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




 
    MEDICARE PART D: MEASURES NEEDED TO STRENGTHEN PROGRAM INTEGRITY

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 14, 2015

                               __________

                           Serial No. 114-66
                           
                           
                           
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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)

                                  (ii)
                                  
                                  
                                  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Timothy 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. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     7
    Prepared statement...........................................     8
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................    66

                               Witnesses

Shantanu Agrawal, M.D., Deputy Administrator and Director, Center 
  for Program Integrity, Centers for Medicare & Medicaid 
  Services, Department of Health and Human Services..............     9
    Prepared statement...........................................    12
    Answers to submitted questions...............................    74
Ann Maxwell, Assistant Inspector General, Office of Evaluation 
  and Inspections, Office of Inspector General, Department of 
  Health and Human Services......................................    23
    Prepared statement...........................................    25
    Answers to submitted questions...............................    85

                           Submitted Material

Subcommittee memorandum..........................................    68
Statement of the National Community Pharmacists Association, July 
  14, 2015, submitted by Mr. Murphy..............................    72


    MEDICARE PART D: MEASURES NEEDED TO STRENGTHEN PROGRAM INTEGRITY

                              ----------                              


                         TUESDAY, JULY 14, 2015

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:02 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Tim Murphy 
(chairman of the subcommittee) presiding.
    Members present: Representatives Murphy, McKinley, Barton, 
Burgess, Blackburn, Griffith, Bucshon, Flores, Brooks, Mullin, 
Hudson, Collins, DeGette, Schakowsky, Castor, Tonko, Yarmuth, 
Clarke, Kennedy, Green, Welch, and Pallone (ex officio).
    Also present: Representative Bilirakis.
    Staff present: Leighton Brown, Press Assistant; Noelle 
Clemente, Press Secretary; Jessica Donlon, Counsel, Oversight 
and Investigations; Charles Ingebretson, Chief Counsel, 
Oversight and Investigations; Alan Slobodin, Deputy Chief 
Counsel, Oversight; Traci Vitek, Detailee, Health; Jessica 
Wilkerson, Oversight Associate; Ryan Gottschall, Democratic GAO 
Detailee; Meredith Jones, Democratic Director of 
Communications, Member Services, and Outreach; Christopher 
Knauer, Democratic Oversight Staff Director; Una Lee, 
Democratic Chief Oversight Counsel; and Elizabeth Letter, 
Democratic Professional Staff Member.
    Mr. Murphy. Good morning. I convene this hearing of the 
Subcommittee on Oversight and Investigations.

   OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    We are here again today to discuss an ongoing problem with 
our entitlement programs--waste, fraud, and abuse--this time in 
the Medicare Part D program. However, the failures that we will 
hear about today go far beyond lost dollars and cents, rather, 
they are helping to feed the prescription drug abuse crisis 
that is gripping the country.
    Medicare Part D is the fastest growing component of the 
Medicare program, providing approximately 39 million 
beneficiaries with supplemental prescription drug coverage. 
Given this rapid growth, Medicare Part D has been a prime 
target for fraud and abuse. In fact, this past June, the 
Department of Justice announced a nationwide Medicare fraud 
takedown, which led to charges against 243 individuals for 
approximately $712 million in false billings. More than 44 of 
the defendants were arrested on fraud related to Medicare Part 
D. This joint law enforcement effort, which involved the 
Department of Justice, the Department the Health and Human 
Services, the Office of Inspector General, and the FBI should 
be commended. But more work needs to be done at the agency 
level to ensure that fraudsters are not able to take advantage 
of the program in the first place.
    Thankfully, since the inception of the Part D program, the 
Office of Inspector General has been working diligently to 
reduce waste, fraud, and abuse in the program. The OIG has 
released numerous reports and issued several recommendations 
intended to strengthen the integrity of Medicare Part D, which 
would save taxpayers a tremendous amount of money and would 
ensure that prescription drugs are being used as intended and 
not overprescribed or diverted.
    Unfortunately, CMS has not implemented these 
recommendations. In its portfolio, the OIG highlighted at least 
nine recommendations that CMS has not implemented. All of these 
recommendations were issued to CMS in at least one previous OIG 
report, and in some instances, up to five previous reports that 
date back to December 2006. And these are commonsense 
recommendations; for example, requiring plan sponsors to report 
all potential fraud abuse to CMS or the Medicare Drug Integrity 
Contractor. This recommendation was issued in five different 
OIG reports.
    Another important recommendation: implement an edit to 
reject prescriptions written by providers who have been 
excluded from the Medicare program. That makes sense. Yet CMS 
hasn't taken action to implement these recommendations. And 
just 6 weeks ago, one of today's witnesses, Dr. Agrawal, 
testified before this subcommittee and said, ``holding our feet 
to the fire is appropriate,'' and when asked about fraud 
occurring under CMS' watch, and as I said, that's precisely 
what we are going to be doing today.
    CMS' failure to implement these recommendations has led to 
trends of questionable billing associated with pharmacies, 
prescribers, and beneficiaries. In fact, in its Data Brief, 
which analyzed prescription drug events, OIG found that a lot 
of questionable billing was tied to commonly abused opioids.
    This subcommittee has held a series of hearings examining 
the growing problem of prescription drugs and heroin addiction 
we know is ravaging our country. The opioid abuse epidemic 
resulted in a loss of 43,000 lives last year, and the problem 
continues to get worse.
    As we examine the Medicare Part D program, it troubles me 
that between 2006 and 2014, the total number of beneficiaries 
receiving commonly abused opioids grew by 92 percent, compared 
to 68 percent for all drugs. Similarly, the average number of 
prescriptions for commonly abused opioids per beneficiary grew 
by 20 percent, compared to 3 percent for all drugs. Since 2006, 
Medicare spending for commonly abused opioids has grown faster 
than spending for all Part D drugs. We need to take a closer 
look at those numbers and make sure that this program is not 
contributing to this devastating epidemic.
    The OIG has outlined several commonsense recommendations 
that CMS can implement. Now it is incumbent upon CMS to take 
action and actually prevent fraud and abuse before it reaches a 
level that requires a nationwide takedown.
    The committee is concerned that it continues to hold 
hearings like this one today where we see steps not taken and 
tools not utilized to protect the integrity of these programs 
as well as taxpayers' dollars. Now, we acknowledge it is the 
people who are committing fraud, whether they are physicians or 
pharmacists or other people, they are the ones we are going 
after, but we are listening today to the ideas of Dr. Agrawal 
and Ms. Maxwell of how we can do that.
    So I thank our witnesses for joining us. You have the 
ability to save the American taxpayer massive amounts of money, 
and of course, save lives in this process.
    It is this subcommittee's hope that we will hear concrete 
plans from you on how you will go about accomplishing this 
task. I might say, we need funds in other areas of care, and so 
we'd also like to hear when you make recommendations if there 
are some things that actually save us money that we know we 
need--for example, the mental health sphere--please tell us 
that as well.
    [The prepared statement of Mr. Murphy follows:]

                 Prepared statement of Hon. Tim Murphy

    I convene this hearing of the Subcommittee on Oversight and 
Investigations. We are here again today to discuss an ongoing 
problem with our entitlement programs: waste, fraud, and abuse. 
This time in the Medicare Part D program. However, the failures 
that we will hear about today go far beyond lost dollars and 
cents, rather, they are helping to feed the prescription drug 
abuse crisis that is gripping the country.
    Medicare Part D is the fastest growing component of the 
Medicare program, providing approximately 39 million 
beneficiaries with supplemental prescription drug coverage. 
Given this rapid growth, Medicare Part D has been a prime 
target for fraud and abuse. In fact, this past June, the 
Department of Justice announced a nationwide Medicare fraud 
takedown, which led to charges against 243 individuals for 
approximately $712 million in false billings. More than 44 of 
the defendants were arrested on fraud related to Medicare Part 
D.
    This joint law enforcement effort, which involved the 
Department of Justice, the Department the Health and Human 
Services, the Office of Inspector General, and the FBI should 
be commended. But more work needs to be done at the agency 
level to ensure that fraudsters are not able to take advantage 
of the program in the first place.
    Thankfully, since the inception of the Part D program, the 
Office of Inspector General has been working diligently to 
reduce waste, fraud, and abuse in the program. The OIG has 
released numerous reports and issued several recommendations 
intended to strengthen the integrity of Medicare Part D, which 
would save taxpayers a tremendous amount of money and would 
ensure that prescription drugs are being used as intended and 
not overprescribed or diverted.
    Unfortunately, CMS has not implemented these 
recommendations. In its Portfolio, the OIG highlighted at least 
nine recommendations that CMS has not implemented. All of these 
recommendations were issued to CMS in at least one previous OIG 
report, and in some instances, up to five previous reports that 
date back to December 2006.
    And these are commonsense recommendations. For example, 
requiring plan sponsors to report all potential fraud abuse to 
CMS or the Medicare Drug Integrity Contractor. This 
recommendation was issued in five different OIG reports. 
Another important recommendation: implement an edit to reject 
prescriptions written by providers who have been excluded from 
the Medicare program. That makes sense. Yet CMS hasn't taken 
action to implement these recommendations. Just six weeks ago, 
one of today's witnesses, Dr. Agrawal testified before this 
subcommittee and said, ``holding our feet to the fire is 
appropriate,'' when asked about fraud occurring under CMS' 
watch, and that's precisely what we are here to do today.
    CMS' failure to implement these recommendations has led to 
trends of questionable billing associated with pharmacies, 
prescribers, and beneficiaries. In fact, in its Data Brief 
which analyzed prescription drug events, OIG found that a lot 
of questionable billing was tied to ``commonly abused 
opioids.'' This subcommittee has held a series of hearings 
examining the growing problem of prescription drugs and heroin 
addiction that is ravaging our country. The opioid abuse 
epidemic resulted in 43,000 lives lost last year and the 
problem continues to only get worse. As we examine the Medicare 
Part D program, it troubles me that between 2006 and 2014, the 
total number of beneficiaries receiving commonly abused opioids 
grew by 92 percent, compared to 68 percent for all drugs. 
Similarly, the average number of prescriptions for commonly 
abused opioids per beneficiary grew by 20 percent, compared to 
3 percent for all drugs. Since 2006, Medicare spending for 
commonly abused opioids has grown faster than spending for all 
Part D drugs. We need to take a closer look at these numbers 
and make sure that this program is not contributing to this 
devastating epidemic.
    The OIG has outlined several common sense recommendations 
that CMS can implement. Now it is incumbent upon CMS to take 
action and actually prevent fraud and abuse before it reaches a 
level that requires a nationwide takedown. The committee is 
concerned that it continues to hold hearings like this one 
today where we see steps not taken and tools not utilized to 
protect the integrity of these programs as well as our 
taxpayers' dollars.
    I would like to thank our witnesses for joining us -you all 
have the ability to save the American taxpayer massive amounts 
of money, and save lives in the process. It is this 
subcommittee's hope that we will hear concrete plans from you 
on how you will go about accomplishing this task.

    Mr. Murphy. So thank you for being here today, and I now 
recognize the ranking member of the subcommittee, 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 so much, Mr. Chairman.
    Medicare Part D represents the fastest growing component of 
the Medicare program overall. From 2006 to 2014, spending for 
Part D drugs increased by 136 percent from $51.3 billion to 
$121 billion. In the last 5 years, the OIG has reported a 134 
percent increase in complaints and cases involving the Part D 
program. The Office of Management and Budget has declared 
Medicare Part D a high-error program with an estimated improper 
payment rate of 3.3 percent, or $1.9 billion. That could make 
up the difference with the 21st Cures and the money we had to 
take out. P.S.
    As with all Federal healthcare programs, reducing improper 
payments and protecting taxpayer dollars must be a priority of 
the Department and a priority of this committee, but here's the 
part where I pile on to the chairman's statement because it is 
not just about Federal taxpayer dollars, it is about all of the 
other problems you have with Medicare Part D.
    As the chairman said, we are in the midst of a prescription 
drug abuse crisis. In 2013, prescription painkillers were 
involved in over 16,000 overdose deaths, and heroin was 
involved in an additional 8,200 deaths. Over 2.1 million 
Americans live with a prescription opioid addiction while 
467,000 Americans are addicted to heroin. These are absolutely 
devastating numbers, and the chairman is right: this series of 
hearings that we have had this year has been, I think, one of 
the most eye-opening series of hearings that we have ever had 
in this committee illuminating this problem. And Part D is a 
part of it because drug diversion and overprescribing are 
serious challenges in the program.
    Between 2006 and 2014, Part D spending for commonly abused 
opioids grew by 156 percent, which outpaced the growth of 
spending for all Part D drugs. Additionally, generic Vicodin 
was the number one prescribed drug in the Part D program in 
2013.
    The OIG is going to testify that investigations into Part D 
fraud, waste, and abuse have uncovered not only financial harm 
to the program but also serious medical harm to individual 
patients from the inappropriate prescribing and diversion of 
opioids as well as other prescription drugs. Complex criminal 
networks involving healthcare professionals, pharmacies, and 
street traffickers are becoming a pervasive element of Part D 
fraud schemes. In fact, last month, the Department announced 
the largest takedown in the history of the Medicare Fraud 
Strike Force, resulting in charges against 243 individuals 
involving about $712 million in false billings. More than 44 of 
the defendants arrested were charged with fraud related to Part 
D.
    So I want to take a minute to recognize both the OIG and 
CMS for the excellent work in achieving this important outcome 
and sending a message to the perpetrators that those who steal 
from Federal healthcare programs will pay a high price for 
their crimes.
    I look forward to hearing from Dr. Agrawal, our perennial 
witness to this committee now, about what the agency has done 
to strengthen program integrity in Part D, particularly as it 
pertains to the issue of drug diversion and overprescribing. I 
know that the agency's Overutilization Monitoring System has 
already resulted in a substantial reduction in the number of 
opioid overutilizers in Part D, and I think this is an 
excellent step in the Federal effort to address the 
prescription drug abuse epidemic.
    However, as we are going to hear from OIG today, Part D 
remains vulnerable to fraud, and there are additional 
opportunities to identify fraud, waste, and abuse. As the OIG 
describes, ensuring the integrity of the Part D program 
requires constant and proactive efforts at every level from the 
plan sponsors to CMS Program Integrity Contractors to the 
oversight role. However, CMS does not require plan sponsors to 
report potential fraud and abuse. In 2012, only 35 percent of 
plans reported such data voluntarily. In the opinion of the 
OIG, the low level of fraud identified by some plan sponsors 
raises questions about the sufficiency of their fraud and abuse 
detection programs.
    I know, Dr. Agrawal, you will have more to tell us about 
this today. I think it is important, Mr. Chairman, that we 
follow up with the plan sponsors themselves to find out why 
they are not reporting this information about the fraud 
detection system. It would have been helpful to have them here 
today but perhaps we can have another hearing, and with that, I 
yield back. Thanks.
    Mr. Murphy. The gentlelady yields back.
    I now recognize the vice chair of the full committee, Mrs. 
Blackburn, for 5 minutes.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman.
    I want to say thank you to our witnesses. It is not your 
first appearance, and I am certain it is not going to be your 
last. We are so pleased to dig into this issue. The chairman 
spoke very well to that.
    And going back to what Ms. DeGette was saying, when you 
look at the opioids, you have got the abuse. The beneficiaries 
receiving these prescriptions grew by 92 percent in 8 years. 
Now, common sense is going to tell you something is wrong with 
that. I mean, that is just common sense. And then last month we 
had 243 individuals charged with $712 million in false 
billings. These people were also charged with money laundering, 
aggravated identify theft, and what these crimes highlight and 
what this growth highlights is basically what is happening at 
CMS, Dr. Agrawal, which is the pay-and-chase model, and it is 
just not working. My office has just completed a study going 
back and looking at the Inspector General reports, and I want 
you to know, HHS ranks as, I think it is number 4 over the past 
10 years in collective abuse of--no, number 2. They are number 
2 on the list, $10.3 billion wasted. OIG has pinpointed this. 
And you have good suggestions. You have got nine outstanding 
recommendations made for CMS right now that you can do 
something about this, and hasn't been implemented.
    Now, you are going to say we need more money. Well, guess 
what? When you have got a budget that is closing in on a 
trillion dollars and you have got $10.3 billion worth of waste 
that you have done nothing about, we need to come dock you that 
$10.3 billion. And by the way, that is just a 4-year window. 
You don't deserve more money. You don't deserve it because 
you're not taking good care of the taxpayer dollars that are 
coming your way.
    What we want is to make certain that people that need a 
program and deserve a program and are rightfully in a program 
are going to receive the benefits of that program, but waste, 
fraud, and abuse is going to be targeted and it is going to be 
rooted out, and when you are given recommendations, we expect 
those recommendations to see an action. And don't tell me you 
are overworked and don't tell me you don't have enough money 
because when you have got a job to do, you work until the job 
is done, and that is what we are wanting to see is that you are 
going to do your job.
    So my question to you today is going to be very pointed. 
You have been given recommendations. Do you agree with the 
recommendations? What are you doing to enact those 
recommendations, and what is your timeline for having them 
completed?
    And those are the questions I am going to have, Mr. 
Chairman. I will yield my time to whomever would like the 
balance of my time.
    Mr. Murphy. Is there anybody on this side who would like to 
speak on this?
    If not, the gentlelady's time, she yields back, and now 
recognize the ranking member of the full committee, 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.
    The Medicare Part D program has been a great success for 
our Nation's seniors and for people with disabilities, and I am 
glad we are here today to discuss ways to strengthen and 
improve it.
    For decades before its enactment, seniors and disabled 
Americans, often living on fixed incomes, struggled to afford 
the rising costs of prescription drugs. Now, more than 40 
million Americans have access to affordable medications through 
the Medicare Part D program, and the ACA strengthened Part D 
and took crucial steps to improve affordability and access by 
closing the gap in coverage where beneficiaries pay the full 
cost of their prescriptions, known as the donut hole. Before 
the ACA, many beneficiaries struggled with crippling out-of-
pocket costs in the coverage gap. The ACA gradually phases out 
the donut hole, and closes it completely by 2020. Since the 
law's enactment, 9.4 million seniors and people with 
disabilities have saved over $15 billion on prescription drugs, 
an average of $1,598 per beneficiary. In 2014 alone, nearly 5.1 
million seniors and people with disabilities saved $4.8 
billion, or an average of $941 per beneficiary. These are real 
dollars and real savings for Americans, allowing them to live 
healthier lives and have the peace of mind that they won't have 
to decide between putting food on the table or paying for 
lifesaving medications.
    In addition, the ACA strengthened Medicare by improving the 
solvency of the program and strengthening program integrity. 
Notably, the law moved beyond the traditional pay-and-chase 
model to a preventative approach that seeks to keep fraudulent 
suppliers out of the program before fraud, waste, and abuse 
occur. For example, under the authorities in the ACA, CMS 
recently issued a final regulation that requires all Part D 
prescribers to enroll in Medicare. This will help ensure that 
Part D drugs are only prescribed by individuals who are 
qualified under State law and under the requirements of the 
Medicare program, and it implements a longstanding 
recommendation by the Department's Office of Inspector General.
    The same rule also gives CMS the authority to revoke a 
provider's Medicare Part D enrollment status under certain 
circumstances, including if CMS determines that the provider 
represents a threat to the health and safety of Medicare 
beneficiaries or has a pattern of prescribing Part D drugs that 
is abusive.
    And finally, to reduce prescription drug abuse and 
diversion, CMS now requires plan sponsors to implement internal 
controls to prevent overutilization of both opioids and 
acetaminophen. These steps and many others are transforming 
Medicare Part D program integrity efforts, making them more 
data-driven and risk-based, and I look forward to hearing from 
both the Office of Inspector General and from CMS about the 
important steps the Agency has taken to improve program 
integrity in Part D.
    I also wanted to highlight the important bipartisan work of 
this committee to address one of the OIG's recommendations to 
improve Part D program integrity. In 2014, the OIG once again 
recommended that CMS seek statutory authority to implement a 
pharmacy lock-in program that would allow prescription drug 
plan sponsors in Medicare Part D to develop safe prescribing 
and dispensing programs for beneficiaries that are prescribed 
high volumes of controlled substances, and I introduced 
legislation on this issue immediately following the OIG's 
earlier work, the Medicare Prescription Drug Integrity Act of 
2013. I am gratified that H.R. 6, the 21st Century Cures Act, 
passed overwhelmingly by the House last Friday, acts on this 
recommendation and gives Part D plan sponsors the authority to 
establish these lock-in programs. This provision strikes the 
right balance to protect the integrity of the Part D program 
and improve patient safety, while carefully protecting 
beneficiary access. It is a strong example of what this 
committee can achieve when working in a bipartisan manner to 
implement commonsense policy solutions.
    So I look forward to hearing from Assistant Inspector 
General Maxwell about the OIG's outstanding recommendations and 
from Dr. Agrawal regarding CMS' ongoing efforts to strengthen 
Part D.
    Thank you, Mr. Chairman, for convening this hearing today. 
I was going to yield to--I don't know if anybody else wants the 
time. I guess not, so I will just yield back. Thank you.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    Thank you, Chairman Murphy, for holding this important 
hearing. The Medicare Part D program has been a great success 
for our Nation's seniors and for people with disabilities, and 
I am glad we are here today to discuss ways to strengthen and 
improve the program.
    For decades before its enactment, seniors and disabled 
Americans, often living on fixed incomes, struggled to afford 
the rising costs of prescription drugs.
    Now, more than 40 million Americans have access to 
affordable medications through the Medicare Part D program.
    The Affordable Care Act strengthened Part D and took 
crucial steps to improve affordability and access by closing 
the gap in coverage where beneficiaries pay the full cost of 
their prescriptions, known as the donut hole. Before the ACA, 
many beneficiaries struggled with crippling out-of-pocket costs 
in the coverage gap.
    The ACA gradually phases out the donut hole, and closes it 
completely by 2020. Since the law's enactment, 9.4 million 
seniors and people with disabilities have saved over $15 
billion on prescription drugs, an average of $1,598 per 
beneficiary. In 2014 alone, nearly 5.1 million seniors and 
people with disabilities saved $4.8 billion, or an average of 
$941 per beneficiary.
    These are real dollars and real savings for Americans, 
allowing them to live healthier lives and have the peace of 
mind that they won't have to decide between putting food on the 
table or paying for lifesaving medications.
    In addition, the ACA strengthened Medicare by improving the 
solvency of the program and strengthening program integrity. 
Notably, the law moved beyond the traditional ``pay and chase'' 
model to a preventative approach that seeks to keep fraudulent 
suppliers out of the program before fraud, waste, and abuse 
occur.
    For example, under authorities in the ACA, CMS recently 
issued a final regulation that requires all Part D prescribers 
to enroll in Medicare. This will help ensure that Part D drugs 
are only prescribed by individuals who are qualified under 
State law and under the requirements of the Medicare program, 
and it implements a long standing recommendation by the 
Department's Office of Inspector General.
    The same rule also gives CMS the authority to revoke a 
provider's Medicare Part D enrollment status under certain 
circumstances, including if CMS determines that the provider 
represents a threat to the health and safety of Medicare 
beneficiaries or has a pattern of prescribing Part D drugs that 
is abusive.
    Finally, to reduce prescription drug abuse and diversion, 
CMS now requires plan sponsors to implement internal controls 
to prevent overutilization of both opioids and acetaminophen.
    These steps and many others are transforming Medicare Part 
D program integrity efforts, making them more data-driven and 
risk-based. I look forward to hearing from both the Office of 
Inspector General and from CMS about the important steps the 
Agency has taken to improve program integrity in Part D.
    I'd also like to highlight the important bipartisan work of 
this committee to address one of the OIG's recommendations to 
improve Part D program integrity. In 2014, the OIG once again 
recommended that CMS seek statutory authority to implement a 
pharmacy ``lock-in'' program that would allow prescription drug 
plan sponsors in Medicare Part D to develop safe prescribing 
and dispensing programs for beneficiaries that are prescribed 
high volumes of controlled substances.
    I introduced legislation on this issue immediately 
following the OIG's earlier work, the Medicare Prescription 
Drug Integrity Act of 2013. I am gratified that H.R. 6, the 
21st Century Cures Act, passed overwhelmingly by the House last 
Friday, acts on this recommendation and gives Part D plan 
sponsors the authority to establish these lock-in programs. 
This provision strikes the right balance to protect the 
integrity of the Part D program and improve patient safety, 
while carefully protecting beneficiary access. It is a strong 
example of what this committee can achieve when working in a 
bipartisan manner to implement commonsense policy solutions.
    I look forward to hearing from Assistant Inspector General 
Maxwell about the OIG's outstanding recommendations and from 
Dr. Agrawal regarding CMS' ongoing efforts to strengthen Part 
D.
    Thank you to the chairman for convening this hearing today, 
and I yield back.

    Mr. Murphy. I thank the gentleman for yielding back.
    I might comment on the opening statement. You can see that 
I think this committee does its best work when we are united, 
and it is clear that that is the case today.
    I also want to make sure I ask unanimous consent if any 
other Members want to introduce any opening statements for the 
record, they can do so, and without objection, those documents 
will be accepted.
    You are now aware that the committee is holding an 
investigative hearing, and when doing so has the practice of 
taking testimony under oath. Do either of our witnesses today 
have any objections to testifying under oath? Both of them say 
no. The Chair then advises you that under the rules of the 
House and the rules of the committee, you are entitled to be 
advised by counsel. Do either of you desire to be advised by 
counsel during your testimony today? And both say no.
    In that case, if you would please rise and raise your right 
hand, I will swear you in.
    [Witnesses sworn.]
    Mr. Murphy. Thank you. You may be seated. Both witnesses 
said yes.
    You are now under oath and subject to the penalties set 
forth in Title XVIII, section 1001 of the United States Code. 
You may now give a 5-minute summary of your written statement, 
and we will start with you, Dr. Agrawal. You may begin.

STATEMENTS OF SHANTANU AGRAWAL, M.D., DEPUTY ADMINISTRATOR AND 
DIRECTOR, CENTER FOR PROGRAM INTEGRITY, CENTERS FOR MEDICARE & 
MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES; AND 
ANN MAXWELL, ASSISTANT INSPECTOR GENERAL, OFFICE OF EVALUATION 
  AND INSPECTIONS, OFFICE OF INSPECTOR GENERAL, DEPARTMENT OF 
                   HEALTH AND HUMAN SERVICES

                 STATEMENT OF SHANTANU AGRAWAL

    Dr. Agrawal. Chairman Murphy, Ranking Member DeGette, and 
members of the subcommittee. Thank you for the invitation to 
discuss CMS' recent work to improve the Medicare prescription 
drug program, also known as Medicare Part D. Our objective is 
to ensure that all Medicare beneficiaries receive the medicines 
they need while reducing and preventing prescription drug 
abuse.
    We appreciate the subcommittee's continued focus on the 
problem of opioid abuse and efforts to combat the 
overutilization of prescription drugs. We also thank the OIG 
for its work to help us improve the Part D program.
    The growth of prescription drug abuse has touched 
providers, pharmacies and beneficiaries in the Part D program. 
As this committee has heard, the problems with overutilization, 
drug diversion, and a variety of other issues are far reaching. 
The statutory construct of operating the Part D program 
requires CMS to work through hundreds of plan sponsors, which 
presents unique challenges to our program integrity efforts. It 
requires a coordinated, multifaceted approach to address the 
major players in Part D including prescribers, pharmacies, 
PMSs, and plan sponsors.
    CMS has taken concrete actions in recent years to 
strengthen the Part D program and address weaknesses identified 
by the OIG and others. One element of these changes has been 
enhancing the culture around Part D to focus--to include a 
focus on program integrity, one that emphasizes prevention over 
the pay-and-chase model, instituting and implementing new 
administrative authorities to ensure only legitimate providers 
are prescribing drugs to beneficiaries, and improving 
collaboration and data sharing with Part D plan sponsors, law 
enforcement, and other stakeholders.
    In particular, CMS is focused on holding sponsors, 
prescribers, pharmacies and our contractors accountable for 
prescribing that is consistent with our goals and values of 
providing safe, high-quality, evidence-based care.
    CMS has also taken steps to protect beneficiaries by 
ensuring that they are receiving prescription drugs from 
legitimate providers. CMS has announced plans to undertake a 
major programmatic change which will require prescribers of 
drugs paid for by Part D to enroll in Medicare, just as they 
would in Parts A or B of the program, and have begun outreach 
efforts to enroll over 400,000 prescribers by January 2016. We 
will then begin enforcement in June 2016 by requiring plans to 
deny Part D prescriptions that are written by prescribers who 
do not meet the necessary requirements.
    During the enrollment process, prescribers will be subject 
to the same risk-based screening requirements, which have 
already contributed to the removal of nearly 575,000 provider 
and supplier enrollments from the Medicare program since the 
enactment of the Affordable Care Act. This enrollment standard 
will directly address issues OIG has noted including 
prescriptions by excluded or invalid prescribers through new 
point-of-sale edits Part D plan sponsors will be required to 
implement.
    CMS also has new authorities to remove problematic 
prescribers from the Medicare program for abusive prescribing 
behaviors. Together, we believe these new policies will help 
prevent bad actors from taking advantage of the Part D program 
and potentially harming beneficiaries. We are also utilizing 
Part D data more effectively. CMS is doing more to analyze and 
share data with Part D plan sponsors to enhance the detection 
and prevention of fraud and overutilization in Medicare Part D. 
This includes the Overutilization Monitoring System, in which 
CMS identifies beneficiaries with potentially dangerous opioid 
utilization. We share a list of those beneficiaries with plan 
sponsors, which are then expected to use enhanced drug 
utilization review strategies such as case management and 
point-of-sale edits to prevent continued overutilization.
    Further, plans are now allowed to share information about 
potentially dangerous beneficiary opioid use, actions that can 
help prevent beneficiaries from changing plans to avoid 
detection.
    CMS has also developed high-risk pharmacy and prescriber 
assessments, which we produce for Part D plan sponsors. These 
assessments contain a list of pharmacies or prescribers 
identified by CMS as high risk based on a methodology which 
goes beyond simple outlier analysis. We provide plan sponsors 
with this information so they can initiate investigations and 
conduct audits, and ultimately terminate pharmacies or 
prescribers from their networks. Since 2013, plan sponsors have 
taken action against hundreds of pharmacies as a result of our 
Pharmacy Risk Assessments. Our newly implemented PLATO system 
allows plan sponsors to report back actions they have taken to 
address issues posed by pharmacies and prescribers.
    We have also taken steps to improve data sharing with our 
colleagues in law enforcement. From January 2010 through the 
present, CMS made nearly 2,300 referrals to law enforcement. We 
are working closely with the OIG to prevent bad actors from 
fraudulently extracting trust fund dollars. Since 2013, CMS has 
been referring providers who qualify for permissive or 
mandatory exclusion from participation in Federal healthcare 
programs to the OIG for exclusion. CMS takes seriously the 
recommendations of the OIG and has taken strong steps to 
improve the integrity of the Part D program. We are committed 
to continue to work with the OIG, this committee, and others as 
we strengthen Medicare Part D.
    I look forward to answering your questions. Thank you.
    [The prepared statement of Dr. Agrawal follows:]
    
    
    
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    Mr. Murphy. Ms. Maxwell.

                    STATEMENT OF ANN MAXWELL

    Ms. Maxwell. Good morning, Chairman Murphy, Ranking Member 
DeGette, and other distinguished members of the subcommittee. I 
am pleased to join you today to discuss how we can protect 
Medicare's prescription drug program from fraud and abuse.
    The OIG has made a strong commitment to help safeguard 
Medicare Part D. Just last month, OIG special agents and other 
law enforcement personnel fanned out across the country to 
conduct the largest criminal healthcare fraud takedown ever. A 
number of the arrests were for doctors and pharmacy owners 
involved in prescription drug fraud, and there are likely to be 
more arrests because we have found that Part D continues to be 
vulnerable to fraud.
    Recently, we identified 1,400 retail pharmacies with 
questionable Medicaid payments. In one example, a Detroit-area 
pharmacy billed for commonly abused pain medications--opioids, 
to be exact--for 93 percent of its Part D patients. As this 
committee is well aware, abusing opioids can lead to patient 
harm and event death. It is also tied to illegal drug 
trafficking, which is why the OIG is not stopping with the 
recent takedown.
    As our special agents investigated and built these cases, 
OIG analysts were already proactively mining the data to 
identify new leads to help us--CMS--shut down and--target and 
shut down this problem.
    As important as our law enforcement efforts have been, we 
cannot arrest our way out of this problem. We have to 
strengthen our defenses. OIG has several outstanding 
recommendations for fixing some of the systemic vulnerabilities 
that allow fraud and abuse to slip through undetected. To 
start, CMS can better leverage data as a tool to improve 
oversight and to keep up with the ever evolving fraud 
landscape. This should include collecting the data necessary to 
ensure that plan sponsors, the hundreds of private companies 
that administer the program, are effectively protecting the 
program. These plan sponsors are Part D's first line of 
defense.
    Currently, as you already heard, CMS does not require these 
plan sponsors to report on the fraud and abuse that they 
identify. While plan sponsors may report this information 
voluntarily, given the choice, we found that less than half 
chose to report. Information on identified fraud and abuse as 
well as how sponsors handle these cases would help CMS assess 
the effectiveness of sponsors' efforts to protect Part D. 
Better leveraging data should also involve expanding the 
analysis of the data CMS already collects. We recommend that 
CMS and plan sponsors monitor payment data for a wider range of 
drugs prone to abuse.
    CMS does have several key initiatives underway focused on 
opioids, and while opioid abuse is certainly a major concern, 
OIG has identified questionable billing patterns related to 
other drugs. This includes non-controlled substance, which can 
present a substantial financial loss to Medicare and can be 
abused in combination with controlled substances.
    In addition to better leveraging data, plan sponsors and 
CMS should buttress current defenses by adding the following 
three oversight tools to their current efforts.
    First, plan sponsors and CMS need to implement stronger 
payment controls to stop paying for things they shouldn't be 
paying for, like payments for drugs prescribed by doctors 
excluded from the Medicare program, or paying for illegal 
refills of controlled substances. Second, another powerful 
preventative measure would be a lock-in program that restricts 
certain beneficiaries to a limited number of pharmacies and 
prescribers. This tool allows for better monitoring to prevent 
at-risk beneficiaries from overutilizing drugs that might harm 
them or diverting those drugs for illegitimate use. Finally, we 
recommend that CMS improve processes to recover inappropriate 
Part D payments.
    Our recent law enforcement and data-mining efforts show 
that the current defenses are not strong enough. Plan sponsors 
need to reinforce that first line of defense but they cannot be 
the only line of defense. Ultimately, it is CMS that is 
responsible for ensuring the integrity of Part D.
    For our part, we will continue to focus our full array of 
resources on protecting the program, and we stand ready to work 
with you, with CMS and others to improve program integrity.
    At this time, I am happy to be of assistance and can answer 
any of your questions. Thank you so much.
    [The prepared statement of Ms. Maxwell follows:]
    
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    Mr. Murphy. Thank you. I will now recognize myself for 5 
minutes as we go through this.
    First of all, we know that prescription drugs and 
medications can heal, they can reduce symptoms, they can keep 
people out of hospitals. Dr. Agrawal, does CMS have any kind of 
report that really takes an accounting as the prices have gone 
up in Medicare Part D? Has there been any corresponding 
decrease in hospitalizations or doctor visits? Is there any 
report of that type out there?
    Dr. Agrawal. Chairman, that is a good question. I am not 
aware of a report along those lines. I may have just not seen 
it, so I am happy to take that question back.
    Mr. Murphy. Thank you. I wish you would.
    Ms. Maxwell, you pointed out in your testimony about nine 
unimplemented recommendations that the OIG identified. So as 
she stated that, Doctor--and some of those go all the way back 
to 2006. Does CMS agree with the recommendations made by OIG?
    Dr. Agrawal. I think we do agree with the recommendations. 
I think we have expressed that in writing to those reports. You 
know, what I would emphasize is, these are all recommendations 
that we are working to make progress on. I think it is very 
fair to say, you know, that we need to continue to work on it, 
need to get to completion. These are often multifaceted 
recommendations that require, you know, multiple levels of 
implementation.
    Mr. Murphy. But you recognize some of these go back to 
2006, so I am sure many members are going to key in on trying 
to get some commitments from you to get that done.
    But let me focus on one of those. The OIG recommended that 
CMS exclude schedule II refills when calculating final payments 
to plan sponsors at the end of each year. So what action has 
CMS taken to implement that recommendation? Ms. Maxwell, can 
you answer that first? Do you know if they have taken action on 
that?
    Ms. Maxwell. Absolutely. It is my understanding--and this 
is one of the recommendations in which CMS did not concur. 
Seven of the nine initially CMS did concur with. There are two 
they didn't. This is one of them. It is my understanding that 
CMS is concerned about the data that is available and the data 
does not make it obvious what is a partial refill versus what 
is an illegal refill, and that they have instituted actions to 
make it more clear in the data. Our position is, once the data 
is clear, then you have the opportunity to put in an edit, and 
we would continue to recommend that they do put in an edit to 
stop those illegal refills.
    Mr. Murphy. Dr. Agrawal, what is your plan of action here?
    Dr. Agrawal. Yes, I think Ms. Maxwell has characterized 
that correctly. So our concern is that the data is not 
completely accurate at this point. Early refills of schedule II 
drugs are illegal. We of course don't support early refills of 
those drugs. However, partial fills, particularly for 
beneficiaries that may be in long-term-care facilities, are 
totally legitimate and may actually help to address pain and 
other issues that they have. So what we are doing is working 
with plan sponsors to clarify coding requirements so that we 
can differentiate the legitimate payments from the illegitimate 
payments and then would be seeking to make the kind of change 
that is being described.
    Mr. Murphy. And as part of that, hopefully you will also be 
going after people who have made the wrong claims and getting 
that money returned.
    On page 3 of your testimony, Doctor, you had mentioned the 
President's budget proposes to provide the Secretary with new 
authorities to suspend coverage and payment for drugs 
prescribed by providers who have been engaged in misprescribing 
to suspend coverage and payment for Part D drugs when those 
prescriptions present an imminent risk to patients and require 
additional information on certain Part D prescriptions such as 
diagnosis instant codes and conditional coverage. Do you have 
any estimate that this will actually save money in terms of 
reducing some of the fraud and abuse to implement those 
recommendations?
    Dr. Agrawal. Yes, I think these kinds of recommendations 
really go at the heart of prevention, moving away from the pay-
and-chase model that others have commented on. We did 
promulgate policy, as you know, last year requiring enrollment 
to prescribers and also with that implementing the ability to 
revoke providers for abusive prescribing. I think all of those 
things really do take a very strong step towards prevention, 
just as we have done in other parts of the program and have 
been shown to be effective.
    Mr. Murphy. I was hoping that was something you can give us 
some numbers on in terms of what you estimate that would be 
savings to Medicare Part D. That would be important to us if we 
implement those.
    Let me mention something else here. This is on Medicaid but 
it is important, because a report just came out in March issued 
by the HHS Office of Inspector General and found that 92 
percent of Medicaid enrolled children who are prescribed 
antipsychotic medications lacked ``medically accepted pediatric 
indications'' that would warrant such prescriptions. There were 
instances there of very young children being prescribed 
antipsychotics, 4-year-olds. It was a very disturbing and 
alarming report. That 92 percent number of not medically 
indicated was absolutely astounding. So given that, and I don't 
expect you to know this today, but if you do know, I would like 
to know what steps CMS is taking to root out the providers who 
are prescribing children powerful psychotropic medications when 
it isn't medically necessary. Would you make sure you get back 
to us on that?
    Dr. Agrawal. Absolutely.
    Mr. Murphy. And finally, the OIG has recommended that CMS 
implement an edit to reject prescriptions written by excluded 
providers. So Ms. Maxwell, what actions has CMS taken to 
implement that recommendation of those who aren't supposed to 
be prescribing at all?
    Ms. Maxwell. It is my understanding that the sponsors are 
required to be monitoring excluded providers and making sure 
that the payments don't go to them. However, when we did look, 
we did find that CMS did accept PDE records from the sponsors 
that included excluded providers. There was about 15 million in 
gross payments over a 3-year period. So again, we continue to 
appreciate the steps that have been taken but there's obviously 
need for further steps and stronger payment controls be put 
into place.
    Mr. Murphy. OK. I would like to follow up, but I am out of 
time so I will now turn to Ms. DeGette for 5 minutes.
    Ms. DeGette. Let me sort of extend that previous line of 
questioning, which is, we are talking about the OIG report on 
Medicare Part D integrity and the report notes ``CMS relies on 
plan sponsors to be the first line of defense against fraud, 
waste, and abuse in Part D.'' I am wondering if both of you can 
each comment on the role that plan sponsors play in this first 
line of defense against waste, fraud, and abuse. I am wondering 
what tools they use and what can be done. Dr. Agrawal?
    Dr. Agrawal. Sure. Thank you. I do think, you know, the 
role of Part D plan sponsors is extremely important since they 
are paying claims or PDE records directly.
    Let me just address maybe the prior point about providers 
first.
    Ms. DeGette. Sure.
    Dr. Agrawal. You know, I think it is absolutely 
indefensible for a Part D plan sponsor to pay the prescription 
of an excluded provider. Now, we have implemented edits behind 
those plan sponsors to indicate when they have done that so 
they can make the appropriate recoveries on their end. I also 
think prescriber enrollment and the screening requirements that 
I mentioned earlier will go a long way, because it will move 
those edits from after the PDE record to the point of sale when 
we have all 400,000 prescribers enrolled in the program.
    So we can clearly buttress Part D plan sponsors but their 
role is absolutely vital. I think they need to be on top of the 
data. We share a lot of data with them so that they are aware 
of who the outlier prescribers and pharmacies and their 
networks are. They also have the ability to implement drug 
utilization reviews and other kinds of programs including case 
management to stem both abusive prescribing as well as abusive 
utilization.
    Ms. DeGette. So let us talk about that data for a minute 
because they are not required to report the data on potential 
fraud and abuse, and in fact, the percentage of plan sponsors 
that voluntarily report this has declined over the last few 
years down from 40 percent in 2010 to 35 percent in 2012. Do 
you have any more recent data about the trends on this?
    Dr. Agrawal. I don't think we have more recent data that I 
can share today. However, this is an area that we have been 
working to make progress as well. So as I mentioned, we give 
data to the plan sponsors on a quarterly basis, and just this 
year implemented a system for them to be able to report back to 
us what actions they took as a result. I think that system, 
which allows the data to be reported, and then for it to be 
searchable and analyzable has been an important step moving us 
towards better reporting.
    Ms. DeGette. What is your view on this, Ms. Maxwell?
    Ms. Maxwell. It is absolutely true that, as I said in my 
oral, that the sponsors are the first line of defense. They 
administer the program and they are the ones that are paying 
the pharmacies but CMS, as I said, is the second line of 
defense, and if things do slip through the processes and edits 
they have in place, it is incumbent upon CMS to have the second 
line of defense to prevent that from happening. That prevents 
the Federal Government from actually reimbursing the mistakes 
the sponsors might be making.
    Ms. DeGette. And do you think CMS is doing enough to 
encourage that?
    Ms. Maxwell. I think CMS has made significant strides in 
response to many of our recommendations, and of course, we 
outline nine in the report that we believe are important to be 
included in their ongoing effort to improve program integrity.
    Ms. DeGette. And what about the plan sponsors' fraud 
detection programs themselves? Do you think that the plan 
sponsors are doing enough or can they be beefing up that over 
time?
    Ms. Maxwell. If we had the data about the fraud and abuse 
incidents that they are detecting as well as the data about how 
they are responding, we would be able to answer that question 
with more authority. We really don't have the visibility that 
we think is necessary to hold them accountable.
    Ms. DeGette. Is that something, Dr. Agrawal, you think you 
could provide?
    Dr. Agrawal. Well, as I mentioned, we are getting some data 
from plan sponsors, and in particular, we are focused on where 
we give them a clear lead such as an outlier pharmacy or an 
outlier prescriber, what are they doing to investigate that 
lead downstream and then take the relevant actions. What we 
have found is certain plan sponsors are actually good at 
following up. So we have been able to see hundreds of 
pharmacies be excluded from networks because of the leads we 
give them. We also conduct compliance reviews of plan sponsors 
to make sure that program integrity processes are a robust part 
of their operations. Again, some plan sponsors I think do quite 
well there and others have opportunities for improvement.
    Ms. DeGette. Well, this is an area where it seems like 
there could be a lot of problems, and OIG has recommended 
making it mandatory that they report potential fraud and abuse. 
I am wondering, first, Ms. Maxwell, could you comment on that 
recommendation?
    Ms. Maxwell. Absolutely. As you have pointed out, given the 
current state of affairs that it is not currently voluntary, we 
don't have full compliance.
    Ms. DeGette. Right.
    Ms. Maxwell. And so we believe we will not have full 
compliance unless it is mandated, and without the comprehensive 
reporting of that data, we can't look across the entire program 
and see----
    Ms. DeGette. Dr. Agrawal, what is your agency's response to 
that?
    Dr. Agrawal. Yes, I think we can essentially agree with 
that, you know, the notion a lot. I think the question for us 
is, what kind of reporting is the most beneficial for other 
plan sponsors and the agency, and so implementing something 
like the PLATO system, giving them leads, and then getting 
results from those leads is a step towards answering exactly 
that question of what kind of information return is useful to 
the agency and would be useful to other plan sponsors. I think 
as we get more information and get better understanding of the 
utility, we will be able to require more of plan sponsors.
    Ms. DeGette. I am sure we have more questions around that 
line too. Thank you.
    Mr. Murphy. Thank you. I now recognize the gentlelady from 
Tennessee, Mrs. Blackburn, for 5 minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman, and I am going to 
follow right along with what Ms. DeGette was saying.
    It is troublesome when we hear--and Ms. Maxwell, of course, 
you all have done so much work on this--with the voluntary 
nature of the reporting, and you have recommended that they 
make it mandatory, and so Dr. Agrawal, what are you doing to 
beef up the compliance? You can say well, we have PLATO, well, 
we have this, you know, but what are you doing to enforce this? 
How do the people that work at CMS understand this is an 
imperative, you have got to do this? I mean, how do you 
communicate that?
    Dr. Agrawal. I think we take all of OIG's recommendations 
as important contributions, as imperatives. We do work to 
implement----
    Mrs. Blackburn. Whoa, whoa, whoa. Wait a minute. They are 
not contributions. They have pointed out to you--let us not 
even start down that road. It is not a contribution. It is, you 
are doing this wrong, you are wasting money, the fraud has been 
identified. Let us just say it like this. They have got nine 
recommendations on the table. Do you agree with those 
recommendations, yes or no?
    Dr. Agrawal. I think we have indicated that we largely 
agree with those recommendations, yes.
    Mrs. Blackburn. That is not the question that I asked. Yes 
or no?
    Dr. Agrawal. Well, I think Ms. Maxwell has pointed out that 
the agency has agreed with seven of the nine recommendations.
    Mrs. Blackburn. OK. Well, the problem is, what are you 
doing then to take an action, and what is your timeline? You 
know, you seem to come here and punt, and we have got another 
report that came out this morning. You are saying oh--and oh, 
by the way, it is only 2 months late. You are 2 months late 
with your report. People in the private sector that deliver a 
report 2 months late generally are, you know--they have other 
problems.
    OK. So let us look at this. You are saying you have 
recovered $454 million and that your Fraud Prevention System is 
returning a 10:1 ratio on this investment, and you are very 
proud of that, but you have got a lot of other waste that is 
out there, so I want to know from you specifically how are you 
enforcing the recommendations and what is your timeline for 
bringing your agency's work into compliance on a program that 
is really important to our Nation's seniors, and that is not 
that difficult a question. Now, getting the work done obviously 
that is a little bit harder for you, but we want to know 
specifics on your enforcement and specifics on your timeline of 
meeting this.
    Dr. Agrawal. First, Congresswoman, let me just say on the 
Fraud Prevention System report that those numbers have been 
certified by the OIG itself, and this was a report that we 
worked on in conjunction with them throughout the timeline----
    Mrs. Blackburn. I am fully aware of that.
    Dr. Agrawal. So I think the 10:1 ROI is positive, 
obviously, a good development for the system. As to your 
questions about the various recommendations, I am happy to take 
that back and we can give you responses for each 
recommendation, what we have done to implement them. I think on 
every recommendation we have worked to make progress to 
implement various systems and changes towards finally 
completing that recommendation, but these recommendations do 
take time to implement.
    Mrs. Blackburn. OK. You said you had the authority to do 
the job. We know that you have the money and the personnel. Why 
does the job not get done? Is it not a priority?
    Dr. Agrawal. This is an absolute priority. We have many 
staff focused every day on the integrity of the Medicare 
program----
    Ms. Blackburn. Do they understand that they are expected to 
meet a timeline? Do you all have a timeline? You still haven't 
spoken to the timeline.
    Dr. Agrawal. It think it depends on which recommendation 
you are referencing.
    Mrs. Blackburn. No, no, all of them. You have got--you 
can't pick and choose on this. You have got a list of 
recommendations. You have had waste, fraud, and abuse 
identified. You know you have got problems with the opioids. 
You know that voluntary reporting gets you part of the way but 
it doesn't get you all the way, that this needs to be made 
mandatory. So as to the leader, what are you doing to make 
certain that there is a set timeline? When is the timeline? Is 
it the next report? Is it the next hearing? Is it the end of 
the year?
    Dr. Agrawal. Yes, so let me give you an example, 
Congresswoman. So we have been very specific when it comes to 
something like prescriber enrollment, which will actually go 
towards resolving at least two of the recommendations I believe 
that OIG has put forward around excluded providers or other 
kind of invalid prescribers. We have stated--you know, we 
promulgated the necessary rulemaking last year. We are now 
working with Part D plan sponsors to get these prescribers 
enrolled so that we don't cause an interruption in legitimate 
access to services, and we have said that that enrollment 
requirement needs to be met by January 2016 between both the 
plan sponsors and CMS working collaboratively together. We will 
then implement point-of-sale edits behind that enrollment in 
June of 2016, which I think will take a significant step 
towards really eliminating excluded prescribing or other 
invalid prescribing----
    Mrs. Blackburn. So basically you are giving yourself a year 
to come into compliance with something that you know has been a 
problem.
    Dr. Agrawal. Well, I think that that----
    Mrs. Blackburn. I yield back my time.
    Mr. Murphy. I now recognize Mr. Pallone for 5 minutes. We 
can let him answer? I will let him answer. Go ahead. You can 
answer. Let me do that first.
    Dr. Agrawal. Thank you. I think it highlights some of the 
technical challenges in actually getting this work done. So we 
have to be very careful to actually enroll 400,000 prescribers 
so that we do not interfere in legitimate access to services 
that the Part D program provides beneficiaries. We balance that 
against the need to do this quickly and effectively to stem the 
various weaknesses and issues that the OIG has correctly 
pointed out. This is a balance we work to achieve every day. So 
yes, it takes time. It takes time for prescribers to get up to 
speed on the requirements and get enrolled. It takes time for 
our Part D plan sponsors to initiate the necessary actions on 
their part and get the point-of-sale edits in place as well.
    Mr. Murphy. Thank you.
    Mr. Pallone.
    Mr. Pallone. Thank you. I believe that both of our 
witnesses here today have studied a growing phenomenon that is 
deeply concerning, and that is the overprescribing and/or the 
overuse of opioids in Medicare Part D. This is an issue that we 
have all worked on for many years in response to OIG's earlier 
work on this topic.
    I introduced the Medicare Prescription Drug Integrity Act 
of 2013. Since that time, OIG has repeatedly recommended that 
CMS seek statutory authority to restrict certain beneficiaries 
to a limited number of pharmacies or prescribers when warranted 
by excessive or questionable billing patterns. This practice, 
commonly referred to as lock-in, I mentioned in my opening 
statement has been successful implemented in the private 
insurance market and some State Medicaid programs.
    In the 21st Century Cures legislation that the House 
overwhelmingly passed on Friday, there is a provision that 
would allow Medicare Part D plan sponsors to use these types of 
drug management programs to curb potentially harmful use of 
opioids and other controlled substances, and that provision as 
agreed to in the legislation strikes the right balance between 
protecting beneficiary choice and access while also improving 
continuity of care by ensuring that those high-risk patients 
obtain and fulfill prescriptions for controlled substances only 
from designated providers, and I think that is a big step in 
the right direction.
    So let me ask some questions. Ms. Maxwell, can you 
summarize OIG's findings that have led the agency to repeatedly 
recommend that Congress gives CMS authority to allow Part D 
plan sponsors to create these so-called lock-in programs?
    Ms. Maxwell. Absolutely. As our current data shows, the 
rate of increase of use of opioids within Part D has far 
outpaced the general increase in drugs. In fact, it has grown 
156 percent since the inception of the program. We also see, as 
I mentioned, the pharmacy fraud where we see pharmacies 
allowing for opioids to flow into the streets and be diverted. 
This poses not only a patient harm issue for the beneficiaries 
but also is a public health issue for some of those things that 
flow into the streets end up back on pharmacy shelves, which 
affects all of us. This is a significant issue, and we believe 
the lock-in would be a significant move forward in protecting 
the program beneficiaries from patient harm as well as the 
program from significant financial loss.
    Mr. Pallone. Thank you.
    Dr. Agrawal, do you believe that if a pharmacy lock-in 
provision in 21st Century Cures was signed into law, CMS would 
have a much-needed tool to address opioid abuse and 
overprescribing in Part D, and have these types of lock-in 
programs been successful in curbing opioid abuse and other 
programs?
    Dr. Agrawal. Yes, I would certainly agree with Ms. Maxwell 
that we have seen beneficiaries that are really at safety risk 
from the levels of utilization of their opioid medications. We 
have been supportive of this kind of legislative change to 
provide a lock-in approach. It is part of the President's 
budget. I do believe that it would have impact as it has, as 
you have already pointed out, in both the private sector as 
well as in various Medicaid programs.
    Mr. Pallone. OK. I want to switch to that report that Mrs. 
Blackburn mentioned, the Fraud Prevention System report that 
the agency released this morning. The FPS uses predictive and 
analytics to detect troublesome billing problems and provide it 
to the Medicare program, and after 3 years of operation, CMS 
today reported that the system identified or prevented $820 
million in inappropriate payments in the program's first 3 
years.
    So Dr. Agrawal, first of all, I want to commend you on your 
work on the FPS. In its third year, how has the program changed 
and matured? And let me throw in the second question too 
because of time. Does CMS plan to expand the program to Part C 
and Part D in the near future, and what additional plans does 
the agency have to expand the FPS to additional fraud detection 
activities?
    Dr. Agrawal. Sure. Thank you for the question. Currently, 
the FPS streams all Medicare A, B, and DME claims, so about 4 
\1/2\ million claims per day. I think what we have seen over 
the last 3 years in terms of evolution of the program is more 
models being implemented, more sophisticated models being 
implemented that not only look at outlier behavior but are 
truly predictive models based on the input of our own 
investigative field staff as well as the input of law 
enforcement, both OIG and DOJ, based on prior kind of patterns 
of fraud and abuse that they have noted. So that is one really 
big change is on sort of the technology side and just improving 
the modeling.
    The second is making sure that these leads are actually 
being followed. So this was almost a cultural change or just a 
contractor accountability change to make sure that our Program 
Integrity Contractors took these leads seriously, they formed a 
substantive, substantial part of their workload, and they were 
driving towards real administrative outcomes as quickly as 
possible.
    I think what we will continue to do with this program is 
continue to leverage the technology to implement new approaches 
like edits so that claims can be stopped from being paid, you 
know, before they are actually ever paid. We have been doing 
some of that already in the first 3 years, and we are looking 
to expand that capability substantially going forward. I think 
also the maturing of the modeling will facilitate this process.
    To your question about other data sources, we have started 
to fold in Part D PDE records and we will be looking to do that 
more. I think in Part C, we still have the challenge of getting 
accurate encounter data from plan sponsors, so we are still 
working with the relevant parts of CMS and plan sponsors to 
help improve that encounter data.
    Mr. Pallone. Thank you.
    Thank you, Mr. Chairman.
    Mr. Murphy. Thank you.
    I now recognize Mr. Barton for 5 minutes.
    Mr. Barton. Thank you, Mr. Chairman.
    I guess the first thing we ought to do is thank HHS and the 
Inspector General for conducting the investigation and actually 
beginning to try to correct the problem and at least 
identifying some of the bad guys. That is a good start.
    My first question I guess would be to Dr. Agrawal. Is that 
correct?
    Dr. Agrawal. You nailed it.
    Mr. Barton. Well, how about that? Just a lucky guess.
    How in the world can somebody be on Medicare Part D if they 
are not enrolled in Medicare? If I heard correctly, you said 
some people are actually getting the benefit but they are not 
in the program. I don't understand that.
    Dr. Agrawal. No, sir, it is not on the beneficiary side of 
the equation. It is the prescriber, the physician or advanced-
practice nurse, for example, who actually sends a prescription 
in, hands it to a patient. Currently or prior to last year, 
there was no specific enrollment requirement for the provider. 
There is now, so going forward, all prescribers are going to 
have to come into the program, be subject to the same screening 
standards as in the rest of Medicare.
    Mr. Barton. OK, but prior to this year, a provider could 
reject Medicare patients but prescribe Medicare Part D 
prescriptions?
    Dr. Agrawal. Correct. It is been a huge program integrity 
focus to bring this up to the rest of the level--to the level 
of the rest of the program.
    Mr. Barton. But that is no longer a problem? That is one 
loophole that has been closed?
    Dr. Agrawal. We are in the process of closing it as we----
    Mr. Barton. In the process----
    Dr. Agrawal [continuing]. Get through enrollment. As I 
mentioned, we have to enroll 400,000 prescribers by January.
    Mr. Barton. OK. And if they have a doctor that is not in 
the program, you just send a letter to the patients that that 
is not a valid prescriber. Is that correct?
    Dr. Agrawal. Yes. So the balance with beneficiary access to 
medications is important. What we have done is created 
essentially a transition period. So if a beneficiary takes a 
prescription to a pharmacy from a prescriber who is not 
enrolled, they will get that information but they will also get 
the medication so that there is no interruption in their 
therapy. They will not get it the second time. By that time we 
would have expected the provider to either be enrolled or for 
the beneficiary to go to a different provider.
    Mr. Barton. OK. Now I am going to switch to Ms. Maxwell.
    One of the recommendations that hasn't been acted on but 
apparently you all are beginning--the program is beginning to 
act upon is this idea of mandatory reporting from the plans. I 
am not a big fan of mandatory anything except people paying the 
taxes. I guess that ought to be mandatory. Why not go the other 
way? Why not create--I heard that--voluntary compliance, but 
you go to jail if you don't voluntarily comply. All right. A 
minor point.
    Why not go the other way and provide an incentive to the 
plan that you don't have to report, but if you do and it really 
is fraudulent and we recover some of the program funds, we will 
give you a percentage of the monies that are fraudulently--have 
been fraudulently paid and then recovered? Why not create an 
incentive program? That works for me, and I think most 
Republicans would prefer it. Now, I may be wrong but I would 
rather have an incentive to do it than a mandate they have to 
do it.
    Ms. Maxwell. You know, the heart of our recommendation is 
to have the visibility to oversight, so as long as we have the 
data and the visibility to what the plan sponsors were doing to 
protect the program, that is ultimately what we are after.
    Mr. Barton. Congressman Gingrich when he was Speaker put in 
or at least requested that this committee put in a program 
where you could create a hotline that people could call in to, 
and if it turned out that--and this wasn't just for Medicare, 
this was before Medicare Part D obviously--but if there was 
fraud involved and somebody reported it and it was proven and 
stopped, the person who reported it got some sort of a bonus, 
and that would be another idea to think about.
    I will go back to the doctor. This is my last question. You 
may have to get back to me on this. Just at the basic level, I 
would like to know where you think the primary cause of the 
fraud is. Is it from the patient's standpoint? You have got 
phantom patients perhaps. Is it from the pharmacy standpoint? 
Is it from a plan who is overbilling even though they don't 
have patients? Or is it possible it could even be in the 
Government itself where they work in conjunction with the plan 
to create fraud? Do you have any data on that?
    Dr. Agrawal. I think what we see is that overutilization in 
Part D is multifaceted. It occurs at patient, prescriber, the 
pharmacy, which is why the response to it--and I think the OIG 
has pointed this out as well--the response to has to be 
multifaceted. The program has to try to address all of the 
different areas that fraud or abuse could be occurring.
    Mr. Barton. If you identify the most prevailing area, then 
you put most of your assets there and you will have a better 
chance to get a greater return on your investigations.
    With that, Mr. Chairman, I yield back.
    Mr. Murphy. Thank you. The gentleman yields back.
    I now recognize the gentleman from Massachusetts, Mr. 
Kennedy, for 5 minutes.
    Mr. Kennedy. Mr. Chairman, thank you, and thank you for 
holding an important hearing. Thank you to our witnesses once 
again for coming back.
    I am going to touch on some--try to flesh out a little bit 
some of what my colleagues have already touched on for both of 
you. Obviously Medicare Part D is a large and important 
program, serving millions of seniors across the country and a 
good deal of them in my district. Given the scope and the 
number of transactions involved, proactive data analysis is an 
essential tool to focus on fraud detection and enforcement 
efforts.
    The OIG Data Brief does just that, highlighting some 
notable outliers when it comes to pharmacy billing. In 
particular, the suspicious prescriptions for opioids are 
especially troubling, given the nationwide epidemic that we 
have heard about at previous hearings and some of my colleagues 
have already touched on.
    So according to the Data Brief, ``spending for commonly 
abused opioids grew at a faster rate than spending for all 
drugs.'' That was on page 3, I believe.
    So Dr. Agrawal, it is my understanding that the initial 
comparison with 2011 data shows that there has been a 
substantial reduction in the number of acetaminophen and opioid 
overutilizers. I was hoping you can try to flesh out a little 
bit more about CMS' measures to prevent the overutilization of 
prescription medications within the Part D program.
    Dr. Agrawal. Sure. So I think where there are--so again, 
multiple facets to the issue where there is beneficiary 
overutilization where, you know, we can identify beneficiaries 
that have exceeded what we would consider kind of standardly 
accepted safety thresholds. We share that information with Part 
D plan sponsors through our Overutilization Management System. 
That gives them the specific beneficiaries that they can then 
implement I think more proactive drug utilization reviews 
around including case management. What we have seen when we 
focus on things like schedule II drugs is a 30 percent decline 
in the prevalence of those beneficiaries, which shows that both 
the data sharing and the actions being taken on the part of the 
plan sponsors is having an impact, and we continue to provide 
that information on a quarterly basis so that plan sponsors can 
continue that work.
    Mr. Kennedy. Thank you.
    And Ms. Maxwell, you touched on in your opening statement 
one of the pieces that were highlighted in the report of a 
Detroit-area pharmacy that billed for commonly used opioids for 
93 percent of its beneficiaries. It amounted to 58 percent of 
all of its Part D prescriptions. Can you talk a little bit 
about OIG's plan for follow-up in the questionable pharmacy 
billing 3-year study and tell us a little bit more about the 
proactive analysis that you ensuring Medicare to take in a 
broader report?
    Ms. Maxwell. Absolutely. As I mentioned in my opening 
remarks, when we were proceeding in the takedown, we were 
already mining the data for new leads. We already have 1,400 
retail pharmacies targeted that had questionable Medicare 
billing. We are actively investigating some portion of those, 
and we have referred the rest to CMS for investigation. So the 
Data Brief allows us to see where there are areas for 
questionable billing and the next step is to investigate and 
weed out which one of those really represent legitimate 
business and which are fraud that we need to pursue either with 
OIG investigations or in conjunction with CMS.
    Mr. Kennedy. And Dr. Agrawal, what's the--after those are 
referred over to CMS, what is CMS' next steps?
    Dr. Agrawal. Yes, so again, I would agree that these--that 
the analytical work is a good starting point for further 
refinement and then also investigative activity. Now, let me 
just say it is the construct of the program that CMS doesn't 
have a direct relationship with pharmacies. That relationship 
really occurs with Part D plans. Pharmacies don't enroll or 
anything like that in the program.
    For that reason, we have to work through Part D plan 
sponsors by giving them better data and, you know, then they 
take the necessary investigative and other administrative 
actions. We certainly will utilize the information given to us 
by the IG so they gave us about a thousand of the roughly 1,400 
pharmacies have been sent over to us, and we have been sharing 
that, or have shared that already with plan sponsors.
    In addition, on a quarterly basis, we do similar work 
utilizing sort of a greater set of variables to identify high-
risk pharmacies and again share that information on a quarterly 
basis, which has yielded literally hundreds of pharmacies being 
excluded from plan sponsor networks.
    Mr. Kennedy. Thank you. And then the brief highlights some 
geographic hotspots as well, some metro areas where average 
payments for certain drugs are much more than the average 
nationwide.
    Ms. Maxwell, in conducting the analysis, did OIG evaluate 
patterns for all non-controlled drugs or did you just focus on 
specific ones?
    Ms. Maxwell. We chose some examples to highlight the 
potential problems with non-controlled drugs, so there are 
other drugs that might be of concern that are not highlighted 
in that Data Brief but the ones we did highlight again like the 
questionable billing for the pharmacies are worthy of further 
scrutiny to understand what is happening and stay in front of 
the evolving healthcare fraud trends.
    Mr. Kennedy. Thank you, and I yield back.
    Mr. Murphy. Dr. Burgess is now recognized for 5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman, and I think you can 
tell, it is great that we are having the hearing on the 
integrity of the program as it relates to Part D drugs, 
particularly with respect to opioids, but you can tell there 
are a lot of general questions about inappropriate expenditures 
within the various programs at HHS, and Mr. Chairman, I hope 
you will take this as perhaps a reason to consider having a 
general hearing, a general oversight hearing on inappropriate 
expenditures within the Medicare and Medicaid system.
    Mr. Barton talked about previous efforts towards the 
concept of predictive modeling, and it does seem to me that 
this is an area where this would be perhaps a particularly 
useful type of activity. I mean, I got a call at 6 o'clock in 
the morning a couple of Sundays ago that there had been 
inappropriate expenditures on my MasterCard. It seems to me 
that with the amount of data that you all collect on a daily 
basis, you ought to be able to do a pretty good job of 
isolating--identifying and isolating and investigating unusual 
trends and expenditures. Is that not possible?
    Dr. Agrawal. Dr. Burgess, I agree that it is. We have 
been--as I mentioned earlier, we are looking to include Part D 
data to a greater degree in the FPS system implementing new 
models just around this program as we demonstrated the impact 
of the FPS.
    Mr. Burgess. It just calls up the question of, you know, 
the scale of the problem is likely to be much more massive than 
any recovery that has been affected to date.
    I do want to ask a couple of questions, and I realize it is 
a little bit off topic, but I know, Dr. Agrawal, we have talked 
about this before. Ms. Maxwell, I apologize, I don't remember 
whether our offices talked to you directly, but it does affect 
you also.
    We had a hospital in Texas--Dr. Tariq Mahmood--who took $18 
million for the development of an electronic record system and 
basically just put his medical records down to the basement and 
let the mice eat them, not computer mice, real furry mice. So 
what can you all do--I mean, yes, one of the manager has gone 
to jail, the doctor will have a trial at some point and likely 
will face jail time through the Department of Justice, but what 
can you all do to recover that $18 million that was 
inappropriately dispensed under the stimulus plan to this 
hospital chain?
    Dr. Agrawal. So thank you for the question, and I am aware 
of the case. I have to tell you, I think it occurred a while 
back so we--you know, I think the general answer is, we do 
conduct audits of the EHR payments, incentive payments that we 
make, and where we find discrepancies, we are able to recover 
those dollars. This was the case that I know we worked on 
conjoinedly with the OIG so I can't tell you if the audit came 
first or the OIG investigation did. If you are interested in 
that, perhaps I can take it back. But these audits are meant to 
address exactly the vulnerability that you are identifying, 
which is, you know, essentially false statements that you have 
implemented an EHR, a viable EHR system. We do look at that 
question.
    Mr. Burgess. And to answer your question, I would be 
interested, but see, this is the problem and this is what just 
drives people crazy. We kind of get into this circuitous stuff 
between agencies, and I think--again, I think we have had this 
conversation before. I am told it is under investigation. But 
really, where are we at getting the 18 million bucks that the 
taxpayer is on the hook for for sending these dollars down to 
Dr. Mahmood? Does either office have that interest in 
recovering that money?
    Dr. Agrawal. Of course we do, and I will happily take that 
question back, I mean, to specifically address whether the $18 
million has ever been recovered. I don't want to leave you with 
a false impression about this particular case. This was 
something that we did work in coordination with the OIG. It 
wasn't sort of a turf battle or anything like that, you know. 
My answer is just, I don't know if they identified the issue 
first and then came to us or vice versa. But we did coordinate 
across this case.
    Mr. Burgess. I actually think it was my newspaper, the 
Dallas Morning News, that identified the problem and I brought 
it to your attention.
    But, I mean, again, this is what just drives people crazy. 
You have a massive inappropriate expenditure of Federal money, 
and then no one seems to be primarily responsible for going and 
recovering it, and quite honestly, reporting back to Congress 
about what the status of that recovery is. In your own 
statement this morning, Dr. Agrawal, you said well, this was 
some time ago. Yes, it was some time ago, so we would like the 
dollars back, please, and I know this individual has--it has 
been reported that he has got plenty of assets so this is 
something that you would think with the full force of the 
Federal Government and Department of Justice we would be able 
to go and effect that recovery.
    Thank you, Mr. Chairman. I will yield back the time, but I 
do want to follow up with both of you and understand where the 
status of this recovery is.
    Mr. Murphy. Thank you.
    I now recognize Mr. Yarmuth for 5 minutes.
    Mr. Yarmuth. Thank you, Mr. Chairman. I appreciate your 
holding this hearing. I think as has been demonstrated, both 
sides are very much interested in rooting out all the waste, 
fraud, and abuse that exists in the Medicare system. Thanks to 
the witnesses for the work you are doing.
    I tend to--I do have a question about that, but before I do 
that, I want to take this opportunity as I often do to talk 
about the experience in Kentucky with the Affordable Care Act 
and the great work that my Governor, Steve Beshear, and his 
team have done in implementing the expansion of Medicaid and 
what has meant for our State. We have more than a half-million 
people who are newly enrolled in Medicaid and in private 
insurance as a result of the ACA. That is in the range of 4.4 
million. We have reduced the uninsured rate by almost 50 
percent in Kentucky. In my district alone, the uninsured rate 
has dropped by 81 percent. Pretty astounding.
    More importantly, for those who say that this is 
economically nonfeasible, the State employed the Deloitte firm 
to analyze the prospects for Kentucky's economy over the next 6 
years under ACA, and they determined that under ACA, Kentucky 
would experience added economic activity of $30 billion, the 
creation of 40,000 new jobs, and I think most importantly, from 
the taxpayer's perspective, an impact, a positive impact on the 
State budget of $819 million. So I think those statistics 
demonstrate that the ACA can be very, very positive, not just 
in insuring people, giving them access to quality care but also 
from an economic perspective.
    So we have talked a lot about Medicare Part D and the fraud 
provisions and your work in those areas. There is a related 
issue when we talk waste as well, and I wanted to talk about 
prescription drug costs. One of the things that--when I was 
part of the Democratic Majority back in 2007, one of the first 
things we did was to pass a bill to allow Medicare to negotiate 
with drug providers on cost that was not implemented into law. 
But I was talking with a physician friend of mine the other 
day, who has done a lot of work in this area, and he was 
showing me some really incredible statistics about the 
difference in cost of certain prescription medicines just in my 
district, and in some areas, the cost was 60 to 70 percent 
different from one outlet to another.
    So my question is, if there are those kinds of potential 
savings involved just in terms of going from one drugstore or 
one grocery store to another, why can't we have some kind of 
systemic approach to that from CMS? Doctor, do you want to 
respond to that?
    Dr. Agrawal. Sure. Thank you for the question.
    You know, I can tell from my own practice in the ER, drug 
costs are an important factor in this whole equation, and the 
ability of people to be able to pay for the drugs that they 
get.
    I will tell you, as you pointed out, that this is an area 
where we do not have legislative authority to kind of engage in 
the negotiation that you are describing.
    Mr. Yarmuth. Do you think that it could have a substantial 
impact on saving money for the taxpayers if you did have 
legislative authority to do that?
    Dr. Agrawal. You know, I am not aware. I am sure there is 
analyses that have been done. I am not aware at this moment 
what the expected impact would be. Perhaps we could get back to 
you about that.
    Mr. Yarmuth. Well, again, this person has done a lot of 
work in the area, and he mentioned one drug--I know Ranking 
Member DeGette talked about saving a billion-plus something in 
one area--one drug that now is responsible for about $8 billion 
worth of sales in the United States every year that actually 
can be purchased for about 15 percent of that, so you are 
really talking there about a savings of almost $7 billion to 
the system per year if we just had that kind of power to deal 
with price. So I will just mention that for the record because 
I think that is something that--as we look at continuing to 
make Medicare and Medicaid sustainable over time, we are going 
to have to deal with the issue of the cost of prescription 
drugs as well as the fraud and abuse side.
    So I thank you for your----
    Ms. DeGette. Will the gentleman yield?
    Mr. Yarmuth. I will yield.
    Ms. DeGette. So the CBO estimates that allowing CMS to 
negotiate Part D prescription drugs would save $155 billion 
over the next 10 years.
    Mr. Yarmuth. That is real money.
    I yield back, Mr. Chairman.
    Mr. Murphy. And obviously there is more to it than that, 
and we will continue that discussion. Thank you.
    I now recognized Dr. Bucshon for 5 minutes.
    Mr. Bucshon. Thank you, Mr. Chairman.
    I was a surgeon before, so I am intimately familiar with 
the situation, and the bottom line, it seems to me that, you 
know, nobody out there is defrauding the Government over Lasix 
or Hyzaar to a large extent. I mean, in my view, we are talking 
about narcotics. We are talking about a funding stream from the 
Federal Government that is helping to facilitate the use of 
narcotics in our country. I mean, that is not the only issue 
but that is a huge part of it. Without the funding stream, the 
problem goes away.
    And so there are multiple funding streams, and people that 
abuse narcotics, people that sell narcotics, when they find an 
avenue to get that paid for in some way, they will take it, and 
so my point is, there are a lot of other issues other than just 
payment that this subcommittee has been trying to address, the 
interconnectability amongst EMRs including those at pharmacies, 
at the State level, at the Federal level is critical so that we 
know who is prescribing these medications better than we know 
today. We know who is using these medications better than we 
know today. And it is going to take a multiagency approach at 
the Federal level to address this problem. The payment is only 
a piece of the pie, right? Payment is a big part of it.
    We had a meeting of the Doctors Caucus this morning with 
the Surgeon General of the United States, a very impressive 
physician who we talked with him about trying to address this 
and using his national stage that he potentially has to address 
this problem. I have worked with--tried to work with the FDA, 
with the States, with physician organizations and many others. 
So this is a problem we are going to have to tackle, and I want 
to thank this subcommittee and the chairman for bringing that--
multiple hearings on that.
    So the question I have, Dr. Agrawal, is, how much 
communication with the other agencies do you have, and is there 
the development of a plan that is coming together maybe to 
address this problem knowing that really the big problem why 
you are being defrauded in Medicare Part D is because of the 
narcotics. I mean, that is the biggest problem. We all know it.
    Dr. Agrawal. Thank you for the question. So I would 
highlight a few things. First, the Secretary of HHS has 
identified prescription drug abuse as a major priority for the 
Department, and there is a sort of three-part strategic 
approach to addressing this issue that the Department has taken 
on inclusive of all of its agencies. So one is exactly what you 
are describing, which is communication with the provider 
community to make sure that prescribing is appropriate, that 
utilization is appropriate. We are also looking at other 
facets, so medication-assisted therapy for substance abuse 
issues and the use of naloxone, for example, for emergent 
overdose issues.
    CMS has a role to play in the broader kind of social 
landscape, and I think again, your point that this is not just 
a Part D issue but a kind of broader societal issue is exactly 
right. We are approaching it as a payer using every lever that 
we can from looking at prescribers to the beneficiaries that 
might be abusing the program, identifying pharmacies that might 
be part of the problem and working very closely with plan 
sponsors. One even sort of broader partnership that I would 
point out is the Health Care Fraud Prevention Partnership where 
we are working with not just Part D or C plan sponsors but the 
private sector generally, a number of private payers, to look 
at these issues and others. So we have done, for example, an 
outlier pharmacy study with this public-private partnership, 
identified 8,000 pharmacies not just in the Part D world but 
also in the private just of pure private payer world that we 
are now looking at and working kind of individually. So I 
completely agree that partnership is at the center of this. We 
are trying various approaches to partnership to help ameliorate 
the issue.
    Mr. Bucshon. Well, I mean, what does Anthem do, for 
example? I don't want to throw out any names, but big insurance 
companies that pay for that are a payer, right? Because for the 
narcotics, if there is a funding stream, people are going to 
look to the funding stream to try to obtain these medications. 
I mean, that is just human nature.
    Is there anything the private sector companies are doing 
differently than maybe CMS is doing on that front?
    Dr. Agrawal. Yes, also an important question. So I think 
one of the advantages of the construct of the Part D program is 
that we do work through the private sector. So the common 
payers that you could identify are Part D plan sponsors, and so 
we are able to utilize the exact same tools and approaches that 
they have in their pure private side for the advantage of 
Medicare, whether it is----
    Mr. Bucshon. So basically you are working through them. I 
know Medicare Part D works through plan sponsors. We have 
talked about that. So you are basically working through them 
and using their techniques to try to tackle this problem?
    Dr. Agrawal. Correct, correct, in addition to the other 
things that we can do from an agency kind of Federal leadership 
standpoint.
    Mr. Bucshon. OK. Thank you. I yield back.
    Mr. Murphy. Mr. Green, you are recognized for 5 minutes.
    Mr. Green. Thank you, and I want to thank both of you for 
being here today, and I want to take a few minutes to talk 
about the recent successes in combating fraud and abuse in the 
Medicare program.
    In June, HHS and the Department of Justice announced a 
sweep led by the Medicare Fraud Strike Force resulting in 
charges of 243 individuals for approximately $712 million in 
false billing. This was the largest takedown in the Strike 
Force history. More than 44 of the defendants arrested were 
charged with fraud related to the Medicare Part D program.
    Ms. Maxwell, the Office of Inspector General was an 
integral part of this takedown. Can you tell me more about the 
OIG's role?
    Ms. Maxwell. Absolutely. I would be happy to provide you 
more details about the national takedown.
    As I mentioned, it is the largest criminal fraud takedown 
in the Medicare Strike Force history. About a third of the 
cases focused on Medicare Part D prescription drug fraud and 
also focused on Medicaid personal care services and Medicare 
home health. In particular, focused on the prescription drug, 
there were 44 defendants charged in related prescription drug 
fraud. We have----
    Mr. Green. Go ahead. I was wondering, have those gone to 
trial yet or is it too early?
    Ms. Maxwell. Too early. So the takedown just happened last 
month, so we are still in the process of working through those.
    Mr. Green. I understand the takedown involves a significant 
component of prescription drug fraud. Can you elaborate? Is 
this type of criminal fraud scheme increasing in prevalence in 
the Part D program?
    Ms. Maxwell. Yes. We have seen an increase of 134 percent 
of our Part D cases. We have 540 pending cases in Part D alone.
    Mr. Green. OK. The Health Care Fraud and Abuse Control 
program, which funds the Medicare Fraud Strike Force, has 
recently seen record-breaking fraud and recovery efforts as 
well. In the fiscal year 2014 alone, the program recovered $3.3 
billion from individuals and companies facing healthcare fraud 
allegations. Since its inception in 1996, the program has 
recovered $27.8 billion. The Affordable Care Act significantly 
increased funding for HCFAC, indexing the program's mandatory 
baseline and funding to inflation, providing over $3 million in 
additional funding.
    Ms. Maxwell, how can we build on these successes in the 
future?
    Ms. Maxwell. The HCFAC funding has been integral to the 
success of the OIG. It, as you mentioned, funds our Medicare 
and Medicaid operations both in investigations, audits and 
evaluations, and as we are looking at this Part D problem, that 
is the IG's approach. We have recognized this as a priority and 
we are taking an all-hands-on-deck approach. So we are using 
those funds to use all the tools available to the OIG to focus 
on this issue.
    Mr. Green. The ACA provided new authorities to combat 
waste, fraud, and abuse such as enhanced penalties for 
fraudulent providers. Ms. Maxwell, how are these new ACA 
authorities assisting the Inspector General in successfully 
combating Medicare fraud?
    Ms. Maxwell. The authorities have been incredibly helpful. 
We have been able to use our civil monetary penalty and 
exclusion authorities to help buttress and protect Medicare 
Part D.
    Mr. Green. OK. Dr. Agrawal, same question.
    Dr. Agrawal. Yes, the authorities in the ACA for CMS have 
also been very significant. You know, what it did 5 years ago 
was, it embarked us on a pathway of enrolling every single 
provider and supplier that is in the program, subjecting them 
to common and consistent screening standards, which have led to 
over 500,000 enrollments now being deactivated or revoked. 
Bottom line is, they can no longer bill the program. So that 
kind of screening approach has been, I think, extremely 
effective. We have also obviously implemented other approaches 
along the way like the predictive analytic system that we 
described earlier to really augment these enrollment 
activities.
    Mr. Green. Thank you, Mr. Chairman. I yield back.
    Mr. Murphy. Thank you.
    Mrs. Brooks is recognized next for 5 minutes.
    Mrs. Brooks. Thank you, Mr. Chairman.
    I am a former United States attorney, and so used to be 
involved when I was in Medicare fraud-type of cases, and so I 
do want to commend you for this huge, massive sweep that just 
happened.
    I am curious if you could share a little bit more about--
during the time I was U.S. attorney, mortgage fraud was kind of 
overtaking the country and we had massive schemes involving 
mortgage fraud. Now it seems that we have massive schemes 
involving Medicare fraud, and I am curious whether or not in 
these investigations you have found are there connections 
between the different communities, and are there schemes that 
are more commonly being utilized than others, particularly with 
prescription drug issues? And I would like both of you to 
comment as to, you know, how prevalent were the identity theft 
issues in these prescription drug cases as well, whether it was 
identity theft of the beneficiaries or identity theft actually 
of prescribers? And I am just curious whether or not you were 
seeing any sort of certain types of enterprises and certain 
types of patterns bubbling up in these cases?
    Ms. Maxwell. Absolutely. We are seeing a wide range of 
fraud schemes emerging in Part D, certainly in the national 
takedown that just happened last month, and it can range from 
small physician or pharmacy to a full-on criminal enterprise.
    One of the new schemes we have been seeing in the emergence 
of patient recruiters that go out and they are in the 
community, trusted individuals in the community that bring 
patients in to these schemes and bring them in as complicit 
beneficiaries. The fraud schemes in the takedown, we focused 
primarily on pharmacy fraud, and we see--for one example we saw 
in Miami, five pharmacy owners were charged with paying for 
beneficiaries' numbers so they could illegally bill and also 
paying a clinic provider to provide them adulterated 
prescriptions to bill for drugs they did not dispense.
    Mrs. Brooks. And so in these different schemes, 
particularly going back to the patient recruiters, were they 
also charged and were they conspiracy charges that were brought 
against these individuals? Do we have appropriate laws on the 
books to deal with all of the different actors in the schemes?
    Ms. Maxwell. I know that we are going after the entirety of 
the scheme and all the people involved. I am not a lawyer, so I 
would want to get back to you with specifics about our 
authorities to combat this.
    Mrs. Brooks. OK. I would be very interested in knowing 
whether or not if as the schemes--and we found this in the 
mortgage fraud issues of the 2000s, that people would be 
recruiting potential home buyers as well who really weren't 
going to be buying homes. And so I think we could see these 
kinds of schemes obviously happening here.
    I am curious what DEA's role is, Dr. Agrawal. It is my 
understanding that you don't have authority to revoke licenses, 
that it has to go from DEA to a medical licensing board or to a 
pharmacy board. What is the type of work that you are doing 
with DEA and are there any impediments that you and/or DEA have 
with respect to revocation of licensing, which is a huge 
penalty for any pharmacist or any physician or prescriber?
    Dr. Agrawal. Yes, I would agree with you that licensure 
either medical licensure or the specific, you know, schedule II 
authority that the DEA license gives you is incredibly 
important and valuable to, you know, legitimate prescribers. 
Those authorities, as you pointed out, are levied somewhere 
else, either at the State level and the State medical board or 
through DEA directly. But where we have really tried to get 
involved is making sure that our licensure information is up to 
date and that we are taking the relevant downstream actions 
from any licensure changes, whether it is a suspension or 
revocation or whatever.
    The rulemaking that we engaged in last year that I 
mentioned earlier actually specifically links our revocation 
authority to the DEA license, and needing to have a valid DEA 
license in place actually prescribed in the program. So that is 
a place--you know, I think these are examples of where we can 
key off the work of other agencies as they engage in their 
oversight and enforcement responsibilities.
    Mrs. Brooks. Do you report anything to the licensing 
agencies of the States yourself?
    Dr. Agrawal. We do. So we are able to make referrals 
informally to them about concerning prescribing habits, and we 
have done that. I think we see a wide degree of discrepancy 
between licensing boards that actually do something as a result 
versus not.
    Mrs. Brooks. OK. Thank you. I have nothing further. I yield 
back.
    Mr. Murphy. Mr. Tonko, you are recognized for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    This subcommittee held a number of hearings earlier this 
year to examine the current opioids abuse epidemic. Dr. 
Agrawal, you mentioned in your testimony that the epidemic has 
touched all parts of the Part D program. The spending for 
opioids has increased substantially over the past decade, and 
the number of prescription drugs overdose deaths is staggering, 
to say the least. We need to use all of the tools at our 
disposal to combat this problem.
    Over the past several years, CMS has taken a number of 
steps to strengthen Medicare program integrity including 
measures to prevent overutilization of prescribed medications. 
In January 2013, CMS implemented the Medicare Part D 
Overutilization Monitoring System that requires plan sponsors 
to have a drug utilization management program in place.
    So Dr. Agrawal, how does that system work so as to reduce 
potential opioid overutilization in the Part D program, and 
would statutory authority from plan sponsors to put so-called 
pharmacy lock-in programs in place complement that system?
    Dr. Agrawal. Sure. The way the system works is, the agency 
identifies for plan sponsors those beneficiaries that have very 
high utilization of things like opioids using commonly accepted 
standards of, you know, sort of safety threshold. We provide 
those specific beneficiaries to the plan sponsors on a 
quarterly basis and then require them to take downstream 
utilization control steps including case management. What we 
have seen from the time that we have been doing this and 
working with plan sponsors in this way is a 30 percent 
reduction in the prevalence of those beneficiaries. So clearly, 
you know, impact is possible and we are looking to--and we 
continue to do this to ensure that we get as much impact as we 
can.
    I think to the second question, you know, lock-in has been 
discussed, I think, quite a bit. We, you know, do view it as 
favorable and it does have, you know, good impact in the 
private sector as well as in various State Medicaid programs. 
It is part of the President's budget, and we look forward to 
working with this committee on getting that passed.
    Mr. Tonko. And what is the role of the plan sponsors in 
identifying potential opioid overutilization?
    Dr. Agrawal. Yes, the plan sponsors have a critical role, 
you know, throughout Part D whether it is with opioids or other 
schedule II drugs, other medications generally. You know, I 
think that is why we have highlighted making sure that they 
have robust compliance programs in place, robust utilization 
programs in place so they can address a wide array of issues. 
We also engage in a lot of data sharing with them, both about 
abusive prescribers, abusive pharmacies, outlier beneficiaries. 
You know, this is a partnership really to ensure the integrity 
of the Part D program. The agency and Part D plan sponsors 
really have to work very closely together.
    Mr. Tonko. And the system has been in place about 2 years. 
Is that correct?
    Dr. Agrawal. The OMS system?
    Mr. Tonko. Right
    Dr. Agrawal. I think that is right, yes.
    Mr. Tonko. OK. And the data that are returning are showing 
great promise, I understand. Have you seen a reduction in the 
number of overutilizers in Part D?
    Dr. Agrawal. Yes, we have, so again, of the beneficiaries 
that we have identified exceeding or meeting a certain safety 
threshold and that we have shared with plan sponsors. We have 
seen a 30 percent reduction or roughly 30 percent reduction in 
the prevalence of those beneficiaries.
    We have also exchanged information about acetaminophen 
because it often is kind of coingested with opioids and is 
liver-toxic in and of itself, and there we have seen a 91 
percent reduction in the prevalence of those at-risk 
beneficiaries.
    Mr. Tonko. And you noted in your testimony that there are a 
number of additional tools in the President's 2016 budget. 
Those tools would prevent the inappropriate use of opioids. Can 
you elaborate on those offerings that he is presenting to us?
    Dr. Agrawal. Sure. I think the main one that I can 
highlight we have discussed to some degree is the lock-in 
approach that would essentially restrict certain beneficiaries 
to, you know, based on kind of abusive utilization to select 
pharmacies and select prescribers, and that is an approach that 
has been utilized in the industry before. It is a way of trying 
to balance access to appropriate care and medications against 
that potentially abusive behavior. So that is something that we 
view as potentially having significant positive impact, and we 
hope this committee and others help to work with us on that.
    Mr. Tonko. Thank you.
    And Ms. Maxwell, the OIG Data Brief noted that there has 
been substantial growth in spending in Part D drugs, especially 
for commonly abused opioids. How can the OIG's recommendations 
to combat fraud and abuse help combat this situation, this 
problem?
    Ms. Maxwell. Similar to the conversation that you have just 
been having, we do recommend that a lock-in program be 
instituted to help address this problem.
    Mr. Tonko. Thank you very much, Mr. Chair. I yield back.
    Mr. Murphy. The gentleman yields back.
    I now recognize the gentleman from Oklahoma, Mr. Mullin, 
for 5 minutes.
    Mr. Mullin. Thank you, Mr. Chairman, and I thank both of 
you all for being here.
    Doctor, I was just going over some of our notes on this, 
and I was disturbed because we have talked before, and we have 
talked about the abuse of opioids--it is not going to come out. 
Anyways, we know what we are talking about.
    Mr. Murphy. Opioids.
    Dr. Agrawal. With narcotics.
    Mr. Mullin. Thank you, narcotics. And not enough coffee 
today.
    Anyways, as we were discussing, some statistics came up, 
and we noticed that Part D spends on average, the 
beneficiaries, around $105 per individual. In Oklahoma, we see 
that at $165 per individual enrolled in Part D. And 43 percent 
of those enrolled in that receive this drug that is commonly 
abused. Doesn't that seem a little high to you?
    Dr. Agrawal. I think Part D is like any other sector of 
healthcare. We have seen the increasing use of opioid 
medications throughout healthcare, whether that is in the 
public sector or in the private, you know, and again, I think 
we have to be careful. I sort of take this as a physician to 
heart. There are people who have legitimate pain issues that 
need to be addressed with these powerful medications.
    Mr. Mullin. But 43 percent enrolled in it in the State of 
Oklahoma alone? I mean, that seems awfully high to me.
    Dr. Agrawal. Yes, I agree, you know, that number does seem 
high. You know, I think the question that is very difficult for 
anyone to answer is what portion of that is the totally 
legitimate utilization that you would expect to see.
    Mr. Mullin. Well, in our previous hearing about Medicaid 
fraud and the addiction of these drugs, I asked you about the 
number of beneficiaries being prescribed methadone as a first 
line of defense, right? And then these numbers come out from 
last year, and by CMS' own recommendation, it says it shouldn't 
be used as a frontline defense. But yet, like I said, in 
Oklahoma, 43 percent of those enrolled in Part D beneficiaries 
are still receiving it. Abuse seems like it speaks for itself 
through numbers. As a business owner, I look at financial 
sheets all the time, especially when we would go in, we would 
go to purchase a company, I could look at the financial sheets 
and I could immediately tell you where the balances were messed 
up at, and what we would do when we would see something like 
that is, we would cut that part out to make the company 
profitable again. If we are seeing numbers like this, isn't it 
easy to say that until we get a hold of it, we should just cut 
it out? There are other drugs on the market. We don't have to 
be prescribing this stuff at the rate that we are. Until we 
understand it more or can oversee it in a better capacity, we 
should pull it. We do that all the time with drugs, don't we?
    Dr. Agrawal. So, you know, I am not an addiction expert, 
and you know, I think----
    Mr. Mullin. You don't have to be.
    Dr. Agrawal [continuing]. There clearly is a role----
    Mr. Mullin. The numbers speak for themselves. I don't know 
how many hearings we have had of this. We have even brought in 
a detective from Oklahoma that talked about it.
    Dr. Agrawal. I think there is clearly a role for 
medication-assisted therapy in the substance abuse space. What 
we focus on rather than just eliminating a benefit for an 
entire group of people, some of whom might really actually need 
that benefit, is to try to cut away the waste, abuse, and fraud 
that may be occurring. So that is the role of things like the 
Overutilization Monitoring System that look at bennies----
    Mr. Mullin. I get that, but just last year we still had 43 
percent in Oklahoma prescribed to it. I can't get that out of 
my head. You can't convince me that nearly half of those on the 
Part D need these type of prescribed drugs when it is not 
supposed to be the first line of defense. It sounds like to me 
it is an easy way for them to just prescribe it and move on.
    There is not enough research being done to make sure that 
it is not being abused. We are putting people on this and they 
are blindly taking it because their physician prescribes it to 
them and then they are becoming addicted to it. Is this not 
throwing up red flags? Is there not something that we can do at 
a more aggressive rate than just simply looking into it?
    Dr. Agrawal. Well, Congressman, I think you are pointing 
out what I think the agency has been saying is that this is a 
multifaceted issue. So whether you are talking about the 
patient or----
    Mr. Mullin. I know, but saying----
    Dr. Agrawal [continuing]. Prescriber----
    Mr. Mullin [continuing]. Is two different things.
    Dr. Agrawal. Correct, and that is why we are focused on 
doing with all of these different programs that we have that 
look at prescribers, that look at beneficiaries getting the 
drugs. We have programs around data transparency to send 
information to prescribers about their own prescribing habits 
so they can see how it compares to others.
    I think this is a complex problem. I am not sure that a 
single number is something that the agency can respond to 
because it really, you know, matters what is underneath that 
number, what is the appropriate utilization that you would like 
to see.
    Mr. Mullin. And sir, I get that and I am out of time.
    Thank you, Chairman, for indulging me there.
    Mr. Murphy. The gentleman yields back.
    I recognize Ms. Castor for 5 minutes.
    Ms. Castor. Well, thank you, Mr. Chairman, for calling this 
hearing. I think it is an important time for us to take a hard 
look at Medicare Part D. We are about 10 years into the 
existence of the program. We have 42 million Americans who rely 
on the benefit. A lot of the consternation was how it was 
constructed where you would get coverage and then you would 
reach a certain level of coverage and then fall off a cliff 
into a doughnut hole, and that made it very difficult for many 
of our neighbors to get the care that they need.
    But thankfully, the Affordable Care Act has brought some 
significant reforms to Part D. Most important is closing the 
doughnut hole. As a result of the ACA, 9.4 million seniors and 
people with disabilities have saved over $15 billion on their 
prescription drugs, an average of about $1,600 per beneficiary.
    And I wanted to pull up the statistics for the State of 
Florida and make sure they are on the record. Since 2010, 
overall savings for Florida's seniors under the Affordable Care 
Act now has been almost a billion dollars, $979 million, and in 
2014, Florida's seniors saw savings of about $306 million. On 
average, that is about $884 back into the pockets of our older 
neighbors, so that has been very beneficial.
    And just as important as the savings to our neighbors is 
the overall savings to the program. OMB has deemed Medicare 
Part D a high error program, meaning it has an improper payment 
rate above a certain threshold, 3.3 percent, which amounts to 
$1.9 billion in improper payments, and we have got to save 
these dollars. So I really appreciate the work that the IG and 
CMS has been doing.
    Clearly, we have to do more, and I want to compliment the 
Medicare Strike Force, especially for the June takedown. In 
Florida, they arrested about 73 people. South Florida has been 
a problem area, and I am going to get into that a little bit 
more.
    Ms. Maxwell, what is the explanation for the--I know you 
have said it multifaceted but break it down a little bit more. 
What is the explanation for the increasing cases of fraud 
nationwide?
    Ms. Maxwell. I think as we have been talking, there is a 
lot of money at stake that is enticing, and we are continuing 
to build the tools to protect the program. Our role in that is 
multifaceted. As you had mentioned, we have investigations 
where we actually go out to try and catch criminals who are 
defrauding the program, but we also have a role to audit and 
evaluate and make sure that there are systemic fixes. As I had 
mentioned in my oral, enforcement is never going to be enough. 
We need to look at the program as a whole and make sure that 
the plan sponsors have compliance programs in place to protect 
the program and that CMS also has strong resources to back 
that.
    Ms. Castor. So your OIG report emphasizes two areas of 
opportunity to improve Part D program integrity, first, in the 
use of data to identify vulnerabilities, and second, an 
increased oversight by all parties responsible for protecting 
Part D, and I know this has to include the new emerging 
criminal networks, because what we saw in Florida, especially 
Miami, of people that have been convicted of drug trafficking 
had served their time, came out of prison and are now looking 
at Medicare Part D fraud. What can--what else do we need to be 
doing to combat these criminal networks, and explain to us what 
some of their schemes are under Part D?
    Ms. Maxwell. Absolutely. I think one of the things that we 
are doing very successfully now and have continued to focus on 
are the Medicare strike forces in which we partner with CMS and 
other local and State law enforcement to stay on top of this 
fraud and address these emerging issues as they hit the ground.
    As you know, fraud is ever evolving, and so----
    Ms. Castor. So one of the--I wish Mrs. Brooks was still 
here. She is a former U.S. attorney. One of the weaknesses has 
been the penalties, the criminal penalties. Do you agree?
    Ms. Maxwell. We could always--yes, we could strengthen our 
penalties.
    Ms. Castor. OK. And Dr. Agrawal, does CMS need specific 
direction to require all plan sponsors to report all fraud 
information rather than keeping it strictly voluntary?
    Dr. Agrawal. Sure. So as I mentioned earlier, we are 
working to evolve the reporting that is both given to plan 
sponsors as well as what they give back to us. We have started 
by focusing on leads, investigative leads, for plan sponsors to 
develop and then take any necessary administrative actions on. 
We implemented an IT system called PLATO earlier this year for 
them to be able to----
    Ms. Castor. My time has run out. Could you just say yes, 
that would be helpful if it was mandatory rather than 
voluntary?
    Dr. Agrawal. I think it could be helpful to help--you know, 
to continue to evolve the program and evolve the relationship 
between the agency and plan sponsors.
    Ms. Castor. Thank you.
    Mr. Murphy. The gentlelady yields back.
    Now Mr. Collins of New York.
    Mr. Collins. Thank you, Mr. Chairman, and I want to thank 
my fellow committee members for the line of questioning we have 
had today.
    So we had an interesting discussion, Dr. Agrawal, last 
time, if you remember, on Six Sigma Lean Six Sigma.
    Dr. Agrawal. Yes, I don't totally remember it as a 
discussion but we had that conversation, I guess.
    Mr. Collins. So let me pick up. After that meeting, what 
did you think, do or say when you went back to your office? 
What did you think, do or say when you went home that night? 
And did you take anything positive out of that discussion or 
whatever you want to call it?
    Dr. Agrawal. I think where there are ideas that benefit the 
program that we can implement differently to improve the 
integrity of Medicaid, of Part D and Medicare, whatever the 
case may be, we take that input seriously, whether it comes 
from the committee, the OIG, the GAO, or others. So again, we 
take good ideas seriously and we work to implement them. It may 
not be instantaneous or overnight but the work is constant.
    Mr. Collins. So afterwards, did you give any more thought 
to your 6.7 percent 5-star error rate that, if you were the 
FAA, you would allow 10 airplanes a week to crash and give 
yourself 5 gold stars, or did you understand the tone of any of 
that and did you take any of that back to say, ``Oh, my God, a 
6.7 fraud rate is not only not acceptable, it is certainly not 
a bell ringer to say you did a good job''?
    Dr. Agrawal. Yes. You know, again, as I think we had 
communicated in that last discussion, you know, we are not tone 
deaf and we understand that there is work to be done. I look at 
that error rate and, you know, recognize that it needs to come 
down. You know, nothing about that line of questioning sort of 
augmented or changed the recognition.
    Mr. Collins. Did you change your 6.7 to something lower or 
is your error rate this year still 6.7?
    Dr. Agrawal. Sir, that is measured on an annual basis. It 
is not going to change day to day.
    Mr. Collins. See, being a private-sector guy, well, if I 
was your boss, how long do you think you would work for me?
    Dr. Agrawal. Sir, I have certain misgivings about thinking 
about working for you.
    Mr. Collins. As you should. As you should.
    Dr. Agrawal. Let me be clear about something perhaps. So I 
came to this job just over----
    Mr. Collins. That was funny, by the way.
    Dr. Agrawal. Thank you. I appreciate it.
    Look, I appreciate the message that you are trying to send, 
and I appreciate the tone of the sort of last line of 
questioning last time. I think what I should have said then in 
response and what I say to you now is, I came to this job from 
the private sector. I have been a clinician. I have taken care 
of thousands of Medicare and Medicaid beneficiaries. My purpose 
is coming here was to help ameliorate, make progress on exactly 
these kinds of issues. I think what would be helpful is a 
collaborative approach. If we can do that, if we can work 
together on devising solutions and getting them implemented, 
nothing would make me happier. I think merely pointing out that 
there is an error rate and kind of harping on it over and over 
doesn't help necessarily make that progress.
    Mr. Collins. So, I mean, if you looked into Six Sigma Lean 
Six Sigma, as the county executive of the largest update county 
in New York that was effectively bankrupt when I took over, we 
took that county from number 62 to number one in 3 years. Three 
years after, I had 500 certified yellow belts, green belts, 
black belts, master black belts. My deputy county executive was 
a master black belt. We had so much money in our county 3 years 
in, we were paying cash for capital projects. We paid down $150 
million of our county debt. We had $100 million county surplus 
in 3 years. Lean Six Sigma works but it starts with somebody at 
the top, in my case, the CEO of a county, but also it could be 
the head of quality control, the head of manufacturing, who 
comes in and says I don't want to accept 67,000 errors per 
million opportunities; I want zero, and I am going to measure 
that every day and I am going to chart that every day, and you 
know what? I am going to send myself and I am going to send 
others to schools, to training to find out how to process map 
an error.
    What Dr. Burgess pointed out, and I got one of these phone 
calls the other day too, I got one from American Express. There 
was a $25 innocuous charge. They said this looks like it could 
be fraud, and it turns out it was. That was 15 minutes after 
somebody put through that transaction. That is an organization 
that gets it. That is an organization that says we won't accept 
any errors, let alone 67,000.
    So I guess as my time runs out, I would simply challenge 
you to dig into Lean Six Sigma more. It does work. It can be 
implemented in Government, but it starts with the person in 
charge, someone like yourself saying I just categorically 
reject the level of fraud or other errors and I am going to be 
proactive in finding out how to do it better, and I would just 
perhaps challenge you to look into this a little further.
    And with that, I yield back.
    Mr. Murphy. The gentleman yields back.
    I now recognize Ms. Clarke for 5 minutes.
    Ms. Clarke. Thank you, Mr. Chairman, and I thank our 
Ranking Member. I thank our witnesses. This is a very complex 
issue. There is no doubt about that. But the stakes are very 
high with respect to what is happening to the American people 
and the illicit prescription drug proliferation that is taking 
place in many parts of our Nation.
    Ms. Maxwell, I think we all agree on the importance of 
ensuring drugs are prescribed and dispensed appropriately and 
legitimately. The Office of Inspector General's report suggests 
several ways to strengthen Part D program integrity efforts. 
The report recommends that CMS determine the effectiveness of 
programs and take action to ensure that sponsors' compliance 
plans meet CMS requirements.
    So Ms. Maxwell, what more could be done to ensure that 
sponsors' fraud detection efforts are effective?
    Ms. Maxwell. Our recommendations point to mandating the 
reporting of fraud and abuse that sponsors identify as well as 
mandating the reporting of what sponsors do with that. We 
believe that comprehensive reporting from all plans would allow 
CMS the visibility and the tools to be able to assess the 
effectiveness of what is happening at the sponsor level.
    Ms. Clarke. So that sounds like a logistical challenge, 
right? You have several sponsors. Right now they voluntarily 
make that information available. Can you drill down a little 
bit deeper in terms of systems that could be established that 
either trigger some sort of an action on the part of CMS or 
what would you suggest? Because if it is voluntary, you know, 
they are operating businesses, they are sponsors. How do you 
sort of hold them accountable in the course of the time that 
they are spending doing all the other activities that they need 
to do to run their companies?
    Ms. Maxwell. Sure, and because they are required right now 
to report voluntarily, I would assume--and I would defer to Dr. 
Agrawal for the specifics--I would assume that there are 
processes for that reporting to happen. So the systems are in 
place. The question is, why isn't everyone using them. So when 
we look for the voluntary reporting, we only see 35 percent. So 
the other plans have the capacity; they have just opted not to 
do the reporting.
    Ms. Clarke. So Dr. Agrawal, is it an issue of at this stage 
voluntary just does not work and that it has to be a mandate?
    Dr. Agrawal. Well, to answer your question, we have been 
working to enhance systems that allow plans to report data back 
to us. We implemented a major enhancement earlier this year 
that allows that data to not only be reported but also be kind 
of searchable so it can be utilized. What we have been doing is 
focusing on getting these plan sponsors better data about leads 
that they should be investigating and potentially taking action 
on. I think as we further that relationship, as we give them 
more data, we will be very interested in hearing back from them 
and perhaps in a mandate exactly what work that they have done. 
But we find that just by improving the system and improving the 
collaboration, we get better reporting.
    Ms. Clarke. So baked into what you are saying is that there 
was an assumption that there were some misgivings or 
misunderstanding of what exactly the sponsors were to do to 
report voluntarily? Is that sort of where the thinking is?
    Dr. Agrawal. Well, I think that sponsors like many private 
companies have concerns about reporting data back, especially 
when it would be visible to other--you know, potentially 
visible to other plan sponsors. So one way that we have worked 
with them not just on the system enhancement side and making 
the process easier is, we actually allow them to report certain 
information deidentified of source. So they tell us a 
problematic pharmacy or problematic prescriber what they have 
done to take action against that entity or individual. But we 
are not--it is not necessarily clear to us which sponsor--or it 
can be sort of deidentified which sponsor put that in.
    From a private-sector kind of competitive standpoint, that 
input made sense to us, and so we have taken as a step allowing 
them to input that kind of data so that we get better reporting 
about the actual problem, which is the fraud and abuse in the 
program.
    Ms. Clarke. So that can be a double-edged sword, right? 
They don't want the information attributed to them on the basis 
of some sort of a proprietary disadvantage. Is that what you 
are saying?
    Dr. Agrawal. Well, I think, you know, there is a narrative 
that, you know, fraud and abuse just doesn't occur in the 
private sector. We have heard numerous committees kind of, you 
know, suggest that that is the case. I think, you know, you 
have programs like Part D which is conducted through the 
private sector and yet we see these problems. So, you know, I 
think what we have to do is get to a place where we are really 
doing the best we can to get all the right information from 
plans. As we develop that expertise, we can, you know, 
implement more stringent guidance, perhaps getting to the kind 
of mandate that OIG is requesting of us. But, you know, we are 
taking steps along that kind of evolutionary pathway.
    Ms. Clarke. Let me ask, Dr. Agrawal, there are some 
troubling findings that the GAO reported in 2014. CMS conducted 
audits of Part D plan sponsors in 2013. Of the plans the agency 
audited, there were fraud, waste, and abuse findings in nearly 
all of the audits, 94 percent. Specifically, CMS found 
inadequacies in plan sponsors' compliance training, resolution 
of fraud, waste, and abuse inquiries in a timely manner, and 
corrective actions taken in response to potential fraud, waste, 
and abuse. These are troubling findings, and I think it goes to 
my previous question. How does CMS evaluate the effectiveness 
of sponsors' compliance programs? Have these efforts changed 
recently? And what is CMS doing to follow up with the audited 
plans to ensure that these deficiencies are being remedied?
    Dr. Agrawal. Thank you for the question. So we do conduct 
audits of--compliance audits of plan sponsors to make sure that 
they are compliant with our regulations, not only on the fraud, 
waste, and abuse side but also, you know, obviously inclusive 
of their program integrity work.
    Recently, we have stepped up the amount of both the volume 
of audits that we do as well as the focus in making sure that 
program integrity is part of those audits. Where a deficiency 
is identified, we work with them like we would any other 
contractor, which is we can send letters of concern, we can 
place them on corrective action plans. There is an array of 
tools to get contractors into compliance with our expectations.
    Ms. Clarke. Thank you. I didn't realize I was so far over 
time. If you could send us something in writing----
    Dr. Agrawal. Sure.
    Ms. Clarke [continuing]. That outlines that, that would be 
helpful.
    Thank you. I yield back.
    Mr. Murphy. Thank you.
    Mr. McKinley is recognized for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman. Again, I apologize. 
I had to step out. We have a pipeline safety issue downstairs 
in another committee, and we just had a fire in a pipeline last 
week, and I needed to be there for that.
    But back on this panel, a few months ago we had a 
discussion here about one of the big problems here with opioids 
was overprescription, and I don't know that we came up with a 
solution how we are going to address that because I don't think 
we want Congress to be practicing medicine. But then we got 
into a discussion, I think it was with, Doc, and that was over 
getting the prescription database in real time across the 
country to be able to have that so that we might be able to 
track the abuse that is happening that way. Are we making any 
progress on that from either one of you? Can you address that 
issue?
    Ms. Maxwell. The Inspector General has not done any work--
you are talking about the prescription drug monitoring 
databases in the States, I take it?
    Mr. McKinley. In States they have--it is not in real time, 
it is within a week they will file the information. But the 
problem of abuse is because it is in real time. Someone goes 
across the river into Ohio or West Virginia or Kentucky and 
they are abusing the system. We have been talking about that, 
my goodness, for at least 3 years. I am just curious what 
progress we are making on that. We heard from the attorneys 
general who were all suggesting that is one of the best ways we 
could make progress in abuse within our Part D. I haven't heard 
what progress we are making.
    Dr. Agrawal. Yes, so the implementation of PDMP, 
prescription drug monitoring programs, like the systems that 
you are describing are, you know, as you know, State-level 
initiatives. HHS has been involved in----
    Mr. McKinley. They can only do it statewide. I am talking 
about interstate, and that is where the catch comes into it 
because so many of us are in border States that we can cross 
easily over to where population is generally on a border. So 
help me out a little bit about where we are going from the 
Federal. Is there a role for us to play? Because you mentioned 
earlier, Doc, you said we need a collaborative effort. I am 
looking to see what do you need from us to help out, to make 
this collaborative effort.
    Dr. Agrawal. Yes, that is a good question. So I think I 
would have to take that back in terms of, you know, the kind of 
interoperability issue that you are identifying or getting more 
States on board because as I mentioned, that is being done at 
the HHS level. There is less of a direct kind of CMS role in 
that set of activities. I am happy to take that back.
    I will you from just sort of my experience as a clinician, 
you know, one way that States, you know, try to remedy this 
issue, and you see this sort of in the DC/Maryland/Virginia 
area, is by encouraging providers to get access to numerous 
different databases. Now, it is not a perfect approach but I 
will tell you, I have utilized that approach in my own practice 
just to make sure that, you know, a patient or a beneficiary is 
not crossing State lines to kind of game the system and get 
these medications.
    Mr. McKinley. I have less than 2 minutes. Let me go back to 
another statement you made to the Congressman from New York.
    You said we need to have more collaborative effort. What 
did you mean by that? Is there something we are not doing? 
Because our whole role here is to try to be supportive. So are 
we not being collaborative?
    Dr. Agrawal. No, and, you know, I appreciate the question. 
The comment wasn't really about the committee as a whole or 
anything like that. I think it is, from my perspective, a 
certain tone of questioning that I find to be less 
constructive, but it was not about the committee in general. In 
fact, I think there have been ideas exchanged in recent 
hearings and certainly even today that I think do demonstrate 
that kind of collaboration.
    Mr. McKinley. In the last minute that I have, I remember 
the issue was over the 6.7 percent, but where do we think--I am 
just curious, where should it be? If not 6.7, should it be 3, 
2? Where do you--and is that the goal? Are we making progress 
or is it--have we plateaued at 6.7 or has it risen to 6.7? I 
don't know the trends. I am just curious. What can you share 
with us about the level of abuse?
    Dr. Agrawal. Sure. So, if you look year on year, there is 
variability in the number, and there are two things that I 
think really have greatest impact on the number. One is, what 
are the requirements that we are implementing that either might 
be new requirements or that we are working to enforce more 
closely. What we find from a program integrity standpoint is 
that when there are new requirements or enforcement steps up, 
inherently the error rate tends to rise because even legitimate 
providers are not able to keep up with those changes. So it 
takes a period of education to actually get everybody into 
compliance. It then allows the trend to come back down.
    Mr. McKinley. Is the trend rising or is the trend going 
down?
    Dr. Agrawal. I don't have the figures in front of me. I 
mean, there is year-on-year change, but we can get that to you.
    Mr. McKinley. Let us say over the 15 years, has the trend, 
is it increasing or decreasing?
    Dr. Agrawal. We can go back as far as the error rate has 
been measured but we will share that with you.
    Mr. McKinley. Thank you very much.
    Dr. Agrawal. Absolutely.
    Mr. McKinley. I yield back my time.
    Mr. Murphy. I think we all as Members have spoken here. 
There is a few things I want to just wrap up--oh, I am sorry. 
Mr. Griffith is here.
    Ms. DeGette. And Mr. Bilirakis came in.
    Mr. Murphy. Mr. Bilirakis is here too. Then we will go with 
Mr. Griffith for 5 minutes. I am sorry.
    Mr. Griffith. That is all right. Thank you, Mr. Chairman.
    Mr. Murphy. You snuck in on me.
    Mr. Griffith. Mr. Chairman, first I would ask unanimous 
consent to insert into the record a statement from the National 
Community Pharmacists Association.
    Mr. Murphy. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Griffith. Let me go to Mr. McKinley's question real 
quick, and I understand that, you know, maybe Maryland, DC, and 
Virginia, you can check that, but there are some real 
difficulties from my district. If you count the Commonwealth of 
Virginia, you can actually, if you work it out really well, you 
could hit five States in a single day. So I do think we need to 
be looking at some way that doctors can check because you get 
down there in that little corner of Virginia and you are 
touching West Virginia, Kentucky, Tennessee and North Carolina 
all within a matter of, you know, 45 minutes to an hour. So you 
could--you would have to work it. You would have to be at the 
doorstep of somebody first thing in the morning but you could 
hit five States in a single day. So I would ask you to take a 
look at what Mr. McKinley raised.
    Now, my question also is about the methodology used in the 
OIG report on questionable billing practices. We all want to 
stop these things. We want to stop folks from abusing the 
opioids, et cetera. As the five factors you used seemed cut and 
dried without much room for additional consideration, my 
concern is that these results could present a broad 
generalization about pharmacies which may not paint the whole 
picture. For example, as I just described to you, I represent a 
fairly rural area, and that area has a higher percentage of 
senior citizens than the Nation as a whole. So a pharmacy might 
dispense a higher percentage of pain relievers when compared to 
other pharmacies in a different geographic or demographic area 
simply because there are not as many pharmacies around and 
perhaps the other pharmacies have a younger population that 
they serve.
    It also would not be unreasonable to expect them to have a 
higher dispensation of controlled substances from a pharmacy 
located near a hospital or a surgery center or an oncology 
center. There are also pharmacies who are contracted providers 
for long-term care facilities and hospices. So how does CMS 
plan to address the results from the study that truly target 
the bad actors that we all want to get to without hitting the 
good guys who are just trying to serve their customers? And 
this came up earlier as a part of a complaint because one of my 
rural pharmacies has one supplier for their medicines, and at 
one point they got cut off and so they were having to tell 
their customers yes, I can't fill it today, come back at the 
end of the week when we change months. Well, that is hard if 
you are a senior citizen and you need that pain medication, and 
in fact, a friend of mine's wife was told that who had just 
gone through some surgery. She had to wait 3 days. They 
managed, but that is really not the way it ought to work, 
whether you would be in the urban areas in the northern part of 
Virginia, Maryland, and DC or you are in southwest Virginia in 
the rural areas. How do we fix it?
    Dr. Agrawal. Yes, I think you make a good point. You know, 
this kind of data analysis is a starting point and, you know, I 
think as to the specific methodology, I will defer a bit to the 
OIG. But you know, data analysis is always the beginning point 
of our investigations. Now, I had shared earlier that on a 
month--on a quarterly basis, we send lists of concerning or 
high-risk pharmacies to Part D plan sponsors. Our methodology 
takes 16 variables into account, and in order for a pharmacy to 
make it onto the list, they have to be a statistical outlier in 
at least four of the variables. So the purpose there is to do 
exactly what you are describing, which is try to bring a little 
more specificity to the methodology. But again, after that 
follows the investigation. I think it is really challenging 
unless the data is extremely cut and dry, which occurs in rare 
situations, to take administrative action without the ensuing 
investigation in between. That is where we really try to get to 
the bottom of, is something really bad happening here or is 
this just an outlier, but it is explained by certain geographic 
factors that you have identified.
    Mr. Griffith. I appreciate it very much. I appreciate you 
all being here today. I apologize. I too have been--we have got 
pipeline issues as well, as you might imagine, and I was in the 
other hearing.
    Mr. Chairman, I appreciate your time, and I yield back.
    Mr. Murphy. The gentleman yields back.
    I now recognize Mr. Bilirakis from the full committee for 5 
minutes.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it. 
Thanks for holding the hearing. Thanks for allowing me to 
participate today.
    Medicare Part D has been an important addition to the 
Medicare program, one of the most successful programs, I think, 
in the history of the Congress. It is a program that my 
constituents love and something that Congress should be proud 
of.
    However, I have been concerned about the growing 
prescription drug problem in the United States and within the 
Medicare program. That is why in 2013 myself and our colleague, 
Ben Ray Lujan, first introduced the Medicare Part D Patient 
Safety and Drug Abuse Prevention Act, which would create a drug 
management program to prevent physician shopping and pharmacy 
shopping within the Medicare program. I am proud that we were 
able to include it in the 21st Century Cures bill that we 
passed last week.
    It is important to the Medicare program to bring a 
commonsense provision that has been used in Medicaid, Tricare 
and commercial insurance. It also makes reforms to the MEDIC 
program in keeping with some of the OIG recommendations. That 
is the 21st Century Cures bill that makes those reforms.
    The first question is for Ms. Maxwell. In your testimony, 
you talk about the need for a lock-in program in Medicare Part 
D to deal with prescription drug abuse and the problem of drug 
diversion. Do you have any estimate on the size of the problem? 
How many people and how much money are being lost to 
prescription drug abuse?
    Ms. Maxwell. I don't have those specific figures but I do 
have the figures in our Data Brief that the growth in 
prescribing opioids has been significant. It has been a 156 
percent increase since the beginning of the program, which 
outpaces the growth in the general program. And so it is a 
continuing concern. We also have seen a tremendous increase in 
complaints against Part D so we have significant concerns about 
this. We do as a result recommend the lock-in. As you mentioned 
and as I think we have been talking about different ways to 
deal with doctor shopping, which can result either in patient 
harm or the diversion of opioids into the street. One way would 
be the PDMP to provide access to data around this issue and 
across State lines by the way is this lock-in, I mean 
specifically directed at that issue.
    Mr. Bilirakis. Very good. Thank you.
    Dr. Agrawal, I am sorry if I mispronounced. I just got 
here. In 2014, CMS issued rules for Part D and stated that they 
had the authority to remove abusive prescribers from the 
Medicare program. Can you give me an update on this? How many 
abusive prescribers have been identified in the Medicare 
program and how many prescribers have been removed from the 
Medicare program?
    Dr. Agrawal. Sure. So yes, you know, this is part of our 
overall approach to extending our enrollment requirements into 
Part D, so what we have been working on is getting prescribers 
enrolled. I think I mentioned earlier that there are 400,000 
prescribers that have written prescriptions in Part D that we 
are working to enroll. We are also working to develop exactly 
the kind of cases that you are identifying, so through 
proactive data analysis, kind of starting to tee up these cases 
for the first time. I am not sure that we have conducted a 
specific revocation action using only that authority yet. 
Usually we try to do them in combination, and we may have added 
that authority to kind of another revocation action but I can 
look into whether there is a case that we uniquely utilized 
that authority.
    Mr. Bilirakis. Thank you. One more question, Mr. Chairman.
    Ms. Maxwell and Dr. Agrawal, when the MEDICs investigate a 
case and finish their investigation, I am assuming it is 
automatically referred to DOJ. Is that the case?
    Ms. Maxwell. I believe they do make referrals as part of 
their requirements.
    Mr. Bilirakis. OK. If DOJ chooses not to pursue the case, 
maybe because of the view that the fraud is too small to be 
worth their time, does the information get automatically 
referred to State and local agencies or State licensing 
authorities? Can you answer that question?
    Ms. Maxwell. I am not aware of that specific mechanism. I 
do know that we are concerned when law enforcement action 
doesn't take place, that there are no mechanisms and processes 
to refer it for recovery of the inappropriate payments.
    Mr. Bilirakis. How about, are Part D plan sponsors provided 
updates by the MEDICs? How does the MEDIC work with local 
authorities and State licensing agencies?
    Ms. Maxwell. Again, I am not familiar with the specifics. 
Perhaps Dr. Agrawal is----
    Dr. Agrawal. Sure. So the MEDIC--I think this was in the 
testimony--MEDIC provided 2,300 referrals to law enforcement 
over the last, I think it is 5 years. Obviously we try to refer 
as much over to law enforcement as we can that we think kind of 
meets the threshold for law enforcement activity and 
investigation.
    Where law enforcement doesn't accept a case, we have a few 
options. We have shared information with State medical boards 
to try to get action on their part. We regularly share 
information with Part D plan sponsors. We do that on a routine 
basis as well as an ad hoc basis if new issues come up or there 
are new entities or individuals that become concerning.
    I think the threshold of our authority currently, you know, 
there is the, you know, OIG recommendation around recovery of 
dollars that Ms. Maxwell discussed. I think there are certain 
limits in our authority that prevent us from going directly to, 
say, a pharmacy and requesting recovery of those dollars. We do 
have to work through Part D plans, but there are a variety of 
avenues to do just that.
    Mr. Bilirakis. Very good. Thank you. Thank you, Doctor. 
Thank you, Ms. Maxwell. I appreciate it, Mr. Chairman, and I 
yield back.
    Mr. Murphy. Thank you. The gentleman yields back.
    I do want to follow up. The committee sent a letter to CMS 
seeking information about the improper-payment rate and that 
response is due tomorrow. Will the committee receive that 
response tomorrow?
    Dr. Agrawal. We have been working diligently on it. I think 
you will get the response tomorrow.
    Mr. Murphy. Thank you. By the way, you seemed to suggest 
something earlier that the ACA is causing an improper-payment 
rate to rise. Is that--did we misunderstand that?
    Dr. Agrawal. No. I don't know if this was perhaps your line 
of questioning. No. What I had said is that, you know, in the 
program integrity world, what we see often is that the 
improper-payment rate rises when there are new, stringent 
requirements that providers must meet, whether that is 
documentation requirements, enrollment requirements or other. 
So for example, the 6.7 rate that we discussed last time in 
Medicaid is largely driven by providers needing to enroll in 
Medicaid programs and States having adequate resources and 
systems to conduct that enrollment activity. I don't think 
anybody doubts the importance of enrollment. We talked about 
that as one of the major levers that we are now implementing in 
Part D that I think will be quite useful. We have already seen 
its impact in the rest of Medicare. But like any other 
requirement or standard, it can be hard for providers to keep 
up and that can sometimes result in the improper-payment rate 
going up.
    Mr. Murphy. All right. Well, we want you to continue to 
stay on that.
    Ms. Maxwell, thank you so much. We do appreciate all that 
your offices do. It means a lot to this committee.
    The next time we see you, Dr. Agrawal, I hope you will give 
me a report that all those have been put into place. As you 
know, some have been sitting around for nearly 10 years, and 
that is just not acceptable. So we thank you.
    I thank all the witnesses and Members who participated in 
today's hearing. I remind Members they have 10 business days to 
submit questions for the record. We will have a number of those 
and ask the witnesses to respond promptly to the questions.
    And with that, this committee is adjourned.
    [Whereupon, at 12:15 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    Medicare Part D is a critically important program for our 
Nation's seniors. Unfortunately, similar to our other 
entitlement programs, Medicare Part D remains vulnerable to 
fraud and abuse. Just last month, the Medicare Task Force 
conducted a nationwide Medicare fraud takedown. This joint law 
enforcement operation led to charges against 243 individuals 
for approximately $712 million in false billings. While this 
was an important effort, much more needs to be done.
    According to recent reports from the Department of Health 
and Human Services Office of Inspector General, the Centers for 
Medicare and Medicaid Services needs to take additional actions 
to strengthen the integrity of the Medicare Part D program. The 
reports find CMS is either failing or refusing to implement 
commonsense recommendations issued by its OIG. For example, CMS 
needs to ensure excluded providers are not allowed to continue 
to bill under Part D. Additionally, CMS should require plan 
sponsors to report potential fraud and abuse. Implementing 
these recommendations is especially important in light of the 
startling increase in Medicare Part D spending on commonly 
abused opioids.
    Medicare Part D is an expansive program, requiring constant 
vigilance. Just as bad actors will continue to try to find ways 
to take advantage of the program, we must take proactive steps 
to protect the program's integrity, taxpayers' dollars, and our 
Nation's seniors. A good first step is CMS implementing the 
OIG's recommendations.

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