[Congressional Record Volume 143, Number 129 (Wednesday, September 24, 1997)]
[Extensions of Remarks]
[Pages E1845-E1846]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           MEDICARE AND MEDICAID PROVIDER REVIEW ACT OF 1997

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                     Wednesday, September 24, 1997

  Mr. STARK. Mr. Speaker, together with Mr. Dellums and Mr. Miller of 
California, I am pleased to introduce the Medicare and Medicaid 
Provider Review Act of 1997.
  The HHS inspector general reports that an estimated 14 percent of 
Medicare payments overall, and 40 percent of home health payments, are 
made inappropriately each year. Much of this $23 billion per year of 
fraud, waste and abuse occurs because providers do not comply with 
Medicare rules about medical necessity, and about how services and 
supplies should be coded and documented. In some cases, providers don't 
comply because they don't understand the rules. But in many other 
cases, providers understand the rules so well that they are able to 
flout them without being detected. The recent indictments of three 
Columbia/HCA executives for overbilling Medicare are a glaring example 
of provider's ability to game the system. In addition, the inspector 
general recently reported that 25 percent of home health agencies it 
investigated have ``abused or defrauded Medicare or misappropriated 
Medicare funds.'' \1\
---------------------------------------------------------------------------
     Footnotes appear at end of speech.
---------------------------------------------------------------------------
  Unfortunately, it's relatively easy for fraudulent operators to 
escape detection because the Health Care Financing Administration 
[HCFA], which oversees the Medicare and Medicaid programs, is woefully 
lacking in resources to provide adequate oversight and to track down 
abusers. Over the past 7 years, the number of Medicare claims processed 
rose 70 percent while HCFA's budget for reviewing claims grew less than 
11 percent. Adjusting for claims growth and inflation, funding

[[Page E1846]]

for review dropped from 74 cents to 48 cents per claim. As a result, 
the proportion of claims reviewed dropped from 17 percent to 9 percent. 
In the especially problematic home health area, reviews plummeted from 
62 percent in 1987 to a target of 3 percent in 1996.\2\
  In many industries, it is standard operating procedure for businesses 
to fund independent audits of their compliance with Federal laws and 
regulations. For example, banks have paid for independent government 
financial and compliance audits since the 1800's. In fact, the Office 
of the Comptroller of the Currency is a special branch of the Treasury 
Department that is fully funded through fees it assesses for conducting 
bank audits.
  This legislation would require all hospitals, skilled nursing 
facilities, home health agencies, hospices, clinical laboratories, and 
ambulance companies to fund annual, federal financial and compliance 
audits as a Condition of Participation in the Medicare and Medicaid 
programs. Other businesses they own in whole or in part would be 
included in the audits, which would ensure, for example, that providers 
are furnishing only services that are covered and medically necessary, 
that they are actually delivering the services for which they bill HCFA 
and that their cost reports are correct.

  To ensure audit quality and consistency, specially trained Federal 
Medicare/Medicaid examiners, analogous to bank examiners in the banking 
industry, would conduct the audits. One home health agency owner 
convicted of Medicare fraud testified before Congress about the 
inadequacy of the few audits that the government currently conducts: 
``the auditors were not always sufficiently knowledgeable about 
Medicare reimbursement and areas of concern to be able to identify 
improper reimbursement practices * * * the audit teams seemed to change 
from year to year so there was no real continuity or consistency. The 
better the auditors understand a provider, the better they will be able 
to know where to look * * * the auditors need to look not just at the 
[core business of the provider], but at the overall structure.'' \3\
  Audits would be paid for through hourly fees charged to providers. 
Thus, provider liability would depend on both the size of the provider 
and on how well they keep their books and records. A small agency that 
follows the rules and documents correctly would be charged very little. 
To further ease the burden on small businesses, the Secretary would 
have the authority to exempt providers from audits based on their 
volume of Medicare and Medicaid business.
  To minimize the administrative burden on all health care providers, 
the bill would require the Secretary to conduct a study of all the 
examining and accrediting agencies and organizations that perform 
audits or inspections of the providers covered under this bill. Based 
on the study, the Secretary would make recommendations to Congress by 
June 1, 1999 on how to coordinate and consolidate these audits and 
inspections in order to reduce related costs to providers and 
government agencies.
  Annual rather than initial one-time audits are needed because 
businesses may start out honestly, but gradually creep into abusing the 
system as they gain experience and test the waters. Annual audits would 
also serve an educational purpose, thus reducing waste that occurs 
because providers don't understand the system.
  Health care spending consumes an ever-increasing portion of the 
Federal budget--now at least 20 percent. And the Federal Government 
pays a third of our Nation's health care bills--more than any other 
single source.\4\ We are the largest purchaser--isn't it time we become 
a wiser purchaser? And isn't it imperative that we have tighter reins 
on an area that consumes so many of our tax dollars?
  Banks have for many decades borne the financial responsibility for 
demonstrating their legitimacy. It is an accepted cost of the privilege 
of keeping other people's money. Medicare and Medicaid providers are 
being given the privilege of taking taxpayers' money, without the 
corresponding responsibility for proving their legitimacy. The 
appalling level of fraud, waste and abuse in the programs is the 
unfortunate result.
  Banks are audited as a matter of public trust to ensure our Nation's 
economic security. Please join Mr. Dellums, Mr. Miller and me in 
demanding provider audits to help ensure its health security.


 FOOTNOTES***NOTE***\1\ Testimony of George F. Grob, Deputy Inspector 
    General for Evaluation and Inspections, HHS Office of Inspector 
      General, before the Senate Special Committee on Aging, 7/28/
97.***NOTE***\2\ Testimony of Leslie G. Aronovitz, Associate Director, 
   Health Financing and Systems Issues, Health, Education, and Human 
    Services Division, General Accounting Office, before the Senate 
 Government Affairs Investigations Subcommittee, 6/26/97.***NOTE***\3\ 
Testimony of Jeanette G. Garrison before the Senate Committee on Aging, 
 7/28/97.***NOTE***\4\ Congressional Research Service, Ways and Means 
Health Subcommittee Chartbook, 1997.

                          ____________________