[Congressional Record Volume 155, Number 169 (Monday, November 16, 2009)]
[Senate]
[Pages S11385-S11386]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY:
  S. 2774. A bill to amend title XVIII of the Social Security Act to 
prevent Medicare payments being lost to fraud, waste, or abuse; to the 
Committee on Finance.
  Mr. GRASSLEY. Mr. President, in 2008, Medicare accounted for about 
$470 billion of the $2 trillion spent on health care in the U.S..
  Conservative estimates are that as much as $60 billion of that 
Medicare spending is lost to fraud, waste, and abuse each year.
  News reports today tell us that the Medicare payment error rate for 
fiscal year 2009 is going to be 12.4 percent. To put it in a different 
way, last year, Medicare made 47 billion dollars in improper payments. 
$47 billion of taxpayer money that by all accounts was wasted by 
Medicare on payments that shouldn't have been made.
  As Medicare spending continues to skyrocket, so will the dollars lost 
to fraud, waste and abuse.
  That problem is bad enough. But it is even worse because it turns out 
that a rule in the law today makes it easier for crooks to cheat the 
system and steal money from Medicare.
  A recent 60 Minutes segment highlighted how the law as written 
contributes to the problem and drives this growing danger to the 
American taxpayer and public coffers.
  In this segment, we saw a medical supply company that billed 
Medicare, $2 million this past July--despite being empty and having 
apparently no staff.
  Federal agents described the problem as far bigger than the drug 
business in Miami now. They were told it has pushed aside cocaine as 
the biggest criminal enterprise there.
  According to those interviewed by 60 Minutes, an entire health care 
fraud industry exists today that is committed to doing nothing except 
finding ways to rip off the Medicare program.
  Many of these suppliers don't exist. There is no office that exists 
and nobody who works there. They recruit doctors and patients and use 
stolen patient lists, and do nothing but figure out how to steal from 
Medicare.
  One man interviewed said he was waking up every day making $20,000-
$40,000 every day. It was like winning the lottery he said. He was 
running a fake medical supply company that didn't actually sell any 
medical equipment to anyone. He says he stole at least 20 million 
dollars from Medicare. He said it was, quote ``real easy.''
  All he says he needed was someone pretending to run the office and 
then he just had to check his bank account every day to see how much 
money he had made. All he did was fill out forms to Medicare and in 15 
to 30 days he would have the money in his bank account.
  Even more alarming, he says that there are about 2,000 to 3,000 more 
fake medical suppliers just in Miami billing Medicare fake claims.
  They are able to do this because Federal law puts Medicare in a 
position of having to ``pay and chase'' health care fraudsters. this is 
because federal law requires that Medicare pay providers promptly 
regardless of any risk of fraud, waste, or abuse.
  The prompt payment requirement in current law requires payment for a 
``clean'' claim within 14 to 30 days. And that is not enough time for 
the limited number of Medicare auditors to determine if the claim is 
legitimate before the payment has to be made.
  The result is that this ``prompt payment rule'' requires that 
Medicare pay fraudsters first, and ask questions later.
  This requirement in current law doesn't make any sense. I am here 
today to introduce a bill to fix it.
  This legislation, the Fighting Medicare Payment Fraud Act of 2009 
Act, would provide the government with an important new tool to fight 
fraud, waste and abuse in Medicare. This bill will stop the cycle of 
``paying and chasing.'' This legislation would protect

[[Page S11386]]

Federal taxpayer dollars from being wasted on suspicious payments that 
are required to be made because of the prompt payment rule.
  Today, the prompt payment rule applies to all payments regardless of 
the risk that those payments would be to fly-by-night operators. But 
this legislation ends the policy of pay first and ask questions later.
  This legislation gives the Secretary of Health and Human Services the 
authority to ask questions first and then and ONLY then to make the 
payment if the health care provider and the payment for services check 
out.
  This bill accomplishes that by extending the time period in which 
payments must be made under the prompt payment rule in cases where the 
Secretary determines there is a likelihood of fraud, waste or abuse.
  For categories of providers or suppliers, the payment time period can 
be extended to up to one year. For individual providers or suppliers, 
the Secretary would be required to take whatever time is necessary to 
engage in more in-depth reviews to determine that the claims are 
supposed to be paid in the first place.
  With this additional time, the Secretary would be required to conduct 
more detailed reviews of suspicious claims to make sure they are 
supposed to be paid.
  This would help ensure that Medicare dollars are in fact going to 
bona fide providers, instead of fraudsters with empty strip mall 
medical supply companies.
  Finally, this legislation requires the experts in the Office of 
Inspector General to recommend, on at least an annual basis, categories 
of providers or suppliers that warrant additional time before payments 
are made under the prompt payment rule.
  To make sure there is action on these recommendations, the Secretary 
would be required to provide a response to the Inspector General on 
these recommendations.
  With this new authority to fight health care fraud, the Federal 
Government will be in a better position to protect taxpayer dollars and 
catch health care crooks.
  Crooks are taking advantage of Medicare's prompt payment requirement. 
They know they can bill Medicare, get their payment, and be gone before 
they get caught. And Federal law enables it to happen. That has got to 
end. This legislation takes that step.
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