[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
PPACA PULSE CHECK: PART 2
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 10, 2013
__________
Serial No. 113-80
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania ANNA G. ESHOO, California
GREG WALDEN, Oregon ELIOT L. ENGEL, New York
LEE TERRY, Nebraska GENE GREEN, Texas
MIKE ROGERS, Michigan DIANA DeGETTE, Colorado
TIM MURPHY, Pennsylvania LOIS CAPPS, California
MICHAEL C. BURGESS, Texas MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee JANICE D. SCHAKOWSKY, Illinois
Vice Chairman JIM MATHESON, Utah
PHIL GINGREY, Georgia G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington DONNA M. CHRISTENSEN, Virgin
GREGG HARPER, Mississippi Islands
LEONARD LANCE, New Jersey KATHY CASTOR, Florida
BILL CASSIDY, Louisiana JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky JERRY McNERNEY, California
PETE OLSON, Texas BRUCE L. BRALEY, Iowa
DAVID B. McKINLEY, West Virginia PETER WELCH, Vermont
CORY GARDNER, Colorado BEN RAY LUJAN, New Mexico
MIKE POMPEO, Kansas PAUL TONKO, New York
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Ohio
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
______
Subcommittee on Health
JOSEPH R. PITTS, Pennsylvania
Chairman
MICHAEL C. BURGESS, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
ED WHITFIELD, Kentucky JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan LOIS CAPPS, California
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee JIM MATHESON, Utah
PHIL GINGREY, Georgia GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey JOHN BARROW, Georgia
BILL CASSIDY, Louisiana DONNA M. CHRISTENSEN, Virgin
BRETT GUTHRIE, Kentucky Islands
H. MORGAN GRIFFITH, Virginia KATHY CASTOR, Florida
GUS M. BILIRAKIS, Florida JOHN P. SARBANES, Maryland
RENEE L. ELLMERS, North Carolina HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
(ii)
C O N T E N T S
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Page
Hon. Joseph R. Pitts, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 2
Hon. Phil Gingrey, a Representative in Congress from the State of
Georgia, opening statement..................................... 3
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 4
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 5
Hon. Tim Murphy, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 6
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 7
Hon. G.K. Butterfield, a Representative in Congress from the
State of North Carolina, opening statement..................... 14
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 119
Witnesses
W. Brett Graham, Managing Partner, Leavitt Partners.............. 18
Prepared statement........................................... 20
Answers to submitted questions............................... 121
Antoinette Kraus, Executive Director, Pennsylvania Health Access
Network........................................................ 30
Prepared statement........................................... 32
Edward A. Lenz, Senior Counsel, American Staffing Association, on
Behalf of the Employers for Flexibility in Health Care
Coalition...................................................... 38
Prepared statement........................................... 40
Answers to submitted questions............................... 125
Cheryl Campbell, Senior Vice President, CGI Federal, Inc......... 51
Prepared statement........................................... 53
Answers to submitted questions............................... 129
John Lau, Program Director, Serco, Inc........................... 57
Prepared statement........................................... 59
Answers to submitted questions............................... 152
Lynn Spellecy, Corporate Counsel, Equifax Workforce Solutions.... 76
Prepared statement........................................... 78
Answers to submitted questions............................... 157
Michael Finkel, Executive Vice President for Program Delivery,
Quality Software Services, Inc................................. 92
Prepared statement........................................... 94
Answers to submitted questions............................... 160
Submitted Material
Democratic memorandum, dated September 10, 2013, ``Re: Committee
Investigation of Affordable Care Act Contractors,'' submitted
by Mr. Waxman.................................................. 9
Letter of August 30, 2013, from Mr. Waxman to Mr. Upton,
submitted by Mr. Butterfield................................... 16
PPACA PULSE CHECK: PART 2
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TUESDAY, SEPTEMBER 10, 2013
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:15 a.m., in
room 2322 of the Rayburn House Office Building, Hon. Joe Pitts
(chairman of the subcommittee) presiding.
Members present: Representatives Pitts, Burgess, Murphy,
Blackburn, Gingrey, Lance, Cassidy, Guthrie, Griffith,
Bilirakis, Ellmers, Pallone, Dingell, Matheson, Green,
Butterfield, Christensen, Castor, Sarbanes, DeGette, and Waxman
(ex officio).
Staff present: Clay Alspach, Chief Counsel, Health; Matt
Bravo, Professional Staff Member; Karen Christian, Chief
Counsel, Oversight and Investigations; Noelle Clemente, Press
Secretary; Paul Edattel, Professional Staff Member, Health;
Julie Goon, Health Policy Advisor; Brad Grantz, Policy
Coordinator, Oversight and Investigations; Sydne Harwick,
Legislative Clerk; Sean Hayes, Counsel, Oversight and
Investigations; Katie Novaria, Professional Staff Member,
Health; Andrew Powaleny, Deputy Press Secretary; Heidi Stirrup,
Health Policy Coordinator; Ziky Ababiya, Democratic Staff
Assistant; Brian Cohen, Democratic Staff Director, Oversight
and Investigations, and Senior Policy Advisor; Hannah Green,
Democratic Staff Assistant; Elizabeth Letter, Democratic
Assistant Press Secretary; Karen Lightfoot, Democratic
Communications Director and Senior Policy Advisor; Karen
Nelson, Democratic Deputy Committee Staff Director, Health;
Stephen Salsbury, Democratic Special Assistant; and Matt
Siegler, Democratic Counsel.
Mr. Pitts. This subcommittee will come to order. The Chair
will recognize himself for an opening statement.
OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
On August 1st, CMS Administrator Marilyn Tavenner testified
before the full committee on implementation of the Affordable
Care Act. She assured us that despite numerous delays,
including a one-year delay of the employee choice provision of
the SHOP exchanges, the employer mandate, and verification of
eligibility for insurance subsidies, that the exchanges would
be ready on October 1st to begin enrolling Americans in new
health plans and that implementation of the law's other
provisions was on track.
Since that hearing, we have learned of several troubling
developments. On August 13, The New York Times reported that it
had discovered a delay in the implementation of the law's out-
of-pocket caps buried in a list of 137 frequently Asked
questions posted on the Department of Labor's Web site on
February 20, 2013. On August 27, CMS announced that instead of
finalizing contracts with health plans set to participate in
exchanges between September 5 and September 9, as had been
expected, final contracts would not be signed until mid-
September.
The Affordable Care Act's implementation involves a litany
of Federal and State agencies, and my constituents are
understandably confused about what is happening with the
exchanges, enrollment and premiums. Considering the
administration's track record on deadlines and delays,
reassurances from CMS officials are not comforting.
In our previous hearing, Administrator Tavenner also made
an extraordinary remark that she had only heard of ``isolated
incidents'' of the ACA having burdensome or negative impact on
Americans.
I would briefly like to share the experiences of some of my
constituents who are being harmed by the law. In April of this
year, Eastern Lancaster County School District and Penn Manor
School District in Lancaster, Pennsylvania, both announced that
they were outsourcing some employees to avoid the costs of
complying with the ACA's employer mandate. Elanco will
outsource approximately 90 food service workers and classroom
aides, and Penn Manor is shifting more than 95 special-
education classroom aides off its payroll. The affected
employees work over 30 hours a week, thus triggering the
employer mandate, and the school districts simply cannot afford
to pay for the additional expenses of covering these
individuals.
Dairy farmers in my district, members of the Mt. Joy
Farmers Cooperative Association, which is affiliated with
Dairylea Cooperative, currently enjoy a negotiated plan
characterized by a low-risk pool and shared savings. As of
January 1, 2014, they will lose this unique risk pool and be
forced on to the exchanges.
A father from my district wrote me, distraught, about his
daughter's work hours being cut to 28 hours a week, because her
employer could not absorb the cost of providing her with health
insurance. He is among dozens of people who have told me that
their hours have been cut, and they have been moved from full-
time to part-time as a direct result of the ACA. Dozens more
have expressed shock at the staggering premium increases they
that face in 2014. These are not isolated incidents.
With that, I would like to welcome all of our witnesses
here today, and I look forward to their testimony.
[The prepared statement of Mr. Pitts follows:]
Prepared statement of Hon. Joseph R. Pitts
The subcommittee will come to order.
The Chair will recognize himself for an opening statement.
On August 1, CMS Administrator Marilyn Tavenner testified
before the full committee on implementation of the Affordable
Care Act.
She assured us that despite numerous delays--including one-
year delays of the "employee choice'' provision of the SHOP
exchanges, the employer mandate, and verification of
eligibility for insurance subsidies--that the exchanges would
be ready on October 1 to begin enrolling Americans in new
health plans and that implementation of the law's other
provisions was on track.
Since that hearing, we have learned of several troubling
developments.
On August 13, The New York Times reported that it had
discovered a delay in the implementation of the law's out-of-
pocket caps--buried in a list of 137 Frequently Asked Questions
posted on the Department of Labor's Web site on February 20,
2013.
On August 27, CMS announced that instead of finalizing
contracts with health plans set to participate in exchanges
between September 5 and September 9--as had been expected--
final contracts would not be signed until mid-September.
Obamacare's implementation involves a litany of Federal and
State agencies.
My constituents are understandably confused about what is
happening with the exchanges, enrollment, and premiums.
Considering the administration's track record on deadlines
and delays, reassurances from CMS officials are not comforting.
In our previous hearing, Administrator Tavenner also made
an extraordinary remark that she had only heard of ``isolated
incidents'' of the ACA having burdensome or negative impact on
Americans.
I would briefly like to share the experiences of some of my
constituents who are being harmed by the law.
In April of this year, Eastern Lancaster County (Elanco)
School District and Penn Manor School District in Lancaster,
PA, both announced that they were ``outsourcing'' some
employees to avoid the costs of complying with the ACA's
employer mandate.
Elanco will outsource approximately 90 food service workers
and classroom aides, and Penn Manor is shifting more than 95
special-education classroom aides off its payroll. The affected
employees work over 30 hours a week, thus triggering the
employer mandate, and the school districts simply cannot afford
to pay for the additional expenses of covering these
individuals.
Dairy farmers in my district, members of the Mt. Joy
Farmer's Cooperative Association, which is affiliated with
Dairylea Cooperative, currently enjoy a negotiated plan
characterized by a low-risk pool and shared savings. As of
January 1, 2014, they will lose this unique risk pool and be
forced on to the exchanges.
A father from my district wrote me, distraught, about his
daughter's work hours being cut to 28 hours a week, because her
employer could not absorb the cost of providing her with health
insurance. He is among dozens of people who have told me that
their hours have been cut, and they have been moved from full-
time to part-time as a direct result of the ACA.
Dozens more have expressed shock at the staggering premium
increases they face in 2014.
These are not ``isolated incidents.''
I would like to welcome all of our witnesses here today,
and I look forward to their testimony.
I yield back.
Mr. Pitts. I yield the balance of my time to the gentleman
from Georgia, Dr. Gingrey.
OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Gingrey. Thank you, Mr. Chairman.
We are now 3 weeks from the beginning of open enrollment
for Obamacare exchanges. It is fitting that we have before us
today the vendors who are charged with running the exchanges.
While I am sure that these companies are working as best they
can to meet the deadlines, the reality is that most were
awarded contracts within the past few months and the complex
system has yet to be fully tested. How can taxpayers expect to
feel secure with their personal information in the exchange
when they have not had adequate security checks to determine
its effectiveness.
Mr. Chairman, Obamacare will saddle taxpayers with higher
premiums, fewer choices and the potential for employment
disruption. We must work to ensure that our citizens will not
face fraud and identity theft from the law as well, and with
that, I yield back and I thank you for the time.
Mr. Pitts. The Chair thanks the gentleman.
At this time I would like to request unanimous consent for
Representative DeGette to participate in the subcommittee
hearing. Without objection, so ordered.
And the Chair recognizes the ranking member, Mr. Pallone,
for 5 minutes for an opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Chairman Pitts, and a special
thanks to our witnesses for taking the time to be here today. I
know you are right in the middle of gearing up for the October
1st start of open enrollment for the health care exchanges and
that your time is valuable.
I must say that I am extremely troubled by the Republicans'
repeated tactics to try to slow the progress of all those
individuals and organizations working so hard to implement the
Affordable Care Act. In particular, the oversight letter that
committee Republicans sent to 51 groups, primarily community
organizations that receive grants to serve as navigators to
help the uninsured sign up for benefits under the ACA I think
is despicable. This is an egregious abuse of the committee
process and an attempt by Republicans to intimidate community
organizations and overwhelm them with information requests at a
critical period so that they don't implement the program.
I have been working with organizations in my district such
as the Food Bank of Monmouth in Ocean County, who have taken on
the responsibility of being navigators for the community and
make sure that they know their rights under the committee
rules, but even more so, I am encouraging them to remain
committed to the critical work they are doing and not be
detracted from their laudable goals of helping uninsured people
gain coverage.
It is time that the Republicans stop trying to obstruct the
law. Health care reform is undeniably moving forward. It is
hypocritical that Republicans are holding this hearing today so
say that the health exchanges are not ready and that the
administration doesn't have enough staff or resources when the
Republicans are the ones who refuse to adequately fund the law
and are out advocating for it to be defunded. But despite this,
I think what we will hear today from our witnesses is that the
contractors, community organizations and States are ready for
October 1st.
It is going to be a challenge, that is for sure. Will the
rollout be flawless? No. Will there likely be some hiccups
along the way as with any major program rollout? Yes. But these
groups have been working day and night to make sure that they
are ready for enrollment so that Americans can start receiving
the benefits of health insurance, and starting October 1st,
millions of people will gain access to health care coverage
they didn't have before. Individuals in every State will have
access to a health exchange where they can select coverage from
an array of qualified health plans. Every health plan will
offer essential health benefits including preventative services
such as screenings and vaccines, mental health services, trips
to the emergency room, outpatient care, care before and after
your baby is born, prescription drugs, lab tests and pediatric
services including dental care and vision care for kids.
Now, one area where more progress is needed is State
expansion of Medicaid. An important tool included in the ACA
was the strengthening of Medicaid by allowing States to expand
coverage to individuals and families who did not previously
qualify for the program but also did not have the resources to
access affordable, quality care through the private insurance
market. Not only is this beneficial for low-income Americans,
it is an advantageous fiscal arrangement for States, and I am
disappointed that a number of States still have not chosen to
expand Medicaid coverage, and anticipate we will hear from Ms.
Kraus from the Pennsylvania Health Access Network today about
how the continued refusal of States to accept Federal funding
and expand Medicaid will hurt low-income families as well as
State economies.
So implementing the ACA is a huge undertaking. It involves
the coordination of a number of complicated provisions. We
can't expect everything to go perfectly but we can support the
administration, the contractors, the community partners and the
States in their efforts so that the American people can access
health care as intended on October 1st and receive the
assistance they need to sign up for health insurance. I just
hope that my Republican colleagues will realize this and stop
trying to impede the law and those working to implement it.
I yield back, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the vice chair of the subcommittee, Dr. Burgess, 5
minutes for opening statement.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. I thank the chairman for yielding, and let me
just say in reply to my friend from New Jersey that it is the
oversight function of this committee and its subcommittees that
really has been one of the cherished functions in the Congress
in the United States, and certainly under both Democratic and
Republican committee leadership, the oversight function is one
that other Members of Congress look to. They look to the
oversight function of this committee. So now we are in a new
situations where self-attestation is going to be the launch
word for people who show up and sign up for benefits. Why we
wouldn't have questions about the vast sums of money that have
been pushed out the door relatively hostility to these
navigator groups? Why wouldn't we have questions as to their
credentials, as to their ability to provide what they've been
required to provide, and why wouldn't we have questions that
other Members of Congress would like answered as well. So
really, it is the function of this committee to provide that
oversight function, and I for one, Mr. Chairman, am grateful
that those letters did go out, and certainly in support of the
fact that we are trying to simply get the information that the
administration for whatever reason does not want to give to the
Congress.
Mr. Pallone. Would the gentleman yield?
Mr. Burgess. No, I will not. I have got some things to say.
If I have time at the end, you may be welcome to it.
We have 3 weeks, 3 short weeks, 21 days, ready or not,
October 1st, the health exchanges including the Federally
Facilitated Marketplaces run by the Obama administration will
open while the White House, Treasury and Health and Human
Services continue to report that everything will be ready,
everything is fine. We have only seen missed deadlines, delays
and really an overall lack of information.
The most significant function for the operation of the
exchanges as it turns out is not in the hands of the
administration but has been outsourced. It has been contracted
to organizations, and many of those witnesses are before us
today and we appreciate your participation. The Federal hub
will be the centerpiece of the exchanges, coordinating data
from other five Federal agencies, millions of individuals,
hundreds of insurance carriers and in all 50 States. Not
surprisingly, the complexity involving coordinating the
exchange has led several States, notably Oregon and California,
to indicate that they will likely need to delay access to their
online marketplaces. States have begun making contingency plans
but the administration continues the same refrain: we will be
ready.
Instead of communicating with Congress, the administration
has decided just to open the door to eligibility errors and
fraud and inappropriate payments by removing verification
requirements and allowing consumers to simply use self-
attestation. Because the agency is silent, because Health and
Human Services will not speak on this, we must go to the
source--the contractors who have to live in a world. Your world
is comprised of contingencies and possibilities, deadlines and
an ever-shifting environment. You know you deal with
contingencies all the time.
The President's health care law continues to create more
chaos, more uncertainty for Americans. Since the administration
won't admit the enormity and complexity of the task they have
undertaken, we have our witnesses today, and I hope that we
will hear from them, from these people who are actually
preparing the systems will be able to tell us the real status
of the implementation of the Affordable Care Act.
Let me then yield to the chairman of the Oversight
Subcommittee, Mr. Murphy.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy. Thank you very much, Doctor.
You know, it is kind of a preposterous thing the gentleman
from New Jersey says, as if the Oversight and Investigations
Committee has no business having oversight and investigation.
When we had multiple hearings, we heard from people from
the administration that everything was fine for business
rollout, only to say well, it wasn't ready and they had to slip
in little unknown statements they were going to delay it for a
year. They said the exchanges actually were supposed to start
their training August 1. They didn't even start hiring until
lately. Also, we saw the administration had to waive some of
the rules for caps on copayments and deductible. Labor has to
take out full-page expensive ads to get the attention of CMS,
who wasn't talking to them. Treasury came before us and said
they haven't heard any concerns from individuals. And by law
and by design, the way the bill was written, the navigators
have to be people who are inexperienced with selling insurance
by law.
So we have every right to ask questions on behalf of the
American people. That is what oversight is supposed to do.
Quite frankly, I am puzzled by people who are trying to say
that we are trying to delay this. No, I think the delays have
been there because the administration, even though they have
had a few years to do this, simply is not ready to bring this
forward upon the American people. So we will continue to ask
questions about how this program is going. If everything is
fine, people will have nothing to be afraid of, but quite
frankly, I think we have a lot to be afraid of, and that is why
things aren't fine. Thank you.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the ranking member of the full committee, Mr.
Waxman, 5 minutes for an opening statement.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you, Mr. Chairman.
It is an interesting example today of the Republicans
ignoring their own oversight findings. They started this
investigation in August. They did interviews. They got
documents. They learned that the contractors were doing
everything right and they were on target to meet the deadlines.
Rather than talk about that, they are attacking the law which
they have attacked from the very beginning. They want to
portray health reform as an impossibly complex, inevitably
doomed enterprise, and that is what we are hearing again today.
We have four private-sector contractors who are actually in
the trenches with the administration implementing this law.
Today's witnesses are not political. They will tell us that the
administration is making steady, step-by-step progress. Their
testimony will deflate the overheated Republican rhetoric of a
coming health care apocalypse.
Last month, the committee launched an extensive
investigation into these contractors. They peppered them with
questions and they scoured the documents for signs of
impropriety. What they found can be summarized in one word:
nothing. The facts don't measure up to their doom-and-gloom
talk. That is why they have said virtually nothing about their
own investigation.
To fill this void, the Democratic staff is releasing a
supplemental memo outlining what we learned from the oversight
investigation. The key findings are as follows. One, the
contractors and CMS have numerous systems in place to secure
the privacy of consumer information; two, the contractors are
on track to complete their remaining tasks by October 1; three,
CMS's management of the program is sound; and four, these
contractors are creating thousands of jobs throughout the
country.
In my view, the timing of the committee's investigation is
under suspicion. Burdensome demands came during the most
critical phase of these contractors' work. The committee is
taking the same approach in its investigation of the health
care navigators. But having launched the investigation and
received extensive responses, we should not ignore what we have
learned. That is why I ask unanimous consent that this
memorandum that I referred to be made part of the record.
Mr. Pitts. Without objection, so ordered.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Waxman. I want to make just a couple of points before I
yield. Inevitably, there will be some glitches and hiccups in
implementation of this law, and I expect every time they find
any hiccup, the Republicans here in Washington will make a hue
and cry about it. I believe we should keep our eyes on the
bigger picture: problems that arise will be fixed, and we are
on a steady path to offering every American quality, affordable
health coverage and making our health care system more
sensible, efficient and fair.
It is also important to remember that most of the
implementation problems are likely to come from Republican
State leaders who are openly obstructing the goals of the law.
Antoinette Kraus of Pennsylvania Health Action has firsthand
knowledge of what this senseless intransigence means to the
hardworking Americans caught in the middle.
I am now going to yield 2 minutes to my colleague and
friend, Mr. Butterfield.
OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NORTH CAROLINA
Mr. Butterfield. Thank you very much, Mr. Waxman, for
yielding time. Mr. Waxman, I want to associate myself
completely with your statement and that of Mr. Pallone.
Mr. Chairman, I am absolutely outraged that the chairmen of
the full committee and Subcommittees on Health and Oversight as
well as other Republican members of this committee sent a 3-
page investigatory letter to 51 grant recipients demanding that
they answer questions giving them only 2 weeks to provide
detailed descriptions of the anticipated scope of wrong, among
other very specific questions, to provide all documentation and
communications related to their grant. My question to my staff
and to you, my friends: how can 15 members of this committee
simply get together and send a letter without committee action?
Wasn't the vast majority of the information being sought by
Chairmen Upton and Pitts and Murphy included in the navigator's
application to CMS?
These grant recipients only received word they were
selected to receive the grant on August 15th. Might I remind my
colleagues that the marketplace goes live on October 1st, less
than one month away? The majority is forcing these recipients
away from their important work of getting ready on October 1st
and diverting their limited resources to entertain its fishing
expedition. Yes, that is what I am calling it, a fishing
expedition, that will surely come back empty-handed. There is
no evidence of any kind that any navigator grantees have
misappropriated or misused grant funds in any way whatsoever.
This is a gross misuse of the company's investigative authority
and just another way this majority is attempting to derail the
Affordable Care Act.
I am outraged by your actions. I want you to tell me when
these letters came back what you have discovered. I believe you
will come back empty-handed.
Thank you. I yield back to Mr. Waxman.
Mr. Waxman. I yield back my time.
Mr. Pitts. The Chair thanks the gentleman.
That concludes the----
Mr. Butterfield. May I ask unanimous consent to include in
the record a copy of Mr. Waxman's letter dated August 30th? Mr.
Waxman's letter to Mr. Upton dated August 30th, may I include
this in the record?
Mr. Pitts. Without objection, so ordered.
Mr. Butterfield. Thank you, Mr. Chairman.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. All right. We have one panel, seven witnesses
today. First, we have Mr. Brett Graham, Partner and Director of
exchange Programs, Leavitt Partners. We have Ms. Antoinette
Kraus, Director of Pennsylvania Health Access Network; Mr.
Edward Lenz, Senior Counsel, American Staffing Association,
testifying on behalf of the Employers for Flexibility in Health
Care Coalition; Ms. Cheryl Campbell, Senior Vice President of
CGI Federal; Mr. John Lau, Program Director of Serco; Ms. Lynn
Spellecy, Corporate Counsel, Equifax Workforce Solutions; and
Mr. Michael Finkel, Executive Vice President of Program
Delivery, QSSI.
Thank you for coming today. You have 5 minutes to summary
your testimony. Your written testimony will be placed in the
record.
At this point I will recognize Mr. Graham for 5 minutes for
his summary.
STATEMENTS OF W. BRETT GRAHAM, MANAGING PARTNER, LEAVITT
PARTNERS; ANTOINETTE KRAUS, EXECUTIVE DIRECTOR, PENNSYLVANIA
HEALTH ACCESS NETWORK; EDWARD A. LENZ, SENIOR COUNSEL, AMERICAN
STAFFING ASSOCIATION, ON BEHALF OF THE EMPLOYERS FOR
FLEXIBILITY IN HEALTH CARE COALITION; CHERYL CAMPBELL, SENIOR
VICE PRESIDENT, CGI FEDERAL, INC.; JOHN LAU, PROGRAM DIRECTOR,
SERCO, INC.; LYNN SPELLECY, CORPORATE COUNSEL, EQUIFAX
WORKFORCE SOLUTIONS; AND MICHAEL FINKEL, EXECUTIVE VICE
PRESIDENT FOR PROGRAM DELIVERY, QUALITY SOFTWARE SERVICES, INC.
STATEMENT OF W. BRETT GRAHAM
Mr. Graham. Good morning, Chairman Pitts, members of the
subcommittee. Thank you for the opportunity to testify today
about the ACA as well as State readiness around State health
insurance exchanges. I am the Managing Director of Leavitt
Partners Center for Health Care Intelligence around health
insurance exchanges. We advise clients on the health insurance
exchange landscape. Several of my colleagues have been very
involved in both the design and development of insurance
exchanges both in the private sector as well as publicly.
Leavitt Partners has also been very involved in advising
clients on implementation and being ready for that
implementation.
First, let me say that it has been very impressive all the
work that States have done to be ready for the open enrollment
season, which is just 3 weeks away. What they have done has
been impressive. That being said, today where we stand, there
is not a single State that is completely ready for open
enrollment 3 weeks away. In an ideal world, States would be
well into their outreach and education campaigns with all of
the exchange operations and functionality fully tested and
completed. In the current situation, however, uncertainty and
doubt still surrounds how functional these systems will be on
October 1st.
The bottom line is that while Leavitt Partners believes
that a very baseline functionality of State-based exchanges
will be up and running on October 1st, it can be expected that
most, if not all, exchanges will experience a rocky enrollment
period as they work to overcome both known and unanticipated
challenges that arise. Today I would like to focus on four
critical challenges that States are facing as they work towards
implementation in the short term.
The first challenge States are facing is the complexity of
an exchange's architecture itself. The establishment of these
health insurance exchanges is one of the most aggressive and
complex IT projects the Federal Government has ever undertaken,
certainly in the health care space. Coupling the complexity of
these challenges with the informational delays has clearly
strained States' capacity to complete their exchanges both on
time and as originally scoped. In fact, as States are making
final preparations for open enrollment, many have had to de-
scope the capabilities they planned in order to be up and
running on October 1st. While this is the right thing to do
from a management perspective, it will certainly have an impact
on consumers as they go to the exchanges.
The second challenge that is facing States is data
verification and integration with the Federal Data Services
Hub. Our surveillance of the exchange landscape shows that
while some States have completed testing, others are working
through the final testing phases despite still being in the
building stage of development. This is problematic. Several
States have expressed to us concern about using the Federal
Data Services hub and where possible are planning to use their
own data resources for verification.
The third challenge is privacy and security. In addition to
integration challenges, there are also serious concerns
regarding security of the hub's data. The Office of the
Inspector General recently stated that any additional delays in
completing the security authorization package would result in
an incomplete assessment of system risks and needed security
controls.
The fourth challenge should not be underestimated. It is
achieving optimal enrollment. Because of the compressed
timeline, States have not been able to devote the necessary
resources to outreach and education. Tens of thousands of
consumers, if not hundreds of thousands of consumers, will come
to these exchanges with little or no prior exposure to health
insurance coverage. They will need comprehensive assistance to
be able to make these very important decisions. A lack of
information and a high potential for misinformation will
increase the likelihood for error, increase the possibility
consumers will select suboptimal products and possibly result
in a delayed enrollment.
In conclusion, Mr. Chairman, let me restate that although
Leavitt Partners believes that baseline functionality of State-
based exchanges will be up and running in 3 weeks, it can be
expected that due to the challenges associated with, number
one, the complexity of the IT exchange infrastructure and
architecture, number two, the Federal Data Services Hub, three,
privacy and security, and finally, four, the necessary
arrangements and outreach associated with achieving optimal
enrollment. Very few States will have a comprehensive working
exchange on October 1st. This will result in a rocky enrollment
period. Thank you.
[The prepared statement of Mr. Graham follows:]
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Mr. Pitts. The Chair thanks the gentleman and recognizes
Ms. Kraus 5 minutes for an opening statement.
STATEMENT OF ANTOINETTE KRAUS
Ms. Kraus. Mr. Chairman and members of the committee, thank
you for the opportunity to speak on the implementation of the
Affordable Care Act in Pennsylvania.
I am the Director of the Pennsylvania Health Access
Network. We are a statewide coalition representing over 60
organizations and 1 million Pennsylvanian consumers. Some of
our partners include local health centers, physician groups,
churches, retiree associations and community groups. Our
mission is to make sure every Pennsylvanian has access to
quality, affordable health care. In my work, I meet people from
all walks of life: working moms and dads, retirees, young
adults, laid-off workers and small business owners. They come
from different backgrounds and live in different places, but
their fears and anxieties over health care are the same: How do
I find coverage? Can I afford to keep it? What do I do now that
I have been denied because of a preexisting condition?
Thankfully, we have the opportunity to address these fears and
relieve the anxiety that so many of our neighbors, and your
constituents, live with daily. We can do that by moving forward
to fully implement the Affordable Care Act in Pennsylvania.
We can often get caught up in talking about the mechanics
of implementing this law, but we should never lose sight of
what this means for working families. Already in Pennsylvania,
the Affordable Care Act has brought 177,000 children with
preexisting conditions freedom from no longer being denied
coverage; a boost for the bottom line of 160,000 small
businesses, who are eligible for tax credits; stability for
91,000 young adults who have been able to stay covered on their
parents' insurance; and soon in just 21 days, all
Pennsylvanians will enjoy the freedom and feel the security
that comes from knowing that affordable health care is within
reach no matter where you work, how much you earn or if you
have been sick in the past.
I want to tell you about two of these folks. Karen and Gary
Capanello, they live in Waterford, which is a small town in
Erie County. Karen and Gary own their own small business, a
commercial cleaning company. For the last 2 years, Karen and
Gary have been uninsured. The couple makes too much to qualify
for Medicaid but nowhere near enough to afford the prices
charged to people with preexisting conditions. Gary has heart
problems and Karen has a torn tendon in her foot. Karen worries
every day about Gary and all the things he is forced to put
off. She is scared that if the couple continues to delay
treatment, they might not be around to see their youngest son
Tony graduate from high school. That is a fear no mom should
have, especially one who works as hard as Karen. Thankfully,
Karen and Gary won't have to live with fear much longer. On
October 1st, they will be able to start looking for coverage in
the Health Insurance Marketplace. They will choose from the
same plans as all of you. They will have quality options that
will cover the services Karen needs to fix her foot and the
preventative care Gary needs to keep his heart healthy.
We are less than a month away from the day the door opens
to 1.2 million Pennsylvanians who are sitting where Karen and
Gary are today on the outside of our health care system looking
it, hoping, praying, waiting to get in and to get the care they
need. The Affordable Care Act opened that door. Political
posturing, partisanship and delays threaten to keep it slammed
shut.
Unfortunately, in Pennsylvania, we have seen our Governor,
Tom Corbett, work to block 1.2 million uninsured Pennsylvanians
from feeling the full benefit of the Affordable Care Act. While
the new law gave each State the flexibility and tools to create
a marketplace that fosters real competition, offers family and
small businesses the best quality choices and ensures rates are
reasonable, Pennsylvania, like several other States, chose to
reject this opportunity and relinquish its responsibilities to
the Federal Government. Instead of working in the best interest
of our Commonwealth, Pennsylvania officials have been slow to
implement the Affordable Care Act, delaying and defaulting on
key provisions of the law.
I want to be very clear about what it is at stake for
Pennsylvania and its decision over Medicaid expansion. The
choice Governor Corbett and State House leaders make will
determine whether or not our Commonwealth brings in $43 billion
in new Federal funding over the next decade, whether or not we
create up to 40,000 family-sustaining jobs, whether we continue
to burden taxpayers with $1 billion in uncompensated care, and
whether or not we leave 400,000 Pennsylvanians shut out from
getting affordable coverage. Too many hardworking
Pennsylvanians are forced to gamble every day with their lives
and their likelihoods. They are counting down the days until
they can sign up for coverage in the marketplace and they are
praying that Governor Corbett will move forward with Medicaid
expansion. They are looking forward to secure coverage no
matter what the economic situation is.
There is a fundamental opportunity in the Affordable Care
Act: the chance to make our future secure, the chance for us
and working families and small business owners to be in
control. We know there will be bumps along the way as there
always are with any new major piece of legislation. Medicare
and Social Security didn't enjoy a perfect rollout. There were
challenges, tweaks and changes along the way but we worked
together to make those laws work for the American people. That
is what we need to do today.
The Affordable Care Act has already made the lives of
millions of Pennsylvanians better, and if we get out of the way
and let it work, this will open the door to stable, quality,
affordable health care for 1.2 million of our uninsured
neighbors. Too many lives and too many likelihoods are on the
line to keep that door shut.
Thank you for allowing me today, and I look forward to your
questions.
[The prepared statement of Ms. Kraus follows:]
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Mr. Pitts. The Chair thanks the gentlelady and now
recognizes Mr. Lenz 5 minutes for your opening statement.
STATEMENT OF EDWARD A. LENZ
Mr. Lenz. Good morning, Mr. Chairman and members of the
subcommittee. I am Senior Counsel of the American Staffing
Association, which is a founding member of the Employers for
Flexibility in Health Care Coalition, which is called E-FLEX,
and I am appearing today on behalf of the coalition.
E-FLEX represents leading trade associations and businesses
in the retail, restaurant, hospitality, construction, temporary
staffing, supermarket and other service-related industries. It
also represents employer-sponsored health plans that insure
millions of American workers. The coalition strongly supports
employer-sponsored coverage, and we have been working to ensure
that it remains a vibrant and competitive option under the ACA.
Our members employ a major portion of the U.S. workforce each
year, upwards of 30 million people. We offer flexible work
opportunities, and the jobs we create are leading the jobs
recovery.
But the high turnover rates and the fluctuating work
schedules of our employees pose unique challenges in offering
ACA-compliant health coverage, and we have been working with
the administration to address those challenges in a way that
does not impose unnecessary operational complexity that could
disrupt our workforces or the labor markets. To that end,
proposed regulations issued earlier in the year would a look-
back measurement period to determine the full-time status of
so-called variable-hour employees for purposes of offering
coverage, but offering coverage is only part of the equation.
Many other issues affecting employers, which are integrally
related to the employer mandate and the offer of coverage, have
not been resolved, for example, the processes for determining
employee eligibility for premium tax assistance and the
employer reporting requirements, and for that reason, E-FLEX
members supported the administration's 1-year delay in
enforcement of the employer mandate.
As you know, the administration issued proposed employer
reporting rules just last week. We have not fully evaluated the
proposal but our initial reaction is that they do not take the
holistic approach that we have been urging that takes into
account all of the processes affecting employers' coverage
obligations, especially the process for determining eligibility
for subsidies and the interaction between employers, health
insurance exchanges and the multiple Federal agencies involved
in making those determinations. Given that our members'
software and other systems must be in place by January 1st of
this coming year to start tracking employees' hours in order to
get ready for 2015, the absence of final reporting rules
creates major uncertainty for employers as they head into the
coming year.
I would like to touch briefly on three other major issues
of concern to E-FLEX. First is the definition of full-time
employee under the ACA. Full-time, as you know, is defined as
30 hours per week. It is below what most employers consider to
be full time, and unfortunately, it is creating perverse
economic incentives to reduce employee hours. We think that
increasing hours to 35 or 40 would benefit employees by
increasing their take-home pay, allowing employers to offer
better coverage, allowing for more flexible employee work
schedules, and interestingly, also because of how the Medicaid
and ACA tax credit eligibility rules work, increasing the hours
would actually allow more lower-income employees to be eligible
for those benefits.
The 30-hour definition is already having an adverse impact
in the market. We see that. And once those changes occur,
employees won't be able to recapture the lost wages, the
flexible hours or the better benefits that they might otherwise
have had. So we strongly encourage Congress to act now to bring
the definition of full-time employee more in line with current
workforce practices.
Another key issue is the definition of large employer. The
ACA defines a large employer as one having 50 or more full-time
employees including full-time-equivalent employees. Full-time
equivalence, the inclusion of full-time equivalence, greatly
expands the scope of the law to cover many smaller businesses,
and our concern is that this will stifle their ability to
manage their workforces and in some cases may even discourage
them from expanding their businesses or offering health
coverage.
Finally, we remain concerned about the law's requirement
that large employers enroll full-time employees into coverage
automatically if an employee does not make an election. We
think it is inappropriate to enroll employees in coverage they
didn't select and may not want or need. It would impose a major
administrative employer on employers and would result in
unexpected and certainly undesired payroll deductions for many
employees.
We greatly appreciate the opportunity to present the views
of E-FLEX and we look forward to continuing to work with you
and the administration to resolve the many outstanding issues
that remain to be addressed. Thank you.
[The prepared statement of Mr. Lenz follows:]
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Mr. Pitts. The Chair thanks the gentleman and now
recognizes Ms. Campbell 5 minutes for an opening statement.
STATEMENT OF CHERYL CAMPBELL
Ms. Campbell. Good morning, Chairman Pitts, Congressman
Pallone, members of the committee. Thank you very much for the
opportunity to appear before you today. My name is Cheryl
Campbell. I am the Senior Vice President at CGI Federal, a
company that has provided information technology services to
the Federal Government for more than 36 years. In my role, I
lead CGI Federal's Health and Compliance Business Unit. I am
responsible for all projects at the Department of Health and
Human Services and several other Federal agencies. It is my
pleasure to appear today to discuss CGI Federal's role as the
contractor designing and developing the IT application known as
the Federally Facilitated Marketplace, which I will call the
marketplace. This application is one of several components
being developed that will allow citizens, health insurance
issuers, CMS and many States to participate in the marketplace
for health insurance mandated by the Patient Protection and
Affordable Care Act.
CMS conducted a competitive procurement, and on September
30, 2011, selected CGI Federal to design and develop the
marketplace consistent with requirements established by CMS. At
the time of contract award, most of these requirements were not
fully defined. For that reason, the contract was issued as a
cost reimbursement-type contract, and the project's original
scope was defined broadly. During the course of performance,
CMS has modified the contract on several occasions generally in
response to more detailed requirements.
CGI Federal's scope of work includes the following three
work streams: architecting and developing a marketplace that
may be used by any State that opts out of building and
operating its own; second, designing an IT solution that is
adaptable and modular to accommodate the implementation of
additional functional requirements and services; and third,
participating in a collaborative environment and relationship
in support of coordination between CMS and its primary
partners.
When open enrollment begins on October 1, 2013, the
marketplace will have three key functions to assist citizens in
comparing, selecting and enrolling in qualified health plans.
First, eligibility and enrollment, which serves as the front
door for consumers to determine eligibility for and enroll in a
qualified plan; second, plan management which serves as the
entry point for health insurers to submit their plans for CMS
certification as qualified health plans; and third, financial
management, which allows CMS to manage financial transactions
with issuers.
The IT solution developed by CGI Federal has been
structured to support CMS as it provides pre-implementation
models to the States. The Federally Facilitated Marketplace,
the State Partnership Marketplace and the State-Based
Marketplace. To date, the marketplace implementation has
achieved all of its key milestones from the initial
architecture review in October 2011 to project baseline review
in March 2012, and most recently, the operational readiness
review in September 2013. Additionally, in April 2013, health
insurers began submitting their plans to the system for review
by CMS. Starting in August 2013, consumers were able to go into
the system and register their counts. At this time, CGI Federal
is confident that it will deliver the functionality that CMS
has directed to enable qualified individuals to begin enrolling
in coverage when the initial enrollment period begins in
October 1, 2013.
Moving forward, CGI Federal is confident in its ability to
deliver successfully on its contract and remains committed to
the success of the marketplace as a mechanism for providing
health insurance coverage by the statutory deadline of January
1, 2014.
I appreciate the opportunity to appear before you today and
would be pleased to answer any questions that you may have.
Thank you.
[The prepared statement of Ms. Campbell follows:]
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Mr. Pitts. The Chair thanks the gentlelady and now
recognizes Mr. Lau 5 minutes for an opening statement.
STATEMENT OF JOHN LAU
Mr. Lau. Good morning, Mr. Chairman, Congressman Pallone,
other members of the subcommittee. My name is John Lau. I
represent Serco Inc., and I am the Program Director for CMS
contract. Thank you for the opportunity to appear today to
discuss Serco's role in this program. For the next several
minutes, I will provide you with an overview of Serco, my
background, the contract we have been awarded, and the status
of our work to date.
Serco is a U.S. company based in Reston, Virginia, and we
employ over 8,000 Americans across 45 States. We provide
professional, technology and management services, primarily to
the U.S. government and our customers include every branch of
the U.S. military, numerous Federal civilian agencies, and the
intelligence community. We are a wholly owned subsidiary of
Serco Group PLC headquartered in the U.K. However, Serco Inc.
maintains a separate board of directors and separate management
under the terms of a special security agreement with the
Department of Defense.
Serco has decades of award-winning experience in
government-related records management and processing support
programs. Examples of this experience include processing large
volumes of visa applications for the Department of State,
patent application processing and classification for the U.S.
Commerce's Patent and Trademark Office, records management and
application and petition processing for the Department of
Homeland Security, and records management services at the U.S.
Citizenship and Immigration Services National Benefits Center.
Personally, I have over 30 years of experience specializing in
implementation and management of large Health and Human
Services programs such as Medicaid and other public assistance
programs. I have been responsible for overseeing eligibility
and enrollment support programs for up to 30 million citizens
involving 50 million or more transactions per year, and those
experiences include the California State Children's Health
Insurance Program, the Texas Eligibility Support System for
Medicaid, Children's Health Insurance Program, food stamps, and
at the time, Temporary Assistance for Needy Families. This
experience gives me the confidence to say that our team is
dedicated and equipped to deliver on our contractual
commitments.
Under the CMS contract, which was awarded to us on July 1,
we will provide support services in the determination of
eligibility for the Federally Facilitated Marketplace and the
State-Based Marketplace for the eligibility support tasks under
the Affordable Care Act. The contract tasks include intake,
routing, review, troubleshooting of applications submitted for
enrollment into a qualified health plan, and for insurance
affordable programs including but not limited to advanced
payment of premium tax credits, cost-sharing reductions,
Medicaid Children's Health Insurance Program, and the Basic
Health Program were applicable beginning on October 1, 2013. It
includes 10 base tasks and potentially three optional tasks,
and in my written testimony, I have a lot more detail on those
tasks, which I think it is best in the interest of time to
review there.
The funded base year of the contract totals $114 million,
and our role is to support a process that is as efficient,
accurate and protective of personal privacy as is
technologically possible. I will just in full disclosure, there
are two pending modifications to our contract, which may change
some of the scope that we currently have. However, we are
prepared to manage the estimated 6.2 million paper applications
representing about 30 percent of the total applications
projected to be received between October 1st and March 31,
2014. We don't do recruitment of Americans to submit
applications nor are we involved in eligibility or enrollment
decisions.
We are on schedule to deliver all requirements for our
contract, and I look forward and am happy to answer any
questions you might have.
[The prepared statement of Mr. Lau follows:]
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Mr. Pitts. The Chair thanks the gentleman and now
recognizes Ms. Spellecy 5 minutes for an opening statement.
STATEMENT OF LYNN SPELLECY
Ms. Spellecy. Good morning, Chairman Pitts, Congressman
Pallone and distinguished member of the subcommittee. My name
is Lynn Spellecy, and I serve as Senior Director and Corporate
Counsel for Equifax Workforce Solutions. In that role, I am the
primary attorney responsible for the day-to-day legal
operations of the business unit, and I provide guidance, advice
and legal support. I appreciate the opportunity today to
provide information related to the income verification services
that Equifax Workforce Solutions will be providing to CMS to
assist them in their benefit eligibility determination
requirements under the Affordable Care Act.
Equifax Workforce Solutions is a wholly owned subsidiary of
Equifax Incorporated. Workforce Solutions provides employers
with various human resources-related services. We serve
employer clients by providing services like unemployment claims
management, W-2 processing, I-9 management and similar other
functions.
One of the largest parts of our business is providing
income verification on behalf of employers. Workforce Solutions
responds to requests for employment and income information on
behalf of our employer clients so that the employers do not
have to devote resources to answering the phone and dealing
with these requests, which typically come from lenders, social
services agencies and any other entity that has the need to
verify a consumer's employment or income information.
In order to provide this service for our employer clients,
our clients send us a data feed every time they process their
payroll so every couple of weeks usually. This feed contains
information regarding their employees' salary information and
employment history. We take that information and store it in a
database that we call The Work Number. We then accept requests
from verifier clients--the lenders, social services agencies
and others mentioned previously--and provide consumer
employment and income information in response to those verifier
requests. The Work Number is a consumer recording database that
is regulated by the Consumer Financial Protection Bureau and is
subject to the Federal Fair Credit Reporting Act. Therefore, we
credential all of our verifier clients to be sure that the
entity making the request is entitled to receive the
information that they are requesting. Subject to Federal laws,
we make sure that the verifier client has a permissible purpose
to access the data, and we require that the verifier obtain
consumer consent before we release income information.
By providing automated access to employment and income
information, we alleviate the need for employers to have human
resources staff verifying income when their employees are
seeking a loan, for example. On the verification side, we can
give verifiers the information so that they can process loans
more quickly and reliably. Similarly, the process benefits
consumers because consumers can obtain more ready access to
credit and to the services for which they have applied without
the delays caused by having to manually obtain pay stubs and
provide them to lenders and others.
Our contract with CMS is to provide the same services we
provide to thousands of other social services agencies and
lenders every day. In late November, CMS issued a request for
proposals to provide automated income and employment
verification to the CMS hub in order to enable CMS to make its
determination of consumer eligibility for tax credits and then
programs like Medicaid and CHIP. We responded to that RFP, and
we were notified at the end of March of this year that we had
won the RFP. We entered into a contract with CMS at the
beginning of April. The contract is a 1-year contract renewable
for up to 5 years. We will be doing verification similar to
what we provide to other clients. CMS will provide us with
information from a consumer who has requested qualification for
Medicaid, CHIP or a tax subsidy or reduced cost sharing. CMS
will obtain the consumer's consent to have their employment and
income information verified. In response to CMS's request, we
will provide CMS with income and employment information that we
have stored in The Work Number database. CMS will use that
information to enable a determination as to whether that
individual is eligible for CHIP, Medicaid and a tax subsidy or
reduced cost sharing.
Equifax Workforce Solutions is prepared to provide income
verifications to CMS. We operate in a closely regulated
environment in accordance with Federal law, and consumers
provide their written consent to CMS before we verify their
income. The configuration between Equifax Workforce Solutions
and the CMS data hub has been tested, and we stand by our
commitment to maintain the highest standards for information
security and consumer data privacy.
Thank you for the opportunity to testify, and I welcome
your questions.
[The prepared statement of Ms. Spellecy follows:]
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Mr. Pitts. The Chair thanks the gentlelady and now
recognizes Mr. Finkel 5 minutes for his opening statement.
STATEMENT OF MICHAEL FINKEL
Mr. Finkel. Good morning, Chairman Pitts, Ranking Member
Pallone and members of the subcommittee. My name is Michael
Finkel, and I am the Executive Vice President for Program
Delivery at QSSI. My role is to ensure successful project
delivery and implementation. I have worked in the IT field for
17 years, and manage the delivery of numerous government
programs.
QSSI is a leading systems integrator that designs and
builds custom IT systems, and we have been working with CMS
since 2006. Currently, QSSI is one of several contractors
developing systems at the direction of CMS that will support
Health Insurance Marketplaces, commonly known as exchanges.
While we do various work with CMS in this area, today I will
focus on QSSI's role in developing the Data Services Hub on
behalf of CMS.
Our job is to write the software code based on CMS approved
specifications for the Data Services Hub. We expect the Data
Services Hub will be ready for CMS to operate as planned on
October 1st. In simple terms, the Data Services Hub will
transfer data. It will facilitate the process of verifying
applicant information by routing queries and responses between
given marketplaces and various data sources. The Data Services
Hub itself will not determine consumer eligibility, it will not
determine which health plans are available in the marketplace,
and it will not handle personal medical records.
Here is how it will work. A consumer will go to the Health
Insurance Marketplace web portal to fill out enrollment forms
and select health insurance plan. Certain information the
consumer provides to the marketplace such as citizenship will
have to be verified. The marketplace will direct a query to
external information sources such as government databases.
Those queries will be funneled through the Data Services Hub.
Once the requested information is sent back, eligible consumers
can then enroll in one of the available plans. The enrollment
data, such as name, address and premium amount will be
transferred through the Data Services Hub from the originating
marketplace to the health plan chosen by the consumer.
It is important to keep in mind that CMS owns and will
operate the hub. It is housed in the CMS secure cloud hosted at
the Terremark Data Center. We are developing the hub within
CMS's environment where it will remain.
Let me address the status of this work. I can report that
our delivery milestones for the Data Services Hub are being met
on time. We have completed software coding for the Data
Services Hub for all functionality required for October 1st. We
are continuing performance and integration testing. We have
connected to the Data Services Hub to the databases at the key
Federal agencies that will be used for verifying information.
We have connected the Data Services Hub to the system that will
transfer data to and from health plan issuers. We expect that
data services functionality planned for October 1st to be
ready.
Finally, let me turn to data security. As I said earlier,
the Data Services Hub is located in the CMS secure cloud. CMS
and its information security contractors will continually
monitor the Data Services Hub. Government regulations require
CMS to follow National Institute of Standards and Technology's
security guidelines applicable to the Data Services Hub. The
design and development of the Data Services Hub complies with
these standards.
Additionally, the Data Services Hub has recently undergone
an independent security risk assessment by CMS's security
assessment contractor, the Mitre Corporation. Our understanding
is that that assessment did not identify any issues that would
prevent CMS from launching the Data Services Hub on October
1st. Once in production, CMS will enforce additional security
controls to protect systems including controlling access and
changes to the system. The Data Services Hub will continually
be monitored by CMS and its information security contractors.
Thank you for the opportunity to testify today. I will be
happy to answer any questions you might have.
[The prepared statement of Mr. Finkel follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The Chair thanks the gentleman and thanks all
the witnesses for your testimony, and we will now begin
questioning and answering. I will begin the questioning, and
recognize myself 5 minutes for that purpose.
Mr. Graham, in your testimony, you included a chart, and we
will put it up on the screen, which displays the sheer
complexity of the exchange, enrollment and subsidy eligibility
process, and I would like to walk through this chart to help
our constituents as to what they will face interacting with the
exchange and what happens to the data provided on the
application.
Mr. Graham. Sure.
Mr. Pitts. I have a series of questions I would like to ask
you. My constituents may apply for enrollment through a paper
application. Is that correct?
Mr. Graham. Yes.
Mr. Pitts. She could also apply online. Is that correct?
Mr. Graham. Correct.
Mr. Pitts. It is also possible to apply by phone. Is that
correct?
Mr. Graham. Correct.
Mr. Pitts. A navigator or an in-person consumer could also
be involved. Is that correct?
Mr. Graham. That is correct.
Mr. Pitts. And so the navigators and others will have
access to personal information included on the application such
as Social Security number, date of birth, address and household
income. Is that correct?
Mr. Graham. That is my understanding.
Mr. Pitts. There would have to be a check on whether an
individual is eligible for Medicaid, and the application
information would then need to be transferred to the State. Is
that correct?
Mr. Graham. That is correct.
Mr. Pitts. The Federal Data Services Hub will have to route
information to several agencies as well. Is that correct?
Mr. Graham. That is correct.
Mr. Pitts. A check will occur with Homeland Security to
verify residency as well. Is that correct?
Mr. Graham. That is correct.
Mr. Pitts. The Social Security Administration will have to
verify citizenship. Is that correct?
Mr. Graham. Yes.
Mr. Pitts. The IRS will also check prior-year income. Is
that right?
Mr. Graham. Yes.
Mr. Pitts. If household income doesn't match, CMS will
check income verification with a private contractor. Is that
correct?
Mr. Graham. Yes.
Mr. Pitts. If the private contractor does not have data on
file, CMS claims they will conduct an audit to check for
eligibility. Is that right?
Mr. Graham. Yes.
Mr. Pitts. Individuals with affordable employer-sponsored
coverage are not eligible for a subsidy. There may have to be a
phone call to an applicant's employer to verify this. Is that
correct?
Mr. Graham. There would be verification needed, yes.
Mr. Pitts. The exchange interface will show approved plan
options upon the entering of application information. Is that
correct?
Mr. Graham. Correct.
Mr. Pitts. Then the beneficiary premium will have to be
calculated correctly after the household income and size is
considered. Is that correct?
Mr. Graham. Yes.
Mr. Pitts. Paper documentation verifying information on the
application may or may not be asked of the beneficiary. Is that
correct?
Mr. Graham. Correct.
Mr. Pitts. Treasury will be responsible for making sure
payment is then sent to the plan. Is that right?
Mr. Graham. Correct.
Mr. Pitts. Based on the application's information, cost-
sharing subsidies will be calculated based on actuarial value
and payments will then be sent to plans accordingly. Is that
correct?
Mr. Graham. Correct.
Mr. Pitts. Overpayments and underpayments of subsidies will
be dealt with during a reconciliation process, both for the
plan. Is that correct?
Mr. Graham. Correct. There will be a reconciliation process
afterwards.
Mr. Pitts. Is there a similar reconciliation process for
the beneficiary?
Mr. Graham. The beneficiary? What do you mean by that?
Mr. Pitts. The tax credits for the individual.
Mr. Graham. So if an individual receives too many tax
credits because they have reported incorrect or their income
status changes throughout the year, there would be a
reconciliation process.
Mr. Pitts. And what happens if there is incorrect
information?
Mr. Graham. So it is projected that if an individual
receives too much subsidy based upon either the information
they submit or the change in income throughout the year, then
they would owe the repayment of whatever additional subsidy
they receive throughout the year.
Mr. Pitts. Would that clawback come back from the insurance
companies or from the individual's income?
Mr. Graham. It would come from the individual's income.
They would owe it.
Mr. Pitts. Well, now, I don't have much time left. I have
just gone through 20 steps of the complexities associated with
the ACA exchange enrollment. I am a little skeptical the system
can actually function as advertised on October 1st, given the
myriad of missed deadlines by the administration, and I am
afraid this Rube Goldberg experiment will not end well.
Trillions of taxpayer dollars are at stake, and it is our duty
to watch this closely as we approach open enrollment.
I wish I could go further but my time is up, and I will
yield to the ranking member 5 minutes for questions.
Mr. Pallone. Mr. Chairman, because I didn't have time
before, I just wanted to respond to this notion that on the
Republican part that somehow this letter that was sent out to
navigators including the Food Bank of Monmouth in Ocean County
in my district was somehow an appropriate oversight function,
which I don't think it is. First of all, you should understand,
and I can use the Food Bank as an example, that they have just
begun the process of trying to sign up people who are uninsured
that happen to come to the Food Bank, and normally when we have
oversight functions, it is after the program has actually been
implemented, not before it even begins. My concern is that this
letter is solely designed to cause delay and to basically take
resources away from the outreach effort of an organization like
the Food Bank, and there has been no evidence that there has
been any mishandling of these funds, particularly since most of
the funds haven't even been used.
So when I say that that oversight function is
inappropriate, it is because it is not consistent with what we
usually do in the committee. We don't usually start oversight
and ask a myriad of questions before the program has even begun
and before there is any indication that there is any kind of
misuse of funds. So that is why I say strictly a delaying
tactic and trying to intimidate these organizations such as the
Food Bank from actually trying to sign up the uninsured.
I wanted to ask two questions. We hear all this over-the-
top criticism of the ACA and the implementation process from my
Republican colleagues, and as a supplemental memo the staff
released today shows the contractors here today are working
hard to do a good job. But I just wanted to down the line and
ask the contractors whether they agree or disagree with my
characterization, and I will start from the left. Granting that
there may be hiccups and unanticipated issues, are you on track
to deliver on your contract and have things up and running, or
is this whole implementation effort doomed to failure? I know
you have sort of answered this so maybe I will just ask yes or
no whether you are on track to deliver and have things up and
running or you think it is hopeful. If you could just answer
quickly, I will run down the line starting with Mr. Graham.
Mr. Graham. So Leavitt Partners is not----
Mr. Pallone. You are not involved. OK. Ms. Kraus?
Ms. Kraus. We are not a contractor.
Mr. Pallone. OK. Then let us start with the contractors.
Ms. Campbell. So I am the first one on the contractor side.
The answer would be yes, we are prepared.
Mr. Pallone. OK.
Mr. Lau. Yes, Serco is prepared.
Ms. Spellecy. Equifax Workforce Solutions is prepared.
Mr. Finkel. QSSI is on schedule.
Mr. Pallone. All right. Thank you so much.
And this is the reality. It simply doesn't match up with my
Republican colleagues' over-the-top rhetoric. Those working to
implement this law are doing difficult but important work. Not
everything is going to go perfectly but we have an obligation
to work together to make this law work for the American people,
and obviously those who are the contractors are not having a
problem in terms of getting up and running.
So I want to ask a second question of Ms. Kraus, if I
could. My Republican colleagues seem intent on using this
hearing to argue that the Affordable Care Act is not ready to
be implemented. They are looking for the smallest missed
deadline, using any indication of difficulty of this task to
argue that implementation is failing, and I think again we need
to put this in perspective. Whatever implementation hiccups or
glitches we see from here, the negative effects will be
nothing, in my opinion, compared to the harm governors around
this Nation are doing to their citizens by rejecting the ACA's
Medicaid expansion. So Ms. Kraus, can you put this in
perspective for us? What can you tell us about the very harm
your State's decision not to expand Medicaid is going to have
and how does that compare to, say, a week's delay in testing IT
readiness?
Ms. Kraus. Thank you. So just to put it in perspective, so
on October 1st, there will be approximately 400,000
Pennsylvanians that will not have access to health insurance.
They will not be able to get tax credits on the exchange. They
can't qualify for health insurance now. So they are going to
continue to be forced to go to Pennsylvania's emergency rooms.
Hospitals as part of the Affordable Care Act are facing cuts in
uncompensated care, and in Pennsylvania, hospitals face about
$1 billion a year in uncompensated care costs, and they are
still going to have to pay for that. In addition, you know, the
economic benefits to Pennsylvania by accepting Federal funding
is huge. We are looking at, you know, $3 billion a year in
increased economic activity. Our own independent fiscal office,
which is a nonpartisan group, looked at it. We are looking at,
you know, being able to create 40,000 jobs in Pennsylvania each
year alone from Medicaid dollars and, you know, Pennsylvania
taxpayers are going to continue to have to shoulder the costs
of uncompensated care and paying for folks that end up in the
emergency room. So as we look forward to October 1st, this is
going to cause a big problem for 400,000 Pennsylvanians.
In terms of IT infrastructure, we have 1.2 million
uninsured in Pennsylvania, about 1.1 million will qualify for
the exchange, and Medicaid expansion, if we go down that road,
these are folks that have been uninsured, you know, for a long
time, have been shut out of the market because they have a
preexisting condition, and these folks are just counting down
the days until October 1st. Their survival counts on it. Right
now they have to choose between, you know, feeding their family
or figuring how to pay medical bills. We hear all the time from
clients who, you know, have ended up in the emergency room.
They don't have health insurance. They have huge bills. They
don't know how they are going to pay them and they don't know
where they are going to turn next. So on October 1st, they will
be able to start the process of making sure they have financial
security and nothing like this happens.
Mr. Burgess. [Presiding] Great. Let us wrap it up there.
The gentleman's time is expired and now recognize myself for 5
minutes for questions.
Mr. Lau, your contract was awarded on July 1st of this
year. Is that correct?
Mr. Lau. Yes, Congressman.
Mr. Burgess. So on July 2nd, things changed, didn't they,
as far as the employer mandate was concerned?
Mr. Lau. Correct, yes.
Mr. Burgess. So were you prepared for that contingency? Was
this something that had been discussed as you were tendering
that contract?
Mr. Lau. Well, at that stage, we were prepared because we
hadn't--we were just really getting started then. So there was
not a change of course that was required.
Mr. Burgess. Had you been to the White House and talked to
the administration about some of these changes that they were
contemplating?
Mr. Lau. No, Congressman.
Mr. Burgess. Ms. Campbell, let me ask you, at any point
have you or CGI been to the White House to discuss the
potential changes that were coming to the Affordable Care Act,
the contingency plans that they were laying?
Ms. Campbell. No, sir, we have not.
Mr. Burgess. And Mr. Lenz, how about yourself?
Mr. Lenz. Well, we are not contractors, sir, so we have had
discussions with the administration with respect to the
employer mandate but not with respect to implementation of the
infrastructure.
Mr. Burgess. But in regards to the employer mandate, what
were those discussions?
Mr. Lenz. Well, our group in particular had tremendous
concern about implementation and specifically around the
definition of who is a full-time employee, given the unique
nature of our workforce--lots of people that come and go. Their
work patterns are unpredictable and uncertain, and at least in
that respect, the administration acknowledged that that posed
significant problems, not just for employers but also for the
administration of the program. So we were able to agree on a
look-back rule. The administration was accommodating in that
respect. But as I noted in my opening remarks, it is not the
whole--it doesn't answer all of the questions. We still have
lots of questions relating to reporting, how the premium tax
credits will be administered and so on.
Mr. Burgess. These meetings at the White House, when did
they occur?
Mr. Lenz. Well, they were--I wouldn't say they were at the
White House. They were with the agencies that are responsible
for the development of the rules, primarily treasury.
Mr. Burgess. Did you talk to them during the month of June?
Mr. Lenz. I can't recall whether we actually spoke to them
in June. We had several meetings with them.
Mr. Burgess. Mr. Lau, let me go back to you. Your contract
is a cost-plus arrangement. Is that correct?
Mr. Lau. That is correct.
Mr. Burgess. And because of the changes that have occurred,
well, if I am doing the arithmetic correctly, this will
represent about 10 percent of your business. Is that correct?
Mr. Lau. The employer postponement? Is that what you are--
--
Mr. Burgess. No, no, just your contract.
Mr. Lau. Oh, with this--I don't know the exact percentage
for Serco. You may well be correct.
Mr. Burgess. You record a cost, or your contract price was
$114 million.
Mr. Lau. Base year, yes, sir.
Mr. Burgess. And your annual revenues are about $1.2
billion?
Mr. Lau. That is close to 10 percent, yes, sir.
Mr. Burgess. So this is a big deal for you all?
Mr. Lau. It is certainly a big deal, yes.
Mr. Burgess. And, I mean, does it concern you that as you--
I mean, you are working through a highly complex set of
circumstances. Does it concern you that things seem to be
changing?
Mr. Lau. I think that things generally tend to change in
complex programs like this. I have been doing these for 30
years. The company itself has lots of experience, and the one
thing we know is that change is a constant, and sometimes the
pace of that change increases as you get closer to the
deadline.
Mr. Burgess. See, and this is what----
Mr. Lau. We are prepared to accommodate and adjust to
whatever changes.
Mr. Burgess. But look, at the committee level, we invite
members of the administration in. We expect to get answers to
our questions, and the question about contingency plans, and
what are you doing to deal with the complexity of this program,
really, we get no answers, so your responses today are really
the first that we have heard that the administration is in fact
or the agency is in fact considering the fact that things may
not be exactly as they think.
Mr. Graham, let me just ask you a question because you used
a word that I had actually used in questioning Mr. Cohen from
the Office of Consumer Information and Insurance Oversight. You
used the word ``de-scoping.'' Is that something that you have
encountered in your study of this?
Mr. Graham. Yes. In fact, many of the State-Based exchanges
have been very public in their intent. Some of the earliest
ones were messaging their plan to de-scope as early as April,
so it is the right thing for them to do, given where they are.
Mr. Burgess. Yes, I don't disagree with that, but again,
Mr. Cohen, in response to a direct question at the end of
April, said no de-scoping, no delay.
My time is expired. Let me recognize Mr. Green for 5
minutes for questions, please.
Mr. Green. Thank you, Mr. Chairman.
I appreciate our panel being here today because of our
oversight effort on the law now, and coming from Texas, it is
really important because we have a national plan. Our State
decided not to participate.
One of the things I want to talk about is, the Affordable
Care Act sets important nationwide standards on insurance plans
and makes financial assistance available to those who need it,
but the law preserves the State's primary role in regulating
your insurance markets. The law was designed to be a floor and
not a ceiling for consumer protections in the insurance market.
It encourages States to set up their own health insurance
marketplaces and tailor rules and regulations for them.
But many States, including my own, have decided to turn
over control of their health insurance marketplace to the
Federal Government. Handing the keys to the Federal Government
seems to be a strange way to be pro-States' rights, but that is
their option. In contrast, States like Maryland and California
have been running their own marketplaces and working to
implement the law and have driven down insurance premiums,
expanded options for small businesses and helped simplify cost
sharing and deductibles.
Ms. Kraus, what benefits can States realize by taking a
more active parting implementation and setting up their own
marketplaces, and how would things look in your State if they
were taking a more active role?
Ms. Kraus. Thank you, and like Texas, Pennsylvania has
decided to default to the Federal Government. In doing that, we
have given up a lot of flexibility and we have really been slow
to move forward. For example, we were the 40th State to submit
our plans to integrate our IT. We submitted it after the
deadline was passed, so that is slowing up the process in
Pennsylvania. We have seen other States go above the Affordable
Care Act standards. Oregon, for example, went above the
requirements of the ACA in terms of rate review. This year they
brought in $69 million from waste, fraud and abuse at looking
at insurance plans in the marketplace in 2014. Other States
have done things to strengthen their essential health benefits
package. We defaulted to a larger small group plan. States
have, you know, defined rehabilitative services, providing, you
know, consumers with greater protection with disabilities. So
we have really passed up the ability to be innovative and
creative and really craft a marketplace that would work best
for Pennsylvania.
Mr. Green. I want to ask you about fraud and subsidies. We
have heard this the last few weeks--in fact, the House may be
voting tomorrow on it--about a particularly offensive attack we
heard recently on health reform that the health insurance
subsidies will be rife with fraud. Marketplaces will have
robust verification of consumers' income before they receive
any financial assistance, and the IRS will make sure no one
receives excess subsidies when taxes are filed at the end of
the year. There are penalties for perjury for lying to get
these benefits, and the ACA even added new penalties for
providing false information on the application. And yet we
still hear what I consider slander of the hardworking people
who get a little help from these programs are really just
fraudsters trying to get benefits they aren't eligible for.
Ms. Kraus, you worked with many folks who might need a
little assistance from these important public programs. These
people, are they just people looking for a free lunch or are
they actually willing to commit fraud to get it?
Ms. Kraus. No. I mean, look, the majority of folks that
would qualify in Pennsylvania for Medicaid expansion, about 80
percent of them have one full-time worker in a job. They are
just trying to get health insurance to protect them and their
family. I think you pointed out, HHS has been very clear in
setting up guidelines on protection against fraud and penalties
for navigators that choose to not have security standards in
place. If we look at how folks apply for health insurance
today, you have to hand over an array of your health history,
very private data. An insurance company can decide whether or
not you have health insurance. Going forward, it is income, it
is age and geographic location. So, you know, to me, that is a
lot safer than handing over very personal, detailed health
insurance records.
Mr. Green. Well, as we know, October 1st, States like
Pennsylvania and Texas, we are going to have a national plan
with no State input. I am not familiar with Pennsylvania law
but I know as a former State legislator in Texas, we tried to
get, for example, 80 percent of the premium by statute. Does
Pennsylvania have anything on a State level that requires a
certain amount of premium to go back to benefits like the
Affordable Care Act does?
Ms. Kraus. No, we don't, so the Affordable Care Act
actually makes sure that, you know, Pennsylvania consumers are
protected, and I think in Pennsylvania, the average
Pennsylvania consumer saw about $200 in a rebate this year from
refunds from insurance companies that did not spend 80 percent
on actual care.
Mr. Green. Well, I appreciate that because that is one of
the things I hear from employers, particularly small
businesses, by going to their exchanges and they can starting
October 1st but they will be able to make sure that at least 80
percent of their premium dollar will come back to benefits.
Ms. Kraus. Correct.
Mr. Green. Thank you, Mr. Chairman.
Mr. Burgess. The gentleman yields back his time. The Chair
now recognizes the gentlelady from Tennessee 5 minutes for
questions, please.
Mrs. Blackburn. Thank you, Mr. Chairman, and thank you all
for being here and for your testimony and allowing us to do the
due diligence that our constituents expect from us.
Mr. Lenz, I would like to come to you, if I may, sir.
Mr. Lenz. Yes, ma'am.
Mrs. Blackburn. We have all been in our districts for 5
weeks, and I have to tell you, not a single day went by that I
did not hear from employers or employees and hearing about
changes, reductions in benefits, uncertainty, confusion, and
you know, they say, well, the employer mandate, that delay for
a year still doesn't take away that underlying requirement. We
know that it is still there and it is going to be affecting
jobs and job creators. All these mandates seem to just have a
crushing effect. I met this morning with a group of business
leaders from another State, and when I said our goal is to
delay, defund, repeal, replace Obamacare and find something
workable, they broke into applause because in their State, just
like in mine, it is a huge problem.
So what I would like for you to do is take just a few
seconds and expand on your testimony and kind of connect for us
how the Obamacare requirements on employers are causing the job
market to contract and not to grow.
Mr. Lenz. Well, thank you, Ms. Blackburn. We do represent a
specific group of employers and a specific concern in regard to
what we sometimes refer to as variable-hour employees, that is,
temporary, part-time employees who work patterns are
intermittent, unpredictable, short term and so on. They present
unique challenges under the statute. We certainly recognize
that there is general concern on the part of employers about
implementation, and we have addressed some of that in our own
testimony, but I would have to confine my comments to the
unique circumstances of our particular workforce, and there are
lots of them. As I pointed out, there are upwards of 30 million
employees that are in that category, and so we have made some
progress, I think. We recognize that it is the law and that we
are compelled to comply with it but we still have major
concerns about implementation, the timing of it, and as you
pointed out, the fact that the employer mandate has been
delayed a year does not mean that we don't have to be ready
now. In fact, we had to be ready yesterday and 6 months ago,
and we weren't and couldn't in large because rules weren't out
that we could rely on, in particular, regarding the reporting
rules. Now, they just came out last week and we are scrambling
to look at them and to digest them. We were somewhat
disappointed to see that some of the suggestions that we had
urged that had not been adopted for various reasons, and we
understand that there is lots of complexity associated with it,
but it doesn't relieve the fact that we have major concerns
about implementation on January 1st of this coming year, not
2015, because all these software programs have to be in place,
up and running, so that employers can begin to track hours now
in order to know who they have to offer coverage to on January
1, 2015. So this has been an ongoing problem in trying to get
certainty and answers as to how we need to operate in order to
comply.
Mrs. Blackburn. Thank you.
Mr. Lau, I want to talk with you a minute about Serco. You
know, you are talking about the data you have got to start
holding now in order to be ready on January 1, 2015, and then
as you look at the amount of information on your employees.
Well, one of the main problems that we hear about from our
constituents, the main concern is the lack of privacy that they
are going to have, and their lack of faith that people are
going to be able to protect that personally identifying
information and the fear that some of that could be used
against them. So what kind of provisions are you putting in
place?
Mr. Lau. Well, Serco has a very comprehensive privacy and
security program beginning with security of the facility,
thorough background checks on each and every employee that will
work there, compartmentalization of the roles and functions of
the employees, role-based security so that employees can only
see certain parts of an applicant's record. We deal with no
personal health information. None of that is there. It is PII
mostly. We also have extensive training, a cultural background
to instill in all of our workers respect for the information
and the fact that it represents very personal information of
people and citizens. In addition, there are a number of
technological components as well in compliance with Federal
information security standards and NIST standards and things
like that so there are firewalls and other preventions. So the
networks are not accessible to the Internet. They are point-to-
point networks and so there is just layer after layer of
security in place.
Mrs. Blackburn. Thank you. Yield back.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the gentlelady from the Virgin Islands, Dr.
Christensen, for 5 minutes for questions.
Mrs. Christensen. Thank you, Mr. Chairman, and thank the
panelists for being here this morning.
I want to focus on some of the concerns that Mr.
Butterfield raised earlier. Mr. Graham, in your testimony you
described consumer outreach as being very important. As a
matter of fact, it is one of your four key areas of concern. By
consumer outreach, I assume you mean advertising, public events
and the navigator program and similar efforts to inform the
public about their new insurance options in the exchange. Is
that correct?
Mr. Graham. That is correct. When I say outreach, I mean
just going out in the community and making consumers aware of
their choices so that they might make the optimal choices for
themselves.
Mrs. Christensen. And is it also important to make sure
that the largest number of young people and healthy people are
also engaged, taking advantage of the exchange so that the cost
might be lower?
Mr. Graham. One of the changes that the ACA brought about
was clearly how risk pools would be created, and as the risk
pools are created, certainly, as with any insurance product, it
is necessary to have a broad spectrum of individuals in that
pool. And so if the exchanges were not able to attract those
individuals, there would be problems in subsequent years.
Mrs. Christensen. And so you would agree that States that
are not doing the consumer outreach and education are likely to
see higher costs than those who are more active?
Mr. Graham. Well, when you say higher costs, higher costs
overall or higher costs----
Mrs. Christensen. Of the premiums.
Mr. Graham. Of the premium? So they run the risk of having
not attracted the right risk pool or everyone into that risk
pool and so having premiums be higher in subsequent years.
Mrs. Christensen. And Ms. Kraus, you agree also? I am sure
that consumer education efforts are important to make this law
work properly?
Ms. Kraus. Yes, correct.
Mrs. Christensen. You know, it is good to see that
witnesses invited by both Democrats and Republicans agreeing on
something this important. I think it is unfortunate that the
Republicans are attacking the HHS for investing in efforts to
inform the public, and it is even more unfortunate that they
are working to undermine the civic and community groups that
are going to be doing some of that consumer outreach, and I
hope we can agree, just as President Bush did with Medicare
Part D, a robust consumer outreach and education campaign for
these new insurance options is important, and we should all get
behind it.
I remember when we passed Medicare Part D. It was not the
Democrats' version of the bill. It created a donut hole that
didn't treat the territories equitably, and yet I went out
across my community to do outreach to ensure that people
understood the bill and engaged our foundation in doing a lot
of outreach across the country. And, you know, I think that is
that the we ought to go instead of trying to undermine the law
and unfund the law that is already helping individuals across
the country.
Ms. Kraus, I was in Pittsburgh about 2 weeks ago at a
women's conference and heard firsthand and personal the issues
of health disparities and lack of insurance in that community,
and it is extremely unfortunate that Medicaid expansion is not
going to be accepted even, as you have said, when it creates
jobs, helps the economy in Pittsburgh and of course provides
services to many--this is a women's conference who are
uninsured in the area.
I think, you know, that really was the question that I
wanted to ask, Mr. Chairman, and I will yield back the balance
of my time.
Mr. Pitts. The Chair thanks the gentlelady and recognizes
the gentleman from New Jersey, Mr. Lance, 5 minutes for
questions.
Mr. Lance. Thank you, Mr. Chairman, and good morning to the
panel.
Mr. Graham, as I understand it, under the law, States will
be responsible for accepting application transfers from an
exchange where Medicaid eligibility needs to be determined.
There has been some systems testing of such transfers where in
fact Medicaid eligibility is valid. However, testing has not
been completed for cases where Medicaid eligibility cannot be
determined for various reasons including an incomplete file.
From your perspective, Mr. Graham, has there been sufficient
testing with the States, and if not, what are some of the
financial risks to the States?
Mr. Graham. So the question about has there been sufficient
testing, one of the key things here is that it is different in
every State so that some States are further along in testing,
and certainly more testing would be more beneficial. The risks
of not having testing completed or if something doesn't work as
plan is really delay: delay for the consumer and delay for
enrollment. So in those instances where things cannot be done
in an automated or electronic way, then physical documents have
to be faxed in or brought in in some form or fashion and
interaction has to occur with the consumer that delays the
actual process to be able to become enrolled. So the risk is
delay.
Mr. Lance. And can you estimate how long that delay might
be?
Mr. Graham. We know that HHS is required to be able to
actually, in instances where it goes to a manual system or has
information brought in, it has a 90-day review period. So that
is what the law requires. I can't estimate in terms of how long
things might go out should there be challenges in Medicaid and
HHS.
Mr. Lance. It would be my suspicion at least that it will
be longer than 90 days. Do you share that suspicion?
Mr. Graham. I think delays tend to be longer than we
originally expect.
Mr. Lance. Can you tell us, perhaps you don't know this,
which States have done a good jobs so far in this regard and
which States need to do a better job?
Mr. Graham. I would be happy do that offline for you in
terms of getting into specifics with States.
Mr. Lance. Thank you, Mr. Chairman, and am willing to yield
my time to anyone who would like it. Dr. Burgess?
Mrs. Blackburn. If the gentleman would yield?
Mr. Lance. Whatever time the gentlelady would like.
Mrs. Blackburn. Just a couple of minutes. Adding to your
question, which I think was a great one on detailing the
States, and you said you would talk with the Congressman
offline. I wish that you would submit that in writing so that
it could be put into the record of the committee, and I yield
back to Mr. Lance.
Mr. Lance. Thank you. Is there any other member on our side
who would like----
Mr. Pitts. If the gentleman would yield?
Mr. Lance. Absolutely. I certainly will, Mr. Chairman.
Mr. Pitts. Mr. Lenz, I had another question. In my opening
statement, I mentioned that Eastern Lancaster County School
District, Penn Manor School District in Lancaster, Pa., both
announced that they were outsourcing some employees to avoid
the cost of complying with the ACA's employer mandate. The
school districts simply cannot afford to pay for the additional
expenses covering these individuals. Are you hearing similar
stories or anecdotes like these from members of your coalition
due to the ACA?
Mr. Lenz. Yes, we are hearing questions being raised as to
whether businesses or entities that would otherwise be subject
to the ACA would try to outsource some of their workers in
order to avoid the rules. It is not clear how that is actually
going to play out because the responsibility for employer
coverage is going to be determined based on common law employer
rules. So it really ultimately will be a legal question as to
who the responsible employer is. We have addressed that at
great length to our members of the American Staffing
Association. I am not speaking on behalf of E-FLEX now but
temporary staffing firms are in the business of supplying
employees to other businesses that require temporary help or
other contract help, and so there are questions in those so-
called third-party employment relationships who is the actual
employer. Our view is, if the temporary staffing firm, for
example, is offering or providing compliant health care
coverage, it shouldn't ultimately matter who technically the
common-law employer is as long as the arrangement is not being
used to circumvent the law. But those are technical questions.
In some cases they raise thorny issues but they remain to be
addressed as we go along.
Mr. Pitts. Thank you. The gentleman's time is expired. The
Chair now recognizes the gentlelady from Florida, Ms. Castor, 5
minutes for questions.
Ms. Castor. Thank you, Mr. Chairman, and thank you to the
panel. This is an important time in the enrollment, or in the
implementation of the Affordable Care Act, particularly with
the online marketplaces about to come online in the open
enrollment period that will run October to March. In my home
State of Florida, it is particularly important. The U.S. Census
Bureau reported over the last couple of weeks that 25 percent
of the population in the State of Florida is uninsured. That is
about 3.8 million individuals. Now, most people have insurance,
and if you have insurance, you want other people to have
insurance because otherwise you are going to--part of your
copayment and premiums is going to go to subsidize folks who do
not have insurance, and if you have insurance today, you have
already seen the benefits of the Affordable Care Act. In
essence, you have new rights. You cannot be discriminated
against for preexisting conditions. You cannot be kicked off
your policy if you get sick. In the greater Tampa Bay area, we
already have almost 50,000 young adults who have been able to
stay on their parents' policies. That is very positive. Over
200,000 small businesses in the State of Florida are eligible
for the new tax credits. That is very meaningful in a State
that has so many mom-and-pop small businesses.
One of my favorites for folks who have insurance today is
the fact that just in the greater Tampa Bay area, over $47
million has come back into the pockets of families due to the
new requirements that 80 to 85 percent of your premiums and
copays have to go to health insurance. So rebates have come
back to about a million people just in my greater community.
But what concerns me now is that we are not all working
together to address the flaws and improve the Affordable Care
Act. Instead, we continue to run into obstruction. Last month,
Ranking Member Waxman and the Democrats on this committee
released an analysis describing 10 ways that Republicans have
acted to undermine and obstruct the Affordable Care Act. That
in addition to the 40 repeal votes that have taken up precious
time here in the House this session. That is a waste of time.
We have got to be working together on this. And then when you
look across at the States, Republicans Governors, including
mine, some have refused to take the Medicare expansion in the
State of Florida. That means that our hard-earned tax dollars
that Floridians have paid are most going to come back to our
State, $50 billion over the next 10 years. That is not smart.
That is not in the public interest.
But I wanted to highlight to my colleagues today the one
that takes the cake, the one that wins the ideology over the
public interest award, and that is the fact that in the State
of Florida, the Republican legislature passed a law to actually
remove State oversight and regulation of insurance companies
and their rates. When Secretary Sebelius was in Florida a few
weeks ago, she said she knew of no other State that had gone
this far. The States still have the authority to negotiate and
regulate insurance rates. So in this effort to elevate ideology
and obstruction over the best interests of my neighbors, they
now have taken the cops off the beat to regulate insurance
rates. I want to know if anyone on this panel thinks that that
is in the best interest of our businesses and consumers. I
didn't think so. I haven't heard of anyone outside of the
Republican legislature and our Governor, even if they don't
like Obamacare and the Affordable Care Act, that thinks it is
reasonable for the State to put insurance companies in charge
of where the rates go. I really think it is a shame, and like I
said before, if you have insurance, you want other folks to
have insurance.
Ms. Kraus, I would like to ask your perspective on these
Republican efforts to undermine the law. What kind of impact
are they having on the implementation in your State? I can tell
you in my State, it is very problematic.
Ms. Kraus. Yes, I mean, I just to emphasize this again and
really hit this home. Medicaid expansion is huge, and when we
have 400,000 people with health insurance, and that affects
every single person. It affects, as you said, the folks that
have health insurance, we are paying for that, and we are going
to continue to have to pay for that. Like Florida,
Pennsylvania's tax dollars are going to be thrown out the
window to pay for health insurance coverage in other States. We
are an island of no amongst other States. Our neighbors, New
Jersey, Ohio, Maryland, they are all moving forward with
Medicaid expansion.
Ms. Castor. Thank you, and I yield back.
Mr. Pitts. The Chair thanks the gentlelady. The Chair now
recognizes the gentleman from Louisiana, Dr. Cassidy, 5 minutes
for questions.
Mr. Cassidy. Thank you, Mr. Chairman.
Mr. Graham, earlier there was a question suggesting the
possibility of fraud in this arrangement where there wouldn't
be income verification was merely a straw horse--straw man. I
understand that under the earned income tax credit, it is
estimated that 21 to 25 percent of the payments are fraudulent,
and that is when they totally integrated hub with the IRS. Now,
are you as comfortable that in States like California where it
is going to be self-attestation with no verification by the IRS
that the level of fraud will be less, or what is your
perspective as to what is going to happen?
Mr. Graham. I am not an expert to project on what the fraud
may or may not be. I will just say that in areas where the
systems testing hasn't been completed or hasn't done to the
full extent that it was originally intended to or needed, that
the potential for fraud exists.
Mr. Cassidy. And knowing that we are all sinners and fall
short of the glory of God, it seems reasonable that there could
be some fraud?
Mr. Graham. That is a reasonable expectation.
Mr. Cassidy. I mean, it is almost laughable to say that
there won't be, and there is going to be a trillion dollars
spent on the health insurance exchanges over the next 10 years.
The Federal taxpayers are about to get whacked.
Ms. Campbell, you mentioned that everything is kind of
going well as regards a baseline, but it is my understanding
that the systems have not included foreign-language support,
and yet I have already read that the hope to get the big
numbers, the young men who currently are not insurance but will
theoretically pay three times the market rate in order to
participate in the exchange, will rely on people who are
minorities, many of whom will not have English as a primary
language. So that said, is it true--I mean, you tell me, I
don't know--are the exchanges robust in terms of their ability
to support folks for whom English is not a primary language?
Ms. Campbell. So Spanish is part of the rollout for
implementation.
Mr. Cassidy. But is it ready? Is the Spanish--put it this
way. If I was a primary Spanish speaker, would I be able to log
on and have a seamless experience as regards my ability to
interface with the forum?
Ms. Campbell. For the online application, yes.
Mr. Cassidy. And what about Vietnamese?
Ms. Campbell. I don't have an answer for that but I can get
back to you.
Mr. Cassidy. That would be great. Chinese, Mandarin?
Ms. Campbell. I have an answer for the Spanish version. I
can get back to you with the other dialects.
Mr. Cassidy. OK. So for these other folks who perhaps are
not currently insured in Orange County, which I gather Orange
County has the greatest concentration of Vietnamese outside of
Vietnam may not be quite ready. Now, granted, a lot of those
folks speak English, but still I am a little interested.
Mr. Lenz, I have heard the President's health care law
described as one of the most significant anti-growth policies
that have been passed by Congress. I am proud to say I voted
against it. And that we continue to see a declining
unemployment rate but only because people are dropping out of
the job market. The total number of jobs is actually terrible.
It is just that people are no longer looking for work.
Now, you described something along those lines. The
businesses that you represent, do you say that they are
encouraged to grow by this law or perhaps they are otherwise
encouraged?
Mr. Lenz. Well, it is almost cliche to say that businesses
don't respond well to uncertainty and higher costs have an
impact on hiring. Those are just basic business truths. I think
our members believe that. I think we are particularly concerned
about the definition of full-time employee as we mentioned. The
30-hour definition we think is not working well and is having
perverse economic impacts already.
Mr. Cassidy. And if I may interrupt, also, when I speak to
small business owners, she will tell me that she is spending so
much thinking about this law, she is not actually thinking
about how to expand her business. She is trying not to run
afoul of the Federal Government as opposed to where do I next
open up. Is that a fair statement?
Mr. Lenz. Well, let me just say on behalf of the American
Staffing Association, which represents temporary staffing
companies, the great majority of which are small business
owners, we have lots of employees that come and go but most of
them are small businesses by anybody's reckoning. There is
tremendous anxiety about enforcement, very much confusion
because of the complexity.
Mr. Cassidy. So it is fair to say, if they are confused,
conflicted, whatever, then it is fair to say that they are not
thinking as much about expanding their business?
Mr. Lenz. I think that is a fair statement.
Mr. Cassidy. Lastly, let me just make the point, Ms. Kraus,
you have been very wonderful about how Pennsylvania is going to
benefit from this, but let me just say that Pennsylvania's
small group market has a projected 27 percent increase in their
premiums, that Pennsylvania's individual market, one insurer
predicted an average increase of 30 percent in the individual
market, males facing premium increases of 11 to 63 percent.
Heck, it doesn't seem as good for the law in Pennsylvania if
you are that male getting a 63 percent in your premium.
Ms. Kraus. Well, I mean, I think a couple of things. First,
when we talk about small businesses, we have to remember that
small businesses with 50 or fewer employees are exempt from
having to offer health insurance coverage, and I think when you
go out----
Mr. Cassidy. So your only salvation is that you are exempt?
Ms. Kraus. No, but I think when you go out and talk to
small businesses, a large concern is, you know, the cost of
health insurance. We have seen health insurance costs rise
astronomically over and over for years before the Affordable
Care Act, and for the first time in history, insurance rates
have slowed, and this year they only grew by 4 percent. So I
think this is going to start to help small business owners that
can now pull their power together and get coverage that is
offered----
Mr. Cassidy. Based on what the insurers say, it seems more
an article of faith. It is a hope. It doesn't seem to be what
the insurers are saying.
I am out of time. I yield back. Thank you.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the ranking member of the full committee, Mr.
Dingell, for 5 minutes for questions.
Mr. Dingell. Thank you, Mr. Chairman, for holding this
hearing, and thank you to our witnesses.
First of all, I welcome the opportunity to hear from our
witnesses today about the progress of ACA implementation. One
misconception that seems to be a big one is the data hub. These
questions are for Mr. Finkel of Quality Software Services Inc.
Mr. Finkel, these are yes or no questions. QSSI has a contract
with CMS to work on what is known as the data hub. Is that
correct? Yes or no.
Mr. Finkel. Yes.
Mr. Dingell. Now, Mr. Finkel, we have heard from some that
the data hub will be this new government database with personal
medical information. Is this an accurate characterization of
the program? Yes or no.
Mr. Finkel. No.
Mr. Dingell. Would you submit for the record what is a
correct representation of the circumstances, please?
Mr. Finkel. Yes.
Mr. Dingell. All right. Now, instead, is it fair to say the
data hub is technological tool to help facilitate the transfer
of data between government agencies? Yes or no.
Mr. Finkel. Yes.
Mr. Dingell. Now, will data hub handle personal medical
records at all? Yes or no.
Mr. Finkel. No.
Mr. Dingell. Mr. Finkel, will the data hub be up and
running 3 weeks from today on October 1? Yes or no.
Mr. Finkel. Yes.
Mr. Dingell. Could you please submit for the record a
summary of the functions of data hub that may relate to an
earlier question I asked? Could you do that for me, please,
sir?
Mr. Finkel. We will work with the committee on that.
Mr. Dingell. Very good. Work with me. This committee might
not be quite as helpful.
The next questions are for Mr. Lau of Serco. Mr. Lau, does
Serco have experience in handling applications and records
management for government agencies? Yes or no.
Mr. Lau. Yes.
Mr. Dingell. CBO has estimated that 6.2 million paper
applications will be submitted between October 1, 2013, and
March 31, 2014. Does Serco have the capability to handle this
large amount of paper application? Yes or no.
Mr. Lau. Yes.
Mr. Dingell. Now, Mr. Lau, how many people has Serco hired
to work on this CMS contract?
Mr. Lau. To date, 1,200. The plan is for about 2,000 by
October 1st.
Mr. Dingell. Now, if you want to submit for the record, it
would be appreciated.
Now these questions are for Ms. Spellecy of Equifax. Ms.
Spellecy, will Equifax get prior consent from a consumer before
conducting an income verification report on that individual?
Yes or no.
Ms. Spellecy. CMS will obtain the consent first, yes.
Mr. Dingell. Thank you. Now, does this practice go above
and beyond what is required of Equifax under the Fair Credit
Reporting Act? Yes or no.
Ms. Spellecy. Yes.
Mr. Dingell. Now, has Equifax done testing of your income
verification systems with data hub and the State exchanges? Yes
or no.
Ms. Spellecy. Yes. Now, will income verification services
provided by Equifax be ready in 3 weeks when the marketplaces
are open or rather are available for open enrollment? Yes or
no.
Ms. Spellecy. Yes.
Mr. Dingell. Now, I want to thank you all for your
testimony. This is a critical time in our history. The American
people are counting on us. When I was back home in Michigan
just recently, my constituents weren't asking me political
questions about the Affordable Care Act. They wanted to know
where and how to sign up for quality, affordable health care
that will help their families and their small businesses. We
have only 3 weeks before the marketplaces open. The time for
political games is over, and it is time for this body, the
Congress, and the Senate, to quit playing games. It is also
time for us to understand that we have to work together. The
law is the law, and ACA is the law of the land, and frankly, we
should all be working together to ensure that implementation
goes smoothly as possible in the interest of seeing to it that
we don't waste hundreds of millions or perhaps billions of
dollars that has been spent so that and that we don't dissipate
our opportunities to see to it that the American people can get
a chance to see to it that health care is a matter of right,
not a privilege just for those who are well-to-do, and I would
observe that working men and women need this legislation. It is
something which will help them to live a better quality of life
and will improve medical care all across the board. I would
also note that it is saving money for everybody in sight, and
if we will just give it a chance and work together, I believe
the country will be better off for it. I thank you, Mr.
Chairman.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Virginia, Mr. Griffith, 5 minutes
for questions.
Mr. Griffith. Thank you, Mr. Chairman, and I appreciate it
very much. I appreciate all the witnesses being here. As you
might gather, Mr. Dingell and I do not agree on this point
although I respect him greatly and appreciate his contributions
over the many decades to this committee, and obviously whenever
you have a law on the books, it is Congress's obligation to
review it and make sure it makes sense, and each Congress has a
separate obligation to do that, and we come to somewhat
different conclusions.
Mr. Lenz, I noticed with some interest on your summary of
major points, your very last point, you said it would impose a
major administrative burden on employers and result--referring
to the large employer auto-enroll requirement--and result in an
unexpected payroll deduction for many employees who do not want
it or need coverage. Am I to assume that you are referring to
perhaps the husband whose wife has a much better plan with her
employer and now he is going to be automatically enrolled,
albeit his wife has a better plan and already has a family plan
for them and their children? Is that the type of thing you are
referencing?
Mr. Lenz. That would be one example.
Mr. Griffith. And would another example be the one that a
constituent came to me with last year or a similar situation
where a student, full-time enrolled in college, also held a
full-time job and through the Affordable Care Act was forced
off of their parents' plan because they were eligible through
their employer and then they ended up having to spend more
money because obviously being part of a family plan with their
parents, it was free, but now because they were doing what I
hope my kids will have the fortitude to do, carry a full-time
load at school and a full-time job, it ended up costing them
several thousand dollars a year. Would that be another example
of that kind of a problem that this Act is just not ready for?
Mr. Lenz. Yes, sir.
Mr. Griffith. And I would ask the gentleman also, I noticed
on page 5 of your testimony, you indicate that the 1-year delay
of the employer requirements means employers will not have
penalty exposure until 2015 but they must still have their
information technology and human resources systems in place by
January 1, 2014, in order to track employees' hours of service
in 2014 and comply with the ACA coverage obligations on January
1, 2015, but I would ask you, Mr. Lenz, has your organization
taken into consideration what happens if the courts determine
that the President didn't have the authority--and I ask this
question because I can't find where in the bill the President
has the authority to delay the employer mandate. If a court
finds oh, let us say, next September that the President didn't
have that authority, you all have got the records, aren't your
employers then responsible for going back in and reimbursing
the costs of that health insurance to their employees that they
thought they weren't mandated to provide but now they are if
they hadn't provided something that would have been in
compliance with ACA as of January 1, 2014?
Mr. Lenz. Well, that would be quite a conundrum.
Mr. Griffith. And isn't it a possibility, understanding
that there is nothing directly authorizing the President to
delay the employer mandate and recognizing that we do live in a
litigious society?
Mr. Lenz. We do indeed, sir.
Mr. Griffith. And so this conundrum could be a great
detriment to many employees in the United States, and isn't it
also just one of the thousands of examples out there of why you
are concerned about employers not knowing what the rules are
and what they have to do and what is coming next as a part of
this Act?
Mr. Lenz. There are multiple opportunities for unforeseen
consequences here.
Mr. Griffith. There are indeed. There are indeed.
I would go back to Mr. Graham. I was reminded when you were
talking about the fraud--and I know you don't want to get on
record as to what percentages are fraud or whether it will be
more or less, and I understand that, but a friend of mine once
explained to me, and I thought it made good sense, that locks
are just there to help keep the honest men and women honest,
and that that is why you have locks because if there is
somebody who really wants to get into your house or get into
your car, they are going to figure out a way to get in. And so
doesn't it cause you some concern that we don't have proper
locks in place on fraud when it comes to this particular Act
and the various requirements that you say what your income is
or don't say what your income is?
Mr. Graham. When I ride my bicycle to work, I lock it up.
Mr. Griffith. Yes, sir. I appreciate your answer.
Mr. Chairman, unless somebody wants my last 30 seconds, I
yield back.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Florida, Mr. Bilirakis, 5 minutes
for questions.
Mr. Bilirakis. Thank you so much. Thanks for holding this
hearing. I apologize for being late. I was at the other
hearing.
A question for Mr. Lau. Did CMS, in any of your
conversations, state why they waited until July to issue the
contract?
Mr. Lau. No, it was a competitive procurement, so I am not
sure what----
Mr. Bilirakis. Well, did they not know that paper
processing was required when the exchanges would go online? Do
you usually get contracts affecting 6.2 million people 3 months
before it occurs?
Mr. Lau. Well, this one was certainly more challenging that
most in that regard in time spent.
Mr. Bilirakis. Thank you.
A question for Ms. Campbell. Ms. Campbell, can you talk
about CGI's role in the exchange? Do you make all final
decisions for yourself and the subcontractors?
Ms. Campbell. I would be happy to discuss the role of CGI
as our role on the exchanges. For us, I would like to equate it
to sort of the face of the exchange. This is where an
individual will be able to go into a portal, sign up, actually
put in a profile, peruse the database or peruse the system to
determine which plan is of interest to themselves. They will
also be able to determine their eligibility through a series of
questions, and then they will make their selection, and that is
the portal that CGI is developing for the marketplace, or for
the exchange.
Mr. Bilirakis. Next question. Ms. Campbell, who is
ultimately considered the integrator, or quarterback, for
making sure the exchange works properly?
Ms. Campbell. That would be CMS.
Mr. Bilirakis. Thank you.
Next question for Mr. Finkel. Will QSSI be offering the
Data Services Hub after open enrollment on October 1st through
2014?
Mr. Finkel. No. As I stated, CMS will be operating the Data
Services Hub once it goes live.
Mr. Bilirakis. Another question. According to the Inspector
General Office's report, it says that CMS's Chief Information
Officers expects to make a security authorization on September
30th. Is it responsible to make this decision so late in the
process? The original timeline, as I understand, was September
4th, the decision would be made. Can you comment on that?
Mr. Finkel. I cannot comment on CMS and what they will
approve and when. I can tell you that the Data Services Hub has
gone through a security risk assessment that was completed on
August 30th and we have no reason to believe why CMS cannot
sign off on the Data Services Hub.
Mr. Bilirakis. OK. Thank you very much, Mr. Chairman. I
appreciate it. I yield back.
Mr. Pitts. The Chair thanks the gentleman. That concludes
the first round of questions. We will have one follow-up on
each side. So Dr. Burgess, you have 5 minutes for follow-up.
Mr. Burgess. Thank you, Mr. Chairman.
Ms. Campbell, let me just ask you, in your testimony you
referenced that your company has achieved all its milestones
and the last one you referenced was the operational readiness
review in September of 2013. Do I understand that correctly?
Ms. Campbell. That is correct.
Mr. Burgess. Is that something you can make available to
the subcommittee?
Ms. Campbell. I can make available our report that we
submitted to CMS.
Mr. Burgess. Can you make that--have you made it available
to the committee?
Ms. Campbell. We have not made that available to the
committee.
Mr. Burgess. Well, then I would ask that if you would make
that available to the committee. Mr. Chairman, when staff gets
that, I would appreciate the opportunity to review it.
Mr. Graham, we talked just a little bit about de-scoping,
and the reason this is important, and I am not just picking on
this, but look, February 1st with the elysian fields of
Obamacare still 11 months away, the window for application to
the Federal preexisting program closed, and it closed rather
suddenly without warning to the people who had been trying to
go six months without health insurance to age into the program.
So for almost a full year, the promise of coverage for
preexisting conditions has been an empty, hollow promise. The
caps on out-of-pocket expenditures was very quietly delayed for
a year. Apparently the press picked it up here in the past
month but it was something that actually happened much earlier
in the year. Of course, we have had the discussions about the
employer mandate being delayed. There have been other pieces of
this apparatus that have sort of fallen into the barrage on the
way to October 1st and January 1st. When you all talk together,
when all of the smart minds who are in charge of the outsourced
implementation, when you get together, are there things that
you talk about and speculate about that may be the next to go
or the next shoe to drop as far as the pieces of the Affordable
Care Act that may go by the wayside?
Mr. Graham. With respect to the de-scoping, when we look at
what capabilities each of the State-based exchanges will have
and which ones will be live on October 1 and those that are
not, how long they will take to come up, we project that as in
many IT implementations, it will be 3 or 6 months for many of
those things to go.
With respect to the law itself, there is a lot of talk
about where that is. I don't know that I am the best to comment
on that.
Mr. Burgess. You are all I have got. You know, as we look
at this group assembled in front of us, you are an impressive
group, and there are some impressive contracts that go with the
work that you sell to the Federal Government, and with all
respect to the ranking member of the subcommittee, I mean, a
local Meals on Wheels outfit being able to do what you all are
doing and it has taken you months to do and hundreds of
millions of dollars in some cases, is it really responsible to
expect that some community organization is going to be able to
accomplish what you all have been tasked to accomplish? I mean,
anybody is free to answer that question. I should do like
Chairman Dingell; I need a yes or no. I got no answer, so Mr.
Chairman, I am going to assume that it is a no.
Let me yield back the balance of my time in the interest of
other members of the committee. If someone wants to claim it,
they may do so.
Mr. Pitts. Thank you. The Chair recognizes the ranking
member for follow-up.
Mr. Pallone. Thank you. I am glad Dr. Burgess brought up
the navigators or, in my cases, the food bank issue. You know,
again, I want to ask a question of Ms. Kraus, but I disagree
totally in terms of who should be a navigator. I mean, I
mentioned the Food Bank of Monmouth in Ocean County, which is
one of a number of organizations or nonprofits in New Jersey
that, you know, received a grant to act as a navigator and now
has been subject to these what I consider intimidation tactics
by the Republicans on the committee, but I totally disagree
with Dr. Burgess.
The Food Bank of Monmouth in Ocean County, which I am very
familiar with in my district, took on this responsibility
because they just get I don't know how many hundreds or
thousands of people that come to the food bank on a regular
basis and obviously a lot of them are uninsured and a lot of
them are probably people who may be afraid to even admit that
they are uninsured or go to a place to try to find insurance.
And so I think they are an excellent organization that would
actually be charged with trying to deal with the uninsured and
navigate them so that they get insurance, and I think that the
whole purpose of these grants is to try to find somebody who
can play that role in a significant way, even if they don't
have extensive background doing that. I commend them for taking
on the role.
But Ms. Kraus, my concern is that they may be intimidated,
that resources are being taken away because they have to answer
all these questions at the same time that there is no evidence
of any wrongdoing or any predicate for this kind of time-
consuming and burdensome investigation that the GOP on this
committee are going about, and, you know, these are small
community-based groups. The timing, I think, was very
suspicious, imposing a burden on these groups before the
October 1st rollout. It is only a few weeks away.
So can you offer some perspective on the importance of
these navigators and the impact on implementation of the law if
the Republicans ' intimidation disrupts their efforts? I am not
asking you to say they are being intimidated but I know that
some have already suggested that they might just not proceed
because of the questions and all the paperwork.
Ms. Kraus. Yes, I mean, look, 75 percent of those that are
eligible for coverage have no idea that this is coming. The
majority of them have never had access to health care before so
a fundamental piece of the Affordable Care Act was to place
community organizations in these local communities to help
folks that might need a little extra help. They are not
building IT infrastructure; they are there to help people kind
of walk through the process and understand what health
insurance means. In Pennsylvania, there are community
organizations that have been helping folks for year: the
Federally Qualified Health Centers, which folks walk into their
office every day and they help them enroll in public assistance
programs. So we are not reinventing new community
organizations, and we need to be assisting these organizations
to make sure they have their resources and the tools they need
to reach constituents where they are and make sure they take
advantage of the Affordable Care Act.
Mr. Pallone. I appreciate that. And the other thing that I
would point out, you know, New Jersey is another State where
the Governor, wrongly, in my opinion, decided not to set up a
State exchange, and the outreach efforts for those State are
very limited. The fact of the matter is, if you didn't set up
your own State exchange, a lot of the Federal dollars that
would have gone to help you do that in terms of outreach are
just not made available, and so it is particularly important
that these community organizations be out there in this time
period trying to sign people up, and I just--again, I know I am
beating a dead horse here but I just feel that it was very
wrong on the part of the Republicans on this committee to use
these kind of tactics right now when we are really trying to
sign people up, and these are community-based organizations
that really have no ax to grind, they are trying to help
people.
Thank you very much. Thank you, Mr. Chairman.
Mr. Pitts. That concludes the questioning. I would like to
thank the witnesses for your testimony, for answering all the
questions. There may be follow-up questions. We will ask that
you please respond promptly as members submit those. I remind
members they have 10 business days to submit questions for the
record, and those questions should be submitted by the close of
business on Tuesday, September 24th. Very important hearing,
very important information. Thank you for your courtesy and
your patience.
Without objection, the subcommittee is adjourned.
[Whereupon, at 12:22 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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