[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
H.R. 3633, PROTECTING HEALTH
CARE PROVIDERS FROM INCREASED
ADMINISTRATIVE BURDENS ACT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, MARCH 13, 2014
__________
Serial No. 113-51
__________
Printed for the use of the Committee on Education and the Workforce
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: www.gpo.gov/fdsys/browse/
committee.action?chamber=house&committee=education
or
Committee address: http://edworkforce.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
86-975 PDF WASHINGTON : 2016
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
Washington, DC 20402-0001
COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Robert C. ``Bobby'' Scott,
Joe Wilson, South Carolina Virginia
Virginia Foxx, North Carolina Ruben Hinojosa, Texas
Tom Price, Georgia Carolyn McCarthy, New York
Kenny Marchant, Texas John F. Tierney, Massachusetts
Duncan Hunter, California Rush Holt, New Jersey
David P. Roe, Tennessee Susan A. Davis, California
Glenn Thompson, Pennsylvania Raul M. Grijalva, Arizona
Tim Walberg, Michigan Timothy H. Bishop, New York
Matt Salmon, Arizona David Loebsack, Iowa
Brett Guthrie, Kentucky Joe Courtney, Connecticut
Scott DesJarlais, Tennessee Marcia L. Fudge, Ohio
Todd Rokita, Indiana Jared Polis, Colorado
Larry Bucshon, Indiana Gregorio Kilili Camacho Sablan,
Trey Gowdy, South Carolina Northern Mariana Islands
Lou Barletta, Pennsylvania Frederica S. Wilson, Florida
Joseph J. Heck, Nevada Suzanne Bonamici, Oregon
Susan W. Brooks, Indiana Mark Pocan, Wisconsin
Richard Hudson, North Carolina
Luke Messer, Indiana
Juliane Sullivan, Staff Director
Jody Calemine, Minority Staff Director
------
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
TIM WALBERG, Michigan, Chairman
John Kline, Minnesota Joe Courtney, Connecticut,
Tom Price, Georgia Ranking Member
Duncan Hunter, California Timothy H. Bishop, New York
Scott DesJarlais, Tennessee Marcia L. Fudge, Ohio
Todd Rokita, Indiana Gregorio Kilili Camacho Sablan,
Larry Bucshon, Indiana Northern Mariana Islands
Richard Hudson, North Carolina Mark Pocan, Wisconsin
C O N T E N T S
----------
Page
Hearing held on March 13, 2014................................... 1
Statement of Members:
Courtney, Hon. Joe, Ranking Member, Subcommittee on Workforce
Protections................................................ 8
Prepared statement of.................................... 8
Walberg, Hon. Tim, Chairman, Subcommittee on Workforce
Protections................................................ 1
Prepared statement of.................................... 7
Statement of Witnesses:
Carrato, Thomas, President, Health Net Federal Services,
Arlington, VA.............................................. 19
Prepared statement of.................................... 21
Goldstein, David, Shareholder, Littler Mendelson P.C.,
Minneapolis, MN............................................ 34
Prepared statement of.................................... 36
Graves, Fatima, G., Vice President for Education and
Employment, National Women's Law Center, Washington, DC.... 27
Prepared statement of.................................... 29
Kirschner, Curt, Partner, Jones Day, The American Hospital
Association, San Francisco, CA............................. 10
Prepared statement of.................................... 13
Additional Submissions:
Mr. Courtney:
United States Government Accountability Office (GAO),
report TRICARE Multiyear Surveys Indicated Problems
with Access to Care for Nonenrolled Beneficiaries...... 50
Ms. Graves:
Prepared statement of.................................... 158
Chairman Walberg:
Letter dated February 3, 2014, from Parkinson, Mark,
President and CEO, American Health Care Association
(AHCA)................................................. 44
Letter dated March 11, 2014, from Perez, Thomas, E.,
Secretary of Labor..................................... 3
Letter dated December 6, 2013, from Pollack, Rick,
Executive Vice President, American Hospital Association 42
Letter dated April 3, 2013, from Waligora, Larry,
Chairman, Association of Federal Health Organizations.. 166
H.R. 3633, PROTECTING HEALTH
CARE PROVIDERS FROM INCREASED
ADMINISTRATIVE BURDENS ACT
----------
Thursday, March 13, 2014
House of Representatives,
Subcommittee on Workforce Protections,
Committee on Education and the Workforce,
Washington, D.C.
----------
The subcommittee met, pursuant to call, at 10:08 a.m., in
Room 2175, Rayburn House Office Building, Hon. Tim Walberg
[chairman of the subcommittee] presiding.
Present: Representatives Walberg, Kline, DesJarlais,
Rokita, Bucshon, Hudson, Courtney, Fudge, and Pocan.
Staff present: Janelle Belland, Coalitions and Members
Services Coordinator; Molly Conway, Professional Staff Member;
Ed Gilroy, Director of Workforce Policy; Christie Herman,
Professional Staff Member; Benjamin Hoog, Senior Legislative
Assistant; Marvin Kaplan, Workforce Policy Counsel; Nancy
Locke, Chief Clerk; James Martin, Professional Staff Member;
Daniel Murner, Press Assistant; Brian Newell, Deputy
Communications Director; Krisann Pearce, General Counsel;
Alissa Strawcutter, Deputy Clerk; Alexa Turner, Legislative
Assistant; Joseph Wheeler, Professional Staff Member; Tylease
Alli, Minority Clerk/Intern and Fellow Coordinator; Jody
Calemine, Minority Staff Director; Melissa Greenberg, Minority
Staff Assistant; Eunice Ikene, Minority Staff Assistant; Brian
Kennedy, Minority Senior Counsel; Brian Levin, Minority Deputy
Press Secretary/New Media Coordinator; Richard Miller, Minority
Senior Labor Policy Advisor; Megan O'Reilly, Minority General
Counsel; Michael Zola, Minority Deputy Staff Director; and Mark
Zuckerman, Minority Senior Economic Advisor.
Chairman Walberg. A quorum being present, the subcommittee
will come to order. Good morning. I would like to welcome our
guests and thank our witnesses for being with us as we discuss
H.R. 3633, the Protect Health Care Providers from Increased
Administrative Burdens Act.
The bill is a result of the Committee's continued oversight
of the Department of Labor, which shed light on an
unprecedented effort by the Office of Federal Contract
Compliance Programs (OFCCP) to exert jurisdiction over health
care providers who participate in certain federal programs.
H.R. 3633 would rein in this executive overreach, prevent an
administrative nightmare for health care providers, and help
some of the nation's most vulnerable citizens maintain access
to care.
OFCCP is responsible for enforcing federal
nondiscrimination and affirmative action requirements on
federal contractors. Today's discussion isn't about whether we
support the important policies that the agency enforces. No one
should be denied because of their--denied employment because of
their gender, their disability, race, or religion. All
employers have a moral and legal obligation to provide a work
environment free of discrimination, including those who receive
taxpayer dollars. The goal of our oversight and the legislation
is to ensure the agency does its job effectively and
responsibly.
In the past, we have encouraged OFCCP to streamline the
myriad of requirements federal contractors must follow. As one
witness from St. Jude Children's Hospital testified, the
current regulatory scheme is, quote--``all stick and no
carrot,'' end quote. Simplifying the process would strengthen
the rights of workers by making it easier for employers to
understand their responsibilities and comply with the law.
Workers, employers, and taxpayers would be better served if
OFCCP spent its time improving the current regulatory structure
rather than unilaterally imposing a broken system on more
workplaces. Yet that is precisely what the agency is trying to
do, by exerting jurisdiction over hospitals and other health
care providers who see patients covered by various federal
programs, such as TRICARE and the Federal Employee Health
Benefits Program.
As a result of the bipartisan concerns addressed in this
legislation, the Department of Labor proposed, earlier this
week, a limited delay of its regulatory overreach. In a letter
to the Committee leadership, Secretary Perez promised a five
year moratorium of new OFCCP enforcement activities against
TRICARE providers.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Walberg. Without objection, this letter will be
included in the hearing record. Hearing no objection, it will
be included.
While we welcome this development, it is ironic the
Secretary's letter refers to a law that includes specific
language stating health care providers in TRICARE are not
subcontractors. This law was enacted after the department took
action against a Florida hospital. Regardless of any statutory
ambiguity the administration thinks exists, the will of
Congress is clear: OFCCP interference in TRICARE must stop.
While I appreciate the Secretary's response and attempt to
address it with a workable solution--and I say that sincerely
and have appreciated the conversations with Secretary Perez--I
truly believe the Secretary's letter may have convinced some to
withhold and even withdraw early support from the bill.
But I have asked my colleagues, aren't you concerned about
what happens five years from now? Does this letter offer
TRICARE providers the long-term certainty they need? What about
those who serve seniors through Medicare, or those who serve
federal employees, both noticeably absent from this moratorium.
If OFCCP intends to regulate TRICARE providers, it can just as
easily impose its will on other federal programs, as well.
At a recent hearing, the senior Democratic member of the
subcommittee commended a witness for, and I quote--``raising
some important issues about the impact on programs that help
our TRICARE military retirees and active duty folks in terms of
making sure that we maintain access for hospital services,''
end quote.
Our colleague then expressed the desire to, quote--``work
out some of the kinks revealed during the hearing.'' And I must
admit that my colleague has attempted to do that. But I am
honestly disappointed to say the kinks we discussed in December
still exist, despite the Secretary's letter.
If the Secretary has accomplished anything he has signaled
to our TRICARE providers the day of reckoning is only delayed.
Any sensible provider will use these few years to decide
whether it is in their best interest to continue operating in a
TRICARE network. Many may decide the administrative burden
looming on the horizon is simply too much to bear.
As a result, veterans, servicemembers, and their families
will lose access to care. Let me repeat that. As a result of
the department's policy, veterans, servicemembers, and their
families will lose access to care; maybe not now, but soon.
As policymakers, we shouldn't accept political half-
measures that merely kick the can down the road. The American
people expect better.
However, it is my hope we can continue working together,
and we will, to provide a lasting solution to this problem not
just for our active and retired military service personnel, but
also for our seniors and the men and women who serve in the
federal workforce. H.R. 3633 provides the long-term solution
they, and their families, deserve.
I will now yield to our distinguished colleague, the senior
Democratic member of the subcommittee, Representative Courtney,
for his opening remarks.
[The statement of Chairman Walberg follows:]
Good morning. I'd like to welcome our guests and thank our
witnesses for being with us as we discuss H.R. 3633, the Protecting
Health Care Providers from Increased Administrative Burdens Act.
The bill is the result of the committee's continued oversight of
the Department of Labor, which shed light on an unprecedented effort by
the Office of Federal Contract Compliance Programs to assert
jurisdiction over health care providers who participate in certain
federal programs. H.R. 3633 would rein in this executive overreach,
prevent an administrative nightmare for health care providers, and help
some of the nation's most vulnerable citizens maintain access to care.
OFCCP is responsible for enforcing federal nondiscrimination and
affirmative action requirements on federal contractors. Today's
discussion isn't about whether we support the important policies the
agency enforces. No one should be denied employment because of their
gender, disability, race, or religion. All employers have a moral and
legal obligation to provide a work environment free of discrimination,
including those who receive taxpayer dollars.
The goal of our oversight and the legislation is to ensure the
agency does its job effectively and responsibly. In the past we've
encouraged OFCCP to streamline the myriad requirements federal
contractors must follow. As one witness from St. Jude Children's
Hospital testified, the current regulatory scheme is ``all stick and no
carrot.'' Simplifying the process would strengthen the rights of
workers by making it easier for employers to understand their
responsibilities and comply with the law.
Workers, employers, and taxpayers would be better served if OFCCP
spent its time improving the current regulatory structure, rather than
unilaterally imposing a broken system on more workplaces. Yet that is
precisely what the agency is trying to do by asserting jurisdiction
over hospitals and other health care providers who see patients covered
by various federal programs, such as TRICARE and the Federal Employee
Health Benefits Program.
As a result of the bipartisan concerns addressed in this
legislation, the Department of Labor announced earlier this week a
limited delay of its misguided approach. In a letter to the committee,
Secretary Perez promised a five year delay of new OFCCP enforcement
activities against TRICARE providers.
Without objection, the letter will be included in the hearing
record.
While we welcome this development, it's ironic the secretary's
letter refers to a law that includes specific language stating health
care providers in TRICARE are not subcontractors. This law was enacted
after the department took action against a Florida hospital. Regardless
of any statutory ambiguity the administration thinks exists, the will
of Congress is clear: OFCCP interference in TRICARE must stop.
The secretary's letter may have convinced some to withhold and even
withdraw earlier support for the bill. But I have to ask my colleagues:
Aren't you concerned about what happens five years from now? Does this
letter offer TRICARE providers the longterm certainty they need? What
about those who serve seniors through Medicare or those who serve
federal employees, both noticeably absent from this so-called
moratorium? If OFCCP intends to regulate TRICARE providers, it can just
as easily impose its will on other federal programs as well. And can
someone please explain how a letter from one administration can control
the actions of another?
At a recent hearing, the senior Democratic member of the
subcommittee commended a witness for ``[raising] some important issues
about the impact on programs that help our TRICARE military retirees
and active duty folks, in terms of making sure that we maintain access
for hospital services.'' Our colleague then expressed a desire to
``work out some of the kinks'' revealed during the hearing. I am
disappointed to say the kinks we discussed in December still exist,
despite the secretary's letter.
If the secretary has accomplished anything, he has signaled to our
TRICARE providers the day of reckoning is only delayed. Any sensible
provider will use these few years to decide whether it's in their best
interest to continue operating in a TRICARE network. Many may decide
the administrative burden looming on the horizon is simply too much to
bear. As a result, veterans, service members, and their families will
lose access to care. Let me repeat that: As a result of the
department's policy, veterans, service members, and their families will
lose access to care. Maybe not now, but soon.
As policymakers, we shouldn't accept political half-measures that
merely kick the can down the road. The American people expect better. I
am disappointed my friend and colleague, Representative Courtney, is no
longer a cosponsor of this important legislation. However, it is my
hope we continue working together to provide a lasting solution to this
problem, not just for our active and retired military service
personnel, but also for our seniors, and the men and women who serve in
the federal workforce. H.R. 3633 provides the long-term solution they
and their families deserve.
I will now yield to our distinguished colleague, the senior
Democratic member of the subcommittee, Representative Courtney, for his
opening remarks.
______
Mr. Courtney. Well, thank you, Mr. Chairman. And I thank
you for your kind words. I have nowhere to go but downhill
after those nice compliments. And I would just say that, you
know, to me this is a situation of whether you want to look at
it as a glass half full or half empty in terms of the movement
that has occurred from the Department of Labor since the last
hearing that took place.
I think it is important, though, to sort of set the context
for what happened in 2011, when the NDAA was enacted, with
language which called for the department to withhold
enforcement through OFCCP. Mr. Kline and I were conferees on
that measure, and it was in response to real-life concrete
issues out there with TRICARE access for veterans. Again, I
have the honor of representing the largest military
installation in New England, with the Groton sub base 8,000
sailors. We hold veterans in active duty council meetings that
my office organizes on a regular basis. And it has been a
chronic issue in terms of finding providers who accept TRICARE
coverage and, frankly, has absolutely nothing to do with OFCCP.
The GAO has been studying this issue for years. And they,
in fact, just issued an updated report in 2013, where they
talked about provider acceptance for TRICARE where, again, it
is lower than Medicare, far lower than Medicare, and lower than
Medicaid in some instances, which is saying something in terms
of the aversion that--whether it is--well, hospitals, by and
large, because of their 501(c)(3) status, almost have to accept
patients. But frankly, the provider community in an outpatient
basis, it is a real problem. And I have talked to everyone from
specialists to dentists, primary care docs who, in many
instances, just provide free care because they just want to
avoid the hassle of dealing with TRICARE.
And, again, it has absolutely nothing to do with OFCCP.
However, in the context of that chronic finding that has been
going on here at the Armed Services Committee, in 2011 the
Committee, through conference, included language which again
said, you know, we are not gonna try and create another
obstacle or another barrier for providers in TRICARE. And the
language was enacted. By the way, you have to give credit. This
was a Senate initiative, but the House did accept, in
conference, the language. We acceded to that language.
So fast forward, we had the hearing recently. And it is
clear that the Florida case and other actions by the
department, the department really was not reading the language
in a way that I think was clear congressional intent. There was
``may'' language instead of ``shall'' language; there was some
disparity they were pointing to in terms of report language
that was attached to the NDAA. And the agency was still sort of
chugging forward.
We also, though, had an intervening event. Which is, we
have a new Secretary of Labor, who was just confirmed in late
December, who, in my opinion has really responded to the
oversight function of this subcommittee, as the Chairman and I
discussed the other day.
They issued new rules on OSHA for the grain elevator issue
that this subcommittee raised, and pulled back the department
in terms of that complaint which we heard here. And I believe
the letter which he submitted a couple days ago is, in fact,
exactly the same type of approach that Secretary Perez has
signaled in the short time that he has been in office. Again,
the letter clearly states that they will issue a five year
moratorium. Any enforcement actions or compliance actions will
be suspended. And he has personally told me that the Florida
case will be withdrawn. And I want to make sure that is
absolutely crystal clear on the record.
Again, this is a letter. This is not a stipulated judgment
that, you know, is entered in front of a judge. But there is no
question the good faith that the Secretary has exercised in the
last couple of months--and frankly, I think it is time that,
you know, he is a former legislator, by the way--he really
respects the legislative branch. And he worked for Senator
Kennedy. He has made it clear that he does not regard us as the
enemy or as a, you know, entity that should just be sort of
overlooked. And I frankly think we should approach this as a
glass half-full. That, in fact, five years is a long time in
terms of this administration will be long gone in five years.
There will be who knows in the White House, in the
Secretary of Labors. It is without prejudice, everybody retains
all their rights in terms of whatever sort of view of the NDAA
language that is on the books. And that we should, frankly,
continue to engage him on whether or not there are issues
regarding Medicare or FEHBP. This is not a person who is taking
the attitude that, you know, he will not listen or talk or
discuss with the Congress.
So based on that, I am willing to reward good behavior. And
I am willing to step back from this legislation and embrace the
good faith that he has exercised. And also, at the same time,
recognize that the OFCCP has done great work in terms of
opening up opportunities for women, for minorities and for
disabled veterans, which I am sure we are gonna hear from our
witness today about the fact that is part of their charge--is
not only to try and create obstacles. I mean, it is the
complete opposite. If they have actually tried to create
employment opportunities for disabled veterans and veterans and
the recent initiative--which, again, is gonna try and sort of
push contractors to get that unemployment rate for veterans
down--is, in my opinion, something that we want federal
taxpayer money to be accomplishing.
So in any case, I want to thank the Chairman again. I do
not regard, you know, the efforts of this subcommittee to be
sort of a partisan, you know, witch hunt kind of thing. It was
a sincere effort to move forward and try and fix a problem. In
my opinion, the Secretary has met us halfway and I think we
should, you know, take a bow, or you should take a bow, for
your work on this issue. And that we should continue to build
on that momentum to try and, again, get smarter policy that
accomplishes the goals that we all want.
And with that, I yield back.
Chairman Walberg. I thank the gentleman. And I would concur
that this subcommittee, our effort will be to move policy
forward in the right direction. And part of that is pushing,
where necessary, to get further. But also a reality of what is
possible. And for that reason, we have the hearing today to
give us more information.
Pursuant to committee rule 7(c), all members will be
permitted to submit written statements to be included in the
permanent hearing record. And without objection, the hearing
record will remain open for 14 days to allow statements,
questions for the record and other extraneous material
referenced during the hearing to be submitted in the official
hearing record.
It is now my pleasure to introduce our distinguished
witnesses. Mr. Curt Kirschner is a partner at Jones Day in San
Francisco, California. What is the weather out there? Never
mind. And is testifying on behalf of the American Hospital
Association.
Mr. Thomas Carrato--did I get that close?
Mr. Carrato. Yes, sir.
Chairman Walberg. Is president of Health Net Federal
Services in Arlington, Virginia. Mr. Carrato retired as a rear
admiral in the Commissioned Corps of the United States Public
Health Service. Ms. Fatima Goss Graves serves as the vice
president for education and employment at the National Women's
Law Center in Washington, D.C. Welcome. Mr. David Goldstein is
a shareholder with the firm Littler Mendelson in--it is too
cold to speak--Minneapolis, Minnesota. Mr. Chairman, help me
with that Minnesota stuff.
Mr. Kline. [Off mike.]
Chairman Walberg. Thank you. Before I recognize each of you
to provide your testimony, let me briefly explain our lighting
system. And I think I will be brief on that. It is like a
traffic light, as you know. You will have five minutes to give
your testimony. We will try to keep as close to that as
possible, and you will help me if you will. When the light
turns yellow you have a minute left. When it is red, wrap up as
quickly as possible. We will hold that policy for our
subcommittee members, as well, under their questioning.
That being said, Mr. Kirschner we welcome you and recognize
you for five minutes of testimony.
STATEMENT OF MR. CURT KIRSCHNER, PARTNER, JONES DAY, SAN
FRANCISCO, CA (TESTIFYING ON BEHALF OF THE AMERICAN HOSPITAL
ASSOCIATION)
Mr. Kirschner. Good morning, Chairman Walberg, Ranking
Member Courtney, and distinguished members of the subcommittee.
My name is Curt Kirschner, and I am a partner in the Jones Day
law firm. Today, I am testifying on behalf of the American
Hospital Association in support of H.R. 3633, the Protecting
Health Care Providers from Increased Administrative Burdens
Act. A more thorough discussion of the AHA's support of the
bill is included in written testimony submitted to the
subcommittee, which I request be introduced into the record.
In my oral comments today, I wanted to explain why, from
the AHA's perspective, H.R. 3633 remains an important bill to
be introduced and why, in our view, the DOL's proposal is
insufficient. H.R. 3633 will clarify that hospitals are not
subject to the OFCCP's jurisdiction solely as a result of their
participation in Medicare, TRICARE, or the Federal Employees
Health Benefit Program, also known as FEHBP.
Previously, OFCCP has acknowledged in its own internal
directives that it does not have jurisdiction over hospitals
that treat beneficiaries of these federally-funded plans. More
recently, however, the OFCCP rescinded those directives and
sought to expand its jurisdiction over health care providers
based solely on their participation in these programs. I had
the opportunity to appear before the subcommittee last
December, where I offered testimony demonstrating that the
OFCCP's assertion of jurisdiction over hospital providers in
these circumstances is inconsistent with both federal law and
regulations.
Moreover, the OFCCP has not given any reasonable
explanation for its shifting position. The only recent relevant
legal change is the one cited by the Chairman, which is
Congress' adoption, in 2011, of section 715 of the National
Defense Authorization Act, which explicitly sought to preclude
OFCCP jurisdiction over hospitals participating in TRICARE.
Despite this statute, the OFCCP continues to assert
jurisdiction over TRICARE providers. And that is true, despite
the fact that the DOL has now said there may be a moratorium on
enforcement. They are still asserting jurisdiction over the
providers.
The agency's continuing attempts to circumvent the NDAA
confirm the need for legislation placing clear limits on the
OFCCP's jurisdiction. The OFCCP proposes an alternative to H.R.
3633, which is a vaguely-defined, case by case basis to
determine jurisdiction. As best as the AHA can tell, the OFCCP,
under this approach, attempts to distinguish between hospitals
that participate in fee-for-service plans from those that
participate in managed care plans under these federally-funded
programs. From the perspective of America's hospitals, this is
a distinction without a difference.
Fee-for-service plans and managed care plans are simply
different mechanisms for reimbursing health care providers for
the care that they provide to their patients; in this case,
servicemembers, federal employees, and their families. Under
any of these plans, the role of the hospital is essentially the
same. That is, to provide quality care for the plan
participant. The OFCCP has provided no guidance regarding which
of the nearly 300 FEHBP plans, and more than 10 TRICARE plan
options, contain sufficient elements of managed care such that
a hospital participating in that plan would be deemed to be a
federal subcontractor.
Already, Florida Hospital of Orlando and three hospitals
affiliated with the University of Pittsburgh Medical Center
have spent years in litigation after refusing to concede to the
OFCCP's jurisdiction. The AHA urges Congress to clarify the law
so that hospitals are not forced to choose between submitting
to the OFCCP's burdensome regulations on the one hand, or
spending years bogged down in costly legal proceedings on the
other. The OFCCP's expansionist agenda is forcing hospitals to
make another difficult choice: whether to provide care to
family servicemembers and federal employees at all.
Rather than risk a jurisdictional claim from the OFCCP,
some hospitals may simply decide to opt out of federally-funded
health plans, further straining the available provider
networks. The DOL's proposal contained in this March 11 letter
is not a solution, in our view. The proposal does not address
at all the role of FEHBP and Medicare programs. Even for
TRICARE, the letter assumes federal contractor status of
hospital providers, despite NDAA 715, and merely delays the
enforcement of the OFCCP's ambiguous standards, potentially
asserting jurisdiction over conduct that occurs during that
five year period.
In sum, at a time when lowering health care costs is one of
the nation's top policy concerns, H.R. 3633 would clarify, once
and for all, that participation in a federally-funded health
benefit program does not subject hospitals to the OFCCP's
jurisdiction. The AHA urges Congress to pass this important
bill.
Thank you for the opportunity to provide these comments to
the subcommittee.
[The statement of Mr. Kirschner follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Walberg. Thank you.
And now we turn to Mr. Carrato for your five minutes of
testimony. Thank you.
STATEMENT OF MR. THOMAS CARRATO, PRESIDENT, HEALTH NET FEDERAL
SERVICES, ARLINGTON, VA
Mr. Carrato. Great. Chairman Walberg, Ranking Member
Courtney, distinguished members of the Committee, thank you for
the opportunity to testify on efforts to expand the
jurisdiction of the Office of Federal Contract Compliance
Programs. Classifying TRICARE network providers as federal
subcontractors poses significant issues for the TRICARE
program, our network providers, and the beneficiaries we
jointly serve. Appreciate the opportunity to address this issue
today.
Health Net Federal Services provides physical and
behavioral health care services to the Department of Defense
and the Department of Veterans Affairs, among others. These
programs include TRICARE, the DOD's Military Family Life
Counseling Program, and the VA's patient-centered Community
Care Program. We have watched the legal action involving OFCCP
with great concern. I don't want to focus on legal arguments or
litigation. The issue I want to address is how will OFCCP's
position affect TRICARE beneficiaries and our ability to
provide military members and their families access to high-
quality providers, especially in locations far from military
treatment facilities. Our primary concern is not a legal point
or an argument about the limits of an agency's jurisdiction,
but how can we best serve our customer and our beneficiaries.
OFCCP has asserted that providers of health care services
in our managed care networks are federal subcontractors. We
firmly believe that they are not subcontractors, and that any
attempt to classify them as such will have significant negative
impact on the ability of TRICARE beneficiaries to obtain high-
quality accessible medical care. The risk for TRICARE is
twofold. The first is that we will have difficulty getting
providers to join our networks. Providers sign contracts with
us and not the federal government. They may not be willing or
able to shoulder the additional burdens of OFCCP compliance.
The second risk is that if OFCCP is successful, instead of
assuming the burden of compliance, providers will leave our
networks. There are 55 sole community hospitals and 151
critical access hospitals in our TRICARE network. If any of
those left it would leave a significant gap in access that
would impact military families and the military member. We
require all of our providers, as part of their contract, to
adhere to all state, federal and local laws, including any
applicable affirmative action laws. We believe expanding
OFCCP's jurisdiction over TRICARE will make it more difficult
to build and retain provider networks.
Ultimately, this will mean fewer options for the military
members, families and retirees who rely on TRICARE, and will
significantly limit their ability to obtain the level of care
they need from a provider of their choice. Health Net believes
that to ensure military beneficiaries have ready access to
needed health care services providers in TRICARE networks must
be exempted from the OFCCP regulation. The uncertainty that
currently exists in the law continues to negatively affect our
ability to provide high-quality, accessible health care for
millions of our nation's most deserving citizens, the men and
women of our uniform services, and their families.
Thank you for your time. I am prepared to answer any
questions you may have.
[The statement of Mr. Carrato follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Walberg. Thank you.
Ms. Graves, we recognize you for your five minutes of
testimony. Thank you for being here.
STATEMENT OF MS. FATIMA GOSS GRAVES, VICE PRESIDENT FOR
EDUCATION AND EMPLOYMENT, NATIONAL WOMEN'S LAW CENTER,
WASHINGTON, D.C. (MINORITY WITNESS)
Ms. Graves. Thank you. Thank you, Chairman Walberg, Ranking
Member Courtney and distinguished members of the subcommittee.
Thank you for the opportunity to testify today on the important
topic of civil rights obligations of federal contractors and
subcontractors.
Over the last 40 years, the National Women's Law Center has
been involved in virtually every major effort to secure and
defend women's legal rights and equal opportunity in the
workplace. And I am pleased to continue that work today by
speaking about the key role that civil rights enforcement plays
in ensuring equal opportunity for American workers.
I will begin with some background on the Office of Federal
Contracts Compliance Programs enforcement. For nearly 50 years,
the federal government has operated with the long-standing
principle that companies that have the privilege of profiting
from doing business with the federal government should not be
permitted to discriminate in employment.
And this is for good reason. The taxpayer dollars used to
buy goods and services from companies simply should not support
discrimination. And the many federal contractors that play by
those rules should not have to compete at a disadvantage with
those who do discriminate. So the important work done by OFCCP
in enforcing these nondiscrimination obligations also helps
employers tap into a diverse pool of talent that leaves them
and the broader economy stronger. OFCCP's measures require that
federal contractors take notice of race and gender and
disability and protected veteran status in the course of
formulating policies designed to foster equal opportunity.
These measures require that contractors not discriminate,
that they take affirmative steps to ensure a diverse workplace,
and that they document these steps. And these steps are
directly related to increasing employment opportunities and
ensuring nondiscrimination. By requiring that contractors take
appropriate steps to document employment practices, OFCCP is
able to affirmatively assess whether there are indicators of
discrimination. And in turn, through the process of record-
keeping and data collection and analysis, an employer can
engage in a self-evaluation that may prompt it to self-correct
its own unfair practices.
And at the very least, both OFCCP and federal contractors
will have the data that they need to track progress in
providing equal employment opportunities. It is worth noting
that few contractors are actually subject to an OFCCP
affirmative compliance review. Only about 4,000 compliance
reviews are conducted each year out of about 170,000 contractor
establishments, which amounts to around a 2 percent chance of
being reviewed. And only federal contractors and subcontractors
that have at least 50 employees and at least 50,000 in contract
dollars are required to develop affirmative action plans. These
are the plans that help contractors identify and analyze
potential problems in the contractor's workforce.
So the systematic approach to civil rights complaints that
OFCCP takes, both historically and currently, helps to improve
opportunities for a wide range of workers. Studies that have
assessed the effective Executive Order 11246 have indicated
that the makeup of federal contract workforces changed
significantly in the years following the issuance of the
executive order. One study of over 70,000 federal contractors
found that female employment by federal contractors increased
by over 15 percent between 1974 and 1980, while it rose by only
2 percent in non-federal contractor settings.
And throughout the years, OFCCP has implemented a number of
initiatives that have aided in the integration of the workforce
in industries such as construction, in higher education,
mining, ensuring opportunity in sectors with long histories of
unfair treatment in hiring, promotion, and compensation. For
example, in 1975, pursuant to a legal settlement reached with
the National Women's Law Center, OFCCP targeted hiring and
employment practices for women in colleges and universities
around the country, improving opportunities for women in higher
education.
And it is measures like these that have really strengthened
American businesses considerably and made them more effective.
Moreover, OFCCP's current strategic priorities, especially its
focus on pay discrimination, its focus on opening opportunities
in high-wage occupations like construction, the new regulations
for veterans and for persons with disabilities, these all
follow in that same tradition. In sum, the key role that OFCCP
has played in improving economic security for workers and their
families really cannot be overstated. The OFCCP process has
expanded opportunities for workers over time, has made federal
contracting more efficient, and has strengthened businesses.
Thank you again for the opportunity to be here today, and I
look forward to any questions.
[The statement of Ms. Graves follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Walberg. Thank you.
Now, Mr. Goldstein, we recognize you for your testimony.
STATEMENT OF MR. DAVID GOLDSTEIN, SHAREHOLDER, LITTLER
MENDELSON P.C., MINNEAPOLIS, MN
Mr. Goldstein. Thank you, Chairman Walberg, Ranking Member
Courtney, distinguished members of the Committee. Thank you for
this opportunity to testify. I have a deep personal sense of
the importance and the history of this Congress. And,
accordingly, it is a great honor to be here today.
I am a shareholder in the Minneapolis office of Littler
Mendelson. I am speaking to you today on my own behalf and not
on behalf of my firm. I have represented government contractors
in connection with OFCCP compliance for over 25 years. Like
most of my clients, I believe in the importance of equal
employment opportunity and in the importance of diversity in
our workplaces. I believe it is essential to the success of our
businesses. Accordingly and, again, like most of my clients, I
support the basic mission of the OFCCP.
In recent years, there has been a significant controversy
regarding OFCCP's efforts to assert jurisdiction over health
care providers. One of the arguments that the OFCCP has
asserted in support of jurisdiction over health care providers
has been providers' participation in TRICARE, the program
designed to provide health care benefits to members of the
military and their families. Whether it is good policy to
impose additional regulations on health care providers at this
time is a question on which reasonable people can disagree.
Indeed, it appears that there are differences of opinion
regarding this issue between executive agencies within the
current administration.
The Department of Defense and the Office of Personnel
Management have expressed a belief in the importance of being
able to contract with providers to offer health care services
for the military and federal employees without having to
subject these providers to OFCCP's regulations. These agencies
believe, correctly I think, that imposing such requirements
limits the number of providers that are willing to offer such
services. The OFCCP, on the other hand, believes that it needs
to regulate such providers, arguing that it can do so without
imposing unreasonable burdens.
Other individuals are testifying today regarding the merits
of this debate. I am here, though, because I understood this
issue to have been resolved, at least with regard to TRICARE,
when Congress passed the National Defense Authorization Act for
fiscal year 2012. That measure included language that was
widely and reasonably understood as putting an end to this
debate by providing that the OFCCP could not exercise
jurisdiction based on providers' participation in TRICARE. This
was a very important outcome because it appeared to provide
health care providers with certainty, and allowed them to
decide what to do.
I can tell you that during this period of uncertainty
regarding OFCCP jurisdiction my colleagues and I spent a great
deal of time discussing with health care clients the costs and
burdens that come with OFCCP compliance. We see, we actually
see, health care providers making decisions not to participate
in TRICARE and in other programs and arrangements because the
costs of compliance are simply greater than the benefits of
participation. And we are talking not only about financial
costs of compliance, but also how OFCCP regulations impact the
ways in which providers deliver services to their patients.
For now, OFCCP is continuing in its efforts to establish
jurisdiction over TRICARE participants through litigation
against a particular health care provider, Florida Hospital of
Orlando, which has disputed OFCCP's assertion of jurisdiction
based on TRICARE. To outside observers, the OFCCP's continued
pursuit of TRICARE jurisdiction, even after Congress has acted,
is shocking. The Florida hospital case is still working its way
through administrative proceedings. We are likely years away
from a final judicial decision. In the meantime, providers
remain uncertain as to their obligations should they agree to
participate in TRICARE.
The interests of health care providers, their patients,
including members of the military, federal employees and their
families, as well as taxpayers would be best served by a final
resolution--a final resolution--of the TRICARE issue. I believe
that this final resolution came from Congress in December 2011.
Ideally, the Department of Labor would accept this and stop
fighting against the fact that Congress has already spoken.
Absent that, the best option would be passage of the Protecting
Health Care Providers from Increased Administrative Burdens
Act.
The third best option would be to let the courts finally
resolve this issue by letting Florida Hospital go through to a
resolution. By contrast, the proposal offered by the Department
of Labor in its letter of March 11, 2014 represents neither a
compromise nor a positive step. To the extent that the
department's proposal would not end the Florida Hospital
litigation and does not represent commitment by the OFCCP to
relinquish its claims of jurisdiction over TRICARE participants
in non-audit contexts such as complaint procedures, nothing is
being resolved. On the other hand, the extent that the
department's proposal would end the Florida Hospital litigation
and, therefore, prevent a final resolution of the issue in the
courts, I am personally concerned.
It has taken more than five years for the Florida Hospital
case to get to the point where it is now. A final determination
may still be years away, but at least it is on the horizon. The
Department of Labor's proposal, on the other hand, means at
least five more years of uncertainty. And those are five more
years during which health care providers are going to remain on
the sidelines and not participate in programs that may subject
them to OFCCP's jurisdiction. And finally, accepting this
proposal would reinforce a very disturbing trend that
contractors have seen at the OFCCP in the context of compliance
reviews, and that is an indifference by the agency to the
letter of the law when, in its judgment, the letter of the law
is inconsistent with the agency's goals.
Thank you, and I look forward to answering any questions
you may have.
[The statement of Mr. Goldstein follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Walberg. Thank you. I thank each of the panelists
for your testimony. Without objection, I would submit two
letters from the American Hospital Association and the American
Health Care Association for the record. Both of these
organizations express their support for H.R. 3633.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Walberg. Hearing none, they will be part of the
record.
Mr. Kirschner, as we have discussed, the Secretary of Labor
has proposed limiting OFCCP's enforcement activities for five
years by instructing OFCCP to not initiate compliance audits
for TRICARE providers, though the letter calls them
subcontractors, and closing any open or scheduled compliance
audits. OFCCP will also provide information, materials and
technical assistance training to TRICARE providers during this
five year period. At the end of the five year delay, OFCCP will
begin conducting compliance audits at TRICARE hospitals and
health care providers.
OFCCP will also continue taking the position in litigation
that TRICARE providers are subcontractors. On the basis of
that, in your opinion, does this proposal address the problems
you have described and negate the need for the Protecting
Health Care Providers from Increased Administrative Burdens
Act?
Mr. Kirschner. Not at all. While we appreciate Secretary
Perez's efforts to try to address the situation, we believe
that what the Secretary has outlined in his letter does not
really address in any substantive way the concerns that the AHA
has brought forward. First of all, the letter does not at all
address the FEHBP or Medicare Part C and D. So those very
significant programs would be left unaddressed. For example,
the FEHBP has more than 8 million participants in it seeking
care at hospitals all across the country. That would be
unaddressed by this issue.
Even with respect to TRICARE, section 715 of the NDAA, we
believed, answered this question already by saying that there
isn't contractor status for providers under TRICARE. Secretary
Perez's letter assumes that they are contractors, and
essentially just kicks the can down the road for enforcement.
What America's hospitals need is greater clarity about whether
they are or are not contractors. And in our view, under the
regulations, under the statutes that are applicable,
participants in TRICARE should not be considered to be federal
contractors any more than participants in FEHBP or Medicare.
Chairman Walberg. Thank you.
Mr. Carrato, referencing the letter from the Secretary of
Labor again, do you believe a five year moratorium will provide
TRICARE providers needed relief and certainty? And secondly,
how do you foresee the impact of this delay, And maybe more
importantly, in enforcement affecting the decisions of TRICARE
providers to remain in your network?
Mr. Carrato. I concur with the comments from Mr. Kirschner.
It doesn't solve the problem. It kicks the can down the road. I
think the fundamental issue is one of the points made by Mr.
Kirschner, and that is the classification of TRICARE providers.
When you get into the area of classifying them as
subcontractors, that brings on a host of additional burden. And
the uncertainty that the five year moratorium would bring, it
does leave providers on the sideline. And we are actually
starting to see this present itself more as we are building the
network to support the VA's new Patient-Centered Community Care
program, where we are required to build networks of providers.
And more and more of our hospital providers are delaying
decisions or just flatly telling us no. And this is one of the
reasons they cite.
Chairman Walberg. Thank you.
Mr. Goldstein, again going on that train of thought, for
the record, will this delay of compliance audits specifically,
while training hospitals in what they need to do for the
future, will it alleviate the uncertainty hospitals? And
secondly, will hospitals still have to make the tough decisions
whether to sign up to care for TRICARE and federal employee
health benefits patients and, ultimately, likely face OFCCP
regulation?
Mr. Goldstein. It does not help the problem, Mr. Chairman.
There are hospitals that are sitting on the sidelines now,
unwilling to participate in TRICARE pending a resolution of the
Florida Hospital of Orlando litigation. The proposal from the
Secretary of Labor merely says there is no resolution for at
least five years down the road, and also makes it clear that
OFCCP is continuing to take the position that the military
authorization Act did not take away its jurisdiction. So it
means at least five, and maybe 10, years more of uncertainty
during which providers are not willing to provide services to
our servicemen and women and their families.
Chairman Walberg. Thank you.
I now recognize, for five minutes of questioning, my
ranking member and friend, Mr. Courtney.
Mr. Courtney. Great. Thank you, Mr. Walberg.
Mr. Goldstein, can you tell me who is gonna be taking the
oath of office for President in January of 2017?
Mr. Goldstein. I cannot.
Mr. Courtney. And let me ask you this. Will it be Barack
Obama?
Mr. Goldstein. Not without a constitutional amendment.
Mr. Courtney. Right. And the likelihood of that happening
is zero between now and then.
Mr. Goldstein. I would agree on that.
Mr. Courtney. That is a really pretty safe assumption?
Okay.
And the proposal from the Secretary of Labor, Ms. Graves,
was for a five year moratorium. Is that correct?
Ms. Graves. That is right.
Mr. Courtney. And if we do the math, okay, we are talking
about 2019 is when this issue could be revisited in terms of
any type of enforcement on it. Isn't that your understanding?
Ms. Graves. That is correct.
Mr. Courtney. And there will be a new President. And since
the Secretary of Labor serves at the will of the President
there will actually be a new Secretary of Labor in place at
that point. Isn't that correct?
Ms. Graves. That is right.
Mr. Courtney. Okay. You know, I don't know, maybe it is my
Irish-Catholic upbringing but, you know, our fatalism says that
there is no such thing as perfect certainty in life. But a five
year moratorium in terms of audit, given the fact that pushes
this well beyond the end date of this administration, would
seem to suggest that this issue really is being, I think,
pretty dramatically dealt with by the Secretary in terms of any
of the issues that people are concerned about. Isn't that
correct, Ms. Graves?
Ms. Graves. Yes, I think so. And I think it provides the
Department of Labor an opportunity to provide training and
outreach and additional clarity for contractors.
Mr. Courtney. Thank you. Now, you know, you talked about
some of the new initiatives by OFCCP in terms of trying to
protect classes of the population that frankly have struggled
in terms of employment opportunities. And one of the groups
that you mentioned was veterans. Can you talk about that in
terms of OFCCP's advocacy for veterans over the years, disabled
veterans and certainly now, recently, all veterans?
Ms. Graves. Well, really importantly, last year OFCCP put
out new regulations around the administration of the statute
that requires nondiscrimination and that contractors take
affirmative steps with regard to protected veterans. So that
requires contractors to establish hiring benchmarks, and
conduct overreach and recruitment. And they have been engaged,
not only just in putting out those regs, but taking the
additional steps of providing training and outreach to make
sure that people really understand them.
Mr. Courtney. And again, that didn't happen out of context.
I mean, it was because there actually is a real problem out
there in terms of the nagging higher unemployment for veterans
versus the rest of the population. And the OFCCP, I think, is
responding to that in terms of using the contracting, you know,
precedence as a way of trying to bring that unemployment rate
down. I mean, isn't that the whole history that led up to the
new rules?
Ms. Graves. Absolutely. It is absolutely connected to the
extraordinary high rates of veteran--high unemployment rates of
veterans.
Mr. Courtney. And so, you know, when we talk about this
agency--which, you know, we have heard today that somehow it is
sort of, you know, looking for a power grab or jurisdiction--I
mean, in terms of its history as far as veterans are concerned,
in fact it is really the opposite. I mean, they have actually
been out there trying to, again, create opportunities for
veterans, again, consistent with their history of advocating
for diversity in the workforce. Isn't that correct?
Ms. Graves. Right. And I think it is important to think
about what jurisdiction means. What it means is that the
contractor then has an obligation to really think about these
protected categories of workers, and conduct outreach and
recruitment. So this is absolutely tied to the employment
opportunities for veterans and, you know, on the basis of race
and sex and disability, as well.
Mr. Courtney. Great. Thank you.
So my time is almost up, Mr. Chairman. I want to enter into
the record the GAO report which came out last April which,
again, was on the question of TRICARE challenges in terms of--I
will get it here somewhere, but--okay, the multiyear surveys
indicate problems with access to care for non-enrolled
beneficiaries. And I would actually like to point to, again,
the section which talks about provider acceptance of TRICARE.
And this goes back well before this administration. Forty-one
percent, only 41 percent, of mental health providers in this
report have expressed a willingness to take TRICARE.
And it has absolutely nothing to do with OFCCP. There is a
chronic issue of reimbursement and complexity in terms of
interacting with--and, again, I have worked with Health Net and
they have done good work with my caseworkers out there. But,
you know, there are much bigger problems out there in terms of
what I am hearing from providers than the fact that, again,
there is a Florida case which will be withdrawn. Which, you
know, in 25 years in practice I always thought a withdrawn case
by the other side was actually a good thing. But I guess, you
know, some people view it differently. But anyway, I have asked
that be admitted to the record.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Walberg. Without objection? Hearing none, it will
be admitted. I thank the gentleman.
Now I recognize my good friend and colleague, NASCAR
colleague, from North Carolina, Mr. Hudson.
Mr. Hudson. Thank you, Mr. Chairman. And I am a proud
supporter of this bill. And, frankly, I am outraged by the
arrogance and the overreach by this agency, OFCCP. Congress
clearly signaled our intent. And to paraphrase one of my
colleagues, Congress doesn't pass suggestions, Congress doesn't
pass things that we hope will happen. Congress passes laws. And
the law has to be followed, Mr. Chairman, and the law was made
very clear in 2011.
And the response from this agency was Congress has
overstepped their bounds by telling us what we can do. That is
outrageous. And now the response is, from the Secretary, well,
we will do a moratorium for five years so we won't violate the
intent of Congress for five years. But at the end of the five
years, the heck with what Congress passed because we don't have
to follow the law. And, frankly, that is outrageous, Mr.
Chairman.
But I will address my question to Mr. Kirschner. You know,
I travel my district in North Carolina. We have got rural
hospitals that are, frankly, dealing with a lot of costs due to
compliance with regulations and laws from the state and federal
level. And, frankly, these hospitals are struggling. And with
the cost of Obamacare, the uncertainty created by the new
health care law and, frankly, having this regulation hanging
over their head is just one more burden.
And what I guess my question to you, Mr. Kirschner, would
be could you highlight what some of the burdens and the
regulations that have to do with nondiscrimination, federal
workforce compliance that hospitals have to deal with anyway?
What are the costs in time and resources that are involved with
complying with the law the way it exists now?
Mr. Kirschner. The American Hospital Association is deeply
concerned about the survival rate of hospitals, particularly
those in rural areas. Hospitals, on average, spend
approximately 20 percent of their revenues on administrative
overhead already, separate from the OFCCP compliance. There are
any number of laws that are applicable to them and will remain
applicable: Title VII, state nondiscrimination laws, the
Americans with Disabilities Act, FMLA, the NLRA. There is a
whole alphabet soup of laws that will remain applicable.
In addition, there is oversight provided by HHS and the
Office of Civil Rights that is applicable specifically to
hospitals that will remain. So there is a lot of oversight
already and nondiscrimination obligations that exist for every
hospital.
To become a federal contractor then imposes a whole new
scheme of obligations that non-federal contractors do not have
to comply with. There may be some underlying similarities with
respect to nondiscrimination compliance, but there is a
reporting obligation for federal contractors that other
employers do not have to do.
There is a variance in terms of the estimate of hours per
time that will take. There was a reference earlier to the St.
Jude Medical Center's prior testimony that said that there is
hundreds and hundreds of extra hours that are necessary just
due to compliance with the recordkeeping obligations of the
OFCCP.
So the added burden is really the concern that we have,
where hospitals may be unknowingly and unclearly becoming
federal contractors despite what Congress has said in section
715 of the NDAA and, in our view, the OFCCP's very vague and
ambiguous standards for what makes you a federal contractor.
Mr. Hudson. Well, I appreciate that. And it is stunning to
think about 20 percent cost going towards just compliance. That
is--you know, you think about any business--and a hospital is a
business, whether it is a for-profit or not-for-profit
hospital--in the business of taking care of their patients.
And, frankly, we have a large TRICARE population, Mr. Chairman,
in North Carolina in my district. And I want there to be
incentives for people to provide- for more providers to engage
in TRICARE.
And so I appreciate the testimony of the witnesses today.
And, Mr. Chairman, again, I am very supportive of this
legislation. I thank you for your work.
And I will yield back the balance of my time.
Chairman Walberg. I thank the gentleman.
And now I recognize my friend and colleague from the great
state of Ohio, and sharer of the Great Lake Erie, for her five
minutes.
Ms. Fudge. Thank you very much, Mr. Chairman. I thank all
of you for being here today.
Ms. Graves, you cite in your testimony a study that found
female employment by federal contractors increased seven times
as much between 1974 and 1980. A period which includes the
establishment of OFCCP in 1978. That increase is significantly
higher than in periods where there was not federal contracting
settings such as we have today. Do you think that the health
care industry could benefit from the unique responsibilities
and enforcement mechanisms of OFCCP, like the affirmative
action plan?
Ms. Graves. Well, certainly. You know, to begin with, there
is clear, documented discrimination based on race and sex in
the health care industry. There have been a number of studies
that have talked about that, that have talked about the wage
gap between male and female physicians, the race discrimination
that occurs among physicians. But beyond that, diversity in the
health care workforce is very much tied to the core purpose in
providing quality patient care. There is evidence that
diversity in the health care field absolutely improves patient
care.
The other thing is that OFCCP is slightly different from
some of the other agencies because of its affirmative
enforcement scheme. And this is especially important when we
are talking about types of discrimination that is difficult to
detect. So hiring discrimination, pay discrimination, these
types discrimination the individuals are not as likely to know
that they have experienced it.
Ms. Fudge. Thank you very much.
Mr. Kirschner, in your testimony from December 14, 2013 you
cited the testimony of Ms. Dana Bottenfeld--Bottenfield. And
she talked about the frustration she had with affirmative
action plan procedures. Do you further agree with her testimony
that she believes that these procedures, these affirmative
action plans, are important?
Mr. Kirschner. I am not familiar with the extent that--the
specific quote that you are referring to from the December
testimony.
Ms. Fudge. I am quoting from you.
Mr. Kirschner. I know that. I am generally familiar with
her testimony. I would say that four hospitals that have
knowingly agreed to become federal contractors--and they accept
the obligations that flow with that--then it is important for
those hospitals to comply with the law. Which would include
having affirmative action programs and otherwise complying with
the OFCCP.
Ms. Fudge. Thank you very much. So you agree with her
testimony.
Mr. Carrato, in your testimony you indicate that you are
proud to be the longest-serving managed care contractor. And,
certainly, I know that is important, and I applaud you, as
well, and congratulate you. Health Net is justified to feel
this way and I agree, having served the Department of Defense
and the Veterans Administration for 25 years or better. A high-
quality product is provided by your company. Do you think that
some of the pride that you feel may also be a result of meeting
and exceeding the high standards that are embedded in any
federal contract, including those requirements enforced by
OFCCP?
And I ask that because I think it is very important for us
to understand we are using taxpayers' dollars, we are held to a
higher standard and should be held to a higher standard. And
that it is not an entitlement to do business with the federal
government. And so I ask the question because since you have
been so successful that means that you have at least met, and/
or exceeded, the requirements of a contract.
Mr. Carrato. Yes. You know, Health Net Federal Services is
a federal contractor. And we are a federal contractor.
Certainly, affirmative action and diversity in the workplace we
have benefited from. We understand the issue of veterans'
unemployment. We have joined with the White House supporting
the joining forces effort. We are committed to, you know,
employing veterans. And we are committed to diversity.
The issue today is the hospitals and providers that are in
our network. I think the issue is classification. As network
providers, they are required, as Mr. Kirschner said, to comply
with, and we enforce that in our contracts with all affirmative
action state-local regulation. We just believe that OFCCP
classifying them as contractors and subcontractors just brings
additional regulatory burden. And as they are making a business
decision whether to continue to support our men and women in
uniform and our veterans, many are staying on the sidelines.
And most, if not all, are very concerned. And this five year
moratorium will not alleviate those concerns.
Ms. Fudge. Well, certainly I disagree.
But I yield back, Mr. Chairman. My time has expired.
Chairman Walberg. I thank the gentlelady.
And now I recognize the distinguished chairman of the
Education and Workforce Committee, Mr. Kline.
Mr. Kline. Thank you, Mr. Chairman. Thanks to the witnesses
for being here today. Mr. Goldstein, real pleasure to see you.
I know you hated to leave balmy Minnesota to come out here,
but--
Mr. Goldstein. To windy Washington.
Mr. Kline. A sacrifice you are willing to make. Good to see
you all, and thanks for the testimony.
I hate that we are in this position. Because I can't speak
for the Ranking Member, but I think that he and I both believed
that we had addressed this in the National Defense
Authorization Act. And, certainly, I believe that the will of
Congress was made pretty clear in terms of OFCCP's jurisdiction
here. And yet here we are. We have got a lawsuit in Florida, we
have got you here, we have hospitals--I am going to get to you
in just a minute, Mr. Kirschner. A lot of uncertainty out there
about what they are supposed to do. And the Secretary has said
he is going to have a moratorium on enforcement.
The law doesn't go away, the interpretation doesn't go
away, a subcontract is still a subcontract. But for five years,
they are not going to enforce it. Although they are apparently
going to have people helping hospitals to understand how they
are going to have to comply in five years from now. So I was
struck a little bit, that, apparently, the suggestion--at least
it was implied, or I inferred, that the solution here would be
to have a better President, a better Secretary of Labor and
then this will go away.
That is a terrible position for us to be in. It is a
terrible position for the providers to be in. So it seems to me
that Congress is going to have to speak again, hence this
legislation to make it clearer that jurisdiction of OFCCP
doesn't apply here. It matters--and we have had this discussion
many times in this Committee and the full Committee--how we
write laws. And the clearer we are and the more explicit we
are, the less chance there is for misinterpretation. We have,
oh, I think it is a couple of million people now employed by
the federal government in the bureaucracies.
We have tens of thousands of pages of regulations that come
every year that individuals and businesses and unions and
everybody has to read, understand, and try to deal with. But
when we write law and we think we are being clear about it, and
we still get in this position, I, and I think many of my
colleagues, are fairly frustrated. So I want to get to the
impact, and I am going to go to you, Mr. Kirschner, because you
mentioned it earlier. This isn't a question of just deciding to
be nondiscriminatory. This is a question of additional
reporting, additional paperwork--a burden, if you will--added
to everything that was already there, all those things you
talked about earlier, state law and the ADA and all of those
things, this is added on to that.
And so you have got providers who, by a couple of testimony
here, are actively considering or have already considered not
providing the service for TRICARE, for example. And as somebody
who had his health care provided by TRICARE and whose family
did for many years, I would-----that would be very, very
painful. That would be an awful thing to happen. So can you
again talk about what this OFCCP jurisdiction is doing to that
workload.
And by the way, the moratorium, as I said, doesn't change
the law. It just changes whether or not they are going to
enforce the law. But could you address that for us one more
time again, what happens here and why hospitals are saying we
don't want to do this?
Mr. Kirschner. Sure. If a hospital is a federal contractor,
then there is a whole scheme of regulations that do apply to
them, ranging from how they track intake of applicants and how
they report that, how they create reports related to
affirmative action and other items. And these are done in a
very particular way, as required by the OFCCP, that is
unrelated to the normal business operations of the hospital. So
it is not as if the hospital has its reports that it just has
to turn over to the OFCCP. Rather, the OFCCP requires the
hospitals to maintain information and gather information in a
way unrelated to anything else that they do.
There are hundreds of hours that are required to be done by
the hospital just to comply on a regular basis with the OFCCP
regulations. And when there is an audit, those audits can last
for years and they can be very time-consuming.
Mr. Kline. So I see my time is about to expire. So there is
a legitimate business decision that is going to have to be made
based on cost in dollars and cost in time. And we are going to
have people who will suffer. I see my time has expired.
I yield back.
Chairman Walberg. You--you may continue, Mr. Chairman. I
just wanted to have that opportunity to say that to you, and
recognize the next time I have that opportunity you would--
Mr. Kline. No, let me be clear here. I yield back.
[Laughter.]
Chairman Walberg. I thank the Chairman.
Now I recognize my friend and colleague from Indiana, Mr.
Rokita.
Mr. Rokita. I thank the Chair and I thank the witnesses,
and good morning to each of you.
I want to quickly go to Mr. Kirschner here, and just simply
ask if you had anything to add about Ms. Graves' testimony. It
was characterized that you agreed with what she was saying, at
an early on question. Did you want anything else on the record?
Mr. Kirschner. My statement is that to the extent that a
hospital or other contractor has an obligation, as a bona fide
contractor, to comply with an affirmative action program I
think that is legitimate. But what I don't think is legitimate
is that if a hospital signs up for a contract, and is told in
that contract that they are not a federal contractor, has no
clear knowledge that they are a contractor, and then after the
fact the OFCCP comes in and says, ``Oh, by the way, for the
last X number of years you may not have known this, but you
were a federal contractor and you have been out of compliance
with the law for years.''
That is the situation we are trying to clarify and, with
support of this bill, to make it clear that providers under
these federally-funded health plans are not federal
contractors.
Mr. Rokita. Yes, that we are going to follow the rule of
law, not the rule of man.
Mr. Kirschner. Right.
Mr. Rokita. Yes, thanks. I am getting that sense here at
the hearing today. It is a shame, though, and I associate my
comments with the full Committee Chairman, that we have to say
again what we intended the first time.
Mr. Goldstein, you note in your testimony, you talked
about, the Florida Hospital of Orlando case. And, you know, one
of the reasons we are here today is that the board took, what
you say was, an unprecedented action. If I understand it right,
the ALJ initially agreed with the hospital that they weren't
going to be contractors or subcontractors. And then the full
board, the review board, then kicked it back down, where it now
sits at the ALJ level. Can you expand on that? Why is this so
unprecedented?
Mr. Goldstein. What happened is, the administrative review
board originally agreed with Florida Hospital and found that
OFCCP did not have jurisdiction because of the congressional
action. It was done and it would have resolved the issue, and
it would have been clear TRICARE does not create OFCCP
jurisdiction.
Mr. Rokita. Yes.
Mr. Goldstein. OFCCP asked the administrative review board,
which basically represents the judgment of the Department of
Labor--asked it for reconsideration. Which, in my experience--
Mr. Rokita. Which is not unusual. Oh, that is unusual.
Mr. Goldstein. In my experience, that is very unusual.
Mr. Rokita. Okay.
Mr. Goldstein. If not unprecedented, and the ARB granted
that reconsideration which, again, is very unusual if not
unprecedented. And in a divided opinion, found that this act of
Congress did not, in the judgment of three of the board
members, divest OFCCP of jurisdiction. Sent the case back down
to an administrative law judge for further proceedings,
basically delaying the final day when a federal district court
gets to determine what did Congress actually mean when it
enacted section 715.
Mr. Rokita. So when you say ``unprecedented,'' do you mean
that it is unprecedented within the jurisdiction and
precedential decisions of the Department of Labor's
administrative review board? Or within federal government
agencies, as a whole?
Mr. Goldstein. To my knowledge, within the ARB; I don't
know the answer with regard to federal agencies as a whole.
Mr. Rokita. Okay, thank you.
Mr. Carrato, thank you for your testimony today. The
Department of Labor--of course, and the reason why we are
here--stated TRICARE providers are subcontractors of the
federal government. I guess what I am wondering, though--and I
want you to expand on it--they seem to be the moose on the
table, the Department of Labor. But do other federal agencies
consider TRICARE providers to be federal contractors? I mean,
that is to say are there broader issues associated with the
OFCCP's--
Mr. Carrato. Yes, there are much broader issues. And I
think, historically, this question has come up as to how to
classify providers. And in addition to OFCCP regulation, there
are a host of flow-down provisions that would flow to federal
contractors: you know, the FAR, the DFAR, which requires
certain cost accounting systems, disclosure statements. So
there would be--if TRICARE providers were, indeed, classified
as contractors, there would be a host of additional burdens. So
to my knowledge today, no other federal agency--to include the
Department of Defense--considers them subcontractors.
Mr. Rokita. Oh, and I am just thinking about this, I guess.
That if they were considered ultimately, legally, contractor to
subcontractors, now they would be subject to the President's
new executive order on raising the minimum wage.
Mr. Carrato. Correct.
Mr. Rokita. Which would have costs as well.
Mr. Carrato. All flow-down provisions.
Mr. Rokita. Right. Mr. Kirschner?
Mr. Kirschner. Yes. If I may just add to that, the
Department of Defense actually has its own regulation
classifying providers in TRICARE as not federal contractors. So
it is not just that they haven't taken a position, but they
have taken a position contrary to that taken by the OFCCP. And
the Office of Personnel Management, similarly, has a regulation
classifying participants in the FEHBP program as not federal
contractors. And the OFCCP has disagreed with them, as well.
Mr. Rokita. Rule of law versus rule of man.
Mr. Chairman, I yield back.
Chairman Walberg. I thank the gentleman.
I recognize now a second distinguished representative from
Indiana, the birthplace of my first two kids, Mr. Bucshon.
Mr. Bucshon. Thank you very much. Thanks to the panel for
being here today, and I will give you my background. I was a
cardiovascular and thoracic surgeon prior to coming to Congress
in 2010, and have been in the health care industry for 30 years
since I went to medical school in the mid-1980s. And my wife is
also a physician, an anesthesiologist, who currently continues
to practice medicine.
And, you know, I have recruited physicians, I have
recruited all kinds of other health care employees as the
president of my medical group. And so when, Ms. Graves, you
commented and you made the allegation that the health care
industry has purposefully continued to discriminate based on
sex and race and other things I take offense to that. Because I
think that I would like you to submit, for the record,
evidence, which you have specifically on the health care
industry, that there is discrimination. That is not a question.
So I know you turned your mike on, but I am not asking for a
response.
Ms. Graves. Oh, it wasn't a question? Oh.
Mr. Bucshon. But whatever hearing I go to, whatever
subject, when I hear people make allegations that may or may
not be substantiated I always ask witnesses, regardless of the
subject, to submit their evidence and data to the subcommittee
and to my personal office to back up those claims.
Because my wife has been hired by multiple different
hospitals and she gets paid the exact same amount as any other
anesthesiologist that they hire. I have hired a female
cardiovascular and thoracic surgeon for my practice, paid
exactly the same as the male cardiovascular and thoracic
surgeons, as are any of the other employees.
So if you would, for the record, submit the evidence that
you have that proves what your claim, that there is still
discrimination.
Ms. Graves. I would be pleased to do that.
Mr. Bucshon. Thank you.
Mr. Carrato, in your testimony your expressed concerns
about Health Net's ability to provide military members and
their families access to high-quality providers, especially in
rural areas and areas far from military treatment facilities,
where there are already shortages of providers. And I would
just like to say, in Evansville, Indiana there is a VA clinic
but there is no VA hospital, and patients have to go to St.
Louis, which is about three hours away, for surgery if they
needed that, for heart surgery.
You mentioned that specialties are already in short
supply--psychiatry, neurosurgery, and dermatology, for example.
Could you elaborate on the extent of the shortages and the
access issues already?
Mr. Carrato. Certainly. And as you well know, there are
certain specialties in short supply. You know, adolescent
psychiatry, dermatology. And as a business decision, providers
need to make a decision how to titrate their panel of patients.
And the reimbursement rates, as Mr. Courtney mentioned, don't
make TRICARE the most attractive payer to participate in. So
any additional burden or regulation makes our ability to
recruit and retain providers much more difficult. And it
essentially is supply and demand.
And in certain rural areas where we place our military
installations--you know, Watertown, New York, Fayetteville,
North Carolina, rural Indiana, as you said--there is not the
abundance of providers, and they have to make a business
decision. They have to decide what payers that they want to
support.
Mr. Bucshon. Thank you, very much. Because I do represent a
very rural area. And not only for military veterans, but for
everyone, access to health care providers, particularly
specialists, is becoming a critical issue across our nation,
not only for--again, for people in the military.
And in my medical practice I had the opportunity to treat
many veterans. And frequently, if they were requested by the VA
to be transferred to another facility I did it for free, and
wrote it off, and got my hospital to do the same. Because I
didn't feel it was fair that their families and them had to
travel three hours for heart surgery, when I could do it, you
know, down the street.
Mr. Carrato. Right.
Mr. Bucshon. And so I am going to go on the record and say
that since I have been in medical practice and in Congress I
support the ability for military veterans to have a card in
their pocket and get health care at their facility of choice,
regardless of whether that is the VA system or private
facilities, if there is not access to the appropriate VA care
within a reasonable area around them.
With that, Mr. Chairman, I yield back.
Chairman Walberg. I thank the gentleman. I thank the panel
for your response to our questions and, for our colleagues, the
questions that you had, hoping leading to greater
understanding.
So now I recognize the Ranking Member, Mr. Courtney, for
his closing remarks.
Mr. Courtney. Thank you, Mr. Chairman. And, again, I want
to again tip my hat to you and your staff in terms of, again,
flushing this issue out. And, in my opinion, resulting in
accomplishing real change in terms of what was clearly an issue
about interpretation of a statute that Congress acted on and I
think had clear intent. And a new Secretary of Labor who
listened, and has really talked to people and interacted with
people.
You know, I think, in my sort of final thoughts here I just
want to make the observation that if H.R. 3633 were to pass the
House, pass the Senate and be signed into law by the
President--which I frankly think there is a high level of
skepticism in my mind that actually would happen--the fact of
the matter is, is the next day we would still have a terrible
challenge in terms of access to health care for TRICARE.
I mean, the issues that have been identified by GAO, the
issues that I have heard over and over again in the last seven
years in terms of retirees and veterans who qualify for
TRICARE, getting access to care is all about reimbursement and
doctors and providers' willingness to basically lose their
shirts every time they take on a new patient.
And, again, the GAO study clearly demonstrates that. Again,
I think every person on this subcommittee, if, you know, we
were given the opportunity to really kind of, again, boost the
financial support for that program there would be strong
support for it. In fact, the Senate had a measure a couple days
ago Senator Sanders proposed which, again, would have a
historic new investment in terms of veterans health care
services. In my opinion, that is clearly the best way to
strengthen the network of access for veterans in this country.
You know, the focus here today, obviously, though is on the
question of OFCCP jurisdiction. Again, I think that the
Secretary could have, you know, gone into the Washington, D.C.
crouch and listened to the lawyers, maybe, and his agency and
said I am not gonna extend myself to try and listen to people
and do anything. But the fact is, is that, as in the case of
OSHA recently, he has really shown a willingness to listen to
Congress and to react.
And to come out with something that--again, I am
disappointed, frankly, that people have dismissed here today
some of the witnesses about the value of it. A five year
moratorium, again, takes this out of the scope of this
administration. Nobody is stipulating to anything in terms of,
you know, you are not being subject to a court order or
relinquishing your legal position here in terms of the
interpretation of the prior bill. Which, by the way, the
language of that is different than H.R. 3633.
It is not like we are just re-passing that language. I
mean, there is ``shall'' language now in this as opposed to
``may'' language before. So, you know, again I have been around
enough lawyers to know that people can fight over, you know, a
couple words, or commas even sometimes in terms of the way
statutes get written. But the fact is, is I think that this
Secretary has shown a willingness to, in my opinion, give a
very robust area of certainty on whether or not OFCCP
jurisdiction is gonna, in fact, apply towards TRICARE
providers.
And, frankly, I don't think he is done in terms of that
dialogue and that discussion. That, you know, we are, I think,
gonna still see him in our Committee rooms and in our offices,
and is willing and open to continue this discussion as far as
other programs are concerned in terms of Medicare and FEHBP.
This is not someone though, in my, you know, estimation has
shown, you know, again, just a rigidity or unwillingness to
talk and interact with people.
So I practiced law for over 20 years. I was with a bunch of
litigators who were fearless and loved, you know, the conflict
and going into the courtroom. But we had a sign that hung in
our office that was a quote from Abraham Lincoln, which said,
``Discourage litigation. Persuade your neighbors to compromise
whenever you can. Point out to them how the nominal winner is
often the real loser in fees, expenses and waste of time.''
And, you know, I would remind you of that quote in order to
what the Secretary did in terms of where we are today.
Again, I respect the Chairman's passion on this issue. And
it may be that this issue is gonna come to the floor. But,
again, this is a Congress whose batting average isn't that
great in terms of getting across the finish line. And I think
it is gonna run into resistance maybe further along in the
process. And I think, in the meantime, you can take credit for
accomplishing something here in terms of having the department
reevaluate its position.
As the Secretary said, I did the forensics. He did the
forensics to understand better what the Armed Services
Committee did and he made an adjustment. And I think that is a
great accomplishment, and something that you should be very
proud of.
And with that, I yield back.
Chairman Walberg. I thank the gentleman. And I would concur
with much of your sentiment there. And it is not a purpose of
this hearing to necessarily push forward a piece of
legislation. And you are right, we don't have a great record of
getting our colleagues on the other side of the Capitol to take
up legislation--good, bad or indifferent--and move it forward.
However, it is important to have the discussion.
I also certainly applaud the Secretary. This little note
paper is my notes I took sitting in my red 2006 Hemi Dodge
2500, three-quarter ton pickup truck outside of a town hall in
Grand Ledge, Michigan, on the banks of the Grand River, when
the Secretary was willing to call me and talk about this issue.
So I appreciate that very much. And we have had open dialogue
in my office and in my pickup truck. And wherever he was, I
have no idea, at that point in time. But we discussed that.
And we need to continue discussing it. I appreciated the
letter that he sent. It didn't include every item that we
discussed that afternoon. That would have been included in the
letter. So there is certainly more discussions I will have with
him, and ask why. We can assume things. But for the record, and
in the reality, we want to make sure things are solid, buttoned
up, and move forward. But I think it even goes beyond that. I
am willing to give credit where credit is due, and enabling
ability to help us work together is great.
But in the end, we want to make sure we have a framework in
place that not only encourages economic growth, the opportunity
for health care to be there and available. Certainly, everyone
in this subcommittee and on the full Committee would never,
never countenance anything that denied employment because of an
individual's gender or their disability, their race, or their
religion, or the fact that they were military veterans. But on
the other side of the ledger, we want to make sure that we
don't put so much uncertainty in place, at the very least, that
decisions are made that will take away opportunities for people
to have the type of care that, in this country, they ought to
have.
That would have the opportunity to have employment in
facilities that are viable and growing and moving forward and,
in fact, expanding to meet the needs of this great citizenry we
represent. I think, as well, this is an opportunity to make
sure that the dialogue, the debate that we even had yesterday
on the floor of the House, pushing back on our executive,
making decisions and, in fact, rewriting laws without the
authority that the Constitution gives, regardless of party, the
issue of the separations of power. The authority that the
people have. As Washington said, I believe it was, when asked
about our government, ``Here, the people rule.''
And we are the elected representatives of the people to
represent them and, on their behalf, make laws. And expect
those laws--good, bad or indifferent--until changed, to be the
law of the land. And that is my concern. That we have not got
to that point right now with OFCCP, and their description,
definition of who a subcontractor is or a provider. And they
are, in fact, as I believe, going against what was decided by
law in the NDAA provision.
So this is a worthy discussion to continue. We will go on.
I am certain I will talk with the secretary. I am certain that
we will push for adequate solution.
But I also want to make sure that we don't have simply five
years of uncertainty. And ultimately, decisions made on the
basis of the fact that we can't just be uncertain for five
years. We are gonna make decisions now that impact, sadly, in
negative ways the people that we ought to be serving.
So I appreciate this hearing today. We will certainly
continue on in various ways. But we want to move forward for
the good our country, for the good of our citizens and so that
everybody has opportunity equal to all.
There being no further business, the Committee stands
adjourned.
[Additional Submissions by Ms. Graves follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Additional Submissions by Chairman Walberg follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Whereupon, at 11:33 a.m., the subcommittee was adjourned.]
[all]