[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
MEDICARE AND MEDICAID PROGRAM INTEGRITY: COMBATING IMPROPER PAYMENTS
AND INELIGIBLE PROVIDERS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
MAY 24, 2016
__________
Serial No. 114-149
[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
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon 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
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Ohio JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
Subcommittee on Oversight and Investigations
TIM MURPHY, Pennsylvania
Chairman
DAVID B. McKINLEY, West Virginia DIANA DeGETTE, Colorado
Vice Chairman Ranking Member
MICHAEL C. BURGESS, Texas JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
LARRY BUCSHON, Indiana JOHN A. YARMUTH, Kentucky
BILL FLORES, Texas YVETTE D. CLARKE, New York
SUSAN W. BROOKS, Indiana JOSEPH P. KENNEDY, III,
MARKWAYNE MULLIN, Oklahoma Massachusetts
RICHARD HUDSON, North Carolina GENE GREEN, Texas
CHRIS COLLINS, New York PETER WELCH, Vermont
KEVIN CRAMER, North Dakota FRANK PALLONE, Jr., New Jersey (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................................. 5
Prepared statement........................................... 6
Hon. Fred Upton, a Representative in Congress from the state of
Michigan, prepared statement................................... 89
Witnesses
Ann Maxwell, Assistant Inspector General, Office of Evaluation
and Inspections, Office of Inspector General, U.S. Department
of Health and Human Services................................... 8
Prepared statement........................................... 11
Answers to submitted questions...............................
Seto J. Bagdoyan, Director, Audit Services, Forensic Audits and
Investigative Service, U.S. Government Accountability Office... 22
Prepared statement........................................... 24
Answers to submitted questions...............................
Shantanu Agrawal, M.D., Deputy Administrator and Director, Center
for Program Integrity, Centers for Medicare and Medicaid
Services, U.S. Department of Health and Human Services......... 45
Prepared statement........................................... 47
Answers to submitted questions...............................
Submitted Material
Subcommittee memorandum.......................................... 91
MEDICARE AND MEDICAID PROGRAM INTEGRITY: COMBATING IMPROPER PAYMENTS
AND INELIGIBLE PROVIDERS
----------
TUESDAY, MAY 24, 2016
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:15 a.m., in
room 2322 Rayburn House Office Building, Hon. Tim Murphy
(chairman of the subcommittee) presiding.
Members present: Representatives Murphy, McKinley,
Griffith, Bucshon, Flores, Brooks, Mullin, Collins, Cramer,
DeGette, Castor, Tonko, Kennedy, Green, Welch, and Pallone (ex
officio).
Staff present: Rebecca Card, Assistant Press Secretary;
Ryan Coble, Detailee; Emily Felder, Counsel, Oversight and
Investigations; Charles Ingebretson, Chief Counsel, Oversight
and Investigations; Chris Santini, Policy Coordinator,
Oversight and Investigations; Alan Slobodin, Deputy Chief
Counsel, Oversight; Gregory Watson, Legislative Clerk,
Communications and Technology; Jeff Carroll, Minority Staff
Director; Ryan Gottschall, Minority GAO Detailee; Chris Knauer,
Minority Oversight Staff Director; Una Lee, Minority Chief
Oversight Counsel; Elizabeth Letter, Minority Professional
Staff Member; and Andrew Souvall, Minority Director of
Communications, Outreach and Member Services.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy. Good morning. The Oversight and Investigations
Subcommittee will come to order on Medicare and Medicaid
Program Integrity: Combating Improper Payments and Ineligible
Providers. Welcome. And I will recognize myself for an opening
statement.
The subcommittee convenes this hearing today to examine
ongoing waste, fraud, and abuse in two of the federal
government's biggest programs: Medicare and Medicaid. Just last
year, HHS estimated approximately $89 billion in improper
payments through Medicare and Medicaid. This means the federal
government cannot verify the accuracy of one out of every ten
payments.
The improper payments occur when federal funds go to the
wrong recipient or the recipient receives the incorrect amount
of funds--either an underpayment or overpayment--documentation
is not available to support a payment, or the recipient uses
federal funds in an improper manner.
To be clear, not all the improper payments constitute
fraud, but when the federal government cannot accurately verify
that nearly ten percent of program dollars were spent according
to law it is a major problem. Improper payments muddy the
waters and make it harder for auditors and investigators to
root out fraud and abuse. If the system is murky and confusing,
that only benefits the fraudsters who take advantage of our
system knowing that the chances are pretty good they can get
away with it.
Although high error rates have been a persistent problem
spanning many years, these rates are nevertheless concerning
because Medicare and Medicaid spending is growing at a rapid
pace. In 2014, Medicare spending grew 5.5 percent to $618.7
billion and Medicaid grew 11 percent to 495.8 billion. Given
the growth in these programs, it is not surprising they have
been targets for fraud and abuse. CMS must strengthen program
integrity now or billions more may be wasted in future years.
Two nonpartisan watchdogs have released reports critical of
CMS response to major program integrity challenges confronting
these programs. Today we will highlight the important work by
the Government Accountability Office and the Health and Human
Services Inspector General that tackles two distinct
challenges: the improper payments and ineligible providers.
First, I want to highlight three reports released by the
HHS Inspector General in conjunction with today's hearing.
These reports examine vulnerabilities within provider
screening, which is a huge contributor to fraud. Two of the
reports examine the issue of accuracy of databases used to
enroll providers into the Medicaid and Medicare programs.
Specifically, these reports look at the accuracy of provider
ownership information because inaccurate provider ownership
information can be a strong indicator of fraud.
In the Medicaid program, OIG found that 14 state Medicaid
programs did not verify the completeness or accuracy of
provider ownership or check all required exclusion databases.
Moreover, nearly all providers had names on record with state
Medicaid programs that did not match those on record with CMS.
For the Medicare provider database, the OIG compared three
sets of owner names: 1) the names listed on Medicare enrollment
records; 2) names submitted by providers directly to the OIG
for their evaluation; and 3) names listed on state Medicaid
enrollment records. The OIG found that nearly all providers in
the OIG's review had different names on record than the state
Medicaid programs.
The third report released today deals with enhanced
provider enrollment screenings in the Medicaid program. While
states are required to screen Medicaid providers using enhanced
screening procedures, such as fingerprint-based criminal
background checks and onsite visits, many states have not yet
implemented these requirements.
I would like to thank the HHS and OIG for its work on these
pivotal reports and for the opportunity to highlight them at
today's hearing. Today we will also examine the larger body of
work conducted by HHS OIG and the GAO over years of audits and
investigations.
And while the GAO and OIG have done a great job of
highlighting Medicare and Medicaid vulnerabilities to fraud,
CMS has not yet implemented some recommendations that could
solve these problems. For example, back in January of 2013, the
OIG found that Medicare erroneously paid over $33 million to
physicians rendering services to incarcerated beneficiaries.
OIG recommended that CMS modify and update its guidance so that
claims were processed consistently to prevent such improper
payments. However, CMS has not yet implemented this
recommendation.
The subcommittee convened a hearing in June of last year to
examine a troubling GAO report that highlighted Medicaid
improper payments. After auditing four states with just over
nine million Medicaid beneficiaries, GAO found that 200
deceased beneficiaries received at least 9.6 million in
Medicaid benefits. The individuals were already deceased before
apparently receiving any medical services covered by Medicaid.
And 1 year later, GAO's recommendation to fix this problem is
still ``open'' indicating CMS has not taken the necessary
action.
The same report found that at least 47 Medicaid providers
in four states had foreign addresses as their location of
services including Canada, China, India, and Saudi Arabia.
Nearly 26,600 providers had addresses that did not match any
United States Postal Service records. However, CMS has not
implemented GAO's recommendation to fix this problem.
It concerns me that the subcommittee held two hearings last
year on wasteful spending in Medicare and Medicaid, and CMS has
not yet acted on some of the recommendations suggested at those
hearings. However, I understand that just last week, CMS
implemented two GAO recommendations to be discussed at today's
hearing. This is important progress and CMS must continue to
move forward on outstanding recommendations.
[The statement of Mr. Murphy follows:]
Prepared statement of Hon. Tim Murphy
The subcommittee convenes this hearing today to examine
ongoing waste, fraud, and abuse in two of the federal
government's biggest programs: Medicare and Medicaid.
Just last year, HHS estimated approximately $89 billion
dollars in improper payments through Medicare and Medicaid.
This means that the Federal Government cannot verify the
accuracy of one out of every ten payments.
Improper payments occur when federal funds go to the wrong
recipient, the recipient receives the incorrect amount of
funds--either an underpayment or overpayment, documentation is
not available to support a payment, or the recipient uses
federal funds in an improper manner.
To be clear: not all of the improper payments constitute
fraud. But when the Federal Government cannot accurately verify
that nearly 10 percent of program dollars were spent according
to the law, it is a major problem. Improper payments muddy the
waters, and make it harder for auditors and investigators to
root out fraud and abuse. If the system is murky and confusing,
that only benefits the fraudsters taking advantage of our
system.
Although high error rates have been a persistent problem,
spanning many years, these rates are nevertheless concerning
because Medicare and Medicaid spending is growing at a rapid
pace. In 2014, Medicare spending grew 5.5 percent to $618.7
billion, and Medicaid spending grew 11 percent to $495.8
billion. Given the growth in these programs, it is not
surprising they have been targets for fraud and abuse. CMS must
strengthen program integrity now, or billions more may be
wasted in future years.
Two non-partisan watchdogs have released reports critical
of CMS' response to major program integrity challenges
confronting these programs. Today, we will highlight the
important work by the Government Accountability Office and the
Health and Human Services Inspector General that tackles two
distinct challenges: improper payments and ineligible
providers.
First, I want to highlight three reports released by the
HHS Inspector General in conjunction with today's hearing.
These reports examine vulnerabilities within provider
screening, which is a huge contributor to fraud. Two of the
reports examine the issue of accuracy of databases used to
enroll providers into the Medicaid and Medicare programs.
Specifically, these reports look at the accuracy of provider
ownership information, because inaccurate provider ownership
information can be a strong indicator of fraud.
In the Medicaid program, the OIG found that fourteen state
Medicaid programs did not verify the completeness or accuracy
of provider ownership, or check all required exclusions
databases. Moreover, nearly all providers had names on record
with state Medicaid programs that did not match those on record
with CMS.
For the Medicare provider database, the OIG compared three
sets of owner names: (1) the names listed on Medicare
enrollment records, (2) names submitted by providers directly
to the OIG for their evaluation, and (3) names listed on state
Medicaid enrollment records. The OIG found that nearly all
providers in the OIG's review had different names on record
than the state Medicaid programs.
The third report released today deals with enhanced
provider enrollment screening in the Medicaid program. While
states are required to screen Medicaid providers using enhanced
screening procedures such as fingerprint-based criminal
background checks and site visits, many states have not yet
implemented these requirements.
I would like to thank the HHS OIG for its work on these
pivotal reports, and for the opportunity to highlight them at
today's hearing.
Today we also will examine the larger body of work
conducted by HHS OIG and the GAO, over years of audits and
investigations.
And while the GAO and OIG have done a great job of
highlighting Medicare and Medicaid vulnerabilities to fraud,
CMS has not yet implemented some recommendations that could
solve those problems.
For example, back in January 2013, the OIG found that
Medicare erroneously paid over $33 million to physicians
rendering services to incarcerated beneficiaries. OIG
recommended that CMS modify and update its guidance so that
claims were processed consistently, to prevent such improper
payments. However, CMS has not implemented this recommendation.
The subcommittee convened a hearing in June of last year to
examine a troubling GAO report that highlighted Medicaid
improper payments. After auditing four states with just over 9
million Medicaid beneficiaries, GAO found that 200 deceased
beneficiaries received at least $9.6 million in Medicaid
benefits. The individuals were already deceased before
apparently receiving medical services covered by Medicaid. One
year later, GAO's recommendation to fix this problem is still
``open,'' indicating that CMS has not taken the necessary
action.
The same GAO report found that at least 47 Medicaid
providers in four states had foreign addresses as their
location of service, including Canada, China, India and Saudi
Arabia. Nearly 26,600 providers had addresses that did not
match any United States Postal Service records. However, CMS
has not implemented GAO's recommendation to fix this problem.
It concerns me that the Subcommittee held two hearings last
year on wasteful spending in Medicare and Medicaid, and CMS has
not yet acted on some of the recommendations suggested at those
hearings. However, I understand that just last week, CMS
implemented two GAO recommendations to be discussed at today's
hearing. This is important progress, and CMS must continue to
move forward on outstanding recommendations.
Mr. Murphy. I want to thank all the witnesses for being
here today and testifying, and I now recognize ranking member
from Colorado, Ms. DeGette, for 5 minutes.
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you so much, Mr. Chairman. This hearing
is really an important opportunity to discuss ways to
strengthen two critically important government programs that
serve over a hundred million Americans: Medicare and Medicaid.
We are going to hear today about recent reports from the OIG
and GAO about provider enrollment and screening in those two
important programs. The reports remind us that we must be ever
vigilant in our efforts to fight fraud and abuse.
Many of us here on the dais and of course those at the
witness table have been working to fight waste, fraud and abuse
and Medicare and Medicaid for many, many decades. The idea that
error rates or improper payments are associated with these
programs is not new. For example, a 2003 committee report found
that Medicaid fraud could exceed $17 billion each year. The
report went on to say, ``this year, the committee will examine
ways in which states could adopt more rigorous enrollment
controls to keep unscrupulous providers out of their programs
and to improve their program integrity standards.''
I just wish we could wave our magic wands and eliminate
waste, fraud, and abuse in these programs. In my almost 20
years on this committee we have assiduously worked to do that
thing. But unfortunately it has been very difficult to
permanently root out waste, fraud, and abuse in Medicare and
Medicaid because keeping fraudulent and unscrupulous providers
out of the program is just a longstanding and pervasive
challenge. We are going to hear today that recent GAO and OIG
reports find there is still progress to make.
I am encouraged though by recent successes of the program
integrity measures which were implemented by the Affordable
Care Act. The ACA provided the Department of HHS and its Office
of Inspector General with a wide range of new tools and
authorities for fighting fraud. We are already seeing
improvements through the use of these new tools, and I believe
they will continue to make a big difference going forward.
I am certainly very eager to hear from CMS about the
progress. Those new tools allow program administrators to
better protect tax dollars and to prevent bad providers from
entering the program. For example, the ACA provided nearly $350
million in new funds for fraud control efforts. It also
provided new means for collecting and sharing data between
states and the federal government to screen potential providers
and suppliers.
The ACA provided the HHS OIG with new authorities to impose
stronger penalties on those who commit fraud and provided CMS
with the ability to temporarily halt payments to suppliers
suspected of fraud. CMS is also now incorporating predictive
analytics to screen payments to look for patterns for fraud
that were previously much harder to detect.
This new effort called the Fraud Prevention System uses
computer modeling tools similar to those used by credit card
companies to look for fraud patterns and to help the government
recover fraudulent or improper payments. According to CMS, in
just 3 years this system has allowed the agency to prevent
nearly $820 million in fraudulent payments.
Mr. Chairman, I think this is good news and we should
applaud the progress. New tools and authorities should allow
CMS and the OIG to move away from the pay and close model and
spend more time stopping bad actors from entering the program
in the first place. These important new tools should greatly
enhance program integrity in the Medicare and Medicaid
programs, and they will help us to achieve some of the anti-
fraud goals that have long been out of reach.
While these are positive developments, we will hear from
the HHS OIG and from the GAO on some areas we can still
improve. A recent OIG report, for example, found not all states
are utilizing the tools as comprehensively as possible. I want
to understand more about that report today and to hear from CMS
about why this is the case and how we can work together to make
sure all of the tools available are being implemented as
broadly as possible.
Let me conclude, Mr. Chairman, by thanking all of the
witnesses before us for the work they do to strengthen these
important programs. I look forward to hearing from the auditors
about what more we can do to reduce fraud and prevent fraud
while maintaining the program's flexibility in delivering
critical health care services.
We have consistently worked in this subcommittee on a
bipartisan basis to strengthen fraud-fighting efforts in
Medicare and Medicaid, and I know that this will just be
another one of those important hearings in our ongoing
oversight. Thank you, Mr. Chairman, and I yield back.
[The statement of Ms. DeGette follows:]
Prepared statement of Hon. Diane DeGette
Thank you, Mr. Chairman. Today's hearing is an important
opportunity to discuss ways to strengthen two critically
important government programs that serve over 100 million
Americans: Medicare and Medicaid.
We will hear today about recent reports from the OIG and
GAO on provider enrollment and screening in Medicare and
Medicaid. These reports remind us that we must be vigilant in
our efforts to fight fraud and abuse in these programs.
Many of us on the dais and at the witness table have been
working to fight waste, fraud, and abuse in Medicare and
Medicaid for decades. The idea that error rates or improper
payments are associated with these programs is not new.
For example, a 2003 Committee report found that Medicaid
fraud could exceed $17 billion each year. The report went on to
say, ``This year, the Committee will examine ways in which
States could adopt more rigorous enrollment controls to keep
unscrupulous providers out of their programs and improve their
program integrity standards.'' We all know that it has been
very difficult to root out fraud, waste, and abuse in Medicare
and Medicaid. Keeping fraudulent and unscrupulous providers out
of the program has been a longstanding challenge. And we will
hear again today that recent GAO and OIG reports find there is
still progress to be made. But I am very encouraged by the
recent success of the program integrity measures implemented by
the Affordable Care Act.
The ACA provided the Department of Health and Human
Services and its Office of Inspector General with a wide range
of new tools and authorities for fighting fraud. We are already
seeing improvements through the use of these new tools, and I
believe they will continue to make a big difference going
forward. I am eager to hear more from CMS about their progress.
These new tools allow program administrators to better
protect tax dollars and prevent bad providers from entering the
program. For example, the ACA provided nearly $350 million in
new funds for fraud control efforts. It also provided new means
for collecting and sharing data between states and the federal
government to screen potential providers and suppliers. The ACA
provided the HHS OIG with new authorities to impose stronger
penalties on those who commit fraud and provided CMS with the
ability to temporarily halt payments to suppliers suspected of
fraud.
CMS is also now incorporating predictive analytics to
screen payments to look for patterns of fraud that were
previously much harder to detect. This new effort, called the
Fraud Prevention System, uses computer-modeling tools similar
to those used by credit card companies to look for fraud
patterns and help the government prevent and recover fraudulent
or improper payments. According to CMS, in just 3 years, this
system has allowed the agency to identify or prevent nearly
$820 million in fraudulent payments.
This is good news, Mr. Chairman, and we should applaud this
progress. These tools and authorities should allow CMS and the
OIG to move away from the ``pay and chase'' model and spend
more time stopping bad actors from entering the program in the
first place. These important new tools should greatly enhance
program integrity in the Medicaid and Medicare programs, and
they will help us achieve some of the anti-fraud goals that
have long been out of reach.
While these are positive developments, we will hear from
the HHS OIG and from GAO on some areas where we can improve. A
recent OIG report, for example, found that not all of the
States are utilizing these tools as comprehensively as
possible. I want to understand more about that report today,
and hear from CMS about why this is the case and how we can
work together to ensure all tools available are being
implemented as broadly as possible.
Mr. Chairman, let me conclude by thanking all of the
witnesses before us today for the work they do to help
strengthen the Medicaid and Medicare programs and for working
so closely with this Committee.
I look forward to hearing from the auditors about what
additional measures they believe we can or should take to
reduce fraud while maintaining the programs' flexibility in
delivering critical health care services.
This Committee has consistently worked on a bipartisan
basis to strengthen the fraud fighting efforts in both the
Medicare and Medicaid programs. I hope today's hearing will be
a continuation of that effort. These critical programs serve
millions of hard working Americans, and it is our duty to make
them run as efficiently and effectively as possible.
With that, Mr. Chairman, I yield back.
Mr. Murphy. Thank you. I don't think we have anybody else
on our side that wants to make a statement, am I correct? Do
you have anybody else on your side? Otherwise we can move
forward.
Ms. DeGette. I think we are good.
Mr. Murphy. All right, thank you. In that case, I ask
unanimous consent that the members' written opening statements
be introduced into the record and, without objection, the
documents will be entered into the record.
I would now like to introduce the witnesses of our first
panel for today's hearing. The first witness on today's panel
is Ms. Ann Maxwell. Ms. Maxwell is the assistant inspector
general in the Office of Evaluation and Inspections within HHS.
Ms. Maxwell manages a national office of 145 evaluators
completing utilization and focused evaluations intended to
provide Congress and HHS with relevant, timely, and useful
information.
We thank you, Ms. Maxwell, for being here and preparing
your testimony. We look forward to hearing your insights.
We would also like to welcome Mr. Seto Bagdoyan. Mr.
Bagdoyan is currently the director for Audit Services in GAO's
Forensic Audits and Investigative Service, which is the FAIS,
mission. In the FAIS he has led a broad body of work related to
fraud, waste, and abuse, and the integrity of internal controls
in various program areas including health care.
Thank you also for being here today, and we look forward to
your comments.
Our third and final witness on today's panel is Dr.
Shantanu Agrawal. Dr. Agrawal is currently serving as deputy
administrator for Program Integrity and director of the Center
for Program Integrity. His focus is to improve health care
value by lowering the cost of care through the detection and
prevention of waste, abuse and fraud in the Medicare and
Medicaid programs.
Thank you, Dr. Agrawal, for being here.
So to our panel here, you are aware that the committee is
holding an 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?
Seeing no objections, 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 this hearing today?
And all indicated they do not desire to be advised by
counsel, so in that case would you all please rise, raise your
right hand, and I will swear you in.
[Witnesses sworn.]
Mr. Murphy. Thank you. You are all now under oath and
subject to penalties set forth in Title 18 Section 1001 of the
United States Code. I am going to ask you all to give a five-
minute summary of your written statement. One of the most
important things is to turn the microphone on; put it as close
to you as possible so we can hear.
And Ms. Maxwell, we will let you begin and give a 5-minute
summary. Thank you.
STATEMENTS OF ANN MAXWELL, ASSISTANT INSPECTOR GENERAL, OFFICE
OF EVALUATION AND INSPECTIONS, OFFICE OF INSPECTOR GENERAL,
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES; SETO J. BAGDOYAN,
DIRECTOR, AUDIT SERVICES, FORENSIC AUDITS AND INVESTIGATIVE
SERVICE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; AND, SHANTANU
AGRAWAL, M.D., DEPUTY ADMINISTRATOR AND DIRECTOR, CENTER FOR
PROGRAM INTEGRITY, CENTERS FOR MEDICARE AND MEDICAID SERVICES,
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
STATEMENT OF ANN MAXWELL
Ms. Maxwell. Good morning, Chair Murphy, Ranking Member
DeGette, and other distinguished members of the subcommittee.
Thank you for the invitation to share with the subcommittee
opportunities to better protect Medicaid and Medicare from
unscrupulous providers and improper payments.
As you mentioned in your opening statement, Chair Murphy,
Medicaid and Medicare reported a combined $89 billion in
improper payments. In addition, OIG found that HHS missed
important performance targets. For example, Medicare fee-for-
service reported an improper payment rate of 12 percent,
exceeding the 10 percent goal established by law. Medicare also
reported an error rate higher than its established target.
These findings indicate that HHS must redouble its efforts
to pay the right provider the right amount for the right
service, and provider enrollment is where it starts. Enrollment
is the green light to start billing. To get that, green light
providers need to clear the provider enrollment process, so the
provider enrollment process is Medicaid and Medicare's chance
to make sure they are not doing business with those whose
business it is to commit fraud.
No one wants Medicare doing business with abusive and
fraudulent providers like Dr. Fata, the oncologist who
administered aggressive cancer treatments to patients who did
not need them simply to increase his billing; or Medicaid
paying Small Smiles, a dental chain performing unneeded root
canals on children.
To help prevent these sort of egregious cases of
beneficiary harm and improper payments Congress, through the
Affordable Care Act, authorized a more rigorous, risk based
approach to screening providers. As a result, provider types
deemed by CMS to be a higher risk are now required to undergo
site visits and sometimes criminal background checks. Today, I
want to talk about how these ACA tools were implemented in
Medicaid and in Medicare, and also the problems we've found
with the databases that support these important tools.
For Medicaid, we found that state implementation of
enhanced provider screening is incomplete for higher risk
providers leaving Medicaid vulnerable. We found that most
states have not yet started conducting criminal background
checks while waiting for additional guidance from CMS. Further,
11 states are not conducting site visits. OIG recommends that
CMS assist states by offering guidance, technical assistance,
and improving the ability of states to rely on Medicare
screening results so they don't need to duplicate that work.
For Medicare, we found that CMS' implementation of enhanced
enrollment screening needs strengthening. In particular, we
found that contractors were inconsistent in applying site visit
procedures and not always using site visit results in
enrollment decisions. The OIG recommends improving the process
by improving the site visit forms, additional training, and
ensuring the consistent use of site visit results in enrollment
decisions.
OIG's reviews also found questionable data in Medicare's
provider enrollment database. We frequently found different
information when comparing owner names in Medicare and Medicaid
databases. In one case, for the same provider Medicare had 14
owners listed while Medicaid had 63. It is hard to know who
you're doing business with if you can't even get their names
straight.
CMS and states are also lacking complete data on providers
terminated for reasons of fraud, integrity or quality because
not all states are reporting that information. As a result,
states may enroll a provider that's already been terminated in
another state. In fact, we found 12 percent of providers
terminated in one state continued to participate in Medicaid
and other state Medicaid programs. OIG recommends that states'
reporting of terminated providers to a centralized CMS database
be made mandatory.
CMS agreed that our recommendations would strengthen
provider enrollment and as such we believe they should be
undertaken immediately. In the longer term, we suggest CMS
consider working towards consolidating Medicaid and Medicare
provider enrollment believing that it could lead to a more
effective and less burdensome enrollment process.
In closing, I would like to say thank you to the
subcommittee for your recognition that provider enrollment is
critically important through your holding of this hearing and
also your congressional action on H.R. 3716, the Ensuring
Access to Quality Medicaid Providers Act. We certainly hope
that our work serves as a catalyst for additional positive
change to ensure that CMS and states are paying the right
provider the right amount for the right service. Thank you.
[The prepared statement of Ann Maxwell follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you, Ms. Maxwell.
Now Mr. Bagdoyan, you are recognized for 5 minutes.
STATEMENT OF SETO J. BAGDOYAN
Mr. Bagdoyan. Thank you. Chairman Murphy, Ranking Member
DeGette, and members of the subcommittee, I am pleased to be
here today to discuss key findings from our complementary
reviews of screening controls CMS uses to detect and prevent
enrollment fraud from Medicare providers and suppliers in its
provider enrollment chain and ownership system, also known as
PECOS.
As context, Medicare, which is on GAO's high risk list for
potential improper payments and fraud, involves significant
expenditures for the federal government totaling about $569
billion in fiscal year 2015. CMS estimates that about 60
billion of these expenditures, or 11 percent, involved improper
payments.
In our June 2015 review, we found that controls for
screening providers and suppliers listed as deceased or
excluded from participating in federal health care related
programs appear to be generally working. However, we identified
weaknesses in two other controls.
First, we identified weaknesses in CMS' verification of
practice locations. Medicare providers must submit addresses of
practice locations from which they offer services. The software
CMS used at the time to validate addresses didn't flag
potentially ineligible addresses such as commercial mail
receiving agencies, also known as CMRA, which include mailbox
rental stores. It also didn't flag vacant or invalid addresses,
i.e., those where providers or suppliers no longer reside or
those not recognized by Postal Service systems.
Of about 981,000 addresses in PECOS we examined using
Postal Service software, about 105,000 initially appeared
questionable. That is, they were either CMRAs, vacant, or
invalid. Based on a projectable sample of 496 addresses, we
estimated that about 23,400 of the questionable addresses were
potentially ineligible and 5,500 of these had associated to
claims paid.
CMS' 2014 guidance revision actually scaled back address
verification steps conducted by its contractors. CMS' previous
guidance had encouraged contractors to conduct additional
verification steps such as using Google Maps and performing
site visits. However, CMS' revised guidance doesn't require
such steps beyond contacting the provider. And accordingly, by
reducing verification steps, CMS has increased Medicare's
vulnerability to potential fraud.
We recommended CMS incorporate flags into its software to
help identify questionable addresses and revise its current
guidance to enhance verification of practice locations. CMS
agreed with the first recommendation and recently implemented
it and is considering implementing the second recommendation.
We continue to believe additional address verification steps to
be an essential control.
Second, we identified weaknesses in the verification of
medical licenses. Medicare physicians are required to hold an
active license in the state they practice in and report any
final adverse actions to CMS. Such actions include license
suspensions or revocations by any state licensing authority.
We found 147 of the 1.3 million physicians in PECOS had
received a final adverse action, but were either not revoked
from the system or revoked much later, and 47 were paid about
$2.6 million in claims. In March 2014, CMS began providing a
report to its contractors to improve licensure reviews, however
this report only included current licensure status for states
in which providers enrolled. It didn't include the full adverse
action history of these providers or their licenses in other
states, creating the opportunity for ineligible physicians to
enroll into PECOS.
We recommended CMS collect additional licensure information
to ensure providers are self-reporting all final adverse
actions, and CMS agreed with this recommendation and has
recently implemented it. In our April 2016 review, we reported
that while CMS has taken steps to improve Medicare provider
criminal background check controls, it has opportunities to
recover about $1.3 million in potential overpayments made prior
to control improvements to 16 enrollees we identified with
criminal backgrounds. CMS said it is considering action in this
regard.
Finally, as I close, we made 600 referrals from our work to
CMS for action. To date, CMS has removed 251 providers from
PECOS while affirming the eligibility of 227 others with action
pending on the rest. The removal of ineligible providers
originally missed by existing controls underscores our ongoing
concerns about inherent risk of improper payments and fraud in
PECOS.
Mr. Chairman, this concludes my statement. I look forward
to the subcommittee's questions.
[The prepared statement of Seto J. Bagdoyan follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you. I appreciate it.
Dr. Agrawal, you are recognized for 5 minutes. Make sure
the mic is close to you, please.
STATEMENT OF DR. SHANTANU AGRAWAL
Dr. Agrawal. Thank you. Chairman Murphy, Ranking Member
DeGette, and members of the subcommittee, thank you for the
invitation to discuss the Centers for Medicare and Medicaid
Service's efforts to strengthen program integrity in the
Medicare and Medicaid programs. We share the subcommittee's
commitment to protecting beneficiaries and taxpayer dollars by
ensuring only legitimate providers participate in our programs
and reducing improper payments. I appreciate your longstanding
interest in these important issues and I know you're interested
in hearing about results and progress that we are making.
A critical component of progress comes from working with
our colleagues in the HHS Office of Inspector General and the
Government Accountability Office to address vulnerabilities
they've uncovered. In the last year, CMS has implemented 38 GAO
recommendations and 122 OIG recommendations across all CMS
programs and has submitted documentation for approximately 100
additional GAO recommendations and 129 OIG recommendations for
their review and closure. For example, we've made the address
verification improvements that GAO recommended as part of their
report last year. We also appreciate the work that the OIG is
releasing today.
Provider enrollment is the gateway to the Medicare program.
In the past, the provider enrollment process was a largely
manual process which included manual checks of the information
providers submitted. Since the ACA, we have made significant
improvements to provider enrollment.
We've moved to a largely automated system utilizing risk
based screening and other mechanisms to target our efforts and
protect beneficiaries and taxpayer dollars. In 2015, we
completed revalidating all current providers and suppliers
under these new requirements. These new provider enrollment
authorities have saved the Medicare program an estimated $1.4
billion since March 2011.
These administrative actions are part of a larger set of
provider enrollment and screening activities which have saved
the Medicare program 2.4 billion in avoided costs in total.
This includes stopping the billing of more than 570,000
providers or suppliers. Increased screening efforts have led
CMS to deny nearly 7,300 applications last year alone,
preventing these providers or suppliers from ever submitting a
single claim. Additionally, CMS has performed over 290,000 site
visits to verify that a provider or supplier's practice
location meets Medicare requirements.
The Affordable Care Act also requires that states conduct
similar screening of providers participating in their Medicaid
programs. While states and the federal government share
Medicaid program integrity responsibilities, states bear the
primary accountability for provider screening, credentialing
and enrollment.
As their partners, CMS has taken a number of steps to
assist states in fulfilling these requirements. CMS has
dedicated staff to coordinate directly with each state, and we
are providing technical assistance and extensive guidance such
as the Medicaid Provider Enrollment Compendium to assist states
on those efforts. This includes giving states direct access to
the PECOS database and allowing states to use a Medicare
enrollment screening to meet Medicaid screening requirements,
thereby reducing duplication of efforts.
We are also continuing our work to prevent improper
payments across our programs. While we have made some progress,
we know we have more work to do. It's important to remember
that improper payments are not typically fraudulent payments.
Rather, they are usually payments made for items or services
that do not include the necessary documentation, that are
incorrectly coded, or that do not meet Medicare's coverage and
medical necessity criteria.
For example, over two-thirds of the Medicare fee-for-
service improper payment rate comes from insufficient
documentation. These are often instances in which a well-
intentioned legitimate provider treated a Medicare beneficiary
but didn't successfully complete their paperwork.
CMS has taken a number of corrective actions to address
improper payments including expanding the use of prior
authorization to make sure services are provided in compliance
with Medicare coverage, coding and payment rules before
services are rendered and claims are paid. We're increasing
efforts to educate providers by offering additional guidance
and simplifying policy requirements as well as conducting probe
and educate pre-payment reviews for certain services.
As I stated earlier, we're also working with states in a
number of ways to help them meet Medicaid provider enrollment
requirements which are a significant driver of the Medicaid
improper payment rate. CMS is committed to our efforts to
prevent waste, abuse, and fraud in the Medicare and Medicaid
programs, protecting both taxpayers and beneficiaries. The GAO
and OIG are critical partners in these continuous improvements
and these continuous efforts.
We look forward to continuing our partnership with GAO and
OIG to work together on additional ways to identify and
eliminate vulnerabilities and to strengthen both of these
programs. Thank you, and I look forward to your questions.
[The prepared statement of Dr. Agrawal follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you. We will now begin questions. I will
begin and recognize myself for 5 minutes. First, Ms. Maxwell, I
want to discuss what this improper payment rate really does
mean. Some kinds of fraud would not actually be captured in the
improper payments, am I correct?
Ms. Maxwell. That's correct.
Mr. Murphy. And some fraud schemes would remain undetected
through auditing and data mining, and sometimes you actually
need human intelligence such as whistle blowers or
investigators especially when it comes to patient services, is
that correct?
Ms. Maxwell. Absolutely.
Mr. Murphy. And even though there are data mining tools for
provider addresses that are inaccurate, you still are going to
have to have some investigators go on site, those boots on the
ground to determine whether or not a provider is legitimate. Is
that your view as well?
Ms. Maxwell. Absolutely.
Mr. Murphy. OK. And Mr. Bagdoyan, if improper payments
don't capture many types of fraud, then is the CMS improper
payment rate really a good indicator of payments that should
not have been made?
Mr. Bagdoyan. Well, I think it's probably not the best
indicator for fraud----
Mr. Murphy. Bring your microphone closer.
Mr. Bagdoyan. I'm sorry. It's probably not the best
indicator for fraud monitoring, but in terms of improper
payments it's probably the best available as long as the
methodology used to develop it is executed properly. But that's
obviously a contingency on each agency that reports these
numbers.
Mr. Murphy. Exactly. Dr. Agrawal, both HHS and GAO have
cited numerous concerns with the Medicare administrative
contractors' decision to enroll and revalidate providers into
the Medicare program. CMS hires outside contractors to verify
provider eligibility.
So specifically, reports from both agencies identify
several instances in which the contractors approved enrollment
applications even though the provider site visit did not meet
CMS standards. So in one OIG report, contractors conducting
site visits found that 651 provider facilities were not even
operational despite notes such the facility is closed, on the
doors, or this building has been vacated and suite appears
closed and abandoned, over half of those providers still made
it on to Medicare's enrollment system. So how is CMS holding
the contractors accountable for poor enrollment decisions? What
are you doing?
Dr. Agrawal. Yes. I think that's an important question and
I appreciate the work of the OIG in this area. There were
specific recommendations contained in their report which we
have acted on. So they have, for example, recommended
streamlining, simplifying the site visit forms which we are
working on.
Mr. Murphy. Well, is it the form's fault? I am asking how
you are going to hold them accountable.
Dr. Agrawal. I think in part we want to make sure that the
process works well. That if----
Mr. Murphy. Well, it doesn't.
Dr. Agrawal. Well, that if that there are elements of the
process that need to be changed like the way contractors
interact with each other, the forms that they utilize, that we
make those changes. Then----
Mr. Murphy. I don't want to go down that road. If it says
this place is closed, there is nothing there, there is a
padlock on the door, what paperwork is going to help you to
understand that that facility is closed and you shouldn't be
billing out of that facility? That is you.
Dr. Agrawal. Sure.
Mr. Murphy. What are you going to do? Are you going to
revoke their ability to have a contract? Are they going to be
fined for sending you fraudulent information? What is it?
Dr. Agrawal. I think part of the answer is prevention to
make sure that changes are made to ensure better processes in
the future. Part of it is looking at the referrals that the OIG
has given us, which we are working through to better understand
exactly what----
Mr. Murphy. That is enough. I have had enough double talk.
Look, show me that slide up here of the trend. I want to--no,
because I want to get the point. I want you to hold these guys
accountable.
Dr. Agrawal. Sir, if you'll give me a couple minutes or
even a few seconds, I can add to that point.
Mr. Murphy. OK, I will give you a chance.
Dr. Agrawal. Thank you. So like I said, I think getting to
specific cases where things might have fallen through the
cracks as indicated in the OIG report is really important,
because then we can have specific discussions with the
contractors about what transpired and hold them appropriately
accountable.
Mr. Murphy. OK.
Dr. Agrawal. Without that evidence and data we would be
having a, you know, high level, general discussion.
Mr. Murphy. Well, I appreciate that because they have given
you some real valuable data, and I know you are a problem
solver because you are an emergency room physician.
I want to show a slide up here of a trend, if they can show
that slide, please. This is on the Medicare fee-for-service
programs. And does it look like the error rate is moving in the
right direction here over the last--which one is it? There we
go. Does that look like it is moving in the right direction,
that error rate? It doesn't seem to me. Am I correct?
Dr. Agrawal. I think what you see in that chart is a
significant increase in the error rate when new requirements
are created that providers have to meet.
Mr. Murphy. OK.
Dr. Agrawal. And that was driven largely by the ACA.
Necessary requirements for program integrity to make sure that
we are paying for the right service to the right beneficiary.
Mr. Murphy. Is it a valid metric? Do you think these are
valid metrics or do we need to be looking at other metrics when
it comes to----
Dr. Agrawal. I think we have to be careful about what it is
and what it isn't. It is not a very good measure of fraud. It
would not capture the most common fraud scheme which is
prosecuted on a daily basis which is the presence of kickbacks
in a provider relationship.
Mr. Murphy. Sure.
Dr. Agrawal. What the improper payment rate does is it
compares billing, the claims that we receive against medical
records that the provider has and that we don't see at the time
of claims payment. If you were to just look at claims payments
in and of itself, CMS pays claims accurately an extremely high
percentage of the time, well over 99 percent of the time.
What the cert contractor does or the improper payment
contractor does is it grabs a sample of 50,000 claims out of a
pool of a billion, and then it asks for the underlying medical
record documentation from the physician or DME company or
whatever, and it looks at that documentation and compares it
against the claim.
Again, we don't see that documentation at the time of
claims payment, something that we are changing through things
like prior authorization. And roughly 12 percent of the time
there's a discrepancy between what's in the medical record
simply not being sufficient enough to justify a claim----
Mr. Murphy. Thank you. I know I am over time. And I
appreciate that and that is important to get those records
correct, and I appreciate what Ms. DeGette brought up in terms
of the number of payments that you are correcting. I think it
was about 800 and some million dollars, and that is good news.
It is just with these other things, I am sure you are aware
of the frustration of the American people in this, and
Congress. When we are trying to find money for programs we are
told we don't have it. To see it going to foreign offices or
places that are closed it is very frustrating to us,
particularly as we are trying to find funding for some things
to help save lives in mental health.
Dr. Agrawal. Could I just comment on that a little bit? So
removing all of those places, again because the way the
improper payment rate is measured and it looks at medical
records, it does not do site visits, it does not talk to
beneficiaries or providers, closing those places would not have
an impact on the improper payment rate, right. This is a
medical record review that is compared against claims.
Mr. Murphy. I understand. I understand. I am talking about
payments to places that are closed.
And Ms. DeGette, you are recognized for 5 minutes.
Ms. DeGette. Thank you, Mr. Chairman. I think we all agree
we need to reduce waste, fraud and abuse. We can just stipulate
to that on a permanent basis, OK. Yes.
Mr. Murphy. So ordered.
Ms. DeGette. One of the problems that we have had as we
heard from the OIG is that the states with respect to Medicaid
have not fully implemented provider screening tools like
fingerprinting, criminal background checks and site visit. The
deadline for the states to complete revalidation from all the
providers has slipped as has the deadline for full
implementation of criminal background checks.
And so I guess I want to ask you, Dr. Agrawal, if you have
some sense if the states are having to lead in preventing fraud
in Medicaid, what can we do to make those states who are
lagging behind comply?
Dr. Agrawal. Yes, I appreciate the question. You correctly
point out that states really have to take the lead in terms of
safeguarding their own----
Ms. DeGette. This is a state-administered program.
Dr. Agrawal. Exactly right. So, and I appreciate very much
the recommendations from both OIG and GAO on these issues. We
have responded by trying to provide technical assistance to the
states, literally giving states a person that they can call
directly on my team to make sure that they are aware of the
requirements and can get whatever assistance they need to meet
them.
Ms. DeGette. And what kind of response are you getting from
the states?
Dr. Agrawal. I think generally it's really interactive. I
mean, they do want more guidance. That led us to release the
Medicaid Provider Enrollment Compendium earlier this year to
give them that. They wanted more access to Medicare enrollment
data so we gave them real-time access to our enrollment data.
They wanted access to law enforcement data so we actually
negotiated on their behalf real-time access to the FBI state
level criminal data, which we believe all of those efforts and
states really taking a proactive stance on this will help get
them into compliance.
Ms. DeGette. Well, I also want to ask you about the
improper payment rate for the Medicaid program that the
chairman was referencing with his chart which increased last
year from 6.7 percent to 9.8 percent. Do you know what has
driven the uptick in the improper payment rate?
Dr. Agrawal. Yes. First, let me say the way the improper
payment rate in Medicaid is calculated is that we sample 19
states every year at three cycles of--I'm sorry, 17 states that
then get us over a 3-year period to assess the entire Medicaid
program. What that means is we are currently in cycle 3 now.
The first cycle was 2 years ago, and that was the first time
that new ACA requirements were introduced in the PERM
measurement.
These ACA requirements are things like provider enrollment,
things like making sure that we have the NPI----
Ms. DeGette. Right, OK.
Dr. Agrawal [continuing]. Of attending physician on every
claim. So those are driving the rate at this point.
Ms. DeGette. So this is your third year. So why has the
rate gone up, because you are still completely getting the
data?
Dr. Agrawal. No. Well, I think the rate has gone up because
of lack of complete state compliance with these new ACA
requirements. And so we expected to see a trend of frankly
increase every year as we sampled more and more states and
looked at how they were implementing----
Ms. DeGette. And so what can we do to make the rate go
down?
Dr. Agrawal. Yes, great question. So----
Ms. DeGette. Thank you.
Dr. Agrawal. I think it is the combination of numerous
different efforts. It is working with states, collaborating
with them, making sure that they're clear on these
requirements, giving them access to the data if they need it.
We have provided federal matching funds for system changes so
that they can get NPIs reported on claims.
It's not a single solution, it's a multitude of solutions
to ultimately get states moving in the right direction. And if
they don't, if, you know, those solutions don't work, then I
think we have to talk seriously about accountability for the
states.
Ms. DeGette. So I just want to thank you for that and I
just want to add, if there is something your agency thinks
Congress can be doing to help this nudge this along we are
happy to do it.
And I would like to point out, earlier this year the House
passed H.R. 3716, the Ensuring Access to Quality Medicaid
Providers Act which our own Representative Bucshon and Welch
co-sponsored. And what this does is it requires states to
report the termination of an individual or entity from its
Medicaid program to a database maintained by the CMS. The
Administration supports the bill. The House passed it by 406 to
0, so maybe we could get our friends on the other side of the
Capitol to pass it. That might be beginning assistance, but
anything else we can do, we are really serious about this.
And the chairman is right. People say all the time, well,
we can fund this. We should just eliminate waste, fraud, and
abuse. But it is not so easy to do especially when you are
relying on the states. So I appreciate you and your efforts and
I appreciate the other agencies in helping you to find new
tools to do it. Anything we can do to participate, let us know.
Thanks, and I yield back.
Dr. Agrawal. Thank you.
Mr. Murphy. The gentlelady yields back. I now recognize the
vice chairman of this committee, Mr. McKinley of West Virginia,
for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman. To try to get
through a series of questions quickly with you, the first is
perhaps with Mr. Bagdoyan. Just quickly, do you think that
telemedicine is contributing to the potential abuse?
Mr. Bagdoyan. That's an excellent question, Mr. McKinley,
but that's not in the scope of the work I've done and I have no
expertise in that. So I couldn't respond to that.
Mr. McKinley. OK. Could you find out from someone in the
panel or elsewhere is what the impact that could be, because
people practicing without license in a state there could be
abuse. I would like to follow up with that.
Now with Dr. Agrawal, thank you for once again appearing
before us, there are a series of questions I have quickly with
you. We talk about this pay and chase, but before I get to the
pay and chase issue what about using the technology that we
have today, the internet, Skype, whatever, to be able to try to
get some of that utilization particularly for people that have,
groups that have abused the system or maybe have been
mischarging?
Could we, do you have an idea of what the cost would be to
implement something, then in real time you would be able to
make a phone call or a Skype information or something to be
able to get that for a pre-approval before they offer these
services? Have you looked into that what that cost could be?
Dr. Agrawal. Yes. I think very important question. We have
tried diligently over the last few years to move away from a
pay and chase model to one that emphasizes prevention. Along
the lines of your question, we've implemented the Fraud
Prevention System which is a predictive analytics technology.
Congress authorized the implementation of this system as well
as funded it for its initial 4 years of implementation.
Mr. McKinley. What about just someone picking up the phone
or talking to someone, a real person? Not a press one or press
two, but actually talking to somebody. I have got this patient
and these are the conditions, is this going to be OK?
Dr. Agrawal. Well, what you are highlighting essentially is
a prior authorization process which is used extensively.
Mr. McKinley. I don't want to do it for everyone, as that
penalizes everyone. I am looking at people that have perhaps
been known to have made mistakes before so that we clarify, so
it is a very single. So you have not looked into it--because I
really want to get to my last two questions quickly.
We have one of the things when we meet back in the district
we keep hearing there is a lack of uniformity in the
application for reimbursement and different rules are being
applied to different regions of the country.
I know in West Virginia and in Ohio there is a separation
of just over a thousand feet. The river separates between West
Virginia and Ohio. But yet the contractors are two different
contractors, and using almost exactly the same circumstance the
one in Ohio is being reimbursed differently than the one in
West Virginia. And similarly to that, that the denial rate, the
initial denial rate is 90 percent. Ninety, 89 percent for West
Virginia, but in Ohio it is only ten percent.
So as a result of that denial rate, a lot of the West
Virginia providers are having to go out and get lines of credit
and increase their cost of doing business because they are not
being reimbursed in a timely fashion. What are we going to do?
Why is there such a disparity between two regions separated by
merely a thousand feet?
Dr. Agrawal. Without the specifics of a case it's hard to
comment, but there are legitimate----
Mr. McKinley. We sent CMS those specifics. So we have not
heard back, so we can send them again.
Dr. Agrawal. I would love to certainly see them and be
happy to follow up with you. There are lots of things that can
drive differences across geographies. First, the way that
providers practice, the way that they submit bills to the
agency----
Mr. McKinley. Ninety percent versus ten percent?
Dr. Agrawal. There are also other coverage decisions that
are different, like local coverage determinations that can vary
from one region of Medicare to another. So a multitude of
factors can figure into this. Again, I'm happy to work on a
particular case if that would be relevant for you.
Mr. McKinley. Well, I think it is more than just a
particular case. It is something uniformly when I go back to
the district this is something we hear from providers time and
time again. Because we enjoy the--we are right there on the
border. We can contrast what they are doing in Ohio for
reimbursement as compared to what they are in West Virginia. So
I guess we can have further conversation, but I appreciate your
answers on this and I hope we can work together.
The last is this thing, you have instituted a 3-year
demonstration program to possibly do a prior authorization. Why
is it across the board? Why isn't it more just for those that
have a history of perhaps violating the system? Because that
way everybody is being punished this way. This doesn't make
sense.
Dr. Agrawal. We have implemented through a demo approach
prior authorization in ambulance services, again in certain
geographies, in certain DME supplies and certain geographies.
We have found that prior auth can be a really useful tool
because it narrows that gap between the medical record and the
claim which helps to reduce the improper payment rate and
reduce expenditure kind of accordingly.
I'm very open to more focused prior authorization, really
focused on bad actors and folks that have high denial rates.
However, I think before we get there we have to get more
experience.
Mr. McKinley. What I want to get at it is the use of
technology that we have today.
Dr. Agrawal. Sure.
Mr. McKinley. If we have all this internet access let's use
it and be able to--so I yield back my time.
Dr. Agrawal. I appreciate it.
Mr. Murphy. The gentleman yields back, and I recognize the
gentlelady from Florida, Ms. Castor, for 5 minutes.
Ms. Castor. Thank you very much, Mr. Chairman, and good
morning and thank you to the panel. I am glad we have the
opportunity to discuss rooting out the fraudsters in Medicare
and Medicaid and tackling the problem of insufficient
documentation, because we want every dollar in Medicare and
Medicaid to go to the health services of our neighbors.
And when you look at the size and scope of all of the
health services under Medicare and Medicaid it really is
daunting. Over 125 million Americans receive their health
services that way, whether it is in the hospital or the
doctor's office or under Medicaid in skilled nursing or for our
neighbors with disabilities. So because of the size and the
scope, fraud and improper payments have been an ongoing
challenge.
But with the passage of the Affordable Care Act in 2010, we
now have these more effective, more significant new tools to go
out to go after these fraudsters and try to reduce some of the
improper payments. I think everyone wants the agencies to be as
nimble and as aggressive and as effective as you can be about
doing this.
So Dr. Agrawal, I would like to ask you about the
Affordable Care Act's anti-fraud measures and how they have
strengthened Medicare and Medicaid. Share with us, what are the
most effective tools now that we are 6 years after the adoption
of the ACA? I know it was kind of cloudy early on. People,
heck, we are still voting to repeal it here in the Congress,
but in the meantime we have wanted you to be as aggressive as
possible on using these new tools.
What are the most effective new tools so far that were
provided under the Affordable Care Act?
Dr. Agrawal. Sure. So in the ACA, provider enrollment is an
extremely useful tool. I think we have significantly changed
the way we enroll providers from pre-ACA years. And while there
are clearly are refinements that we can continue to make, I
just want to remind everybody that we have revalidated every
single provider and supplier in Medicare.
Through that and other actions we have disenrolled over
500,000 providers who are no longer able to build a program.
Just from site visits and finding nonoperational providers
we've removed 1,900 providers from the system, from licensure
checks over 19,000. So again I think the numbers are important.
We can clearly continue to make progress, but that's a really
useful set of tools for us.
We also have new tools that put us on the prevention end of
our activities, so things like payment suspensions where we are
able to suspend all payments to a provider pending an
investigation and potentially other administrative actions.
That prevents us from making payments to potentially bad
providers on the front end.
Working with Medicare and increased Medicare and Medicaid
data sharing, another feature of the ACA, I think extremely
important, can continue to be improved. But that allows us to
see when a state has taken an action against a provider to see
if it should be duplicated in Medicare, and for states to
exchange data with each other.
We've seen significant state uptake of that kind of
transparency to each other and seen some real results with
refinements that we will continue to work on. So I think
without the ACA we would be in a substantially different place
in this program than where we are today.
Ms. Castor. Ms. Maxwell, the same question. You highlighted
at the beginning of your testimony that the Affordable Care Act
provisions now provide more rigorous tools to root out
fraudsters and to tackle insufficient documentation. From your
point of view, what have been the most effective tools provided
under the ACA?
Ms. Maxwell. Thank you for the question. We do believe the
tools really change the possibilities for the strengthening of
the provider enrollment. And while we looked at the
implementation of both Medicaid and Medicare, what we really
came away with was the potential for maximizing their
utilization.
We think the tools have great promise and we want to make
sure that Medicaid and Medicare are extracting the full promise
from those tools, so that the Medicaid systems implement all
the tools that are available to them and the Medicare program
implements them to their fullest degree. So we think they have
tremendous potential and we hope that our recommendations will
be of assistance in making them even stronger.
Ms. Castor. So you have both highlighted problems with
state implementation, whether it is the criminal background
checks or getting some things done. My time is running out, but
if you could quickly say is this a capacity problem at the
state level? Is there a reluctance at the state level because
of the political cloud that has hung over the Affordable Care
Act for many years? Or is it just a lack of funds, a lack of
action, a lack of technical know-how?
Ms. Maxwell. Well, the states reported to us that they were
facing operational challenges with specifics in terms of the
fingerprint background checks. It's a new process for them.
It's difficult to operationalize, and also resource concerns.
Ms. Castor. Dr. Agrawal.
Dr. Agrawal. I think that's right. These are complicated
expectations that we are placing on the states. There's lots of
requirements. There are, I think, a lot of operational
challenges. I think that is why they're asking for more data,
access to more guidance, which we are providing. These things
will take time, but I see states making progress.
Ms. Castor. Thank you very much.
Mr. Murphy. The gentlelady's time is expired. I recognize
the gentleman from Virginia, Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you very much, Mr. Chairman. If I could
pick up on the questioning that the gentlelady was asking, you
indicated, and I may have misunderstood that there were some
complications and I would address this to Ms. Maxwell or Dr.
Agrawal, there were some complications but it sounded like when
I was listening to the testimony that we were talking about
fingerprinting and criminal background checks and many of the
states are already doing that for lots of other things. Why is
that complicated?
Dr. Agrawal. I think what we've heard from the states is
that they'd like better access to real-time law enforcement
data so that their fingerprint checks are higher in accuracy.
And we heard that loud and clear from a number of states. They
also wanted more guidance about how we implemented these checks
in Medicare.
So we've given them that guidance, and then on their behalf
got them access to FBI state level criminal data so that they
can bump their fingerprint checks against that database. And so
we look to states now making significant progress since we've
armed them with these tools.
Mr. Griffith. I guess I am just curious, because checking
both the national and the state with the fingerprint has been
something that has been done, background checks have been done
for quite some time at least in the Commonwealth of Virginia
that I represent, but I didn't realize some states were not
doing that.
Mr. Bagdoyan, in your testimony you have indicated of
course, and we have already heard today about the weaknesses in
the CMS' verification of provider practice location, physician
licensure status, et cetera, and you said you had made some
recommendations which CMS indicated they would implement or are
taking steps to address.
What specifically did you recommend to them that they might
do to improve that because obviously it is a little shocking
when you find out that we have got money potentially going to
empty office buildings or to a UPS mail drop?
Mr. Bagdoyan. Right. Well, thank you for your question.
Regarding the locations it was a software issue, a screening
software issue where it was lacking some critical flags like
whether it's a mailbox, whether it's an empty lot, or it's just
not recognized by the Postal Service. So CMS took this to
heart, they did some work and went ahead and upgraded the
software with a new package that has these flags. This is a
relatively recent development so we'll see going forward how
effective that's going to be.
Regarding----
Mr. Griffith. And do you think that was the software
providers' problem? Because it seems to me that that would have
been something normal that we shouldn't in 2016 or even in 2015
be thinking, well, shucks, we ought to check to see if somebody
really is there. Is that something new, or is this just that
their software failed them?
Mr. Bagdoyan. It's not new. We have the software from the
Postal Service that we use at GAO for various forensic audits.
It's relatively inexpensive and easy to use. However, at the
time CMS purchased its own software, I'm not sure what kinds of
requirements definitions they made of the contractor or
requirements to the contractor regarding requirements of the
software. So I can't speak to that in any depth, but forward-
looking CMS is moving in the right direction.
Mr. Griffith. And I appreciate that. But Ms. Maxwell, if
the Postal Service has a system that they use for this that GAO
uses to check up on things, why did you all go out and spend
money on something else? And can you tell me, I know you may
not have that off the top of your head, but can you give us the
information on how much you spent on a software program when
the Postal Service had one that was fairly effective and easy
to use, according to Mr. Bagdoyan?
Ms. Maxwell. If I'm understanding your question correctly,
I believe that's directed to CMS, about the database?
Mr. Griffith. Yes.
Ms. Maxwell. We did not look particularly at that. The work
that we did looked at the information that was in the data
system about provider ownership and found discrepancies in that
information as well. And in totality, I would say having the
correct address, having the correct owner's name is critical to
making the proper enrollment decision. You need that
information to make a decision.
Mr. Griffith. So I should have asked that question of you.
Dr. Agrawal. I was thinking of bailing her out, but then--
--
Mr. Griffith. So why are we, I mean, how do I tell my
taxpayers back home that we are getting our dollars' worth when
we are going out and reinventing the wheel, when the Postal
Service already has something that would at least tell us
whether or not that was an address that actually existed or was
in the middle of the river somewhere?
Dr. Agrawal. Right. So the Postal Service, I think the GAO
identified a very useful tool for us. We have integrated that
into our systems. Now, there's a difference in integrating a
tool like that into your systems, making sure that it cross-
talks with other databases, making sure that you have a process
behind it that's very different than what's conducted in an
audit where a few people get access with a license to the
database. So it will inherently be more expensive to actually
get it fully integrated with our other work.
I also do want to make the point that the data is a great
source of lead information, but it also can produce false
positives. So we saw that in the sample provided to us by the
GAO as well.
Mr. Griffith. My apologies because my time is out, but I
have got two things I would like for you all to respond to at a
later date. One, how do you rank with the private industry as
far as your being able to identify fraud; and two, I like
telemedicine, so let's figure out a way we can make that work
because I heard somebody else say earlier they were worried
about that creating fraud, but for rural districts it is very
important. And I yield back.
Dr. Agrawal. Thank you.
Mr. Murphy. Thank you. Mr. Pallone is recognized for 5
minutes.
Mr. Pallone. Thank you.
Dr. Agrawal, thank you for appearing here today. The
Affordable Care Act gives CMS a number of new tools and
expanded authorities to reduce fraud and improper payments in
both Medicaid and Medicare. For example, the ACA required
increased scrutiny of providers and suppliers who have
historically posed a higher risk of fraud or abuse to either
program, and this heightened screening process applies to
providers and suppliers that are attempting to enroll in these
programs or are revalidating their participation.
So let me ask, Dr. Agrawal, can you describe how CMS uses
this risk based screening method and applies different
standards to providers and suppliers in each category of risk,
and how does this approach help us protect against fraud and
how does this compare to what private payers do before they
enroll providers and suppliers?
Dr. Agrawal. Sure. So the ACA required that we segment
provider categories into three different risk groups: a high
risk, a moderate risk, and a limited risk. Certain enrollment
and screening requirements are applied across the board, often
the ones that we can do in an automated fashion like confirming
licensure or certification.
There are certain other screening requirements that are
leveraged against a higher risk provider types. Newly enrolling
DME companies, for example, or home health agencies, these are
provider categories that have had historical issues with fraud
in that group. And so we've leveraged greater tools to address
their enrollment like site visits, criminal background checks
that are fingerprint based.
So what this enrollment approach allows us to do is really
respond to the risk where it exists. We've done that in
collaboration with law enforcement, with the Office of
Inspector General in making sure that we are not overburdening
providers but at the same time getting additional data so that
we can make the right enrollment decision.
Mr. Pallone. Now how many providers and suppliers have been
subject to the enhanced screening requirements at this point in
the Medicare program?
Dr. Agrawal. So at this point all of them have. We've done
that in an automated fashion, but also through the revalidation
process which went to every single provider and supplier in
Medicare, about 1.6 million. What we've seen as far as results
is 500,000 providers that don't meet our requirements for one
reason or another. Nineteen thousand of those were merely for
licensure requirements. They didn't have the appropriate
certification. Another about 1,900 that weren't operational. So
again these are, I think, important numbers. They show the
impact of this kind of screening.
Mr. Pallone. And certain ones of those have lost their
ability to bill Medicare then as a result?
Dr. Agrawal. Absolutely.
Mr. Pallone. OK. I wanted to go Ms. Maxwell. I think these
screening tools show promise in lowering fraud rates and I am
sure that HHS OIG sees the importance of using them, but also
understand that you believe they need to be more widely used
particularly by some state Medicaid programs, and the OIG found
that a number of states were lagging behind in implementing
provider enrollment and screening procedures.
So Ms. Maxwell, does the HHS OIG see value in these tools,
and how do we help states use them more comprehensively?
Ms. Maxwell. The goal of our work is to ensure the maximum
value from these tools both for the Medicaid program and for
the Medicare program. And you're absolutely right that we
believe that the way to do that for the Medicaid program is to
have all the tools implemented. We know not many states are
already doing the criminal background checks, some states are
not doing site visits, and some states are going to miss their
revalidation deadline. So I think that's the way to strengthen
the Medicaid program.
Mr. Pallone. But how are you going to help the states use
these things more comprehensively?
Ms. Maxwell. Our recommendation is for CMS to assist. As
we've been talking about here it does certainly rely on the
states to step up and to implement many of these tools, but we
see a way for CMS to assist them, providing technical
assistance, providing more guidance that we heard states really
wanted.
In addition, there's a possibility of reducing burden on
the states by allowing them to better substitute their
screening for Medicare screening. And we heard from states that
they often were reluctant to do that out of concerns with the
data in the Medicare enrollment database.
Mr. Pallone. OK. Let me go back to Dr. Agrawal for my last
question. Can you give us an update on what you are doing to
help the states get to the finish line, and what is the crux of
the issue here? Do states need additional technical assistance
and guidance?
Dr. Agrawal. Sure, and I think it dovetails nicely with
what the OIG has recommended. We are providing more technical
assistance. Every single state has a person they can call in my
office for help and guidance on how to implement these
requirements. We put out the most comprehensive set of
guidances really in the last few months that we have ever
provided to the states so that they know step by step what they
have to do to meet all of their enrollment requirements.
We've given them real-time access to Medicare data and the
guidance that if we have already enrolled and screened a
Medicare provider they don't have to duplicate that effort on
their end, which is better for the state, better for the
provider. And finally we've given them access to criminal
justice or law enforcement data to make sure that they can
implement the fingerprint based background checks through an
FBI database that they have now real-time access to.
Mr. Pallone. All right. Thanks so much. Thanks, Mr.
Chairman.
Mr. Murphy. I now recognize Mr. Bucshon for five minutes.
Mr. Bucshon. Thank you, and thank you to the witnesses. I
had practiced cardiovascular and thoracic surgery before. I
think most of you, many of you know that. So I understand some
of this from a provider perspective.
We did pass legislation in the House, 3716, and I think the
Senate will be taking that up. It is common sense to prevent
providers from going to another state and getting on the system
when they have been fraudulent or ineffective practitioners in
the previous state.
Medicare by the way does a good job in their billing
services. I mean, when I was in practice electronic claims paid
more quickly in general than the private sector and more
accurately in many respects. So I just want to say that there
are things that the Medicare system does very well.
There are things that because of the size of the program
there is some trouble. One of those, and you talk about
incorrect payments being, Dr. Agrawal, two-thirds being
documentation issues. I can tell you why that is and you
probably can tell me too, because it has to do with the
complexity of sometimes physician documentation.
I was a surgeon. I will give you an example. Right after
the surgery I always did a handwritten note about what I did in
the case. I didn't have the codes specifically in front of me
and describe the procedure exactly the way that it might say,
especially now under ICD-10, so and that will be paid probably
fairly quickly based on my handwritten operative note.
And then when the dictated note comes through, which
sometimes can be weeks, there may be a slight discrepancy, and
then when you go back and review the case you will find a
discrepancy in billing and say that that is an improper
payment. So some of that I don't know what you can do to
address, I mean, address that situation. It is difficult as a
provider sometimes to make everything perfectly line up even
though there is no intent to defraud the program.
Dr. Agrawal. Yes. That's a great and very concrete example,
Dr. Bucshon. So I think you might be right that you might
generate an improper payment unfortunately from that note,
maybe not. But I think what's important to keep in mind for you
and your colleagues is that is not fraud, right, nor would
anybody at the agency----
Mr. Bucshon. Right.
Dr. Agrawal [continuing]. Say that you have tried to commit
fraud. That shows you in a real-world, I think, example how we
differentiate improper payments from the more concerning fraud
and abuse activity. You're absolutely right, also, about our
documentation requirements, so I think there's a few things we
can do. We are working on educating physicians and other
providers about what those requirements are through our probe
and educate and other kinds of approaches.
Second, I think we can streamline some of our requirements
where appropriate, so if there are excess requirements that no
longer belong I think we have looked at them and decreased them
wherever possible. You saw this in the two-midnight rule and
the home health face-to-face requirement.
And three, and I think again a useful tool that we are
exploring is prior authorization. It's getting to see that
medical record before a service is offered so that the
physician isn't on the hook, and then before a payment is made
so that we are really being preventive of issues.
Mr. Bucshon. Yes, I think that is good because a lot of
those numbers could be improved. I mean, well intended
practitioners, you know, you end up having an improper payment
and you are on this percentage list, but it really is not.
Another thing is, is fraud a moving target? Obviously it
is. I mean, my concern is as I mentioned, Medicare and many
other payers are going to electronic payment method. In fact,
Medicare, I think you have to do that if you want to
participate. Do we have strong enough cyber experts? Is any of
this related to cyber related type of issues through Medicare?
I mean, is--or not?
Dr. Agrawal. Yes. You're absolutely right that fraud is a
moving target, which is why I think it's important to invest in
flexible tools that you can use across a variety of issues. I
mean, things like automated screening. Things like automated
real-time claims checking.
I think cybersecurity is definitely a priority for the
agency. We have focused on it. We track medical identity theft
issues or potential issues so that we can intervene where
appropriate. Congress has recently required and funded a change
to the Medicare HICN number so that we can be more proactive on
these kind of identify theft issues. I do think that that's a
component of the world that we are seeing and we're being
proactive in making sure our systems are secure and then we
respond to vulnerabilities where they are.
Mr. Bucshon. OK, and I am running out of time. But the
other thing is, is in certain respects maybe we need to look at
whether or not criminal penalties for defrauding the federal
government and this type of thing are strong enough to deter
people from trying to do it. Someone said years ago, they asked
a bank robber why they robbed banks, and because they said that
is where the money is. These programs have billions and
billions of potential money and that is why this is an ongoing
struggle.
And Dr. Agrawal, I just want to say I appreciate your
efforts in what you are doing. I know that it is a difficult
problem to tackle and I know that you are trying to do the best
job that you can to get ahead of this. Thank you. I yield back.
Dr. Agrawal. Thank you. I appreciate it.
Mr. Murphy. Now Mr. Tonko is recognized for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair, and welcome to our
panelists. Under the ACA, the secretary of HHS has the
authority to implement a temporary moratorium on the enrollment
of new Medicare providers and suppliers. This is particularly
useful, I believe, because if CMS sees a possible trend in
fraud such as overutilization of a certain type of service or
product, new enrollment can be temporarily suspended while
suspect activity is investigated. This approach ensures that if
a bad actor enters the program, the fraud can be limited and
corrective actions or additional controls can be put in place.
So with that said, Ms. Maxwell, can you tell us why having
the ability to temporarily suspend enrollment for suppliers or
providers is an important tool, and what can it do for reducing
fraud or abuse?
Ms. Maxwell. Thank you for that question. We are here to
talk about the critical role that provider enrollment plays and
that is part of the tools that are available. We want to make
sure that the programs are not doing business with people whose
intent is to defraud the program, and the way to do that
ideally is to prevent them from getting in the program in the
first place. So we were talking about the particular role of
screening tools, but the moratorium offers a different tool to
prevent that from happening.
Mr. Tonko. And also, Ms. Maxwell, can you explain for us
why having a temporary moratorium helps us from further
limiting the pay and chase problem that has been so problematic
over the years?
Ms. Maxwell. Absolutely. As I said in my opening statement,
enrollment is the green light to start treating beneficiaries
and to start billing. And so our best opportunity to not let
that happen is to prevent them getting in the program in the
first place. So that would be strong provider enrollment
screening tools, moratorium, and other ways to make sure that
we know exactly who we're doing business with and we are
comfortable letting them treat our patients and paying them.
Mr. Tonko. And also, CMS has the authority to temporarily
suspend enrollment in certain categories of suppliers or
providers. This is a useful tool, I would think, in reducing
fraud and abuse also. So Dr. Agrawal, can you explain how
enrollment moratoria have boosted the agency's efforts to limit
fraud and improper payments in the Medicare programs?
Dr. Agrawal. Sure. And I agree with Ms. Maxwell that
closing that doorway to Medicare can be a very important tool.
The moratoria essentially allows us to pause enrollment in a
certain geographic area for certain providers.
We have implemented it in the areas of home health and
ambulance services in a number of geographic areas. We're
currently evaluating the impact of the moratorium. It certainly
allows us to step up our efforts in those areas as well as
working with law enforcement. What we have found so far is that
in moratoria area we have removed about 900 providers that no
longer meet our requirements or that after an investigation are
found to be fraudulent or abusive of the program.
So I think it can be a very useful tool to open up that
investigative possibility. And we have also, we are working
with states to approve any moratoria that they would like to
implement in the Medicaid program.
Mr. Tonko. Great. And how often would you say these tools
are reached to?
Dr. Agrawal. I'm sorry?
Mr. Tonko. How often are you reaching to this kind of tool
in the kit? Is it frequent? Is it----
Dr. Agrawal. I think with respect to the moratoria we want
to be careful with it. We want to make sure that we are
implementing it in clear geographic areas where there is
saturation of certain provider types. We put out data for the
public recently to better understand where we are seeing these
issues, clearly showing problems in the areas we have the
moratorium.
I think while we gather data on what it's doing, what it
allows us to accomplish, I want to be very careful that we
don't just sort of use it all over the place and potentially
impact legitimate access to services.
Mr. Tonko. And then also, Dr. Agrawal, what steps are being
taken by CMS to ensure that enrollment moratoria do not
adversely affect Medicare beneficiaries' access to medical
assistance?
Dr. Agrawal. Yes. So I think part of it is being really
methodical about where we implement the moratoria, making sure
that we're responding to clear indicators of market saturation.
We are also tracking access to services in real time, making
sure that beneficiaries continue to enjoy the legitimate access
to services, and working with states so that there's on the
ground reporting. If the data doesn't show it we might still
hear anecdotes and other inputs from the states.
So far I will tell you, given where we started and the
extreme levels of market saturation, we are not at a place yet
really in any of the moratoria area where we would start to
impinge upon legitimate access to services.
Mr. Tonko. OK. Well, it is good to know, and I thank you
all again for serving as witnesses on this important topic, so
thank you. I yield back.
Mr. Murphy. The gentleman yields back. Thank you. I now
recognize Mr. Collins of New York for 5 minutes.
Mr. Collins. Thank you, Mr. Chairman. And boy, I thought I
was upset the last time we got together, and I can't even get
my mind around this, Dr. Agrawal. And since you are part of my
stump speech on pretty much a weekly basis, and I don't mean
that in a complimentary way, I do know your name well.
So 2013, error rate 5.8. Oh, what was your goal in '14?
5.8. Not exactly a private sector mindset. Didn't hit 5.8, hit
6.7. Oh, so the next year your goal was 6.7. Ah, didn't hit
that either. It was 9.8. Can I kind of connect these dots? Is
your goal this year 9.8? You just keep raising it. What is your
goal this year?
Dr. Agrawal. Congressman, I think what you're referring to
is what we expect to see in the Medicaid improper payment rate
as----
Mr. Collins. Yes, that is all I am asking. It was 5.8, went
to 6.7, went from 6.7 to 9.8. What is your goal this year? Do
you have one? Is it 9.8?
Dr. Agrawal. Congressman, I can get you that goal, but I
will tell you that----
Mr. Collins. Oh, you don't even have it.
Dr. Agrawal. I will tell you that we expect to see the
numbers----
Mr. Collins. Now you have really blown my mind. We are
halfway into 2016, and in your position you can't even tell me
what your expected error rate is this year? We don't work in
the same universe. Lean Six Sigma, as I brought that up last
time. We allow in the private sector three errors, 3.4 errors
per million transactions. 3.4. You had 97,800 errors per
million last year. 97,800.
Could you imagine, Mr. Chairman, what we would be talking
about today if American Express screwed up 97,800 transactions
out of a million? Could you imagine if Google or Amazon screwed
up 97,800 transactions out of a million? I can't even conceive
of the outrage.
And Dr. Agrawal, here we sit today with last year your goal
was 67,000 per million, you got 97,800, and here we are at the
end of May in 2016 and you can't even tell me today what error
rate is your goal for 2016. I am guessing you have blown the
mind of everybody in this room and anybody watching this.
Taxpayers in my world as we have argued on this committee
and others, even the other day Zika virus, we need more money.
We want more money. We don't have more money. We want more
spending for NIH cancer research. That is the one thing that I
can assure you that the Democrats remind us of all the time, we
want more money. You know, we have to balance our deficits, our
debt and our obligation to taxpayers and future generations.
And here you are in your seat accepting 97,800 errors per
one million transactions, and from the tone of what I have
heard so far I would presume you actually think you are doing a
good job. Is that a fair statement? Do you think you are doing
a good job? That is a yes or no. Do you think you are doing a
good job?
Dr. Agrawal. There are clearly improvements that we are
working on making.
Mr. Collins. You know what, again you can't even answer a
question. Are you doing a good job? That is a yes or no. Do you
think you are? Yes or no.
Dr. Agrawal. There are clearly improvements that we are
working on making.
Mr. Collins. And has everyone heard me ask him a yes or no
question and you heard the answer? He couldn't even answer yes
or no. I think you can understand why--last year I asked Dr.
Agrawal a straightforward question. I said, ``Dr. Agrawal, if
you worked for me how long do you think you would last?'' Took
Agrawal about 20 seconds to answer that question and at the end
his comment was, respectfully, Mr. Congressman, I hope I never
work for you.
So let me answer the question right now and be clear
because we never really got there. If you worked for me you
would be fired this afternoon. And I yield back.
Mr. Murphy. The gentleman yields back. Do you need to----
Ms. DeGette. Chairman, I find it very abusive of the
witnesses and I just, I think that is really objectionable. I
would just like to put that in the record.
Mr. Murphy. Well, I would like to see if the witness has an
answer that he wants to respond.
Dr. Agrawal. No, I don't.
Mr. Murphy. Thank you. Then I recognize Mr. Green for 5
minutes.
Mr. Green. Thank you, Mr. Chairman. Last year, CMS reported
that its advanced analytics computer system called the Fraud
Prevention System did find and prevented 820 million in
improper payments for the first 3 years of use. This system
assisted predictive analytics to identify billing patterns that
appear suspect, may be improper or even fraudulent. The Fraud
Prevention System is similar to systems used by credit card
companies.
Dr. Agrawal, can you explain in more detail how this system
works and how it is applied and how CMS has used it to protect
tax dollars?
Dr. Agrawal. Sure. So the Fraud Prevention System--and we
do appreciate the support Congress has provided to implement
and fund this system--what it does is it streams Medicare
claims in real time, about four and a half million claims per
day. It bumps those claims against established algorithms,
which are predictive algorithms and other kinds, based on what
we find going on in the field that are indicative of potential
fraud or abuse. And it flags both the claims and the associated
providers so that it can prioritize and protect the downstream
investigations.
The impact from the FPS has clearly been extremely
important. It put us clearly on a path away from pay and chase
towards prevention where we can prioritize the right
investigations and take actions more quickly. The OIG has
certified the ROI from the system showing that it is very
positive, and we look forward to releasing more data soon on
how the system has continued to progress.
Mr. Green. And since that system was similar to those used
by credit card companies in the private sector, do you compare
your successes, compare your failures, with the private sector?
Dr. Agrawal. We are constantly communicating with the
private sector. I meet regularly with my correlates in the
private sector to see how they do their business on, across the
range of things that we're engaged in from analytics to
provider enrollment.
What we see, what we are using the FPS for is sort of two
main missions. One is to directly deny claims wherever we can,
so if a claim comes in that shouldn't be paid on the face of it
we will deny that claim through the FPS. And second, to really
direct our investigative resources so that they're being well
spent and producing real return.
And again, here, I think we've seen significantly improved
returns on investment, 5 to 1, 2 years ago, 10 to 1 last year,
and we're--oh, I'm sorry, 10 to 1, 2 years ago, and we're
working on numbers for last year to release.
Mr. Green. OK. As I mentioned in the beginning of my
questions, CMS reported last year that the Fraud Prevention
System has assisted in identifying and preventing about 820
million in inappropriate or improper payments. Can you tell me
more about this figure and how did CMS accomplish this?
Dr. Agrawal. Sure. The FPS, in addition to being able to
deny claims where there's clear payment policy and the claim
doesn't meet it, what it's also able to do is identify new
providers that might not have yet sort of shown up on our radar
based on the field work and intelligence that we have and it
can also corroborate data that we already have, making the
investigation more efficient.
What we do is we work with our investigators to get from
them knowledge that they have from the field in doing this kind
of work to let us know what kind of analytical models would be
helpful in their work, what kind of data they need to see on
the front end that would be helpful.
What we've found is that by taking that input in and
putting it into the Fraud Prevention System, we can actually
give investigators access to data that they might otherwise
take weeks, maybe even months to put together themselves. This
allows them to act as quickly as possible on the data that
they're seeing and to intervene. I'll give you one example.
We have a model that's focused on ambulance providers,
ambulance services. What we found was by giving access to an
investigator for in that model they were able to take an action
based on $1,500 worth of claims that had been sent in to the
agency because we had short cut the time for that data
investigation and for them to get to the administrative action.
That really moves us towards a prevention system where,
otherwise without the FPS that provider might have billed the
program for far more money before they were ultimately caught.
Mr. Green. Well, and I know, and I represent a Houston area
where one time we were the wheelchair, motorized wheelchair
capital of the world, I think, and also with ambulance with
transfers. How do you anticipate the program will work in the
coming years? Do you see similar results getting better, so to
speak?
Dr. Agrawal. Yes. We are focused on continuous improvement
of that program. So we have recently acquired a new contractor
and we'll be building the 2.0 version of the system. Our aims
are to make the system more efficient so that models can be
implemented more quickly, more efficiently for lower cost to
help continue to improve the ROI.
We also would like to direct these models to address a
wider spectrum of activities so that there are still fraud and
abuse oriented models, but also other ones that are looking at
waste and outlier behavior to help direct other kinds of audit
resources. And finally, really bolstering and boosting the
kinds of edits that we have in the system so that claims can be
denied even without the need for a subsequent investigation.
Mr. Green. OK. Thank you, Mr. Chairman.
Mr. Murphy. The gentleman yields back. I now recognize Mr.
Flores of Texas for 5 minutes.
Mr. Flores. Thank you, Mr. Chairman, and I thank the panel
for joining us today. I want to expand on some of the prior
questions from Mr. Green and Mr. Collins. Let me start by
saying this.
Earlier, the panel discussed the new tools that resulted
from the ACA, but all of us here today know that HHS and CMS
reportedly made $89 million in improper payments in 2015 alone.
We also know that there are additional costs associated with
these improper payments. So the critical issue is, what is HHS
and CMS doing to deal with these?
And so I want to continue, I want us to think outside the
box for a minute. Not in the typical model the way the federal
bureaucracy thinks about things, but about how would we do this
if we were a private entity. And Mr. Collins talked about the
differences in the error rates between the federal government
and also between that and between the private sector. We have
seen the same issues at the IRS in terms of improper refunds.
It seems to be a bureaucracy culturally related issue more than
anything else.
And so, Mr. Agrawal, I would ask you this question. Well,
let me say this. I will give you some stats that I have that
are a little different than what Mr. Collins had. If you look
at Visa's global fraud rate it's 0.06 percent or 6 cents for
every $100 that has been of transactions. If you look at CMS it
is $10 per $100. So could you tell us, Dr. Agrawal, why the
error rate is so high for a federal program versus the private
sector?
Dr. Agrawal. Yes. I think it's important, Congressman, to
differentiate again the improper payment rate from fraud. As
we've been discussing the improper payment rate is primarily
driven by documentation issues. Really, it's incapable of
uncovering the kind of fraud that we are clearly all concerned
about.
Those documentation issues are what we are working on. They
drive 70 percent of the Medicare fee-for-service rate. There's
a host of things that we can do to try to get it down, but
primarily focused around getting providers more up to speed
with our requirements, making sure the requirements are right,
and then as much as possible in areas of high error really
looking at that documentation before payments are made so that
we can make sure that errors are not produced, that the right
payments are being made, and ultimately that appeals are
unnecessary because we won't be denying claims or there won't
be a post-pay review that then leads to a denial.
So I think it can be better in that regard, but those are
the major initiatives that we have around us.
Mr. Flores. Earlier today you had said something that you
collaborate with your private sector colleagues or peers. What
has CMS learned from the private sector and what do you intend
to try to implement based on those learnings?
Dr. Agrawal. Sure. Yes, so we have, I think, near constant
contact with the private sector, my analogs in private
insurance companies that are looking at the same issues. The
first thing I'd say is, as a government agency we have to be
transparent, appropriately so, about things like the improper
payment rate.
Private insurers also have the same sets of issues. They
have documentation errors and coding errors that they see in
their systems that are just not made transparent to the public
because they're not required to be. So their approaches are
very similar to ours. They have implemented prior authorization
to a far greater degree than what we've been able to do so far
because we are acting within the authorities that we have and
there are proposals, a President's budget proposal to increase
those authorities. So they use that as a very common tool.
I think, secondly, they use provider enrollment just as we
do. What I often hear from my colleagues is that they use
Medicare enrollment as their gold standard. If somebody has met
Medicare enrollment requirements they assume that they can meet
their own enrollment requirements, but where they have extra
flexibility is the ability to network however they choose.
So if there is a provider that is simply not driving value
for their network that they don't need that many of a
particular provider type in their network, the provider's
producing a lot of errors, they can just remove them from the
network. They don't have to actually go through the process of
trying to prove that the provider was fraudulent or abusive.
That's a level of flexibility that frankly doesn't exist in the
Medicare or Medicaid programs.
Mr. Flores. Ms. Maxwell, what are some things that the
federal government can do to emulate the private sector to be
more judicious with taxpayer dollars?
Ms. Maxwell. I can offer some ways in which the Office of
Inspector General has tackled this issue that I think have been
successful, and that is really targeting our approach and
putting a wide array of disciplines and resources where we see
problems, watching those problems get driven down and then
moving our focus to someplace else.
So for example, we have a concerted effort in home health
and we watch those payments go down a billion dollars a year.
We know there's a high payment rate in ERFs in patient rehab
facilities. We're focusing resources there. So I think we have
found tremendous success in the IG's office in gathering people
across disciplines and really focusing them on high risk areas.
Mr. Flores. OK. I have run out of time, but if any of my
colleagues have some leftover time I will take that and
continue this line of questioning. Thank you, and I yield back.
Mr. Murphy. Thank you. I will recognize Mr. Mullin of
Oklahoma for 5 minutes.
Mr. Mullin. Thank you, Mr. Chairman. Excuse me, Doctor, if
I get your name wrong, but it is Agrawal?
Dr. Agrawal. Agrawal. I think you got it.
Mr. Mullin. OK. Well, it is the Oklahoma accent if I didn't
get it. You know, a couple of questions and some follow-up
questions, the controls that CMS has put in how do we know they
are working?
Dr. Agrawal. Well, I think there's a variety of controls
and we see that they're working because they're having impact.
So something like provider enrollment we can see----
Mr. Mullin. Measurable impact how? And I say this because
in our state in Oklahoma we are having to take some serious
cuts to Medicaid. And the one thing we have been looking at in
our task force is from cutting down on the fraud and abuse. So
what specifically can you show us that the controls are
actually working?
Dr. Agrawal. I can show you, including in Oklahoma, the
over 500,000 providers that are no longer allowed to bill the
program. I can show you, including in Oklahoma, the site visits
that have produced nonoperational settings that have been
kicked out of the program; the providers that don't have
appropriate licensure that have been kicked out of the program.
I can show you the $5 billion in payments that we have stopped
from going out the door just last year prior to any payments
being made. There's impact from the Fraud Prevention System.
Mr. Mullin. What is the percentages of the improper
payments right now?
Dr. Agrawal. In the Medicare fee-for-service program it's
12.1 percent.
Mr. Mullin. What was it in 2014?
Dr. Agrawal. It was lower. I'm sorry, it was higher. It was
12.5 or 12.6 percent.
Mr. Mullin. So we have dropped two percentage points?
Dr. Agrawal. About 0.5, I think.
Mr. Mullin. Well, you said 0.2 and 0.7; is that what you
said?
Dr. Agrawal. Yes.
Mr. Mullin. And how long have these controls been in
effect?
Dr. Agrawal. Well, every year we have to do new things to
try to get the improper payment rate down, so sometimes it's
expanding efforts that we have already underway, other times
it's new efforts.
Mr. Mullin. But we are talking about a half of a percentage
point. It is still well over ten percent. In a company, in any
company that would be disastrous. I mean, in any company making
that much improper payments would sink any business. And we are
OK with that?
Dr. Agrawal. We are not OK with that. We are----
Mr. Mullin. Then if we can identify where the improper
payments are, then why can't we do something to change it?
Dr. Agrawal. Well, it's----
Mr. Mullin. If you can identify the percentage at 12.2
percent, then you can identify the source because that is the
only way you can come up with the dollars. So----
Dr. Agrawal. Correct, we can. So the primary sources of the
improper payment rate are home health providers. They have an
over 50 percent rate in home health billing.
Mr. Mullin. Does it have anything to do with, because you
keep talking about the doctors themselves of the facilities
themselves. Are we looking at the patient?
Dr. Agrawal. The improper payment rates are it's driven by
documentation----
Mr. Mullin. I am talking about fraud and abuse as a whole.
Dr. Agrawal. But it is not driven by fraud and abuse,
right. The improper payment rate is driven by documentation
problems. Seventy percent of the rate is provider-driven
documentation issues. That is in, for example, the home health
space, lack of coordination between the ordering physician and
the home health agency to take care of the patient.
Mr. Mullin. So where would you see it to be in a year from
now? You recognize 12.2 percent, so where would you like it to
be in a year?
Dr. Agrawal. I would like it to be significantly lower.
Mr. Mullin. What is significant, a half of a percentage
point?
Dr. Agrawal. I don't wake up every day trying to figure out
how I can massage----
Mr. Mullin. I would.
Dr. Agrawal [continuing]. The number by 0.1, 0.2.
Mr. Mullin. You would if as a business owner----
Dr. Agrawal. I wanted to implement----
Mr. Mullin. I have been a business owner my whole life. And
I promise you, you pay attention to the pennies, the dollars
take care of themselves. So a half a percentage point here and
there and everywhere else, yes, it does take a significant
impact over time. So if I was you I would wake up every
morning.
Dr. Agrawal. Congressman, I think you have connected two
things that shouldn't be. So lowering the improper payment rate
will not necessarily change the amount of expenditure of the
program, and that is because in order to----
Mr. Mullin. How do you figure if you have got 12.2 percent
of improper payments that it wouldn't make a significant
impact? What is 12.2 percent? How much is that?
Dr. Agrawal. Let me answer that question, sir. So since
documentation problems are the primary driver of the rate, what
we can do by better educating providers and looking at
documentation on the front end is that they meet our
requirements. That would knock down the rate but not
necessarily the expenditure.
Mr. Mullin. How much did we spend on improper payments last
year?
Dr. Agrawal. I believe in the Medicare fee-for-service
program it was on the order of about 45 billion, according to
the number.
Mr. Mullin. $45 billion.
Dr. Agrawal. Right.
Mr. Mullin. And we don't think that is going to have a
significant impact?
Dr. Agrawal. What I said, and I want to be specific about
that is lowering the improper payment rate might not alter the
expenditure. We have seen that in certain examples.
Mr. Mullin. Well, it would sure help the taxpayers knowing
that $45 billion isn't going out the door when we can identify
that it is 12.2 percent and yet we can't stop it.
Mr. Chairman, I yield back.
Mr. Murphy. I now recognize Mr. Bilirakis for 5 minutes.
Mr. Bilirakis. Thank you. Thank you, Mr. Chairman. Thanks
for letting me sit in on this hearing.
Ms. Maxwell, back in December, the IG's Office issued a
report titled, CMS Could Not Effectively Ensure That Advanced
Premium Tax Credit Payments Made under the Affordable Care Act
Were Only for Enrollees Who Paid Their Premiums. The question,
can you talk about what the Inspector General's Office found
and what they recommended, please?
Ms. Maxwell. Thank you for the question. Yes, ensuring
appropriate payments in the marketplace program is a priority
for the OIG just like it is for the Medicaid and Medicare
program. And I am generally aware of the audit that you are
talking about, although I was not specifically involved in it.
So generally, my understanding of the findings is that we
found some weaknesses in CMS's internal controls to ensure the
accuracy of cost sharing payments for qualified individuals in
the marketplace. And my understanding of those internal
weaknesses is that CMS at the time was relying on self-
attestation from the insurers about the amounts that CMS owed
the insurers and had no independent way to verify that
information.
But as I said, that's what I know of the topic but I am not
an expert. We do have experts on that topic back in the office
and I'd be happy to get them in touch with you to brief you
further and in more detail about that report.
Mr. Bilirakis. Oh, I appreciate that. Has CMS implemented
all the IG's recommendations?
Ms. Maxwell. I am not familiar with that but I'd be sure to
get back to you with that information, yes.
Mr. Bilirakis. OK. How about this? Has the Inspector
General inspected CMS' new automated processing system?
Ms. Maxwell. The APS?
Mr. Bilirakis. I do not believe that is in our work plan
right now. We are looking more broadly at the totality of their
enhanced provider screening system.
Mr. Bilirakis. How about this? Is CMS' automated processing
system in place for both federal-run and state-run exchanges?
Ms. Maxwell. I am not aware, and again I would refer you to
the experts back in the office.
Mr. Bilirakis. My understanding is that CMS did not comment
on your second recommendation, the IG's recommendation for
sharing payment data with the IRS to verify an individual's
Form 1095-A at tax time. Can you explain what needs to be done
and why is this so important?
Ms. Maxwell. We take all of our recommendations seriously
and expect engagement with the operating division around them.
Again, I think you'd be best off talking to the team that did
the work and could brief your staff on all the details and
where we are with our engagement with CMS to implement those
recommendations.
Mr. Bilirakis. But you can't tell me why it is important
that they comply?
Ms. Maxwell. I am so sorry, but that is outside of the work
that I typically do and I am not that familiar with that study.
Mr. Bilirakis. All right. Well, I am going to follow up.
Ms. Maxwell. Please do. Thank you.
Mr. Bilirakis. All right, thank you. I yield back, Mr.
Chairman.
Mr. Bucshon. Would the gentleman yield some of his time for
me?
Mr. Bilirakis. Yes, I will, absolutely.
Mr. Bucshon. Thank you. I just want to clear up with Dr.
Agrawal, we were talking that last line of questioning about
improper payments because I made the comments about physician
documentation.
I mean, and again clarify the difference between an
improper payment, what percentage of improper payments do you
think ultimately are resolved and found to be proper payments?
I would imagine they are a very, very high percentage. And what
percentage approximately would be considered fraudulent? There
is a separation. I just want to clarify that and give you a
chance to clarify that again.
Dr. Agrawal. Yes, I appreciate it. So I think what we find
when we work with providers, make sure that they're educated on
the documentation requirements, simplify those requirements
where necessary that we can actually get significant
improvements in the rate.
I'll give you two examples. In the DME space, which is
historically at a very high rate, we've seen a 30 percent
reduction in just the last year; a similar 30 percent reduction
in the hospital inpatient rate. Both of those are driven by new
policy, the two-midnight rule as one example, as well as a
probe and educate approach where we literally have gone to
every single hospital in the country, pulled a claim sample to
educate them on how better to send in the supporting
documentation for that claim.
So we can see significant impact in the improper payment
rate, but again we might be spending very similar if not the
same amount of money because we're bringing people up to speed
on what's required. I can't give you an actual estimate of
fraud either as it relates to the improper payment rate or on
its own. There just isn't a validated statistical methodology
for generating a fraud rate. We are working on that in a pilot
approach at CMS. Part of the challenge is for fraud you have to
prove intentionality, and so that's challenging from a
methodological standpoint.
Mr. Bucshon. Thank you, I yield.
Mr. Bilirakis. And I will yield back. Thank you.
Mr. Murphy. Mr. Flores, did you want the next 30 seconds?
Mr. Flores. I don't think--no.
Mr. Murphy. OK, then I will recognize Ms. Brooks for 5
minutes.
Ms. Brooks. Thank you, Mr. Chairman. In 2014, nine
employees in a dental center from my district in Anderson,
Indiana, were charged with Medicaid fraud. Not only did the
dental center submit false and inflated bills for dental
services to the Indiana Medicaid program costing taxpayers well
over $300,000, one of the practices, one of the individuals was
not even licensed to practice yet continued to bill the
Medicaid program for services.
Indiana's Attorney General Greg Zoeller put it best when he
said, and I quote, when an ineligible provider engages in fraud
to wrongly bill Medicaid for millions of dollars it is a
violation of the public trust as we know and demonstrates
contempt for the taxpayers, and it is as simple as that.
And this story is not unique. In the last 10 years, GAO has
released at least seven reports indicating the possibility of
fraud or improper payments in the Medicaid program. Health and
Human Services OIG has released at least 31 reports and three
more reports were released today.
So it truly is astonishing that after 10 years of albeit
thoughtful reports, many reports, we have continued to allow
our nation's largest health insurance programs to run really
with this much fraud for this long of a period of time. But I
am encouraged that we are continuing as a subcommittee to push
for answers that protect beneficiaries as well as taxpayer
dollars.
Ms. Maxwell, I am curious. The OIG report released today
deals with enhanced provider enrollment screening in the
Medicaid program. And while states are required to screen
Medicaid providers using the enhanced screening procedures such
as fingerprint based criminal background checks and site
visits, many states haven't yet implemented these requirements.
What is the significance of this finding in the report and how
will it impact improper payment rates?
Ms. Maxwell. Thank you for the question. It is critical to
get provider enrollment correct for the very reasons you
mentioned. We do not want Medicaid paying providers who are
unlicensed. We do not want Medicaid paying providers who are
intent on defrauding the program. Our report points to the
vulnerabilities that still exist in Medicaid provider
enrollment, and primarily those vulnerabilities have to do with
they have not instituted all of the tools available to them.
You mentioned the fingerprint criminal background check.
There is also site visits. And in terms of the impact I can't
quantify that precisely, but I do know from our report that 27
states reported that 25,000 high risk providers were enrolled
in the Medicaid program without the benefit of those criminal
background checks.
Ms. Brooks. And so is it fair to say that CMS with respect
to these findings you have provided a pretty clear pathway
forward as to how they should implement these provider
screenings.
Ms. Maxwell. Yes. In the body of six reports that I'm
addressing here today, we have over 20 recommendations that we
believe are practical implementation fixes to make the tool
stronger.
Ms. Brooks. With respect to the Medicare provider database,
OIG compared three sets of owners' names: the names listed on
Medicare enrollment records, names submitted by providers
directly to OIG for their evaluation, and names listed on state
Medicaid enrollment records. And the OIG found that nearly all
providers in the OIG's review had different names on record
than the state Medicaid programs.
What is the significance of this finding and why does it
matter that the databases didn't match? And is this an
administrative issue or is it a possible indicator of fraud
from your view?
Ms. Maxwell. We are very concerned about that finding and I
thank you for bringing it up. We think it is a concern that
needs to be addressed to strengthen provider enrollment. And to
just start with your methodological question, we matched those
names. If those names were similar but the not the same we
counted them as a match.
So we don't think we're actually capturing just clerical
error, we think we're capturing a real schism between the two
databases. The reason it's important is we want to know who
we're doing business with. And if we don't know who we're doing
business with we don't know whether or not they were excluded,
and we have a lot of history with fraud of people being
excluded from the program and then getting back in behind a
straw owner.
And in fact, recently, the New York Medicaid program paid a
straw owner $60 million over the course of multi-years' fraud
scheme, three pharmacies, he was a front for his father who had
been excluded from the program. So it has significant
consequences, this mismatched data.
Ms. Brooks. And like you mentioned in the previous
question, there was a list of 20 recommendations that you have
made. How about with respect to this matching of the databases?
What should CMS do with your findings with respect to this?
Ms. Maxwell. Well, first of all, we have referred the
mismatches to CMS to look particularly at those cases so they
can rectify the discrepancies between the data that we found.
More long term, there are recommendations to improve the data,
to verify the data, and then ultimately to think about better
coordination between Medicaid and Medicare. We think better
coordination could lead to a more effective system and a system
that's less burdensome on providers.
Ms. Brooks. Thank you. My time is up and I will yield back.
Mr. Murphy. Thank you. We are going to wrap up. I am going
to recognize Ms. DeGette for 5 minutes for any other comments
or questions.
Ms. DeGette. Thank you. Thank you, Mr. Chairman. I just
want to clarify a couple of things. Frequently here in Congress
we try to get our government agencies to act like private
businesses and it doesn't always translate a hundred percent.
But Ms. Maxwell, something you said kind of rang a bell
with me which is the way that your agency is dealing with a lot
of these thorny problems is you are taking this
interdisciplinary approach, you are focusing on one problem,
you are applying all of your resources to that and then you are
moving to the next one. That is very similar to what they do at
Toyota.
And in fact at Denver Health, which is my, in Denver it is
the public safety net hospital, and provider in Denver, Pattie
Gabow who was our previous CEO of Denver Health, she applied
that same kind of thinking to when they would have thorny
problems there and they actually were able to do things like
reduce medical care errors and so on and so forth. And so I
think some of those principles can be applied.
Dr. Agrawal, I am wondering what your agency thinks about
taking some of those innovative approaches to approaching
really thorny problems, focusing in on the issue, taking an
interdisciplinary approach, coming up with solutions and moving
on.
Dr. Agrawal. Yes. I absolutely agree with you that is the
right way of continuous improvement and making the changes that
we're describing. We do work in an interdisciplinary way across
and, you know, within CMS and across different agencies.
We work very closely with OIG and GAO having, you know,
frequent interaction to make sure that we are thinking about
the recommendations in the right manner, that we are working
towards a common solution that we can both agree with. We also
work very closely with our payment policy experts, our coverage
experts, and coding experts to making sure that we are
implementing good solid controls on the front end.
Ms. DeGette. Now you heard a lot of concerns on both sides
of the aisle today, Dr. Agrawal, about this increasing number
for the inaccurate or improper payments. And while you are not
able to give a specific number today, if we had this very same
hearing next year given the changes that you are implementing
in consultation with the other agencies, do you believe this
number will be substantially lower?
Dr. Agrawal. I believe it will be lower. My hope is that it
will be lower, and it is because we are implementing a
multitude of changes around some of the biggest drivers of the
rate that we are trying to impact the numbers.
Ms. DeGette. I am going to tell the chairman to schedule
this hearing again next year. And one last thing, Ms. Maxwell
talked about 20 recommendations and there are a lot of other
recommendations that the GAO and the IG have made. What is your
agency's position with respect to those recommendations and do
you disagree with any of them, are you implementing them?
Dr. Agrawal. I think the recommendations are generally very
important. All the recommendations that we have talked about
today I think the agency has agreed with. The issue with the
recommendations is that some are quite relatively easier to
implement than others, systems changes that we can make
relatively quickly. Others take far more time. They require
larger programmatic changes, regulatory changes, perhaps even
some statutory changes, and that's where I think you see
certain recommendations open for a longer period of time.
But as I mentioned in the opening, we have worked to close
between GAO and OIG over a hundred recommendations this past
year and have shared with them over a hundred more that we
believe can be closed based on the work that we have done.
Ms. DeGette. And Ms. Maxwell, would you agree that CMS is
trying to implement your recommendations?
Ms. Maxwell. Yes, I would. Our goal is to push positive
change and so we work very, very closely with CMS to implement
a recommendation.
Ms. DeGette. And Mr. Bagdoyan.
Mr. Bagdoyan. Yes, I would agree with that definitely. As
Dr. Agrawal mentioned, it is a back and forth. Sometimes we
don't see eye to eye in terms of what they've done and whether
it meets the spirit of a recommendation we would like to close,
but the interaction is very active and quite productive.
Ms. DeGette. And just one last thing, Dr. Agrawal. You
mentioned that sometimes you might need statutory changes. If
you do, please come to us because we would be happy to work
with you on that. Thank you, and I yield back.
Dr. Agrawal. Thank you.
Mr. Murphy. I think I am going to recognize myself. Just
some wrap-up questions here.
Mr. Bagdoyan, on June 2015, the GAO report found
vulnerabilities in the provider eligibility system for both
invalid addresses and physicians with revoked licenses. CMS
issued guidance in March of 2014 to reduce the amount of
independent verifications conducted by contractors, and GAO
says this guidance increases the program's vulnerability to
potential fraud. So why would this guidance increase fraud?
Mr. Bagdoyan. Well, if you dial back the verification steps
and you essentially can meet the new guidance by picking up the
phone, dialing a provider and asking them is this your address
and the provider says yes and you leave it at that, that
obviously is a potential concern that as to the thoroughness of
the verification.
Now to CMS' credit, they are going to take another look at
the guidance issue once they've had a chance to test the new
software in terms of screening for addresses and then make a
determination as to whether to upgrade the guidance to what it
was before or change it further.
Mr. Murphy. Well, we will look forward also to get us a
follow-up on if that worked.
Ms. Maxwell, is it true that unscrupulous providers
continue to enroll in the Medicare program?
Ms. Maxwell. Unfortunately, yes.
Mr. Murphy. And by implementing screening requirements we
can keep bad providers out we hope and reduce improper payment?
Ms. Maxwell. That is absolutely the goal.
Mr. Murphy. Can you explain what kind of changes will help?
Ms. Maxwell. Absolutely. I would say out of the 20-plus
recommendations that we're featuring in our reports, the most
critical are to ensure that the ACA tools are implemented
fully. And that for Medicaid means all the tools are in place,
and for Medicare that means full implementation of the tools
they have in place.
I would say another critical recommendation is featured in
H.R. 3716 which is to ensure that providers that are terminated
in one state are not able to enroll in another state. Finally,
we recommend a better coordination between the two systems
leading to less duplication of resources across federal and
state government, as well as less duplicate burden on
providers.
Mr. Murphy. All right, thank you. I just want to say too,
and my colleague and others have talked about this, really
getting some of the private sector involved in this. We look at
models such as we talked about Toyota, there are other
companies out there doing this whose job it is to find more
effective and efficient ways of doing this.
I appreciate the work that GAO has done in this to try and
improve things. And look, it is frustrating for us as members
here to come back year after year in meeting after meeting as
Oversight Committee and try and find ways, an indication that
something is improving. It is very frustrating as we see those
graphs increasing as the amount that is there.
I strongly encourage you to, just because you can't meet a
metric, that isn't a reason to change it from something and 5
percent to 6 percent or whatever else that might be. No doubt
you would never do that in medicine. I would never do that in
my practice. None of us would do that. It is a matter of always
trying to drive it down to zero, otherwise we become tolerant
of that.
So what we want to know in terms of your goal of recovering
here and particularly the concern I have is how are you going
to measure this? It sounds like the metrics have changed over
time. And so how do we measure a success or failure in this in
a way that you can be held accountable for that is appropriate?
It sounds like these are changing. Can you give me some
feedback?
Dr. Agrawal. Yes. I think the improper payment rate
measurement is a validated methodology that does measure
something important, right. It does measure provider compliance
with our rules and requirements. Now addressing the rate isn't
just a matter of, it's a matter of frankly working with
providers to make sure that they're doing their best to adhere
to these requirements.
I think the other thing that would help is making sure that
our dialogue around the rates are pretty clear about what they
measure, what they don't, what leads to improvement. If the
improper payment rate is viewed primarily as expenses that
should not have occurred in the first place, I think frankly
that is a misunderstanding of the rate. I think it's a
misunderstanding of what it measures. For us to assume that
it's a measure of fraud sort of implies that almost every
provider interacting with the program would then be guilty of
some level of fraud. I think that is an inappropriate
conclusion.
So I think what would help, certainly we can look at other
ways of measuring impact. We have moved to ROI as a really
common measurement across all of our programs. We have looked
at administrative actions and where we have been able to take
those actions, the number of providers impacted. I think
improper payment still has a utility to it as long as we can
get the discussion around it correct.
Mr. Murphy. Well, we want to see that and as Ms. DeGette
said we are going to have you back here. We need to know this.
We want to find these things out. We want to see success. We
want to see change on this. I repeat again, our frustration
with finding funding for programs specifically in Medicare and
Medicaid. We have got to make some changes.
We have to, for one it is clear we want to provide some
different services for people who are mentally ill and it is
frustrating to have to tell them no, that we can't get service
for those who need it, but money goes to those who are
committing crimes and we want that to stop.
That being the case, having no further questions, I want to
state here that I would like to thank all the members and the
witnesses and members that participated in today's hearing. I
remind members they have 10 business days to submit questions
for the record, and ask that the witnesses all agree to respond
promptly to the questions. We will have some further questions
for you. So with that this subcommittee is adjourned.
[Whereupon, at 12:09 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
Today, we take a close look at strengthening program
integrity within the Medicare and Medicaid programs.
This is a bad news--good news hearing.
The bad news is that reports from the Government
Accountability Office and the Health and Human Services
Inspector General identify weaknesses in how CMS roots out
fraud, waste and abuse.
These reports tell the story of CMS paying out millions of
taxpayer dollars on behalf of beneficiaries who turned out to
be incarcerated or deceased. They tell the story of physicians
who enrolled for Medicare payments and listed addresses located
in Saudi Arabia, and at the location of a Five Guys' burger
joint, and CMS did not notice. They explain how CMS continued
to pay some physicians whose licenses were revoked, or had been
convicted of health care fraud or patient abuse. Overall, these
reports show that, despite recent strides, CMS must stay
vigilant to combat new and emerging threats to program
integrity.
The good news is that there are more tools available to CMS
to combat these improper payments. As Medicare and Medicaid
continue to grow in size and cost, CMS must use every tool in
its box to prevent taxpayer dollars from being spent
fraudulently or wastefully.
CMS has recently implemented some new enrollment methods to
help screen out fraudulent or ineligible providers. However,
there are concerns that they are not being implemented in the
best way. A report published last month by the OIG found
missing data in the enrollment system, and ``gaps'' in
contractors' verification of key information on enrollment
applications that could leave Medicare vulnerable to
illegitimate providers.
For example, contractors conducting site visits found 651
provider facilities were not operational. Despite notes such as
the ``facility does not exist,'' ``building has been vacated,''
and ``suite appeared closed and abandoned,'' over half of those
providers made it into Medicare's enrollment system.
Even though this one example constitutes a small percentage
of the 16,000 site visits total, it is a symptom of the larger
problem. It does not matter how good the processes are if they
are not implemented correctly.
But there have been steps toward improvement. Just days
before today's hearing CMS implemented two open GAO
recommendations. We look forward to CMS implementing additional
recommendations, so we can continue the important work of
strengthening the integrity of these critical programs. Every
dollar is important when it comes to Medicare and Medicaid. And
we owe it to our seniors and the most vulnerable folks in
Michigan and across the country to ensure resources are being
spent wisely on their quality of care.
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