[Senate Hearing 115-572]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 115-572

                      PRESIDENT'S FISCAL YEAR 2019
                         HEALTH CARE PROPOSALS

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

                                HEARING

                               BEFORE THE

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 15, 2018

                               __________

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            Printed for the use of the Committee on Finance


                               __________
                               

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                          COMMITTEE ON FINANCE

                     ORRIN G. HATCH, Utah, Chairman

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

                     A. Jay Khosla, 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......................     4

                         ADMINISTRATION WITNESS

Azar, Hon. Alex M., II, Secretary, Department of Health and Human 
  Services, Washington, DC.......................................     8

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Azar, Hon. Alex M., II:
    Testimony....................................................     8
    Prepared statement...........................................    47
    Responses to questions from committee members................    51
Hatch, Hon. Orrin G.:
    Opening statement............................................     1
    Prepared statement...........................................    97
Wyden, Hon. Ron:
    Opening statement............................................     4
    Prepared statement with attachments..........................    99

                             Communication

Center for Fiscal Equity.........................................   109

                                 (iii)

 
                      PRESIDENT'S FISCAL YEAR 2019
                         HEALTH CARE PROPOSALS

                              ----------                              


                      THURSDAY, FEBRUARY 15, 2018

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 9:05 a.m., 
in room SD-215, Dirksen Senate Office Building, Hon. Orrin G. 
Hatch (chairman of the committee) presiding.
    Present: Senators Grassley, Crapo, Thune, Isakson, Portman, 
Toomey, Heller, Scott, Cassidy, Wyden, Stabenow, Cantwell, 
Nelson, Menendez, Carper, Cardin, Brown, Casey, McCaskill, and 
Whitehouse.
    Also present: Republican staff: Jay Khosla, Staff Director; 
Chris Armstrong, Chief Oversight Counsel; Brett Baker, Health 
Policy Advisor; Ryan Martin, Senior Human Services Advisor; 
Stuart Portman, Health Policy Advisor; and Caitlin Soto, 
Oversight Counsel. Democratic staff: Joshua Sheinkman, Staff 
Director; Laura Berntsen, Senior Advisor for Health and Human 
Services; Anne Dwyer, Health-care Counsel; Michael Evans, 
General Counsel; Elizabeth Jurinka, Chief Health Advisor; Matt 
Kazan, Health Policy Advisor; and Arielle Woronoff, Senior 
Health Counsel.

 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.
    Before I begin, I want to express on behalf of the 
committee the sadness we all feel in light of yesterday's 
events in Florida.
    I was firstly horrified as I watched the news unfold 
yesterday, though I was also moved to hear some of the stories 
of the heroism displayed by some of the students and teachers 
at the school.
    In times like these, I know that thoughts expressed from 
those of us who are far away can sometimes seem empty and 
meaningless in the face of such a terrible tragedy. I will 
simply say that I am praying for all of those who were affected 
by these acts of senseless violence. That, of course, includes 
a member of our committee, who I know is mourning the loss and 
pain felt by those in his own State.
    May they all find peace, healing, and a speedy recovery.
    Now, I welcome everybody here to today's hearing, which 
will be our third and final hearing on the President's budget 
for fiscal year 2019. We have already had the Treasury 
Secretary and the Acting IRS Commissioner appear before us. And 
today we will be talking with Secretary Azar from the 
Department of Health and Human Services.
    Secretary Azar, I want to thank you for being here and 
cooperating with us, and welcome back. It has been just a 
little over a month since you last appeared before us. This 
could cause some nervous reactions, you never know.
    Of course, you are still very new to your position, but we 
are glad to have you back, because we have a lot to discuss.
    Since you were last here, this committee has amassed a 
number of legislative victories. I want to take a few minutes 
to highlight these accomplishments, as many are within HHS's 
jurisdiction.
    Last month, as a result of countless hours of work by this 
committee, Congress passed and the President signed a 6-year 
CHIP extension. A few weeks later, we added another 4 years to 
that extension as part of a bipartisan budget act. That is 10 
more years of CHIP funding, which is, quite frankly, really a 
historic accomplishment.
    Senator Ted Kennedy and I created the CHIP program more 
than 2 decades ago. And despite always enjoying bipartisan 
support, at no point in the program's history have we been able 
to deliver this much certainty and security for the families 
and children who depend on CHIP.
    I want to once again commend my colleagues on both sides 
who joined in this effort and who share in this success, and 
especially my colleague from Oregon. It was no small feat.
    In addition to the CHIP extension, the CHRONIC Care Act, 
another bipartisan legislative product out of this committee, 
was also signed into law recently. This new law will improve 
care for Medicare beneficiaries living with chronic conditions, 
streamline care coordination, and improve quality outcomes 
without worsening Medicare's shaky fiscal status.
    Again, I want to thank everyone on this committee who 
worked on this bill, most notably our ranking member, Senator 
Wyden, as well as Senators Isakson and Warner, who were key 
leaders in the drafting and passage of this very important 
bill.
    And it does not end there. The budget bill also included 
the bipartisan Family First Prevention Services Act, which will 
help keep more children safely with their families specifically 
by funding substance abuse and mental health services that have 
been shown to prevent children from entering foster care.
    All of this success is testament to bipartisanship and 
proves that it is possible for both parties to find common 
ground and work together. As always, there is more work to be 
done, and I am optimistic that we can be just as effective in 
the coming months.
    Of course, these recent achievements will not mean much if 
they are not implemented properly.
    Secretary Azar, I look forward to working with you as this 
process moves forward.
    Now, I would like to take a moment to talk about some of 
the specifics in the President's budget which recognize the 
need to eliminate wasteful spending, rein in our national debt, 
and focus on protecting Americans at home.
    I appreciate that the President's budget takes steps toward 
a course correction that will hopefully lead to a more 
economically sound future, all while still ensuring high-
quality and accessible health care.
    One of the key and critical assumptions in the President's 
budget is the repeal of Obamacare. The budget bakes in this 
repeal and replaces it with a State-based grant system. All 
told, the administration estimates that would save more than 
$675 billion--that is with a ``b.''
    Many of us on the committee, I think all of us on the 
Republican side, share this desire to repeal Obamacare. And we 
have actually done some great work on rolling back major 
elements of the so-called Affordable Care Act this Congress.
    For starters, our tax reform bill zeroed out the individual 
mandate tax. The recent budget bill also included the so-called 
Medicare extenders and repealed the Independent Payment 
Advisory Board. And in that same bill, we extended previous 
delays on other Obamacare taxes, including the medical device 
tax, the health insurance, and the so-called ``Cadillac tax.''
    But as the budget points out, we are not quite there yet. I 
hope we can take additional steps in the future, and I look 
forward to continuing our discussions on how we can stop the 
skyrocketing costs of health care in a meaningful and a well-
governed way.
    Beyond the critical repeal-and-replace efforts with 
Obamacare, we also need to start getting serious about Medicare 
and Medicaid reforms. Both of these programs need to be put on 
more sustainable paths so that we can fulfill the promises of 
these programs for future generations.
    I know that any time a Republican mentions the fiscal 
predicament of Medicare and Medicaid, we are essentially asking 
to be accused of robbing the elderly and low-income families of 
their health care. But none of these scare tactics will improve 
the outlook of our Federal health-care programs. That is going 
to take some hard work, and hopefully we can find a path 
forward there as well.
    Secretary Azar, during your confirmation hearing, you 
emphasized that addressing rising drug prices would be one of 
your top priorities. As you know, I have spent quite a bit of 
time on this issue working to ensure that patients have access 
to innovative and high-quality medications.
    It can be tricky to balance the need to encourage 
investment and development of new and effective drugs and 
treatments while also working to make sure those in need can 
obtain access to those potentially lifesaving and life-
improving products.
    Some have made a crusade out of scapegoating the companies 
that develop drugs and treatments. And when this almost 
singular focus prevails, the result is policy that tends to be 
less than perfect, to put it charitably. We saw an example of 
this in last week's bipartisan budget act that increased the 
discount that manufacturers were required to provide under the 
so-called ``doughnut hole'' in Medicare Part D. Now, I voiced 
my opposition to the inclusion of this provision in the budget 
agreement on the Senate floor last week. I am working with my 
colleagues who share my concern on the increased manufacturer 
discount provision to mitigate its impact.
    And we should all strive further. As this budget has a 
number of other drug-related policy proposals, I implore the 
administration to take care to strike a balance between access 
and innovation. It is a balance that I hope that we should all 
strive to achieve.
    Now, Secretary Azar, you also emphasized that addressing 
America's opioid crisis is another one of your top priorities. 
I am happy to see that the President's budget stresses the 
importance of working together to fight this epidemic.
    The CDC estimates that each day our country experiences 
more than 100 opioid-related deaths. My home State of Utah has 
been especially hard hit. And while the drug-overdose rate has 
risen over the past decade, we are starting to see a shifting 
tide thanks to the leadership of many officials in my State.
    With that said, they need Federal help. And I know that 
many in Congress, including several members of this committee, 
have been outspoken leaders in this effort. And I commend them 
for their work.
    We are committed to continuing our bipartisan committee 
process to address the opioid epidemic, especially through 
mandatory program proposals that can bring about meaningful and 
enduring change to a system plagued with issues.
    Mr. Secretary, I look forward to working with you in the 
coming months as we look for solutions to address this crisis. 
And I hope that we, as a committee, can continue our bipartisan 
efforts to curtail this growing string of tragedies.
    To close, let me just say that, as we all know, it is 
Congress's responsibility to pass a budget. The President's 
proposed budget merely sets the tone and provides us with the 
baseline for debate. I hope that we can work together to 
implement many of the 
common-sense reforms we have been debating for so long, and I 
hope that we can continue to work to set aside our differences 
in order to find beneficial solutions.
    I look forward to having an open and frank discussion with 
Secretary Azar about these and other matters.
    Before I close, I do want to note that because we were 
unable to get a quorum yesterday, if at any point during the 
hearing a suitable quorum is present, I intend to pause the 
hearing and move to votes on the nominations of Mr. Dennis Shea 
and Mr. C.J. Mahoney. Thereafter, we will resume our hearing.
    With that, let me now turn to my friend, the ranking 
member, for his opening remarks.
    [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 very much, Mr. Chairman.
    Mr. Chairman and colleagues, 18 school shootings this year. 
And I am just going to begin by saying, when is enough? And we 
watch these young people from the high schools, and I heard one 
in effect say, you know, we are kids, we cannot fix this. You 
adults get over it and deal with it. And that, to me, is 
central to what we are talking about this morning, because we 
are going to talk about health care.
    And what we have been hearing on the news is, it sure 
sounds like there are a lot of young people who are frightened 
about what can happen at their school. So we deal with lots of 
bills and lots of amendments, but like those students said, it 
is time to get over it. It is time to act. And we have learned 
in the last 24 hours enough is enough.
    And, Mr. Chairman, I want to pick up first on the point you 
made, because in the last couple of weeks on the health-care 
front, as you have noted, we have had some very positive 
developments here in the last few weeks.
    If you had told me in the winter of 2017 that we would have 
10-year CHIP reauthorization, everybody would have said, what 
planet is this person residing on?
    The CHRONIC Care bill, and I see Senator Isakson, who was 
with me on day one--Senator Warner is not here--with Senator 
Isakson in this room, we launched it.
    Chairman Hatch, to his credit, pulled together a bipartisan 
group of us.
    Colleagues, let us make sure we understand what this 
CHRONIC Care bill is all about. The CHRONIC Care bill is about 
updating the Medicare guarantee and modernizing the program to 
deal with where most of the money is going to be spent: on 
cancer and diabetes and heart disease and strokes.
    And when I was director of the Gray Panthers, it was a 
really different Medicare program. You had Part A for hospitals 
and you had Part B for doctors, and that was that. And 
colleagues like Senator Isakson and Senator Warner and our 
bipartisan group said, when you have 10,000 people turning 65 
every day and it is going to happen for years and years to 
come, you have got to dig in.
    Chairman Hatch made that possible. I want to thank the 
chairman.
    And then, of course, a lot of people who work in the child 
welfare field are saying that the Family First bill was what 
they have been dreaming about for 3 full decades. And that came 
together here in the last couple of weeks, and I want to thank 
you for that, Mr. Chairman.
    Now, on a not-so-positive note, the budget season is at 
hand again, so the Trump agenda of health-care discrimination 
is back. And I am going to go through the examples.
    Start with discrimination against Americans with pre-
existing conditions. People who have pre-existing conditions 
count on having a robust private insurance market with strong 
consumer protections. What the Trump budget offers is chaos in 
the private insurance market and the elimination of key 
consumer protections.
    The budget embraces the old Graham-Cassidy proposal that 
lived a mercifully short life last fall because, in this room, 
we blew the whistle on the fact that it did not lock in 
protections for those who have pre-existing conditions.
    On top of that, the administration is giving a green light 
to junk insurance policies that revive the worst insurance 
abuses of the past, such as skimpy coverage and dollar limits 
on care. So for millions of people with pre-existing 
conditions, the Trump administration seems dead-set on making 
the care they need unaffordable and inaccessible.
    Next on the agenda of health-care discrimination is 
discrimination against women. When you get rid of the consumer 
protections in the Affordable Care Act, you return to an era 
when 75 percent of insurance plans in the individual market did 
not cover maternity care or birth control.
    And under the Trump budget, which arbitrarily attacks key 
providers--Planned Parenthood and others--millions of women 
would lose the right to see the doctor they trust, the doctor 
of their choosing.
    Then the Trump agenda of health-care discrimination goes 
after Americans who walk an economic tightrope. One-point-four 
trillion dollars cut from Medicaid, millions of Americans 
locked out of the program, a scheme to wipe out key nationwide 
protections and cap the program, essentially ending the 
guarantee of care for those who qualify for Medicaid. Now the 
administration reportedly is discussing lifetime limits for 
Americans on Medicaid.
    Both sides used to agree that lifetime limits in health 
care were absolutely wrong, no exceptions. The ban on lifetime 
limits in the Affordable Care Act was one of the core 
protections that Republicans--Republicans--said ought to stay.
    Introducing lifetime limits in Medicaid raises the 
frightening question of, what happens if somebody maxes out 
after cancer treatment at age 45? Are they going to be on the 
street in old age, capped out of nursing home benefits? We are 
going to be discussing that.
    Finally, the Trump agenda of health-care discrimination 
turns against older Americans. Slashing Medicaid to the bone 
and transforming the program into a capped program is an 
extraordinary threat to the welfare of older people. Medicare 
helps to pay for two out of three seniors in nursing homes. And 
it is essential for seniors who count on home-based care.
    Even for older people at age 62 or 63, there is bad news. 
The Trump budget hits them with an age tax, allowing insurance 
companies to charge them far-higher rates than they charge 
others.
    Bottom line: the agenda of health-care discrimination is 
out in force in this Trump budget. And in my view, it is a 
comprehensive plan to drag the country back to the days when 
the health-care system was basically working for people who are 
healthy and wealthy and everybody else was on their own.
    Finally, we are going to, I am sure, talk about the 
question of prescription drugs. The President famously talked 
about how drug companies were, quote, ``getting away with 
murder.'' Those are his words, not mine. And the President said 
they were getting away with murder by setting drug prices so 
high. The way he talked about the problem, Americans thought he 
was going to come out swinging with big solutions to the 
challenge.
    In the plan released last week, I still do not see a 
solution to the fundamental issue: drug companies set prices 
that are way too high.
    There is not a debate about the fact that the system is 
broken and it needs reform, but if pharmaceutical companies can 
come out of the gate with unaffordable prices, patients will 
suffer. And I do not see where you fix that with some efforts 
to play catch-up ball.
    The Trump prescription drug plan lets pharmaceutical 
companies keep on--to borrow a phrase--getting away with 
murder.
    Finally, a lot of what the administration put forward last 
week looks familiar. On the pharmaceutical side, some of it is 
borrowed from legislation I proposed or recommendations that 
came from outsiders. There is value in these ideas; there is an 
opportunity to move on a bipartisan basis. But that is not what 
the American people were promised.
    The American people were promised a muscular approach, a 
position where the American people would know that their 
government was on their side and helping them deal with this 
issue of how they are getting clobbered at the pharmaceutical 
window when they go in to get their medicine.
    I will wrap up by talking about a different part of the 
Secretary's agenda vital to kids. Chairman Hatch and I have 
both mentioned Family First. I am very proud of that effort, 
because for too long the child welfare system has basically 
been about splitting families apart. That is what Family First 
seeks to reform because, instead of just two lackluster 
options--leaving young people in a family setting where they 
were still going to face problems or sending them off to a 
future of uncertainty in foster care--we said we would allow 
States to find safe ways to keep families together and families 
healthier.
    States could use foster care dollars to fund services like 
substance abuse treatment, mental health and parenting 
programs, with the goal of preventing a prolonged slide into 
the crises that end with families breaking apart.
    I share Chairman Hatch's view about the opioid epidemic. It 
was good that additional funds were made available in the 
recent budget agreement. And now what we have to do is make 
sure that the Department moves quickly so that the States can 
get away from business as usual and deal with the epidemic.
    We look forward to hearing from you, Secretary Azar.
    As I have said publicly, the Secretary indicated in our 
pre-
nomination hearing that he was going to take the initiative and 
be in touch on a regular basis to discuss the issues. And he 
has already shown he is serious about that with a call here 
recently. I appreciate it.
    I look forward to our work together. And let us try to make 
more of it look like what has happened out of this committee in 
the last couple of weeks, and let us make less of it look like 
the agenda of health-care discrimination that I believe is what 
the budget is all about.
    Thank you, Mr. Chairman.
    The Chairman. Well, thank you, Senator.
    [The prepared statement of Senator Wyden appears in the 
appendix.]
    The Chairman. Today we have the pleasure of being joined by 
Mr. Alex M. Azar, the Secretary for Health and Human Services.
    Mr. Azar, I want to thank you for taking time out of what I 
know is a tremendous schedule and for your appearing here 
today.
    Because we heard two very eloquent introductions for you 
just over a month ago, I will keep my introduction short and to 
the point.
    After graduating with his law degree from Yale University, 
Mr. Azar also clerked for Justice Scalia on the Supreme Court 
and later became a partner at Wiley, Rein, and Fielding before 
being confirmed as General Counsel at HHS back in 2001.
    Then in 2005, he was asked to serve as Deputy Secretary at 
HHS, where he served as the chief operations officer for the 
largest civilian Cabinet department in the United States of 
America, in our government, with over 66,000 employees and a 
budget of nearly $700 billion.
    Following his service at HHS, Secretary Azar rejoined the 
private sector as a senior vice president for corporate affairs 
and communications at Eli Lilly and Company. He eventually went 
on to become president of Lilly USA, LLC, the largest affiliate 
of Eli Lilly.
    Then just last month, Secretary Azar was confirmed to his 
current role as Secretary of HHS.
    So, Secretary Azar, we are grateful to have you here, 
grateful for your time, grateful for your expertise, and 
grateful for the service you have already given and continue to 
give.
    Please proceed with your statement.

  STATEMENT OF HON. ALEX M. AZAR II, SECRETARY, DEPARTMENT OF 
           HEALTH AND HUMAN SERVICES, WASHINGTON, DC

    Secretary Azar. Chairman Hatch, Ranking Member Wyden, and 
members of the committee, thank you for inviting me here today 
to discuss the President's budget for the Department of Health 
and Human Services for fiscal year 2019.
    I would like to begin, though, by joining Chairman Hatch 
and Ranking Member Wyden in expressing our deepest sympathies 
and prayers for the victims and their families in Florida.
    It is an honor to be here today, and it is an honor to be 
able to serve as Secretary of HHS thanks to the support of the 
members of this committee.
    Our mission at HHS is to enhance and protect the health and 
well-being of all Americans. It is a vital mission, and the 
President's budget clearly recognizes that.
    The budget makes significant strategic investments in HHS's 
work, boosting discretionary spending at the Department by 11 
percent in fiscal year 2019 to $95.4 billion. Among other 
targeted investments, that is an increase of $747 million for 
the National Institutes of Health, a $473-million increase for 
the Food and Drug Administration, and a $157-million increase 
over 2018 funding for emergency preparedness across the 
Department.
    The President's budget especially supports four particular 
priorities that we have laid out for the Department, issues 
that the men and women of HHS are hard at work on already: 
fighting the opioid crisis, increasing the affordability and 
accessibility of health insurance, tackling the high price of 
prescription drugs, and using Medicare to move our health-care 
system in a value-based direction.
    First, the President's budget brings a new level of 
commitment to fighting the crisis of opioid addiction and 
overdose that is stealing more than 100 American lives from us 
every single day.
    Under President Trump, HHS has already dispersed 
unprecedented resources to support access to addiction 
treatment. The budget would take total investment to $10 
billion in a joint allocation to address the opioid epidemic 
and related mental health challenges.
    Second, we are committed to bringing down the skyrocketing 
cost of health insurance, especially in the individual and 
small-group markets, so more Americans can access quality, 
affordable health care. This budget recognizes that this will 
not be accomplished by one-size-fits-all solutions from 
Washington. It will require giving States room to experiment 
with models that work for them and allowing customers to 
purchase individualized plans that meet their needs.
    That is why the budget proposes a historic transfer of 
resources and authority from the Federal Government back to the 
States, empowering those who are closest to the people and can 
best determine their needs. The budget would also restore 
balance to the Medicaid program, fixing a structure that has 
driven runaway costs without a commensurate increase in 
quality.
    Third, prescription drug costs in our country are too high. 
President Trump recognizes this, I recognize this, and we are 
doing something about it. This budget has a raft of proposals 
to bring down drug prices, especially for America's seniors. We 
propose a five-part reform plan to further improve the already 
successful Medicare Part D prescription drug program.
    These major changes will straighten out incentives that too 
often serve program middlemen more than they do our seniors, 
over the next 10 years adding to savings that we are already 
generating with reforms to Medicare Part B payments under the 
340B drug discount program.
    The budget also proposes further reforms in Medicaid and 
Medicare Part B to save patients money on drugs and provides 
strong support for FDA's efforts to spur innovation and 
competition in generic drug markets. We want programs like 
Medicare and Medicaid to work for the people they serve. That 
means empowering patients and providers with the right 
incentives to pay for health and outcomes rather than 
procedures and sickness.
    Our fourth departmental priority is to use the tremendous 
power we have through Medicare as the largest purchaser of 
medical services in the United States to move our whole health-
care system in this direction. This budget takes steps towards 
that by, for instance, eliminating price variation based on 
where post-acute care is delivered, rationalizing payments to 
physicians in hospital-owned outpatient facilities, supporting 
investments in telehealth, and advancing the work of 
Accountable Care Organizations.
    The future of Medicare must be driven by value, quality, 
and outcomes, not the current thicket of opaque, unproductive 
incentives.
    The President's budget will help accomplish three important 
goals at HHS: first, making the programs we run really work for 
the people they are meant to serve, including by making 
insurance affordable for all Americans; second, making sure 
that our programs are on a sound fiscal footing that will allow 
them to serve future generations too; and third, making the 
necessary investments to keep Americans safe from natural 
disasters and infectious threats.
    Making our programs work for today's Americans, sustaining 
them for future generations, and keeping our country safe is a 
sound vision for the Department of Health and Human Services, 
and I am proud to support it.
    Thank you, Mr. Chairman.
    [The prepared statement of Secretary Azar appears in the 
appendix.]
    The Chairman. As you may know, the Finance Committee is 
undertaking a bipartisan process to identify ways to address 
the opioid crisis or epidemic in Medicare and Medicaid so that 
the right incentives exist for addressing pain and addiction.
    When you testified before this committee earlier this year, 
you mentioned that addressing the opioid epidemic would be one 
of your top priorities. Now, I am personally pleased to see a 
number of proposals included in the President's budget on this 
particular topic. And I am sure you have helped do that.
    Will you commit to working with this committee to find 
bipartisan solutions to address this epidemic within Medicare 
and Medicaid?
    Secretary Azar. Absolutely, Mr. Chairman.
    The Chairman. Well, I appreciate that.
    I am not going to ask any further questions at this time, 
so we will turn to the ranking member, Senator Wyden.
    Senator Wyden. Thank you very much, Mr. Chairman.
    And I am going to start, Mr. Secretary--and we have talked 
about this matter of junk insurance and particularly what seems 
to be an administration plan to greenlight it. And I recognize 
that this did not essentially commence on your watch, but you 
are there now and so I have to make sure we are going to have a 
sensible policy.
    What junk insurance is all about is making sure that 
insurance companies can charge more for people with pre-
existing conditions and include arbitrary caps on the amount of 
care.
    And in a lot of ways, junk insurance just turns back the 
clock. And when I heard about this, the first thing I thought 
about is, when I was director of the Gray Panthers, it was 
common for an older person to have, like, 15, 20, 25 policies 
that were sold to supplement their Medicare. They were called 
Medigap.
    And finally, we wrote a bipartisan law--Senator Dole, for 
example, was very helpful in it--which drained the swamp, an 
appropriate phrase for the time.
    And now I look at what seems to be bubbling up again--
different population group, not seniors, but the same sort of 
thing--that we are going to greenlight policies that are 
appropriately called junk because they are not worth the paper 
they are written on.
    Idaho seems to have the most active effort: once again, 
people spending hard-earned money on a plan they need, only to 
find that they are being ripped off by an insurer.
    So thus far, Blue Cross of Idaho is the only insurer that 
has applied to sell the junk plans. And I have the application 
here, and it seems all about finding out if people have pre-
existing conditions so they can discriminate against them, 
charge them more. All the questions in section 5A deal with 
that issue. Have you been pregnant? Have you been tested for 
allergies? Has anybody had a claim over $5,000?
    If an insurer is following the law banning discrimination 
against those with pre-existing conditions, what are all those 
questions about?
    Secretary Azar. So, Senator Wyden, I have seen the media 
reports about the Blue plan request and the actions in Idaho. I 
have not yet seen the plan or received any type of waiver 
request. I can assure you that if we do receive that and if 
that does progress forward, we will be looking at that very 
carefully and measuring it up against the standards of the law, 
as is our duty.
    Senator Wyden. I appreciate that. And I know this is new 
for you, so this is a first impression.
    This, as I understand it, is not a waiver. In effect, Idaho 
is just saying, we are going to do this; we are going to do it 
because we are a State that wants to do it.
    But there is a Federal law, something I fought very hard 
for. It was right in the heart of a bipartisan proposal, the 
Healthy Americans Act, the centerpiece--seven Democrats, seven 
Republicans--airtight protection, loophole-free, airtight 
protection for those who would have a pre-existing condition.
    And now, what this is going to be all about--and when we 
talked in the office, I said you are not going to be sitting 
around reading paperbacks in your job--this is going to be a 
question of whether the Department is going to say Federal law, 
which protects people from discrimination against pre-existing 
conditions, controls or if Idaho can start something that just 
moves America back towards yesteryear where we can have 
insurers beat the stuffing out of people with a pre-existing 
condition.
    So let us do this. This is new for you. I would like you to 
get back to me, let us say within 10 days, with respect to how 
the Department is going to pursue this. Because I think that 
this case is really being watched. This is the one that is 
really going to determine whether States can just on their own 
say, we are going back to yesteryear. So this has very, very 
substantial implications.
    And what I would like to do--two things, Mr. Chairman. I 
would like to ask unanimous consent to enter the Blue Cross of 
Idaho application form into the record. That would be my first 
unanimous consent request.
    [The application appears in the appendix on p. 101.]
    Senator Wyden. My second unanimous consent request is to 
enter in a letter to the Secretary from 15 organizations that 
represent millions of patients expressing serious concerns with 
essentially the points I am talking about, that Idaho is 
breaking a Federal law.
    In other words, the first time I heard about it, I said, 
wow, maybe it is just a waiver, it will be complicated. I have 
been very interested in waivers--a lot of Senators have--but 
this is not a waiver. This is just saying, we are going to do 
it.
    So I want to enter into the record the letter from the 15 
organizations that represent millions of patients expressing 
the concerns I have with Idaho breaking the law, the harm it 
will have on patients, the implications as a precedent.
    [The letter appears in the appendix on p. 104.]
    Senator Wyden. And then, is it acceptable to you that you 
will get back in some way to outline how the Department intends 
to pursue this within 10 days?
    Secretary Azar. I am very happy to get back. I do not want 
to commit on the 10 days because this has to run through a 
process of, first, I guess they are applying to Idaho, and 
Idaho will have to decide its own thing under its laws that it 
has. And then anything would presumably come to us.
    I will be happy to work with you and be very transparent 
about that process. I just do not--I do not want to prematurely 
be involved before there is even a matter in controversy at the 
State level. So all we have seen is a press report that the 
Blues have submitted an application. I do not know whether it 
would even be approved by Idaho or certified as compliant under 
the ACA. So it is really just a question of timing.
    I can assure you we will be looking, at the right time, 
looking very seriously at the legal requirements.
    Senator Wyden. I am over my time. Here is what concerns me. 
They are not planning to come to you and ask permission. They 
have made the argument that they can just do it on their own. 
So this idea that we are going to just sit in our offices back 
here and wait for somebody to tell us, oh, we are going to 
discriminate against people with pre-existing conditions, that 
will not cut it with me. It does not cut it.
    Secretary Azar. No, and that is not what I would propose.
    Senator Wyden. How about if we say I will be told how the 
Department is going to pursue this within 30 days?
    Secretary Azar. I hope--I believe that would be acceptable. 
My only issue is, I need a case in controversy; I need to know 
that there is actually action that is happening.
    Senator Wyden. I am over my time.
    Secretary Azar. But I do not think we----
    Senator Wyden. I think I have made my point. I am over my 
time.
    Secretary Azar. I do not think we have any difference about 
the need of the Department to be engaged here, Senator.
    The Chairman. Well, if you will do that, that would be, I 
think, very helpful to the Senator.
    Senator Crapo?
    Senator Crapo. Thank you, Mr. Chairman.
    And thank you for being here, Secretary Azar.
    I am from Idaho, and I am very familiar with what Idaho is 
doing. And once again, we are in--this is like Groundhog Day. 
Every time a new idea for how to fix the health-care system 
comes out, it is accused of eliminating pre-existing conditions 
as well as every other possible attack that can be dreamed up 
against it.
    I think it is appropriate for you, Mr. Secretary, to wait 
to see exactly what is developing and evaluate it carefully. 
And I would encourage all of my colleagues to review what is 
actually being done rather than just jumping right back in.
    And my good friend from Oregon and I work very closely 
together on many, many issues. I look forward to working with 
you on this issue.
    This plan, as I understand it, does not eliminate pre-
existing issues. When the Graham-Cassidy proposal was made, the 
attack was that, as we give greater responsibilities to States 
to be that incubator of new ideas and of new approaches to 
health care, that it was going to get rid of pre-existing 
conditions, that it was going to drive people out of the 
marketplace, that it was going to cause people to lose their 
insurance.
    The reality is, the effort being undertaken by the people 
in Idaho is one to protect and expand the opportunities and 
access people have to insurance of their choice, insurance that 
will work for them.
    And yes, it does move away from the notion that the only 
insurance policy anyone in America should be able to buy is one 
that this committee or this Congress or this Federal Government 
decides they can buy.
    Fortunately in the tax legislation that we just passed, we 
eliminated the tax penalty for people who do not want to buy 
the product the Federal Government wants to force on them. And 
now the States are seeking to have some flexibility.
    In your testimony, Mr. Azar, you talked about the fact that 
we want to encourage the States to experiment and that 
additional resources are going to be provided to the States to 
allow them to experiment.
    And I understand what the law is. And as I evaluate this, I 
do not see a violation at all. Idaho is still providing 
Obamacare-
compliant plans for anyone who wants to purchase them, but they 
are allowing others to have options. And if the idea is that 
people in America can have options--comply with all the 
Obamacare mandates for anyone who wants that but allow others 
who want to buy a different kind of insurance policy to have an 
option--the idea that that is a direction that we should choke 
off right at the beginning is one that I resist.
    And I would just like your--I know you cannot comment on 
the Idaho situation specifically. But I would just like your 
observation on the notion that we need to facilitate, 
incentivize, and provide additional resources to the States so 
that they can do exactly what many States are trying to do 
right now, which is to find a way to give their citizens 
greater choice and greater access.
    Secretary Azar. Thank you, Senator. And as you said, I 
think any consideration of a State proposal or any matter like 
this requires great deliberation and caution and care in 
assessing it. So I just simply cannot state a view based on 
media reports around a State's program.
    But I think what we are seeing here is a cry for help. It 
is saying that where we are right now with our individual 
market, because of the structure we have, is not serving enough 
of our citizens and there are too many citizens who simply 
cannot afford the insurance packages that we have in our 
program because of the way the statute is designed and the way 
it has been implemented.
    And so that is why it is so important that we work to give 
States flexibility so that we try to offer for those 28 million 
Americans who cannot afford access to the individual market--
Affordable Care Act plans--that they can have other options to 
choose from that may meet their needs, and then also try to fix 
what is in the program to help make that as affordable as 
possible, working together with the Congress.
    Senator Crapo. Well, thank you. And I will just conclude 
with an observation.
    In addition to the program that my colleague from Oregon 
referenced, I expect that Idaho, like many other States, is 
probably going to apply for a waiver or two from HHS with 
regard to some aspect of Federal law, as States are starting, I 
think increasingly, to seek the flexibility that they can get 
from the Federal Government to do this kind of creative work on 
our health-care system to help us find the right path to 
provide the best and the most effective and efficient and 
inexpensive insurance that we can find.
    And I would just encourage you--not just with regard to any 
applications that Idaho provides, but with regard to all 50 of 
the States as they seek to ask you, under the authorities you 
have to grant waivers, to allow them to do this kind of thing 
and to work to improve our health-care markets--to give those 
applications very careful consideration.
    Thank you.
    The Chairman. Thanks, Senator.
    Senator Carper?
    Senator Carper. Thanks, Mr. Chairman.
    Several of my colleagues have expressed their remorse and 
sorrow over the latest shooting, mass shooting, this time down 
in Parkland, FL. I share that.
    I was born in West Virginia, but grew up in Virginia in a 
family of hunters. My dad introduced me to hunting at a very 
young age. I got my first BB gun when I was about 10. I got my 
first shotgun from my dad, and my grandfather died and he 
willed his shotgun to me. And I used it for many years hunting 
as I grew up in Virginia with my dad.
    My dad was a gun collector and sold guns until near the end 
of his life down in Florida. I believe, my family believes in 
the Second Amendment to the Constitution, the right to bear 
arms.
    I want to say, though, I am tired, sick and tired, of 
opening a hearing like this and we express our remorse, again 
another mass shooting. This has got to end.
    My dad used to say we ought to use some common sense. In 
this case, we ought to use some common sense with respect to 
guns and gun legislation.
    Senator Feinstein has legislation that has been introduced; 
it is called a ``no-fly, no-buy'' bill. If you are on a 
terrorist watch list, you should not be able to buy weapons. 
And we cannot even get that passed. It is a sad commentary.
    And, colleagues, we have to use some common sense and use 
our hearts here. And enough of these expressions of remorse. I 
know they are heartfelt, but enough. That is not what we are 
here to talk about today.
    I just want to say, Mr. Secretary, congratulations to you. 
Thank you for the dialogue and the conversations that we had 
during the nomination process. Thank you for the conversation 
we had earlier this week. And I look forward to more as well.
    Sometimes we vote our hopes over our fears here, and I 
voted for you, for your confirmation, out of my hopes. And we 
have this moral obligation I have talked to you about, to my 
colleagues about, until they are sick of hearing it. We have a 
moral obligation to the least of these, and that includes the 
moral obligation to make sure people have access to health 
care, everybody has access to health care.
    We have a fiscal imperative to make sure we are doing it in 
a fiscally responsible way. Among the ways that we do that is 
Federally Qualified Health Centers, the CHIP program.
    Congratulations, Mr. Chairman, on this latest extension of 
your creation, that with Ted Kennedy.
    As a recovering Governor, former chairman of the National 
Governors Association, along with Mark Warner who was chairman 
of the NGA, I know a little bit about what States can do when 
they are given some flexibility.
    By the same token, people can buy cheap insurance, and it 
is not worth the paper that it is written on. And so we have to 
be careful and be mindful of that.
    I want to talk a little bit about our efforts to shift, 
move away from fee-for-service payment to a value-based system, 
Mr. Secretary. But before I do that, I want to just mention, 
despite the efforts of the administration to, I would say, 
undermine, even sabotage our insurance marketplaces, almost 9 
million Americans, over 95 percent of the enrollment population 
in 2007, signed up for insurance plans for 2018.
    Americans support it, they want to keep the Affordable Care 
Act. In contrast, the President's budget proposes to repeal the 
ACA, replaces it with a proposal that eliminates subsidies that 
make health insurance more affordable, and cuts more than $1.4 
trillion out of Medicaid.
    I know you were not in the administration when this 
committee reviewed this proposal last year, so I just want to 
make sure you know that nearly every patient group, every 
physician group, every hospital group, health insurance group, 
strongly opposes the President's proposal.
    More than two-thirds of Governors urged Congress not to 
pass that proposal. The Brookings Institution found that more 
than 20 million Americans could lose insurance if we go that 
path.
    And individuals with pre-existing conditions could lose, 
would lose the guarantee of affordable health insurance. And 
with that, there is much concern from every corner of our 
health-care system in this country.
    Do you think it might be worthwhile to first reexamine this 
proposal and work together with our patients, with our doctors, 
with our health-care providers to make some substantive changes 
before offering up this idea again?
    Secretary Azar. So on this proposal, our concept is, of 
course, to change it to a $1.2-trillion grant program to the 
States that still retains protections for pre-existing 
conditions, maternal care, newborn care, reconstructive surgery 
after mastectomy, and certain coverage for those under the age 
of 26 on family plans.
    So I am very happy to work with you on details to see if we 
can make this program work and have it make sense.
    Where we are is not working for so many people, is the 
challenge. Now, I will work with whatever the Congress has 
given me to try to make it as affordable as possible for 
individuals, with as much choice as possible. We would like to 
pursue legislative change to see if this can be the approach. 
Because insurance is so complex, I do not think, from the 
Federal level, we can do it all.
    Your colleague, Senator Cardin, has a State that has taken 
a very different approach. Other States will take different 
approaches. I love the laboratory of States trying things in 
this very complex area.
    Senator Carper. All right. Good.
    Mr. Chairman, the administration actually--and our 
Secretary has actually offered a couple of ways to stabilize 
the exchanges. This administration, up until now, has been just 
hell-bent on undermining the exchanges, destabilizing the 
exchanges. But I just want to thank you for some encouraging 
developments there.
    And let us say--I think there are some things we can work 
together on, including reinsurance. But we will talk about that 
later. Thank you very much.
    Secretary Azar. Thank you.
    The Chairman. Well, thank you, Senator.
    The Senator from Georgia, Senator Isakson.
    Senator Isakson. Thank you, Mr. Chairman.
    Well, I can testify that you hit the ground running, 
because your first weekend on the job you were on the phone 
long-distance with me talking about the CDC. And I appreciate 
that very much.
    I also know that you probably had no hand in the crafting 
of this budget, because you were not onboard when it was 
crafted, or at the least you saw it after it was done.
    But with regard to the Centers for Disease Control and 
Prevention in Atlanta, I am deeply concerned this has a $1-
billion reduction in funding for CDC from 11.9 to $10.9 billion 
at a critical time for our containment laboratories and the 
research and development that is done there, as well as our 
preparedness at CDC.
    CDC was on the job, ready to go when Ebola hit. It did not 
need additional appropriations to hit the ground running. They 
hit the ground running, and appropriations came later. We 
stopped an epidemic which could have been a disaster, not just 
in Africa, but around the world.
    CDC had the first people on the ground here when anthrax 
broke out after September 11, 2001 in Washington against 
members of the Senate and the House.
    They are the world's health center. They are our 
protection, they are our safety blanket. It is the finest 
facility that there is. And to cut them by almost 10 percent, 
$1 billion, in one fell swoop, to me is unconscionable.
    Have you had time to look at the CDC's budget? Will you 
work to get it to an appropriate level to meet the needs that 
we place on it every single day?
    Secretary Azar. So, Senator, you know the care that I give 
to CDC and the value I place on it, both domestically and 
internationally.
    As I look at the budget for CDC, the biggest part of change 
there really is our two transfers that are part of the 
reorganization that was begun at HHS. One is to move the 
leadership of the Strategic National Stockpile and the 
budgeting under the Assistant Secretary for Preparedness and 
Response. So that just moves where it reports to; it does not 
even change the Atlanta aspect, but just moves where it reports 
to. That is one major chunk.
    The other is the National Institute for Occupational Safety 
and Health, to integrate that--again, not moving it, but 
changing its leadership--to be reporting into the National 
Institutes of Health because of the research function.
    So net-net, it is actually only about a $100-million 
reduction on the operations of CDC.
    What I am really proud of is that we were able to get the 
CDC budget regularized here in our proposal. So, you know, we 
have been operating out of the prevention fund. We have now 
moved that over to $900 million of discretionary, moved that 
over so that the core operations of CDC are now regularized in 
the budget and do not just sit there as a pay-for as we look at 
other legislation. I think it is really critical to the long-
term stability of CDC that we show that that is not variable 
each year, it is really built into the base of operations.
    So I share the commitment and look forward to working with 
you on CDC.
    Senator Isakson. Well, as we transition to a new Director--
CDC is in a transitional leadership role right now--we need to 
not lose focus on the importance of that agency and see to it 
we are funding them to the level they need to be.
    One other point on that funding: the containment 
laboratories, again, are facing economic obsolescence and 
practical obsolescence as early as next year.
    Secretary Azar. Yes.
    Senator Isakson. So it is time that we did some replacing. 
And that is where all the bad, bad, bad pathogens are out 
there. And a lot of young people risk their lives every day 
working with dangerous things, trying to protect us, so we want 
to make sure those laboratories are as safe as possible.
    Secretary Azar. Yes, sir.
    Senator Isakson. In the legislation on chronic care, we 
also had another bill that went in that last night. When the 
train left the station, there were a lot of cabooses on that 
train. One of them was reimbursement for home infusion, which 
you are probably familiar with. This is legislation I worked on 
for a long time and has a deadline of January 1st of next year 
for you to develop reimbursement under Part B to see to it 
those reimbursements for home infusion therapy take place.
    It is a real reduction in the cost to us, because home 
infusion is a lot better than hospital infusion in terms of its 
cost and what it costs the patient, as well as a better place 
for the patient to receive care.
    Would you work with me to see to it that by January 1st of 
next year we get that in place so those reimbursements are 
done?
    Secretary Azar. Certainly. I am not familiar with that 
provision, but I will certainly work with you to make sure we 
get the job done on time.
    Senator Isakson. I do not expect you to be familiar with 
it, but I would never leave here this morning without making 
you familiar with it.
    Secretary Azar. Yes.
    Senator Isakson. And one last point on that. The graduate 
medical education programs were consolidated in the budget: 
Medicare, Medicaid, and the children's graduate medical 
education program into one program with a net decrease in 
appropriation. Those programs are fantastic for creating good 
physicians and new physicians in health care for children and 
the elderly.
    Will you work with me to see if we can get the maximum 
appropriation appropriate to continue to meet the needs of the 
people of the United States for graduate medical education?
    Secretary Azar. Yes, absolutely, Senator. What we are doing 
with the proposal on graduate medical education is trying to 
pull the three different streams together and actually give 
flexibility to make sure that we are able to invest in 
specialties and underserved geographic areas that need it the 
most.
    Right now, we are very ossified from 1996 program levels 
and sort of stuck there. This would grant flexibility to ensure 
that the money, that scarce money, is going where needed most 
for our health profession development, but I am happy to work 
with you on that.
    Senator Isakson. I look forward to working with you and 
wish you the very best of luck in your new responsibility.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Cardin?
    Senator Cardin. Thank you, Mr. Chairman.
    Mr. Azar, a pleasure to see you here.
    I want to talk about a few issues in the President's 
budget, following up on some of our conversations from your 
confirmation hearings and discussions that we have had.
    You and I talked about our commitment in regards to 
minority health and health disparities, the Institute of 
Minority Health and Health Disparities at the National 
Institutes of Health, and the Office of Minority Health at HHS.
    I was disappointed to see that where we have put newer 
resources into NIH--and I support that strongly--there was a 
reduction of resources at the National Institute for Minority 
Health and Health Disparities and a reduction of resources at 
the Office of Minority Health within HHS.
    Can you just share with me the rationale of those budget 
cuts and reassure us of your commitment to the mission of 
minority health and health disparities?
    Secretary Azar. Yes, Senator Cardin. Thank you for raising 
that.
    The NIH issue, if I could, I would like to get back to you 
on that, because I am not familiar--14 days on the job--with 
that granular level within the NIH budget. We are delighted we 
are able to actually keep NIH funding at the level it is, that 
we are proposing. So I do not know about some of the ups and 
downs there. I would like to get back to you on that if I 
could.
    On the Office of Minority Health, you know, it is still a 
scarce and tight budget environment, and one thing that we 
tried to do was to really prioritize direct service delivery 
programs and actual scholarship, an underserved area, and 
promotional activities around health professions.
    So as we looked across the budget, a thematic approach that 
was taken was, is this delivering direct care in minority 
communities or is this supporting the development of health 
professionals who will serve in underserved areas through 
scholarship and reimbursement programs?
    So that was the thesis that we tried to operate from. And 
more general programmatic activities sometimes would have been 
deemphasized against those in just the budget tradeoffs that 
get made there.
    So it is certainly not a minimization around minority 
health programs. It is really the tradeoff and focus on service 
delivery.
    Senator Cardin. Well, that is helpful. If you could work 
with our office so that we are aware of your strategies, 
because I think together we can be more effective. We want to 
make sure you have the resources that you need here and are 
able to deal with the mission that we believe in: reducing 
disparities in our communities. So if we could work together, I 
would appreciate it.
    Secretary Azar. Thank you.
    Senator Cardin. I would just caution on another area in 
regards to the budget and imposing some additional costs on 
emergency care, which turns out to be non-emergency conditions.
    And my concern here is that we are seeing an attack on the 
prudent layperson's standard in the private insurance 
marketplace. Congress has passed legislation on this to make it 
clear that if it is prudent for you to seek emergency care, it 
is going to be reimbursed. And we are very happy if you end up 
in the emergency room and the condition is not life-
threatening--that is good news. But then you might get a shock 
when you get the bill and recognize it is not being paid by 
your insurance company.
    So the policies in the government programs become 
particularly important because they are used as goalposts by 
the private companies. And it looks like you are now imposing 
additional copayments and costs on emergency care, where the 
individual may have gone into the emergency room for proper 
reasons but now finds there is a cost issue, which could be 
used to deter people who need it from seeking care.
    Secretary Azar. So I believe you are referring to a 
suggested proposal that is in the budget that would allow for 
Medicaid copays for emergency room visits that are determined 
to have been misuse of emergency room visits. I agree with you, 
we have to be----
    Senator Cardin. I did not know it was misuse. I thought it 
was that it turned out not to be emergency care.
    Secretary Azar. Well, yes. We would need, we would want to 
work with you to make sure that any legislation there is done 
in a common-sense way. There is zero desire that it should 
deter anyone from going into emergency rooms for care that they 
ought to be seeking. And we need to make sure there is enough 
of a cushion there that is common-sense and that does not, as 
you said, create a situation where it deters people from going 
in when they ought to go in.
    Senator Cardin. Thank you, because we worked a long time on 
the prudent layperson's standards. We had horrible practices in 
the private sector, preauthorizations and things like that, 
that were jeopardizing people's health.
    There is one last point I would like to make, and that is, 
I disagree with the budget on the Medicaid cuts and the basis 
behind the Medicaid cuts.
    But I just want to raise one issue that I would urge you to 
be very careful about. We do not really have a long-term care 
policy in America. And the States have the lion's share of the 
burdens under the Medicaid system for long-term care. And to 
the extent that we put more pressure on the States on Medicaid 
programs, we jeopardize long-term care, which is critically 
important to our seniors in America.
    And I just think it is important that, whatever policies we 
adopt here at the Federal level, we are mindful of the negative 
impact it could have on care for seniors.
    We would like seniors to be able to pay for their long-term 
care; we would love them to have third-party coverage. Most do 
not and therefore fall under the Medicaid program. And if we 
put too much of a strap on the Medicaid program, we are going 
to jeopardize long-term care for our seniors.
    The Chairman. Well, thank you, Senator.
    Senator Portman?
    Senator Portman. Thank you, Mr. Chairman.
    And, Secretary Azar, thank you for coming before us. I 
think you are now fully in place, and it is great to see the 
good work that you already started to do.
    I know you are very interested in this issue of substance 
abuse and particularly the opioid crisis. You and I have talked 
about it at some length. And I would ask you a couple of 
questions about that.
    First, with regard to the funding, I notice that in your 
budget you have additional funding for HHS, for SAMHSA. We also 
in this body in this fiscal year actually increased the funding 
for the Comprehensive Addiction and Recovery Act programs over 
the authorization level. We have $267 million for fiscal year 
2017, for instance, which was over the roughly $181 million 
that was authorized, because we think these evidence-based 
programs are where we ought to be directing some of this 
funding, rather than just throwing money after the problem to 
find out what works.
    And these are the right kinds of treatment programs: long-
term recovery programs, prevention programs, helping our first 
responders.
    My question to you is, with the President's budget 
indicating that HHS would have additional funding and with our 
recent budget indicating that there would be $6 billion 
directed toward this effort over the next 2 years, would you 
support additional funding for these evidence-based programs 
under the Comprehensive Addiction and Recovery Act?
    Secretary Azar. So I do not know where our breakdown is on 
the additional $3 billion in 2018 and $3 billion that we are 
allocating in 2019. If I can get back to you, I just want to 
see if we have put in the allocation, the funding toward those 
particular programs.
    But I am just delighted by the support of Congress and of 
the President here and the amount of funding. We are going to 
be able to support our addiction and treatment programs at 
historic levels. We also put more money out last year than ever 
before in history to help with the opioid crisis. And then with 
these 2 years' funding and the $10-billion total, I am excited 
to be able to work with all of you on these efforts.
    Senator Portman. Again, I would say that the $267 million, 
which was unprecedented, that we appropriated for this fiscal 
year is a relatively small amount compared to the $10-billion 
issue, say, that HHS was budgeted without specificity, as I see 
it, in your budget. And we just want to work with you to be 
sure that funding is used for evidence-based programs that 
really work.
    We have an example of one, by the way, that works which I 
am concerned that your budget is going to make less effective, 
and that is the Drug Free Communities Act. And I was the author 
of this many years ago in the House, so maybe I have a little 
bit of a bias toward it, but I also spent 9 years as chair of 
our local coalition which was funded initially with some seed 
money from this program. Over 2,000 community coalitions have 
been formed around the country in response to the Drug Free 
Communities Act, which essentially provides some matching 
funds, almost seed money, for a short period of time.
    We required that these coalitions, by the way, have 
performance measures so we know whether they are working or 
not. We think this is a very effective prevention and education 
program.
    At the time of an opioid crisis, it seems to us to be 
exactly the wrong thing to do to take something that is working 
and risk its ability to be effective in the future by moving it 
from, in the case of your budget, ONDCP to HHS to combine with 
other prevention programs that are different in kind.
    So I would ask you to take a look at that. If you can 
explain to me this morning why you think it ought to be moved, 
I would be interested to hear. But I would hope that you would 
not promote this idea.
    I frankly do not think Congress is going to go along with 
it. If they do, I am going to fight against it. Again, when 
something is not broken, let us not try to fix it, and 
particularly at a time when we need desperately to have more 
prevention and education out there.
    Secretary Azar. So I hope that I am remembering the correct 
program, but I believe the change that you may be referring to 
is the movement of the program, the funding, from ONDCP to 
SAMHSA.
    Senator Portman. That is correct.
    Secretary Azar. We already at SAMHSA administer that 
program. And I think this is just regularizing where the 
funding is, since ONDCP is not a grant-making organization, 
does not have those capabilities and staffing around that we do 
already. And it is just putting the money where the function 
already is.
    So I actually do not believe it is in any--I know it is in 
no way a deemphasis of the program. It was much more a 
regularizing of the function over to SAMHSA where the work was 
already getting done. I believe that is the case. And I will be 
happy to just confirm that.
    Senator Portman. Yes. Again, it, you know, has gone back 
and forth over the years. It was at DOJ for a while and HHS in 
terms of administering some of the actual grants, the grant-
making that goes out, as we talked about, but the direction 
comes from ONDCP, which has this ability to take an interagency 
approach. And it does involve a number of different departments 
and agencies ultimately, the prevention and education efforts.
    So I would hope that you would take a look at that, because 
it is something that is actually working out there at a time 
when we need more help than ever.
    So I thank you again for your service. My time is expired. 
I have a couple of other questions I am going to submit for the 
record. And again, I appreciate the fact that you have stepped 
up, and I look forward to working with you on the opioid crisis 
and other matters.
    The Chairman. Okay. Senator Toomey?
    Senator Toomey. Thank you, Mr. Chairman.
    Secretary Azar, thank you for joining us. Good to see you 
again.
    The administration's budget in your area, I think, strikes 
some constructive balances. You have emphasis in some important 
priority areas, like Senator Portman has alluded to: opioid 
abuse, research, and treatment. I do hope we will be doing more 
to understand the root causes of addiction as well as treatment 
of addiction. I think we have a long way to go there.
    Also, ideas about lowering the costs of prescription drugs 
and continued investment in medical research generally are all 
good.
    But I also want to commend you for addressing a huge, huge 
fiscal challenge that we have, which I think your budget does 
address, and which I am going to ask you to comment on in a 
moment, and that is dealing with the unsustainable spending of 
our entitlement programs.
    I just think we cannot underscore enough that you cannot 
tax your way out of a problem. There is no revenue solution to 
Federal Government spending programs that are growing faster 
than our economy, as ultimately tax revenue can never, for 
long, grow at a rate faster than our economy.
    It strikes me, it long has struck me, that one of the 
sensible places to begin to address this is with Medicaid, in 
part because it is the biggest net expenditure program in the 
Federal Government. There is no dedicated revenue stream, as 
with Social Security and Medicare.
    So Medicaid has these huge, huge outlays. The growth has 
been staggering, right? In 1980, the Federal spending on 
Medicaid was 2.4 percent of our budget, half a percent of GDP. 
Today, it is 10 percent of our budget and 2 percentage points 
of GDP.
    Yesterday, the CMS actuary report on national health 
expenditures projects that Medicaid will continue to grow at 6 
percent per year--6 percent. Nobody believes that our economy 
is going to grow at 6 percent. So what that means is, this 
program is going to continue to consume an ever-greater share 
of Federal spending and the economy if we do not do something 
about it.
    Well, one of the things we might consider doing about it is 
restructuring this program so that there are Federal caps on 
spending on a per-capita basis. And this, of course, is a 
completely bipartisan idea, first floated seriously by 
President Bill Clinton, supported by Donna Shalala and Howard 
Dean and the American Academy of Pediatrics. And at one point, 
every Democrat in the United States Senate supported 
establishing these per-capita caps in a restructure of 
Medicaid.
    And your budget, as I understand it, further would allow 
this per-capita cap to grow every year and you would tie it to 
a measure of inflation that we might actually be able to keep 
up with, the CPI-U.
    And so the net effect of all that is that Medicaid spending 
every year would grow. Medicaid spending per beneficiary would 
grow. But it might just grow at a rate that we could afford, 
that we could keep up with.
    Now, I think it is also critical that you tie this to 
giving States more flexibility to discover ever more efficient 
and effective ways to deliver services. My colleague from Rhode 
Island and I discussed just yesterday how many opportunities 
there are to encourage the development of more efficient ways 
to deliver health-care services.
    So I am just wondering if you would elaborate a little bit 
on how you envision this reform idea, how it would still work 
for the people who need this program, as that is a necessary 
criterion for anything that could possibly be considered 
successful.
    And if you would care to elaborate on how appropriate 
setting--I know you touched on that a moment earlier--how that 
might fit into this, I would welcome your thoughts.
    Secretary Azar. Well, thank you, Senator.
    Actually, the President's budget goes exactly along the 
lines of the concerns and the solutions that you just 
expressed. And it adds into it, also helping to fix the 
concerns that we have around the individual marketplace. So it 
changes Medicaid to allow for these per-capita grants to the 
States that then they would have tremendous flexibility with to 
run their Medicaid program. They would have the skin in the 
game to run that program, but within a 
budget.
    And it would combine money in a $1.2-trillion program out 
to the States that would allow for coverage of what we 
currently call the Medicaid expansion folks as well as the 
individual markets--so money that could be used as States 
determine to try to create really effective mechanisms to 
provide affordable, flexible, tailored insurance for 
individuals in their State that would still have protections 
for pre-existing conditions, maternal care, newborn care, et 
cetera.
    And so that is what actually, I think, is one of the really 
constructive aspects of this budget: putting all of those 
people together gives the State a real tool to create effective 
risk pools that can create sustainable, affordable insurance in 
the future.
    And even core Medicaid would grow from $400 billion to $453 
billion over 10 years. So even the core traditional Medicaid, 
as you said, would grow because of inflation adjustment.
    So I am excited to work with Congress on this as a possible 
idea.
    Senator Toomey. Thanks very much. I look forward to working 
with you.
    Thank you, Mr. Chairman.
    Senator Portman [presiding]. Senator Whitehouse?
    Senator Whitehouse. Well, thank you, Mr. Chairman.
    Senator Portman. You looked lonely down there at the end of 
the panel.
    Senator Whitehouse. I know; it is a long way down here, and 
I am afraid Secretary Azar is going to get a crick in his neck 
that will require medical treatment from having to turn so far 
to see me. I appreciate it.
    When we met in my office, I showed you, I think, one of my 
favorite charts, which is this one, which shows the CBO 
estimates for total Federal heatlh-care expenditures. And the 
red line along the top was CBO's predicted total Federal 
health-care expenditures as of 2010.
    The Affordable Care Act went into effect and time went on, 
and it turned out that instead of that red line, what actually 
happened was that green line. And then here in 2017, CBO did 
another forecast. So from this dot forward, the green line here 
is the newer forecast.
    As you know from our budget process, we think in 10-year 
increments in the budget process. So this green area is the 10-
year budget window from 2018 through 2027. And in that period, 
we estimate that anticipated Federal health-care spending is 
$3.3 trillion lower.
    Now, I do not know how that happened. And I have a terrific 
staff, but they are not like your staff. I think it should be a 
matter of urgency to try to really think hard about why that 
happened. And I hope that you will take a look, because if we 
can find $3.3 trillion in Federal health-care savings without 
inflicting pain on seniors and other beneficiaries, that is a 
goal worth fighting for.
    Now my sense of it, to go from the global scale down to 
local, is it has a lot to do with delivery system reform and 
payment reform. And I want to focus on the group that I 
mentioned to you, I think, also in our meeting, the Coastal 
Medical provider group, a primary care group in Rhode Island, 
which was one of the early ACOs.
    In the 5 years that they have been an ACO, they have saved 
an average of $558 per patient per year. And they were not 
high-flyers to begin with. In 2016, which is the year we have 
the last complete data for, they were down $700 from their 
previous measure, but they were down a thousand dollars from 
the average. So it is not like they were one of the most 
expensive provider groups; they were actually doing better than 
average when they began, and they still saved an average of 
$558 per patient per year.
    And the patients could not be happier, I can tell you 
first-hand, because those savings came through better service 
and better care.
    So it seems to me that if you take $558 per patient per 
year and you spread that across the Federal health-care system, 
you start to look at numbers like $3.3 trillion, that there is 
a connection perhaps between the payment reforms that empowered 
Coastal Medical to change their means of practice to save that 
money and better serve their patients and that big estimate of 
savings that we are seeing.
    So I just want to flag that for you. We saved CMS $28 
million with what the Coastal Medical people did. Twenty-eight 
million dollars is not big bucks to you. You would probably 
have to put a ``b'' instead of an ``m'' in that. But in small 
Rhode Island from one provider group, to save 28 million bucks 
is pretty significant. And you start adding in the multipliers 
nationally, and I think there is a big gain here.
    So I really want to work with you on this. I would urge 
that the more that we talk about repealing Obamacare and having 
those fights, fine if that is what you want to do. I do not 
think that is good policy. I do not think that is good for the 
recipients. I do not think that is good at all.
    But what I do not want is for you to get so involved in 
that fight that you will not work on the delivery system reform 
piece, which I think is strongly bipartisan, is completely 
beside the Obamacare wars. I do not think the people who want 
to repeal and replace Obamacare the most want to go back and 
repeal and replace the ACOs. They would have an explosion from 
their home-State doctors and providers if they tried. So I 
think this is a safe bipartisan place where real progress can 
be made.
    And I just want to take my time with you today to urge 
that. And we are counting on a visit from you at some point to 
meet Dr. Kurose and his Coastal Medical team up in Rhode 
Island. We have other primary care physicians who are producing 
similar results. And there is a lot of excitement and 
satisfaction around that.
    Secretary Azar. Well, if I could say, I totally agree about 
the need for the value-based transformation. I think it is a 
bipartisan issue that we can improve quality, we can decrease 
costs, and we can make all of our programs more sustainable the 
more we can do that.
    Senator Whitehouse. And I will just give you fair warning, 
but I am going to be harassing your folks at the staff level 
for more information out of, like, the MACRA program, the MIPS 
program, the Center for Medicare and Medicaid Innovation, all 
those things. So I hope I will get good answers to my 
questions.
    Thank you.
    Senator Portman. Senator Cantwell?
    Senator Cantwell. Thank you.
    Welcome, Secretary Azar.
    You mentioned GME in the discussion with our colleagues. 
How would the proposal encourage medical training in community 
clinics where most physicians actually care for patients? And 
how would it help the community clinics that are not under the 
current cap?
    Secretary Azar. So in terms of the--is this the community 
health center program on GME that you are referring to, 
Senator?
    Senator Cantwell. Your proposal to change the structure, so 
I am just trying to understand how would it address a couple of 
things that are in the need area----
    Secretary Azar. Right.
    Senator Cantwell [continuing]. Which is community-based 
clinic training and teaching hospitals that are not under the 
current cap program.
    Secretary Azar. So we are not proposing a change to the 
community health center-based training programs that we have. 
Those are separate. These are the Medicare, Medicaid, and then 
the HRSA-run children's hospital programs on GME. And it puts 
those together so that we do not operate under these artificial 
1996-based caps and instead can really focus on the providers 
that can help train our physicians and get them to both make 
sure we are funding in the underserved specialties and areas 
where we need physicians the most to make----
    Senator Cantwell. Including primary care.
    Secretary Azar. Absolutely, absolutely, as well as 
underserved areas. How can we make sure that we are dedicating 
the money to get training to physicians that are or will serve 
in areas that are lacking in appropriate physician care.
    Senator Cantwell. Okay. So if you are saying you are 
willing to take on the big behemoth of east coast teaching 
institutions having most of the capacity, I am all with you, 
okay? Because I think with the divergence of medicine and where 
we are going, we need to train physicians in all sorts of ways. 
So I am all for that.
    I do not like the fact that you have actually then cut the 
program. Because from my estimation and what I see in the 
Pacific Northwest and our shortage and the whole notion of 
everybody having a medical home--and we are very excited about 
P4 medicine, you know, predictive, preventive, personalized, 
participatory, so that physicians are being trained on what you 
would, I hope, describe as a way to drive value into the system 
and get off of fee-for-service.
    So what about that number? Why cut the program when I am 
pretty sure we need probably, like, four or five times that 
amount?
    Secretary Azar. Well, overall, one of the philosophies that 
we had was to try to move some of our programs, where right now 
we are having Medicare carry the burden across the whole 
health-care profession. As we looked at how can we make 
Medicare be more sustainable, you know, our proposals actually 
stretch out the life of the program for another 8 years as a 
result of it. And they are tough choices, I will admit that.
    But right now, we are having Medicare and Medicaid fund 
graduate medical education that private insurers, commercial 
people get the benefit of. And so there is a bit of 
recalibrating in there, from the Federal taxpayer perspective 
and Medicare and Medicaid, that transition to cut that back a 
bit. As a result, I think it is $48 billion off of where we 
stand right now over 10 years.
    Senator Cantwell. But if we examined the shortage and the 
need, you would not cry if Congress basically boosted that 
number.
    Secretary Azar. I would have to do so within our budget 
targets. So if that goes up, something else has to go down. 
That is the age-old challenge of these budgets.
    Senator Cantwell. Okay. Well, please mark me down as very 
counter to what Senator Toomey just said.
    I believe that we have a growth in our Medicare and 
Medicaid population because we have a burgeoning baby boomer 
population that is reaching retirement. So the notion that 
somehow people think that you should cut Medicaid and Medicare 
or block-grant Medicaid as a way to save dollars just because 
the population is growing, because of the demographics in our 
population, I just think is wrongheaded.
    Now, do I think there are efficiencies? You and I have had 
a chance to talk about rebalancing as one of those. That is a 
huge, huge savings. But the notion that somebody, after giving 
away billions of dollars in tax breaks to big corporations, 
would want to come here and say, now we have to block-grant 
Medicaid as the only solution because it is growing in numbers 
because of demographics is just--I just do not agree with it. 
As my providers have told me--hospitals--they view the block-
granting proposal as nothing but a budget mechanism to cut 
Medicaid.
    So what they do support are the efficiencies that we are 
driving in the Northwest and implementing those in the system. 
You know, who doesn't want to stay at home and get long-term 
care, as my colleague just mentioned? Who doesn't want to do 
that? That is one-third the cost.
    And so, if you could, comment on rebalancing from nursing 
home care to community-based care as a big savings.
    Secretary Azar. For some individuals, institutional nursing 
home care meets their needs and is what they need. But I am, as 
I said at my confirmation hearings, a firm supporter of the 
notion of home-based care and these alternatives ways that I 
believe can save us money.
    I believe that for many it can be the best solution. It can 
be the way to age with dignity. So I am very supportive and 
very much want to work with you on ways we can generalize that 
more across the United States.
    Senator Cantwell. Well, I appreciate that. I am just very 
concerned about some of my colleagues. We have been very 
suspicious that this is what might happen now after the tax 
bill passed, that people are going to go back to trying to 
block-grant Medicaid. And just mark me down as very opposed.
    And basically, a much better--we are already doing the job. 
We are already doing the job of reducing the costs. So the 
notion that somebody wants to create a budget mechanism to cut 
people off Medicaid, my providers--the community services, the 
children's hospitals--they are just not going to support it.
    Thank you, Mr. Chairman.
    Senator Portman. Senator Nelson?
    Senator Nelson. Mr. Chairman, thank you for the kind 
comments of several of you with regard to the slaughter of 17 
students and teachers.
    And Senator Rubio and I will be addressing this issue on 
the floor of the Senate at noon today.
    Mr. Secretary, I want you to know that you are a very 
prepared individual. You are a fine person.
    When you were here on your confirmation hearing, I asked 
you several questions about Medicaid and Medicare. And you 
sidestepped the questions about cuts. And now, coming forth 
just a few weeks later with the budget, sure enough you have 
about $1.4 trillion over 10 years in cuts to Medicaid. And that 
is going to shift costs to the States, and the States will have 
to plug the holes by raising taxes or cutting other parts of 
the budget that they are responsible for, like education.
    A State alternatively could choose to cut Medicaid benefits 
or drop people from the program or cut payments to providers.
    How would you expect a State, like Florida, that has a big 
population to afford to cover the higher cost, Mr. Secretary?
    Secretary Azar. So on Medicare, one thing that I would want 
to emphasize is, you know, we are proposing to Congress to make 
some changes there in how we do various payments to providers. 
We are actually not suggesting changes that would impact the 
beneficiary. The only ones that we have that would impact 
beneficiaries are around drug pricing that we think would have 
a very positive effect for beneficiaries in terms of their out-
of-pocket spending.
    What we do is, the net change to Medicare that we propose, 
it is $250 billion over 10 years, which is about a 2.8-percent 
reduction. But just to give a sense of perspective, that takes 
Medicare, which is growing at a 9.1-percent annual rate of 
growth over that 10-year period, and changes that to an 8.5-
percent rate of growth.
    Senator Nelson. Now, you are talking about Medicare.
    Secretary Azar. Yes, in Medicare.
    Senator Nelson. Well, my question was Medicaid. My question 
was Medicaid.
    Well, let me ask you then on Medicaid--for example, 
veterans rely on Medicaid. Seventy percent of seniors in 
nursing homes rely on Medicaid in Florida. So capping Medicaid 
benefits could lead to States cutting these veterans' benefits 
and the seniors'. What do you say to that?
    Secretary Azar. Well, we believe that States are in the 
best position to decide how to use the money to allocate among 
various populations.
    So for instance, the core Medicaid continues and actually 
grows from $400 billion to $453 billion over the 10-year 
period. And then we replace the Medicaid expansion and the 
Affordable Care Act individual markets program with a $1.2-
trillion grant out to States that is very flexible, that 
actually, on the expansion population, the States then do not 
have that 10 percent of copayment Federal matching that they 
would have to come up with to do that. So it actually gives 
them flexibility, and it is sort of found money for them in 
that sense.
    Senator Nelson. That is what is typically the case with a 
block-grant program or turning it over to the States.
    My State is subject to hurricanes. Puerto Rico is subject 
to hurricanes. We saw what has happened with Medicaid. It has 
to respond to a public health emergency in a natural disaster. 
And if your response is that, oh, further Medicaid funding 
would be provided after a hurricane, the fact is that Congress 
waited nearly 5 months before passing disaster aid for 
hurricane victims in Florida--5 months--and 32 months after 
Flint, Michigan's lead poisoning.
    I know what your answer is--you have provided it--and we 
have a significant difference of opinion.
    Let me ask you this specific question. States faced $1.3 
billion in higher Medicaid drug costs with the introduction of 
the then-new hepatitis C drug Sovaldi in 2014. By cutting 
Medicaid, are you suggesting that States should not cover these 
kind of breakthrough treatments that cure chronic conditions 
and come with high costs?
    Secretary Azar. Absolutely not. In fact, the Sovaldi case 
is a really good example of how all of our payment systems are 
really not equipped to deal with what we would call curative 
therapies. And that is an area I would look forward to working 
with you and the committee on.
    Our payment systems just cannot handle the notion of a 
high-cost drug that we would pay for but get the benefit then 
over the course of somebody's entire lifetime, from a single 
year's expenditure. We need to be creative and we have to think 
about ways all of our programs, including the commercial 
marketplace, can handle, in the future, products like that.
    Senator Nelson. Mr. Chairman, in closing I just want to 
point out that in a growth State like your State, especially my 
State that is growing at a thousand people a day, where we 
educate the doctors and then we do not have the residency 
programs, they end up going and doing their residency outside 
of the State of Florida, and they usually stay and practice 
there. And yet we have borne the cost of educating them.
    And when you start cutting $48 billion over 10 years to the 
graduate medical education payments, it is going to severely 
hurt a State like ours that is a growth State that desperately 
needs those residency programs to keep our doctors.
    Senator Scott [presiding]. Senator Casey?
    Senator Casey. Thank you, Mr. Chairman.
    Mr. Secretary, good to be with you. I guess you have been 
on the job about a month.
    Secretary Azar. Fourteen days.
    Senator Casey. Fourteen days; okay, less than a month. We 
are grateful you are here.
    And you and I have had discussions before, and certainly in 
this setting about Medicaid. Our approaches to it differ, so I 
want to raise it with you in the context not just of the 
program, but also what I believe the administration has been 
trying to do with regard to Medicaid, and secondly some kind of 
Pennsylvania-specific challenges.
    When I think about the program, both the core Medicaid and 
then the expansion, I try to think about it in terms of the 
people who are impacted.
    In our State--there are lots of ways to describe it, but 
more than 2 million people are covered. But also, you could 
think about it with three numbers: 40, 50, 60. Forty percent of 
the children in Pennsylvania, 50 percent of individuals with 
disabilities in our State, and 60 percent of individuals who 
are in fact nursing home residents. So that is, as you can 
tell, a big, big number--or three big numbers.
    In our State, we have 48 rural counties out of 67. And just 
in those rural counties, 180,000 people got the benefit of 
Medicaid expansion for their health care.
    And then another way of looking at it is the horror, which 
you know well--the horror of the opioid epidemic and the 
overdoses that come with that as well as related overdoses. 
Just in Pennsylvania, when we look at it between 2015 and 2016, 
the overdose death rate is up some 37 percent. It is higher 
actually, in the low 40s, I guess, for rural areas.
    You are a native; you have roots in Cambria County. That is 
one of those counties, among many, not among a few, where the 
overdose death rate has gone way up: 94 deaths just in Cambria 
County in 2016.
    So I raise all that because Medicaid is critically 
important to our State. It is especially important, the 
Medicaid expansion part of the story, to deal with the opioid 
crisis, because it is basically the 
number-one payer for those who need treatment and services.
    My real concern is twofold. Number one is that the 
administration, I believe, in a little more than a year now, 
has been sabotaging the Affordable Care Act, taking 
administrative actions, doing everything it can to undermine 
the Affordable Care Act in the absence of getting full repeal 
by way of legislation. I would hope that you would put an end 
to that.
    And then secondly, there appears to be an effort in the 
budget to use the budget process over time not only to cut 
Medicaid dramatically, but to end the Medicaid expansion.
    So I would ask you two questions. Number one is, will you 
commit to ending the sabotage through the efforts of an agency 
like yours?
    And secondly, tell us about the impact of the budget on 
Medicaid and, in particular, Medicaid expansion.
    Secretary Azar. Yes, thank you, Senator.
    On the first point, as we have talked about before, you 
have my commitment that I and my department will work to make 
health insurance as affordable as possible, have as much choice 
for people and meet their needs as much as we can, and do so 
faithfully within the law of whatever programs we have.
    I am about making our programs work as best they can. And I 
can tell you, the team around me has that same commitment to do 
so.
    Now, you and I will often disagree ideologically about what 
might work and what will not work, our understanding about 
economics or insurance benefits and how they will function. Our 
desire is the same. I want as many people as possible, as do 
you, to have access to affordable health insurance and to help 
those who cannot afford it get access within our fiscal 
constraints. So I think we certainly share those goals.
    On the second point of Medicaid----
    Senator Casey. Just parenthetically to add, I hope your 
goal also would be that no one loses coverage who is covered by 
Medicaid now.
    Secretary Azar. So our goal is to make sure people have 
access to affordable insurance and that they have a choice of 
those packages.
    On Medicaid, you actually mentioned some populations that I 
do care a lot about--and we care about all--but children, the 
disabled, the elderly in nursing homes. One of the really odd 
incentives of the way the expansion was done is, it created a 
perverse incentive, because of the differential matching from 
the Federal Government, to actually prioritize the expansion to 
able-bodied, new-entry populations, over those traditional 
Medicaid populations.
    So I am actually concerned, and I hope that, through our 
proposals and our work together, we can reorient Medicaid to 
fix a lot of those counter-incentives there that are in what we 
might call the traditional Medicaid populations. So I do worry 
about that group.
    Senator Casey. Well, I just hope that we are not at a point 
where we are talking about access, that we are talking about 
ensuring that people covered by Medicaid do not lose it, all 
those folks who have a disability, all the children, all the 
folks in nursing homes.
    Let me just, Mr. Chairman, with your indulgence, have one 
more minute.
    You probably have not seen this yet because it was just 
sent yesterday, but I have a letter that I have sent you about 
what States are applying for in their waivers. I will just read 
one sentence from the letter I sent you. I hope you will take a 
close look at this and provide a response.
    At the end of the first paragraph, I say, ``I urge you to 
reject Medicaid waiver applications from States that would 
further three things: limit, restrict, or block Americans' 
guaranteed access to affordable coverage.''
    So I just hope you take a close look at that and provide a 
response.
    Secretary Azar. I will. Thank you.
    Senator Casey. Thank you.
    Senator Cassidy [presiding]. Hi, Mr. Azar.
    You know, as one of the authors of Graham-Cassidy--I was 
not intending to, but I will at least open up with some 
comments regarding that.
    And as I have heard some of my Democratic colleagues speak 
to this, it becomes clear that what I suspected is true, that 
they really do not understand the legislation. Because what we 
have been speaking to, Graham-Cassidy addressed.
    For example, one of my colleagues said that there has been 
a problem after natural disasters, that there were not dollars 
made immediately available for Medicaid for those who were 
impoverished because of the disaster. And of course, under 
Graham-
Cassidy, we have either every 3 or 6 months a registration in 
which the State would say, hey, these people are now eligible 
so, therefore, we get money for them. And they would get money 
on a risk-adjusted, per-person enrollment. And so indeed, the 
State only gets money if they enroll somebody, aligning the 
incentive to enroll.
    It acknowledges something, which I have to say I was a 
little surprised others are now acknowledging who were in the 
Obama administration, which is that the status quo is not 
working.
    I just got an email from Bill Frist, if you will, one of 
those emails everyone gets, the United States of Care, which is 
a group of people including Andy Slavitt, Melanie Bella, Pat 
Conway, Tom Daschle, a constellation of Democrats who were 
concerned with or in the Obama administration--either nominated 
or who actually served--saying that the status quo is not 
working.
    So it is interesting, people are defending a status quo 
which is not working. And I would digress just a minute more to 
speak about how it is not.
    One, States in the individual market, if they are not 
getting a subsidy, can no longer afford insurance. Folks in 
Louisiana are paying as much as $40,000 a year for premiums. 
Get that, $40,000 a year. Now, people like Andy Slavitt and 
Melanie Bella are acknowledging that, but some folks up here 
are not. This is not sustainable.
    It is not sustainable for States. Oregon is having to pass 
new taxes in order to pay for the State's share of Medicaid 
expansion. I heard one person say who opposed it, she said, 
hmm, we are excluding unions, but we are taxing individuals and 
small businesses. They are the only ones without lobbyists. And 
so those without lobbyists will pay the tax for everyone else. 
Oregon is having to pass new taxes to afford the Medicaid 
expansion.
    So what Graham-Cassidy did is, it told States that if you 
cannot afford the match, you do not have to put it up.
    One other thing I will note. Senator Nelson from Florida 
was concerned about the impact on his State. Under Graham-
Cassidy, Florida would have gotten $15 billion more than under 
current law to care for those who are poor or poorly insured in 
their State.
    Why somebody would oppose--as a doctor who took care of the 
uninsured for 25 years, why somebody would oppose $15 billion 
more over 10 years to care for the poorly insured in their 
State, I have no clue, no clue whatsoever, except a dogged 
determination to support the status quo.
    That said, now I will get to my question.
    I had an intriguing conversation yesterday--I do not know 
if it is true, but I would like your thoughts--that Medicaid 
best price actually drives up the cost of medicines for 
everybody else. Medicaid best price was put into place--only 
one out of 11 Americans was covered by Medicaid, but now one 
out of four Americans are.
    By the way, this is not because of demographics, as 
suggested earlier, because this is not age-based. It is rather 
because of an expansion of Medicaid under Obamacare.
    And just one-quarter of the population getting the best 
price has a hydraulic effect, which, sure, if you lower the 
price here--it does for Medicaid, but in turn, it raises the 
costs for everybody else.
    What are your thoughts about that?
    Secretary Azar. Senator, I think that is a very perceptive 
observation. And I think it is something that we have to be 
careful of, not just when we talk about drug pricing, but when 
we talk about our hospital physician services.
    With Medicare and Medicaid, if we end up underpaying what 
sort of natural market forces would lead to, we will see higher 
rates in the commercial space, for instance, and we end up 
having this, it is called the cross-subsidization problem, with 
Medicare and Medicaid.
    Senator Cassidy. I get that. Specifically on drug costs, 
though--because that was obviously a major emphasis of the 
Obama administration--does Medicaid pricing increase that cost?
    Secretary Azar. If we underpay in Medicaid, it will 
increase costs elsewhere; it will increase pricing elsewhere.
    Senator Cassidy. Then let me ask you one more thing. 
Related to that, I was also told some States have carved out 
the pharmacy benefit from their managed-care contracts, and 
carving out that allows them to get the rebates. And they are 
preferentially going to name-brand drugs, the higher-priced 
drug, because it increases their rebate. As long as the Federal 
taxpayer is paying 90 percent in the Medicaid expansion, it is 
a good deal for them. Sure, it increases what the Federal 
taxpayer pays, but the State gets more in rebate. Have you 
observed that?
    Secretary Azar. I have seen that on the carve-outs. And 
there is a bit of a perverse incentive in the Medicaid system 
to carry branded drugs because the rebates are so high compared 
to generic drugs. And so from the program perspective, it can 
actually be beneficial to the State Medicaid program to receive 
the branded rebate as opposed to paying the reimbursement to 
the pharmacy, which is acquiring a generic drug at quite a low 
price. It is an oddity in the system.
    Senator Cassidy. So we have misaligned incentives, do we 
not?
    Secretary Azar. Yes. We need to work on that.
    Senator Cassidy. Yes, and what I will say, as I close, is 
that 
Graham-Cassidy aligns incentives. It does not incentivize 
States to do that sort of trickery, to hose, if you will, the 
Federal taxpayer in order to make money for the general fund of 
the State, but frankly, ultimately driving up costs for 
everybody else.
    Thank you. I may have a second round.
    Senator Stabenow?
    Senator Stabenow. Well, thank you very much, Mr. Chairman.
    I do not know where to start. I greatly respect my 
colleague who just spoke. We have such a different view of the 
world in terms of health care. You know, it is not a commodity; 
I think it ought to be a basic human right. We all get sick. It 
is not like the way you can choose to buy a car or not buy a 
car. And I would love everybody to buy a new car made in 
Michigan, but if you do not, you know, it is not going to 
affect everybody else's rates going up and so on. But health 
care is just very different, because we are all human and we 
all get sick.
    So let me just say one other thing I had not originally 
intended, which is when folks say ``status quo'' now, this is 
the new status quo under the Trump administration where there 
are no cost-
sharing payments, no reinsurance, no requirements that people 
share in their own health care in terms of responsibility.
    So we are back to junk plans, people buying insurance that 
may not cover basics and they do not know it until they get 
sick, and folks walking into emergency rooms without insurance 
and everybody else is going to pay for it. That is what we 
called uncompensated care. That is what it used to be.
    Because of the Affordable Care Act and people being 
involved and responsible in terms of being able to pay for 
their health insurance, the State of Michigan actually saved 
hundreds of millions of dollars last year, and group market 
rates were flattened for a lot of small businesses in Michigan, 
and so on.
    So a very different view of the world; I look forward to 
debating that as we go on.
    I do want to start with something, though, a positive that 
I have seen in the budget. A lot of things I disagree with 
certainly, certainly as it relates to the view on Medicaid and 
what that means for seniors and families and children in 
Michigan when we see these kinds of cuts.
    But part of the recent budget agreement, the caps 
agreement, included a much-needed $6-billion investment over 2 
years in combating the opioid crisis and mental illness, which 
is a major focus for me and has been.
    And I want to acknowledge the fact that in the budget, the 
HHS budget actually recommends expanding what Senator Blunt and 
I have been working on as certified behavioral health clinics 
and being able to do with behavioral health what we have done 
for health centers.
    And so, one of my big frustrations has been the fact that 
we literally pay for service, we pay providers that provide 
physical health care, but for mental health or addiction 
services we do something we would never do, which is, you know, 
we provide service until the grant runs out.
    So I cannot imagine, if somebody needs heart surgery, that 
the doctor would say, gosh, I would love to provide your 
surgery, but the grant ran out. And we do that every day for 
mental illness and opioid addiction.
    And we know this is part of multiple things that need to 
happen around violence and even what we saw yesterday. So this 
is, I believe, an all-hands-on-deck moment.
    So I want to first say that I appreciate that that is in 
the budget, that we have begun. Eight States have been fully 
funded as demonstrations across the country: Minnesota, 
Missouri, New Jersey, New York, Nevada, Oklahoma, Oregon, and 
Pennsylvania. We are working to expand that.
    I would like very much to work with you as we move forward 
to expand comprehensive services in the community, including 
24-hour psychiatric services and facilities so people are not 
going either to the emergency room or to the jail, which is 
exactly what is happening for folks right now. So I look 
forward to working with you on that.
    I am concerned, though, that if we go on to talk about 
opioids and mental health, that when we look at the change, the 
cuts in Medicaid, this time about $1.4 trillion--and we can 
talk about grants again, I mean the sort of big grants rather 
than small grants--I am very concerned that the Medicaid cuts 
would really make it more difficult for us in Michigan and 
across the country to fight the opioid crisis as well as expand 
what we need to do in mental health.
    In fact, expanding what we call Healthy Michigan--if we 
were to end Healthy Michigan, the addiction treatment gap would 
increase by 50 percent. And substance abuse disorders and 
mental health funding would be cut over $5 billion across the 
country.
    So has HHS modeled the effect of the Medicaid cuts on 
individuals with substance abuse or mental health disorders?
    Secretary Azar. Not to my knowledge, but certainly the 
points you raise are important concerns that we would want to 
work with in any legislative package around Medicaid reform, 
obviously ensuring that what we are doing there provides 
adequate resourcing around substance abuse treatment.
    Senator Stabenow. Do you believe that mental health and 
substance abuse treatments should be included in all health-
care plans?
    Secretary Azar. I believe so, but I think mental health--I 
think our mental health parity requirements would provide that. 
I would need to look at the statutes, but I believe that is 
part of that.
    Senator Stabenow. We do have mental health parity; I 
authored the language in the ACA to make sure that this was 
included in everything, because it had not been happening up 
until then. And so it is part of the essential benefits package 
that would, as I understand it, be eliminated under the kind of 
approach, the large block-grant approach, that is being talked 
about. So I am very concerned about that.
    What would you suggest, I mean, if people lose coverage 
under the budget? If these Medicaid cuts go through, what would 
you recommend to the State of Michigan and those right now who 
desperately need services?
    Secretary Azar. So of course, the challenge we have now is 
that, for 28 million Americans, what we have is simply not 
affordable for them. As Senator Cassidy was speaking about 
earlier, the status quo is leaving tens of millions out through 
unaffordable options.
    So we want to work together to try to see, what can we do 
to build stable, good, affordable, flexible, tailored options 
for individuals out there? Because that status quo is not 
working for as many people as it ought to.
    Senator Stabenow. And I would just close, Mr. Chairman, by 
saying it has been a year and a half under a new administration 
with a very aggressive approach, some would say a war, on 
health care, and multiple changes that are raising costs. And 
so the status quo today is a new status quo based on actions 
that have been done and ramifications that will continue to be 
felt as new insurance rates come out based on what has been 
done as part of the tax bill as well as other decisions to roll 
back efforts to keep health care affordable.
    And I do want to say also, at some point we can debate how 
Medicaid pricing is the reason drug companies are dramatically 
raising their prices. If that was part of what you were saying 
in terms of the pricing, I would have major concerns about 
that.
    Secretary Azar. I certainly did not mean to say that that 
is the reason. Certainly, it is an economic incentive. And what 
we have to do in addressing drug pricing is, how do we flip 
those incentives around across the board?
    Senator Stabenow. I understand.
    Thank you, Mr. Chairman.
    Senator Cassidy. Yes.
    Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman.
    Mr. Secretary, welcome.
    In New Jersey, one in 41 children is diagnosed as having 
autism spectrum disorder, much higher than the national average 
of one in 68. Is it true that the fiscal year 2019 budget 
zeroes out a program that is of great interest to those in the 
autism community, the Autism CARES Act program in HRSA?
    Secretary Azar. I do not know that program in particular, 
Senator. As you know, I am 14 days into this. And so I know we 
have several programs that, as part of just prioritizing 
direct-care delivery, direct-service delivery and underserved 
care-service delivery, there are programs that simply we had to 
recommend not funding because of the tradeoffs----
    Senator Menendez. Well, let me help you out. You may be on 
the job only 14 days. I have been here a little longer. It is 
zero in the budget.
    And in fiscal year 2018, the congressional justification 
was that the Department believed that the same services could 
be provided to the States through the Maternal and Child Health 
Services Block Grant. Do you know if that is the same reasoning 
today?
    Secretary Azar. As I said, the challenge that we have is, 
we are prioritizing direct-care service delivery, not----
    Senator Menendez. I am asking a specific question. Is it 
your view that the congressional justification in fiscal year 
2018 that the services can be provided by States through the 
Maternal and Child Health Services Block Grant is the reason 
that you have zero in this budget?
    Secretary Azar. No. I do not know if that is the reason why 
the budget was prepared with that program zeroed out. It more 
likely is the fact that if it is not a direct-care service 
delivery program or was viewed as being less effective than 
other expenditures of money in a scarce fiscal environment, 
tough choices had to be made.
    Senator Menendez. Well, yes. The autism community does not 
need those tough choices. They have a tough life as it is 
already, with their children who are trying to fulfill their 
God-given capabilities and families that are enormously 
challenged with that reality.
    Well, I have a feeling that that is the justification. The 
problem with that is that you also cut funding for the Maternal 
and Child Health Services Block Grants as well. So I do not 
know how--explain to me how you think that States are best 
positioned to replace the education, training, and research 
authorized by the Autism CARES Act with reduced funding for the 
programs that you claim replicate HRSA's progress?
    Secretary Azar. I did not claim that. What I have told you 
is that we prioritized our direct care-delivery programs, and 
these programs that are back-door support programs we had to 
deprioritize against others or those direct service-delivery 
programs would have been cut.
    Senator Menendez. I can assure you, Mr. Secretary, they are 
not back-door to these communities; they are front-door.
    Secretary Azar. No, but it is actual direct care, providing 
clinical care and service to individuals, is what we had to 
prioritize in the budget to----
    Senator Menendez. Well, let me ask you something. How is it 
when I wrote QFRs in your confirmation, I specifically asked 
you about working with me on reauthorizing the Autism CARES Act 
and you provided a vague answer saying you were fully committed 
to implementing the laws passed by Congress and improving 
access in disadvantaged communities. That was your answer.
    So explain to me, how does zero-out funding to implement a 
law passed by Congress and signed into law by the President 
allow you to do that?
    Secretary Azar. In a budget--you are a member of the Senate 
and part of setting the targets that we have to operate within. 
And we operate within that and have to propose a budget. If you 
have a tradeoff of another program you are willing to defund--
--
    Senator Menendez. You are not fulfilling the law. The law 
is clear.
    Secretary Azar. There is not limitless money, Senator. I am 
sorry.
    Senator Menendez. I know. That is why we should not have 
spent $1.5 trillion on tax cuts to the wealthiest people in 
this country. Maybe we would not be having this debate now. And 
maybe we would not be having this debate if we were not 
spending tons of money in other things outside of our health-
care system.
    But it is simply inexcusable to take a community that is so 
challenged, that the law specifically directs the Department to 
engage in, and then you zero that out. And how do you think 
eliminating the Medicaid disproportionate share payments at the 
same time you strip Medicaid funding to States--are hospitals 
going to be able to deal with that?
    Secretary Azar. That is a continuation of the Medicare 
disproportionate share hospital payment reductions that are 
part of the Affordable Care Act. And we continue to scale down 
there as we have many other programs.
    Senator Menendez. It is not a scale-down, it is an 
elimination.
    Secretary Azar. And we will be putting out $1.2 trillion in 
the budget of the America's Health Care Grant program so that 
we have alternative insurance vehicles that should be the 
alternative, as with the Affordable Care Act, to 
disproportionate share hospital subsidies.
    Senator Menendez. Mr. Secretary, it is not a scaling down. 
It is an elimination--elimination, zero, cero, nada. That is 
not a scaling down. And I expect you to enforce the law. And 
the law on autism is very clear. And I am going to challenge 
this administration to respect the law and enforce it.
    Thank you, Mr. Chairman.
    Senator Cassidy. Senator Brown?
    Senator Brown. Thanks, Mr. Chairman.
    Mr. Secretary, welcome.
    I concur with Senator Menendez and what he is saying about 
the trillion-and-a-half-dollar tax cut, and then how you are 
just taking away so much for so many people who are a whole lot 
less privileged than CEOs and Cabinet Secretaries and members 
of the Senate, starting about January 20th a year ago, going 
after the health care law.
    And you know, I mean the Republican approach of this 
Congress has been to increase the deficit by billions of 
dollars. You know, this is the party that cares so much about 
deficits when there are Democratic Presidents, but not so much 
now--tax relief to the richest individuals, and then you cut 
programs that millions of working families rely on to pay for 
those tax cuts. I mean, it is just morally reprehensible. I 
would assume you think the same thing.
    A few months ago, Mr. Secretary, the first lady and 
Kellyanne Conway visited a facility in West Virginia, Lily's 
Place, which provides treatment for babies born with neonatal 
abstinence syndrome. We have a similar facility in Kettering, 
OH right outside Dayton called Brigid's Path that is focused on 
keeping families together and helping both moms and babies 
overcome addiction and withdrawal.
    I introduced a bill last year with a number of members of 
this committee, including my colleague from Ohio, called the 
CRIB Act. Our legislation would provide State Medicaid programs 
with flexibility to reimburse residential pediatric recovery 
facilities like Brigid's Path.
    I understand yesterday you all announced it is approved, 
you have approved reimbursement for this type of residential 
treatment service in West Virginia. We should not have to do 
this State by State. I would like to ask for your commitment, 
Mr. Secretary, to ensure that babies in Ohio in a place like 
Kettering have the same opportunities as those in West 
Virginia, whether it be through administrative action or 
through helping the five of us pass the CRIB Act. Would you 
commit to doing that?
    Secretary Azar. Senator, I do not know that particular 
waiver approval, but I am happy to work with you and Governor 
Kasich if that is a request that they have, to make sure it 
goes through our process as expeditiously as possible if it 
complies with our waiver requirements. Absolutely, it seems a 
very noble purpose to me.
    Senator Brown. Okay, thank you.
    Another issue. I appreciate the efforts you have put in to 
proposing some initiatives that would help lower the cost of 
prescription drugs in Medicare and Medicaid as part of this 
year's budget proposal. Some of them I agree with and support.
    Can you, as you do this, point to a single proposal in this 
budget that would force a pharmaceutical company to lower the 
list price of a drug in a way where all Americans who rely on 
that drug will benefit?
    Secretary Azar. So actually, one of the things we are 
trying to do in the budget proposal is to create the incentives 
so that it will put downward pressure on the list price of 
drugs. So one of the things that we are recommending, in that 
catastrophic coverage in Part D, is changing the incentive 
structure.
    Right now, the government is on the hook for most of the 
cost once a senior citizen gets to catastrophic coverage. We 
propose to progressively switch that so that the insurer is on 
the hook for that and will then have even more incentive to 
fight against the branded drug companies to keep those list 
prices down, as opposed to now where they have a lot of 
incentive for those higher prices, to just drive into the 
catastrophic coverage and offload that expense onto us. So that 
is certainly one of them.
    And this is just one step in working on the issue of drug 
pricing. And this is the one that is in the context of the 
budget and Medicare and Medicaid, many more things that we are 
working on. And if you have ideas around list price, ways that 
we can reverse those incentives on list, I would love to work 
with you and hear them, because it is the most difficult 
challenge as opposed to even net pricing.
    Senator Brown. And I appreciate that, but it sounds to me 
like relying on a middleman here--and none of these policies 
actually goes after the pharmaceutical industry, your former 
employers, the folks who set these prices in the first place. 
None of these policies guarantees--I understand you work with 
insurance companies to sort of incent them to push, but none of 
these policies guarantees lower drug prices for individuals who 
rely on drugs like insulin, who are not insured by Medicare or 
Medicaid. Nothing that we can see so far will help individuals 
who pay for drugs out of pocket and cannot benefit from a 
rebate policy.
    It seems the administration--an administration that 
promised that it would make the drug companies pay, until the 
President met with the drug company executives and came out 
singing a very different song as he met with his CEO friends--
left out of its budget proposal any policy that would directly 
target big pharma and hold them responsible for the prices they 
set.
    Rely on insurance companies, to be sure, but we need to do 
better. We are ready to partner with the President. I note 
Ranking Member Wyden from Oregon is willing to do that, to go 
after pharmaceutical companies in ways that will not reduce 
patient choice. I hope you will take us up on our willingness 
and join us.
    Secretary Azar. Well, I hope I will have the chance to meet 
with you to brief you on our budget proposals, because in fact 
there is a suite of proposals here that will dramatically 
reduce senior citizens' out-of-pocket costs, which I would be 
happy to walk you through.
    In addition, in Part B, we are proposing an inflation cap 
on list prices. So if you increase the price above inflation, 
just like in Medicaid, the pharma company, there will be lower 
reimbursement paid out through our Medicare Part B program. But 
we have a whole suite that we believe will dramatically reduce 
senior citizens' out-of-pocket costs when they walk into the 
pharmacy for medicines and get their Part D drugs, which are 
the physician-administered drugs.
    And I would love to brief you and talk with you about that, 
because I am quite proud--I think there is a lot that you 
actually could get behind on this.
    Senator Brown. That is good news, but that is Medicare. 
What about everyone else? So we have lots to do.
    Senator Cassidy. Senator Thune?
    Senator Thune. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for being here today. I appreciate 
the priorities you have laid out in the President's budget, 
particularly the emphasis on addressing drug prices, opioids, 
and reducing regulatory burdens.
    And while it is not the jurisdiction of this committee, I 
also want to point out that I appreciate the attention to the 
Indian Health Service in your written testimony today.
    And on that topic, it was great to see the proposed 8-
percent increase in funding for IHS and resources to help 
facilities in the Great Plains area meet CMS's quality and 
accreditation standards.
    However, as I have said before, money alone cannot solve 
those problems. And one thing I had hoped to see included in 
the budget was a legislative proposal signaling the 
administration's interest in working to reform the IHS 
structurally, like the Restoring Accountability in the IHS Act 
that we have discussed previously.
    So my question is, is that legislative solution something 
that the administration will continue to work with us on?
    Secretary Azar. We will certainly work with you on that. I 
have not been able to get deep into it yet myself, but I am 
happy to work with you on that, Senator.
    Senator Thune. Thank you.
    As you recall, we talked at your confirmation hearing about 
the pending interim final rule regarding the application of 
competitive bidding rates in non-competitively bid areas for 
durable medical equipment. And I realize you have only been 
sworn in for a couple weeks, so I get that.
    But I wanted to ask you to please provide a status update 
on when that rule will be finalized and whether the President's 
budget proposal on competitive bidding, which projects more 
than $6 billion in savings, takes that rule into account.
    Secretary Azar. I will be happy to do that. The proposal 
that we have in the budget, I hope is sensitive to the 
concerns. I am very focused on the concern of rural providers' 
and rural citizens' access to durable medical equipment. And so 
the proposal we have would have the DME bidding be targeted 
towards the area in which it is bid, so rural, and also so that 
the winners get compensated at what their bid was as opposed to 
being pulled down to a median if you happen to win and be 
entered into the process.
    But I am concerned about access and affordability in rural 
areas through the DME program. So I hope that, as we work on 
legislative approaches here, that we can solve that problem.
    Senator Thune. Okay, good. Well, that is what we like. The 
issues you talked about are where we would like to see you 
focus with respect to that issue.
    While it was listed as having no budget impact, I am 
encouraged by CMS's proposal to reduce reporting burdens and 
eliminate low-value metrics of meaningful use.
    I do think that there will be a positive impact on health-
care providers. And I have been working with others here on the 
Finance Committee to address these challenges for many years.
    In fact, one of the provisions to eliminate the requirement 
for meaningful use standards to become more stringent over time 
was just signed into law as part of the budget deal. Is this 
change incorporated into your budget proposal? And what other 
reforms do you expect to make in this space?
    Secretary Azar. Senator, I do not know if the most recent 
change on meaningful use has made it in. The budget is a rather 
fast-
moving target, so I do not know if that was fully integrated 
yet into that.
    But the other aspect that you mentioned I am very proud of, 
which is for physicians who are being paid under MACRA, the 
incentive program for quality, what we are doing is taking a 
whole host of physicians who not only will have reduced 
reporting burdens, but maybe none under the MIPS part of that 
program, where we would be able to independently look at data 
ourselves to decide their compliance with the quality programs 
rather than their having to even report anything. So I think it 
is one of many significant regulatory burden relief efforts 
that Administrator Seema Verma has been taking charge of.
    Senator Thune. Okay. And so with respect to that as sort of 
a follow-on, could you speak to or at least address the sort of 
current all-or-nothing approach to meaningful use? You kind of 
spoke to that a little bit in your answer.
    Secretary Azar. Yes. So I want to delve more into the 
current status of where we stand on meaningful use. For me, the 
important thing is becoming not so much meaningful use but 
actual interoperability. And it is not going to do us a lot of 
good if we have everybody electrified and have simply converted 
our records to electric format if they do not actually 
communicate with each other.
    Senator Thune. Right.
    Secretary Azar. So my energies and focus are, how do we now 
get those connected to each other? But I will be happy to get 
back to you, if that is okay, on your meaningful use question. 
I just want to make sure I answer that accurately for you.
    Senator Thune. Got it. Okay. Thank you. We will look 
forward to continuing to work with you on that and with your 
team.
    Mr. Chairman, thank you.
    Senator Cassidy. Senator Scott?
    Senator Scott. Thank you, Mr. Secretary. Thank you for 
being here this morning.
    I know that you have had a number of questions on opioids 
and the abuse and the challenges that we face as a Nation. And 
I will ask you another question that you may have answered in a 
different way before.
    The last time you and I had an opportunity to discuss 
opioids was at your first hearing. Congratulations and 
condolences as well.
    We talked about the importance of addressing the growing 
opioid abuse epidemic from the bottom up, from the local level.
    In South Carolina, Horry County is a place where a lot of 
folks come to vacation, the Myrtle Beach area, but it is also 
the place where we have seen the highest opioid-related 
overdoses in the State. More than a hundred folks have lost 
their lives in Horry County, accounting for 16 percent of the 
State's challenges on the opioid epidemic front.
    In your response to my questions on the crisis, you 
mentioned that there is not a one-size-fits-all approach to 
opioid treatment and prevention programs. How does your 
department plan to use the $6 billion to customize and to 
create more flexibility for local jurisdictions to play a more 
important role in addressing the challenges that we see?
    Secretary Azar. So just by way of example, the $3 billion 
initially that we have allocated in the 2019 funding that we 
are proposing, we would have $1 billion in grants under the 
State Targeted Response grant program, which is very flexible 
for the States to be able to customize and target that money. 
That is a doubling of the current funding of $500 million a 
year.
    So that is very flexible, and so the State of South 
Carolina, for instance, could really work with communities on 
coming up with community-based, very customized approaches.
    Another program that we are really interested in is, at 
HRSA we are going to be investing $150 million in rural 
substance abuse programs to try to develop novel methods of 
care and of treatment for addiction and dependence in more 
rural communities because of the access issues and distribution 
of resource issues, to focus there in the rural communities.
    Senator Scott. Yes.
    Secretary Azar. And then another $400 million of that goes 
to quality incentive work with our community health centers, 
again, localized.
    Senator Scott. Excellent. Thank you very much.
    I am not sure that you have answered a question on wellness 
so far during this hearing.
    I spent, as you may recall, a few years in the insurance 
industry. And one of the things that we have done over the last 
year is talk about the access to health insurance; we have 
talked about the cost of health insurance. We have talked about 
who is insured, who is not insured, who is underinsured. We 
have talked about a lot of topics around the exploding costs of 
health insurance.
    But the underlying driver is obviously the exploding costs 
of health care. And unless we spend more time talking about the 
explosive costs of health care, we will not be able to address 
the actual challenge of the explosive costs of health 
insurance.
    And many of the issues that we face from a health-care cost 
perspective--and the costs continue to rise--are around issues 
of the morbidities of diabetes and obesity as well as the 
challenges around cancer. These are explosive drivers of our 
health-care costs.
    When it comes to encouraging healthy habits so that we can 
prevent some of the challenges that we see, that too requires a 
local, bottom-up approach to creating more flexibility in the 
alternatives.
    I know in South Carolina we have a unique population. Some 
of the programs that we see that are very effective in the 
State are programs that work with nonprofits, whether it is 
churches or synagogues, whether it is the ability to create 
wellness programs at your local community nonprofit, or 
planting community gardens. We have found that these programs 
have been quite successful in South Carolina.
    What do you plan to do this year to empower and encourage 
States to invest in this space of wellness programs so that we 
can attempt to get control of future costs, perhaps before they 
happen?
    Secretary Azar. So, Senator Scott, I think you have put 
your finger on some of the important drivers of health-care 
costs in our system, which are the social and behavioral 
determinants of health. And I am very committed in that space 
that we help to provide alternatives to minimize both medical 
spend and health-care spend if we can do so in alternative 
ways.
    But also, on the behavioral side, can we create adequate 
incentives or create flexibility for adequate incentives on the 
behavioral side?
    Actually, when I was at HHS in the 2000s, we were involved 
in helping to create greater flexibility through HIPAA, the 
statute to allow employers and insurance plans to create 
greater financial incentives for healthy behaviors. If you have 
other ideas of things that we could work to address, barriers 
where our programs or authorities are in the way, I would love 
to learn more about that, because I think it can be very 
constructive.
    Senator Scott. Certainly, I look forward to having that 
conversation with you perhaps at another time. There have been 
a number of programs that focus on healthy alternatives and how 
you avoid what it is that we find to be incredibly tasty but 
may not long-term be very helpful for your arteries. So I look 
forward to having that conversation.
    Secretary Azar. Thank you.
    Senator Scott. Thank you, Mr. Chairman.
    Senator Cassidy. Mr. Secretary, we have these two folks, me 
and the ranking member, to ask another set of questions, and 
then you will be through.
    Let me first observe--not related to you, but someone 
earlier criticized the Tax Cuts and Jobs Act provision which 
does not allow the deduction of State and local taxes. Excuse 
me, they were criticizing the Tax Cuts and Jobs Act as a 
benefit for the upper-income. But the same Senators who say 
that also complain about the SALT tax provision. They complain 
about that.
    Well, the SALT tax provision disproportionately affects the 
wealthy. So on the one hand, you cannot have the wealthy 
getting taxed more and on the other hand having a bill which 
benefits the wealthy. But that is one of the incongruities of 
our debates up here.
    Secondly, there were a couple of assertions about Graham-
Cassidy that I have to address.
    One, we, under Graham-Cassidy, maintained the mental health 
benefit. We encouraged provisions such as auto-enrollment, 
which could increase enrollment relative to now. We allowed 
pooling of the individual market and the Medicaid pools, which 
I am told would lower premiums by 20 percent, therefore making 
insurance more affordable.
    Again, folks on the left just do not seem to care about 
those 
middle-class families paying $40,000 a year.
    And I will say, the criticism of the status quo, the status 
quo still includes the individual mandate. And I suppose all of 
this is the reason that folks, like Andy Slavitt, Tom Daschle, 
and Melanie Bella, are saying that we need to do something 
different.
    Now, to another question. You spoke earlier of the Part D 
provision, I presume decreasing the out-of-pocket exposure for 
a beneficiary. And I gather that is by increasing the mandates 
pharmaceutical companies must pay. My concern is that these 
rebates that they pay count towards the true out-of-pocket 
cost. And so, if you will, it is pushing the senior more 
rapidly into the catastrophic portion of the Medicare Part D 
benefit, which means that the taxpayer is paying even more.
    The other thing I have observed, and I think I have read 
this as well, is that when drug companies have to increase the 
rebate, they just increase the cost of the drug.
    So if we are, going back to our earlier discussion, forcing 
them to increase the cost of the drug if you are not on 
Medicare and you are not on Medicaid, you are going to pay a 
lot more. And if we are counting these rebates towards the true 
out-of-pocket cost, then we are pushing people up into that 
provision, the catastrophic coverage where the taxpayer is 
paying more.
    I am not sure I am seeing this as a great benefit for 
society writ large. What are your comments, please?
    Secretary Azar. So the proposals that we have in the budget 
around drug pricing, really I think we need to look at them as 
a holistic set of all five parts there, because they work 
together in a related way.
    First, we would require that the rebates that the drug 
companies are paying the drug plans be offered to the senior 
citizen, at least one-third of that benefit, when they arrive 
at the pharmacy, at point of sale--so a real out-of-pocket 
benefit for them on that.
    Second, we would have a genuine out-of-pocket maximum in 
Part D for the first time. Right now, even in catastrophic 
coverage, the senior citizen has to pay 5 percent, which can be 
a lot of money. That would now be zero.
    We also would fix this incentive we have where the Federal 
Government is picking up that catastrophic care to the tune of 
80 percent and reverse that so that the insurance company pays 
80 percent and we pay 20 in the future.
    We would also have--to that true out-of-pocket-cost 
question that you raised, Senator, we propose that we would not 
count the coverage gap discount payments from the drug 
companies against true out-of-pocket costs, again creating a 
continued incentive for the plans to not hustle the beneficiary 
to catastrophic, to unload them on us, and also to have higher 
list prices to get them there.
    And finally, for our low-income-subsidy seniors, free 
generics.
    Senator Cassidy. All that sounds fantastic. I am glad you 
explained it. And as a package, it sounds better. But let us go 
back to what we discussed in my earlier questioning about the 
hydraulic effect upon those who are not on Medicare or 
Medicaid.
    Now they have Medicare and Medicaid, both of which are 
getting large rebates and/or discounted pricing and/or taxes 
upon the cost of the drug going back to the State, causing the 
drug company to raise the price to make that up. Is that going 
to increase the price that the person who is either paying cash 
through a small-business group plan or through the individual 
market pays for their drug?
    Secretary Azar. I do not believe the mechanisms that we are 
proposing would have that effect, because what we are trying to 
get at in particular is the out-of-pocket to the patient, which 
is much more a matter between them, the insurance company, and 
us. And so we want to get that out-of-pocket from the patient 
down and then reverse the incentives on list price. The net 
could even remain the same to the program level.
    I do hope that we will keep good incentives to keep driving 
our net prices down, as we do quite effectively. It is that 
list price that we have to reverse. As you have said, every 
incentive towards that higher list price, we have to try to 
flip those incentives backwards on that.
    And this is a starting point on that, and I am going to 
keep working with you all to come up with other ideas that can 
either contain or actually pull back those list prices, create 
financial incentives, create market forces that will actually 
get those list prices down.
    Senator Cassidy. I was following you on everything up until 
the last 45 seconds, but we will have a follow-up conversation 
on that.
    Senator Wyden?
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Secretary, I want to come back to what Senator Brown 
said and do it very quickly. Because as we have talked about, 
we are going to have to spend a lot of time to really dig into 
these issues.
    So seniors, people in organizations, like the work I have 
done with the Gray Panthers over the years; they talk about how 
they are getting clobbered when they go to the pharmaceutical 
window.
    Senator Brown asked you about that, because I was with him 
in Ohio and I heard seniors talking about it. And you said, you 
know, what we are going to do is, we are going to change the 
incentives, we are going to change the incentives for the 
middlemen.
    As you know, I have legislation to do that. That is a key 
part of the puzzle. But what Senator Brown was saying and what 
I am saying is--we will talk some more about it in the future--
you cannot solve this problem if you let the manufacturers off 
the hook. And that is what the budget does, and that will be a 
topic for another day.
    My question for you deals with something our colleague and 
someone I admire, Congressman Davis, talked to you about 
yesterday in Ways and Means: this question of AFCARS, this 
important rule, AFCARS, the adoption, the foster care kids.
    This rule has, as far as I can tell, been blocked or put on 
hold or something of this nature. This gives us critical data, 
like how many foster kids get really terrorized in the sex-
trafficking system. We really want to get this out.
    Are you supportive of this? Will you work with us? This is 
what Congressman Davis was talking to you about yesterday.
    Secretary Azar. And I did not have a chance yet to follow 
up from his comment. That was the first I had heard of this 
issue.
    Obviously, I want to learn more from you about that and 
work on this. If that is the impact, we want to be doing 
everything in our power to solve that problem.
    Senator Wyden. Good. The reason this is so important is, as 
you know, a number of us are supportive of the idea of States 
having a bigger role in these kinds of areas, but we have to 
know what is going on at the State level and have this kind of 
information to have this partnership. So that is that.
    And then, because my friend is here, I am going to put 
something into the record, because we have talked a fair amount 
about 
Graham-Cassidy, and sometimes people do not know this, but the 
two of us talk often about health policy. I think Senator Hatch 
thought at one point we were going to punch each other out in 
the middle of the Graham-Cassidy debate.
    Here is where it was left on the pre-existing condition 
issue. And I am going to actually put it in the record, because 
I suspect we are going to come back to that.
    [The information on preexisting conditions appears in the 
appendix on p. 106.]
    Senator Wyden. When we had the hearing, I had received 
voluminous amounts of information from doctors and hospitals 
who were concerned that Graham-Cassidy did not protect people 
with pre-existing conditions. My colleague said, ``That is not 
right; those people mean well, but they are not right.''
    So sitting on the far end of the table was a representative 
from the Cancer Society. And the representative from the Cancer 
Society looked at me and looked at my colleague and said, ``We 
know something about pre-existing conditions, and this does 
not,'' this being Graham-Cassidy, ``protect people with pre-
existing conditions.''
    The reason I am going to put it in the record is I want my 
colleague and others to have a chance to comment and be part of 
the debate. But since Graham-Cassidy has come up several times 
and I am particularly concerned about the trend apparently 
started by Idaho to go back to junk insurance and, again, no 
protection for people with pre-existing conditions, I want all 
sides to have a fair chance to comment on this.
    And we will put into the record what I have just given, a 
shorthand description. I am sure my colleague sees this issue 
differently. But at least we are going to be picking up where 
it was left when we actually had our hearing.
    Thank you, Mr. Chairman.
    Senator Cassidy. Yes. And hopefully it will be noted that 
that is rhetoric; it is not based upon fact.
    By the way, Mr. Secretary, thank you for being here.
    Thank you, my colleague, and all others who participated. A 
very good hearing.
    Since it appears we will not obtain a quorum, we will 
postpone the markup scheduled for today to occur during a 
rollcall vote of the Senate at a location to be determined that 
will be off the floor.
    I want to thank Secretary Azar for attending today.
    I thank all my colleagues for participating.
    For any of my colleagues who have written questions, I ask 
that you submit them by the close of business next Thursday, 
February 22nd.
    With that, this hearing is adjourned.
    [Whereupon, at 11:25 a.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


        Prepared Statement of Hon. Alex M. Azar II, Secretary, 
                Department of Health and Human Services
    The mission of the Department of Health and Human Services (HHS) is 
to enhance and protect the health and well-being of the American 
people.

    President Trump and all of us at HHS take that charge seriously. 
So, when programs are not as effective as they can be, or cost more 
than they ought to, or fail to deliver on their promise, change and 
reform are necessary.

    The President's fiscal year (FY) 2019 budget applies this reform 
mindset to the work of the Department, making thoughtful and strategic 
investments to protect the health and well-being of the American 
people, while addressing the opioid crisis, promoting patient-centered 
health care, strengthening services for American Indians and Alaska 
Natives, encouraging innovation in America's health-care future, 
addressing high drug prices, reforming the Department's regulations, 
and generally focusing resources toward proven and effective 
initiatives. The budget also recognizes the fiscal challenges our 
country faces today, and the need to focus our investments and update 
them to meet the needs of a rapidly changing world.

    The President's budget for HHS also reflects proposals to meet the 
President's comprehensive government-wide reform plan through a 
Department initiative called ``ReImagine HHS.'' ReImagine HHS, through 
a range of initiatives, aims to identify opportunities to improve the 
work HHS does for the American people, in terms of its efficiency, 
quality, and cost-effectiveness. In particular, ReImagine HHS offers a 
unique opportunity for the experienced career staff of the Department 
to lead initiatives that will advance the work of the Department and 
revamp outdated processes and structures.

    Across all of HHS's priorities, the budget makes clear that 
business-as-usual will not suffice, and that the substantial 
investments made every year at HHS ought to be allocated with 
efficiency and toward programs that work.
                      tackling the opioid epidemic
    One of the Department's top priorities is fighting the scourge of 
opioid addiction facing our country.

    Due to skyrocketing numbers of opioid overdoses, deaths by drug 
overdose have become the leading cause of injury death in the United 
States. In 2016, 174 Americans died each day from drug overdoses. 
American life expectancy has dropped for the second year in a row--a 
tragic development not seen in more than a half century.

    The President's budget recognizes the devastation caused by this 
crisis in communities across America, by providing a historic new 
investment of $10 billion in HHS funding to address the opioid crisis 
and serious mental illness, and building upon the work started under 
the 21st Century Cures Act.

    The budget's targeted investments advance the Department's five 
part strategy, which complements work being done elsewhere in the 
administration and covers:

        Access: improving access to prevention, treatment, and 
recovery services, including medication-assisted treatment;
        Overdoses: targeting availability and distribution of 
overdose-reversing drugs;
        Data: strengthening our understanding of the epidemic through 
better public health data and reporting;
        Research: supporting cutting edge research on pain and 
addiction; and
        Pain: advancing better practices for pain management.

    The budget proposes to improve ways in which the Federal Government 
helps communities respond to the opioid epidemic. As just one example, 
the budget directs resources to the Substance Abuse and Mental Health 
Services Administration to improve access to medication-assisted 
treatment services, boost State capacity to establish and operate 
comprehensive prevention systems, and disseminate high-quality 
resources on best practices for treatment.

    The budget includes a total of $126 million to support efforts by 
the Centers for Disease Control and Prevention (CDC) to prevent the 
abuse and overdose of opioids. This investment supports key public 
health and surveillance activities at the State level, recognizing that 
States can best determine their unique needs. CDC will also continue to 
increase the awareness and adoption of the CDC Guideline for 
Prescribing Opioids for Chronic Pain. In all of these activities, CDC 
will endeavor to support and execute programs that have a proven track 
record of success.

    We recognize that government at the Federal, State, and local 
levels cannot defeat the opioid crisis alone, so HHS will continue to 
leverage the resources and expertise of the private sector and academia 
to develop new tools to end the epidemic. This includes a $500 million 
investment in a National Institutes of Health (NIH) public-private 
partnership to accelerate the development of new treatments for pain 
and addiction.

    To help address the drivers of the epidemic, current practices for 
pain management must also be rethought, including in the work of 
Federal agencies that prescribe painkillers. The FY 2019 budget will 
support the Pain Management Best Practices Inter-Agency Task Force, 
which will determine whether there are gaps or inconsistencies in pain 
management best practices among Federal agencies; propose 
recommendations on addressing gaps or inconsistencies; provide the 
public with an opportunity to comment on any proposed recommendations; 
and develop a strategy for disseminating information about these best 
practices.
              effectively treating serious mental illness
    Serious mental illness, such as a psychotic or major depressive 
disorder, afflicts nearly 10 million American adults each year, and 
remains one of the Nation's most difficult health-care challenges. 
Without treatment, many of these individuals cycle repeatedly among the 
health, behavioral health, and criminal or juvenile justice systems, 
with each system insufficiently prepared to meet their needs. According 
to one report, 10 times as many Americans with serious mental illness 
are in jail or prison than in inpatient psychiatric treatment, and 
tragically, Americans with serious mental illness live lives at least 
10 years shorter, on average, than others.

    The budget recognizes that there are effective, proven forms of 
treatment for those struggling with serious mental illness, which have 
not always received the necessary support. One is ``assertive community 
treatment,'' which places individuals in the care of a 
multidisciplinary behavioral health staff to deliver comprehensive 
services and treatment and has been shown to reduce hospitalization and 
improve patient satisfaction compared with other interventions of the 
same cost. The budget fully funds a new Assertive Community Treatment 
for Individuals with Serious Mental Illness program, authorized by the 
21st Century Cures Act.

    Another effective approach to serious mental illness is the 
budget's support of Certified Community Behavioral Clinics, funded as 
part of the new $10 billion investment to address the opioid epidemic 
and serious mental illness. The budget also continues to direct 10 
percent of State allocations from the Community Mental Health Services 
Block Grant to bring care more quickly to those experiencing a first 
episode of psychosis, a proven intervention.
                   advancing health reform that works
    A Washington-centric, one-size-fits-all approach to health care--
especially in insurance markets most affected by Obamacare--is simply 
not working and must change. The President's budget proposes a bold 
plan to redirect a significant amount of health-care funding back to 
the States and individuals, where health-care decisions should be made, 
while also taking major steps to encourage innovation and better 
quality of care.

    The budget supports repealing Obamacare and replacing the law with 
flexibility for States to create a free and open health-care market 
tailored to their citizens' needs. The two-part approach is modeled 
closely after the Graham-Cassidy-Heller-Johnson amendment to H.R. 1628, 
the American Health Care Act of 2017, and also includes additional 
reforms to put health-care spending on a sustainable fiscal path.

    The proposed Market-Based Health Care Grant Program will help 
States stabilize their insurance markets and provide for a smooth 
transition away from Obamacare. The budget would also fix the perverse 
incentive structures created by Obamacare, by ending the disparity 
between States that expanded Medicaid to new populations and those that 
did not and providing States with a choice between a per capita cap and 
a block grant.

    The budget also proposes reforming our broken medical liability 
system, to ensure it is not driving excess costs. Finally, the budget 
proposes consolidating the byzantine system of graduate medical 
education funding into a single, direct grant program that will 
streamline incentives and better serve patients and providers.
Bringing Down Drug Prices
    As President Trump has repeatedly made clear, the prices Americans 
pay for prescription drugs are simply too high. The budget proposes a 
range of legislative measures to build on the proven success of the 
Medicare Part D prescription drug program, including through giving 
drug plans more tools to negotiate with manufacturers and encourage use 
of higher value drugs. In addition, the budget discourages rebate and 
pricing strategies that increase spending for both beneficiaries and 
the government and, for the first time in the program's history, 
provides beneficiaries with more predictable annual drug expenses 
through the creation of a new out-of-pocket spending cap for seniors 
with especially high drug costs.
Sustainable Medicaid and Medicare Reforms
    Millions of Americans rely on Medicaid and Medicare to meet their 
everyday health-care needs. Together, Federal health care programs 
comprise the largest portion of the Federal budget. The President's 
budget proposes several legislative solutions to improve the programs, 
promote greater efficiencies, advance patient-
centered care, and reduce government-imposed burden on providers.

    The administration recognizes that the over-50-year-old structure 
of the Medicaid program has failed to create a sustainable Federal-
State partnership that is capable of controlling costs. In fact, its 
outdated design incentivizes cost increases without delivering 
commensurate benefits or allowing for much-needed local health 
innovation.

    Our budget proposes a new future for Medicaid that will restructure 
Medicaid financing, provide States with new flexibilities to better 
serve their communities, improve the State plan and waiver processes, 
and provide the right incentives to preserve the program for future 
generations.
                   boosting upward economic mobility
    There is no more effective anti-poverty program than helping 
someone find a job. Recognizing this common-sense approach, the 
President's budget re-focuses HHS's public assistance programs on 
helping low-income Americans find gainful employment, providing them 
with a sense of purpose, personal dignity, and independence.

    Importantly, the budget proposes key reforms to the Temporary 
Assistance for Needy Families program that reinforce its focus on 
promoting work as the best pathway to self-sufficiency. Specifically, 
the budget strengthens the program's accountability framework related 
to work requirements and ensures that States allocate sufficient funds 
to work, education, and training activities.

    The budget also proposes establishing Welfare to Work Projects that 
will allow States to streamline funding from multiple public assistance 
programs and redesign service delivery to meet their constituents' 
specific needs. Importantly, these Welfare to Work Projects would be 
rigorously evaluated, expanding the evidence base that informs how 
assistance programs can be most effectively structured to help 
Americans achieve self-sufficiency.

    In January, for the first time in the history of the Medicaid 
program, the Federal Government indicated openness to State-led 
innovations that promote work or community engagement activities for 
working age, able-bodied enrollees. Productive work and community 
engagement is associated with improved health and well-being, meaning 
this reform can achieve the goals of the Medicaid program while also 
supporting independence and economic self-sufficiency for millions of 
able-
bodied adults.
         promoting efficiency and innovation in scientific work
    Supporting and encouraging scientific research is a longstanding 
Federal priority, one that results in both a growing economy and longer 
lives. Executing this responsibility demands that the Federal 
Government regularly consider how to organize such support in the most 
efficient manner possible.

    The administration believes it is a priority to support NIH, a 
crown jewel of American science, and proposes to do so not just through 
continued financial investments but also through innovative 
partnerships with non-federal entities, administrative reforms, and 
better coordination and planning.

    Among other efforts to derive maximum benefit from the substantial 
Federal investments made in NIH research, the budget supports expanding 
public-private partnerships that will challenge private sector partners 
to match Federal investments; increasing coordination across NIH's 
Institutes and Centers; focusing grant awards on projects with the 
highest potential to accrue benefits for public health; assessing new 
and current strategic investments in research; curtailing the rate at 
which high researcher salaries at private institutions are reimbursed 
with taxpayer dollars; and implementing burden reduction measures to 
reduce costs for grant recipients.

    The budget also supports administrative reforms for NIH, including 
efforts to harmonize operational functions and break down silos within 
the agency. In addition, the budget proposes to consolidate three other 
major HHS research institutions in NIH to maximize the effectiveness of 
their research.

    The Food and Drug Administration (FDA) is another crown jewel of 
American science. But its needs and priorities must change as the face 
of medical innovation changes, too. The budget includes investments for 
FDA to speed the development and approval of new drugs and medical 
devices, and to increase the quality and safety of next generation 
manufacturing practices, including approximately $500 million to 
strengthen medical product safety development and access.
            investing in our biodefense, preparedness, and 
                    global health security programs
    The President's budget aims to improve our Nation's preparedness 
for, and capabilities to respond to, chemical, biological, 
radiological, and nuclear threats; pandemic influenza; natural 
disasters; emerging infectious diseases; and cybersecurity challenges.

    In each area, smart investments that empower the private sector and 
our global partners will help keep our country safe.
Chemical, Biological, Radiological, and Nuclear Threat Preparedness
    The budget includes $512 million for the Biomedical Advanced 
Research and Development Authority (BARDA) and $510 million for Project 
BioShield, which fund successful public-private partnerships that 
support the development and procurement of new medical products crucial 
to defending our country against chemical, biological, radiological, 
nuclear, and infectious disease threats. Prior HHS investments in these 
programs have resulted in more than 190 medical countermeasure 
candidates, 34 FDA-approved products from BARDA, and the procurement of 
14 new products for the Strategic National Stockpile. Funding will also 
be available for exercises to build preparedness for threats such as 
emerging infectious diseases, natural disasters, and manmade 
biological, chemical, nuclear, and radiation threats.

    The budget proposes to transfer the Strategic National Stockpile to 
the Office of the Assistant Secretary for Preparedness and Response, to 
boost operational efficiencies and streamline development and 
procurement of medical countermeasures. It also provides $575 million 
to maintain and replenish the stockpile, the Nation's largest supply of 
life-saving medical countermeasures that can be deployed in the event 
of a public health emergency.
Natural Disaster Preparedness
    Following the powerful hurricanes and historic wildfires of 2017, 
HHS remains ready to respond to any and all hazards when disaster 
strikes. The budget ensures the Department is able to support essential 
emergency preparedness activities to refine our disaster responses. In 
particular, Hospital Preparedness Program resources will continue to be 
allocated to States and localities according to risk, ensuring 
communities with more risk have the necessary coordination and 
resources. The budget also continues to provide $50 million to support 
the National Disaster Medical System. Through this cost-effective and 
successful program, HHS trains and deploys teams of American health-
care professionals from across the country to provide medical care to 
our fellow Americans in the event of an emergency.
Global Health Security
    One of the most effective ways to protect Americans from the threat 
of infectious diseases is to enable other countries to follow through 
on their own commitments to contain and respond to disease threats. 
Such investments are far less expensive than mounting an international 
public health response to control an epidemic.

    To support this goal, the budget provides a total of $409 million 
for CDC's global health activities, which strengthens CDC's 
international preparedness and response capabilities. The budget would 
also build on substantial progress that has been made toward global 
health security goals under the Global Health Security Agenda (GHSA), 
including a $59 million investment that provides funding for CDC to 
continue this work into FY 2020.
Cybersecurity
    The budget recognizes that HHS must continue robust operations to 
meet today's cybersecurity needs and includes $68 million to ensure the 
Department is able to protect sensitive and critical information in an 
ever-changing threat landscape. The Department will also focus on 
support for and coordination with the health care and public health 
sectors in close coordination with the Department of Homeland Security, 
to promote information and resource sharing across levels of government 
and the private sector.
                strengthening the indian health service
    Through the Indian Health Service (IHS), HHS is responsible for 
providing quality health-care services to more than 2.2 million 
eligible American Indians and Alaska Natives. The budget prioritizes 
funding for this agency, and in particular for direct health services. 
The budget also makes significant investments to assist IHS facilities 
with meeting CMS quality health standards.

    Looking forward, and consistent with our statutory authorities, we 
recognize that how we provide quality health care in Indian Country and 
beyond must change to achieve and ensure the high quality of these 
services. More Tribes have assumed the responsibilities of providing 
health care for their members with support from the IHS, and 
investments in the budget reflect our support for the growth of tribal 
self-governance in the provision of health care.

    The President's 2019 budget for HHS recognizes the importance of 
focusing government spending on programs that work and reforming our 
Nation's health-care programs for a fast-changing world. This budget 
recognizes that securing America's future demands sound fiscal 
management and responsible decisions about our priorities. If we are 
serious about fulfilling HHS's mission of enhancing and protecting the 
well-being of all Americans, we must adopt the bold innovation and 
direction espoused by the President's budget.

                                 ______
                                 
       Questions Submitted for the Record to Hon. Alex M. Azar II
               Questions Submitted by Hon. Orrin G. Hatch
    Question. Mr. Azar, In the Medicare program, providers like doctors 
and hospitals are experiencing extremely long wait times to resolve 
appeals of Medicare payment decisions. These providers sometimes have 
to wait months or years to resolve cases and get reimbursed. This 
situation is mostly attributable to the backlog in appeals at the 
Office of Medicare Hearings and Appeals. The Senate Finance Committee 
passed the Audit and Appeals Fairness, Integrity, and Reforms in 
Medicare Act, known as AFIRM out of committee in the last Congress, and 
I believe the need for this legislation is just as important today. Mr. 
Azar, please describe how the changes to the appeals process in the 
President's budget will fix this backlog.

    Answer. The budget includes several proposals to reform the 
Medicare appeals process across all four levels within the Department, 
at CMS, the Office of Medicare Hearings and Appeals, and the 
Departmental Appeals Board. These proposals will improve the efficiency 
and efficacy of the administrative appeals process. The strategies 
include taking administrative actions to reduce the number of pending 
appeals and encourage resolution of cases earlier in the process and 
proposing legislative reforms that provide additional funding and new 
authorities to address the appeals volume. The FY 2019 budget includes 
significant funding increases for OMHA and the DAB along with a package 
of legislative proposals that would provide the flexibilities needed 
for both agencies to process their appeals workload more efficiently 
and allow OMHA to resolve a portion of its appeal receipts at lower 
cost.

    In addition to increased financial resources for greater 
adjudication of claims, the President's budget proposes legislative 
authority to:

        Remand appeals to the redetermination level with the 
introduction of new evidence.
        Increase the minimum amount in controversy for ALJ 
adjudication of claims to equal amount required for judicial review.
        Establish Magistrate adjudication for claims with amount in 
controversy below new ALJ amount in controversy threshold.
        Expedite procedures for claims with no material fact in 
dispute.
        Change the Medicare Appeal Council's standard of review from 
de novo to an appellate-level standard of review (which would increase 
its adjudication capacity by up to 30 percent, without increasing 
costs).
        Limit appeals when no documentation is submitted.
        Require a good-faith attestation on all appeals.
        Establish a post-adjudication user fee for unfavorable appeals 
at the 3rd and 4th levels of appeal.

    Taken together, these common sense reforms would significantly 
reduce the backlog and ultimately allow suppliers and health-care 
providers to more efficiently deliver services and goods to patients. I 
look forward to working with you to help realize our shared goals in 
this area.

    Question. Mr. Azar, as you may know, this committee held a round 
table discussion in 2015, as well as a hearing in 2016, to hear from 
industry stakeholders on proposals to reform the Stark Law. Many of the 
proposals and challenges faced by providers under the law are still 
very relevant today. The President's budget contains a request for 
additional authority to create exemptions from the self-referral law to 
facilitate participation in alternative payment models and apply Stark 
to physician-owned distributors.

    How will additional exemptions and authorities under the Stark Law 
help facilitate the transition to value-based care and assist in 
implementation of Advanced Alternative Payment Models under MACRA?

    Answer. We agree that the physician self-referral law must better 
support and align with alternative payment models. The FY 2019 
President's budget proposes establishment of a new exception to the 
physician self-referral law for arrangements that arise due to 
participation in Advanced Alternative Payment Models. The Department, 
in consultation with the HHS Office of Inspector General, will identify 
the types of arrangements and the minimum risk levels and level of 
participation in the model required for such exceptions.

    Question. I am concerned about the viability of independent, 
especially small, physician practices. The past decade has seen a 
significant uptick in hospital acquisitions of independent physician 
practices. According to the Physician Advocacy Institute, hospital 
acquisitions of physician practices rose 86 percent between 2012 and 
2015, and physician employment by hospitals increased over 50 percent. 
Is HHS actively evaluating how to better support independent practices 
and develop policies that allow solo providers to compete on a level 
playing field with hospitals and large health systems?

    Answer. We bear in mind whether new burdens created by models or 
programs or the scale they require for viability may be driving 
consolidation in the health-care market. As a matter of principle, we 
want to move to a system where we can be agnostic about ownership 
structures, a system that will allow independent providers to group 
together to drive innovation, quality, and competition. Independent, 
small physician practices play an important role in the health-care 
system. Technical assistance is available to help small practices 
participate successfully in the Quality Payment Program, including 
assistance with all aspects of the program and optimizing the use of 
technology. This assistance is provided through the Small, Underserved 
and Rural Support initiative, the Transforming Clinical Practice 
Initiative and the Quality Improvement Organization program. I look 
forward to examining this issue further and working with Congress to 
support these practices.

    Question. A 2014 law requires that ordering physicians consult 
imaging appropriate use criteria (AUC) that are developed by national 
medical specialty society or other provider-led entities prior to 
referring Medicare patients for advanced diagnostic imaging services, 
such as CTs, MRIs, and PET scans. In addition to facilitating improved 
health-care outcomes through the use of physician-developed guidelines 
and minimizing patient exposure to unnecessary radiation, this approach 
was thought to be more physician-friendly than establishing an advanced 
imaging prior authorization program that is typical among other payers. 
Although the law called for ordering physicians to begin consulting AUC 
for advanced diagnostic imaging procedures beginning on January 1, 
2017, CMS, working iteratively through the rulemaking process, has set 
a January 1, 2020 start date for the program. Can you affirm the 
decision to start the program on this date?

    Answer. The Medicare Appropriate Use Criteria (AUC) Program for 
Advanced Diagnostic Imaging will begin in a manner that allows 
practitioners more time to focus on and adjust to the Quality Payment 
Program before being required to participate in the AUC program. The 
Medicare AUC program will begin with an educational and operations 
testing year in 2020, which means physicians are required to start 
using AUCs and reporting this information on their claims. During this 
first year, however, CMS will pay claims for advanced diagnostic 
imaging services regardless of whether they correctly contain 
information on the required AUC consultation. This allows both 
clinicians and the agency to prepare for this new program.

    In addition, physicians may begin exploring the AUC Program and the 
use of clinical decision support mechanisms well in advance of the 
start of the Medicare AUC program through the voluntary participation 
period that will begin mid-2018 and run through 2019. During this time 
CMS will collect limited information on Medicare claims to identify 
advanced imaging services for which consultation with appropriate use 
criteria took place.

    Question. Mr. Azar, this budget puts forward a demonstration 
related to the Medicaid Drug Rebate Program and State flexibility. I, 
and many members on the dais, have long shared the goal of providing 
States with flexibility to administer Medicaid programs in the most 
appropriate way for their populations. However, this demonstration 
should give us a moment of pause.

    How will CMS evaluate these demonstrations to ensure that 
beneficiaries will have access to the best therapies available? It is 
very important that we have strong evaluations of such ideas before 
making broader policy decisions.

    Answer. The budget includes a new statutory demonstration authority 
to allow up to five States more flexibility in negotiating prices with 
manufacturers, rather than participate in the Medicaid Drug Rebate 
Program, and to make drug coverage decisions that meet State needs. 
Participating States will be required to include an appeals process so 
beneficiaries can access non-covered drugs based on medical need. By 
structuring the proposal as a limited demonstration opportunity, HHS 
and participating States will have the tools to rigorously evaluate 
these demonstrations, providing an assessment of the demonstrations' 
impacts on cost and access to medications.

    Question. Mr. Azar, I'm glad the budget proposes changes to the 
financing of the child welfare system to help States keep more families 
safely together instead of bringing more children into foster care. I'm 
pleased to note that last week the President signed into law the Family 
First Prevention Services Act as part of the government funding bill, 
and this legislation is focused on achieving the same goals set out in 
the President's budget. Will you commit to working with Senator Wyden 
and I--and other members of this committee--to be sure this new law is 
implemented quickly, so we can achieve our shared goal of keeping more 
kids safely with their families and out of foster care?

    Answer. We are committed to the implementation of the Family First 
Prevention Services Act. As the act makes numerous significant changes 
to Federal financing for child welfare, we must ensure that we take 
into consideration the needs of children and families, State and tribal 
challenges, and the landscape of available services as we implement the 
law. Changes of this magnitude cannot be rushed, but we are working as 
quickly as possible while continuing to work towards our goals of 
permanency, safety and well-being for all children.

    Question. Mr. Azar, as you may know, the Finance Committee is 
undertaking a bipartisan process to identify ways to address the opioid 
epidemic in Medicare and Medicaid so that the right incentives exist 
for addressing pain and addiction. When you testified before this 
committee earlier this year, you mentioned that addressing the opioid 
epidemic would be one of your top priorities, and I'm pleased to see a 
number of proposals included in the President's budget on this topic. 
Will you commit to working with this committee to find bipartisan 
solutions to address this epidemic within Medicare and Medicaid? Can 
you please elaborate on the mandatory program changes included in the 
President's budget to help move Medicare and Medicaid forward to better 
confront this epidemic?

    Answer. The budget includes several proposals that work to address 
the impact that the opioid epidemic has on our Nation's seniors. The 
Medicare population has among the highest and fastest-growing rates of 
opioid use disorders, currently at more than six of every 1,000 
beneficiaries. Many Medicare beneficiaries take multiple medications 
and receive prescriptions from multiple doctors, making tracking and 
controlling any misuse of these prescriptions a substantial challenge. 
HHS has made tackling this issue, and the opioid epidemic more broadly, 
a top priority.

    The budget proposes to conduct a demonstration to expand access to 
comprehensive substance abuse treatment for Medicare beneficiaries, 
including medication-
assisted treatment. This demonstration would be expanded nationwide if 
successful. A corresponding expansion of medication-assisted treatment 
is also proposed for Medicaid beneficiaries, who likewise have rates of 
opioid use disorder beyond those of other populations.

    The budget also proposes to address opioid misuse in Medicare by 
giving the Secretary authority to require plan participation in a 
program to prevent prescription drug abuse in Part D, essentially 
strengthening the statutory authority already provided through the 
Comprehensive Addiction Recovery Act of 2016 to ``lock'' an at-risk 
beneficiary into a single prescriber or pharmacy. To address 
potentially abusive prescribing practices the budget proposes to allow 
the Secretary to work with the Drug Enforcement Administration (DEA) to 
revoke a provider's DEA Certificate of Registration after CMS revokes a 
provider's Medicare enrollment based on a pattern of abusive 
prescribing.

    Question. The President's budget includes a proposal to authorize 
the Secretary to consolidate certain drugs covered under Part B into 
Part D. As the details would be helpful to evaluate this proposal, I 
ask some initial questions. Has HHS identified certain conditions or 
treatments that lend themselves to a transition from Part B to Part D? 
What would be the implications for moving a drug from Part B to Part D 
for beneficiaries, physicians, and the Medicare program?

    Answer. Senator Hatch, thank you for raising this crucial issue and 
bringing attention to an important proposal in the President's budget 
to lower drug costs for American seniors. While I am unable to discuss 
specific drugs or conditions that would be targeted, at this time, if 
given this authority, HHS would carefully analyze the projected impacts 
on beneficiary access and cost-sharing, as well as costs to the 
Medicare program, before pursuing any drug consolidation approaches. We 
look forward to working with you, your staff, and other interested 
members of Congress on this proposal, and we would seek any opportunity 
to find ways to reach our shared goal of bringing down the cost of 
prescription drugs for all Americans.

                                 ______
                                 
               Questions Submitted by Hon. Chuck Grassley
    Question. As a strong supporter of Medicare Part D and as someone 
who cares about those who will count on these programs today and for 
many years to come, I have a responsibility to ensure the survival of 
this program for future generations.

    Please tell me how you will bring down drug prices and ensure the 
Medicare Part D will continue to work as a free market solution for the 
seniors who depend upon the program.

    Is there need for more transparency in the Part D program? How 
would you achieve that?

    Answer. The budget modernizes the Part D drug benefit, based upon 
12 years of program experience, to improve plans' ability to deliver 
affordable drug coverage for seniors and reduce their costs at the 
pharmacy counter. Seniors will benefit from the budget's proposals, 
which are designed to better protect beneficiaries from high drug 
prices, give plans more tools to manage spending, and address the 
misaligned incentives of the Part D drug benefit structure. The 
proposed changes enhance Part D plans' negotiating power with 
manufacturers, encourage utilization of higher value drugs, discourage 
drug manufacturers' price and rebate strategies that increase spending 
for both beneficiaries and the Government, and provide beneficiaries 
with more predictable annual drug expenses through the creation of a 
new annual out-of-pocket spending cap.

    Question. In the HHS budget justification, there is a proposal to 
use centralized CMS screening for enrollment of providers who receive 
Medicare, Medicaid, or CHIP funding.

    Current regulations currently allow State Medicaid Agencies to rely 
on CMS screening, but providers are still subject to duplicative 
screening in many situations. I want to draw your attention to 
bipartisan legislation that Senator Bennet and I introduced this week. 
S. 2415, the Accelerating Kids Access to Care Act would streamline the 
enrollment process for some pediatric providers while protecting 
program integrity. I became aware of the need for this legislation when 
I heard a child's heart surgery was delayed because a provider--who was 
already credentialed in Medicaid in one state--could not be 
credentialed by the referring State because he could not find his 
original social security card. Thankfully, most children are well. But, 
there are a few who need care for their complex medical needs. We 
should not have artificial barriers to that care. Mr. Secretary, will 
your office work with staff from my office and Senator Bennet's to get 
this proposal off the ground?

    Answer. We are available to work with your staff and review any 
legislative language you may have in order to provide technical 
assistance.

    Question. Recent news investigators have reported on a wide variety 
of generic medications that on certain insurance plans could be cheaper 
when patients pay out of pocket instead of using their insurance 
benefits, but a so-called Pharmacy Benefit Manager ``gag clause'' can 
prevent some pharmacists from telling patients that they may be 
overpaying for their prescription. Are you aware of these concerns 
regarding ``gag clauses'' on pharmacies? Do you believe this is helpful 
in promoting a competitive free market? What changes do you believe 
need to be made in regard to PBM transparency?

    Answer. Senator Grassley, as you know, we share the mutual desire 
to ensure that Americans are paying the lowest possible price at the 
pharmacy counter, and I have made it a top priority in my tenure as 
Secretary to meet that goal, so I thank you for raising this important 
issue. We are committed to looking further into this, and any other 
issues that relate to Medicare Part D or other HHS programs that impact 
the price of pharmaceuticals, and we look forward to working with you 
and your staff to identify government policies which impede consumer 
access to drugs and to develop patient-driven solutions to empower 
patients.

    Question. Community pharmacists in Iowa have reported increasing 
use of price concessions and fees imposed by pharmacy benefit managers 
months after prescriptions are filled, called Direct and Indirect 
Remuneration (DIR) fees. CMS has now for several years recognized 
issues with how DIR fees are reported by part D plan sponsors, how 
these fees impact pharmacy business, and the resulting challenges they 
create for Part D beneficiaries, including addressing it in the 
President's budget. CMS recently proposed requiring that all DIR fees 
would be reflected at the point of sale, and I joined with 20 of my 
colleagues urging CMS to move forward with this proposal, which would 
lower out of pocket costs for beneficiaries. Given the fact that these 
``fees'' are detrimental to the Federal Government, Part D 
beneficiaries and Part D pharmacy care providers, how will you work to 
resolve these concerns?

    Answer. In the proposed Parts C and D rule (CMS-4182-P), we 
included a Request for Information in which we discussed considerations 
related to and solicited comment on requiring sponsors to include at 
least a minimum percentage of manufacturer rebates and all pharmacy 
price concessions received for a covered Part D drug in the drug's 
negotiated price at the point of sale. Feedback received will be used 
for consideration in future rulemaking on this topic. HHS is committed 
to enacting reforms to ensure our health-care programs work for the 
American people, provide Americans with access to care that meets their 
needs, increase options for patients and providers, and build financial 
stability and responsibility.

                                 ______
                                 
                Questions Submitted by Hon. John Cornyn
    Question. Secretary Azar, you've talked about bringing more 
competition into the market in Medicare Part B. What would that look 
like?

    Answer. I look forward to working with Congress to explore ways 
that we can bring the negotiation strategies that are currently working 
in Medicare Part D, where we receive the best deals of any payer in the 
commercial marketplace, into Part B, which does not negotiate prices. 
Additionally, the budget proposes to leverage Medicare Part D Plans' 
negotiating power by providing HHS the authority to consolidate certain 
drugs covered under Part B into Part D, when there are savings to be 
gained from price competition.

    Question. The Senate Finance Committee has consistently exhibited 
broad bipartisan support to fix the competitive bidding program, and in 
particular, the component in need of our immediate attention: the 
payment rate cuts for DME supplied to rural areas or ``non-CBAs'' must 
be reversed. While I appreciate the Medicare Program's goal to save 
taxpayer money, I am greatly concerned that the payment reductions for 
DME supplied to rural America are negatively impacting suppliers' 
ability to reach Medicare's most needy beneficiaries. Congress shares 
my concern, having established a temporary reprieve through The 21st 
Century Cures Act, which reversed these cuts for 6 months through the 
end of 2016. The cuts, however, were reinstated on January 1, 2017 and 
remain in place today. Adversely impacting durable medical equipment 
suppliers' ability to do their jobs is creating very real patient 
access issues for Medicare beneficiaries in rural America, which in 
turn undermines the quality of health care they rightfully depend upon.

    We know that CMS leadership shares our concern, having prepared an 
Interim Final Rule (IFR) for publication last year, known as the 
``Durable Medical Equipment Fee Schedule; Adjustments to Resume the 
Transitional 50/50 Blended Rates to Provide Relief in Non-Competitive 
Bidding Areas'' (RIN: 0938-AT21). The IFR has been stalled at the 
Office of Management and budget since last summer. This is both an 
unfortunate and unacceptable way to treat our Medicare beneficiaries.

    Please describe in detail the steps you have taken and will take to 
ensure that OMB promptly releases the IFR to allow CMS to publish it 
promptly. If there are any obstacles to the prompt publication of the 
IFR, then please describe them to the committee, why they haven't been 
removed, and what you will do to remove them.

    Answer. Senator Cornyn, thank you for raising this important issue. 
While this regulation is under review by the administration, and I am 
unable to answer in specific details as you request at this time, I do 
want to stress that I share your interest and commitment to ensuring 
access to durable medical equipment for Medicare beneficiaries. The 
Department is prioritizing actions to address the concerns you have 
expressed.

    Question. The Affordable Care Act included an effective ban on the 
expansion of physician-owned hospitals, as well as a ban on the 
construction of new hospitals. As you are aware, Hurricane Harvey 
caused massive damage to hospitals in Texas, including the permanent 
closure of one in Pasadena. This has resulted in a community of over 
300,000 individuals having access to only one physician-owned hospital 
with 65 beds. Do you support an exception that would allow physician-
owned hospitals in regions impacted by major disasters?

    Answer. I understand that HHS and CMS staff have been providing 
technical assistance on bill text that would lift the ban on the 
expansion of physician-owned hospitals. I am happy to continue working 
with your office to learn more about this issue.

    Question. Most people would be surprised to know that State 
Medicaid programs cannot negotiate--or get someone to negotiate on 
their behalf--with drug manufacturers. Do you foresee State Medicaid 
programs banding together to get the kind of scale that would drive 
even greater rebates than the statutory rebates already required?

    Answer. Under current Federal law, drug manufacturers must provide 
Medicaid programs the best prices for prescription drugs that they 
offer to any private payer. As part of an administration-wide effort to 
address the high costs of prescription drugs and provide States more 
purchasing flexibility, the budget proposes a new statutory 
demonstration authority that will allow up to five States to test a 
closed formulary under which they negotiate prices directly with 
manufacturers, rather than participating in the Medicaid Drug Rebate 
Program. I am happy to work with Congress regarding this legislation.

    Question. Many agencies within HHS are pursuing the right things to 
incentivize innovation in health care. For example, the FDA has a pilot 
program that moves health-care technology into a 21st-century paradigm 
by certifying a company and its development processes as a whole, as 
opposed to each individual product. This shift enables rapid, iterative 
development processes for lower-risk medical device software and aligns 
with the rest of the consumer technology industry. How will the 
Secretary work to align all of HHS policy on health IT and digital 
health tools to foster private sector innovation in a similar manner to 
the FDA's forward thinking approach in its pre-certification pilot?

    Answer. The 21st Century Cures Act provided FDA some additional 
important tools to help the agency ensure adequate and timely 
implementation so that patients can realize the benefits, companies 
have a clear and predictable path to bring these new advances to the 
United States, and patients and consumers can realize the benefits of 
new products while maintaining confidence that products will be 
reasonably safe and effective. In the area of digital health, FDA has 
released an action plan that includes the agency's precertification 
pilot program (FDA Pre-Cert), which seeks to apply a tailored approach 
toward digital health technology by looking at the software developer 
or digital health technology developer, rather than primarily at the 
product. The 21st Century Cures Act expands on policies advanced by the 
Center for Devices and Radiological Health (CDRH) generally to make 
clear that certain digital health technologies--such as clinical 
administrative support software and mobile apps that are intended only 
for maintaining or encouraging a healthy lifestyle--generally fall 
outside the scope of FDA regulation. Such technologies tend to pose low 
risk to patients but can provide great value to the health-care system. 
I look forward to reviewing our current policies on health IT and 
digital health tools to see where there may be other areas we can 
expand this approach. Our policies should protect consumers, but at the 
same time be flexible enough to allow innovation.

    Question. The administration proposes creating savings in Medicare 
Part D by allowing Part D plans more flexibility in managing their 
formularies. Could the agency implement allowing plans to cover one 
drug per class or would you need Congress to change the statute? What 
other tools can CMS provide plans NOW under current authority?

    Answer. CMS is committed to supporting flexibility and efficiency 
throughout the MA and Part D programs. The MA and Part D programs have 
been successful in allowing for innovative approaches for providing 
Medicare and Part D benefits to millions of Americans. Our budget 
includes this proposal for legislative authority because the statute 
does not allow for plans to cover one drug per class. In the proposed 
Parts C and D rule (CMS-4182-P) released in November 2017, CMS proposed 
to provide more formulary flexibility to plan sponsors by, for 
instance, permitting Part D sponsors to immediately substitute newly 
released equivalent generics for brand name drugs at the same or lower 
cost-sharing tier, if they meet revised requirements, including 
generally advising enrollees beforehand that such changes can occur 
without a specific advance notice and later providing information to 
affected enrollees about any specific generic substitutions that occur.

                                 ______
                                 
                 Question Submitted by Hon. John Thune
    Question. As discussed at your confirmation hearing, I have 
concerns regarding how the Department of Veterans Affairs' (VA) change 
in its electronic health record system would impact the Indian Health 
Service (IHS), which relies on the same system. Last week, Secretary 
Shulkin testified that he expects the VA's transition may require 
maintaining the existing system for several years to come. While that 
would likely be helpful to IHS for the short-term, I want to ensure 
attention continues to be paid to this issue. I've been told that a 
working group was formed to examine the current platform and how VA and 
IHS will continue to collaborate when a transition occurs. Then-
Secretary Price expected that recommendations from the group would be 
made by fall 2017. Have these recommendations been completed, and if 
so, what are they?

    Answer. The Indian Health Service (IHS) continues to work with the 
Department of Veterans' Affairs (VA) about the VA's plans and 
anticipated timelines. Similarly, the IHS remains engaged in 
discussions with its stakeholder groups such as the Tribal Self-
Governance Advisory Committee, Direct Services Tribal Advisory 
Committee, and Information Systems Advisory Committee. Monthly updates 
are provided during the IHS All Tribes Call.

    IHS published a Request for Information (RFI) in FedBizOps in 
December 2017 seeking new and innovative solutions to the goals and 
challenges which Federal and Tribal health programs seek to address in 
the delivery of care. Over 40 vendors of commercial electronic health 
record systems responded to the RFI describing a variety of software 
platforms and various services. IHS will continue a robust dialogue 
with a number of the respondents throughout Spring of 2018. Future 
steps will be determined based on the developments resulting from our 
work with all stakeholders.

                                 ______
                                 
               Questions Submitted by Hon. Johnny Isakson
    Question. We know and I suspect agree that Hospital Acquired 
Pressure Ulcers (HAPUs) are an important problem that contributes to 
morbidity, mortality, and cost for Medicare, Medicaid, and commercially 
insured and uninsured beneficiaries. My question pertains to pain 
management protocols and the prevalence and impact to human suffering 
and associated medical costs of HAPUs, a national epidemic that kills 
approximately 60,000 patients/year while impacting over 2 million 
Americans and costing between $9-$11 billion (mid 2000's data from 
AHRQ).

    The data from the National Scorecard on Rates of Hospital-Acquired 
Conditions 2010 to 2015: Interim Data From National Efforts To Make 
Health Care Safer states that pressure ulcers had the lowest reduction 
of hospital acquired conditions in the United States in that time span. 
Specifically, more recent data from the Office of Enterprise Data and 
Analytics at CMS shown in October 2017 identified pressure ulcer 
discharges increased by 58.4% between Q1 2016 and Q1 2017, a concerning 
trend. These data sets demonstrate the need to work together to 
determine how we can improve our Nation's health-care outcomes by 
reducing pressure ulcers and saving the government significant costs.

    The aforementioned provides concerns for the lowest reduction and 
rising state of one of the most preventable unintended consequences of 
the Hospital-Acquired Condition (HAC) score used by CMS. The HAC 
Reduction Program (HACRP) requires the Secretary of the Department of 
Health and Human Services to adjust payments through the domain formula 
with respect to risk-adjusted HAC quality measures. The CMS has the 
ability to re-balance the domain formula in the HACRP to incentivize 
the reduction of hospital acquired Pressure ulcers.

    I would like to understand what HHS is doing to promote the 
prevention of pressure ulcers. Specifically:

        (1)  What steps is CMS taking to implement an improved care 
        protocol to ensure the Hospital-Acquired Condition (HAC) 
        Reduction Program incentivizes hospitals to reduce HAPUs?

        (2)  Does HHS have statutory authority to test or implement new 
        scientifically based HAPU prevention protocols?

        (3)  Please describe how CMS can use existing tools like re-
        balancing the domain formula in the Hospital-Acquired Condition 
        Reduction Program (HACRP) to reverse the trend and reduce HAPUs 
        and the time line for any such action?

    Answer. We agree that pressure ulcers are a critical area to 
address. We now have pressure ulcer quality measures for all of the 
post-acute care providers (long-term care hospitals, inpatient 
rehabilitation hospitals, skilled nursing facilities, and home health 
agencies). The measure looks at the percent of patients with pressure 
ulcers that are new or have worsened. In the acute care hospital 
setting, there is not such an individual pressure ulcer measure; 
however, there is a patient safety composite measure (the Patient 
Safety and Adverse Events Composite) that includes pressure ulcers as 
one of the eight components of this composite measure. In FY 2018, this 
measure will comprise 15 percent of a hospital's score under the 
Hospital Acquired Condition (HAC) Reduction program. In the HAC 
Reduction Program, we solicit comments in our rulemaking on future 
potential safety measures that could be added to the program. We are 
always re-evaluating the measure set as well as the weights of the 
measures and domains in the program, and are able to add and remove 
measures, as needed. In addition, the Quality Improvement Organization 
(QIO) Program has worked over the past several years to bring together 
hospitals, nursing homes, physician practices, and patient advocates to 
work on patient safety issues, including the reduction of pressure 
ulcers. The Hospital Improvement Innovation Networks are part of the 
QIO program, and pressure ulcers are one of the 11 areas of harm they 
have been focused on.

    Question. In the updated Unified Agenda, FDA Commissioner Gottlieb 
identifies more than 70 actions the FDA will pursue this year to 
deliver on its critical mission of protecting and promoting the public 
health.

    Across the FDA's broad regulatory portfolios, Commissioner Gottlieb 
is prioritizing innovation, committing the FDA to:

        . . . ``evaluating all aspects of its policies to make sure 
        we're protecting consumers, while promoting beneficial 
        innovation that has the potential to . . . improve public 
        health'' and taking ``steps to foster innovation and regulating 
        areas of promising new technology in ways that don't raise the 
        cost of development or reduce innovation.''

    Examples of these steps include modernizing medical device pathways 
to be more ``transparent, consistent, and objectively defined,'' 
supporting innovation in digital health products, establishing a new 
regulatory framework for regenerative medicine policy to provide 
``efficient access to potentially transformative products, while 
ensuring safety and efficacy,'' and announcing a new regulatory 
framework for nicotine that seeks to ``reduce(e) the addictiveness of 
combustible cigarettes'' and supports ``innovation to lead to less 
harmful products, which under FDA's oversight, could be part of a 
solution.''

    Will you commit to supporting Commissioner Gottlieb's vision for 
fostering innovation in industries regulated by the FDA through 
sensible regulatory pathways that don't raise costs or stifle 
technological advancements? If yes, please provide examples of how you 
will be supportive at the full agency level.

    Answer. Yes, I am committed to supporting Commissioner Gottlieb's 
vision for fostering innovation in industries regulated by FDA through 
sensible regulatory pathways that do not raise costs or stifle 
technological advancements. For example, I will support actions that 
FDA has planned for 2018 in the areas of food safety, drug safety, and 
broadening access to nonprescription drugs.

    Question. Will you commit to supporting Commissioner Gottlieb's 
efforts to modernize the FDA by focusing on making the FDA more 
efficient, innovative, and transparent? If yes, please provide examples 
of how you will be supportive at the full agency level.

    Answer. Yes, I am committed to supporting Commissioner Gottlieb's 
efforts to modernize FDA by focusing on making FDA more efficient, 
innovative, and transparent. I support the following goals of FDA for 
2018.

    FDA is working to ensure efficiency of existing regulations--a key 
focus of the Unified Agenda--by making sure that FDA's standards are 
clearly defined, that they advance our public health goals and help 
promote the protection of consumers, and achieve these goals in an 
efficient way that does not place unnecessary burdens on those FDA 
regulates. FDA also wants to ensure that our standards and regulations 
are modern and reflect the latest science, and have not become 
outdated, obsolete, or otherwise not applicable to the current 
environment.

        Harmonizing global standards: FDA will be updating its 
requirements for accepting foreign clinical data used to bring new 
medical devices to market. While helping to ensure the quality and 
integrity of clinical trial data and the protection of study 
participants, this rule should also reduce the burden on industry 
because it will harmonize with the standards currently used in drug 
regulation.
        Modernizing mammography standards: FDA will be proposing a 
rule to modernize mammography quality standards that will improve 
women's health. FDA's aim is to recognize advances in technology and 
help to ensure women get the most relevant, up-to-date information 
about their breast density, which is now recognized as a risk factor 
for breast cancer. This information can help doctors and patients make 
more informed decisions about further imaging.
        Embracing electronic submissions: FDA will propose a new 
framework that will allow FDA and product developers to take greater 
advantage of the efficiency of electronic, rather than paper, 
submissions for devices and veterinary drugs.
        Removing outdated rules: FDA will remove an outdated 
inspection provision for biologics and outdated drug sterilization 
requirements to remove barriers to the use of certain sterilization 
techniques.

    Question. Do you also believe that FDA regulatory pathways should 
be modernized to be transparent, consistent, and objectively defined? 
If yes, please describe what specific steps will you take to ensure 
this happens at the FDA under your and Commissioner Gottlieb's watch?

    Answer. Yes, I believe we should always look for ways to modernize 
our regulatory approach. For example, FDA's new comprehensive tobacco 
regulation plan (announced in July 2017) builds on current endeavors 
and is part of an overall effort to reduce the adverse effects of 
tobacco products, create clearer guideposts for the regulation of all 
tobacco products, and account for the role of noncombustible products.

    The components of the plan work together as a package to help 
achieve our public health goals of reducing tobacco-related disease and 
death. The agency's new tobacco regulatory framework has two primary 
parts: exploring the reduction of the addictiveness of combustible 
cigarettes while recognizing and clarifying the role that potentially 
less harmful tobacco products could play in improving public health. 
Several steps and components make up each part, and to be successful, 
all these measures must be pursued together to allow FDA to address 
known harms while establishing a framework for sustainable regulation 
of all products going forward, including by encouraging innovations 
that have the potential to help smokers quit cigarettes. FDA is taking 
a fresh look at noncombustible tobacco products and recognizing the 
potential for innovation to lead to less harmful products, which under 
FDA's oversight could reduce risk while delivering satisfying levels of 
nicotine for adults who still need or want it.

    To encourage innovations that have the potential to make a notable 
public health difference and to put foundational rules in place to 
provide increased clarity and efficiency for industry, the agency 
extended the premarket application compliance deadlines described in 
the deeming rule for certain products. Specifically, FDA is deferring 
enforcement of requirements to submit premarket applications for newly 
regulated tobacco products that were on the market as of August 8, 
2016. Under these revised timelines, applications for such newly 
regulated combustible products, such as cigars, pipe tobacco, and 
hookah tobacco, would be submitted by August 8, 2021, and applications 
for such non-combustible products such as ENDS would be submitted by 
August 8, 2022.

    As another example, FDA continues to work to advance the field of 
regenerative medicine and, in November 2017, issued a comprehensive 
framework for the development and oversight of regenerative medicine 
products, including novel cellular therapies.

    Congress advanced the promise of this cutting-edge field when it 
passed the 21st Century Cures Act which includes several provisions 
that build upon FDA's previous efforts in the field of regenerative 
medicine and provides the agency with tools to facilitate the 
development and review of these important products. FDA's Center for 
Biologics Evaluation and Research implementation of the regenerative 
medicine-
related provisions of the Cures Act, including the new Regenerative 
Medicine Advanced Therapy (RMAT) designation program, is a key part of 
the agency's efforts to encourage the development of innovative, safe, 
and effective regenerative medicine products.

                                 ______
                                 
                 Question Submitted by Hon. Rob Portman
    Question. Secretary Azar, you noted that the President's budget 
calls for $10 billion in funding to address the epidemic, but it does 
not obligate any of these funds to specific programs. Because of this, 
you stated that you could not commit at the time to seeing these funds 
used to support existing programs, like those under the Comprehensive 
Addiction and Recovery Act (CARA). What would the intended strategy be 
for utilizing these proposed funds? Would HHS rely on existing programs 
and infrastructure like those established under CARA, or would HHS seek 
to establish new opportunities for addressing the epidemic?

    Answer. The President's budget request for $10 billion reflects the 
administration's strong commitment to addressing the opioid epidemic 
and mental health. Of the $10 billion, an initial allocation provides 
$1.2 billion to SAMHSA for a variety of new and expanded efforts to 
fight the crisis. Of that amount, $1 billion is included to expand the 
State Targeted Response Grants. Additional funds will also help States 
provide services to reduce injection drug use and related HIV/AIDS and 
Hepatitis C infection rates, allow communities to purchase naloxone for 
first responders, and expand the use of drug courts, as well as 
services to pregnant and postpartum women.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
    Question. During the Finance Committee hearing on your nomination 
to be HHS Secretary, you proposed applying principles from Medicare 
Part D to how Medicare pays for Part B drugs. In response to my 
Question for the Record (QFR) on this topic, you reiterated your 
interest in working with Congress on this proposal to ensure the 
Medicare program pays the most appropriate rate for Part B drugs (and, 
as a result, beneficiaries pay the lowest possible cost-sharing).

    The FY 2019 President's budget includes a proposal to provide you, 
as the Secretary of Health and Human Services (HHS), ``with the 
authority to consolidate certain drugs currently covered under Medicare 
Part B into Part D.'' Please provide detailed answers to the following 
questions regarding this proposal.

    If given this new authority, how would you, as HHS Secretary, 
determine which Part B drugs to shift to Part D? What categories of 
Part B drugs does HHS consider good candidates for shifting to Part D? 
Are there any specific categories of Part B drugs that HHS does not 
consider appropriate to shift to Part D?

    The President's budget proposal states that the HHS Secretary would 
exercise this authority when ``there are savings to be gained from 
price competition.'' If given this new authority, how would you, as HHS 
Secretary, determine whether there are savings to be gained from 
shifting a specific Part B drug to Part D? In exercising this new 
authority, how would HHS determine the savings gained from shifting a 
drug from Part B to Part D would result from a lower price of the drug 
rather than reduced utilization due to any access concerns? Would HHS 
consider any factors other than potential savings when determining 
whether to shift a Part B drug to Part D? If so, what other factors 
would be considered?

    Please describe in detail how HHS would implement this policy if 
Congress were to adopt the President's budget proposal, including how 
the policy would impact Medicare beneficiaries, physicians and other 
health care providers, drug plan sponsors, and pharmacies. Do you 
anticipate changes in Part D Plan premiums as a result of shifting 
drugs to Part D? Would changes in beneficiary premiums as a result of 
shifting drugs from Part B to Part D factor into savings estimates?

    Answer. I look forward to working with Congress to explore ways 
that we can bring the negotiation strategies that are currently working 
in Medicare Part D, where we receive the best deals of any payer in the 
commercial marketplace, into Part B, which does not negotiate prices. I 
hope to work with you and your colleagues to develop legislation that 
will provide us with the authority to re-classify Part B drugs into 
Part D when appropriate, while taking into consideration the projected 
impacts on beneficiary access and cost-sharing, as well as costs to the 
Medicare program.

    Question. The President's FY 2019 budget proposes to eliminate the 
Medicaid expansion and impose a per capita cap or block grant on the 
remainder of the Medicaid program, the combination of which would cut 
an estimated $1.4 trillion from Medicaid just over the next 10 years. 
When asked about these proposals during a hearing before the Senate 
Finance Committee, you testified that these policies would help 
``reorient Medicaid'' to fix what you called a ``perverse incentive'' 
in the Medicaid expansion program to ``prioritize the expansion able-
bodied new entry populations over those traditional Medicaid 
populations,'' including children, the elderly, and individuals with 
disabilities.

    As demonstrated by the independent, nonpartisan Kaiser Family 
Foundation in a report entitled ``Data Note: Data Do Not Support 
Relationship between States' Medicaid Expansion Status and Home and 
Community-Based Services Waiver Waiting Lists,'' expansion of the 
Medicaid program has not lead to increased waiting lists for services 
for those with disabilities. In fact, according to the analysis, among 
States that saw their waiting lists grow over that time period, the 
average increase was more than 2.5 times greater in non-expansion 
States compared to expansion States. In fact, in 2015, the two States 
with the largest HCBS waiver waiting lists--Texas and Florida--were 
non-expansion States.

    Given these data demonstrating that the claim that the decision to 
expand Medicaid comes at the expense of access to HCBS for traditional 
Medicaid beneficiaries is inaccurate, please explain how the Medicaid 
expansion program creates a ``perverse incentive'' in this case.

    Answer. Thank you for the opportunity to further explain the 
structural defects in the PPACA which prioritize able-bodied adults 
over the traditional Medicaid population, including Americans with 
disabilities. As you know, States receive a larger Federal match (94 
percent in 2018 which declines to 90 percent by 2020 and beyond) to 
cover the able-bodied, but a Federal match ranging from 50-75 percent 
to cover individuals with disabilities. Unfortunately, the report cited 
above does not take into account a number of important factors which 
might impact a State's decision to expand Medicaid or reduce its 
waiting lists for individuals with disabilities such as the relative 
size, wealth or tax base of a State, the differing demographics of 
States, or other fiscal challenges within the States. In addition to 
the study not controlling for critical differences among the States, it 
is an undeniable feature of the Medicaid expansion to provide States a 
significantly greater financial incentive to cover the able-bodied 
expansion population (94 percent Federal share) instead of individuals 
with disabilities (as low as 50 percent Federal share). Whether and how 
to prioritize Medicaid coverage for their citizens varies significantly 
among States due to a number of factors, but a significantly larger 
Federal share of spending for one population over another is a clear 
financial incentive to cover one group of citizens over another.

    Question. Studies conducted by the independent Robert Wood Johnson 
Foundation, Kaiser Family Foundation, and others have also demonstrated 
that extending Medicaid coverage to low-income adults produces savings 
for State governments. In fact, over 2015 and 2016, States that opted 
not to expand their programs saw Medicaid costs rise at a faster rate 
than the costs reported by expansion States. Such data suggests that 
the Medicaid expansion program supports, rather than limits, the 
ability of States to fund and support services for traditional Medicaid 
beneficiaries and other individuals in State health care programs.

    In light of these data, how does repealing the Medicaid expansion 
program support State efforts to provide health-care coverage and 
services?

    Answer. The FY 2019 budget establishes a block grant or per capita 
cap for the traditional Medicaid populations and repeals the PPACA 
Medicaid expansion. States would have the option to cover the former 
Medicaid expansion population through the new Market-Based Health Care 
Grants included in the Graham-Cassidy-Heller-Johnson legislation. These 
new financing mechanisms will harmonize the treatment of States over 
time and allow States to better target resources to their most needy 
citizens. To that end, we need reforms to provide States flexibility to 
design their Medicaid programs to meet the spectrum of diverse needs of 
their Medicaid populations. Currently, outdated Federal rules and 
requirements prevent States from pioneering delivery system reforms and 
from prioritizing Federal resources to their most vulnerable 
populations, which hurts access and health outcomes. Reforms like block 
grants, when paired with additional authority and flexibility, can 
incentivize and empower States to develop innovative solutions to 
challenges like high drug costs and fraud, waste and abuse. We must 
make health care more tailored to what individuals want and need in 
their care. The President's FY 2019 budget takes a significant step in 
that direction by putting the Medicaid program on a sustainable course 
and returning local health-care decisions back to where they should be 
made.

    Question. Repealing the Medicaid expansion and capping the 
traditional Medicaid program would have severe consequences for State 
budgets by increasing the number of uninsured residents and leaving 
State Medicaid programs with billions fewer dollars in Federal support. 
Such cuts would force States to compensate by modifying their 
traditional Medicaid programs by limiting enrollment, rolling back 
optional benefits--including HCBS--and reducing provider payments, as 
the non-partisan Congressional budget Office reported in 2017.

    In light of these projections, how does this budget's proposal to 
cut and cap the traditional Medicaid program ensure that low-income 
children, seniors, and individuals with disabilities do not lose access 
to the services and coverage they need?

    Answer. The budget's Medicaid proposal is modeled after the Graham-
Cassidy-Heller-Johnson bill, which includes a modernization of Medicaid 
financing and repeal of the Obamacare's Medicaid expansion. Medicaid 
financing reform will empower States to design individual, State-based 
solutions that prioritize Medicaid dollars for traditional Medicaid 
populations and support innovations like community engagement 
initiatives for able-bodied adults. Additionally, the Market-Based 
Health Care Grant Program included in the Graham-Cassidy-Heller-Johnson 
legislation will provide more equitable and sustainable funding to 
States to develop affordable health-care options for their citizens. 
The block grant program will empower States to improve the functioning 
of their own health-care market through greater choice and competition, 
with States and consumers in charge. Putting States back in charge of 
their health-care decisions will allow them to better target resources 
to low-income children, seniors and individuals with disabilities.

    Question. In January, OCR and HHS issued a proposed rule regarding 
protecting the conscience rights of providers that have objections to 
certain activities based on their values or religious beliefs.

    There is no language included in this proposed rule regarding 
discrimination against gay, lesbian, bisexual or transgender 
individuals.

    Will you commit to including language in the final draft of this 
rule to State that the rule does not permit discrimination against LGBT 
populations or allow a provider to refuse care or services to an 
individual that identifies as LGBT?

    Answer. We are currently reviewing public comments on the proposed 
rule, and we cannot predetermine the outcome of the notice and comment 
process. The Federal conscience laws were passed by Congress with bi-
partisan support in order to prohibit discrimination and to further 
diversity in health care. The proposed conscience regulation would 
provide mechanisms for enforcement of current Federal laws that have 
been under-enforced in the past. HHS is committed to faithfully 
applying the facts to the law, and to treating all complainants fairly 
under every statute it enforces.

    Question. Mental illness affects millions of Americans, regardless 
of culture, race, ethnicity, gender, or sexual orientation. As the 
primary Federal agency for research on mental illness, the National 
Institute of Mental Health (NIMH) is tasked with conducting clinical 
research that advances prevention, treatments, and cures for mental 
disorders. There is an urgent need for clinical research that addresses 
immediate public health needs and reduces disparities among 
underrepresented communities. At NIMH, clinical trials are vital to 
discovering interventions that are culturally appropriate for each 
community.

    The Fiscal Year 2019 President's budget would increase funding to 
the National Institute of Mental Health (NIMH) by $21 million.

    How would NIMH balance the allocation of new resources between 
basic and clinical research priorities?

    Answer. NIMH strives to maintain a diverse portfolio of short-, 
medium-, and long-term investments to maximize impact on public mental 
health. Short-term investments include applied research, such as 
clinical trials and implementation research; medium-term investments 
involve research aimed at understanding mechanisms of illness; and 
long-term investments focus on basic research to understand how the 
brain works, how it is influenced by environment, and how it guides 
behavior. By supporting this diversity of research across timeframes, 
NIMH helps those who have mental illnesses now, and funds research that 
leads to more effective treatment and prevention programs in the 
future. Increased funding would enable NIMH to fund excellent science 
across all timeframes that might otherwise go unfunded.

    Question. How would NIMH use the additional funding to focus on 
clinical research trials that test the effectiveness of mental health 
interventions for minority groups and other underserved communities?

    Answer. NIMH recognizes the compelling need to assess treatment 
efficacy among minority groups and other underserved communities. NIMH 
is committed to research focused on decreasing disparities, as 
exemplified by the inclusion of mental health disparities as a theme 
that cross-cuts its entire NIMH Strategic Plan for Research. NIMH 
strives to include adequate numbers of men and women and members of 
diverse racial/ethnic groups in research studies--from genomics to 
services and clinical research--in order to detect and mitigate these 
disparities. In addition, studies of diverse populations can contribute 
to our understanding of risks for mental illnesses, responsiveness to 
prevention and treatment interventions, and access to, and engagement 
in, care.

    Through current funding opportunity announcements, NIMH is seeking 
research applications to specifically target the reduction and 
elimination of mental health disparities. In addition, notable NIMH 
clinical research trials directed toward underserved populations 
include a safety study of the antipsychotic drug clozapine, and a 
community-based study examining adherence to an HIV intervention. NIMH 
will continue to support efforts to test effectiveness of mental health 
interventions for minority groups. Research on sex, gender, age, 
racial, and ethnic differences related to mental disorders will provide 
information essential to the development of precision medicine and 
personalized interventions.

    Question. What steps will NIMH take to increase the diversity of 
clinical trial participants across all NIMH funded clinical research 
studies?

    Answer. NIMH applies NIH policies on the inclusion of women, 
minorities, and individuals across the lifespan in clinical 
research.\1\, \2\ The NIH Grants Policy Statement (4.1.15.7-
8) requires that applicants address the inclusion of individuals based 
on sex/gender, race, and ethnicity in research designs as appropriate 
to the scientific objectives of the study.\3\ In addition, the NIMH 
Recruitment of Participants in Clinical Research Policy requires 
recruitment plans for all NIMH extramural-funded clinical research 
studies proposing to enroll 150 or more subjects per study, and all 
clinical trials, regardless of size. Consideration must be given to 
recruitment plans for females and males, members of racial and ethnic 
minority groups, and children. Grantees are encouraged to propose 
outreach plans for research participation.\4\
---------------------------------------------------------------------------
    \1\ https://grants.nih.gov/grants/funding/women_min/guidelines.htm.
    \2\ https://grants.nih.gov/grants/guide/notice-files/NOT-OD-18-
116.html.
    \3\ https://grants.nih.gov/grants/policy/nihgps/HTML5/section_4/
4.1_public_policy_
requirements_and_objectives.htm?tocpath=4%20Public%20Policy%20Requiremen
ts%2C%20
Objectives%20and%20Other%20Appropriation%20Mandates%7C4.1%20Public%20Pol
icy%
20Requirements%20and%20Objectives%7C4.1.15%20Human%20Subjects%20Protecti
ons%
7C_____7#4.1.15.7_Inclusion_of_Children_as_Subjects_in_Clinical_Research

    \4\ https://www.nimh.nih.gov/funding/grant-writing-and-application-
process/nimh-recruitment-of-participants-in-clinical-research-
policy.shtml.

    To increase awareness of opportunities to participate in research, 
NIMH provides an online resource for studies conducted at the NIH 
Clinical Center.\5\ NIMH also engages with mental health professional 
and advocacy groups that focus on health disparities communities.\6\ 
These efforts provide a unique opportunity to reach diverse groups, 
increase awareness about the opportunities to benefit from 
participation in mental health research, and increase public access to 
science-based mental health information.
---------------------------------------------------------------------------
    \5\ https://www.nimh.nih.gov/labs-at-nimh/join-a-study/index.shtml.
    \6\ https://www.nimh.nih.gov/outreach/partnership-program/
index.shtml.

    Question. The President's FY 2019 budget proposes policies that 
will undermine access to essential health services for millions of 
---------------------------------------------------------------------------
women across the country.

    The budget calls for Congress to exclude providers of abortion, 
including Planned Parenthood from the Medicaid program. However, 
Planned Parenthood provides preventive care to roughly 2.7 million 
patients, at least 60 percent of whom rely on Medicaid or title X to 
access care. Excluding Planned Parenthood and other providers from 
Medicaid would block these beneficiaries from accessing primary care 
and reproductive health services, including contraception, breast and 
cervical cancer screenings, vaccines, and testing for sexually 
transmitted diseases. As a result, these women could face higher rates 
of unintended pregnancy or maternal mortality.

    In over 20 percent of counties across America, a Planned Parenthood 
health center is that county's only safety-net family planning 
provider. How will you ensure access to health care for the women in 
these counties?

    Experts agree that community health centers do not have the 
capacity to provide care to the millions of patients who rely on 
Planned Parenthood. What steps will you take to protect access to care 
for the 4 in 10 women who rely on Planned Parenthood and similar 
providers as their only source of health care?

    Answer. Preventing unintended pregnancy is important to women's 
health. As I said in my opening statement to the committee, we must 
make health care more affordable, more available, and more tailored to 
the medical care individuals need. I look forward to working with 
Congress to ensure that such a system is in place.

    Question. Over 54 percent of Planned Parenthood health centers are 
in health professional shortage or medically underserved areas. What 
steps will you take to ensure that women in rural and underserved 
regions of the country continue to have access to family planning 
services?

    Answer. Women should have access to the health care and services 
they need. The Department is committed to ensuring that women in rural 
and underserved regions have access to quality family planning 
services. Accordingly, the most recent title X family planning services 
funding opportunity announcement (FOA) encourages new applicants to 
submit quality and innovative proposals, to expand subrecipient 
partnerships in novel ways, and to extend services to those areas and 
clients previously unserved or underserved.

    Question. The budget also calls for Congress to bring back the 
Graham-Cassidy-Heller proposal, which proposed establishing a new State 
block grant program. This program would have permitted States to waive 
certain consumer protection mandates for insurers, including the 
requirement that insurers cover maternity care as an essential health 
benefit. The non-partisan Congressional Budget Office projected that if 
insurers are permitted to waive essential health benefits, many will 
forgo coverage to maternity care given its high cost. Consistent with 
this projection, prior to the Affordable Care Act, only 11 States 
required maternity coverage on the individual and small-group markets.

    Reducing access to coverage for maternity care will make it more 
difficult for women to find plans that cover these services, and will 
likely drive up the cost of plans that offer such services. Does this 
administration believe women should have to pay more for coverage to 
access care essential to women's health?

    Does this administration support allowing States to decide whether 
women should be guaranteed access to coverage for maternity care?

    Answer. I support ensuring access to health care for all Americans. 
I will work to promote a health-care system that will provide access to 
quality care, while ensuring patients are able to make decisions that 
work best for them. I will also work with States to help them achieve 
their goals within the parameters and confines of the law.

    Question. On January 25th, the Associate Attorney General for the 
Department of Justice (DOJ) issued a memorandum to the DOJ's civil 
litigating components instructing United States attorneys on the legal 
enforceability of guidance for administrative enforcement actions. This 
memorandum stated that going forward, noncompliance with guidance could 
not create new legal obligations on regulated parties and could not be 
used as a basis for proving legal violations, including in cases 
brought under the False Claims Act.

    Please explain how this Department of Justice memorandum will 
impact the Department of Health and Human Services' efforts to combat 
fraud and abuse in programs under the Senate Finance Committee's 
jurisdiction, including the Medicare and Medicaid programs.

    Answer. The Department of Justice memorandum instructs Department 
civil litigators that they are prohibited from using guidance documents 
to establish violations of law in affirmative civil enforcement 
actions. While guidance documents can be helpful, too often 
administrations have used them to circumvent the rulemaking process. 
The Department of Justice's memorandum helps clarify that guidance 
documents cannot create additional legal obligations. The relevant laws 
covering fraud and abuse within Department programs, including Medicare 
and Medicaid, are still in effect. I remain committed to fighting all 
fraud, waste, and abuse in our programs and I look forward to 
discussing with you how we can work together to do this.

    Question. Please describe the justification for converting the 
Maternal, Infant and Early Childhood Home Visiting program from a 
mandatory to discretionary program.

    Answer. The administration viewed the higher spending caps as an 
opportunity to resolve some long-standing budget challenges across the 
Federal budget, including the use of funding for types of activities 
that would more typically be supported with discretionary resources.

    Question. Medicaid is the single largest payer of substance use 
disorder (SUD) services in the Nation and pays for a third of all 
medication-assisted treatment (MAT) in the United States. Many States 
with the highest opioid overdose death rates have employed the Medicaid 
expansion to increase access to MAT including Kentucky, Pennsylvania, 
Ohio, and West Virginia as well as many other States being devastated 
by the opioid epidemic like my home State of Oregon. Under the ACA's 
Medicaid expansion, one out of three people covered through the 
Medicaid expansion have a mental illness, substance use disorder, or 
both. In fact, independent researchers estimate that repealing the 
Medicaid expansion would cut $4.5 billion from mental health and 
substance use services for low-income Americans. According to SAMHSA, 
the Affordable Care Act, including the expansion of Medicaid, is 
expected to increase total spending on behavioral health by more than 
$7 billion per year by 2020. Unfortunately, the President's budget aims 
to directly undermine much of this progress by gutting the Medicaid 
program.

    As Secretary of HHS, how do you intend to protect the gains in 
access to SUD treatment achieved through Medicaid expansion if Medicaid 
is cut by $1.4 trillion and the Medicaid expansion is repealed?

    One of the critical ways in which we see the importance of access 
to SUD treatment is by looking to the spread of the opioid epidemic, 
particularly in rural regions of the country. The Congressional Budget 
Office projected millions of Americans would lose coverage under the 
Graham-Cassidy-Heller-Johnson proposal. How do you plan to combat this 
epidemic if millions of Americans lose coverage for mental health and 
SUD treatment? Given the fact that this epidemic is particularly 
devastating for rural communities, do you have plans to combat opioid 
abuse that will target individuals in these regions?

    Answer. Our Medicaid program is an important tool in providing 
health care to many Americans but we must put it on a stable, long-term 
sustainable footing for it to be there for this and future generations. 
That's the challenge that we have as we seek to empower the States with 
the right incentives to deliver quality service. The FY 2019 budget 
provides additional flexibilities to States, puts Medicaid on a path to 
fiscal stability by restructuring Medicaid financing, and refocuses on 
the populations Medicaid was intended to serve--the elderly, people 
with disabilities, children, and pregnant women. Annual Federal 
Medicaid spending will grow from $421 billion in FY19 to $702 billion 
in FY28 over the budget window. The FY 2019 budget also repeals the 
Medicaid expansion and the Exchange program subsidies and replaces 
these programs with the $1.2 trillion Market-Based Health Care Grant 
program through the Graham-Cassidy-Heller-Johnson legislation.

    Opioid misuse, abuse, and overdose impose immense costs on the 
Nation, contributing to two-thirds of deaths by drug overdose. Deaths 
by drug overdose are the leading cause of injury death in the United 
States. The FY 2019 President's budget recognizes the devastation 
caused by the opioid crisis in communities across America and fulfills 
the President's promise to mobilize resources across the Federal 
Government to address the epidemic. The budget provides a historic 
level of new resources across HHS to combat the opioid epidemic and 
serious mental illness--$10 billion--to build upon the work started 
under the 21st Century Cures Act.

    The budget's targeted investments advance the Department's five 
part strategy, which involves:

        Improving access to prevention, treatment, and recovery 
services, including medication-assisted treatment;
        Targeting availability and distribution of overdose-reversing 
drugs;
        Strengthening our understanding of the epidemic through better 
public health data and reporting;
        Supporting cutting edge research on pain and addiction; and
        Advancing better practices for pain management.

    Question. Earlier this fall, ACF blocked for 2 years the 
implementation of the AFCARS rule which would have provided decision 
makers with new key information on children in the child welfare system 
including children at-risk of sex trafficking. This information is used 
to inform policy and help us understand what is happening with children 
who are removed from their homes. The questions asked of States about 
their children in foster care have NOT been updated since 1993. Since 
then, several major laws have been enacted that statutorily mandate 
that these upgrades take place and charge HHS with using new 
enforcement tools.

    Earlier this month I sent a letter to your department outlining 
these issues. In my view, this 2-year delay is completely unreasonable.

    Please explain the policy rationale for this 2-year delay.

    Answer. HHS is publishing an Advance Notice of Proposed Rulemaking 
(ANPRM) seeking public suggestions for streamlining the AFCARS data 
elements and removing any undue burden related to reporting AFCARS. The 
HHS Regulatory Reform Task Force identified the extensive additions to 
the reporting system included in the December 2016 AFCARS final rule as 
an area where there may be areas for reducing reporting burden and 
where costs may exceed benefits. The proposed 2-year delay in 
implementation of the new requirements would allow HHS time to consider 
the comments to the ANPRM and use them to draft a NPRM proposing 
revisions to the AFCARS consistent with the objectives and direction of 
E.O. 13777. It would also allow title IV-E agencies ample time to 
consider the full impact the data reporting from the 2016 AFCARS rule 
and provide HHS with specific comments on the burden associated with 
the 2016 rule.

    Question. Do you believe delaying congressionally mandated data 
collection is consistent with HHS's authority?

    Answer. Section 479 of the Social Security Act requires us to 
regulate the AFCARS requirements. There is no legislative deadline 
established in the act for updating or issuing regulations. Therefore, 
it is within our authority to issue regulations and revise the 
regulations. Title IV-E agencies will continue to submit AFCARS data 
per the requirements in regulations 45 CFR 1355.40 and the appendix to 
part 1355.

    Question. How do you square HHS's decision to delay this 
improvement to child welfare data with your stated priorities related 
to improving Federal data and program management?

    Answer. The delay provides HHS with time to consider the best 
approach to improving child welfare data that balances the need for 
improved data with the burden of reporting by title IV-E agencies. Our 
effort is to ensure that we are collecting the data required by law and 
needed for program management, and not creating an unnecessary burden 
for agencies when their time and resources could instead be used to 
directly help children.

    Question. In your questions for the record for your nominations 
hearing, you cited data indicating support of the 1996 welfare reform 
law in demonstrating increased employment rates for single mother-led 
families and decreased poverty rates among single mother-led families. 
It seems that you are supportive of TANF and how it has impacted 
welfare in the United States. The President's budget included a 10% cut 
in funding for TANF.

    If TANF has been a successful program, why would the budget propose 
to cut it?

    Answer. TANF's success comes from its restructuring of a welfare 
system to create a program that provides time-limited assistance, 
promotes empowerment through work, and fosters innovation, and, not 
from the amount of dollars spent. Moreover, since TANF's inception, 
cash assistance caseloads have fallen about 70 percent. Our budget 
reduces TANF spending in part because we understand that the amount 
spent in the program has not been the key to its success.

    Question. As a general matter, do you support cutting funding for 
successful programs?

    Answer. This administration supports using taxpayer funds as 
efficiently as possible for the purposes they are intended. For 
example, in the TANF program, many States are not sufficiently 
investing their current dollars in TANF's key welfare-to-work 
activities. In fiscal year 2016, States spent only about 31 percent of 
their total TANF and State maintenance-of-effort funds on the 
combination of work, work supports like child care and transportation 
services, and case management services. States do not need more money 
in the TANF program; they need to target the money more effectively to 
help move individuals to stable work that can lead to self-sufficiency.

    We are confident States could find ways to use more of their block 
grant funds to increase engagement in work, and would be encouraged to 
do so with the proposed spending floor. States use a significant amount 
of TANF funds to fill State budget gaps in areas that are tangential, 
at best, to the core purposes of TANF. This includes spending on 
college scholarships for students from families who earn incomes well 
above the Federal poverty level.

    Question. In the President's proposed FY 2019 budget, the 
administration makes clear that it intends to bring back the failed 
Graham-Cassidy-Heller-Johnson proposal, legislation that would gut the 
Affordable Care Act's consumer protections--legislation that the 
American people clearly rejected last year. Indeed during the 
committee's hearing on the Graham-Cassidy-Heller-Johnson proposal last 
fall, the witness from the American Cancer Society confirmed that this 
proposal would allow insurance companies to discriminate against 
Americans with pre-existing conditions and impose annual caps on 
coverage.

    Does the administration believe insurers should be able to 
discriminate against individuals with pre-existing conditions by 
charging them more for their health insurance coverage or not covering 
essential services?

    Answer. The ACA statutory requirements here are very strict and 
burdensome. While this may help some consumers, it also prevents States 
from developing innovative solutions that are tailored to their 
populations. I believe that when States are not permitted to innovate, 
everyone is worse off. Affordability, accessibility, benefit options, 
and procedural safeguards are all valuable, but our current top-down, 
Federally driven approach is not working well for Americans. I will 
work with States to allow innovation within the confines of the ACA.

    Question. Does the administration believe that insurers should be 
able to refuse to cover maternity care or birth control, as many States 
allowed before the Affordable Care Act?

    Answer. I look forward to working across the administration and 
with Congress to ensure that women have access to the care they need--
that may include care for cancer, diabetes, maternity care, family 
planning, cardiovascular health and many other issues affecting women, 
men and families--while simultaneously implementing the many 
conscience-protections that Congress has enacted.

    Question. Does the administration believe that insurers should be 
able to charge older Americans even more for their insurance premiums 
than they are able to today, as AARP confirmed would happen under the 
Graham-Cassidy-Heller-Johnson proposal?

    Answer. There is an emerging bipartisan consensus that the ACA's 
structure is fundamentally flawed in this area. The age rating 
structure as currently in statute does not allow for functional risk 
pooling. Under the ACA age rating requirements, insurance is 
unaffordable for younger and healthier individuals. That is why older 
enrollees currently represent the largest share of enrollees. As a 
result, premiums have risen for older and younger Americans far beyond 
anything that would have occurred in a stable risk pool even with a 
more realistic age rating structure. This is a problem we must all work 
together to solve, as effective and predictable risk pools are critical 
to the success of any health insurance system. I pledge to work with 
Congress on health-care reforms that create effective risk pools.

    Question. During your confirmation hearing last month, you pledged 
to be responsive to members of the Finance Committee. Following the 
hearing, in response to questions for the record from Senator Casey, 
you wrote that you would be responsive to all members of Congress. 
Therefore, I was extremely concerned by the inadequate reply that three 
congressional colleagues and I received in response to a January 31st 
letter to you and Administrator Verma regarding changes to Idaho's 
insurance regulations. On February 9th, Administrator Verma responded 
to that letter without even attempting to answer the questions that had 
been posed, before doubling down by saying that CMS ``does not have any 
additional information to share.'' Absent any other correspondence, 
Administrator Verma's letter appears to represent the Department's 
position, which is simply unacceptable. It also appears to continue the 
Department's general lack of responsiveness to Congress that has become 
commonplace since the beginning of the Trump administration, and been 
subject to criticism from both parties, most recently by Congressman 
Gowdy in a letter to you. As such, let me take this opportunity to 
restate Senator Casey's written question from your confirmation 
hearing--do you commit to providing thorough, complete, and timely 
responses to requests for information from all members of Congress, 
including requests from members in the minority? Will you review the 
letter that I and other colleagues sent you on January 31st and 
Administrator Verma's response and let us know whether you will provide 
answers to the questions we asked?

    Answer. Thank you for bringing this matter to my attention. 
Regarding this particular communication, it is my understanding that in 
an effort to provide timely responses to incoming congressional 
inquiries, and given that the Department had not yet received any 
communication from the State, there was no additional information to 
provide in response to the questions at that time.

    I continue to pledge that I will work with my staff to ensure that 
the Department's responses to requests from Congress are timely, 
appropriate, and reasonable. However, at the time of this response, the 
Department did not have information to share regarding the Idaho 
bulletin.

    Question. The Idaho Department of Insurance issued a Bulletin on 
January 24th allowing insurers in Idaho to submit so-called ``State-
based health benefit plans'' or ``State-based plans.'' Idaho would 
allow these plans to ignore many of the Affordable Care Act's consumer 
protections including prohibitions on charging individuals more for 
pre-existing conditions, annual limits, geography, as well as expanding 
age rating ratios to 5:1. Recently, Blue Cross of Idaho announced that 
they would be the first plan to submit insurance plans under this new 
program. The application for these plans includes numerous questions 
about the applicant's health status and family history, presumably to 
medically underwrite the applicant.

    Do you think it violates Federal law for an insurance company to 
ask these kinds of very personal questions? If an insurer is following 
the law barring discrimination against those with pre-existing 
conditions, why would they need this information?

    In your confirmation hearing, you committed to upholding the law. 
Major patient groups and legal experts believe that Idaho is violating 
the law. What specific actions are you taking and do you plan to take 
to ensure that Idaho follows Federal law?

    Why, if what Idaho is doing is illegal or wrong, is the 
administration's proposal that allows issuers to sell similar or even 
lower quality plans renamed as ``short-term plans,'' legal or not 
wrong?

    Answer. I am committed to working with States to grant flexibility 
wherever appropriate to provide their citizens the best possible access 
to health care. However, the Affordable Care Act remains the law. CMS 
informed the State that its State-based plan proposal, as originally 
issued, is inconsistent with the law.

    The Department looks forward to working to explore ways in which 
Idaho can achieve its policy goals ensuring that health insurance 
coverage sold within the State complies with all applicable Federal 
laws and requirements.

                                 ______
                                 
               Questions Submitted by Hon. Maria Cantwell
    Question. I understand the President's budget proposes statutory 
changes similar to the so-called Graham-Cassidy legislation. Numerous 
nonpartisan evaluations, including those performed by the Congressional 
Budget Office, have found that 
Graham-Cassidy would reduce insurance coverage and sharply lower 
Federal Medicaid investment, relative to current law. I am concerned 
that Graham-Cassidy would consequently lead to large spikes in hospital 
uncompensated care levels. Does the administration project that 
enacting the Graham-Cassidy legislation will not increase levels of 
hospital uncompensated care, and if so, what is the administration's 
rationale for that projection?

    Answer. The administration is committed to rescuing States, 
consumers, and taxpayers from the failures of Obamacare and to 
supporting States as they transition to more sustainable health-care 
programs that provide appropriate choices for their citizens. The 
budget supports a two-step approach to repealing and replacing 
Obamacare, starting with enactment of legislation modeled closely after 
the Graham-Cassidy-Heller-Johnson bill, as soon as possible. The 
administration supports the comprehensive Medicaid reform in the 
Graham-Cassidy-Heller-Johnson bill, including modernization of Medicaid 
financing and repeal of the Obamacare's Medicaid expansion. Medicaid 
financing reform will empower States to design individual, State-based 
solutions that prioritize Medicaid dollars for traditional Medicaid 
populations and support innovations like community engagement 
initiatives for able-bodied adults. Additionally, the Market-Based 
Health Care Grant Program included in the Graham-Cassidy-Heller-Johnson 
legislation will provide more equitable and sustainable funding to 
States to develop affordable health-care options for their citizens. 
The block grant program will empower States to improve the functioning 
of their own health-care market through greater choice and competition, 
with States and consumers in charge. The second step of the repeal and 
replace proposal builds upon the Graham-Cassidy-Heller-Johnson bill to 
make the system more efficient by including proposals to align the 
Market-Based Health Care Grant Program, Medicaid per capita cap, and 
block grant growth rates with the Consumer Price Index for all Urban 
Consumers.

    Question. In addition to proposing the Graham-Cassidy legislation, 
I understand the President's budget calls for a net reduction of $69.5 
billion in Medicare uncompensated care payments to hospitals over a 10 
year period. What is the administration's policy rationale for this 
proposal?

    Answer. This proposal would remove uncompensated care payments from 
the Inpatient Prospective Payment System and establishes a new process 
to distribute uncompensated care payments to hospitals based on share 
of charity care and non-Medicare bad debt. This proposal more closely 
aligns Medicare payment policy with private insurers, who do not 
typically cover uncompensated care.

    Question. I appreciate that your budget includes a proposal to 
expand beneficiary assignment rules for Medicare Accountable Care 
Organizations (ACOs) to include primary care visits furnished by non-
physician providers. Your budget also projects that this statutory 
change would yield $140 million in savings over 10 years, presumably to 
the Medicare program. What are the administration's assumptions for 
this cost-saving estimate, and does the administration believe that 
more Medicare beneficiaries would participate in an ACO under this 
proposal?

    Answer. Effective CY 2019, this proposal allows the Secretary to 
base beneficiary assignment on a broader set of primary care providers, 
to include nurse practitioners, physician assistants, and clinical 
nurse specialists, in addition to physicians. This option broadens the 
scope of Accountable Care Organizations to better reflect the types of 
professionals that deliver primary care services to fee-for-service 
beneficiaries. Potentially assignable beneficiaries could increase for 
ACOs that rely on non-physician practitioners for a majority of primary 
care services, such as those in rural or underserved areas. As the 
program's goals are to improve quality of care received by Medicare 
fee-for-service beneficiaries while reducing overall growth in costs, 
broader participation could help improve care received by beneficiaries 
and lower Medicare expenditures.

    By expanding the basis for beneficiary assignment to better reflect 
the types of professionals that deliver primary care services, the 
proposal would move more beneficiaries to value-based care.

    Question. In the past, we have discussed the importance of 
accelerating Medicare's transition from fee-for-service to a value-
based payment system. I understand that your budget proposes a 
statutory change to the 5 percent bonus for participation in an 
Advanced Alternative Payment Model (A-APM) under Medicare's new 
physician payment framework. The HHS budget in brief document states 
that this change will better incent clinicians to participate in A-
APMs. Could you further explain the mechanisms of this proposed change? 
Specifically, could you explain whether HHS projects that, under this 
proposal, the aggregate level of A-APM bonus payments would rise, fall, 
or stay the same compared to current law? Additionally, why is HHS 
unable to make a cost or savings estimate for this proposal?

    Answer. The President's budget proposes to modify how the 5-percent 
incentive payment is determined in order to better reward clinicians 
who participate in Advanced Alternative Payment Models (APMs). Instead 
of receiving a 5-percent incentive payment on all physician fee 
schedule (PFS) payments if they meet or exceed certain payment or 
patient thresholds, clinicians will receive a 5-percent incentive 
payment on PFS revenues received through the Advanced APMs in which 
they participate.

    This proposal changes two major aspects of the QP determination 
process and how the 5-percent incentive is calculated: it eliminates 
the payment and patient thresholds for becoming a QP. All clinicians in 
Advanced APMs would be eligible for incentive payments. It also alters 
how the 5-percent incentive payment is calculated. Instead of being 
calculated based on the total PFS payments from the previous year, it 
is based on the payments clinicians received through the Advanced APM.

                                 ______
                                 
                Questions Submitted by Hon. Bill Nelson
    Question. Last week at the House Budget Committee hearing, the 
Office of Management and Budget Director said the FDA will apply a new 
set of standards to the cost-benefit analyses involved in the review of 
premium cigar regulations. He also expressed a willingness to work with 
Congress and all stakeholders on this issue moving forward. In light of 
these commitments from the OMB, would HHS consider delaying upcoming 
deadlines pending the release of the Advanced Notice of Proposed 
Rulemaking (ANPRM)?

    Answer. Thank you for the opportunity to clarify FDA's work in this 
area. Due to the continued interest in the regulation of ``premium'' 
cigars, FDA intends to provide an opportunity for the public to provide 
new information for the agency to consider. In particular, FDA is 
seeking comments and scientific data related to how to define a 
``premium'' cigar and the patterns of use and resulting public health 
impacts from these products. This has taken the form of a new Advance 
Notice of Proposed Rulemaking (ANPRM). While ANPRMs do not contain 
cost-benefit analyses, the agency is seeking any information that may 
inform regulatory actions FDA might take with respect to premium 
cigars. The agency will explore any new and different questions raised 
and consider additional data that is relevant to the regulatory status 
of premium cigars.

    In the meantime, the tobacco deeming rule, including upcoming 
compliance dates, will remain in effect based on FDA's previous 
determination that there was no appropriate public health justification 
to exclude ``premium'' cigars from regulation.

    Question. Last week, a former student at Marjory Stoneman Douglas 
High School in northern Broward County, Parkland, Florida, walked on to 
campus carrying an AR-15 assault rifle and opened fire killing 17 
students and teachers.

    This incident marked the 30th mass shooting in 2018 alone. The 
victims of this act of gun violence were children--high school students 
with promising futures. How many more lives must be lost until we say 
enough is enough?

    Sandy Hook elementary, 20 students killed. That wasn't enough. The 
Pulse nightclub in Orlando, 49 people killed. That wasn't enough. Las 
Vegas, 58 people killed, that wasn't enough. Or just a year ago also in 
Broward county, Fort Lauderdale airport, five people killed. That 
wasn't enough. In his speech addressing the Parkland shooting, 
President Trump pledged to work with State and local leaders to 
``tackle the difficult issue of mental health.'' Yet, the budget 
proposal guts billions from programs critical to increasing access to 
mental health treatment, including Medicaid--the single largest payer 
of mental health services in the United States. It also slashes 
spending for established programs within the Substance Abuse and Mental 
Health Administration by over $600 million, and revives a tried and 
failed approach to repealing the Affordable Care Act through the 
Graham-Cassidy bill. This is the same bill that the National Alliance 
on Mental Illness has said would allow States to drop the requirement 
to cover mental health care.

    Tell me, do you stand by your cuts to critical mental health 
programs in light of the President's call to ``tackle'' mental health?

    Answer. The FY 2019 budget includes funding for State and local 
programs to help individuals with serious mental illness (SMI) and 
serious emotional disturbances (SED), including: $563 million for the 
Community Mental Health Services Block Grant, $15 million for a new 
Assertive Community Treatment for Individuals with SMI program to help 
communities establish, maintain, or expand evidence-based efforts to 
avoid the ineffective cycling of patients with SMI, and directs up to 
10 percent or $12 million of the Children's Mental Health Program to 
new, 
evidence-based demonstration grants for earlier intervention in a first 
episode psychosis. The President's budget also includes $10 billion to 
address the opioid crisis and SMI.

    Question. Under the last administration, the National Institutes of 
Health sponsored a new funding opportunity under the National Institute 
of Mental Health and the National Institute on Alcohol Abuse and 
Alcoholism for ``Research on the Health Determinants and Consequences 
of Violence and its Prevention, Particularly Firearm Violence.'' The 
gun violence research initiative has funded 14 firearm related research 
projects for $11.4 million from January 2014 to January 2017 to help us 
identify the causes and factors for the prevalence of gun violence in 
our country. According to news reports, the NIH initiative expired in 
January 2017 and has yet to be renewed.

    Do you support the renewal of the gun violence research program at 
the National Institutes of Health?

    Answer. A key component of NIH's mission is to enhance health, 
lengthen life, and reduce illness and disability. In the spirit of this 
mission, NIH is committed to understanding effective public health 
interventions to prevent violence, including firearm violence, and the 
trauma, injuries, and mortality resulting from violence. NIH-funded 
research on the causes and prevention of firearm violence addresses a 
range of topics, such as parental roles in preventing injury--including 
injuries from firearms--in the home and in other settings, the 
relationship between alcohol abuse and gun violence, risk factors for 
gun violence, appropriate containment measures to reduce risk of 
suicide or accidental deaths among children and adolescents, as well as 
determinants that make war veterans at higher risk for suicide with 
guns.

    NIH has supported research on firearm violence for many years, and 
it will continue to support this area of research in the future.

    Question. Amyotrophic Lateral Sclerosis (ALS) is a progressive 
disease that results in the loss of muscle control and leads to death 
within 2 to 5 years after diagnosis. They may stop walking, speaking, 
eating, moving, or even breathing. The incidence of ALS in the military 
is twice that of civilians, but it can affect anyone. There is no cure, 
and treatments are extremely limited.

    The National ALS Registry, at the Centers for Disease Prevention 
and Control, is a unique patient and research asset for this 
devastating disorder. The Registry connects people living with ALS with 
information for clinical trials. To date, more than 100,000 email 
notifications have been sent to people with ALS alerting them of 
clinical trials and studies.

    The Registry also includes a biorepository which collects 
biological samples, which are a critical resource for researchers who 
are investigating treatments and a cure for ALS. The Registry has 
collaborated and assisted more than 35 institutions, both 
pharmaceutical and academic, with recruitment for their clinical trials 
and epidemiological studies. In addition, the ALS Registry has funded 
13 research institutions to identify risk factors and possible causes 
for ALS. The ALS Registry has received bipartisan support and is 
typically funded with an appropriation of $10 million. Without the 
registry, research on ALS would be set back considerably.

    Please describe how the administration's FY 2019 budget request 
will advance the operation of this essential initiative.

    Answer. While the FY 2019 President's budget eliminates the 
Amyotrophic Lateral Sclerosis (ALS) registry and related research 
program, NIH-funded research on ALS will continue. External researchers 
would still be able to use biospecimens previously obtained from the 
ALS biorepository.

    Question. The opioid crisis is devastating families across the 
Nation. In Florida alone, 5,275 opioid-related deaths were reported in 
2016--35 percent more than reported in 2015. Fentanyl killed 1,390 
Floridians, nearly double the 705 Floridians killed by fentanyl a year 
before. I've long called for a comprehensive solution that includes new 
resources to prevent and treat the opioid epidemic before more lives 
are lost. The President's budget proposes a $10-billion investment into 
combating the opioid epidemic. I share this goal, but this modest 
increase in funding is coupled with a massive cut to Medicaid--to the 
tune of nearly $1.4 trillion in cuts. Medicaid is the largest payer of 
substance abuse services in the country.

    Explain how States like Florida can help communities fight the 
opioid epidemic if you cut billions from Medicaid.

    Answer. Our Medicaid program is an important tool in providing 
health care to many Americans but we must put it on a stable long-term 
sustainable footing for it to be there for this and future generations. 
That's the challenge that we have as we seek to empower the States with 
the right incentives to deliver quality service. The FY 2019 budget 
provides additional flexibilities to States, puts Medicaid on a path to 
fiscal stability by restructuring Medicaid financing, and refocuses on 
the populations Medicaid was intended to serve--the elderly, people 
with disabilities, children, and pregnant women. Annual Federal 
Medicaid spending will grow from $421 billion in FY19 to $702 billion 
in FY28 over the budget window. The FY 2019 budget also repeals the 
Medicaid expansion and the Exchange subsidies and replaces these 
programs with the $1.2 trillion Market-Based Healthcare Grant program 
through the Graham-Cassidy-Heller-Johnson legislation.

    Opioid misuse, abuse, and overdose impose immense costs on the 
Nation, contributing to two-thirds of deaths by drug overdose. Deaths 
by drug overdose are the leading cause of injury death in the United 
States. The FY 2019 President's budget recognizes the devastation 
caused by the opioid crisis in communities across America and fulfills 
the President's promise to mobilize resources across the Federal 
Government to address the epidemic. The budget provides a historic 
level of new resources across HHS to combat the opioid epidemic and 
serious mental illness--$10 billion--to build upon the work started 
under the 21st Century Cures Act.

    The budget's targeted investments advance the Department's five 
part strategy, which involves:

        Improving access to prevention, treatment, and recovery 
services, including medication-assisted treatment;
        Targeting availability and distribution of overdose-reversing 
drugs;
        Strengthening our understanding of the epidemic through better 
public health data and reporting;
        Supporting cutting edge research on pain and addiction; and
        Advancing better practices for pain management.

    Question. Over 5,658 cases of Zika virus have been reported across 
the U.S. States and territories. No State has been hit harder by the 
Zika outbreak than Florida. The State has seen more than 1,735 reported 
cases of the Zika virus to date and reported 255 new cases of Zika in 
2017. In 2016, I fought to secure funding to address the Zika crisis. 
Congress ultimately approved $1.1 billion to combat the threat. These 
funds made critical investments into agencies to support vaccine 
development and better understand the virus; to bolster vector control 
and enhance laboratory capacity; and to support Zika-related health 
care, to name a few.

    The administration's proposed budget slashes the very programs 
Congress voted to fund in 2016 so they could help prevent, control and 
research the spread of Zika. The cuts are numerous, but here are a few 
highlights. Compared to 2017, it cuts $27 million from the CDC's 
National Center on Birth Defects and Developmental Disabilities, $68 
million from the CDC's Center for Emerging and Zoonotic Infectious 
Disease, $58 million from CDC's National Center for Environmental 
Health, and $602 million from the CDC's Office of Public Health 
Preparedness and Response, all of which are central to Zika 
surveillance and control.

    Given these cuts, do you believe the administration is doing 
everything it can to prepare for public health threats, like a Zika 
outbreak?

    How would you justify the cuts to Zika control programs to my 
constituents in Florida with mosquito season right around the corner?

    Answer. Preparedness for public health threats is of critical 
importance to us at the Department. Specifically, the Centers for 
Disease Control and Prevention (CDC) helps to protect America's health, 
safety, and security by working to prevent, detect, and respond to a 
wide range of public health threats, from anthrax and Ebola to 
Salmonella food poisoning and Zika.

    A large portion of the proposed cut to CDC includes a $575 million 
reduction representing the transfer of the Strategic National Stockpile 
from CDC to ASPR. Those funds will continue to be used to maintain and 
replenish the Nation's largest supply of life-saving medical 
countermeasures that can be deployed in the event of a public health 
emergency. This transfer will streamline the medical countermeasure 
development and procurement enterprise and will increase operational 
efficiencies during emergency response by fully integrating the 
Stockpile with other preparedness and response capabilities.

    With the remaining funding requested by the administration, CDC 
will prioritize efforts to maintain its critical preparedness and 
response infrastructure. CDC may reduce ongoing core preparedness 
activities (e.g., preparedness exercises, timeliness of reporting 
critical information, applied research for first responders, select 
agent training, etc.) and prioritize funds to address the most urgent 
needs.

    CDC's vector-borne diseases program is the core of our Nation's 
capacity to detect, control, and prevent pathogens transmitted by ticks 
and insects. The FY 2019 President's budget maintains the elevated 
level of funding proposed in the FY 2018 President's budget for vector-
borne diseases at $49.459 million, which is $12.601 million above the 
FY 2018 Annualized Continuing Resolution. At this funding level, CDC 
would provide enhanced support for up to nine States at the greatest 
risk for vector-borne disease outbreaks. Each vector program would 
include increasing State entomological expertise, as well as support 
for laboratory activities, case and outbreak investigation activities, 
and vector control and management activities.

    CDC's FY 2019 President's budget, also proposes a $10 million 
investment to continue the Zika Pregnancy and Infant Registry in four 
to eight high risk U.S. jurisdictions. With this investment, CDC will 
be able to continue to follow the outcomes of babies exposed to Zika 
during pregnancy in these jurisdictions, and provide on-the-ground 
support to a small number of cities or counties at highest risk from 
either local transmission or travel. Overall, this investment would 
allow the CDC to understand the full spectrum of Zika-associated birth 
defects, and maintain capacity at a small number of health departments 
to identify and track emerging threats that potentially cause birth 
defects or developmental disabilities.

    Question. The Federal Government supports patient care and 
physician training at the Nation's teaching hospitals through Medicare 
Graduate Medical Education (GME) payments. The United States is facing 
a massive physician shortage of up to 104,900 physicians by 2030.

    Yet, the President's budget makes more than $48 billion in cuts 
over the next 10 years to GME by consolidating GME spending from 
Medicare, Medicaid, and the Children's Hospital GME program into a 
single grant program. The budget proposes to adjust FY 2016 spending 
levels each year by the Consumer Price Index (CPI-U) minus 1 percent. 
This would cause enormous harm to the future physician supply in our 
country, and threaten what is usually stable Medicare funding for 
training doctors.

    For the past several Congresses, I have introduced the Resident 
Physician Shortage Reduction Act, this year with Senator Heller, to 
increase the number of residency slots eligible for Medicare GME 
support. Investing in the training of the next generation of physicians 
will not only address our country's growing health-care needs, but it 
will keep us as a leader in health-care innovation. We should pass my 
bill and expand support of GME in this Nation, not enact draconian 
cuts.

    Please explain how the administration reconciles the need to 
address the physician shortage while also proposing $50 billion in cuts 
to GME funding?

    How should teaching hospitals absorb these cuts?

    Answer. The budget proposes to better focus Federal spending on GME 
by consolidating spending that is currently in the Medicare, Medicaid, 
and Children's Hospital GME Payment Program into a new capped Federal 
grant program. In an effort to improve the distribution of specialties 
in health care, to address health-care professional shortage areas, and 
to incentive better training of professionals, funding would be 
distributed to hospitals that are committed to building a strong 
medical workforce and would be targeted to address medically 
underserved communities and health professional shortages.

    Payments would be distributed to hospitals based on the number of 
residents at a hospital (up to its existing cap) and the portion of the 
hospital's inpatient days accounted for by Medicare and Medicaid 
patients. Funding for this consolidated, single grant program for 
teaching hospitals would be equal to the sum of Medicare and Medicaid's 
2016 payments for graduate medical education, plus 2016 spending on 
children's hospitals graduate medical education, adjusted for 
inflation. Funding would increase at a rate of inflation minus 1 
percentage point each year.

    In addition, the National Health Service Corps (NHSC) and Teaching 
Health Center GME (THCGME) programs will continue to address health 
professions shortages NHSC serves as a vitally important recruitment 
tool for community health centers and other health-care entities 
nation-wide operating in underserved areas where shortages of health-
care professionals exist. In FY 2017, the NHSC had over 2,000 
physicians providing health-care services in NHSC-approved sites. In 
addition, the THCGME program supports primary care medical and dental 
residency programs in community-based ambulatory patient care settings. 
In Academic Year 2017-2018, the THCGME program supports the training of 
732 residents in 57 primary care residency programs.

                                 ______
                                 
              Questions Submitted by Hon. Robert Menendez
    Question. The FDA received additional funding for FY 2019. How much 
of this money do you anticipate going to promote investment into 
production of older generics that have only one or two producers to 
keep costs low?

    Answer. I understand the importance of having multiple generic 
applications approved, including for older generics, to help provide 
American consumers with lower-cost medicines. Under FDA's Manual of 
Policy and Procedure (MAPP) on Prioritization of the Review of Original 
ANDAs, Amendments, and Supplements (Prioritization MAPP), the agency 
prioritizes the review of generic applications: (1) for ``sole source'' 
drug products, where there is only one approved drug product listed in 
the Prescription Drug Product List (i.e., the ``active section'') of 
FDA's Approved Drug Products With Therapeutic Equivalence Evaluations 
(Orange Book) and for which there are no blocking patents or 
exclusivities; and (2) for drug products for which there are not more 
than three approved drug products listed in the Orange Book and for 
which there are no blocking patents or exclusivities listed for 
reference listed drug.

    In addition, under the Commissioner's Drug Competition Action Plan 
(DCAP), the agency has taken substantial steps to facilitate increased 
competition through the approval of lower-cost generics medicines. In 
the coming months, FDA will continue to take actions to enhance the 
efficiency of the generic drug review process, to maximize scientific 
and regulatory clarity with respect to generic drugs, and to reduce 
``gaming tactics'' by brand name drug companies that delay the generic 
competition Congress intended when it enacted the Hatch-Waxman 
Amendments. All these actions are intended to help ensure consumers can 
get the medicines they need at affordable prices.

    FDA cannot determine the precise amount of funding that will go 
toward older generics, as we do not ultimately control which drugs the 
generics industry chooses to submit marketing applications for, but the 
actions we are taking should help encourage industry to invest in the 
development of older generics that have minimal competition.

    Question. Will the FDA's New Medical Data Enterprise take into 
account the current lack of true representation of all patient 
populations in clinical trials and address the need for greater 
inclusion of women and minorities in clinical trials?

    Answer. The FDA will advance the use of real-world evidence to 
better inform patient care and provide more efficient, robust, and 
potentially lower-cost ways to develop clinical data that can inform 
product review and promote innovation. The FDA will establish new 
capabilities, including the development of data and analytical tools, 
to conduct near-real-time evidence evaluation down to the level of 
individual electronic health records for at least 10 million 
individuals in a broad range of U.S. health-care settings and 
populations beyond those who typically participate in clinical trials.

    Toward these ends, an expanded use of natural language processing 
for the assessment of information submitted to the agency would be 
developed in an effort to markedly speed recognition and remediation of 
emerging safety concerns in a variety of populations. The effort would 
cover a broad range of medical products, including drugs, biologics, 
and medical devices. The health-care settings would be carefully 
selected to cover data gaps in the Sentinel and National Evaluation 
System for health Technology (NEST) systems for FDA-regulated products 
not currently easily assessed with existing systems.

    Expanding the FDA's capacity to utilize real-world evidence to 
evaluate the pre- and post-market safety and effectiveness of medical 
products would generate processes that could improve the efficiency of 
the regulatory process, better inform patients and providers about pre- 
and post-market safety, reduce some of the burdens that drive up the 
time and cost required to bring beneficial innovations to the market 
and address barriers that can make certain important safety and 
effectiveness information around the real-world use of products hard to 
collect and evaluate (e.g., subpopulation evaluations based on sex, 
gender, race, ethnicity, age). The use of real-world evidence may allow 
subpopulation evaluations beyond those conducted in the controlled 
setting of a clinical trial and expand our knowledge base to further 
reflect actual usage and experience by a wider population.

    The agency has already leveraged the use of real-world data to 
reduce the time and cost of clinical evidence development resulting in 
more timely and informative post-market data collection and more timely 
and efficient approvals of new devices and expanded indications of 
already marketed drugs and devices, including for drug-eluting stents, 
pacing leads, companion diagnostics, a spinal cord stimulator, and a 
pediatric ventricular assist device. In the case of transcatheter heart 
valves, leveraging real-world evidence has already resulted in a 
greater than 400-percent cost savings for industry, improved post-
market surveillance, and moved the United States from 42nd to, in some 
cases, first-in-the-world approvals for life-saving technologies.

    Question. The CDC's ability to study gun violence has been limited 
by a 1996 amendment (the ``Dickey Amendment'') that prevents the agency 
from collecting data to ``advocate or promote gun control.'' On 
February 15, 2018, you told a House Energy and Commerce subcommittee 
that a provision passed 2 decades ago limiting the CDC's work on gun 
violence only prevents it from taking an advocacy position--not from 
doing research. Specifically, you said, ``[m]y understanding is that 
the [Dickey] rider does not in any way impede our ability to conduct 
our research mission. . . . We believe we've got a very important 
mission with our work with serious mental illness as well as our 
ability to do research on the causes of violence and the causes behind 
tragedies like [Parkland]. So that is a priority for us.''

    As Secretary of Health and Human Services, will you direct the CDC 
to conduct research into gun violence? If yes, please be specific as to 
the steps you will take.

    Answer. At HHS, we are always working to keep Americans safe from 
public health threats including violence. CDC currently conducts and 
funds research on a variety of related topics, including youth 
violence, child abuse and neglect, domestic violence, and sexual 
violence. These are the topical line items that are supported through 
CDC's annual appropriation for both research and non-research 
activities. In order to fund new research, we must make decisions about 
moving funds from other important areas. We will continue to support 
surveillance activities, epi-aid investigations, and analyses of 
surveillance and other data to document the public health burden of 
firearm injuries in the United States.

    Question. Do you believe that gun violence is a public health 
issue?

    Answer. Violence is certainly a public health issue of importance 
and one that HHS continues to study. We are committed to researching 
and evaluating what causes individuals to commit violence. Public 
health works to prevent health problems and to extend better care and 
safety to entire populations. An important function of public health is 
to prevent injuries and violence or to lessen their impact when they 
occur.

    Question. In your written responses during your confirmation 
hearing, you seemed to acknowledge the importance of the CDC's work in 
global health. The budget cuts $23 million from global health programs 
at the CDC and reserves $59 million for the Global Health Security 
Agenda. Coupled with cuts to the emerging and zoonotic of $60 million, 
this is an overall reduction in investment against global health 
threats.

    How do you envision maintaining HHS's leadership on global health 
policy in light of these cuts?

    Answer. As announced by administration officials in Uganda in 
October 2017 at the high-level ministerial meeting on the Global Health 
Security Agenda (GHSA), the United States supports the extension of 
that initiative through 2024. President Trump has himself emphasized 
the importance of the GHSA, including at the UN General Assembly in 
September 2017, by highlighting that the GHSA is one of several 
programs that promotes better health and opportunities all over the 
world.

    President Trump's FY 2019 budget of $59 million in funding for 
activities in support of the GHSA for FY 2019 for CDC demonstrates the 
administration's commitment to global health leadership. If enacted, 
this funding would also provide an important bridge to the extension of 
the GHSA announced by the administration in October 2017 in Uganda. CDC 
is engaged in a deliberative process regarding U.S. Government support 
for the next phase of GHSA, led by the National Security Council.

    At the reduced level proposed for Global Health activities overall 
in the FY 2019 President's budget, CDC will continue supporting 
scientific and technical experts at headquarters and in the field, but 
will prioritize efforts across its disease specific programs including 
global HIV and tuberculosis programs and polio and measles eradication 
efforts. CDC will provide technical support to optimize staffing and 
resources to address the highest disease burden areas. At this funding 
level, CDC will also strategically limit reference laboratory services 
and viral sequencing to priority areas, including CDC's polio, measles, 
and rubella reference laboratories' diagnostic services, and HIV 
reference lab services.

    Question. Last month, several news outlets indicated that the CDC 
may have to dramatically scale back operations undertaken as part of 
the Global Health Security Agenda to help countries prevent and respond 
to health threats such as infectious-disease epidemics from 49 
countries to just 10 in 2019.

    Will that drawdown still be necessary under this budget request?

    Answer. With regard to the recent news about CDC reducing its 
global presence, CDC is in the process of planning, as the $1.2 billion 
supplemental Ebola/Global Health Security funding awarded to CDC in FY 
2015 sunsets at the end of FY 2019. However, the U.S. commitment to 
global health security and the Global Health Security Agenda (GHSA) 
specifically, remains steadfast.

    The FY 2019 President's budget includes $59 million for CDC to 
continue activities that support Global Health Security Agenda 
implementation--evidence of the continued commitment. The $59 million 
for GHSA in the President's FY 2019 budget are bridging funds that 
would be used to support the continued development of core public 
health capabilities in GHSA priority countries as CDC transitions from 
the funding surge provided by the emergency supplemental funding to the 
next phase of GHSA implementation.

    The U.S. Government strongly supports the GHSA and its objectives 
to build capacity to prevent, detect, and respond to infectious disease 
threats at their source. As President Trump has publicly stated, and as 
reaffirmed by U.S. administration officials at the GHSA Ministerial 
Meeting in Uganda in October 2017, the U.S. Government strongly 
supports the extension of GHSA through 2024.

    Question. If so, what countries will CDC staff be withdrawing from?

    Answer. CDC is in the process of planning, as the $1.2 billion 
supplemental Ebola/Global Health Security funding awarded to CDC in FY 
2015 sunsets at the end of FY 2019. CDC is engaged in a deliberative 
process regarding U.S. Government support for the next phase of GHSA, 
led by the National Security Council. CDC's goals are to maximize 
global impact and to plan responsibly. CDC will continue to respond to 
outbreaks and build long-term capacity around the globe, utilizing 
assets both in host countries and from headquarters.

    Question. When will the drawdown take place?

    Answer. CDC remains committed to the U.S. Government's July 2015 
pledge to support the Global Health Security Agenda in 17 partner 
countries through FY 2019. CDC is engaged in a deliberative process 
regarding U.S. Government support for the next phase of GHSA, led by 
the National Security Council. This process will inform decisions about 
CDC's country presence and activities.

    Question. What will be the capability of HHS to respond to the next 
Ebola or Zika crisis with these budget cuts?

    Answer. CDC's global programs, utilizing assets in countries and at 
headquarters, build the capabilities required for countries to meet the 
International Health Regulations and are essential to our national 
defense, forming critical links in the U.S. prevention, detection, and 
response chain for outbreaks--in collaboration with the Departments of 
Defense and State, as well as the U.S. Agency for International 
Development and other partners.

    CDC, working with other partners, is making America safer from 
public health threats. For the first time, countries are closing health 
security gaps using standardized metrics. This has allowed for the 
mobilization of significant contributions from other donor nations and 
the private sector, as well as increased host government support from 
low- and middle-income countries themselves. For example, in 2014-2016, 
Liberia experienced more than 10,000 cases of Ebola and more than 4,800 
deaths, as the initial response took more than 90 days from virus 
detection to the initiation of a coordinated response. In April 2017, 
in response to an outbreak of meningococcal disease, Liberia was able 
to mobilize 14 U.S.-trained Liberian disease detectives, activate a new 
public health emergency operations center, deploy a national rapid 
response team, and, through local laboratory testing, rule out Ebola 
within 24 hours. Rapid and coordinated response interventions helped 
contain the outbreak within days, limiting it to 31 cases and 13 
deaths. Rapid and high-quality response prevents an isolated outbreak 
from spreading and potentially becoming a global catastrophe. 
Similarly, CDC's health security personnel and resources were 
indispensable in averting crisis during the 2017 responses to Ebola in 
the Democratic Republic of the Congo and Marburg virus in Uganda.

    CDC's global investments and continued domestic investments along 
with other activities across HHS (including through ASPR) support 
infrastructure that will allow HHS to respond to future public health 
issues.

    Question. It has been reported closures of CDC offices are planned 
for some of the world's hot spots for emerging infectious diseases: 
Congo, Haiti, Pakistan, etc. When will those closures take place?

    Answer. HHS remains committed to the U.S. Government's July 2015 
pledge to support implementation of the Global Health Security Agenda 
in 17 partner countries through FY 2019. CDC is engaged in a 
deliberative process regarding U.S. government support for the next 
phase of GHSA, led by the National Security Council. This process will 
inform decisions about CDC's country presence and activities.

    In addition to Global Health Security-funded work, CDC's global 
health work in polio eradication, HIV, and malaria, will continue in 
many of the world's hot spots and CDC will continue to monitor and 
respond to emerging and reemerging diseases and outbreaks where they 
occur. CDC's global health security work in Haiti is funded through 
earthquake supplemental reconstruction funds which will end in FY 2020.

    Question. How would you characterize the change in risk and 
vulnerability for these diseases reaching U.S. shores with the closure 
of these 30 country programs?

    Answer. With regard to the recent news about CDC reducing its 
global presence, CDC is in the process of planning, as the $1.2 billion 
supplemental Ebola/Global Health Security funding awarded to CDC in FY 
2015 sunsets at the end of FY 2019. However, the U.S. commitment to 
global health security and the Global Health Security Agenda (GHSA) 
specifically, remains steadfast.

    CDC, working with other Global Health Security Agenda partners, is 
making America safer today. For the first time, countries are closing 
health security gaps using standardized metrics. This has allowed for 
the mobilization of significant contributions from other donor nations 
and the private sector, as well as increased host government support 
from low- and middle-income countries themselves. For example, in 2014-
2016, Liberia experienced more than 10,000 cases of Ebola and more than 
4,800 deaths, as the initial response took more than 90 days from virus 
detection to the initiation of a coordinated response. In April 2017, 
in response to an outbreak of meningococcal disease, Liberia was able 
to mobilize 14 U.S. trained Liberian disease detectives, activate a new 
public health emergency operations center, deploy a national rapid 
response team and through local laboratory testing rule out Ebola 
within 24 hours. Rapid and coordinated response interventions helped 
contain the outbreak within days, limiting it to 31 cases and 13 
deaths. Rapid and high-quality response prevents an isolated outbreak 
from spreading and potentially becoming a global catastrophe. 
Similarly, CDC's health security personnel and resources were 
indispensable in averting crisis during the 2017 responses to Ebola in 
the Democratic Republic of the Congo and Marburg virus in Uganda.

    CDC's global disease detection programs are designed to build the 
capabilities required for countries to meet the International Health 
Regulations. These programs support U.S. national defense, forming 
critical links in the U.S. prevention, detection, and response chain 
for outbreaks. CDC's global investments and continued domestic 
investments along with other activities across HHS (including through 
ASPR) support infrastructure that will allow HHS to respond to future 
public health issues.

    Question. How much of an investment is being made into the research 
of pain and alternate forms of pain management?

    Answer. Addressing the opioid crisis is one of my top four 
priorities at the Department. One prong of our five-part opioid 
strategy is to support cutting-edge research into pain and alternative 
forms of pain management. Specifically, the budget provides $500 
million to NIH for a public-private partnership to accelerate the 
development of safe, non-addictive, and effective strategies to prevent 
and treat pain, opioid misuse, and overdose. NIH holds a broad research 
portfolio on pain, ranging from basic research into the molecular, 
genetic, and bio-behavioral basis of chronic pain to large-scale 
clinical studies of potential treatments, including an array of non-
pharmacological approaches. In addition, a long-term plan to coordinate 
and advance pain research across the government, the Federal Pain 
Research Strategy, was developed recently. It includes important 
research priorities spanning basic to clinical research across the 
continuum of acute to chronic pain, including development of non-opioid 
pain medications and an expanded evidence base for non-
pharmacological treatments. These recommendations are being considered 
as funding priorities by NIH and other Federal agencies and departments 
that support pain research, including AHRQ, CDC, FDA, DoD, and VA.

    Question. The FY19 budget provides $10 billion to fight the opioid 
epidemic. However, the budget significantly reduces the availability of 
resources to fight opioids and coordinate a national effort by 
repealing the ACA and capitating Medicaid. How do you envision 
stretching the $10 billion for all of the administration's aims?

    Answer. Our Medicaid program is an important tool in providing 
health care to many Americans but we must put it on a stable long-term 
sustainable footing for it to be there for this and future generations. 
That's the challenge that we have as we seek to empower the States with 
the right incentives to deliver quality service. The FY 2019 budget 
provides additional flexibilities to States, puts Medicaid on a path to 
fiscal stability by restructuring Medicaid financing, and refocuses on 
the populations Medicaid was intended to serve--the elderly, people 
with disabilities, children, and pregnant women. Annual Federal 
Medicaid spending will grow from $421 billion in FY19 to $702 billion 
in FY28 over the budget window. The FY 2019 budget also repeals the 
Medicaid expansion and the Exchange program subsidies and replaces 
these programs with the $1.2 trillion Market-Based Health Care Grant 
program through the Graham-Cassidy-Heller-Johnson legislation.

    Opioid misuse, abuse, and overdose impose immense costs on the 
Nation, contributing to two-thirds of deaths by drug overdose. Deaths 
by drug overdose are the leading cause of injury death in the United 
States. The FY 2019 President's budget recognizes the devastation 
caused by the opioid crisis in communities across America and fulfills 
the President's promise to mobilize resources across the Federal 
Government to address the epidemic. The budget provides a historic 
level of new resources across HHS to combat the opioid epidemic and 
serious mental illness--$10 billion--to build upon the work started 
under the 21st Century Cures Act.

    The budget's targeted investments advance the Department's five 
part strategy, which involves:

        Improving access to prevention, treatment, and recovery 
services, including medication-assisted treatment;
        Targeting availability and distribution of overdose-reversing 
drugs;
        Strengthening our understanding of the epidemic through better 
public health data and reporting;
        Supporting cutting edge research on pain and addiction; and
        Advancing better practices for pain management.

    Question. The HHS FY 2019 budget proposes to both eliminate the 
Medicaid Disproportionate Share payments and capitate Medicaid funding 
to States. What will be the impact on hospitals?

    Answer. The budget's Medicaid proposal is modeled after the Graham-
Cassidy-Heller-Johnson bill, which includes a modernization of Medicaid 
financing and repeal of the Obamacare's Medicaid expansion. Medicaid 
financing reform will empower States to design individual, State-based 
solutions that prioritize Medicaid dollars for traditional Medicaid 
populations and support innovations like community engagement 
initiatives for able-bodied adults. Additionally, the Market-Based 
Health Care Grant Program included in the Graham-Cassidy-Heller-Johnson 
legislation will provide more equitable and sustainable funding to 
States to develop affordable health-care options for their citizens. 
The block grant program will empower States to improve the functioning 
of their own health-care market through greater choice and competition, 
with States and consumers in charge. By putting States back in charge 
of their Medicaid dollars and decisions, hospitals will benefit from 
the ability to locally partner with the State to innovate and target 
resources to the most needy citizens and health-care providers.

                                 ______
                                 
                Question Submitted by Hon. Sherrod Brown
    Question. Last year, the President made the decision to stop paying 
mandatory cost-sharing reduction (CSR) payments to Affordable Care Act 
(ACA) insurers, saying that ``the gravy train end(s) the day I knocked 
out the insurance companies' money.'' As a result of his decision, 
insurers and State regulators in more than 40 States adjusted their 
plan offerings by dramatically increasing the cost of their silver 
plans--or ``silver loading.'' As a result, taxpayers are now supporting 
larger payments to insurers through tax credits and subsidies than 
would have been provided through the CSRs.

    The President's budget proposal includes a provision that would 
provide a mandatory appropriation for cost-sharing reduction (CSR) 
payments for FY18 through the end of FY19. This means that insurers 
that have been benefitting from higher premium payments for silver 
plans will also now receive CSR payments on top of the taxpayer support 
they are already receiving. In other words, the President's budget 
proposal proposes to use taxpayer dollars to compensate insurers twice: 
first through higher tax credits because of silver loading, and second 
through the additional CSRs proposed in the budget. This seems to be 
proposing two gravy trains.

    Why is this administration reversing course on CSR payments?

    Do you support paying insurance companies twice for FY18, as the 
budget proposes?

    Answer. In 2017, the administration conducted a legal review and 
concluded that because Congress did not appropriate the money for Cost 
Sharing Reductions, the administration could no longer legally make the 
payments.

    I am party to related litigation and am limited in what comments I 
can make. The government's litigation position on cost sharing 
reduction payments has not changed, and I refer any questions about the 
litigation to the Department of Justice.

                                 ______
                                 
              Questions Submitted by Hon. Thomas R. Carper
    Question. In October, the President issued an executive order to 
expand so-called ``short-term, limited-duration plans,'' which are 
plans that can still discriminate based on pre-existing conditions, 
charge older people more, exclude coverage for services such as 
maternity care and treatment for opioid addiction, and impose annual 
and lifetime limits. Furthermore, you recently proposed a new rule that 
would expand short-term plan durations to 3 months to 12 months. Health 
insurers and patient groups, including the American Cancer Society and 
the American Heart Association, have said short term plans could ``lead 
to higher premiums for consumers, particularly those with pre-existing 
conditions'' and ``destabilize the health insurance markets.'' With 
these concerns in mind, how will HHS ensure that these plans are 
transparent with consumers about their lack of comprehensive benefits 
and coverage?

    Answer. Short-term limited duration insurance plans are flexible, 
adaptable insurance products that can be particularly useful for those 
entering the job market, those transitioning between jobs and other 
forms of insurance, or who are otherwise priced out of unaffordable ACA 
insurance markets. Americans need more insurance options with less 
Federal micromanagement of those insurance options.

    The status quo is not working for millions of Americans--whether it 
is those who are in the insurance market or those who have been left 
out of it. Although there are many Americans who may not be best served 
by a short-term, limited-duration plan, expanding the availability of 
such plans creates affordable options for those who understand how to 
choose and use these flexible, short-term products. HHS will work with 
the Departments of Labor and the Treasury, and across the executive 
branch, to create a health insurance system that is more affordable and 
accessible, where individuals and families can choose the type of 
insurance coverage that works best for them, including the option of 
short-term, limited-duration insurance. As part of the short-term, 
limited-duration proposed rule, the Departments proposed standard 
language that issuers of short-term, limited-duration insurance would 
have to provide to applicants and enrollees that describes the 
potential limitations of the short-term, limited-duration insurance and 
how it is not Minimum Essential Coverage. I will also work to ensure 
the least disruptive approach to implementing these policies, and to 
appropriately consider the concerns expressed by stakeholders during 
the rulemaking process.

    Question. Secretary Sylvia Burwell, one of your predecessors at 
HHS, laid out an ambitious goal of tying 90 percent of Medicare fee-
for-service payments to quality and value by the end of 2018, and 
linking 50 percent of Medicare payments to innovative payment models 
such as accountable care organizations by the end of 2018. 
Unfortunately, CMS has indicated that it will no longer operate on the 
timeline laid out by Secretary Burwell.

    Without this goal in place, how specifically does CMS intend to 
improve Medicare payments and better coordinate care for patients and 
on what timeline will Medicare move away from fee-for-service payments 
towards outcomes-based reimbursement? How can we include Medicare and 
Medicaid's payment for drugs in the movement towards value and 
outcomes-based payments? More broadly, how can HHS better work with the 
private sector to encourage delivery system reforms and bring down the 
cost of health coverage for Americans?

    Answer. Senator, thank you for your questions. As you know, upon 
taking office at HHS, I identified the value-based transformation of 
our entire health-care system as one of the top priorities for our 
Department. Value-based transformation in particular is not a new 
passion for me. It became a top priority for Secretary Mike Leavitt 
when I was working for him as deputy secretary, and it was taken 
seriously by President Obama's administration as well.

    It has been, at times, a frustrating process. But there is no 
turning back to an unsustainable system that pays for procedures rather 
than value. In fact, the only option is to charge forward--for HHS to 
take bolder action, and for payers and providers to join with us.

    Millions of Americans rely on Medicaid and Medicare to meet their 
everyday health-care needs, and together these Federal health-care 
programs comprise the largest portion of the Federal budget. As such, 
the budget proposes several legislative solutions to improve the 
programs, promote greater efficiencies, advance 
patient-centered care, and reduce government-imposed burden on 
providers.

    The budget makes significant strides toward addressing and reining 
in drug prices. The legislative solutions would benefit seniors by 
protecting Medicare beneficiaries from high drug prices, giving plans 
more tools to manage spending, and realigning incentives in the Part D 
drug benefit structure. The proposed changes enhance Part D plans' 
negotiating power with manufacturers; encourage utilization of higher 
value drugs; discourage drug manufacturers' price and rebate strategies 
that increase spending for both beneficiaries and the government; and 
provide beneficiaries with more predictable annual drug expenses 
through the creation of a new out-of-pocket spending cap.

    I look forward to working with you, and any other stakeholders, who 
will work with us toward our shared goal of transforming our health-
care system to make sure we are paying for quality, rather than 
quantity.

    Question. Mr. Secretary, the affordability of health-care coverage 
continues to be a problem across our health-care system. One of the 
ways the public and private sectors have been trying to address this 
challenge is through value-based purchasing models. For example, 
employers have been offering Accountable Care Organizations and we have 
seen their growth and success in the Medicare Program. How can HHS 
better work with the private sector to encourage delivery system 
reforms and bring down the cost of health coverage for Americans?

    For example, companies such as Boeing are operating accountable 
care programs in cities across the country to improve the quality of 
care their employees receive, enhance employees' experience with the 
health-care system, and reduce costs. Over the last several years, 
Boeing has seen improvement in their employees' health, including a 
significant uptake in depression screenings and better control of blood 
pressure and diabetes. Employees also like the customer-focus of these 
programs and re-enroll at high rates. How will you increase this type 
of innovation in Medicare, Medicaid, CHIP, and our other government 
health-care programs?

    Answer. One of the key commitments President Trump has made across 
this administration has been to see the private sector as our partners, 
not just as entities to be regulated or overseen. Upon taking office at 
HHS, I identified the value-based transformation of our entire health-
care system as one of the top priorities for our department. Value-
based transformation in particular is not a new passion for me. It 
became a top priority for Secretary Mike Leavitt when I was working for 
him as Deputy Secretary, and it was taken seriously by President 
Obama's administration as well. It has been, at times, a frustrating 
process. But there is no turning back to an unsustainable system that 
pays for procedures rather than value. In fact, the only option is to 
charge forward--for HHS to take bolder action, and for payers and 
providers to join with us.

    There are four particular areas of emphasis that will be vital to 
laying down new rules of the road, accelerating value-based 
transformation, and creating a true market for health care. The four 
areas of emphasis are: giving consumers greater control over health 
information through interoperable and accessible health information 
technology; encouraging transparency from payers and providers; using 
experimental models in Medicare and Medicaid to drive value and quality 
throughout the entire system; and removing government burdens that 
impede this transformation.

    Question. Obesity, tobacco, and lack of medication adherence cost 
our health-care system more than $1 trillion each year. Part of the 
challenge is our doctors don't know how to talk to patients about their 
weight and Medicare and Medicaid beneficiaries don't understand how to 
access services to treat obesity and addiction to tobacco products.

    Will you commit to working together with me to redouble our efforts 
to address these root causes of poor health outcomes and high costs?

    Answer. The conditions that you mentioned are all complex public 
health issues that deserve our attention. I believe we must implement 
evidence-based programs and policies that are proven to make an impact 
in these areas. I commit to ensuring that we are leveraging our 
resources to the greatest extent possible to make advances in these 
areas. The President's Fiscal Year (FY) 2019 budget supports the 
mission of the Department of Health and Human Services (HHS) by making 
thoughtful and strategic investments to protect the health and well-
being of the American people.

                                 ______
                                 
             Questions Submitted by Hon. Thomas R. Carper 
                          and Hon. Pat Roberts
    Question. Secretary Azar, we applaud the inclusion of the provision 
in CMS' Proposed Part D Rule revising the MLR requirements, which 
clarifies that Part D medication therapy management (MTM) programs fall 
under quality improving activities (QIA). This is the right approach 
and policy, and we would strongly urge CMS to finalize this important 
provision to increase proper medication adherence through better 
utilization of MTM services.

    How is CMS working to ensure multiple delivery options for MTM 
services, either in person at retail or community pharmacies as well as 
remotely, are included in the demo and available to beneficiaries?

    When does CMS intend to expand the Enhanced MTM demo to Medicare 
Advantage plans?

    Answer. That said, the provision of Enhanced MTM items or services 
may not be tied to use of specific network pharmacies for dispensing of 
Part D drugs. The model does not waive Part D network access 
requirements or any other Part D requirement not specifically listed in 
the Enhanced MTM Request for Applications. CMS believes that a 
successful participant in this model will design an MTM program that 
effectively engages enrollees at risk for medication-related issues 
``where they are'' as opposed to requiring the enrollee to come to the 
plan or plan preferred providers for assistance in overcoming a barrier 
to improved medication use.

    The Enhanced MTM model tests design elements that give standalone 
PDPs many tools that MA-PD plans already have (such as sharing Parts A 
and B data with Part D sponsors), which would not make such plans 
appropriate for the model as it is currently designed.

    Question. Secretary Azar, we applaud the inclusion of the provision 
in CMS' Proposed Part D Rule revising the MLR requirements, which 
clarifies that Part D medication therapy management (MTM) programs fall 
under quality improving activities (QIA). This is the right approach 
and policy, and we would strongly urge CMS to finalize this important 
provision to increase proper medication adherence through better 
utilization of MTM services.

    How is CMS working to ensure multiple delivery options for MTM 
services, either in person at retail or community pharmacies as well as 
remotely, are included in the demo and available to beneficiaries?

    When does CMS intend to expand the Enhanced MTM demo to Medicare 
Advantage plans?

    Answer. That said, the provision of Enhanced MTM items or services 
may not be tied to use of specific network pharmacies for dispensing of 
Part D drugs. The model does not waive Part D network access 
requirements or any other Part D requirement not specifically listed in 
the Enhanced MTM Request for Applications. CMS believes that a 
successful participant in this model will design an MTM program that 
effectively engages enrollees at risk for medication-related issues 
``where they are'' as opposed to requiring the enrollee to come to the 
plan or plan preferred providers for assistance in overcoming a barrier 
to improved medication use.

    The Enhanced MTM model tests design elements that give standalone 
PDPs many tools that MA-PD plans already have (such as sharing Parts A 
and B data with Part D sponsors), which would not make such plans 
appropriate for the model as it is currently designed.

                                 ______
                                 
             Questions Submitted by Hon. Benjamin L. Cardin
    Question. I am following up on the conversation we had regarding 
the budget for the Office of Minority Health and the National Institute 
on Minority Health and Health Disparities (NIMHD). I raised a concern 
about the President's budget cutting the Office of Minority Health by 
$2 million from the FY18 continuing resolution, and the NIMHD by $7 
million. You stated that because you did not have a granular knowledge 
of the budget that you would get back to me on the cuts to NIMHD. Would 
you please share your rationale for these budget cuts?

    Answer. The cuts you point out do not signify a lack of commitment 
by this Department to minority health issues. Many programs throughout 
HHS received small cuts to ensure that funding is more targeted towards 
direct service delivery. Our strategy is to focus in on existing 
programs that provide these services. The President's budget continues 
to show its commitment to minority health by requesting $281 million 
for the National Institute on Minority Health and Health Disparities 
and $54 million for the Office of Minority Health.

    Question. You offered a rationale regarding the cuts to the Office 
of Minority Health. You stated that there is not a minimization around 
minority health programs, rather a tradeoff and focus on service 
delivery. Would you please share your strategies to increase the focus 
on service delivery, where those resources are being reallocated from, 
and the programs or initiatives that are having their funding reduced?

    Answer. The cuts you point out do not signify a lack of commitment 
by this Department to minority health issues. Many programs throughout 
HHS received small cuts to ensure that funding is more targeted towards 
direct service delivery. Our strategy is to focus in on existing 
programs that provide these services. The President's budget continues 
to show its commitment to minority health by requesting $281 million 
for the National Institute on Minority Health and Health Disparities 
and $54 million for the Office of Minority Health.

    Question. The President's budget wishes to provide $10 billion in 
funding to address the opioid epidemic. Nearly 12 percent of Medicaid 
beneficiaries over the age of 18 have a substance use disorder. To me, 
there seems to be a disconnect between trying to fund programs that 
address the opioid epidemic, while also cutting Medicaid, a program 
which so many people with substance use disorders rely on to get the 
treatment and the care they need. Can you discuss how cutting Medicaid 
and eliminating the Medicaid expansion under the Affordable Care Act 
helps those with a substance use disorder?

    Answer. Our Medicaid program is an important tool in providing 
health care to many Americans but we must put it on a stable long-term 
sustainable footing for it to be there for this and future generations. 
That's the challenge that we have as we seek to empower the States with 
the right incentives to deliver quality service. The FY 2019 budget 
provides additional flexibilities to States, puts Medicaid on a path to 
fiscal stability by restructuring Medicaid financing, and refocuses on 
the populations Medicaid was intended to serve--the elderly, people 
with disabilities, children, and pregnant women. Annual Federal 
Medicaid spending will grow from $421 billion in FY19 to $702 billion 
in FY28 over the budget window. The FY 2019 budget also repeals the 
Medicaid expansion and the Exchange subsidies and replaces these 
programs with the $1.2 trillion Market-Based Health Care Grant program 
through the Graham-Cassidy-Heller-Johnson legislation.

    Opioid misuse, abuse, and overdose impose immense costs on the 
Nation, contributing to two-thirds of deaths by drug overdose. Deaths 
by drug overdose are the leading cause of injury death in the United 
States. The FY 2019 President's budget recognizes the devastation 
caused by the opioid crisis in communities across America and fulfills 
the President's promise to mobilize resources across the Federal 
Government to address the epidemic. The budget provides a historic 
level of new resources across HHS to combat the opioid epidemic and 
serious mental illness--$10 billion--to build upon the work started 
under the 21st Century Cures Act.

    The budget's targeted investments advance the Department's five 
part strategy, which involves:

        Improving access to prevention, treatment, and recovery 
services, including medication-assisted treatment;
        Targeting availability and distribution of overdose-reversing 
drugs;
        Strengthening our understanding of the epidemic through better 
public health data and reporting;
        Supporting cutting edge research on pain and addiction; and
        Advancing better practices for pain management.

    Question. In our conversation regarding the prudent layperson 
standard, you mentioned the proposal in the budget that would allow for 
Medicaid to impose copayments on beneficiaries for emergency room 
visits that are determined to be ``misuse of emergency room visits.'' 
You suggested that any legislation would need to be done in a common 
sense way, and it should not deter anyone from going to the emergency 
room for the care that they ought to be going in for. Would you please 
provide your proposed language that would make this change in policy, 
as well as provide your definition for ``misuse of emergency room 
visits''?

    Answer. Currently, States are required to obtain waiver authority 
to charge copayments above the nominal statutory amounts for non-
emergency use of the emergency department. I am happy to work with 
Congress to define the exact parameters of this proposal.

    Question. Would there be a limit as to what States could charge for 
ER copayments or surcharges for non-emergency use of the ER? Would 
States be able to charge these individuals--many of which are making 
less than $15,000 a year whatever amount they want?

    Answer. The budget proposes to provide States the option to use 
State plan authority to increase these copayments to encourage personal 
financial responsibility and proper use of health-care resources.

    Question. Under this proposal, how would the administration ensure 
individuals have access to other, more appropriate care settings, 
especially if the State no longer has to offer non-emergency 
transportation?

    Answer. We would want to work with you to make sure that any 
legislation is done in a common sense way that does not deter anyone 
from going to the emergency room for care when appropriate.

    Question. As you know, working Americans may be unable to go 
receive medical care in a less expensive setting because the ER is the 
only provider open when they can go--whether that's late at night or on 
the weekend. How will the administration work with States to ensure 
that individuals who are not able to get time off or cannot afford 
child care will be able to access these providers?

    Answer. I am happy to work with Congress to develop this 
legislation in a way that ensures that individuals maintain access to 
emergency care when appropriate.

                                 ______
                                 
               Questions Submitted by Hon. Sherrod Brown
    Question. The President's HHS budget lists ``tackling the opioid 
epidemic'' as its first priority, yet the proposal eliminates Medicaid 
expansion and proposes additional cuts to Medicaid, the number one 
source of addiction treatment services in Ohio.

    During your testimony in front of the House Ways and Means 
Committee, you mentioned that you had recently spoken with Governor 
Kasich about Ohio's struggle with the addiction epidemic. You said that 
we need to take best practices from one State and ensure other States 
can benefit from those innovative practices in tackling this epidemic.

    Yet the President's budget proposes the exact opposite--it would 
actually eliminate Medicaid expansion, a program that is already 
working in Ohio that could help other States across the country who 
have yet to expand their programs. It would take this option away from 
States. Medicaid expansion is an issue that Governor Kasich and I agree 
on--without Medicaid expansion, hundreds of thousands of Ohioans 
currently struggling with addiction and mental illness would lack 
access to treatment. It's Ohio's number one tool in our fight against 
addiction. Taking this option away from States and then making 
additional cuts to Medicaid is not supporting our local communities--
it's abandoning them. We should be giving States the flexibility to 
provide more services, not less.

    If this administration is going to make the argument that States 
are the best 
decision-makers when it comes to the health-care options their 
constituents need, then why eliminate a program that States like Ohio 
have said are working?

    Answer. Our Medicaid program is an important tool in providing 
health care to many Americans, but we must put it on a stable long-term 
sustainable footing for it to be there for this and future generations. 
That's the challenge that we have as we seek to empower the States with 
the right incentives to deliver quality service. The FY 2019 budget 
provides additional flexibilities to States, puts Medicaid on a path to 
fiscal stability by restructuring Medicaid financing, and refocuses on 
the populations Medicaid was intended to serve--the elderly, people 
with disabilities, children, and pregnant women. Annual Federal 
Medicaid spending will grow from $421 billion in FY19 to $702 billion 
in FY28 over the budget window. The FY 2019 budget also repeals the 
Medicaid expansion and the Exchange program subsidies and replaces 
these programs with the $1.2 trillion Market-Based Health Care Grant 
program through the Graham-Cassidy-Heller-Johnson legislation.

    Opioid misuse, abuse, and overdose impose immense costs on the 
Nation, contributing to two-thirds of deaths by drug overdose. Deaths 
by drug overdose are the leading cause of injury death in the United 
States. The FY 2019 President's budget recognizes the devastation 
caused by the opioid crisis in communities across America and fulfills 
the President's promise to mobilize resources across the Federal 
Government to address the epidemic. The budget provides a historic 
level of new resources across HHS to combat the opioid epidemic and 
serious mental illness--$10 billion--to build upon the work started 
under the 21st Century Cures Act.

    The budget's targeted investments advance the Department's five 
part strategy, which involves:

        Improving access to prevention, treatment, and recovery 
services, including medication-assisted treatment;
        Targeting availability and distribution of overdose-reversing 
drugs;
        Strengthening our understanding of the epidemic through better 
public health data and reporting;
        Supporting cutting edge research on pain and addiction; and
        Advancing better practices for pain management.

    Question. During your nomination process, I submitted a QFR about 
the Low-
Income Heating Assistance Program (LIHEAP). I want to share my question 
and your answer with you again in light of the new FY19 budget 
proposal, and then re-phrase my question to you.

    As you know, the Low-Income Heating Assistance Program, or LIHEAP, 
plays a key role in helping the elderly and low-income families stay 
warm in the winter and avoid dangerous heat in the summer. With the 
sustained cold in Ohio this winter, we see firsthand how critical it is 
to the nearly 450,000 households in my State that would otherwise be 
forced to choose between keeping warm or going hungry. When your 
predecessor was before the committee, he indicated that he supported 
this program, then he proceeded to eliminate it in the FY18 budget 
request.

    If confirmed, would you propose to once again eliminate the 
program?

    Answer. If confirmed, I will prioritize programs that demonstrate 
results for the populations they intend to serve. If resources for 
LIHEAP continue to be appropriated by Congress, I will continue to 
implement the program in the most effective and efficient manner 
possible.

    Question. The President's budget would eliminate LIHEAP in FY19. 
How do you intent to ``implement the program in the most effective and 
efficient manner possible'' without any funding? How do you justify the 
elimination of this program?

    Answer. After careful examination, the administration believes that 
LIHEAP is unable to demonstrate strong performance outcomes. In 
addition, we reviewed programs and policies of utility companies and 
State and local governments and found that they provide significant 
heating and cooling assistance to individuals and families, including 
policies in the majority of States prohibit utilities from 
discontinuing heating during the winter months. With our limited 
resources and based on that review, we determined that continued 
funding of the LIHEAP program is not the best use of taxpayer dollars 
and have proposed eliminating future funding for this program. While 
this is the administration's proposal, as long as there continues to be 
an appropriation of resources for this program I will continue to 
implement the program in as effective and efficient manner as possible.

    Question. As I said during last week's hearing, I appreciate the 
efforts the administration has put into proposing some initiatives that 
would help lower the cost of prescription drugs in Medicare and 
Medicaid as part of this year's budget proposal, some of which I agree 
with and support. During the hearing last week I asked you about 
proposals to lower the list price of drugs for all Americans, not just 
those who rely on Medicare or Medicaid, by putting pressure directly on 
the pharmaceutical industry--not just through leveraging other entities 
on the drug supply chain. In order to truly address the high cost of 
drugs we can't just put pressure on insurers and pharmacy benefit 
managers, we must also put pressure directly on manufacturers.

    In your answer to one of my QFRs from your confirmation hearing, 
you said: ``I believe that we need to institute policies that lower the 
list prices of drugs while also maintaining innovative new research and 
development.''

    Are there any proposals in the proposed budget that will force a 
pharmaceutical company to lower the list price of a drug in a way where 
all Americans who rely on that drug will benefit?

    Do you plan on pursuing any policies that go after pharmaceutical 
manufacturers, in addition to these policies in the budget that target 
insurance companies and pharmacy benefit managers? If so, what are 
those policies?

    Answer. The budget includes proposals to create incentives that 
will put downward pressure on the list price of drugs. One proposal 
involves changing the incentive structure in the catastrophic coverage 
in Part D. Currently, the government is on the hook for most of the 
cost once a senior citizen gets to catastrophic coverage phase. We 
propose to progressively move to a system where the insurer bears the 
risk for the catastrophic coverage phase, and will then have even more 
incentive to negotiate with branded drug companies to keep those list 
prices down. Currently, plan sponsors have incentives to accept higher 
prices so that their enrollees reach the catastrophic coverage phase 
sooner and that expense is offloaded on to the Federal government. In 
addition, in Part B, the budget proposes an inflation cap on the 
average sales price, so that the increase of the average sales price 
above inflation will receive lower reimbursement paid out through 
Medicare Part B. Another proposal requires Part D sponsors to apply at 
least one-third of total rebates and price concessions at the point of 
sale. This will improve price transparency and allow beneficiaries to 
share more directly in the savings from discounts negotiated by plans. 
Yet another proposal will improve manufacturers' reporting of average 
sales prices to set accurate payment rates. This proposal would provide 
the Secretary with the authority to apply penalties for manufacturers 
who do not report required data. And finally, the budget proposes 
increased plan formulary flexibility and negotiation power with 
manufacturers. Increased competition for formulary placement will 
provide plans with enhanced ability to negotiate lower prices with 
manufacturers.

                                 ______
                                 
               Question Submitted by Hon. Sherrod Brown 
                     and Hon. Robert P. Casey, Jr.
    Question. This year's budget represents a drastic change from last 
year's budget in how it treats the Children's Hospitals Graduate 
Medical Education (CHGME) payment program. Last year, the President's 
budget proposed to maintain funding for the CHGME program at $295 
million. This year, the budget proposes to eliminate the program and 
combine it with other graduate medical education funding streams, while 
reducing total Federal support for graduate medical education by almost 
$50 billion over a decade.

    Eliminating programs like CHGME that have helped to grow our 
pediatric subspecialty workforce, and that currently train nearly half 
the pediatric physician workforce, will weaken our training pipeline 
and ultimately hurt access to care for children across the country. We 
urge the Department and the White House to focus its attention on 
working with Congress on finding ways to strengthen our commitment to 
producing the next generation of doctors, both for children and adults.

    What caused the President to reverse course on CHGME in this year's 
budget proposal, as compared to last year's budget proposal?

    If CHGME is eliminated, how will HHS ensure that our pediatric 
workforce pipeline is protected and kids have access to the care we 
need?

    Answer. The President's budget supports continued funding for GME 
in children's hospitals through a mandatory appropriation. The budget 
proposes to better focus Federal spending on GME by consolidating 
spending that is currently in the Medicare, Medicaid, and Children's 
Hospital GME Payment Program into a new capped Federal grant program. 
In an effort to improve the distribution of specialties in health care, 
to address health care professional shortage areas, and to incentive 
better training of professionals, funding would be distributed to 
hospitals that are committed to building a strong medical workforce and 
would be targeted to address medically underserved communities and 
health professional shortages. Children's hospitals would remain 
eligible for funding.

                                 ______
                                 
            Questions Submitted by Hon. Robert P. Casey, Jr.
    Question. The President's budget proposes moving control of the 
Strategic National Stockpile from the Centers for Disease Control and 
Prevention to the Office of the Assistant Secretary for Preparedness 
and Response. My staff has been informed by HHS that this move is 
already under way, and will be completed by the end of the current 
fiscal year. I am concerned that such a significant change could 
disrupt our public health emergency preparedness. Could you please 
explain how this move will contribute to protecting the public health 
and increase our capacity to respond to public health emergencies?

    Answer. HHS is transferring the SNS from CDC to ASPR to improve 
emergency response effectiveness. While placing the SNS at CDC made 
historical sense, the creation and maturation of ASPR provides an 
opportunity to better align the direct oversight and management of SNS 
under ASPR. When disasters occur, ASPR leads the National Response 
Framework, Emergency Support Function #8 as delegated by the Secretary, 
thereby coordinating Federal public health and medical responses, such 
as the recent string of high consequence hurricanes. (ASPR also 
coordinates HHS's recovery functions under the Health and Social 
Services Recovery Support Function of the National Disaster Recovery 
Framework.) ASPR has a robust medical logistics capability that 
supports the National Disaster Medical System (NDMS), moving medical 
personnel, equipment, and supplies across the Nation within hours.

    ASPR works closely with State and local emergency management 
professionals, clinicians, health-care facilities, public health 
officials and NDMS response teams who may be called upon to dispense 
SNS medical products. ASPR plans to exercise different SNS dispensing 
mechanisms and implement innovative approaches to improve stockpiling 
and distribution practices, and to ensure SNS contents can continue to 
be quickly dispensed and used locally in natural or manmade 
emergencies. This reorganization also streamlines the medical 
countermeasure development and procurement enterprise by fully 
integrating the Stockpile with other preparedness and response 
capabilities within ASPR.

    The transfer of the SNS from CDC to ASPR is fully underway, and we 
expect to complete this transition by October 1, 2018. Workgroups are 
meeting often to ensure that all of the details of the move are 
addressed. CDC personnel employed by the SNS will remain employed by 
the SNS and will stay in Atlanta. In addition, CDC subject matter 
experts will remain actively involved in the MCM enterprise, and ASPR 
will continue to rely on CDC relationships with State and local public 
health officials and the agency's scientific expertise.

    Question. In recent years, policymakers and multiple 
administrations have indicated an increased desire to pursue evidence-
based policies and programs, the hallmarks of which are providing an 
objective set of criteria for evaluating programs, and an open and 
transparent process for publishing the results of these evaluations. 
The Teen Pregnancy Prevention Evidence Review does exactly that--it 
identifies effective programs, based on rigorous evaluation, that 
reduce teenage pregnancy, the behavioral risk factors underlying 
teenage pregnancy and other associated risk factors. The Assistant 
Secretary for Planning and Evaluation oversees this work. While the 
review is supposed to be updated regularly, the last update was made in 
June 2016 reflecting studies published through August 2015, and the new 
evidence submitted by researchers in November 2016 has yet to be 
incorporated into the review. This lack of action denies programs, 
policymakers, and researchers access to the most up-to-date information 
about what works. Please provide details on when the updated evidence 
review will be published.

    Answer. HHS is committed to research that informs programs. The 
Office of the Assistant Secretary for Planning and Evaluation continues 
to undertake review of the Teen Pregnancy Prevention program, and I 
will ensure HHS shares any results with you and your office.

    Question. January 4, 2017 was last year's submission date for home 
visiting models to seek review for inclusion on the Home Visiting 
Evidence of Effectiveness (HomeVEE) list under the Maternal, Infant, 
and Early Childhood Home Visiting Program. As of today, submissions 
from that round have not been reviewed. What is the timeline for 
reviewing these submissions and responding to the models who have been 
waiting for over a year to learn whether or not they will be included 
on the HomeVEE list?

    Answer. In September 2017, we released the results of HomVEE's 
annual review for 2017, which took into consideration submissions of 
studies through January 4, 2017. HomVEE will release the results of 
2018's review in the fall of 2018.

    Hundreds of models are considered in HomVEE's annual prioritization 
process; many more models than there are resources to review. The 
process is not first-come-first-served. Instead, HomVEE follows a 
systematic and transparent process for selecting the models that will 
be reviewed in a given year.

    Specifically, each year, HomVEE screens all new research for 
eligibility, according to its screening criteria (for details, see 
https://homvee.acf.hhs.gov/Review-Process/4/Screening-Studies/19/3). To 
determine which models HomVEE will review each year, points are 
assigned to models based on published criteria (for details, see http:/
/homvee.acf.hhs.gov/Review-Process/4/Prioritizing-Program-Models-for-
Review/19/4). The number of models selected for review each year 
depends on (1) the number of studies each of the models with the most 
points has, (2) available resources, and (3) HHS policy and 
programmatic needs. Studies identified for models not selected for 
review in a given year remain in the queue and are considered in each 
subsequent year's prioritization decisions. However, studies are not 
reviewed until the model they are associated with is selected for 
prioritization.

    Models that HomVEE has studies on (including those received last 
year during the call for studies which closed in January 2017) are 
considered for prioritization each year until they are prioritized for 
review. If a model is not prioritized for review, it means that other 
models had higher points on the prioritization list based on their 
available research. Studies on models that were not prioritized for 
review in a particular year will be included in the prioritization 
process until the model has enough studies and points (relative to 
other models) to be prioritized for review.

    HomVEE releases an annual update every fall. The annual release 
announces the models that were reviewed that year and the results of 
the review. Results may include adding new models to the list of models 
HomVEE has reviewed (both evidence-based models and those that do not 
meet evidence-based criteria) and/or updating findings on previously 
reviewed models. As of September 2017, HomVEE had prioritized 45 
program models for review, and completed reviews of 363 impact studies 
and 274 implementation studies of these 45 models. These reviews have 
resulted in HomVEE identifying 20 home visiting models that meet the 
HHS criteria for an evidence-based early childhood home visiting 
service delivery model.

    Question. In the administration's fiscal year 2019 budget, you have 
called for an extensive cut to Medicaid. Such a cut would 
disproportionately affect people with disabilities. In the 2017 State 
of the States in Developmental Intellectual and Developmental 
Disabilities report, 76 percent of the public intellectual and 
developmental disability funding goes to home and community based 
services and supports making it possible for people with disabilities 
to live in their own home, be independent, and be full participants in 
their communities. A cut of the size you recommend would drastically 
reduce Medicaid funding for States. How will you ensure that people 
with disabilities who wish to live in their own homes and be part of 
their communities will not be forced to return to nursing homes or 
institutions if these cuts go into effect?

    Answer. The budget's Medicaid proposal is modeled after the Graham-
Cassidy-Heller-Johnson bill, which includes a modernization of Medicaid 
financing and repeal of the Obamacare's Medicaid expansion. Medicaid 
financing reform will empower States to design individual, State-based 
solutions that prioritize Medicaid dollars for traditional Medicaid 
populations and support innovations like community engagement 
initiatives for able-bodied adults. Additionally, the Market-Based 
Health Care Grant Program included in the Graham-Cassidy-Heller-Johnson 
legislation will provide more equitable and sustainable funding to 
States to develop affordable health-care options for their citizens. 
The block grant program will empower States to improve the functioning 
of their own health-care market through greater choice and competition, 
with States and consumers in charge. Putting States back in charge of 
their Medicaid dollars and decisions will allow them to better serve 
and target resources for needy citizens, such as individuals with 
disabilities who wish to live in their own homes.

                                 ______
                                 
            Question Submitted by Hon. Robert P. Casey, Jr. 
                          and Hon. Rob Portman
    Question. We introduced legislation last year, S. 486, the 
Protecting Beneficiary Access to Complex Rehab Technology Act, that is 
designed to permanently protect complex rehab wheelchairs from the 
application of Medicare's Durable Medical Equipment (DME) Competitive 
Bidding program. The legislation reiterates the language in the 
Medicare Improvements for Patients and Providers Act of 2008 that 
exempts complex rehab wheelchairs and accessories from the DME 
competitive bidding program that was designed for standard DME items.

    Last year, HHS reinterpreted a previous CMS response to a 
``Frequently Asked Questions'' document from December of 2014 that 
would have applied DME bid pricing for standard wheelchair accessories 
to complex rehab wheelchair accessories. The problem is the HHS 
reinterpretation only applies to those accessories provided on complex 
power wheelchairs and not all complex wheelchairs.

    While we appreciate the agency's reinterpretation on power 
accessories, there needs to be a similar fix for manual accessories. 
Why did the agency limit its regulatory relief to complex rehab power 
wheelchair accessories and not all complex rehab wheelchair accessories 
rather than use its authority to broaden the regulatory relief to also 
include complex manual wheelchair accessories? It is our hope that can 
happen in the future.

    Answer. Section 1847(a)(2)(A) of the Social Security Act provides 
the categories of items that are subject to the DME Competitive Bidding 
Program and excludes certain complex rehabilitative power wheelchairs 
recognized by the Secretary as classified within group 3 or higher (and 
related accessories when furnished in connection with such 
wheelchairs). We believe that this statutory exclusion should inform 
our implementation of section 1834(a)(1)(F) of the Act such that the 
fee schedule amounts for wheelchair accessories and back and seat 
cushions used in conjunction with group 3 complex rehabilitative power 
wheelchairs would not be adjusted based on DME competitive bidding 
information. The fee schedule amounts for all other accessories used 
with different types of base wheelchair equipment would be calculated 
in accordance with the adjusted DME fee schedule methodology using DME 
competitive bidding information.

                                 ______
                                 
               Questions Submitted by Hon. Mark R. Warner
    Question. Gabriella Miller, a 10-year old girl from Leesburg, VA 
who suffered from pediatric brain cancer, became an extremely 
impressive activist on behalf of childhood cancer awareness before her 
untimely death. Her work led to the passage of the Gabriella Miller 
Kids First Act in 2014, and NIH has been moving forward to implement 
this law and expand pediatric research.

    I have appreciated the steps NIH has taken to continue prioritizing 
pediatric research, including brain tumor research. However, still the 
amount of funding for research on adults far outpaces that for 
children. I am hopeful that under your leadership there can be more 
focus.

    Will you commit to continuing to implement efforts to focus on 
pediatric medical research--including focus on the Gabriella Miller 
research fund?

    Answer. We are committed to continuing support for pediatric 
medical research, including childhood cancer research.

    Pediatric research will continue to be an NIH priority. In fiscal 
year (FY) 2017, the NIH funded over $4.1 billion in research grants and 
projects directed specifically at pediatric research. The Eunice 
Kennedy Shriver National Institute of Child Health and Human 
Development (NICHD) funds the largest portion of pediatric research 
among the 27 NIH Institutes, Centers, and Offices (ICOs), taking a 
leadership role in many pediatric research efforts that involve trans-
NIH collaborations. However, all ICOs support aspects of pediatric 
research; the NICHD accounts for only 19 percent of the total NIH 
support for pediatric research. This reflects the breadth of the 
research portfolio at the NIH dedicated to improving the health of 
children everywhere.

    The National Cancer Institute (NCI) is committed to addressing the 
unique scientific challenges and opportunities that pediatric cancers 
pose in ways that lead to better outcomes for children with cancer. 
Conducting and supporting childhood cancer research remains a high 
priority for NCI, and each year the Institute identifies the best 
research opportunities to build upon the foundation of basic science, 
expand scientific understanding of genetic drivers of childhood 
cancers, identify promising new therapies, and improve the outlook for 
pediatric cancer survivors. In addition to soliciting applications in 
areas of scientific focus, NCI also remains committed to supporting a 
number of key research efforts focused specifically on childhood 
cancers. NCI has been renewing many of these programs for numerous 5-
year funding periods.

    With regard to childhood cancer research, in addition to NCI-
supported efforts described above, NCI will also continue to implement 
childhood cancer research efforts through two high priority pediatric 
research opportunities within the Cancer MoonshotSM. The 
first is fusion oncoproteins in pediatric cancers, as these distinctive 
proteins are unique to childhood cancers and drive cancer growth and 
survival. The second priority area is pediatric immunotherapy, and 
specifically creating a translational science network devoted to 
pediatric immunotherapy research. This is a critical research area as 
it is likely that many immunotherapy treatments being developed for 
adult cancers will not be applicable to childhood cancers.

    The NIH is also committed to continuing support for the Gabriella 
Miller Kids First Pediatric Research program, pending continued 
appropriation of funds from the Pediatric Research Initiative Fund 
created for this purpose.

    Question. The National Alzheimer's Project Act became law in 
January 2011. From that legislation came a national strategic plan to 
address the rapidly escalating Alzheimer's disease crisis and the 
coordination of Alzheimer's disease efforts across the Federal 
Government. Additional data show that more than 5 million Americans are 
suffering from Alzheimer's and dementia today with total costs 
exceeding $200 billion annually and on the way to exceeding $1 trillion 
annually by mid-century.

    How are we measuring and tracking progress towards this goal? Do we 
have the necessary resources and tools to achieve if it? If not, what 
are we lacking? What more can Congress do to help achieve the goals of 
the plan, including the 2025 goal as well as improving care and 
supporting caregivers?

    Answer. In order to track progress made at the Federal level on 
Alzheimer's disease and related dementias, HHS continues to annually 
update the National Plan to Address Alzheimer's Disease, with the 2018 
Update expected later this summer. The National Plan establishes five 
ambitious goals:

        Prevent and effectively treat Alzheimer's disease and related 
dementias by 2025;
        Optimize care quality and efficiency;
        Expand supports for people with Alzheimer's disease and 
related dementias and their families;
        Enhance public awareness and engagement; and
        Track progress and drive improvement.

    The activities outlined in the National Plan Update vary in scope 
and impact and include: immediate actions that the Federal Government 
has taken and will take; actions toward the goals that can be initiated 
by the Federal Government or its public and private partners in the 
near term; and longer-range activities that will require numerous 
actions by Federal and non-Federal partners to achieve. Progress is 
tracked through these annual updates of the Plan, as well as through 
quarterly meetings of the Advisory Council on Alzheimer's Research, 
Care, and Services. The Advisory Council receives updates from Federal 
partners at each meeting and provides annual recommendations to HHS, 
Congress, and other stakeholders about areas where they feel additional 
work is necessary to achieve the goals of the National Plan.

    Progress has been made on a number of fronts, particularly in 
biomedical research, where NIH has been able to translate its yearly 
increases in funding to nearly double the number of individual research 
grants it has awarded, and continues to make strides towards the goal 
of finding a cure for dementia. In the care and services sphere, CMS's 
National Partnership to Improve Dementia Care in Nursing Homes 
established a national goal in 2014 of reducing the use of 
antipsychotic medications in long-stay nursing home residents by 25 
percent by the end of 2015, and 30 percent by the end of 2016. Both 
goals were achieved and new goals are currently under development.

    One of the greatest successes of the past year was the National 
Research Summit on Care and Services, held in October of 2017, and 
sponsored by the Advisory Council. The goal of the Summit was to bring 
together experts from across the country to focus on research that is 
needed to improve quality of care and outcomes across care settings, 
including quality of life and the lived experience of persons with 
dementia and their caregivers. The Summit was a resounding success, 
attended by over 500 people, and many others viewed the webcast online. 
The Summit also produced a number of recommendations for Federal 
agencies and non-Federal partners to pursue. These recommendations are 
already being considered by the Federal members of the Advisory Council 
as they pursue research projects and policy alterations in the coming 
fiscal year.

    Congress's continued engagement and commitment to the goals set out 
in the National Plan are very helpful in spurring progress. The 
Advisory Council has articulated a desire for congressional response to 
their annual recommendations, particularly those directed at 
legislative change and improvement. Implementation of caregiver support 
programs and other services outlined in the President's budget will 
help HHS make further progress on providing quality care for people 
living with dementia and their caregivers.

    Question. I have worked with bipartisan members of the Finance 
Committee to expand the use of telehealth, especially in Medicare. 
Recently, provisions were signed into law that expand telehealth 
services offered through different providers of care that will benefit 
seniors in rural areas and increase access to primary care services and 
telestroke care. During your previous hearings before the committee you 
have called telehealth an ``exciting innovation for rural and 
underserved areas.''

    As Secretary, I am hopeful that you will prioritize implementing 
the important provisions that Congress just passed. I am also 
interested in seeing you utilize HHS's existing authority to lower 
barriers for telehealth and remote patient monitoring in Medicare. Do 
you have any updates on projects that you are working on?

    Answer. Telehealth can provide innovative means of making health 
care more flexible and patient-centric. Innovation within the 
telehealth space could help to expand access to care in rural and 
underserved areas. We are working to implement the provisions of the 
Bipartisan Budget Act of 2018 addressing telehealth, such as the 
provisions increasing access to home dialysis-related care and stroke 
care in Medicare, as well as providing certain Part B covered benefits 
to Medicare Advantage enrollees, through telehealth.

    Furthermore, the Centers for Medicare and Medicaid Services (CMS) 
has previously sought information regarding ways that it might further 
expand access to telehealth services within the current statutory 
authority and pay appropriately for services that take full advantage 
of communication technologies. CMS is carefully reviewing comments and 
considering commenters' suggestions for future rulemaking and any 
appropriate sub-regulatory changes.

    I look forward to continued discussions on telehealth, including on 
the best means to offer patients increased access, greater control, and 
more choices that fit their medical needs.

    Question. The declining cost of digital storage and Internet 
connectivity have made it possible to connect a vast range of products 
and services to the Internet, with medical devices and medical data at 
the forefront of this trend.

    However, manufacturers are often bringing insecure devices to 
market, with few incentives to design the products with security in 
mind, or to provide ongoing support to address vulnerabilities. For 
example, there have been cases where implantable devices are 
susceptible to unauthorized or malicious commands that are sent 
remotely.

    While I am pleased to see a spending boost for cybersecurity 
efforts within HHS, I am concerned that the administration is proposing 
to cut the Office of the National Coordinator for Health IT, ONC's, 
budget by more than a third, from $60 million to $38 million, for FY 
2019.

    ONC has been some of the most technically adapt, along which FDA in 
taking important steps to addressing cybersecurity in the Internet of 
things. During your confirmation you said that you would continue 
efforts to strengthen cybersecurity with the industry.

    How does your Department have the expertise to fight and protect 
cyber threats if those who have the appropriate knowledge and expertise 
don't have the requite resources? Does the HHS have a perspective on 
how best to improve our Nation's cybersecurity posture?

    Answer. The HHS Deputy Secretary (currently Eric D. Hargan) serves 
as the senior official responsible for coordinating cybersecurity 
activities across the Department. Mr. Hargan convenes the HHS 
Cybersecurity Working Group, which brings together representatives from 
all Operating and Staff Divisions with cybersecurity responsibilities 
for senior-level coordination on policy and program matters. The 
Department takes seriously its role as the sector specific agency for 
the Health care and Public Health Sectors with respect to cybersecurity 
under, among other things, PPDs 21 and 41.

    Various components of the Department, including the Office of the 
National Coordinator for Health IT (ONC), the HHS Office for Civil 
Rights (OCR), Assistant Secretary for Preparedness and Response (ASPR), 
and the Department's Office of the Chief Information Officer (OCIO) 
have formed strong partnerships within the Department--and with other 
Federal partners such as the Department of Homeland Security and 
National Institute for Standards and Technology. Through these 
partnerships, HHS provides cybersecurity expertise with a health care 
(including health IT) and public health focus. This also includes 
participation in public-private initiatives, such as those related to 
the National Health Information Sharing and Analysis Center (NH-ISAC) 
and helping to communicate identified security threats to the health IT 
community (e.g., ransomware attacks).

    Question. The administration halved this years' Open Enrollment 
period and significantly reduced funding for nonpartisan health-care 
Navigators. Cuts to this important program greatly diminished their 
ability to reach consumers during the enrollment period. The 
information these Navigators and outreach efforts would have provided 
would have been especially valuable given the high amount of confusion 
surrounding the marketplace.

    Now that you are leading the Department, what are you going to do 
to ensure that consumers are well informed about the opportunity to 
enroll? Are you committed to ensuring Americans wishing to enroll in 
coverage, have access to unbiased application assistance from the 
navigator program in years to come?

    Answer. Please note that the previous administration proposed that 
the open enrollment period be shortened to the current length starting 
for the 2019 plan year, and that this policy aligns more closely with 
the 1 month open enrollment periods we typically see in the employer-
sponsored insurance market and the 7 week Medicare open enrollment 
period, the two markets where the vast majority of Americans are 
successfully enrolled, year after year.

    I will examine the data and work with the Administrator to make the 
best, 
evidence-based decisions, balancing prudent use of resources with 
faithful execution of the law. As it relates to advertising 
expenditures, it is my understanding that the current level of spending 
is consistent with what is spent on promotion for Medicare Advantage 
and Part D, and that Navigators were funded at levels based partly on 
their ability to meet their enrollment goals from the prior year so as 
to inject accountability into that program.

    Question. As you may know, included in the Bipartisan Budget 
Agreement of 2018 is a provision that reduces hospital payments when a 
patient is transferred to hospice. I have concerns that this financial 
penalty could discourage hospitals from giving patients a timely 
referral to hospice. One way to help address this concern is for the 
administration to develop new quality metrics that will allow 
individuals as well as policymakers to identify models that honor 
patient choice and provide high-quality care.

    Can you provide an update on how the administration is approaching 
quality measurement, especially with regard to honoring patient choice 
at end of life?

    Answer. This is an area of significant importance to our health-
care system and every family who ultimately faces challenging end of 
life care questions. To your specific question, as required under 
section 1814(i)(5) of the Social Security Act, CMS administers a 
Hospice Quality Reporting Program. Section 1814(i)(5)(A)(i) of the act 
requires that beginning with FY 2014 and each subsequent FY, the 
Secretary shall reduce the market basket update by 2 percentage points 
for any hospice that does not comply with the quality data submission 
requirements for that FY. The Hospice Quality Reporting Program 
includes data submitted by hospices through the Hospice Item Set (HIS) 
data collection tool, and an experience of care survey, the Hospice 
Consumer Assessment of Healthcare Providers and Systems (CAHPS).

    The HIS captures information about patient choice at the end of 
life through two of its National Quality Forum (NQF)-endorsed quality 
measures: the Treatment Preferences measure, and the Beliefs/Values 
Addressed measure. The CAHPS Hospice Survey is used to collect data on 
the experiences of hospice patients and the primary caregivers listed 
in their hospice records and is the first standardized national survey 
available to collect information on patients' and informal caregivers' 
experience of hospice care. Several of the CAHPS Hospice Survey NQF-
endorsed measures address patient choice at the end of life, including 
the Communication with Family measure, the Treating Patients With 
Respect measure, and the Emotional and Spiritual Support measure.

                                 ______
                                 
              Questions Submitted by Hon. Claire McCaskill
    Question. Mr. Azar, please describe any provisions in the 
President's FY 2019 budget that would directly limit increases in 
prescription drug list price. Additionally, please describe any 
provisions in the President's FY 2019 budget that directly limit 
increases in reimbursement for prescription drugs.

    Answer. The budget includes proposals to create incentives that 
will put downward pressure on the list price of drugs. One proposal 
involves changing the incentive structure of the Part D benefit by 
modifying the distribution of liability in the catastrophic phase. 
Specifically, the proposal increases Part D plan sponsors' risk in the 
catastrophic phase by increasing plan liability over 4 years from 15 
percent to 80 percent, and simultaneously decreasing Medicare's 
reinsurance liability from 80 to 20 percent. Additionally, beneficiary 
coinsurance would decrease from 5 to 0 percent, creating a true out-of-
pocket maximum in Part D for the first time in the program's history. 
Collectively, these changes provide beneficiaries with more predictable 
annual drug expenses and incentivize plans to better manage spending 
throughout the entirety of the benefit. Currently, plan sponsors have 
incentives to accept higher prices so that their enrollees reach the 
catastrophic coverage phase sooner and that expense is offloaded on to 
the Federal Government These proposed modifications additionally 
incentivize plans to negotiate with drug manufacturers to keep list 
prices down as they now bear the majority of the financial risk in the 
catastrophic phase. In addition, in Part B, the budget proposes an 
inflation cap on the average sales price, so that the increase of the 
average sales price above inflation will receive lower reimbursement 
paid out through Medicare Part B. Another proposal to improve 
manufacturers' reporting of average sales prices would provide the 
Secretary with the authority to apply penalties to manufacturers who do 
not report required data. Incomplete or inaccurate data leads to 
Medicare paying more for drugs. Additionally, increased plan formulary 
flexibility and negotiation power with manufacturers will provide plans 
with enhanced ability to negotiate lower prices. This will improve 
price transparency and allow beneficiaries to share more directly in 
the savings from discounts negotiated by plans.

    Question. Mr. Azar, there was nothing in the budget specifically 
aimed at reining in the increases in direct-to-consumer prescription 
drug advertising. Are there steps that the administration can take to 
address the rise in direct-to-consumer prescription drug advertising? 
If so, please describe.

    Answer. I am working with Commissioner Gottlieb to examine whether 
our approach to how we authorize and approve direct-to-consumer 
prescription drug advertising, consistent with the law, including the 
First Amendment.

    When considering a change to the FDA's policy on direct-to-consumer 
drug advertisements, the agency often examines and conducts research to 
ensure that any changes are grounded in science and will have the 
greatest benefit to public health. For this reason, the FDA conducts 
research about the content and delivery of drug advertisements to 
ensure it is delivered in a way that will optimize health-care 
professional and patient understanding of the benefits and risks of 
prescription drugs.

                                 ______
                                 
             Questions Submitted by Hon. Sheldon Whitehouse
    Question. As you know, Secretary Burwell announced specific payment 
reform goals of tying 30 percent of Medicare fee-for-service payments 
to quality or value through alternative payment models by the end of 
2016 and 50 percent by 2018. These goals sent a strong signal that 
galvanized the public and private sectors to participate in the 
movement away from fee-for-service payment.

    During your nomination hearing before the Health, Education, Labor, 
and Pensions Committee, you acknowledged the importance of this work, 
saying: It is, I think, one of the great legacies of Secretary 
Burwell's tenure was launching off so many of the alternative payment 
models that we have out there, and I would like to keep driving that 
forward.

    Should the Federal Government take a leadership role in moving our 
health-care system away from fee-for-service payment?

    On February 20th, The Washington Post reported that the Centers for 
Medicare and Medicaid Services is no longer focused on achieving the 
Medicare payment reform goals announced by Secretary Burwell in 2015 
but instead on ``evaluating the impact of new payment models on 
patients and providers.'' Do you plan to announce different goals and 
targets for participation in value-based payment and alternative 
payment models? Why can't evaluation of the past administration's 
efforts be done at the same time CMS works toward those payment reform 
goals?

    How do you intend to monitor and measure overall progress related 
to payment reform and implementation of new delivery models?

    What is your plan for driving forward participation in alternative 
payment models across public and private health-care sectors?

    Answer. Upon taking office at HHS, I identified the value-based 
transformation of our entire health-care system as one of the top 
priorities for our department. Value-based transformation in particular 
is not a new passion for me. It became a top priority for Secretary 
Mike Leavitt when I was working for him as Deputy Secretary, and it was 
taken seriously by President Obama's administration as well, including 
under the leadership of Secretary Burwell.

    It has been, at times, a frustrating process. But there is no 
turning back to an unsustainable system that pays for procedures rather 
than value. In fact, the only option is to charge forward--for HHS to 
take bolder action, and for payers and providers to join with us.

    There are four particular areas of emphasis that will be vital to 
laying down new rules of the road, accelerating value-based 
transformation, and creating a true market for health care. The four 
areas of emphasis are: giving consumers greater control over health 
information through interoperable and accessible health information 
technology; encouraging transparency from payers and providers; using 
experimental models in Medicare and Medicaid to drive value and quality 
throughout the entire system; and removing government burdens that 
impede this transformation.

    The key theme uniting these four priorities is the recognition that 
value is not accurately determined by outside authorities or central 
planners.

    Question. At your Health, Education, Labor, and Pensions Committee 
nomination hearing, you said, ``As I indicated in my opening statement, 
one of my top priorities as Secretary, if confirmed, will be to use the 
power of Medicare and Medicaid to drive transformation of our health-
care system from a procedure-based system that pays for sickness to a 
value-based system that pays for quality and outcomes. If given the 
opportunity to serve I will use the appropriate tools within the 
Department to meet this goal and measure our progress in reaching it. 
''

    What specific tools in the Department of Health and Human Services 
will you use to meet and measure progress on transforming our health-
care system from a procedure-based system to a value-based system?

    Answer. I am committed to value-based transformation of the health-
care system. We have a range of tools for using the Medicare and 
Medicaid programs to pay for value, many created by the 2015 MACRA 
legislation. The Center for Medicare and Medicaid Innovation, alongside 
these tools, vests HHS with tremendous power to experiment with new 
payment models. In addition, the President's budget especially supports 
particular priorities that we have laid out for the Department, 
including using Medicare to move our health system to a more value-
based direction.

    Question. As we've previously discussed, I have observed a 
recurring bias within the HHS for taking care of the middle of the pack 
on major health initiatives. This type of policymaking makes political 
sense because that is where most health-care providers are. But it 
fails to drive and reward the health-care providers who take financial 
and reputational risks by engaging early in new payment and delivery 
models and investing in the tools and personnel needed to improve the 
quality of care while reducing costs.

    In a response to a question for the record on this topic, you 
responded that we need to ``ensure that our programs do not penalize or 
create any disincentives for those providers who are at the forefront 
of leading us toward the desired future State of our health-care 
system.'' What steps have you taken, and what steps do you intend to 
take, to ensure HHS programs do not penalize or create disincentives 
for the ``lead dogs,'' the providers at the forefront of payment and 
delivery system reform?

    Answer. I am committed to value-based transformation of the entire 
health-care system and will work to ensure that providers at the 
forefront of payment and delivery system reform are not penalized. One 
example of a step that has been taken is the changes CMS has made to 
the Medicare Shared Savings Program to encourage continued 
participation from high performing ACOs. In addition, we are looking at 
our efforts regarding ACOs to determine how we can improve results, and 
we are looking at all alternative payment models to determine what is 
and what is not working. Furthermore, under the Merit-based Incentive 
Payment System (MIPS), one of two avenues under the Quality Payment 
Program, the structure of the program incentivizes performance by 
``lead dogs'' or high performers. The higher a clinician's or a group 
practice's score, the higher the payment adjustment under MIPS. For 
exceptional performance above an even higher performance threshold, an 
additional MIPS payment adjustment factor is also available for the 
first 6 years of the program.

    Question. As you know, the framework for MACRA is laid out in 
statute, but the administration has significant flexibility to adjust 
the metrics by which clinician performance is measured and to exempt 
clinicians from MACRA requirements.

    What is your goal for the number of clinicians participating in the 
advanced alternative payment model pathway in 2019 and 2020?

    What is your goal for the number of clinicians participating in the 
Merit-Based Incentive Payment System in 2019 and 2020?

    Will you commit to pursuing higher performance standards in the 
Merit-Based Incentive Payment System over time?

    Answer. Although we do not have numerical participation goals for 
clinicians in either the Merit-Based Incentive Payment System (MIPS) or 
Advanced Alternative Payment Models (APMs), we have done extensive 
outreach with clinicians, patients and other stakeholders, and created 
seven strategic objectives for these programs. These objectives help to 
guide our policies and future rulemaking so that we can design, 
implement, and advance a program that aims to improve health outcomes, 
promote efficiency, minimize burden of participation, and provide 
fairness and transparency in operations.

    These strategic objectives are: (1) To improve beneficiary outcomes 
and engage patients through patient-centered Advanced APM and MIPS 
policies; (2) to enhance clinician experience through flexible and 
transparent program design and interactions with easy-to-use program 
tools; (3) to increase the availability and adoption of robust Advanced 
APMs; (4) to promote program understanding and maximize participation 
through customized communication, education, outreach and support that 
meet the needs of the diversity of physician practices and patients, 
especially the unique needs of small practices; (5) to improve data and 
information sharing on program performance to provide accurate, timely, 
and actionable feedback to clinicians and other stakeholders; (6) to 
deliver IT systems capabilities that meet the needs of users for data 
submission, reporting, and improvement and are seamless, efficient and 
valuable on the front and back-end; and (7) to ensure operation 
excellence in program implementation and ongoing development; and to 
design the program in a manner that allows smaller independent and 
rural practices to be successful.

    The first year of MIPS was established as a transition year, and in 
the second year, we continued the transition and provided a gradual 
ramp-up of the program and of the performance threshold. To allow the 
Quality Payment Program to work for all stakeholders, we also recognize 
that we must provide ongoing education, support, and technical 
assistance so that clinicians can understand program requirements, use 
available tools to enhance their practices, and improve quality and 
progress toward participation in APMs if that is the best choice for 
their practice.

    Question. In response to a question for the record, you wrote, ``Of 
course, we must exercise the power of CMMI and other authorities in 
ways that are open and transparent, and that seek out collaboration and 
input as much as possible.'' Last year, the Centers for Medicare and 
Medicaid Services collected public comments on a Request for 
Information on a new direction for the CMS Innovation Center. To date, 
none of those comments have been released publicly.

    Give your emphasis on openness and transparency, why hasn't CMS 
released all of the public comments submitted to its ``new direction'' 
Request for Information?

    Do you have a timeline for releasing all of the comments?

    Answer. As you highlight, Senator Whitehouse, we share a commitment 
to harnessing the power of the Center for Medicare and Medicaid 
Innovation (Innovation Center) to advance and enhance the way health 
care is provided in America. Our existing partnerships with health-care 
providers, clinicians, States, payers and stakeholders have generated 
important value and lessons and CMS is setting a new direction for the 
Innovation Center. That is why, in September 2017, CMS released a 
Request for Information \7\ (RFI) seeking public feedback on ways to 
promote 
patient-driven care and test market-driven reforms that empower 
beneficiaries as consumers, provide price transparency, increase 
choices and competition to drive quality, reduce costs, and improve 
outcomes. We are grateful for the comments and thoughtful ideas that we 
received in response to the RFI. Overall, through the close of the 
comment period in November, CMS received approximately 1,000 
submissions. CMS continues to review these submissions, and they will 
be an integral source of information as CMS moves forward with the 
agency-wide efforts to promote innovation, including through the design 
and testing of additional Advanced APMs that will aim to improve the 
patient-provider experience. However, our engagement with stakeholders 
has not ended with this RFI and we look forward to continuing to work 
with all stakeholders to make sure we are delivering results and 
putting the patient in the driver's seat.
---------------------------------------------------------------------------
    \7\ https://innovation.cms.gov/Files/x/newdirection-rfi.pdf.

    We are committed to following the Administrative Procedures Act 
(APA) and while the comments were not solicited as part of any proposed 
rule, and therefore CMS is not obligated to publish the comments, we 
plan to make the comments available on the Innovation Center's website 
and are happy to work with you and relevant stakeholders to share any 
---------------------------------------------------------------------------
additional information as needed.

    Question. How is CMS disseminating best practices from payment and 
delivery models identified as working and lessons learned from those 
that are not?

    Answer. As required by section 1115A of the Social Security Act, 
CMS conducts an evaluation of each model tested under such section. The 
Innovation Center, using independent evaluators, routinely and 
rigorously assesses the impact of each model on quality and cost. Each 
evaluation report is posted on the Innovation Center's website. The 
Innovation Center has also created model-specific learning 
collaboratives that promote broad and rapid dissemination among model 
participants of evidence-based best practices that have the potential 
to deliver high quality and lower cost care for Medicare, Medicaid, and 
CHIP beneficiaries. In addition, CMS has incorporated lessons from 
models in other programs. For example, after the Pioneer Accountable 
Care Organization (ACO) Model was determined to meet the statutory 
requirements for expansion, CMS incorporated elements of the Pioneer 
ACO Model into the Medicare Shared Savings Program.

    Question. Please provide the following information about CMS 
Innovation Center operations:

        The number of FTEs working at the Center in 2016, 2017, and 
2018 (to date).
        Annual Center expenditures in 2016, 2017, and 2018 (to date).
        A list of alternative payment models and initiatives that, 
since 2016:
            Have been announced or introduced by the Center;
            Are being tested;
            Have been terminated by the Center; and
            Have been deemed eligible for expansion by the Center.
        A list of alternative payment models for which there are 
interim or final evaluations.

    Answer. As of September 30, 2017, the Innovation Center had 581 
staff. The Innovation Center's net outlays in FY 2016, 2017, and 2018 
(to date) are $1,156 million, $1,136 million, and $1,278 million, 
respectively. To date, the Innovation Center has tested or announced 39 
models. A list of the models and information about their status is 
available at https://innovation.cms.gov/initiatives/
index.html#views=models. Every Innovation Center model is independently 
evaluated, and all evaluation reports are available at: https://
innovation.cms.gov/Data-and-Reports/index.html.

    Question. I have heard from stakeholders that CMS does not have a 
coherent, systematic strategy for resolving issues that arise--e.g., 
attribution of beneficiaries, expenditures, and savings--when health 
care providers and beneficiaries participate in overlapping alternative 
payment models. Instead, resolution of these issues is done on a one-
off, model-by-model basis, and that guidance is not made widely 
available to the public. This lack of transparency and haphazard 
approach creates uncertainty and confusion about the rules of the road 
for participating in alternative payment models.

    What is CMS's framework for resolving issues that rise related to 
overlapping alternative payment models?

    Will you direct CMS to make publicly available policy decisions 
related to overlapping alternative payment models?

    Answer. Transparent model design is one of the guiding principles 
for models tested by CMS. Overlap between current and anticipated 
alternative payment models is a factor that CMS considers in the design 
of models. CMS has a system for aligning beneficiaries to models and 
programs and ensuring that shared savings and 
performance-based payments are only paid once for an individual 
beneficiary. Generally, policies for overlap between models and other 
initiatives are included in the Requests for Applications for models.

    Question. An evaluation published in Health Affairs of the 2016 
Medicare Shared Savings Program results showed that the longer 
providers participate in the program, the more likely they were to 
achieve shared savings. In addition, the data shows that physician-led 
ACOs are more likely to achieve shared-savings payments than ACOs whose 
membership includes hospitals. What is CMS's strategy for ensuring 
physician-led ACOs are able to sustain their participation in the 
Medicare Shared Savings Program?

    Answer. I agree that physician-only ACOs continue to outperform 
ACOs that include a hospital and that ACOs continue to show greater 
improvement in financial and quality performance as they gain 
experience in the program. We are looking at our efforts regarding ACOs 
to determine how we can improve results. CMS has made changes to the 
Medicare Shared Savings Program to encourage continued participation 
from high performing ACOs, and we continue to consider ways to enhance 
the program.

                                 ______
                                 
              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 Finance Committee 
hearing to consider the administration's fiscal year (FY) 2019 budget 
request for the Department of Health and Human Services (HHS).

    Before I begin, I want to express, on behalf of the committee, the 
sadness we all feel in light of yesterday's events in Florida. I was 
personally horrified as I watched the news unfold yesterday, though I 
was also moved to hear some of the stories of the heroism displayed by 
some of the students and teachers at the school.

    In times like these, I know that thoughts expressed from those of 
us who are far away can sometimes seem empty and meaningless in the 
face of such a terrible tragedy. I will simply say that I am praying 
for all of those who were affected by these acts of senseless violence.

    That, of course, includes a member of our committee who I know is 
mourning the loss and pain felt by those in his home State. May they 
all find peace, healing, and a speedy recovery.

    I welcome everyone to today's hearing, which will be our third and 
final hearing on the President's budget for fiscal year 2019.

    We've already had the Treasury Secretary and the Acting IRS 
Commissioner appear before us. And today, we'll be talking with 
Secretary Azar from the Department of Health and Human Services.

    Secretary Azar, thank you for being here and welcome back. It has 
been just a little over a month since you last appeared before us. Of 
course, you are still very new to your position, but we are glad to 
have you back because we have a lot to discuss.

    Since you were last here, this committee has amassed a number of 
legislative victories. I want to take a few minutes to highlight these 
accomplishments as many are within HHS's jurisdiction.

    Last month, as a result of countless hours of work by this 
committee, Congress passed and the President signed a 6-year CHIP 
extension. A few weeks later, we added another 4 years to that 
extension as part of the Bipartisan Budget Act.

    That is 10 more years of CHIP funding, which is, quite frankly, a 
historic accomplishment.

    Senator Ted Kennedy and I created the CHIP program more than 2 
decades ago. And, despite always enjoying bipartisan support, at no 
point in the program's history have we been able to deliver this much 
certainty and security for the families and children who depend on 
CHIP. I want to once again commend my colleagues on both sides who 
joined in this effort and who share in this success.

    It was no small feat.

    In addition to the CHIP extension, the CHRONIC Care Act, another 
bipartisan legislative product out of this committee, was also signed 
into law recently. This new law will improve care for Medicare 
beneficiaries living with chronic conditions, streamline care 
coordination, and improve quality outcomes without worsening Medicare's 
shaky fiscal status. Again, I want to thank everyone on this committee 
who worked on this bill, most notably our ranking member, Senator 
Wyden, as well as Senators Isakson and Warner, who were key leaders in 
the drafting and passage of this important bill.

    And it doesn't end there. The budget bill also included the 
bipartisan Family First Prevention Services Act, which will help keep 
more children safely with their families--specifically by funding 
substance abuse and mental health services that have been shown to 
prevent children from entering foster care.

    All of this success is testament to bipartisanship and proves that 
it is possible for both parties to find common ground and work 
together. As always, there is more work to be done and I am optimistic 
that we can be just as effective in the coming months.

    Of course, these recent achievements won't mean much if they are 
not implemented properly. Secretary Azar, I look forward to working 
with you as this process moves forward.

    Now, I'd like to take a moment to talk about some of the specifics 
in the President's budget, which recognizes the need to eliminate 
wasteful spending, rein in our national debt, and focus on protecting 
Americans at home. I appreciate that the President's budget takes steps 
toward a course correction that will hopefully lead to a more 
economically sound future, all while still ensuring high-quality, and 
accessible health care.

    One of the key and critical assumptions in the President's budget 
is the repeal of Obamacare. The budget bakes in this repeal, and 
replaces it with a State-based grant system. All told, the 
administration estimates that this would save more than $675 billion.

    Many of us on the committee--I think all of us on the Republican 
side--share this desire to repeal Obamacare, and we've actually done 
some great work on rolling back major elements of the so-called 
Affordable Care Act this Congress. For starters, our tax reform bill 
zeroed out the individual mandate tax.

    The recent budget bill also included the so-called Medicare 
extenders and repealed the Independent Payment Advisory Board. And, in 
that same bill, we extended previous delays on other Obamacare taxes, 
including the medical device tax, the health insurance, and the so-
called Cadillac tax. But, as the budget points out, we are not quite 
there yet. I hope we can take additional steps in the future and I look 
forward to continuing our discussions on how we can stop the 
skyrocketing cost of health care in a meaningful and well-governed way.

    Beyond the critical repeal and replace efforts with Obamacare, we 
also need to start getting serious about Medicare and Medicaid reforms. 
Both of these programs need to be put on a more sustainable path, so 
that we can fulfill the promises of these programs for future 
generations.

    I know that any time a Republican mentions the fiscal predicament 
of Medicare and Medicaid, we're essentially asking to be accused of 
robbing the elderly and low-income families of their health care. But, 
none of these scare tactics will improve the outlook of our Federal 
health-care programs. That's going to take some hard work and, 
hopefully, we can find a path forward there as well.

    Secretary Azar, during your confirmation hearing, you emphasized 
that addressing rising drug prices would be one of your top priorities. 
As you know, I've spent quite a bit of time on this issue, working to 
ensure that patients have access to innovative and high-quality 
medications. It can be tricky to balance the need to encourage 
investment and development of new and effective drugs and treatments 
while also working to make sure those in need can obtain access to 
those potentially life-saving and life-improving products.

    Some have made a crusade out of scapegoating the companies that 
develop drugs and treatments.

    And, when this almost singular focus prevails, the result is policy 
that tends to be less than perfect, to put it charitably. We saw an 
example of this in last week's Bipartisan Budget Act that increased the 
discount that manufacturers are required to provide under the so-called 
donut hole in Medicare Part D.

    I voiced my opposition to the inclusion of this provision in the 
budget agreement on the Senate floor last week. I am working with my 
colleagues who share my concern on the increased manufacturer discount 
provision to mitigate its impact.

    Further, as this budget has a number of other drug-related policy 
proposals, I implore the administration to take care to strike a 
balance between access and innovation. It is a balance that I hope that 
we should all strive to achieve.

    Secretary Azar, you also emphasized that addressing America's 
opioid crisis is another one of your top priorities. I am happy to see 
that the President's budget stresses the importance of working together 
to fight this epidemic.

    The CDC estimates that, each day, our country experiences more than 
100 opioid-related deaths.

    My home State of Utah has been especially hard hit. And while the 
drug overdose rate has risen over the past decade, we are starting to 
see a shifting tide thanks to the leadership of many officials in my 
State. With that said, they need Federal help.

    And, I know that many in Congress, including several members of 
this committee, have been outspoken leaders in this effort, and I 
commend them for their work.

    We are committed to continuing our bipartisan committee process to 
address the opioid epidemic, especially through mandatory program 
proposals that can bring about meaningful and enduring change to a 
system plagued with issues.

    Mr. Secretary, I look forward to working with you in the coming 
months as we look for solutions to address this crisis, and I hope that 
we, as a committee, can continue our bipartisan efforts to curtail this 
growing string of tragedies.

    To close, let me just say that, as we all know, it is Congress's 
responsibility to pass a budget. The President's proposed budget merely 
sets the tone and provides us with a baseline for debate. I hope that 
we can work together to implement many of the common-sense reforms 
we've been debating for so long. And I hope that we can continue to 
work to set aside our differences in order to find beneficial 
solutions.

    I look forward to having an open and frank discussion with 
Secretary Azar about these and other matters.

    Before I close, I do want to note that because we were unable to 
get a quorum yesterday, if, at any point during the hearing, a suitable 
quorum is present, I intend to pause the hearing and move to votes on 
the nominations of Mr. Dennis Shea and Mr. C.J. Mahoney. Thereafter, 
we'll resume our hearing.

                                 ______
                                 
                 Prepared Statement of Hon. Ron Wyden, 
                       a U.S. Senator From Oregon
    It's budget season in Washington, which means the Trump agenda of 
health care discrimination is back. This morning I'll run through the 
plan example by example.

    Let's start off with discrimination against Americans with pre-
existing conditions. People who have pre-existing conditions count on 
having a robust private insurance market with strong consumer 
protections. What the Trump budget offers is chaos in the private 
insurance market and the elimination of key consumer protections.

    The budget embraces the old Graham-Cassidy proposal, which lived a 
mercifully short life last fall before it was blocked on a bipartisan 
basis. But here it is once again, warts and all, another crack at 
repealing the Affordable Care Act and forcing Americans to pay more for 
less care. On top of that, the administration is giving a green light 
to junk insurance policies that revive the worst industry abuses of the 
past, such as skimpy coverage and dollar limits on care. So for 
millions of people with pre-existing conditions, the Trump 
administration seems dead-set on making the care they need unaffordable 
and inaccessible.

    Next up in the agenda of health-care discrimination is 
discrimination against women. When you get rid of the consumer 
protections in the Affordable Care Act, you're turning the clock back 
to an era when 75 percent of insurance plans in the individual market 
didn't cover maternity care or birth control. And under the Trump 
budget, which arbitrarily attacks Planned Parenthood and other key 
providers, millions of women would lose the right to see the doctor of 
their choosing.

    Then the Trump agenda of health-care discrimination goes after 
Americans who are walking an economic tightrope: $1.4 trillion cut from 
Medicaid. Millions of working Americans locked out of the program. A 
scheme to wipe out key nationwide protections and cap the program, 
essentially ending the guarantee of care for those who qualify for 
Medicaid. Now the Trump administration is reportedly discussing 
lifetime limits for Americans in Medicaid. Both sides used to agree 
that lifetime limits in health care were absolutely wrong, no 
exceptions. The ban on lifetime limits in the Affordable Care Act was 
one of the core protections even Republicans said should stay. 
Introducing lifetime limits in Medicaid raises the frightening question 
of what happens if somebody maxes out after cancer treatment at age 45. 
Are they going to be on the street in old age, capped out of the 
nursing home benefit, for example?

    Finally, the Trump agenda of health care discrimination turns 
against older Americans. Slashing Medicaid to the bone and transforming 
the program into a capped program is an enormous threat to the welfare 
of seniors. Medicaid helps pay for two out of three seniors in nursing 
homes, and it's essential for seniors who count on home-based care. 
Even for Americans at age 62 or 63, there's bad news. The Trump budget 
would hit them with an age tax, allowing insurance companies to charge 
them at far higher rates than they charge others.

    Bottom line, the agenda of health care discrimination is out in 
force in this Trump budget. It is a comprehensive plan to drag America 
back to the dark days when health care worked only for the healthy and 
the wealthy.

    Another issue the committee needs to address this morning is the 
cost of prescription drugs. Donald Trump famously talked about how drug 
companies were ``getting away with murder'' by setting drug prices so 
high. The way he talked about the problem, Americans believed he was 
going to come out swinging with big solutions to this challenge.

    In the plan released late last week, I still don't see a solution 
to the fundamental issue: drug companies set prices that are way too 
high. Yes, the whole system is broken and needs reform. But if drug 
companies can still come right out of the gate with unaffordable 
prices, patients will still suffer. I'll put this simply. The Trump 
prescription drug plan lets pharmaceutical companies keep on, to borrow 
a phrase, getting away with murder.

    That said, much of what the administration put forward last week 
looks awfully familiar. That might be because a lot of it borrowed 
directly from legislation I've proposed, or recommendations that came 
from outside groups. There's value in these ideas, and much of it could 
move forward on a bipartisan basis. But the American people are still 
looking for the kind of muscular policies the President promised he'd 
bring forward, and it's still not there.

    Finally, I want to discuss a different part of Secretary Azar's 
jurisdiction at HHS, but one that's vital to the well-being of kids 
across the country. Last week, the Congress passed a bill Chairman 
Hatch and I wrote called the Family First Prevention Services Act, 
which amounts to the most consequential improvements to the child 
welfare system in decades.

    For too long, the child welfare system has defaulted to splitting 
families apart. The Family First Act is all about finding safe ways to 
keep families together and healthy. For the first time, States will get 
to use foster care dollars to fund services like substance use 
treatment, mental health treatment, and parenting programs with the 
goal of preventing the kind of prolonged slide into crisis that ends 
with families breaking apart.

    Particularly with the opioid epidemic raging across the country, 
this is a smart, new approach that can go a long way to helping 
hundreds of thousands of families and kids. But now that Congress 
passed the bill, it's up to HHS to implement it the right way. With 
bipartisan legislation that has this much potential for good, it would 
be criminal for HHS to stand pat and let States continue the status 
quo.

                                 ______
                                 
                 Blue Cross of Idaho Application Form 
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


                                 ______
                                 
                   Letter Submitted by Hon. Ron Wyden
February 14, 2018

Honorable Alex Azar
Secretary of Health and Human Services
U.S. Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201

Re: Idaho Department of Insurance Bulletin 18-01 (January 24, 2018)

Dear Secretary Azar:

The 15 undersigned organizations represent millions of patients facing 
serious, acute, and chronic health conditions across the country. We 
collectively stand ready to ensure that these patients have access to 
affordable, adequate health insurance in order to treat and manage 
their conditions. We write regarding the recent action by the State of 
Idaho to authorize the issuance of health insurance plans that violate 
numerous requirements of the Affordable Care Act (ACA) that provide 
essential protections to individuals and families. We urge you to 
address this issue in a timely manner, and provide clarification by the 
Department of Health and Human Services that Idaho's Department of 
Insurance Bulletin 18-01 is legally invalid.

Idaho's insurance bulletin would allow insurers to sell individual 
market plans that do not comply with federal law.\1\ Because the Idaho 
Bulletin purports to authorize the issuance of insurance coverage that 
is prohibited by federal law, it is legally invalid. Under the 
Affordable Care Act, a ``health insurance issuer'' is prohibited from 
offering ``health insurance coverage'' in the individual or small group 
market that violates the statute's consumer protection standards.\2\
---------------------------------------------------------------------------
    \1\ The Supremacy Clause of the United States Constitution (Article 
V, Section 2) provides that federal laws ``shall be the supreme Law of 
the Land; . . . any Thing in the Constitution or Laws of any State to 
the Contrary notwithstanding.'' States therefore cannot authorize 
companies to violate federal law.
    \2\ See 42 U.S.C. Sec. Sec. 300gg and 300gg-4.

---------------------------------------------------------------------------
Idaho's insurance bulletin would allow the sale of products that could:

      Deny coverage of pre-existing conditions for those with a break 
in coverage; \3\
---------------------------------------------------------------------------
    \3\ Federal law bars insurers from imposing pre-existing condition 
exclusions (42 U.S.C. Sec. 300gg-3) or continuous coverage requirements 
(42 U.S.C. Sec. 300gg-1), but the Idaho bulletin ( 3) permits such 
exclusions for individuals who lack coverage in the prior 63 days.
---------------------------------------------------------------------------
      Charge older Americans up to five times as much as younger 
Americans; \4\
---------------------------------------------------------------------------
    \4\ Federal law prohibits insurers from setting premium rates that 
vary by more than a 3:1 age ratio and that vary by more than 50% for 
tobacco use (42 U.S.C. Sec. 300gg and 300gg-4), but the Idaho bulletin 
( 5) allows plans to vary their rates by a 5:1 age ratio.
---------------------------------------------------------------------------
      Impose higher premiums on people with pre-existing conditions; 
\5\
---------------------------------------------------------------------------
    \5\ Federal law prohibits insurers from setting premium rates based 
on health status (42 U.S.C. Sec. Sec. 300gg), but the Idaho bulletin ( 
5) allows plans to vary their rates based on a risk factor.
---------------------------------------------------------------------------
      Put a dollar limit on insurance benefits; \6\
---------------------------------------------------------------------------
    \6\ Federal law prohibits insurers from setting an annual limit on 
the amount the insurer will pay (42 U.S.C. Sec. 300gg-11), but the 
Idaho bulletin ( 6) permits an annual limit of no less than $1 million 
per person.
---------------------------------------------------------------------------
      Increase consumers' annual out-of-pocket costs; \7\ and
---------------------------------------------------------------------------
    \7\ Federal law prohibits health insurance coverage that violates 
the maximum out-of-pocket cost limit established by Federal law (42 
U.S.C. Sec. 18002(c)), but the Idaho bulletin ( 7) applies the out-of-
pocket cost ceiling to the bulletin's more restrictive list of 
essential health benefits (and therefore permits higher out-of-pocket 
costs than does Federal law) and in addition permits separate maximums 
for different types of services (e.g., one for prescription drugs and 
another for other services), which is also contrary to Federal law.
---------------------------------------------------------------------------
      Exclude key health benefits such as maternity care, newborn 
care, habilitative services, and pediatric vision and dental services--
and potentially others such as contraceptive services, tobacco 
cessation and cancer screening.\8\
---------------------------------------------------------------------------
    \8\ Federal law prohibits individual market coverage that fails to 
cover specified essential health benefits (42 U.S.C. Sec. Sec. 300gg-6 
and 300gg-13), but the Idaho bulletin ( 4) permits plans that do not 
cover a number of the essential health benefits specified under Federal 
law: maternity care; newborn care; pediatric vision and dental care; 
habilitative services; and the full set of preventive services, such as 
contraceptive services, recommended cancer screening, and gestational 
diabetes screening.

Idaho's action--if it is permitted to stand--would seriously injure 
Idaho patients and consumers and significantly destabilize Idaho's 
entire health insurance market. Individuals and families who purchase 
these plans may not have insurance coverage for essential health 
services and would likely pay more out of pocket for the services that 
are covered--while older Americans and individuals with pre-existing 
conditions, because of premium surcharges, would likely pay more for 
less coverage. Further, older Americans could be charged up to five 
times the premiums for younger Americans--much more than the three-to-
one limit in federal law. People with pre-existing conditions could be 
charged up to 50 percent on top of what they otherwise would pay. And a 
person who is both older and has a pre-existing condition could be 
charged premiums up to 15 times more than a young, healthy American.\9\
---------------------------------------------------------------------------
    \9\ Tim Jost, ``Idaho's Proposal for State-Based Plans Violates the 
Affordable Care Act,'' The Commonwealth Fund, February 8, 2018, 
available at http://www.commonwealthfund.org/publications/blog/2018/
feb/idaho-state-based-plan.

Health-care providers that care for patients with these substandard 
plans may find the plans won't cover the bills, resulting in medical 
debt for patients or uncompensated care for providers. While the 
Bulletin would require issuers who offer skinny plans to provide a 
disclosure ``on the face of the policy that: The Policy is not fully 
compliant with federal health insurance requirements,''\10\ we are 
concerned that this disclosure is insufficient education to consumers 
to warn them of the limitations of the plan's coverage.
---------------------------------------------------------------------------
    \10\ Idaho Bulletin at  8.

The cap on insurers' payments and increased out-of-pocket limits for 
families could impose serious financial burdens on Idaho families. For 
instance, a person who has an accident and requires an expensive 
medication after being hospitalized may pay twice the federal limit on 
out-of-pocket spending of $7,350: once for medical care and a second 
---------------------------------------------------------------------------
time for the prescriptions.

Individuals and families who continue to purchase plans that comply 
with Federal law will likely pay more for it, because healthier 
individuals are more likely to be siphoned off, which will unbalance 
the risk pool for lawful plans.\11\ Insurers that do not offer these 
plans will incur losses as their risk pools are left with sicker, 
costlier patients.
---------------------------------------------------------------------------
    \11\ Policy experts surmise that the skimpy plans will be 
attractive to younger and healthier consumers, while older and sicker 
individuals will gravitate to ACA-compliant plans ``rendering coverage 
unaffordable for many Idahoans who don't qualify for the ACA's premium 
tax subsidies and aren't young or healthy enough to afford the State-
based plans.'' This will result in higher Federal subsidies needed to 
pay for the more expensive plans offered on the exchanges. See Sabrina 
Corlette, ``Idaho Goes Rogue: State Authorizes Sale of Health Plans 
That Violate the Affordable Care Act,'' Georgetown University Health 
Policy Institute Center for Children and Families, February 1, 2018, 
available at https://ccf.georgetown.edu/2018/02/01/idaho-goes-rogue-
state-authorizes-sale-of-health-plans-that-violate-the-affordable-care-
act/.

The Federal Government must uphold the requirements of Federal law that 
protect patients, their families, and the health system against these 
consequences. On behalf of our patients, and all Americans, we urge you 
to make clear that Idaho cannot authorize the issuance of health 
insurance coverage that violates federal law, and that any insurer that 
---------------------------------------------------------------------------
issues such plans risks enforcement action and serious penalties.

Sincerely,

American Cancer Society Cancer Action Network
American Diabetes Association
American Heart Association
American Liver Foundation
American Lung Association
Cystic Fibrosis Foundation
Epilepsy Foundation
Hemophilia Federation of America
Leukemia and Lymphoma Society
Lutheran Services in America
March of Dimes
Mended Little Hearts
Muscular Dystrophy Association
National MS Society
National Organization for Rare Disorders

                                 ______
                                 
               Excerpt From the Hearing to Consider the 
                 Graham-Cassidy-Heller-Johnson Proposal

                           September 25, 2017

    Senator Wyden. Mr. Chairman, one of our past great chairmen, Pat 
Moynihan, said everybody is entitled to his own opinion, but not his 
own facts. So let us hear from the American Cancer Society with respect 
to the real facts. They have a lot of members who understand the hurt 
that comes from being discriminated against for having a pre-existing 
condition. Mr. Woodruff, what do you think with respect to this bill 
and what it is going to do to people with a cancer fight on their 
hands?

    Mr. Woodruff. Well, it does not protect them, Senator. It basically 
makes the patient protections that were enacted into law in the 
Affordable Care Act discretionary on the part of each State. And each 
State can decide to keep those patient protections or not. But what is 
important about what the Act achieved is, it created a definition, a 
national standard for what is adequate insurance and what is 
affordable. And so with the essential health benefits, we actually have 
an assurance that when you buy insurance, it is going to cover the 
services that you need when you are sick, whether you have cancer or 
any other disease. The essential health benefits are there to protect 
you.

    Senator Wyden. Thank you.

    Mr. Woodruff. Sure.

    Senator Wyden. And I want the American people to understand the 
consequence of that statement. The Cancer Society knows something about 
what it means for patients to get clobbered by an extraordinary 
illness, and what they have said is, this opens up the door to charging 
those people more.

                                 ______
                                 

                             Communication

                              ----------                              


                        Center for Fiscal Equity

                    Statement of Michael G. Bindner

Chairman Hatch and Ranking Member Wyden, thank you for the opportunity 
to submit these comments for the record to the Committee on Finance on 
the HHS FY 2019 Budget Request.

Most of our proposals are about tax and entitlement policy and the 
process of estimating discretionary spending, rather than specific 
recommendations for departmental budgets. We are wondering, however, 
why this hearing, which mainly presents discretionary budget request 
data for the subject fiscal year, is still being held when on Friday 
last an Omnibus Appropriation for the period in question was passed and 
signed into law. For the record, we fully support the increases to the 
NIH budget, which was horribly underfunded of late. Regardless, our 
comments still apply so we will preface them with our comprehensive 
four-part approach, which will provide context.

      A Value-Added Tax (VAT) to fund domestic military spending and 
domestic discretionary spending with a rate between 10% and 13%, which 
makes sure very American pays something.
      Personal income surtaxes on joint and widowed filers with net 
annual incomes of $100,000 and single filers earning $50,000 per year 
to fund net interest payments, debt retirement, and overseas and 
strategic military spending and other international spending, with 
graduated rates between 5% and 25%.
      Employee contributions to Old-Age and Survivors Insurance (OASI) 
with a lower income cap, which allows for lower payment levels to 
wealthier retirees without making bend points more progressive.
      A VAT-like Net Business Receipts Tax (NBRT), which is 
essentially a subtraction VAT with additional tax expenditures for 
family support , health care and the private delivery of governmental 
services, to fund entitlement spending and replace income tax filing 
for most people (including people who file without paying), the 
corporate income tax, business tax filing through individual income 
taxes and the employer contribution to OASI, all payroll taxes for 
hospital insurance, disability insurance, unemployment insurance and 
survivors under age 60.

Discretionary activities of the Department of Health and Human Services 
would be funded by the VAT. While some of our VAT proposals call for 
regional breakdowns of taxing and spending, they do not for this 
department. While some activities, such as the Centers for Disease 
Control, exist outside the Washington, DC metro area, even these are 
site specific rather than spread out on a nation-wide basis to serve 
the public at large. While some government activities benefit from 
national and regional distribution, health research will not.

The one reform that might eventually be considered in this area is to 
more explicitly link government-funded research with ownership of the 
results, so that the Department might fund some of their operations 
with license agreements for some of the resulting research, enabling an 
expanded research agenda without demanding a higher budget allocation.

Of course, regionalization is possible if the Uniformed Public Health 
Service is put into the role of seeing more patients, particularly 
elderly patients and lower-income patients who are less than well 
served by cost-containment strategies limiting doctor fees. Medicaid is 
notoriously bad because so few doctors accept these patients due to the 
lower compensation levels, although we are encouraged the health care 
reform is attempting to reduce that trend. Medicare will head down that 
road shortly if something is not done about the Doc Fix. It may become 
inevitable that we expand the UPHS in order to treat patients who may 
no longer be able to find any other medical care. If that were to 
happen, such care could be organized regionally and funded with 
regionally based taxes, such as a VAT.

The other possible area of cost savings has to do with care, now 
provided for free, on the NIH campus. While patients without insurance 
should be able to continue to receive free care, patients with 
insurance likely could be required to make some type of payment for 
care and hospitalization, thus allowing an expansion of care, greater 
assistance to patients who still face financial hardship in association 
with their illnesses and a restoration of some care that has been 
discontinued due to budget cuts to NIH. This budget contains even more 
cuts. These should not be allowed. Rather, previous cuts must be 
restored.

The bulk of our comments have to do with health and retirement 
security.

One of the most oft-cited reforms for dealing with the long-term 
deficit in Social Security is increasing the income cap to cover more 
income while increasing bend points in the calculation of benefits, the 
taxability of Social Security benefits, or even means-testing all 
benefits, in order to actually increase revenue rather than simply 
making the program more generous to higher-income earners. Lowering the 
income cap on employee contributions, while eliminating it from 
employer contributions and crediting the employer contribution equally 
removes the need for any kind of bend points at all, while the 
increased floor for filing the income surtax effectively removes this 
income from taxation. Means testing all payments is not advisable given 
the movement of retirement income to defined contribution programs, 
which may collapse with the stock market--making some basic benefit 
essential to everyone.

Moving the majority of Old-Age and Survivors Tax collection to a 
consumption tax, such as the NBRT, effectively expands the tax base to 
collect both wage and non-wage income while removing the cap from that 
income. This allows for a lower tax rate than would otherwise be 
possible while also increasing the basic benefit so that Medicare Part 
B and Part D premiums may also be increased without decreasing the 
income to beneficiaries. Increasing these premiums essentially solves 
their long term financial problems while allowing repeal of the Doc 
Fix.

If personal accounts are added to the system, a higher rate could be 
collected, however recent economic history shows that such investments 
are better made in insured employer voting stock rather than in 
unaccountable index funds, which give the Wall Street Quants too much 
power over the economy while further insulating ownership from 
management. Too much separation gives CEOs a free hand to divert income 
from shareholders to their own compensation through cronyism in 
compensation committees, as well as giving them an incentive to cut 
labor costs more than the economy can sustain for consumption in order 
to realize even greater bonuses.

Employee-ownership ends the incentive to enact job-killing tax cuts on 
dividends and capital gains, which leads to an unsustainable demand for 
credit and money supply growth and eventually to economic collapse 
similar to the one most recently experienced.

Congress just adopted a Chained CPI, but no additional fund has been 
proposed for poor seniors or the disabled, which means there will be 
suffering. This should not be allowed without some readjustment of base 
benefit levels, possibly by increasing the employer contribution and 
grandfathering in all retirees. This is easily done using our proposed 
NBRT, which replaces the Employer Contribution to OASI and all of DI 
and should be credited equally to all workers rather than being a 
function of income.

The NBRT base is similar to a Value-Added Tax (VAT), but not identical. 
Unlike a VAT, an NBRT would not be visible on receipts and should not 
be zero rated at the border--nor should it be applied to imports. While 
both collect from consumers, the unit of analysis for the NBRT should 
be the business rather than the transaction. As such, its application 
should be universal--covering both public companies who currently file 
business income taxes and private companies who currently file their 
business expenses on individual returns.

A key provision of our proposal is consolidation of existing child and 
household benefits, including the Mortgage Interest and Property Tax 
Deductions, into a single refundable Child Tax Credit of at least $500 
per month, per child, payable with wages and credited against the NBRT 
rather than individual taxes. Ending benefits for families through the 
welfare system could easily boost the credit to $1,000 per month for 
every family, although the difference would also be made up by lowering 
gross and net incomes in transition, even for the childless.

Assistance at this level, especially if matched by state governments 
may very well trigger another baby boom, especially since adding 
children will add the additional income now added by buying a bigger 
house. Such a baby boom is the only real long-term solution to the 
demographic problems facing Social Security, Medicare and Medicaid, 
which are more demographic than fiscal. Fixing that problem in the 
right way adds value to tax reform. Adopting this should be scored as a 
pro-life vote, voting no should be a down check to any pro-life voting 
record.

The NBRT should fund services to families, including education at all 
levels, mental health care, disability benefits, Temporary Aid to Needy 
Families, Supplemental Nutrition Assistance, Medicare and Medicaid. 
Such a shift would radically reduce the budget needs of HHS, while 
improving services to vulnerable populations, although some of these 
benefits could be transferred to the Child Tax Credit.

The NBRT could also be used to shift governmental spending from public 
agencies to private providers without any involvement by the 
government--especially if the several states adopted an identical tax 
structure. Either employers as donors or workers as recipients could 
designate that revenues that would otherwise be collected for public 
schools would instead fund the public or private school of their 
choice. Private mental health providers could be preferred on the same 
basis over public mental health institutions. This is a feature that is 
impossible with the FairTax or a VAT alone.

To extract cost savings under the NBRT, allow companies to offer 
services privately to both employees and retirees in exchange for a 
substantial tax benefit, provided that services are at least as 
generous as the current programs. Employers who fund catastrophic care 
would get an even higher benefit, with the proviso that any care so 
provided be superior to the care available through Medicaid. Making 
employers responsible for most costs and for all cost savings allows 
them to use some market power to get lower rates, but not so much that 
the free market is destroyed. Increasing Part B and Part D premiums 
also makes it more likely that an employer-based system will be 
supported by retirees.

Enacting the NBRT is probably the most promising way to decrease health 
care costs from their current upward spiral--as employers who would be 
financially responsible for this care through taxes would have a real 
incentive to limit spending in a way that individual taxpayers simply 
do not have the means or incentive to exercise. While not all employers 
would participate, those who do would dramatically alter the market. In 
addition, a kind of beneficiary exchange could be established so that 
participating employers might trade credits for the funding of former 
employees who retired elsewhere, so that no one must pay unduly for the 
medical costs of workers who spent the majority of their careers in the 
service of other employers. Conceivably, NBRT offsets could exceed 
revenue. In this case, employers would receive a VAT credit.

The Administration believes that the Affordable Care Act is failing. It 
was not, but it will soon with the end of mandates. Rates will soon 
start going up as incentives for the uninsured are not adequate in the 
light of pre-existing condition reform to make them less risk averse 
than investors in the private insurance market, the whole house of 
cards may collapse--leading to either single payer or the enactment of 
a subsidized public option (which, given the nature of capitalism, will 
evolve into single payer). While no one knows how the uninsured will 
react over time, the investment markets will likely go south at the 
first sign of trouble.

We suggest to the Secretary that he have an option ready when this 
occurs. Enactment of a tax like the NBRT will likely be necessary in 
the unlikely event the ACA collapses. It could also be used to offset 
non-wage income tax cuts proposed by the House, rather than cutting 
coverage for older, poorer and sicker Americans. Single-payer is 
inevitable unless the President is simply blowing smoke about the ACA 
failing.

Thank you for the opportunity to address the committee. We are, of 
course, available for direct testimony or to answer questions by 
members and staff.

                                   [all]