chairman's questions around the exchange set up. we have proposed rules for medicaid expansion. both have been informed by active conversations by the states. we have put out guidance on a strategy to the health benefits. we are having many conversations trying to reach the balance between affordable coverage and comprehensive coverage making sure we are mindful of the law. but know that having a product priced and able to be operated in a state is also an essential piece of the puzzle. we fully intend to put out interim rules and final rules. you cannot enforce without final rules in place. we want to be informed by state insurance commissioners and employers on the ground, our colleagues in governors offices across the country. >> that sounds like a very reasonable approach. this hearing is about the

budget. you will be asked about everything. the budget includes the important funding to ensure effective administration of medicare and medicaid and child programs and continued budget of the health care law. it includes an increase of $1 billion over the 2012 level. that includes the request of $864 million for establishing insurance exchanges in the states. that is essential that congress meet the president's budget request. some of my colleagues may wish to deny your agency this funding in an effort to halt the progress of the health reform law. i think the political approach would jeopardize all of the progress you made 2.5 million adults under the age of 26 have health insurance on their parents plan. more than 85 million people, including medicare and private health plans, have access to pre preventive coverage.

more than 30 states have health exchange. helping make food on the promise of affordable coverage for all. more premium dollars going to benefits. this helps the consumers get the value for their dollar. can you address the critics that are claiming your budget increase for the implementation money for the affordable care act is wasteful over spending by the government? >> mr. waxman, the additional $1 billion in medicare and medicaid is for really two categories. one is about $800 million that actually is for the one-time build out of the federally operated exchange program. i.t., consumer outreach and the services in the areas where the state is not setting up a

state-based exchange. once a state-based exchange with with the federal government and we will pick up the other pieces. part of the dollars are for that. part of the dollars, actually, are $200 million are toward increases and enhancements in the medicaid and medicare programs themselves. the overall administration of the two efforts where we have about 118 million people that we need to update. i will tell you, mr. chairman, with the additional request, our overall costs with the largest insurance programs in the world are running under 3% with the $1 billion increase. >> that is very impressive. thank you. >> the chair thanks the gentleman. the committee will stand in recess until the end of the last vote. we will reconvene immediately.

we stand in recess. >> the chair recognizes dr. burgess for five minutes.

>> thank you, mr. chairman. i got a lot of stuff to ask today. i know we only have five minutes. i will, of necessity, have to submit a lot of questions for the record. i would appreciate a timely response. let me follow-up on where chairman upton was going a few moments ago. we have the 2013 budget from the president on the premium assistance tax credit and the line items between the fiscal year 2012 budget as submitted and fiscal year 2013 submitted are different year by year. in fact, the total increase in this year's president's budget is $111 billion. so what has happened that accounts for this change? are you having to reassess the number of people that perhaps might be driven out of

employer-sponsored insurance on an exchange? >> mr. burgess, the one issue that i think has changed definitively is there was a legislative change dealing with the adjusted gross income for people in medicaid versus the exchange which we feel will actually have an impact on fewer people eligible for medicaid and more people eligible for the exchange. much of the changes in the numbers are also again in the treasury department budget, not in our budget. i would be glad to get you a very specific answer in writing. i'm not as familiar with some of the treasury issues. i can tell you that legislative change has impacted the estimates of how many people will be eligible for the exchange. the maji rule. >> fair enough. that is a 30% increase. >> there is a legislative change. i would be delighted to get

additional details from the department of treasury. >> i think we have to have that. speaking of the treasury, can you give us a line item on how much money has been transferred to the internal revenue service for the affordable care act? >> mr. chairman, let me see if i can get the treasury number. i know that of the $475 million, 261 has been spent by our department. the rest is our partners in terms of treasury dollars have -- we have transferred $210 million to the treasury department in terms of how they have allocated those funds, i cannot answer that question.

>> that was my next question. do you require from them to provide you with the allegatioc number? >> yes, we do. >> when do you expect those? >> i would be happy to get you that answer in writing. i know it is $210 million. i will give you the detailed report. we get a quarterly report from them. in terms of how they are expending and what dollars. i would be happy to answer that. >> they are your partners on this. they are the enforcers who will mandate. it is important that you share that information with the committee. last year, you were asked whether section 1311-h of affordable care act provided you the authority to exclude doctors and other health professionals from participating in exchange plans. are you prepared to answer that

question today? >> sir, what is the question? >> section 1311-h of the patient protection affordable care act that deals with exchanges. it starts out january 2015. it may contract with the health care provider only if such provider has mechanisms as the secretary made by regulation require. are you prepared to exclude providers from the exchange? are you developing that criteria? are providers soon to see the day that they are prohibited in the exchange if they don't comply with all of the things you don't set for the? >> mr. burgess, we see that issue as one that at the state level will be decided between the board of the exchange and the issuers.

>> how about a state that doesn't do an exchange? my state is not, as you know. there will be a federal exchange if we can get through the problems. >> we will make decisions at the federal level of issuers have programs of their own based on the quality performance. >> the congress said that you would decide. not the state. >> i'm telling you for the federal exchange, we will be making decisions about issuers. we do not intend to reach in to a state exchange. they will be making the determinations at the state level. >> are you asking us for a change in the language to allow you the freedom to do that? >> i am not. >> the statute says you make that decision. >> i'm telling you how i will make the decision. we will be working with the state-based exchanges to make determinations based on their issuers. if, for some reason, there was an outline, we could have a

conversation. we continue to work with the states as law intends. the state sets up the state-based exchange. we will establish a program for federal exchange. >> will you exclude providers from the national exchange? >> this is not an issuer of providers. this is an issue of which plans are operated. plans have their own networks. we will be working -- >> if you don't belong to a particular program, you will not see your patient of longstanding? >> that is not at all what i said. clearly determinations will be made. >> you might infer that. >> the gentleman's time has expired. the chair recognizes ms. katz for five minutes. >> i thank you. secretary sebelius, i thank you for your testimony. we are aware of the challenging climate in which we are living.

as a nurse, i also believe that we -- i know that we cannot reach our health care goals without a strong health care work force. made up of a range of health care professionals. i would like to ask a couple of questions if you could discuss briefly what steps have been taken in the budget to ensure we have a health care work force well equipped and diverse and large enough to help us successfully reach these goals. it is a tall order. >> i think you are slightly right, mr. cap-- ms. capps, abo the work force transforming the health care system. certainly primary care providers become essential not just physicians, but nurses and nurse practitioners and dental assistants. we are pleased that this budget

continues the progress we've made. so far in the administration, we tripled the number of the health service core providers. this budget intends to continue the training of 7,100 new health care providers who will serve in the most under-served areas. i have the privilege of meeting with some of the young people every day who are thrilled with the idea that they can serve the under served communities and have their loans paid off so they don't emerge with so much debt. we are also, as you know, part of the affordable care act is encouraging more providers to deal with medicaid patients. changing medicaid rates to medicare. using our graduate medical resources to focus on slots for primary care. we are very aware of the looming

issue if we are going to change from a sick care system to a health care system. the primary care work force and the community care work force is essential. we are trying to use all of the levers that we have. >> thank you. i want to highlight the commitment to the nursing work force which has been expanded in the affordable care act. the training can take some of the expensive care costs away and transform them into excellent care that can be delivered by nurses and others. i'm going to be circulating a letter in support of the nursing programs and urge my colleagues in joining me in support of them. in addition to the robust health care work force, we know improving health care, it requires research and development and innovation. however, during the research economic downturn, i heard from researchers, many in my district

about the lack of reliable grant funding available. especially in the private sector. this limits their ability to pursue the scientific achie achievements and advancements we need. it highlights the importance of the national endowment of health in an age that has been a bipartisan issue. the president's budget includes flat funding for nih. reports indicate that stream lining will free up money for 8% more grants to be awarded. would you explain what goes into that process and how it improves the economic situation in many of our congressional districts? >> i certainly share your view that bio-medical research is a critical component of not only saving lives, but lowering costs and improving strategies so the leadership at the national institutes of health led by dr.

francis collins, i think, have reorganized the resources at that very critical institution so that we anticipate with this budget funding 672 new research grants. new research grants will be funded. about a 7.7%, almost an 8% increase in current grant funding. there is a new center for translation al science thanks to the work that congress focused on with the most promising areas. a cure acceleration network. moving resources to the most promising strategies. yes, funding is flat. this is about 40% of our discretionary budget in the nih. we found ways to make sure the critical programs go on.

i think the administrative costs are diminished and work toward the research that needs to go forward. >> thank you. >> i thank the gentle lady. i recognize mr. whitfield from kentucky for five minutes. >> madam secretary, in the health care act 2010-2011, it provided $150 million for the prevention fund. under the fund, you have the authority to move that money into various accounts at hhs. i would like to ask you to provide to the committee for the year 2010 and 2011 the amounts of money that was transferred to which particular accounts and then from those accounts, if grants were made to grantees

around the country, the name of the grantee and the amount of money, the purpose of the grant and the date of the grant. would you be able to do that for us? >> i would be happy to do that. >> thank you. thank you very much. now, one of the things that is a little bit troublesome to me in the president's 2013 budget is that he, in essence, eliminates part of the anti-lobbying provisions of the use of federal funds. as you know, in the appropriation bills, since the mid '70s, we had prohibitions using federal funds for lobbying. to define it more specifically, prohibits using federal funds being used to influence in any

manner, an official to favor or adopt by vote or otherwise, any legislation, law, ratification or policy. why would the president want to omit that from his fy '13 budget? >> mr. whitfield, i have to confess. i'm not sure exactly what is being referred to. i know that our fy '12 budget, our budget, and there may be other statements in other budgets that i'm not familiar with. our fy '12 budget included additional lobbying restrictions which we are actively working to comply with which not only applied to our department, which have been in place for traditionally for years and we have complied within terms of lobbying, but also now apply to downstream grantees who receive money through the prevention

fund. we are updating our grant language, enhancing our oversight. i'm not -- -- >> i think that's commendable. i do appreciate it. but the president, the prohibition has been very specific about using those funds at the federal level, state level or local level. and the president explicitly in his 2013 budget allows those funds to be used at the local level. and my question to you would be do you know why that action was taken by the white house? >> again, i would be -- i will provide a more thorough answer in writing. what i have just been told by our staff is that the language that we are proposing be eliminated is duplicative of existing law, that it already exists in statue. i will verify that and get back to you. i'm not aware of any new measures that --

>> so from your perspective you're already doing that? >> that's what i -- >> the reason i have asked the question is i have seven pages here of 25 specific instances where grantees of hhs receiving money from hhs are explicitly trying to influence laws at the state and local levels relating to all sorts of issues. for example, in one town in california, baldwin park, they're using these -- the entity, the grantee is using this money to reduce the density of fast food restaurants and convenience stores. for example. and we have seven pages of this and it looks to me just on the surface that it's explicitly violating the law as set out in the appropriation act. >> again, mr. whitfield, the new

language in our budget for fy-2012, we have not issued any new grants where the new language would be applicable. we are updating the grantee advice, but the prospective language has not impacted any of the grants in place. the language that has been statutory applied to our use of our federal funds. we have also complied with that law for years. so i can assure you that the new language attached to the fy budget and it did go beyond statutory language is one that we are updating grants about. >> well, ms. chairman, i will make the comment that it was understanding that this prohibition applied to fy-2010-11. >> it applied to us, but not the

grantees. >> the gentle lady from illinois is recognized. >> just in regard to family budgets, i wanted point out and thank you for the fact that 54 million americans were provided one preventative service through their private health insurance plans for no cost. and i think that the conseque e consequences of that are probably priceless in terms of colonoscopy screenings and flu shots and all the disease that's prevented. this is one of the consequences of the affordable care act. i had the privilege of going out with the fraud prevention and enforcement action team on a drive around, which is very interesting where there's this real effort to make sure that we're spending all the taxpayer dollars correctly.

although we didn't have anything quite as exciting as what we learned earlier this week about a dallas doctor arrested for a shocking $375 million in healthcare fraud schemes. so what i wanted to ask is how the affordable care act contributed to greater oversight and enforcement and what kind of additional fund -- how much money was found through that effort. and that's it. >> well, i think there's no question that the affordable care act contains provisions that are probably the toughest anti-fraud provisions ever in the history of the medicare program. criminal penalties were enhanced. civil penalties were enhanced. we were given tools to recredential providers.

new resources for the law enforcement teams that are a justice department partnership on the ground. we now have teams in seven cities, we're expanding to nine. we intend to continue that. probably as important as anything are the resources that allow us to for the first time ever catch up with the private sector and put together a data system where real data is pulled together in one time. in the past 12 different billing systems have various parts of cms billing data, so you never could identify the provider in texas in one space. it was coming through too many portals. so data analysis is now in two years significantly better than it was in the past. and we now have a predictive modeling system to look at billing -- not errors, billing anomalies and be able to target

our resources on the ground to immediately investigate and stop money from going out the door. so we -- the attorney general and i were able to announce at a couple of weeks ago that $4 billion, the largest amount ever, came back to the taxpayers and to the trust funds because of these anti-fraud efforts and yesterday alone as you identified a provider -- i'm sorry, on tuesday, in texas, a provider was arrested who has been fraudulently 28 or 29 home health agencies. we knew that that was an area fraught with problems and we targeted that area, used the new analytics, identified this provider, but i think it's the first of many, many that will follow. >> so did the additional resources and tools in the aca, was it responsible for this

increase in recovery, the $4 billion that were recovered? >> i think it was enormously helpful. there is an ongoing, underlying fraud program, but the new resources and the new tools we have allowed us to for the first time put together some of these technology advances that really have been used by the private sector very effectively for a long time, but missing in our critical healthcare programs. >> in the moments remaining, there are two issues that i would like to work with you and your staff on. one is medicare beneficiaries are often designated as being in the hospital on outpatient observation status. they could be in the hospital up to three days or whatever under that status. they're not really admitted as an an inpatient and this affects

when they're sent to a nursing home or put in an ambulance. often they don't really understand what observation status is. you're in a hospital bed, you think you're in the hospital. you think you have full insurance coverage. i would like to work with you on that. >> glad to do that. >> and the other is the important information, hospital compare that is a useful tool for consumers, but there's also the feeling that some of the safety net hospitals for reasons, for example, dealing with non-english speakers that their ratings get lower and that concern has been brought to me. these are little tweaks that i think we can fix. i want to thank you for the fact that you are working with the states. you are working with members of congress to make this a better bill and a better policy.

>> gentle lady's time has expired. gentleman from michigan, mr. rogers, recognized five minutes. >> thank you. thank you for being here. as when working closely my democrat colleagues on the re-authorization bill, i would hope that we could submit some questions for the record that's very important to us. i know it's important to you. >> that would be great. >> we look forward to working with you on. in the 2013 budget, how many are dedicated and committed to getting this -- the healthcare law up and implemented and coordinated in the states? >> i do have those numbers here, if you could give me just a moment to make sure i give you the accurate number. we have 210 people in the division that is specifically working on exchange, health insurance reform and others and we have another about 146 working on thea