[Senate Hearing 112-155]
[From the U.S. Government Publishing Office]
S. Hrg. 112-155
NEW TOOLS FOR CURBING WASTE AND FRAUD IN MEDICARE AND MEDICAID
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HEARING
before the
FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
INFORMATION, FEDERAL SERVICES, AND
INTERNATIONAL SECURITY SUBCOMMITTEE
of the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
of the
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
MARCH 9, 2011
__________
Available via the World Wide Web: http://www.fdsys.gov
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri JOHN ENSIGN, Nevada
JON TESTER, Montana ROB PORTMAN, Ohio
MARK BEGICH, Alaska RAND PAUL, Kentucky
Michael L. Alexander, Staff Director
Nicholas A. Rossi, Minority Staff Director
Trina Driessnack Tyrer, Chief Clerk
Joyce Ward, Publications Clerk and GPO Detailee
------
SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION,
FEDERAL SERVICES, AND INTERNATIONAL SECURITY
THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan SCOTT P. BROWN, Massachusetts
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
CLAIRE McCASKILL, Missouri RON JOHNSON, Wisconsin
MARK BEGICH, Alaska ROB PORTMAN, Ohio
John Kilvington, Staff Director
Bill Wright, Minority Staff Director
Deirdre G. Armstrong, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Carper............................................... 1
Senator Brown................................................ 4
Senator Klobuchar............................................ 7
Senator Coburn............................................... 8
Prepared statements:
Senator Carper............................................... 43
Senator Brown................................................ 47
WITNESSES
WEDNESDAY, MARCH 9, 2011
Peter Budetti, M.D., Deputy Administrator and Director, Center
for Program Integrity, Centers for Medicare and Medicaid
Services....................................................... 10
Gregory Andres, Acting Deputy Assistant Attorney General, U.S.
Department of Justice.......................................... 11
Daniel R. Levinson, Inspector General, U.S. Department of Health
and Human Services............................................. 13
Kathleen King, Director, Health Care, U.S. Government
Accountability Office.......................................... 15
Helen Carson, Volunteer Coordinator and Case Manager, Delaware
Partners of Senior Medicare Patrol............................. 16
Alphabetical List of Witnesses
Andres, Gregory:
Testimony.................................................... 11
Prepared statement........................................... 67
Budetti, Peter, M.D.:
Testimony.................................................... 10
Prepared statement........................................... 48
Carson, Helen:
Testimony.................................................... 16
Prepared statement........................................... 118
King, Kathleen:
Testimony.................................................... 15
Prepared statement........................................... 88
Levinson, Daniel R.:
Testimony.................................................... 13
Prepared statement........................................... 79
APPENDIX
Questions and responses for the Record from:
Mr. Budetti.................................................. 122
Mr. Andres................................................... 129
Mr. Levinson................................................. 135
Ms. King..................................................... 140
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NEW TOOLS FOR CURBING WASTE AND FRAUD IN MEDICARE AND MEDICAID
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WEDNESDAY, MARCH 9, 2011
U.S. Senate,
Subcommittee on Federal Financial Management,
Government Information, Federal Services,
and International Security,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:33 p.m., in
room 342, Dirksen Senate Office Building, Hon. Thomas R.
Carper, Chairman of the Subcommittee, presiding.
Present: Senators Carper, Begich, Brown, Coburn, and
Klobuchar.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. I always rap my gavel like that and say
that the hearing will come to order, but this one is already in
order. This is a remarkably well behaved panel and audience, as
well. The press is in line over there. It is nice to see all of
you. Welcome. Thanks for coming today.
Sometimes our hearings are fairly timely, sometimes less
so. But this is actually a hearing that is more timely than
most. We are going to be voting, starting in about 30 minutes,
on a Republican proposal, H.R. 1, to reduce budget deficits in
the next half-year or so and even beyond and a Democratic
alternative to that proposal. So this is something that we are
focused on a great deal. And what we are going to be talking
about here today is Medicare and Medicaid and our ability to
get better outcomes for less money. How does that actually
affect our debate in the Senate today and the folks that are
served by Medicare and Medicaid?
We still face in this country considerable economic
challenges. The economy is coming back. We added about 230,000
private sector jobs last month and we are encouraged by that.
That is the good news. The bad news is our national debt stands
at about $14 trillion. It has pretty much doubled in the last
decade or so.
One of the things we look at is debt as a percentage of
Gross Domestic Product (GDP), and if you look at our debt as a
percentage of GDP, it is about 65 percent. I think the last
time it was that high was maybe the end of World War II. That
is the highest it has ever been, so we are on treacherous,
treacherous ground.
Some other countries that run very high debt as a
percentage of GDP are places like Greece and Ireland, and we
are reminded what happened to them and their economy. So we are
on some thin ice here. We need, clearly, to work on that, and
hopefully we will find a way today to help out.
A wide variety of ideas have been put forward on how to
reduce our budget deficit and begin whittling down our debt.
Last fall, a majority of the bipartisan Deficit Commission
appointed by the President--and it is known as the Bowles-
Simpson Commission for Erskine Bowles and former Senator Alan
Simpson--provided us with a road map to reduce the cumulative
Federal deficits over the next decade or so by about $4
trillion. A number of the steps that we would need to take to
accomplish this goal are going to be painful. And while most
Americans want us to reduce the deficit, determining the best
path forward is not going to be easy.
Many Americans believe that those of us here in Washington
are not capable of doing some of the hard work we were hired to
do, and that is to effectively manage the tax dollars with
which we have been entrusted. They look at the spending
decisions we made in recent years and question whether the
culture here is broken. They question whether we are capable of
making the kind of tough decisions that they and their
families--our families--have to make on a regular basis for
their own budgets. I do not blame people around the country for
being skeptical.
I think we need to establish a different kind of culture
here in Washington when it comes to spending. A lot of people
think what we have here is a culture of spendthrift. We need to
replace that with a culture of thrift. We need to look in every
nook and cranny of Federal spending, whether it is domestic
programs, defense programs, entitlements, oh, gosh, tax
expenditures, tax credits, tax deductions, we need to look at
all of that and ask the question, is it possible to get better
results for less money? And if that is not possible, is it
possible to get better results for the same amount of money?
Today, we are here to examine the steps that have been
taken and should be taken to save literally billions of dollars
in waste and fraud in Medicaid and Medicare. Medicare and
Medicaid are, two vital programs that provide health care for a
lot of our Nation's seniors, people with disabilities, low-
income children, among others.
I was surprised to learn a number of years ago that the
majority of money that we spend in Medicaid is not just for
largely mothers and their children. The majority of money spent
in Medicaid is for folks that spend down the value of their
money, their assets, and they are, in many cases, folks who are
going to end up in a nursing home, and a lot of money that we
put into Medicaid helps to pay for those bills.
But last year, Medicare paid about $509 billion, over half-
a-trillion dollars, to care for some 47 million beneficiaries.
Think about that. Over half-a-trillion dollars to pay for
almost 50 million beneficiaries. Medicaid expenditures for the
Federal Government and our States was an additional $381
billion, almost $400 billion. Those numbers are expected to
grow as our population grows older.
Americans' increasing reliance over time on Medicare and
Medicaid presents another opportunity for criminals to take
advantage of lax anti-waste and anti-fraud controls, and they
do try to take advantage, as we know all too well. Medicare
made an estimated $47.9 billion in improper payments in fiscal
year 2010. We have a chart that indicates that.
One of our new laws that we passed last year, signed into
law by President Obama, is one that says all Federal agencies
have to keep track of improper payments, mostly overpayments.
They have to report improper payments. They have to reduce
improper payments. And they have to go out and recover the
money from those improper payments.
How much in Medicare last year alone? Almost $48 billion.
How much in Medicaid last year alone? About $22.5 billion. So
we are talking about real money here. And this does not even
include an estimate for the Medicare prescription drug program.
I think this is Medicare A, B, and C. I do not believe it
includes Medicare Part D, which I am told could add even maybe
another $5 billion to that total for improper payments. For
Medicaid, the improper payments, again, totals about $22.5
billion.
Moreover, Attorney General Eric Holder estimates that
Medicare fraud totals as much as $60 billion each year--$60
billion just from fraud, criminal activities, largely--and
Medicare and Medicaid continue to be on the Government
Accountability Office's (GAO's) list of government programs at
risk. The new At-Risk List has come out again just recently.
They do it every year. But at risk for waste, fraud, and abuse.
They have been on the list--Medicare, I think, and Medicaid
have been on the list for maybe 20 years.
As improper payments occur, as most of you know, when an
agency pays a vendor for something it did not receive or maybe
even pays them twice. It can occur when a doctor is reimbursed
by Medicare for a procedure that never took place or perhaps
one that was not necessary and should not have taken place at
all. These kinds of mistakes occur every day across the
country. What disturbs me about the problem here in the Federal
Government is that we seem to make expensive, often avoidable
mistakes at a rate much higher than a business or the average
family would tolerate or could afford.
So it is easy to see how urgent it is that we step up the
pace of our efforts with Medicare and Medicaid, that we sharpen
our pencils and eliminate to the best of our abilities the
problems that lead to waste and fraud. Success in doing so will
help us get closer to our deficit reduction goals.
It will also lengthen the life of the Medicare Trust Fund,
now forecast to run out of money, I think, in 2029. The changes
we made in the health care reform law actually extended, if you
will, the date that the Medicare Trust Funds run out of money
by about another 8 years, I am thinking from 2017 to 2029, but
we will get some confirmation of that.
The good news is that we are seeing renewed commitment to
curb waste and fraud in Medicare and Medicaid. President Obama
and Secretary Sebelius have set a goal of reducing the Medicare
fee-for-service improper rate by, get this, 50 percent by 2012.
That is pretty ambitious, very aggressive. It represents the
kind of goals that we need and we applaud that.
Congress has also put Medicare waste and fraud in its
sights. The Affordable Care Act, which was enacted about a year
ago, includes a number of provisions aimed at enhancing our
efforts to fight waste, fraud, and abuse in Medicare and
Medicaid. Central to the new law is a goal to obtain better
results in health care for less money. Eliminating avoidable
mistakes and cracking down on fraudsters will be an important
element in achieving that goal.
The new Affordable Health Care law calls for dramatically
improving screening of Medicare providers. The measure also
aims to stop payment to providers before payment is made when
there is credible allegations of fraud. This ends a practice
often called pay and chase in which a provider is paid and then
chased down later once an error or fraud was detected. So the
idea is to do something before we actually make that payment
and have to begin the chase.
The new law also extends Recovery Auditing Contracting
(RAC), which involves the use of private contractors who comb
agency books for improper payments and then seek to recover
them. CMS has had considerable success with this tool in the
past, recovering roughly $1 billion in Medicare fee-for-service
improper payments in just five States, I believe, during a
pilot project. That effort is now being expanded to all of
Medicare and Medicaid and to all 50 States.
CMS is also working to implement other program changes,
such as increased support for the Senior Medicare Patrol (SMP)
and the strengthening of controls over the Medicare
prescription drug program. The men and women who run Medicare
and Medicaid are making strides in fixing many of the problems
in those programs that lead to waste and fraud, but we have a
long way to go.
Today, we have been joined by a number of witnesses--five
of them, in fact--who are each trying to do their part in the
efforts underway. We have witnesses from law enforcement to
describe how we catch fraudsters. We have witnesses to describe
how we can prevent waste and fraud before it happens. We are
also pleased to welcome this afternoon someone who works
directly with seniors in Delaware to identify fraud through the
Senior Medicare Patrol.
We are here today in large part because I believe that we
have a moral imperative to ensure that our Medicare and
Medicaid beneficiaries have access to quality care and at the
same time that the scarce resources that we put into those
programs are well spent. Eliminating waste and fraud is the
right thing to do, as well, both for the health of those two
programs and for our Federal budget as a whole. Each and every
one of us can agree on that point, and I hope on a great deal
more.
Now, with that having been said, let me turn, if I may, to
Senator Brown, our Ranking Member on this Committee, for any
comments that he would like to make. Senator Brown, welcome.
Thanks for joining us.
OPENING STATEMENT OF SENATOR BROWN
Senator Brown. Thank you, Mr. Chairman. I appreciate the
opportunity to be here again and look forward to the hearing.
Just looking at your chart, it is just amazing to me that
we can have that amount of improper payments, because when you
look at--I mean, just an example, you take the credit card
industry, which has over $2 trillion in transactions per year,
which is nearly the size of the health care sector, and there
are more than 700 million credit cards in circulation, there
are millions of vendors and countless items that can be
purchased with a credit card, yet the credit card fraud is a
fraction of one percent.
And I am shocked that the government cannot do it better. I
mean, in doing the research and being on the Committee with
Senator McCaskill, we dealt with a lot of these things and you
hear--if you go through the historical records, you actually
see that we are doing the same thing, like, 10 years later.
There has been no change, really, substantial change. The
numbers are bigger, and now here we are. We are expanding the
program to the point where the opportunity for improper
payments and waste, fraud, and abuse is just so much greater,
it is scary.
I have very deep concerns that--and we just keep talking
and talking and talking about this stuff instead of somebody
putting their foot down and saying, oh, yes, before we send the
money out the door, we are going to find out if they are
actually entitled to it. Oh my goodness. Is that not a novel
idea.
And I want to thank you for your leadership on this because
I intend to make the oversight of our entitlement programs the
primary objective of my tenure here on the Subcommittee. And as
waste, fraud, and abuse undercuts the vitality of these
programs. The people that need it most are not getting the
money. I mean, just that alone--and that is just the tip of the
iceberg.
And I want to thank you, as we have spoken privately on
this issue. I know how dedicated you are on these, and Senator
Coburn and others. We care very deeply, Senator Klobuchar. That
is why we are here to kind of bang away at this problem and fix
it, especially when the dollars are so sparse.
And experts estimate that there are potentially upwards of
$100 billion in fraud, waste, and abuse in Medicare and
Medicaid combined. This is more than the Gross Domestic Product
of three-quarters of the world's countries, to put it in
perspective, and with any large government program, Medicare
and Medicaid are prime targets for those who want to commit
waste, fraud, and abuse, and health care fraud is not a
victimless crime, either. It inevitably translates into higher
premiums and costs for everybody.
The Patient Protection and Affordable Care Act (PPACA)
expands Medicaid coverage, as we all know, by over 16 million
people by 2019. That is a 32 percent increase over the current
enrollment, and the cost of Medicaid expansion is expected to
exceed $430 billion over the next 10 years. Well, if that
happens, what happens to those numbers, Mr. Chairman? Are they
going to stay the same? Are they going to go down? When does it
get better? When do we start to focus on these things?
I know there are a lot of good people here. They are new.
But that is the problem. We just keep kicking the can down the
road a little bit. It is very frustrating.
I know the administration has introduced a variety of new
program integrity measures into the law and I am greatly
appreciative of that and it is intended, obviously, to reduce
the amount of fraud in the health care program. Yet while an
improvement, they are only a drop in the bucket in light of the
incredible wave of health care spending, and the history of lax
oversight in these programs does not give me much confidence
right now and I believe that more needs to be done, and quite
frankly, done very quickly.
These issues, for example, the previous expansions of
government health care benefits, such as those for Medicare
Part D, also included new integrity measures for the Centers
for Medicare and Medicaid Services (CMS). Unfortunately, their
track record for implementing these new measures on a timely
basis, I feel, and others, as well, that they are spotty, at
best. Congress has extended the Part D prescription drug
benefit in 2003, yet the GAO reported as recently as last year
that the oversight of the $51 billion program was limited. I
mean, we are talking billions.
When I go back home and I say the numbers that we throw
around here, they are just shocked that a billion is like a
hundred bucks. Sometimes we lose track of what real money is.
And when we are talking about cutting--what are we talking,
Tom, about, $61 billion? Is that the House number? Well, it is
right there, folks. It is right there. That is it right there.
I mean, to put it into perspective, we would not have to do A
if we could get B under control.
Senator Coburn. We have to do both.
Senator Brown. Yes, thank you. I knew you would say that.
We have to do both. I do not disagree with that. But before we
can do one, can we not do the other? We can do something.
The 2010 Department of Health and Human Service (HHS)
Financial Audit revealed shortcomings in both the Department's
information technology (IT) and the financial systems. Now,
there is a question whether they will be able to actually
handle the robust increase of new demands placed on it by the
Health Care Act. We cannot afford this wait and react approach
any more. We have to be proactive, before the money gets out
the door. I have never seen anything like it. Not only do we
give them the money, then we have to pay someone to go chase
the money. And then sometimes we will not only do that, we will
renew their contracts and give them a bonus. What a job, if you
can get it.
So the implementation of an effective program integrity
system must ensure effective deterrence against these potential
criminals while also protecting providers from overly
burdensome regulations. And this expansion of the government's
role is already straining our Nation's already dire financial
situation.
I know that we have a lot of problems, folks, but I really
do not want to hear today the same type of stuff. I mean, I
have the historical records. I went down, and I am anxious to
see what your testimony is so I can say, yes, back in 1992,
they said the same thing, based on the previous report.
So I appreciate the opportunity to speak and look forward
to participating.
Senator Carper. Yes. I am just grateful that you are
sitting here and that we are going to work on this together.
One of the things that was different, in 1992, we did not
know how much the improper payments were from agency to agency
across the Federal Government. In 2002, we did not know what
they were, either. Today, we know that improper payments for
last year in the whole Federal Government, as best we could
tell, without the Department of Defense (DOD), without Medicare
Part D, was about $125 billion. We know from Medicare, it was
about $48 billion. That is not counting Part D. For Medicaid,
it is $22.5 billion. We actually know that now.
One of the things that is different, I would say to Senator
Brown, my colleague----
Senator Brown. Is you are here.
Senator Carper. No, that we are here. And Tom Coburn is
here and Senator Klobuchar is here.
But the thing that is different now, the Federal
Government, agency by agency, is required to report their
improper payments. They are required to stop them. We are going
to evaluate the performance of managers within these
Departments by the kind of job that they do in reducing
improper payments. We are going to evaluate by what kind of job
they do in going out and recovering improper payments.
And finally, we have had the Administration come here and
say on the record, and the President has already said this on
the record, we want to reduce, cut in half, improper payments.
Cut this number in half by 2012. That is encouraging.
And the other thing that I hope is encouraging is we are
going to be providing whatever help we can to enable you to
meet that goal. We are also going to be here to make sure that
you do meet the goal to the best of your ability. Senator
Klobuchar.
OPENING STATEMENT OF SENATOR KLOBUCHAR
Senator Klobuchar. Thank you very much, and I wanted to
thank you, Chairman, for inviting me into this Subcommittee.
Senator Carper. It is almost like you are a Member. We like
that.
Senator Klobuchar. Well, I feel quite at home, because
looking at that fugitive chart, I feel like I am back in
Judiciary, where we often have those charts, and I really
appreciate the leadership you have shown in these areas.
As we all know and as Senator Brown so strongly pointed
out, one of the greatest contributors to wasteful government
spending is fraud and abuse, and law enforcement authorities
estimate that Medicare fraud costs about $60 billion every
year. Last year, $4 billion was stolen from Federal health care
programs, and that was recovered.
As a former prosecutor, this really bothers me, and I also
look at it as coming from a State that, while we have had some
prosecutions--I actually worked on one where we secured the
conviction of a woman for bribing a county official and
fraudulently billing Medicaid for services that were never
provided--but coming from a State that has a well-organized
health care system with high quality, lower cost care, one of
the things I know is that some of the hot spots--and I learned
this term in Judiciary from some of our Justice Department
people--the hot spots tend to be in areas where they have less
organized health care systems. I know Florida has some hot
spots down there.
And that the answer to all of this is the work that we are
going to be doing with Senator Carper and others, but it is
also about doing a better job of having more organized health
care systems, some of which we started out with in the health
care bill, but a lot more work has to be done with how these
delivery systems coordinate with each other so there are other
watchdogs besides just the government. I believe that is why we
have less fraud in Minnesota than in some of the other States.
Another tool to use is that CMS must take steps to
consolidate its databases, allowing for more data sharing and
efficient use of technology. Creating these types of claims
databases will help us better identify potential sources of
fraud.
I also introduced the Improve Act with Senator Snowe that
requires electronic payments for Medicare and Medicaid. We were
able to include this requirement for Medicare in the health
care reform bill, but still more work needs to be done with the
Medicaid bill, because you all know that if you have these
electronic payments, you are not going to have these checks go
to storefronts. Then you have to watch where the electronic
payments go, but you can greatly reduce fraud with the
electronic payments.
So I want to thank the witnesses for being here. I look
forward to hearing this update and look forward to working with
Senator Carper and Senator Brown and others on this very
important issue. Thank you.
Senator Carper. Always happy to welcome you. Thank you for
your good work.
Senator Coburn, you have been working these vineyards for
at least 6 years here and I have been pleased to work with you
on a bunch of that stuff. We are always delighted to have you
here, Tom. Welcome.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. Well, it is an appropriate time, Mr.
Chairman, to have the hearing. I have seen Dr. Budetti and
Inspector General Levinson more than I have my wife in the last
week. [Laughter.]
I saw them before the Finance Committee, as well.
I would mention to you that Senator Carper and I are
working on a very substantive addition on fraud, and we have
been working on it for about 5 months, I think, and hopefully
we will put that in front of the GAO and get their comments and
in front of you before we release it. But we all know there are
areas to go.
My big problem is Medicare as it is currently designed is
designed to be defrauded. I mean, if you just set at it, you
could not set up much of a better system than this one to
defraud it. I applaud some of the changes the administration is
making. I applaud the Justice Department, where they have been
aggressive in going after some of this. The more aggressive we
are and the greater the consequences for defrauding or abusing
or wasting Medicare dollars will send a signal.
So I am pretty pleased with the direction we are going. I
think you still need some more tools and look forward to
working with you and thank you for being here.
Senator Carper. Dr. Coburn, thanks very, very much.
Let me just briefly introduce our witnesses, if I may.
Dr. Peter Budetti, no stranger to a bunch of us, is our
first witness today. Dr. Budetti is the Deputy Administrator
and Director for Program Integrity at the Centers for Medicare
and Medicaid Services. He is responsible for program integrity
policies and operations in both the Medicare and Medicaid
programs. Dr. Budetti has a long history in the health care
arena as a pediatrician, in government, and as Chairman of the
Board of Directors of the Taxpayers Against Fraud, as well as a
professor at the University of Oklahoma. We thank him for being
with us today.
I went to Ohio State. I understand you have an OSU in
Oklahoma, too.
Dr. Budetti. We have the real OSU. [Laughter.]
Senator Carper. The guy who used to be President of Ohio
State is now the President of Oregon State University. I like
to tell him he has one more to go, OSU and U State, and he
would have the hat trick, so we will see.
Greg Andres, our second witness, is from the Department of
Justice (DOJ) and the Acting Deputy Assistant Attorney General
in the Criminal Division. Mr. Andres oversees the Fraud
Section, the Appeals Section, the Capital Case Unit, and the
Organized Crime and Racketeering Section. You are a busy man.
Mr. Andres has been involved in prosecuting many of the bad
guys we will talk about today regarding Medicare fraud during
his distinguished career at the Department of Justice. I would
also note that Mr. Andres served in the Peace Corps in West
Africa, and we thank you for that and we thank you for joining
us today and for your service.
Inspector General Daniel R. Levinson. Mr. Levinson is the
Inspector General of the Department of Health and Human
Services. Mr. Levinson has been Inspector General of Health and
Human Services for nearly 7 years, leading the important work
overseeing Medicare and Medicaid and other Department programs.
Mr. Levinson has a long history of public service. We
appreciate very much your being with us here today.
And next is Kathleen King. Ms. King is a Director of the
Health Care Team at the U.S. Government Accountability Office,
affectionately known as GAO. Ms. King is responsible for
leading various studies of our health care system, specializing
in Medicare management and prescription drug coverage. Ms. King
has over 25 years of experience in health policy and
administration. I am happy to note that we learned in a
previous hearing that Ms. King grew up in Wilmington, Delaware,
graduated from Ursuline Academy High School. We thank her for
being here today. You could only turn out well with that kind
of background.
Finally, we are delighted to welcome Ms. Helen Carson, who
is a Volunteer Coordinator and Case Manager at the Delaware
Senior Medicare Patrol. Ms. Carson came to work at the Senior
Medicare Patrol after first seeking help from the program, then
decided to work as a volunteer and was later hired on to help
other volunteers. She is one of the people on the front lines
fighting fraud in Delaware, and there are a lot of people like
her around the country--not enough, though, I would say. But I
note that her home town, again, is Wilmington, and she now
resides near New Castle, a place where I bought my first home
when I was just a pup coming out of the Navy. Ms. Carson, we
are pleased to have you here today.
All of you, welcome. Your entire testimony is going to be
made part of the record. Feel free to summarize. If you go much
more than 5 minutes, we will try to rein you in. We will start
voting probably around 3:00, but we will finish a couple of
testimonies and then run and vote and come right back.
Dr. Budetti, why do you not lead off. We are happy you are
here. Thanks.
TESTIMONY OF PETER BUDETTI,\1\ M.D., DEPUTY ADMINISTRATOR AND
DIRECTOR, CENTER FOR PROGRAM INTEGRITY, CENTERS FOR MEDICARE
AND MEDICAID SERVICES
Dr. Budetti. Thank you very much, Chairman Carper, Senator
Brown, Senator Klobuchar, Dr. Coburn, for this opportunity. I
appreciate this opportunity to come and discuss with you what
we are doing in the Centers for Medicare and Medicaid Services.
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\1\ The prepared statement of Mr. Budetti appears in the appendix
on page 48.
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Ever since I had the privilege of taking this job a little
over a year ago, I have been asked two questions. Why do you
let crooks into the programs? And why do you pay their claims
when you think they are fraudulent? I am very pleased to be
able to tell you that, with the tools that we have now and that
we are putting into place under the Affordable Care Act and
through other legislation, we are going to do things that will
put a stop to both of those. We are going to keep out the bad
guys without making things worse for the honest providers, and
we are going to cut off payments that should not be made.
Under the leadership of Secretary Sebelius, she reorganized
the Centers for Medicare and Medicaid Services, realigned them
into four Centers, one of which is the Center for Program
Integrity. This consolidated Medicare and Medicaid Program
Integrity together for the first time. This is a very important
step, I believe, both organizationally and symbolically because
it speaks to the seriousness of our anti-fraud efforts and it
also provides notice to would-be fraudsters that we do, in
fact, take this very seriously.
Also, this reorganization has provided new opportunities
for us to collaborate with our law enforcement partners, and so
I believe we are indeed on the road that many of you alluded
to, to making things different.
I would like to draw your attention to our chart. I think
you have copies of this. But this tells you exactly what we are
doing in terms of moving from where we have been to where we
are going.
First of all, we want to move from what you mentioned, Mr.
Chairman, the pay and chase mode, into preventing fraud, and
the way that we are going to move to preventing fraud is to
keep the people out of the program who should not be there and
to cut off payments that we should not make.
Second, we do not want to take a monolithic approach, a
one-size-fits-all approach. We want to target our resources to
the real problems, to identify the real problems, and to be
focusing our efforts on the bad actors.
Third, we are taking advantage of new technology and we are
going to be moving quickly to take administrative action as
well as referrals to law enforcement.
Fourth, consistent with this administration's commitment to
transparency and accountability, we are developing performance
measures that will spell out what we hope to achieve, what we
will achieve, and will lay out what our goals are and what we
are going to accomplish.
And five, we are actively engaging the private sector, our
private partners, to work with us across the spectrum because
we know that although the public programs are certainly
targeted by scams and scam artists, so, too, are the private
programs and we need to join together to fight against this.
And finally, we are committed to coordinating and
integrating the program activities across the Centers for
Medicare and Medicaid Services in order to get more effective
and more coordinated activities underway.
To do this, we need to focus on several things. We need to
do a better job of preventing bad actors from enrolling in
Medicare. We need to act quickly in concert with our law
enforcement partners to cut off payments that are fraudulent.
And we need to do this--and I would stress this point--that as
we crack down on those who would commit fraud, we are mindful
of the necessity to be fair to health care providers and
suppliers who are our partners in caring for beneficiaries, and
to protect beneficiary access to necessary health care
services. This requires striking the right balance between
preventing fraud and other improper payments, but without
impeding the delivery of critical health care services to
beneficiaries.
We will always respect the fact that the vast majority of
health care providers and suppliers are honest people who
provide critical health services every day to millions of
beneficiaries and we are going to target our anti-fraud efforts
on the people who would commit fraud while reducing the burden
on legitimate providers and saving public funds.
As this has proved to be a very good investment over the
years. The Health Care Fraud and Abuse Control program (HCFAC)
has had very substantial returns on investment over time. We
know that the more that we look for fraud, unfortunately, the
more we find, but the return on that investment has been very
substantial and this year reached a new high.
I appreciate this opportunity to discuss what we are doing
with you and I look forward to working with you in the future.
Thank you very much.
Senator Carper. Great. Thanks, Dr. Budetti.
Mr. Andres, please. And what we will probably do is, once
you have completed your testimony, three or four of us will run
and vote, make two votes, and come right back. Please proceed.
TESTIMONY OF GREGORY ANDRES,\1\ ACTING DEPUTY ASSISTANT
ATTORNEY GENERAL, U.S. DEPARTMENT OF DEFENSE
Mr. Andres. Chairman Carper, Senator Brown, and
distinguished Members of the Subcommittee, thank you for
inviting me to speak to you today about the Department of
Justice's efforts to combat health care fraud. I am privileged
to appear before you on behalf of the Department of Justice.
The Department of Justice is grateful to the Subcommittee for
its leadership in this area and we appreciate the chance to
testify here today.
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\1\ The prepared statement of Mr. Andres appears in the appendix on
page 67.
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Health care fraud is a significant law enforcement problem.
The Federal Government spends billions of dollars every day to
fund Medicare and other government health care programs, and
taxpayers rightly expect these funds to be used to provide
health care to seniors, children, the poor, and the disabled.
Most medical professionals work hard to comply with the rules,
but too many doctors, nurses, and others in the health care
industry devote their energies elsewhere, to schemes that cheat
taxpayers and patients alike and defraud Medicare and other
government programs.
At the Justice Department, together with our colleagues at
the Department of Health and Human Services, we are fighting
back. We investigate, we prosecute, and we secure prison
sentences for hundreds of defendants each year, and we are
recovering billions of dollars in stolen funds. With the
additional resources provided to us by Congress over the past 2
years, we are making significant strides in this battle.
In fiscal year 2010, we collectively recovered a record
$4.02 billion on behalf of taxpayers, $2.86 billion of which
was deposited back into the Medicare Trust Fund. This
represents a $1.47 billion, or 57 percent increase over the
amount recovered in fiscal year 2009, which was itself a record
at that time. Indeed, over the past 3 years, we have
collectively recovered an average of $6.80 for every dollar of
funding that Congress has appropriated for health care fraud
enforcement.
The Justice Department has a multifaceted litigation
approach to fighting health care fraud with the Criminal
Division, the Civil Division, the Civil Rights Division, the
U.S. Attorneys Offices, and the Federal Bureau of Investigation
(FBI) all contributing substantial resources to this effort.
Allow me for a moment to focus on our criminal enforcement
efforts.
Criminal health care fraud enforcement is aimed at holding
accountable doctors, nurses, health care providers, and others
who conspire to cheat government health care programs,
including Medicare and Medicaid. Today, our criminal
enforcement efforts are at an all-time high. In fiscal year
2010, we brought criminal charges against 931 defendants, the
most in any single fiscal year since the HCFAC program began,
and approximately 16 percent more than in fiscal year 2009.
Moreover, we secured 726 criminal health care fraud
convictions, also the most in any year of the HCFAC program,
and approximately 24 percent more than in fiscal year 2009. In
short, the Justice Department is working hard and with great
success to investigate and prosecute health care fraud wherever
we find it.
We have been fortunate to receive important new tools for
fighting health care fraud. In the Patient Protection and
Affordable Care Act of 2010, Congress made several important
revisions and additions to Federal statutes that the Justice
Department uses in health care fraud cases. These changes are
likely to have and are already having a significant impact on
our health care fraud enforcement efforts.
For example, the Act clarifies that a defendant need not
have been aware of a specific statutory provision in order to
be convicted of violating the health care fraud statute or the
Medicare anti-kickback statute. In addition, the Act directs
the U.S. Sentencing Commission to make certain important
changes to the Sentencing Guidelines that will increase
sentences for health care fraud offenders. Finally, the Act
provides significant additional funding for our collective
health care fraud enforcement efforts.
Prosecuting health care fraud is a high priority for the
Department of Justice. Every day, every single day, Federal
prosecutors and law enforcement agents at the Federal, State,
and local levels are working hard to investigate and prosecute
those intent on defrauding Medicare and Government health care
programs, and we have been successful.
Thank you for the opportunity to provide the Subcommittee
with this overview of the health care fraud enforcement
efforts. I look forward to answering any questions you may
have.
Senator Carper. Good. Thanks so much.
Mr. Levinson, go ahead and give us your testimony and then
we will run to the vote. Thanks. Please proceed.
TESTIMONY OF DANIEL R. LEVINSON,\1\ INSPECTOR GENERAL, U.S.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Mr. Levinson. Good afternoon, Chairman Carper and Members
of the Subcommittee. Thank you for the opportunity to testify
about the efforts of OIG and our partners to combat health care
fraud, waste, and abuse. I appreciate your support for OIG's
mission to protect the integrity of HHS programs and their
beneficiaries.
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\1\ The prepared statement of Mr. Levinson appears in the appendix
on page 79.
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OIG has been leading the fight against health care fraud
for more than 30 years in collaboration with the Justice
Department and CMS. Thanks in part to the HEAT Initiative, we
are making strides in preventing fraud, catching and
prosecuting criminals more quickly, and assisting well-
intentioned providers in complying with the law. Our efforts
will be bolstered by the additional funding provided through
the Affordable Care Act for the Health Care Fraud and Abuse
Control, or HCFAC, program.
The HCFAC program is a prudent investment of taxpayer
dollars. In fiscal year 2010, this program's activities
returned an unprecedented $4 billion in fraudulent and misspent
funds. Over the past 3 years, for every dollar spent on the
HCFAC program, the government has returned an average of $6.80.
The Affordable Care Act further augments our program integrity
efforts by addressing vulnerabilities, strengthening
enforcement, and encouraging greater coordination among Federal
agencies.
Despite our successes, there is more to be done. Those
intent on breaking the law are becoming more sophisticated and
their schemes are more difficult to detect. Some fraud schemes
go viral and they replicate quickly. They also migrate. As law
enforcement cracks down on a particular scheme, the criminals
may design it or relocate to a new city. When detected, some
perpetrators have become fugitives, fleeing with stolen
Medicare funds.
To combat this fraud, the government's response must be
swift, agile, and well organized. My written statement
describes in more detail our collaboration with CMS and DOJ,
enhanced program integrity tools in the Affordable Care Act,
and OIG fraud fighting initiatives. This afternoon, I will
highlight just a few of those initiatives.
Our Medicare fraud strike forces are cracking down on
criminals and fraud hot spots around the country. Since 2007,
strike force operations have charged almost 1,000 individuals,
involving more than $2.3 billion in Medicare billing. Just last
month, strike force teams engaged in the largest Federal health
care fraud take-down in history. The teams charged more than
100 defendants in nine cities, including doctors, nurses, and
health care company owners and executives for fraud schemes
involving more than $225 million in Medicare billing.
OIG has referred credible evidence of fraud to CMS to
implement payment suspensions, helping to turn off the spigot
to prevent dollars from being paid for fraudulent claims. OIG
excludes fraudulent or abusive providers from Federal health
care programs, cutting them off from Federal funds. We are now
focusing on holding responsible those individuals who are
responsible for corporate misconduct. This exclusion authority
is a powerful deterrent to corporate fraud.
However, enforcement alone is not enough. We are also
engaging health care providers to help prevent fraud and abuse.
For example, we are conducting free training seminars in six
cities this spring to educate providers on fraud risks and
share compliance best practices. We recently published a
Roadmap for New Physicians. It provides guidance on how doctors
should comply with fraud and abuse laws in their relationship
with payers, vendors, and fellow providers.
We are also asking the public to help us track down
Medicare fraud fugitives. We have posted online OIG's Ten Most
Wanted health care fraud fugitives, including photographs and
details on their fraud schemes, and you can see our current
``Most Wanted'' list on display here today. We hope the public
will help us bring these individuals to justice by reporting
any information about their whereabouts to our Web site or
fugitive hotline.
In conclusion, OIG is committed to building on our
successes, employing all oversight and enforcement tools
available to us, and maximizing our impact to protect our
health care programs, the people served by them, and American
taxpayers.
Thank you for your support, Mr. Chairman, and I welcome
your questions.
Senator Carper. Thank you so much.
We will take a break here. We will be back in about 15
minutes and, Ms. King, you will be on. You are the batter on
deck. Thanks so much. [Recess.]
All right. I think that is the voting for a while. We will
hopefully have a chance to maybe complete this hearing. I sure
hope so.
We are back in session, and Ms. King, you are recognized.
Please proceed. Thank you.
TESTIMONY OF KATHLEEN KING,\1\ DIRECTOR, HEALTH CARE, U.S.
GOVERNMENT ACCOUNTABILITY OFFICE
Ms. King. Mr. Chairman, thank you for inviting me to speak
with you today about provisions of recently enacted laws and
agency actions that may help to reduce fraud, waste, and abuse
in Medicare and Medicaid.
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\1\ The prepared statement of Ms. King appears in the appendix on
page 88.
---------------------------------------------------------------------------
Fraud represents intentional acts of deception with
knowledge that the action or representation could result in an
inappropriate gain. Waste includes inaccurate payments for
services, while abuse represents actions inconsistent with the
acceptable business or medical practices. An improper payment
is any payment that should not have been made or was made in an
incorrect amount and includes both overpayments and
underpayments.
I was asked to address whether recently enacted laws could
help CMS in preventing fraud, waste, and abuse. Congress has
recently passed a few laws, as you mentioned, the Improper
Payments Elimination and Recovery Act, the Patient Protection
and Affordable Care Act, and the Small Business Jobs Act, which
provide additional authority and resources and impose new
requirements designed to help CMS reduce improper payments.
In previous work, we have identified five strategies to
reduce improper payments. They are: strengthening provider
enrollment and standards; improving prepayment review of
claims; focusing post-payment review on those most vulnerable
areas; improving oversight of contractors; and developing a
robust process for addressing identified vulnerabilities.
The provisions in PPACA, if properly implemented, could aid
CMS's efforts to reduce improper payments. We also note that
CMS has not implemented some of our recommendations in this
area, which we believe merit continued consideration.
With respect to provider enrollment, the law contains
multiple provisions designed to strengthen the enrollment
process. It requires the Secretary of HHS to establish
procedures for screening providers enrolling in Medicare,
including assessing their potential risk levels. Moderate and
high-risk providers may be subject to unannounced site visits.
CMS has categorized home health agencies (HHA) and durable
medical equipment (DME) suppliers as high-risk providers, which
we believe is appropriate given our work in this area.
The law also requires all providers to be subject to
licensure checks, including across State lines, and it also
authorizes the Secretary and the States to impose a moratorium
on enrollment if they believe it is necessary to prevent fraud,
waste, and abuse.
With respect to prepayment review of claims, our work has
shown that such reviews are essential to help ensure that
Medicare pays correctly the first time. Conducting these
reviews is challenging because of the volume of claims.
Medicare pays approximately 4.5 million claims every business
day and less than one percent of these claims are subject to
review by trained medical personnel.
The Small Business Jobs Act requires CMS to use predictive
analytic technologies both to identify and prevent improper
payments. By analyzing Medicare provider networks and billing
patterns and beneficiary utilization patterns, these
technologies may help CMS detect potentially fraudulent
activity and conduct additional reviews before making payment.
In addition, CMS is implementing a 2010 Presidential
memorandum known as the ``Do Not Pay'' list, that directs
agencies to consult these lists before making payments to
ensure that payments are not made to providers who are dead or
entities who have been excluded from Federal payment.
We have also found that post-payment review is critical to
identifying payment errors. Steps could be taken to improve
post-payment review, including focusing these reviews on the
most vulnerable areas and by adding recovery auditing. The law
directed that CMS expand its Recovery Audit, or RAC program, to
Medicare Parts C and D and to Medicaid.
With respect to improving oversight of contractors, the law
included new requirements for CMS to evaluate contractors
receiving Medicare and Medicaid Program Integrity funding every
3 years, and for these contractors to provide performance
statistics to the OIG and HHS on request.
One area where more progress is needed is having a robust
process for identifying vulnerabilities that lead to improper
payments. Our work on the Medicare RAC program found that CMS
had not established an adequate process to address these
vulnerabilities.
In conclusion, the enactment of these laws as well as
agency actions gives CMS new tools for fighting fraud, waste,
and abuse, but effective implementation of them is critical.
Mr. Chairman, this concludes my prepared statement. I would
be happy to answer any questions. Thank you.
Senator Carper. Great. Thanks so much. Thanks for your good
work on this and all your help.
Ms. Carson, welcome, Helen Carson.
TESTIMONY OF HELEN CARSON,\1\ VOLUNTEER COORDINATOR AND CASE
MANAGER, DELAWARE PARTNERS OF SENIOR MEDICARE PATROL
Ms. Carson. Good afternoon, Senator Carper and staff. Thank
you for convening these hearings for the opportunity to present
my testimony today.
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\1\ The prepared statement of Ms. Carson appears in the appendix on
page 118.
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The National Senior Medicare Patrol has been very busy
since its inception in the mid-1990s. In Delaware, the Senior
Medicare program began in 1999. Today, there are 54 Medicare
Patrol programs, one in every State as well as the District of
Columbia. Senior Medicare Patrol programs recruit and train
senior volunteers and Medicare beneficiaries to conduct
outreach and education to their peers, caregivers, and
professionals about Medicare and Medicaid fraud prevention.
The goals of Senior Medicare Patrol are twofold. First, to
educate and motivate consumers on how to prevent, detect, and
report health care fraud, errors, and abuse, and second, to
receive and prepare to refer appropriate complaints of
potential health care fraud.
I would like to begin with my health care victimization
story. After a history of cardiac issues, my husband had a
heart attack in 2004 and was hospitalized. It was discovered he
had a defective device controlling his heart. Costly errors by
the hospital resulted in an original 2-day stay turning into 30
days of multiple testing, a serious operation, and intensive
care. As a result of this situation, the impact of our lives
amounted to my husband not being able to work, leaving us with
large copayments, private hospital bills, and costly
medication. We had no other choice but to refinance our home
and use credit cards with minimal payments. Another major
decision I made during this time period was to personally
forego a year without medication for chronic conditions so that
my husband could get life-saving medication.
It was this experience that inspired me to learn about
billing, to read Medicare Summary Notice (MSNs), and to help
others with issues of health care error, fraud, and abuse.
Medicare Summary Notice is a quarterly statement of service and
supplies that providers and suppliers bill to Medicare. While
trying to cope with this situation, I watched a Senior Medicare
Patrol segment on television on how to address some health care
issues.
As a result, I became a Senior Medicare Patrol volunteer
and now a part-time Volunteer Service Coordinator Case Manager
for Delaware Partners of Senior Medicare Patrol. I became a
self-advocate and now assist others in recognizing hospital
billing errors and questionable medical service. I used to be
one of those seniors who threw away the Medicare Summary Notice
because I thought my insurance would take care of anything.
Now, I know better and realize that the Medicare Summary Notice
can be a big help in assisting with cases of potential Medicare
fraud.
There are many Medicare rules that are complicated and,
therefore, seniors often do not understand the Medicare system.
That is why the Senior Medicare Patrol reaches out to Medicare
beneficiaries to inform and educate so seniors can be self-
advocates, and report questionable health care issues back to
the program.
In Delaware, we are working on many complaints involving
durable medical equipment providers. A senior resident
contacted us about a durable medical equipment provider who was
putting up flyers which advertised free durable medical
equipment in a senior apartment building. The provider then
came in and educated the seniors, pressuring at least one
Medicare beneficiary to get an electric wheelchair for the
future. This provider manipulated the individual to give out
his Medicare number and supplementary insurance. As a result,
this Medicare beneficiary has an electric wheelchair and fears
that if he speaks with us, he may lose the wheelchair. This is
potential fraud to the taxpayer and Medicare and a harm to the
senior who feels caught in the fraudulent process.
In another case, an assisted living beneficiary was billed
for Medicare services not provided by a facility physician.
These services included office visits to the physician and foot
surgery. All the services were billed to Medicare and secondary
insurance and the beneficiary. The beneficiary kept a log of
services he received. He was then able to reconcile his record
against the monthly Summary Notice. The beneficiary was fearing
retaliation and charges from the assisted living facility and
did not report the fraud until intervention by Senior Medicare
Patrol staff. The case was referred to law enforcement for
investigation.
Working with Senior Medicare program as a volunteer, and
now as a team member, is the most rewarding job I have ever
had. I help people who suffer the same problems that I faced,
and some are much greater than mine. But the greatest gift is
to see the smile on their face after you have helped a Medicare
beneficiary who was victimized by health care fraud, abuse, or
waste. I should know, because I have been a victim and have
felt that sense of hopelessness.
SMP volunteers know they do this work for satisfaction and
not pay, and the impact of these volunteers' efforts nationally
has been impressive. Since it started in 1997, the Senior
Medicare Patrol program has trained over 6,000 volunteers,
handled over 141,000 beneficiary complaints, and educated 2.9
million people to be self-advocates. In addition, the program
has saved Medicare, Medicaid, and beneficiaries close to $106
million through referral and resolution of beneficiary
complaints.
Thank you for inviting me to be a part of this panel.
Senator Carper. Great. Ms. Carson, thank you so much for
sharing that with us.
I just want to start my first question with you, if I may.
How many people did you say have been trained to be part of the
Senior Medicare Patrol? Did you say 6,000?
Ms. Carson. Yes.
Senator Carper. That is across the country?
Ms. Carson. No, 60. Sixty.
Senator Carper. Sixty-thousand? That is across the country?
Ms. Carson. That is across the country.
Senator Carper. Over the last, what, dozen or so years?
Ms. Carson. Seven years.
Senator Carper. Over these last 7 years.
Ms. Carson. Yes.
Senator Carper. OK. Do you think that is enough?
Ms. Carson. No.
Senator Carper. What might be enough? What should be our
goal in terms of recruitment?
Ms. Carson. Well, what is going on in our State--I can only
talk about Delaware--our senior population is growing in the
Sussex County of Delaware.
Senator Carper. That is Southern Delaware for those who do
not know.
Ms. Carson. Yes. Because we are a tax-free State, what is
happening is that a lot of seniors are moving to the Sussex
area of Delaware, and because of that, we are the seventh, I
think--we have the seventh largest population of seniors in the
Nation.
Senator Carper. Any idea how many--we have got 60,000 that
we have trained. How many folks could we use to be part of the
Senior Medicare Patrol? Could we use a couple hundred thousand
across the country?
Ms. Carson. I think we can use that and more.
Senator Carper. Yes. And how would you suggest we go about
recruiting them?
Ms. Carson. Well, first of all, actually putting our
program more out there, that people are aware that we are
there, and that we have volunteers that are lawyers. We have
volunteers that were former chemists. We have volunteers that
are former hairdressers. We have----
Senator Carper. Any former Senators?
Ms. Carson. Yes. [Laughter.]
Senator Carper. You will take us, too?
Ms. Carson. Yes, we will take you, too.
Senator Carper. All right. It is all well and good that Dr.
Budetti and his folks are taking advantage of the new laws we
have, whether it is improper payments and the kind of resources
that are provided in the Affordable Care Act. It is all well
and good we have the Government Accountability Office, GAO,
doing their oversight. We have the IG helping us out on this
stuff, and we are trying to do oversight.
But boots on the ground--we need boots on the ground, as
well, and one of our jobs is figuring out how to grow this
operation to get more--we have tens of millions of senior
citizens in this country and some of them are looking for
things to do, worthwhile things to do with their time, and most
of them do not even know this program was there. Maybe we could
do a better job of acquainting them with that and making sure
they have the opportunity to do what you have done with your
life. Good. Thanks.
I have a question--we have been joined by Senator Mark
Begich from Alaska, one of how many Marks in the U.S. Senate?
Senator Begich. There are five now.
Senator Carper. Five. There are more Marks in the U.S.
Senate, ladies and gentlemen, than any other name. If you are
not sure what a Senator's name is, call him Mark and there is a
pretty good chance you will nail it. [Laughter.]
Senator Begich. You can join the caucus. [Laughter.]
Senator Carper. All right. We will see.
My next question, if I can, is for Dr. Budetti. I want to
talk about our work with the Medicare prescription drug
program. We have a big problem with folks who were not supposed
to be writing prescriptions to folks who should not have been
getting them for controlled substances, and we, I think, are
doing a better job of stopping that.
Could you just talk about what we are doing? I think it is
a success, something we have been very active in putting a
spotlight on, and I think you all have reacted in a way that is
appropriate. Would you just want to talk about it, please?
Dr. Budetti. Yes, Senator. Thank you for that question. In
the Medicare prescription drug program, we make our payments
directly to the drug plans and then, of course, they pay for
filling the actual prescriptions, and then they report to us
certain information, which is what we use to oversee what they
have been doing. In the reporting of that information, there
have been identified problems with the identifiers that were
used to track who it was that wrote the prescriptions.
We have made a lot of progress in terms of shifting from
less effective to more effective identifiers and we are very
much interested in looking at making sure that we can track
back to be sure who the prescriber was of the prescription that
was filled and make sure that it was appropriately prescribed,
because we are paying for it through the drug plan. And so we
are actively considering a rule that would move towards
requiring the National Provider Identifier (NPI) be provided to
us for us to be able to track that back. We do recognize that
this is an area that needs attention and we are working on it
very diligently.
Senator Carper. Good. Let me follow up by asking a related
question to Mr. Levinson, if I could. Let me just ask you, do
you believe that the new steps to control some of this fraud
with respect to Medicare prescription use, do you think the
things that Dr. Budetti has been talking about, are they on the
right track? Are the things that he is talking about, are they
the appropriate things that should be done? Are there other
steps that ought to be taken?
Mr. Levinson. Mr. Chairman, we think those are important
steps, and indeed, the Part D program has vulnerabilities that
need to be aggressively monitored and in many cases corrected.
A very important part of our work is now and in the near future
to look at how Part D sponsors, as well as the contractors who
are supposed to oversee those sponsors, how they are doing
their anti-fraud work to ensure that we can actually track the
money better.
Senator Carper. All right. Have any of you ever worked for
a credit card company? Did anybody ever work for a credit card
company?
Ms. Carson. I have.
Senator Carper. Is there anything we can learn from credit
card companies in the way that they go after fraud? I remember
when MBNA was a big credit card bank in our State, now part of
Bank of America, but I remember talking to the CEO of the
company maybe 10 years or so ago and saying, why do you keep
hiring all these folks from the FBI, people retiring from the
FBI and other law enforcement services? And I said, what do
they know about credit cards? And he said, they do not know a
lot about credit cards, but they are pretty good on fraud.
One of the things that we talked about at another hearing
where Dr. Budetti and Senator Coburn and I were at not long ago
was the idea of maybe putting together what we call a
roundtable, which is sort of a hearing but it is an informal
hearing, and bring in folks from the credit card industry who
actually do this stuff every day. This is what they do 24/7 and
are pretty good at it, to see what lessons we can learn from
them, share with them what we are doing. Might that be a good
idea?
Ms. Carson. I think it would be an excellent idea.
Actually, I come from the credit card industry myself----
Senator Carper. Do you?
Ms. Carson [continuing]. But I find that Medicare fraud and
Medicaid fraud are quite different than what we were dealing
with. It is much bigger.
Senator Carper. Yes. Maybe there are some lessons learned
from the financial services, from the credit card industry that
are transferable. We are going to try--Dr. Budetti, any
comments, and then I am going to yield to Senator Brown.
Dr. Budetti. Yes, Senator. As we have discussed, we are
actively engaged with different private sector industries. We
have looked at activities to fight fraud in the banking
industry and in telecommunications. We are certainly interested
in--we have a pilot project underway in DME where we are using
swipe cards that will rely on credit card-like technology. We
intend to build on that pilot to see what the results are and
to move into this area in a way that we actually learn lessons
first and then build on it. So this is something that we are
delighted to continue this dialogue with you on, yes.
Senator Carper. Great. OK. Let us do that.
All right. Senator Brown.
Senator Brown. Thank you, Mr. Chairman. It is good to be
back.
So I will just start with Mr. Andres, if we could. So you
indicated that you, through the Justice Department, collected
$4 billion of fraud through your Department and a couple of
billion went back to, obviously, back into the program. Where
did the rest of the money go?
Mr. Andres. The difference between the $4 billion recovered
and the $2.86 billion that went back to the Medicare fund is
the question of how much has actually been collected. So the
$2.86 billion is the amount. The $4 billion----
Senator Brown. Oh, so you got judgments for $4 billion----
Mr. Andres. Exactly.
Senator Brown [continuing]. And you only collected that
amount.
Mr. Andres. That is correct.
Senator Brown. So in looking at the chart that the Chairman
provided, I mean, we have substantially more billions and we
have only collected $4 billion. Where is the difference in
terms of the collection versus the actual improper payments?
How do we get a better return on our dollar?
Mr. Andres. Well, I mean, in terms of prosecuting
additional people for fraud, at the Justice Department,
unfortunately, we are more on the back end of the process,
where the fraud has already occurred, and we are prosecuting
people. We are seeking forfeiture to the extent possible. But
as you can imagine, it is not as though criminals, once they
are able to defraud the program, keep that money locked in a
bank or place where we can necessarily get at it. A lot of
times, the funds have been dissipated. So while judges order
restitution and we seek forfeiture----
Senator Brown. Yes, typical collection issues.
Mr. Andres [continuing]. We are not able to always collect
after a prosecution.
Senator Brown. So are you satisfied you have the tools and
resources you need to continue on with your job? Is there
anything that we in the Congress can do for you?
Mr. Andres. So two things, Senator, and thank you for the
question. In the Affordable Care Act, one of the provisions in
the Act directed the Sentencing Commission to look at and
revise the Sentencing Guidelines----
Senator Brown. The Sentencing Guidelines to make it more--
--
Mr. Andres. Exactly, to increase it, and the Sentencing
Commission has since made proposals, and so we would ask
Congress to support those proposals.
And the second----
Senator Brown. Have you reviewed those and you are
satisfied with those?
Mr. Andres. Yes, Senator.
Senator Brown. OK. I will look at them.
Mr. Andres. Just to give you an example, they raised the--
they will raise the jail time that is available for offenders
in that category. So if you take an example of somebody who,
for example, was involved in $23 million, or $20 to $25 million
in fraudulent billing, the fact that they were involved in that
amount of billing does not necessarily mean that they got that
amount of money that they were actually paid. The guidelines
now allow us to use the amount that they billed----
Senator Brown. Right.
Mr. Andres [continuing]. As opposed to the amount that they
were paid----
Senator Brown. OK.
Mr. Andres [continuing]. And that is significant.
Senator Brown. So noted. OK. Number two?
Mr. Andres. The second thing is that in the President's
budget, there is additional funding for our strike forces and
for our health care fraud enforcement efforts. As one of the
other witnesses mentioned, the return on investment is almost
seven dollars for every dollar spent on health care fraud.
Senator Brown. OK.
Mr. Andres. We are returning seven dollars. So to the
extent that we are able to continue our current efforts in the
strike force process and able to expand where appropriate, we
think that the strategy we have in the strike forces is
working, and as was mentioned, we have arrested almost a
thousand people since the inception of the strike force
program.
Over the last year, we have had significant national
arrests, one in July 2010. We arrested almost 90--more than 90
people. And then recently, in February, we arrested over 100
people in nine different cities. The fraudulent billing related
to those arrests was over $200 million. In that same week, we
had made other arrests in Miami and arrested another 20-some-
odd defendants. And so the total billing related to the
enforcement actions in that week alone was $400 million. So we
think the strike force efforts are having great success, and we
would like to be able to continue those efforts?
Senator Brown. Is there an opportunity for my office to
meet with somebody in your office to get kind of briefed as to
what you are doing?
Mr. Andres. Certainly, Senator.
Senator Brown. All right. Thank you.
So, Dr. Budetti, looking at--as I said, I went back. In
1992, HCFA, now CMS, it was reported by the GAO, testified at
the House hearing that the lack of vigilance over contractor
payment safeguard activities has left the program funds
inadequately protected from loss and waste. So that was back in
1992. And currently, Medicare is designated by the GAO as a
high-risk program and it has been so since the 1990s.
Looking at the chart, once again, that I appreciate was
brought forth, I mean, can you instill confidence that your
organization will address these problems, and if so, like, what
has been done that we can really--because we have four billion
here, but is there not a mechanism--unless I am just totally
lost here, is there not a mechanism to identify whether it is a
legitimate claim and before it goes out the door so we are not
chasing it? Is there not a way to do that?
Dr. Budetti. Senator, thank you. We certainly share your
concern about the magnitude of the issues that we are facing
here----
Senator Brown. And may I just interrupt one second----
Dr. Budetti. Yes.
Senator Brown [continuing]. And I will certainly let you
answer.
Dr. Budetti. Go ahead. Sure.
Senator Brown. We just voted on a budget over there to cut
$51, $61 billion. It is right there. As I said earlier, I do
not get it.
Dr. Budetti. So, Senator, we really need to address two
aspects of this problem, and I will briefly describe them. One
is the numbers you are looking at up there, improper payments.
Improper payments really span a spectrum from honest billing
mistakes to other kinds of reasons why a payment should not
have been made, and that requires one set of activities to deal
with and we are certainly actively pursuing those. The other--
--
Senator Brown. In what way are you actively pursuing it?
Dr. Budetti. OK. Well, we are doing that on a variety of
levels. One is to work with the provider community to make sure
that when they submit a payment, it is submitted in the right
way, it is documented, the service is provided at the right
site. The vast majority of the improper payments that we have
been measuring are--often involve services that a legitimate
provider provided to an eligible beneficiary, but perhaps at
the wrong site of service, perhaps as an inpatient instead of
an outpatient. It might have lacked the appropriate
documentation----
Senator Brown. So you are saying that the amount here
really is not--it is not illegal or fraudulent payments, they
are just done improperly. We have to get the accounting squared
away. So if that is what you are saying-----
Dr. Budetti. That is a big piece of----
Senator Brown. All right. So how much out of that money is
actually that scenario?
Dr. Budetti. That is the second prong of what we need to
address, which is the real fraud, and that is a major issue
that we are addressing in a number of ways, and I would just
like to touch on one aspect of what I believe you were getting
at, which is the fact that we are now moving to use modern
technologies, advanced analytics, to look at not just claims
data, but to look at a wide range of data in a way that will
allow us to predict where the problems are and to stop payments
before they are made. That is what we need to do to really----
Senator Brown. No, I agree.
Dr. Budetti [continuing]. Put this to an end. We are in the
process right now, and with the support that we got both from
the Affordable Care Act and also the Small Business Jobs Act on
the predictive analytics side, we are implementing programs and
we are working with private contractors and using the best
ideas from private industry, putting them into the context of
the Medicare and Medicaid programs, Medicare at first, to be
able to do exactly what you are getting at, Senator, which is
to spot these problems and not to make the payments in the
first place. That is the best way to stop an improper payment,
is to not make it----
Senator Brown. It has been almost 20 years. It has almost
been 20 years that we have had this identified as high-risk
designation by the GAO--20 years, and we are still talking
about it.
Dr. Budetti. It is a long time and I think we are turning
the corner. I----
Senator Brown. All right. How are you turning----
Dr. Budetti. I have been here----
Senator Brown. How are you turning the corner? Tell me how
you are turning the corner so I can feel good tonight when I
leave.
Dr. Budetti. I hope you will feel good about this, Senator.
We are turning the corner because we are implementing the
authorities in the Affordable Care Act that really give us new
and expanded tools that we are going to use very diligently.
For example, the advance screening to keep the bad guys out of
the program; to spot them when they are in the program and to
get rid of them; and, the new authority that when there is a
credible allegation of fraud, and we do that in consultation
with our law enforcement partners, we determine when an
allegation is sufficiently credible, we can suspend payments.
We have additional authorities to declare moratoria where there
is no evident need for new suppliers or providers to come into
the program. We are coordinating the Medicare and Medicaid
screening processes and other tools together. We are expanding
the Recovery Audit Contractor program into Medicare Parts C and
D as well as into Medicaid.
And backing all of that up is our development of the
application of modern predictive analytics, looking at many,
many different aspects of a health care situation all at the
same time in order to know which claims represent the highest
risk of fraud and not to pay them, to make sure that the money
is never paid. So we want to keep the bad guys out and we want
to stop the payments before they are made.
We also have a variety of measures that we are taking
specifically to cut the Medicare fee-for-service improper
payment rate in half by 2012. That is a commitment the
President has made and we are going to carry that out----
Senator Brown. In half from this number right here?
Dr. Budetti. That is correct, from the Medicare fee-for-
service components of those numbers. That was the commitment.
We are also, of course, working to cut the improper payments in
the rest of Medicare as well as in Medicaid. But we have the
specific commitment to--and in 2012, we will be accountable for
reaching that goal.
Senator Brown. OK. I appreciate it. I will turn it back and
then get back at you.
Senator Carper. Those are good questions.
It is kind of confusing, because on the one hand we have
the improper payments reports that come that are required under
the legislation just passed and signed by the President last
year while we have, I think, what Attorney General Holder says
may be as much as $60 billion in fraud, criminal fraud.
Improper Payments are not necessarily criminal fraud activity,
maybe some element of it, but for the most part, that is not
the case. So we are going here on two tracks.
I think our job, I would just say to my colleague, Senator
Brown, our job is to ask what resources are needed, what
authorities are needed to do the best that we can. The payoff
is seven-to-one. For every dollar we invest, we get seven
dollars in recovery. That is a pretty good return on the
investment, to make sure that we are doing that, to ask our
friends at GAO and our IGs to advise us and the agencies as we
go forward in this area to recruit a whole lot of people like
Ms. Carson to go out there and help us to identify this fraud
and stamp it out as best we can.
And then our responsibility is oversight, oversight,
oversight. We will be back here certainly before 2012 to see
how we are doing. But as Senator Brown says, if we can cut that
number, you all can cut that number in half, that is real
money. That is real money, and that is one--people say, we
cannot do anything to reduce the growth of entitlement
spending. Well, maybe we can, and this is one of the ways we
can do that.
All right. Senator Begich, and then back to Senator
Klobuchar. Mark, nice to see you.
Senator Begich. Thank you very much, Mr. Chairman.
Let me ask, Mr. Budetti and Mr. Andres, let me, if I can,
first ask two simple questions. If the Affordable Care Act was
repealed, would it crimp the ability for you to do the work you
need to do?
Mr. Andres. There are numerous benefits to our----
Senator Begich. I do not need the detail, just the yes or
no.
Mr. Andres. Yes, and certainly in light of the changes to
the sentencing and the funding.
Senator Begich. Excellent. We just had a House resolution
in front of us to reduce $57-point-some billion out of the
Federal budget. Would that amendment affect either one of your
divisions in any negative way for you to do the work you need
to do on fraud?
Mr. Andres. Senator, I do not know the specifics of that
bill.
Senator Begich. OK.
Dr. Budetti. I would agree with that, but in commenting on
the need for the Affordable Care Act provisions, Senator,
certainly, as I have mentioned, those are very central to our
efforts to fight fraud and abuse.
Senator Begich. Excellent. Could you, just for the record,
on H.R. 1 that we just rejected, could you have whoever in your
appropriate divisions report back to us if that bill would have
had an impact to you in the sense of ability to go after fraud
and abuse?
Mr. Andres. Certainly, Senator.
Senator Begich. OK. Let me go to this number, if I can. The
improper payments, my understanding is that it does not include
Medicare Part D also in this, or does it?
Ms. King. It does not.
Senator Begich. It does not. OK. So let us assume--I do not
know what that number is, but let me make sure I clearly define
improper payments. Once you go through the process of
determining that the paperwork is filled out for some of these,
that is not necessarily recovered money, that is just
clarification of the right--I mean, when it is improper
payment, it could be like me, for example--not me, because I am
not a provider, but when I go fill out my reimbursement to
Aetna, they send back a form and say, you did not send us the
right verification. Now, they may have sent me a check and
still ask for the paperwork. That could be an improper payment
on my end. But on the Medicare provider who may send in their
information to get reimbursed but does not send in all the
correct information, that is an example of a improper payment?
Ms. King. Yes.
Dr. Budetti. That is----
Senator Begich. OK, either one.
Dr. Budetti. Go ahead.
Senator Begich. Yes. Nodding the head to say yes. So of
this number, which may not be recoverable money because it is
still paid, just they need to do their paperwork right, so it
is not new money to the Treasury, but a percentage of this, if
we go after the fraud that really is people who are abusing the
system, what percentage would you guess of this number plus
Medicare Part D is in that category of recoverable potential,
knowing that some is--you can never squeeze it all out of
someone when they have done it wrong because they have spent
it. What is the percentage that you would estimate on this?
Dr. Budetti. Senator, I would draw a little distinction
here, which is improper payments are recoverable if they are
identified and if there are resources to collect them. But the
way that we measure improper payments right now is not designed
to measure fraud. Fraud is elusive. Fraud is secretive. Fraud
is hidden. Fraud is something that requires different ways of
identifying it. So it really is not a question of what
proportion of the improper payments are fraud. If the auditors,
in measuring the improper payments, detect signs of fraud, they
are required and they do report that to our anti-fraud
contractors----
Senator Begich. I understand. Here is the dilemma I am
trying to solve, and that is we use these big numbers----
Dr. Budetti. Yes.
Senator Begich [continuing]. But that is not accurate.
Dr. Budetti. It----
Senator Begich. In other words, unless you are telling me
that all of this is recoverable to the Federal Treasury----
Dr. Budetti. It may be recoverable, but it does not mean
that it will be avoided to be paid. Let me tell you what I
mean. If, for example, if a beneficiary who is eligible for the
program receives appropriate services from a legitimate
provider----
Senator Begich. Right.
Dr. Budetti [continuing]. But they get those services in
the hospital and they could have been provided in the
outpatient setting----
Senator Begich. Right.
Dr. Budetti [continuing]. That money that was paid is
recoverable. However, had those services been provided in the
outpatient department, in other words, had they been a proper
payment instead of an improper payment, we would have been
responsible for making that proper payment good. And so the
difference, if any, between the payment for the inpatient
service and the payment for the outpatient service is what the
net to the Treasury would be----
Senator Begich. Right. I have got you.
Dr. Budetti [continuing]. Or to the trust funds would be.
Senator Begich. I have got you. Again----
Dr. Budetti. We could still recover the amount if we went
after it.
Senator Begich. Right, but you may have only a differential
that you are requiring recoverable because you may have paid
that inpatient----
Dr. Budetti. Under current rules, we recover the entire
amount, but we are looking into exactly that and working on--
our main thrust, though, is to make sure that the services are
provided correctly in the correct setting----
Senator Begich. I understand that.
Dr. Budetti [continuing]. And the documentation and the
billing is proper in the first place to support this.
Senator Begich. So let me--I am going to end this line,
because----
Dr. Budetti. Sure.
Senator Begich [continuing]. Honestly, it is--then what we
are going to still be using, just so we are clear, that there
is $60 billion of recoverable money, because----
Dr. Budetti. Yes.
Senator Begich [continuing]. I think that is one of the
struggles here for us, is what is--do we believe at the end of
the day 30, 40 percent of this number is really the hard nut
that we are going to crack and go after in the sense of
returning back to the Treasury?
Dr. Budetti. What we need to focus on, Senator, is the fact
that because some of that--a substantial amount of that--may be
due to improper documentation, or a lack of documentation
entirely, or provided in the wrong setting, we are still going
to be providing the right services. So there may be a
differential between what we could pay and what we would need
to pay if the service were provided and billed for properly----
Senator Begich. The right way.
Dr. Budetti [continuing]. But having said that, there is
still the world of real fraud that we need to take on, and that
is a major challenge to us and that is what we are intent on,
as well, what we are intent on preventing.
Senator Begich. You mentioned you are working with private
contractors to try to go after the fraud and use new
technology, which I think is great, and there is a ton out
there. Credit card companies, as the Chairman indicated, they
use a lot of it to figure out where there are situations
occurring. What do you think your time table will be to really
implement some of that new technology on the ground that has an
impact, a real dollar impact?
Dr. Budetti. We are in the process right now of looking at
the solicitations that were out. The bids are in. We will be
implementing the kinds of solutions that come in this year and
we will have them integrated into our claims payment system, in
part, this year. We will be phasing it in this year and the
target is no later than the middle of next year that we would
have it thoroughly integrated. So we are not just waiting until
we get all the results.
Senator Begich. Understood.
Dr. Budetti. We are going to integrate the findings as we
get them.
Senator Begich. So from a Committee perspective, when would
you be able to say to the Committee, here is some update. Here
is what we are seeing. Here is some positive news or here is
some negative news, depending on how we look at it----
Dr. Budetti. Later this year, I think would be----
Senator Begich. Later this year?
Dr. Budetti [continuing]. Would be the first phase.
Senator Begich. OK. And I will just ask two quick
questions. In regard to medical schools and the education that
is going on, are you engaged in helping folks that are coming
through the system now that will soon be providers how to deal
with improper payments and Medicare fraud and those kinds of
elements? Do you go to that level, or do you kind of----
Dr. Budetti. Senator, I think I will defer to my colleague,
the Inspector General, on that count----
Senator Begich. OK.
Dr. Budetti [continuing]. Because I know they have a major
initiative on that front, if he does not mind.
Senator Begich. OK.
Mr. Levinson. Yes, thank you. And indeed, we have published
a Roadmap for New Physicians in which we actually provide a
very good, succinct summary of the major laws that are
implicated in the Federal health care programs, everything from
the physician self-referral law, the Stark Law, the exclusion
statute, to give the incoming medical profession a sense of
what is at stake, how to go about conducting their business in
a way that conforms with our requirements. It has been very
well received in the medical schools in which it has already
been presented and before the medical associations, and it is
part of our Health Care Fraud Summits that we have conducted
this past year and we continue to do so this year, in which we
do this kind of outreach to the medical community. It is a very
important initiative and I am pleased to say it has been very
well received.
Senator Begich. Very good. And I will just end, Mr.
Chairman, and say I do not know whose Web site it was, but when
I was able to review the Top Ten Most Wanted in the fraud of
Medicare, I want to commend whoever did that, I do not know if
it is--there we go--I think it is a great thing to do. I know
as a former mayor, one of the things we did with people who did
not pay their bills, we put them on the web. It actually was so
popular, it crashed the system three times over a weekend--not
that people wanted to see if they were on it, they wanted to
see who else was on it. But of $20 million, we collected almost
$9 million in the first year, because people are not happy when
other people are cheating the system.
And so I thank you for that. I think that is a great
system. I think you should continue to do whatever you can to
put those ``Most Wanted'' up, because people actually are
intrigued by that and probably would be your best allies and
your best enforcement arm.
Thank you very much.
Senator Carper. Thanks, Senator Begich. Senator Klobuchar.
Senator Klobuchar. Thank you very much, Mr. Chairman, and
thank you to the witnesses.
Dr. Budetti, many States are taking the initiative to set
up all-payer claim databases similar to CMS's integrated data
repository, and I am working on legislation that actually would
create a standard for the process for these other States so
that we can expand the use of these databases. Do you feel that
having databases combined with predictive analytics and other
tools are a good way to combat fraud and abuse in the health
care system?
Dr. Budetti. Yes, Senator, and certainly working with the
States to enhance the Medicaid data and to enhance the use of
those data is a priority for us and we would be very interested
in talking to you about that.
Senator Klobuchar. OK. Very good. Mr. Andres, you mentioned
in your testimony that the average prison term for defendants
convicted of health care fraud is over 40 months. How recent is
that, over what span of time?
Mr. Andres. I believe that is fairly recent, Senator.
Senator Klobuchar. Mm-hmm, because I remember at a previous
hearing that most people convicted were not sent to jail and I
think they served less than 3 years, and I think it has gone up
by a few months. Do you feel that the current sentencing limits
are enough of a deterrent?
Mr. Andres. As I mentioned earlier, Senator, the Affordable
Care Act directs the Sentencing Commission to examine the
sentences for health care offenses and those proposals have now
come through and will significantly increase sentences, and we
believe that--or we would ask Congress to support the
Sentencing Commission's recommendations.
If I could just address the 40-month issue in two ways.
First, the average of 40 months may be a little misleading
because the types of health care fraud cases that are included
in that figure could vary widely----
Senator Klobuchar. Mm-hmm.
Mr. Andres [continuing]. From the beneficiary who was
abusing the system to a health care provider who was billing
$20 or $30 or $40 million. So there is a wide range there, and
so that number may be misleading.
Let me say this. Our prosecutors are asking for jail time
in appropriate cases, and I believe in many cases, we are
getting significant jail sentences. To give you an example, in
November 2010, a defendant and owner/operator of a Miami clinic
was sentenced to 10 years in prison for her role in a $22
million fraud. A doctor in Detroit was sentenced to 72 months
in prison for writing prescriptions for unnecessary and non-
rendered services. Another doctor was sentenced to 14 years in
prison and ordered to pay $9.4 million in restitution for a
scheme involving $18.3 million.
So in appropriate cases, judges are certainly sending
defendants to jail and they are sending them to jail for
significant periods of time.
Senator Klobuchar. And I, in my former life as a
prosecutor, I found, especially with these types of white
collar crime cases, that sometimes the best thing you can do is
just the example and that you may not know of some other fraud
going on, but then people get very nervous and either pay back
money or change their ways, so thank you for that.
Inspector Levinson, the OIG and DOJ's Medicare Strike Force
has expanded to include nine total hot spots of health care
fraud, leading with Miami, Los Angeles, Detroit, Houston,
Brooklyn, Baton Rouge, Tampa, Dallas, and Chicago. Could you
talk about what makes a city a hot spot, and does the mention
that I made of coordination of care, does that have anything to
do with the low incidence of fraud?
Mr. Levinson. Well, I think that over time, through our own
experience as well as that of the Justice Department, it is
clear that there are concentrated areas around the country
where either ethnic groups, organized sense a vulnerability in
a particular part of the program--very often it is within the
area of DME, infusion therapy, home health is becoming a
popular scam area--where the same kind of scheme is hatched and
becomes very, in a sense, viral.
And, of course, South Florida several years ago emerged as
the hottest of hot spots and we concentrated on South Florida
years ago to try to especially focus on the DME area with
tremendously good results, not only in terms of investigation
and prosecution, but billings for DME are way down as a result
of that activity, indicating that there is real value to
getting the word out, even as you do the work-----
Senator Klobuchar. How about the question I asked on
coordination of care? And this is related to delivery system
reform, where you know what is happening with a patient. You
have maybe one primary care provider and you have a group that
works together. This is the model we tend to use in Minnesota.
And my argument is that in itself, outside of the government
and the work that Mr. Andres and others are doing, that it
polices itself some. You need the government, as well, but it
polices itself because there are other private sector people
that are working with a group of people.
Mr. Levinson. I am not sure whether any examination or
study has been done about the impact of that in terms of the
fraud area. Again, I am talking about those who really do not
belong in the program in the first place. The fraud part of
this exercise has so much to do with cleansing the program, and
then the next step, of course, is strengthening the program,
and I think there are important provisions in the Affordable
Care Act on coordination that perhaps my colleague, Dr.
Budetti, can speak about.
Senator Klobuchar. Right. I just--I want to point out that
some of the areas that have the more coordinated care in our
country are not included in your hot spot list, and there is
more of a check on the system.
Mr. Levinson, you mentioned the use of exclusion from
Federal programs as a disincentive for executives and providers
to commit fraud and corporate misconduct. In the consideration
of whether or not someone should be excluded from the programs,
are stronger civil and criminal charges also considered in
addition to the exclusion?
Mr. Levinson. Well, they do play a very, very important
part in whether permissive exclusion goes forward. There are
mandatory exclusions if someone is convicted of a felony, for
example. But within the context of permissive exclusions, the
record of executives, of managers, is very important.
Senator Klobuchar. And your testimony also highlighted the
steps CMS and OIG are taking to move away from the pay and
chase model, focusing more on preventing fraud from occurring
in the first place. How will CMS and OIG prevent a person who
is denied payment in one area simply from relocating and doing
it in another area? That is what we see with, like, Web sites
and piracy. Do you want to answer that, Mr. Budetti?
Dr. Budetti. I would be happy to, Senator. One of the
provisions in the Affordable Care Act requires that if someone
is excluded--is thrown out of the Medicaid program in one
State, they also have to be similarly treated in all States.
And, of course, if they are tossed out of the Medicare program,
provided that the reasons for them being tossed out are the
kinds of things that we are concerned about. If they just
resigned without being under a cloud or they just decided to
move from one State to another, that is not going to count. But
if they are terminated in one State for cause, they are going
to be terminated everywhere, and if they are terminated in
Medicare, they are going to be terminated in all the States.
And so we are working with the States to set up a system
that will allow the identity of the people who are subject to
this provision to be securely identified so that the right
person will be identified across the country, so aimed at
exactly what you are getting at.
Senator Klobuchar. OK. And thank you, Ms. King--my time is
done here--for your testimony, and also, Ms. Carson, for
telling your story. And if I could just ask one question, it
would be how do you think we can help seniors and Medicare
beneficiaries become more aware of potential fraud schemes?
Ms. Carson. Actually getting out and publicizing it, and
also letting the seniors know that they do have forces on the
ground that will help them. A lot of them that are in high-
rises and nursing homes are not aware of what is going on
unless we come out. We do presentations and we are educating
them on the frauds that are happening around the country and
also in our State.
Senator Klobuchar. Thank you very much.
Senator Carper. Thanks so much for those questions and for
your work, good work in a lot of areas, really, a lot of areas.
I want to come back to, if I can, a question for you, Ms.
King, before too long, but not yet. I want to come back to Dr.
Budetti. On the issue of Recovery Audit Contracting, and for
folks that are not familiar with that, I actually used to do
this, at the time I was Governor of Delaware, we had people who
worked in the Division of Revenue. Their job in Delaware was to
collect revenues that were owed to the State. And some cases,
particularly for difficult monies to collect that were owed to
the State of Delaware, we would hire contractors and their job
was to go out and collect the money. They kept a percentage of
that which they collected and that was their compensation. It
worked well, and the Division of Revenue, rather than providing
worse service, ended up providing, I think, better service and
won the Quality Award for the State of Delaware my last year as
Governor, so we are very proud of that.
I am going to go back in time 4 or 5 years when the idea of
using a similar approach with contractors doing recovery with
respect to Medicare, and I think the idea was to do a
demonstration focused on three States, I want to say
California, maybe Florida, maybe New York. I think those are
the initial three States that we did the demonstration for a
couple of years, and then I think we expanded to a couple more
States, maybe five, and then before the demonstration was over,
I think we might have gone to 19 States.
Then I think we had like what we used to call in the Navy a
stand-down. We used to have a safety stand-down in our Navy air
squadrons and we would not fly for a day or a couple of days,
just focus on safety. For recovery Audit Contracting we had
what I would call a stand-down for, I think for a year, to do
sort of lessons learned. What did we learn from the
demonstration that would enable us to collect more money, that
would enable us to cause less intrusion, less confusion among
the provider community.
And then we went back and said, we are going to do this in
all 50 States. Now that we have learned from this
demonstration, we are going to do it in all 50 States. My
recollection was in the last year that we did the demonstration
before the stand-down, we collected, or contractors collected
over $300 million. I think it was over $300 million. And for
the 4 years, I think they collected about maybe a billion
dollars.
And we are told that in the first year coming back, doing
this in all 50 States that we can expect to collect less than
$100 million. That just seems strange to me. And as we look at
your improper payments of $48 billion, in order for us to get
close to half of that, we are going to have to do a whole lot
more, than the $100 million or $200 million. And I know that
your focus is on prevention, so we do not pay and chase. But it
seems to me we ought to be able to do a whole lot better in 50
States, looking at improper payments, Medicare Part A, Part B,
Part C, Part D. The numbers just do not add up.
Dr. Budetti. Senator, we certainly appreciate your
leadership in this area, and I think, the program was just
expanded to the Nation as a whole in 2010. That was the first
full year, and a lot of that year was spent in implementing
many of the lessons that were learned from the pilot program,
getting feedback from the provider community, doing exactly
what you said, which was standing down in some ways long enough
to make sure that the program was implemented in a way that
benefited from the pilot.
So much of 2010 was spent with the initial stages of
improving operations, of working with our partners, making sure
that the program was up and running. So we do see that the
recoveries are going back up again and we believe that we will
be on track to reach the goals that were established. We are
also in the process of----
Senator Carper. And what were the goals? Could you just
talk about the goals that were established?
Dr. Budetti. I do not have the numbers in front of me,
Senator----
Senator Carper. Just roughly.
Dr. Budetti. They are in the--I believe they were in the--
for 3 years, in the $300 to $500 million a year range, and we
believe that we are on track to getting there.
We also believe, as you said, that as we implement--we have
already signed a contract for a Recovery Audit Contractor to
look at overpayments and underpayments in the Part D program.
We are right now finished collecting public comments on how to
implement the other aspects that were in the Affordable Care
Act on the Part C and Part D programs. And we have also been
working very closely and diligently with the States to
implement the Medicaid RACs in the States.
So we are on track, I think, to get the full benefit out of
the Recovery Audit Contractor program and we will be happy to
keep tabs with you on how successful we are.
Senator Carper. We have had this conversation before, and I
do not mean to beat a dead horse, but this is a lot of money.
If we can collect through Recovery Audit Contracting a billion
dollars in roughly 4 years out of anywhere from three to five
States, and that was not Medicare Part A, Part B, Part C, Part
D, but it was just maybe A and B, if we are adding C and D to
that and we are adding another 45 States, we ought to be able
to do a whole lot more than $300, $400, $500 million in the
next several years. It just--it does not add up.
Dr. Budetti. I certainly appreciate that, Senator. I think
that some of the changes that were made in the program will
take a while to be fully in place and to be implemented
properly. And also, we are working with the provider community
to correct many of the problems that led to the identification
of an improper payment that could be recovered. Certainly,
everybody's goal is to eliminate that problem in the first
place, not just to recover the funds after the fact. But we
will be happy to, as I said, keep tabs on this with you.
Senator Carper. And we will keep tabs on it, as well.
You mentioned Medicaid. Let me just touch bases on that. My
understanding was that CMS will no longer require that States
have Medicaid Recovery Audit Contractors in place by April 1 of
this year. That is what I am told. And that the Medicaid
program final rule will establish a new deadline, not April 1,
but a new deadline. I am told that CMS has also dropped the
March target for publishing the final rule and there has been
no announcement of a new target date for the final rule. And I
would just ask, when do you expect to see the final rule for
Medicaid Recovery Audit Contracting?
Dr. Budetti. Senator, we did publish the Notice of Proposed
Rulemaking last fall and we did get a lot of feedback from both
the States and from the provider community, in particular, on
the way that the program would be implemented across the States
and trying to assure that the Recovery Audit Contractors under
Part A and B of Medicare, for example, were not completely
different than the way that they are implemented under
Medicaid. So we are taking a lot of considerations seriously as
we design the program.
But we are on track. We are working diligently, and
although I can never talk about the exact date of a regulation
that has not yet been published, I can tell you that we are
working on getting this in final form very diligently and it
will be forthwith.
Senator Carper. And I would like to take more comfort. I am
not sure, but is the beauty in the eye of--
Dr. Budetti. It will be in the short term, Senator----
Senator Carper. OK.
Dr. Budetti [continuing]. But since we are in the process
of rulemaking, I am just not in a position to specify exactly
what the content or timing would be just yet.
Senator Carper. Well, sooner rather than later. I hope you
feel that sense of urgency and reflect it.
Dr. Budetti. I feel that sense of urgency, sir.
Senator Carper. All right. Let me yield to Senator Brown. I
have a couple more questions, and then we will come back to--I
have at least one question for you, Ms. King, so do not go
away. Senator Brown.
Senator Brown. Thank you, Mr. Chairman. I have been
listening back at another meeting. The Chancellor of UMass-
Lowell came out.
Mr. Budetti, just to kind of reengage a little bit, the GAO
designated Medicaid a high-risk program, in 2003, and under the
Affordable Care Act, the cost of the Medicaid expansion is $430
billion over the next 10 years and the Federal Government is
going to be responsible for 90 percent of that.
On page ten of your testimony, you state that the return of
the ROI for the Medicare Integrity program is 14 to one. Do you
know what the ROI will be for the Medicaid Integrity program?
Dr. Budetti. Senator, the Medicare Integrity program is
something that we operate fully at the Federal level and the
collections and the data are all something that is entirely
under our purview. The activities in the Medicaid Integrity
program itself and the various Medicaid activities that are
designed to combat fraud and go after these kinds of problems
are really a partnership between us and the States. We operate
a number of activities. For example, we run the Medicaid
Integrity Institute, which has trained a couple of thousand
State employees in program integrity. And so that is one kind
of activity that we do at the Federal level that is not really
designed for us to have a direct return on investment like we
can measure in the Medicare Integrity program. We also have, of
course, auditors that do audit and do those audits based upon
data that we collect from the States, but we do not have direct
access to the kind of claims data that we do on the Medicare
side.
So it is really a partnership, and there are funds that are
coming back to the States that we may or may not actually be
able to identify easily for calculating our return on
investments. But we are working on this. This is an issue
before us. We are looking at the best way to go about
calculating the return on investment on the Medicaid side. We
firmly believe that what we have done is effective and is
leading to recoveries, but it is much more complicated in the
sense that it is a partnership with the States and there are a
variety of activities that go on at the State level that we are
not directly responsible for.
Senator Brown. So do you think you are effectively able to
figure out if the money is effectively being spent or not and
if it is being allocated in the right integrity activities?
Dr. Budetti. Well, that for sure. We certainly believe that
we are engaging with our States. We are moving to get the
States and ourselves, as Senator Klobuchar referred to, to have
better data available for this process. We are working with
them on looking to the ways to use the data. We are working
with the States on clusters of States working on issues that
are important to them. We are revisiting this entire issue
because we believe that the States are effective partners.
States have a variety of activities that go on that we are
not directly overseeing. For example, the Medicaid Fraud
Control Units that generally are in the Attorneys Generals'
offices in the States are something that, although they are
funded out of Medicaid operations, they are not directly
controlled by us.
Senator Brown. That being said, have you noticed any
differences, because, for example, in Massachusetts, we have 98
percent of our people already insured. Have you noticed any
difference between the States like ours that are already kind
of dealing with those issues and already have a health care
plan in effect and, quite frankly, I think it is better than
the Federal plan? Have you noticed a difference between our
State and maybe other States that are not where we are?
Dr. Budetti. I do not have any State-specific data at hand,
Senator, but I would be happy to see whether we can find
something for you----
Senator Brown. No, just--not looking for anything. It is
just a general, do you notice a difference, that is all. But if
you cannot answer, that is fine.
Dr. Budetti. I do not think I have anything to add to that,
Senator.
Senator Brown. All right. I was looking for an ``atta boy''
for Massachusetts. [Laughter.]
Man, I cannot give any more softballs than that. Simply,
``Yes, Massachusetts is doing great, Senator.'' OK. [Laughter.]
Dr. Budetti. I am sure Massachusetts is doing great in
many----
Senator Brown. Oh, it is too late. [Laughter.]
And just to follow up again, HHS's fiscal year 2010 agency
financial report estimates the national improper payment rate
for Medicaid is 9.4 percent, with the Federal share being an
estimated $22.5 billion. The same report stated that CMS faced
challenges with State payment systems that had paper-only and
aggregate claims. Changes in information systems, IT,
obviously, at the State level during the course of the
measurement cycle and wide variations of system designs and
capabilities vary, from State to State.
I know CMS is working with the States to modernize their
IT. How long and how much money do you think it will take
before the States achieve and kind of get on the same sheet of
music when it comes to dealing with these types of issues?
Dr. Budetti. Well, Senator, as I am sure you are aware,
some States are far more advanced than others----
Senator Brown. Like Massachusetts. [Laughter.]
I have you flustered, do I not? [Laughter.]
Senator Brown. Good. I am trying to throw you off, so--I am
obviously teasing. I am glad everyone has a sense of humor.
Dr. Budetti. I am looking for something here, Senator.
Senator Brown. All right. Good.
Dr. Budetti. The States--the way that the States are
running their programs does vary from State to State, and the
way that the improper payments are measured in the States is on
a three-year rotating cycle, so that 17 programs are studied
and reported on annually. So when we reported the figure for
this year, for the first time that we had 3 years of data to
get a comprehensive national figure, that set the target for us
for what we want to reduce.
Now, what that means is that States typically have 2 years
before the next time that they will be studied, because it is a
three-year rolling cycle. So that is the cycle that we expect
the States to implement their improvement plans in, and it is
in that kind of a cycle that we will know whether the States
are improving. So----
Senator Brown. May I interrupt for one second?
Dr. Budetti. Yes, sir.
Senator Brown. So it is clear to me that the States are all
different. It has been 40 years, basically, and we still do not
have, like, a uniform national claims system where you can all
be on the same sheet of music, same type of ``keep it simple,
stupid'' type of philosophy where we just do it all the same
and there is no miscommunication, there is no misunderstanding,
there are no improper classifications. I mean, what type of
problem, I guess, would it be to have a lack of uniform
national claims kind of data system? Is there something you
guys talk about at all, or----
Dr. Budetti. Well, Senator, as I said, the Medicaid program
is a partnership with the States and the States have
substantial flexibility. They are the ones who end up paying
the claims and having the claims data to analyze. So we do need
to work individually with all of the States and to make sure
that we are doing something that is appropriate for a given
State.
On the other hand, as you mentioned, we do want the States
all to get the maximum possible return on their program
integrity investments and that is why we do things like our
Medicaid Integrity Institute. We also do a variety of ways of
communicating with the States so that they know what each other
is doing and can learn from each other best practices.
Senator Brown. I have one final question. Thank you for
your sense of humor. I appreciate it. It is not easy to come
here. I appreciate everyone else laughing, too.
So, Ms. King, I want to just touch base very quickly,
because I know the Chairman has a question or two left. The
expanded prescription Part D drug benefit program began in
2006, but it was not until 2010 that GAO indicated that CMS has
made progress in the $51 billion program for waste, fraud, and
abuse. Due to the nature and size and complexity, how confident
are you that CMS will be able to implement in a timely manner a
vastly more complex system to make sure that we are not having
any of the fraud, waste, and abuse that we are kind of
discussing here today in that program?
Ms. King. Well, if I could elaborate a little bit on the
Medicare Part D situation, CMS, before Part D went into effect,
required the sponsors and the plans to have compliance
programs, and in effect, that is sort of self-policing. CMS put
forth elements that you have to have in your required
compliance plan, so the plan is supposed to police themselves
and they were, in effect, and they were checked. But what CMS
did not do as soon as they said they would do is audit whether
the compliance plans were working.
Senator Brown. Right.
Ms. King. So there is a little bit of a nuance there.
Senator Brown. No, I understand----
Ms. King. And in the Affordable Care Act, there are
requirements for providers to have compliance plans. So going
forward, I think that there is going to be more on the provider
community and providers as a group to take those things into
account on the front end, so to share more in the
responsibility.
Senator Brown. Thank you, Mr. Chairman.
Senator Carper. Thanks for all those questions and for
helping, and your staff, as well, for helping us with this
issue.
This is not a partisan issue. We all know we have a huge
debt. We need to bring it down. We have a problem with
Medicare. We are running out of money somewhere down the line.
We want to make sure that does not happen. And we want to put
bad guys in jail and put the white hats, we want to make sure
they get some credit. We appreciate the work that is being done
on this.
When I get to the end of my questions, the last question I
will ask is for you to come back to us and give us advice and
maybe one thing, and I will start maybe with you, Ms. Carson--
not now, but in 7 or 8 minutes--come back and say, if the
Congress could do one thing, the Legislative Branch, what can
we do? What should we do to try to make sure that we do a
better job with respect to these issues? Just be thinking about
that, everybody here.
All right. A question, if I could, for Mr. Andres, if I
could. I think our Attorney General, Eric Holder, has been
quoted as saying maybe the fraud on Medicare is as much as $60
billion. Let us just say it is half that. Let us just say it
is, like, $30 billion. I do not think anybody knows what it is,
but let us say it is only half that number, $30 billion.
Last year, we reached a high-water mark, I think, the most
recent year, where we recovered, what, about $4 billion, or we
tried to recover as much as $4 billion, reported that. That
would be the biggest recoveries we have ever made. Going
forward, obviously, we want to stop the incidence of fraud in
the first place, but can we expect next year--I think we have
seen this growth, these recoveries grow from maybe $1 billion
to $2 billion to $4 billion. Given the fact that there is a lot
more out there, can we expect to see that number continue to
rise?
Mr. Andres. Senator Carper.
Senator Carper. And what can you do, what can we do to make
sure that happens? I think one answer might be, if you are
getting seven bucks back for every dollar that you have to
invest, maybe we need to make sure that you can get those one
dollars so you can get to seven. Maybe we ought to double that.
But what can we do, what do you need to do to make sure that we
continue to increase that number of recoveries?
Mr. Andres. Certainly support the President's budget, which
asks for additional funding for the Department of Justice. A
lot of the money on the recovery side comes from the tremendous
work from the Civil Division. The Civil Division is involved in
False Claims Act and other related lawsuits in which they are
suing pharmaceutical companies and going after a variety of
different actors in the field. So a lot on the recovery side
comes from the civil side as opposed to on the criminal side.
Our recovery numbers on the criminal side, as I mentioned
earlier, are a little harder because, again, we are involved in
the arrest and prosecution and jailing of these individuals,
but it is harder for us to actually collect money in many
instances because the money is simply gone or we cannot get to
it.
Senator Carper. All right. Ms. King, I have been saying I
am going to ask you a question and the moment has come. Let me
just see how I lead into this. I think--Dr. Coburn is gone now.
He was instrumental in having GAO conduct a review, I think,
that led to the release of a report that identified numerous
duplicative government programs as well as ways that the
Federal Government could cut costs and save money. I think we
all realize that identifying duplication in the agency and
improvements are critical at this time of economic challenge,
at this time of high deficits, as well as trying to be better
stewards.
As an old recovering Governor, I understand the serious
challenges that come along with running a major program like
Medicare and Medicaid. We all know that our Medicare and
Medicaid systems are not perfect. We have to find ways to make
them better.
So my question is basically this. We have discussed a
number of the changes that are being made at CMS to fight
fraud. As we look forward to the next steps, can you identify
some best practices or other activities that CMS should
consider to further prevent fraud, waste, and abuse in these
programs? So beyond what is being done, how about some
additional steps, next steps, to do even better? And are there
additional statutory authorities that you need from Congress
that would enable you, or enable them to do an even better job?
Ms. King. I think one thing that we would suggest that they
could do a better job on at the moment is, and especially
following up on the RAC program, to aggressively identify a
process to look at what happens with the vulnerabilities so
that they do not happen again. When we evaluated the RAC pilot
program, we found out that they did not have a process like
that in place, and going forward in the national program, I
think that would be important.
In terms of additional authorities----
Senator Carper. Dr. Budetti, would you briefly respond to
that comment, please?
Dr. Budetti. Yes, Senator. We appreciate the comment from
GAO and we are looking to do exactly that, to follow up on the
vulnerabilities. We believe that we should learn from the
findings of the Recovery Audit Contractors to correct those
problems.
Senator Carper. All right. Thanks.
Go ahead, Ms. King.
Ms. King. I think in terms of new authorities, I think CMS
has a really full plate at this point, so----
Senator Carper. Is that true, Dr. Budetti? [Laughter.]
Ms. King [continuing]. And they have testified before that
they feel like they have the tools necessary. But effective
implementation of those authorities is going to be really
important.
The other thing that I think that was pointed out in the
Coburn Report is, as you probably know, the Congress sets a lot
of the payment policies in Medicare in law and I think it is
important to look carefully at those policies to see that they
are providing the right incentives to provide care effectively.
Senator Carper. All right. Thank you.
Let me go to an issue involving contractor conflict of
interest. Mr. Levinson, I think this involves some of the work
that you all have been doing. But we are always trying to
identify ways to incentivize government contractors for better
performance as well as to try to remove some of the hindrances
that they face. About a week or so ago, Senators Baucus,
McCaskill, and I sent a letter to your office asking to review
contracting oversight by CMS. The issues involved potential
organizational conflicts of interest among the contractors
hired, on one hand, to perform the Medicare claims
reimbursements and those hired to oversee the process. I would
just ask, is your office going to be able to examine the
questions and the issues that we raised, and if you could
respond to that, I would be very pleased.
Mr. Levinson. Thank you, Mr. Chairman. We have received the
letter and, indeed, we have ongoing work in the conflicts area
that we believe overlaps to a certain degree with what the
request is, and we look forward actually to working with your
staff to see how we can align our work that was started some
time ago with this fresh request, which we think in many
respects will be very helpful, actually, in filling out our own
work. So the answer is a very enthusiastic yes.
Senator Carper. All right. Good.
And a follow-up, if I could, Dr. Budetti. Do you have any
thoughts on the steps that CMS could take to improve the
oversight of your Program Integrity contractors?
Dr. Budetti. Senator, we certainly, just as you do, we take
any conflict of interest issues very seriously. We do have
processes in place to screen for conflicts of interest before
contracts are awarded. We are always willing to take a second
look at something so important and we look forward to
continuing to do so. So we do take this very seriously. We
believe we have good processes in place, but if we need to
learn something, we are open to learning it.
Senator Carper. OK. Thank you.
All right. Ms. Carson, I indicated I would have one last
question for the whole panel and it is basically the same
question. What can we do on the legislative side? This Federal
Government, three branches, executive, judicial, and
legislative, and we try to work together. I am actually quite
pleased, in preparing for this hearing, to know as we try to
reduce improper payments and try to reduce the incidence of
fraud, as we try to recover additional monies that have been
defrauded from these programs, my sense is we are actually
working as a team. The team works actually pretty good.
We have GAO out there being a watchdog and coming up with a
bunch of recommendations and telling us maybe some things that
we need to be doing or some things that the folks at CMS need
to be doing.
We have the Department of Justice chasing the bad guys,
putting them in jail, fining them, sending out a real strong
message to people who are doing this stuff that if they keep it
up, we will catch you. You will not be happy. And that is an
important message, as well.
And for Ms. Carson over here to say we have not just tens
of thousands of our senior citizens out there, but maybe
hundreds of thousands we can put out on the beat, some new cops
on the beat, and they are all 65 or over, but if we got them
out on the beat and helping us to beat back the bad guys.
But what I really want to hear from you is what more--not
so much what should the folks at the table and those you
represent be doing, but is there anything, any advice, good
advice you have to close with what more the Legislative Branch,
the Congress, can be doing to help us do a better job on this
front?
Ms. Carson. Well, when I was in banking, we had a tracking
system called an Excessive Transaction Report.
Senator Carper. Excessive transaction?
Ms. Carson [continuing]. Report that we had, and what is
going on in a day in which an alert is transmitted, with the
fraud that is--and the new scams that are coming out in other
cities? If we were alerted, we can educate the seniors to what
is going on so that they can be best prepared to actually--they
can be best prepared and we can be best prepared in educating
them on what to look out for and also not to be taken in by any
of the new scams that are coming about.
Senator Carper. All right. Thanks. I think we are going to
want to follow up with you back in Delaware and figure out
how--maybe we can be a model in getting a whole lot more folks
involved in this.
During the time I served as Governor for 8 years, we
focused a lot on recruiting mentors. I wanted to recruit 10,000
mentors to work in our schools with kids on a voluntary basis
and we hit the target. We actually still have thousands of
people who mentor. I still mentor. That is something where we
actually made a big difference in terms of quality of the
education, students doing better in school, less disruption,
just simply doing better academically. It did not cost really
much money at all and we got a great return on that investment.
Maybe we can figure out a way to leverage and get more of our
seniors to sign up for the Patrol. Thank you.
All right. Ms. King, I am always happy to work with all you
folks at GAO. I had a nice chat with your new Comptroller
General yesterday and it was very encouraging--a very
encouraging conversation. But what else can we do at our end to
help on this front?
Ms. King. I think effective oversight is really critical at
this juncture, such as you are doing now. The Congress has
taken a really active role in oversight of late and I think
that is critical going forward, as well.
Senator Carper. All right. Thank you. Mr. Levinson.
Mr. Levinson. Mr. Chairman, of course, it would be very
helpful to have strong continuing support for the HCFAC
program.
Senator Carper. Talk about that.
Mr. Levinson. Well, over the course of its history, it has
been able to recover $14 billion, and as was pointed out
earlier, those dollars are continuing to increase. The stakes
are much larger and the HCFAC program really presents a very,
very important vehicle for DOJ, OIG, CMS to work in a
coordinated fashion to attack the fraud problem. So continued
support of HCFAC, I would----
Senator Carper. For the folks who are monitoring and
following this hearing intently across the country, why do you
not tell them what HCFAC actually means in words that they can
understand.
Mr. Levinson. It is the Health Care Fraud Account program
that was established as part of the Kennedy-Kassebaum HIPAA law
in the mid-1990s, and it created this dedicated account that is
shared between the Departments of Justice and Health and Human
Services to coordinate a multi-prong attack against health care
fraud. And as I have said, it has produced very, very
significant results. The return on investment continues to look
even better.
Senator Carper. Good.
Mr. Levinson. As a second more particular matter, on
(b)(15) exclusion authority----
Senator Carper. Say that again?
Mr. Levinson. On (b)(15) exclusion authority that OIG
exercises, there is bipartisan interest in Congress now on
giving us additional authority under (b)(15) that would allow
us to pursue, in the context of sanctioned entities, to pursue
parent or sister corporations that, in effect, control or are
working with the entity that has been excluded for--as a part
of the sanction.
Senator Carper. OK.
Mr. Levinson. We need to be able to pursue those who, in
effect, are in or connected with the corporation that we have
identified as committing a serious health care infraction.
Giving us that authority would allow us to go up the corporate
chain or be able to pursue other corporations in which
individuals basically are working together.
Senator Carper. Good. That is one that--I think that is new
to me. That is not something I have thought about before, so we
appreciate that idea.
Mr. Levinson. Thank you.
Senator Carper. Thanks. Mr. Andres, what can we do to help
you guys do a better job?
Mr. Andres. Chairman Carper, the President's budget seeks
an additional $63 million in discretionary funding for the
Department of Justice, and we would use those funds to continue
our law enforcement efforts. As we have testified here today,
investment in health care fraud enforcement is a sound one, one
that generates revenue, and we believe that supporting the
budget would be instrumental to us continuing those efforts.
Senator Carper. All right. Thank you.
Dr. Budetti, before you respond, let me just say, my
colleagues and I have, frankly, asked a lot of questions, not
easy questions, in some cases difficult questions. I am sure as
we go forward there are going to be even more tough questions.
But having said that, I just want to note that a very good and
important step that you described. CMS implementing new
requirements and controls will help curb waste and fraud from
the Medicare prescription drug program. We are mindful of that.
These steps directly address the findings of the IG that I
released. That is just one of several in a series of solid
progress. I just would like to say that.
It is not enough just to pull somebody before a Committee
and just say, well, why do you not do a better job? The
important thing is, well, we have asked you to do a better job.
We have provided the resources. We have asked you, how can we
help you. We have provided the resources. And then we say we
expect you to do a better job, and on a number of fronts, you
are, and we want to make sure that continues and we are keeping
up our share of the bargain.
But any closing comment in terms of how we can help more?
Dr. Budetti. Thank you very much for those kind words,
Senator. I truly anticipate that we will be in the position to
give you more reason to feel good about the investments that
you have made.
As far as going forward, well, first of all, we certainly
appreciate everything that you and your colleagues in the
Senate and in the Congress have done with providing us with the
authorities and the expanded funding in the Affordable Care Act
and other new authorities. Those are absolutely critical to
what we are doing.
Going forward, as my colleagues have said, the President's
budget for 2012 does propose additional spending that promises
to save another $30 billion or more over the coming decade. So
we continue to believe that it would be an ongoing wise
investment to make, for the Congress to make. So if there is
any one thing that I would mention, it would be for you to
support the President's budget request for 2012.
But I also want to thank you, sir, for your leadership in
this area and look forward very much to continuing to work with
you.
Senator Carper. We look forward to it, as well.
My thanks to each of you for joining us today, for
preparing today, for the good work that you and your teams are
doing. Let us just keep it up.
I will close with this. I say this probably once or twice
every day. Everything I do, I know I can do better. The same is
probably true for all of us. And if it is not perfect, we need
to make it better, and while we are doing better, better yet, I
know we can all do better still. Let us just make sure that we
do.
Thank you so much. This hearing is adjourned. [Whereupon,
at 5:02 p.m., the Committee was adjourned.]
A P P E N D I X
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