[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                     IMPROPER PAYMENTS IN STATE- ADMINISTERED 
                               PROGRAMS: MEDICAID

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

                             JOINT HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         GOVERNMENT OPERATIONS

                                AND THE

                            SUBCOMMITTEE ON
                       INTERGOVERNMENTAL AFFAIRS

                                 OF THE

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 12, 2018

                               __________

                           Serial No. 115-106

                               __________

Printed for the use of the Committee on Oversight and Government Reform


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              Committee on Oversight and Government Reform

                  Trey Gowdy, South Carolina, Chairman
John J. Duncan, Jr., Tennessee       Elijah E. Cummings, Maryland, 
Darrell E. Issa, California              Ranking Minority Member
Jim Jordan, Ohio                     Carolyn B. Maloney, New York
Mark Sanford, South Carolina         Eleanor Holmes Norton, District of 
Justin Amash, Michigan                   Columbia
Paul A. Gosar, Arizona               Wm. Lacy Clay, Missouri
Scott DesJarlais, Tennessee          Stephen F. Lynch, Massachusetts
Virginia Foxx, North Carolina        Jim Cooper, Tennessee
Thomas Massie, Kentucky              Gerald E. Connolly, Virginia
Mark Meadows, North Carolina         Robin L. Kelly, Illinois
Ron DeSantis, Florida                Brenda L. Lawrence, Michigan
Dennis A. Ross, Florida              Bonnie Watson Coleman, New Jersey
Mark Walker, North Carolina          Raja Krishnamoorthi, Illinois
Rod Blum, Iowa                       Jamie Raskin, Maryland
Jody B. Hice, Georgia                Jimmy Gomez, Maryland
Steve Russell, Oklahoma              Peter Welch, Vermont
Glenn Grothman, Wisconsin            Matt Cartwright, Pennsylvania
Will Hurd, Texas                     Mark DeSaulnier, California
Gary J. Palmer, Alabama              Stacey E. Plaskett, Virgin Islands
James Comer, Kentucky                John P. Sarbanes, Maryland
Paul Mitchell, Michigan
Greg Gianforte, Montana
Vacancy

                     Sheria Clarke, Staff Director
                    William McKenna, General Counsel
                 Drew Baney, Professional Staff Member
                 Kelsey Wall, Professional Staff Member
     Sarah Vance, Health Care, Benefits, and Administrative Rules 
                      Subcommittee Staff Director
     Julie Dunne, Government Operations Subcommittee Staff Director
                    Sharon Casey, Deputy Chief Clerk
                 David Rapallo, Minority Staff Director

                 Subcommittee on Government Operations

                 Mark Meadows, North Carolina, Chairman
Jody B. Hice, Georgia, Vice Chair    Gerald E. Connolly, Virginia, 
Jim Jordan, Ohio                         Ranking Minority Member
Mark Sanford, South Carolina         Carolyn B. Maloney, New York
Thomas Massie, Kentucky              Eleanor Holmes Norton, District of 
Ron DeSantis, Florida                    Columbia
Dennis A. Ross, Florida              Wm. Lacy Clay, Missouri
Rod Blum, Iowa                       Brenda L. Lawrence, Michigan
                                     Bonnie Watson Coleman, New Jersey
                               
                               
                               ------                                

               Subcommittee on Intergovernmental Affairs

                     Gary Palmer, Alabama, Chairman
Glenn Grothman, Wisconsin, Vice      Jamie Raskin, Maryland, Ranking 
    Chair                                Minority Member
John J. Duncan, Jr., Tennessee       Mark DeSaulnier, California
Virginia Foxx, North Carolina        Matt Cartwright, Pennsylvania
Thomas Massie, Kentucky              Wm. Lacy Clay, Missouri
Mark Walker, North Carolina          Vacancy
Mark Sanford, South Carolina
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 12, 2018...................................     1

                               WITNESSES

Mr. Tim Hill, Deputy Director, Centers for Medicaid and CHIP 
  Services, U.S. Department of Health and Human Services
    Oral Statement...............................................     5
    Written Statement............................................     8
Ms. Megan Tinker, Senior Advisor for Legal Review, Office of 
  Counsel, Office of Inspector General, U.S. Department of Health 
  and Human Services
    Oral Statement...............................................    28
    Written Statement............................................    30
Ms. Carolyn Yocom, Director of Health Care, U.S. Government 
  Accountability Office
    Oral Statement...............................................    43
    Written Statement............................................    45
The Honorable Daryl Purpera, CPA, CFE, Louisiana Legislative 
  Auditor
    Oral Statement...............................................    68
    Written Statement............................................    70
Mr. Andy Schneider, Research Professor of the Practice, Center 
  for Children and Families, Georgetown University
    Oral Statement...............................................    78
    Written Statement............................................    80

                                APPENDIX

Hearing Follow-up Response submitted by Ms. Yocom, Government 
  Accountability Office..........................................   110
Hearing Follow-up Response submitted by Mr. Schneider, Georgetown 
  University Center for Children and Families....................   113

 
       IMPROPER PAYMENTS IN STATE-ADMINISTERED PROGRAMS: MEDICAID

                              ----------                              


                        Thursday, April 12, 2018

                   House of Representatives
  Subcommittee on Government Operations Joint with 
          Subcommittee on Intergovernmental Affairs
               Committee on Oversight and Government Reform
                                                   Washington, D.C.
    The subcommittees met, pursuant to call, at 10:00 a.m., in 
Room 2154, Rayburn Office Building, Hon. Mark Meadows, chairman 
of the Subcommittee on Government Operations, presiding.
    Present: Representatives Meadows, Palmer, Grothman, Jordan, 
Walker, DeSantis, Connolly, Raskin, Maloney, DeSaulnier, 
Norton, and Lawrence.
    Mr. Meadows. The Subcommittee on Government Operations and 
the Subcommittee on Intergovernmental Affairs will come to 
order, and without objection, the presiding members are 
authorized to declare a recess at any time.
    I would like to thank the gentleman from Alabama, Mr. 
Palmer, for his leadership on this particular issue, and 
certainly for the ranking members, Mr. Connolly and Raskin. We 
appreciate all of you being here.
    As we look at the hearing today examine once again improper 
payments, particularly within Medicaid, it is very simple that 
as we look at the payments that should not have been and were 
made for the incorrect amounts. These issues encompass the 
entire Federal government, and, in fact, improper payments are 
a huge problem. The GAO estimates that there is over $1 
trillion in improper payments since the Fiscal Year 2003. And, 
again, that is $1 trillion since 2003.
    In Fiscal Year 2017 alone, the government got it wrong to 
the tune of $141 billion in improper payments. This amount of 
money is indeed staggering. As they say back home, eventually 
this adds up to real money, and so it is incumbent upon all of 
you as we look at the testimony today to hopefully highlight 
how we are going to address this issue. For some of you, this 
is, Ms. Tinker, your first rodeo here. We will try to make sure 
that it is not memorable in a negative way, and so welcome.
    The Department of Health and Human Services accounts for 
the largest amount of improper payments with over $90 billion. 
The Medicaid Program accounts for over $36 billion, or 40 
percent, of the HHS improper payments. And if we think about 
that number, $36 billion in taxpayer dollars that are 
unaccounted for for one Federal program, it is not only 
staggering, but you start to look at and say why are we not 
addressing it.
    One of the keys to addressing improper payments and 
restoring program integrity for the Medicaid issue is having 
complete, accurate, and timely data. Screening Medicaid 
providers with better data could prevent some of the improper 
payments that are made to bad actors. And I also want to stress 
that because we look at this, there are times when we have 
improper payments. There are times when some of those things 
are not indeed fraudulent. They are not bad actors. They 
perhaps are a result of our bureaucratic network that we have. 
I would be interested in hearing that. I am one that believes 
that every improper payment is not necessarily because of a bad 
actor.
    And yet when we look at this, Ms. Tinker, you are from HHS 
OIG. You have illustrated the importance of providing screening 
in your testimony, but describing some of the cases in 
Virginia, in North Carolina. And in the Virginia case, one 
individual participated in a scheme to defraud the special 
caregiver program covered by Medicaid by submitting timesheets 
for services that were not actually provided. Those are the 
kind of things that we do need to go after. This individual was 
in jail at the time, so it is amazing how creative they were 
getting from the jail cell, and a simple check of his status 
could have stopped the fraud, and yet somehow that did not 
happen.
    In North Carolina, a mental health facility operator 
defrauded Medicaid by submitting at least $2.5 million in 
fraudulent claims for services never provided to the 
beneficiaries with developmental disabilities. Now, to support 
these fraudulent claims, this individual used stolen 
beneficiary information from a company he previously co-owned 
that was no longer operational. And this could have been 
stopped with better data and a site visit.
    And when we look at these kinds of things, you would say, 
well, these should be easy operational checks that in the 
private sector if you were writing checks, you would actually 
say, well, if we are going to write a $2.5 million check, you 
would want to make sure that it was for legitimate purposes. 
So, we need to look at it, and I am going to challenge all of 
you to look at this as if it were your own money because indeed 
it is. It is the people's money, and sometimes we forget when 
we are looking at this that it is a mom and dad, and an aunt 
and uncle, and, quite frankly, people who pay the taxes each 
and every day that we have an obligation, a stewardship, that 
we have to oversee.
    You know, Obamacare's dramatic expansion of Medicaid has 
further highlighted the need for better data to determine 
eligibility. And if we are going to make sure that Medicaid 
dollars are going to those programs that they are designed to 
cover, we need to also look at detecting improper payments and 
fraud, and we need complete and accurate national data on 
Medicaid.
    So, for almost 20 years after Congress directed States to 
submit such data, the transformed Medicaid statistical 
information is still a work in progress after 20 years. And so, 
it is incumbent that we come together today. I see my time has 
run out in terms of my opening statement, but we look forward 
to hearing from all of you. And with that, I will recognize the 
ranking member, Mr. Raskin, for his opening statement.
    Mr. Raskin. Mr. Chairman, thank you very much, and thanks 
for that very fine opening statement, and thanks to all of our 
witnesses for testifying today.
    Medicaid provides comprehensive, affordable care to more 
than 70 million Americans regardless of their preexisting 
health conditions. And I want to start just by identifying the 
fact that that is an historic achievement and triumph that we 
have a Medicaid system that is addressing the health needs of 
so many Americans. Roughly 40 percent of the beneficiaries are 
children, including nearly half of all kids with special 
healthcare needs, and 1 in 4 children in my home State of 
Maryland. 1 in 5 Medicare beneficiaries relies on Medicaid for 
long-term care and other benefits. Thanks to the ACA's Medicaid 
expansion, 12 million more Americans have gained health 
coverage for the very first time.
    Today's hearing focuses on improper payments--excuse me--
which include overpayments, underpayments, and legitimate 
payments with paperwork errors, as well as fraudulent payments. 
This year's improper payment rate, I understand, was 10.1 
percent. One dollar of an improper payment is a dollar too 
much, whether it is a dollar at Medicaid, or the VA, or the 
Pentagon, or whatever program it might be, and we can all agree 
that 10 percent is just too high. But solving that problem must 
take into account the fact that all 50 States administer their 
own Medicaid programs, and they all have their own challenges 
maintaining program integrity. It is a large and decentralized 
system, and it can be leaky.
    So, all 50 State Medicaid agencies along with the Federal 
Centers for Medicare and Medicaid Services must work together 
to lower the rate of improper payments, not only in the 
interest of preserving our tax dollars, but also because fraud 
and inefficiency threaten the stability of Medicaid and deprive 
enrollees of the benefits that they rightfully rely on. 
Fortunately, the ACA gave CMS new program integrity tools to 
fight fraud, including enhanced provider screening 
requirements, and I am eager to hear about people's 
perspectives on that today.
    We should reject the notion that errors in Medicaid justify 
slashing Federal funding, or undermining the Federal/State 
financing structure, or imposing work requirements on Medicaid 
beneficiaries. I think all of these are a non-sequitur.
    I hope we will use this hearing as an opportunity to learn 
from the experts gathered today how we can improve the Medicaid 
Program, and I would like to close simply by sharing an 
experience of one of my constituents, Alaina from Silver 
Spring, whose family relies on Medicaid. Her daughter has 
serious medical conditions affecting her heart, her lung, her 
airways, and her kidneys. She spent the first 5 months of her 
life in an ICU and had three major surgeries before she could 
use a ventilator and oxygen tank, which allow her now finally 
to breathe to this day. But she must see over a dozen 
specialists to receive the care that she needs. When Alaina's 
daughter left the hospital at 5 months old, she had incurred 
over $3 million in medical bills, an amount which would be 
higher today, and it includes medical supplies and equipment, 
medications, additional procedures, and more. Alaina and her 
family have depended on Medicaid and the ACA to save their 
family from financial ruin and to save her daughter's life.
    This story reminds of why Medicaid is so important, why we 
have to do everything we can to strengthen this vital program, 
and to guarantee that every dollar is going actually to service 
the beneficiaries of the program. I hope this hearing brings us 
closer to this goal, and I thank you very much, Mr. Chairman, 
for convening the meeting.
    Mr. Meadows. I thank the gentleman. The chair will 
recognize the gentleman from Alabama, Chairman Palmer.
    Mr. Palmer. Thank you, Mr. Chairman. Today's hearing marks 
the continuation of the committee's close look at the rising 
problem of federal improper payments. As we watch the national 
debt continues to decline, improper payments grow with it. As 
Chairman Meadows pointed out, since 2003, we have sent out a 
trillion dollars in improper payments. I would only add to that 
that that is a trillion dollars plus interest. We have been 
operating in deficit all those years, so every dollar that we 
sent out improperly was a borrowed dollar.
    Every year, the Federal government loses billions of 
taxpayer dollars because of improper payments, dollars that 
were intended to fund programs that serve the people that are 
improperly paid out or managed. In my questions I will address 
this a little bit more.
    The Government Accountability Office has been unable to 
render an opinion on the Federal government's consolidated 
financial statement since 1997 due in part to the Federal 
government's inability to adequately account for and reconcile 
its financial activities. GAO has also stated with respect to 
improper payments that absent changes, the Federal government 
continues to face an unsustainable long-term fiscal path. This 
is the reason we are here today. We want to try to figure out a 
way to solve this.
    As Chairman Meadows cited, the Federal government reported 
$141 billion in improper payments last year, Fiscal Year 2017, 
a $4 billion increase from just 2 years ago. Over two-thirds of 
these erroneous payments originated from the Department of 
Health and Human Services. Rapid growth and improper payments 
is largely attributed to the Medicaid Program, which is the 
focus of this hearing. Medicaid is a federally funded, State 
administered program that covers over 73 million people. The 
program represents about a sixth of the national healthcare 
economy and accounts for over $36 billion in improper payment. 
I think it was about $36.7 billion to be precise. The GAO has 
placed the Medicaid Program on its high-risk list every year 
since 2003. That makes 15 years and counting.
    State partners are on the front lines of defense against 
these erroneous payments. However, the Centers for Medicare and 
Medicaid Services plays a critical role in monitoring and 
supporting State efforts to reduce and recover improper 
payments. Although the States have great flexibility in 
implementing Medicaid, they are constrained by lack of Federal 
guidance and overwhelmed by the vast and increasing enrollment 
from expansion of the program under Obamacare. Diligent and 
bipartisan oversight is imperative in order to curb Medicaid's 
current trajectory as the fastest-growing source of improper 
payments.
    Today we will hear from our witnesses about current efforts 
to strengthen Federal and State partnerships in the Medicaid 
Program and make an attempt to ensure program integrity. To 
achieve the necessary reform of Medicaid, only a whole of 
government oversight approach will safeguard the faith and 
credit of American taxpayers.
    I thank the witness for coming today, and I look forward to 
hearing their testimony. I yield back.
    Mr. Meadows. I thank the gentleman from Alabama. I am now 
pleased to introduce our witnesses: Mr. Tim Hall, deputy 
director at the Center for Medicaid and CHIP Services, 
Department of Health and Human Services. Welcome, Mr. Hill. Ms. 
Megan Tinker, senior advisor for legal review in the Office of 
Counsel to the Inspector General, Department of Health and 
Human Services. Welcome, Ms. Tinker. Ms. Carolyn Yocom, 
director of health care at the Government Accountability 
Office. Welcome. The Honorable Daryl Purpera, legislative 
auditor for the State of Louisiana, and I believe you are 
accompanied by Mr. Wesley Gooch, special assistant for 
healthcare audit, who will also be sworn in. And Mr. Andy 
Schneider, research professor of practice at the Center for 
Children and Families at Georgetown University, McCourt School 
of Public Policy. That is a mouthful, Mr. Schneider. Welcome. 
Welcome to you all.
    Pursuant to committee rules, all witnesses will be sworn in 
before they testify, so if you will please stand and raise your 
right hand.
    Do you solemnly swear or affirm that the testimony you are 
about to give is the truth, the whole truth, and nothing but 
the truth, so help you God?
    [Chorus of ayes.]
    Mr. Meadows. All right, thank you. You may be seated. Let 
the record reflect that all witnesses answered in the 
affirmative.
    In order to allow time for discussion, please limit your 
testimony to 5 minutes. However, your entire written testimony 
will be made part of the record. And as a reminder, the clock 
in front of you will show the remaining time during your 
opening statement. The light will turn yellow which means you 
had better speed up, you got 30 seconds left, and red means 
that you are subject to being gaveled down at any time, 
hopefully in a light tap first, and then a stronger tap later. 
But we also ask you to press the button in front of you to turn 
on your microphone before speaking.
    So, Mr. Hill, we will go ahead and recognize you for 5 
minutes.

                       WITNESS STATEMENTS

                     STATEMENT OF TIM HILL

    Mr. Hill. Great, thank you. Chairman Meadows and Palmer, 
Ranking Member Raskin, members of the subcommittee. Thank you 
for the invitation and the opportunity to discuss CMS' efforts 
to prevent and reduce improper payments in Medicaid. We share 
your commitment to ensuring that spending for Medicaid is 
devoted to the care and the well being of the beneficiaries 
that we serve and is not wasted through error or fraud.
    In that regard, we greatly appreciate the ongoing work by 
the OIG and the GAO to highlight potential vulnerabilities in 
these important programs. And similarly, I want to recognize 
the work of this committee on these important issues, 
particularly with respect to Medicaid reimbursements and 
financing issues. I want to use my time this morning to 
highlight some of the foundational work we do here at CMS to 
promote the integrity of the Medicaid Program and then spend a 
little time emphasizing some of the new initiatives and 
approaches that this Administration has initiated in this area.
    In terms of our foundational work, I like to think of our 
efforts as resting on a three-legged stool. The first leg of 
the stool is measurement. Our primary tool in this regard is 
the Payment Error Rate Measurement Program, or PERM. Using 
PERM, we measure and report on improper payments in Medicaid. 
The information we get from this program, in addition to just 
measuring and giving us a measure, actually helps us identify 
the underlying cause of payment error. What is it that is 
driving the error rate? Using this information, we can drive 
States to implement corrective actions to reduce improper 
payments and to prevent them in the future.
    The second leg of the stool is partnership. We work with 
our State partners to provide the information, the resources, 
and the technical assistance they need to implement programs to 
safeguard Medicaid. The best illustration of our efforts in 
this area is our Medicaid Integrity Institute established in 
collaboration with the Department of Justice where we bring 
together State employees, CMS policy experts, our law 
enforcement partners, and other stakeholders to collaborate and 
share best practices while simultaneously staying up to date on 
emerging program vulnerabilities.
    The final leg of the stool is a robust financial oversight 
activities to ensure that when States ultimately claim for a 
Federal match on their expenditures, Federal Medicaid funds are 
spent lawfully and appropriately. We use specialized 
accountants and financial management analysts to review State 
claims each quarter using trend analysis, environmental 
scanning, and the results of external audits to find anomalies, 
and request additional documentation or justifications for 
spending when necessary. We also engage in State-specific 
reviews, going on site to State Medicaid programs to ensure 
that State expenditures and corresponding claims for Federal 
funds are allowable. Last year we worked with States to resolve 
$2.7 billion in questionable costs through this program.
    Under the leadership of Secretary Azar and Administrator 
Verma, we are building on this foundation to further enhance 
and strengthen our oversight efforts. As you know, this 
Administration is fully committed to providing as much 
flexibility as possible to States to help them structure 
Medicaid programs that work for the people and the situations 
of their State. In return for this flexibility, we will be 
holding States accountable in new and important ways.
    For example, for the first time ever, we are implementing a 
Medicaid scorecard to measure and report on Medicaid 
performance across three pillars: health systems, Federal 
administrative performance, and state administrative 
performance. Driving improvement using the scorecard is 
integral to our efforts to safeguard Medicaid from unnecessary 
and wasteful spending.
    Underpinning the scorecard initiative is the implementation 
of the Transformed Medicaid Information System, or T-MSIS. The 
data we collect in T-MSIS will drive the analytics that will 
help us and States improve health outcomes and improve program 
integrity. I am happy to report that as of today, T-MSIS 
includes the data for 98 percent of the beneficiaries we serve, 
and we expect the remaining data, which represents one State, 
to be live in the system shortly.
    In terms of oversight of State financing problems, we have 
closed off financing loopholes that some States have used to 
generate Federal dollars to support State programs that are 
best support with State-only dollars. Finally, we are 
bolstering our ongoing efforts to ensure that States are 
appropriately determining eligibility for beneficiaries in the 
expansion population. While we have significant existing 
controls in this area, we are concerned by recent OIG findings 
about State implementation of eligibility systems as well as 
the findings of our own review of State managed care rates for 
beneficiaries in the expansion group. The issue is a top 
priority for this Administration and the CMS administrator, and 
moving forward, CMS will continue to enhance our oversight 
efforts to make sure States are appropriately enrolling 
beneficiaries and that the Federal government is bearing only 
its fair share of the cost for Medicaid.
    We look forward to continuing to work with our States and 
oversight partners and other stakeholders to improve efforts to 
reduce the improper payment rate in Medicaid. I thank you, and 
I am happy to take your questions.
    [Prepared statement of Mr. Hill follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Meadows. Thank you, Mr. Hill.
    Ms. Tinker, you are recognized for 5 minutes.

                   STATEMENT OF MEGAN TINKER

    Ms. Tinker. Good morning, Chairman Meadows and Palmer, 
Ranking Members Connolly and Raskin, and other distinguished 
members of the subcommittees. I am Megan Tinker of the Office 
of the Inspector General. Thank you for inviting me to discuss 
improper payments in Medicaid and the need for robust national 
Medicaid data.
    Medicaid is a $574 billion program that touches the health 
and welfare of 69 million Americans. In 2016, Medicaid 
estimated improper payments totaled $36 billion. Today I will 
highlight recommendations that OIG has made to help States and 
CMS secure the data necessary to reduce improper payments.
    OIG's work clearly shows that in order to gain the full 
benefit of 21st century data analytics, Medicaid needs 
comprehensive national data. We recommend that CMS and States 
focus on OIG's core program integrity principles: prevention, 
detection, and enforcement. First, prevent improper payments by 
using data to keep bad actors and ineligible beneficiaries from 
participating in Medicaid. Second, detect improper payments by 
using data to identify potential fraud, waste, and abuse. And 
third, enforce, take swift and appropriate enforcement actions 
to correct problems and prevent future harm.
    Our work shows that States often lack the necessary data to 
prevent bad actors from participating in Medicaid. Doing so 
effectively can reduce and prevent improper payments. For 
example, OIG has raised concerns that States are not conducting 
required provider screenings such as criminal background 
checks. Preventing improper payments also means ensuring 
Medicaid only serves eligible beneficiaries. OIG's review of 
three States found that their enrollment data systems sometimes 
lacked the ability to reliably make proper eligibility 
determinations, which could result in incorrect payments. 
Quality data are vital to decreasing improper payments and to 
ensuring a high-performing Medicaid program.
    CMS has made progress in implementing T-MSIS, which is the 
Transformed Medicaid Statistical Information System. T-MSIS is 
a national system to aggregate Medicaid claims data. As of this 
month, as Mr. Hill said, almost all States are reporting data 
to T-MSIS. However, there is more to do to make sure that the 
data can be used effectively to prevent and detect improper 
payments and fight fraud, waste, and abuse.
    Improper payments and fraud do not respect State borders. 
Without complete and uniform national data, fraud schemes 
affecting multiple States are difficult to detect because we 
cannot see the whole picture. Utilization and spending patterns 
may not appear problematic until compared with other States. 
CMS must remain vigilant and ensure that States are 
consistently reporting data elements to T-MSIS, and that those 
are the data elements that will best inform program integrity 
efforts.
    In addition, an ever-increasing number of Medicaid patients 
receive some or all of their services through managed care. 
OIG's work has shown that States' Medicaid managed care data 
was incomplete when submitted to CMS. As a result, both Federal 
and State governments lack the transparency to ensure proper 
oversight.
    OIG has seen the benefits of data in identifying and 
targeting bad actors in Medicare. For example, last summer the 
Medicaid Fraud Strike Force used comprehensive Medicare data, 
including data on opioid prescribing, to conduct the largest 
national healthcare fraud takedown in history. Over 400 
individuals were charged for their alleged participation in 
healthcare fraud screens, responsible for $1.3 billion in fraud 
losses across numerous States. We cannot replicate this type of 
enforcement action in the Medicaid Program because we still 
lack comprehensive national Medicaid data.
    It remains to be seen whether T-MSIS will live up to its 
potential. That is why it is critical that CMS persist in 
ensuring the availability of complete, accurate, and timely 
national Medicaid data. Such data are essential to preventing, 
detecting, and decreasing improper payments, and to the 
efficiency and effectiveness of the Medicaid Program.
    Thank you for the opportunity to testify this morning. I am 
happy to answer any questions you may have.
    [Prepared statement of Ms. Tinker follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Meadows. Thank you, Ms. Tinker.
    Ms. Yocom, you are recognized for 5 minutes.

                   STATEMENT OF CAROLYN YOCOM

    Ms. Yocom. Chairman Meadows, Chairman Palmer, Ranking 
Members Connolly and Raskin, and members of the subcommittee, I 
am pleased to be here to discuss oversight efforts in Medicaid. 
This joint Federal/State program financed healthcare services 
for over 70 million low-income and medically needy individuals, 
including children and people who are elderly or disabled.
    Medicaid is a significant component of Federal and State 
budgets with nearly $600 billion in estimated outlays for 2017. 
Due to concerns about the adequacy of oversight, Medicaid has 
been on our list of high-risk programs since 2003.
    The partnership between the Federal government and States 
is a central tenet of the Medicaid Program. Within broad 
Federal requirements, States have flexibility to design and 
implement Medicaid based on their unique needs. The overall 
program is overseen at the Federal level by CMS. However, 
despite oversight efforts by CMS, overall improper payments 
continue to increase from $29 billion to $37 billion between 
Fiscal Year 2015 and 2017.
    My statement today will focus on three broad areas critical 
to improving Medicaid oversight: addressing data challenges, 
strengthening Federal oversight, and improving and expanding 
Federal and State collaboration.
    First, data challenges. CMS oversight relies on State-
reported data that address multiple aspects of Medicaid, 
including expenditures and utilization of services. We and 
others have reported that insufficiencies in these data have 
affected CMS' ability to ensure proper payments and 
beneficiaries' access to care. We have raised concerns about 
the usefulness of state-reported data due to issues with 
completeness, accuracy, and timeliness.
    To address these longstanding concerns, CMS has worked to 
develop a reliable national repository, T-MSIS. Implementing T-
MSIS as has been and will continue to be a significant 
multiyear effort. Nearly all States are reporting some T-MSIS 
data. While recognize this progress, more work is needed before 
CMS or States can use T-MSIS for program oversight. For 
example, it remains unclear when all States will report 
complete and comparable T-MSIS data, and how CMS and States can 
use these data to improve the program.
    Second, strengthening program oversight. Our work has 
identified other areas where CMS should take action. CMS has 
implemented many of our related recommendations, yet additional 
actions are needed to further strengthen program oversight.
    First, our work has identified risks associated with 
provider enrollment and beneficiary eligibility. Continuing to 
develop strategies to address these risk and monitor progress 
will improve CMS oversight and reduce improper payments. 
Second, additional oversight is needed to ensure that Medicaid 
beneficiaries are able to access necessary healthcare services. 
This is particularly critical for beneficiaries who rely on 
long-term services and supports as well as behavioral needs, 
including treatment for those with opioid use disorders. It is 
important to note that Medicaid is the largest payer for both 
long-term and behavioral healthcare.
    Third, collaboration between the Federal government and the 
States. Identifying and sharing program integrity practices is 
critical, and there are challenges, but also some successes, 
here. In March 2017, we reported that collaborative audits in 
which CMS worked with States in partnership have great 
potential, but they are limited in their current use. We 
recommend that CMS take steps to remove barriers that limit 
State participation in these audits. In 2016, CMS, GAO, and a 
select group of State audit officials met to discuss future 
collaboration and specific areas of concern in Medicaid. 
Involving the State auditors in program oversight adds an 
important arsenal to reducing improper payments in Medicaid.
    Lastly, in 2012, CMS created the Healthcare Fraud 
Prevention Partnership to study and share healthcare-related 
information on fraud, waste and abuse. Participants have told 
us that the partnership helped them identify potentially 
fraudulent providers and foster information sharing.
    Chairman Meadows and Palmer, Ranking Members Raskin and 
Demings, and members of the subcommittee, this concludes my 
prepared statement, and I will be pleased to answer any 
questions you might have.
    [Prepared statement of Ms. Yocom follows:]
    
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    Mr. Meadows. Thank you, Ms. Yocom.
    Mr. Purpera, is that how you say it? You can go ahead and 
correct me. Everybody does.
    Mr. Purpera. That is how you say it.
    Mr. Meadows. Okay, all right. Well, the gentleman from 
Louisiana is recognized for 5 minutes.

              STATEMENT OF HONORABLE DARYL PURPERA

    Mr. Purpera. Thank you, sir. Mr. Chairman and members, 
Daryl Purpera, legislative auditor for Louisiana. I really come 
to speak with you specifically today about the underutilization 
of State auditors across our Nation in the fight against fraud, 
waste, abuse, and improper payments.
    I have heard it mentioned here 2 times today that it is a 
$36 billion problem. I want to remind everyone that is Federal 
dollars. There is an additional $20 billion or so of State 
dollars that are also being misspent.
    I want to talk to you specifically about how the State 
auditors roll. State auditors are required by the Single Audit 
Act to audit the Medicaid Program, so that is one of our jobs 
responsibilities. We get our instructions from the OMB through 
what is called a compliance supplement. That is kind of the 
audit program, what are we to do. And I want to talk to you 
about some inadequacies in this.
    The Medicaid Program has as a key determination point for 
eligibility is the income component based upon modified 
adjusted gross income of the recipient. However, the compliance 
supplement, the document that we are to operate under, 
specifically tells the State auditor that we are not to test 
Medicaid eligibility based upon modified adjusted gross income. 
Now, the rationale behind that is because CMS has some other 
oversight mechanisms. Well, in the State of Louisiana, that 
other oversight mechanism is part of this pilot program, but 
that task was given to our department of health. So, you have 
the department who is administering the program auditing itself 
when it comes to eligibility using the modified adjusted gross 
income. That is a scope limitation for the auditor, a 
significant departure from auditing procedures.
    State auditors also do not have access to data that we 
need, specifically Federal tax information. Access to the 
Federal tax information is restricted by 26 USCA 6103, Federal 
law. We have access to the tax data when we are auditing our 
Department of Revenue. So, if my auditors are auditing our 
Department of Revenue, we have got the Federal tax data. But if 
I am auditing over at the Department of Health and Hospitals 
looking at my Medicaid Program, now I cannot use the very thing 
that I can use over here on my right hand. I cannot let my left 
hand see it. So, it is a counterproductive restraint upon us.
    Furthermore, the Federal regulations do not require the 
examination of Federal tax data when making eligibility 
determinations. We learned that 25 States actually use Federal 
tax data, but the remainder do not use the Federal tax data. 
But since we are basing the program on modified adjusted gross 
income, I would think it would be wise to use the Federal tax 
data. The other databases that we are using do not encompass 
all income categories. For example, it does not include self-
employment, farming and fishing, rents, royalties, retirements, 
pensions, and alimony, and many other things. And so, we are 
kind of operating the program with our hands tied behind our 
back.
    I also want to talk to you about what I believe is the 
costly effect of the reasonable compatibility standard. The 
reasonable compatibility standard came about with the 
Affordable Care Act, and it is a policy or a rule of the CMS. 
And what it does it allows an individual to attest to an income 
when they are applying for Medicaid, and the State agency is to 
verify that income by using electronic data sources such as 
wage data. And so, if they attest to, say, 138 percent of 
Federal poverty limit and that is my attested-to income, but 
the State looks over at the wage data and sees that the 
individual makes, let's say 150 percent of Federal poverty 
limit, in the State of Louisiana, we use a reasonable 
compatibility standard of 25 percent. That individual is going 
to be deemed eligible even though their income is higher than 
the 138 percent. And so, I believe that's a standard that not 
only creates a significant problem for auditors because we 
really can't see where the line is anymore, but it's also we've 
extended the upper limit of Medicaid eligibility by doing that.
    Now, why are these issues important to me? Let me tell you 
why they're important. In 2017, our State formed the Medicaid 
Fraud Task Force. I chair that committee. It's a legislative 
committee. We did a test, and we took 860,000 individuals, 
basically our adult population, and we asked our Department of 
Revenue, because I can't get the data. We asked our Department 
of Revenue to compare what the individuals put on their 
Medicaid application, compare it to their tax returns. Eighty-
three thousand individuals came back as they had a tax return 
income of $20,000 or more different than what was on their 
Medicaid application. We can't make any conclusions from that, 
but it does point to a significant risk that there is a 
problem. In addition, 48 percent of the applicants had 
household sizes for their tax returns different than their 
Medicaid. Now, I realize the rules are a little different, but 
they're very much the same.
    I believe that we need to be looking for new audit 
approaches, and the State auditors needs to be right in the 
middle of this. Currently, dollars are flowing from the Federal 
government to our attorney generals to prosecute fraud, but 
very few dollars are going to our State auditors all around our 
Nation to help prevent and detect these improper payments 
before they happen.
    Thank you, gentleman. I'll take any questions you have.
    [Prepared statement of Mr. Purpera follows:]
    
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    Mr. Meadows. Thank you so much.
    Mr. Schneider, you are recognized for 5 minutes.

                  STATEMENT OF ANDY SCHNEIDER

    Mr. Schneider. Thank you, Mr. Chairman, and good morning, 
Ranking Members Connolly and Raskin, and members of the 
subcommittees. I'm Andy Schneider, a research professor of the 
practice at the Center for Children and Families. The Center is 
an independent, nonpartisan policy and research organization 
based in the McCourt School of Public Policy at Georgetown 
University. Our mission is to expand and improve high-quality, 
affordable health coverage for America's children and families, 
particularly those with low and moderate incomes. I want to 
emphasize I'm here in my individual capacity, and my views do 
not necessarily represent the views of Georgetown University.
    Thank you for the invitation to testify. I'm especially 
honored to be here. I had the privilege of serving as chief 
health counsel to the full committee in 2007 and 2008, and I 
know from that experience how important the oversight efforts 
of this committee's members and staff can be to making 
government work better. And thank you for holding this hearing 
which I think is in the best tradition of government oversight.
    Medicaid is an enormously important health insurer for 
America's low-income children and families. A growing body of 
research, added to just this week by analysts at America's 
Health Insurance Plans, demonstrates that Medicaid is working 
well for children and adults alike, giving them access to care 
and preventive services at levels similar to those who have 
commercial coverage. All that said, Medicaid is not perfect. It 
can and should be improve by, among other things, reducing the 
rate of improper payments. And I hope today's hearing will get 
us to that result.
    I want to make three quick points. First, Medicaid's 10.1 
percent improper payment rate is too high, and it needs to come 
down. There is a clear path forward to bringing it down, a path 
that the Office of Inspector General is also urging this 
morning, which is to fully implement the provider screening and 
enrollment requirements that are already on the books. By 
identifying bad actors, keeping them out of the program, 
provider screening and enrollment will protect children and 
families and other Medicaid beneficiaries from substandard 
care, at the same preventing the theft or diversion of Federal 
and State funds from their intended use.
    Secondly, I want to underscore a point made by Mr. Hill. 
Payments made to fraudulent providers are clearly improper, but 
improper payments are not the same as fraud. Fraud is a 
deception or misrepresentation made by a person or entity with 
the intent of receiving an unauthorized payment. Improper 
payments in contrast are payments that should not have been 
made or that were made in an incorrect amount. They include 
payments made to providers who have defrauded the program, but 
they also include unintentional documentation errors, 
noncompliance with provider screening, and enrollment 
requirements.
    The way to reduce fraud as well as improper payments 
generally is to screen providers before allowing them to treat 
Medicaid beneficiaries and bill the Medicaid Program. And that 
is true whether you are in a fee-for-service or in a managed 
care mode.
    My last point is that Medicaid is a successful health 
insurer for 4 in 10 of our Nation's children, in large measure 
because of its Federal/State financing partnership. And as GAO 
testified this morning, CMS can improve that partnership by 
improving its expenditure and utilization data and 
strengthening its oversight. Disrupting that partnership by 
capping Federal Medicaid payments to States will not improve 
the oversight, it will not prevent fraud, and it will not 
reduce improper payments. Instead, it will put low-income 
children and families at severe risk for rationing of care.
    I look forward to your questions.
    [Prepared statement of Mr. Schneider follows:]
    
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    Mr. Meadows. Thank you, Mr. Schneider. Thank you all for 
your insightful testimony. And as I mentioned earlier, your 
entire written testimony, if you did not cover it orally, will 
be made part of the record. I will now recognize my good friend 
and the gentleman from Virginia, the ranking member, Mr. 
Connolly, for his opening statement.
    Mr. Connolly. I thank the chair, and in the interest of 
time, I am going to forego my formal opening statement. I echo 
some of what we just heard from the panelists, particularly Mr. 
Schneider. A, Medicaid works. It does its job: 76 million 
Americans, 43 percent of them children, benefit from Medicaid, 
and it looks like we are going to expand those numbers.
    In my home State of Virginia, we are on the brink of a 
bipartisan agreement to finally expand Medicaid pursuant to the 
Affordable Care Act, which will now bring healthcare to 400,000 
people in Virginia, and by the way, bring $400 million net to 
the coffers of the State of Virginia, allowing to reinvest in 
healthcare and other needed investments. So, that is a good 
thing, and we will become, I believe, the 33rd State to expand 
Medicaid, States led by both Republicans and Democrats.
    But secondly, the point Mr. Schneider just made, and I know 
echoed by our panelists. But the improper payment part of 
Medicaid is too high. Ten percent is not tolerable, and we have 
got to work to get that number down. And that will include 
actually implementing the regulations and screenings already on 
the books, but it also means law enforcement has got to get 
more involved. We need U.S. attorneys involved. We need 
attorneys general to be involved. We need to beef up Medicaid's 
own self-policing to bring that number down because every 
dollar that is an improper payment is a dollar foregone. It is 
a dollar not invested in healthcare. It is a dollar that 
detracts from the important core mission of Medicaid.
    And finally, I would say, Mr. Chairman, working with you 
and others over the years on this committee, you know, there 
are two things this committee needs to focus on or can focus on 
that I think would make a material difference in reducing the 
debt, neither of which involve new taxes, neither of which 
involve, you know, cutting critical investments. And one is 
improper payments, about $142 billion a year. Multiply that 
times 10, and you get $1.4 trillion. Now we are talking real 
money. And the other is uncollected taxes, which have now 
grown, by starving the IRS over the years, to over $450 billion 
a year. You combine those two, we are at almost $6 trillion 
over 10 years, and I for one would be willing to commit that 
every one of those dollars we, in fact, recover I would devote 
to debt reduction because they are dollars we do not have now. 
And that would be a good down payment on the national debt over 
a 10-year period.
    And it seems to me there is some potential bipartisan 
common ground. You know, we would have to make some 
investments, but these are two things we can do something 
about, and there is no downside to addressing them. And so, I 
thank you, Mr. Chairman, for having a hearing on the Medicaid 
piece today, and I look forward to having the opportunity to 
hear more from our expert panelists. And, again, thank you for 
your leadership, Mr. Chairman.
    Mr. Meadows. I thank the gentleman for his comments, and I 
would like to stress obviously today we are looking at 
Medicaid, but there is a huge improper payment issue with the 
Department of Defense as well. And so, at times where sometimes 
one program looks ideologically to be aligned more with one 
side than the other, I can assure you in a bipartisan manner, 
we are willing to tackle those. And I thank the spirit in which 
the ranking member offered that.
    The chair is going to recognize the chairman of the 
subcommittee, Mr. Palmer, for a series of questions at this 
time. So, he is recognized for 5 minutes.
    Mr. Palmer. Thank you, Mr. Chairman. Mr. Hill, Medicaid 
payments are made to States based on the number of people 
eligible in each State and the State maintenance of effort 
match. In other words, CMS has a reasonable estimate of how 
much funding to request from Congress on an annual basis. Given 
that for the last 2 years Medicaid improper payments have 
exceeded $36 billion, does CMS inflate its funding request to 
include improper payments? Is that just part of your overhead?
    Mr. Hill. I would not say that we directly, that the 
measure of improper payments goes into the formula to say what 
we are going to ask for. It is much more of an actuarial 
analysis of the trends over time and what we think we are going 
to need in the next year given economic and other forecasts. 
So, I think it is baked there, and I think that is the point 
that folks have made across the board here, that because 
improper payments are in the baseline it is inflated, and to 
the extent that we could reduce improper payments, we would 
recoup some savings.
    Mr. Palmer. Well, you had a number of recommendations for 
correcting this. Ms. Tinker, thank you for being here. Welcome 
to OGR. How many recommendations has HHS inspector general made 
to CMS to establish a deadline for complete and accurate TMS 
data?
    Ms. Tinker. We have one recommendation that ----
    Mr. Palmer. Yeah, please turn that on.
    Ms. Tinker. We have one recommendation ----
    Mr. Meadows. You better hit that button or--no.
    [Laughter.]
    Ms. Tinker. We have one recommendation that is currently 
still on the books for CMS to set a deadline for the completion 
the T-MSIS system.
    Mr. Palmer. How about GAO, Ms. Yocom?
    Ms. Yocom. We also have a recommendation. It is a little 
more detailed in terms of establishing some steps and some 
dates along the way. We think taking a step-by-step approach 
would be helpful rather than saying we are going to get this 
all done by X date.
    Mr. Palmer. Yeah, I agree with that. I think it is a 
process, and I think it is multifaceted. It is reading the 
GAO's last report that I got on it that indicates, and this 
would be true across the Federal government, but I think it 
would be applicable to CMS, is about 20 percent of the improper 
payments is a result of antiquated data systems. And one of the 
things that concerns me is the antiquated data systems is an 
issue that we can resolve. Obviously, we will have to spend 
some additional funding.
    But, Mr. Purpera, in dealing with this between the State 
and Federal level, is that an issue, because one of the things 
we are saying is that State systems do not always match up with 
Federal systems. You have a communication issue with that. Is 
that a problem?
    Mr. Purpera. Mr. Chairman, data is a problem. It is a 
considerable problem because are not dealing with finding a 
needle in a haystack here. We are dealing with finding needles 
in fields of haystacks. So, we have to have good data from the 
State level on up, and it extremely hard for my office to get 
data sometimes from the managed care operators.
    For example, we keep talking about the improper payment 
rate being 10 percent, but that number I would tell you is 
considerably understated because it includes managed care at 
.03 percent, which clearly we are not looking at the full 
spectrum there.
    Mr. Palmer. Well, Ms. Yocom, in the last GAO report that I 
saw, there were 18 Federal programs that were reported. Among 
those were the managed care side of Medicaid. So, and I agree, 
in talking with Mr. Dudero about this, he thinks the $141 
billion is understated because of the failure of programs such 
as the managed care side of Medicaid report.
    Ms. Yocom. Yeah, the estimation of managed care is focused 
on a very narrow piece of information. It is focused on what 
did the contract say that you would pay on a per capita basis 
and was the person who you paid for eligible for Medicaid. It 
does not look at whether or not the services were provided at 
all or whether they were necessary or anything else.
    Mr. Palmer. Well, that is an administrative issue ----
    Ms. Yocom. It is.
    Mr. Palmer.--because the report also showed that you had 
failure to verify eligibility, failure to do proper 
documentation. That was about 52 percent of the improper 
payments.
    Ms. Yocom. Yes.
    Mr. Palmer. And one other question in the last few seconds 
I have is on the fraud. Is fraud more an issue at the Federal 
level, people fraudulently billing the Federal government for 
Medicaid payments, or is it more at the State level? Where is 
the fraud most likely to occur? And, Ms. Tinker, if you know 
the answer to that, you can respond as well.
    Ms. Tinker. We see fraud at both the Federal and the State 
level in the Medicaid Program because it is a shared program 
between both the Federal government and the State.
    Mr. Palmer. So, when someone files a fraudulent claim, they 
file it at the State level, which when the State makes a 
payment it includes Federal dollars, or is it possible that 
they file it directly with the Federal government?
    Ms. Tinker. Directly with the State government.
    Mr. Palmer. Directly with the State. Thank you very much. I 
yield back.
    Mr. Meadows. I thank the gentleman from Alabama. The chair 
recognizes Ranking Member Raskin for 5 minutes.
    Mr. Raskin. Mr. Chairman, thank you very much. Let me 
follow up on Mr. Palmer's question. Ms. Yocom, your testimony 
includes a statement that between May of 2015 and December of 
2017, 11 different recommendations were made by the GAO to CMS 
about improvements that could be made in terms of ferreting out 
fraud, but your testimony also says that these recommendations 
have not been adopted yet by CMS. And I am wondering, I do not 
know, Mr. Hill, if you could speak to that, why were they not 
adopted, and what is the hold up there?
    Mr. Hill. So, I would need to go back, and unfortunately, I 
do not know specifically the 11 recommendations. I know as a 
general matter, sometimes the recommendations that are offered 
require a change in regulation. Not often, but sometimes in 
statute. And the other issue in Medicaid unlike in Medicare 
because it is a shared partnership with the State, many of the 
recommendations that we have to implement, we have to do in 
partnership with our State partners. And so, we have talked a 
lot, for example, about provider enrollment and screening.
    We can require States to do that initial guidance and tell 
States they need to be doing a better job, but the actual on-
the-ground implementation of screening, for example, takes 
place at the State. So, the shared partnership, I think, does 
introduce some level of slowness to our response.
    Mr. Raskin. Okay. Well, I would be interested in following 
those recommendations because, you know, lots of times we have 
great hearings, and then recommendations come out, and then we 
do not see anything happen. So, I would love to see the follow 
through on that.
    So, I wonder if somebody would dig down deeper into this 
whole question of fraud. Is most of the fraud provider-based 
fraud, or is it actually people who are impersonating 
beneficiaries, or fabricating information on applications? I 
mean, what is the nature of the fraud component of the problem? 
And I do not know, Mr. Schneider, Mr. Purpera, yeah.
    Mr. Schneider. So, I do not know that I am the most 
qualified person to speak to this.
    Mr. Raskin. Okay.
    Mr. Schneider. You already have some experts on this who 
have the data, right?
    Mr. Raskin. Okay, let us take Mr. Purpera and Mr. Hill.
    Mr. Purpera. Thank you, sir. I think I can approach it from 
the State level. At the State level, our attorney general 
offices, they have the Medicaid fraud control units, so they 
are looking at fraud. But the funds that flow from the Federal 
government to operate those units are strictly for provider 
fraud. My attorney general, if he were sitting here today, 
would tell you he would very much like to work in the area of 
recipient fraud, but right now he is prevented from doing so. 
Now, my office focuses not just on fraud, but we focus on 
fraud, waste, abuse, the whole gamut. And, you know, 
strategically, what we want to do is make recommendations to 
improve the process going forward.
    But I can tell you this. In the past, and as I heard about 
other recommendations, there have been times when I have 
written findings on my department of health that says, ``for 
the 8th consecutive year,'' and then the finding. And that 
seems to me where there is part of the problem is holding the 
agencies accountable and somehow forcing the changes that are 
needed to prevent the waste and abuse.
    Mr. Raskin. Thanks. Mr. Hill?
    Mr. Hill. I would say that in terms of the type of fraud 
that we see, and I have worked in Medicaid and I have worked in 
Medicaid, the key to the kingdom is a card, is an eligibility 
card. So, we do not see a lot of fraud of an individual 
beneficiary saying I am going to lie on my taxes to get 
Medicaid. They will get eligible, and then typically what we 
will see is they will then be in cahoots. There will be some 
sort of scheme with a Medicaid beneficiary or Medicare 
beneficiary and a group of providers to generate fictitious 
billings or fraudulent billings, and it is much more of a ----
    Mr. Raskin. A collective activity. It is more than a 
conspiracy.
    Mr. Hill. Yeah, they are smarter than we are many times, 
and they have found ways to ping and game our systems. And 
typically, once somebody gets eligibility, they are able to, if 
they are so inclined, defraud us using nefarious providers to 
bill and get paid.
    Mr. Raskin. Okay, yes, Ms. Yocom.
    Ms. Yocom. I would just add that if you can screen and 
enroll and ensure that your providers act in good faith, you 
have managed most of the fraud. A beneficiary alone trying to 
commit fraud needs a complicit provider, so focusing attention 
on ensuring good screening and enrollment processes is 
critical.
    Mr. Raskin. Great. Okay. My final question is about data. 
Everybody seems to agree that a much more comprehensive data 
system is going to be essential lower that 10 percent rate. Are 
there legislative changes that need to be made, or can all of 
this be done through regulatory action? Mr. Hill.
    Mr. Hill. In terms of collecting data from States and us 
aggregating the data, we do not see it as a statutory problem. 
If you want to write a check and give us more money, we are 
always happy to sort of have more infrastructure. But the issue 
really is compliance with States and us working with States to 
get the data in at the Federal level that they already have at 
the State level, so it is not really a statutory issue from our 
perspective.
    Mr. Raskin. Thank you. Yield back, Mr. Chair.
    Mr. Meadows. I thank the gentleman. The chair recognizes 
himself for 5 minutes for a series of questions. Ms. Tinker, 
let me come to you. As we look at this transformed medical 
statistical information system, or, I guess, ``T-MSIS,'' as 
they would say, how significant are your concerns about the 
quality of the information in there?
    Ms. Tinker. We have significant concerns about the quality 
of the data.
    Mr. Meadows. Okay. Let me give it to you in a different 
way. On a scale of 1 to 10, with 10 being the most highest, 
most concern, what number would you give it?
    Ms. Tinker. That is a pretty difficult question to answer 
as the ----
    Mr. Meadows. And that is why I am here, so ----
    [Laughter.]
    Ms. Tinker. How I would answer is while we are very pleased 
that States are reporting and data now, and almost all are 
there, that that really means that we are really at the 
starting line and not at the finish line in terms of building 
T-MSIS. We are still looking to see that the data has the 
quality necessary to perform program integrity efforts, 
specifically that all States report all data, and secondly, 
that when States are reporting that data, that it is actually 
uniform, that all States interpret the data pieces the same 
way.
    Mr. Meadows. Right, yeah. Ms. Tinker, you have been well 
coached, and so I am going to give you another piece of advice. 
When I ask a question on 1 to 10, you might as go ahead and 
answer it because I am not going to stop until you answer. So, 
on a scale of 1 to 10 with ``10'' being most concern, what 
number would you give it?
    Mr. Hill. I would give it a 7.
    Mr. Meadows. Thank you, Ms. Tinker. Mr. Hill, in your 
statement I think you said that 98 percent of those that should 
be reporting are reporting. Is that correct?
    Mr. Hill. That is correct.
    Mr. Meadows. And so, would you say 98 percent is a good 
percentage?
    Mr. Hill. It is.
    Mr. Meadows. Oaky. Out of the 98 percent based on the 
statement that Ms. Tinker gave me with a 7 being a concern, how 
much of the 98 percent data can you actually use?
    Mr. Hill. Right. I mean, I share Ms. Tinker's concern. I 
would not say we are necessarily at the starting line. We are 
probably midfield. But it is absolutely the case that the first 
thing that we had to accomplish was get the States to report. 
We now have them to report. The next challenge for us is being 
sure that, as described, the data is uniform, that we can use 
it, that States are reporting ----
    Mr. Meadows. So, can you use it today?
    Mr. Hill. We are using it today. We were ----
    Mr. Meadows. Can you use it accurately today?
    Mr. Meadows. I would not want to rely a whole lot of policy 
analysis on the data that we have because we have just started 
----
    Mr. Meadows. So, that means that we got 98 percent 
compliance of un-useful data.
    Mr. Hill. Right, and the ----
    Mr. Meadows. Do you not see a problem with that?
    Mr. Hill. I see a program that we had to continue ----
    Mr. Meadows. I see your staff behind you. They are nodding 
that there is a real problem with that. And so, as we look at 
that, how do you fix that, I mean, because for you to come and 
say, well, we got a 98 percent compliance rate, we really do 
not have a 98 percent compliance rate because Ms. Yocom and Ms. 
Tinker both in their testimony have shown the quality of the 
data is worthless. So, if the quality of data is worthless, why 
are we focusing on a compliance rate of 98 percent?
    Mr. Hill. I would not characterize the data as worthless 
first. And as I said ----
    Mr. Meadows. But you just said you cannot use it.
    Mr. Hill. Well, I think it is important to understand how 
we build data systems, right? So, this is not an information 
system that we are using to process and pay claims like the 
States are. We are asking States to aggregate their claims data 
and give it to us to put in a database that we can use to do 
analytics. The first step in that process is for them to build 
that interface, to give us that data, and to put it into T-
MSIS, and that is where we have it. Until we ----
    Mr. Meadows. But the ranking member--hold on.
    Mr. Hill. Yeah.
    Mr. Meadows. I am running out of time. The ranking member 
and I have the Data Act. We have a number of other systems when 
we look at that. We have a dashboard on FITARA, which, you 
know, is the Connolly-Issa bill. Is that correct? So, when we 
look at that, bad data going in makes those systems worthless, 
and you say that it is not worthless, but at the same time, 
asking them to comply is a real problem.
    So, let me shoot real quickly to another area. It appears 
that $1.2 billion worth of improper payments actually come from 
three States. Is that correct, Ms. Tinker, $1.2 billion in 
estimated improper payments came from three different States?
    Ms. Tinker. We did find beneficiary eligibility errors in 
three States--California, New York, and Kentucky--totaling $1.2 
billion.
    Mr. Meadows. All right. So, what can we do to fix this? I 
mean, if it is three States, I would say that was a target rich 
environment, that we can focus on those three States.
    Ms. Tinker. The main causes of the errors we found were 
human errors and eligibility system inability to actually 
perform the functions it needed to. The recommendations that we 
made to States were three: one that where we found errors they 
do the redeterminations necessary; two, that they put policies 
and procedures in place to properly train people so that we 
could decrease the human errors; and third, that they update 
their systems so that they could better talk to other data 
systems to get the correct information to make those 
determinations.
    Mr. Meadows. So, Mr. Hill, are you going after the $1.2 
billion?
    Mr. Meadows. The $1.2 is identified as potential 
overpayment. There was not a recommendation to collect it 
because ----
    Mr. Meadows. Well, let me give you a recommendation. 
Collect it. I mean, it is the American taxpayers' dollars. I 
mean, is it your sworn testimony here today is because you did 
not get a recommendation to collect ----
    Mr. Hill. No.
    Mr. Meadows.--$1.2 billion in improper payments, you are 
not going after it?
    Mr. Hill. No, the recommendations were to fix the system in 
California ----
    Mr. Meadows. So, are you going after it or not?
    Mr. Hill. We are not issuing a disallowance to California 
----
    Mr. Meadows. Okay. I want you to report back to this 
committee in 30 days on why you decided to ignore $1.2 billion 
in improper payments and decided not to collect it.
    Mr. Hill. Yep.
    Mr. Meadows. All right.
    Mr. Meadows. All right. The chair recognizes the ranking 
member, Mr. Connolly, for a generous 6 minutes.
    Mr. Connolly. I thank the chair, and let me echo what the 
chairman just said, Mr. Hill. I mean, on a bipartisan basis, we 
simply cannot say that, well, we have lost that if for no other 
reason besides the fact that this is taxpayer money, but also 
if we are going to get serious about improper payments, we got 
to get serious about improper payments. How about we start now? 
And people have to know they cannot get away with it, that 
mistakes will be corrected, and fraud or abuse will be pursued 
vigorously. And we are prepared to back you up on a bipartisan 
basis, but we need you to do it. So, I strongly support the 
chairman's recommendation that we review, if not rescind, the 
decision not to pursue that $1.2 billion.
    Let me ask a question about how much we know about the 
data. Ms. Yocom, Ms. Tinker, Mr. Hill, how much of Medicaid 
improper payments is fraud? How much of it is fraud because in 
Medicare, for example, Mr. Hill, we know it is about $50 
billion a year in fraud in Medicare. And correct me if I am 
wrong, most of it is provider fraud as you pointed out. It is 
not individual beneficiaries committing fraud, though some may 
be involved, but it is actually, and this is always hard for 
the public to believe, that doctors cheat. They lie. They 
steal. Not all doctors of course, but a handful of bad actors, 
but it adds up to a lot of money. A lot of money.
    So, in Medicaid, how much of the total improper payment we 
are looking at is fraud, because one has to disaggregate the 
kinds of improper payments because there are different 
strategies. You know, if it is overpayment because we messed it 
up, you know, we thought you were eligible and you were not, we 
thought you qualified for this additional benefit, but you did 
not or you did, that can be addressed through management, 
personnel, and technology.
    Fraud is different. That has a law enforcement element to 
it which I am going to get to. But in order to know how we 
marshal our resources to get at the improper payments, we got 
to be able to accurately say this much is fraud. So, what 
percentage of total Medicaid improper payments is fraud?
    Mr. Hill. My understanding in the way we measure improper 
payments now, you cannot disaggregate it. It does not measure 
fraud for a variety of reasons. As you just described, it 
measures compliance errors, it measures where documentation is 
missing. Sometimes when you look at a fraudulent claim, it is 
going to look perfect, right? It would not show up as an error 
because a fraudulent provider is going to make sure that they 
get it through the system in a way that it will get paid. And 
so, it is a much more complicated analysis to make the 
determination on whether it is fraud involving law enforcement 
partners and others.
    So, it is my understanding we do not have a measure, you 
know, a rigorous measure as we do with the Payment Error Rate 
Measurement Program for fraud in Medicaid, which is why we 
spend time with our law enforcement partners and in partnership 
with our States to identify it in an investigatory way. But it 
is not something that we can use the PERM Program to address.
    Mr. Connolly. It is distressing to hear you say that 
because I do not how you have a coherent, let alone effective, 
countermeasure to improper payments. I mean, ideally want to 
bring improper payment to zero.
    Mr. Hill. Right.
    Mr. Connolly. Now, we know that we are never going to quite 
reach zero, but we certainly can do better than $142 billion a 
year. But I cannot devise a strategy that is efficacious if I 
cannot disaggregate fraud from administrative errors or 
technical error in the computer. Ms. Yocom, help us. Can GAO 
help Mr. Hill disaggregate that global number so that we are 
dealing with its component parts and developing efficacious 
strategies?
    Ms. Yocom. Yeah, I do not have good news in terms of a 
percentage. However ----
    Mr. Connolly. Oh, Ms. Yocom, come on. If there was one 
person in this room I thought would bring me good news, it was 
you.
    [Laughter.]
    Ms. Yocom. However, we do have a fraud risk framework that 
we have put together and have looked at CMS' practices to 
prevent fraud, and we have found that those are lacking. There 
are things that CMS could be doing to better look strategically 
across its programs and to coordinate within its program in 
order to better prevent fraud.
    Mr. Connolly. Well, let me make an informal request of GAO, 
and I am sure my colleagues, Mr. Meadows, Mr. Palmer, and Mr. 
Raskin, as respective chairman and ranking member would join in 
the request. We need you to get back to us in developing 
methodologies in disaggregating the improper payment global 
number so that we can better devise strategies.
    Mr. Meadows. I concur with the ranking member, and so I 
would ask within 60 days if you can come back to this committee 
with a plan to do that, Ms. Yocom, once you check with your 
colleagues.
    Mr. Connolly. Because I do not know how we do it 
rationally, frankly, if we cannot have that kind of analytical 
tool.
    Mr. Connolly. My final question because I do not want to 
impose on my good friend and brilliant thespian, who makes 
Shakespeare happy every time she appears on stage, Eleanor 
Holmes Norton. But before that, I mean, Mr. Purpera is here 
from Louisiana and doing his job at the State level. But an 
observation: I do not think we are using U.S. attorneys all 
that well for fraud, and I will give you an example. I know of 
one example personally, but a few years ago the U.S. attorney 
in Boston decided to make Medicaid fraud a very high priority, 
and guess what happened? Her office alone identified and mostly 
recovered $3 billion. One office because she made it a 
priority.
    There are 99 U.S. attorneys, and my sense it is kind of up 
to the individual U.S. attorney whether this is a priority or, 
you know, we will look for it if we see it and find it, maybe 
we will do something about it, as opposed to saying, no, one of 
our top five this year or top three or whatever it might be is 
going to be fraud, Medicare fraud, Medicaid fraud. Any of you 
want to comment on that, I mean, because I think that is an 
underutilized tool as well that could really make a difference 
in reducing improper payments. Ms. Tinker.
    Ms. Tinker. We believe that obviously working closely with 
our partners in the U.S. attorneys office is extremely 
important. And, in fact, when you look at the return on 
investment in 2017, there were $4.7 billion in expected 
recoveries, over 881 criminal actions, and 826 civil actions. 
But an additional important part in Medicaid is our work with 
the Medicaid Fraud Control Units.
    In 2017 in our Medicaid Fraud Control Unit annual report, 
we found that $1.8 billion had been recovered as a result of 
the efforts of Medicaid fraud control units across the country, 
including 1,500 convictions, 1,100 exclusions, meaning 
providers who no longer able to participate in Federal 
healthcare programs, and over 961 civil settlements and 
judgments. We are very proactive in working to prevent fraud 
and to bring bad actors ----
    Mr. Connolly. So, my time is up, but what you are saying to 
us is you are happy with the cooperation you are getting from 
U.S. attorneys.
    Ms. Tinker. There is always more we can be doing without a 
doubt.
    Mr. Meadows. So, Ms. Tinker, I want to follow up on that. 
If you will help us identify perhaps those U.S. attorney 
districts where you get more help, it would help us, you know, 
to the ranking member's concern. If you could help us do that. 
I mean, that is not a formal request, but if you will get that 
as part of the report back. And I see your staff nodding 
behind. So, I feel we are in good shape.
    The gentleman from Ohio is recognized for 5 minutes.
    Mr. Jordan. Mr. Hill, how many Americans are on the 
Medicaid Program?
    Mr. Hill. I think we have 70 million roughly.
    Mr. Jordan. Seventy million?
    Mr. Hill. Yep.
    Mr. Jordan. And what has happened to that number since 
Obamacare and the Medicaid expansion?
    Mr. Hill. Under the Medicaid expansion, we added about 
roughly 11 million people to Medicaid.
    Mr. Jordan. So, it increased, you know, fairly 
significantly.
    Mr. Hill. Mm-hmm.
    Mr. Jordan. All right. So, of the 70 million, how many of 
those 70 million are able-bodied adults?
    Mr. Hill. Well, in general, the expansion was expanded to 
adults, childless adults, and so I would venture to guess that 
the majority of the folks in the Medicaid expansion are folks 
who otherwise would not have been covered either as a ----
    Mr. Jordan. So, it is safe to say the 11 million is 
probably all in that category.
    Mr. Hill. Right.
    Mr. Jordan. And some of the previous 59 million were 
probably in that category as well, even though Medicaid 
initially started off for disabled kids and different things.
    Mr. Hill. Right.
    Mr. Jordan. Those kinds of populations. It is fair to say 
that there was some portion of the 59 million prior to 
Obamacare who were able-bodied adults as well.
    Mr. Hill. To the extent States have expended to that group, 
yes.
    Mr. Jordan. The number we have heard is 28 million able-
bodied folks in the Medicaid population. Do you think that is 
accurate?
    Mr. Hill. I am not familiar with that number.
    Mr. Jordan. Okay. All right. But it is something more than 
11 million.
    Mr. Hill. Presumably, yes.
    Mr. Jordan. All right. Of that 11 million, do you know how 
many are working? How many have a job?
    Mr. Hill. I mean, the data suggests that a large proportion 
of the folks who are on Medicaid who can work, in other words, 
who are not disabled or a caretaking parent, are working. I do 
not have the specific number.
    Mr. Jordan. The Kaiser Foundation says 40 percent of that 
able-bodied adult population in the Medicaid Program are not 
working. Do you think that is accurate?
    Mr. Hill. I would need to go back and look at the Kaiser 
data.
    Mr. Jordan. That is a big number, though, right.
    Mr. Hill. Are not working, correct.
    Mr. Jordan. That is a darn big number. Now, the Democrats 
sent a letter a couple months ago that said we should not even 
think about work requirements for able-bodied adults getting 
taxpayer money in largely the Medicaid expansion program. Do 
you agree with that?
    Mr. Hill. Well, as you know, the Administration is pursuing 
a number of waivers under our authority to promote community 
engagement. We have got a number of States that we have already 
approved.
    Mr. Jordan. I am asking you. Do you agree with that? Do you 
think we need a work requirement for the program?
    Mr. Hill. Well, it is the Administration's policy that we 
are pursuing work request and community engagement for States 
who believes that that works for their Medicaid system.
    Mr. Jordan. Yeah. How about you, Ms. Yocom? Do you think we 
need to do that?
    Mr. Hill. Well, I think we need to carry out ----
    Mr. Jordan. Well, I am going to ask some other people.
    Mr. Hill. Well, as others have said, right, we are here 
representing the Administration, and I am representing the 
Administration's position.
    Mr. Jordan. How many waivers have you given thus far to 
States to implement a work requirement for the Medicaid 
expansion population or for anyone on Medicaid, able-bodied?
    Mr. Hill. Three. Kentucky, Indiana, and Arkansas are the 
first three States that we have approved waivers for.
    Mr. Jordan. Anyone else asked?
    Mr. Hill. There are a number of States in the pipeline.
    Mr. Jordan. How many?
    Mr. Hill. I think a total of 10 or 11 States have expressed 
interest, and they are all in various stages of review right 
now.
    Mr. Jordan. How long does it take to get the approval?
    Mr. Hill. Well, you know, overcoming and sort of getting 
our policy squared away, once we got the first waiver approved, 
they can go through relatively quickly, anywhere from, you 
know, 3 months, 6 months, 9 months. Sometimes the waivers are 
packaged up with other innovations that the State wants to 
pursue that are not necessarily ----
    Mr. Jordan. It takes 9 months for you guys to okay. The 
State says we want to make people who are able-bodied folks, 
and the State says we want to acquire a work component, maybe a 
work study component, maybe a training component. And you take 
9 months for you to give them the thumb's up to do that?
    Mr. Hill. Well, we try and do it as quickly as we can 
depending upon what the State is asking for and how complex 
their waiver is.
    Mr. Jordan. Of that 40 percent of this at least 11 million 
number--I think it is closer to 28 million--who are able-bodied 
and non-working, how many of them are younger folks? How many 
are under 35, under 40?
    Mr. Hill. Well, I think that able-bodied or that expansion 
population is 19 to 65, anywhere from 19 up to 65. I do not 
know the distribution of how many are in what age category.
    Mr. Jordan. Again, I think most of it from what we have 
seen in other studies, most of them are younger folks. So, you 
got younger folks, able-bodied in the program. States coming to 
you saying we would like to impose a work requirement, and you 
are telling me it takes 9 months to give them the thumb's up.
    Mr. Hill. I am telling you we work as fast as we can to get 
the wavers approved depending on how complex they are coming 
from the State.
    Mr. Jordan. And, again, refresh my memory. How many States 
have asked for the waivers thus far?
    Mr. Hill. We have approved three, and I think there are 11 
in the pipeline.
    Mr. Jordan. Eleven have asked. Do you know how long ago 
some of these States asked?
    Mr. Hill. Most of them have all been since last January. 
Some were in the previous Administration.
    Mr. Jordan. Well, this is important. I mean, you talk to 
taxpayers across the 4th District of Ohio, my guess is 
taxpayers even in the Democrat districts who sent this letter 
saying do not do this, a bunch of taxpayers would say this 
makes so much sense particularly when so much of the population 
who are in Medicaid who are able-bodied are younger folks. The 
fact that there is not a work component just boggles people's 
minds. So, I would just encourage you to work a little faster 
and get those waivers approved, and make sure this happens.
    With that, I yield back.
    Mr. Hill. Thank you.
    Mr. Meadows. Before I recognize the gentlewoman the 
District of Columbia, I want to make sure we clarify your 
testimony because I think you said it one way, and the 
gentleman from Ohio came back. There has been 14 States who 
have requested the waiver. You have granted three. Eleven are 
in the hopper. Is that correct?
    Mr. Hill. That is correct.
    Mr. Meadows. Okay.
    Mr. Hill. The 11, I would need to go back and just be sure 
it is precisely 11, but roughly 11.
    Mr. Meadows. Okay.
    Mr. Connolly. Mr. Chairman, could I just piggyback on your 
clarification? One of those pending States is Tennessee. Is 
that correct?
    Mr. Hill. I believe so, yes.
    Mr. Connolly. And Tennessee has estimated that this work 
waiver requirement would actually cost $18.5 million to 
implement, and they have asked permission to use TANF money, 
taking sort of from Peter to pay Paul, to do that. Is that 
correct?
    Mr. Hill. I know that I have seen reports on how Tennessee 
wants to finance their work requirements.
    Mr. Connolly. Right.
    Mr. Hill. I am really not in a position to get into what 
they have requested.
    Mr. Connolly. And while philosophically we may agree or 
disagree on this, is there any reason to believe that a work 
requirement has anything to do with waste, fraud, and abuse in 
reducing improper payments? Is there a connection?
    Mr. Hill. I am not sure that I have drawn the connection 
myself. I mean, we believe the community engagement and getting 
folks into work ----
    Mr. Connolly. Thank you.
    Mr. Hill.--promote health.
    Mr. Connolly. Thank you, Mr. Chairman.
    Mr. Jordan. Mr. Chairman? Mr. Chairman?
    Mr. Meadows. Yes.
    Mr. Jordan. The work requirement has everything to do with 
treating taxpayers with respect. Able-bodied adults. Many of 
these folks are young, many of them single men, and you do not 
have to do anything to get free healthcare from the taxpayer. 
So, it has everything to do with treating the people who pay 
for this with respect they deserve. That is why it is so 
critical. And, oh by the way, it might actually help the 
recipient. That is why we are for it.
    Mr. Meadows. All right. The chair recognizes his allowance 
of a colloquy that came up without the intention of that. So, 
the chair is going to recognize, no intention of colloquy from 
the gentleman from Virginia. The chair recognizes the 
gentlewoman from the District of Columbia for a generous 5 
minutes.
    Ms. Norton. I thank my good friend. Mr. Chairman, he is 
always fair to me. That was just a debate in case you wondered 
what was just happening there. I want to thank my good friend 
from Virginia, the ranking member, for mentioning our work 
together, making fun of members of committee with Shakespeare. 
Every year it is one of the highlights ----
    Mr. Meadows. Does the gentlewoman want to strike down his 
words?
    [Laughter.]
    Mr. Connolly. No, she does not.
    Ms. Norton. On the contrary. I am a part of this play 
acting, Democrats and Republicans, and I must say it makes us 
understand that not all play acting occurs from this podium.
    Just let me say something about a waiver in order to allow 
people to work right here. I would welcome a waiver for people 
who are not working in the District of Columbia on Medicaid, 
and with that waiver I would need in this knowledge economy 
from the agencies who grant the waiver, help in finding jobs 
for people in the District of Columbia who are on Medicaid who 
are not working. I have not found them as I go around my 
district. I do not know if this happens in yours, but if you 
want a job here, and you do not have a high school education, 
then you need training. You need what the Federal government is 
not offering such people.
    Most of the people on Medicaid are elderly, disabled, or 
children. So, let us understand who we are talking about. What 
I do not understand is the definition of terms. Once we get a 
term, it just begins to be used as if everybody understood what 
it means. ``Improper payment rate'' has been used over and over 
again. I thank you, Mr. Hill, for clarifying that that does not 
mean deliberate fraud.
    And one of the things I would ask the chairman to do is to 
call for a task force of U.S. attorneys to work with the 
Agency. I do not think you are equipped to tell us what is 
fraud and what is not fraud. I state that as a member of the 
District of Columbia Bar that you need help, particularly since 
you are not even able to disaggregate. That is very, very 
unfortunate because we are using ``improper payments'' to cover 
all payments. And that is not very professional here, and it 
will not help you to uncover those improper payments. So, let 
us find out what we mean.
    In HHS's 2017 financial report, and here I am quoting, 
``Improper payments are not necessarily expenses that should 
not have occurred.'' So, why do we not just start there? Can 
you explain how payments are categorized as improper, and how 
improper payments could be legitimate payments? Any of you, 
please help us clarify what we are talking about here.
    Mr. Hill. I will start, and we can let others jump in, and 
we can turn back to our three-State audit in California, 
Kentucky, and New York where we are looking at eligibility 
systems failures. And it can be the case that a State has not 
complied with all the rules that we have established for 
verifications, for checking income, for determining whether or 
not a person was eligible. If they have not completed those 
system checks, we would count that eligibility decision as an 
error, and that would be a payment error.
    Ms. Norton. So, that is an error, not fraud.
    Mr. Hill. Right, but in fact ----
    Ms. Norton. Improper because it is an error.
    Mr. Hill. Right, but it does not mean necessarily that all 
those payments should not have been made. So, for example, when 
a State in those instances would have gone back and done their 
redetermination, actually fulfilled the checks that they were 
supposed to have fulfilled, and found that the person was, in 
fact, eligible, the payment would have been made. So, it is an 
improper payment because the State has not complied, but it may 
not necessarily ----
    Ms. Norton. And, of course, the State may at a later date 
correct the mistake.
    Mr. Hill. Right, similarly with providers who ----
    Ms. Norton. And we are talking about some people who do not 
have a high school education, some people are elderly, some 
people may have given the wrong data, some people may not have 
had the right data. Mr. Chairman, that was really my basic 
point, to try to clarify what we are talking about here, to 
understand that the Agency itself has not, in fact, been able 
to decide whether we are talking about fraud or not.
    Every member of this body has women, children, elderly, the 
majority of the people we are talking about may have committed 
errors. But it would be terrible to categorize them together 
with, as Mr. Hill says, there are very few people who set out 
to lie on their forms, whether they are income tax or other 
forms, and, therefore, commit fraud. And so, Mr. Chairman, I 
call upon the committee again, if you would, at least as a 
pilot to ask some U.S. attorneys to join with some members of 
the Agency so that they can begin to, in fact, go after fraud. 
And I would be glad to have my district be one of those, who 
would work with the Agency on actual fraud so then you could 
come back and give us a report on progress you are making.
    I am outraged if there is actual fraud at a time when we 
are seeing cuts of all kinds in-services, and in Medicaid, and 
all kinds of threats to cover exactly the kind of services and 
benefits to women, children, the elderly, and disabled as are 
involved in Medicaid. So, a task force would help us clarify 
what we mean. I do not think we can ask the Agency, which is 
not a law enforcement agency, to do this on its own.
    Mr. Meadows. Well, I think the gentlewoman's perspective on 
that, as she might have recalled in my opening statement, we do 
know that fraud is part of the problem because of ----
    Ms. Norton. Granted.
    Mr. Meadows.--what happened in Virginia and what happened 
in North Carolina that I highlighted in my opening statement. 
And so, in doing that, I think it is incumbent upon us before 
we get the U.S. attorneys involved, and, Ms. Tinker, I have 
already asked you to help us identify those. But it is 
incumbent on Mr. Hill, it is about quality data. And the truth 
is it is not as much the beneficiaries, as Ms. Yocom has 
pointed, as those that are actually providing that. That is 
where the fraud comes from, so it is not actually as much your 
individual constituents as maybe a constituent who is providing 
the service where the greatest amount of fraud happens. And so, 
I think if you can help us, Mr. Hill, highlight that.
    I think the gentleman from Wisconsin, Mr. Grothman, is now 
recognized for 5 minutes.
    Mr. Grothman. Thank you. I am not sure how many cuts there 
are, but I worry about cuts to amend, too. A couple question 
here. First of all, for Mr. Purpera, as far as Louisiana is 
concerned, we talk about over time going for fee-for-service to 
managed care. I would like you to comment the degree to which 
that will, in addition to other benefits, reduce fraud.
    Mr. Purpera. Well, one thing to understand, sir, is that 
under managed care, our liability is 100 percent from day one. 
So, under fee-for-service, we enroll someone and they become a 
recipient, but there are no payments made until they actually 
go and see a physician or get a prescription.
    Mr. Grothman. Correct.
    Mr. Purpera. But under managed care, their liability 
becomes first day it is 100 percent. As to fraud, I can only 
speak for Louisiana at the moment and maybe 25 other States 
that do not use income tax data to verify the eligibility role. 
But realize when you apply for Medicaid, it is very much based 
upon income, and the only thing that most of these States have 
to check is the wage data. Wage is data is very limited. It 
does not include all kinds of self-employment types of income.
    And so, you know, I guess we have talked several times 
today about fraud as only on kind of on the provider side. I am 
not so sure about that, but I do not know that we know either 
because we are not really looking.
    Mr. Grothman. Right. Well, I guess the question is there is 
a feeling with regard to medical costs in general that maybe 
less procedures would be done on managed care than fee-for-
service. And given that some of the fraud is from the provider 
side, there would be less opportunity for fraud there. I guess 
that is what I'm trying to get you to say, or do you think that 
is true or not?
    Mr. Purpera. Well, I do believe, I think it was the State 
of Washington, their auditor issued a report saying that for 
every dollar in improper payment that went into the system 
under managed care, it came back in the form of a dollar and a 
quarter in increased per member per month later on. So, that 
kind of data is out there. In other words, a bad payment today 
can result in increased payments later in ----
    Mr. Grothman. So, you do not think that managed care would 
be necessarily a benefit is what you are telling me.
    Mr. Purpera. Would be, sir?
    Mr. Grothman. Would necessarily be a benefit. You do not 
buy into the idea that managed care would ----
    Mr. Purpera. No, sir, I am not saying it would not be. I 
think that the data on that is still out. In my State, we are 
looking or continuously looking at what are the actual costs in 
counter costs of our managed care partners as compared to the 
PM/PMs that we are paying, you know, the money that we are 
sending them. And we are looking at that gap and trying to 
determine what is the extent of that gap.
    The major portion of that, I am not saying this is fraud, 
but it is based upon the actuarial assumptions that go into 
developing the per month/per month. In Louisiana, for example, 
the normal rate for a Medicaid recipient PM/PM, let us say, 
$350. It is around there. But under expansion, it is $500.
    Mr. Grothman. Okay.
    Mr. Purpera. Now, I do not think we have really come to 
understanding why it jumped so much.
    Mr. Grothman. Okay. Another question kind of follow-up on 
what a couple people have said in the past, obviously Medicaid 
is a huge benefit, and unless you do not get out at all, I 
think you know that people are intentionally holding down their 
income because they want to keep their Medicaid, which is 
understandable. It is such a generous program. Either they are 
making less, or maybe just reporting less income, which is 
maybe what you were referring to, because you want to hold 
under a given amount.
    Does anybody have any comments on that? Are there any 
people even beginning to make an estimate on the amount of 
income that the economy is losing as people either work less or 
find a way to work for cash to keep this generous benefit? 
Anybody given it any thought? Mr. Purpera, that is why we like 
you. You are always thinking.
    Mr. Purpera. Yeah. So, let me just say this. I do not have 
any statistics on ----
    Mr. Grothman. I mean, it is obvious that it is going on to 
a degree because you hear about it if you talk to people.
    Mr. Purpera. If you just strictly want to talk about the 
fraud perspective, and I am not trying to give any degree of 
how many people are committing fraud in this perspective. At 
least in Louisiana and 25 other States, they have to reduce 
their income because are not looking. The program is not 
looking, right? We are looking at their wages. So, if they are 
self-employed, they are a home building contractor, they can 
make as much money as they want to. We do not know the answer 
to that, and our State departments are not going to know the 
answer to that.
    In addition to that, the way the regulations are written 
right now, I have got one of the applications in my briefcase 
back here. It says what did you make this month, and what was 
your income this month? Well, so if you have cyclical incomes 
it really gets crazy as to whether or not they are eligible or 
not eligible.
    Mr. Grothman. Yeah, and I was not aware of that. You can 
tell me this. If I am somebody who is working 60 hours a week 
from March 1st to November 30th, and I go in and apply for 
Medicaid on January 1st, how long do I get Medicaid for?
    Mr. Purpera. In my State, they would ask you what was your 
income in the previous month.
    Mr. Grothman. Correct.
    Mr. Purpera. And then you are going to be based upon that. 
And then in addition to that, you are going to be enrolled in 
the system primarily for a year. Now, you have a responsibility 
to report any time that you increase your income, but we are 
talking about fraud, right? So, if we are talking about fraud, 
then that individual is not going to report.
    Mr. Grothman. Okay. And in the case I said, and thank you, 
Mr. Chairman, for indulging me. In my example, if I am a guy, 
say, involved in construction and I am making a 80 grand a year 
every year from March 1st to November 30th, and I apply on 
January 1st and I am found eligible, as a practical matter, if 
I just let the Medicaid run and never report anything until the 
end of the year, am I ever going to get caught or is anything 
bad ever going to happen to me?
    Mr. Purpera. Unless you are honest about what you make, I 
do not believe you will because in 25 States, they are not 
using tax data. In addition to that, let me just point out, 
because we are basing it on modified adjusted gross income, 
which is a number that looks a whole bunch like tax data, then 
in your construction company, if you buy a new piece of 
equipment that year and decide to pull a 1079 deduction and 
write off more that year in your depreciation, then you may be 
living off $100,000, but you qualify for Medicaid.
    Mr. Grothman. Thank you. Do you think we should require all 
States to use tax data?
    Mr. Purpera. I absolutely.
    Mr. Meadows. You can answer the question, the gentleman 
from Wisconsin has exceeded my gracious timeframe.
    Mr. Grothman. That is why. It was such a good question.
    Mr. Meadows. You can very quickly answer the question and 
we will close out.
    Mr. Purpera. I absolutely, sir. Absolutely do.
    Mr. Purpera. Thank you.
    Mr. Meadows. All right. I thank the gentleman from 
Wisconsin. The chair recognizes the gentleman from Virginia for 
his closing remarks.
    Mr. Connolly. I thank the chair, and, again, I think this 
hearing is a good piece of work in trying to get at both 
methodology for accounting for improper payments, 
disaggregating them so that we can devise strategies working 
together to effectively reduce it. I do think it is important 
in listening sometimes to some of the rhetoric, you know, 
overwhelmingly people who take advantage of Medicaid need it. 
They are not gaming the system. They are not takers. They are 
not con men. They are families who are trying to make sure they 
have access to healthcare.
    And what we also know is that when people have that access, 
society benefits. There are not free riders. People get 
healthier, can live more productive lives, can become 
taxpaying, contributing members of society. So, healthcare is 
an investment. We do not want anyone cheating. We do not want 
people stealing. We do not want people defrauding. But let us 
not overstate the extent of the problem. Medicaid is there for 
a very good reason and it has worked.
    Ms. Norton. Would the gentleman yield for a moment?
    Mr. Connolly. Of course.
    Ms. Norton. I just wanted to inject another bipartisan note 
here because my colleague who just spoke, who just asked 
questions indicated, and I am glad the chairman allowed him to 
ask the question, whether or not using tax forms would be 
better than having people report, for example, on a monthly 
basis what their income is, or even self-report.
    I must say in terms of whether hearings are designed to get 
to remedies, unless I hear something and we need another time 
for this, perhaps another hearing, or perhaps they could even 
respond to the chairman's request for information on why tax 
forms would not be a better way to get at the notion of the 
actual income of people so that we could get at Medicaid fraud. 
And I yield back to my good friend.
    Mr. Connolly. I thank my friend for that, and I think she 
makes a very good point. We have heard testimony here. No one 
has said there is massive individual fraud going on because 
people are gaming the system in terms of their income, reported 
income. There may be examples of that, and we want to try our 
best to perfect the system. But I want to go at the 
institutional problems first because that is where the real 
money is, and every dollar we save at that level can be 
invested in the program for people in need. And so, you know, 
until and unless we have testimony that would corroborate the 
need for such a thing because of wrongdoing by large numbers of 
individuals, let us focus at the problem at hand that we have 
heard testimony from, including from the Administration.
    And, again, I want to thank my friend, Mr. Meadows, for 
this thoughtful hearing, and I know we are going to have others 
on improper payments. This committee is committed to addressing 
this issue and working with the executive branch to do so and 
with our friends at GAO to develop methodologies to better 
capture the nature of the problem. And I thank the chair.
    Mr. Meadows. I thank the gentleman for his remarks. A few 
housekeeping items and follow-ups that I would like to add. Mr. 
Schneider, you have been over there to my right. Normally I 
focus on my right. Today I did not. And in doing that, if you 
could actually give us a list of the top three recommendations 
that you either personally or in your official capacity could 
make to us on possibly implementing areas to address this 
improper payment issue. If you could do that from an 
intellectual standpoint. Are you willing to do that and get to 
the committee?
    Mr. Schneider. I am, Mr. Chairman. I did provide some 
recommendations in my written statement. Do you want additional 
ones?
    Mr. Meadows. Three additional ones above your opening 
written statement if you can, and I guess what I am saying is 
based on the testimony you have heard today, critiquing it from 
an intellectual standpoint, if you can do that, that would be 
very helpful so I can be very specific with that request.
    Mr. Schneider. I would be happy to, Mr. Chairman.
    Mr. Meadows. All right, thank you.
    Mr. Meadows. Mr. Hill, let me come back to you one area, 
and it gets back to the quality of the data that we talked 
about with the reporting system and the data that obviously is, 
according to Ms. Yocom and Ms. Tinker, is less than what we 
would want it to be, and I think from your testimony, less than 
what you would want it to be. We have had a number of deadlines 
that seem to get extended in terms of compliance. So, what I 
need from you is really a plan, and I will give you, is 45 days 
enough to come up with a plan on how we can date specific look 
at how you are going to implement and improve that quality, 
exponentially I might add, from where it is today. Is 45 days 
enough to get back to this ----
    Mr. Hill. Yep.
    Mr. Meadows.--with date-specific targets on when you are 
going to do that so it addresses that?
    Mr. Hill. It is a fair question.
    Mr. Meadows. Thank you, Mr. Hill.
    Mr. Meadows. And so, for all of you, thank you. And thank 
you for the thoughtful way that you have answered these 
questions. Hopefully this has not been as painful as some 
oversight hearings that you either may have been a part of. I 
know from a CMS standpoint, hopefully this is better. I look 
back in the back and she is smiling, but there have been some 
that have been a little bit more contentious in the past. And 
thank you all.
    And if there is no further business before the committees, 
the committees stand adjourned.
    [Whereupon, at 11:46 a.m., the subcommittee was adjourned.]


                                APPENDIX

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