[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
IDEAS TO IMPROVE MEDICARE OVERSIGHT
TO REDUCE WASTE, FRAUD AND ABUSE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
APRIL 30, 2014
__________
Serial No. 113-HL11
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
DAVE CAMP, Michigan, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin JIM MCDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington XAVIER BECERRA, California
CHARLES W. BOUSTANY, JR., Louisiana LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
TOM PRICE, Georgia EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida RON KIND, Wisconsin
ADRIAN SMITH, Nebraska BILL PASCRELL, JR., New Jersey
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois
KENNY MARCHANT, Texas LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio
Jennifer M. Safavian, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
______
SUBCOMMITTEE ON HEALTH
KEVIN BRADY, Texas, Chairman
SAM JOHNSON, Texas JIM MCDERMOTT, Washington
PAUL RYAN, Wisconsin MIKE THOMPSON, California
DEVIN NUNES, California RON KIND, Wisconsin
PETER J. ROSKAM, Illinois EARL BLUMENAUER, Oregon
JIM GERLACH, Pennsylvania BILL PASCRELL, JR., New Jersey
TOM PRICE, Georgia
VERN BUCHANAN, Florida
ADRIAN SMITH, Nebraska
C O N T E N T S
__________
Page
Advisory of April 30, 2014 announcing the hearing................ 2
WITNESSES
Shantanu Agrawal, M.D., Deputy Administrator and Director, Center
for Program Integrity, Centers for Medicare and Medicaid
Services, Department of Health and Human Services.............. 47
Gloria L. Jarmon, Deputy Inspector General for Audit Services,
Office of Inspector General, Department of Health and Human
Services....................................................... 6
Kathleen M. King, Director, Health Care, Government
Accountability Office.......................................... 19
SUBMISSIONS FOR THE RECORD
Jim McDermott, Ranking Member, Subcommittee on Health, Committee
on Ways and Means, submission.................................. 87
AARP, statement.................................................. 329
ACHCI, statement................................................. 331
AFSCME, statement................................................ 333
AMCP, statement.................................................. 337
AMRPA, statement................................................. 345
AOPA, statement.................................................. 353
IDEAS TO IMPROVE MEDICARE OVERSIGHT
TO REDUCE WASTE, FRAUD AND ABUSE
----------
WEDNESDAY, APRIL 30, 2014
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Health,
Washington, DC.
The Subcommittee met, pursuant to call, at 1:58 p.m., in
Room 1100, Longworth House Office Building, Hon. Kevin Brady
[Chairman of the Subcommittee] presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON HEALTH
CONTACT: (202) 225-3625
FOR IMMEDIATE RELEASE
Wednesday, April 23, 2014
No. HL-11
Chairman Brady Announces Hearing on Ideas to
Improve Medicare Oversight to Reduce Waste, Fraud and Abuse
House Ways and Means Health Subcommittee Chairman Kevin Brady (R-
TX) today announced that the Subcommittee on Health will hold a hearing
on Medicare waste, fraud, and abuse, with a focus on the policies that
address these problems. This hearing will allow the Subcommittee to
hear directly from the U.S. Office of the Inspector General at the
Department of Health and Human Services (OIG-HHS), the U.S. Government
Accountability Office (GAO), and the Centers for Medicare and Medicaid
Services' Center for Program Integrity (CPI) about the different
recommendations and approaches to curb abuses within Medicare. The
Subcommittee will hear testimony from Gloria Jarmon, Deputy Inspector
General for Audit Services at OIG-HHS; Kathleen King, Director, Health
Care at GAO; and Dr. Shantanu Agrawal, Deputy Administrator and
Director of CPI. The hearing will take place on Wednesday, April 30,
2014, in 1100 Longworth House Office Building, beginning at 2:00 p.m.
In view of the limited time available to hear from the witnesses,
oral testimony at this hearing will be from the invited witnesses only.
However, any individual or organization not scheduled for an appearance
may submit a written statement for consideration by the Committee and
for inclusion in the printed record of the hearing.
BACKGROUND:
According to the 2014 March Medicare Payment Advisory Commission
(MedPAC), the Medicare program paid out approximately $574 billion each
year to more than 1.5 million doctors, hospitals and medical suppliers,
and citing a GAO report estimates that about $44 billion a year is lost
to fraudulent activity within the system. There are many methods
utilized by perpetrators of fraud, including false billing and identity
theft.
CMS has primary responsibility for paying providers appropriately
for furnishing services to beneficiaries and preventing fraud, waste,
and abuse. The agency partners with numerous entities to carrying out
these important functions, including contracts with:
Medicare Administrative Contractors (MACs) perform
prepayment medical reviews to ensure services provided to
Medicare beneficiaries are covered and medically necessary,
among other activities;
Zone Program Integrity Contractors (ZPICs), located
in seven zones throughout the country, are auditors that
perform a wide range of medical review, data analysis, and
evidence-based policy auditing activities;
Recovery Audit Contractors (RACs) aim to reduce
Medicare improper payments through the detection and collection
of overpayments, the identification of underpayments, and the
implementation of actions that will prevent future improper
payments. Many of these activities involve data-mining
activities based on billing information. Most of the data
analysis is done after Medicare has made payment, but some work
is now also being done before on a pre-payment basis. The
Affordable Care Act established RACs for Medicare Part C and
Part D and for Medicaid.
The OIG-HHS and GAO monitor efforts by CMS and its contractors to
evaluate performance and identify vulnerabilities. OIG-HHS and GAO
reports, often requested by Members of the Committee, provide valuable
insight and information to assist the Congress in oversight of the
Medicare program.
The Federal Government devotes significant resources and employs
numerous entities to curb inappropriate and excessive payments. While
significant improvements in fraud detection have been made, such as
enhanced screening of certain provider types before Medicare pays them,
the most recent Comprehensive Error Rate Testing (CERT) contractor
report to Congress shows additional improvements can and should be
made. The report states that the payment error rate for the Medicare
program was 8.5 percent for FY2012, the most recent data available,
representing $29.6 billion in payment errors. This hearing will give
Members the opportunity to assess if resources are being used
efficiently and identify how to improve a system in need of
transparency and upgrade.
In announcing the hearing, Chairman Brady stated, ``It is very
clear that problems with Medicare waste, fraud, and abuse persist. The
Medicare trust fund is already headed toward insolvency and every
dollar of fraud is a dollar not dedicated to providing quality care for
our Nation's seniors. It's a double whammy for seniors, threatening
their access to necessary care while also hitting their pocketbook.
More action, stronger oversight, and true transparency is needed. This
hearing will find areas of improvement by looking honestly and
thoroughly at the problem. We must move beyond the unacceptable status
quo and work to enact bipartisan bills to strengthen anti-fraud
programs to protect the Medicare program for generations to come.''
FOCUS OF THE HEARING:
The hearing will focus on the different agencies roles and missions
in curbing the fraud, waste, and abuse within the Medicare program.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Any person(s) and/or organization(s) wishing to submit
for the hearing record must follow the appropriate link on the hearing
page of the Committee website and complete the informational forms.
From the Committee homepage, http://waysandmeans.house.gov, select
``Hearings.'' Select the hearing for which you would like to submit,
and click on the link entitled, ``Click here to provide a submission
for the record.'' Once you have followed the online instructions,
submit all requested information. ATTACH your submission as a Word
document, in compliance with the formatting requirements listed below,
by the close of business on Wednesday, May 14, 2014. Finally, please
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Police will refuse sealed-package deliveries to all House Office
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please call (202) 225-1721 or (202) 225-3625.
FORMATTING REQUIREMENTS:
The Committee relies on electronic submissions for printing the
official hearing record. As always, submissions will be included in the
record according to the discretion of the Committee. The Committee will
not alter the content of your submission, but we reserve the right to
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1. All submissions and supplementary materials must be provided in
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relies on electronic submissions for printing the official hearing
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2. Copies of whole documents submitted as exhibit material will not
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3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental
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address, telephone, and fax numbers of each witness.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TDD/TTY in advance of the event (four
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Note: All Committee advisories and news releases are available on
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Chairman BRADY. This Subcommittee will come to order. Good
afternoon, everyone.
Every dollar lost to Medicare fraud is a dollar stolen from
America's elderly and every dollar lost to improper payments,
intentional or not, robs from the solvency of this important
program. Today's hearing will examine the issue of Medicare
fraud. This is a bipartisan concern shared by our seniors, the
Medicare program and lawmakers on this Committee.
The Office of Inspector General, which is testifying here
today, cites that nearly $50 billion is lost to improper
Medicare payments each year. That is an alarming amount. I am
most alarmed by how often I open the Houston Chronicle back
home to find stunning investigations of Medicare fraud that
runs into tens of millions of dollars, involving doctors,
ambulance companies, mental health clinics and even patient
advocates, those who are tasked with protecting the sick and
elderly.
Last Friday brought news of a 13-count indictment of
providers in Florida and the Houston area for allegedly billing
Medicare for services that were not needed and providing
kickbacks for patient referrals. Last Wednesday was the
sentencing of a Houston-area woman after her 2013 conviction
for defrauding Medicare. These stories are all too frequent in
communities around the Nation.
To make matters worse, in the past year, the Office of
Inspector General has documented evidence that Medicare has
paid for services to those who are deceased, in prison, and not
entitled to benefits, all this while Medicare's main trust fund
is on a crash course with insolvency in a short 12 years.
President George W. Bush established the Federal Medicare
Fraud Strike Force in 2007 that changed to a much more
aggressive approach to Medicare fraud, and it is starting to
bear fruit. In response, the Centers for Medicare and Medicaid
have taken strides to address this growing problem. The agency
has used its authority to impose a temporary moratorium on the
enrollment of certain providers in high-risk areas, including
preventing new ambulance companies from billing Medicare in my
home State of Texas; however, more must be done to protect our
seniors and taxpayers.
While a moratorium on new providers may very well prevent
unscrupulous providers from entering the program, it doesn't
stop those who have already enrolled and are improperly
billing. More must be done to move from the outdated pay-and-
chase approach to a new 21st century approach that stops
improper payments before they go out the door.
I am also concerned about the CMS lack of leadership and
interest in problems that are especially embarrassing for the
Medicare program. Preventing payments for services to those who
are dead or are in jail involves a straightforward fix, yet it
is still a problem, regrettably still a topic for discussion at
this hearing. And that is the focus of this hearing, not merely
identifying the fraud and abuses, but identifying what can be
done using new technologies and successful strategies to
prevent and deter fraud in the future.
First, I commend my colleagues on this Committee, Members
on both sides of the aisle, who have introduced bills to make
commonsense changes. For example, my colleagues and fellow
Texans, Mr. Johnson and Mr. Doggett, have been working on a
legislative fix for nearly a decade to take Social Security
numbers off of Medicare cards. And you see bipartisan efforts
throughout this Subcommittee. It is frustrating that such a
simple fix has yet to happen. I look forward to the day when I
can tell my seniors in my district that they no longer must
worry about having their Social Security number compromised
simply by carrying the Medicare card they need to access their
health care.
Second, we are interested in hearing recommendations from
the OIG and the Government Accountability Office. These
watchdog entities have identified vulnerabilities and proposed
solutions in the areas of improper payments, and CMS oversight
of claims paying and fraud fighting contractors. Many of these
recommended fixes support bills that Members of Congress on
this Committee are championing.
Third, we will hear from CMS about its program integrity
efforts. While we are interested to hear what the agency has
done, we are perhaps more interested in what it plans to do
going forward.
The written statements from our witnesses make clear that
much work is left to be done. Lawmakers have ideas, OIG and GAO
have made recommendations, and CMS has its plans. So let's
identify the ideas and solve our problems and get to work now
to put them in place. It is not important who comes up with
these ideas on fighting fraud, waste and abuse. What is
important is that we act on these good ideas. It is my intent
that we move forward on a bipartisan basis, working with CMS,
to protect our seniors, bolster the Medicare trust fund, and
ensure appropriate use of taxpayer funds.
Before I recognize the Ranking Member, Dr. McDermott, for
the purposes of an opening statement, I ask unanimous consent
that all Members' written statements be included in the record.
Without objection, so ordered. I now recognize our Ranking
Member, Dr. McDermott, for his opening statement.
Mr. MCDERMOTT. Thank you, Mr. Chairman. I want to commend
the chairman for having this hearing. I think the controlling
of costs as we move forward in health care is going to be the
toughest issue we face. This administration has been serious
about combating fraud, waste and abuse. The joint effort of
Attorney General Holder and Secretary Sebelius through the
Health Care Fraud Prevention and Enforcement Action Team, so-
called HEAT, there have been measurable results. The team has
recovered in excess of $4 billion every single year since 2011.
That is real money.
There was a time when a hearing on Medicare fraud such as
this would have focused solely on the dollar amounts recouped
at the back end after the fraud had been perpetrated, and any
money that could have been recouped would have been long spent.
Then came the Affordable Care Act, which gave regulators
additional new powers to prevent fraud rather than just
reactively address it, powers such as expanded payment
suspension authority and the requirements to effectively police
who gets into the Medicare program, ensuring Medicare
participation is reserved for scrupulous providers and
suppliers.
So now when we talk about our fraud prevention efforts, we
speak a different language than even 5 years ago. We speak of
payment suspensions in greater numbers, we speak of high risk
or moderate risk providers and suppliers, we are talking about
fingerprinting owners of the high risk providers and suppliers,
we speak of the fraud prevention system and the predictive
analytics designed to monitor for potential fraud on a real-
time basis.
Notwithstanding all the efforts that have been made at
transforming Medicare and Medicaid into programs that hold
participating providers and suppliers accountable, as the
chairman has said, much more work needs to be done.
With alternative delivery system models, what does fraud,
waste and abuse really look like? With the expanded waiver
authority that essentially granted Federal agencies the ability
to issue wide-open waivers, what new fraud schemes will emerge?
So our important work in this area is not done. Much more
work remains. I know the GAO will continue to play an important
role in helping us with our oversight responsibilities, and the
OIG and CMS will use their expanded authorities to root out the
fraud, waste and abuse to preserve the Medicare and Medicaid
programs for the future.
I look forward to working with the chairman on a bipartisan
basis on these issues. I yield back the balance of my time.
Chairman BRADY. Thank you, Doctor.
Today we will hear from three distinguished witnesses:
Gloria Jarmon, Deputy Inspector General for audit services at
the Office of Inspector General, the Department of Health and
Human Services; Kathleen King, Director of Health at the
Government Accountability Office; and Dr. Shantanu Agrawal,
Deputy Administrator at CMS and Director of Center for Program
Integrity.
We have reserved 5 minutes for each of the opening
statements and we will explore the testimony further during
questions. Ms. Jarmon, you are recognized.
STATEMENT OF GLORIA L. JARMON, DEPUTY INSPECTOR GENERAL FOR
AUDIT SERVICES, OFFICE OF INSPECTOR GENERAL, DEPARTMENT OF
HEALTH AND HUMAN SERVICES
Ms. JARMON. Good afternoon, Chairman Brady, Ranking Member
McDermott, and other distinguished Members of the Subcommittee.
Thank you for the opportunity to discuss OIG's work related to
Medicare oversight and reducing fraud, waste and abuse. We have
a lot of work in this area. Today my statement focuses on our
recent work related to improper Medicare payments and billings
and oversight of Medicare contractors.
CMS needs to continue to take steps to reduce improper
Medicare payments and improve its oversight of the various
Medicare contractors. Improper Medicare payments cost taxpayers
and beneficiaries about $50 billion a year. In recent work, OIG
has identified millions in improper payments made on behalf of
persons not entitled to Medicare, such as incarcerated,
unlawfully present, deceased, or entitlement-terminated
individuals. While some progress has been made by CMS in these
areas, it needs more accurate and timely information to trigger
payment edits and better procedures to detect and recoup these
improper payments.
OIG has also uncovered a stream prescribing patterns for
hundreds of general care physicians and questionable billings
by thousands of retail pharmacies. Medicare also paid millions
for prescriptions from unauthorized prescribers, such as
massage therapists and athletic trainers. This is especially
concerning in light of OIG's increasing investigations into
drug diversion. Verification of prescriber authority edits and
enhanced monitoring are necessary to safeguard Medicare Part D
and ensure patient safety.
Recently we have also reported improper payments to
hospitals of millions of dollars related to vulnerabilities we
identified as part of our nationwide hospital compliance
reviews. In addition, we found that Medicare could have saved
about $638 million over just a 2-year period by establishing a
hospital transfer-of-payment policy for hospice transfers and
strengthening billing requirements. OIG has made specific
recommendations to reduce these and other improper payments,
but those steps alone will not adequately safeguard Medicare.
CMS must continue its efforts to improve its oversight of
Medicare contractors. CMS relies on contractors to administer
various parts of Medicare, including claims payment,
identification and recoupment of overpayments and benefit
integrity functions. Our work has identified vulnerabilities
associated with CMS's oversight of contractors.
First, CMS has not fully leveraged data to improve
oversight. Part C and Part D plans report fraud and abuse data
on merely a voluntary basis. CMS does not mandate such
reporting. Under this system, we found that less than half of
the Part D plans have actually reported fraud data, and
reporting varies significantly from plan to plan. In addition,
CMS has made limited use of the data it has received in
overseeing Part C plans and has not fully used reported fraud
and abuse data for monitoring Part D. As a result, CMS is still
missing opportunities to discover and alert plans and law
enforcement to emerging fraud and abuse schemes.
Second, we have found that while CMS's performance reviews
of Medicare Administrative Contractors, or MACs, were
extensive, they were not always timely. If the performance
reviews are not performed--completed and performed timely, the
information they contain may not be available to support future
contracting decisions.
To improve contractor oversight, we have made several
recommendations to CMS that are included in our compendium of
priority recommendations on our Web site.
While my testimony focuses on our work to help CMS improve
program operations, I would like to make a request that would
help OIG better meet our growing oversight responsibilities.
OIG is responsible for oversight of about $0.25 of every
Federal dollar spent, but our mission is challenged by
declining resources at a time when our oversight
responsibilities are increasing.
By the end of this fiscal year, OIG expects to reduce
Medicare and Medicaid oversight by about 20 percent. During the
same time, 2012 to 2014, outlays for Medicare are expected to
grow by about 20 percent. To ensure that we can continue to
provide needed oversight as these programs expand, we ask for
the Committee's support of our 2015 budget request.
In summary, we remain very committed to carrying out our
responsibilities in the area of improving Medicare oversight to
reduce waste, fraud and abuse as comprehensively and
effectively as possible with the tools and resources we have
available.
Thank you for your interest and support. I would be happy
to answer your questions.
[The prepared statement of Ms. Jarmon follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman BRADY. Thank you. Mrs. King.
STATEMENT OF KATHLEEN M. KING, DIRECTOR, HEALTH CARE,
GOVERNMENT ACCOUNTABILITY OFFICE
Ms. KING. Mr. Chairman, Ranking Member McDermott and
Members of the Subcommittee, thank you for inviting me here----
Chairman BRADY. Ms. King, is the microphone on there?
Ms. KING. I thought--I had a green--oh. Sorry.
Chairman BRADY. I know.
Ms. KING. Thank you for inviting me to talk about our work
regarding Medicare fraud, waste and abuse.
CMS has made progress in implementing several
recommendations we identified through our work to help protect
Medicare from fraud and improper payments, but there are
additional actions they should take. I want to focus my remarks
today on three areas: provider enrollment, pre- and post-
payment claims review, and addressing vulnerabilities to fraud.
With respect to provider enrollment, CMS has implemented
provisions of the Patient Protection and Affordable Care Act to
strengthen the enrollment process so that potentially
fraudulent providers are prevented from enrolling in Medicare
and higher-risk providers undergo more scrutiny before being
permitted to enroll.
CMS has recently imposed moratoria on the enrollment of
certain types of providers in fraud hotspots and has contracted
for fingerprint-based criminal background checks for high-risk
providers. These are all positive steps; however, CMS has not
completed certain actions authorized by PPACA, which would also
be helpful in fighting fraud. It has not yet published
regulations to require additional disclosures of information
regarding actions previously taken against providers, such as
payment suspensions. And it has not published regulations
establishing the core elements of compliance programs or
requirements for surety bonds for certain types of high-risk
providers, including home health agencies.
With respect to claims for payment, Medicare uses pre-
payment review to deny payment for claims that should not be
paid and post-payment claims review to recover improperly paid
claims. Pre-payment reviews are typically automated edits in
claims processing systems that can prevent payment of improper
claims.
We found some weaknesses in the use of pre-payment edits
and made a number of recommendations to CMS to promote
implementation of effective edits regarding national policies
and to encourage more widespread use of local pre-payment edits
by Medicare administrative contractors, or MACs. CMS agreed
with our recommendations and has taken steps to implement them.
With respect to post-payment review, we recently completed
work that recommended greater consistency in the requirements
under which four post-payment review contractors operate when
it can be done without impeding the efficiency of efforts to
reduce improper payments. CMS agreed with our recommendation
and is taking steps to implement them.
We also recommended to CMS that they collect and evaluate
how quickly one type of post-payment review contractor, the
zone program integrity contractor, and takes action against
suspect providers. CMS did not comment on this recommendation.
We also have further work underway on the post-payment
review contractors to examine whether CMS has strategies in
place to coordinate their work and whether these contractors
comply with CMS's requirements regarding communications with
providers.
With respect to vulnerabilities to fraud, we have made
recommendations to CMS over the last several years, and CMS has
implemented several of them, including establishing a single
vulnerability tracking process and requiring MACs to report to
them on how they have addressed vulnerabilities; however, CMS
has not taken action to address our recommendations to remove
Social Security numbers from Medicare cards, because display of
these numbers increases beneficiaries' vulnerability to
identity theft. We continue to believe that CMS should act on
our recommendations, and we are currently studying the use of
electronic card technologies for Medicare, including potential
benefits on limitations and barriers to implementation.
Because Medicare is such a large and complex program, it is
vulnerable to fraud and abuse. Constant vigilance is required
to prevent, detect and deter fraud so that Medicare can
continue to meet the health care needs of its beneficiaries.
This concludes my prepared remarks. Thank you, Mr.
Chairman.
[The prepared statement of Ms. King follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman BRADY. Thank you, Ms. King. Dr. Agrawal.
STATEMENT OF SHANTANU AGRAWAL, M.D., DEPUTY ADMINISTRATOR AND
DIRECTOR, CENTER FOR PROGRAM INTEGRITY, CENTERS FOR MEDICARE
AND MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES
Dr. AGRAWAL. Thank you. Chairman Brady, Ranking Member
McDermott and Members of the Committee, thank you for the
invitation to discuss the Centers for Medicare and Medicaid
Services Program Integrity efforts.
Enhancing program integrity is a top priority for the
administration and an agency-wide effort at CMS, and we have
made important strides in reducing waste, abuse and fraud with
the strong support of this Committee and Congress. I know that
this also is an area of particular interest to the Members of
this Committee, and I look forward to hearing your input and
working with you on strengthening program integrity in the
Medicare program.
Before proceeding, I would like to take a moment to
introduce myself. I am a board certified emergency medicine
physician. For the past several years and concurrently with
other positions I have held, I continue to work as an emergency
medicine doctor, both in large academic centers and in area
community hospitals.
Shortly after completing my medical training, I joined a
management-consulting firm, where I had the opportunity to help
hospitals, health systems and biotech and pharma companies
improve the quality and efficiency of health care delivery.
In 2011, I joined CMS to serve as the chief medical officer
of the Center for Program Integrity, where I had the chance to
apply both my medical knowledge and private sector health
experience to helping CMS fight fraud and ensure quality care
for the millions of patients insured through Medicare and
Medicaid. I view program integrity through the lens of these
experiences and as a physician who fundamentally cares about
the health of patients.
Our health care system should offer the highest quality and
most appropriate care possible to ensure the well-being of
individuals and populations. CMS is committed to protecting
taxpayer dollars by preventing or recovering payments for
wasteful, abusive or fraudulent services, helping to extend the
life of the trust fund, but the importance of program integrity
efforts extend beyond dollars and health care costs alone. It
is fundamentally about protecting our beneficiaries, our
patients, and ensuring we have the resources to provide for
their care.
Numerous experts have cited the waste endemic to our system
caused by multiple factors, from inefficiencies in care
delivery to outright fraud. Underlying the issues and numbers
are real patients. We are all too familiar with the stories of
a patient getting inappropriate care or services due to the
malfeasance of others to defraud our system. When providers and
suppliers are influenced by their own financial interests or
incentives, this can lead to up-coding or other gaming of
Medicare and Medicaid.
Fraud is not merely deception for dollars through falsified
billing. It threatens beneficiary health through blatantly
unnecessary services, substandard or non-existent care,
dangerous prescribing through pill mills, and a host of other
schemes.
Examples of such waste and abuse are driving our agency and
my team to rethink the way it approaches program integrity. Due
to new authorities and resources provided by Congress over the
past few years, CMS is changing the program integrity paradigm
to one of focus on prevention and collaboration to identify and
combat waste, abuse and fraud in our system, and in partnership
with other stakeholders.
As deputy administrator, I will continue to lead CMS on
this course with three main areas of intention: coordination
across the agency and the broader health care system,
excellence in program integrity operations, and a clear view
towards improving the costs and appropriateness of care.
First, coordination. The Center for Program Integrity is
responsible for leading and coordinating agency efforts to
reduce waste, abuse and fraud. Collaboration with stakeholders
external to the agency is vital to--as well for the
identification of vulnerabilities and increasing our impact.
Led by the interagency HHS-DOJ partnership, HEAT, the Federal
Government made its highest recovery of funds this past year,
$4.3 billion in fiscal year 2013. This resulted in the highest
return on investment in the HCFAC program, $8.10 for every $1
invested. We are continuing to build on existing partnerships
with private sector pairs, health care organizations and
providers through our public-private partnership. Results from
the initial data exchanges under the partnership have helped
identify fraudulent schemes and specific providers impacting
private and public payers, and led to CMS administrative
actions such as revocations, as well as law enforcement
referrals.
Second, operational excellence. CMS's robust measures of
the return on program integrity appropriations, the result of
audit and investigation activities, and the impact of advanced
data analytic systems, all of which shows strongly positive
returns on investment. I intend to build on this foundation by
managing performance and strategic decision making based on the
areas of greatest risk and return. In particular, CPI's work on
provider enrollment and screening has enhanced program
integrity while lowering burden for providers.
Finally, the cost and appropriateness of care. CMS has a
comprehensive Program Integrity strategy that includes multiple
tools and interventions that are used individually and in
tandem to tackle specific vulnerabilities. By applying these
tools across Medicare and Medicaid in a coordinated way, CMS
can impact the overall cost of care. We can and should aim to
do even more.
As just one example, CMS has been piloting the use of a
fraud prevention system, which is applying predictive analytics
technology to all streaming Medicare fee-for-service claims to
identify not only potentially fraudulent providers for
investigation, but all providers who are billing
inappropriately and may require education or medical review.
Thank you for your time and opportunity. I appreciate your
support in achieving these goals. I look forward to hearing
your ideas on how we can work together as we continue to focus
on beneficiaries and strive every day to protect their health
and well-being.
[The prepared statement of Dr. Agrawal follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman BRADY. Thank you, Doctor.
Thank you to all the panelists.
Dr. Agrawal, you have highlighted a number of actions CMS
has taken to reduce waste, fraud and abuse, and we appreciate
them. While your fellow panelists acknowledge that your agency
has made progress, the inspector general, General
Accountability Office identify a number of areas for
improvement. I am particularly troubled by the inspector
general's revelation that Medicare pays $23 million for
services to those who have died, according to the testimony,
$117 million lost to those unlawfully present, and $33 million
paid to those in prison. And there is more fraud within the
fee-for-service area: overprescribing by physicians, the
hospital transfer of payment issue, which is more than half a
billion dollars lost to Medicare. These are problems that hurt
seniors and erode public confidence in the Medicare program,
and to my mind, reading the testimony, are preventable. I truly
believe that preventing fraud is a bipartisan issue and has
been a long-standing challenge, and my hope is that we can work
collaboratively with CMS.
And since this is your first time before the House and
before the Committee, can I get a commitment from you that your
agency will work with me and our Committee to stop the nearly
$50 billion in improper payments each year?
Dr. AGRAWAL. Thank you for the question. Focus on improper
payments is absolutely very important for the agency. We
appreciate the work of the OIG and the GAO in identifying
further vulnerabilities that we can work on. I think we can all
agree, and it has been stated, that these are areas that we
have made important progress in. That is not to say that we
should stop being aggressive on these issues.
I think there are numerous factors in our more recent kind
of programs that have provided important progress. So work that
we have done on enrollment and screening standards on advanced
analytics have, I think, really started to and made significant
strides in addressing improper payments as well as the other
access--improper payment issues that OIG and GAO have
identified. We will continue to work on those and look forward
to working with this Committee in doing so.
Chairman BRADY. It will go easier if you just start with
yes. Just so you know.
Dr. AGRAWAL. Yes, sir.
Chairman BRADY. Doctor, I want to thank you for your
willingness to work. As a followup on the fundamental
challenges that you have and will face is moving CMS from a
pay-and-chase fraud-fighting model. I am glad you mentioned it
in your written statement, but I am concerned your efforts
focus mostly on recouping money that has already gone out the
door. Many Members on this panel, again, bipartisan, believe we
should be copying what private payers are doing already to
prevent, detect and deter fraud, stopping payments before they
go out the door. And so what actions is CMS taking to move in
that direction, and how do we as a Committee measure that
movement and those results?
Dr. AGRAWAL. I think that is a very important question. We
have taken a lot of steps to both emulate the private sector
where appropriate and work with the private sector in our
common program integrity challenges. As one example, we have
recently completed a demonstration on the use of prior
authorization to mitigate improper payments as well as other
fraud, waste and abuse issues, and there is language in the
President's budget that would allow us to expand that program.
Another example, I think a notable one, is the health care
flawed prevention partnership, which specifically brings up
private payers together with CMS in order to jointly and in a
coordinated manner, detect and prevent fraud. Under that
partnership, we have already engaged in numerous data exchanges
and also sort of qualitative exchanges around best practices.
It has led to some real actions for us.
The way that I think you could measure them is similar to
how we measure them. We look at identified savings from HFPP
activities as well as other activities and specific outcomes,
like revocations and law enforcement referrals.
Chairman BRADY. Ms. Jarmon, in her testimony, laid out a
number of recommendations, but more importantly what seems to
be a fairly simple sharing of data that would have prevented
improper payments in a number of areas. Why aren't those being
done?
Dr. AGRAWAL. Well, sir, I think there are multiple examples
of where we are sharing data. We are sharing data with State
Medicaid agencies, with the private sector, with law
enforcement and that--and all of those examples are really by
directional sharing of data, so we are getting data from them
and learning from all of these entities as well as providing
our data to these other parties.
There is certainly more that we can do, and we continue to
expand our data-sharing activities. I am happy to continue to
work on those, but I think there are really notable examples in
numerous programs where data exchange is central to those
programs.
Chairman BRADY. Thank you.
Ms. King, I understand GAO generally directs CMS to make or
recommend changes with which the agency has administrative
authority, and that General Accountability Office
recommendations that require legislation are directed to us in
Congress. Can you give us--so that we can track these and so we
can measure the progress and know where we need to focus; can
you give us a rough percentage of the GAO unimplemented
recommendations that CMS has authority to implement, and your
sense of why it has not yet acted?
Ms. KING. We do track all of our recommendations over time,
and we keep them open for a considerable period of time, and I
don't have the exact numbers at my fingertips, but our track
record is pretty good on whether they have been implemented,
and we have supplied to your staff a list of the open
recommendations.
Chairman BRADY. But approximately how many are there? I am
not trying to pin it down. I am just trying to figure out----
Ms. KING. Oh, jeez. Off the top of my head, 20 to 30.
Chairman BRADY. To put it in perspective, these 20 to 30
recommendations, what potential impact do they have? How
important are these recommendations not yet implemented for
either stopping improper payments or recouping them once done?
Ms. KING. Well, I don't think we make a recommendation
unless we think that it is going to have a real effect. We
identify a problem and we identify a way that it can be fixed.
And some of those recommendations are actually not on the
improper payment side, they are for all of Medicare, and some
of them go to changes in payment policy and some of them go to
changes in management, and others do go to improper payments.
And I think on the improper payment side, I think a good
many of those recommendations have been implemented or are in
the process of being implemented. And we don't close a
recommendation until we are satisfied fully that it has been
implemented.
Chairman BRADY. Can you share that information with us?
Ms. KING. Yes, sir.
Chairman BRADY. Great. And we will make sure the Committee
has it.
Ms. Jarmon, I have introduced legislation with my
colleague, Dr. McDermott, to expand your authority to exclude
individuals and companies from participation in Medicare and
other Federal programs.
Our intent is to prevent individuals who are responsible
for fraud from jumping to another company before sanctions are
handed down and prevent a company from creating a shell company
that could further commit fraud and shield a parent company
from liability. That is the intent of the legislation.
I think these situations--we can all agree need to be
prevented. Several types of providers have understandably
expressed concern that this expansion could leave companies
that serve seniors at serious legal risk, even if they have no
role in fraudulent activity exposed to the OIG overreach.
So how do you respond to these concerns?
Ms. JARMON. Well, we--well, I would like to note that OIG--
we don't have the resources to actually go--even go after all
of the people who maybe should be excluded. So the chance of us
even going broader is very limited.
We do--we are very careful about how we use the authorities
that we have. We have guidance on our website as far as
reasonable factors to consider when determining--when deciding
to do an exclusion, which includes the seriousness of the
misconduct or the alleged fraud and whether it hurt--harms
beneficiaries or the health plan.
And this exclusion authority is very important to us
because we do need the authority to be able to exclude people
who actually leave the organization before the citation who
have been accused of fraud.
So that was a loophole in the prior legislation that is
very important that we fixed so that the wrongdoers would be
able to be excluded. So we are very careful----
Chairman BRADY. Thank you.
Dr. McDermott and I are very serious about closing this
loophole and----
Ms. JARMON. Thank you.
Chairman BRADY [continuing]. And stopping this jumping from
company to company, and it--continues to be a problem.
So now I recognize the Ranking Member, Dr. McDermott, for 5
minutes for his questions.
Mr. MCDERMOTT. Thank you, Mr. Chairman.
Ms. Jarmon, I appreciate your testimony and recognize that
you are with the Office of Audit Services component of OIG.
And I have questions that are more appropriately perhaps
addressed to the Office of Counsel within OIG; therefore, I
want to make a statement and I will submit several questions
for the record. I will look forward to the responses from the
OIG.
I remain concerned about the application of our current
fraud and abuse laws, given our movement to new payment
methods. My concern exists on several levels.
First, I believe that Federal regulators have sufficient
experience with some models such that these arrangements should
not be afforded protection under broad waiver authority, which
is unclear exactly how the False Claims Act applies and where
whistleblowers can be reticent--may be reticent to bring qui
tam cases.
Instead, regulators should put forth, I believe, an
appropriate exception under the self-referral law and make
modifications to other laws, including the gain sharing civil
monetary penalty laws necessary to provide parameters for such
conduct.
As an example, I am aware that OIG has issued no fewer than
15 advisory opinions--I have read some of them, not all of
them--on various incentive compensation programs between
hospitals and patients--and physicians.
And, Mr. Chairman, I would like to enter into the record
these advisory opinions that OIG has issued since 2001 in the
area of incentive arrangements between hospitals and
physicians.
Chairman BRADY. Without objection.
Mr. MCDERMOTT. Rather than issue a case-by-case advisory
opinion, it seems to me that more structure should be put in
place around such arrangements.
This would allow regulators to better monitor these
arrangements and would afford participants some level of
certainty that participation in such arrangements would not be
problematic under the fraud laws.
My bill, H.R. 1487, called the Improved Care of Lower Cost
Act of 2013, seeks to require regulators to provide more
structure around certain arrangements that regulators have been
approving for over a decade on a case-by-case basis to allow
broad participation by providers, but also ensure an adequate
scrutiny by regulators.
This case-by-case thing--as we spread the Accountable Care
Act over the country, they are going to have endless case-by-
case things, and I think it ought to be done systematically.
Second, I remain concerned that there are new fraud, waste
and abuse schemes that we may not be fully aware of, given the
different incentives under emerging payment models. So everyone
agrees and usually mentions that we need to be concerned about
stinting on care for Medicare beneficiaries.
One of the ways you can save money is don't give care. But
what about monitoring whether a few unscrupulous providers
would game the system by manipulating quality measures since
these measures have taken on an increased importance in this
new era of health care?
All a patient would have to say is, ``I like the doctor and
they have got good quality,'' but that doesn't mean they have
gotten the care they needed.
This conduct seems to me to be much harder to identify than
a false storefront, for example. This type of fraud is just as
detrimental to our beneficiaries as to the solvency of the
Medicare trust fund.
And I will submit these questions in writing to the
counsel.
I am also a co-sponsor of a bill, H.R. 2914, the Promoting
Integrity in Medicare Act, which would retain, but narrow, the
in-office ancillary services exception under the Physician's
Self-Referral Act so that the law and implemented regulations
would more closely approximate what Congress intended.
CBO has suggested that the change reflected in this
legislation would save the Federal Government $3.4 billion over
the next 10 years.
Ms. King, can you provide the GAO's key findings related to
the in-office ancillary services exception and the existing
policy in this area?
Ms. KING. Yes. We have done a few reports on that, and what
we have found is that, in instances where there is an ownership
interest, that the utilization is higher.
And, in our view, the self-referral component of it is one
of the primary driving forces behind the higher utilization.
And we have made a recommendation to CMS that they more
closely track when services are provided in a self-referral
situation, but they did not agree with us on that. And we wish
they had and we wish they would.
Mr. MCDERMOTT. Could you give us their reasoning that they
gave you when they didn't agree with you?
Ms. KING. They said that they thought it would be really
complicated to track.
Mr. MCDERMOTT. It would be complicated to track.
Ms. KING. Yes, sir.
Mr. MCDERMOTT. And since it is complicated in this day of
computers and programming and all the rest, they couldn't
figure out how to do it? Is that what you are telling me?
Ms. KING. Well, sir, I can't speak for them, but that is,
you know, what they responded to us.
Mr. MCDERMOTT. Dr. Agrawal, does that make sense to you?
Dr. AGRAWAL. Sir, I appreciate the question, and I
appreciate the issue that you are raising.
I would say that Stark and self-disclosure laws don't
actually fall within the activities of the Center for Program
Integrity. I am happy to take your comments back and connect
you with the right expert at CMS.
Mr. MCDERMOTT. All right. If you would, I appreciate it.
Because I think that, when there is this much money on the
table as there is in health care today, it is bound to attract
some folks who don't have the best interests of the patients or
the government or the taxpayers at heart.
And it is going to be difficult for us--certainly with
Medicare, we have got problems already. We are going to have
more problems with the Accountable Care Act.
And I think it is important that these fraud laws be
updated to move from fee-for-service application, which is what
we have had in the past, to now these more complicated other
payment arrangements for physicians.
Physicians are hired by hospitals or get into relationships
with hospitals. That whole of the fraud thing changes--or at
least it seems to me it changes.
And I want us to look carefully at that and make the kinds
of changes we need to so that we don't come here 5 years from
now and say, ``Here is $100 billion that has been wasted'' or
50 billion or whatever. I want us to try and stop it before it
starts.
I yield back the balance of my time.
Chairman BRADY. Thank you, Mr. McDermott.
Mr. Johnson is recognized.
Mr. JOHNSON. Thank you.
Mr. McDermott, I agree with you. They refuse to do
anything.
Dr. Agrawal, I understand you are now in charge of the CMS
Program Integrity mission. Is that true? True or false?
Dr. AGRAWAL. Sir, I am in charge of the Center for Program
Integrity. Yes.
Mr. JOHNSON. Okay. You may not know, but in recent years,
the House has twice overwhelmingly passed bills to take the
Social Security number off the Medicare card.
My colleague, Lloyd Doggett, and I have been trying to get
this done for years. And it seems to us that CMS, who tells
seniors they must carry their Medicare card with their Social
Security number in their wallet, refuses to protect seniors
from becoming victims of identify theft. And, you know, you
talk big about doing things over there, but you guys haven't
done anything.
Do you care about protecting seniors from identity theft?
Dr. AGRAWAL. Unequivocally, yes, sir, we care about
protecting seniors from identity theft.
Mr. JOHNSON. Well, when are you going to do that?
Dr. AGRAWAL. We have taken a number of actions to do so. We
have, for example, beneficiary education activities, campaigns,
in order to make them more aware of identity theft issues,
given them real tactical solutions and ideas for how to not be
victimized by identify theft.
Beyond that, sir, when it looks like somebody has become a
victim of identify theft, we have a way of tracking their
existing numbers and incorporating that through our compromised
numbers database into other analytical work that we have
underway.
So we are able to use that information in our activities to
help prevent fraudulent billing under their HCCN.
Mr. JOHNSON. Yeah. But how are you going to stop them from
stealing their Social Security number off of your Medicare
card?
Dr. AGRAWAL. Well, I appreciate the issue and I realize its
importance to this Committee.
I also know that you are very aware of the dialogue that
the agency has had with the Committee and the operational kind
of requirements in order to be able to remove the Social
Security number from the card.
I think, given the right resources to be able to do it, we
would be very open to further discussion on--on----
Mr. JOHNSON. Well, you could at least just put the last
four digits on there instead of the whole number.
Does CMS support our bipartisan bill, H.R. 781, the
Medicare Identify Theft Prevention Act of 2013? Yes or no?
Dr. AGRAWAL. Sir, I would have to review the specifics of
that bill to give you a----
Mr. JOHNSON. How long have you been there?
Dr. AGRAWAL. Pardon me?
Mr. JOHNSON. How long have you been there?
Dr. AGRAWAL. 2 months.
Mr. JOHNSON. Well, you ought to know it by now.
When are you going to do something about it? I would like
to know what your plan is and when CMS will try to do the right
thing.
Ms. King, GAO told us that CMS has efforts underway to
modernize their IT system and that these efforts could be used
to remove Social Security numbers off Medicare cards, yet CMS
has not included removing Social Security numbers. And you just
talked about it.
Is it still true that you agree with that?
Ms. KING. Yes, sir, it is. I mean, I think--CMS' position
on that, at least at the time that we did our work, is that
they knew that it was really complicated and they had revised
their cost estimates, but they believed that they needed
additional funding to do it.
Mr. JOHNSON. Well, I am not sure about that. But I want you
to know that both Lloyd Doggett, who is a Democrat, by the way,
and I agree that something needs to be done. We have been
working on this for what seems like 8 years, and you guys
haven't moved off that center.
Thank you, Mr. Chairman. Yield back.
Chairman BRADY. Thank you.
Just as a note, the money saved from not paying felons,
those who are dead and those who are here undocumented would
pay for the implementation of removal of those Social Security
numbers.
Mr. Blumenauer.
Mr. BLUMENAUER. Thank you, Mr. Chairman.
And I do appreciate what you and our Ranking Member have
done in terms of moving forward with this and setting the stage
for it, and I share both the sense of the urgency and the
potential of doing something.
You may have noticed occasionally we are cranky around here
and we don't always see eye to eye, but what has been outlined
today and what you are going to hear is an area, I think, of
tremendous consensus.
And beyond the consensus, I think there is a commitment and
a passion to get something done. It doesn't make any difference
about how you feel about the Affordable Care Act or global
warming. These are incontrovertible facts. And we are looking
at $50, $60 billion, whatever the number is.
Now, the individual areas in the vast payment scheme are
maybe understandable, but the target number needs to be
addressed aggressively.
And you are going to hear from some of my colleagues. I am
not going to steal their thunder. Just because of the luck of
the draw, a couple of my colleagues come after me, and I will
let them elaborate on their bills.
But I am happy to have been a co-sponsor of the Prime Act.
I think my friend Mr. Roskam and a number of people have zeroed
in--there is about 60 bipartisan co-sponsors with provisions
that would probably welcome some refinement, but the essentials
there are solid and need to be pursued.
I have been working for several years with Mr. Gerlach on a
universal access card. And I think if anything, it started a
little timid. It has been--you know, it has been very careful
and calculated to try and move this forward, and I think he is
going to weigh forth.
And I couldn't agree more with Congressman Johnson about
getting the flipping numbers off the Social Security card. We
understand that it takes resources and takes time and you have
had a lot going on, but we are into a phase now of
implementation of the Affordable Care Act and you have had
time.
And I think that there is--this is something that is not
rocket science, and I think people would be open to what needs
to happen in terms of some modification of a budget going
forward.
But it is going--these things collectively are going to
save far more than they are going to cost, and it speaks to the
integrity of the system and the protection of the people that
we represent.
Now, Mr. Chairman, I would hope that we could continue with
a little deeper dive on some of these proposals. I would hope
that these would be at sort of a level.
I have talked with some of my colleagues about what would
happen if we took some of--and we have had this conversation--
we take some of the things that are second- or third-tier
issues that don't have to, you know, stop the planet, they--the
leadership doesn't much care in either party, to break some of
this stuff loose, be with it on the floor.
Maybe that would be a going-away present--Mr. Roskam and I
talked about this last week--to Members of Congress, that this
would be kind of a wrap-up session that we would have on the
Thursday or Friday when we leave, to have one of these
specifics on the floor that could bring people together, that
would make a difference, that would be a signal to the people
out there who are cheating and, more important, to the people
that we are representing.
So I will get off my high horse. I won't go any further
because you need to hear from the people who are the principal
authors and who have put huge amounts of work into it.
But I would respectfully request, Mr. Chairman, that our
witness friends could be able to give a little deeper analysis
on each of these items that they are going to hear from about
how--about what we need to do to do that.
And the last thing I would recommend is that we think about
working with CBO on some scoring mechanisms, because things
that actually save money we ought to be able to apply present-
value accounting, particularly if we can hold agencies
accountable for the savings, that this isn't a pipe dream, but
this is something that is beyond theoretical, and that we have
the hammer to go back and make sure that they deliver. Then
maybe we can cut some slack in terms of CBO scoring.
I appreciate your courtesy, Mr. Chairman. If there is
something that my colleagues don't get to, I will submit it to
our witnesses in writing. But at this point I will yield back.
Chairman BRADY. Thank you, Mr. Blumenauer.
Two comments, if I may.
One, this is a bipartisan concern. This is the first
hearing of what we hope will be deeper dives, as you have laid
out, and the goal is to begin moving legislation in these
areas.
Second, I agree with you completely on the scoring
challenge. Often very good ideas that we know will work and
improve and save money elsewhere are not given the score we
think they deserve.
We are eager to work with you and CBO on those issues. So
thank you.
Mr. BLUMENAUER. Thank you.
Chairman BRADY. Mr. Roskam is recognized.
Mr. ROSKAM. Thank you, Mr. Chairman, for your leadership
and convening this hearing, and for Mr. Blumenauer and his
thoughtful setting of this discussion.
I think most Americans when they hear these numbers are
actually scandalized by them. It is very difficult to absorb.
We are in this very clinical, antiseptic setting, but this
is a situation that is bad. It has been bad and it is actually
getting worse. This is not getting better. And these are the
numbers--these are objective numbers.
So CMS's own numbers in 2010 said that this number, in
terms of fraud and abuse and waste and so forth, was $48
billion. A year later, it jumped up, according to GAO, to $64
billion. The latest estimate from the FBI is $75 billion plus
and climbing.
So, Doctor, with due respect, in my view, you don't get to
use words like ``top priority,'' ``robust,'' and ``strongly
positive.'' They should be out of your lexicon. This is a
scandal. This is an embarrassment.
And there is an irony in that Ms. Jarmon in her opening
statement makes an inquiry of this Committee, ``Would you
please support our request for a budget, an appropriation?''
And the irony is you have got all the money already.
So can you imagine the level of confidence that would be
buoyant in our country if we were able to come together? And
you have brought us together in ways that we have never been
brought together before.
As Mr. Blumenauer alluded, we can hardly agree what time it
is between the two of our parties. We cannot agree on what day
of the week it is. Yet, we are nearly unanimously scandalized
by just these big, big numbers.
I have got three inquiries of you. And I recognize you are
the new person on the job. You have been there 2 months. So I
am measured by that, but here are three legitimate issues that
are upon us that have broken through.
One is the Medi-Medi data sharing. This is this whole
notion of Medicaid and Medicare being in communication, if
there is fraud in one area, communicating that in another area.
Right now only 10 States are participating. In my view, that is
ridiculous.
What is your remedy to that?
Dr. AGRAWAL. Thank you.
I think the Medi-Medi program is very important for our
activities. It does, as you pointed out, allow us to exchange
data with the States so that we can, again, find those
providers and schemes that are crossing the line between
Medicare and Medicaid and kind of committing schemes against us
all.
Expansion is an important element of that, and we have been
working to expand the numbers of States that participate in
Medi-Medi. This is, I would just point out, a voluntary
program, and there are a number of other data exchange
activities that the States are engaged in.
We have heard consistently from them that, while they would
in some cases value participation, they have to weigh that
against other priorities and data exchanges that they have.
So we are very open to more expansion, have actually added
more States since that figure of 10. And I could get you a more
updated number.
Mr. ROSKAM. So the next time we meet in a hearing setting
so that you can claim those superlatives that I admonished you
from using before, what is your plan in terms of the Medi-Medi
goal?
Let's say you are back in a hearing in 6 months. There are
currently 10 states that are participating. What is reasonable
for us to assume. I am not asking pipe dreams.
What is a reasonable number for you to coax, cajole, urge
States to participate if only 20 percent of the Nation is
participating now?
Dr. AGRAWAL. I am not sure that I could give you a specific
number----
Mr. ROSKAM. Sure you can.
Dr. AGRAWAL [continuing]. That would--you know, to kind
of--for a followup hearing.
I think what is important to note is that Medi-Medi is just
one of the many activities that we perform with the States.
We also collaborate with them in the Medicaid Integrity
Institute, which is all about best practice and knowledge-
sharing.
We work with them on specific cases that might fall out of
the Medi-Medi context, but are active investigations either
that we have initiated or that they have.
So I am not sure that participation alone in Medi-Medi is
the best measure of how well that----
Mr. ROSKAM. Yeah. But it would help. I mean, my Home State
of Illinois just paid out $12 million to people who are dead.
Dr. AGRAWAL. Yes, sir. I--I also am aware of that.
Do you--I think I go back to the answer that I had about
Medi-Medi. If you are asking specifically about Illinois, I
could certainly look into what activities we have with them.
Mr. ROSKAM. So here is my question: If only 10 States are
participating and we are losing $75 billion a year, according
to the FBI, doesn't it follow that, if we had every State
participating, that this gets better? And don't you play a key
role in whether every State participates or not? Am I over-
characterizing this?
Dr. AGRAWAL. I think it is fair to say we, too, want more
States to participate. I think----
Mr. ROSKAM. What is your plan to have that happen? That is
my question.
Dr. AGRAWAL. So we have lots of outreach activities with
the States to let them know about the existence of the program,
to indicate the sort of portion of the Medi-Medi budget that we
are willing and able to handle versus what they would need to
undertake, and we engage, you know, with States in numerous
different venues in order to be able to do that.
Again, I believe States are under a lot of pressure to also
produce data for CMS, including the T-MSIS program. So there
will be exchange of data. And I am not sure, again, that Medi-
Medi is the singular kind of measure of that collaboration----
Mr. ROSKAM. But you are not satisfied----
Dr. AGRAWAL [continuing]. Of examples.
Mr. ROSKAM. You are not satisfied with 10 states, are you?
Dr. AGRAWAL. Oh, we always want more states to collaborate.
Mr. ROSKAM. How many more? Next time we meet, how many more
is a reasonable number?
Dr. AGRAWAL. Sir, I am not sure I could give you a
particular number.
Mr. ROSKAM. Okay. Let's switch gears.
Provider legitimacy, this notion of a provider being
illegitimate, losing a licensing, being a hustler and so forth,
being thrown out of a system and, yet, that doesn't sync up
with other systems. There was a ProPublica piece not long ago,
I am sure you are familiar with it.
Could you speak to that?
Dr. AGRAWAL. Sure. And I think that is a great example of
data exchange outside of the Medi-Medi program.
So, for example, as a result of the ACA, Medicaid programs
are now required to share their termination data with CMS, and
we are then able to take relevant action in Medicare, if that
provider is indeed enrolled in Medicare, as well as take a
reciprocal action in other State Medicaid programs.
I think there are very good examples. We have had
compliance in sharing that kind of data increase dramatically
since the beginning of the program. We get a lot more
information from the States in terminations that they are able
to perform.
Now, I would point out licensure decisions are very
different from enrollment in Medicare or Medicaid. Those are
conducted by non-CMS-affiliated bodies. Those are State
licensure boards. They operate very independently of us.
We certainly can take an action if a license is revoked,
but we, as such, have no more authority in that process than
anybody outside the licensure board.
Mr. ROSKAM. Okay. We would love to help you.
I yield back.
Chairman BRADY. Thank you.
Mr. Kind is recognized.
Mr. KIND. Thank you, Mr. Chairman.
I commend you for holding this important hearing. And it is
one that really should be non-partisan and, hopefully, we will
have an opportunity to work in a bipartisan way.
You are never going to find any Member of Congress
defending fraud, waste and abuse, whether it is Medicare or any
other Federal program. But I think we need to approach this in
the proper context.
It is not just Medicare fraud that we are talking about
here. We are talking about system-wide health care fraud, and
Medicare is a subset of that.
I would assume that, if we are detecting fraudulent
practices, fraudulent billing, in Medicare, it is much larger
than that and it involves private payers and those involved in
the health care system.
Is that right, Dr. Agrawal?
Dr. AGRAWAL. Yes. I think that is a very important point.
Part of the reason for the creation of the health care
fraud prevention partnership is this very notion that fraud
crosses the public-private divide, and the fact that private
payers have joined the partnership really does indicate that
they face these challenges, too.
Mr. KIND. And that--the private partnership program right
now, how successful do you think that has been working, the
collaboration with the private sector and the private payers?
And what more do you think could be added to it in order to
enhance its success?
Dr. AGRAWAL. Thank you. I appreciate the question.
It has--the collaboration has been extensive. For example,
next week a number of private payers are going to be coming to
the command center at CPI as part of partnership activities.
We have over 30 partners at this point between private
payers, national health care agencies, and law enforcement
bodies.
We have conducted numerous data exchanges within the
confines of the partnership, specific data exchanges, not just
qualitative data around best practices, though we have done
that as well.
And each of us has then used that data--each participant
has used that data to go and take action wherever appropriate
in our own systems, and CMS has been able to do that. So I
think the partnership has really continued to mature.
Mr. KIND. Mr. Roskam did point out some startling numbers
as far as trend lines, from $48 billion to $75 billion or so.
But I also sense there is a little bit of the dial being moved
in the right direction as well.
I mean, because of the existing tools now in the Affordable
Care Act and some pre-existing authorities, we have got the
HEAT strike force that has been out there.
I think, since passage of ACA, over $20 billion has been
recouped or recaptured of Medicare fraud, 1,400 individuals
have been charged up and criminal charges are pending against.
So there are some instances that we can point to showing
some progress is made, but, obviously, there is no reason for a
victory lap or satisfaction from any of us here.
My question for you, Doctor, coming from the profession
yourself, we just had a huge CMS physician reimbursement data
dump recently.
Where do you think this is going to lead as far as looking
at over-utilization practices and possible fraudulent
detection?
Dr. AGRAWAL. Thank you.
I think that data release was a very important element of
the administration's overall approach to transparency and
health care data. Since then, we have heard from a lot of
external stakeholders about their use of the data, how they
would like to leverage it.
I think that kind of innovation, you know, among
stakeholders is very important. It also fits into an overall
kind of set of programs that we have at the Center for Program
Integrity.
Another example that we are implementing now is the
Sunshine Act that will allow more transparency into the
financial interactions between industry and physicians. I
think, you know, all of these programs are designed to give
beneficiaries and other stakeholders a view into data.
And one group that we have heard from pretty extensively is
the physician community, especially, for example, in emergency
medicine where physicians have written back to CMS saying,
``Thank you. This is data I did not have before.'' And it would
facilitate their own practice.
Mr. KIND. I think, to be fair to them that was only a small
piece of the information out there. What is lacking in that is
quality measurements, protocols of care, things of that nature,
and the overall success rate and how doctors are practicing
medicine.
But, finally, let me ask with the remaining time, from you,
Doctor--and I would also like to hear Ms. Jarmon and Ms. King's
opinion--we are trying to move the system--the payment system
away from fee-for-service and volume-based--outcome and value-
based. And, obviously, we are seeing a lot of effort in bundled
payments as well.
What are the implications of that new payment model when it
comes to the detection of fraud and how successful? Because,
obviously, under the fee-for-service model, there is a lot of
reporting and a lot of steps that people are being reimbursed
for.
Is this going to make it easier or harder for us to detect
fraud, moving to a more bundled form of payment system or a
value-based system, ultimately?
Dr. AGRAWAL. Yeah. Thank you for that question as well.
I think the movement, obviously, towards value is extremely
important. It is a central tenet of the ACA. And that movement
is important for health care overall.
I think, while I will sort of leave the specifics of new
payment models to the experts at CMS who handle the new payment
models, what I would just want to clarify is that none of the
payment models that are new and innovative preclude us from
performing the activities that we already have in place for
fee-for-service.
We are still able to conduct the medical review that we
conduct. We can still open up investigations and take
appropriate actions whether a provider is participating in just
traditional fee-for-service or one of the newer models.
So we still have and continue to have the same level of
oversight and have the same level of authority. So I think, as
the new systems mature, certainly it will be an opportunity for
all of us to learn more, but the oversight and the controls are
still very much there.
Mr. KIND. Okay. Thank you.
Chairman BRADY. Dr. Price.
Mr. PRICE. Thank you, Mr. Chairman.
And I want to thank the panelists as well. Having practiced
medicine for over 20 years before I got here, I think, as I
mentioned, often we lose sight of the patients in all of this.
We all want to save money. None of us want to have fraud
exist out there, pay for folks that are scamming the system.
But sometimes that money that is taken is taken from folks
who are actually trying to provide care and potentially
destroying the quality health care for seniors.
And so it is important that we have a feedback mechanism to
be able to tell whether or not we are actually doing the right
thing.
Ms. King, there was a GAO report that was released earlier
this month on the competitive bidding program for durable
medical equipment, DME, including home oxygen supply and the
like.
These are services that affect real lives, whether or not
individuals can actually live a comfortable life or whether or
not they live at all. And, again, we all want to hold
contractors accountable.
We are into round 2. Nearly 2 years into round 2, the OIG
found that there were problems and concerns that they had with
round 1 and, yet, CMS went ahead with round 2. GAO said that
was a good idea.
Recently your report said that there was decreased
utilization of durable medical equipment, there was decrease in
suppliers, and no adverse effect to the beneficiaries.
So, you read the top line of that and you jump up and down
and you say, ``Hallelujah. That is a wonderful thing.''
Are you aware of any of the concerns that have been voiced
about this by the COPD--the Chronic Obstructive Pulmonary
Disease Foundation?
Ms. KING. Not specifically the COPD Foundation, but we have
done a considerable amount of work on the implementation of
competitive bidding for DME and----
Mr. PRICE. Did you interview them for your report?
Ms. KING. I don't know, but I can get back to you on that.
Mr. PRICE. How did you decide who you interviewed for your
report?
Ms. KING. We laid out the methodology in our report--and we
have a very transparent methodology--and we contacted a number
of people in the industry and met with them several times. But
I don't recall whether they included the COPD folks.
Mr. PRICE. I don't think you did. I would encourage you to
talk to them. They disagree strenuously with the conclusions
that you have made and the recommendations that you provided.
Did you use data that you had or did you use CMS data in
your evaluation?
Ms. KING. We got claims data from them and did our own
analysis.
Mr. PRICE. Claims data?
Ms. KING. Yes, we did.
Mr. PRICE. No clinical data?
Ms. KING. No. They had clinical data and they set up
areas----
Mr. PRICE. They have claims data. They have claims data.
Right?
Ms. KING. Yeah. And they----
Mr. PRICE. That is what we are looking at, looking at
claims. We are looking at money, which is wise. We need to do
that. But oftentimes we don't look at patients.
Did you ask or did you find out or did your data tell you
whether or not a patient that fell off, wasn't utilizing the
service anymore--whether they needed the service anymore? Could
you tell that?
Ms. KING. CMS did their own beneficiary satisfaction work
and we evaluated that, and in their work they did not find
significant access problems. And we----
Mr. PRICE. That wasn't what I asked.
I asked: Did you ask whether or not patients fall off? Do
they go to self-pay? Do they pay for the service themselves, or
have they been transferred to a nursing home? Is there any way
to know whether they have been transferred into a nursing home
in the data that you used?
Ms. KING. Not that I am aware of.
Mr. PRICE. That is correct.
These are chronic diseases. These are chronic diseases. And
CMS says it only tracks data for 120 days. If you don't have a
current claim within 120 days, they don't care.
You could have gotten the pennies together in your sofa and
paid for the oxygen to keep you alive or you could pull it out
of our pocket or you could go to a nursing home. CMS doesn't
know.
So I would suggest that we have got a long way to go toward
getting the right data when you are talking about quality.
When the Federal Government is defining quality, then
anybody that doesn't do what the Federal Government wants to do
is fraudulent. I would suggest that is not the right place to
define quality.
Let me just touch on--I have got a few more seconds here.
Ms. Jarmon, you mentioned about the in-office ancillary
self-referral increase utilization. You are aware that there
are studies in individuals that have been done that demonstrate
that that is not the case, that there is no increase in
utilization in use of in-office ancillaries.
Are you aware of that?
Ms. JARMON. No. I was not aware of that.
Mr. PRICE. All right. Well, we will get that for you, and
we will be happy to see the change in the next report.
Ms. Jarmon, talking about the number of counties that have
the kind of high incidents of home health outliers, 3,143
counties in the country, 25 counties have the highest
incidents.
Wouldn't we do a whole lot better job if we would just
concentrate on those 25 counties?
Ms. JARMON. When we are doing our work, we do try to focus
on the areas where there is higher risk. So we do try to focus
on those areas in our analysis.
Mr. PRICE. The work wouldn't demonstrate that, though,
because we continue to have that same statistic, that same
statistic, year after year after year. So I would encourage you
to focus where the real problems are.
Thank you, Mr. Chairman.
Chairman BRADY. Thank you.
Mr. Pascrell.
Mr. PASCRELL. Thank you, Mr. Chairman.
I am encouraged that we get some bipartisan support. One
area that has been of particular interest to me is the hip and
knee replacements.
I first became involved in this issue in 2007 when five of
the Nation's biggest makers of artificial hips and knees agreed
to pay $311 million in penalties to settle Federal accusations
that they used so-called consulting agreements, better known as
bribes, and other tactics to get surgeons to use their
products, regardless of the effect of the product.
So this may be the cost of doing business, but it is
serious, because in the next 10 years, if we are going to spend
$65 billion on knee and hip replacements, Medicare and Medicaid
will pick up most of the cost.
So if we are not concerned in this particular issue in
avoiding the debacle that happened just 10 years ago, what are
we?
Strong action needed to be taken, and instead of anyone
going to jail, no one went to jail. Five companies got deferred
prosecution agreements where they simply paid a fine and agreed
to be monitored by private firms.
That is not the subject of what I am going to get into
today, but let me tell you, your hair would stand up. Go back
and read those cases.
I introduced two bills that I believe get at the root of
the issues here.
First is the Accountability and Deferred Prosecution
Agreements Act, which will require the Department of Justice to
establish guidelines for the use of deferred prosecution
agreements. I plan to introduce this bill later this week.
And second is the National Knee and Hip Replacement
Registry Act, which would establish a registry to help identify
failing implants into identified--we are talking about senior
citizens that got shafted over and over again, had to be re-
surged because of what we did not do. Make no mistake. Problems
with faulty joint implants are no means behind us.
Just last year one of the largest medical device companies
agreed to pay $2.5 billion to settle lawsuits filed by
thousands of patients who had to undergo--we are talking mostly
seniors. That is what we are talking about. And in the next 10
years, again, we are going to spend $65 billion.
By the way, do you agree that we should have a registry in
this country so we know who is stealing from other people?
Dr. AGRAWAL. Sir, on the hip and knee registry, you know, I
think we would be open to reviewing the proposal and offering
you any guidance that would be helpful.
I do think that we are aligned in certain other ways
already. I alluded earlier to the Physician Payment Sunshine
Act.
We will be able to see through that program as just one
example of financial interactions between medical device
companies and physicians, and I think that will be a level of
data transparency that is important----
Mr. PASCRELL. Do you believe, Doctor, that collecting
patient data in a registry on knee and hip replacements could
help us to identify ineffective knee and hip devices so that we
can cut down on unnecessary surgery? Do you agree with that or
you don't agree with it? It is a pretty simple question.
Dr. AGRAWAL. I think that we are happy to review any
proposal that comes from this Committee and help you in the
evolution of that proposal.
Mr. PASCRELL. Well, it would seem to me, if you know the
history--and I was trying to give it to you in capsule form,
unfortunately.
Back in 2007--much of it occurred before 2007. And you
folks have not--even though you just came on the job, you folks
have not done anything about this, encouraging anything. This
is a major part of your budget. This is a major part of the
fraud.
It would seem to me that we should be interested in these
kinds of things. Correct?
Dr. AGRAWAL. Yes, sir. I think we are interested. As I have
alluded to a couple of times now, I think the Sunshine Act will
get at this issue as well.
Mr. PASCRELL. Mr. Chairman, I think that, when we speak of
trying to make the system better and when we speak about trying
to save money--because there is tremendous amount of fraud and
the many people who committed the fraud never went to jail.
Okay?
Talk about our system of justice about, when you have a
buck in your pocket, you stay out of jail; when you don't have
a buck, you sure the hell will go to jail.
And one way to stop this is to look at this registry, which
I am talking about here so that one hand knows what the other
is doing. And I think it would reduce health care costs,
period, not only in this area, but also in other areas.
And I yield back. And I thank you.
Chairman BRADY. Thank you, Mr. Pascrell.
Mr. Smith.
Mr. SMITH. Thank you, Mr. Chairman.
And thank you to our witnesses here today for sharing your
insight. It is a tough job out there that I think you are
trying to do.
And it is frustrating from our standpoint. I get especially
frustrated when I hear from providers wanting to do the right
thing and, yet, it is so cumbersome, it is so complex, that
even doing the right thing has become so difficult. And I am
afraid that that is just getting worse.
And we know that Medicare is on an unsustainable path. At
least that is my opinion. And we need to make some changes.
We did hear about the embarrassing situations of improper
payments, Ms. Jarmon.
Any of you, how do these improper payments happen?
What can you tell us is being done to fix this, Dr.
Agrawal?
Dr. AGRAWAL. Sure. One thing I would just want to clarify
is certainly the improper payment rate is a huge focus for the
agency and we are focused on reducing the improper payment
rate. I just want to differentiate that rate from a measure of
fraud.
The improper payment rate is not a true measure of fraud.
It is really more a measure of perhaps waste and abuse. A lot
of the major drivers of the improper payment rate are
insufficient documentation, which is often caused by providers
sometimes not understanding regulatory requirements. But if we
got the documentation that was required, chances are those
claims would have been just fine.
Mr. SMITH. So services for a dead person, how does that
happen?
Dr. AGRAWAL. Yeah. So there are--you know, we utilize----
Mr. SMITH. Would that be fraud or would that be improper
payment?
Dr. AGRAWAL. It could be either. I think, obviously, you
know, establishing fraud depends on establishing intent, and
that really is a law enforcement determination. What we do is
we look at drivers of improper payment and try to go after the
biggest drivers.
With respect to dead beneficiaries or dead providers in
specific, we work very closely with the Social Security
Administration to get information on their Death Master File to
be able to link that information to our own data so that we can
stop claims from being paid for those beneficiaries or to those
providers.
Mr. SMITH. So would you say that current measures are
sufficient? More measures are needed? Lack of enforcement? How
would you sum up what the current situation is or needs to be?
Dr. AGRAWAL. Well, I think, if you were to look at the
improper payment overall, certainly, you know, there is more
that we can do and we are working on various initiatives to
decrease the improper payment rate.
Again, because documentation issues drive a huge portion of
that rate, we are working with providers to educate them on
real documentation requirements.
Some of the other things that drive the rate are medically
necessary services, but being provided in the wrong place. So,
again, that does come down to education and working with
providers.
Mr. SMITH. The wrong place, could you elaborate?
Dr. AGRAWAL. Sure. So there might be a service like a
stress test, for example, that is provided in an inpatient
setting that could be provided in an office or outpatient
setting.
That inpatient claim could potentially lead to an improper
payment, you know, depending on how it was documented and all
that.
But, you know, nobody is contending necessarily that the
service should not have been provided. It should just have been
provided in a more medically reasonable location.
So a lot of that, again, does come down to working with
providers. I take your point very seriously about provider
burden and agree, as a physician myself, that we should do
whatever we can to lower burden as feasible while still meeting
our obligations to protect trust fund dollars and educating
providers as best we can on the front end so mistakes are not
made.
Mr. SMITH. Well, I would also add, as I have in previous
hearings in working on health care issues, especially in rural
America, there are arbitrary regulations that I think might be
intended for greater efficiencies and, yet, the result is the
exact opposite.
And I am afraid patients actually suffer as a result of the
Federal bureaucracy supposedly in the name of striving for
efficiency, but services are worse. I think it is arbitrary and
I would hope that we could have your cooperation as we do move
forward on trying to find some efficiency there.
We know that hardworking taxpayers need protection, so to
speak, and that we have, I think, many options ahead of us,
hopefully, we will pursue that will have the Federal Government
step back instead of step forward and into the lives of so many
patients because I think it is counterproductive.
Thank you. I yield back.
Chairman BRADY. Thank you.
Mr. Gerlach.
Mr. GERLACH. Thank you, Mr. Chairman.
Thank you all for coming and testifying today.
The amount of fraud and abuse in the program is staggering.
We all know that. And I relate it back to just where I am from,
Pennsylvania. The Commonwealth of Pennsylvania State budget is
about $32 billion a year.
So, really, what we are talking about here is fraud and
abuse in one program of the Federal Government that has doubled
the size of the Commonwealth of Pennsylvania's budget each
year. That is staggering.
And I am really concerned that, in the years that I have
been on this Committee and we have had these kinds of hearings,
very little progress has been made to deal with it from the
witness side of things, where the same questions have been
asked by Mr. Johnson year after year after year, why there are
still Social Security numbers on these cards. Still don't have
a solid answer as to what you are doing about it.
And, frankly, not to take it personally, you ought to be
embarrassed. You ought to be embarrassed for the agency you
work for and for the American people. Now, that doesn't mean
you are personally responsible for that. So please don't take
that as a personal slight to any of you.
But it ought to just remind you, as you sit here today, how
important these issues are and how important it is to make
progress on these issues. And I hope a year from now you are
not back testifying and you are giving the same answers to the
same questions and no progress has been made.
A number of us on this Committee--my lead cosponsor, Mr.
Blumenauer, and other Members of this Subcommittee--have
cosponsored H.R. 3024, which will create a smart card program
within the Medicare program to deal with this issue, having
both a provider and the beneficiary have a card without a
Social Security number on it that would be swiped at the time
of the medical transaction to try to reduce fraud and abuse
and, in particular, deal with fraudulent billing, phantom
billing, duplicate billing, dealing with unlawfully present
beneficiaries, dealing with deceased beneficiaries, dealing
with identity theft.
We think this kind of technology, which is already being
used in the Department of Defense to prevent people from
getting access to certain buildings of the department or into
computer systems, being used by perhaps yourselves--I
understand all Federal employees have a Homeland Security
technology card that they use.
Other health care delivery systems around the world are
using smart card technology to deal with waste, fraud and
abuse. Yet, here in the United States we don't have that as
part of our program and we also include the Social Security
numbers on our cards.
So a number of us not only here in the House, but, also, on
a bipartisan, bicameral basis, have sponsored this kind of
legislation to bring smart card technology into the program.
And we have asked GAO--Ms. King, I know you are well aware--we
have asked GAO to do some preliminary background evaluation of
the idea.
Ms. King, can you give us an update as to--the work you are
doing in GAO with this particular idea, where you might be in
that process and when do--what you think there would be a
completion to that so that we can move forward with evaluating
that information from you and then move forward legislatively?
Ms. KING. Yes. Thank you for that question.
At your request and the request of several other Members of
Congress, we are looking at the use of electronic cards in
Medicare, and we are looking at several aspects of that.
We want to try and find out what--the potential benefits
and any limitations, if there are any, with the use of them,
what issues might be involved in the implementation of smart
cards, and we also want to evaluate where they are in use in
other settings. And we hope to finish up that work about the
end of the year.
Mr. GERLACH. Okay. And then will you come back to us with a
report and recommendations relative to the idea?
Ms. KING. We will.
Mr. GERLACH. Okay. Doctor, on that same idea, are you
currently out of your shop looking at the use of digital
technology solutions to more accurately authenticate providers
and beneficiaries at the time of the medical transaction rather
than continuing this pay-and-chase process we have today,
having more front-end verification methods in place, could
include smart card technology, could include other types of
technology, to, again, address this issue?
Dr. AGRAWAL. Yes. Obviously, we do look forward to seeing
GAO's findings. That will certainly help the agency as well.
We did conduct a little while ago a swipe card pilot with
DME ordering. That basically required or allowed providers to
swipe an electronic card at the time of the order being placed
in the office and then a beneficiary taking that card
essentially to a DME supplier to be able to connect the order
in the office to the supply that was actually given.
And I think the outcomes of that program have highlighted,
you know, some of the challenges that might emerge in this
report as well.
Number one; there are obviously some operational
constraints that we should be aware of on the part of the
provider.
I think we have to be very careful in instituting any kind
of alternative technology approach, that we not place too much
of a burden on providers, whether it is a resource burden or
other kind of technology acquisition burden.
Second, I would just highlight or emphasize that, in any
new technology implementation, we not get in the way of the
physician-patient relationship.
This was actually some specific feedback that we got to our
pilot, that certain physicians saw that as an intrusion, having
to swipe a card when they were seeing a patient.
Obviously, beyond that, there are other operational
constraints of implementation, but I would just ask the
Committee to keep these things in mind.
Mr. GERLACH. We will look forward to your information.
Thank you.
Mr. BLUMENAUER. Mr. Chairman, just a point of
clarification, please.
Chairman BRADY. Yes.
Mr. BLUMENAUER. I would note that this particular project
of Mr. Gerlach--he has unfortunately decided that he is not
going to be with us next year. And I am pained with the notion
that we are not going to get a report for 6 months.
Is it possible to get some sort of interim report in the
next few months that could feed back into the work we are doing
here, that we might be able to wrap this up? He has invested
years in this very positive idea. Is there some way that we
could get a little something sooner?
Ms. KING. We are not at the point right now of being able
to tell you what our preliminary findings are, but I think we
will be before the end of the year.
Mr. BLUMENAUER. Yes.
And I am just saying respectfully, because we have a
different timetable here----
Ms. KING. I understand.
Mr. BLUMENAUER [continuing]. If there is some way--even not
a final preliminary, but something that would give guidance
sooner, late in the summer or early in the fall, would make a
big difference.
Chairman BRADY. And, Ms. King, I imagine every one of us
would add our support for that request as well.
All right. Thank you.
Mrs. Black.
Mrs. BLACK. Thank you, Mr. Chairman. And I do sincerely
appreciate the opportunity to participate in this hearing. And
I thank you for your leadership on this issue. This is a very
important issue in understanding the fraud, waste and abuse in
the Medicare program.
Myself and all my colleagues that have spoken here do have
serious concerns about the future of Medicare, the program, and
appreciate viewing some of the recommendations that have been
made by the GAO that has been published in order for CMS to
address some of these fundamental structural changes that are
facing our growing system.
I think it was our colleague, Mr. Roskam, that made mention
of $75 billion. When I think about billions of dollars that
potentially cannot be accounted for, it is a tremendous,
tremendous amount of money. I certainly appreciate the good
work that is done by both the GAOs and the Inspector General as
well.
Just recently I sent a letter to Ms. Tavenner on this very
topic to understand why CMS has not adopted two recommendations
made by GAO to reduce improper payments issued by CMS. One of
them goes back pretty far, and we still don't see that there
has been a resolution on this.
It goes back to a 2007 GAO recommendation that was a
requirement for contractors to develop thresholds for
unexplained increases in billing in order to implement the
controls under an automated payment system.
And prior to issuing these payments under a fee-for-
service, thresholds have not been developed to explain
unexpected increases in billing.
And that seems to me to be one that just ought to jump out
and ought to be one that takes priority to say, ``Why is that
happening?'' and, ``Let's put thresholds there so we can at
least catch that,'' as has already been said by the previous
questioner.
Dr. Agrawal, would you be able to help me understand why
this still has not been put into place?
Dr. AGRAWAL. Sure. So we have the fraud prevention system,
which is a predictive analytics system that allows us to look
at claims in real-time.
One of the models in that system does look at the type of
spike billing that you are talking about, essentially,
significant changes in billing behavior in a relatively brief
period of time.
We also have other models that look at just the absolute
dollars that are going out. So, you know, some that look at the
change and others that just look at high-dollar amounts.
We could perhaps work with the GAO to close that
recommendation, but I do believe we have addressed it.
Mrs. BLACK. Well, if you have, I think it would be a great
idea to work with GAO because it continues to show up, the
recommendations.
Dr. AGRAWAL. Yes, ma'am.
Mrs. BLACK. And if we go all the way back to 2007 and we
see this continue to be a recommendation that hasn't been
closed, then there is a question about why that is.
A lot of money is spent with the GAO in trying to get these
recommendations to you all. Understanding that you are very
busy on administering the program, I think when the
recommendations are given, they need to be taken seriously and
we don't need to see them being open year after year.
I want to go to just one other one. And I am interested in
the recommendation that was made by GAO regarding the home
health agencies with known high rates of improper billing. The
GAO recommended that the CMS conduct post-payment reviews, and
that also seems to have not been done yet.
Can you speak to that?
Dr. AGRAWAL. Yes, ma'am. So we receive regular reports from
our zone program integrity contractors that conduct
investigations against various providers that have, you know,
risen in priority.
Each one of our zone program integrity contractors does
conduct post-pay reviews of home health agencies in their
zones. Again, this perhaps may be a recommendation that we
could close.
In specific, you know, the Committee is aware of the
moratorium that we have implemented in home health services in
a number of different geographies as a result of those
activities and other activities.
As just one example, we have revoked over 100 home health
agencies in just Miami alone in the last year, half of them
after the moratorium was put in place. So home health care is
something that we are closely looking at.
We, in fact, do conduct post-pay audits and payment
suspensions and pre-pay reviews just in alignment with our
other authorities. So I would be happy to work with them to
perhaps close that recommendation.
Mrs. BLACK. Just an observation that--you did talk about
several of these recommendations that you all are trying to
address.
I think that, since you are fairly new with the
organization, the agency, that it might be a good change in
culture to go back and look at these and be able to report back
to this Committee in particular, but to Congress in general, to
let them know that you are taking these recommendations
seriously.
Because, as I say, there is a lot of money that goes into
researching these recommendations and giving them to CMS, and I
would hope that we would have you close those out.
If you are really doing these, let us know. And let us
know, also, how much has been saved. If you can help us to know
that, that is very helpful.
Thank you, Mr. Chairman.
Chairman BRADY. Thank you, Mrs. Black.
And to the witnesses, thank you for being here.
The bipartisan frustration you hear expressed is not
because fraud in Medicare is new. It is not. It is growing as
the program is growing. It, at times, seems super human and
immortal, and it is not. Much of the fraud and abuse we have
seen is preventable.
And so, one, this won't be the last time you are before the
Subcommittee. We are dead serious about both aggressive
oversight to ensure that the recommendations by the Inspector
General and GAO are implemented in a timely way by the agency.
I appreciate your support and commitment to work with us to do
that.
Second, the Subcommittee hopes to develop and advance a
package of legislative bills related to fraud. So if you have
views on the legislation that you heard from the Members today,
I would encourage you to get with them immediately because we
intend to move on the area of fraud.
With that, I would like to thank all of the witnesses for
their testimony today. Appreciate the continued assistance
getting answers to the questions that are asked by our
Committee and Members.
As a reminder, any Member wishing to submit a question for
the record will have 14 days to do so. Any questions that are
submitted, I ask the witnesses to respond in a timely manner.
With that, the Subcommittee is adjourned.
[Whereupon, at 3:35 p.m., the Subcommittee was adjourned.]
[Submissions for the Record follow:]
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