[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
A MEDICAID FRAUD VICTIM SPEAKS OUT: WHAT'S NOT WORKING AND WHY
=======================================================================
JOINT HEARING
before the
SUBCOMMITTEE ON GOVERNMENT ORGANIZATION,
EFFICIENCY AND FINANCIAL MANAGEMENT
and the
SUBCOMMITTEE ON HEALTHCARE, DISTRICT OF
COLUMBIA, CENSUS AND THE NATIONAL ARCHIVES
of the
COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
DECEMBER 7, 2011
__________
Serial No. 112-113
__________
Printed for the use of the Committees on Oversight and Government
Reform and Natural Resources
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Government Organization, Efficiency and Financial
Management
TODD RUSSELL PLATTS, Pennsylvania, Chairman
CONNIE MACK, Florida, Vice Chairman EDOLPHUS TOWNS, New York, Ranking
JAMES LANKFORD, Oklahoma Minority Member
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
FRANK C. GUINTA, New Hampshire ELEANOR HOLMES NORTON, District of
BLAKE FARENTHOLD, Texas Columbia
Subcommittee on Health Care, District of Columbia, Census and the
National Archives
TREY GOWDY, South Carolina, Chairman
PAUL A. GOSAR, Arizona, Vice DANNY K. DAVIS, Illinois, Ranking
Chairman Minority Member
DAN BURTON, Indiana ELEANOR HOLMES NORTON, District of
JOHN L. MICA, Florida Columbia
PATRICK T. McHENRY, North Carolina WM. LACY CLAY, Missouri
SCOTT DesJARLAIS, Tennessee CHRISTOPHER S. MURPHY, Connecticut
JOE WALSH, Illinois
C O N T E N T S
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Page
Hearing held on December 7, 2011................................. 1
Statement of:
Brice-Smith, Angela, director, Medicaid Integrity Group,
Centers for Medicare & Medicaid Services; Gary Cantrell,
Assistant Inspector General for Investigations, Office of
the Inspector General, Health & Human Services; Carolyn
Yocom, Director, Health Care, Government Accountability
Office; and Valerie Melvin, Director of Information
Management and Human Capital Issues, Government
Accountability Office...................................... 41
Brice-Smith, Angela...................................... 41
Cantrell, Gary........................................... 55
Melvin, Valerie.......................................... 90
Yocom, Carolyn........................................... 65
West, Richard, victim of Medicaid fraud; and Robin Page West,
attorney, Cohan, West, & Karpook, P.C...................... 12
West, Richard............................................ 12
West, Robin Page......................................... 19
Letters, statements, etc., submitted for the record by:
Brice-Smith, Angela, director, Medicaid Integrity Group,
Centers for Medicare & Medicaid Services, prepared
statement of............................................... 44
Cantrell, Gary, Assistant Inspector General for
Investigations, Office of the Inspector General, Health &
Human Services, prepared statement of...................... 57
Connolly, Hon. Gerald E., a Representative in Congress from
the State of Virginia, prepared statement of............... 123
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, prepared statement of............... 9
Gowdy, Hon. Trey, a Representative in Congress from the State
of South Carolina, prepared statement of................... 5
Melvin, Valerie, Director of Information Management and Human
Capital Issues, Government Accountability Office, prepared
statement of............................................... 92
West, Richard, victim of Medicaid fraud, prepared statement
of......................................................... 15
West, Robin Page, attorney, Cohan, West, & Karpook, P.C.,
prepared statement of...................................... 21
Yocom, Carolyn, Director, Health Care, Government
Accountability Office, prepared statement of............... 67
A MEDICAID FRAUD VICTIM SPEAKS OUT: WHAT'S NOT WORKING AND WHY
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WEDNESDAY, DECEMBER 7, 2011
House of Representatives, Subcommittee on
Government Organization, Efficiency and
Financial Management, joint with the
Subcommittee on Healthcare, District of
Columbia, Census and the National Archives,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittees met, pursuant to notice, at 10:07 a.m.,
in room 2154, Rayburn House Office Building, Hon. Todd Russell
Platts (chairman of the Subcommittee on Government
Organization, Efficiency and Financial Management) presiding.
Present: Representatives Platts, Issa, Lankford, Gosar,
DesJarlais, Gowdy, Cummings, Towns, Norton, Connolly, and
Davis.
Staff present: John Cuaderes, deputy staff director; Sery
E. Kim, counsel; Mark D. Marin, director of oversight; Brian
Blase, professional staff member; Will L. Boyington, staff
assistant; Molly Boyl, parliamentarian; Tegan Millspaw,
research analyst; Linda Good, chief clerk; Laura Rush, deputy
chief clerk; Gwen D'Luzansky, assistant clerk; Suzanne Sachsman
Grooms, minority chief counsel; Yvette Cravins, minority
counsel; Devon Hill, minority staff assistant; Lucinda Lessley,
minority policy director; Ashley Ettienne, minority director of
communications; Jennifer Hoffman, minority press secretary;
Jaron Bourke, minority director of administration; and Carla
Hultberg, minority chief clerk.
Mr. Platts. This hearing will come to order. I appreciate
everyone's attendance and welcome everybody here in this joint
subcommittee hearing, the Subcommittee on Government
Organization, Efficiency and Financial Management along with
the Subcommittee on Health Care, District of Columbia, Census
and the National Archives.
Today's hearing will examine the serious problem of fraud,
waste and abuse in Medicaid. In fiscal year 2011, the Medicaid
program issued $21.9 billion in improper payments, higher than
any program in government except Medicare. It is unknown how
much of these improper payments are fraudulent or how much
fraud goes undetected. The integrity program is responsible for
identifying improper payments, educating providers about fraud
and providing assistance to States in order to combat fraud,
waste and abuse. The Patient Protection and Affordable Care Act
of 2010 expanded funding for Medicaid program integrity.
However, it also expands the size of the Medicaid program and
will increase Medicaid spending by over $600 billion between
2014 and 2021.
Given this dramatic expansion, fraud detection and
prevention will be all the more important.
Better data quality is essential in reducing waste, fraud
and abuse. In 2006, CMS initiated two new data systems in an
attempt to improve quality and access. GAO issued a report
finding that both the new systems were inadequate and
underutilized. GAO also could not find any evidence of
financial benefits in implementing the new systems despite the
fact that CMS has been using them for over 5 years. There are
also problems with State-reported data.
Many States are not reporting all required data and there
are often lag times for up to 1 year between when States report
data and when CMS gets it and verifies it. This makes it
extremely difficult and often impossible to prevent data fraud
before payments are issued. And as I know, we will hear in the
testimony here today from one of our witnesses some of the
information is as old as 12 years, which is just unthinkable as
far as usefulness of it.
As a result of poor data systems, CMS relies on contractors
to identify fraud through audit work. CMS spent $42 million on
Medicaid integrity contractors in 2010. However, GAO has noted
pervasive deficiencies in CMS's oversight of its contractors
and has issued numerous recommendations to CMS.
Most of these recommendations have not been implemented.
The Office of Inspector General has been on the front lines of
investigating fraud through its work with the State Medicaid
fraud control units, MFCUs.
In 2010, these units conducted 9,710 fraud investigations
and recovered $1.8 billion. This work is essential and would
become even more crucial as Medicaid expands. But States have
limited resources to combat the rising problem of Medicaid
fraud, and there is also a question of the incentive of States
to do so because of much of the money is coming back to Federal
Government, not to their own treasury.
Health care fraud is sometimes called a faceless or
victimless crime, and we also talk about it in terms of money
lost. As a result, it can be easy to overlook what a
devastating impact it can have on victims, beneficiaries who do
not get the care that they need and deserve.
Today we are joined by one such individual, Mr. Richard
West, a Vietnam war veteran and a victim of Medicaid fraud.
He and his lawyer, along with his son, will testify here
today about their personal experiences and their efforts to
uncover fraud within the Medicaid program.
And their case is going to show that this isn't just about
money, this is about ensuring that we do right by every
American citizen who is in need of medical assistance and is a
part of the Medicaid program. As Mr. West will share, it wasn't
just the millions of dollars that was being stolen from
American taxpayers, it was because of that fraud that he was
being denied care through the Medicaid program. It is not just
about money, it is about people. We will also hear testimony
from CMS, OIG and GAO on systemic problems within Medicaid and
what must be done to provide effective oversight and reduce
fraud, waste and abuse in the Medicaid program.
And now I am honored to recognize the ranking member of our
subcommittee, the gentleman from New York, Mr. Towns, for an
opening statement.
Mr. Towns. Thank you very much, Mr. Chairman.
Let me thank the ranking member, Mr. Davis, as well for
convening today's hearing on fraud in the Medicaid system.
Weeding out fraud is a bipartisan goal that all stewards of
taxpayers' dollars should share, so I truly appreciate this
opportunity to explore this subject fully.
I thank the witnesses on both panels for joining us today
to discuss their views. I especially would like to thank Mr.
West for sharing his story and for his service to this country,
the Vietnam War. Mr. West, I salute you.
There is no question that Medicaid is an essential program.
It provides a vital safety net for many children, seniors, and
the disabled who truly need it. It is unfortunate, however,
that it has become a target for bad actors seeking to game the
system. There is some positive news to note, even in this era
of budget cuts. CMS, in its efforts to undercover fraud, are
actually making money for the government and for taxpayers. For
every $1 invested in fraud prevention and detection, over $16
is actually recovered. Much of this recovery came from cases
like the very successful case brought by Mr. West.
We need to be certain that we are encouraging
whistleblowers who become aware of these cases in the Medicaid
program to bring them forward. This administration has done an
admirable job of stepping up fraud detection in the Medicare
and Medicaid programs. However, I understand that there have
been a number of recommendations made by GAO that intends to
address this issue but have not yet been adopted.
I look forward to exploring the limitations that CMS and
HHS has so that we can work together to further prevent
undercover and recover payments in the Medicaid system.
Thank you, Mr. Chairman, of course, and for this hearing
and I look forward to working with you and I yield back the
balance of my time.
Mr. Platts. Thank you, Mr. Towns. I am now honored to yield
to the chairman of the subcommittee on Health Care, District of
Columbia, Census and National Archives, the distinguished
gentleman from South Carolina, Chairman Gowdy.
Mr. Gowdy. Thank you, Mr. Chairman. Today the committee
will hear from Richard West, a man with firsthand knowledge of
how easily government programs are defrauded and how the
government all too often just doesn't seem to care. Mr. West
acted responsibly and alerted the State of New Jersey Medicaid
and his social worker to the fraudulent behavior of his health
care provider, but none of the government agencies did
anything. This is wholly unacceptable. And this is why people
have lost trust in the institutions of government, and this is
why our fellow citizens have so little trust that we are
spending their money as carefully as we would spend our own.
Mr. West kept track of the nursing care received and was
able to compare his records to the provider's records. He found
discrepancies and because Medicaid capped the monthly services
provided to Mr. West, he was not receiving the care he was
entitled to. In other words, due to the fraudulent activities
of the company providing Mr. West's care, he reached the cap
and Medicaid told him his services were suspended. So not only
was the provider ripping off taxpayers, but the provider was
also not providing the obligated services to Mr. West.
It is impossible to believe that Mr. West's story is
isolated. Medicaid is designated a high-risk program and is,
therefore, highly susceptible to waste, fraud and abuse. Many
experts believe the loss rates for Medicaid and Medicare due to
fraud equals about 20 percent of the total program funding. So
perhaps as much as one-fifth of the money spent is wasted, and
ignoring legitimate calls for investigations into fraud when
witnessed firsthand, has a chilling effect on other like-minded
people who might be willing to alert authorities to abuse.
Most of the fraud occurs when providers bill for services
never delivered to Medicaid patients. According to Malcolm
Sparrow, a Harvard University expert on health care fraud, the
rule for criminals is simple. If you want to steal from
Medicare or Medicaid, or any other health care insurance
program, learn to bill your lies correctly. Then for the most
part, your claims will be paid in full and on time without a
hiccup by a computer with no human involvement at all.
One reason for high rates of abuse might be that States do
not appear to have an adequate incentive to root out waste and
fraud. This is, in large part, due to the fact that a large
part of what is recovered must be sent back to Washington.
Another reason may be the Centers for Medicaid & Medicare
Services doesn't typically analyze claims data for over a year
after the date the claim was filed.
This lag time indicates CMS needs to update the tracking
system used to root waste, fraud and abuse of the Medicaid
system out.
Although every tax dollar inappropriately spent is a
concern, the magnitude of waste, fraud and abuse in Medicaid
elevates this problem.
Our country now spends $430 billion on Medicaid a year. And
CMS projects the total spending on Medicaid will double by the
end of this decade. States are struggling to deal with
Medicaid's growth and Medicaid is crowding out State priorities
like education, transportation and public safety.
I look forward to today's hearing and hearing from our
witnesses and hopefully flushing out ideas for eliminating the
amount of tax dollars that are being wasted through the
Medicaid program. When folks like Mr. West are being hurt and
neglected due to fraud, it is time to find solutions and our
fellow citizens, the ones who trust us enough to let us be
their voice in this town are increasingly losing confidence
that we are not serious about tackling waste, fraud and abuse.
We must reclaim their confidence. We do that one episode at a
time, and we might as well start with Mr. West. With that, I
would yield back to the chairman.
[The prepared statement of Hon. Trey Gowdy follows:]
[GRAPHIC] [TIFF OMITTED] T3451.001
[GRAPHIC] [TIFF OMITTED] T3451.002
Mr. Platts. I thank the gentleman. I am now pleased and
honored and yield to the ranking member of the Subcommittee on
Health Care, District of Columbia, Census and National
Archives, the gentleman from Illinois, Mr. Davis.
Mr. Davis. Thank you very much, Chairman Platts, Chairman
Gowdy, Ranking Member Towns, I thank all of you for holding
today's hearing. Reducing waste, fraud and abuse in health care
is a rare and desirable policy shared by Republicans and
Democrats alike.
It is disturbing that some entrusted with caring for our
most vulnerable populations would seek to defraud the
government by falsely billing for services. It is the height of
corporate greed. In this era of budget shortfalls and cuts, we
can no longer stumble upon these bad actors. We must be
vigilant in locating and weeding out fraud. The proper
resources must be dedicated to root out waste and abuse. Our
taxpayer dollars are too precious. The more funds expended on
phantom services delay or extinguish the authentic and
necessary health care programs and services that people depend
upon daily.
As Medicaid is determined to be a high-risk program, I want
to further encourage CMS to fully utilize and implement all of
the tools available in this fight, including the Integrated
Data Repository and the One Program Integrity. These
technological programs are invaluable in consolidating the data
necessary in fraud detection. The Patient Protection and
Affordable Care Act further provides tools to fight Medicaid
fraud. The licensure and background checks on providers and
suppliers are a productive first step for program integrity.
In the enforcement arena, the new civil penalties created
for falsifying information is evidence that the Federal
Government takes fraud seriously. To that end, the Affordable
Care Act adds $10 million annually for fiscal years 2011
through 2020.
Simply put, fighting health care fraud is good fiscal
policy.
And I might add that I am totally opposed to fraudulent
practices in medicine, especially involving the most
vulnerable, the most unsuspecting, and, in many instances, the
most gullible members of our society. I have seen firsthand
low-income communities deal with Medicaid meals where people
are lined up to be taken advantage of. These are practices we
should not, cannot and must not tolerate.
Therefore, I applaud the tireless efforts of Mr. Richard
West. He serves as an example to others. He saw a wrong and
tried to right it. And so we all thank you, Mr. West. I look
forward to your testimony and the testimony of all the
witnesses. And I thank you, Mr. Chairman, and yield back.
Mr. Platts. I thank the gentleman. We have also been joined
by the distinguished ranking member of the full Committee on
Oversight and Government Reform, the gentleman from Maryland,
Mr. Cummings. And I recognize him for an opening statement.
Mr. Cummings. Thank you very much, Mr. Chairman. I would
also like to thank Mr. West for taking the time to come to
Capitol Hill today to share his experience so we might apply
the lessons learned from his case to future policy and law
enforcement decisions. Last year, Medicaid provided critical
health care services to an estimated 56 million Americans in
need, the vast majority of whom are seniors, individuals with
disabilities, and children. Since so many Americans rely on
this program, it is imperative that we root out fraud because
every dollar squandered is a dollar that does not go to
critical health care services for these vulnerable Americans.
Today's hearing focuses on a case that was brought to light
by Richard West, a Medicaid beneficiary who asserted his rights
under the False Claims Act to prosecute fraud against the
Medicaid system by Maxim Healthcare Service. Mr. West's lawsuit
retrieved nearly $150 million for the U.S. taxpayers. We need
support efforts by people like Mr. West to ensure that American
citizens are empowered to take on corporate wrongdoing. The
written testimony of our witnesses on the second panel also
makes clear that we need better coordination between State and
Medicaid programs and the Centers for Medicare & Medicaid
Services to reduce duplicative efforts and better align
resources.
Fortunately, the Affordable Care Act provides additional
funding to fight waste, fraud and abuse in Medicaid. It also
contains a number of provisions designed to improve data
quality and promote data sharing between Federal agencies, the
States and health care providers.
The fight against unscrupulous companies like Maxim
Healthcare Services requires more resources, not less. When we
invest in fraud prevention, government spending more than pays
for itself. That is one reason why repealing the Affordable
Care Act and cutting Medicaid's enforcement budget would be
very shortsighted, and indeed, counterproductive.
I look forward to the testimony of our witnesses today, and
I hope their recommendations will help reduce fraud, waste, and
abuse and create a stronger Medicaid program for those who rely
on it.
And with that, Mr. Chairman, I yield back.
[The prepared statement of Hon. Elijah E. Cummings
follows:]
[GRAPHIC] [TIFF OMITTED] T3451.003
[GRAPHIC] [TIFF OMITTED] T3451.004
Mr. Platts. I thank the gentleman, and yield to the
distinguished gentleman from Virginia, Mr. Connolly, for his
opening statement.
Mr. Connolly. Thank you Mr. Chairman and thank you for your
leadership on this important subject.
Reducing Medicaid improper payments contributes directly to
the long-term health of these essential health care programs. I
appreciate our two subcommittees holding a hearing on the
different anti-fraud programs within HHS and Centers for
Medicare & Medicaid Services. While HHS and CMS are devoting
unprecedented attention to reducing Medicaid fraud, it is clear
we must do more to reduce improper payments and protect the
economic security of individuals such as Richard West who have
lost benefits temporarily as a result of attacking Medicaid and
Medicare fraud.
As the written testimony of this hearing makes clear,
Congress and the administration have devoted a great deal of
effort to reducing improper payments within the last decade. In
2005, Congress passed the Deficit Reduction Act which
established the Medicaid integrity program. The MIP provides
States with technical assistance to identify and prevent fraud
which is appropriate since States administer Medicaid.
The Deficit Reduction Act also requires CMS to work with
Medicaid integrity contractors to ferret out overpayments,
conduct audits and educate program participants about fraud
prevention.
CMS uses this and other data for its Medicaid statistical
information system which includes eligibility and claims
information across the country. By maintaining a central data
base, CMS can conduct analyses which identify possible fraud or
areas where fraud is likely to occur. It also works with
agencies to duplicate best practices and has identified 52 of
them that could be replicated all across the country. Despite
these laudable efforts, it is clear more can and must be done
to reduce fraudulent Medicaid payments.
As the testimony of Mr. West today and Robin Page West
demonstrates, CMS has not always been responsive to reports of
fraud. I look forward to learning more from Ms. Brice-Smith and
Mr. Cantrell about what CMS is doing to prevent such
negligences from occurring in the future.
Continuing robust implementation of existing policies is
essential because CMS also must implement important reforms
enacted under the Affordable Care Act.
As Ms. Brice-Smith notes in her testimony, the Affordable
Care Act sometimes referred to as ObamaCare significantly
strengthens anti-fraud programs. These include elementary
reforms such as requiring service providers and suppliers to
document orders and referrals. The Affordable Care Act also
established the Medicaid Recovery Auditor Contract [RAC]
program to create incentives for contractors to reduce
fraudulent payments and in conjunction with Secretary Sebelius'
Center For Program Integrity, the Affordable Care Act is
designed to identify improper fraud payments before they are
issued by CMS.
I hope today's testimony illuminates the progress we have
already made and additional administrative improvements which
would reduce Medicaid fraud. Perhaps we should consider more
stringent punishments for companies and individuals who
systematically defraud Medicaid. As Mr. West suggests in his
testimony, consider harsher punishment for the management of
such companies.
Again, I thank you Mr. Chairman for holding this very
important hearing, part of a series of getting at so called
improper payments from the Federal Government which total $125
billion a year. So there is plenty of work to be done. Thank
you.
Mr. Platts. I thank the gentleman. I thank all of our
witnesses and guests, your patience while we gave our opening
statements, but now we are going to move to why we are really
here, and that is to hear from our witnesses, and we are
honored in our first panel to have a true patriot, Mr. Richard
West, who served our Nation not just in uniform during the
Vietnam War, which we are all eternally grateful and indebted
to you for that service, but also Mr. West's service as a
private citizen who saw a wrong and sought to correct it, and
when the government didn't take action to correct it, he did.
And so, Mr. West, we are honored to have you here along
with your attorney, Attorney Page West and your son, Adam.
As is consistent with the rules of the committee, we need
to swear all three of you in before we have your testimony. Ms.
West and Adam, if you would stand and raise your right hands
and we will swear all three of you in.
[Witnesses sworn.]
Mr. Platts. Let the record reflect all three witnesses have
affirmed the oath.
And you may be seated.
And on behalf of Mr. Richard West, who I will save his
voice for questions, we are going to have his son Adam read his
opening statement. Adam, if you are ready, please begin.
STATEMENTS OF RICHARD WEST, VICTIM OF MEDICAID FRAUD; AND ROBIN
PAGE WEST, ATTORNEY, COHAN, WEST, & KARPOOK, P.C.
STATEMENT OF RICHARD WEST
Mr. Adam West. Thank you, Chairman Platts, Chairman Gowdy,
Ranking Member Towns, Ranking Member Davis, and distinguished
members of the subcommittees for inviting me to discuss
Medicaid fraud. I received home health care and other services
through the Community Resources For People With Disabilities
Medicaid Waiver program. As a ventilator wheelchair and oxygen-
dependent person, I qualified for the government-funded program
that provides Medicaid benefits up to 16 hours per day of in-
home nursing care. There's a limit on the services under this
program each month, and benefits may be suspended or reduced if
the monthly cap is exceeded.
Beginning in March 2003, I received home health care
through Maxim Health Care Services under this program. Maxim
billed the home health care services to Medicaid which paid for
them with both State and Federal funds. In September 2004, I
received a letter from the New Jersey Department of Human
Services Division of Disability Services Home and Community
Services telling me that I had exceeded my monthly cap and that
my Medicaid services were being temporarily reduced or
suspended as a result. This prevented me from obtaining needed
dental care.
I complained to the State of New Jersey, I complained to
Medicaid, and I complained to a social worker who was assigned
to me telling them that Medicaid had been billed for nursing
care I had not received. None of them did anything about it.
Since none of the government agencies I had contacted about
this did anything, I hired a private attorney, Robin Page West,
no relation, of Baltimore, Maryland, who filed on my behalf a
whistleblower lawsuit under the False Claims Act that triggered
an investigation of Maxim.
Somebody decided to make a profit on my disability and rip
off the government. That was wrong and the right thing for me
to do was to expose it. But because the case was under seal
while the government investigated, I couldn't talk about it.
Sometimes I had trouble getting nurses and I suspected word had
gotten out that I was a troublemaker. Over the course of the
government's investigation, viruses made me severely ill. Each
day when I sat alone in my home and no nurse came, I got sicker
and sicker. I was afraid of dying and leaving my son with a big
legal mess. I feared that if I were no longer alive, the case
might be dismissed. Meanwhile, the government investigation
carried on, and investigators kept discovering more and more
billing improprieties.
Finally after 7 years, the government reached a settlement
with Maxim and the case went public with Maxim paying a civil
settlement of approximately $130 million and a criminal fine of
approximately $30 million. This was the largest home health
care fraud settlement in history. Yet Maxim is still permitted
to do business with the government and none of the executives
went to jail. Details of the settlement are available at
www.homehealthcarefraudsettlement.com.
Maxim was overbilling and under delivering basic services
to America's oldest, sickest and poorest. The goal was not to
provide better services and products at lower prices, but
rather to see if they could take advantage of weak Medicare and
Medicaid oversight, to see if Uncle Sam could be ripped off and
no one noticed, to see if patients who complained would not be
taken seriously or would give up after a few calls to Medicaid.
And guess what? They were right. Maxim's game went on for years
and America's taxpayers were systematically ripped off.
But not only were taxpayers ripped off, when corporations
rip off Medicare and Medicaid there are other victims besides
taxpayers.
Maxim took services from people like me.
Despite the big monetary settlement, Maxim executives did
not go to jail and the company was not excluded from doing
future business with Medicare and Medicaid. The settlement
received a lot of these covers that many folks asking why this
was. How is it that a company that takes millions of government
dollars is not entitled to continue along in business, while a
shoplifter of a few $100 worth of merchandise will be sent to
jail. It is commendable that the government did take on Maxim,
but until corporate executives receive harsher penalties, I do
not think we will see the fraud stop. Having the corporation
pay some settlement money is just a cost of doing business for
the fraudsters.
The settlement money does not even come out of their own
pockets. Changing that and sending some executives to jail may
actually make the fraud stop.
How many other companies got away with this same fraud for
the last 7 years? How many other people saw this and did
nothing? How many were afraid of losing their health care for
being a troublemaker? That is what happened to me. At this
time, I am being told my Medicaid will end because of this
settlement. My whistleblower recovery is being paid over 8
years with half of it coming at the end of that period. In the
intervening years, there will not be enough to pay for my in-
home care. I will go broke or die.
This is the price of doing the right thing. Do I know of
other companies doing fraud? Yes. Four. Can I tell anyone? No.
I can't afford to lose any more services. I thought if you do
the right thing that maybe things would work out in the end,
but maybe not. I am a Vietnam veteran and never took or asked
for any services I didn't need. I lived a productive life and
raised my son, Adam West. This program allowed me to live in my
own home, to see him graduate high school and college, and now
he is living on his own. If someone is willing to steal from
and old sick vet, I would think my government would help. If I
had an HMO, who would help? Should I call their CEO? It took 7
years, but I had the full weight of the U.S. Government behind
me. Many folks are not as fortunate.
I came to this hearing hoping to help Congress help other
people who need help through no fault of their own. Thank you
again for inviting me to testify. I look forward to answering
your questions.
Mr. Platts. Thank you, Mr. West.
[The prepared statement of Mr. West follows:]
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Mr. Platts. Ms. West, if you would like to share your
testimony.
STATEMENT OF ROBIN PAGE WEST
Ms. Page West. Thank you, Chairman Platts, Chairman Gowdy,
Ranking Member Towns, Ranking Member Davis and distinguished
members of the subcommittees for inviting us to discuss
Medicaid fraud. I represented Richard West in the Medicaid
fraud lawsuit that resulted in the $150 million settlement with
Maxim. For the past 20 years, I have focused on bringing cases
such as Mr. West's to recover money the government has lost to
fraud. I am also the author of a book on this subject published
by the American Bar Association entitled Advising the Qui Tam
Whistleblower.
In examining ways to improve oversight and accountability
of Medicaid, it is helpful to look at the process we followed
in bringing Mr. West's Medicaid fraud lawsuit. As he testified,
after Mr. West attempted to bring this matter to the
government's attention by contacting the State, the Medicaid
program and his social worker, all to no avail, he turned to a
private lawyer. We then brought a lawsuit under the False
Claims Act [FCA], which empowers an ordinary person to step
into the shoes of the government and sue fraudsters to recover
the amounts stolen plus civil penalties and trouble damages.
The person who sues on behalf of the government, the
whistle-blower, is known as a qui tam relater, based on a Latin
phrase that translates as he who sues on behalf of the king as
well as for himself.
The act provides for a whistleblower reward that in a
successful intervened case can range from 15 to 25 percent of
the government's recovery. In our case, using records Mr. West
had kept, we showed how the number of hours Maxim had billed
Medicaid exceeded significantly the number of hours Mr. West
received. In addition, we gave the government information Mr.
West had learned through discussions with various of his nurses
that led him to believe Maxim was doing this on purpose.
The FCA provides 60 days for the government to decide
whether to intervene in a case, and if it needs more time, it
must request it from the court. This is quite different from
hotlines that are not accountable for acting on callers' tips
within a certain period of time, if at all. The FCA is also
different from oversight programs and contractors that exist to
identify improper payments and fraud. These cost the government
money, sometimes more than they recover. For example, CMS's
senior Medicare patrol program teaches seniors and others how
to review Medicare notices and Medicaid claims for fraud and
what to do about it.
Over 14 years, from 1997 to 2010, it saved $106 million.
But its current annual budget of $9.3 million leads to the
question whether it is even saving what it costs.
The incentive of earning a False Claims Act whistleblower
reward, on the other hand, mobilizes private individuals and
their attorneys to do the work without the need for any
government programs. The FCA model also outperforms the
Medicare Recovery Audit Contractor, RAC, program which although
it pays contractors a percentage of the improper payments they
recoup stills dips into the recouped fund to pay those
contingencies.
Not so with FCA recoveries. Not one dime comes from
taxpayers to pay for these recoveries because the statute
allows recovery of triple damages from the fraudster so that
the government can be made whole for the cost not only of the
whistleblower rewards, but also the investigation, prosecution
and lost interest over time, not to mention the savings caused
by deterrence.
There is no doubt that the cases whistleblowers are
bringing to the government are of high quality. As shown on
this graph, which is based on Department of Justice statistics,
recoveries from whistleblower-initiated cases by far outpace
those in government-initiated cases. More than 80 percent of
the False Claims Act cases now being pursued by the U.S.
Department of Justice were initiated by whistleblowers, and the
amounts of the recoveries are in the billions each year.
In closing, one aspect of Mr. West's case that I would like
to highlight is that the waiver program capped his benefits at
a monthly amount that if exceeded, triggered a denial of
further Medicaid benefits. So when Mr. West went to the
dentist, he was informed that he could not get treatment
because he had supposedly exceeded his cap.
In most Medicare, Medicaid and other Federal and State
health programs, that would not happen because there is no cap
that stops benefits from being paid, so even if Medicaid
beneficiaries noticed suspicious billing, they have no
incentive to spend time questioning them because their future
Medicaid benefits are not at stake. And this is one reason I
believe we have not seen more health care fraud cases initiated
by Medicare and Medicaid beneficiaries.
Thank you again for inviting us to testify. I look forward
to answering your questions.
[The prepared statement of Ms. Page West follows:]
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Mr. Platts. Thank you, Ms. Page. We appreciate, again, all
three of you being here with us to share your insights and the
experiences you have had in helping to protect American
taxpayer dollars as well as to ensure citizens like Mr. West
get the care they need and deserve.
We will now begin questions, and I would yield to the
subcommittee chairman, Mr. Gowdy, for the purpose of questions.
Mr. Gowdy. Thank you, Mr. Chairman.
Mr. West, on behalf of all of us, I want to thank you for
your service to our country, both on this soil and on foreign
soil. We are indebted to you. It strikes me, Mr. West, that you
brought this to the attention of every single person that you
could reasonably have known to bring it to.
Mr. Richard West. Yes.
Mr. Gowdy. And nobody did anything. You had to go get a
private lawyer to do what either the State of New Jersey, CMS,
or some social worker should have done, is that correct?
Mr. Richard West. That's right, yes.
The social worker asked Maxim if they could back up their
billing with paperwork. They said yes. So she had no power to
audit, or she had no power, so I took it to the State. And the
State sat in my living room in August in 2003, I told them I
was not getting the nursing they are telling me I'm getting.
They did nothing. The person running the program retired. The
only person sitting at my dining room table got promoted, and
everybody just goes on. If people aren't held accountable, both
Maxim and State and Federal workers, there is nowhere for me to
go.
Mr. Gowdy. And that is exactly what I want to ask Ms. West.
Do you have any criminal practice at all to go along with your
civil practice? Have you ever done criminal defense work?
Ms. Page West. No, I haven't.
Mr. Gowdy. For those of us who are not smart enough to do
civil work and had to do criminal work, it has always struck me
that nothing gets people's attention quite like the fear of
going to prison. And poor folk who steal do go to prison. Rich
folk who steal have the corporation pay a fine and then they
continue to participate in the Medicaid program. How in the
world does that happen?
Ms. Page West. It is much more difficult to prove a
criminal case. The standard is guilty beyond a reasonable
doubt, it takes a lot of resources to investigate these cases.
Mr. Gowdy. Let me stop you right there. You have a Vietnam
war veteran witness who says that this work was not done on me
and you have a document that says that they were billed for it.
I think you and I could win that case. I guess that there is a
different standard of proof, but there is a different standard
of proof in all criminal cases.
Ms. Page West. Someone in the government is making the
decision of whether to prosecute these cases.
Mr. Gowdy. Do you know who that is? Do you know who it is?
Ms. Page West. The U.S. Attorney's Office.
Mr. Gowdy. In New Jersey?
Ms. Page West. Yes. And the Department of Justice.
Mr. Gowdy. So they went to a Civil Division to reach an
agreement, pay a fine, the shareholders pay, none of the
corporate executives go to jail, and then they continue as part
of the settlement to be able to participate in the Medicaid
program? That is as outrageous as anything I have heard in the
11 months I have been here and I have heard some outrageous
things.
Let me ask you this: There have been civilizations that of
been formed in less than 7 years. What took 7 years for this
case to be resolved?
Ms. Page West. The investigation started locally and then
it expanded to the State of New Jersey, and then it expanded to
the States beyond New Jersey eventually expanding nationwide.
And during that time, there were numerous audits going on of
the documents, there was an independent audit company that was
hired to determine what was, what type of document qualified as
a proper claim and what was an improper claim. Maxim's
attorneys were involved every step of the way. They were
allowed to have input into this process, and then at the end,
because fraud is difficult to quantify, the settlement had to
be reached, and it is often likened to making sausage because
there are so many elements that have to be brought together
that so many people have to agree on, and that's what also took
a long part of the time is the agreement on the various aspects
of the settlement, and there was a criminal component to it as
well.
Mr. Gowdy. And the criminal component went away as part of
the civil settlement? Did anyone go to jail as a result of
this?
Ms. Page West. My understanding is that there were nine
indictments, eight of which were of Maxim employees, not
executives, but managers.
Mr. Gowdy. And did they go to jail?
Ms. Page West. I don't know.
Mr. Gowdy. My time is expired, Mr. Chairman.
Mr. Platts. I thank the gentleman. I yield to the gentleman
from Illinois, the ranking member, Danny Davis.
Mr. Davis. Thank you, Mr. Chairman. Mr. West, let me again
thank you for taking time to come to Capitol Hill to testify.
And I also thank you again for your service to this country
during the Vietnam War. The coalition against insurance fraud
estimates that 80 percent of health care fraud is committed by
providers, 10 percent by consumers, and 10 percent by others
such as insurance companies or their employees.
I applaud you for your diligence in maintaining records and
keeping such a close eye on the actual number of hours you were
receiving home health services and the number of hours Medicaid
was being billed.
What I want to ask you is when you receive notice that your
services, that you had reached or were going beyond your
monthly cap, and your Medicaid services were being temporarily
reduced or suspended, how did you feel when you read that
letter or got that information?
Mr. Richard West. I was in a nursing home, and this program
allowed me to live in my own home, and in 3 months, I knew what
they were doing. I had always been an advocate for people with
disabilities, and when I got that notice, I knew that it wasn't
me, it was all the other people that these services that were
getting screwed that they were going to take my service and I'm
going to fight them. Other people can't do that. I'm on oxygen.
And I'm probably too stubborn and arrogant to give up.
But if you're the average person in my position, you can't
fight. You're helpless. You are being abused. So, how I felt? I
was being abused, and I needed to stand up for everybody.
Mr. Davis. And you knew that you were weren't going to take
it sitting down?
Mr. Richard West. I started this as an advocate and through
the 7 years, it became more patriotic.
Mr. Davis. Thank you very much. Ms. West, let me ask you,
you indicate that you have handled any number of cases. What is
the typical client or person who comes to you with a situation
and asks for your assistance?
Ms. Page West. More often it's a person who works in the
company that's committing the fraud, someone who sees something
that seems amiss, and they will go to their supervisor and say,
hey, why are we doing this, and the supervisor will try to
brush it off, and oftentimes they will escalate it to another
superior, and eventually oftentimes they get fired for being
nosy, at which point they will come to me or close to the end
of that process.
Mr. Davis. So they will come, they are whistleblowers who
themselves have been abused in a way in terms of losing their
jobs?
Ms. Page West. Exactly, and also in terms of being asked to
do things in the job that they know are not right. And as Mr.
West pointed out, many of their co-workers know the same thing
but they won't come forward because they're afraid of losing
their jobs and their health care.
Mr. Davis. Thank you very much, Mr. Chairman. My time is
expired.
Mr. Platts. I thank the gentleman. I yield myself 5 minutes
for the purpose of questions.
And again, the case that you shared with us, Mr. West, and
your attorney, should not happen, and our efforts as focused
here are in trying to ensure it doesn't happen again in the
future.
If I understood your written testimony and your responses
here today, when you reached out to the State of New Jersey
Medicaid, social worker that, other than, if I understood, with
the social worker, it looks like they looked at Maxim's records
and said, well, they have paper to back up saying they provided
this service and they basically took the company's word over
your word. Is that a fair statement?
Mr. Richard West. Correct.
Mr. Platts. Did the State of New Jersey or Medicaid itself
even get to that point? Or did they just pretty much do
nothing?
Mr. Richard West. They did nothing. I wrote to Governor
Corzine, Senator Menendez, they sent the paperwork to the same
people that were doing nothing.
Mr. Platts. So in addition to your own contacts, to the
State and Medicaid, you contacted your elected officials,
Governor, U.S. Senator----
Mr. Richard West. Yes.
Mr. Platts. They contacted those entities and still nothing
happened?
Mr. Richard West. Correct.
Mr. Platts. It is just as Mr. Gowdy said, just somewhat
unbelievable that here you have a citizen trying to do the
right thing and protect taxpayers and ensure he receives the
services and the government collectively failed you terribly.
When they were denying your claim of fraud and failing to
act on it, what was their response as far as how that then
related to your care? Because of that fraud, you were being
denied dental. Were they saying, we don't believe you that
there is fraud, but we are going to provide you care or----
Mr. Richard West. They don't come out and say we don't
believe you. They just don't----
Mr. Platts. They just don't do anything.
Mr. Richard West [continuing]. Return your calls, don't
answer your letters, don't respond to your emails. You are a
burden to them creating paperwork for them. It is easier for
them to do nothing.
Mr. Platts. Push you to the side?
Mr. Richard West. Correct.
Mr. Platts. How about on the fact that that fraud was
denying your services, did they correct that and ensure that
you got the dental care, or did that continue to----
Mr. Richard West. Eventually, I got the dental care. But at
that time, I had nursing 7 hours a day, 7 days a week, and
nursing 3 nights a week totaling 18 hours. I lost those 18
hours for 7 years. So if you turn off my ventilator, I have a
hard time breathing. But if you let me sit there, I slowly
deteriorate, because I'm not getting the care I need.
Mr. Platts. I want to make sure I heard you correctly.
While the investigation was going on for 7 years, they were
denying you the services because saying you were not entitled
to it because of the fraud?
Mr. Richard West. Right.
Mr. Platts. Outrageous.
Mr. Richard West. Yes.
Mr. Platts. Thank you for persevering and weathering the
terrible care and treatment you received.
Ms. West, a question, and I'm not sure from, as a lawmaker,
how our Federal whistleblowers were seeking to strengthen the
whistleblower protections provided Federal employees because we
want, as you referenced, more often than not, it's an employee
who comes forward with what they know is going on in their
company or their office.
We're trying to strengthen that law. We've passed
legislation out of this committee, out of the full Oversight
and Government Reform Committee and now working for a floor
vote to give whistleblowers within the Federal Government more
protection.
If a Federal employee came to you, I assume then that they
are impacted differently going to you for this type of case and
bringing forth fraud because they are a Federal employee, is
that correct?
Ms. Page West. Historically in my experience, the
government has been less receptive to intervening in
whistleblower cases brought by Federal employees.
Mr. Platts. They keep it more internal?
Ms. Page West. It's hard for me for to understand the
reasoning that goes behind how an intervention decision is
made. I don't know why that is.
Mr. Platts. But your experience over 20 years is it's less
common for them to intervene?
Ms. Page West. It's more difficult for them to be accepted
as an intervened case.
Mr. Platts. So all the more unlikely, given that, for a
Federal employee to pursue this type case because they're lease
likely to succeed?
Ms. Page West. Yes. More difficult. Yes.
Mr. Platts. Thank you. My time is expired. I yield to the
gentleman from New York, Mr. Towns.
Mr. Towns. Thank you very much, Mr. Chairman.
Let me, again, thank you, Mr. West, for coming and sharing
your story with us, and of course, regret that you had to go
through so much in order to make the point, but I appreciate
your time here today.
Let me begin by just, can you tell me about the process you
went through in trying to contact various agencies? Could you
talk for just a moment about the process that you went through
trying to reach agencies?
I know that you said that you sent out letters and e-mail
and phone calls. Can you just talking talk about the process
just briefly?
Mr. Richard West. The local county social worker comes to
the house once a month. So once a month, I'm telling her I'm
not getting my services, and I'm calling her in between those
visits saying the nurses aren't showing up, I'm having to
depend on family, friends. The State workers, the county
workers the State workers supposedly, they didn't follow
through, and the State program was telling me I had to have a
caregiver in my home for when a nurse didn't show up. My son
was in high school getting ready to graduate, and I wasn't
about to put that burden on him because the nursing aid wasn't
doing their job.
So the State decided they wanted to have a meeting in my
home. So they all came down, sit at my table and tell me what
services I've got. And I said I am not getting the hours of
nursing you are telling me I'm getting.
And the State workers said, well, you need a caregiver and
you don't have one, so maybe you don't qualify for the program.
And I said, I'm not going to have a caregiver, and she said,
you're not compliant and I said arrest me. She didn't
appreciate that.
And the county social worker told her those discrepancies
in the hours, they all went out, had a pow-wow out by the car
and went back to Trenton and never followed through with any of
it. When I realized the county and the State wasn't doing
anything, I went to the Medicaid fraud hotline, called them.
They said we'll give you an investigator and we'll look into
it. Never heard a word.
So I figured I have to get out of the State of New Jersey
because I have no idea who is involved, whether they're
involved with Maxim or their own programs. So I went on the
Web, looked up Medicaid fraud. That is when I found out that
there is a whistleblowers lawsuit. I had no idea. Then I read
you could receive a portion of the recovery. I figured, well,
hey, I could fish my brain, maybe I will get $5,000. And the
first person I called was in Alabama, a whistleblower attorney.
He said well if it's not $10 million, I don't even want to talk
to you. I was informed of a whistleblower lawyer in California.
He said send me the documentation you have. I did. He called me
back and said, I think you have a pretty good case but you need
an attorney closer to where you're at. Then I found Robin on
the Internet, and that's how we proceeded.
Mr. Towns. So you found someone with the same last name?
Mr. Richard West. When I called, her secretary said, who is
calling? I said Richard West. And there was a silence. And I
said no relation.
Mr. Towns. Thank you very much.
Mr. Chairman, I just ask for an additional 30 seconds. I
want to ask Ms. Page to submit something to us.
In your written testimony, you indicated that the False
Claim Act is both unusual and effective in uncovering fraud in
the health care system. If you would be kind enough in writing
to summarize your top three arguments for why this law is
effective. I'm interested in that because we would like to
strengthen the law to improve it so if you would be kind enough
to submit that to us in writing, being my time is out.
Ms. Page West. The top three reasons why it's effective.
Mr. Towns. Yes. Thank you.
Mr. Platts. I thank the gentleman. The gentleman Mr.
DesJarlais is recognized for 5 minutes for questions.
Mr. DesJarlais. Thank you, Mr. Chairman.
Mr. West, Admiral Mullens this past year was quoted as
saying the biggest threat to our national security is our
national debt, so not only did you fight for our country in
Vietnam, you are fighting for our country again against a big
threat which is spending and debt. So I applaud you for your
courage and taking the time to come here and speak with us
today.
I just wanted to ask you a few questions about your
relationship with the people that spent a lot of time caring
for you because with your condition with the trach ventilator
I'm assuming you had a respiratory therapist that came to your
home?
Mr. Richard West. No.
Mr. DesJarlais. No? You had home health nurses?
Mr. Richard West. I had nursing.
Mr. DesJarlais. And I'm assuming you had nurses aids to
help with activities of daily living, they have to help you
dress, they have to help you eat.
Mr. Richard West. Right.
Mr. Platts. They have to help you maintain your residence
so it's safe?
Mr. Richard West. Yes.
Mr. DesJarlais. So they spent quite a bit of time in your
home?
Mr. Richard West. Correct.
Mr. DesJarlais. Did you ever feel like you got close to any
of these people? They take care of you. Were they caring
people? Did you talk to them on a first name basis? Did any
one, say, an aide, stay with you for several months at a time
or was it different aides on different days?
Mr. Richard West. I have a nurse now that has been with me
4 years. Over the course of the 7 years, there have been
different nurses, different agencies, but many have been there
for extended time.
Mr. DesJarlais. So you knew them very well and they knew
you very well and it was generally friendly and cordial? Did
you like them and they liked you?
Mr. Richard West. Yes.
Mr. DesJarlais. When you first started noticing the fraud,
were you able to talk to them about this, and share your
concerns?
Mr. Richard West. They were part.
Mr. DesJarlais. I'm sorry?
Mr. Richard West. They were part of the fraud.
Mr. DesJarlais. Did you talk to them and ask them, did they
try to make excuses or did they say they'd talk to their
managers?
Mr. Richard West. No. I could tell by what they were
saying, what they were telling me, they were getting paid but
they weren't putting in for the hours in my home, they were
putting in for additional hours. And the company, the nurses
told me on several occasions that the Maxim office managers
work on a bonus system so the more profitable they are the
bigger their bonus.
So these people, despite having a relationship--you liked
them, they liked you--you felt they were aware of the fraud
that was going on but would do nothing?
Mr. Richard West. They knew.
Mr. DesJarlais. They knew.
Mr. Richard West. They knew.
Mr. DesJarlais. Did you feel like you were betraying them
in a sense when you had to go over their head to try to fix
this situation?
Mr. Richard West. You can't betray somebody that is abusing
you.
Mr. DesJarlais. Okay. Well, I guess I just wonder, you
know, how unusual you are.
Ms. West, how many other Medicaid beneficiaries have come
to you such as Mr. West? How unusual is Mr. West?
Ms. Page West. It is very unusual. Just a handful of people
have even inquired. And if memory serves, Mr. West is the only
beneficiary case that I have taken.
Mr. DesJarlais. Okay. So given the success by whistle
blowers, why do agencies and officials typically ignore people
like Mr. West? What would be your opinion on that?
Ms. Page West. I don't think it's so much that the False
Claims Act isn't serving them and that the government isn't
picking up the cases. I think it's that there are not that many
beneficiaries who are coming to the False Claims Act attorneys.
Mr. DesJarlais. Okay. So why then when someone like Mr.
West, who obviously has a legitimate claim that was proven
legitimate, why do you think Medicare just chose to ignore it?
And I will ask you that and ask Mr. West that.
Ms. Page West. Well, I think Mr. West is an extremely
unusual person. Relaters need to be very tenacious, very
intelligent, very persistent. And quite often, Medicare and
Medicaid beneficiaries who are sick cannot bring all those
qualities and have the stamina to, you know, figure it all out
and bring it to a lawyer. And I think that's basically the
issue, is that they are not aware of it. They are not aware of
the incentives, and they don't necessarily have the skill set
to put it all together and follow through on it.
Mr. DesJarlais. Okay. Well, I will just say--and I know I
am about out of time, if you will indulge me for a few seconds.
As a practicing physician, primary care physician, for 18 years
before coming to Congress, I dealt closely with home health.
There was a lot of issues of fraud and abuse in the 1990's
where people who did not have near your level of disabilities
had aides and what not coming to the house. That was kind of
reined in a little bit in the 1990's. But I see that it tends
to be alive and well as we moved into the next decade as well.
Again, I applaud you, Mr. West, for your efforts. And
clearly, I think that CMS and Medicare, who we will have on the
next panel, we will get an opportunity to see why people like
yourself are being ignored. Thank you so much for stepping
forward and fighting again for your country.
I yield back.
Mr. Richard West. The people in my position don't have the
support once they turn people in. If I was a government
informant for a mob-related case, you would take care of me.
But when I went to the special agent in charge and asked to get
nurses so I could continue through this case, there was nothing
he could do to help me. So why would those people turn somebody
in, knowing they should die? So you have to give support to the
patient, client--whatever you want to call me--so he can bring
the lawsuit. If the threat is, ``you complain, we take you
services,'' where is the incentive? There isn't.
Mr. Platts. I thank the gentleman.
Mr. West, along the lines of what you just expressed, it
sounds as if--whether through a need for a legislative change
or regulatory change--that if you had a beneficiary, as in this
case, that the government makes a determination, they are going
to take on the case and go forward, that that decision should
maybe include a provision, you know, that while the case is
being pursued, 1 year or 7 years, in your case, you are given
the services on a provisional basis, you know, while it is
proceeding. Because, again, otherwise you have a disincentive
from reporting it because of being at risk of further losing
care.
Mr. Richard West. Correct.
Mr. Platts. I thank the gentleman.
I yield to the distinguished ranking member of the full
committee Mr. Cummings from Maryland.
Mr. Cummings. Mr. West, I thank you also for being here.
And I agree with you, these folks needed to go to jail. And
it's interesting that I now have done a little research to see
what happened.
I want to follow up on some of Mr. Gowdy's concerns.
They did go to jail. One went to jail from Maxim, and he
got--this was the highest sentence of eight or nine people--5
months in prison and 5 months of home confinement. Most of them
got a fine and home imprisonment. That's what they got.
Now 40 miles away from here, I represent Baltimore. And
about 6 months ago, I had literally thousands, thousands of
young African American boys, many of whom may have stolen a
bike, may have done something wrong with drugs or whatever, and
they got a record, Mr. West. They got a record.
And you know what, they can't get a job. If they live to be
99 years old, they will not be able to get a job. But here we
have Maxim, a company that has basically stolen, stolen from
the American people--Maxim, a company that has taken away the
services, not only from you but so many others, but yet and
still, they are in a position to continue to make millions.
Something is absolutely wrong with that picture.
And I agree with you. When the people from the CMS and the
IG come up, they have to explain to us--and by the way, every
member of this panel, every Member of this Congress should be
saying, Maxim should be put out of business with regard to
doing business with the Federal Government. It is ridiculous
how a young man in Baltimore can steal a $300 bike and not be
able to get a job for a lifetime, but Maxim can steal millions
and continue to do the same thing over and over again. Yeah,
they got sentenced. But this sentence is simply a slap on the
wrist. If you can pay $150 million fine, this is just a cost of
business.
And so, you know, I am very concerned about this.
And I want to enter into the record, Mr. Chairman, the U.S.
Attorney's Office, District of New Jersey--it's basically their
summary of the sentencing. It is dated November 21, 2011. I
would ask that that be made a part of the record.
Mr. Platts. Without objection, so ordered.
Mr. Cummings. And a Reuters article dated--I ask that this
be made a part of the record, too--dated Monday, September 12,
2011. And it says, in part, Maxim settled with the U.S.
Department of Justice and 41 States. Their company entered into
a deferred prosecution agreement with the Justice Department
under which it paid--it will pay a $20 million fine. If Maxim
meets the agreement's requirements, it will avoid charges. And
the government said it was willing to enter into an agreement
with Maxim in part--in part because of its cooperation and
significant personnel changes it has made since 2009.
Mr. Platts. Without objection, entered into the record.
Mr. Cummings. Thank you very much.
Well, that's all well and good; but if you are paying
people bonuses to screw people and mess them over--and you're
right. Everybody's not like you. There are people who are
sitting in wheelchairs right now, looking at this right now,
who feel helpless, and many of them are going to die. That's
why I cannot understand for the life of me how every Member of
this Congress should not want to put Maxim out of business, at
least with regard to its business with the Federal Government.
Now to you, Ms. West. Ms. West, you stated in your written
testimony that you have over 20 years of experience in bringing
cases such as Mr. West's to the government's attention. Can you
explain how these False Claims Act cases help government work
better and save taxpayer dollars?
I'm sorry. I didn't mean to get so upset, but this makes me
want to vomit. Go ahead.
Ms. Page West. The False Claims Act gives the government a
bird's eye view into the fraud. Without the whistleblowers, the
government really has no way of knowing how the fraud is being
committed. Every time there is a fraud that's detected, the
government learns about it, comes in, kind of shuts it down.
But then there's a new fraud that pops up. And it's a constant
never-ending thing. And there is more creativity behind fraud
because there is so much money to be made by it. And that's why
the False Claims Act is so effective is because it reaches out
to the people who are seeing the fraud and understand the fraud
and giving them an incentive to tell about it and explain to
the government how to stop it.
Mr. Cummings. Ms. West, do you think there are too many
False Claims Act lawsuits? And what disincentives are there for
bringing a frivolous False Claims lawsuit?
Ms. Page West. Well, the disincentive for bringing a
frivolous False Claims Act lawsuit is there's a provision in
the statute that allows the defendant to recover its attorney's
fees from the relater if it's shown that the suit was brought
for purposes of harassment.
In addition, it's difficult to bring a frivolous lawsuit
because the qui tam lawyers work on contingency. And if we
don't think a case is really good, we're not going to bring it.
Only about 20 percent of the False Claims Act cases brought are
intervened in by the government. So we're looking at a very
tiny window, and we are looking for the very best cases to
bring to the government's attention.
Mr. Cummings. I see my time is expired. Again, Mr. West, I
want to thank you very much for you and all others who will
benefit from what you are doing.
Mr. Platts. I thank the gentleman.
Before yielding to the gentleman from Virginia, Ms. West,
the example of having a bird's eye view, the beneficiary goes
out on the front lines being able to bring a False Claims Act,
in the second panel, we're going to hear about a lot of
expenditures of moneys for new technology, new analytical
programs and things. Is it a fair statement to characterize
your experience here that--rather than the investment of all
this money in new programs, that if we had simply better
listened to the beneficiary, we would have prevented the fraud?
Ms. Page West. Yes, I think so. And listen to Malcolm
Sparrow, who has analyzed this and feels that the money should
not be paid out first. It should be paid out properly, not paid
and then followed after to be gotten back.
Mr. Platts. Right. So it is being more up front as opposed
to the recovery type of audits. It's focus up front.
Ms. Page West. Exactly.
Mr. Platts. I yield to the gentleman from Virginia, Mr.
Connolly, for the purpose of questions.
Mr. Connolly. Thank you, Mr. Chairman.
And I want to thank Mr. West particularly for his courage,
both serving his country and in serving his country a second
time in trying to make sure taxpayers' investments are
protected and are made secure and for the courage of persisting
when many others might have been daunted and discouraged.
I also want to say to our colleague, if he's still here. I
guess Mr. Gowdy isn't here. But if Mr. Gowdy is serious about
toughening up the criminal penalties, he will find allies on
this side of the aisle. Our subcommittee has pointed out that
there are, every year, $125 billion in improper payments. Now
sometimes it's innocent--you know, a mistake in billing.
Somebody gets paid who shouldn't have or gets double paid;
somebody who's not qualified to receive a benefit gets a
benefit. But a lot of it's fraud.
I know that U.S. Attorney's Offices are consumed with
Medicare and Medicaid fraud. The U.S. Attorney's Office in
Boston just announced a $3 billion recovery. That's 1 out of 99
U.S. Attorney's Offices. So we know it's out there.
If we eliminated improper payments, by the way, we could
give a Christmas gift to the supercommittee of $1.25 trillion
over the next 10 years, without breaking a sweat, without
affecting anyone's benefits, without having political drama,
without having to gut any necessary investments.
Mr. Platts. Would the gentleman yield?
Mr. Connolly. I yield to the chair.
Mr. Platts. I thank the gentleman for yielding.
As you well state, if you took the fraud and improper
payments--again, we don't know how much is fraud--improper
payments of Medicaid, as you are just discussing here today and
as you know from our previous hearing on Medicare, these two
programs alone account for about $70 billion a year of that
125. So over 10 years, you are talking $700 billion.
I yield back.
Mr. Connolly. Thank you, Mr. Chairman.
Of course, as you know, some of that money was cited in the
financing of the Affordable Health Care Act, some criticized us
for that as if we were gutting the program. But in fact, we
were simply trying to recover either improperly made payments
or illicitly made payments.
I want to just make sure we get the narrative on the
record, Ms. West, if you don't mind. I've heard Mr. West. When
did Mr. West first discover something was wrong and how?
Ms. Page West. He testified----
Mr. Connolly. If you could speak into the microphone.
Ms. Page West. Three months after he came out of the
nursing home, he realized something was wrong.
Mr. Connolly. And what made him realize something was
wrong?
Ms. Page West. That he was not getting the care that he was
entitled to get under the program. He was getting fewer hours
of nursing care.
Mr. Connolly. Okay. And maybe initially he thought that was
a mistake?
Mr. Richard West. Initially, I thought that they were
having a hard time servicing my case. But then it became
apparent that they would send when they wanted, who they
wanted.
Mr. Connolly. Well, the testimony submitted on your behalf
by your attorney, Ms. West, says, you attempted to bring the
matter to the government's attention by contacting the State.
What State was that?
Mr. Richard West. The State of New Jersey.
Mr. Connolly. New Jersey. The Medicaid program itself--so
you went to a local office, okay--and your social worker.
Mr. Richard West. Correct.
Mr. Connolly. And the testimony says, all to no avail.
Mr. Richard West. Correct.
Mr. Connolly. Meaning what, they ignored it?
Mr. Richard West. Yes.
Mr. Connolly. Okay. So you then decided, this isn't right.
I'm not getting anywhere, and I'm, therefore, going to turn to
a private attorney. And you used actually something Congress
did well, the False Claims Act.
Mr. Richard West. Correct.
Mr. Connolly. Which gave you a vehicle for redress as a, as
you put it, qui tam relater.
Mr. Richard West. Right.
Mr. Connolly. Ms. West, if you could describe for us, what
was the reaction of the Medicaid officialdom when faced with
this potential fraud, at least on your initial contacts?
Ms. Page West. Are you asking me?
Mr. Connolly. Yes. I'm asking you, Ms. West.
Ms. Page West. I did not contact Medicaid. I filed a
lawsuit under the False Claims Act. So my first contact was
with the U.S. Attorney's Office With the District of New
Jersey.
Mr. Connolly. Did Medicaid at any point react to the filing
of the lawsuit or the claims contained therein?
Ms. Page West. Again, I didn't have any contact with anyone
from Medicaid. I was coming in through the Department of
Justice.
Mr. Connolly. Did your client have any contact with
Medicaid in terms of reaction to the filing of the lawsuit or
the claims therein?
Ms. Page West. Well, once we filed the lawsuit, it's under
seal, and we aren't allowed to talk about it.
Mr. Connolly. Even with Medicaid?
Ms. Page West. Not unless there would be a partial lifting
of the seal or if they would set up a meeting and Medicaid
officials would be there. But there was nothing like that.
Mr. Connolly. And presumably--you made repeated attempts
with the Medicaid office, Mr. West. And I know my time is
running out--to try to alert them to this and get them to act.
Mr. Richard West. Yes.
Mr. Connolly. And they were indifferent?
Mr. Richard West. Correct.
Mr. Connolly. We look forward to their testimony. Thank
you. My time has run out.
Thank you, Mr. Chairman.
Mr. Platts. I thank the gentleman for yielding back.
Before we conclude, I yield myself just a final minute.
Mr. West, my understanding is, in giving an interview, you
shared an example of the lack of cooperation you got as you
tried to correct this and that you were in front of a judge or
an adjudicative setting where you were told that--well, there's
evidence that they did provide these services, and they were
not agreeing with you or believing you, and that you made a
statement that you would bet that while you were in front of
this individual that Maxim was probably falsely appealing for
services to you. Could you share that?
Mr. Richard West. We went to Scranton to the Federal
courthouse. I picked up Robin at the train station. We met with
I believe it was Silverman and a special agent, and after they
heard my story, I said, I'll bet Maxim bills for a nurse in my
home while I'm sitting here with you. I left my home at 6:45 in
the morning. My son was driving. We went to Scranton, met with
the prosecutors. I said, I'll bet they bill for this time. And
they said, no, they couldn't possibly do that.
In January, I sent an email to Robin saying, I told you so.
They billed for 7 to 3 for an RN in my home. Me and Adam didn't
get home until about 5 that night. They also billed for the
same nurse Christmas Day. We were in Pennsylvania, the next
State over. And this particular nurse was reading my mail,
looking at my email. I had to tell my attorney, do not send
anything to my home. All updates and emails, don't mention who
they're from or who they're about. I lived in a closet because
I couldn't--I had people spying on me in my home while they
were stealing from you.
Mr. Platts. One more example of how you were being
victimized by a very unscrupulous company.
Mr. Richard West. Yep.
Mr. Platts. And its employees. And the fact that while you
were sitting with the very investigators, they're falsely
billing for services to you just epitomizes the outrageousness
of this case. And again, as you reference having left your home
at quarter of 7 a.m., and not getting back until 5, another
example of your persistency and willingness to do whatever it
took to bring justice on behalf of the American people, the
taxpayers and to ensure that you were properly provided the
services you've earned and deserved, especially as a veteran of
our Nation's Armed Forces. I thank each of you again for your
testimony here today, but more so than just your testimony here
today, your efforts over almost a decade of trying to bring
justice on behalf of your fellow citizens.
And Adam, I think it probably goes without me saying, but I
imagine you're a very proud son to be Richard West's son and
know that he's a true servant of this Nation.
Mr. Adam West. Very much so.
Mr. Platts. So God bless each and every one of you. We will
recess for 5 minutes as we recess for the second panel.
Mr. Richard West. May I have 1 minute?
Mr. Platts. Yes, you may.
Mr. Richard West. Today is Pearl Harbor today. And I would
like to say, my dad, Thomas L. West, served in the Pacific. My
mom, Catherine B. West, worked in a factory during that war. We
had a country that worked together for the country. We need
that now. We need people like me, people like you to sit down
and fix the government.
Mr. Platts. Well stated, Mr. West.
Mr. Richard West. Thank you. I'm honored to be here.
Mr. Platts. God bless you. Thank you. We will stand in
recess.
[Recess.]
Mr. Platts. The hearing is reconvened.
And we thank our second panel of witnesses for being with
us and again your knowledge and insights to help educate both
of our subcommittees on this important topic of how do we
prevent and protect and recover American taxpayers' dollars
that have been defrauded through the Medicaid program.
We are delighted to have four witnesses with us: First Ms.
Angela Brice-Smith, director of the Medicaid Integrity Group at
the Centers for Medicare & Medicaid Services; Mr. Gary
Cantrell, assistant inspector general for investigations at the
Office of the Inspector General for Health and Human Services;
Ms. Carolyn Yocom, director of health care at the Government
Accountability Office; and Ms. Valerie Melvin, director of
information management and technology resource issues at the
Government Accountability Office.
We thank each of you for being with us. And again, as is
pursuant to the committee rules, if I could ask each of you to
stand and raise your right hand, swear you in before your
testimony.
[Witnesses sworn.]
Mr. Platts. Thank you. You may be seated.
And the clerk will reflect that all four witnesses affirmed
that oath. And again, we have had the chance of reviewing your
written testimony and appreciate your providing that to us. It
allows us to be a little better prepared for today's hearing,
and we will set the clock for roughly 5 minutes for your oral
testimony here today.
Ms. Brice-Smith, if you would begin.
STATEMENTS OF ANGELA BRICE-SMITH, DIRECTOR, MEDICAID INTEGRITY
GROUP, CENTERS FOR MEDICARE & MEDICAID SERVICES; GARY CANTRELL,
ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS, OFFICE OF THE
INSPECTOR GENERAL, HEALTH & HUMAN SERVICES; CAROLYN YOCOM,
DIRECTOR, HEALTH CARE, GOVERNMENT ACCOUNTABILITY OFFICE; AND
VALERIE MELVIN, DIRECTOR OF INFORMATION MANAGEMENT AND HUMAN
CAPITAL ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE
STATEMENT OF ANGELA BRICE-SMITH
Ms. Brice-Smith. Thank you Chairmen Platts and Gowdy,
Ranking Members Towns and Davis, and members of the
subcommittees.
Thank you for the invitation to discuss the Centers for
Medicare & Medicaid Services' efforts to reduce fraud, waste,
and abuse in the Medicaid program. Medicaid is the primary
source of medical assistance for 56 million low-income and
disabled Americans. Although the Federal Government establishes
requirements for the program, States design, implement,
administer, and oversee their own Medicaid programs. The
Federal Government and States share in the cost of the program.
State governments have a great deal of programmatic
flexibility within which to tailor their Medicaid programs. As
a result, there is variation among the States in eligibility
services reimbursement rates and approaches to program
integrity.
Prior to 2005, States were solely responsible for the
oversight of their Medicaid program. However, in 2005 with the
passage of the Deficit Reduction Act, Congress recognized the
need for a greater focus on health care fraud and gave CMS new
authority and funding to establish the Medicaid Integrity
Program.
I am the director of the Medicaid Integrity Group which
implements the Medicaid Integrity Program. The Medicaid
Integrity Program is a Federal effort to prevent, identify, and
recover inappropriate Medicaid payments. It also supports the
program integrity efforts of the State Medicaid agencies
through a combination of oversight and technical assistance.
The establishment of the Medicaid Integrity Program began a
new era of combating waste and fraud in the Medicaid program,
which was once again improved by the creation of the Center for
Program Integrity. The Center for Program Integrity brings a
coordinated approach to program integrity across all Federal
health care programs.
This new focus on program integrity and anti-fraud efforts
continue with the Affordable Care Act, which is the most
comprehensive legislative step forward to fight health care
fraud in over a decade. The administration has made an
unprecedented investment to reduce improper payments, invest in
program integrity strategies, and rein in waste, fraud, and
abuse in Federal health care programs.
Our efforts within the Medicaid Integrity Program focus on
protecting Medicaid resources at the beneficiary level, the
State level and the national level. Beneficiary involvement is
a key component to all of CMS's anti-fraud efforts. We strongly
believe that alert and vigilant beneficiaries are one of the
most valuable tools in our efforts to stop fraudulent activity.
We are committed to enlisting beneficiaries in our fight
against fraud in several ways: For example, our Education
Medicaid Integrity Contractor [EMIC], provide beneficiaries
with quick facts and tips on how to prevent, spot, and report
Medicaid fraud through social network sites, through electronic
letters, through public service announcements, and other
educational materials. We encourage Medicaid beneficiaries to
report suspected fraud, waste, and abuse to their State's
Medicaid fraud control unit or Medicaid agency or the HHS fraud
tips hotline as examples.
CMS is also committed to supporting our State partners and
their program integrity efforts and their efforts to reduce
improper payments. Our Medicaid Integrity Institute provides
substantive training and support to the States. We have trained
more than 2,600 program integrity staff from all 50 States,
D.C. and Puerto Rico.
CMS provides boots-on-the-ground teams that can assist
States with special investigative audits and emerging threats.
Since October 2007, CMS has participated in 10 projects in 3
States, which have resulted in $33.2 million in savings through
cost avoidance. In addition, CMS's review and audit MICs, or
Medicaid Integrity Contractors, complement and support program
integrity efforts underway in the States. Between 2009 and
November 1st of this year, the audit MICs have initiated 1,663
audits in 44 States. In addition to the Federal audits, States
report that they have recovered $2.3 billion as a result of all
Medicaid program integrity activities.
The Affordable Care Act has also strengthened Federal
oversight for the Medicaid program by providing new tools to
CMS and law enforcement officials to protect Federal health
care programs from fraud, waste, and abuse. These tools include
the new screening and enrollment requirements, strengthen
authority to suspend potentially fraudulent payments, and
increased coordination of the anti-fraud actions and policies
between Medicare and Medicaid.
The Affordable Care Act expanded the Recovery Audit
Contractors to Medicaid, which will help States identify and
recover improper Medicaid payments. Over the next 5 years, we
project that the Medicaid RAC effort will save the Medicaid
program $2.1 billion, of which $910 million will be returned to
the States.
CMS is committed to working with and sharing with our law
enforcement partners, who take a lead in investigating,
determining, and prosecuting alleged fraud. We also continue to
work to address the concerns raised by the GAO that could
reduce improper payments and potential vulnerabilities in the
Medicaid program.
I am happy to announce that the fiscal year 2011 Medicaid's
national improper payment rate is 8.1 percent, a drop from the
9.4 percent in fiscal year 2010. Despite this decrease, we
remain focused on improving program integrity in Medicaid and
are confident that the actions outlined today and in my written
testimony as well as the continued efforts of our Federal,
State, and public partners will continue to reduce improper
payments.
I look forward to working with the subcommittee to ensure
that CMS carries out this important work. Thank you.
[The prepared statement of Ms. Brice-Smith follows:]
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Mr. Platts. Thank you Ms. Brice-Smith.
Mr. Cantrell.
STATEMENT OF GARY CANTRELL
Mr. Cantrell. I am Gary Cantrell, assistant inspector
general for investigations with the U.S. Department of Health
and Human Services Office of Inspector General. I appreciate
the opportunity to testify today about our efforts to combat
Medicaid fraud.
First and foremost, I would like to thank Mr. West for
coming forward with allegations of billing fraud on the part of
Maxim Health-care Services. OIG recognizes that our success is
dependent upon cooperation with courageous individuals like Mr.
West. The documentation that he provided was critical to us in
helping us unravel a broader scheme within Maxim Health-care
that spanned across the Nation.
Our investigation resulted in Maxim agreeing to pay more
than $150 million to resolve civil and criminal allegations of
fraud, the largest-ever settlement relating to home health
services. Nine individuals, including three senior managers,
also pled guilty to felony charges. This example highlights the
potential for citizens and government to collaborate and
curtail schemes that are harming the Nation's most vulnerable
citizens. OIG encourages citizens to report suspected fraud, so
we can investigate and bring to justice those responsible.
Medicaid fraud drains vital Federal and State program
dollars that harms both recipients relying on those services as
well as the American taxpayers. OIG has a team of over 480
highly skilled criminal investigators located throughout the
country. And in fiscal year 2011, our enforcement efforts
resulted in record numbers that included over 720 criminal
convictions and $4.6 billion in expected recoveries. Nearly 400
of these actions addressed schemes related to Medicaid fraud,
and over $1.1 billion is expected to be returned to the
program.
The types of schemes perpetrated in the Medicaid program in
many ways mirror Medicare fraud schemes. For example, we see
billing for services not rendered, medical identity theft,
false statements, bribery and kickbacks. These have been
especially common in relation to home health prescription drugs
charitable medical equipment and transportation services.
Data access is critical to our enforcement efforts in both
Medicare and Medicaid. OIG has worked closely with CMS to
expand our access to national Medicare claims data. This
improved access has enabled OIG to more effectively identify
Medicare fraud trends. And that allows our agents to more
efficiently investigate allegations of fraud. Unfortunately,
this is not the case on the Medicaid side.
Our inability to access timely comprehensive data impedes
effective oversight of the program. CMS's Medicaid statistical
information system is the only source of nationwide Medicaid
claims data, and weaknesses in the system limit its usefulness
for effective oversight and monitoring of the program. For
example, the system does not capture many of the data elements
necessary for us to detect fraud, waste, and abuse.
As in the Maxim case, Medicaid presents our investigators
with unique data challenges. Why? It's because the data does
not exist in a single location. Rather, it exists in
independent systems across 50 States and the District of
Columbia. We understand that CMS is taking steps to collect
more timely comprehensive data from the States, and we hope
they move quickly to accomplish this goal.
State Medicaid fraud control units have been valuable
partners in our investigative efforts. Our number of joint
investigations has nearly doubled over the last 5 years. And to
improve on our success, we believe that Medicaid fraud control
units could also benefit from enhanced analytic capabilities
with regard to their State Medicaid data. This will lead to
improved oversight and enforcement.
In closing, we need to make a lasting impact on Medicaid
fraud. The need has never been more important. The
Congressional Budget Office estimates that in 2014, 16 million
new recipients will be added to the Medicaid program.
Therefore, it is especially critical that OIG have access to
timely comprehensive data in order to protect these Federal and
State dollars.
Together, we must work to eliminate vulnerabilities and
ensure that we are positioned to effectively oversee this
program for years to come. Thank you for your support of our
mission and I would be happy to answer any questions you have.
[The prepared statement of Mr. Cantrell follows:]
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Mr. Platts. Thank you Mr. Cantrell.
Ms. Yocom.
STATEMENT OF CAROLYN YOCOM
Ms. Yocom. Mr. Chairmen, ranking members, and members of
the subcommittees, I am pleased to be here as you discuss
improper payments in fraud in the Medicaid program. My remarks
today will focus on an important challenge as well as
opportunities that CMS faces, given its expanded role in
Medicaid program integrity.
In 2005, GAO testified that CMS needed to increase its
commitment to helping States fight Medicaid fraud, waste, and
abuse. That year, Congress passed the Deficit Reduction Act,
which provided for the creation of the Medicaid Integrity
Program and other provisions. The Patient Protection and
Affordable Care Act gave CMS and States added responsibilities
and new oversight tools. Thus CMS's spending for and attention
to Medicaid program integrity activities has grown, primarily
through the creation of the Medicare Integrity Group or the
MIG.
The MIG gradually hired staff and contractors to implement
a set of core activities, such as reviewing and auditing
Medicaid provider claims and providing education to State
officials and Medicaid providers. In 2005, CMS had
approximately 8 staff years focused on program integrity. Today
it has over 80 of the 100 statutorily required positions
authorized in the DRA.
However, more is not necessarily better. A key challenge
faced by the MIG is the need to avoid duplication of Federal
and State program integrity efforts, particularly in auditing
provider claims, which has been primarily a State function. The
amount of overpayments that the MIG identifies is not
commensurate with its costs or with amounts identified by some
States. For example, in a similar number of audits, New York
reported identifying more than $372 million in overpayments
compared with $15 million identified through the national
provider audits.
In 2011, the MIG reported plans to redesign its national
provider audit program to allow for greater coordination with
States on data policies and audit measures. While it remains to
be seen whether these changes would help identify additional
overpayments, the proposed redesign appears promising. In
particular, the collaborative projects currently underway in 13
States would first allow States to augment their own resources;
second, address audit targets that States have too few
resources to handle; and third, assist States with less
analytic capability. These projects could help avoid
duplication as well as strengthen Federal and State efforts.
CMS's expanded role also offers the opportunity to enhance
State program integrity efforts, but more consistent data are
needed. For example, two core activities of the MIG, triannual
comprehensive reviews and annual assessments, collect similar
information such as States' program integrity planning,
prevention activities, and recoveries. However, some of the
data that States report show implausible and/or inconsistent
State responses. Improved data would allow CMS to further
target assistance to States through the MIG's primary training
initiative, the Medicaid Integrity Institute. Not only is the
training offered at no cost to States, but such venues provide
opportunities for State program integrity officials to develop
relationships with their counterparts in other States. Such
relationships are critical in a program like Medicaid where
providers and beneficiaries can cross State lines and repeat
improper or even fraudulent behaviors.
Since fiscal year 2008, the institute has trained over
2,200 State employees. Instituted expenditures are a small
portion of MIG's spending, just $1.3 million of its $75 million
budget. Yet they could greatly increase networks across States
and disseminate best practices for ensuring appropriate
payments in Medicaid.
For many years, Medicaid has been a critical part of the
health care safety, providing health care services to some of
our Nation's most vulnerable populations. This heightens CMS's
responsibility to ensure that billions of program dollars are
appropriately spent. In these difficult economic times, it
creates an even greater imperative. The challenges of
coordination are significant for States and for CMS. No less
significant is the need for improved data to prevent
overpayments.
But there's also an opportunity for the MIG to work with
States to disseminate and improve oversight of program spending
and hopefully decrease the level of improper payments. This
concludes my prepared remarks. I'd be happy to answer any
questions you or members of the subcommittees may have.
[The prepared statement of Ms. Yocom follows:]
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Mr. Platts. Thank you, Ms. Yocom.
Ms. Melvin.
STATEMENT OF VALERIE MELVIN
Ms. Melvin. Chairmen Platts and Gowdy, Ranking Members
Towns and Davis and members of the subcommittee, thank you for
inviting me to testify at today's hearing on fraud and improper
payments in the Medicaid program. At your request, my testimony
will summarize findings from a report that we issued earlier
this year on CMS's efforts to protect the integrity of the
Medicare and Medicaid programs through the use of information
technology.
Specifically, in June 2011, we reported on two programs
that CMS initiated in 2006 to help improve the ability to
detect fraud, waste, and abuse: The integrated data repository
or IDR, which is intended to provide a single source of data on
Medicare and Medicaid claims and the one program integrity or
one PI system, a Web-based portal that is to provide CMS staff
and contractors with a single source of access to the data
contained in IDR as well as tools for analyzing that data.
Our work examined the extent to which IDR and one PI had
been developed and implemented as well as CMS's efforts to
identify, measure, and track benefits resulting from these
programs. We also provided recommendations on actions CMS
should take to achieve its goals of reduced fraud and waste.
Regarding IDR, we noted that this data repository had been
in use since 2006. However, it did not include all of the data
that were planned to be in the system by 2010. For example, IDR
included most types of Medicare claims data but no Medicaid
data. IDR also did not include data from other CMS systems that
can help analysts prevent improper payments. Moreover CMS had
not finalized plans or developed reliable schedules for efforts
to incorporate these data.
Further, while one PI had been developed and deployed, we
found that few analysts were trained in using the system.
Program officials had planned for 639 analysts to be using the
system by the end of fiscal year 2010. However, as of October
2010, only 41 were actively using the portal and tools. None of
these users included Medicaid program integrity analysts.
We pointed out that until program officials finalized plans
and schedules for training and expanding the use of one PI, the
agency may continue to experience delays. With one PI, CMS
anticipated that it would achieve financial benefits of about
$21 billion. As we have previously reported, agencies should
forecast expected benefits and then measure the actual results
accrued through the implementation of programs.
However, CMS was not positioned to do this. As a result, it
was unknown whether the program had provided any financial
benefits. CMS officials told us that it was too early to
determine whether the program had provided benefits since it
had not met its goals for widespread use.
To help ensure that the development and implementation of
IDR and one PI are successful in helping CMS meet the goals of
its program integrity initiatives and possibly save tens of
billions of dollars, we made several recommendations to CMS.
Among our recommendations was that the agency finalized plans
and schedules for incorporating additional data into IDR,
finalized plans and schedules for training all program
integrity analysts intended to use one PI, and establish and
track outcome-based performance measures that gauge progress
toward meeting program goals. In commenting on a draft of our
report, CMS agreed with our recommendations. The agency's
timely implementation of these recommendations could lead to
reduced fraud and waste and overall substantial savings in the
Medicare and Medicaid programs. This concludes my oral
statement. I look forward to addressing your questions.
[The prepared statement of Ms. Melvin follows:]
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Mr. Platts. Thank you, Ms. Melvin.
We will begin questions. I will yield myself 5 minutes to
begin this round of questions. And I certainly appreciate all
four of your testimonies and your efforts in regard to
protecting American taxpayer funds and ensuring that we are
properly caring for and providing services.
Ms. Brice-Smith, I am going to begin with you. And I
certainly appreciate the breadth and depth of your testimony on
what we are trying to do. I have to be honest with you that I
am surprised after hearing the testimony of Mr. West that as a
representative of CMS, you did not acknowledge how badly we
failed him and how I believe CMS--specifically our government
in total--owes him an apology. And I worry that that's a sign
of trouble for us in trying to address this issue because we
can have great programs in place, but if we're not listening to
the beneficiaries--I mean, having a hotline's great. Teaching
beneficiaries how to detect and report fraud is great. He did.
And we didn't do anything in response.
So I do have to express that I was disappointed that you
did not acknowledge what he went through to make sure that we,
as a government, did right by the taxpayers and by him. Because
if he was denied services, how many other citizens are out
there who are being denied services because of fraudulent
conduct? So more of a statement there than a question, I guess.
But specific to his case is, to the best of your knowledge,
has CMS begun and conducted any investigation of why we did not
heed Mr. West's claims of fraud and that it resorted to him
hiring a private attorney to have it investigated?
Ms. Brice-Smith. When I heard Mr. West's story, I was very
much touched by what he said. And I was trying to figure out
what was the root cause and how did that happen. But when he
said that he communicated with State officials, I felt like
that was appropriate. Medicaid is run by the States. And he
indicated he spoke with local people. That was in 2004. And as
Ms. Melvin indicated, we had less than six full-time
equivalents that even--there was no Medicaid Integrity Group
back in 2004. The DRA didn't happen until 2005. We started the
building of that infrastructure for staff in 2006. So there was
no existence of Federal level contact, if you will. We had--
prior to 2005--six full-time equivalents that had no funding,
that supported the States when questions came into CMS. So
there was really no structural vehicle at the Federal level in
2004.
Mr. Platts. I think the point's well made. And that's what
your testimony is for, we are trying to do much better today at
the Federal level.
But I guess while we didn't have it in 2004 in place, New
Jersey, as the operator or the provider of the Medicare
services that we're helping to fund, did and was responsible.
And I guess what I'm saying, have we even gone back to New
Jersey and said, Listen, this is a case where you blatantly
failed somebody that we're paying you know a huge share of you
to provide this service; and because of your failure, you know,
tens of millions of dollars was being lost and but for that
private citizen's efforts would have been forever lost. So what
has New Jersey done--in other words, what did New Jersey do to
better ensure that it's not repeated?
And even though that may be at the State level in addition
to what we're doing, CMS has a responsibility to make sure they
are doing that. Have we made those types of inquiries to New
Jersey to make sure they're doing much better?
Ms. Brice-Smith. Yes, we have. We did contact New Jersey
and request information about what happened and what was their
information in terms of how the communications took place.
We're still looking at that information to understand what
actions that they plan to take to mitigate that in the future.
In the meantime, CMS has taken a number of actions related
to how to report fraud, who are the contacts in the State, even
through the 1-800 Medicare line. There's a clear vehicle for
people to be able to reach us at any time.
Mr. Platts. And I think that's critically important because
of the efforts of trying to encourage beneficiaries who, as we
talked with the previous panel, are truly on the front lines.
They are the ones who see the inaccurate information, you know,
if they're diligent as Mr. West was and those are the ones who
are suffering the consequences if they're fraudulently taken
advantage of because of denying services.
So having a system in place is one thing, but making sure
we respond to the information that comes in to that system is
going to be key.
A final question here and then my time is going to be up.
Regarding Maxim itself. Can you--I don't know if you have it
here with you today or if can estimate. For this year, fiscal
year 2011 that just ended, roughly how much money did Maxim
receive under the Medicaid program nationally?
Ms. Brice-Smith. I would have to research that question. I
don't have that information.
Mr. Platts. If you could provide that. My guess is it's
hundreds of millions, if not billions of dollars as a provider
in 41 States, they're probably receiving. And as Mr. Cummings
in the previous round specified, it just is, to me, incredible
that someone who knowingly, intentionally a company defrauded
the American people to the tune of tens of millions and if not
more--this is what we know of--and would never have known of
but for the heroic efforts of a private citizen that that
company is still receiving hundreds of millions, if not
billions, of dollars from the American taxpayers to provide a
service. And it just, to me, sends a terrible message, as Mr.
Cummings said, that companies are going to just look at this as
the cost of doing business. Hey, if we get caught, we just pay
a fine and we just factor that in, but we keep getting the
business. And in the real world, the private sector, if you
defrauded somebody $130--$150 million, I guarantee you, you are
not going to be doing business with that company anymore. And
they shouldn't be doing business with the American taxpayers.
So we need to do much better. And I know there's also a
criminal side that we may get into with Mr. Gowdy.
So my time is well expired. I yield to the ranking member,
Mr. Davis from Illinois.
Mr. Davis. Thank you very much, Mr. Chairman. The
Affordable Care Act put into place various provisions. And of
course, it was just passed last year to help fight fraud and
abuse in Medicare and Medicaid. The Congressional Budget Office
estimates that these provisions, when fully implemented, will
save the American taxpayers $7 billion over the next 10 years.
Ms. Brice-Smith, can you describe the tools and technical
changes to the anti-fraud laws that are included in the
Affordable Care Act that will directly benefit your office?
Ms. Brice-Smith. Sure. In the Affordable Care Act, it
offered up several things related to provider enrollment and
screening. And we believe that that's the best tool for making
sure that we keep people who are more fraudulent or fraudsters
out of the program and also be in a place to reverify and
validate them over time to make sure that we can keep them out
of the program or adjust our scrutiny of them through risk
assessments, if you will, over time. So that's part of that.
Then there is the payment of suspension activity with
respect to changing the level of proof, if you will, from a
reliable evidence-based allegation to a credible allegation;
that will also give us additional flexibility.
Then there's also the opportunity for a temporary
moratorium that can be effectuated through that vehicle as
well.
And also Congress recognized the shortcomings of the data,
as we've recognized the shortcomings of the data, in the
Medicaid program and offered up section 6504 that will allow us
to strengthen the data elements that we desire and need for
program integrity purposes.
Mr. Davis. Thank you. Mr. Cantrell, what specific aspects
of fraud detection do you think will be most positively
impacted by the activity that has been included or the
provisions included in the Affordable Care Act?
Mr. Cantrell. One of the things that was included in the
Affordable Care Act are stiffer penalties, stiffer sentences
for those convicted of health care fraud. And we believe, as
was discussed during the first panel, that stiffer sentences
are important in deterring ongoing fraud.
Mr. Davis. Let me ask you and Ms. Brice-Smith, knowing that
there are some of our colleagues who have put forth efforts and
have continued to push for a repeal of the Affordable Care Act,
if that was to happen, do you see your organizations being
affected in any way, certainly negatively affected if we were
to repeal the Affordable Care Act?
Ms. Brice-Smith. Before the Affordable Care Act, we had
improper payments. One would argue that I think we would still
have the concerns around improper payments. I think we are
working very diligently to address them.
I think many of the concerns I think around repeal seem to
be around the growth or the expansion of the programs, and what
I have seen from Congress is a recognition that you have
provided commensurate administrative tools and authorities to
expand our efforts commensurate with that growth.
Mr. Cantrell. We did receive additional funding for our
organization through the Affordable Care Act, and we were able
to hire almost 100 new investigators so that was certainly
welcome.
Mr. Davis. Could I suggest that the Affordable Care Act
strengthens your ability to weed out fraud and abuse in
Medicare and Medicaid?
Ms. Brice-Smith. I would agree with that, yes.
Mr. Cantrell. Some of the tools and certainly the
additional agents on the ground will definitely assist us in
weeding out additional fraud.
Mr. Davis. Thank you very much and thank you Mr. Chairman.
Mr. Platts. I thank the gentleman for yielding back.
I recognize the subcommittee chairman Mr. Gowdy.
Mr. Gowdy. Thank you, Mr. Chairman.
Ms. Brice-Smith, which States have the highest rate of
improper payments?
Ms. Brice-Smith. That is a very good question. We are aware
of which States they are. We do what we refer to as a payment
error rate measurement that bans 17 States on a 3-year cycle.
We engage those States and expect corrective actions from those
individual States. But we do not release it publicly.
Mr. Gowdy. Well, I was looking for the name of a State
because it strikes me that you want to put your law
enforcement/prosecutorial resources where there is the highest
level of graft or fraud or waste or abuse.
So which five States would have the highest improper
payment ratios?
Ms. Brice-Smith. We would gladly share any of those data
with our law enforcement partners, but we usually do not
disclose them.
Mr. Gowdy. Why? There are four States being sued right now
by the Department of Justice for having the unmitigated
temerity to want to enforce immigration laws. Why the
reluctance to say which States can't get their act together
with respect to Medicaid payments? What is the reluctance?
Ms. Brice-Smith. I think it could be perceived as somewhat
punitive. I think there is a desire by CMS to work with our
State partners to address the improper payments in a meaningful
way. We are continuing to do that. The States know who they
are. We work with them on a corrective action plans. We follow
up on that.
Mr. Gowdy. Do this for me then: Tell me are there any
States that on an annual basis just don't seem to get their act
together? I can understand not wanting to dime out an episodic
State that just had one bad year but then later engaged in
corrective actions. Are there any States that just have a
history of Medicaid overpayments?
Ms. Brice-Smith. I cannot for certain give you the repeated
findings because it is early in the per-measurement cycles. We
have now completed the fourth year of measuring the States, so
we have passed the cycle of the first 17 States now being
examined for the second time.
Mr. Gowdy. So you know who the States are, agreed?
Ms. Brice-Smith. I do not personally know who the States
are, but my colleagues do.
Mr. Gowdy. Someone does know, and they've made the decision
to not publicize the States that are doing the worst job?
Ms. Brice-Smith. I think our desire is to work with our
State partners, and we are continuing to do that in a
meaningful way, and we will continue to do so.
Mr. Gowdy. Mr. Cantrell, I was under the mistaken
impression, apparently, that the amount of loss impacted the
amount of time you went to jail. Apparently, that's not the
case, because in the Maxim case, other than watching television
at home for 3 months, I only saw one person go to a Federal
Bureau of Prison. And that was for what, 5 months? So has that
changed since I left the U.S. Attorney's Office? Is the amount
of loss or the amount of the fraud no longer a factor in the
length of a prison sentence?
Mr. Cantrell. The amount of fraud is a factor in the prison
sentence, and it would depend though on the individuals who
were convicted the amount of fraud that was actually attributed
to them.
Mr. Gowdy. They still don't have relevant conduct.
Mr. Cantrell. There is relevant conduct that is taken into
consideration.
Mr. Gowdy. They do in the drug cases, they take the lowest
mule in a cocaine conspiracy, and they dump all the drugs they
can possibly dump on them. But it doesn't happen when it's rich
folk committing the crime.
Mr. Cantrell. I don't think that is the case, sir. I think
a recent example we are seeing increased sentences throughout
the country----
Mr. Gowdy. Let me ask you about that. Let me ask you about
that. How many motions for upward departure are you aware of
being filed?
Mr. Cantrell. I don't have that information, sir. That
would be the Department of Justice.
Mr. Gowdy. Can you get that for me? Can you find out?
Because that is a really good indicator to me about how serious
someone is about criminal activity, whether or not they are
going to move that the sentence be higher than what the
guideline was? If you can tell me where to find that, I will be
happy to do that myself.
Mr. Platts. If the gentleman would yield.
Mr. Cantrell, if you could submit that to the committee for
the record, that would be great.
Mr. Cantrell. We will have to get that information from the
Department of Justice, but we will work with them to identify
what we need to get and provide it to you.
Mr. Platts. I thank the gentleman for yielding.
Mr. Gowdy. Thank you, Mr. Chairman.
My final question is, do you believe there is a presumption
in favor of criminal prosecution over civil enforcement? When
you prosecute somebody criminally, not only can you recoup the
losses, but you also get to punish people. So is there a
presumption in favor of criminal over civil?
Mr. Cantrell. That is our presumption in the Office of
Inspector General, Office of Investigations.
Mr. Gowdy. What about the U.S. Attorney's Office in the
Department of Justice?
Mr. Cantrell. I believe that is also the case with the U.S.
Attorney's Office when there is evidence to support a criminal
indictment.
Mr. Gowdy. You heard the facts of Mr. West's case. That
wouldn't be a hard case for you and I to win would it?
Mr. Cantrell. I can't comment on the specifics of that.
Mr. Gowdy. Sure you can. He just announced it to the whole
world. Even you and I can win a case where you are billing
someone while they're at the U.S. Attorney's Office for a
meeting; you and I could win that, couldn't we?
Mr. Cantrell. That case, it sounds obvious, there are I'm
sure several factors that we went into decisions at the U.S.
Attorney's Office to determine who to prosecute and who not to
prosecute.
Mr. Gowdy. I yield back.
Mr. Platts. I thank the gentleman for yielding back.
The ranking member of the full committee, Mr. Cummings,
recognized for 5 minutes.
Mr. Cummings. To Ms. Brice-Smith and to Mr. Cantrell, as
you heard, I was very upset that a kid from Baltimore,
thousands of them by the way, thousands, can face a lifetime of
economic punishment over a few hundred dollars stolen, yet a
company like Maxim can be found guilty of stealing from
taxpayers, pay a fine and continue to bill the Federal
Government for millions of dollars of services each year.
Ms. Brice-Smith, do you share that sentiment? Something is
wrong with that picture.
Ms. Brice-Smith. I'm equally concerned about the equity
that you have pointed out.
Mr. Cummings. Yeah, and who has the power, by the way, do
you all have the power, who has the power to debar these
companies?
Mr. Cantrell. We do have the power to exclude providers.
Mr. Cummings. Have you ever done it can?
Mr. Cantrell. Certainly, we do.
Mr. Cummings. Why not this company?
Mr. Cantrell. The decisions on who to exclude is based on
several factors, including access to care as well as the
specific conduct and the expectation of whether they will
continue the bad behavior or not. We utilize, in cases where we
do not exclude corporations, we utilize corporate integrity
agreements, in this case, there was a deferred prosecution
agreement where we will monitor this corporation in hopes to--
--
Mr. Cummings. To hell with monitoring. They've already done
it. If you had somebody working in your house, cleaning your
house and you came home and your wife's bracelet that was worth
$50 is missing, you don't hire them again. Duh.
What do mean deferred prosecution? This company needs to
go. How many other companies are like this or, in other words,
have defrauded the people of the United States of America, have
taken away services from people like our witness, our earlier
witnesses, and are still doing business with Medicaid? How
many?
You're the IG. You sat up here and you said all these
wonderful things, sounds nice, oh we're doing this, and we're
doing that. That's real nice. But what I'm trying to tell you
is that your normal is not good enough. If you're going to come
in here with a badge on your chest and talk about what you've
done in a company that's taken millions of dollars away from
taxpayers is still doing business, and they come in 41 States
and have said, all right, we're ready to do business again,
yeah, we've stolen from you, but we're ready to go. And we say,
okay, all right, we'll do it. Something is wrong with that
picture, and you're the IG. So is that the normal that we
should expect?
Here we are slashing budgets, people talking about slashing
Medicare, slashing Medicaid, slashing Social Security, and
we've got some greedy folks who are out there stealing money
from people, and you're going to tell me that we have the power
to debar, and we're not using it? In what case will we use it?
Mr. Cantrell. We use it, on average, nearly 3,000 times
every year.
Mr. Cummings. Well, why not this company?
Mr. Cantrell. As I said, there are factors that play into
the decision, depending on whether they are criminally
convicted or whether there's going to be an impact to access to
care going forward and their expectation of whether or not they
will continue to commit the fraud or whether we believe that,
through compliance monitoring, we can bring them into the fold
and allow them to continue to provide services to the
population that they are serving.
Mr. Cummings. Oh. Oh. The fact that maybe they steal your
wife's broach, you say to her, or the cleaning person, you say
to her, oh, Ms. Jane or Mr. Johnson, yeah, you have stolen a
broach, but we want you to come back in because we think you
can be rehabilitated. We think the next time you have a
cleaning assignment, you won't take the diamond ring. Something
is wrong with that picture. And I guess what I'm trying to get
through to you is that that is not the normal. Our country is
better than that.
And there are people in my district that are suffering
because they can't get the services they need, but yet and
still, we are letting these companies do this.
And by the way, there are other situations in government
where people did much less than this, and they'd be out. Again,
I go back to the young boys and girls in my district, some of
whom live in my block and if they stole a $300 bike, they would
be punished for a lifetime, not a day, not an hour. And they
damn sure wouldn't get a multimillion dollar contract and
multimillion dollar contracts in 41 States.
I would be embarrassed to even come in here and stick out
my chest talking about what I have accomplished when the
company is still--they've got to be looking at us like we're
fools. So I'm hoping that we'll be able to work in a bipartisan
way to get rid of Maxim because see, all of this stuff you're
talking about, it does not matter if the end result, Mr. Gowdy
said part of it--I'm almost finished, Mr. Chairman--part of it
is making sure somebody goes to jail, but there is another
part.
That other part is saying to them that we are not going to
allow you to do business and screw over the American people any
more. That's the second part. And you can do all these things
you're talking about, bring in all the technology you want to
talk about all these wonderful things you're doing, but if
there's not that end result, do you know what they do? They
just come right back, and they pay the price, but they come
right back.
Thank you, Mr. Chairman.
Mr. Platts. I thank the gentleman.
The gentleman from Arizona, Dr. Gosar, is recognized.
Mr. Gosar. I got to tell you, this is great playing the
closer on these two gentlemen right here. I couldn't agree
more. Being a health care provider who did Medicaid for 7 years
and left it for all the reasons they talked about, I did not
stop; I just provided it for free.
This system, we are starting to talk about access to care,
and the only provider is those that are thieving in one of the
most densely populated parts of the country is absurd to me
folks, absolutely absurd to me.
So I'm going to ask you something real quickly. I want to
give you the opportunity to give yourself a grade in front of
the American people on how you think you have done this job in
regards to policing yourself.
Mrs. Brice-Smith, give yourself a grade.
Ms. Brice-Smith. In light of our youngness of our program--
--
Mr. Gosar. I don't really care. Give me a grade.
Ms. Brice-Smith. C.
Mr. Platts. Mr. Cantrell.
Mr. Cantrell. I would give us a B. I know--we know there is
much more fraud out there that we need to attack, but we are
improving every year. This last year was a record year with
720-plus criminal convictions, which is over 50 more than our
previous record year, and $4.6 billion in recoveries through
these criminal and civil fraud investigations.
Mr. Gosar. I'm going to interrupt you there, because I
think what you have to do is you are working on behalf of the
American people, and I doubt that they would give you a above a
D. Don't you agree with me?
I think so. I have been out there on Main Street walking
this, and so I understand this very well. Because there is a
missing component; the process, the whole process is broken
here because the problem for this gentleman, Mr. West, here
would have been a lot less if he was empowered to help make
those decisions on the ground. And we have failed to do that.
Let me ask you a question, Ms. Brice-Smith, when we were
looking at these innovative ideas of making some change, did
you contact Visa or MasterCard on what may be some ideas they
may have to reduce some of the fraud, waste and abuse?
Ms. Brice-Smith. CMS has engaged credit card companies in
using the analytics and tools that they have available and try
to apply that in the Medicare claims.
Mr. Gosar. How would you look at that as far as the IT
systems? I know that in a lot of the States in the IT system
its lowest bid buys. That is not usually a good investment, as
far as I'm concerned. Dentists love their toys, okay, and the
better the IT, the better, and so sometimes it's not the most
frugal decision that is always is better.
Would you agree?
Ms. Brice-Smith. Yes.
Mr. Gosar. Do you work with the States in allowing them to
have the flexibility to working with that?
Ms. Brice-Smith. Yes, we do. In fact, we have incentivized
the States to upgrade and enhance their IT systems for the
future. We have done that through setting what we refer to as a
matching a 90-10 match, where they get additional funding, but
we apply criteria or expectations to that funding so we can
have a better system at the State level for the Medicaid
claims.
Mr. Gosar. So when you start looking at, I look at these
two gentlemen looking at criminal prosecution, and very few
people or fewer people, I should say, in the criminal division
really want to renege on their rules of parole. And the reason
I look at that and I bring it to point is called bounty
hunters, is because they have a lot more eyes on the prize.
There are some incentives. And it seems to me when you lot
these F maps on reimbursement rates, we ought to be engaging
the States for activity, as well as patients.
The first person who is going to know is the patient. And
giving them some oversight on their bill. That's why it needs
to be in hand. And I think that what we are trying to do is
we're putting a Band-Aid here. And I will tell you I'm one of
these people speaking I'm tired of Band-Aids here. I came to
Congress to recorrect things. I think trying to reconstruct
doing the same things over and over and expecting a different
result is insanity, absolutely insanity.
But we need to start empowering patients. And that's not
what you've done. There is no part of this--that does not
empower these patients. And I can tell you I have firsthand
knowledge of that. I served our dental patients who couldn't be
seen by a federally qualified health center. I can repeat
stories, not as bad as this because they're dental, but I can
repeat this all day long. It's sad. Because I think what we
ought to be doing is sharing that information all across the
sandbox, not playing and not explaining who is a bad player
here, and allowing them to be still participating to the rules
is criminal. And it is criminal on our part for not changing
it.
That's what's wrong here.
So let me ask you a question, I want to see thinking
outside the box, how could you envision something that we could
empower patients like Mr. West to have some skin in the game,
to be one of those whistleblowers and to uphold their ability
and right? Give me some ideas, Ms. Brice-Smith.
Ms. Brice-Smith. We have already observed that there are a
handful of States that have developed sort of reward programs,
if you will, that are short of sort of the qui tam approach of
the False Claims Act but will give cash for tips, if you will,
related to health care fraud.
So there are already a handful of innovative States that
have recognized that that is an additional insight and benefit
to fighting fraud.
Mr. Gosar. Do you have an insider newsletter that says,
hey, listen, these State are on cutting edge, days to crime,
days to time?
Ms. Brice-Smith. We are using our education to be able to
communicate and outreach that information. We also use best
practices summaries for the States so that we can inform other
states of what States that are being innovative are doing. So
we use our Web sites, we use forums and meetings and our
Medicaid institute to communicate that information.
Mr. Gosar. Thank you. I'm out of time.
Mr. Platts. I thank the gentleman.
I'm going to go to a second round here, while we have the
opportunity for a few more questions. Yielding myself 5
minutes. First, to follow up on the questions of Mr. Gowdy
about the States that are most egregious as far as improper
payments. It sounds like your contention is that information is
not subject to the Freedom of Information Act [FOIA].
Ms. Brice-Smith. I am not sure FOIA, but we could
certainly, I could certainly look into that.
Mr. Platts. Because I've shared his, I guess, statements
regarding the fact that American taxpayers are sending $275
billion to States to handle properly, and I think the American
taxpayers have a right to know which States are doing it well
and which States are not. And I'm not sure, I would be
interested in any additional feedback from CMS as to why we
don't want to share--often in cases of deadbeat dads, one of
the ways we can get them to pay is we publicize that they are
not paying. We shame them into paying.
Well, maybe we need to shame these States into doing a
better job of protecting the American people's money. So I do
look forward to further interaction with you and CMS on that.
Mr. Cantrell, on the specific case of Mr. West, appreciate
various factors. I find it somewhat unbelievable that we are
still doing business with this entity.
Can you tell me when, the 41 States, as part of the
agreement, in addition to Mr. West's case in New Jersey, was
there evidence of other similar misconduct in other States
regarding this company?
Mr. Cantrell. Yes, there was. The $250--$150 million was
not related specifically to Mr. West's scenario. It was a
broader issue.
Mr. Platts. In how many States would, if you know, or
estimate that we found this misconduct?
Mr. Cantrell. I don't know specifically. The answer to
that.
Mr. Platts. That, to me, would go to, if it was just New
Jersey, and we had some bad apples in one subdivision of this
large company, that is one thing to say we're not going to
punish the whole company. But if we found similar misconduct in
half, 20 of the 41 States, that's a very different story.
So if you could provide to the subcommittee how many States
and how many different States do we find similar misconduct by
Maxim?
Mr. Cantrell. I don't believe our evidence suggested that
they were committing 100 percent fraud across the country, but
I don't know how many States. But we will get back to you on
that.
Mr. Platts. We would welcome that information.
Also, looking at an analogy to the private individuals in a
criminal sense, when we have a victim, because most of our
focus has been about the money, which is very important, but it
is also about the care provided. As we heard from the testimony
of Mr. West, because of the fraud Maxim committed, it wasn't
just the money being lost; it was care to an individual. And
that is an even more serious crime in my opinion; because of
their intentional fraudulent conduct, they denied medical care.
Given that he was a victim directly, taxpayers in total
were victim, but he was a victim directly of their misconduct,
was he consulted or any other similar victims consulted as to
whether they felt the settlement with Maxim was acceptable
punishment for their wrongdoing?
Mr. Cantrell. I believe, as in most of these cases, the
attorneys for Mr. West, Ms. Page, would probably have been
participating in some of those discussions, yes. I don't know
specifically in this case how it was, but that is, I believe,
the routine.
Mr. Platts. So and they are given the opportunity to say,
yes, I sign off on this, or they are just aware of this.
Mr. Cantrell. I think they're aware of it. I don't know
that they have the ability to stop, stop it from happening.
Mr. Platts. In a sentencing in a court, there is a formal
process where the victims can offer testimony to the final
decider. Do you know if there is any formal process of that
nature where a victim can make a presentation to the U.S.
attorney directly that is going to make that decision?
Mr. Cantrell. Certainly, there is the opportunity. I don't
think there was a sentencing hearing in this case, so there was
no, may not have been the opportunity to do it in a courtroom,
but I believe it have would been conversations between U.S.
Attorney's Office and the assistant U.S. attorney, Mr. West.
Mr. Platts. My hope is that we make sure that is a formal
process, a routine part of any settlement. Because I do
acknowledge that you can have somebody who had some bad apples
in a small way, that's got to be factored in versus a more
deliberate across-the-board fraudulent case. But we have to
remember there are victims here that aren't just about money;
it is about care being denied, and that is a very serious crime
in my opinion.
I want to quickly get to two other issues. In your
testimony, Mr. Cantrell, you talk about the Medicaid
statistical information service, and you reference in your
testimony about some of the data is 12 years old? How common is
that?
Mr. Cantrell. Sir, let me correct the record. That is 1 and
a half years old.
Mr. Platts. Twelve years just seems so outrageous. But even
1 and a half, when you talk about then trying to correct it, it
goes to the point of I guess what you talked about and Ms.
Brice-Smith of trying to much more quickly identify, respond to
and prevent, because 1 and a half years even is the money is
long gone.
Mr. Cantrell. We agree. The more timely the data, as close
as we can get to real time, the better we are. On the Medicare
side, as I said, we have a lot more success to talk about. We
use that data, which is much more timely to mine for fraud,
identify areas where we have hotspots of fraud. We had the
strike force model, which we utilized. We deploy those to areas
of the country where there is high instances of the fraud, such
as south Florida, Bronx, New York, Detroit, Los Angeles,
Dallas, Houston.
Mr. Platts. Seeking to replicate where you have had success
for Medicare to Medicaid?
Mr. Cantrell. Absolutely.
Mr. Platts. And that's one of the things that came through
to me in preparing for this is that it seems like there is
almost a conscious decision within CMS to devote much more
attention and resources to Medicare fraud than to Medicaid
fraud. Is that a fair, until the last, say, 5 years. Is that a
fair statement?
Mr. Cantrell. I would have to defer to my colleague on that
question.
Mr. Platts. Ms. Brice-Smith, is that it, that we are kind
of late to the game on the Medicaid side?
Ms. Brice-Smith. I think you're recognizing certainly the
support that Congress gave us through DRA in that 5 year
period.
But I think one could take that a step further. The
Medicaid program was structured to be administered day to day
by the States, so those claims are going to the States or their
fiscal agents. And we are engaged at the postpay with the
subset of data to try to oversee the----
Mr. Platts. I think a very valid point. In the Deficit
Reduction Act and as Mr. Davis well reflected in the Affordable
Care Act, there is a greater understanding here in Washington
in the last 5 years that maybe it's State administered, but
bottom line is we are paying the majority of the bill. And so
we need to be a little more proactive in protecting the
taxpayer funds. And that is why I said I think we're late to
the game, but we are finally getting there and being more, I
think, hands on in trying to protect those dollars.
I know, I'm one last question. I appreciate my colleagues'
indulgence here with being way over my time, and Ms. Yocom, in
your testimony, you talk about the, again, the Medicaid
statistical information system and you talk about what States
are supposed to provide. But it says MSIS does not contain
billing information such as referring provider's identification
number or beneficiary's name. The less information provided,
the harder it is to say, hey, this provider, obviously, is
billing for an inordinate number, and that would be one of the
flags that would jump out that there may be something askew
here.
Can you try to address, based on your knowledge, why aren't
we requiring States to provide all of that information to make
the MSIS system a more useful tool, to be more timely, but also
more comprehensive?
Ms. Yocom. I can't speak to why we don't require it, but I
can speak to the effect of not having that information
available. As you say, it's impossible to do some of the data
mining techniques on things that are done routinely on the
Medicare program.
GAO does have some work underway right now, and that is
just looking at the States' capabilities and their activities
in this regard.
Mr. Platt. Thank you.
Ms. Brice-Smith. May I speak a little bit to that?
Mr. Platts. Yes.
Ms. Brice-Smith. I just want you to be aware that we are
taking active actions to actually enhance that data. We are
referring to it as transformed MSIS data, which is largely
expanded. We're currently pilot testing it now to test drive,
if you will, if that data will give us a better output in terms
of program integrity activity among 10 volunteer States. So we
are very excited about that.
Mr. Platts. My hope is that that is successful, and I will
say more successful than IDR and the one program integrity,
which many years in doesn't seem that we're getting the results
that were intended and certainly not in the timeframe, and I am
way over my time.
Mr. Davis, I don't know if you had other questions. I yield
to the ranking member, Mr. Davis.
Mr. Davis. Thank you very much, Mr. Chairman.
The cap on services and denial of his dental needs were a
major red flag to Mr. West that something was awry, that
something was wrong, something was not right with his benefits.
Ms. Brice-Smith, to those patients without a similar cap,
are they less likely to ensure that their services are properly
being rendered and billed to Medicaid correctly?
Ms. Brice-Smith. I think what we've learned about fraud if
you, many fraudsters can submit a very clean looking claim. And
you have to examine many other factors, such as complaints from
beneficiaries, such as our own data analytics in terms of
patterns and trends to see, does this really make sense? Is
this even feasible that he could have used that many services
for example.
Mr. Davis. The 1-800 Health and Human Services tips hotline
is widely publicized as an avenue that individuals can use to
provide information that assist in combating fraud waste or
abuse in Federal health care programs.
While the extent of health care fraud is estimated to be in
the billions of dollars each year, HHS emphasizes that Medicare
and Medicaid beneficiaries are the frontline of defense in
detecting Medicare and Medicaid fraud because they have
firsthand knowledge of the health care services they have
received.
Mr. West contends that there was no follow-up to his
hotline calls.
So, Mr. Cantrell, could you provide information on the 800
HHS tips hotline, what procedures are followed, and any
timeframes there might be to handling or responding to
complaints?
Mr. Cantrell. Sure. We have the 1-800 HHS tips telephone
line, which in this case, Mr. West, we don't believe he
contacted that. I think he called the State and local offices.
But we have that phone number. We also have a Web site, where
we collect complaints via Web forum. And between those two
mechanisms, we receive thousands of complaints every year. And
we have a process for evaluating those complaints, determining
the--whether there's enough information there to proceed with
an investigation or whether there isn't enough information.
In some cases, we refer those complaints out to our
regional offices for our investigators to look at further, and
in other cases, we refer them directly to CMS for
administrative review.
Mr. Davis. While our focus today has been on Medicaid
fraud, I will just point out that there is also fraud in the
private sector, in private health care. For example, in 2009,
United Health paid $350 million to settle lawsuits related to
the intentional manipulation of the reasonable and customary
rate. And also Pfizer, in 2009, paid a $2.3 billion civil and
criminal penalty for unlawfully marketing medications for
conditions that they had not been approved for by the Food and
Drug Administration.
Ms. Melvin, Ms. Yocom, could you comment on the challenges,
from GAO's perspective, of looking seriously into the private
sector fraud and abuse situations?
Ms. Yocom. Well, one of the challenges of looking into the
private sector, I think, particularly on Medicaid, might be the
Federal State partnership. That is an unusual circumstance to
begin with.
Data is also a huge challenge in terms of combating fraud.
And the steps that CMS is taking right now are in the right
direction, but there is a lot of work to be done there.
Mr. Davis. Ms. Melvin.
Ms. Melvin. From a technical perspective, in looking at
moving data, for example, from the States into the integrated
data repository, a lot of the key challenge stems or surrounds
having to make sure that the data is of a format, that the
their data elements follow formats that are consistent with the
IDR requirements for a file format. So there are technical
challenges in being able to do that.
One of the concerns we raised in our report is CMS's plan,
as we understand it, to try to bring all of the 50 States or 50
plus programs data into IDR by September 2014, I believe. The
concern we have is what type of planning they will have in
place to make sure that they can, in fact, bring that data,
consolidate it, identify all the data elements that are very
different.
We talked previously about disparate systems in all of the
different State programs, and those have to be addressed, the
differences in data have to be addressed and brought into the
system in a common format.
We have not seen plans yet. We haven't done the work that
would allow us to know how effectively CMS is handling that
particular challenge.
Mr. Davis. Thank you very much.
I want to thank all of the witnesses.
And thank you, Mr. Chairman, for this hearing. And I yield
back.
Mr. Platts. I thank the gentleman.
Dr. Gosar.
Mr. Gosar. So let me ask you a question. We are talking
about fraud. Is it just limited to the private sector, or is it
also for public health? Ms. Brice-Smith.
Ms. Brice-Smith. I believe that there are equally concerns
in private and public sector in terms of fraud, waste and
abuse. And I think evidence of that certainly is the American
Medical Association's own fourth annual report card on health
insurers, which showed their error rate was double, more than
double certainly the Medicaid error rate.
So when you think about extrapolating even that out, you're
talking about a savings in the private sector of $70 billion
right there. So I think that is an example.
I think with Medicaid and Medicare, two big high priority
programs, we certainly recognize that we tend to report and
disclose, and we are transparent, as we should be, but many
private companies don't have to be transparent about the
fraudulent activities that might be occurring.
Mr. Gosar. I also want to highlight federally qualified
health centers. I'm a dentist, just to make sure that we all
get that out there, that when we work a rule, for example, a
child, we numb up the whole quadrant, and then we only do one
tooth at a time because of the reimbursement rate. Would you
call that fraud? I do.
Ms. Brice-Smith. It sounds like there are a lot of things
going on that we would have to take into consideration in terms
of how that billing is occurring. It sounds like that might be
an effort to unbundle services possibly. It might draw some
suspicions depending on how----
Mr. Gosar. Do we have the same scrutiny on federally
qualified health centers as we do everybody else?
Ms. Brice-Smith. Certainly, they are inclusive. Although I
think our efforts tend to be focused on where we relieve the
greater Medicaid expenditures and the greater vulnerabilities
are and the categories of services that tend to drive the error
rate as we know it today.
Mr. Gosar. Ms. Yocom, do you believe that the Medicaid, the
State Medicaid systems are maybe too big and unwieldy the way
they are?
Ms. Yocom. Too big------
Mr. Gosar. To oversee properly? We're finding a big problem
here, and it just seems like it is unwieldy.
Ms. Yocom. I think the actions taken by the Congress under
the Deficit Reduction Act and under the Patient Protection and
Affordable Care Act meant a lot of activity which can help
oversee these programs in a better fashion.
To speak to the States on this, this is a partnership, but
CMS also needs to be able and willing to----
Mr. Gosar. Give up some of the rules.
Ms. Yocom. Yeah.
Mr. Gosar. It seems to me like we're talking about a broken
system. It is very obvious to me. I'm from rural Arizona. We
don't get paid. I can tell you right now, in dentistry, you
might be getting paid in 6 months. So I don't know too many
people that can make a business work that way. Somehow we do.
But in this government take-over of health care, that's the
only way I can talk about it, okay, we are going to dump
another 20 million people into this, into a broken system. I
don't see a lot of urgency in fixing this situation and looking
outside the box for solutions.
Do you agree with me?
Ms. Yocom. Well, it's not my position to agree or disagree.
Mr. Gosar. Do you agree it's broken right now?
Ms. Yocom. I think the facts are we need to do better on
program integrity, yes.
Mr. Gosar. And it's going to be problematic when you dump
another 20 million people in there.
Ms. Yocom. And the best approaches are, frankly, to keep
the payment from happening at the beginning.
Mr. Gosar. In Medicare, most of our Medicare patients are
older, right? They are very responsible, and they have been
empowered to look at bills, which gets back to my point about
empowering people in being part of that.
I want to go back to that and ask you a question.
Do any States use the advanced analytics, like the credit
card industry, that would spot in realtime an outlier of
billing practice before payment goes out the door?
Ms. Melvin. We have just started work to look at that, so
I'm not in a position yet to say exactly what States are doing.
We do know there are analytical tools that are being used in
some capacity by them at this point, but I couldn't speak to
how much or to what extent they are using them.
Mr. Gosar. Are there any rewards to utilizing the analytic
tool?
Mr. Melvin. The analytic tools, as I understand them, are
to be used to in particular to help prevent improper payment so
that it allows them to analyze, say, if you will, mined data
and really make calls on data that would help them to prevent
fraud and improper payments on the front end versus, for
example, the integrated data repository and one PI tools that
we have currently assessed, which are, at this point at least,
focused on the back end in terms of identifying improper
payments after they've been made.
Mr. Gosar. Indulge me just for a second. To me, it seems
like there is a common tool here I want to get to. It's on the
front end with a card empowering the patient to pay to make the
system a lot faster.
Because here is another part to this. There's also the
State board because when you defraud a patient on a billing
process directly when they're paying for it, it is also a
standard of care issue. So, therefore, there is a better
penalty that we're talking about.
So I think that there should be some aspect that we look at
the front end more so the back end in empowering patients. And
I think you've got something that works very, very well.
I come from a State that the dental board is extremely
active. Arizona is not one, two or three in the country for
population, but we are for activity, because patients are
empowered. And that's where we need to go. And I think that's
what we're failing to do is empowering people.
And I see constantly, I'm approached by the WIC program,
saying, Dr. Gosar, we need you to sign a contract? And I say,
why are we signing a contract? What's the deal? Why is it
taking a WIC mother six or seven visits just to see the doctor?
Something is wrong there. But there's also something right
because women are speaking out about that process.
And I think the more eyes on the prize, the stiffer the
penalties, I think the better opportunity that that happens in
empowering States to make those jurisdictions really helps and
I think standard of care is a remarkable tool.
Mr. Platts. I thank the gentleman.
And I would just comment, as we heard Mr. West's testimony,
it seems like not only empowering the patient, the beneficiary,
but in this case, we heard we discouraged and prevented them
from taking hold. So we do certainly do need to do much better.
And I think as we wrap up here kind of a final comment and
that's that we need to remember that there are two issues at
hand here. First, it's protecting tax dollars, and while
certainly we're glad to have the improper payment rate for
Medicaid to be down, we're still talking about $22 billion of
improper payments this last past year that we know of. And
again, using Mr. West's case, but for his individual heroic
efforts to uncover the fraud, we would not have known about
Maxim. And so how many other Maxims are out there that we don't
know about? The $22 billion is what we do know about of
improper payments. So when we talk about the whole number of
$125 billion, there are some estimates that that is probably at
least $200 billion, but we only know of $125 billion. So we
certainly have a lot of work to do.
I want to thank each of our witnesses for your testimony
here today, both your written testimony, which is, again, very
helpful in preparing, and your oral testimony here today, and
most importantly, for your efforts day in and day out.
I know we are all on the same page, that we are trying to
seek the same result, and I think that with the Deficit
Reduction Act of 2005, the Affordable Care Act language on
trying to better go after fraud, we're all collectively better
acknowledging and starting to commit the resources necessary to
protect ours, ensure the care that is earned and deserved is
provided and not denied inappropriately.
So I commend you for your efforts, and we certainly as a
committee look forward to continuing to work with you, both
subcommittees, work with you and your respective agencies on
this important issue.
We will keep the record open for 2 weeks for additional
information as was requested to be submitted, and we stand
adjourned.
[Whereupon, at 1 p.m., the subcommittees were adjourned.]
[The prepared statement of Hon. Gerald E. Connolly and
additional information submitted for the hearing record
follow:]
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