CMS is a division of the U.S. Department of Health and Human Services (HHS) and the parent of the Center for Consumer Information and Insurance Oversight (CCIIO), the agency directly responsible for overseeing the Patient Protection and Affordable Care Act (PPACA) exchange system, including the HealthCare.gov exchanges and the state-based exchanges.

Watch the hearing video

The House Energy & Commerce oversight committee organized the hearing to look at how CMS is managing the state-based exchange program.

HHS used PPACA grant money to help states set up exchanges, but the exchanges that went live in January 2014 were not supposed to use the startup grant money to cover operating expenses after Jan. 1, 2015.

Slavitt said CMS has an effective program in place to review state-based exchange spending, reject use of HHS grant money for prohibited purposes, and recoup misspent money.

"We control the purse strings," Slavitt said.

Some lawmakers questioned whether CMS has done enough to punish states with failed efforts to set up exchange enrollment and administration programs.

Five states had serious information technology problems, Slavitt said. He said two of those recovered and are still running their own enrollment systems. Three have shifted to using HealthCare.gov.

CMS has already recovered money from one of those exchanges, is starting to recover money from a second, and is closing down and preparing to recover money from a third, Slavitt said.

Slavitt said most of the state-based exchanges use some kind of insurer assessment to pay for exchange operations, and that a few use general fund money to pay for exchange operations.

Rep. Susan Brooks, R-Ind., tried to get Slavitt to say how many exchanges have sustainability problems.

Slavitt told her CMS is talking to all of the state-based exchanges about sustainability.

"In some cases," he said, "there's a little bit of tough love."

In the past, CMS had tough conversations with managers of the Hawaii exchange that led to that exchange shifting to using HealthCare.gov, and it had conversations with the Rhode Island exchange that led to that exchange getting more revenue, Slavitt said.

"The general rule is, the smaller the state, the greater the commitment of effort we need to focus on them," Slavitt said.

Rep. Chris Collins, R-N.Y., asked Slavitt about the failure of Health Republic Insurance of New York, one of the nonprofit, member-owned Consumer Operated and Oriented Plan (CO-OP) carriers created by PPACA.

Read: N.Y. hospitals: Failed CO-OP owes them more than $150 million

"Doctors are calling my office complaining that checks from Health Republic are bouncing," Collins said.

Slavitt said CMS and state regulators worked to get the insurers' enrollees transferred smoothly into replacement coverage, but that questions about provider claim payments should be directed to New York state officials.

When Collins pressed Slavitt for an answer about whether providers would be paid, Slavitt said, "The answer is that I'm not going to speak for the state."

Brooks, who represents the home district of UnitedHealth Group Inc. (NYSE:UNH), asked what UnitedHealth's plans to withdraw from most state exchanges means for the exchange program.

Slavitt, who was group executive vice president for UnitedHealth's Optum unit before he went to work for CMS, said the exchange program has hundreds of issuers and thousands of plans.

"At any given time, there's going to be people entering the market and some exiting the market," Slavitt said. "Some will have good strategies and some will have not-so-good strategies. That's just how marketplaces work."

PPACA requires members of Congress to get their health coverage through the exchange system.

Rep. Michael Burgess, R-Texas, a medical doctor, said he declined to use the special group PPACA exchange coverage available to members of Congress and instead bought bronze coverage through HealthCare.gov.

The experience was miserable, and the deductible is so high, he views himself as being functionally uninsured, he said.

He said Congress could improve the PPACA exchange system by passing a bill he has introduced, H.R. 1196, that would classify all exchange bronze and exchange silver plans as plans compatible with health savings accounts (HSAs), and by increasing the HSA contribution limit to be the same as the PPACA exchange plan deductible cap.