Senator orrin hatch chairs the subcommittee. This is just over an hour. The meeting will come to order. Its a pleasure to welcome everyone here this morning. Well be talking with representatives from the office of Inspector General, and from the Government Accountability office about their ongoing oversight work with respect to health care. Gov. And enrollment in the federal Health Insurance marketplace. I want to thank both entities for their hard work on these issues and acknowledge the contributions they made to help this committee perform more accurate and timely oversight. No secret ive been a fan of the socalled Affordable Care act. The evidence overwhelmingly shows that i and the many others oppose this from the beginning has been right all along. The facts speak for themselves. Republicans signed into law, hhs, lig and gao have released at least 6 dozen reports detailing various operation and information issues. Detailing the numerous areas where the law has fallen short. These reports are specific and focused on key operational failures like systems issues. Some of which well hear about today. The gao and hhsoig are not independentities. Theyre tasked with the responsibility of assessing what is and what is not working in various federal programs. Including those created or amernded by the Affordable Care act. Theres no better record showing how this happened in the reports we received from these offices. Today we are going to specifically discuss operations issues, related to health care. Gov and enrollment problems at the federal insurance marketplace, otherwise known as the federal exchange. Lets start with healthcare. Gov launch. With the deemployment of healthcare. Gov and its supporting systems, customers, really kwon assumers encountered widespread performance issues when trying to create accounts and enrole in health plans. After numerous inquiries and reports, we know what caused these performance issues. For example, there was inadequate capacity planning. The centers for medicare and Medicaid Services cut corners and did not plan for adequate capacity to maintain health care. Gov and its supporting systems. There were problems with the software that were entirely avoidable. They identified errors in the software coding for the website, but did not adequately correct them prior to the launch. We saw a lack of functionality. They did not adequately prepare the supporting systems prior to the initial launch. Cms also failed to apply recognize best practices for System Development which contributed to the problems. Admittedly since the initial launch. Cms has taken steps to address these problems, including increasing capacity, requiring Additional Software quality reviews and awarding a new contract to complete development and improve the functionality of key systems. Many of the problems have still not been entirely resolved and continue to cause frustration. Especially for consumers trying to obtain Health Insurance. I wish we could boil all this down. Boil down all the volunteers problems to the functions of a single website. Indeed this was just an it problem, all of our jobs would be a lot easier. However, the problems with obama care and the federal insurance marketplace in particular go much deeper. And many of them remain unaddressed. Now, we know for example that the enrollment controls for the federal marketplace have been inadequate. During undercover testing by gao, the federal marketplace approved Insurance Coverage with taxpayer funded subsidies for 11 out of 12 fictitious online applicants. In 20 14 the gao applicants which once again were fake, make up fake made up people. Obtained roughly 30,0 30,000. These fictitious enrollees maintained subsidized coverage throughout the year, even though the documents or no documents at all to reserve the inconsistencies. The subsidies, including those branded the gaos fictitious applicants are paid to health care insurers. They nevertheless represent a benefit to consumers and a cost to the government. Now, gao did find that cms relies on a contractor charged with document processing, to basically uncover the to uncover and report possible instances of fraud. Yet gao also found the agency does not require that the contractor has any fraud detection capabilities. And according to gao, cms has not performed a single comprehensive fraud assessment. Recommended best practice of the obama care enrollment and eligibility process. Until such assessment is completed, cms is unlikely to know whether existing control activities are designed to produce inherent fraud risk to an acceptable level. In other words, cms isnt even sure if cms is Fraud Prevention systems are designed correctly or if theyre affected. Not the focus of the reports that will be covered by the testimony today. Another matter weve been tracking closely is cmss other side on the health care coops. We had a hearing on this topic in late january, where we examined a number of financial and oversite explanations for the abject failure of the coop program. Todays report describes cmss efforts to deal with financial or operations issues that the coops, including the use of an escalation plan for coops with Serious Problems. As of november 2015, 18 coops, had enough problems they had to submit to a cms escalation plan including nine that disfinned operations. Cms appeared to have failed just like virtually every other element of this program. The failure of cms to adequately implement the coop program is well documented here on the finance committee and elsewhere. So many other parts of obama care, the highlighted rhetoric surrounding this program has fallen short of reality. With nearly half of the coops now closed, the failed experiment has wasted taxpayer dollars and forced patients and families to scramble for new insurance. So many problems now, i believe cms should work with and not against states to safeguard taxpayer dollars. As always, we have a lot to discuss. I look forward to hearing more from the officials, we have testifying here today. Mr. Chairman, and colleagues. Its known the healthcare. Gov rollout three years ago was botched. Its new news that the Inspector General of the health and Human Services department recently said and i want to quote here, cms recovered the healthcare. Gov website for High Consumer use within two months and adopted more effective organizational practices. Thats what the Inspector General said. The department recovered the website for High Consumer use within two months. That quote comes from one of two reports looking back at 2013 and 2014 the finance committee will be presented with today. I think we ought to start by recognizing the story is well documented. After the launch went badly, some of the best minds, technology and a new contractor were brought in. They scrambled to overhaul the system and the exchange is soon up and running. The center for medicare and Medicaid Services is now following up on each of the Inspector Generals recommendations which the Inspector General notes in its repo report. Nearly 10 million americans used healthcare. Gov to sign up for a plan or reenrole automatically. In my home state, close to 150,000 persons have used the site to sign up for a plan. Thats up by more than 30 compared to last year. The committee will hear an update from the Government Accountability office. The Government Accountability office first brought this study before the committee in july of last year. Im going to repeat what i said back then. On this side of the aisle we dont take a back seat to anybody in fighting fraud and protecting taxpayer dollars. One dollar ripped off is one dollar too many. Lets recognize what was true last summer remains true today. This gao investigation has not uncovered one single shred of real world fraud in the insurance marketplace. It was built on fictitious characters with specially created identities not real consumers and not real fraud. Its true that Government Accountability office found there are sometimes differences between the information on somebodys insurance application and their tax forms and citizenship records. When it comes to these inconsistencies in peoples data, this investigation cant differentiate between fraud and a typo. Meanwhile, health and Human Services has not looked the other way when it finds the red flags. In 2014, the year of the gaos investigation, the center of medicare and Medicaid Services closed more than 100,000 insurance policies because documents didnt match the warrant provided. Tax credits were adjusted for nearly 100,000 households. In 2015, health and Human Services closed more policies and adjusted more tax credits. If you come at this from the left, you may say thats too harsh. If you come at it from the right, you may take a different view. Theres no basis whatsoever for the argument that health and Human Services ignores problems with peoples records or leaves the door open to fraud. It seems to me rather than rehashing old news, you ought to be looking at the facts and talking in a bipartisan way about how to move forward together. Because of the Affordable Care act, the number of americans is at or near its lowest point in half a century. For the 160 Million People who get their insurance from their employer, colleagues premiums climbed 4 last year. Let me repeat that, for 160 Million People who get their insurance from their employer, premiums climbed only 4 . Working age americans in oregon with preexisting conditions, 80 Million People or more can no longer be denied insurance. So instead of battling out what happened three years ago, we ought to be pulling on the same end of the rope and solving some problems. For example, democrats and republicans ought to be working together to look at ways in which we can provide even more competition and bring costs down for consumers. And a lot of you in this room have worked with me on that issue for some time. If youre going to be spectacular, the real question is whether our Health Care System is going to be able to afford them. Here senator grassley has worked closely with me to put together a bipartisan case study, which looked at one blockbuster drug involving hepatitis c. Solving the cost of blockbuster drugs is going to take a lot of hard work, it again can only be done on a bipartisan basis. And finally, i want to express my appreciation to colleagues on both sides of the aisle. I think were on the cusp of being able to make Real Progress on a huge opportunity for older people and our country. And that is protecting the medicare guarantee. Very sacred guarantee we have for seniors, while updating the program to look at the great new challenge which is chronic illness, i want to thank senator bennett who is out in front. Hes not here, but senator isaacsohn and senator warner were champions as well much i want to express my appreciation to the chairman you can the progress that we are making. I have to make some comments with respect to something we didnt know about, until about an hour ago. Thats this matter of the coops. What we have said is that we want to work in a bipartisan way to improve a variety of sections of the Affordable Care act. Now the, this new material on the coops that neither i nor anyone knew something about, was available. I intend to look at it with an eye on what can be done on a bipartisan basis goingforward. But my work and i think the work of colleagues here always ought to come back to the idea of making Health Care Policy more accessible and more affordable. And for now, and i certainly havent seen this report. Im not going to be participating in any celebration of people suffering because the coops were tied up in a congressionally induced economic straightjacket. Thank you, mr. Chairman. Thank, senator. Our first witness is miss erin bliss. From the office of Inspector General or oig at hhs. Miss bliss has served in many roles at oig since her career began. I think your career began in 2000, correct . She started as an analyst for the office of evaluation and inspections, and later went on to serve as a Senior Adviser where she provided management advice and analysis to the Inspector General and other Senior Executives on priorities and internal policies and operations. Afterwards she worked from 2009 to 2014 as director of the external affairs at oig. And was responsible for implementing oigs Communication Strategies and Relationship Management with the administration. Congress, media, the Health Care Industry and the public. Miss bliss received her bachelors degree from the government at the university of notre dame, before receiving her masters degree in Public Policy from the university of chicago. Our second witness, during his gao career, hes served in a variety of positions, including as legislative adviser and the assistant director for Homeland Security and justice. Mr. Bagdoyan has also served on congressional details with the Senate Finance committee were glad to see you back here again. Am i pronouncing that right . Pretty close. Hes also had a number of positions in consultancies, including most recently focusing on Political Risk of home land security. He received his masters degree in International Relations and an mba in strategy from pepperdine university. I want to thank you both for coming. Miss bliss, please proceed with your five minute statement. Thank you. Good morning, chairman hatch. Thank you for the opportunity to testify today about the office of Inspector Generals case study which examines the management of healthcare. Gov. The website consumers use to purchase Health Insurance through the federal marketplace. As is well known on october 1st, 2013, the healthcare. Gov website failed almost immediately upon launch. Within two months, cms had substantially improved the sites performance. How did such a high priority project start so poorly . And how did cms turn the website around . Our case study provides insights into these questions and Lessons Learned to help health care. Gov work better. We police our assessment at the intersection of technology, policy and management can benefit a broad range of federal projects and programs. Our report chronicles the breakdown and turn around of healthcare. Gov over a fiveyear period. From the outset, the healthcare. Gov project faced a high risk of failure. It was technically complex with a fixed deadline and many uncertainties. Still hhs and cms made many missteps in its implementation. Most critical was the absence of clear leadership and overall project responsibility which had ripple effects. Policy decisions were delayed affecting the technical decisions. Policy and technical staff were in silos and not well coordinated. Contract management was disjointed. Changes to the project were not well documented and progress not adequately monstered. This culminated in cms not fully communicating or acting upon many warnings of problems before the launch. Cms failed to fully grasp the poor status of the build. One reason was that no one had a full view into all of the problems and how they fit together. Red flags raised to leadership, did not always float a staff working on the build. And staff did not always alert leadership to problems on the front lines. Cms was unduly optimistic. Last minute attempts to correct problems were rushed and pin sufficient. And the two months before the launch. Cms added twice the staff to the project and cut many planned website functions. Just 72 hours ago, cms asked its contractor to double its computing capacity. Even with these efforts, the health does care. Gov website saw many problems. The problems went beyond capacity. The website entry tool worked poorly, and software coding defects caused malfunctions. Cms and its contractors did not have coordinated tools to diagnose these problems. Cms pivoted quickly to make corrections to the website. They brought in additional staff and expertise from across government and the private sector. One key was creating a badgeless culture. Cms integrated policy and technical staff and developed redundant systems to aroid future website problems. Cms took a more realistic approach. It practiced what officials called ruthless prioritization. Which focused on effectively developing the most critical functions like reenrollment and delaying other features. They measured progress and monitored problems to respond more quickly and effectively. These factors contributed to an improved website, and important organizational changes. Looking ahead, cms continues to face challenges and improving healthcare. Gov and managing the federal marketplace. This includes addressing more than 30 recommendations from oigs other federal marketplace reports. We will continue to monitor cmss reactions and its overall management of this and other programs. Thank you again for inviting oig to speak with the committee today. Ill be happy to answer your questions. Thank you,