[Congressional Record Volume 144, Number 54 (Tuesday, May 5, 1998)]
[Extensions of Remarks]
[Page E760]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


DON'T LET FRAUD BLEED MEDICARE: OPPOSE EFFORTS TO GUT THE FALSE CLAIMS 
                                  ACT

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                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                          Tuesday, May 5, 1998

  Mr. STARK. Mr. Speaker, there is a move afoot to re-open Medicare and 
other federal health care programs to gross waste, fraud and abuse. The 
legislative Trojan Horse in question is the ``Health Care Claims 
Guidance Act,'' (H.R. 3523) which would erect huge new barriers to 
federal prosecution of cases that target claims submitted with reckless 
disregard, deliberate ignorance or actual knowledge that the claim is 
false.
  I strongly urge my colleagues not to support--or to withdraw their 
support--for this pernicious legislation.
  The False Claims Act is the primary mechanism used by the Department 
of Justice to recover money paid out for services that Medicare doesn't 
cover, or that have no medical record to back them up. It's a civil, 
not a criminal statute, and has been used since Abraham Lincoln's 
administration to punish contractors who defraud the government. In the 
1980's, the False Claims Act was used against defense contractors who 
overbilled the government by millions of dollars for items like those 
infamous toilet seats. Last year, the Department of Justice used the 
law to recover about $100 million in health care actions. Measured 
against the roughly $100 billion that Medicare pays out every year in 
hospital claims, that's a relatively modest amount.
  But that figure may rise in the future, because the False Claims Act 
is now being used more effectively to crack down on providers who 
deliberately overcharge Medicare through upcoding, unbundling, and 
other rip-off schemes. An alarming book by Harvard economist Malcolm 
Sparrow, ``License to Steal,'' documents how unscrupulous providers can 
devise billing strategies that pass muster under Medicare's claims 
processing system. It is precisely these kind of over-aggressive, 
sophisticated billing practices that the federal government is trying 
to stop using the False Claims Act.
  That's why the effort by the American Hospital Association to create 
a ``free fraud zone'' for providers who wished to overbill Medicare by 
as much as $11.4 billion every year is so offensive. The kind of cases 
that are brought under the False Claims Act are NOT innocent billing 
mistakes. I like to call H.R. 3523 the Columbia/HCA Protection Act, 
since even AHA admits that if the bill were enacted, it could be used 
to get the poster child for health care fraud off the hook!
  In addition to dismissing pending cases, the bill includes a 
``material amount'' provision that Justice Department officials say 
would effectively shut down most False Claims Act cases. Simply put, 
the bill's proposed threshold of 10% would prohibit the government from 
bringing suit at all--unless the disputed amount exceeded 10% of the 
hospital's billing to Medicare or Medicaid for the entire year. So in 
effect, a large provider like Columbia could submit hundreds of 
millions of dollars in false claims every year--no questions asked. 
That's a form of immunity that the tobacco industry might well envy.
  We must not go down that route. We must not enact legislation like 
the Health Care Claims Guidance Act that raises the government's burden 
of proof and makes hospital compliance plans into escape hatches for 
providers who fraudulently bill. I strongly believe, and I know the 
Administration does too, that providers who deliberately scam the 
system must be punished.
  On the American Hospital Association's web page is an announcement 
that AHA is ``working with state metropolitan associations to identify 
a hospital that would be willing to be a plaintiff in a court case 
against the Justice Department.'' Let 'em sue. Any decent court will 
throw out a case that attempts to roll back the legal and proper use of 
the False Claims Act in recovering taxpayer's money that was 
inappropriately paid to hospitals for services that have no medical 
record to back them up. Congress should also throw out H.R. 3523, which 
Senator Grassley has called a ``misguided missile in the war against 
fraud.''
  I'd like to make a point about how the False Claims Act is being used 
to stop patient abuse. In 1996, the law was successfully used to bring 
suit against three Philadelphia-area nursing homes that were found to 
be denying wound care and nutrition to three residents. In plain 
English, the nursing homes were starving the residents and ignoring 
their very serious skin ulcers, while continuing to submit false claims 
to Medicare and Medicaid. The amount of claims money involved was not 
large. But the statute was effectively used to stop the horrendous 
abuse of helpless, frail people, and to severely punish the nursing 
home.
  Experts say that the Philadelphia nursing home settlements are 
helping to establish a clear precedent for use of the False Claims Act 
in poor quality of care cases. But if H.R. 3523 is enacted, the law's 
present deterrent value against patient abuse would be nullified.
  The sheer toll that fraud and overpayment exacts on federal health 
programs each year makes it imperative that the federal government use 
every means available to fight back. The False Claims Act is a critical 
part of our current legislative arsenal, since it harnesses the 
energies of whistleblowers who are in a position to observe bad billing 
practices that the best computers can never detect. After all, if a 
claim looks okay, Medicare requires intermediaries and carriers to pay 
it within 14 days.
  It is perhaps not surprising that just as the federal government 
steps up its anti-fraud efforts, doctors and hospitals are beginning to 
complain loudly that they are somehow being ``unfairly targeted.'' This 
response from providers may even signal a certain level of fear that 
the federal government's no-questions-asked payment policy is changing. 
As it must: The latest report from the HHS Inspector General shows 
hospitals were paid $6 billion too much last year. Physicians were also 
paid $6 billion too much, and overpayments to home health agencies 
reached $2.5 billion. Fraud costs Medicare billions every year that it 
can ill afford to lose, and it must be stopped.
  A back-of-the-envelope calculation shows that if fraud ceased today, 
the five-year savings would amount to more than $100 billion. That's 
enough to extend the life of the hospital insurance trust fund by an 
additional seven years, and is nearly equal to what the Balanced Budget 
Act saved last year! The government's war against Medicare fraud has 
only begun, and the IG's audit makes it clear that no one who supports 
a ``zero tolerance for fraud'' policy can support H.R. 3523.
  I've probably introduced more legislation in this area than any other 
member of Congress--13 bills in the 105th Congress alone. A bill that I 
will shortly propose would give back to HCFA an authority it used to 
have--the ability to adjust base payments to Medicare HMOs every year, 
based on the previous year's documented overpayment or underpayment. 
Right now, the Congressional Budget Office says Medicare will overpay 
HMOs by $31 billion over the next 10 years! HCFA has always had the 
flexibility to adjust payments for Medicare managed care plans--until 
the Balanced Budget Act took it away last year. That's a legislative 
mistake that must be fixed soon, or taxpayers will be outraged.




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