in the "washington post." the article details an incident in the 1980s. you were working as a nurse in the intensive care unit at johnston-willis hospital in richmond, virginia. at 2 a.m. a young woman in the late '20s was brought to the hospital by a rescue squad. she had been in a horrific car accident and crashed through the windshield of her old vw bug. haply injured and having suffered massive blood loss, she was pronounced dead, but you and the doctors went to work anyway, trying to revive her. the surgeon on call told reporters quote, maryland was very supportive in everything. we came up with the game plan and it was right on target. we use about 60 units of blood, but the patiently ultimately walked out of the hospital. ms. tavenner, it sounds like you or someone who doesn't give up. your experience israel, buried, and it will serve you well in this position. cms faces a great cast and it

requires a leader with the qualities general macarthur described, confidence, courage and compassion. i believe you have what it takes and you will do very well as administrator. i look forward to your testimony. senator hatch. >> thank you, mr. chairman but i want to thank chairman baucus for convening this hearing to consider the nomination of marilyn tavenner to serve as administrator for the centers for medicare and medicaid services, cms. this is a critical agency for a number of reasons has been without a confirmed administrator since the fall of 2006. cms is the world's largest health insurer. and has a budget of nearly $1 trillion processes over 1.2 billion claims a year or services provided to some of our nation's most vulnerable citizens receiving medicare and medicaid. if confirmed, ms. tavenner, you'll have a daunting challenge ahead of you. while i believe you have the qualifications to do the job,

there is still much that you will need to do in order to assure members of this committee that cms is heading in the right direction and that your leadership will help steer the agency through the very turbulent times that lie ahead. one of the greatest challenges facing cms in the near future is implementation of the federal and state-based health insurance exchanges. in a speech last june, you said that the health care changes quote keep you up at night, unquote. i can relate to the. they keep me up at night, too, but probably not for all the same reasons. there are numerous obstacles and issues that would need to be addressed at cms works to input the changes -- the exchanges and bring them online later this year. cms on to been able to provide a satisfactory answer to number of questions posed by myself, the chairman, and other members of congress regarding the exchanges. for example, we still know very little about how the exchanges will operate, what the key

operational and a publication deadlines are, and how cms is monitoring them to determine if things are on track or not. we are still waiting to see a breakdown of the budget for the federal facilitated exchange. if you are confirmed, it is essential that you work with this committee to provide us with this level of detail so we can assess the invitation of the exchanges and work with you to address issues as they arise. the costs of soda with the exchanges are of critical importance to this committee as we are already seeing evidence that health insurance premium cost are continuing to rise and are projected to be, on average, 32% higher in the individual market. at the same time, the congressional budget office has estimated that the number of people enrolled in the exchanges in 2014 will be 1 million lower than originally projected, and quotes from the administration officials indicate that the number could be even lower than that. this is a perfect storm of unanticipated consequences that

are combining to make this part of the so-called affordable care act seem more like what i prefer to call it, the un-affordable care act. in addition to overseeing this massive expansion of benefits, you will also be charged with having to ensure the longevity and solvency of the existing medicare trust fund, which is projected to go bankrupt in 2024. all told, between now and 2030, 76 million baby boomers will become eligible for medicare. even factor in deaths over that period, the program will grow from approximately 47 million beneficiaries today to roughly 80 million in 2030. maintaining the solvency of the medicare program while continuing to provide care for an ever-increasing beneficiary base is going to require creative solutions and a skillful administrator at the helm. i believe that you'll be up to the challenge and i strongly support you. overseeing the complex infrastructure of an agency like cms is not a job for the faint of heart.

you will be expected to ensure that beneficiaries get the care they want from the providers they prefer all the while making sure that the claims get paid on time, that administrative and overhead costs are kept low, and the congressional mandates are fully implement it. so i wish you the best of luck as you work to address these challenges and as you continue going through the confirmation process. you're going to need a. we will try to help you appear to the extent that we can. mr. chairman, i would also like to take a minute to thank my colleague, senator warner and senator kaine for being here to introduce ms. tavenner. i think it's great you're both are here and it means a lot to us. i would a special bike to express my gratitude to the majority leader cantor for taking time out of what i know is a tremendously busy schedule to be here this morning. this bipartisan gesture means a lot to the committee and especially to me. so i'm really grateful for you folks taking the time to be with us.

thank you, mr. chairman. >> thanks senator. thanks very much. august and cantor, senator warner, senator cane, i would like you to introduce our witness. i joined senator hatch in thanking all of you for coming here. before you, ms. tavenner, i would like you to take this opportunity to introduce any damage he might have here with you. they're all part of the sinking. >> thank you, mr. chairman. to my right, my husband, bob. >> bob. >> my son-in-law, david, and my daughter, sarah leadbetter. >> let's give them all a round of applause. thank you. [applause] >> why don't you proceed? >> mr. chairman, thank you very much. ranking member hatch, also i appreciate the opportunity to be here before the senate finance committee. and to members, it is my

pleasure to be here, to join with my colleagues from virginia in introducing, presenting to the committee for your hearing today, ireland tavener. -- marilyn tavenner. under chairman, you as well as senator hatch spoke about the wealth of experience in the private sector as well as her service to people of the commonwealth. i'm here to just underscore my faith in marilyn tavenner as an individual who is eminently qualified to take on the challenges of which you speak when it comes to the health care complexities that our country faces. i first met her when i served in the virginia house delegates, and it was plain to me very early on that she not only came from the private sector experience, she understood people. as you rightly point out, mr.

chairman, marilyn started as a nurse with the hospital corporation of america. and having served with the company for 20 years, ultimately rising in 2001, to be ceo of the central atlantic divioersaw 20 . she really was a force to be reckoned with when they come to not only the state legislature and the policies of virginia at the time, but somebody who was there to speak on behalf of patients. you pointed out the story of marilyn's health care delivery and that very daunting situation that you spoke of in the profile. but might expect with maryland, she does, she approach this problem from health care from the patient's perspective. and given her long experience in the private sector, i have complete faith that she is an individual that will be able to take on the challenges that we

face on the half of constituents that we represent. you mention also, and i know that both were governors, now senators are here, but marilyn did serve as secretary of health and human resources in richmond, overseeing the commonwealth health care agency, including dns, which was a state counterpart to cms. it was a $9 billion agency, and had 18,000 employees. so she certainly stepped up the task. i went in with cink's, chairman. i don't think there's any secret that i'd differ with the obama administration a lot of matters on health care policy. and, obviously, the issue of obamacare remains one very controversial, but if there is anyone that i trust to try and navigate the challenges, it is

marilyn tavenner. and i feel that strongly about and that's what i'm here. delighted to be you here, and sy that i strongly endorse your confirmation of president obama's nomination of marilyn tavenner to be the next administrator of the centers for medicare and medicaid services. and again i yield back. >> thank you very much for making the effort. i understand there was a little bit of traffic that you guys faced coming your. >> apologize spirit deeply appreciate you making those extra effort. thank you very much. senator warner? >> thank you, mr. chairman. and ranking member hatch, i want to echo comments of my friend and colleague, eric cantor, who i know will be echoed by well as my friend tim kane, to also lend my support, i think the president has made a great choice in nominating marilyn tavenner to be head of semester

i've no marilyn for over 20 years, and can echo firsthand that she is the real deal. and i think is a phenomenal choice to lead to cms. as a naked i think will probably come back and question time and again, she brings i think a pretty unique set of skills to the job. she grew up in southside virginia and a real community can work away to school. has been mentioned already she started as a nurse, worked her way up to administrator of a major hospital company. but marilyn has always had a commitment to public service, always had a commitment to the people that she served. she has, i know tend will make mention of them did a great, great job as the commonwealth secretary of health. she came in direct content with the kind of administrating, at least medicaid programs, beginning at the administration she joins cms where she served

as the highest levels. so what i think she'll bring to this job is not only a depth of background on the public sector side, but at going what majority leader cantor said, her career and the private sector, i think she knows the impact that regulations and rules have on the real world, and understands the importance of not just achieving a policy goal but making sure it works in practice. i also think him and i know that she was this way when she served in virginia, and my interactions with or seem is, she that it is our job in congress to hold her feet to the fire in this very important, both you and senator hatch mentioned, complicated entity. she has a history of welcoming discussions that will be the first thing, first person to tell you that she wants things done in the right, fairway. she's also held an extraordinary

high esteem by her peers. i think it's pretty remarkable that in february all the previous leading senate confirm cms administrators, the ones who really know what it takes to run that enormous agency, sent a letter urging her confirmation, noting that it was quote hard to imagine a candidate more worthy of a bipartisan support. so when you the majority leader of the house, two democratic senators, all coming together saying it's time to get a cms administrator fully confirmed so that she can go about her important work, i commend her without reservation to this committee and look forward to having the opportunity to work with her in the future. and thank the chairman for the opportunity to, and present your. >> i deeply appreciate your confidence in this chapter. thank you. >> thank you, mr. chairman and ranking member hatch, committee members but it is a treat to be here with my colleagues from virginia on the half of marilyn

tavenner to be the first confirmed sinister minister since 2006. i was the mayor of richmond dealing with the challenges of an urban city and its health care safety net when i first met marilyn back in the late 1990s. when i was running as governor i made it a superstitious practice not to think about who i might higher if i became governor, but marilyn was one of the two people that i sort of broke my superstitious rule and thought about if i forget to recover i would love to have her working on my team. i asked marilyn to be the cabinet secretary over the health and human resources portfolio and came to know her scales very well. and a supporter strongly for this position. for quick things. i support her because she's a nurse and she will always put patient care first. she was not a nurse in the past tense. she is a nurse in the present tense but they will never be an issue that she will wrestle with. as the cms administered where she will not be thinking primarily of patient care. budgets are important, numbers on a page. policy manuals are important but

everything this agency does deals with the realize of people, many of them very vulnerable. marilyn's nursing background is example five by the story, mr. chair, that you recounted and some others will make sure she will always put that first. this qualification support for and i also think it's an important attribute to a profession that is increasingly at the core of health care. her confirmation would send a wonderful said the. her experience as recounted by congressman cantor and senator warner gives her a real understanding of the project how is what cms needs to you. it's not just about numbers on the page or policy regulations or rules. and has to be able to be implemented in hospital waiting rooms and in doctors offices. and it has to be simple so the folks in the public or making claims, they have to be able to understand that marilyn is a person is dealt her whole career with the practicality and will carry out her mission in cms in a very practical way because of

that wide ranging experience. third, i support her because she is proven again and again that she is a creative problem solver. as governor i give all my cabinet secretaries problems to solve. marilyn, why are we tend in the nation in per capita income at 35th in the nation in infant mortality? you have to find out the adjective that and help us solve a. what can we do to reduce youth smoking and a state that has a historical connection and a strong want to tobacco? why are we facing shortages among nurses? why are we facing shortages among physicians, and what we do about a? and again and again what marilyn it was in a non-ideological way, get the data, understand the problem, not just one conventional wisdom that understand the problem and then devise very specific and targeted solutions to go after the problem. some of the problems that i gave to her were areas of expertise, but she oversaw not just health care but also human resources areas where she hadn't worked interprofessional cover.

we had a broken foster care system. system. that was that something should work on in the past but i gave her that challenge and she and her team did a wonderful job in helping reform virginia's foster care system. that created an innovative approach to solving problems is an important skill that she will need every day at cms. and finally the reason i support her is the biggest challenge that i didn't get your butt circumstances gave huber was trying to control costs. i have i guess i'm it's not an accolade, sort and achievement through no benefit of my own as government until the governor of virginia left office of a small general budget and i saw what i get no credit for but it was constitution mandated and i was governor during a recession but i had to give to my cabinet secretaries the very difficult task of not reducing the rate of growth but even reducing the size of expenditure during a tough time. and health care portfolio was the second largest one in a

state government after education. and again and again and again, we had to go back and sharpen pencils and a race and start over again and find savings. and i saw marilyn and her team struggle very mightily with that. her skill in doing that is a skill that is very precisely matched with the needs of the moment. how to keep patient care first, because that's her first attribute. but nevertheless, wrestled with difficult hospital issues not only for the good of this, but also because the more we control costs, the more affordable we make it for people and for businesses. cost control is ultimately about health care access and marilyn understands it very, very well. so for those for reasons, and many others, i'm proud to be here and support her. this is a vote, voting to confirm or is a vote that you will never regret. whether you're for patient care or cost control, or just managerial efficiency, a vote for marilyn tavenner is a safe vote and i'm proud to recommend her to you.

thank you very much. >> thank you very much, senator. appreciate you taking the time. ms. tavenner, why did you proceed. as you know our practice here is submit your record come your testimony for the record and just summarize it, please, the best you can. >> than one. chairman baucus, treachery -- >> you might want to pull the microphone up a little bit closer. >> see if this works. >> thank you very much. >> i want to thank you for holding the hearing today, and for the committee's consideration of my nomination to be administrator of the centers for medicare and medicaid services. i'd like to start diagnosing what we are all aware of, the cms is a large and complex agency. we have a very large federal budget, and we provide services that are critical to our nation's health care. as such, this committee and all of congress have a strong interest in the management of our agency, as they should and

as july, and so i would like to split a little bit about myself and my background, why cms is so important to me, how i've spent the last three years managing the agency, and by vision for moving us forward. i'll begin with my mother, ruby martin. i just celebrated her birthday with her down in a small rural town of fielder dale, virginia, where i grew. as a strong woman, we raised four children while working full-time in a textile industry for over 40 years. she has been and she continues to be inspiration in everything i do. and she relies on medicare, and not just medicare. she also relies on the q. and p. or q. i program as we tend to call it here in d.c. that's critical for her health care needs. my youngest child center is with me today was diagnosed with type i diabetes at the age of 11.

she, too, has been a strong inspiration in what i do for different reasons. she relies on and needs access to health insurance, no questions asked. i think all of us know someone who relies on either the traditional programs we been administering at cms or the ones we are embarking on in 2014. and that makes it personal for a lot of us and underscores the fact that we do at cms directly affects the lives of so many. i have been fortunate that my group asking a bright a perspective on health care that i believe uniquely positioned me to leave cms. i do have a clinical background for my early days as a staff nurse, a business perspective for my days as a hospital ceo and division president, and a government perspective both from the work as virginia's secretary of health, and also the previous three years at cms. simply put, cms needs an administrator, and they need one

with strong operational skills. while it is for import have a vision for the agency, we also have over $800 billion business to run that enlargement of the country has a stake in, from beneficiaries to providers, the hospitals to insurance companies, the congress, to the the administration, to the american taxpayer, and to our cms employees and contractors. therefore i consider it essential to my leadership role at cms to be a partner with all of those stakeholders. and i do my relationship with this committee, and with congress as a whole, as a partnership. i have personally met with most of the members of this committee and i have appreciated the opportunity to engage with all of you in an open dialogue. while we may not always share the same views, we have worked together to resolve challenges, and i would like the chance to continue to do so. my management style centers a lot around listening,

pragmatism, and consistently trying to do what's right, even though it may not be the quickest or easiest path. this style has led to many achievements over the last three years, and i highlighted some of those in my written testimony, and i will not go over those now. but in closing, i would like to share my vision and the three primary focus is that we have from moving the agency forward. the first one is when he to operate cinemas as a business and act like business partners. this means having an open door policy to work together and listen to concerns of all the groups that we are accountable with, those groups i listed earlier. second we have a large responsibility in the months ahead to intimate key pieces of legislation to ensure all americans have access to affordable health care coverage rather through the health insurance marketplace, whether it's through medicaid, chips, original medicare or medicare advantage. and alas, we need to leverage the tools that you'll have granted us to reduce overall

costs of care and for the health care delivery system. these tools include payment charges connected to performance, innovative new models of care, and enhanced tools to combat fraud. lastly i would like to thank this committee and the staff for the respect and the working relationship we have built over the last several years and i want to thank you, thank you, and senator hatch, for holding this hearing and giving me the opportunity to speak before the committee and answer any questions spent thank you very much, ms. tavenner. i would like to ask you a few questions about the payment rule. i mention this because in montana, i was sitting there about 10 years ago, i met a group of folks there who are suffering from asbestos-related diseases, mesothelioma, and a large percentage of that town

unfortunately has passed away because of the asbestos produced eyed a company, w. r. grace, asbestos has affected people in montana as well as around the country. because asbestos is found and a lot of insulation products. when i visited them in one fell -- one fellow very much impressed me. i found a photograph for you. i want you do have. less said to me, i will be watching, center. a lot of people said they would help us but they haven't. i knew he meant it and he didn't have to say that. every once in a while you come across a situation where you will do whatever it takes to solve it. this was that. that is, make sure people in montana get justice. there is les. les has passed away. died of mesothelioma. when he came home, a friend of mine, caked with dust, his wife

has the disease now, to. his kids would jump in his life. one of his children has not died of mesothelioma. i won't go to all the ins and outs of health care treatments. is also one of the largest equipped and sites in the country. it's very similar to the book, the movie, civil action in massachusetts, the company than, w.r. grace, the same company here, franco. and the point is this. many people -- well, the administration's very correctly declared a national health care emergency for the people in transit. that meant people receive medicare payments even though they're not 65, they get medicare. but agenda under the medicare payment rule, after the settlements, folks in libby and the company, payments cannot be made pursuant to the settlement,

determines what cost, if any, the person has to make back to medicare so that they get paid. there are many people in libby have waited up to a year. a woman was waiting coming while her husband died. finally, a year later, cms may be determination under the statutory payment rule, but even by then she had died. but when the determination was made after she got commit turned out there was no reimbursement necessary from her to cms. so the world a lot of people got into situation. there's been so they levels of injustice, in libby montana where this is one of them. the delays in the secondary payment rule. ideas please appreciate if you could tell me what you're going to do to speed up the process so the people there have suffered

from asbestos, related diseases, are going to get medical care. >> chairman baucus, let me start by first of all thank you on behalf of of the residents of libby. your work there has been amazing. when i first came to cms, it was being done, and were able to get coverage through the medicare program. and we have seen so many families benefit from the program. the first of all i personally thank you for the. at second, the medicare secondary payer has also been a program that i've been intimately involved with over the last several months. we had some for performance issues but i think with corrected those with the staff there brought on behalf of contractors that we work with. but more specific to your question, we did have a large number of cases that need to be resolved. they need to be moved so people could understand what they were eligible for. i think by the end of this month we will have completed at least

100 individual cases that i'm aware of. is also another large group that's moving through in a large settlement. so i think we will have done a good job of eliminating most of the backlog. you have my commitment that i will stay on top of it spent i appreciate that very much. i neglected to ask you, so i'll ask you to return over to senator hatch. is there anything you're aware of in your background that might have a conflict of interest with the duties for the office of which have been nominated? >> there aren't none i'm aware. i want to make the committee a way of those. the first area has to do with micah measure, i worked a long time for the hospital corporation of america. so i volunteered and asked for a recusal there. which enmeshed in certain matters specific to hca. but that was one that i initiated with our ethics department. the second one, it was a state

of virginia, and although i have completed my time with the center of health position that i could've participated in that matter, my husband worked with allegedly division within the states so i have recused myself with specific matters of the state of virginia spend your the first witness was answered that question without, without just saying no. that is, you explained it. last -- that has never happened before. [laughter] senator grassley is here, he can verify that. [laughter] you are an impressive lady. second, we will see how you do with this one. >> and downhill from here. and if you know any reason, personal or otherwise it would prevent you from fully and on the and the response was of the office for which have been nominated? >> i do not spent do you agree

without reservation to respond to any results from its appearance has lived for any newly cosseted committee of the congress if you can from? >> yes. >> do you commit to provide, prompt response inviting to any questions addressed to you by any senator of this committee? [inaudible] >> i will do my best and i know i have some areas of improvement of there. >> thanks very much. senator hatch spent if you do you will be one of the first ones. we hope you will. this committee takes these responsibility really, really serious a. i'm proud of you i'm proud of the work you've done through the years. i'm really pleased with the effort you're putting forward at cms and how important it is to you and how you value that agency. even though it's a favorite difficult agency to administer. me ask you this, a couple specific question to the cbo recent estimate 70 people will enroll in the exchanges, which is 1 million lower than what --

7 million people. and what cbo as to at the time the law was being debated. now, how much will the exchange user fees go up in enrollment targets are not met? what is the lowest target enrollment at cms anticipated when doing budget projections and will cause the agency to raise the user fees if the enrollment targets are not met? >> that is a great question. senator hatch, we have actually followed the cbo's guidelines comment so we are using the same estimate as cbo. and our user fee was predicated on that number. and when we are going through, we have extended discussion. so i think we believe that that number is appropriate and the user fee would cover that number of. >> okay. details on the application of title i has been lacking, as you

know, especially as relates to the associate of exchanges and efforts to educate consumers without enrollment. could you commit to providing a biweekly update on the establishment of exchanges in enrollment, including milestones, deadlines, and progress reports? >> yes, sir. i think we have submitted some early work, but a survey think at this point, we are kind of going through four stages with the exchanges, and i think we are now entering the part where consumer outreach and education is becoming more important. so i think we'll be able to give you biweekly updates. >> it's something that we're really concerned about and we want to make sure we are on top of it as well. in public speeches you've said that the patient protection and affordable care act has some of the strongest health care anti-fraud provisions in american history. you mentioned in your testimony the centers for medicare and medicaid services, the agency

you are going to supervise, along with its partners recovered a record for points you billion dollars last fiscal year, from individuals who tried to defraud the federal health care program. i think that's an impressive number. but i'm interested in which is interested in which is basically to to to that number and how much is a trivial to cms to entering her time at cms, provisions, why you serve their, what you want a formal health care provisions have seen this used to reduce fraud? and can you provide quantifiable results to the scene of specific actions undertaken? even though that $4.2 billion sounds like a lot we know there's a lot more fraud than that. we know that we are just beginning to really go after people fraud in our taxpayers.

if you could answer that for me speak as i will try to talk about -- you're right, the affordable care act gave us several tools to work with. so we have kind of gone through an implementation period, i would say we started first with the work that was done around providers, making sure we had legitimate providers in the system. and some of our early proposed and final rules dealt with that. and also signing categories of risk to those providers. because i think not only do we have a system that was bobby a bit outdated but it didn't find a fair and degrees of risk based on what we need to be fact. so we have done that. so if you're in a moderate or high risk category, you could have on site visits. we did whatever we can do to preempt fraud on the front end versus pay and chase with the 4.2 billion which is a great number and i proud of that number, that's also what we want to prevent in the first place. that was the first thing.

the second area that we went after, if you will, was the prepayment or our authorization on the forfeiture act gave us the ability to withhold payments in event of something suspicious. so we started doing that. 38 which we are now approaching will be how we look at the moratorium. you all gave us the ability and act to impose moratorium to certain providers. so are starting to look at that as kind of the third national stage but there's also work in the small business act that was done around predictive modeling, and we've had it up and running and our first report to congress but with more work to do in that area. so there are a lot of different tools, but i think our goal, our absolute primary goal is let's stop it before it happens. because once we're in a situation where the money has already been paid out, we have great working relationships but it's much more difficult after the fact. >> thank you, mr. chairman.

appreciate your willingness to serve spirit senator menendez. >> thank you, mr. chairman. ms. tavenner, congratulations on your nomination again. thousand we discuss when we met, i look for to working with you in ways that we can address reducing costs throughout medicare and improving health care to the nation's seniors. and that includes moving past the sgr and finding new way to pay physicians for the coordinated and cory delivery of health care. and utilizing methods that improve medication management which has been shown to reduce unnecessary readmissions and provide significant savings and improve health outcomes, including, that includes using medication to the most efficient use. and coordinating care delivery across the spectrum. especially for special populations like dual medicare and medicaid eligible and those with severe disabilities so that both providers and patients are at the table to work together to

improve health care. so as we work to fully implement health care reform, we need to continue to look forward to new and innovative ways to reduce costs while improving care. i appreciate some of the average of already taken in that regard as the acting administrator. i have a specific question with reference to one of the elements of the essential health benefits required of all plans offered in the exchange or marketplace. which is coverage for behavioral health, including therapy for autism. it is a provision that i have the support of this committee, and including civil law. april is currently autism awareness month, and i'm hearing from families in new jersey and throughout the nation, especially those states without an existing autism benefit requirement, who are nervous that the rules regulating the essential health benefits will allow insurance companies to skirt this requirement by substituting benefit categories

and offering actuarial equivalence benefits that in railing don't really cover these incredibly important services. so my question to you is, what specific steps we take to ensure the intent of this committee and of the law to ensure behavioral health benefits, especially those for autism and other developmental disabilities, are available in all qualified health plans? that includes plans on federally facilitated exchanges and in states that like existing state level requirements. >> thank you, senator menendez. i also share your concerns about reducing costs and medication, and we have some work underway in those areas and i would love to come talking about those spirit we will look forward to the. >> same is true with the essential health benefits. i think would be helpful if i could, sit down in your office and walk through some of these concerns. i had not heard the specifically

but i would like you more information from your staff and follow up with your spirit we would love to do that. it is clearly the intent of myself as the author and abroad support we received from the committee, and, obviously, in the final version of the law to have the inclusion as part of the essential health benefits package, the benefits april health and to begin to water down that would clergy violate the intention of what those of us who offered it. finally, in new jersey specific context, our governor has indicated that he has no intention of doing anything to assist hhs with the establishment of the new jersey health insurance exchange. there's not a state-based exchange. there's going to be a federal exchange. so many other consumer protections and ensuring market reforms, we instead and health care reform requires state legislators to enforce, concern

the people living in states like new jersey with a state government is uncooperative will -- what specific role will state insurance regulators have under a federally facilitated exchange? are you going to provide vigorous oversight and reject plans if they don't meet the standards for quality required under the affordable care act? >> that's a great question as well, senator. in the case, in most cases, states have continued to in the but, if you remember there were certain section of the role of the insurance reform from exchange is or the market place. we've had great cooperation with states, insurance commissioners. we also have the ability to work with the national association of insurance commissioners, and wherever possible, it both in proposed rulemaking and in final rules would've gotten feedback. so what we're seeing inside states is they have very active

review programs. we do have the authority under the statute, stepped in and supervise and have more vigorous oversight. we may ultimately end up doing that and a couple of states but right now states been very much a part of that process. end states where we are responsible pashtun in states where we are responsible for the exchange, we work with the issuers and with the state insurance office to the issuers will be submitting their plans but they will go through a series of reviews, first to make sure that if you will all the center categories, then to make sure that they are appropriate service is covered. so that process is actually underway even as we speak, and we handle that for any state that does not have a state-based exchange. >> my time is a. i would love to get feedback from you as we move forward to the specific new jersey exchange on how we are perceiving and whether we're getting cooperation.

thank you, mr. chairman. >> thanks sender, very much. senator grassley spent i, too, join my colleagues in welcoming you more important for the work you've done thus far, hopefully you'll be able to continue. i particularly appreciated your coming to my office for some meetings, and i think it reinforces what senator kaine said about you as you worked for him in that administration. i think you would make a fine administrator and i want to be able to support your confirmation. i have just one issue that in the scheme of things that you deal with might be a little issue i want to bring up with you, something that maybe back in 2011 from another angle i wrote to you about. i'm not, so i would like to know how you do with a problem that has recently come to my attention. on monday, april 1, this year, 3:42 p.m., tight security send

advisor that told their clients of the cms medicare advantage policy decision, and that they supported related stocks. the consequence of a political intelligence firm having access to this information 18 minutes before the market closed is astonishing. in the 18 minutes remaining, creating minutes, on april 1 the volume of humana, unitedhealth group that aetna stock was more than half a billion dollars. more stock in those companies was traded in those 18 minutes than throughout the rest. when information leaks from the administration that has the ability to cause significant market movement, it is wrong. and quite possibly illegal. i sent a letter last thursday formally seeking information

from you, and i hope you agree that ultimately your responsible. what are you going to do to hold somebody accountable for this leak? >> senator grassley, let me start by saying i am a too, appreciate our meetings. .. >> and i thank you for inviting

the inspector general. i was going to ask you if you were going to do that, and you are. i assume that gives you the authority that you're -- your investigation has to compel with production of information within cms, would that be fair to conclude that the inspector general can get all of this information out. you don't have to worry about authority? >> yes. okay. i'd be even more curious what authority your investigation has to compel the production of information beyond cms at hhs, omb, or the white house. i would assume you're saying that the inspector general going do that. i hope if it's founded other agencies are involve -- has the authority to get that information out. >> i will follow up with that, senator, i don't want to give you incorrect information as to

the authorities. >> no, i obviously don't believe you can get the folks at hhs or omb or white house without some help. i'm exoing to -- going to pursue this. you inform them this is beyond cms. i'm going get to the bottom of this. i know, you are inseer in what you said, i'm going to be following up with the -- inspector general as well. thank you, mr. chairman. >> thank you, senator. senator carden, you are next. >> thank you. thank you for your service and your willingnd to continue to serve. one of the things you spoke about is -- 36 of our colleagues and the last congress introduced that's good enough good enough to adopt a number of

proadditions without the legislation being passed. i would invite my colleague to join us in the idea that better health care result for the same amount of money or less money and going by some of the fraud that exists and waste and efficient sei that exist. i want to thank you for the cooperation we've experienced thus far and invite the continue the participation to make the legislation better and tell us what you need to do -- we need do to enable you to do your job better. i also want to mention an issue of improper payment. a lot of people think they are the same as fraud. they are not. they are mistakes. they are accounting mistakes, financial mistakes or human mistakes and add to up a lot of money. 2002 we signed legislation that said agencies must be begin reporting improper payments. 2010 senator coburn and i

introduced legislation don'ted an signed by president obama said not only they have to report it but stop making them and have to begin to try to recover money improperly paid. and we're going to hold accountable the folks running the agency to make sure they ared a herring to the law. we have seen improper agency is reporting them. the amount of them dropping which is a good thing. even though the amount of improper payments reported has gone up. the number has gone down. which is a positive. talk us about your efforts to continue to drive down improper payments. not just do this pay a -- pay a bill, a medical bill and found it was wrong and try to run the money down. you're doing the front end of the situation to stop the improper payments. thank you. >> thank you, senator. obviously one of the first things we do have to do is

training and education not only for physicians and hospitals but also for the stf and individuals they work with. so we spend a great deal of time on what i'll call the training and education piece on the front end. the second thing we are done in some areas if we have seen consistent -- if you will. it's not fraud in term of fraud. it's documentation difficulty. failure to submit the required documentation. it's review of documentation after the fact. one area where we had a tremendous amount of problems had to do with power mobility devices. the power wheelchair. so we implemented a pilot in a prior authorsization some like private insurance tends to do. since september of last year, individuals who need power wheelchair there's whale -- there's actually a prior

authorization process. we have seen it control some of the abuse and also beneficiary are able to get the wheelchair within a short period of time. we have a ten-day threshold to return it and get it out. i think it's those model on the front end. we're seeing a reduck in the improper payment which is encouraging. we are looking at are there other areas we needs to look at. are things we can do on the front end. the competitive bid handgun to do with some of the prevention on the front end. we enjoy working with you and your staff and supporting you. >> thank you. here are some numbers you might find interesting. improper payments 2010, $120 billion. billion dollars. 2011 down to $1 15.

we have seen drop numbers. medicare are flat as cro the year. we want to do better in that regard. i spend some time in minnesota this last week and visited mayo and united health group. one of the things we talked about how do we move away from fee-for-service. how do we better collaborate dlifort i are of -- delivery of health care. and the role it may play in that regard. we talk to us about the role medicare advantage in the next several years. thank you. >> i think as you're well aware, the medicare advantage program have grown and continue to grown. we have great working relationship with some of the medical directors on the issue of fee-for-service or accountable care organization. it it's a coordinator approach.

some of the stuff you talk about is leader in the area. i think we're sharing ideas. some of the ideas that some of the things we learnedded in the innovation center we are developing some of their -- developing some of their idea. i see that continue to grow. they are great partners with us. the programs beneficiary like the programs. they do quality review. i see that partnership continuing. >> thank you. mr. chairman -- one last quick point. to my republican colleagues it was best been a long time without a administrators. i think we have a good one here. i would hope we can get a report out of here and confirmed. she's a good candidate, excellent candidate. she's willing to serve. thank you. >> that's my plan. [laughter] thank you mr. chairman. that was an impressive group of introductions and i really appreciate that you listed out the stakeholders in your

statement. i used to be in the shoe business, i call those customers. it's a great thing to have recognized. i am concerned about some recent reports that identified some competitive effect of excessive integration in hospital systems including reduction and access and increase in cost for the consumers. what's cms doing to ensure the incentive build together medicare program a better coordinate care or integrate services. don't have an adverse effect on competition and the price of health care in the long run? and have you engaged in the department of justice on the issue at all? >> thank you. this is something that we do work with the department of justice and but in a different way. when we tend to look at model through the innovation center it tends to be engaging the department of justice to make sure we're not creating any

anticompetitive work in the demonstration areas. i think engaging them more and having them being a partner is a good suggestion it's something we can do. >> in your answers to some of the questions, you mentioned your involvement with hca, this is a hospital issue, but i would assume you're thing about not being specific -- having to recuse yourself on that. >> right. >> okay. now the society of actuary recently released a report which they estimate that health insurance premium in the individual market will increase 32% on the average nationally and wyoming specially. -- specifically. they released a paper just in the last week that outline -- to the health care law. in fact the naic paper concludes states quote, should begin

evaluating these and other strategies immediately. what's cms doing address the risk identified by that report and other reports? >> senator incity, first i would say we don't agree completely with the actuary report. i'll give you reasons why. but i'll remind this committee that while i have great respect for actuary and work with them daily. these are estimates. they are predictions about things we don't know for certain. i'll take us back to part d. and some of the estimate around part d. that i think we ended up being less than 40% of the original estimate for the cost of part d. i would caution us about taking the word or the reports of actuaries at more than just estimates or speculation. but having said all of that, there are things in the affordable care act that i think

mitigate any type of insurance increase. i'll talk about that. i'll talk about in three areas. the first area is when individuals talk about premium increases, i think they would have you believe that's the entire insurance market. and i'll remind you that what the affordable care act is dealing with is a small market or individual market. so less than $20 million max. large employers are fairly exempt from the requirements, and large employers have sewn the most -- seen the most modest increase in the last three years. i think our overall strategy both in government and in the private sector around controlling cost is bearing some fruit. the second issue, in addition to the size of the market, it does not take in to account those pieces of the affordable care act that actually worked to decrease. first of all, thrts the issue --

there's the issue of the tax credit, which is obviously applied to the premium. second there's variety of plans. so you a bronze or silver, platinum plan which change it is. third, the availability of catastrophic coverage for individuals up to 30. fourth, there's the issue of dpebt -- dependent we are covering individuals up to the age of 26. there are issues around reinsurance. if you resh -- remember you put $10 billion to the reinsurance pool the idea of mitigating. there's a long list. i won't bore you with the entire list. i'm happy to give if to you. we have it. the third area i would say, reminder to folks, i think we saw it some in the "time" magazine article insurance is not necessarily insurance as we tend to think of it having

worked for large employers and robust insurance policy. sol of these, if you will, lo cost premium were or low cost for a reason. they didn't really offer robust insurance as many folks found out the first time they had to be hospitalized or diagnosed with cancer or another disease that required a lot of treatment. as you can tell, i feel strongly about this. i don't agree with the actuary. >> my time is expired. i'll have some follow-up questions and other questions i hope you'll answer. >> thank you, senate. >> thank you, mr. chairman. it mrs. i want to thank you for your willingness to serve. we appreciate that. and your statement you point out that you are have many stakeholders. that's true. the most important stakeholders, as chairman baa -- baucus pointed out the taxpayers in the

country and the families that depend upon the implementation, medicare, medicaid, and the chip program. i want to talk about one aspect which is peed peed said it would be a mistake to silo world health care and treat separately as we did once mental health care. but i'm worried that is exactly how we're moving and treating peeded at you pointed out in a response to a letter from if there are prepare policy does to the cor it dr -- cover it. it looks like they have to stake

a policy if they continue want to. you have gone through the deductions and you started with $1,000 in those plans, that you are administrating now. you are talking about $700 as a separate deductible for dental oral health. and you cite as one of the reasons to me that the cost issue, even though the mehlman reports that the difference between $700 and $27 0 is less than $200 a month. can you assure me how you're going implement the affordable care ak and make sure pediatric doesn't -- it's part of the essential health benefit and going to assure that all families have access to affordable pediatric dental care. we made progress. acknowledge that. i'm concerned it could be backsliding.

please assure me my fears are going to be alloveuated. >> thank you, senator carden. as you know from my we -- i'm supportive of it. you are done a tremendous amount of work in the medicaid program and have gone a long way. and the tragedy in maryland had a lot to do with that. i hear you on the issue. let me tell you we will take a look at it. we did mitigate some of the cost sharing, if you will, at your recommendation. but on the coordination of the two, we may have more work to do. i'm happy to take a look and work with you. we have to do it in future rulemaking. so because we are pretty far along right now. >> i as i understand that. i urge you, congress allowed you to have a stand alone policy. i don't think we intended that families wouldn't have to coverage. and now it looks like because

the combination that you are interpreting it as not being required, and the fact you have high deductible meaning that families would have to make a decision. am i going really reach $700 per child? do i want a policy that looks like that many families will go coverage. which is not what congress intended. and i would appreciate you following up on that. >> i do. and i would like to meet with you to look at the report also. >> i also contacted you about experience we had in the state with the private medicare program, bravo health care that gave notice one week before the end of the open enrollment period to a large number -- this plan included a large number of people under a federally qualified plan in east baltimore, the individuals are modest income, it's difficult for them to travel. they don't have automobiles and it's difficult, it's a pretty close community.

as a result of the decision terminate they no longer have the primary care physician they had once before. they are being given they have to travel a long distance in order to get to primary care physician. can we ask for some relaxation of the open enrollment period in order deal with the hardship so far we haven't heard anything positive about this. can you look in to this and perhaps find a way which we can provide help these individuals? >> i will do that. ly get back to you. >> thank you, mr. chairman. >> thank you, senator. on the list, i have several senates. next -- i understand that senator roberts has a -- senator roberts as well as the senators ahead of him.

senator i haven't asked senator isaacson. i have permission from my friend and colleague, senator port pan. i would ask the senator indulgence. >>ly voluntary indulge the senator from kansas. [laughter] >> what do you want to be called? administrator? miami administrate -- ma'am administrator? >> i actually prefer marilyn. [laughter] i have a different name. our state motto is to the stars through difficulty. i apply that. farmers in montana, for that matter, anywhere -- [inaudible] they never put the seed in the ground unless they thought they were going have a crop

regardless of the years of doubt. you have endorsed by the candace medical association, candace million society. you have the support of hospice, blanks drivers, nurses and drivers and the list goes on. all the providers. there's a reason for that. that's because of everything that has been said about you. i think -- i'm going to dub you for dodge city area as new sheriff in town. you'll wear a white hat. there's a lot of anemia cms that -- people in cms that wear black hats. it's in the way the royal health care deliver system has been treated. and as most important when you say cms, the line used by many providers there's a new acronym. it's a mess. it's not nice thing to be saying about an theation is supposed to

be helping folks. that's the way it is. we have talked about this. i appreciate you coming in. you have been through the chairs which makes that exceedingly important. i express my concerns with the current process. we discussed the deviation from the traditional process and notice of comment. the lack of stakeholder info as it relates to the comment period and through the use of something called regular will story guidance, posted, e-mail, and something called faq, frequently asked questions. nobody has any time to read the stuff or be aware of this until somebody contracted out knocks on the door with a fine. that's not right. so during our discussion, you mentioned these are all issues that cms is aware of, and that you expect to be addressed. the commitment there would be ifr, what we call the --

[inaudible] final resumes stakeholders given more opportunity to participate in the regulatory process by allowing a sixty day comment period like has been done in the past and enough suggestions have come in to tweak the proposed or change it. you have another sixty days. and cms work with omb to ensure the cost included are clear so the health care providers can know what to expect as it remit to the cost associated with the regulatory actions. do you agree with me? and i agree with you in regards to your commitment. but i was dismayed that following our most recent conversation and -- issued to implement benefit and payment parameters. understanding qo you are on a tight time line. this is a completely unacceptable process, however. i would hope that your previous commitment to return to the judicial notice and comment

period ie tran parent sei make it sufficient that cms is not considered in the rural health care area as welcome as a plague of locust. you work with me and i think you said yes at that particular time. i hope that we will continue on that basis. i think the answer is yes. and yield back the balance of my time to senator portman or senator isaacson. >> the answer is yes. you did educate me about the four corners. we will try to do our best to follow the regular process. there are sometimes emergency situations where we do. i don't want to leave you we will never consider that. >> as i understand that. >> i think we're more to the regular order of business. i appreciate your support. >> mr. chairman, it's not often i give you fifty seconds back. >> that's true. [laughter]

senator isaacson. >> thank you, mr. chairman. the fgr, i was sworn in february of 1999 by the u.s. house of representatives. it i'm correct every year in december we had the last minute patch the fgr or conditions going to be the dubs. it's still if the case in 2013. cbo recently gave us a score, or lower score on the cost of fixing sgr. will -- i assume you will be confirmed will you encourage the president to adopt that as a priority this year. we have a window of opportunity to do it. i would like us to fix it. >> i will work with the president and the president's team. we agree it needs to be replaced and we need a permanent solution. >> every doctor in america would agree with you as well. >> yes. >> the georgia department of community health has a med candidate waiver application to

allow them tow put foster children in a managed care program. did you know foster kids move around a lot. they have many times complex medical issues. managed care type of approach allows them to get away from the fee-for-service and do it all over again when they move locations and have good quality of coordination on the care. i work with a lot with foster kids and did in a state legislature in georgia. if you can check on the application and see if you can help them expedite what they need to do. foster kids are important people in our state's care. i would like to see you do nap. >> i can certainly do that. >> one other question, in the house, we did a piece of legislation probably ten years ago now i've been a member of the diabetes caucus for a number of years, and i'm aware of the number of the complications that come from the needle sticks with diabetes. i understand from what i'm told

my staff, you have the flexibility with regard to diabetes to improve reimbursement for ancillary diabetes treatment and services. needle stick divisions which are any number available right now are excellent way to avoid unwanted needle sticks and further complications and other problems. i have a piece of legislation that i've introduced to senator koontz to get cms to approve. if you can do it administratively it would seem to be a help. we have a study done by united health care to estimate the savings to those if they had a needle stick destruction device the savings it would because of the number ancillary problems it would reduce. would you look in to that for me? >> i certainly will. >> and that's all of my questions.

>> thank you, senator. >> senator. >> mr. chairman, thank you very much. i wanted to commend you for your public service already. the work you have done over a long period of time in a difficult area of our government and also the work you have done in the private sector. i want to commend your family. i think the applause that we gave to your family earlier today was entirely appropriate but not at all commence -- with the sacrifice they have made. we're grateful for that. i want to focus, i'll try to be brief. we have a number of other questioners on -- on children in

the context of health care and as we implement very difficult piece of legislation to implement and get it right. those of us who supported a committed to getting it right especially as it relates to children. in our state, we have 0 a little more than 900,000 the last count -- about 919,307 children covered by medicaid. about 45 percent of the total. and as a lot of the experts tell us about children, when it comes to the kind of health care we have got to provide to them, that children as -- these aren't my words. children are not small dpults. they are different. their health care needs are different. you know that from your experience better than i do. i want to focus maybe on two or three areas. one would be instead of asking a

broad question, we don't have time for that. some of the challengings that will arise when we begin to see the exchanges be implemented. in particular where kids in the exchanges who normally would get by way of medicaid or some other way mostly by medicaid so-called wrap around services if they have particularly difficult challenges. if a child is covered in the exchange at some future time. how do you deal with that to make sure if the private coverage doesn't meet their need there's going to be something complabl -- or similar to wrap around service. can you address that? >> yes, sir, senator casey. let me start by saying you heard it from senator cain in the opening canes. -- comments.

we're committed to children. i think we heard it on the oral care, dental care. we have done work around with the strong start and i know your state has project there and we appreciate your support of that. so there's a lot of work to be done around newborn and infant mortality. , around childhood obesity, smoking. i'm happy to brief your staff on that. we are committed to working what we are seeing we may have parents in the exchange, children and vice versa. we are working to treat -- working them as a family unit and i'm happy to sit down with your staff and walk through how we put the added protection in. if they're in medicaid, they obviously are eligible for all of the wrap around benefits and the added protection. whenever possible we try to sync up with medicaid and policy if the central health benefit and

kind of give you more detail in the area. >> that would be great. because with all of the changes, i want to make sure that we meet -- we meaning myself as well meet the. one of the challenges we're facing as well as in some states like pennsylvania, we may be confronting a situation where the state is not part of the exchange and may not embrace the challenges as it relates to medicaid. in two major areas of health care implement takes our state may be in a different position than a lot of other states. i know, we will continue to taunt this, but -- talk about this, but any suggestions you have or any insights you have as as it relates to states in that position either not part of the exchange, or not part of the

medicaid elements. >> yes, sir. and senator casey, for us and obviously pennsylvania as well, we're meeting with pennsylvania team today, we are continuing to work with the state on the issue of medicaid engs expansion to see if there are at least educational piece. if we can give them ways they can look at it. classifying any -- clarifying any questions they may. in the issue of the exchanges, what we -- you actually have a bit of an advantage in pennsylvania we have a regional office, but i'll remind folks that we have ten regional offices throughout the country. so in states where we are states are not having a state-baseddings change or partnership, we will will be mobilizing our staff to work inside each staff. belle doing series on web snares and traveling inside the state and there's several other things

we'll be rolling out through the the number now. >> thank you very much. thank you, mr. chairman. >> thank you, senator. >> thank you, mr. chairman. welcome. thank you for your service and willingnd to come up here and answer all of the questions today. a couple of things quickly. i'm interested in this physician super vision of outpatient thiewrpic services in 2009 medicare pps final rule which cms issued a new policy regarding direct physician super vision of outpatient therapeutic services and there a lot of health care recognize it as burden many. it seems that if cms retroactively interpreted the policy and require physician provide direct --

at all times when the therapeutic services i'm concerned it's instead a significant change in medicare policy that would place considerable burden on hospital especially facility in rural areas. so i know there's been a panel convened. i'm concerned that panel is not sufficiently considering the input from rural critical action hospital. i'm wondering if you would agree to return to the pre2009 interpretation of this policy for critical. >> senator, i appreciate that question and after we talked yesterday, i thought there were a couple of things that we could go. first of all, i think we discuss this with your staff yesterday, adding additional members representing the rural hospitals and critical access hospital would be helpful. to make sure we have a balanced dialogue about what direct super vision really means and what is required in these smaller

hospitals in remote area. i will go back and take look and sit down with your team. i think we made some progress, i would want the opportunity to sit down with your team and walk through what has been done. we are certainly willing to look at the original standards and see where we're different. >> okay. i guess my concern in all of this, i wish i voiced to you yesterday, there's not a sufficient avenue for rule voiced to be heard in the process when the panel is predpom nantly for nonrural facility. i would appreciate any -- [inaudible conversations] and the ore question i want to raise with you, i've been hearing from constituents in south dakota about the impact of preferred frarm drk pharmacy networking and the part d. program. some seniors are not aware of it until after open enrollment for part d.

it means the drug plan they have been using for several years changed. they increase copay to go to the regularly pharmacy instead of the pharmacy in the new preamped networking. it's having an adverse impact as you might impact on the client base. i would like to know what is being done to ensure that seniors are aware of the impact of choosing a part d. dug plan with a preferred networking. what it might mean in terms of them being able to access the pharmaceutical services from the pharmacy they have been using previously. >> senator, after we talked about this one yesterday, i did a little homework last night in this area. thing are a -- we certainly try educate ben beneficiary about the plan they are in and the plans it involved. what pharmacies are in the the networking. we need to do more in the area, obviously, if beneficiary are confused still. that's the first area. the second area, i think based on your feedback yesterday.

we need to take a look at the policy and see if there are changes we can make in the policy in the future that might make it easier on the issue. i appreciate that. i was not aware of the issue until we talked. we will follow up with. >> i appreciate your responses, and mr. chairman, i yield back the balance of my time. >> thank you, senator. senator portman. >> thank you, mr. chairman. thank you for your willingness to step forward, and thank you for coming by the office. i enjoyed the conversation on the issues i'll raise today. i think your background is going to be very helpful as you move from the acting to assuming the successful -- i like your -- i like your state background in virginia and the private sector background. and you have a huge scwoob. -- job. they are concerned how it will

be implemented. we continue to have strong concerns about some of the policy decisions that were made here a couple of years ago, and yet, you know, because of the constituents are looking at huge changes, many of them we want to be sure that somebody can help them work through that. so one that i'm concerned about is wellness and prevex and what -- prevention and they do or might not help that. as i travel around ohio, i'm amazed of companies doing innovative state-of-the-art things getting their employees involved in wellness activities. i'm concerned about the regulation and the man at a times that might actually take the country in the wrong direction in terms of what is happening in the private sector. i would like to hear your comments on that. second within the federal programs themselves i think there's great opportunity in particular with regard to medicare and medicaid. because you senator wyden and introduced a plan.

we are planning to reintroduce soon. it basically says people go the annual physical that are paid for anyway they go for a process six different criteria to look at including diabetes, smoking sensation, and so on and get a reward through the program. can you comment on those? can you going to be sensitive to private sector initiative. are you willing to look at more innovative -- [inaudible] >> thank you, senator portman. fist of all, i'm aware of the wellness and prevention program in the private sector. i certainly think they are critical and very important. and we have -- if you will, and we actually a demonstration inside medicaid we have adopted some of those ideas around wellness and prevention, and from the standpoint of encouraging medicaid recipient.

it's more the reward than punishment, if you will. we are open to well their --ness and prevention opportunity. as far as medicare, i would like to work with you on the legislation and offer assistance there. we have tried to look at that in a couple of ways, obviously part of the affordable care act and the administration has been covering services. we think it's key to -- it's a better place to be. second how we're looking at changes in payment i think that senders a strongal to physicians and other providers it's not about the volume of services you provide. it's about the outcome of the individuals and the outcome should be as much focused on prevention and optimal health as opposed to waiting until after the fact and dealing with expensive and low quality-type

outcome. >> i appreciate the extents. i -- comment i hope you will be one to show respect for the private sector in the area. another issue big in ohio is durable medical equipment. there are a lot of companies involved in this and rely on it. the current program have has nine bidding areas total. two are located in ohio. number of bidding areas expand to additional 91 areas including another six in ohio and access to durable they depend on it also businesses and supply seniors are worried about the uncertainty. we want to see saving we want do it done in a smart way. we don't want to see it at the expense of senior access to necessary equipment. a number of constituents have contacted me talking about how

once bidders win through the competition. they are not able to supply the necessary -- they come in a low bid they get selected and can't complete the responsibility. cms in the role acting strengthen the bid review process to make sure it's sustainable for the suppliers. can you describe the measures so you taken to strengthen review process and what you're going do in the future before expanding the program including what you did this summer. >> yes, sir. let me start when congress authorized the durable -- or the competitive bidding for dme, it's several years ago. we spent long time in planning this effort and obviously rolled out the pilot a couple of years ago. it was critical to determining and modifying the program. i'll give you some of the result from the pilot. the first area we have done,

what we have seen is actually we have seen reduction in cost. we have over 90% of the original folks who bid in the supply still in the market. we were careful that we don't allow individuals to take too much of the market, if you will. we have kind of this informal cap if you will about 20% so we make sure we have at least five suppliers in an area providing a piece of equipment. we have ongoing real time evaluation with beneficiary. we set up a separate call center. we monitored the feedback. the feedback has been great from the beneficiary. we have careful we look at the trend. where are we seeing dropoff in supplies. we have concerns. we follow drop in to two area. one was