[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


                   HEALTH CARE FRAUD INVESTIGATIONS

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

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON OVERSIGHT

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 28, 2016

                               __________

                          Serial No. 114-OS14

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
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                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan,
DEVIN NUNES, California              CHARLES B. RANGEL, New York
PATRICK J. TIBERI, Ohio              JIM MCDERMOTT, Washington
DAVID G. REICHERT, Washington        JOHN LEWIS, Georgia
CHARLES W. BOUSTANY, JR., Louisiana  RICHARD E. NEAL, Massachusetts
PETER J. ROSKAM, Illinois            XAVIER BECERRA, California
TOM PRICE, Georgia                   LLOYD DOGGETT, Texas
VERN BUCHANAN, Florida               MIKE THOMPSON, California
ADRIAN SMITH, Nebraska               JOHN B. LARSON, Connecticut
LYNN JENKINS, Kansas                 EARL BLUMENAUER, Oregon
ERIK PAULSEN, Minnesota              RON KIND, Wisconsin
KENNY MARCHANT, Texas                BILL PASCRELL, JR., New Jersey
DIANE BLACK, Tennessee               JOSEPH CROWLEY, New York
TOM REED, New York                   DANNY DAVIS, Illinois
TODD YOUNG, Indiana                  LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania
JIM RENACCI, Ohio
PAT MEEHAN, Pennsylvania
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
ROBERT J. DOLD, Illinois
TOM RICE, South Carolina

                     David Stewart, Staff Director

                   Nick Gwyn, Minority Chief of Staff

                                 ______

                       SUBCOMMITTEE ON OVERSIGHT

                  PETER J. ROSKAM, Illinois, Chairman

PAT MEEHAN, Pennsylvania             JOHN LEWIS, Georgia
GEORGE HOLDING, North Carolina       JOSEPH CROWLEY, New York
JASON SMITH, Missouri                CHARLES B. RANGEL, New York
TOM REED, New York                   DANNY DAVIS, Illinois
TOM RICE, South Carolina
KENNY MARCHANT, Texas


                            C O N T E N T S

                               __________
                                                                   Page

Advisory of September 28, 2016 announcing the hearing............     2

                               WITNESSES

Abhijit Dixit, Special Agent, Office of Investigations, Office of 
  Inspector General, Department of Health and Human Services.....    18
Barbara McQuade, United States Attorney, Eastern District of 
  Michigan.......................................................     7
Scott Ward, Senior Vice President, Health Integrity LLC..........    28

 
                    HEALTH CARE FRAUD INVESTIGATIONS

                              ----------                              


                     WEDNESDAY, SEPTEMBER 28, 2016

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                 Subcommittee on Oversight,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1100, Longworth House Office Building, the Honorable Peter 
Roskam [Chairman of the Subcommittee] presiding.
    [The advisory announcing the hearing follows:]
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    Chairman ROSKAM. The subcommittee will come to order.
    Good morning and welcome to the Ways and Means Subcommittee 
on Oversight's hearing on health investigations and Medicare 
fraud. Fraud is a serious problem throughout health care with 
some experts estimating that up to 10 percent of healthcare 
spending is fraudulent. That would mean that Medicare alone, 
that this committee has jurisdiction over, the government is 
spending nearly $60 billion a year in fraudulent payments. That 
is an incredible cost. Think about it in the context of this 
time of year where people are trying to negotiate different 
end-of-year spending plans and how much more flexibility you 
would have with $60 billion that weren't being literally thrown 
away. This hearing is a continuation of the subcommittee's work 
over the past 2 years in trying to understand the causes and 
solutions to this incredible problem.
    One aspect to the problem is that not only taxpayers 
impacted, but may fraud schemes actively harm patients. In the 
past, a lot of our discussions have been focused in on the 
financial aspects alone. And while finances do matter, we need 
to recognize that this hurts people. And one of the most 
egregious examples is the case of Dr. Fata, a well-known cancer 
physician in Michigan. He purposely misdiagnosed people, so 
think about that. He misdiagnosed people, went to them falsely, 
told them that they had cancer, which they didn't have. And 
think about the heart sink of that news, manipulating them in 
order to provide them with treatments which he would bill 
Medicare and private health insurance companies for in the 
millions of dollars. Several patients who were perfectly 
healthy ended up dying because of his actions.
    In other instances, fraudsters may bill Medicare for 
opioids and other prescription drugs and then sell them on the 
black market. Here not only is the taxpayer footing the bill 
for unnecessary narcotics, but also this contributes to the 
country's growing opioid and painkiller epidemic. I know nearly 
every Member of Congress has seen this uptick--not just an 
uptick, an incredible high rate of activity--in this area in 
all of our congressional districts across the country. So, even 
when a fraudster doesn't physically harm someone, the fraud 
creates significant and long-term damage down the line.
    Many fraudsters steal beneficiarys' identities and use them 
to bill Medicare, another issue that Congress is dealing with 
and this committee is dealing with. Once a person's identity is 
stolen and used to improperly collect Medicare benefits, that 
person can be prohibited from accessing necessary care down the 
line, because they are already in Medicare system and receiving 
service.
    So think about it: A fraudster gets your benefit. Then you 
legitimately need something. You go to Medicare, and Medicare 
says, ``Sorry, your benefit has already been used up.'' ``Well, 
what do you mean my benefit has been used up? It has not been 
used up. I haven't used it.'' And a fraudster has done it. So, 
if it can be done, fraudsters are finding a way to do it.
    At the beginning of this Congress, this subcommittee held a 
hearing on Medicare fraud and improper payments from the 
10,000-foot level. We heard from the Centers for Medicare & 
Medicaid Services, or CMS, about their methods to detect and 
prevent improper payments, and the results were not 
particularly reassuring.
    Despite the fact that Congress has given the agency 
expanded authority to stop payments before they are made, it 
continues to rely disproportionately on pay-and-chase, or 
making the payment and only checking after the fact to see if 
it was proper. One of the difficulties that we in Congress have 
when trying to legislate to reduce improper payments and also 
fraud is how the budget process works. According to the 
Congressional Budget Office, or CBO, preventing the government 
from spending money improperly is not savings because the money 
should have never been paid in the first place. I mean, this 
logic just completely suspends all bits of rationality that 
should foster it. It makes no sense in the real world, and that 
is not how American families handle their own household 
finances.
    And this committee finds it just outrageous to be told in 
pursuing some of these things, well, that doesn't, quote, 
``score well.'' The fact is money is going out the door, and 
there are steps Congress can take to stop these crimes and save 
taxpayers from having to pay billions of dollars in improper 
payments in fraud.
    Additionally, CBO does not take into account that cost that 
fraud incurs in addition to the stolen money. These costs 
include the amount of time and resources that law enforcement 
needs to investigate and prosecute cases, attempting to 
retrieve the money already out the door in fraudulent payments, 
or in repairing patient harm.
    And no one can deny that the drug crisis continues to grow. 
We have spent billions of dollars fighting the drug epidemic. 
Just a few months ago, Congress passed CARA, the Comprehensive 
Addiction and Recovery Act, that authorizes $620 million over 
10 years to help fight the opioid epidemic. It is an important 
step, but we also need to focus on healthcare fraud contributes 
to that problem.
    Last year, we got a closer look at some of the tools CMS 
uses to detect fraud. Members of the subcommittee took a field 
trip, and we went up to CMS' Center for Program Integrity in 
Baltimore. We got to see the fraud prevention system, CMS' 
predictive analytics program, firsthand, and we were encouraged 
by what we saw. But we remain concerned that CMS relies too 
heavily on pay-and-chase, rather than preventing potentially 
fraudulent payments from getting out the door. And we hope to 
see greater improvements going forward.
    At our hearing last year, I drew a comparison between how 
the private sector and the government investigate fraud. In the 
private sector, a credit card company can detect unusual 
behavior--and guess what, my credit card has been--whether my 
credit card has been stolen instantaneously, and this actually 
happened to me. A witness from Visa testified that their 
improper payment rate is less than 1 percent. Compare that to 
the numbers that I have been talking about a minute ago, that 
are well over 10 percent. But when I asked CMS why it can't do 
the same thing, the witness from CMS said, ``Well, Medicare 
claims are more complicated.'' And it is one of those answers, 
at first blush, you say, ``Oh, yeah, that's right; Medicare 
claims are more complicated,'' but in fact, if Medicare claims 
are more complicated, it is more complicated for fraudsters to 
make them look legitimate. So then isn't it true and doesn't it 
follow that predictive analytics and other data analysis would 
make it easier for that to be disclosed? It is important not 
only to save taxpayers but also to save patients who are being 
harmed by these criminals.
    But no matter how good data analytics get, there will still 
be the need for investigations and law enforcement, and that is 
the final piece of puzzle, and that is what we are focusing on 
today. We have got an excellent panel of witnesses, who I will 
introduce in a few minutes. They have been active in detecting, 
investigating, and prosecuting fraud cases. Two of our 
witnesses worked on the Dr. Fata investigation that I 
referenced earlier. And thanks in part to their tenacious work, 
he has been sentenced to 45 years in prison. The work these 
witnesses do is incredibly important, and I know I speak for 
the whole subcommittee. I look forward to their insights.
    Now, I would like to yield to my friend and colleague, the 
Ranking Member, Mr. Lewis.
    Mr. LEWIS. Good morning.
    Mr. Chairman, before we begin, I would like to announce 
that today is the last hearing for Drew Crouch, the Democratic 
Oversight Subcommittee staff director. This is actually the 
second time that Drew worked for the committee. He first joined 
the Ways and Means Committee tax staff in 2009 and served with 
us for over 4 years. Drew returned last year to be the 
Oversight Subcommittee staff director. Working with Drew has 
been wonderful. He is pleasant, passionate, and committed. His 
work is so good that others keep stealing him, but I hope that 
he will not forget us and will keep doing the good work, the 
people's work, in his next great position. Drew is a good and 
kind spirit, and he will be deeply must. I want to thank him 
for his years of service and wish him good luck in his next 
position.
    Mr. Chairman, I want to thank you for holding this hearing 
today, but I would also like to thank all of the witnesses for 
being with us today. Each and every person here knows that 
Medicare is an important program for seniors and the disabled. 
Fifty-six million people rely on Medicare to receive health 
care.
    Today, several witnesses will speak about a terrible 
criminal case where a doctor treated healthy patients with 
chemotherapy. Medicare is a key part of the very fabric of our 
country, signed into law by President Lyndon Johnson in 1965. 
What is happening is unbelievable. It is unreal. That is what 
makes these stories so alarming.
    I applaud the Obama Administration on their effort to take 
a hard line on waste, fraud, and abuse. They launched the HEAT 
Task Force, which coordinates resources and information across 
the government agencies. The administration also developed a 
Medicare fraud prevention system which uses advanced technology 
to track possible fraud.
    It is also worth noting that the Affordable Care Act has 
stronger tools to fight fraud. These include new penalties, 
better funding for the healthcare fraud and abuse control 
account, new screening and enrollment tools for Medicare and 
Medicaid.
    Let me be clear: People who are committing fraud in 
Medicare are criminals; no doubt about it. They prey on the 
disadvantaged, the sick, the weak, the elderly among us. Each 
and every one of us must do our best to fight and end Medicare 
fraud. Congress has a duty, a mission, a mandate and a moral 
obligation to provide the necessary resources for law 
enforcement to investigate and prosecute these criminals.
    There is no doubt that the stories we will hear about are 
horrible. But in our fight against fraud, we must be mindful. 
We must be careful, and we must put Medicare patients first. 
Patients must continue to have access to necessary medical 
treatment. We must do all we can to preserve their choice of 
doctors and hospital. My friend, this is not a Democratic issue 
or a Republican issue. This is a question of standing up for 
all Americans, especially for seniors and for the disabled. It 
is what is right. It is what is just. It is what is fair.
    And, again, Mr. Chairman, I want to thank you for holding 
today's hearing. And I look forward to the testimony of our 
witnesses.
    Chairman ROSKAM. Thank you, Mr. Lewis. And I think you said 
it well; this is a question of standing up. And three people 
who have stood up are witnesses today.
    The first is Barbara McQuade, United States attorney of the 
Eastern District of Michigan. You will find two sympathetic 
ears in former U.S. attorneys here, Mr. Meehan and Mr. Holding.
    Abhijit Dixit, special agent, Office of Investigations, 
Office of Inspector General, Department of HHS. Welcome.
    And Scott Ward, senior vice president, Health Integrity, 
LLC.
    You each have 5 minutes for your testimony, and we welcome 
you.
    Ms. McQuade, you are recognized.

 STATEMENT OF BARBARA MCQUADE, UNITED STATES ATTORNEY, EASTERN 
                      DISTRICT OF MICHIGAN

    Ms. MCQUADE. Chairman Roskam, Ranking Member Lewis, 
distinguished Members of the Committee, thank you so much for 
inviting me to speak to you today about the Department of 
Justice's efforts to combat healthcare fraud. I am deeply 
honored to be with you here today.
    Every year, the Federal Government spends hundreds of 
billions of dollars to provide health care to the most 
vulnerable members of our society. And while most medical 
providers are doing the right thing, some exploit Medicare and 
other healthcare programs for their own financial benefit. This 
fraud deprives patients of resources needed to pay for medical 
services and places patients at risk of harm from unnecessary 
treatments. Medicare fraud also motivates some doctors to 
overprescribe opioids to patients who don't need them for 
legitimate medical purposes, and that is contributing to our 
Nation's opioid epidemic. For these reasons, fighting 
healthcare fraud is the top priority of Department of Justice.
    The Department brings the vast majority of its civil cases 
under the False Claims Act. Since 2000, our attorneys, working 
with other Federal, State, and local law enforcement agencies, 
have recovered over $1 billion every year in FCA settlements 
and judgments.
    In fiscal year 2015, the Department recovered over $2 
billion in civil healthcare settlements and judgments, and 
anticipates matching, if not exceeding, that amount this fiscal 
year. Since 2009, the Department has recovered over $18.5 
billion in civil healthcare fraud cases.
    The Department's criminal healthcare fraud efforts have 
also been a success. Beginning in March of 2007, the Criminal 
Division's Fraud Section, working with the U.S. Attorney's 
Office, the FBI, HHS OIG, and State, and local law enforcement 
agencies launched the Medicare Fraud Strike Force in Miami. 
Based on the success of these efforts and increased 
appropriated funding for healthcare fraud from Congress and the 
administration, strike force operations are now in nine areas 
of the United States, including Detroit. The strike force 
focuses on the worst offenders in regions with the highest 
known concentrations of fraud.
    Today, our criminal enforcement efforts are at an all-time 
high. In 2016, the Department of Justice organized the largest 
national healthcare fraud takedown in history, both in terms of 
individuals charged and the loss amount. On June 22, Attorney 
General Lynch and Secretary Burwell announced that the 
nationwide takedown, led by the Medicare Fraud Strike Force and 
36 U.S. attorneys' offices, including mine, resulted in charges 
against 301 individuals, including 61 doctors, nurses, and 
other licensed medical professionals, for their alleged 
participation in Medicare fraud schemes involving $900 million 
in false billings.
    In addition, CMS suspended payments to a number of 
providers using authority provided by the Affordable Care Act. 
Cases included schemes to submit claims to Medicare for 
treatments that were medically unnecessary or never provided or 
allegations that patient recruiters were paid cash kickbacks in 
return for supplying beneficiary information to providers so 
that those providers could submit false Medicare claims.
    The AUSAs in my own district, working with the strike 
force, have handled a wide variety of healthcare matters. And I 
would like to talk particularly about the case of Dr. Farid 
Fata, which Chairman Roskam mentioned. Dr. Fata was a licensed 
medical doctor who owned and operated Michigan Hematology 
Oncology, the largest cancer treatment center in Michigan. A 
former office manager at Fata's clinic reported to the 
Department that Fata was administering chemotherapy to patients 
who did no need it. The investigation showed that, from 2007 to 
2013, Fata prescribed and administered unnecessary aggressive 
chemotherapy cancer treatments and intravenous iron and other 
infusion therapies to patients. Some of his patients did not 
have cancer at all. Fata then submitted fraudulent claims to 
Medicare and other insurers for these unnecessary treatments. 
On August 6, 2013, Fata was charged an indictment. He pleaded 
guilty of 13 counts of healthcare fraud and related charges. 
And in July 2015, he was sentenced to 45 years in prison for 
his role in his healthcare fraud scheme that included 
administering unnecessary infusions and injections to 553 
individual patients and submitting bills to Medicare and other 
insurance companies totaling $34 million in fraudulent claims.
    Thank you for this opportunity to provide an overview of 
the Department's healthcare efforts and successes. I would be 
happy to respond to any questions that you might have at the 
appropriate time.
    Chairman ROSKAM. Thank you, Ms. McQuade.
    [The prepared statement of Ms. McQuade follows:]
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    Chairman ROSKAM. Mr. Dixit.

     STATEMENT OF ABHIJIT DIXIT, SPECIAL AGENT, OFFICE OF 
  INVESTIGATIONS, OFFICE OF INSPECTOR GENERAL, DEPARTMENT OF 
                   HEALTH AND HUMAN SERVICES

    Mr. DIXIT. Good morning, Chairman Roskam, Ranking Member 
Lewis, and distinguished Members of the Subcommittee. I am 
Abhijit Dixit, a special agent with the United States 
Department of Health and Human Services, Office of the 
Inspector General. Thank you for the opportunity to testify and 
describe the work that I and my fellow agents perform to 
protect Medicare and Medicaid beneficiaries and to fight 
against healthcare fraud.
    I am here this morning to give you a field agent's 
perspective in the investigation of providers that defraud 
healthcare programs. The work of our special agents has a 
valuable and positive impact across the Nation. During the last 
3 fiscal years, OIG investigations have resulted in over $10.9 
billion, 2,856 criminal actions, 1,447 civil actions, and 
11,343 program exclusions.
    It is important to point out OIG investigations are 
typically conducted in partnership with investigators of other 
Federal and State agencies, as well as private sector. OIG 
participates in Medicare Fraud Strike Force teams that combine 
the resources of Federal, State, and local law enforcement to 
prevent and combat healthcare fraud across the country.
    A clear example of success came in June 2016 when I and 
approximately 350 fellow OIG agents partnered with over 1,000 
law enforcement personnel to execute the largest healthcare 
fraud takedown in history involving approximately $900 million 
in false billings. Despite our success, more work remains to be 
done across the Nation. To accomplish our mission, we employ 
sophisticated data analytics, which is a valuable tool in 
detecting fraud. However, it is necessary to combine the 
insights gained with field intelligence. Traditional field 
intelligence is obtained through witness and subject 
interviews, execution of search of warrants and surveillance, 
which is critical to reveal the scope and nature of the fraud 
scheme and whether patients are being harmed.
    I would like to emphasize that Medicare fraud is not a 
victimless crime. It is not just about the loss of taxpayer 
dollars when fraud is committed. Medicare beneficiaries can 
suffer physical harm. One case of which I was personally 
involved is of a Detroit area hematologist-oncologist, Dr. 
Fata, who was sentenced last year to serve 45 years in prison. 
Dr. Fata used false cancer diagnosis and unwarranted dangerous 
treatments as tools to steal millions of dollars from Medicare.
    Let me describe my work as a field agent for this case. The 
initial phase of the investigation, determining whether the 
allegations were credible, lasted just 5 days. Near real-time 
data was retrieved and analyzed to identify witnesses who could 
give us more information. As evidence was uncovered, it became 
clear that patient-related decisions were made to maximize 
reimbursement rather than to advance the best interest of the 
patient. At this point, traditional law enforcement techniques 
were deployed and a command post was set up to relay 
information directly and immediately to a prosecution team. On 
the fifth day, Dr. Fata was arrested, and six search warrants 
were executed.
    OIG special agents are specifically trained to identify and 
address potential patient harm and work with law enforcement 
team prior to the execution of the operation to protect 
patients. In conjunction with DOJ and the FBI, a victim 
assistance hotline was set up to provide around-the-clock 
information to affected patients. We also deployed additional 
staff to each operational site that morning.
    While such stark cases of direct physical harm in the 
pursuit of profit like this one are not the most common, it is 
far from the only example.
    Another priority for the OIG is the enforcement and 
prevention of prescription drug fraud. In one example of 
prescription drug diversion, a Michigan pharmacist, Mr. Patel, 
and a network of pharmacies were among 37 defendants convicted 
for their roles in a widespread scheme to defraud Medicare and 
Medicaid of nearly $58 million.
    In conclusion, I would like to underscore the commitment of 
the OIG in protecting program beneficiaries in fighting 
healthcare fraud. The highly specialized investigative work of 
our special agents combined with cutting-edge data analytics 
continue to prove effective in making a valuable and positive 
impact.
    Thank for the opportunity to speak to you today. I would be 
happy to answer any questions.
    Chairman ROSKAM. Thank you, Mr. Dixit.
    [The prepared statement of Mr. Dixit follows:]
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    Chairman ROSKAM. Mr. Ward.

    STATEMENT OF SCOTT WARD, SENIOR VICE PRESIDENT, HEALTH 
                         INTEGRITY LLC

    Mr. WARD. Good morning, Chairman Roskam, Ranking Member 
Lewis, and distinguished Members of the Subcommittee. I am 
Scott Ward, senior vice president of Health Integrity and 
program director of ZPIC Zone 4. I am here today, and I 
appreciate the opportunity, to tell the committee about the 
important work that we do at the Centers for Medicare & 
Medicaid Services in protecting the integrity of the Medicaid 
and Medicare program.
    Health Integrity is a nonprofit corporation incorporated in 
2006 and is a wholly owned subsidiary of the Quality Health 
Strategies. Our corporate headquarters are in Easton, Maryland, 
and we have offices located throughout the United States. We 
have 285 nationwide employees. And we also have a large 
resource pool of statisticians, data analysts, predictive 
modeling specialists, medical directors, nurses, certified 
coders, subject-matter experts on policy, communication 
specialists, auditors, and investigators. Our staff understands 
the healthcare delivery system and the differences in provider 
fraud, waste, and abuse actions across all provider types in 
all settings and in the fee-for-service and managed-care 
payment environments.
    We also understand how fraud is committed and how abusive 
practices lead to poor and inadequate patient care and program 
vulnerabilities. We also know how beneficiary and provider 
improper actions cause wasteful expenditures of program funds 
and ultimately improper payments. Our contracts with CMS 
include all aspects of the Medicare program integrity 
operation. We are the Zone Program Integrity Contractor for 
Zone 4, which investigates fee-for-service claims for Medicare 
and Medicaid in Texas, Oklahoma, New Mexico, and Colorado. We 
are also the National Benefit Integrity Medicare Prescription 
Drug Contractor with a responsibility to identify and 
investigate incidents of fraud, waste, and abuse in the 
Medicare Advantage and the Medicare prescription drug programs.
    We also have the Audit Medicaid Integrity Contractor that 
identifies Medicaid overpayments in 34 States and the District 
of Columbia. Additionally, we hold a UPIC IDIQ as well.
    Health Integrity was awarded the ZPIC Zone 4 contract on 
September 30, 2008, and was the first ZPIC awarded by CMS. The 
primary focus of the ZPIC is to protect the Medicare trust fund 
by preventing, detecting, and deterring fraud, waste, and abuse 
in the Medicare and Medicaid programs.
    The ZPIC authority includes investigating and analyzing 
Medicare Parts A, B, durable medical equipment, home health, 
hospice, and the Medicare and Medicaid data match programs 
operating in conjunction with State Medicaid agencies.
    These investigative activities are conducted through 
proactive and reactive methods and actions that may be taken to 
correct these problems to help ensure that future fraudulent 
billing practices or improper payments are not made. 
Investigative leads are both reactive and proactive. Reactive 
leads are identified from outside source complaints, such as 
referrals from Medicare Administrative Contractor, beneficiary 
complaints, ex-employees, Office of Inspector General hotline 
complaints, and the CMS fraud prevention system. Proactive 
leads are identified through data analysis, local knowledge, 
subject-matter expertise, and policy review.
    During Health Integrity's investigative process, Health 
Integrity is constantly looking to implement any available 
administrative action that can be taken to effectuate a 
correction or elimination of the identified fraudulent or 
abusive claim submission or medical service scheme. ZPIC uses 
multiple tools to combat fraud, waste, and abuse. These efforts 
are effective through or collaborative partnerships with CMS, 
law enforcement and other stakeholders. The work that ZPIC does 
is an important function in the overall CMS effort to combat 
fraud, waste, and abuse in the Medicare and Medicaid programs. 
We are proud of our contributions we have made in this process.
    This concludes my statement, and I would be welcome to take 
any questions you may have.
    Chairman ROSKAM. Thank you, Mr. Ward. I thank all of you.
    [The prepared statement of Mr. Ward follows:]
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    Chairman ROSKAM. I think it is so interesting. We have a 
lot of questions for you. And the first person that you will 
hear from is Mr. Holding.
    Mr. HOLDING. Thank you, Mr. Chairman.
    Ms. McQuade, Mr. Dixit, it is truly a notable case, the 
Fata case.
    Ms. McQuade, how did you originally find out about the 
case? What was the trigger that got you looking at Dr. Fata?
    Ms. MCQUADE. The Dr. Fata case to us from a whistleblower. 
The office manager in his office was someone who heard from 
some of the doctors, noticed that some of them were resigning, 
and found out that Dr. Fata was prescribing unnecessary medical 
treatment. So he came into the office, and as Agent Dixit said, 
we took it very seriously. We, frankly, thought it sounded too 
outrageous to be true, but we knew that, if it was true, we 
needed to act quickly. And so I am very proud of how hard the 
agents and prosecutors worked around the clock to be able to 
take him down within 5 days, to make sure that, as Ranking 
Member Lewis has said, patient care needs to be of paramount 
concern. And it was in that case, and that is why I am so proud 
of the work of those prosecutors and agents.
    Mr. HOLDING. Did you have a grand jury open looking at 
fraud and just plugged that in there? Did you bring it to a 
grand jury, or did you just have enough evidence to go and get 
an arrest warrant?
    Ms. MCQUADE. We charged him in a complaint initially and 
then continued to investigate additional incidents, continued 
to talk to additional witnesses, and ultimately presented it to 
a grand jury. But we were able to act quickly by charging him 
in a compliant and executing the six search warrants on a 
Tuesday morning.
    One thing that was very important to us was making sure 
that patient care continued and so, again, due to the good 
thinking of the agents and the prosecutors, came up with a 
protocol so that patients could obtain their patient records 
and patient files even after they had been seized by agents so 
that they could take them to another cancer provider and to 
ensure continued patient care.
    Mr. HOLDING. And how long--it was a period of 6 years that 
he had been doing this, $34 million, multiple patient deaths.
    Mr. Dixit, you referenced sophisticated data analysis that 
you all used, I assume, to proactively to look for fraud. So 
how was he able to elude data--your sophisticated data analysis 
for so long to such a great extent?
    Mr. DIXIT. Thank you for that question, Congressman. Data 
analytics is a very valuable tool, as I stated in my statement. 
But it has to be combined with field intelligence. We do, along 
with the ZPIC and CMS folks, we actually do a lot of proactive 
work. However, unless you actually go to the field and find out 
who the actual provider is and how many providers are in that 
particular practice, all we know is that he will be an outlier. 
That is indicative of fraud, but it is not necessarily fraud. 
It does not rise to an----
    Mr. HOLDING. So, in the scope of your work, when you see an 
outlier like that, what do you do?
    Mr. DIXIT. We further the investigation. We combine it with 
surveillance. We find out--we get a better picture. We have 
ZPIC and folks, analysts, who are experts in data analysis. We 
find out, is it one provider billing say $30 million, or is it 
10 providers billing $30 million? It makes a big difference.
    Once he is an outlier, we start doing our investigative 
techniques, like surveillance, talking to witnesses, 
beneficiaries, and we get a better picture of whether or not we 
should proceed on the criminal side.
    Mr. HOLDING. Can you give me some idea of the scope of 
outliers out there that you would be looking at on any given 
quarter, month?
    Mr. DIXIT. I can't exactly quantify it with a number. But I 
can give you an example of one of the cases I worked, which 
came straight from a proactive data analysis system. We had a 
physician in Michigan who, through proactive data analysis--the 
ZPIC actually forwarded it to us--stated that if this provider 
would have provided these services, that particular doctor 
would have had to travel 450 miles in that one day and perform 
36 hours of services, which is practically impossible. Yes, we 
opened the case for further investigation, and that individual 
was indicted and convicted.
    Mr. HOLDING. Ms. McQuade, did this go to trial?
    Ms. MCQUADE. No, the case did not go to trial. Ultimately, 
Dr. Fata entered a guilty plea and was sentenced to 45 years in 
prison.
    Mr. HOLDING. During the process of negotiating that, did he 
raise any defense at all?
    Ms. MCQUADE. He really did not. Ultimately, at his 
sentencing hearing, he admitted to the judge that he had been 
motivated both by greed and by power, so it was an interesting 
statement on his part. But he never really mounted much of a 
defense. I think his goal was mitigating his sentence at the 
end of the day. But we were pleased that the judge imposed a 
sentence--although we sought a higher sentence--a sentence of 
45 years, which, for a 50-year-old man, is a substantial 
sentence.
    Mr. HOLDING. Right.
    Mr. Chairman, I yield back.
    Chairman ROSKAM. Mr. Lewis.
    Mr. LEWIS. Thank you very much, Mr. Chairman.
    Let me thank each of the witnesses for being here.
    Can you tell me maybe just speculate, what motivates 
doctors or other medical professionals to engage in fraud, 
Medicare fraud? Is it simple greed? People have to conspire and 
have to engage in a conspiracy to get doctors and other health 
providers, pharmacists and others.
    Mr. DIXIT. Thank you for that question, Congressman. What 
we see in Detroit, what I have seen personally in Detroit, I 
will give you an example, which will make a better point of 
this case. We worked a home health agency case where the 
defendant won, out of 20 defendants that were indicted in that 
$13 million case. The defendant was arrested. The day of his 
arrest, he was interviewed. He cooperated with law enforcement. 
And he told us that he was not a medical professional. He 
worked at a Church's Chicken. For him, it was easier to get 
into the field, sign up with Medicare, and start billing for 
services that were never rendered. However, he did learn a 
scheme from a different health agency owner and wanted to start 
his own because he did not want to make just dimes and dollars. 
He wanted to make millions of dollars. So that is one part of 
it.
    We also see another part of it where individuals that try 
to do the right thing at the beginning get sidelined because 
there is a lot of fraud. Fraud is a problem. Obviously, we all 
know that fraud is a problem. But we do have doctors who have 
come in and proffered with U.S. attorneys and agents who tell 
us it was impossible for them to actually perform the services 
without getting involved. Did they stop? No. So were they 
convicted? Eventually, yes. Greed got the better of all of them 
at one point, but the motivation we see in Detroit is all about 
money.
    Mr. LEWIS. Is organized crime involved?
    Mr. DIXIT. We see a variety of cases, we see simple folks 
who have no medical background all the way up to sophisticated 
doctors like Dr. Farid Fata. In this particular case that I was 
talking about, the home health agency case, we had four home 
health agency owners, three doctors, physical therapists. They 
all operated exactly like a criminal enterprise. One would not 
do without the other. One had to do--for example, the physical 
therapists had to make up these sheets if Medicare came looking 
whether or not the service was provided. It was all done at the 
back end. They would bill Medicare upfront, but all the 
fraudulent paperwork, everything else was done on the back end. 
Everyone served a purpose. It was a criminal enterprise, yes.
    Mr. LEWIS. Would others like to comment?
    Ms. MCQUADE. Congressman Lewis, I don't know that we see 
traditional organized crime groups being involved in Medicare 
fraud, but as Agent Dixit said, there are sometimes very 
complex and sophisticated conspiracies designed to defraud 
Medicare and other insurance programs. I do believe that the 
motivation is greed, that there is substantial money to be 
made, and that is what motivates this work.
    Another case that we had that does result in patient harm 
and harm to the community involved a doctor in Monroe, 
Michigan, named Oscar Linares, who set up what can be described 
as a pill mill. And I am certain that he did it for greed 
because he used his funds to buy things like Rolex watches and 
luxury vehicles, like a Bentley and a Ferrari. And so I believe 
that his motivation was greed, but he was prescribing 
oxycodone, pain pills, to people who did not need it for 
medical necessity. He saw more than 250 patients a day and was 
putting these pills out into the community. And in exchange, he 
would have the patient submit to unnecessary medical treatments 
or unprovided medical treatments for which he would bill 
Medicare. So he made a lot of money. And in the process, many, 
many people were provided with prescription opioids that I 
believe contributes to our Nation's opioid epidemic. And as you 
know, it is a gateway to heroin use and overdose deaths. So it 
is a serious problem that does, as you said, impacts patient 
harm.
    Mr. LEWIS. Thank you.
    I yield back, Mr. Chairman.
    Chairman ROSKAM. Mr. Rice of South Carolina.
    Mr. RICE. Thank you, Mr. Chairman.
    Medicare is certainly a noble and essential program 
provided by the Federal Government. It is a promise made to our 
seniors, and we have to make that promise solid and keep it--
and make sure it is kept. It is also one of the largest, most 
expensive programs run by the Federal Government. We paid more 
for Medicare services in 2015, about 20 percent more than we 
paid for our national defense. With $20 trillion in debt, we 
have to make sure that those dollars are spent wisely. 
Obviously, we have to eliminate every drop of fraud that we 
possibly can. I know that 99 percent of the people using 
Medicare are certainly honest and deserving people, but there 
are always crooks out there. And I appreciate very much what 
you do to detect those and to bring them to justice.
    The Fata case is an example that is shocking to everybody 
that he could bill I think it was $60 million--is that right?--
over 6 years and not be detected until a whistleblower came 
along.
    Mr. Dixit, why is it that a whistleblower had to come 
along? How long would it have been had that whistleblower not 
come along? Had somebody not within his practice not come and 
turned him in, how long would it have taken us to detect this 
astounding level of fraud?
    Mr. DIXIT. Thank you for that question, Congressman. 
Unfortunately, I do not have an answer for that. Unless the 
office manager or citizens that are concerned or beneficiaries 
that see fraud happening, unless they come forth, which is one 
of our main sources of referrals, along with the OIG hotline, 
referrals from ZPIC, proactive data analysis, I wouldn't be 
able to tell you with any assurance that anybody would have 
come forward or we would have found that particular issue.
    Mr. RICE. Okay. Well, can you tell me--we have these tools 
for predictive analysis--can you tell me what percentage of 
these fraud cases are brought as a result of predictive 
analysis versus whistleblowers, people coming forward and 
fessing up.
    Mr. DIXIT. I can't quantify a percentage, but I would be 
happy to get back to the subject-matter experts who actually 
work in this area and get back to you at a later date with a 
percentage.
    Mr. RICE. I would love to see that. I would love to know. 
That would give me some indication of the effectiveness of the 
predictive analysis.
    Mr. Ward, I think your job is detecting this fraud, right?
    Mr. WARD. Yes, sir.
    Mr. RICE. You talked about outliers. You look at 
statistical analysis of Medicare providers I suppose and you 
look at things that just don't make sense, right? You look at 
outliers?
    Mr. WARD. That is correct.
    Mr. RICE. Is there a procedure for auditing those outliers? 
Do we have an ongoing, like the IRS, annual audit procedure 
where we select providers for review?
    Mr. WARD. Yes. That actually occurs at the Medicare 
Administrative Contractor level. The contractor that actually 
pays the claims, they do, on an annual basis, they develop a 
probe plan of audits that they are going to conduct on specific 
services that are billed when they see--when they do data 
analysis, and then they coordinate with the ZPICs to determine 
areas that they think could potentially be fraudulent as well 
as they review the OIG's annual plan for areas that they are 
going to focus on.
    Mr. RICE. All right. So, coming back to you, Mr. Dixit, can 
you tell me, as a result of these audits, what percentage of 
the criminal prosecutions that you do are as a result of these 
audits versus whistleblowers versus predictive analysis?
    Mr. WARD. Well----
    Mr. RICE. Mr. Dixit.
    Mr. DIXIT. Thank you, again, but once again, I can't 
quantify the number in terms of percentage, but we would be 
more than happy to get back to you. We have data analysts who 
actually work in this field, and we will get you a percentage 
for sure.
    Mr. RICE. Thank you.
    Mr. Ward, in the process of these contractors that you say 
are doing the audits, so the government is hiring independent 
contractors to do--the government is not doing it itself, 
right? Is that what you said?
    Mr. WARD. Correct.
    Mr. RICE. So do you know the mechanics of choosing who they 
are going to audit? Do they focus on outliers? Do they do 
random audits like the IRS? Do you have any idea of the 
procedure?
    Mr. WARD. My knowledge of how the Medicaid--Medicare 
Administrative Contractor develops that is limited. They do 
statistically valid sampling. They look at areas where maybe 
there is over utilization of certain claims, you know, code 
types, different--or just billing spikes, things of that 
nature, and then they determine from that who they might probe.
    Mr. RICE. My time is up, but I have one more question for 
you, and that is, based on your--I have read this memo, and it 
says that we don't have a good number on what the actual fraud 
is, but that is your job. So I would just like your opinion. 
What percentage of the actual fraud and abuse are we catching?
    Mr. WARD. Are you taking about nationwide or just area?
    Mr. RICE. Yeah, nationwide.
    Mr. WARD. That would be hard for me to----
    Mr. RICE. Is it more or less than 50 percent?
    Mr. WARD. Probably less than 50 percent.
    Mr. RICE. Thank you, sir.
    Chairman ROSKAM. Mr. Crowley of New York.
    Mr. CROWLEY. Thank you all. I will be very brief. I thank 
you all for your testimony this morning before the committee. 
And I want to thank the chairman and the Ranking Member, all 
the members, for continuing to delve into what has been a 
historical problem facing our Nation, and that is Medicare 
fraud.
    Mr. Dixit, I applaud your work in protecting beneficiaries 
from Medicare fraud every day. Thank you to all of you for what 
you do every day. This is important work that you are engaged 
in and you outline very clearly how fraud harms beneficiaries 
as well as the taxpayers, and some of these cases horrendously 
in terms of poisoning, literally poisoning people, not only 
with opiates but with other drugs intended to fight cancer, but 
in their own nature are in essence poison themselves to kill 
those bad cells.
    The Affordable Care Act added several important tools to 
fight against fraud. Always knowing that those who are intent 
on committing fraud will find ways around the law. We did give 
additional tools. It gave increased funding to combat fraud and 
provided new tools to screen providers so that we can prevent 
criminals from getting into the system on the front end, 
improved data analytics, and instituted more payment review to 
check for problems before money goes out the door.
    Mr. Dixit, can you talk about how increased funding, 
improved data analytics, and more forward fighting tools has 
helped you do your job?
    Mr. DIXIT. Thank you, Congressman. Data analytics, as I 
stated earlier, has been an extremely powerful tool for agents 
to analyze and protect fraud. At least they are indicative of 
fraud. Combined with agents and resources on the ground, we 
work with State and local law enforcement. Data has always 
pointed us in the right direction, taken--combined with agents 
going into the field and following up on surveillance 
techniques. And to get a better picture of what we are actually 
seeing has helped us immensely. So data analytics, the more 
analysis we do on data, we figure out where the problems are. 
We can identify geographic hot spots. We can identify, for 
example, if there is a physician billing for services and it is 
in cahoots with a home health agency owner, we can actually do 
data analysis to see who the highest paid home health agency is 
through data analytics. Of course, we will have to combine that 
to see--because data analytics is not going to tell us whether 
the home health agency owner is paying any kickbacks to that 
doctor. So, combined, it is a very valuable tool.
    Mr. CROWLEY. It is one of a number of tools that were added 
through the Affordable Care Act, is that correct, including 
additional funding and other tools to fight fraud?
    Mr. DIXIT. I cannot speak to the funding portion of it. I 
am a field agent, so my expertise is limited in the funding 
portion as to what we are getting regarding where the funding 
stream is coming from. I can have the folks at our office 
headquarters get back to you on that particular issue.
    Mr. CROWLEY. I would suggest additional funding has been 
made through the Affordable Care Act that is there to help you 
fight the fraud that you are involved in every day. So, on 
behalf of the American people, I want to thank you for your 
efforts, all of your efforts. I yield back the balance of my 
time.
    Chairman ROSKAM. Thank you.
    Mr. Reed of New York.
    Mr. REED. Thank you, Mr. Chairman.
    And before I get started, I just want to kind of put in 
perspective what we are talking about here. We are spending 
about $600 billion, to my understanding, looking at the 
material before me on Medicare. The improper payments, 
including fraud payments, totals about $60 billion I think is 
what the reports show us. Out of that of $60 billion, there is 
a debate whether it is 18 to 50 percent of it is actual fraud 
as opposed to just improper billing situations, which is also 
an issue, which is outside the scope of this hearing today.
    But just to put that $60 billion figure in perspective, we 
are talking about an amount of money that is twice the level at 
$60 billion that the entire U.S. Government spends on the 
National Institutes of Health. National Institutes of Health is 
a leading public agent trying to fight cures for some of the 
most devastating diseases amongst us as American citizens. It 
is three times as much as the Nassau--NASA budget. Not Nassau, 
that is in New York. My colleague from New York had me thinking 
of that. NASA budget. It is about the size of my home State of 
New York State, Department of Parks and Recreation budget. All 
the money we spend in New York State for our parks and 
recreation services for the entire State of New York is 
equivalent to what we are talking about here today. And so what 
I am very interested in looking at--and Mr. Ward, I am very 
interested in your testimony that you have submitted here, 
because I am too also a firm believer in data analytics, 
predictive analytics, the algorithms that go into the software 
that create that analytic possibility. So I just want to ask 
some--because you are the contractor, you are the contractor 
that is utilizing a lot of these analytics on a day-to-day 
basis is my understanding from your testimony. Is that correct?
    Mr. WARD. Yes.
    Mr. REED. Okay. So I just want to make sure, are there any 
issues with the data itself that you are getting from CMS, from 
Medicare, that is a problem in order for you to run it through 
that computer software analytic program the algorithms that are 
there. Are there any data exchange? Are you getting the data 
you need in order to input that into the system?
    Mr. WARD. Yes, we are actually getting the data.
    Mr. REED. And the data comes in a way that you can read it 
and run it through the programs.
    Mr. WARD. Yes.
    Mr. REED. Okay. That is very good to hear, because we 
haven't heard that in other agencies and departments.
    So let's talk a little bit about what other data could you 
be interested in looking at that would improve the analytic 
capacity that you have as a contractor looking at this issue?
    Mr. WARD. Well, in addition to the Medicare claims data, if 
we had--we do have some abilities, and we have been looking at 
areas of using like doing Web analysis to look at social media 
and things of that to compare. There have been some piloting 
efforts that we have used to identify, to kind of put some----
    Mr. REED. How about other agencies of the U.S. Government?
    Mr. WARD. If we had access to, like, maybe Internal Revenue 
Service records, maybe State Department records, Immigration 
records as well, that might be helpful too.
    Mr. REED. And why would that be helpful?
    Mr. WARD. Well, using the State Department records or maybe 
Immigration, we would be able to tell if someone maybe has a 
physician--for example, we had a physician that we are 
currently working an investigation in the Houston area where he 
was billing for Medicare, and then we ended up contacting him, 
and we found out that he has been in Dubai for several months, 
because we were going to interview him. So we looked at his 
claims history, and we coordinated with the Office of Inspector 
General, who--they coordinated with Immigration and found out 
that, yes, they could give us specific dates of when his 
passport, when he left, and never returned to the country. We 
would be able to identify immediately the provider needs to be 
put on a payment hold and ultimately could be revoked for 
billing for services not rendered.
    Mr. REED. I appreciate that. Mr. Dixit, as a field agent, 
what other data would you be looking for outside the Medicare 
sphere that might be helpful to you?
    Mr. DIXIT. I would double down on what Mr. Ward said. We as 
law enforcement agents do have access to multiple systems where 
we can work in conjunction with other Federal agencies. For 
example, we work a lot with marshals on our fugitive program. 
We work a lot with----
    Mr. REED. Do you interact on a data analytic basis? If had 
you that data stream coming in--you are talking about 
physically you have to go march to the Marshals Office and say: 
Who are you working on? This is Mr. John Doe that triggered--
one of our analytics produced him as a target, and now I have 
to call you and do that.
    That is very--that is time-consuming. Is there anything you 
could do on a more proactive predictive analytic basis that 
would help you?
    Mr. DIXIT. Not that I can think of off the top of my head. 
But we do data analysis in terms of like--for example, we see 
dead beneficiaries that are being billed over and over and over 
again in our data analytic program. When we analyze the data, 
we find out that Medicare beneficiaries have been billed 
thousands of dollars and have died 2 years ago; they are 
deceased.
    Mr. REED. And you don't have access to that info?
    Mr. DIXIT. No, we do have access to that. I am just saying 
that is one of those.
    Mr. REED. An example.
    Mr. DIXIT. Just an example. If we could--I can't--off the 
top of my head, I can't think of anything else that might help 
us, but those are the things that we ask the ZPIC to provide. 
We get a data download, and we will ask ZPIC to give us, ``Can 
you also include the date of death, if possible?'' So they add 
that, and it is helpful.
    Mr. REED. Thank you very much.
    I yield back.
    Chairman ROSKAM. Mr. Davis of Illinois.
    Mr. DAVIS. Thank you very much, Mr. Chairman.
    I also want to thank all of our witnesses for being here 
today. You know, nothing is more important, I don't believe, 
that the government does to intervene on behalf of individual 
citizens than the Medicare program, especially as we see the 
continuing aging of individuals who reach that point and who, 
without these services, in many instances, would have no 
resources at all to get the medical care that they need.
    I less remember the days when we used to have the great big 
discussions about Medicare mills and Medicaid mills and the 
high level of fraud that existed, so much to the extent that 
there would be people lined up in some of these places to go in 
and see physicians.
    Unfortunately, there have always been a number of people in 
our country who operate on the principle that if you find a 
sucker, bump his head. And, unfortunately, many of those have 
been involved in the practice of medicine. They have been 
involved in the administration and management of activities. 
And so I applaud the Federal Government, especially in what we 
have done in the last few years through the Affordable Care Act 
to try and put an end to as much of this fraud as we can 
possibly do. And I note that, in the last 3 years, we recovered 
a record-breaking $10.7 billion, which certainly is not chump 
change, and it is certainly an indication that there is some 
effort underway.
    Let me ask each one of you, I have always been told that an 
ounce of prevention is worth much more than a pound of cure. 
What can we do more proactively to try and prevent fraud and 
abuse?
    And we will just perhaps start with you, Ms. McQuade.
    Ms. MCQUADE. Yes, thank you Congressman. I think that is an 
outstanding strategy to prevent any kind of crime from 
happening in the first place. Some of the things that we are 
doing is gathering stakeholders together for regular meetings 
to talk about fraud trends so that we can share information 
with each other and identify the trends, because they evolve. 
Criminals are very entrepreneurial, and when one scheme gets 
detected, they move on to another. So that is one thing we are 
doing and certainly probably could be done more of in other 
parts of country.
    We also do outreach work to citizens to talk to them and 
ask them to help us by reading their explanations of benefits 
and ensure that Medicare is not being billed for services that 
were not rendered. And there is a website there, StopFraud.gov 
and a phone number that they can call if they see that.
    One of the other things that is being done is HHS is 
sending letters to the top billers that can be identified as 
the outliers in the home healthcare arena and explaining to 
them what the rules are in hopes of deterrence in fraud. If 
they might be those outliers because they are engaged in fraud, 
maybe a letter saying, ``We are watching you and just wanted to 
make sure you understood the rules,'' maybe will prevent some 
fraud from occurring.
    And then, finally, under the Affordable Care Act, there is 
a new provision that helps stop the flow of fraudulent funds in 
that CMS may now suspend Medicare payments upon credible 
allegations of fraud so an indictment can at least stop the 
flow of funds at that point. So those are some of the things 
that we are doing. But I agree with you that prevention is 
certainly a worthwhile endeavor.
    Mr. DAVIS. Mr. Dixit.
    Mr. DIXIT. Thank you for that question, Congressman. Let me 
give you a field agent's perspective on what we do as agents in 
the field to try to prevent further fraud. We reach out to 
Medicare beneficiaries on a daily basis. We do a lot of witness 
interviews. So we educate Medicare beneficiaries to look at 
their explanation of benefits: ``If you see something that you 
never received, please call us.'' We will hand out our cards. 
That is one we try to prevent.
    Another very important point I want to make is indicted 
folks who come in and cooperate with the government, they give 
a lot of information about fraud that is just beginning. That 
is another very valuable tool that we have, but we have 
cooperators, informants. Agents do a lot of outreach while they 
are working cases, while asking us to give us information, 
leads, anything new, and also to just watch their benefits and 
let us know if there is anything----
    Mr. DAVIS. Thank you very much.
    Mr. WARD. Thank you for that question, Congressman. Just to 
bolster what my colleagues have said, we think that 
communication, more communication, is probably one of the 
things you can do to help stop more of the fraud, waste, and 
abuse, but from a ZPIC perspective, one of the things that we 
have done over the last couple of years is we have utilized 
more of the administrative actions and tools that we have had 
put forth to us. We have utilized payment suspension and 
prepayment review of providers much more to get a better 
picture of what they are doing and stopping the money 
immediately from going out the door. And then we have had more 
of use of revocation of the healthcare provider as well. We try 
really hard to make sure that we look at the providers that are 
in question to see if they do meet the criteria to be revoked 
and not be allowed to participate in the program.
    Mr. DAVIS. Thank you very much, Mr. Chairman.
    Chairman ROSKAM. Mr. Marchant of Texas.
    Mr. MARCHANT. Thank you, Mr. Chairman.
    I would like to talk about a case that broke in 2012 in 
Dallas. In Dallas, it was known as the Dr. Roy case, and it 
involved a doctor who used home health agencies kind of as a 
recruiting group, fed the clients, patients to him. And, 
frankly, it was something that was on the front page of every 
newspaper, all the TV stations, radio stations. It created 
quite a level of awareness in the Dallas-Fort Worth area about 
this that we still today in my office get emails and calls from 
time to time because people are a little frightened that this 
fraud undermines a program that they depend very heavily on. 
And because there is so much fraud, they are not getting the 
reimbursement or the care they deserve because there are so 
many dollars going away from the program that could be plowed 
back into the program.
    So the public is very interested. I don't think they are 
particularly accusatory toward the government in that they 
think we are part of it, but they are very concerned that it 
takes so long from the beginning of the crime to when the 
people are convicted. And they don't understand that long time 
lapse. And I think you can understand that.
    We have a unique system. You get a bill; we pay it. You 
come back later and investigate whether it is a good bill. 
Almost--even if I get an electric bill, I look at my electric 
bill, and I kind of say, ``Does this sound right?'' You know, I 
make kind of a quick analysis on all my bills. And I think 
everybody here in the room probably does the same thing. And 
then I pay it. But our system is very unique, and because of 
that, I understand that there are long delays.
    Can each of you just talk about how you discovered, those 
of you that were involved in that case, how you discovered this 
fraud, and what tools did you use that were at your disposal at 
that time to solve this case, and what additional tools you 
might have needed to solve this case faster? Let's start with--
I think, Mr. Dixit, you were involved with this.
    Mr. DIXIT. Thank you for that question, Congressman. I 
personally did not work on the Dr. Roy case. Let me take that 
back, actually. I did do an interview for the Dr. Roy case in 
Detroit. Dr. Roy's scheme was so widespread that his employees 
at some point started leaving with fear of prosecution.
    One of the individuals, I got a lead from the Dallas 
office. One of the Dallas agents contacted me to interview this 
particular individual, and that is how I got involved in this 
case. But let me just go back and tell you that the scheme for 
the Dr. Roy case is something that we have seen nationwide. 
What we refer to as recruiters or marketers or they call 
themselves community liaisons, they go door-to-door, grocery 
stores, homeless shelters, solicit beneficiaries for their 
numbers.
    They might pay them cash and oral prescriptions--narcotic 
prescriptions--in exchange for their Medicare number, which is 
then billed by the home health agency owners for no services 
ever provided. And Dr. Roy was one of those individuals who 
would sign off on those prescriptions and also those home 
health referrals.
    This actually, just so you know, is, and I am sure you are 
aware of it, is the largest healthcare fraud, home health 
agency fraud takedown, perpetrated by one single doctor. We see 
a lot of multiple doctor cases that come to that amount, but 
this is one single doctor.
    Mr. MARCHANT. And in 2012, did we have the same level of 
data analytics then in place that we do now, Mr. Ward?
    Mr. WARD. We, actually, in 2012, we had better data 
analytics than when Dr. Roy was first discovered. He was first 
identified back in 2010, and a referral was made on that, but 
it was such a complex case that it required a lot of field 
investigative work, in addition to the original data analytics 
that were done. From a ZPIC standpoint, we did over 700 
beneficiary interviews related to Dr. Roy. That is individual 
patient interviews to identify where patients weren't homebound 
and things of that nature.
    So our data analytics are much more improved from 2009 
today, and in 2012, they were much better as well. They 
improve, you know, on an almost weekly basis.
    Mr. MARCHANT. Thank you.
    Thank you, Mr. Chairman.
    Chairman ROSKAM. Mr. Smith of Missouri.
    Mr. SMITH. Thank you, Chairman Roskam.
    Thank you to the witnesses for being here. We are here to 
discuss a topic that is very important to me and the folks that 
I represent in southeast and south central Missouri. We hear a 
lot about fraud, and we hear estimates of more than 50 billion 
in fraud each year paid by Medicare. We talk a lot about loss 
to taxpayers, but I want to talk about damage to patients.
    In many cases, patients are harmed. One important aspect of 
investigating healthcare fraud is whether there is patient 
harm. In July, I learned that the University of Missouri, where 
I graduated from, agreed to pay the Federal Government $2.2 
million to settle a claim that their healthcare program 
physicians committed fraud.
    According to a U.S. attorney prosecuting the case, a 
Federal investigation found that physicians had not reviewed 
radiology images. I am curious how these types of settlements 
are reached, and that is why I ask you, Ms. McQuade, can you 
discuss the considerations you use to determine an appropriate 
sentence or settlement for Medicare fraud?
    Ms. MCQUADE. Thank you, Congressman.
    So I am not familiar with the Missouri case in particular, 
but in other kinds of cases, in a criminal case, we are 
governed by sentencing guidelines, and so those will offer an 
advisory range for what a sentence ought to be in terms of a 
prison sentence and will also offer an advisory range for a 
fine. So that is the starting point for any negotiations in a 
criminal case.
    In a civil case, there are a number of different ways one 
might quantify an appropriate settlement. You could look to 
fraudulent dollars actually expended. Some of the False Claims 
Act permits triple damages, so you could start at that as a 
triple point and, for the certainty and swiftness of a 
settlement, come down from that number. Oftentimes, ability to 
pay of an organization is also a factor that is considered.
    So all of those things are considered. But I can assure you 
that at the U.S. Attorney's Office, perhaps unlike private law 
firms, we constantly strive for what is in the best interest of 
justice and what is in the best interest of the victims and 
prepare to go to trial in cases where we cannot reach an 
appropriate settlement that we believe meets those aspirational 
goals.
    Mr. SMITH. Is patient harm a consideration in your 
settlement negotiations?
    Ms. MCQUADE. It is. It is certainly considered an 
aggravating factor. Under those sentencing guidelines, patient 
harm is an aggravating factor, and it is something that we 
would consider in terms of the egregiousness of the conduct.
    Mr. SMITH. Do you have a list of crimes that are considered 
egregious to determine an appropriate sentence?
    Ms. MCQUADE. It is difficult to talk about all of them, but 
we have a few examples. There is the Dr. Fata case, which in my 
view is the most egregious, providing chemotherapy to patients 
who did not need it, some of whom did not have cancer. We had 
another case involving a Dr. Sabit who installed medical 
devices--claimed to install a medical device into people's 
backs, performing back surgeries, instead replaced it with a 
cheaper material for his own cost savings, resulting in real 
patient harm and the need for additional surgeries by some of 
those patients.
    So the patient harm can really range from a whole number of 
things--exposure to unnecessary nuclear stress tests and 
radiation--so it is a wide spectrum of things. But patient harm 
is certainly something that is considered in imposing any kind 
of sentence or fine.
    Mr. SMITH. Thank you, Ms. McQuade.
    I yield back, Mr. Chairman.
    Chairman ROSKAM. Mr. Renacci of Ohio.
    Mr. RENACCI. Thank you, Mr. Chairman. I want to thank the 
witnesses for being here. You know, it is frustrating. I was in 
the healthcare profession for almost three decades before I 
came here, and I know back home people are very frustrated 
because they know there is fraud and abuse. And as a healthcare 
provider, I saw it around me. At least I thought I saw it 
around me, but you can never prove it. So I realize you guys 
are in a very tough situation, and I appreciate the work you 
are doing.
    But the American people are sitting here listening, and 
look, there are three types of people out there: There are 
those that commit fraud and are caught, and we have talked 
about some of those. There are those that commit fraud and are 
not caught. And there are those that don't commit fraud that 
are accused, which is even worse.
    So I hear a lot from those that are accused and then are 
not convicted or committed, and they have to go through a 
process. In fact, I heard from one agency that spent more in 
defending themselves in legal fees than the total revenues of 
the whole company for that year, so those are the issues that 
concern me as well too.
    But that still doesn't mean we shouldn't be going after 
those that have committed fraud and haven't been caught. And I 
am trying to figure out, in that universe, those that are 
caught--we already know those, those are the ones you are 
talking about--those that have been potentially said you have 
committed fraud and then aren't, and then those that we haven't 
caught. Is there any--and maybe, Mr. Ward, can you tell me, out 
of those that are potential fraud abusers, do we have a 
statistic that says, ``We have gone after, you know, 100 and 
convicted 10, 5, 20, 30, 70,'' is there a number on that, at 
least?
    Mr. WARD. I don't know that I would be qualified to answer 
that question.
    Mr. RENACCI. I mean, because these are the statistics and 
these are the things I know would help everybody up here on the 
dais and would also help the American people understand we are 
going after fraud.
    I mean, if you say that, ``Look, we went after 100 people 
and we caught 99,'' that is a pretty good statistic. If you 
say, ``We went after 100 and caught 5,'' people are going to 
say, what are we doing wrong?
    But the problem that I am hearing today, which is very 
frustrating for me and very frustrating for anybody watching 
this, is that we are not quantifying this in numbers. We are 
not saying, ``Look, there are''--one member up here asked how 
many people--what is the estimate of fraud, and we are not 
getting any numbers, so it is very frustrating.
    You can come here and tell us about the ones you caught, 
but what frustrates the American people are the ones you 
haven't caught, and I would love to hear what we are doing.
    The other thing that is so important--I also heard this 
from one of the members--you can catch somebody after they have 
committed 50, 100, 300 million dollars' worth of fraud. You are 
never going to get that money back. They are going to prison, 
but we have lost a lot of money. So how do we somehow put 
this--wrap this package up and be able to say to the American 
people, ``We know there is fraud; here is our percentages''? I 
mean, I would have loved for somebody to come today and say: 
Look, we have this analytic procedure. We know that there is, 
you know, 20 percent fraud. We are--we do an analysis that 
means we look at 1,000 people. Out of those 1,000 people, we 
catch 200.
    These are the kind of numbers that I make us feel 
comfortable. Are there any answers you can give me to make me 
feel comfortable--who is frustrated and the American people 
that are frustrated?
    Mr. DIXIT. Well, I can say that we have folks back at 
headquarters who do keep a tab of the complaints that come in, 
how many cases are investigated, how many are criminal actions, 
how many are civil actions. I guess, in my oral statement, I 
had a quick short paragraph regarding the numbers, but we can 
get back to you in detail regarding numbers, if you want, 
though. We do have folks that will get back to you at a later 
date on that particular question.
    Mr. RENACCI. I would appreciate that.
    Mr. DIXIT. I also want to answer the question regarding the 
money. I do want to make one--I do want to emphasize that one 
of the missions of OIG agents is to make that trust fund whole. 
We do want to bring money back to Medicare and all the 
government programs that lost it. So we work with the 
Department of Justice and FBI and try, during our investigative 
process, forfeiture warrants is one of the things that we 
always do and try and seize and take back whatever we can.
    Mr. RENACCI. And I am not taking away anything the three of 
you are doing. I am very happy to hear what you are doing. I am 
trying to figure out the big picture of how we can do it 
better, and this--but I also want the make sure that any 
constituent that has been accused of fraud, it would be great 
to hear how many have been accused, and I hope at some point I 
can get that information: if they have been accused and then 
how many have been convicted. That is an important number, 
because if we are going after--we can say we are going after 
1,000 people, but if we are only convicting 1 out of 1,000, 
that is not a good number.
    Ms. MCQUADE. Congressman, I believe the conviction rate is 
around 95 percent in healthcare fraud cases.
    Mr. RENACCI. Now, I am talking about the ones that we go 
after on a statistical basis because I did hear that we don't 
have that number, I thought.
    Mr. WARD. Well, we can get you those numbers. I didn't come 
prepared for that. I mean, one of the things that we do is we--
there are several different levels of how the investigative 
work and some do not meet--are not egregious enough. We 
prioritize them in a manner to where some of them can be 
handled administratively.
    So I am not sure if this is the answer to your question, 
but some of the things, when we identify through data 
analytics, outliers or things that do not meet medical policy 
or outside of what the local or national coverage 
determination, we do things like we put auto deny edits into 
the Medicare claim system, meaning that, when those claims hit 
the system, they are just automatically denied out. They are 
not--there is no cost to process.
    I mean, they are submitting claims that will be 
automatically captured and denied and never paid or processed, 
so that is something we can give you some numbers on cost 
savings. But then you have other levels where they may require 
more investigative methods and will require referrals to the 
Office of Inspector General to look at it for criminal or civil 
investigation and then essentially go to the Department of 
Justice for prosecution.
    Mr. RENACCI. All right. Thank you.
    I yield back.
    Chairman ROSKAM. Thank you. I just have a couple of 
questions to follow up and then maybe some wrap-up comments.
    Mr. Dixit, Mr. Reed was asking you about the billing with 
dead beneficiaries. Can you just walk us through that? It is 
kind of one of those things, we hear that and say, how can this 
possibly happen? So what is it that we--and that seems just a 
fundamental thing.
    So what is it that, number one, how does it happen? Number 
two, how can we be intentional about stopping that one? That 
seems like it is low-hanging fruit.
    Mr. DIXIT. Thank you, Chairman.
    Doctors who actually bill for services not rendered never 
see the beneficiaries. They never realize that the beneficiary 
has passed away 4 months ago. They keep billing for the 
beneficiary on what is allowable under the Medicare guidelines.
    When ZPIC, sometimes through proactive analysis, data 
analysis, ZPIC will send us this particular complaint and say 
something to the effect of, ``There is a doctor who is billing 
for dead beneficiaries.'' That is when we start opening the 
investigation. Of course, we go to the beneficiary's home, make 
sure that we go to vital statistics, other Federal, State, and 
local partners that we work with and get the necessary 
documentation to make sure that the beneficiary is deceased. 
The reason it happens is because the doctor never sees anyone 
to begin with.
    Chairman ROSKAM. How is it--I understand. I understand your 
point. How is it possible, in your view--or Mr. Ward, weigh in 
here as well--how is it possible that there is not--I mean, at 
some point the Social Security office makes a declaration that 
this person has passed away, and there is a recognition that 
that person has passed away. How is it--how is this continuing 
to be possible? Can you just walk through the mechanics of it, 
when everybody else knows that the individual has passed away, 
that the payment system doesn't know that the individual has 
passed away?
    Mr. WARD. Well, one of the things that we have noticed from 
the ZPIC standpoint is that we see there is a delay in the 
Social Security databases known as the common working file, 
which links bake to CMS' files and updating, so sometimes you 
can have a delay in a report of the death of a beneficiary, 
sometimes 60, sometimes 90 days, and in that period of time, 
you can get those billings, and the system won't recognize it.
    Chairman ROSKAM. Okay. So then can we at least get some 
comfort in the knowledge that after that 60- or 90-day period, 
those kinds of claims are not--false claims are not happening 
anymore?
    Mr. WARD. Yes. They will--once that is hitting the system 
where the beneficiary is deceased, those claims should be 
kicked out through edits that will show that the beneficiary 
has deceased and that it is not a valid claim. But, on 
occasion, sometimes, if that information is missed or if 
certain modifiers are put into place, claims can go through the 
system. There are some occasions where, when there is hospice 
related or sometimes durable medical equipment, where services 
may have been rendered and then the beneficiary ends up being 
deceased, where the claim will continue to pay.
    Chairman ROSKAM. For how long, would you estimate?
    Mr. WARD. Maybe 30 days, maybe 45 days.
    Chairman ROSKAM. Okay. So, Mr. Dixit, did I over interpret 
your response to Mr. Reed? I thought you said that this could 
happen for years, and what Mr. Ward is saying is that it is a 
shorter duration than that. So what is your view?
    Mr. DIXIT. I guess what I was trying to say is that there 
are multiple beneficiaries. I might have misspoken. Multiple 
beneficiaries that are billed every 2 to 3 weeks. We don't see 
a dead beneficiary being billed for 5 or 6 years. I don't have 
the exact number off the top of my head how long they actually 
bill a dead beneficiary for, but what we do see is like, for 
example, a doctor that I worked had 1,700 beneficiaries. You 
saw 1,700 active beneficiaries, but he was not seeing all these 
beneficiaries.
    So, when a person passed away--there are multiple 
beneficiaries that are passing away--he would keep billing 
them. So we have close to about $200,000 in billings within a 
span of 60 days for multiple beneficiaries that have passed 
away.
    Chairman ROSKAM. Uh-huh. I want to piggyback a little bit 
on Mr. Renacci's point a couple of minutes ago. And I think 
that there is the--I think what is actually emerging is a 
consensus on this issue and that there are a lot of people 
now--and it is a consensus that is based on necessity.
    You know, in the old days, there was a lot of money around 
Washington, D.C. You know what I mean. These budgets were flush 
and so forth. And now, with this increasing downward pressure 
from a financial point of view, I think folks are looking over 
the landscape and saying: We have got to do things better, 
smarter, faster, and cheaper, and more efficiently. And the 
first place to start is the notion of not paying people who are 
ripping off a system.
    You know what I mean? That is just so intuitive, and that 
is why you hear this unanimous cheering for you but also asking 
a very simple question: What can we do? What can we do more to 
help you?
    So what recommendation would you have, each of you? Ms. 
McQuade, let's start with you. You kind of got into it a little 
bit with Mr. Davis from Illinois in that he was asking you a 
question, and your response was what you are doing, which is, 
hey, listen, we are all in the business of selling, so good for 
you. But can you give us a sense of what would actually--what 
do you want us to know? What is helpful for us to know moving 
forward?
    Ms. MCQUADE. Well, we appreciate the investment that 
Congress makes into our work. And as you know, the return on 
investment is $6 for every $1 that is spent in terms of 
recovery. I would like to think that the work we do and when we 
publicize our work with convicting doctors and other healthcare 
fraud criminals, that that has a deterrent effect on others 
when they see that there are criminal consequences to that 
action, so I think continuing to fund our work is one thing 
that can be done.
    But of course, that is more of a pay-and-chase model that 
occurs after the fact. One tool that would be helpful to us is 
to continue to enhance the data that we have available to us. 
An emerging area is pharmaceutical fraud, prescription drugs. I 
know, in Michigan, our electronic database that doctors can 
enter data into for prescriptions is incomplete and imperfect, 
and an improved database would help us to see which doctors are 
prescribing medication, so that would be one tool that would 
helpful to us to improve our work.
    Chairman ROSKAM. Okay. Improved pharmaceutical database. 
Okay.
    Mr. Dixit, what do you think? What do you want us to know?
    Mr. DIXIT. Thank you for that question, Congressman, and 
thank you for your continued support for the OIG and its 
mission.
    As a field agent, in my perspective, more agents, more 
resources, more boots on the ground as a force multiplier for 
agents who are doing this work. That would help every agent in 
every jurisdiction to investigate more, spread the wealth, so 
to speak, will be more efficient and effective.
    Chairman ROSKAM. Okay. Mr. Ward, how about from your point 
of view?
    Mr. WARD. You know, I can say over the span of my career, I 
have seen very many iterations of how this program has 
progressed and how I have seen fraud progress as well with it, 
and I can't--I can say right now, with our work that we do with 
the CMS and with our law enforcement partners, that it is 
probably the most aggressive that it has ever been in my career 
as far as how successful we are being, so I appreciate your 
continued support.
    I think probably the most important thing to continue this 
fight is that we do get your support and collaboration with CMS 
and with the OIG and the Department of Justice as well.
    Chairman ROSKAM. Yeah, I think--you know, one of the areas, 
kind of in closing, one of the areas that Mr. Blumenauer and I 
are working on, a member of the Ways and Means Committee, from 
Oregon, and that is a secure ID bill, in other words, having 
a--using the same technology that the Department of Defense 
uses to limit access to sensitive places. It is well deployed 
in the Federal Government, and we have got a pilot program that 
says let's use this in Medicare and let's make sure that there 
is data that matches between a beneficiary and a provider so 
that, you know, the sale of a Medicare number underneath, you 
know, a bridge somewhere to manipulate and rip the system off, 
that can't happen, so that that is part of the legislative 
remedy.
    I think this idea of more boots on the ground, I 
understand. We wrestle with that same question on intelligence 
issues, national intelligence issues, the tension between, you 
know, the data side and having people in country and so forth. 
You are describing essentially the same thing.
    There is an element of prevention that really, I think, we 
can be very satisfied with, and these numbers are so big, they 
just take your breath away. So while they are impressive, the 
work that you are doing, we would be so much better off if we 
basically put you out of business. If it were up at the front 
end, and these claims data were so tight and so well screened 
and so intuitive, that you--the types of fraudulent claims that 
you had to chase down were, you know, were just di minimis, 
that would be so satisfying, I think, all the way around. And 
then we could have great debates in this Congress about how to 
spend an additional $60 billion that we could save, and we can 
figure out ways to do it more much efficiently.
    But on behalf of the entire subcommittee, thank you very 
much for what you are doing, number one, the work that you are 
doing and your willingness to spend time with us today. I 
appreciate it.
    The committee is adjourned.
    [Whereupon, at 11:20 a.m., the subcommittee was adjourned.]

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