[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
STRENGTHENING MEDICAID PROGRAM INTEGRITY AND CLOSING LOOPHOLES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 11, 2015
__________
Serial No. 114-74
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
____________
U.S. GOVERNMENT PUBLISHING OFFICE
98-281 WASHINGTON : 2016
________________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
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 Health
JOSEPH R. PITTS, Pennsylvania
Chairman
BRETT GUTHRIE, Kentucky GENE GREEN, Texas
Vice Chairman Ranking Member
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois LOIS CAPPS, California
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas G.K. BUTTERFIELD, North Carolina
MARSHA BLACKBURN, Tennessee KATHY CASTOR, Florida
CATHY McMORRIS RODGERS, Washington JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILLY LONG, Missouri JOSEPH P. KENNEDY, III,
RENEE L. ELLMERS, North Carolina Massachusetts
LARRY BUCSHON, Indiana TONY CARDENAS, California
SUSAN W. BROOKS, Indiana FRANK PALLONE, Jr., New Jersey (ex
CHRIS COLLINS, New York officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
C O N T E N T S
----------
Page
Hon. Joseph R. Pitts, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 32
Hon. Gene Green, a Representative in Congress from the State of
Texas, opening statement....................................... 33
Hon. Brett Guthrie, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 35
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 36
Witnesses
John Hagg, Director of Medicaid Audits, Office of Inspector
General, U.S. Department of Health and Human Services.......... 38
Prepared statement........................................... 40
Answers to submitted questions............................... 105
Nico Gomez, Chief Executive Officer, Oklahoma Health Care
Authority...................................................... 47
Prepared statement........................................... 49
Answers to submitted questions............................... 108
Trish Riley, Executive Director, National Academy for State
Health Policy, and Commissioner, Medicaid and CHIP Payment and
Access Commissio............................................... 55
Prepared statement........................................... 57
Answers to submitted questions............................... 110
Submitted Material
Terminated providers bill........................................ 3
H.R. 3444........................................................ 11
H.R. 1570........................................................ 14
Electronic verification bill..................................... 18
H.R. 2339........................................................ 23
H.R. 1771........................................................ 28
Statement of the Alzheimer's Foundation of America, submitted by
Mr. Pitts...................................................... 99
Statement of Sandata Technologies, LLC, submitted by Mr. Pitts... 101
Statement of ResCare, submitted by Mr. Guthrie................... 103
STRENGTHENING MEDICAID PROGRAM INTEGRITY AND CLOSING LOOPHOLES
----------
FRIDAY, SEPTEMBER 11, 2015
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:17 a.m., in
room 2322, Rayburn House Office Building, Hon. Joseph R. Pitts
(chairman of the subcommittee) presiding.
Present: Representatives Pitts, Guthrie, Murphy, Burgess,
Blackburn, Lance, Griffith, Bilirakis, Long, Ellmers, Bucshon,
Brooks, Collins, Green, Engel, Capps, Schakowsky, Butterfield,
Castor, Sarbanes, Kennedy, and Pallone (ex officio).
Also Present: Representative Mullin.
Staff Present: Clay Alspach, Chief Counsel, Health; Gary
Andres, Staff Director; Leighton Brown, Press Assistant; Noelle
Clemente, Press Secretary; Graham Pittman, Legislative Clerk;
Michelle Rosenberg, GAO Detailee, Health; Heidi Stirrup, Health
Policy Coordinator; Josh Trent, Professional Staff Member,
Health; Christine Brennan, Minority Press Secretary; Jeff
Carroll, Minority Staff Director; Tiffany Guarascio, Minority
Deputy Staff Director and Chief Health Advisor; Rachel Pryor,
Minority Health Policy Advisor; and Samantha Satchell, Minority
Policy Analyst.
OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Pitts. The subcommittee will come to order.
The chair will recognize himself for an opening statement.
Today Medicaid is the world's largest health coverage program.
Medicaid plays a critical role in our healthcare system,
providing access to needed medical services and long-term care
for some of our Nation's most vulnerable patients. The
Congressional Budget Office estimates that Federal Medicaid
expenditures will grow from $343 billion this year to $576
billion in 2025. At the same time, State expenditures have
grown significantly, today accounting for more than 25 percent
of state spending in fiscal year 2014.
Given the growing portion of the Federal budget dedicated
to Medicaid and the fact that roughly one in five Americans may
be served by the program in a given year, Congress has a
responsibility--even a duty--to ensure that the program is
safeguarded against waste, fraud, and abuse. And while there is
never a perfect program, the status quo in Medicaid certainly
can be improved. The increasing size, complexity and
vulnerability of Medicaid have led the GAO to designate it a
high-risk program that can too easily be subjected to fraud and
abuse.
Both Federal and state governments play critical roles in
oversight of program integrity efforts. And while I believe
states are and should be treated as full partners in the
program, the reality is that Congress has a duty to expect the
best from states and take commonsense steps to help prevent
fraud, waste, and abuse at systemic levels. After all,
protecting the integrity of the Medicaid program is about
ensuring the program is not only more accountable and
transparent for taxpayers, it is about safeguarding program
dollars and encouraging more meaningful access to care for
patients who rely on the program. And that is why I am so
pleased today to be discussing several bills that will help
boost the integrity, oversight and accountability of the
Medicaid program.
First, a bill to be introduced by Dr. Bucshon and some of
his colleagues would fix a problem identified by the HHS
inspector general ensuring that providers terminated in one
state don't improperly bill the system or negatively impact
patients in another state.
[The bill follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. Second, Representative Brooks and I have
introduced H.R. 3444, which would operationalize a proposal in
the President's budget to help reduce Medicaid and CHIP fraud
in the territories of the United States.
[The bill follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. Next, Representative Bilirakis has introduced
H.R. 1570, a bipartisan bill which would bring increased
transparency and information to Federal expenditures related to
Medicaid and CHIP in U.S. territories.
[The bill follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. Fourth, Vice Chairman of the Health Subcommittee
Brent Guthrie has a bill which would incentivize States to
require providers of Medicaid personal care services to have
electronic verification systems in place. This commonsense
proposal will ensure taxpayers only pay for the services
delivered to Medicaid beneficiaries.
[The bill follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. Fifth, I have introduced H.R. 2339, a
commonsense proposal to give States better options to how
lottery winnings are calculated for purposes of Medicaid
eligibility. I hope we can all agree that multimillion dollar
lottery winners should not be eligible to receive Medicaid,
which is precisely the problem in current law that my bill
would fix.
[The bill follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. Finally, Representative Mullin on the full
committee has authored H.R. 1771, a bill which would close a
loophole in current law identified by some GAO reporting. And
this bill would amend the Social Security Act to count portions
of income from annuities of a community spouse as income
available to institutionalized spouses for purposes of Medicaid
eligibility.
[The bill follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. It is my hope that through the policies we
discuss today and through future actions by this committee, we
can work together on a bipartisan basis to boost Medicaid
program integrity while making the program more sustainable,
accountable and transparent. I look forward to hearing our
witnesses today.
I would like to yield to Congressman Mullin to introduce
one of our witnesses.
[The prepared statement of Mr. Pitts follows:]
Prepared statement of Hon. Joseph R. Pitts
The Subcommittee will come to order.
The Chairman will recognize himself for an opening
statement.
Today, Medicaid is the world's largest health coverage
program. Medicaid plays a critical role in our health care
system, providing access to needed medical services and long-
term care for some of our nation's most vulnerable patients.
The Congressional Budget Office estimates that federal
Medicaid expenditures will grow from $343 billion this year to
$576 billion in 2025. At the same time, state expenditures have
grown significantly, today accounting for more than 25% of
state spending in FY 2014.
Given the growing portion of the federal budget dedicated
to Medicaid--and the fact that roughly one in five Americans
may be served by the program in a given year--Congress has a
responsibility, even a duty, to ensure that the program is
safeguarded against waste, fraud, and abuse.
While there is never a perfect program, the status quo in
Medicaid certainly can be improved. The increasing size,
complexity, and vulnerability of Medicaid have led the GAO to
designate it a ``high-risk program'' that can too easily be
subjected to fraud and abuse.
Both federal and state governments play critical roles in
oversight of program integrity efforts. While I believe states
are--and should be treated as--full partners in the program,
the reality is that Congress has a duty to expect the best from
states and take common-sense steps to help prevent fraud,
waste, and abuse at systemic level.
After all, protecting the integrity of the Medicaid program
is about ensuring the program is not only more accountable and
transparent for taxpayers; it is about safeguarding program
dollars and encouraging more meaningful access to care for the
patients who rely on the program.
That's why I'm so pleased today to be discussing several
bills that will help boost the integrity, oversight, and
accountability of the Medicaid program.
First, a bill to be introduced by Dr. Bucshon and some of
his colleagues would fix a problem identified by the HHS
Inspector General-ensuring that providers terminated in one
state don't improperly bill the system or negatively impact
patients in another state.
Second, Representative Brooks and I have introduced H.R.
3444, which would operationalize a proposal in the president's
budget to help reduce Medicaid and CHIP fraud in the
territories of the United States.
Next, Representative Bilirakis has introduced H.R. 1570, a
bipartisan bill which would bring increased transparency and
information to federal expenditures related to Medicaid and
CHIP in U.S. territories.
Fourth, Vice Chairman of the Health Subcommittee Brett
Guthrie has a bill which would incentivize states to require
providers of Medicaid personal care services to have electronic
verification systems in place. This common-sense proposal will
ensure taxpayers only pay for the services delivered to
Medicaid beneficiaries.
Fifth, I have introduced H.R. 2339--a common-sense proposal
to give states better options to how lottery winnings are
calculated for purposes of Medicaid eligibility. I hope we can
all agree that multi-million dollar lottery winners should not
be eligible to receive Medicaid--which is precisely the problem
in current law that my bill would fix.
Finally, Representative Mullin on the full committee has
authored H.R. 1771--a bill which would close a loophole in
current law identified by some GAO reporting. This bill would
amend the Social Security Act to count portions of income from
annuities of a community spouse as income available to
institutionalized spouses for purposes of Medicaid eligibility.
It is my hope that through the policies we discuss today,
and through future actions by this committee, we can work
together on a bipartisan basis to boost Medicaid program
integrity, while making the program more sustainable,
accountable, and transparent.
I look forward to hearing from our witnesses today, and I
yield to --------------.
Mr. Mullin. Thank you, Chairman Pitts.
And it is an honor to be able to sit on a subcommittee
panel with you and introduce a Nico Gomez, our CEO of the
Oklahoma Health Care Authority. Nico has brought in a unique
approach to sometimes an agency that can be bogged down with
bureaucracy by looking outside the box, by understanding that
there is always a better way to do things. As he openly admits,
it wasn't his idea but it was his ability to hire good people
which we constantly refer to in the private sector as being
extremely smart. And he brought in an outside look by being
able to get people to enroll at a simpler pace by being online.
At the same time, and most importantly, it gives people and it
gives the agency the ability to check the eligibility of the
participant at any given time with the touch of a button.
Instead of having to go through and audit them to see if they
are eligible since it is based on a month-to-month income
basis, they can simply push the button and find out their
eligibility.
I think it is something that not just Oklahoma can benefit
from but the entire country can benefit from.
So, Mr. Gomez, it is an honor to have you in D.C., even
though his flight didn't get in until 3 a.m. This morning. And
as you can tell, he is still drinking coffee. So Nico thank you
so much for being here.
Mr. Pitts, thank you so much for the ability to introduce
him.
Mr. Pitts. The chair thanks the gentleman.
Without objection, the gentleman will sit with the
subcommittee today in the hearing.
The chair now recognizes Mr. Green for 5 minutes for an
opening statement.
OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Green. Thank you, Mr. Chairman.
And good morning, and I thank our witnesses for being here
today, even if you didn't arrive until 3 a.m.
Throughout its 50-year history, Medicaid has been an
adaptable, efficient program that meets the healthcare needs of
millions of children, pregnant women, people with disabilities,
seniors, and low-income adults. Today Medicaid serves as a
lifeline to nearly 72 million Americans who depend on the
program for health coverage. The Affordable Care Act included
the most significant changes to the program since its creation.
It expanded coverage, made improvements to promote program
integrity and transparency, and advance delivery system reform.
Thanks to these provisions, the uninsured rate is at a
record low. The program continues to efficiently provide
coverage to enrollees. Program integrity provisions of the ACA
mark a shift from the traditional pay-and-chase model to a
preventative approach in which fraudulent actors are kept out
of the program before they commit fraud.
Today we are examining six Medicaid proposals, efforts that
truly improve transparency and program integrity is something I
think we all can support.
The Affordable Care Act took major steps to improve program
integrity in Medicaid, including new protocols for screening of
suppliers and providers and additional authority to terminate
entities that commit fraud. These are significant steps
forward, and more can be done to ensure these reforms are fully
implemented.
We should also continue to examine other ways to further
strengthen Medicaid for all beneficiaries so that dollars are
spent on quality care without inappropriately limiting access.
While we hear from all six proposals during today's
hearing, I want to take the opportunity to highlight two. Prior
to the passage of the ACA, if a state terminated a provider's
participation in its Medicaid program, the terminated provider
could potentially participate in a program of a different
state. In the case of Texas, they would probably come to
Oklahoma and vice verse, leaving the system vulnerable to fraud
and abuse. The ACA took steps to prevent this from happening,
but OIG has identified weaknesses in that process.
One of the legislative proposals will build on the ACA with
some technical changes. A proposal that would achieve its
intent to further reduce waste, fraud and improve quality and
safety in the Medicaid program is something, again, we can all
support.
I am concerned that two bills under consideration would
scale back Medicaid eligibility under the guise of closing
loopholes. The Affordable Care Act establishes a streamlined,
coordinated eligibility determination system for Medicaid and
CHIP as well as premium tax credits and cost-sharing subsidies.
The approach was designed so that people can qualify for the
appropriate program without gaps or duplication and move
between insurance programs when their incomes change.
H.R. 2339 would undermine this by requiring states to count
lump-sum income as though it were income that the individual
has received for up to 20 years after it is actually received.
The bill is being described as a way to prevent people who win
large lottery payouts from receiving Medicaid, but this is
misleading. By counting all lump-sum income as monthly income,
the overwhelming the majority of people it would affect all
those who receive things like workers' compensation
settlements, unemployment, and retroactive disability payments.
If 2339 became law, a significant number of low-income
Americans who receive lump sum could be inappropriately
determined ineligible for Medicaid and lose access to their
health insurance.
Coverage gaps due to temporary changes in income are bad
for patients, providers, and health plans and ultimately is a
waste of taxpayer dollars. This is a concept MACPAC has
recommended in several reports to Congress. Gaps in coverage is
an issue that I have been concerned about for years. For the
last several Congresses I have worked with my colleague from
Texas, Representative Joe Barton, to advance legislation to
require 12-month continuous enrollment Medicaid and SCHIP.
Proposals that ensure Federal and state taxpayer dollars are
spent appropriately on delivering quality care and prevent
fraud, waste, and abuse from occurring should be supported.
Good program integrity holds all stakeholders accountable
without unintentionally impeding the access.
I look forward to working with my colleagues on the
committee to further strengthen the Medicaid program in key
areas and build on the success. Again, I would like to thank
our witnesses for being here today and look forward to the
discussion on the legislative proposals under consideration.
And I yield back.
Mr. Pitts. The chair thanks the gentleman.
I now recognize the vice chair of the subcommittee, Mr.
Guthrie, 5 minutes for his opening state.
OPENING STATEMENT OF HON. BRETT GUTHRIE, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Guthrie. Thank you, Mr. Chairman. I thank you for
yielding time.
I appreciate the committee holding this hearing on efforts
to strengthen Medicaid by reducing waste, fraud, and abuse. In
doing so we can ensure the program's longevity and
effectiveness.
Earlier this year, I introduced H.R. 2446, which would
require states to put in place an electronic visit verification
system for personal care services. Medicaid personal care
services are becoming increasingly more important as the need
for them continues to grow. However there is also growing
concern about the high levels of improper payments in this
area.
My bill will help address these concerns by requiring
states to adopt an EVV system to verify the date, time, and
site of visit as well as the provider of the services. This is
critical to ensure that beneficiaries receive the services they
need.
Many states already operate EVV systems, and they have seen
a decrease in improper payments and significant cost savings
for the states.
I want to thank the subcommittee for holding this hearing;
certainly Chairman Pitts for including it in today's hearing.
And by strengthening Medicaid, we can ensure those who need it
can rely on it in the future.
And I would like to yield time to my friend from Florida,
Mr. Bilirakis.
Mr. Bilirakis. Thank you. Thank you, sir, I appreciate it
very much.
And thank you, Chairman Pitts, for holding the hearing.
Earlier this year, I, along with the delegates from all the
territories, introduced the Medicaid and CHIP Territory
Transparency and Information Act, H.R. 1570. CMS reports
Medicaid CHIP data for all 50 states and the District of
Columbia, but not the territories. Three months after
introduction, CMS has started to report Puerto Rico data but
not the other territories, and the level of data is less than
what is reported for states.
My bill would require CMS to provide the same data for the
territories as it does for the states. Puerto Rico's Medicaid
program is facing some huge problems over the horizon. As a
committee, we have to make some big policy decisions, and
regardless of your policy views, we have to have all the data,
all the information to understand the problem and exercise
proper oversight over their program if we are to attempt to
address these problems going forward.
Thank you very much for the time, and I yield back.
Mr. Guthrie. I yield back.
Mr. Pitts. The chair thanks the gentleman.
I now recognize the ranking member of the full committee,
Mr. Pallone, 5 minutes for an opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman, for convening this
hearing on the six pieces of legislation before our committee.
I am pleased to see that some of the bills we are considering
here today are true efforts to improve program integrity in
Medicaid in ways that will strengthen the Medicaid program.
That is a longstanding priority of mine, and there is still
some technical work to be done, but the draft proposal that
would build on authority given to CMS and states to terminate
fraudulent providers from the Medicaid program is a worthwhile
policy.
We need to do a better job in this area to make sure that
providers eliminated in one state are no longer able to cross
state lines and continue to be reimbursed for bad care for
beneficiaries, and this legislation will do that. And I look
forward to working with my colleagues on the proposal.
The proposed legislation under consideration today that
would encourage our territories, like Puerto Rico, to invest in
the creation of Medicaid fraud control units that over the long
term bring dollars back to beneficiaries is a no-brainer.
I have to say, however, that another bill, H.R. 1570,
requiring Web site information about the territories beyond
Puerto Rico is a dramatic step, and I prefer to start first
with the request to the agency for that information before
enacting a law to that effect. While not harmful, this approach
seems rigid and misguided.
I appreciate the interest in cracking down on fraud in the
personal care services and home and community-based care space.
Ensuring beneficiaries actually receive quality PCS to which
they are entitled is an issue of serious importance and one
that I look forward to working with this committee on further.
HHS and the Office of the Inspector General have published an
extensive body of work examining Medicaid personal care
services and has found significant and persistent compliance
payment and fraud vulnerabilities that we will hear about
today. I have concerns about H.R. 2446, as drafted, however. I
do believe this issue should be addressed and look forward to a
thorough review and assessment of recommendations for
improvement.
Unfortunately, we aren't considering just program integrity
bills today. The ultimate test for all Medicaid legislation
should be to determine if the proposal supports overarching
Medicaid objectives to strengthen coverage, expand access to
providers, improve health outcomes, and increase the quality of
care for beneficiaries. I believe that the majority of what we
are looking at for program integrity in Medicaid today achieves
these goals. However, efforts to scale back eligibility in the
Medicaid program in any way is not program integrity, and it is
not closing loopholes. Proposals like the one we have here
today that purports to address this so-called plight of lottery
winners in Medicaid I think are completely unnecessary from a
practical perspective. We have several checks in place and
states already have the authority they need, but far more
concerning is that H.R. 2339 is not about lottery winners at
all; it is about undermining the streamlined coordinated
eligibility approach the ACA established by allowing states to
count lump-sum income that an individual may receive as though
it were income that the individual is receiving for 1 to 20
years after actual receipt. And by ``lump sum,'' we are not
talking about lottery winners; we are talking about
uncompensated care settlement payments, Social Security
disability back pay. We are talking about eliminating coverage
for up to 20 years for a child on Medicaid because they have a
parent that finally got a break with a little bit of income
from selling the family home. Proposals like these that would
undermine the coverage for millions of low-income individuals,
including some of our most vulnerable children and seniors, are
punitive to beneficiaries.
Reviewing our final bill here today, H.R. 1771, I am
pleased that perhaps we can have a discussion about long-term
care insurance or the lack thereof. I appreciate this
legislation's effort to ensure spousal impoverishment
protections remain when one spouse must enter a nursing home.
As many of you know, I was a strong supporter of the CLASS
Act that has since been repealed, and I have called repeatedly
for a real discussion about a long-term care benefit that a
middle-income family can depend on to be there when they need
it. We have no long-term care insurance in this country, and
until we are ready to have a discussion about improving options
in the long-term care insurance marketplace, I am concerned
about changes to Medicaid eligibility in this space even for a
very small amount of individuals.
Mr. Chairman, I have said repeatedly that the Medicaid
program is the bedrock of the Nation's safety net. I take
protecting Medicaid seriously, and I have used some of the good
program integrity proposals we have to consider here today as
efforts to advance that goal. However, Medicaid is the lifeline
of nearly 72 million children, elderly, and low-income
individuals depend on for health coverage. And I will never
support a proposal that would take that coverage away.
So I want to thank you again for calling this hearing, and
I look forward to working with you further to consider some of
these initiatives, Mr. Chairman, and having a thoughtful
discussion. Thank you.
Mr. Pitts. The chair thanks the gentleman.
That concludes the opening statements. As usual, the
written opening statements of all members will may be made part
of the record. And I would like to ask unanimous consent to
submit the following documents for the record: letters from the
Alzheimer's Foundation of America and Sandata Technologies.
Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Pitts. We have one panel today. I will introduce them
in order of your testimony. Thank you very much for coming
today.
First of all, John Hagg, Director of Medicaid Audits,
Office of Inspector General, U.S. Department of Health and
Human Services; secondly, we have heard from Mr. Mullin the
introduction for Nico Gomez, chief executive officer for
Oklahoma Health Care Authority; and finally, Trish Riley
executive director of the National Academy for State Health
Policy, and Commissioner, Medicaid and CHIP Payment and Access
Commission.
Thank you very much for coming today. Your written
testimony will be made a part of the record. You will each be
given 5 minutes to summarize your written testimony.
So at this time, Mr. Hagg, you are recognized for 5
minutes.
STATEMENTS OF JOHN HAGG, DIRECTOR OF MEDICAID AUDITS, OFFICE OF
INSPECTOR GENERAL, U.S. DEPARTMENT OF HEALTH AND HUMAN
SERVICES; NICO GOMEZ, CHIEF EXECUTIVE OFFICER, OKLAHOMA HEALTH
CARE AUTHORITY; AND TRISH RILEY, EXECUTIVE DIRECTOR, NATIONAL
ACADEMY FOR STATE HEALTH POLICY, AND COMMISSIONER, MEDICAID AND
CHIP PAYMENT AND ACCESS COMMISSION
STATEMENT OF JOHN HAGG
Mr. Hagg. Good morning, Chairman Pitts, Ranking Member
Green, and other distinguished members of the committee. Thank
you for the opportunity to testify about the Office of
Inspector General's efforts to reduce fraud, waste, and abuse
and to promote quality and safety in the Medicaid program.
Protecting the integrity of Medicaid takes on a heightened
urgency as expenditures and the number of beneficiaries served
continues to grow.
My testimony today focuses on three specific areas of
concern that the OIG has identified to be problematic.
First, terminated providers continue to participate in and
bill Medicaid. Second, there are inadequate safeguards for
personal care services. And third, the U.S. territories lack
Medicaid fraud control units.
Prior to the passage of the Affordable Care Act, if a state
terminated a provider's participation in its Medicaid program,
the provider could potentially participate in another state's
Medicaid program, leaving the second state vulnerable to fraud,
waste and abuse. To prevent this, states are now required to
terminate a provider's participation if that provider is
terminated in another state. The termination has to be for
cause, for example, for reasons of fraud, integrity, or
quality.
Through our work, we found significant problems.
Specifically, we determined that not all states submitted data
on terminated providers and that much of the data that was
submitted did not relate to providers terminated for cause. We
also found 12 percent of providers terminated in 2011 continued
participating in other states' Medicaid programs.
To further complicate states' ability to terminate
providers, many states do not require providers that
participate via managed care to be directly enrolled in
Medicaid. If a state has not directly enrolled a provider, it
cannot not terminate that provider, and it may not even be
aware that the provider is participating in its Medicaid
program.
The OIG believes that CMS should, one, require states to
report providers terminated for cause rather than leaving it as
voluntary; two, ensure that the information reported is
uniform, accurate and complete; and three, require state
Medicaid programs to enroll all providers participating in
Medicaid managed care.
Another problematic area within Medicaid is personal care
services. These services allow many elderly people and those
with disabilities to remain in their homes rather than being
placed in a nursing facility. As more and more state Medicaid
programs explore home care options, OIG believes it is critical
that adequate safeguards exist to prevent fraud, waste and
abuse in personal care services. Through our work, OIG
discovered some payments for these services were improper
because they were either not provided in accordance with state
requirements, not supported by adequate documentation, billed
during periods in which the beneficiaries were
institutionalized, or were provided by attendants that failed
to meet state qualifications.
Over the years, we have made a number of recommendations to
CMS to address Medicaid's deficiencies within the delivery of
personal care services, including requiring qualification
standards for care attendants be consistent across states,
requiring care attendants to be enrolled or registered with the
states, and requiring dates, times and attendants' identities
to be listed on Medicaid's claims. Currently, none of these
recommendations have been implemented.
Another way the OIG helps protect the integrity of Medicaid
is by overseeing the state Medicaid fraud control units. Fraud
control units currently operate in 49 states and the District
of Columbia, but none are in the five U.S. territories.
The major barrier to establishing fraud control units in
the territories is the nature of Medicaid funding. Unlike
Medicaid funding for the states, the territories receive a
capped appropriation and routinely use the full amount
appropriated. This becomes a disincentive to allocate scarce
Medicaid dollars to the establishment and operation of fraud
control units.
Legislation could remove the disincentive. This could be
accomplished by exempting unit funding from the capped Medicaid
appropriation. OIG believes that such a change would also be
cost efficient, specifically in Puerto Rico, which has a total
Medicaid enrollment of more than 1 million beneficiaries which
is comparable to Medicaid enrollment of many medium-sized
states.
In conclusion it is critical that we strengthenoversights
to ensure that Medicaid funds are spent appropriately. Thank
you for your interest in our work and for the opportunity to
appear before you today.
[The prepared statement of Mr. Hagg follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The chair now recognizes Mr. Gomez 5 minutes for
your summarization.
STATEMENT OF NICO GOMEZ
Mr. Gomez. Good morning, Chairman Pitts and Ranking Member
Green, and distinguished committee members, good morning. It is
honor to share Oklahoma's perspectives and experiences on a
critically important topic like program integrity in an ever
changing healthcare delivery environment. It is important to
note that this testimony is that of only one state's program.
It is not made on behalf of any of the other states or
associations. Equally important is acknowledgment that
solutions offered here are not to the exclusive benefit of
Oklahoma. This testimony highlights and reinforces the need for
state flexibility rather than uniform mandates.
Oklahoma maintains a dedication of integrity in every
aspect of our Medicaid program. Recent changes have included
improving the process for determining member eligibility,
provider contracting and enrollment, claims payments, medical
necessity, asset verification, and service verification. Prior
to the implementation of the Affordable Care Act, Oklahoma made
investments toward developing the Nation's first fully
automated, realtime online enrollment system. Currently, two-
thirds of Oklahoma's applicants for Medicaid are received from
a personal or public computer through our online system.
When added to the benefit of our community partners, more
than 99 percent of our applications processed in the community
are processed in realtime using a rules-based decision engine.
In addition to relieving a tremendous administrative burden,
this system allows for realtime enrollment, while strengthening
the state's ability to verify reported information with various
sources, including the Social Security Administration,
Department of Homeland Security and the Oklahoma Employment
Security Commission.
Oklahoma's pride is in its constant dedication to improving
its program's integrity reflected in its payment error rate
measurement. The Payment Error Rate Measurement Program is an
audit conducted by CMS on a 3-year rolling average to measure
the accuracy of payments made to Medicaid covered goods and
services. The audit takes into consideration member
eligibility, provider eligibility, and medical necessity.
Oklahoma's most recent PERM audit identified a.24 percent error
rate, .24 percent amongst the lowest of the 17 states with the
same cycle. Most states are around 9 percent.
This success is a testament to the engaged provider
services and training infrastructure as well as Oklahoma's
continual audits to using PERM criteria in the interim during
and between PERM audits, something we are very proud of.
Many of the issues being addressed in the upcoming hearings
are issues that Oklahoma is facing or has attempted to address
in the past.
One issue in particular we have attempted to address on our
own and now with the help of Congressman Mullin we are able to
address in H.R. 1771. Since its creation, the statutes and
regulations governing the Medicaid program have been amended
numerous times and now consist of complex, interrelated
provisions that are often difficult to understand. One such
area surrounds standards to prevent spousal impoverishment.
Medicaid statutes allow the spouse of a Medicaid applicant for
long-term care to keep a certain amount of his or her resources
so that he or she is not required to become impoverished before
their spouse can receive long-term care. Unfortunately,
individuals are now using court-recognized loopholes to
transfer significant resources to a spouse, transfers that
would normally disqualify them from Medicaid.
States have denied applicants who are clearly above
Medicaid's income standards or resource limit standards only to
have the court order the approval of such applications as a
result of certain estate-planning loopholes that they recognize
are contrary to Medicaid's intended purpose but can only be
corrected by Congress.
In an attempt to curtail the practice, Oklahoma denied such
application using this loophole that resulted in the Morris v.
Oklahoma Department of Health and Human Services. Morris is the
seminal 10th Circuit decision which directly impacts not only
Oklahoma but five other states in the circuit, but it also has
been extended and relied upon in at least three other Federal
circuits and several state courts.
The Court's rulings essentially permits a married couple to
shelter potentially unlimited amounts of assets through the use
of nonassignable, nontransferable annuities in order for the
spouse in need of medical care to qualify for Medicaid. In
reversing the district court, the court of appeals stated,
although we understand the district court's concerns regarding
the exploitation of what can only be described as a loophole in
the Medicaid statutes, we conclude that the problem can only be
addressed by Congress.
The passage of H.R. 1771 would be a needed step towards
preserving shrinking resources that would help empower states
to ensure those applicants truly in need can still access
quality services. I would like to thank Congressman Markwayne
Mullin for agreeing to working with the states remedying this
and look forward to working together with the committee. And
with that, I conclude my remarks and am happy to answer any
questions.
[The prepared statement of Mr. Gomez follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The chair thanks the gentlemen.
I now recognize Ms. Riley 5 minutes for your summary.
STATEMENT OF TRISH RILEY
Ms. Riley. Good morning, Chairman Pitts, Ranking Member
Green, and members of the subcommittee.
I have served as the commissioner of MACPAC, the Medicaid
and CHIP Payment and Access Commission, since its inception in
2010. As you know, MACPAC is a congressional advisory body
charged with analyzing and reviewing Medicaid and CHIP policies
and making recommendations to Congress, the Secretary, and the
states on issues affecting these programs.
I am one of 17 members appointed by the GAO.
While I am also executive director of the National Academy
for State Health Policy, my comments today solely reflect the
work of MACPAC.
We very much appreciate the opportunity to be here today as
the subcommittee considers changes to the Medicaid program. The
Commission shares the subcommittee's interest in ensuring
Federal and state taxpayer dollars are spent appropriately on
delivering quality, necessary care, and preventing fraud, waste
and abuse from taking place. When designed and implemented
well, program integrity policies and procedures should ensure
that eligibility decisions are made correctly, prospective and
enrolled providers meet Federal and state participation
requirements, services provided to enrollees are medically
necessary and appropriate, and provider payments are made in
the correct amount for the appropriate services.
The Commission has identified and shared with you through
our reports to Congress a number of challenges associated with
implementation of an effective and efficient Medicaid program
integrity strategy, including overlap between Federal and state
responsibilities, insufficient collaboration and information
sharing among Federal agencies and the states, diffusion of
authority among multiple Federal and state agencies, lack of
information on the effectiveness of program integrity
initiatives, and appropriate performance measures. We also
identified concerns about lower Federal matching rates for
state activities not directly related to fraud control;
incomplete and outdated data; and few program integrity
resources for delivery system models other than fee for
service.
Specifically, the Commission recommended that the Secretary
of HHS should collaborate with states to create feedback loops
to simplify and streamline program integrity requirements,
determine which current Federal program integrity initiatives
are most effective, and take steps to eliminate programs that
are redundant, outdated, or not cost-effective.
In addition, in order to enhance states' ability to detect
and prevent fraud and abuse, the Commission has recommended
that the Secretary should develop methods for better
quantifying the effectiveness of program integrity activities.
The Secretary should assess analytic tools for detecting and
preventing fraud and abuse and promote the use of those tools
that are most effective.
In addition, the Department should improve dissemination of
best practices in program integrity and enhance program
integrity training programs.
The measures before the subcommittee today also speak to
other policy objectives of interest to the Commission,
including simplification, transparency, and the alignment of
policies across Federal health programs. Even so, I want to
clarify that MACPAC has not reviewed nor expressed its views on
the merits of the six specific initiatives that are the focus
of today's hearing. My written statement provides technical
comments on the potential implications of these proposals and
issues that could be addressed as the subcommittee considers
them.
Again, thank you very much for this opportunity to appear
before the committee, and we would of course be happy to
provide technical information from the staff or to answer
questions today.
[The prepared statement of Ms. Riley follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The chair thanks the gentlelady. That concludes
the opening statements. We will now begin questions, and I will
recognize myself 5 minutes for that purpose.
Mr. Hagg, the U.S. territories are already required by law
to have a Medicaid fraud control unit. Is that correct?
Mr. Hagg. I believe that is correct, yes.
Mr. Pitt. Given that, can you explain why the territories
do not already have such units and how H.R. 3444, the Medicaid
and CHIP Territory Fraud Prevention Act, would encourage their
creation?
Mr. Hagg. Yes. I think they don't have fraud control units
now has to do with how their Medicaid programs are structured
or how the funding of those programs are structured. In the
territories, the Medicaid programs are capped, unlike the
states, where it is open-ended. To create fraud control units,
the funding that it would take to start up the units and then
to operate the units would take away from trying to provide for
services for beneficiaries in the territories. I think that is
a difficult decision for them, taking away funds that could be
used to provide services.
The bill will move the funding that would be required to
run the fraud control units out of that capped amount. And so
it should take that disincentive from creating a program away.
Mr. Pitts. Thank you.
And, Mr. Hagg, your work found that the lack of uniform
terminology for the reasons for provider terminations caused
challenges for state agencies. Can you please explain the
challenges created, how the policy we are discussing today
could help resolve those challenges?
Mr. Hagg. Well, you know as far as uniform terminology, we
performed two studies involving terminated providers. The first
was looking at the action CMS had taken to create a central
data system that would house all of the providers that had been
terminated. And looking at that data set, we found some states
didn't submit any data at all. We found some states that
submitted data, but the data wasn't complete. They were
missing, for example, an address for the provider. And then as
far as uniform terminology, we found that some states were
submitting providers that had been terminated for reasons other
than cause, reasons other than fraud or integrity or abuse
issues. So say for example in a state if they terminated a
provider because of billing inactivity, some states would
submit that information to the central database, other states
potentially could look at that database and say, ``We need to
terminate that provider as well,'' even though there wouldn't
be a reason to. So only providers terminated for cause should
be submitted to that central data system; not other ones.
And so uniform terminology or guidance provided by CMS
about uniform terminology could help correct that issue.
Mr. Pitts. Mr. Gomez, according to the GAO, some states
have indicated that the use of annuities as a Medicaid planning
tool have increased in recent years, despite congressional
action most recently as part of the Deficit Reduction Act to
eliminate this loophole. Has Oklahoma seen an increase in the
use of annuities in recent years? And if so, why do you think
this is the case?
Mr. Gomez. Mr. Chairman, thank you.
Yes, we have seen an increase in the number of annuities
as, quite frankly, families have found ways to avoid the 5-year
lookback on income and assets. And it has allowed also a growth
in the number of promissory notes too, which this amendment
doesn't deal with. But it is a growing issue where we have
allowed the annuity to be able to shelter assets so the spouse
can in the community--the spouse, the institutionalized spouse,
will be able to qualify for the program when the assets are
there to be able to help pay for the services provided.
Mr. Pitts. Mr. Gomez, do you think it is appropriate for
millionaires or multimillionaires to be receiving Medicaid
while at the same time there are disabled children on the
waiting lists for home and community-based services?
Mr. Gomez. That is why we are here, Mr. Chairman, is
because we have, in Oklahoma, have cut the program hundreds of
millions of dollars over the last couple of years, and every
time we cut the program, we recognize that there are potential
families that are getting access to the Medicaid program who
are not financially qualified. So to answer your question, no.
Mr. Pitts. So if I told you that states are barred from
disenrolling multimillionaire lottery winners from Medicaid, I
would assume that you would find this troubling, yes?
Mr. Gomez. Yes, I would find that troubling.
Mr. Pitts. Furthermore, while the Federal Government is
paying 100 percent of the cost of Medicaid expansion, including
the medical bills of millionaire lottery winners, there are
disabled children and HIV patients on waiting lists for some
Medicaid programs, so do you think it is fair to use Medicaid
dollars to pay for lottery winners?
Mr. Gomez. The purpose of Medicaid is to provide coverage
for low-income families and other categorically related
individuals who meet certain eligibility requirements. And it
is an income-based program, so it is very difficult to make an
argument for anybody above a low-income.
Mr. Pitts. Can you explain how it is that Medicaid policy
permits million or multimillion dollar lottery winners to
retain Medicaid coverage when they can clearly afford to
purchase their own health insurance?
Mr. Gomez. Well, the way the system is set up now through
Medicaid is we look at eligibility on a month-by-month basis we
are not able to look at it from a, so a person could receive a
lottery winning within a given month and then come back and
reapply the next month and be qualified for the program, which
I don't believe that was the program's intent.
Mr. Pitts. I see my time is expired.
I recognize the ranking member, Mr. Green, 5 minutes for
questions.
Mr. Green. Thank you, Mr. Chairman.
Mr. Gomez how many recipients, how many people receive
Medicaid in Oklahoma on any given day?
Mr. Gomez. Over a given course of a year, we will serve
about 1 million Oklahomans. Oklahoma only has about 3.6, 3.7
million Oklahomans, so more than 25 percent of our population
is utilizing the Medicaid program in a given year.
Mr. Green. How many people have you identified that are
either using the lottery exception or even the annuity in
Oklahoma? Do you have a number?
Mr. Gomez. Ranking Member Green, I do not have a number,
but I am happy to provide that to the committee for the record.
Mr. Green. Do you think it would be more than 100 out of
the million people?
Mr. Gomez. I would really hesitate to speculate, but I am
happy to give you the information.
Mr. Green. I would love to see that information because I
would like to see--obviously we want folks who need the program
to get it, but if we also through up some impediment, we may
end up excluding people who really do need it but again thank
you.
One of the reasons the Affordable Care Act changed from the
previous asset test of Medicaid into the current modified
adjusted gross income formulas is to streamline and coordinate
eligibility between Medicaid and health insurance marketplaces.
Ms. Riley, can describe the complexity of implementing this
legislation for purposes of keeping coverage streamlined and
coordinated? Do you think the legislation moves us backwards in
a patchwork system where we potentially have 50 different rules
for eligibility?
Ms. Riley. Well, I understand the concern of wanting to be
sure that we have a quality affordable healthcare system and
that we have investments in coverage that are appropriate. That
said, there has been enormous undertaking in the states,
through the Affordable Care Act, to try to integrate the
eligibility systems between the Federal marketplace and
Medicaid. And I think giving states options to change some of
that, could certainly make it more complex.
Mr. Green. Would this potentially create additional cost at
the Federal level and particular with the Federally facilitated
marketplaces in 37 states?
Ms. Riley. I think it could. Again, this would be a state
option so it is unclear how each state would tweak its
eligibility determinations, and as such when integration with
the Federal marketplace to try to streamline and make
eligibility smoother and simpler, would require the Federal
marketplace to have to make a tweak to its Federal system for
each change that every state makes.
Mr. Green. Is it correct, and I am reading the legislation
that it is potentially applying to anything such as Social
Security disability back payments, workers' compensation, in
any amount at all and the state would prorate the amount
monthly for up to 20 years even if you no longer have access to
those funds?
Ms. Riley. I am sorry I didn't hear the end of the
question, I am sorry.
Mr. Green. Would this legislation potentially applying the
Social Security disability back payments, workers'
compensation, or any amount at all that the state could pro
rate that would amount to monthly up to 20 years even though it
is not available to them over that 20 years?
Ms. Riley. Yes. It is my understanding of the bill that it
would do just that. Certainly we all appreciate the lottery
issues, but as written lump sums could be SSDI payments,
disability payments, and others.
Mr. Green. We have a lot of program integrity bills that we
are considering today that are focused on niche areas. I want
to take a step backward and look more globally at the
landscape, the program integrity in Medicaid. Can you describe
MACPAC's work on program integrity to date?
Ms. Riley. I can. We have taken a very serious look at
program integrity both in our March 2012 report and our March
2013 report to the Congress. We have seen a real complexity in
program integrity where there are multiple state and Federal
agencies that have various aspects of program integrity,
including the Department of Justice, numerous Health and Human
Services agencies, and state governments, often competing often
redundant. And we have suggested that there is a real need to
streamline those activities, to look where there is redundancy,
and to find out where the best practices exist among the
states.
Importantly, while we invest in Medicare fraud control
units with a 75-25 match, we do not invest in other activities
states need to undertake to prevent fraud at that same level,
notably the administration of the program.
Mr. Green. Thank you.
Mr. Chairman, I have some other questions I would like to
submit to Ms. Riley on highlights, low-matching rates for
activities not directly related to fraud control, and things
like that. I appreciate MACPAC's reports and hope that Congress
can act on those both to save Federal money, but also--because
in Texas, our match is about 65 percent Federal, about 35
percent state, and somewhere along the way we need to match
that. We want the states' participation but we also want to
make it to where it is we can get that fraud that we are
looking at.
Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman.
We will submit the followup questions to you in writing.
Please respond.
The chair now recognizes the vice chairman of the
subcommittee, Mr. Guthrie, 5 minutes for questioning.
Mr. Guthrie. Thank you, Mr. Chairman. I appreciate that
very much. First, I have a unanimous consent request to enter
into the record a letter from ResCare.
Mr. Pitts. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Guthrie. Thank you, Mr. Chairman.
This is a question for Mr. Hagg. We agree it is important
to ensure that patients receive the services they are supposed
to and that taxpayer resources are protected. In that vein, I
introduced H.R. 2446, which would require states to use
electronic visit verification for personal care services under
Medicaid. So I would like to discuss some the work your office
has done in this area of fraud and abuse of personal care
services.
In 2012, in your year 2012 portfolio report on personal
care services, you outline a series of audits that were done in
eight locations, seven states and then one city, that
identified over $582 million in questionable costs. There was a
wide error rate from zero percent in one state to over 40
percent in another.
Can you walk us through some of the issues you found in
those audits, and what were the most frequent problems you saw?
Mr. Hagg. Yes, I would be glad to. The main issues we found
were providers submitting claims that didn't follow all of the
Federal and state requirements. Some examples would be just
across-the-board qualifications of the attendants not being
met, things like background checks, specific training, things
like that. We found that proper supervision wasn't provided.
There is a certain level of supervision for the attendants, and
in some cases, it wasn't always met. We found instances where
physician approval or authorization hadn't been set up for the
service to be provided. We found instances where plans of care
hadn't been approved or set up. Other cases where there was
just a lack of documentation. Without the documentation, you
can't tell if it is just sloppy record keeping or if the
service was never provided. We found a lot of instances where
we had a bill for a specific beneficiary yet we knew from data
match that beneficiary was in an institution, a hospital or a
nursing home, at the same time.
Those are the main type things. There are a lot of
different areas across the board, a lot of high error rates, a
lot of dollars as you point out. But those are I think the main
buckets of the problems that we found.
Mr. Guthrie. Thank you. Your report also outlined a number
of concerns about quality of care for beneficiaries receiving
personal care service due to some of these problems. Can you
outline how the Medicaid beneficiary suffers because of some of
these instances?
Mr. Hagg. Well, the quality of care issues that came out of
those reports, what we tried to do in a lot of those audits,
not in every one but a lot of them, we tried to interview the
beneficiaries receiving services. And a lot of the responses we
received back had to do with the attendant stealing from the
beneficiary or abusing them, or threats of abuse. I think there
were cases of abandonment where the attendant would be out
shopping for groceries or someplace with the beneficiary, and
they would say: My shift is up. It is time for me to go, and
they would leave them there. Those are the type of quality type
of issues that we mainly identified.
Mr. Guthrie. Thank you. And the electronic visit
verification systems provide information on the date, time,
duration location of service as well as the type of service
performed. How do you think the availability of such
information will help minimize the problems you identified?
Mr. Hagg. Well, I think it would help. Of the problems that
I have laid out, some of them I don't think would be addressed
by the electronic visit verification, but some would. When you
have cases of lack of documentation, I would think EVV would
help clear that up. You are either providing the service at
that location or you are not.
The same thing with beneficiaries who are in institutions
at the same time were receiving a bill at the same time. The
same thing for where we have time sheets of an attendant that
says they were in a different location yet we have a bill for
somebody else. I think EVV would help or may help address those
type issues.
Mr. Guthrie. Thank you. Those are my questions, and I yield
back my time.
Mr. Pitts. The chair thanks the gentleman.
Now I recognize the ranking member of the full committee,
Mr. Pallone, 5 minutes for questions.
Mr. Pallone. Thank you. I understand that we have a piece
of legislation here to tighten up eligibility in the Medicaid
long-term care space, and I think this bill has been drafted in
a way that it is careful, unlike the other eligibility
legislation under consideration today, and it is drafted to
guard against unintended consequences that can be harmful for
beneficiaries.
However, I still remain concerned about tightening
eligibility in Medicaid when overall we have no other
alternative for people of low and moderate income to invest in
long-term care planning so that a long-term care benefit is
there for people when they need it. So before we start
tightening up on Medicaid, we need to have a real conversation
on long-term care in this country so that we don't take away
the lifeline for people without having any other options in
place.
The reality is that this legislation would change the
historical consideration of a spouse's income as separate and
that is a big precedent to set in the absence of long-term care
reform in this country.
In addition, I understand that income and resource counting
in the various eligibility pathways for long-term care in the
Medicaid program are incredibly complex already.
Ms. Riley, I know that MACPAC has done a fair amount of
work in Medicaid, so can you give us an overview of the
commission's work on long-term care and any recommendations you
have in that regard?
Ms. Riley. I am very happy to. Obviously, this is an area
of great concern for the Commission, given that Medicaid does
pay, as you say, 61 percent of all the long-term care costs in
the Nation, and on the converse to the point of the cost
effectiveness, while long-term care clients represent about 6
percent of users, they use 51 percent of Medicaid dollars. So
it is an area of great concern to the Commission.
To date, we have looked and have reported to you about the
managed care, managed care initiatives and long-term care, at
rebalancing between home and institutional care, and about the
data needs that we really have to address to be able to address
some of the broader issues.
On our plate for future work is to look at the merits of
standardizing functional assessments affecting who gets into
coverage, to look strongly at the quality measures in long-term
care, to focus on housing and assisted living, and particularly
to look at how the new Medicaid managed care regulations may
impact efforts to manage care and long-term care.
Mr. Pallone. And I understand used to be the Director of
Aging in Maine. What areas of recommendations can you share for
our consideration based on the challenges that you encountered
in your operational experience?
Ms. Riley. I am aging in place. That was a very long time
ago.
Mr. Pallone. Well we are all aging in place.
Ms. Riley. I think the tragedy is that we still have a
situation where in this country the majority of long-term care
services are still paid for by Medicaid--we had hoped 30 years
ago that might not be the case--and that Medicaid funding
remains a critically important program.
I think way back in those days we were just beginning state
recovery efforts, which relate very much to the work here, very
important efforts to make sure Medicaid is spent properly and
efficiently and effectively. And I think what one learns
running the programs is the devil is always in the details. It
is very difficult to think about how to implement these kind of
programs, and one needs to think about all the alternatives and
the administrative demands and the costs of those and weigh
those against what the benefit will be.
Mr. Pallone. I can just say I guess many people probably
already know this, but I just hate the whole spend down
provision. I think it is awful. I am so tired after 27 years in
Congress of having these people call up my office who are
involved in spend down and all the terrible implications of
that. And I would really like to see them--and I know not to
take away from the chairman or our Republican colleagues, I
know they are not going to be in favor of some kind of
Medicare, new Medicare benefit for long-term care, but I really
think we need to, we really need to do that at some point
because the way we operate where we make people spend down and
then go on Medicaid is just, I can't imagine, I have never
looked, but I can't imagine any other country in the world
operates that way. It is just the most stupid thing to do. And
availability of long-term care insurance is very, very limited.
If anything, it seems like it is more limited.
And I know that when we did the Affordable Care Act, that
we were subject to certain spending limitations. And so we
really couldn't address this. We tried to do the CLASS Act and
that got repealed with regard to community-based care. But for
constitutional care, we just can't continue to operate this
way. And I just hope at some point, Mr. Chairman, even though
there may be Republican opposition, that we can have some kind
of hearing or deal with this larger issue of paying for long-
term care in a different way than we do. So thank you very
much.
Mr. Pitts. The chair thanks the gentleman.
I now recognize Dr. Burgess 5 minutes for questions.
Mr. Burgess. Thank you, Mr. Chairman. I will try to find a
microphone where I can actually see the panelists. It may be
difficult so I apologize if I am talking to you through
someone. OK, Mr. Pallone brought up some points and actually
used the debate to say the Republicans were not interested
enough in long-term care.
Look, I haven't been on this committee nearly as long as
Mr. Pallone. I will in no universe be able to spend the amount
of years on the committee that Mr. Pallone has spent. But I do
remember the Deficit Reduction Act of 2005. And we talked at
that time about things we might do to get people interested in
purchasing long-term care insurance who could afford it. And
that was met with a lot of resistance. Now, I buy my health
insurance in the individual market, and as a consequence, I pay
for that with after-tax dollars. So those are really expensive
dollars to have to spend.
And we do the exact same thing to people who want to
provide long-term care insurance for themselves or their
families. They pay for it with after-tax dollars, and there has
been an absolute stonewall providing any type of recognition
that this was a benefit or this was an activity that we would
like to encourage people to do.
I can think of no more loving gift that a parent can give
to their children than to carry long-term care insurance so
that they, the parent, are not a burden to their children. Not
everyone can afford long-term care insurance. I understand
that. I pay for a policy myself. I understand how the policies
are sometimes difficult to find, and, yes, they can be
expensive. We have made that harder. We made that harder with
the Affordable Care Act when the CLASS Act provision was thrown
in at the last minute, very little consideration, no hearings,
no evidence collected. And as a consequence, companies that
were involved in providing long-term care insurance, because
the assumption was then made that, hey, the Affordable Care Act
is now taking care of long-term care insurance, when it wasn't,
and we had to abandon the provisions of the CLASS Act because
they were so bad and a classic insurance death spiral that now
people are, in fact, left with less than they had before.
So I apologize. I didn't mean to go off topic, but I felt
that there needed to be some counterbalance to that debate. Now
since I am off-topic already let me stay of off topic.
Mr. Gomez, your Governor, Mary Fallin, who served with us
here in the House of Representatives several years ago, and we
miss her, but we do value her service to the people of Oklahoma
as their chief executive, she signed a bill last March or April
that was a requirement for prescription drug monitoring, the
requirement for physicians to check against a database before
prescribing certain drugs. We have had I don't know how many
hearings this year in the Health and Oversight Subcommittees on
prescription drug abuse.
And we go back and forth with the prescription drug
monitoring issue. But you guys solved it in your State when
Governor Fallin signed that into law--well, it will go into
effect I guess in November. So you haven't quite solved it yet.
But you are on the road to doing that. When Governor Fallin was
at the National Governors Association meeting this summer and
Secretary Burwell was addressing that meeting, she asked
Secretary Burwell about, would it be possible to require that
same type of prescription drug monitoring in Medicaid? And I
guess my confusion then is why does being on Medicaid somehow
exempt someone from prescription drug monitoring? Or is it that
this is such a good idea, we ought to use it, since there is a
Federal jurisdiction for Medicaid, that we should apply it in a
Federal sense across the country? Can you clarify that for me?
Mr. Gomez. Let me clarify by what is happening in Oklahoma
is Governor Fallin and that legislation has empowered the use
of a realtime database that is available to physicians and
pharmacies and for us in the Medicaid program to be able to
monitor prescription drug abuse in the program. And it requires
physicians to look at, when they make a prescription, to look
and see if there has been some abusive pattern, physician
shopping, or ER diversion, something like that, to where they
have been able to see it.
Mr. Burgess. Right. We get that. We have authorized the
monitoring program here in this committee. It is called NASPER.
We are in a fight with the appropriators, so they have got
their own--so is there anything that prevents Oklahoma from
using the database for their Medicaid patients?
Mr. Gomez. No. We actually have access to the database
today.
Mr. Burgess. So the same requirement that will be there for
anyone else is there for Medicaid patients?
Mr. Gomez. Yes, sir.
Mr. Burgess. This is an important point because, I mean,
the CDC has already pointed out where the prescription drug,
the difficulties with prescription drugs are expanding, state
expenses and Federal expenses for prisons, jails, what have
you, recovery programs. So it is extremely, if we want to talk
about saving money in Medicaid, it seems to me this is one of
the places where we should focus.
Mr. Hagg and Ms. Riley, let me just ask a brief question.
The problem with third-party liability, a state that is paying
a Medicaid bill for someone who actually has coverage from
another insurance company, and there is a GAO report from--now
it is over 10 years ago. It has been very frustrating to me
that this cannot be, this is a problem that cannot be fixed,
but is the issue of somebody who has got coverage with a
regular indemnity insurance plan and yet the state is picking
up the tab because that person is also covered by Medicaid. In
other words, Medicaid should be the provider of last resort,
not first resort. Can either of you address that?
Mr. Hagg. I would be glad to try. Over the years, we have
done a little bit of work involving third-party liability.
Clearly, there is probably more work that needs to be done. I
know states go to great efforts through contractors and through
their own staff to try to identify people on Medicaid who do
have other insurance with data matches and other actions to try
to recoup that money that they would have spent for those
beneficiaries or to try to prevent it from going out the door
to begin with. I think states do a pretty good job with that.
But just like anything, there is more work that needs to be
done.
Mr. Burgess. Not according to the GAO report, but I may
talk to you more about that further because it is not an
insignificant amount of money we are talking about. It can be
as much as 25 percent in some States.
Thank you, Mr. Chairman. I will yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from California, Ms. Capps, for 5
minutes of questions.
Mrs. Capps. Thank you, Chairman Pitts and also Ranking
Member Green, for holding this hearing. And we have another
topic that I think we need to address, I hope we can, in terms
of long-term healthcare needs. But our Nation's Medicaid
Program is a critical safety net for all Americans who know
that if they fall on hard times, they will not need to
sacrifice their access to health care. The Affordable Care Act
took great strides in streamlining eligibility to the program,
ensuring that it would be there for those who need it. And many
of these bills would help--that we are addressing today--would
help strengthen this program further. And they should be
supported. But I want to focus on one which I have heard here
today, H.R. 2339. And I believe that is not one of these that
should be supported. I am curious about the situation of a
young child whose parent may receive a lump-sum payment. So to
be clear, and I think this is a common misperception, the
parent receives the lump sum. But it is actually the child who
is the Medicaid enrollee. And that is what the misconceptions
are about. The Medicaid Program in this case is for the child.
As we all know, the majority of Medicaid enrollees are
children. And this is followed closely by low-income elderly
and by disabled individuals, with a very small proportion of
parents and low-income adults rounding out the program.
Ms. Riley, if a child's parent received a lump sum for any
amount, $50,000 or whatever, and then, of course, that would be
taxed I am sure, but the child is actually the Medicaid
enrollee. Would the bill, as drafted, potentially count against
the child's eligibility not just 1 month, but from then on? I
will let you answer that question or address it.
Ms. Riley. As I understand the bill, it would, indeed, have
that potential. And our staff could certainly do some more
technical analysis on that.
Mrs. Capps. How long could that amount potentially count
against the child's Medicaid eligibility?
Ms. Riley. As I understand the bill, if it was over
$50,000, it could count for 20 years.
Mrs. Capps. So that that lump-sum amount, no matter what
the parent or adult spent it on, would make sure this child was
not eligible for a very long time.
Ms. Riley. That would be how I would read the bill, yes.
Mrs. Capps. So you are saying it is possible this bill
could be interpreted in a way that would cause a child to lose
Medicaid eligibility for the rest of their childhood, even if
the family's financial status were to change in the next 5, 10,
or 20 years or even in the next month because that lump sum is
a precarious amount in some respects.
Ms. Riley. Right. And it gets stretched over months, yes.
Mrs. Capps. Right. I think this actually has, as it is
being interpreted differently by many, I find it very
concerning in the underlying challenges because it is, the
truth is that H.R. 2339 could have many unintended
consequences, consequences that could keep poor kids from care
really for their lifetime and leave many others in limbo
because the eligibility isn't an overnight thing. So please
comment, I have some other time and this is the topic I wanted
to address, if you would like to make further statement about
it.
Ms. Riley. I think that is a possibility. I think the
definition is broad. And I think it would also depend on how
each state would interpret it. So it would also be a variation
in the program across states.
Mrs. Capps. I see. So this is something that I can't
support. And I hope my colleagues will reconsider their, if
they are supporting it, because I think on the surface it may
seem very attractive, but underneath there's some unintended
consequences that I think could be very harmful. And it goes
back to the basic thought that it is the parents who receive
the benefit when it actually is Medicaid in most cases in this
case are designed to benefit poor children and those with
disabilities. Thank you.
I yield back the balance of my time.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes Dr. Murphy for 5 minutes for questions.
Mr. Murphy. Thank you, Mr. Chairman.
Thank you, panel, for being here.
As we are talking about the integrity here, one of the
things we had a hearing on in our Oversight and Investigations
subcommittee, which I chair, was the idea that Medicaid has
$17.5 billion in improper payments and maintains a high
threshold of tolerance on that. I want to talk about one area
where it is not just going after those who are being fraudulent
but a policy within Medicaid--and Mr. Hagg particularly, get
your comments on this--in HHS' OIG report from March of this
year, it was entitled ``Second Generation Antipsychotic Drug
Use Among Medicaid-Enrolled Children: Quality-of-Care
Concerns.'' I don't know if you are familiar with this report.
Mr. Hagg. Not overly, no.
Mr. Murphy. OK. Then I will give you some information on
it.
Mr. Hagg. Great.
Mr. Murphy. They describe in there that 8 percent of second
generation antipsychotics, otherwise known as SGAs, were
prescribed for the limited number of medically accepted
pediatric conditions, only 8 percent. That means 92 percent of
claims that were not prescribed for medically accepted
pediatric indications were off label, off label. There is a
quality of care concern that was identified in this report and
medical records where 67 percent of claims for SGAs prescribed
for children. And there was two or more problems for 49
percent. I will read you one of the case studies.
A 4-year-old child diagnosed with ADHD and a mood disorder
in which--this was reviewed by a child and adolescent
psychiatrist. They said there was no evidence in the child's
medical history of any monitoring while the child was taking
the sampled SGA. The reviewer stated that individual, family,
and behavioral therapy should have been attempted before
initiating treatment with drugs. However, there was no evidence
in the child's medical record indicating that such therapies
were attempted. They also went on to say that the child was
prescribed four psychotropic drugs during the review period of
which two were antipsychotics. The reviewer noted there was no
appropriate doses prescribed of antipsychotics for this child's
condition. And the reviewer stated that the treatment with the
SGA was not appropriate for a 4-year-old.
Now, it made a series of recommendations. First, to work
with state Medicaid Programs to perform utilization review of
SGAs prescribed to children. Second, CMS should work with State
Medicaid Programs to conduct periodic reviews of medical
records associated with claims for SGAs prescribed to children.
And, third, CMS should work with states to consider other
methods of enhanced oversight of SGAs prescribed to children,
such as implementing peer-reviewed programs. Apparently, CMS
concurred with all these recommendations. Are you familiar with
any of this? Do you know if any progress was made on any of
these recommendations?
Mr. Hagg. Unfortunately, I am not familiar with that work.
I would be glad to take questions back to my colleagues at the
OIG and get back to you with answers.
Mr. Murphy. Would you, please? Thank you.
Either of you familiar with this as state issues?
Ms. Riley. It is very serious issue. And I know, I believe
that is the report, Congressman, that spoke specifically to
foster children and their disproportionate use of these.
Mr. Murphy. Yes, in 2011, talked about foster children.
This looked at a wider range of kids. But, yes, you are right
about that too.
Ms. Riley. I know that MACPAC has taken that under very
serious attention and is looking at, particularly around the
focus on foster children, and we reported on that in our June
2015 report to Congress.
Mr. Murphy. So here is something I am thinking for the
states and also with regard to your office too, sir, we are all
very concerned about people who are involved with waste, fraud,
and abuse. But there is a Medicaid policy that says you can't
see two doctors in the same day, same day doctor rule. So the
pediatrician identifies, a mother brings a 17-year-old to the
doctor and says, ``I am very concerned, my son is talking to
himself; he is hearing voices; he is doing poorly in school; he
has lost his friends; he is isolated,'' and that pediatrician
rightfully says, ``We need to have you see a psychiatrist
immediately. This is a very serious concern. Oh, you are on
Medicaid? I am sorry, you have to go home.'' This is the rule.
And so what happens is, I wonder if this is perhaps one of
the reasons why over 72 percent of antipsychotic drugs are
prescribed by nonpsychiatrists. You can imagine the outrage if
I said 72 percent of heart surgeries were performed by people
who weren't surgeons. So what I see here is while people may be
operating within the rules of Medicaid, it may be actually
inviting these kind of improper cases. So when we look at what
has happened in the past where this committee has rightly been
concerned, 50 deceased providers and 50 providers who have been
excluded from Medicaid and people on suspended or revoked
licenses can all bill Medicaid, my concern is we have rules
within Medicaid that say just because you have an M.D. or D.O.
After your name, you can still prescribe. But we end up with
what I think is a pretty amazing report from the Office of
Inspector General saying something is wrong here. And I hope
that this is something that States comment on and your office
comments on too and recognizes that part of the problem we have
here is to fix this.
This committee, everybody in this committee knows we have
to fix things in mental health. People have got some tremendous
ideas how we are going to do this. But I hope this is one of
those areas that Medicaid can also review to fix this harm that
is happening to our children.
Thank you. I yield back.
Mr. Pitts. The chair thanks the gentleman.
Now recognizes the gentlelady from Florida, Ms. Castor, 5
minutes for questions.
Ms. Castor. Thank you, Mr. Chairman.
And good morning. Like many of the other members, I am very
concerned with the unintended consequences of H.R. 2339.
Medicaid eligibility was recently updated. And it was tied to
the modified adjusted gross income measure to streamline
eligibility and prevent gaps in coverage. Now, H.R. 2339
proposes a surgical change in the law to prevent lottery
winners from maintaining Medicaid eligibility. But as currently
drafted, children and other individuals may be affected by the
change. In MACPAC, a relatively quick review of this
legislation, can the Commission foresee problems with
implementation and unintended consequences?
Ms. Riley. We don't take positions on particular pieces of
legislation. The staff has looked at this. And I think the
concerns are around the definition of lump sum and the
discussions we have earlier that, in fact, it could catch
payments for disability, for an accident, for somebody who has
been paid a disability payment. We know that there is a 2-year
wait for people for SSDI. And then there is often a lump-sum
payment for the person who may, in fact, have medical bills to
pay. So I think the issue here would be the issue of how broad
the definition is.
Ms. Castor. Right. So we have some work to do here. Many of
the bills on the agenda today target provider fraud and
individual eligibility. But I would like to ask you all as
experts whose responsibility is it to enforce Medicaid and the
Social Security Act statutes when a state does not follow the
law? Mr. Hagg?
Mr. Hagg. Well, CMS is responsible for the broad Federal
oversight of the program.
Ms. Castor. I know this probably has never happened in
Oklahoma. But, generally speaking, what is your answer?
Mr. Gomez. Well, CMS has the oversight. And it is one of
those things where we have auditors in our office every day
looking at every aspect of the program, both Federal and state
level.
Ms. Castor. OK.
Ms. Riley. CMS.
Ms. Castor. And can you give me an example where a state
was in violation of the law under Social Security Act, Medicaid
statutes, and they took action and addressed the situation?
Mr. Hagg. Yes. A lot of the examples that we see in that
area have to do with state financing arrangements, mechanisms
the states use to help fund the state's share of Medicaid
payments. At times, we see states pushing the limits or working
in gray areas to try to obtain Federal Medicaid funds in some
cases when they shouldn't be, when it is inappropriate. And
those are examples when CMS would need to jump in and take
action.
Ms. Castor. Ms. Riley, what about when a state limits
access to care and, for example, children are being denied
access to pediatricians or specialists? Have you seen an
example where CMS came in and did some kind of enforcement
action or exercised their oversight?
Ms. Riley. Let me get back to you and ask the staff to make
sure that we do a comprehensive review. But there certainly is
CMS oversight.
Ms. Castor. Mr. Gomez, do you know of an example there?
Mr. Gomez. Speaking for Oklahoma, in my 15 years in the
Medicaid Program, we have never found, been found to have
violations.
Ms. Castor. Here is what I am getting at, and if you all
can look at this situation, at the end of December, a Federal
court judge said to the State of Florida that your restrictive
networks for specialists and pediatricians, they are so
restrictive that you have, in effect, denied access to care for
kids to medical services. They weighed in on reimbursement
rates that are so low that they can't get doctors to
participate.
During the 8 months, in the interim, the State of Florida,
rather than stepping up and saying, ``OK, we are going to
rectify the situation,'' has said, ``Talk to the hand, no. In
fact, we are going to continue to limit these networks.'' And
all of the children's medical directors across the state now
are in protest because children now are being screened out.
They don't have access to specialists. And it would seem that,
especially after the Armstrong case by the U.S. Supreme Court,
that it really is up to CMS to enforce and step in. I don't
know what else these kids can do if they have to rely on
Federal regulators.
Ms. Riley. And that is the charge of the Medicaid and CHIP
Payment and Access Commission. It is the broad set of
activities in which we are engaged. And I am not familiar with
this particular case. But I am certain--we have a Commission
meeting coming up, and I can assure you it will be one of the
topics we talk about.
Ms. Castor. Kids across Florida would be grateful if the
Commission would take a look. Thank you.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentleman from New Jersey, Mr. Lance, 5 minutes
for questions.
Mr. Lance. Thank you very much. And good morning to you
all. My last name is Lance. I am sitting here because I would
like to interact with the distinguished panel. I don't know a
lot about this issue, but I am certainly interested in it. And
I come from a small family law practice where, on occasion,
middle-aged children come into the law practice--my late father
and my twin brother who practices law now--wishing to
impoverish their parents. And we throw them out of the office.
And this is an issue that concerns me greatly.
Now, am I right, did I hear you say, Ms. Riley, that 60
percent of all nursing home costs are through the Medicaid
Program?
Ms. Riley. Long-term services and support.
Mr. Lance. And am I right that 37 percent of all child
births in this country are through Medicaid?
Mr. Gomez. In Oklahoma, it is about 60 percent.
Mr. Lance. Sixty percent of child births. Now, Medicaid, as
I understand it, is a shared program?
Mr. Gomez. Yes, sir.
Mr. Lance. Costs borne by the Federal Government and costs
borne by the State Government?
Mr. Gomez. Yes, sir.
Mr. Lance. But it is not equal across this country. And it
depends on the state--is that accurate?--as to percentages?
Mr. Gomez. Yes, sir.
Mr. Lance. And in Oklahoma, what is the percentage?
Mr. Gomez. This October, it will be 60.99 percent.
Mr. Lance. Roughly 61 percent is paid by----
Mr. Gomez. The Federal Government.
Mr. Lance [continuing]. The Federal Government. That
certainly is not true in all of the states?
Mr. Gomez. No, sir.
Mr. Lance. I live in New Jersey. And we pay more than most
states. Is that accurate?
Mr. Gomez. I believe so.
Mr. Lance. And there are states that pay as much as 50
percent. And New Jersey is one of them. So this is not a
program that is equal across the United States.
Now specifically regarding the impoverishment of parents or
of a spouse, you are telling me, Mr. Gomez, that the 10th
Circuit has ruled that there can be no clawback for annuities?
Is that what are your telling me?
Mr. Gomez. Yes, sir.
Mr. Lance. Could you explain that in a little greater
detail to me? Because this certainly interests me greatly.
Mr. Gomez. Let me find the note on that particular section.
Mr. Lance. Take your time. Here in Washington, everybody is
in too much of a rush.
Mr. Gomez. The rationale of the court's decision in Morris
and similar cases has been extended in other courts in at least
on the 10th Circuit decision to other financial vehicles that
similarly thwart Medicaid's intended purpose. In particular, we
have seen an increase in the use of non-assignable,
nontransferable promissory notes. But that is not the issue,
but the issue of annuities, to shelter assets, which the courts
have----
Mr. Lance. And this means that a couple go to an insurance
company and give that insurance company $100,000 or $200,000 or
$5000,000, purchasing an annuity. And then when one of the
couple go into a nursing home, there is the claim that that
half of the marital unit is impoverished and the other spouse
can receive 100 percent of the annuity. Is that what is
occurring?
Mr. Gomez. Yes, sir.
Mr. Lance. And the 10th Circuit said that was legal?
Mr. Gomez. What they are saying is that, the court's ruling
essentially permits a married couple to shelter potentially an
unlimited amount of assets through a non-assignable,
nontransferable annuity in order for the spouse of medical need
to qualify for Medicaid.
Mr. Lance. And is that based upon the fact that we have not
contemplated that here and the Mullin legislation would rectify
that?
Mr. Gomez. Let me go back and say Medicaid statutes allow
for a spouse of a Medicaid applicant for long-term care
services to keep a certain amount of his or her resources.
Mr. Lance. I understand that.
Mr. Gomez. So the amount of the spouse of the applicant is
referred to as community spouse and the institutionalized
spouse. The amount the community spouse is allowed to retain is
called the community spouse resource allowance, CSRA. So, in
general, Medicaid will divide that couple's total resources in
half to determine the CSRA. What the 10th Circuit said is that
money can be diverted in that where the spend down can be
achieved and still protect----
Mr. Lance. Thank you. I am sure this is not a large problem
in the number of persons who utilize this loophole. But I
certainly think that it should be closed and closed pronto. And
I commend Congressman Mullin in his efforts. And I think the
purpose of the law is not to permit this type of diversion. And
I certainly think that it borders on fraud and, in my opinion,
is immoral.
Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman.
I now recognize the gentlelady from Illinois, Ms.
Schakowsky, for 5 minutes of questions.
Ms. Schakowsky. Thank you, Mr. Chairman. We have talked
about that personal care services may be an area that is
vulnerable to fraud. And we must make sure that beneficiaries
are receiving the services that they need at the right time in
the right way. However, I have concerns about a penalty on the
State's FMAP in an environment with Medicaid, where Medicaid
Programs really are struggling right now administratively.
So, Ms. Riley, I know that MACPAC has not extensively
studied this issue. But the Commission has looked at Medicaid
administrative infrastructure. Could you tell us, what are some
of the challenges that are being faced in this space?
Ms. Riley. In the verification space? The states have an
array of activities which they pursue. And I think the notion
of electronic validation raises questions about the cost of
that. It is, again, the cost-benefit tradeoff. I think there
are 9 or 10 states that currently have those systems. They have
said that they are succeeding in getting savings from those
activities. But I don't, we are not aware of any evaluations
that have been underway or completed that would tell us really
what the cost-benefit analysis of that verification activity
is.
Ms. Schakowsky. That is what I am concerned about. Because
if the state doesn't implement the electronic verification
system, under this legislation that is being considered, they
face a cut in their Medicaid reimbursement. But there aren't
any start-up funds or implementation funds before the penalty
begins to go into effect. So is it possible that when States
spend Medicaid dollars to build these systems, they are going
to need to decrease the spending that they have on services?
Basically, what is the tradeoff?
Ms. Riley. Well, it is obviously a laudable goal to make
sure we root out any fraud and abuse in this very important
area. It is a $16 billion spend. The elderly and people with
disabilities depend on these services. That said, I think it is
a good example of one of the issues that MACPAC has raised in
one of its reports. We pay fraud and abuse and fraud control
units with a 75/25 match. But we pay for the activities like
EVV with a 50/50 match. So there are not startup funds, and
there is sort of a disincentive to do the frontend activity
with a lower match rate, but a higher match rate to go get them
when there is a mistake or fraud has occurred. So I think it
raises an important question that MACPAC has raised in the past
about whether we ought to invest differently in state
administrative functions that could better prevent fraud and
abuse.
Ms. Schakowsky. So is this decision-making underway right
now at MACPAC?
Ms. Riley. It was a recommendation from MACPAC in I believe
our March 2012 report and a discussion that we have had
numerous times with the states. It is really frustrating that
one wants to do more to prevent fraud and abuse. And that
enhanced match could address. Of course, that is a cost to the
Federal Government, so it is easy to talk about and difficult
to do. But I think it is, again, a balancing act of how much to
invest after the fact to go and recoup from fraud and abuse
practices versus before the fact to try to prevent them. And
EVV is a good example of such an initiative.
Ms. Schakowsky. So how can we get at a real cost-benefit
analysis then?
Ms. Riley. I think it would be useful, there are the 10
states like Oklahoma that are now engaged in EVV. And I think
it would be a fairly quick kind of study. And I will certainly
speak with our staff about whether we can take a look at that.
Ms. Schakowsky. OK. I do want to go back to this issue that
was raised by Representative Castor about the issue of the
treatment of lottery winnings and other lump-sum income. You
spoke to it a bit. I mean, it is one thing to talk about a
lottery winner and, you know, millions of dollars or whatever.
But it really does lump, if you will, together these other
things--and you actually raise the issue of disability. I am
really worried about that, that, as you pointed out, that
disabled individuals frequently have to wait a year or more,
you mentioned 2 years, for their application to be processed
for disability. And that is after the mandatory 2-year waiting
year. And, generally, they are paying for other living expenses
and medical bills during that time. So if they are eventually
determined to be eligible for SSDI and then get a lump-sum
payment to cover that waiting period but that then deprives
them of the Medicaid benefit, then how are they to pay back all
the expenses that they had while they were waiting?
Ms. Riley. I think that is a question in the drafting of
the bill about how broadly one defines ``lump sum.''
Ms. Schakowsky. I just think that putting those two things
together, that there ought to be--I totally get somebody
strikes it lucky and gets the lottery. But I am over my time.
Thank you.
Mr. Pitts. The chair thanks the gentlelady.
I now recognize the gentleman from Florida, Mr. Bilirakis,
5 minutes for questions.
Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it.
Commissioner Riley, our U.S. territories have Medicaid
programs. But unlike the states, they have different rules that
govern their Medicaid Program, such as eligibility or payment
rules. Can you briefly talk about how their program may differ
from the mainland if you think CMS should provide this type of
information on its central Web site like they do for the
states?
Ms. Riley. Again, Congressman, we haven't taken a position
on this. But the MACPAC has long been a supporter of good,
consistent data from all the states and territories. I think
this bill includes the same sorts of information states now
must report. So it is very much related and would be consistent
with what states now have to report.
Mr. Bilirakis. Thank you. Thank you.
According to Puerto Rico's Resident Commissioner, the Ways
and Means Green Book used to have a chapter on social welfare
programs from the territories, such as Medicaid. However, that
chapter has been removed because a nonpartisan Congressional
Research Service, CRS, could not find enough publicly available
information to keep it accurate and up to date.
Commissioner Riley, MACPAC is the nonpartisan legislative
branch agency that provides Congress with policy and data
analysis for Medicaid and CHIP. If Congress needs information
to make policy decisions, for example, if the ACA Medicaid
funding for Puerto Rico will be entirely spent before 2019,
what does MACPAC have to do to find information on the
territories to carry out your advisory role?
Ms. Riley. That is a very good question. We have a
wonderful staff who provide detailed information to us. And we
can certainly take a look at how much we report on the
territories.
Mr. Bilirakis. Thank you. Please get back to me on that as
well.
Ms. Riley. We will.
Mr. Bilirakis. Mr. Hagg, do the territories have the same
Medicaid data reporting requirements as the 50 states and the
District of Columbia? If so, can you think of a reason why CMS
would not include the same information about the territories as
they do for the 50 states and D.C.?
Mr. Hagg. I believe they do have the same reporting
requirements. And no, I can't think of a reason why it couldn't
be shared.
Mr. Bilirakis. OK. Good. Mr. Hagg, again, I know that you
don't take positions on pieces of legislation. I understand
that. But, in general, does OIG typically favor greater
transparency?
Mr. Hagg. Yes.
Mr. Bilirakis. In general.
Mr. Hagg. Yes. In general, more transparency is better than
less.
Mr. Bilirakis. Very good. Thank you.
I yield the rest of my time to Representative Guthrie.
Mr. Guthrie. Thank you. Thank you for yielding. I want to
clarify a question just before, one of the questions was about
the cost of EVV Programs and on the states, and my legislation
mandates providers use EVV. It does not mandate that states
purchase or spend anything to create its own program or moving
forward. The disparity between EVV and fraud system is not a
disincentive at all. And states should still have an incentive.
And there are already people out there that are doing EVV and
the states aren't building a program, aren't setting up a
program. It is not separate and distinct. There are people
currently doing this, so it wouldn't cost the states money. I
just want to clarify that point. Thank you.
Mr. Pitts. The chair thanks the gentleman.
I now recognize the gentleman Mr. Butterfield 5 minutes for
questions.
Mr. Butterfield. Thank you very much, Mr. Chairman. Thank
you for holding this important hearing today.
Thank you to the witnesses for your attendance. Mr.
Chairman, several weeks ago, we all celebrated the 50th
anniversary of Medicaid. It was a great day. The benefits of
Medicaid cannot be overstated. More than 72 million Americans
rely on this program. Seventy-five percent of children who live
in poverty in this country depend on Medicaid. Greater than 10
million school-aged children who live in poverty depend on
Medicaid.
I represent, Mr. Chairman, one of the poorest congressional
districts in the country. More than one out of every four
people in North Carolina's first congressional district lives
in poverty. One out of three of our children live in poverty.
Medicaid is absolutely critical to my constituents. It is
especially important to children in eastern North Carolina. As
I child, I graduated from high school in 1965, the year of the
enactment of Medicaid. And I recall, as a child, as a high
school student, none of my classmates ever, ever, ever received
any type of medical treatment or dental treatment because they
couldn't afford it because 90 percent of our school students
lived in poverty.
Democrats on this committee have done our part to
strengthen Medicaid. I want all Americans to understand and
appreciate the importance of Medicaid. The Affordable Care Act,
which was drafted by this committee, it actually strengthened
Medicaid. I remember the debate so well. It strengthened
Medicaid's integrity by requiring regular risk-based grading of
providers and suppliers. The ACA increased termination
authority to ensure that malicious actors cannot participate in
the program. And so it is abundantly clear that the ACA
improved the integrity of the Medicaid Program across the
board.
So I am interested in hearing more today about how to
ensure that the ACA termination requirements are upheld. We
want to uphold those in each and every state. I am also
interested in protection Medicaid beneficiaries from
potentially harmful changes to eligibility.
Mr. Hagg, Director Hagg, thank you. The integrity of the
Medicaid Program is critical to ensure that beneficiaries are
not taken advantage of. It is important that the Federal
Government and our States work together to ensure Medicaid
beneficiaries have access to care, reliable care. Can you
describe, sir, whether the ACA strengthened the law to prevent
providers terminated for cause from operating in other states?
Mr. Hagg. It did, yes. There is a requirement that if a
provider is terminated in one state or Medicare, they are
required to be terminated in other states as well. So, yes, it
is a very good upfront program integrity control to ensure that
bad actors aren't able to access state Medicaid programs.
Mr. Butterfield. Has the ACA had a positive impact as of
this date in reducing the number of terminated providers from
operating in other states?
Mr. Hagg. Yes, it has. It is a start for sure. It was CMS'
responsibility to try to set up a central data system that
would house all the terminated providers so that other states
could access. Based on our work, we found various limitations
with that database. We found that, based on some testing we
performed, there are some providers still that are terminated
in one state that are still operating in other states. And we
have made recommendations on how to improve that so those
things don't happen any longer.
Mr. Butterfield. If you know, will the draft legislation
that I am working on in conjunction with Mr. Bucshon address
the recommendations made by OIG to further eliminate the
participation of terminated providers?
Mr. Hagg. Most of the problems we found would be addressed.
The one difference I would point out is we have recommended
that providers who operate in managed care environments be
required to enroll as providers. I believe the legislation
talks about having the providers register with the state and
then a process of having the state notify the managed care
network if that provider should be terminated. That is a good
start. We believe having them enroll rather than register would
create that direct legal authority between the state agency and
the provider.
Mr. Butterfield. All right.
Finally, Commissioner Riley, you mentioned in your
testimony that Federal rules are already in place to prevent
providers terminated in one state from operating in others. Are
those Federal rules as a result of the ACA law that we have
been talking about?
Ms. Riley. I believe that is correct.
Mr. Butterfield. Would you agree that the ACA has
strengthened the Medicaid Program's integrity?
Ms. Riley. Yes. And I think CMS has restructured and
strengthened its work with the states as well.
Mr. Butterfield. Thank you. Thank all three of you.
I yield back.
Mr. Pitts. The chair thanks the gentleman.
I now recognize the gentleman from Indiana, Dr. Bucshon,
for 5 minutes of questions.
Mr. Bucshon. Thank you, Mr. Chairman.
Along that same line, Mr. Hagg, we were talking about, Mr.
Butterfield was talking about, does CMS require reporting into
their system? Because from the information I have, at this
point, over a year and a half after your recommendation, 4 \1/
2\ years after the ACA requirement, CMS does not require such
reporting of terminated providers. Is that true or not true?
Mr. Hagg. That is my understanding as well. We have made
the recommendation that it be required. I think CMS said they
concur with our recommendations. But then they pointed to
information provided to states that talks about being
encouraged. It doesn't talk about being required.
Mr. Bucshon. You probably know in government agencies, if
you encourage something, it never happens; you have to require
it most likely. And other than that, have they given an
explanation of why they haven't required it?
Mr. Hagg. Beyond that, no.
Mr. Bucshon. OK. Can you also talk about the challenges
that states may have faced in complying with the Medicaid
requirements to terminate a provider's participation in their
Medicaid program if that provider is terminated for cause from
a Medicaid Program from another state?
Mr. Hagg. Sure. The challenges are that there needs to be a
central data set that states can look to to determine whether a
provider has been terminated in another state.
Mr. Bucshon. So really CMS needs to have a required
reporting to a database?
Mr. Hagg. We believe so, yes.
Mr. Bucshon. OK. And in your opinion, does the draft bill
address this challenge, some of the states' challenges do you
think?
Mr. Hagg. My understanding, the draft bill makes it a
requirement, yes. Again, the one thing I would point out is
that we do recommend that managed care providers enroll rather
than register.
Mr. Bucshon. Understood. And we are also talking about for
cause. So can you give maybe some examples of why a provider
would be terminated for cause from the Medicaid Program?
Mr. Hagg. Yes, for cause would be they have committed fraud
or patient abuse. Or some other type of billing privilege that
they have abused. Rather than just being an inactive biller,
that wouldn't be for cause.
Mr. Bucshon. Is there quality determinations in there too?
Mr. Hagg. Absolutely, yes. If there is some type of patient
abuse or a quality care issue, absolutely.
Mr. Bucshon. And that would be reported to the state or to
CMS if they had those issues?
Mr. Hagg. If the state is aware of that, that type of
abuse, then, yes. If they terminate that provider for cause,
they should report that provider to CMS.
Mr. Bucshon. Mr. Gomez, could you talk maybe about the
process of terminating providers from your state Medicaid
Program and how that process works in your state?
Mr. Gomez. We have a 30-day with cause termination and a
60-day without cause termination.
Mr. Bucshon. So I am talking about the process of, how do
you determine that it is for cause? Who does that in your
state, for example? I am just trying to get----
Mr. Gomez. We have a Medicaid Fraud Control Unit, as each
state does, and we rely heavily on them in the determination of
fraud. And then we actually have through our contracting system
the ability to go--if we have a new provider coming into the
state--the ability to go look on the database and see if that
provider has been terminated in other state.
Mr. Bucshon. So, for example, I was a physician before. So
there are physicians that get their privileges terminated at
their hospital for a variety of reasons, right. Does that type
of information get to the state?
Mr. Gomez. It does. We have an agreement with the licensure
boards in order to be able to share that information. If there
is a licensure issue, we will be able to take appropriate
action within our contract.
Mr. Bucshon. Thank you, Mr. Chairman.
I yield back.
Mr. Pitts. The chair thanks the gentleman.
I now recognize the gentleman from Maryland, Mr. Sarbanes,
5 minutes for questions.
Mr. Sarbanes. Thank you, Mr. Chairman.
Ms. Riley, I apologize if the topic has been touched upon
already or this question in particular. But I am interested in
this, the bill that relates to someone converting assets to
income through purchase of an annuity and the proposed change
for how that might be handled. I gather that right now there is
some protections that make the state the ultimate beneficiary
of annuity proceeds in the case where that spouse dies. So
there is a way for the state to benefit.
But now there is a proposal to I guess divide in half the
proceeds during the period in which both spouses are alive, one
being in the institution and the other being still at home. And
I just wondered if you could speak to what you think, first,
the incidence of, like, how frequently do you have a sense the
situation is even arising where somebody is doing that annuity
purchase under circumstances where there is a spouse that is
institutionalized, and then within that universe, how often it
is the case that the amounts we are talking about would be such
that you could argue that they were trying to kind of waste or
hide or redirect assets that would otherwise create a profile
that would disqualify the spouse from institutional care?
And I would imagine, as well, that if somebody for the
right reasons was converting assets to an income stream, that
if you required that 50 percent of that be allocated to the
institutionalized spouse, you might create a situation where
the spouse that remains at home would actually qualify faster
for institutional care based on their profile because there is
a reduced amount of income available to them. So in terms of
the income profile, you might actually be adding someone onto
the state's burden who otherwise because of a smartly purchased
annuity would be able to cover their expenses through that if
they ultimately ended up in an institutionalized setting. So
maybe you could comment on some of those issues.
Ms. Riley. The law currently protects the spouse at home to
a max of $119,000. I don't believe there is any data that I am
aware of, we can certainly have the staff look at this, that
talks about the number of people who would be eligible for this
kind of annuity. I suspect it is small. And you are correct,
there remain the estate recovery provisions for long-term care,
so that the state is compelled by Federal law to go after the
remaining estate after the death of the spouse.
Mr. Sarbanes. All right. Thank you.
I have no other questions.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from New York, Mr. Collins, 5 minutes
for questions.
Mr. Collins. Thank you, Mr. Chairman.
I want to thank all the witnesses as well. We are delving
into something. And I do think, regardless if there is some
disagreement, we all do agree no one wants to see the system
gamed. As Mr. Lance said, you know, he will throw somebody out
of the office if they walk in to explicitly game the system.
But a couple other questions, I may delve into that a
little bit, but my question, Mr. Gomez, the electronic
verification system that--Oklahoma uses that as I understand?
Mr. Gomez. Correct.
Mr. Collins. Give me an idea of what Oklahoma would
consider the return on that investment, was an investment to
get into that.
Mr. Gomez. We actually with that independently evaluated.
We have been in the EVV system for a little over 5 years. And
the first 3 of that system, Oklahoma has had a 5-to-1 return on
its investment through cost savings and cost avoidance.
Mr. Collins. That is what I expected. And I guess I would
just point out for anyone who is a little bit worried that
whether the Federal Government piece is 75/25 or 50/50, I know
if I am running a State and the return is 5 to 1, I don't even
need the Federal Government to pay any of it. There is smart,
and there is stupid. So while we would all like to see perhaps
if you are in the state the Federal Government paying 75
percent, I don't know too many things in life that are 5 to 1.
So, Mr. Gomez, I appreciate that.
Now, we talked a little bit about annuities. I think Mr.
Sarbanes made it sound like if there is an annuity, half of
that annuity goes to the community spouse, and half goes to the
institutional spouse. But isn't it true that in gaming the
system, the annuity can give 100 percent to the community
spouse?
Mr. Gomez. That is my understanding, yes.
Mr. Collins. Right. And that is a big difference. So it
isn't like they are buying this annuity and giving half the
money to the institutionalized spouse. In fact, the whole way
of gaming the system is buying an annuity where none of it goes
to the institutional spouse. The community spouse gets all of
the benefit going forward, and it doesn't count. I mean, that
is how you game the system. So I just wanted to be clear. It
was left kind of hanging there that in the annuity, half of
that would be going to the institutionalized spouse, and that
is not the case.
In your written testimony, Mr. Gomez, you also mentioned
promissory notes. You didn't really cover that. And I think we
know what annuities are, and it is certainly clear how that
could be gamed. Can you maybe in just a very short time, is
there also an issue on promissory notes?
Mr. Gomez. Yes. I think what we are seeing as we are
dealing with the annuities in the state of Oklahoma, we are
seeing the practice then change to a number of applicants using
the court's logic to extend that to promissory notes, to where,
again, they are using, it is the same impact, so it is where
you are able to shelter some of the wealth from that in a way
that is not intended.
Mr. Collins. So I guess it just goes back, there is
creativity in the financial world as we saw with derivatives.
That didn't go so well. But there are hedge funds out there.
The minute smart people get together and say how are we going
to game the system--whether it is on taxes or, in this case, on
impoverishing yourself--there is a lot of folks that make a lot
of money coming up with the next financial product to get past
the law. And I guess the real issue here is the fact that
Congress plays a role. Is that really what the courts ruled? It
was almost like saying: We know this is wrong, but if Congress
doesn't act, there is nothing we can do.
Mr. Gomez. Correct. That is what the 10th Circuit
effectively said.
Mr. Collins. And I guess, the other thing that came out in
the hearing, one of the things about going almost last is you
get to hear the other testimony, is some thought, frankly, by
the other side that parents aren't responsible for their kids.
Oh, my God, the parent won the lottery; the kid might not be on
Medicaid. I think it is the fundamental responsibility of
parents in the United States to take care of their kids. If
they have got money and wealth, their kids shouldn't be on
Medicaid. And if there is a way, because somebody has won the
lottery literally, their kids shouldn't be on Medicaid. We
shouldn't apologize for the fact the family is wealthy now; the
kids aren't going to be on Medicaid. That is what parents do.
They take care of their kids.
So, again, back to this piece, and we have nuanced the
issue of spreading it out over 1 month. But it isn't like you
count it, if they win $100,000, that $100,000 doesn't count
every month for the next 20 years to disqualify the child. It
counts now for 1 month. But if you won a few thousands dollars,
a state could decide how to implement this. And if they did
spread it over time, it might be $100 dollars a month, and that
is not going to disqualify the child anyway. There was some
insinuation that this one-time winning of, $20 million is $20
million, but $20,000 would then disqualify this child from
Medicaid for the rest of their life. But if you took $20,000
and you then spread it over 20 years, that is $1000 a year.
Then you spread that over 12 months, you are talking about $90
a month. That is not going to disqualify a child from Medicaid,
is it, Ms. Riley?
Ms. Riley. I don't believe so. I think the example is a
higher number. And I think that is the issue with the
definition.
Mr. Collins. Sure. And if it is $20 million, the kid
shouldn't be on Medicaid. We do have to be careful in our
wording. But in this case, as far as I know, it would go back
to the states to decide how to implement it. States are not in
the business of hurting their own citizens and certainly not
hurting children. At some point, at the Federal level, we just
need to trust the judgments of our elected is officials in the
50 states and our territories to do what is right by their
folks and not try to nuance this in a way that, quite frankly,
is disingenuous.
Thank you, Mr. Chairman. I yield back.
Mr. Pitts. The chair thanks the gentleman, now recognizes
the gentleman from New York, Mr. Engel, for 5 minutes for
questions.
Mr. Engel. Thank you, Mr. Chairman.
Thank you, Mr. Green.
You know, nobody wants anyone to game the system. I
certainly don't. And I think that we need to crack down if
people are gaming the system for sure. But I think we have to
be careful not to imply that somehow Medicaid needs to be
denigrated because people are gaming the system. Medicaid is
something that is very, very important. It is a critical safety
net. There is some hostility around here toward it, and I think
that we need to point out how important it is. There are 72
million Medicaid beneficiaries. There are many Americans who
face economic hardship or sudden exorbitant healthcare costs.
And I want to talk about my state of New York. We have made
significant strides in our efforts to reform Medicaid, both in
terms of cutting costs and improving the quality of care that
patients receive. Governor Cuomo, in June, announced that over
the past year, Medicaid spending per person in New York fell to
a 13-year low. And during the same period, the Affordable Care
Act allowed more than half a million additional New Yorkers to
enroll in Medicaid, which is, I think, a significant step in
the effort to reduce the number of Americans who are uninsured.
New York has also had success boosting program integrity
through the use of corporate integrity agreements. And these
agreements are extended to providers that had compliance
issues, an alternative to barring the said providers from the
Medicaid Program and consequently triggering service shortages
to beneficiaries. Corporate integrity agreements afford these
providers opportunities to improve their compliance and set up
mechanisms through which their compliance can be monitored more
closely.
In 2013, corporate integrity agreements allowed New York's
Medicaid Program to save over $58 million. That is significant.
So, Ms. Riley, I would like to ask you this, I understand that
MACPAC has recommended that CMS disseminate best practices
concerning program integrity so that states may replicate other
states' successes. Would New York's success, as I just
mentioned, using corporate integrity agreements be considered a
best practice worth emulating? And, more broadly, can you speak
to the value of focusing more of our efforts on sharing best
practices like the example I have outlined?
Ms. Riley. MACPAC is very much concerned about that. There
is quite a disparate set of activities across the states. And I
think the New York example sounds very intriguing. I think part
of the problem is we don't have a good definition of what best
practices are and what works and what doesn't. So it would be
helpful to be able to have a set of criteria against which to
measure state activities and then disseminate those that work
across the country. And it was very much a recommendation of
MACPAC.
Mr. Engel. Thank you. So if something works in one state,
it may not work in every state, but it may work in many more
states?
Ms. Riley. That is right. It may not work in Oklahoma, but
Oklahoma may be able to tweak it a bit so it works better. And
that certainly is an experience that we have seen in MACPAC.
Mr. Engel. Thank you. My second question concerns H.R.
1771. Mr. Sarbanes referred to a little bit. It would modify
the manner in which spousal income purchase through an annuity
would be considered in evaluating eligibility for nursing home
coverage. And let me, Ms. Riley, go to you again. I know that
MACPAC has done a lot of work regarding long-term care in the
U.S. Is it accurate to say that Medicaid provides the sole form
of long-term care insurance in the U.S. today?
Ms. Riley. It provides 61 percent of all spending on long-
term care services.
Mr. Engel. As a follow up, can you speak to the importance
of protections against spousal impoverishment in states with
high costs of living, like New York? Might this legislation
have the unintended consequences of leaving a community spouse
with very meager resources because she happens or he happens to
live in a high-cost-of-living state like New York?
Ms. Riley. Well, I think that is always a question in these
adjustments about the difference in cost of living across the
country. And that is a very legitimate question. Obviously,
today spouses are protected up to the limit of $119,000. It is
interesting to think about the unintended consequence that
could occur if this bill passes and that would be to wonder if
people would stop buying annuities and then maybe become
eligible sooner. It is a question, I think, without an answer
at this point.
Mr. Engel. But something we should look into?
Ms. Riley. I think always the unintended consequences are
the most difficult to contemplate but need to be considered.
Mr. Engel. Thank you very much.
Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Virginia, Mr. Griffith, 5 minutes
for questions.
Mr. Griffith. Thank you, Mr. Chairman. Thank you very much
for holding this hearing. As always, these hearings are very
enlightening. I came in today without any questions related to
annuities and long-term care insurance, and now I have all
kinds of questions.
But let me say this, Ms. Riley has indicated--and I didn't
look it up--but she has been in this field for quite some time
and the hope had been that long-term care insurance would help
offset some of what Medicaid is having to pay. Folks are going
to look at the money, when you are talking about putting a
loved one into a nursing home, they are going to look at this
as a tax avoidance situation, as opposed to tax evasion. A lot
of folks today have said, this is immoral or nobody wants to
game the system. The people are going to find a way to hang
onto their assets if they can.
And one of the things we have to be careful of, and, Mr.
Chairman, we may need to have a roundtable discussion among our
members, we have to be careful that we don't go too far in a
direction because people are going to figure out a way. And one
of those ways is to go through a divorce, as long as the spouse
who is the spouse in the nursing home or incapacitated in some
way needing the care is competent. Because they want to pass
assets on to their children, they are going to figure out a
way. And if the only way left is divorce, they will divorce.
They will reach a property settlement agreement. They will
transfer all the money to the healthy spouse. And then the
healthy spouse will start working on ways to get that to the
children. People will do that.
So this is a complicated issue. It is not one where we need
folks on each side of the aisle pointing the finger at the
other side of the aisle. We need to see if we can't come up
with a new paradigm, a new way to do this.
I don't have the answer, Mr. Chairman. But I have heard a
lot of concern on a lot of issues regarding promissory notes,
et cetera, annuities. But we need to figure out a way that we
can make it so that it is affordable for the average American
family to have a loved one in long-term care without losing
everything they have worked for 45 or 50 years. And they are
going to want to pass it on to their kids. So as long as even
the incapacitated party is competent, they are going to figure
out a way. And they are going to game, if you want to call it
gaming the system, they are going to game the system because in
the long-term, it is better off for their loved ones. So I
don't know the answer. But let's not think there is a quick and
easy solution.
And I think, Ms. Riley, you would agree with that.
Ms. Riley. Yes, sir. I think there is some good news and
that is if one is concerned about the spending in Medicaid on
long-term care, when I started in this field, Medicaid spending
for long-term care was about 75 percent of the total bill, as I
recall. And so we have improved economic conditions, improved
income supports for older people; some use of long-term care
insurance has changed that situation.
Mr. Griffith. And, Mr. Hagg, I got off on that and what I
was really going to ask about was in your written testimony,
the OIG has a body of work related to healthcare provider taxes
and how that impacts Medicaid Programs. I have a bill in that
would do some lowering. The President's Fiscal Commission
recommended eliminating the use of provider tax providing for
non-Federal share of Medicaid funding.
Can you just discuss that issue in the minute and 40
seconds I have left?
Mr. Hagg. We have done some recent work involving
healthcare provider taxes. In one state we looked at a
healthcare provider tax that didn't follow the existing rules
that are in place. To us, it looked like it would have been
impermissible. In talking to the state about it, the state
said, they disagreed, they didn't think it was a healthcare tax
at all. They just said it was a general gross receipts tax, and
therefore those Federal Rules did not apply. We issued a report
to CMS. CMS responded by saying they agreed with the position
we had taken, but they felt like they hadn't done a good enough
job of providing clear guidance to the states on what was
expected. So I think sometime about last year they put out a
letter providing that guidance, and at some point, we plan to
follow up at the appropriate time to make sure that guidance is
now being followed.
Mr. Griffith. Well, I think we need to do something.
Virginia historically has tried to follow the rules, but for
those states that have done other things creatively to figure
out way to make the finances work for their states, they have
eaten up some of the money and really put Virginia at a
disadvantage. And so Virginia has consistently rejected a so-
called bed tax but many states have that. We think other states
are gaming the system to our detriment, and so we would like to
see it be a level playing field and everyone know what the
rules are.
So thank you for your work on that.
With that, Mr. Chairman, I yield back.
Mr. Pitts. The chair thanks the gentleman.
And now the chair recognizes the gentlewoman from Indiana,
Mrs. Brooks, 5 minutes for questions.
Mrs. Brooks. Thank you, Mr. Chairman.
To the panel, thank you all so much for being here and for
helping us understand these complex issues. I am a former
United States Attorney and so I have worked with my state's
Medicaid Fraud Control Unit, I think we called it MFCU is the
acronym that I recall. It has been a few years, but I
understand all too well the nationwide prevalence of the
problem of Medicaid fraud, and I am encouraged by the fact that
the committee is taking up the issues of program integrity.
I also am very pleased that Chairman Pitts has introduced,
and I am working with him, on H.R. 3444, the Medicaid and CHIP
Territory Fraud Prevention Act because it is important that our
territories also have Medicaid Fraud Control Units. And I want
to dive into that a little bit further.
Can you, Mr. Hagg, really just talk with us, and I know
Chairman Pitts started out by talking about the units and how
they are funded and so forth, but can you give us, based on
your experience with the Fraud Control Units in the states, can
you explain further why this is a wise investment of our
Federal dollars to make sure that the territories set up
Medicaid Fraud Control Units?
Mr. Hagg. Well, in general, yes, the Fraud Control Units in
states, they are the groups that are primarily responsible for
investigating Medicaid fraud. They are also responsible for
investigating patient abuse when it occurs in healthcare
facilities. Now we would be supportive in expanding that, their
authority over patient abuse. Right now, they have authority
when it occurs in the hospital or nursing home. But if patient
abuse occurs in a home-based setting, for example, they
currently don't have the authority to investigate that, and we
think that is something that should be expanded.
The Fraud Control Units do a great job. They, I think, 2014
had about 2 billion in recoveries, around 1,300 or so in
convictions. It equates to about a return of 8 \1/2\ to 1 for
every dollar spent, they return about 8 \1/2\. So we think they
are very important in Medicaid program integrity.
Mrs. Brooks. Thank you. You anticipated my next question,
which was actually about the amount of recovery that the units,
that the Medicaid Fraud Control Units across the country have
recovered, and that is $2 billion that is reinvested for other
patients, is that correct? Or how is the $2 billion then when
it is recovered by the government units that recover it, how is
that money used?
Mr. Hagg. I am not sure exactly how that process works. But
certainly, yes, it is, it is more money available that can be
used to provide legitimate healthcare services to Medicaid
beneficiaries that need the services.
Ms. Brooks. I think just to repeat, that was $2 billion
recovered.
Mr. Hagg. Two billion.
Mrs. Brooks. How many Medicare fraud units are there in the
country right now roughly?
Mr. Hagg. There are 50, 49 states and the District of
Columbia.
Mrs. Brooks. Thank you. And Mr. Gomez can you just share
with me the experience in Oklahoma and the work that Oklahoma
is doing, the benefits, and how do states like Oklahoma feel
about the fact that the territories don't have Medicaid Fraud
Control Units?
Mr. Gomez. Well, I think for Oklahoma we take a lot of
pride in making sure that we have appropriate program integrity
pieces in place, and we actually do counsel states with our
territories and try to share information in terms of how to
improve the integrity of the system, even if they don't happen
to have some of the resources that other states or territories
have. So we do a lot of sharing of information to see what we
are seeing on certain activities and how can we share that
information to strengthen other programs.
So when we find in Oklahoma, when we find weaknesses in the
program using technology, we try to fix it in the system so we
can prevent that money instead of a pay-and-chase situation
preventing on the front end.
Mrs. Brooks. I think Mr. Hagg brought up while I initially
was more focused on the fraud aspects and the amount of money
that would be recovered, I think your point about the Medicaid
Fraud Control Units being, are they actually the primary units
investigating patient care issues, Mr. Hagg?
Mr. Hagg. Patient care issues that occur in healthcare
facilities, yes.
Mrs. Brooks. OK.
And, Ms. Riley, any comments you would like to make based
on your experience about Medicaid Fraud Control Units and the
patient care issues?
Ms. Riley. They clearly are an important front line and
they rest in attorneys general offices and work closely with
Medicaid programs, and so it certainly seems that the
territories could benefit from that kind of support.
Mrs. Brooks. And so because the territories don't have
these, is that not happening now then, the patient care issues
with respect to healthcare facilities, how is that being
monitored then?
Ms. Riley. There are a variety of ways that states look at
patient care, not just through the fraud lens, and there are
numerous reports and numerous activities of state licensing
boards as well as Medicaid agencies that look at the quality of
patient care.
Mrs. Brooks. Thank you.
Thank you. I yield back.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentlelady from North Carolina, Mrs. Ellmers, 5
minutes for questions.
Mrs. Ellmers. Thank you, Mr. Chairman.
And thank you to our panel, and I will just start off by
saying I have a few questions here, and I apologize for not
being here for the full committee. It is getting back to town,
and being the third day back, we are all pretty busy, and I had
some other issues I had to take care of. But I want to start,
Mr. Gomez, asking you about the Deficit Reduction Act, so I
guess my point is if I ask you a question that has already been
presented, please indulge me because I apologize for the
redundancy.
But in the Deficit Reduction Act of 2005, implemented new
policies that intended to try to close the loopholes related to
the use of annuities as a Medicaid planning device. However,
based on the testimony that has taken place today and just what
I have listened to, it obviously has not achieved that goal.
Can you please explain what the DRA did and why that has
not sufficiently closed the loopholes?
Mr. Gomez. I think the best way I can explain it is the
relevant findings of the 10th Circuit Court where we took this
issue from Oklahoma, so couples can purchase a qualifying
annuity payable to the community spouse without affecting the
institutionalized spouse's eligibility for Medicaid benefits.
So couples can purchase the annuities as a lawful spend down of
the institutionalized spouse's resources. The court will only
limit transfers made to the community spouse after the
applicant has been deemed eligible for Medicaid assistance so
it allows for the unlimited transfer of resources before the
applicant is approved. The DRA actually was trying to, had that
5-year look back and this is a way to get around that.
Mrs. Ellmers. OK, so along the line of, in the discussion
again on annuities, the 2014 GAO report of elder law attorneys
told the GAO undercover investigators that annuities could be
created quickly and thus are a tool for last minute Medicaid
planning. Is this something that you have seen in Oklahoma, and
typically how many months elapse between the creation of an
annuity and the submission of the Medicaid application?
Mr. Gomez. Please allow me to get back with you on that
length of time, I don't know, but we certainly would be happy
to get that back to you for the record.
Mrs. Ellmers. Ms. Riley, do you have a comment on that at
all?
Ms. Riley. I don't, but we would be happy to look at.
Mrs. Ellmers. That would be great because that gives us a
little bit better perspective when we are talking about
timelines.
Mr. Hagg, your office, OIG, has a long history of raising
serious concerns to waste, fraud, and abuse involving personal
care services and having the discussion I was listening very
closely to my colleague from Indiana in a very interesting
conversation.
You have already made numerous recommendations to CMS.
What actions has CMS taken in response to your
recommendations and how can the legislation that we are
discussing here today really help to fulfill some of the goals
that haven't been met?
Mr. Hagg. Involving personal care services, we have made a
number of recommendations. I think CMS is generally in
agreement with those recommendations that more guidance is
needed, that more uniformity is needed. I think there is maybe
a disagreement in how you go about doing that because of the
limited Federal Rules that are there now and all the problems
we found we felt like a regulation was needed to really spell
out what the Federal Government is looking for. I think CMS
doesn't want to go that far, and maybe that is part of the
problem with whether the recommendations have been implemented
or not. Certainly with the problems we found, electronic
verification would I think address some of those issues, not
all of them, but it would address some of them.
Mrs. Ellmers. Great. Well, thank you very much. And like I
said, this is a really important hearing for us, and we really
do appreciate your input on this. Hopefully we will be able to
craft that legislation in the manner that will make some real
hurdles and improvement so thank you.
Mr. Chairman, thank you, again, and I yield back the
remainder of my time.
Mr. Pitts. The chair thanks the gentlelady. That concludes
the questions of the members.
The members will have followup questions. We will send
those to you in writing. We ask you to please respond promptly.
This has been a very interesting, very informative, and
excellent hearing. We thank you for your testimony, and we look
forward to working together on behalf of the people to address
these issues that we have heard about today.
I remind, members that they have 10 business days to submit
questions for the record, and members should submit their
questions by the close of business on Friday, September 25.
Without objection, the subcommittee is adjourned.
[Whereupon, at 11:30 a.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]