[Senate Hearing 112-310]
[From the U.S. Government Publishing Office]
S. Hrg. 112-310
HARNESSING TECHNOLOGY AND INNOVATION
TO CUT WASTE AND CURB FRAUD IN FEDERAL HEALTH PROGRAMS
=======================================================================
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
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
JULY 12, 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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20402-0001
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 ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska JERRY MORAN, Kansas
Michael L. Alexander, Staff Director
Nicholas A. Rossi, Minority Staff Director
Trina Driessnack Tyrer, Chief Clerk
Joyce Ward, Publications Clerk and GPO Detailee
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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
William Wright, Minority Staff Director
Deirdre G. Armstrong, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Carper............................................... 1
Senator Brown................................................ 3
Prepared statements:
Senator Carper............................................... 37
Senator Brown................................................ 40
WITNESSES
TUESDAY, JULY 12, 2011
Peter Budetti, M.D., Deputy Administrator and Director for
Program Integrity, Centers for Medicare and Medicaid........... 5
Lewis Morris, Chief Counsel, Office of Inspector General, U.S.
Department of Health and Human Services........................ 7
Joel C. Willemssen, Managing Director, Information Technology
Issues, U.S. Government Accountability Office.................. 9
Louis Saccoccio, Executive Director, National Health Care Anti-
Fraud Association.............................................. 10
Alphabetical List of Witnesses
Buddetti, Peter, M.D.:
Testimony.................................................... 5
Prepared statement........................................... 43
Morris, Lewis:
Testimony.................................................... 7
Prepared statement........................................... 55
Saccoccio, Louis:
Testimony.................................................... 10
Prepared statement........................................... 79
Willemssen, Joel C.:
Testimony.................................................... 9
Prepared statement........................................... 66
APPENDIX
Questions and responses for the Record from:
Mr. Buddetti................................................. 95
Mr. Morris................................................... 99
Mr. Willemssen............................................... 107
Mr. Saccoccio................................................ 113
Chart referenced by Senator Carper............................... 118
HARNESSING TECHNOLOGY AND INNOVATION
TO CUT WASTE AND CURB FRAUD IN FEDERAL HEALTH PROGRAMS
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TUESDAY, JULY 12, 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 2:34 p.m., in
room 342, Dirksen Senate Office Building, Hon. Thomas R.
Carper, Chairman of the Subcommittee, presiding.
Present: Senators Carper, McCaskill, Brown, and Coburn.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Well, why don't we go ahead and invite our
first panel to the table, please. Welcome, one and all.
On most Tuesdays that we are in session, Senate Democrats
and Senate Republicans eat lunch, never together, always apart,
and talk about the challenges that we face as a Nation, and we
spent the last hour, hour-and-a-half in the Senate Democratic
Caucus talking about the budgetary challenges that we face and
what to do about them. One of the people who has thought about
this for a lot longer than this week or this month or this year
is the fellow who is sitting to my right, Senator Coburn, who
has just joined us.
He was a member of a commission created by Executive Order
(EO) by the President over a year ago called the Deficit
Commission, co-chaired by Erskine Bowles and by former Senator
Alan Simpson, and 11 of the 18 members of that Commission voted
for a deficit reduction package that would basically reduce the
deficits by about $4 trillion over the next 10 years, mostly on
the spending side, some on the revenue side. It was an approach
in which almost everything was on the table--defense spending,
domestic discretionary spending, entitlement spending, tax
expenditures, and weighted about two-to-one or three-to-one to
the spending side in terms of deficit reduction.
One of the concerns, primarily among Democrats but also by
Republicans and some Independents, is how do we reduce
entitlement spending without significantly cutting benefits and
inflicting real harm on people. Thanks to the good work by
folks on my staff and on Senator Coburn's staff, some good work
has been done drilling down on Medicare and on Medicaid to find
there are ways for us to be able to reduce outlays from those
programs, but to do so in a way that does not mortally wound
beneficiaries or, frankly, mortally wound the providers.
As it turns out, there is a lot that we can do and there is
a fair amount that we are doing. The health care legislation
that we passed here a year or so ago actually provides a number
of tools to the Centers for Medicare and Medicaid Services
(CMS) to enable them to go out and save some money and to
reduce the flight of funds, almost the thievery of funds, the
theft of funds from the Medicare Trust Fund.
Senator Coburn and I have been working, and our staffs have
been working to see if there are other things that we can do to
shore up the Medicare Trust Fund, which is now scheduled to run
out of money in 2024. As it turns out, there is a fair amount
that we can do in our role to help some of you at this table,
especially Dr. Budetti and his folks, to realize additional
savings. And a lot of us would just say it is common sense.
The fellow who just handed me my talking points here is
Peter Tyler. Peter has done great work here along with the
Republican staff. But one of the things that we learned most
recently was that in 2007, if you look at the amount of money
that was spent--what was the expenditure, Peter, what was it
for 2007? About half of what was spent on power wheelchairs. I
do not know if this came from the Inspector General (IG) or
from the Government Accountability Office (GAO) or who. Who did
it come from, the IG?
Dr. Budetti. The Office of Inspector General (OIG).
Senator Carper. Yes, the IG. In the first half of 2007, we
spent, I think, about $190 million for power wheelchairs that
year, and roughly half of that was, frankly, pretty hard to
prove it should have been spent.
We have dead doctors writing prescriptions for controlled
substances for folks who should not be receiving those
substances. They are going out and filling those prescriptions
and using the drugs to help feed the drug trade. It is far too
easy for bad people, for folks with criminal intent to get
their hands on the provider IDs, and they are not only ordering
controlled substances, but all kinds of durable medical
equipment (DME). There is just a lot going on.
You look at improper payments, $125 billion, I think GAO
tells us, last year, about $47 billion of that for Medicare,
not counting the Medicare Prescription Drug Program. I am told
there is about another 20 or so billion dollars last year for
Medicaid improper payments. Eric Holder, our Attorney General,
tells us there is $60 billion in Medicare fraud. I do not know
if he is combining some of those numbers out of improper
payments or not, but it is a lot of money. And if the President
says we are going to cut improper payments in Medicare by half
by the end of next year, if we do that, that is $25 billion a
year. If you do it for 10 years, that is $250 billion. That is
a quarter-of-a-trillion. If we take out half of the fraud in
Medicare, that is another $30 billion a year times 10 years is
$300 billion. And you add it together and we are talking about
real money, and none of that has to savage beneficiaries or
inconvenience providers.
We are interested in getting better results for less money,
and we have been interested in that in health care. We are
interested in a lot of other ways. And one of the ways to do
that is to, frankly, drill down into some of the stuff we are
going to talk about today.
I am just very grateful to each of the witnesses for
coming, for preparing for today's hearing, and with that, I am
going to yield to Senator Brown. Thanks very much.
OPENING STATEMENT OF SENATOR BROWN
Senator Brown. Thank you, Mr. Chairman. It is good to see
you again.
Senator Carper. Nice to see you.
Senator Brown. We are beginning to face difficult decisions
that must be made in order to put our Nation back on the path
to economic prosperity and fiscal sustainability, and one step
we can all agree on is eliminating the waste, fraud, and abuse.
Senator Coburn and Senator Carper were working on it long
before I did. It is about $100 billion a year, and that is why
I joined both of them in supporting the ``FAST'' Act of 2011,
as one of the early cosponsors. It is a crucial tool for the
government to attack this monumental waste of taxpayer dollars.
This is the second hearing in 5 months that this
Subcommittee has held, finding out ways to root out waste and
abuse in the system. It is the key to ensuring the viability
for these important programs. Simply put, it is no longer
acceptable, for business as usual, approach and the endless
promises for action while the problem of waste, fraud and abuse
continues to grow. This legislation is important and is long
overdue.
As I stated at the Subcommittee's March 9 hearing, the
Patient Protection and Affordable Care Act (PPACA) expands
Medicaid coverage by an estimated 16 million people by 2019.
That is a 32 percent increase over the current enrollment in
the program, and the cost of the Medicaid expansion alone is
estimated to be about $430 billion over the next 10 years, and
the Federal Government is responsible for paying over 90
percent of these increases.
This expansion in the government's role in health care will
unduly strain our Nation's already dire fiscal condition and
entice predators that you referenced, Mr. Chairman, just now,
to gorge on the cash cow which these programs represent. It is
the government's chronic mismanagement of Medicare and Medicaid
fraud prevention that has landed both programs on the GAO's
High-Risk List for many years. Expanding benefits without first
establishing the necessary controls, checks, and balances to
prevent the waste, fraud, and abuse we all hear about is
putting the cart before the horse.
The government's performance overseeing these programs in
the last few decades does not indicate a history of success,
and in light of the burgeoning wave of health care spending and
the history of lax oversight, we need to do more and we need to
do it quickly.
Today, we will hear about CMS's progress in confronting
these areas through efforts like creation of the Integrated
Data Repository (IDR) program. The IDR was created to provide a
single source of data related to Medicare and Medicaid claims,
a good first step. They began incorporating data in 2006, but
have yet to incorporate any Medicaid data. At the behest of
Congress, CMS recently began the use of predictive modeling
software to prevent payment of possible fraudulent claims. This
has historically been at the heart of the problem, is trying to
identify a lot of these fraudulent claims, and Congress has
that oversight duty through your leadership, Mr. Chairman, to
be proactive in pursuing ways to obtain--to curb that waste,
fraud, and abuse.
So we have a lot of work to do. The American taxpayers
expect more. We expect more and we need to move quickly, so I
appreciate you holding this hearing.
Senator Carper. Thanks, and I am happy to be here with you.
Senator Coburn, and I again just want to say thanks for
letting me be your wingman on some of this stuff, improper
payments----
Senator Coburn. I think you have said it all. I will look
forward to hearing testimony.
Senator Carper. All right. Great. Thanks so much.
All right. Let me give some brief introductions for our
witnesses. Dr. Budetti, I am glad we are not paying you on an
appearance basis because this could get expensive, but our
first witness today is Dr. Peter Budetti. He is the Deputy
Administrator and Director for Program at the Centers for
Medicare and Medicaid Services. He is, in effect, the person in
charge of combating waste and fraud for both the Medicare and
the Medicaid programs--no small job. Dr. Budetti has a long
history in the health care arena in both government and private
sector, including Chairman of the Board of Directors at
Taxpayers Against Fraud and as a professor at the University of
Oklahoma. Dr. Budetti generously testifies in front of our
Subcommittee quite frequently and we thank you very much for
being with us today.
Lewis Morris, also known as Lew Morris, right?
Mr. Morris. Yes, sir.
Senator Carper. There you go. He is the Chief Counsel of
the Department of Health and Human Services (HHS), Office of
Inspector General. Mr. Morris has worked for 25 years for the
Inspector General. He has also served as Special Assistant U.S.
Attorney for the Middle District of Florida, the Eastern
District of Pennsylvania, and the District of Columbia. He also
serves on the Board of Directors of the American Health Lawyers
Association, and Mr. Morris, it is good to see you and thanks
so much for your testimony and your preparation for today.
Joe Willemssen, who joins us today from the Government
Accountability Office, is the Managing Director of the
Government Accountability Office's Information Technology Team,
where he oversees evaluations of technology across the Federal
Government. This includes assessments of computer security,
electronic government, privacy and systems acquisition. He has
been at GAO for over 30 years, and I understand he has
testified more than 80 times before Congress. Mr. Willemssen
received both a Bachelor's and Master's degree in business
administration from the University of Iowa. I think that makes
you a Hawkeye for life. We are glad that you are here with us
today.
And we finally want to welcome Louis--do people call you
Lou or Louis?
Mr. Saccoccio. Lou.
Senator Carper. Lou Saccoccio, who is Executive Director at
the National Health Care Anti-Fraud Association (NHCAA), a
national organization focused exclusively on combating health
care fraud in both the public and the private sectors. We focus
a lot on the public, fraud in the public sector, but it turns
out there is a lot in the private sectors, as well, and we can
learn from them. Maybe they can learn something from us. Mr.
Saccoccio has served as Executive Director for over 6 years.
Previously, he worked at the organization America's Health
Insurance Plans. He is a graduate of the U.S. Naval Academy--
Bravo Zulu--and also of Harvard Law School, and he served as a
Navy JAG lawyer.
Mr. Saccoccio, always glad to have another Navy guy.
You have a common bond with at least two of us, maybe
three, I do not know, but we are happy to have you.
Each of you have roughly 5 minutes to make your statement.
If you go a little bit over that, that is OK. If you go way
over it, that is not OK. I will rein you in. So I would just
ask you to go ahead and your full statements will be made part
of the record.
So, Dr. Budetti, please proceed. Thank you all, again, for
joining us.
STATEMENT OF PETER BUDETTI, M.D.,\1\ DEPUTY ADMINISTRATOR AND
DIRECTOR FOR PROGRAM INTEGRITY, CENTERS FOR MEDICARE AND
MEDICAID SERVICES
Dr. Budetti. Thank you, Senator Carper, Ranking Member
Brown, and Senator Coburn. Good to be here again. It is my
pleasure to be here before the Subcommittee and have the chance
to tell you that there actually is some good news, that on July
1 of this year we at CMS implemented a new predictive modeling
technology that was developed with private industry experts to
fight Medicare fraud.
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\1\ The prepared statement of Mr. Budetti appears in the appendix
on page 43.
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This is built on technology that has been used in the
private sector and it will help identify fraudulent Medicare
claims prior to their being paid on a nationwide basis so that
we can begin to take action to stop fraudulent payments before
they are made. This, of course, builds on the anti-fraud tools
that we were provided in the Affordable Care Act (ACA),
including enhanced screening and enrollment requirements,
strengthened authority to suspend payments pending credible
allegations of fraud and increased coordination of anti-fraud
actions and policies across Medicare and Medicaid. This is
helping us move from beyond the pay-and-chase mode into a new
era of preventing problems prior to payment.
You have all seen my poster before. I just want to use it
once again to highlight the top three lines. First of all, that
we are moving to a prevention mode. Second, that we are
targeting our resources based on the actual risk that we are
facing. And third, that we are moving to use innovative and
advanced technologies that have not previously been used in
this fight against fraud.
I would like to now move on to telling you about our
predictive modeling system that we have put into place, and I
am pleased to be able to bring you up to date on this. This is
not easy to do, but it is a challenge that we take on
willingly. The Administration is committed to this action and
we are going to move forward with it very enthusiastically.
The main purpose of this slide is to confuse you.
Senator Carper. So far, it is working. [Laughter.]
Dr. Budetti. It is to illustrate how the new system will
integrate into the claims payment system. You all know that
claims go into our Medicare Administrative Contractors (MACs).
They also then go through a series of other steps, and our
fraud prevention system will intervene in the claims payment
cycle. So this is not going to interfere with the claims
payment process unless and until there is a reason to stop a
claim from being paid, and I will be delighted to talk more
about that in just a few minutes.
The result of the analysis will be fraud alerts, risk
alerts that will tell us that we need to look more carefully at
individual or patterns of claims, and we will use that
information to target our investigative resources. This will
lead to administrative actions by CMS. It will also lead to
referrals to our law enforcement partners.
So this is an important step forward. It is a new system
and it has been in place now for exactly 12 days. The system
uses algorithms and advanced data analytics to look at many
different factors, all simultaneously. Another characteristic
of the system is that it is capable of and will, in fact, grow
over time. As we get more experience with it, as we know which
of our analyses are, in fact, paying off with fraud leads that
are worth pursuing, that will then feed back into the system.
As we learn from our law enforcement colleagues information
from their investigations and other work, patterns that we
should incorporate into our system, the system can incorporate
that, as well. We can look at information by beneficiary, by
provider, by service origin, by a variety of different
approaches, all simultaneously.
We are also moving to deal with the information that is
generated by the system in a number of ways. We are setting up
a command center that will look at the alerts, will prioritize
them, will triage them, and will take appropriate action very
quickly, whether that is referral to our program integrity
anti-fraud contractors to do investigations, whether it is
immediate action by us, whether it is immediate referral to law
enforcement.
We are also going to be prioritizing our vulnerabilities,
looking more carefully at exactly what the vulnerabilities are
that need to be expanded in the fraud prevention system that we
are implementing.
And we are building a sandbox, an analytics sandbox that
will include data from many sources, including the Integrated
Data Repository and other sources of information. This will
allow us to test additional models and additional algorithms
and incorporate the ones that are likely to pay off into the
system.
I want to emphasize that this system is one that was used
in the private sector and it was immediately applicable to the
Medicare system. So we were able to implement it just within 9
months of when the President signed the bill and within the
statutory deadline that you provided us with.
I look forward to continuing to tell you about this and I
look forward to your support and working with you as we move
forward to fight fraud in health care. Thank you.
Senator Carper. Well, good. Thanks for that opening
statement. We will look forward to pursuing a number of points
that you have raised. That is good. Thanks.
Mr. Morris, please proceed. Again, welcome. We appreciate
the great work that you and your team have done.
STATEMENT OF LEWIS MORRIS,\1\ CHIEF COUNSEL, OFFICE OF
INSPECTOR GENERAL, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Mr. Morris. Thank you very much. Chairman Carper, Ranking
Member Brown, and Senator Coburn, thank you for the opportunity
to testify this afternoon about the role that technology can
play in cutting waste and fraud in the Federal health care
programs.
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\1\ The prepared statement of Mr. Morris appears in the appendix on
page 55.
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The Office of Inspector General's anti-fraud efforts are
substantially enhanced by information technology (IT). Data
mining and analytics help us conduct risk assessments, target
our oversight efforts, and reduce the time and resources
required for audits, investigations, and other program
integrity activities. By integrating data from Medicare Parts
A, B, and D into a data warehouse and harnessing powerful
analytic tools, we have expanded our analysis of questionable
billing practices.
For example, through data mining and analytics, we found
that Medicare was spending about $4,400 per beneficiary for
inhalation drugs in South Florida compared to $815 for the
beneficiaries in the rest of the country. By combining the drug
manufacturers' sale data and Medicare claims information for a
particularly expensive inhalation drug, we discovered that
South Florida suppliers billed Medicare 17 times more units of
the drug than was actually distributed for sale in that region.
Thanks to increased data storage and analytic capabilities,
we are now more efficiently identifying providers that present
compliance risks. For example, we are using data mining
techniques to construct a comprehensive picture of a hospital's
billing vulnerabilities. Two years ago, the analysis would have
taken weeks or months to execute. Now, it takes approximately
20 minutes to run the computer program for each hospital.
Senator Carper. Say that one more time.
Mr. Morris. What took us months 2 years ago to construct
the actual software package and apply it to a hospital's set of
compliance issues, we can now do in about 20 minutes. We have
started a series of audits already looking at up to 28
different risk areas in a hospital system by pulling samples of
claims and then going back to that hospital, identifying those
compliance issues, and allowing them to not only repay the
money owed to our program, but take a much closer look at their
internal controls so that when we come back in a year or two,
we hope to have found corrective action so we do not need to
keep repeating the pay and chase.
Senator Carper. Good. Thank you.
Mr. Morris. As exemplified by the Medicare Fraud Strike
Force data, it is combined with field intelligence to enable us
to identify fraud schemes and trends more quickly. This data-
driven approach pinpoints fraud hot spots, identifies
suspicious billing patterns, and targets criminal behavior as
it occurs. The Strike Force model has proven highly successful
and has accelerated the government's response to health care
fraud, decreasing by half the average time from an
investigator's start to the prosecution in these types of
cases. Since their inception in 2007, Strike Force teams have
charged over 1,000 individuals with attempting to defraud
Medicare of over $2.4 billion.
We also recognize that we can learn a great deal from the
private health care insurers, who have developed technological
expertise in addressing our common goal of stopping health care
fraud. It is axiomatic that most criminals who prey on the
Nation's health care system are equal opportunity thieves. They
defraud private health care insurance as well as the Federal
health care programs.
OI agents actively participate in health care fraud working
groups, which bring together government agencies and private
sector insurers to share field intelligence and ongoing schemes
and develop best practices. We also conduct joint
investigations with the private sector.
While the use of technology allows for a more efficient and
targeted approach, several caveats are in order. First, human
intelligence remains a key part of any program integrity
strategy. Medicine and the health care system are extremely
complex. A data run, even if derived from sophisticated metrics
and powerful computers, cannot replace the role of
professionals who bring experience and insight into the
analysis of that data.
In addition, while predictive analytics have proven
effective in identifying potential fraud in the credit card
transactions, there are characteristics of the Federal health
care program that may limit the usefulness of these tools in
the health care environment. For example, a treatment that may
be medically unnecessary but may not be apparent on the face of
the claim for reimbursement.
It is also important to recognize that fraud schemes will
evolve in response to these technologies, which introduce new
vulnerabilities. For example, electronic health records (EHR)
may not only facilitate more accurate billing and increase
quality of care, but these electronic health records may also
facilitate fraudulent claims. The very aspects of these records
that make a physician's job easier---cut and paste features and
templates--can also be used to fabricate information that
results in improper payments and leads to inaccurate and
potentially dangerous information on a patient's record.
A final caveat. Even the best anti-fraud technology are of
limited value if not effectively implemented and appropriately
overseen. The OIG work spanning a decade has revealed
persistent problems with the performance of CMS's program
integrity contractors and vulnerabilities in CMS's oversight.
Because CMS is relying on contractors to perform these data-
driven program integrity functions, there is a critical need
for meaningful performance evaluation and adequate oversight of
that work.
In summary, technology can be a powerful weapon in the
fight against fraud, but it is not a silver bullet. We must be
mindful to carefully implement and oversee its use, and I would
be pleased to answer any questions.
Senator Carper. Great. Thanks so much, Mr. Morris.
Mr. Willemssen, please proceed.
STATEMENT OF JOEL C. WILLEMSSEN,\1\ MANAGING DIRECTOR,
INFORMATION TECHNOLOGY ISSUES, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE
Mr. Willemssen. Thank you, Mr. Chairman, Ranking Member
Brown, Senator Coburn. Thank you for inviting us to testify
today on your hearing on Medicare and practices to reduce fraud
and waste in Medicare and Medicaid.
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\1\ The prepared statement of Mr. Willemssen appears in the
appendix on page 66.
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At your request, we produced a report that is being
released today on two CMS programs intended to improve the
ability to detect waste, fraud, and abuse. As requested, I will
briefly summarize our statement, which is based on that report,
and I will also say that we have not looked at the initiative
that Dr. Budetti discussed, but it sounds intriguing. We are
interested to hear more.
But in talking about our statement today, I will briefly
touch on three areas. One, discuss the extent to which the
Integrated Data Repository and One Program Integrity (One PI),
have been developed and implemented. Two, address CMS efforts
to identify, measure, and track benefits resulting from those
programs. And finally, I will talk about the recommendations we
have made to CMS to help achieve its goals of reducing fraud,
waste, and abuse.
Regarding IDR, it has been in use since 2006 and it is a
very large data warehouse that can be of great benefit to CMS.
However, currently, it does not include all the data that were
planned to be in it by 2010. For example, IDR currently
includes most types of Medicare claims data but not Medicaid
data. IDR also does not include data from other CMS systems
that can help analysts prevent improper payments. Further, CMS
has not finalized plans or developed reliable schedules for
efforts to incorporate these data.
One PI is a web-based portal that is to provide CMS staff
and contractors with a single source of access to the data
contained in IDR as well as tools for analyzing those data.
While One PI has been developed and deployed, we found that few
analysts were trained in using the system. Program officials
planned for 639 analysts to be using the system by the end of
Fiscal Year 2010. However, as of October 2010, only 41 were
actively using the portal and tools. Until program officials
finalize plans and schedules for training and expanding the use
of One PI, the agency may continue to experience delays.
With One PI, CMS anticipated that it would achieve
financial benefits of $21 billion. As we have previously
reported, agencies should forecast expected benefits and then
measure the actual results accrued through the implementation
of programs. However, CMS is not yet positioned to do this. As
a result, it is unknown whether the program has provided any
financial benefits yet. CMS officials added it is too early to
determine whether the program has provided benefits since it
has not yet met its goals for widespread use.
To help ensure that the development and implementation of
IDR and One PI are successful in helping CMS meet the goals of
its program integrity initiatives and possibly save tens of
billions of dollars, we are making several recommendations to
CMS. Among those, one, to finalize plans and schedules for
incorporating additional data into the data repository. Two,
finalize plans and schedules for training all program integrity
analysts intended to use One PI. Three, establish and
communicate deadlines for program integrity contractors to
complete training and use of One PI. And four, to establish and
track measurable outcome-based performance measures that gauge
progress toward meeting program goals.
In commenting on a draft of our report, CMS agreed with our
recommendations. CMS's timely implementation of these could
lead to reduced fraud and waste and overall substantial savings
in the Medicare and Medicaid programs.
That concludes a summary of my statement. I look forward to
your questions. Thank you.
Senator Carper. Thanks, Mr. Willemssen. Thank you so much.
Mr. Saccoccio, please proceed.
STATEMENT OF LOUIS SACCOCCIO,\1\ EXECUTIVE DIRECTOR, NATIONAL
HEALTH CARE ANTI-FRAUD ASSOCIATION
Mr. Saccoccio. Thank you. Chairman Carper, Ranking Member
Brown, and Senator Coburn, thank you for the opportunity this
afternoon to testify.
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\1\ The prepared statement of Mr. Saccoccio appears in the appendix
on page 79.
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The National Health Care Anti-Fraud Association was
established in 1985 and is the leading national organization
focused exclusively on combating health care fraud. We are
uncommon among associations in that we are a private-public
partnership. Our members comprise more than 85 of the Nation's
most prominent private health insurers along with more than 85
Federal, State, and local government, law enforcement, and
regulatory agencies that have jurisdiction over health care
fraud who participate in NHCAA's law enforcement liaisons.
NHCAA's mission is simple: To protect and serve the public
interest by increasing awareness and improving the detection,
investigation, civil and criminal prosecution, and prevention
of health care fraud. The magnitude of this mission remains the
same regardless of whether a patient has health coverage as an
individual or through an employer or has coverage under a
public program, such as Medicare, Medicaid, or TRICARE.
Health care fraud is a serious and costly problem that
affects every patient and every taxpayer in America. Just as
importantly, health care fraud is a crime that directly affects
the quality of health care delivery. Patients are physically
and emotionally harmed by health care fraud. As a result,
fighting health care fraud is not just a financial necessity,
it is a patient safety imperative.
Health care fraud does not discriminate also between types
of medical coverage. The same schemes used to defraud Medicare
mitigate over to private insurers and schemes perpetrated
against private insurers make their way into government
programs. Additionally, many private insurers are Medicare Part
C and D contractors that provide Medicare coverage and Medicaid
coverage in the States, making clear the intrinsic connection
between private and public interest.
As a result, the main point I want to emphasize is the
importance of anti-fraud cooperation and collaboration between
private and public payers. NHCAA has stood as an example of the
power of a private-public partnership against health care fraud
since its founding, and we believe that health care fraud
should be addressed with private-public solutions.
One salient example that illustrates the power of
cooperative efforts against health care fraud can be found in
South Florida. In response to the challenge of health care
fraud schemes in South Florida, including fraud schemes
involving infusion therapy and home health care, NHCAA formed
the South Florida Work Group. In meetings held in 2009 and
2010, this NHCAA work group brought together representatives of
private insurers, FBI headquarters and 10 FBI field divisions,
CMS, HHS's Office of Inspector General, the Justice Department,
the Miami U.S. Attorney's Office, and local law enforcement to
address the health care fraud schemes emerging from South
Florida. The details of the emerging schemes, investigatory
tactics, and the results of recent prosecutions were discussed
with the dual goals of preventing additional losses in South
Florida and preventing the schemes from spreading and taking
hold in other parts of the Nation.
This type of anti-fraud information sharing, sharing
between the Federal and State programs and between private and
public payers, is critical to the success of anti-fraud
efforts. The HHS Office of Inspector General, CMS, the FBI, and
the Justice Department have demonstrated a strong commitment to
information sharing and are working with NHCAA to identify the
barriers, both actual and perceived, to effective anti-fraud
information sharing with the goal of increasing the
effectiveness of this critical tool in the fight against health
care fraud.
In addition to information sharing, the other critical
means needed to detect and identify emerging fraud patterns and
schemes in a timely manner is to apply effective and cutting-
edge data analytics to aggregated claims data. The pay-and-
chase model of combating health care fraud, while necessary in
certain cases, is no longer tenable as the primary method of
fighting this crime.
In this regard, we applaud CMS for its recent
implementation of predictive modeling using rules and pattern
recognition for Medicare claims. NHCAA is also encouraged by
the expanded provisions provided in the Affordable Care Act.
The Act mandates an expanded integrated data repository that
will incorporate data from all Federal health care programs.
Progress is also being made by commercial health insurers.
In addition to the business rules and outlier models used by
insurers to detect potential fraud, some companies have begun
to utilize or are in the process of evaluating the use of
predictive modeling technology and other advanced data
analytics, applying them to fraud prevention efforts on the
front end prior to medical claims being paid. Although the
health care industry has not achieved the level of real-time
data analytics used in the financial services industry, it is
moving in the right direction.
NHCAA is encouraged by the renewed Federal emphasis given
to fighting health care fraud. We know continued investment and
innovation are critical, and as greater attention is given to
eradicating fraud from our government health care programs, we
urge decisionmakers to also recognize and encourage the
important role that private insurers play in minimizing fraud
in our Nation's health care system.
Thank you for allowing me to speak today. I will certainly
answer any questions from you.
Senator Carper. Thanks for that testimony. I thought your
testimony was just excellent and enjoyed reading it and hearing
it in here today. Thanks.
Let me start, if I could, with Dr. Budetti. First, I would
like to address an issue that has been raised by GAO. First,
before I do that, I just want to say, Dr. Budetti, that the
Office of Program Integrity under your leadership has made, I
think, a lot of progress, and there are a number of people
responsible for that, but I just want to say to you, thank you.
Since you took your position last year, there have been any
number of positive efforts underway, including the
implementation of program integrity provisions within the
Affordable Care Act. I think you deserve a lot of credit. So
does your team, as do many of your colleagues at the Center for
Medicare and Medicaid Services.
However, as I say oftentimes in this room, everything I do,
I know I can do better. The same is true for all of us, and the
enormous waste and fraud challenges that we have, that we have
heard about again here today, we have heard about in the past
and, hopefully, we will hear about in smaller magnitudes in the
future. But those challenges call out for very large efforts
and require that the Congress ensures that the Federal
Government takes many more strides to cut back on waste and
fraud and abuse where we can.
Now, in the GAO testimony and their audit report released
today, the fraud detection system, that is the combined
Integrated Data Repository and One PI, is presented as an
important new tool to examine Medicare and Medicaid payments in
order to detect fraud, and it is depicted on this chart\1\ up
to my left and to your right. In fact, the Centers for Medicare
and Medicaid Services own estimates show that if it is fully
implemented, the new fraud detection systems will save some $21
billion--$21 billion--over 10 years by detecting and avoiding
improper payments. The cost to date for the system is about
$161 million, and to complete and operate the system for 10
years, the additional cost is roughly $184 million.
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\1\ The chart referenced by Senator Carper appears in the appendix
on page 118.
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That is quite a return on investment (ROI), if you think
about it, and curbing $21 billion in waste and fraud would
represent a lot of progress--a lot more progress. I think it
makes sense that the timely implementation would help get these
cost savings, obtain these cost savings more rapidly. That is
what we want to do.
However, the GAO has clearly shown that the system is not
fully deployed. Despite the Centers for Medicare and Medicaid
Services declaring the system up and running, only, as we have
heard, 42 people were trained in 2010, and despite the stated
requirement for, I think, 639 people. Further, the system has
yet to include Medicaid data. Also, GAO reported that there are
no clear plans nor projected dates with specific milestones to
either train more people nor to include the Medicaid data. And
despite being part of the original design, there are no solid
plans to give access to Medicaid State offices, I am told.
Obviously, without the system being fully implemented as
well as ensuring that Federal staff, oversight contractors, and
law enforcement have access and are fully engaged, we will not
realize that $21 billion in savings and that would be a shame.
So, Dr. Budetti, let me just ask, what is your plan
schedule to fully implement and deploy the new fraud detection
system? When will we have more people trained? And when will
State Medicaid offices have access to this system?
Dr. Budetti. Thank you very much for your comments,
Senator. I want to add that we always welcome the kind of arms'
length oversight that we receive from the General Accounting
Office--the Government Accountability Office--I dated myself
there--and from our colleagues at the Office of Inspector
General. And, in this case, we do, in fact, concur with their
recommendations.
Senator Carper. Can I just make a comment?
Dr. Budetti. Certainly.
Senator Carper. I say this a lot. We are all in this
together.
Dr. Budetti. Yes.
Senator Carper. We are all in this together. And the only
way for us to get out of this hole, this fiscal hole that we
are in, including some that we are talking about here, is to
get out together. Go ahead.
Dr. Budetti. And we very much appreciate the interest and
support you have shown in this.
The Integrated Data Repository and the One PI system are
ones that were started some 5 years ago or so. The agency did
set rather ambitious goals for itself in terms of the
implementation of those and some of those goals have been met.
Some of them have not been met. This illustrates a number of
factors. First of all, it does illustrate to some degree the
challenges of implementing systems, especially, for example,
with respect to the Medicaid data because States have different
kinds of data systems and different formats and different
responsibilities on the States in terms of their ability to
supply the data. The structure of the Integrated Data
Repository at first had to be, as I understand it, had to be
redone somewhat. So there were some problems along the line in
terms of meeting certain deadlines. Others were met.
But in terms of your specific questions, I would like to
make a couple of points, sir. One is that the Integrated Data
Repository is intended for many purposes other than just
fighting fraud. It is a valuable resource and it still
continues to be a valuable resource and it will be as we move
forward with our new and advanced technological solutions that
I mentioned earlier. But the Integrated Data Repository is not
strictly for that purpose. It also has a variety of other uses
within CMS and that is an important aspect of this.
The other question that you asked about, the training, we
have, in fact, now trained an additional 55 personnel so far
this year. We now have a schedule for training all of the
private sector personnel who are going to be working with the
One PI and Integrated Data Repository----
Senator Carper. Give us some idea what that schedule is.
That would be----
Dr. Budetti. That is----
Senator Carper [continuing]. Forty-two plus about 58, so
that is about a hundred.
Dr. Budetti. All of the ones who are in our Zone Program
Integrity Contractors (ZPICs), the anti-fraud contractors who
will be using the system. I am told that they are all on
schedule to be trained this year, and so that is--we did have
to, after getting feedback from the people who were trained in
the initial courses, we did redesign the program. We had some
user feedback and realized that we were not--the agency was not
adequately preparing them for using the system. These are
complicated systems and the training program was restructured
and revised and we believe it is now an extremely effective one
and we have moved forward with an aggressive schedule. We have
trained 55 and we are going to finish the ZPIC staff training,
I am told, this year. So that is a very important aspect of all
of this.
The other thing I would tell you is that the Integrated
Data Repository will be one of the sources of data that we will
be using in the sandbox that I described, so that the
Integrated Data Repository, which holds all of the claims over
a prolonged period of time, is very different than the claims
processing system that we are using with our new predictive
analytics. So one is a repository and one--the IDR is a
repository that will hold all the information. The other is
being implemented on top of the claims processing system. So
they will go hand-in-glove.
We are moving forward. We already have the Medicare claims
data in, as you described. We anticipate finishing the
different stages of the Medicare data by next year and we are
moving very aggressively with a variety of systems to improve
the Medicaid data, as well, and doing that in a way that we
believe will serve a variety of purposes, both for the States
and providing access to the States and also for our purposes,
both fraud fighting and otherwise. So I----
Senator Carper. I am going to ask you to hold there. I am
well over my time----
Dr. Budetti. OK.
Senator Carper [continuing]. So I want to be fair to my
colleagues. When we come back, I am going to ask our friend
from GAO just to respond to what we just heard from Dr.
Budetti----
Mr. Willemssen. Sure.
Senator Carper [continuing]. And if you can tell us whether
or not we should feel reassured. Do not do it now, but I am
going to ask you to tell us if we should feel reassured by what
he has just presented, all right? Thanks.
Dr. Budetti. Thank you, sir.
Senator Carper. Senator Brown.
Senator Brown. Thank you, Mr. Chairman.
So just to followup a little bit, so 41 people, and you are
training another 55, so you are a little under a hundred. You
are supposed to have 639 done by the end of the fiscal year,
and I have a little sheet here to look at. We have 41, so we
can increase that a little bit. We are supposed to have 639 and
it looks like we are a little short. Ultimately, when we get it
done, we have spent $100 million, if I am not mistaken, on this
system and we are trying to obviously identify, for example,
despite deployment of the One PI program, Medicare fee-for-
service (FFS) improper payments amounted to $34.3 billion for
Fiscal Year 2010, an astonishingly high rate of 10.4 percent of
all Medicare fee-for-service payments. So when will they be all
trained? You are saying that the remaining 539, give or take,
will be trained by the end of this year?
Dr. Budetti. The 55 that have already been trained and the
rest of the workers in our contractors will all be trained by
the end of this year. We are also doing training for law
enforcement personnel and other----
Senator Brown. Yes, but in terms of the 639, though----
Dr. Budetti. Well, the 639 was a number that was
established as a goal a number of years ago, and whether that
is ultimately the correct number, we are constantly revisiting
who needs to use what in terms of fraud fighting capabilities.
But we are proceeding with both the law enforcement personnel
and with the ones in our contractors on a newly structured
training program and an aggressive schedule. So I can tell you
exactly how many people we plan to train by when, but I can
tell you what I have said so far, which is what we have done to
date and what we expect to do the rest of this year----
Senator Brown. Right.
Dr. Budetti [continuing]. So that will----
Senator Brown. Thank you. You said, though, this was
implemented quite a few years ago and----
Dr. Budetti. Right.
Senator Brown [continuing]. We have started the program,
and yet quite a few years ago, still have only done, as of
recently, under 100 of these folks to implement this system
that is a $100 million system. I mean, are we getting a good
value? Is it reaching its full potential? It does not seem to
be, but maybe I am missing something.
Dr. Budetti. Well, I think we--we have admitted that there
have been some deadlines that we had established that we did
not meet, and we are now working----
Senator Brown. Well, what ones have you actually met?
Dr. Budetti. All of the Part A and Part B and Part D data
were put into the Integrated Data Repository in terms of the
post-payment data, in fact, as I understand it, I think two of
those were actually put in ahead of schedule and the additional
data to support the use has also been put in.
I would like to emphasize that the IDR with the One PI
system on top of it is a very valuable tool. We are moving to
fully implement it. It is not the only resource that is
available either to us or to our fraud fighting partners,
either in law enforcement or in our systems. But it represents
a major step forward. And in terms of the savings, we believe
that the savings from moving forward with the IDR will not only
be reflected in the fraud fighting capabilities, but also
efficiencies in our contracting structure, because instead of
having a series of small data systems set up all around the
country, we will have this one integrated system.
So we are moving forward with that, Senator, and we do view
it as valuable. But I want to emphasize that it is not our only
fraud fighting tool.
Senator Brown. Sure. I understand that. Do you know if the
$150 million or so spent on either system has been a good
investment if no outcome performance metrics have been
established to measure their actual benefit?
Dr. Budetti. So one of the things that we did commit to in
concurring with the GAO's report was to establish and put into
place a measurement of exactly those----
Senator Brown. Have you done that?
Dr. Budetti. This is what we have now committed to doing.
Senator Brown. Oh, OK.
Mr. Morris, on the PPACA legislation that provides
additional funds to strengthen the program's integrity, it
contains other fraud prevention provisions such as the ability
of CMS to withhold Medicare payments to providers or suppliers.
States also have this ability in the Medicaid program. How many
payments have actually been withheld, if you know?
Mr. Morris. We took a look at our data and it appears that
since the passage of the Affordable Care Act, there have been
53 payment suspensions which were initiated at the Inspector
General's request----
Senator Brown. Fifty-three out of how many? Out of
billions, right?
Mr. Morris. Oh, of potential payment suspensions?
Senator Brown. No, out of payments, how many have actually
been withheld?
Mr. Morris. Well, we identified approximately $8 million in
money that was either on the payment floor, about to go out to
the target of an investigation, or money that was otherwise
stopped. So the 50 payment suspensions I referenced realized a
withholding of about $8 million in monies in the Trust Fund. We
have been working with CMS to strengthen this process. We have
entered into an memorandum of understanding (MOU) that will
facilitate more rapid exchange of information, and particularly
in our strike force areas where we are identifying career
criminals. These are not health care providers.
Senator Brown. Sure.
Mr. Morris. These are people exploiting our program.
Payment suspensions are more and more becoming the standard.
Senator Brown. Great. As the opportunity for fraud grows
with the expansion of Medicaid, will CMS be able to meet the
added threat, or is it inevitable, as with past expansions of
benefits, that it will lead to more fraud, or is it a kind of
in between?
Mr. Morris. Well, certainly with the expansion of the
benefit and thus an increase in the volume of claims, there
will be a greater threat to the program. But we think that if
many of the provisions that are both in the Affordable Care Act
and are part of the program integrity efforts that Dr. Budetti
has been talking about are implemented, there should be
safeguards.
For example, effectively screening at the enrollment so
that we only let in honest providers will go a long way to
keeping the crooks out of the system. Similarly, having payment
methodologies that reflect what the true cost of a service is
and does not have enormous fluff which is then used to
perpetuate a fraud scheme, and making sure that we are actually
paying for legitimate services. These sorts of internal
controls will go a long way to protecting the Medicaid program
as it expands.
Senator Brown. Thank you, Senator Coburn.
Senator Coburn. [Presiding.] Well, I thank each of you for
your testimony. I was not a big fan of the Affordable Care Act,
but the fraud provisions in it, I readily support.
And I want to emphasize this next point in as nice a way as
I can: Having the testimony at 9pm last night for a hearing
that has been announced, getting questions for the record
(QFRs) answered last night from 3 months ago from a Finance
Committee hearing is not acceptable for us to be able to do our
job. And my hope would be that those of you that turned in your
testimony or your QFRs late would understand that. Otherwise,
it seems to me the way we get QFRs answered is have another
hearing, so we will have another hearing in 2 weeks to get our
QFRs back because that seems to be the only way to get them
back.
Dr. Budetti, what is the cost of the new contract with
Raytheon? And is it a cost-plus contract?
Dr. Budetti. The new contract with Northrop Grumman and
their subcontractors----
Senator Coburn. With Northrop Grumman, yes.
Dr. Budetti [continuing]. Is set at $77 million for just
over a 4-year period. It is an initial implementation period of
several months followed by 1 year of award, and then there are
3 years, three option years to follow.
Senator Coburn. So that is a fixed-price contract?
Dr. Budetti. That is my understanding, sir, yes.
Senator Coburn. Well, you all have let that contract,
correct?
Dr. Budetti. We let the contract.
Senator Coburn. OK. So it is a fixed-price contract and----
Dr. Budetti. I know that there is a cap on it of the $77
million. That much, I know----
Senator Coburn. And my question is, this is a great
company. I do not have any problem with it. When was the last--
did they have experience in doing predictive modeling for the
insurance industry?
Dr. Budetti. So the system that Northrop Grumman and its
partners put forward was one that was developed for the private
sector, was developed and used in Verizon. They used it for
their own transactions and also for their credit card
transactions. And part of our solicitation requirement was that
the system would be immediately applicable to Medicare claims
processing, that there would not have to be a major startup
period. And so they partnered with the National Government
Service (NGS) and they were able to demonstrate to the
satisfaction of the people who were reviewing the proposals
that they could apply this immediately, and, in fact, we have
been able to show that is actually happening.
Senator Coburn. Good. What is your goal? You have showed us
what the plan is with IDR and One PI. What is your goal in
terms of fully implementation of predictive modeling on
everything that CMS does?
Dr. Budetti. As of, actually, June 30, July 1, all Medicare
fee-for-service claims nationwide are being screened before the
claims are paid. Our goal is to advance that, to build into the
system more and more of our analytics. Our goal is also to
develop the ways that we can then apply this, as well, to the
Medicaid program. That is a very different set of challenges.
We are committed to doing it. We are also--we are already
beginning to look at that, at the possibilities of doing that.
But we have the system in place and operating nationwide
and it is looking at all Medicare claims right away. It will
become more sophisticated. It will add more and more analytics,
and we also will then be taking great care to make sure that we
are interpreting the results properly and going after the bad
guys and not the good guys with it.
Senator Coburn. What percentage of claims that are going
through this now are halted for review?
Dr. Budetti. At the moment, what we have done is put it
into place in a way that we have the ability to stop the claims
before they are paid, but we want to get a track record. We
want to get some traction here in terms of knowing what to do
with respect to the kinds of risk scores that we are getting.
We are getting some very impressive results. We are getting
some--a very large number of fraud risk scores. But we do not
know for sure yet that those are fraudulent. Now, many of the--
--
Senator Coburn. So you are going on and paying these
claims?
Dr. Budetti. I am sorry?
Senator Coburn. So they are going on and being paid at this
point?
Dr. Budetti. We are taking a much closer look and we are
exploring the ways that we can take action right now on an
administrative basis before they get paid.
Senator Coburn. But right now, of the claims that come
through----
Dr. Budetti. Right.
Senator Coburn [continuing]. And they get flagged, what
percentage of them are the payments halted on and what
percentage are gone on and paid?
Dr. Budetti. Well, we are 12 days into it and right now,
what we are doing is taking the results of the most egregious
findings that we have, taking those to our new rapid response
system that we are setting up to get our contractors to look
more carefully--our Zone Program Integrity Contractors to look
more carefully at them. And if it comes back that our strong
suspicions are confirmed, we will have the ability to stop
those payments. So I am not ready to tell you that we are--we
are--yes, we are making payments now, but we are positioning
ourselves to be able to stop them. But we want to do this
correctly. We did not set this up to automatically stop claims
on day one because we wanted to make sure that we were getting
results that were responsible first.
Senator Coburn. All right. Then let me get you on the
record. When is it that you are going to have suspicious claims
stopped pay?
Dr. Budetti. I expect that we will have some suspicious
claims----
Senator Coburn. No. Every one of them is being reviewed
now, every one of them that hits your risk profile. When is it
CMS is going to quit paying those claims and send them for
review?
Dr. Budetti. That is exactly our goal, Senator Coburn.
Senator Coburn. But when?
Dr. Budetti. Well, let me--so my answer is that, first of
all, we get a risk score that covers a very wide range. So we
are taking the very top, the most egregious ones. We are
looking at them, first of all, to see whether or not they are
already under law enforcement investigation of some kind. We do
not want to interfere unnecessarily with a law enforcement
investigation if there is one underway. And then the others we
are looking at very carefully to start--and we expect to start
cutting off payments very soon.
I am not going to give you an exact date because we are
going through this process for the first time. We are going
through it in a responsive and responsible way. But we are set
up for doing this and we will have the system integrated into
the--fully integrated and automated into the claims processing
system over the course of the next year. But at the moment, we
are going to do it ourselves, taking the time to make sure that
we are not interrupting claims payments that should not be
interrupted.
Senator Coburn. Yes, I agree. So I guess the answer is,
within a year----
Dr. Budetti. Within a year we will have----
Senator Coburn [continuing]. You plan to have this
implemented and working so that we are not sending payments
to----
Dr. Budetti. We will stop making payments sooner than that,
but we will have it fully--we will have it set up so that we
are interrupting on a much more rapid basis the claims that
fall into the patterns that we have confidence should be
interrupted.
Senator Coburn. Yes.
Dr. Budetti. And, yes, this is a step-wise process, but we
are committed to getting there and we are going to get there.
This is the whole purpose of doing it. We want to stop these
payments before they go out the door, but we want to do it
right.
Senator Coburn. OK. All right. Thank you.
Senator Carper. [Presiding.] I think you can feel Senator
Coburn's sense of urgency, and it is one that we all feel.
Senator McCaskill, good to see you. Welcome. And thank you
very much for cosponsoring our legislation.
Senator McCaskill. Yes, thank you.
Senator Carper. We very much appreciate your interest and
your leadership.
Senator McCaskill. I apologize. Just say if there is any
question I am asking that you have been asked before. I could
not get here at the beginning of the hearing. I wish I could
have, and I want to make sure I do not cover any ground that
has already been covered. Did Northrop provide CMS an off-the-
shelf product for this?
Dr. Budetti. The product that Northrop Grumman and its
partners provided to us was built on the one that Verizon and
its subsidiary had developed for use within the
telecommunications industry, both for their telecommunications
fraud and for their own credit card transactions. What the
partnership together provided was an approach that was proved
in one industry but that was immediately applicable to the
Medicare payment system, which, of course, is very different
than either telecommunications or credit card transactions. So
this is the system that was selected. This is the one that has
shown itself to be capable of being implemented immediately and
is now up and running on all Medicare fee-for-service claims as
of the beginning of this month.
Senator McCaskill. I am cynical about buying IT systems
because my experience in the Armed Services Committee and,
frankly, dealing with other parts of government in contracting
issues is that if we say we want somebody to do something,
typically, they say they are going to design a system and it
takes years and a lot more money than we thought it was
originally going to take. Then, ultimately, sometimes it does
not even work like it is supposed to and it gets abandoned. And
so it is interesting to me that you were able to essentially
get an off-the-shelf product. Was it specified that you wanted
an off-the-shelf product?
Dr. Budetti. We specified that we wanted a product that had
been proven in the private sector that could be immediately
applicable to the Medicare system and that was capable of being
implemented to meet the rather impressive time line that we
were working under, and we met all of those requirements.
Senator McCaskill. OK. I think it is great that you were
able to do that and I wish the rest of government would take
note that we are way behind in terms of the integration of data
and the systems that are available for analysis in government
and we use the excuse of siloed agencies and we want our own
system and, well, we have already got this and it needs to talk
to that. Way too often, we are not specifying that we want
something that has already been proven that, frankly, is off
the shelf. That is the good news.
Now, the bad news. IDR was supposed to contain Medicaid
data, and we began this, what, in 2006?
Dr. Budetti. Yes, Senator. You are correct that there are
some, as I mentioned a minute ago, there were some deadlines
that the agency had set out, some goals that the agency had set
out that, for a variety of reasons, were not met. One of them
was the full integration of Medicaid data into the Integrated
Data Repository. There are a number of reasons why that did not
happen----
Senator McCaskill. Give me, like, the top three.
Dr. Budetti. The top three are, No. 1, the States really
were not under any requirement that they had to submit the data
to us. They also faced serious resource constraints. They also
have their data in many different formats and many different
systems, and so the integration of those into one place was
complicated. And as I understand it--this, of course, was all
somewhat before my time here--and I also understand that the
way that the initial design for the system was structured, that
it might have made it more difficult to get the Medicaid data
into it.
Those are all things that we are well aware of as the major
initiative to get much better Medicaid data, both for the
States and also for the Federal Government. That is very much a
cross-CMS initiative. It is not just program integrity. It
involves the Centers for Medicare and Medicaid Services, the
Children's Health Insurance Program (CHIP), and survey and
search the MCS, as well, and there is a great deal of work
going on to improve that system.
But we do expect to be able to phase in the Medicaid data
over time, and in the meantime, we are doing quite a bit
working with the States directly, as well.
Senator McCaskill. What is the date that you think you will
get the Medicaid data in?
Dr. Budetti. We are currently targeting 2014 for the
ultimate, but that includes the entire revised system that we
are talking about that would be restructured and much more
useful for everybody. In the meantime, we are working very
closely with individual States and with other approaches, and
we are currently exploring ways that we can apply our
predictive modeling system, which is not exclusively dependent
on or the same as the IDR, ways that we can work with the
States to use the predictive modeling approach, because we do
not get the same flow of claims data directly to the Federal
Government for Medicaid that we get for Medicare. Medicare, we
get their claims. They send us their claims----
Senator McCaskill. Right.
Dr. Budetti [continuing]. Because they want to get paid.
Senator McCaskill. No, I understand.
Dr. Budetti. And in Medicaid, we are dependent upon the
States who are processing the claims----
Senator McCaskill. And they are dependent on our money.
Dr. Budetti [continuing]. To report to us, and they are
dependent upon our money and other resources----
Senator McCaskill. And I have found that can be a very
persuasive tool.
Dr. Budetti. And that is a challenge to everybody, yes.
Yes, Senator.
Senator McCaskill. Yes. And I think the more that you begin
to exercise that muscle, I think the more cooperation you will
get from the States. They are all gasping right now and
incredibly dependent on the help that they are getting from the
Federal Government, and I, for one, think that it makes more
sense that we are giving them that help as opposed to jacking
up costs for everybody by all the uninsured care that would
occur the more we cut back on the Medicaid program. So I
encourage you to use that muscle, that we have money and you
need it to get the data that we need to provide the integrity
to the program.
Let me know the acronyms, you all are not nearly as bad as
the Department of Defense (DOD), but you have a dizzying array
of contractors that are supposed to be fighting fraud. We have
the MACs, the Recovery Audit Contractors (RACs), the ZPICs, the
Program Safeguard Contractors (PSCs), and that is not counting
the IDRs, the IDIQs, and now the new program. Obviously, all
these contractors that were supposed to be doing all this, it
has not worked out as well as we hoped. What are you doing to
clean up this mess in terms of how many contractors we have and
is everybody on the same page, is everybody working together,
are we working at cross-purposes? What efforts are being made
to allow people to track how well we are doing on integrity
without a scorecard?
Dr. Budetti. Senator, it took me several months on the job
to get all those acronyms down and I do not think I have
mastered all of them yet. But in answer to your question, we
are doing a number of things. For one thing, we have
restructured the way that we are overseeing our anti-fraud
contractors, the Zone Program Integrity Contractors, and we are
working to finish the transition to have Zone Program Integrity
Contractors uniformly across the country.
We have also assigned more staff. We are conducting onsite
reviews instead of paper reviews. We have a number of oversight
changes that we have put into place. We have put them under a
new group within the Center for Program Integrity. We are doing
a lot to improve our oversight of those contractors.
The Medicaid administrative contractors, the ones that
handle the claims, of course, are responsive to a number of
different components within CMS, but we are working very
closely with them, as well. They interact with the Recovery
Audit Contractors, the RACs, as well.
We have done a lot to improve the ability of the programs
to work together. One of my goals is exactly that, to have a
much more efficient system. One of the characteristics of our
new fraud prevention system that is very useful is that it is
also a management tool, because as we do these analytics and we
send to the Zone Program Integrity, the anti-fraud contractors,
we send them the results and say, here are 10 people with
astronomical fraud scores. Do something. Look at these real
carefully and get back to us right away. That is our rapid
response strategy that we have developed. That is a new use of
the interaction with them, but it is also a management tool
because we know when we sent them that information and when
they responded. So we have a number of----
Senator Carper. Dr. Budetti----
Dr. Budetti [continuing]. Doing this.
Senator Carper. I am just going to ask that we draw--finish
your sentence, but then----
Senator McCaskill. No, I do not have any more. I just
wanted to--
Senator Carper. No. Go ahead and finish your sentence and
we will have a second round, I promise.
Senator McCaskill. Yes. I would just----
Senator Carper. Go ahead and finish your sentence, Dr.
Budetti.
Senator McCaskill. The only request I would make for the
record is if you could provide me a flow chart of all of the
different anti-fraud contractors that are currently working for
our Federal Government and how they work together and what
their responsibilities are. Somebody someplace has diagramed
that out, I bet.
Senator Carper. Would that be with or without acronyms?
[Laughter.]
Senator McCaskill. It would be helpful if the acronyms
would be front, bold, and center, because I think for oversight
purposes, it is going to be helpful for us to understand how
they work together now, and then hopefully when you come back
in a year or two and show us the $20 billion a year you have
saved, you can point to which part of the system worked and we
can get rid of some of these contractors that are not working.
Dr. Budetti. I will be delighted to do that for you,
Senator.
Senator McCaskill. Thank you, Mr. Chairman.
Senator Carper. I want to lower expectations. It is
actually $20 billion over 10 years, but if you can do the $20
billion a year, we will take it.
I said earlier when I was asking the first round of
questions and my time was expiring, I said I was going to come
back to, I think I said to Mr. Willemssen, but I am going to
ask the other witnesses to do this, as well. I want you to
reflect on what Dr. Budetti has said in his testimony and his
responses to our questions. What should we feel good about?
What should we feel concerned about? Do you want to go first,
Mr. Willemssen?
Mr. Willemssen. Certainly, Mr. Chairman. One, we are
pleased that CMS has concurred with all seven of our
recommendations and planned to act to implement those
recommendations. If they act appropriately and implement them
fully, then we can see figures like that $21 billion on the
chart up there.
Second, I do not want to underestimate the----
Senator Carper. Now, how do we make sure that they actually
follow those recommendations? You give them the
recommendations. They say, yes, these are good
recommendations----
Mr. Willemssen. That would be my second point----
Senator Carper. OK.
Mr. Willemssen [continuing]. And that is related to
committing to milestones and deadlines on when those actions
are going to be put in place. For example, when will CMS put in
place the ability to establish tracking mechanisms associated
with those two systems to demonstrate what kind of benefits are
we getting and what kind of cost reductions are we getting,
what kind of fraud are we identifying and preventing?
And a third point is related to the Integrated Data
Repository. I do not want to underestimate how important that
is. That is a tremendous tool, to have one massive database----
Senator Carper. Let me interrupt here just a minute. If
somebody on the other side of the moon were listening in to
this conversation and trying to understand what an IDR is, who
can explain it so that a regular person off the street or just
a mortal like me----
Mr. Willemssen. One way to think of it----
Senator Carper [continuing]. Could actually understand it
and it actually be meaningful.
Mr. Willemssen [continuing]. Is if you are----
Senator Carper. Give me a good example. Somebody just give
me a good example of this, OK, and I do not care who does it.
Mr. Morris. The way I have been led to think about it,
because I do not understand it, either, is that instead of
going to five little grocery stores to pick up all the parts
you need for a dinner, an IDR is a supermarket where you get
all the components, all the information you need to build your
dinner.
Senator Carper. All right. That is great. Even I understand
that.
Dr. Budetti. And the One PI system that sits on it is the
recipe book.
Mr. Willemssen. Yes. Very good.
Senator Carper. All right.
Mr. Willemssen. In fact, it would give you instant access
to the data you are looking for because you do not have to go
through a lot of iterations. It is sitting right there on your
desktop. So I want to emphasize the importance of that, and
that is why it reinforces why we get as much data on there as
possible.
In terms of concerns, I am a little bit concerned with the
change in going from an incremental approach to adding State
Medicaid data to now the approach will be to do all 50 States
in September 2014. Our experience shows going in an incremental
fashion is often a more prudent risk-based approach, kind of a
lessons learned, what works, what does not. So just based on
what I heard and what I know of, doing all 50 in 1 month in
2014 sounds a little risky as opposed to the incremental
approach.
Senator Carper. Would you suggest that the course we take
would be to maybe start with the first State that ratified the
Constitution, then the second State? [Laughter.]
Mr. Willemssen. I will defer to you, Mr. Chairman.
Senator Carper. All right. OK. Thanks for those responses.
Mr. Saccoccio.
Mr. Saccoccio. Yes. We are very excited about what CMS is
doing, and we understand it is going to take some time. But
when you look at the Medicare system, and then if you bring the
Medicaid data, as well, there are enormous opportunities there,
because unlike on the private side where, say, an Aetna has its
own data or Cigna has its own data or Blue Cross-Blue Shield of
Louisiana has its own data, here--and although they could take
a look at that data, they are looking at a very small slice of
what is going on out there.
With Medicare and Medicaid, because of the enormous numbers
and integrating all of that data into one place, there is
enormous opportunity there not only for Medicare and Medicaid
as they begin to analyze that data, suspend payments go after
fraud, but then to take that information and share that
information also with the private side, as well, not giving the
private side access to the data, but taking the trend
information that they see, the schemes that they see arising
out of that data.
For example, J codes, the codes used for infusion therapy
are being abused in South Florida and we are starting to see a
lot of that based on the analysis that we are doing. Let the
private side know, the payers that are in those areas know that
they should look at their data so that they can focus efforts,
too. So I think it is an enormous opportunity, given the
enormous amount of data that is there for Medicare and
Medicaid.
Senator Carper. All right. Thanks.
Mr. Morris, what should we feel encouraged about and what
should we still have some concerns about?
Mr. Morris. From the perspective of the Inspector General's
Office, we are very pleased with the sense of partnership and
CMS's interest in engaging us in designing a system that works
for law enforcement as well as program integrity. And having
worked in the IG for a number of decades, I can tell you it is
refreshing compared to prior interactions we have had with CMS.
I would say areas of concern, as touched on in my written
testimony, we think it is going to be critical to monitor how
the contractors perform in this context because our past
experience is that contractors oftentimes disappoint us.
The other particular interest we have is moving to what we
call real-time data. Much of the information that we use as
part of our criminal investigative work is pre-adjudicated. It
is data that has not been scrubbed and perhaps may not even get
paid. But it tells us that criminals are pinging the system.
They are testing to see where claims get rejected because then
they shape their strategy around those screens. So knowing when
a criminal has tried to get in and has been unsuccessful is as
valuable to us for fraud detection as spotting the claims
through the predictive analytics. It is what we are building
on. It is something we look forward to getting.
Senator Carper. All right. That is a good point.
Dr. Budetti, just take a minute and respond to what you
just heard from your three colleagues here, just a minute.
Dr. Budetti. Senator, I think that we are very encouraged
by the partnership that we have been able to establish with the
Office of Inspector General and our other law enforcement
colleagues and I will be delighted to look at whatever
suggestions the GAO has for other ways to implement the
Medicaid data. I will tell you that there is a lot of work
going on right now to try to make sure that we are in position
to be able to do that and do it properly.
Senator Carper. All right. Thanks. Senator Brown.
Senator Brown. Thank you, Mr. Chairman, and you asked a
good question, Mr. Chairman, about IDR and explain it for the
average person listening at home. Doctor, you referred to it as
a recipe book and then a grocery store. It is interesting. It
is a recipe book and a grocery store that does not have all the
required items to either look up or purchase. The shared
systems are not in there. There are a lot of holes in it.
So I am curious, like, when is the recipe book going to be
completed and the grocery store going to have all the products
you need, because every hearing that I participate in, it is,
like, oh, yes, we all get along. Everyone is great. We agree
with this. We agree with that. And at the end of the day, we
are kind of in the same situation, and doing the legislative
history and the committee histories as we have done, being the
newer person here, it is like deja vu. It is like Groundhog
Day. You hear the same thing over and over and over. You have a
new guy coming in. He has all the greatest intentions and he is
picking up the slack where the other person left off and here
we are.
So I guess my question ultimately is to you, Mr.
Willemssen. You have testified previously that one system, the
old Medicare Transaction System (MTS), was terminated after we
spent $80 million, and you stated that it was a huge learning
experience. Yes, it was a very expensive learning experience,
too, in my estimation. In your opinion, at this point, has CMS
learned from its past failure and do you have confidence that
they will be able to meet its stated deadline of 2014 for
incorporating all Medicaid data into the IDR?
Mr. Willemssen. Yes----
Senator Brown. That is the recipe and grocery store we were
just referring to.
Mr. Willemssen. I did testify on that failed Medicare
Transaction System about 14 years ago. There are similarities.
There are differences. One of the similarities and lessons
learned is there was some underestimation of complexity going
into this.
One area I would point to is in Medicaid. When asked
earlier, Dr. Budetti talked about three reasons that made it
difficult for why those were problematic in bringing into the
IDR. I would echo the third reason that he talked about. All
those State Medicaid Management Information Systems are
separate. They often have different data element definitions
and different file structures. So trying to aggregate those all
together is very difficult.
So we are encouraged to hear that there are efforts
underway to do that, but I think the way you have to hold the
agency's feet to the fire is you have to have them commit to
milestones and deadlines----
Senator Brown. Right, and----
Mr. Willemssen [continuing]. On when are certain activities
going to be done, and we would like you to come and--the way to
enforce that, continuing congressional oversight. I think there
were comments earlier about QFRs coming at a certain point in
time relative to a certain hearing. There is a lot to be said
for congressional oversight and actions that get taken.
Senator Brown. And it is interesting you say that, because
my next followup question was, what are key indicators we
should look for to ensure that these progress results are being
made.
Mr. Willemssen. The key indicator I would look for is to
ask CMS what kind of benefits are accruing. Now that they have
agreed to implement a system to track those benefits, what is
happening? What kind of fraud reduction are we accruing? What
kind of chunk out of that $21 billion, which, as the Chairman
mentioned, was for a 10-year period, but that 10-year period
was 2006 to 2015, and right now, CMS does not know if they have
accrued any benefits.
Senator Brown. Right. That is part of the problem that the
Chairman and Senator Coburn and others have been working on
before I got here. But, I guess, getting back to you, Dr.
Budetti, how can you convince us that this time--and when I say
``you,'' it is not you, obviously, because you are new--your
entity, your group that you are representing, how do we know
that you are going to get it right this time? What confidence
should we have?
I think we are kind of optimistic here. We will try to work
together. The Senator and I, out of the people that work here,
are probably the two closest people that work together when we
have an opportunity. What assurances can you give us that, in
fact, you are getting it right this time, based on previous
testimony and previous experiences?
Dr. Budetti. I appreciate that question, Senator Brown, and
there is a lot of history in a lot of these situations that it
is important for us to learn from. All I would cite is one
example, the fact that we did get a major system implemented
and up and running within 9 months of when the President signed
the legislation and it has already reviewed all Medicare claims
for the last 12 days and that we are setting up systems to deal
with the results of that.
Senator Brown. And if I could just interrupt----
Dr. Budetti. Certainly.
Senator Brown [continuing]. I want to congratulate you on
that. Aside from just throwing bombs, I think it is important
to recognize a good job, as well, so congratulations on that
effort.
Dr. Budetti. I appreciate that very much, and, of course, I
pass along your nice words to the people who actually did the
work, who were my colleagues.
The other thing I can say is that I think that you have
heard from me before and you know that the intense commitment
that we bring to this task. I think this is something that we
want to accomplish, we are dedicated to accomplishing. We want
to know exactly the kinds of results that the GAO mentioned,
which is we want to know whether this is working, and we are
developing metrics. We are looking to be able to measure not
just money that we recover, which is very difficult in some of
these situations, but in avoidance of payments that otherwise
would have gone out the door. So we are, in fact, developing
those metrics and looking at the ways that we can collect those
data and I am delighted to continue with your oversight and
report back to you regularly on our progress.
Senator Brown. Thank you.
Mr. Saccoccio, you look lonely, so I wanted to ask you a
question. [Laughter.]
In your testimony, you discussed how FICO, an expert in
credit risk analysis, was built on its expertise in the
financial services industry to provide a predictive modeling
for the private health care industry. Are any of your members
currently using predictive modeling to prevent fraudulent
payments?
Mr. Saccoccio. Yes, several are. On the private side, it is
kind of a mixed bag in the sense that you do have some
companies that are well ahead of others. Obviously, you have
the national companies that have more resources than, say, the
smaller regional insurers. But some of them are using
predictive modeling. They are trying to get a handle on the
whole prepayment thing. Remember, it is not just an issue of
predictive modeling but when are you applying it. Are you
looking at claims before they are being paid or are you taking
a look at them after they have been paid.
So the push is to try to do this prepayment as much as
possible, and that is a real challenge because there are
requirements to pay claims in a certain amount of time. Every
State has a prompt pay law. ERISA requires claims to be paid in
a certain amount of time. So the private payers do have that
pressure to try to pay those claims as quickly as possible,
which then kind of offsets some of their efforts on the
prepayment side.
But some of the companies have started to use predictive
modeling. Some are ahead of others. They all have some sort of
data analytics that they do, but they are all moving in that
direction with the emphasis trying to be pushed to the
prepayment side of things.
Senator Brown. All right. Thank you, Mr. Chairman.
Senator Carper. No, thank you.
One of the things that Senator Coburn and I had worked on
for a number of years was the issue of improper payments, and
the earlier legislation, I think, passed in the first term of
George W. Bush on improper payments, I think basically said,
Federal agencies, we want you to be mindful of improper
payments and start writing them down, or at least noting what
they are.
Senator Coburn and I came back a year or so ago and
legislation signed by President Obama basically said, we not
only want you to note the improper payments, we want you to
stop making them. Federal agencies, we want you to report them.
And last, we want you to go out and recover as much money as
you can from those improper payments, particularly when there
are overpayments that were made. And we had a fair amount of
discussion in this hearing room in the past on recovery audit
contractors, folks that literally we send out to recover
overpayments, in some cases fraud, in other cases just
mistakes.
One of the questions that we got into here--I think, Dr.
Budetti, we discussed this with you and the folks at CMS in the
past--but just give us--I think maybe when you appeared at our
last Subcommittee hearing on this topic, I think you said that
CMS plans as expeditiously as possible to implement the final
rule on Medicaid recovery audit contracting, and I think that
was in the early part of maybe March this year. It has been 3
or 4 months. And now that we are meeting again in July, could
you give us just maybe a more definitive date on when the final
rule for Medicaid recovery audit contracting might be issued.
Dr. Budetti. Thank you, Senator. Yes, I did use words
probably to that effect. I have also said that it would be
forthcoming soon. We do expect----
Senator Carper. Those are the kind of answers that we give.
You are not supposed to do that. You have to be more specific.
Dr. Budetti. I can never commit to a specific date on a----
Senator Carper. I have noticed that.
Dr. Budetti [continuing]. Promulgating regulation.
Senator Carper. That troubles me.
Dr. Budetti. But we are expecting this to be out by the end
of the summer.
Senator Carper. The end of the summer, OK. Now, could that
be, like, September 21?
Dr. Budetti. You are very good at knowing the calendar,
Senator. [Laughter.]
Senator Carper. Well, sometimes, like on the beaches, we
close our beaches down on Labor Day, so we will see. OK. End of
the summer. We will take your word on that.
I want to go back to the--this is really one for all the
panelists, and we will start with you, Mr. Saccoccio, and this
is regarding public-private partnerships. Sometimes we think
fraud is something that only happens in the Federal Government
or State Governments or local governments. Actually, a lot of
fraud occurs, at least with respect to health care, I am told,
with the private health insurance companies.
I once remember talking to folks from MBNA, a big credit
card bank headquartered in Delaware, now part of Bank of
America. But I could not understand why they kept hiring all
these folks who had been, like, top senior-level FBI and any
number of other law enforcement agencies around the country,
and I thought, what do they know about credit cards? And as it
turns out, they knew a lot about ferreting out fraud and trying
to stop it where it raised its head.
A lot of folks in financial services know some things that
we could learn from, and certainly the folks in the private
health insurance companies that we could then learn from them,
as well. And I think, if I understood your response to Senator
McCaskill, Dr. Budetti, one of the reasons why we are able to
get something off the shelf is because other sectors of our
country, our economy, our health care delivery system, they had
already worked on this issue and had come up with a way we were
able to actually take that off the shelf. I think that is what
I heard you say.
But let me just--here is a question to all of our panelists
on public-private partnerships. We have heard, I think from
each of our witnesses here today, the importance of information
sharing, public and private partnerships. Health care fraud
criminals target everyone, whether they happen to be a private
health insurance company or Medicare, and unless we find a way
to work together to identify those who would steal from us,
prevent improper payments, and prosecute those who have already
committed fraud, we will continue to struggle to root out and
defeat these fraudsters. I think it was Mr. Morris--I think it
was you, sir--who referred to the public-private partnership,
and Mr. Saccoccio has shared with us how the National Health
Care Anti-Fraud Association brings together representatives
from private insurers and public health care providers.
What I want to ask each of you to do, just take a minute or
so, a minute or maybe two, to tell us how those of us in
Congress could help strengthen and formalize these types of
working relationships or other improvements that we should
encourage in these important public-private partnerships. Maybe
there is nothing we can do. Maybe there is plenty of incentive
just to do it on its own. But if there is something that we
ought to be doing, we would like to know about it. Mr.
Saccoccio, do you want to go first?
Mr. Saccoccio. Sure. Thank you, Senator. I think a lot of,
as you discussed, private-public partnerships, a lot of it is
something that can be done independent necessarily of
additional laws or statutes. But there are some areas that you
may want to take a look at.
First of all, with respect to--as we go down the road here
with respect to predictive modeling in the Medicare program, is
there an opportunity to allow the private insurers, again,
access to information, not, again, access to the data, but
access to trending information, schemes, those kinds of things.
I suspect that a lot of that could be done by CMS without
legislation, but to the extent that those issues are addressed
in legislation, for example, your FAST Act bill that you have
proposed, allowing the private side to participate as much as
possible in those types of activities that make sense, and
information sharing, obviously, is the biggest one.
The other thing is, are there any other areas of the law
that in some way undermine the ability of law enforcement to
share information with the private side unnecessarily.
Obviously, if there is a law enforcement investigation, you do
not want to compromise that investigation in any way. But if
there are some statutes out there that in some ways undercut or
undermine the ability to share information that do not make any
sense, to maybe take a look at those and maybe look at maybe
changing that.
Senator Carper. All right. Good. Thanks. Mr. Willemssen.
Mr. Willemssen. I would echo a lot of those comments. I
think to the extent--looking at the predictive modeling, to the
extent that you can see some best practices and share those
best practices, I think you will find a lot of private sector
organizations willing to share their tools, in some cases at
not that high of a cost because they want to get the word out.
They want to be shown as best in class and what they are doing
may be at a discounted rate for the Federal Government in a
variety of important areas.
I also would second the comment about enhanced information
sharing and just to ensure that as that occurs, that we take
into account privacy and security considerations.
Senator Carper. All right. Thanks. Mr. Morris.
Mr. Morris. I would first note, as was set out in my
written testimony, that since 1996, the law has charged us, the
Attorney General's Office and the Secretary through the
Inspector General, with working with the private sector to
identify ways to share information, and one of the results of
that has been the Health Care Fraud Working Groups, which are
based in U.S. Attorneys' Offices, many of which have a
collaborative relationship with the private side. So
encouraging the spirit of the law be embraced and that we look
for more opportunities to collaborate would be part of it.
I should also tell you that the Inspector General's Office,
through the leadership of Inspector General Levinson, has
really pushed for greater collaboration, and one of the things
that we have done is undertaken a survey of both our agents,
our partners at the Department of Justice, and the private
sector to get an idea of what are best practices. What are the
work groups doing that are bringing about successful
identification and prosecution of fraud, both on the private
and public side. We are going to be generating a report as a
result of that work and hope to spread the good news about what
works and what best practices should be embraced.
The other thing I would note is that bringing people
together to share ideas is a great way to identify barriers and
break them down, and through the leadership of the Attorney
General and the Secretary, we have had a series of HEAT summits
around the country where the private sector and government
agencies have come together and shared ideas about identifying,
preventing, and prosecuting fraud. So I think knowing that the
law is in place and then having the commitment of leaders to
see that its spirit is met goes a long way to getting greater
collaboration.
Senator Carper. Good. Thank you. Dr. Budetti.
Dr. Budetti. I would echo the comments of my co-panelists
today, and I would also--the only thing I would add to that is
that working together with the private sector is both something
that we have done with this particular initiative that we are
talking about today, the predictive modeling, but also there is
a very strong interest at the highest levels of the Department
of Health and Human Services to work out a specific framework
for additional interactions with the private sector and working
with our colleagues in law enforcement, as well.
So one of the first things we are going to be doing is
sharing information on payment suspensions with our private
sector insurance companies that provide Medigap plans. If we
are not going to pay a claim, why should the Medigap plan pay a
claim? But we are exploring many other ways for us to proceed
along the public-private partnership to fight fraud. We
recognize that everybody has to be in this together, so----
Senator Carper. Well, might that work the other way for the
private health insurance companies if they decide not to pay a
claim under the Medigap----
Dr. Budetti. Those are the kinds of things that are very
much of interest and under discussion, yes.
Senator Carper. Good. All right. One hand washes the other.
Senator Brown.
Senator Brown. Mr. Chairman, I just have two quick
questions, and I appreciate you holding this hearing again.
So when I am back home talking to people about the
overpayment issue, I say, you buy an insurance policy. You pay
the monthly premiums. You have a beneficiary. That person dies.
The beneficiary gets the check, right. Well, in the
government's instance, sometimes they get that check three or
four or five times, and as a result we have overpayments, or we
are paying people that are actually dead and they are not
supposed to be getting payments from the government.
So I am wondering, I know in the FAST Act that Senators
Carper and Coburn pushed, that requires a daily view of the
Social Security Administration (SSA) death master to prevent
that type of fraud. Is that something that you folks are doing
or plan to do, or would support, or what is that so that we do
not keep paying people who are already dead, giving them
benefits?
Dr. Budetti. Senator, one of the things that we are doing--
I have not talked about this today yet, but one of the other
major initiatives that we are undertaking, and, in fact, we are
in the process of looking for contractors to work on this with
us, is to automate the screening process that puts into place
the more detailed screening that was required under the
Affordable Care Act. A lot of that is being done right now, but
it is being done in more cumbersome ways and we are going to be
doing it in a way that will be checking databases and will be
checking databases as often as is necessary to keep them
updated. We are going to be checking on databases continually,
not just when people apply to the program, but while they are
in the program, on an ongoing basis.
So, yes, we are very much interested. We do not want to pay
any claims to or on behalf of someone who was not alive when
the service is either delivered or received, and so we are
committed to all of the ways that we can do that, and one of
the ways is through greatly improving and enhancing our
screening process so that we are checking all of those
databases and checking them regularly.
Senator Brown. It would just be nice to have an alert on
the screen, ``Alert, alert, he is dead. Do not pay him.''
Something pretty simple.
Dr. Budetti. We want to head in that direction, but as you
know, when somebody is entered into the death file, they are
entered as a person who dies----
Senator Brown. Sure.
Dr. Budetti [continuing]. Not necessarily as a physician,
and so we have some other connections to make.
Senator Brown. Well, governmentwide, I mean, we had a
hearing, $150 billion a year that we are giving out in just
overpayments. That is a lot of money when we are looking for
ways to kind of balance the budget and get our fiscal and
financial house in order again.
Mr. Morris, I just have one final question. How concerned
are you about cybersecurity, the safety and security of the
networks and having people get into private issues with not the
best of intentions?
Mr. Morris. It is a great concern of ours and we have been
doing a lot of work, both with the Office of the National
Coordinator, focusing on how to build safe systems as we move
into an electronic health record. There is additional work we
are doing right now which we would be pleased to brief you
about, probably more appropriate in a private setting.
Senator Brown. Sure. Are you confident at this point that
our systems are safe and secure?
Mr. Morris. I think there are opportunities for
improvement.
Senator Brown. OK.
Senator Carper. What I always say here, and Scott has heard
this a million times already, everything I do, I know I can do
better. That is true for all of us, and it is true here, too.
We just have to constantly improve, because the bad guys, they
are not stupid and they are testing us and we just have to be
smarter, get smarter faster.
Anything else?
Senator Brown. I am all set, Mr. Chairman. Thanks for
holding this hearing.
Senator Carper. Thanks very much for being a part of it and
for joining us in cosponsoring the legislation.
I am going to ask just maybe one or two more and then we
will wrap it up.
This would be for, I think, Mr. Morris and Dr. Budetti. Let
me just ask a question about the program integrity provisions
of the Affordable Care Act, the health care law. There were
several provisions of the law, as you may recall, that
strengthen new Medicare and Medicaid provider screening. It
allowed for the suspension of payments--we have had some
discussion of that here today--where there is credible evidence
of fraud, and that expanded recovery audit contracting. Since
the passage of the Affordable Care Act, the Centers for
Medicare and Medicaid Services has taken many steps to
implement these provisions.
I would ask, Mr. Morris, maybe you, Dr. Budetti, if you
would, could each of you just outline briefly for us the areas
where you think CMS has done a very good job implementing a
provision and where have we seen the most success. Could you
tell us also a little bit about activities that might still be
wanting, where CMS should focus more or perhaps where we need
improvements to get the most out of its new authorities. We had
some discussion of this already here today. I just wanted you
to drill down on it one more time.
Mr. Morris. I would say that, across the board, the
Inspector General's Office has been very impressed by how
quickly CMS has developed the regulations and put into practice
many of the statutory requirements. It is no small undertaking
and they have really put their shoulder to the wheel. We have
seen this in a wide range of the program integrity functions.
If there is one area that we have identified where we think
there are opportunities for improvement, it would be in the
area of enrollment screening. There are regulations out now
that implement the Affordable Care Act's authority to create
different tiers of prescreening based on the risk presented by
a class of suppliers. We think that there are opportunities for
greater flexibility in using those tools and there are ways
that we could encourage CMS to use that tool to keep the bad
guys out more effectively. But across the board, we have been
very impressed by how hard CMS has worked to get these
integrity tools in place, and as I have said previously, how
open they have been to collaborating with us and taking
advantage of our expertise as they have gone through that
process.
Senator Carper. The second half of that question--anything
you want to add about activities where CMS's performance might
be wanting in this regard?
Mr. Morris. Well, I think I touched on one, which is we
think there are opportunities to enhance the enrollment
screening process. I should say that because so many of these
provisions have just recently been implemented, we still need
some time to be able to see how they are actually put into
effect and some opportunity to study. We will be, as part of
our general oversight function, going back and reviewing many
of these. Some of them are required by the statute for us to do
an assessment, for example, screening of background for long-
term care providers. Others, we will be taking on as part of
our general work planning. So we will look forward to being
able to come up here and give reports of progress as the
implementation goes forward.
Senator Carper. All right. Somebody said to me, I think in
anticipation of this hearing today, he said, this is about as
exciting as watching wet paint dry. [Laughter.]
For somebody who has--those of us who have worked on these
issues for a while, it is actually more exciting than that.
What would be exciting is when it gets to be 2024 and we run
out of money in the Medicare Trust Fund. What would be exciting
is to say to the people who depend on Medicare in 2024 or 2025
or beyond, I am sorry, we do not have any more money to pay for
your coverage.
What would be exciting is as we try to get into these
deficit reduction negotiations and we can actually say to the
President and bipartisan leadership of the Congress we think we
can save some money in Medicare and Medicaid that we had
anticipated because of the good work that is being done, in
part in response to the passage of the Affordable Care Act and
in part maybe out of some of the ideas that come out of Senator
Coburn's legislation and mine, ideas that, I might add, were
fed to us by some of our friends here at the table from the
IG's office and from GAO and from CMS, as well, and from smart
guys like Mr. Saccoccio. That would be exciting.
What I want to do is make sure that we have some of the
latter kind of excitement and none of the excitement that I
talked about earlier, when we run out of money and have to turn
to a whole couple of generations of people and say, that great
Medicare program that has been around since 1965 is going away.
We do not want to do that.
I appreciate the spirit with which CMS has tackled these
challenges. Dr. Budetti, how long have you been in your job
now?
Dr. Budetti. Since February of last year, Senator.
Senator Carper. I remember the first time we met. Your hair
was all dark. It was black.
Dr. Budetti. It was. [Laughter.]
Senator Carper. And here we are, not very much later. But,
obviously, you and your folks are putting a lot of effort into
this.
One of the things I liked to do as Governor--I still like
to do it--is I like to do customer calls. I still call on
businesses in our State, outside of our State that have
operations in our State, and the questions we ask those
businesses are, how are we doing, in this case, the Federal
Government or State Government, and what can we do to help you?
And one of the ways I want to close out here is to sort of
say, what else can we do on our side, on the legislative side,
to help make sure that there will be Medicare around after
2014, and to make sure that some of the savings that we are
talking about here actually are available to put on the table
to help move these deficit discussions. What else can we be
doing? Dr. Budetti.
Dr. Budetti. Well, Senator, I just want to express our
appreciation for the support and interest that you have shown
in this area because that is probably the key for us. We have
absolutely terrific tools, both in previous laws but also
powerful new tools in the Affordable Care Act and we need to
make sure that we continue to have those supported in a way
that will allow us to carry out our job. So we look forward to
continuing to have your support, and, of course, we are always
open to engaging in dialog with you at any time on ways to move
even further forward. And I know, as you always say, we are
doing a good job, somebody, but they could always do better.
Well, we are happy to keep talking to you about that. Thank
you.
Senator Carper. Yes, thanks. Mr. Morris.
Mr. Morris. We have had the pleasure of working with your
committee staff on a number of ideas around the FAST Act----
Senator Carper. Are any of them sitting behind me today?
Mr. Morris. They are, sir.
Senator Carper. Do you want to mention any names? Who has
been especially helpful?
Mr. Morris. I would say Peter Tyler has been amazing.
Senator Carper. Oh, really. You did not have to say that.
How about on the Republican side? We have some pretty good
people over here, too.
Mr. Morris. So outstanding that I would not even know where
to begin.
Senator Carper. OK, fair enough. [Laughter.]
All right. Well, Peter has mentioned a couple of them to me
and we are grateful for the sense of partnership that we have
here.
Mr. Morris. I could offer as just one example of a small
way that we could expand the ability to protect the integrity
of the program, under the FAST Act, the bill would expand
access to CMS for the National Director of New Hires so they
could use that information for their integrity work. We would
suggest that you consider also expanding that access to the
Inspector General's Office. We would like to use that tool to
screen health care providers to ensure they have not hired
excluded individuals who might be compromising both
beneficiaries as well as the integrity of the program.
Senator Carper. All right. That is a good point. Thank you.
Mr. Willemssen.
Mr. Willemssen. I would again echo one thing I mentioned
earlier. I think continued congressional oversight through
hearings such as this can, among other things, help spur
action. They can help identify issues. They can identify
obstacles that maybe the Congress can assist the agency, in
this case CMS, in overcoming.
Senator Carper. All right. That is good. I am a big
believer in oversight. Good. Mr. Saccoccio.
Mr. Saccoccio. Senator, I think a lot of the--all the
aspects in the FAST Act are very good, especially those dealing
with drug diversion. That is a major, major issue now with
respect to fraud.
Senator Carper. Have you heard a price tag put on that?
Mr. Saccoccio. No, I would not have a price tag for that,
but it is a major problem, and it is obviously not just a
financial issue. It is a real person issue, as well, as far
as----
Senator Carper. Yes. Well, take just a second and just
explain to the folks that are listening here or following the
hearing, the Drug Diversion Act, just tell them what we are
talking about here----
Mr. Saccoccio. What we are talking about there is basically
narcotic-type prescription drugs that are being abused and----
Senator Carper. Controlled substances, that kind of thing--
--
Mr. Saccoccio [continuing]. Controlled substances, the
types that are used many times for pain management, and what is
happening is either through providers that are doing, turning
their practices into pill mills or patients that go from doctor
to doctor to doctor shop to try to get those pills, or
pharmacies or pharmacists that may be involved, and basically
getting those drugs and then selling them on the street because
they have a very high street value and it has just become a
very big problem.
Last year, our organization gave our Investigation of the
Year Award to a case out of Kansas where, basically, a
physician and his wife were running a pill mill that was
responsible for----
Senator Carper. And when you say ``pill mill,'' I know what
it means, but why do you not tell others.
Mr. Saccoccio. Basically, they were open 24 hours a day and
anybody that wanted those narcotic controlled substances could
come get a prescription for them without any examinations or
anything like that. Basically, you just pay me the money, I
will give you the prescription so you could go out and get
those drugs for your use or to sell them on the street.
And based on that investigation that was both a private-
public type of investigation, there were at least about 64
deaths that were attributed to overdoses based on drugs coming
out of that particular physician's office.
Senator Carper. That one place.
Mr. Saccoccio. That one place. So it is an enormous problem
and the State entities that would take a look at drug diversion
and try to share that information, some of the provisions that
are in the FAST Act, I think, are very important.
But I think the one message that is critically important is
that this has to be an effort that is not just focused on 1
year or 2 years. It is going to take a long time. It has to be
consistent, and it has to be a continuous-type effort from year
to year. I know there is a lot of focus on it right now because
of the deficit and trying to find recovery of funds, but it is
something that has to be focused on year in and year out and it
has to have a commitment by this Administration and, quite
frankly, any subsequent Administrations, to just keep at it
year after year, and that is the only way that you are going to
really make an enormous dent in the problem.
Senator Carper. Thanks for that. I really think all the
testimony has been helpful. The thing that you have done is to
remind us that there are human consequences here. It is not
just fraud. It is not just money that is being stolen out of
the Medicare Trust Fund, but there are real implications for
people, for human lives, and I thank you for humanizing this.
Does anybody have anything else you want to add or take
away?
I think one of the people I asked, Peter Tyler, I said, who
on the Republican side working for Senator Coburn has been
especially helpful, and he said, ``Well, not Josh Trent--''
[Laughter.]
No, he said Josh was a lot of help, so, Josh, thank you,
and everybody else who has been a part of that, we thank you,
as well.
Well, this is a little bit like a marathon, not a sprint,
but like a marathon, and we all just need to stay on task. My
hope is if we do that, we will actually save a lot of money and
we will help preserve the integrity of this program and we will
help restore some fiscal sanity in this country, and to Mr.
Saccoccio's point, maybe save some human lives at the same
time. So that would be a good day's work.
I thank you all for joining us, for your preparation. What
we will do is, I think--Peter, help me, but I think my
colleagues have 2 weeks to submit questions and then if they
do, I would just ask that you respond to those questions
promptly.
With that, this hearing is adjourned. Thank you all very
much.
[Whereupon, at 4:25 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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