[Senate Hearing 113-613]
[From the U.S. Government Publishing Office]
S. Hrg. 113-613
PRESIDENT'S FISCAL YEAR 2015
HEALTH CARE PROPOSALS
=======================================================================
HEARING
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
APRIL 10, 2014
__________
Printed for the use of the Committee on Finance
______
U.S. GOVERNMENT PUBLISHING OFFICE
93-936PDF WASHINGTON : 2015
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COMMITTEE ON FINANCE
RON WYDEN, Oregon, Chairman
JOHN D. ROCKEFELLER IV, West ORRIN G. HATCH, Utah
Virginia CHUCK GRASSLEY, Iowa
CHARLES E. SCHUMER, New York 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
MARK R. WARNER, Virginia
Joshua Sheinkman, Staff Director
Chris Campbell, Republican Staff Director
(ii)
C O N T E N T S
__________
OPENING STATEMENTS
Page
Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee
on Finance..................................................... 1
Hatch, Hon. Orrin G., a U.S. Senator from Utah................... 3
ADMINISTRATION WITNESS
Sebelius, Hon. Kathleen G., Secretary, Department of Health and
Human Services, Washington, DC................................. 5
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Hatch, Hon. Orrin G.:
Opening statement............................................ 3
Prepared statement........................................... 41
Sebelius, Hon. Kathleen G.:
Testimony.................................................... 5
Prepared statement........................................... 44
Responses to questions from committee members................ 50
Wyden, Hon. Ron:
Opening statement............................................ 1
Prepared statement........................................... 115
(iii)
PRESIDENT'S FISCAL YEAR 2015
HEALTH CARE PROPOSALS
----------
THURSDAY, APRIL 10, 2014
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 10:06
a.m., in room SD-215, Dirksen Senate Office Building, Hon. Ron
Wyden (chairman of the committee) presiding.
Present: Senators Rockefeller, Stabenow, Cantwell, Nelson,
Menendez, Carper, Cardin, Bennet, Casey, Warner, Hatch,
Grassley, Crapo, Roberts, Enzi, Cornyn, Thune, Burr, Isakson,
and Toomey.
Also present: Democratic Staff: Joshua Sheinkman, Staff
Director; Jocelyn Moore, Deputy Staff Director; Elizabeth
Jurinka, Chief Health Advisor; Matt Kazan, Health Policy
Advisor; Michael Evans, General Counsel; and Juan Machado,
Professional Staff Member. Republican Staff: Chris Campbell,
Staff Director; Kimberly Brandt, Chief Healthcare Investigative
Counsel; Jay Khosla, Chief Health Counsel and Policy Director;
and Anna Bonelli, Detailee.
OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM
OREGON, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. The hearing will come to order.
This morning the Finance Committee is here to discuss the
health care proposals in the President's fiscal year 2015
budget. Secretary Sebelius, thank you very much for joining us
this morning.
This discussion will undoubtedly trigger debate about the
Affordable Care Act. Certainly there are going to be reasonable
differences of opinion. What I would like to do is start with a
handful of overlooked facts that are not in dispute about what
has happened since the Affordable Care Act became law.
First, with the passage of the law, health care in America
finally is no longer just for the healthy and the wealthy.
Before the law was enacted, insurance companies could
discriminate against Americans with a preexisting condition.
That meant those who were healthy had nothing to worry about.
Those who are well-off could pay their bills, and everybody
else went to bed worried that they could be wiped out
financially.
Second, the rate of growth in Medicare is slowing. The fact
is that, according to the Department of Health and Human
Services and their data, annual Medicare spending per senior
grew by 1.9 percent over a 2-year period, slower than overall
economic growth and much slower than historic growth.
Over the past 3 decades, per-senior spending grew 2.7
percentage points faster than the economy, so the fact that the
rate of growth in Medicare is slowing has the potential to be
great news for seniors who want lower premiums, and for
taxpayers who want to extend the life of Medicare without
breaking the bank.
Third, there are several important reforms that have been
launched over the past few weeks. For example, building on work
members of this committee have done--thank you, Senator
Grassley, on this point--to open the Medicare database to
Americans, the Obama administration yesterday made public
unparalleled amounts of information that will help our people
make choices about their health care. This is also going to
help fight fraud, promote competition for Medicare services,
and be a useful tool for the private sector. This information
can be used by private employers and others to bring down the
cost of insurance.
Another recent and promising announcement helps provide
patients with life-threatening illnesses with more choices for
their care. For the first time, patients will have access to
hospice care without having to give up the prospect of curative
treatment. This puts patients and families first, and it is
high time.
Fourth, the Congress now has a bipartisan, bicameral plan
for dealing with chronic disease. Thank you, Senator Isakson,
for your work on this. We appreciate the input of Senator
Bennet and Senator Warner. This legislation focuses on
improving care for older people with multiple chronic
conditions. This is the fastest-growing part of the Medicare
population, and those older people deserve better and more
affordable care.
Fifth, there is plenty of debate about which Americans
enrolled in the Affordable Care Act and when, but the
independent data shows that the number of insured Americans is
significantly lower than it has been in years. For example, a
Gallup poll released this week shows that the rate of uninsured
Americans fell to the lowest level since 2008.
Finally, the Congress has made real progress on permanent
repeal of the broken and dysfunctional Medicare physician
payment formula. The reforms agreed to would push Medicare to
be driven by the quality and the value of care. Today's volume-
driven system is not good for seniors, it is not good for their
doctors, and it is not good for Medicare. The President's
budget proposal endorses a bipartisan, bicameral reform
package, and we look forward to working with you, Secretary
Sebelius, to get this done--get it over the finish line--by the
end of this year.
Madam Secretary, in wrapping up, the last time you were
here--Chairman Baucus, of course, chaired that hearing--I
compared the roll-out of the Affordable Care Act to the
expansion of Medicare to provide prescription drugs to
America's seniors during the Bush administration. I focused on
the bipartisanship that took place then, and the need for it to
be repeated. And obviously, the Medicare prescription drug
benefit, like the Affordable Care Act, zeroed in on the key
concerns: expanding coverage and financial assistance to the
needy and increasing marketplace choices.
The reality is that Medicare Part D has been an enormous
success. For millions of seniors, it has been a godsend. It has
cost less, 30 percent less, than the Congressional Budget
Office predicted. We all know it had a pretty bumpy start, and
many of the news stories from those early days of Part D
resemble the kind of news stories that we see with the
Affordable Care Act. The Congress did work in a bipartisan way
across the aisle, regardless of how a member voted on Part D,
and the program was able to get off the ground and become the
success it is today.
Like the Medicare drug benefit, millions of Americans now
have the economic security of health insurance they did not
have just a few years ago. Regardless of politics or feelings
about this law, that is something that is good for the economy
and good for our country.
I am going to turn to Senator Hatch here in just a quick
second. I did want to tell colleagues that we have this vote at
10:30, and it is the intention of Senator Hatch and I to just
keep this going. We will have Senators coming in and out and
just going in the order of appearance back and forth. But I
wanted colleagues to know, given the interest in this subject
and its importance today, we are going to just keep this going.
[The prepared statement of Chairman Wyden appears in the
appendix.]
The Chairman. Senator Hatch, we welcome your comments and
again express our thanks to Secretary Sebelius for being with
us.
Senator Hatch?
OPENING STATEMENT OF HON. ORRIN G. HATCH,
A U.S. SENATOR FROM UTAH
Senator Hatch. Well, thank you, Mr. Chairman. I appreciate
your wanting to keep this going, both as a courtesy to the
Secretary, as well as members. I am grateful that you scheduled
today's hearing. Secretary Sebelius, thank you for taking the
time to be here today.
Now, this discussion is long overdue. Mr. Chairman, the
President's budget was released on March 4th, 37 days ago.
Typically, these hearings are scheduled within days after
release of the budget. Indeed, it is generally considered to be
routine to have budget hearings immediately. Yet, here we are
now, more than a month later, finally sitting down to discuss
the HHS provisions of the President's budget. Now, that type of
lag time is disappointing, to say the least.
That said, the delay in holding this hearing is not the
only delay that I am concerned about today. Madam Secretary,
each time you have appeared before this committee, I have asked
you to be prompt when responding to our communications,
especially those dealing with the implementation of the
Affordable Care Act. Yet numerous inquiries submitted to HHS by
members of Congress have been ignored entirely, and we have yet
to receive the answers to the questions submitted for the
record after your last appearance before this committee on
November 6th of last year.
This committee takes its oversight responsibilities very
seriously, and I hope that in the future we can see a more
cooperative and responsive approach to these efforts. Mr.
Chairman, given how HHS has responded to our past attempts to
exercise oversight, I think we may have to schedule another
hearing with the Secretary in the near future. That might be
the only way that our members will get answers to the questions
they submit after this hearing.
Now, Secretary Sebelius, process matters aside, I have some
specific policy concerns that I hope you will be able to
address today. For example, according to the President's
proposed budget, combined spending for Medicare and Medicaid is
expected to exceed $11 trillion over the next decade. To me,
that is simply an astronomical number.
We are only talking about two separate Federal programs.
Entitlement spending has become a generational challenge that
demands all of our attention; however, the administration
appears all too willing to continue to ignore these problems.
The proposed budget would save a meager $414 billion over
the next decade, or roughly 3.7 percent of total Medicare and
Medicaid spending, and it would do so primarily through
provider cuts and government price controls. Anyone who has
spent more than 5 minutes looking at our budget has concluded
that these programs are in serious trouble and that they are,
along with Social Security, the main drivers of our debts and
our deficits.
The nonpartisan Congressional Budget Office, for example,
has referred to our health care entitlements as our
``fundamental fiscal challenge.'' I hope that during today's
hearing we can get some answers about entitlement reform,
because it is, quite frankly, one of the elephants in the room
when we are talking about our Nation's fiscal future.
Another elephant in the room is implementation of
Obamacare. Last week, President Obama took to the Rose Garden
to spike the football and declare his health care law a
``success'' after it was announced that 7.1 million people had
enrolled in the program. So far, the administration has spent
at least $736 million on advertising for Obamacare, and some
say more than that.
The Healthcare.gov website has cost more than $317 million.
The call centers have cost at least another $300 million. So,
using the most conservative estimates, the total cost of the
website and the advertising have, to date, amounted to just
over $1.3 billion.
That is a lot of taxpayer money, especially when you look
at all the outstanding questions, like how many of these people
will actually pay premiums? How many of them already had health
insurance before the law went into effect? So far, it appears
that the administration is hoping that the public will ignore
these important questions and only focus on the number of
claimed enrollees.
In fact, Madam Secretary, in your testimony before the
House Energy and Commerce Committee, in response to some of
these very questions, you stated that members of Congress would
have to go ask the insurance companies, because you and your
department were not keeping track of these figures, or at least
that is how I interpreted it.
Now, it is my understanding that the 7.1 million enrollees
touted by the administration and much of the press is merely a
count of those who have selected an insurance plan through the
exchanges, not of those who have actually purchased and paid
for insurance. Now, that seems like a pretty odd number to
celebrate.
Indeed, it is like Amazon.com taking stock of how many
people have placed items in their shopping carts and then
counting them as sales. In other words, it is a false metric.
It is certainly not one that can justify the President's
attempt to declare that the debate over his health care law is
officially over.
There are many other questions that need answered with
regard to Obamacare. For example, so far the administration has
made more than 20 unilateral changes to the law. What is the
cumulative cost of all those changes? While we are on the
subject, how many more delays and changes are yet to come?
As you can see, there are a number of important matters to
discuss today, both with regard to the President's budget and
the implementation of Obamacare. I just hope we can have a
serious discussion about these critical issues.
Madam Secretary, I do know that you have one of the most
difficult jobs in Washington. I have worked with HHS all these
years, and it is not an easy job. I appreciate you being here,
and I know that you have been back and forth and sometimes not
treated as well as maybe you should be. But we are grateful to
have you here.
Mr. Chairman, I am grateful that you are holding this
hearing.
The Chairman. Thank you, Senator Hatch.
[The prepared statement of Senator Hatch appears in the
appendix.]
The Chairman. Secretary Sebelius, we want to welcome you.
It is pretty evident that the topic of health care reform is
not exactly for the faint-of-heart. We very much appreciate
your working with us.
I particularly want to note this morning your focus on the
reform of the delivery system of American health care. You have
been working on this since the days when you were a Governor,
and we are very appreciative of it because it is important
today. It is going to be even more important tomorrow as we
repeal and replace the flawed SGR system for reimbursing
physicians, and then particularly zero in on chronic care.
So we appreciate your efforts, and why don't you proceed?
We will make your prepared remarks a part of the hearing record
in their entirety, and you can tell you are going to get a fair
amount of questions. Thank you.
STATEMENT OF HON. KATHLEEN G. SEBELIUS, SECRETARY, DEPARTMENT
OF HEALTH AND HUMAN SERVICES, WASHINGTON, DC
Secretary Sebelius. Well, thank you so much, Chairman
Wyden, Ranking Member Hatch, and members of the committee. I
appreciate the opportunity to join you here today. I want to
start by thanking members of the committee for your commitment
to improving Medicare Advantage. Today, over half of all
enrollees receive benefits from 4- or 5-star rated Medicare
Advantage plans, thanks to our collaborative work together.
Our department's mission is to help our fellow Americans
secure the opportunity to live happier, healthier lives and
reach their fullest potential. Although the hard work of our
employees is oftentimes unheralded, their efforts benefit
millions of Americans.
Our Nation's seniors, for example, benefit from the hard
work of employees at CMS and the Administration on Community
Living, children benefit from the ACF-administered initiatives
like Head Start, and all of us benefit from SAMHSA's work on
mental health and substance abuse treatment, and from the
efforts of employees across all our departments, operations,
and staff divisions.
Another area that is benefitting all Americans is the
implementation of the Affordable Care Act. Even prior to open
enrollment in the marketplace, millions of Americans and their
families obtained new rights and new consumer protections. Now,
during these past 6 months, millions have obtained the security
and peace of mind of affordable health coverage. Many of the
people I have met have told me that they have been able to get
coverage for the first time in years, and some have insurance
for the first time in their entire lives.
Last week, we announced that 7.1 million Americans have
signed up for private insurance through the marketplace. As of
this week, 400,000 additional Americans have signed up, and we
expect that number to continue to grow. Between October and the
end of February, an additional 3 million Americans enrolled in
Medicaid coverage. A total of 11.7 million people were
determined eligible for Medicaid and CHIP. Now, we know that if
more States move forward on Medicaid expansion, more uninsured
Americans will be able to get covered.
Affordable health coverage, accessible health care, mental
health, substance abuse treatment, food safety, early childhood
care, and health security--all of these issues connect to
President Obama's goal for expanding opportunity, strengthening
our security, and growing our economy. The budget before you
would move these priorities forward.
These investments create jobs and strengthen our primary
care workforce by expanding the National Health Service Corps.
We add to our mental health workforce by increasing the number
of licensed behavioral health professionals, peer
professionals, and mental health and addiction specialists. We
protect the security of our seniors by investing in elder
justice, and we invest in prevention efforts to protect the
health of patients in nursing homes, primary care practices,
and other health care settings.
The proposed expenditures also advance new approaches to
some of our Nation's most vulnerable children, those in foster
care. We are proposing investing in a new $750-million CMS/ACF
partnership to encourage the use of evidence-based screening,
assessment, and treatment of trauma and mental health
disorders, all with the goal of reducing the over-prescription
of psychotropic medications. I want to particularly thank
Senator Grassley and other members of this committee for
expressing interest in the administration's focus on this area,
and I look forward to working with the committee to address
this need.
The budget also strengthens and expands important birth-to-
kindergarten initiatives with strategic investments in
priorities like the Child Care and Development Fund, home
visitation, and Early Head Start partnerships.
President Obama's total child care request will enable a
total of 1.4 million children to receive assistance. If you
move forward with the President's Opportunity, Growth, and
Security Initiative, we will be able to provide an additional
100,000 children with access to high-quality early education
through the expansion of Early Head Start partnerships.
Now, we know that these investments work. They pay
dividends throughout a child's education and development, and
they are proven to return an estimated $7 for every $1 we
invest. I would say, Mr. Chairman, there are a lot of traders
on Wall Street who would be envious of that kind of return.
In addition to a profound and lasting impact on children,
these investments would also save lives, because most of the
Early Learning Fund for partnership with States is paid for by
increasing the tobacco tax, which we know is one of the most
effective ways to prevent smoking, especially among young
smokers. Today we will have 3,200 American children trying
their first cigarette each and every day, and each day 2,100 of
those children and young adults become daily smokers.
Now, it is no surprise that these early childhood
investments have broad bipartisan support from Governors, CEOs,
leaders in military and law enforcement, parents, and health
care providers. Our global competitors are financing similar
opportunities for their children.
Finally, this budget not only invests, but also saves. We
will contribute a net $369 billion toward deficit reduction
over the next decade. When you take all of these factors into
account, it is clear that the budget before you is a security
budget, an economic growth budget, and an opportunity budget
which puts us on a pathway to a healthier and more prosperous
Nation.
Thank you again, Mr. Chairman, for having me here today. I
look forward to your questions.
The Chairman. Thank you, Madam Secretary.
[The prepared statement of Secretary Sebelius appears in
the appendix.]
The Chairman. Let us start with Medicare because of its
special importance. Madam Secretary, as you know, for millions
of Americans, Medicare is a guarantee. It is going to be there.
Americans do not have to worry about seniors and their
families. Of course, our challenge is to protect the Medicare
guarantee while dealing with what has historically been an
escalation in costs. We have the demographics--more older
people. We have the technology.
I am particularly interested in starting today by having
you analyze the role of growth in Medicare spending, and
particularly its slow-down. The Congressional Budget Office has
said that Medicare spending is at a historic low and is
projected to stay there. Just this week, we got additional
news. The independent actuary for the Centers for Medicare and
Medicaid Services said the same thing. This was part of the
release on the Medicare Advantage announcement.
So what this suggests is the Medicare guarantee is being
protected, costs are being held down, and the needs of seniors
are not being compromised. So this certainly strikes me as
encouraging for seniors who want lower premiums, and for future
generations who want Medicare to be around when they need it.
So I think I would like you to really unpack why you think
we are seeing this slow-down, and then, can it be anticipated
to continue in the days ahead? Why don't we start with that?
Secretary Sebelius. Mr. Chairman, I think you are
accurately reporting what has happened. In the 9 years between
2001 and 2009, the spending on average for Medicare enrollees
was growing at about 6 percent a year. That was above the
national GDP, and that had been traditional. What has happened
in the subsequent 4 years is pretty dramatic. Between 2010 and
2012, expenditures grew per capita at about 1.6 percent,
significantly below that 6 percent average. In 2012, it grew at
0.7 percent.
What the actuaries said in the recent statement regarding
Medicare Advantage pricing--and this will be confirmed when the
trustees meet later this spring--is that they are now adjusting
the trend line once again. They think the growth trend will be
a minus 3.4 percent. This is the lowest growth ever seen in the
history of the program in 50 years.
At the same time, I think that seniors are enjoying
additional benefits. They now have preventive services benefits
with no out-of-pocket costs. They have more choices with
Medicare Advantage. They have had a reduction in prescription
drug costs, including closing of the donut hole, which is
happening over time, averaging about $929 of senior savings for
those in the donut hole.
We have done unprecedented work in waste, fraud, and abuse.
We have increased competitive bidding, and we are improving
quality and value. So I would say, all in all, it is very, very
good news for seniors.
The Chairman. Let us go then to another important issue for
seniors, and that is Medicare Advantage. During the course of
the Affordable Care Act debate, we heard repeatedly that the
legislation would be the ruin of Medicare Advantage as the
country knows it. The evidence suggests just the opposite.
Since the Affordable Care Act was signed into law, Medicare
Advantage premiums have fallen by almost 10 percent and
enrollment has increased by 38 percent to an all-time high of
over 15 million seniors, so we are almost now nationally at
about 30 percent of seniors in an MA plan.
This is particularly important, as you know, to Oregon,
because we have some of the best MA in the country, and we were
pleased now that finally we are rewarding those high-quality
plans, the 4-star plans, as well. Tell us what you think is
ahead in terms of Medicare Advantage, and particularly how we
might build on this progress.
Secretary Sebelius. Well, again, Mr. Chairman, I think that
it was definitely predicted throughout the debate in 2009 and
2010 that any proposal to bring Medicare Advantage payment
rates in line with fee-for-service would destroy the program,
would make seniors give up their plans, and would harm Medicare
Advantage.
Medicare Advantage, just by reminder, was put in place as a
choice for seniors, and initially the private plans were going
to be paid 95 percent of fee-for-service cost, because the
promise was that Medicare Advantage would deliver better care
at lower cost, and the competition would be good, and seniors
could have a choice. Over time, by 2009, Medicare Advantage
plans were being paid 114 percent of fee-for-service, so they
went from 95 percent to a much higher rate. According to a
number of independent reviews of quality, the quality was not
improved. It was, on average, delivering similar benefits.
What has happened with the framework put in place, again,
within the Affordable Care Act, is those costs for Medicare
Advantage have gradually come down, so what was at 114 percent
is more like 106 percent now. Quality has improved. More
seniors have chosen the 4- and 5-star quality plans, and more
plans are migrating in that direction. Rates have come down.
Seniors are paying about 10 percent less than they did 4 years
ago.
The access is, throughout the country, 99.1 percent of
seniors have many choices for Medicare Advantage plans. Ninety
percent of them have access to a zero-percent Medicare
Advantage plan. So what we have seen is more competition, more
plans, lower costs.
Frankly, all seniors benefit. Thirty percent choose
Medicare Advantage plans. The 70 percent who do not choose
Medicare Advantage plans were subsidizing those higher costs
through their premiums. That has, again, decreased, and the
seniors who choose Medicare Advantage plans are no longer
paying $1,280 more than their colleagues who were choosing
traditional Medicare.
The Chairman. Thank you.
Senator Hatch will go next. Senator Rockefeller will be
here by 10:40, colleagues, and we are just going to keep this
going through the vote so that everybody is going to get a
chance to ask their questions.
Senator Hatch?
Senator Hatch. Well, Madam Secretary, today the
administration has made at least 20 unilateral changes to
Obamacare without consulting Congress. The most recent was the
announcement on March 31st, the enrollment deadline, that the
enrollment deadline would be delayed for those who merely
claimed to have technical difficulties signing up.
On March 12th, you testified before the House Ways and
Means Committee and were asked by Representative Kevin Brady,
``Are you going to delay the open enrollment beyond March
31st?'' Your response was, ``No, sir.'' Barely 2 weeks later on
March 26th, you announced that the March 31st deadline would be
indefinitely delayed. So, clearly there is some disconnect on
this point, so let me ask you two questions.
One, will there be any more unilateral changes or delays to
any part of Obamacare? ``Yes,'' ``no,'' ``I do not know'' are
all acceptable answers here, but I need a very clear response
from you on this one. Two, if you do expect more changes or
delays to Obamacare, what exactly might they be, or will they
be?
Secretary Sebelius. Well, Senator, I need to start my
answer with clarifying what you have already stated. We did not
extend the open enrollment period. What we said was that people
who were in the system, who were trying to get enrolled by the
31st, could finish the process.
I believe in customer-friendly operations. What we had was
2 million visits over the weekend and 380,000 calls to the call
center, and then on Monday the 31st we had 4.8 million visits
to the website and 2 million calls. A number of people were
given the opportunity to return to the site, giving their e-
mail and their call number, and they are doing that. The site
has said very clearly from midnight on the 31st that open
enrollment is closed.
We also have some paper applications which are being
processed. States are processing applications. But we did not
extend the open enrollment period beyond the 31st. We are
giving people a chance to finish their purchase.
We do not anticipate at this point, Senator, additional
delays. Most of the policy issues are out. What we have tried
to do over the course of the 4 years of implementation is do a
gradual transition into a new marketplace strategy and, as we
issue rules and regulations, make them work for people as much
as can possibly be done. We will continue to do that, but I
think the basic policies are now in place, and we anticipate
moving forward.
Senator Hatch. All right. As I mentioned in my opening
statement, a conservative estimate of how much the
administration has spent to date on efforts relating to
enrollment total over $1.3 billion. These amounts are in
addition to the millions spent by Enroll America and others
that you yourself helped to raise.
Now, I see that, in your fiscal year 2015 budget, you have
requested an additional $774 million for consumer information
and outreach. By my calculation, that adds up to over $2
billion that we spent in a little over 2 years. As of now, HHS
has reported that 7.1 million people have enrolled in private
coverage.
Now, these are enormous sums of money to be paying for such
a small fraction of the population, especially considering that
preliminary estimates show that well over half of these
enrollees already had health insurance before the law went into
effect and that most of them will also obtain advanced premium
tax credits, which further drives up the cost to taxpayers.
Now, given that you propose to spend more than $2 billion
in outreach and enrollment, let me ask two questions of you
today. One, can you tell us today how many of the 7.1 million
enrollees the President has touted already had health insurance
before the Affordable Care Act went into effect and how many
were forced to give up their insurance due to mandates under
the law? ``Yes'' or ``no''?
Secretary Sebelius. I do not know what I am saying ``yes''
or ``no'' to. You asked a question about how----
Senator Hatch. Well, how many of those 7.1 million
enrollees that the President has mentioned have had health
insurance before the Affordable Care Act went into effect? How
many were forced to give up their insurance due to mandates
under the law? Were there any forced to give up----
Secretary Sebelius. Senator, there were a lot of plans that
were adjusted to come into compliance with the law, and there
were certainly people who were transitioned into new plans and
given options of new plans. I do not have data to give you
right now in terms of who exactly was previously uninsured. We
are collecting that.
The recent independent Rand study that just came out this
week says that, before even the final surge at the end of
March, by mid-March, there were an additional 9.3 million
people with health insurance thanks to the Affordable Care Act.
I can tell you that those numbers are going to be much more
significant by the time we tally the newcomers. But the
insurance companies are presenting us with that data, and we
will continue to collect that and give it to you as fast as we
get it.
Senator Hatch. All right. If you do not have these numbers
today, I might understand that. I just really need to know when
you are going to make them available. Do you think----
Secretary Sebelius. Well, again, Senator, over 2 million
people have signed up since the 15th of March. We are getting
that information from insurers. We do not have individual names
and numbers of who exactly was insured prior and who was not,
so we will be feeding you information as soon as we get it from
the companies.
Senator Hatch. All right. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Hatch.
Senator Stabenow will talk, and I am going to run and vote
and hopefully be back. Senator Rockefeller is on his way, so,
colleagues, we will just go back and forth. There are 5 minutes
left in this vote.
Senator Stabenow?
Senator Stabenow. Thank you very much, Mr. Chairman.
Welcome, Madam Secretary.
The ongoing debate on health care reminds me very much of
the old saying, it is a lot easier to tear down a house than to
build one. I remember under Medicare Part D, I voted ``no''
because I did not support the structure. I did not shut down
the government afterwards because I did not get the approach on
Medicare Part D that I wanted.
We are at a point now where we need to be talking about how
we move forward and strengthen and make better something that,
as you have indicated, 7.5 million people are now using to get
their health insurance, many for the first time, for themselves
and their families. It does not count the 3 million young
people on their parents' insurance under age 26, and it does
not count the millions under Medicaid.
I have a question, but first just a comment in comparing
differences in values between the President's budget, the
Affordable Care Act, and the Ryan budget that the House will be
voting on.
I think it is stark when we look at, under Medicare alone,
in addition to costs going down, as you have said, we have
seniors with about $1,200 more back in their pocket because we
closed the gap in Medicare Part D. That was one of the things
we needed to fix after we passed that, and we did fix it.
Chairman Ryan's budget, the Republican budget in the House,
would block-grant Medicare, turn it into a voucher, and tell
folks to go back and figure it out with private insurance
companies. A big difference.
The Affordable Care Act--we are looking, in Michigan alone,
at upwards of 400,000 people who have never had insurance
before, a lot of those working minimum-wage jobs, 40-hours a
week,
minimum-wage jobs, still in poverty, getting care and being
able to get health insurance.
In the House budget, they will block-grant Medicaid and cut
it by $732 billion over 10 years, a big difference in values
and views. If I understand right, the majority of those on
Medicaid, in terms of the costs, are seniors in nursing homes,
so this is a huge cut there.
Finally, I would just say that the Affordable Care Act--7.5
million people being able to get health care for themselves and
their children, many for the first time--the Ryan budget
repeals that and basically takes that back to zero and puts the
health insurance companies in charge of whether or not they
drop you for a preexisting condition. So a big difference. I
hope that we are going to really debate how to move forward
rather than move backwards to that system.
I have a couple of questions on two different topics,
actually. I talked to you a little bit before about a real
victory for community mental health that we were able to
achieve with support from the committee on a bipartisan basis
in the Medicare, as we call it, Doc Fix bill.
We now have a demonstration project that will be taking
place, rules that need to be written, and I just want to make
sure that HHS and CMS and SAMHSA, who will be charged with
drafting the regulations, will work with us, Senator Blunt and
I and others who care deeply about moving this forward as
quickly as possible, so that the States can apply for these
demonstration projects and we can strengthen community mental
health care. So I would like to have you comment on that.
Secretary Sebelius. Well, Senator, first of all, I want to
thank you for your leadership in this area. You and I have
worked on this for a while. I think this is a big step forward
to find out how we can structure programs and actually develop
some best practices that could be used then to take it to
scale.
So we look forward to working with you, Senator Blunt, and
others to fashion the rules and regulations, to get the
Requests for Proposals out the door quickly, and to actually
get those best practices from States around the country to
figure out how to make sure that the mental health system,
which is in definite need of assistance, really is grown and
fostered in various regions of the country.
Senator Stabenow. Right. Thank you.
Another area that is critically important, if we want to
talk about cost as well as saving lives and supporting
families, is the area of Alzheimer's. I wonder if you might
speak for a moment about the President's budget. We have had
the Alzheimer's Association in town, and I met with people,
again, as I have in the past, from Michigan.
We all are touched by this issue, and, as we grow old and
have a chance to live longer, it becomes more and more of an
issue. One in five Medicare dollars is spent on someone with
Alzheimer's, and that does not count the caregiver
responsibilities and challenges to the families.
Despite the shocking cost to the health care system, only
.25 percent is spent on research. So I wonder if you would
speak to this and how we might work together to really focus in
on research and caregiving support for those with Alzheimer's.
Secretary Sebelius. Well, Senator, the Alzheimer's Action
Plan, which was put together with a lot of stakeholder input,
has a number of features in it. Certainly, research is at the
heart of it. I think that the NIH proposal for brain mapping
will have a significant impact on Alzheimer's. Trying to
identify exactly what is going on at what stage would be
helpful to try to identify people who may be prone to being
diagnosed with Alzheimer's and whether or not there are any
effective strategies for real recession, much less cure.
I think that there is an increase and a variety of ways in
not only the brain mapping strategy, but NIH is proposing to
spend an additional $63 million to continue to implement the
components of the national plan to address Alzheimer's disease
that was put in place and has a scheduled spending plan up
until 2025.
A total of $2.8 billion is in our budget for 2015 on
Alzheimer's disease, which is an increase. Some of that is for
caregivers and hospice. That is run under the umbrella of the
Administration for Community Living. Some of it is within NIH.
There are other strategies in place. So, we share the concern
that this is a growing issue. As seniors live longer, frankly,
we are going to have significantly more diagnoses along the
way. So I think both the President's budget calls this out, and
certainly NIH has identified this as a key concern moving into
the future.
Senator Stabenow. Thank you very much.
I turn it now to Senator Enzi.
Senator Enzi. Thank you, Madam Chairman.
Secretary Sebelius, I appreciate you being here today. I
see that a new health care workforce program is promoted in
your budget, like the expansion of the National Health Service
Corps, which is $4 billion in new funding, and then the new
targeted support for graduate medical education. They are
included under the purview of the Health Resources and Services
Administration. However, according to recent GAO analyses of
Federal health care workforce programs, there are already over
90 programs in the Federal Government, including more than 50
within HHS, dedicated to improving the health care workforce.
Did the Department assess whether or not the proposals for
new programs would be duplicative of existing efforts before
including them in the budget and, if not, why not? Are there
programs that should be reduced or eliminated as a result of
the proposed expansion of the Health Service Corps or the new
funding for the graduate medical education?
Secretary Sebelius. Well, Senator, we definitely did an
analysis and looked across the Department. Frankly, the bulk of
the workforce training efforts are in the Health Resources
Services Administration, which is why we are proposing that the
additional effort also be designed and promoted by HRSA. HRSA
also is the umbrella agency over the Community Health Centers,
where a lot of the National Health Service Corps members end up
practicing, so it was a logical combination.
What we are doing is, I would say we are not decreasing
funds in some of the earlier programs, so we are certainly
targeting those funds. The focus of a lot of the workforce
goals is focusing on more physicians to work in primary care
and under-staffed specialty areas.
Senator Enzi. Well, I appreciate what they are aimed at
doing. Did you find anything duplicative that you are going to
eliminate that would help us out in this budget situation?
Secretary Sebelius. Well, again, I do not think it is
necessarily duplicative; it is shifting. What we have been
doing for a couple of years, for instance, is changing some of
the research slots, the residency slots, to focus on primary
care, collecting them, if you will, from institutions that were
not doing that and refocusing them.
So it is not that they have been eliminated, because I
think everyone would agree that, with the population that we
have and the health needs that we have, we are going to need
more providers, not fewer providers. So we have not eliminated
anyone, but I would say we are much more strategic about the
way money is being spent.
Senator Enzi. So we will have 92 programs instead of 90.
The administration announced that it was going to begin
open enrollment for the exchanges for the 2015 plan year on
November 15, 2014. Conveniently, that date falls after the
election day this year and is over a month later than the
traditional beginning of open enrollment season for health
insurance plans, including the exchange.
Can you explain why the administration elected to begin the
enrollment so late in 2014, and can you assure the committee
that this decision was based on input from insurers, consumers,
and other stakeholders, and not simply made to provide
political cover for vulnerable members?
Secretary Sebelius. Yes, sir. I think that the date was
very much in collaboration with the insurers, looking at their
calendar. Frankly, you cannot bid on the new plans until you
know who is in their pool. Given the fact that that pool is
currently being tallied, this is a multi-month process where
they will then be able to assess who is in, what their pool
looks like, and be able to compete and offer bids for the
following year.
There is no traditional open enrollment. This will be the
second year. We had a 6-month open enrollment the first time.
We always knew that the second time around and in subsequent
years we would have a shorter open enrollment, so choosing a
portion of that window to move forward is exactly what we have
done.
Senator Enzi. Thank you. Thank you.
A number of my colleagues and I sent a series of letters to
OMB expressing significant concerns with the administration's
treatment of certain self-insured plans under the rules for the
reinsurance program. Specifically, we were concerned that the
administration would exempt certain insurance plans from paying
the reinsurance fee.
Many of them were union-sponsored plans, which would create
the appearance of political favoritism. Sure enough, the
administration has done just that. Can you please explain why
the administration believed it was necessary to exempt those
plans from paying the fees and not others?
Secretary Sebelius. Well, the policy decision was that
plans that are administering their own insurance going forward,
and do not rely on an insurer, were not covered by the
reinsurance fee. There are some union plans that are in that.
There are a whole lot of self-funded employer plans that are
also included, and that was just a policy decision that was
possible under the law. We got a lot of input from stakeholders
along the way and made that call.
Senator Enzi. Thank you. My time has expired.
Senator Rockefeller. Who is up? Is it Cardin? Senator
Roberts.
Senator Roberts. Mr. Chairman, I am going to yield my time
to Mr. Grassley, who has a very important commitment.
Senator Rockefeller. Did he tell you that specifically with
any detail? [Laughter.]
Senator Roberts. Something about ethanol. [Laughter.]
Ethanol and pork producers, I think were the two top
things. But I may be mistaken. Anytime the distinguished
Senator says he has a very important commitment and could I
yield, I would be more than happy to do so.
Senator Grassley. Thank you.
Senator Roberts. And I hope you will recognize me later.
Senator Rockefeller. Yes, I certainly will.
Senator Grassley. Can my 5 minutes start over again, or do
I---- [Laughter.]
Senator Rockefeller. Yes. You have 5 minutes.
Senator Grassley. There are two things I would like to
discuss with you. One is sunshine, and the other one is kind of
an obscure part of Obamacare, but something I have brought up
with you before.
So I welcome you, and I am glad to have you here, because I
wish we could see you more often. Yesterday, your department
began the process of releasing Medicare payment data. This is
something Chairman Wyden has already spoken about, but he and I
have been working on that for years.
No one should be--this is before I get to your question. No
one should be afraid of this data coming out. No one should be
afraid of explaining their payments or defending the existing
payment structure. Certainly we in Congress benefit from asking
tough questions about the data and considering policy changes
as needed. I believe transparency works, and with transparency
you get accountability. I hope people will now accept that and
work to improve the system instead of fighting it. But context
is critical.
So now I want to bring up the Physician Payments Sunshine
Act. That kind of fits in. It is also a form of payment
transparency. I remain concerned that the database collected by
CGI will provide appropriate context. Many providers have
raised concerns with me about journal article reprints being
reportable. I want to know if the database will make clear to
the readers what specifically a provider accepts is reportable.
So I would like to have you tell me that providers can have
confidence that the data made publicly available through the
Sunshine Act will have explicit context providing details about
items accepted and not just dollar amounts.
Secretary Sebelius. Well, Senator, I am not sure I can
answer that specifically. I will definitely check on that. As
you know, we are doing the data collection. We are on track to
have publication this fall. We are doing the data collection--
first aggregate data and then secondly with more granularity.
We believe like you do, that transparency is very important.
But I will double-check on what exactly will be part of the
display when it is out. I agree with you that people should be
able to put it in context.
Senator Grassley. I wonder if, before you answer us, you
could have somebody on your staff talk to my staff----
Secretary Sebelius. Sure.
Senator Grassley [continuing]. So we get some idea where
you are headed, so, if we think you are not headed in the right
direction--I am not saying that you are responsible to us, but
we want to make sure this Sunshine Act works.
Secretary Sebelius. Well, I know your leadership, Senator,
along with Senator Kohl and others, on this Sunshine Act was
critical. We share your concerns. So we would be happy to come
in and do a briefing on exactly what is being collected now and
what the second phase looks like, because the worst of all
worlds is to put data out that is inaccurate or interpreted
inaccurately.
Senator Grassley. Sure. Yes. I do not think it would be
inaccurate.
Secretary Sebelius. Yes.
Senator Grassley. But I think the latter part of what you
said is possible.
Secretary Sebelius. Yes. Right.
Senator Grassley. Now to this next issue. I think I have
discussed it with you before in this context, or maybe written
you a letter or something. I would like to turn to the Anti-
Kickback Statute and its application to qualified health plans
under the Affordable Care Act.
I have three questions that I hope you can give me a short
answer to, and they are kind of hypothetical. Would a hospital
or other third party be allowed to pay insurance premiums for
individuals without payment being considered a kick-back? Well,
let me ask two other hypotheticals. When I say
``hypothetical,'' it seems to me like these are things that
could actually happen.
Would a hospital or other third party be allowed to pay
insurance co-pays and deductibles without the payments being
considered a kick-back? Or a third example: can a drug company
provide direct discounts to a patient for them to use in
purchasing prescriptions without the payment being considered a
kick-back? That is the end of my questions on that subject.
Secretary Sebelius. Senator, I do not want to try to give a
legal answer, because I am not a lawyer, to those three very
specific questions. I can tell you we have made some guidance
available so, for instance, not-for-profit plans, a Ryan White
plan, could help purchase insurance coverage. That has gone on
for years. That would continue to go on.
In terms of the hospital situation, we have weighed in and
said they would not be able to do that, but the kick-back
determination really is a Justice determination. The reason we,
I would tell you, interpreted that the Federal health care
program applicability is not able to be applied to the
qualified health plans is that these are private insurance
plans operating in a private market with customers paying their
premiums, not connected to the trust fund like Medicare
Advantage, not connected to a government program. So it was a
determination that we wanted to make clear, that this was a
private market.
Having said that, we know that it is important that we look
at the entire fraud statute. They are not immune from that in
any way, shape, or form and have in fact asked our Inspector
General and others to look at the False Claims Act and other
applicable statutes so we make sure that we hold them equally
accountable.
Senator Grassley. Mr. Chairman, can I have just 10 seconds
for a summation, not a question?
The Chairman. Sure.
Senator Grassley. I want to say to you, Madam Secretary,
that with the release of the rule regarding qualified health
plans in the anti-kickback statute, it is very unclear to me
what the Federal policy is regarding the anti-fraud provisions
available in statute and whether they would prevent false
claims and kick-backs for qualified health plans. So this is
something that probably I hope I can continue to have a
discussion with you on. Thank you.
Secretary Sebelius. I look forward to that.
The Chairman. Let us do this, colleagues. I think we have
clear sailing on the floor, so what we can do is just get every
Senator who is here their 5 minutes.
Senator Thune is next.
Senator Thune. Thank you, Mr. Chairman.
Madam Secretary, not too long ago HHS finalized a rule--and
I think Senator Enzi touched on this a little bit, but I want
to just get you on the record on this--that will exempt certain
self-
insured, self-administered plans from paying the reinsurance
tax in 2015 and 2016, which, as it turns out, means that there
are going to be a number of union groups that will not have to
pay the tax, which would appear on the surface to be sort of a
political favor.
As you know, that tax is designed to raise $8 billion in
2015 and $5 billion in 2016. There was a question posed of an
HHS official recently in which that person, when asked for
clarification on how the change would affect other plans,
rates, and fees, said it is true that fees will be higher for
plans that do have to pay the fee in 2015 because some plans
are exempt.
I am wondering if you agree with that statement that those
plans that did not get an exemption are going to have to pay a
higher fee because the White House--I guess you could say,
favored groups got a favor.
Secretary Sebelius. Well, Senator, I would say that what we
did was look at the statutory language and made a determination
that the best interpretation of the statute was that any plan
that did not have an insurance component or use a third party
administrator should be exempted. Our legal counsel felt that
was by far the best interpretation of the statute. This was not
a union issue; it was a broad-based issue about self-funded
employer plans also. In order to put out the rule, we
determined who would be applicable and who would not be
applicable under the rule.
Senator Thune. The question, though, is a very
straightforward one. I mean, we can dispute----
Secretary Sebelius. Well, there is a dollar amount in the
statute----
Senator Thune. Right.
Secretary Sebelius [continuing]. That will be collected
from those to whom the law applies.
Senator Thune. Right. Correct. Meaning that those who did
not get exempted will pay higher fees.
Secretary Sebelius. Well, there have never been any higher
or lower. There were no fees; it was just a definition of who
the pool is, who is obligated to pay the fees.
Senator Thune. But, if you distribute that among a certain
number of people, and that number of people has now shrunk
because of the exemption, is it not true that those who are
left in are going to have to pay more?
Secretary Sebelius. They will pay the fee as obligated. But
again, there was no interpretation of who was in and who was
out. We put out guidance, and that is who will pay the fee.
Senator Thune. That is a very straightforward question that
could result in a very simple answer. I think the answer is
``yes.''
I want to ask a question about the 340B program. This last
year, Congress has engaged in more active oversight of the 340B
program. I think that all the parties that are engaged in that
program want to see it improved and maintained, that there is
integrity in the program. It is vital to ensure that that
program can continue to benefit the covered entities, as well
as, ultimately, patients.
To that end, the Consolidated Appropriations Act provided
an additional $6 million in funding to implement new program
and integrity efforts in that program. I am wondering how these
funds are being used. Can you provide information about HRSA's
intentions to use the additional appropriations funding? An
example of that, I guess: HHS has already undertaken audits of
covered entities. Are there plans to extend those to
manufacturers as well?
Secretary Sebelius. Well, Senator, I would say that Dr.
Wakefield, who is the head of HRSA and the umbrella agency
under the 340B program, is very much engaged in making sure
that the program operates in a more stringent fashion to adhere
to the rules. There are audits, as you say, already under way.
She has done a couple of briefings for me, and she looks
forward to working with Congress to make sure that we are not
allocating funds inappropriately and that the programs entitled
to receive the 340B discounts are the ones in fact receiving
the 340B discounts. So that landscape is being reviewed right
now.
I cannot tell you specifically about manufacturers, but I
would be glad to follow up with Dr. Wakefield and come back to
you on that. I think it is safe to say it has expanded beyond
its bounds, and we look forward to the opportunity to make sure
that we are following the rules, because it is a vitally
important program.
Senator Thune. It is.
Very quickly, CMS's 96-hour rule regarding patient
reimbursement at critical access hospitals--can you comment on
that? There are a lot of physicians whom we deal with in a
State like ours, where we have a lot of critical access
hospitals, who do not think it is fair to impose that kind of a
requirement and require essentially physicians to predict the
future.
Secretary Sebelius. Well, I would say, Senator, this is one
issue that we are getting a lot of feedback about and having a
lot of conversations on. I do come out of a rural State. I
absolutely know the vital health care needs that people have
and how important it is to have critical access hospitals
operate in a profitable manner and stay in the community.
So I think the rule was put in place in terms of trying to
define an appropriate boundary. But Jon Blum is having ongoing
conversations about whether or not that may be too stringent or
too rigid, so we would appreciate your input and feedback as we
look toward the future.
I do not think the intent from anybody is to damage the
opportunity for critical access hospitals to remain in place,
but trying to define what is appropriate in terms of a
patient's stay, I think, was the attempt.
Senator Thune. All right. Thank you.
Thank you, Mr. Chairman.
The Chairman. Senator Thune, I just want to let you know, I
am very sympathetic to what you are talking about and am
interested in working with you. It is evident that the
administration will work with us as well.
Next in order of appearance would be Senator Isakson, and
he, as so many Senators are doing this morning, is juggling.
Senator Isakson, would you like to go next now?
Senator Isakson. Thank you.
Madam Secretary, thank you very much for your appearance
today.
As a former Governor of Kansas, I have a question for you.
It is not a loaded question; it is a question of great concern
around the country in various States. In the Affordable Care
Act, there is an opportunity for States to expand Medicaid
eligibility. In that, there is a promise for the Feds to hold
harmless the States for a period of time, but not forever.
In 1978 in the Carter administration, when we passed IDEA
for handicapped children, there was a 40-percent Federal
mandate of increased money flowing to under-privileged children
and disabled children, with a promise that the Feds would fund
their fair share. But in all the years since 1978, the Feds
have not, and the cost of education in the States has gone a
lot higher.
As a former Governor, do you fear at the end of the hold
harmless period on the Medicaid expansion, that States that
have taken it will be burned with an amount of money they
cannot afford to pay on Medicaid?
Secretary Sebelius. Well, I certainly was the recipient of
the IDEA promise that was never fulfilled, so I watched that
very carefully. I could tell you that at least for the decade
that ACA is funded and in place, the funds are there to, in
fact, fully expand Medicaid for all the States, which is what
was anticipated when the law was passed.
I do not know the window beyond that 10 years, but I can
tell you that that funding is there. It is part of the law. So,
unless pieces of that funding are repealed along the way or
Congress decides to change the law, that will be done.
Senator Isakson. A second question. I was one of eight
Republicans who met for a series of 8 weeks with Denis
McDonough and on two occasions with the President in an ad hoc
fashion, if you will, to try to find some common ground on
deficit and debt reduction. This was last year, dealing with
last year's recommendations by the President.
In his recommendations were significant cuts in terms of
Medicare to help reduce the growth rate of the debt and the
deficit. One of those was chained CPI, which at the time in the
budget last year was included by the President, which has not
been included this year.
Does that indicate a reduction in the interest of the
administration to find ways to reform entitlements so, without
cutting people's ability to get those entitlements, we manage
them on a basis that makes sense for the future?
Secretary Sebelius. Senator, I would say that the President
still is very interested in the possibility of some global
approach to deficit reduction and revenue enhancement, but he
has said, I think from the very beginning--and I assume he said
it inside the room where you were--that he feels a balanced
approach is very important.
I think there are a whole series of ideas that he put
forward as part of that balanced approach, where in some cases
cuts are made and in other cases revenue is raised. But in that
context, which did not go forward, as we know, I do not think
it is a lack of interest. He would be eager to engage in that
discussion again but not make cuts where there is not a
balanced approach.
Senator Isakson. Well, the actuarial clock is ticking on
our country in terms of debt and deficit, and all of us in both
parties are going to have to sit around a table and talk about
some very difficult discussions. One of those is going to have
to be reforms to entitlements.
I personally think calling Social Security and Medicare an
entitlement is a little bit wrong, because I have paid 1.35
percent of my income for Medicare since 1968 and 6.2 percent of
my income for FICA taxes for Social Security. People should
expect them, but, if we continue to promise more than we can
deliver and do not reform the system, one day the game is going
to be up and the American people are going to be left holding
the bag, and I do not want to be a part of that.
And your department has probably more to do with the rate
of growth--not because of anything you are doing but just
because of the demands of health care in Medicare and
Medicaid--of debt and deficit of any other single entity
whatsoever. So I look forward to working together with you and
the administration in the years ahead to try to find some way
to find common ground so we can begin to do that.
Secretary Sebelius. Well, I would very much look forward to
that opportunity. Circling back to Chairman Wyden's point at
the beginning of this discussion, I think that there was an
enormous amount of entitlement reform in the Affordable Care
Act around Medicare, and it is working.
It is working in a way that was difficult to predict at
that point, but it is happening. I think that it is continuing
on into the future. I think the recent prediction of the
actuary--if we could just keep Medicare spending at the rate
that we have seen the last couple of years, we would have an
enormous change in the overall cost growth.
So I think there are some features in place, some ways to
shift from a volume payment to a value payment, some different
reforms, as the chairman referred to, the delivery system
reforms that are beginning to show very promising results. So I
think that we would very much look forward to talking about a
structural change that really is on the delivery system payment
side and keeps benefits in place for seniors.
Senator Isakson. Well, I agree with that comment. I just do
not want us to substitute provider cuts for reform. We can
reach the point where you can cut too far, and then it is not
reform, it is disastrous for the program.
Thank you very much.
Secretary Sebelius. Yes. Thank you, sir.
The Chairman. And, Madam Secretary, I would just say, we
talked about chronic disease earlier. Senator Isakson and
Senator Toomey on that side of the aisle, Senator Warner, and
others have a great interest in working with you on that, and
we want to follow up there after the hearing.
Senator Cardin is next.
Senator Cardin. Thank you, Mr. Chairman. Secretary
Sebelius, thank you very much.
Let me just make one comment about the Affordable Care Act.
We now know millions of people who have directly benefitted
from the Affordable Care Act, from the Medicaid expansion that
you talked about, which has been a great success in my State,
to the insurance reforms that have protected families, to
Medicare filling in a lot of the coverage gaps that we had for
preventive care and prescription drugs, to now people having
affordable options through the exchange to get quality
insurance products.
I just want to make one observation. It would be, I think,
a lot easier for you if we in Congress took a look at the law
as to how we could help you in dealing with many of the
challenges that you have had in implementing the law, but
instead we are still stuck in this repeal/non-repeal mode,
particularly in the House of Representatives.
That is not doing a service to the people of this country,
because we should be working together to give you the budget
support that you need and to take up the law as to what we need
to do to improve it, make it stronger, and make it easier for
the American people. I hope that as we talk about a bipartisan
budget, for my friend Senator Isakson, whom I admire greatly,
that we also talk about working together to make our health
care system work in this country. I think the framework of the
Affordable Care Act is proven to millions of Americans, and I
can give you many, many letters that I have received from
people whose lives have been changed because they now have
quality insurance coverage.
On the budget, and I think we are here on the budget, I
will start with a ``thank you.'' That is, the Holocaust
survivor assistance that is in this budget for the first time
will provide direct help to Holocaust survivors, Americans who
are very vulnerable, with a real fear of institutionalization
and getting help to access governmental services, and I thank
you for including that in the budget.
On the other side, the realities of the budget hit home, I
think, with the National Institutes of Health. The budget
there, to me, is entirely too low. I am extremely disappointed
that several of the Institutes get no increase in their budget
at all, including the National Institute on Minority Health and
Health Disparities that you and I have talked about in the
past.
I know your commitment to that Institute and to the
departments and agencies that are directly responsible for
dealing with minority health and health disparities. I just
encourage you to do everything you can within the budget
restraints to continue to make that a top priority.
Let me ask a question as it relates to the therapy caps in
the SGR. I am strongly in support of Chairman Wyden's and
Senator Hatch's efforts to get a permanent fix, a replacement,
to the SGR and the therapy caps and the other issues. To me,
that makes the most sense. We are very close, and I hope that
we can continue to work on it.
But in the meantime, we are still in that mode of dealing
with a temporary extension through March of next year. In the
therapy caps, which make absolutely no sense whatsoever from a
point of view of health policy, we now have the manual medical
review issue on those that hit the cap at $3,700 that could
prevent access to timely payment.
It is my understanding that you are considering some
payment review rather than looking at it and holding up those
who are in need of care, wondering whether their services will
be covered or not. Can you just give us an update as to the
implementation of the therapy cap under the existing law, how
you envision that during this period of time?
Secretary Sebelius. Senator, what I would like to do is
come back to you with a much more descriptive answer of what
our folks are looking at for, as you say, what may be this
interim period of time. I know there has been a lot of
discussion.
I do not want to give you incorrect information about the
direction that is likely to go, but I do know it is of great
concern in terms of patient care and how it is interpreted, so
I will circle right back and give you kind of an updated answer
from our Medicare team on how they anticipate going forward.
Senator Cardin. Thank you. I yield back.
The Chairman. Thank you, Senator Cardin.
Senator Roberts is next.
Senator Roberts. Well, thank you, Mr. Chairman.
Madam Secretary, I have a couple of news articles here that
maybe you could help us clarify as to exactly what is going on.
Rather than me trying to explain this, I am just going to read
it.
``Americans thinking about buying health insurance on their
own later this year or maybe switching to a different insurer
are probably out of luck. The policies are going off the market
as a little-noticed consequence of the Affordable Care Act.
With limited exceptions, insurance companies have stopped
selling until next year the sorts of individual plans that used
to be available all year round. That locks out many of the
young and healthy, as well as the sick and injured, even those
who can afford to buy without the government subsidy. Now they
are stuck, according to an independent insurance broker in Los
Angeles, who says she warned her customers last year the change
was coming. It just closes everything down. The next wide-open
chance to sign up comes in November when enrollment for 2015
begins. Companies are following that schedule even for the
plans they sell outside the Federal/State exchanges.''
There are other news articles that say the same thing, and
I am not going to take the committee's time to read them.
Could you clarify that, because I think there has probably
been some misunderstanding, or perhaps you can shed some light
on that.
Secretary Sebelius. Certainly, Senator. As a recovering
insurance commissioner, I would tell you that the rules that
you just described are really set at the State level. You
quoted an article from Los Angeles, and they have decided in
California that they will not allow off-market plans to be
sold. They want to encourage people to buy during open
enrollment inside Covered California. This is a State-by-State
decision.
I think Kansas has made a very different decision. So those
determinations about what the off-market plans will be and how
robust that market will be are made by individual insurance
commissioners throughout the country.
Senator Roberts. Well, we have an expert at the Kaiser
Family Foundation, and he says it is highly unlikely--he is
talking about nationwide now, not just State-by-State--that
companies will offer such coverage after the deadline window
fully closes.
Some still offer temporary plans lasting from a month to a
year, but those plans do not cover pre-existing conditions, do
not get buyers off the hook for the law's tax penalty, and
there is a window for life-threatening situations.
I know you are stating that is up to individual States and
their insurance companies and they are all different, but I
think that this is a national concern. Am I wrong on this? Help
me out here.
Secretary Sebelius. Well, again, it is my understanding
that it is very different State to State, that a lot of States
will have robust off-market plans that will actually have a
number of the consumer protections and features that are in the
market.
But it is a State-by-State decision. I think that
reference, Senator, may be to the accepted plans, the kind of
mini-coverage plans, and those will be less available. But
again, the companies are making that determination, not the
law.
Senator Roberts. Well, I think the companies are making the
decision due to the law, but we will get past that.
I want to go back to the 96-hour rule, because it gets to
the President's budget, which is the same question that I asked
you last year about the proposals included in the budget that
caused disruption to the critical access hospital delivery. You
are extremely familiar with that, in that you designated some
of these hospitals in Kansas.
So I am concerned that the proposals are once again in the
President's budget. They set the mileage limits and they
reduced the reimbursement for critical access hospitals. We all
know the value of the critical access hospitals. We have 83 in
Kansas, as you know.
I would like to know if we could get some regulatory
relief. In that regard, one of the more problematic decisions
is based on a letter that I wrote, if I can find it. But at any
rate, it was to CMS and indicated that--here it is. And the
reply was that they are ``statutorily obligated to enforce the
new requirements.''
I do not know where we came up with 96 hours. I mean, you
could do 120, 72, 48 hours, whatever. Then, if you have a
patient come in to that hospital, they can keep them for those
number of hours, and it seems to me that it was not statutorily
designated. When I asked if they could waive that in certain
conditions or be of help, they said, well no, it was statutory.
It is not. That is just, once again, something that we could
do.
Could we get 1 year's relief from that? I understand you
said that Mr. Blum, or maybe Marilyn Tavenner, could be of help
on this. What happens is, the patient comes in, they are
monitoring that patient, and then these hours go off. The
doctor does not get any Medicare reimbursement so they would
have to go to another hospital which could be miles and miles
away, or just out of the hospital. You know about hospital
readmissions; you cannot do that. Help me out on that.
Secretary Sebelius. Well, Senator, what I would like to do
is maybe get a copy of the letter that you are referring to,
and I will personally follow up with Marilyn Tavenner and Jon
Blum and get back to you. I do not know exactly what the
questions were in the letter, and I do not know exactly what
statute they were referring to, but I will definitely circle
back and get you a response.
Senator Roberts. I appreciate that.
Secretary Sebelius. I agree that we do not want to make it
more difficult for patients to access care or for doctors to be
reimbursed.
Senator Roberts. I appreciate that. I will provide the
letter as soon as possible.
Secretary Sebelius. Thank you.
The Chairman. Thank you, Senator Roberts.
Senator Casey is next.
Senator Casey. Thank you, Mr. Chairman.
Madam Secretary, thank you for your testimony and for your
service. I was not here during your testimony regarding the
number of folks who have taken advantage of the exchanges, and
I guess we are up to 7.5 million. That is good news.
I wanted to ask you about two questions, the first
regarding children. On the one hand, I cannot say enough about
the commitment the administration has made to our children on a
whole host of fronts--a very substantial commitment on programs
and on prioritization. I commend you for that, and I commend
the President.
Where I have kind of a fundamental disagreement with the
administration, and where I think we will probably continue to
be--and I hope not--unalterably opposed to the administration's
policy as it relates to children, is graduate medical
education. We fortunately passed, and the President signed into
law, a bipartisan reauthorization. I was very happy about that.
We have worked very hard on that.
But I know going forward that the position of the
administration is to eliminate that funding for that program. I
do not agree with that, and I wanted to ask you about it. We
have right now about 1 percent of all hospitals train nearly
half, about 49 percent, of all pediatricians.
So you have a program that works. It delivers tremendous
results. It solved a big problem, meaning pediatric care, or
the shortage of that if we did not have the trained
specialists. It is bipartisan. It is not expensive. I do not
understand the opposition to it. So I would ask you about the
position the administration has taken, why that is, and whether
or not there is some way we can reconcile our differences.
Secretary Sebelius. Well, Senator, I know your commitment
to this area, and, as you say, I think the administration also
has a commitment to, not only children, but to training
providers in needed areas. The budget proposes that there is
$100 million in new, targeted support for children's hospital
GME programs and additionally, with a bigger bulk of money, the
$430 million, a competitive opportunity where I would suggest
that I think it is possible that children's hospitals receive
even a larger amount than was in the directed program of the
past, because there is a floor kind of set automatically and
then an opportunity for more slots.
We estimate that the new targeted support will be about
13,000 new residencies between 2015 and 2024. I will tell you
that with the discretionary program in the past, about 26
percent of those slots were for non-pediatric residents. So
even though it was a directed program, that is not how at least
a fourth of the slots were filled throughout the hospital.
So we would love to work with you on ways to make sure that
the financing that is going in is really directed to training
more pediatricians, training more child specialists. I think,
looking at this, there is an opportunity to really then target
the funding.
Senator Casey. Well, I hope we can, because we have in our
State--and I can say this, I think, without contradiction--two
of the best children's hospitals in the world in Philadelphia
and Pittsburgh, in addition to St. Christopher's in Philly. So
we have two in Philly, one in Pittsburgh. They are very happy
with the program, and we are very concerned that it would not
get reauthorized. So I hope we can continue to work together. I
know I am short on time, and some of this we can do for the
record by way of written response if we run out of time.
Medicare Advantage. I was grateful for the administration's
recent determination as it relates to Medicare Advantage. We
know that premiums are down 10 percent and enrollment is up,
and that is good news. But there are still some concerns about
the near term and the long term. I just want to ask, and you
can amplify it in writing if necessary, what steps you plan to
take to help the program remain as strong as possible.
The Chairman. Secretary Sebelius?
Secretary Sebelius. Yes?
The Chairman. If you could do that briefly and then get to
Senator Casey in writing. Colleagues, if we sprint we can get
everybody in before Secretary Sebelius has to leave, and that
is my goal.
Senator Casey. That is a good goal.
Secretary Sebelius. Why do I not get it----
The Chairman. Is that all right with the Senator? Great.
Thank you so much.
Senator Warner is next.
Senator Warner. Thank you, Mr. Chairman. Great to see you,
Madam Secretary.
Let me first of all say, with the numbers you report today
at 7.5 million, I hope this will start to change the nature of
the debate, from some of us on our side of the aisle who do not
want to change a word of the ACA to some of our friends on the
other side who simply want to repeal.
I know they are not here, but I want to commend Senator
Hatch and Senator Burr. I do not agree with the framework they
have laid out, but they have laid out some alternatives. There
are a group of us who have laid out a series of, I think,
targeted changes to the ACA that I think will improve delivery.
I would like, in my time, to touch on one of those.
One of the areas--I know you are aware that the Treasury
Department recently finalized reporting rules that will help
enforce the employer and individual mandates. We have this
challenge, where Treasury does the reporting and HHS provides
the subsidies, of trying to make sure they are correct amounts.
I continue to hear from a number of employers that are
concerned that some of their workers who are offered employer
plans might erroneously still apply through the exchange to try
to get individual tax credits. What this is setting up is
potentially, at the end of a year, a contentious dispute
between the business and the IRS, with the IRS kind of being
the referee. I think this could actually be prevented if there
was more accountability on the front end between Treasury and
HHS.
I think there are ways our legislation--we have eight co-
sponsors at this point and would welcome others looking at
this--would basically allow employers who would be willing to
provide that information up front some ability to be forward-
leaning rather than having this monthly reporting requirement
that, for small enterprises, is going to be an enormous burden,
to give them, not completely a safe haven, but by having this
kind of up-front collaboration between HHS and Treasury, we
might be able to remove one of the administrative burdens that
quite honestly in a system does not need to be there. I do not
know.
Our legislation is S. 2176. It is one of six or seven
different pieces of specific legislation that we would like to
advance, that hopefully will move the debate to, how do we keep
what is good and fix what is wrong in ACA? I would just like to
solicit your opinion--I do not know if you have had a chance to
look at this--about whether you would be willing to work with
us on this and other areas where we can streamline the process.
Secretary Sebelius. Well, I would very much like to work on
streamlining the process. Anything that we can do up front that
reduces confusion and certainly reduces administrative burden
on businesses--we, as you know, Senator, took a number of your
ideas in terms of how implementation and the administrative
exchange of paperwork should work. The last thing I think the
administration wants is to burden people who are already in the
system providing insurance, trying to get accurate reporting.
So yes, very much I would like to----
Senator Warner. This is one area, again, where we have your
shop doing the subsidies, Treasury doing the reporting
requirements. If we could set the standards up front and
provide employers a little more guidance, we could eliminate
what is right now I think, for particularly small to mid-sized
firms, this monthly reporting that I think will prove to be a
burden.
Secretary Sebelius. I look forward to it.
Senator Warner. Now let me hit two other items very
quickly. One, I know Senator Stabenow has already mentioned
this, but let me say ``amen,'' as one of the co-chairs of the
Alzheimer's Caucus, to trying to move forward on the National
Alzheimer's Plan, making this a higher priority, thinking more
creatively. I would echo what Senator Cardin has said as well
about overall cuts to research.
But we all know, every one of us has family members, myself
included, who have either passed from Alzheimer's or who are
going through the scourge of Alzheimer's. This is a human
tragedy, as well as obviously one of the fastest-growing
expenses in the Medicare/Medicaid combined budgets.
Secretary Sebelius. Yes.
Senator Warner. So we would urge your work on that.
The final point I just want to make in my 44 seconds,
recognizing the Senator's goal to get us all through, I would
commend this to my colleagues. Last Sunday, 60 Minutes did a
feature on a clinic called ``The Health Wagon,'' which is in
southwest Virginia. It was started back in the 1980s by Sister
Bernie Kenny in an old VW, very close, Senator Rockefeller, to
West Virginia, and she would travel around and provide medical
services.
There was a certain Governor early in the decade who
actually included this program in the State budget. It has now
grown dramatically. She serves six counties, has nine folks,
and has assisted 11,000 folks in an area that has dramatic
poverty.
HRSA grants are very important in this innovative service
delivery model, and I would simply commend, again, the
remarkable, remarkable story that 60 Minutes documented. I
think it is a demonstration of really stretching dollars. For
every dollar of Federal money, we get $100 back in health care
services. That is a rate of return that, even as a venture
capitalist, I would love to see. So, I commend that to you.
The Chairman. You Governors all stick together.
Senator Toomey?
Senator Toomey. Thank you, Mr. Chairman, and thank you,
Secretary Sebelius, for joining us.
Let me just briefly echo Senator Warner's comments about
Alzheimer's. I too was absent when Senator Stabenow first
brought this issue up. But as you know, and I really think it
bears repeating, we have made so much progress on all of the
chronic diseases that threaten and take people's lives,
especially in their older years--heart disease, cancer, stroke.
Many of them are frequently not fatal. They can be fatal, but
they are not always. They are much more treatable. We have so
much better survival rates.
The glaring exception is Alzheimer's, for which we do not
understand the cause. We have no treatment, we have no cure.
So, as people live longer and longer, because fortunately they
are no longer dying from these other diseases, increasingly
they are being afflicted by Alzheimer's. So I, for one, cannot
think of a more worthy cause than finding the cause and cure
for Alzheimer's. I appreciate your interest in this and your
commitment, and I hope we will make this a very, very high
priority.
I do have a technical issue that I want to raise with you.
This arises--I am still trying to frankly wrap my brain around
the many ways in which we have socialized the individual and
small group health insurance market. We have the mandatory
payments between the insurers that have to cross subsidization
based on the risk parameters that the various firms have.
We have the famous belly button tax that covers the cost of
paying for the high-risk patients that we have. Then of course
we have the risk corridors, by which the government gets 80
percent of the upside and taxpayers get hit with 80 percent of
the loss beyond certain parameters, which CMS gets to define.
What I found curious is that in the 2015 budget, my
understanding is that OMB has moved the account into which and
from which funding will go, depending on whether the government
is making money or losing money in this joint venture, if you
will. It has moved the account to a CMS general program
management account, and that is an account into which other
sources of funds go and from which and toward which other
expenses are covered. I am wondering why that was done.
Secretary Sebelius. Senator, I would tell you that the CMS
budget and a lot of the employees who are in administrative
work dealing with the marketplace issues are also dealing with
a range of other issues. There is no way that a lot of these
programs are not intertwined with Medicare and Medicaid. They
are implicated across the board, but why exactly that budget
design is there any more than for the efficiencies of making it
clear that that is what workers do----
Senator Toomey. All right. Well, my concern is this.
Previously, including in the current fiscal year, under the
budget that we are now operating under, any payments from
insurers into this fund go into an account that immediately
goes to the Treasury general fund and is used to reduce the
size that the deficit would otherwise be.
Since it is reclassified into this more general program
management fund, it remains available to CMS to spend on other
things rather than to be used exclusively to diminish the
deficit as it is now. I am concerned that, (A) it might be
spent on other things, and (B) since this is commingled with
other sources of revenue and it can be spent on other things,
it could be harder for us to understand exactly what is
happening here.
Secretary Sebelius. My experts tell me, because I did not
want to give you an incorrect answer, that it can only be used
for the risk corridor program.
Senator Toomey. But the account is a general program
management account that has revenues that come from other
sources, and there are expenditures that can go to other
directions. So how will we be able to properly monitor this and
know----
Secretary Sebelius. We can give you direct reporting on
what is coming in and what is going out. But my understanding
is, it can only be used on the risk corridor program.
Senator Toomey. All right.
Secretary Sebelius. We have user fee authorization in that
umbrella authority, so we are using that, but it can only be
used for the risk corridor.
Senator Toomey. So can you assure us that any surpluses
that come into this account by virtue of the government's take
on insurance companies' profits, or any taxpayer bail-outs of
insurance companies that have losses, any of that will be
precisely quantified, and we will be able to track that?
Secretary Sebelius. Yes, sir.
Senator Toomey. Thank you.
Thanks, Mr. Chairman.
The Chairman. Thank you.
Senator Nelson?
Senator Nelson. Madam Secretary, first of all, I want to
compliment you. You have been through about one of the roughest
patches that any department head could go through, and it is
working, so congratulations.
Secretary Sebelius. Thank you.
Senator Nelson. It is working in our State as well. We are
starting to see, there is beginning to be a realization, that
there are a lot of young people who were included because they
could be on their parents' policies. Now there is a realization
of what is going on with the significant number that you
enrolled in the exchanges.
In addition, people are catching on to Medicaid expansion.
Now, unfortunately, in our State they took the position, nyet,
no Medicaid expansion. Now they are starting to feel the heat
from the Chamber of Commerce and the hospitals, and starting to
realize that this means more out of ordinary Floridians'
pockets, because people will still go to the emergency room
uninsured.
So I want to thank you for your flexibility. What we are
trying to present are some ideas for flexibility that the State
of Florida could propose to you, CMS, Ms. Tavenner, and so
forth. So what I have done is sent a letter to Ms. Tavenner
that would entertain a new plan if the State were to suggest
this--and I understand it has to come from the State--to allow
for Medicaid expansion using inter-governmental transfers which
would supply the State's 10 percent part in the 4th year, when
the Feds will provide 90 percent and the States 10 percent.
Now, I thank you for setting the table for flexibility.
There is, compounding on this, what is now going on in a State
legislative session where the appropriators are meeting, which
is the extension of the Medicaid waiver for managed care.
It is my understanding that there is a basic agreement of 1
year. Of course, if this can be done, if they can get that out
now, it would be helpful to the State appropriators for the
agreement to come in time for the legislature to incorporate it
into their appropriations. I do not expect you to have the
details on this, but do you have any comment on this?
Secretary Sebelius. Well, I can tell you, Senator, we are
working very, very closely with the Florida team, and my
understanding is that those sessions have been very productive.
We are very much aware of the legislative deadline. While I
would tell you that there is not any final resolution, I am
confident that we are going to get to a productive answer. But
those discussions are very much under way as we speak.
Senator Nelson. On Medicare Advantage, we have had some
complaints about insurance companies suddenly obliterating a
whole bunch of doctors from a plan and obliterating hospitals
from a plan. So the question is, the definition of
``significant change.''
What I would like is to call to your attention to remind
CMS that when they are planning network changes that an insurer
deems significant, there needs to be some communication of this
fact to the poor insureds, as you and I, as colleagues, as
insurance commissioners decades ago, would try to look out
for----
Secretary Sebelius. It was not that many decades ago.
Senator Nelson. Believe it or not, it was almost 2 decades
ago.
Secretary Sebelius. Well, that is a couple, you know. It is
not--I agree with you, Senator. We were concerned when this
issue arose, first, I think, in Connecticut. We are watching it
very carefully. It is my understanding that we have provided
some formal communication with insurers that a notification is
indeed a part of their responsibility, and that we are going to
be watching that a lot more closely to make sure that, if a
plan institutes changes, beneficiaries can then make other
choices based on that plan decision.
Senator Nelson. And of course I would have to mention, on
behalf of our seniors in Florida, the special enrollment period
for them, particularly if they need to make sure that they have
the specialists that they want.
Secretary Sebelius. Yes.
Senator Nelson. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Nelson.
Senator Rockefeller?
Senator Rockefeller. Thank you, Mr. Chairman.
Welcome.
Secretary Sebelius. Thank you.
Senator Rockefeller. I join very much with what has been
said by several Senators, starting with Ben Cardin. It is
extraordinary that we have a program here which is the first of
its kind in history to have actually worked, to have actually
been passed, and it is working. All they can do, those who
oppose it, is to take out newspaper clippings. That was very
smart when you said, well, that was from the Los Angeles Times.
But that is what they do. That is what they make a living
out of. That is what they do on Fox News. It makes life very
difficult for you. But always know that there are many of us
who have been for the Affordable Care Act from the very
beginning and will stay that way until it is absolutely
perfect. That is just simply the way things happen in America.
It is just, we are at a very bad patch in terms of getting
stuff done or to be helpful to the American people right now.
I have a couple of questions, one on the Children's Health
Insurance Plan. That is always my top priority. It has to be. I
am worried about two things. One is that I cannot recall the
President talking about it. Now, why would that be important?
It probably is not important. But it becomes important because
the CHIP funding runs out at a most inconvenient time. So we
are funded through this year and part of next, and then it just
stops.
So I have to, in the President's budget, understand if his
feeling, and the feeling of HHS, is that we are talking about
keeping this thing going for a period of years and years,
because right now it is strange that he has not mentioned it,
he has not talked about it. He has talked about so many social
programs.
This is one of the most important for West Virginia and
everybody--the 8 million Americans involved. So can we look
forward to this being a continuing program, because it does not
necessarily reflect itself in the budget because the budget is
out of sync, so to speak, with other parts of the budget?
Secretary Sebelius. Well, Senator, I first of all know your
passion in this area and also your incredible leadership. We
would look forward to working with you on what the future looks
like.
I would tell you that one of the great things I think that
is going on for children around the country is, with the
simplified Medicaid and CHIP application and with literally
millions of people coming forward who may have been in the past
eligible but not really enrolled, I think we are going to see
more children gaining benefits than ever before--who probably
should have been signed up in the first place, but they just
were not because States were not taking down some of the
blockades and barriers. States are now making it far easier for
people to be engaged in that process. I think that is all very
good news for the children of America.
Senator Rockefeller. I would agree with that. But I would
really be happy if the President, in one of his press
conferences or something, just mentioned it. It is just odd to
me, knowing him and his commitments, that he just simply has
not mentioned it at all.
Secretary Sebelius. Well, I will share that.
Senator Rockefeller. Thank you.
Secondly, black lung. Obviously that is most important for
West Virginia. What you have is, HRSA has imposed a new
requirement, and it is abstract, so to speak. It puts a limit
of $900,000--and then it is capped--that any one State can get
for that. West Virginia, last year, spent $1.4 million for a
very simple reason: we have an awful lot of coal miners, and we
had an awful lot more coal miners before, so the black lung
back-up is huge.
There are various ways we are trying to, through the
reduction of ambient air pollutants in coal mines--you cannot
treat or you cannot cure black lung, but you can prevent it,
but only by having a clean coal mine, which operators are
loathe to do.
But nevertheless, I am stuck with this West Virginia
problem. We are the only State which is affected by this HRSA
initiative. As far as I am aware, we are the only State. That
is not pleasing to me, because we worked very hard on it, and
we have an awful lot of people, because that has been sort of
our history. What I would like you to do is waive West
Virginia, but somehow we need to solve this problem.
Secretary Sebelius. Well, Senator, it is my understanding
that the HRSA cap is not for a State, it is for an entity. In
fact, in many States there are multiple entities who are
receiving funding for various support services. So we would
like very much to work with you about what is going on.
Senator Rockefeller. Well, but that raises----
Secretary Sebelius. I think West Virginia could get
significantly additional resources, and probably should, given
the level of disease in the program.
Senator Rockefeller. That brings up a further thought, that
one of the effects of the HRSA rules and regulations would be
we would have to sort of divide black lung clinics up into
different lumps. We have nine of them in the State, and what
would happen administratively to black lung clinics is very
untidy and unhelpful. If you could just go look at that
problem.
My final point is, Senator Isakson wanted to reduce the
deficit, and we all want to do that. What I am going to bring
up probably has no chance of passing, because the power of the
pharmaceutical companies is very, very strong on the Finance
Committee, which I regret to say. But the easiest way to do
that is to simply go back to what we were doing with the dual-
eligibles, 9 million of them, when they were under Medicaid and
it was all rebated pricing.
There was an enormous amount of money saved. The
pharmaceutical companies now say, well, we would have to stop
doing research and all the rest of it. But of course back then
when it was in effect under Medicaid, they were doing fine.
They were doing just fine, thank you.
Now all of this, the dual-eligibles, is under Medicare. We
made that switch in Medicare Part D, but we did not switch the
rebated pricing part. If we were to do so, we would save $141.2
billion over 10 years.
Secretary Sebelius. Senator, that is why we need to pass
the President's budget, because that recommendation is in the
budget.
Senator Rockefeller. Yes. Yes. Yes.
Secretary Sebelius. I agree.
The Chairman. Let us do this. We are going to rush to get
all Senators in. Senator Carper is next, if that is all right,
Senator Rockefeller.
Senator Rockefeller. Sure.
The Chairman. Senator Carper?
Senator Carper. Thanks. Welcome, Secretary Sebelius. It is
very nice to see you again. Thank you for your stalwart
stewardship and leadership in these troubling, trying, but
ultimately encouraging months. Thank you.
One of the things I look forward to seeing every Thursday
in my clips is a report from the Department of Labor, and every
Thursday we get from the Department of Labor, on Thursday
morning, the number of people who filed for Unemployment
Insurance the previous week.
The week that Barack Obama and Joe Biden were inaugurated
as President and Vice President, that week the number of folks
filing for Unemployment Insurance was 628,000 people. When I
read the news today in my clips, that number for this past
week, announced today, was 300,000 exactly, right on the money.
When you think about job creation in this country, any time
that number is under 400,000, we are creating new jobs. What we
do is, as the number bounces up and down, as you probably know,
we take a 4-week running average and keep updating that. That
number is running at about 320,000, and we are at a point where
we are creating significant jobs. We need an economy that
creates even more.
One of the keys to doing that, according to Alan Blinder,
who used to be Federal Reserve vice chairman but is back to
teaching economics at Princeton--he sat right where you are
sitting less than 2 years ago, and I asked him a question about
deficit reduction, what we need to do.
He said the 800-pound gorilla in the room on deficit
reduction, and on growing the economy, is to get our arms
around and our heads around the health care costs and to be
able to wrestle them to the ground so we can get essentially
better results for less money.
I am encouraged when we look at the growth of health care
costs as a percentage of GDP, which has gone up, up, up
forever. Last year, it actually came down a little bit.
Hopefully with all the smart things we are doing--not just in
the Affordable Care Act but just by health care providers,
companies, employers, just a lot of smart stuff, moving from a
sick care system to a health care system and focusing on
prevention and wellness and making better use of technologies--
this is morning in America on this front.
A question, if I could. Alan Blinder said to us that
morning, when I said, what do we need to do to continue to make
progress on reducing health care costs as a percentage of GDP:
find out what works and do more of that. I said, do you mean,
find out what does not work and do less of that? He said
``yes.''
But in terms of finding what works--as you know, obesity
and costs that relate to obesity are just eating us alive. We
are trying very hard in this country to reduce not just the
size of our deficit, but reduce the size of our girth and lose
weight and be able to start ratcheting down those costs.
But I just want to ask, in the President's budget with
respect to obesity, the need to do more there, the costs that
run from that, and also medication adherence--we know that we
can save a lot more money if folks actually take the
medications they are supposed to take and to continue to take
and so forth. Just those two points: in the budget, how do we
address obesity and continue to bring it down; how do we
address medication adherence and continue to improve that,
please?
Secretary Sebelius. Well, I would say, on the first front
of obesity, there are a whole variety of programs under at
least our umbrella that offer support for the First Lady's
entire initiatives, which actually are making a significant
difference. There are the efforts to work with our partners at
the Department of Education to revamp everything from school
lunches to exercise programs. The new FDA rules and
requirements and more are coming on nutrition facts, giving
consumers the tools they need to make good choices. Menu
labeling is under process and will be out shortly. Then there
needs to be ongoing research on what exactly works.
In addition to the Prevention Fund, there are efforts
around community projects, what really works. We know a lot
about smoking; we do not know a lot about obesity, what
actually is the most effective thing to get people engaged and
involved and actually have them make different decisions about
exercise and eating. So there is a lot in various agencies in
our budget and through the CDC that is working on the obesity
front.
I would say on medication adherence, it is one of the key
targets of the Partnership for Patients, which has been a very
effective effort involving over 3,000 hospitals and doctors'
offices. It also is a piece of what the electronic medical
record effort is about, which is collecting the data.
It is stunning how many patients with high blood pressure
are not monitored on a regular basis--leading to heart attacks
and strokes--to see who has high cholesterol that is not being
followed up on, who is actually not taking their meds.
So part of becoming a meaningful user in the electronic
record world is that a provider not only has to collect data,
but then demonstrate that there are actual changes being made
and patients being monitored, which I think can be enormously
effective, and tying pay to those quality outcomes is going to
be enormously effective.
Less than a third of the people in this country diagnosed
with high blood pressure are on any kind of strategy to reduce
that blood pressure. And our folks feel you could save a
million hearts, as they say, a million heart attacks and
strokes by just collecting data, focusing on the ABCs, and
making sure that a piece of that is management of chronic
conditions.
Senator Carper. Great. Thanks.
Thank you.
The Chairman. Thank you.
Senator Menendez?
Senator Menendez. Madam Secretary, thank you for your
service and for performing an extraordinary job under a
landmark law's implementation.
One of the main goals of the Affordable Care Act was to
provide access to health care coverage to all Americans, and
the expansion of Medicaid eligibility was a fundamental step
towards achieving that goal. I am pleased that New Jersey is
among the States that expanded their program, but I am also
concerned by some reports, including one in this morning's
National Journal, about how Medicaid applications are being
processed in several States, including New Jersey.
Specifically, I am hearing about extensive backlogs caused
by the New Jersey Medicaid Department's need to input the
applicant's information by hand in the 21st century. I am not
quite sure. Despite the ``no wrong door'' policy that allows
Medicaid enrollment via the State or the marketplace websites,
the online applications are apparently just being printed out
and manually input into the system.
In Camden County, NJ, for example, there is a reported
backlog of 10,000 Medicaid applications and only about 6 data
entry personnel, meaning it would take nearly a year and a half
to clear the backlog. So that is clearly an issue of concern as
people are waiting for their enrollment verification so that
they can see their doctor.
What steps will be taken to address the current backlog and
to prevent more from happening in the future applications?
Secretary Sebelius. Well, Senator, we share your concerns.
Frankly, it is not just States like New Jersey expanding
Medicaid, but it is States across the country that really have
been on notice since the law was passed 4 years ago that they
needed to update and upgrade their eligibility systems to make
it seamless and easy for people to enroll. We are still finding
a number of States like New Jersey that are not ready to
receive automated data.
We are working closely with States around the country and
frankly share your frustration that there are people waiting.
There are also people probably in that line who may think they
are
Medicaid-eligible who are really marketplace-eligible and they
do not even know that yet, so that is an additional problem.
But in terms of the automated system, the Federal system is
ready to send automated reports and receive automated reports
to try to seamlessly do this. We are actually kind of ramping
up the pressure on States, and we will look at potentially some
administrative reductions in payment if people do not pick up
this pace, because having a backlog that is not being processed
in a timely fashion is just keeping way too many people from
the health care that they are entitled to.
Senator Menendez. So in essence, States that have this
backlog, it is because of their own lack of performance?
Secretary Sebelius. Well, at this point, yes. The Federal
system did take a while to get to the point where we could
actually process it electronically, but we are now at the point
where we are able to input the electronic files. What we have
is a system that goes back and forth between the States. So,
somebody comes in at the State level and is marketplace-
eligible; somebody comes in at the Federal level and is
Medicaid-eligible. But most of what New Jersey is seeing is
actually the New Jersey system not being able to keep up with
the numbers of people who are qualified.
Senator Menendez. Well, we would love for the Department to
keep us apprised of how we are going to make progress.
Secretary Sebelius. We would be glad to.
Senator Menendez. That is a lot of people.
Secretary Sebelius. Yes.
Senator Menendez. Finally, last year CMS devised a new rule
to determine whether or not a Medicare beneficiary would be
considered an inpatient or an outpatient during their hospital
stay solely based on whether their hospital stay spans more
than 2 midnights. While it helps clarify some issues, we have
all heard about beneficiaries spending a week or more in
hospitals under observation status.
The rule fails to acknowledge an instance where a
beneficiary needs a high level of inpatient care for a shorter
amount of time, even if the physician determines it is
medically necessary or appropriate. I think CMS has already
acknowledged that there are problems with the rule and has
delayed it on a number of occasions.
Additionally, Congress just stepped in and posed a
statutory delay as part of the recent SGR bill, prohibiting
enforcement until March 31, 2015. I have a bill with several
members of this committee, who are co-sponsors, called the Two-
Midnight Rule Coordination and Improvement Act.
But what is more important to me is that CMS has the
existing authority to implement the provision of this bill,
which basically is to have CMS consult with outside experts
like hospitals and physicians to develop the criteria
methodologies that ensure beneficiaries in need of short-stay
inpatient care are able to receive it and to make sure we do
not have those long stays when they are not necessary. So can
you give us some sense of whether we can make progress here
without necessarily dealing legislatively with it?
Secretary Sebelius. Well, I think, given the fact that
Congress, as you say, has chosen to delay the implementation,
we will certainly be looking for strategies. I know there was a
lot of consultation earlier, but I would love our staff to
circle back with you and your staff to see what the elements
are in the bill that we could perhaps move forward on an
administrative basis.
Senator Menendez. Thank you. Senator Fischer--it is a
bipartisan bill, so I hope we can do that.
Secretary Sebelius. Great.
The Chairman. Thank you, Senator Menendez.
Senator Cantwell?
Senator Cantwell. Thank you, Mr. Chairman. Madam Secretary,
thank you for all your hard work. Washington State has, I
think, the 6th-highest rate of marketplace enrollment in the
country, so we obviously have had a lot of success in getting
people coverage.
I wanted to talk about the fact that we have seen--my
colleagues may have brought this up earlier, I am not sure--a
lot of discussion in the Wall Street Journal and the New York
Times about small segments of the physician community getting a
lion's share of Medicare payment and reimbursement, or I think
as one said, a tiny fraction of doctors getting like 25 percent
or something.
So as you know, I have been very interested in the value-
based modifier and implementation of that from the Affordable
Care Act so that we can focus on healthy outcomes instead of
the number of procedures performed. So I want to get an update
from you on where we are in getting that implemented, and to
also know if some of this other information, which is part of
the mix of reimbursement that we do not have data on--things
like the diagnosis, whether the care was necessary, the
procedures performed, particularly on fewer than 10 patients,
or data on durable medical equipment--whether we can make that
information more transparent as well to help us in this effort
of really focusing on outcomes instead of procedures.
Secretary Sebelius. Well, Senator, I know your interest in
this area, and I certainly share it. I would say that the data
released earlier this week was a big breakthrough. That data
has been under Federal injunction since 1979, when an attempt
was made to put it out that was blocked, and that injunction
has been updated ever since. We at the Department joined with
the Wall Street Journal and others asking the judge to lift the
injunction, and I am pleased to say that the data is now
available.
There is also--and we discussed this a little bit with
Senator Grassley earlier--a portion of the Affordable Care Act
which deals with the sunshine law and has some other data
elements which will be collected, and we are on track to have,
this fall, additional data sets available, because they are
helpful to consumers to make good choices. It is also helpful
to look at what providers are actually collecting. So we would
love to work with you going forward on other data sets.
I think the determination, at least initially, about the 10
or more procedures was that sometimes collecting one at a time
is a pretty scatter-shot look at the scenario and does not give
you very comprehensive data. We want consumers to know, if you
are going to go under the knife, if you will, for surgery, I
think you would want to know who does the most hip replacements
or knee replacements or whatever, who is the most familiar with
that. So on one hand it is great consumer empowerment, and on
the other hand it is also billing information that we think
should be transparent with public dollars.
Senator Cantwell. And then the value-based modifier?
Secretary Sebelius. Again, that is part of the, I think,
initiatives going forward. It is certainly one of the looks
that the Medicare team is making in how you can allocate
adjustments to payments based on value and setting up a series
of criteria of what exactly the outcomes are.
We are testing a lot of different models, including through
Accountable Care Organizations. I would say that is probably
the most promising set of tests, where not only cost is being
watched closely, but certainly the quality outcomes for
patients.
We have some very promising early results, and I see that
as something that could be taken to scale in terms of what
works very well. But the Innovation Center is probably testing
15 different models right now, which all would lend scientific
data to the value-based modifier and give us ways that we could
really change payments based on what works, to both increase
quality and lower costs.
Senator Cantwell. Well, I appreciate that. I just, for the
record, am for more information being released. We kind of feel
like we have already been the experiment, and we have provided
better care at lower cost and consequently get lower
reimbursement rates. I would not say we are all fine with that,
but we certainly would be more amenable to that continuing if
the rest of the country would follow suit.
Secretary Sebelius. And you do not want to be punished for
it.
Senator Cantwell. Exactly.
Secretary Sebelius. Yes.
Senator Cantwell. We would rather be rewarded.
Secretary Sebelius. Yes. Got you.
Senator Cantwell. So I think transparency will help us on
outcome, yes. So thank you.
Thank you, Mr. Chairman.
The Chairman. Well said, Senator Cantwell.
Senator Bennet?
Senator Bennet. Dead last.
The Chairman. The best.
Senator Bennet. No, I would not say that, but thanks for
calling on me, Mr. Chairman. I appreciate it.
Madam Secretary, it is good to see you again. I am glad we
are here under these circumstances and not circumstances some
had predicted in October. I am glad there are more than a
quarter of a million Coloradans who now have health insurance
who did not have it before this law was passed.
But like you, I have worked at different levels of
government, and I do think that what we saw in the fall is a
reminder that we may not be up to the task in the 21st century
when it comes to certain things like IT, and procurement, and
customer service.
My hope is that, as the politics around this bill subside,
which I deeply hope they will, because at home, health care is
the farthest thing from a political issue for people. It is a
day-to-day how-people-live-their lives issue, but as it
subsides, I think that any wisdom that has been acquired
through those brutal days in the lead-up to it that could
benefit other agencies or other levels of government, even as
Senator Menendez was talking about just a minute ago, I think
you could provide a huge service at some point by--I do not
know whether it is leading a discussion or having an
interagency initiative in the Federal Government. This is the
work that no one ever gets to. You know that.
Secretary Sebelius. Right. Right.
Senator Bennet. At the State level, the local level, the
Federal level, no one ever gets to it. What it means in the
21st century, with the velocity of the world we are living in,
is that we run the risk of finding ourselves in that position
again someday. You do not need to react to that day, or you can
if you want to, but that is just a thought. I think it would be
a shame just to let that experience, as searing as it was, just
disappear and for us not to learn what we need to learn from
it.
The other topic I just wanted to raise at the end here is
that, when we passed the law, CBO had some projections about
what premiums would look like. I think that the actual premiums
came in somewhere under 15 percent less than what CBO
projected. If you look at the last 3 years, it has been the
slowest rate of health care inflation in the last 50 years,
which is saying something. The Medicare growth rate, I think we
just learned, is minus 3.4 percent.
I wonder if you could just take a few minutes at the end
here to help us understand what is going on out there. I mean,
for years and years and years we have talked about trying to do
things in Congress that might actually bend the cost curve in
health care. Are we seeing the beginning of that? I mean, after
all this sturm und drang and name-calling and all the rest,
have we actually done something here, or is it too early to
tell?
Secretary Sebelius. Well, I think there is no question,
Senator, you have done something. I think in the early days of
the Affordable Care Act, a lot of the cost reductions were
attributed to recession and saying it really had to do with the
economy and people not using health care as much, although I
would argue that Medicare is a little recession-proof because
you have a guaranteed package of benefits, and it really did
not vary a lot with the recession.
But having said that, now that we have crossed year 4 and
we are seeing really a fundamental shift, I think some of it is
due to the framework that was put in place as part of the
Affordable Care Act, not only in directions to reduce costs and
increase quality in Medicare and in Medicare Advantage, but
also delivery system reform, the very strong signal that we
needed to look at ways to lower overall costs.
So what I find to be intriguing and very encouraging is
that it is not just Medicare spending which is down, it is
overall health expenditures. So, in the 8 years 2001 to 2009,
health expenditures per capita rose at just about 6 percent a
year, and GDP per capita during that time was rising at 2.9
percent a year. So, health care was dramatically over it.
In 2012, GDP per capita rose at about 3.8 percent, and
health expenditures--and this is everything, not just the
public programs--were at 3 percent. So we have come from twice
as high to underneath. Medicare is significantly underneath.
Those trends, as you say, were just updated, going down even
further. Medicaid is on a trend line going down, and private
health insurance is on a trend line going down.
So I think the news is good. What we are trying to do is
capture exactly where those expenditures are. Some of it is
hospital days, some of it is some of the work being done around
hospital-acquired infections, some has to do with, I think,
efforts on the preventive side. But what you have done in the
Affordable Care Act, at least on the public program side, is to
give us an indication that, if you find things that work, you
can take them to scale without running a demonstration project
and then coming back and doing them. So there is an opportunity
really to accelerate this as we learn more.
Senator Bennet. Well, and I know my time is up, but, Mr.
Chairman, as we think about this on a going-forward basis,
these trends all look good. Obviously the real question is
whether they are sustainable over time.
Secretary Sebelius. Right.
Senator Bennet. And we ought to be watching for that. But I
do think the committee, I hope, would be interested in getting
that data from you in real time so we can understand what is
working well and what is not working well so we can help people
at home who are trying to deliver care at a lower cost, bring
that to scale, and not just wait for the next--who knows when
it is going to come--discussion we are going to have about
health care.
We have a bill in place. We are collecting data. We ought
to be transmitting that data, and we ought to be surging ahead
with the stuff that is actually out there that is working. A
lot of it is in my State, and I know the other States around
here as well.
Secretary Sebelius. Well, Chairman Wyden and I have had
some conversations about the possibility of briefing this
committee and others about the Innovation Center, which was
created as part of this--what is being tested and tried, what
we know about, what those results are. Some of it is at the
State level, some of it is with dual-eligibles, some of it is
directed to the delivery system, but it is very promising
information, and we would love to do that.
Senator Bennet. And ultimately have that in the form of
reimbursement.
Secretary Sebelius. Yes. Which is exactly----
Senator Bennet. That is what we need to do.
Thank you, Mr. Chairman.
The Chairman. That is a very good point to quit on. I am
just going to leave you with one thought as we get you out the
door, Secretary Sebelius. I have been struck over the last
couple of hours at how often the conversation focused
essentially on the nuts and bolts of improving health care
policy.
If you look at the issues that came up on matters like
Medicare Advantage, the critical access hospitals, value
purchasing, and children's health care, these are all areas
where Democrats and Republicans can work together and with the
administration in a constructive kind of way.
This was not about turning back the clock to the days when
you could discriminate against people with preexisting
conditions; this was about the opportunity for Democrats and
Republicans to work together to improve health care. We are
going to have a lot more conversations like that in the days
ahead. We thank you for your patience, and we will excuse you
at this time.
Secretary Sebelius. Thank you.
The Chairman. The Finance Committee is adjourned.
[Whereupon, at 12:18 p.m., the hearing was concluded.]
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