[Congressional Record Volume 142, Number 10 (Thursday, January 25, 1996)]
[Senate]
[Pages S363-S365]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            FRAUD, WASTE, AND ABUSE IN THE MEDICARE PROGRAM

  Mr. HARKIN. Mr. President, I came to the floor today to talk about a 
letter I received just yesterday from the inspector general of the 
Department of Health and Human Services.
  Mr. President, over the last 6 years I have spoken frequently on the 
Senate floor about the problem of fraud, waste and abuse in the 
Medicare Program. For several years I chaired the appropriations 
subcommittee that funded the Health Care Financing Administration. 
Every year I would have one full day of hearings on fraud, waste and 
abuse in the Medicare Program.
  Through the use of our subcommittee we have had a number of GAO 
investigations and the inspector general's investigations. I was 
wondering just what might be happening to these investigations because 
of some of the Federal Government shutdowns and slowdowns. As 
background, let me just say that the GAO has estimated that up to 10 
percent of Medicare spending is lost to waste, fraud and abuse. And 10 
percent out of a program running about $180 billion a year means that 
is $18 billion a year going for waste, fraud, and abuse. So it is not 
just a small item. It is a big item, and it is a direct hit to the 
pocketbooks of taxpayers.
  One of the main activities and one of the main positive forces we 
have going after waste, fraud and abuse is the inspector general's 
office. It is our main line of defense against Medicare fraud. As I 
pointed out before, even at last year's level, they did not have enough 
resources to do the job. But it is absolutely essential in stopping 
this terrible waste of taxpayers' dollars and saving us money.
  So I was concerned about the possible impact of the Government 
shutdowns and the low level of temporary funding that the inspector 
general is operating under, and what that would mean in our fight 
against Medicare waste, fraud and abuse.
  Last year I wrote to Inspector General June Gibbs Brown to ask her 
what the impact was. Mr. President, I received her letter yesterday. I 
want to share it with the Senate because it is absolutely shocking.
  The inspector general has said that literally billions of dollars are 
to be lost to fraud and abuse if action is not taken now. Let me read 
some portions of this letter.
  First of all she says:

       Dear Senator Harkin: Thank you for your recent letter 
     expressing concern about the extent to which the critical 
     anti-fraud and abuse activities of the Office of Inspector 
     General (OIG) in the Department of Health and Human Services 
     (HHS) are suffering from the government shutdowns and under 
     the current stop-gap spending bill. Specifically, you asked 
     the following questions:
       Were major enforcement initiatives, investigations, and 
     audits suspended?
       [Second,] [a]re fewer initiatives, investigations, and 
     audits being initiated?
       [Third,] [w]hat is the potential impact on Inspector 
     General activities of being forced to operate under another 
     short-term funding measure similar to the one currently in 
     effect?

  As I said, Mr. President, the answers are shocking.
  I am not going to read the whole letter. I will put it in the Record. 
A few points need to be highlighted. On my question on investigations 
and audit activity, listen to this, Mr. President.
  Cases to U.S. attorneys offices for prosecution dropped from 92 in 
the first quarter of last year to 51 in the first quarter of this year. 
Indictments fell from 50 to 34.
  Criminal convictions dropped from 84 for the first quarter of last 
year to 36 for the same period this year.
  Investigative receivables fell from approximately $77.7 million for 
the first quarter last year to about $30.8 million for the same period 
this year.
  The Office of Inspector General issued 33 percent fewer reports, 
processed 30 percent fewer non-Federal audits, and identified 40 
percent fewer dollars for recovery to the Federal Government compared 
to the same period last year.

       The shutdowns [she went on to say] prevented us from 
     excluding individuals and entities from participation in 
     Medicare and Medicaid. Providers were allowed to continue to 
     bill the Medicare and Medicaid programs even though they 
     should have been excluded due to convictions or because they 
     [have been] abusive to patients.

  Understand what she is saying. She is saying that certain individuals 
and entities should be excluded from participation because they have 
been convicted of criminal activities. They could not even keep them 
out because of the their lack of funds caused by the shutdown in the 
Government and because of their underfunding.
  In comparison, she states that last year at the same time there were 
493 health care exclusions versus only 210 

[[Page S364]]
exclusions for the same period this year. Starts on 100 audit 
assignments were delayed or postponed.
  But here is really the central point of the whole letter.

       . . . Under the continuing resolution scenario, [the 
     Inspector General said] the number of completed inspections 
     may drop to approximately half [of the number of last year, 
     which was 68.] Considering the program savings generated in 
     past years as a result of such reports, as much as $1 billion 
     could be lost from the drop in program inspections alone.

  That is $1 billion.

       Program inspections identify sources of fraud and abuse and 
     recommend program adjustments to prevent future occurrences.

  That is what will not be done this year, as she said, under the 
continuing resolution scenario.
  Mr. President, I ask unanimous consent that the full text of the 
inspector general's letter be printed at this point in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

         Department of Health and Human Services, Office of 
           Inspector General,
                                 Washington, DC, January 24, 1996.
     Hon. Tom Harkin,
     Ranking Minority Member, Subcommittee on Labor, HHS, and 
         Education, Senate Committee on Appropriations, 
         Washington, DC.
       Dear Senator Harkin: Thank you for your recent letter 
     expressing concern about the extent to which the critical 
     anti-fraud and abuse activities of the Office of Inspector 
     General (OIG) in the Department of Health and Human Services 
     (HHS) are suffering from the government shutdowns and under 
     the current stop-gap spending bill. Specifically, you asked 
     the following questions:
       Were major enforcement initiatives, investigations, and 
     audits suspended?
       Are fewer initiatives, investigations, and audits being 
     initiated?
       What is the potential impact on Inspector General 
     activities of being forced to operate under another short-
     term funding measure similar to the one currently in effect?


             Suspension and Curtailment of Pending OIG Work

       [Note: Social Security related activities have been removed 
     from FY 1995 figures because the Social Security 
     Administration became an independent agency on March 31, 1995 
     with its own Inspector General. The FY 1996 figures include 
     some activities funded by Operation Restore Trust--a limited 
     Medicare demonstration project funded through the Health Care 
     Financing Administration.]

   Investigations and audit activity--comparison of the first fiscal 
                       quarters of 1995 and 1996

       Presentations of cases to United States Attorneys for 
     prosecution dropped from 92 in the first quarter of Fiscal 
     Year (FY) 1995 to 51 in the first quarter of FY 1996 while 
     indictments fell from 50 to 34.
       Criminal convictions dropped from 84 for the first quarter 
     of last year to 36 for the same period this year with civil 
     judgements going from 27 to 19.
       Investigative receivables fell from approximately $77.7 
     million for the first quarter last year to about $30.8 
     million for the same period this year.
       The OIG issued 33 percent fewer reports (54 reports 
     compared to 82 reports), processed 30 percent fewer 
     nonfederal audits (861 compared to 1,223), identified 40 
     percent fewer dollars for recovery to the Federal Government 
     ($14.2 million compared to $23.8 million), and is collecting 
     30 percent fewer dollars approved for recovery ($83.2 
     million compared to $120.1 million).

                     HHS financial statement audits

       The Government Management Reform Act requires that agencies 
     have financial statement audits beginning FY 1996. The HHS-
     wide financial statement audit requires audits of eight 
     operating agencies accountable for about $280 billion. The 
     financial statements of the Health Care Financing 
     Administration alone comprise expenditures in excess of $230 
     billion that are material to the overall departmental 
     financial statements and to the General Accounting Office 
     effort to report on governmentwide financial statements. If 
     travel funds are not obtained, all such audit work will be 
     suspended with resultant impact on HHS-wide and 
     governmentwide statements. Audit activity must be performed 
     at multiple State agencies and Medicare contractor locations, 
     all requiring substantial travel funds. In addition, funding 
     must be sought for expert medical assistance to review 
     medical claims.

       Administrative sanctions--fines, penalties, and exclusions

       The shutdowns prevented us from excluding individuals and 
     entities from participation in Medicare and Medicaid. 
     Providers were allowed to continue to bill the Medicare and 
     Medicaid programs even though they should have been excluded 
     due to convictions or because they are abusive to patients.
       By comparison, there were 493 health care exclusions 
     implemented for the first quarter of FY 1995 versus 210 
     exclusions for the same period this year. Approximately 400 
     exclusion cases are presently awaiting implementation.


                     impact on new oig initiatives

       During the first quarter of last year, the OIG 
     investigations component opened about 560 cases and closed 
     about 605 cases. For the same period this year, under the 
     continuing resolution, we opened only 425 and closed about 
     390. During the furlough period this year, we opened and 
     closed only 2 criminal cases.
       Starts on 100 audit assignments were delayed or postponed 
     indefinitely because of the furlough. An example of this is 
     the national review of prospective payment system (PPS) 
     transfers. The United States Attorney in Pennsylvania 
     proposed a joint review of PPS transfers based on prior audit 
     work that identified over $150 million of overpayment to 
     hospitals. If we are able to follow the Department of Justice 
     proposal, we anticipate recoveries of over $300 million under 
     the provisions of the Federal False Claims Act. The project 
     has been suspended due to the furlough and lack of 
     adequate travel funds.


               Potential Effect of Continued Underfunding

       Lack of funds for travel and other expenses of field work

       For investigations, audits, and inspections not funded 
     under Operation Restore Trust, travel has been reduced to 
     about one-third of the prior year's expenditure for the same 
     period. If the underfunding of OIG activities continues, most 
     travel will be suspended and employees furloughed. 
     Approximately 60 percent of ongoing or planned audits will be 
     curtailed or severely reduced in scope because of travel 
     requirements with the resultant loss in program savings. The 
     FY 1995 audit-related savings totaled $5.5 billion.
       Last year the OIG issued 68 program evaluation reports. 
     Under the continuing resolution scenario, the number of 
     completed inspections may drop to approximately half that 
     number. Considering the program savings generated in past 
     years as a result of such reports, as much as $1 billion 
     could be lost from the drop in program inspections alone. 
     Program inspections identify sources of fraud and abuse and 
     recommend program adjustments to prevent future occurrences.

                      Effect on sanctions activity

       The OIG expects a decline in potential settlements and 
     exclusions as a result of fewer investigative and audit 
     initiatives. In addition, since many of the false claim cases 
     originating from the Department of Justice are generated 
     through OIG investigations and audits, we expect a decline in 
     that caseload as well.
       Currently, the OIG administrative sanctions staff has under 
     development 292 cases including false claims, Qui Tams, and 
     civil monetary penalties, all of which will be put on hold 
     during another furlough. Activity on them would be greatly 
     reduced if we are operating under a continuing resolution 
     with an inadequate level of funding.
       Since the furlough, we have not been able to respond to 
     more than 2,217 inquiries from licensing boards and private 
     sector providers, who are required by law in inquire about 
     the exclusion status of a practitioner before hiring, 
     concerning the current status of a health care practitioner.
       The minimum funding that would allow the OIG to meet its 
     basic obligations and maintain its infrastructure is the 
     amount shown in the Senate markup of the HHS appropriations 
     bill ($75,941,000). We have enclosed at Tab A a copy of the 
     Committee recommendation.
       We sincerely appreciate the effort you have made toward 
     achieving a level of funding for the OIG that would allow us 
     to sustain basic services. We also appreciate your consistent 
     support year after year toward curtailing waste, fraud, and 
     abuse in Medicare, Medicaid and other HHS programs. The 
     attention you give to our findings and recommendations and 
     your enthusiastic encouragement assist us greatly in 
     strengthening the integrity of these important programs.
           Sincerely,
                                                 June Gibbs Brown,
                                                Inspector General.

  Mr. HARKIN. Thank you, Mr. President.
  Much of the problem is they have no funds for travel. It is 
interesting that their auditors and their investigators can come to 
work and sit at a desk, but they cannot do anything. Much of the 
investigative work of the inspector general is involved in traveling 
and in investigative activities. So we have hundreds of these people 
sitting at their desks unable to do their jobs. Every day that the 
Government is either shut down or every day that they operate under the 
continuing resolution, with the short funding that they have, the 
crooks and the con artists are picking Medicare's and the American 
taxpayers' pockets costing us billions, as the inspector general said, 
if we fail to act.
  So this is not just again some little item. It is very odd to me, Mr. 
President, we can pass a continuing resolution to provide a full year 
of funding to a number of important programs, including the Kennedy 
Center for the Performing Arts--that is fine--and yet we do not fully 
fund the inspector general's office that goes out after the 

[[Page S365]]
crooks and the con artists and stops them and recovers money for the 
taxpayers.
  We cannot fund that. I just wish somebody could justify that to me. I 
do not understand it. I guess we are going to be considering a new 
continuing resolution tomorrow.
  I want to take this opportunity today to let my colleagues know that 
I intend to insist that that continuing resolution provide adequate 
funding for the Office of Inspector General in the Department of Health 
and Human Services to fight Medicare fraud, waste, and abuse. If we do 
not, then it is the crooks and the scam artists who will be smiling as 
they rip off the taxpayers even further.
  I just want to point that out, Mr. President. If there is a 
continuing resolution and they are going to fund some portions of the 
Government to go on, this is one portion of the Government that this 
Senator is not going to let sit there and not be adequately funded. 
People are talking about cutting Medicare and making our beneficiaries 
pay more for their monthly premiums to make up for Medicare shortfalls 
in the future. I say, wait a minute, if the General Accounting Office 
is saying that up to 10 percent of Medicare money is lost to waste, 
fraud, and abuse, that is $18 billion a year each year for 7 years. We 
already have more money than we need right there to make up for the 
Medicare shortfall that we face.
  So this is an important matter and I intend to pursue it. I hope 
Senators will do so on both sides of the aisle--I do not say this is a 
partisan issue. I just hope we pay some attention to this issue and 
make sure the Office of Inspector General is fully funded.

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