[Senate Hearing 112-788]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-788

 
PROTECTING MEDICARE AND MEDICAID: EFFORTS TO PREVENT, INVESTIGATE, AND 
                      PROSECUTE HEALTH CARE FRAUD

=======================================================================

                                HEARING

                               before the

                  SUBCOMMITTEE ON CRIME AND TERRORISM

                                 of the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 26, 2012

                               __________

                        PROVIDENCE, RHODE ISLAND

                               __________

                          Serial No. J-112-67

                               __________

         Printed for the use of the Committee on the Judiciary



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                       COMMITTEE ON THE JUDICIARY

                  PATRICK J. LEAHY, Vermont, Chairman
HERB KOHL, Wisconsin                 CHUCK GRASSLEY, Iowa
DIANNE FEINSTEIN, California         ORRIN G. HATCH, Utah
CHUCK SCHUMER, New York              JON KYL, Arizona
DICK DURBIN, Illinois                JEFF SESSIONS, Alabama
SHELDON WHITEHOUSE, Rhode Island     LINDSEY GRAHAM, South Carolina
AMY KLOBUCHAR, Minnesota             JOHN CORNYN, Texas
AL FRANKEN, Minnesota                MICHAEL S. LEE, Utah
CHRISTOPHER A. COONS, Delaware       TOM COBURN, Oklahoma
RICHARD BLUMENTHAL, Connecticut
            Bruce A. Cohen, Chief Counsel and Staff Director
        Kolan Davis, Republican Chief Counsel and Staff Director
                                 ------                                

                  Subcommittee on Crime and Terrorism

               SHELDON WHITEHOUSE, Rhode Island, Chairman
HERB KOHL, Wisconsin                 JON KYL, Arizona
DIANNE FEINSTEIN, California         ORRIN G. HATCH, Utah
DICK DURBIN, Illinois                JEFF SESSIONS, Alabama
AMY KLOBUCHAR, Minnesota             LINDSEY GRAHAM, South Carolina
CHRISTOPHER A. COONS, Delaware
                Stephen Lilley, Democratic Chief Counsel
               Stephen Higgins, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode 
  Island.........................................................     1

                               WITNESSES

Benway, Mary, President, Rhode Island Partnership for Home Health 
  Care, North Kingston, Rhode Island.............................    20
Doolittle, Ted, Deputy Director, Center for Program Integrity, 
  Centers for Medicare and Medicaid Services, U.S. Department of 
  Health and Human Services, Washington, DC......................     7
Kilmartin, Peter F., Attorney General for the State of Rhode 
  Island, Providence, Rhode Island...............................     3
Neronha, Peter F., U.S. Attorney for the District of Rhode 
  Island, U.S. Department of Justice, Providence, Rhode Island...     5
Taylor, Catherine, Director, Rhode Island Division of Elderly 
  Affairs, State of Rhode Island Department of Human Services, 
  Providence, Rhode Island.......................................    17

                       SUBMISSIONS FOR THE RECORD

Benway, Mary, President, Rhode Island Partnership for Home Health 
  Care, North Kingston, Rhode Island, statement..................    27
Doolittle, Ted, Deputy Director, Center for Program Integrity, 
  Centers for Medicare and Medicaid Services, U.S. Department of 
  Health and Human Services, Washington, DC, statement...........    32
Fortin, Edla, Fortin joins fight against Medicare Fraud at age 
  82, article....................................................    46
Kilmartin, Peter F., Attorney General for the State of Rhode 
  Island, Providence, Rhode Island, statement....................    49
Neronha, Peter F., U.S. Attorney for the District of Rhode 
  Island, U.S. Department of Justice, Providence, Rhode Island, 
  statement......................................................    55
Roberts, Nancy, President and Chief Executive Officer, Warwick, 
  Rhode Island, statement........................................    68
Taylor, Catherine, Director, Rhode Island Division of Elderly 
  Affairs, State of Rhode Island Department of Human Services, 
  Providence, Rhode Island, statement............................    72


PROTECTING MEDICARE AND MEDICAID: EFFORTS TO PREVENT, INVESTIGATE, AND 
                      PROSECUTE HEALTH CARE FRAUD

                              ----------                              


                         MONDAY, MARCH 26, 2012

                               U.S. Senate,
               Subcommittee on Crime and Terrorism,
                                Committee on the Judiciary,
                                           Providence, Rhode Island
    The Subcommittee met, pursuant to notice, at 10 a.m., East 
Providence Senior Center, 610 Waterman Avenue, East Providence, 
RI, Hon. Sheldon Whitehouse, Chairman of the Subcommittee, 
presiding.
    Present: [None.]

 OPENING STATEMENT OF HON. SHELDON WHITEHOUSE, A U.S. SENATOR 
                 FROM THE STATE OF RHODE ISLAND

    Senator Whitehouse. Good morning, everyone. Welcome to 
today's field hearing of the Senate Judiciary Committee's 
Subcommittee on Crime and Terrorism.
    We have convened this hearing in Rhode Island today to 
consider a topic that is extremely important to Rhode Island 
seniors, families and children, and that is protecting Medicare 
and Medicaid from fraud and abuse.
    Thousands of Rhode Islanders rely on Medicare and Medicaid 
for effective and affordable care, and rising costs, 
particularly from fraud and abuse, threaten to undermine these 
critical programs.
    I want to thank the East Providence Senior Center for 
hosting us. Bob Rock has done a lot to make this go smoothly. 
Thank you very much, Bob.
    I want to recognize John Martin, who is here representing 
the AARP. And in addition to our witness, Ted Doolittle from 
CMS, Ray Herd, who is the Deputy Regional Administrator for 
CMS, Sylvia Yu from the Office of Legislation of CMS, and 
Maureen Kerrigan, who is CMS' liaison to the Senior Medicare 
Patrol, are all here and I want to thank them for joining us.
    We all have a role to play in protecting Medicare and 
Medicaid from fraud and abuse. I have been working with my 
colleagues in Congress to enact new tools for our investigators 
and prosecutors to fight fraud. Law enforcement at the State 
and Federal level play an important role in investigating and 
prosecuting bad actors. And Rhode Island seniors and health 
care providers can function as eyes and ears on the ground, 
identifying possible fraud and protecting themselves and their 
neighbors.
    We have in the audience today Edla Fortin, who is a member 
of our State Senior Medicare Patrol, which works to protect 
beneficiaries from fraud and billing mistakes.
    By coordinating efforts between Congress, Medicare and 
Medicaid administrators, law enforcement, seniors, and 
providers, we can reduce fraud and strengthen Medicare and 
Medicaid so that Rhode Islanders can continue to rely on these 
vital programs without having to bear the burden of fraud.
    A serious effort in Congress, unfortunately, is underway to 
do away with Medicare, as we know it, and to slash the support 
the Federal Government provides for Medicaid. Last year, the 
House of Representatives passed a Republican budget which would 
have privatized Medicare and required seniors to pay the 
majority of their health expenses on their own.
    We defeated the House Republicans' plan last year, but just 
last week, they announced that they will try again.
    I believe we need to stem the rising costs of health care 
rather than just forcing seniors and families to pay more of 
those costs. One way to do this is to fight fraud and abuse in 
all of its forms--patients being billed for services they did 
not receive, drug companies seeking reimbursement for improper 
uses of prescription drugs, scam artists using scare tactics or 
bogus mailings to sell phony health insurance plans, or 
organized crime groups stealing seniors' Medicare, Medicaid, or 
banking information through deceptive sales pitches.
    Federal authorities in Dallas recently arrested a Texas 
doctor and six others in a scheme using homeless people to 
charge for home health services that they, of course, never 
received.
    Authorities say the fraud operation cheated the government 
out of nearly $375 million in Medicare and Medicaid fees. This 
shameful criminal behavior hurts individual seniors, taxpayers, 
the vast majority of honest health care providers who receive 
reimbursement from Medicare and Medicaid, and, of course, the 
financial stability of the programs themselves.
    I have been working hard in the Senate to fight health care 
fraud. In 2010, for example, I cosponsored and helped to pass 
bipartisan Medicare fraud-fighting legislation that was signed 
into law as part of the Small Business Jobs Act. The law 
required Medicare to adopt state-of-the art technology, the 
same kind of predictive modeling systems that are used by the 
credit card and banking industries to identify unusual or 
anomalous billing, and that will help identify fraudulent 
claims and billing patterns before taxpayer funds are spent.
    This year I cosponsored the bipartisan Medicare and 
Medicaid Fighting Fraud and Abuse to Save Taxpayer Dollars Act, 
which would further improve CMS' ability to stop fraudulent 
claims before they are paid out, cut down on fraud in the 
Medicare Part D prescription drug program, and strengthen 
penalties for certain types of fraud.
    And along with three other Senators, I have requested from 
the Government Accountability Office a report on 
vulnerabilities for fraud in Medicare data bases and 
prescription drug programs. These actions will help support the 
great work that our law enforcement officials do to prevent and 
punish Medicare and Medicaid fraud.
    I look forward to learning more today about their efforts. 
I also look forward to hearing from our representatives of the 
senior and health care provider communities, two groups that 
can help us fight the fraud that threatens our system.
    As many of you know, a hearing is a formal opportunity for 
Congress to learn more about an issue. The witness testimony 
becomes part of the official legislative record and provides 
valuable guidance to Congress in conducting oversight of 
government activities and updating our Nation's laws.
    We are fortunate this morning to have two panels of expert 
witnesses. The first panel consists of our State's Attorney 
General, Peter Kilmartin; Rhode Island's U.S. Attorney, Peter 
Neronha; and Ted Doolittle of the Centers for Medicare and 
Medicaid Services, or CMS, the Federal agency that administers 
Medicare and Medicaid.
    On the second panel, we will hear from Catherine Taylor, 
the head of Rhode Island's Division of Elderly Affairs; and 
Mary Benway, President of the Rhode Island Partnership for Home 
Care.
    I will take what we learn from today's discussion in Rhode 
Island back to Congress and will continue to work on bipartisan 
solutions to keep these crucial programs working for Rhode 
Island seniors and families.
    I thank the witnesses for coming to share their expertise 
and all of the attendees today for recognizing the need to 
protect these programs.
    If I can ask first that the first panel stand and be sworn 
for the hearing.
    [Witnesses sworn.]
    Senator Whitehouse. Please be seated. We will start with 
our Attorney General, Peter Kilmartin.
    Peter was elected to Rhode Island's Attorney General office 
in 2010. Before taking office, he had served for nearly 20 
years as a State Representative in Rhode Island's General 
Assembly. Concurrent with that time, Attorney General Kilmartin 
served the community as a member of the Pawtucket Police 
Department for 24 years.
    He earned his bachelor of arts from Roger Williams 
University and later returned to earn his jurist doctorate from 
Roger Williams School of Law.
    Attorney General Kilmartin has received numerous public 
service awards from organizations including Mothers Against 
Drunk Driving, the Boys' and Girls' Club, Gateway Healthcare, 
and the Northern Rhode Island Chamber of Commerce.
    His office is active in health care fraud investigation and 
prosecution. And I am delighted to have him here and thank him 
for his testimony.
    Attorney General Kilmartin.

STATEMENT OF HON. PETER F. KILMARTIN, ATTORNEY GENERAL FOR THE 
             STATE OF RHODE ISLAND, PROVIDENCE, RI

    Mr. Kilmartin. Thank you, Senator. First, let me thank you 
for inviting me to be here today and be part of this panel on 
such an important issue, especially for Rhode Island seniors. 
And it is an issue that the Rhode Island Attorney General's 
office takes extremely seriously.
    We have a Medicaid Fraud and Patient Abuse Unit, which 
consists of 11 individuals from two attorneys, case 
investigators, and field operatives who basically go out and 
try to investigate fraud in the Medicaid field, patient abuse, 
and we try to work collaboratively--and this is what I think is 
part of the key and one of the things that I want to express to 
Congress--that we work collaboratively with so many 
organizations at the State level, be it Department of Elderly 
Affairs, Health and Human Services.
    We work with private entities, Alliance for Long-Term Care, 
and many organizations, and we work closely with my colleague 
who you are going to hear from in a moment, U.S. Attorney Peter 
Neronha's office. And that collaboration is really what I 
consider the key to the success of our unit, because it does 
two things. One, we know what each other are doing as far as 
the prosecution and investigation goes; and, No. 2, these 
collaborations bring information to us.
    Most people think that the Rhode Island Attorney General's 
office is an investigatory agency. They'll say--you'll hear on 
the news, ``And call the Attorney General and have them 
investigate this immediately.'' Well, for the most part, we 
handle the prosecution. Most things are investigated by the 
Rhode Island State Police.
    But on this issue, when it comes to Medicaid fraud and 
abuse, we are the enforcement agency. We are the investigatory 
agency, and we are the folks who determine, in the final 
analysis, whether there is someone who we could charge either 
with a crime or maybe seek civil remedies or, if necessary, 
turn the case over to the U.S. Attorney's office for 
prosecution.
    So it's an extremely specialized unit. Last year, we took 
in over $1 million, I think it was $1.1 million in moneys from 
fraud and abuse, and we think there is much more money out 
there and we're working diligently to get that money.
    I have provided some written testimony, copies of which are 
available at the back of the room. So I didn't want to read to 
you all of the nuts and bolts of what the office does. I wanted 
to give you a brief oversight now orally and then I'm sure as 
we get into this, Senator, we'll get into a little more detail 
as to the nuts and bolts of what we do.
    [The prepared testimony of Mr. Kilmartin appears as a 
submission for the record.]
    Senator Whitehouse. Thank you, Attorney General. Your full 
statement will be, without objection, entered into the record 
of this proceeding.
    Our next witness is Peter Neronha, who--I guess we are all 
graduates--almost all of us are graduates, one way or the 
other, of the Department of Attorney General. He currently 
serves as United States Attorney for the District of Rhode 
Island. He was nominated for that position by President Obama 
and confirmed by the Senate on September 15, 2009.
    Mr. Neronha began his career in public service in 1996, 
when he was appointed a Special Assistant Attorney General in 
the Rhode Island Department of Attorney General.
    In 2002, he joined the office of the United States Attorney 
for the District of Rhode Island. Prior to being named United 
States Attorney, Mr. Neronha was chief of the district's 
Organized Crime Strike Force.
    He graduated summa cum laude from Boston College and earned 
his JD magna cum laude from Boston College Law School. And we 
are delighted to have him with us.
    Mr. Neronha.

   STATEMENT OF HON. PETER F. NERONHA, U.S. ATTORNEY FOR THE 
     DISTRICT OF RHODE ISLAND, U.S. DEPARTMENT OF JUSTICE, 
                    PROVIDENCE, RHODE ISLAND

    Mr. Neronha. Thank you, Senator. And thank you for inviting 
me to speak with you today about the Department of Justice's 
efforts to combat health care fraud. I'm also delighted to be 
here in East Providence, where I see so many friends, including 
my friend, Jim Dooby, who I haven't seen for longer than I'd 
like.
    ''At no cost to you.'' Those five words have become 
synonymous with health care fraud. When you're sitting at home 
and you receive a phone call from someone you don't know 
telling you that you can get a piece of medical equipment or 
home health care services at no cost to you because the 
government will pick up the cost, alarm bells should be going 
off in every American's head. More likely than not, you are 
being asked to participate in a fraudulent scheme.
    Such schemes are underway all over the United States, 
including right here in Rhode Island. These types of schemes 
and other types of health care fraud are costing American 
taxpayers billions of dollars and are misdirecting health care 
dollars which could be spent on those actually in need.
    Health care fraud threatens the long-term health of 
Medicare, as well as all Federal, State, and private health 
care programs. Every year, the Federal Government spends 
hundreds of billions of dollars to provide health care to the 
most vulnerable of our society--our seniors, our children, 
disabled, and the needy.
    While most health care providers are doing the right thing, 
some target Medicare and other government and private health 
care programs for their own financial benefit. With the rising 
cost of medical care, every dollar stolen from our health care 
programs is $1 too many.
    Accordingly, together with our colleagues at the Department 
of Health and Human Services, CMS and our State partners, like 
Attorney General Kilmartin and his office, we are aggressively 
investigating and prosecuting health care fraud cases, securing 
prison sentences for hundreds of defendants every year across 
the Nation, and recovering billions of dollars in stolen funds.
    With the additional resources provided to us by Congress 
over the past 3 years, we are doing more than ever before. In 
fiscal year 2011, the government's health care fraud and 
prevention efforts recovered nearly $4.1 billion in taxpayer 
dollars. This is the highest annual amount ever recovered from 
doctors and companies who attempted to defraud seniors and 
taxpayers or who sought payments to which they are not 
entitled.
    Assistant United States Attorneys from my office, working 
with our law enforcement partners, have handled a wide variety 
of health care fraud matters, including false billings by 
doctors and other providers of medical services, overcharges by 
hospitals, kickbacks to induce referrals of Medicare and 
Medicaid patients, fraud by pharmaceutical and medical device 
companies, and failure of care allegations against nursing home 
owners.
    I want to discuss with you this morning, briefly, just 
three recent examples of the kinds of health care fraud cases 
we're seeing right here in Rhode Island.
    The first matter I'd like to discuss involves Rhode Island 
Hospital. This case was resolved just this past February, when 
the hospital agreed to reimburse Federal health care programs 
approximately $2.6 million and pay approximately $2.7 million 
in double and treble damages for ordering medically unnecessary 
overnight patient stays and then submitting claims for payment 
to federally funded Medicare and Medicaid programs.
    Our investigation determined that for approximately 6 
years, from 2004 to 2009, medically unnecessary overnight 
hospital admissions were ordered for approximately 260 patients 
who underwent radio-surgery, otherwise known as gamma knife 
treatment.
    Rhode Island Hospital's claims for reimbursement for the 
overnight admissions to Medicare and Medicaid falsely 
represented that the admissions were medically necessary, when, 
in fact, they were not.
    A second case worth noting involves Planned Elder Care, a 
nationwide supplier of durable medical equipment, headquartered 
in Illinois. The owner of the company recently was sentenced to 
37 months in Federal prison right here in Rhode Island for 
defrauding the Medicare program.
    This health care fraud scheme was a classic example of an 
``at no cost to you'' scheme. From 2005 until 2009, the company 
owner told his employees to call people like you and me out of 
the blue and ask them if they suffered from diabetes or 
arthritis. If you or I said that we did, the Planned Elder Care 
employee told that person they could provide them with products 
at no cost to you.
    They then asked the person for their physician's name, 
information, and their Medicare information, and then they 
ordered useful products, literally, useless products, billing 
Medicare for the cost to the tune of approximately $2.2 
million.
    One last example involves Med Care Ambulance, a Warwick 
ambulance company. In November of 2011, Med-Care Ambulance's 
owner was sentenced to 24 months in Federal prison, again, 
right here in Rhode Island, for defrauding Medicare and Blue 
Cross of more than $700,000. This was a classic over-coding 
scheme in which Med-Care Ambulance charged Medicare and Blue 
Cross for specialty ambulance runs when, in fact, those runs 
were routine.
    Unfortunately, these cases are not unique. The good news is 
that Federal, State and local law enforcement, using both 
traditional and new data-driven techniques of the kind Senator 
Whitehouse alluded to, are working effectively and efficiently 
to combat these schemes.
    Working together, we have had tremendous success, returning 
over $20.6 billion to Medicare trust funds since the inception 
of the program in 1997. I expect that the success will 
continue. And I thank you for being with you today.
    [The prepared testimony of Mr. Neronha appears as a 
submission for the record.]
    Senator Whitehouse. Thank you, Peter. Without objection, 
your full written statement will also be made part of the 
record.
    Our final witness on this panel is Ted Doolittle. Ted is 
the Deputy Director for Policy at the Center for Program 
Integrity at the Centers for Medicare and Medicaid Services.
    Mr. Doolittle is a former Federal prosecutor, with a long 
career in health care and law enforcement. Prior to his current 
position, he worked for UnitedHealthcare's legal and regulatory 
affairs department. Before that, he served as an assistant 
attorney general in the health care fraud and whistleblower 
department of the Connecticut Attorney General's office. Mr. 
Doolittle has also served as a trial attorney in the U.S. 
Department of Justice's Tax Division.
    He completed his undergraduate studies at Harvard 
University and earned his JD from the University of Connecticut 
School of Law.
    Thank you, Mr. Doolittle.

  STATEMENT OF MR. TED DOOLITTLE, DEPUTY DIRECTOR, CENTER FOR 
PROGRAM INTEGRITY, CENTERS FOR MEDICARE AND MEDICAID SERVICES, 
  U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, WASHINGTON, DC

    Mr. Doolittle. Thank you so much, Senator Whitehouse, and 
it's good to be in East Providence. I'm not from East 
Providence, but I have close family ties here. My in-laws are 
here today. My wife is a 1977 graduate, I believe, of East 
Providence High School, and she was actually voted most likely 
to succeed, which the plan was going according to plan until 
she met me in our third year of law school.
    [Laughter.]
    Mr. Doolittle. So, anyway, as the Senator said, I am the 
Deputy Director of the part of Medicare and Medicaid that's 
responsible for waste, fraud and abuse.
    Chairman Whitehouse, thank you so much for the invitation 
to be here in Rhode Island to discuss how the Centers for 
Medicare and Medicaid Services, which we call CMS, has improved 
program integrity and has continued to reduce waste, fraud and 
abuse in Medicare and Medicaid and the Children's Health 
Insurance Program.
    This Administration has made a truly historic commitment to 
fighting fraud and developing unprecedented new tools to do so. 
Fraud, waste and abuse in our health care system is a problem 
that affects both public and private health insurance plans and 
it drains critical resources from our health care system, 
contributes to the rising cost of health care for all, and 
endangers the quality of care, in fact, that patients receive.
    It's important to keep in mind that most health care 
providers and suppliers who work for Medicare and Medicaid are 
honest. We're trying to target those who are not. We're trying 
to target those who are trying to defraud us, the American 
people and taxpayers.
    Thanks to recent laws that the Senator alluded to, such as 
the Affordable Care Act, which is also known as the health care 
reform law, and the Small Business Jobs Act that was passed by 
Congress and that Senator Whitehouse had a great deal to do 
with, CMS has more tools than ever before to protect the 
Federal health programs.
    Our recent innovations in fighting Medicare fraud we call 
our ``twin pillar'' strategy. The first pillar is to keep 
fraudulent providers out using our new automated provider 
screening system, where we're able to quickly and--using 
computers that do screening that had to be manually done 
before. And the other part of the program is what we call the 
fraud prevention system, which I'll probably allude to at 
various times during my testimony. The fraud prevention system 
is the new computer modeling system, the type of protection 
that the credit card companies use so that you know that you're 
going to get a call if you try to charge five flat screen TVs 
in Idaho and you live in East Providence.
    This is the kind of technology that we're trying to bring 
for the first time to the public health care programs.
    So in just 8 months, the system got up and running on June 
30 of last year, and we've shown impressive results. It has 
identified thousands of fraud alerts, which are matters that 
need to be investigated by us or our law enforcement partners.
    The system so far has led to over 800 active investigations 
by our fraud contractors around the country. And, in addition, 
we've done 400 direct interviews with providers that we would 
not have otherwise identified. This is in addition to our very 
large traditional work. I'm just telling you what we're getting 
out of our new computer modeling system.
    Also, like credit card companies, we're using the new 
system to identify beneficiaries--that's the folks who are our 
Medicare patients, we call them beneficiaries--when they might 
be a target of a fraud scam.
    And as a result, again, of this computer system, this new 
computer system we call the FPS, we've conducted over 1,200 
interviews with beneficiaries to confirm that they received 
services that Medicare was billed for.
    I really want the folks in the room who are Medicare 
beneficiaries to understand that our beneficiaries are really 
probably our single most valuable partner in fighting fraud. 
Last year alone, our 1-800-Medicare line received over 49,000 
beneficiary calls that had to do with fraud.
    We use those calls--we follow-up on them and we use them in 
various ways to try to detect fraud. You're our eyes and ears, 
you're our antenna on the ground, and we really need you to pay 
attention and if you suspect anything, please call 1-800-
MEDICARE or you can contact the local Senior Medicare Patrol. 
And I thank Maureen and Edna for being here today.
    As a reminder, any beneficiary whose tip leads to the 
recovery of dollars associated with Medicare fraud can, in 
fact, be eligible for a cash award of up to $1,000. So there is 
some incentive to scan those explanations of benefits which we 
call the Medicare summary notice that comes to you quarterly.
    Let me give you an example of this type of tip to 1-800-
MEDICARE. There was a local beneficiary who reported to us that 
his Medicare ID had been stolen and that somebody, he 
suspected, was billing for services that were not provided. So 
we quickly worked to confirm that the providers in both Rhode 
Island and Massachusetts were, indeed, billing for services 
that had not been provided to our beneficiary and then we 
placed a flag on that Medicare beneficiary's number, noting 
that the number was compromised, and protecting the beneficiary 
from further abuse and illegitimate charges on the account; 
and, of course, still allowing the person to use it for their 
necessary services, but we would just flag the unnecessary 
services and be aware of them as they came through. And we're 
taking appropriate action on that provider. So that's a local 
case.
    So, again, I urge you to, as a beneficiary or as a family 
member or caregiver, stay alert and vigilant and review those 
Medicare billing statements online, if you've got computer 
capability. That's at myMedicare.gov. Again, that's 
myMedicare.gov, or look for the mailed quarterly Medicare 
summary notices.
    And we've just--those quarterly forms are good. They're 
packed with information. We've actually just improved it and 
made it simpler and easier to understand. Those new notices you 
should start seeing in your mailboxes in early 2013. The new 
notice is available right now, the simplified notice, which is 
easier to use, at myMedicare.gov.
    Recently, some bad actors have targeted beneficiaries with 
scams claiming to offer durable medical equipment for free or 
at a reduced cost to the patient. Peter really went into that 
very well, but--so I would just add.
    There is no such thing as a free lunch, that's true, and if 
something sounds too good to be true, it generally is. And 
think about this. You should guard your Medicare card and your 
Medicare number like you would your debit card, if that debit 
card had your PIN on it. That's a level of security you need to 
think about.
    And I ask you to think about this. Would your bank call you 
up and ask for your account number? Your bank doesn't call you 
up and ask for your account number. Medicare doesn't either. So 
keep that in mind.
    So in addition to the beneficiaries and the families that 
we have to work so closely with, we're working closely with our 
other key partners to protect Medicare and Medicaid. And I'm 
pleased to be joined by two of my colleagues in the fight, U.S. 
Attorney Peter Neronha and Attorney General Petr Kilmartin.
    Our partners include the office of the Inspector General, 
the Department of Justice, State Medicaid offices, and I see 
that Jim Dubay and Ralph Rocca are here. I know them from our 
partnership, with training our State Medicaid officials. And 
partners, of course, from the health care sector, the private 
industry.
    We're committed to working with all of our partners to 
combat waste, fraud and abuse, and we're continuing to improve 
and expand the ways that we work with these groups.
    Thank you, Chairman Whitehouse, for this opportunity to 
outline CMS' efforts to cut waste, fraud and abuse in Medicare, 
Medicaid and CHIP. With the new tools Congress has provided and 
the coordinated efforts of that outlined above, the 
Administration and CMS have been successful in combating waste, 
fraud and abuse, and we look forward to working with 
beneficiaries, providers, community partners, and Congress to 
continue our efforts to prevent and identify health care waste, 
fraud and abuse.
    And, Senator Whitehouse, if I could just end on a personal 
note, it's always an honor for any citizen to be able to 
address any arm of Congress. But this has particular personal 
resonance for me, because my great-grandfather, George Norris 
of Nebraska, was, for many years, the Chairman of the full 
Judiciary Committee in the 1920s and 1930s. So it's a great 
privilege for me to be here today.
    Thank you.
    [The prepared testimony of Mr. Doolittle appears as a 
submission for the record.]
    Senator Whitehouse. Not to mention that your wife is from 
East Providence.
    [Laughter.]
    Senator Whitehouse. A more important thing, at least to us 
here in Rhode Island. But thank you very much, Director 
Doolittle. And, also, without objection, your entire written 
statement will be made a part of the record of this proceeding.
    What I would like to bring up, and I will start with a 
question for Attorney General Kilmartin, is the new predictive 
modeling software.
    I worked very closely with Senator Lemieux of Florida, our 
Republican colleague, on that legislation. We worked on it for 
months and months and, eventually, when I was satisfied with 
it, I joined him on the bill, and then he went to his 
leadership and I went to mine and we were able to get it into 
the Small Business Jobs Act. And it's been a while getting up 
and implemented, but it's in place now.
    And as I said in my opening statement, it is the difference 
between basically a flood of payments going out of Medicare and 
then you discover that there has been fraud and then you have 
to go and chase down the person who was paid versus having the 
same kind of computer program that causes you to--if you have 
traveled, if you have ever had a phone call from your credit 
card company saying, ``Were you just in Fort Lauderdale'' or 
``Were you just in Arizona,'' and they are calling because they 
got a bill from there and they were not tracking you, the 
computer said, ``This is different than usual, somebody should 
give a call and check it out.''
    And so the program that--it is called predictive modeling 
that does that, and that is now being implemented by CMS.
    Now, Rhode Island was actually ahead on this. And so I want 
to talk to Peter, because his Medicaid fraud control unit, 
Attorney General Kilmartin, has been working with a program 
like this that has dealt with Medicaid fraud through the State 
Department of Health and Human Services.
    And if you could describe a little bit what your experience 
with it has been and if you have any advice for us as the 
Federal program that is nationwide and a little bit broader 
goes forward, I would love to hear your thoughts, because you 
have worked with this longer than we have.
    Mr. Kilmartin. Thank you, Senator. Basically, what this 
program is is something that's done by Hewlett Packard and it's 
a form of--I guess you would call it maybe data mining.
    It's an analysis of the trends, as the Senator mentioned, 
that are happening and they pick up on abnormalities in those 
trends and then try to extract that data and investigate it and 
turn it over to us.
    We, as an agency, are barred from doing any data mining 
type activities. So we rely on this Hewlett Packard model, and 
it is an effective model and it is--the analogy was made to 
credit cards.
    I can remember once my wife and I being on vacation and 
getting a call from the credit card company, ``We saw a charge 
here, are you there.'' And it is--that's the analogy. They see 
these abnormalities in these charges to Medicaid and Medicare.
    So it's a very effective tool and it's one that works on a 
couple of levels, not the least of which it gets that 
information to us for further investigation. But from our 
perspective, one of the nice things is it's a 90/10 split as 
far as funding. The Federal Government pays 90 percent of it, 
10 percent of it is paid by the State.
    That being said, Senator, the data analysis and all of the 
work that is done and the statistics that are being drawn out 
is a very expensive program, even at 10 percent from the State. 
And I know in Congress these days, there's a lot of debate as 
to funding, but a block grant for States who are actively 
pursuing this, to help them with the 10 percent, I think, would 
go a long way toward helping us.
    The other thing is Chairman Constantino, to help get some 
of this data, has put in for more investigators under Health 
and Human Services, something we support, because when that is 
done and we can root out more for more abuse and get it turned 
over to us, it's more that we can, No. 1, protect the seniors 
and, No. 2, hopefully, recover dollars, precious dollars for 
the State and the national government.
    The other point that I want to bring up about it--and one 
thing I do appreciate about the model is that they are not 
averse to getting new information. If we find a trend or we 
find a better way to help that model, they are receptive to it. 
They encourage us to say, ``You know, you may be seeing this 
area where we can do a little more improvement,'' and they are 
receptive to that, and that's good, because they are not stuck 
in one mode, if you will, where ``Here's the model, this is 
what it is, take it.'' It's, ``Give us your feedback, help it 
grow,'' and that's a positive.
    The other part, though, one thing where we do potentially 
see an area of improvement would be, for instance, if there was 
a crossover from Medicaid and Medicare, and I'll give the 
example of maybe someone who is on a non-Medicaid transport and 
going to a doctor's office. And you'll see that charge and that 
charge will go to Medicare.
    What will happen, though, is the transport might get 
charged to Medicaid. So Medicare gets the bill, Medicaid gets 
the bill for the transport, and the data mining system may pick 
up that. ``What is this transport? We don't see anything--any 
nexus. Is it a fraudulent billing,'' and you have to take the 
time and the resources to investigate that and then you find 
out it was for a non-emergency situation.
    So for those crossover types of billings, to have the 
system communicate, that may stop us from wasting precious 
time, if you will, to do the investigation to find that there 
was nothing wrong, there was nothing abnormal, it was just a 
dual billing and a crossover billing. So to have the system 
somehow talk down the line, I think, would be a great 
improvement and streamline us in our investigation.
    Senator Whitehouse. Well, I think that's a very good and 
logical next step. We've gone from having just the local 
Medicaid fraud control units have access to this, and they're 
all different state-by-state, to having the national program 
just for Medicare to a bill that is pending that would actually 
tie all the Medicare programs together under it, and then the 
next logical step would be to tie Medicare and Medicaid so that 
there is that cross-reference. So that's a very good 
suggestion.
    Director Doolittle, let me ask you. How is it going on the 
rollout? Are you seeing any results? What would be good next 
steps to strengthen the predictive modeling program?
    Mr. Doolittle. Let me thank you for the question, Senator. 
Let me just go off what Attorney General Kilmartin says.
    I think it is important for Medicaid to be able to talk to 
Medicare. It's a tremendous data challenge, because the States 
we've got, and then we've got territories and so forth, and so 
we've got 56 different data--types of data that need to be 
worked together in a way that--you know when you change a 
computer system, you know how difficult that is. We've got 56 
that we need to get together.
    That was mentioned in the Small Business Jobs Act. We need 
to ultimately mesh our fraud prevention system that works with 
Medicare, fee-for-service data, with the Medicaid programs, as 
well. So that is an important next step that we need to take 
and that we're committed to taking.
    You asked about the rollout of the predictive modeling, and 
let me just give you some statistics. We're very pleased with 
how it's going so far. We started on June 30 of last year and 
we've identified so far over $35 million in improper payments. 
This has also resulted, Senator--and as a former prosecutor, 
you know the importance of this--this has resulted in over 800 
active investigations.
    These are the conservative numbers that I'm telling you, 
which are only--which wouldn't have been found without our new 
predictive modeling. Our new predictive modeling can also help 
ongoing cases that were found through traditional leads. I'm 
just giving you the conservative view of what only we know 
would not have been found at all thus far without the 
predictive modeling.
    So we've got 846 active investigations. We've had over 400 
interviews with providers, and those are important not only as 
investigative tools, but if you are a provider who is either 
over the line or close to the line and somebody comes to talk 
to you, it can have a dramatic effect on your behavior, because 
you know now you're on our radar screen. So those are 
important.
    We've conducted close to 1,300 telephone interviews with 
beneficiaries to confirm that the services were rendered as 
they were billed to us.
    So as you know, under the bill that you were active with, 
Senator, the Small Business Jobs Act, we are required to make a 
full report on all our results and our measures of success by 
September 30 of this year. We're working toward developing 
those metrics. It's a new system, much different from our old 
pay-and-chase model, which is easy to score how much was stolen 
and how much are we trying to get back.
    Here we're trying to figure out what we caught up front and 
what we prevented going forward. So it's a very interesting and 
difficult measurement problem, but we really look forward to 
getting you a report that we can all mull over that is 
thoughtfully and thoroughly done by September 30 of this year.
    So by this time next year, we'll have a much better view, 
but that's a preliminary look at how we're doing so far.
    Senator Whitehouse. Good. Well, I will look forward to the 
September 30 report.
    I wanted to ask you and U.S. Attorney Neronha. There is 
health care fraud prevalent throughout the system, and U.S. 
Attorney Neronha listed three cases that our U.S. Attorney's 
office has done very recently.
    But for all of that, it does strike me that some of these 
real whopper cases, when I read about them--maybe this is just 
an anecdotal view, but they seem to disproportionately emerge 
from Florida, Texas and, somewhat, California.
    In terms of the national picture, are there hot spots that 
we should be concerned about; and, I guess I'd ask, is Rhode 
Island one of them?
    Mr. Neronha. Well, Senator, my answer to that is that 
certainly the department recognizes that there are hot spots. 
Florida has traditionally been one, particularly in the area of 
durable medical equipment. And the trend seems to be that that 
issue is moving north into Georgia.
    That is why the department has stood up, I believe, nine 
strike forces in some of those hot spots around the country. 
There is one in Boston, and certainly there is a good 
connection between HHS since the SAC, the special agent in 
charge, is in Boston.
    So there are hot spots around the country. I can get the 
specifics of these, if the Senator would like. I know Detroit 
is another; certainly, Miami or south Florida. Boston is 
another. But, certainly, there are those hot spots.
    But leads are pushed out not only to and from the strike 
force cities, but from the department generally. There is data 
that is pushed out from the department through both the 
department itself. Some information comes directly to the U.S. 
Attorneys' offices from DOJ.
    We have access to an HHS data base called the STARS data 
base, from which people in my own office can search for 
anomalies and outliers to run down cases. And then HHS, as I 
said pushes out information to the various field offices, as 
well.
    But there's no question there are hot spots around the 
country.
    Mr. Doolittle. I certainly agree with everything that Mr. 
Neronha stated. At this point, the HEAT program, which is a 
joint effort between DOJ and the Department of Health and Human 
Services, who really bring to bear, in a very focused way, our 
investigative and prosecution resources and to try to get as 
small as possible, as short as possible, the time between when 
we detect crime and when there's an ultimate indictment.
    Those nine cities, Attorney Neronha is absolutely right. 
There are a couple in Florida. In Florida, it's Miami and 
Tampa. And then the other--there are nine at this point. 
There's ambition and a plan to move it out to a larger group of 
cities, but right now there's nine.
    So in Florida, we have Miami and Tampa, and then, also, 
Baton Rouge, Louisiana, Los Angeles, California, Houston, 
Texas, Detroit, Michigan, Brooklyn, New York, Dallas, Texas, 
and Chicago. Those are where we're concentrating right now.
    As I mentioned, we are--DOJ and HHS are, I'm hopeful, going 
to expand that. We recently were going through an exercise at 
my office to analyze where some good likely candidates for HEAT 
and strike force expansion were and, as part of that, because I 
knew I was coming here, I did have a little bit of work done 
around Providence in Rhode Island. And I will say that there is 
fraud everywhere in the Nation, but we don't have any plans to 
expand to a strike force or anything like that around here.
    Senator Whitehouse. Well, I think I will conclude the panel 
with a last question, which I think is connected to this. And I 
think one of the reasons that Rhode Island is not a hot spot 
and that people can get away with these huge billing scams in 
other places is that in Rhode Island, we do tend to know each 
other. And if somebody set up a shop someplace in Warwick or 
East Providence and put out millions of dollars in fraudulent 
Medicare billing, somebody would notice.
    [Laughter.]
    Senator Whitehouse. It would be hard to kind of pull that 
off for long, we would hope. And a lot of that has to do with 
the activity of seniors and other folks who are alert to fraud. 
We will talk about that more in the next panel.
    But my last question for this panel is that Director 
Doolittle mentioned that a senior could get a cash award of up 
to $1,000 if a tip on fraud through the 1-800-MEDICARE hotline 
number proved productive. And I wanted to find out a little bit 
more about what we might be able to do to raise that limit, 
knowing that it would be a good thing. And if you are looking 
at even a $1 million fraud, set aside a $375 million fraud, 
$1,000 is not a particularly big piece of it, and, in 
particular, by comparison to--I am going to get lawyery on 
this, but there is a thing called a qui tam action in which 
somebody can file a lawsuit basically in the name of the 
government for fraud and if they proceed with it, they get a 
very significant share of the proceeds. In fact, people can 
retire off what they get off a good, successful qui tam action.
    So somewhere between the $1,000 limit and requiring people 
to become qui tam plaintiffs, is there room to--do you think it 
is something that we should look at to provide a greater 
incentive to seniors and others to report Medicare fraud?
    Attorney General Kilmartin, I would ask you to lead and go 
right across the panel to U.S. Attorney Neronha and Director 
Doolittle.
    Mr. Kilmartin. I do, and, actually, it's something that was 
mentioned earlier. I forget who if it was by Ted or Peter, when 
they said the best eyes and ears we have are the folks who are 
the recipients of Medicare and Medicaid.
    And I view one place in particular as ripe for fraud and 
abuse and while the dollars don't add up or seemingly are 
small, when you take them all combined, they add up to 
significant dollars, and that's in the area of home health care 
and personal care attendants at home. Because if you're having 
a personal care attendant at home, one of the best things you 
folks can do to help us is keep a log of the time they're going 
to be there, how many hours they're there a day or a week, 
because that's where a lot of over-billing can occur, at the 
very small face-to-face level, if you will. And that's a place 
that can be ripe for abuse.
    Now, you may say it'll only be a few hundred dollars a day, 
but if you times that by all of the patients and all of the 
days, that can run into significant dollars.
    So I think that's one place, in particular, where we can 
get a lot of help from seniors and from folks who are 
recipients of these Federal programs.
    And the other thing that--if I can just diverse a little 
bit off of that. In Rhode Island, we got a $1.3 million grant 
for a pilot program to do national background checks of these 
home health care attendants who can come into your homes, and 
we are trying to get the legislature to pass that to enable us 
to do that so we can protect seniors, so you know that someone 
coming into your home doesn't have a criminal record and so 
forth. So anything you folks can do on that.
    Again, it's at this home--really, the trend now, as you 
folks know better than I, nationally is to have home health 
care, keep people out of hospitals, keep people out of nursing 
homes, and that's a wonderful thing. It was a goal we had with 
my mother right up until the day she passed away 6 months and 6 
days ago.
    So with that, you can be very helpful with us, though, on 
those two things. Home health care is so important, and that's 
one place I think seniors and all of us can really pay 
attention to. To, number one, protect each other, but, No. 2, 
for the system itself, maintain its integrity and watch the 
dollars and cents, because they add up to millions and billions 
in the end.
    Senator Whitehouse. Thank you, Attorney General.
    U.S. Attorney Neronha.
    Mr. Neronha. Senator, just a quick housekeeping matter. 
Apparently, I mentioned Boston as one of those strike forces. 
Apparently, I was wrong. I thought that they were. I know 
they're acting, but let me correct that, first of all.
    But I think, Senator, you are absolutely right. Just a 
couple things. One, you are absolutely right to focus on data 
mining. Of the three cases that I mentioned, which I consider 
to be high impact cases in Rhode Island, two of them were the 
result of data mining.
    But to address the final point that you asked us to 
address, the third one, the planned elder care case, in which 
this company was calling elders out of the blue and saying, 
``Here's all this equipment and no cost to you,'' we got onto 
that case because a Medicare beneficiary, somebody like all of 
us sitting in this room, went to their physician and said, 
``Hey, you know, they're charging Medicare for all this stuff. 
What's up with this,'' and the physician called HHS and we were 
off to the races.
    So I think you are absolutely right in hitting in those two 
ways of getting leads and attacking this problem.
    Certainly, any incentive that would encourage people to 
come forward would be wonderful. But I will say we are getting 
so many leads from seniors who just recognize that, look, 
something is wrong here, that the program has really been very 
successful because of that.
    Senator Whitehouse. Director Doolittle.
    Mr. Doolittle. Yes. Thank you for your question. The 
program that we have now in place, it's called the incentive 
reward program, and when I first took this job, one of the 
first things I wanted to do, almost, I think, literally the 
first day on the job, was can we get an incentive reward 
program of this type, because the beneficiaries are so 
important to our anti-fraud efforts. They are our best eyes and 
ears. How can we reward it and how can we get it onto their 
billing statements that come?
    Well, we've got it onto the billing statement. Well, excuse 
me, it turned out that I wasn't aware of it, because it was 
little publicized, it turned out that there was already this 
incentive reward program in place. It was little used. There is 
the limitation, which doesn't make any sense, because $1,000 is 
a lot of money, but it doesn't have that--the umph that you're 
looking for and that we are, too; and, also, the timing of when 
the rewards can be given out and the difficulty--I won't get 
into the technicalities of it. But these rewards are, 
unfortunately, difficult for us to give out as frequently as 
we'd like.
    Now, the good news here is that we do have the necessary 
statutory authority, Senator, but what we don't have is we 
don't have the right regulations in place. So one of our 
regulatory priorities for this year is actually to get some 
improvements to that statute.
    Our basic idea, just to give you a preview of coming 
attractions, is to kind of parallel a similar incentive reward 
program that the IRS has, and that is a 15 percent reward 
program. There is a cap. It doesn't go up to the hundreds of 
millions of dollars, but there is a cap at like $10 million.
    So we're thinking of something along those lines, but we 
also need to get changes in place and we may need statutory 
changes, but we also may not, to make sure that we can pay the 
claims--any claim against this quickly.
    Right now, the status is we can't actually pay until we 
recover the money. As you know, that could be years. So where 
is the incentive there?
    So we've made the improvement of getting a reference to the 
incentive reward program onto the new Medicare summary notice, 
and that will be rolled out into everybody's mailboxes in 2013 
and is available now online.
    So at least we're having the advertisement part of it 
right, and we need to get the speed and the amount right. So 
we're working on that right now.
    Senator Whitehouse. Good. Well, that gives me a project, 
too, to ride herd on that and try and make sure it gets done 
quickly and effectively.
    So let me conclude with this panel by thanking the three 
witnesses. Attorney General Kilmartin is doing a wonderful job 
as attorney general, but I know that it is an extremely busy 
office and I appreciate that he took the time out today.
    We are very proud of you, Peter. Thank you very much for 
your great service.
    Mr. Kilmartin. Thank you, Senator.
    Senator Whitehouse. U.S. Attorney Neronha, thank you very 
much. I know a little bit about that office, as well, and it is 
a demanding one, and I am grateful to you that you have taken 
time out for this.
    Mr. Neronha. Glad to be here.
    Senator Whitehouse. You are also doing a superb job, and 
very grateful to have you here.
    And, Director Doolittle, thank you for coming up from 
Washington for this. I am glad I gave you a chance to connect 
with the in-laws.
    [Laughter.]
    Senator Whitehouse. We will take a 5-minute recess while we 
change the tables for the next panel.
    [Recess.]
    Senator Whitehouse. The hearing will come back to order. 
And I will begin by asking the second panel to please stand and 
be sworn.
    [Witnesses sworn.]
    Senator Whitehouse. Thank you very much. Please be seated.
    I am delighted to have these witnesses here and appreciate 
very much that they have taken the trouble to come.
    Let me start with Director Taylor. Catherine Taylor is our 
Director of the Rhode Island Division of Elderly Affairs within 
the Rhode Island Department of Human Services. Prior to her 
appointment to head the Division of Elderly Affairs, Ms. Taylor 
was a partner at Lang Taylor, Limited, a Providence-based 
public affairs consulting firm, which she co-founded in 2007.
    She previously worked for 20 years as an aide to the late 
and great Senator John Chafee, and then to Senator Lincoln 
Chafee. She is a graduate of Yale University, and I am 
delighted to have her here.
    Please proceed with your testimony, Ms. Taylor.

   STATEMENT OF MS. CATHERINE TAYLOR, DIRECTOR, RHODE ISLAND 
 DIVISION OF ELDERLY AFFAIRS, STATE OF RHODE ISLAND DEPARTMENT 
               OF HUMAN SERVICES, PROVIDENCE, RI

    Ms. Taylor. Thank you, Senator. I really appreciate your 
inviting me here to call attention to the highly successful 
activities of the Rhode Island Senior Medicare Patrol, and I'm 
delighted to be here in East Providence at Bob Rock's fantastic 
senior center and to see so many partners in the work here.
    And thank you for calling attention to my service for 
Senator Chafee. Senator Whitehouse, I always know how to get in 
touch with you, because it is my old phone number. So we've got 
the hotline going on.
    [Laughter.]
    Ms. Taylor. Several significant--and can people in the back 
hear? I understand that there was a problem hearing in the 
back. So raise your hand if you can't.
    Several significant cases of suspected Medicare fraud have 
occurred in the last few years in Rhode Island, and these 
aren't redundant, I don't think, from the previous panel.
    Between March 2008 and December 2010, a Warwick, Rhode 
Island ambulance company owner allegedly defrauded Medicare and 
Blue Cross/Blue Shield of Rhode Island out of more than 
$700,000 by soliciting beneficiaries to receive medically 
unnecessary ambulance transportation.
    In 2010, a Massachusetts-based dermatologist agreed to 
repay $275,000 for Medicare payments for unnecessary pathology 
services.
    In April 2011, CVS Pharmacy paid the United States, Rhode 
Island, and nine other states a collective $17.5 million to 
resolve allegations of over-billing Medicaid for prescription 
claims.
    And in January 2012, a Woonsocket, Rhode Island woman 
pleaded guilty to committing Medicare fraud by obtaining 
Medicare numbers from seniors at senior centers, senior housing 
facilities, and assisted living facilities and ordering 
numerous diabetic shoes and arthritis equipment at no cost to 
the seniors and without their knowledge. Medicare was charged 
more than $70,000.
    Now, Rhode Island's 184,000 Medicare beneficiaries can play 
an active role in ensuring that the Medicare trust fund remains 
solvent by working on the front lines to prevent the multi-
billion dollar annual drain on the program nationwide 
attributable to fraud.
    The Senior Medicare Patrol, or SMP program, keeps our 
Medicare beneficiaries alert to possible fraudulent activity 
and, importantly, arms them with the knowledge and the tools to 
combat it.
    The Rhode Island Division of Elderly Affairs, DEA, has 
administered the Senior Medicare Patrol program since 2006, 
with funding from the U.S. Administration on Aging and the 
Centers for Medicare and Medicaid Services.
    The SMP program marshals the efforts of senior volunteers 
to teach their peers how to fight Medicare fraud. And I think 
it's important to point out, too, that unlike a lot of other 
financial abuse that seniors suffer, that we work very hard at 
Elderly Affairs and with our ombudsman to combat, this fraud is 
not felt directly by the seniors. It is passed through their 
bills straight to Medicare. So that's why the SMP is important. 
And this year, pursuant to the Affordable Care Act, the Federal 
Government is ramping up its anti-fraud effort, offering grants 
to States to beef up volunteer recruitment and to provide 
rigorous training to volunteers.
    Rhode Island was fortunate to receive a 1-year grant to 
engage a volunteer recruiter and trainer, Louanne Marcello, who 
is here in the audience today, along with DEA's SMP program 
manager, Aleatha Dickerson, in the back. They do a great job.
    The Rhode Island Division of Elderly Affairs and our SMP 
partners have worked diligently over the last 3 years to 
publicize the SMP message. In the 2011 SMP funding year, we 
conducted the following activities that may have resulted in 
decreased Medicare fraud, waste or abuse and maybe it's the 
explanation why we're not a hot spot, Senator. 8,016 Medicare 
and Medicaid error, fraud, waste or abuse simple inquiries were 
received, right here in Rhode Island; 4,223 people, it's 
estimated, have been reached by our community education events; 
34 fraud, waste or abuse complex issues are pending further 
action; and, we have 40 active volunteers recruited and trained 
in 1 year with this new 1-year grant, and we really expect that 
to increase this year.
    SMP volunteers are helping their peers get in the habit of 
carefully reviewing their Medicare summary notice each month, 
on the lookout for discrepancies, such as charges for services, 
equipment or medications never prescribed or provided. In fact, 
I saw a fellow that goes to my church, yesterday, who lives 
here in East Providence who said he didn't know he had a knee 
replacement until Medicare told him he'd had one.
    [Laughter.]
    Ms. Taylor. Charges for appointments that were never made, 
or with an unknown physician, or extraordinarily high bills. 
Other common Medicare scams include counterfeit prescription 
drugs, double billing both Medicare and a private insurance 
company for the same service, billing for individual counseling 
when group counseling was used, and medical identity theft.
    One-on-one counseling and general education sessions are 
available in Rhode Island at six SMP partner locations--THE 
POINT at United Way, Tri-Town Community Action Agency, South 
County Community Action Agency, the East Bay Community Action 
Program, the West Bay Communication Action Program, and Child 
and Family Services of Newport County.
    Volunteers help check paperwork, such as Medicare notices 
and billing, to identify those errors and discrepancies.
    The greatest ally of any scam artist is silence. SMP 
volunteers teach their peers that stopping Medicare fraud is as 
easy as 1-2-3--protect your Medicare number, detect 
discrepancies on your Medicare summary notice, report your 
concerns.
    Anyone who suspects they have been a victim of fraud or 
abuse can file a report with the Rhode Island SMP program by 
calling 462-0931.
    It is exciting that Medicare beneficiaries are taking 
ownership of protecting the Medicare program from fraud. One of 
our newest volunteer recruits at West Bay CAP, 82-year-old Edla 
Fortin, sitting here, who Senator Whitehouse told us was here, 
a controller and accountant at Columbus Door, responded 
recently to an ad in December saying, ``I started thinking how 
much older people can give back to their community.'' And 
Barbara Hackett, a retired project manager at AT&T and a 
resident of East Greenwich, says of the Medicare beneficiaries 
she assists, ``I want to make them feel empowered.''
    It's also essential that we harness the volunteer power of 
Medicare beneficiaries themselves to do this work. No one is 
better positioned to recognize fraud or more invested in 
ensuring that Medicare dollars are there for them, not the scam 
artists.
    Thank you, again, Senator Whitehouse, for allowing me to 
showcase what an excellent investment the Senior Medicare 
Patrol is.
    [The prepared testimony of Ms. Taylor appears as a 
submission for the record.]
    Senator Whitehouse. Thank you very much, Director Taylor.
    Our next witness is Mary Benway. She is a professional 
nurse, and she is President of the Rhode Island Partnership for 
Home Care. She has over 30 years' of experience in health care, 
specializing in long-term care.
    Since 1985, she has been the owner and President of 
Community Care Nurses, a long-term home health care provider in 
Rhode Island. And since 1996, she has been the owner and Vice 
President of Capital Home Care, a Rhode Island Medicare skilled 
home care provider.
    Ms. Benway has been a member of the Rhode Island 
Partnership for Home Care since 1990 and has twice headed the 
organization as its president.
    She holds a bachelor's degree in business administration, 
and we are delighted to have her here today.
    Ms. Benway.

     STATEMENT OF MS. MARY BENWAY, PRESIDENT, RHODE ISLAND 
         PARTNERSHIP FOR HOME CARE, NORTH KINGSTON, RI

    Ms. Benway. Thank you, Senator. I appreciate the 
opportunity to speak with you today. And hello to you and 
members of your committee.
    And as the Senator stated, I am currently the President of 
the Rhode Island Partnership for Home Care. So, obviously, I'm 
going to be speaking to fraud and abuse in home care today.
    The Partnership for Home Care is a statewide trade 
association for licensed home nursing care, home care, and 
hospice agencies in Rhode Island, and this is nonprofit and 
proprietary organizations. So we are a very unusual 
organization, representing the broad spectrum of providers in 
home health care.
    I'm also a registered nurse and owner and principal of both 
Medicare and Medicaid home care and long-term care providers, 
and, like many of you, as most of you, a taxpaying citizen of 
this country and this State.
    Before I begin my formal remarks on behalf of the 
Partnership for Home Care, I want to take this opportunity to 
say that as a professional, a small business owner, and a 
taxpayer, I'm appalled, as well, by the horrendous behavior of 
unscrupulous health care providers and I support any effort to 
confront agencies that are abusing the Medicare and Medicaid 
system and the patients that they serve.
    Both I and the Partnership for Home Care applaud the swift 
action of Federal agencies and State law enforcement after a 
Texas doctor and owners of five home health care agencies were 
charged earlier this month with $375 million in fraud against 
Medicare and Medicaid.
    Home health care, non-medical care, and hospice agencies 
provide for thousands of Rhode Island citizens every day. Among 
our patients are those who have acute illnesses and need short-
term care, older adults who need long-term support to remain 
living in the community, persons with disabilities who may have 
medical issues and need assistance with activities of daily 
living, and, also, children with special health care needs.
    We're also a major employer here in the State. Our industry 
employs thousands of professionals and para-professionals.
    The services home care provides are not only most preferred 
by patients and families, they are outcomes-based, patient-
centered, and the least expensive alternative to costly 
institutional care. We help lower hospital admissions, help 
keep people living in their communities, and assist those at 
end of life, ensuring that their final days are comfortable and 
dignified, and that their families are also supported and cared 
for.
    Many treatments that were once offered only in hospital or 
physician's office can now be safely, effectively, and 
efficiently provided in the patient's home. Chronic diseases, 
which are among the most costly of Medicare services, can be 
successfully managed by skilled home health care providers 
working with home care patients.
    Every 13 seconds, another American turns 65 years old. This 
trend will continue for the next 20 years. In 2009, 3.3 million 
people received Medicare-funded home health care. With the 
onset of the aging baby-boom generations, millions more will 
join their ranks.
    The time to repair the system is now. America's health care 
sector is rife with waste, fraud and abuse. The Government 
Accountability Office reported in January 2009 that 10 percent 
or $32.7 billion of Medicaid payments in 2007 were improper. 
Estimates of Medicare waste, fraud and abuse are even more 
staggering.
    The home care industry and our National associations, the 
National Association for Home Care, the Visiting Nurse 
Association of America, have been champions for program 
integrity and have recommended to Congress, CMS, MedPAC, and 
other regulators various strategies to improve quality and 
payment integrity.
    Before I explain some of them, I need to make clear the 
following. Medicare and Medicaid fraud and abuse in home care 
is a targeted problem which requires a targeted solution. 
MedPAC, the Medicare Payment Advisory Commission, has 
identified 25 counties in the United States with excessive home 
care utilization.
    The home care problem is not nationwide. The percentage 
cost increase to Medicare of these 25 counties between the 
years of 2005 and 2009 was nearly 3.5 times the increase of the 
U.S. as a whole. The table which I've attached to this 
testimony identifies these 25 counties, which I will call the 
MedPAC 25, and these are located in the States of Texas, 
Louisiana, Oklahoma, Mississippi, and Florida.
    When compared to the broader home health community, the 
growth in spending in these counties is totally out of line. 
The number of providers in the country grew by 7.3 percent 2005 
to 2009, but the growth during that time period of these MedPAC 
25 grew by 41.8 percent. Home health revenue growth in the U.S. 
during that same period averaged 11.75 percent. In the MedPAC 
25, it was 40.8 percent.
    It is crucial to eliminate fraud and abuse while also 
ensuring that beneficiaries maintain access to needed care. A 
current proposal to recoup lost Medicare revenue by charging 
beneficiaries a co-payment is not the right response to 
criminals' fraudulent billing. Rather than placing the 
financial burden on all recipients of home care, the innocent, 
vulnerable and homebound seniors, our government needs to focus 
on and weed out the criminals.
    That being said, there are some specific actions we think 
would go a long way to address the problem. Firstly, enact a 
moratorium on new certifications of Medicare participating home 
health agencies; cap outlier payments; require background and 
competency credentialing of home health agency owners, 
executives and managers; mandate that all home health agencies 
maintain a comprehensive compliance plan; require reporting of 
all financial relationships with patient referral sources; and, 
mandatory data transparency, make all claims data publicly 
available. We've already had a good discussion about the 
predictive modeling data analysis program.
    There are other more detailed recommendations available 
from the National Association for Home Care, the Partnership 
for Home Health Integrity, the Visiting Nurse Association of 
America, and the Fight Fraud First Coalition. I urge you to 
review their expert reports, data and analysis.
    On a smaller scale, the Rhode Island Partnership for Home 
Care has adopted a code of ethics to which each of our members 
must ascribe. The code is our pledge to conduct our business 
with integrity, treat our patients with dignity, and treat each 
other with respect. I've attached a copy of the code for your 
review.
    We've also reminded our members to keep it legal and report 
any wrongdoing to Federal authorities. I've also attached a 
copy of a document identifying common practices that are 
prohibited. We invited the FBI and Interagency Health Care 
Fraud Program from Boston to meet with our members and acquaint 
them with fraud and abuse reporting processes.
    I tell you this to demonstrate that we are taking steps, 
not just paying lip service, to our commitment to ethical 
business practices and compliance with Medicare and Medicaid 
requirements.
    I close by reiterating a previous point. The home care 
industry is committed to quality, integrity and efficiency of 
the Medicare skilled home health benefit. The fraudsters are 
shining a negative light on us, and we want the HHS secretary, 
OIG and the Department of Justice to continue investigating 
abhorrent market practices and close the perpetrators down.
    The expensive spending growth and over-utilization of 
services is not difficult to identify and with oversight from 
the committees like this, I'm confident that we can restore the 
public trust, save valuable resources, and provide exceptional 
care to those in the Medicare and Medicaid programs.
    Thank you for this opportunity and for your attention, and 
I'd be happy to answer any questions you may have.
    [The prepared testimony of Ms. Benway appears as a 
submission for the record.]
    Senator Whitehouse. Thank you, Ms. Benway.
    It sounds as if the hot spot problem that we discussed with 
the first panel is equally, if not more acute, in the home 
health care agency. Is that your testimony?
    Ms. Benway. Very much so, but as I said, in targeted areas 
of the country and may are repeat offenders, particularly in 
Texas and Louisiana and Florida.
    Senator Whitehouse. Let me ask both of you, starting with 
Director Taylor. The Senior Medicare Patrol is such a good 
idea. How do you recruit people for it? What can we do to be 
more helpful in your recruitment efforts?
    I hope this hearing helps get the word out and brings 
volunteers to 462-0931.
    Ms. Taylor. Thank you, Senator.
    Senator Whitehouse. And what advice do you have for seniors 
who might be considering volunteering for the senior Medicare 
patrol?
    Ms. Taylor. Yes, sir. This hearing was enormously helpful. 
I know we got tremendous publicity around the program, and we 
have a booth here passing out information, as well, with our 
staff.
    Part of the funding from our grant goes to publicity, and 
we've done a lot of work with radio ads and with print ads and 
going around giving events to try to recruit volunteers--I 
think that's what Ms. Fortin responded to is one of our ads in 
December--and to really broadcast that message that this is the 
way that we really can maintain the trust fund, that seniors 
need to be on the front lines.
    Helping us with the grant money so that we can continue 
those recruitment efforts is important. We are on the third 
year of a $180,000 per year grant. We just hit the ``send'' 
button on our follow-on grant application a week ago Friday, 
and we have a 1-year grant now to ramp up the recruitment 
efforts, and we hope that that will continue.
    I will say something about that grant, that CMS and AOA 
have a wonderful and very rigorous training module that has 
been put into place this time around and it's really going to 
be a model for other volunteer efforts.
    So that support for our ability to continue with the 
outreach from the Federal Government is really, really helpful.
    Senator Whitehouse. And what would you tell a senior who 
was thinking about potentially joining the Senior Medicare 
Patrol? What is your advice to someone like that?
    Ms. Taylor. Please join on! This is an opportunity to use 
your skills that you had in your professional life. For the 
actual counseling, we can use anybody who had a background in 
business or accounting, or even teachers who would give 
presentations to groups. We can use your skills now and you can 
help to save the program for other people.
    I will also say, too, that the Corporation for National 
Service has asserted that for people over 65, there are 
actually strong, measurable health benefits to volunteering. 
Actually, you are doing as good a job as eating your vegetables 
or quitting smoking by volunteering once you hit the age of 65, 
and I'm not kidding about this.
    So a program like this is actually a very valuable public 
health program, as well as an anti-fraud program. So I really 
encourage people to join it.
    Senator Whitehouse. Good and good for you.
    Ms. Taylor. Exactly.
    Senator Whitehouse. Wonderful.
    Well, Ms. Benway, what role do you see for senior 
volunteers in the home health care fraud industry?
    Ms. Benway. Integral. I think it's very important that 
seniors advocate for themselves when they can, but when they 
can't, it's important that they have folks that can advocate 
for them. I think we welcome in home care. Certainly, one of 
our greatest roles as home care providers is as teachers to our 
patients, providing the services we need, but also fostering 
their learning about their diseases, particularly chronic 
diseases, and, also, the family members.
    So we welcome and encourage volunteers or advocates for 
seniors. Oftentimes, it's a family member, but it could be 
someone from the community. I think the more--as they say, 
knowledge is power, and this could be a great help to us in our 
mission of teaching and helping folks to stay home and stay 
well.
    Senator Whitehouse. I encourage you two to work together.
    Ms. Benway. Absolutely.
    Ms. Taylor. And we do. We do.
    Senator Whitehouse. Ms. Benway, in your testimony, you said 
something that I thought was very important about home health 
care, ``We help lower hospital admissions, help keep people 
living in their communities, and assist those at the end of 
life, ensuring that their final days are comfortable and 
dignified, and that their families are supported and cared for, 
as well.
    I agree with all of that. I have seen it all in action. It 
is important to all of us to have the American health care 
system reduce hospital admissions where home care could provide 
the service at home, from a cost perspective.
    It is certainly important to seniors who seek to be 
independent and to keep their lives out in their communities to 
be able to do that. It is one of the most important things that 
can be done for senior citizens. And, last, when the end of 
life comes, it is so important that those final days be 
comfortable and dignified and that families be supported 
through the difficulties of that change.
    My father died at home and the reason that we could have 
that happen is because we had really wonderful home health care 
nurses who could help us with what was going to take place and 
help him remain comfortable and keep his dignity, and it just 
makes such a difference.
    So all three of those things, I think, are important in 
terms of cost, in terms of people keeping their individual 
choices in their lives the way they have had them, and in terms 
of dealing with the most difficult and challenging of moments 
when we must lose a loved one.
    And so it is really particularly infuriating when something 
that is so good as home health care services becomes an avenue 
for fraud.
    Ms. Benway. Right.
    Senator Whitehouse. And I really applaud the specific 
recommendations you have made and I look forward to working 
with your organization to see what can be done by way of moving 
them into legislation.
    We do two things in Congress. One is to legislate and 
create new laws. The other is to oversee the executive branch 
of government and its administration of laws that already 
exist. And, indeed, this week I will be putting out a report 
that I have done on the implementation of the Affordable Care 
Act, the health care reform bill's delivery system reform 
provisions, the provisions that make health care better for 
people and lower the cost at the same time.
    So I am very alert to the oversight functions of Congress 
of what we could from a regulatory and oversight perspective.
    Do you have particular recommendations there, as well?
    Ms. Benway. In terms of what could be done at CMS, I mean, 
one question I have to ask myself is that--when first I read 
about these atrocities in these States, the first thought that 
came to my mind was I had to wonder who was minding the store 
and why these obvious outliers didn't draw scrutiny and 
investigation sooner.
    I think quick action is key. That was discussed here on the 
panel. I think whatever systems can be put in place to--we like 
to, call, scrub claims, make sure the claims are appropriate 
and proper before they're paid, because it's awfully difficult 
to chase folks once you've made the payment, because they know 
how to shut down shop and open somewhere else.
    So I think speed and accuracy in scrutinizing claims, and I 
think claims transparency. Those would be the things that stand 
out, in my mind. I mean, we have----
    Senator Whitehouse. Tell me a little bit more what you mean 
by claims transparency and how do you protect patient privacy 
through that?
    Ms. Benway. I guess that would be for them to figure out. I 
don't know. But I do know that the more providers know that 
people are watching what they're doing, the less chance you 
would have.
    Good providers are not going to turn into bad providers. 
But I think when you look at these MedPAC statistics, you have 
to think, well, why the growth, why are these folks opening up 
shop.
    We struggle every day as good providers who are playing by 
the rules really to pay our bills, to pay our staff, and to 
just make sure we keep open. And you have to wonder, why 
would--what would be so attractive to someone to open a shop in 
Florida and take on 50 patents. Something is wrong with someone 
that does that.
    These types of things--one of the things I brought up in my 
solutions list was, again, to put a moratorium on this growth, 
this rapid growth, the signing on of ``I want to be a Medicare 
provider.''
    It's not easy to do that and it shouldn't be easy, but I 
think however it can be done----
    Senator Whitehouse. And that is something CMS could do 
through regulation.
    Ms. Benway. Absolutely. Absolutely. Let's slow this down. I 
mean, do we need all these providers? Why? Why is this 
happening? And CMS could certainly look at that. That could 
certainly be one thing they could do. Let's just hold the dam 
back and see what we've got for providers, see do we need all 
these new providers.
    And then as I said, as providers are making claims for 
services, let's scrutinize these claims. Make it as transparent 
as possible. When people know they are being watched, they are 
going to behave.
    Senator Whitehouse. I think that is probably about as good 
a phrase to end this on as we could get.
    [Laughter.]
    Senator Whitehouse. When people are being watched, they are 
going to know that they are going--when people know they are 
being watched, they are going to behave. And we are trying to 
watch them through our State and Federal law enforcement 
officials, as you saw in the first panel.
    We are trying to bring new technologies that have proven 
themselves in other fields to bear, to watch the payment of 
claims, and we are counting on seniors who have done such an 
important job so far in reporting on fraud and abuse to also be 
the eyes and ears on the ground.
    So let me thank you both for your testimony.
    I would also like to add the news article about Edla Fortin 
into the record of these proceedings. And without objection, 
that record will be added.
    [The article appears as a submission for the record.]
    Senator Whitehouse. And Nancy Roberts, who is the President 
and Chief Executive Officer, a VNA of CARE New England in 
Warwick, has provided written testimony that we will also add 
to the record of this proceeding.
    [The information referred to appears as a submission for 
the record.]
    Senator Whitehouse. And the record of Congressional 
hearings remains open for 7 days after the gavel goes down at 
the end of the hearing. So if there is anything that anybody 
would like to contribute to the record of this hearing, you 
have 7 days to get it to my office and we will add it to the 
proceedings.
    And with that, I will bring the hearing to a close, again, 
thanking Director Taylor and Ms. Benway for their testimony, 
and thanking our Attorney General, our U.S. Attorney, and Mr. 
Doolittle for their testimony. And thank you all very much for 
attending.
    This has been interesting to me. I hope it has been 
interesting to you, as well.
    [Whereupon, at 11:35 a.m., the hearing was concluded.]
    [Submissions for the record follow.]

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