-QHP-Cost-Sharing-and-Benefits-Comparison-
    First-Focus-July-2014.pdf.
    ---------------------------------------------------------------------------
    Wakely Consulting Group
    _______________________________________________________________________

    COLORADO

    The following provides a comparison of the benefits and cost sharing
    provisions of plans available to low income children in the state's
    Children's Health Insurance Program (CHIP) compared to what would be
    available to them through the Health Insurance Exchange (assuming
    enrollment as an individual in the lowest cost silver plan). This
    appendix consolidates key results specific to the state. Please refer
    to the body of the report for methodology, assumptions, and limitations
    for each comparison.
    Actuarial Value and Average Cost Sharing
    The following table compares the average out of pocket costs
    (copayments, deductibles and coinsurance) for children enrolled in CHIP
    compared to the coverage that would be available through the Exchange
    (with cost sharing reduction subsidies).

    ----------------------------------------------------------------------------------------------------------------
                                                                160% FPL                    210% FPL
                      Income Level Coverage                       CHIP           QHP          CHIP           QHP
    ----------------------------------------------------------------------------------------------------------------
    Actuarial Value.........................................        97.4%       86%-88%         95.3%       72%-74%
    Enrollee Average Percent of Allowed Claims..............         2.6%       12%-14%          4.7%       26%-28%
    Average Annual Cost Sharing.............................          $90     $411-$480          $161     $891-$960
    ----------------------------------------------------------------------------------------------------------------

    Out of Pocket Maximums
    Member out of pocket costs are capped for coverage under both CHIP and
    plans offered on the Exchange, limiting the financial exposure to
    families with children who have high cost medical needs. The following
    compares the maximum out of pocket costs for the CHIP plans to that of
    Exchange coverage, assuming enrollment as an individual in a silver
    plan. The maximum out of pocket costs for CHIP differ by state and may
    be either $0 (e.g., the plan has no cost sharing), a fixed dollar
    amount, or a percent of income (with premiums also included in the
    maximum out of pocket amount). Where CHIP out of pocket costs are based
    on a percent of income, we have assumed a family of three and
    subtracted out the annual premium for one individual to get to an
    estimated out of pocket maximum for use of medical services.

    ----------------------------------------------------------------------------------------------------------------
                          Plan                                  Type of Maximum             160% FPL      210% FPL
    ----------------------------------------------------------------------------------------------------------------
    CHIP............................................  % of income.......................         $925        $1,970
    QHP.............................................  fixed dollar......................       $1,450        $4,750
    ----------------------------------------------------------------------------------------------------------------

    Pediatric Dental and Vision Cost Sharing
    The following highlights the cost sharing and limit differences for
    pediatric dental and vision benefits. These are not explicitly
    accounted for in the AV calculation, and can be material benefits for
    children.

    ----------------------------------------------------------------------------------------------------------------
                   Service                 160% FPL CHIP           QHP           210% FPL CHIP           QHP
    ----------------------------------------------------------------------------------------------------------------
    Routine Vision Exams................  $5 copay         50% after            $10 copay        50% after
                                                            deductible                            deductible
    Eyeglasses Cost Sharing.............  No copay: P$50-  50% after            No copay:P$50-   50% after
                                           $150             deductible           $150             deductible
    Dental Checkup Cost Sharing.........  No copay         50% after            No copay         50% after
                                                            deductible                            deductible
    ----------------------------------------------------------------------------------------------------------------

    Benefit Coverage and Limits
    The following table summarizes the coverage of core and child-specific
    benefits (as outlined below) for this state.

    ----------------------------------------------------------------------------------------------------------------
                                                                                    QHPs (Based on EHB)
            Type Benefit           of Total      CHIP       Limited       Not    ------------------------     Not
                                   Benefits     Covered                 Covered     Covered     Limited     Covered
    ----------------------------------------------------------------------------------------------------------------
    Core........................         11         91%          9%          0%         91%          9%          0%
    Child-Specific..............         14         36%         29%         36%         36%         29%         36%
    ----------------------------------------------------------------------------------------------------------------

    The following table shows the coverage and limits for the core
    benefits.

    ------------------------------------------------------------------------
                              CHIP                       EHB
           Service          Coverage      Limits      Coverage      Limits
    ------------------------------------------------------------------------
    Physician Services    C                         C
    ------------------------------------------------------------------------
    Clinic Services &     C                         C
     Other Ambulatory
     Health Care
     Services
    ------------------------------------------------------------------------
    Laboratory &          C                         C
     Radiological
     Services
    ------------------------------------------------------------------------
    Durable Medical       L$            Certain     C
     Equipment & Other                   items
     Medically-PRelated                  Psubject
     or Remedial Devices                 to $2,000
                                         annual
                                         limit
    ------------------------------------------------------------------------
    Inpatient Services    C                         C
    ------------------------------------------------------------------------
    Inpatient Mental      C                         C
     Health Services
    ------------------------------------------------------------------------
    Surgical Services     C                         C
    ------------------------------------------------------------------------
    Outpatient Services   C                         C
    ------------------------------------------------------------------------
    Outpatient Mental     C                         C
     Health Services
    ------------------------------------------------------------------------
    Prescription Drugs    C                         C
    ------------------------------------------------------------------------
    Medical               C                         C
     Transportation--Eme
     rgency Transport
    ------------------------------------------------------------------------

    The following table shows the coverage and benefit limits for child-
    specific benefits,

    ------------------------------------------------------------------------
                              CHIP                       EHB
           Service          Coverage      Limits      Coverage      Limits
    ------------------------------------------------------------------------
    Dental--Preventive &  L$            $600        C
     Restorative
     Services
    ------------------------------------------------------------------------
    Dental--Orthodontics  U                         U
    ------------------------------------------------------------------------
    Vision--Exams         C                         C
    ------------------------------------------------------------------------
    Vision--Corrective    L$            $50/year    C
     Lenses
    ------------------------------------------------------------------------
    Audiology--Exams      C             ..........  C
    ------------------------------------------------------------------------
    Audiology--Hearing    C             ..........  C
     Aids
    ------------------------------------------------------------------------
    ABA Therapy           U             ..........  LQ            550
                                                                   sessions
                                                                   (age 0-
                                                                   8); 185
                                                                   sessions
                                                                   (age 9-
                                                                   19) (25-
                                                                   minute
                                                                   session
                                                                   increment
                                                                   s)
    ------------------------------------------------------------------------
    Autism--General       C                         LQ            550
                                                                   sessions
                                                                   (age 0-
                                                                   8); 185
                                                                   sessions
                                                                   (age 9-
                                                                   19) (25-
                                                                   minute
                                                                   session
                                                                   increment
                                                                   s)
    ------------------------------------------------------------------------
    Physical Therapy,     LQ            No limit    LQ            20 visits/
     Occupational                        (age 0-3)                 year (per
     Therapy, and Speech                 30 visits/                type of
     Therapy                             year (per                 therapy)
                                         diagnosis
                                         , age 3+)
    ------------------------------------------------------------------------
    Podiatry              LC            Routine     U
                                         foot care
                                         not
                                         covered
                                         except
                                         for
                                         patients
                                         with
                                         diabetes
    ------------------------------------------------------------------------
    Habilitation          C                         LQ            20 visits/
                                                                   year (per
                                                                   type of
                                                                   therapy)
    ------------------------------------------------------------------------
    Enabling Services     U                         U
    ------------------------------------------------------------------------
    Medical               U             ..........  U
     Transportation--Non-
     Emergency Transport
    ------------------------------------------------------------------------
    Over-the-Counter      U             ..........  U
     Medication
    ------------------------------------------------------------------------

                                     ______

                                Dannel P. Malloy

                                    governor
                              state of connecticut

                210 CAPITOL AVENUE, HARTFORD, CONNECTICUT 06106

         TEL (860) 566-4840  FAX (860) 524-7396  www.governor.ct.gov

                             governor.malloy@ct.gov

    October 30, 2014

    The Honorable Ron Wyden             The Honorable Fred Upton
    Chairman                            Chairman
    Committee on Finance                Energy and Commerce Committee
    United States Senate                United States House of
                                        Representatives
    221 Dirksen Senate Office Building  2183 Rayburn House Office Building
    Washington, DC 20510                Washington, DC 20515

    The Honorable Orrin G. Hatch        The Honorable Henry Waxman
    Ranking Member                      Ranking Member
    Committee on Finance                Energy and Commerce Committee
    United States Senate                United States House of
                                        Representatives
    104 Hart Office Building            2204 Rayburn House Office Building
    Washington, DC 20510                Washington, DC 20515

    Dear Chairmen Wyden and Upton, and Ranking Members Hatch and Waxman:

    Thank you for your letter of July 29, 2014, concerning the Children's
    Health Insurance Program (CHIP). I appreciate the opportunity to
    address the merits of and continued need for federal funding for this
    vital program.

    Connecticut has made it a priority to ensure that all of its citizens
    have access to high quality and affordable health insurance.
    Connecticut's state-based health insurance exchange, Access Health CT,
    enrolled over 200,000 people during the first open enrollment period.
    This reduced Connecticut's rate of uninsured from 7.9% in 2012 to 4%--
    one of the ten largest reductions in the country. Over 80% of these new
    enrollees qualified for Medicaid. Connecticut Medicaid is now serving
    almost 770,000 individuals, over 2l% of the state population.

    Connecticut's CHIP, which is known as HUSKY B, is an essential source
    of coverage for 14,119 children under age 19. Additionally, the program
    provides federal match for additional income-eligible children in
    Connecticut's coverage group for children and relative caregivers,
    which is known as HUSKY A. CHIP provides a broad range of preventative
    care, behavioral health, and dental services that support Connecticut
    children in early childhood development, school readiness and
    performance, and overall well-being.

    I have provided below our responses to the six questions that you
    raised in your letter.
                1.  How many individuals are served by your state's CHIP
                        Program? What are the characteristics of CHIP
                        enrollees in your state (e.g. income, health
                        status, demographics)?
    Connecticut is currently covering 14,119 children in CHIP/HUSKY B. The
    PPACA Modified Adjusted Gross Income (MAGI) conversion increased the
    maximum income eligibility limit for HUSKY B from 300% to 323% of the
    Federal Poverty Level (FPL). Additionally, Connecticut permits families
    with income in excess of 323% of FPL to purchase coverage via monthly
    premiums. The distribution of participants across Connecticut's three
    ``bands'' of coverage is depicted below:

    ----------------------------------------------------------------------------------------------------------------
                                     Annual income     Annual income                    Annual out-of-
         HUSKY B  premium band       level as % of    level in dollars     Premiums         pocket        Number of
                                          FPL        (family of four)*                      maximum     participants
    ----------------------------------------------------------------------------------------------------------------
    Band 1........................    201% to 254%    $47,938-$60,578   None            5% of gross           8,941
                                                                                         income
    Band 2........................    254% to 323%    $60,579-$77,035   Maximum $30     5% of gross           4,805
                                                                         for one         income
                                                                         child, $50
                                                                         for two or
                                                                         more children
                                                                         per month
    Band 3........................      Above 323%      Above $77,035   $314 per child  No cap                  373
                                                                         per month
    ----------------------------------------------------------------------------------------------------------------
    * As of July 1, 2014, Connecticut's annual poverty level for a family of four is $23,850. See:
    http://www.ct.gov/dss/lib/dss/PDFs/PovSMI.pdf.

    This is the HUSKY B enrollment by band as reported by Xerox as of
    October 1, 2014:

    ------------------------------------------------------------------------
                                                                      Grand
                                       Band 1    Band 2    Band 3     Total
    ------------------------------------------------------------------------
    Total Enrollment by Premium Band    8,941     4,805       373    14,119
    ------------------------------------------------------------------------

    HUSKY B coverage is contributing to significant improvements in health
    outcomes for enrolled children. Under Connecticut's unique, self-
    insured managed fee-for-service system, the following results were
    achieved for calendar year 2013:

       increased well-child visits in the first 15 months of life (six or
            more visits) by 13.5%;

       increased well-child visits in the third, fourth, fifth and sixth
            year of life by 4%;

       increased access to primary care practitioners for children age 12-
            24 months by 4% to 99.5%;

       increased access to primary care practitioners for children age 25
            months to 6 years by 3% to 97%;

       increased immunization rate for adolescents (Tdap/Td Total) by 7%;

       increased lead screening in children by 21.5%; and

       increased number and percentage of children age 3 to 19 who
            received preventive dental care to 69% (HUSKY A) and 73% (HUSKY
            B).

    The demographics of children served by CHIP/HUSKY B are as follows:

       48.2% are female and 51.8% are male;

       10.1% identify as African-American;

       22.5% identify as Hispanic; and

       70.6% identify as Non-Hispanic White.
                2.  What changes has your state made to its CHIP program as
                        a result of the Patient Protection and Affordable
                        Care Act? How has the implementation of PPACA
                        impacted the way your state administers CHIP?
    The PPACA Modified Adjusted Gross Income (MAGI) conversion increased
    the maximum income eligibility limit for HUSKY B from 300 to 323% of
    the Federal Poverty Level (FPL). Additionally, Connecticut availed
    itself of the option to eliminate the crowd-out for coverage.
                3.  To the extent the following information is readily
                        available and you believe that it is relevant,
                        please describe the services and or benefit and or
                        cost sharing currently provided in your state under
                        CHIP that are not comparably available through your
                        state's exchange or through the majority of
                        employer sponsored health plans in your state.
    CHIP/HUSKY B provides a much broader range of behavioral health
    benefits than do exchange and employer-sponsored health plans.
    Additionally, CHIP/HUSKY B covers dental services with among the best
    geo-access of Medicaid programs in the country. Dental services are
    only covered through the exchange through purchase of stand-alone
    plans, and are typically covered by employer-sponsored health plans on
    a much more limited basis. There are no monthly premiums and a
    limitation on annual out-of-pocket costs of 5% of gross income in
    Connecticut's Band 1 for CHIP coverage; and a modest monthly premium of
    $30 for one child and $50 for two or more children, and a limitation on
    annual out-of-pocket costs of 5% of gross income in Connecticut's Band
    2. These modest cost-sharing obligations (low if any premium, no
    deductible, limitations on out-of-pocket costs) are substantially less
    than would be paid for a Connecticut Qualified Health Plan (QHP).
                4.  Do you recommend that CHIP funding be extended? If so,
                        for how long, and for budgeting and planning
                        purposes, under what timeframe should Congress act
                        upon an extension? If you do not believe that CHIP
                        funding should be extended, what coverage (if any)
                        do you believe that CHIP enrollees in your state
                        would be able to obtain? How many children covered
                        by CHIP would become uninsured in the absence of
                        CHIP?
    CHIP funding should be made permanent. Over the course of its
    existence, CHIP has proved to be a critical source of support for
    hundreds of thousands of children nationwide. The current cost-sharing
    arrangement between the federal government and the states represents an
    appropriate balancing of interests in the health, safety, and well-
    being of our children.
                5.  In spite of the restructuring and retargeting of
                        allotments that occurred in 2009, some CHIP funding
                        remains unspent. Do you believe the annual
                        allotments has received starting in 2009 have been
                        sufficient and the formula is working
                        appropriately? Do you believe there is a need for
                        Congress to further address the issue of unspent
                        allotments?
    Connecticut's current CHIP expenditures are at levels that will fully
    utilize an amount equal to our annual allotment of funding. This has
    been the case for the past several fiscal years. That said, there is
    also an ongoing balance of funds that have been carried forward from
    years prior that affects the manner in which Connecticut accesses its
    federal funds, resulting in a carry-forward from year to year.

    To the extent that there are states that are unable to expend their
    allotments, Congress could adopt a distribution methodology that
    examines expenditures year over year and makes appropriate adjustments
    based on demonstrated need.
                6.  Over the past number of years, states have worked to
                        reduce the number of uninsured children, and
                        Medicaid and CHIP have been a critical component of
                        that effort. Do you believe there are federal
                        policies that can help states do an even better job
                        of enrolling eligible children? What other policy
                        changes, if any, would help improve enrollment of
                        eligible children, reduce the number of uninsured,
                        and improve health outcomes for children in your
                        state?
    Connecticut has been demonstrably successful though both its CHIP/HUSKY
    B program and Access Health CT enrollment activities in reducing the
    incidence of uninsured children in Connecticut. With respect to CHIP,
    the single most effective support for enrollment and continuity of care
    for children served by CHIP will be extension of federal CHIP funding.
    Additionally, performance bonuses have effectively incented and
    rewarded states that have (1) met their target for enrollment; and (2)
    implemented at least five of eight identified policies that support
    timely access to and maintenance of CHIP coverage (12-month continuous
    coverage; either no asset test or simplified asset verification; no
    face-to-face interview requirement; joint application and consistent
    information verification processes across Medicaid and CHIP;
    administrative or ex parte renewals; presumptive eligibility; express
    lane eligibility; and premium assistance option). Connecticut has
    qualified in Federal Fiscal Years 2011 ($5.2 million), 2012 ($3.0
    million) and 2013 ($1.6 million) for CHIPRA performance bonuses. Over
    and above activities related to Medicaid, Congress could support access
    to and adequacy of coverage under QHPs by:

       examining the incidence of families affected by the ``family
            glitch'' and considering appropriate remedies;

       reviewing the cost effectiveness, network adequacy and scope of
            coverage of QHPs with respect to supporting the needs of
            children and Families; and

       providing ongoing support for the in-person assister functions that
            have been funded under PPACA.

    Thank you for the opportunity to share our perspective. Continued
    funding for CHIP is essential. Failure to preserve CHIP funding will
    jeopardize continued coverage for children in demonstrated need for
    these supports and necessarily expose states to significant budget
    constraints. I respectfully request that you make resolution of this
    pending issue a high priority.

    Sincerely,

    Dannel P. Malloy,
    Governor.
                                     ______

                      Delaware Health and Social Services

                            Office of the Secretary

    1901 N. DUPONT HIGHWAY, NEW CASTLE, DE 19720  TELEPHONE: 302-255-9040
                               FAX: 302-255-4429

    November 3, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    Congress of the United States       Congress of the United States
    Washington, DC 20515                Washington, DC 20515

    The Honorable Henry A. Waxman       The Honorable Orrin G. Hatch
    Ranking Member                      Ranking Member
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    Congress of the United States       Congress of the United States
    Washington, DC 20515                Washington, DC 20515

    Thank you for the opportunity to comment on the Children's Health
    Insurance Program (CHIP) as you consider an extension of funding beyond
    FY 2015. CHIP has been an integral component of the health safety net
    for children in low-income families since its enactment in 1997.

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state?

          14,612 children were enrolled in Delaware's CHIP program during
            State Fiscal Year 2014 (July 2013-June 2014). This represents
            an unduplicated count of children who were enrolled at any
            point during the year.

          Demographic characteristics of the children can be found in the
            tables below.

    ------------------------------------------------------------------------
                                                     Number        Percent
    ------------------------------------------------------------------------
    Gender:
        Male....................................        7,387         50.5%
        Female..................................        7,225         49.5%

    Age:
        Under 5.................................        2,677         18.3%
        5-8.....................................        3,650         25.0%
        9-12....................................        3,530         24.2%
        13-15...................................        2,516         17.2%
        16-18...................................        2,239         15.3%

    Income:
        100%-150% FPL...........................        7,958         54.5%
        150%-200% FPL...........................        6,654         45.5%
    ------------------------------------------------------------------------

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

          Very few substantive changes were made to the Delaware CHIP
            program as a result of PPACA. CHIP and Medicaid are
            administered by the same agency, the Division of Medicaid and
            Medical Assistance, and CHIP offers the full range of services
            covered under EPSDT. Eligibility and enrollment are integrated
            and children are served by the same Managed Care Organizations
            (MCOs).

          Changes made as a result of PPACA include adoption of MAGI
            eligibility rules and transition of children between 100%-133%
            of FPL from CHIP to Medicaid. Children who transitioned to
            Medicaid will no longer be subject to a monthly premium and
            will now have access to the non-emergency transportation
            benefit.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            benefits and or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

          Cost sharing for families of children enrolled in CHIP is very
            minimal. The maximum family premium is $25 per month. There are
            no additional co-pays with the exception of a $10 charge for
            non-emergency visits to the emergency department. Since the
            full range of EPSDT covered services is available to the CHIP
            population, these children also have access to dental and
            specialized services that might not be available in exchange or
            employer-sponsored health plans.

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP funding should be extended, what coverage (if any)
            do you believe CHIP enrollees in your state would be able to
            attain? How many children covered by CHIP do you estimate would
            become uninsured in the absence of CHIP?

          Yes, CHIP continues to provide a critical health care safety net
            for children. Funding should be extended to align with the
            current authorization ending in 2019. Discontinuation of
            funding could result in various scenarios depending on the
            structure of a state's CHIP program. Delaware administers a
            combination CHIP program with both a Medicaid expansion
            component and a stand-alone component.

          Children enrolled in the CHIP Medicaid Expansion would continue
            to receive services but the state would receive the lower
            Medicaid FMAP rather than the CHIP enhanced EFMAP. The state
            would be required to meet MOE requirements for the stand-alone
            component. Beyond that, without an infusion of state funds,
            families would need to purchase insurance through the
            marketplace. This would likely present a financial burden for
            some families. There is also the concern that some children
            would not be eligible for marketplace coverage due to the
            ``family glitch'' in the affordability test.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

          Annual allotments have been sufficient to cover the federal
            portion of CHIP expenditures. It remains to be seen whether
            states will benefit from the PPACA FMAP increase without an
            extension of funding and review of the funding methodology.

      6.  Over the past number of years, States have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children? What other policy changes, if
            any, would help improve enrollment of eligible children, reduce
            the number of uninsured, and improved health outcomes for
            children in your state?

          Delaware is actively engaged in promoting health innovation and
            transformation. As these efforts roll out, it will be necessary
            to critically assess the roles and value of each program with
            the goal of greater integration and alignment. CHIP currently
            provides a critical bridge between Medicaid and the marketplace
            but that need may diminish over time. It is also essential to
            more seriously consider all factors which impact health
            outcomes for children, including social determinants of health.
            Increased coordination and alignment of eligibility policies
            between federal agencies would strengthen the financial,
            nutritional, housing, and social supports necessary for
            children in low-income families.

    Thank you,

    Rita M. Langraf,
    Secretary
                                     ______

                                STATE OF GEORGIA

                             office of the governor

                               ATLANTA 30334-0900

    Nathan Deal
     governor

                               November 20, 2014

    The Honorable Ron Wyden, Chairman
    Senate Finance Committee
    221 Dirksen Senate Office Building
    Washington, D.C. 20510

    The Honorable Orrin G. Hatch, Ranking Member
    Senate Finance Committee
    104 Hart Senate Office Building
    Washington, D.C. 20510

    The Honorable Fred Upton, Chairman
    House Committee on Energy and Commerce
    2183 Rayburn House Office Building
    Washington, D.C. 20515

    The Honorable Henry A. Waxman, Ranking Member
    House Committee on Energy and Commerce
    2204 Rayburn House Office Building
    Washington, D.C. 20515

    Dear Chairmen Wyden and Upton and Ranking Members Hatch and Waxman:

    On behalf of the State of Georgia, I would like to thank you for the
    opportunity to provide state-level input as Congress considers the
    future of the Children's Health Insurance Program (CHIP). I am writing
    to respond to the questions outlined in your July 29, 2014 letter
    regarding the Children's Health Insurance Program in Georgia which is
    also known as PeachCare for Kids. As a state-established program,
    funded jointly between federal and state governments, your request for
    input from the state of Georgia, on behalf of nearly 200,000 children
    this program covers in our state, is greatly appreciated.

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristic of CHIP enrollees in your state
            (e.g. income, health status, demographics)?

          Response: In August 2014, 196,996 children were enrolled in the
            PeachCare for Kids program. As renewals are completed monthly,
            some children have been found to be eligible for the Medicaid
            program, and they have been transferred to the Title XIX
            program. We expect a monthly decrease of 3,000-4,000 children
            until December 2014.

          In terms of demographics, the following tables depict race,
            gender, and household income data that you may find helpful.

                                  Count of RACE
    ------------------------------------------------------------------------
                                                                     Grand
                                                 F          M        Total
    ------------------------------------------------------------------------
    American Indian or Alaska Native.......        107         94        201
    Asian..................................      4,519      4,736      9,255
    Black or African American..............     31,198     31,907     63,105
    Hispanic or Latino.....................     14,477     15,034     29,512
    Native Hawaiian or Other Pacific                56         64        120
     Islander..............................
    None...................................      7,974      8,115     16,089
    Not Specified..........................         77         80        157
    Other..................................      6,536      6,840     13,376
    White..................................     39,342     42,119     81,461
    ------------------------------------------------------------------------
        Grand Total........................    104,286    108,989    213,276
    ------------------------------------------------------------------------

         The household income breakdown for members enrolled in the Georgia
            CHIP program in June 2014 is included in the table below.

    ------------------------------------------------------------------------
                       Yearly Household Income                       Count
    ------------------------------------------------------------------------
    $0-10,000....................................................         97
    $11,000-20,000...............................................     14,929
    $21,000-30,000...............................................     44,448
    $31,000-40,000...............................................     37,175
    $41,000-50,000...............................................     17,446
    $51,000-60,000...............................................      6,113
    $61,000-70,000...............................................      1,452
    $71,000-80,000...............................................        295
    $81,000-90,000...............................................         69
    $91,00 and up................................................         59
    ------------------------------------------------------------------------

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

          Response: Georgia took several actions that were required as a
            result of the Affordable Care Act (ACA). Note that these
            changes required significant additional state resources and
            extensive modifications to existing computer systems.

         a.  Georgia was required to lower premiums due to the income/
            federal poverty level conversions required by the Act.
         b.  Georgia implemented a single application for Medicaid,
            PeachCare for Kids and other public assistance programs.
            Individuals wishing to apply may now apply through a single
            electronic portal. Should individuals choose to apply via
            paper, the paper application now used by the program is based
            on the streamlined application created by the Centers for
            Medicare and Medicaid Services (CMS).
         c.  Georgia was required to remove the requirement that families
            returning to CHIP eligibility due to nonpayment of premiums pay
            back past due premiums in order to be eligible for CHIP.
         d.  As a result of ACA, we have begun and will continue the move
            of an estimated 58,000 children from CHIP to the Medicaid
            program through December 31, 2014. These are children who are
            between 100-133% of the federal poverty level.
         e.  The eligibility determination process for CHIP has been moved
            to a Modified Adjusted Gross Income (MAGI) methodology. States
            were required to adopt MAGI rules to determine income in order
            to align with rules used for premium tax credits available
            through the exchanges.
         f.  The CHIP program implemented a 45-day standard of promptness
            for completion of applications in order to align with the
            Medicaid program and comply with new regulations.
         g.  Consistent with Section 10203(b)(2)(D) of the Act, Georgia
            modified CHIP eligibility criteria to permit enrollment of low-
            income children of state employees who are otherwise eligible
            under the state employees' health insurance plan.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            benefits and or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

          Response: Georgia has not completed a comparison of the services,
            benefits, or cost sharing available through our CHIP program to
            the exchange plans.

          However, several organizations have completed reports that
            include a comparison of Georgia's CHIP program to Exchange
            plans.

          The Robert Wood Johnson Foundation issued a report \1\ in July
            2014 that was completed by Wakely Consulting Group that
            included a comparison of Exchange plans available in Georgia to
            the PeachCare for Kids (CHIP) program. They concluded that the
            Actuarial value of Georgia's CHIP plan is 99.3% with an average
            annual cost sharing of $24.00 when compared at 160% and 210% of
            the FPL.
    ---------------------------------------------------------------------------
        \1\ Wakely Consulting Group, A.B. (2014, July). Comparison of
    Benefits and Cost Sharing in Children's Health Insurance Programs to
    Qualified Health Plans. Retrieved August 1, 2014, from Kaiser Health
    News: http://www.wakely.com/wp-content/uploads/2014/07/FlNAL-CHIP-vs-
    QHP-Cost-Sharing-and-Benefits-Comparison-First-Focus-July-2014-.pdf.

         The National Alliance to Adolescent Health also completed a study
            \2\ that compared Georgia's plan to exchange plans. They
            concluded that Georgia's CHIP coverage is much more affordable
            and provides a broader set of benefits than subsidized silver
            plans sold in the federal exchange. For your comparison
            purposes, the premium cost per month for PeachCare for Kids
            coverage is $0 to $35 for one child and a maximum of $70 for
            two or more children living in the same household. There is no
            cost for coverage for children under age 6. Additionally, co-
            pays range from $0 to $15.00 depending on the service provided
            and the age of the child. There are no copays for preventive
            care services, including well child visits. Federal
            requirements limit out of pocket costs for CHIP to be no more
            than 5% of household income, including premiums and co-pays.
    ---------------------------------------------------------------------------
        \2\ Fox, M.M. (2014, July). The National Alliance to Advance
    Adolescent Health. Retrieved August 7, 2014, from
    thenationalalliance.org:http://www.thenationalalliance.org/index.cfm.

          The aforementioned studies, as previously noted, were completed
            by third party organizations and their findings have not been
    ---------------------------------------------------------------------------
            validated by the State of Georgia.

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP funding should be extended, what coverage (if any)
            do you believe CHIP enrollees in your state would be able to
            obtain? How many children covered by CHIP do you estimate would
            become uninsured in the absence of CHIP?

          Response: Children covered through CHIP could be enrolled in
            other insurance through the federal exchange. The exchange plan
            must be comparable to CHIP and be approved by the Secretary of
            Health and Human Services. To date, the Secretary has not
            certified such a plan. Also, the exchange is only an option if
            the child's parent does not have access to affordable employer-
            sponsored insurance.

          Until such time that the Secretary identifies comparable plans,
            the disparity between the CHIP premiums and copayments and
            their impact on enrollment remains unknown. Therefore, an
            estimate of the number of children that would be uninsured is
            difficult to determine at this time. However, we do know that
            today some families have difficulty paying the relatively low
            cost-sharing for the CHIP program, and we project that
            approximately 170,000 children would lose CHIP coverage in
            Georgia if the program ended at this time.

         The ACA required children 100%-138% of FPL to be covered by
            Medicaid. This population is sometimes referred to as ``stair
            step kids.'' In Georgia, these children were previously covered
            under our CHIP program, PeachCare for Kids. Though this is a
            mandatory expansion of Medicaid, CMS allowed states to continue
            to draw the enhanced CHIP federal match for the stair step
            population even though they are enrolled in Medicaid. The end
            result was that moving this population to Medicaid had no cost
            impact to the state.

          If Congress were to discontinue the CHIP program, they would need
            to either: (1) remove the requirement that Medicaid cover kids
            up to 138% of FPL; or (2) continue the enhanced FMAP for the
            stair step population.

          Consistent with the recommendations of the Medicaid and CHIP
            Payment Access Commission (MACPAC), an additional two (2) years
            of funding would provide benefits which include but may not be
            limited to: (1) ensuring continued access for children who may
            otherwise become uninsured due to increased premiums and/or
            patient co-payments; (2) providing sufficient market place
            experience with exchange plans delivery of healthcare services
            to children to assess comparability; and (3) give states
            adequate time to prepare for the ending of the program, and to
            assist with the transition of CHIP members to an exchange plan.
            A critically important factor Congress should consider is need
            for sufficient time for states to phase down the program and
            work toward a smooth transition for these children. Therefore,
            states need the earliest decision possible from Congress on the
            direction of this program.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

          Response: To date, the funding formula has worked appropriately
            for Georgia and we do not see a need for Congress to address
            the issue of unspent allotments at this time.

      6.  Over the past number of years, States have worked to reduce the
            number of uninsured children and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children? What other policy changes, if
            any, would help improve enrollment of eligible children, reduce
            the number of the uninsured, and improve health outcomes for
            children in your state?

          Response: There are several federal policy changes that would be
            helpful.

         A. Permit individuals to seek coverage and subsidies on the
            exchange if the employer's offer of family coverage exceeds
            9.5% of family income. The ACA requires that premiums for
            individual coverage not exceed 9.5 percent of household income,
            but there is no limit on the employee's share of premiums for
            family coverage. Considering the cost of family coverage as a
            percentage of family income as criteria for accessing coverage
            through a subsidized plan via the exchange should be
            considered. Otherwise, the cost of family coverage may cause
            many to opt out of providing coverage for their children.
         B. Permit federal subsidies for people with incomes below 400
            percent of the federal poverty level. These subsidies are not
            currently available for anyone who receives an offer of
            insurance from an employer. That means workers who can't afford
            employer-offered premiums for family coverage now have nowhere
            to go except the Children's Health Insurance Programs (CHIP) or
            Medicaid, if they qualify. Congress should consider expanding
            Premium Assistance approaches to assist families in purchasing
            employer-sponsored coverage for children and their parents as
            an alternative to CHIP. We believe maintaining coverage as a
            family unit--rather than approaches that split parents and
            children--is a preferable approach and is beneficial to the
            family.
         C. Change Vaccines for Children (VFC) rules for CHIP to match
            Medicaid rules, so that they are the same for all CHIP and
            Medicaid programs. Children enrolled in a stand-alone CHIP
            program are not eligible to receive VFC stock because the
            children are considered insured. Children enrolled in a
            Medicaid expansion CHIP model are eligible to receive VFC stock
            because they are considered to be Medicaid eligible. The
            current rule creates administrative and access barriers to
            vaccines while disadvantaging certain states like Georgia who
            have established separate CHIP programs.

    Again, Georgia appreciates the opportunity to provide our thoughts on
    the future direction of the CHIP program. As Congress evaluates various
    options going forward, please do not hesitate to let me know if you
    have any questions or concerns. For any follow up inquiries please
    contact Clyde Reese, Commissioner, Department of Community Health.

    Sincerely,

    Nathan Deal
                                     ______

                                State of Hawaii

                               executive chambers

                                    HONOLULU

    NEIL ABERCROMBIE

        GOVERNOR

                                October 10, 2014

    The Honorable Fred Upton
    The Honorable Henry A. Waxman
    The Honorable Ron Wyden
    The Honorable Orrin G. Hatch
    2183 Rayburn House Office Building
    Washington, D.C. 20515

    Dear Congressman Upton, Congressman Waxman, Senator Wyden, and Senator
    Hatch:

    This letter is in response to the questions posed regarding the
    Children's Health Insurance Program (CHIP) in your July 29, 2014
    letter. CHIP is an immensely valuable program for reducing the rate of
    uninsured children. According to the U.S. Census Bureau Current
    Population Survey 2013 Annual Social and Economic Supplement, Hawaii
    had an uninsured children rate of 3.6%, one of the lowest in the
    nation. CHIP, which provides health care coverage to 28,230 children in
    Hawaii, plays an important role assuring access to health care for
    Hawaii's children.

    1.  How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state (e.g.
        income, health status, demographics)?

        As of June 2014, 28,320 children, of which 88 were blind or
        disabled, benefited from Hawaii's CHIP program. The distribution of
        eligible children by island of residence is 57% Oahu, 18% Hawaii,
        14% Maui, 9% Kauai, and 1% Molokai/Lanai. Of the eligible children
        statewide, 1% were age <1 year, 19% age 1-5 years, and 80% age 6-19
        years. Distribution by household income is provided in the table.

    ------------------------------------------------------------------------
                          % FPL                            #           %
    ------------------------------------------------------------------------
    <150............................................        575        2.0%
    150 to <200.....................................         53        0.2%
    200 to <250.....................................         21        0.1%
    250 to <300.....................................     27,671       97.7%
                                                     -----------------------
        Total.......................................     28,320      100.0%
    ------------------------------------------------------------------------

    2.  What changes has your state made to its CHIP program as a result of
        the Patient Protection and Affordable Care Act? How has the
        implementation of PPACA impacted the way your state administers
        CHIP?

        Hawaii has implemented CHIP as a Medicaid expansion program. As
        such, the two programs are fully integrated from an operational
        perspective. Hawaii has implemented changes specifically required
        under the ACA (e.g., provider enrollment and screening), and has
        successfully implemented a new eligibility system with online
        application capability and interface to the federal services data
        hub. The implementation of PPACA has otherwise not impacted
        Hawaii's administration of its CHIP program.

    3.  To the extent the following information is readily available and
        you believe it is relevant, please describe the services and or
        benefits and or cost sharing currently provided in your state under
        CHIP that are not comparably available through your state's
        exchange or through the majority of employer sponsored health plans
        in your state.

        Children in Hawaii covered under CHIP receive full Medicaid state
        plan benefits, including EPSDT, which meet minimal essential
        coverage and are comparably or more available compared to
        commercial health plans available in the State. Hawaii's CHIP has
        no cost sharing.

        I strongly support extending the enhanced reimbursement in
        Medicaid, expanding provider eligibility to other key specialties
        and provider types, and extending these initiatives to all of CHIP
        or at least to Medicaid expansion CHIP. Commercial health plans
        reimburse providers at a higher rate. The reimbursement enhancement
        to primary care providers in Medicaid has been valuable, but this
        provision did not extend to CHIP. This has been challenging in
        states, like Hawaii, that have implemented CHIP as a Medicaid
        expansion as it has been difficult to implement the enhancement for
        primary care providers but not for CHIP providers as Hawaii does
        not have a separate CHIP program.

    4.  Do you recommend that CHIP funding be extended? If so, for how
        long, and for budgeting and planning purposes, under what timeframe
        should Congress act upon an extension? If you do not believe CHIP
        funding should be extended, what coverage (if any) do you believe
        CHIP enrollees in your state would be able to obtain? How many
        children covered by CHIP do you estimate would become uninsured in
        the absence of CHIP?

        No child should be without health insurance, and I strongly
        recommend that CHIP funding be extended. To avoid any gap in
        program continuity and provide stability to states, funding should
        be established prior to expiration of the current funding and for a
        period of no less than two years, preferably ten years.

    5.  In spite of the restructuring and retargeting of allotments that
        occurred in 2009, some CHIP funding remains unspent. Do you believe
        the annual allotments your state has received starting in 2009 have
        been sufficient and the formula is working appropriately? Do you
        believe there is a need for Congress to further address the issue
        of unspent allotments?

        The CHIP funding for Hawaii has been sufficient.

    6.  Over the past number of years, States have worked to reduce the
        number of uninsured children, and Medicaid and CHIP have been a
        critical component of that effort. Do you believe there are federal
        policies that could help states do an even better job in enrolling
        eligible children? What other policy changes, if any, would help
        improve enrollment of eligible children, reduce the number of
        uninsured, and improve health outcomes for children in your state?

        Looking at the federal funding given to health insurance exchanges
        for outreach as precedent, providing 100% federal funding to states
        for outreach to identify and enroll uninsured children would be
        beneficial. For younger children, increased federal funding could
        be made available to public health agencies to incorporate health
        insurance tracking and application assistance with immunization
        efforts. For school age children, schools in receipt of federal
        funding could be required to verify that students have health
        insurance, and schools could be required and/or given the authority
        to submit an application for affordable health insurance on behalf
        of an uninsured student.

    Thank you for the opportunity to communicate my complete support for
    continued funding for the CHIP program and for other efforts to reduce
    the rate of uninsured children. If you have any questions regarding
    these responses, please contact our State Medicaid Director, Dr.
    Kenneth Fink.

    Neil Abercrombie,
    Governor, State of Hawaii

    c:  Patricia McManaman, (OHS, Director)
       Kenneth S. Fink, MD, MGA, MPH, (DHS, MQDA)
                                     ______

                               The State of Idaho

                              C.L. ``Butch'' Otter

                                    Governor

                               November 10, 2014

    Congressman Fred Upton
    House Committee on Energy and Commerce
    2183 Rayburn House Office Building
    Washington, DC 20515

    Dear Congressman Upton,

    Thank you for your recent letter about the Children's Health Insurance
    Program (CHIP). Idaho has partnered with the Centers for Medicare and
    Medicaid Services (CMS) since 1997 to provide healthcare coverage for
    eligible Idaho children.

    I am aware that the existing funding authority under CHIPRA for the
    CHIP Program is ending, and I appreciate your inquiry seeking specifics
    about our program here in Idaho. My responses are below.

      (1)  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g. income, health status, demographics)?

         (a)  Idaho had 25,518 children enrolled in our SCHIP program as of
            the end of FFY13.

         (b)  Idaho 's CHIP income cap is 185 percent (plus 5-percent
            disregard) of the federal poverty guidelines. CHIP enrollees
            are primarily Caucasian, tend to live in the largest urban
            areas of Idaho and are of good health status.

      (2)  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

         (a)  In accordance with the PPACA, Idaho changed our income and
            eligibility methodology to use the Modified Adjusted Gross
            Income (MAGI) basis and moved children to our Title XIX
            program, effective January I, 2014.

         (b)  Idaho's administration of CHIP was impacted by the changes
            indicated above which required extensive modifications to our
            automated eligibility and claims systems. Idaho expects to
            exhaust all of our CHIP allotment this year.

      (3)  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            benefits and or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

      Children enrolled in Idaho's CHIP program have the same benefits as
        children enrolled under the Idaho Medicaid State plan. Idaho's CHIP
        program provides some benefits typically not provided through
        exchange or Employer Sponsored Insurance (ESI) plans such as:
        disposable medical supplies, hospice, case management for children
        with special health care needs, dental care, Early Periodic
        Screening Diagnosis & Treatment services (EPSDT) and enabling
        services such as translation and medical transportation.

      Idaho's CHIP children are subject to $3.65 copays for some, but not
        all services, which is about 60 percent less than co-pays provided
        through gold plans on our exchange or through ESI plans. Premiums
        for CHIP children are $15 or less per month. This also is
        significantly less expensive than exchange or ESI plans. CHIP
        children are not subject to deductibles, out of pocket maximums or
        lifetime benefit limitations, which are integral parts of exchange
        and employer sponsored plans.

      (4)  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what time
            frame should Congress act upon an extension? If you do not
            believe CHIP funding should be extended, what coverage (if any)
            do you believe CHIP enrollees in your state would be able to
            obtain? How many children covered by CHIP do you estimate would
            become uninsured in the absence of CHIP?

      Yes, I do recommend that CHIP funding be extended. Extending the
        funding through 2019 as a transition period would allow for key
        issues regarding the affordability and adequacy of children's
        coverage on the exchange to be addressed. Provisions in the current
        law that make it difficult for families to affordably maintain a
        single source of coverage should be addressed. We do not have a
        good estimate of the number that would become uninsured at this
        time.

      (5)  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

         (a)  Yes, the annual allotment Idaho has been receiving in recent
            years has been sufficient to meet our needs.

         (b)  Yes. Adjusting to allow greater flexibility for states would
            be a positive measure to allow states to improve management and
            planning for their CHIP programs.

      (6)  Over the past number of years, states have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been
            critical components of that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children? What other policy changes, if
            any, would help improve enrollment of eligible children, reduce
            the number of the uninsured, and improve health outcomes for
            children in your state?

      Yes, there are federal policy changes that could assist Idaho
        families in providing health coverage for their families.

        Make CHIP look like an insurance plan (rather than an entitlement
            plan) by removing entitlement assurances like EPSDT and non-
            emergency medical transportation.

        Allow parents to have the option of choosing between premium
            subsidies on the exchange or subsidies for ESI coverage. These
            changes would allow families to choose a family plan through
            the marketplace or ESI and would improve continuity of care for
            the entire family and would avoid placing family members on
            separate health plans with separate provider networks and/or
            cost sharing requirements. Traditional insurance plans can do a
            better job managing premium/co-pay requirements.

    Thank you for the opportunity to share the specific details of Idaho's
    CHIP program. If you need any additional information regarding our
    program, please contact my CHIP Director, Matt Wimmer.

                    As Always--Idaho, ``Esto Perpetua''
    CLO/tp
                                   C.L. ``Butch'' Otter
                                      Governor of Idaho

    cc: Congressman Henry Waxman
                                     ______

                               State of Illinois

                             OFFICE OF THE GOVERNOR

                          Springfield, Illinois 62706

    Pat Quinn

    GOVERNOR

    October 24, 2014

    The Honorable Fred Upton
    House Committee on Energy and Commerce

    The Honorable Henry A. Waxman
    House Committee on Energy and Commerce

    The Honorable Ron Wyden
    Senate Finance Committee

    The Honorable Orrin G. Hatch
    Senate Finance Committee

                 Re: Children's Health Insurance Program (CHIP)

    Dear Honorable Members of Congress:

    Thank you for offering this opportunity to express Illinois' strong
    support for the continuation of the federal Children's Health Insurance
    Program.

    CHIP has played a key role in Illinois' efforts to provide health
    coverage to hundreds of thousands of children and pregnant women since
    the inception of our first expansion of coverage in 1998. Not only has
    CHIP enabled Illinois to expand coverage to children in families with
    income above our Medicaid income level, the outreach activities and
    streamlined application processes resulting from CHIP have had
    important spillover effects by facilitating enrollment of eligible
    children in Medicaid.

    The close integration of CHIP funded coverage with Medicaid coverage
    has allowed Illinois to provide a safety net of health coverage to
    uninsured Illinois children for more than 15 years. Illinois was one of
    the first states to cover a broad demographic of uninsured children
    including non-citizen children and children in families at higher
    income levels. As a result of our approach, over the past five years
    Illinois has received over $60 million in bonus payments under the
    Children's Health Insurance Program Reauthorization Act of 2009. We
    understand we are one of only nine states to receive bonus payments for
    five consecutive years.

    As a result of changes required by the Affordable Care Act and with
    CHIP and Medicaid support, Illinois now covers children with family
    income up to 318 percent of the federal poverty level guidelines.

    Responses to your specific questions follow.

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g., income, demographics)?

    CHIP funding contributes to Illinois' coverage of approximately 219,000
    children and pregnant women as of June 30, 2014.

    Illinois uses the CHIP ``unborn'' group to cover pregnant women who are
    not eligible to enroll in Medicaid and their children for the first few
    months of the children's lives. The unborn group included a total of
    about 38,000 individuals on June 30, 2014: 12,000 pregnant women and
    26,000 infants. All of these individuals live in families with income
    no greater than 213 percent of the Federal Poverty Level (FPL)
    guideline. They have no cost-sharing obligations for services.

    Of the 181,000 children not in the unborn group, about 50 percent have
    family income falling into the lowest CHIP funded plan which is our
    Medicaid expansion. They have no cost sharing for services. Of the
    remaining 91,000 children, about 14 percent pay modest co-payments for
    most services not including well-child care and about 36 percent pay
    small monthly premiums in addition to co-payments for services.

    Of the 207,000 CHIP-funded children enrolled in Illinois on June 30,
    2014 (including the 26,000 infants mentioned above), 25 percent are age
    5 or younger, 41 percent are ages 6 through 12 and 34 percent are ages
    13 through 18.

    The majority of enrollees, 73 percent, live in Cook County and the five
    counties neighboring Cook. About 10 percent live in the northwestern
    region of the state and about 17 percent live in central and southern
    Illinois.

    Of those who reported their race, 48 percent self-identified as White
    of whom 26 percent reported Hispanic/Latino ethnicity; 10 percent self-
    identified as Black or African American of whom 2 percent reported
    Hispanic/Latino ethnicity; 5 percent self-identified as Asian of whom 2
    percent reported Hispanic/Latino ethnicity; fewer than 1 percent self-
    identified as Hawaiian/Other Pacific Islander of whom 26 percent
    reported Hispanic/Latino ethnicity; fewer than l percent self-
    identified as American Indian/Alaska Native of whom 46 percent reported
    Hispanic/Latino ethnicity; and 1 percent self-identified as multiracial
    of whom 14 percent reported Hispanic/Latino ethnicity. Of the 35
    percent of enrollees who did not answer the race question, 72 percent
    reported Hispanic/Latino ethnicity. Of the total population, 12 percent
    reported Hispanic/Latino Ethnicity. Eighteen percent of the population
    failed to report any race or ethnicity.

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

    While technically Illinois has implemented CHIP through a combination
    Medicaid expansion and separate CHIP program, the ``separate'' program
    is highly integrated with Medicaid and has been since its
    implementation in Illinois in 1998. Largely for that reason, Illinois
    had to make few changes in the administration of CHIP as a result of
    enactment of the ACA. The most significant change required was the
    adoption of the Modified Adjusted Gross Income or ``MAGI'' methodology
    for determining eligibility. This required converting our CHIP income
    standards to eliminate the state specific income disregards that we had
    previously employed.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            benefits and or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

    Illinois' separate CHIP coverage is administered under the umbrella of
    All Kids, our array of plans for children. For CHIP eligible children,
    All Kids offers more robust benefits than those available through the
    Health Insurance Marketplace and All Kids' cost sharing requirements
    are more affordable.

    The fundamental difference between services covered under All Kids and
    services covered by the benchmark plan for qualified health plans
    available through the Marketplace in Illinois is the availability of
    Early and Periodic Screening, Diagnosis, and Treatment (EPSDT)
    benefits. Illinois has always offered our CHIP eligible children the
    same EPSDT services required for Medicaid eligible children. EPSDT
    coverage includes all screening, prevention and medically necessary
    diagnostic and treatment services falling with in the federal
    definition of Medicaid. EPSDT benefits include dental, vision and
    hearing services. No similarly broad coverage is found within the
    Marketplace benchmark plan, nor are we are aware of any comparable
    coverage offered by employer-sponsored plans in Illinois.

    Premium and cost sharing limits in Illinois' All Kids are much lower
    than what is allowed in the Marketplace plans at equivalent income
    levels. We believe the same holds for children enrolled in employer-
    sponsored plans. For children in All Kids whose services are funded
    with CHIP dollars, monthly premiums range from $0-40 per child with a
    maximum of $80 per month for two or more children, and cost sharing for
    office visits ranges from $3.90-$15 per visit. Appropriate emergency
    room visits require no co-payment. On the Marketplace in 2014, the
    lowest cost bronze plan in Chicago for one child has a monthly premium
    of $76 per month and a$6,000 deductible. The lowest cost silver plan
    has a monthly premium of $105 per month, a $6,000 deductible, and a $30
    co-pay for a primary care doctor, $50 co-pay for a specialist, and $500
    co-pay for an emergency room visit. Similarly, in Peoria, the lowest
    cost bronze plan for one child has a monthly premium of $81 per month
    with a $6,300 deductible. The lowest-cost silver plan has a premium of
    $108 per month with a $3,750 deductible and a $10 co-pay for a primary
    care doctor, $75 co-pay for a specialist, and $500 co-pay for an
    emergency room visit.

    Financial help is available on the Marketplace through premium tax
    credits and cost-sharing reductions, but All Kids is less expensive.
    For example, All Kids covers children in families with income up to 318
    percent of the federal poverty level guidelines in Illinois. On the
    Marketplace at 300 percent FPL, families are expected to contribute 9.5
    percent of their household income toward the benchmark plan's premium
    and no cost-sharing reductions are available. Even at 200 percent FPL
    on the Marketplace, the household is expected to contribute 6.3 percent
    of their household income toward the benchmark plan and, with cost-
    sharing reductions, a consumer has to cover 27 percent of the cost of
    benefits, on average.

    Additionally, on the Marketplace, financial help is only available to
    consumers without alternative minimum essential coverage (MEC). Under
    IRS regulations, if an employee receives an affordable offer of
    coverage from their employer and even if the dependent coverage offered
    by the employer is unaffordable, all dependents are considered to have
    MEC. While CMS regulations provide dependents in this situation with an
    exemption from the individual responsibility penalty, the children
    still need health insurance. Without CHIP financing to support All
    Kids, households who face this ``family glitch'' are unlikely to have
    an affordable coverage option for their children.

    Two recent articles appearing in Health Affairs that document the hit
    to children's coverage that would be experienced from ending CHIP
    support our analysis. Abdus \1\ et al. used a carefully developed
    simulation model to estimate the impact on children's coverage of these
    kinds of changes (i.e. from CHIP to Marketplace) and found it would
    materially reduce coverage. McMorrow \2\ et al. suggested that more
    than 50 percent of children currently on CHIP would not be eligible for
    the Marketplace because of parental access to other MEC. If insurance
    were purchased from this other source, it would materially increase
    premiums and other costs, resulting in the loss of coverage estimated
    by Abdus et al.
    ---------------------------------------------------------------------------
        \1\ Abdus, S. et al., ``Children's Health Insurance Program
    Premiums Adversely Affect Enrollment Especially among Lower-income
    Children,'' Health Affairs (Vol. 33, Num. 8; August, 2014), pp. 1353-
    1360.
        \2\ McMorrow, S. et al., ``Trade-Offs Between Public and Private
    Coverage for Low-Income Children Have Implications for Future Policy
    Debates,'' op. cit., pp. 1367-1374.

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP funding should be extended, what coverage (if any)
            do you believe CHIP enrollees in your state would be able to
            obtain? How many children covered by CHIP do you estimate would
    ---------------------------------------------------------------------------
            become uninsured in the absence of CHIP?

    We strongly recommend extending CHIP funding for five years. Because of
    the significantly lower amount of subsidy for Marketplace plans and the
    lack of any public subsidy for employer sponsored plans, we believe a
    significant number of families would choose to forgo health coverage
    for their children should CHIP funded All Kids coverage be eliminated.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

    The allotments have been sufficient for Illinois since 2009. At this
    time, we do not see a need to adjust the process for reallocating
    unspent funds. However, we strongly encourage the Congress to preserve
    the 23 percent increase in CHIP federal financial participation (FFP)
    scheduled for 2016 and also assure that state allotments are adequate
    to permit us to take full advantage of the increase in FFP.

      6.  Over the past number of years, States have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children? What other policy changes, if
            any, would help improve enrollment of eligible children, reduce
            the number of the uninsured, and improve health outcomes for
            children in your state?

    Illinois strongly recommends allowing states to use CHIP funds to cover
    undocumented children through age 18. Regardless of how they came to
    live in the United States, an investment in children is an investment
    in the future. For this reason, we work to promote the health of all
    children residing in Illinois and request federal funding to support
    this goal.

    In closing, I must stress that preserving the support CHIP provides to
    states is critical to assuring we do not lose ground in our quest to
    give all of our children the health care they need to thrive.

    Sincerely,

    Pat Quinn, Governor of Illinois

                                     ______

               Indiana Family and Social Services Administration

                           Michael R. Pence, Governor

                                State of Indiana

                     Office of Medicaid Policy and Planning

                   MS 07, 402 W. WASHINGTON STREET, ROOM W382

                          INDIANAPOLIS, IN 46204-2739

                               December 12, 2014

    The Honorable Ron Wyden             The Honorable Orrin G. Hatch
    Chairman                            Ranking Member
    Senate Finance Committee            Senate Finance Committee

    The Honorable Fred Upton            The Honorable Henry A. Waxman
    Chairman                            Ranking Member
    Energy and Commerce Committee       Energy and Commerce Committee

    Dear Chairman Wyden, Ranking Member Hatch, Chairman Upton, and Ranking
    Member Waxman:

    Indiana appreciates the opportunity to respond to your questions about
    the Children's Health Insurance Program (CHIP) and health coverage for
    children in our state. We applaud efforts by Congress to ensure low
    income children have access to affordable, high quality health care
    coverage and recognize the significant contribution of CHIP in
    accomplishing this goal. In determining the appropriate course for the
    CHIP program in both the short term and the long term, we recommend
    that Congress address several challenges to children's coverage put in
    place by the Patient Protection and Affordable Care Act (PPACA).

    Many families struggle to afford health care coverage in our state
    because of increased costs directly related to PPAC's changes to
    insurer ratings rules. We estimate that these changes have resulted in
    cost increases of 50 to 100 percent, which puts a substantial strain on
    family budgets. In addition, the advance premium tax credits available
    to adults through the Market place do not coordinate with the CHIP
    program and separate children from their parent's health plans.
    Children may receive coverage through the CHIP program or Medicaid and
    their parents may receive coverage through the Marketplaces, which
    means that many families must manage multiple health programs.

    In addition, PPACA could create a perverse incentive for employers to
    increase the cost of dependent coverage. The law requires an employer
    to offer coverage that costs no more than 9.5 percent of income for the
    eligible employee; however, if coverage for the employee is considered
    ``affordable'' then, regardless of the cost of family coverage, all
    family members are disqualified from accessing the PPACA's tax credits
    to purchase private family policies on the Marketplace. As long as the
    cost of the employee's coverage meets the affordability test, the
    employer avoids a penalty. This so-called ``family glitch'' therefore
    has the potential to thwart access to subsidies designed to increase
    access to health insurance.

    Congress should repeal PPACA and enact legislation that offers families
    more choices to enroll their children into private market coverage
    instead of being forced into government health care programs. Subsidies
    should create affordable health care options and be coordinated across
    programs so that families have the choice of obtaining a private health
    plan that covers the entire family through the Marketplace or an
    employer plan, if that plan meets their needs.

    If Congress continues CHIP, the program should be targeted to the
    lowest income children, reflecting the bipartisan compromise approved
    by Congress in 1997 that provided coverage for the neediest children
    without expanding government programs into the middle class. A
    continued CHIP must provide states with maximum flexibility to achieve
    coordination of family coverage without federal requirements that limit
    family choices and access to private market plans. Legislation should
    be structured to allow states to integrate CHIP with existing Medicaid
    reform models, such as our state's Healthy Indiana Plan (HIP). The HIP
    program prepares individuals to move from public assistance to the
    private insurance market and advances consumer-driven health care while
    creating incentives for participants to obtain preventive care and
    adopt healthy lifestyles.

    Below, we provide responses to each of your specific questions.

    1.  How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state (e.g.
        income, health status, demographics)?

    In October 2014, 74,518 individuals were enrolled in the Indiana CHIP
    program. This includes both the Medicaid Expansion Program (MCHIP) and
    the Separate CHIP (SCHIP) populations.

    ------------------------------------------------------------------------
                                         Number Enrolled    Number Enrolled
                                           October 2013       October 2014
    ------------------------------------------------------------------------
    Medicaid Expansion CHIP (MCHIP)               54,285             50,675
        Age 0-1:157%-208% FPL *
        Ages 1-5: 141%-158% FPL *
        Ages 6-18: 106%-158% FPL *
    ------------------------------------------------------------------------
    Separate CHIP (SCHIP)                         26,734             23,843
        Age 0-1: >208%-250% *
        Ages 1-18: >158%-250% *
    ------------------------------------------------------------------------
        Total                                     81,019             74,518
    ------------------------------------------------------------------------
    * All FPL percentages represent MAGI rates effective Jan 1, 2014

    The demographic analysis of the CHIP population found here applies to
    the 2013 program enrollees. Nearly half of the children enrolled in
    CHIP are between the ages of 6 and 12. This is because children under
    age 6 are eligible for Medicaid at higher family income levels. Just
    fewer than 35 percent of CHIP enrollees are teenagers, while the
    remaining 17 percent are under age 6. This distribution is consistent
    with observed demographics since CHIP was first implemented in Indiana.

    There is a higher distribution of minorities in Indiana's CHIP program
    than the overall population in Indiana for children ages 18 and
    younger. Compared to the U.S. Census estimate, African-American
    children (15.9% of CHIP enrollees in CY 2013) and Hispanic children
    (14.3% of CHIP enrollees in CY 2013) are represented more in CHIP than
    in the statewide population. Between CY 2011 and CY 2013, the
    proportion of Caucasian CHIP members declined (67.5 and 65.5,
    respectively). The African-American proportion increased from 14.4
    percent in 2011 to 15.9 percent in 2013. The Hispanic proportion
    decreased slightly from 14.8 percent in 2011 to 14.3 percent in 2013.
    Other races have increased from 3.3 percent in 2011 to 4.3 percent in
    2013.

    2.  What changes has your state made to its CHIP program as a result of
        the Patient Protection and Affordable Care Act? How has the
        implementation of PPACA impacted the way your state administers
        CHIP?

    Indiana operates its CHIP program in close coordination with the
    Medicaid program. The changes made to the CHIP program for PPACA mirror
    the overall Medicaid program changes that were required by the PPACA.
    Indiana has had a single, streamlined application and eligibility
    process for both Medicaid and CHIP for many years. This allowed us to
    make only a few changes to the CHIP program and stay compliant with new
    Federal rules. The following highlight the major changes:

        The Indiana Health Coverage Programs Application was altered to
            meet new PPACA requirements. This application is for all
            Medicaid and CHIP program eligibility.
        The financial eligibility guidelines were modified to reflect the
            Modified Adjusted Gross Income (MAGI) methodology. New MAGI
            adjusted FPLs for allcategories led to an adjustment of the
            lowest level FPL for the SCHIP income eligibility standard.

    3.  To the extent the following information is readily available and
        you believe it is relevant, please describe the services and or
        benefits and or cost sharing currently provided in your state under
        CHIP that are not comparably available through your state's
        exchange or through the majority of employer sponsored health plans
        in your state.

    The Indiana SCHIP program requires monthly premiums and a limited set
    of co-pays. Monthly premiums are set on a sliding scale based on family
    income and the number of children covered. The table below details
    premium charges. Co-pays are assessed for prescription drugs ($3 or $10
    per prescription) and for emergency ambulance transportation ($10).

    ----------------------------------------------------------------------------------------------------------------
             Number of Covered Children           Up to 175%  FPL  Up to 200%  FPL  Up to 225%  FPL  Up to 250%  FPL
    ----------------------------------------------------------------------------------------------------------------
    1...........................................             $22              $33              $42              $53
    2 or more...................................             $33              $50              $53              $70
    ----------------------------------------------------------------------------------------------------------------

    Children in the MCHIP program are covered by full State Plan benefits.
    Children in the SCHIP program have access to slightly fewer services,
    including no organ transplants, no non-emergency transportation, and
    limitations to physical, speech, and occupational therapy.

    The Medicaid State Plan provides services beyond the standard
    commercial plan and Essential Health Benefits. We do not have a
    detailed comparison of SCHIP cost sharing and coverage compared to
    typical exchange products or commercial cost sharing and coverage.

    4.  Do you recommend that CHIP funding be extended? If so, for how
        long, and for budgeting and planning purposes, under what timeframe
        should Congress act upon an extension? If you do not believe CHIP
        funding should be extended, what coverage (if any) do you believe
        CHIP enrollees in your state would be able toobtain? How many
        children covered by CHIP do you estimate would become uninsured in
        the absence of CHIP?

    Indiana supports efforts to ensure that children have access to
    affordable health care coverage and we encourage Congress to seek
    solutions to the issues outlined above. Congress should also be mindful
    of the cost of these efforts, as states are already burdened by the
    PPACA's many unfunded mandates. We also recommend timely action to
    avoid any coverage gaps for children.

    Extension of CHIP funding should be considered in the context of
    addressing the current barriers to family coverage created by PPACA.
    Again, we believe there is significant value in families taking
    advantage of family coverage options in the private market and we
    encourage those options over government programs.

    Indiana is currently exploring premium assistance options to keep
    parents and their children together using CHIP dollars. If CHIP funding
    is extended, we believe the federal government should make it easier
    for states to coordinate their CHIP programs with the Marketplace and
    employer plans and eliminate problems resulting from health coverage
    silos created in the Affordable Care Act. Indiana also requests that
    the Maintenance of Effort provision be lifted to allow states the
    flexibility to establish eligibility levels most appropriate for their
    states.

    5.  In spite of the restructuring and retargeting of allotments that
        occurred in 2009, some CHIP funding remains unspent. Do you believe
        the annual allotments your state has received starting in 2009 have
        been sufficient and the formula is working appropriately? Do you
        believe there is a need for Congress to further address the issue
        of unspent allotments?

    The structure of the CHIP program provides key evidence that states can
    successfully manage entitlement programs within a block grant
    structure. Indiana has never exceeded the state's allotment for the
    CHIP program. The funding formula has never disadvantaged Indiana or
    limited our ability to cover the populations we believe are most in
    need of assistance. However, we believe states should have even more
    flexibility with the use of CHIP dollars--for example, in the areas of
    benefit and cost-sharing design. We believe a block grant funding model
    with additional flexibility could allow states to develop more
    innovative Medicaid solutions like the Healthy Indiana Plan that
    prepare individuals to transition off of public assistance. We
    encourage Congress to look at this model for structural Medicaid
    funding reform.

    6.  Over the past number of years, States have worked to reduce the
        number of uninsured children, and Medicaid and CHIP have been a
        critical component of that effort. Do you believe there are federal
        policies that could help states do an even better job enrolling
        eligible children? What other policy changes, if any, would help
        improve enrollment of eligible children, reduce the number of the
        uninsured, and improve health outcomes for children in your state?

    The current policies of the CHIP program have positively impacted the
    health of children in our state and have allowed us to have one of the
    lowest uninsured rates for children under 200% FPL. For this income
    group, Indiana's most recent uninsured rate is 10.3 percent compared to
    the national average of 14.4 percent. Indiana's 10.3 percent uninsured
    rate among children in families below 200 percent of the FPL places the
    State as the 15th lowest uninsured rate in the country for this income
    group among all states.

    In conclusion, we strongly support efforts to provide health coverage
    to America's children and recognize, in particular, the role the CHIP
    program has in addressing the needs of low income children. We believe
    that policies intended to grow the state's economy will reduce reliance
    on the CHIP program and move families off public assistance programs
    and into private coverage. We encourage Congress to work with states to
    assess alternative private coverage sources in the new coverage
    landscape lo determine the need for, and design of, the CHIP program
    moving forward. If the program is continued by Congress, we believe
    additional flexibility should be given to states in the administration
    of the program and that assistance in the program should be targeted to
    the lowest income children reflecting the bipartisan compromise
    approved by Congress in 1997 that provided coverage for the neediest
    children without expanding government programs into the middle class.
    We look forward to working with you on this important effort.

    Sincerely,

    Joseph Moser
    Medicaid Director
                                     ______

                       Iowa Department of Human Services

                1305 E. Walnut Street, Des Moines, IA 50319-0114

                               Terry E. Branstad

                                    Governor

                                  Kim Reynolds

                                  Lt. Governor

                               Charles M. Palmer

                                    Director

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    U.S. House of Representatives       U.S. Senate
     Committee on Energy and Commerce   Committee on Finance
    2125 Rayburn Office Building        219 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    The Honorable Henry A. Waxman       The Honorable Orrin G. Hatch
    Ranking Member                      Ranking Member
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    2322A Rayburn Office Building       219 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    Dear Chairman Upton, Ranking Member Waxman, Chairman Wyden, Ranking
    Member Hatch:

    The purpose of this letter is to respond to specific questions
    regarding the reauthorization of the Children's Health Insurance
    Program (CHIP), for which funding expires at the end of Federal Fiscal
    Year 2015.

    CHIP is a successful program providing affordable access to healthcare
    coverage for children of the working poor. In considering CHIP
    reauthorization, it is necessary to contemplate the current context of
    healthcare coverage post implementation of the Patient Protection and
    Affordable Care Act (PPACA). Viewed through this lens, the value of
    CHIP can be less clear as new options for healthcare coverage have
    emerged in a complicated patchwork of eligibility boundaries, coverage
    mechanisms and subsidy levels. This has produced confusion for families
    as different individual qualifications cause them to fracture across
    multiple plans, each with unique coverage policies and provider
    networks. The result is an overall approach to healthcare support
    layered with disorder and inefficiency.

    Iowa believes it is necessary to streamline and simplify eligibility
    moving forward with a goal of keeping families together, as is
    generally the case under private coverage. It is understood that will
    take time. In the near term, CHIP funding should be extended for two
    more years while that simplified course is charted. We must ensure the
    stability of this coverage group, especially when considering the
    implications for states regarding maintenance of effort requirements
    found in PPACA.

    Included are responses to the July 29, 2014, letter from congress
    regarding Iowa's CHIP program. Please feel free to contact me if you
    need additional information.

    Sincerely,

    Charles M. Palmer
    Director

    CMP/jl

    Attachment

    cc:  IME, Julie Lovelady, Medicaid Director
        IME, Bob Schlueter, CHIP Director
        Mr. Doug Hoelscher, Office of State-Federal Relations

                                     ______

                  July 29, 2014 Letter from Congress CHIP Q&A

      How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state (e.g.,
        income, health status, demographics)?

      Response: Iowa's CHIP program is made up of three components: a
        Medicaid expansion component, a separate CHIP component (hawk-i),
        and a dental-only component (hawk-i dental-only). As of April 2014,
        the number of children served by the Medicaid expansion component
        was 26,781 children, the separate CHIP component (hawk-i) was
        36,904 children, and the dental-only component (hawk-i dental-only)
        was 3,504 children. Combining all groups brings the total to
        67,189.

      Within the hawk-i program, approximately 70% are at or below 200% of
        the federal poverty level. The racial and ethnic breakdown of these
        individuals is approximately 47% White, 5% Hispanic, 1.9% Black, 1%
        Asian/Pacific Islander, and 44% unspecified.

      What changes has your state made to its CHIP program as a result of
        the Patient Protection and Affordable Care Act? How has the
        implementation of PPACA impacted the way your state administers
        CHIP?

      Response: The biggest change was the conversion to the PPACA's MAGI
        method of income determination on January 1, 2014. That
        implementation has not fundamentally changed the population served.
        The administration of the program also remains consistent with pre
        PPACA approach, although technical details around implementing MAGI
        (including the new eligibility system related to that) have
        presented a number of detail operational changes.

      To the extent of the following information is readily available and
        you believe it is relevant, please describe the services and or
        benefits and or cost sharing currently provided in your state under
        CHIP that are not comparably available through your state's
        exchange or through the majority of employer sponsored health plans
        in your state.

      Response: The benefits of the CHIP hawk-i component would be roughly
        comparable to Qualified Health Plan (QHP) coverage on the federal
        Marketplace, but the cost sharing would be lower in virtually all
        cases. Benefits under the Medicaid expansion component would be
        superior to the QHP and also include Early Periodic Screening,
        Diagnosis, and Treatment (EPSDT) Program. EPSDT is the child health
        component of Medicaid and basically mandates extensive coverage of
        anything diagnosed in a child; this means things like glasses would
        be covered under CHIP that may not be typical of marketplace or
        employer-based coverage. Iowa's CHIP does not have cost sharing for
        any of its benefits and service, but can include premiums up to
        $40.

      Do you recommend that CHIP funding be extended? If so, for how long,
        and for budgeting and planning purposes, under what timeframe
        should Congress act upon an extension? If you do not believe CHIP
        funding should be extended, what coverage (if any) do you believe
        CHIP enrollees in your state would be able to obtain? How many
        children covered by CHIP do you estimate would become uninsured in
        the absence of CHIP?

      Response: We recommend that CHIP financing be extended at least two
        years until alternative policy options can be fully considered. One
        alternative for CHIP enrollees is subsidized coverage available
        through the Marketplace. Certain policy changes will need to take
        place before states can move freely in this direction.

      Currently, Department of Treasury rules do not allow the children of
        an employee to access federal Premium Tax Credits if the employee
        is offered affordable employer-sponsored insurance. However, the
        affordability test does not take into consideration the cost of
        family coverage, only individual coverage. Without a change in this
        policy, families that are subject to this standard would be unable
        to attain affordable coverage for their children. If comparable,
        affordable QHP coverage is available for families in the
        Marketplace, it could be considered as an option for uninsured
        children if CHIP were not continued.

      In addition, the Maintenance of Effort (MOE) requirements in the
        PPACA need to be modified to reflect any changes to the program. As
        long as the MOE requirement remains part of federal law, we cannot
        consider changes that affect CHIP. After these changes are made,
        states will be able to further consider policy options regarding
        the CHIP program.

      In spite of the restructuring and retargeting of allotments that
        occurred in 2009, some CHIP funding remains unspent. Do you believe
        the annual allotments your state has received starting in 2009 have
        been sufficient and the formula is working appropriately? Do you
        believe there is a need for Congress to further address the issue
        of unspent allotments?

      Response: Federal Fiscal Year (FFY)13 and FFY14 allotments have been
        adequate to fund Iowa's CHIP program. It is unclear if there will
        be sufficient funding in FFY15 and beyond, to maintain Iowa's CHIP
        program. PPACA directs that beginning October 1, 2015 the already
        enhanced CHIP federal matching rate will increase by 23 percentage
        points, bringing the average federal matching rate for CHIP to 93%.
        The enhanced federal matching rate continues until September 30,
        2019. This legislation would require a much larger annual allotment
        in order for Iowa to maintain the CHIP program in its current form.

      Over the past number of years, States have worked to reduce the
        number of uninsured children, and Medicaid and CHIP have been a
        critical component of that effort. Do you believe there are federal
        policies that could help states do an even better job in enrolling
        eligible children? What other policy changes, if any, would help
        improve enrollment of eligible children, reduce the number of
        uninsured, and improve health outcomes for children in your state?

      Response: Federal policies should streamline and simplify eligibility
        policies of the various programs. CHIP, Medicaid and the Health
        Insurance Marketplace have been layered, creating both unnecessary
        redundancy and coverage silos. The resulting ``system'' is complex,
        creates confusion and exacerbates churn as beneficiaries move
        across various boundaries around age, income and other
        qualifications. It is often impossible to keep families together in
        a unified coverage. Policies that help the parents of children gain
        coverage and stay enrolled would help to improve the penetration
        rate and reduce the uninsured rate.

      Once coverage is clear and secure, healthcare system transformation
        efforts, such as ACO, show a great deal of promise in improving
        health outcomes for both children and adults. In addition,
        partnerships with groups outside of the ACO, such as public health
        or outreach workers, could help to mitigate some of the gaps that
        prevent individuals and families from engaging in more healthy
        behaviors. Within Iowa's SIM test, the multi-payer aligned
        healthcare transformation process is intended to expand across
        greater segments of the population, including CHIP. This payment
        structure and related reforms is pushing for improved population
        health outcomes by focusing payment on value.
                                     ______

                                     Kansas

                       Department of Health & Environment

                          Curtis State Office Building

                         1000 SW Jackson St., Suite 540

                             Topeka, KS 66612-1367

                              Phone: 785-296-0461

                               Fax: 785-368-6388

                                 www.kdheks.gov

    Robert Moser, MD, Secretary                          Sam Brownback,
    Governor

    Dear Chairmen and Ranking Members:

        Thank you for your inquiry regarding the Children's Health
    Insurance Program (CHIP). I agree that it is crucial that Members of
    Congress seek insight and analysis on federal/state partnerships such
    as CHIP. I have considered each of your questions and provided the
    pertinent information and recommendations. I have included each of the
    questions from your initial correspondence for reference.

    1.  How many individuals are served by your state's CHIP program? What
    are the characteristics of CHIP enrollees in your state (e.g. income,
    health status, demographics)?

      Concerning enrollment, 56,705 children were covered by CHIP as of
        June, 2014. Age groupings are less than 1% under age 1; 18.5% for
        ages 1-5; 47.4% for ages between 6 and 12; and 33.4% for teenagers.

      Concerning demographics, 67.3% reside in an urban setting, 28.4%
        reside in a rural county and 4.3% live in a frontier community.
        51.3% were male and 48.7% were females.

      Concerning income characteristics, 53.3% belong to households with
        incomes less than 150% FPL, 34.3% belong to households with incomes
        between 150 and 200% FPL and 12.4% belong to households with
        incomes over 200% FPL.

      Looking at Health Status information, claims/type of services
        rendered during FY 2013 and 2014, most services are associated with
        normal childhood illnesses (ear infections, flu, eye problems,
        other infections and childhood injuries). The large number of
        mental health services is also worth noting. Children meeting
        disability criteria are generally covered under Medicaid categories
        and are not covered by the CHIP program.

    2.  What changes has your state made to its CHIP program as a result of
    the ACA? How has implementation of the ACA impacted the way your state
    administers CHIP?

      Kansas has always operated an integrated Medicaid/CHIP program, so
        changes to CHIP have not been significant.

      Kansas has implemented:
        a.   The new MAGI methodologies requiring the use of new household
                and income requirements.
        b.   The new ``m-chip'' group (moving a group of children from CHIP
                into Medicaid) is mandated by the ACA.
        c.   The new Premium payment enforcement timeline--under previous
                policy, families who were delinquent on premium payments
                were not eligible until they became current on payments. We
                are now applying 3 months maximum non-payment penalty as
                mandated by the ACA and/or associated regulations.
        d.   Changes in the crowd-out. Crowd out occurs when someone
                voluntarily drops health insurance in order to be eligible
                for CHIP. Previously, Kansas had an 8 month waiting period
                from the date of voluntarily dropping coverage. As required
                by ACA, Kansas changed the look-back timeframe from 8
                months to 3 months.

    3.  To the extent the following information is readily available and
    you believe it is relevant, please describe the services and/or
    benefits and/or cost sharing that is currently provided in your state
    under CHIP that are not comparably available through your state's
    exchange or through the majority of employer-sponsored health plans in
    your state.

      That information is as follows:

        a.   Cost sharing: The only cost sharing for CHIP in Kansas are
                premiums (see chart below) for some higher income families.
                There are no deductibles or co-pays. Here are the levels of
                premium obligations:

    ----------------------------------------------------------------------------------------------------------------
                         FPL Percentage                                           Premium Amount
    ----------------------------------------------------------------------------------------------------------------
    167-191%                                                                                                    $20
    ----------------------------------------------------------------------------------------------------------------
    192-218%                                                                                                    $30
    ----------------------------------------------------------------------------------------------------------------
    219-242%                                                                                                    $50
    ----------------------------------------------------------------------------------------------------------------

        b.   Benefits: As indicated under Question 2, Kansas operates an
                integrated Medicaid/CHIP program. The benefit coverage is
                the same between programs including the Early Periodic
                Screening Diagnosis and Treatment provision. No commercial
                insurance has a benefit coverage as rich as the Medicaid/
                CHIP coverage.

    4.  Do you recommend that CHIP funding be extended? If so for how long,
    and for budgeting and planning purposes, under what timeframe should
    Congress act upon any extension? If you do not believe CHIP funding
    should be extended, what coverage (if any) do you believe CHIP
    enrollees in your state would be able to obtain? How many children
    covered by CHIP do you estimate would become uninsured in the absence
    of CHIP?

      Yes, a 5 year extension to CHIP funding should be considered for
        budgeting and planning purposes. In the absence of CHIP, the only
        other options would be
        employer-sponsored coverage or coverage through the Exchange.
        Either option would have a less rich benefit package and higher
        cost sharing. It can be assumed that most of the non-premium paying
        children may become uninsured if CHIP is not extended.

    5.  In spite of the restructuring and retargeting of allotments that
    occurred in 2009, some CHIP funding remains unspent. Do you believe the
    annual allotments your state has received starting in 2009 have been
    sufficient and the formula is working appropriately? Do you believe
    there is a need for Congress to further address the issue of unspent
    allotments?

      The annual allotment for Kansas has been sufficient. Additionally,
        the State of Kansas has not lapsed on any CHIP funding allotments.

    6.  Over the past number of years, states have worked to reduce the
    number of uninsured children, and Medicaid and CHIP have been a
    critical component to that effort. Do you believe there arefederal
    policies that could help states do an even better job in enrolling
    eligible children? What other policy changes, if any, would help
    improve enrollment of eligible children, reduce the number of
    uninsured, and improve health outcomes for children in your state?

      Give States more flexibility in program design allowing the States to
        design program models specific to their population mix and budget
        constraints.

      Relax Waiver red tape and encourage agility and flexibility in
        program development.

      Enact federal policy addressing beneficiary overpayments that include
        the ability to establish penalty periods for individuals who
        haven't accurately reported information.

      Allow options for repayment of overpayment, including the ability for
        states to utilize federal debt set-off for repayment of medical
        assistance claims attributed to beneficiary overpayments.

        I appreciate the opportunity to answer your questions and provide
    these recommendations on improving CHIP. If you need additional
    information or have further questions, please contact me.

    Sincerely,

    Susan Mosier, MD, MBA, FACS
    Division Director and Medicaid Director
    Division of Health Care Finance
    Kansas Department of Health and Environment
                                     ______

                            Commonwealth of Kentucky

                             Office of the Governor

                               Steven L. Beshear

                                    Governor

                               700 Capitol Avenue

                                   Suite 100

                              Frankfort, KY 40601

                                 (502) 564-2611

                              Fax: (502) 564-2517

                                October 20, 2014

    The Honorable Fred Upton            The Honorable Henry A. Waxman
    Chairman                            Ranking Member
    Committee on Energy and Commerce    Committee on Energy and Commerce
    2183 Rayburn House Office Building  2204 Rayburn House Office Building
    Washington, D.C. 20515              Washington, D.C. 20515

    The Honorable Ron Wyden             The Honorable Orrin G. Hatch
    Chairman                            Ranking Member
    Committee on Finance                Committee on Finance
    United States Senate                United States Senate
     219 Dirksen Senate Office Building 219 Dirksen Senate Office Building
    Washington, D.C. 20510              Washington, D.C. 20510

    Dear Chairman Upton, Chairman Wyden, Ranking Member Waxman, and Ranking
    Member Hatch:

        I am writing in response to your letter of July 29, 2014, seeking
    state input on the Children's Health Insurance Program (CHIP).

        I am incredibly proud of the work we have done to provide access to
    affordable health insurance through kynect, the state's health
    insurance exchange, and the national attention we have received for so
    dramatically reducing our uninsured rate. However, before we began
    these efforts through kynect, I worked to greatly lower our rate of
    uninsured children. I strongly believe that it is shameful and
    shortsighted to deny children with the health care they need and
    deserve.

        In 2008, I launched a plan through the Kentucky Children's Health
    Insurance Program (KCHIP) to dramatically cut the number of children
    without health coverage by removing barriers to enrollment, retaining
    more children once they are enrolled and significantly increasing
    education and outreach. The steps we took to get more eligible children
    enrolled in KCHIP were fiscally responsible, economically smart, and an
    unqualified success. Since the launch of our efforts, the number of
    Medicaid-covered children has increased by 97,251, a 22 percent
    increase, which includes an increase of 10,563 children in KCHIP. In
    addition, we eliminated a six- month waiting period to enroll in KCHIP
    that had been required for children whose private insurance was dropped
    voluntarily and whose family income was between 150 percent and 200
    percent of the federal poverty level. Finally, earlier this year, we
    removed the five-year ban for lawfully present residents under the age
    of 18 to enroll in KCHIP.

        KCHIP has been essential to ensuring that quality health coverage
    for Kentucky's children is affordable and accessible. As you know,
    children with health coverage have improved health outcomes throughout
    their childhood and are more likely to receive preventive care,
    treatment when they are ill and for recurring illnesses; get sick less
    frequently; have better attendance and performance at school; and have
    parents with better attendance and performance at work. Quite simply,
    KCHIP is a vital piece of the health care landscape for Kentucky's
    children and I urge its immediate reauthorization.

        Below are answers to your specific questions:

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g. income, health status, demographics)?

          Currently, 21,159 children are enrolled in the Medicaid Expansion
            portion of CHIP and 25,988 children are enrolled in the
            separate portion program.

          As a result of the new MAGI income calculation methodology,
            children may be enrolled in KCHIP if household MAGI is at or
            below 159% of the federal poverty level (FPL), and they may
            enroll in the separate portion program at income levels up to
            218% FPL. The previous thresholds were 150% and 200%
            respectively.

          Children receiving disability benefits are not generally enrolled
            in KCHIP, but are eligible through programs for the disabled,
            though there may be some children with disabilities who do not
            qualify for disability payments that are enrolled in the
            program. Generally, both KCHIP and the separate portion program
            are comprised of children without disabilities.

          The demographics of the combined group are below. These children
            are 51.08% male and 48.92% female (table 1). More than 97% of
            the children identify as non-Hispanic (table 2). Almost 60% do
            not list a standard federal racial category at the time of
            application, while 35% identify as white and 4.6% identify as
            black (Table 3). The enrollment by age group is shown in table
            4.

                       Table 1. KCHIP Enrollment by Gender
    ------------------------------------------------------------------------
                                                                   Percent
    ------------------------------------------------------------------------
    F..........................................................       48.92%
    M..........................................................       51.08%
    ------------------------------------------------------------------------

                     Table 2. KCHIP Enrollment by Ethnicity
    ------------------------------------------------------------------------
                                                                   Percent
    ------------------------------------------------------------------------
    Hispanic...................................................        2.23%
    Non-Hispanic...............................................       97.73%
    Not Listed.................................................        0.04%
    ------------------------------------------------------------------------

                        Table 3. KCHIP Enrollment by Race
    ------------------------------------------------------------------------
                                                                   Percent
    ------------------------------------------------------------------------
    E--Other Race or Ethnicity.................................       59.45%
    0--White...................................................       35.10%
    B--Black...................................................        4.62%
    A--Asian or Pacific Islander...............................        0.50%
    7--Not Provided............................................        0.04%
    I--American Indian or Alaskan Native.......................        0.18%
    J--Native Hawaiian.........................................        0.11%
    ------------------------------------------------------------------------

                     Table 4. KCHIP Enrollment by Age Group
    ------------------------------------------------------------------------
                                                                   Percent
    ------------------------------------------------------------------------
    0-5........................................................       20.95%
    6-12.......................................................       43.54%
    13-18......................................................       35.51%
    ------------------------------------------------------------------------

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

          As I mentioned above, Kentucky lifted the five-year waiting
            period for lawfully residing immigrant children. We have also
            added a substance use treatment benefit as a Medicaid covered
            service and amended cost-sharing requirements for children.
            Kentucky utilizes the existing Medicaid infrastructure to
            administer KCHIP; therefore, implementation of PPACA had a
            minimal impact on KCHIP, outside of the small impact of the
            MAGI calculation methodology on income thresholds.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            benefits and or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

          Kynect adopted the KCHIP vision and dental benefit package, which
            makes the two benefit packages more comparable. However, cost
            sharing in KCHIP is limited. Kentucky does not have a monthly
            premium or enrollment fee for KCHIP, while the monthly
            premiums, co-payments, deductibles, and cost-sharing in kynect
            are higher for families with children, depending on the income
            of the family.

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP funding should be extended, what coverage (if any)
            do you believe CHIP enrollees in your state would be able to
            obtain? How many children covered by CHIP do you estimate would
            become uninsured in the absence of CHIP?

          CHIP funding must be extended until all Kentucky families' income
            no longer necessitates the need for this assistance. It is
            short-sighted to deny children health care coverage--sick
            children cannot be successful students; sick children cannot
            thrive in our workforce; and sick children will not lead the
            happy, productive lives that they deserve. I cannot urge
            strongly enough for you to continue funding for CHIP.

          If a decision is made NOT to fund CHIP after FY2015, as many as
            50,000 Kentucky children will lose health care coverage.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

          The restructuring and retargeting of allotments in 2009 have been
            adequate and sufficient for Kentucky; so far, Kentucky fully
            expends its annual CHIP allocation. Congress could easily
            address the issue of unspent allotments by reducing a state's
            next scheduled allotment by the unspent amount. The state would
            retain the unspent allotment from the previous period along
            with the modified new allocation, which would ensure the state
            retains the allotment necessary to maintain its CHIP program
            for the new period.

      6.  Over the past number of years, states have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children? What other policy changes, if
            any, would help improve enrollment of eligible children, reduce
            the number of the uninsured, and improve health outcomes for
            children in your state?

          KCHIP and PPACA have been instrumental in reducing the number of
            uninsured in Kentucky. As mentioned in the answer to question
            4, CHIP serves as a vital transition point for children who may
            eventually move to a qualified health plan through kynect.
            Therefore, Kentucky recommends that the federal government fix
            the ``family glitch'' that exists in PPACA today. Since the
            affordability test for individuals who have access to other
            insurance is based on the cost of a single plan and not the
            cost of a family plan, the only options currently available to
            families who cannot afford the cost of a family plan through
            their employer are either enrolling in CHIP or not insuring
            their entire family. This unfortunate glitch must be addressed.

        I greatly appreciate the opportunity to provide my perspective on
    this critical program. Continued funding of this program is the right
    thing to do and Congress should view it as a moral obligation.

    Sincerely,

    Steven L. Beshear
                                     ______

                               State of Maryland

                    Department of Health and Mental Hygiene

               201 W. Preston Street  Baltimore, Maryland 21201

     Martin O'Malley, Governor--Anthony G. Brown, Lt. Governor--Joshua M.
                          Sharfstein, M.D., Secretary

                               September 4, 2014

    The Honorable Ron Wyden             The Honorable Fred Upton
    Chairman                            Chairman
    Senate Finance Committee            House Energy and Commerce Committee
    219 Dirksen Senate Office Bldg.     2125 Rayburn House Office Bldg.
    Washington, DC 20510                Washington, DC 20515

    The Honorable Orrin G. Hatch        The Honorable Henry A. Waxman
    Ranking Member                      Ranking Member
    Senate Finance Committee            House Energy and Commerce Committee
    219 Dirksen Senate Office Bldg.     2322A Rayburn House Office Bldg.
    Washington, DC 20510                Washington, DC 20515

    Dear Chairman Wyden, Senator Hatch, Chairman Upton and Congressman
    Waxman:

    Thank you for your letter to Governor O'Malley regarding funding for
    the Children's Health Insurance Program (CHIP) and to inquire about
    program data and policy changes as the program moves forward. The
    Governor received your letter and asked me to respond on his behalf.

    Maryland operates a Medicaid expansion CHIP program called the Maryland
    Children's Health Program (MCHP). MCHP provides full health benefits
    for children up to age 19 who have household incomes below 300 percent
    of the federal poverty level (FPL) ($71,550 for a family of four);
    families between 200 percent and 300 percent FPL are required to pay a
    monthly premium. Benefits are obtained through the managed care
    organizations that participate in HealthChoice, Maryland's Medicaid
    managed care program. Benefits include, but are not limited to: doctor
    visits (well and sick care); hospitalization; lab work and tests;
    dental care; vision exams and corrective lenses; hearing exams and
    hearing aids; immunizations; prescription drugs; transportation to
    medical appointments; mental health services; inpatient and outpatient
    behavioral health services; physical and occupational therapy; services
    for speech, hearing and language disorders; and durable medical
    equipment.

    Congress has not authorized funds for the CHIP program beyond Federal
    Fiscal Year (FFY) 2015. We strongly urge Congress to reauthorize the
    program and to make changes to the allotment formula to account for the
    enhanced FMAP slated to begin October 1, 2015. The Patient Protection
    and Affordable Care Act (PPACA) includes a provision for a 23
    percentage point increase in Maryland's CHIP Federal Medical Assistance
    Percentage (FMAP) match rate effective October 1, 2015 (FFY 2016),
    which will enhance Maryland's FMAP from 65 percent to 88 percent. As a
    result, any funds carried over from the FFY 2015 authorization will be
    exhausted more quickly than in previous fiscal years. Without
    additional CHIP funding, once FFY 2015 funds are depleted, MCHP
    expenses will be subject to the regular Medicaid FMAP of 50 percent.
    With enrollment in MCHP and MCHP Premium likely to continue to increase
    due to PPACCA, this State fiscal impact has the potential to be even
    more significant.

        Below are answers to the specific questions you posed in your
    letter:

      l.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g., income, health status, demographics)?

    As of July 2014, 97,158 children are enrolled in MCHP. A total of
    18,262 children in MCHP are enrolled in MCHP Premium.

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

    PPACA has had a modest impact on the way Maryland administers MCHP.
    MCHP eligibility determinations are now based on the applicant's
    modified adjusted gross income (MAGI), rather than the income disregard
    and asset rules used in the past. Maryland has not seen a decrease in
    enrollment due to this new eligibility determination method. PPACA has
    also opened up new avenues for Maryland families to apply for MCHP.
    Families can now apply for coverage by completing an application using
    Maryland's Marketplace, the Maryland Health Connection, by contacting
    the Maryland Health Connection Consumer Support Center, or by visiting
    a Connector Entity. Individuals also continue to be able to apply at
    Local Health Departments, Local Departments of Social Services, online
    using the Maryland SAIL application, and by mail.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and/or
            benefits and/or cost-sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer-sponsored
            health plans in your state.

    Individuals enrolled in MCHP are exempt from cost-sharing requirements
    for all services and prescription costs. MCHP recipients also receive
    the Early and Periodic Screening, Diagnostic and Treatment (EPSDT)
    benefit, which provides comprehensive and preventive health care
    services for children enrolled in the program. EPSDT is key to ensuring
    that children and adolescents receive appropriate preventive, dental,
    mental health and developmental, and specialty services.

      4.  Do you recommend that CHIP funding be extended? lf so, for how
            long, And for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP funding should be extended, what coverage (if any)
            do you believe CHIP enrollees in your state would be able to
            obtain? How many children covered by CHIP do you estimate would
            become uninsured in the absence of CHIP?

    Maryland strongly recommends that CHIP funding be extended. The State
    anticipates additional funding will be required in FFY 2016. However,
    for budgeting and planning purposes, an extension would ideally be
    granted prior to the commencement of the State Fiscal Year 2016 on July
    1, 2015.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

    Through FFY 2013, Maryland has been sufficiently funded for its CHIP
    expenditures, through a combination of ``rollover'' unused allotment
    from its prior Federal Fiscal Years(s) and the fresh allotments for
    each of its ``current'' Federal Fiscal Year(s). From most recent FFY
    2014 actuals and projections, we expect to have ample allotment funding
    through FFY 2014, and we are reasonably comfortable with FFY 2015
    projections.

    However, we are keeping a close watch on recent increased expenditure
    trends due to CHIP enrollment growth (at least in part due to the
    impact of PPACA), and increased participation in CHIP administrative
    match due to additional claims from Maryland agencies that perform
    CHIP-related eligibility and other administrative functions: the
    Maryland Department of Human Resources (DHR), the Maryland Health
    Benefit Exchange (MHBE), and the University of Maryland School of
    Pharmacy Poison Control Center. This, in conjunction with the provision
    for a 23 percentage point increase in Maryland's CHIP FMAP match rate
    effective October 1, 2015 (FFY 2016), leaves us with a concern for how
    expanded allotment needs will be addressed in FFY 2016 and beyond.
    Maryland anticipates that the higher CHIP FMAP will result in available
    federal funding being depleted more quickly than in previous FFYs.

      6.  Over the years, states have worked to reduce the number of
            uninsured children, and Medicaid and CHIP have been a critical
            component of that effort. Do you believe there are federal
            policies that could help states do an even better job in
            enrolling eligible children? What other policy changes, if any,
            would help improve enrollment of eligible children, reduce the
            number of the uninsured, and improve health outcomes for
            children in your state!

      In FFY 2009 under the Children's Health Insurance Program
        Reauthorization Act of 2009 (CHIPRA), Congress appropriated funding
        for annual CHIP performance bonuses for states that were able to
        (1) increase child enrollment in Medicaid (not CHIP) by a certain
        amount and (2) implement at least five out of eight specific
        outreach and retention strategies that make it less difficult to
        enroll and retain eligible children in Medicaid and CHIP. Maryland
        was able to meet these requirements and to date, has received
        nearly $86.5 million in bonus payments. This federal payment is
        needed to help states maintain the increased enrollment levels that
        were achieved by meeting the standards that Congress established.
        Congress should continue to make these bonus payments available to
        states as part of any CHIP funding renewal legislation.

      Under CHIPRA, states are authorized to use eligibility information
        from other programs to streamline and simplify enrollment and
        renewals in Medicaid and CHIP. This process is known as Express
        Lane Eligibility. Express Lane Eligibility permits states to rely
        on findings, for things like income and household size, from
        certain designated programs. This enables states to avoid
        duplicative enrollment efforts and lowers administrative costs as a
        result. Congress should renew the Express Lane Eligibility
        provision.

      In FFY 2016, the FMAP for CHIP will increase by 23 percentage
        points, so that Maryland's FMAP will increase from 65 percent to 88
        percent. The practical effect of this increase is that Maryland
        will exhaust its federal allotment for MCHP more quickly. Congress
        should maintain the enhanced FMAP increase and adjust the allotment
        formula accordingly so that state CHIP programs have a stable,
        predictable funding source.

      Under current law, children enrolled in Medicaid-expansion CHIP
        programs (like Maryland's) are enrolled in Medicaid but funded by
        CHIP. The PPACA includes a maintenance of effort (MOE) requirement
        that states maintain their Medicaid and CHIP eligibility levels for
        children until September 30, 2019. When a state's CHIP funding is
        exhausted, these children will continue to be enrolled in Medicaid
        but will be funded at the state's regular Medicaid match rate
        instead of CHIP's enhanced FMAP levels, which will require
        significantly higher levels of state funding.

    Thank you again for your inquiry. We look forward to working with our
    partners at the federal level to maintain this valuable resource for
    care that so many of Maryland's children have come to rely on. If you
    have questions or need more information on Maryland's CHIP program,
    please do not hesitate to contact Tricia Roddy, Director of Planning,
    Office of Health Care Financing.

    Sincerely,

    Joshua M. Sharfstein, M.D.
    Secretary

    cc:  The Honorable Martin O'Malley
        Tricia Roddy

      Toll Free 1-877-4MD-DHMH--TTY/Maryland Relay Service 1-800-735-2258

                        Web Site: www.dhmh.maryland.gov

                                     ______

                             OFFICE OF THE GOVERNOR

                         Commonwealth of Massachusetts

                         State House  Boston, MA 02133

                                 (617) 725-4000

                                DEVAL L. PATRICK

                                    GOVERNOR

                                October 30, 2014

    The Honorable Ron Wyden
    Chairman, Senate Finance Committee

    The Honorable Orrin G. Hatch
    Ranking Member, Senate Finance Committee

    The Honorable Fred Upton
    Chairman, House Energy and Commerce Committee

    The Honorable Henry A. Waxman
    Ranking Member, House Energy and Commerce Committee

    Dear Senator Wyden, Senator Hatch, Representative Upton and
    Representative Waxman:

        I am pleased to provide response to your letter of July 29, 2014,
    regarding the operation of the Children's Health Insurance Program
    (CHIP) in Massachusetts.

        Massachusetts has achieved near-universal coverage thanks in part
    to programs such as CHIP. Providing coverage reflects our values as a
    Commonwealth and helps keep families strong and children healthy.
    Massachusetts is a strong supporter of CHIP and below you will find
    responses to the specific questions in your July 29, 2014 letter.

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g. income, health status, demographics)?

          As of June 2014, there were 117,000 children enrolled in our CHIP
            program, including over 1,200 children with disabilities. Just
            over 95,000 have family income that is less than or equal to
            200% of the Federal Poverty level. Of the children for whom we
            have race information, less than 1% are American
            Indian/Alaska Native, 2% are interracial, 9% are Asian/Pacific
            Islander, 14% are Black/Non-Hispanic, 25% are Hispanic and 50%
            are White.

      2.  What changes has your state made to its CHIP program as a result
            of the
            Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

          Massachusetts has updated our CHIP policies to align with PPACA,
            including the use of Modified Adjusted Gross Income to
            determine eligibility and altered the residency and
            citizenship/non-citizen rules related to eligibility. We also
            updated the rules for children with unpaid premiums to allow
            the children to re-enroll in CHIP after a 90 day waiting
            period, even if the premiums remain unpaid.

          The Commonwealth has also extended the hospital presumptive
            eligibility available under PPACA to individuals eligible under
            the CHIP unborn child option.

          While this was not required under PPACA, Massachusetts eliminated
            the six month waiting period that was in place for CHIP
            children with income 200% to 300% FPL who were ineligible due
            to having dropped group health insurance coverage.

          Along with the other coverage and eligibility changes made under
            PPACA, Massachusetts replaced Healthy Start, our CHIP unborn
            child option program, which provided only pregnancy related
            services to pregnant women who were ineligible for the Medicaid
            (MassHealth) Standard program. These women are now provided
            with full MassHealth Standard benefits under CHIP.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services or
            benefits and/or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            plans in your state.

          Massachusetts charges premiums to CHIP children on a sliding
            scale (ranging from $12 to $28 per child per month) and caps
            family premiums at $84 per month, with the result that CHIP
            premiums are much lower than those charged by private plans.
            CHIP children are also exempted from paying premiums if they
            have a parent enrolled in a Qualified Health Plan and receiving
            tax credits. There is no cost sharing for any services for CHIP
            children with direct coverage where private plans typically
            have deductibles and charge copays for most services.

          Also, our CHIP plan allows us to provide premium assistance to
            enable families to enroll their children in available employer-
            sponsored insurance that they would not otherwise be able to
            afford. This is not an option available to families in the
            exchange. Further, combined premiums and cost-sharing in our
            CHIP premium assistance program cannot exceed 5% of family
            income making this CHIP program too, like CHIP direct coverage,
            far more affordable than coverage through an exchange or
            unsubsidized employer coverage.

          In addition, there are some benefits available to children in our
            CHIP program that are generally not available through private
            plans, including those offered through the exchange or employer
            sponsored plans. The scope of benefits in our CHIP program was
            designed specifically to meet the needs of children. These
            benefits include eyeglasses, hearing instrument specialist
            services, diversionary behavioral health services, early
            intervention services, special education evaluation services,
            and child-specific screening and diagnostic services. Some of
            these services are of course available in private plans, but
            many may not be, particularly in the employer plans that are
            not subject to our state insurance laws. Our CHIP program also
            provides full dental benefits for children and while these
            benefits may be purchased through the exchange as separate
            plans, a family purchasing dental benefits and medical benefits
            receives no higher tax credit than a family purchasing only
            medical benefits. Since dental coverage is not required to meet
            the individual mandate, it is likely some parents may forgo
            dental coverage for their children due to costs.

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe that CHIP funding should be extended, what coverage (if
            any) do you believe CHIP enrollees in your state would be able
            to obtain? How many children covered by CHIP do you estimate
            would become uninsured in the absence of CHIP?

          Massachusetts strongly supports the indefinite extension of CHIP
            funding as it is an integral part of ensuring that low income
            children have affordable, comprehensive insurance and provides
            federal financial support to states to help fund that coverage.
            While children in the Medicaid expansion portion of our CHIP
            program would be covered through Medicaid if CHIP funding is
            not extended, the state would no longer receive CHIP enhanced
            federal funding for their coverage.

          Given the differences in cost sharing between our CHIP program
            and private insurance plans, it is clear that children
            currently enrolled in our separate CHIP program would be
            negatively affected if CHIP funding is not extended. If their
            families are unable to afford the premiums and copays under
            private insurance, they may become uninsured. As noted above,
            they may also need benefits that are not generally provided by
            private insurance.

          In addition, many of these families may be impacted by the
            eligibility standards under the ACA for individuals who have an
            offer of private insurance through their employer. These
            standards only take into account the cost to purchase
            individual coverage through an employer, rather than the cost
            to purchase family coverage.

          It is difficult to estimate the number of children who would
            become uninsured if CHIP funding is not extended but, given
            that over 27,000 of the children currently enrolled in our CHIP
            program have family income above Medicaid levels, but at or
            below 200% FPL, it is likely that a significant portion of that
            population would become uninsured if CHIP funding is not
            extended.

          In addition, as you know, the ACA established Maintenance of
            Eligibility (MOE) requirements that prohibit states, until
            2019, from imposing more restrictive eligibility and enrollment
            standards for children in Medicaid and CHIP. These mandates
            were effective as of March 23, 2010. We believe that this
            demonstrates strong legislative intent to continue CHIP program
            funding until at least 2019.

      5.  In spite of the restructuring and reallocation of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received since
            2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

          The annual CHIP allotments that we have received since 2009 have
            been sufficient.

      6.  Over the past number of years, states have worked to reduce the
            number of uninsured children and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            of enrolling eligible children? What other policy changes, if
            any, would help improve enrollment of eligible children, reduce
            the number of uninsured, and improve health outcomes for
            children in your state?

          Massachusetts has taken advantage of the Express Lane option in
            the 2009 CHIP Reauthorization bill and now uses Supplemental
            Nutrition Assistance Program (SNAP) information to
            automatically renew children with income up to 150% FPL. We
            recommend that any CHIP funding extension include additional
            administrative simplification policies to help increase the
            number of eligible children in coverage.

          Massachusetts also recommends that the Performance Bonus program
            included in the 2009 Reauthorization bill also be included in
            any funding extension. However, we recommend that the program
            be modified to allow bonuses to go to states with smaller
            percentages of growth but have the highest level of coverage
            for children as compared to when the 2009 baseline enrollments
            were calculated. The current program penalizes states: such as
            Massachusetts, that have traditionally had high levels of
            coverage and therefore cannot achieve the significant
            percentage gains in coverage necessary to qualify for a bonus.

          The quality provisions included in the 2009 CHIP Reauthorization,
            including the establishment of a core set of children's health
            care quality measures and the CHIPRA Quality Demonstration
            grants have done much to advance the quality of care provided
            to children and we hope that any extension of CHIP funding
            would include a similar emphasis on quality of care. The
            quality funding in CHIPRA continues to improve the value of
            CHIP funded coverage and services. The investment has already
            advanced work on better quality measurement in pediatrics,
            spread of best practices in Patient Centered Medical Home
            service delivery, and the creation of a multi-stakeholder
            coalition to set improvement priorities and collaborative
            approaches to improvement in pediatric health care.

          Finally, Massachusetts has found federal funding to support
            outreach to be extremely helpful as we try to find and enroll
            the remaining 1-2% of uninsured children in the state and hope
            that such funding will continue to be available in the future.

        Thank you for your interest in the Commonwealth's CHIP program and
    for the opportunity for us to share our strong support for
    reauthorization of the CHIP program and for changes to improve and
    strengthen this valuable program. Please do not hesitate to contact me
    for any further information.

    Sincerely,

    Deval. L. Patrick
    Governor
                                     ______

                               State of Michigan

                         DEPARTMENT OF COMMUNITY HEALTH

                                    Lansing

    Rick Snyder
    Nick Lyon
    governor
    director

    November 25, 2014

    Mr. Fred Upton, Chairman            Mr. Ron Wyden, Chairman
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance

    Mr. Henry A. Waxman, Ranking Member Mr. Orrin G. Hatch, Ranking Member
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance

    Dear Representatives Upton and Waxman and Senators Wyden and Hatch:

    This is in response to your letter of July 29, 2014, requesting
    information from Michigan regarding the Children's Health Insurance
    Program (CHIP) and its possible extension. After a brief introduction,
    this letter will respond to the specific questions laid out in your
    letter. You will find that our input leads to a strong recommendation
    that Congress reauthorize this successful program and maintain enhanced
    federal match rates that encourage this vital coverage for children.

    Michigan's CHIP plan combines a standalone program named MIChild and a
    smaller CHIP funded Medicaid expansion that covers children above the
    traditional Medicaid income limits. With these combined strategies,
    Michigan currently covers close to 45,000 children and has provided
    services to well over 300,000 children since the inception of the
    program in 1998. Families with children on MIChild are required to
    contribute a premium of $10 per month, a meaningful but very affordable
    form of participation in supporting the cost of care.

    1.   How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state (e.g.
        income, health status, demographics)?

    Michigan's CHIP program currently has about 45,000 children enrolled,
    36,000 in the standalone MIChild program and 9,000 in a Medicaid
    expansion. This expansion provides coverage to 16 to 18 year olds with
    incomes between 110 and 160% for the federal poverty level. Monthly
    enrollment has seen a modest increase since the implementation of
    PPACA. Please see the attached chart for a detailed breakout of the
    MIChild demographics for three recent months.

    2.   What changes has your state made to its CHIP program as a result
        of the Patient Protections and Affordable Care Act? How has the
        implementation of PPACA impacted the way your state administers
        CHIP?

    Michigan's program has not changed in design since the implementation
    of PPACA. The flexibilities afforded by CHIP prior to the enactment of
    the PPACA enabled Michigan to use the program's policy and
    administrative processes as a template in adapting to PPACA. For
    instance, Michigan was able to focus on coordination between programs
    by utilizing our existing CHIP online application as a model for a
    single application for all Medicaid and CHIP programs allowing us to
    better coordinate results and referrals among the various programs.

    3.   To what extent the following information is readily available and
        you believe it is relevant, please describe the services and or
        benefits and or cost sharing currently provided in your state under
        CHIP that are not comparably available through your state's
        exchange or through the majority of employer sponsored health plans
        in your state.

    Michigan's MIChild is a standalone program based on employer coverage.
    By definition, it is comparable to large employer and Qualified Health
    Plan coverage on the Exchange. One key difference with the Exchange is
    that MIChild assures dental coverage while it has to be separately
    purchased on the Exchange, an option that may not be consistently
    exercised by families.

    There also are important and substantial differences between MIChild
    and QHP cost sharing. Given the deductibles and copays that are built
    into the QHP cost sharing structure, we are very concerned about the
    impact on families of children with health conditions, especially those
    with special health care needs. Per a recently published Wakely
    Consulting Group analysis, cost sharing obligations for families can
    accumulate to more than $1,000 per year and be a barrier to seeking
    services that are needed.

    The most dramatic problem will be for children in families where the
    employed adult has access to affordable health insurance through their
    employer but where the policy is not affordable for the family and,
    hence, the children. This ``family glitch'' clearly creates a barrier
    for the affected cohort of children because of the great disparity in
    the cost of covering children in those families and the inability to
    access subsidies through the Marketplace.

    4.   Do you recommend that CHIP funding be extended? If so, for how
        long, and for budgeting and planning purposes, under what timeframe
        should Congress act upon an extension? If you do not believe CHIP
        funding should be extended, what coverage (if any) do you believe
        CHIP enrollees in your state would be able to obtain? How many
        children covered by CHIP do you estimate would become uninsured in
        the absence of CHIP?

    The CHIP program provides an affordable health care option for families
    and facilitates children's access to benefits designed with their
    specific needs in mind. Current information identifies factors that
    could significantly erode health coverage of children in various ways
    if CHIP is not extended. Therefore, we strongly recommend that Congress
    reauthorize CHIP. We believe that CHIP coverage has helped provide
    valuable coverage and contributed to the health of Michigan's children.

    In terms of timeframe, we would prefer action in the next month or two
    as we are now in the process of formulating our fiscal year 2016
    budget. The budget impact of CHIP ending, or making changes in the
    state's matching rate, would shift significant costs back to Michigan.
    If CHIP ended other existing programs would need to provide services to
    a range of vulnerable children.

    We recommend a reauthorization of at least five years so that
    consistent coverage can be provided to our children. CHIP could be
    changed if there are other Congressional actions that would assure
    coverage of children beyond the provisions of PPACA. If that were to
    occur, changes to CHIP could be made concurrently as part of a larger
    legislative package.

    5.   In spite of the restructuring and retargeting of allotments that
        occurred in 2009, some CHIP funding remains unspent. Do you believe
        the annual allotments your state has received starting in 2009 have
        been sufficient and the formula is working appropriately? Do you
        believe there is a need for Congress to further address the issue
        of unspent allotments?

    The formula seems reasonable but should be able to respond more rapidly
    as conditions change in a state. Michigan currently is working with CMS
    to obtain needed allotment adjustments due to such changing conditions.
    We are anticipating a positive resolution.

    6.   Over the past number of years, States have worked to reduce the
        number of uninsured children, and Medicaid and CHIP have been a
        critical component of that effort. Do you believe there are federal
        policies that could help states do an even better job in enrolling
        eligible children? What other policy changes, if any, would help
        improve enrollment of eligible children, reduce the number of the
        uninsured, and improve health outcomes for children in your state?

    With CHIP and Medicaid, Michigan has built a system that has produced
    one of the lowest rates of uninsured children in the nation, about 5%
    for most of the recent years. We believe that the flexibilities
    afforded by CHIP have contributed to our success. While we have no
    specific recommendations for additional flexibility at this time, we
    are open to suggestions that contribute to improved health outcomes for
    children. We stand ready to help if you or your offices need any
    assistance or input on suggestions around this or other health
    programs.

    Thank you for this opportunity to provide input on this important
    issue.

    Sincerely,

    Nick Lyon, Director
    Michigan Department of Community Health

        CAPITOL VIEW BUILDING  201 TOWNSEND STREET  LANSING, MI 48913

                        www.michigan.gov  517-373-3740

                                           Chart: Michigan's CHIP Demographics
    ----------------------------------------------------------------------------------------------------------------
                                                      May-14                  June-14                 July-14
                                             -----------------------------------------------------------------------
                                                            Percent                 Percent                 Percent
                                                 Count     Enrolled      Count     Enrolled      Count     Enrolled
    ----------------------------------------------------------------------------------------------------------------
    Gender:
    Female..................................     15,478       48.5%      16,559       48.6%      17,548       48.6%
    Male....................................     16,426       51.5%      17,478       51.4%      18,547       51.4%
                                             -----------------------------------------------------------------------
        Gender Total........................     31,904        100%      34,037        100%      36,095        100%
    ================================================================================================================
    Age (See note below):
    Under age 1.............................        163        0.5%          81        0.2%          58        0.2%
    Age 1 through 4.........................      6,455       20.2%       6,979       20.5%       7,708       21.4%
    Age 5 through 14........................     18,246       57.2%      19,453       57.2%      20,438       56.6%
    Age 15 through 18.......................      7,040       22.1%       7,524       22.1%       7,891       21.9%
                                             -----------------------------------------------------------------------
        Age Total...........................     31,904        100%      34,037        100%      36,095        100%
    ================================================================================================================
    Race:
    American Indian or Alaskan..............        300        0.9%         299        0.9%         299        0.8%
    Asian Indian............................         49        0.2%          72        0.2%         101        0.3%
    Black or African American...............      3,170        9.9%       3,522       10.3%       3,719       10.3%
    Chinese.................................         11        0.0%          15        0.0%          18        0.0%
    Filipino................................          5        0.0%           6        0.0%           6        0.0%
    Guamanian or Chamorro...................          0        0.0%           1        0.0%           1        0.0%
    Hispanic................................      1,125        3.5%       1,073        3.2%       1,053        2.9%
    Japanese................................          1        0.0%           2        0.0%           2        0.0%
    Korean..................................          6        0.0%           7        0.0%           7        0.0%
    Native Hawaiian.........................          7        0.0%          10        0.0%          12        0.0%
    Other Race or Multiracial...............      1,972        6.2%       1,833        5.4%       1,682        4.7%
    Pacific Islander........................          7        0.0%          15        0.0%          16        0.0%
    Samoan..................................          2        0.0%           1        0.0%           2        0.0%
    Unknown.................................      2,482        7.8%       2,703        7.9%       2,943        8.2%
    Unspecified.............................         70        0.2%          71        0.2%          87        0.2%
    Vietnamese..............................          3        0.0%           5        0.0%           6        0.0%
    White/Caucasian.........................     22,694       71.1%      24,402       71.7%      26,141       72.4%
                                             -----------------------------------------------------------------------
        Race Total..........................     31,904        100%      34,037        100%      36,095        100%
    ================================================================================================================
    Ethnicity:
    Chicano.................................          5        0.0%           5        0.0%           7        0.0%
    Cuban...................................          5        0.0%          10        0.0%          17        0.0%
    Hispanic................................        322        1.0%         541        1.6%         811        2.2%
    Mexican.................................         53        0.2%          65        0.2%         107        0.3%
    Mexican American........................         19        0.1%          26        0.1%          34        0.1%
    Non-Hispanic............................      5,676       17.8%       9,017       26.5%      11,936       33.1%
    Other...................................        158        0.5%         193        0.6%         280        0.8%
    Puerto Rican............................          6        0.0%           9        0.0%          12        0.0%
    Unknown Ethnicity.......................     25,660       80.4%      24,171       71.0%      22,891       63.4%
    ----------------------------------------------------------------------------------------------------------------
        Ethnicity Total.....................     31,899        100%      34,037        100%      36,095        100%
    ----------------------------------------------------------------------------------------------------------------
    Note: The income guideline for children under age 1 is 195 to 212% of the Federal Poverty Level (FPL). The
      income guideline for other children is 160 to 212% of the FPL.

                                     ______

                               STATE OF MINNESOTA

                         Office of Governor Mark Dayton

     116 Veterans Service Building  20 West 12th Street  Saint Paul, MN
                                     55155

                                October 8, 2014

    The Honorable Fred Upton
    Chairman
    House Committee on Energy and Commerce
    Room 2183 Rayburn House Office Building
    United States House of Representatives
    Washington, DC 20515

    The Honorable Ron Wyden
    Chairman
    Senate Finance Committee
    Room 221 Dirksern Senate Office Building
    United States Senate
    Washington, DC 20510

    The Honorable Henry A. Waxman
    Ranking Member
    House Committee on Energy and Commerce
    Room 2204 Rayburn House Office Building
    United States House of Representatives
    Washington, DC 20515

    The Honorable Orrin G. Hatch
    Ranking Member
    Senate Finance Committee
    Room 104 Hart Senate Office Building
    United States Senate
     Washington, DC 20510

    Dear Senators and Congressmen:

        Thank you for seeking input from governors regarding whether and
    how the Children's Health Insurance Program (CHIP) should be extended
    and whether any additional policy changes are needed.

        Minnesota's circumstances differ from most states in the use of
    CHIP funding. To explain those differences, we offer this brief summary
    of the CHIP Program as it affected Minnesota. When CHIP was enacted in
    1997, Minnesota had one of the lowest rates of uninsured children in
    the nation. In 1995, Minnesota expanded Medicaid coverage for children
    under age 21 with family income up to 275% of the federal poverty level
    through a federal waiver. The laws governing CHIP prevented Minnesota
    from using CHIP funds for children who were already covered under
    Medicaid at this high level. Because federal law prevents us from using
    the CHIP matching funds on behalf of children already covered,
    Minnesota covers relatively few people under the CHIP program.

        Minnesota covers two groups with CHIP funds--a small group of
    infants under age two; and unborn children of mothers who are
    ineligible for Medicaid.

        Over the years, Minnesota has also used other authority in the CHIP
    law to support special health initiatives; to cover parents via federal
    waivers and more recently, the state has used its status as an
    expansion state to receive enhanced federal matching for a subset of
    Medicaid children. CHIP funds have helped support coverage for children
    and their families and I recommend that the program continue.

    In response to your more specific questions, I offer the following:

    1.  How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state (e.g.,
        income, health status, demographics)?

    Minnesota covers the following groups with CHIP funds:

          Infants up to age two in the Medical Assistance (MA) Program
    with income between 275% and 283% of the federal poverty level; and
          Unborn children of mothers ineligible for Medicaid who have
    income up to 278% of the federal poverty level.

      Minnesota serves approximately 4,100 CHIP enrollees per year. In
        addition, the CHIP program provides enhanced funding for children
        enrolled in Medicaid.

    2.  What changes has your state made to its CHIP program as a result of
        the Patient Protection and Affordable Care Act? How has the
        implementation of PPACA impacted the way your state administers
        CHIP?

         Minnesota has no changes other than the conversion of the income
    standards to the required modified adjusted gross income standards. The
    most significant impact to administration is the state-based Exchange
    that supports electronic application processing of Medicaid and CHIP
    eligibility.

    3.  To the extent the following information is readily available and
        you believe it is relevant, please describe the services and or
        benefits and or cost sharing currently provided in your state under
        CHIP that are not comparably available through your state's
        exchange or through the majority of employer-sponsored health plans
        in your state.

         Minnesota's CHIP benefits and services are modeled after those
    offered in the Medicaid program. No premiums or cost-sharing apply to
    children in either the Medicaid or CHIP programs.

    4.  Do you recommend that CHIP funding be extended? If so, for how
        long, and for budgeting and planning purposes, under what timeframe
        should Congress act upon an extension? If you do not believe CHIP
        funding should be extended, what coverage (if any) do you believe
        CHIP enrollees in your state would be able to obtain? How many
        children covered by CHIP do you estimate would become uninsured in
        the absence of CHIP?

         I recommend the extension of CHIP funding. This would help us
    continue to support our investment in health care coverage and continue
    to reduce the rate of uninsurance. As Governor of Minnesota, I do not
    plan to recommend reducing coverage for children. Extending the CHIP
    program would help avoid that result.

    5.  In spite of the restructuring and retargeting of allotments that
        occurred in 2009, some CHIP funding remains unspent. Do you believe
        the annual allotments your state has received starting in 2009 have
        been sufficient and the formula is working appropriately?

         Do you believe there is a need for Congress to further address the
    issue of unspent allotments?

         In my view, greater flexibility is needed in order for states to
    spend all available CHIP funding.

    6.  Over the past number of years, States have worked to reduce the
        number of uninsured children, and Medicaid and CHIP have been a
        critical component of that effort. Do you believe there are federal
        policies that could help states do an even better job in enrolling
        eligible children? What other policy changes, if any, would help
        improve enrollment of eligible children, reduce the number of the
        uninsured, and improve health outcomes for children in your state?

         I recommend lifting or raising the cap on special health
    initiatives and other forms of child health assistance. Currently, we
    are limited to 10% of CHIP program expenditures.

        In summary, the CHIP program has helped Minnesota maintain its high
    levels of coverage for children and maintain its high rate of insurance
    coverage among children, and l hope that support continues. Please do
    not hesitate to contact me if you have further questions or need
    additional information.

    Sincerely,

    Mark Dayton
    Governor

     Voice: (651) 201-3400 or (800) 657-3717    Fax: (651) 797-1850    MN
                              Relay (800) 627-3529

      Website; http://mn.gov/governor/                          An Equal
                              Opportunity Employer

                                     ______

                                STATE OF NEVADA

                    DEPARTMENT OF HEALTH AND HUMAN SERVICES

                  DIVISION OF HEALTH CARE FINANCING AND POLICY

                       1100 E. William Street, Suite 101

                           Carson City, Nevada 89701

                                 (775) 684-3800

                                                      romaine gilliland
                                                               Director

                                                      laurie squartsoff
                                                          Administrator

    Brian Sandoval
    Governor

    October 28, 2014

    Representative Henry Waxman
    Ranking Member
    Committee on Energy and Commerce
    U.S. House of Representatives
    2125 Rayburn House Office Building
    Washington, DC 20515

    Representative Fred Upton
    Chairman
    Committee on Energy and Commerce
    U.S. House of Representatives
    2125 Rayburn House Office Building
    Washington, DC 20515

    Dear Sirs:

    The Nevada Division of Health Care Financing and Policy (DHCFP), the
    Nevada Medicaid and Children's Health Insurance Program administrative
    entity is supportive of Congress extending CHIP and CHIP funding after
    the end of Federal Fiscal Year 2015. In Nevada the CHIP is a
    combination program, both a Medicaid expansion program and a separate
    CHIP. In both CHIP models, Nevada provides the Medicaid benefit plan
    where coverage emphasize children's unique needs. The DHCFP believes
    that the Nevada CHIP does provide medical coverage and care to children
    who otherwise may not get care due to the high cost of premiums,
    deductibles and co-payments, that are part of commercial insurance
    plans, even those with subsidies available through the Heath Care
    Exchange.

    1.  How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state?

         In State Fiscal Year 2014 (July 2013-June 2014) Nevada's CHIP
    program covered 5,647 children through the Medicaid expansion program
    and a monthly average of 21,316 children through the Nevada's Separate
    CHIP program. The CHIP enrollees in the Medicaid expansion program,
    where the state receives the CHIP federal match percentage, have income
    levels up to 165% of the Federal Poverty Level for children below age 6
    and have incomes up to 138% of the Federal Poverty Level for children
    age 6 through 18. Historically about 60% of the Nevada Check Up
    caseload has identified themselves as Hispanic and 87% of the caseload
    has resided in the urban areas of Nevada and has been served in our
    managed care delivery model.

    2.  What changes has your state made to its CHIP program as a result of
        the Patient Protection and Affordable Care Act? How has the
        implementation of PPACA impacted the way your state administers
        CHIP?

         The state consolidated the CHIP and Medicaid eligibility process
    into a single state Division, the Division of Welfare and Supportive
    Services. Wherever possible we aligned Medicaid and CHIP policies,
    including the elimination of the six month crowd out (wait time between
    loss of private insurance) period for CHIP. The application process was
    consolidated and electronic applications can be entered through Nevada
    Health Link, the front face of the Nevada Health Insurance Exchange and
    Access Nevada the Division of Welfare and Supportive Services multi
    benefit application beginning November 2015.

    3.  Please describe the services and or benefits and or cost sharing
        currently provided in your state under CHIP that are not comparably
        available through your state's exchange or through the majority of
        employer sponsored health plans in your state.

         Nevada implements the Medicaid benefit plan which emphasizes child
    wellness services. It also includes behavioral health rehabilitative
    supports, dental and vision care and long term services and supports
    such as private duty nursing and attendant care.

         The cost for the CHIP program is significantly less than the cost
    sharing on the exchange. The only cost is a quarterly premium. There
    are no co-payments, deductibles, or other charges for covered services.
    Premiums are determined by family size and income. Premiums are charged
    per family, not per child and are paid quarterly. The premium for a
    family with income up to 150% of FPL is $25 per quarter with a total
    annual cost of $100, for a family with income between 150% and 175% of
    FPL the premium is $50 per quarter with a total annual cost of $200 and
    for a family with income between 175% and 205% of FPL the premium is
    $80 per quarter with a total annual cost of $320.

         For a child receiving coverage from a plan on the Health Care
    Exchange, the average premium cost at an income level of 168% of FPL
    would be $326 a year for medical coverage. Dental coverage would run an
    additional $18-$25 dollars a month. At this FPL the co-pays, though
    subsidized, would also be an additional cost. At 205% FPL, the yearly
    medical premium would be $534 per year. These premiums are per child.
    Children are charged individually in a family unit up to the third
    child; at that point any additional children are not charged an
    additional premium.

         If we utilize the exchange premium payment level of $326 a year,
    an estimated dental monthly premium of $20 and look at the Nevada CHIP
    population as a whole we would find that the per year per person cost
    of going from CHIP to the exchange would be $480.50. This includes
    premiums only and does not include co-pays. The average CHIP household
    size is 2.5; therefore, the annual impact per CHIP family would be
    $1,201.00 plus co-pays.

    4.  Do you recommend that CHIP funding be extended? If so, for how long
        and for budgeting and planning purposes under what timeframe should
        Congress act upon an extension? How many children do you believe
        would become uninsured in the absence of CHIP?

         Nevada recommends that the Children's Health Insurance Program
    funding be extended. It is our belief that CHIP facilitates medical
    care to children in low income families. In comparing Nevada CHIP
    HEDIS, The National Committee for Quality Assurance Healthcare
    Effectiveness Data and Information Set, rates to Nevada Medicaid
    percentiles, the CHIP program exhibits better rates, demonstrating this
    receipt of medical care. Because of this level of medical care and the
    success of CHIP programs we feel the CHIP program should become a
    permanent program for children, continuing to allow states to operate
    CHIP as a Medicaid expansion or a standalone CHIP. If Congress is
    concerned about making CHIP permanent, Nevada believes CHIP should
    remain funded at least until the end of the children's Maintenance of
    Eligibility period in 2019. This would give the state time to
    thoughtfully plan for the needs of these children.

         Nevada due to the ability to spend CHIP allotments in a future
    year, currently anticipates funds will be available through June of
    2016. It is projected, if CHIP funding is eliminated that in State
    Fiscal Year 2017 (the first state fiscal year where lack of federal
    dollars to support CHIP will affect Nevada) the loss of the increased
    CHIP federal match percentage will cost Nevada up to an estimated
    (based on an estimated FMAP) additional $10,000,000 to cover the cost
    of our Medicaid CHIP expansion children.

         For those children in Nevada's Separate CHIP, it would cost Nevada
    approximately (based on an estimated FMAP) $9.8 million in SGF if we
    expanded Medicaid children's eligibility and covered these children in
    Medicaid. To date, this possibility has not been part of Nevada's
    budget discussions.

         For those children in Nevada's Separate CHIP program, if the
    program was eliminated without expanding Medicaid's coverage of
    children, with only the option to the families to access the more
    expensive coverage through the exchange, there is a potential these
    children will lose their medical coverage. Nevada has no method to
    determine the number of the children who would actually lose medical
    coverage, but, based on caseload projections, there are expected to be
    approximately 15,000 children in the Separate CHIP program that would
    be at risk.

    5.  In spite of the restructuring and retargeting of allotments that
        occurred in 2009, some CHIP funding remains unspent. Do you believe
        the annual allotments your state has received starting in 2009 have
        been sufficient and the formula is working appropriately? Do you
        believe there is a need for Congress to further address the issue
        of unspent allotments?

         The funding formula has been sufficient for Nevada. Nevada
    appreciates the ability to use unspent funds in a future year. This has
    allowed Nevada to address the cost swings that are present in smaller
    programs when a few high cost children can affect the overall program
    cost.

         The availability to carryover unspent funds has also provided
    Nevada with the guarantee of some funding to cover ongoing costs,
    possibly needed for wind down or to transition operations when, through
    Congressional processes, ongoing CHIP funding has not been assured.
    Historically, states have continued to operate their CHIP programs,
    enrolling new children into the health care coverage, pending decisions
    on continued funding of CHIP from Congress. This remains true for the
    current situation. States are still operating and enrolling children
    into CHIP, pending information on the continued funding of the program.

    6.  Over the past number of years. States have worked to reduce the
        number of uninsured children, and Medicaid and CHIP have been a
        critical component of that effort. Do you believe there are federal
        policies that could help states do an even better job in enrolling
        eligible children? What other policy changes, if any, would help
        improve enrollment of eligible children, reduce the number of the
        uninsured, and improve health outcomes for children in your state?

         Nevada has experienced a large increase in program enrollment
    (Medicaid and CHIP) including children this past year. Nevada believes
    this can be greatly attributed to the insurance mandate and the
    increased applications received through the Health Insurance Exchange
    entry point. Balance needs to be maintained between ease of application
    and policy for enrolling eligible individuals. Any changes that
    simplify application and enrollment processes must also be supported by
    the federally required audits of individual's eligibility. When these
    audits employ stricter processes than the actual enrollment process
    does, states are at risk of being cited for enrolling individuals who
    are not eligible.

         Nevada believes program enrollment is only part of the process.
    Polices and processes need to focus on developing the health care
    workforce. A limited healthcare workforce will impact health care
    access and outcomes. There also needs to be federal support, systems
    and the companion funding, for states to implement expanded health care
    outcome data gathering and measurement that can be benchmarked across
    systems and states. States greatly appreciate the opportunities the
    federal government provides to receive grants or increased federal
    financial participation to support these activities.

         Nevada appreciates the opportunity to provide our information and
    insights regarding the Children's Health Insurance Program. We believe
    the program has been successful in Nevada. We believe CHIP does provide
    medical coverage and care to children who otherwise may not get care
    due to the higher cost of commercial insurance plans, even those with
    subsidies available through the Health Care Exchange.

    Thank you for your interest in the Children's Health Insurance Program.
    Should you require any additional information or have any other
    questions lease feel free to contact Elizabeth Aiello, Deputy
    Administrator.

    Respectfully,

    Romaine Gilliland
    Director, DHHS

    Laurie Squartsoff
    Administrator

    Cc:   Honorable Brian Sandoval, Governor, Nevada
         Elizabeth Aiello, Deputy Administrator, DHCFP

                                     ______

                             STATE OF NEW HAMPSHIRE

                             office of the governor

      107 North Main Street, State House--Rm 208, Concord, New Hampshire
                                     03301

                 Telephone (603) 271-2121  FAX (603) 271-7640

           Website: http://www.nh.gov/  Email governorhassan@nh.gov

                      TDD Access: Relay NH 1-800-735-2964

    Margaret Wood Hassan
    governor

                                October 20, 2014

    Congressman Fred Upton, Chair
    Committee on Energy and Commerce
    2125 Rayburn House Office Building
    Washington, DC 20515

    Dear Congressman Upton:

        Thank you for seeking New Hampshire's feedback on the CHIP Medicaid
    expansion program for children. We strongly support the reauthorization
    of CHIP until at least 2019 to both allow sufficient time to ensure
    that health plans have the ability to serve children with special and
    intensive needs and to allow Congress to make the technical corrections
    necessary to the Patient Protection and Affordable Care Act to allow
    families to more easily access Marketplace plans.

        In addition, a change in CHIP Medicaid now would unfairly penalize
    New Hampshire's children and taxpayers for the state's fiscal
    responsibility. Several years ago, in a change that reduced state and
    federal costs, New Hampshire moved its CHIP program into Medicaid.
    Failure to reauthorize would penalize New Hampshire's efficiency by
    forcing it to pay more for children's health coverage than other
    states.

        Below you will find New Hampshire's specific responses to the
    questions posed by the Ranking Members of the House Committee on Energy
    and Commerce and the Senate Finance Committee on the impact the end of
    Title XXI CHIP funding could mean to low- to moderate-income families.
    We have also included information about the health status of children
    in our CHIP population, which we think supports recent analyses by a
    number of organizations that the Qualified Health Plans (QHPs) on the
    Marketplace may not meet children's needs, especially our most
    vulnerable children, those with special health care needs.\1\
    ---------------------------------------------------------------------------
        \1\ The National Alliance to Advance Adolescent Health, Georgetown
    University Health Policy Institute Center for Children and Families,
    Wakely Consulting Group, MACPAC and the GAO.

    1.  How many individuals are served by your state's CHIP Program? What
    are the characteristics of CHIP enrollees in your state (e.g., income,
    ---------------------------------------------------------------------------
    health status, demographics)?

        As of June 30, 2014, New Hampshire had 11,029 children in its CHIP
    population; about 44 percent were adolescents (12-18 years old). NH has
    a CHIP Medicaid Expansion (meaning that the CHIP population is enrolled
    via the Medicaid program as opposed to a stand-alone program outside of
    Medicaid) to serve these children in the 185-300 percent FPL income
    group. Approximately three-quarters of these children are in the 185-
    250 percent FPL income group. Previous analyses of children's health
    insurance in New Hampshire showed that about half the CHIP program
    population dis-enrolls each year compared to about one-quarter each of
    the Medicaid and commercial populations.

        These previous analyses of children's health insurance in New
    Hampshire also included health status classification using a relative
    clinical risk score (3M's Clinical Risk Grouping software), which
    showed that among those continuously enrolled (for a year) Medicaid
    children had the highest score (0.591) with the CHIP population
    somewhat lower (0.549) but still 10 percent higher than commercially
    insured children (0.494). Despite similar demographics to the
    commercially insured children, this group had a higher prevalence rate
    of mental health disorders (22.7 percent versus 14.2 percent) and about
    twice the prevalence rate of asthma. The last study, released in 2013,
    found a shift toward a greater level of chronic disease in CHIP
    children.\2\
    ---------------------------------------------------------------------------
        \2\ Onpoint Health Data for NH DHHS. Children's Health Insurance
    Programs in New Hampshire. June 2013.

        This trend is of concern and supports the need for access to a
    health benefit plan that addresses the acute and chronic health care
    needs of children. Despite this shift towards greater chronic
    illnesses, there are positive outcomes for New Hampshire's children
    enrolled in the CHIP program. On average CHIP funding allows New
    Hampshire to provide health care coverage to more than 19,000 children
    during the course of a year. Over the course of a year CHIP funding in
    New Hampshire assures access to 46,000 physician/clinic visits
    (including 6.500 for preventive care), 20,000 dental visits, 10,000
    mental health visits, 2,500 emergency department visits, and 57,000
    ---------------------------------------------------------------------------
    prescriptions filled.

    As a result of this care:

       The access to and use of primary care practitioners has improved
            such that New Hampshire's CHIP rates were higher than both
            Medicaid and the New Hampshire Commercial rates in the 2013
            study.
       Well-child visit rates have increased substantially with the
            children enrolled in CHIP leading the way (83.9 percent)
            followed by the commercial insurance (79.3 percent) and
            Medicaid (73.2 percent).
       Children enrolled in the CHIP program saw a significant improvement
            in the rates for the appropriate testing and treatment for
            ambulatory sensitive conditions (ASC) that could be treated in
            a physician's office rather than in the emergency room.
            (SFY2011 (88.7 percent) vs SFY2009 (80.0 percent)).
       The use of inpatient hospital services for ASC (asthma,
            dehydration, bacterial pneumonia, urinary tract infections and
            gastroenteritis), by children enrolled in the CHIP program (1.6
            per 1,000 members) are much less than children enrolled in the
            Medicaid program (3.4 per 1,000 members) and equal to those
            with commercial insurance.

        Without the CHIP Program, New Hampshire would not have seen such
    improvements. This is why it is vital that before decisions are made to
    end the CHIP program, in favor of providing a health benefit through
    the Marketplace, an analysis of impact on health outcomes must be
    undertaken. To not look at this question is inviting a cascade of
    negative, harmful, unintended outcomes for children.

    2.  What changes has your state made to its CHIP program as a result of
    the Patient Protection and Affordable Care Act? How has the
    implementation of PPACA impacted the way your state administers CHIP?

        New Hampshire has applied the new Modified Adjusted Gross Income or
    MAGI regulations as required by the PPACA to its CHIP program. The key
    differences between MAGI and the former method for calculating income
    is the use of a standard 5 percent income disregard and no asset test.

    3.  To the extent the following information is readily available and
    you believe it is relevant, please describe the services and or
    benefits and or cost sharing currently provided in your state under
    CHIP that are not comparably available through your state's exchange or
    through the majority of employer sponsored health plans in your state.

        New Hampshire is a CHIP Medicaid Expansion state; children in the
    CHIP population receive the Medicaid benefit package, which is a
    broader set of benefits important to children and adolescents and can
    often be significant to those with special health needs. There is no
    cost sharing in New Hampshire Children's Medicaid. Families would face
    considerably higher out-of-pocket costs for their children's health
    care in a Qualified Health Plan (QHP); for lower-income families that
    might be anywhere from 2.2 to 8.3 times higher than a separate CHIP
    program,\3\ more so in a CHIP Medicaid Expansion state like New
    Hampshire. The impact on children with special health care needs could
    be devastating--some families could go from paying nothing in CHIP to
    facing more than $5,000 in annual out-of-pocket costs in QHPs.\4\ Some
    of these current services in New Hampshire have limited or no coverage
    in Marketplace or commercial plans, e.g., dental, audiology exams and
    hearing aids, non-emergent transportation and Early Periodic Screening,
    Diagnosis and Treatment services. Of particular concern to children's
    well-being is dental care. Families will forego dental care if it means
    purchasing a stand-alone dental plan with additional premiums and cost
    sharing that doesn't count toward their medical deductibles and out-of-
    pocket maximum.
    ---------------------------------------------------------------------------
        \3\ Brooks, T., Heberlein, M., Fu, J. Dismantling CHIP in Arizona:
    How Losing KidsCare Impacts a Child's Health Care Costs. Georgetown
    University Health Policy Institute Center for Children and Families.
    May 2014.
        \4\ Wakely Consulting Group. Comparison of Benefits and Cost
    Sharing in Children's Health Insurance Programs to Qualified Health
    Plans. July 2014.

        It is too early to tell how the Marketplace plans will serve
    children in New Hampshire. Several new carriers offering multiple
    health plans are poised to enter the Marketplace for 2015 after only
    one carrier participated in 2014. There are no plans in New Hampshire
    to require any benefits beyond the Essential Health Benefits and Early
    Periodic Screening, Diagnosis and Treatment (EPSDT) services as
    required for individuals that are 19 and 20 years of age who are found
    eligible for the NH Health Protection Program (PPACA Medicaid
    ---------------------------------------------------------------------------
    Expansion).

    4.  Do you recommend that CHIP funding be extended? If so, for how
    long, and for budgeting and planning purposes, under what timeframe
    should Congress act upon an extension? If you do not believe CHIP
    funding should be extended, what coverage (if any) do you believe CHIP
    enrollees in your state would be able to obtain? How many children
    covered by CHIP would become uninsured in the absence of CHIP?

        Yes, CHIP funding should be extended through 2019 when the PPACA
    Maintenance of Effort (MOE) requirements ends. New Hampshire--as a
    Medicaid Expansion state--must cover this population through 2019 due
    to the federal government's MOE requirement. It would be catastrophic
    if New Hampshire were obligated to continue CHIP without relief from
    the MOE requirement. While Medicaid funding would not run out, NH's
    contribution to covering these children would increase significantly.
    Cost increases would need to be offset by other Medicaid cuts at a time
    when we are developing a new system of care. New Hampshire is one of
    the states that would be subject to an inequitable financial impact as
    states with separate CHIP programs would end those programs when CHIP
    funding expired.\5\
    ---------------------------------------------------------------------------
        \5\ MACPAC (Medicaid and CHIP Payment Access Commission). Report to
    the Congress on Medicaid and CHIP. June 2014.

        Congress needs to address this issue as soon as possible. New
    Hampshire is building its 2016-2017 biennium budget it will be
    difficult planning for an uncertain outcome that would involve
    ---------------------------------------------------------------------------
    significant increased costs for covering these children.

        During the time period Congress extends CHIP funding, it is
    imperative that analyses are done regarding the benefit packages, cost
    sharing and network adequacy of Marketplace plans and their impact on
    the needs of low-income children. If deemed necessary, Congress should
    act to revise Marketplace plan requirements for children. In
    particular, PPACA's affordability test (the ``family glitch'') that
    counts only the employee's cost of Employer Sponsored Insurance (ESI)
    has the potential to erase many of the gains made in reducing
    uninsurance among children, if CHIP funding ends and families cannot
    afford ESI but are prevented from accessing subsidies in the
    exchange.\6\
    ---------------------------------------------------------------------------
        \6\ Sara Rosenbaum discusses two basic PPACA ``design flaws'' in
    her Milbank Quarterly Op-Ed piece (volume 92, Issue 3, 2014):
    inadequate cost-sharing help for low income families and the family
    ``affordability'' problem that bars families from accessing premium
    subsidies for their children.

    5.  In spite of the restructuring and retargeting of allotments that
    occurred in 2009, some CHIP funding remains unspent. Do you believe the
    annual allotments your state has received starting in 2009 have been
    sufficient and the formula is working appropriately? Do you believe
    there is a need for Congress to further address the issue of unspent
    ---------------------------------------------------------------------------
    allotments?

        New Hampshire has been able to work within its annual allotment due
    to a July 2012 policy change that moved the children in the separate
    CHIP program to the CHIP Medicaid Expansion. The cost of the separate
    program was outstripping legislative appropriations and New Hampshire
    came dangerously close to capping enrollment and/or instituting a wait
    list for the first time in the history of its CHIP program (with CMS
    approval). Moving to a CHIP Medicaid Expansion allowed NH to stay
    within its legislative appropriation, continue to cover all eligible
    children, provide comprehensive benefits, and maintain its low rate of
    uninsured children.

        Depending on what Congress does, it may not be necessary to further
    address unspent allotments if CHIP funding is temporarily extended
    while the critical analytical work that is needed is done.

    6.  Over the past number of years, states have worked to reduce the
    number of uninsured children, and Medicaid and CHIP have been a
    critical component of that effort. Do you believe there are federal
    policies that can help states do an even better job of enrolling
    eligible children? What other policy changes, if any, would help
    improve enrollment of eligible children, reduce the number of
    uninsured, and improve health outcomes for children in your state?

        As indicated in question #4, policy changes should focus on
    technical issues with the PPACA and their effect on enrollment of
    children and the resulting impact on the rate of uninsurance among
    children, which could erase many of the gains this nation has made in
    children's coverage. If Congress intends to end CHIP funding, it should
    put in place a temporary extension and focus its policy attention on
    the affordability, accessibility and appropriateness of Marketplace
    plans for children during an extension period.

        In summary, the CHIP funding extension to 2019 will allow time for
    Congress to fix the existing Marketplace technical issues that left
    unattended, and in combination with not reauthorizing CHIP funding,
    will prove to be catastrophic for New Hampshire families. In addition
    the extension will allow time for the critical analytical work to be
    done that is required to support informed decision-making by Congress
    about the future of the CHIP funding. That analytic work includes, but
    is not limited to:

        Assessing the impact of the existing ``family glitch,'' which
            could keep half of the children on CHIP from accessing
            Marketplace Plans;
        Ensuring that QHPs are designed to meet children's health care
            needs with attention to children with special health care
            needs;
        Examining cost sharing in order to arrive at a family contribution
            that is fair and encourages QHP enrollment and appropriate use
            of health care services;
        Assessing whether stand-alone dental plans and their additional
            cost sharing are appropriate; and
        Designing tools to help families choose the best coverage in the
            Marketplace for their children.

        Thank you for this opportunity to offer New Hampshire's
    perspective. We recommend and request that Congress extends funding for
    CHIP through 2019 and uses the time to perform the careful analyses
    MACPAC and others are calling for to make certain that the cost-sharing
    and benefits in Marketplace plans are affordable and appropriate for
    children. It would be premature to eliminate support for this program
    without understanding the impact of such action without adequate time
    for states to do the necessary planning and budget adjustments.

    With every good wish,

    Margaret Wood Hassan
    Governor

    cc:  Congressman Henry Waxman
        Senator Ron Wyden
        Senator Orrin Hatch
        Senator Jeanne Shaheen
        Senator Kelly Ayotte
        Congresswoman Carol Shea-Porter
        Congresswoman Ann Kuster
        Katie Dunn, Associate Commissioner and Medicaid Director, NH DHHS

                                     ______

                              STATE OF NEW MEXICO

                           HUMAN SERVICES DEPARTMENT

    MEDICAL ASSISTANCE DIVISION  PO BOX 2348--SANTA FE, NM 87504  PHONE:
                                (505) 827-3103
                              FAX: (505) 827-3185

    Susana Martinez, Governor
    Sidonie Squier, Secretary
    Julie B. Weinberg, Director

    October 30, 2014

    The Honorable Ron Wyden             The Honorable Orrin Hatch
    Chairman                            Ranking Member
    Senate Finance Committee            Senate Finance Committee

    The Honorable Fred Upton            The Honorable Henry Waxman
    Chairman                            Ranking Member
    House Energy & Commerce Committee   House Energy & Commerce Committee

    Dear Congressmen:

    Thank you for your July letter to governors seeking information and
    feedback about the Children's Health Insurance Program (CHIP),
    including policy recommendations for the program as Congress considers
    the future of CHIP and the reauthorization of funding beyond federal
    fiscal year 2015. As you rightly note, both Medicaid and CHIP are
    operated as state-federal partnerships, and New Mexico appreciates the
    chance to offer input about imminent policy and financial
    considerations. In response, we are pleased to answer your questions in
    greater detail.
    CHIP Enrollment Status and Demographics
    New Mexico administers CHIP as an expansion of Medicaid, rather than as
    a stand-alone program. While CHIP enrollees have some additional cost-
    sharing responsibilities that differ from traditional Medicaid
    (discussed in greater detail below), the program itself has the same
    benefit package, application process and administrative structure as
    children's Medicaid; and essentially operates as two separate
    categories to cover children ages 0-5 and 6-18 who do not meet the
    income maximums for Medicaid.

    As of October 1, 2014, New Mexico covered just over 14,000 children
    under CHIP--a number that has grown significantly since last January,
    when New Mexico had approximately 7,500 CHIP enrollees. For children 0-
    5 years-old, income eligibility for CHIP is between 240-300 percent of
    the federal poverty level (FPL); and for children ages 6-18, income
    eligibility is between 190-240 percent FPL. Children in families with
    income below these thresholds are eligible for Medicaid.

    Approximately 12 percent of CHIP enrollees are Native American, and
    about 55 percent reside in rural New Mexico counties. CHIP enrollees
    are generally considered a healthy population. In New Mexico, most
    children who are enrolled in CHIP receive services through a managed
    care organization (MCO), with the exception of Native Americans, who
    may opt-into or out of managed care.
    ACA-Related Changes
    The most noteworthy change that New Mexico made to its CHIP program as
    a result of the Patient Protection and Affordable Care Act (ACA) was
    the conversion of existing CHIP income thresholds to equivalent income
    limits based on the modified adjusted gross income (MAGI) methodology.
    Per Section 2101(f) of the ACA, New Mexico also created a specific sub-
    category of CHIP for children who lose Medicaid coverage at renewal due
    to the elimination of income disregards as a result of MAGI conversion.
    And, like most other Medicaid categories, CHIP is subject to the same
    streamlined application and renewal processes that are required by the
    ACA.
    CHIP Benefits & Cost-Sharing
    Since CHIP operates as an extension of Medicaid in New Mexico, the
    benefits that are available to CHIP enrollees include the full gamut of
    physical, behavioral, oral health, vision and Early and Periodic
    Screening, Diagnosis and Testing (EPSDT) services that are provided to
    the traditional Medicaid population. There are some notable benefit
    differences between CHIP and the health plans that are available via
    most New Mexico employers and the Health Insurance Marketplace, since
    these plans generally do not include dental services, eyeglasses,
    vision refraction and psychiatric residential treatment centers
    comparable to CHIP. The CHIP dental benefit package is the benefit
    source for stand-alone dental plan offerings available to children on
    the Marketplace.

    New Mexico charges co-payments to CHIP recipients, as outlined below;

    ------------------------------------------------------------------------
                     Co-Pay                          Item or Service
    ------------------------------------------------------------------------
    $2.....................................  Prescription drug item
                                             (Not applied when the co-
                                              payment for a brand-name drug
                                              is applied.)
    $3.....................................  Brand-name drug
                                             (Applied when there is a less
                                              expensive drug available.)
    $5.....................................  Outpatient visit to a physician
                                              or other practitioner, dental
                                              visit, therapy session or
                                              behavioral health session
    $8.....................................  Non-emergent use of the
                                              emergency room
    $25....................................  Inpatient hospital admission
    ------------------------------------------------------------------------

    These co-payments are far lower than the cost-sharing provisions of
    most other commercial and Marketplace health plans. New Mexico CHIP
    does not charge premiums or deductibles.
    Future CHIP Funding
    New Mexico receives a higher federal match rate for CHIP enrollees than
    it does for Title XIX Medicaid recipients, and this additional federal
    funding has allowed our state to provide health insurance to children
    whose families have too much income to qualify for Medicaid, but who
    may have historically struggled to afford the deductibles and premiums
    associated with private or employer-sponsored coverage. With the
    creation of the Health Insurance Marketplace and federally subsidized
    coverage options and cost-sharing reductions, private insurance is now
    more affordable than when CHIP began years ago. It is interesting to
    note that CHIP enrollment has increased substantially in New Mexico
    since last January, the reasons for which are unclear. While a portion
    of this enrollment increase may be a ``woodwork'' effect due to the
    ACA's individual mandate and the related outreach and visibility of new
    coverage options, the increase may also reflect that middle income
    families might be forgoing private coverage to take advantage of the
    greater affordability offered by CHIP.

    CHIP reauthorization presents an opportunity for Congress to inventory
    and streamline the wide array of coverage and affordability options
    that are now available to moderate- and middle-income families. While
    New Mexico currently uses the federal Marketplace platform, our state
    is moving quickly toward implementation of a state-based Marketplace
    for the 2016 open enrollment period. Our experience to date has been
    that transitioning populations and coordinating coverage between
    Medicaid and the federally facilitated Marketplace is a clunky and
    challenging process; and fewer families than originally anticipated
    have been able or willing to purchase coverage through the Marketplace.
    Until New Mexico has a mature state-based Marketplace that can ensure a
    streamlined and seamless process for families in accessing coverage,
    our state believes that CHIP--and the federal funding that goes with
    it--will remain an important coverage option for New Mexico families.

    No discussion about CHIP funding can be held without recognizing that
    all states are currently operating under the ACA's maintenance of
    effort (MOE) provision, which requires the continuation of pre-ACA
    Medicaid and CHIP coverage levels for children through 2019. Federal
    rules for maintaining eligibility are unclear should CHIP allotments be
    discontinued, and any Congressional action on CHIP funding must make
    clear that the MOE provision would not apply should federal funding for
    the program be reduced or disappear altogether.
    CHIP Allotments
    The CHIP allotment process and methodology have worked well for New
    Mexico, and we don't have any specific recommendations for change.
    Should you consider a new allotment process or methodology, we urge you
    to keep financial stability and predictability for states at the
    forefront of your deliberations. We are committed to slowing the growth
    rate of health care costs while improving the quality of care,
    especially in Medicaid and CHIP. Large swings in federal financial
    participation can inhibit those efforts. Given that New Mexico, like
    most other states, would exhaust federal CHIP allotments during fiscal
    year 2016 without funding reauthorization, we may need more flexibility
    and time to adjust to this funding change.
    Reaching Uninsured Children
    New Mexico agrees that Medicaid and CHIP have been at the frontlines of
    making headway in reaching uninsured children, and this has
    historically been where our state has focused much of its attention. In
    addition to New Mexico's comparatively high Medicaid and CHIP income
    thresholds, the state has worked hard to facilitate the easiest and
    most straightforward enrollment and eligibility processes possible--
    including widespread use of presumptive eligibility for children and
    pregnant women, implementation of continuous eligibility for child
    categories, use of administrative renewals, and automatic deeming of
    newborns as Medicaid- or CHIP-eligible when born to a Medicaid-enrolled
    mother. These policies have greatly aided our state in not only
    enrolling uninsured children into coverage, but in facilitating greater
    retention and ongoing child health improvements. Our state encourages
    Congress to be innovative and flexible in thinking about how states
    might continue to develop similar strategies as it works through the
    CHIP reauthorization process.

    In conclusion, let me thank you again for seeking consultation from the
    states on this important issue. If you have any questions or need
    additional information, please don't hesitate to let me know.

    Sincerely,

    Julie B. Weinberg, Director
    Medical Assistance Division

                                     ______

                               State of New york

                               EXECUTIVE CHAMBER

                                  Albany 12224

    Andrew M. Cuomo
    Governor

                               September 4, 2014

    The Honorable Ron Wyden             The Honorable Fred Upton
    Chairman                            Chairman
    Committee on Finance                Energy and Commerce Committee
    U.S. Senate                         U.S. House of Representatives
    221 Dirksen Senate Office Building  2183 Rayburn House Office Building
    Washington, DC 20510                Washington, DC 20515

    The Honorable Orrin G. Hatch        The Honorable Henry Waxman
    Ranking Member                      Ranking Member
    Committee on Finance                Energy and Commerce Committee
    U.S. Senate                         U.S. House of Representatives
    104 Hart Office Building            2204 Rayburn House Office Building
    Washington, DC 20510                Washington, DC 20515

    Dear Chairmen Wyden and Upton, and Ranking Members Hatch and Waxman:

    Thank you for your recent letter requesting information regarding the
    Children's Health Insurance Program (CHIP). New York State's CHIP
    program, Child Health Plus, has been in existence since 1990 and
    successfully provides comprehensive, affordable insurance coverage to
    uninsured children throughout the state,

    The CHIP program has made an enormous difference in expanding health
    insurance coverage in New York. When CHIP was enacted, New York had
    over 800,000 uninsured children. Today, there are about 100,000
    uninsured children, nearly a 90 percent decline. We appreciate your
    interest in collecting information to determine if funding should be
    continued beyond Federal Fiscal Year 2015. Below are responses to the
    information requested in your July 29, 2014 letter:

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g., income, health status, demographics)?

          New York's Child Health Plus program currently is a combination
            program, meaning children ages 6 to 18 between 100% and 133% of
            the Federal Poverty Level (FPL) are funded under Title XXI of
            the Social Security Act through a Medicaid expansion. The
            separate portion of the program provides subsidized coverage to
            children from birth through age 18 that are not eligible for
            Medicaid and in families with incomes under 400% of the FPL
            ($95,000 for a family of four). Children in families over 400%
            of the FPL that are otherwise eligible for coverage may enroll
            in the program at full cost.

          As of July 2014, approximately 476,000 children are covered by
            CHIP: 297,180 in the separate CHIP program and approximately
            179,000 through the Medicaid expansion. Attached is additional
            information describing the demographic characteristics of
            children enrolled through the separate program, including
            enrollment by poverty level, immigration status and ethnicity.

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act (PPACA)? How
            has the implementation of PPACA impacted the way your state
            administers CHIP?

          The biggest change in the administration of the CHIP program as a
            result of the PPACA is that eligibility determinations are now
            being performed by the New York State of Health (NYSOH), New
            York State's health insurance marketplace. NYSOH is an
            integrated eligibility system for all programs available under
            the Affordable Care Act, Medicaid, Child Health Plus, and
            qualified health plans with and without tax credit and cost
            sharing reductions. Previously, eligibility determinations for
            Child Health Plus were performed by participating health plans
            and Medicaid eligibility determinations by local departments of
            social services.

          Another significant change under the ACA is the use of Modified
            Adjusted Gross Income (MAGI). Previously, the Child Health Plus
            program used gross income in determining eligibility. Moving to
            MAGI resulted in changes such as no longer counting child
            support or worker's compensation coverage as income. In
            addition, household composition rules were changed under ACA.
            The household composition is now based on the tax filing
            household.

          Other changes have been made as a result of the ACA to more
            closely align the separate CHIP program with Medicaid
            eligibility rules.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            benefits and cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

          The Child Health Plus program offers subsidized health insurance
            coverage to children under 400% of the FPL. There are no co-
            payments or deductibles in the program. Depending on household
            income, families may be responsible for a monthly premium
            contribution. Family contribution levels are as follows:

         <160% of the FPL..................  Free
         160 to 222% FPL...................  $9 per child per month/$27 per
                                              month family maximum
         223 to 250% FPL...................  $15 per child per month/$45 per
                                              month family maximum
         251 to 300% FPL...................  $30 per child per month/$90 per
                                              month family maximum
         301 to 350% FPL...................  $45 per child per month/$135
                                              per month family maximum
         351 to 400% FPL...................  $60 per child per month/$180
                                              per month family maximum
         Over 400% FPL.....................  Full premium which varies by
                                              participating health plan

          Child-only policies are available through the NYSOH at a
            considerably higher cost than Child Health Plus. The child-only
            policies available within NYSOH have a monthly premium that
            ranges from $175 to $287 per month as well as cost sharing
            provisions that range from $15 to $1,500 per service depending
            on the coverage level. Deductibles for these policies range
            from $0 to $3,000 depending on income. As noted above, there
            are no copayments or deductibles in Child Health Plus, and for
            families with incomes below 400%, FPL the maximum premium
            contribution is $180 per month depending on income. In New York
            State, 62% of all enrollees in Child Health Plus pay less than
            $9 per month.

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP funding should be extended, what coverage (if any)
            do you believe CHIP enrollees in your state will be able to
            obtain? How many children covered by CHIP do you estimate would
            become uninsured in the absence of CHIP?

          New York State strongly recommends that CHIP funding be extended.
            We believe funding through 2019 is the appropriate length of
            time for an extension. A more informed decision regarding the
            continuation of the program can be made after NYSOH has had
            several years of experience.

          If the decision is made to not reauthorize CHIP funding, New York
            believes that states need at least twelve months of lead time
            in order to plan for, notify, and efficiently transition
            children to other programs. If the decision is not made with
            enough lead time, there is the potential that many children
            covered in the program will become uninsured. Even with
            sufficient lead time, we anticipate that many children may
            become uninsured if CHIP were discontinued given the large cost
            differential between Child Health Plus and the child-only
            policies on NYSOH.

      5.  In spite of restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

          To date, New York State has received sufficient funding to
            support its Child Health Plus program through annual allotments
            and expansion allotment adjustments. With the potential for
            program growth under the ACA, New York anticipates there may be
            a need for increased allotments in the future.

      6.  Over the past number of years, States have worked to reduce the
            number of uninsured children and Medicaid and CHIP have been a
            critical component in that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children? What other policy changes, if
            any would help improve enrollment of eligible children, reduce
            the number of uninsured and improve health outcomes for
            children in your state?

          New York believes that performance bonuses available under the
            Children's Health Insurance Program Reauthorization Act
            (CHIPRA) were an effective means of increasing enrollment under
            the programs. We suggest that the provision to reinstate
            performance bonuses be reauthorized.

    Thank you again for your consideration in reauthorizing CHIP funding.
    Should you have any further questions, please feel free to contact
    Judith Arnold, New York State's CHIP director and the director of the
    Division of Eligibility and Marketplace Integration.

    Sincerely,

    Courtney Burke
    Deputy Secretary for Health

    Attachment

    Cc:  Jason Helgerson, New York State Medicaid Director
         Judith Arnold, CHIP Director, New York State

                             We Work For the People

                        Performance  Integrity  Pride

                          NYS CHILD HEALTH PLUS PROGRAM
    ------------------------------------------------------------------------
     Household Income--Federal Poverty Level   Enrollment *     % of Total
    ------------------------------------------------------------------------
    <160% FPL...............................          74,165             25%
    160-222% FPL............................         109,451             37%
    223-250% FPL............................          35,664             12%
    251-300% FPL............................          36,582             12%
    301-350% FPL............................          20,709              7%
    351-400% FPL............................          11,598              4%
    >400% FPL...............................           9,011              3%
                                             -------------------------------
    Grand Total.............................         297,180            100%
    Total Subsidized........................         288,169             97%
    ========================================================================
    CITIZENSHIP
    Citizen.................................         256,757             86%
    Qualified Immigrant.....................           8,335              3%
    Unqualified Immigrant...................          32,088             11%
                                             -------------------------------
    Total...................................         297,180            100%
    ========================================================================
    RESIDENCE
    NYC.....................................         104,276             35%
    Rest of State...........................         192,904             65%
                                             -------------------------------
    Total...................................         297,180            100%
    ========================================================================
    ETHNICITY
    Asian...................................          23,157              8%
    Black...................................          19,340              7%
    Hispanic................................          46,830             16%
    American Indian.........................             311              0%
    Pacific Islander/Hawaiian N.............             230              0%
    Unknown.................................          85,668             29%
    White...................................         121,644             41%
                                             -------------------------------
    Total...................................         297,180            100%
    ------------------------------------------------------------------------
    *July 2014 Enrollment

                                     ______

            North Carolina Department of Health and Human Services
                         Division of Medical Assistance

                                 www.ncdhhs.gov

                      Tel 919-855-4100  Fax 919-733-6608

       Location: 1985 Umstead Drive  Kirby Building  Raleigh, NC 27603

       Mailing Address: 2501 Mail Service Center  Raleigh, NC 27699-2501

                An Equal Opportunity/Affirmative Action Employer

    Pat McCrory
    Governor
                                                    Aldona Z. Wos, M.D.
                                                      Ambassador (Ret.)
                                                         Secretary DHHS

                                              Robin Gary Cummings, M.D.
                                   Deputy Secretary for Health Services
                               Director, Division of Medical Assistance

    November 10, 2014

    The Honorable Ron Wyden             The Honorable Fred Upton
    Chairman                            Chairman
    Senate Finance Committee            House Energy & Commerce Committee
    221 Dirksen Senate Office Building  2183 Rayburn House Office Building
    Washington, DC 20510                Washington, DC 20515

    The Honorable Orrin Hatch           The Honorable Henry Waxman
    Ranking Member                      Ranking Member
    Senate Finance Committee            House Energy & Commerce Committee
    104 Hart Senate Office Building     2204 Rayburn House Office Building
    Washington, DC 20510                Washington, DC 20515

    Dear Chairman Wyden, Ranking Member Hatch, Chairman Upton and Ranking
    Member Waxman:

    On behalf of Governor Pat McCrory, I am responding to your recent
    letter asking for North Carolina's input on the Children's Health
    Insurance Program (CHIP). We have provided detailed responses and data
    that may assist in your discussions on CHIP reauthorization.

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g. income, health status, demographics)?

    North Carolina has four groups of children funded under Title XXI of
    the Social Security Act, the Children's Health Insurance Program
    (CHIP):

                                                          FAMILY INCOME
            PROGRAM                AGE RANGE               ELIGIBILITY

    Medicaid expansion      Birth-12 months         186-200% FPL
    Medicaid expansion      13 months-5 years       134-200% FPL
    Medicaid expansion      6-18 years              101-133% FPL
    Separate CHIP Program   6-18 years              134-200% FPL

    Note: Federal Poverty Limit (FPL)

    Under the Medicaid expansion programs, children receive the full range
    of Medicaid services paid for using Title XXI (CHIP) funds. These
    children are considered enrolled in Medicaid. Title XXI funding, with
    its enhanced Federal matching rate, allows North Carolina to provide
    these children with a richer array of services necessary early in life
    at a reduced cost to the State.

    NC Health Choice program beneficiary enrollment in July 2014 exceeded
    82,000. NC Health Choice beneficiaries reside in all 100 counties, but
    the number of beneficiaries varies from only 57 in one coastal county
    to more than 5,700 in one southwestern county. The average number of NC
    Health Choice beneficiaries per county is 821. See the figures below
    for the beneficiary age distribution, gender distribution, and income
    distribution.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

    As a part of Affordable Care Act implementation, North Carolina
    modified its Health Choice Program eligibility to reflect the new
    Modified Adjusted Gross Income (MAGI) requirements that expand Medicaid
    for children to 133 percent FPL. As a result, approximately 72,000
    children aged 6 through 18 who were previously eligible for NC Health
    Choice became eligible for Medicaid coverage on January 1, 2014.

    Other than the new MAGI eligibility formula for both Medicaid and CHIP
    program applicants and the aforementioned shift in the income
    eligibility threshold, the Affordable Care Act has not affected the way
    that North Carolina administers the separate CHIP program. North
    Carolina uses one joint application for Medicaid and CHIP. Local county
    departments of social services workers screen applicants for Medicaid
    first. If household income exceeds Medicaid limits, workers then screen
    applicant s for CHIP.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            benefits and or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

    Benefits coverage for the North Carolina CHIP program is controlled by
    federal Title XXI statutes, NC General Statutes, and the Centers for
    Medicare and Medicaid Services (CMS)-approved State Plan. NC Health
    Choice program services covered include many but not all of those
    allowable under federal Title XXI law:

     Inpatient hospital services;         Durable medical equipment and
                                           medical supplies;
     Outpatient hospital services;        Nursing services;
     Physician services;                  Substance abuse treatment;
     surgical services;                   Case management;
     Clinic services, including           Care coordination;
     ambulatory health centers and local
     health departments;
     Pharmacy benefits;                   Specialized therapies;
     Laboratory services;                 Hospice care;
     Radiological services;               Emergency medical
                                           transportation; and
     Mental health services;              Preventive and restorative
                                           dental services.

    Detailed Division of Medical Assistance Clinical Coverage policies for
    NC Health Choice program benefits are located at http://www.ncdhhs.gov/
    dma/mp/index.htm.

    North Carolina General Statutes mandate that the separate CHIP program
    benefits be equivalent to Medicaid benefits. There are a few
    exceptions, as outlined in N.C.G.S. 108A-70.21(b):

      (1)  No services for long-term care;
      (2)  No non-emergency medical transpo1tation;
      (3)   No federal Early and Periodic Screening, Diagnosis and
            Treatment (EPSDT) requirements; and
      (4)  Restricted dental services.

    Cost sharing for the NC Health Choice Program is also outlined in the
    General Statutes and the CMS-approved State Plan. N.C.G.S. 108A-
    70.21(d) and (e) outline that there is no cost-sharing for families
    with incomes below 150 percent FPL, except for a $1 copay on generic
    prescription drugs and a $3 copay on brand name prescription drugs.

    Families with incomes above 150 percent FPL are subject to greater
    cost-sharing, including a $5 copay for provider visits and outpatient
    hospital visits, excluding well-baby, well-child, or immunization
    visits. There is also a $1 copay for generic prescriptions, a $10 copay
    for brand name prescriptions, and a $20 copay for non-emergency
    emergency department visits. Overall cost-sharing per family cannot
    exceed 5 percent of the family's annual income.

    The table following shows a comparison of NC Health Choice cost sharing
    with the North Carolina's Teachers and State Employees Health Plan
    (SHP) benefit plan and a Silver Blue Cross Blue Shield (BCBS) plan on
    the Federally Facilitated Marketplace (FFM). Both NC Health Choice and
    the FFM BCBS plan include medical and dental coverage; the SHP includes
    only medical coverage. The SHP insures nearly 700,000 State employees.

    Income for a family of four living at 200 percent of the 2014 FPL is
    $47,700. This family income qualifies for NC Health Choice. Higher
    family income qualifies for both a health insurance premium tax credit
    and cost sharing reductions on the FFM. There are three broad
    qualifying criteria for the premium tax credit (See: http://
    www.irs.gov/uac/Newsroom/The-Premium-Tax-Credit2):

      (1) the individual must purchase health insurance coverage through
            the FFM;

      (2) household income cannot exceed 400 percent of the FPL; and

      (3)  the individual cannot be eligible for other coverage such as
            Medicare, Medicaid, or employer-sponsored coverage.

    Cost sharing reductions are limited to Silver plans in the Bronze,
    Silver, Gold, Platinum continuum on the FFM. The SHP example in the
    table represents a 70 percent coverage/30 percent coinsurance plan
    option for comparison purposes because Silver plans have 70/30
    coverage.

    Comparison of NC CHIP, Employer-Sponsored, and FFM Health Insurance Cost
                                     Sharing
    ------------------------------------------------------------------------
                                          NC Teachers and     NC Federally
                                         State  Employees     Facilitated
                           NC Health       70/30 Health    Marketplace 70/30
                             Choice       Plan with BCBS    Silver Plan with
                                               (SHP)              BCBS
    ------------------------------------------------------------------------
    Monthly Premium     (individual) $0  (individual       (individual
                        (family) $0       employee) $0      child) $139 **
                        Annual            for employee;
                         enrollment fee   paid by the
                         of $50 per       State
                         child or $100   (employee + 1 or
                         per family for   more children)
                         applicants       $205.12
                         living at 151%- (employee +
                         200% of FPL      spouse + 1 or
                                          more children)
                                          $562.94
    Annual Deductible   (individual) $0  (individual)      (individual
                        (family) $0       $933              child) $5,000
                                         (family) $2,799   (Pharmacy) $200
    Coinsurance         (individual) $0  (individual) 30%
                        (family) $0       of eligible
                                          expenses after
                                          deductible
                                         (family) 30% of
                                          eligible
                                          expenses after
                                          deductible
    Coinsurance         (individual) 5%  (individual)      (individual
     Maximum             of household     $3,793            child) $6,350 **
     (excludes           income, or      (family) $11,379  (pharmacy) $0
     deductible)         $2,385 *        (pharmacy)
                        (family) 5% of    $2,500
                         household
                         income, or
                         $2,385 *
    Preventive/         $0 for all       $35 primary care  $25 primary care
     Wellness Visit      beneficiaries   $81 specialist
     co-payment
    Other Provider      $0 for           $35 primary care  $25 primary care
     Office Visit Co-    beneficiaries    or mental        $50 specialist
     payment             living at 134%-  health
                         150% of FPL     $81 specialist
                        $5 for
                         beneficiaries
                         living at 151%-
                         200% of FPL
    Inpatient Hospital  $0 for all       $291 co-pay,      30% after
      Co-payment         beneficiaries    then 30% after    deductible
                                          deductible for
                                          hospital
                                          services
                                         30% after
                                          deductible for
                                          provider
                                          services in the
                                          hospital
    Prescription Drug    $1 generic     Range of $12-     After deductible:
     Co-payment          for all          $125 tiered co-    $10 generic
                         beneficiaries    pays depending    $50 preferred
                         $3 brand if     on tier and       $70 non-
                         generic          brand if          preferred
                         available for    generic
                         beneficiaries    available
                         living at 134%-
                         150% of FPL
                         $10 brand if
                         generic
                         available for
                         beneficiaries
                         living at 151%-
                         200% of FPL
    ------------------------------------------------------------------------
    * For a family of 4 living at 200% of the 2014 federal poverty level
      ($47,700).
    ** Before any applicable premium tax credits or cost sharing reductions.
      See: http://www.shpnc.org/library/pdf/annual-enrollment/2015/med-prime-
      comp-chart.pdf, State Health Plan 70130 plan and https://
      www.healthcare.gov/find-premium-estimates/#results/
      &aud=indv&type=med&state=NC&county=Durham&age O=10&employerCoverage=no
      &householdSize=4&income, Blue Value Silver 5000.

    In North Carolina's FFM, a BCBS's 70/30 Silver plan monthly premiums
    for a 10 year-old child is $ 139/month, with an individual maximum
    deductible of $5,000/year and an individual maximum. coinsurance of
    $6,350/year, adding up to approximately $13,000/year in annual out-of-
    pocket expenses for only one child before any premium tax credits or
    cost sharing reductions. For NC Health Choice, maximum out-of-pocket
    expense would be only 5 percent of household income or $2,385 for a
    household with one or more children.

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP funding should be extended, what coverage (if any)
            do you believe CHIP enrollees in your state would be able to
            obtain? How many children covered by CHIP do you estimate would
            become uninsured in the absences of CHIP?

    According to the NC Institute of Medicine's (NCIOM) 2013 Child Health
    Report Card, ``More than 160,000 children in NC slipped into poverty
    during the recent recession, as the percentage of poor children
    increased from 19.5 percent of the child population in 2007 to 26
    percent--more than one in every four children--in 2012.'' However, the
    NCIOM reported that in a five year period from 2007 to 2012, the
    percentage of uninsured children living under 200 percent of the FPL in
    North Carolina decreased from 20.6 percent to 11.4 percent. The report
    also states that the number of children covered by public health
    insurance (Medicaid or NC Health Choice) rose from 896,792 in 2007 to
    l,135,016 in 2012. 4. (See: NC Institute of Medicine, 2013 Child Health
    Report Card,
    http://www.nciom.org/wp-content/uploads/2013/12/2013_CHRC-
    121913hi.pdf).

    North Carolina supports extended funding of the CHIP program beyond
    federal fiscal year 2015. In North Carolina alone, based on the July
    2014 enrollment statistics, 80,000 children would become uninsured in
    the absence of CHIP. And as long as household income remains at or
    above 134 percent of the federal poverty level, those children would
    not qualify for Medicaid. They would therefore only be eligible for
    employer-sponsored or private health insurance coverage in a plan
    available on the Federally Facilitated Marketplace.

    If CHIP program funding is not extended, there will be fewer insurance
    options for children living in low-income families in North Carolina.
    Although comparable benefits may be available in the FFM, low income
    families' out-of-pocket expenses may be higher than they are for low
    income families with children enrolled in the North Carolina CHIP
    Program. The side by-side comparison in the table shows that cost
    sharing could be a prohibitively expensive factor for families even if
    their children qualify for insurance on the FFM, depending in part on
    the amount of applicable premium tax credits or cost sharing
    reductions.

    Federal legislators and administrators at the Centers for Medicare and
    Medicaid Services already know that program beneficiaries ``churn''
    back and forth within the CHIP and Medicaid programs as a result of low
    income families' sometimes transient or even seasonal work and
    fluctuating income statuses. When family income temporarily becomes too
    high for CHIP program eligibility but too low to allow a family to
    afford a private insurance policy on the FFM, the children in those
    families will be at risk for being uninsured, gaps in coverage, and
    limited to no access to preventive screenings, treatment, prescription
    medications, or behavioral health interventions for chronic conditions.
    Cost-effectiveness studies have shown that preventive care saves
    millions of dollars in long-term treatment for preventable chronic
    conditions and co-morbidities. CHIP program funding is therefore an
    investment in the health and future of North Carolina's and America's
    low income children.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

    Federal allotments received for the North Carolina CHIP program have
    been sufficient to fund operations within the framework of the existing
    State budget for the program. North Carolina recommends that any
    modifications to the formula addressing unspent allotments should
    account for the shift of previously eligible children from CHIP
    programs to State Medicaid programs as a result of the Affordable Care
    Act MAGI eligibility threshold changes.

      6.  Over the past number of years, states have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children? What other policy changes, if
            any, would help improve enrollment of eligible children, reduce
            the number of the uninsured, and improve health outcomes for
            children in your state?

    North Carolina's outreach and enrollment processes have been very
    effective. North Carolina has qualified for Children's Health Insurance
    Program Reauthorization Act (CHIPRA) Performance Bonus awards for
    enrollment and retention for the past three consecutive years. Given
    the enhanced outreach inherent to FFM implementation and successful
    State outreach and enrollment in recent years, North Carolina does not
    have any policy recommendations or requests for improvements for
    federal program enrollment regulations.

    However, North Carolina encourages increased flexibility in the design
    and implementation of our health care delivery systems and federal
    funding streams so that we may address the unique needs of North
    Carolinians.

    Thank you again for your letter. Please feel free to contact me or my
    staff if you need any additional information.

    Sincerely,

    Robin Cummings, MD
    Director

    cc:  Governor Pat McCrory, State of North Carolina
         Secretary Aldona Wos, MD, North Carolina Department of Health &
    Human Services

                                     ______

                   North Dakota Department of Human Services

       600 East Boulevard Avenue Department 325--Bismarck, ND 58505-0250

                                 www.nd.gov/dhs

                                                  Fiscal Administration

                                                         (701) 328-1980
                                                     FAX (701) 328-1030
                                               Toll Free 1-800-472-2622
                                            ND Relay TTY 1-800-366-6888
    _______________________________________________________________________
    Jack Dalrymple, Governor
    Maggie D. Anderson, Executive Director

    October 28, 2014

    Representative Fred Upton
    Chairman
    House Committee on Energy and Commerce

    Representative Henry A. Waxman
    Ranking Member
    House Committee on Energy and Commerce

    Senator Ron Wyden
    Chairman
    Senate Finance Committee

    Senator Orrin G. Hatch
    Ranking Member
    Senate Finance Committee

    Re: State of North Dakota's Insight on CHIP

    Dear Congressmen:

    Governor Dalrymple has asked me to respond to your request for
    responses to questions you posed in your July 29, 2014, letter about
    the Children's Health Insurance Program (CHIP). Following are the North
    Dakota responses to your questions.

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g. income, health status, demographics)?

          As of July 1, 2014, approximately 3,200 children are served by
            North Dakota's CHIP. The income level is set at 175% of the
            Federal Poverty Level using Modified Adjusted Gross Income
            (MAGI). Children are enrolled through age 18.

          Out of the 3,200 children enrolled, there are 430 American Indian
            children enrolled.

          For the 12 months of calendar year 2013, there were 1,507
            children that had coverage for the 12 calendar months. Of those
            1,507:

            79% (1,180) of children enrolled in Healthy Steps have been
                seen by a primary care provider.
            71% (87) age 13 (122 children age 13 had continuous coverage)
                have received meningitis and T-Dap vaccines.
           There were 139 children with Asthma.
           There were 20 children with Type 1 diabetes.

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act.? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

          As required in the Affordable Care Act, on January 1, 2014,
            eligibility determination for Medicaid and the Children's
            Health Insurance Program changed to use Modified Adjusted Gross
            Income (MAGI). This new eligibility determination process does
            not allow the use of income disregards. Children previously
            enrolled in Medicaid who are no longer eligible for Medicaid
            due to the elimination of income disregards are eligible for
            coverage through CHIP for 12 months. This 12-month CHIP
            eligibility period is intended as a way to ensure a smooth
            transition and continuity of coverage for children as the new
            income eligibility rules in the Affordable Care Act take
            effect. After the 12-month coverage period, the family will be
            able to apply again for health care coverage and if the family
            no longer qualifies for Medicaid or CHIP, they will be directed
            to apply for coverage inside or outside the Federal
            Marketplace.

          The Department began transitioning children in April 2014, and
            the transition will be ending in December 2014. In accordance
            with the ACA mandates, North Dakota no longer allows a three-
            year average for self-employed individuals for income
            determination. This appears to be having an impact on families
            who report farm income.

          Prior to the ACA, North Dakota policy included a six month
            waiting period for dropped coverage (crowd out period). In
            accordance with the requirements in the ACA, the waiting period
            has been reduced to 90 days.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            benefits and or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

          This information is not available.

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP funding should be extended what coverage (if any)
            do you believe CHIP enrollees in your state would be able to
            obtain? How many children covered by CHIP do you estimate would
            become uninsured in the absence of CHIP?

          The North Dakota CHIP has been successful and has been supported
            by policy makers and many advocacy organizations. The Executive
            Budget request for the 2015-2017 biennium assumes continued
            federal CHIP funding. The North Dakota legislative session will
            be January through April 2015, so a funding decision as soon as
            possible would be appreciated. The Department of Human
            Services' does not have information available to estimate the
            coverage options that would be available for children should
            CHIP funding cease. We could expect that some children may be
            able to join the coverage policy from a parent or access
            coverage through a child-only policy. However. we do not
            collect or maintain information that allows us to estimate the
            percent of children that would retain some type of low cost or
            free coverage or the percent of children that may become
            uninsured.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately?

          Yes, the funding formula has been sufficient for North Dakota.
            Currently we are carrying over and spending the remaining
            previous federal fiscal year allotment within the second
            quarter of the subsequent federal fiscal year.

          Do you believe there is a need for Congress to further address
            the issue of unspent allotments?

          North Dakota has not had significant, multiple-year unspent
            allotments and we do not have perspective to provide a
            recommendation on this.

      6.  Over the past number of years, States have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children?

          The alignment of federal policies could strengthen enrollment
            efforts. For example, guidelines for determining family/
            household based income being consistent across similar economic
            assistance programs such as:

            SNAP = Supplemental Nutrition Assistance Program
            TANF = Temporary Assistance for Needy Families
            CCA = Child Care Assistance Program

          What other policy changes, if any, would help improve enrollment
            of eligible children, reduce the number of the uninsured, and
            improve health outcomes for children in your state?

          North Dakota does not have additional policy change suggestions.

    Thank you for your work to look at funding for the Children's Health
    Insurance Program. Should you have any additional questions, please
    contact me or Governor Dalrymple's Health and Human Services policy
    advisor, Tami Ternes.

    Sincerely,

    Maggie D. Anderson
    Executive Director

                                     ______

                                 State of Ohio

                             Department of Medicaid

                         50 West Town Street, Suite 400

                             Columbus, Ohio, 43215

                                www.jfs.ohio.gov

               An Equal Opportunity Employer and Service Provider

                            John R. Kasich, Governor

                           John B. McCarthy, Director

    November 6, 2014

    Chairman Fred Upton
    House Committee on Energy and Commerce
    2183 Rayburn House Office Building
    Washington, D.C. 20515

    Chairman Upton,

    On behalf of Governor John Kasich, I would like to thank you for the
    opportunity to weigh in on the debate over funding for the Children's
    Health Insurance Program (CHIP). Ohio remains committed to improving
    the health and well-being of its children and looks forward to working
    with the Federal government to improve their future.

    Ohio's CHIP program is administered as an extension of the Ohio
    Medicaid program covering children who come from households with income
    under 200% of the Federal Poverty Level. Children enrolled in CHIP have
    access to all Medicaid benefits including vision, dental, behavioral
    health services, physical health, and most importantly early periodic,
    screening, diagnosis and treatment (EPSDT) services. Additionally,
    there is no cost sharing for services. With the way Ohio has chosen to
    administer CHIP, there was no need for changes due to the Patient
    Protection and Affordable Care Act (PPACA). Ohio currently covers
    151,605 children under CHIP with 51% of them being male and 49% female.
    Roughly 74% of the population is Caucasian, 23% African American, 2%
    Asian/Pacific Islander, and 1% listed other.

    To continue our successes in connecting children to coverage, Ohio and
    other states need clarity on what Congress plans to do sooner rather
    than later. A decision regarding tens of millions of dollars requires
    ample time for states to properly budget. Should the Federal government
    choose not to fund CHIP, Ohio must continue to cover the children and
    the services they receive unless there is a corresponding change in the
    Federal Maintenance of Effort (MOE) requirement under the Affordable
    Care Act. That would mean a reduction in the federal matching
    percentage for those services from 73.85% to 62.64%, which equates to
    an 11.21% cut in funding to the state. The difference would have to be
    covered by state dollars which would cause a significant budget
    deficit. The timeline for Ohio's budget process sees a budget bill
    being introduced in early February with passage occurring prior to the
    start of a new state fiscal year on July 1, 2015. This needs to be
    taken into consideration when Congress makes their decision moving
    forward. Ohio's CHIP allotment has worked well for the state and has
    sufficiently covered all of its CHIP expenditures, therefore Ohio does
    not recommend any changes in that area.

    Ohio's children remain a priority and through Medicaid, CHIP, and
    private insurance, Ohio has covered roughly 9% of its children. Ohio
    has received over $63 million since 2010 in Children's Health Insurance
    program Reauthorization Act of 2009 (CHIPRA) bonuses. CHIPRA dollars
    have gone on to fund and supplement funding for modernization of the
    Medicaid program and for innovative strategies in providing services.
    Ohio has also made a major step towards simplifying enrollment. On
    October 1, 2013. Ohio launched Ohio Benefits, a simple, self-service
    website that makes it easier for Ohioans to sign up for the health care
    coverage that may be available to them. Through July 31, 2014, this
    system has processed over 825,000 applications. The success of this
    system comes from coordination from the state and local government
    entities.

    Thank you again for the opportunity to explain Ohio's Children's Health
    insurance Program. Please let me know if you need any further
    information.

    Sincerely,

    John B. McCarthy
    Director
    Ohio Department of Medicaid

    Cc:   Ranking Member Henry A. Waxman, House Committee on Energy and
    Commerce
         Chairman Ron Wyden, Senate Finance Committee
         Ranking Member Orrin Hatch, Senate Finance Committee

                                     ______

                                  Mary Fallin

                             Office of the Governor

                               State of Oklahoma

     STATE CAPITOL BUILDING  2300 N. LINCOLN BLVD., SUITE 212  OKLAHOMA
        CITY, OKLAHOMA 73105-4801  (405) 521-2342  FAX (405) 521-3353

                                October 29, 2014

    The Honorable Ron Wyden             The Honorable Fred Upton
    Chairman                            Chairman
    Committee on Finance                Energy and Commerce Committee
    U.S. Senate                         U.S. House of Representatives
    221 Dirksen Senate Office Building  2183 Rayburn House Office Building
    Washington, DC 20510                Washington, DC 20515

    The Honorable Orrin G. Hatch        The Honorable Henry Waxman
    Ranking Member                      Ranking Member
    Committee on Finance                Energy and Commerce Committee
    U.S. Senate                         U.S. House of Representatives
    104 Hart Office Building            2204 Rayburn House Office Building
    Washington, DC 20510                Washington, DC 20515

    Dear Chairmen Wyden and Upton, and Ranking Members Hatch and Waxman:

    On behalf of the state of Oklahoma, I am pleased to submit this reply
    to the July 29 Congressional correspondence requesting our input on the
    continuation of Children's Health Insurance Program (CHIP) funding
    beyond Federal Fiscal Year (FFY) 2015.

    Since 1997, Oklahoma's CHIP children have been enrolled in SoonerCare,
    the Oklahoma Medicaid program, which is currently a combination
    program. Members qualifying for SoonerCare under the CHIP program are
    under age 19 and have incomes between the maximum for standard Medicaid
    eligibility and 185 percent of Federal Poverty Level (FPL) guidelines.
    The majority of these CHIP children are enrolled in an integrated
    health care delivery system, SoonerCare Choice, which is a patient-
    centered medical home program. Since 2010, through Insure Oklahoma (a
    public-private premium assistance program) Oklahoma has been providing
    subsidized coverage through qualified small business employers to
    children from birth through age 18 who are not eligible for Medicaid
    and in families with incomes from 186 percent through 200 percent of
    FPL, as well as pregnancy-related benefits to some Medicaid-ineligible
    pregnant women.

    Below are responses to the six questions outlined in your
    correspondence:

    1.  How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state (e.g.,
        income, health status, demographics)?

        In State Fiscal Year (SFY) 2014, Oklahoma had 155,718 unduplicated
        CHIP enrollees in its SoonerCare programs. Attached is additional
        information describing the demographic characteristics of this
        population.

    2.  What changes has your state made to its CHIP program as a result of
        the Patient Protection and Affordable Care Act (PPACA)? How has the
        implementation of PPACA impacted the way your state administers
        CHIP?

        Oklahoma's real-time online enrollment system for SoonerCare,
        operational since September 2010, required significant and costly
        modification to its rules engine and single streamlined application
        to comply with the PPACA Modified Adjusted Gross Income (MAGI)
        standard. Because of the PPACA eligibility changes for income and
        household com position, extensive training modules were developed
        for both Medicaid agency staff as well as contracted call center
        staff in order to effectively assist Oklahoma families with
        children who were not eligible through the Federally Facilitated
        Marketplace (FFM). Because Oklahoma is an assessment state, the
        final eligibility determination is completed by the state's
        Medicaid agency. Overall, it is more complex and time consuming for
        Medicaid agency staff to accurately determine income under MAGI,
        adding an increased burden to Oklahoma.

        Oklahoma also made all necessary policy revisions and system
        changes to comply with the PPACA, including moving those children
        under 133 percent FPL from Title XXI to Title XIX.

    3.  To the extent the following information is readily available and
        you believe it is relevant, please describe the services and or
        benefits and cost sharing currently provided in your state under
        CHIP that are not comparably available through your state's
        exchange or through the majority of employer sponsored health plans
        in your state.

        The majority of Oklahoma's SoonerCare CHIP children are enrolled in
        the Medicaid/CHIP combination program. As required by CMS, these
        children receive comprehensive medically necessary benefits,
        including non-emergency transportation, dental and vision care.
        These services are offered within the Medicaid cost sharing
        limitations.

        SoonerCare coverage for children, with CMS required benefits and
        wrap around services, is equal to Federally Facilitated Marketplace
        plans with a 90 percent actuarial value. Premiums for a comparable
        child-only plan for a 12-year-old in Oklahoma County, excluding
        dental and vision, currently range from $192 to $252 per month.
        There are premium variations across the state based on age, county
        of residence and scope of benefits.

    4.  Do you recommend that CHIP funding be extended? If so, for how
        long, and for budgeting and planning purposes, under what
        timeframes should Congress act upon an extension? If you do not
        believe CHIP funding should be extended, what coverage (if any) do
        you believe CHIP enrollees in your state will be able to obtain?
        How many children covered by CHIP do you estimate would become
        uninsured in the absence of CHIP?

        Yes, to allow time to resolve existing program or policy issues,
        such as the family glitch, and provide continuity of coverage to
        children, Oklahoma recommends the CHIP program be extended through
        FFY 2019. The family glitch refers to the situation in which
        employer-sponsored insurance for family coverage might prove too
        costly for low-income employees, even though affordable on an
        individual basis. This situation should be resolved during the
        extension period to ensure the health and financial security of our
        families and in a way that supports workers through enrollment in
        employer-sponsored health insurance. For state budgeting and
        planning purposes, Congress should take immediate action.

    5.  Do you believe the annual allotments your state has received
        starting in 2009 have been sufficient and the formula is working
        appropriately? Do you believe there is a need for Congress to
        further address the issue of unspent allotments?

        Since FFY 2013, Oklahoma's annual allotments have not been
        sufficient to cover our CHIP expenditures. However, the state had
        enough unspent allotments from previous years to bridge the gap
        between our annual allotments and annual expenditures. For FFY
        2014, Oklahoma's projected CHIP expenditures will exceed the annual
        allotment. Once again, Oklahoma will rely on its unspent allotment
        for sufficient funding. With the continued pressure of program
        growth forced by the PPACA, Oklahoma expects there will be a need
        for increased allotments in the future.

        Unspent allotments from each state might be more efficiently
        managed if Congress established and maintained a contingency fund
        for states that experience funding shortfalls.

    6.  Over the past number of years, states have worked to reduce the
        number of uninsured children and Medicaid and CHIP have been
        critical components in that effort. Do you believe federal policies
        could help states do an even better job in enrolling eligible
        children? What other policy changes, if any would help improve
        enrollment of eligible children, reduce the number of uninsured and
        improve health outcomes for children in your state?

        I have stated health goals for Oklahoma that include improving
        population health outcomes, reducing the number of uninsured,
        increasing access to health services and improving the quality of
        care. To that end, I believe federal policies should support state
        managed programs to achieve these objectives. Oklahoma specifically
        supports the following programs and policies:

        Provide flexibility to states for innovation and reward that
            innovation through incentive programs (for example, the CHIP
            performance bonus program);
        Support quality measurement and improvement as a way to
            specifically address health outcomes through programs such as
            the CHIPRA pediatric quality measurement and improvement;
        Reduce the burden on states for the PPACA enrollments by extending
            the use of CHIP allotments to cover previously Medicaid-
            eligible children; and
       Create program efficiencies by establishing and maintaining a
            contingency fund for states with annual CHIP expenditures
            exceeding that state's annual allotment.

    In conclusion, Oklahoma believes adoption of these recommendations
    would have a positive impact on health outcomes for our youngest
    citizens by improving access to quality preventive and primary health
    care.

    Sincerely,

    Mary Fallin
    Governor

                                                SoonerCare CHIP SFY 2014
    ----------------------------------------------------------------------------------------------------------------
                                                                                           CHIP
                                                                       Medicaid/CHIP   Standalone *     CHIP Total
    ----------------------------------------------------------------------------------------------------------------
    American Indian.................................................          19,009             191          19,200
    Asian or Pacific Islander.......................................           3,285             661           3,946
    Black or African American.......................................          12,950             274          13,224
    Caucasian.......................................................          93,768           6,847         100,615
    Declined to Answer..............................................           4,758             212           4,970
    Multiple Race...................................................          13,667              96          13,763
                                                                     -----------------------------------------------
    Total...........................................................         147,437           8,281         155,718
        Hispanic Ethnicity..........................................          30,673           5,642          36,315
    ----------------------------------------------------------------------------------------------------------------
    Race is self-reported by members at the time of enrollment. The multiple race members have selected two or more
      races. Hispanic is an ethnicity not a race. Hispanics can be of any race and are accounted for in a race
      category above.

    ----------------------------------------------------------------------------------------------------------------
                                                                                           CHIP
                                                                       Medicaid/CHIP   Standalone *     CHIP Total
    ----------------------------------------------------------------------------------------------------------------
    Female..........................................................          72,799           7,930          80,729
    Male............................................................          74,638             351          74,989
                                                                     -----------------------------------------------
    Total...........................................................         147,437           8,281         155,718
    ----------------------------------------------------------------------------------------------------------------

    ----------------------------------------------------------------------------------------------------------------
                                                                                           CHIP
                                                                       Medicaid/CHIP   Standalone *     CHIP Total
    ----------------------------------------------------------------------------------------------------------------
    Infant (0)......................................................           3,563               5           3,568
    1-5.............................................................          29,996             149          30,145
    6-12............................................................          64,699             282          64,981
    13-18...........................................................          49,179             511          49,690
    19 & Over **....................................................               0           7,334           7,334
                                                                     -----------------------------------------------
    Total...........................................................         147,437           8,281         155,718
    ----------------------------------------------------------------------------------------------------------------
    Age as of end of SFY (6/30/2014).
    ** Only Soon-To-Be-Sooners members can be 19 & Over.

    ----------------------------------------------------------------------------------------------------------------
                                                                                           CHIP
                                                                       Medicaid/CHIP   Standalone *     CHIP Total
    ----------------------------------------------------------------------------------------------------------------
    100%-132%.......................................................          66,424           5,995          72,419
    133%-149%.......................................................          23,915             548          24,463
    150%-185%.......................................................          57,098           1,738          58,836
                                                                     -----------------------------------------------
    Total...........................................................         147,437           8,281         155,718
    ----------------------------------------------------------------------------------------------------------------

    ----------------------------------------------------------------------------------------------------------------
                                                                                           CHIP
                                                                       Medicaid/CHIP   Standalone *     CHIP Total
    ----------------------------------------------------------------------------------------------------------------
    Monthly Average Enrollment......................................          76,870           3,201          80,071
    ----------------------------------------------------------------------------------------------------------------
    * CHIP Standalone includes Soon-To-Be-Sooners (STBS) and Insure Oklahoma children. STBS provides limited
      coverage for pregnant women related to pregnancy-related health care services for the benefit of the baby.
    Data valid as of 7/14/2014 and subject to change.

                                     ______

                                State of Oregon

                             John A. Kitzhaber, MD

                                    Governor

      254 STATE CAPITOL, SALEM OR 97301-4047 (503) 378-3111 FAX (503) 378-
                                      8970

                                 www.oregon.gov

    October 29, 2014

    The Honorable Ron Wyden             The Honorable Fred Upton
    Chairman                             Chairman
    Committee on Finance                Committee on Energy and Commerce
    U.S. Senate                         U.S. House of Representatives
    Washington, DC 20510                 Washington, DC 20515

    The Honorable Orrin Hatch           The Honorable Henry Waxman
     Ranking Member                     Ranking Member
    Committee on Finance                Committee on Energy and Commerce
    U.S. Senate                         U.S. House of Representatives
    Washington, DC 20510                Washington, DC 20515

    Dear Chairmen Wyden and Upton, Senator Hatch, and Representative
    Waxman.

    This letter is in response to correspondence to the state of Oregon
    from House Representative Fred Upton and Henry A. Waxman, and Senators
    Ron Wyden and Orrin G. Hatch regarding questions members of the
    bipartisan bicameral committees asked about the Children's Health
    Insurance Program (CHIP) and considering whether and how the program
    should be extended, and what, if any, additional policy changes should
    be made.

    We strongly encourage you to pass a long-term extension of the CHIP
    program as soon as possible. It has been and continues to be invaluable
    in ensuring access to affordable health insurance coverage for
    thousands of families in our state. Without an extension of the program
    and the funding, many children would be at risk of not being covered
    since premium, co-pays and deductibles may be unaffordable for
    families. Also the benefits covered under our CHIP program ensure that
    children have affordable access to a broader range of services
    including dental care, physical and speech therapy and vision services.

    Oregon's responses to these questions are included here:

    1.  How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state (e.g.
        income, health status, demographics)?

        There are 76,000 children enrolled in CHIP in Oregon as of June 15,
        2014, about evenly split between males and females. We also cover
        over two thousand pregnant women who are Medicaid eligible except
        for their immigration status. Of children covered under the Oregon
        Health Plan (our Medicaid and CHIP program), CHIP children make up
        about 20%. The following tables show the income and demographics:

    ------------------------------------------------------------------------
                                                            # enrolled as of
                                                              June 15, 2014
    ------------------------------------------------------------------------
    < l-18 years old, 100-200%............................            58,772
    < 1-18 years old, 201-300%............................            17,726
    Pregnant women........................................             2.122
                                                           -----------------
    Total.................................................            78,620
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
                                                                % of CHIP
                                                               population
    ------------------------------------------------------------------------
    American Indian/Alaska Native.........................              1.2%
    Asian.................................................              3.4%
    Black or African American.............................              1.8%
    Native Hawaiian/Other Pacific Islander................              0.4%
    White.................................................               57%
    More than one race....................................              0.5%
    Unspecified Race/Unknown..............................               35%
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
                                                             % of population
    ------------------------------------------------------------------------
    Hispanic or Latino....................................               16%
    ------------------------------------------------------------------------

    2.  What changes has your state made to its CHIP program as a result of
        the Patient Protection and Affordable Care Act? How has the
        implementation of PPACA impacted the way your state administers
        CHIP?

        Oregon administers CHIP as a separate Medicaid ``look alike''
        program. A couple changes made to the CHIP program since 2012 that
        were indirectly related to the ACA include:

         Transitioning the CHIP premium assistance commercial insurance
            option for children from 200-300% to direct coverage under for
            the Oregon Health Plan (the same as the CHIP program for
            children under 200% FPL), and increasing the income limits for
            children on OHP up to 300% FPL

         Per the ACA, some of the CHIP children (6-18 100%FPL-133% FPL
            were moved to Medicaid coverage (the ``stair-step'' children).

    3.  To the extent the following information is readily available and
        you believe it is relevant, please describe the services and or
        benefits and or the cost sharing currently provided in your state
        that are not comparably available through your state's exchange or
        through the majority of employer sponsored health plans in your
        state.

        Services not provided by Qualified Health Plans (QHPs) available at
        the Marketplace/Exchange and typically not available by employer
        sponsored insurance include:

         Pediatric Dental--QHPs are not required to provide, so generally
            enrollees must purchase a stand-alone dental plan with
            additional cost shares and premiums.

         Vision Senvices--Also available from QHPs, but with high
            deductibles, other cost shares, and limited benefits from QHPs.
            These services are not limited by our CHIP program.

         Hearing exams, hearing aids.

         Physical and speech therapy--QHPs have tighter limits on benefits
            than our CHIP program.

         Non-Emergent Medical Transportation--This benefit is not
            available through QHPs or employer sponsored coverage and
            transportation is frequently a barrier to access for children
            in lower income households.

         Enabling services--Sign language and translation/interpretation
            for individuals with limited English proficiency.

        In addition, the QHPs have cost sharing requirements for both
        premiums and co-pays/deductibles that our CHIP program does not.
        Even when the family does qualify for tax credits, the
        affordability of the premium may be challenging since the
        affordability criteria only looks at an employee's employer
        coverage not what it costs to cover the family/dependent (the so-
        called ``kid glitch'').

    4.  Do you recommend that CHIP funding be extended? If so, for how long
        and for budgeting and planning purpose, under what timeframe should
        Congress act upon an extension? If you do not believe CHIP funding
        should be extended, what coverage (if any) do you believe CHIP
        enrollees in your state would be able to obtain? How many children
        covered by CHIP do you estimate would become uninsured in the
        absence or CHIP?

        Oregon recommends extending CHIP funding at least through 2019.
        During an extended funding period, many of the key issues regarding
        the affordability and adequacy of children's coverage could be
        addressed, and states and the federal government would have time
        and opportunity to determine what strategies will work best for the
        future.

        With CHIP funding currently scheduled to run out shortly after FY
        2015, children now served by CHIP Likely would be left to find
        coverage elsewhere--the Marketplace or employers if available. It
        is unlikely that low-income families would be able to afford the
        coverage on the exchanges given the ``kid glitch.'' Also, low
        income families may not be able to afford to purchase some of the
        additional benefits that Oregon's current children can access such
        as dental care, physical and speech therapies, or to be able to get
        to the care needed if they were to have transportation barriers. In
        addition, given our experience, we agree with the Medicaid and CHIP
        Payment and Access Commission (MACPAC) that transitions to the
        Marketplace likely not would be smooth and that many children would
        likely fall in with MACPAC data that as many as half of our CHIP
        kids may lose coverage, which would erase much of our coverage
        gains for children that we've made over the past five years.

    5.  In spite of the restructuring and retargeting of allotments that
        occurred in 2009, some CHIP funding remains unspent. Do you believe
        the annual allotments your state has received starting in 2009 have
        been sufficient and the formula is working appropriately? Do you
        believe there is a need for Congress to further address the issue
        of unspent allotments?

        Given that CHIP is capped and is allotted states annually based on
        a methodology that relies on each state's recent CHIP spending and
        that states have two years to spend each allotment, Oregon has not
        experienced any challenges in running low on allotment funds nor in
        having excessive leftover funds at the end of a fiscal year.
        Congress should consider keeping in place and extending the safety
        net provisions of CHIPRA, however, in order to protect states and
        optimize the use of funds. Under these provisions, if a state
        should run out of allotment, there are options of applying for
        funds from (1) the CHIPRA contingency fund established by the 2009
        legislation or (2) FY 2012 redistribution funds from states that
        did not exhaust their FY 2012 allotment after two years of
        availability.

    6.  Over the past number of years, States have worked to reduce the
        number of uninsured children, and Medicaid and CHIP have been a
        critical component of that effort. Do you believe there are federal
        policies that could help States do an even better job in enrolling
        eligible children? What other policy changes, if any, would help
        improve enrollment of eligible children, reduce the number of the
        uninsured, and improve health outcomes for children in your state?

        Oregon has seen dramatic decline in the number of uninsured
        children by more than six (6) percentage points since implementing
        the State's HealthyKids programs in 2009 and has a rate of
        uninsured children 1.5 percent lower than the national average.
        This success was due in large part to (1) the expansion in the
        income eligibility criteria to 300 percent of FPL for families of
        children (2) implementation of 12 month continuous eligibility for
        children, (3) the use of the option for Expedited enrollment using
        SNAP and (4) the use of premium subsidies for children in families
        who chose to have their children covered in the family's individual
        or group insurance coverage or through the HealthyKids Connect
        program's private coverage.

        The state's implementation of the Coordinated Care model, and
        Patient Centered Primary Care Homes as part of the Health Systems
        Transformation effort to better integrate and coordinate care and
        provide a full scope of coverage has already shown measurable
        improvement in health outcomes and key indicators of population
        health. Oregon, therefore, would encourage Congress to continue to
        allow states these and other available flexibilities to enhance
        both numbers of insured and health outcomes for children and their
        families.

    Sincerely,

    John A. Kitzhaber, MD
    Governor

                                     ______

                          Commonwealth of Pennsylvania

                             Office of the Governor

                                   Harrisburg

                                October 31, 2014

    Honorable Fred Upton                Honorable Ron Wyden
    Chairman                            Chairman
    Energy & Commerce Committee         Committee on Finance
    2183 Rayburn House Office Bldg.     221 Dirksen Senate Office Bldg.
    Washington. D.C. 20515              Washington. D.C. 20510

    Honorable Henry Waxman              Honorable Orrin Hatch
    Ranking Member                      Ranking Member
    Energy & Commerce Committee         Committee on Finance
    2204 Rayburn House Office Bldg.     104 Hart Office Bldg.
    Washington, D.C. 20515              Washington, D.C. 20510

    Dear Chairmen Upton and Wyden, and Ranking Members Hatch and Waxman:

        Thank you for contacting Pennsylvania regarding the future of the
    Children's Health Insurance Program (CHIP) and how it should be
    extended. As the leader of a state with more than 157,200 children
    enrolled in CHIP, there is no question that funding for CHIP should be
    extended on a federal level. We must allow CHIP to continue to
    successfully provide quality, affordable health care coverage to
    children. Moreover, addressing this issue promptly is critical for
    providing certainty to CHIP families and making sure that children can
    stay with their health care providers.

        CHIP works for kids. Pennsylvania's CHIP program (PA-CHIP) has
    provided vital health care coverage to hundreds of thousands of
    children in Pennsylvania for over 20 years and is an example of how
    states can develop innovative solutions to meet the needs of their
    residents. PA-CHIP was enacted in 1992, and five years later, when the
    federal CHIP was created, PA-CHIP was acknowledged as a national model
    for the federal health care coverage program for children. PA-CHIP
    continues to be one of the benchmark benefit packages recognized in the
    federal CHIP law.

        Pennsylvania has worked tirelessly to continue providing PA-CHIP
    coverage as an option for children and their families. However, as you
    know, the passage of the Affordable Care Act (ACA) serves as a
    challenge for PA-CHIP because it forces an efficiently functioning
    program to conform to rigid federal standards. In addition to the ACA's
    overwhelming strain on the program's resources, the ACA has proved
    damaging to PA-CHIP's enrollment figures by requiring children in the
    100%-133% Federal Poverty Level (FPL) range to be enrolled in Medicaid,
    rather than in CHIP.

        Last year, Pennsylvania vehemently opposed a federal interpretation
    requiring an unnecessary transfer of children from PA-CHIP into
    Medicaid. I spoke personally with then Secretary Kathleen Sebelius and
    said no child in Pennsylvania should be forced to change health care
    coverage and potentially lose access to his or her health care provider
    needlessly. Unfortunately, this is the scenario we now face because of
    the ACA. While the Obama Administration ultimately refused to grant
    Pennsylvania a permanent waiver from this ACA requirement in order to
    protect the child/health care provider relationship, we did
    successfully secure additional time to prepare for the transition and
    keep children with their providers for as long as possible.

        When extending federal funding for CHIP, I also would suggest that
    the federal government use this extension as an opportunity to improve
    upon the federal program for the betterment of Pennsylvania's children
    and children nationwide. For example, Federal authorities should
    consider structuring flexibilities into the program for states, such as
    allowing states with separate CHIP programs the option to enroll
    children above 100% FPL in CHIP or Medicaid. Additionally, federal
    authorities should consider ``at-cost'' CHIP to be Minimum Essential
    Coverage (MEC), therefore avoiding unnecessary tax consequences for
    families.

        With the health care needs of Pennsylvanian's children at stake,
    the extension of federal funding is critical to retain PA-CHIP as an
    option for families seeking health care coverage for their children.
    Thank you for the opportunity to share the importance of the extension
    of federal funding for CHIP and what it will mean for Pennsylvania's
    children and their families. With regard to your specific questions,
    please find the responses attached.

        I urge you to extend CHIP's federal funding, and I look forward to
    working with you to improve this successful program.

    Sincerely,

    TOM CORBETT
    Governor

    Enclosure
    Attachment A
      1.  How many individuals are served by you r state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g. income, health status, demographics)?
    Pennsylvania CHIP population characteristics. (September 2014)

                                                                          Income Range
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                          Income Range                          $0    < $10,000  < $20,000  < $30,000  < $40,000  < $50,000  < $60,000  > $60,000    Total
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Enrollees..............................................    1,596      1,443      5,360     28,613     41,773     35,759     20,709     22,642    157,895
    --------------------------------------------------------------------------------------------------------------------------------------------------------

                                                        Ethnicity
    ----------------------------------------------------------------------------------------------------------------
                        Ethnicity                       Unspecified      Hispanic      Non-Hispanic        Total
    ----------------------------------------------------------------------------------------------------------------
    Enrollees.......................................          21,200          15,523         121,172         157,895
    ----------------------------------------------------------------------------------------------------------------

                                                                              Race
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             More
                                                                       African                      Hawaiian/  Alaskan/    Asian    Other    Than
                            Race                         Unspecified  American  Caucasian   Asian   Islander    Indian   (Indian)    Race     One     Total
                                                                                                                                             Race
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Enrollees..........................................       11,338    21,737    102,744   5,337          81       138       854   13,927   1,739   157,895
    --------------------------------------------------------------------------------------------------------------------------------------------------------

                                     Gender
    ------------------------------------------------------------------------
                       Gender                     Female    Male     Total
    ------------------------------------------------------------------------
    Enrollees..................................   78,493   79,402    157,895
    ------------------------------------------------------------------------

                                                                          Cost Category
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Free  (133%-     Low Cost 1      Low Cost 2      Low Cost 3
                          Cost Category                          208% FPL)      (208%-262%      (262%-288%      (288%-314%     At-Cost (314%       Total
                                                                                   FPL)            FPL)            FPL)       FPL and above)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Enrollees...............................................         120,637          23,395           5,895           4,512           3,456         157,895
    --------------------------------------------------------------------------------------------------------------------------------------------------------

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

    As a result of the Affordable Care Act (ACA), Pennsylvania's CHIP (PA-
    CHIP) has faced tremendous operational and administrative challenges in
    order to comply with the requirements and expectations of the ACA,
    including but not limited to:

       Transitioned to the use of Modified Adjusted Gross Income (MAGI) to
            determine applicants' eligibility for PA-CHIP. The change to
            MAGI resulted in a complete reconfiguration of the methods by
            which PA-CHIP calculates applicants' income and determines
            applicants' household composition.

       Moved eligibility determinations out of the PA-CHIP Application
            Processing System and into a combined rules engine with the
            Medicaid program. PA-CHIP and the Medicaid program continue to
            work through discrepancies regarding eligibility, as the
            programs take different approaches to certain eligibility
            characteristics.

       Prepared for a transition of PA-CHIP enrollees ages 6-18 within
            100%-133% FPL to the Medicaid program, consequently forcing
            enrollees to undergo an unnecessary transition of coverage and
            potential disruption in continuity of care.

       Implemented the ``Single Streamlined Application'' and renewal
            form. By changing the initial and renewal applications to
            remove requests for verifications prior to electronic
            verification sources being accessible, incomplete application
            and renewal forms accumulated to create a significant backlog.
            Each processing entity experienced significantly increased
            administrative workloads, and families experienced delays in
            processing and requests to produce paper verifications.

       Initiated coordination with the Federally Facilitated Marketplace
            (FFM) to transfer account information to and from the FFM. PA-
            CHIP faced significant challenges as the Federal Data Services
            Hub underwent inadequate testing and was not prepared to
            facilitate the transfer of the account information.

       Transitioned to Income Tax Rules, causing considerable confusion
            for a means tested program. Confusion as to the applicability
            of the rules to certain households' composition continues, as
            federal regulators are still interpreting certain rules as to
            when or how income should be counted.

    Currently, Pennsylvania administers a Title XXI CHIP through nine
    private insurance companies serving as contractors. (Title XXI of the
    Social Security Act allows states to operate a stand alone CHIP
    program, separate and apart from a Title XIX Medicaid program.) The
    contractors provide healthcare benefits to the children, and are
    responsible for certain portions of the eligibility and enrollment
    process. Pennsylvania is the only state with this type of arrangement.
    In response to the ACA, along with the passage of the CHIP
    Reauthorization Act of 2009, PA CHIP is performing a holistic
    assessment of the administration of the program to identify areas of
    possible administrative improvement. The review has thus far
    demonstrated the benefit of a Title XXI CHIP, and the corresponding use
    of contractors, as this administrative framework allows CHIP to operate
    very efficiently.

    The ACA also impacted PA-CHIP's ``Buy-In'' program, which allows
    families with incomes greater than 300% FPL \1\ to purchase the PA-CHIP
    benefit package at no cost to the state or federal government. Even
    though the Buy-In program maintains the same eligibility requirements
    and benefit package as the subsidized PA-CHIP, federal authorities have
    not yet concluded the Buy-In program constitutes Minimum Essential
    Coverage (MEC) for enrollees. Without this conclusion, enrollees in the
    Buy-In program may face penalties pursuant to the ACA's individual
    mandate if other coverage is not secured.
    ---------------------------------------------------------------------------
        \1\ Factoring in the ACA MAGI rules, 300% FPL is effectively 314%
    FPL.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            benefits and or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
    ---------------------------------------------------------------------------
            health plans in your state.

    As a preliminary note, in a study performed by Deloitte Consulting, LLP
    (Deloitte) for Pennsylvania in August 2012, Deloitte analyzed the ten
    benchmark options for the exchange and concluded, among other things,
    that there was little variation in the benchmark options. Thus, for
    purposes of this response, the PA benchmark benefits and the majority
    of employer sponsored health plans in the state are assumed to be
    parallel, and our comments will focus on comparing PA-CHIP benefits and
    the PA benchmark benefits.
    Cost-Sharing
    PA-CHIP has graduated levels of premiums and cost-sharing based on
    income level.\2\ Under PA law, Free PA-CHIP covers children in families
    with an adjusted gross household income no greater than 200% of the
    FPL. There are no premiums and no co-payments collected for enrollees
    in this group. Low-cost PA-CHIP covers children in families with an
    adjusted gross household income greater than 200% but no greater than
    300% of the FPL; these enrollees pay modest premiums.
    ---------------------------------------------------------------------------
        \2\ As noted above, PA-CHIP also has a full-cost component for
    those above 300% FPL, which is not subsidized by either federal or
    state dollars. In keeping with the focus of the Congressional inquiry,
    this cost-sharing discussion addresses only the subsidized components.

    Children in Low-cost PA-CHIP also are charged point-of-service co-
    payments for primary care visits ($5), specialists ($10), emergency
    room care ($25, waived if admitted), and prescriptions ($6 for generic
    and $9 for brand names). There are no co-payments for well-baby visits,
    well child visits, immunizations, or emergency room care that results
    in an admission. Co-payments apply to physical health services but are
    no applicable to routine preventive and diagnostic dental services or
    vision services. Cost sharing for PA-CHIP, the combination of premiums
    and point of service co-payments, is capped by federal CHIP regulation
    (42 C.F.R. 457.560) at 5% of household income.\3\
    ---------------------------------------------------------------------------
        \3\ 42 C.F.R. Sec. 457.560(a): ``A State may not impose premiums,
    enrollment fees, copayments, coinsurance, deductibles, or similar cost-
    sharing charges that, in the aggregate, exceed 5 percent of a family's
    total income for the length of a child's eligibility period in the
    State.''

    In summary, PA-CHIP enrollees pay modest premiums, depending on income
    ---------------------------------------------------------------------------
    level, and have limited cost-sharing:

    ----------------------------------------------------------------------------------------------------------------
                                                                     Approximate Average
                                          Premium as a % of the   Premium Cost to Enrollee  Total Premium Plus  Cost-
    Income Federal Poverty Level (FPL)    Per Member Per Month         Per Month as of      Sharing Per Year as % of
                                               (PMPM) Cost            September 5, 2014         Household Income
    ----------------------------------------------------------------------------------------------------------------
    < 201% FPL........................                       0%                        $0                        0%
    201% FPL-250% FPL.................                      25%                    $50.25                        5%
    251% FPL-275% FPL.................                      35%                    $70.35                        5%
    276% FPL-300% FPL.................                      40%                    $80.40                        5%
    ----------------------------------------------------------------------------------------------------------------

    By comparison, premiums for the second lowest cost silver QHP in
    Pennsylvania for 2014 plans ranged from $84.46 to $149.13.\4\ Moreover,
    with the addition of cost-sharing, premiums plus cost-sharing under the
    ACA may be substantially more than 5% of household income, even with
    premium tax credits and cost-sharing reductions.\5\ Focusing on the
    cost-sharing differential only, a study by Wakely Consulting Group in
    July 2014 \6\ concluded that the cost sharing (deductible, copays, and/
    or coinsurance) for a child on a silver plan, with cost sharing
    reduction subsidies, would be considerably more than the cost sharing
    for PA-CHIP coverage:
    ---------------------------------------------------------------------------
        \4\ http://aspe.hhs.gov/health/reports/2013/MarketplacePremiums/
    datasheet_home.cfm.
        \5\ See, e.g., www.communitycatalyst.org/doc-store/.../
    affordability_in_aca.pdf;
        http://www.kaiserhealthnews.org/features/insuring-your-health/2013/
    070913-michelle-andre
    ws-on-cost-sharing-subsidies.aspx.
        \6\ ``Comparison of Benefits and Cost Sharing in Children's Health
    Insurance Programs to Qualified Health Plans,'' Wakely Consulting
    Group, July 2014 (``Wakely Study'') available at http://www.wakely.com/
    wp-content/uploads/2014/07/FINAL-CHIP-vs-QHP-Cost-Sharing-and-
    Benefits-Comparison-First-Focus-July-2014-.pdf.

    ----------------------------------------------------------------------------------------------------------------
                                                              160% FPL                          210% FPL
                Income Level Coverage            -------------------------------------------------------------------
                                                      PA-CHIP            QHP            PA-CHIP            QHP
    ----------------------------------------------------------------------------------------------------------------
    Actuarial Value.............................          100.0%          86%-88%            97.2%          72%-74%
    Enrollee Average Percent of Allowed Claims..            0.0%          12%-14%             2.8%          26%-28%
    Average Annual Cost Sharing.................              $0        $411-$480              $98        $891-$960
    Maximum Out of Pocket.......................              $0      $500-$2,250           $1,419    $3,000-$5,200
    ----------------------------------------------------------------------------------------------------------------

    This cost-sharing structure of PA-CHIP compares very favorably to QHP
    coverage available through the exchange. In many instances, cost-
    sharing for PA-CHIP enrollees will be equal to or less than a family
    would experience with enrollment in a QHP.
    Benefits
    PA-CHIP provides identical, comprehensive benefits to individuals
    enrolled in all levels of the program. Basic services include:

       Preventive care, including physician, nurse practitioner and
            physician assistant services;

       Specialist care, including physician, nurse practitioner and
            physician assistant services;

       Autism services, not to exceed $36,000 annual benefit cap
            (specified by Act 62 of 2008);

       Diagnosis and treatment of illness or injury;

       Laboratory/pathology testing;

       X-rays;

       Injections and medications;

       Emergency care, including emergency transportation;

       Prescription drugs;

       Emergency, preventive and routine dental care, and medically
            necessary orthodontia; \7\
    ---------------------------------------------------------------------------
        \7\ As a result of the CHIP Reauthorization Act of 2009 (CHIPRA),
    medically necessary orthodontia was added to the dental benefits
    package. The orthodontia benefit is capped at a lifetime maximum of
    $5,200. The yearly dental benefit limit is $1,500.

    ---------------------------------------------------------------------------
       Emergency, preventive and routine vision care;

       Emergency, preventive and routine hearing care; and

       Inpatient hospital care (90 days including mental health).

    Additional medically necessary and therapeutic services include mental
    health services, inpatient and outpatient treatment of substance abuse,
    rehabilitative therapies, medical therapies, home health care, hospice
    care durable medical equipment, and maternity care.

    Significantly, the Wakely Study distinguished child-specific benefits--
    those that are other than the core benefits typically included in a
    major medical insurance policy--and found that PA-CHIP covers 79% of
    those services, while QHPs cover only 50%. Child-specific benefits
    focus on dental, including orthodontics; vision; audiology;
    habilitation; and therapy coverages.\8\
    ---------------------------------------------------------------------------
        \8\ See Wakely Study at Table 16, pages 26-27.

    PA-CHIP, like QHP coverage, includes some limitations on benefits.
    However, it is difficult to compare those limitations with the QHP
    coverage of those benefits for two reasons. First, QHPs may also impose
    limits, but data is not readily available to identify the frequency or
    level of those limitations, and the limits may vary by product and
    plan. Second, if a child is approaching those limits on PA-CHIP it is
    likely that the child will be eligible for Medicaid coverage through a
    special PA Medical Assistance program for children with special health
    care needs or chronic conditions (for which income is not considered
    ---------------------------------------------------------------------------
    when determining eligibility).

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP funding should be extended, what coverage (if any)
            do you believe CHIP enrollees in your state would be able to
            obtain? How many children covered by CHIP do you estimate would
            become uninsured in the absence of CHIP?

    Federal funding for CHIP should absolutely be extended promptly. PA-
    CHIP has provided health care coverage to hundreds of thousands of
    children in Pennsylvania for over 20 years and is an example of how
    states can develop innovative solutions to meet the needs of their
    residents. Pennsylvania has worked tirelessly to continue providing PA-
    CHIP coverage as an option for children and their families. With the
    health care needs of Pennsylvanian's children at stake, it is critical
    that federal funding be extended to allow PA-CHIP as an option for
    families seeking coverage for their children.

    Pennsylvania strongly recommends that federal funding be extended to
    align with Congress's authorization of the program, i.e. through fiscal
    year 2019. As current federal funding of CHIP is set to expire on
    October 1, 2015, Congress should begin the reauthorization process
    immediately. States, as partners in the CHIP program, need the timely
    assurance of funding as they prepare their budgets. But perhaps more
    critically, Congress should urgently address the continued
    appropriation of federal funding for CHIP to provide certainty for
    families who rely on CHIP coverage for their children.

    In the absence of CHIP, families would have fewer options for accessing
    health care and more than 157,200 Pennsylvania children would need to
    find replacement coverage, which could take time, be more expensive,
    and potentially jeopardize the children's access to health care
    services. This would be devastating to Pennsylvania families.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

    The states' allotments are based on complex methodologies specified in
    Section 2104(m) of the Social Security Act. Each state's federal fiscal
    year (FFY) allotment is adjusted based on several factors, including
    per capita health care growth and the child population growth.

    For FFY13, ACA mandated a ``rebasing'' process to determine the
    allotment. This methodology bases the allotment on the states' payments
    (i.e., based on enrollment) rather than the allotments for FFY12. For
    FFY14, the methodology reverted to using the prior year allotments as a
    base. For FFY15, there will be two allotments: one for each six months
    of the FFY.

    Pennsylvania has been fortunate since the passage of CHIPRA to have
    adequate federal funds to meet the increased demand for the CHIP
    services. We saw our CHIP enrollment increase from 183,000 to nearly
    198,000 between early 2009 and mid-2010 before enrollment again leveled
    off and began a slow decline through 2012. The decline has continued
    due to the ACA requirement that children in the 100%-133% FPL range be
    enrolled in Medicaid, rather than CHIP.

    The federal matching rate is set to increase by 23 percentage points
    beginning in FFY15. This will lead to a quicker exhaustion of federal
    CHIP dollars. Simultaneously, as Pennsylvania has experienced leaner
    enrollment figures--partially attributable to the unnecessary transfer
    of children to Medicaid--the formula works against Pennsylvania since
    the program's lower enrollment numbers will be used for calculating
    future allotments (rebasing). Thus, just as the matching rate is set to
    increase by 23 percentage points--resulting in a quicker exhaustion of
    federal CHIP funds--Pennsylvania will receive a smaller allotment of
    federal funds to support its CHIP program. Many states will be in a
    similar predicament.

    In sum, it may be wise to take unspent funding from past years and make
    it available to states, such as Pennsylvania, that have decreased CHIP
    enrollment due to Medicaid expansion, so that their programs will not
    be doubly jeopardized when the significantly increased federal match
    funds are distributed in accord with the rebased allotments.

      6.  Over the past number of years, States have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children? What other policy changes, if
            any, would help improve enrollment of eligible children, reduce
            the number of the uninsured, and improve health outcomes for
            children in your state?

    When contemplating federal policies to reduce the number of uninsured
    children, Pennsylvania suggests a shift of focus away from only looking
    at the number of enrollees and move towards structuring programs that
    empower families to get engaged in improving their health and becoming
    more well-informed consumers of their health care. Focusing solely on
    the fluctuations in enrollment numbers distracts advocates,
    legislators, auditors, and others away from the overall goal of
    improving the health of children by ensuring there are a range of
    coverage options to allow a child to be covered, regardless of changing
    life circumstances. Under Governor Corbett's leadership, the health
    care coverage rate for children in Pennsylvania is close to 95%. While
    this is extremely high, Governor Corbett believes we can still do more
    and has pushed to continuously work toward getting all kids covered
    while also seeking to strategically improve Pennsylvania's overall
    health insurance system. Any policy changes contemplated by the federal
    government should align with Governor Corbett's Healthy Pennsylvania
    priorities: providing affordability, improving access, and ensuring
    quality.

    Access to health care coverage must be affordable for consumers. To
    accomplish this, more incentives should be built into government
    programs to allow states to help individuals transition from fully
    subsidized coverage to self-sufficiency, such as additional premium
    assistance for employer-sponsored insurance. Policymakers should shift
    away from eliminating premiums, and rather toward giving states the
    flexibility to develop premium structures that are affordable for
    consumers and begin to build into these programs various levels of
    health care consumer engagement and a stronger focus on healthy
    behaviors. CHIP premiums are designed on a sliding scale based upon a
    family's ability to pay. As income increases, the cost-sharing rises
    closer to what is experienced in commercial health insurance coverage.
    The flexibility to stagger cost-sharing would allow the program time to
    engage consumers and begin educating enrollees on the benefits of
    having a personal stake in improving their health. Establishing greater
    flexibility could lead to the development of healthy behavior incentive
    programs that reward good health care choices and improved health,
    therefore, allowing CHIP enrollees to receive some of the newest
    innovations in health care coverage that are found in the commercial
    health insurance market.

    Access to health care coverage must also be available for consumers.
    Policymakers should focus on how to attract and retain highly qualified
    medical professionals as providers to facilitate better access to the
    health care system. As enrollment numbers increase, so potentially do
    the wait times to see a practitioner. When individuals desire to be in
    the medical profession, we should provide incentives to fill the gaps
    as far as medical specialties--including general practitioners--and
    geographic locations. As part of Healthy Pennsylvania, Governor Corbett
    continues to support loan forgiveness programs to incentivize primary
    health care providers to practice in rural and underserved areas of the
    Commonwealth.

    Policymakers should seize the opportunity presented by the federal
    extension of CHIP to improve upon the program's strengths, and to allow
    CHIP to serve as an integral bridge to independence for CHIP children
    and their families.

                                     ______

                State of Rhode Island and Providence Plantations

                             State House, Room 224

                         Providence, Rhode Island 02903

                                  401-222-2080

    Lincoln D. Chafee
    Governor

    October 28, 2014

    Fred Upton, Chairman                Ron Wyden, Chairman
    House Committee on Energy and
    Commerce                            Senate Finance Committee

    Henry A. Waxman, Ranking Member     Orrin G. Hatch, Ranking Member
    House Committee on Energy and
    Commerce                            Senate Finance Committee

    Dear Chairmen and Ranking Members:

    I appreciate the opportunity to express my strongest support for the
    continuation of the Children's Health Insurance Program (CHIP). The
    CHIP has been instrumental in reducing the number of uninsured children
    and pregnant women in Rhode Island and assuring they have access to the
    high quality prenatal and pediatric services they need to start and
    stay healthy. Moreover, the CHIP has provided Rhode Island with the
    crucial resources necessary to sustain RIte Care, the state's
    nationally recognized, successful Medicaid managed care program for
    families with children.

    The significant contributions the CHIP has made to children's health
    are not unique to the State of Rhode Island. The CHIP has played a
    similar role in ensuring access to care and better health outcomes for
    children in states all across the nation. Given the gains the CHIP has
    made, it is critical that Congress act to re-authorize the program for
    an additional four more years along with the already scheduled 23
    percent increase in the CHIP federal match rate. Without decisive
    action to extend the CHIP by the end of this year, millions of children
    will lose access to cost effective, high-value health coverage and we,
    as a nation, will be dealing with the consequences for generations to
    come. For states like Rhode Island which have emerged as leaders in
    children's health, the extension of the CHIP is critical not only for
    preserving the gains we have already made, but also for ensuring we
    have the resources necessary to continue to succeed in the years ahead.

    As per your request, below are the responses to questions contained in
    your letter of inquiry pertaining to the scope and operations of the
    CHIP in Rhode Island:

    1. How many individuals are served by your state's CHIP program? What
    are the characteristics of CHIP enrollees in your state (e.g. income,
    health status, demographics)?

    Rhode Island operates a combined Medicaid/CHIP program for families,
    pregnant women, and children through its RIte Care managed care
    delivery system. RIte Care uses a medical home model centered on
    providing the best evidenced-based practices in primary care.

    As of September 30, 2014, an average of 20,803 of the children and
    pregnant women enrolled in RIte Care received health coverage funded,
    in whole or in part, by the CHIP. As we administer a joint Medicaid/
    CHIP program, we use a single income eligibility for each RIte Care
    population regardless of funding source. The Modified Adjusted Gross
    Income (MAGI) eligibility limit for RIte Care children is at or below
    261% of the federal poverty level (FPL); the MAGI limit for pregnant
    women is at or below 253% of the FPL.

    Since RIte Care was established 30 years ago, we have been providing
    high-quality, affordable health care to Rhode Islanders who might
    otherwise be uninsured. The CHIP has enabled Rhode Island to maintain
    and, in some instances, expand RIte Care eligibility for children and
    pregnant women at risk for poor health outcomes from regions all across
    the state. On-going evaluations of RIte Care health plans show that
    they are achieving positive health and utilization outcomes ranging
    from low rates of emergency hospital admissions and preventable
    hospitalizations, to fewer high-risk pregnancies and infant deaths,
    declines in pregnant women who smoke and present with gestational
    diabetes, and healthier newborns, infants, and children overall.

    Rhode Island has one of the lowest rates of uninsured children in the
    country (5.4% of children lacked insurance coverage in 2013). This low
    rate of uninsured children is due, in a large part, to Medicaid/CHIP-
    funded RIte Care coverage. Rhode Island's CHIP participation rate was
    90.4% in 2012, higher than the national average of 88.1%. However,
    Rhode Island still has room to improve. Approximately 71% of the
    uninsured children in Rhode Island between 2010 and 2012 were eligible
    for RIte Care based on their family income, but were not enrolled.
    While some of these children mostly likely enrolled in 2014, we know
    that we still have uninsured children in the community and CHIP is key
    to helping us to finish the job of insuring kids.

    2. What changes has your state made to its CHIP program as a result of
    the Patient Protection and Affordable Care Act? How has the
    implementation of PPACA impacted the way your state administers CHIP?

    There have been several changes made to the RI CHIP as a result of the
    Patient Protection and Affordable Care Act (PPACA). Each is outlined
    below:

    CHIP Claiming--A major impact of the PPACA was the loss of the state's
    authority to claim CHIP funds for health coverage provided to RIte Care
    families with incomes under 133% FPL. The loss of revenue from that
    change forced the state, for financial reasons, to lower the Medicaid/
    CHIP eligibility of parents and caretakers from 175% to 133% of the FPL
    and shift them to our new health insurance marketplace--HealthSource RI
    (HSRI). The state has offered these parents state-funded premium
    assistance to help pay for the federally subsidized qualified health
    plans (QHP) they can now purchase through HSRI.

    MAGI Income Standard--The PPACA required all states to use the MAGI
    methodology for determining income eligibility for Medicaid and CHIP
    coverage. Beginning in 2014, Rhode Island eligibility levels for the
    CHIP were revised upwards by 3 to 5% based on MAGI methodology.

    Streamlined Access--The PPACA required states to simplify the
    application process, coordinate enrollment between Medicaid/CHIP and
    QHP coverage, and implement an electronic verification process to
    ensure seamless access to coverage options. Rhode Island has made
    significant progress in improving access in all these areas through our
    new automated eligibility system. We now have a fully integrated and
    interoperable system which uses a single on-line application for making
    determinations for affordable coverage funded wholly or partially
    through Medicaid/CHIP, federal tax credits and cost sharing reductions,
    or employers.

    Consumer Support--Rhode Island implemented enhanced consumer support
    services as required by the PPACA in October of 2013. Implementation of
    these new services in conjunction with our new unified eligibility
    greatly improved RIte Care access and enrollment. For example, from
    October 2013 to March 2014, an additional 12,000 children and parents
    with CHIP-funded coverage enrolled in RIte Care managed care plans.

    Elimination of Premiums--The coordination between Medicaid/CHIP and QHP
    plans required by the PPACA posed operational and equity issues for
    continuing RIte Care premiums. The state opted to eliminate RIte Care
    premiums effective January 1, 2014 to: (1) reduce the likelihood of
    premium stacking; and (2) provide an incentives for parents of RIte
    Care eligible children to enroll in a QHP through HSIU if otherwise not
    qualified for Medicaid coverage.

    3. To the extent the following information is readily available and you
    believe it is relevant, please describe the services and or benefits
    and or cost-sharing currently provided in your state under CHIP that
    are not comparably available through your state's exchange or through
    the majority of employer sponsored health plans in your state.

    At present, there are no commercial QHPs available in Rhode Island that
    provide health care coverage comparable to the Medicaid/CHIP-funded
    RIte Care plans when taking into account differences in the scope,
    amount, and duration of benefits and cost-sharing obligations. RIte
    Care enrollees have no cost-sharing or out-of-pocket costs.
    Additionally, RIte Care plans provide a more extensive array of child-
    specific services with fewer limits than QHPs. For many families,
    especially those who have a child with disabilities, it is nearly
    impossible to obtain comparable coverage to RIte Care plans at an
    affordable cost even through subsidized HSRI plans.

    There are two areas of coverage where the differences between RIte Care
    and QHP plans is most pronounced due in large pan to federal Medicaid
    and/or CHIP requirements: RIte Care enrollees must have access to
    comprehensive pediatric dental coverage and any medically necessary
    services deemed warranted as a result of Early Periodic Screening
    Detection and Treatment (EPSDT) requirements. In Rhode Island, as in
    most states, pediatric dental coverage and many EPSDT services are
    either unavailable or unaffordable in the commercial health insurance
    marketplaces. We do not anticipate that commercial or employer-
    sponsored plans will provide coverage for these services for children
    in the near future: most enrollees in these plans purchase them out-of-
    pocket.

    4. Do you recommend that CHIP funding be extended? If so, for how long,
    and for budgeting and planning purposes, under what timeframe should
    Congress act upon an extension? If you do not believe CHIP funding
    should be extended, what coverage (if any) do you believe CHIP
    enrollees in your state would be able to obtain? How many children
    covered by CHIP do you estimate would become uninsured in the absence
    of CHIP?

    As stated at the outset of this letter, Rhode Island strongly supports
    extending CHIP's funding and as soon as possible. The state is facing
    significant budget pressures in the year ahead and most likely will be
    unable to sustain Medicaid coverage at current eligibility levels for
    certain populations if the CHIP is not re-authorized. The sooner
    Congress passes legislation to extend CHIP funding, the less
    uncertainty there will be and the more time states will have to ensure
    critical coverage is not disrupted. Congress should also maintain the
    scheduled 23 percent federal matching rate increase that goes into
    effect next year. These enhanced matching funds will help states like
    Rhode Island continue to provide high quality children's health
    coverage, as they have since the CHIP was initially enacted. Rhode
    Island also recommends that Congress extend CHIP funding at least
    through 2019. The PPACA requires states to maintain current Medicaid
    and CHIP eligibility levels for children until 2019. This Maintenance
    of Effort (MOE) provision would apply to the nearly 20,000 RIte Care
    children currently funded through CHIP.

    If CHIP funding is not renewed, Rhode Island would lose the enhanced
    CHIP match but still be required to maintain existing coverage levels
    at the lower Medicaid FMAP under the MOE. As a result, Rhode Island's
    federal financial support for coverage would decrease by the difference
    between the CHIP and Medicaid match rates. For FY2014, Rhode Island's
    CHIP-FMAP is 65.08 percent. The scheduled match increase would bring
    Rhode Island's CHIP-FMAP to 88.08 percent. In comparison, Rhode
    Island's FMAP for FY2014 is 50.11 percent.

    It is essential that Congress act to reauthorize the CHIP in a timely
    manner that takes into consideration the imperatives of state budget
    cycles. If Congress delays taking action until FY2016, states like
    Rhode Island face dire fiscal consequences: Rhode Island stands to lose
    an estimated $28.19 million of annual federal CHIP dollars. Covering
    any of this difference would be a challenge for our state, given
    current and projected deficits. As roll-backs in eligibility for
    children are not feasible, Rhode Island will have no option but to
    reduce access to Medicaid coverage for adults, vulnerable elders and
    persons with disabilities, most of whom will be unable to purchase
    comparable affordable coverage through HSRI.

    5. In spite of the restructuring and retargeting of allotments that
    occurred in 2009, some CHIP funding remains unspent. Do you believe the
    annual allotments your state has received starting in 2009 have been
    sufficient and the formula is working appropriately? Do you believe
    there is a need for Congress to further address the issue of unspent
    allotments?

    The CHIP allotment for Rhode Island has not been sufficient. We are
    among the states that regularly exhaust our CHIP allotment and receive
    additional dollars (a total of millions) from other states that have
    not done so. Although no new federal funds for allotments are slated
    for FY2016, Rhode Island will continue to be able to draw on unspent
    federal CHIP funds returned by other states, as long as they are
    available, unless Congress develops a new allotment formula. Congress
    may want to consider the option of increasing allotments to states like
    Rhode Island which not only consistently use their complete allotment,
    but achieve improvements in health access and outcomes that meet or
    exceed the goals of the CHIP.

    6. Over the past number of years, States have worked to reduce the
    number of uninsured children, and Medicaid and CHIP have been a
    critical component of that effort. Do you believe there are federal
    policies that could help states do an even better job in enrolling
    eligible children? What other policy changes, if any, would improve
    enrollment of eligible children, reduce the number of uninsured, and
    improve health outcomes for children in your state?

    Although Rhode Island has had some success on the enrollment front, we
    are committed to providing every child in the state with access to high
    quality health care. There are several strategies and federal policies
    that could be implemented to facilitate access and improve health
    outcomes. For example, Congress could allocate more resources to expand
    services in high demand, such as pediatric dental coverage, by
    providing an enhanced federal match.

    Congress may also want to consider providing states like Rhode Island
    that operate combined Medicaid/CHIP programs and/or utilize their full
    allotments with additional flexibility. Combined programs are bound to
    follow Medicaid rules and this prevents states from using the
    flexibility provided in the CHIP authorizing statute to tailor benefit
    packages to meet the changing needs of the children we enroll. In Rhode
    Island, additional flexibility would allow us to focus on high demand
    but short supply service areas like behavioral health and to develop
    new design, delivery and payment approaches that more effectively
    leverage and integrate federal and state dollars, promote population
    health, and recognize the whole range of social supports kids need to
    start and stay healthy--e.g., stable families, housing, food security,
    etc.
    Conclusion
    I urge you to extend CHIP funding as soon as possible. CHIP is
    essential to assuring that we do not lose ground on children's coverage
    in Rhode Island and as a nation.

    Thank you for the opportunity to respond to these important questions.
    Please contact me or any member of my staff should you have any
    questions.

    Sincerely,

    Lincoln D. Chafee
    Governor, State of Rhode Island

    cc:  Steven Costantino, Secretary, Executive Office of Health and Human
    Services
         David Burnett, Deputy Director, Executive Office of Health and
    Human Services
         Deidre Gifford, Medicaid Director, Executive Office of Health and
    Human Services
         Deborah Florio, CHIP Director, Executive Office of Health and
    Human Services
        Jacqueline Kelley, Esquire, Executive Office of Health and Human
    Services

                                     ______

                             STATE OF SOUTH DAKOTA

                           Dennis Daugaard, Governor

    State Capitol  500 East Capitol  Pierre, South Dakota  57501-5070
                                  605-773-3212

    October 28, 2014

    The Honorable Fred Upton
    Chairman
    Committee on Energy and Commerce
    U.S. House of Representatives
    2125 Rayburn House Office Building
    Washington, DC 20515

    Dear Chairman Upton,

    Thank you for the opportunity to provide information about the
    Children's Health Insurance Program (CHIP) reauthorization. CHIP
    provides insurance coverage to over 12,500 low-income children in South
    Dakota, and I strongly support continued funding for this program.

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state?

          There were 12,519 children enrolled in the CHIP program during
            our State Fiscal Year 2014 (July 1, 2013-June 30, 2014). Eighty
            percent of the children are age six years or older. The vast
            majority of children are at lower incomes with 77%, with income
            less than 182% of the federal poverty level ($43,407 annually
            for a family of four).

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act (PPACA)? How
            has the implementation of PPACA impacted the way your state
            administers CHIP?

          South Dakota implemented the required PPACA changes including the
            federal poverty level conversion, modified adjusted gross
            income (MAGI) eligibility methodologies, use of the federally
            required streamlined application to include tax filer
            information for other Insurance Affordability programs and
            Qualified Health Plans, and telephonic application capability.
            Although CHIP funding expires in September 30, 2015, the CHIP
            program remains authorized and states may use unspent portions
            of their FFY15 allotments. In addition, the PPACA also
            increased the enhanced Federal Medical Assistance Percentage
            (FMAP) available to states for CHIP programs by 23% beginning
            in FFY16. Unless CHIP allotments are increased, this will speed
            up the rate at which states spend their allotments resulting in
            potential funding shortfalls. The PPACA also added a
            Maintenance of Effort (MOE) provision and states must maintain
            Medicaid and CHIP eligibility standards, methodologies, and
            procedures that are no more restrictive than those in effect
            March 23, 2010. An exception to the MOE requirement includes
            the lack of federal CHIP funding.

          Despite these changes, the Centers for Medicare and Medicaid
            Services (CMS) maintain the implementation of PPACA would not
            result in significant reductions to the CHIP program. However,
            South Dakota continues to experience a significant shift of
            children from the CHIP program where services are paid at the
            enhanced federal match rate to Medicaid where services are
            funded at the regular Federal Medical Assistance Percentage
            (FMAP). From December 2013 to August 2014, we saw a decrease of
            1,833 children (-13.4%) in the CHIP program. During this same
            time period, our Title XIX children have increased by 2,647
            (4.1%). This is the opposite trend we saw in the six months
            prior to PPACA implementation. From June 2013 to November 2013,
            we saw an increase of 604 (4.6%) CHIP recipients while our
            Title XIX children recipients were decreasing by 1,414
            recipients (-2.1%).

          South Dakota expressed concern with CMS in March 2013 when the
            poverty level conversions were first provided. We began to see
            a significant reduction to our CHIP program in January 2014
            when the new federal poverty levels were implemented. At the
            end of April, we saw 19% fewer children enrolled in the CHIP
            program and an offsetting increase to children enrolled in
            Medicaid. In April, after continued discussions with CMS, CMS
            agreed to adjust the federal poverty levels by approximately
            30%. While we were pleased with this adjustment, we continue to
            see a shift from CHIP to Medicaid for children. Our latest
            numbers through August 2014, after adjusting the federal
            poverty levels, reflect a 13.5% reduction in CHIP enrollment.
            The result is a cost shift from the federal government to our
            state. In addition, although the state has successfully been
            able to send and receive applications to and from the Federally
            Facilitated Marketplace (FFM), the FFM is unable to check for
            existing Medicaid/CHIP eligibility causing applications to be
            sent to the state to process even though the applicant is
            already eligible for Medicaid/CHIP. Significant administrative
            effort was expended in assisting individuals and families who
            were ``stuck'' in the FFM process. The MAGI methodologies,
            while simplified, also require increased effort to determine
            eligibility individually rather than a single determination per
            household. The PPACA related federal reporting requirements are
            yet to be determined.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            benefits and or cost sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

          South Dakota operates CHIP as a Medicaid look-alike program,
            where all Medicaid benefits are extended to individuals
            eligible for CHIP. In addition to the essential health benefit
            offered through the marketplace plans, children eligible for
            CHIP have access to the Early and Periodic, Screening,
            Diagnosis, and Treatment (EPSDT) benefit. The EPSDT benefit
            allows South Dakota to provide medically necessary services to
            children outside of the scope of the normal services under the
            Medicaid or CHIP State Plan and those offered through the
            marketplace plans. No similar benefit is available from private
            health plans where children are only eligible to receive
            services within the limits imposed by the plan.

          Some of the children who would lose coverage if CHIP is not
            funded will not be eligible for tax credits through the federal
            marketplace because a parent may have access to employer
            sponsored coverage. However, the affordability test for
            employer coverage is based on a calculation of the individual
            coverage relative to a workers wages, not the cost of a family
            policy. This situation is referred to as the ``family glitch''
            and could leave more children uninsured.

          While families at or above 100% Federal Poverty Level (FPL) are
            eligible to apply for subsidies and enroll in health plans
            offered through the exchange, the cost sharing, premiums, and
            out of pocket costs for plans available through the marketplace
            are at levels most low-income families on the CHIP program
            cannot afford. For example, a family at 183% FPL ($43,656
            annually for a family of four) would be eligible to apply for
            the average silver plan through the marketplace at an average
            net monthy cost after subsidy of $174 per month. Additional
            premiums ranging from $6 up to $38 per dependent would apply
            and the out of pocket costs for the family plan would double
            from $2,750 to $5,500 by adding additional dependents. In
            addition, if CHIP were eliminated, parents with employer
            sponsored health insurance with a cost under 9.5% of their
            income would not be eligible for subsidy and would bear the
            full cost of the premium. Because families are not required to
            pay a premium for CHIP coverage and children under age 21 in
            South Dakota are exempt from cost sharing, these increased
            costs may result in reduced access to essential healthcare
            services for children. Preventative care, including preventive
            oral health care has direct impacts on longer term health and
            avoiding higher cost care.

      4.  Do you recommend that CHIP funding be extended? It so, for how
            long, and for budgeting and planning purposes under what
            timeframe should Congress act upon an extension? If you do not
            believe CHIP should be extended, what coverage, lf any, do you
            believe CHIP enrollees in your state would be able to obtain?
            How many children covered by CHIP do you estimate would become
            uninsured in the absence of CHIP?

          We recommend that the CHIP funding be extended indefinitely and
            Congress should act on the extension of the CHIP as soon as
            possible to ensure there are no gaps in federal funding for the
            program. The South Dakota legislature will act on my fiscal
            year 2016 recommended budget in March of 2015. The status of
            South Dakota's current $20.0 million dollar federal CHIP award
            is a critical component of our Medicaid budget. Currently,
            South Dakota utilizes CHIP funding for Medicaid eligible
            children who are uninsured and whose income is between 111% and
            182% of the federal poverty level (over 9,200 children). If
            CHIP funding ends, South Dakota will be required to cover these
            children at the regular FMAP rate at an additional cost of $3.0
            million in state funds due. South Dakota also utilizes CHIP
            funding for uninsured children whose family income is between
            182% FPL and 204% FPL (over 2,660 children). If CHIP funding
            ends, these children will lose coverage altogether as there is
            no Medicaid coverage group for them.

          In addition to funding benefits, CHIP is used to fund $1.0
            million annually in administrative costs, primarily for program
            eligibility determination staff. The loss of CHIP funding would
            result in an annual state general fund impact of $160,000.

      5.  In spite of restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

          The redistribution of CHIP funding in 2009 was critical for South
            Dakota. Prior to the redistribution, South Dakota1s annual
            expenditures for children eligible for CHIP exceeded our CHIP
            allotment. The redistribution increased our allotment by $10.0
            million, which aligned our award closer to our annual
            expenditures for children eligible for CHIP, avoiding a budget
            impact to the state or reducing eligibility levels for the
            program. The enhanced FMAP rates of 23% for CHIP under the
            PPACA will provide state general fund savings. However, if CHIP
            allotments are not increased, South Dakota will not have
            adequate CHIP federal funds to support annual expenditures,
            resulting in a shift of children to the Medicaid program at the
            regular FMAP rate. Congress should adjust CHIP federal
            allotments commensurate with the 23% enhanced matching rate for
            CHIP.

      6.  Over the past number of years, states have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            of enrolling eligible children?

          South Dakota has a high penetration rate relative to CHIP and
            Medicaid coverage for children. Continued funding for the CHIP
            program offers a strong financial incentive for continued
            efforts to enroll children where services will be paid at a
            match rate almost 15% higher than South Dakota's regular FMAP
            rate.

      7.  What other policy changes, if any, would help improve enrollment
            of eligible children, reduce the number of uninsured, and
            improve health outcomes for children in your state?

          The ability of the Federally Facilitated Marketplace (FFM) to
            verify Medicaid and CHIP eligibility must be resolved to avoid
            children being ``stuck'' in the FFM process and unnecessary
            duplication of effort by state resources.

    I encourage Congress to act quickly to appropriate funding for the CHIP
    program so that low-income children in South Dakota continue to have
    insurance coverage.

    Sincerely,

    Dennis Daugaard

                                     ______

                               State of Tennessee

                                  Bill Haslam

                                    Governor

         State Capitol  Nashville, TN 37243-0001  PH: 615-714-2001
                                   www.tn.gov

    October 31, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    U.S. House of Representatives       U.S. Senate
     Committee on Energy and Commerce   Committee on Finance
    2125 Rayburn Office Building        219 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    The Honorable Henry A. Waxman       The Honorable Orrin G. Hatch
    Ranking Member                      Ranking Member
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    2322A Rayburn House Office Building 219 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    Dear Chairman Upton, Ranking Member Waxman, Chairman Wyden, Ranking
    Member Hatch:

    The purpose of this letter is to respond to your questions regarding
    the reauthorization of the Children's Health Insurance Program (CHIP),
    for which funding ends at the end of Fiscal Year (FY) 2015.

    CHIP is a successful program providing healthcare coverage for
    children, but as a result of the PPACA, CHIP reauthorization must now
    be considered carefully within the context of overlapping, government-
    subsidized healthcare coverage programs. The PPACA has increased health
    care coverage silos, which reduce efficiency, increase member churning
    across arbitrary eligibility boundaries, and cause families to be split
    across different plans due to the eligibility status of individual
    family members.

    Tennessee is looking for opportunities to streamline and simplify
    eligibility. I believe children covered by the CHIP program will have
    access to alternative coverage options that offer comparable services
    in the future. However, I do not believe that there is enough time to
    adequately consider and implement policy changes before federal funding
    for the CHIP program ends next year. Therefore, I recommend CHIP
    financing be extended for at least two years, through Federal FY 2017.
    In addition, states' maintenance of effort requirement, currently in
    effect through September 30, 2019, should end if the current level of
    federal participation in CHIP ends.

    Below are detailed responses to your July 29, 2014 letter regarding
    Tennessee's experiences with the CHIP program.

    Sincerely,

    Bill Haslam
    Governor

    cc:   Darin Gordon, Deputy Commissioner, Department of Finance and
    Administration
        Brooks Daverman, Director of Strategic Planning and Innovation

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g., income, health status, demographics)?

          Tennessee's CHIP program is a ``Combination'' program with two
            components that provide coverage to approximately 88,000
            children using Title XXI funds.

          Approximately 68,000 children are covered through Tennessee's
            stand-alone CHIP program called CoverKids. Of these, about 45
            percent are below 150 percent FPL, 38 percent are between 150
            and 200 percent FPL, and 18 percent are between 200 and 250
            percent FPL. Over three-fourths of children in the CoverKids
            program are between the ages of 6 and 18. Less than 5 percent
            are unborn children.

          Approximately 20,000 CHIP enrollees are served through the
            TennCare program. Nearly 9 out of 10 children in this group
            have incomes below 150 percent of the FPL. Over three fourths
            are between the ages of 6 and 18. About 70 percent are White,
            while 13 percent are Hispanic and 12 percent are Black/African
            American.

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act? How has the
            implementation of PPACA impacted the way your state administers
            CHIP?

          Tennessee has made a number of changes to its CHIP program as the
            result of the PPACA. These include the following;

            Tennessee eliminated our state-funded ``buy in'' CHIP
                eligibility category for families over 250 percent of the
                federal poverty level as of January 1, 2014. This category
                included children with family incomes above the maximum set
                by CHIP in Tennessee. With the availability of subsidized
                insurance through the federal Marketplace, the state no
                longer needed to subsidize the coverage of children who
                were above the income level for CHIP in Tennessee.

            Tennessee eliminated the three month ``go bare'' period,
                requiring children to be uninsured for three months before
                becoming eligible for CHIP. As a result of the PPACA's
                guaranteed issue requirement, this policy was no longer
                relevant.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and/or
            benefits and/or cost-sharing currently provided in your state
            under CHIP that are not comparably available through your
            state's exchange or through the majority of employer sponsored
            health plans in your state.

          While we do not have a detailed comparison of benefits for any
            particular plan, we know that the benefits offered by our CHIP
            program are roughly comparable to those offered by Qualified
            Health Plans (QHPs) in the federal Market place. However, cost
            sharing is lower in CHIP than in most, if not all, QHPs
            currently offered in the Marketplace. There are no premiums or
            deductibles required of CHIP children, as there are of
            individuals enrolled in a QHP, and CHIP copays are relatively
            modest. The actuarial value of Tennessee's CHIP plan is between
            90 and 95 percent which is slightly higher than a platinum
            level plan available in the Marketplace.

      4.  Do you recommend that CHIP funding be extended? If so, for how
            long, and for budgeting and planning purposes, under what
            timeline should Congress act upon an extension? If you do not
            believe that CHIP funding should be extended, what coverage:
            (if any) do you believe CHIP enrollees in your state would be
            able to obtain? How many children covered by CHIP do you
            estimate would become uninsured in the absence of CHIP?

          We recommend that CHIP financing be extended for at least two
            years until alternative policy options can be fully considered.
            One alternative for CHIP enrollees is subsidized coverage
            available through the federal Marketplace. Certain policy
            changes will need to take place before states can move freely
            in this direction.

          Currently the rules of the Department of the Treasury do not
            allow the children of an employee to access the federal
            Advanced Premium Tax Credits if the employee is offered
            affordable employer-sponsored health insurance. However, the
            affordability test does not take into consideration the cost of
            family coverage, only individual coverage. Tennessee will be
            unable to support covering currently CHIP-eligible children
            through the federal Marketplace until the Department of the
            Treasury issues an update to the Health Insurance Premium Tax
            Credit final rule (2012) so that children can be eligible for
            federal premium assistance tax credits in families where
            affordable employer-sponsored coverage is available for only
            the employee.\1\ A change to this rule would allow more
            families to stay on the same plan and receive subsidized
            private coverage through the federal Marketplace. We believe
            the Health Insurance Premium Tax Credit rule should be updated
            before funding for CHIP ends.
    ---------------------------------------------------------------------------
        \1\ 26 CFR Sec. 1.36B-2(c)(3)(v)(A)(2), Eligibility for premium tax
    credit, Federal Register Vol. 77, no. 100, http://www.gpo.gov/fdsys/
    pkg/FR-2012-05-23/pdf/FR-2012-05-23.pdf.

          In addition, the PPACA's maintenance of effort requirement on
            states for their CHIP program needs to be modified to reflect
            any changes to the program. As long as the maintenance of
            effort requirement remains part of federal law, we cannot
            consider any changes that affect CHIP.\2\ After these changes
            are made, states will be able to further consider policy
            options regarding the CHIP program.
    ---------------------------------------------------------------------------
        \2\ PPACA; Public Law 11-148; 2101(b), Additional federal financial
    participation for CHIP.

          If comparable, affordable QHP coverage is available for families
            in the Marketplace, we believe that the QHP coverage should be
            considered as a potential coverage option for uninsured
    ---------------------------------------------------------------------------
            children in the state if CHIP were not continued.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

          We believe Tennessee's federal allotment for CHIP will be
            sufficient for FY 2015.

      6.  Over the past number of years, States have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            enrolling eligible children? What other policy changes, if any,
            would help improve enrollment of eligible children, reduce the
            number of uninsured, and improve health outcomes for children
            in your state?

          We believe that federal policies should be targeted to
            streamlining and simplifying the eligibility policies of
            various programs. CHIP, Medicaid, and the Health Insurance
            Marketplaces have been layered on top of each other, creating
            duplicative coverage silos, each with their own benefit and
            eligibility rules. Duplication of programs reduces efficiency,
            increases member confusion, and causes beneficiaries' to
            ``churn'' across arbitrary eligibility boundaries as their age
            and income change. Many families are now split among coverage
            programs, such as families with children in CHIP and adults
            covered on the Marketplace. In order to be more customer-
            focused and relevant to meeting the needs of low-income
            families, federal health policy and program eligibility must be
            simplified.

                                     ______

                               The State of Texas

                             Office of the Governor

    Post Office Box 12428, Austin, Texas 78711 (512) 463-2000 (Voice)/Dial
                            7-1-1 for Relay Services

     Visit www.TexasOnline.com the Official Web Site of the State of Texas

    Rick Perry
    Governor

    October 31, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    2183 Rayburn House Office Building  221 Dirksen Senate Office Building
    Washington, D.C. 20515              Washington, D.C. 20510

    The Honorable Henry A. Waxman       The Honorable Orrin G. Hatch
    Ranking Member                      Ranking Member
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    2204 Rayburn House Office Building  104 Hart Senate Office Building
    Washington, D.C. 20515              Washington, D.C. 20510

    Dear Chairmen Upton and Wyden and Ranking Members Waxman and Hatch:

    I appreciate the opportunity to provide Congress with feedback
    regarding the Children's Health Insurance Program (CHIP), which
    provides health insurance coverage for certain uninsured children.
    States possess valuable insights on the efficacy and efficiency of CHIP
    given that they implement the program and see firsthand the impact of
    the Affordable Care Act (Obamacare).

    The Texas Legislature passed legislation in 1999 creating CHIP,
    separate from Medicaid. Texas provides services for children of
    families with income at or below 200 percent of federal poverty level
    (FPL). Figures provided by the Texas Health and Human Services
    commission (HHSC) show that in FY 2014, Texas CHIP served 524,658
    children. Of that:

       60.9 percent of recipients are ages 6-14;
       22.3 percent are ages 15-18;
       16.7 percent are ages 1-5; and
       0.1 percent of recipients are younger than one.

    In terms of income in FY14:

       55.9 percent have incomes between 100-150 percent FPL;
       30.9 percent have incomes between 151-185 percent FPL;
       6.7 percent have incomes between 186-200 percent FPL; and
       6.5 percent of recipients have incomes below 100 percent FPL.

    Texas CHIP provides a variety of services to its recipients, including
    preventive health, dental, vision, mental health and hospital services.
    Texas requires certain CHIP families to pay an annual enrollment fee to
    cover all children in the family. Qualifying families must also pay co-
    pays for doctor visits, prescription medications, inpatient hospital
    services and non-emergent services in an emergency room setting.
    Additional information can be found here:http://www.hhsc.state.tx.us/
    medicaid/about/PB/10_PB_9th_ed_Chapter9.pdf.

    As a consequence of Obamacare, Texas has seen a significant number of
    children moved from CHIP into Medicaid. Though Obamacare provides for
    enhanced matching rate for this CHIP-to-Medicaid population, these
    enhanced federal funds diminish over time--shifting costs to the
    states.

    Moving additional people into Medicaid is particularly significant
    given that Obamacare exacerbates problems with a broken Medicaid
    program. For example, Obamacare prevents states from using common-sense
    tools, including asset testing, to ensure that Medicaid is preserved
    for those individuals most in need. Furthermore, Obamacare taxes
    Medicaid to help fund private insurance subsidies for individuals who
    earn more than Medicaid recipients. In other words, Obamacare makes it
    more expensive for both federal and state governments--and ultimately
    the American taxpayer--to operate Medicaid, providing absolutely no
    benefit to the program or its recipients. As I explained in a recent
    letter to Congressman Elijah Cummings, current state and federal
    Medicaid expenditures are unsustainable. Obamacare only compounds that
    problem.

    Additionally it's important to point out characteristics of CHIP that
    differentiate the program--for the better--from Medicaid. For example,
    states receive federal matching funds for CHIP through allocations that
    function in a manner very similar to block grants. States have
    considerably more flexibility in operating their CHIP programs than
    Medicaid programs. Such flexibility empowers states to better serve
    their unique CHIP populations. States have the ability to implement
    reasonable cost-sharing and enrollment measures that help ensure
    appropriate utilization of services, emphasize preventive care and
    encourage active participation in health care decisions.

    Absent much needed comprehensive Medicaid reform, Congress should
    implement in Medicaid those initiatives that have proven to be
    effective and beneficial to CHIP and recipients.

    As for the reauthorization of CHIP, given that there appears to be no
    immediately viable alternative proposed for covering existing CHIP
    recipients, Congress should act to reauthorize CHIP prior to the
    expiration of funding in 2015. The sooner action is taken, the more
    predictability and stability Congress will provide to state
    appropriators.

    Please do not hesitate to contact my office or HHSC for any additional
    information.

    Sincerely,

    Rick Perry
    Governor

                                     ______

                                 State of Utah

                             Office of the Governor

                              Salt Lake City, Utah

                                   84114-2220

    Gary R. Herbert                                              Spencer J.
    Cox
    Governor                                              Lieutenant
    Governor

                                November 5, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    Committee on Energy and Commerce    Committee on Finance
    U.S. House of Representatives       U.S. Senate
    Washington, D.C. 20515              Washington, D.C. 20510

    The Honorable Henry A. Waxman       The Honorable Orrin G. Hatch
    Ranking Member                      Ranking Member
    Committee on Energy and Commerce    Committee on Finance
    U.S. House of Representatives       U.S. Senate
    Washington, D.C. 20515              Washington, D.C. 20510

    Dear Chairman Upton, Chairman Wyden, Representative Waxman, and Senator
    Hatch:

        I am grateful for the opportunity to provide you with feedback
    regarding Utah's position on funding for the Children's Health
    Insurance Program (CHIP). The bottom line is that the CHIP has
    decreased the number of uninsured children in our state and that there
    remains a need for the CHIP until low income working families have a
    viable alternative to providing care for their children. Furthermore,
    Americans would be well-served by a federal government that provides
    maximum flexibility to states to provide services to their residents in
    the most efficient and effective ways possible.

        In an attempt to be responsive to your inquiry, I have asked
    Michael Hales, director of Medicaid and Health Financing in Utah, to
    answer your specific questions on our state's behalf. His response is
    attached.

        Thank you for your attention to this important matter. We
    appreciate your outreach on the CHIP and any other issues that have a
    substantial impact on Utah.

    Sincerely,

    Gary R. Herbert
    Governor

                           Utah Department of Health

                    288 North 1460 West  Salt Lake City, UT

        Mailing Address: P.O. Box 143101  Salt Lake City, UT 84114-3101

             Telephone (801) 538-6689  Facsimile (801) 538-6478
                              www.health.utah.gov

                             W. David Patton, Ph.D.

                               Executive Director

                   Division of Medicaid and Health Financing

                                 Michael Hales

                   Deputy Director, Utah Department of Health

              Director, Division of Medicaid and Health Financing

                                November 5, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    Committee on Energy and Commerce    Committee on Finance
    U.S. House of Representatives       U.S. Senate
    Washington, D.C. 20515              Washington, D.C. 20510

    The Honorable Henry A. Waxman       The Honorable Orrin G. Hatch
    Ranking Member                      Ranking Member
    Committee on Energy and Commerce    Committee on Finance
    U.S. House of Representatives       U.S. Senate
    Washington, D.C. 20515              Washington, D.C. 20510

    Dear Chairman Upton, Chairman Wyden, Representative Waxman, and Senator
    Hatch:

    At the request of Governor Herbert, Utah's CHIP team has compiled the
    following information. We hope you find it responsive to your
    inquiries. We stand ready to provide any additional information that
    you may need. Thank you for your outreach and consideration of Utah's
    experience.

    1.  How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state (e.g.
        income, health status, demographics)?

    Utah's Response: The implementation of PPACA had a significant impact
    on the CHIP in Utah. Utah was one of three states in the nation, which
    had an asset test for Medicaid eligibility for children ages 6-18 prior
    to 2014. PPACA not only raised the eligibility income level for
    Medicaid children but also required the elimination of any asset test
    for Medicaid children. Prior to the implementation of PPACA, Utah
    averaged about 34,000 children per month on CHIP. With the
    implementation of PPACA, the number of children on Utah's CHIP has
    dropped to an average of 15,000 per month and it continues to be an
    important program for the children of Utah.

    Before implementation of PPACA, children with household incomes from 0
    to 200 percent of the federal poverty level (FPL) could be eligible for
    Utah CHIP. The program was broken out into three plans: Plan A for
    family incomes between 0-100 percent FPL, Plan B for family incomes
    between 101-150 percent FPL, and Plan C for family incomes between 151-
    200 percent FPL. Plan A existed primarily because Utah had an asset
    test for Medicaid children ages 6 to 18, but did not have an asset test
    for CHIP. Consequently, children ages 6 to 18 with family incomes under
    the poverty level enrolled in CHIP, rather than Medicaid. It was not
    uncommon to have younger children (under age 6) on Medicaid and older
    children on CHIP in a single household. Since the implementation of
    PPACA earlier this year, Utah CHIP eligibility covers children in
    families whose income is between 133 percent FPL and 200 percent FPL.
    CHIP Plan A was eliminated--leaving a modified Plan B (133-150 percent
    FPL) and Plan C (151-200 percent FPL).

    The majority of CHIP families have earned income. Children in these
    families are eligible for CHIP either because they have no health
    insurance coverage available through an employer or because the costs
    of the employee's share of coverage is unaffordable. Utah's CHIP
    applies a test of five percent of gross annual income to determine if
    the cost of coverage is reasonable.

    2.  What changes has your state made to its CHIP program as a result of
        the Patient Protection and Affordable Care Act? How has the
        implementation of PPACA impacted the way your state administers
        CHIP?

    Utah's Response: As indicated above, PPACA changed the eligibility
    income levels for Medicaid and removed the asset test for children.
    This resulted in a significant reduction in the number of children on
    the stand-alone CHIP in Utah. However, since the children who
    transferred from CHIP to Medicaid are still eligible for the enhanced
    FMAP available under CHIP, Utah has had to implement a more complex
    expenditure tracking model to claim the enhanced FMAP on the CHIP
    children who transferred to Medicaid. The implementation of PPACA
    required significant changes in eligibility requirements for both
    Medicaid and CHIP, taking away much of the flexibility Utah previously
    had in determining eligibility for CHIP. With regard to benefits and
    service delivery, Utah's process remains largely unchanged.

    3.  To the extent the following information is readily available and
        you believe it is relevant, please describe the services and/or
        benefits and cost sharing provided in your state under CHIP that
        are not comparably available through your state's exchange or the
        majority of employer sponsored health plans in your state.

    Utah's Response: By state law, Utah's CHIP benefit is benchmarked
    against the HMO with the largest commercial, non-Medicaid enrollment in
    the state. Therefore, the benefits available to Utah CHIP children are
    very much like benefits offered in a silver plan available in the
    commercial market with a couple of exceptions. Utah does not operate an
    individual plan exchange. Utah has an agreement with the federal
    government to operate a federally facilitated exchange for the private
    individual market in our state. In addition, Utah operates a small
    employer exchange, known as ``Avenue H.''

    As a stand-alone program, CHIP cost sharing includes co-payments,
    coinsurance, and premiums and is limited to five percent of the
    family's annual gross income. Cost-sharing reductions for families on
    the exchange are limited to 94 percent actuarial value (AV) for 100-150
    percent FPL and 87 percent AV for 150-200 percent FPL. Even though the
    cost-sharing reductions create a plan that limits average out of pocket
    costs, the costs facing a family with a severe medical issue could
    easily exceed the CHIP five percent of income standard. If CHIP is
    eliminated, CHIP families will experience greater out-of-pocket costs
    in the marketplace.

    Second, a significant number of Utah CHIP families work for small
    employers. Under PPACA, if the employee's share of premium for the
    employee's coverage (not family coverage) is less than 9.5 percent of
    the annual gross household income, the family is not eligible for
    advanced premium tax credits to purchase private coverage instead of
    getting coverage at work. This issue is commonly known as the ``family
    glitch.'' If CHIP is no longer available, former Utah CHIP families
    will be subject to higher cost sharing, and many will likely not be
    eligible for tax credits to help defray the cost of family coverage.

    4.  Do you recommend that CHIP funding be extended? If so, for how
        long, and for budgeting and planning purposes, under what timeframe
        should Congress act upon an extension? If you do not believe CHIP
        funding should be extended, what coverage (if any) do you believe
        CHIP enrollees in your state would be able to obtain? How many
        children covered by CHIP do you estimate would become uninsured in
        the absence of CHIP?

    Utah's Response: Any change to the existing CHIP will impact Utah's
    budget for state fiscal year 2016. State appropriations for this period
    will be determined by mid-March 2015. Therefore, it is imperative that
    Congress act soon to make a decision on this issue. Thousands of Utah
    children will be impacted. Utah and other states cannot wait until the
    last minute to transition these families or make substantive changes to
    Utah CHIP and the data systems that support this program. As mentioned
    earlier, Utah administers benefits for CHIP through contracts with
    private entities that will also be significantly impacted by any
    change. Most importantly, Utah children with chronic or emergent
    conditions could go without care because of a lack of action on this
    issue.

    At a minimum, states must know whether or not the CHIP will continue,
    and whether or not changes will be made to the program or funding for
    the program at least six months in advance of any change. That being
    said, Utah supports extending the CHIP for at least two years, and
    preferably for four years, to allow time to address any outstanding
    issues with the federal market place and the availability of subsidies.
    In addition, other changes should be made to federal law to address
    state concerns.

    Utah has identified the following issues of concern that need to be
    addressed in the CHIP:

      1.  Continuing issues with the Healthcare.gov web site and remaining
            issues with the interface between the federal government and
            the state need resolution.

      2.  Federal law should be changed to resolve the ``family glitch.''

      3.  The CHIP needs ongoing funding, or the federal law regarding the
            Maintenance of Effort (MOE) must be modified to delink the CHIP
            from Medicaid and provide states with flexibility on this
            issue.

      4.  Federal law should allow states to use the commercial market with
            the assistance of premium subsidies as the primary service
            delivery system for the CHIP.

    Utah continues to have approximately 55,000 uninsured children, who
    appear to be eligible for public programs based on their income. It is
    difficult to determine exactly why these children remain uninsured.
    Some parents choose not to access public programs. Many do not seek
    coverage while their children are healthy. Others may be children of
    mixed immigration status households, which hesitate to seek assistance
    for other reasons. If the CHIP is eliminated, Utah anticipates the
    number of uninsured children in the state will increase.

    5.  In spite of the restructuring and retargeting of allotments that
        occurred in 2009, some CHIP funding remains unspent. Do you believe
        the annual allotments your state has received in 2009 have been
        sufficient and the formula is working appropriately? Do you believe
        there is a need for Congress to further address the issue of
        unspent allotments?

    Utah's Response: Utah has no concerns with the CHIP allotments or the
    formula used to determine those amounts. We have been able to manage
    our program effectively under the current allotment formula.

    6.  Over the past number of years, states have worked to reduce the
        number of uninsured children, and Medicaid and CHIP have been a
        critical component of that effort. Do you believe there are federal
        policies that could help states do an even better job in enrolling
        eligible children? What other changes, if any, would help improve
        enrollment of eligible children, reduce the number of uninsured and
        improve the health outcomes for children in your state?

    Utah's Response: We recognize that many changes were made in an effort
    to streamline eligibility for Medicaid and the CHIP. PPACA also
    intended to make the commercial market place more accessible to all.
    Unfortunately, many of the changes brought about by PPACA did anything
    but simplify the enrollment process. A part of the concern is the
    prescriptive nature of the law and the lack of flexibility for states.
    The issues with the federal marketplace are also well known.

    In addition, there needs to be a more seamless way to address churn for
    lower income families. Relatively small, but often frequent, changes in
    income can cause these families to move from the market place to public
    programs and back again. Utah would like to see more flexibility in the
    CHIP to allow broad use of Title XXI funding to provide premium
    subsidies to families to keep them in the commercial marketplace, even
    when their income drops to CHIP income eligibility level. This not only
    allows families to stay in the same health plan together but it also
    allows families to stay with the same provider network, which minimizes
    disruption in services and promotes continuity of care.

    It is imperative that Congress act quickly but thoughtfully on the
    determination of the future of the Children's Health Insurance Program.
    Thank you for consideration of our input. We look forward to continued
    dialogue on this issue.

    Sincerely,

    Michael Hales
    Deputy Director, Department of Health
    Director Medicaid and Health Financing

                                     ______

    PETER SHUMLIN
    Governor

                                State of Vermont

                             OFFICE OF THE GOVERNOR

         109 STATE STREET  THE PAVILION  MONTPELIER, VT 05609-0101
                                www.vermont.gov

        TELEPHONE: 802.828.3333  FAX: 802.828.3339  TDD: 802.828.3345

                                October 14, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    2125 Rayburn House Office Building  219 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510-6200

    The Honorable Henry A. Waxman       The Honorable Orrin G. Hatch
    Ranking Member                      Ranking Member
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    2125 Rayburn House Office Building  219 Dirksen Senate Office Building
     Washington, DC 20515               Washington, DC 20510-6200

    RE:   Children's Health Insurance Program (CHIP)--Vermont

    Dear Chairmen and Ranking Members:

    In response to your recent inquiry, I have asked my Vermont Agency of
    Human Services to compile answers to your six questions regarding the
    Children's Health Insurance Program (CHIP), including an assessment of
    impact should federal funding for the program end at the close of the
    2015 federal fiscal year. We appreciate the opportunity to provide
    Vermont's perspective. Please find our responses below.

    1.  How many individuals are served by your state's CHIP program? What
        are the characteristics of CHIP enrollees in your state (e.g.
        income, health status, demographics)?

        Vermont has a longstanding commitment to providing coverage for all
            children. In Vermont, CHIP is operated as part of Dr. Dynasaur,
            the umbrella name for state sponsored children's health
            insurance, which includes Medicaid and CHIP. In 1989, Dr.
            Dynasaur was created as a state-funded program that extended
            coverage for children under age 7 to 225% FPL. In 1992,
            coverage was expanded to children up to age 18.

        In 2013, CHIP served 7,393 children ages 0-19, with a family income
            between 237% and 312% of federal poverty level. Vermont is a
            rural state with 67% of the population living in rural areas.
            In the most rural areas of the state over 60% of the population
            is eligible for Medicaid. Vermont's population is 97% white,
            with 3% from a variety of racial and ethnic backgrounds.

        The 2012 Vermont Household Health Insurance Survey reported that
            51.0% of Vermont's 111,257 children under 18 had private
            insurance, 43.4% had coverage through Dr. Dynasaur (Medicaid/
            CHIP), and 2.5% were uninsured. The rate of uninsured children
            has steadily declined from 4.9% in 2005. Between December of
            2013 and April of 2014, Vermont saw an increase of 3,655
            children enrolling in Dr. Dynasaur.

    2.  What changes has your state made to its CHIP program as a result of
        the Patient Protection and Affordable Care Act? How has the
        implementation of the PPACA impacted the way your state administers
        CHIP?

        As a result of the PPACA, changes to CHIP in the state of Vermont
            include the transition to a modernized application process
            through Vermont's state-based insurance marketplace, Vermont
            Health Connect, and conversion of income eligibility to a
            simplified MAGI based methodology. In addition to PPACA
            requirements, Vermont took advantage of other provisions
            including moving the administration of the CHIP program under
            the Medicaid State Plan. Benefits through the CHIP program
            continue to be the same as those offered in Vermont's Medicaid
            program.

    3.  To the extent the following information is readily available and
        you believe it is relevant, please describe the services and or
        benefits and or cost sharing currently provided in your state under
        CHIP that are not comparable available through your state' s
        exchange or through the majority of employer sponsored health plans
        in your state.

        The services and benefits offered through the state's exchange are
            comparable to the CHIP benefit. Medicaid services include
            comparable essential health benefits. Vermont covers up to 138%
            FPL for adults under Medicaid and up to 312% for children in
            CHIP and in families with other insurance.

        The state of Vermont receives close to $8 million in federal funds
            annually to provide coverage for the CHIP population and to
            support Vermont's early expansion of Medicaid coverage for
            children. In the absence of federal funding for CHIP,
            Vermonters would face significant hardship, as the state would
            not be able to supplement the full loss of the enhanced federal
            match until the CHIP authorization ends in 2019. At that time
            states can maintain coverage or shift coverage to plans offered
            through the exchange. For a single parent with a child out of
            pocket costs on the exchange range from $180-$628 per month.
            This is a substantial increase from the $60 a month premium for
            CHIP.

    4.  Do you recommend that CHIP funding be extended? If so, for how
        long, and for budgeting and planning purposes, under what timeframe
        should Congress act upon an extension? If you do not believe that
        CHIP funding should be extended, what coverage (if any) do you
        believe CHIP enrollees in your state would be able to obtain? How
        many children covered by CHIP do you estimate would become
        uninsured in the absence of CHIP?

        The state of Vermont strongly recommends that CHIP funding be
            extended through the federal Title XXI authorization period to
            2019. Failure to extend CHIP funding would result in a
            significant financial burden to the State, could result in many
            children becoming uninsured and would increase the cost of
            coverage for many who would remain insured. Continued funding
            would also allow states time to plan for a transition if needed
            and to assure that children will receive continued coverage.

        The elimination of CHIP funding in 2015, will have a financial
            burden to the state. CHIP authorization requires Medicaid
            Expansion states including Vermont, to maintain the current
            level of coverage through 2019. Even with unspent funds from
            prior years, federal estimates indicate that CHIP will run out
            of money early in FY2016. The state will have to subsidize the
            loss of enhanced match. As state budgets are increasingly
            tight, this could mean the elimination of services for state
            funded programs outside of CHIP. Vermont relies on the enhanced
            federal match to provide healthcare coverage for CHIP enrolled
            children.

        Elimination of CHIP will also have a detrimental effect on coverage
            for children in 2019. CHIP is an extremely successful program
            significantly increasing children's coverage in Vermont and
            across the nation. In the absence of CHIP, enrollees could
            obtain coverage through the state's marketplace, Vermont Health
            Connect, however there is potential for over 7,000 children to
            become uninsured. Depending on the plan they choose, families
            would have to pay higher premiums, deductibles and co-pays.
            This places an increased financial hardship on families,
            regardless of whether or not they are eligible for a subsidy.

        Nationally, CHIP covers more than 8 million low-income children,
            CHIP and Medicaid combined cover more than 1 in every 3
            children in the United States. Research indicates that for
            families below 150% FPL a premium increase to $120 is
            associated with a 5% increase in uninsured children.\1\
    ---------------------------------------------------------------------------
        \1\ Salam Abdus, Julie Hudson, Steven C. Hill and Thomas M. Selden,
    Children's Health Insurance Program Premiums Adversely Affect
    Enrollment, Especially Among Lower-Income Children, Health Affairs, 33,
    no. 8 (2014):1353-1360.

    5.  In spite of the restructuring and retargeting of allotments that
        occurred in 2009, some CHIP funding remains unspent. Do you believe
        the annual allotments your state has received starting on 2009 have
        been sufficient and the formula is working appropriately? Do you
        believe there is a need for Congress to further address the issue
    ---------------------------------------------------------------------------
        of unspent allotments?

        The 2009 restructuring and retargeting of allotments has improved
            the state of Vermont's ability to spend down the state's
            allocation. The formula change allows Vermont to receive full
            compensation based on funds expended. In FY 13, Vermont had
            less than 1% in unspent funds.

    6.  Over the past number of years, States have worked to reduce the
        number of uninsured children, and Medicaid and CHIP have been a
        critical component of that effort. Do you believe there are federal
        policies that could help states do an even better job of enrolling
        eligible children? What other policy changes, if any, would help
        improve enrollment of eligible children reduce the number of the
        uninsured, and improve health outcomes for children in your state?

        As state budgets are increasingly tight, there is no guarantee that
            states will be able to maintain coverage for children beyond
            2019, without federal appropriation. Continued federal support
            that would increase enrollment includes augmenting the state's
            ability to identify and enroll children who are eligible for
            CHIP or Medicaid but have not enrolled through incentives and
            funding for outreach.

        Other policies to support health outcomes include providing
            incentives to states to increase evidence-based practices in
            primary care for children, supports for analyzing pediatric
            quality measures, and linking quality measures to clinical
            decision support. Federal policies requiring universal coverage
            for all children will insure that states can enroll children
            and reduce the number of uninsured. Vermont is moving in the
            direction of coverage through a publicly funded, universal
            health care system. Under this system, eligibility will be
            based on residency, which will guarantee that all children have
            access to coverage. If federal policy for universal coverage
            for all children is impracticable for all states, we feel
            strongly that Vermont should receive federal support for its
            health care reform efforts.

    Please feel free to reach out should you need additional input or
    clarification regarding the contents of Vermont's responses.

    Sincerely,

    Peter Shumlin
    Governor

    Cc:  Senator Patrick Leahy
         Senator Bernie Sanders
         Congressman Peter Welch
         Secretary Hany Chen, Vermont Agency of Human Services
         Commissioner Mark Larson, Department of Vermont Health Access

                                     ______

                            COMMONWEALTH of VIRGINIA

                             Office of the Governor

     Patrick Henry Building  1111 East Broad Street  Richmond, Virginia
                                     23219

                      (804) 786-2211  TTY (800) 828-1120

                           www.governor.virginia.gov

    Terence R. McAuliffe
    Governor

                                October 23, 2014

    The Honorable Ron Wyden             The Honorable Fred Upton
    Chairman                            Chairman
    Committee on Finance                Committee on Energy and Commerce
    U.S. Senate                         U.S. House of Representatives
    221 Dirksen Senate Office Building  2183 Rayburn House Office Building
     Washington, DC 20510               Washington, DC 20515

    The Honorable Orrin G. Hatch        The Honorable Henry Waxman
    Ranking Member                      Ranking Member
    Committee on Finance                Committee on Energy and Commerce
    U.S. Senate                         U.S. House of Representatives
    104 Hart Office Building            2204 Rayburn House Office Building
    Washington, DC 20510                Washington, DC 20515

    Dear Chairmen Wyden and Upton, and Ranking Members Hatch and Waxman:

        I am writing in response to your July 29, 2014 letter to states
    requesting information about our Children's Health Insurance Program
    (CHIP) in the context of the funding reauthorization. Thank you for the
    opportunity to provide information about Virginia's very successful
    CHIP programs, called Family Access to Medical Insurance Security
    (FAMIS) that provide comprehensive health care coverage to
    approximately 200,000 children and pregnant women in Virginia's low-
    income working families. These families earn 200% or less of the
    Federal Poverty Level (FPL), or up to $39,580 a year for a family of
    three.

        FAMIS has enjoyed bi-partisan support in Virginia and is viewed as
    a bridge program for families earning too much to qualify for Medicaid,
    but yet not enough to afford employer or Marketplace insurance. While
    the Marketplace provides new affordable health care options for adults,
    there remain some significant concerns for children's coverage
    especially for those 200% or less of FPL. These concerns include
    barriers to affordable coverage because of the ``family glitch''
    (determining affordability based on the cost of employee-only coverage
    instead of family coverage); lack of comparable child-specific benefit
    plans; exclusion of the cost of stand-alone pediatric dental plans in
    the calculation of subsidies; and annual out-of-pocket cost sharing
    that far exceeds the CHIP affordability limit (5% of income).

        Attached are answers to your questions which outline the importance
    of our programs and the coverage they provide to the children and
    pregnant women in the Commonwealth. Without Congressional action,
    Virginia will not have enough federal carryover funding to continue the
    program in federal fiscal year 2016. I urge Congress to fund the CHIP
    program for an additional four years through 2019 at the enhanced 23
    percentage point match rate, because Virginia, like many other states,
    has already budgeted for this enhanced funding established in the
    Affordable Care Act. The four years of CHIP funding will provide the
    needed time to evaluate coverage for children through the Marketplace
    while continuing to provide quality health care through a proven and
    effective program.

        Please contact Linda Nablo with the Department of Medical
    Assistance Services (DMAS) for any additional questions about our
    programs.

    Sincerely,

    Terence R. McAuliffe

    Attachment

    1. How many individuals are served by your state's CHIP program? What
    are the characteristics of CHIP enrollees in your state (e.g. income,
    health status, demographics)?

    Virginia has a combination CHIP program made up of two components that
    covered over 196,000 otherwise uninsured children during FFY 2013:

      a.  A separate CHIP (S-CHIP) program called Family Access to Medical
            Insurance Security (FAMIS) covered over 104,000 children, ages
            0-18, living in families with incomes between 134% FPL and 200%
            FPL in FFY 13. These FPL limits were converted to 144-200%
            during the Modified Adjusted Gross Income (MAGI) conversion at
            the beginning of FFY 2014; and

      b.  An expansion of Medicaid paid for by CHIP funding (M-CHIP)
            covered approximately 92,000 additional children, ages 6-18,
            living in families with incomes between 100% and 133% FPL in
            FFY 13. These FPL limits were converted to 110-143% during the
            Modified Adjusted Gross Income (MAGI) conversion at the
            beginning of FFY 2014.

    Approximately forty-one percent (41%) of Virginia's CHIP enrollees are
    Caucasian; twenty-six percent (26%) are African American; nineteen
    percent (19%) are Hispanic; four percent (4%) are Asian; and the
    remaining ten percent (10%) identify themselves as a mixed race or
    another racial group. Forty-nine (49%) of the enrollees are female
    while fifty-one percent (51%) are male. Ninety percent (90%) of
    families report English as their primary language while nine percent
    (9%) report Spanish as their primary language.

    About ninety-five percent (95%) of Virginia's CHIP enrollees are served
    through a managed care organization (MCO) delivery system for the
    majority of their health care needs. Virginia's contracted MCOs are
    required to obtain and maintain accreditation with the National
    Committee for Quality Assurance (NCQA). Quality outcomes are monitored
    by the state in part through Healthcare Effectiveness Data and
    Information Set (HEDIS) measures and Consumer Assessment of Healthcare
    Providers and Systems (CAHPS) surveys. As compared to the benchmark of
    HEDIS' 2013 National Medicaid Managed Care 50th Percentile,
    the Virginia MCO average for services provided in 2012 met or exceeded
    the benchmark for the following measures:

       Six or more well-child visits in the first 15 months of life
       Annual well-child visits in the third, fourth, fifth, and sixth
            years of life
       Use of appropriate asthma medication (ages 5-11 and 12-18)

    Key findings from Virginia's 2013 CAHPS survey of FAMIS enrollees show
    that more than eight in ten parents/guardians gave positive
    satisfaction ratings of their child's Personal Doctor (89%), Specialist
    (85%), Health Care overall (85%) and Health Plan overall (84%); and for
    parents/guardians of children with chronic conditions more than eight
    in ten gave positive satisfaction ratings of their child's Personal
    Doctor (91%), Health Care overall (87%), Specialist (87%) and Health
    Plan overall (84%). In addition, sixty-two percent (62%) of three to
    eighteen year olds enrolled in FAMIS received a dental service during
    the state fiscal year (SFY) 2013.

    The Centers for Medicare and Medicaid Services (CMS) PERM program
    measures improper payments in Medicaid and CHIP and produces error
    rates for each program. The National average PERM rate is 6.1%. For FY
    2012, Virginia's most recent Managed Care program PERM rate was less
    than 1%.

    Additionally, Virginia has an 1115 waiver through CHIP that provided
    prenatal care, delivery, and postpartum coverage to over 4,600 women
    over age 18 living in families with incomes between 134% FPL and 200%
    FPL in FFY 2013. Based on External Quality Review studies, low birth
    weight rates for Virginia's program have continued to improve during
    the three year period 2011-2013 and outperformed the Centers for
    Disease Control national benchmark for all three years. Virginia MCO
    HEDIS score for the first trimester prenatal care was 86%, exceeding
    the National HEDIS Medicaid average rate.

    2. What changes has your state made to its CHIP program as a result of
    the Patient Protection and Affordable Care Act (PPACA)? How has the
    implementation of PPACA impacted the way your state administers CHIP?

    To align with the Federal Marketplace's first open enrollment, Virginia
    was an early adopter of the new MAGI eligibility methodology which we
    began to use in October 2013 at the same time we launched our new
    Eligibility and Enrollment system that determines eligibility for both
    Medicaid and CHIP. In July of 2014, following the issuance of new
    regulations by CMS, we also removed the four month waiting period after
    dropping health insurance for S-CHIP applicants. In addition, we are
    currently in the process of submitting a state plan amendment to allow
    dependents of state employees to enroll in our S-CHIP program starting
    January 1, 2015--an option made available to states through the ACA.

    3. To the extent the following information is readily available and you
    believe it is relevant, please describe the services and or benefits
    and or cost sharing currently provided in your state under CHIP that
    are not comparably available through your state's exchange or through
    the majority of employer sponsored health plans in your state.

    Virginia's separate CHIP program, FAMIS, provides comprehensive health
    care benefits originally modeled after the state employee health
    insurance benefits, but tailored to meet the specific health care needs
    of children. These benefits are not limited to well and sick care
    visits, prescriptions, hospitalization, and vision care, but include
    comprehensive dental coverage including medically-necessary
    orthodontia, Early Intervention services, school health services, and
    substance abuse treatment services as well as non-traditional
    behavioral and psychiatric services.

    FAMIS has no monthly or annual premiums and very affordable co-pays.
    For most services under FAMIS, the co-pay is only $2 or $5 and there
    are no co-pays above $25. In addition to not charging co-pays for well
    child check-ups, there are no co-pays for dental care. Cost sharing
    cannot exceed $180 per family per calendar year if a family's gross
    income is less than 150 percent of the federal poverty level and $350
    per family per calendar year if gross income is more than 150% of the
    federal poverty level. Based on the July 2014 Comparison of Benefits
    and Cost Sharing in Children's Health Insurance Programs to Qualified
    Health Plans prepared by the Wakely Consulting Group for the Robert
    Wood Johnson Foundation, FAMIS has much lower average annual cost
    sharing and out of pocket maximum than a silver qualified health plan
    (QHP):

    ------------------------------------------------------------------------
     Enrollees with family incomes of                        QHP in Federal
                 160% FPL                     FAMIS             Exchange
    ------------------------------------------------------------------------
    Average Annual Cost Sharing.......               $89          $411-$480
    Out of Pocket Maximum.............              $350      $1,500-$2,250
    ------------------------------------------------------------------------

    4. Do you recommend that CHIP funding be extended? If so, for how long,
    and for budgeting and planning purposes, under what timeframe should
    Congress act upon an extension? If you do not believe CHIP funding
    should be extended, what coverage (if any) do you believe CHIP
    enrollees in your state would be able to obtain? How many children
    covered by CHIP do you estimate would become uninsured in the absence
    of CHIP?

    Yes, we strongly recommend the funding for CHIP be aligned with the
    current authorization of the program through 2019 and should include
    the ACA authorized twenty-three percentage point increase in the
    Federal Financial Participation (FFP) match rate. While the Marketplace
    provides new affordable health care options for adults, there remain
    some significant concerns for children's coverage, especially for those
    under 200% FPL. These include barriers to affordable coverage because
    of the ``family glitch;'' lack of comparable child specific benefit
    plans; exclusion of the cost of stand-alone pediatric dental plans in
    the calculation of subsidies; and annual out-of-pocket cost sharing
    that far exceeds the 5% of income affordability limit of CHIP.

    We do not have estimates for how many separate CHIP enrollees covered
    during the year would become uninsured if CHIP is not funded, but
    approximately 104,000 Virginia children would be in jeopardy of
    becoming uninsured. According to our projections submitted in our
    August 2014 CMS 37/21B report, we do not project a CHIP allotment
    carryover from FFY 2015. Therefore, Virginia would have no federal
    funds available to continue coverage for these children into FFY 2016.

    We project that we will need $356,175,917 in total funds to continue
    our CHIP programs in FFY 2016. For our S-CHIP program alone, Virginia
    expects to need $219,644,400 in total funds to continue the program.
    Eighty-eight percent (88%) of that or $193,287,072 is currently
    budgeted to come from the federal government due to the twenty-three
    point increase in the state's Federal Financial Participation (FFP)
    match rate starting with FFY 2016. While we believe that FAMIS is a
    successful and needed program, if CHIP is not funded, Virginia will not
    be able to absorb the federal share and continue the S-CHIP program
    with state funds only.

    In addition to concerns about children in our separate CHIP program
    becoming uninsured if CHIP funding is not extended, Virginia also has
    serious concerns about funding the M-CHIP program. Without the expected
    CHIP funding at eighty-eight percent (88%) FFP match rate, our
    understanding is that we would be required to continue to cover these
    children under the Maintenance of Effort (MOE), but that our match rate
    for covering these children would fall to the regular Medicaid FFP
    match rate of fifty percent (50%), requiring an additional $51,881,977
    in state funds for FFY 2016.

    5. In spite of the restructuring and retargeting of allotments that
    occurred in 2009, some CHIP funding remains unspent. Do you believe the
    annual allotments your state has received starting in 2009 have been
    sufficient and the formula is working appropriately? Do you believe
    there is a need for Congress to further address the issue of unspent
    allotments?

    The allotment process was greatly improved under the 2009 CHIPRA
    legislation and appears to be working appropriately.

    6. Over the past number of years, States have worked to reduce the
    number of uninsured children, and Medicaid and CHIP have been a
    critical component of that effort. Do you believe there are federal
    policies that could help states do an even better job in enrolling
    eligible children? What other policy changes, if any, would help
    improve enrollment of eligible children, reduce the number of the
    uninsured, and improve health outcomes for children in your state?

       Guarantee twelve months of continuous coverage for children.
       Eliminate requirements to prevent substitution of coverage from the
            CHIP program to reduce coverage barriers and streamline
            administration of the program. CHIP is the only publically-
            funded health care program with this requirement.
       Allow coverage for dependents of public employees without
            additional qualifying steps.
       Improve alignment of coverage with the Marketplace so that there is
            no gap in coverage when a child/family moves from CHIP or
            Medicaid coverage to the Marketplace.
       Enhance the electronic verification systems available to states
            through the HUB to reduce the need to request paper
            verifications.
       Allow coverage of medically-necessary Institution for Mental
            Diseases (IMO) placements for CHIP eligible children as is
            available to children covered by Medicaid.
       Allow states to claim enhanced FFP for production of materials
            (brochures, posters, member handbooks, TV and radio ads, etc.,
            as well as media buys) in languages other than English, not
            just the translation itself.

                                     ______

                              STATE OF WASHINGTON

                             HEALTH CARE AUTHORITY

      626 8th Avenue, SE  P.O. Box 45502  Olympia, Washington 98504-5502

    October 6, 2014

    The Honorable Fred Upton            The Honorable Ron Wyden
    Chairman                            Chairman
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    2183 Rayburn House Office Building  221 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    The Honorable Henry A. Waxman       The Honorable Orrin G. Hatch
    Ranking Member                      Ranking Member
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    2204 Rayburn House Office Building  104 Hart Office Building
    Washington, DC 20515                Washington, DC 20510

    Dear Senators Wyden and Hatch and Representatives Upton and Waxman:

    SUBJECT: Extending Funding of the Children's Health Insurance Program

    Thank you for the opportunity to provide input as federal policymakers
    considers extending funding of the Children's Health Insurance program
    (CHIP). Washington State is supportive of extending funding of the CHIP
    program through 2019. Below we have provided responses to the questions
    posed. We hope our responses resonate with Congress and other states in
    continuing this popular and effective program for providing health care
    coverage for children.

      1.  How many individuals are served by your state's CHIP program?
            What are the characteristics of CHIP enrollees in your state
            (e.g. income, health status, demographics)?

          State's response: Washington State provides health care coverage
            for nearly fifty thousand low-income children each year under
            its stand-alone CHIP program. Average monthly enrollment
            exceeds 38,000. Coverage is provided to unborn children whose
            mothers do not qualify for Medicaid because of citizenship
            status, but family income is at or below 193 percent federal
            poverty level (FPL), and to children birth through age eighteen
            whose family income is at or below 312 percent FPL. Thirty-two
            percent of the children birth to age 19 served by Washington's
            CHIP are members of an ethnic minority. Eighty-five percent of
            the children enrolled in CHIP receive their coverage via a
            Managed Care Plan.

      2.  What changes has your state made to its CHIP program as a result
            of the Patient Protection and Affordable Care Act? How has the
            implementation of the PPACA impacted the way your state
            administers CHIP?

          State's response: Over the last year, Washington State has
            implemented a highly successful state-based exchange--
            www.wahealthplanfinder.org. Through this exchange portal,
            individuals and families can apply for the full range of
            subsidized insurance options including Medicaid (Apple Health)
            and CHIP (Apple Health with premiums). Applicants who use the
            web portal receive an eligibility decision in ``real-time''
            based on Modified Adjustable Growth Income. This has
            dramatically improved the timeliness of service delivery and
            reduced delays in accessing needed medical care.

      3.  To the extent the following information is readily available and
            you believe it is relevant, please describe the services and or
            cost sharing currently provided in your state under CHIP that
            are not comparably available through your state's exchange or
            through the majority of employer sponsored health plans in your
            state.

          State's response: The benefit package under CHIP is the same as
            that offered children under Medicaid, and has an actuarial
            value of 100 percent. This value is over 25 percent higher than
            the actuarial value of a subsidized silver level plan in the
            exchange. There is no cost-sharing for this coverage other than
            a nominal $20-$30 per monthly premium based on income, applied
            to a maximum of two children each household. In addition, CHIP
            coverage offers a richer set of services beyond the ten
            essential health care benefits in the exchange plans, including
            Early Periodic Screening, Diagnosis and Treatment, Health
            Homes, Personal Care Services, Tobacco Cessation Counseling,
            Targeted Case Management, Nursing Facility-Long-Term Care, and
            Intermediate Care, Individuals with Intellectual Disabilities
            Facilities for the Developmentally Disabled.

      4.  Do you recommend that funding be extended? If so, for how long,
            and for budgeting and planning purposes, under what timeframe
            should Congress act upon an extension? If you do not believe
            CHIP funding should be extended, what coverage (if any) do you
            believe CHIP enrollees in your state would be able to obtain?
            How many children covered by CHIP do you estimate would become
            uninsured in the absence of CHIP?

          State's response: We strongly support Congress acting to extend
            funding of CHIP for a minimum of two years as recommended in
            the June 2014 MACPAC report. We believe an additional two-year
            extension to 2019 will allow Congress and the states the
            necessary time for the exchanges and health care networks to
            mature without negative impacts to the health care of our
            nation's children. We believe CHIP has been instrumental in
            providing effective health care coverage for uninsured children
            for the last 15 years. We would urge Congress to act no later
            than March 2015 to extend funding for CHIP if the State is to
            avoid development costs associated with eliminating the program
            in fiscal year 2015. If funding for CHIP is not authorized in
            FY 2016, 12,000 unborn children annually will not have access
            to prenatal coverage.

      5.  In spite of the restructuring and retargeting of allotments that
            occurred in 2009, some CHIP funding remains unspent. Do you
            believe the annual allotments your state has received starting
            in 2009 have been sufficient and the formula is working
            appropriately? Do you believe there is a need for Congress to
            further address the issue of unspent allotments?

          State's response: In recent years, Washington State's CHIP
            expenditures have met or exceeded the available allotment.
            Given the 20 percent increase in our CHIP enrollment over the
            last year, we would ask that Congress consider a formula for
            establishing Washington's annual allotment that recognizes our
            success in operating a state-based exchange. Washington
            occupies a unique niche as a Sec. 2105(g) qualifying state. If
            the allotment formula for our state is not substantially
            modified, we estimate a loss of federal revenue in excess of
            $50 million dollars. We would also recommend Congress address
            the issue of unspent allotments by extending the enrollment
            performance bonus authorized under the Children's Health
            Insurance Program Reauthorization Act (CHIPRA).

      6.  Over the past number of years, States have worked to reduce the
            number of uninsured children, and Medicaid and CHIP have been a
            critical component of that effort. Do you believe there are
            federal policies that could help states do an even better job
            in enrolling eligible children? What other policy changes, if
            any, would help improve enrollment of eligible children, reduce
            the number of the uninsured, and improve health outcomes for
            children in your state?

          State's response: We support Congress establishing a unified set
            of Pediatric Quality measures as described in CHIPRA. We
            believe Congress could encourage states to pursue improved
            health outcomes by supporting adoption of such quality measures
            with enhanced federal funding (similar to performance bonuses
            for enrollment). Further, we believe grant funds should
            continue to be designated for pediatric institutions to
            continue the study, development, and measurement of improved
            health outcomes for children and adolescents.

    Thank you for the opportunity to review your request and answer your
    questions. Sincerely,

    Sincerely,

    Dorothy F. Teeter, MHA
    Director

                                     ______

                             State of West Virginia

                             Office of the Governor

                          1900 Kanawha Boulevard, East

                              Charleston, WV 25305

                                 (304) 558-2000

    Earl Ray Tomblin
    Governor

                                October 31, 2014

     The Honorable Fred Upton           The Honorable Henry A. Waxman
    Chairman                            Ranking Member
    U.S. House of Representatives       U.S. House of Representatives
    Committee on Energy and Commerce    Committee on Energy and Commerce
    2183 Rayburn House Office Building  2204 Rayburn House Office Building
    Washington, D.C. 20515              Washington, D.C. 20515

    The Honorable Ron Wyden             The Honorable Orrin G. Hatch
    Chairman                            Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
    Washington, D.C. 20510              Washington, D.C. 20510

    Dear Chairman Upton, Chairman Wyden, Ranking Member Waxman, Ranking
    Member Hatch, House Energy and Commerce and Senate Finance Committees:

        Thank you for the opportunity to respond to your recent inquiries
    regarding policy considerations affecting the federal Children's Health
    Insurance Program (CHIP) and West Virginia's Children's Health
    Insurance Program (WVCHIP). Since launching WVCHIP in July 1998, we
    have provided coverage and access to health care services for more than
    185,000 West Virginia children who were previously ineligible to
    receive insurance coverage through Medicaid or other insurance
    providers. For years, West Virginia has been a leader in reducing the
    number of uninsured children through WVCHIP's continued outreach
    efforts to protect and promote the health of West Virginia children by
    gradually expanding eligibility and health services to families in
    need.

        As we continue to implement health care reform, our state's vision
    for CHIP services assumes enrollees would transition to receive
    services either through Medicaid expansion coverage or subsidized
    commercial plans that provide more affordable and robust coverage. As
    we prepare for the last year of CHIP funding, it is unlikely our vision
    will become a reality for significant number of West Virginia
    enrollees.

      1)  Individuals Served: In Federal Fiscal Year 2013 WVCHIP served an
            unduplicated 37,413 children. In FFY 2014, the unduplicated
            enrollment decreased to 33,767, a 9.7% decrease in part due to
            the Medicaid child eligibility expansion to 133% federal
            poverty level (FPL) income level. On December 31, 2013, WVCHIP
            monthly enrollment was 25,011, prior to the transition of all
            WVCHIP enrollees to Medicaid by December 31, 2014, at which
            date the WVCHIP enrollment is estimated to total 19,557.

          Since the creation of the WVCHIP program, the demographics of
            West Virginia children receiving available services have
            evolved. In 2000, WVCHIP expanded its eligibility income level
            in several phases from 200% FPL and again in 2011 to 300% FPL.
            On July 1, 2014, children of public employees also became
            eligible to receive WVCHIP coverage. A past comparison of non-
            disabled WVCHIP children and non-disabled Medicaid children
            showed the WVCHIP population were identified by higher risk
            adjustment factors (were sicker) than Medicaid children. Simply
            put, CHIP and WVCHIP are serving a population of our state's
            children that Medicaid is not.

      2)  CHIP Changes under PPACA: The most significant changes to CHIP
            operations resulting from PPACA include those policy changes
            requiring the MAGI income counting rules and implementing
            operational changes to the eligibility system and electronic
            claims systems. While these updates are necessary enhancements,
            they have required significant resources and commitment, by not
            only WVCHIP, but from all those systems which provide similar
            administrative functions for the State's Medicaid program.

      3)  Premiums and Copayments: WVCHIP currently applies both modest
            premiums and copayments to different income tiers as follows:

                        Premiums and Selected Cost Sharing in West Virginia's PCHIP Program, 2014
    ----------------------------------------------------------------------------------------------------------------
                                                                                       Inpatient       Prescription
                Family Income Level                  Premiums       Office Visits       Services          Drugs
    ----------------------------------------------------------------------------------------------------------------
    150% FPL..................................              None             $5 *             None            $0-$5
    > 150-211% FPL............................              None        $15-$25 *              $25           $0-$10
    > 211% FPL................................    $35/$71 max **        $20-$25 *              $25           $0-$15
    ----------------------------------------------------------------------------------------------------------------
    * Waived when member has a designated medical home.
    ** There is a single child family rate vs. multi-child family rate.

          NOTE: Premiums and cost sharing are set within federal
            parameters, i.e., in total, any family contribution to the cost
            of coverage cannot exceed five percent of family income.

          WVCHIP currently collects more than $900,000 in premium payments
            each year from families with incomes over 200% up to 300% FPL
            level. In 2013, approximately one-third of these families fell
            behind on premium payments and/or cancelled their enrollment.

          Lack of Affordable Options and Increase in Uninsured Children: If
            federal funding for CHIP is eliminated in 2015, current
            enrollees will be given the option to enroll in Qualified
            Health Plans (QHP) in West Virginia's Marketplace. We expect
            more than half of WVCHIP enrollees would drop enrollment during
            the benefit year, as the affordability of premium levels for
            family coverage of four would be challenging, even with the tax
            subsidy. The average monthly premium cost for a silver plan in
            West Virginia's Marketplace covering a family of four at the
            139% FPL level would be $354 with a $200 deductible. The same
            WVCHIP family now pays no monthly premium. The silver plan
            average monthly premium cost for a family of four at the 300%
            FPL would be $824 with a $9,500 deductible. The most affordable
            bronze plan for a family of four at the 139% FPL has an average
            monthly premium of $253 with a $10,000 deductible. This same
            plan for a family of four at the 300% FPL level would be an
            average monthly premium of $723 with a $10,000 deductible. Even
            if these families could afford the cost of premium, the
            deductibles are a significant access barrier to services
            offered to WVCHIP children. This is especially the case for
            dental services where families would bear a $350 deductible per
            child up to a $700 deductible per family for dental care.
            WVCHIP has some $25 copayments for a handful of lesser used
            services, but there are no deductibles for dental. This
            information is summarized in the chart below.

                             West Virginia Qualified Health Plans' Premiums and Deductibles
    ----------------------------------------------------------------------------------------------------------------
                                                                     Silver Plan                       Bronze Plan
               Family Size and Income               Silver Plan         Family        Bronze Plan         Family
                                                      Premiums        Deductible        Premiums        Deductible
    ----------------------------------------------------------------------------------------------------------------
    4 (139% FPL)................................      $354/month             $200       $253/month          $10,000
    4 (300% FPL)................................      $824/month           $9,500       $723/month          $10,000
    ----------------------------------------------------------------------------------------------------------------

          In addition to the substantial increase in cost sharing for
            families, children would not receive the same health services
            as QHPs in the Marketplace were not created with the unique
            needs of children in mind. An important value of a pediatric-
            centered benefit is to assure coverage and access of preventive
            services, which WVCHIP does with no copayments or deductibles.
            WVCHIP children between the ages of three years to six years
            accessed well child visits at a 77.4% rate last year and 76.4%
            the year before. We would expect to see this rate and other
            preventive services decrease for CHIP children if they are
            subject to copayments and deductibles.

      4)  Recommended Extension for Four Years: We recommend consideration
            of a four-year CHIP extension. This extension would allow for
            further market development and stabilization with potentially
            more affordable choices for more West Virginians. In 2014, the
            total percentage or children enrolled in QHP plans was quite
            low (less than 1%). It would take at least two or three more
            budget cycles to determine the participation rates for CHIP
            income populations in QHPs. To determine whether enrollees are
            better served in alternative Medicaid bridge plans or under a
            basic health plan option would require an extension.

          QHP Non-Affordability for West Virginia CHIP Households: In the
            spring prior to the 2014 Marketplace enrollment, a survey of
            WVCHIP households was completed. The results found more than
            half of the surveyed households indicated they could pay only
            $50 per month in premiums for family coverage, considerably
            less than QHP premium rates. Based on this survey and without
            an extension of CHIP funds, we believe children currently
            receiving WVCHIP coverage and benefits could potentially become
            uninsured, resulting in increased uncompensated care costs for
            providers and unmet healthcare needs for children. While our
            ultimate goal remains to achieve a better Marketplace/public
            coverage fit for these families in whatever means possible, not
            extending CHIP funds would be a significant step backward for
            the health of West Virginia children.

      5)  The Allotment Formula: WVCHIP has been managed through strong
            fiscal management efforts, and federal dollars have always been
            sufficient to meet the needs of those enrolled. Since the CHIP
            Reauthorization Act (CHIPRA) of 2009, the basic allotment
            funding formula has worked well to support our state's program
            even during phased in expansion periods. This has allowed West
            Virginia to continue to expand the program within the
            parameters of its budget and reduce the number of uninsured
            children. CHIPRA special contingency funds and bonus set aside
            for enrollment incentives were less effective clue to the
            current successes in terms of increased enrollment for children
            in our state as well as the efficient implementation of stream
            lining enrollment changes. CHIP allotments must now be split
            between WVCHIP and Medicaid, which causes us great pause as
            CHIP funds may be used at a more rapid rate, potentially
            leading to federal funding shortfalls. If federal funding to
            support CHIP is not extended, WVCHIP will be terminated due to
            state statute requiring the elimination of the program if
            federal funds are no longer sufficient. Without the extension
            of CHIP federal funds, thousands of West Virginia children and
            families will be impacted.\1\
    ---------------------------------------------------------------------------
        \1\ Sec. 5-16B-8. Termination and reauthorization. (a) The program
    established in this article abrogates and shall be of no further force
    and effect, without further action by the Legislature, upon the
    occurrence of any of the following: (2) The effective date of any
    reduction in annual federal funding levels below the amounts allocated
    and/or projected in Title XXI of the Social Security Act of 1997.

           Federal Funds Shortfall Projection: WVCHIP's actuary currently
            projects the program could start to experience a funding
            shortfall as early as first quarter Federal Fiscal Year 2016
            (December 2015) without additional federal appropriations after
    ---------------------------------------------------------------------------
            2015.

          The CHIP Allotment Post Federal Fiscal Year 2015
          Currently no Title XXI funds are allotted for the program past
            federal fiscal year 2015. The ``separate'' CHIP has $41,806,543
            in projected costs for 2016 based on current projected
            enrollment and trends. The ``expansion'' CHIP has projected
            2016 costs of $22,900,000. If the ``enhanced'' federal matching
            percentage (FMAP) is increased by 23%, as stated in the ACA,
            and additional federal funding is allotted, the federal cost
            for CHIP in West Virginia would be $64,706,543. There would be
            no state share, as West Virginia's federal matching percentage
            would be 100% (2016 enhanced FMAP = 79.99% + 23% = 100% FMAP
            cap). If the 23% increase to the enhanced FMAP is disregarded,
            and sufficient funding is allotted at the federal level, the
            federal cost for CHIP in West Virginia would be $51,758,764,
            while the state cost would be $12,947,779. If no funding is
            allotted at the federal level post 2015, West Virginia would
            have state costs of $41,806,543 to continue the ``separate''
            CHIP. The ``expansion'' CHIP would continue to be funded at the
            regular FMAP using Title XIX funds. The projected federal cost
            for the ``expansion'' CHIP in 2016 is $16,355,180 and state
            funding of $6,544,820 at the regular FMAP. This represents an
            additional state cost of $1,962,530 compared to the enhanced
            FMAP currently available or $6,544,820 compared to enhanced
            FMAP with the 23% increase. The unknown is the additional costs
            to families who move from CHIP coverage to the marketplace or
            from CHIP coverage to being uninsured because of rules
            regarding marketplace eligibility--most notably the ``family
            glitch,'' or to affordability issues mentioned above. The state
            will also bear the uncompensated costs for those children who
            cannot enter the Marketplace.

          Federal Budget Action Timeline: It is important to stress action
            must fall early within the 2015 current year's cycle, as the
            state would amend its State Plan by the second quarter in the
            2015 calendar year to allow time to close enrollment six months
            in advance of the December 2015 date. If Congress were to delay
            a decision on a CHIP funding extension until late 2015 for the
            2016 budget cycle, it could come too late to continue West
            Virginia's program.

      6)  Furthering Children's Enrollment, Reductions in Uninsured
            Children: West Virginia continues to streamline its enrollment
            processes, particularly re-enrollment so as to not eliminate
            coverage for children due to noncompliance for timely response.
            We know many children dropped from the rolls at renewal remain
            eligible, and children are re-enrolled as soon as they are sick
            or have coverage need. Policy changes such as including Express
            Lane Eligibility as a permanent option or incentivizing
            coverage renewal at the time of SNAP enrollment would minimize
            this administrative inefficiency and promote better continuity
            of care for children. These changes also help lower caseloads
            for a workforce that has been severely stretched since
            recessionary pressures caused spikes in enrollment of safety
            net programs. In considering further incentives, most states
            are likely to continue to streamline enrollment where possible.
            The most important incentive would be one which would address
            continued lowering of the children's uninsured rate.

          Improving Health Outcomes: West Virginia has been a participant
            in a CHIPRA Pediatric Quality Demonstration grant concerning
            medical home and quality measurement--work that has been
            challenging and complex and is drawing to a conclusion this
            year. It is critical that states have such funds to work on
            quality changes and identify performance drivers in the health
            care delivery system with the child population as its main
            focus. While much of the focus for federal funding has been
            tailored toward the chronically ill adult population, in many
            cases it leaves the needs of children out of the equation or in
            a secondary place of consideration. The importance of continued
            use of CHIP federal funding allotment to incentivize states to
            continue children's quality work cannot and must not be
            understated.

        In conclusion, West Virginia continues to face changing budgetary
    times. Without an extension of CHIP federal funding to help sustain
    child health care coverage while Marketplace options for children are
    evaluated and improved upon, we will not be able to provide the health
    care coverage our children need.

    Sincerely,

    Earl Ray Tomblin
    Governor

                                     ______

                               State of Wisconsin

                         Department of Health Services

      1 West Wilson Street  Post Office Box 7850  Madison, WI 53707-7850

                 Telephone 608-266-9622  www.dhs.wisconsin.gov

        Protecting and promoting the health and safety of the people of
                                   Wisconsin

    Scott Walker, Governor

    Kitty Rhoades, Secretary

    September 2, 2014

    Representative Fred Upton           Senator Ron Wyden
    Chairman                            Chairman
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    2183 Rayburn House Office Building  221 Dirksen Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    Representative Henry A. Waxman      Senator Orrin G. Hatch
    Ranking Member                      Ranking Member
    U.S. House of Representatives       U.S. Senate
    Committee on Energy and Commerce    Committee on Finance
    2204 Rayburn House Office Building  104 Hart Senate Office Building
    Washington, DC 20515                Washington, DC 20510

    Dear Representative Upton, Representative Waxman, Senator Wyden, and
    Senator Hatch:

    Governor Walker asked me to respond to your recent letter asking for
    input on the Children's Health Insurance Program (CHIP).

    In Wisconsin, CHIP funding is integrated with the state's Medicaid
    coverage for children and low income families, called BadgerCare Plus.
    Using the combination of federal Medicaid and CHIP funds and state
    match, Wisconsin provides health coverage to children up to 300% of
    federal poverty level (FPL).

    The following are answers to your specific questions:

    1. As of June 2014, Wisconsin had 38,652 children in CHIP. The
    populations served by the CHIP program in Wisconsin currently include:

       Children aged 1 through 5 years with incomes between 185% and 300%
            of the FPL.
       Children aged 6 through 18 years with incomes between 133% and 300%
            of the FPL.
       Unborn children of women not eligible for Medicaid with incomes up
            to 300% of the FPL.

    2. As required under the Patient Protection and Affordable Care Act
    (PPACA), the state has implemented modified adjusted gross income
    (MAGI) rules for CHIP funded children. Wisconsin has maintained income
    eligibility levels for all Medicaid and CHIP funded children. Effective
    April 1, 2014, the state began providing Medicaid Standard Plan
    benefits coverage to all adults and children in the Medicaid and
    BadgerCare Plus program, including CHIP funded children. Previously,
    children above 200% FPL were enrolled in a benchmark health plan, whose
    benefits were consistent with commercial insurance. In another change
    resulting from PPACA, the state has begun processing CHIP applications
    received from the federal health insurance exchange.

    3. The Standard Plan offered to all Medicaid and CHIP funded
    individuals includes more generous dental, prescription drugs, mental
    health, transportation, and long term care benefits, as well as lower
    cost sharing requirements, than plans offered through the health
    insurance exchange or in other commercial coverage. A list of Standard
    Plan benefits is available at: http://badgercareplus.org/standard.htm.

    4. Wisconsin recommends that CHIP funding be extended and that Congress
    act to do so before the expiration of the funding authorization at the
    end of federal fiscal year 2015. In FFY14, Wisconsin's CHIP allotment
    was $109,462,826, representing an important component of funding the
    state devotes to health coverage for low income children. It is crucial
    for Congress to provide states with predictable funding levels in the
    coming years. Wisconsin recommends that CHIP be extended at least for
    the duration of the PPACA requirement that states maintain current
    eligibility levels for children. This requirement is in place through
    September 2019. As noted above, CHIP funding supports over 38,000
    children in Wisconsin. Also Wisconsin receives the CHIP enhanced
    federal Medicaid matching rate for some children 6 to 18 years old who
    are between 100% and 133% of the FPL and children under age 6 with
    incomes over 133% of the FPL and below Medicaid income limits.

    5. In general, the current allocation formula has been sufficient for
    Wisconsin. It is important for Wisconsin at minimum to keep its current
    allocation. Congress may wish to consider indexing states' allocations
    to reflect population growth or health care inflation.

    6. The most useful thing the federal government can do is provide
    states with as much flexibility as possible to design programs to meet
    each state's unique needs for health coverage.

    Thank you again for your letter. Please feel free to contact me or my
    staff if you need any additional information.

    Sincerely,

    Kitty Rhoades
    Secretary
                                     ______

                       Response from the State of Wyoming

    1. How many individuals are served by your state's CHIP program? What
    are the characteristics of CHIP enrollees in your state (e.g. income,
    health status, demographics)?

       5,220 average monthly enrollment, SFY 2014.
        -  Serve youth 0-19 years of age, with thirty-six (36%) of CHIP
                recipients being between seven (7) and eleven (11) years of
                age; only four percent (4%) between zero and two (2) years
                of age.
        -  Even distribution of male and female youngsters.
        -  Sixty-five percent (65%) of CHIP population live in seven (7) of
                the twenty-three (23) counties.
        -  Sixty-four percent (64%) of CHIP families have incomes between
                151%-200% FPL (prior to Jan. 2014); seventy-seven percent
                (77%) of CHIP families have incomes between 151%-200% FPL
                (post Jan. 2014).

        Seventy-one percent (71%) of all CHIP recipients utilized a
            medical benefit, including pharmacy, during a 12-month period
            of time.
        -  Professional services such as diagnostic lab, x-ray, optical
                exams and urgent care services account for forty-four
                percent (44%) of delivered services.
        -  Institutional services (inpatient) for treatment of ailments
                such as psychoses and depressive neuroses account for
                twenty-four percent (24%) of delivered services.
          *  The catastrophic claims classification ($50,000+) is comprised
                of twenty-two CHIP recipients, with eleven (11) of the
                twenty-two catastrophic claims being for inpatient
                treatment of psychiatric disorders.
        -  Institutional services (outpatient) for treatment of ailments
                such as abdominal pain, bone fracture, ear ache account for
                twenty-one percent (21%) of delivered services.
        -  Prescription Drugs account for eleven percent (11%) of services.
          *  Antiasthmatic, AD HD treatment, a variety of antibiotics and
                dermatological pharmaceuticals are the most prevalent.

       Fifty-three percent (53%) of all CHIP recipients utilize a dental
            benefit during a 12-month period of time.
        -  Services such as sealants, fluoride, varnish, x-rays account for
                54% of services delivered.
        -  Services such as fillings and crowns account for 27% of services
                delivered.
        -  Five hundred forty-four (544) youngsters received oral surgery
                services.
        -  Orthodontic services are growing at a higher rate than other
                services.

    Data indicates that overall the CHIP population is quite healthy,
    utilizing services to address health issues as they present, and are
    reactionary in nature. Preventive services, such as well-child and
    well-adolescent checks are not utilized as frequently even though there
    is no co-pay for preventive services. Limited data suggests an hourly
    wage parent/caregiver may consider it too costly to forego work in
    order to schedule a well-child exam.

    2. What changes has your state made to its CHIP program as a result of
    the Patient Protection and Affordable Care Act? How has the
    implementation of PPACA impacted the way your state administers CHIP?

        CHIP enrollment processes are now conducted in a centralized
            Customer Service Center.
        CHIP eligibility is now determined by a new integrated eligibility
            system, the Wyoming Eligibility System (WES) that ascertains
            CHIP and Medicaid eligibility with a single, streamlined
            application.
        Implementation of the new Modified Adjusted Gross Income (MAGI)
            based income standard deemed approximately 1,251 CHIP enrollees
            Medicaid eligible. The identified youth were transitioned to
            Medicaid beginning January 1, 2014.
        Verification is now required for reported income. Previous to the
            ACA income amounts were provided via self-declaration.
        Previous to the ACA, a social security number was not necessary
            for CHIP application. A social security number is now required
            for each individual on the application applying for CHIP
            enrollment.

    The administration of the eligibility and enrollment elements of the
    program have shifted from in-house eligibility staff to a customer
    service center with the CHIP Eligibility Manager providing
    administrative oversight of the work conducted by the customer service
    center staff.

    The administration of the Federal CHIP requirements including State
    Plan and Amendments, Federal Reporting, strategic planning, coverage
    and benefit requirements, outreach and education activity have remained
    as they were prior to the ACA for the CHIP Program Manager.

    3. To the extent the following information is readily available and you
    believe it is relevant, please describe the services and or benefits
    and or cost sharing currently provided in your state under CHIP that
    are not comparably available through your state's exchange or through
    the majority of employer sponsored health plans in your state.

    Premium: None                         Premium: $771/mo-$1,159/mo
    Deductible: None                      Deductible: $2,000/yr-$3,000/yr
    Out of Pocket max: 5% annual gross    Out of Pocket max: $3,000/yr-
     income                                $12,700/yr
    Dental benefits: included in benefit  Additional deductible or separate
     package                               policy

    4. Do you recommend that CHIP funding be extended? If so, for how long,
    and for budgeting and planning purposes, under what timeframe should
    Congress act upon an extension? If you do not believe CHIP funding
    should be extended, what coverage (if any) do you believe CHIP
    enrollees in your state would be able to obtain? How many children
    covered by CHIP do you estimate would become uninsured in the absence
    of CHIP?

    The recommendation would be for the extension of CHIP beyond September
    30, 2015. The principal rationale for the recommendation is the vast
    majority of youth currently enrolled in CHIP would not have any viable
    options in the Marketplace nor would they be eligible for Medicaid. In
    addition, it is unlikely the CHIP family would be eligible for a tax
    credit as the formula to determine tax credit eligibility is based on
    the employee's share of the premium exceeds 9.5% of the employee's
    adjusted gross income. The option of the State absorbing the 65% match
    currently provided at the Federal level is not probable. The result
    would be a significant number of children returning to the rolls of the
    uninsured, defeating one of the purposes of the Affordable Care Act
    (ACA).

    5. In spite of the restructuring and retargeting of allotments that
    occurred in 2009, some CHIP funding remains unspent. Do you believe the
    annual allotments your state has received starting in 2009 have been
    sufficient and the formula is working appropriately? Do you believe
    there is a need for Congress to further address the issue of unspent
    allotments?

    The allotments we have received have been sufficient, and since 2009
    unspent allotment monies have been returned for redistribution. Perhaps
    there is an opportunity for Congress to readdress the use of unspent
    allotment dollars as a means to transition CHIP programs in a seamless
    fashion, and avoid children returning to the rolls of the uninsured.
    Retention of unused allotment monies would allow states to begin to
    develop options, such as subsidizing an affordable child only policy in
    the Marketplace.

    6. Over the past number of years, States have worked to reduce the
    number of uninsured children, and Medicaid and CHIP have been a
    critical component of that effort. Do you believe there are federal
    policies that could help states do an even better job in enrolling
    eligible children? What other policy changes, if any, would help
    improve enrollment of eligible children, reduce the number of
    uninsured, and improve health outcomes for children in your state?

    The CHIP program is a Federal and State partnership with each partner
    participating to the extent politically and economically feasible. To
    date numerous program options have been offered at the Federal level to
    State CHIP programs. Our State has embraced several of the program
    options, but not all options. There are currently no impediments to
    expanding the outreach and enrollment efforts from a federal level.

                                     ______

         Prepared Statement of Hon. Sylvia Mathews Burwell, Secretary,
                  U.S. Department of Health and Human Services
        Chairman Hatch, Ranking Member Wyden, and Members of the Committee,
    thank you for the opportunity to discuss the President's FY 2016 Budget
    for the Department of Health and Human Services (HHS).

        The Department has made historic strides towards ensuring that all
    Americans can lead healthy and productive lives. Today, thanks to the
    Affordable Care Act (ACA), middle class families have more security,
    and many of those who already had insurance now have better coverage.
    In the past year alone, about 10 million uninsured Americans finally
    gained health insurance. In the private market, millions more now have
    access to expanded coverage for preventive health care services, such
    as a mammogram or flu shot, without cost sharing. At the same time, as
    a nation we are spending our health care dollars more wisely and
    starting to receive higher quality care.

        In part due to the ACA, households, businesses, and the Federal
    Government are now seeing substantial savings. Today, health care cost
    growth is at exceptionally low levels, and premiums for employer
    sponsored health insurance are about $1,800 lower per family on average
    than they would have been had trends over the decade that preceded the
    ACA continued. Across the board, the Department has continued its
    commitment to the responsible stewardship of taxpayer dollars through
    investments in critical management priorities. We have strengthened our
    ability to combat fraud and abuse and advance program integrity,
    further driving savings for the taxpayer while enhancing the efficiency
    and effectiveness of our programs.

        The Department has done important work addressing historic
    challenges, including the coordinated whole-of-government responses to
    Ebola both here at home and abroad and to last year's increase in
    unaccompanied children crossing the Southwest border into Texas.

        The President's FY 2016 Budget for HHS builds on this progress
    through critical investments in health care, science and innovation,
    and human services. The Budget proposes $83.8 billion in discretionary
    budget authority, an increase of $4.8 billion from FY 2015
    appropriations. This additional funding will allow the Department to
    make the investments that are necessary to serve the millions of
    American people who count on our services every day, while laying the
    foundation for healthier communities and a stronger economy for the
    middle class in the years to come. The Budget also further strengthens
    the infrastructure needed to prevent, prepare for, and respond to
    future challenges effectively and expeditiously.

        The Department's Budget request recognizes our continued commitment
    to balancing priorities within a constrained budget environment through
    legislative proposals that, taken together, would save the American
    people a net estimated $228.2 billion in HHS programs over 10 years.
    The Budget builds on savings and reforms in the ACA with additional
    measures to strengthen Medicare and Medicaid, and to continue the
    historic slow-down in health care cost growth. Medicare proposals in
    our Budget, for example, more closely align payments with the costs of
    providing care, encourage health care providers to deliver better care
    and better outcomes for their patients, improve access to care, and
    create incentives for beneficiaries to seek high value services.

     providing all americans with access to quality, affordable health care
        The President's FY 2016 Budget request builds on progress made to
    date by focusing on access, affordability, and quality--goals that we
    share with Congress and hope to work on together, in partnership,
    moving forward. The Budget also continues to make investments in
    Federal public health and safety net programs to help individuals
    without coverage get the medical services they need, while
    strengthening local economies.

        Expanding Options for Consumers through the Health Insurance
    Marketplaces. The ACA is making quality, affordable health coverage
    available to millions of Americans who would otherwise be uninsured. As
    of mid-January more than 9.5 million consumers selected a plan or were
    automatically re-enrolled through the Health Insurance Marketplaces for
    coverage in 2015. At the same time, consumers are seeing more choice
    and competition. There are over 25 percent more issuers participating
    in the Marketplace in 2015 compared to 2014. Not only that, in 2015,
    nearly 8 in 10 Federal Marketplace customers can get coverage for $100
    or less per month after applicable tax credits.

        Partnering with States to Expand Medicaid for Low-Income Adults.
    The ACA provides full Federal funding to cover newly eligible adults in
    states that expand Medicaid up to 133 percent of the Federal poverty
    level through 2016, and covers no less than 90 percent of costs
    thereafter. This increased Federal support has enabled 28 states and
    the District of Columbia to expand Medicaid coverage to more low-income
    adults. Just recently we saw another state, Indiana, join us to bring
    much needed access to health care coverage to a state-estimated 350,000
    uninsured low-income residents. Across the country, as of November
    2014, over 10.1 million additional individuals are now enrolled in
    Medicaid and CHIP compared to the fall of 2013. As Secretary, I am
    personally committed to working with Governors across all 50 states to
    expand Medicaid in ways that work for their states, while protecting
    the integrity of the program and those it serves.

        Extending the Children's Health Insurance Program. The Budget
    includes an additional four years of funding for CHIP through FY 2019
    to provide comprehensive and affordable coverage for children and
    families across the United States. This extension will help bring
    stability to state budgets and continuity of coverage for children. We
    believe there is bipartisan support for CHIP and look forward to
    working with Congress to extend this program for the millions of
    children who depend upon it.

        Improving Access to Health Care for American Indians and Alaska
    Natives (AI/AN). Reflecting the President's commitment to improving
    health outcomes across tribal nations, the Budget includes $6.4 billion
    for the Indian Health Service to strengthen programs that serve over
    2.2 million American Indians and Alaska Natives at over 650 health care
    facilities across the United States. The request fully funds estimated
    Contract Support Costs in FY 2016 and proposes to modify the program in
    FY 2017 by reclassifying it as a mandatory appropriation, creating a
    longer-term solution.

        Bolstering the Nation's Health Workforce. The Budget includes a
    $14.2 billion investment in our Nation's health care workforce to
    improve access to health care services, particularly in rural and other
    underserved communities. That includes support for over 15,000 National
    Health Service Corps clinicians, who will serve the primary care,
    mental health, and dental needs of nearly 16 million patients in high-
    need areas across the country. The Budget also creates new funding for
    graduate medical education in primary care and other high-need
    specialties, which will support more than 13,000 residents over 10
    years, and advance the Administration's goal of higher-value healthcare
    that reduces long-term costs.

        To continue encouraging provider participation in Medicaid, the
    Budget invests $6.3 billion to extend the enhanced Medicaid
    reimbursement rate for primary care services, and makes strategic
    investments to encourage primary care by expanding eligibility to
    obstetricians, gynecologists, and non-physician practitioners. A
    January 2015 study by University of Pennsylvania and Urban Institute
    researchers found that the share of Medicaid enrollees who successfully
    got appointments with primary care providers grew by nearly 8
    percentage points between 2012 and 2014, when the program was fully
    implemented. The Budget also supports the provision of primary care
    services in the Medicare program by permanently incorporating the
    temporary 10 percent primary care incentive payment program into the
    Medicare physician fee schedule.

        Investing in Health Centers. Health centers are an essential
    primary care provider for America's most vulnerable populations,
    serving 1 out of every 15 Americans while reducing the use of costlier
    care through emergency departments and hospitals. The Budget includes
    $4.2 billion for health centers, including $2.7 billion in mandatory
    resources, to serve approximately 28.6 million patients in FY 2016 at
    more than 9,000 sites in medically underserved communities throughout
    the country.

        The Department's requests for health centers and the National
    Health Service Corps are vitally important, as the existing mandatory
    funding streams for these programs end in 2015. Without renewed funding
    in 2016 and beyond, millions of Americans may lose access to essential
    cost-effective primary care services provided through our Nation's
    health centers, and efforts to ensure provider access in underserved
    rural and urban areas across the country through the National Health
    Service Corps will come to a halt.
       delivering better care and spending our health care dollars wisely
        If we find better ways to deliver care, pay providers, and
    distribute information, we can receive better care and spend our
    dollars more wisely, all the while supporting healthier communities and
    a stronger economy. To build on and drive progress on these priorities,
    we are focused on the following three key areas:

        Improving the Way Care is Delivered. The Administration is focused
    on improving the coordination and integration of health care, engaging
    patients more fully in
    decision-making, and improving the health of patients--with an emphasis
    on prevention and wellness. HHS believes that incentivizing the
    provision of preventive and primary care services will improve the
    health and well-being of patients and slow cost growth over the long
    run through avoided hospitalizations and additional office visits. The
    Administration's efforts around patient safety and quality have made a
    difference--reducing hospital readmissions in Medicare by nearly eight
    percent, translating into 150,000 fewer readmissions between January
    2012 and December 2013 and reducing hospital patient harm by 17 percent
    from 2010 to 2013, saving 50,000 lives and $12 billion in health
    spending according to preliminary estimates.

        Improving the Way Providers are Paid. The Administration is testing
    and implementing new payment models that reward value and care
    coordination--rather than volume. HHS has seen promising results on
    cost savings with alternative payment models: already, existing
    Accountable Care Organizations (ACOs) programs have generated combined
    total program savings of $417 million to Medicare. To shift Medicare
    reimbursement from volume to value, and further drive progress in the
    health care system at large, the Department has announced its goal of
    tying 30 percent of traditional, or fee-for-service, Medicare payments
    to quality or value through alternative payment models by 2016 and 50
    percent by 2018.

        The Budget supports progress in this area by including proposals
    targeted at changing provider incentives and payment mechanisms. For
    example, the Budget puts Medicare's payments to physicians on solid
    ground by replacing Medicare's flawed Sustainable Growth Rate formula.
    The Budget would establish new annual physician payment updates to
    provide certainty and consistency to providers; create incentives for
    providers to participate in proven alternative payment models like
    ACOs; and streamline other value-based incentives. The Administration
    supports a long-term policy solution to fix the SGR and applauds the
    bipartisan, bicameral efforts that Congress undertook last year. The
    Administration looks forward to working with Congress to build on that
    effort and reform Medicare physician payments in a fiscally responsible
    manner.

        Improving the Way Information is Distributed. The Administration is
    working to create transparency of cost and quality information and to
    bring electronic health information to the point of care--enabling
    patients and providers to make the right decisions at the right time to
    improve health and care. The Centers for Medicare and Medicaid Services
    (CMS) is making major strides to expand and improve its provider
    compare websites, which empower consumers with information to make more
    informed health care decisions, encourage providers to strive for
    higher levels of quality, and drive overall health system improvement.
    To improve communication and enhance care coordination for patients,
    the FY 2016 Budget also includes a substantial investment ($92 million)
    in efforts supporting the adoption, interoperability, and meaningful
    use of electronic health records.
                  leading the world in science and innovation
        Investments in science and innovation have reshaped our
    understanding of health and disease, advanced life-saving vaccines and
    treatments, and helped millions of Americans live longer, healthier
    lives. With the support of Congress, there is more that we can do
    together. The President's FY 2016 Budget request lays the foundation to
    maintain our Nation's global edge in medical research. This Budget for
    NIH supports ongoing research and provides real investments in
    innovative science.

        Advancing Precision Medicine. The FY 2016 Budget includes $215
    million for the Precision Medicine Initiative, a new cross-Department
    effort focused on developing treatments, diagnostics, and prevention
    strategies tailored to the genetic characteristics of individual
    patients. This effort includes $200 million for the National Institutes
    of Health (NIH) to launch a national research cohort of a million or
    more Americans who volunteer to share their information, including
    genetic, clinical and other data to improve research, as well as to
    invest in expanding current cancer genomics research, and initiating
    new studies on how a tumor's DNA can inform prognosis and treatment
    choices. The Department will also modernize the regulatory framework to
    aid the development and use of molecular diagnostics, and develop
    technology and define standards to enable the exchange of data, while
    ensuring that appropriate privacy protections are in place. With the
    support of Congress, this funding would allow the Department to scale
    up the initial successes we have seen to date and bring us closer to
    curing the chronic and terminal diseases that impact millions of
    Americans across the country.

        Supporting Biomedical Research. The FY 2016 Budget includes $31.3
    billion for NIH, an increase of $1 billion over FY 2015, to advance
    basic biomedical and behavioral research, harness data and technology
    for real-world health outcomes, and prepare a diverse and talented
    biomedical research workforce. This research is critical to maintaining
    our country's leadership in the innovation economy, and can result in
    life-changing breakthroughs for patients and communities. For example,
    that NIH estimates it will be able to spend $638 million under this
    Budget request on Alzheimer's research, an increase of $51 million over
    FY 2015, which will position us to drive progress on recent advances in
    our understanding of the genetics and biology of the disease, including
    drugs currently in clinical trials, and those still in the pipeline.
        ensuring the building blocks for success at every stage of life
        As part of the President's plan to bolster and expand the middle
    class, the Budget includes a number of proposals that help working
    Americans meet the needs of their families--including young children
    and aging parents.

        Investing in Early Learning. High-quality early learning
    opportunities both promote children's healthy development and support
    parents who are balancing work and family obligations. Across the
    United States, many American families face real difficulties finding
    and affording quality child care and early education. In 2013, the
    average cost of full-time care for an infant at a child care center was
    about $10,000 per year--higher than the average cost of in-state
    tuition and fees at a public 4-year college. The Budget outlines an
    ambitious plan to make affordable, quality child care available to
    every low-income and middle-class family with young children; to expand
    access to high-quality early learning opportunities through the Head
    Start and Early Head Start programs; and to invest in voluntary,
    evidence-based home visiting programs that have been shown to leave
    long-lasting, positive impacts on parenting skills, children's
    development, and school readiness. These investments complement
    proposals at the Department of Education to provide high-quality
    Preschool to all four year olds from low- and moderate-income families
    and expand programs for middle-class children as well.

        The President's child care proposal builds on the reforms passed by
    Congress in the bipartisan reauthorization of the Child Care and
    Development Block Grant enacted last fall. The proposal makes a
    landmark investment of an additional $82 billion over 10 years in the
    Child Care and Development Fund (CCDF), which by 2025 would expand
    access to more than 1 million additional children under age four,
    reaching a total of more than 2.6 million children. At the same time,
    the proposal provides resources to help states raise the bar on
    quality, and design programs that better serve families facing unique
    challenges in finding quality care, such as those in rural areas or
    working non-traditional hours.

        The Budget includes an additional $1.5 billion above FY 2015 to
    improve the quality of Head Start services and expand access to Early
    Head Start, including through Early Head Start--Child Care
    Partnerships. The proposal will ensure that all Head Start programs
    provide services for a full day and full-school year and increase the
    number of infants and toddlers served in high-quality early learning
    programs. It will also ensure that program funding keeps pace with
    inflation and that the program can restore enrollment back to the 2014
    level.

        The Budget also proposes $15 billion over ten years to extend and
    expand access to evidence-based home visiting programs building on
    research showing that home visits by a nurse, social worker, or other
    professional during pregnancy and in the early years of life can
    significantly reduce child abuse and neglect, improve parenting, and
    promote child development and school readiness.

        Research by the President's Council of Economic Advisors indicates
    that investments in high-quality early education generate economic
    returns of over $8 for every $1 spent. Not only that, studies show
    high-quality early learning programs result in better outcomes for
    children across the board--with children more likely to do well in
    school, find good jobs and greater earnings, and have fewer
    interactions with the criminal justice system. These programs also
    strengthen parents' abilities to go to work, advance their career, and
    increase their earnings. That is why the Administration has outlined a
    series of measures, including tax cuts for working families, to advance
    our focus on improving quality, while also dramatically expanding
    access.

        Supporting Older Adults. The number of older Americans age 65 and
    older with severe disabilities--defined as 3 or more limitations in
    activities of daily living--that are at greatest risk of nursing home
    admission, is projected to increase by more than 20 percent by the year
    2020. With 2015 marking the year of the White House Conference on
    Aging, the Department's Budget request makes investments to address the
    needs of older Americans, many of whom require some level of assistance
    to continue living independently or semi-independently within their
    communities. The Budget includes common-sense reforms that help to
    protect older Americans from identity theft, while supporting family
    caregivers and expanding options for home and community-based services
    and supports.

        Improving Child Welfare. The Department's Budget also proposes
    several improvements to child welfare programs that serve children who
    have been abused and neglected or are at risk of maltreatment. The
    Budget includes a proposal that has generated bipartisan interest that
    would provide $750 million over five years for an innovative
    collaboration between the Administration for Children and Families
    (ACF) and CMS that would assist states to provide evidence-based
    interventions to youth in the foster care system to reduce the over-
    prescription of psychotropic medications. There is an urgent need for
    action: ACF data show that 18 percent of the approximately 400,000
    children in foster care were taking one or more psychotropic
    medications at the time they were surveyed. It also requests $587
    million over ten years in additional funding for prevention and post-
    permanency services for children in foster care, most of which must be
    evidence-based or evidence-informed. It includes savings of $69 million
    over ten years to promote family-based foster care for children with
    behavioral and mental health needs, as an alternative to congregate
    care, and provides increased oversight of congregate care when such
    placements are determined to be necessary.
                           keeping americans healthy
        The President's FY 2016 Budget strengthens our public health
    infrastructure, invests in behavioral health services, and prioritizes
    other critical health issues.

        Investing in Domestic and International Public Health Preparedness.
    The health of people overseas directly affects America's safety and
    prosperity, with far-reaching implications for economic security,
    trade, the stability of foreign governments, and the well-being of U.S.
    citizens abroad and at home. The Budget includes $975 million for
    domestic and international public health preparedness infrastructure,
    including an increase of $12 million for Global Health Security Agenda
    implementation to build the capacity for countries to detect and
    respond to potential disease outbreaks or public health emergencies and
    prevent the spread of disease across borders.

        As new infectious diseases and public health threats emerge, HHS
    continues to invest in efforts to bolster the Nation's preparedness
    against chemical, biological, nuclear, and radiological threats. This
    includes a $391 million increase for Project BioShield to support
    procurements and replenishments of new and existing countermeasures and
    to advance final stage development of new products, and to replace
    expiring countermeasures and maintain current preparedness levels in
    the Strategic National Stockpile.

        Combatting Antibiotic Resistant Bacteria. The Centers for Disease
    Control and Prevention estimates that each year at least two million
    illnesses and 23,000 deaths are caused by antibiotic-resistant bacteria
    in the United States alone. The Budget nearly doubles the amount of
    federal funding for combating and preventing antibiotic resistance
    within HHS to more than $990 million. The funding will improve
    antibiotic stewardship; strengthen antibiotic resistance risk
    assessment, surveillance, and reporting capabilities; and drive
    research innovation in the human health and agricultural sectors.

        Addressing Prescription Drug and Opioid Misuse and Abuse. The
    misuse and abuse of prescription drugs impacts the lives of millions of
    Americans across the country, and costs the American economy tens of
    billions of dollars in lost productivity and increased health care and
    criminal justice expenses. In 2009, total drug overdoses overtook every
    other cause of injury death in the United States, outnumbering
    fatalities from car crashes for the first time. In 2012 alone, 259
    million opioid prescriptions were written--enough for every American
    adult to have a bottle. As part of a new, aggressive, multi-pronged
    initiative, the Budget includes more than $99 million in new funding
    this year in targeted efforts to reduce the prevalence and impact of
    opioid use disorders. The Budget also includes improvements in Medicare
    and Medicaid, including a proposal to require states to track high
    prescribers and utilizers of prescription drugs in Medicaid, which
    would save $710 million over 10 years and bolster other efforts to
    reduce abuse of prescription drugs.
                        leaving the department stronger
        The FY 2016 Budget request positions the Department to most
    effectively fulfill our core mission by investing in a number of key
    management priorities that will strengthen our ability to combat fraud,
    waste, and abuse, strengthen program integrity, and enable ongoing
    cybersecurity efforts, among other areas.

        Strengthening Program Integrity. The FY 2016 Budget continues to
    build on progress made by the Administration to eliminate excess
    payments and fraud. The Budget includes new investments in program
    integrity totaling $201 million in FY 2016 and $4.6 billion over ten
    years. This includes, for example, the continued funding of
    comprehensive efforts to combat health care fraud, waste, and abuse
    through prevention activities, improper payment reductions, provider
    education, audits and investigations, and enforcement through the full
    Health Care Fraud and Abuse Control (HCFAC) discretionary cap
    adjustment. This investment builds on important gains over the course
    of the past several years: from 2009 to 2013, programs supported by
    HCFAC have returned over $19 billion in health care fraud related
    payments. Together, the Department's proposed program integrity
    investments will yield $22 billion in gross savings for Medicare and
    Medicaid over 10 years.

        Reforming the Medicare Appeals Process. Between FY 2009 and FY
    2014, the number of appeals received by the Office of Medicare Hearings
    and Appeals has increased by more than 1300%, which has led to a
    backlog that is projected to reach 1 million appeals by the end of FY
    2015. The Department has undertaken a three-pronged strategy to improve
    the Medicare Appeals process: (1) Take administrative actions to reduce
    the number of pending appeals and prevent new cases from entering the
    system; (2) Request new resources to invest at all levels of appeal to
    increase adjudication capacity and implement new strategies to
    alleviate the current backlog; and (3) Propose legislative reforms that
    provide additional funding and new authorities to address the appeals
    volume. The FY 2016 Budget includes a comprehensive legislative package
    of seven proposals aimed both at helping HHS process a greater number
    of appeals and reducing the number of appeals filed and requests
    additional resources for CMS, OMHA, and the Departmental Appeals Board
    to enhance their capacity to process appeals.
                                   conclusion
        Members of the Committee, thank you for the opportunity to testify
    today. The President's FY 2016 Budget request for HHS makes the
    investments critical for today while laying the foundation for a
    stronger economy for the middle class. I am looking forward to working
    closely with Congress and Members of this Committee on these priorities
    moving forward so that together we can best deliver impact for those we
    serve--the American people. I welcome any questions you may have.

                                     ______

       Questions Submitted for the Record to Hon. Sylvia Mathews Burwell
                   Questions Submitted by Hon. Orrin G. Hatch
                                    medicaid
        Question. As the Medicaid program has grown, so too has the need
    for more accurate data on Medicaid spending, payments, and utilization.
    Today, Medicaid is the largest insurer in the nation, serving more than
    20 percent of the nation's population. Nonetheless, accurate and timely
    information about spending, provider payments, and beneficiaries'
    utilization is not available. This is unacceptable and CMS has been
    working to improve this situation for years but with limited success.
    More recently, CMS has established enhanced matching funds and grants
    to states to develop the Transformed-Medicaid Statistical Information
    System (T-MSIS), the primary source of national information on Medicaid
    utilization and provider payments. According to CMS, this data system
    is supposed to be getting monthly data feeds from all states by the end
    of 2015.

        How much federal funding is allocated to Medicaid information
    system development and maintenance and how does this compare to federal
    funding for the Medicare program?

        Answer. The total FY 2014 federal match for state MMIS was $4.3
    billion. In addition to the federal match for state claims systems, CMS
    allocated $20.2 million to T-MSIS development and maintenance in FY
    2014. Federal funding is allocated to a variety of information systems
    at both the state and federal level, and Medicaid is a state-federal
    partnership. This makes it difficult to provide a Medicare system
    funding number that is at all comparable with the aggregate spending on
    Medicaid systems. Specifically, Medicaid claims systems include state
    Medicaid Management Information Systems (MMIS) and the federal Medicaid
    Statistical Information System (MSIS), which is being updated and
    modernized as part of the Medicaid and CHIP Business Information
    Solutions (MACBIS) initiative to become the Transformed-MSIS (T-MSIS).

        Question. Please provide a breakdown of the Medicaid budget for
    activities within CMS, for federal contractors, and for each state. Is
    this funding adequate to bring all states into compliance with most of
    the T-MSIS reporting requirements?

        Answer. The $20.2 million in FY 2014 for CMS to develop and
    maintain T-MSIS went entirely to federal contractors, including $4
    million for a contractor providing technical assistance to states as
    states work to come into compliance with T-MSIS reporting requirements.
    This technical assistance was available to all states. We anticipate
    the need for continued expenditures on MACBIS as states transition to
    T-MSIS over the coming years. To this end, the FY 2016 President's
    Budget requests $4 million in CMS Program Management for maintenance of
    MACBIS systems.

        Question. The federal Medicaid statute affords states considerable
    flexibility both in how they finance their Medicaid programs and in how
    they pay providers. Health care related taxes on providers and
    intergovernmental transfers are commonly used by states to finance
    their share of Medicaid expenditures, yet information on the taxes and
    governmental transfers is not systematically collected by CMS. Provider
    taxes effectively reduce Net Medicaid payments to providers. In
    addition, states often make lump-sum supplemental payments, commonly
    referred to as non-DSH supplemental payments to certain providers that
    increase providers' compensation to the maximum federal upper limit
    (FUL), thereby qualifying for additional federal matched dollars. Some
    providers receive as much as 50 percent of their payments from non-DSH
    supplemental payments. However, these payments are not reported to the
    federal government in a consistent or useable format. Without data on
    both health care related taxes and supplemental payments, we do not
    know how much we are paying providers, how much we are spending for
    Medicaid services, we cannot assess payment adequacy or the
    relationship between payment and important outcomes. Further, without
    this key information, the program is vulnerable to fraud and abuse.

        What initiatives, if any, has CMS taken to collect this
    information? Are there particular obstacles in collecting this
    information?

        Answer. We take our responsibility for oversight and federal
    stewardship of the Medicaid program very seriously, including requiring
    that states correctly report their Medicaid expenditures so that we can
    ensure Federal Medicaid funds are appropriately spent. In 2013, to
    improve transparency into supplemental payments, CMS began requiring
    states to submit upper payment limit (UPL) documentation on an annual
    basis, allowing CMS and states to have a better understanding of the
    variation in rate levels, supplemental payments, total providers
    participating in the programs, and the funding supporting each of the
    payments described in the UPL documentation.

        Question. What steps are you taking to ensure that your agency
    Administrators are addressing and coordinating on an ongoing basis on
    issues and programs that intersect?

        Answer. The complex issues the Department deals with often cross
    Agency boundaries. The Department takes coordination very seriously.
    The Department has many mechanisms to encourage coordination on its
    cross-cutting issues and programs, and has internal processes to ensure
    that public documents fully reflect the views of the Department and not
    individual agencies. Some of these are formal and of long-standing. For
    example, for almost twenty years, the Department's Data Council, co-
    chaired by officials from the Agency for Healthcare Research and
    Quality and the Office of the Assistant Secretary for Planning and
    Evaluation, has coordinated data policy for the Department and its
    agencies through regular meetings, shared work products, and
    coordinated data policy.

        Other groups are established to draw and share expertise from
    across the Department on issues of current concern. One such example is
    a trans-HHS taskforce, the Healthy Weight, Nutrition and Physical
    Activity (HWNPA) workgroup. This group is convened by the Office of the
    Assistant Secretary for Health and allows Agency representatives to
    share information on their activities addressing issues such as school
    nutrition, childhood obesity, healthy weight measures, and walking and
    walkability. As part of the annual budget process, HHS reviews all
    programs to eliminate duplicative activities either by eliminating
    programs or changing the scope of a program.

        Every quarter, our agencies meet to discuss the HHS high priority
    goals, for example, eliminating healthcare associated infections (HAIs)
    and reducing the use of tobacco products, that involve many HHS
    agencies. These meetings foster communication and ensure that HHS
    efforts are coordinated. For example, AHRQ has developed best practices
    for health care providers to reduce HAIs, CDC monitors the prevalence
    of HAIs, and CMS distributes best practice information to providers.
    Regular meetings ensure that efforts are not duplicated but rather that
    each agency's efforts supports the efforts of its fellow agencies.

        For the second time this year, HHS will undertake a review of its
    twenty-one strategic objectives and grade itself on our success meeting
    those objectives. Part of that process will focus on coordination and
    duplication and those assessments will be publically available.

        Question. Specifically, with regard to Medicaid, there are
    financing, quality of care and program integrity issues that providers
    and public entities have identified as duplicative and sometimes
    conflicting (e.g. with FQHCs and Medicaid, with 340B entities and
    Medicaid, with SAMHSA funded entities and Medicaid funding streams
    including the new Sec. 223 behavioral health clinics, privacy
    regulations that prevent care coordination, etc.). From among these,
    what are you as the Secretary prioritizing?

        Answer. As HHS operates, improves and modernizes existing programs,
    we always strive to ensure that these programs work in coordination
    with programs within our Agencies and throughout the Department. We
    will continue to strive for continuous improvement making the programs
    we steward work better for the people they serve while consistently
    improving their efficiency.

        For example, in April 2014, the Protecting Access to Medicare Act
    was signed into law, funding a demonstration program to allow eight
    participating states to make payments to Certified Community Behavioral
    Health Clinics based on a prospective payment system. The goal of the
    demonstration is to expand access to community mental health services
    and strengthen the quality of care offered at those centers. CMS has
    been focused on working collaboratively with other agencies to
    implement this important program. While CMS is responsible for
    determining the details of the payment system, SAMHSA is responsible
    for setting the criteria that clinics will have to meet to be eligible
    for the demonstration program, and ASPE is helping with both of those
    components as well as with designing the evaluation of the
    demonstration. CMS is also working with SAMHSA and other HHS partners
    to incorporate comments received on draft criteria published for
    comment in February 2015 to ensure coordination of federal guidance.

        Question. How is the Department managing other issues on an ongoing
    basis to ensure the integrity of the Medicaid program?

        Answer. States and the Federal Government share mutual obligations
    and accountability for the integrity of the Medicaid program and the
    development, application and improvement of program safeguards
    necessary to ensure proper and appropriate use of both Federal and
    state dollars.

        This Federal-state partnership is central to the success of the
    Medicaid program, but it depends on clear lines of responsibility and
    shared expectations. We take seriously our role in overseeing the
    financing of states' Medicaid programs, and we continue to look for
    ways to refine and further improve our processes.

        Medicaid is currently undergoing significant change as CMS and
    states implement reforms to modernize and strengthen the program and
    its services. While focused on implementation of the Affordable Care
    Act, CMS has been working closely with states to implement delivery
    system and payment reforms. CMS has encouraged state efforts with new
    tools and strategies to improve the quality of care and health outcomes
    for beneficiaries and to promote efficiency and cost effectiveness in
    Medicaid. And, as always, CMS works to ensure appropriate financial
    management mechanisms are in place to ensure dollars are spent
    appropriately.

        Question. What, if any, role have state Medicaid agencies or states
    more generally had in the new Medicare Health Care Payment and
    Innovation Network? Can you describe how the Department plans to
    incorporate them going forward?

        Answer. In January 2015, HHS announced the creation of the Health
    Care Payment Learning and Action Network. The Health Care Payment
    Learning and Action Network (``Network'') is being established to
    provide a forum for public-private partnerships to help the U.S. health
    care system (both private and public) meet or exceed recently
    established Medicare goals for value-based payments and alternative
    payment models. To help drive the health care system towards greater
    value-based purchasing--rather than continuing to reward volume
    regardless of quality of care delivered, HHS has set a goal of moving
    30 percent of Medicare payments into alternative payment models by the
    end of 2016 and 50 percent into alternative payment models by the end
    of 2018. Alternative payment models include models such as Accountable
    Care Organizations (ACOs), bundled payments, and advanced primary care
    medical homes. Overall, HHS seeks to have 85 percent of all traditional
    Medicare payments tied to quality or value by 2016 and 90 percent by
    2018 through programs such as the Hospital Value Based Purchasing and
    the Hospital Readmissions Reduction Programs.

        States and state Medicaid agencies are critical partners in this
    effort. Engagement with state Medicaid programs and commercial payers
    can help increase alignment, reduce burden on providers, and accelerate
    progress to deliver higher quality care. The first meeting of the
    Network will be held on Wednesday, March 25th, and we expect
    significant participation from both entities. For example, we expect
    Governor Jack Markell of Delaware to participate in the event and
    announce goals for the state of Delaware to move their health care
    system towards rewarding quality over quantity.

        Question. How is HHS/CMS planning to work with states to advance
    community integration initiatives and balancing competing priorities
    given limited state and federal resources?

        Answer. Many states choose to provide home and community-based
    alternatives to institutional care to allow Medicaid beneficiaries to
    receive services in the most integrated setting. The Centers for
    Medicare and Medicaid Services (CMS) works with these states to ensure
    beneficiaries receive long-term services and supports (LTSS) in
    settings that are integrated in and support full access to the greater
    community. In addition, CMS administers the Money Follows the Person
    and Balancing Incentive grant programs to provide participating states
    additional resources to assist in rebalancing their LTSS systems to
    transition Medicaid beneficiaries from institutions to the community.

        Question. Does CMS require specific new authority to support states
    that seek to improve Medicare and Medicaid coordination using the
    Medicare Advantage Duals Special Needs Plans? If not, what have you
    done to accomplish this to date and what are your plans for doing so?
    What are the barriers to aligning traditional MA, MA-DSNPs and
    Medicaid?

        Answer. The President's budget includes two specific
    recommendations for legislative authority that would allow CMS and its
    state partners to improve Medicare and Medicare coordination through D-
    SNPs. The first recommendation would provide the Secretary of HHS the
    authority to implement an integrated appeals system for Medicare-
    Medicaid enrollees of health plans that integrate Medicare and Medicaid
    benefits, such as D-SNPs. This legislative proposal was also included
    in the President's Budget for Fiscal Year 2015 and the FY2013 Report to
    Congress from the CMS Medicare-Medicaid Coordination Office. The second
    recommendation would provide CMS and states the ability to perform
    cooperative reviews of D-SNP marketing materials for compatibility with
    a unified set of standards, reducing the burden on CMS, the states, and
    plans, and resulting in a more uniform message to Medicare-Medicaid
    enrollees.

        States that seek to improve Medicare and Medicaid coordination
    using the Medicare Advantage Duals Special Needs Plans (D-SNPs) can
    structure their State Medicaid Agency Contracts--required by all D-
    SNPs--to encourage better integration, and may require full integration
    of Medicare and Medicaid services under a single Medicare Advantage
    Organization. CMS has worked with a number of States seeking to move
    toward higher integration of their D-SNPs on how best to structure
    their State Medicaid Agency Contracts.

        We are working to extend administrative flexibilities to D-SNPs
    that meet a high standard for integration of Medicare and Medicaid
    benefits with a particular focus on:

        Development of materials that better communicate the integrated
            benefit to the Medicare-Medicaid enrollee population, including
            materials in alternative formats and languages other than
            English for Medicare-Medicaid enrollees who require such
            materials;

        Enhanced coordination of state and CMS regulatory oversight; and

        Integration of state quality-of-care priorities into the care
            delivery provided by highly integrated D-SNPs.

        Of note is that under current CMS requirements, all D-SNPs must
    meet the same requirements applicable to all Medicare Advantage plans,
    regardless of the level of integration.

        Question. Congress has passed statutory language related to
    provider enrollment issues. CMS has indicated that it is also focusing
    resources on this issue. What barriers (policy and/or systems) are you
    encountering to streamline and improve efficiencies for processes
    within and between Medicare and Medicaid?

        Answer. In 2014, CMS finalized rules that strengthen oversight of
    Medicare providers and suppliers and protect taxpayer dollars from bad
    actors. These new safeguards are designed to prevent physicians and
    other providers and suppliers with unpaid debt from re-entering
    Medicare, remove providers and suppliers with patterns or practices of
    abusive billing, and implement other provisions to help save more than
    $327 million annually. Authorized by the Affordable Care Act and by
    provisions in the Social Security Act, the new changes allow CMS to:

        Deny enrollment to providers, suppliers and owners affiliated with
            any entity that has unpaid Medicare debt; this will prevent
            people and entities that have incurred substantial Medicare
            debts from exiting the program and then attempting to re-enroll
            as a new business to avoid repayment of the outstanding
            Medicare debt.

        Deny or revoke the enrollment of a provider or supplier if a
            managing employee has been convicted of a felony offense that
            CMS determines to be detrimental to the Medicare program and
            its beneficiaries. The recently implemented background checks
            will provide CMS with more information about felony convictions
            for high risk providers or suppliers.

        Revoke enrollments of providers and suppliers engaging in abuse of
            billing privileges who demonstrate a pattern or practice of
            billing for services that do not meet Medicare requirements.

        In addition, state Medicaid agencies are required to deny
    enrollment or terminate the enrollment of any provider that is
    terminated on after January 1, 2011 under Medicare or, for cause, by
    other states' Medicaid (or CHIP) programs. CMS tools available to help
    states facilitate this requirement include the following:

        CMS has been providing states direct access to the Medicare
            provider enrollment system known as PECOS (Provider Enrollment,
            Chain, and Ownership System) since April 2012. This system
            enables states to review all current and historic information
            on each Medicare provider and supplier, including a National
            Provider Identifier, Taxpayer Identification Number, and legal
            business name. To increase efficiency and accessibility for
            states, CMS has been creating a regular data extract of key
            Medicare enrollment information since January 2013.

        In December 2013, CMS developed and launched an enhanced
            collection, storage, and delivery process for Medicaid
            termination notifications. A CMS system notifies state Medicaid
            agencies of terminations submitted by other state Medicaid and
            CHIP programs as well as all Medicare revocations.

        All states can request and gain access to the CMS Fraud
            Investigation Database (FID), which contains information on
            investigations, cases, and payment suspensions pertaining to
            Medicare providers. The database contains numerous searchable
            fields that can assist states in identifying problem providers
            who are enrolled in both Medicare and Medicaid.

        Finally, the Federal Coordinated Health Care Office (Medicare-
    Medicaid Coordination Office) works to improve the coordination between
    the Federal Government and states to enhance access to quality services
    for individuals who are enrolled in both Medicare and Medicaid. Since
    2011, the Medicare-Medicaid Coordination Office has undertaken the
    Alignment Initiative, which has served as CMS' guide for streamlining
    Medicare and Medicaid program rules, requirements, and policies.
    Department and CMS-wide Medicare-Medicaid workgroups have been formed
    to work on the opportunities for alignment identified through the
    Alignment Initiative, which have included provider requirements.
                         medicare advantage and part d
        Question. The Medicare Advantage and Part D programs have continued
    to grow since their inception, and are expected to continue that growth
    and represent an increasing proportion of the Medicare population.
    However, funding for important program integrity and audit activities
    for these programs does not reflect an equitable and appropriate
    distribution of funds.

        In the FY 2015 HCFAC (Health Care Fraud and Abuse Control) program
    budget, approximately $9 million was budgeted for audit, oversight and
    enforcement of Medicare Advantage and Part D sponsors. Meanwhile,
    approximately 30 percent of all Medicare eligible beneficiaries are
    enrolled in the Medicare Advantage program, and approximately 70
    percent are enrolled in Part D. My understanding is that with the
    current level of funding, it will take approximately seven years for
    CMS to complete audits of all Medicare Advantage and Part D sponsors.

        Can you tell me what amount of money is budgeted for this important
    work in FY 2016?

        Answer. The FY 2016 President's Budget includes a request for
    $184.9 million in HCFAC discretionary funding for Medicare Parts C and
    D oversight and program integrity activities. This funding will
    strengthen Medicare Parts C and D efforts by the Medicare Drug
    Integrity Contractors to proactively fight fraud; improve safeguards
    that ensure the accuracy of payments to Medicare Advantage
    Organizations and Part D Prescription Drug Plans; and invest in
    additional program, compliance, and risk adjustment data validation
    (RADV) audits, and system updates for our contracting and plan
    oversight efforts.

        Question. Do you think this amount of funding is sufficient for
    oversight of these important programs?

        Answer. The HCFAC funding requested in the President's Budget is
    consistent with the level included in the Consolidated and Further
    Continuing Appropriations Act, 2015, with the full cap adjustment
    included in the Budget Control Act of 2011. With the full discretionary
    HCFAC cap adjustment funding, requested in FY 2016, CMS will be able to
    fully support Medicare Parts C and D activities to fight fraud, waste,
    and abuse, and invest in additional audits and system updates to our
    contracting and plan oversight efforts.
                      medicare alternative payment models/
                  center for medicare and medicaid innovation
        Question. Just last week, HHS announced plans to dramatically
    increase the percentage of Medicare payments made under alternative
    payment models to 50 percent by 2018. I'm concerned about going down
    this path too quickly when we know there are risks to beneficiaries and
    the evidence on their results is limited. In the 4 years that the CMS
    Innovation Center has been testing alternative payment models, we
    haven't seen many evaluation reports, and of the programs that CMS has
    evaluated so far, results are mixed at best.

        Do you agree that we need to fully understand the implications of
    alternative payment models on patient access and quality of care before
    encouraging greater participation in these models?

        Answer. We are taking action to build on progress made in improving
    health care so patients and their families can get the best care
    possible. Our goal is to spend our health care dollars more wisely,
    so--ultimately--people can live healthier lives. To achieve better
    care, smarter spending and healthier people, we are focused on three
    key areas: (1) improving the way providers are paid, (2) improving and
    innovating in care delivery, and (3) sharing information more broadly
    to providers, consumers, and others to support better decisions while
    maintaining privacy.

        In support of the alternative payment model goals, we are testing a
    variety of models at a sufficiently large scale to produce valid data
    on results, to understand the dynamics of how a model might operate
    under a variety of market circumstances and also to foster and
    encourage a climate of innovation and quality improvement within the
    provider community. So that we fully understand the implications of our
    efforts, we conduct a robust evaluation of all of our models on an
    ongoing basis throughout the life of the model. In every model
    evaluation, we strive to determine the impact of the innovation on
    patient and provider experiences, outcomes and quality of care, and
    program expenditures. We make sure that our models are well designed--
    and we use all appropriate scientific and statistical methods to study
    the impact of the model test relative to what would have happened in
    the absence of that model test. We study these results carefully in
    making decisions about models.

        Question. The CMS Innovation Center Bundled Payments for Care
    Improvement (BPCI) Initiative--which pays providers a single
    ``bundled'' payment for hospital and/or post hospital service--is the
    largest initiative undertaken by the CMS Innovation Center. Yet, as of
    October last year, over 95 percent of the participants in the program
    are not currently receiving bundled payments.

        Why are so few BPCI participants currently receiving bundled
    payments?

        Answer. Applicants had two opportunities to enter the Bundled
    Payments for Care Improvement (BPCI) initiative. Once screened,
    interested organizations entered into Phase 1 of the models 2, 3 or 4
    of BPCI. We had more than 890 participants enter Phase 1 over the
    course of this initiative between January 2013 and April 2014. Phase 1
    Participants do not receive bundled payments. They receive baseline and
    monthly claims data that will help participants determine the clinical
    episodes for which they see an opportunity for care redesign. Phase 1
    is also the preparatory stage of the initiative during which CMS works
    with participants and their partners through education and shared
    learning activities to prepare for transition to Phase 2, which is the
    risk bearing stage of BPCI. In Phase 2, participants are financially
    responsible to Medicare if their expenditures are higher than a target
    price established by Medicare for the episode(s) in which they are
    participating. Participants in Phase 2 sign an agreement with CMS and
    begin receiving bundled payments. Participants began entering Phase 2
    in October of 2013. As of January 26, 2015 there are 105 participants
    in phase 2 of BPCI. We expect more organizations to enter Phase 2 in
    July at which time the opportunity to participate in Phase 1 will end.
    As more participants enter Phase 2, the number of awardees receiving
    bundled payments will increase.

        Question. The Bundled Payment for Care Improvement Initiative also
    does not tie provider payment to patient quality of care--what is the
    agency doing to protect patients treated by providers participating in
    this initiative?

        Answer. CMS protects beneficiaries treated by BPCI awardees in a
    number of ways. BPCI awardees that have an agreement with CMS are
    required to submit their approach to care redesign and quality
    performance targets to CMS for approval. CMS conducts reviews to make
    certain BPCI awardees are in compliance with their care redesign
    methods.

        We continually monitor patient quality of care. All sites
    participating in BPCI are required to submit extensive quality related
    data to CMS for evaluation. This data includes participant baseline
    characteristics (i.e. patient case mix, payment incentives experiences,
    health information exchange), quality monitoring measures (i.e.
    medication reconciliation at admission and discharge, patient death or
    serious injuries reportable to the FDA, etc.), and status of care
    redesign. Participants must comply with all relevant quality reporting
    and incentive programs for providers enrolled in Medicare. In addition,
    beneficiaries may call 1-800-Medicare with any questions or speak to
    their physicians about the initiative.

        Question. To encourage greater provider participation in the
    bundled payments, has CMS considered adjusting the BPCI to build in
    protections for providers treating patients who need specialized
    treatment?

        Answer. Making certain that our beneficiaries receive high quality
    health care--and that the quality of their care improves over time--is
    one of our most important goals. CMS does make adjustments in BPCI that
    mitigate provider financial risk for certain unrelated services. CMS
    also mitigates financial risk for extreme levels of expenditure that
    could occur during an episode of care. These policies help in making
    sure that patients in BPCI will get any type of treatment that they
    need.

        For example, CMS maintains and updates lists of services that are
    excluded from BPCI Clinical Episodes in Models 2-4 for both Part A and
    Part B services. Services that are considered unrelated are not
    included in the episode and the provider or supplier will receive
    normal Fee-for-Service (FFS) payment. These lists are updated
    periodically and include things like heart transplants and hemophilic
    clotting factors.

        With regard to extreme levels of expenditure, BPCI participants in
    Models 2 and 3 also have the discretion to choose three different
    episode durations and three different risk tracks on a quarterly basis.
    Depending on the selected risk track, BPCI participants bear 100
    percent financial risk up to a certain threshold and then are liable
    for only 20 percent of all spending beyond the threshold. This
    mitigates financial risk for episode expenditures above the upper
    threshold while still providing an incentive for the provider to
    provide services efficiently for beneficiaries with high episode
    expenditures.

        Question. The CMS Innovation Center is charged with testing
    ``innovative payment and service delivery models to reduce program
    expenditures . . . while preserving or enhancing the quality of care''
    in federal health care programs. Yet, many of the measures the
    Innovation Center is intending to use to monitor quality of care focus
    on the amount of health services patients receive, not the effect those
    services have on patient health.

        If reducing health services is being used as a proxy for quality of
    care, how can we be certain that providers are not stinting on care in
    an effort to meet CMS's measures?

        Answer. Making certain that our beneficiaries receive high quality
    health care--and that the quality of their care improves over time--is
    one of our most important goals. For each model that CMS tests, CMS
    includes a monitoring and evaluation effort to address issues of
    patient protection and safety, including continual assessment of
    quality of care. We monitor for issues related to patient safety, care
    stinting and patient access to care, patient freedom of choice, and
    provider induced demand for unnecessary care. The monitoring approach
    is multipronged and utilizes a variety of measures and data sources
    depending on the specifics of the model. We use measures that provide
    information on patient case-mix, clinical process and outcomes,
    utilization patterns, and patient reported experience of care.
    Information comes from a variety of sources including claims, patient
    and proxy interviews, patient assessment information, and in
    qualitative sources such as site visits and interviews. These findings
    are tracked, examined and reviewed on an ongoing basis, typically
    quarterly. These efforts would allow us to quickly identify potentially
    negative shifts in patterns of care, including stinting of care. The
    precise monitoring strategy adopted is tailored to the unique
    circumstances of every model. The choice of measures is a reflection of
    the possible provider behaviors that could result from the incentives
    being tested in that model.

        Question. What is CMS doing to ensure that the quality of care
    provided to patients in alternative payment models is equivalent or
    better than that provided to patients in traditional Medicare?

        Answer. Making certain that our beneficiaries receive high quality
    health care--and that the quality of their care improves over time--is
    one of our most important goals. CMS does this in two ways--real-time
    monitoring and rapid-cycle evaluation. First, each model has a
    monitoring strategy that is customized to the specific circumstances
    and model financial structure. Before launching a model, CMS carefully
    considers unintended consequences, such as care stinting, and designs
    monitoring strategies that actively check for such adverse outcomes. By
    receiving regular updates from 1-800-MEDICARE, a model team can quickly
    learn of any potential issues as they arise. Other monitoring
    strategies include: analysis of claims data to identify abnormal
    billing patterns, audits of participants, and analysis of EHR-based
    quality measures.

        Second, every model has a rigorous, yet rapid-cycle, evaluation
    conducted by an independent team that unfolds concurrently with model
    implementation. A key component of each evaluation is measuring care
    quality. While each model is different and requires a customized
    evaluation approach, common components include: regular surveys of
    beneficiary experience of care, analysis of claims-based quality of
    care outcomes, and qualitative data collection, such as patient and
    caregiver focus groups. By conducting these activities as the model is
    implemented, the evaluation can quickly identify potential issues with
    care quality and allow CMS to take action.

        Finally, Innovation Center models include incentives to provide
    more efficient and better quality care. For example, shared savings
    components of models generally require participants to meet or exceed
    quality benchmarks relative to traditional Medicare.
                 competitive bidding program--enteral nutrition
        Question. In the FY2015 omnibus appropriations bill, Congress
    requires CMS to conduct a study of the impact of the competitive
    bidding program. Specifically, the study is on enteral nutrition and
    requires CMS to submit a report within 90 days after enactment that
    assesses the impact of the program on changes in treatment patterns of
    enteral nutrition patients residing in skilled nursing facilities,
    nursing facilities, and intermediate care facilities, including the
    impact on the patient's health, whether access has been reduced, and if
    costs have increased due to new suppliers unfamiliar with the clinical
    demands associated with such care.

        What is the status of this report?

        Answer. CMS is currently reviewing initial findings from a data
    analysis contractor and is on track to submit this report later this
    spring.
                         biologics and biosimilar drugs
        Question. As currently written, law requires payment for a
    biosimilar product to be the sum of the average sales price (ASP) of
    the biosimilar product plus 6 percent of the reference (innovator)
    biologic. However, there are payment ambiguities that the law does not
    address:

        The law does not address coding for a biosimilar, which is a
    critical component of determining payment. Specifically, does CMS
    intend to assign a separate J-code for a biosimilar product?

        Answer. CMS will address coding and payment for biosimilars later
    this year.

        Question. The law does not address payment of multiple biosimilars.
    How will CMS pay a 2nd, 3rd, etc. biosimilar? Some interpret the law to
    say that the weighted average ASP of the biosimilars plus 6 percent of
    the reference biologic will be the payment for all of the biosimilars.
    Others read the law to say that the ASP of each biosimilar plus 6
    percent of the reference biologic will be the rate for each biosimilar.

        Answer. CMS is currently considering this question and expects to
    provide further guidance later this year.

        Question. The payment structure in the law detailed above refers to
    a biosimilar product but not a biosimilar product that is
    interchangeable. What are CMS's views on basing the payment of a
    biosimilar product on the reference product for which it is not
    interchangeable as determined by the FDA? Is this the intent of the
    law? Is this sound policy?

        Answer. CMS is currently considering the statutory basis for coding
    and payment of biosimilars and will provide further guidance later this
    year.

        Question. Under current Medicare Part D rules, health plans are
    permitted to switch a patient who is stable on a biologic to another
    biologic without the consent of the physician or patient. The
    introduction of biosimilars on the market presents new safety concerns
    not envisioned by current Part D rules and requirements.

        Does CMS intend to add safeguards to the Part D formulary
    requirements that protect patients who are stable on a biologic from
    being switched to a biosimilar that is not interchangeable?

        Answer. Part D rules allow plans to consider requesting use of
    biosimilars instead of reference biological products. Under Part D
    rules, if a plan requests and is approved for a mid-year formulary
    change to substitute a biosimilar for the reference product, all
    beneficiaries currently receiving the reference product will continue
    to be able to receive that product for the remainder of the plan year.
    For new plan years, beneficiaries receiving a reference biological
    product who enroll in a plan that only lists the biosimilar will be
    eligible for a transition fill of the reference product and will have
    the right to request a formulary exception to continue on the reference
    product. The appeal process includes clinical factors that have been
    successfully applied since the initiation of the Part D program.

        Question. Given the importance of interchangeability and other
    biosimilar-related matters, is CMS collaborating with FDA to ensure
    consistent interpretation and implementation of the law?

        Answer. CMS regularly communicates with the FDA about drug related
    matters.

        Question. FDA officials stated several times last year that we
    would see a number of pending guidance documents on biosimilars before
    the end of the year, including one on interchangeability, but we have
    not seen those and to date, we have four pending biosimilar
    applications before the Agency.

        Can you please inform the Committee when we can expect to see
    guidance on interchangeability?

        Answer. FDA has so far issued six draft guidances, all available on
    the FDA website. These documents give clear information on the
    requirements for biosimilars in terms of structure, safety, purity,
    potency, and other factors. We believe we have promptly and thoroughly
    analyzed and explained the requirements of the Act for all prospective
    manufacturers of biosimilar products; however, we will continually
    update these documents and issue additional guidances as needed.

        With respect to interchangeability, FDA opened several dockets to
    solicit public comments on interchangeability of biosimilar products
    and is currently in the process of scientific review of these comments
    and developing the draft guidance. We understand the urgency of
    publishing this guidance and will do so as soon as possible.

        Question. It now appears that in 2015 FDA will approve the first
    biosimilar drugs stemming from authority Congress provided in 2010.

        What is the Department's estimate of impact of the introduction of
    biosimilars on government spending this year and over the next 5 and 10
    years?

        What are the unit cost and volume assumptions behind these
    estimates?

        Does your estimate factor in added office visit and hospitalization
    costs that can be incurred when a stable patient is switched and has to
    be stabilized on the new drug?

        Answer. The Department has not made an independent estimate of the
    impact of biosimilars on prescription drug spending in the U.S. The
    Department has closely monitored and reviewed estimates made by the
    Congressional Budget office and the experience with biosimilar products
    in Europe. In Table 1 below we summarize the estimates made by CBO. The
    most recent estimates (from 2008 and 2009) suggest that 10-year
    government savings stemming from the introduction of biosimilars will
    be in the range of $9.2 to $13 billion. As you will note the reports on
    those estimates do not include explicit volume assumptions. They also
    do not assume any costs of switching.

        We have also been tracking the European experience with the
    introduction of biosimilar products. Recent research papers and
    published data suggest mixed experiences across Europe with respect to
    penetration rates for biosimilar products and price reductions linked
    to the competition they create. Germany, the UK and Sweden have had
    among the higher rates of biosimilar penetration and maybe instructive
    regarding potential savings in the U.S.\1\ The penetration rate varies
    considerably by type of product. It can be as low as 9 percent to 18
    percent or as high 55 percent to 73 percent in those nations. The price
    experience for biosimilars also ranges. Data for Germany, the UK and
    Sweden show biosimilar prices that are 16 percent to 55 percent below
    pre-biosimilar introduction prices. Grabowski and colleagues report
    price reductions on the order of 25 percent.\2\
    ---------------------------------------------------------------------------
        \1\ IMS Institute, Assessing Biosimilar Uptake and Competition in
    European Markets, October 2014.
        \2\ Grabowski HG, R Guha and M Salgado (2014), Regulatory and Cost
    Barriers Are Likely to Limit Biosimilar Development and Expected
    Savings in the Near Future, Health Affairs 33(6):1048-1057.

        For all of the reasons described above, modeling the potential cost
    impact of biosimilars is a complex task. We have been assessing
    evidence and closely monitoring the European experience with
    biosimilars in order to examine which of their evidence is most
    appropriate to use for theU.S. health care system. We also must
    carefully examine the extent to which current law and regulation which
    affects drug pricing under Medicare and Medicaid will potentially
    influence both price reductions for biosimilars and their market
    ---------------------------------------------------------------------------
    penetration.

                                 TABLE 1--Government Projections for Biosimilars Savings
    ----------------------------------------------------------------------------------------------------------------
                                                                     CBO December     CBO December
                                                                     2008  (w/out      2008  (w/
                     Source Name                   CBO June 2008   Medicare Part B  Medicare Part B   CBO March 2009
                                                                     Payment Rate     Payment Rate      (page 18)
                                                                    Modification)   Modification) *
    ----------------------------------------------------------------------------------------------------------------
    Source Website..............................              **              ***              ***             ****
    ----------------------------------------------------------------------------------------------------------------
    1-Year Timeline.............................            2013             2010             2010              n/a
    ----------------------------------------------------------------------------------------------------------------
    1-Year Government Savings (2013)............           $52 M           $100 M           $200 M              n/a
    ----------------------------------------------------------------------------------------------------------------
    5-Year Timeline.............................       2009-2013        2010-2014        2010-2014              n/a
    ----------------------------------------------------------------------------------------------------------------
    5-Year Government Savings (2009-2013).......           $52 M           $100 M           $200 M             n/a
    ----------------------------------------------------------------------------------------------------------------
    10-Year Timeline............................       2009-2018        2010-2019        2010-2019        2009-2019
    ----------------------------------------------------------------------------------------------------------------
    10-Year Government Savings (2009-2018)......          $6.6 B           $9.2 B          $12.2 B            $13 B
    ----------------------------------------------------------------------------------------------------------------
    Q2: Unit Cost and Volume Assumptions........             n/a              n/a              n/a              n/a
    ----------------------------------------------------------------------------------------------------------------
    Q3: Are Indirect Costs of Switching Factored              No               No               No               No
     into Estimate?.............................
    ----------------------------------------------------------------------------------------------------------------
    * Assumes the Medicare Part B payment system is modified to place the follow-on biologic in the same billing
      code as the original brand-name product.
    ** https://www.cbo.gov/sites/default/files/s1695.pdf.
    *** http://www.cbo.gov/sites/default/files/12-18-healthoptions.pdf.
    **** https://www.cbo.gov/sites/default/files/03-20-presidentbudget.pdf.

                           racs and improper payment
        Question. The improper payment rate for Medicare has been
    increasing in recent years, from 8.6% in FY 2011 to 12.7% in FY 2014.
    At the same time, the entities charged with reducing improper payments,
    Medicare's recovery auditors, have seen their work curtailed in the
    past year.

        What is CMS's plan to put the RACs back to work and bring the
    improper payment rate down going forward?

        The RAC program seems to be an effective tool to fight against
    improper payments in the system.

        Given that the error rate grew to 12.7% last year, how do we expand
    the RAC program to help lower the error rate?

        Answer. HHS strives to manage programs in an efficient manner that
    balances the need to limit burden on Medicare providers with our
    responsibility to protect Trust Fund dollars. HHS has carefully
    evaluated the Recovery Audit program, and announced a number of changes
    to it in response to industry feedback.\3\ HHS is confident that these
    changes will result in a more effective and efficient program through
    enhanced oversight, reduced provider burden, and more program
    transparency. These changes will be effective with each new contract
    award beginning with the Durable Medical Equipment, Home Health and
    Hospice Recovery Audit contract awarded on December 30, 2014.\4\ The
    President's FY 2016 Budget also includes a proposal to permit HHS to
    retain a portion of recovered funds to implement corrective actions
    identified through the Recovery Audit program.
    ---------------------------------------------------------------------------
        \3\ See http://www.cms.gov/Research-Statistics-Data-and-Systems/
    Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-
    Program/Downloads/RAC-Program-Improvements.pdf.
        \4\ Due to a post-award protest filed at the Government
    Accountability Office (GAO), CMS has delayed the commencement of work
    under the national DMEPOS/HH&H, Region 5, Recovery Audit contract.

        In all, Medicare receives about 3.3 million fee-for-service claims
    each day, or 1.2 billion claims a year. Due to the high number of
    claims, HHS is committed to paying claims in an accurate and timely
    manner and has a comprehensive strategy in place to address the
    Medicare improper payment rates. For the Medicare program, these
    strategies include strengthening provider enrollment safeguards to
    confirm only legitimate providers are enrolled and preventing improper
    payments by using edits to deny claims that should not be paid. HHS
    also develops targeted demonstrations in areas with consistently high
    rates of improper payments and, as your note, operates the Medicare
    fee-for-service Recovery Audit Program to identify, recover, and
    ---------------------------------------------------------------------------
    prevent improper payments.

        The Recovery Audit Program identifies areas for potential improper
    payments and offers an opportunity to provide feedback to providers on
    future improper payment prevention. HHS uses Recovery Auditors, as
    required by law,\5\ to identify and correct improper payments by
    reviewing claims on a post payment basis. HHS responds to the
    vulnerabilities identified by the Recovery Auditors by implementing
    actions that will prevent future improper payments nationwide. Since
    full implementation in FY 2010 through the fourth quarter of FY 2013,
    the Recovery Auditors have returned over $5.4 billion to the Medicare
    Trust Fund. Additionally, HHS Medicare Administrative Contractors
    (MACs) review claims and conduct provider education to help providers
    avoid documentation errors and other sources of improper payments,
    including articles or bulletins providing narrative descriptions of the
    claim errors identified and suggestions for their prevention. Other
    efforts include system edits for improper payments that can be
    automatically prevented prior to payment. HHS encourages collaboration
    between Recovery Auditors and MACs to discuss improvements, areas for
    possible review, and corrective actions that could prevent improper
    payments.
    ---------------------------------------------------------------------------
        \5\ The Recovery Auditor demonstration project was required by
    section 306 of the Medicare Prescription Drug, Improvement, and
    Modernization Act of 2003, and the Congress expanded the program in
    section 302 of the Tax Relief and Health Care Act of 2006, directing
    CMS to implement a permanent national recovery audit contractor program
    by January 1, 2010.
    ---------------------------------------------------------------------------
                            medicare appeals backlog
        Question. The Administration recognizes the backlog in Medicare
    appeals as a problem and has set forth a series of legislative
    proposals to address it. Yet current policy is fueling large numbers of
    appeals--namely that ALJs are not bound by Medicare policy and certain
    ALJ's have been found by the Inspector General to rule with providers
    almost 100% of the time.

        Do you agree the current system encourages providers to appeal
    frequently and contributes to the backlog?

        Answer. The Department is committed to paying claims right the
    first time. However, we understand and respect the right of appeal.
    Administrative Law Judges (ALJs) administer the third level of Medicare
    appeals at the Office of Medicare Hearings and Appeals (OMHA). ALJs are
    bound to follow the same authorities that bind lower level
    adjudicators, with the exception of informal policy guidance and
    manuals which CMS may issue to its contractors. Although this leads to
    a common misperception that ``Administrative Law Judges are not bound
    by Medicare policy,'' the current regulatory scheme does bind CMS
    Qualified Independent Contractors, ALJs, and the Medicare Appeals
    Council to follow all laws and regulations pertaining to the Medicare
    and Medicaid programs, as well as CMS Rulings and National Coverage
    Determinations. These adjudicators are also required to give
    substantial deference to other CMS and Medicare Administrative
    Contractor guidance, including Medicare manuals and Local Coverage
    Determinations.

        CMS establishes the policies governing Medicare. In 2010, OMHA
    began a program of coordinated training using policy experts from CMS
    and the Medicare Appeals Council to provide training to adjudicators
    throughout the year on Medicare policy. OMHA has enhanced its quality
    assurance program, and introduced a tool for ALJs and their staff to
    access and search Level IV Medicare Appeals Council decisions. OMHA
    also continues to provide ALJ and their staff with regular updates on
    relevant CMS rulemaking and changes to Medicare manuals. As described
    in the FY 2016 President's Budget, CMS is pursuing more resources for
    contractors to participate in ALJ hearings to help ensure that ALJs
    have all of the information necessary to make a decision, not just the
    views of the appealing party. Together, these measures will help ensure
    ALJs have the necessary training and information to make informed
    decisions, and that adjudicators follow binding authority and give
    appropriate deference to guidance materials.

        Although the potential for a more favorable result is certainly a
    factor that prompts parties to appeal, thus, increasing the appeal
    rates, there are other factors which may have a more significant impact
    on appeal rates. Low jurisdictional thresholds in terms of the monetary
    amount in controversy required to appeal to OMHA combined with the lack
    of a filing fee to appeal, provide no incentives for providers and
    suppliers to evaluate the merits of their claims prior to filing which
    could encourage them to continually appeal. The Department has proposed
    in the FY 2016 President's Budget legislative measures to address these
    drivers by establishing a refundable filing fee at each level and
    increasing the monetary amount that must be at issue in order to appeal
    to the Office of Medicare Hearings and Appeals. These measures will
    provide incentives which will encourage appellants to evaluate their
    claims prior to filing and to only appeal meritorious claims.

        Question. How will the proposals in the President's Budget, such as
    case consolidation and a refundable filing fee for providers who
    prevail on appeal, reduce the backlog of cases resulting from
    providers' decisions to appeal Medicare contractors' decisions?

        Answer. The Department has a three-pronged approach to addressing
    the increasing number of Medicare appeals and the current backlog:
    First, invest new resources at all levels of appeal to increase
    adjudication capacity and implement new strategies to alleviate the
    current backlog, as described in the FY 2016 President's budget.
    Second, take administrative actions to reduce the backlog and to
    appropriately resolve claims at earlier levels of the appeals process.
    Third, pursue legislative proposals described in the President's FY
    2016 Budget that provide additional funding and new authorities to
    address this urgent need.

        Legislative proposals along with additional resources requested in
    the President's FY 2016 Budget set a framework for bringing the
    Medicare appeals process into balance going forward. For example, the
    legislative proposal to establish a refundable filing fee at each level
    of appeal will encourage providers to be more judicious in determining
    what they appeal. Providing authority to consolidate appeals requests,
    or group similar claims together to allow for a single decision on
    multiple claims, will improve the efficiency and timeliness of the
    Medicare appeals process. Increasing the minimum amount in controversy
    required for adjudication by an ALJ to the Federal District Court
    amount in controversy requirement will reduce the volume of claims that
    could be appealed for ALJ review.

        The Budget requests $270 million, an increase of $183 million above
    the FY 2015 level, to address the backlog of over 800,000 pending
    appeals at OMHA. The Budget includes $140 million in budget authority
    and $130 million in program level funding from proposed legislation to
    support new field offices and additional Administrative Law Judges
    teams. It will also support appeals adjudication by less costly methods
    such as settlement facilitation and the proposed Medicare Magistrate
    program. The 2016 Budget invests $36.2 million to allow CMS to engage
    in discussions with providers to resolve disputes earlier in the
    appeals process and greater CMS participation in Administrative Law
    Judge hearings at OMHA. This investment will improve the efficiency of
    the Medicare appeals process at the third and fourth levels and reduce
    the number of claims appealed beyond the CMS levels, enabling the OMHA
    to more quickly adjudicate its current backlog. The Budget also
    requests $12.5 million, an increase of $2.5 million above FY 2015
    level, to hire additional staff to address Medicare appeals at Level IV
    (the Medicare Appeals Council).

        Question. Administrative Law Judges have been overruling
    determinations made at the lower levels of appeal as a result of not
    being familiar with Medicare policy. This budget calls for funding OMHA
    with recoveries from the Recovery Audit Contractor program.

        What assurances do we have that these dollars will be used to
    educate ALJs on the proper interpretation of Medicare policy?

        Answer. The President's Budget includes increased resources from
    general budget authority, and program authority including recovery
    audit recoveries, and filing fees for OMHA to address the backlog of
    appeals, and the appeal receipts going forward. In order to address the
    workload, improve the overall appeals process, and increase stakeholder
    confidence in decision making, OMHA recognizes the importance of
    investing in education for ALJs and their staff. Even with limited
    resources in the face of significantly growing workloads, OMHA has made
    education a priority, working with CMS and the Medicare Appeals Council
    on coordinated training, establishing an internal cadre of seasoned
    ALJs and attorney advisors to educate new staff, and providing
    continuing education for existing staff. At the FY 2016 requested
    funding level, OMHA would continue its commitment to providing thorough
    training and continuing education for ALJs and support staff. However,
    the Department notes that OMHA ALJ decisions that overturn CMS
    contractor denials result from many factors, including new evidence
    being presented for good cause, the appellant having an opportunity to
    discuss the evidence and explain what transpired in the clinical
    setting, and the authority to decline to apply Medicare manuals and
    contractor policies when warranted by the circumstances (an authority
    shared with the QICs and the Medicare Appeals Council). Since 2012 the
    rates at which OMHA adjudicators reverse lower level decisions has
    declined significantly, indicating that coordinated training efforts
    have resulted in increased consistency in decision making throughout
    the process.
                         precision medicine initiative
        Question. The Administration recently announced its Precision
    Medicine Initiative for the purpose of investing in a new generation of
    lifesaving discoveries based on the recent advances in genetic
    research. One of its goals is to assemble a database of one million
    volunteers. The Utah Population Database (UPDB) today represents over
    7.3 million people connected to 23 million records, including vital
    statistics and medical records. It is the world's largest repository of
    genealogies, public health and medical records--and it is already a
    powerful resource for advancing precision medicine. Using the UPDB,
    researchers at the Utah Genome Project (UGP) have so far identified
    genes that contribute to more than 30 diseases, including breast
    cancer, heart disease, melanoma, and colon cancer, opening the doors to
    new personalized diagnostics and therapies. The UGP is housed at the
    University of Utah Health Sciences and Huntsman Cancer Institute. The
    UPDB is not only ahead of the curve, but also is a unique resource that
    is unlikely to be duplicated. The deep family histories represented
    within UPDB are made possible by a cultural emphasis within Utah on
    large families and carefully assembled extensive genealogies, the
    combination of which serve as a magnifying glass to uncover inherited
    genetic mutations that cause specific diseases. Moreover, many of the
    methods and tools used to discover these genes, and to understand their
    function, were developed by scientists at the University of Utah. The
    UGP is now focusing on UPDB families with exceptionally high incidences
    of diseases such as type 2 diabetes, multiple sclerosis, and early-
    onset heart disease. Multigenerational families have already been
    identified in which dozens of relatives are affected with the same
    disease, often at an unusually early age. The UGP offers a fresh angle
    and a powerful approach for disease-gene identification.

        Do you agree with me that the UGP is a resource that should fit
    well within the goals of the Administration's Precision Medicine
    Initiative?

        Answer. I appreciate your interest in the President's Precision
    Medicine Initiative (PMI). The National Institutes of Health (NIH)
    assembled a PMI Working Group of the Advisory Committee to the NIH
    Director (ACD) charged with delivering a report to the ACD in September
    that articulates the vision for building a research cohort of one
    million or more voluntary participants. To help inform the report, the
    PMI ACD Working Group will gather additional input from a wide variety
    of stakeholders through a series of public workshops over the next
    several months on topics around precision medicine. One of these
    workshops, which will be held at the end of May, will focus on
    recommending the optimal strategy for designing and assembling the
    national research PMI cohort. The output of that workshop and the ACD
    Working Group process will better inform NIH and the Administration
    about the ideal clinical research entities to potentially include in
    the cohort. The NIH hopes that stakeholders associated with a wide
    variety of national resources like UGP will be part of this dialogue.
    The resulting ACD report recommendations will, if accepted by the NIH
    Director, significantly inform what kind of resources are appropriate
    to include in the cohort in the near and longer term.
                           child support enforcement
        Question. Secretary Burwell, on November 17, 2014, HHS published a
    Notice of Proposed Rule Making (NPRM) in the Federal Register. This
    NPRM, the ``Flexibility, Efficiency and Modernization in Child Support
    Enforcement Programs,'' if implemented would result in numerous
    significant changes to Child Support Enforcement Programs. On December
    22, 2014, former House Ways and Means Committee Chairman Dave Camp and
    I wrote to you expressing our belief that the NPRM exceeds the
    Department's authority to interpret Congressional intent and implement
    current law. As this Administration has done on a number of occasions,
    I believe this Administration is attempting to bypass the Congress in
    order to enact legislative policies without appropriate action from the
    legislative branch.

        I, along with current Ways and Means Committee Chairman Paul Ryan,
    are contemplating how best to address this current example of executive
    over-reach. As we undertake this exercise, we would like to proceed in
    as thoughtful a way as possible. For example, while we believe there
    are aspects of the NPRM which clearly extend beyond the authority of
    the Department, other elements appear to be within your proper
    regulatory authority or at least are open to that interpretation.

        In order to inform our review of these proposals, I request a
    detailed assessment of the Department's legal justification for the
    following sections which include changes to current law contemplated by
    the NPRM:

      Section 302.38, which includes a new prohibition precluding a State
        IV-D program from disbursing child support collections to private
        collection agencies;

      Section 302.56, which creates a new requirement setting parameters
        relative to the percent of the obligor's income which the state can
        require as part of a child support payment;

      Section 302.56, which sets a new criterion to prohibit the treatment
        of incarceration as ``voluntary unemployment'';

      Section 302.56, which creates a new Federal Financial Participation
        (FFP) for parenting time;

      Section 302.76, which creates an entirely new job services program
        for which states are eligible for FFP;

      Section 303.8, which is a new provision allowing Medicaid and CHIP to
        be considered medical support;

      Section 303.8, which is a new criterion preventing regular Social
        Security payments from being garnished under an existing child
        support order; and

      Section 304.20, which details new expenditures subject to FFP. I
        would encourage you to provide the Committee with as robust and
        comprehensive ananalysis as possible.

        Answer. Thank you for the opportunity for a dialogue on these
    important issues. We would be pleased to collaborate with you on
    legislation regarding them, if you wish.

        Section 302.38, which includes a new prohibition precluding a State
    IV-D program from disbursing child support collections to private
    collection agencies.

        This provision implements sections 457(a)(4) and 454(11)(B) of the
    Social Security Act (Act), pertaining to distribution of the child
    support collections. Section 457(a)(4) provides that, with respect to
    families that never received assistance, ``the State shall distribute
    to the family the portion of the amount so collected'' after deducting
    the state fee required by statute. This statutory provision requires
    child support collections to be distributed to the family served by the
    state child support agency when the family has not received public
    assistance from the state. Section 454(11)(B) of the Act provides that
    ``any payment required to be made under section 656 or 657 of this
    title [sections 456 and 457 of the Act] to a family shall be made to
    the resident parent, legal guardian, or caretaker relative having
    custody of or responsibility for the child or children.'' The proposed
    rule carries out the Congressional intent that moneys collected be paid
    to families. In addition, the Department has authority under section
    452(a)(1) of the Act to ``establish such standards for State programs
    for locating noncustodial parents, establishing paternity, and
    obtaining child support . . . as he determines to be necessary to
    assure that such programs will be effective.'' Section 454(13) provides
    that ``the State will comply with such other requirements and standards
    as the Secretary determines to be necessary to the establishment of an
    effective program for locating noncustodial parents, establishing
    paternity, obtaining support orders, and collecting support payments
    and provide that information requests by parents who are residents of
    other States be treated with the same priority as requests by parents
    who are residents of the State submitting the plan.''

        The primary goal of the Child Support Enforcement program is to
    ensure that families benefit directly from child support payments.
    Accordingly, states must provide in their state child support
    enforcement plans that any payments required to be made to a family
    pursuant to section 457 must be made to ``the resident parent, legal
    guardian, or caretaker relative having custody of or responsibility for
    the child or children.'' This provision overlaps with and is reinforced
    by section 453(c)(3) authorizing the same categories of individuals to
    receive child support information. Each of these individuals has a
    relationship with the child that imposes responsibility to protect and
    further the child's best interests, while private collection agencies
    historically do not. Based on information available in the past two
    decades about the practices of private collections agencies, detailed
    below, the Department has determined that the practices undermine the
    intent of Congress, clearly stated in the statute, that payments
    collected by the state for families are to be paid to the family and
    not to third party creditors.

        The proposed rule does not in any way regulate the relationship
    between custodial parents and private collection agencies or prevent
    custodial parents from entering into contracts with private collection
    agencies. Instead, the intent of the proposed rule is to regulate state
    distribution of funds to families in accordance with section 457(a)(4)
    and 454(11)(B). The proposed rule would take state child support
    agencies out of the business of indirectly enforcing private contracts
    between parents and private collection agencies that purport to require
    the state agency to divert child support payments to a particular
    creditor of the custodial parent, or any creditor of the custodial
    parent, as such distribution is not supported by title IV-D. In
    addition, evidence from a number of family distribution studies
    indicates that the child support program is most effective in obtaining
    child support when collections are paid directly to the family. This
    rule is intended to clarify policy regarding payment disbursement to
    families, strengthen parents' commitment to supporting their children,
    and ensure families' self-sufficiency. We believe the rule will improve
    child support payment compliance and program effectiveness.

        Private collection agencies enter into contracts with custodial
    parents to collect child support, often times using deceptive and
    abusive practices. Under the terms of such contracts, when a payment of
    child support is paid to the state child support agency, the custodial
    parent owes the private collection agency the contractual fee,
    regardless of whether the private collection agency's efforts resulted
    in the payment. State court decisions, consumer complaints, and
    extensive national media coverage over the past two decades establish
    that some state child support agencies were pressured to distribute
    support payments collected through state efforts to private collection
    companies, rather than families as required by section s 454(11)(B) and
    457(a)(4). The court decisions and consumer complaints concerned a
    common practice by private collection agencies of withholding between
    29 and 35 percent before disbursing the collections collected by the
    state to custodial parents. Such companies deceptively claimed credit
    for the successful state collection efforts.

        A typical example involves a custodial parent learning that after
    entering into a contract with a company that she received even less
    child support than before, since amounts previously distributed to her
    by the state were now one-third lower. When she would confront the
    company and attempt to cancel the contract, the company typically would
    tell the custodial parent that she could not get out of the contract
    until the entire amount of child support debt had been paid off and
    then threaten a lawsuit against her. Such companies also engage in
    other deceptive and abusive practices such as posing as a government
    agency, fraudulently inflating the amount of child support debt to
    create a ``contract for life,'' refusing to provide an account to
    parents of child support payments and fees retained by the companies,
    and demanding immediate payments from grandparents and threatening to
    send the noncustodial parent to jail if payments are not made. Consumer
    complaints also indicate that some private collection companies refuse
    to release the custodial parents from the contract even when the
    custodial parents complain of increased strain placed on family
    relationships due to the companies' abusive practices, including harm
    to the noncustodial parent's relationship with their child, or an
    elevated fear of domestic violence by the noncustodial parent. We would
    be happy to further brief your staff on the practices of these types of
    private agencies and the need to update the regulations in this area.

        Section 302.56, which creates a new requirement setting parameters
    relative to the percent of the obligor's income which the state can
    require as part of a child support payment.

        The Child Support Enforcement Amendments of 1984 (Pub. L. 98-378)
    added section 467 to require each state, as a condition of state IV-D
    plan approval, to establish guidelines to establish appropriate child
    support award amounts within the State. The Family Support Act of 1988
    amended section 467 to require that the State's guidelines be used to
    create a rebuttable presumption that the amount of the child support
    order is the ``correct'' amount based on numeric income-based
    guidelines. The statute further provides that a written finding or
    specific finding on the record that application of the guidelines would
    be unjust or inappropriate in a particular case, as determined under
    criteria established by the state, shall be sufficient to rebut the
    presumption in that case. The state is required to review the
    guidelines at least every four years to ensure that their application
    results in the determination of appropriate child support award
    amounts. The Department has authority under section 452(a)(1) of the
    Social Security Act to ``establish such standards for locating
    noncustodial parents, establishing paternity, and obtaining child
    support . . . as he determines to be necessary to assure that such
    programs will be effective.'' Section 454(13) provides that ``the State
    will comply with such other requirements and standards as the Secretary
    determines to be necessary to the establishment of an effective program
    for locating noncustodial parents, establishing paternity, obtaining
    support orders, and collecting support payments and provide that
    information requests by parents who are residents of other States be
    treated with the same priority as requests by parents who are residents
    of the State submitting the plan.''

        Pursuant to sections 467, 454(13), and 452(a)(1), the Department
    promulgated 45 C.F.R. 302.56 in 1985. The guidelines regulations have
    been revised two times since 1985. The Department proposes to amend its
    existing rule to provide that state guidelines take into consideration
    the noncustodial parent's actual income and subsistence needs (as
    defined by the state in its guidelines) and provide that amounts
    ordered for support be based upon available data related to the
    parent's actual earnings, income, assets, or other evidence of ability
    to pay, such as testimony that income or assets are not consistent with
    a noncustodial parent's current standard of living.

        One approach that a number of states have implemented to consider
    the subsistence needs of the noncustodial parents is to incorporate a
    self-support reserve into their guidelines to recognize the
    noncustodial parents' subsistence needs, that is, the minimum food,
    shelter and other basic needs necessary to support life.\6\ For
    example, New Jersey defines a self-support reserve as the amount of
    income that the state determines is necessary to ensure that a
    noncustodial parent ``has sufficient income to maintain a basic
    subsistence level and the incentive to work so that child support can
    be paid.'' This reserve amount can be either disregarded or used to
    adjust the child support obligation so the noncustodial parent is able
    to meet his basic needs.\7\
    ---------------------------------------------------------------------------
        \6\ Carmen Solomon-Fears. Fatherhood Initiatives: Connecting
    Fathers to Their Children. Congressional Research Service(2015),
    available at: http://fas.org/sgp/crs/misc/RL31025.pdf.
        \7\ Rules Governing the Courts of New Jersey, Appendix IX-A
    Considerations in the Use of Child Support Guidelines, Section 7.h.,
    Self-Support Reserve, available at: http://www.
    judiciary.state.nj.us/csguide/app9a.pdf.

        The basic premise of state guidelines is to establish policies that
    result in an accurate child support order based upon evidence of the
    parent's ability to pay, considering the specific circumstances of the
    parties and the best interests of the child. The proposed regulation in
    '302.56(c)(4) gives states wide latitude to develop guidelines for fair
    orders resulting in reliable child support payments to families. For
    example, the proposed rule permits a state to impute income where the
    noncustodial parent's lifestyle is inconsistent with claimed earnings
    or income. In setting an order, a court may also take the earning
    capacity of the parents into account. An example of this would be a
    noncustodial parent who, despite good educational credentials and
    marketable job skills, simply refuses to work. In this situation the
    court may deviate from the guidelines to impute income based on earning
    ---------------------------------------------------------------------------
    capacity.

        However, the evidence is clear that child support is not paid when
    the child support order is set beyond the means of a noncustodial
    parent to comply with the order. A growing body of research finds that
    compliance with child support orders in some states, regardless of
    income level, declines when the support obligation is set above 15 to
    20 percent of the obligor's gross wages or income, and that orders for
    excessive amounts result in lower, not higher, child support
    payments.\8\ The HHS Office of Inspector General concluded that child
    support orders set for low income parents are ineffective in generating
    child support payments when set too high relative to ability to pay,
    finding that compliance is significantly lower when a monthly order is
    more than 20 percent of a parent's income than when it is 15 percent or
    less.\9\ Setting child support orders that reflect ability to pay is
    crucial to encouraging compliance, increasing parental accountability
    for making payments, and discouraging uncollectible arrearages.
    ---------------------------------------------------------------------------
        \8\ Mark Takayesu, How Do Child Support Order Amounts Affect
    Payments and Compliance? Orange County, CA Department of Child Support
    Services (2011), available at: http://ncsea.omnibooksonline.com/
    2012policyforum/data/papers/PV_1.pdf#page=1; Carl Formoso, Determining
    the Composition and Collectability of Child Support Arrearages, Volume
    1: The Longitudinal Analysis (2003), available at:https://
    www.dshs.wa.gov/pdf/esa/dcs/reports/cvol1prn.pdf.
        \9\ HHS Office of Inspector General (OIG), The Establishment of
    Child Support Orders for Low Income Non-custodial Parents, OEI-05-99-
    00390 (2000), available at:
        http://oig.hhs.gov/oei/reports/oei-05-99-00390.pdf.

        Research also suggests that noncustodial parents are less likely to
    pay their support orders when they are based on presumed income, such
    as 40 hour minimum wage employment, or set at a standard level (such as
    the cash assistance amount received by the custodial family) that is
    often well above the parent's ability to pay.\10\ Such imputed income
    orders are not based on evidence of actual income and result in high
    uncollectible arrears balances that can provide a disincentive for
    obligors to maintain employment in the regular economy. Uncollectible
    debt does not accomplish the goals of the child support program to
    obtain child support. Most arrearages are owed by noncustodial parents
    with earnings under $10,000 and are uncollectible.\11\ Research finds
    that high arrearages substantially reduce the formal earnings of
    noncustodial parents and child support payments in economically
    disadvantaged families, while reducing unmanageable arrearages can
    increase payments.\12\ Accumulation of high arrearage balances is often
    associated with incarceration because parents have little to no ability
    to earn income while they are incarcerated, and little ability to pay
    off the arrearages when released due to lack of employment.
    ---------------------------------------------------------------------------
        \10\ Letitia Logan Passarella and Catherine E. Born, Imputed Income
    Among Noncustodial Parents: Characteristics and Payment Outcomes.
    University of Maryland, School of Social Work (2014), available at:
    http://www.familywelfare.umaryland.edu/reports1/imputed.pdf.
        \11\ Elaine Sorensen, Liliana Sousa, and Simon Schaner, Assessing
    Child Support Arrears in Nine Large States and the Nation, The Urban
    Institute (2007), available at: http://aspe.hhs.gov/hsp/07/assessing-
    CS-debt/.
        \12\ Carmen Solomon-Fears, Gene Falk, and Adrienne L. Fernandes-
    Alcantara, Child Well-Being and Noncustodial Fathers, Congressional
    Research Service (2013), available at: http://fas.org/sgp/crs/misc/
    R41431.pdf; Carolyn J. Heinrich, Brett C. Burkhardt, and Hilary M.
    Shager, Reducing Child Support Debt and Its Consequences: Can
    Forgiveness Benefit All? Institute for Research on Poverty (2010),
    available at:
         http://www.irp.wisc.edu/research/childsup/cspolicy/pdfs/2007-09/
    FamiliesForward_3_19_
    10.pdf.

        Our proposed regulations are intended to ensure that state
    guidelines result in appropriate support orders based upon available
    evidence of an individual parent's ability to pay and to correct the
    ineffective practice in some states of setting orders in low-income
    cases that are not based upon any evidence of the parents' specific
    circumstances but instead simply assume full-time employment. Parents
    cannot comply with orders set above their means to pay what is ordered.
    Several studies make clear that when orders are set above the
    noncustodial parent's ability to pay, compliance drops--they pay less
    money than if the orders were set based on the parent's ability to pay.
    The research is clear that when orders are set too high, low-income
    parents are far less likely to stay employed in low-wage jobs and pay
    child support. They are more likely to avoid contact with the child
    support program and their children. They are more likely to enter the
    underground economy and, often, prison, a result that is not good for
    children. Regular employment and consistent child support payments
    collected every month through income withholding is what helps
    custodial families achieve economic stability. Sustainable payments
    paid on time every month is especially important to the millions of
    low- and moderate-income families served by the child support program.
    When families receive regular child support payment, they are less
    likely to need public assistance.\13\ We believe that this provision
    will improve child support payment compliance and program
    effectiveness.
    ---------------------------------------------------------------------------
        \13\ Carl Formoso, Child Support Enforcement: Net Impacts on Work
    and Welfare Outcomes pre- & post-PRWORA, Washington State Division of
    Child Support (2000), available at: http://www.dshs.wa.gov/pdf/esa/dcs/
    reports/csepolicybrief.pdf.

        Section 302.56, which sets a new criterion to prohibit the
    ---------------------------------------------------------------------------
    treatment of incarceration as ``voluntary unemployment.''

        Section 467 of the Social Security Act requires states to establish
    guidelines for setting appropriate support orders. Section 454(4)
    requires states to provide services relating to order establishment and
    modification to any child receiving services under title IV-D. Section
    454(20) requires states to have in effect laws to improve child support
    effectiveness listed in section 466 of the Act, including section
    466(a)(10), which requires states to have procedures under which every
    3 years, upon the request of either parent (or the state, if there is
    an assignment under part A of the Social Security Act), the state must
    review and, if appropriate, adjust the order in accordance with the
    guidelines established pursuant to section 467(a), taking into account
    the best interests of the child.

        The Department has authority under section 452(a)(1) of the Social
    Security Act to ``establish such standards for locating noncustodial
    parents, establishing paternity, and obtaining child support . . . as
    he determines to be necessary to assure that such programs will be
    effective.'' Section 454(13) provides that ``the State will comply with
    such other requirements and standards as the Secretary determines to be
    necessary to the establishment of an effective program for locating
    noncustodial parents, establishing paternity, obtaining support orders,
    and collecting support payments and provide that information requests
    by parents who are residents of other States be treated with the same
    priority as requests by parents who are residents of the State
    submitting the plan.''

        Pursuant to sections 467, 454(13), and 452(a)(1), the Department
    promulgated 45 C.F.R. 302.56 in 1985. The guidelines regulations have
    been revised in 1991 and 2008. The existing rule, 45 C.F.R. 302.56,
    requires states to set numeric guidelines that take earnings and income
    into consideration and to review and revise the guidelines every 4
    years to ensure appropriate and correct child support order amounts.
    Existing rule, 45 C.F.R. 303.8(b)(3)(ii)(A) requires both upward and
    downward changes in the amount of the support order. Existing rule 45
    C.F.R. 303.8(b)(5) also requires the state to have procedures to review
    orders outside of the 3-year cycle if the requesting party demonstrates
    a ``substantial change in circumstances.'' Existing rule 45 C.F.R.
    303.8(b)(6) requires states to provide notice not less than once every
    3 years to the parents subject to the order informing them of their
    right to request a review and adjustment.

        In order to carry out statutory requirements that state guidelines
    produce appropriate orders, and that states review and adjust orders
    upon a substantial change in circumstances, and our statutory
    responsibility to improve program effectiveness, the proposed rule
    would amend 45 C.F.R. 302.56 to provide that state guidelines may not
    treat incarceration as ``voluntary unemployment'' in establishing or
    modifying child support orders. The effect of the proposed rule is to
    require states to carry out the review and adjustment requirements of
    section 466(a)(10), prohibiting states from legally precluding review
    and, if appropriate, adjustment of support orders during incarceration.
    If an incarcerated noncustodial parent has income or assets, the
    proposed rule permits orders to be set taking that income or those
    assets into account.

        Voluntary unemployment policies are yet another form of income
    imputation that results in inappropriate support orders, prevents
    review and adjustment of such support orders as required by federal
    statute, and is contrary to the evidence of what works to increase
    child support payments. The consequence of voluntary unemployment
    policies is to maintain pre-incarceration support order amounts that
    are not based on the earnings and income available to incarcerated
    parents, resulting in the accumulation of an additional $23,000 on
    average of uncollectible debt during incarceration.\14\ The research
    indicates that accumulation of uncollectible debt results in a number
    of harmful outcomes, including decreased employment, increased
    participation in the underground economy, increased crime and
    recidivism, and increased father absence.\15\ All of these outcomes
    reduce child support collections and hurt children.
    ---------------------------------------------------------------------------
        \14\ Nancy Thoennes, Child Support Profile: Massachusetts
    Incarcerated and Paroled Parents, Center for Policy Research (2002),
    available at:http://cntrpolres.qwestoffice.net/reports/
    profile%20of%20CS%20among%20incarcerated%20&%20paroled%20parents.pdf.
        \15\ Carmen Solomon-Fears, Gene Falk, and Adrienne L. Fernandes-
    Alcantara. Child Well-Being and Noncustodial Fathers, Congressional
    Research Service (2013), available at:
    http://fas.org/sgp/crs/misc/R41431.pdf; Harry Holzer, Paul Offner, and
    Elaine Sorensen. Declining Employment Among Young Black Less-Educated
    Men: The Role of Incarceration and Child Support (2004), available at:
        http://www.urban.org/UploadedPDF/411035_declining_employment.pdf;
    Judi Bartfeld and Dan Meyer. Child Support Compliance Among
    Discretionary and Nondiscretionary Obligors, 77 Soc. Serv. Rev. 347
    (2003), available at:
        http://www.jstor.org/discover/10.1086/
    375793?sid=21106384595223&uid=3739936&uid=2&
    uid=4&uid=3739256; Elaine Sorensen, Liliana Sousa, and Simone Schaner.
    Assessing Child Support Arrears in Nine Large States and the Nation,
    The Urban Institute (2007); HHS, Office of Inspector General, The
    Establishment of Child Support Orders for Low Income Non-custodial
    Parents, 2000, OEI-05-99-00390, available at https://oig.hhs.gov/oei/
    reports/oei-05-99-00390.pdf.

        Over the last 15 years, most states have eliminated the ``voluntary
    unemployment'' provision in their guidelines that precludes review and
    adjustment of the orders of incarcerated parents. At least 36 states,
    including Wisconsin and Utah, currently permit review and adjustment
    during incarceration of the noncustodial parent, while 14 do not. A
    number of state supreme courts have rejected the approach that a
    parent's reduction in income due to incarceration is ``voluntary
    unemployment'' or that order amounts should remain at pre-incarceration
    levels. Instead, these courts have found that orders based on the
    actual income and assets available to the parent are most likely to
    produce support payments upon release.\16\
    ---------------------------------------------------------------------------
        \16\ See e.g., Lambert v. Lambert, 861 N.E.2d 1176, 1180 (Ind.
    2007), (stating ``the conclusion is also supported by the overarching
    policy goal of all family court matters involving children: protecting
    the best interests of those children.''),
        http://www.ai.org/judiciary/opinions/pdf/02220701rts.pdf; State v.
    Porter, 610 N.W.2d 23 (Neb. 2000) (holding that initial child support
    determination which was based upon the father's earning capacity prior
    to his incarceration constituted abuse of discretion noting that during
    the parent's incarceration, the judgment would simply accrue with
    interest and not benefit the child.)

        In a 2005 bipartisan report based upon the work of state judges,
    attorneys general, corrections officers, law enforcement officials,
    victims representatives, and community-based programs, the Council of
    State Governments identified child support obligations, especially
    arrearages, as a barrier to successful re-entry into society because
    they have a tendency to disrupt family reunification, parent-child
    contact, and the employment patterns of ex-prisoners, and recommended
    against voluntary unemployment child support policies.\17\ State child
    support programs have found that they can make their programs more
    successful by identifying parents with support obligations while they
    are in prison so that parents are better able to avoid the accumulation
    of excessive child support debt by requesting an order modification to
    reflect their current ability to pay.\18\
    ---------------------------------------------------------------------------
        \17\ Report of the Re-Entry Policy Council: Charting the Safe and
    Successful Return of Prisoners to the Community,http://
    csgjusticecenter.org/reentry/publications/the-report-of-the-re-entry-
    policy-council-charting-the-safe-and-successful-return-of-prisoners-to-
    the-community/ (Policy Statement 13, pp. 198-2000).
        \18\ Carmen Solomon-Fears, Gene Falk, and Adrienne L. Fernandes-
    Alcantara. Child Well-Being and Noncustodial Fathers, Congressional
    Research Service (2013), available at:
        http://fas.org/sgp/crs/misc/R41431.pdf.

        Section 302.56, recognizes existing state child support order
    establishment practices and clarifies the extent of state flexibility
    ---------------------------------------------------------------------------
    to incorporate Parenting Time into child support orders.

        Section 467 of the Social Security Act requires states to establish
    guidelines for setting child support award amounts within the state.
    The State must review their guidelines every 4 years to ensure that the
    application of the guidelines results in the determination of
    appropriate child support award amounts.

        The Department has authority under section 452(a)(1) of the Act to
    ``establish such standards for locating noncustodial parents,
    establishing paternity, and obtaining child support . . . as he
    determines to be necessary to assure that such programs will be
    effective.'' Also, section 454(13) provides that ``the State will
    comply with such other requirements and standards as the Secretary
    determines to be necessary to the establishment of an effective program
    for locating noncustodial parents, establishing paternity, obtaining
    support orders, and collecting support payments and provide that
    information requests by parents who are residents of other States be
    treated with the same priority as request by parents who are residents
    of the State submitting the plan.''

        In 1985, the Department promulgated 45 C.F.R. 302.56 to implement
    section 467 and 452(a)(1) of the Act. The rule has been revised two
    times since 1985. Specifically, the existing rule requires states to
    set numeric guidelines that take all earnings and income of the
    noncustodial parent into consideration, be based on specific
    descriptive and numeric criteria and result in a computation of the
    support obligation, and address how the parents will provide for the
    children's health care needs. Additionally, the state must review and
    revise, if appropriate, the guidelines every 4 years to ensure
    appropriate child support order amounts.

        The Department proposes to amend its existing rule to recognize
    legal developments in states over the past two decades and current
    state IV-D program activities that do not result in identifiable costs
    to the federal government. We believe that this provision will reflect
    the current practice in some States, recognize judicial flexibility in
    others, and improve child support payment compliance and program
    effectiveness. FFP is available to states to establish child support
    orders. The provision is intended only to clarify that states do not
    need to develop complicated cost allocation formulas to somehow
    separate out the incidental costs associated with applying the
    parenting time aspect of child support guidelines to determine child
    support order amounts, or require parents to return to court another
    day if they wish to submit to the judge a parenting time agreement that
    they have worked out ahead of time so that it can be included in the
    child support order.

        A number of state legislatures, such as New Jersey, Texas,
    Tennessee, and Oregon, have incorporated parenting time factors into
    their state guidelines calculations and established shared parenting
    presumptions to recognize the trend toward shared parenting. Although
    parenting time is a legally distinct and separate right from the child
    support obligation, the research finds that parents are more willing to
    pay child support if they are able to play an active parenting
    role.\19\ Thus, states have concluded that the recognition of parenting
    time can improve child support compliance and program
    effectiveness.\20\ States have been further encouraged to coordinate
    child support and parenting time by the Sense of Congress provision
    included in the Preventing Sex Trafficking and Strengthening Families
    Act of 2014, Sec. 303, Pub. L. 113-183. Some state courts judges and
    administrators have encouraged the Department to clarify existing
    authority to recognize state guidelines provisions and inclusion of
    parenting time agreements in a child support orders.
    ---------------------------------------------------------------------------
        \19\ Kathryn Edin and Timothy Nelson. Doing the Best I Can:
    Fatherhood in the Inner City, University of California Press (2013).
        \20\ National Child Support Enforcement Association, Parenting Time
    Orders. July 21, 2013, available at: http://www.ncsea.org/documents/
    Parenting-Time-Order_7.31.13.pdf.

        The Department's proposed rule reflects the trend of states to
    incorporate parenting time into their guidelines. The proposed rule
    acknowledges these developments \21\ by adding a new criterion as '
    302.56(h) to clarify that states may recognize parenting time
    agreements included in child support orders. ``State child support
    guidelines that incorporate parenting time'' refers to those States
    that have guidelines which incorporate allowances (or credits) for the
    amount of time children spend with both parents in the calculation of
    the child support order amount.
    ---------------------------------------------------------------------------
        \21\ Carmen Solomon-Fears, Gene Falk, and Adrienne L. Fernandes-
    Alcantara. Child Well-Being and Noncustodial Fathers, Congressional
    Research Service (2013), available at:
        http://fas.org/sgp/crs/misc/R41431.pdf.

        The proposed parenting time provision is a minor change to existing
    regulations intended to clarify that a court or child support agency
    may include an uncontested parenting time agreement into the child
    support order at the time the child support order is entered without
    violating federal child support regulations. The proposed rule would
    remove uncertainty about whether a parenting time agreement may be
    included in a child support order when IV-D program attorneys are
    present at the hearing. Allowing a court to address both child support
    and a parenting time agreement in one hearing, when the parents are
    present and willing, increases efficiency and reduces the burden on
    parents of participating in multiple administrative or judicial
    processes without increasing IV-D program costs.\22\ Child well-being
    is positively affected when the noncustodial parents become more
    responsible and involved with their children.\23\
    ---------------------------------------------------------------------------
        \22\ Alicia Key, Parenting Time in Child Support Cases in Texas,
    Family Court Review (Forthcoming 2015).
        \23\ Carmen Solomon-Fears, Gene Falk, and Adrienne L. Fernandes-
    Alcantara. Child Well-Being and Noncustodial Fathers, Congressional
    Research Service (2013), available at: http://fas.org/sgp/crs/misc/
    R41431.pdf.

        The intent of the rule is to modestly increase state flexibility,
    not to increase federal expenditures. This new parenting time provision
    does not permit state IV-D agencies to claim Federal Financial
    Participation for a parenting time program or activities using IV-D
    program funds and has no additional impact on the federal budget. If a
    state incurs costs for parenting time activities, such as mediation or
    legal assistance, it must do so with other funds. Under the proposed
    rule, IV-D program costs must be minimal and incidental to IV-D
    establishment activities. Our proposed regulation is intended to
    clarify that a state does not need to establish a cost allocation plan
    or require parents to come back for a second court hearing if they ask
    the judge to include an uncontested and agreed upon parenting time
    provision incidental to the establishment of a child support order when
    ---------------------------------------------------------------------------
    convenient to the parties, IV-D agency and court to do so.

        The NPRM proposes minimal clarifying changes to increase state
    flexibility, recognize existing state practice, and avoid the creation
    of cost allocation formulas to address trivial costs. It does not
    require or permit state IV-D agencies to undertake new functions that
    do not carry out the child support purposes defined in statute.
    However, the President's Budget Proposal calls for new legislation that
    would expand the statutory responsibilities of the child support
    program to include parenting time establishment. Specifically,
    ``federal resources are made available to states that choose to include
    parenting time responsibilities in initial child support orders
    beginning in FY 2016 and all states are required to include parenting
    time responsibilities in all new child support orders beginning in FY
    2021.''

        Section 302.76, which provides states additional flexibility to
    adopt evidence-based practices to improve program effectiveness and
    recognizes that parents cannot pay regular child support unless they
    have a job.

        Section 452(a)(1) of the Social Security Act provides the Secretary
    with authority to ``establish such standards for State programs for
    locating noncustodial parents, establishing paternity, and obtaining
    child support . . . as he determines to be necessary to assure that
    such programs will be effective.'' Section 454(13) requires the state
    plan to ``provide that the State will comply with such other
    requirements and standards as the Secretary determines to be necessary
    to the establishment of an effective program for locating noncustodial
    parents, establishing paternity, obtaining support orders, and
    collecting support payments. . . .'' The proposed rule is informed by
    section 466(a)(15), which requires states to have procedures to request
    a court or administrative agency to order an individual to participate
    in a plan for noncustodial parents with overdue TANF arrears to pay or
    participate in work activities.

        With very few exceptions, the federal government reimburses the
    cost of procedures implemented by states under section 466, including
    paternity acknowledgments, tax refund offsets, enforcement of liens,
    review and modification of support orders, drivers' license suspension,
    and income withholding activities. While the other procedures in
    section 466 are effective in cases where the noncustodial parent has
    income or resources, they are not effective in situations where the
    noncustodial parent lacks a job.

        The most effective procedure in section 466 is income withholding,
    which accounts for 75 percent of all IV-D child support collections. In
    addition, income withholding results in regular child support payments
    made on time every month. However, income withholding is only effective
    when a noncustodial parent has wages or other monthly income. The
    evidence is clear that the main reason for non-payment of child support
    is unemployment.\24\
    ---------------------------------------------------------------------------
        \24\ Carmen Solomon-Fears, Gene Falk, and Adrienne L. Fernandes-
    Alcantara. Child Well-Being and Noncustodial Fathers,Congressional
    Research Service (2013), available at:
        http://fas.org/sgp/crs/misc/R41431.pdf.

        Based on information from recent studies about child support-led
    employment programs, the Department has determined that authorizing FFP
    for such programs is a reasonable and cost-effective method for
    obtaining and increasing collection of child support payments and
    improved program performance. In fact, noncustodial parent employment
    services can be a more productive and cost-effective tool for
    increasing collections in hard-to-collect cases than the traditional
    enforcement tools reimbursed under current rules. If the proposed rule
    is adopted, we expect that some states would redirect funding toward
    more effective approaches and away from less productive efforts. This
    is particularly so because states put up a 34 percent match and state
    incentive funding is based upon performance improvements. The proposed
    work activities are an evidence-based and cost-effective approach to
    obtaining and increasing child support collections in difficult-to-
    enforce cases, and would be targeted to non-custodial parents who would
    likely not otherwise receive employment services. This option provides
    states with an alternative to repeated, costly, and largely ineffective
    court hearings and jail time when the reason for non-payment is
    unemployment.\25\
    ---------------------------------------------------------------------------
        \25\ Carmen Solomon-Fears, Gene Falk, and Adrienne L. Fernandes-
    Alcantara. Child Well-Being and Noncustodial Fathers, Congressional
    Research Service (2013), available at:
        http://fas.org/sgp/crs/misc/R41431.pdf.

        Studies of state child support-led employment programs for
    noncustodial parents have shown that these efforts increase employment,
    earnings, and child support payments.\26\ Increased child support
    payments avoid public assistance costs. When families receive regular
    child support payments, they use fewer public assistance benefits such
    as TANF and SNAP.\27\ The evidence shows that job services are a more
    cost-effective way to hold unemployed parents accountable and increase
    collections than any other approach.\28\
    ---------------------------------------------------------------------------
        \26\ Carmen Solomon-Fears. Fatherhood Initiatives: Connecting
    Fathers to Their Children. Congressional Research Service (2015),
    available at: http://fas.org/sgp/crs/misc/RL31025.pdf.
        \27\ Laura Wheaton. Child Support Cost Avoidance in 1999, The Urban
    Institute (2003), available at: http://www.acf.hhs.gov/programs/css/
    resource/child-support-cost-avoidance-in-1999-final-report.
        \28\ Daniel Schroeder and Nicholas Doughty, Texas Non-Custodial
    Parent Choices: Program Impact Analysis (2009), available at
        https://www.texasattorneygeneral.gov/cs/ofi/
    ncp_choices_program_impact.pdf; Kye Lippold, Austin Nichols, and
    ElaineSorensen, Strengthening Families Through Stronger Fathers: Final
    Impact Report for the Pilot Employment Programs (2011), available at:
        http://www.urban.org/uploadedpdf/412442-Strengthening-Families-
    Through-Stronger-Fathers.pdf.

        Over the past two decades, most state child support agencies have
    attempted to partner with other programs to establish work slots for
    noncustodial parents behind in their child support payments. However,
    despite strong efforts to promote and coordinate work activities for
    noncustodial parents, few state child support agencies have been able
    to secure resource commitments for noncustodial parent work activities
    ---------------------------------------------------------------------------
    from TANF and workforce agencies.

        Thus, although Congress requires states to have procedures to
    develop work plans for nonpaying noncustodial parents and require
    noncustodial parents to participate in work activities, states have had
    great difficulty carrying out section 466(a)(15). Without funding for
    jobs activities, child support agencies will continue to spend federal
    and state resources on court hearings and state resources on jail, but
    will not accomplish the goal of collecting full and regular child
    support payments for families. Unless more nonpaying noncustodial
    parents are able to participate in job activities, more children will
    go without child support, depend more on public assistance, and remain
    in poverty.

        Section 303.8, which is a new provision allowing Medicaid and CHIP
    to be considered medical support.

        The Child Support Enforcement Amendments of 1984 added section
    452(f) of the Act to require the Secretary to issue regulations
    requiring state child support agencies to petition for the inclusion of
    a medical support provision in child support orders whenever health
    care coverage was available to noncustodial parents at a reasonable
    cost. At the same time, Congress added section 466(a)(19), requiring
    states to have procedures under which all child support orders include
    a provision for the health care coverage of the child. As part of the
    Child Support Performance and Incentive Act of 1998 (CSPIA), Congress
    established a Medical Child Support Working Group to study medical
    child support.\29\
    ---------------------------------------------------------------------------
        \29\ The Medical Child Support Working Group Report, 21 Million
    Children's Health: Our Shared Responsibility, June 2000, available at:
        http://fatherhood.hhs.gov/medsupport00/chap8.htm.

        In 2006, the Deficit Reduction Act amended section 452(f) to
    ---------------------------------------------------------------------------
    provide that:

      The Secretary shall issue regulations to require that State agencies
        administering the child support enforcement program under this part
        enforce medical support included as part of a child support order
        whenever health care coverage is available to the noncustodial
        parent at a reasonable cost. A State agency administering the
        program under this part may enforce medical support against a
        custodial parent if health coverage is available to the custodial
        parent at a reasonable cost. Such regulation shall also provide for
        improved information exchange between such State agencies and the
        State agencies administering the State Medicaid programs under
        title XIX with respect to the availability of health insurance
        coverage. For purposes of this part, the ``term ``medical support''
        may include health care coverage, such as coverage under a health
        insurance plan (including payment of costs of premiums, co-
        payments, and deductibles) and payment for medical expenses
        incurred on behalf of a child.

        In addition, Congress amended section 466(a)(19)(A) to require
    states to have procedures under which ``all child support orders
    enforced pursuant to this part shall include a provision for medical
    support for the child to be provided by either or both parents, and
    shall be enforced, where appropriate, through the use of the National
    Medical Support Notice. . . .'' Section 454(20) incorporates the
    procedures in section 466 into the state plan, by requiring states to
    have in effect laws that implement procedures prescribed in or
    ``pursuant to'' section 466 to improve child support enforcement
    effectiveness.

        The Department has additional authority under section 452(a)(1) of
    the Social Security Act (Act) ``to establish such standards for State
    programs for locating noncustodial parents, establishing paternity, and
    obtaining child support . . . as he determines to be necessary to
    assure that such programs will be effective.'' Section 454(13) provides
    that ``the State will comply with such other requirements and standards
    as the Secretary determines to be necessary to the establishment of an
    effective program for locating noncustodial parents, establishing
    paternity, obtaining support orders, and collecting support payments
    and provide that information requests by parents who are residents of
    other States be treated with the same priority as requests by parents
    who are residents of the State submitting the plan.''

        As directed by Congress, the Department promulgated medical support
    regulations in 1992, 2000, and 2008. In the preamble to its 2000
    regulation, we responded to commenters asking whether Medicaid and the
    State Children's Health Insurance Program should be excluded from
    consideration as alternative coverage. Our response was that ``The
    statute does not preclude medical support under Medicaid or SCHIP from
    being stipulated in the order as alternative coverage,'' but stated
    that ``we are examining the Working Group's recommendations on this
    issue.'' \30\
    ---------------------------------------------------------------------------
        \30\ See 65 Fed. Reg. 82154, dated December 27, 2000, available
    at:http://www.gpo.gov/fdsys/granule/FR-2000-12-27/00-31611.

        Section 466(a)(19)(a) requires ``all child support orders enforced
    pursuant to this part'' to include a provision for medical support for
    the child to be provided by either or both parents. Employer-sponsored
    health care coverage is not available to most children in the child
    support caseload. Although states have committed substantial resources
    toward increasing the percentage of child support orders that include
    medical support, federal administrative data indicates that medical
    support is actually provided as ordered in only 33 percent of
    cases.\31\ The 2009 Center for Policy Research Report analysis of
    selected states also found that issuing a National Medical Support
    Notice to the noncustodial parent's employer results in the child being
    enrolled in a health plan only 10 to 23 percent of the time.\32\ An
    Urban Institute study found that in 2009, only 37 percent of child
    support-eligible children had parents with employer-sponsored health
    care.\33\ This contrasts with data from two decades earlier included in
    a 1992 GAO report that ``The Bureau of Labor Statistics' 1989 and 1999
    surveys of employee benefits indicate that 81 percent of adult workers
    have insurance available through their employer.'' \34\
    ---------------------------------------------------------------------------
        \31\ Center for Policy Research, Medical Child Support: State
    Strategies Re-examined, prepared under Office of Child Support
    Enforcement Grant #08-C0067 to the Texas Office of the Attorney
    General, Division of Child Support (2011).
        \32\ Center for Policy Research, Medical Child Support: Strategies
    Implemented by States, prepared under Office of Child Support
    Enforcement Grant #08-C0067 to the Texas Office of the Attorney
    General, Division of Child Support (2009).
        \33\ Stacey McMorrow, Genevieve Kenney, Allison Cook, and Christine
    Coyer. Health Care Coverage and Medicaid/CHIPEligibility for Child
    Support Eligible Children. ASPE Research Brief, available at: http://
    aspe.hhs.gov/hsp/11/HealthCare-ChildSupport/rb.shtml.
        \34\  General Accounting Office (GAO), Medicaid: Ensuring That
    Noncustodial Parents Provide Health Insurance Can Save Costs, GAO/HRD-
    92-80, p. 8, June 1992, available at: http://www.gao.gov/assets/220/
    216432.pdf.

        In order to effectively carry out the statutory requirement that
    states establish medical support orders in all IV-D cases and to
    improve the effectiveness of the child support program in establishing
    medical support, the rule proposes to amend the 2008 rule to give
    states flexibility to recognize the sources of health care coverage--
    private or public--available to either parent at a reasonable cost. We
    believe that this provision will improve child support payment
    ---------------------------------------------------------------------------
    compliance and program effectiveness.

        Section 303.8, which is a new criterion preventing regular Social
    Security payments from being garnished under an existing child support
    order.

        Section 459 of the Act provides that only moneys that are based
    upon remuneration for employment are subject to child support
    garnishment. Supplemental Security Income (SSI) payments are not based
    upon remuneration for employment. Rather, they are provided based on
    need. Since 2000, federal policy on child support garnishments has
    recognized this exception by directing child support agencies not to
    collect against SSI benefits (either directly or from bank
    accounts).\35\ Currently, OCSE estimates that about three percent of
    noncustodial IV-D parents receive SSI.
    ---------------------------------------------------------------------------
        \35\ See OCSE Dear Colleague Letter (DCL) 00-103, Attachment of
    Social Security Benefits, October 6, 2000, available at:
        http://www.acf.hhs.gov/programs/css/resource/attachment-of-social-
    security-benefits.

        Additionally, the Department has authority under section 452(a)(1)
    of the Act to ``establish such standards for locating noncustodial
    parents, establishing paternity, and obtaining child support . . . as
    he determines to be necessary to assure that such programs will be
    ---------------------------------------------------------------------------
    effective.''

        Section 454(13) provides that ``the State will comply with such
    other requirements and standards as the Secretary determines to be
    necessary to the establishment of an effective program for locating
    noncustodial parents, establishing paternity, obtaining support orders,
    and collecting support payments and provide that information requests
    by parents who are residents of other States be treated with the same
    priority as request by parents who are residents of the State
    submitting the plan.''

        The new provisions related to SSI garnishment were added to our
    proposed rule consistent with Section 459 of the Social Security Act
    and the rule jointly issued by the Department of Treasury, in
    conjunction with the Social Security Administration, Department of
    Veterans Affairs, Office of Personal Management, and the Railroad
    Retirement Board, on February 23, 2011, to prevent the garnishment of
    bank accounts containing certain federal benefits.\36\ On February 27,
    2013, the HHS Office of Child Support Enforcement issued Dear Colleague
    Letter (DCL) 13-06 providing guidance to state and tribal child support
    agencies urging them to implement automated and manual safeguards to
    ensure that Supplemental Security Income (SSI) benefits are not being
    garnished.\37\ The DCL indicated that we were reviewing our regulations
    to determine if additional requirements were needed to ensure that
    exempt federal benefits are not garnished.
    ---------------------------------------------------------------------------
        \36\ See 76 Fed. Reg. 9939, February 23, 2011, available at: http:/
    /www.google.com/
    url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=2&ved=0CCYQFjAB&url=http%3A
    %2F%2F
    www.gpo.gov%2Ffdsys%2Fpkg%2FFR-2011-02-23%2Fpdf%2F2011-
    3782.pdf&ei=S2MlVdz3J47bs
    ATpsYG4Aw&usg=AFQjCNEYHTclYGyhrjxBJ35wea64XFPtHw.
        \37\ See OCSE Dear Colleague Letter (DCL) 13-06, Garnishment of
    Supplemental Security Income Benefits, February 27, 2013,available
    at:http://www.acf.hhs.gov/programs/css/resource/garnishment-of-
    supplemental-security-income-benefits.

        The Department has been urged by several stakeholders to exclude
    ``dual eligibility'' benefits, where the individual is eligible for
    both SSI and Social Security Disability Insurance (SSDI), meets the
    income test for SSI benefits, and would have received the same amount
    in SSI-only funds, but for the fact that the individual qualifies for
    SSDI benefits as well as SSI benefits. The proposed rule requires
    states to develop safeguards for the states to prevent garnishment of
    exempt benefits. These provisions only relate to excluding SSI
    ---------------------------------------------------------------------------
    benefits, as well as concurrent SSI and SSDI benefits.

        The proposed rule does not make any revision related to SSDI
    benefits, which remain subject to garnishment, except in the one
    circumstance described above. SSDI benefits are considered remuneration
    from employment, and therefore, state or tribal child support agencies
    are allowed to continue to garnish the benefits of child support
    directly from the federal payer as authorized under section 459(h).

        The proposed rule requires states to review these noncustodial
    parents' financial accounts to determine whether there are available
    assets above subsistence level available for garnishment other than SSI
    or concurrent SSI and benefits under title II of the Act. The rule also
    requires states to have automated procedures in place to return funds
    to a noncustodial parent within 2 days after the agency determines that
    SSI or concurrent SSI and benefits under title II of the Act in the
    account have been incorrectly garnished.

        The proposed rule is consistent with long-standing federal child
    support policy and the rule promulgated jointly by Treasury and other
    federal agencies, and strengthens policies and safeguards to prevent
    garnishment of low-income noncustodial parents' financial accounts when
    they are only receiving these exempt benefits, which retain their
    character as exempt even after being deposited.

        Section 304.20, which details new expenditures subject to FFP.

        Section 455 of the Social Security Act generally provides that the
    Secretary will reimburse amounts expended for the operation of the
    state plan. Section 452(a)(1) of the Social Security Act (Act) provides
    the Secretary with authority to ``establish such standards for State
    programs for locating noncustodial parents, establishing paternity, and
    obtaining child support . . . as he determines to be necessary to
    assure that such programs will be effective.'' Section 454(13) provides
    that ``the State will comply with such other requirements and standards
    as the Secretary determines to be necessary to the establishment of an
    effective program for locating noncustodial parents, establishing
    paternity, obtaining support orders, and collecting support payments
    and provide that information requests by parents who are residents of
    other States be treated with the same priority as requests by parents
    who are residents of the State submitting the plan.''

        To implement section 455, the Department promulgated a set of FFP
    rules, including 45 C.F.R. 304.20, 304.21, 304.23, and 304.26. These
    rules have been amended 14 times since 1975. Proposed changes to 45
    C.F.R. 304.20 would provide clear guidance to states and update
    existing FFP rules to reflect current practice in the field for the
    establishment and enforcement of child support orders. The proposed
    rule articulates standard OMB cost principles incorporated in existing
    45 C.F.R. 304.10 to the effect that costs must be necessary,
    reasonable, and allocable to the child support program.\38\
    ---------------------------------------------------------------------------
        \38\ See Uniform Guidance for HHS Awards at 45 CFR 75, Subpart E,
    Cost Principles.

        The proposed rule at 304.20(b)(12) would explicitly permit FFP for
    educational and outreach activities for the state agency to carry out
    their responsibilities to publicize child support services under
    section 454(23) of the Social Security Act and to coordinate with other
    programs to improve the effectiveness of the child support program.
    Effective programs incorporate such educational and outreach
    activities, and this cost is routinely claimed by state child support
    ---------------------------------------------------------------------------
    agencies.

        The proposed rule at 304.20(b)(3)(vi) would expressly permit FFP
    for services to increase pro se access to adjudicative and alternative
    dispute resolution practices. Some states use alternative dispute
    resolution because it is more effective and less expensive than paying
    for costly court hearings and attorneys. Alternative dispute resolution
    also can increase compliance with child support orders more effectively
    than court hearings because such procedures are less adversarial and
    damaging to family relationships. Some state courts also provide child
    support education and assistance to unrepresented parties in child
    support cases in order to explain the process and help parents complete
    forms needed in court. The research shows that parents who feel heard
    and respected by the child support process are more likely to comply
    with the orders.\39\ States using alternative dispute resolution and
    pro se services in child support cases have claimed FFP for these costs
    for many years.
    ---------------------------------------------------------------------------
        \39\ Kelly Macatangay, Anton Westveld, Brian Kunkel, Intervening
    for Success. NV: Clark County District Attorney, Family Support
    Division (2012); Karen Roye, Enhanced Parental Involvement
    Collaborative Project: Final Report. CA: San Francisco Department of
    Child Support Services (2006).

        The proposed rule at 304.20(b)(3)(v) would permit FFP for local bus
    fare for participants to attend child support appointments and court
    hearings. Providing FFP for local bus fare can be a cost-effective way
    to reduce costly no-shows at court, increase parental cooperation, and
    improve access to legal proceedings. In some states, the no-show rate
    can be as much as 50 percent. When a parent does not show up, the
    agency may need to reschedule a paternity genetic test or the court may
    need to reschedule or reopen an earlier default order--all costs
    ---------------------------------------------------------------------------
    otherwise charged to the federal government.

        According to the cost principles, states may only claim such costs
    if they are necessary, reasonable, and allocable to title IV-D. Under
    the proposed rule, a state could not claim such costs for custody or
    child welfare cases, for example, because they would not be allocable
    to title IV-D.

        The proposed rule at 304.20(b)(3)(ix) would provide FFP for certain
    work activities to increase child support payments through early
    intervention efforts so as to improve child support outcomes and
    redirect major program costs associated with repeated and ineffective
    enforcement efforts, expensive attorney and court time, and jail costs.
    Legal authority for this provision is discussed in the response to
    question 5 on Medicaid.

        A number of states are moving forward to improve coordination
    between child support and parenting time. The proposed rule at
    304.20(b)(3)(vii) is not intended to expand FFP, but to clarify that
    FFP is not available for parenting time activities. The de minimis
    exception is added to clarify that state allocation plans are not
    required when the state incurs nominal costs associated with child
    support guidelines development. Since the late 1990s, several state
    legislatures have adopted child support guidelines that require the
    child support agency to calculate parenting time to determine the
    amount of child support order amounts. In addition, the proposed rule
    clarifies that parents who have previously worked out a parenting time
    agreement (without using FFP) do not have to come back for another
    hearing and state attorneys do not need to leave the courtroom in those
    situations when a support order is being set and it is convenient for
    the judge and parents to add the parenting time agreement to the
    support order. See response to question 4 on Medicaid.
                                     stark
        Question. The Affordable Care Act established procedures for self-
    reporting Stark law violations. However, hospitals that have followed
    these procedures to try and reach a settlement for technical
    noncompliance (ex. administrative mistakes, missing signatures) are
    awaiting decisions from CMS for what seems to be an excessive period of
    time.

        How many self-referral disclosures are currently pending a
    settlement decision by CMS and how many hospitals are involved?

        Answer. There are 400 disclosures pending settlement. Based on our
    experience to date, approximately 90 percent of disclosures involve
    hospitals.

        Question. How many cases are within three months of reaching the
    four year look back period and in jeopardy of not reaching a settlement
    in time?

        Answer. The four year look back period refers to the period of time
    during which a provider making a disclosure may not have been in
    compliance with the physician-self referral law, but is not a time
    limit for when a settlement must be reached. Once a provider of
    services or supplier electronically submits a disclosure under the
    Self-Referral Disclosure Protocol (SRDP) (and receives email
    confirmation from CMS that the disclosure has been received), the
    statutory obligation to return any potential overpayment within 60 days
    will be suspended until a settlement agreement is entered, the provider
    of services or supplier withdraws from the SRDP, or CMS removes the
    provider of services or supplier from the SRDP.
                                      pace
        Question. Secretary Burwell, you recently announced your plans to
    move the Medicare program toward paying providers based on the quality,
    rather than the quantity, of care they give patients by shifting more
    Medicare dollars toward value based models. How will CMS account for
    Medicare Advantage plans and the PACE program as part of this
    initiative?

        Answer. Medicare Advantage and PACE are a central part of the
    broader effort to increasingly shift Medicare to value-based payments.
    CMS will reach out to Medicare Advantage (MA) organizations to better
    understand the way they are using physician incentive payments (e.g.
    payments based on quality of care, patient satisfaction) and value-
    based contracting of provider services to achieve lower costs and
    improve quality of care, including reduced hospital readmissions and
    improved performance on specific health care measures. MA organizations
    have great flexibility to include incentives in their physician
    contracts, and many are employing methods to reduce costs, better
    coordinate care and promote better health outcomes.

        Sponsors of Medicare Advantage and PACE plans are key participants
    in the Health Care Payment Learning and Action Network; through their
    participation, they will have the opportunity to learn about and
    potentially adopt value-based payment approaches being used in Medicare
    fee-for-service, employer/individual plans, and elsewhere. Also,
    Medicare Advantage and PACE plans will be able to share their
    experience in incentivizing quality and value for their enrollees.

        In addition, the Center for Medicare and Medicaid Innovation is
    working on developing new payment and delivery models specifically
    focused on innovation in health plans. Public responses to a request
    for information issued in late 2014 generated valuable feedback to
    inform this work. Such payment and delivery models will further move
    Medicare towards value-based purchasing.

        Question. In its fall 2012 Regulatory Agenda, CMS published a
    Notice of Proposed Rulemaking to revise the PACE regulation and noted
    it would be issued in July 2013. Since then, this deadline has been
    extended to December 2013, again to August 2014, and most recently, to
    Spring 2015. Will CMS issue a revised PACE regulation this spring?

        Answer. CMS is currently performing a comprehensive review of the
    federal regulations governing PACE to identify potential regulatory
    changes to reflect the evolving needs and opportunities of the program.
    As CMS continues to contemplate potential regulatory changes, they have
    implemented a number of improvements to PACE, including streamlining
    the application process, updating the notification requirements for the
    use of alternative care settings, and establishing a new PACE council
    to bring together different components of the agency to focus on PACE
    issues.
                              special needs plans
        Question. It is well known that a relatively small proportion of
    very sick, high-risk Medicare beneficiaries drive a significant
    proportion of the program's overall costs. Many of these chronically
    ill beneficiaries remain in unmanaged fee-for-service Medicare, despite
    the fact that their health outcomes could be substantially improved if
    they were enrolled in a program that coordinated their care. Medicare
    Advantage (MA) plans, including Special Needs Plans (SNPs), provide
    this type of disease management and care coordination that both
    optimize health while reducing costs associated with unmanaged care and
    poorer outcomes. Recent cuts to MA plan payments jeopardizes this
    success.

        Secretary Burwell, with the annual rate notice for MA plans coming
    out next week, what can you tell this Committee about the Agency's
    commitment to ensuring that robust disease management programs such as
    those provided by MA plans can continue to be available for chronically
    ill high-risk beneficiaries?

        Answer. CMS will continue to promote robust disease management
    programs, such as those offered by Medicare Advantage (MA) plans, so
    they continue to be available for chronically ill high-risk
    beneficiaries. CMS continues to support MA organizations seeking to
    offer Special Needs Plans (SNPs), which provide this type of disease
    management and care coordination for those high-risk beneficiaries who
    qualify for these plans. CMS also encourages organizations to extend
    the disease management and care coordination efforts to all MA plans,
    not only SNPs. CMS requires MA organizations to make a best effort to
    conduct an initial assessment of each enrollee's health care needs
    within 90 days of the effective date of enrollment. CMS also requires
    SNPs to perform a comprehensive initial health risk assessment (HRA)
    that includes assessment of each enrollee's physical, psychosocial, and
    functional needs within the first 90 days of enrollment and conduct
    reassessments annually thereafter. HRAs used by MA organizations serve
    to identify beneficiaries at risk for disease, and MA organizations use
    these assessments to better target outreach and engagement efforts.

        Furthermore, MA organizations must have an ongoing Quality
    Improvement (QI) program for each of their plans. A QI program is
    designed such that MA organizations have the necessary infrastructure
    to coordinate care, promote quality, performance, and efficiency on an
    ongoing basis. The HRA and QI programs are a few examples of programs
    used by MA organizations to improve disease management and care
    coordination for beneficiaries.

        CMS believes care coordination and disease management are central
    tenets of the MA program and expects all MA organizations not only to
    continue to meet CMS's requirements related to care coordination and
    disease management, but to also improve upon existing efforts to
    optimize health while reducing costs associated with unmanaged care and
    poorer outcomes.
                           co-op financial statements
        Question. As you know, HHS requires health insurance co-operatives
    to submit quarterly financial statements to the Centers for Medicare
    and Medicaid Services. On multiple occasions in recent months--
    including September 30, 2014, December 16, 2014, and January 11, 2015--
    Senate offices have asked for these quarterly reports, but not received
    them.

        Have the state health insurance co-operatives been filing the
    reports as required? If so, why has CMS not provided this material on
    request to Senate offices?

        Answer. To ensure strong financial management, CO-OPs are required
    to submit quarterly financial statements, including cash flow data,
    receive site visits by CMS staff, and undergo annual external audits,
    in order to promote sustainability and capacity to repay loans. This
    monitoring is concurrent with ongoing financial and operational
    monitoring by state insurance regulators.

        CMS appreciates Congressional interest in the quarterly financial
    statements, and shares the goal of assuring that CO-OP loans are fully
    repaid. The quarterly financial reports contain extensive financial
    information, including assets, liabilities, revenue and expenses, and
    cash flow sheets. Additionally, premium, enrollment, and utilization
    information is found in the reports, as well as claims and underwriting
    information. As careful stewards of the federal funding invested in CO-
    OPs, CMS has an obligation to safeguard these reports, as the release
    of the proprietary information they contain could impede the loan
    recipients' ability to compete and thus imperil their ability to repay
    the loan amount to the federal government. These financial statements
    are not typically made public by privately held entities, which may be
    in direct competition with CO-OP issuers, and the disclosure of these
    materials could create undue harm to the CO-OPs, have an anti-
    competitive effect on the health insurance market in, and, as such,
    could prevent a CO-OP from repaying loans to the federal government.

        CMS looks forward to continuing to work with Congress with respect
    to its interest in the CO-OP program, and to facilitate the success of
    the CO-OPs in providing an affordable and robust health insurance
    option for consumers.
                                     ______

                     Questions Submitted by Hon. Ron Wyden
                delivery system reform's effect on chronic care
        Question. Over time, the Medicare program and providers have been
    increasingly focused on treating beneficiaries with chronic conditions
    such as cancer, diabetes and heart disease. I am determined to find a
    way to improve the care for chronically ill individuals, particularly
    Medicare beneficiaries.

        The President's budget highlights the importance of our health care
    system rewarding providers that deliver high quality and coordinated
    care. Last week, you announced the Administration's, ``Better Care,
    Smarter Spending'' initiative, which sets goals and timelines so that
    more Medicare payments will be based on the quality and the care
    delivered, not just the number of services delivered. I have long
    believed we should move away from a volume-based system to one based on
    value. I believe we must also focus on the chronically ill who are most
    in need of care coordination and management. These are the patients
    most harmed by a fragmented health care system that works in silos,
    rather than teams. In order to reach the goals you've laid out, we're
    going to need to know what is working today.

        How did you arrive at the goals and timelines you set for the
    ``Better Care, Smarter Spending'' initiative? What is the strategy to
    achieve these goals?

        Answer. In setting goals and timelines, HHS wanted to be ambitious
    while also being realistic and to provide the private sector with a
    clear signal about Medicare's future direction.

        Almost no Medicare fee-for-service payments were paid through
    alternative payment models (APMs) in 2011. This percentage increased to
    approximately 20 percent by the end of 2014 with a goal of 30 percent
    of payments in APMs by 2016 and 50 percent by 2018. This sends a clear
    signal about the importance of value-based payments in the future of
    Medicare. Additionally, for Medicare fee-for-service (FFS) payments
    linked to quality or value, HHS also set a goal of tying 85 percent of
    all traditional Medicare payments to quality or value by 2016 and 90
    percent by 2018.

        The strategy to reach these goals includes increasing enrollment in
    existing models, expansion of test models meeting the statutory
    requirements for expansion, and testing new APMs. The existing Medicare
    Shared Savings Program (MSSP) with Accountable Care Organizations
    (ACOs) continues to show success, with 89 new ACOs starting in 2015.
    Over 400 ACOs are now participating, serving more than 7.2 million
    beneficiaries. Additionally, a number of alternative payment models are
    being tested by the CMS Innovation Center including the Pioneer ACO,
    Bundled Payments for Care Improvement, and Comprehensive Primary Care
    models.

        Question. How will you work with Congress on this initiative?

        Answer. We look forward to working together with Congress as we
    continue our efforts to develop and test innovative payment and service
    delivery models. We continue to welcome congressional feedback and
    input. As we proceed with this initiative, we will keep Congress
    apprised of our progress and achievements.

        Question. How do you plan to work with the private sector to
    achieve high, quality, high value care?

        Answer. HHS plans to launch the Health Care Payment Learning and
    Action Network (Network), a collaborative network that will bring
    private sector payers, providers, and businesses together with
    consumers and public sector representatives to accelerate the
    transformation of the nation's health care delivery system to one that
    achieves better care, smarter spending, and healthier people, by
    supporting the adoption of alternative payment models through their
    aligned work. The goal of the Network is to provide a forum for public-
    private partnerships to help the U.S. health care payment system meet
    or exceed the recently established Medicare goals for value-based
    payments and alternative payment models.

        Participants in the Network will meet and identify best practices
    related to alternative payment models. These best practices will be
    made available to individuals and organizations who are interested in
    learning more about value-based care and alternative payment models.
    Through communication and collaboration, participants will have an
    opportunity to align on key characteristics of payment models that will
    facilitate the increased adoption of these models.

        Question. Which Medicare and Medicaid programs are showing the most
    success at delivering high-quality, high-value care?

        Answer. Early signs of the most success at delivering high-quality,
    high-value care are being demonstrated in the Pioneer Accountable Care
    Organization (ACO) initiative. The Pioneer ACO model has demonstrated
    that it's possible for providers to lower costs while improving
    quality. Preliminary results from the evaluation of the first
    performance year (2012) have shown that Pioneer ACOs achieved $147
    million in savings in total spending above baseline and local market
    trends. At the same time, Pioneer ACOs had a mean quality performance
    score on 33 quality measures that increased from 71.8 percent in 2012
    to 85.2 percent in 2013.

        Other initiatives are also showing promising early results.
    Findings of the early effects of the Comprehensive Primary Care
    initiative (CPC) on service utilization and costs for attributed
    Medicare fee-for-service (FFS) beneficiaries through September 2013 are
    promising and more favorable than might be expected for the first 12
    months of the initiative. Across all seven regions in the first year,
    early results suggest that CPC has generated enough savings in Medicare
    health care expenditures to nearly cover the CPC care management fees
    paid by CMS for attributed Medicare FFS beneficiaries. CPC also
    generated reductions in hospitalizations, outpatient ED visits, primary
    care physician visits, and specialist visits.

        The Partnership for Patients initiative, launched in April 2011
    with funds provided by the Affordable Care Act, aims to save 60,000
    lives by averting millions of hospital acquired conditions over three
    years by reducing complications and readmissions and improving the
    transition from one care setting to another. At the core of this
    initiative are 26 Hospital Engagement Networks that work with 3,700
    hospitals (representing 80 percent of the American population), working
    with health care providers and institutions, to identify best practices
    and solutions to reducing hospital acquired conditions and
    readmissions. As of December 2014, an HHS report shows an estimated
    50,000 fewer patients died in hospitals and approximately $12 billion
    in health care costs were saved as a result of a reduction in hospital-
    acquired conditions from 2010 to 2013. Preliminary estimates show that
    in total, hospital patients experienced 1.3 million fewer hospital-
    acquired conditions from 2010 to 2013, which translates to a 17 percent
    decline in hospital-acquired conditions over the three-year period.

        Question. Which of your programs are targeting the chronically ill,
    and when will we see results from those programs?

        Answer. Innovation Center models engage practices and serve
    beneficiaries whose needs range from the simple to the complex. Many
    Innovation Center models focus their efforts on chronically ill
    beneficiaries using one of two strategies. Models such as the
    Comprehensive Primary Care (CPC) Initiative and the Pioneer Accountable
    Care Organization (ACO) Model are structured in such a way that many
    practices and awardees have chosen to focus on the chronically ill as a
    means by which to achieve savings and show success in the program.

        Another set of Innovation Center models are explicitly defined to
    meet specific needs of Medicare beneficiaries who are chronically ill
    and high utilizers of services. For example, the Comprehensive End
    Stage Renal Disease (ESRD) Care (CEC) Model is testing a new model of
    care delivery and payment for the segment of the Medicare fee-for-
    service (FFS) beneficiary population with ESRD. By creating incentives
    for dialysis facilities, nephrologists, and other Medicare providers of
    services and suppliers to collaboratively and comprehensively address
    the extensive needs of the complex ESRD beneficiary population, it
    seeks to improve outcomes for this population while reducing
    expenditures. We anticipate that the CEC model will begin in 2015.
                             hit and meaningful use
        Electronic health records and health information technology (HIT)
    have made huge advancements over the past decade and the Meaningful Use
    (MU) Program can largely be credited for that success. But we know that
    there is still a long way to go to reach the full value of HIT for both
    patients and providers. The MU program has had fits and starts along
    the way, but we know the administration, lawmakers and providers want
    the program to be successful to ensure the promise of electronically
    integrated information that will benefit providers and patients alike.
    Recently, HHS announced it plans to propose more flexibility in the MU
    program, most importantly allowing for a shorter reporting period in
    2015 for providers to meet MU, 90 days rather than 365 days.

        Question. Can you explain the rationale for this decision?

        Answer. CMS is working on multiple rulemaking tracks right now to
    realign the EHR Incentive Programs to reflect the progress toward
    program goals and be responsive to stakeholder input. CMS announced
    earlier this year that they are considering proposals to:

        Realign hospital EHR reporting periods to the calendar year to
            allow eligible hospitals more time to incorporate 2014 Edition
            software into their workflows and to better align with other
            CMS quality programs.

        Modify other aspects of the program to match long-term goals,
            reduce complexity, and lessen providers' reporting burdens.

       Shorten the EHR reporting period in 2015 to 90 days to accommodate
            these changes.

        These intended changes would help to reduce the reporting burden on
    providers, while supporting the long term goals of the program.

        The new rule, expected this spring, would be intended to be
    responsive to provider concerns about software implementation,
    information exchange readiness, and other related concerns in 2015. It
    would also be intended to propose changes reflective of developments in
    the industry and progress toward program goals achieved since the
    program began in 2011.

        Question. Where do you see the MU program going so that providers
    and patients alike can receive value from their EHRs and their health
    information? What is your definition of success for the program?

        Answer. To date, we have more than 414,000 providers who have
    earned an incentive payment for the adoption and meaningful use of
    certified EHR technology in the Medicaid and Medicare EHR Incentive
    Programs combined.

        When the program first began we established the structure as a
    series of progressive milestones or benchmarks to encourage the
    adoption of certified EHRs rather than as a single goal. Stage 1 was
    focused on structured data capture, Stage 2 is focused on sharing that
    data and using health IT to support clinical processes, and Stage 3
    will further focus on advanced use of EHRs for health information
    exchange, patient engagement, and quality improvement. Earlier this
    year we announced we would consider proposals to realign hospital
    reporting timelines with the calendar year and modify other aspects of
    the program to match long-term goals, reduce complexity, and lessen
    providers' reporting burdens. We also announced a proposal to
    transition from a full year to a 90 day reporting period in 2015 in
    order to accommodate these other changes.

        Regarding the definition of success for the program, we began by
    focusing on obtaining success through adoption, and are moving toward
    focusing on obtaining success through the advanced use of certified EHR
    technology.

        We have also identified progress towards key Stage 2 milestones,
    such as the exchange of health information and ensuring that patients
    have access to their records through an electronic means. We are
    focused on a continuous improvement model, with certified EHR
    technology as a foundation upon which delivery system reform can
    continue to build. We envision providers in all settings of care being
    able to freely exchange health information and patients having
    electronic access to their health information in order to facilitate
    engagement with their care team to make informed decisions about their
    health. We are placing emphasis on enhanced patient safety as functions
    such as clinical decision support interventions as well as electronic
    transmission of prescriptions and clinical orders to allow for improved
    real time checks within the clinical setting. Finally, we envision that
    the data available on quality and patient outcomes can help to inform
    best practice models and quality improvement initiatives to support
    chronic disease management, reduce health disparities, and ultimately
    improve health outcomes for patients.

        We will know that we are successful when we see continued increase
    in the overall number of providers achieving Meaningful Use each year,
    improved performance over time, and an expansion in the meaningful use
    of certified EHR technology.
                         unique device identifier (udi)
        Question. The FDA is establishing a national unique device
    identification system for medical devices, which will improve patient
    safety and quality of care. When the system is fully implemented, the
    label of most devices will include a unique device identifier (UDI).
    The device labelers must submit information about each device to the
    Global Unique Device Identification Database (GUDID), which will be
    publically accessible to all stakeholders to search and download
    information. However, there currently is no mechanism to capture the
    UDIs associated with patient claims data. While including UDIs in
    electronic health records may help better understand the safety and
    quality impacts of specific devices for individual patients, this
    mechanism does not allow for the aggregation or trending of data to
    identify safety or quality issues. While registries are a potential
    solution to this concern, they are unlikely to ensure the
    comprehensiveness that is needed. Integrating UDIs into administrative
    data would ensure comprehensiveness while also allowing for aggregation
    and trending over time. While this option would require administrative
    and claims data changes, it seems that the benefits of a claims option
    could greatly outweigh the administrative burdens, particularly over
    time as coding UDIs would become part of the regular process in claims
    processing.

        As Medicare and the private sector continue to emphasize quality as
    their programs evolve, can you tell us the benefits of gathering UDI
    information?

        Can you discuss the pros and cons of including UDIs for implantable
    devices in electronic health records?

        Are there any significant barriers to including a data field on the
    standard administrative claims form that would allow for the collection
    of UDIs?

        Can you discuss the pros and cons of including UDIs for implantable
    devices on Medicare claims data? What are your views on starting with a
    small number of the most relevant implantable devices?

        Answer. HHS is committed to sharing information transparently to
    improve the quality and safety of care delivered to people across the
    country. The centerpiece--and most critical element--of post-market
    surveillance is the incorporation of UDIs into electronic health
    information; particularly electronic health records (EHRs) and device
    registries.

        UDIs incorporated into EHRs would allow the use of a device to be
    linked with a patient's experience with that device, thereby generating
    better information for patients and providers to make well-informed
    decisions, and facilitate medical device innovation and safety
    surveillance. The FDA, the Office of the National Coordinator for
    Health IT (ONC), and the Centers for Medicare & Medicaid Services (CMS)
    are working closely on the shared goal of incorporating UDIs into EHRs,
    starting with implantable devices. UDIs incorporated into device or
    procedure-related registries could have similar benefits as those noted
    for EHRs. Registries could promote postmarket surveillance monitoring
    and quality by serving as a single location where robust information
    would be collected.

        Key challenges include lack of standardized capture of the UDI on
    the label at point of care (POC), a challenge that also applies to
    claims reporting, and obstacles to electronic transmission of the UDI
    (e.g., from EHRs to registries). Professional societies, as they either
    modify or develop their registries, are increasingly enabling POC-
    capture of UDIs. Consistent with the National Medical Device Postmarket
    Surveillance System, the FDA continues to promote registry development,
    both domestically and through international consortia. Additionally,
    standards development organizations are tackling how to standardize
    data transmission.

        Some have suggested that incorporating UDIs into claims could also
    facilitate device safety analysis. As a first step, the American
    National Standards Institute's Accredited Standards Committee (ASC
    X12), the body that develops and maintains electronic data interchange
    standards, is exploring business cases for including UDIs into health
    care transactions. Both CMS and FDA are participants and look forward
    to continuing working through these issues at the ASC X12 Committee.
    HHS also supports the recommendations by the National Committee on
    Vital and Health Statistics to consider conducting voluntary pilot
    tests of the benefits, costs, and feasibility of UDIs in claims
    reporting between providers and commercials payers. Voluntary pilots
    should address key challenges to adding UDIs to claims including
    significant technological hurdles and costs (for providers, payers and
    others), as well as difficulties in validating UDIs reported on claims.
           benefits of the medicaid expansion and lost opportunities
        Question. There are still 22 states that have not expanded
    Medicaid. Medicaid dollars flow directly to health care service
    providers such as physicians, hospitals, and nursing facilities--
    further bolstering job growth in these sectors and having positive
    indirect effects in other sectors of the economy. In 2013, the Kaiser
    Family Foundation reviewed over 30 studies that universally showed
    Medicaid's simulative impact on state economies. The President's
    Council of Economic Advisers has also noted that Florida and Texas
    alone would see over 33,000 new jobs in 2016 if they expanded their
    Medicaid programs. These findings and others strongly suggest that the
    states avoiding Medicaid expansion are missing out on considerable
    economic opportunities.

        Can HHS elaborate on the different ways Medicaid expansion might
    help bolster state economies and create jobs?

        Answer. HHS is eager to work with all states to expand Medicaid so
    that they can take advantage of federal funding provided under the
    Affordable Care Act. The Administration believes that consumers with
    health insurance have better access to health care, get more preventive
    screening and are financially protected in the event of a health
    emergency. If non-expansion states reversed their decision, 255,000
    fewer consumers would face catastrophic out-of-pocket medical costs and
    810,000 fewer consumers would have trouble paying other bills because
    of the burden of medical costs.\40\ Pre-Affordable Care Act (ACA)
    Medicaid expansions have been associated with significant reductions in
    consumer bankruptcy rates.\41\ State residents with a more secure
    financial future are more productive workers, face less mental health
    concerns like depression, and are able to invest in their education,
    business or retirement.
    ---------------------------------------------------------------------------
        \40\ https://www.whitehouse.gov/sites/default/files/docs/
    missed_opportunities_medicaid_0.pdf.
        \41\ Gross, T. and Notowidigdo, M. (2011). Health Insurance and the
    Consumer Bankruptcy Decision: Evidence from Expansions of Medicaid.
    Journal of Public Economics 95(7-8): p. 767-778: http://
    www.sciencedirect.com/science/article/pii/S0047272711000168.

        Evidence suggests that Medicaid expansion is financially beneficial
    to health care providers like physicians and hospitals. Recent HHS
    analysis indicated that hospitals in Medicaid expansion states have
    seen larger drops in uninsured/self-pay admissions and emergency
    department visits than those in non-expansion states.\42\ When provider
    balance sheets improve, they are able to grow their business and hire
    more staff. Fitch Ratings, a financial information services firm,
    recently released findings that healthcare jobs grew faster in states
    that expanded Medicaid under the Affordable Care Act than those that
    did not.\43\ Further, analysis from the President's Council of Economic
    Advisors demonstrated that expansion would have boosted employment in
    non-expansion states by 85,000 jobs in 2014 and 184,000 jobs in
    2015.\44\
    ---------------------------------------------------------------------------
        \42\ http://aspe.hhs.gov/health/reports/2014/uncompensatedcare/
    ib_uncompensatedcare.pdf.
        \43\ https://www.fitchratings.com/gws/en/fitchwire/
    fitchwirearticle/Healthcare-Jobs-Grew?pr
    _id=980053&cm_sp=homepage-_-FitchWire-_-
    Fitch:%20Healthcare%20Jobs%20Grew%20Faster
    %20in%20ACA%20Expansion%20States.
        \44\ https://www.whitehouse.gov/sites/default/files/docs/
    missed_opportunities_medicaid_0.pdf.

        States that have secure and healthy workforces, along with strong
    healthcare sectors, are ripe for investment and job growth. HHS stands
    ready to work with those states that wish to take advantage of this
    important opportunity and expand high-quality, affordable coverage
    ---------------------------------------------------------------------------
    under Medicaid.

        Question. Is any information forthcoming from HHS (or elsewhere in
    the Administration) on the impact of Medicaid on the overall economy?

        Answer. Yes, the Department is examining the economic impact of the
    Medicaid expansion, and we will be happy to share the results of that
    work once it is completed. Additionally, in July 2014 the Council of
    Economic Advisors released a report titled: ``Missed Opportunities: the
    Consequences of State Decisions not to Expand Medicaid.'' \45\
    ---------------------------------------------------------------------------
        \45\ https://www.whitehouse.gov/sites/default/files/docs/
    missed_opportunities_medicaid_0.pdf.
    ---------------------------------------------------------------------------
                       benefits of medicaid for children
        Question. According to a new study from the National Bureau of
    Economic Research, when kids have Medicaid they are more likely to earn
    higher wages and pay higher federal taxes when they become adults. This
    is great news for them and also the economy and our federal budget.

        Can HHS provide more detail on how Medicaid enrollment might lead
    to both longterm gains in revenue and benefits to child enrollees?

        Answer. Medicaid and the Children's Health Insurance Program (CHIP)
    are vital sources of health coverage for our nation's children. The
    programs offer high-quality care and financial protection from
    unaffordable health care bills. As you mentioned, the National Bureau
    of Economic Research recently found that Medicaid has positive long-
    term effects on mortality, amount of federal taxes paid and college
    attendance. Because of these benefits, the study also concluded that
    the government will recoup 56 cents of each dollar spent on childhood
    Medicaid by the time these children reach age 60.\46\ This research
    adds an important perspective to the ongoing discussion on Medicaid's
    effectiveness and we look forward to future research demonstrating the
    programs' positive impacts.
    ---------------------------------------------------------------------------
        \46\ http://www.nber.org/papers/w20835.
    ---------------------------------------------------------------------------
                           care planning in medicare
        Question. The Advisory Council on Alzheimer's Research, Care, and
    Services makes recommendations to HHS on how to improve care for
    individuals, including Medicare beneficiaries, living with Alzheimer's
    and other dementias. The Advisory Council's 2014 recommendations
    included the following recommendation: ``CMS should redesign Medicare
    coverage and physicians' and other health care providers' reimbursement
    to encourage appropriate diagnosis of Alzheimer's disease and to
    provide care planning to diagnosed individuals and their caregivers.''

        How can effective care planning improve care for patients with
    Alzheimer's and other chronic diseases like cancer or diabetes?

        Do you agree that Medicare can promote better care coordination if
    care planning for Alzheimer's patients were covered and reimbursed?

        Do you think that care planning could promote better care
    coordination for all beneficiaries with a chronic disease?

        Answer. CMS wants providers to have the resources and information
    they need to coordinate patient care.

        Chronic illnesses, such as Alzheimer's, heart disease and diabetes,
    can be a major detriment to beneficiaries' quality of life and generate
    significant expense for the Medicare program. In 2010, the 37 percent
    of Medicare beneficiaries who were treated for four or more chronic
    conditions accounted for 74 percent of all Medicare expenditures.

        The goal of coordinated care is to make sure that beneficiaries,
    especially the chronically ill, get the right care at the right time,
    while avoiding unnecessary duplication of services and preventing
    medical errors. Beneficiaries, their families, doctors, and taxpayers
    will all benefit as we move our health care delivery system towards
    more coordinated care.

        CMS is working through a variety of programs and demonstrations to
    test models of care and the effectiveness of coordinated care for high-
    risk beneficiaries. One such model is the Medicare Coordinated Care
    Demonstration.\47\ While this demonstration produced mixed results, it
    has helped to inform CMS as they continue to look for ways to improve
    care for beneficiaries and while producing savings for the Medicare
    trust funds.
    ---------------------------------------------------------------------------
        \47\ http://innovation.cms.gov/Files/reports/
    MedicareCoordinatedCareDemoRTC.pdf.

                                     ______

                   Questions Submitted by Hon. Chuck Grassley
          maternal, infant, and early childhood home visiting (miechv)
        Question. The Maternal, Infant, and Early Childhood Home Visiting
    (MIECHV) program that serves so many families and children has enjoyed
    bipartisan support because it embraces a common sense idea. It provides
    states with the resources to design programs that they think work best
    for their communities to strengthen families and save money. For
    example, I know in my home state of Iowa, the MIECHV Program has helped
    participating vulnerable families move toward self-sufficiency. In
    fact, 86% of enrolled families have demonstrated an increase in income
    and are better off now than when they started participating. Congress
    needs to extend the program by March 31, and I look forward to working
    with my colleagues on the Finance Committee to get the job done. We all
    stand to benefit from this continued wise investment in our families.

        Secretary Burwell, can you speak to the effective services that
    families are receiving as a result of the MIECHV Program and the
    likelihood that this program will produce good outcomes for children
    and savings to the taxpayer?

        Answer. The Home Visiting Program funds states, territories, and
    tribal entities to develop and implement evidence-based home visiting
    services for at-risk pregnant women and parents with young children up
    to kindergarten entry. The program builds upon decades of scientific
    research showing that home visits by a nurse, social worker or early
    childhood educator during pregnancy and in the first years of life
    improve the lives of children and families by preventing child abuse
    and neglect, supporting positive parenting, improving maternal and
    child health, and promoting child development and school readiness.
    Research has also shown that evidence-based home visiting is a good
    investment for taxpayers, as it can provide a positive return on
    investment to society through savings in public expenditures on
    emergency room visits, child protective services, special education, as
    well as increased tax revenues from parents' earnings. In fiscal year
    (FY) 2014, states reported serving approximately 115,500 parents and
    children in 787 counties in all 50 states, the District of Columbia,
    and five territories through the Home Visiting Program. Since 2012, the
    Home Visiting Program has provided more than 1.4 million home visits,
    building strong, positive relationships with families who want and need
    support. In FY 2014, tribal grantees reported serving about 2,800
    children and families as a result of the Tribal Home Visiting Program
    and tribal grantees have provided nearly 18,000 home visits since the
    start of the program. For more information on the Home Visiting
    Program, including outcomes for children, please see the recently
    released fact sheet entitled, The Maternal, Infant, and Early Childhood
    Home Visiting Program Partnering with Parents to Help Children Succeed,
    available at HRSA.gov.
                          sunshine act implementation
        Question. Last year, rollout of the Open Payments website by CMS
    involved multiple challenges and technical problems, such as the
    incorrect attribution of payment data that resulted in a decision by
    CMS to publish a substantial amount of data in de-identified form.

        What steps are CMS taking to ensure that the same technical
    problems will not occur this year?

        Answer. Last year, CMS identified payment records submitted by the
    applicable manufacturers and group purchasing organizations (GPOs) that
    had inconsistent physician information, such as National Provider
    Identifier (NPI) for one doctor and a license number for another. CMS
    took the Open Payments system offline on August 3, 2014 to resolve
    these data integrity issues and reopened the system on August 14, 2014.
    During this period, CMS worked to verify that the physician and
    teaching hospital identifiers reported by applicable manufacturers and
    GPOs matched data in CMS or external data sources. This matching
    verified that payment records were attributed to a single, consistent
    physician or teaching hospital. Because these records represent
    payments that were actually made and legally attested to by the
    submitting company, they are available on the public website, but they
    are de-identified by suppressing physician or teaching hospital
    identifying information. To provide as complete a data set as possible
    to the public, CMS published both ``identified'' and ``de-identified''
    data.

        On October 30, 2014, CMS made a non-public, downloadable Validated
    Physician List available to applicable manufacturers and GPOs in the
    Open Payments system. This list contains variations of physician
    identifier information for physicians to whom payments were reported in
    the Open Payments system in 2013, and is provided to assist with data
    matching. Many of the inconsistencies identified in the returned
    records were a result of physician identifiers not matching against CMS
    or external data sources. CMS has encouraged applicable manufacturers
    and GPOs to use the provided physician list to avoid further
    inconsistencies in data reporting. CMS anticipates releasing similar
    lists for upcoming years for industry use.

        To correctly attribute records to covered recipients, CMS has
    created covered recipients profiles based on the data in the National
    Plan & Provider Enumeration System (NPPES) and the Medicare Provider
    Enrollment, Chain, and Ownership System (PECOS). All payments or other
    transfers of value and ownership or investment interest records
    reported by applicable manufacturers and GPOs are then validated using
    these profiles. Incoming records that contain incongruent identifying
    information about covered recipients are rejected before entering the
    system and returned to the applicable manufacturer or GPO for
    correction.

        CMS has also provided applicable manufacturers and GPOs with
    numerous aids and guides to assist with data submission. These support
    materials included the annually-updated teaching hospital list,
    submission data mapping documents, sample submission files, the Open
    Payments System User Guide, step-by-step detailed instructions, and
    quick reference guides.
                                      340b
        Question. It was anticipated that last year, the Health Resources
    and Services Administration (HRSA) would submit updated regulations
    concerning the 340B drug program. Those regulations have not been
    released.

        Does HRSA intend to issue regulations concerning 340B? If yes, what
    is the status of that regulation? If no, does HRSA plan to issue
    guidance on the 340B program in FY 2015?

        Answer. In 2014, HRSA planned to issue a proposed omnibus
    regulation for the 340B Program to establish additional clear,
    enforceable policy to advance our oversight of covered entities and
    manufacturers. In May 2014, while the omnibus proposed regulation was
    under review within the Administration, the U.S. District Court for the
    District of Columbia issued a ruling addressing an earlier 340B
    regulation concerning orphan drugs (certain drugs used to treat rare
    conditions or diseases). The court invalidated the orphan drug
    regulation, finding that HRSA lacked explicit statutory authority to
    issue it. In light of this ruling, HRSA will issue proposed rules where
    the statute is specific about rulemaking and provide revised guidance
    to address critical policy matters raised by 340B Program stakeholders
    for which there is a lack of explicit regulatory authority. The
    guidance will enable covered entities and manufacturers fully comply
    with statutory 340B Program requirements and will increase the
    Department's ability to ensure effective implementation, oversight, and
    monitoring of the 340B Program.

        There are three areas of the 340B statute where HRSA has explicit
    regulatory authority: calculation of 340B ceiling prices; imposition of
    manufacturer civil monetary penalties; and implementation of a dispute
    resolution process. HRSA expects to release Notices of Proposed
    Rulemaking this year on these three issues. HRSA intends to release a
    proposed omnibus guidance for public notice and comment later this
    year. HRSA will review and consider public comments, and finalize the
    regulations and guidance.

        Question. How many audits did HRSA conduct of 340B hospitals in
    FY2014, and what were the results of the audits?

        Answer. HRSA applies a risk-based model taking into consideration
    multiple factors when determining which entities to audit in any given
    year. These factors include the length of time a covered entity has
    been in the program, the number of associated sites, volume of
    purchases, and the number of contract pharmacies. There are also
    entities selected on a targeted basis, meaning that HRSA has
    information regarding potential compliance issues that require further
    review. In FY 2014, HRSA conducted 99 audits covering 1,476 outpatient
    facilities and 4,028 contract pharmacies. Eighty of the 99 audits (81
    percent) conducted in FY 2014 were conducted at 340B participating
    hospitals and approximately 43 of these 80 have been finalized. The
    remaining 340B audits on participating hospitals are in various stages
    of being finalized with the covered entities. Of the 43 finalized, 28
    percent had no findings. The remaining 72 percent had a range of
    findings and are required to submit a corrective action plan to come
    into full compliance and remedy any issues. These findings include:

        37 percent had eligibility findings (i.e., database record errors,
            including incorrect contact information);

        44 percent had diversion of 340B drugs to non-340B patients; and

        19 percent did not have mechanisms in place to prevent duplicate
            discounts.

        These audit findings are made available to the public on HRSA's
    website. Once an audit is completed and the covered entity agrees with
    the adverse findings, the covered entity has to submit a plan for
    future compliance, including items such as correcting database errors,
    training of staff, improving policies and procedures and correcting
    system errors. The plan may also include repayment to affected drug
    manufacturers, if applicable. All corrective action plans must be
    approved by HRSA. HRSA monitors the covered entity during the course of
    implementation and closes the audit upon completion of the corrective
    action plan.

        Question. How many audits did HRSA conduct of pharmaceutical
    companies for 340B compliance in FY2014, and what were the results of
    the audits?

        Answer. HRSA, in partnership with the OIG, is currently conducting
    an audit of a manufacturer. Once an audit is complete, the summary
    information will be posted on HRSA's website. HRSA developed a protocol
    for auditing manufacturers later this fiscal year.

        Question. Please describe the oversight activities HRSA took in FY
    2014 over the 340B drug program and planned oversight activities for FY
    2015.

        Answer. HRSA places a high priority on the integrity of the 340B
    Program and has strengthened oversight of this program, particularly in
    the last four years. As part of our oversight of the program, HRSA
    verifies that both 340B-covered entities and manufacturers are in
    compliance with 340B Program requirements. As a result of our enhanced
    focus on compliance issues, there has been more attention paid to
    compliance of program requirements by covered entities, which has
    resulted in increased self-disclosures and voluntary terminations
    initiated by the covered entities when requirements were not being met.
    In order to augment these efforts, the Congress provided HRSA with an
    additional $6 million in the Consolidated Appropriations Act for FY
    2014. This funding has enabled HRSA to:

        Improve information technology (IT) systems to more effectively
            track entity and manufacturer compliance;

        Increase the number of audits performed on covered entities and
            manufacturers in order to ensure compliance; and

        Hire additional auditors and staff to implement new IT investments
            for expanded program integrity efforts.

        HRSA ensures manufacturer compliance through development of
    guidances (including issuance of forthcoming omnibus proposed guidance)
    and policy releases. Additionally, HRSA verifies manufacturers in
    Medicaid have signed a pharmaceutical pricing agreement, reviews all
    allegations brought to our attention, requires refunds when a covered
    entity is overcharged, and undertakes manufacturer audits, beginning
    with the one currently underway and furthered by ongoing work on an
    auditing protocol.

        As noted previously, HRSA conducted 99 covered entity audits
    encompassing 1,476 outpatient facilities and 4,028 contract pharmacies
    in FY 2014.

        HRSA plans to audit approximately 200 covered entities in FY 2015.
    For FY 2015, HRSA has already completed 51 on-site audits of covered
    entities encompassing 926 outpatient facilities and 2,114 contract
    pharmacies. As of March 30, 2015, seven FY 2015 audits have been
    finalized and are posted on the HRSA website.

                     medicare and medicaid improper payment
        Question. Improper payment rates for Medicare increased in FY2013
    and FY 2014. In Medicare Fee-for-Service, the amount of improper
    payments increased from a low of $29.6 billion in 2012 to $36 billion
    in 2013 and $37.3 billion in 2014.

        Why are improper payment rates increasing?

        Answer. HHS shares your concerns and we strive to be good stewards
    of taxpayer and trust fund dollars. It is important to remember that
    not all improper payments are necessarily fraudulent. Like other large
    and complex Federal programs, Medicare, Medicaid, and CHIP are
    susceptible to payment, billing, coding and eligibility errors referred
    to as ``improper payments.'' While improper payments are not
    necessarily indicative of fraud, HHS is committed to reducing all waste
    within our programs.

        The primary causes of Medicare FFS improper payments are
    insufficient documentation and medical necessity errors. A large driver
    of this year's increase in the Medicare FFS improper payment rate was
    insufficient documentation for home health claims. It can take time for
    providers and suppliers to fully comply with new policies, especially
    those with new documentation requirements, which can increase the
    improper payment rate until full compliance is achieved.

        Question. What actions does HHS plan to take to address the
    increase in improper payments made?

        Answer. In all, Medicare receives about 3.3 million fee-for-service
    claims each day, or 1.2 billion claims a year. Due to the high number
    of claims, HHS is committed to paying claims in an accurate and timely
    manner and has a comprehensive strategy in place to address the
    Medicare improper payment rates. For the Medicare program, these
    strategies include strengthening provider enrollment safeguards to
    confirm only legitimate providers are enrolled and preventing improper
    payments by using edits to deny claims that should not be paid. HHS
    also develops targeted demonstrations in areas with consistently high
    rates of improper payments and operates a Medicare fee-for-service
    Recovery Audit Program to identify, recover, and prevent improper
    payments.

        HHS has developed targeted demonstrations to reduce improper
    payments for items and services at high risk for fraud, waste, and
    abuse, such as Power Mobility Devices (PMDs), where HHS found that over
    80 percent of claims for PMDs did not meet Medicare coverage
    requirements.\48\ HHS implemented the Medicare Prior Authorization of
    PMDs Demonstration in seven high risk states in September 2012.\49\
    Since implementation, HHS has observed a decrease in expenditures for
    PMDs in both demonstration and non-demonstration states. Based on
    claims processed as of November 14, 2014, monthly expenditures for the
    PMDs included in the demonstration decreased from $20 million in
    September 2012 to $6 million in June 2014 in the non-demonstration
    states and from $12 million to $3 million in the demonstration
    states.\50\ HHS expanded the demonstration to an additional 12 states
    on October 1, 2014.\51\
    ---------------------------------------------------------------------------
        \48\ http://cms.gov/Research-Statistics-Data-and-Systems/
    Monitoring-Programs/CERT/Down
    loads/MedicareFFS2011CERTReport.pdf.
        \49\ The seven states are: CA, IL, MI, NY, NC, FL and TX.
        \50\ https://www.cms.gov/Research-Statistics-Data-and-Systems/
    Monitoring-Programs/Medi
    care-FFS-Compliance-Programs/Medical-Review/Downloads/
    PMDDemoDecemberStatusupdate
    12302014.pdf.
        \51\ http://www.gpo.gov/fdsys/pkg/FR-2014-07-29/pdf/2014-17805.pdf;
    the twelve states are: AZ, GA, IN, KY, LA, MD, MO, NJ, OH, PA, TN, and
    WA.

        HHS is also testing whether prior authorization helps to reduce
    unnecessary expenditures, while maintaining or improving quality of
    care. HHS issued a proposed rule in May 2014 to establish a prior
    authorization process for certain durable medical equipment,
    prosthetics, orthotics, and supplies (DMEPOS) items that are frequently
    subject to unnecessary utilization. Additionally, HHS recently
    implemented a prior authorization model for repetitive scheduled non-
    emergent ambulance transport in New Jersey, Pennsylvania, and South
    Carolina.\52\ HHS will also begin implementing a prior authorization
    demonstration program for non-emergent hyperbaric oxygen therapy in
    Illinois, Michigan, and New Jersey.\53\ HHS believes using a prior
    authorization process will help ensure services are provided in
    compliance with applicable Medicare coverage, coding, and payment rules
    before services are rendered and claims are paid. The President's FY
    2016 Budget includes a proposal that would build on the success of the
    prior authorization demonstrations by giving CMS the authority to
    require prior authorization for all Medicare fee-for-service items that
    it determines are at the highest risk for improper payments.
    ---------------------------------------------------------------------------
        \52\  http://www.cms.gov/Research-Statistics-Data-and-Systems/
    Monitoring-Programs/Medicare-FFS-Compliance-Programs/Prior-
    Authorization-Initiatives/Prior-Authorization-of-Repetitive
    -Scheduled-Non-Emergent-Ambulance-Transport-.html.
        \53\ T3http://www.cms.gov/Research-Statistics-Data-and-Systems/
    Monitoring-Programs/Medicare
    -FFS-Compliance-Programs/Prior-Authorization-Initiatives/Prior-
    Authorization-of-Non-emergent
    -Hyperbaric-Oxygen.html.

        Question. How has the Recovery Audit Contracting program impacted
    ---------------------------------------------------------------------------
    improper payment rates within Medicare?

        Answer. The Recovery Audit Program identifies areas for potential
    improper payments and offers an opportunity to provide feedback to
    providers on future improper payment prevention. HHS uses Recovery
    Auditors to identify and correct improper payments by reviewing claims.
    HHS responds to the vulnerabilities identified by the Recovery Auditors
    by implementing actions that will prevent future improper payments
    nationwide. Since full implementation in FY 2010 through the fourth
    quarter of FY 2013, the Recovery Auditors have returned over $5.4
    billion to the Medicare Trust Fund. Additionally, MACs review claims
    and conduct provider education to help providers avoid documentation
    errors and other sources of improper payments, including articles or
    bulletins providing narrative descriptions of the claim errors
    identified and suggestions for their prevention. Other efforts include
    system edits for improper payments that can be automatically prevented
    prior to payment. HHS encourages collaboration between Recovery
    Auditors and MACs to discuss improvements, areas for possible review,
    and corrective actions that could prevent improper payments.
                        telehealth and rural healthcare
        Question. Through telemedicine, Iowans in rural parts of the state
    can access specialists in their home-communities, instead of traveling
    to a big city for an appointment. Telemedicine saves patients in rural
    America time and money. Unfortunately, there seems to be a disconnect
    in the eligibility criteria for facilities that want to use this
    technology for their Medicare population. CMS guidelines stipulate that
    a hospital must be located outside an urban Metropolitan Statistical
    Area (MSA) in order to be an originating site (which is the location of
    an eligible Medicare beneficiary at the time the service furnished via
    a telecommunications system occurs). CMS also indicates that Critical
    Access Hospitals (CAH) are eligible to be originating sites.

        The problem arises when a hospital is technically located in an
    urban MSA, but through proper procedures and channels has obtained the
    designation of a CAH. For example, Madison Country Memorial Hospital,
    located in Madison County IA is considered to be located in an urban
    MSA. However, in 2005 they received authorization from CMS to be re-
    classified as a rural hospital and subsequently designation as a CAH.
    Recently, they looked into offering telehealth services to their
    Medicare patients and discovered they were unable to do so because of
    the urban MSA rule, despite their designation as a CAH. Hospitals in
    urban MSAs are allowed to re-classify as rural hospitals for a reason:
    they serve a community that is, under other considerations, rural.

        Do you believe hospitals in these, and similar circumstance, should
    have the opportunity to provide telehealth services to their Medicare
    population?

        Answer. CMS must comply with statutory requirements related to the
    sites eligible to furnish telehealth services. The law only allows
    telehealth services to be furnished from originating sites that are
    located in rural areas or rural health professional shortage areas
    (HPSA). CAHs have a rural location requirement: the law requires that
    CAHs either be physically located in a rural area or that they
    reclassify as rural. Therefore, some facilities are located in urban
    areas but have been able to obtain designation as CAHs because they
    have reclassified as rural. One way in which a facility can reclassify
    as rural for purposes of meeting the CAH rural location requirement, is
    if it is located in a rural census tract of an MSA. However, CAHs do
    not have to be located in an area that is a HPSA.

        As in this case, if the rural census tract of an MSA is not a HPSA,
    the CAH does not meet the statutory requirement for being a telehealth
    originating site. The statutory provisions applicable to telehealth
    originating sites are based on the physical location of the site.

        Question. Is this discrepancy something Congress needs to fix, or
    do you have any latitude in the matter?

        Answer. CMS pays for telehealth services in accordance with the
    statute. We are willing to work with Congress to provide technical
    assistance on proposals to change the law.
                       drugs for the treatment of obesity
        Question. The amount of money our country spends to combat obesity
    and diabetes is incredible. But there are ways to address both, like
    counseling those with diabetes regarding diet and exercise and coverage
    for a new spate of FDA-approved drugs to treat obesity. These efforts
    do require spending. But these are investments that will drive
    reductions in the incidence of obesity and diabetes and their related
    co-morbidities such as certain cancers, heart disease, hypertension,
    and end stage renal disease to name a few. Undoubtedly, a reduction in
    obesity and diabetes will lead to healthier individuals--which should
    cost Medicare and Medicaid less money over the long term.

        So I was disappointed to receive your letter in December 2014
    indicating that you do not believe existing statute ``could be
    construed to permit basic Part D coverage to include FDA-approved
    weight loss drugs used to treat obesity'' and that Part D coverage for
    such products ``would require a legislative change passed by
    Congress.'' I hope this Committee will move such legislation this year.

        In terms of your offer for HHS to provide technical assistance on
    this matter, can you please report back to the Committee both
    legislative technical assistance based on the bills from the 113th
    Congress (S. 1184 and HR 2415) as well as provide any estimates of
    potential cost savings to the Medicare and Medicaid programs if the
    incidence of obesity and diabetes were reduced and/or delayed?

        Answer. We welcome the opportunity to work with you to provide
    technical assistance on this important issue. As you noted, counseling
    on diet and exercise is critically important for those with diabetes.
    Medicare covers diabetes self-management training for diagnosed
    diabetics, as well as diabetes screening tests for those with risk
    factors for diabetes (including obesity). Medicare also covers medical
    nutrition therapy for persons diagnosed with diabetes or renal disease.
    In addition, Medicare covers intensive behavioral therapy for obesity
    in primary care settings. The availability and importance of these
    services would also be highlighted, as appropriate, in the one-time
    ``Welcome to Medicare'' visit and the Annual Wellness Visit. Under
    Medicare Part D, each Part D sponsor must have a Medication Therapy
    Management program for beneficiaries with multiple chronic conditions
    such as diabetes. Medication Therapy Management services include
    interventions for beneficiaries and prescribers; an annual
    comprehensive medication review which is an interactive, person-to-
    person, or telehealth consultation performed by a pharmacist or other
    qualified provider for the beneficiary; and quarterly targeted
    medication reviews with follow-up interventions when necessary. CMS
    also encourages sponsors to offer Medication Therapy Management
    services to beneficiaries who fill at least one anti-hypertensive
    medication, to support the Million Hearts Initiative.
                     medicare part d and network pharmacies
        Question. During the 2015 open season, many pharmacies were listed
    on Medicare's plan finder and on Aetna's website as being in network
    that were in fact out of network, creating chaos for both pharmacies
    and their patients. A very large concern is the worry that this could
    happen again.

        Were you aware that out of network pharmacies were listed on
    Medicare's plan finder and on Aetna's website as in network?

        Answer. Aetna disclosed to CMS that a total of 6,887 pharmacies
    were erroneously identified by Aetna as ``retail in-network'' for 2015
    on its website and through its call center customer service
    representatives during the CY 2015 Annual Election Period. Once CMS
    became aware of the issues that Aetna's pharmacy contracting strategy
    created, CMS issued a compliance action requesting Aetna to implement a
    Corrective Action Plan (CAP) on January 28, 2015.

        Question. What will be done to ensure something like this doesn't
    happen again?

        Answer. In Aetna's Corrective Action Plan request letter, CMS
    advised Aetna that its CAP should include plans for making certain that
    any Part D pharmacy contracting process it may adopt for the 2016 plan
    year is compliant with the CMS requirements. Also, CMS will review its
    experience with Aetna's plan year 2015 Part D pharmacy contracting
    process to determine what additional oversight might be appropriate to
    make certain that beneficiaries and pharmacies are correctly and fully
    informed of Aetna's (or any other Part D sponsor's) network pharmacy
    arrangements for 2016.
                               state marketplaces
        Question. Currently the question of subsidies available to
    beneficiaries through federally facilitated marketplaces is being
    considered before the Supreme Court.

        If a state with a federally facilitated marketplace asked HHS/CMS
    to deem that marketplace to serve as their state-based marketplace,
    does HHS/CMS have the authority to grant that request?

        Answer: We have previously provided public guidance with regard to
    the process that states need to follow if they choose to operate a
    state based marketplace and are willing to assist any state that would
    like to do so.
                                     ______

                 Questions Submitted by Hon. Michael F. Bennet
        Question. While plans on the Exchanges limit out-of-pocket
    maximums, a large amount of discretion is left up to States to set
    limits on exorbitantly high co-pays, co-insurance, and deductibles.
    Unfortunately, I've seen some plans in Colorado with deductibles as
    high as $6000 for an individual, and $12,000 for a family. Often, these
    plans are combined with 30-40% co-insurance for specific services,
    which can make them too expensive for a middle-class family.

        Given that the transparency of pricing in our health care system is
    still woefully inadequate, I wanted to know how much HHS is monitoring
    this and ensuring that families that are on the Exchange feel confident
    that we're taking steps to give these Colorado families the security
    they need.

        Answer. The Affordable Care Act is delivering on the promise of
    access to high quality, affordable health care coverage, while
    controlling the growth of health care costs. The creation of a
    successful, viable health insurance market has benefits for all
    Americans no matter where they get their health insurance.

        There are five categories or ``metal levels'' of coverage in the
    Marketplace. Plans in each category pay different amounts of the total
    costs of an average person's care. This takes into account the plans'
    monthly premiums, deductibles, copayments, coinsurance and out-of-
    pocket maximums. Metal levels range from bronze, in which the health
    plan pays 60 percent of care costs on average, to platinum, in which
    the health plan pays 90 percent of care costs on average. Catastrophic
    plans, in which plans pay on average less than 60 percent of care costs
    on average and the consumer pays low premiums but have high
    deductibles, are also available in the Marketplace. Consumers with low
    and middle incomes may qualify for advance premium tax credits to help
    lower their monthly premium costs and cost sharing reductions through
    the Marketplaces to help with out of pocket expenses like copayments
    and deductibles.

        When choosing their health care coverage, consumers must consider
    factors like the frequency of doctor visits and their need for regular
    prescriptions. Although it may be impossible for families to predict
    their health care needs, HHS is confident that they will be able to
    find a high quality, affordable health insurance plan that will meet
    their needs.

        Question. I saw that the HHS budget has new proposals on child
    welfare and foster care. As you know, this is a highly vulnerable
    population, and these children need stability and resources in areas
    with proven outcomes.

        Given the focus on this area in your budget, can you share
    additional background on the Administration's plans to invest more in
    prevention and permanency through evidence-based programs?

        Answer. Overall, the use and development of evidence-based programs
    and interventions has the potential to ensure effective practice that
    improves outcomes for families and children. Below, we provide specific
    explanations of how evidence-based practice factors into the child
    welfare proposals:

        Title IV-E for Prevention and Permanency Services: We propose to
    allow title IV-E agencies to claim federal reimbursement for pre-
    placement and post-placement services included as part of the child's
    case plan for candidates for foster care at 50 percent FFP (the same
    rate as administrative costs). A majority of such funds must be used
    for evidence based/informed interventions as defined by the Secretary.
    Currently, states face challenges in providing evidence based/informed
    services statewide because of the cost and the availability of
    providers trained in these practices. Therefore, we estimate that 7.5
    percent of services that child welfare agencies currently provide would
    fall within the standards required under the proposed approach, and
    expect the percentage will gradually increase over the next ten years
    with the availability of IV-E funding for this type of service.

        Demonstration to Address the Over-Prescription of Psychotropic
    Drugs for Children in Foster Care: This proposal will include the
    development and scaling up of screening, assessment, and evidence-based
    treatment of trauma and mental health disorders among children and
    youth in foster care with the goal to reduce the inappropriate reliance
    on psychotropic medications and improve child and family well-being.
    Youth in foster care have enough challenges without being overly or
    inappropriately medicated. The existing evidence-base in the area of
    trauma-informed psychosocial interventions warrants a large initial
    investment to expand access to effective interventions.

        Reauthorize, Modify, and Re-name the Abandoned Infants Assistance
    Act to ``Protecting At-Risk Infants and Toddlers Act'': The
    demonstration will support the development of evidence based
    interventions that can safely prevent entry into out-of-home care as
    well as interventions that meet the unique needs of infants and
    toddlers who do enter care. Data from the National Survey of Child and
    Adolescent Well-Being notes that many parents coming into contact with
    the child welfare system with infants and toddlers are referred to
    parenting classes, of which there is little efficacy evidence on their
    ability to provide appropriate parenting support to families facing so
    many challenges. The field is also lacking strong empirical information
    on how to best serve the needs of mothers facing domestic violence. The
    Institute of Medicine's 2013 report, New Directions in Child Abuse and
    Neglect Research, notes a critical need to build a body of empirical
    evidence on what strategies work for this population. This
    demonstration program will address the needs of families with infants
    and toddlers and simultaneously test the efficacy of strategies at all
    levels of prevention.

        Question. Also, would you be willing to work with my office to
    determine the financial impact of shifting children from congregate
    care to family foster care and how this affects outcomes?

        Answer. Yes, we would be happy to work with your office on the
    financial implications of the family-based care proposal. This proposal
    is estimated to cost $78 million in FY 2016 and reduce costs of title
    IV-E foster care by -$69 million over ten years. The Administration's
    cost estimate assumes that the proposal will increase the availability
    of family-based care and, as a result of establishing and enhancing
    those services, states will move children from congregate placements to
    family settings to better meet the needs of children while reducing the
    costs for IV-E.

        Title IV-E agencies will be reimbursed with 50 percent federal
    financial participation (FFP) for administrative activities associated
    with this oversight and eligibility documentation components of the
    proposal. This rate is the same as current law, but we estimate that
    IV-E agencies will have higher claims for eligibility determination
    activities to implement and comply with the new requirements for
    documenting the justification for congregate care settings and
    acquiring judicial determinations every six months. We assume that the
    additional claims related to this new procedure will decline as the
    congregate care placements decline following the implementation of the
    supports for family-based care.

        The Children's Bureau, within the Administration for Children and
    Families, produced a data brief that examined how, when, and for whom
    congregate care is being used in the child welfare system (http://
    www.acf.hhs.gov/programs/cb/resource/congregate-care-brief). The brief
    highlights that seventy percent of children and youth in congregate
    care are age 13 and older. Most of the youth in congregate care had a
    DSM diagnosis, physical disability or entered care due to a child
    behavior problem. Some of these children and youth were initially
    placed into congregate care for treatment; others were subsequently
    placed in congregate care because they were not able to remain in a
    traditional foster family care placement.

        The proposal seeks to reduce use of congregate care while improving
    outcomes for children in two ways. First, the proposal promotes family-
    based care for children who have been traditionally placed in
    congregate care due to youth's complex needs through increased
    investments in alternative interventions, specialized caseworker and
    foster parent training, increased foster parent reimbursement for those
    providing specialized care to high-need children and day treatment
    programs.

        In addition, the proposal promotes family-based care, through
    increased oversight, for those children in congregate care, including
    those who have no apparent clinical indicators. In 2013, there were
    15,000 children (29 percent) who were placed in a congregate care
    setting but had no identifiable clinical indicators.

        Second, the proposal creates a new eligibility requirement under
    title IV-E requiring documentation to justify congregate care as the
    correct foster care placement setting, based on the child's mental,
    behavioral or physical health needs and the congregate care provider's
    ability to address those needs. The oversight requirements will both
    require more careful scrutiny of the appropriateness of these
    placements and give states a financial incentive to ensure that
    residential care placements are used appropriately and only for as long
    as the specific interventions provided in the placement are necessary.
    This proposal would require states to review case plans for all
    children currently in congregate care, and moving children who do not
    have clinical needs out of congregate care and new children entering
    congregate care setting. The goal is that children are only placed in
    congregate care, when it is medically appropriate, and determined to be
    the least restrictive foster care placement setting. In order to
    support family based care for children with complex needs, the
    President's budget proposal increases reimbursement for specialized
    caseworker training and case management, increases reimbursement for
    foster parent who provide therapeutic care and provides additional
    reimbursement for day treatment.

        Question. In my home state of Colorado, the population of seniors
    choosing Medicare Advantage is rising. About 250,000 Coloradans
    representing nearly 35% of all beneficiaries in the state are in a
    Medicare Advantage plan. I want to ensure that seniors across my state
    continue to have their choice of providers and Medicare Advantage plans
    no matter their health status. One of the concerns I have involves CMS'
    discretion in implementing Medicare Advantage's risk adjustment. For
    2014, CMS proposed fully implementing a new risk-adjustment model.
    After many groups, including MedPAC, raised concerns that it
    artificially lowered payments and affected plans serving a large share
    of chronically ill beneficiaries, CMS opted to phase-in the new model
    by blending it with the previous model.

        While I understand you cannot comment on the specifics of upcoming
    notices, are these types of trends informing CMS's rulemaking process?

        Answer. We believe that the new risk adjustment model pays more
    accurately and supports a stronger, more robust Medicare Advantage
    program. The new model incorporates updates that better predict costs
    and improvements that will allow CMS to incorporate new diagnosis
    codes. In addition, the new model decreases the impact on risk scores
    of plans' coding efforts. CMS has used the new model for part of MA
    plans payments for 2014 and 2015 and expects that plans should now be
    familiar with the new model.

        Question. As many on the Committee have discussed already and in
    keeping with your budget priorities and the move away from fee-for-
    service models, I just wanted to take a minute to highlight some of the
    work Colorado has been doing since the passage of the Affordable Care
    Act to transform the delivery system. We were one of the first states
    to invest in a multi-payer medical home, which resulted in a 15 percent
    reduction in ER visits, and significant cost savings for Coloradans in
    both public and private plans. This model has now become the standard
    for primary care across the state. Similarly, our Medicaid program
    launched an Accountable Care Collaborative that links every member to a
    primary care provider to coordinate his or her care. This program saved
    $44 million in our state over the last three years and resulted in a
    nearly a 20% reduction in hospital readmissions.

        As we begin to see more of these results from successful state
    models, what are your plans for scaling these efforts?

        Answer. We applaud Colorado's achievements to transform their
    health care system to improve care while also reducing cost. The
    Centers for Medicare and Medicaid Services is actively working with
    states, consumers and health care providers to transform the health
    care delivery system. Through the CMS Innovation Center, we are
    supporting the development and testing of innovative payment and
    service delivery models that aim to achieve better care, better health,
    and lower cost through improvement for our health care system. Also, as
    you may know, last year CMS launched the Medicaid Innovation
    Accelerator Program (IAP) to accelerate new payment and service
    delivery reforms in the Medicaid program. We are using the IAP to work
    closely with states, consumers, and health providers on these critical
    issues through technical assistance, tools development and cross-state
    and national learning opportunities.

        And how can we here in Congress help HHS as it begins the process
    of taking these state models nationwide?

        Answer. Initiatives such as the IAP, Health Homes, and
    demonstration waivers serve as avenues by which states can test
    delivery system models and collaborate in an environment that produces
    real results. Through the IAP, we are building on lessons and
    recommendations we have heard from our state partners for specific
    opportunities to advance innovation, and we will develop strategically
    targeted resources and technical assistance that states can leverage to
    accelerate Medicaid-focused innovations to transform health care.
    Efforts to expand successful models will take place after the
    evaluation of these models.

                                     ______

                   Questions Submitted by Hon. Johnny Isakson
        Question. Last May, I, along with Chairman Hatch, HELP Committee
    Chairman Alexander, and Senator Burr sent a letter to FDA Commissioner
    Hamburg raising a number of serious concerns about the FDA's use of
    draft guidances. We have still not received a response. Additionally,
    it took 10 months for the FDA to respond to questions for the record
    from a Senate HELP Committee hearing last March. As the Senate prepares
    to consider reforms to strengthen America's leadership in medical
    innovation, we are going to need much more cooperation and
    responsiveness from HHS agencies, including the FDA.

        Will you commit to ensure that we get this cooperation?

        Answer. I absolutely commit to cooperating with the HELP Committee
    as you embark on medical innovation legislation. I understand that
    senior officials from the FDA, NIH, the Office of the Assistant
    Secretary for Planning and Evaluation, and the Office of the National
    Coordinator have conducted a series of briefings for the Committee
    staff on the innovations in medical research, streamlining medical
    product approvals at the FDA, utilization of ``big data'' and other
    topics. We look forward to continued discussion as the process moves
    forward.

        Question. The President's FY 2016 budget creates the Effective
    Health Insurance Initiative, which spends $30 million each year for ten
    years for a new project to examine how changes in health insurance
    benefit packages impact health care utilization, costs, and outcomes.

        Can you detail what specific metrics you will use to examine
    utilization, costs, and outcomes, as well as what you hope these
    results will accomplish?

        Answer. The goal of the Effective Health Insurance Initiative is to
    produce rigorous evidence about how the structure of health insurance
    can be modernized in a way that improves health outcomes while
    controlling costs. The study's results will become a resource for
    policymakers and insurers to understand how changes in health insurance
    would affect health care quality, health outcomes, utilization, and
    costs.

        The results of the study are intended to accomplish three key
    goals:

        Identify insurance designs that promote better health and lower
            costs by helping people become more effective health care
            consumers;

        Enable federal and state policymakers, employers, and insurers to
            select effective benefit designs and evaluate costs of
            alternative designs, including for key populations of interest;
            and

        Provide sound data to estimate how changes in health insurance may
            impact spending growth.

        Metrics to examine utilization include the share of people who use
    any health care services and the number of services used, measured
    overall and by specific categories such as inpatient hospital,
    outpatient hospital, physician, pharmaceutical, and across preventive,
    chronic, and acute care. Examples of cost metrics include total
    spending per person; spending by service type; and the number of
    episodes and costs per episode of spending. Quality and health outcomes
    metrics will draw from an array of recently developed measures
    including receipt of clinically recommended care, preventable
    hospitalization rates, outcomes following episodes such as
    hospitalizations, consumer assessments of health plans and health care,
    and patient health and functional status. Further, this study will
    provide an opportunity to examine these metrics among subpopulations,
    such as those with chronic illness or low-incomes, where targeted
    findings could provide particular improvements.

        Question. How will the fate of this study differ from the 21-year
    National Children's Study which abruptly ended in December of 2014 yet
    cost approximately $195 million for each year of its existence?

        Answer. The Effective Health Insurance Initiative will build upon
    the successful experience of a prior large scale study whose results
    are still used today. In contrast, the National Children's Study (NCS)
    was a proposed national longitudinal study of environmental influences
    (including physical, chemical, biological, and psychosocial) on child
    health and development--a first of its kind undertaking. The National
    Academy of Sciences conducted two reviews of the NCS, with a similar
    conclusion in 2014 as in 2008, ``. . . [the study] offers enormous
    potential, but it also presents a large number of conceptual,
    methodological, and administrative challenges.'' As a result of a
    review by an Advisory Committee to the NIH Director (ACD) working
    group, which determined that the NCS was not feasible as currently
    outlined, the NIH Director discontinued the study. However, NIH remains
    committed to research at the intersection of environmental and
    children's health, and will support research in this area through
    alternative approaches.

        The aim of the Effective Health Insurance Initiative is to foster
    judicious use of health care resources. To do so, the Effective Health
    Insurance Initiative will build upon the proven success of the landmark
    1970 Health Insurance Experiment study, and leverage recent research
    advances. Not only was the Health Insurance Experiment successfully
    completed, its results are still regarded as the best evidence on the
    effects of cost sharing on utilization and outcomes due its gold
    standard randomized study design. The Effective Health Insurance
    Initiative will utilize a strong infrastructure of already developed
    conceptual underpinnings, metrics, and data collection techniques that
    have been refined over the past four decades. In addition, it will
    develop a management and scientific oversight infrastructure to ensure
    sound study design and operations. In sum, the Effective Health
    Insurance Initiative is a feasible and valuable study whose results
    would facilitate effective health care resource use in the years ahead.

        Question. Several weeks ago, your department announced a target of
    tying 50 percent of Medicare payments to alternative, value-based
    payment models by 2018. That's an admirable goal, but I think it's
    worth noting that 30 percent of Medicare beneficiaries are already
    enrolled in Medicare Advantage plans that receive capitated payments.
    I'm concerned that CMS policies continue to discourage plans from
    signing up seniors with multiple chronic conditions who would benefit
    the most from care coordination. The Medicare Payment Advisory
    Commission has estimated that Medicare's risk adjustment model already
    underpays by 29 percent for the sickest beneficiaries, yet your budget
    proposes $36 billion in additional cuts to Medicare Advantage risk
    adjustment.

         Why has CMS continued to offer further cuts while ignoring the
    proposals from MedPAC and others to improve risk adjustment, such as
    paying more to care for beneficiaries based on the number of chronic
    conditions they have?

        Answer. The purpose of risk adjustment is to target payments to
    those plans that have relatively sicker enrollees and, therefore,
    higher expected costs. We believe the new model incorporates updates
    that improve payment accuracy while at the same time addressing
    differential coding patterns by some Medicare Advantage Organizations.
    Model updates are not intended to cut payments to Medicare Advantage
    plans, but to pay more accurately. CMS takes seriously suggestions for
    model improvement from stakeholders and continuously conducts research
    to explore the best approach to improving the model.

        CMS appreciates the importance of identifying ways to better align
    incentives and improve care for beneficiaries with chronic conditions.
    CMS is working through a variety of programs and demonstrations to test
    models of care and the effectiveness of coordinated care for high-risk
    beneficiaries. Models such as the Comprehensive Primary Care (CPC)
    Initiative and the Pioneer Accountable Care Organization (ACO) Model
    are structured in such a way that many practices and awardees have
    chosen to focus on the chronically ill as a means by which to achieve
    savings and show success in the program. In addition, the Center for
    Medicare and Medicaid Innovation is working on developing new payment
    and delivery models specifically focused on innovation in health plans.
    Public responses to a request for information issued in late 2014
    generated valuable feedback to inform this work. Such payment and
    delivery models will further move Medicare towards value-based
    purchasing.

        Question. Hundreds of trauma centers have closed over the past two
    decades providing diminished access in particular for rural communities
    and in areas with high shares of African-American residents, low-income
    people, and the uninsured. We have seen this impact in Georgia as
    trauma center closures continue to exacerbate disparities in access and
    quality of health coverage in our state and across the nation.

        Why has the Administration not prioritized trauma and emergency
    care funding in the FY2016 Budget?

        Answer. I would like to assure you that federal support for local
    trauma systems, emergency care, and disaster preparedness remains a
    high priority of the administration. From 1992-2005, trauma systems
    grants supported through the Health Resources Services Administration
    (HRSA) provided $17 million to ``enhance the development of trauma care
    systems.'' The Trauma system grants served as a key building block to
    saving the lives of injured Americans. Now, 90 percent of the U.S.
    population, and 89 percent of Georgians, are within 60 minutes (by
    ground or air) of a level 1 or 2 trauma center (2010, data, reference:
    www.traumamaps.org). While there are state and local challenges, the
    overwhelming majority of Americans now have rapid access to trauma
    care.

        We are committed to support trauma and emergency care. ASPR
    supports the Emergency Care Coordination Center (ECCC) which leads the
    U.S. Government's efforts to create an emergency care system that is
    patient and community-centered, integrated into the broader healthcare
    system, high quality, and prepared to respond in times of public health
    emergencies. The ECCC convenes a government-wide Council on Emergency
    Medical Care (CEMC) to identify and prioritize interagency emergency
    care issues. ECCC has brought increasing attention to emergency and
    trauma care in the delivery system reform initiative that is currently
    a key focus of the administration. Our vision is that Trauma, burn, and
    emergency care on the whole will be seamlessly integrated into the
    broader healthcare system.

        Also, ASPR's Hospital Preparedness Program (HPP) supports regional
    emergency and disaster care system planning, along with a complementary
    Public Health and Emergency Preparedness Program at the Centers for
    Disease Control and Prevention (CDC).

        HHS is also an active member of the Federal Interagency Committee
    on EMS (FICEMS) which coordinates federal agencies involved with state,
    local, tribal, and regional emergency medical services, 9-1-1 systems
    and trauma centers.

        HHS continually encourages improvement in the delivery of health,
    emergency, and trauma care. We recognize that the day-to-day health
    care and public health system are the foundation of a community's
    ability to respond and recover from disasters and these systems must
    function effectively. Because the private sector encompasses most
    emergency and trauma care enterprises, HHS sponsors, through ASPR and
    CDC preparedness grants, research, guidance, and support to emergency
    and trauma care systems. I look forward to working with you to ensure
    we support the important work of our nation's dedicated trauma centers.

        I would like to assure you that federal support for trauma systems,
    disasters, and emergency care remains a high priority of the
    administration.

        Question. In June of 2014, the Department of Health and Human
    Services (HHS) announced a delay in the release of the Final Rule on
    Medicaid Covered Outpatient Drugs. What is HHS' current timeline for
    release of the Final Rule, Final AMP-based Federal Upper Limits (FULs)
    and corresponding guidance for implementation of the Final AMP-based
    FULs?

        Answer. As you know, on February 2, 2012 the Centers for Medicare &
    Medicaid Services (CMS) issued a notice of proposed rulemaking (NPRM)
    on Medicaid covered outpatient drugs. This proposed rule would revise
    requirements pertaining to Medicaid reimbursement for covered
    outpatient drugs to implement provisions of the Affordable Care Act.
    This proposed rule would also revise other requirements related to
    covered outpatient drugs, including key aspects of Medicaid coverage,
    payment, and the Drug Rebate Program.

        The NPRM generated significant feedback from stakeholders. We are
    continuing to work on the Medicaid Covered Outpatient Drug final rule
    (CMS-2345-F), but, at this time, do not have a release date. As stated
    in a November 2014 Informational Bulletin, CMS expects to release the
    Affordable Care Act Federal Upper Limits (FULs) at or about the same
    time that we publish the Medicaid Covered Outpatient Drug final rule.
    At that time, we also plan to issue formal detailed guidance to the
    states on implementing the Affordable Care Act FULs.

        Question. Once HHS releases the Final Rule on Medicaid Covered
    Outpatient Drugs, the Final AMP-based FULs and corresponding guidance,
    the states will need time to implement those changes. State efforts may
    prove difficult due to the timing of state legislative sessions, the
    need for cost of dispensing studies, and the legislative and regulatory
    process for changing Medicaid drug reimbursement methodologies.

        In light of these concerns, will HHS provide states with the
    necessary one year time frame for implementation?

        Answer. CMS is mindful of states' concerns in this area. CMS
    intends to issue formal detailed guidance to states to implement the
    Affordable Care Act FULs, including the information that states will
    need to include in their Medicaid state plan amendments and detailed
    timelines for compliance. We expect to release the finalized Affordable
    Care Act FULs and formal guidance on implementation at or about the
    same time that we publish the Medicaid Covered Outpatient Drug final
    rule.

        Question. Secretary Burwell, as you know, there was an issue with
    some Medicare Part D drug plans listed on the Medicare Plan Finder
    website during the 2014 Medicare open enrollment period. Some seniors
    were given incorrect information regarding which pharmacies were in-
    network when selecting a plan last year. I appreciate CMS's efforts to
    work with me and local pharmacists in Kansas to establish a special
    enrollment period for Medicare Part D beneficiaries who enrolled in a
    plan that listed an incorrect pharmacy network on the Medicare Plan
    Finder.

        How does CMS ensure that the approved plan network is accurate when
    presented to beneficiaries during open enrollment?

        Answer. CMS appreciates that Medicare beneficiaries need accurate
    information on provider networks in Medicare Advantage plans. CMS' role
    is to ensure the plan's network meets Medicare's pharmacy network
    requirements, oversee the requirement that plans offer standard terms
    and conditions to pharmacies upon request, and monitor that the sponsor
    is notifying affected beneficiaries and pharmacies of major changes.
    Part D sponsors may add or remove pharmacies from their networks at any
    time during the year. Also, CMS will review its Part D plan year 2015
    experience to determine what additional oversight might be appropriate
    to make certain that beneficiaries and pharmacies are correctly and
    fully informed of Part D sponsors' network pharmacy arrangements for
    2016.

        Question. What rules are in place to ensure beneficiaries have
    access to a broad network of pharmacies?

        Answer. Part D sponsors must secure the participation in their
    pharmacy networks of a sufficient number of pharmacies that dispense
    drugs directly to patients (other than by mail order) to ensure
    convenient access to covered Part D drugs by Part D plan enrollees. CMS
    convenient access rules require Part D sponsors to establish pharmacy
    networks in which:

        In urban areas, at least 90 percent of Medicare beneficiaries in
            the Part D sponsor's service area, on average, live within 2
            miles of a retail pharmacy participating in the sponsor's
            network;

        In suburban areas, at least 90 percent of Medicare beneficiaries
            in the Part D sponsor's service areas, on average, live within
            5 miles of a retail pharmacy participating in the sponsor's
            network; and

        In rural areas, at least 70 percent of Medicare beneficiaries in
            the Part D sponsor's service area, on average, live within 15
            miles of a retail pharmacy participating in the sponsor's
            network.

                                     ______

                 Questions Submitted by Hon. Patrick J. Toomey
        Question. The World Health Organization (WHO) is convening the
    First WHO Ministerial on Dementia on March 16 and 17 in Geneva. As you
    know, dementia is a progressive neurological condition that affects
    more than 5 million Americans and another 40 million people around the
    world. Globally, the costs of care are creating a significant drag on
    global economic activity. The US has been an historic leader in
    biomedical research generally and in Alzheimer's efforts specifically.
    It would seem to me that it would be important that our top health
    official attend this WHO Ministerial. What is your view?

        Answer. The Department of Health and Human Services (HHS) strongly
    supports all work on dementia that can help accelerate our
    understanding of the condition and any possibilities for medical and
    human services interventions. HHS also understands that until
    interventions can be developed, work must also focus on improving the
    current care of patients with dementia and supporting patients and
    their caregivers. To this end, HHS coordinates the National Plan to
    Address Alzheimer's Disease and the National Advisory Council on
    Alzheimer's Research, Care, and Services, both mandated by the National
    Alzheimer's Project Act.

        HHS understands that the U.S. is inextricably linked to global
    effects of and efforts on dementia, and that we necessarily need to
    collaborate with international partners to achieve the fastest outcomes
    and advancements possible. For this reason, from the beginning we have
    been and remain strong supporters of the Global Action Against Dementia
    (GAAD), initiated by the United Kingdom under the
    G-8/G-7 and now transitioning to the World Health Organization, where
    there will be a broader collaborative reach across the globe and more
    stable institutional support for the work.

        The importance of this topic to HHS is the reason why we sent a
    high-level delegation to the WHO Ministerial, representing a blend of
    policy and scientific expertise needed to shepherd the transition,
    develop a related Call for Action, and send a signal of strong and
    continued U.S. Government support for GAAD. Although the Secretary will
    not be at the event in person, she has developed a personal statement
    of support to be read at the event on her behalf by the ranking U.S.
    diplomat to the UN in Geneva, Ambassador Pamela Hamamoto. Additionally,
    the Secretary will be attending the Sixty-Eighth World Health Assembly
    in Geneva, May 18-26, where the topic of dementia also is likely to be
    discussed in an international forum.

        Question. In its fall 2012 regulatory agenda, the Centers for
    Medicare and Medicaid Services (CMS) published that a Notice of
    Proposed Rulemaking to revise the Medicare Programs of All-Inclusive
    Care for the Elderly (PACE) regulation would be issued in July 2013.
    Since then, the projection has been delayed to December 2013, August
    2014, and most recently to Spring 2015. In fall of last year I joined
    several Senators on this committee urging to use the upcoming
    rulemaking to enhance flexibility within the PACE program. What
    assurances can you offer that CMS will meet its deadlines and issue a
    revised regulation this spring?

        Answer. We share your desire that the PACE program have the
    operational and regulatory flexibility necessary to serve our most
    vulnerable Medicare and Medicaid beneficiaries. CMS is currently
    performing a comprehensive review of the federal regulations governing
    PACE to identify potential regulatory changes to reflect the evolving
    needs and opportunities of the program. As CMS continues to contemplate
    potential regulatory changes to PACE they have implemented a number of
    improvements, including streamlining the application process, updating
    the notification requirements for the use of alternative care settings,
    and establishing a new PACE council to bring together different
    components of the agency to focus on PACE issues.

                                     ______

                     Questions Submitted by Hon. Mike Crapo
                                     part d
        Question. Time and again, Obamacare has proven government
    intervention in our health care system does not work. Hundreds of
    thousands of Americans have been forced from the insurance and doctors
    they liked because of this law. Premiums and deductibles continue to
    rise. Little to nothing has been done to address the underlying causes
    of rising health care costs--instead this Administration has relied on
    the ill-conceived notion that government bureaucracy is the answer to
    the many inefficiencies plaguing our health care system. Your budget
    now requests the authority to micro-manage Medicare Part D, a market-
    oriented prescription drug program chosen by 35 million Medicare
    beneficiaries, which has proven to be successful because the government
    has been prevented from interfering.

        Why has the Administration not yet learned that increased
    government control of the market reduces choice, raises costs, and
    diminishes quality?

        Answer. The Medicare Part D prescription drug benefit program has
    been very successful. The program has made medicines more available and
    affordable for Medicare beneficiaries, leading to improvements in
    access to prescription drugs, better health outcomes, and greater
    beneficiary satisfaction with their Medicare coverage. In addition, the
    drug benefit is helping beneficiaries avoid the need for other services
    that would otherwise be covered under Medicare Parts A and B; the
    Congressional Budget Office (CBO) has estimated that a one percent
    increase in the number of prescriptions filled by beneficiaries causes
    Medicare's overall spending on medical services to fall by roughly one-
    fifth of one percent. According to surveys, 95 percent of Part D
    enrollees are satisfied with their drug coverage and confident that the
    level of coverage meets their needs.

        While beneficiaries are saving money, government subsidies for
    reinsurance and low-income cost sharing subsidies continue to increase.
    Moreover, Part D costs are projected to increase with the introduction
    of new, expensive biologic therapies, making it important to find ways
    to reduce costs when possible in order to keep premiums low.

        Question. Would you be willing to work with Congress to choose a
    smarter path that increases competition and brings down costs to
    beneficiaries?

        Answer. HHS is always willing to work with Congress to improve the
    Medicare program, including the Medicare prescription drug benefit.
                               medicare advantage
        Question. Your budget again proposes cuts to the successful,
    market-based Medicare Advantage (MA) program. CMS's repeated attempts
    to use the MA program as a ``piggy-bank'' to offset Medicare program
    inefficiencies undermines the future stability of the program.
    Furthermore, CMS continues to phase-in a flawed risk adjustment (RA)
    model that has been called inaccurate by MedPAC. The proposal also
    ignores the practical experience and knowledge of providers that
    understand the implication of such actions on beneficiaries.

        Shouldn't the risk adjustment model ensure plans have appropriate
    resources to deliver high-quality care and services to beneficiaries
    and reflect improvements recommended by MedPAC and other stakeholders?

        Answer. The purpose of risk adjustment is to target payments to
    those plans that have relatively sicker enrollees and, therefore,
    higher expected costs. We believe the new model incorporates updates
    that improve payment accuracy while at the same time addressing
    differential coding patterns by some Medicare Advantage Organizations.

        Question. How can CMS better incorporate the recommendations of
    stakeholders and others in the development of an improved risk
    adjustment model?

        Answer. CMS takes seriously suggestions for model improvement from
    stakeholders and continuously conducts research to explore the best
    approach to improving the model.

        Question. What can CMS do to ensure transparency when making
    adjustments to the RA model?

        Answer. Whenever CMS updates a risk adjustment model they provide a
    description of the updates in the Advance Notice for the relevant
    payment year. They often provide information for review outside the
    Notice process, including updated diagnoses groupings and plan-specific
    impacts. CMS will continue this practice, as well as explore ways to
    share information prior to the Advance Notice. We are open to
    discussions with stakeholders on how we can better communicate
    information about models updates.

        Question. I note your interest in health care delivery reform and
    moving to coordinate care for Medicare beneficiaries. Fortunately, in
    Medicare Advantage, we have a program in place that already does that
    cost-effectively and successfully. In many rural states, such as Idaho,
    Medicare Advantage plans have used collaborative efforts to increase
    beneficiaries' primary care visits by almost 100 percent.

        The key to reducing cost in the Medicare program is coordinating
    patient care, especially for those that have many chronic conditions.
    Getting these patients to see a Primary Care Physician (PCP) is
    critically important because research shows most beneficiaries with
    chronic conditions won't participate in a chronic care program without
    the encouragement from a PCP.

        These seniors are getting their care directed and coordinated, and
    this is precisely the kind of results we want to encourage. Many are
    concerned, however, that, as you look at payment rates for 2016, the MA
    program is going to be cut or curtailed in its ability to provide the
    best possible care for our seniors in Idaho and around the country.

        What should we expect as we look forward to the next MA rate
    notice?

        Answer. Enrollment in Medicare Advantage plans is now at an all-
    time high and quality in the Medicare Advantage and the Part D
    Prescription Drug Program continues to improve. Medicare Advantage has
    reached record high enrollment each year since 2010, a trend continuing
    in 2015 with a total increase of more than 40 percent since passage of
    the Affordable Care Act, and premiums have fallen by nearly 6 percent
    from 2010 to 2015. And, more than 90 percent of Medicare beneficiaries
    have access to a $0 premium Medicare Advantage plan. CMS is focused on
    building on this success with policies that will enhance the stability
    of the Medicare Advantage program and continue the movement to reward
    providers of high quality,
    consumer-friendly care.
                           critical access hospitals
        Question. The Administration has proposed various cuts to critical
    access hospital (CAH) reimbursements and participation, including
    repealing CAH designation for facilities within 10 miles of another
    hospital. This distance requirement does not consider the services
    offered by the ``other'' hospital. For example, there is a CAH in
    Blackfoot, Idaho, within two miles of two different hospitals. However,
    one of these facilities is a state-owned psychiatric facility that
    provides long-term and acute inpatient care for mentally ill patients.
    The other is a small neurological specialty hospital that provides
    primarily spinal surgery services and does not have an emergency
    department staffed with a physician 24 hours a day. Under the
    President's proposal, this CAH in Blackfoot, Idaho, would lose its
    designation, even though the other two facilities are incapable of
    providing emergency capabilities or obstetrics.

        What steps will you take to ensure rural residents continue to have
    access to health care services should CMS adopt this proposal?

        Answer. We take the concerns and care of rural Americans very
    seriously and agree that adequate access in these areas is critically
    important. This proposal is targeted to ensure that hospitals that are
    the only source of emergency and basic inpatient care for their
    communities will maintain Critical Access Hospital status. Only
    communities that have another source of hospital care within ten miles
    will be affected. In addition, it is anticipated that the vast majority
    of these CAHs would continue to participate in Medicare as hospitals
    paid under the applicable prospective payment system, and would
    continue to provide hospital services to their communities without
    reliance on CAH designation. In addition, because Medicare is not the
    only payer for these CAHs, they could also continue receiving payment
    from other payers.

        In the event that some of the potentially affected CAHs were to
    close, CMS analysis found that there likely is sufficient capacity in
    nearby facilities to provide the services any closed CAH had been
    providing. Overall, the data suggests that there would be no
    significant issues related to access to inpatient acute care services
    or skilled nursing services for the communities currently being served
    by the potentially affected CAHs should the CAH cease to provide
    services rather than convert its Medicare agreement to participate as a
    hospital. Additionally, HHS will continue to monitor rural communities
    to ensure that access to medical care is preserved.

        Question. Does the President support an exceptions process for CAHs
    like the one in Blackfoot, which are the only facilities capable of
    providing emergency response and other essential procedures in their
    respective communities?

        Answer. If this proposal became law, the impact on the status of
    any particular CAH would be determined by the CMS regional office on a
    case-by-case basis and would depend on the legislative language and
    implementing regulations.

                                     ______

                  Questions Submitted by Hon. Michael B. Enzi
                         mandatory health care savings
        Question. The President's budget includes $400 billion in displayed
    net mandatory health care savings. The President also call for an
    extension of CHIP funding, a permanent Medicare ``doc fix,'' an
    immigration plan that would increase health spending and new Medicare
    spending as a result of turning off the BCA sequester.

        When you add these elements of the President's budget to the $400
    billion in displayed net mandatory health savings, what is the new net
    health savings amount?

        Answer. The Budget includes about $400 billion of specified net
    health savings that grow over time, extending the life of the Medicare
    Trust Fund by approximately five years, and building on the Affordable
    Care Act with further incentives to improve quality and control health
    care cost growth. This includes a proposal to accelerate physician
    participation in high-quality and efficient health care delivery
    systems by repealing the Medicare Sustainable Growth Rate formula and
    reforming Medicare physician payments in a manner consistent with the
    reforms included in recent bipartisan, bicameral legislation.

        These savings are estimated against the Budget's adjusted baseline,
    which assumes that large reductions in Medicare physician payment rates
    required by law under a formula, commonly referred to as the
    ``sustainable growth rate'' (SGR), do not take place. This formula has
    called for reductions in physician payment rates since 2002, which the
    Congress has routinely over-ridden for more than a decade. Including
    this adjustment to baseline spending allows the Administration to
    better represent the deficit outlook under current policy and serves as
    a more appropriate benchmark for measuring policy changes.

        Outside of the $400 billion in net health savings, the Budget also
    proposes to extend funding for the Children's Health Insurance Program
    (CHIP), ensuring continued, comprehensive, affordable coverage for
    children enrolled in CHIP. This proposal is paid for through an
    increase in tobacco taxes that will help reduce youth smoking and save
    lives.

        The Budget continues to propose commonsense, comprehensive
    immigration reform that would strengthen border security, modernize the
    legal immigration system, and provide a path to earned citizenship. The
    Congressional Budget Office (CBO) estimates that the 2013 Senate-passed
    immigration bill, S. 744, would have reduced deficits by almost $1
    trillion over 20 years. The Budget includes an allowance for the budget
    effects of immigration reform based on the CBO cost estimate.

        Finally, the Budget includes $185 billion in net costs to replace
    mandatory sequestration government-wide. The policy estimates for the
    President's Budget for Medicare include the effects of the proposal to
    replace mandatory sequestration, along with the effects of all of the
    Budget's health savings proposals.
                                king v. burwell
        Question. The Supreme Court will issue a decision in the King v.
    Burwell case before the end of its term in late June of this year. A
    ruling in favor of the plaintiff could have major budgetary
    implications by, in effect, invalidating exchange subsidies, the
    employer mandate, and much of the individual mandate in up to 37
    states. A recent analysis by the Urban Institute concluded that the
    total budgetary effect of a ruling in favor of the plaintiff could be
    as much as $340 billion over the 10-year budget window.

        Has the administration done its own estimate of the likely
    budgetary impact of such a ruling?

        Answer. It has not.

        Question. Has the administration estimated how many HealthCare.gov
    enrollees would lose subsidies?

        Answer. Individuals with a 2015 plan selection through the
    Marketplaces in the 34 Federally-facilitated Marketplace states who
    qualify for an advance premium tax credit would lose subsidies.

        Question. Similarly, has the administration estimated how many
    individuals and employers would then be exempt from penalties under the
    individual and employer mandates?

        Answer. As noted in the Government's brief in King v. Burwell, if
    tax credits were no longer available in States with federally-
    facilitated Exchanges, millions of people currently relying on them to
    pay for insurance would be exempt from the individual-coverage
    provision because they would not be able to afford insurance.

        Question. In light of the significant budgetary implications, has
    the Administration been working on any contingency plans in the event
    that the court rules in favor of the plaintiff?

        Answer. We know of no administrative actions that would undo the
    massive damage to our health care system that would be caused by an
    adverse decision and, therefore, we have no plans that would undo the
    massive damage.
                                medicare part d
        Question. Medicare Part D is performing well beyond expectations
    and its costs are coming in far below projections. Part of that success
    is driven by the structure in the law that restricts HHS from
    interjecting itself into pricing and plan structure. There are a number
    of policies in the president's budget that would destabilize the
    program, including negotiated drug pricing and expanding Medicaid-style
    rebates. The Congressional Budget Office (CBO) has said that, if
    Medicare Part D instituted drug rebates rebating similar to that in
    Medicaid, a substantial amount of any of the assumed savings would be
    lost within 15-20 years as the market adjusted over time.

        Is that consistent with the agency's estimates?

        Answer. The CMS Office of the Actuary provided the Department's
    estimate of potential savings from the proposal, ``Align Medicare Dug
    Payment Policies with Medicaid Policies for Low-Income Beneficiaries.''
    The actuaries project that this proposal would reduce future Medicare
    spending by $116.1 billion over 10 years (Fiscal Year 2016 through
    Fiscal Year 2025). The actuaries have not provided estimates of any of
    the President's Budget proposals beyond the 10-year budget window.

        Question. Does the Secretary agree that, as CBO has repeatedly
    cautioned, there is a risk that it these proposals will also reduce
    innovation and depress investment by drug manufacturers in research and
    development?

        Answer. Analysis has found substantial differences in rebate
    amounts and prices paid for brand name drugs under the two programs,
    with Medicare receiving significantly smaller rebates, resulting in
    Medicare paying higher prices than Medicaid. Prior to the establishment
    of Medicare Part D, manufacturers paid Medicaid rebates for drugs
    provided to dual eligible individuals, who were subsequently enrolled
    in Part D for their prescription drug coverage.

        Manufacturers have sufficient incentives--the desire to have their
    products covered on a preferred tier--to offer price concessions to
    Part D plan sponsors. Competition within a specific drug class from
    other brand or generic options will also play an important role in
    keeping down the cost of drug coverage.
                                exchange grants
        Question. Under the ACA, each exchange is expected to be self-
    sustaining beginning January 1, 2015. Please describe the ``Affordable
    Exchange Grants'' for which $380 million has been requested in the
    president's budget.

        Please describe how these grants would differ from Early Innovator,
    Planning, or either category of Development Grants, the last of which
    were awarded in 2014.

        Answer. The $380 million in the President's Budget for Affordable
    Exchange Grants represents outlays of previously awarded grants and
    does not support any new grant awards. The final round of grant funding
    was awarded in December 2014, but states may continue to spend their
    funding on establishment-related activities for one year following the
    date of award. States may request No Cost Extensions to extend the
    project period beyond one-year from the date of the initial award.

        CMS used a phased approach to provide resources to states based on
    their progress and the approach that worked for their state. This
    included planning grants in 2010, which provided states up to $1
    million to plan the early phases of establishing an Exchange in their
    state that would work best for their citizens; early innovator grants
    in 2011, which provided a small number of states resources to begin the
    IT build of their exchange; and establishment grants in 2011-2014,
    which provided states resources to establish a State-based Marketplace,
    to build functions that a state elects to operate under a State
    Partnership Marketplace, and to support state activities to build
    interfaces with a Federally-facilitated Marketplace.
                                     co-ops
        Question. In light of the collapse of one CO-OP in Iowa, the
    largest CO-OP in the country, and concerns about instability in other
    markets, please describe the estimates that HHS makes regarding the
    loan program as relates to the ability of those plans to repay and
    detail steps being taken by HHS to promote repayment of the $2.5
    billion in loans awarded through this program.

        Answer. Implementation of the CO-OP program has been a
    collaborative effort among CMS, state Departments of Insurance (DOIs),
    and the new CO-OP plans. States are the primary regulator of health
    insurance issuers and market rules and state DOIs oversee the financial
    stability of issuers and protect consumers in those markets. In
    addition to state regulation, CMS's role is to monitor CO-OPs for
    compliance with their loan agreements and program policies.

        CMS continues to conduct oversight of CO-OPs as they enter their
    operational phase. CO-OP account managers have regular status meetings
    during which CO-OPs report on progress in achieving milestones, as well
    as about progress on operational experience. To ensure strong financial
    management, CO-OPs are required to submit quarterly financial
    statements, including cash flow data, receive site visits by CMS staff,
    and undergo annual external audits, in order to promote sustainability
    and capacity to repay loans. This monitoring is concurrent with ongoing
    financial and operational monitoring by state insurance regulators.

        Question. Please describe any interactions that HHS had with
    CoOportunity in Iowa leading up to the determination by the State
    Insurance Commissioner that they be liquidated.

        Answer. In late December, the state of Iowa brought to our
    attention their immediate concerns over the rapidly deteriorating
    financial viability of the CoOportunity insurance company. CMS has
    worked with the Iowa Department of Insurance and the CoOportunity to
    assist with the smoothest possible transition for the current members
    of CoOportunity.

        Question. What involvement will HHS have, if any, in the process of
    dissolving the entity?

        Answer. On December 23, 2014, the Iowa Insurance Division concluded
    that CoOportunity did not have sufficient funding to remain viable and
    placed CoOportunity in rehabilitation. During this time, the Iowa
    Insurance Division determined that rehabilitation was not possible and
    announced on January 23, 2015, that it would seek a liquidation order
    for CoOportunity Health for February 28, 2015. As a result, CMS
    announced that CoOportunity would be decertified as a Qualified Health
    Plan (QHP), effective February 28, 2015. Additionally, given
    CoOportunity's insolvency, the CO-OP is in violation of the Loan
    Agreement under Section 15.2(d). As such, CMS will exercise the right,
    under Section 16.3, to terminate the Loan Agreement with the CO-OP.

                                     ______

                    Questions Submitted by Hon. Richard Burr
        Question. Insurers signed an agreement with CMS as part of their
    participation in the federally-facilitated exchanges that essentially
    allows for the termination of such agreement in the event that tax
    credits or cost-sharing reductions are no longer available.

        How does this provision fit into HHS's overall contingency plans if
    the Supreme Court strikes down the subsidies in the states that did not
    establish an exchange?

        Answer. It doesn't. As we have previously said, we know of no
    administrative actions that could, and therefore we have no plans that
    would, undo the massive damage to our health care system that would be
    caused by an adverse decision.

        Question. How is HHS ensuring that beneficiaries who could be
    impacted by such an outcome are aware that they could lose their
    exchange-coverage and subsidies? If no such outreach or communication
    has occurred to date with these enrollees, why is that the case
    considering the significant impact such an outcome could have for these
    individuals?

        Answer. We don't believe that such assurances are appropriate under
    the circumstances. As we have previously stated, we are confident that
    we will prevail because the text and structure of the Affordable Care
    Act demonstrates that citizens in every state are entitled to tax
    credits, regardless of whether they purchased their insurance on a
    federal or state marketplace.

        Question. HHS recently announced a pretty aggressive timeline for
    tying traditional fee-for-service Medicare payments to selected
    alternative payment models.

        Were providers consulted on this proposal, specifically the
    proposed timelines for implementation?

        Answer. Yes, we sought the input of providers as we developed the
    proposal. A number of providers were supportive of and attended the
    announcement of alternative payment model goals in January, including
    the American Academy of Family Physicians, the American Medical
    Association, the American Hospital Association, Trinity Health,
    Dartmouth-Hitchcock, Ascension Health, and Montefiore Health System.

        In setting goals and timelines, HHS wanted to be ambitious while
    also being realistic. Almost no Medicare fee-for-service payments were
    paid through alternative payment models (APMs) in 2011. This percentage
    increased to approximately 20 percent by the end of 2014 with a goal of
    30 percent of payments in APMs by 2016 and 50 percent by 2018.

        Question. How will your agency decide which alternative payment
    models to utilize for Medicare payments? Please describe in detail.

        Answer. CMS is testing alternative payment models that show promise
    for increasing quality and reducing costs, and CMS will scale up and
    continue to implement those that have a proven track record for doing
    so. Alternative payment models currently being implemented include the
    Medicare Shared Savings Program, which is operating within the standard
    Medicare fee-for-service payment system and was created by Section 3022
    of the Patient Protection and Affordable Care Act. Various accountable
    care organization (ACO) models are also being tested at the CMS
    Innovation Center. These include the Pioneer ACO Model, which increases
    the level of financial risk and reward for provider organizations.

        Three other types of models being tested include bundled payments,
    advanced primary care medical homes, and models that support states
    with implementing comprehensive delivery system reforms. Each of these
    ideas had previously been tested in the public or private sector on a
    smaller scale. The CMS Innovation Center is currently testing these
    ideas on a larger scale with rigorous evaluation criteria.

        Question. Earlier this month, Chairman Alexander and I released a
    report analyzing the current state of medical product discovery and
    development. Our report, ``Innovation for Healthier Americans'' asks a
    simple, but critical, question of how we could do it better when it
    comes to ensuring that America's patients have access to medical
    products in as timely a manner as possible. The size and scope of FDA
    as an organization has never been more complex. As the President's
    budget notes, the FDA workforce has doubled since 2008.

        What opportunities do you see from a management perspective to help
    FDA function even better on behalf of patients that don't involve
    further growing the Agency in terms of its size and resources?

        Answer. Patients are at the core of FDA's mission and the focus of
    the agency's vision. Patients who live with a disease have a direct
    stake in the outcome of the review process and are in a unique position
    to contribute input that can inform FDA's benefit-risk considerations
    that can occur throughout the medical product development process. That
    is why FDA relies on patient input to evaluate and approve products.

        For example, patient representatives serve on FDA advisory
    committees. Additionally, FDA has already held 11 Patient Focused Drug
    Development meetings to learn more about the patient experience, as
    required by the Food and Drug Administration Safety and Innovation Act
    of 2012 (FDASIA). Another five are planned in 2015 and more will take
    place in 2016 and 2017.

        FDA's research on patient tolerance for risk helped inform the
    recent clearance of an implantable obesity device. FDA is currently
    developing other tools to better measure patient preferences and
    tolerance for risk including a benefit-risk assessment for new drugs
    and biologics.

        FDA is constantly involved in management changes and innovations
    within the agency to better serve the American people. The agreements
    made pursuant to the various user fee agreements are part of the
    roadmap for improving the agency. Other initiatives stem from major
    legislation enacted in recent years such as FDASIA and initiatives
    undertaken by the Commissioner. In addition, we have reviewed the
    report authored by you and Chairman Alexander and look forward to
    working with you as the Senate shapes legislation to increase access to
    innovative medical products. Our goal throughout is to emerge with an
    FDA that is as efficient as possible and to increase access to safe and
    effective medical products that benefit the American people.

        Question. How can we better utilize the significant resources FDA
    already receives?

        Answer. We believe that FDA does exercise prudent use of resources.
    This is partially evident by the trust that industry places in the
    agency year after year in the expenditure of industry user fees. One
    area where there is potential to better utilize existing resources is
    with respect to retention of medical and scientific experts. The
    medical product industry is concerned that many of their new
    therapeutic technologies will require FDA to have additional
    sophisticated technical and scientific expertise if FDA is to be able
    to efficiently and expeditiously review those new therapies for
    approval and conduct post-market surveillance activities. However, in
    many cases, these experts are able to command higher salaries in the
    private sector than FDA can provide. I would welcome a discussion with
    you on the use of funds by the FDA and to hear your suggestions on how
    things could be improved.

        Question. The President's budget acknowledges the significant
    growth in appeals coming before the Office of Medicare Hearings and
    Appeals. I consistently hear concerns from my constituents back home
    about the need to make sure the audit and appeals processes are as fair
    and predictable as possible. What reforms do you believe would be most
    impactful to increase the predictability and timeliness of the audit
    and appeals processes?

        Answer. The Department has a three-pronged approach to addressing
    the increasing number of Medicare appeals and the current backlog.
    First, invest new resources at all levels of appeal to increase
    adjudication capacity and implement new strategies to alleviate the
    current backlog. Second, take administrative actions to reduce the
    backlog and to appropriately resolve claims at earlier levels of the
    appeals process. Third, pursue legislative proposals described in the
    President's FY 2016 Budget that provide additional funding and new
    authorities to address this urgent need.

        Legislative proposals along with additional resources requested in
    the President's FY 2016 Budget set a framework for bringing the
    Medicare appeals process into balance going forward. For example, the
    legislative proposal to establish a refundable filing fee at each level
    of appeal will encourage providers to be more judicious in determining
    what they appeal. Providing authority to consolidate appeals requests,
    the authority to group similar claims together to allow for a single
    decision on multiple claims, will improve the efficiency and timeliness
    of the Medicare appeals process. Increasing the minimum amount in
    controversy required for adjudication by an administrative law judge to
    the Federal District Court amount in controversy requirement will
    reduce the volume of claims that could be appealed for ALJ review.

        The Budget requests $270 million, an increase of $183 million above
    the FY 2015 level, to address the backlog of over 800,000 pending
    appeals at OMHA. The Budget includes $140 million in budget authority
    and $130 million in program level funding from proposed legislation to
    support new field offices and additional Administrative Law Judges
    teams. It will also support appeals adjudication by less costly methods
    such as settlement facilitation and the proposed Medicare Magistrate
    program. The 2016 Budget invests $36.2 million to allow CMS to engage
    in discussions with providers to resolve disputes earlier in the
    appeals process and greater CMS participation in Administrative Law
    Judge hearings at OMHA. This investment will improve the efficiency of
    the Medicare appeals process at the third and fourth levels and reduce
    the number of claims appealed beyond the CMS levels, enabling the OMHA
    to more quickly adjudicate its current backlog. The Budget also
    requests $12.5 million, an increase of $2.5 million above FY 2015
    level, to hire additional staff to address Medicare appeals at Level IV
    (the Medicare Appeals Council).

                                     ______

                     Questions Submitted by Hon. John Thune
                                     emtala
        Question. In South Dakota, several hospitals in rural areas that
    border Indian reservations see a high volume of emergency cases with
    patients who primarily receive care at Indian Health Service facilities
    entering their emergency departments. EMTALA requires that providers
    provide care for patients who present at an emergency facility. Claims
    by private providers for this emergency care are often denied.
    Providers appeal but the appeals languish at the highest level of
    appeal with no response. This results in no reimbursement for care they
    were required by federal law to provide.

        If providers claims are denied at the local level, how are these
    appeals evaluated at the headquarters level?

        Answer. Indian Health Service adheres to the appeal process set
    forth in 42 CFR 136.25, which establishes a three-stage, time-limited
    appeals process for patients and providers. The IHS Director considers
    appeals only after denial decisions have been made by the facility
    Chief Executive Officer (CEO) and the IHS Area Director. To be
    considered timely, the PRC appeals must be submitted in writing to the
    appropriate reviewer within 30 days after receipt of the notice of
    denial.

        All appeals submitted to the IHS Director are reviewed to ensure
    the local and Area appeals requirements have been met. Cases are
    reviewed on an individual basis to ensure sufficient information is
    provided to make an appeal decision. Appeals are reviewed for patient
    eligibility, access to alternate resources, medical priority,
    availability of IHS facilities and PRC program notification
    requirements. If an appeal is denied for a medical priority, all
    related medical records must be obtained for a Headquarters medical
    review. After documentation and medical reviews are provided, all
    information is considered and a decision rendered regarding the appeal.
    All decisions are reviewed by program staff and senior leadership
    before the IHS Director issues the decision.

        Question. In what timeframe should providers expect that claims
    will be reviewed?

        Answer. Timeframes for review can vary depending on the case, the
    reason for denial and the information submitted for review. A recent
    factor that affects the review time is the number of denials that are
    appealed. Some health care providers are appealing every denial
    decision received by the facility which has resulted in the number of
    appeals increasing fivefold over the last 18 months. In 2014, almost
    500 denials were appealed to the IHS Headquarters.

        IHS recognizes the burden that delayed responses create for
    patients and providers and is improving business practices to
    effectively address the current workload while maintaining adequate
    consideration for each patient and case. IHS is drafting new procedures
    and workplans to address the increase in appeals. Area staff have been
    brought to Headquarters to assist with the research and review that is
    required for appeals adjudication and to provide feedback on successful
    Area processes that Headquarters may replicate. Dual timelines are
    being implemented to address current appeals as well as the backlog of
    appeals. With increased efforts focused on PRC appeal adjudication,
    patients and providers can expect more timely responses from IHS
    Headquarters.
                                     va/ihs
        Question. As you know, for care that cannot be provided at an IHS
    service unit, patients are referred out through the IHS PRC program.
    Patients may be referred to a private provider or in some cases to a
    Veterans Affairs (VA) facility. In accordance with the law, eligible
    Indian veterans who are referred to the VA are required to be charged a
    copayment for services at the VA. Under a separate federal statute,
    providers are not permitted to impose financial liability on a patient
    pursuant to an authorized PRC referral. We understand that conflicting
    federal statues have resulted in eligible Indian veterans being held
    responsible for the VA copayments. My office has been working with both
    the VA and IHS for the last two years to better understand and address
    this issue.

        Is this an issue that can be resolved administratively?

        Answer. Federal law prohibits providers from charging IHS patients
    for authorized PRC referrals. As noted above, American Indian and
    Alaska Native (AI/AN) Veterans have overlapping eligibility for
    services provided at IHS and VA facilities. When an AI/AN Veteran is
    seen under the authority of the IHS, there is no copayment. The AI/AN
    Veteran is never charged for any level of care received directly at an
    IHS facility.

        Question. If not, what particular legislative changes are necessary
    to allow for PRC dollars or other IHS funds to be used to cover the
    cost of a required VA copayment?

        Answer. Currently, IHS has no recommendations for legislative
    change.

        Question. Are there technical barriers to implementing a process
    for PRC to cover eligible Indian veterans' copayments at the VA?

        Answer. The issue is due to statutory authority and not related to
    technical barriers for IHS/PRC program.
                            internal policies at ihs
        Question. My staff regularly works with the office of congressional
    affairs and previously, officials from the Great Plains office, on both
    constituent and legislative issues. Unfortunately, we often find that
    it is difficult to receive timely responses to inquiries and
    communicate with local IHS staff. My staff was recently prohibited from
    visiting an IHS facility without clearance--which took weeks to
    obtain--from headquarters. We also understand that service unit CEO's
    have been instructed not to provide even basic information to my office
    without prior clearance. Often, my staff is working on time sensitive
    issues that could be resolved quickly if information sharing at the
    local level was permitted.

        Can you provide me with information regarding internal policies
    specific to communication with individual service units and the area
    office and Congressional offices, including the rationale for these
    policies?

        Answer. I am sorry that your staff has had difficulty.
    Congressional requests for site visits, field hearings, etc., should be
    made through IHS headquarters legislative staff who customarily work
    with health staff on scheduling appropriate dates and times for staff
    and member visits and to ensure appropriate area office and/or service
    unit leadership are available. Additionally, we are particularly
    sensitive to the need to protect patient confidentiality during site
    visits to hospitals or health facilities, so visits are arranged in a
    manner that takes such concerns into consideration. If there is ever
    any question regarding this process, please contact IHS Headquarters
    legislative staff directly and they will ensure all requests are
    coordinated with appropriate personnel in the Areas and Service Units.
    If they are unable to assist, please contact the Office of the
    Assistant Secretary of Legislation at HHS.

        Question. This fall, my staff organized a purchased and referred
    care roundtable with various stakeholders, including the IHS. My staff
    requested, and was promised, prior access to the information that would
    be presented by the IHS. After numerous requests, the information was
    provided after close of business the night before the event, leaving my
    staff without time to evaluate the information. These are just a few
    examples of what has become a pattern of untimely responses to requests
    from the IHS headquarters office. Another example is the response to a
    letter I sent that arrived eleven months after I sent my letter. This
    is unacceptable.

        While I certainly recognize that the headquarters office is
    responding to a multitude of requests, I am interested in hearing how
    you are working to improve response times and what goals the IHS has
    for average response times?

        Can you provide me with information on the clearance process and
    who is required to sign off on information provided to my office?

        Answer. I understand your concern. I want to assure you that I am
    personally committed to responding quickly and thoughtfully to letters
    from Members of Congress. Since I was confirmed, I have made it a top
    priority for the Department to respond as promptly and thoroughly as we
    possibly can to every letter--and I have communicated this to
    leadership throughout the Department.

        IHS is working to improve response times by setting deadlines that
    allow time for review and signature, incorporate compliance with
    correspondence deadlines into performance plans, and focus additional
    staff resources to address backlogs in correspondence. The IHS goal is
    to respond to correspondence within a 30-day timeframe, unless issues
    involve other agencies' input requiring multiple levels of review
    outside of the agency's control. As Secretary, I am insisting that all
    parts of HHS improve their response time to congressional
    correspondence.
                               medicare solvency
        Question. It is no secret that Medicare Hospital Insurance Trust
    Fund will become insolvent by 2030. What is being done to help address
    looming insolvency of Medicare?

        Answer. In 2009, the Trustees projected the Hospital Insurance
    Trust Fund would become insolvent in 2017. As of the 2014 Trustees
    Report, the Trustees project the Hospital Insurance Trust Fund will be
    solvent until 2030, 13 years later than the 2009 projection--an
    improvement that is thanks in part to cost controls implemented in the
    Affordable Care Act. These include reforms that are reducing excessive
    payments to private insurers and health care providers in Medicare,
    creating strong incentives for hospitals to reduce readmission rates,
    and starting to change health care payment structures from volume to
    value.
                        rural health regulatory burdens
        Question. During your confirmation hearing, I asked you about what
    you would do to help address unnecessary regulatory burdens on rural
    health providers. You said, ``I look forward to working with you and
    your colleagues to ensure that the burdens faced by rural providers are
    limited. By eliminating stumbling blocks and red tape we can assure
    that the health care that reaches patients is more timely, that it's
    the right treatment for the right patient, and greater efficiency
    improves patient care across the board.''

        Since you were confirmed, what have you done to follow through on
    this promise?

        Answer. As we discussed at my confirmation hearing and in
    subsequent conversations we are committed to working with all
    providers, but especially rural providers to make sure they are able to
    provide their patients with the care they need when they need it. Since
    I arrived at HHS, we have expanded the use of telemedicine in Medicare
    and announced the creation of a new initiative to support care
    coordination nationwide, while continuing to listen to rural
    stakeholders.

        One area that I would highlight is the area of telemedicine, which
    is of particular importance to rural providers and their patients. As
    you know, the Medicare program provides telehealth services for
    Medicare beneficiaries for a limited number of Part B (outpatient)
    services furnished through a telecommunications system by a physician
    or practitioner to an eligible telehealth individual, where the
    physician or practitioner providing the service is not at the same
    location as the beneficiary. CMS considers requests to add new services
    annually through the physician fee schedule rulemaking process, and has
    established criteria for adding telehealth services. Services can be
    added if they are similar to existing telehealth services, or can
    demonstrate clinical benefits to a patient if delivered by a
    telecommunications system in place of a face-to-face visit. For
    example, CMS finalized adding psychoanalysis, family psychotherapy,
    annual wellness visits, and prolonged evaluation and management
    services as telehealth services in 2015.

        The Medicare Shared Savings Program statute encourages accountable
    care organizations (ACOs) to coordinate care through the use of
    telehealth, remote patient monitoring, and other such enabling
    technologies. ACOs participating in the Shared Savings Program and the
    Pioneer ACO Model are encouraged to use these technologies. CMS also
    announced the creation of the ACO Investment Model, which is an
    initiative designed for organizations participating as ACOs in the
    Medicare Shared Savings Program (Shared Savings Program). The ACO
    Investment Model is a new model of pre-paid shared savings that builds
    on the experience with the Advance Payment Model to encourage new ACOs
    to form in rural and underserved areas and current Medicare Shared
    Savings Program ACOs to transition to arrangements with greater
    financial risk.

        Another area pertains to outpatient therapeutic services in
    critical access hospitals. We are aware of the concerns expressed by
    some critical access hospitals regarding our direct supervision
    requirement for most outpatient therapeutic services, meaning that a
    physician or qualified non-physician practitioner must be immediately
    available during the service. Working with the Federal Office of Rural
    Health Policy, located within the Health Resources and Services
    Administration, we established the Hospital Outpatient Payment Panel to
    consider requests to establish alternative supervision requirements for
    specific outpatient therapeutic services. The Panel has been evaluating
    requests for changes in supervision levels for various outpatient
    therapeutic services.

                                     ______

                Questions Submitted by Hon. Robert P. Casey, Jr.
        Question. The budget includes savings of $69 million over the next
    decade, attributed to promoting ``family-based foster care for children
    with behavioral and mental health needs.'' Can you elaborate on this
    proposal? How will the Administration encourage family-based care for
    these children, many of whom have traditionally been sent to congregate
    care?

        Answer. Children are best served when raised in safe, loving
    families; congregate care may be appropriate as a temporary placement
    for children to address complex physical, mental and behavioral health
    needs. This proposal is estimated to cost $78 million in FY 2016 and
    reduce costs of title IV-E foster care by $69 million over ten years.
    The Administration's cost estimate assumes that the proposal will
    increase the availability of family-based care and, as a result of
    establishing and enhancing those services, states will move children
    from congregate placements to family settings to better meet the needs
    of children while reducing the costs for IV-E.

        Through this proposal, title IV-E agencies will be reimbursed with
    50 percent federal financial participation (FFP) for administrative
    activities associated with this oversight and eligibility documentation
    components of the proposal. This rate is the same as current law, but
    we estimate that IV-E agencies will have higher claims for eligibility
    determination activities to implement and comply with the new
    requirements for documenting the justification for congregate care
    settings and acquiring judicial determinations every six months. We
    assume that the additional claims related to this new procedure will
    decline as the congregate care placements decline following the
    implementation of the supports for family-based care.

        The Children's Bureau, within the Administration for Children and
    Families, has produced a data brief that examine how, when, and for
    whom congregate care is being used in the child welfare system (http://
    www.acf.hhs.gov/programs/cb/resource/congregate-care-brief). The brief
    highlights that seventy percent of children and youth in congregate
    care are age 13 and older. Most of the youth in congregate care had a
    DSM diagnosis, physical disability or entered care due to a child
    behavior problem. Some of these children and youth were initially
    placed into congregate care for treatment; others were subsequently
    placed in congregate care because they were not able to remain in a
    traditional foster family care placement.

        The proposal seeks to reduce use of congregate care while improving
    outcomes for children in two ways. First, the proposal promotes family-
    based care for children who have been traditionally been placed in
    congregate care due to youth's complex needs through increased
    investments in alternative interventions, specialized caseworker and
    foster parent training, foster parent reimbursement for those providing
    specialized care to high-need children, and day treatment programs.

        In addition, the proposal promotes family-based care, through
    increased oversight, for those children in congregate care, including
    those who have no apparent clinical indicators. In 2013, there were
    15,000 children (29 percent) who were placed in a congregate care
    setting but had no identifiable clinical indicators.

        Second, the proposal creates a new eligibility requirement under
    title IV-E requiring documentation to justify congregate care as the
    correct foster care placement setting, based on the child's mental,
    behavioral or physical health needs and the congregate care provider's
    ability to address those needs. The oversight requirements will both
    require more careful scrutiny of the appropriateness of these
    placements and give states a financial incentive to ensure that
    residential care placements are used appropriately and only for as long
    as the specific interventions provided in the placement are necessary.
    This proposal would require states to review the case plans for all
    children currently in congregate care, and new children entering
    congregate care setting. The goal is that children are only placed in
    congregate care when it is medically appropriate, and determined to be
    the least restrictive foster care placement setting. In order to
    support family based care for children with complex needs, the
    President's budget proposal increases reimbursement for specialized
    caseworker training and case management, increases reimbursement for
    foster parent parents who provide therapeutic care and provides
    additional reimbursement for day treatment.

        Question. As you know, I was disappointed that you once again
    included deep cuts to the Children's Hospital Graduate Medical
    Education (CHGME) program in your FY 2016 budget. CHGME has been a
    major success and has enjoyed broad bipartisan support. Indeed, just
    last year it was reauthorized at $300 million a year for five years,
    which the President signed. Now he proposes funding it at just a third
    of that. This cut in funding puts at risk the gains that have been made
    for children's health under CHGME. The small class of hospitals that
    receive CHGME, less than one percent of all hospitals, train nearly
    half (49%) of all pediatricians, including 45 percent of general
    pediatricians and 51 percent of pediatric specialists. I know you
    excuse these cuts by pointing to new investments in primary and
    preventive care that Children's Hospitals can access, but that's not
    what these hospitals need most. As you know, there are serious national
    shortages in many pediatric specialties, shortages which the CHGME
    program has been crucial in helping to address. In some specialties,
    like pediatric rehabilitation, the CHMGE hospitals train virtually 100%
    of those providers. Have you considered the likely impact on specialty
    care from this reduced funding? Please explain how with this level of
    funding we can adequately ensure resources are available to train the
    specialty pediatric workforce of tomorrow? Very simply: who will treat
    our kids if we do not invest in CHGME?

        Answer. I share your view that it is important to support funding
    for medical residency training programs for pediatric and pediatric
    subspecialty residents. I remain committed to working with Congress to
    make sure our training hospitals have the resources they need to
    develop a strong pediatric workforce.

        The goal of our Budget proposals is to improve access to health
    care services for all Americans, including our nation's children. Our
    graduate medical education proposals target the investments where they
    are needed most--in primary care (including pediatrics) and certain
    specialties--and for practice in rural and other underserved areas.

        As you noted, the President's FY 2016 Budget Request includes $100
    million for the CHGME program. This request for the CHGME program
    supports direct medical education expenses for graduate medical
    education at children's hospitals. The Budget will support
    approximately the same number of pediatric resident slots as in
    previous years by funding the direct costs associated with training
    residents. Direct medical education spending includes stipends and
    salaries for residents and supervising faculty, costs associated with
    providing the GME training program, and overhead costs.

        Another way the President's FY 2016 Budget seeks to maximize
    federal resources is by encouraging innovation in graduate medical
    education training models and greater accountability in the use of
    graduate medical education funding. The President's FY 2016 Budget
    proposes the Targeted Support for Graduate Medical Education (TSGME)
    program. The TSGME proposal requests $400 million in FY 2016 and $5.25
    billion over a 10-year period through a mandatory funding mechanism
    which would provide increased stability for the program while
    supporting approximately 13,000 residents.

        As you are aware, children's hospitals would be eligible to receive
    CHGME funds and compete for the TSGME funds. The TSGME proposal would
    also re-orient training to community-based, ambulatory care settings.
    Many institutions, including children's hospitals, are already
    providing care using this type of delivery. As eligible entities for
    both the CHGME and TSGME programs, children's hospitals will have the
    opportunity to compete for even more funding than the FY 2015-enacted
    level of $265 million or FY 2016-authorized level of $300 million.

        Question. I applaud the Administration's commitment to move away
    from a purely fee-for-service approach of providing and paying for care
    and toward a health system that pays for value and quality. I have
    advocated for and strongly believe that providers and health plans
    should be paid for the quality of care they deliver, not merely for the
    number of services they can bill and for whom coverage is provided.

        However, I understand, as do you, that providers and plans that
    have a higher percentage of low-socio-demographic status patients face
    unique challenges to achieve the same health outcomes that occur in
    more affluent areas. Healthy food, transportation to a doctor's visit,
    and a warm, safe home are critical to a patient's health, yet many
    Americans cannot afford these basics. While I fully support delivery
    system reform, we must also foster policies that improve vulnerable
    American's health by taking on these challenges as a part of expanding
    accountability in medical care.

        Medicare's current and new payment models that measure quality
    should account for the impacts on health care associated with a
    patient's economic circumstances. Unless our valued-based system
    recognizes these factors, hospitals and health plans caring for the
    most vulnerable patients may be unfairly penalized, and your historic
    effort to reward value may well fall short. Can you help me understand
    why this aspect was not included in your plan and how I can help you
    and your staff to make certain of its inclusion?

        Answer. To address the issue of risk adjustment for socioeconomic
    status specifically, the Office of the Assistant Secretary for Planning
    and Evaluation (ASPE) is conducting research on this issue as directed
    by the IMPACT Act, and will issue a report to Congress by October 2016.
    This report will examine relationships between socioeconomic status and
    performance under CMS quality programs across a number of settings,
    including hospital, plan, provider, and post-acute programs, and
    provide insight into potential policy alternatives that might address
    socioeconomic status within these programs. CMS will closely examine
    the research conducted by ASPE.

        In addition to work in quality measurement, CMS has made
    significant investments in the provision of technical assistance for
    delivery system reform efforts for providers that serve rural and
    vulnerable populations through our Quality Improvement Organization
    (QIO) program and the recently announced Transforming Clinical Practice
    Initiative that will assist providers in rural and underserved areas.

        HHS is committed to working with you and other stakeholders to
    reform the delivery system while addressing any negative unintended
    consequences, particularly for those facilities serving dual-eligible
    and low-income beneficiaries. I look forward to future discussions with
    you and other stakeholders on ways to further improve the quality of
    care provided to beneficiaries.

        Question. I want to raise the issue of the ``Two Midnights'' Rule,
    which is a CMS policy that was intended to try to simplify inpatient
    admissions by clarifying which hospital stays are reimbursable under
    Medicare Part A, because I am concerned that this policy has not
    resulted in its originally intended outcomes. This Rule utilizes time
    as the primary factor in qualifying a patient for a hospital stay what
    is reimbursable under Medicare Part A, rather than patient acuity
    levels and physician judgment. I know CMS has been working with
    stakeholders to develop a consensus on inpatient policy options. Where
    does that process stand? And given the current 18-month delay CMS has
    implemented in enforcement of this policy, can you provide me with
    details of what the impact of this delay is having on health outcomes
    and costs to the system?

        Answer. After finalizing the two-midnight rule effective beginning
    FY 2014, CMS sought comments in the FY 2015 Inpatient Prospective
    Payment System (IPPS) proposed rule on an alternative payment
    methodology under the Medicare Program for short hospital stays. Topics
    for comment included the definition of short or low cost inpatient
    hospital stays and the determination of appropriate payment for short
    inpatient hospital stays. We received a number of comments indicating
    that any short-stay policy should adhere to certain general principles
    and that additional research and collaboration were needed before a
    formal short-stay policy proposal were to be made by CMS. CMS noted in
    the FY 2015 IPPS final rule that there was no consensus among
    commenters. Although there was no consensus, CMS stated it would take
    the comments into account in any potential future rulemaking to address
    the complex question of payment policy for short inpatient hospital
    stays.

        CMS has undertaken extensive efforts to engage with stakeholders
    directly on efforts to comply with the 2-midnight rule, including
    numerous ``Open Door Forums'' and national provider calls.

        In addition, CMS instructed Medicare Administrative Contractors
    (MACs) to conduct ``probe and educate'' reviews for inpatient claims
    with dates of admission between October 1, 2013 and March 31, 2014, to
    assess provider understanding and compliance with the new policy. The
    Protecting Access to Medicare Act of 2014 (Pub. L. 113-93) permitted
    CMS to continue medical review activities under the MAC probe and
    educate process through March 31, 2015 and precluded recovery auditors
    from conducting post-payment patient status reviews for inpatient
    claims through March 31, 2015. All MACs have completed the first round
    of probe reviews and provider education. Throughout the probe and
    educate process to date, CMS has seen positive effects and improved
    provider understanding of the 2-midnight rule. We believe that this
    process has been well-received and beneficial to the provider
    community.

                                     ______

                    Questions Submitted by Hon. Rob Portman
                                medicare part d
        Question. Last time CMS's Administrator, Marilyn Tavenner, was
    before this Committee she told us that actual costs for Part D are
    approximately 40% less than the original estimates for the program. In
    addition, CBO has reduced its 10 year cost projections for Part D by
    over $100 billion in each of the last three years.

        I believe these statements and data clearly illustrate that Part D
    has been a success. Yet, the President's budget targets Part D, the
    cost of which is ultimately borne by seniors and taxpayers. As we
    consider solutions to reduce the nation's debt, I encourage the
    Administration and my colleagues to learn from, not undermine, Part D.

        Your budget proposes to give the HHS secretary--for the first
    time--the authority to negotiate drug prices for biologics and high-
    cost drugs in Medicare Part D. While I understand the growing concerns
    with the rapidly escalating prices of specialty and brand name drugs, I
    am concerned that going against the original structure of the Part D
    program and enabling the government to interfere in the current market
    structure could be detrimental to the proven success of the Part D
    program. Is there any concern that interfering with the existing
    program will undermine the market-based structure?

        Answer. The pharmaceutical industry is shifting its focus from the
    blockbuster drugs of the 1990s to specialty pharmaceuticals. While
    these new treatments may represent important medical breakthroughs,
    their extremely high-costs raise concerns as to whether beneficiaries
    have access to the drugs they need. The Federal government needs to be
    mindful of the balance between incentivizing new pharmaceutical
    research with protecting the long-term sustainability of this important
    benefit for generations to come.

        Robust competition leads to reasonable prices for many drugs in the
    Part D program, and that competition will remain strong under this
    proposal. Other major purchasers, such as health plans, employers, and
    pharmaceutical benefit mangers negotiate with manufacturers to get
    better deals for their enrollees and employees. For example, Express
    Scripts and CVS recently negotiated lower prices for Hepatitis C drugs.
    Similarly, this proposal would provide the Secretary with additional
    tools to leverage Medicare's buying power to obtain lower prices for
    high-cost and specialty medications.

        The Administration looks forward to working with Congress to
    address growing pharmaceutical costs and this proposal is one of many
    potential solutions to help alleviate address the growing cost of
    specialty and brand name drugs.

        Question. The budget also proposes to introduce Medicaid-level drug
    rebates to certain beneficiaries. Has HHS modeled the effect on
    Medicare Part D of providing Medicaid-level drug rebates to certain
    beneficiaries for brand name and generic drugs? Is there any concern
    that interfering with the existing program will undermine the market-
    based structure?

        Answer. Analysis has found substantial differences in rebate
    amounts and prices paid for brand name drugs under the two programs,
    with Medicare receiving significantly smaller rebates, resulting in
    Medicare paying higher prices than Medicaid. Prior to the establishment
    of Medicare Part D, manufacturers paid Medicaid rebates for drugs
    provided to dual eligible individuals, who were subsequently enrolled
    in Part D for their prescription drug coverage. The rebate proposal
    restores the rebates that would have been made on their behalf and
    extends it to other low-income Medicare beneficiaries.

        Manufacturers have sufficient incentives--the desire to have their
    products covered on a preferred tier--to continue to offer price
    concessions to Part D plan sponsors. Competition within a specific drug
    class from other brand or generic options will also play an important
    role in keeping down the cost of drug coverage.

        Question. In early 2014, CMS released a proposed Medicare Part D
    rule that would have significantly undermined the success of the Part D
    program, a program that is relied upon by nearly 40 million seniors and
    individuals with disabilities. After strong opposition from a variety
    of health care stakeholders and from the bipartisan membership of this
    Committee (SFC), Administrator Tavenner sent a letter to Members of
    Congress stating that CMS would not move forward with finalizing the
    most controversial proposals, and the Agency has continued to assure
    Congress that it does not intend to revisit these misguided policies.
    Can I have your word that the Agency still does not intend to revisit
    these or similar Part D proposals in future rulemaking?

        Answer. CMS does not plan to revisit these provisions.
                              competition in fehbp
        Question. The President's Budget includes a proposal that saves a
    minimal amount while increasing premium for most federal workers across
    the United States. Ohio is particularly hard hit under the proposal. Is
    the Administration open to alternatives that will ensure vibrant
    competition in every state without having a negative impact on federal
    workers?

        Answer. For information about the FEHBP proposals included in the
    President's Budget, I would refer you to Director Archuleta who would
    be open to discussing proposals that increase competition and reduce
    costs in the FEHB.
                      medicare advantage and star ratings
        Question. Secretary Burwell, please describe the standard that CMS
    holds MA plans to with respect to stars data integrity, and what are
    the penalties associated with even small errors in data reporting?

        Answer. CMS holds plans responsible for submitting accurate data,
    whether the data are produced or reported directly by the plan or by a
    vendor under contract to that plan. The plan may receive a one-star
    rating for a measure if the plan's data are known to be problematic.
    Examples include cases where CMS finds mishandling of data,
    inappropriate processing, or implementation of incorrect practices by
    the organization/sponsor have resulted in biased or erroneous data.

        Question. Now, please describe the standard that CMS holds itself
    to in terms of data collection to support star ratings, and the
    consequences associated with significant errors in such data
    collection?

        Answer. We review on an annual basis the quality of data available
    for all measures, the variation among organizations and sponsors, and
    measures' accuracy and validity before making a final determination
    about inclusion of measures in the Star Ratings. This review is
    completed in mid-summer in preparation for the final Star Ratings,
    published in early October. CMS cannot publish performance ratings of
    plans that are based on data it cannot trust nor can we base Quality
    Bonus Payments to MA organizations on biased or incorrect ratings.
    Therefore CMS suppresses measures when we determine that the data
    collected by CMS or its contractor(s) are inaccurate.

        Question. Do you mean to tell me that in either instance, it is the
    plan--and ultimately the beneficiary--that ultimately pays the price?
    That seems inequitable to me.

        Answer. Suppressing a measure does not penalize plans, but rather
    it makes sure that we are fairly comparing all plans' performance and
    rewarding them accordingly. This action serves to protect, not harm,
    beneficiaries from using false or biased performance ratings for their
    enrollment choices. To use untrustworthy data would bias the Star
    Ratings and ultimately Quality Bonus Payments.
                     hhs proposal to tie payments to value
        Question. In January of this year, for the first time ever, HHS
    presented explicit goals to implement value-based payments in Medicare.
    According to this announcement, HHS set a goal to have 85% of all
    Medicare fee-for-service payments tied to quality or value by 2016, and
    90% by 2018. While I applaud the Administration for setting goals to
    move our healthcare delivery system toward a system based more on value
    and quality, I am curious how these goals figure into other Medicare
    payment issues. The budget also estimates that repealing the
    sustainable growth rate (SGR) and providing a zero percent update will
    cost $6 billion for 2015 and $131 billion between 2016 and 2025.

        How does HHS's new proposal to implement value-based payments in
    Medicare affect the cost of repealing the SGR over the next ten years?
    Did you consider the cost of the SGR repeal in light of the new payment
    structure?

        Answer. The Budget includes about $400 billion of specified net
    health savings that grow over time, extending the life of the Medicare
    Trust Fund by approximately five years, and building on the Affordable
    Care Act with further incentives to improve quality and control health
    care cost growth. This includes a proposal to accelerate physician
    participation in high-quality and efficient health care delivery
    systems by repealing the Medicare Sustainable Growth Rate formula and
    reforming Medicare physician payments in a manner consistent with the
    reforms included in recent bipartisan, bicameral legislation.

        These savings are estimated against the Budget's adjusted baseline,
    which assumes that large reductions in Medicare physician payment rates
    required by law under a formula, commonly referred to as the
    ``sustainable growth rate'' (SGR), do not take place. This formula has
    called for reductions in physician payment rates since 2002, which the
    Congress has routinely over-ridden for more than a decade. Including
    this adjustment to baseline spending allows the Administration to
    better represent the deficit outlook under current policy and serves as
    a more appropriate benchmark for measuring policy changes.

        The Budget's adjusted baseline does not include assumptions on cost
    changes due to HHS's new delivery system reform goals. However, going
    forward, HHS believes that SGR reform will strengthen our ability to
    reach these goals by increasingly linking payments to providers to
    quality and value and encouraging participation in alternative payment
    models.

                                     ______

                  Questions Submitted by Hon. Robert Menendez
       qualified health plan reimbursement to federally qualified health
                                    centers
        Question. Section 1302(g) of the Affordable Care Act is a provision
    I authored to ensure Federally Qualified Health Centers (FQHCs) receive
    an adequate reimbursement for services provided to enrollees of
    qualified health plans through the Marketplace. This provision of law
    specifically states that QHPs cannot reimburse health centers an amount
    lower than the Medicaid PPS rate. Nowhere does this section of law
    provide for ``mutually agreed upon'' rates that are lower than the
    Medicaid PPS nor distinguish between in-network and out-of-network
    coverage.

        Unfortunately, the regulations implementing Section 1302(g) have
    provided a number of exemptions that contradict the both the letter and
    intent of the law. These exemptions, on which I have had numerous
    conversations with HHS over the years, are resulting in serious a
    reimbursement shortfall for FQHCs, forcing many to use limited grant
    funding designed to cover uncompensated care to instead cover costs
    associated with QHP-enrollees.

        What specific actions are CMS and CCIIO going to take to amend the
    current regulations, which misinterpret and misapply the statutory
    requirements outlined in Sec 1302(g), and ensure that all FQHCs receive
    a minimum reimbursement of the Medicaid PPS in the next plan year,
    irrespective of whether or not the center is in-network or out-of-
    network?

        Answer. As you may be aware in the 2015 letter to issuers in the
    Federally-Facilitated Marketplaces, CMS reiterated the importance of
    issuers complying with federal regulations regarding payment of FQHCs.
    For covered services provided by an FQHC, QHP issuers must pay an
    amount that is not less than the amount of payment that would have been
    paid to the center under relevant Medicaid law for such item or
    service. The regulations do allow the QHP issuer and FQHC to mutually
    agree upon alternative payment rates, as long as such mutually agreed
    upon rates are at least equal to the generally applicable payment rates
    of the issuer. CMS has encouraged issuers and FQHCs, as well as other
    ECPs, to develop mutually beneficial business relationships that
    promote effective care for medically underserved and vulnerable
    populations.
     implementation of the changes to the clinical laboratory fee schedule
           included in the protecting access to medicare act of 2014
        Question. In addition to staving off a 24 percent reduction in
    Medicare physician reimbursements, the Protecting Access to Medicare
    Act (PAMA; Pub. L. 113-93) included substantial changes to the Clinical
    Laboratory Fee Schedule (CLFS). Among these changes are requirements
    that CMS collect private-market testing rates for ``applicable
    laboratories,'' which the statute defines as a laboratory that derives
    a majority of revenue from either the CLFS, the physician fee schedule
    (PFS) or the section 1834A created by PAMA. CMS is further directed to
    use this data to reestablish laboratories' payment rates.

        What level of formal stakeholder involvement, such as in-person
    meetings and notice and comment periods, will CMS utilize when
    developing the regulations for the reporting of private-market payment
    data? What steps will be taken (e.g. utilizing a testing period without
    penalties) to ensure laboratories are able to successfully comply with
    the reporting requirement prior to the regulations taking effect?

        Answer. In July 2014, at its annual public meeting on payment for
    new laboratory tests, CMS added a special open session to receive
    stakeholder input on implementing the PAMA provisions. CMS has also
    listened to concerns from stakeholders during several in-person
    meetings about the law. CMS is currently developing a notice of
    proposed rulemaking to implement the PAMA provisions. As part of the
    rulemaking process, public comments will be invited on CMS' proposed
    implementation approaches, and all comments will be addressed in the
    subsequent final rule. In addition, PAMA required the establishment by
    July 1, 2015, of an Advisory Panel on Clinical Diagnostic Laboratory
    Tests, to advise the Secretary and CMS on laboratory payment issues
    including implementation of the new payment system and rates. On
    October 27, 2014, CMS published a Federal Register Notice announcing
    the establishment of the Panel and requesting nominations for
    individuals to serve on the Panel.

        Question. Will the final definition of ``applicable laboratory''
    include all laboratories, including independent labs, hospital outreach
    and outpatient labs, and labs located in a physician's office? If so,
    what steps will CMS take to account for the various payment systems
    found across these provider entities?

        Answer. CMS is developing policy on each of these questions through
    the notice of proposed rulemaking that is currently in development.
    This proposed regulation will be subject to public comment before we
    develop a final rule to implement PAMA's provisions.

        Question. When calculating the weighted median payment rate and
    implementing changes to payments based on that rate, how will CMS
    account for variations in the clinical laboratory industry, such as
    geographic differences, varying levels of Medicare participation or
    labs that specialize in serving specific types of providers such as
    skilled nursing facilities?

        Answer. CMS will provide more information on these issues through
    the notice of proposed rulemaking currently under development.
                      home health face-to-face requirement
        Question. The Affordable Care Act includes a provision that
    requires a physician or other authorized provider have a face-to-face
    encounter with a beneficiary in order to certify eligibility for home
    health services. This is a well-intentioned provision of the law aimed
    at not only ensuring beneficiaries are accurately being referred to the
    proper care setting, but also to help reduce the potential for waste,
    fraud and abuse within the home health benefit. The implementation of
    the face-to-face requirement, however, has been difficult on both home
    health providers and ordering providers and has included several
    iterations of the requirements necessary to satisfy this provision of
    law, including at least one which was so onerous CMS rescinded it
    entirely.

        Recently, CMS released a draft of a ``template'' designed to be
    used by physicians when documenting the face-to-face encounter. While
    this template is still being developed, there are some ongoing issues
    with the existing face-to-face requirements that needs to be addressed.

        What steps is CMS taking to actively engage with stakeholders--home
    health agencies, physicians and Medicare Administrative Contractors--
    during the development of the recently announced face-to-face template
    as well as to educate them prior to the full implementation of the
    template?

        Answer. CMS plans to conduct outreach and education with
    physicians, Home Health Agencies, hospitals, post-acute facility
    discharge planners, and non-physician practitioners via Open Door Forum
    calls to discuss the draft clinical templates.

        Question. Does CMS plan to provide any transition time, including
    any moratoria on audits based on the face-to-face requirement, prior to
    the template taking full effect?

        Answer. CMS simplified the face-to-face encounter documentation
    requirements by eliminating the specific face-to-face narrative
    requirement, in order to reduce administrative burden, and provide home
    health agencies with additional flexibility. CMS will use documentation
    from the certifying physician's medical records, and/or the hospital or
    post-acute facility's medical records, for beneficiaries as the basis
    for certification of home health eligibility. This simplification was
    finalized after public comment in the Calendar Year 2015 Home Health
    Prospective Payment System final rule (79 FR 66031). The use of the
    template is voluntary and CMS believes the use of clinical templates
    may reduce burden on the physicians and practitioners who order home
    health services.

        Question. There is currently a three-year backlog of home health
    claims resulting from the face-to-face requirement's lack of
    finalization. How does CMS expect to clear out this backlog? Are there
    any plans to provide settlement options to home health agencies and, if
    so, what timeframe will CMS offer the settlements and how does it plan
    to calculate the settlement amounts?

        Answer. The majority of CMS contractors at the first and second
    level of the appeals process are processing appeals timely and do not
    have backlogs. Although there are backlogs at the third and fourth
    levels, we cannot separately calculate the home health appeals backlog
    or confirm that the face-to-face requirement is at issue in all of the
    pending home health appeals without manual reviews of the case files.

        The Department has a three-pronged approach to addressing the
    increasing number of Medicare appeals and the current backlog of claims
    to be adjudicated. First, invest new resources at all levels of appeal
    to increase adjudication capacity and implement new strategies to
    alleviate the current backlog. Second, take administrative actions to
    reduce the number of pending appeals and more efficiently handle new
    cases that are entering the appeals process. Third, pursue legislative
    proposals described in the President's FY 2016 Budget that provide
    additional funding and new authorities to address this urgent need.
                 hospital short stays and the two-midnight rule
        Question. During the hearing, I raised my concerns about the so-
    called two-
    midnight rule and what steps CMS has taken to ensure that the
    compliance with, and enforcement of, the rule is feasible when the
    current statutory enforcement delay expires on March 31, 2015.

        Can you provide specifics on the steps CMS has taken to engage with
    stakeholders--physicians, hospitals, audit contractors, etc.--to
    further develop a hospital inpatient short-stay policy?

        Answer. After finalizing the two-midnight rule effective beginning
    FY 2014, CMS sought comments in the FY 2015 Inpatient Prospective
    Payment System (IPPS) proposed rule on an alternative payment
    methodology under the Medicare Program for short hospital stays. Topics
    for comment included the definition of short or low cost inpatient
    hospital stays and the determination of appropriate payment for short
    inpatient hospital stays. We received a number of comments indicating
    that any short-stay policy should adhere to certain general principles
    and that additional research and collaboration were needed before a
    formal short-stay policy proposal were to be made by CMS. CMS noted in
    the FY 2015 IPPS final rule that there was no consensus among
    commenters. Although there was no consensus, CMS stated it would take
    the comments into account in any potential future rulemaking to address
    the complex question of payment policy for short inpatient hospital
    stays.

        CMS has undertaken extensive efforts to engage with stakeholders
    directly on efforts to comply with the 2-midnight rule, including
    numerous ``Open Door Forums'' and national provider calls.

        In addition, CMS instructed Medicare Administrative Contractors
    (MACs) to conduct ``probe and educate'' reviews for inpatient claims
    with dates of admission between October 1, 2013 and March 31, 2014, to
    assess provider understanding and compliance with the new policy. The
    Protecting Access to Medicare Act of 2014 (Pub. L. 113-93) permitted
    CMS to continue medical review activities under the MAC probe and
    educate process through March 31, 2015 and precluded recovery auditors
    from conducting post-payment patient status reviews for inpatient
    claims through March 31, 2015. All MACs have completed the first round
    of probe reviews and provider education. Throughout the probe and
    educate process to date, CMS has seen positive effects and improved
    provider understanding of the 2-midnight rule. We believe that this
    process has been well-received and beneficial to the provider
    community.

        Recovery auditors may continue to conduct CMS-approved claim
    reviews, unrelated to the appropriateness of the inpatient admission
    (that is, patient status). In response to industry feedback, on
    December 30, 2014, we announced a number of changes to the Recovery
    Audit Program, including changing the recovery auditor ``look-back
    period'' to 6 months from the date of service for patient status
    reviews, in cases where the hospital submits the claim within 3 months
    of the date of service, to address hospital's concerns that they do not
    have the opportunity to rebill for medically necessary Part B inpatient
    services by the time a medical review contractor has denied a Part A
    inpatient claim. Additional changes intended to address stakeholder
    concerns were announced, including: new additional documentation
    request limits based on a provider's compliance with Medicare rules;
    incremental application of limits for providers that are new to
    recovery auditor reviews; requiring diversification of limits across
    all claim types for each facility; requiring recovery auditors to
    complete complex reviews within 30 days, and if recovery auditors fail
    to complete the review in 30 days, not allowing them to receive a
    contingency fee even if they find an error; and requiring recovery
    auditors to wait 30 days, to allow for a discussion period request,
    before sending a claim to the MAC for adjustment.

        Question. What is the timeline CMS has for any new inpatient short-
    stay policy to be fully developed and implemented?

        Answer. CMS solicited comments in the FY2015 IPPS proposed rule on
    an alternative payment methodology under the Medicare program for short
    inpatient hospital stays. As noted in the FY 2015 IPPS final rule,
    although stakeholders were not able to come to a consensus, CMS will
    take the comments into account in any potential future rulemaking to
    address the complex question of payment policy for short inpatient
    hospital stays.

        Question. Will CMS continue to administratively delay enforcement
    of this rule after March 31, 2015, until such time that policy is in
    place?

        Answer. Because of Congressional action, Recovery Auditors are
    currently prohibited from conducting post-payment inpatient hospital
    patient status reviews for claims with dates of admission from October
    1, 2013 through March 31, 2015.

        Question. I am concerned with the ongoing enforcement delay's
    impacts on the ability for Medicare to recover improper payments, but
    clearly the status quo two-midnight rule is failing and leading to a
    significant backlog of audit appeals. The administration offered to
    settle pending claims with hospitals as a way to alleviate this appeal
    backlog. The deadline for hospitals to accept this settlement was
    October, 2014.

        How many of the pending appeals have been settled, or are in the
    process of being settled? What has been the subsequent impact of these
    settlements on the ability of the Administrative Law Judges to process
    the still-pending appeals?

        Answer. The Department has a three-pronged approach to addressing
    the increasing number of Medicare appeals and the current backlog of
    claims to be adjudicated. First, invest new resources at all levels of
    appeal to increase adjudication capacity and implement new strategies
    to alleviate the current backlog. Second, take administrative actions
    to reduce the number of pending appeals and more efficiently handle new
    cases that are entering the appeals process. Third, pursue legislative
    proposals described in the President's FY 2016 Budget that provide
    additional funding and new authorities to address this urgent need.

        The settlement provides an opportunity for the government to reduce
    the pending appeals backlog by resolving a large number of homogeneous
    claims in a short period of time. In addition, it allows hospitals to
    obtain payment now for rendered services, rather than waiting an
    extended period of time, with the additional risk of not prevailing in
    the appeals process. HHS is still in the process of verifying and
    completing the review of the claims submitted for settlement.

        Question. Can you provide an estimate of the total costs associated
    with the two-midnight rule, including negative impact on the recovery
    of payments for issues unrelated to inpatient short-stays, costs
    associated with the overwhelmed appeals process, and the lack of
    potentially legitimate payment recovery resulting from CMS's settlement
    offer?

        Answer. In the FY 2014 IPPS/LTCH PPS final rule, our actuaries
    estimated that our policy would increase IPPS expenditures by
    approximately $220 million. These additional expenditures result from
    an expected net increase in hospital inpatient encounters due to some
    encounters spanning more than 2 midnights moving to the IPPS from the
    OPPS, and some encounters of less than 2 midnights moving from the IPPS
    to the OPPS. CMS actuaries estimated that, on average, the per
    encounter payments for these hospital outpatient encounters would be
    approximately 30 percent of the per encounter payments for the hospital
    inpatient encounters.

        In light of the widespread impact on the IPPS of this policy and
    the systemic nature of the issue, in the FY 2014 IPPS/LTCH PPS final
    rule, we stated our belief that it is appropriate to propose to use our
    exceptions and adjustments authority under section 1886(d)(5)(I)(i) of
    the Act to offset the estimated $220 million in additional IPPS
    expenditures associated with this proposed policy and applied a -0.2
    percent adjustment to the operating IPPS standardized amount, the
    hospital-specific rates, and the Puerto Rico-specific standardized
    amount.

        To more quickly reduce the volume of inpatient status claims
    currently pending in the appeals process, CMS offered an administrative
    agreement to any hospital willing to withdraw their pending appeals in
    exchange for timely partial payment (68 percent of the net allowable
    amount). HHS is still in the process of verifying and completing the
    review of the claims submitted for settlement.
                          medicaid enrollment backlog
        Question. As we discussed during the hearing, New Jersey continues
    to face a serious problem processing Medicaid applications in a timely
    manner. While it is my understanding that, as you stated, significant
    progress has been made processing Medicaid applications submitted
    through the Marketplace website, there is still a problem with
    applications submitted directly to the state or through the County
    Welfare Agencies. This delay is preventing a substantial number of
    Medicaid-eligible New Jerseyans from accessing the care they need and
    deserve.

        What specific steps has CMS taken to help alleviate this enrollment
    backlog, including working with the state and counties to update and
    overhaul their eligibility and enrollment process?

        Answer. CMS and the state have worked together in order to mitigate
    systems challenges. When the state knew they were unable to accept and
    process account transfers in late 2013, they worked with CMS to
    leverage authority to enroll individuals through a weekly file sent by
    CMS to the state, ensuring that individuals applying through the FFM
    would be enrolled in coverage in an expeditious manner. The file
    contains a subset of the application information, and the state
    developed a process to be able to pull the information into its system
    to complete the enrollment for the appropriate individuals.

        New Jersey also has experienced challenges with processing the
    volume of applications that it receives directly from applicants. To
    help alleviate this backlog the state used the additional resources of
    its Health Benefits Coordinator to assist with the processing of
    applications. To help support this effort, it incorporated an open
    source tool developed with HHS support so eligibility determinations
    could be automated. The State is working hand in hand with the counties
    to identify backlogged applications and to shift the processing of
    those applications to the Health Benefits Coordinator. The Health
    Benefits Coordinator is also processing all online applications and
    many of the redeterminations. The Health Benefits Coordinator has hired
    100 additional people to process applications.

        The state also requested and received a waiver to enroll
    individuals in Medicaid based on a preliminary finding of eligibility
    and then to complete the determination within 120 days of initial
    enrollment. Lastly, CMS granted the state a waiver to delay the
    processing of redeterminations in 2014 so that it could focus on the
    processing of new applications.

        Question. Since it is taking a substantially than the maximum
    allowed 45 days for New Jersey to process applications, what is CMS
    doing to ensure that individuals who have applications pending beyond
    that 45-day deadline are informed of their application's status?

        Answer. CMS is working closely with the state to improve their
    application processing timelines and have granted the state
    flexibilities through the use of waivers to ensure timely processing of
    applications.

        Question. Does CMS ensure that these individuals receive, at a
    minimum, provisional benefits until their application is processed and
    they are fully enrolled?

        Answer. Yes, CMS granted the state a waiver to allow them to enroll
    individuals in Medicaid based on a preliminary finding of eligibility
    and then to complete the eligibility determination within 120 days of
    initial enrollment. This allows that individuals who are found eligible
    based on a preliminary determination can access care while they await a
    final eligibility determination.

        Question. In order for an individual to be eligible to receive an
    advanced premium tax credit (APTC) for coverage through the Marketplace
    they must not be eligible for Medicaid coverage. Because of the
    application backlog there are many individuals are unable to access an
    APTC because they haven't been formally denied access to Medicaid.

        What steps is CMS taking with states to ensure that individuals who
    are not eligible for Medicaid are able to verify their Medicaid
    ineligibility and access an APTC for Marketplace coverage?

        Answer. The state must notify the individual of their ineligibility
    for Medicaid or CHIP through the standard notice process and transfer
    their application to the Marketplace as appropriate. Given that New
    Jersey lacks the functionality to transfer applications back to the
    Federally Facilitated Marketplace, information on how to contact the
    Marketplace to enroll in coverage is included in their denial notices.
    However, CMS is working closely with the State to improve their
    enrollment processes and develop this functionality.

                                     ______

                  Questions Submitted by Hon. Thomas R. Carper
            expanding pace eligibility and allowing pace innovation
        Question. As Governor, I worked on the development of the Program
    for All-inclusive Care for the Elderly (PACE) program in Delaware. It
    is a very high-value, cost-effective model that provides fully-
    integrated care for very frail seniors. PACE provides a comprehensive
    package of coordinated care and services to individuals who are 55 or
    older--and does so in a capitated payment arrangement.

        I was pleased to see the Administration's proposal to expand PACE
    to serve younger individuals with disabilities and other high-risk
    populations. The PACE model for providing care and services is a good
    fit for this younger, qualified population.

        I have two questions regarding PACE:

        First, with regard to the proposed pilot program, it is my
    understanding that the Centers of Medicare and Medicaid Innovation is
    already considering a demonstration project to do just that.

        Answer. As you noted, the President's Fiscal Year 2016 Budget
    includes a legislative proposal to create a pilot demonstration to test
    whether the PACE program can effectively serve a younger population
    without increasing cost. In developing this proposal, we have
    considered whether there are non-statutory avenues for conducting a
    similar demonstration, and believe that legislative authorization is
    the best option for moving forward.

        Question. Can you tell me more about the demonstration; what the
    agency is going to move this initiative forward; and when we might
    expect an RFP?

        Answer. As noted above, we continue to believe that statutory
    authorization of a demonstration is the best option for moving forward
    at this time.

        Question. Secondly, the PACE program is a value-based model that
    should be able to innovate and expand just as all providers of care and
    services are being asked to do as part of our health care system's
    shift to payment for quality. However, the program needs long-awaited
    revised regulations to allow this increased efficiency and innovation
    to occur. In its fall 2012 Regulatory Agenda, CMS published that a
    Notice of Proposed Rulemaking to revise the PACE regulation would be
    issued in July 2013. Since then, this deadline has been extended to
    December 2013, again to August 2014, and most recently, to Spring 2015.
    This delay creates numerous burdens for the PACE community and stifles
    their ability to innovate and grow.

        What assurances can you offer that CMS will meet its own deadlines
    and issue a revised PACE regulation this spring?

        Answer. CMS is currently performing a comprehensive review of the
    federal regulations governing PACE to identify potential regulatory
    changes to reflect the evolving needs and opportunities of the program.
    As CMS continues to contemplate potential regulatory changes, they have
    implemented a number of improvements to PACE, including streamlining
    the application process, updating the notification requirements for the
    use of alternative care settings, and establishing a new PACE council
    to bring together different components of the agency to focus on PACE
    issues.
                     medicare coverage for treating obesity
        Question. This summer, it will be two years since the American
    Medical Association classified obesity as a disease and called on
    patients, health care providers, insurers, and policymakers to take
    this epidemic seriously. More than two-thirds of all American adults
    are affected by being overweight or obese, and excess weight increases
    the risk of diabetes, heart disease, stroke and other illnesses.
    Medical costs are directly proportional to body mass index, which is
    the leading indicator of obesity.

        In light of this epidemic, we need an ``all hands on deck''
    approach to treating obesity, not the piecemeal approach we currently
    pursue. The guiding principle for us should be to provide physicians
    with the means to make every treatment regimen available to those
    individuals fighting obesity. This is why we need to make two important
    changes to Medicare: first we need to expand access to weight
    management counseling for those who with overweight or obesity. And
    second, the coverage ban on FDA-approved obesity drugs under the
    Medicare prescription drug program must be lifted.

        I know you and the Administration share Congress's concern about
    the climbing rates of obesity in our country and the concurrent cost
    implications. Please report back to the Committee any data, analyses
    and/or information the Chief Actuary or others at HHS might have that
    sheds light on how those who are obese or overweight drive costs to
    both the Medicare and Medicaid programs.

        Answer. The Department shares your concern about obesity.
    Currently, the Office of the Assistant Secretary for Health convenes an
    HHS inter-agency workgroup on Healthy Weight, Nutrition and Physical
    Activity (HWNPA). This group meets monthly and representatives from
    across HHS share information on their agencies' HWNPA activities, which
    range from school nutrition, childhood obesity, and healthy weight
    measures to walking and walkability. CMS is part of this workgroup.

        Currently, Medicare covers several types of bariatric surgery for
    beneficiaries with a Body Mass Index (BMI) of 35 or greater and at
    least one co-morbidity related to obesity who have previously been
    unsuccessful with medical treatment for obesity. Medicare also covers
    intensive behavioral counseling for obesity for individuals with a BMI
    of 30 or greater.

        There have not been many studies to date examining how increasing
    rates of obesity have affected Medicare or Medicaid costs. A paper
    published in Health Affairs in 2009 by Finkelstein and colleagues
    estimated that, in 2006, $147 billion in national health expenditures
    was attributable to obesity, including $34.3 billion for Medicare and
    $27.6 billion for Medicaid. Another review paper by Tsai and colleagues
    in 2010 put total obesity-related spending in 2008 at $114 billion.
          reducing improper prescriptions of psychotropic medications
                               to foster children
        Question. In your testimony, you mentioned a ten-year program that
    would help children in foster care access the mental health services
    they need. As you are aware, children in foster care are often
    prescribed mind-altering medications to treat their behaviors. Experts
    say that these medications can have harmful effects in the long term,
    and that they may be less effective than therapies or other treatments
    to address emotional trauma. Additionally, these prescriptions are very
    costly, sometimes costing more than $532 million per year in Medicaid
    expenses for prescriptions to foster children alone.

        I was very pleased to see that the Administration is making access
    to effective mental health treatment for foster children a priority.
    The demonstration program that this proposal would fund would provide
    states with important tools to improve mental and behavioral health
    care for children in foster care, through increased use of effective
    screening and assessment, and evidence-based treatment of trauma, along
    with emotional and behavioral disorders. That program would be jointly
    administered through the Administration for Children and Families (ACF)
    and the Centers for Medicare & Medicaid Services (CMS), two agencies
    within the Department of Health and Human Services.

        Given the strengths of the proposed demonstration, I would like to
    know:

        First, are there any activities outlined in the proposal, including
    providing incentive grants to states that CMS and ACF cannot undertake
    without Congressional action, such as legislation to allow new
    authorities?

        Answer. Neither ACF nor CMS can pay incentive payments as
    envisioned in the proposal without both authorization and
    appropriation.

        If authorized without sufficient funding, ACF would have the
    authority to provide for the child welfare workforce, training, and
    evaluation pieces of this proposal under the authority of existing
    grants under title IV-B-1 and IV-B-2 of the Social Security Act, but
    would only be able to fund these efforts by reducing expenditures for
    important existing activities including the National Survey of Child
    and Adolescent Well-Being (NSCAW), national training and technical
    assistance for improving state and tribal child welfare systems, and
    various grant opportunities for child welfare professionals and
    students. However, as these are appropriated funds, this would involve
    significant trade-offs, with less funding available for existing
    activities including the National Survey of Child and Adolescent Well-
    Being (NSCAW), national training and technical assistance for improving
    state and tribal child welfare systems, and various grant opportunities
    for child welfare professionals and students.

        This proposal will help encourage States to implement evidence-
    based psychosocial interventions targeting children and youth in the
    foster care system, as an alternative to the current over-prescription
    of psychotropic medications in this population. However, we are working
    with States to identify ways to strengthen their efforts to address
    this issue today. In terms of monitoring, CMS has encouraged states to
    use their Medicaid Drug Utilization Review (DUR) programs to intensify
    the oversight of prescribing psychotropic medications to children.
    States are employing a variety of techniques in this area. Some states
    have a system by which a prescription for a psychotropic medication in
    a child triggers a preauthorization which requires a manual review of
    the prescription request by a panel of experts of a multi-disciplinary
    team, a psychiatrist or by the Medicaid agency's pharmacy staff. Other
    states require that, for children under certain ages (e.g. under age
    five, under age six, under age seven, etc.), the prescriber is required
    to complete a form providing prescriber information, patient diagnosis,
    target symptoms being treated, other drugs prescribed and laboratory
    tests.

        Question. Secondly, which activities, if any, require legislation?

        Answer. The incentive payments would require both authorization and
    appropriation for ACF and CMS. Using existing grant authority under the
    Social Security Act as described above would require appropriations to
    fund the appropriate portions of the proposal.

                                     ______

                    Questions Submitted by Hon. John Cornyn
                                king v. burwell
        Question. Has the Department of Health and Human Services (HHS)
    taken steps to inform all current federal exchange enrollees and all
    visitors to HealthCare.gov about the King suit and how a ruling against
    the Administration could affect them?

        Answer. It has not.

        Question. What are your agency's contingency plans to ensure that
    people inappropriately subjected to the individual and employer
    mandates and associated tax penalties are not punished further?

        Answer. We are confident that we will prevail because the text,
    structure, and history of the Affordable Care Act make clear that tax
    credits are available to people in all states.

        Question. Do you plan to ask Congress for a legislative solution?

        Answer. We are confident that we will prevail because the text,
    structure, and history of the Affordable Care Act make clear that tax
    credits are available to people in all states.

        Question. Do you believe you have the authority to make an
    administrative fix?

        Answer: We know of no administrative actions that would undo the
    massive damage to our health care system that would be caused by an
    adverse decision and, therefore, we have no plans that would undo the
    massive damage. If the Supreme Court says we have no authority to
    provide tax credits for citizens in States with federally-facilitated
    Exchanges, we cannot provide them in such states.

                                     ______

                   Questions Submitted by Hon. Sherrod Brown
         national institute for occupational safety and health (niosh)
        Question. As you already know, one of my priorities for FY2016 is
    to find and prioritize funding necessary to identify and acquire a new
    NIOSH facility in Cincinnati, Ohio.

        NIOSH's mission is to ``prevent work-related injury, illness, and
    death.'' In Cincinnati, NIOSH research and support activities are
    located on two separate campuses, approximately eight miles apart. Both
    campuses are comprised of aging 1950s-era facilities that are in
    varying states of disrepair, and are increasingly deficient in both
    space configuration and building systems. Because of this, scientific
    collaboration is limited and NIOSH's cutting-edge scientific research
    is inhibited. Upgrading these facilities is of paramount importance,
    and should be a funding priority.

        Funding for a new facility for NIOSH was not included in the FY2016
    proposed budget. Will there be funds left over from FY2015 that NIOSH
    could use to begin this project? As you work with the Office of
    Management and Budget (OMB) on this issue moving forward, do you have a
    start date or location in mind?

        Answer. HHS is supportive of the critical work being conducted at
    NIOSH's Cincinnati campuses. The Department's FY 2015 Nonrecurring
    Expenses Fund allocation includes $110 million to fully fund the
    Cincinnati consolidation project. CDC has already engaged the General
    Services Administration to secure acquisition services to support the
    site solicitation process. Public responses to the site solicitation
    will identify potential facilities for CDC's consideration;
    solicitation responses are currently projected for FY 2016. The
    solicitation's delineated search area will include the greater
    Cincinnati area. I would be happy to keep you informed about the
    Department's continued work on selection of a site and relocation/
    consolidation.
                             antibiotic resistance
        Question. Last year, the CDC came out with a report conservatively
    estimating that more than two million people are sickened each year
    with antibiotic-resistant infections--resulting in at least 23,000
    deaths a year. I am pleased that the Administration has proposed an
    increase in funding to strengthen the federal response to antibiotic
    resistance (AR) and help combat this public health crisis.

        I commend the Administration for investing more in AR surveillance,
    research, and stewardship, and I am eager to know more about the
    Administration's plan to combat AR going forward. Next week, the
    President's Task Force for Combating Antibiotic-Resistant Bacteria is
    scheduled to submit its 5-year National Action Plan to the President
    outlining specific actions to be taken to implement a National Strategy
    for Combating Antibiotic-Resistant Bacteria. What will be the Agency's
    role in implementing this Strategy?

        Answer. The National Action Plan for Combating Antibiotic Resistant
    Bacteria will outline steps for implementing the National Strategy for
    Combating Antibiotic-Resistant Bacteria and addressing the policy
    recommendations of the President's Council of Advisors on Science and
    Technology (PCAST) report on Combating Antibiotic Resistance. The
    National Action Plan will outline federal activities over the next five
    years to enhance our domestic and international capacity to prevent and
    contain outbreaks of antibiotic-resistant infections, maintain the
    efficacy of current and new antibiotics, and develop and deploy next-
    generation diagnostics, antibiotics, vaccines, and other therapeutics.
    These activities are consistent with investments proposed under the FY
    2016 President's Budget request, which nearly doubles the amount of
    Federal funding for combating and preventing antibiotic resistance to
    more than $1.2 billion.

        The FY 2016 budget request would support implementation of
    activities in CDC's FY 2016 AR Solutions Initiative, an increase of
    $264 million, which will build a more robust network to improve
    detection for all of the antibiotic resistance (AR) threats outlined in
    CDC's AR Threat Report and protect patients and communities from all of
    these threats--saving lives, and reducing costs. CDC plans to award
    more than 85 percent of AR Solutions Initiative funding to states,
    communities, healthcare providers, universities, and other groups to
    implement these activities.

        CDC's FY 2016 budget request supports comprehensive tracking of AR
    infections, rapid detection, and faster outbreak response by leveraging
    existing detection programs and capabilities to:

        Establish state AR prevention programs dedicated to improving
            outbreak detection across healthcare facilities and in
            communities, improve antibiotic prescribing, and prevent AR
            infections and Clostridium difficile.

        Establish a ``Detect'' network of up to seven regional
            laboratories that will serve as a national resource to
            characterize emerging resistance and rapidly identify outbreaks
            of AR threats using state-of-the-art methods to characterize
            known resistance patterns in real time and identify clusters of
            resistant organisms more quickly. It will also track the spread
            of AR organisms in communities and through food to people. This
            will dramatically improve our understanding of which AR threats
            are most common in the United States, and which will be
            critical for new drug and diagnostic development. This network
            will also provide rapid analysis of local, state, and national-
            level resistance trends, and rapid dissemination of findings.

        As AR threats change, CDC will tailor the testing protocols of the
            labs to adapt to new and emerging threats. To ensure that key
            stakeholders are aware of current AR threats, CDC will
            establish an AR isolate library that will be accessible to
            pharmaceutical companies and researchers testing new antibiotic
            agents, and biotech and diagnostic companies designing the next
            generation of clinical tests.

        Expand the use of National Healthcare Safety Network's Antibiotic
            Use and Antibiotic Resistance reporting options to track
            antibiotic use and AR infections in over 90 percent of eligible
            hospitals. These data allow hospitals to target prevention
            efforts and assess the quality of antibiotic prescribing to
            improve how antibiotics are used in U.S. healthcare facilities.

        Double from 10 to 20 the number of CDC's Emerging Infections
            Program (EIP) sites to expand population-based AR assessments
            and faster assessments of risk to specific populations in the
            community and in healthcare.

        Question. Last year, I re-introduced the Strategies to Address
    Antimicrobial Resistance (STAAR) Act, which would strengthen the
    federal response to AR by reauthorizing the Interagency Task Force on
    Antimicrobial Resistance (ITFAR) and allowing the CDC to partner with
    state health departments to implement prevention collaboratives, and to
    expand public health partnerships through the CDC's established
    Prevention Epi-Centers work. I plan to reintroduce similar legislation
    later this year to compliment the National Action Plan and National
    Strategy in combating AR.

        How could an updated version of the STAAR Act help compliment the
    National Action Plan and implement a National Strategy? How could the
    budget's increase in funding to combat AR bolster the STAAR Act's
    potential to coordinate a federal response to this public health
    crisis?

        Answer. To support the National Strategy on Combating Antibiotic-
    Resistant Bacteria, CDC is working to address the threat of antibiotic
    resistance (AR) in four areas. These four areas touch on similar
    activities outlined in the STAAR Act:

        1. Slowing the development of resistant bacteria to prevent the
    spread of resistant infections.

        Supports regional prevention collaboratives between the CDC and
            state health departments to interrupt and prevent the
            transmission of significant AR pathogens being transferred
            across health care settings in a geographic region.

        Intensifies and expands academic public health partnerships
            through the work of CDC's Prevention Epicenters to support the
            evaluation of interventions to prevent or limit AR.

        Improves the use of antibiotics by supporting CDC's work with
            standard setting organizations such as the National Quality
            Forum to benchmark appropriate antibiotic use and to assess the
            impact of antimicrobial stewardship programs.

        2. Strengthening the national one-health surveillance efforts to
    combat resistance.

        Intensifies and expands CDC's current efforts to collect AR data
            to monitor theemergence and changes in patterns of AR
            pathogens.

        3. Advancing the development and use of rapid and innovative
    diagnostic tests for identification and characterization of resistant
    bacteria.

        To ensure that key stakeholders are aware of current AR threats,
            CDC will establish an AR isolate library that will be
            accessible to pharmaceutical companies and researchers testing
            new antibiotic agents, and biotech and diagnostic companies
            designing the next generation of clinical tests.

        4. Improving international collaboration and capacities for
    antibiotic resistance prevention, surveillance, control and antibiotic
    research and development.

        Under the national strategy, CDC will develop a communications
            network to improve the linkage of domestic and international AR
            labs to track urgent and emergent AR pathogens across borders.
                         medication therapy management
        Question. CMS recently released a rule related to the Part D
    program, which finalized several of the remaining provisions from the
    proposed Part D rule from last year. One of the provision from last
    year's proposed rule that was not finalized looked to increase the
    number of beneficiaries eligible for medication therapy management
    services. MTM has been shown to improve patient health while at the
    same time reducing costs, so increasing access to these services makes
    sense.

        Can you comment on the importance of the Part D MTM program as well
    as on HHS's plans for making meaningful changes to the Part D MTM
    program? Do you agree that HHS should finalize this part of the rule to
    increase the number of beneficiaries eligible for MTM services?

        Answer. Part D MTM programs are important to improve quality,
    reduce adverse events, and improve therapeutic outcomes for enrollees.
    Despite the comments to the proposed rule from those who supported the
    proposed changes in eligibility criteria, we also considered the
    comments that the timeline for implementing the proposed changes was
    too aggressive and could negatively affect existing MTM programs. While
    our goal was to increase eligibility and access to MTM, we did not want
    to do it at the expense of sacrificing any quality with existing
    programs. Therefore, we did not finalize our proposed changes to the
    eligibility criteria.

        CMS is conducting several evaluations of MTM programs: (1)
    Evaluation to consider revisions of MTM eligibility criteria and to
    identify effective outreach strategies; (2) MTM Improvements project to
    improve the standardized format for the CMR written summary; and (3) a
    Center for Medicare and Medicaid Innovation model in development to
    test regulatory flexibilities and payment incentives for more robust
    and effective MTM programs. Based on the outcomes of these evaluations,
    CMS could engage in new notice and comment rulemaking.
                             esrd five star program
        Question. I am concerned about CMS's methodology behind the new End
    Stage Renal Disease (ESRD) Five Star program. As I understand it, the
    current design of the program distorts actual dialysis facility
    performance by forcing facility scores onto a hard bell curve. This
    method exaggerates small differences in performance and skews hard data
    around a center peak. As a result, states like Ohio have seen over 47%
    of our dialysis facilities become 1 and 2 star facilities. It is
    important that this program be effective and accurate.

        These Star rankings fail to reflect the actual performance of
    dialysis facilities and provide oftentimes inaccurate and misleading
    information to patients. CMS even admits in their responses to
    questions about the new star rating system that ``1 or 2 star
    facilities are not necessarily the facilities that provide poor
    service.'' Adding to the confusion, the new star rankings and the
    Quality Improvement Program (QIP), mandated by Congress, are
    inconsistent and, from a consumer's perspective, can be in direct
    conflict. For example, 47.37% of Ohio's facilities are labeled as 1
    Star or 2 Star facilities, yet 1.05% received a penalty of -2% or -1.5%
    (the bottom two of five penalty categories).

        5. What process has CMS has used in developing the Dialysis Five
    Star program?

        Answer. Information obtained from CMS consumer testing focus groups
    revealed that the use of star ratings is more easily interpreted by
    dialysis patients and their families than the information previously
    available on Dialysis Facility Compare (DFC). In developing the Five
    Star program, CMS first reviewed existing star-rating methodologies,
    such as the Nursing Home star-rating system. CMS sought to be
    consistent with that methodology, but to also learn from its
    implementation. CMS also considered the implications of having a more
    limited set of available measures derived from different data sources
    than could be found for nursing homes.

        The methodology depended on quality measures already publicly
    reported on DFC, in some cases for more than a decade, with the
    expectation that additional data and measures could be considered in
    future iterations. CMS assessed existing measures for appropriateness
    and removed those on which all providers performed highly since these
    were not useful in distinguishing differences in care. This left the
    current set of nine quality measures.

        CMS developed the scoring methodology through a process that
    considered alternative approaches, many of which have been suggested by
    the dialysis provider community. Their specific methodological design
    and supporting analyses were documented in a technical report and a
    series of FAQs that are available to the public for review. CMS
    presented the star rating methodology in July 2014 and shortly
    thereafter provided preview reports to dialysis facilities for their
    review and comment. They received extensive comments from the community
    over the next several months and delayed the posting of the ratings
    from October 2014 until January 2015, in part to consider concerns and
    to respond in writing and through a series of public and private
    meetings with stakeholders. After considering those concerns, CMS
    determined that the star ratings methodology was appropriate to the
    task of providing patients and other consumers with reliable and valid
    summary data on the quality of care received at dialysis facilities.
    CMS implemented the star ratings in January 2015.

        CMS took steps to address concerns regarding the interpretation of
    the data after speaking with patient advocates and conducted additional
    testing to ensure messaging of the star ratings was appropriate for
    patient needs. CMS also modified descriptive language on the DFC
    website, in direct response to suggestions made by patients and patient
    advocates.

        Moving forward, in an effort to continuously improve, CMS decided
    to use a Star Rating Technical Expert Panel (TEP) to more formally
    incorporate public input into the methodology, and to drive the
    prioritization of additional measures and data with a focus on patient
    and consumer needs. This culminated in the announcement of a TEP in
    early October 2014, and the distribution of a call for nominations of
    TEP members from the public in early 2015. CMS's contractor is
    preparing to convene the TEP in a series of meetings that are open to
    the public.

        Question. Unlike the development of the nursing home five star
    program, where a technical expert panel (TEP) was convened to help
    design the system, CMS convened no TEP and relied on no stakeholder
    input to design the Dialysis Five Star program. In addition, although
    CMS encouraged input when announcing its Dialysis Five Star program,
    CMS said that it would not consider any input until the program was
    updated. What was the rationale behind requesting input, but refusing
    to consider it?

        Answer. While CMS did not initially convene a TEP specific to the
    star ratings for Dialysis Facility Compare, feedback obtained from
    stakeholders and from the development of consumer websites in general
    was considered in the design. CMS also recognized early in the process
    that Star Ratings for DFC would be an iterative process that requires
    periodic updating and maintenance. This would be necessary when new
    measures became available, when old measures appeared to top out, or
    methodological weaknesses in the scoring approach were identified. It
    was not clear when CMS began developing the star ratings whether a TEP
    would be necessary or appropriate, given the limited availability of
    measures for dialysis facilities. Prior experience with star ratings
    and the limited information available for inclusion originally
    suggested that an initial run of the star ratings could be developed
    internally and then improved upon with public feedback.

        The Star Ratings were announced in July of 2014 accompanied by the
    request for feedback from all stakeholders. CMS delayed posting of the
    star ratings in order to give more time for stakeholders to meet with
    CMS officials and to provide detailed input. CMS made it clear at that
    time that it would consider all feedback prior to moving forward. In
    fact, information from the community was considered, alternative models
    where explored and after consideration was given to all factors, it was
    determined that the model selected was the most appropriate for the
    current time. Recognizing that the rating system is evolutionary and
    the need to continually include more data, CMS decided that a TEP would
    be appropriate as we consider future iterations of the program. As
    CMS's contractor has prepared to convene the Star Ratings TEP, they
    continue to speak regularly with stakeholders, including patients,
    patient advocates, professional associations, and dialysis providers.
    The contractor will be presenting much of the feedback we've received
    to the TEP to inform their deliberations on scoring methodology,
    measure prioritization, and communications, as well as other issues
    that may arise.

        Question. Just recently, CMS announced it is convening a dialysis
    TEP. However, it does not seem that CMS has provided stakeholders or
    patients with reasonable advanced notice or adequate time to submit
    materials to the TEP for review and consideration as CMS seeks to
    revise the Five Star program for 2016. It is critical that we give
    patients, nephrologists, nurses and others a voice in this process and
    even more critical that we consider recommendations that will allow the
    Five Star program to accurately measure performance. In the interest of
    transparency, what is CMS doing to ensure the engagement of outside
    experts and input from patients in the effort to revise the ESRD Five
    Star program for 2016? What level of transparency can we expect moving
    forward?

        Answer. We agree that reviewing and considering the recommendations
    of stakeholders is critically important. CMS has frequent listening
    sessions with nephrologists, nurses, patients and others that are
    critical to the provision of ESRD care. The TEP provides a valuable
    opportunity to further incorporate external input from key stakeholders
    including statistical methodologists, clinical nephrologists,
    nephrology nurses, and a large number of dialysis patients.

        CMS announced in October 2014 that a contractor would convene the
    TEP, representing 2-3 additional months of notice beyond what is
    typical when we announce the formation of a TEP, so we believe that we
    have given stakeholders ample time to provide us with their
    recommendations and detailed methodologies. CMS' contractor is taking
    care to present alternative methodologies to the TEP alongside the
    existing Star Rating methodology, accompanied by extensive analyses
    assessing stakeholder concerns. These materials are not privately held
    and may be accessed by the community. Many of these are already
    available via our FAQ documents.

        The TEP will meet in-person in the spring of 2015 to consider the
    methodological issues raised by the community, and to make suggestions
    about future modifications to the scoring methodology, quality measure
    set, and other related issues.
                          medicare part d plan finder
        Question. Over the last several weeks, it has come to my attention
    that hundreds of thousands of Medicare beneficiaries who chose Part D
    plans for 2015 have had trouble accessing their medications because of
    a mistake that was made as one particular insurance company created its
    pharmacy networks. As I understand the situation, incorrect information
    was posted on Medicare plan finder throughout open enrollment as well
    as provided by insurance company regarding where seniors could have
    their prescriptions filled. As a result, many pharmacies were listed on
    Medicare's plan finder and on the company's website as being ``in
    network'' when they were in fact out of network, creating chaos,
    consternation, and very real medication access/distribution issues for
    both pharmacies and their patients.

        CMS acknowledged this issue in December, however no fixes were
    implemented until well into January. Why didn't the agency address
    before the new plan year started? What are you doing now to fix this
    issue and provide recourse for current beneficiaries? What measures
    will you put into place to ensure this does not happen to seniors
    moving forward?

        Answer. CMS was alerted in late November 2014 to possible
    inaccuracies in the referenced Part D sponsor's network pharmacy
    information when they received a complaint from a pharmacy stating that
    its status as a network participant for the sponsor was reflected
    incorrectly on the Medicare Plan Finder (MPF). During their
    investigation of the matter, the plan sponsor acknowledged that it had
    provided inaccurate pharmacy network information to CMS for the MPF and
    in its own beneficiary communication materials. CMS acted promptly to
    address this issue by removing the sponsor's Part D plan information
    from display on the MPF in early December.

        CMS's investigation also revealed that the sponsor's pharmacy
    contracting process had left many pharmacies confused about their
    participation in the sponsor's networks. CMS directed the sponsor to
    issue notices to all its contracted pharmacies explicitly identifying
    the plans for which they were network participants. In early January
    2015, they also advised the sponsor to provide clear and binding offers
    of standard contracting terms and conditions for participation in all
    its plan types to pharmacies requesting them for CY 2015.

        After the start of the 2015 benefit year, CMS began receiving
    numerous complaints through 1-800-MEDICARE from beneficiaries upset
    that their regular pharmacy was no longer participating in the Part D
    plan they had elected. CMS took two significant steps to address these
    complaints. First, beneficiaries were alerted that CMS would afford
    them a special election period during which they could pick a new plan
    for 2015 that included their pharmacy of choice in its network. Second,
    CMS required the sponsor to agree to pay in-network claims at all of
    the pharmacies with which it had contracted during 2014, until the
    sponsor conducted additional beneficiary and pharmacy outreach about
    the network changes and contracts with additional pharmacies that will
    accept standard terms and conditions.

        CMS will continue to monitor the sponsor's performance closely to
    protect beneficiaries' access to their Part D benefits. CMS is also
    evaluating additional steps they may be authorized to take to reduce
    the likelihood of future inaccuracies in plan network information
    provided to beneficiaries. CMS has issued multiple compliance actions
    to the sponsor related to the erroneous information and the overall
    beneficiary disruption caused by these changes. Also, they have and
    will continue to advise pharmacy trade associations that they should
    pay close attention to the process for contracting with Part D sponsors
    and how their Part D participation information is represented by
    sponsors and on the Medicare Plan Finder.

                                     ______

                    Questions Submitted by Hon. Pat Roberts
        Question. Last year the Administration's Flexible Spending Account
    (FSA) regulations allowed employees to rollover up to $500 to the next
    plan year. Does the Administration support additional measures to make
    FSAs and HSAs more useful to the middle class, such as restoring over-
    the-counter (OTC) medicine eligibility without a prescription?

        Answer. Regulations concerning the administration of Flexible
    Spending Accounts (FSAs) are within the purview of the Department of
    the Treasury, specifically, the Internal Revenue Service (IRS). This
    Administration is open to improving the Affordable Care Act as long as
    proposed changes enhance health care affordability, access, and quality
    and help the economy.

        Question. Under the current Self-Referral Disclosure Protocol for
    Stark law violations, hospitals are awaiting decisions from CMS for
    what seems to be an excessive period of time for technical
    noncompliance (administrative mistakes, missing signatures, etc). How
    many self-referral disclosures are currently pending a settlement
    decision by CMS, and from how many hospitals? With a four year timeline
    for CMS to reach a settlement, how many of these cases are nearing
    expiration without a resolution?

        Answer. There are 400 disclosures pending settlement. Based on our
    experience to date, approximately 90 percent of disclosures involve
    hospitals. The four year look back period refers to the period of time
    during which a provider making a disclosure may not have been in
    compliance with the physician-self referral law, but is not a time
    limit for when a settlement must be reached. Once a provider of
    services or supplier electronically submits a disclosure under the
    Self-Referral Disclosure Protocol (SRDP) (and receives email
    confirmation from CMS that the disclosure has been received), the
    statutory obligation to return any potential overpayment within 60 days
    will be suspended until a settlement agreement is entered, the provider
    of services or supplier withdraws from the SRDP, or CMS removes the
    provider of services or supplier from the SRDP.

        Question. Last year, CMS presented a global settlements offer and
    over 2,000 hospitals entered this process. How many acute hospital and
    critical access hospital claim denials were eligible for the settlement
    when it was extended, and how many of those have been settled thus far?
    For other hospitals not currently eligible for settlement, such as IRFs
    and LTCHs, how many denials for these hospitals are in the system?

        Answer. The Department has a three-pronged approach to addressing
    the increasing number of Medicare appeals and the current backlog of
    claims to be adjudicated. First, invest new resources at all levels of
    appeal to increase adjudication capacity and implement new strategies
    to alleviate the current backlog. Second, take administrative actions
    to reduce the number of pending appeals and more efficiently handle new
    cases that are entering the appeals process. Third, pursue legislative
    proposals described in the President's FY 2016 Budget that provide
    additional funding and new authorities to address this urgent need.

        The settlement provides an opportunity for the government to reduce
    the pending appeals backlog by resolving a large number of homogeneous
    claims in a short period of time. In addition, it allows hospitals to
    obtain payment now for rendered services, rather than waiting an
    extended period of time, with the additional risk of not prevailing in
    the appeals process. HHS is still in the process of verifying and
    completing the review of the claims submitted for settlement.

        Question. Since this settlement process was only open to Acute Care
    Hospitals and Critical Access Hospitals, will the same process be
    extended to all hospitals and other Medicare providers and suppliers?
    And if so, when?

        Answer. HHS has no plans to extend the settlements at this time,
    but we will continue to pursue options to responsibly resolve the
    backlog of appeals.

        The Department has a three-pronged approach to addressing the
    increasing number of Medicare appeals and the current backlog of claims
    to be adjudicated. First, invest new resources at all levels of appeal
    to increase adjudication capacity and implement new strategies to
    alleviate the current backlog. Second, take administrative actions to
    reduce the number of pending appeals and more efficiently handle new
    cases that are entering the appeals process. Third, pursue legislative
    proposals described in the President's FY 2016 Budget that provide
    additional funding and new authorities to address this urgent need.

        Question. What oversight is being done on the Recovery Audit
    Program to ensure the RACs aren't adding to the backlog problem with
    inaccurate payment denials?

        Answer. CMS strives to manage programs in an efficient manner that
    balances the need to limit burden on Medicare providers with our
    responsibility to protect Trust Fund dollars. CMS has carefully
    evaluated the Recovery Audit program, and announced a number of changes
    to it in response to industry feedback.\54\ CMS is confident that these
    changes will result in a more effective and efficient program through
    enhanced oversight, reduced provider burden, and more program
    transparency. These changes will be effective with each new contract
    award beginning with the Durable Medical Equipment, Home Health and
    Hospice Recovery Audit contract awarded on December 30, 2014.\55\ The
    President's FY 2016 Budget also includes a proposal to permit CMS to
    retain a portion of recovered funds to implement corrective actions
    identified through the Recovery Audit program.
    ---------------------------------------------------------------------------
        \54\ See http://www.cms.gov/Research-Statistics-Data-and-Systems/
    Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-
    Program/Downloads/RAC-Program-Improvements.pdf.
        \55\ Due to a post-award protest filed at the Government
    Accountability Office (GAO), CMS has delayed the commencement of work
    under the national DMEPOS/HH&H, Region 5, Recovery Audit contract.

        CMS has many safeguards in place to ensure Recovery Auditors are
    not financially incentivized to inappropriately deny claims. For one,
    if the claim is overturned at any level of appeal, the Recovery Auditor
    does not receive a contingency fee payment. When Recovery Auditor
    determinations are in fact appealed, many of these decisions are
    upheld. Overall, only 9.3 percent of all Recovery Auditor
    determinations were challenged and later overturned on appeal in FY
    2013. CMS also contracts with an independent entity that reviews a
    random sample of claims from each Recovery Auditor to establish an
    accuracy rate, which is a measure of the accuracy of each Recovery
    Auditor's overpayment and underpayment determinations. The combined
    accuracy rates for the Recovery Auditors are consistently above 90
    percent. In addition, continued poor performance by a Recovery Auditor
    will result in negative performance evaluations and may result in work
    stoppage, corrective action plans and/or contract modification or
    ---------------------------------------------------------------------------
    termination.

        Question. Providers are spending money on the appeals process--in
    essence spending money to get money back that was theirs in the first
    place. Are the auditors also spending money in the appeals process or
    are those costs covered by CMS? If covered by CMS, how much money is
    that, and is it being included in the cost-benefit analysis of the RAC
    program?

        Answer. The Tax Relief and Health Care Act of 2006 gives CMS the
    authority to pay Recovery Auditors a contingency fee on recovered
    improper payments. All operating expenses incurred by RACs from
    activities conducted under the recovery audit program, including costs
    incurred by RACs to support the appeals process, come out of the
    contingency fee the Recovery Auditors receives for correcting the
    claim.

        Question. As part of the Department's focus on delivery system
    reform, you highlighted an initiative that would change how doctors are
    paid for treating cancer patients. What safeguards will be included to
    ensure these patients can access treatments that are individualized to
    meet their health care needs and aren't steered towards other options
    purely based on cost?

        Answer. We believe that oncology is an area of medicine where
    efforts to improve the quality and efficiency of care can have
    significant beneficial effects. Peer reviewed publications and
    Institute of Medicine reports both demonstrate areas where patient care
    can be improved. HHS believes that changing the way oncology care is
    paid for and delivered can both improve the quality of cancer care and
    reduce expenditures.

        For each model that CMS tests, CMS includes a monitoring and
    evaluation effort to address issues of patient protection and safety,
    including continual assessment of quality of care. We monitor for
    issues related to patient safety, care stinting and patient access to
    care, patient freedom of choice, and provider induced demand for
    unnecessary care. The monitoring approach is multipronged and utilizes
    a variety of measures and data sources depending on the specifics of
    the model. CMS uses measures that provide information on patient case-
    mix, clinical quality process and outcomes, utilization patterns, and
    patient reported experience of care. Information comes from a variety
    of sources including claims, patient and proxy interviews, patient
    assessment information, and in qualitative sources such as site visits
    and interviews. These findings are tracked, examined and reviewed on an
    ongoing basis, typically quarterly. These efforts would allow us to
    quickly identify potentially negative shifts in patterns of care. The
    precise monitoring strategy adopted is tailored to the unique
    circumstances of every model. The choice of measures is a reflection of
    the possible provider behaviors that could result from the incentives
    being tested in that model.

        Question. Last year, the Government Accountability Office found
    that individuals in five states did not have the option of purchasing
    an insurance plan through the marketplace that excluded elective
    abortion. For the 2015 enrollment period, there are still four states--
    Hawaii, New Jersey, Rhode Island, and Vermont--whose marketplaces only
    offer plans covering elective abortion. While at least one Multi-State
    plan is required to exclude it, not every state has MSPs yet. What
    plans are underway to ensure that individuals in these states are able
    to purchase a health plan that does not pay any amount towards elective
    abortion? Will you assure consumers that there will be a plan that does
    not cover abortion in each state by the 2016 open enrollment season?

        Answer. Some of the issues raised by your question currently are
    the subject of litigation. The Department of Justice will address these
    issues in the course of the litigation as appropriate. In addition, the
    Affordable Care Act, which established the Multi-State Plan Program,
    directs the Office of Personnel Management (OPM) to contract with
    private health insurers to offer high-quality, affordable health
    insurance options called Multi-State Plans (MSP). A few states do not
    currently have a MSP plan option available for purchase on the Exchange
    in their States. As OPM is responsible for the administration of the
    MSP Program, if you have questions regarding the availability of MSPs,
    including the states in which they are available, those inquiries
    should be directed to OPM.

        Question. The California Department of Managed Health Care (DMHC)
    issued a directive mandating that all health plans under its
    jurisdiction immediately include coverage for legal abortions in all
    circumstances. This includes plans provided by pro-life employers,
    churches and religious institutions and plans that were previously
    approved by DMHC that excluded some abortions. What action is HHS
    taking to ensure that the DMHC complies with the Weldon amendment?

        Answer. HHS supports clear and strong conscience protections for
    health care providers and entities who are opposed to performing
    abortions. The HHS Office for Civil Rights (OCR) received three
    complaints alleging that the DMHC directive violates the conscience
    clause protections of the Weldon Amendment. OCR has opened an
    investigation to examine the allegations in these complaints and has
    been proceeding expeditiously. Because these are open cases, we cannot
    comment on the status of the review.

                                     ______

        Questions Submitted by Hon. Pat Roberts and Hon. Johnny Isakson
        Question. As you know, there was an issue with some Medicare Part D
    drug plans listed on the Medicare Plan Finder website during the 2014
    Medicare open enrollment period. Some seniors were given incorrect
    information regarding which pharmacies were in-network when selecting a
    plan last year. We appreciate CMS's efforts to work with us and our
    local pharmacists to establish a special enrollment period for Medicare
    Part D beneficiaries who enrolled in a plan that listed an incorrect
    pharmacy network on the Medicare Plan Finder. How does CMS ensure that
    the approved plan network is accurate when presented to beneficiaries
    during open enrollment? What rules are in place to ensure beneficiaries
    have access to a broad network of pharmacies?

        Answer. The Part D statute requires Medicare prescription drug
    plans to afford their enrollees access to retail pharmacies in urban,
    suburban, and rural areas at rates equivalent to at least those
    applicable to the TRICARE program. To develop such a network, the
    statute authorizes Part D plan sponsors to contract with the pharmacies
    they select and with which they can negotiate mutually acceptable
    terms. A sponsor must also offer to any pharmacy making such a request
    the opportunity to participate in the sponsor's plan network under
    standard terms and conditions established by the sponsor.

        CMS relies on each sponsor to provide beneficiaries and CMS with
    accurate pharmacy network information, including that used to populate
    the Medicare Plan Finder (MPF) website. CMS conducts an outlier
    analysis on pharmacy network and drug pricing information sponsors
    submit for the MPF to identify instances where a sponsor's submission
    may be inaccurate. While this outlier analysis is useful in supporting
    MPF accuracy, it cannot detect all inaccuracies in a sponsor's
    submission.

        CMS was alerted in late November 2014 to possible inaccuracies in
    the referenced Part D sponsor's network pharmacy information when we
    received a complaint from a pharmacy stating that its status as a
    network participant for the sponsor was reflected incorrectly on the
    MPF. During our investigation of the matter, the plan sponsor
    acknowledged that it had provided inaccurate pharmacy network
    information to CMS for the MPF and in its own beneficiary communication
    materials. CMS acted promptly to address this issue by removing the
    sponsor's Part D plan information from display on the MPF in early
    December until it was cancelled in late December.

        CMS's investigation also revealed that the plan sponsor's pharmacy
    contracting process had left many pharmacies confused about their
    participation in the sponsor's plan networks. CMS directed the plan
    sponsor to issue notices to all its contracted pharmacies explicitly
    identifying the plans for which they were network participants. In
    early January 2015, we also advised the sponsor to provide clear and
    binding offers of standard contracting terms and conditions for
    participation in all its plan types to pharmacies requesting them for
    CY 2015.

        After the start of the 2015 benefit year, CMS began receiving
    numerous complaints through 1-800-MEDICARE from beneficiaries upset
    that their regular pharmacy was no longer participating in the Part D
    plan they had elected. CMS took two significant steps to address these
    complaints. First, beneficiaries were alerted that CMS would afford
    them a special election period during which they could pick a new plan
    for 2015 that included their pharmacy of choice in its network. Second,
    CMS had the sponsor agree to pay in-network claims at all of the
    pharmacies with which it had contracted during 2014,until the sponsor
    conducts additional beneficiary and pharmacy outreach about the network
    changes and contracts with additional pharmacies that will accept
    standard terms and conditions.

        CMS will continue to monitor the sponsor's performance closely to
    protect beneficiaries' access to their Part D benefits. CMS is also
    evaluating additional steps we may be authorized to take to reduce the
    likelihood of future inaccuracies in plan network information provided
    to beneficiaries. CMS has issued multiple compliance actions to the
    sponsor related to the erroneous information and the overall
    beneficiary disruption caused by these changes. Also, we have and will
    continue to advise pharmacy trade associations that they should pay
    close attention to their process for contracting with Part D sponsors
    and to how their Part D plan participation information is represented
    by sponsors and on the MPF.

                                     ______

                Submitted for the Record by Hon. Maria Cantwell
    From Bloomberg

    U.S. to Overhaul Medicare Payments to Doctors, Hospitals

    by Alexander Wayne

    January 26, 2015

    (Bloomberg)--The Obama administration will make historic changes to how
    the U.S. pays its annual $3 trillion health-care bill, aiming to
    curtail a costly habit of paying doctors and hospitals without regard
    to quality or effectiveness.

    Starting next year Medicare, which covers about 50 million elderly and
    disabled Americans, will base 30 percent of payments on how well health
    providers care for patients, some of which will put them at financial
    risk based on the quality they deliver. By 2018, the goal is to put
    half of payments under the new system.

    For doctors and health facilities, the system will tie tens, and then
    hundreds, of billions of dollars in payments to how their patients
    fare, rather than how much work a doctor or hospital does, lowering the
    curtain on Medicare's system of paying line-by-line for each scan, test
    and surgery.

    ``We believe these goals can drive transformative change,'' Sylvia
    Mathews Burwell, secretary of the Health and Human Services Department,
    said in the statement.

    The program would be a major shift for hospitals, health facilities and
    physicians, eventually more than doubling the reach of programs that
    the U.S. said has saved $417 million and that have been a model for how
    the government hopes to influence, and slow down, health spending.

    Medicare paid about $362 billion to care providers in 2014, the health
    department said in a statement, making it the biggest buyer of health
    care services in the U.S. Paying separately for each procedure, called
    ``fee-for-service,'' has long been viewed as an inefficient driver of
    U.S. health spending, which at more than 17 percent of gross domestic
    product is the highest in the world.

    Broad Reach

    The Obama administration's announcement today is the first time the
    government has ever set specific goals to steer the nation away from
    fee-for-service payments.

    Medicare's practices are often echoed by private insurers who cover 170
    million Americans. If the U.S.'s plan is successful, non-elderly
    consumers could eventually see cost savings, though they may also find
    that doctors and hospitals offer fewer services as they seek to cut
    waste and maintain profits.

    Doctors and hospitals are already facing changes under the Patient
    Protection and Affordable Care Act, or Obamacare. About 20 percent of
    Medicare spending is now paid through programs in which health-care
    providers either take some financial risk for their performance or at
    least collect and report measures of their quality, the health
    department said. Expanding that figure was a key goal of the law.

    At Risk

    ``The people who are delivering care are increasingly at financial risk
    for the services that are being rendered,'' Dan Mendelson, CEO of
    Avalere Health, a Washington consulting firm, said in a phone
    interview. ``It's increasingly likely the physician or the hospital is
    going to make more money if they provide less care.''

    The country's main lobbying groups for doctors and hospitals said they
    were on board, at least with the broad idea behind the overhaul. ``We
    support Secretary Burwell's goals and plans,'' said Maureen Swick, a
    representative of the American Hospital Association.

    Robert Wah, president of the American Medical Association, said that
    physicians were worried about additional bureaucracy. ``This idea that
    we're talking about delivery reform and setting up a system of delivery
    reform, we're very supportive of that,'' Wah said in an interview in
    Washington. ``The details will be important to see.''

    Industry Reaction

    Burwell met with about two dozen health industry officials this morning
    to brief them on the administration's plan. Participants included
    executives of Verizon Communications Inc., Boeing Co., UnitedHealth
    Group Inc., Anthem Inc. and representatives of large hospital chains
    and physician organizations.

    The Affordable Care Act, often criticized by its opponents for not
    doing much to control health-care costs, created several programs the
    Obama administration now plans to rely upon to end fee-for-service
    payments. For example, the law penalizes hospitals with high rates of
    readmissions of Medicare patients within 30 days of discharging them,
    and encourages doctors and hospitals to band together and closely
    coordinate their care, with the aim of reducing redundancies and
    inefficiency.

    Those programs have saved about 50,000 lives and reduced health-care
    spending by about $12 billion, based on preliminary estimates, the
    health department said.

                                     ______

                  Prepared Statement of Hon. Orrin G. Hatch,
                            a U.S. Senator From Utah
    WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
    today delivered the following opening statement at a committee hearing
    on President Obama's fiscal year 2016 budget for the Department of
    Health and Human Services (HHS):

        Good morning. It's a pleasure to welcome everyone to today's
    hearing on the Fiscal Year 2016 budget for the Department of Health and
    Human Services (HHS).

        Thank you Secretary Burwell, for being here today. This is your
    first hearing before this committee since being confirmed, so welcome
    back in your official capacity.

        I told you when we were talking at your confirmation hearing that
    the job you now have would be a thankless one and that you were
    undertaking an enormous responsibility. At that time, we also discussed
    three main areas that I encouraged you to focus on during your time at
    HHS: responsiveness, accountability, and independence.

        I'd like to talk more about each of those areas today.

        Let's start with responsiveness. During your confirmation hearing,
    I raised the importance of being responsive to Congress and to this
    committee in particular. You assured me this would be a top priority of
    yours as well, and that, under your watch, we would see a marked
    improvement.

        In the past year, this committee has written at least twenty
    letters to HHS or CMS, asking questions about serious issues such as
    fraud prevention, hacking of the HealthCare.gov website, Medicaid
    expansion, and many others. I understand that we have now received
    answers to nearly every one of the outstanding letters just in time for
    your appearance here today, with the last few responses coming just
    last week.

        This is an improvement. And, I appreciate the efforts being made to
    provide these answers.

        However, I hope that it will not require calling you to testify
    before the committee to ensure more timely responses going forward. If
    it does, then I suppose I will have to look forward to seeing you for a
    hearing every thirty to sixty days.

        Thank you for continuing to make this a priority. Good
    communication between HHS and this committee is paramount to a good
    working relationship.

        Now let's talk about accountability. One of the big issues we
    discussed at your confirmation hearing was the absolute need for fiscal
    accountability given the huge breadth and scope of HHS's programs and
    budget. Overseeing them requires constant vigilance and effective
    management. When looking at the size of the budget for HHS for this
    coming fiscal year, we see just how big a job that is.

        In fact, the expression ``too big to fail'' does not really apply
    here as the HHS budget is so big one could argue that it is destined to
    fail.

        The HHS budget for FY 2016 is just over a trillion dollars.

        In real terms, if HHS were a country and its budget was its GDP, it
    would be the 16th largest economy in the world.

        To put it in a more American context, the total budget of HHS is
    more than double that of Walmart and five times more than Apple.

        My concern is that the savings and efficiencies in the overall HHS
    budget are very small when compared to the overall spending. The
    President's proposed budget would save just under $250 billion over the
    next decade, which sounds like a lot, but that is only 3.8 percent of
    total Medicare and Medicaid spending. More accountability is critical
    here to ensure these programs have sufficient resources to continue to
    provide benefits for years to come.

        On the policy front, the administration needs to be up front to
    Congress about their contingency plans if the King v. Burwell case is
    not decided in its favor. Depending on what happens in the Supreme
    Court, in late June, HHS could have to figure out how to provide
    services for millions of Americans who are currently receiving tax
    subsidies that enable them to pay for health insurance. I can only
    assume that the agency has a plan in place for dealing with this
    possibility. Secretary Burwell, I hope you'll share that with us today.

        That brings me to independence. For some time now, I have been
    concerned about the amount of influence HHS and the administration has
    over the operations and policies impacting the entitlement programs run
    by CMS. The budget released this week indicates that spending on just
    Medicare and Medicaid is expected to exceed $11 trillion over the next
    decade. In fact, CMS accounts for 85 percent of the total HHS budget.

        These are astonishing numbers.

        They also reinforce for me something that I have long believed: It
    is time to start talking about making CMS an independent agency apart
    from HHS.

        Nearly twenty years ago, Congress passed, and the President signed
    into a law, the Social Security Independence and Program Improvements
    Act of 1994. That law separated the Social Security Administration from
    HHS and made it an independent agency. At that time, SSA was the
    largest operating division within HHS and accounted for about 51
    percent of HHS's total staff and more than half of HHS's total annual
    budget.

        I intend to introduce legislation to move CMS out of HHS.

        Whether or not CMS becomes an independent agency is something to
    consider going forward, but the accountability and transparency
    problems we currently see in CMS programs cannot wait. I hope that we
    can work together in the coming months on both Affordable Care Act and
    entitlement issues to create solutions that work for all Americans.

        Finally, I just want to note that while there is much in the
    President's budget that I disagree with, there are areas where I think
    we can find common ground.

        For example, I appreciate the provision in the budget that
    addresses the issue of over-reliance on congregate care facilities or
    group homes for children and youth in foster care. For years, I have
    been working to call attention to the deplorable conditions in many of
    these group homes. Recent research indicates that these group homes are
    unsafe, expensive, and too often contribute to profoundly negative
    outcomes for the children and youth who are placed in them. I look
    forward to working with the administration to end the over-reliance on
    group homes.

        Secretary Burwell, I look forward to your testimony today and to
    working with you to ensure our most vulnerable citizens get the care
    they deserve.

        I'd now like to turn it over to Senator Wyden for his opening
    remarks.

                                     ______

                     Prepared Statement of Hon. Ron Wyden,
                           a U.S. Senator From Oregon
        Far too many people--including millions in Oregon and across the
    country--feel like they're falling behind as the economy picks up
    steam. Congress's job is to make sure that doesn't happen. It's
    important for the Finance Committee to keep that challenge in focus
    this week as it examines the President's fiscal year 2016 budget
    proposals.

        The budget articulates the priorities of today, and it also
    reflects our priorities for the future. Secretary Burwell will have the
    opportunity in just a moment to illustrate how the President's budget
    proposal aims to strengthen our health and human services programs and
    promote economic mobility. But I'd first like to make a few comments
    about where American health care has been, and where it's going.

        This year marks the 50th anniversary of Medicare and Medicaid, and
    a lot has taken place since they were first created. Congress came
    together to create the Children's Health Insurance Program, or CHIP,
    and has reauthorized it three times. Congress has improved and expanded
    Medicare and Medicaid.

        It passed the Affordable Care Act, making access to high-quality
    care wider than ever before. Thanks to five decades of progress, health
    care in America is no longer reserved for the healthy and the wealthy.

        The job, however, is not done. Our budget must reflect a twofold
    commitment: first, to protect the progress that's already been made,
    and second, to clear the way for progress to continue in the future.

        For Medicare, that means guaranteeing that the program's benefits
    fully meet the needs of this era's seniors. The demands on the program
    are different than they were 50 years ago. The big-ticket Medicare
    costs of 2015 are no longer things like kidney stones and broken
    ankles. They're chronic conditions like cancer, diabetes, and
    Alzheimer's that are tougher and more costly to treat. The HHS budget
    begins to acknowledge that reality, and bigger investments in research
    on chronic conditions are a positive step. But treating chronic disease
    is Medicare's future.

        What's needed is a roadmap to efficient and effective care that
    moves away from fee-for-service. Patients and providers told this
    committee last summer about the need to address chronic care in a
    different way. There is bipartisan support for that in Congress, and I
    look forward to working with you, Secretary Burwell, and the
    administration to make chronic care reform a reality.

        Precision medicine will need the same kind of roadmap. Medical
    professionals know that a treatment will often affect Susan in a
    different way than it affects George. And with the right research, it
    will be possible to learn what drives those differences and how to
    tailor treatments to fit an individual patient's needs. The Precision
    Medicine Initiative included in the President's budget proposal follows
    an innovative test program I fought to include in the Affordable Care
    Act. Looking ahead, the next step will be to design a payment system
    for this innovative field of medicine that will work for patients and
    taxpayers.

        The President's budget proposal will also continue the progress
    made by the Affordable Care Act to reward the quality of care, rather
    than the quantity. Congress can do even more by passing bipartisan,
    bicameral legislation to improve the way Medicare pays physicians.

        The President's proposal takes a vital step by including four years
    of funding for CHIP. There are more than 10 million kids in America who
    get health insurance through CHIP, including more than 75,000 in
    Oregon. A child who starts life with quality health insurance has a
    much better shot at a successful, middle-class life than a kid who
    doesn't. Renewing CHIP is a no-brainer. Families and state agencies
    across the country are waiting for Congress to act.

        These are steps Congress can take to help guarantee that our health
    programs remain strong for generations to come. They are lifelines for
    countless Americans, and as a result, millions of families will never
    have to choose between paying for a loved one's care and sending kids
    to college. And millions of kids will grow up with access to quality
    health care that keeps them healthy and out of the emergency rooms
    whenever possible.

        Of course, it's important to remember that Health and Human
    Services does far more than oversee Medicare, Medicaid and CHIP. No
    department plays a bigger role preserving America's safety net than
    HHS. This committee has a long history of working on a bipartisan basis
    on policies to strengthen our federal child welfare programs for
    vulnerable kids.

        Just five months ago, Congress enacted the Preventing Sex
    Trafficking and Strengthening Families Act, and HHS is helping turn
    this bill from a piece of paper signed by the President into new tools
    that help states move vulnerable kids out of harm's way and into safe
    and permanent homes.

        The President's budget proposal shows that it's possible to build
    on this momentum by expanding programs that keep children and families
    together and healthy--particularly through early interventions like
    home visiting for first time parents. These multigenerational supports
    can help prevent the long-term costs associated with homelessness,
    abuse or neglect, and foster care. These investments are critical at a
    time when too many Americans feel like the recovery hasn't yet reached
    them because they're still struggling to get ahead.

        Thank you, Secretary Burwell, for joining the committee today to
    discuss the HHS budget for the year ahead. Managing our health and
    human services programs is a tough job. This budget makes it clear as
    day that there will be many chances for the Finance Committee and the
    administration to work together to protect those programs today and in
    the future.

                                     ______

                                 Communication

                                  ----------

               Association for Community Affiliated Plans (ACAP)

            1015 15th Street, N.W., Suite 950  Washington, DC 20005

         Tel. 202.204.7508  Fax 202.204.7517  www.communityplans.net

     John Lovelace, Chairman  Margared A. Murray, Chief Executive Officer

                               February 10, 2015

    The Honorable Orrin Hatch, Chairman
    U.S. Senate Committee on Finance
    United States Senate
    Washington, DC 20510

    The Honorable Ron Wyden, Ranking Member
    U.S. Senate Committee on Finance
    United States Senate
    Washington, DC 20510

    Dear Senator Hatch and Senator Wyden,

    We write to express our support to members of the Senate and to members
    of the Senate Finance Committee for encouraging the Centers for
    Medicare & Medicaid Services (CMS) to take steps to alter the Star
    ratings program to account for underlying differences in Medicare
    Advantage (MA) plans' enrolled populations. Forty Senators submitted a
    letter to Administrator Tavenner on February 3, 2015, and this issue
    was also raised during the Senate Finance Committee's February 4
    hearing. We believe that the Star ratings program, in its current form,
    disadvantages health plans that enroll dual eligible beneficiaries. We
    applaud the Senators for urging CMS to use its existing regulatory and
    administrative authority to improve the Star ratings program so that
    the quality of care MA plans provide to dual-eligible beneficiaries can
    be accurately measured and compared across plans.

    Dual-eligible beneficiaries are among the poorest, sickest, and most
    costly individuals to both the Medicare and Medicaid programs. They
    often fall through the cracks between the two programs, and many of
    these beneficiaries experience uncoordinated care in Medicare and
    Medicaid fee-for-service (FFS). D-SNPs are an opportunity for these
    beneficiaries to receive better coordinated care and higher quality of
    care than they would otherwise receive through FFS. Unlike other types
    of MA plans, D-SNPs exclusively enroll and focus their provider
    networks, benefit packages, and care management resources specifically
    on dual-eligible beneficiaries.

    The inability of the Star ratings program to accurately assess and
    compare quality measures for dual-eligible beneficiaries is a consumer
    issue as well as a plan issue. Dual-eligible beneficiaries will lose if
    their health plans--particularly those that integrate all of their
    Medicare and most of their Medicaid benefits--are no longer financially
    able to continue serving them due to low reimbursement on account on
    inaccurate Star ratings.

    We support a Star ratings program that evaluates and compares all MA
    plans based on the quality of care they furnish, rather than on the
    underlying characteristics and needs of their enrollee population.

    We have asked CMS to improve the program by:

    1.  Using quality measures that are appropriate for dual-eligible
        beneficiaries with complex health, behavioral, and cognitive needs;

    2.  Reporting and applying quality ratings of D-SNPs at the plan level
        instead of the contract level; and

    3.  Comparing D-SNPs to other D-SNPs that enroll similar populations.

    We have also asked Congress to require the Government Accountability
    Office (GAO) to conduct a study to determine how the Secretary could
    change the Star ratings program to accurately compare the quality of
    care provided by individual D-SNPs (and D-SNPs as a whole) to the
    quality of care dual-eligible beneficiaries receive under Medicare FFS
    and other MA plans with similar populations.

    It is a high priority for our D-SNP member plans that the quality of
    care they provide to their dual-eligible enrollees is accurately
    measured and reported to consumers. We will continue to work with our
    member plans to identify ways to improve the accuracy of the Star
    ratings program. We hope that the experience of our member plans in
    serving some of the most complex, challenging, and costly Medicare and
    Medicaid beneficiaries is a resource to the Congress and to CMS as the
    MA program is improved, so that all Medicare beneficiaries have the
    opportunity to receive better quality of care through this program.

    ACAP is prepared to assist with additional information, if needed. If
    you have any additional questions please do not hesitate to contact
    Christine Aguiar at (202) 204-7519 or caguiar@communityplans.net.

    Sincerely,

    Margaret A. Murray
    Chief Executive Officer

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