[Congressional Record Volume 141, Number 159 (Friday, October 13, 1995)]
[Senate]
[Pages S15157-S15162]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FRAUD IN THE MEDICARE SYSTEM
Mr. HARKIN. Mr. President, I could not believe my eyes this morning
when I opened up the front page of the newspaper. And here is the
headline, Mr. President: ``Gingrich places low priority on Medicare
crooks, defends cutting anti-fraud defenses.''
Well, what is this all about, Mr. President? Well, what it is about
is the House bill, the House bill on Medicare reform, which I think
ought to be titled, ``The Scam Artist Protection Act.'' But, Mr.
President, do not take my word for it. Here is a letter dated September
29 from the inspector general's office of the Department of Health and
Human Services.
It says:
However, if enacted, certain major provisions of H.R.
2389--
The House bill.
would cripple the efforts of law enforcement agencies to
control health care fraud and abuse in the Medicare program
and to bring wrongdoers to justice.
``Would cripple their efforts.'' And so the Speaker yesterday says,
``It is all right. No big deal.'' He said that it is more important to
lock up murderers and rapists than dishonest doctors. Well, it is
important to lock up murderers and rapists. You bet it is. But what
does that have to do with Medicare fraud? Talk about using a logic that
just about takes all right there.
But even more astounding is this quote attributed to the Speaker.
When he was pressed on it, he said that they might be willing to
negotiate on it. He said--this is a quote attributed to the Speaker--
``We can be talked out of it if there is enough public pressure.''
I will repeat that:
We can be talked out of it if there is enough public
pressure.
Talked out of what? Talked out of easing the antifraud measures that
we now have in the law?
I think in that statement is a tacit acknowledgment by the Speaker
that they are, indeed, opening the doors to more fraud and abuse in
Medicare. But he said if there is enough public pressure, we can change
it.
If we can slip it through in the dark of night, if we can do it
behind closed doors, if we can ram it through in a hurry and the public
does not know about it, we will do it. But if the public finds out
about it and they put pressure on us, well then, we will change it.
Mr. President, I am here to start putting pressure on us. The public
ought to put pressure on us, because what has been happening in
Medicare is billions of dollars in proportion. The ripoffs, the fraud,
the waste and abuse is ongoing and getting worse instead of better,
[[Page S 15158]]
and the few minimal laws that we have that permit the inspector
general's office to go after the crooks in Medicare are now being
weakened in the House bill and the inspector general said so. She said
it would cripple the efforts of law enforcement agencies to control
health care fraud and abuse.
Mr. President, I ask unanimous consent to have printed in the Record
a letter dated September 29 from the inspector general's office
outlining the provisions in the House bill that would, indeed, cripple
their efforts.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Department of Health
& Human Services,
Washington, DC, September 29, 1995.
Re H.R. 2389: ``Safeguarding Medicare Integrity Act of
1995.''
Hon. Tom Harkin,
U.S. Senate,
Washington, DC.
Dear Senator Harkin: You requested our views regarding the
newly introduced H.R. 2389, which we understand may be
considered in the deliberations concerning the ``Medicare
Preservation Act.'' We strongly support the expressed
objective of H.R. 2389 of reducing the fraud and abuse which
plagues the Medicare program. The proposed legislation
contains some meritorious provisions. However, if enacted,
certain major provisions of H.R. 2389 would cripple the
efforts of law enforcement agencies to control health care
fraud and abuse in the Medicare program and to bring
wrongdoers to justice.
The General Accounting Office estimates the loss to
Medicare from fraud and abuse at 10 percent of total Medicare
expenditures, or about $18 billion. We recommend two steps to
decrease this problem: strengthen the relevant legal
authorities, and increase the funding for law enforcement
efforts. Some worthy concepts have been included in H.R.
2389, and we support them. For example, we support:
A voluntary disclosure program, which allows corporations
to blow the whistle on themselves if upper management finds
wrongdoing has occurred, with carefully defined relief for
the corporation from qui tam suits under the False Claims Act
(but not waiver by the Secretary of sanctions);
Minimum periods of exclusion (mostly parallel with periods
of exclusion currently in regulations) with respect to
existing exclusion authorities from Medicare and Medicaid;
and
Increases in the maximum penalty amounts which may be
imposed under the civil monetary penalty laws regarding
health care fraud.
As stated above, however, H.R. 2389 contains several
provisions which would seriously erode our ability to control
Medicare fraud and abuse, including most notably: making the
civil monetary penalty and anti-kickback laws considerably
more lenient, the unprecedented creation of an advisory
opinion mechanism on intent-based statutes, and a trust fund
concept which would fund only private contractors (not law
enforcement). Our specific comments on these matters follow.
1. making civil monetary penalties for fraudulent claims more lenient
by relieving providers of the duty to use reasonable diligence to
ensure their claims are true and accurate
Background: The existing civil monetary penalty (CMP)
provisions regarding false claims were enacted by Congress in
the 1980's as an administrative remedy, with cases tried by
administrative law judges with appeals to Federal court. In
choosing the ``knows or should know'' standard for the mental
element of the offense, Congress chose a standard which is
well defined in the Restatement of Torts, Second, Section 12.
The term ``should know'' places a duty on health care
providers to use ``reasonable diligence'' to ensure that
claims submitted to Medicare are true and accurate. The
reason this standard was chosen was that the Medicare system
is heavily reliant on the honesty and good faith of providers
in submitting their claims. The overwhelming majority of
claims are never audited or investigated.
Note that the ``should know'' standard does not impose
liability for honest mistakes. If the provider exercises
reasonable diligence and still makes a mistake, the provider
is not liable. No administrative complaint or decision issued
by the Department of Health and Human Services (HHS) has
found an honest mistake to be the basis for CMP sanction.
H.R. 2389 Proposal: Section 201 would redefine the term
``should know'' in a manner which does away with the duty on
providers to exercise reasonable diligence to submit true and
accurate claims. Under this definition, providers would only
be liable if they act with ``deliberate ignorance'' of false
claims or if they act with ``reckless disregard'' of false
claims. In an era when there is great concern about fraud and
abuse of the Medicare program, it would not be appropriate to
relieve providers of the duty to use ``reasonable diligence''
to ensure that their claims are true and accurate.
In addition, the bill treats the CMP authority currently
provided to the Secretary in an inconsistent manner. On one
hand, it proposes an increase in the amounts of most CMPs
which may be imposed under the Social Security Act. Yet, it
would significantly curtail enforcement of these sanction
authorities by raising the level of culpability which must
be proven by the Government in order to impose CMPs. It
would be far preferable not to make any changes to the CMP
statutes at this time.
2. making the anti-kickback statute more lenient by requiring the
government to prove that ``the significant'' intent of the defendant
was unlawful
Background: The anti-kickback statute makes it a criminal
offense knowingly and willfully (intentionally) to offer or
receive anything of value in exchange for the referral of
Medicare or Medicaid business. The statute is designed to
ensure that medical decisions are not influenced by financial
rewards from third parties. Kickbacks result in more Medicare
services being ordered than otherwise, and law enforcement
experts agree that unlawful kickbacks are very common and
constitute a serious problem in the Medicare and Medicaid
programs.
The two biggest health care fraud cases in history were
largely based on unlawful kickbacks. In 1994, National
Medical Enterprises, a chain of psychiatric hospitals, paid
$379 million for giving kickbacks for patient referrals, and
other improprieties. In 1995, Caremark, Inc. paid $161
million for giving kickbacks to physicians who ordered very
expensive Caremark home infusion products.
Most kickbacks have sophisticated disguises, like
consultation arrangements, returns on investments, etc. These
disguises are hard for the Government to penetrate. Proving a
kickback case is difficult. There is no record of trivial
cases being prosecuted under this statute.
H.R. 2389 Proposal: Section 201 would require the
Government to prove that ``the significant purpose'' of a
payment was to induce referrals of business. The phrase ``the
significant'' implies there can only be one ``significant''
purpose of a payment. If so, at least 51 percent of the
motivation of a payment must be shown to be unlawful.
Although this proposal may have a superficial appeal, if
enacted it would threaten the Government's ability to
prosecute all but the most blatant kickback arrangements.
The courts interpreting the anti-kickback statute agree
that the statute applies to the payment of remuneration ``if
one purpose of the payment was to induce referrals.'' United
States v. Greber, 760 F.2d 68, 69 (3d Cir. 1985) (emphasis
added). If payments were intended to induce a physician to
refer patients, the statute has been violated, even if the
payments were also intended (in part) to compensate for
legitimate services. Id. at 72. See also: United States v.
Kats, 871 F.2d 105, 108 (1989); United States v. Bay State
Ambulance, 874 F.2d 20, 29-30 (1st. Cir. 1989). The proposed
amendment would overturn these court decisions.
However, the nature of kickbacks and the health care
industry requires the interpretation adopted by Greber and
its progeny. to prove that a defendant had the improper
intent necessary to violate the anti-kickback statute, the
prosecution must establish the defendant's state of mind, or
intent. As with any intent-based statute, the prosecution
cannot get directly inside the defendant's head. The
prosecution must rely on circumstantial evidence to prove
improper intent. Circumstantial evidence consists of
documents relevant to the transaction, testimony about what
the defendant said to business associates or potential
customers, etc. These types of evidence are rarely clear
about the purposes and motivations of the defendant. The
difficulties of establishing intent are multiplied by the
complexity, size, and dynamism of the health care industry,
as well as the sophistication of most kickback scheme
participants. Documents are ``pre-sanitized'' by expert
attorneys. Most defendants are careful what they say. In most
kickback prosecutions, the Government has a difficult task to
prove beyond a reasonable doubt that even one purpose of a
payment is to induce referrals.
If the Government had to prove that inducement of referrals
was ``the significant'' reason for the payment, many common
kickback schemes would be allowed to proliferate. In today's
health care industry, very few kickback arrangements involve
the bald payment of money for patients. Most kickbacks have
sophisticated disguises. Providers can usually argue that any
suspect payment serves one or more ``legitimate purposes.''
For example, payments made to induce referrals often also
compensate a physician who is providing health care items or
services. Some payments to referral sources may be disguised
as returns on investments. Similarly, many lease arrangements
that indisputably involve the bona fide use of space
incorporate some inducement to refer in the lease rates. In
all of these examples, and countless others, it is impossible
to qualify what portions of payments are made for nefarious
versus legitimate purposes.
Where the defendant could argue that there was some
legitimate purpose for the payment, the prosecution would
have to prove beyond a reasonable doubt, through
circumstantial evidence, that the defendant actually had
another motive that was ``the significant'' reason. For the
vast majority of the present-day kickback schemes, the
proposed amendment would place an insurmountable burden of
proof on the Government.
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3. creation of an easily abused exception from the anti-kickback
statute for certain managed care arrangements
Background: There is great variety and innovation occurring
in the managed care industry. Some managed care
organizations, such as most health maintenance organizations
(HMOs) doing business with Medicare, consist of providers who
assume financial risk for the quantity of medical services
needed by the population they serve. In this context, the
incentive to offer kickbacks for referrals of patients for
additional services is minimized, since the providers are at
risk for the additional costs of those services. If anything,
the incentives are to reduce services. Many other managed
care organizations exist in the fee for service system, where
the traditional incentives to order more services and pay
kickbacks for referrals remain. In the fee for service
system, the payer (like Medicare and private insurance plans)
is at financial risk of additional services, not the managed
care organization. While broad protection from the anti-
kickback statute may be appropriate for capitated, at-risk
entities like the HMO described above, such protection for
managed care organizations in the fee for service system
would invite serious abuse.
H.R. 2389 Proposal: Section 202 would establish broad new
exceptions under the anti-kickback statute for ``any
capitation, risk-sharing, or disease management program.''
The lack of definition of these terms would result in a huge
opportunity for abusive arrangements to fit within this
proposed exception. What is ``risk-sharing?'' Is not any
insurance a form of risk sharing? What is a ``disease
management program?'' Does not that term include most of
health care?
Nefarious organizations could easily escape the kickback
statute by simply rearranging their agreements to fit within
the exception. For example, if a facility wanted to pay
doctors for referrals, the facility could escape kickback
liability by establishing some device whereby the doctors
share in the business risk of profit and loss of the business
(i.e., they would share some risk, at least theoretically).
Then, the organization could pay blatant kickbacks for every
referral with impunity.
If the concern is that the kickback statute is hurting
innovation, as observed above, there is now an explosion of
innovation in the health care industry, especially in managed
care. No one in Government is suggesting that HMOs or
preferred provider arrangements, etc., formed in good faith,
violate the kickback statute. There has never been any action
against any such arrangement under the statute.
4. inappropriate expansion of the exception to the anti-kickback
statute for discounts
Background. Medicare/Medicaid discounts are beneficial and
to be encouraged with one critical condition: that Medicare
and/or Medicaid receive and participate fully in the
discount. For example, if the Medicare reasonable charge for
a Part B item or service is $100, Medicare would pay $80 of
the bill and the copayment would be $20. If a 20 percent
discount is applied to this bill, the charge should be $80,
and Medicare would pay $64 (80 percent of the $80) and the
copayment would be $16. If the discount is not shared with
Medicare (which would be improper), the bill to Medicare
would falsely show a $100 charge. Medicare would pay $80, but
the copayment would be $0. This discount has not been shared
with Medicare.
Many discounting programs are designed expressly to
transfer the benefit of discounts away from Medicare. The
scheme is to give little or no discount on an item or service
separately billed to Medicare, and give large discounts on
items not separately billed to Medicare. This scheme results
in Medicare paying a higher percentage for the separately
billed item or service than it should.
For example, a lab offers a deep discount on lab work for
which Medicare pays a predetermined fee (such as lab tests
paid by Medicare to the facility as part of a bundled
payment), if the facility refers to the lab its separately
billed Medicare lab work, for which no discount is given. The
lab calls this a ``combination'' discount, yet is a discount
on some items and not on others. Another example is where
ancillary or noncovered items are furnished free, if a
provider pays full price for a separately billed item, such
as where the purchase of incontinence supplies is accompanied
by a ``free'' adult diaper. Medicare has not shared in these
combination discounts.
H.R. 2389 Proposal. Section 202 would permit discounts on
one item in a combination to be treated as discounts on
another item in the combination. This sounds innocent, but it
is not. Medicare would be a big loser. Discounting should be
permissible for a supplier to offer a discount on a
combination of items or services, so long as every item or
service separately billed to Medicare or Medicaid receives no
less of a discount than is applied to other items in the
combination. If the items or services separately billed to
Medicare or Medicaid receive less of a discount than other
items in the combination, Medicare and Medicaid are not
receiving their fair share of the discounts.
5. unprecedented mechanism for advisory opinions on intent-based
statutes, including the anti-kickback statute
Background: The Government already offers more advice on
the anti-kickback statute than is provided regarding any
other criminal provision in the United States Code.
Industry groups have been seeking advisory opinions under
the anti-kickback statute for many years, with vigorous
opposition by the Department of Justice (DOJ), and the HHS
Office of Inspector General (OIG) under the last three
administrations, as well as the National Association of
Attorneys General. In 1987, Congress rejected calls to
require advisory opinions under this statute. As a
compromise, Congress required HHS, in consultation with the
Attorney General, to issue ``safe harbor'' regulations
describing conduct which would not be subject to criminal
prosecution or exclusion. See Section 14 of Public Law 100-
93.
To date, the OIG has issued 13 final anti-kickback ``safe
harbor'' rules and solicited comment on 8 additional proposed
safe harbor rules, for a total of 21 final and proposed safe
harbors. Over 50 pages of explanatory material has been
published in the Federal Register regarding these proposed
and final rules. In addition, the OIG has issued six general
``fraud alerts'' describing activity which is suspect under
the anti-kickback statute. Thus, the Government gives
providers guidance on what is clearly permissible (safe
harbors) under the anti-kickback statute and what we consider
illegal (fraud alerts).
H.R. 2389 Proposal. HHS would be required to issue advisory
opinions to the public on the Medicare/Medicaid anti-kickback
statute (section 1128B(b) of the Social Security Act, as well
as all other criminal authorities, civil monetary penalty and
exclusion authorities pertaining to Medicare and Medicaid.
HHS would be required to respond to requests for advisory
opinions within 30 days.
HHS would be authorized to charge requestors a user fee,
but there is not provision for this fee to be credited to
HHS. Fees would therefore be deposited in the Treasury as
miscellaneous receipts.
Major problems with anti-kickback advisory opinions
include:
Advisory opinions on intent-based statutes (such as the
anti-kickback statute) are impractical if not impossible.
Because of the inherently subjective, factual nature of
intent, it would be impossible for HHS to determine intent
based solely upon a written submission from the requestor.
Indeed, it does not make sense for a requestor to ask the
Government to determine the requestor's own intent.
Obviously, the requester already knows what their intent is.
None of the 11 existing advisory opinion processes in the
Federal Government provide advisory opinions regarding the
issue of the requestor's intent. An advisory opinion process
for an intent-based statute is without precedent in U.S. law.
The advisory process in H.R. 2389 would severely hamper the
Government's ability to prosecute health care fraud. Even
with appropriate written caveats, defense counsel will hold
up a stack of advisory opinions before the jury and claim
that the dependent read them and honestly believed (however
irrationally) that he or she was not violating the law. The
prosecution would have to disprove this defense beyond a
reasonable doubt. This will seriously affect the likelihood
of conviction of those offering kickbacks.
Advisory opinions would likely require enormous resources
and many full time equivalents (FTE) at HHS. The user fees in
the bill would go to the Treasury, not to HHS. Even if they
did go to HHS, appropriations committees tend to view them as
offsets to appropriations. There are no estimates of number
of likely requests, number of FTE required, etc. Also, HHS is
permanently downsizing, even as it faces massive structural
and program changes. The possible result of the bill is a
diversion of hundreds of anti-fraud workers to handle the
advisory opinions.
For the above reasons, DOJ, HHS/OIG and the National
Association of Attorneys General strongly oppose advisory
opinions under the anti-kickback statute, and all other
intent-based statutes.
6. creation of trust fund mechanism which does not benefit law
enforcement
Background: In our view, the most significant step Congress
could undertake to reduce fraud and abuse would be to
increase the resources devoted to investigating false claims,
kickbacks and other serious misconduct. It is important to
recognize that the law enforcement effort to control Medicare
fraud is surprisingly small and diminishing. There is
evidence of increasing Medicare fraud and abuse, and
Medicare expenditures continue to grow substantially. Yet,
the staff of the HHS/OIG, the agency with primary
enforcement authority over Medicare, has declined from
1,411 employees in 1991 to just over 900 today. (Note: 259
of the 1,411 positions were transferred to the Social
Security Administration). Approximately half of these FTE
are devoted to Medicare investigations, audits and program
evaluations. As a result of downsizing, HHS/OIG has had to
close 17 OIG investigative offices and we now lack an
investigative presence in 24 States. The OIG has only
about 140 investigators for all Medicare cases nationwide.
By way of contrast, the State of New York gainfully
employs about 300 persons to control Medicaid fraud in
that State alone.
Ironically, the investigative activity of OIG pays for
itself many times over. Over the last 5 years, every dollars
devoted to OIG investigations of health care fraud and abuse
has yielded an average return of over $7 to
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the Federal Treasury, Medicare trust funds, and State Medicaid
programs. In addition, an increase in enforcement also
generates increased deterrence, due to the increased chance
of fraud being caught. For these reasons, many fraud control
bills contain a proposal to recycle monies recovered from
wrongdoers into increased law enforcement. The amount an
agency gets should not be related to how much it generates,
so that it could not be viewed as a ``bounty.'' The Attorney
General and the Secretary of HHS would decide on
disbursements from the fund. We believe such proposals would
strengthen our ability to protect Medicare from wrongdoers
and at no cost to the taxpayers. The parties who actually
perpetrate fraud would ``foot the bill.''
H.R. 2389 Proposal: Section 106 would create a funding
mechanism using fines and penalties recovered by law
enforcement agencies from serious wrongdoers. But none of the
money would be used to help bring others to justice. Instead,
all the funds would be used only by private contractors for
``soft'' claims review, such as, medical and utilization
review, audits of cost reports, and provider education.
The above functions are indeed necessary, and they are now
being conducted primarily by the Medicare carriers and
intermediaries. Since the bill would prohibit carriers and
intermediaries from performing these functions in the future,
there appears to be no increase in these functions, but only
a different funding mechanism.
These ``soft'' review and education functions are no
substitute for investigation and prosecution of those who
intend to defraud Medicare. The funding mechanism in H.R.
2389 will not result in any more Medicare convictions and
sanctions.
* * * * *
In summary, H.R. 2389 would:
Relieve providers of the legal duty to use reasonable
diligence to ensure that the claims they submit are true and
accurate; this is the effect of increasing the Government's
burden of proof in civil monetary penalty cases;
Substantially increase the Government's burden of proof in
anti-kickback cases;
Create new exemptions to the anti-kickback statute which
could readily be exploited by those who wish to pay rewards
to physicians for referrals of patients;
Create an advisory opinion process on an intent-based
criminal statute, a process without precedent in current law;
since the fees for advisory opinions would not be available
to HHS, our scarce law enforcement resources would be
diverted into hiring advisory opinion writers; and
Create a fund to use monies recovered from wrongdoers by
law enforcement agencies, but the fund would not be available
to assist the law enforcement efforts; all the monies would
be used by private contractors only for ``soft'' payment
review and education functions.
In our view, enactment of the bill with these provisions
would cripple our ability to reduce fraud and abuse in the
Medicare program and to bring wrongdoers to justice.
Thank you for your attention to our concerns.
Sincerely,
June Gibbs Brown,
Inspector General.
Mr. HARKIN. Mr. President, over the last several years when I was
Chair of the Subcommittee on Appropriations that funded HCFA and
Medicare, we held a series of hearings, and I requested GAO to do a
number of studies on waste, fraud, and abuse in the Medicare system.
What we have uncovered is mind boggling: HCFA paying for 240 yards of
tape per person per day--Medicare paying that. Medicare paying over
some $200 for a blood glucose tester that you can buy down at Kmart for
$49.99. Medicare is paying thousands of dollars for devices that only
cost $100. Foam cushions that cost about $50 that Medicare is paying
$880 each for.
The list goes on and on and on, and we know it is happening out
there. We know how medical suppliers are scamming the system, double
billing going on. We have documentation. GAO has documented this in the
past.
Last year, I asked the GAO to do a study just on medical supplies--
just on medical supplies. They started their study in about May or June
1994, and the study was completed in August of this year. They issued
their report.
GAO went to Medicare and said, ``We want to take a representative
sample of bills that you have paid for medical supplies.''
You have to understand, Mr. President, that when Medicare pays a bill
for medical supplies, they do not even know what they are paying for,
because all of the supplies are put under one code, 270. So Medicare
pays a bill, code 270, medical supplies, $20,000. They have no idea
what is in there, because they do not require it to be itemized.
Imagine that.
So GAO went to Medicare, got a representative sample, went behind the
code to the suppliers, to the nursing homes, to the hospitals and said,
``OK, we want the itemized account.''
Guess what they found? Now this will knock your socks off. They found
that that 89 percent--89 percent--of the claims should have been
totally or partially denied; 61 percent of the money spent should never
have been paid out--61 percent.
Then you ask the question: How much did Medicare pay last year for
medical supplies? The answer, $6.8 billion. If you can extrapolate from
this sample and say that 61 percent of that money should not have been
paid out, you are talking about $4 billion--$4 billion. Maybe we cannot
get it all, but could we get $3 billion? I bet we could. How about even
$2 billion? We ought to be able to save that. Multiply that over 7
years, which is what we are talking about here, and you can see that is
a pretty good chunk of money. And that is just medical supplies, that
is just tape and bandages, things like that. We are not even talking
about durable medical equipment. We are not talking about the double
billing that goes on. That is just one, just medical supplies. It does
not include oxygen, and it does not include ambulances, orthotic
devices. It does not include durable medical equipment. It is just the
bandages, $6.8 billion, and 61 percent should not have been paid.
A lot of this is fraud. A lot of it comes about because scam artists
know that they can game the system.
Why would they do that? Are there not enough penalties? Would they
not be afraid of getting caught? The fact is that in 24 States, the
inspector general's office does not even have a presence. They are not
even in 24 States.
Right now, Medicare reviews about 5 percent of the claims. So if you
want to scam the system, you want to put in fraudulent claims, your
chances are 5 percent that you are even going to be reviewed, and out
of the reviews, they may or may not do something based upon that. If
you are in one of the 24 States where there is not an inspector general
operating, the sky is the limit.
That is why fraud is so rampant in the Medicare system today. What
the Speaker says is that is fine, that is a low priority. We do have
some antifraud legislation on the books, as inadequate as it is right
now. The House bill weakens it even further, and the Speaker says that
is fine, but he says if the public catches on to it and they put on
enough pressure, maybe we will change it.
I hope the public does put on the pressure, because we do have to
change it. The House will say, well, they put more money into the IG's
office, they put $100 million into the inspector general's office. So
you give more money into the inspector general, then you put the
handcuffs on it by making it so they cannot prove fraud. That is
exactly what they have done.
Mr. President, we have to not put waste, fraud, and abuse in the back
seat, we ought to put it in the front seat. We have to attack that. I
do not think it is right, I do not think it is fair for this Congress,
for the Speaker of the House to say, ``OK, we're going to double your
premiums for the elderly, we're going to double your deductibles, but
we're going to let the crooks go, we're not going to crack down on
them.''
Oh, yeah, from what I read, they are going to let the doctors off,
too. They are not going to have to belly up to the bar.
One other item before I finish on fraud. I have another report from
the inspector general's office issued just this month in October. Here
is what they found: 13 percent of nursing homes have been offered
inducements in exchange for allowing suppliers to provide products to
patients in their facilities; 17 percent of nursing homes with
Medicare-reimbursed products have been offered these inducements. The
inducements range from free trial products to cameras, blenders, and
diamond rings. Fraud, and yet the Speaker says it is too tough the way
it is, we have to make it even less tough. We have to ease up. One
other thing, Mr. President, that has disturbed me, came to my attention
in the last 24 hours. It has to do with the block granting of Medicaid
to the States. The Finance Committee--the Senate Finance Committee, of
which I am not a member, but I follow closely what it has done--adopted
an amendment offered by a Republican, Senator Chafee, that says, OK, if
you block grant it to the States,
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we still want to have some guarantees. What do we want to guarantee? We
want to guarantee that pregnant women who fall under the poverty line
get medical help under Medicaid; we want to guarantee that all children
under the age of 12 get Medicaid medical help; we want to guarantee
that all disabled continue to get medical help, as they are today.
Plus, they want to guarantee that we continue the provisions in law
that provide that a spouse does not have to spend all of his or her
money down to nothing and give up their income before Medicaid will
start paying for their spouse's long-term care in a nursing home. It is
called the spousal impoverishment provision. It says you cannot
impoverish a spouse simply because his or her husband or wife is in a
nursing home. What does it say? It says basically that, minimum, a
spouse can keep, I think, a little over $14,000 in assets and can make
a little over $1,200 a month.
Now, in my view, if a couple saved up all of their lives and they
have $50,000 in the bank, and one spouse gets Alzheimer's and cannot be
cared for and has to go to a nursing home and the other spouse has to
spend that $50,000 until they get to $14,000 and then Medicaid will
kick in and start paying, that $14,000 is not a lot of money to have in
the bank for a rainy day when you are getting old.
So these provisions were left in the Senate-passed Finance Committee
bill. It passed, as I understand, by a vote of 17 to 3. I picked up
this publication, the National Journal of Congress, dated Friday,
October 13, this morning. Here is what it says:
``Thursday, Senator Jay Rockefeller said GOP leaders were
trying to undo a compromise that preserved the disabled's
right to Medicaid,'' the Associated Press reported.
Rockefeller and Senator John Chafee won a 17 to 3 Finance
panel vote to keep the Medicaid entitlement for poor children
and pregnant women, as well as the disabled. But GOP
Governors have protested overly prescriptive and onerous
provisions in the bill. Roth said Thursday evening, ``It is a
matter that is still open.''
The AP said, ``Sheila Burke, Dole's Chief of Staff, told
reporters, ``The disabled will not be an entitlement.''
Chafee and six other moderates wrote Dole, asking him to
``stand fast in your support for at least a minimal level of
support provided to our Nation's most vulnerable
populations.''
Mr. President, I hope this is not true. I hope this is not true that
now the Republicans on the Senate Finance Committee are going to throw
out the disabled in our country, that they are going to say, OK, all
right, we will keep pregnant women in and children up to age 12, but
the disabled, you are out the door, you are not entitled to be covered,
we are not going to guarantee you coverage--the most vulnerable of our
population, those who are disabled.
Mr. President, here is another thing I cannot believe. We got a
letter the other day, sent to Senator Dole on October 6, signed by 24
Republican Governors, saying that they wanted the block granting of the
Medicaid bill. They supported that, but they said there are some things
they do not like.
I will read this from the letter of 24 Republican Governors:
The bill includes a number of overly prescriptive and
onerous provisions that will mitigate against the States'
ability to implement reforms.
What are those onerous provisions? They are that the Senate Finance
Committee, by a vote of 17 to 3, on a bipartisan basis, said you have
to cover pregnant women who fall under the poverty line with medical
care, you have to provide for children to age 12 who are in poverty,
you have to cover the disabled, and you have to have provide against
espousal impoverishment. The Republican Governors said that is onerous.
I have to ask this, Mr. President. These Governors have said, ``Turn
Medicaid over to the States. We will take care of it better than the
Federal Government can take care of it.'' What makes you think that
these Republican Governors do not care for the disabled, poor, and the
women as much as Congress? Well, they cannot have it both ways. If
these Republican Governors say they do not want these provisions in
there that mandate that they continue to cover the disabled, then are
they then saying they want to have the freedom to throw the disabled
out? If the Republican Governors are saying they do not want the
provision in there that says we will ensure against spousal
impoverishment, are they then saying that they, the Republican
Governors, are willing to throw that out?
Well, if they are not saying that and if the Republican Governors are
saying, oh, no, no, no, no, we will make sure we keep provisions
against spousal impoverishment, we will cover the disabled, pregnant
women, and the children, why do they care if it is in there? You cannot
have it both ways.
These Republican Governors have shown their hand. If we turn Medicaid
over to the States without these provisions, they are going to go cut
the disabled, pregnant women, children, and cut back on the provisions
against spousal impoverishment. It is right here in this letter, signed
by 24 Republican Governors.
So I think it is becoming clearer as the days roll by, Mr. President,
that on the Medicare side, the Speaker and the GOP are turning a blind
eye to the concerns of seniors. But they are giving a wink and a nod to
the Medicare crooks.
When it comes to Medicare, Mr. Gingrich and his allies are willing to
tell the seniors they have to pay more, double their premiums, double
their deductibles. They want to take $270 billion out of Medicare and
use it for a tax cut for some of the most privileged in our society.
Yet, they are not willing to crack down on those that are scamming the
system, bilking the system of billions of dollars a year. Oh, no, we do
not want to do that. Well, I think the public ought to know about it. I
think the public is becoming aware of it, Mr. President. I think the
public is now beginning to wake up to the fact that we do not need to
cut $270 billion out of Medicare.
The head of Medicare said that maybe $90 billion would get us through
the next 10 years; $90 billion would provide for the security of the
Medicare system through 2006. Think about that. GAO said that 10
percent of Medicare goes for waste, fraud, and abuse. That is about $18
billion a year. Well, $18 billion a year for 7 years is $126 billion,
which, over the next 7 years, will go for waste, fraud, and abuse. If
we cannot get all the $126 billion, can we get $90 billion of it? We
might be able to squeeze enough out of waste, fraud, and abuse to
ensure the viability of Medicare at least for the next 10 years. But,
no, Republicans say, though, they want $270 billion out of Medicare.
Sock it to the seniors, make them pay double for premiums, double for
deductibles, and then they will take that money and give a $245 billion
tax cut for the most privileged in our society. Not fair, not right. I
think the people and the public are beginning to understand that.
Now, on the Medicaid side, $187 billion of cuts in Medicaid and then
block granted to the States. I think the Senate Finance Committee cast
a conscientious vote last week when they said, ``Look, we will block
grant to the States but we want to make sure that we cover all pregnant
women who are eligible for Medicaid, all children who are eligible for
Medicaid, and the disabled.''
Now, I understand that they are willing to throw out the disabled.
That is unconscionable--unconscionable that some would be willing to
throw out the disabled to say that, ``No, we are not going to cover
you. You just go plead your case in the States. Go to the Governors.''
Well, the Governors told us what they wanted to do in their letter.
They found those provisions onerous.
Mr. President, it is becoming clearer, in Medicare it is the seniors
who get hit. In Medicaid, it is the poor.
Here it is right here in contrast, Wednesday, October 11, the
Washington Post. Here it is. This is it, right here. Two stories, side
by side, that tell it all.
On the right hand side, it says: ``Leaders Pledge Full Tax Cut By
Senate GOP.'' Full $245 billion tax cut. ``Leaders Pledge Full Tax Cut
By Senate GOP.'' The story right next to it: ``Working Poor May Pay the
High Price for Reform.''
There you go. It cannot be said any better than that.
In Medicare, the disabled, if you are disabled, forget it. You will
not have any protections. We throw you out.
Well, I hope that is a wrong report. I hope everything I have said
here today will prove not to be so. I hope that the Senate Finance
Committee will not jettison the most vulnerable in our society, the
disabled. If they do, if that is what comes here to the Senate floor,
[[Page S 15162]]
that we have a Medicaid bill--I do not care how it is wrapped up. If it
is wrapped up in reconciliation, as you know, we cannot filibuster that
under the rules. But if they jettison the disabled, I hope and trust
that President Clinton will veto that the second it lands on his desk
and say to this country that we are not going to make the most
vulnerable in our society, those who have disabilities, pay for the
$245 billion tax cut for the most privileged in our society.
I yield the floor.
Mr. President, I ask unanimous consent that the article be printed in
the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Washington Times]
Gingrich Places Low Priority on Medicare Crooks
defends cutting anti-fraud defenses
(By Nancy E. Roman)
House Speaker Newt Gingrich yesterday defended GOP moves to
reduce penalties and enforcement efforts against Medicare
fraud by saying it's more important to lock up murderers and
rapists than dishonest doctors.
The Georgia Republican cited ``murderers out after three
years'' and ``rapists who don't even get tried'' in response
to a question at a seniors gathering to promote the GOP
Medicare overhaul. ``For the moment, I'd rather lock up the
murderers, the rapists and the drug dealers,'' he said.
``Once we start getting some vacant jail space, I'd be glad
to look at it.''
The GOP bill in the House would weaken laws against
kickbacks and self-referrals in the Medicare program. The
Congressional Budget Office has estimated the seven-year cost
of relaxing those laws to be $1.1 billion.
Gerald M. Stern, special counsel for health care fraud at
the Justice Department, said one provision would overturn a
common interpretation of Medicare anti-kickback case law and
increase the burden of proof in criminal prosecutions.
Rep. Pete Stark, the California Democrat who drafted the
anti-kickback and self-referral statutes, called Mr.
Gingrich's comments ``arrogant and gratuitous.''
``To put O.J. Simpson, the Menendez brothers and Claus von
Bulow in the same category as physicians who get kickbacks
and who steal from the government is not the issue,'' Mr.
Stark said. ``Republicans are in the position of having
weakened protections that we put in [Medicare law] at the
urging of the Reagan and Bush administration.''
Mr. Stark said Republicans weakened the provisions to shore
up support from the American Medical Association, a wealthy
lobby representing 300,000 doctors.
Rep. Tom Coburn, Oklahoma Republican and obstetrician who
helped draft the new anti-kickback provisions, said the
changes simply would put medical professionals on equal
footing with other professionals subject to such laws.
Courts have interpreted the Medicare anti-kickback law to
prohibit a payment if ``one purpose'' of it is to induce
referrals of services paid for by Medicare.
The GOP bill would change that to ``the significant
purpose,'' which Mr. Stern and others said is much harder to
prove in court. Under this standard, he said, the government
would not have won two big cases this year that led to fines
of hundreds of millions of dollars.
Kern Smith, an assistant commerce secretary under
Presidents Johnson and Kennedy, posed the question about
lighter fraud rules to Mr. Gingrich at a forum sponsored by
the Coalition to Save Medicare, a group backing the GOP
reforms.
The 73-year-old Democrat said he's gone ``around the
country selling your plan'' but found seniors vexed by the
new fraud rules. He said they were hard to defend.
``I've been around Washington for a long time, and you are
giving the Democrats something to clobber you with,'' Mr.
Smith said.
Mr. Gingrich said Republicans are willing to negotiate on
fraud and abuse provisions, leaving open the possibility of
the bill being changed on the House floor.
``We can be talked out of it if there is enough public
pressure,'' he said.
A senior House aide yesterday said the legal standard in
the anti-kickback law was changed to make it consistent with
other such laws ``without a lot of thought, and it is
something that could be changed.''
Republicans spent much of the summer discussing Medicare
changes with seniors, and many found that fraud topped
constituents' complaints. Many seniors erroneously thought
eliminating fraud and abuse could solve Medicare's money
woes.
Republicans have created other ways to reduce fraud, such
as: allowing seniors to keep a portion of money recovered
from fraud cases they report; establishing a voluntary
disclosure program for corporate managers who uncover
wrongdoing in their companies; and increasing the maximum
civil penalties for health care fraud.
The CBO estimates that these changes would save $2 billion
over seven years.
Democrats support some of these changes but argue that
relaxing kickback and self-referral laws would undermine the
success achieved in reducing Medicare fraud.
After Democrats upbraided Republicans for going soft on
fraud, the House Ways and Means Committee added $100 million
to the budget of the Inspector General's Office to prosecute
fraud and abuse. The CBO estimates that the additional money
would produce $700 million more in Medicare fraud fines.
Rep. Sam M. Gibbons of Florida, ranking Democrat on the
Ways and Means Committee, said it will be difficult to block
the softer fraud rules without public outcry.
``The Republicans are all marching in lock step,'' Mr.
Gibbons said. ``In my lifetime I've never seen anybody march
in lock step like this.''
Mr. HARKIN. Mr. President, I ask unanimous consent that the letter be
printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Republican Governors Association,
Washington, DC, October 6, 1995.
Hon. Robert Dole,
Majority Leader, U.S. Senate, Capitol Building, Washington,
DC.
Dear Senator Dole: Collectively we desire to express our
gratitude for the working relationship with you and
Republican governors. We share your commitment to balancing
the budget and returning responsibilities to the states. Your
leadership on these matters is acknowledged and admired. We
are writing to you to convey our deep concern with provisions
that were included in the Medicaid portion of the
reconciliation bill approved by the Senate Finance Committee
on September 30.
Since January of this year, Republican governors have
worked in good faith with Republican leadership on concepts
to bring meaningful, urgently needed reforms to the Medicaid
program while achieving the Congressional budget targets. As
governors representing the unique needs of our individual
states, we have not been in total agreement on all aspects of
the program. However, throughout this lengthy partnership, we
have consistently argued that the fiscal and functional
integrity of the program demand freedom from individual and
provider entitlements and other mandates on states. The
Senate Finance Committee bill ignores this principle.
The bill includes a number of overly prescriptive and
onerous provisions that will militate against the states
ability to implement reforms. Among these are individual
entitlements, which create both a huge potential cost shift
to states and unlimited potential for litigation; a set-aside
for one class of providers; and mandated federal requirements
on spousal asset protection.
Further, we are concerned that the bill reported out by the
Senate Finance Committee will be amended on the Senate floor
with additional mandates on states. While we support efforts
to reduce the deficit and balance the federal budget we will
not sit idly by while the costs associated with this program
are shifted to the states.
We have kept our commitments to Republican leadership
throughout a difficult process of negotiating reforms that
states can implement, while protecting the interests of all
of our citizens. We are fully prepared to provide health care
for our most vulnerable populations, without prescriptions
and mandates from the federal government. We are pleased with
the flexibility provisions incorporated in the House measure
and intend to work for inclusion of such provisions in the
final bill.
We are hopeful that we can work with the Senate leadership
on this most important issue. We urge you to remove mandates
and other prescriptive provisions from the Senate bill.
It is our sincere hope that we can resolve these issues
quickly. As those charged with the actual administration of
these programs, we cannot support a combination of individual
entitlements and mandate provisions that will subject us to
unlimited ligation, and still meet the budget targets.
Sincerely,
Michael O. Leavitt, Bill Weld, Fife Symington, John G.
Roland, Christine T. Whitman, John Engler, Marc
Racicot, Gary E. Johnson, George V. Voinovich, Frank
Keating, William J. Janklow, George Allen, Jim Edgar,
Fob James, Jr., Pete Wilson, Phil Batt, Terry E.
Branstad, Kirk Fordice, Stephen Merrill, Edward T.
Schafer, Tommy G. Thompson, David M. Beasly, George
Bush, Jim Geringler.
Mr. HARKIN. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. HELMS. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________