resolved this, you know, yesterday, and why can't the government fix this and stop play, catch-up ball? so my question to you on this is, the president issued an excessive order on this last fall. what specifically since then has changed so that the government is going to get out in front of this urgent problem? i'm not the only member of the senate who's hearing from parents. i want to know what i can tell that parent when i call them back tonight. i said i was going to call them back tonight and say that i spoke to the government's point person on this issue. what can we tell that parent tonight that the government is doing to get out in front of this urgent issue? >> well, the good news for the parents of the child with leukemia is that the fda did announce yesterday that they feel that in the next two weeks, the leukemia drug shortage will,

indeed, be resolved. people were afraid that they were going to run out of the drug in two weeks, and it's resolved because what we can do at the fda is accelerate alternatives. if we have notification, what we know is that since the executive order that the president issued in october, there have been over 200 shortages that actually have been averted, because the fda was notified, they can look for alternative sources of the drugs, they can expedite manufacturing lines and other areas. that really is, though, senator, unfortunately, a bit of a market glitch where the market capacity for drugs has not increased. there are pipeline increases that are two and three years off, but currently, we have the same manufacturing capacity and drug marketers choosing which line of drug to produce at which time. the earlier we're notified, and you have a bill pending in both

the house and the senate, that we would be eager to work with you. we've done as much as we can administratively. but a mandatory notification of drugs that appear to be getting to a shortage gives us, then, the ability to put our team into gear, and we can be fairly effective, at least finding alternative strategies, trying to ramp up other lines, putting pressure on groups looking in europe and asia for an alternative. but if we done know that it's coming, there's almost nothing the government can do. >> miss chairman, i know my t e time's expired. i will say that i don't think notification alone will do it. i think it's a question of what kind of feneed to get to manufacturers. just notifying about what people already knows about i don't think's going to do it. the chairman's been gracious in terms of his time. we will continue this with you.

>> we would love to work with you on this. and i would say that notification is a huge piece of it and maybe one of the few govt can control. again, looking at the market, which we have done vely the manufacturing capacity needs to be increased and a number of the major pharma companies are in the process of doing that. they're just a bit behind the demand. >> i think the government's been behind. >> senator coburn. >> thank you, madame secretary, i appreciate you being here. i have two areas that i want to discuss with you. one in your testimony, you talked about saving $7 out of every $1 you put in terms of fraud prevention. and you came up with a number of $4 billion. outside estimates as well as the gao estimate improper payments over $59 billion a year in fraud and medicaid and medicare, somewhere close to $100 billion a year. so we're at 4%. my question is, is you all

signed a contract for there are 77 million on a cost plus basis with three firms that have never done what you're asking them to do. and at the same time, another firm, who has done this for 70% of all the insurance companies in this country, in terms of predictive payment and whether or not to pay or whether to look, offered to do this for free for the government. now, i understand the government can't take free services. but it is concerning to me that we would go with three contractors who have absolutely no experience to set up something that could immediately save us billions of dollars, and not contract with the one firm who actually has real experience in doing that. can you explain that to me? >> senator, i have to confess, i'm not aware of the contracting negotiations or who bid or what the decision was. i would be very pleased to get that answer to you in detail and have doctor peter budetti, who is the first person at medicare and medicaid to ever focus on

fraud. we have a senior leader who is charged with doing that, build the predictive modeling, but i will get you a very detailed answer. >> i understand that. we've had him in front of our committee, and his answers weren't satisfactory on that has well. so the question is, we have a cost plus contract, $77 million, getting ready to expire, we're going to renew it on the performance criteria for y'all to effectively manage what you're doing. and you chose somebody that's never done it before and refused to use the person who offered to do it for free, which was ibm, who has the vast experience in this world, in terms of predictive modeling. and to me, it makes no sense, and it's no wonder that people in this country don't have any confidence in us, when we don't have the common sense to utilize things that are with us. sec thing, in the affordable care act was a nice little trick that enhances massachusetts to the tune of $3.5 billion over the next ten years at the expense of 48 other states. by what they did with a trick with one hospital, one rural

hospital, converting one hospital in the most expensive place to live in massachusetts to a rural hospital, thereby upgrading the wage valuations for the rest of the hospitals in massachusetts. y'all either had the opportunity to either do that or not do that. why is it that you've decided that we should go ahead and do that and decrease the reimbursements -- for the members of the this committee, it's going to cost you $280 million a year for your hospitals that's going to be massachusetts on the basis of this one gimmick in the affordable care act. >> i'm sorry, senator, i'm trying to get the details of the act. when you say, we could do it or don't do it. i'm trying to understand what it is. >> you had the ability to grant that waiver or not grant that waiver back to a rural hospital status. you didn't have to. you could say, no, that will disrupt the payments to the rest of the hospitals throughout the

country, but you chose to do it anyway. so the question is, we're going to take $3.5 billion out of the hospital from all the rest of the states and transfer it to the highest cost state there is. and on the evaluations in the future in terms of labor wage rates, we're going to protect massachusetts on the basis of that, and every other state's going to have a different determination because of how we're going to value their inputs in the future. and the question is, is why should one sate have the advantage over all the rest of the states for reimbursements that are markedly higher than everybody else? and all the other hospitals pay for it throughout the country. >> well, again, senator, i will take a look at that specific provision. i know that part of the requirement of the affordable care act are two different studies on wage analysis that will be -- one is underway. i think the second one is about to be started. and we are directed to not only report back to congress, but to actually re-evaluate the entire

cms wage bases based on that market analysis. so this will be part of that overall look. if it was directed as the affordable care act, it is not something our department executed. it was part of the legal requirements. but let me make sure i understand -- >> well, the way i read it, you had the opportunity to whether you were going to grant them rural status or not. and you chose to do that. >> if it was directed as part of the affordable care act, we did not. >> well, you had -- >> i need -- >> certain delegations have written to you, asking you to make sure you maintain what your decision was, so you obviously had a decision or they wouldn't be writing to you, and i have a copy that i'll be happy to put the letter in the record. i know you know what it is. i would ask this this would be part of the record. but the point is, when we advantage certain people through legislation, that's exactly what america's sick of. this insider trading, the real insider trading, where we cheat the hospitals of 48 other states

to advantage one group. it's inappropriate, it's not fair, and it doesn't do anything in the long run for the better aspects of medicine. i yield back. >> senator menendez. >> thank you, mr. chairman, and thank you, madame secretary, for your service. i have three questions and i would like to put the questions out there first and then see if your responses. and they all deal with elements of the affordable care act, which i supported. and i want to see, some of these are particularly of great interest to me and to many people in the country who would advantage themselves of what these provisions in the act would do. one is, in the law, we ensured all qualified health plans would include behavioral health services as part of the essential health benefits package.

among those are those who have families in the autism spectrum. new jersey has the highest autism rate in the nation, unfortunately. so i've heard these stories very vividly, yet they're unable to access vital behavioral health services, even in states with autism coverage mandate, there are a number of exemptions that lead people to fall through the cracks. the language in the law, the affordable care act, specifically designed to address their needs and ensure that all qualified health plans will provide the benefits so many families need. i am concerned that hhs' recent bulletin on the essential health benefits package refers to states using a benchmark plan, as the basis for the essential health benefits package. but because of the current patchwork of state autism coverage requirements and exemptions, i know i'm not alone

in the serious concerns that the benchmarking plan is insufficient to ensure behavior health coverage would be available in all qualified health plans, as the law dictates it to be. so one is, can you please explain what steps hhs is going to take to ensure plans will provide behavioral health services as required by the law, and how will the process move forward on finalizing the essential health benefits rule? that's my first question. the second question is with reference to provision of the law that i previously introduced call the mother's act. it focuses on the devastating disease of postpartum depression and the language in the law required that hhs submit a report to congress, specifically addressing the benefits associated with screening for postpartum depression, and this report is supposed to be doing

within two years after enactment, which would be march 23rd. so i'd like to get a sense of how that report is coming along, when we can expect to see it, and if you know what the report's going to say, what findings does it have as it relates to this issue. and lastly, new jersey currently has an 1115 waiver application pending before the cms. these waivers, comprehensive. they involve major structural changes to a state's medicaid program, affecting hundreds of thousands of the state's most vulnerable residents. new jersey's application was submitted in september of last year and rumor has it that it may be approved as soon as this weekend. and i say rumor, because this entire process, i have to be honest with you, goes behind closed doors, without public notice, certainly without public input. my understanding of the law requires a process that is more

transparent, and the rules on that have not been finalized. and i have to say, as a member of the committee with jurisdiction over the medicaid program, and as a senator, it is more than frustrating to be shut out of a discussion affecting not only medicaid beneficiaries in my state, but institutional providers, such as hospitals, skilled nursing facilities, and home health care providers. so if the law was meant to be transparent and a member of the finance committee and a united states senator cannot get information about the process, which is what we're constantly being told over by cms, something is wrong with that process. >> well, senator, let me see if i can address your concerns. the essential health benefit model that we chose to adopt is the so-called benchmark model, which would allow a state to use

a popular employer coverage or state employee coverage or the federal employee coverage existing as a benchmark. but all of the rules of the aca apply, including the ten categories of mandatory coverage. so none of that is waived, as you look at a benchmark for a particular state, and i would say that we tried to balance affordability with comprehensive coverage in order to get a state up and running. and what we found, looking at the models across the country, is that there was very little variation in the actual coverage, there was a lot of variation in cost sharing. that seemed to be the most significant in the categories. but the anti-discrimination, the ability of a plan to weight one category, so disadvantaged behavioral health and say, well, we're looking at nine of the ten, but we're going to be very skimpy on behavioral health, those rules are all imposed on

top of the benchmark strategy. so we'll be working very closely with states to make sure that, as you know, behavioral health is one of those critical categories of care that's an underlying premise for what has to be in every essential health benefit. but to make sure that's in place, not only in new jersey, but around the country. but we wanted to kind of take advantage of plans that were in the market, were purchased, were priced, and could be up and running as we start this process. and we will continually re-evaluate and make sure that there are not benefits that are being overlooked or skipped along the way. the mothers act provisions is definitely underway at the national institute of mental health, looking at postpartum depression studies. they have 60 different grants on the issue, two program announcements, and we will be

reporting back. i can't tell you right now what exactly that is going to say, because i haven't seen the draft of the report, but we will make sure senator, and get you the various clinical research that's been going on, the risk factors, the neuroscience that they're taking a look at, and make sure that, you know, your concerns about this very important area are addressed when we come back with the study. >> can i get the third answer? >> and the 11 -- >> okay, a little over time here. go ahead. go ahead. finish -- >> no, finish. >> my questions were within time. the answers -- >> well, still, that's -- i'm not going to get into that debate. but, anyway, go ahead. finish it. finish, madame secretary. >> again, our -- you're absolutely right that new rules, far more robust lace, will

1115 waivers, hearing at the state level, an opportunity for comment. the current rules really is governor and the state negotiates with our department. re statute, able to share those negotiations. know, vernor's office could there is no imminent, in fact, i speak to the governor this n't decision, but i understand what you're saying. much more get to the point transparent process in the very near future. >> thank you. senator stone? chairman. welcome, madame secretary. the first question, i have to areas, one in low assistance fuel program, and the other in the make program. first of all, i was just truly surprised and disappointed that the president's proposed budget

for the next year advances another major reduction in the low-income fuel assistance by almost $500 million, in addition to the proposed cut last year, that was almost $1.2 billion. fortunately -- $2.2 billion, actually, and the congress restored a billion of that. i mean, this is historically low, you know, assistance for the needy population, certainly in cold weather states. i mean, "new york times" just did a front page story, just a couple weeks ago, on the dire, desperate circumstances so many people fac instance, where the individual offered offered his car as collateral to pay for assistance. maine has gone underesident's a $80 million to a proposed $32 million with this additional cut. i just don't understand it opinion given the insignificant increase in oil prices, which is now close to $3.80, for propane,

it's over $4, it requires an average 850 gallons. that is devastating. in fact, i talked to one woman. she and her husband both lost their jobs, three children, and one child contracted pneumonia because they had no heat in their house. why isn't the president proposing cuts in the program, that $7 billion cuts in discretionary in the final omnibus bill, yet $1.2 of that $7 billion ended up being the low-income fuel assistance? >> well, senator, i understand your concerns and certainly the states where heating oil is the primary heat, it is particularly dire. i would say this budget is $500 billion million above the president's request in the budget. i know that's not much solace as you look back on the several years. and again, in a better budget

time, this request would be far more substantial, but it is an increase over what was requested last year. and i do understand your concerns. >> well, i appreciate that. i just know that your budget of billion, i would hope that we can find a place for people, you know, who have $16,000 and have to pay $2500 to $3,000 for an oil bill. i'm telling you the circumstances are horrific. i would hope the president and you could find some place. really, this program is really taking a heavy hit. on the second question on medicaid, i know this has been discussed. many states, including mine are wret willing wi wrestling with the challenges and debating the finance committee. we were able, you know, to include it in some flexibility in an effort to bring down for parents and children down to 133% of poverty level. maine happens to have the most -- one of the top five most generous programs in the country

for parents. you can see the red line, that's maine. the point is states are grap wlg deficits. that is what our amendment was all about, to give them flexibility in the event of budget deficits. you have written to the governors back in february of last year that you were committed to responsiveness and flexibility to expedite review of state proposals to address some of these problems in medicaid. in addition, the medicaid director suggested in your department reductions in eligibility solely for budgetary purposes would not be experimental pilot and demonstration projects. there is obviously a concern, you know, exactly what authority you have and what you don't. i think the point is here we want to avoid reductions and eligibility and to continue with the eligible population having coverage. but to also avert choices like in maine, for example, eliminating optional benefits like waiting lists for those who have developmentally disabled.

what can you offer to states like maine so that we avert and avoid those type of choices but address some of the budgetary issues that they are facing that can provide short term savings now? >> well, senator, i had a conversation with your governor, i think, in the last two weeks about this very issue. we, again, made it clear to him what was within the state's discretion and some of the provision that's you just outlined. the adults down to 133%. that is a choice that could make right away. we volunteered to send a team in to look at the other choices. we didn't have a lot of paper from the governor about what exactly was the proposal. but committed to doing whatever we could to look at ways that not only they could make immediate changes in areas where they had administrative flexibility and we would identify them category at a time. but then look at ways that

hopefully we could help reduce costs. but we're waiting to get some responsiveness. and we're doing that with states across the country. >> well, i think it would be helpful if we could, going forward, to find models that work. and i know the areas you identified about five areas to the national governor's association where they could find short term savings. i'm just wonldering if we could go beyond that, figure out what can work that within the constraints and even with the constraints of maintenance of effort and continue with the eligible population. but are there ways and models and demonstration programs that could be used infectively to actually work to reduce those savings? you know, achieve savings and help deliver these programs and services more efficiently? >> and we are eager to do that. dan kripon, the head of the new national governor's association, the former head of the congressional budget office was in my office yesterday. we talked about the fact that

there was a new class of governors in 2010, 19 new governors. while i met with i think each and every one of them, a number of them were facing lots of incoming and it's very difficult what we want to do is go back around and have those conversations in great detail. we have lots of governors now participating in this effort on duel eligible which is one of the most expensive populations that any state has in their medicaid budget. frankly, moms and kids are fairly inexpensive to cover. disabled, mentally poor are challenging not only in term of care but in terms of cost. so we're working closely. we want to get got strategies and ideas to everybody. i'd be happy to work with your office and keep you updated. >> if there is anything we can do to help in that process, because i think then it's -- you

know, sort of becomes a win-win. it becomes collaborative rather than adversarial. >> you bet. >> senator grassley? >> i only have a couple questions. i want to associate myself with remarks made by my colleagues about the so-called contraceptive rule. i think you got it very wrong. the first try and you have a lot more work to do. my question deals with whistle blowers. first question does, and, of course, i made the point that i wouldn't be able to perform my constitutional oversight of the executive branch without federal whistle blowers. they shed light on matters that affect public safety and oftentimes risk losing their jobs. they expose incompetence and promote reform. their perspective has done a lot of good. the fda faces accusations that it monitored nine fda

scientists' personal e-mails accounts. however, the health and human services office of inspector general said they did not leak classified information. instead, it looks like fda monitored these accounts because whistle blowers were talking to the office of special counsel and in the case of congress, some of the e-mails of people on my staff came up. it may be unlawful and should not be tolerated. i'm committed to getting to the bottom of it. that is why today chairman isa and i are sending a letter to the u.s. office of special consult to launch an investigation into the facts and circumstances surrounding the e-mail monitoring and i would

ask permission to put that letter in the record. do you think it is just because of a special counsel or congress and would you agree that would be unacceptable? >> government employees need to have whistle-blower protections. on the other hand, the fda needs to have protections around propriety information. as you know this case is in litigati litigation. >> we're talking about personal e-mails over here.

there was some monitoring of office e-mails and screen shot may have appeared that access to personal e-mail. there was no monitoring of personal e-mail that's had anything to do with anything outside of the office space. en that and that is something that federal employees throughout government are put on notice that their e-mails can be monitored. >> let me lead it to this question then. now fda may have the right to monitor e-mails sent from government computers. but if the evidence shows that the fda captured e-mails that were not sent from a government computer, then do you agree that that would be inappropriate? >> again, senator, this is in litigation. i really don't want to speculate. i do know that employees are put on notice that their government e-mails will be monitored.

i assume they will listen to the justice department about what they can and cannot do. yes, sir, everyone shares your concern about retaliation against whistle blowers. i think you would share our concern that the release of propriety information that may disadvantage companies which is how this incident came to light is also of concern. >> okay. for years now i've been working on the physicians payment sunshine act which was included in the health care reform bill. i want to emphasize two years ago. i'm disappointed the cms is taking so long to each of the sunshine regulations, the proposed regulations was two months late. and last week the office omb said law would not be fully implen