[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

                               __________




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]








                                
                                     

            Printed for the use of the Committee on Finance
                                   ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

98-325--PDF                    WASHINGTON : 2016 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001

















                          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

                         [email protected]

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 [email protected]

                  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 [email protected].

Sincerely,

Margaret A. Murray
Chief Executive Officer


                                   [all]