Pocket. This is for the walmarts, this is for the Koch Brothers that pay your salary and you should be ashamed of yourself. Lets finish. A couple of comment there is. The cost of productivity, hes disagreeing with your figures and the other caller mentioned this was another biggovernment program. Well, i would encourage the gentleman to take a look at the study we put out specifically for the fast Food Industry where labor is 25 to 30 of the costs. And why do people buy fast food . Because its inexpensive and fast. If it becomes more expensive theyll lose customers and raise costs higher. So analyze that and the fast Food Industry we found the price increase would be about 38 in the short term. In the long term what will happen is firms will install machines that automate these jobs. Youll see cashiers replaced with kiosks. Youll seema sheens like the alpha. Google it. Its been invited thats an automated hamburger that cooks 360 gourmet hamburgers an hour or custom grinds a meat patti. So lets say you want one half pork, one half turkey or whatever your patti will be, custom grinds it, keeps the flavor in, cooks at an internal oven, adds the bun and does this 360 burgers an hour without a single human worker doing everything after the setup. Those machines are expensive but if you raise the minimum wage to 15 and hour and the fast food restaurants want to avoid hiking up their price what is they deal is start buying machines like that and that will mean less jobs and less opportunities for the workers that kendall wants to help. Lets hear from kendall fells, reaction to the callers or what james sherk said. The ceo of papas just came out this month and essentially said theres just been a lot of hubbub and the industry as a whole is overreacting to the increases happening in the minimum wage and the increases in the wages of fast food workers and that the industry would adjust accordingly the same way they do for the price of chicken wings or biscuits, et cetera. What we have to keep in mind is this is a 200 billion industry. Its one of the fastestgrowing industries in the country. They have plenty of money. Its more than enough money to go around and in the end theres no evidence that shows that the increase in minimum wage or wages as a whole from major corporations who are making a billion dollars a year will result in job losses. As far as automation is concerned. Automation is a reality of life. A lot of these stores already have automation but they still have employees. Automation is in a lot of these stores but workers are still making 7. 25 and those workers are out there on strike also saying we deserve 15 an hour. Nobody knows what these workers need more than someone who has to live this life. Somebody like Guadalupe Salazar whos a mcdonalds worker from oakland whos received 4 raise between increases her employer has given her and increases in the minimum wage. Shes basically received a 50 increase in her wages in the last two years and we havent even won the campaign yet and that speaks for itself. Kendall fells is the director of the organizing organizing director of the fight for 15 joining us from kansas city. James sherk is labor and Economics Research fellow at the heritage foundation. Gentlemen, thanks for being with us on washington journal this morning. Thank you. Thanks so much for having us. Tonight on cspan, we remember several Public Officials and activists who died this year. Including former new york governor mario cuomo, former senators edward brook and Fred Thompson, gun control advocate sara brady and several rights activist julian bond. The main thing i think that we need to think about Going Forward. But what are the principle were going to operateqn a 15 or 20point plan is great. Ahha, i can beat him, i got a 30point plan. Great. But what are the underlying principles . When the plans go asunder but you cant get agreement on them, Something Like that i think the United States and we as its citizens ought to remember our first principles. What i call our first principles. I dont think the declaration of independence and the constitution of the United States are outmoded documents. The declaration tells us [ applause ] the declaration tells us the rights come from god and not from government. The constitution has a framework set up not as some kind of result of bureaucratic haggling but as something that is designed to protect and promote freedom. And the president is right. In many ways we are a shining city on a hill. But the hard truth is that not everyone is sharing in this citys splendor and glory. A shining city is perhaps all the president sees from the portico of the white house and the veranda of his ranch where everyone seems to be doing well. But theres another city. Theres another part to the shining city the part where some people cant pay their mortgages and most young people cant afford one. Where students cant afford the education they need and middleclass parents watch the dreams they hold for their children evaporate. In this part of the city there are more poor than ever. More families in trouble, more and more people who need help the but cant find it everyone worse, there are elderly people who trumbull in the basements of the houses there and there are people who sleep in the citys streets, in the gutter where the glitter doesnt show. You can see the entire speeches from mario cuomo and Fred Thompson as well as other Public Officials and activists who died this year tonight on cspan at 8 00 p. M. Eastern. This sunday night on q a a Michael Ramirez on his book of a tier yall cartoons. I have this figure thats a conglomeration of extremist Israeli Settlers and a palestinian figure who if you notice hes on a prayer rug but he has his shoes on so both these figures are sort of utilizing a false religion for political purpose so it proves once again i am an equal opportunity offender. Sunday night at 8 00 eastern and pacific on cspans q a. The acting administrator of medicare and medicaid testified earlier this month on the staterun helts insurance exchanges where millions of americans have purchased Health Insurance. This house subcommittee hearing is almost two hours. Good morning. This subcommittee will now convene. The oversight investigation of subcommittee and commerce. This hearing is to continue examination of state Health Insurance marketplace established under the Affordable Care act, the aca. On september 29, the Committee Heard from a panel of witnesses representing six state exchanges. While attempting to paint a rosy picture, its clears you there are shortterm and longterm problems with state exchanges. One of our main concerns we will address is how centers for medicare and medicaid services, or cms is conducting oversight in taxpayer dollars invested in establishing state exchanges. Today we expect the director from cms back. Today cms has handed out 5. 51 billion to the states to help them establish insurance exchanges. Despite this whopping investment of taxpayer dollars, four state exchanges have been turned entirely over to the federal exchange while countless others are struggling to become selfsustaining. As the federal dollars run dry and enrollment numbers appear below administration projections, all state exchanges face significant budget shortfalls. By law, state exchanges were supposed to be selfsustaining by january 1 of 2015. At which point federal establishment grant money could not be used to operate the exchanges. Not be used. Yet cms has been issuing nocost extensions to exchanges allowing them to use the remainder of the grants through 2015 and in some cases 2016 against intent and letter of the law. Federal funds still cannot be used for operational costs but because of lax oversight and weak guidance we dont know whether or not state exchanges have spend this federal money appropriately. We intend to get clear answers today. In the over five years since the aca was enacted cms has issued two documents to inform state exchanges on the ways to spend federal establishment funds. The first guidance issued in march, 2014, was less than a page. The second guidance came only after the hhs office of Inspector General issued an alert to acting administrator andy slav it have highlighting with urgency the state exchanges that state exchanges may be using grant funds for operational expenses, which is not allowed. In fact, the oig had discovered based on budget documents that Washington Health benefit exchange might have used 10 million in establishment grant funds to support operations such as printing, postage and bank fees, again, not allowed. Hhs, oig urged acting administrator slavit to develop and issue clear guidance on the appropriate use of funds. What followed was a vague document bereft of concrete examples, based on these guidan guidance one wonders if theyre encouraging them to spend federal dollars in any way possible to keep the exchanges limping along. Through the committees information, we have learned state exchanges may have used establishment grant dollars to cover operational cost or transition costs when a state exchange shuts down and moves to the federal flat form. It hasnt been easy to discern because these funds have been comingled and expenses and costs have been redefined. For example rent, which is an operational cost by any definition suddenly becomes Business Development cost. Convoluted by design. In spite of or perhaps because of cms handsoff approach, exchanges are struggling to become selfsustaining. They face it problems, lowerthanexpected enrollment numbers and growing maintenance costs and as the hhs oig pointed out, state exchanges are facing uncertainties in revenue. Four state exchanges hawaii, nevada, new mexico and oregon have shut down their state exchanges and these four states alone receive 733 million in federal establishment grants. The taxpayers return on investment appears minimal at best. Further, there is little indication that cms has attempted to recoup this money. Its our hope the acting administrator commits to and lays out a blueprint recouping these dollars so the American People are not footing the tab for another aca failure. To better understand the challenges these exchanges face, the committee has a number of questions, why are state exchanges troubling to become selfsustaining given the extraordinary taxpayer investment . Is it lack of cms accountability oversight . Is cms taking a hands off approach which has allowed money to be spent uncontrollably, unwisely and impermissibly . And where an exchange has decided to shut down has cms sought to recoup the grant dollars. Are the exchanges doomed to fail . In my estimation, sees me oversight has been sloppy and ignorant butcms oversight has been sloppy and ignorant but we hope they will answer questions in overseeing the aca state exchanges swell provide members of blueprint and how the administration recouped loss taxpayer dollars moving forward. Right now the situation is a mess and taxpayers are on the losing side and thats unacceptable. The hearing comes as a time when premiums are on the rise, major insurers are questioning their decision to join the exchange, coops are failing and state exchanges are expressing doubts about their ability to exist long term. Mounting evidence suggests the aca faces insurmountable problems in 2016 and today we have an opportunity to ask cms top officials if and when the administration will address these concerns in a meaningful way. I think that the acting administrator slavit and look forward to hearing answers to our questions. I recognize Ranking Member ms. Degette for five minutes. Thank you very much, mr. Chairman, today were having yet another hearing on the Affordable Care act. As usual, mr. Chairman, im disappointed that here we are on having another hearing focused on undermining the law rather than focusing our efforts on trying to make the law work better and i know with respect to the topic of this hearing today cms is trying to implement efforts to make the law work better and i think that we should be using our time today to see how we can partner to make that happen. Since the aca was passed over five years ago, this committee has held dozens of oversight hearings on the law. Not one of them has been focused on ways to make the law work better. Not one of them has pressed a balanced view of the laws benefits, but despite that weve gotten a lot of good news out of these hearings about the number of americans that the law is helping and about what the agencies are trying to do to improve coverage despite some of the bumps in the road. You know, even more disturbingly to me, though, its been really an uphill climb to implement this legislation because some of our colleagues, both here in congress and around the country have intentionally placed roadblocks to implementation that make it harder for their own constituents to access care. Some of the governors when the law was passed refused to implement the Medicaid Expansion which would give Health Care Coverage to millions of lower income americans. One republican president ial candidate who also happens to be a u. S. Senator bragged he killed obamacare by limiting risk quarter payments. Ive got two things to say in response to that. First, i think its really disappointing that members of congress would brag about taking Health Care Away from vulnerable americans. Secondly, i think people are wrong on the facts. The Affordable Care act does s not going anywhere. Despite countless attempts to repeal, undermine, defund and defame the law, the Affordable Care act is making comprehensive health care a reality for American Families. Its saving lives. Since passage of the law more than five years ago, an estimated 17. 6 million americans have gained coverage through the acas various provisions. According to the recent cdc data, the uninsured rate has dropped to a historic low of 9 , down from 16 in 2010. I just ran into my colorado folks yesterday at the airport coming out here and they told me despite the fill your of the colorado coop a month or two ago, theyre expecting because of the revisions in colorado, they may be up to 95 coverage in colorado pretty soon. Thats extraordinary for the health care of our constituents and thats what we should be working to achieve. Ive gotten a article from the New York Times entitled rise in Cervical Cancer detection is linked to Affordable Health care, mr. Chairman, according to researchers from the american cancer society, more women are receiving an early diagnosis of Cervical Cancer due to an increase in Health Insurance coverage under the aca. Id like to ask unanimous consent to put that in the record. Without objection. Early diagnosis of Cervical Cancer improves womens prospects for survival of the disease and bolsters their hope to preserve fertility during treatment and women with Health Insurance are more likely to get a screening that can identify Cervical Cancer early. You know, i know that its hard to make this specific about constituents. Its hard sometimes for my colleagues on the other side of the aisle to acknowledge that actual people are being helped by this law but millions of americans are benefitting from it and a lot of people like me think we could be making it better. The reason im talking about this this morning is because on the house floor we will be likely voting this week on a reconciliation bill to repeal key parts of the Affordable Care act. This will be by our calculation the 62nd attempt to eliminate or repeal key provisions of the aca. If inacted, virtually all of the historic gains in Health Care Coverage weve made in the last five years would be lost. This would be a tragedy for the American People and a gross failure of leadership. Weve done so much good this year in this stub committee. We did bipartisan work on pandemic flu. We did bipartisan work on the volkswagen information and many other things. I think this could be the committee where we had these hearings and then we sat down to think about how to improve rather than undermine the Affordable Care act. I hope thats what well do in the next year but frankly i dont hold out a lot of hope. I yield back. I want to welcome today we have several members here from the National Democrat institute in support of the house democracy partnership. This is a peertopeer exchange cochaired by representative peter rosco and representative david price and guests from kenya and peru. Welcome here. Just to let you know. We this is a love fest among us. We all like each other so take back to your country sometimes we argue but in the end we are in here for the same cause. If the chairman will yield. We might disagree but we disagree in a civil way. Watch this, see . [ laughter ] thats torture for me. I now recognize mr. Upton for five minutes. I thank the good chairman. Today we continue our oversight into the on state Health Insurance marketplaces. Hardworking taxpayers invested some 5. 5 billion to establish the state exchanges yet they still continue to struggle, as we know. Exchanges are struggling to sign up new customers, struggling to fix it systems and ultimately struggling to become selfsustaining, we welcome to cms acting administrator mr. Slavit and we appreciate his testimony on this very important issue, as the states changes struggle to survive. We seek to understand cms role in overseeing them. The governments robust investment in federal funds should be accompanied by equally robust accountability by the stewards of taxpayer dollars yet the committees oversight has revealed cms took a handsoff approach from the state exchanges. For example, cms rubber stamped nocost extension requests, issued vague guidelines and welcomed failed exchanges to the platform with no questions asked. We want to hear how cms plans to improve its oversight to ensure theyre spending some grant dollars legally. And wisely. We must understand the longterm affordability of exchanges against the backdrops of rising premium, failing coops. The writing is on the wall that we could see yet another big taxpayer investment spiral down the drain. So its critical that we all understand the shortterm and longterm challenges that state exchanges are facing as well as what cms is doing to help the exchanges confront the challenges. Regardless of ones views of the president s health law, the law and its implementation demand oversight as we continue to see today billions of dollars are certainly at stake and i yield the balance of my time to vice chair blackburn. Thank you, mr. Chairman. We appreciate youre here, mr. Slavit. Shopping on the federal exchange was supposed to be as simple as shopping from insurance as kayak or esurance and what we continue to hear from our constituents is that this insurance, the obamacare insurance product is too expensive to use once they get it because of the copays, deductibles and premiums there. Its a very expensive product. We want to look at the gao report from september. As chairman murphy said, its difficult for our constituents and what it appears is that this has been a false promise that was given to people. That they would have Health Care Access because they were going to have insurance and that has not come about so we are very concerned about the dollars that have been spent on these state exchanges. Were concerned about the quality of the product and i yield the balance of my time to dr. Burgess. Thank you for yielding. Look, the administration has invested billions of dollars in an experiment. The experiment that did not include the necessary safeguards and, in fact, ignored successful models in the private market. The Health Benefit exchanges are one such experiment, billions of taxpayer dollars have been pumped in to reinventing the wheel and millions of americans myself included, have been forced to rely on exchanges to purchase Health Care Coverage. My experience as a consumer on healthcare. Gov has been extremely frustrating and my experience as a member of congress and a member of this committee and this subcommittee has been just as frustrating. I know there are those who want to accuse us of trying to undermine the law. That, in fact, is not the case. The law should work and we as members of this subcommittee, we as members of congress have a constitutional obligation for oversight as to how those federal dollars are spent. Its been extremely difficult getting questions answered. So i hope in the last year of the administration we can at least now admit to each other that there are Serious Problems with the law, that there are serious actions we could take too fix those. Thank you, mr. Chairman, ill yield back. I now recognize the Ranking Member of the full committee, the gentleman from new jersey, mr. Palone. Thank you, mr. Chairman, were here today for yet another hearing to attack the Affordable Care act. Since the august recess, the majority of the subcommittees hearings have been dedicated to undermining the law. The majority has called in the state exchanges and cms to criticize them and they have burdened them with massive document requests in the middle of the open enrollment. I do not mean to suggest that we should not be doing oversight of the implementation of the aca but what were seeing from my republican colleagues is not balanced oversight designed to improve the law. Instead, the majoritys efforts are designed to hamper employment station and undermine the Affordable Care act regardless of the facts. Frankly, its incredibly frustrating to sit here time and time again listening to my republican colleagues is lay into the administrations witnesses, criticize the efforts of their departments without any sense of perspective on the historic gains in coverage that have been achieved. I would have hoped by this point, nearly six years after the passage of the law, we could where implementation of the law faces challenges but just as importantly where it is helping americans lead better lives and become more productive citizens. We should be talking about ideas to advance the mission of the law to provide Affordable Care to all constituents or make key fixes where appropriate. We should target the remaining uninsured. As cms will testify today the aca is making the difference in the lives of millions of americans. Its making families and states stronger, making america stronger. The law has faced challenges but we have many more successes that you never hear about from my colleagues on the other side of the aisle so ill take a moment to ensure we hear some successes. Because of the Affordable Care act, 17. 6 million uninsured people have gained coverage through the laws provisions. Since the start of the open Enrollment Period, two million americans have selected plans through the federally facilitated exchange. More and more states are making the right decision on Medicaid Expansion which is benefitting their most vulnerable citizens as well as saving billions of dollars. Preexisting conditions can no longer preclude individuals from gaining Health Insurance. Consumers dont have to worry about losing coverage if their employment changes. Reductions in the uninsured rate means doctors and hospitals provide less uncompensated care which means fewer costs are being passed along to consumers and employers for health coverage. My republican colleagues insist on holding more hearings to undermine the law. Whats worse, theyre actively trying to take Health Insurance away from those who have it. This week, the house may be voting on a reconciliation bill to reveal key parts of the Affordable Care act. Care act which republicans have said they would offer for several years now let me say this ill believe it when i see it. Lets work in a productive bipartisan way to make the Affordable Care act work better instead of taking empty meaningless votes to repeal it and take Insurance Coverage away from our constituents and i yield back. As youre aware, the committee is holding a hear and when doing so has the practice of taking testimony under oath. Do you have objections to testifying under oath . I do not. I do not. Under the rules of the house and rules of the committee youre entitled to be advised by counsel. Do you require to be advise bid counsel . I do not. Please rise and ill swear you in. Do you swear the testimony youre about to give is the truth, the whole truth and nothing but the truth . Thank you. Let the record show the witness said yes. Youre under oath and subject to the penalties set forth in title 18 section 1001 of the United States code. You may give a five minimumry of your written statement. Chairman murphy, Ranking Member degette, thank you for the invitation to discuss statebased Health Insurance marketplaces. Im andy slavitt. Cms is working hard for the American Health Care Consumer and american taxpayer to provide access to affordable quality Health Care Coverage marketplaces, whether offered through states or federally facilitated marketplaces allow individuals and families access to information, tool, personal help, Consumer Protections and an array of Health Plan Options from private Sector Health plans. Setting up and managing state marketplaces is a significant task and id like to talk about how we provide oversight and assistance to the marketplaces but also watch over the american taxpayer dollars. In considering our oversight role, its important to understand all the responsibilities of a statebased marketplace. States must establish the infrastructure to review and qualify health plan offerings, develop online and Call Center Capabilities to provide eligibility, interfaith with state medicaid systems, develop Cyber Security eligibilities, outreach and dozens of other activities. Weve seen significant successes as states have innovated to meet the needs of their populations and are successfully serving their populations today having ensured millions of people. Every state has had its share of challenges during the startup phase, including five who have had more significant it t challenges and it represents 30 to 50 of a States Development budget given their other responsibilities. In discussing our three key oversight priorities, i want to focus in particular on those situations where states have had more significant challenges. Our First Priority is to be good stewards of the federal taxpayers dollars. This means returning unspent dollars to the treasury and closing grants, collecting improperly spent dollars and more from going out the door. Over 200 million of the original grant awards have been returned to the federal government and we here in the process of collecting and returning more. This means no new money to fix it problems was given or will be given to any of the five states or any other state that ran into difficulties we should not pay twice for the same result. Second our job is to manage every spend less time recovering from them. Every statebased marketplace has external funding sufficient to run their operations. Federal money may not be used for regular operations. We do a lineitem review of the expenditures a state proposes to ensure it complies with the law and conduct audits to ensure there is a full accounting of all federal dollars. Important to our approach we maintain control of the Purse Strings and 69 times this year weve denied use of federal funds. We also make adjustments through readiness reviews, detailed reporting of regular audits. Third and perhaps most important we assist a state in getting a return on their investment as measured by the value they provide to their state. For all the challenges theyve had, their ingenuity, their persistence has paid off for millions of americans. As after june 30, statebased marketplaces provided coverage to 2. 9 Million People, has helped millions access medicaid and the uninsured have declined an average of 47 since 2013 to under 10 . Now ive worked in health care in the private sector since the early 1990s and joined the government only last year. Among other things, i founded a company that assisted people who were unand underinsured. And ran an Analytics Organization touching virtually every part of the Health Care System. I can tell you from my perspective what a significant advancement has been made for American Families in a short time by giving access to care and eliminate the worries that come from not being able to protect ones own family. I can tell you how difficult it can be to launch and operate any New Enterprise of this scale. In conclusion, i have the privilege of serving as active administrator as we are celebrating the 50th anniversary of medicare and medicaid. The perspective it offers is that at this early stage of the marketplace there are millions still to educate and enroll and leaders are continuing to find the best, most efficient ways of meeting the needs of these populations. Cms oversight responsibilities are critical in this equation. Cms must not only be accountable for these responsibilities but we must take every opportunity to find ways to improve how we do our job, including taking outside input so we can best provide affordable coverage for consumers and protecting the investment by taxpayers. We do appreciate the subcommittees interest in this area, and i am happy to answer your questions. I recognize myself for five minutes of questions. The office of Inspector General found that washington states exchange budgeted 10 million federal dollars for expenses including printing and postage fees from july through december 31st of this year. These expenses are prohibited, but cms had approved them in washingtons grant application. I know you said you disprove them but how do you explain that . The early alert stated that there was a potential that there may have been misspent funds, but i dont think oig made that conclusion, and we conducted an investigation and looked through all their funds, i think there were few adjustments made, but state of washington by and large is spending its money and categorized it properly. We do have one small collection that we are undertaking with the state of washington, but thats in process. But the oig did say that was occurring, but you said there has been an adjustment made . Theres been plenty of adjustments, we have by background hundreds of interactions with the states. We rely all their line items and budgets monthly. So at any point in time they may have found something that they thought was classified improperly. We take advantage of the work of the oig and go conduct further the investigation ourselves. I dont believe we think all those 10 million were unclassified. Would you have found these if the oig had not pointed these out . I wouldnt represent that our team finds everything. I would say that we have multiple pieces of the process, most important being prevention. Once the dollar goes out the door, you have to spend an effort to collect it. So we spend a lot of effort preventing things from being misclassified. We do find things and collect them. And i think oig also finds things that we dont find, and when they do, we have a period of time that extends three years past when the grant periods end, and the clock hasnt started ticking yet, so we will make sure we collect anything that gets uncovered. Will you then post what your findings are in the oig to show this is an inappropriate category and notify states that if you have spent money in these categories you will be asked to return that money . Yes, states are all aware. Is it appropriate for state exchanges to transition healthcare. Gov after spending hundreds of millions of tax dollars on their own sites, and shouldnt there be other consequences . They failed and later they said sorry, it didnt work out. Does that seem appropriate . I think its important for us to recognize, states have the right under the law to decide whether they want to be a statebased exchange or federal exchange or to be a statebased exchange and use our platform. They have the right to change their mind for a variety of reasons including technical and otherwise. We think thats important. What also is important is if we find any money has been misspent or granted money we believe the state no longer needs, we control the Purse Strings. We have collected money from the state of maryland. With regard to the states trying to get into the Insurance Business and didnt work out for many states, but theres no real consequence if they were able to take the money, say, toss their hands up and say well, turns out it didnt work out, well just go to the federal exchange. Many of us have a concern, if there are no consequences then thats hardly a lesson. This is what i want to know. Do you have any plan or intention to gather back, to recoup the federal funds that have been provided to states to set up their exchanges only to shift into healthcare. Gov . Theres five states that have had most significant i. T. Challenges. Two of them maintained the role as state exchanges. Three of them are using the federal platform but are still statebased exchanges. In each of those cases its slightly different. In one of those cases we have recovered money. In another case, the state, two of the other cases, states in process of trying to recover money, after which we will try to go after our federal share. One of the other states we are in the process of closing down and collecting some money. It varies by state. But even states that had challenges, they were, by every measure, able to enroll people, they had contingency plans and eventually able to set up a system that worked, which extends, as i said earlier i understand that, but it was after a lot of failure and waste of money. And i would love if you could give us something in writing of what your specific plan is with recouping these federal lost dollars. Mr. Chairman, im assuming that youre referring to this gao report from september 2015 to congress . Yes. In these questions . Id ask unanimous consent to make that part of the record as well. Yes. Have you also reviewed this gao report . Yes, i have. That the chairman was asking you about . And one of the things that they said is that it was their finding that cms that had established a framework for oversight, but it wasnt always effectively executed. Did you see that finding . Yes, i did. And whats cms response to that, to that finding . Yeah, i believe we concurred with that finding. You know, from our perspective, we are overseeing a lot of grants, so engaging the oig, which we have worked in partnership with as well as gao are very helpful to us. And we take action when we get those findings. So did you take action as a result of that concurrence . Yes, we did. What did you do, briefly. We built a tool which allows and monitors all of the funding before it occurs, so were able to collect money, to stop money from going out the door that shouldnt. I think this hooks onto the question the chairman was asking you. If you could supplement your responses by letting us know the policies that youve implemented, i think that would be great. Yes. Now, can you tell me about cmss interactions with sbm officials like weekly checkin calls and site visits . Yes, i think we have dozens if not hundreds of interactions that relate to issues such as weekly checkin calls to site visits to audits. There. Administrator, what types of reporting are required from cms establishment grant recipients, and how are they used by cms . So, you know, we conducted at omb a123 financial audit. We have a Smart Program audit, an external security audit. The states have their own audits, legislature audits. So these numbers get pored over. And then how do you use them . Well, if we find that moneys been improperly classified either as a Cost Allocation or as an operating expense when it wasnt, we go collect it. And what types of independent assessments and audits are required . Well, theres the omb audit. Mmhm. Theres a large variety of audits that follow these. Sometimes i think as you said before states do misclassify or misuse the grants. So what steps does cms take then to bring the state back into compliance . To give you an example, we found that in the case of arkansas, roughly 1 million and weve notified them. And were in the process of collecting that. Theres three other states that have amounts of money that we thought were misclassified but i also emphasize, congresswoman, we do a lot more to prevent these from happening. That was my next question, yeah. Go ahead. I think 69 times this year we have caught in a request something to be used for generally an operating purpose that we didnt believe was an operating purpose, we believed, im sorry for a development process, and we denied the funding. In reviewing the original app. Reviewing the original request. And what types of evaluation does cms conduct on nocost extension requests. Pretty extensive. It needs to be to fulfill whats part of their work plan that they have set up and that they just need more time to establish. We all know that these things are taking a little more time to implement than people originally thought. Now i just want to shift, shift my questioning for a second. To talk about some of the things the aca is doing. The most recent data from the cdc and Census Bureau found that the uninsured rate has fallen to 9 from 16 in 2010. Im wondering, is this a new historic low in the uninsured rate . I believe it is. Do you believe that the Medicaid Expansion has played a significant role in these reductions . It has. Why do you say that . Because we see millions of people in the states that have expanded medicaid who now have access to coverage largely for the first time. They didnt have insurance before. They didnt have insurance before. And for these vulnerable citizens, can you talk about how the Medicaid Expansion has impacted them . Yeah, certainly. I think very briefly, congresswoman, when these families get access to health care for the first time, it changes their participation in the community and in many profound ways, but it keeps them healthier and i think it reduces costs for the long term. Thank you very much. We now recognize ms. Blackburn for five minutes. Thank you, mr. Chairman. Mr. Slavitt, lets go to page 8w of the gao report. I dont have it in front of me. On page 86, what you find is the grants that have gone out, and the pool of money, which was 4. 5 billion. And youve sent about 1. 3 billion out the door. So what we want to know is, wheres the balance of the money . Wheres it currently sitting . Yeah. Do you have a proper accounting of that . We do. We, in fact, we can provide you with an accounting of every dollar thats been spent, every dollar that hasnt been spent but we still have control of, and were in the process in many cases of pulling that money back. Okay. Then do provide us with that. We will. With that accounting, because we will need to see that. And, you know, if there is money that you are lets go to the arkansas situation. Okay. I know you had said there was a Million Dollars there unallowable. So tying back in to what the chairman was asking you, when you have a situation, do you give them a plan of action and a timeline for returning that money to the treasury . Yes. Sometimes theres a little negotiation at first, but then we do that, yes. Okay. It seems interesting there would be negotiation if they used it for something that was not allowed. Well, i think really this is all a matter of us explaining to them why we believe it was unallowable. Theyre reviewing it, reviewing with their lawyers. It takes a little bit of time. All right. How many other states have utilized funds for unallowables . For unallowables . I can think of at least three. And you plan to get all that money back . We do. Excellent. That sounds good. Also in the gao report, one of the things that is of concern to me is they say none, zero, nobody, not a one of these exchanges are meeting the desired operational outcomes in all functional categories envisioned by cms. So at this stage of the process, doesnt this demonstrate that the systems are incomplete and incapable of functioning properly . What i could tell you today is that all of the exchanges are functioning, serving the members in their states and their communities. And some of all of them have run into their share of challenges. None of this was easy. Some of them bigger challenges than others. But there have been some that are very successful, and i think the experimentation model of states then how do you answer the gaos assessment that none are ÷ meeting the desired functional outcomes . I think at any given point in time there have been challenges, things that have been delayed, have been in the contingency plans. But nobody is meeting the desired outcomes. We continue to get complaints about these exchanges. We hear from people that, you know, the dissatisfaction is rampant. It costs too much, its too expensive to use. The exchanges dont work, and then you get a gao report that says nobody is hitting the metrics. So why do you continue to put money in on this, if theyre not meeting the functional outcomes, the desired outcomes . Why are you continuing to put money into this . So i understand the question. And its an important question. Of course, 2. 9 Million People have been covered. Thats the point of these coverages. They are reaching the needs of populations that have never been meant before. So weve spent or could spend 4. 5 billion to get access to 2. 9 Million People. Thats what youre saying. Im saying the states have reduced their uninsured rate, the states that have statebased marketplaces to under 10 . And theyre still in the establishment phase. Its still early on. If theres money thats improperly spent or money part of a grant thats no longer needed we have every ability to collect that money, and well bring it back. So if you were in the private sector and you were five years into a rollout and you werent functional, would you give yourself an a or an f . I wouldnt agree with characteristic that they are not functional. The gao says they are not, so you are disagreeing with the gao report . I would say at this point the states are all functional. So you disagree. The gao says not any of them have hit the desired operational outcomes in all functional categories. Mr. Slavitt, it means, it aint workin. Let me take a look at the language they used and let me get back to you on the well, i would think that you would have known that answer if youre functional or not before you came to us. Yield back. Now recognize mr. Pallone for five minutes. Thank you, mr. Chairman. Despite countless attempts by the republicans to repeal and undermine and defund the Affordable Care act, it is making affordable, comprehensive coverage a reality for American Families. According to recent cdc data, the uninsured rate has dropped to a historic low of 9 down from 16 . So i want to ask administrator slavitt, can you put this in historic perspective . How significant is this drop in the uninsured rate, and can you comment on how the different coverage provisions of the aca have operated to result in these gains in Insurance Coverage . Well, since at least ive been in health care in the early 1990s theres been very little progress. So these strike me as fairly significant improvements. I think theyve come both from Medicaid Expansion as well as the offering of qualified health plans through the exchange. And you said, of course, that these gains really are historic, and i want to thank you for your contributions to making Health Insurance more affordable and available to millions of americans, but looking to the future, its my understanding that this open enrollment and future seasons are more challenging, because there are some that are hard to reach. Thats correct. Many of the remaining uninsured are actually still unaware or confused about how federal subsidies are available to help them purchase insurance, so i just wanted to ask you a couple questions about that. How is cms recalibrating its outreach and enrollment strategy in order to communicate with these harder to reach populations . I think everybody in the marketplace needs to figure out how to simplify not only the messages but how Health Care Works and how insurance works so people can understand which doctors are in which networks. Building tools for those things. These are important challenges and opportunities for all of us. Aim correct in stating that nearly 80 who are eligible ma be eligible for tax credits to purchase sub cititizsidized ins . Thats correct. So there are obvious advantages if theyre made aware. What is cms doing to communicate so that they understand that they may be eligible for the subsidies . I dont know if you answered that, but id like to know more specifically, if you could. For us, its really a function as you said congressman, making sure people are aware that there are subsidies, that there are plenty of choices available. These are people many of whom didnt have Health Insurance for a long time. So theyre not as connected to the process as the people who have been engaged so far. Ply own experience, when you began the open enrollment, i guess, was what, in the early part of november . Mply own experu began the open enrollment, i guess, was what, in the early part of novembely own experienc began the open enrollment, i guess, was what, in the early part of novembey own experience began the open enrollment, i guess, was what, in the early part of november . Is that when it began . November 1st. And we had a couple of events at, you know, the centers that were being set up. And there was a lot of, you know, outreach that was done, not so much in the traditional way, you know, with ads or media type things, but more, you know, just with people going around, you know, fliers and, you know, knocking on doors and that type of thing. And we did get a lot of people actually show up. You know, even that first day, and you know, its hard, a lot of times you have to, you know, figure out exactly where your Placement Center is. You know, operate on weekends, you know, do things that are not easy, to be honest, just to get people, and i just think that, you know, i know that a very good job is being done right now, you know, during this period to try to get to the people, but it is hard, and i, i just, you know, even when i talk to people one on one and i explain to them, you know, that they can get help with their premium, theyre kind of shocked by it, which, to me, is surprising six years after, you know, we voted on this that people still dont understand that they can get help with their premium, but thats the reality. This is one of the successes of statebased marketplaces because they understand their local populations better than anyone could here in washington, d. C. , and i think they do a nice job of that. Thank you. The chair will recognize mr. Mckinley for five minutes. Thank you, mr. Chairman, and thank you for appearing for us, mr. Slavitt. Several comments. One, i think, when your opening remarks you touched on some of your Mission Statement of providing oversight and assistance, but what was missing, i thought, maybe i because my hearing loss, i might have missed something, but i didnt hear about accountability. Trying to give us, give some guidance to the people, not only your own staff, but those affected parties with it. And the chairman talked a little bit about accountability. And i know coming from the private sector, there is accountability. We just a quick grab this morning of things here was a person that, because he had committed fraud, hes going to spend 30 months in prison. Here was another one that paid 7 million in restitution to nih. Heres another individual, 27 months for 335,000. In fraudulent documentation. And heres another one. Person is going to spend 364 days for inappropriate expenditures. What are we doing . Just checking the box that youre providing guidance . Or are you Holding People accountability . Either in your department or, like arkansas, is anyone going to be held accountable . We are accountable for making sure that the federal tax dollars are getting spent properly and we are accountable and have been collecting federal tax dollars when theyve been misused or not. Has anyone lost their job . At a state, in the state . In the state or in your own department, if youve, if you, theyve given inappropriate advice. These people all have gone to prison as a result of doing something wrong. I cant speak to whats happening in the states. But i would tell you that just because a state misclassified information doesnt necessarily mean that they did it with intent, and each case, as you know, its case by case. I keep looking for a good analogy and a quick term. You seem to be like a policeman or a state trooper along the road trying to people guided and under control, but when they speed, theyre ticketed, theyre fined. Im just wondering what youre doing for accountability after that, if they abuse it, then they should be paying for it. Well, were certainly willing to make all these things a matter of Public Record as we have. But you dont have anyone has been held accountable for anything going on. Im sure there have been people throughout the exchanges who have lost their jobs. Could you share that back with me and the names of any just give me a handful of names. Because surely during this process as convoluted as its been, theres someone that should be held accountable for it. And just in closing, you had mentioned about the affordability. I would, with all due respect i have a little problem because in West Virginia we only have one exchange representing the majority of the state. And there, their costs are going to be increasing 19. 7 if their rate is approved. Thats thats not affordable. What should be done . What can we do in West Virginia . Almost a 20 hike in premiums. Yes, i believe West Virginia has seen an uninsured rate from 17. 6 to 8 . Thats not my question. The question is affordability. Thats part of the title of this bill is the Affordable Care act. But under the entitlement, they cant afford it. Ill be happy to get back with you with specifics around the state of West Virginia. What i can tell you is that for the majority of the residents, they still have opportunities to get covered for less than 100 per month. No doubt we take accountability seriously and im happy to work with you on the state specifically. I want accountability. Thats what we started with. Who is going to be responsible for whats happening out here . All in federal government, but in yours right now is over this Affordable Care act. Whos being held accountable . I look forward to talking to you. Yield back. Mr. Mckinley, when you referred to the affordability, are you referring to the premiums . Deductibles . All of this together. The premiums themselves are 19. 7 increase. I think theres also concern for the deductibles. So if you could also get that information. Now recognize from practice ms. Castor for five minutes. Survey after survey over the past year all confirm that the percentage of uninsured americans has declined substantially. Due to both the Affordable Care act exchanges and marketplaces and also due to the expansion of medicaid in many states. In fact, the census data from september found that the uninsured rate dropped in each and every state. And this is a wonderful accomplishment. It was one of the overriding goals to ensure that our neighbors have that very basic, fundamental access to Affordable Health care. Although all states saw a reduction in the uninsured rate, states that set up their own statebased marketplaces and expanded medicaid saw the greatest gains. For example according to the census data and mr. Yarmuth will like this, from 2013 to 2014, kentucky showed an over 40 drop in the uninsured rate. Oregons rate dropped 34 , and minnesotas rate dropped 28 , and further declines in uninsured rates are likely to continue into the next year. Now florida, my home state doesnt have a statebased marketplace, but were going gangbusters on the number of my neighbors now that have access to an affordable plan. And it was announced just last week that as my neighbors enroll and renew coverage, were approaching over 500,000 so far, just over the past four weeks, thats out of the 2 million all across the country that are renewing in the federal marketplaces. And if you all are looking for a holiday gift for a loved one, for your son or daughter or niece or nephew, be sure to get them enrolled by december 15th. Because then they can start their coverage on january 1st. Were very fortunate in the tampa bay area, the average cost of our standard of Exchange Insurance plan is actually dropping this year. And so it is very helpful to have that competition in the areas where we have that competition costs and the costs of plans are going down. But back to the statebased exchanges. Administrator slavitt, what do the declines tell us about the statebased marketplaces . Do you think they are succeeding overall . Yes, congresswoman, i think they are. I think the statebased marketplaces are on arm doing even better than the federal marketplaces. And do you have a sense of how many people have enrolled in coverage through the statebased marketplaces so far . Ago of june 30th, the number was roughly 2. 9 Million People. And what role has the premium support played in that . And who receives the premium support . Whos it available to . Sure. So the cost sharing reductions and the tax credits that are available through the Affordable Care act really are allowing people to afford their coverage for the first time in many of these places, so its been a big impact. And what weve found in florida is its kind of complicated for folks whove never had the ability to afford health care before, the navigators are playing a very important role, because theyll sit down with you and go through all of the options and what makes sense for you or your family. And youve seen this same thing across the country . Absolutely. Absolutely. I was just at a Community Center and saw the exact same thing. And what more can we do to continue to lower the uninsured rates even further . So we are willing to work with any state that hasnt yet expanded medicaid that is interested in having a conversation. Yeah, thats my state. Boy, we have thousands and thousands of my neighbors. And its just been governor scotts been so intransigent, while it shows that it would lower costs, the chamber of businesses, hospital, okay, youre willing to work, but what happens when you run into this wall of unreasonableness and unwillingness to expand medicaid . Were willing to work with any state. We know the states have their local concerns and were willing to entertain them on their terms. We are open for business for states that are interested. I know youre still willing to talk to florida. I hope we can put the coalition together again to do it. And even though we have those challenges in certain states on medicaid, and there are going to be glitches and audit reports that are not so favorable in some ways, its still important to remember the purpose of these exchanges and the grants that support them is to provide Affordable Health coverage. And its great to see that the Affordable Care act is providing that lifeline to affordable coverage and Consumer Protections and that the state and federal exchanges are achieving those goals, so thank you very much. Gentlewoman yields back, recognize dr. Burgess for five minutes. Thank you, mr. Chairman. Mr. Slavitt, im going to depart a little bit from the stated purpose of the hearing. Its so rare that we get the cms administrator in here, i think its been two or three years, so theres some things that i feel that i need to ask you since i have the opportunity to do so. But first, i want to offer to colleagues on the other side of the dais complaints that no one on the republican side is trying to improve anything in health care, i have had a bill out there hr 1196 which would al lou the bronze and silver level plans to be each considered as an hsa compliant plan. You have high deductible insurance. When i had an hsa i had a higher deductible. And i could put some of that money away to use toward that high deductible. Weve made it very, very difficult for people who have these high deductible policies, but, again, id encourage people on the other side of the dais to look at hr 1196. If you can suggest improvements we have something to talk about. But it says every silver and bronze plan would be hsa compatible. You wouldnt have to look to find one thats hsa compatible. They would be. And another thing thats straightforward, currently i have a Health Savings account. Im capped at 3400 a year that i can contribute, but my deductible is 6,000 on a bronze plan in the ppo, so why not make those two amounts equal . And if the deductible is 6,000 in a bronze or silver level plan, let that be the cap on the amount they put away into the Health Savings account. Now, as i sit here and listen to the discussion on both sides of the dais, i feel like im stuck in a dickens novel. Its the best of times. Its the worst of times. So i think the fair observation is that the Affordable Care act has never had, never had even a plurality of positivity. Its about a 52 to 53 negative right now, when you look at the polling numbers. You have to ask yourself, youre giving something away, why arent people liking it more. And the answer is because even though youre giving something away, its still really expensive to live under the Affordable Care act. Now my personal experience, i rejected the special deal for members of congress, and i just took a bronze plan at healthcare. Gov, one of the most miserable experiences ive ever been through trying to get signed up for that darn thing, but look, ive got an Insurance Premium thats higher than ive ever paid in my life. I have a deductible that quite honestly leaves me, at least in my consideration, functionally uninsured. People have asked me, is your doctor on the list of providers you can go to . I dont know, because im not going to look, because im not going to go to the doctor. If i cant fix it myself, thats that. But im not going to spend 6,000 on an office call or e. R. Visit. And most people actually fall into that category. So once again, even though you have people with that insurance you have people financing a lot of their day to Day Health Care needs out of cash flow, which is exactly the way it was before, the only difference was you could in fact buy an affordable policy before, now you simply cannot, and oh, by the way, were going to fine you if you dont do that. I also have a question about some of the implementation on the Affordable Care act, and i apologize for doing this to you without warning you before. But section 1311h, subsection b, which deals with hs, were talking about the exchanges. H deals with quality improvement, enhancing patient safety, a hospital greater than 50 beds. Next paragraph is b, a health care provider. And here are Health Care Providers that can work in the exchange only if a provider implements such mechanisms to improve Health Care Quality as the secretary by regulation may require. And the start date for that was january of this year. So my question to you is have the rules been written on 1311h when my provider friends ask me where is this in the rule making process, has that in fact happened . Are people going to be excluded from the exchanges because they dont meet the secretarys definition of quality, and has the secretary defined quality, and are those definitions likely to change . Thanks. So i think your question was relative to how were implementing the quality provisions in the Affordable Care act relative to exchanges. And i could spend more time with you, either here or in another setting, kind of taking you through the quality steps were introducing a whole series of quality reporting measures that are going to be coming with the exchange shortly. I think i understood have you excluded a provider based on quality . Im not sure i understand your question correctly. I want to make sure that i said it at particular subsection. We do reviews, and i think we do reviews based upon the Network Adequacy. Im not sure weve yet excluded any provider for quality purposes at this point, but i will get back to you. Chair recognizes mr. Tonko for five minutes. Thank you and welcome administrator. As you mentioned in your opening testimony we need to keep in perspective that the Affordable Care act is working. And it is working best in states that have embraced the law and taken advantage of the tools that the Affordable Care act provides. When states take ownership of the law and its benefits, the residents of that state see better outcomes. And let me use as an example my home state of new york. We expanded medicaid. We set up our own exchange, the new york state of health. And this year we are one of the first states to utilized basic Health Plan Option known in new york as the essential plan. The essential plan will help people toward the lower end of the income spectrum but above the Medicaid Eligibility line to gain access to quality Health Insurance for as little as 20 per month. Because new york has taken a proactive approach to health care reform, the citizens in our state have reaped the benefits. More than 2 million new yorkers have enrolled in coverage because of the Affordable Care act. Certainly, with that in mind and across the board, states have been have pursued the statebased marketplace models. And theyre serving as laboratories for innovation, testing new roles for enrollment and Consumer Protection and they are tailoring the aca to their own given citizens. With that in mind, administrator, california has been a leader in the active purchaser model. Can you explain what this is and how this has helped covered california ensure access to highquality, affordable Health Insurance coverage . Thank you for the question. I think this is an example of a state innovation where california has really been, as the description says, actively involved in defining the benefit offerings for the residents of their state. I think quite successfully given both the number of people that have been covered, but also the management of the rate of cost has been, i think done a very nice job. Now are other states taking steps that you know of to qualified health plans . I believe there are several others, yes. Any number that you have in mind of how many states . Let me get back to you on the exact number. Thank you. And what are the steps are the sbms taking to improve the quality of care to transform the Health Care Delivery system . I got back from a tour of several states. And theyre each doing unique, innovative things. Some are reaching out into communities where theyve got specific needs. But, again, i think this is a benefit of the model of the state having their own, operating their own exchange. It gives them more control to be able to tailor things to the needs of their population. And as we move forward, does cms plan to encourage states to set up and operate their own exchanges . What federal support will exist out there . Will remain for our other states to plan to continue their own exchanges . The law provides every state the flexibility to make their own decision, but we will of course support any state that wants to set up a statebased marketplace. Today if the state wants to do this, they get the benefit of all the best practices and Lessons Learned that the states that originally did it didnt have access to. Did we hear do you hear from residents of these given states that have not expanded medicaid, for example, or established their own exchanges . Do you hear from any of the consumers . We do. We do frequently. And whats the whats that dialog like . Is it one of concern . Frustration . You know, i think anybody who doesnt have coverage has to manage their own personal family situation very differently than the rest of us do. Know, they dont do things, typically like let their kids play sport in school, because they might get hurt or injured. So theres a whole set of things that are in the insecurity of peoples lives that those of us who have insurance dont have to deal with every day. Well, i certainly appreciate the work that youre doing. I know that it takes a lot of focus and concerted effort to move us into, transition us into a new era of Health Care Delivery, and we thank you for the work that youre doing at the agency. With that, mr. Chair, he yield back. And i recognize the gentleman from texas, mr. Flores, for five minutes. Thank you, chairman. The aca wanted the state exchanges to be selfsustaining after january 2015. At which point they can no longer use grant funds to cover maintenance and operating costs. And yet, as you heard earlier today, according to the gao report, the greatest challenges that stating with statebased marketplaces face are one inadequate staff and two, inadequate funding. And you answered a question earlier. And in that question, you said this. You said statebased exchanges are doing better than federal exchanges. So given that the gao report says that the statebased exchanges are having a problem, it doesnt foretell good news for the federal exchange. None of the statebased exchanges were fully operational in all the required functional categories as of february 2013. You heard that from ms. Blackburns question. Four have already transitioned because they failed to be selfsustaining. My question is this. How many more state exchanges do you expect to fail to make the transition to the federal exchange . I believe what i said earlier that the states have been even more successful at reducing uninsured rate. The National Average has been 45 . Statebased exchanges have done about 47 . I think both successful, states even more so. Lets go to my question. Do you expect more state exchanges to fail to make the transition to the federal exchange . All the states have access to a source of their own funding, either through an assessment that they have on the Health Insurers in their state so are you saying no state exchanges are going to fail . Im saying all have funding. Its a dynamic world. We do an evaluation at least twice a year. Based on those evaluations, how many state exchanges do you expect to fail and move to the federal system . I cant predict, because there are a lot of factors, including their own decision about given this trend, do you think the selfsustainability is and always has been a serious situation facing these exchanges, the state exchanges . So, as i said, as of today all the states are sustainable. Whether they will be in the future, im not willing to predict. But as of today they are. The underlying economics of the aca have not changed since its inception. Was there any work that cms did that could have predicted that these state exchanges would fail . I mean, did you know in advance that any of the state exchanges would fail because of sustainability . A lot of this comes before my time, but i wouldnt classify a challenge as a failure. I think every state has had challenges. But every state today is successfully enrolling individuals in their state, and every state has sources of funds sufficient to run their operations, so i would measure that as a success. When cms granted the funds to set of exchanges, how did states like hawaii set up their exchanges . These are decisions made before my time. So i cannot speak to what was being thought of at the time. Its an ongoing process for states to make that evaluation, and as i think youre aware, the states of nevada and hawaii have decided it would be more efficient to maintain the statebased exchange but use our platform. Because theyre broke and couldnt sustain themselves. How much has been recovered, i would ask for granularity on that and each state how much each state still owes that they have not repaid back to the federal government. And the last question, how would you ensure the states have not used and will not use grant funds for improper expenses after january 1st, 2015. Yes, i will provide that information that you requested. And we do this through several steps. Most importantly is to prevent them from spending the money improperly in the first place, this year, 2015, 69 occasions we have rejected a states request to spend the money improperly. If it turns out that they have, for some reason, we conduct an audit, and we go back, and then we go through a collection process as ive said. We have the first several states that weve begun the process for have begun to refund money, and we take that very seriously. Thank you. I yield back my time. The chair recognizes another gentleman from texas, mr. Green. I thank cms for working with us. On something other than the gao report, Blue Cross Blue Shield recently announced that they will no longer be offering a ppo plan in the National Exchange in texas and also in the individual market. This means theres no ppo plans on the individual and exchanges policies, as a result Specialty Hospitals like md anderson and Houston Texas Childrens Hospital would be out of network. Group plans are not under the same decision, so they will still have ppos. Blue cross and blue shield texas pulled the plan saying it is no longer financially feasible, that they could not raise rates for ppos without raising rates for all the plans. This is not limited to the texas example, because we are a National Exchange and not a state exchange, but has reported is an issue in other exchanges across the country. What can cms do to address the issue of Network Adequacy that would ensure that plans with premiere and Specialty Hospital in network are available to consumers in the original market . Thank you for the question. We have just released a proposed rule around Network Adequacy. The National Association of Insurance Commissioners has also done some work in this area. But let me also say that this is an early stage of a market. And consumers are in the process of communicating through what plans they choose what things theyre willing to pay for, what things they value and what things they dont. And health plans are in the process of trying to figure out offerings that are affordable and meet the needs of individuals. I think we need to recognize this is still in year three of an early set of offerings, and i think if consumers suggest that they will want certain things in their networks, my suspicion is that the health plans in those states will begin to make those things available. The houston market, if you dont have texas childrens or md anderson or a major full purpose hospital in our system, its going to limit their opportunities for even using. From your perspective, is there any actions that congress can take to address this issue . I think we should just continue to listen to all of us continue to listen to residents and make sure we adjust and adapt whatever our regulations are or however we are viewing this in the context of making sure that people are getting their basic needs met, and we make sure that there is sufficient Network Adequacy, and we do a review prior to allowing a state to go on the exchange, and if we hear problems wed like your office to let us know of specific instances. Let me talk about the open enrollment for 2016. November 1st marked the beginning. Im interested to hear how things are going. I realize you may not be able to speak to the federal marketplace in terms of early data, but how are things going with the open Enrollment Period and how many folks are shopping for and signing up for some of the plans . I think weve had 3. 5 million applications and 2 million plan selections of i believe 1. 3 million have been to renew coverage and 700,000 have been to get new coverage. And of course, we are now just beginning a what has been a very big ramp up period between now and december 15th. People tend to be deadline driven, and this week we are seeing that acceleration we expect to see through the middle of december. In our area in houston, both with the original signup and the second time, youre right, we all procrastinate. What types of indications are you receiving from the states on their enrollment . Any information on how enrollments going in states that have their own plan . Ive seen some preliminary data. It looks to be pretty well on track to what they expected so far. I understand several statebased marketplaces as well as healthcare. Gov are offering enhanced shopping compare tools to help consumers make better choices. Can you elaborate on what things are being offered to consumers and why are such innovations important . I think this allows me to speak to the question about deductibles. 80 of consumers have accessed the plans that offer Services Like primary care visits, prescription drugs outside of the deductible. They dont need to meet the deductible before they hit them. And the tools youre describing allow people to understand whether a physician is in their network, whether a drug is in their specific plan and how to make the tradeoffs exist between coinsurance and premium levels which i think is a complicated thing for people. So statebased exchanges as well as the federal exchange all have those types of tools i shouldnt say all. Many of them and certainly the federal marketplace has those tools available. Thank you. Now recognize the gentleman from oklahoma, mr. Mullin, from for five minutes. Thanks for being here today. I know sometimes that seat must get uncomfortable. But theres real questions and real concerns, and i dont want people to get caught up thinking this is a partisan issue, because really, this is about taxpayer dollars, and whats been going on with it and if theyre being misused. If we remember back, this was supposed to be budget neutral, and that hasnt taken place, and so now the american taxpayers are on the hook for it. And whats happening with the dollars . Where are they going . Whats the accountability process . And so i kind of want to maybe go down a different path with you. My understanding is that state operating on the federal exchange receive a 3. 5 user fee . For the platform, is that correct . The health plans have the fee, not the states. The health plan does . What happens to the 3. 5 user fee . It goes to Fund Exchange operations. Who pays that . Does the state pay that . The Health Insurance company. The company does . So the user, the insurer. The insurer, yes. So it gets passed down to them. If the state closes its market place and transitions into the healthcare. Gov, is it required is it required to charge the 3. 5 . If a state continues to operate as a statebased marketplace right. But uses the federal platform, we just have a rule that was proposed last month thats proposed, so its still open for comment period, on what the fee would be and the fee thats proposed is 3 . The states that are currently on it, though, do they pay it . Do the insurers that participate in the fee states such as oklahoma . The states that are well, we have some states that have obviously closed down, and theyve went now, if im not mistaken here, theyve went into the marketplace or transitioned out into healthcare. Gov, are they currently having to pay the 3. 5 to participate in healthcare. Gov such as other states that were already in it. Again, the states dont make the payment, the plans do. The plans do, but theyre operating inside the state. Yes, and the proposed rule is for 2017, january. So oregon, nevada and hawaii that recently came out. Yes. Theyre not theyre users inside the state, their insurers inside the state, are they required to pay the 3. 5 . No, they make the payment to the state. Okay. The current individuals, current states that are in it, are they paying a 3. 5 . The three you just mentioned . No, they just came into. Current states that are already offering inside the healthcare. Gov. Yes. Theyre paying it, but the states that are coming out arent . Yes. Why . The law didnt contemplate a splitting of duties. One of the things the law didnt contemplate a lot of things. It didnt anticipate a lot of this. We get that. But if one state is the users inside the state is required to pay for it and the other one isnt, then who where is the offset coming from . The first thing we had to do is determine how much is the appropriate amount to pay given that the state maintains a lot of responsibilities. Remember, i. T. Is just 30 to 50 on average of all of the responsibilities relative to a state budget. We are setting so once that is done, were now setting the fee for 2017 contemplating the fact that they have had that year that you have described. So well set to make sure that we have essentially evened up the tables. But the first year they have been waived . First year they have been waived, but the second year fee contemplates the fact that they didnt pay for one year. They will go to 7 . No, its not 7 . If youre making up for the last year, then where does it come from . The states have their own another set of duties. So the calculation is not as simple as 3. 5 . The calculation is based upon what portion of the a lot of complications inside this bill and we understand that. There is a lot of figuring that we cant get to. Im literally trying to figure it out. If theyre trying to make up for it, simple math is if you waived this year and making up for it next year 3. 5 and adding an additional year would be 7 . Thats not how the math works, but im happy to sit down with you and washington you tlk how obviously because im confused, too. Im not trying to be difficult. Im trying to figure out is oklahoma making up for the lost fee . If theyre missing it, the states are already on it, are we having to pay, the taxpayers inside oklahoma, are they having to pay for the poor exchanges that were already set up and the failures of the taxpayers that theyve already paid on top of i completely understand the question. Its a very fair question. Id be happy to sit down and back you through the math, the thing i want to make sure thats clear the states that are using the federal exchanges are still running call centers and many other activities so its not as simple as taking the whole fee and moving it. Ill yield back in just one second. If you can if you can sit down with me please put it on paper because id like to share it with the committee because i think all of us need to figure it out. Yes. As i mentioned its pat of a proposed rule so theres certain legal restrictions we have. Thank you. Now recognize mr. Yarmuth of kentucky for five minutes. Thank you very much, mr. Chairman. And thanks to you, administrator, for being here and your work on this issue. As far as im concerned this is a very timely hearing because as were sitting here the inaugural events are jubunder way for mat beven and he and i have very different perspectives on the Affordable Care act in kentucky. Hes proposed as one of his Campaign Priorities to dismantle our statebased exchange which is called connect. And im very proud to represent louisville and proud of the work of our outgoing governor in implementing the Affordable Care act. With the expansion of medicaid in our state and the successful launch of connect weve seen more than 500,000 kentuckians gain access to quality, Affordable Care, uninsured rate in the commonwealth has dropped by more than half and in my district by 81 which is pretty astounding. In my opinion obviously rolling back these successes would be shortsighted. It would jeopardize the health of a half million kentuckians and waste millions of taxpayer dollars and cost us jobs and hurt us economically. Id like to ask you, administrator, a few questions about what it would mean to undermine our Successful Exchange connect. I believe im correct in about 280 million was spent in setting up kentuckys exchange, is that correct . In the ballpark. Pretty substantial investment. And is it true that if we were to dismantle connect and move into the federal exchange that kentucky taxpayers would have to pay about 23 million . Ive seen second hand similar number but its true that there would be some expense to the state. So, millions of dollars would be spent to shut down what most Health Care Policy experts consider to be a hugely Successful Exchange. As a matter of fact, one republican state senator Ralph Alvarado who is also a physician has proposed marketing our exchange to other states because its been so successful. Would you on behalf of cms consider kentuckys exchange a success . I would congratulate kentucky and the state and everyone involved. Kentuckys been a terrific success. Now, segueing on congressman mullins questioning, we know now that the federal exchange, it would be 3 roughly charge which would be passed down to consumers. In kentucky its 1 . Thats what Insurance Companies plan pay in kentucky. So, clearly if we moved to the federal exchange consumers would have to pay more for their policies, apples and apples, is that correct . I think thats correct. And would it be reasonable to assume that, again, reasonable to assume that they would be passed on . I think thats reasonable. Those costs. So, shutting down connect will either raise Health Insurance premiums or drive insurers out of the market, cost taxpayers more than 20 million, eliminating hundreds of jobs and harming the kentucky economy. Administrator, is there any way that you can think of that kentucky consumers would benefit from shutting down the connect, our statebased exchange, and moving to the federal exchange . Well, of course, by law these are state decisions and were willing to cooperate and support the state in any way we can, but it feels like kentuckys done such a great job and its so successful that it feels like its going to be a good course for consumers to stay where we are. Knowing what you know about it, is there any way in which consumers would benefit from that kind of switch . Not that im aware. Thank you for that. Just before i close, one of the things that i think is important to recognize is that while some premiums have still gone up, while we still have issues with deductibles and im very glad that you gave that explanation in the last session about the reality of deductibles, that what we really need to focus on is figuring out how to deal with the high costs of health care. And weve seen incident after incident of pharmaceutical costs going skyrocketing by several hundred percent or even 1,000 and thats really something that congress has not done a very good job of addressing. Would you say thats accurate . I know cms tries to address much of that, but isnt that still the biggest problem we face in health care . Its one of the Critical Issues we all have to address. I thank you for that. And i yield back. Thank you, the gentleman yields back and recognize ms. Brooks for five minutes. Thank you, mr. Chairman. Ive been very surprised actually the other side of the aisle seems to have focussed on the uninsured rate, Medicaid Expansion things that really havent been relevant i dont think to the oversight of todays hearing. I think its our duty to provide that oversight because billions of dollars have been spent and are at stake and im, you know i am very concerned about ensuring that our taxpayer dollars are spent effectively and efficiently as i know you are. And im concerned because you have indicated that the states and congressman flores testimony you indicated that the states have their own funding at some point, that the states have their own source of funding and so im curious if you would expand on those states with the exchanges when the federal dollars run out, what is the source of funding you are referring to . Sure. Thank you for the question. So, most of the states, all but i think two, have some type of assessment that they assess the health plans that operate in their marketplace. In some cases its a percentage. In some cases its Percentage Plus a flat fee and in some cases its based on how many members are enrolled. There are a few states that fund it directly out of state budget as well. And because there are all of these different mechanisms and different way states have decided to fund it, what confidence do you have that the different methods they have all chosen will be adequate so that the states will not be coming back to the federal government for more funding . Well, i have enough confidence that i need to make sure we check twice a year because things change with state budgets, things change with memberships and enrollments and sometimes we have to have Difficult Conversations with states to say to them, lock, we dont think this looks like a very good future. Can you help explain to us why this makes sense and in some cases theres a little bit of tough love which results in some of the changes in course that youve seen. Can you give us an idea how many tough love discussions are you having . Well, an example of a tough love conversation might be hawaii which has been was in the process last year of trying to decide whether or not what was the best course for themselves and we had conversations where we laid out the numbers for them and i think that made that decision to come to the federal exchange. But how many states are you actually having discussions with about selfsustaining Going Forward in the future . So, were having discussions with all of the states. I wouldnt tell you were concerned about all of the states, but i would tell you that, you know, as a general rule the smaller the state is, the greater the amount of effort we need to focus on them to make sure that they have a plan thats sustaining them. So, do you have a chart that shows how many youre confident theyve got it, were not going to have any problems with them, were concerned or were really very, very concerned that theyre not going to make it, and how many people are in those different buckets or states . Congresswoman, you must know me well. I have hundreds of charts i could tell. Yes. So, you know, i think i think id say that at this point in time we are confident that all the states are sustainable for the period of time that they need to be sustainable for. How long is that . Well, as i say, we look at least every six months because of budget cycles, because of membership cycles, because of costs, because of other factors. And all i can tell you is at any point in time if we believe a state is nearing the point when we think they may not be sustainable, we talk to them. Ill give you another example. We talked to rhode island which is a small obviously a smaller state. And this was last year or earlier in the year, and told them they needed to increase their sources of funding, and they did that. But they did that because we had this kind of dialogue with them. So, we try to get out in front of the problem and prevent it from becoming a problem. Along with the states. And the states have the same interests. Well, i appreciate that, and i am very concerned about the sustainability particularly if were only doing it in sixmonth increments. In my brief time remaining, United Health has recently announced it may leave the exchanges for next year. Could you please comment upon your thoughts about this announcement, what that might do to the exchanges and impact the sustainability of state exchanges if United Health, which is in my district, pulls out from all of these different exchanges because it has been a bad quote, it was a bad decision for us per United Health. So, i tell you what, i wont comment on any one specific health plan. I think the majority of health plans that have made statements the last few weeks have been very positive about their involvement in the exchanges. I think the vast majority of people in this country have access to at least three plan choices. There are literally of hundreds of insurers with thousands of plans, and at any given time theres going to be people entering the market and people exiting the market. Some will have Good Strategies. Some will have not so Good Strategies thats how marketplaces will work as they interact with the private sector. Recognize the gentleman from new york mr. Collins for five minutes. Thank you, mr. Chairman. In late september hhs ordered that the new york state coop set up by the Affordable Care act Health Republic to shut down. This past year Health Republic insured about 20 of the individuals on the new york state Health Insurance exchange. So far, Health Republics failure has cost taxpayers over 265 million and 155,000 new yorkers were kicked off their current Insurance Plan last week. While other insurers in the marketplace picked up the displaced beneficiaries and honored the deductibles, there remains heavy concerns about Health Republics outstanding liabilities to providers. Doctors have been calling my office complaining that their checks from Health Republic are bouncing. And ive seen estimates that hospitals in the state are owed at least 160 million. So, into the questions. I understand that cms reviewed Health Republics Financial Filings and conferred with state regulators and coop leaders during the setup and operation, im assuming thats a correct statement. Thats correct, congressman. So, im curious, can you walk me through the decisionmaking process. Our concerns are, why was the coop, Health Republic, with the largest taxpayer losses in the country allowed to continue as long as it did. Which was up until a week ago. So, i would say we grew concerned about the financial situation of the coops with each consecutive Financial Report that they submitted, conducted our own audit. Sent up our own people. And worked very closely with the department of insurance and the state. You know, i will tell you that in situations like this, the most important thing from my perspective, you mentioned it, is making sure we get a smooth a transition as possible for all of the state for all of the coop consumers, so having a transition on december 1, all seamlessly to smooth plans that honored the deductible was important and i think was great work from the department of insurance and the state and i think that was very important. Your other your other point relative to collection of ultimate collection of payments i think is a matter of state policy regarding state guarantee funds and other potential avenues and tools. We stand ready to assist both consumers and the state in any way we possibly can. So, a simple question, will the providers, for instance, 160 million to the hospitals and many doctors where the checks are bouncing, are they going to be paid with 100 assurance . Again thats a question better directed at the state because its based on state policy. So, the answer is, no, they may not get paid. Again, youd have to ask the state but wed be cooperate in any way we can. I live in a world where if the answer is not yes, its no. I cant speak for the state. If im a doctor ill start worrying come christmas on my bounced checks because we dont have any assurance from you certainly at the federal level theyre going to be paid and i think we all know how new york state does things. So, now, you spoke to a smooth transition and that importance. Well, i disagree with you one thing. I believe taxpayer money is more important than a smooth transition when it comes to 265 million of losses adding to our debt. So, goes back to 2014 Health Republic lost 35 million. Its inconceivable to me what then happened. They were loaned an additional 91 million. I mean, i suppose is that, like, doubling down on a stock that loses all its value so you go buy more . I dont know. Other than your smooth transition how we squandered another 91 million. Didnt ask any of the right questions. Just said heres another 91 million and sure enough its flushed. So, can you speak to that 91 million after you knew they lost 35 million . Sure. The way that we have set up coops is the vast majority of the funding, the vast majority of funding is needed to even set up the coop in the first place to have enough capital to write members. Of course, nobody knew how many members they were going to write because this is the new year of open enrollment. They wrote more than expected. Everyone else is complaining when they write less than expected, oh, my god, oh, my god. Health republic signed up more than expected. They did. And, of course, the first time you have an understanding of the ability to match claims to the premiums theyve collected isnt for some time because of the way claims come in and because of the way the financials work. So, it really wasnt until early, the middle of 2015 that we really started to have data that would give us reason to be significantly concerned about the state and about their ability to pay claims given my times expired, but i can tell you in the private sector we start worrying when someone says i just lost 35 million thats when i have them starting to report hourly, daily, weekly, not just, oh, hey wrx every quarter, how did you do this quarter, we only lost 30 million. Thats not a fair characterization of how we worked with the coop. It sure sounds like it to me. You lost another 91 million. I yield back. Just a followup for ms. Brooks question and you said you had charts and things that relate to the state. Can you make sure you share with us. Not all the charts, apparently you make charts for everything. Just the relevant ones. I recognize the gentleman from indiana for five minutes. I was a cardiovascular surgeon prior to coming to congress and i want everyone in our country to have access to quality Affordable Health care. That said, i feel compelled to comment on the uninsured rate and that coverage doesnt necessarily equal access. And i think thats a point that maybe people that arent in health care dont necessarily get, in fairness. And not implying you, but others that made comments. Because the medicaid program, for example, traditional medicaid is a program that doesnt reimburse providers at a level that many will accept. And even though people may have medicaid doesnt necessarily access them to anything more than the emergency room that they had access to when they didnt have medicaid and the data shows that thats the truth. In indiana we are using healthy indiana plan 2. 0 to cover those citizens and this is something that i support because its a statebased way to manage medicaid dollars more effectively and efficiently in my opinion. And its hsa based which youve heard some comments about hsas in the past which does encourage more proper utilization of the Health Care System by the person who has the coverage because they actually have some of their own Financial Resources at risk if they dont. My question will be about the plans offered under the exchanges. I mean, most of my questions have been answered about the