[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
MEDICARE PROGRAM INTEGRITY: SCREENING OUT
ERRORS, FRAUD, AND ABUSE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JUNE 25, 2014
__________
Serial No. 113-156
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois FRANK PALLONE, Jr., New Jersey
JOSEPH R. PITTS, Pennsylvania BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon ANNA G. ESHOO, California
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
PHIL GINGREY, Georgia JIM MATHESON, Utah
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington DORIS O. MATSUI, California
GREGG HARPER, Mississippi DONNA M. CHRISTENSEN, Virgin
LEONARD LANCE, New Jersey Islands
BILL CASSIDY, Louisiana KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland
PETE OLSON, Texas JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia BRUCE L. BRALEY, Iowa
CORY GARDNER, Colorado PETER WELCH, Vermont
MIKE POMPEO, Kansas BEN RAY LUJAN, New Mexico
ADAM KINZINGER, Illinois PAUL TONKO, New York
H. MORGAN GRIFFITH, Virginia JOHN A. YARMUTH, Kentucky
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Oversight and Investigations
TIM MURPHY, Pennsylvania
Chairman
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
Vice Chairman Ranking Member
MARSHA BLACKBURN, Tennessee BRUCE L. BRALEY, Iowa
PHIL GINGREY, Georgia BEN RAY LUJAN, New Mexico
STEVE SCALISE, Louisiana JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
PETE OLSON, Texas KATHY CASTOR, Florida
CORY GARDNER, Colorado PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
BILL JOHNSON, Ohio JOHN A. YARMUTH, Kentucky
BILLY LONG, Missouri GENE GREEN, Texas
RENEE L. ELLMERS, North Carolina HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
C O N T E N T S
----------
Page
Hon. Tim Murphy, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 3
Hon. Diana DeGette, a Representative in Congress from the state
of Colorado, opening statement................................. 4
Hon. Fred Upton, a Representative in Congress from the state of
Michigan, opening statement....................................
Prepared statement........................................... 6
Hon. Henry A. Waxman, a Representative in Congress from the state
of California, opening statement............................... 8
Witnesses
Shantanu Agrawal, M.D., Deputy Administrator and Director, Center
for Program Integrity, Centers for Medicare and Medicaid
Services....................................................... 10
Prepared statement........................................... 12
Answers to submitted questions............................... 105
Gary Cantrell, Deputy Inspector General, Investigations, Office
of Inspector General, Department of Health and Human Services.. 24
Prepared statement........................................... 26
Answers to submitted questions............................... 138
Kathleen M. King, Director, Health Care, U.S. Government
Accountability Office.......................................... 39
Prepared statement........................................... 41
Answers to submitted questions............................... 154
Submitted Material
Subcommittee memorandum.......................................... 96
Department of Health and Human Services memorandum, submitted by
Mrs. Ellmers................................................... 103
MEDICARE PROGRAM INTEGRITY: SCREENING OUT ERRORS, FRAUD, AND ABUSE
----------
WEDNESDAY, JUNE 25, 2014
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:03 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Tim Murphy
(chairman of the subcommittee) presiding.
Members present: Murphy, Burgess, Blackburn, Olson,
Griffith, Johnson, Long, Ellmers, Upton (ex officio), DeGette,
Braley, Schakowsky, Tonko, Green, and Waxman (ex officio).
Staff present: Clay Alspach, Chief Counsel, Health; Gary
Andres, Staff Director; Matt Bravo, Professional Staff Member;
Leighton Brown, Press Assistant; Karen Christian, Chief
Counsel, Oversight; Noelle Clemente, Press Secretary; Brad
Grantz, Policy Coordinator, O&I; Brittany Havens, Legislative
Clerk; Sean Hayes, Deputy Chief Counsel, O&I; Robert Horne,
Professional Staff Member, Health; Emily Newman, Counsel, O&I;
Macey Sevcik, Press Assistant; Alan Slobodin, Deputy Chief
Counsel, Oversight; Josh Trent, Professional Staff Member,
Health; Tom Wilbur, Digital Media Advisor; Peter Bodner,
Democratic Counsel; Brian Cohen, Democratic Staff Director,
Oversight and Investigations, Senior Policy Advisor; Lisa
Goldman, Democratic Counsel; Elizabeth Letter, Democratic Press
Secretary; and Stephen Salsbury, Democratic Investigator.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy. Good morning. I convene this hearing of the
Subcommittee on Oversight and Investigations. Today we will be
revisiting a subject that every member of this committee
believes has gone on for far too long: the fraud, waste, and
abuse rampant in our Medicare program.
Last year the Medicare program helped finance the medical
services of approximately 51 million individuals and in doing
so spent approximately $604 billion. Sadly, a budget that large
makes the program a high target for fraud and abuse. Last year
the Centers for Medicare and Medicaid Services estimated that
improper payments were almost $50 billion. Outside news reports
have also pegged the amount lost to fraud as high as $60
billion. This is a shocking amount of taxpayer money to lose
every year, especially considering that some experts tell us
that we do not even know the full extent of the problem. These
financial losses are simply unacceptable.
To someone unfamiliar with the topic, some of the ways the
government improperly pays out Medicare funding may seem
completely unbelievable. For example, according to the
Department of Health and Human Services Office of Inspector
General, just a few years ago the Federal Government managed to
pay out $23 million in Medicare funding to dead people. One
news story involved an Ohio doctor learning that he was the CEO
of a medical practice only when a reporter called him to ask
about it, and the practice he was allegedly running. Just a
mailbox. Earlier this month news broke about an accusation that
one doctor in California was able to help facilitate
approximately $22 million in inappropriate Medicare payments
for wheelchairs. The economics of this also incentivize abusing
the Medicare program as well. Last year the Department of
Justice issued a release noting that an individual was able to
bill Medicare $6,000 for a wheelchair that cost $900 wholesale.
These are but a few of the more darkly humorous examples.
But this is no laughing matter. Quite frankly, it is a national
outrage.
It is not only the stories or amounts of money that should
shock us all but also the length of time the government has
allowed this to continue. Since 1990, 24 years ago, the
Government Accountability Office has designated the Medicare
program as a high risk for fraud and abuse, a quarter century
of wasted taxpayer dollars. When does it all stop? Think for a
moment about a single company in the private sector that could
lose this much money, year after year. How could they still be
in business today?
We recognize that the administration is attempting to solve
this problem. In the past few years CMS has implemented new
programs to provide enhanced screening for certain categories
of providers. If a provider is servicing an area that typically
is more susceptible to fraud, they may undergo additional
scrutiny. I hope today to hear about how this is working and
the number of fraudulent providers that have been stopped
before they even entered the Medicare system.
Meanwhile, the administration testified before the
Committee on Ways and Means earlier this year on new
collaborations with state governments on ways to combat
fraudsters from moving their Medicare or Medicaid schemes from
one state to another. I hope to also hear an update on this
today.
One of the main problems in the past with Medicare fraud
was that those combatting it often relied on a pay-and-chase
model, that is, pay out claims for Medicare, learn of potential
fraudulent activity, and then try to stop the fraud. Our
government simply must do better. Today I hope to hear about
ways the administration is using new methods to use analytics
to stop fraud before it happens. With the technological
advances that the Medicare program has seen in its lifetime it
simply should be much more difficult for individuals to defraud
the program.
And one of the easiest ways to prevent fraud on the system
and protect Medicare patients is by excluding the bad actors
who have committed crimes in the past, that is, make sure
there's a pre-approved list of providers. Yet, news reports
indicate that doctors who should not be billing Medicare
continue to do so. Earlier this year one news outlet reported
that several doctors who had a lost a medical license were
still able to bill the Medicare program for millions of
dollars.
Committee staff has identified more problems as well. At
least 14 individuals convicted of FDA-related crimes--health
providers that have been debarred by the FDA--do not appear to
be excluded from the Medicare program. Worse, 6 doctors
debarred by the FDA actually were paid over $1 million in
Medicare payments in 2012.
Finally, today I hope we hear about the steps that can be
taken to further combat fraud. GAO has recommended some common
sense steps that would reduce fraud, such as removing social
security numbers from Medicare cards, but CMS has yet to
implement this recommendation.
I want to thank the witnesses for joining us. And by the
way, I also want to note that last night HHS and CMS finally
released their report to Congress on the second implementation
of the fraud prevention system. We are pleased we finally got
this. We hope that these new technologies can yield even
greater returns in the future. And I believe this is a
committee that pushed for this, and we are pleased we finally
got that. Unfortunately, it was last night, so we haven't had a
chance to review it fully. It is 9 months late, and if we are
truly serious about combatting Medicare fraud, we can't have
these delays.
[The prepared statement of Mr. Murphy follows:]
Prepared statement of Hon. Tim Murphy
I convene this hearing of the Subcommittee on Oversight and
Investigations. Today we will be revisiting a subject that I
and every Member of this Committee believe has gone on for far
too long: the fraud, waste, and abuse rampant in our Medicare
program.
Last year the Medicare program helped finance the medical
services of approximately 51 million individuals and in doing
so spent approximately $604 billion. Sadly, a budget that large
makes the program a high target for fraud and abuse. Last year
the Centers for Medicare and Medicaid Services estimated that
improper payments were almost $50 billion. Outside news reports
have also pegged the amount lost to fraud as high as $60
billion. This is a shocking amount of taxpayer money to lose
every year, especially considering that some experts tell us
that we do not even know the full extent of the problem. These
financial losses are simply unacceptable.
To someone unfamiliar with the topic, some of the ways the
government improperly pays out Medicare funding may seem
completely unbelievable. For example, according to the
Department of Health and Human Services Office of Inspector
General, just a few years ago the federal government managed to
pay out $23 million in Medicare funding to dead people. One
news story involved an Ohio doctor learning that he was the CEO
of a medical practice only when a reporter called him to ask
about it; and the ``practice'' that he was allegedly running?
Just a mailbox. Earlier this month news broke about an
accusation that one doctor in California was able to help
facilitate approximately $22 million in inappropriate Medicare
payments for wheelchairs. The economics of this also
incentivize abusing the Medicare program as well-last year the
Department of Justice issued a release noting that an
individual was able to bill Medicare $6,000 for a wheelchair
that cost $900 wholesale. These are but a few of the more
humorous examples. But this is no laughing matter: it should be
a national outrage.
It is not only the stories or amounts of money that should
shock you, but also the length of time the government has
allowed this to continue. Since 1990--24 years ago-the
Government Accountability Office has designated the Medicare
program as a high risk for fraud and abuse. A quarter century
of wasted taxpayer dollars--when does it stop? Think for a
moment about a single company in the private sector that could
lose this much money, year after year, and still be in business
today.
We recognize that the administration is attempting to solve
this problem. In the past few years CMS has implemented new
programs to provide enhanced screening for certain categories
of providers. If a provider is servicing an area that typically
is more susceptible to fraud, they may undergo additional
scrutiny. I hope today to hear about how this is working and
the number of fraudulent providers that have been stopped
before they even entered the Medicare system. Meanwhile, the
administration testified before the Committee on Ways and Means
earlier this year on new collaborations with state governments
on ways to combat fraudsters from moving their Medicare or
Medicaid schemes from one state to another. I hope to also hear
an update on this today.
One of the main problems in the past with Medicare fraud
was that those combatting it often relied on a ``pay and
chase'' model. That is: pay out claims for Medicare, learn of
potentially fraudulent activity, then try to stop the fraud.
Our government simply must do better. Today I hope to hear
about ways the administration is using new methods to use
analytics to stop fraud before it happens--with the
technological advances that the Medicare program has seen in
its lifetime it simply should be much more difficult for
individuals to defraud the program.
And one of the easiest ways to prevent fraud on the system
and protect Medicare patients is by excluding the bad actors
who have committed crimes in the past. Yet, news reports
indicate that doctors who should not be billing Medicare
continue to do so: Earlier this year one news outlet reported
that several doctors who had lost a medical license were still
able to bill the Medicare program for millions of dollars.
Committee staff has identified more problems as well: at least
14 individuals convicted of FDA-related crimes--health
providers that have been debarred by the FDA--do not appear to
be excluded from the Medicare program. Worse, 6 doctors
debarred by the FDA actually were paid over $1 million in
Medicare payments in 2012.
Finally, today I hope we will hear about the steps that can
be taken to further combat fraud. GAO has recommended some
common sense steps that would reduce fraud, such as removing
social security numbers from Medicare cards, but CMS has yet to
implement this recommendation. I would like to thank the
witnesses joining us today-you all have the ability to save the
American taxpayer a massive amount of money, and we hope to
hear from you today on how you plan to do that.
Mr. Murphy. But now I would like to recognize the ranking
member of this committee, Ms. DeGette, for 5 minutes.
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you very much, Mr. Chairman. This is the
third hearing that the committee has had on Medicare fraud in
the last 3 years, and I think it is perfectly appropriate to do
that. Medicare fraud wastes money and endangers the care of
seniors and the disabled. That is why I think we can work in a
bipartisan way, and I am pleased.
We have witnesses today from CMS, the HHS Inspector
General, and the GAO with us. I appreciate all of you joining
us and look forward to hearing your perspective on where we
stand and what we need to do to further reduce Medicare fraud,
waste, and abuse.
The administration has also made some important strides in
this area. The Healthcare Fraud Prevention and Enforcement
Action, or HEAT Teams, a joint effort between HHS and DOJ, have
played a critical role in these efforts. Medicare strike forces
are a key component of HEAT, interagency teams of analysts,
investigators, and prosecutors who can target emerging or
migrating fraud schemes, including fraud by criminals masking
as healthcare providers or suppliers. These efforts have
produced immediate returns. In fiscal year 2012, the government
recovered $4.2 billion in fraud, and from 2009 through 2012, it
has returned a record-breaking $14.9 billion to taxpayers, more
than doubling returns compared to the previous 4 years. CMS has
also implemented many of the new tools provided to the agency
under the Affordable Care Act. These new provisions of law have
marked a dramatic shift in the way CMS fights fraud, moving
from the old pay-and-chase model to the newer and much more
effective approach of keeping fraudulent providers out of the
Medicare system entirely.
New Medicare providers are screened before they are allowed
into the program. Providers in risky programs face additional
scrutiny. CMS has embarked on an ambitious project to
revalidate the enrollments of all existing 1.5 million Medicare
providers and suppliers by 2015. This revalidation effort has
deactivated or revoked almost 200,000 providers so far.
The Affordable Care Act also limits the ability of
fraudulent providers and suppliers to move from state to state
or program to program by requiring all states to terminate
providers whose billing privileges have been revoked by
Medicare or have been terminated by another state Medicaid
program for costs. And the administration has invested in
predictive analytic tools that use algorithms and other
sophisticated information technology to identify potentially
fraudulent behavior. This technology has resulted in leads for
more than 500 new fraud investigations and has provided new
information for more than 500 existing investigations.
Mr. Chairman, this is good news, but we also have some
unfinished work for CMS that we are going to hear from the IG
and GAO about. I am particularly concerned about reports that
Medicare Part C and D plans may not be doing enough to identify
and report fraud. The private Part C and D providers are
popular with many beneficiaries and have become a key and
growing part of Medicare, and that is why we need to make sure
that they are doing as much as traditional Medicare to fight
fraud.
And finally, Mr. Chairman, Congress needs to do our part,
especially when it comes to financial support for the fraud
fighters. Sequestration meant that the CMS program integrity
funding declined in the last 2 years, and the majority staff's
official hearing memo describes how funding cuts for the OIG
will limit the agency's ability to carry out its mission,
forcing staff reductions of over 200 people and forcing the IG
to close over 2,000 investigative complaints and cut Medicare
and Medicaid oversight by 20 percent. So at the same time we
are trying to increase a robust program of oversight, we are
cutting the funding for investigations. Now, I think we can all
agree, this is penny-wise and pound-foolish. There is
bipartisan agreement that we need to do more to wipe out
Medicare fraud, and there is bipartisan agreement that every
dollar spent to reduce fraud brings back more than a dollar in
return.
So we should fix this problem. I know a number of members
on this and other committees have discussed bipartisan fraud
prevention legislation. We should work diligently on that to
give the CMS the tools they need to fight fraud, and we need to
make sure that all of the fraud fighters have the funding they
need to do this important work. And I yield back, Mr. Chairman.
Mr. Murphy. The gentlewoman yields back. I now recognize
the Chairman of the Full Committee, Mr. Upton, for 5 minutes.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well, thank you, Mr. Chairman. I do share my
colleagues' frustration on this issue for sure. It was 24 years
ago when the GAO first announced the Medicare program was a big
high risk for fraud and abuse. The program's financial
sustainability has also been under threat for years. This
committee has routinely, on a bipartisan basis, conducted
oversight of the Medicare program in an effort to eliminate
waste, fraud and abuse. Our goal is to save taxpayer dollars
and strengthen the program. While rooting out waste, fraud, and
abuse cannot alone keep the promise of Medicare, it is an
important step that has the potential to benefit both seniors
as well as taxpayers.
To our witnesses here today, we have got a simple question.
How can the government continue losing tens of billions of
taxpayer dollars every year?
For years, HHS has relied on a pay-and-chase model to
recover Medicare losses, learning far too late that fraudsters
routinely tricked the Federal Government into paying them. But
today there are some predictive methods that can help the
government detect the fraud before the payments go out the
door.
I hope that today's witnesses will do more to make these
tools work.
We should not pay potential fraudsters a dime, let alone
the billions we actually do. All taxpayers, and those relying
on Medicare, deserve better.
Thank you for being here.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
I share my colleagues' frustration on this issue. It was 24
years ago when the Government Accountability Office first
announced the Medicare program was a high risk for fraud and
abuse. The program's financial sustainability has also been
under threat for years. This committee has routinely conducted
oversight of the Medicare program in an effort to eliminate
waste, fraud, and abuse. Our goal is to save taxpayer dollars
and strengthen the program. While rooting out waste, fraud, and
abuse cannot alone keep the promise of Medicare, it is an
important step that has the potential to benefit both seniors
and taxpayers.
To our witnesses here today, we have a simple question: How
can the government continue losing tens of billions of taxpayer
dollars every year?
For years, the Department of Health and Human Services has
relied on a pay-and-chase model to recover Medicare losses,
learning far too late that fraudsters routinely tricked the
federal government into paying them. But today there are some
predictive methods that can help the government detect the
fraud before the payments go out the door. I hope that today's
witnesses will do more to make these tools work. We should not
pay potential fraudsters a dime, let alone the billions we
actually do. All taxpayers, and those relying on the Medicare
program, deserve better.
To our witnesses here today: thank you for being here. I
realize that bad actors will always be present. But we need to
do better. I hope that today we can have a productive
discussion about how we can finally move to a fraud-free
Medicare system.
Mr. Upton. I yield now to Dr. Burgess.
Mr. Burgess. I thank the chairman for yielding and, too,
want to welcome our witnesses. I appreciate your being here.
Earlier this year, the CEO of a Texas hospital chain was
indicted for defrauding the government of $18 million. The
money continued to flow from the Center for Medicare and
Medicaid Services despite the hospital's long record of patient
safety violations and billing fraud. Conditions at these
facilities were bad. Patients died. In 2012, regulators moved
to cut off funds, but a few months later, other officials at
the Center for Medicare and Medicaid Services provided well
over $1 million to these hospitals.
This case in Texas raises broader questions about CMS's
ability to prevent improper payments to fraudulent or even
dangerous providers. Providers that are excluded from one
federal program because of improper or illegal conduct can
often continue to be paid by other programs. It is my belief
that providers that have been banned from federal programs for
wrongdoing should be excluded from all federal programs.
Period. The incident in Texas prompted me to work with Chairman
Upton and Mr. Barton. We sent a letter to CMS and the Office of
Inspector General. We asked about the screening of providers
receiving Medicare payments and other types of federal funds.
Dr. Agrawal was kind enough to come into my office to brief me
in response to these letters. They have been very helpful and
informative, but you still can't help but be disappointed to
learn that little progress has been made in this area over
several decades.
Numerous audits have been performed. Recommendations have
been made in ways to improve the system. Through the miracle of
Google you can find these recommendations going back well over
20 years. But 2 decades later, these recommendations continue
to be ignored, and taxpayers continue to lose money. The fact
is that the Center for Medicare and Medicaid Services is not
doing all they can to prevent this type of fraud and abuse of
the system. You have the authority to implement tools to
prevent abuse. Yet, you have not done so. We are here today to
find out why.
I look forward to hearing from our witnesses today and
yield the balance of the time to the vice chair of the Full
Committee, Ms. Blackburn.
Mrs. Blackburn. Thank you, Dr. Burgess, and I want to
welcome all of you. You have heard us talk about Medicare
fraud, and we know that it is tens of billions of dollars. And
it seems like it continues despite RAC audits and ZPICS and
CERTS and the additional authorities that you all at CMS have
been given, and we still have a permissive approach that allows
providers with questionable backgrounds to continue to bill
taxpayers. We have heard about doctors enrolled in Medicare who
have been convicted of crimes. We have heard about companies
that have been found guilty of fraud that are continuing to
benefit. They rename themselves. They stay in the process.
People are sick of this. And what we want to hear from you
today is what are you going to do about it? If you can't clean
it up, let me tell you what. We are going to clean it up. But
this is something that just absolutely has to stop. It is not
your money. It is not the Federal Government's money. It is the
money of the taxpayer and they are fed up with the inept
attitudes and approaches that are coming out of some of these
agencies.
So we thank you for being here. We are concerned about the
persistence of this issue, and we look forward to solving it. I
yield back.
Mr. Murphy. The gentlelady yields back, and now I will
recognize the ranking member of the Full Committee, Mr. Waxman,
for 5 minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Mr. Chairman, I appreciate your holding this
hearing today. I care passionately about the Medicare program,
and I want to make sure that we are doing everything we can to
wipe out fraud. When I was chairman of this committee, we held
hearings and passed legislation as part of the Affordable Care
Act that gave CMS new authorities, new resources and a whole
new approach to reducing fraud.
We are going to hear today about some of the successes of
that new approach. We are also going to hear from Members of
the Congress' outrage if there is any fraud. Well, it is
outrageous to have any fraud, but it is also outrageous for
Members of Congress to say this is outrageous, we are going to
solve the problem, and then not hear a solution.
We are seeing some progress. We have seen increases in
enforcement, recovery for the taxpayers of that money that has
been taken by fraud, and questionable providers have been
kicked out of the program. CMS is using new, predictive
analytics to sniff out and take action against fraud. And I
know the IG and GAO will tell us about the work that CMS still
has left to do, and I expect the agency to take additional
action to fully implement the Affordable Care Act's anti-fraud
provisions and to address other concerns raised by the experts
of these two agencies.
I suppose one of the things the Republicans want to do to
solve this problem is repeal the Affordable Care Act anti-fraud
provisions which they would have done in over 50 times they
have tried to get the Congress to repeal the whole law,
everything.
We should be working in a bipartisan way in Congress to
address anti-fraud funding shortfalls caused by the sequester
and close gaps in Medicare law identified by the administration
and by GAO and by the IG. There is no reason we can't work
together on these issues, unless we just want to use them for
talking points in an election year or the year before the next
election.
But Mr. Chairman, we need to address Medicare waste, fraud,
and abuse. We need to look at all three of these areas, and
probably the biggest source of waste of taxpayer funds in
Medicare are the high prices that Medicare Part D plans pay for
prescription drugs.
Mr. Chairman, last week I wrote a letter to you and
Chairman Upton requesting that the committee hold a hearing on
the implications of the high cost on the Medicare Part D
program of Sovaldi, the new Hepatitis C drug manufactured by
Gilead Pharmaceuticals, and I hope we hold this hearing.
Sovaldi has been hailed as a breakthrough treatment for
individuals suffering from Hepatitis C, but it is costly:
$1,000 per pill, or $84,000 for the entire 12-week course of
treatment. And there are an estimated 350,000 Medicare Part D
beneficiaries with Hepatitis C.
As a result, a recent analysis was done by researchers from
Georgetown University and Kaiser Family Foundation that said
Medicare Part D will be spending $6.5 billion or 8 percent in
2015 for this one drug.
Mr. Chairman, this problem is exacerbated by the fact that
Medicare Part D plans are not able to effectively negotiate for
lower prices for Sovaldi or any other drug. While Gilead
provides substantial discounts on the drug in other countries,
and for the VA and the Medicaid program, these discounts are
not available to Medicare Part D plans.
The result of this inability of Medicare Part D plans to
negotiate for lower drug prices is the waste of hundreds of
billions of taxpayers' dollars. This is a problem we should
solve, at least examine. I hope this committee will hold a
hearing, but I have written a lot of letters asking for
hearings and if it affects the fossil fuel industry, forget
about it. If it affects the pharmaceutical industry, well, they
are big campaign contributors. But we ought to look into this
issue.
We could save money, and we could be doing the Medicare
program a great service and we could be doing people who need
this drug a great service. At least we ought to look at the
problem.
But today's hearing on reducing Medicare fraud is useful.
Let us approach it in a constructive manner. I thank the
witnesses for being here today, and I yield back the balance of
my time.
Mr. Murphy. The gentleman yields back. And I would like to
introduce the witnesses on the panel for today's hearing. Dr.
Shantanu Agrawal. Did I say that correctly?
Dr. Agrawal. That is correct.
Mr. Murphy. Thank you. The Deputy Administrator and
Director of the Center for Program Integrity of the Centers for
Medicare and Medicaid Services. Mr. Gary Cantrell is a Deputy
Inspector General for Investigations, the Office of Inspector
General at the Department of Health and Human Services. Today
Mr. Cantrell is accompanied by Ms. Gloria Jarmon. She is the
Deputy Inspector General for Audit Services in the Office of
Inspector General at the Department of Health and Human
Services. Ms. Kathleen King is the Director of Health Care at
the U.S. Government Accountability Office.
I will now swear in the witnesses. You are aware that the
committee is holding and investigative hearing and when doing
so has the practice of taking testimony under oath. Do any of
you have any objections to testifying under oath?
None of the witnesses have indicated that. So the chair
then advises you that under the rules of the House and the
rules of the committee, you are entitled to be advised by
counsel. Do any of you desire to be advised by counsel during
your testimony today?
All the witnesses decline that. So in that case, would you
all please rise and raise your right hand and I will swear you
in?
[Witnesses sworn.]
Mr. Murphy. Thank you. All of the witnesses said yes, so
you are now under oath and subject to the penalties set forth
in Title 18, Section 1001 of United States Code.
I will ask all of you to give a 5-minute opening statement
summary. Dr. Agrawal, we will begin with you.
STATEMENT OF SHANTANU AGRAWAL, M.D., DEPUTY ADMINISTRATOR AND
DIRECTOR, CENTER FOR PROGRAM INTEGRITY, CENTERS FOR MEDICARE
AND MEDICAID SERVICES; GARY CANTRELL, DEPUTY INSPECTOR GENERAL,
INVESTIGATIONS, OFFICE OF INSPECTOR GENERAL, DEPARTMENT OF
HEALTH AND HUMAN SERVICES; AND KATHLEEN M. KING, DIRECTOR,
HEALTH CARE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
STATEMENT OF SHANTANU AGRAWAL
Dr. Agrawal. Thank you. Chairman Murphy, Ranking Member
DeGette, and members of the committee and subcommittee, thank
you for the invitation to discuss the Centers for Medicare &
Medicaid Services' program integrity efforts. Enhancing program
integrity is a top priority for the administration and an
agency-wide effort at CMS. We share a commitment to protecting
beneficiaries and ensuring taxpayer dollars are spent on
legitimate items and services. I would like to make three major
points in my oral remarks this morning. First, our work in
implementing new provider enrollment and screening standards at
CMS has had significant, tangible program integrity impacts and
moved us firmly towards prevention on these issues.
Second, we recognize that further work remains to improve
our safeguards, and we are taking specific, proactive steps
toward those improvements. And finally, one of our many tools
is our advanced predictive analytic system, the fraud-
prevention system, which has continued to develop and deliver a
positive return on investment in just the second year of
operation. That ROI has been certified by the Office of
Inspector General.
Thanks in part to the authorities and resources provided by
the Affordable Care Act and the Small Business Jobs Act of
2010, CMS is changing the program integrity paradigm toward a
focus on prevention to identify and combat waste, abuse, and
fraud in our system. Our enhanced screening requires certain
categories of providers and suppliers that have historically
posed the higher risk of fraud to undergo greater scrutiny
prior to their enrollment in Medicare.
The Affordable Care Act also required CMS to revalidate all
existing 1.5 million Medicare suppliers and providers under the
new screening requirements. We have real, tangible results from
these efforts to share. Since March 25, 2011, more than 930,000
providers and suppliers have been subject to these new
screening and validation requirements. Over 350,000 providers
and suppliers have had their billing privileges deactivated as
a result of revalidation and other screening efforts, and over
20,000 providers and suppliers have had their billing
privileges entirely revoked. Just since the start of this year,
CMS has revoked over 800 providers for lack of appropriate
licensure. These deactivations and revocations mean these
providers can no longer bill or be paid by Medicare.
Our experiences with provider screening tell us that there
is more work to be done to continue to enhance the screening
process. We already rely on over 200 databases in our current
screening processes, but challenges remain. For example, CMS
has historically relied on Medicare exclusion and GSA debarment
data to identify relevant felony convictions because there is
not a centralized or automated means of obtaining felony
conviction data. Using these databases on an automated basis,
CMS ensures that individuals convicted of healthcare fraud,
related crimes or other conduct that bars them from contracting
with the Federal Government are denied enrollment to Medicare
or swiftly removed from the program as part of our routine
screening and validation.
However, to address the lack of an off-the-shelf solution
for all criminal data, CMS is developing a process to match
enrollment data against numerous public and private data
sources to ensure receipt of timely conviction data.
Additionally, in April 2014, CMS announced that high-risk
providers will now be subject to fingerprint-based background
checks to gain or maintain billing privileges for Medicare.
We are also applying our enrollment and screening processes
more broadly. Just a few weeks ago, CMS issued a final rule to
extend enrollment requirements to Part D which prevents revoked
or excluded providers from prescribing to Medicare
beneficiaries. The same rule also allows us to use data from
the Drug Enforcement Agency to ensure prescribers are
appropriately licensed to prescribe certain drugs and enable
CMS to remove them from Medicare when the DEA has taken an
action against an individual's license.
In addition to enhanced provider screening procedures, CMS
is using private-sector tools and best practices to stop
improper payments of all types. Since June 2012, the fraud
prevention system has applied advanced analytics on all
Medicare fee-for-service claims on a streaming national basis.
In its second year of operations and through over 70 active
models in the system, FPS identified or prevented more than
$210 million in improper Medicare payments, double the previous
year, and resulted in CMS taking action against 938 providers
and suppliers. The tool is part of CMS comprehensive program
integrity strategy. For example, the FPS is used as part of an
agency focus on home health services in South Florida which
includes our screening processes, implementation of an
enrollment moratorium, on-the-ground investigations and
collaboration with law enforcement.
CMS is expanding the use of FPS beyond the initial focus on
identifying potential fraud into the areas of waste and abuse
which we expect to increase future savings. While we have made
significant progress to address areas of vulnerability, we also
know that more work remains to further refine our efforts and
prevent improper payments and fraud in the first place.
I look forward to answering the subcommittee's questions on
how we can improve our commitment to protecting taxpayer and
trust fund dollars while also protecting, I think very
importantly, beneficiaries' access to safe, high-quality care.
Thank you.
[The prepared statement of Dr. Agrawal follows:]
[GRAPHICS NOT AVAILABLE TIFF FORMAT]
Mr. Murphy. Thank you. Mr. Cantrell, you have 5 minutes.
STATEMENT OF GARY CANTRELL
Mr. Cantrell. Good morning, Mr. Chairman, and other
distinguished members of the committee. I am Gary Cantrell,
Deputy IG for Investigations, and I am joined today by my
colleague, Gloria Jarmon, who is Deputy IG for Audit Services.
Thank you for the opportunity to testify about OIG's
efforts to fight fraud, waste and abuse in Medicare and
Medicaid. OIG utilizes a range of tools in this fight including
audits, evaluations, investigations, enforcement authorities
and educational outreach. We focus our resources on areas most
vulnerable to fraud so we obtain the greatest impact from our
work.
OIG works closely with the Department of Justice, CMS, and
other federal and state law enforcement partners to bring those
who commit fraud against our programs to justice. Our Medicare
fraud strike force teams, located in nine cities throughout the
country, exemplify this approach. The OIG and our partners are
committed to fighting and preventing fraud, waste, and abuse.
Our efforts have produced impressive results. In 2013, our
work resulted in record numbers of criminal convictions and
civil actions, and over the last 5 years, we have recovered
more than $19 billion from those defrauding federal healthcare
programs, and our return on investment is over $8 for every
dollar spent. Perhaps even more important, we are seeing strong
indicators of a deterrent effect. When we work together to shed
light on program vulnerabilities, put criminals behind bars and
CMS takes appropriate administrative actions, our efforts are
most successful. We have seen significant declines in Medicare
payments across several program areas in strike force cities
where we focused our efforts.
For example, following federal enforcement and oversight
activities, there have been sustained declines in Medicare
payments for DME, home health, ambulance, and community mental
health centers, or CMHCs. Nationwide, Medicare payments for
CMHCs have decreased by approximately $250 million annually.
Total Medicare payments for ambulance services in Houston
are down approximately 50 percent. Miami area DME payments have
decreased by approximately $100 million annually since the
launch of the strike force. And since 2010, home health
payments have decreased nationally more than $1 billion
annually.
Despite these successes, more needs to be done. Fraud
schemes are constantly evolving and migrating, and some of the
IG's top oversight priorities include the rise in prescription
drug fraud and schemes involving home base services.
Rarely are these schemes perpetrated by one provider
operating independently. There is often a network of
individuals including business owners, patient recruiters,
healthcare practitioners, and sometimes even the patients.
Kickbacks in the form of cash or drugs bind these networks
together.
The federal forfeitures are a valuable tool to help defund
and disrupt illegal activities and can serve as a powerful
deterrent. Empowering OIG to execute forfeiture warrants would
help curb the profitability of healthcare fraud and exert a
deterrent effect. Removing Social Security numbers from
Medicare cards could also protect patient data and disrupt
fraud schemes. The theft of patient and provider data underpins
many of our cases. In a recent case, criminals perpetrated a
$100 million fraud scheme by stealing the identities of doctors
and thousands of patients.
In conclusion, I must note that OIG's mission is challenged
by declining resources at a time when our oversight
responsibilities are growing. OIG is responsible for oversight
of about 25 cents of every federal dollar. However, since 2012,
we have lost 200 employees and expect to reduce our Medicare
and Medicaid oversight by 20 percent by the end of the fiscal
year. Now is not the time to reduce oversight in the face of a
growing and changing program, and OIG is a proven investment.
We would appreciate the committee's support in securing full
funding of OIG's 2015 budget request. And thank you for the
interest and opportunity to testify. We would be happy to
answer any questions.
[The prepared statement of Mr. Cantrell follows:]
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Mr. Murphy. Thank you. Ms. Jarmon, I don't think you have a
statement, do you?
Ms. Jarmon. No.
Mr. Murphy. Ms. King, do you have a statement? Thank you.
You are recognized for 5 minutes.
STATEMENT OF KATHLEEN M. KING
Ms. King. I do. Chairman Murphy, Ranking Member DeGett,e
and members of the subcommittee, 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 background checks for high-risk
providers. These are positive steps.
However, CMS has not completed certain actions authorized
in PPACA which would also be helpful in fighting fraud. It has
not yet published regulations to require additional disclosures
of information regarding actions 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 at-risk
providers, including home health agencies.
With respect to review of claims for payment, Medicare uses
pre-payment review to deny payment for claims that should not
be paid and post-payment review to recover improperly paid
claims. Pre-payment reviews are typically automated edits in
claims processing systems that can prevent payment of improper
claims. Post-payment reviews are those that are made after the
fact and recover payments. We have found some weaknesses in the
use of pre-payment edits and have made a number of
recommendations to CMS to promote the implementation of
effective edits regarding national policies and to encourage
more widespread use of local pre-payment edits by Medicare
administrative contractors.
With respect to post-payment claims 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 reducing the efforts to
reduce improper payments. CMS agreed with our recommendations
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 Contractors, or ZPICS, 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 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 the MACs to report
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, such as smart cards, for Medicare
cards, including potential benefits and 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 needs of its beneficiaries.
I would be happy to answer questions. Thank you.
[The prepared statement of Ms. King follows:]
[GRAPHICS NOT AVAILABLE TIFF FORMAT]
Mr. Murphy. Thank you. I thank all the witnesses. I will
now begin some questions for 5 minutes. Dr. Agrawal, you need
to know whether the agency's actions have been successful in
reducing fraud and abuse, and one way that the agencies examine
the effect on this is by measuring performance as required by
the Government Performance and Results Act of 1993 as amended
by the GPRA Modernization Act. One of CMS's goals is to fight
fraud and work when they've made improper payment. Isn't that
right?
Dr. Agrawal. We are absolutely focused on the improper
payment rate and working to reduce that rate.
Mr. Murphy. And isn't it correct that CMS's target improper
payment rate for Medicare fee for service for fiscal year 2013
was 8.3 percent? Is that about what the target was?
Dr. Agrawal. Yes.
Mr. Murphy. Now, that translates to about $36 billion in
losses. So what I don't understand is why is it acceptable to
have about a $36 billion loss rate that is acceptable?
Dr. Agrawal. I don't think it is about acceptability, sir.
We are focused on the improper payment rate and reducing that
rate as much as feasible.
I will say just two points on the improper payment rate.
One is it is not equivalent to the fraud rate. Improper
payments do not measure the amount of criminal behavior that is
in the Medicare program. That is often an area of confusion I
find among stakeholders. Second, what it really does I think
show, demonstrate, is the ability of providers to follow our
strict payment guidelines and requirements, namely and most
particularly, documentation requirements. So we see for example
areas where the improper payment rate continues to rise, like
certain institutional providers, DME suppliers, home health
services, and we do think----
Mr. Murphy. It went up for 2013 for you to 10.7 percent, I
think.
Dr. Agrawal. Well, I think what we have done is institute a
lot more specific requirements in those areas in order to
reduce fraud, waste and abuse. Those requirements can take time
for providers to catch up with, and what we see is
documentation lags and the improper payment rate goes up.
Mr. Murphy. I guess I am concerned about that you went from
8.5 percent to 10.7 percent which says it is getting worse.
Dr. Agrawal. Again, I think it is an outcome of our more
stringent requirements. I think this shows the balancing act
between trying to be very strong on program integrity which is
really enforced by strong rules and regulations and then those
rules and regulations being difficult for providers to follow.
Mr. Murphy. The bottom line up front, though, is you didn't
meet your goals and it is getting worse.
Dr. Agrawal. Correct. Well, we did not meet our goal, and
we have taken proactive steps to help reverse that trend. One
is we work very closely with providers to help educate them on
our rules to make sure that they are able to follow our rules,
follow our documentation requirements. We have instituted point
audits that allow us to look at specific----
Mr. Murphy. I get all that. I am just saying bottom line
for taxpayers is the amount of money that has been done in
improper payments is greater than the entire budget of the
State of Pennsylvania. So I hope you will improve that.
Let me ask this. I am trying to find ways that can
facilitate you on this because you are probably familiar with
that old quote from the bank robber Willie Sutton why he robbed
banks, and he says because that is where the money is. So with
$600 billion in Medicare spending, that looks like a ripe
target for a lot of people. But the fact that he was convicted
as a bank robber, I believe the way the laws and regulations
are written right now, those types of criminal convictions
wouldn't prevent you from giving someone Medicare payments, am
I correct? They could still slip through the system?
Dr. Agrawal. Certain convictions we can revoke from the
Medicare program for----
Mr. Murphy. Would bank robbery be one of them?
Dr. Agrawal. Felony convictions? So I am no lawyer. I
assume bank robbery is a felony conviction.
Mr. Murphy. A felony conviction.
Dr. Agrawal. If it is a felony conviction, then yes, we can
kick people out of the Medicare program.
Mr. Murphy. I just want to be sure. Mr. Cantrell, would you
know if someone with some felony conviction--we are trying to
improve this. So if it is not there, I would like to know.
Insurance fraud, auto insurance fraud, tax fraud. I believe tax
fraud is still acceptable, that they wouldn't be kicked out of
the program. Do either of you know that?
Mr. Cantrell. As it relates to our exclusion authority?
Mr. Murphy. Yes.
Mr. Cantrell. There are requirements that link it to in
connection with the delivery of a healthcare item or service.
Mr. Murphy. But if it is not healthcare. So if someone was
involved with auto insurance fraud or assault or convicted of
clinical research fraud, if it is not health, right, they can
still be a Medicare provider, am I correct----
Dr. Agrawal. We have----
Mr. Murphy [continuing]. The way the law is currently
written?
Dr. Agrawal. We have very proscribed guidelines for what we
can revoke for. They are four types of felony convictions.
Mr. Murphy. I am trying to help you so----
Dr. Agrawal. These are not----
Mr. Murphy. If you would like it stricter, we need to know
this. So if someone has a history of criminal fraud, criminal
felony behavior, and you can't exclude them, I think one of the
best predictors of future problems is past. And if someone has
a pattern of this, can they still slip through and be a
provider for Medicare?
Dr. Agrawal. Yes, I think the agency agrees with you, sir.
In fact, we have taken steps in the last year to put out a
proposed rule that would actually expand our use of this felony
conviction.
Mr. Murphy. Well, we would like to work with you on that.
Let me ask one other thing. Can someone with a foreign address
or just a box number also be a Medicare provider? Do you go
through and check those records?
Dr. Agrawal. We do check records. We have automated checks
for addresses as well as the ability to conduct on-site visits
to make sure that these are legitimate places of business.
Mr. Murphy. Can someone with a foreign address be a
Medicare provider?
Dr. Agrawal. I would have to check specifically on that,
but I believe the answer is no.
Mr. Murphy. OK. We will find out. Ms. DeGette, you are
recognized for 5 minutes.
Ms. DeGette. Dr. Agrawal, in your testimony you discussed
how taxpayers get a significant return on investments to reduce
Medicare fraud, is that right?
Dr. Agrawal. Yes.
Ms. DeGette. And I have been told for each dollar we spend,
we save more than a dollar. Is that right?
Dr. Agrawal. Yes.
Ms. DeGette. Why is that true?
Dr. Agrawal. Our activities are having impact. I think we
have clearly----
Ms. DeGette. But why for each dollar that we spend do we
save more than a dollar?
Dr. Agrawal. I think our activities have a cumulative
effect, so they can actually prevent dollars from going out the
door in the first place. They have sentinel effects where we
see impact beyond just the specific providers and suppliers
that we are looking at. I think all those things cumulatively
lead to that higher ROI.
Ms. DeGette. It is a systemic issue?
Dr. Agrawal. Correct.
Ms. DeGette. OK. And what are the sources of funds for CMS
program integrity efforts?
Dr. Agrawal. We have a variety of funds. We have both
Medicare and Medicaid funds. We have Small Business Jobs Act
funds that are connected, for example, to the FPS, HCFAC funds.
Ms. DeGette. How much will CMS spend this year on Medicare
and Medicaid program integrity efforts?
Dr. Agrawal. I would have to come back to you with a
specific number. I am not sure about----
Ms. DeGette. I would appreciate it----
Dr. Agrawal [continuing]. The total application----
Ms. DeGette [continuing]. If you would supplement your
response.
Dr. Agrawal. Absolutely.
Ms. DeGette. Do you remember how much you spent in 2012?
Dr. Agrawal. No, ma'am.
Ms. DeGette. OK. Do you know if there has been an increase
or a reduction in funding for fighting fraud over the last 2
years?
Dr. Agrawal. Well, we have experienced between the
sequester and then sort of flat-funding is a general flattening
out of our funding and that has forced us to make certain
budgetary decisions about what programs and tools to focus on.
Ms. DeGette. Now, you mentioned the layoffs, and I talked
about that in my opening statement. What other programmatic
adjustments have you made?
Dr. Agrawal. Well, I might just point out that the layoffs
most significantly impacted the Office of Inspector General----
Ms. DeGette. OK.
Dr. Agrawal [continuing]. Which we take seriously obviously
as well.
Ms. DeGette. So Mr. Cantrell, maybe you can answer that.
Mr. Cantrell. Sure. Our budget is primarily funded--our
healthcare oversight is primarily funded by the Healthcare
Fraud and Abuse Control Act, and that fund is--we get about
$300 million a year. But with sequestration, it takes about $14
million out of that healthcare oversight fund. We have another
funding stream that we call our discretionary fund that funds
all of our other activity related to the Department of Health
and Human Services but not the Medicare and Medicaid programs.
Ms. DeGette. Have you made programmatic adjustments to
account for the budget cuts or have you just laid people off?
Mr. Cantrell. We haven't laid people off. We have lost
people through attrition.
Ms. DeGette. OK.
Mr. Cantrell. We have reduced investments in things like
training, equipment----
Ms. DeGette. Now you have fewer people doing the job.
Mr. Cantrell. That is correct.
Ms. DeGette. Right?
Mr. Cantrell. That is correct.
Ms. DeGette. So are you trying to make them figure out how
to do the job more efficiently?
Mr. Cantrell. We do. We are trying to focus our work on the
areas where we can have the greatest impact. So the biggest
thing we are doing is picking our work. There is much more work
in this program than we have the ability to do. So we are being
very strategic about the work that we select, and placing our
resources in areas where they can have the greatest impact is
our strategy here.
Ms. DeGette. So this is really a situation. If we
adequately funded you, then you could actually do more
investigations and pick more cases, correct?
Mr. Cantrell. Absolutely.
Ms. DeGette. Now, for either one of you who knows the
answer to this, while we have been having a slight reduction in
the funding, at the same time, the Medicare population has
increased and Medicare expenditures have increased. Is that
correct, Dr. Agrawal?
Dr. Agrawal. That is correct.
Ms. DeGette. You know, Mr. Chairman, I think that there are
some things you can do by efficiencies and by being smart and
so on. But when you cut $30 million from CMS's integrity
efforts, I am not sure how much you can make up for that.
Dr. Agrawal, the administration has asked for significant
increase in program integrity funding for fiscal year 2015,
over $400 million. Is that correct?
Dr. Agrawal. Yes.
Ms. DeGette. And what would you do with that funding?
Dr. Agrawal. That funding would really allow us to expand
programs that we know have impact. As an example, our prior
authorization demo could be expanded nationally into program
areas that it doesn't currently cover. We know that that could
have impact.
Ms. DeGette. Do you think that would assist you?
Dr. Agrawal. Absolutely.
Ms. DeGette. Perhaps you can also add to your supplement,
to your testimony, some of the things, some of your plans for
this money if Congress appropriates the money.
Dr. Agrawal. I will do that.
Ms. DeGette. OK. Thanks. Mr. Cantrell, let us see, what
would you be able to do with the funding if we adequately
funded your agency?
Mr. Cantrell. Well, first we would hire more investigators,
auditors, evaluators, attorneys to support the work that we are
doing and actually have more boots on the grounds performing
this type of oversight work. We also need investments in
technology. As we deploy electronic health record systems
throughout the country and that becomes a greater adoption of
EHR, that creates digital evidence that we have to collect,
store, maintain and sort through. So we need investments in
technology to maintain, to kind of stay above water here in
this area that continues to evolve.
Ms. DeGette. Thank you. Thank you, Mr. Chairman. I yield
back.
Mr. Murphy. Thank you. Now I recognize Mr. Burgess, or Dr.
Burgess, for 5 minutes.
Mr. Burgess. Thank you, Mr. Chairman. So again, I
appreciate everyone being here this morning. If I understood
your testimony correct, we are doing a great job. If you just
give us a little bit more money, we will do a better job, and
yet the problem continues. Year after year after year we are
here having these same hearings.
Let me just ask--I have got questions that I must ask, but
at the same time, I feel obligated to make the statement that,
yes, I supported the sequester. It was a policy that I
supported, but it was the President who signed it into law.
Now, we all knew after the President signed it into law that it
was going to affect the Department of Health and Human Services
significantly at a time when the President's healthcare law was
being implemented. So I had asked repeatedly for someone, the
Secretary of HHS, to come to this committee and talk about how
you were going to deal with an 8- to 10-percent reduction in
across-the-board funding, how were you going to prioritize. I
would think, Mr. Cantrell, you would prioritize your
department. I don't know why you would prioritize money going
to build an exchange that you then had to reinvest when they
didn't build the exchange the right way. But I am not the head
of HHS, so I don't make those decisions. So please forgive me
if I am a little bit circumspect about people coming in here
and saying more money for my agency, more money for my agency,
when my God, you have wasted so much money in that agency in
the last 4 years that it is just absolutely astounding.
Now, let us get to the reason why we are here. Mr.
Cantrell, do you have recommendations, your office, the Office
of Inspector General, have recommendations and have you made
recommendations to the Centers for Medicare and Medicaid
Services relating to improvements in the screening of providers
that have not been adopted?
Ms. Jarmon. I can answer that question. We have several
recommendations. In fact, we posted in March 2014 a compendium
of priority recommendations that are unimplemented, and that
has over 100 recommendations to CMS, many related to Medicare
and Medicaid payment and process issues and some related to
quality of care. So we do have several recommendations that we
have been working with CMS, and they have been unimplemented
but----
Mr. Burgess. Let me just ask----
Ms. Jarmon [continuing]. We are still working with them.
Mr. Burgess [continuing]. The question, Dr. Agrawal or Mr.
Cantrell. What is the status of the implementations of those
recommendations from the Office of Inspector General?
Dr. Agrawal. You know, we have appreciated the
recommendations that are provided to us, both by the OIG as
well as GAO. We work diligently to implement those
recommendations based on our ability to do so, and budgetary
and other resource constraints.
Since January 2013, we have completed or closed out over 60
recommendations provided to us by GAO and OIG. We continue to
work through the remaining recommendations in order of priority
based on their potential impact on our program. But we do
appreciate those recommendations.
Mr. Burgess. Will you provide to the committee a list of
those recommendations that have been made which have not yet
been implemented? Are you able to do that?
Dr. Agrawal. I can do that.
Mr. Burgess. And the committee would appreciate that
information.
There was an article in Bloomberg not too terribly long ago
talking about doctors who have lost their licenses and
continued to get paid by Medicare. I mean, I always lived in
fear--as a practicing physician, I always lived in fear of
getting a bad mark at the National Practitioner Data Bank. I
would assume that all of these doctors have recorded activity
in the National Practitioner Data Banks. Dr. Agrawal, do you
query the National Practitioner Data Bank when you authorize or
when you permit someone to bill the Medicare system?
Dr. Agrawal. Yes. And I share your feelings about my
medical license as well, Dr. Burgess. It is something that I
guard very carefully and want to make sure is untarnished.
We access a lot of different data sources including the
NPDB and over 200 other data sources to check things like
licensure. As I said in my opening remarks, we revoked over 800
providers just since the beginning of this year for licensure
issues. This was an area of vulnerability for us, even a couple
of years ago, that we have really worked hard to close by
getting access to all the right data at the state level so that
we can do automated checks on licenses literally every week and
revoke any providers that don't have appropriate licensure.
Mr. Burgess. You know, a lot of the substance of this
hearing came about because of the local article in the
newspaper back home where you had a doctor, a CEO of a hospital
chain, who had received $17 million from the stimulus to
improve medical records in his system. And then it was found
that the medical records were boxed up and sitting in the
basement being eaten by rodents. So I guess you would classify
that as meaningless use of health information technology. But
yet, at the same time, with this bad and egregious an offense,
he continues to get paid by CMS. Is this just a one-off or are
there other such stories out there in the country?
Dr. Agrawal. I think it is a notable case. It is one that I
know well personally. I can tell you that we have a lot of
checks in place to ensure that that kind of thing does not
happen both before payments are made and after.
Mr. Burgess. But it did happen.
Dr. Agrawal. I agree that it did. I think in part this
person was providing misleading information to the agency, and
we were also made aware about law enforcement concerns well
into their process. And I think OIG would agree here that early
collaboration between our agencies is very helpful. That allows
us to take the actions that we can take very quickly, and we
can work with law enforcement to facilitate their actions as
well.
Mr. Burgess. Then do it.
Mr. Murphy. Thank you.
Mr. Burgess. Early collaboration is the key. I yield back,
Mr. Chairman.
Mr. Murphy. Just a quick question. When you are getting
that clarifying data for the committee with regard to
recommendations you have made that have not been implemented,
if they have not been implemented, could you let us, with each
one, explain some reason of why that is, if it is some federal
action, if there is any state action, if states are not sending
you data. That is extremely important. We want to help you, but
we need to have that thorough report.
I now recognize the gentleman from Texas, Mr. Green, for 5
minutes.
Mr. Green. Thank you, Mr. Chairman, and ranking member. Dr.
Agrawal, can you tell me more about how the Affordable Care Act
helps CMS in fighting Medicare fraud? Specifically, can you
expand a little on CMS's provider enrollment and screening
process?
Dr. Agrawal. Absolutely, and thank you for the question.
The Affordable Care Act has had significant impact on our
ability to safeguard the program and particularly in the area
of provider enrollment and screening. The ACA really required
us to, for the first time, categorize providers based on the
risk of fraud and subject higher risk providers to greater
levels of scrutiny. That includes automated checks, site
visits, fingerprinting. All of that was made possible by the
Affordable Care Act.
In addition, our moratorium authority, our requirement to
revalidate all providers on a cyclic basis, again, comes out of
the ACA.
Mr. Green. OK. I appreciate it because some of the savings
from the ACA was actually giving CMS the tools to go after the
fraud. We would prefer not to read it on the front page of the
papers before we can get to you.
The health reform bill includes the authority for CMS enact
moratorium on enrolling new providers. Has CMS used this new
tool yet?
Dr. Agrawal. We have. So we implemented the first moratoria
last summer in July. We have moratoria in two different
provider categories, ambulance services, and home health
services in seven different metropolitan areas and are closely
monitoring the impact of that moratorium.
I should also say while the moratorium is in place, we have
really stepped up our activities to make sure that we are
taking action on the providers that are already in the
moratoria area.
Mr. Green. OK. Good. Because I represent the Houston area,
and it seems like we are ground zero for some of the fraud, and
I appreciate that. How does the moratorium help fight the
fraud?
Dr. Agrawal. Well, what the moratoria really allows us to
do is essentially close the door for enrollment, in this case,
for new ambulance services as in Houston or home health
agencies in other parts of the country. That gives us an
opportunity to clean up the providers or suppliers that are
already there and work very closely with law enforcement. We
actually work very closely with them in identifying these areas
for the moratoria and then in the stepped-up activities to make
sure that we are cleaning up those areas before eliminating the
moratoria.
Mr. Green. OK. The Affordable Care Act required Medicare
providers to report and return overpayments once they are
identified. Failing to do so would constitute a federal crime
under the False Claims Act. Was this requirement necessary and
have you seen evidence of providers complying with this
requirement and is it being enforced?
Dr. Agrawal. I am sorry, Mr. Congressman. I missed the
beginning part of your question.
Mr. Green. The Affordable Care Act required Medicare
providers to report and return overpayments once they are
identified, and failing to return those payments would
constitute a federal crime under the False Claims Act. I was
wondering if this is being enforced and how it is working.
Dr. Agrawal. Yes, we published a proposed rule on this, and
we are looking to finalize that. We do see providers actually
taking just the statutory authority seriously itself and
actually returning overpayments voluntarily. We have also
promulgated another proposed rule that would actually have
overpayments follow providers if they try to close down one
location and open up another one. They will have to pay the
overpayment before they can get into the program again.
Mr. Green. OK. Ms. King, do you have a view on how CMS is
doing at implementing the broad range of new Affordable Care
Act anti-fraud positions? And after you, I would like to give
Dr. Agrawal a chance to respond.
Ms. King. Yes, we view the new provisions in the Affordable
Care Act as a positive step because we are in favor of keeping
people out of the program who shouldn't be in the program, and
right now our investigative team has work under way to
determine whether people are being kept out of the program as
they should be and whether people who have committed bad acts
and should be thrown out of the program are being thrown out.
And we should be able to report on that by the end of the year.
Mr. Green. OK. Thank you. Dr. Agrawal, do you have a
comment on that, how CMS is doing with the GAO?
Dr. Agrawal. Sure. And again, I appreciate Ms. King's
comments and agree that their recommendations are very
important. We have done a lot based on their recommendations to
strengthen our program in Part D, in basic provider enrollment
and screening. There are other recommendations that we continue
to work through, but they are very helpful to us.
Mr. Green. OK. Thank you, Mr. Chairman. I yield back.
Mr. Murphy. Thank you. Now I recognize Ms. Blackburn for 5
minutes.
Mrs. Blackburn. Thank you, Mr. Chairman. Dr. Agrawal, I
want to come to you. You mentioned in your testimony that since
2011, 20,000 providers and suppliers had their participation in
Medicare revoked and some from felony convictions and some from
administrative actions. And also, you mentioned that CMS has
issued a proposed rule that would clarify the list of felony
convictions that may result in a denial of participation. And
yet, I have heard from constituents that some of these bad
actors that are out there continue to do business because they
change their names and they start a new business. But it is the
same bad group of people. And we have seen this time and again,
and I know the chairman, a couple of years ago, had a piece of
legislation that went through judiciary, didn't get very far at
the time. We need to bring it back. It would say if you have
ever been convicted, you can in no way participate and benefit.
GAO has recommended that CMS could potentially thwart this
type of behavior by strengthening enrollment procedures as is
currently authorized, and CMS could require additional
disclosure information on the front end. And yet, according to
GAO, it hasn't been done. My question to you is this. After 20
years after being on a fraud high-risk list, when can the
taxpayers expect to see results from some common-sense activity
in this arena?
Dr. Agrawal. Well, I think we clearly are seeing results,
and I think you saw that in the testimony that I provided to
the committee this morning that there are clear results of our
activities. Now, I, too, am frustrated by the kind of case that
you are identifying. If there are cases like that specific ones
that we can work on with your office, I would be happy to do
that.
Let me just say that we are working toward strengthening
disclosure requirements. We actually have a proposed rule that
would require far more disclosure to resolve issues just like
that so that we can actually prevent people from entering the
program that are just changing names and switching from company
to company. I think that kind of approach is indeed very
frustrating, and we are working to expand our authorities to
get greater clarity.
Mrs. Blackburn. Well, you are not giving me the granular
level that I am seeking. Tell me specifically what you are
going to do because when I talk to my constituents, they say we
want to know specifically what is going to be done about this.
It is our money, and you are wasting it.
Dr. Agrawal. Well, beyond the overall approach that I have
described, there are two things that I think will affect the
situation. One is we are expanding our ability to actually
revoke or deny enrollment for a broader list of felony
convictions than we currently are authorized to do, and second,
we are requiring greater transparency at the time of attempted
enrollment so that if there are overpayments from other
enrollments that that provider had, we can actually deny
enrollment until those overpayments are recovered. Those are
two very specific things that I think will go directly at the
cases that you are talking about.
Mrs. Blackburn. But why did we let them in the program in
the first place?
Dr. Agrawal. Well, again, historically, I think Medicare
has had a more open enrollment process than it has had since
the passage of the Affordable Care Act. So we are working very
diligently every day to clean up those records and hence, the
numbers that you have seen of over 300,000 deactivations and
over 20,000 revocations ----
Mrs. Blackburn. OK. Does CMS give bonuses?
Dr. Agrawal. Pardon me?
Mrs. Blackburn. Does CMS give performance bonuses to
employees?
Dr. Agrawal. I am not sure. I don't really manage our HR
function. I don't know what kind of bonuses----
Mrs. Blackburn. Do you get a performance bonus?
Dr. Agrawal [continuing]. That we do. I joined the agency
in this role 3 \1/2\ months ago.
Mrs. Blackburn. OK.
Dr. Agrawal. I haven't qualified for bonuses.
Mrs. Blackburn. Mr. Cantrell, did you get a performance
bonus?
Mr. Cantrell. We do pay performance bonuses in OIG based on
our ranking of record.
Mrs. Blackburn. OK. Ms. Jarmon, HHS, do they do performance
bonuses?
Ms. Jarmon. I am in the same office with Mr. Cantrell.
There are performance bonuses based on performance.
Mrs. Blackburn. OK. All right. Let me come back, Mr.
Cantrell and then also--let me talk to you about this issue. I
have got a prop back here.
[Chart shown.]
Mrs. Blackburn. Identity theft and privacy is a huge issue,
and this is something we have tried repeatedly to get cleaned
up. This is a copy of a Medicare card. Now, what we have that
is a problem with identity theft, you have got the program, the
health insurance program it is in, Medicare. You have got the
name. And this Medicare claim number is the Social Security
number. When are you going to delink these and make certain
that a Social Security and a name do not appear on this card?
When are you going to change that?
Dr. Agrawal. I think you are probably asking me, not Mr.
Cantrell. So we have----
Mrs. Blackburn. I am sorry. I thought I called for you and
then I would like to know from Ms. King, has GAO recommended
doing this?
Ms. King. We have.
Mrs. Blackburn. OK. Back to you, Doctor.
Dr. Agrawal. So this is an area----
Mrs. Blackburn. Why not?
Dr. Agrawal [continuing]. We have looked at. We have
appreciated the recommendations. We are not, as an agency,
opposed to the idea. It is, however, a challenging idea that
requires a lot of sort of rigor to implement----
Mrs. Blackburn. Do something. Take an action. Be brave.
Dr. Agrawal. I think we need to be adequately resourced----
Mrs. Blackburn. I yield back.
Dr. Agrawal [continuing]. By the Congress to be able to do
that. But yes, we appreciate the ability.
Mr. Murphy. Dr. Agrawal, do you have the authority to make
that decision to eliminate the Social Security number from the
cards?
Dr. Agrawal. I think we as an agency could do that. Again,
however, as we have discussed this with the GAO, making this
change would require changes to over 70 systems that CMS has.
It would also require changes to state Medicaid agency systems,
private insurers that deal with us in Part C and D as well as
even potentially on the provider side. So there is quite a bit
of burden across the healthcare community to make this change.
Again, we are not opposed to it. I think as an agency we just
need to be adequately resourced to be able to take on that
challenge.
Mr. Murphy. Just don't hire the same company that did the
Obamacare rollout. You can do better. Ms. Schakowsky first.
Ms. Schakowsky. I would like to talk a little bit about
fraud and the Medicare Part D program. Dr. Agrawal, CNS
released a Medicare Part D proposed rule in January of 2005.
What steps did that rule take to reduce fraud in Medicare Part
D?
Dr. Agrawal. So just to clarify, this is the rule that we
finalized now 3 weeks ago, or roughly 3 weeks ago, is that
correct?
Ms. Schakowsky. Yes.
Dr. Agrawal. Yes. I think that rule is going to have really
important impact for us in Part D. One thing is it extends our
controls and safeguards in Parts A and B to Part D. It will
actually require an enrollment of providers in the Medicare
program to--even if all they do is prescribe in the Part D
program. So we will have much more transparency into who those
providers are, and I think importantly, we can keep revoked and
excluded providers out of the Part D program so they can no
longer prescribe.
A second big impact is that it will allow us for the first
time to go after abusive prescribing. So this will be not just
those prescribers that have actually committed fraud but will
allow us to go upstream of the problem and actually be much
more preventive to make sure that prescribers that are
endangering the safety and health of our beneficiaries, for
example, can be taken action against and we can actually kick
them out of the program.
Ms. Schakowsky. So it is a financial issue, but also a
health issue for a patient?
Dr. Agrawal. Absolutely.
Ms. Schakowsky. OK. So I appreciate these steps. Fraud in
Part D appears to be a problem that is increasing, and it is
important that CMS act quickly to nip this fraud in the bud.
Mr. Chairman, fraud is not the only problem with Medicare
Part D. Waste and abuse is also a problem. In particular,
taxpayers and beneficiaries are forced to pay too much for
prescription drugs because Medicare Part D plans are not able
to negotiate for lower prices. The poster child for high
Medicare Part D prices will soon be Sovaldi, which Mr. Waxman
was talking about, the Hepatitis C drug manufactured by Gilead.
The company charges $84,000 for a course of treatment. A recent
analysis by researchers from Georgetown University and the
Kaiser Family Foundation found that Medicare Part D coverage
for Sovaldi alone would increase Medicare drug spending by $6.5
billion, or 8 percent, in 2015 which is an astounding amount of
money for one drug. While Gilead provides substantial discounts
on this same drug in other countries and for the VA and the
Medicaid program, these discounts are not available to Medicare
Part D plans. According to the studies' authors, ``It is likely
to be hard for Part D plans to have an impact on the price in
the case of Sovaldi. Part D sponsors have little negotiating
power.''
Mr. Chairman, Sovaldi is not unique. Part D plans are not
able to obtain significant discounts on many expensive drugs.
So Mr. Cantrell, the Inspector General has conducted analyses
of Part D drug prices and compared prices charged for the same
drugs on Medicaid. Can you tell us what those investigations
have found?
Mr. Cantrell. I can tell you that Part D drug prices are
higher. We are paying more in Medicare than we are in Medicaid,
and our work has come out of the Office of Evaluation and
Inspections and somewhat from the Office of Audit Services. So
I will pass on to Ms. Jarmon.
Ms. Schakowsky. OK.
Ms. Jarmon. One of the things we have looked at are
rebates--the Part D drug prices were higher than Medicaid
prices because Medicaid received higher rebates. Average
rebates for Medicaid drugs were 45 percent of the cost while
average rebates from Part D drugs were only 19 percent of cost.
And in the Compendium of Unimplemented Recommendations, we
actually have several recommendations related to payment
policies, looking at lab costs, and the differences between
Medicare and Medicaid prices for these same services.
Ms. Schakowsky. And how much would the--so you are saying
that there is an administration proposal that would end the
waste and require higher rebates for Part D drugs, is that
right?
Ms. Jarmon. I am not sure if there is a proposal.
Ms. Schakowsky. Dr. Agrawal?
Dr. Agrawal. There is. There is an item in the President's
budget that would put Medicare payments on par with the
Medicaid rebates.
Ms. Schakowsky. And how much would that proposal save
taxpayers?
Dr. Agrawal. I would have to look back at the O Act
estimation. I can get back to you about that.
Ms. Schakowsky. OK. The number I have heard, and you can
confirm it, is about $150 billion would be saved by that one
change.
Dr. Agrawal. Right.
Ms. Schakowsky. And I would certainly support that change.
Thank you, and I yield back.
Mr. Murphy. Thank you. Now I recognize Mr. Olson for 5
minutes.
Mr. Olson. I thank the chair for having this hearing that
is required by our rules. Welcome to all the witnesses. Before
I get to my questions, I want to tell you about what Medicare
fraud looks like back home in Texas 22, in Houston in
particular. These are some stories that have been in local
papers. January 24, 2014, ``Houston medical device supplier
charged with $3.4 million in Medicare fraud.'' February 2, 2
weeks later, Houston psychiatrist indicted for $158 million in
Medicare fraud. February 29, Houston physician arrested in
healthcare fraud conspiracy. In that case, CMS missed the fact
that one person had been tested 1,000 times and billed those
tests over a 3-year period. April 3 of 2014: ``Houston
businesswoman convicted of $1.5 million in Medicare fraud.''
April 24, 3 weeks later: ``$70 million alleged healthcare scam
busted in Texas.'' And finally, June 4 of 2014: ``Houston
physician and four others indicted for $2.9 million in
healthcare fraud in state and federal case.'' That is 6 months
and $200 million in fraud in Houston. And that is what we have
known. That is what has been charged, what has been put in the
press. We know that it is much, much worse in Houston and all
across America.
One area of abuse is billing Medicare for ambulance
services that aren't given or provided or needed. As was
mentioned by some of our witnesses, Houston is one of seven
cities in America that have a moratorium on new ambulance
services under Medicare. And I believe, Mr. Cantrell, in your
testimony you said that because of the moratorium, Houston's
costs have gone down 50 percent since 2010. Is that correct?
Mr. Cantrell. I am not linking it directly to the
moratorium, sir, but based on our collective efforts, yes, our
enforcement efforts and administrative efforts.
Mr. Olson. You anticipate my question. So it is not due to
moratorium. It may be due to putting people in jail as opposed
to some sort of combination thereof?
Mr. Cantrell. Absolutely. We think putting people in jail
who commit these crimes is paramount to success in this area.
Mr. Olson. Can you get us that data, separate the
moratorium from actually putting people in jail? Is that
possible?
Mr. Cantrell. We haven't studied that, the impact of the
moratoria. I don't know if Dr. Agrawal----
Mr. Olson. Dr. Agrawal, any possibility of having that
information?
Dr. Agrawal. Well, we are monitoring the certain measures
like utilization and cost in the moratoria area. I think
statistically it is very hard to desegregate all the work that
we are doing from the moratorium alone. In fact, we bring a
package of activities between us and the Office of Inspector
General that allow us to attack these problems head on. The
moratorium is one component. We also have, as you saw the
report, the fraud prevention system enrollment requirements. So
I think all of those things together clearly have impact. It is
very hard to desegregate and say that this is the impact of one
of those things.
Mr. Olson. Do you plan to expand the moratorium?
Dr. Agrawal. Pardon me?
Mr. Olson. Do you--expand the moratorium with the seven
cities, make it go longer?
Dr. Agrawal. Well, what we are doing currently, since this
is a new authority and the first time that CMS has really
implemented it, is that we are studying it to see what impact
it does have, making sure that it plays a useful role in our
toolbox and that it allows us to take action against providers
that are already in those areas.
So until we know the answers to those questions I think,
given that it has a real impact on even potentially legitimate
providers, we want to be careful about expanding that authority
until we really have a sense of what it does for us.
Mr. Olson. Any idea of when that timeframe will come out
and when you can tell us this is working, we will expand it in
a year, 2 years, 3 years, 4 years?
Dr. Agrawal. Well, we are required by the statute to
publish a federal register notice every 6 months in order to
continue the moratorium or eliminate it or implement new ones.
So we will be looking forward to publishing a notice within the
next month with that decision.
Mr. Olson. So if you expand it to the seven cities
currently involved in the moratorium that you will take more
cities, 12, 14, 15, 20, 25 to see if it is working? It seems to
be working. Costs have gone down 50 percent since 2010. Let us
go forward.
Dr. Agrawal. Yes, again, I think we are very open to using
this authority more. I think we just want to be able to know
what its impact is and make sure that we are not negatively
impacting legitimate providers or beneficiary access to care. I
think that is really paramount for us as an agency.
Mr. Olson. Thank you, and I have 47 seconds left. Mr.
Burgess, would you like my time or----
Mr. Burgess. Yes, let me just ask a question on the
predictive modeling issue. Prior to the passage of the
Affordable Care Act, was there any prohibition on using
predictive modeling?
Dr. Agrawal. Well, sir, in fact the predictive modeling
became a requirement from the Small Business Jobs Act which
preceded the ACA. There was no prohibition. I think what the
Small Business Jobs act really gave us was the necessary
funding to be able to implement this kind of advanced
technology.
Mr. Burgess. But predictive modeling has long been known,
particularly among the credit card agencies. I mean, I don't
know how many years they have used this, but it has been some
time. It is a reliable way to cut down on fraud. One of the
things I have never understood is why CMS has been so slow to
embrace it. I will yield back.
Mr. Murphy. Thank you. I now recognize Mr. Tonko for 5
minutes.
Mr. Tonko. Thank you, Mr. Chair, and welcome to our
panelists. Yesterday the Second Annual Fraud Prevention System
Report to Congress was released which detailed some of the
accomplishments of CMS in the fiscal year 2013 to identify bad
actors and again protect Medicare. If we could just visit those
report findings for a moment, for starters, Dr. Agrawal, can
you just give us a basic description of what the fraud
prevention system is and just how it works?
Dr. Agrawal. Sure. So the fraud prevention system is an
advanced piece of technology. It allows us to perform
predictive analytics and other kinds of analytics on claims in
Medicare as they are streaming through the system in real time.
So the Medicare program sees about 4.5 million claims per day.
This allows us to more quickly and specifically identify those
claims that need to be evaluated by our investigators, and
further develop to see if they represent aberrancies or even
fraud.
Mr. Tonko. And beyond that, are there other things that
enable your office to do that that was not previously
available? Are there new opportunities here with that system?
Dr. Agrawal. Yes. I think the system itself is a great
piece of technology that allows us to, again it would be
impossible for a human being to lay eyes on all 4.5 million
claims per day. The fact that we have an automated system to
pull out those claims and those providers that are really
problematic is an amazing step forward for us.
In addition to that, it allows us to do certain things as
well, like simply deny claims that don't meet payment
requirements, which is an ability that the agency had before
but the FPS allows us to do it more flexibly and quickly.
Mr. Tonko. And what kind of investment has been made by CMS
in the prevention system?
Dr. Agrawal. The Small Business Jobs Act came with about
$100 million of funding for the fraud prevention system that we
have been utilizing in its implementation. You know, as I think
we have pointed out earlier, we implemented the system on a
very rapid timeframe and actually exceeded the expectations of
the statute by going to a national view as opposed to a
regional view which the statute required initially. We have
also shown good progress in the implementation, going from a 3-
to-1 ROI to now this year a 5-to-1 ROI that I would point out
has actually been certified by the Office of Inspector General.
Mr. Tonko. So any expanded opportunities there in terms of
fiscal impact? You see it improving even beyond that?
Dr. Agrawal. Yes. We have undertaken various measures to
increase the value and return of the FPS. We are, for example,
applying it against a wider spectrum of program integrity
issues, actually using it to identify providers for medical
review, as one example, being able to implement those automated
edits as another example. We do look forward to the value of
this program increasing.
Mr. Tonko. OK. Thank you. And Mr. Cantrell, are you
familiar with the FPS system and with the results that were
released yesterday?
Mr. Cantrell. I think Ms. Jarmon is the person to answer
that question, if you don't mind.
Mr. Tonko. Ms. Jarmon?
Ms. Jarmon. Yes. It is not a part of the Office of
Investigations--the OIG office of Audit Services actually did
that work looking at the fraud prevention system the second
year. The first year we weren't able to certify the information
because of inconsistencies, and the second year we were able to
certify both the unadjusted number, the number before
adjustments, and the adjusted number to reflect what actually
gets returned to the Medicare trust fund. We were able to
certify both numbers in the report that went out late
yesterday, the larger number being $210 million of unadjusted
projected actual and projected savings, and the adjusted number
of $54.2 million is a 1.34-to-1 return on investment.
Mr. Tonko. And basically what is the significance of the
certification?
Ms. Jarmon. The significance is that the auditors actually
looked at supporting documentation. They actually did work
similar to financial audit work to determine the reasonableness
of the numbers. So the numbers actually started out as the
larger number, and we worked closely with CMS on any concerns
we had if we couldn't directly associate these savings to the
fraud prevention system so we really got comfortable with the
unadjusted number. Like I said, it started out as a larger
number. So it was the audit work that was done to make us feel
comfortable that we could certify the numbers this year.
Mr. Tonko. Thank you. And earlier you were quizzed as a
panel about the legislative recommendations for further
improvements in anti-fraud. Could any of you highlight which of
those recommendations would be your top priority?
Mr. Cantrell. From a law enforcement perspective, our
ability to have asset seizure authority is important to OIG,
but also removing the Social Security number from the Medicare
beneficiary card is important from an identity theft
perspective, preventing identity theft.
Mr. Tonko. Do you all share that same priority?
Ms. King. Yes. I think from our perspective the removal of
the Social Security number from the cards is a very high
priority.
Mr. Tonko. OK, and Dr. Agrawal?
Dr. Agrawal. Well, being from the agency that I am, I don't
get to make the recommendations. I get to implement them. So,
again, we look at all of them. There are others that I think
have very high priority because of their impact on our
enrollment and screening work. The SSN issue is one that we
have looked at specifically. Again, we are open to that
recommendation, but need to be resourced appropriately to meet
its requirements.
Mr. Tonko. Thank you very much. I yield back.
Mr. Murphy. Thank you, Mr. Tonko. I would like to get some
clarification on something the gentleman asked you. On page II
of the Executive Summary of this document you released last
night, the Report to Congress, Fraud Prevention, you indeed say
in this little blue box, ``The results are a 5-to-1 return on
investment almost double the value of the FPS in the first
implementation year.'' But then when we get into the meat of
the text on--it also says in here, what we found, it says
Medicare fee for service program and return on investment on--
it is only $1.34 for every dollar spent on the FPS. Can you
justify for us what that distinction is?
Dr. Agrawal. Sure. So number one, let me just say, either
number, both numbers, demonstrates that the fraud prevention
system has had a positive ROI. The two numbers are something
that Ms. Jarmon alluded to. There is an unadjusted savings
number and then an adjusted savings number. We believe in the
agency that the unadjusted savings number most directly
measures the impact of the fraud prevention system.
Mr. Murphy. In which one of those, the $5 or the $1.34?
Dr. Agrawal. The 5-to-1 ROI. And the reason for that is
because the FPS is a piece of technology, again, as I have
pointed out earlier that points to those claims and those
providers that need further investigation. What the adjusted
number gives you is the downstream impact of all of a series of
work. So not only the outcomes of the investigation, the
outcomes of any administrative processes, any recovery
processes and the work of law enforcement referrals.
So it reflects dollars returned to the trust fund, but the
FPS was not designed to impact the entire downstream process.
Mr. Murphy. Ms. Jarmon and Mr. Cantrell, then he is saying
your numbers aren't accurate. Is it $1.34 or is it 5-to-1?
Ms. Jarmon. Well, both numbers show again the positive
effect of the fraud prevention system.
Mr. Murphy. Sure.
Ms. Jarmon. But in Office of Inspector General, we feel
more comfortable with the adjusted number which shows the
return on invest of 1.34-to-1 because that reflects the actual
amount that is expected to be returned to the Medicare trust
fund. The larger number is the number before adjustments. In
some cases assets were not there to be collected. So the larger
number--while it was identified by the Medicare contractors,
what actually is going to come in is the adjusted number with
the expected return of investment of 1.34-to-1.
Mr. Murphy. Thank you. I appreciate that. I now recognize
Mr. Johnson of Ohio for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman, and I thank the panel
for being with us today. You know, one of the ways that has
been suggested to fight fraud is increase disclosure of prior
actions against providers and suppliers that were enrolling or
revalidating their Medicare enrollment. So Dr. Agrawal, has CMS
issued a rule on increasing disclosure of prior actions?
Dr. Agrawal. Yes, we have actually put out a proposed rule
that will allow for more disclosure. But one thing I would
point out is, again, disclosure is one aspect of a program
integrity approach. If these are really criminals, then they
probably won't have much of a problem lying on an application.
So we have a lot of other resources at our disposal that
include data checks that go beyond anything that somebody puts
on an application. And those I think data checks have had
significant impact on our ability to keep people out of the
program or remove them if necessary.
Mr. Johnson. OK. Mr. Cantrell, Ms. Jarmon, would, in your
opinion, would such disclosure help fight fraud, for instance?
Would contractors that CMS currently works with, say Medicare
Advantage and drug plan sponsors, be better able to identify
fraudulent providers up front if they had access to such
information?
Mr. Cantrell. Well, I think for one thing, if they lied on
the application, it would be a means for us to charge them with
that actual crime. So we like that attestation by the provider
or whoever is attesting to the facts on the application so that
we, or in this case, someone might withhold some information,
to use against them as evidence if you will of intent to commit
fraud. So I think it would help our efforts on the prosecution
and enforcement side.
Mr. Johnson. OK. Ms. Jarmon, any comment?
Ms. Jarmon. Yes, and it is in line with what we have also
been recommending that the Part C and Part D contractors report
fraud also so that they can use that information to try to make
sure the bad actors are not in the program.
Mr. Johnson. OK. Ms. King, are Medicare contractors able to
share such information with each other? For instance, if a
patient or provider is suspected of fraud and they change plans
during open enrollment, would a plan a beneficiary is leaving
be able to communicate with a plan they are joining about the
suspected fraud?
Ms. King. I am not sure of the answer on that. Let me get
back to you.
Mr. Johnson. Can you take that for the record and get
back----
Ms. King. I don't believe they can, but I am not positive.
Mr. Johnson. OK. All right. Well, certainly it would be
good if they could, right? OK. Also for Ms. King, Medicare
administrative contractors known as MACs, MACs were created
about a decade ago. Today they serve as the primary bill payers
for Medicare claims. Given that the bulk of Medicare
reimbursements are processed by MACs, the bulk of improper
payments are also made by MACs. I know GAO is currently
wrapping up work examining the work of the MACs. Do you have
any early observations on your work that you can share with our
committee?
Ms. King. Not from the work that is ongoing, but we did
release some work recently that looked at a lot of their
requirements. There are different types of contractors that do
post-payment review for fee-for-service claims, and we found a
lot of variety among the requirements that they are subject to
which is a source of confusion for providers. And we
recommended that the CMS take steps to align those requirements
where it wouldn't hurt program integrity efforts.
Mr. Johnson. OK.
Ms. King. So streamlining--not streamlining but making the
requirements more consistent across contractors--we think would
be helpful.
Mr. Johnson. OK. And then a follow-up, Ms. King. GAO has
conducted work looking at CMS's management of all program
integrity contractors. GAO made several interesting findings
including the fact that CMS did not standardize its
requirements for all contractors. One of the consistent
findings from GAO's work over the years is that CMS will often
sign a contract for a program integrity function but either
fail to measure the right functionality and activities from the
contractor or failed to assess progress as the contractor
conducts the work.
So in what ways do you think the current contracting
mechanism that CMS uses, which is subject to the federal
acquisition rules or the FAR, might hinder CMS's flexibility to
manage the program well?
Ms. King. Are you referring to the MAC's or the program
integrity contractors', if I might ask a clarifying question?
Mr. Johnson. I think we are talking about management of all
program integrity contractors.
Ms. King. OK. We did some work recently that evaluated the
program integrity contractors that are called ZPICs, and we did
find that they had a positive return on their investment. And
they are FAR contracts subject to the FAR and they are cost
plus award fee contracts. We made some recommendations to CMS
that they could further link the program integrity contracts
with the agency's higher goals in the GPRA Act so that the
goals from the top of the agency flow down through the program
integrity contractors.
Mr. Johnson. OK. So do you think that the current
contracting mechanism that CMS uses would hinder their
flexibility to manage the program well?
Ms. King. I don't have reason to believe that it does.
Mr. Johnson. I yield back, Mr. Chairman.
Mr. Murphy. Thank you. I now recognize Mr. Long for 5
minutes.
Mr. Long. Thank you, Mr. Chairman, and thank you all for
being here today. Ms. King, I want to direct my questioning
toward you, and in my questioning I would like to focus on the
issue of post-payment audits within the Medicare program and
the effect they are having on hospitals and small businesses
across the State of Missouri.
In the Dallas airport last Friday I ran into a fellow that
happened to be one of my constituents. We both happen to be
flying back to Springfield, and he owns a prosthetics and
orthotics company. If you go to Google and look that up, O&P,
it is the evaluation, fabrication, and custom fitting of
artificial limbs and orthopedic braces. I am sure you know
that--but custom fitting. He sat and told me that Medicare is
sitting on a quarter million dollars or better in these RAC
audits. And so as I go through this little line of questioning
that I have here, I want you to keep in mind that fellow. It is
him and his wife and his son. They own a little O&P business in
my district, and think about a small businessman that is
sitting around waiting for a quarter million dollars and when
he might see that money.
But as you know, Medicare currently contracts with private
vendors referred to as recovery audit contractors, RACs, to
perform these payment audits. These contractors are paid on a
contingency fee basis receiving a share of the improper
payments they identify, and they are not penalized if the
alleged improper payments are overturned on appeal. So they are
going to hold this money and try and prove--because they are
going to benefit if they are going to make money by proving
that these were paid when they shouldn't have been paid. But if
they are wrong and they hold this guy's money forever and put
him out of business, if it is overturned on appeal, there is no
penalty for those companies. As a result, the demands with the
contractor for medical and billing records have nearly doubled
since 2012. Ultimately this has resulted in administrative
quagmire where the Office of Medicare Hearings and Appeals has
suspended the ability for providers to appeal their decisions
due to the backlog of almost 357,000 cases they are backlogged.
So they have suspended it.
I recognize that the post-payment audits are an appropriate
tool for HHS to employ and have also successfully recovered
millions from genuine bad actors in the system. But there are a
lot of small business people just like my constituent that are
out there waiting for this money. Now it has been suspended.
The people that are doing the audits are getting paid for what
they find, and even if it is overturned on appeal there is no
penalty for those people.
So one question I have is do you believe that the current
structure of the system is designed in such a way that it
incentivizes quantity over quality of these audits?
Ms. King. Let me answer your question in several parts. You
are correct that the RACs are paid on a contingency fee basis,
and they are paid differently from all of the other post-
payment review auditors who are paid on a cost basis. And
initially, the RACs were not penalized if payments were
overturned on appeal, but now they are. So if they lose on
appeal, they have to----
Mr. Long. OK. I----
Ms. King. There is a penalty there.
Mr. Long. I had incorrect information on that, ma'am.
Ms. King. It was initially correct. The volume of audits
done by the RACs has increased substantially over the last
several years, and they do by far----
Mr. Long. Have they doubled since 2012?
Ms. King. Oh, more than that. Well, not since 2012 but
probably since 2010 or 2011. And for example----
Mr. Long. My information says 2012, but OK.
Ms. King. They have gone up a lot and your----
Mr. Long. Are there 357,000?
Ms. King. Yes, they are out of the----
Mr. Long. Backlogged?
Ms. King. Of the $2.3 million of--2.3 million post-pay
audits in 2012, about 2.1----
Mr. Long. Those are audits, not dollars, right?
Ms. King. Audits, yes.
Mr. Long. OK.
Ms. King. 2.1 million of them were done by the RACs. You
are also correct that there is a huge backlog in appeals, and
we have----
Mr. Long. What do you do for a small business guy like
mine? He and his wife and his son are trying to make a living
in a custom-fit part that is not returnable. Nobody else can
use that. If they say, oh, you shouldn't have got that part, we
should not reimburse you for that part, what do you do in that
situation? I mean, what can we do?
Ms. King. Well, I think there are a few things. One is that
I would be curious to know what the reason is for the payment
being declared improper. If it is a documentation error----
Mr. Long. But the company that is declaring it is going to
get compensated if they can prove that it is, whether it is or
not.
Ms. King. No. But there----
Mr. Long. Maybe you can correct me on this, too.
Ms. King. There----
Mr. Long. Excuse me, ma'am.
Ms. King. Oh, I am sorry.
Mr. Long. It is my understanding that like it is 93 and
above, maybe 97--93, 97, somewhere in that range of these
357,000 cases are going to be adjudicated have been fine in the
first place, and the small business guy should have been paid
his money. Is that correct? Is it over 90-some percent that
were----
Ms. King. I don't know the numbers on that.
Mr. Long [continuing]. Proper in the first place and they
were holding this money?
Ms. King. I don't know. I don't know the numbers on that
but----
Mr. Long. OK. Well, can you find out for me and see if that
is accurate, if it is above 90-some percent that they say, oh,
yes, we should have paid you months and months and months ago,
maybe after he's out of business?
Ms. King. Well, I have been asked to look at the appeals
process and look at the backlog and determine what some of the
underlying reasons are and to figure out whether we have any
recommendations for solutions.
Mr. Long. Has the GAO ever made any recommendations and
more efficiently reviewed claims after payments were made?
Ms. King. We have made some recommendations to improve the
consistency of the requirements that the post-payment review
audit contractors are subject to, and we have further work
under way that is looking at the post-payment review process,
and that should be out later this summer.
Mr. Long. OK.
Mr. Murphy. Gentleman's time has expired.
Mr. Long. Thank you. I yield back.
Mr. Murphy. Now I recognize Ms. Ellmers for 5 minutes.
Mrs. Ellmers. Thank you, Mr. Chairman, and thank you to our
panel. I have a number of questions, so I would really like to
get right into my questioning. And I just want to start by
saying, just as my colleague, Mr. Long--I also, as we all do,
have constituents who are very, very concerned about this
issue. They are small business owners. They are medium-sized
business owners. They are taking care of our patients. They are
taking care of Medicare patients.
Now, I just want to outline for you just how ridiculous
this process is in relation to the MAC, both RAC and MAC,
absolutely ridiculous.
Oxygen, CPAP, hospital beds. They outline for me over a
year's time--we are talking about 2,600 of those filled. Of
those, they have 1,228 audits. That is 46 percent. Why would
any business have to be audited 46 percent? Dr. Agrawal?
Dr. Agrawal. Thank you for the question. I think you
highlight a really important and complex topic, so I think what
this highlights is--and we try to achieve a balance every day
between not being burdensome on providers, making sure that
beneficiaries can get access to the services that they need,
and yet being fiscal stewards of the trust fund as required by
law.
Mrs. Ellmers. And----
Dr. Agrawal. And these are areas--just to complete the
thought, if you don't mind. DME supplies, orthotics and
prosthetics are areas that the OIG has identified as being very
high for improper payment rates.
Mrs. Ellmers. OK. I am going to stop you right there----
Dr. Agrawal. Seventy percent of DME alone.
Mrs. Ellmers [continuing]. And reclaim my time because the
issue here is they are not getting paid. The product has gone
out to the patients, to the family that is taking--the
caregivers who are taking care of this patient. This patient
has oxygen, this patient has a hospital bed. But they have not
been paid. And the timeline, the ridiculous timeline. You know,
we are talking about the process of the audit, and then we have
the redetermination period. Then we have the reconsideration
period, and now the Administrative Law Judge, they are coming
in and saying, you know what? We can't even take anymore new
appeals. You know, there is going to be a 2-year waiting list
just to get a hearing. How can anyone run a business if they
are not going to get paid for some of the most basic--I am a
nurse. These are basic items that our seniors need and use
every day. How can these gentlemen that run this business in my
district continue to keep their doors open when they are not
getting paid? Can you please just tell me how that can be
possibly addressed?
Let me back up also. One of the issues in talking about the
fraud--and this is what I see here. There is fraud. We all know
that there is fraud and abuse of the system. But you are going
after the good guys to make up the dollar difference. You are
not addressing the real fraud issues that are there. You are
not taking recommendations and applying them. Your own
recommendations--let me ask a question, Dr. Agrawal. As far as
the audit system, if the provider is found to, you know, have a
low denial rate, why are we not rewarding them? Why are we not
saying, look, you are in this category, whether you want to
score them, grade them. Why are we not rewarding them?
Dr. Agrawal. I think that is a great point and idea. In
fact, that is something that we got from the provider community
and we are actually implementing in the next round of RAC
contracts.
Mrs. Ellmers. And when will that round be?
Dr. Agrawal. Well, we have been engaged in that procurement
for a while now, but the procurement itself has come under
protest. So we would have looked forward to actually having it
completed by now. But it is currently in that protest process.
Mrs. Ellmers. And who is protesting it?
Dr. Agrawal. Other contractors.
Mrs. Ellmers. So these folks, my constituents and every
other provider is just left in limbo right now, not getting
paid?
Dr. Agrawal. Well, I would point out----
Mrs. Ellmers. You know, being good actors, playing by the
rules, doing everything they can. They are not getting paid,
and we are waiting because someone is protesting?
Dr. Agrawal. Let me just say that these audits are required
by law. The contingency fee structure was set up in statute.
This is not typically the way that--most of our other
contractors are not paid that way, either. They also post-pay
audit, so they did in fact get paid. These are--and just to
differentiate sort of improper payments from fraud, these are
tools that we actually utilize to lower the improper payment
rate, which this committee has identified as a priority, I
think we can agree. And you know, the areas that the RACs have
gone after are areas where there is high cost and high improper
payments. The DME supplies I just pointed out----
Mrs. Ellmers. Well, how is it----
Dr. Agrawal [continuing]. Are those areas----
Mrs. Ellmers. How does the RAC auditor--how do they
determine--what is it that makes them, that puts the red flag
up that they need to go in and audit? What is it?
Dr. Agrawal. I think one of the best early indicators is
where the improper payments are based on our CERT audits that
are also required by law. So the CERT audits pointed out for
example that the improper payment rate in DME is about 70
percent so----
Mrs. Ellmers. OK. But why--OK. So XYZ provider now has
auditors, and what is it that they did that alerted the RAC
auditor to come in?
Dr. Agrawal. Oftentimes it is the area in which they
operate. Again, the areas of high----
Mrs. Ellmers. What do you mean the area?
Dr. Agrawal. So if they are a DME supplier and 70 percent
of DME payments are improper, then you are obviously going to
go----
Mrs. Ellmers. So DME provider is just subject to a random
audit at any given time?
Dr. Agrawal. It is not typically random. It is based on
real analytical work to see where improper payments could
reside among the specific suppliers. In addition, as I
mentioned to you, we are very interested in rewarding those
that have low denial rates so that they get audited less
frequently and at less volume.
Mrs. Ellmers. But we don't know when that will happen
because we are in a protest.
Dr. Agrawal. We want to get the RACs up and running as
quickly as anybody else.
Mrs. Ellmers. OK. Thank you, Mr. Chairman, for indulging
me. I am over my time, but I would like to submit for the
record and ask unanimous consent, there is a memorandum to OMHA
Medicare appellants on the time, the length of time for the
Administrative Law Judge hearings on the claims and entitlement
appeals.
Mr. Murphy. Thank you. Any objections?
Ms. DeGette. Let me see that document.
Mr. Murphy. Could you send that document over here for a
second. Thank you. While that is being looked over, let me just
ask a question here that I think is important, too. When people
get caught for Medicare fraud--is that acceptable? That is
acceptable for the record.
[The information appears at the conclusion of the hearing.]
Mr. Murphy. When people get caught for Medicare fraud, are
they going to jail? Are you fining them? What kind of examples
can they be made of, if I can end with a preposition there? So
are there current penalties that are incurred upon folks who
are involved with Medicare fraud? Mr. Cantrell?
Mr. Cantrell. They are going to jail more and more. The DOJ
reported in strike force cases over 2013, the average length of
sentence was 52 months. And that is a fairly substantial time
for this kind of crime, and that is an average from 2013. Over
the last several years the average has been since the
implementation of the strike force, 47 months. So they are
going to jail. There are criminal fines. There are criminal
forfeitures that are applied, and that is the work that results
in the recoveries that the government has received.
Mr. Murphy. So can I ask then, of those who are--when you
catch someone, the likelihood that they will serve time, they
will pay a fine, any idea what those numbers are like?
Mr. Cantrell. I don't have the percentage, sir.
Mr. Murphy. That would be important if we get those----
Ms. King. I believe that we have some information on that,
sir.
Mr. Murphy. Yes? You do, Ms. King? If you can get that to
us----
Ms. King. We do.
Mr. Murphy. Do you know anything offhand or can you get
those to us?
Ms. King. I don't remember off the top, but I can tell you
that most of the people--we did some work on 2010 data that
came out I think in 2012--most of the people who are
investigated for fraud, both criminally and civilly, those
actions do not go forward. On the criminal side, only about 15
percent of the investigations actually result in the action
going forward.
Mr. Murphy. What is that percent?
Ms. King. 15 percent.
Mr. Murphy. 15 percent? Only 15 percent actually go forward
to some criminal prosecution?
Ms. King. Yes.
Mr. Murphy. Are the rest somehow settled or does that mean
you have an 85 percent chance of getting away with it?
Ms. King. No, that is the settlements. You know, some
investigations just do not go forward for a host of reasons.
Mr. Murphy. OK. So for example, they are not really guilty
of fraud or if there is no fraud charges there. Is that what
that is--am I correct in that?
Ms. King. Well, there are no fraud charges finally brought
or there is no settlement.
Mr. Murphy. I guess what we want to know, if someone is--
there is a fraud charge, what is the likelihood they are going
to see the inside of a prison cell or pay a fine? The rate of
success?
Ms. King. I believe we have some high-level data on what
the results are not bound to the length of the sentence but the
types of penalties imposed.
Mr. Murphy. We would like to--Ms. DeGette, do you have a
quick question?
Ms. DeGette. I just have a follow-up. Mr. Cantrell, the IG
identified problems with Medicare C and D plans not reporting
data and recommended that the CMS make the reporting mandatory.
Is that correct?
Mr. Cantrell. That is correct.
Ms. DeGette. And Dr. Agrawal, has CMS done that?
Dr. Agrawal. Well, we have taken a number of steps to
better align Medicare C, D and you know, the fee-for-service
programs. I talked earlier about the Part D rule that was going
to allow us to require provider enrollment in Part D.
We are also working on other activities like the healthcare
fraud prevention partnership that actually allows us to
exchange data and best practices directly with the private
sector so that we can jointly, you know, work to detect and
prevent fraud.
Ms. DeGette. Right. So I am going to take that answer as a
no, you have not made it mandatory, is that right?
Dr. Agrawal. We have currently not yet made it mandatory.
Ms. DeGette. Yes. Thanks. I think frankly, Mr. Chairman, I
think CMS needs to do that because we know there is a lot of
fraud in those Part C and Part D programs. I appreciate the
efforts that the agency has made on those other ends, but I
think making it mandatory would really help. And I appreciate
your indulgence, Mr. Chairman.
Mr. Murphy. Thank you. Mr. Long and Ms. Ellmers have each
asked for 1 minute.
Mr. Long. Just a quick follow-up, Dr. Agrawal. When you
were answering Congresswoman Ellmers' questions, you said 70
percent. Are you talking about O&P or are talking about
prosthetics? That business? 70 percent of them are not correct
on their billing?
Dr. Agrawal. No, what I was identifying was that there is a
high improper payment rate for DME, but there is also a high
improper payment rate in orthotics and prosthetics.
Mr. Long. OK.
Dr. Agrawal. Those are reports that the OIG has also
published.
Mr. Long. OK, because if what my constituent is telling me
is accurate, isn't it 93 or 97 percent they go ahead and pay
eventually, some time, a couple years from now. The 70 percent
didn't match. So I just wanted a clarification on that.
Dr. Agrawal. Well, if I could clarify on that point, sir,
so of all of the RAC overpayment determinations, only 7 percent
are actually overturned on appeal. That is 7. So of all the
overpayments that the RACs actually get from providers, 7
percent go onto appeal and at any level of appeal----
Mr. Long. Yes, but we are talking apples and oranges. We
are talking about how many were not improper in the first place
is what my question is, not how many were overturned on appeal.
Dr. Agrawal. OK. Got you, sir.
Mr. Murphy. Thank you. Ms. Ellmers, 1 minute.
Mrs. Ellmers. Thank you, Mr. Chairman. Dr. Agrawal, I have
a question, too, about what is the period of time--a provider
has an audit and maybe they haven't been educated. I know that
you said that there is an effort to educate. Is there a grace
period? Is there a time? What time limit from a change that is
made to the time that the auditor goes in are we looking at? If
something is flagged to, you know, for an audit?
Dr. Agrawal. So if I am understanding the question, a
change in payment policy that would then----
Mrs. Ellmers. Right.
Dr. Agrawal [continuing]. Downstream be enforced?
Mrs. Ellmers. Yes. So a change is made. The provider may or
may not have had time to--what does CMS consider a reasonable
time that that provider should know that a change has occurred?
Dr. Agrawal. Sure. So I don't think there is a set time
period, the kind of set time period that you are identifying. I
will point out that a lot of the audits----
Mrs. Ellmers. So the change could be made and the next day
the auditor can be in the office?
Dr. Agrawal. It is typically not like that. The majority of
audits that we conduct are around rules and policies that are
very well known by the provider community. So the high improper
payment rates in DME for example are based on documentation
requirements that have been around for a while.
Mrs. Ellmers. OK. So that is not what I am hearing from my
constituents. My constituents are looking at the situation.
They are saying, look, we weren't even aware of that change.
Ms. King, is that something GAO has recommended, that there be
a grace period time or anything like that?
Ms. King. It is not an issue that we have looked at.
Mrs. Ellmers. OK.
Ms. King. But you raise an interesting question about
education of providers about the documentation requirements and
the rules.
Mrs. Ellmers. One last question, Dr. Agrawal. You did say
that one of the things that you are suggesting in the change in
the next RAC audit time period is the idea that those are
rewarded. What would you say the percentage, if you have got a
low denial rate? Throw out a number.
Dr. Agrawal. I don't have a specific number. You know, we
can actually get that for you based on the----
Mrs. Ellmers. Well, I would like to work with you----
Mr. Murphy. Thank you.
Mrs. Ellmers [continuing]. On that. Thank you so much, and
thank you, Mr. Chairman.
Mr. Murphy. Dr. Burgess, you have some concluding
questions?
Mr. Burgess. Thank you, Mr. Chairman. OK. Well, I want to
go back for a minute to the article, the Bloomberg article,
that I referenced that was published on April 28th of this
year. Doctors get millions from Medicare after losing their
licenses. And this article goes through sometimes in rather
painful detail of how a doctor would lose their license in one
state and then be able to bill Medicare in another state. I
realize that states have a responsibility here as well. But you
as the payer for Center for Medicare and Medicaid Services, you
ultimately have the responsibility about those dollars going
out, and even though New Mexico may have erred in not checking
a database for someone who lost their license in Ohio, which
was the case of one of the doctors that was referenced here,
Medicare paid that doctor an additional $660,000 for that
doctor to treat patients in New Mexico. You know, the question
is, why won't CMS at least do the basics on checking with the
National Practitioner Data Bank to see if there is a problem
with this doctor's license?
Dr. Agrawal. Congressman, it is not a question of will, it
is a question of authorities. So loss of licensure is one of
the best triggers that we have for removing somebody from the
Medicare program. If a provider loses their license in one
state, however, and they have a license that is active in
another state, we are bound by limits of authority about, you
know, whether or not we can revoke that person across the
entire Medicare program. We can certainly revoke or eliminate
any enrollment in the state in which they lost their license.
But loss of licensure in one state is not in and of itself a
basis for losing enrollment nationally.
Now, if there was something underlying the licensure loss--
--
Mr. Burgess. I have to stop you there. I find that
absolutely incredulous. A guy loses his license, and some of
these doctors were charged with fairly serious crimes. And
because they had good lawyers, they were able to keep their
license in another state. But I mean, does that at least not
trigger some sort of basic curiosity on the part of CMS as to
why the doctor lost their license in a given state, what was
the crime of which they were accused and should we keep sending
them checks for $660,000?
Dr. Agrawal. Of course, and I, again, as a physician am
very frustrated when loss of licensure in one state is not
followed by loss of licensure in all states. We do look at
those providers to investigate or understand what they have
done. But again, this comes down to due process. If there is
just not an authority that we can trigger to cause the
revocation, then we simply can't do it. These are the
constraints that are placed on us rightfully by taxpayers to
make sure we don't go too far.
Mr. Burgess. I don't want you to go too far, and we have
certainly heard from other members about some of the problems
when you go too far. But should this at the very least, should
this not trigger some type of heightened scrutiny on the bills
that are coming in from a doctor who has lost their license in
another state because of the death of a patient or because they
are charged with a serious crime?
Dr. Agrawal. It can absolutely be a risk factor. I don't
think that that is what is under contention. I think the real
issue is whether we can just revoke summarily across the
country for loss of licensure in one state, and that is where
there are significant restrictions or limitations in our
authority.
Mr. Burgess. Do you not have the authority for heightened
scrutiny? I mean, you paid this guy $660,000. Apparently we
weren't scrutinizing very highly.
Dr. Agrawal. That may or may not be true. I don't know
about the data on that particular case or what the report was.
But we can subject providers to medical review based on a
multitude of factors. We can certainly do that in these kinds
of cases. But again, providers can--as you know as well as I
do, providers can lose their licenses for a variety of reasons,
some of them having nothing to do with healthcare fraud or the
extent of our authorities and concern.
Mr. Burgess. Yes, but it just raises or begs the question,
should the Medicare system be paying those doctors? I mean,
should they even be taking care of Medicare patients? The
fundamental question, is there a way that you have of debarring
someone who has been accused of or been convicted of a fairly
serious allegation and lost their license as a consequence?
Dr. Agrawal. So we have a specific revocation authority
that we utilize on a consistent basis. The OIG has an exclusion
authority. GSA has a debarment authority. We utilize as
triggers for our actions the GSA debarment list as well as the
OIG exclusion list.
Mr. Burgess. Is that the exclusion list here?
Dr. Agrawal. Yes.
Mr. Burgess. I mean, one of the permissive exclusions is
license revocation or suspension. One of the mandatory is
conviction on three or more occasions of mandatory exclusion
offenses. I mean, what have you got to do? What have you got to
do to lose your ability to bill Medicare and have you guys pay?
Dr. Agrawal. Well, I would have to defer exclusion
questions to the OIG since we don't put people on the exclusion
list.
Mr. Murphy. The gentleman's time is expired.
Mr. Burgess. Can we let Mr. Cantrell answer the question?
Mr. Murphy. Mr. Cantrell?
Mr. Cantrell. We also have a variety of limitations to our
exclusions authority. There are situations--often it is the
underlying crime or offense that resulted in the loss of
license. But the real vulnerability that we face is we don't
have 100 percent of the data that we would need to implement
exclusions in 100 percent of the cases where we would have the
opportunity and the authority. We have a voluntary reporting
system to the OIG from the state boards, from other federal
agencies, and so that is an area where we know we have
incomplete information. But we get--we currently have 57,000-
plus entities and individuals who are excluded, and we exclude
over 3,000 every year. So there is a lack of complete data that
we have access to, but there is still a great number of
exclusions that occur.
Mr. Burgess. I just have to ask you. Can you not query the
National Practitioner Data Bank? Can you?
Mr. Cantrell. I believe that we can. There were some
restrictions on law enforcement access to the National
Practitioner Data Bank. I can't speak to whether that is
actually a continuing concern or not.
Mr. Murphy. Let me----
Mr. Burgess. Can you find out and get me that information,
please?
Mr. Cantrell. Certainly.
Mr. Murphy. Let me ask in general for that for this
committee if Dr. Agrawal, Mr. Cantrell and Ms. King, to the
extent you can, you have heard a number of things there. We
recognize also that you are aware that there is more
information that would be valuable to you to help prescreen out
people who have some tendency towards crime. The example I gave
before, if someone has robbed a bank or involved with some
other fraud that is not Medicare fraud, they can still be
involved in this I think raises all of our questions, and Mr.
Cantrell, you just said you don't have a lot of data.
If you would please in a timely manner get that data back
to the committee, as I was talking to Ms. DeGette, too, as I
think this is something I think this committee would be
interested in moving forward on some legislation to assist you
in that rather than just pay and chase moving forward.
I am going to ask unanimous consent that the members'
written opening statements be introduced in the record, and
without objection, the documents will be there. Also, in
conclusion, I thank all the witnesses and members who
participated in today's hearing. I remind members, I am sure
many people have some other follow-up questions for you. They
have 10 business days to get them to you, and I do ask that you
do all agree to respond promptly to the questions. So with
that, this committee is adjourned. Thank you.
[Whereupon, at 12:00 p.m., the subcommittee was adjourned.]
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