[Congressional Record Volume 141, Number 121 (Tuesday, July 25, 1995)]
[House]
[Pages H7556-H7557]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                      STOP WASTING MEDICARE FUNDS

  The SPEAKER pro tempore. Under the Speaker's announced policy of May 
12, 1995, the gentleman from Florida [Mr. Stearns] is recognized during 
morning business for 5 minutes.
  Mr. STEARNS. Mr. Speaker, I do not think many Members know how many 
more cases of fraud, waste, and abuse have come before our Committee on 
Commerce. According to the General Accounting Office, the amount of 
taxpayers' dollars that will be lost to waste, fraud, and abuse for 
fiscal year 1996 is estimated to be an astounding $19.8 billion, or 
roughly 10 percent.
  In hearings held in both the House and Senate, evidence was presented 
showing how widespread these practices have become. The Committee on 
Commerce on which I sit has been holding a series of hearings on waste, 
fraud, and abuse; and frankly, some of the examples that we have 
discovered are simply unbelievable.
  One such example was transmitted to me by Willis Publishing Co. in 
Lebanon, GA. I was provided with documented evidence of licensed 
providers of goods and services marking up their products by as much as 
a thousand percent. That is right. You heard me correctly. A thousand 
percent.
  You might ask, how is this possible? A good example is billing of 
Medicare-Medicaid $1,210.55 for 155 adult diapers which on a wholesale 
level cost 41 cents. Tripling the wholesale cost, a great markup, would 
have resulted in a price of $1.23 each.
  The licensed Medicare provider billed Medicare for $1,210.55, 
collected $986.44, and then had the nerve to bill Medicaid for the 
remaining $242.11. U.S. taxpayers paid $7.81 for each one of these 
diapers which went on wholesale for 41 cents each.
  I will include the material I received from Willis Publishing in the 
Record.
  Another very telling example of that further demonstrates that this 
type of abuse, but on a larger scale, was reported during the hearings 
held before the Senate Select Committee on Aging this past March.
  At those hearings, the inspector general at the Department of Health 
and Human Services testified that a special investigation of home 
health care visits for which Medicare reimbursement was sought by a 
health care agency in Florida showed that from the $45.4 million that 
was claimed, the office of inspector general estimated that almost $26 
million did not meet Medicare reimbursement guidelines.
  This is just one agency in the State of Florida covering home health 
visits. Frankly, I shudder to think what the IG's office would find if 
it investigated all 50 States.
  I would like to convey yet another example that was sent to my office 
by a constituent from Altoona, FL. This letter read, in part, ``The 
hospital charges seemed to me to be excessive. One in particular in the 
amount of $195 was for trimming my toenails. My only comment to that 
would be, that is a pretty expensive pedicure.''
  Mr. Speaker, it doesn't take a math genius to figure out how much 
money we could save by wiping out waste, fraud, and abuse in the 
Medicare Program. By my calculations, if, as has been reported by the 
GAO, such practices of bilking Medicare at the cost of $20 billion a 
year are now prevalent, then by putting a stop to this type of 
fraudulent behavior we could save $140 billion in expenditures over the 
next 7 years.
  Mr. Speaker, earlier this year I introduced legislation to establish 
a bipartisan commission on the future of Medicare to make findings and 
issue recommendations on the future of this program. One of the areas 
on which the commission shall make specific findings is the need to 
eliminate waste, fraud, and abuse.
  We are doing a vast disservice to our seniors if we do not stop this 
type of abuse from occurring. Such practice not only costs taxpayers 
money, but it cheats our seniors by denying them access to benefits 
they would have otherwise received.
  Mr. Speaker, I include the following material for the Record:

                                            Willis Publishing,

                                       Lebanon, GA, July 13, 1995.
     c/o Representative Cliff Stearns,
     Rayburn Building,
     Washington, DC.
       Ms. Crow: Here is the question I'd like someone to answer 
     during your congressional hearings on fraud and abuse in the 
     Medicare/Medicaid system:
       ``How are prices set for the goods and services sold to 
     Medicare/Medicaid recipients and who approves those prices?''
       It is my belief, based on 2 years research, that there is 
     corruption in every step of the Medicare/Medicaid delivery 
     system. Per our conversation today, here is a synopsis of my 
     findings:
     
[[Page H 7557]]

       1. ``Licensed providers'' are bribing government officials 
     for the license and then for setting the prices paid at 
     artificially high levels: [Example (see document transmitted 
     with this letter): The ``licensed providers'' of goods and 
     services are marking their products up by as much as 1,000% 
     (one-thousand percent). An example of billing Medicare/
     Medicaid $1,210.55 for 155 adult diapers which cost 41 cents 
     each wholesale is included with this transmission. Tripling 
     the wholesale cost--a great markup--would have resulted in a 
     price of $1.23 each. The ``licensed Medicare provider'' 
     billed Medicare for $1,210.55, collected $968.44 and then 
     billed Medicaid for the remaining $242.11. U.S. Taxpayers 
     paid $7.81 each for diapers which wholesale for 41 cents 
     each!]
       2. Facilities which provide services to the elderly and 
     handicapped are paying bribes to government agency personnel 
     who refer the elderly and handicapped to them for treatment; 
     [I have access to a tape of a conversation between a druggist 
     and a personal care home owner in which the druggist offered 
     a ``kickback'' if the owner would allow him to bill Medicare/
     Medicaid for all prescriptions of the owner's residents. This 
     was not a ``volume discount'' but an under-the-table bribe.]
       3. ``Licensed providers'' are bribing owners of facilities 
     providing housing and other services to the elderly and 
     handicapped to allow the providers to furnish goods and 
     services to their residents; [Example: a ``licensed 
     provider'' approached the owner of a personal care home about 
     providing ``hip protectors'' to the elderly residents of the 
     facility. The ``provider'' said he had a doctor who would 
     ``sign off'' on the ``protectors'' and that the ``hip 
     protectors'' were already ``Medicare approved''. The ``hip 
     protector''
      consisted of two cotton pads about 6 inches in diameter 
     connected with Velcro belts to hold them in place around 
     the hips. The price to Medicare--$300.00 per unit!]
       4. The nursing home and home-health industries are bribing 
     legislators and government administrators and regulators to 
     channel all Medicare/Medicaid payments into their industries 
     rather than to the less-expensive ``intermediate care'' homes 
     and ``local'' nurses, doctors and social workers who might 
     accomplish the same goals at one-third to one-half the cost 
     of nursing homes and the ``licensed'' home-health agencies. 
     [This is common knowledge among State legislators in Georgia. 
     Studies from Georgia government agencies and corroborating 
     studies from Oregon, Maryland, South Carolina and numerous 
     other places have shown that of the 40,000+ people residing 
     in 24-hour skilled nursing facilities in Georgia with 
     Medicaid funding, more than two-thirds do not need ``skilled 
     nursing'' and would be better off in a smaller, more 
     residential setting like a personal care home with the 
     resultant savings to Georgia taxpayers of more than 
     $350,000,000 per year!
       In terms of long term care for the elderly and handicapped, 
     including home-health and residential facilities, here are 
     some experts that you might wish to contact regarding 
     potential savings to Medicare/Medicaid and the real benefits 
     for the elderly and handicapped which would be derived by 
     eliminating the graft and corruption from the system:
       Richard Ladd (former head Oregon and Texas agencies 
     handling the elderly and handicapped who succeeded in 
     reducing nursing home populations in both states) (512) 266-
     7406/266-7648, Austin, TX
       Professor Rosalie Kane, Institute for Health Services 
     Research, Univ. Minnesota, 420 Delaware Street SE, Box 197, 
     Mayo Building, Room D-527, Minneapolis, MN 55455 (612) 624-
     5171]
       Larry Polivka, University of S. Florida, Aging Dept., 
     Tampa, FL (813) 974-3468
       Please pass along my gratitude to Rep. Stern for the good 
     work. If the fraud and abuse were eliminated in Georgia from 
     the Medicare/Medicaid system, it would reduce the that 
     expenditure by at least 50% while not cutting one needed 
     service to the elderly and handicapped.
       I am continuing my research and working with the Georgia 
     Attorney General's office, several legislators and many 
     professionals in the long-term care field. If I find more 
     information, I'll send it along and if there is some specific 
     information you need, please let me know.
           Sincerely,
                                                      Clay Willis.
     

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