[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
MEDICAID PROGRAM INTEGRITY: SCREENING OUT ERRORS, FRAUD, AND ABUSE
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HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
JUNE 2, 2015
__________
Serial No. 114-48
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
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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
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Page
Hon. Tim Murphy, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 3
Hon. Diana DeGette, a Representative in Congress from the state
of Colorado, opening statement................................. 4
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 6
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 7
Hon. Fred Upton, a Representative in Congress from the state of
Michigan, prepared statement................................... 68
Witnesses
Seto J. Bagdoyan, Director, Audit Services, Forensic Audits and
Investigative Service, U.S. Government Accountability Office... 9
Prepared statement........................................... 11
Answers to submitted questions............................... 74
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......... 23
Prepared statement........................................... 25
Answers to submitted questions............................... 78
Submitted material
Subcommittee memorandum.......................................... 69
MEDICAID PROGRAM INTEGRITY: SCREENING OUT ERRORS, FRAUD, AND ABUSE
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TUESDAY, JUNE 2, 2015
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:16 a.m., in
room 2322 of the Rayburn House Office Building, Hon. Tim Murphy
(chairman of the subcommittee) presiding.
Members present: Representatives Murphy, McKinley, Burgess,
Blackburn, Bucshon, Brooks, Mullin, Collins, DeGette,
Schakowsky, Castor, Yarmuth, Clarke, Kennedy, Green, Welch, and
Pallone (ex officio).
Staff present: Noelle Clemente, Press Secretary; Jessica
Donlon, Counsel, Oversight and Investigations; Brittany Havens,
Oversight Associate, Oversight and Investigations; Charles
Ingebretson, Chief Counsel, Oversight and Investigations;
Michelle Rosenberg, GAO Detailee, Health; Chris Santini, Policy
Coordinator, Oversight and Investigations; Alan Slobodin,
Deputy Chief Counsel, Oversight; Jessica Wilkerson, Oversight
Associate, Oversight and Investigations; Jeff Carroll,
Democratic Staff Director; Ryan Gottschall, Democratic GAO
Detailee; Ashley Jones, Democratic Director, Outreach and
Member Services; Chris Knauer, Democratic Oversight Staff
Director; Una Lee, Democratic Chief Oversight Counsel;
Elizabeth Letter, Democratic Professional Staff Member; and Tim
Robinson, Democratic Chief Counsel.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy. Good morning. I convene this hearing of the
Subcommittee on Oversight and Investigations. We are here today
to discuss a continuing and increasingly expensive problem,
waste, fraud, and abuse in the Medicaid program. I guess one
way I could put this is, for centuries people have tried to
deal with the issue is there life after death, and apparently
there is in Medicaid, and we will get to the bottom of that
today.
Last year the Medicaid program provided medical services
for approximately 60 million people at a cost of $310 billion.
But during that same year, the Centers for Medicare and
Medicaid Services estimate that the improper payment rate was
6.7 percent, or $17.5 billion. This is an increase of almost
one percent, or over three billion, from the previous year. It
is a troubling trend, especially as the program continues to
expand.
Unfortunately, the Medicaid program is far too accustomed
to fraud. In fact, the Government Accountability Office has
designated the Medicaid program as a high risk for fraud and
abuse since 2003, and it has been the subject of multiple GAO
and Department of Health and Human Services Office of Inspector
General Reports over the past several years, including a GAO
report being highlighted today.
In 2012 the Committee requested GAO identify and analyze
indicators of improper and potentially fraudulent payments to
Medicaid beneficiaries and providers. In a trustworthy study,
another in a longtime examining Medicaid fraud, GAO has
reported that CMS needs to take additional actions to improve
provider and beneficiary fraud controls. GAO found that
thousands and Medicaid beneficiaries and hundreds of providers
in just four states: Arizona, Florida, Michigan, and New
Jersey, were involved in possible improper or fraudulent
payments during fiscal year 2011. For example, almost 200
deceased beneficiaries received at least $9.6 million in
Medicaid benefits. About 8,600 beneficiaries received payments
by two or more states, totaling at least $18.3 million.
The Social Security numbers for about 199,000 beneficiaries
did not match the Social Security Administration databases.
About 90 medical providers had their medical license revoked or
suspended in the state in which they received Medicaid
payments. At least 47 providers had foreign addresses as their
location of services, including Canada, China, India, and Saudi
Arabia. About 50 providers who received Medicaid payments were
excluded from the Federal program for a variety of reasons,
including patient abuse, or neglect, fraud, theft, bribery, and
tax evasion.
GAO acknowledged that regulations issued in response to the
Affordable Care Act may have addressed some of the improper
payment indicators found in GAO's analysis. For example, CMS
created a tool called the Data Services Hub to help verify
beneficiary application information, but questions remain
whether this tool has been properly implemented, and if the
states have been able to effectively use this tool to combat
waste and fraud. In fact, just a few weeks ago, a Reuters
report found that more than one in five of the thousands of
doctors and other health care providers in the U.S. prohibited
from billing Medicare are still able to bill state Medicaid
programs.
The report included disturbing stories, such as a Georgia
optometrist who claimed he conducted 177 eye exams in one day,
yet remained on South Carolina's Medicaid rolls for almost a
year after he pleaded guilty in Georgia. In another instance,
an Ohio psychiatrist routinely over-reported the time he spent
with patients, and even billed for no-show patients. CMS
revoked his billing privileges after he was convicted of felony
Workers' Compensation fraud, yet he continued to work in the
Illinois Medicaid program, getting paid $560,000 for services
or prescriptions he wrote after his Medicare provider
revocation. Shockingly, on the day he was being sentenced in
Columbus, Ohio, he also claimed that he saw 131 group therapy
patients at his Illinois practice.
Now, these stories, we know, are unacceptable. Medicaid
fraud undermines the integrity of the program, denies our most
vulnerable the services they deserve, and waste taxpayers' hard
earned dollars. I hope we will hear today about the steps that
can be taken to further combat fraud in the Medicaid program.
That is what we want to focus on. And GAO has recommended some
common sense steps that would reduce fraud, such as issuing
guidance to states, better identifying beneficiaries who are
deceased, and the availability of automated information through
Medicare's enrollment database.
In light of the history of fraud in the Medicaid program,
and its growing size, however, will these steps be enough? Will
we be here again in another 2 years discussing the same thing?
And with the Medicaid program continuing to expand, the
Committee is concerned that the opportunity and motivation to
defraud the program will only increase.
So I would like to thank our witnesses who are here today.
You have the ability to save the taxpayers a massive amount of
money. We hope to hear from you today how you plan to do that,
and we are grateful for your presence.
[The prepared statement of Mr. Murphy follows:]
Prepared statement of Hon. Tim Murphy
We are here today to discuss a continuing and increasingly
expensive problem: Waste, fraud, and abuse in the Medicaid
program.
Last year the Medicaid program provided medical services
for approximately 60 million people at a cost of $310 billion.
But during that same year, the Centers for Medicare and
Medicaid Services estimated that the improper-payment rate was
6.7 percent or $17.5 billion. This is an increase of almost 1
percent or over $3 billion from the previous year. This is a
troubling trend, especially as the program continues to expand.
Unfortunately, the Medicaid program is far too accustomed
to fraud. In fact, the Government Accountability Office has
designated the Medicaid program as a high risk for fraud and
abuse since 2003. And it has been the subject of multiple GAO
and Department of Health and Human Services Office of Inspector
General reports over the past several years, including a GAO
report being highlighted today.
In 2012, the Committee requested GAO identify and analyze
indicators of improper or potentially fraudulent payments to
Medicaid beneficiaries and providers. In a just-released study-
another in a long line examining Medicaid fraud-GAO has
reported that CMS needs to take additional actions to improve
provider and beneficiary fraud controls.
GAO found that thousands of Medicaid beneficiaries and
hundreds of providers in just four states--Arizona, Florida,
Michigan, and New Jersey-were involved in possible improper or
fraudulent payments during Fiscal Year 2011. For example,
almost 200 deceased beneficiaries received at least $9.6
million in Medicaid benefits. About 8,600 beneficiaries
received payments by two or mate states totaling at least $18.3
million. The Social Security Numbers for about 199,000
beneficiaries did not match the Social Security Administration
databases. About 90 medical providers had their medical
licenses revoked or suspended in the state in which they
received Medicaid payments. At least 47 providers had foreign
addresses as their location of service, including in Canada,
China, India, and Saudi Arabia. About 50 providers who received
Medicaid payments were excluded from the federal program for a
variety reasons including patient abuse or neglect, fraud,
theft, bribery, and tax evasion.
GAO acknowledged that regulations issued in response to the
Affordable Care Act may have addressed some of the improper-
payment indicators found in GAO's analysis. For example, CMS
created a tool called the Data Services Hub (hub) to help
verify beneficiary applicant information. But questions remain
whether this tool has been properly implemented and if the
states have been able to effectively use this tool to combat
waste and fraud.
In fact, just a few weeks ago, a Reuters report found that
``more than one in five of the thousands of doctors and other
health care providers in the U.S. prohibited from billing
Medicare are still able to bill state Medicaid programs.'' The
report included disturbing stories such as a Georgia
optometrist, who claimed he conducted 177 eye exams in one day,
yet remained on South Carolina's Medicaid rolls for almost a
year after he pleaded guilty in Georgia. In another instance,
an Ohio psychiatrist routinely overreported the time he spent
with patients and even billed for no-show patients. CMS revoked
his billing privileges after he was convicted of felony
workers' compensation fraud. Yet, he continued to work in the
Illinois Medicaid program, getting paid $560,000 for services
or prescriptions he wrote after his Medicare provider
revocation. Shockingly, on the day he was being sentenced in
Columbus, Ohio, he also claimed that he saw 131 group therapy
patients at his Illinois practice.
These stories are unacceptable. Medicaid fraud undermines
the integrity of the program, denies our most vulnerable the
services they deserve, and wastes American taxpayers' hard-
earned dollars.
I hope we will hear today about the steps that can be taken
to further combat fraud in the Medicaid program. GAO has
recommended some common sense steps that would reduce fraud,
such as issuing guidance to state to better identify
beneficiaries who are deceased and the availability of
automated information through Medicare's enrollment database.
In light of the history of fraud in the Medicaid program and
its growing size, however, will these steps be enough? Will we
be here again in another two years discussing the same thing?
With the Medicaid program continuing to expand, the Committee
is concerned that the opportunity and motivation to defraud the
program will only increase.
I would like to thank our witnesses joining us today-you
all have the ability to save the American taxpayer a massive
amount of money, and we hope to hear from you today on how you
plan to do that.
Mr. Murphy. And I now recognize the Ranking Member, Ms.
DeGette of Colorado, for 5 minutes.
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you, Mr. Chairman. Good news on a
bipartisan basis, we are against waste, fraud, and abuse, as
usual, in the Medicaid program, and everyplace else. I have
been on this subcommittee now 19 years, and we have had a whole
series of hearings over the years. And as you accurately point
out, Mr. Chairman, it goes from administration to
administration, Medicaid seems to be particularly vulnerable to
issues like fraud, and we have to continue our oversight. So
when you say will we be here again in 2 years? Probably. We
will probably be here in 10 years, because this kind of a
problem takes ever vigilance by this Committee.
The GAO report we are talking about today tells us that the
Medicaid program, like many other large programs, like
Medicare, defense contracts, and private insurance plans,
experience thousands of improper, and possibly fraudulent,
payments every year. Last year CMS found an estimated improper
payment rate of 6.7 percent, which amounted to about $17.5
billion for the Medicaid program in 2014.
Now, as I said, and you said, like many other programs,
Medicaid fraud is not unique to this Committee. In our report,
which was published in 2003, which was 12 years ago, we said,
``Committee hearings last year revealed that the cost of the
Medicaid fraud program could exceed $17 billion every year.
This year, 2003, 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.'' And we had laudable efforts
since that time. Truly, $17 billion in 2003, and about $17
billion now, even with the Medicaid expansion, that is not
something to be proud about, although I guess we should be glad
it doesn't seem to be getting a lot worse. Nonetheless,
Congress, and the Administration, and the governors all across
the country need to focus on improper payments.
There is something exciting, though, that I think may
actually make a major difference going forward. Under the
Affordable Care Act, a number of important measures were
enacted to prevent or reduce improper payments in the Medicaid
and Medicare programs. For example, the ACA provided nearly
$350 million in new funds for anti-fraud efforts. It provided
new authorities to the Secretary of HHS to help shift from a
traditional pay and chase model to a preventative approach, by
keeping fraudulent suppliers and providers out of the program
before they commit fraud. And now we have in place a host of
new and enhanced anti-fraud penalties to deter those attempting
to improperly bill Medicaid or Medicare. These are important
new tools, and I think they can help safeguard the program. I
am looking forward to hearing from CMS and GAO on how these
efforts are working, and how they expect to build upon efforts
to strengthen Medicaid at both the Federal and State levels.
I think it is important to put this discussion of improper
payment rates in context with large scale financing of other
public and private sector programs. For example, I can cite
endless examples of major defense contractors receiving
improper payments from the Pentagon. Last year the Washington
Post revealed that one company improperly charged the
government more than $100 million for services. DOD alone
reported it had made $1.1 billion in improper payments for
fiscal year 2011.
Overbilling occurs across all sectors of the government,
and we have to figure out why that is happening, and how we can
strengthen our financial controls across the government to
prevent this kind of overpayment and fraud, and find new ways
to protect taxpayers. And so I think the GAO does a really
important job, both here, in helping strengthen the Medicaid
program, and many other places.
I have a lot of questions about the finding and
recommendations, some of which may go beyond the scope of the
report. For example, and this is in context of the ACA too, the
audit relies on data from fiscal year 2011. As we implement
these ACA provisions that have gone into place since that time,
I would be interested to know, are they really making a
difference on the data in the 3 or 4 years since that time? The
other issue we need clarification on is the basis of the four
states that were chosen for this audit.
So, as I say, I really want to thank the agencies for
coming in and helping us. Anything we can do to strengthen the
controls to prevent overpayment and fraud is great with me,
because the hard working Americans in all 50 states rely on
these Medicaid services, and they also rely on the fact that
their tax dollars are going to best serve this country. Thank
you, Mr. Chairman.
Mr. Murphy. Thank you. Now I will recognize Dr. Burgess for
5 minutes.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. Thank you, Mr. Chairman. This is an important
hearing we are having today. Medicaid, a program that is
entirely under our jurisdiction in the Energy and Commerce
Committee, is a vital program that covers and provides care for
some of the nation's most vulnerable populations. This
Committee does have exclusive legislative jurisdiction over
Medicaid, and it is our responsibility to ensure that the long
term sustainability of Medicaid is assured through proper
oversight.
Inefficient and misdirected payments within the Medicaid
program have substantive budgetary, access, and provider
impacts that ultimately affect patients. If states do not have
the proper tools available for monitoring enforcement, there
can be lasting effects on the nation's Medicaid recipients, and
the providers of their care. CMS has reported improper payments
well over $17 billion for fiscal year 2014 for the Medicaid
program, an increase of nearly $3 billion from the prior year.
That is a trend that should concern all of us. Each of those
dollars that is spent inappropriately is a dollar not spent on
a patient, and is, in fact, a wasted taxpayer dollar.
I do want to point out that the recently passed H.R. 2,
that this committee had a great hand in getting started, and
shepherding through the legislative process, and ultimately it
was signed by the President, but it did have a number of anti-
fraud provisions contained within. Most of those pertained to
the Medicare system, but I do wonder if some of those examples
may not also be extrapolated to the Medicaid system.
Specifically, Mr. Chairman, Section 502, preventing wrongful
Medicare payments for items and services furnished to
incarcerated individuals, individuals not lawfully present, and
deceased individuals. That may be something worthy of study
that the CMS may want to consider for the Medicaid system as
well.
I am also concerned about allowing entities engaging in
fraud to continue to receive Federal funds. We want to ensure
provider participation in Medicaid, and patients should never
be faced with a choice of no care or low quality care from
those providers. The Office of Inspector General has the
authority to exclude entities that employ deceptive business
practices within the Medicaid program. In 2014 Ranking Member
DeGette and I looked into the practices of certain dental
management service companies within the Medicaid program which
not only provide managerial services to dental clinics, but
also, in fact, actually own these clinics, and have direct
control over the operations and finances of the clinics. We
became very concerned because this corporate structure was
resulting in failure to meet basic quality and compliance
standards.
Unfortunately, many of these practices have continued,
despite Federal Government intervention. The Office of
Inspector General may initiate a corporate integrity agreement,
but these deceptive entities may dissolve under bankruptcy,
only to re-emerge under new management. The Office of Inspector
General has the authority to exclude individuals and entities
that have engaged in fraud and abuse related to Federal health
programs, including Medicaid. Following our investigation, we
sent a letter to the Office of Inspector General recommending
that OIG consider excluding any corporate entity that employs
deceptive practices that result in substandard care.
So we are grateful that some action was taken over that,
but it is incredibly important that there be a way to exclude
someone who is engaged in deceptive practice, and prevent that
process of dissolving, and then re-emerging in another
corporate form. We must ensure that states have the proper
tools available to ensure that tax dollars are never
fraudulently wasted in the Medicaid program, and that access
for Medicaid beneficiaries is subsequently protected.
Mr. Chairman, I thank you for the recognition, for the
time, and I will yield back.
Mr. Murphy. Gentleman yields back, and--if there is anybody
else on our side who wants the remaining 50 seconds? And, if
not, we will move over to the Ranking Member, Mr. Pallone, for
5 minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman. For decades Medicaid
has been a lifeline for tens of millions of hard working
Americans across the country. That is why we must make sure
that the resources we devote to this program are administered
efficiently and effectively. Every dollar lost to misuse or
fraud of our Federal health programs is one less dollar
available to fund essential lifesaving medical services for
Americans. Cutting down on waste, fraud, and abuse is, and must
remain, a priority for CMS, state Medicaid programs, and this
Committee.
Some of my colleagues on the other side of the aisle have
expressed concerns that expansion of Medicaid will put state
budgets in an untenable position and increase fraud, and that
is simply not true. Beneficiary access and program integrity
efforts are not competing goals. Smart, effective regulation
reinforces both goals simultaneously.
In the short time since states have had the option to
expand Medicaid, those states have already realized significant
qualitative and economic benefits, as uncompensated care rates
drop, and states are able to collect more revenue. Expansion
makes good economic sense, and good moral sense. For instance,
in my home state of New Jersey, projects a nearly $150 million
decline in charity care in fiscal year 2016, with savings from
the Medicare expansion totaling nearly $3 billion through 2020.
Let us also not forget that Medicaid coverage lowers financial
barriers to access, increases use of preventative care, and
improves health outcomes. Making the program available to more
vulnerable Americans is a great achievement, and one that I am
very proud of having played a part in.
But, of course, it is now more important than ever that we
act as good stewards of Medicaid dollars, and ensure that the
benefits of this program are available for generations to come.
That is why, when we passed the Affordable Care Act in 2010, we
included a number of measures to strengthen program integrity
and reduce fraud in the Medicaid program. In 2011, for example,
CMS established procedures to screen providers and suppliers
based on their risk levels so we can prevent fraud before it
occurs. This has changed the traditional pay and chase model
towards a preventative approach by keeping fraudulent suppliers
out of the program before they can commit fraud.
There are a number of other ACA anti-fraud measures that
have impacted the Medicaid program positively over the past few
years. These include new and enhanced penalties for fraudulent
providers. These new authorities allow the Inspector General to
exclude from Medicaid any provider that makes false statements
on an application to enroll or participate in the program. The
ACA also requires state Medicaid agencies to withhold payments
to a provider or supplier pending investigation of a credible
allegation of fraud. The law also significantly increased
funding to fight Medicare and Medicaid fraud.
So I want to hear today about how all these measures have
worked, and about how CMS is implementing regulations to better
protect patients and legitimate providers. Although the ACA
made significant steps to reduce fraud and abuse in the
Medicaid program, I know there is always room for improvement,
and I am glad the GAO is here today to share their findings and
provide constructive advice about how can we make the Medicaid
program even stronger.
But I want to caution against applying GAO's findings too
broadly. First, the analysis focused on four states, Arizona,
Florida, Michigan, and New Jersey, and its findings are not
generalizable across the country. Second, the report looked at
data from fiscal year 2011, before many of the ACA anti-fraud
provisions went into effect. GAO acknowledges several times in
a report that CMS has since made changes to address improper
payment issues. Third, I want to make the point that many of
the potentially improper payments listed in this report are
likely examples of provider fraud, not beneficiary fraud. The
GAO report lists examples such as billing under deceased
beneficiaries' identities, or billing on behalf of currently
incarcerated beneficiaries. Given that these beneficiaries are
hardly in a position to defraud the government, I think it is
likely that many of these are examples of provider fraud.
So, Mr. Chairman, good program integrity helps to ensure
that beneficiaries receive the care they need, so I look
forward to hearing from CMS and GAO how these latest efforts
are being implemented by the states. I don't know if anybody
wants my 30 seconds--otherwise I will yield back. Thank you.
Mr. Murphy. Thank you, I appreciate that. We will proceed
onward. It is good to see we are all on the same team today,
focused on this, and our witnesses are part of this too, so I
would like to introduce the witnesses for today's panel, make
sure I get the names right. It is Seto Bagdoyan, did I get that
right? Good, thank you. The Director of Audit Services in the
U.S. Government Accountability Office Forensic Audits and
Investigative Services Missions Team. Welcome here.
And Dr. Shantanu Agrawal--you have been here before,
welcome back--is the Deputy Administrator and Director of the
Center for Program Integrity at the Centers for Medicare and
Medicaid Services.
I will now swear in the witnesses. As you are aware, the
committees holding investigative hearing and when doing so, has
the practice of taking testimony under oath. Do either of you
have any objections to testifying under oath? Neither of you
do, thank you.
So, as the Chair, I would advise you that under the rules
of the House and rules of the Committee you are entitled to be
advised by counsels. Do either of you desire to be advised by
counsel during your testimony today? And both of you say no to
that, so, in that case, if you would please rise, raise your
right hand, I will swear you in.
[Witnesses sworn.]
Mr. Murphy. Thank you. You are now under oath, and subject
to the penalties set forth in Title 18, Section 1001 of the
United States Code. You may now give a 5 minute summary of your
written statement. You know how to watch the red light in front
of you. Stick with that, and I guess we will start off with Mr.
Bagdoyan.
TESTIMONY OF 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
TESTIMONY OF SETO J. BAGDOYAN
Mr. Bagdoyan. Chairman Murphy, Ranking Member DeGette, and
members of the subcommittee, I am pleased to be here today to
discuss results of GAO's recent report on Medicaid beneficiary
and provider fraud controls. As you know, and as you mentioned,
Mr. Chairman, Medicaid is a significant expenditure for the
Federal Government and the states, with combined outlays of
about $516 billion in fiscal year 2014, involving millions of
beneficiaries and providers.
These numbers, as members mentioned, are all expected to
grow as a result of the expansion of Medicaid under the
Affordable Care Act. A program of this scope and scale is
inherently susceptible to error, including improper payments,
as well as fraudulent activity. In fact, as mentioned again,
CMS reported an estimated improper payment rate of 6.7 percent,
or $17.5 billion, for Medicaid in fiscal year 2014, compared to
5.8 percent, or $14.4 billion respectively, in FY 2013. Also,
earlier this year we reported that Medicaid remains on GAO's
high risk list in part because of concerns about the adequacy
of fiscal oversight of the program, including improper
payments.
With this backdrop, I will now discuss our report's key
findings. Overall we found thousands of Medicaid beneficiaries
and hundreds of providers were involved in potentially improper
or fraudulent payments during fiscal year 2011, the most recent
year for which reliable and comparable data were available in
the four selected states we reviewed, namely Arizona, Florida,
Michigan, and New Jersey. These states accounted for about 9.2
million beneficiaries, and about 13 percent of all fiscal year
2011 Medicaid payments.
More specifically, examples of potentially improper or
fraudulent payments include about 8,600 beneficiaries had
payments made on their behalf concurrently by two or more of
the selected states, totaling at least $18.3 million. The
identities of roughly 200 deceased beneficiaries received about
$9.6 million in Medicaid benefits subsequent to the
beneficiary's death. Some 3,600 individuals received about $4.2
million worth of Medicaid services while incarcerated in State
prison facilities. 90 providers had suspended or revoked
licenses in at least one state in which they received payment.
Associated Medicaid claims totaled at least $2.8 million.
To its credit, as, again, mentioned in opening statements,
CMS has taken some regulatory steps to make the Medicaid
enrollment process more rigorous and data-driven. However, gaps
in beneficiary eligibility, verification guidance, and data
sharing persist. For example, in 2013, CMS required states to
use electronic data maintained by the Federal Government in its
data services hub to verify beneficiary eligibility. According
to CMS, the hub can verify key application information,
including state residency, incarceration status, and
immigration status.
However, CMS regulations do not require states to review
Medicaid beneficiary files for deceased individuals more
frequently than annually, nor specify whether states should
reconsider using the more comprehensive Social Security
Administration's full death master file in conjunction with
state reported death data when doing so. As a result, states
may not be able to detect individuals that have moved to, and
later died, in another state, or prevent the payment of
potentially fraudulent benefits to individuals using their
identities. Accordingly, additional guidance from CMS to states
might further enhance program integrity efforts beyond using
the hub.
In closing, our findings underscore that, as Medicaid's
numbers grow as expected, both the Federal Government and the
states need to maximize their efforts to promote program
integrity by preventing and reducing potential for improper
payments and fraud. Our recommendations to CMS, which the
agency has accepted, are designed to enhance its toolbox to
this effect, help narrow the windows of opportunity for
improper payments and fraud, and provide reasonable assurance
that Medicaid eligibility controls are functioning as intended.
Mr. Chairman, members of the subcommittee, this concludes
my statement. I look forward to your questions. Thank you.
[The prepared statement of Mr. Bagdoyan follows:]
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Mr. Murphy. Thank you. Dr. Agrawal, you are recognized for
5 minutes.
TESTIMONY OF SHANTANU AGRAWAL
Dr. Agrawal. Thank you. Chairman Murphy, Ranking Member
DeGette, and members of the Subcommittee, thank you for the
invitation to discuss CMS's efforts to strengthen Medicaid.
Enhancing program integrity is a top priority for the
Administration, and an agency-wide effort at CMS. We share the
Subcommittee's commitment to protecting beneficiaries and
ensuring taxpayer dollars are spent on legitimate items and
services, both of which are at the forefront of our program
integrity mission.
I would like to make three major points in my testimony
today. First, Medicaid program integrity is a shared state/
Federal responsibility, and I feel strongly that states and the
Federal Government share the goal that the Medicaid program be
as secure as possible to ensure beneficiaries are protected,
and the right payments are being made. Second, we have made
important progress in addressing beneficiary eligibility and
provider enrollment issues through advanced data systems and
improved collaboration. And third, it is clear that more work
remains, that we can build on our accomplishments with improved
guidance, building more capabilities, and enhanced oversight.
States and the Federal Government share mutual obligations
and accountability for the integrity of the Medicaid program,
and the development, application, and improvement of program
safeguards necessary to ensure proper and appropriate use of
both Federal and state dollars. This Federal/state partnership
is central to the success of the Medicaid program, and it
depends on clear lines of responsibility and shared goals.
Although the Federal Government establishes general guidelines
for the program, states design, implement, and administer their
own Medicaid programs. Medicaid is currently undergoing
significant changes as CMS and states implement reforms to
modernize and strengthen the program and its services.
While focused on implementation of the Affordable Care Act,
CMS has been working closely with states to implement new, more
modern delivery system and payment reforms. In the last few
years CMS and states have made important progress in improving
the systems and processes that determine a beneficiary's
eligibility for Medicaid, and that ensure only legitimate
providers enroll in and build a program. We have made great
strides. The error rate in beneficiary eligibility, for
example, has been cut in half since 2011. We recognize,
however, that more remains to be done, and continue to work
collaboratively with states to further improve Medicaid program
integrity.
A critical component to preventing waste, abuse, and fraud
is ensuring that only legitimate providers have the ability to
bill Medicaid in the first place. While states bear the primary
responsibility for provider screening and enrollment for
Medicaid, CMS is engaging in new efforts to work with states to
make sure that only legitimate providers are enrolling in the
Medicaid program. The ACA required CMS to implement risk-based
screening of providers and suppliers who want to participate in
Medicaid. This enhanced screening requires certain categories
of providers and suppliers that have historically posed a
higher risk of fraud to undergo greater scrutiny prior to their
enrollment or re-validation in Medicare, Medicaid, or CHIP.
To enroll providers more efficiently, CMS has provided
states with direct access to Medicare's enrollment database,
the Provider Enrollment Chain and Ownership System, or PECOS,
and in response to input from states, began providing access to
monthly PECOS data extracts that states could use to
systematically compare state enrollment records against
available PECOS information.
CMS also provides guidance, education through the Medicaid
Integrity Institute, which has reached over 4,200 state
employees on enrollment and other topics, and oversight through
state program integrity reviews. Additionally, the ACA, and
accompanying Federal regulations, have enhanced beneficiary
eligibility safeguards by establishing a modernized, data-
driven approach to verification of financial and non-financial
information needed to determine Medicaid eligibility. States
now rely on available electronic data sources, including the
Federal data hub and PARIS system, to confirm information
included on the application and promote program integrity,
while minimizing the amount of paper documentation that
consumers need to provide.
CMS has also developed its most recent comprehensive
Medicaid integrity plan, in collaboration with our partners,
including the National Association of Medicaid Directors, and
is working to implement this plan. This work includes providing
Medicare data to states for program integrity purposes,
expanding support and training of state program integrity staff
in vulnerable areas, such as program integrity oversight of
managed care and evolving integrated care models, and
facilitating development of state capacity and access to cost-
effective analytics technology.
The past several years have brought numerous gains in
combating fraud, waste, and abuse in the Medicaid program, but
more work clearly remains. Today the eligibility determination
process for beneficiaries and provider screening efforts are
significantly more modern and digital than ever before. We
thank the GAO for highlighting critical issues in the Medicaid
program, and look forward to continuing to work with states and
other stakeholders to establish new initiatives and expand upon
our existing programs to fight fraud, reduce improper payments,
and improve oversight. Thank you, and I am happy to answer any
questions.
[The prepared statement of Dr. Agrawal follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you very much. Let me recognize myself
for 5 minutes and keep this moving. We appreciate your input on
this, and some ideas here.
Dr. Agrawal, the improper payment rate for Medicaid program
was 6.7 percent in fiscal year 2014. That was an increase over
fiscal year 2013, where it was just 5.8 percent. Now, CMS set
the target rate for Medicaid payments at 5.6 percent, so CMS
failed to meet the target rate for 2014, is that correct?
Dr. Agrawal. That is correct.
Mr. Murphy. So why was the target rate not met?
Dr. Agrawal. Yes, there are three major components of the
PERM rate of the Medicaid improper payment rate. There is a
fee-for-service component, a Medicaid managed care component,
and then a beneficiary eligibility component, and what I think
you see in the error rate is a bit of a mixed picture. So on
one hand, the beneficiary eligibility rate, which was a central
topic in the GAO report, did actually decrease, from 3.3
percent to 3.1. Where we saw the biggest rise was in the
provider screening and enrollment standards in the fee-for-
service component. What I think the increase shows is that
states are in various places of implementing those screening
standards, which has led to an increase in the error rate in
that part of PERM.
Mr. Murphy. But for 2015 they have set this improper
payment rate target at 6.7 percent, and that is the same rate
it was in 2014. It is actually higher than the improper payment
rate for 2013 and 2014. So why is CMS actually raising that
improper payment rate, that error rate, for Medicaid instead of
lowering it, and setting a target for reduction of errors?
Dr. Agrawal. Well, I think, you know, we clearly want to
make progress on the improper payment rate and Medicaid. The
biggest driver right now are those provider enrollments and
screening standards. You know, obviously we want to continue to
make progress on the beneficiary eligibility requirements as
well. You know, what we find is that states are in various
different places of implementing their screening and enrollment
for providers. It is a major driver.
I think there are a lot of tools that we have to help
states make progress, including oversight, education, guidance,
giving access to more data systems. But I think we want to set
realistic targets and, you know, work on that to make sure
states can meet them.
Mr. Murphy. And we want to help you with this. We just want
to make sure that the information that this Subcommittee gets,
this Committee gets, can help facilitate that process. But if
we raise our tolerance level for errors, and then we say, well,
it is all within what we accept, that's not acceptable, so I
really want to caution you on that. What I am hoping, that we
can not have that goal, but really work towards of a goal of
how to lower it, and then identify those outliers. And, I mean,
you heard the opening statements. This subcommittee is with you
on trying to identify mechanisms for this.
Now, the Office of Management and Budget has designated
Medicaid as one of 13 programs as higher, with Medicaid ranking
third, with $17.5 billion in improper payment amounts. So does
CMS know why Medicaid has been designated by OMB as a high
error agency, Dr. Agrawal?
Dr. Agrawal. Yes. There are clearly important factors in
the size and scope of the program. The fact that the program is
administered in numerous, different state Medicaid agencies,
and require a great deal of collaboration. I am sure it does
also reflect our historical error rate. So I think the
designation of it being a high risk program certainly makes
sense.
I would also add, Chairman, to your last question that part
of, what we see as the dynamic in program integrity, which is,
I think, important to think about, is that as requirements
increase, as the stringency of the program increases,
oftentimes we also see an increase in the error rate as a
result, because providers, or other stakeholders, such as
states, need time to catch up to requirements. I think that is
a common underlying element to many factors in the error rate,
but specifically the provider enrollment standards that the ACA
created.
Mr. Murphy. Well, let me move on to something else here.
Director Bagdoyan, the GAO has also designated Medicaid as a
high risk program since 2003.
Mr. Bagdoyan. Right.
Mr. Murphy. What are the criteria that land the Federal
program into that kind of category, and it has been that way
for a long time?
Mr. Bagdoyan. Yes. For Medicaid, Mr. Chairman, the specific
factor that we cited in our report is the fact that its fiscal
oversight over the years has been not where it should be, and
within that, the----
Mr. Murphy. Fiscal oversight at the Federal level, or
state, or both?
Mr. Bagdoyan. That would be at both levels, since it is----
Mr. Murphy. OK.
Mr. Bagdoyan [continuing]. A joint program. And then,
further within that context, of course, the risk of improper
payments and/or fraudulent activity contributes to that
designation.
Mr. Murphy. And part of this too is--we see that you are
collecting data. You couldn't even get data from some of the
states because it just isn't there. Is there things we need to
do or things that you can recommend as well--what we need to
make sure that states have been presenting data so we can
analyze it and identify the problem, either one of you?
Mr. Bagdoyan. I would go first. Obviously data analytics is
the growing field, and it would be incumbent upon both the
Federal Government and the states to really pay attention to
the quality of their data, the collection, the analysis, the
reliability to make cross-comparisons and other analyses.
Mr. Murphy. And what we usually have as our tools in
Congress is a carrot or a stick to enhance that, I am out of
time here, but I would be looking forward to your comments of
what we could do, because without the data, you can't provide
an accurate recommendation to us. Ms. DeGette, 5 minutes.
Ms. DeGette. Thank you. Dr. Agrawal, in March 2011 CMS put
into place new requirements for enrolling and re-validating
Medicaid providers and suppliers, is that correct?
Dr. Agrawal. Yes, that is correct.
Ms. DeGette. And the new process separates providers and
suppliers into categories of risk, either high, moderate or
limited risk for additional screening before enrollment or re-
validation in the Medicaid program, is that correct?
Dr. Agrawal. That is correct.
Ms. DeGette. And, briefly, how does CMS determine which
risk category an individual provider or supplier will be put
into?
Dr. Agrawal. Sure. So these risk categories are done at the
provider sort of group level, or provider type level. So it
isn't an individual provider that we would be placing in these
various categories, it would be a whole class, such as--newly
enrolling home health agencies are considered high risk.
Ms. DeGette. I see.
Dr. Agrawal. And we designated these risk levels based on
input from multiple sources, including the HHS OIG, based on
historical levels of fraud or----
Ms. DeGette. Fraud.
Dr. Agrawal [continuing]. Issues with those specific
provider types.
Ms. DeGette. OK. And do the states also have to implement
screening requirements before they enroll a provider in the
Medicaid program?
Dr. Agrawal. They do. Those requirements are largely
identical to Medicare's.
Ms. DeGette. And those go into effect March 2016, 5 years
after the regulation first went into effect, is that right?
Dr. Agrawal. Many of the requirements have had to be
implemented by now already.
Ms. DeGette. OK.
Dr. Agrawal. There were already deadlines. I think what you
are referencing is a re-validation deadline----
Ms. DeGette. Right.
Dr. Agrawal [continuing]. Yes, March of 2016.
Ms. DeGette. OK. And then, after everything is either
validated or re-validated, it has to be re-validated again
every 5 years, is that right?
Dr. Agrawal. That is correct.
Ms. DeGette. Now, is CMS working with the states to
implement these new requirements?
Dr. Agrawal. We are, across the board. So, we have largely
the same requirements in Medicare and, therefore, are
undertaking the same work in the Medicaid program. Where
possible, we have made data assets available to states so that
they can utilize the results of our screening. For example, I
referenced PECOS, where we have done a site visit, or
fingerprint-based background check. States have access to that
data so that they don't have to duplicate those----
Ms. DeGette. OK.
Dr. Agrawal [continuing]. Initiatives.
Ms. DeGette. And are the states generally on track with
their implementation?
Dr. Agrawal. You know, states are in really different
places, what we----
Ms. DeGette. OK.
Dr. Agrawal [continuing]. Find. So, when we do the PERM
rate measurement every year, or do state program integrity
reviews, there are certain states that are well advanced in
their implementation of these requirements, and other states
that are lagging quite far behind.
Ms. DeGette. And so I assume those are the states you are
focusing on, trying to get them----
Dr. Agrawal. Correct. We can increase the amount of
oversight, we can offer more technical assistance, education
efforts, things like that.
Ms. DeGette. Now, these efforts were not included in the
data of the GAO report, which went for 2011 data, is that
right?
Dr. Agrawal. That is right.
Ms. DeGette. Yes or no will work.
Dr. Agrawal. Yes.
Ms. DeGette. Thank you. Now, Mr. Bagdoyan, in your written
testimony, which you confirmed in your testimony today in the
Committee, you said CMS has taken steps since 2011 to make the
Medicaid enrollment verification process more data-driven. I am
assuming you are talking about some of these implementations
that----
Mr. Bagdoyan. Right.
Ms. DeGette [continuing]. Dr. Agrawal is----
Mr. Bagdoyan. Yes.
Ms. DeGette [continuing]. Talking about.
Mr. Bagdoyan. That is correct.
Ms. DeGette. Do you think that these steps will help close
some of the gaps GAO identified in the report with regard to
potentially improper fraudulent payments?
Mr. Bagdoyan. Sure. As I mentioned in my closing, those
steps will definitely add to the toolbox that CMS and the
states have, and narrow the opportunities for potential
improper payments and fraudulent activity. They will probably
play out over time. As Dr. Agrawal said, some states are in
different places than others, so----
Ms. DeGette. And we have to focus on the ones who are----
Mr. Bagdoyan. That is correct.
Ms. DeGette. Yes.
Mr. Bagdoyan. Long term implementation success and
sustainability will be key in these areas.
Ms. DeGette. Now, since 2011, do you agree that CMS has
taken measures to address some of these real concerns that you
raise in your report, like the deceased providers billing
Medicaid, providers with suspended or revoked licenses, and
people inappropriately using virtual addresses? Are they
working on that now?
Mr. Bagdoyan. I think they are taking steps. They are in
the right direction, we believe, but execution and
sustainability will be, again, key for both----
Ms. DeGette. I agree.
Mr. Bagdoyan [continuing]. Federal Government and the
states.
Ms. DeGette. Yes. I appreciate GAO's sustained work on this
issue. Excuse me, that is my child. She programmed my phone to
bark when----
Mr. Bagdoyan. Distinct voice that your child has.
Ms. DeGette. Yes. That is my other one. But I am glad that
you both agree that the Affordable Care Act has changed the way
we prevent and address Medicaid fraud, and I look forward to
it. As we said, Mr. Chairman, we are going to be back here in a
couple of years, making sure that these ACA requirements have
been implemented. Thank you.
Mr. Murphy. Thank you. I now recognize Mr. McKinley for 5
minutes.
Mr. McKinley. Two quick questions. One, the CMS has raised
its proper payment rate target from fiscal year 2015 to 6.7
percent, from the 5.6 target rate in 2014. Is that a good
internal control practice, to raise the target rate?
Dr. Agrawal. Sir, are you asking me?
Mr. McKinley. Yes.
Dr. Agrawal. No. I do appreciate the question, and, again,
I think it is important to set realistic targets and goals that
do push us to improvement, but at the same time recognize that
Medicaid is a state and Federal program that states are in
various places of implementing things like the provider
enrollment standards, which are the major driver of the
improper payment rate at this point.
Mr. McKinley. OK. Let me get to the question I had from
West Virginia, and it is more of a question, I think, of--
perhaps abuse and errors. Let me frame the argument. In West
Virginia, \1/3\ of the hospitals we have in West Virginia are
critical access hospitals. We are a very rural state. And for
nearly 30 years, since the early '80s, West Virginia's critical
access hospitals have been using a provider tax to supplement
and provide resources for them.
In 2012 CMS hired a different auditor from all of these
past 30 years, and this new auditor stepped in and said that
process isn't approved anymore, and we are going to go back
and--we are auditing you back until 2009, and--trying to
recover the money that you previously were working under the
idea that this was the appropriate way to go about getting the
provider tax revenue coming in. This is going to be an
incredible hindrance for these hospitals to provide medical
care in rural areas of West Virginia, when we go backwards on
them after they were working under the idea that they thought
they were working properly.
So we have talked about--can we go forward from here, not
go back and try to penalize them for following someone else's
advice, that was also with CMS? Now we go forward. We have
written letters. We have had conversations with CMS--until
recently, but CMS really was disengaged with us. Now these
hospitals are all getting invoices 3 years after 2012, when
they were told, we are not going to allow that anymore, now in
2015 they are getting invoices that they say they have to pay
them within 15 days, or they are going to have the funds
withheld.
First, I don't know of any private sector--coming from the
private sector--I have got 50 years in the private sector. I
have never heard of someone saying, if you don't pay within 15
days, we are taking it out of your hide. That just doesn't
work. There are no details on these invoices. And when they
have asked, can we get the details of what this invoice
includes, and they say that they can't have it. They are being
denied access to what the invoice reflects.
I hope you understand, this kind of smacks of bullying on
the part of CMS to rural hospitals. Especially given the fact
that they were told to use this, this was OK. And now a new
auditor has a different opinion. So do you think CMS is
handling this crisis in West Virginia, and probably in other
rural areas of this country? Do you think CMS is handling this
sensitively and appropriately?
Dr. Agrawal. Congressman, I appreciate the question. I can
tell you that CMS has definitely been focused on critical
access hospitals and rural hospitals, and the various policies
we promulgate, including payments and other policies. I will
tell you, I am not aware of the specifics of this particular
situation. I understand some of the details now from what you
have explained. However, I think I would have to connect you to
the other folks in the agency that are directly working on this
issue, but I would be happy to take it back.
Mr. McKinley. If you would, please. We have been given the
runaround. I have never seen so many fingers pointing in
different directions. It is not my problem, it is someone else,
and we have been trying to pursue that. So if you can help us
on that, we will put you on record. OK. You are under oath that
you said you were going to help, so----
Dr. Agrawal. Thank you, Congressman, I appreciate that. I
will----
Mr. McKinley. I will remind you----
Dr. Agrawal. I will think of that.
Mr. McKinley [continuing]. Of that in the future. But thank
you, because we need to get this resolved. Remember, a third of
the hospitals could very well go under if they have to make
these payments. Thank you.
Dr. Agrawal. Thank you.
Mr. McKinley. Yield back.
Mr. Murphy. Gentleman yields back. Now recognize the
Ranking Member, Mr. Pallone, for 5 minutes.
Mr. Pallone. Thank you. GAO reports that CMS has made
several changes since 2011 to help limit improper payments, and
these steps may address many of the potential improper payments
GAO found in their analysis of 2011 claims. In addition, to
noting in their progress already made, GAO made two
recommendations to further improve efforts to limit improper
payments by increasing information and data sharing efforts
between the Federal Government and the state Medicaid programs,
and GAO first recommended that CMS help states better identify
deceased beneficiaries.
I want to ask a question of each of you, but I have got
three sets here, so we have got to go fairly quickly. Mr.
Bagdoyan, can you comment on GAO's findings that led to this
recommendation?
Mr. Bagdoyan. Well, we did matching of deceased roles from
the death master file. That is the complete file that has about
98 million records, and we matched those against claims data,
and we discovered those beneficiaries who had been deceased
before their services were billed for, so----
Mr. Pallone. OK. And, Dr. Agrawal, what steps is CMS taking
to implement this recommendation?
Dr. Agrawal. Yes. We take the recommendations very
seriously, and, as I mentioned, we do appreciate the report.
Specifically for the dead beneficiaries issue, there are
clearly things that we have done, like implement the Federal
data hub that allows states to check for death and other issues
on the front end. We are also looking to work with our
technical advisory groups with the states and recommend more
guidelines for the states to both access the right data, and
then access it frequently enough.
Mr. Pallone. OK. The GAO next recommended that CMS apply
more complete data for screening Medicaid providers by
providing states with full access to the Provider Enrollment
Chain and Ownership System, or PECOS, database. So, again, Mr.
Bagdoyan, can you describe the PECOS system? Can you comment on
how states are using PECOS, and why GAO issued a recommendation
for CMS to provide additional guidance to states?
Mr. Bagdoyan. Sure. Thank you for your question. With PECOS
it is a situation where states would need access to the system
electronically so they can be able to run batch searches, if
you will. I know it is a little technical term, but right now
they have to do a manual search on a case by case basis each
name, each time in order to get a result, whether there is an
issue or not. So that is the essence of our recommendation, is
to get them the automated access that would allow them to do
bigger and wider searches at once.
Mr. Pallone. Thanks. Dr. Agrawal, what training and
guidance has been provided to states on using the PECOS system,
and what additional efforts will you be undertaking?
Dr. Agrawal. Sure. So we have two different kinds of access
to PECOS, one that is the sort of provider-by-provider real
time access to the system, but since this analysis was done, we
have also been making data extracts available to states so that
they can use those extracts and compare them against their
entire enrollment file. We have already made changes to those
extracts based on state input, and are looking to expand them
as we go on.
With respect to guidance, we do offer education in using
CMS data assets to states through things like the Medicaid
Integrity Institute. We also offer other technical guidance,
and sort of case-by-case help as needed, and states can contact
us for that.
Mr. Pallone. All right. Let me see if I get my third
question in. Given that Medicaid is a joint state/Federal
program, states have a very important role to play in
preventing improper payments. It sounds like there is a fair
amount of Federal information available to states, but that not
all states are taking full advantage of what is available. So I
will start with Dr. Agrawal. How can states be encouraged to
use the data available to them?
Dr. Agrawal. Yes, I think that is a great question. So,
there are data assets like PECOS and PARIS, where we know that
all states have access. And I think part of getting them to use
it offering the guidance, offering the technical input to make
sure that they are using the data in the right way, and using
it as frequently as they can. With something like PARIS, for
example, we were able to release guidance, and ask all states
to not only input their data every quarter, but also to use
that data in their enrollment efforts every quarter.
Mr. Pallone. OK. And, Mr. Bagdoyan, based on GAO's
findings, how can the states more effectively use the data
available to them?
Mr. Bagdoyan. I think I would echo Dr. Agrawal's comments.
I think, if they are available, once they are available, they
would be encouraged through guidance, they would be held to
account to make sure that this works as intended. I mean,
again, it is a partnership. It is a common model, if you will,
to make this work.
Mr. Pallone. All right. Just want to thank both of you. In
addition to the important tools already added by the Affordable
Care Act, I am encouraged that CMS implementation of GAO's
recommendations will further help state Medicaid programs in
their efforts to address this persistent issue. So thanks
again. Thanks, Mr. Chairman.
Mr. Murphy. Thank you. Now recognize Dr. Burgess for 5
minutes.
Mr. Burgess. Thank you, Mr. Chairman. One of the hazards of
having been on this committee for a number of years is you see
themes repeating themselves. And, Chairman Murphy, I remember
very well a morning in late September 2008, when we held a
Health Subcommittee hearing downstairs, and we had some, I
don't know, 8, 10, 12 witnesses. It was a pretty varied panel.
Karen Davis from Commonwealth, Steve Parenti from the McCain
campaign, the late Elizabeth Edwards was one of the panel
members, and it was all a panel to discuss what is it going to
cost to provide health care to everyone who lacks health
insurance in this country. And the estimates were quite varied,
and they ran from $60 billion a year to $800 billion a year.
Chairman Murphy, I remember you asking the question, how
could there be so much variation? And Steve Parenti, on the
panel, was the only one willing to take it on, and said, well,
if you provide Medicaid to everyone, and that is how you expand
your coverage, that is the lower number. If you provide Federal
employee health benefit plan to everyone, which was being
talked about by some of the candidates at the time, that is the
higher number.
So I guess my point is, everyone knew going into everything
that became the Affordable Care Act that the way to expand
coverage without blowing up the cost was Medicaid expansion.
Why wouldn't you fix some of these problems before you
undertook to expand a program that, if I understand correctly,
Mr. Bagdoyan, it was already on a watch list in 2008, and
certainly on a watch list in 2009, when the law was written in
2010, when the law was signed. But really, why not put the
effort on the front end? The way we are going to expand
coverage is through Medicaid, maybe we could deal with some of
these problems. What about the fact we have got dead people
that we are paying money for? What about the fact we have got
people who are receiving benefits in two states simultaneously?
That is not supposed to happen, is it, Dr. Agrawal?
Dr. Agrawal. That is correct.
Mr. Burgess. Then the whole issue--GAO in 2005 or 2006 put
out a report about the third party liability--Medicaid will pay
a claim when a person has private health insurance. And,
really, Medicaid is supposed to be the payer of last resort,
not the payer of first resort. And we have never really
satisfactorily dealt with that problem, have we?
Mr. Bagdoyan. I am not familiar with the report.
Mr. Burgess. Well, I will tell you, no, we have not. So
here we have it here, three very basic steps, don't pay the
dead people, don't pay people twice, and, hey, if Aetna,
United, Cigna is supposed to be paying the bill, you get them
to pay first, before the state reimburses on their Medicaid
system. Relatively simple steps that could have been done
before expanding a program massively. And now we are in a
situation where not every state has expanded their Medicaid.
And Dr. Agrawal, let me just ask you, when states come in
with their proposals, if a state is considering expanding
Medicaid in their state, and some states are, whether I think
that is correct or not, some states are, when they come in with
those proposals, are you talking to them about the fact that
there are some inherent problems in the Medicaid system, and we
would like to see those fixed before you double your number?
Dr. Agrawal. Yes, thank you for the question, Dr. Burgess.
So I think our relationship with the states is such that we are
talking to them regardless of whether or not they are seeking
to expand their Medicaid programs. There are current program
integrity challenges and vulnerabilities, as the GAO has
pointed out. They exist in the current Medicaid program. Our
state oversight efforts, whether it is the PERM rate, or state
program integrity reviews, include all states, not just those
that are expanding.
I think, to your larger point, what we are trying to do is
balance real program integrity interests and needs against the
needs of socioeconomically disadvantage population that needs
access to health care and health----
Mr. Burgess. Let me stop you there, because time is going
to become critical. In my opening statement I referenced a
problem that was related to dental care in the State of Texas.
You have got a real problem. People who should be barred from
ever participating in the program again simply dissolve into
bankruptcy, and re-emerge someplace else. What are you doing to
keep that from happening?
Dr. Agrawal. There are clearly efforts that we--we do
conduct collaborative audits and investigations with states
and, where appropriate, encourage states to take termination
actions in their programs. I think you referenced the exclusion
authority by the HHS OIG. We obviously agree that that is a
very powerful authority. We encourage OIG to implement it where
appropriate. And where they do, we can take revocation action
quickly behind it.
Mr. Burgess. Let me just, before time expires, Dallas
Morning News over the weekend, an article that I think is part
of a series of articles about how private nursing homes are
drawing down dollars by combining with a public entity, and
some of these are fairly low ratings on the star rating on the
nursing homes. Are you working with the states to address this
problem?
Dr. Agrawal. Yes. I am not aware of the specific nursing
homes, but we do have survey and certification, and other
rating functions CMS uses to work with states on these issues.
Mr. Burgess. Well, $69 million just to these nursing homes
identified last year, so it is a place where we need to put
some effort. Thank you, Mr. Chairman, I will yield back.
Mr. Murphy. Gentleman yields back. Now recognize Mr.
Kennedy for 5 minutes.
Mr. Kennedy. Thank you very much, Mr. Chairman. Thank you
to our witnesses for coming today, and for your testimony at an
important hearing. I want to touch base a little bit on the
improper payment rate, and put that in context. Medicaid
program provides about 70 million low income and disabled
Americans with vital health care services, and we must do
everything we can to strengthen it and protect it. As you have
heard from my colleagues here this morning, no one, Democrat or
Republican, is in favor of fraud. We clearly want to make sure
this program is as lean as it possibly can be, and that the
people that need help and need the services are getting them.
So, to that end, Mr. Bagdoyan, I would like to begin with
you. Since its peak of 9.4 percent in 2010, the improper
payments rate for the Medicaid program has steadily decreased,
reaching a low of 5.8 percent in 2013, or $14.4 billion. That
number rose to 6.7 percent in 2014, or $17.5 billion. Is that
right?
Mr. Bagdoyan. That is correct, sir.
Mr. Kennedy. So I want to dig into that number a little bit
deeper and see if I can better understand the dynamics that
are, in fact, driving that improper payment rate. The ACA
provided CMS with a number of new tools to strengthen program
integrity in the Medicaid program. In 2011 CMS established a
new risk-based screening procedure for Medicare, Medicaid, and
CHIP providers. CMS also promulgated new regulations, requiring
the states to use electronic data maintained by the Federal
Government to verity and revalidate beneficiary eligibility
through the data services hub.
So, Dr. Agrawal, let us break down that payment rate into
its relevant components. I know you touched on this a little
bit earlier. If I understand this correctly, Payment Rate
Measurement Program, or PRM, measures error rates both overall
for the Medicaid program, as well as for certain subcategories,
fee-for-service, managed care, and beneficiary eligibility. Is
that right?
Dr. Agrawal. That is correct.
Mr. Kennedy. So what has happened to that beneficiary
eligibility error rate since 2011?
Dr. Agrawal. I think that is an important point, and it
does highlight some of the intricacy in the rate. The
beneficiary eligibility error rate has actually been cut in
half since 2011.
Mr. Kennedy. So the error rate for--beneficiary eligibility
rate cut in half, declined by three percent. Is that a
substantial improvement, major improvement, small improvement?
How do you characterize it?
Dr. Agrawal. I think, given the issues that GAO has
highlighted, that is obviously a substantial improvement. More
work remains to be done, which we are focusing on, but it does
indicate good progress.
Mr. Kennedy. And so what is driving that improvement, then?
Is it the result of, in your opinion, the work CMS has been
doing to implement the new program integrity tools in the ACA?
Is it something else? What is behind the success?
Dr. Agrawal. I think it is work being done at both the
Federal and state levels between increased collaboration, more
education and technical guidance going to states, better data
assets that have been highlighted by Mr. Bagdoyan.
Mr. Kennedy. Given that large drop in the error rate for
beneficiary eligibility, what factors are driving the increase
in the overall PERM rate? And I realize you touched on this a
little while ago, but if you could flesh that out a little bit
for me?
Dr. Agrawal. Sure, no problem. The biggest driver of the
increase in the rate are provider enrollment and screening
standards. And, again, as with other PI aspects of program
integrity, whenever there is a new requirement, certain
stakeholders, in this case states can experience some
difficulty in keeping up. So what we have found, that, while
some states are quite far along, other states are lagging
behind, and generally that is causing the error rate to rise.
Mr. Kennedy. And how do we get those other states to pick
up the pace?
Dr. Agrawal. Well, we exercise oversight in a variety of
ways, so I think it is both what can we offer them in terms of
collaboration that will help, like technical assistance, data
assets like PECOS, and then where can we exercise real
oversight? We do that through the PERM rate. We require states
to submit corrective actions to improve the error rate going
forward, and also conduct state program integrity reviews, with
associated corrective action plans where states fail to meet
requirements. So I think it is a mix of both of those things.
I think the error rate increase in that particular aspect
is the reflection of more stringent policy, which in and of
itself is a good thing. We need that policy.
Mr. Kennedy. What, if anything, can this committee do to
help you with that?
Dr. Agrawal. I appreciate the question. I think holding our
feet to the fire is appropriate.
Mr. Kennedy. You are welcome.
Dr. Agrawal. Thank you very much. I also think encouraging
states to stay on the right path, take advantage of the various
resources that we offer, identify improvements that we need to
make so that they can make progress, would be extremely
helpful.
Mr. Kennedy. And, again, just putting this in context, if I
understand Mr. Bagdoyan, the GAO report, it was four states,
yes?
Mr. Bagdoyan. Yes.
Mr. Kennedy. And it covered 9.2 million Medicaid
beneficiaries, right?
Mr. Bagdoyan. That is correct.
Mr. Kennedy. And I know we talked a little bit about the
200 or so deceased beneficiaries that received payment. If we
were to put that--just so I understand it, that is 200 out of
9.2 million, right?
Mr. Bagdoyan. My math is not that good.
Mr. Kennedy. Right. If we wanted to put that in that
percentage, though, if you take my word for it that my iPhone
calculator ain't so bad, that is .00002, four zeros and then a
two--as far as error rates go, nothing is acceptable, but we
are doing OK if it is 200 out of 9.2 million, right? You guys
are doing your jobs?
Mr. Bagdoyan. Well, that is we found is 200 out of the 9.2
million. That is all I am prepared to say.
Mr. Kennedy. Well, thank you for your work on this. Thank
you for your research, and being here today, and highlighting
an important issue for the hearing.
Mr. Bagdoyan. Thank you.
Mr. Murphy. I guess this can go in the category of lies,
damn lies, and statistics. We appreciate it no matter what it
is, and we are all in agreement that we want to make sure we
rid that--Dr. Bucshon, you are next for 5 minutes.
Mr. Bucshon. Thank you, Mr. Chairman. First of all, I was a
practicing physician for 15 years, as I had mentioned to our
witnesses beforehand. I have taken care of all patients,
regardless of their ability to pay, which is what we do in
health care. But I just want to highlight that all is not rosy
with Medicaid. And I know this hearing is about waste, and
fraud, and abuse, but I am from Indiana, and our medical
practice routinely wrote off hundreds of thousands of dollars
from a neighboring state's Medicaid program in billings every
year because they ran out of money before the end of the year,
and this pre-dates the ACA.
The other thing is that the program within our own state
has been financially challenged historically with a significant
Medicare provider cut within the last 10 years just to stay
afloat. That said, Medicaid is a critical program that we have
to have for our citizens. What can we do? Well, Indiana has
expanded our Medicaid program using an innovate plan called
Healthy Indiana Plan 2.0, and I am hopeful that this state-
based plan, as well as state-based plans around the country,
can be used as a proving ground how to move forward on our
Medicaid program.
Some facts about the Medicaid expansion that are not
surprising to me, but seem to be surprising to those who wanted
to expand traditional Medicaid, is that ER visits are up, in
some cases dramatically up, in multiple studies across the
country. And the hospitals are very happy, but we have made no
progress because this is the highest cost form of medical care
available in the country. And so, having a card in your pocket,
but having no access to primary care physicians or others
outside of the emergency room is not progress. And the
encouragement to seek preventative care, as was mentioned
earlier, may be technically true, but functionally not accurate
because you can't get preventative care if no one takes your
coverage.
States that have expanded Medicaid are already starting to
look for ways to pay for the program once the Federal money for
the expansion goes down to 90 percent, and my concern is
reimbursement cuts will be the way that will happen. And what
does that do? Further limits access to the citizens in their
states. And if anyone doesn't think that sometime in the future
that the Federal Government will look for a way to pay for
other things by further cutting that expansion money to the
states on their Medicaid program, then you are not following
the government very well.
That said, I do have a couple of questions. And, again this
is a very important hearing. I saw that we limited the study,
Mr. Bagdoyan, to the four states. Why did we pick these states,
and did the GAO try to include other states in your study?
Mr. Bagdoyan. Thank you for your question, Dr. Bucshon. The
way we picked our states is we began with the universe of
beneficiaries per state, and then we also looked at data
reliability, as well as geographic dispersion. So those were
the three key factors that we used to pick these states. Now,
data reliability being a very important factor, we don't have
reliable data, we can't do our analysis.
Mr. Bucshon. And that segues into Dr. Agrawal. The data we
were just talking about, not accurate from states, how do you
envision the progress we are making in information sharing on
Medicaid between the states and the Federal Government? How can
we improve on that situation so if, in the future, we want to
study this situation, we can pick any one of the 50 states? How
are we doing?
Dr. Agrawal. Yes, thank you. I think that is a really
important question. Data is really central to program integrity
work. What we have found is access to the right data set can
really increase the sensitivity and specificity of our leads.
The agency has made some of the biggest investments we have
ever made in improving Medicaid data assets in programs like T-
MSIS, which is seeking to dramatically increase the amount of
data and the kind of breadth of that data that we get from
state programs.
In addition, Congress has funded previous programs like the
Medi-Medi, which encourages Medicare and Medicaid data sharing
and integration specifically for program integrity purposes,
and we have been engaged in that process for years now.
Mr. Bucshon. Is proprietariness among different systems a
problem? What are the barriers to, it seems like it would be
simple, right, but there are barriers.
Dr. Agrawal. There are, and I am not a technologist, but
there are clearly differences between systems, and getting data
integration to occur, that is not a trivial task at all,
especially, you know, amongst 50 different states. So, yes,
there are some real technical barriers to getting the right
data formatted in the right way so that it is readily
accessible.
Mr. Bucshon. But some of it is not just about money, right,
where the systems don't want to communicate because of
proprietary control over data?
Dr. Agrawal. I am not sure how much proprietary issues
stand in the way. I think it is more technical implementation.
And then, yes, resourcing is important to make sure that we can
adequately make this all work together.
Mr. Bucshon. Thank you. Mr. Chairman, I yield back.
Mr. Murphy. Ms. Clarke, you are recognized for 5 minutes.
Ms. Clarke. Thank you, Mr. Chairman, and I thank the
Ranking Member, thank our witnesses for their testimony here
today. I am glad we have had the opportunity today to talk
about the Medicaid program, and how many people it helps across
the country. As of February 2015, over 70 million people were
enrolled in Medicaid. The number of enrollees will continue to
rise, as 30 states have expanded Medicaid, and even more states
are considering doing so. We know that fraud and improper
payments have long been a reality of the Medicaid system, but
with the passage of the Affordable Care Act in 2010, we have
made significant steps to strengthen the Medicare, Medicaid,
and CHIP programs by reducing waste, fraud, and abuse.
Dr. Agrawal, I would like to ask you about the Affordable
Care Act anti-fraud measures, and how they have strengthened
the Medicaid program. In your testimony you noted that the
Secretary of HHS can temporarily pause enrollment for new
Medicaid providers and suppliers if she determines certain
geographic areas face a high risk of fraud. Dr. Agrawal, how
does the Secretary make that determination?
Dr. Agrawal. Yes, thank you. So, you are right, the
moratorium authority is one of many tools granted to CMS for
its program integrity efforts. We currently have moratoriums in
place in seven different metropolitan areas in two main service
categories, ambulance services and home health agencies. And,
we arrived at those areas, both the service types and the
geographies, by doing data analysis to look at where there were
clear areas of market saturation of these provider types, and
in all of these metropolitan areas we see somewhere between
three to five times higher the number of providers of these
categories than, you know, comparative metropolitan areas.
We also conferred with our law enforcement colleagues in
DOJ and OIG to assess where hot spots really are, and where
billing is really concerning for fraud, and it was really a
multitude of things that led us ultimately to implement these
moratoria.
Ms. Clarke. How have they been effective in preventing and
reducing fraud in those affected areas?
Dr. Agrawal. So, what the moratoria really do is,
essentially, pause enrollment. It stops new providers from
coming into those areas in these specific provider categories.
That affords both us and law enforcement the opportunity to
step up our activities in those areas and remove bad actors
that are already in those areas prior to lowering the
moratorium, and allowing new providers to enroll again.
Ms. Clarke. And has that been effective, in your
estimation?
Dr. Agrawal. I think we are still doing data analysis to
look at how effective the moratorium as a singular tool is, but
what we are finding is that, in those area, which clearly are
hotspot areas anyway, we have been able to effectuate literally
hundreds of revocations of both home health agencies and
ambulance companies. So, we continue to assess the moratorium.
We are obviously very concerned about access to care, want to
make sure that the moratoria don't interfere with access. And,
so, there are a lot of analytics that go on, as well as
collaborating with the states.
Ms. Clarke. And how does the affected states, during the
moratorium period, how does CMS work with them?
Dr. Agrawal. So, just as we do more broadly, we engage in
data exchanges, we work with them on collaborative audits and
investigations, and then we do those access to care analyses to
make sure that the moratorium is not having an adverse
consequence.
Ms. Clarke. Yes, and on that point, how do you make sure
that Medicaid beneficiaries are continuing to receive the
services they need?
Dr. Agrawal. Right, that is of primary importance. Again,
these areas in service categories were chosen in the first
place because of really significant market saturation, making
access not such a huge problem right at the outset. But, as the
moratoria have gone on, we have worked, through our regional
offices at CMS, with the relevant states. We have stayed in
contact with them, exchanged data to make sure that that
picture has not changed, and thus far it hasn't. Access to care
continues not to be a major issue.
Ms. Clarke. And then, finally, ACA significantly increased
funding to fight Medicare and Medicaid fraud. How will
additional funding help CMS address program integrity
vulnerabilities?
Dr. Agrawal. Yes. We do appreciate the work of Congress,
and the leadership of this Committee, in providing more
resources for us. Those additional resources will allow us to
continue to invest in existing programs, to encourage, again,
more data collaboration with Medicaid agencies, provide more
technical guidance and education. And then, where necessary,
especially to respond to recommendations like this, we will be
implementing new initiatives and programs to continue the
Medicaid and Medicare programs.
Ms. Clarke. Very well. And just out of curiosity, the
implementation of the data hub, have you used that
collaboratively in those high concentrated metropolitan areas
as you also employ the moratoria?
Dr. Agrawal. Well, the data hub is really more of a general
Federal asset for states to utilize at the time of beneficiary
enrollment and eligibility determinations. It is not really
specifically focused on moratoria area. Rather, we see it as a
tool that should be utilized across the Medicaid program, to
ensure eligibility is done correctly the first time.
Ms. Clarke. Very well. I yield back. Thank you, Mr.
Chairman.
Mr. Murphy. Now recognize Mr. Brooks for 5 minutes.
Mrs. Brooks. Thank you, Mr. Chairman, and thanks to our
witnesses for being here. I am a former United States Attorney,
and so have worked with Medicaid fraud control units run by our
states' Attorney General, and also with HHS OIG agents, and my
question is really to both of you about the staffing, and the
number of people that we dedicate--so while you are very
focused on prevention, I understand, but deterrence is also a
wonderful tool, and I am curious about the effectiveness of our
deterrence. Because if we don't prosecute those, and--while
certainly I know U.S. Attorneys' offices and Attorney Generals
are prosecuting all across the country, I don't believe they
have the resources that they need. These are very complex
investigations. The last thing they want to do is prosecute
someone wrongfully, and these are very complicated cases.
So my question is to both of you about whether it is our
health care providers, or the beneficiaries who are receiving
improper payments, what is your thoughts on how we are doing
with respect to prosecutions?
Dr. Agrawal. So I appreciate the question. Prosecution is
obviously an important aspect of health care fraud control
generally. What we have been doing over the last 5 years, since
the creation of the Center for Program Integrity, is really
investing resources in preventing these issues from arising in
the first place. That includes, you know, payment edits,
audits, investigations, and ultimately removing a provider from
the program, if necessary, to stop inappropriate billing.
As part of that work, we are also collaborating closely
with OIG and DOJ, making sure that they have data that is
adequate for their cases, providing them whatever additional
services or resources they need, even using administrative
authorities that CMS has, as long as, you know, we are
obviously following those authorities and implementing them in
the proper way. So I think it is a balance. I think deterrence
is obviously very important, and we continue to collaborate
with law enforcement as needed.
Mrs. Brooks. Mr. Bagdoyan?
Mr. Bagdoyan. Yes, thank you, Ms. Brooks. The issue of
prosecution was not within the scope of our audit, certainly,
but I would see it certainly as part of the toolbox that I
alluded to in my opening remarks. So, in its totality, it would
have to have preventative controls, and the ability to
investigate, and, if appropriate, prosecute.
Mrs. Brooks. Let me dig a bit further on the investigation,
though, and I have seen the reports done by those units, and
the analysis they do, and it is very complex. And I know that
in your written testimony you talked about the Medicaid
Integrity Institute, Dr. Agrawal. How many employees do you
know across the country deal with Medicaid, state and Federal?
Any idea? Because I saw in a Reuters report that more than
4,200 employees have been trained, but there are thousands
more, I would suspect, but I have no idea.
Dr. Agrawal. Right. So I am not sure exactly what the total
number of Medicaid employees is. I think the 4,200 number, what
that really sort of refers to are state employees that we have
been able to bring over to the Medicaid Integrity Institute to
engage in an educational experience on some aspect of program
integrity, whether it is working with law enforcement, or
provider enrollment in screening standards, beneficiary
eligibility, whatever the case may be.
I think there are definitely more than 4,200 out there.
Right now, our only constraint is the resourcing and the time
to get as many employees in as possible. But the program is a
strong one, I think, because it really allows us to spend
Federal resources. States have to pay very little to nothing
for an individual employee to be educated and have access to
those courses.
Mrs. Brooks. And are all the courses required to be done in
person, or could you move to an online training program to help
states who have constrained budgets have more of their Medicaid
employees trained?
Dr. Agrawal. Yes, that is a----
Mrs. Brooks. I think that is a challenge for a lot of
states.
Dr. Agrawal. Agreed, that is a great question. We have, up
until now, done the vast majority of this educational work in
person because there is a value to that in-person education,
being able to conduct seminars, real sort of small group
trainings. However, I think your point is a good one, and we
are currently looking at ways of using more virtual training,
as well as potentially putting MII on the road, so that states
that can't travel, or for their own policies or whatever, still
have access to the education.
Mrs. Brooks. Do you have any sense as to the success of
this institute? I mean, how many folks have gone back and have
actually prevented fraud?
Dr. Agrawal. Yes. So, measuring the impact of education, as
you are probably aware, is really challenging to connect it to
specific dollars and cents that are saved. What we find, in
certainly post-course assessments, is a very high rating by
state officials that indicate that they really did value the
education that was given. We do also ask them to self-report
where they feel the education contributed to recoveries or
savings. We can give that number to you. But, again, I think it
is hard to connect education to a specific dollar that is
saved. I think it is often important to do these activities
merely because that greater awareness at the state level is
valuable onto itself.
Mrs. Brooks. Thank you. I yield back.
Mr. Murphy. The gentlelady yields back. Now recognize Ms.
Castor for 5 minutes.
Ms. Castor. Well, thank you, Mr. Chairman, for calling this
hearing, and thank you to the witnesses. Thank you for your
attention to program integrity, and rooting out fraud in
Medicaid. In Medicaid, every dollar counts, because these are
dollars that go, in large part, to children and their health
care needs, and our older neighbors in nursing homes, and other
hard working Americans.
Now, CMS has issued several new regulations and guidance
just in the past month, and I would like to ask you about them
today. Dr. Agrawal, as I understand it, under the proposed
regulation for Medicaid managed care organizations, managed
care providers would be subject to the same screening
requirements as providers for the fee-for-service program, is
that correct?
Dr. Agrawal. That is correct.
Ms. Castor. And that is especially important because many
states are moving their Medicaid programs to managed care
models, is that right?
Dr. Agrawal. That is correct.
Ms. Castor. In fact, do you know how many states have
already shifted, and have instituted Medicaid managed care?
Dr. Agrawal. I think the majority have. They are at various
levels. States like Arizona, where it is essentially all
managed care at this point, and other states that have a hybrid
population between fee-for-service and managed care. But, that
kind of enrollment requirement is a vulnerability or an issue
that has been flagged by both OIG and GAO----
Ms. Castor. Yes.
Dr. Agrawal [continuing]. And so we are happy to get into a
proposed rule.
Ms. Castor. OK. Elaborate on that. Why did CMS make that
decision?
Dr. Agrawal. Yes. So, as you mentioned the rise of managed
care is definitely occurring in all states, with some at
various levels of integrating managed care. Previous OIG and
GAO reports have highlighted that as an issue because, up until
now, providers that provide services in managed care programs,
through MCOs, aren't necessarily known to the states. They
don't necessarily have to go through the same enrollment
standards. Some states require that. Most don't.
We felt that this was an important vulnerability or an
issue to address. Hence, that was one piece of the program
integrity provisions in that NPRM, and we think that requiring
the same screening standards will ensure beneficiary safety,
regardless of whether they choose to stay in fee-for-service or
managed care.
Ms. Castor. Good. And, Mr. Bagdoyan, is this a policy
change that the GAO supports?
Mr. Bagdoyan. I am aware of the rule coming out, but I am
not familiar with its details. I would go back to my original
point that steps like this one would, over time, if executed
and sustained, help narrow that window of opportunity for fraud
and improper payments. So that would be my assessment at this
point.
Ms. Castor. OK. Dr. Agrawal, my understanding is that the
proposed rule also imposes new internal compliance and program
integrity requirements on Medicaid and CHIP managed care plans.
Can you walk us through those requirements?
Dr. Agrawal. Sure. There are other requirements of managed
care plans that include elevating issues, or informing the
state about audit issues, other vulnerabilities that they have
identified. It is making sure that they have compliance
programs in place to ensure the integrity of payments, program
integrity generally. Those are all new elements that the
majority of states don't have.
In addition, there is a data sharing element, which
requires language in managed care contracts to ensure states
can still get access to managed care data as needed for
obviously, we are in sort of the rulemaking process. But, if
finalized in its current form, would make really important
progress in program integrity.
Ms. Castor. And your goal is to complement what is already
in place at some states? Some don't have similar safeguards, is
that right?
Dr. Agrawal. Correct. You can think of this as trying to
build the safeguards in place that have been started in fee-
for-service. So, the same screening and enrollment standards,
the same kind of access to data, and making sure that those go
through to managed care plans. So, again, beneficiaries have
the choice for which to engage in in states that have both, or
states can make the transition to managed care without
necessarily feeling that they have to give up program integrity
along the way.
Ms. Castor. OK. I would also like to ask you about the
guidance CMS issued earlier this week on criminal background
checks and fingerprinting of certain providers in the Medicaid
program. First of all, who will be subject to the full
background check and fingerprinting requirement, and how will
CMS and state agencies determine if a provider represents a
high risk?
Dr. Agrawal. Sure. So you are referring to fingerprint-
based criminal background checks that were one of the ACA
requirements in enrollment and screening for providers.
Generally fingerprint checks are utilized for provider types
that are designated high risk. That would be, for example, a
newly enrolling home health agency or DME company where there
has been a history of kind of endemic fraud issues. If you are
newly enrolling in the state in one of those categories, you
would be subject to a fingerprint-based criminal background
check. If CMS has already done it, states can utilize our
results as their own.
The only other provider types are those that have already
been issues in the program, and therefore are on an individual
basis designated high risk if they try to re-enroll.
Ms. Castor. Thank you very much.
Mr. Murphy. Mr. Mullin, you are recognized for 5 minutes.
Mr. Mullin. Thank you, Mr. Chairman. Doctor, can you walk
me through the process of what happens when a state medical
fraud unit identifies a provider that is committing fraud
within the system?
Dr. Agrawal. Broadly speaking I can. I will sort of tell
you the steps that I know, but I will just make the point that
MFCUs, or the Medicaid Fraud Control Units, actually respond to
the Office of Inspector General, and they work with program
integrity units at the state Medicaid agency.
But I, surmising that the relationship is really similar to
what we have with our Office of Inspector General, we will
often initiate investigations based on data assets, beneficiary
complaints, a host of other inputs. And then, if there is any
indication of fraud, or patient safety issues, we will send
that over to the OIG, and oftentimes state Medicaid agencies
with similar policies, engaging their fraud control unit.
Mr. Mullin. Can the state Medicaid fraud units indict
providers?
Dr. Agrawal. I believe they can, working with regional DOJ
offices.
Mr. Mullin. Communication with our Oklahoma fraud unit for
Medicaid, they indicated that they couldn't. They had to
basically turn it over to you all.
Dr. Agrawal. Again, they might be referring to Federal law
enforcement, either, again, OIG or DOJ. As an administrative
agency, we don't indict providers. We have various
administrative authorities and actions, but the most severe is
kicking somebody out of the program.
Mr. Mullin. So they can go in and be fraudulent, billing
Medicaid for millions of dollars, and the worst thing that
happens to them, they get kicked out of the program?
Dr. Agrawal. Well, again, we have the administrative
authorities that we have. We are able to suspend payments,
terminate the enrollment of providers. And then I think, to the
point that was made earlier, we do work with law enforcement to
bring other, more criminal justice activities.
Mr. Mullin. But we hear reports over and over again about
providers that were kicked out of the program for having
fraudulent claims, and then they turn back around, change their
name, and are back in business the following week.
Dr. Agrawal. So----
Mr. Mullin. What is the indicator that you communicate with
the Federal prosecutors and say, look, we want this guy to go
to jail----
Dr. Agrawal. Right.
Mr. Mullin [continuing]. Or do you guys just don't do that?
You say, well, whatever, she defrauded the taxpayers millions
of dollars, but it is up to you?
Dr. Agrawal. Well, specifically with working with law
enforcement, we make referrals--I think hundreds, if not
thousands of referrals, and we can actually get you some
numbers for the last couple of years to show you how many, to
law enforcement for those cases that are most concerning for
fraud, and where we believe a law enforcement action would be
appropriate, at least from our determination.
But I think, to your larger question about providers
reinventing themselves, we too have noted that as a
vulnerability, and, in fact, have promulgated rules that have
allowed us to close it by, for example, tracking administrative
actions, and actually applying them to owners who would try to
reinvent companies.
Mr. Mullin. Well, it seems like, to me, if more of them
went to jail, that might prohibit them from going through. So
do we know how many actually end up doing jail time?
Dr. Agrawal. I think that is a question for at least the
OIG, or the state law enforcement officials.
Mr. Mullin. Is that a number that you guys can provide?
Dr. Agrawal. Remember, our authorities don't involve----
Mr. Mullin. So there is a breakdown in communication is
what I am saying.
Dr. Agrawal. No, I wouldn't say that----
Mr. Mullin. I am asking you, because you kick them out of
the program, then turn it over, then no one pays attention to
them anymore. And if the Federal prosecutors aren't willing to
prosecute, then they come right back into your system, no one
is paying attention to them, and they end up doing the same
thing over again. Because if the worst thing that happens to
them is they get kicked out, then it is not there.
It might be something that we might want to look at. Maybe
we ought to let the states do this. If they have a unit that
specifically identifies claims to Medicaid that the state is
issuing, and they see fraudulent activities, and they turn it
over to you, you all kick them out, you all turn it to the
Federal prosecutors, if they end up getting lost in the chain,
why don't we simplify the process and just let the state
prosecute them?
Dr. Agrawal. Just to be clear, states don't have to go
through CMS in order to get to prosecutors or law enforcement.
They do have Medicaid fraud control units that they can go to
directly.
Mr. Mullin. But they----
Dr. Agrawal. They have other----
Mr. Mullin [continuing]. Can't prosecute them, though.
Dr. Agrawal. Right. As administrative agencies, the state
Medicaid agency, CMS, we don't prosecute directly, but we don't
work with law enforcement to do that. I wouldn't characterize
it as a communication breakdown. I would characterize it as
different lines of authority. We are happy to work with law
enforcement. We provide law enforcement with data on a routine
basis, work with them sometimes for years as they develop,
investigate, and take action on cases.
Mr. Mullin. So do you think there is a better way--quickly,
because I am running out of time, is there a better way to
handle this, then?
Dr. Agrawal. I think it depends on what this is that you
are trying to improve.
Mr. Mullin. Well, to prosecute the individuals, rather than
just kicking them out of the program, and not actually sending
them to prison.
Dr. Agrawal. Yes. So it is really important, I think, to
engage in prevention, because prosecution takes,
understandably, time, and what we don't want is folks billing
programs that shouldn't be billing programs. And, so it is
useful to actually kick them out of the program and stop
dollars from going out the door. At the same time, if we can
work with our law enforcement colleagues to get the
prosecution, we can have the deterrence effect, and other
impact that we want.
Mr. Mullin. Appreciate it. Thank you.
Mr. Murphy. Thank you. Mr. Green, you are recognized for 5
minutes.
Mr. Green. Thank you, Mr. Chairman. Mr. Bagdoyan, Medicaid
is a large program, as is Medicare. Would it be fair to say
that as long as these programs existed, there have always been
at least some improper payments, some people gaming the system?
Mr. Bagdoyan. That seems to be the historical record, sir,
yes.
Mr. Green. I know it wasn't part of your audit
specifically, but improper payments were not only associated
with Medicare and Medicaid, but they are a challenge
government-wide, I assume.
Mr. Bagdoyan. That is correct. OMB measures that. I think
maybe the Chairman or the Ranking Member earlier referred to
the higher error programs that OMB tracks, so yes.
Mr. Green. OK. Clearly we want to lower the rate of
improper payments in programs such as Medicare and Medicaid,
but it is important to put it in context. This Committee
examined this issue more than a decade ago. Then, as we are
discussing today, there were improper payments associated with
Medicaid and Medicare. But do we want to constantly try to
eliminate improper payments--and we do want to try and
eliminate improper payments and better controls.
On page 14 of your report, your audit mentions that CMS, as
part of the passage of the Affordable Care Act has put in place
some new tools that may help bring down improper payments. I
realize that gaps remain, but do you see this as an important
step in the right direction?
Mr. Bagdoyan. I would say they are, and they add to their
toolbox that I referred to in my opening statement.
Mr. Green. OK. Do you see any new tools as a step in the
right direction? If so, can you explain how you think they will
help us reduce improper payments moving forward?
Mr. Bagdoyan. Well, the two recommendations we make
available to states, where the action happens, so to speak,
with the data they need to better screen both beneficiaries and
providers.
Mr. Green. OK. I understand more specifically that CMS
regulations established a more rigorous approach to verifying
financial and non-financial information that could help
determine Medicaid beneficiary eligibility. It has created a
tool called the data services hub. I know that gaps will
remain, and bad actors constantly try to find ways to game the
system, however, does the implementation of this new tool, the
data service hub, give you some encouragement that we can
reduce the rate of improper payments?
Mr. Bagdoyan. Again, by all means it is a step in the right
direction. Getting the data right and reliable is a key step
there, as well as having states regular and electronic access
would be also useful.
Mr. Green. I am guessing some of these new tools are
already having some positive effect. I understand the GAO's
audit has some limitation--mainly due to using data that is now
almost 5 years old. While I applaud GAO's efforts to help
strengthen Medicaid through its work, it is unfortunate that we
cannot see how these new and encouraging tools are working
until we can examine more recent billing data.
Mr. Chairman, I hope that we continue to work with GAO and
CMS to see how these new tools CMS is working on can help us in
taking out the fraud and abuse. Again, I want to thank GAO for
the excellent work you are doing, and also CMS for responding
to what we did in the Affordable Care Act to give you those
tools. I yield back my time.
Mr. Murphy. Gentleman yields back. Now recognize Mr.
Collins for 5 minutes.
Mr. Collins. I come from the private sector. I am a Lean
Six Sigma guy. I have brought Lean Six Sigma into a large
municipal government. I think you both know where I am going.
It is not a good place. This is the most disturbing hearing I
have attended in 2 \1/2\ years. I hear you saying that making
67,000 errors per million opportunities is worth a gold star.
Six Sigma says you make 3.4 errors per million. 3.4, not
67,000.
I will be using today's hearing in my stump speeches, in my
town halls for a very long time. It is everything wrong with
government. That you are setting a standard of making 67,000
mistakes for every million times you try to do something, and
you are going to reward and congratulate yourselves, this is
disbelief, absolute, utter disbelief of what is wrong with
government, to have you two individuals, with smiles on your
face, and congratulating each other over trying to achieve
67,000 errors per million opportunities. My mind is blown. I
know if 1,000 airplanes take off, and 67 of them crash, that is
a 6.7 percent error rate. I don't think we are going to be
flying on our airplanes if 67 airplanes crash for every
thousand that take off.
In the manufacturing world today, whether it was Toyota
many years ago, whether it was General Electric, or some things
I have done, we set a goal of Six Sigma, 3.4 errors per
million. It is achieved every single day in the private sector.
And here we are in government, talking about 67,000 errors per
million opportunities, and how this is progress? This is
disgusting. It is a waste of taxpayer dollars. It is setting
the bar so low that, yes, I guess, we had a goal of 5.6, we hit
6.7, so next year let us make it 6.7. Well, if it is 7.2, then
the next year it is going to be 7.2, and we are going to have a
hearing, and you guys are going to self-congratulate each other
on achieving something like that? I don't even know that you
can't defend the indefensible.
So, while I am carrying on here a little bit, I know you
can't defend the indefensible, but maybe I will let you try.
And I will also say there is a sign in my office, in God we
trust, all others bring data. I am a data guy, if you can't
already tell. That means you need good data. And now I am
reading that the PERM program, the Payment Error Rate
Measurement Program, at best, it is using a rolling sampling of
17 states, the data is not consistent, it is not gathered in a
consistent way. I have one word for that data, and that is
garbage. Garbage, complete garbage.
So, I don't know, Mr. Bagdoyan, do you have anything to
say?
Mr. Bagdoyan. Well, Mr. Collins, I thank you for your
comments. I think our audit was thorough, by our audit
standards, and our findings speak for themselves.
Mr. Collins. You are familiar with Six Sigma, right?
Mr. Bagdoyan. I am indeed, yes.
Mr. Collins. All right. So, what would you think if you are
in my world, and I am used to 3.4 errors per million, and you
are at 67,000? How long do you think you would work for me?
Mr. Bagdoyan. I take your point.
Mr. Collins. Yes, not very long. And, Dr. Agrawal, again,
you are--you seem OK with taking the 5.6 to 6.7. Can you defend
that? I am going to stand up in front of my residents, and I am
going to talk about this hearing, and they are going to be
shaking their heads in total disbelief. You are going to be an
example of everything wrong with government from this day
forward in western New York when I tell them at 5.6 percent--
you hit 6.7, so the next year you just changed it to 6.7. If
that is not oh, my God, I am just--again, this is the most
disturbing hearing I have ever taken place in. So what do you
say to the third graders when I tell them that?
Dr. Agrawal. I think I have made it pretty clear from my
opening remarks, Congressman, that we do view these findings as
important, and, while we have made progress, there is more
progress to be made. I don't view it as any other way. I don't
view it as just sort of being happy with the results and where
we are.
Mr. Collins. Well, my time has expired, but I would suggest
you set different standards for yourselves, ones that respect
the B in billions. We talk in government about dollars like
billions don't even matter anymore because we are trillions in
debt, and I would suggest that, as somebody who has got
something to do with this, next year, when they try to raise
the error rate to 7.2 percent, you actually stand up and make a
name for yourself and say, I am not going to stand by and let
that happen. With that, I yield back.
Mr. Murphy. Gentleman yields back. Just to clarify, Dr.
Agrawal, did you set the standard at 6.7 percent?
Dr. Agrawal. No. That is a process that involves a
different part of the, it is obviously kept separate from folks
that are trying to make the interventions, right, so that there
is some objectivity to it.
Mr. Murphy. And, Mr. Bagdoyan, you more or less audited
this information and provided it for us, correct?
Mr. Bagdoyan. Yes. We use it as a point of reference, sir.
We don't set the number.
Mr. Murphy. So the follow up to Mr. Collins's question that
is important for us to know, the process of how that is done?
Because I think you heard unanimity of opinion, none of us want
to tolerate that, but we need to know how that is happening so
we can make changes on this very thing. But I thank you. I now
recognize Mr. Yarmuth for 5 minutes.
Mr. Yarmuth. Thank you, Mr. Chairman, and thanks to the
witnesses. I want to get some clarification on this PERM rate,
because I am not sure I understand it. If you characterize
these as errors, are these errors that CMS made, or are they
errors that--just some kind of incorrect payment was made? So
you would have had, for instance, a bill come in that was coded
incorrectly, wrong procedure, whatever it is, and--would that
have been counted as an error?
Dr. Agrawal. Yes, it would be.
Mr. Yarmuth. So it wasn't a mistake that you made, it was a
mistake that somebody who was sending the bill in made, is that
correct?
Dr. Agrawal. Yes. I mean, I think it could be argued, and
in fairness, that we need to have preventative programs in
place to catch that.
Mr. Yarmuth. I understand, but this is not necessarily an--
--
Dr. Agrawal. Correct.
Mr. Yarmuth [continuing]. Indication of negligence on the
part of CMS.
Dr. Agrawal. Correct.
Mr. Yarmuth. And I have got my problems, as everybody does,
with CMS, but if somebody sent in a bill on a fee-for-service
basis for $100, and they were actually only entitled to $90,
that would be an error under this----
Dr. Agrawal. That would be----
Mr. Yarmuth [continuing]. Report? Now, would that total
$100 be counted in the 14 billion? My point being that----
Dr. Agrawal. Yes.
Mr. Yarmuth [continuing]. I think there is the danger
here--and I am a former journalist. There is a danger here that
somebody would look at this report and say the mistakes cost
taxpayers $14 billion in 2013, when, in fact, they didn't cost
taxpayers $14 billion, they cost them some--could be a very
small fraction of $14 billion. Am I analyzing that correctly?
Dr. Agrawal. Right. I think what is really important is the
measured tone that GAO and Mr. Bagdoyan have taken today, that
these are all potentially improper payments, and not the data
inconsistency alone doesn't absolutely establish that. In many
of the specific claims where these improper payments have been
noted, states or CMS are able to actually recover those
dollars, or Federal portions are withheld. So, yes, there is
obviously complexity underlying this that you are correct to
point out.
Mr. Yarmuth. Right. I just want to make that clear,
because, again, I think there is a danger in taking these
numbers and blowing them out, at least not with a full
understanding of what they represent.
And, Mr. Bagdoyan, looking at the numbers there, I did the
same calculations that Mr. Kennedy did, and on the deceased
question, looking at it another way, it was one out of every
46,000 beneficiaries. Just on the total beneficiary problems,
it was one out of every 742, and on the provider problems it
was one out of every 2,753. Now, I think, again, there is a
danger in looking at it and saying, 8,600 beneficiaries got
benefits in two states, but----
Mr. Bagdoyan. Yes.
Mr. Yarmuth [continuing]. It is a relatively small number.
I would be negligent if I didn't spend time talking about the
Kentucky experience, because I know my colleague from Indiana
talked about how states are worried about paying for the
Medicaid expansion. I think everybody has some concern over
what the impact will be, but--in Kentucky--and I need to
congratulate Governor Beshear and his team. Under the expansion
of Medicaid, more than 520,000 Kentuckians now have insurance
who didn't have it before. The ACA, the uninsured rate across
the state has been reduced by almost half. In my district
alone, the uninsured rate has been reduced by 81 percent, which
is a phenomenal occurrence--I think a very humane one.
But more importantly, the governor just had the Deloitte
Firm, highly respected accounting and business consulting firm,
do an analysis and a project as to what the ACA would mean to
Kentucky over the next 6 years. And, again, most of this is
because of Medicaid expansion, but the vast majority of the
newly insured are part of the Medicaid expansion. The Deloitte
Firm concluded that over the next 6 years the ACA, in Kentucky,
would create 40,000 new jobs, it would have a positive impact
on the economy--additional impact on the economy positive of
$30 billion, and would have a positive impact on Kentucky's
budget over the next 6 years of $819 million.
So, I think that it is easy to sit here and say, gosh, what
are states going to do when they have to pay 90 percent in
2021, or 95 percent in 2017 or '18? But, in fact, an analysis
of our situation shows that it is going to have a positive
impact well into the 2020s. So I wanted to get that on the
record as part of this discussion, and with that, Mr. Chairman,
I yield back.
Mr. Murphy. Gentleman yields back, and I will recognize Ms.
Blackburn for 5 minutes.
Ms. Blackburn. Thank you, Mr. Chairman, and I thank you all
for being here. And, as Mr. Collins just said, this is really a
frustrating hearing in so many ways for us. In 2003, shortly
after, we did a field hearing in Tennessee, looking at the
TennCare program, which was the test case for Hillary Clinton's
health care, and implemented in Tennessee, and a lot of
Obamacare has been built on it. And one of the focuses of that
hearing was the waste, fraud, and abuse, and the fact that CMS
just couldn't seem to get its act together when it came to
dealing with waste, fraud, and abuse.
And when you isolated our state and looked at it, the
payment error rate, and the eligibility issues with
verification of who was and was not eligible, and then the
providers, so to see this continue on, and your willingness to
accept a failing grade in addressing this is just beyond us.
Because you are not getting better, you are getting worse, and
then you change the grading system to accommodate that you are
not improving.
And, Dr. Agrawal, if I am understanding this right, you
moved from 5.6 to 6.7 in that rate, and this was done by
committee, so there is no one person in charge of this debacle,
is that correct?
Dr. Agrawal. I am sorry, ma'am, I don't understand what you
are asking about.
Ms. Blackburn. You changed your grading rate. You went from
a target for--5.6, a target rate, to 6.7 in your improper
payment rate. And, if I am understanding your answer to Mr.
Collins, there is no one person that decided that, it was a
committee, or a group, that decided that. Is that correct? Who
do we hold responsible for accepting a failing grade?
Dr. Agrawal. Well, Congresswoman, clearly the target is
set, but I think what is important is we actually measure our--
--
Ms. Blackburn. Who sets the target? Who set it?
Dr. Agrawal. I don't know. We would have to----
Ms. Blackburn. Who accepts this?
Dr. Agrawal [continuing]. Go back and identify that person.
Ms. Blackburn. Who accepts the wasting of taxpayer money?
You have got an issue that gets worse every year. Let me ask
you this, we are going to get in behind this. Was it 90
providers in one state that were found to be receiving
erroneous payments? Did I understand that right, sir?
Mr. Bagdoyan. Sorry, it was 90 in the four states we looked
at.
Ms. Blackburn. Ninety in four states?
Mr. Bagdoyan. That is correct.
Ms. Blackburn. OK. What would happen if we were to say
there were a zero tolerance policy for improper payments, and
for waste, fraud, and abuse that is taking place in CMS? What
would happen? How would you all react? Because Federal agencies
that deal with taxpayers, they pretty much have a zero
tolerance policy.
Or what if we did this, what if we were to look at these
numbers--according to CMS, improper payments in the Medicaid
program rose from 14.4 billion in 2013 to 17.5 in 2014. What if
we were to say, CMS, we are going to charge you back with this
$17.5 billion until you can get your act together? And you have
got to take that out of your budget, and you have got to find a
way to deliver the services and avail yourselves of technology.
Let me ask you a question too. When it comes to the data,
and transferring that into information that can be used, have
you looked? You say you offer guidance and support to the
states. Have you told the states, we are going to hold you
accountable for giving us data that can be turned into
information, and we are going to cut your payments if you don't
give us the data that can be used? Garbage in, garbage out. It
is not going to change.
And the fact that you have a secure job, and a paycheck,
and think you can't be fired, and then you come in here, and
what we hear is, going back to my first hearing on this in
2003, the problem gets worse, the problem doesn't get better,
and when it does get worse, you just change the metrics and
say, well, that is OK, we are going to do better next year. No,
it is not OK. The error rate is not OK. And it is something we
are going to push forward, and holding you all accountable, and
look for new ways of doing that. And I yield back my time.
Mr. Murphy. Gentlelady yields back. I am going to let Ms.
DeGette take 2 minutes, and Mr.----
Ms. DeGette. Yes.
Mr. Murphy [continuing]. Dr. Burgess, and we will proceed
from there. Thank you.
Ms. DeGette. Now, in fairness, Dr. Agrawal, were you in
your job in 2003, in this job?
Dr. Agrawal. No.
Ms. DeGette. Mr. Bagdoyan, were you in this job in 2003?
Mr. Bagdoyan. I was not, ma'am.
Ms. DeGette. I am going to ask you, because you are with
the GAO, has the agency tried to institute new metrics to try
to prevent fraud since 2003?
Mr. Bagdoyan. I think, as we reflect in our report, and in
my statement, they have. Those will have to play out over the
long term----
Ms. DeGette. Right, and as----
Mr. Bagdoyan [continuing]. At all.
Ms. DeGette. And as we discussed when I was asking
questions, unfortunately, the data that you had for those four
states was from 2011, so it didn't reflect some of the
preventative efforts that have happened since----
Mr. Bagdoyan. That is correct. That was part of the
necessity of our methodology.
Ms. DeGette. Right, exactly, because you just didn't have
the data, right?
Mr. Bagdoyan. That is correct.
Ms. DeGette. And, Dr. Agrawal, do you think that it is a
good idea to have fraud? Do you support that? Because I have
been listening to these other questioners, they seem to somehow
imply that either you personally, or the agency, think that it
is acceptable to have fraud.
Dr. Agrawal. Obviously, I do not.
Ms. DeGette. Why?
Dr. Agrawal. Well, I come at it from the perspective of an
ER physician. I have taken care of Medicaid and Medicare
beneficiaries, and other beneficiaries, the uninsured. I do
this work so that we can preserve resources for the folks who
need it.
Ms. DeGette. Thank you. I yield back.
Mr. Murphy. Dr. Burgess?
Mr. Burgess. Thank you, Mr. Chairman. I do thank our panel
for being here, and I know it has been a long morning. Let me
just ask a question, because I am trying to get a better
understanding of what is referred to as the PERM program. That
is a 3 year rolling average of 17 states examined on a yearly
basis, is that correct?
Dr. Agrawal. That is correct.
Mr. Burgess. And, now, what kind of statistical modeling
was involved in coming up with that formula?
Dr. Agrawal. So there is a statistical sample done in each
of these states along the three major categories of the PERM
program. And, again, we conduct the cycle so that every state
is measured at least once in the 3 year period. And there is
statistical analysis behind it to make sure that the results
are generalizable, and can actually arrive at a national rate.
Mr. Burgess. How do you select the 17 states to be in the
particular cohort?
Dr. Agrawal. They are----
Mr. Burgess [continuing]. Alphabetical, and then you cut it
off at 17, and----
Dr. Agrawal. That is a good question. Actually, I am not
sure. I don't think it is alphabetical, but there are 17 in
every cohort, and we make sure that every state is represented
once in a 3 year period.
Mr. Burgess. So the four states that Mr.----
Mr. Bagdoyan. Bagdoyan.
Mr. Burgess [continuing]. Bagdoyan was concerned about, are
those four states all in one cohort, or are they evenly
distributed between the three rolling averages?
Dr. Agrawal. They are distributed between them.
Mr. Burgess. Well, I guess, it seems like that is a
difficult one. I don't understand why that model was selected.
Is it just simply too difficult to assess every state on a
yearly basis?
Dr. Agrawal. I think it would be a real resource constraint
to try to assess every single state every single year, and it
does also pose burden issues for the states.
Mr. Burgess. Everybody knows HHS has the best computers in
the world, right? So why can't you?
Dr. Agrawal. I can take that back as a specific question if
we are going to alter the methodology, but I think the
methodology itself has been--it is not the--sort of under----
Mr. Burgess. Yes.
Dr. Agrawal [continuing]. Your question here. It----
Mr. Burgess. It just struck me as unusual to do it in this
fashion. So, again, that is why I was wondering, is there a
particular statistical methodology that has been followed, as
far as the sampling, on a rotating basis, 17, 17, 17 year in
and year out, and how long have you been doing it this way?
Dr. Agrawal. Since the PERM program started.
Mr. Burgess. Which was?
Dr. Agrawal. I believe we had the first rates in '07, but I
would have to get back to you about that.
Mr. Burgess. And do you see consistency in those numbers
over those years that you go back and look at this?
Dr. Agrawal. What we do is we report a national average
rate every single year so you can actually follow the rates, as
people have done in this hearing, sort of talk about the rates
over time. What we don't report are rates by state, because it
is very difficult to compare two different Medicaid programs
that might have two very different approaches to eligibility
and other things.
Mr. Burgess. All right, thank you. Mr. Chairman, I am going
to submit a question in writing about the Dallas Morning News
article that I referenced earlier in the hearing, and I would
appreciate a response on that.
Dr. Agrawal. Sure. Thank you.
Mr. Burgess. Thank you.
Mr. Murphy. Thank you. Let me just say this, first of all,
we are grateful you came to us in a candid way. But I think you
hear among us, we want to facilitate this. None of us are going
to tolerate any kind of acceptance of this. And there was a
concern about whoever made the decision to just raise the
level, it is not really acceptable. What we want to know is the
methodology, and work with you, and see what next steps we need
to take to deal with fraud and abuse.
Granted, this data is from 2011. Some changes, as Ms.
DeGette pointed out, may have already been put in place, to
whatever extent you can tell us about that. We want to move a
trajectory towards this, because, goodness knows, federal
dollars are limited, and anybody who is out there being a crook
needs to be handled appropriately so the money can go to those
who need it. That is where our compassion should be. It is sort
of in the category of those who can, those who can't, and those
who won't. And those who won't play by the rules, they need to
face the consequences.
So we will be passing on other questions to you, and, to
that extent, I want to thank the members for participating, and
when the questions are submitted for the record, we would
appreciate it if you could get back to us with prompt
responses. So, to that extent, I now adjourn this hearing.
Thank you.
[Whereupon, at 12:11 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
It was 12 years ago that the Government Accountability
Office first sounded the alarm that the Medicaid program was a
high risk for fraud and abuse. The Office of Management and
Budget has designated it as one of the federal government's
``high-error'' programs with $17.5 billion in improper
payments-third on the OMB's list. For decades, Members of both
sides of the aisle have asked both Republican and Democratic
administrations a very basic question: how are you going to
stop the waste of billions of taxpayer dollars? Nevertheless,
Medicaid continues to waste billions of taxpayer dollars,
jeopardizing the care of the most vulnerable.
Put simply: this is unacceptable. Medicaid is supposed to
provide our most vulnerable with vital medical services, but
continued waste and fraud undermines this important goal.
For the past several years, tools have been developed,
initiatives started, and regulations authored with the goal of
reducing Medicaid fraud. And still, fraud in Medicaid continues
to grow, not shrink. We owe it to folks in Michigan to do a
better job and reverse that trend.
I appreciate the work and testimony of our witnesses. I
realize that with over $310 billion spent, some element of bad
actors may be unavoidable as they normally follow the money.
But we must do better to protect the integrity of this vital
program and the care for our most vulnerable. The testimony
today provides valuable insight as we continue to work toward a
fraud-free Medicaid system.
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