[Congressional Record (Bound Edition), Volume 156 (2010), Part 11]
[Extensions of Remarks]
[Pages 15853-15855]
[From the U.S. Government Publishing Office, www.gpo.gov]




            FINDINGS PURSUANT TO THE HOUSE BUDGET RESOLUTION

                                 ______
                                 

                          HON. SANDER M. LEVIN

                              of michigan

                    in the house of representatives

                     Wednesday, September 15, 2010

  Mr. LEVIN. Madam Speaker, I submit the following.

                          Health Care/Medicare

       Congress spent the first part of this session enacting 
     landmark health reform legislation that substantially reforms 
     and strengthens the Medicare program. As a result of this 
     legislation, CBO estimates net deficit reduction of $143 
     billion from 2010 to 2019, and deficit reduction of more than 
     $1 trillion in the next decade. In addition, the Medicare 
     Actuary estimates that the Medicare changes enacted in health 
     reform will extend the life of the Part A Trust Fund by 12 
     years--the largest extension in history. Finally, as a result 
     of the new law, national health expenditures per insured 
     person will fall by $1,400 by 2019.
       The health reform law also includes extensive provisions to 
     aggressively reduce fraud, waste, and abuse in government 
     health programs. The Affordable Care Act (ACA) establishes 
     new authorities to enhance fraud-fighting when providers 
     first enroll in the program and during the pre- and post-
     payment periods.
       During the Medicare provider enrollment period, ACA 
     strengthens provider screening and disclosure requirements 
     and allows the Secretary to impose a moratorium on new 
     providers in areas of significant risk. These tools will help 
     keep fraudulent providers out of government programs before 
     they have a chance to act. In the pre-payment period, ACA 
     directs the Secretary to establish a program of increased 
     oversight for new providers and allows for the suspension of 
     payment, if deemed appropriate, to a provider or supplier. 
     For the post-payment and enforcement period, ACA establishes 
     new penalties for the submission of false data or false 
     claims and increases funding for proven fraud-fighting 
     programs used by the Office of Inspector General (OIG) and 
     the Department of Justice.
       Taken together, these provisions reduce fraud, waste, and 
     abuse by improving payment accuracy, promoting efficiency, 
     and controlling spending within Medicare and other government 
     programs.
       The Committee's efforts to achieve deficit reduction, 
     prevent fraud, promote efficiency, and control spending 
     within government programs extend beyond the ACA. The 
     Preservation of Access to Care for Medicare Beneficiaries and 
     Pension Relief Act of 2010 (P.L. 111-192) included two 
     provisions that address these goals. First, this law 
     clarifies the 3-day payment window for inpatient admissions 
     to ensure that all services related to the hospital admission 
     are included in the bundled payment. Absent this provision, 
     hospitals would likely have unbundled hospital payments 
     driving up Medicare spending. Second, the law established a 
     CMS-IRS data match to identify potentially fraudulent 
     providers. This provision authorizes the Centers for Medicare 
     and Medicaid Services (CMS) to collaborate with the IRS to 
     determine whether providers enrolling or re-enrolling in 
     Medicare have failed to file Federal tax returns or have 
     delinquent tax debts. In doing so, the law helps to identify 
     potentially fraudulent providers earlier in the application 
     process and allows the Secretary to use this information in 
     determining whether

[[Page 15854]]

     to deny such application or to apply enhanced oversight to 
     the provider.
       Following passage of health reform legislation, the 
     Committee has held and will continue to hold oversight 
     hearing on a number of issues, including:


                         Fraud, Waste and Abuse

       While many of the HHS OIG recommendations from their annual 
     compendium were adopted in the ACA, combating fraud remains a 
     top priority for the committee. On June 15th, the Health and 
     Oversight Subcommittees held a joint hearing on combating 
     fraud, waste, and abuse. At this hearing, a representative of 
     the HHS Office of Inspector General discussed two new tools 
     that would improve OIG's ability to prevent criminals from 
     becoming providers in the Medicare program. The first 
     recommendation was to provide OIG with broader permissive 
     authority to exclude permanently from Medicare corporate 
     executives who have been involved in Medicare fraud. Second, 
     it was suggested that the OIG permissive authority could also 
     be expanded to better enable the OIG to reach parent 
     companies that may be hiding behind corporate shells.
       On September 14, 2010, in response to these 
     recommendations, Health Subcommittee Chairman Representative 
     Stark and Ranking Republican Wally Herger introduced the 
     Strengthening Medicare Anti-Fraud Measures Act. The bill 
     would provide the OIG with this expanded permissive 
     authority. We are awaiting a CBO score of the legislation.


                         HITECH Implementation

       Enactment of the American Recovery and Reinvestment Act of 
     2009 included the Health Information Technology for Economic 
     and Clinical Health (HITECH) Act, which created incentive 
     payments for providers that adopt and meaningfully use 
     electronic medical records. Increased adoption and meaningful 
     use of health information technology will arm providers with 
     information that is usually held only in paper records, lower 
     duplication rates of procedures, promote efficiency and 
     quality, and reduce waste as providers coordinate care 
     through improved exchange of clinical information. The Health 
     Subcommittee held an oversight hearing on implementation of 
     HITECH Act earlier this year and will continue to monitor the 
     program to ensure that the advance of health information 
     technology improves quality and efficiency of the delivery of 
     health care in the Medicare program.


         Durable Medical Equipment competitive bidding process

       The Medicare Modernization Act directed CMS to establish a 
     competitive bidding process for payment of durable medical 
     equipment, prosthetics, orthotics, and supplies (DMEPOS) 
     under Medicare. The first round of competitive bidding for 
     DME was delayed in 2008 because of implementation problems. 
     Later this year, CMS will award contracts under the first 
     round of the revised program. The Health Subcommittee will 
     examine whether CMS has adequately addressed problems with 
     the competitive bidding program and explore its potential 
     effect on beneficiaries' access to the program and supplier 
     participation.

           Tax Provisions to Prevent Tax Avoidance and Fraud


                  Closing Foreign Tax Credit Loopholes

       On August 10, 2010, the House passed H.R. 1586, the 
     Education Jobs and Medicaid Assistance Act by a vote of 247 
     to 161. The bill, signed into law the same day (P.L. 111-
     226), included changes developed jointly by the Treasury 
     Department, the Committee on Ways and Means, and the Senate 
     Committee on Finance to curtail abuses of the U.S. foreign 
     tax credit system and other targeted abuses. Foreign tax 
     credits are intended to ensure that U.S.-based multinational 
     companies are not subject to double taxation. However, multi-
     national corporate taxpayers have taken advantage of the U.S. 
     foreign tax credit system to reduce the U.S. tax due on 
     completely unrelated foreign income in a manner that has 
     nothing to do with eliminating double taxation. The bill 
     eliminated $9.6 billion of foreign tax credit loopholes.


                            Transfer Pricing

       On July 22, 2010, the Committee on Ways and Means held a 
     hearing to begin initial discussions of the complex areas of 
     tax law that govern transfer pricing practices among related 
     parties (multinational corporations). Pursuant to a request 
     by the Committee in December 2009, the Joint Committee on 
     Taxation (JCT) undertook a study of transfer pricing issues. 
     Part of that study involved meetings with tax practitioners 
     and the IRS to gain a better understanding of how companies 
     can structure overseas operations to minimize U.S. taxes. The 
     JCT released a report summarizing its work, beginning with a 
     study of the issues and specific case studies to illuminate 
     the potential for income shifting through transfer pricing. 
     The Committee continues to investigate opportunities for 
     reducing tax avoidance by multinational corporations through 
     transfer pricing structures.


                      First-Time Homebuyer Program

       The Housing and Economic Recovery Act of 2008 established 
     the First-Time Homebuyer Credit, which generally provided an 
     $8,000 tax credit to certain taxpayers for the purchase of a 
     home. The credit was extended and expanded by the American 
     Recovery and Reinvestment Act of 2009 and the Worker, 
     Homeownership, and Business Assistance Act of 2009 
     (Assistance Act). On October 22, 2009, the Subcommittee on 
     Oversight of the Ways and Means Committee held a hearing on 
     administration of the credit by the Internal Revenue Service 
     (IRS). At the hearing, the Treasury Inspector General for Tax 
     Administration (TIGTA) released a report finding instances of 
     fraud and abuse in the program. In response to the report, 
     TIGTA and the U.S. Government Accountability Office made 
     several legislative recommendations to improve administration 
     of the credit. On October 22, 2009, Oversight Subcommittee 
     Chairman John Lewis (D-GA) introduced H.R. 3901, the 
     Homebuyer Tax Credit Improvement Act of 2009, which provided 
     the IRS with additional authority to prevent fraudulent 
     claims and claims by minor children. On November 6, 2009, 
     H.R. 3901 was enacted into law as part of the Assistance Act 
     (P.L. 111-92).


                           Prisoner Tax Fraud

       On September 27, 2008, the House passed H.R. 7082, the 
     Inmate Tax Fraud Prevention Act of 2008. This law allows the 
     IRS to exchange with officers and employees of the Federal 
     Bureau of Prisons certain tax return information with respect 
     to prisoners whom the Secretary has determined may have filed 
     false or fraudulent tax returns. This provision was enacted 
     into law on October 15, 2008. In June 2010, TIGTA released a 
     report estimating that about 1,300 prison inmates (more than 
     90 percent of whom were state prison inmates) claimed and 
     received more than $9 million in fraudulent first-time 
     homebuyer tax credits. On June 29, 2010, a provision to allow 
     the IRS to disclose tax return information to officers and 
     employees of State agencies charged with the administration 
     of prisons passed the House in H.R. 5623, the Homebuyer 
     Assistance and Improvement Act of 2010. On July 2, 2010, this 
     provision was enacted into law as part of the Homebuyer 
     Assistance and Improvement Act of 2010 (P.L. 111-198).

       Tax Provisions to Promote Government Efficiency and Reform


               Increase electronic filing of tax returns

       The Internal Revenue Service Restructuring and Reform Act 
     of 1998 (RRA) established a goal for the IRS to receive at 
     least 80 percent of tax and information returns 
     electronically. For 2010, the overall electronic filing (e-
     filing) rate is projected to reach approximately 59 percent. 
     To achieve the 80 percent goal, an estimated 40 million 
     additional returns need to be e-filed. On October 22, 2009, 
     Oversight Subcommittee Chairman John Lewis (D-GA) introduced 
     H.R. 3901, the Homebuyer Tax Credit Improvement Act of 2009, 
     which authorized the IRS to require tax return preparers to 
     file returns electronically in order to achieve additional 
     cost reduction and savings. On November 6, 2009, H.R. 3901 
     was enacted into law as part of the Worker, Homeownership, 
     and Business Assistance Act (P.L. 111-92). The Electronic Tax 
     Administration Advisory Committee, established by the RRA, 
     believes that this is the single most important initiative 
     that will enable the IRS to reach its 80 percent electronic 
     filing goal.


              Removal of cell phones from listed property

       In 1989, Congress passed a law requiring taxpayers to 
     substantiate the business use of cell phones. At that time, 
     cell phones were an expensive perk for executives. Cell 
     phones and similar equipment are now ingrained in daily 
     business practices at all levels. The Administration has 
     recognized that cell phone service in this country has 
     changed dramatically over the past decade and recommended 
     that the law be modernized to remove the special 
     documentation requirements for cell phones and reduce the 
     cost of administering and complying with the provision. On 
     April 15, 2010, a provision to eliminate the strict 
     substantiation rules on cell phones passed the House in H.R. 
     4994, the Taxpayer Assistance Act of 2010.
       Repeal of the partial payment requirement on submissions of 
     offers-in-compromise. Offer-in-compromise (OIC) agreements 
     are an important collection alternative for the IRS and 
     taxpayers. Under current law, due to legislation passed in 
     2006, a taxpayer offering to settle a tax liability must make 
     a partial payment with submission of an OIC application. The 
     need to increase the usage of OIC agreements in situations of 
     economic hardship was raised at a February 2009 hearing of 
     the Subcommittee on Oversight of the Committee on Ways and 
     Means. On May 12, 2009, Oversight Subcommittee Chairman John 
     Lewis (D-GA) introduced H.R. 2343, a bipartisan bill that 
     would increase the likelihood that some amount of tax is 
     collected and promote continued tax compliance by repealing 
     the partial payment requirement. On April 15, 2010, a 
     provision to repeal the partial payment requirement passed 
     the House in H.R. 4994, the Taxpayer Assistance Act of 2010.


                    Study on delivery of tax refunds

       The National Taxpayer Advocate (NTA) has stated that the 
     quickest and cheapest way to distribute tax refunds is 
     electronically rather than by paper checks in the

[[Page 15855]]

      mail. However, a large number of taxpayers do not have bank 
     accounts. These taxpayers are not able to fully participate 
     in electronic filing because the IRS cannot transmit their 
     refunds to them electronically. The NTA recommended that the 
     Department of Treasury develop a program to enable taxpayers 
     to receive refunds on stored value cards. On April 15, 2010, 
     a provision to require the Secretary of Treasury, in 
     consultation with the National Taxpayer Advocate, to conduct 
     a study on the feasibility of delivering federal tax refunds 
     on debit cards, prepaid cards, or other electronic means 
     passed the House in H.R. 4994, the Taxpayer Assistance Act of 
     2010.


       Study on timely processing and use of information returns

       Under current law, the IRS processes tax returns before it 
     processes related information returns, such as Forms W-2 and 
     Forms 1099. The IRS does not match information on income tax 
     returns to information returns until after the filing season 
     has ended. There are two reasons for the delay: (1) the 
     deadline for filing information returns generally is March 31 
     and (2) the tax filing season begins in mid-January. A 
     provision to require the Secretary of Treasury to study, and 
     make recommendations on, the administrative and legislative 
     steps required to allow the IRS to receive information 
     returns before it processes income tax returns passed the 
     House in H.R. 4994, the Taxpayer Assistance Act of 2010.


   Clarify that the bad check penalty applies to electronic payments

       Taxpayers are subject to a penalty if their check or money 
     order in payment of their tax liabilities is not honored. On 
     April 15, 2010, a provision to ensure fair application of the 
     penalty by clarifying that the penalty applies to all 
     commercially acceptable instruments of payment (i.e., 
     electronic payments) passed the House in H.R. 4994, the 
     Taxpayer Assistance Act of 2010. On July 2, 2010, this 
     provision was enacted into law as part of the Homebuyer 
     Assistance and Improvement Act of 2010 (P.L. 111-198).

                                 Trade

       The Trade Subcommittee is developing Customs and Border 
     Protection (CBP) reauthorization legislation addressing two 
     important oversight issues explored at a May 2010 hearing: 
     (1) correcting the agency's failure to collect antidumping 
     and countervailing duties; and (2) addressing cost overruns 
     and delayed implementation of the agency's new, modernized 
     computer system, the Automated Commercial Environment (ACE).


  Combating the Evasion of Antidumping and Countervailing Duty Orders

       The U.S. government loses hundreds of millions of dollars 
     every year when foreign companies employ fraudulent tactics 
     to evade U.S. antidumping and countervailing duty orders. 
     Such tactics include misrepresenting the country of origin of 
     imported products or mislabeling the types of products being 
     imported on Customs import documentation. The resulting 
     impact in the United States is two-fold. Not only is there 
     lost revenue to the government, but also American businesses 
     and workers are denied relief from the illegal trade 
     practices that the antidumping and countervailing duties are 
     designed to neutralize. The Trade Subcommittee is preparing 
     legislation to counter these kinds of practices and aims to 
     move that legislation shortly. This legislation: (1) 
     establishes clear, expeditious timeframes for CBP to 
     investigate and determine whether evasion is occurring; (2) 
     requires maximum cooperation between CBP and the Department 
     of Commerce in making and enforcing such determinations; and 
     (3) provides authority for CBP to collect unpaid duties and 
     assess penalties. This legislation will diminish 
     substantially the duties lost to evasion as well as the 
     corresponding harm to the U.S. industry.


  Ensuring Efficient Use of Taxpayer Dollars in Further ACE Deployment

       The Trade Subcommittee is preparing legislation that will 
     support the positive steps taken by CBP since its May 20th 
     hearing to get ACE deployment back on track and moving in the 
     right direction. ACE development to date has cost over $3 
     billion, and the system continues to have limited 
     functionality to attract a critical mass of users. Completion 
     of ACE promises significant benefits to CBP, businesses, and 
     workers alike, increasing U.S. competitiveness and saving 
     taxpayer dollars. The Trade Subcommittee is developing 
     legislation to ensure that: (1) ACE is completed 
     expeditiously and with strong functionality; and (2) the 
     funds invested in this project, going forward, are used 
     efficiently and effectively.

                            Social Security

       In December of 2009, Congress enacted H.R. 4218, the No 
     Social Security Benefits for Prisoners Act of 2009 (P.L. 111-
     115) to prevent retroactive Social Security and Supplemental 
     Security Income benefit payments from being issued to 
     individuals while they are in prison, along with 
     beneficiaries in violation of conditions of parole or 
     probation, or who are fleeing to avoid prosecution for a 
     felony or a crime punishable by sentence of more than one 
     year. The Social Security Act already barred payment of 
     monthly benefits to such individuals. This new law ensures 
     the prohibition applies to retroactive benefit payments as 
     well, and allows payments to be paid once the beneficiary is 
     no longer prohibited from receiving payments under the 
     provisions of this bill.
       In response to a Social Security Administration Inspector 
     General report that as many as eight states use prison 
     industries to perform work that allows inmates access to 
     individual Social Security numbers, Chairman Pomeroy 
     introduced H.R. 5854, the No Prisoner Access to Social 
     Security Numbers Act of 2010. The bill would protect the 
     accuracy of Social Security records and help shield 
     individuals from identity theft and other potential crimes by 
     prohibiting federal, state, and local governments from 
     employing prisoners in any capacity that would allow inmates 
     access to full or partial SSNs of other individuals. The 
     Federal Bureau of Prisons already proscribes such work by 
     federal inmates by regulation. This bill would extend this 
     policy to all of the states.
       In recent years, we have substantially increased funding 
     for program integrity at the Social Security Administration, 
     which will save billions of dollars in overpayments and 
     payments to people who have become ineligible for benefits. 
     Because the Social Security Administration uses innovative 
     predictive modeling techniques to identify cases with the 
     highest risk of an overpayment and targets those cases for 
     careful review, they are able to generate savings of as much 
     as $12 for every dollar invested in program integrity, 
     despite Social Security's already very low error rate. For 
     example, in 2008 their computer models allowed them to target 
     the beneficiaries most likely to have medically improved for 
     full eligibility reviews, saving $3.8 billion in Social 
     Security, Medicare, Medicaid, and SSI benefits. If SSA had 
     randomly selected cases for intensive review, they would only 
     have saved $900 million.
       Because the return on investment is so significant, we plan 
     to work on legislation that will increase our investment in 
     Social Security's fight against fraud, waste, and abuse.

                          ____________________