[Congressional Record Volume 143, Number 120 (Thursday, September 11, 1997)]
[Extensions of Remarks]
[Page E1739]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             THE MEDICARE AND MEDICAID RECOVERY ACT OF 1997

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                      Thursday, September 11, 1997

  Mr. STARK. Mr. Speaker, today I am introducing the Medicare and 
Medicaid Recovery Act of 1997.
  Under current law, providers and suppliers are using the Bankruptcy 
Code as a vehicle to defeat the Secretary's efforts to battle fraud and 
abuse involving Medicare and Medicaid payments. Specifically, providers 
and suppliers who have acted improperly or have been overpaid by 
Medicare, are using the protections afforded by the Bankruptcy Code to 
stop short the imposition of administrative sanctions or recoupment of 
Medicare overpayments. Providers can make strategic use of two 
devices--the automatic stay and the discharge of all pre-bankruptcy 
obligations.
  Under the Bankruptcy Code, the provider can respond to the threat or 
imposition of an administrative sanction by filing a petition in 
bankruptcy and then asserting that the automatic stay bars any further 
sanction activity. Regarding discharge, the provider can assert that 
any overpayment or civil monetary penalty due to the Medicare program 
is discharged and does not survive the bankruptcy proceeding.
  The Federal Government has long enjoyed a priority for taxes, duties 
and related penalties. However, it does not have a priority for nontax 
claims, such as Medicare and Medicaid overpayments to providers. The 
Government's priority for nontax claims was abolished in 1979.
  A 1992 report issued by the Office of Inspector General (OIG), 
entitled ``Federal Recovery of Overpayments from Bankrupt Providers,'' 
found that as of March 1991, the Medicare Trust Fund lost $109 million 
due to the ability of providers and suppliers to discharge their 
outstanding overpayments. While the report recommends giving Medicare 
claims a priority status in bankruptcy, better cost savings would be 
achieved by excepting these claims from discharge. Surely, we should 
favor the path that leads to greater cost savings.
  The U.S. taxpayer spends $191 billion each year to fund Medicare 
programs. However, an estimated $20 billion, or 10 percent, is lost to 
fraud. Too many health providers are putting their hands into the 
public trough.
  Mr. Speaker, this bill holds fraudulent providers accountable. It 
would amend the Social Security Act to specify that an administrative 
sanction imposed by the OIG on a health care provider, whether a civil 
monetary penalty or program exclusion, is not subject to the automatic 
stay provisions of the Bankruptcy Code. Second, this bill would also 
amend the Social Security Act to specify that any overpayment or civil 
monetary penalty amounts due to the Medicare program are not 
dischargeable under the Bankruptcy Code.
  The Medicare Trust Fund has suffered losses from the bankruptcy 
discharge of providers' obligations to repay Medicare overpayments. The 
drafters of the Bankruptcy Code could not have foreseen or intended 
that the protections they afforded under the Code would be used to 
support and sustain Medicare fraud and abuse. Allowing medical 
professionals to use such loopholes as those discussed above only makes 
it more difficult for the Government to provide the types of programs 
that Americans deserve. With this bill we can force providers and 
suppliers to take responsibility for their actions while putting money 
back into the Medicare Trust Fund where it is desperately needed.

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