[Senate Hearing 111-1059]
[From the U.S. Government Publishing Office]
S. Hrg. 111-1059
PREVENTING AND RECOVERING MEDICARE PAYMENT ERRORS
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HEARING
before the
FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
INFORMATION, FEDERAL SERVICES, AND
INTERNATIONAL SECURITY SUBCOMMITTEE
of the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
of the
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
JULY 15, 2010
__________
Available via the World Wide Web: http://www.fdsys.gov
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
U.S. GOVERNMENT PRINTING OFFICE
58-400 PDF WASHINGTON : 2011
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri JOHN ENSIGN, Nevada
JON TESTER, Montana LINDSEY GRAHAM, South Carolina
ROLAND W. BURRIS, Illinois
EDWARD E. KAUFMAN, Delaware
Michael L. Alexander, Staff Director
Brandon L. Milhorn, Minority Staff Director and Chief Counsel
Trina Driessnack Tyrer, Chief Clerk
Joyce Ward, Publications Clerk and GPO Detailee
------
SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION,
FEDERAL SERVICES, AND INTERNATIONAL SECURITY
THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan JOHN McCAIN, Arizona
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri JOHN ENSIGN, Nevada
ROLAND W. BURRIS, Illinois
John Kilvington, Staff Director
Bryan Parker, Staff Director and General Counsel to the Minority
Deirdre G. Armstrong, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Carper............................................... 1
Senator Coburn............................................... 5
Prepared statements:
Senator Carper............................................... 41
Senator McCain............................................... 44
Senator Coburn............................................... 46
WITNESSES
Thursday, July 15, 2010
Kathleen M. King, Director, Health Care, U.S. Government
Accountability Office.......................................... 5
Deborah Taylor, Chief Financial Office and Director, Office of
Financial Management, Centers for Medicare and Medicaid
Services, U.S. Department Health and Human Services............ 7
Robert Vito, Acting Assistant Inspector General, Centers for
Medicare and Medicaid Audits, Office of Inspector General,
Department of Health and Human Services........................ 9
Libby Alexander, Chief Executive Officer, Connolly Healthcare,
Connolly, Inc.................................................. 25
Lisa Im, Chief Executive Officer, Performant Financial
Corporation.................................................... 27
Andrea Benko, President and Chief Executive Officer,
HealthDataInsights, Inc........................................ 29
Robert Rolf, Vice President for Healthcare BPO, CGI Federal, Inc. 31
Romil Bahl, President and Chief Executive Officer, PRGX Global,
Inc............................................................ 32
Alphabetical List of Witnesses
Alexander, Libby
Testimony.................................................... 25
Prepared statement........................................... 77
Bahl, Romil
Testimony.................................................... 32
Prepared statement........................................... 93
Benko, Andrea
Testimony.................................................... 29
Prepared statement........................................... 84
Im, Lisa
Testimony.................................................... 27
Prepared statement........................................... 81
King, Kathleen
Testimony.................................................... 5
Prepared statement........................................... 48
Rolf, Robert
Testimony.................................................... 31
Prepared statement........................................... 90
Taylor, Deborah
Testimony.................................................... 7
Prepared statement........................................... 58
Vito, Robert
Testimony.................................................... 9
Prepared statement........................................... 69
APPENDIX
Recovery Audit Contractor Demonstration Vulnerabilities Progress
Report, submitted for the Record by Senator Carper.............
................................................................. 107
Questions and responses for the Record from:
Ms. Taylor................................................... 114
Mr. Vito..................................................... 131
Ms. Alexander................................................ 134
Ms. Im....................................................... 141
Ms. Benko.................................................... 145
Mr. Rolf..................................................... 154
Mr. Bahl..................................................... 159
PREVENTING AND RECOVERING MEDICARE PAYMENT ERRORS
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THURSDAY, JULY 15, 2010
U.S. Senate,
Subcommittee on Federal Financial Management,
Government Information, Federal Services,
and International Security,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:06 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Thomas R.
Carper, Chairman of the Subcommittee, presiding.
Present: Senators Carper and Coburn.
Also Present: Senator Klobuchar.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. The hearing will come to order.
I am going to say something as we lead off here today that
I do not think I have ever said at the beginning of a hearing,
and that is, this is going to be a great hearing. [Laughter.]
I really think so. We have some terrific witnesses. The
subject material is very important, and we have some good news
to talk about, and we have some lessons learned and some ideas
that we need to drill down on, and we can do some real good for
our taxpayers.
I was on the phone earlier today with a long-time friend, a
fellow who used to be Chief of Staff to former President Bill
Clinton, Erskine Bowles. Erskine, along with Alan Simpson,
former Senator from Wyoming, are heading up the Deficit
Reduction Commission (DRC), which has begun working in recent
months, and I think working effectively and with a lot of good
thought, a lot of energy. So my mind is on deficit reduction
today, and it is on the minds, it turns out, of a lot of people
in our country. So I swapped with Erskine some ideas that the
Commission is working on and some ideas that we are working on
literally in this Subcommittee, talking about here today.
But our focus today is to figure out what we are doing to
prevent fraud and waste with respect to Medicare, and we have
some witnesses that are going to tell us about what we are
doing and maybe what we could do even better.
The witnesses who are joining us today will tell an
important story. Medicare, as we all know, is a critical
component of health care in our Nation. I think there are some
45 million seniors that are participating. I am a baby boomer,
and while I am too young to participate in Medicare, someday I
hope to. And there are a lot of my colleagues, people born, as
I was, after World War II, who have the same expectation.
As a recovering Governor, I understand the unique
challenges that come along with running major programs.
Unfortunately, Medicare has seen its share of problems, and
while it has done a lot of good for people, we are mindful that
it certainly has its share of problems.
We know that no program is perfect, and I like to say if it
is not perfect, make it better. In fact, I just did a press
interview with a reporter, and we were talking about my four
core values: Figure out the right thing to do, just do it;
treat other people the way I want to be treated; if it is not
perfect, make it better; and if you know you are right, do not
give up. So those are my core values, and number three applies
here. If it is not perfect, make it better.
But we in Congress need to ensure that the more than $460
billion that we are spending, I think, this year in Medicare to
address health care needs of our Nation's senior citizens is
spent effectively and that we spend it in a cost-effective way.
Medicare, as we know, is on the Government Accountability
Office's (GAO) list of government programs at high risk for
waste, fraud, and abuse. There are several differing estimates
of waste and fraud within the Medicare program. The Office of
Management and Budget (OMB), for example, has reported $36
billion in improper payments by the Medicare program, according
to data gathered from--I think that was fiscal year (FY) 2009,
$36 billion in 2009. And I ought to point out that figure does
not include information about payments for the Medicare
prescription drug program, affectionately known as Part D, as
the administration is still struggling to determine the amounts
of wasteful spending in that part of Medicare. Again, that is a
part of Medicare that does a lot of good. But we are certain
that there is a fair amount of waste or fraud involved there,
and we want to try to identify that and go out and get it.
I am told that U.S. Attorney General Holder estimates that
Medicare fraud in total is probably more like $60 billion a
year rather than $36 billion a year.
So what has Congress and the Executive Branch done to
address these very real problems with waste and fraud? Well,
again, I want to start with some good news. In 2003, Congress
mandated a Recovery Audit Contractor (RAC) demonstration
program to examine Medicare fee-for-service (FFS) payments. And
through recovery auditing, internal auditors or outside
contractors are employed to go through an agency's books,
essentially line by line, to identify and recover payments that
are made erroneously, such as duplicate payments or payments
for medical procedures that never happened.
This innovative tool is widely used in the private sector.
We used it in State government in Delaware for the Division of
Revenue to go out and recover tax monies that were owed but not
being collected. And now we have seen successful use by the
Federal Government with Medicare.
The Recovery Audit Contractor program for Medicare began as
a demonstration program I think in March 2005. We started in
three States, California, Florida, I believe New York, and a
couple years later added Massachusetts and South Carolina. And
the program I think has been successful by almost anybody's
measure.
Looking back at 2006, we were starting with three, I think
later adding South Carolina and Massachusetts, but in 2006, $54
million was recovered. In 2007, we had about, we will say, a
quarter of a billion dollars recovered. In 2008, almost $400
million, in the five States was recovered. The program was
essentially down in 2009 or so for a little more than a year,
but that year we still collected almost $300 million while we
were standing down and doing kind of lessons learned, looking
back at the demonstration. But if you add up the money for
those 3 or 4 years, it was about $1 billion, which is real
money by our standards in Delaware, maybe even in Oklahoma.
Somewhere along the line, we said, ``Well, why don't we
step it up to 19 States? '' And then we said, ``Well, if this
works in three States, if this works in five States, if this
works in 19 States, maybe it would work in all of them.'' And
there is a provision in the newly enacted health care law that
the President signed earlier this year to expand the program
not just for Medicare Part A and B, doctor and hospital stuff,
but also Part C, which is Medicare Advantage, and Medicare Part
D, which is the prescription drug program. And also, in a
hearing we had here--I do not know if Dr. Coburn remembers
this, but we had a guy here who I think ran the Medicaid
program in New York State, and he said, ``You are not
collecting any money much at all on fraud in Medicaid.'' And he
told us why. He said we ought to make some changes. And we have
made those changes in the legislation that was--again, the
health care law. And our expectation is not only are we going
to collect a lot more money, recover a lot more money from
Medicare, but also to help the States recover Medicaid waste
money, and we will split that with them on roughly a 50/50
basis. So that will help both the States and we hope help the
Federal situation as well.
There is an added benefit to expanding the Recovery Audit
program in Medicare. The Recovery Audit Contracting pilot
program has identified dozens of vulnerabilities in the
Medicare payment system that can lead--can lead--to waste and
fraud. According to the Centers for Medicare and Medicaid
Services, (CMS) contractors hired to recoup overpayments
identified ongoing vulnerabilities that could lead to future
overpayments totaling more than $300 million. That is like $300
million a year, not just one time, but $300 million each year,
if we do not do something about it. So not only did the
contractors recover about $1 billion for us in overpayments in
the 3-year pilot program; they also identified problems in the
system that, if addressed, will avoid literally billions of
dollars in future errors and more fraud.
Our witnesses from the Government Accountability Office
will describe for us today how the Center for Medicare and
Medicaid Services, the agency which oversees Medicare, could do
even more to use the work of recovery audit contractors to
address overpayments.
We have a chart based on GAO's work.\1\ As I recall, GAO
noted about 58 vulnerabilities. They said these are things
that, if you do not fix these, you are going to continue to
waste more money. They identified about 58 vulnerabilities
through the demonstration programs. They represent, as I said
earlier, about $300 million in overpayments on an annual basis.
That is obviously useful information. However, according to
GAO, CMS has actually only addressed, I think, maybe 23 of the
58 vulnerabilities. That leaves about 35 to go. And while we
are glad they have addressed 23, we do not want to lose sight
of the other 35. They represent cumulatively about almost a
quarter of a billion dollars in annual overpayments, and they
are awaiting action, and we want to make sure we do not forget
them.
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\1\ The information submitted from Senator Carper appears in the
Appendix on page 107.
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GAO has also stated that CMS has not established steps to
assess the effectiveness of any action taken to date to reduce
the vulnerabilities by the auditors. So, one, the auditors
identified the vulnerabilities; two, we say we are going to do
something about it; three, we are going to figure out are we
being effective in addressing those vulnerabilities. So it is a
sort of three-step process. I look forward to hearing more
about this issue from our witnesses.
The last thing I want to mention before I turn it over to
Dr. Coburn is prescription identifiers--this is interesting. I
was in a Walgreens pharmacy in southern Delaware, in Seaford,
the little town of Seaford, where the first nylon plant was
built in this country 60 years ago. But Walgreens used to be
Happy Harry's. Happy Harry's was a large regional chain in our
State, taken over by Walgreens. But I spent about an hour there
just to see how they are doing their work, how they are filling
prescriptions and some of the safeguards that they have to
protect consumers and make sure people who are taking more than
one prescription are not having prescriptions that are just
incompatible with one another, all kinds of stuff. They use a
lot of technologies. It was very impressive.
But the second issue for today's hearing will focus on the
Medicare prescription drug program. An audit by the Inspector
General at the Department of Health and Human Services (HHS)
discovered that Medicare does not have a strong process to
ensure valid identification numbers on reimbursed prescriptions
under the drug program.
Now, what does that mean? When a beneficiary brings in a
prescription for medication he or she has been prescribed, the
pharmacy is required to enter a provider identifier showing
that an actual doctor or some other authorized provider
correctly OKed the prescription. It sounds like common sense to
me. Probably to you, too. But, apparently, some 18 million
prescription drug claims contained invalid prescriber
identifiers in 2007. That represents about $1.2 billion in
Medicare spending.
The Inspector General (IG), concluded and this is a quote.
He said, ``It appears that CMS and Part D plans do not have
adequate procedures in place to ensure valid prescription
identification.'' This is a lot of money, and we want to make
sure that this is one that we address here today.
Our witnesses are going to report for us not only the
current challenges of waste and fraud that we have outlined in
the Medicare program but identify solutions, too, and we look
forward to your presentations. Again, thank you for joining us.
Dr. Coburn, welcome, you are on.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. Mr. Chairman, thank you for holding this
hearing. I have a statement for the record that I would ask to
be submitted for the record--and then we will go forward with
the witnesses. Thank you.
Senator Carper. Without objection, your statement will be
inserted as part of the record.
Let me just introduce our three witnesses on panel one. Our
first witness today will be Kathleen King, Director of Health
Care at the Government Accountability Office, where she is
responsible for leading various studies of the health care
system, specializing in Medicare management and prescription
drug coverage. Ms. King has over 25 years of experience in
health policy and administration. We thank you for being here
today. Thank you.
Deborah Taylor, Chief Financial Officer for the Centers for
Medicare and Medicaid Services and the Director of the Office
of Financial Management. Ms. Taylor is accountable and
responsible for planning, directing, analyzing, and
coordinating the agency's comprehensive financial management
functions, including the release of the Centers for Medicare
and Medicaid Services annual financial report.
And our third witness is Robert Vito--again, welcome back.
Several of you have been with us before. It is good to see you
all again. But Mr. Vito is a Regional Inspector General for
Evaluations and Inspections at the Department of Health and
Human Services. Mr. Vito works in the Inspector General's
office in Philadelphia, a suburb of Wilmington, Delaware, and--
-- [Laughter.]
Under his leadership has been credited with identifying
billions of dollars in savings for the Medicare program.
Again, welcome one and all. Your full statements will be
made part of the record, and you can proceed. I will ask you to
try to keep your statement to about 5 minutes. If you run a
little over that, that is OK. If you run a lot over that, that
is not OK.
Please proceed, Ms. King.
TESTIMONY OF KATHLEEN M. KING,\1\ DIRECTOR, HEALTH CARE, U.S.
GOVERNMENT ACCOUNTABILITY OFFICE
Ms. King. Mr. Chairman and Senator Coburn, thank you so
much for inviting me here today to talk about the use of
recovery audit programs in Medicare.
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\1\ The prepared statement of Ms. King appears in the Appendix on
page 48.
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For almost 20 years, as you pointed out, we have designated
Medicare as high risk due to its size, complexity, and
susceptibility to improper payments. The purpose of the RAC
demonstration was to test the feasibility of using recovery
auditing as a means of identifying improper payments. Congress
directed CMS to test the use of RACs in a 3-year demonstration
program from March 2005 to 2008. And in 2006, Congress enacted
legislation that made the RAC program a permanent part of
Medicare, and CMS launched the national program in March 2009.
In its first year, the demonstration was estimated to have
recouped more than $300 million. It was the first time the
agency paid contractors on a contingency basis through a share
of improper payments identified. The demonstration provided a
unique opportunity for CMS to identify issues at risk of
improper payments. CMS could then use the information to take
corrective action to address the root causes and to help reduce
improper payments in the future.
The demonstration required coordination, particularly
between RACs and Medicare's claims contractors. The
demonstration RACs reviewed claims that had already been paid
by those other contractors to identify payment errors. RACs
then shared those errors and their amounts with providers and
the claims contractors, which collected any overpayments due,
repaid underpayments, and handled the first level of provider
appeals.
Many providers expressed concerns about the operation of
the demonstration. In particular, they were concerned about the
use of contingency fees because they thought it created an
incentive for RACs to be too aggressive in determining improper
payments. They also indicated that RACs made many inappropriate
determinations that resulted in thousands of provider appeals.
The appeals created additional workload and coordination
challenges for the claims contractors.
In 2008, CMS said it would make a number of changes to the
RAC program to address these problems. In our March 2010
report, we said that CMS had learned valuable lessons from the
RAC demonstration, particularly in regard to coordination
between contractors and program oversight of RAC accuracy.
However, we identified improvements still to be made. In
particular, as of March 2010, and as your chart shows, CMS had
not yet implemented corrective actions for 60 percent of the
most significant RAC-identified vulnerabilities, which are
those representing more than $1 million. In our report, we
identified steps that CMS should take to improve the national
program.
First, we said that they should establish an adequate
process to address RAC-identified vulnerabilities that lead to
improper payments. For the national program, CMS did develop a
process to identify the vulnerabilities and take corrective
actions. It is better than the process they used during the
demonstration, but it still lacks essential procedures. We
recommended, and CMS concurred, that they improve their
process. CMS said that they would promptly evaluate findings of
the RAC audits, decide on appropriate responses, and act to
correct the vulnerabilities identified.
Second, we said CMS should take steps to address
coordination issues among the contractors. Based on lessons
learned during this demonstration, CMS has improved ways for
RACs and the other contractors to communicate. CMS also
improved its data warehouse that helps providers avoid
duplicate reviews, and it is working to improve its storage and
transfer of medical records, which was a significant issue
during the demonstration.
Third, we said that CMS should oversee the accuracy of RAC
claims reviews and the quality of their service to providers.
CMS did take steps to address concerns about inaccurate RAC
decisions. The agency hired a validation contractor to
independently review RAC decisions. They created performance
metrics to monitor RAC accuracy and service. And they also
changed the contingency fee payment structure so that RACs will
have to refund contingency fees for any determinations
overturned at any level of appeal.
CMS' experience with the RACs provides useful lessons in
identifying the root causes of vulnerabilities and effectively
coordinating and overseeing accuracy and customer service of
contracts.
Mr. Chairman, this concludes my prepared remarks. I would
be happy to answer questions.
Senator Carper. Thanks, Ms. King. Ms. Taylor.
TESTIMONY OF DEBORAH TAYLOR,\1\ CHIEF FINANCIAL OFFICE AND
DIRECTOR, OFFICE OF FINANCIAL MANAGEMENT, CENTERS FOR MEDICARE
AND MEDICAID SERVICES, U.S. DEPARTMENT HEALTH AND HUMAN
SERVICES
Ms. Taylor. Thank you, Chairman Carper and Senator Coburn,
for the opportunity to appear before you today to discuss the
Centers for Medicare and Medicaid Services' efforts to prevent
and recover Medicare improper payment errors.
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\1\ The prepared statement of Ms. Taylor appears in the appendix on
page 58.
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As you know, the Medicare Modernization Act of 2003
required the Centers for Medicare and Medicaid Services to
establish a recovery audit demonstration to pilot the potential
usefulness of recovery auditing in the Medicare fee-for-service
program. During the demonstration program, three demonstration
States were selected: Florida, California, and New York. Within
the first 18 months of the recovery audit pilots, we saw much
potential and promise for results. Thus, in the summer of 2007,
we expanded the demonstration to three additional States: South
Carolina, Massachusetts, and Arizona. By the time the recovery
audit demonstration concluded in May 2008, the six pilots in
the demonstration project had collectively identified over $1
billion of improper payments and returned over a net $690
million to the Medicare Trust Fund.
At the conclusion of the demonstration program, the
Government Accountability Office evaluated our results and
progress. Generally, they had some positive comments about the
demonstration; however, they did note, as Kathy said, 58
vulnerabilities were identified, and we had addressed or done
corrective actions for 23, leaving 35 vulnerabilities with no
corrective actions. At this time I am pleased to report that
CMS has taken or begun corrective actions in all 35 of the
remaining vulnerabilities. We appreciate GAO's recommendations,
and going forward, we are committed to developing and
implementing corrective actions to prevent these
vulnerabilities from occurring in the future.
The ultimate goal and measure of success of the recovery
audit program is to prevent these errors from occurring after
they are identified. The success of the RAC demonstration
provided us with valuable information about vulnerabilities
where improvements in the Medicare program were needed as well
as some lessons learned for improving the recovery audit
program. In general, we were able to gain valuable feedback
from providers about ways to improve the recovery audit program
with respect to interactions between the provider community. We
took these lessons learned very seriously when designing the
national recovery audit program and incorporated them into the
national program.
For example, we required all recovery audit contractors to
hire a physician medical director to be responsible for
ensuring that the medical records were properly reviewed in
accordance with our payment policies. We also established a new
Issue Review Board (IRB) within the agency to review and
approve all claim review areas before the recovery auditors can
begin widespread medical review.
Another important step we took before the national recovery
auditors could begin requesting and reviewing claims was to set
up meetings with State representatives and provider
associations in every single State to discuss the recovery
audit program and answer their questions. These outreach
meetings coupled with the incorporation of lessons learned with
critical improvements to the national recovery audit program.
While the national recovery audit program is now
operational, it did take time to establish these improvements
and build the infrastructure that Kathleen talked about for the
national program. We currently have four national recovery
auditors. They are divided into four regions across the
country. And as of June, the national recovery audit program
has returned over $32 million to the Medicare Trust Funds.
Although the national program just began, it has also
identified some significant program vulnerabilities. To date,
the program has focused mostly on durable medical equipment
(DME), an area where we know we have had high improper payments
in the past. We are currently working on corrective actions to
address these vulnerabilities.
CMS also takes seriously the use of invalid prescriber
identifiers in the Part D claims, as described by the OIG's
recent report and as shown on the chart. Although not an
automated indicator of fraud or invalid claim, the use of
invalid prescriber identifiers does hamper the oversight of the
Medicare Part D benefit. Since the OIG's review of Part D
claims from 2007, there has been a substantial shift away from
the use of DEA numbers toward the use of a national provider
identifier. CMS plans to thoroughly evaluate these more recent
claims to determine whether there are similar incidents of
invalid NPIs and to understand what pharmacies and prescriber
practices are resulting in the use of invalid identifiers.
As the Chief Financial Officer (CFO) for CMS, it is my
responsibility to ensure that we do everything possible to
ensure the accuracy of all payments in the Medicare and
Medicaid programs. I take this responsibility very seriously. I
thank you for your continued support and interest in this
program, and I look forward to answering any questions you may
have.
Senator Carper. Thanks so much. Mr. Vito, welcome back.
Nice to see you. Please proceed.
TESTIMONY OF ROBERT VITO,\1\ ACTING ASSISTANT INSPECTOR
GENERAL, CENTERS FOR MEDICARE AND MEDICAID AUDITS, OFFICE OF
INSPECTOR GENERAL, U.S. DEPARTMENT HEALTH AND HUMAN SERVICES
Mr. Vito. Good morning, Mr. Chairman and Members of the
Subcommittee. I am Robert Vito, Acting Assistant Inspector
General for the Centers for Medicare and Medicaid Audits at the
U.S. Department of Health and Human Services Office of
Inspector General. I would like to thank you, Mr. Chairman, for
holding a hearing on this important topic.
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\1\ The prepared statement of Mr. Vito appears in the appendix on
page 69.
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A little more than 4 months ago, I sat before you and
testified about the OIG's body of work related to program
integrity efforts and payment safeguards in the Medicare Part D
prescription drug program. At that time I stated the oversight
of this area by the Centers for Medicare and Medicaid Services
and its contractors had been limited, and as a result, the Part
D program was vulnerable to fraud, waste, and abuse.
Unfortunately, our current work further illustrates the
potential impact of these vulnerabilities as the lack of
program safeguards has actually resulted in Medicare paying for
a substantial number of questionable claims for prescription
drugs.
One of the most basic safeguards in paying for medical
care, whether we are talking about Medicare, Medicaid, or
private payers, is ensuring that an item or service was
performed, provided, and prescribed by an appropriate medical
professional. To that end, CMS requires that pharmacies list an
identifier for the drug prescriber on most Part D claims.
Without a valid identifier, we cannot even be sure that an
actual practicing physician prescribed the drug, much less
determine the physician's name, verify the physician was
appropriately licensed, or identify questionable prescribing
patterns associated with a particular physician.
In other words, even though invalid prescriber identifiers
do not automatically indicate fraud, they severely inhibit our
ability to detect it. In our report, ``Invalid Prescriber
Identifiers on Medicare Part D Drug Claims,'' we found that
more than 18 million prescription drug claims contained invalid
prescriber identifiers in 2007, representing 2 percent of the
nearly 1 billion claims submitted by the plan sponsors that
year. These identifiers were either not listed in the
appropriate provider identifier directories or had been
deactivated or retired more than a year earlier. Part D
sponsors and enrollees paid pharmacies $1.2 billion in 2007 for
these questionable claims.
Furthermore, CMS and the sponsors did not successfully
verify that the prescriber identifiers were even in the proper
format. In almost 20 percent of the cases, the invalid
identifiers did not have the correct number of characters and/
or contained inappropriate letters, numbers, punctuation marks,
or keyboard symbols. Just to give an example, one invalid
prescriber that did not meet the format specifications was a
string of nine zeros. Despite this obvious issue, Medicare paid
$3.7 million for almost 40,000 claims listed with this
identifier in 2007.
In other cases, identifiers met format requirements, but
still appeared to be highly questionable on their face.
Prescriber identifier AA with seven zeros after it was listed
on almost 1.8 million prescription drug event (PDE) records in
2007, representing more than $100 million in paid claims for
150,000-plus beneficiaries who were enrolled in almost 250
different Part D sponsors. In other words, 10 percent of all
PDE records with invalid prescribers contained this one invalid
identifier.
So what can be done to fix the problem with invalid Part D
prescription identifiers? To start with, we have provided
invalid identifier data from our report to the Centers for
Medicare and Medicaid Services. We are also conducting
additional analysis and have identified specific geographical
areas with an unusually large number of questionable claims. In
addition, the OIG will soon issue another report that looks
specifically at prescriber identifiers on claims for Schedule
II drugs, like OxyContin, which are highly susceptible to fraud
and abuse activity.
In terms of the systemic changes, OIG recognizes the
difficult balancing act CMS faces in trying to ensure
beneficiary access to needed drugs while also preventing
improper payments. Therefore, rather than implementing
prepayment edits, we recommended that CMS conduct periodic
reviews to ensure the validity of the prescriber identifiers
used on the PDE records. CMS could also require sponsors to
institute procedures that would identify and flag for review
any Part D claims with invalid identifiers in the prescriber
identifier field. The success of these intermediate steps
relies on the appropriate action being taken by CMS, the
sponsors, and the program integrity contractors when
problematic claims are identified.
I would also like to note that this is not the first time
the OIG has identified vulnerabilities related to invalid
identifiers. In July 2008, I testified that invalid identifiers
were also an issue on claims for durable medical equipment,
such as wheelchairs and diabetic supplies, covered under Part
B. Specifically, Medicare paid millions of dollars for claims
that did not accurately identify the physician that supposedly
ordered the item, including many that listed a deceased doctor
as the prescriber.
In conclusion, prescriber identifiers are the only data on
the Part D drug claim to indicate that a legitimate
practitioner has prescribed medication for Medicare
beneficiaries and, as such, serves as an invaluable program
safeguard. With CMS' agreement to take steps to address the
findings in our report, we are hopeful that the issues with
prescriber identifiers are being resolved. However, you can be
assured that the OIG will continue to monitor the agency's
progress in this area.
I would be happy to answer any questions that you might
have at this time.
Senator Carper. Good. Mr. Vito, thanks very much.
I have asked Dr. Coburn if he will just lead off the
questioning, and he has agreed to do that.
Senator Coburn. Thank you. I appreciate the privilege. I do
not know why I have it, but I appreciate it. Thank you.
Senator Carper. It is because of your good work on the
improper payments legislation which the House passed yesterday
and is going to the President and something that we can
celebrate for----
Senator Coburn. We have been working on it for 6 years.
Senator Carper. A long time. Good work.
Senator Coburn. Several reports outside of the government's
reports estimated Medicare and Medicaid fraud at $80 to $100
billion. It is really interesting to me that the government
estimates it at far less. So the question I have is: Given that
the private insurance industry has about a 1-percent fraud
rate, why do we have a pay-and-chase system? Ms. Taylor.
Ms. Taylor. Well, I believe part of the reason is--and we
do a lot up front to ensure that providers coming into the
system are legitimate as they do the enrollment. But we are a
system that is any willing provider, so if a provider has a
legitimate State license, we must allow that person to
participate in Medicare----
Senator Coburn. I am not talking about participation. I am
talking about payment of a claim. Why do we pay it and then
chase it if it is erroneous? Why don't we certify it
beforehand? In other words, there are statistical models out
there and programs that look for abnormalities in claims. Are
these models being used by HHS?
Ms. Taylor. We have a system that does utilize edits up
front. We have medically unbelievable edits. We have unlikely
edits. We do have, correct coding initiatives that look for
diagnosis with an incorrect code. So we do have those up-front
sort of identifiers that are in the system. We currently are
looking at commercial software out there that could be added to
our systems where maybe there are commercial edits that would
apply to Medicare.
Senator Coburn. Have you ever gone and sat down with one of
the large insurance companies and said, ``Show me how you all
do your proactive fraud''?
Ms. Taylor. We have talked to.
Senator Coburn. No. I am talking about you. Have you ever
sat down and gone through one of the large insurance companies'
proactive fraud detection programs?
Ms. Taylor. I have talked to a plan sponsor----
Senator Coburn. OK. I am going to ask the question again,
and I am not trying to be combative.
Ms. Taylor. Right.
Senator Coburn. Have you personally sat down and gone
through a proactive fraud detection program by one of the large
health insurers? Gone through it so that you see how it works.
Ms. Taylor. No, I have not.
Senator Coburn. Would you think that would be a good idea
since their fraud rate is markedly less than yours?
Ms. Taylor. I would agree and I do think, we should be
doing more of that, and I can take that and do that. I do want
to explain, though, that in Medicare we have different rules
than some of the commercial. They do a lot of prior
authorization of claims. We do not do that--prior authorization
of services prior to services being rendered and claims paid.
So we do have a different type of system where they do an up-
front validation before the service and claim is ever even
provided or submitted.
Senator Coburn. Well, on large items they do.
Ms. Taylor. Right.
Senator Coburn. But on small items, on the vast majority of
Medicare Part B, which are small items, other than the DME
product, they do not. I do not have to have permission from
Blue Cross/Blue Shield to see a patient in my office if they
have a valid card. And that is a large portion--I know it is
not the hospital-based, I am really just talking interaction.
You said that all 35 you have taken action on or have
begun. Which ones--how many have you begun action on but not
completed of the recommendations?
Ms. Taylor. I do not know that number exactly.
Senator Coburn. That is a real important number for us to
know. Would you supply to the Subcommittee the ones that you
have actually taken and finished the action on the others that
you are taking actions and what steps you are taking? It does
not have to be in detail, but so we see where you are.
Ms. Taylor. I can absolutely do that. I do want to stress,
though, that much of the errors we are identifying are the
harder ones to fix, meaning on the face of the claim the
service and the payment looks absolutely valid and necessary.
It is not until you get into the underlying medical records
that you find that possibly progress notes are missing, a
physician did not, in fact, order the service, there is no
signed order from the physician. So it becomes very much human
error within the medical record that is creating much of these
errors, and that is very, very difficult to stop and to
identify a real solid corrective action. It is really doing
education and outreach with providers on what is necessary to
be inside the medical record to support----
INFORMATION SUPPLIED FOR THE RECORD FROM MS. TAYLOR
From the demonstration project 58 ``vulnerabilities'' were
identified. The GAO reported in March 2010 that CMS took action on 23
of the 58. CMS has initiated several corrective actions for the 35
vulnerabilities identified by the GAO that had not been addressed when
the GAO conducted their review; since that time, three of the
outstanding vulnerabilities have been addressed, 22 are on track for
completion within 6 months, eight are likely to take up to a year to
correct, and two are on hold pending law enforcement investigations. In
response to the identified vulnerabilities, corrective actions CMS has
taken to date include:
Education to providers at various nationwide outreach
events. Provider outreach occurred in all 50 States to discuss what
documentation providers need to submit to support their claims;
Education to our claims processing contractors during RAC
Vulnerability Calls;
Approval of continued review in the National RAC program
for those vulnerable areas that cannot be addressed and corrected
through proactive automated system edits (CMS gave RACs the approval to
review on August 6, 2010);
Publication of a Medicare Learning Network educational
article on July 12, 2010 emphasizing the importance of medical record
documentation and submission of documents timely;
Publication of a Medicare Learning Network educational
article published on September 23, 2010 on hospital billing codes and
the importance of submitting documentation and quantifying the correct
principal and secondary diagnoses and the correct procedure codes for
billing purposes; and
Publication of a Medicare Learning Network educational
article published on September 23, 2010 concerning medical necessity
review.
Senator Coburn. You know the best way to educate me as a
physician to do it right? Not pay me. I guarantee you the next
time I will get it right.
Do you have sufficient sanction authority that you need
with which to make corrective actions when people are not
compliant with the record?
Ms. Taylor. We do not have sanction authority.
Senator Coburn. In other words, you cannot limit somebody's
ability to participate in Medicare if they are not complying?
Ms. Taylor. All we can do is flag their claims for pre-
payment review. That I believe was with the OIG, any exclusion
or sanction.
Senator Coburn. Well, do you think it would be important
that you could have sanction on individual providers who, in
fact, do not comply with the rules under which you say they
have to operate?
Ms. Taylor. That would maybe be helpful, yes.
Senator Coburn. I guarantee you, when I send a claim to
Blue Cross/Blue Shield, if it is not backed up, I do not get
paid. And then I ask why I am not getting paid, and they say,
``You did not comply.'' So either I comply and they pay me, or
I do not comply. If I do that multiple times, guess what? They
sanction me. They will not let me provide benefits to their
insurer.
Do any of our panelists have any thoughts on what they
think we ought to do to limit the improper payments, just
general thoughts, improper payments that are occurring in
Medicare and Medicaid outside of the recommendations of the GAO
report on what you saw on recovery audits?
Ms. King. Senator, there is a new program that is beginning
for competitive bidding for durable medical equipment that
gives the agency the ability to screen providers ahead of time
to make sure that they are legitimate businesses, and that
gives CMS the ability not to take any willing provider but to
make sure that they are legitimate and that they have the
financial ability to provide services. That is something that
we think is helpful.
Senator Coburn. Would the GAO think it would be helpful to
give Medicare the ability to provide sanctions on providers if,
in fact, they were not in compliance with the rules of
Medicare? I am not talking fraud. I am just saying lack of
compliance, not having the data there. In other words, do I
have a responsibility as a provider if I am going to contract
with Medicare to make sure the available information to justify
my charge to Medicare is there?
Ms. King. That is not an issue that we have examined, but I
can say that CMS does have the ability, as has been said, to
not pay providers for services that are not provided
legitimately or that are provided in error, or in the case of
the RACs, to take payments back. So that is one thing they can
do.
When I think of sanctions, I think of that having more to
do with illegal or fraudulent behavior, and that enters more
into an enforcement realm. So in terms of official sanctions,
you would want to think about whether it crosses over into
something that is abusive or fraudulent.
Senator Coburn. So your position would be--I am out of
time?
Senator Carper. You have had 9 minutes, and we start voting
at 11 o'clock.
Senator Coburn. All right. I will yield back.
Senator Carper. If you would.
One thing I want to just follow up on Dr. Coburn's
questions is this issue of pay and chase, which is not
something I have thought a lot about until actually this
hearing today. But I am told Peter Tyler, who is sitting over
my left shoulder, says that the new health care law gives CMS
some new authority to stop pay and chase, and it requires CMS
to stop payments if there is credible evidence of fraud. And as
I understand, this is a significant change.
Would you just respond on the record, Ms. Taylor, as to
what you are all going to do with that authority?
Ms. Taylor. I believe we are still drafting regulation on
that authority, so I really cannot speak to it right now.
Senator Carper. I am asking you to respond on the record
what you are going to do with that new authority. All right.
Thank you.
Senator Coburn, it sounds like they may have some new
authority here. We will find out how they are going to use it.
INFORMATION PROVIDED FOR THE RECORD FROM MS. TAYLOR
The Affordable Care Act (ACA) provides CMS with many new
authorities to combat waste, fraud, and abuse in Federal health care
programs. These new authorities offer more front-end screening and
enrollment protections to keep those who are intent on committing fraud
out of the programs in the first place, and new tools for deterring
wasteful and fiscally abusive practices, identifying and addressing
fraudulent payment issues promptly, and ensuring the integrity of the
Medicare and Medicaid programs. CMS is pursuing an aggressive program
integrity strategy that better incorporates fraud-protection activities
into our claims payment and provider processes where appropriate, with
the goal of preventing fraudulent transactions from ever occurring,
rather than simply tracking down fraudulent providers and chasing fake
claims. CMS also now has the flexibility needed to tailor resources and
activities in previously unavailable ways, which we believe will
greatly support the effectiveness of our work.
On September 17, CMS put on display proposed rule CMS-6028-P that
details the initial steps the Agency is taking to implement certain
provisions in the Affordable Care Act, including new provider
enrollment screening measures and requirements, new authority to issue
a temporary moratorium on enrollment for areas at high risk of fraud in
our programs, and authority to suspend Medicare and Medicaid payments
for providers or suppliers subject to credible allegations of fraud.
This proposed rule builds on existing authorities and on earlier
rulemaking that implemented the Affordable Care Act requirement for
physicians and other professionals who order or refer Medicare-covered
items or services to be enrolled in the Medicare program.
Senator Carper. OK. From Minnesota, welcome, Senator
Klobuchar. Thanks for joining us.
Senator Klobuchar. Well, thank you very much, Senator
Carper. Thank you for inviting me to be part of this
Subcommittee for the purpose of this hearing. I am not actually
on this Subcommittee, but I have a great interest in this issue
due to my work on Judiciary, where Senator Coburn also serves,
as well as my former job as a prosecutor where we prosecuted a
number of cases in this area. I am glad that you are back to
report on some of the work that has been done since our last
hearing a few months ago. When I say the numbers myself, I
always think I get the million wrong over the billion, but $60
billion a year in fraud to taxpayers for Medicare, as we know,
is just simply unacceptable. And every time I say that, I think
it is million, and I am wrong. It is billion.
The recently released OIG report confirmed just that, one
of the most basic oversights ensuring that a drug was
prescribed by a doctor is not operating effectively. Medicare
drug plans and beneficiaries paid pharmacies $1.2 billion in
2007 for more than 18 million prescriptions that contained over
500,000 invalid prescriber numbers. What is almost even most
shocking is that the invalid prescriber identified, which is
AA0000000, accounted for $105 million in paid claims. That is a
lot of money for AA0000000. So I think that just gives us the
example of the enormity of what we are dealing with here.
I guess I would start with you, Ms. King. Your report noted
58 vulnerabilities identified through the pilot program
representing $303 million in overpayments. However, the CMS
only addressed 23 of these vulnerabilities, leaving the 35
vulnerabilities, which I think accounted for $231 million in
overpayments, still awaiting action. Was there a reason to
address only some of the identified overpayments?
Ms. King. I do not think there was a specific reason. I
think there were some issues in which there were problems with
categorization. There were some issues where it was hard to
tell what the problem was. But there was not always a reason
why they were not addressed.
Senator Klobuchar. Do you think you will go back and look
at them or see if they----
Ms. King. We do not have any ongoing work looking at the
RACs, but, I think CMS has testified that they are working on
them.
Senator Klobuchar. OK. Mr. Vito, in your testimony, you
made recommendations to CMS for subjecting invalid identifiers
to further review. It is alarming that just 10 invalid
prescriber identifiers account for 17 percent of all the
invalid prescriber identifiers. And when I saw this, I thought,
Shouldn't there be some kind of flagging system in place? And
if so, can you describe how your recommendations would add to
what is already in place?
Mr. Vito. Well, I think the first thing is that CMS has
determined that they want the beneficiaries to be able to get
the prescriptions that they were given. So with that in mind,
we understand the balancing act that they have to do. But we
are suggesting that CMS start looking and doing work in this
area to ensure that the claims that come in have valid IDs on
them.
In addition to that, we are saying that CMS should remind
the sponsors or make the sponsors first identify all these
invalid prescriber IDs and then review them to ensure that they
do not keep coming up. When you see $100 million, $100 million
as a regular doctor would cause people to be very concerned. It
is just the volume of the claims. And the issue really is that
you do not know if the claim is a good one or a bad one until
you do more work. It could be that, they just put a number in
and they are using that. But you will not know that until you
actually go into doing all the work, going back into it and
getting the information.
So for us, it is so much more valuable to prevent it up
front and to stop it right at that time and make sure that the
information is correct.
Senator Klobuchar. That it is correct.
And, Ms. Taylor, what do you think about his
recommendations?
Ms. Taylor. We actually agree with all the OIG
recommendations. We actually have looked at what is going on in
2009. We were troubled by seeing some entities with a
preponderance of invalid numbers. We did have discussions with
them. What we are seeing now is a trend that the pharmacies and
the sponsors are using the National Provider Identifiers
(NPIs). I think in the early days of the program there was
confusion as to whether or not those numbers should be
protected. And so, I think we have clarified that, but because
they were DEA numbers, people thought they needed some privacy
or protection to them. Some sponsors told us they just put in
fictitious numbers rather than putting in the actual number. We
told them they need to use the NPI. And we are starting to see
about 75 percent of the claims now in the PDE database coming
in with NPI numbers rather than, these DEA numbers.
Senator Klobuchar. So do you think some of this is not
really fraud, it is just them putting in any number? Is that
what you are saying?
Ms. Taylor. We believe that may be part of the reason. They
just put in a number rather than trying to look up for a valid
number.
Senator Klobuchar. Because they know they are going to get
paid.
Ms. Taylor. Correct.
Senator Klobuchar. Of course, that also leads to a lot of
fraud, I would think.
Ms. Taylor. Right. I mean, so we have several efforts
underway now. We are looking at what is going on in 2009. We
are going to validate those NPI numbers. We do want to
understand if there is a systemic reason for why they cannot
get to a valid number. If there is a problem with systems or
look-up tables, we need to work on that. But we also want to
and have started dialogue with those who seem to be not
following our guidance, and we will be discussing that and
telling them to cease and desist, that they need to do actual
look-ups for valid numbers on the PDE claims.
Senator Klobuchar. So what do you think has been the
greatest--we just passed this bill. There are major fraud
components in there, and I know it was just a few months ago,
but, --since we had our hearing 4 months ago, or since Senator
Carper did. What would you say have been the greatest
improvements? And do you think you see a difference in the
money that is being saved already?
Ms. Taylor. I think it is probably too early for me to give
you an answer on that. We are still looking into it. But I do
think that the plans understand we are looking and that the
oversight is going to be much harder, and we will be
scrutinizing the information they are giving us.
Senator Klobuchar. When is the first time you will know if
there has actually been savings?
Ms. Taylor. Maybe by the end of the year. I am not really
sure.
Senator Klobuchar. OK. Anyone else have any other examples
of changes that you think have been significant? Nothing? So
those have to be made soon. That is what we are going to do,
right?
OK. Very good. Well, we will be looking forward to--we are
continuing to work on legislation and pushing things. I think
what really counts here is the numbers and those cost savings,
which are going to be very important to taxpayers. So thank
you.
Senator Carper. Thanks a lot for joining us today. The
welcome mat is always out for you.
Senator Klobuchar. Thank you.
Senator Carper. A first question for Ms. Taylor, if I
could. I think three points are especially clear from your
testimony.
First, you and CMS have recognized the importance of
curbing waste. We are talking about a program where we are
spending about $460 billion this year, and the amount of waste
that has been identified ranges anywhere from $36 billion to, I
think, $60 billion. Senator Coburn suggests it is higher than
that. But we are talking about something in excess of 10
percent of the amount of money that we are spending is going in
what many would describe as waste or fraudulent spending. And
as pleased as I am that we are focused on that and beginning to
drill down and address it more comprehensively, that is still a
huge amount of money. But there is a huge upside there in
reducing fraud. So we are pleased that you are focusing on
this.
Second, we learned a lot from the Recovery Audit
Contracting demonstration program that can apply toward the
current program as well as the next expansions that are taking
place right now. That is good.
Third, the Recovery Audit Contractor program has proven
itself capable of not only recovering payments, but almost as
important in identifying vulnerabilities that can lead to those
overpayments. I think your testimony used the word ``success,''
and overall I think the Medicare program deserves credit for
increasing the level of priority for recovery auditing in order
to ensure that the current program is successful. And with the
signing by the President in a week or two of the improper
payments bill, we are going to take what you are doing here in
recovery for Medicare Parts A and B and extend to other parts
of our government. So that is good.
Of course, under the recently enacted health care reform
bill, the Recovery Audit Contractor program will expand, as I
suggested, to Medicare Advantage, Part C, Medicare prescription
drug, Part D, and to Medicaid. I think the deadline for
completing this expansion is this December 31st. I believe it
is very important, considering the success of the Medicare
Recovery Audit Contracting demonstration and current program,
that the expansion stays on track, including meeting the
expansion deadline of December 31st.
Will we see the expansion by the end of this year of the
Medicare Recovery Audit Contracting program to all of Medicare
and to Medicaid as is required by this new law?
Ms. Taylor. Yes, so we are in, still planning and early
stages of how we would expand it into the Medicare Advantage
arena as well as the Part D program. We have some ideas
specifically in the drug area where we think recovery auditing
would be very valuable, such as validating the drug rebate and
price concessions data. We think that would be very valuable to
us. So we do have, some ideas there.
Part C, a little tougher. We know that risk adjustments are
something we have had problems with. We currently are already
doing some audits in that area, but we want to explore a little
more about some opportunities for expansion of recovery audit
in Part C.
For Medicaid, a little bit tougher, meaning there are 56
different programs in Medicaid. We know that it is not free to
bring up a recovery audit even if it is with--pays for itself
eventually. It does require contracts. It does require
resources. And some State legislature may not be in positions
to give States money to seed that recovery auditing.
So we are looking a little harder at Medicaid. I can say
that we will do everything possible to be ready to bring it up,
expand it in all three of those programs. I think Medicaid is a
little bit tougher for us, just given the States' timing and
the 56 very unique programs.
Senator Carper. I understand that what we have asked you to
do is not easy, and what we have asked you to do is hard, and
especially with Medicaid. But I would just urge you and your
colleagues to give this everything you have. There is a lot of
money at stake here, and we just need your very, very best
efforts. And we also need--if there are things that we need to
be doing here on the legislative side, you need to tell us
that, and we would do our best to try to be supportive.
A question, if I could, Ms. King, for you. The GAO
testimony that you have offered describes, I think, a great
opportunity provided by the Recovery Audit Contracting program.
Not only has the program recouped about $1 billion over a 3-
year period, but it identified vulnerabilities that can lead to
future overpayments, and we talked about some of this today.
However, the GAO audit in today's testimony points out that not
all the recovery audit contractor overpayment vulnerabilities
have been addressed by CMS. And, again, we have a chart, I
think, that shows how much progress has been made right over
here. Blue is good, corrective action taken on 23 out of the 58
areas. It is about 40 percent of the areas identified. Sixty
percent, 35 items. And let me just say--and Ms. Taylor
mentioned, she said, ``We have already started working on the
other 35,'' which is good. ``We have completed some of them,''
which is good. But I would just ask of you, Ms. King, has there
been progress in your view since the audit was completed? When
was the audit completed?
Ms. King. We finished our work in March of this year.
Senator Carper. OK, so it was about 3 months ago. Has there
been progress since the audit was completed that you are aware
of? And how many of the 35 items that had not been addressed as
of March have been addressed today?
Ms. King. Senator, I am afraid I cannot answer that because
we have not done any work on the issue since then.
Senator Carper. OK. I am going to ask you to answer that
for the record.
Ms. King. OK.
Senator Carper. Just answer that one for the record if you
could.
Let me go back to you, Ms. Taylor. I understand from my
staff that some of your folks from your office prepared some
documents describing some of the progress in addressing the
vulnerabilities identified by the recovery audit contractors,
and I appreciate your providing those statements. My staff also
tells me that the documents show--I should not say ``my
staff.'' It is Subcommittee staff. Subcommittee staff tells me
that documents show that CMS has a system in place, I think a
database, to track the reported vulnerabilities, and I think
that is one of the recommendations that GAO made. Is that
correct?
Ms. Taylor. Yes, sir.
Senator Carper. Thank you. Let me just ask, Ms. Taylor, if
you could, could you describe further for us the process that
has been in place for the current program to address all the
identified vulnerabilities. Just talk to us about how you are
doing that. And do you have a timeline for when you think all
the vulnerabilities of the identified thus far will have been
addressed?
Ms. Taylor. Sure. The way we track vulnerabilities is there
is a data warehouse where vulnerabilities are--or denied claims
are run through. What it does is it cumulates those so that we
can see by provider and by provider type what are some repeated
vulnerabilities, and it allows us to lump them together. We put
as major vulnerabilities anything where overpayments are
identified in the cumulative total of over $500,000. So that is
how we are tracking and identifying the major vulnerabilities.
Right now my office is directly responsible for the day-to-
day monitoring and reporting out of that data warehouse. To the
extent I have to reach out to colleagues across CMS to develop
corrective actions, that is what I do. But if we need to
elevate things, meaning there are vulnerabilities that require
policy and systems changes as well as possibly national
coverage decision changes, that may involve someone at the
Office of the Chief Operating Officer to get involved. But at
this point, most of it is managed in my office on a day-to-day
basis. I cannot give you an exact date of when I think we will
resolve all the vulnerabilities. I think the fair answer there
is some are easy to fix, meaning it is a systems edit that we
can put into place.
For example, we had an issue with a drug where we were
paying for a claim even though the dosage was too high and
likely not to be reasonable. So we were able to put an edit in
place to stop that drug from being paid at too high of a
dosage.
Other things require policy changes which may require us to
do legislative changes. It also can require us to do lots of
education and outreach with our providers to understand what
the documentation requirements are for the medical record.
Senator Carper. I see. So if I understand it--in my
question, do you have a timeline for when all the identified
vulnerabilities of the current program will be addressed? And
the answer is, ``Really we do not.''
Ms. Taylor. I do not have a timeline, mostly because many
of the underlying issues require us to continue to do education
and outreach. The only way to find problems is to look at
medical records. It is not evident on the face of the claim. It
is very difficult to find. And it is constant repeated
reviewing of medical records and having education and outreach
with physicians.
I will say that as an outgrowth of the recovery audit
program, a lot more providers are doing compliance programs
themselves where they are actually having compliance auditors
and programs in-house looking through their own medical records
to ensure that they are following our policies. So that is
something where, we are seeing some positive impacts there.
Senator Carper. My father used to say that the work expands
to fill the amount of time we allocate to do a particular job.
And I find it helpful for myself and for my own staff in other
roles that I have held to set timelines. And I think a timeline
could be helpful here as well. You all have addressed 40
percent of the vulnerabilities. That is good. We have 60
percent to go, and maybe some of those have already been
addressed. And I am going to ask you to respond for the record
what is a reasonable timeline, and I would like for it to be
aggressive.
Ms. Taylor. OK.
Senator Carper. I do not want, 5 years from now or 4 years
from now or 3 years. I want it to be aggressive.
Let me just ask Ms. King, in terms of a timeline, is it
important? What is a reasonable timeline for getting most of
this stuff done?
Ms. King. I do not know that we have an exact date that we
think that it should be accomplished, but we do think it is
important to set timely goals for achieving it.
Senator Carper. All right.
Ms. King. And, as Ms. Taylor pointed out, some things are
more complicated than others, and some things are under appeal.
So you have to take different factors into consideration, but
we think it is important to press forward and to establish a
timeline.
Senator Carper. And as I said earlier, if there are some of
these vulnerabilities that need some legislative action, you
just need to come back and lay that out for us, and we will see
what we can do and work together.
Mr. Vito, we are going to have a vote here in just a
minute. I do not want to let you get away without being asked
some questions. In fact, this is probably the vote starting
right now. We very much appreciate your being here today and
the good work that you and your folks do.
Mr. Vito. Thank you.
Senator Carper. I think your audit has pointed out an area
that Medicare needs to pay a lot more attention to, and you
have described to some extent the importance of prescriber
identifiers and ensuring that prescriptions are valid and
also--but I am going to ask you to drill down on it a little
bit more. Do you believe that the same validation process has
impacts on other parts of Medicare, such as with fee-for-
service?
Mr. Vito. OK. We have identified the invalid prescriber
problem in both the Part B area and the durable medical
equipment and in the Part D area for prescription drugs. We
believe that it is very important that this information be
there. I could give you an analogy. This would be similar to
placing a combination lock on the gate to protect what is
inside, but then allowing any combination to open the lock.
This leaves whatever is behind the gate vulnerable, just like
accepting invalid prescriber IDs on Part D claims leaves the
program vulnerable to fraud, waste, and abuse. And when you do
not have this information, there are many things you--when you
look at it, there are three main controls: First, that the
beneficiary is eligible for the Medicare program and is
enrolled; second, that a supplier has enrolled with the program
and meets the Medicare standards; and third is that the
physician actually wrote the prescription.
So that is one of the main controls. If you cannot tell
that a prescription actually--that a physician--you cannot tell
who it is that actually wrote that prescription, it makes it
very difficult for you to do a lot of program integrity work.
Senator Carper. When you say ``you,'' who is ``you'' ?
Mr. Vito. Anyone who is doing program integrity work. It
makes the Medicare Drug Integrity Contractors (MEDICs), it
makes CMS, it makes the OIG. Without knowing that, you cannot--
normally what is done is you do aberrancy analysis. You lay out
all the claims, and then you see who the prescribers are that
are hitting the higher levels. In this case, when you have an
invalid number you really do not know who that prescriber is,
and you have to go back and look at it. You do not know if that
prescriber, is licensed. You do not know if they had actions
taken against them. You do not know if they saw the patient
before they actually wrote the prescription. There are many,
many things that you do not know. You do not know if they can
write a prescription for controlled substances.
So this is a very valuable key, and the only way you are
going to find out if this information--if the claim is good,
you have to do more work, and that takes a lot of effort. And
that is why we are thinking that if you put this information up
front, then you will be stopping the problem before you have to
go on the back end to look at it and figure out what is going
on.
Senator Carper. Do we have a chart that speaks to this?
If your eyes are pretty good, you can read this, folks. But
if they are not, I will help. We are looking at PDE--PDE stands
for?
Mr. Vito. Prescription drug event data.
Senator Carper. All right. Prescription drug event data.
Records and payments for the top 10 prescriber identifiers in
2007. And on the left-hand column, we are looking at invalid
prescriber identifiers. In the middle column, we are looking at
the number of PDE records for invalid identifiers, the number
of records for invalid identifiers. And then on the right-hand
side, we are looking at the payments to invalid identifiers. I
think you mentioned the first one in your testimony. And the
invalid prescriber identifiers, AA, and then there is like
about five or six zeros after that.
Then you come on down, and some of them have a lot of 1's
in their identifier number, then a lot of 5's, but it adds up
to a lot of money. And this is just 1 year? This is the top 10?
Mr. Vito. 2007.
Senator Carper. I suspect that this is not all fraudulent
or improper payments, but my guess is some of it might be, and
we really do not know.
Mr. Vito. The only way you are going to know is when you do
the work to find out what is really behind that, and that is
the key, that if you are able to put edits up front, like you
are trying to stop it at the very early stage, then you do not
have to do all the work on the back end, because as Ms. Taylor
said, some of this could be that the plans are putting in just
certain numbers or dummy numbers. But you do not know if that
is masking other problems that are underneath that until you
actually do the work.
Senator Carper. This might be an obvious question, but are
there some simple things that we could do to really perform
checks on the identifiers?
Mr. Vito. Yes, I think there are, like in 17 percent of the
cases, we knew that the actual format did not match. You know,
if it was a DEA number, you had nine numbers in it. If you had
an NPI, it was 10 numbers. If you do not have that exact
number, right off the bat they could have stopped the problem
for about $200 million because these were ones that did not
meet the format requirements at all.
So, I mean, at the very easiest stage, when you see that
coming in, right off the bat there is something wrong there,
and you should say, OK, there is something wrong here, we need
to check into it and we need to address it, make sure it does
not happen again.
Senator Carper. Do you know if CMS has data, say, for 2010
in terms of the number of PDE records that include the top 10
invalid identifiers? Do you know that?
Mr. Vito. I do not know if CMS has that information. It
would be better if you would ask them. We do know that medics
have been doing some analysis, the Medicare drug--they have
been actually looking at this and identifying some of these
numbers. And I believe according to the information we have
received from them, there is a movement away from the DEA
number towards the NPI number. But the question also is: When
we did our work in 2007, we found that there were NPI numbers
that were invalid as well. Are there going to be invalid
numbers in the NPI system? Just because they are moving to a
system where it is one uniform identifier, that does not mean
that there might not be these problems still. So I think they
still need to be vigilant in that area.
Senator Carper. OK. We are well into our vote. I am going
to just take about 2 more minutes, and then I am going to run
and vote, and we will recess until I have voted, and I will
come back as quickly as I can, probably within 15 minutes.
I want to stay on this issue for a bit longer and, Ms.
Taylor, just ask you to talk to us about this situation. And,
again, what are we doing about it? How serious are you all
taking this?
Ms. Taylor. Sure. We obviously take this very seriously,
and we are not happy that there were invalid numbers, certainly
dummy numbers that on the face of the claim were not valid to
begin with. I think Mr. Vito has alluded--we have asked our
contractors for some of these top 10 to go back to the entity
and find out why they were putting those numbers in there. We
certainly are focused on the high-risk claims, meaning those
where controlled substances were part of the claim. We will
work closely with the IG if we find any real underlying issues.
We believe that because it was in the beginning of the program,
there may have just been a misunderstanding of whether or not
they could put the DEA number on the face of the PDE claim.
Some of the sponsors have told us they thought that was a
protected number, that they would not be allowed to put it on
the claim. So we certainly want to work and figure out what is
going on there.
Again, we have seen a substantial shift moving away from
the DEA number to the NPI. We are going to be looking at the
2009--we do not have all of 2010 yet, but we will look at 2010
also to see whether or not, we are just substituting invalid
numbers from DEA to NPI. We want to understand that. We want to
be able to give these plans and pharmacies information and
guidance about how to get to a valid NPI number. We do not know
if there is a systems issue. We do not know if all pharmacies
and plan sponsors have the ability to get into the NPI
database. We do not know if there are problems with slowness of
the database, whatever. So we want to figure out what is
causing some of the underlying reasons why they are just
putting a number on there.
I think Mr. Vito and certainly the CMS concern is we do not
want beneficiaries standing in front of the drug counter not
being able to get needed and necessary drugs. So we always
weigh that balance of making sure we get the valid information
on the claim, but not holding up beneficiaries from getting
their needed drugs. So we do not want to stop that. I think the
issue here is we need the pharmacies and the sponsors to then,
even if they give the information out because the system is
slow or whatever, the drugs out, they still go back and
validate the number, they do not leave it as a fake number on
the PDE. We absolutely do not want that.
And we are absolutely going to be working directly with
those who seem to not want to follow our guidance and figure
out whether or not we can take some actions. We certainly will
tell them cease and desist, we will be watching you. But what
further actions we can take on their behalf, I mean, we will
absolutely be looking at that.
Senator Carper. All right. Again, our thanks to each of you
for being here today and for your testimony and for your
responses. We are going to do a lot of oversight and follow-up
on this. There is real money to be saved here. We have a
Medicare Trust Fund that has somewhere between--I do not know--
10, 15 years of life left in it, and we need every dollar--it
needs every dollar that we can save.
It appears to me that roughly one out of every seven or
eight dollars that is being spent in Medicare is being spent
wastefully or fraudulently. And we have a pretty good idea
where some of that is coming from, and obviously work has begun
to identify those and correct it and recover money where we
can. But when you have a trust fund that is running out of
money in the next 10, 15, or 20 years and we know that one out
of every seven or eight dollars is being misspent, fraudulently
spent, there is a good way to stretch the life of the trust
fund without raising anybody's taxes. I appreciate the work
that is being done here. Let us keep it up. As I said earlier
on, one of my core values, if it is not perfect, make it
better. And while we are doing better, we can still improve,
and we need to. So thanks very much.
We will stand in recess for about 15 minutes, and I will
hustle back as quickly as I can for the second panel. Thanks
very much. [Recess.]
The Subcommittee will reconvene. Welcome. Thanks for
hanging in here. We were voting. If you want to know what we
were voting on, we were voting on what we call a cloture
motion. That is to see whether or not we will proceed to a vote
on the conference compromise that has been worked out on
financial regulatory reform legislation. So we need 60 votes to
proceed to the vote on the conference report, and we will find
out probably by now whether we got the 60 votes. I think we
did, but we will see.
I want to introduce our panel of witnesses. Our first
witness, I am told, is Libby Alexander. Is Libby short for
Elizabeth?
Ms. Alexander. Yes.
Senator Carper. OK. Chief Executive Officer of Connolly
Healthcare, Connolly, Incorporated. Where are you all located?
Ms. Alexander. Wilton, Connecticut.
Senator Carper. OK. And I understand you provide recovery
audit contracting services under Medicare. OK. Thank you.
Our next witness--this is kind of a nice--I am always after
my staff, when we have names that are just names you do not
hear every day, I ask them to spell it out phonetically, and
they said that your name is Lisa Im, ``rhymes with Kim.'' Is
that right?
Ms. Im. That is correct.
Senator Carper. Pretty good. Chief Executive Officer of
Performant Financial Corporation. I understand you are
headquartered in--is it Livermore?
Ms. Im. Yes.
Senator Carper. Livermore, California. I used to live in
Palo Alto, in Menlo Park, right across the bay, when I was a
naval flight officer. It is nice to have you here. And we
understand that your company, Performant, also performs
recovery audit contracting for Medicare.
Ms. Im. Yes. Region A.
Senator Carper. What is that, Region A?
Ms. Im. Region A is the Northeast.
Senator Carper. OK. Thank you. Does that include Wilton,
Connecticut?
Ms. Im. Yes.
Senator Carper. OK. Thank you.
Our next witness is Andrea--it says ``Bank-o.'' But your
name is spelled B-E-N, like my son's name is Ben, and we call
him Ben, but is your name pronounced ``ban''?
Ms. Benko. No. Benko, just like----
Senator Carper. Benko, thank you. All right. President and
Chief Executive Officer of HealthDataInsights, Incorporated. I
am told that you are based in Las Vegas, Nevada.
Ms. Benko. Correct.
Senator Carper. OK. And that you also provide recovery
audit contracting under Medicare. I just spoke with Harry Reid
when I was over on the floor a few minutes ago. He said, ``Be
nice to the witnesses from Nevada.'' [Laughter.]
Our next witness is Robert Rolf, Vice president of CGI
Federal. CGI is based in Montreal, Quebec, and provides
recovery audit contracting services under Medicare throughout
Canada. Is that right? [Laughter.]
Mr. Rolf. Senator, our U.S. headquarters is in Fairfax,
Virginia.
Senator Carper. All right. What part of the country do you
all cover?
Mr. Rolf. We cover Region B, which is seven States in the
Midwest, and that work is performed out of Cleveland, Ohio.
Senator Carper. OK. And our fifth and final witness is
Romil Bahl--is it ``Ra-mill''?
Mr. Bahl. It is ``Row-mill.''
Senator Carper. Is the emphasis on the first or second
syllable?
Mr. Bahl. If you actually do not emphasize either side of
that, it works better.
Senator Carper. It works. Romil. And your last name is B-A-
H-L, but it is pronounced ``ball'' like in baseball. Is that
right?
Mr. Bahl. Close enough again. Thank you, Mr. Chairman.
Senator Carper. All right. President and Chief Executive
Officer of PRGX Global, and I understand you are based in
Atlanta, Georgia, and also do Medicare recovery audit
contracting. What part of the country do you all cover?
Mr. Bahl. Sir, we have an interesting arrangement with
three of my colleagues here on this panel, Regions A, B, and D.
So we are actually serving about 11 States, Senator, sort of
holistically on our own, and then we have roughly 24 other
States that we provide other services to, for example, in the
DME area and home health.
Senator Carper. OK, good. We are happy that you are here,
and you have had a chance to listen to the first panel of
witnesses, and to my colleagues and I ask some questions. Now
we look forward to hearing your testimony. We value the work
that you and your colleagues do for our country, and we want to
make sure that we get the full value out of the work that you
are doing. As I said earlier, everything I do I know I can do
better, and I suspect it might be the same is true for your
folks as well.
So, again, Ms. Alexander, I am going to ask you to lead us
off, and we will make your full statement a part of the record,
and you can summarize as you see fit. Try to stick to about 5
minutes, each of you, if you would. Thank you.
TESTIMONY OF LIBBY ALEXANDER,\1\ CHIEF EXECUTIVE OFFICER,
CONNOLLY HEALTHCARE, CONNOLLY, INC.
Ms. Alexander. Chairman Carper and distinguished Members of
the Subcommittee, thank you for the opportunity to testify
today on preventing and recovering government payment errors.
We appreciate your interest in recovery auditing, a best
practice that is increasingly recognized as an invaluable tool
for returning improper payments to the government and for
identifying ways to mitigate future payment errors. My name is
Libby Connolly Alexander. I am the Vice Chairman of Connolly,
Inc., and the CEO of Connolly Healthcare.
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\1\ The prepared statement of Ms. Alexander appears in the appendix
on page 77.
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Connolly currently serves as a recovery audit contractor,
or RAC, for the Centers for Medicare and Medicaid Services,
Region C, the Southeast, and we were one of the three RACs
during the demonstration program serving in New York and
Massachusetts. We have also performed recovery audit work for
the Department of Health and Human Services, the Department of
Education, and the Defense Logistics Agency.
Since our founding in 1979, Connolly's sole focus is the
identification and recovery of improper payments. I personally
have lived and breathed recovery auditing for the past 25
years. Our company serves some of the world's largest----
Senator Carper. What is it like to live and breathe
something like that for 25 years?
Ms. Alexander. We have something in common: Our passion for
this subject.
Our company serves some of the world's largest and best-run
organizations in the retail, non-retail, health care, and
government arenas. We entered the health care market in 1998
and have since grown to where we now serve commercial insurers,
Blue Cross/Blue Shield plans, Medicare Advantage plans,
Medicaid managed care plans, and, of course, CMS. In all, we
recover nearly $1 billion annually for our clients. Our growth
has been dramatic, including tripling the number of employees
over the course of the past 5 years to over 700 today, a
reflection of the widespread adoption of recovery audit as a
best practice.
Most large organizations have created dedicated teams
assigned to recovery auditing and plan recovery dollars into
annual budgets. The Federal Government recognized the value of
recovery audits nearly 10 years ago, and since that time
strides have been made, with the RAC demonstration program
perhaps being the best example of how a successful national
recovery audit program can be.
As we replicate and build upon the success of the national
expansion of the RAC program and extend the RAC efforts to
Medicare Parts C and D and Medicaid, as called for under
Section 6411 of the Patient Protection and Affordable Care Act
and now the Improper Payments Elimination and Recovery Act, the
country should realize recoveries of billions of dollars
annually.
So what made the RAC demonstration program so successful?
And what can we do to build upon it? In our testimony for the
written record of this Subcommittee, Connolly submitted eight
recommendations to help the government successfully expand its
recovery audit efforts. In the interest of time, I will discuss
only five of them here today.
No. 1, establish goals. In our 30 years' experience, a
successful recovery audit program is achieved when there is a
strong alignment on the metrics against which the success of
the program can be measured. These goals can be determined by
examining agency estimated error rates and the success of
previous recovery audit programs in areas such as outreach,
transparency, and quality.
No. 2, executive sponsorship. Since our earliest years of
conducting recovery audits, we have continually found that
recovery audits are most successful when there is a champion at
a high enough level to see that the program gets off the ground
and continues to see success.
No. 3, provide proper funding and resources to ensure the
greatest financial benefit to the government. Agencies need a
comprehensive program for preventing and recovering improper
payments, and resources for the audit on the agency side should
be established prior to the start of the audit. This would
include resources to assemble audit data and personnel to
approve audit issues for recovery, to manage the collection
process, and to handle provider-vendor relations. Over time
these costs can be funded through a portion of the recoveries
that flow back to the agencies. But to recover the most
improper payments possible, funds and personnel should be put
in place and committed up front to get the program off the
ground.
No. 4, institutionalize recovery audit as a comprehensive
program, not a stand-alone project. By itself, a recovery audit
project can recover some money for the taxpayers which we all
can feel good about. But the true value comes from being part
of a comprehensive program where the agency supports the audit
and uses its results to make continual improvements. Every
agency's mission should include a commitment to recapture
improper payments, support valid overpayments through the
appeals process, and look for ways to improve the recovery
audit program going forward.
No. 5, use the experts. Rely on recovery audit experts to
conduct audits and provide guidance for rolling out future
audits under 6411 of the Patient Protection and Affordable Care
Act. Recovery audit contractors have the people, the tools, the
technology, the processes, the years of experience, and
independence to achieve the goals of a program. Agencies should
focus their resources on the activities necessary to support
the execution of a comprehensive recovery audit program in a
timely fashion and on improvements to prevent improper payments
from occurring in the future.
In conclusion, Mr. Chairman, recovery auditing for the
government is a valuable tool in the war chest against fraud,
waste, and abuse. If an effort is made to align resources and a
commitment made to recover improper payments, then we will
continue to see the kind of success that we saw or encountered
with the RAC demonstration program.
Mr. Chairman and other Members of the Subcommittee, thank
you for the opportunity to provide my insights, and I am
available for any questions.
Senator Carper. Thanks very much.
Lisa Im.
TESTIMONY OF LISA IM, CHIEF\1\ EXECUTIVE OFFICER, PERFORMANT
FINANCIAL CORPORATION
Ms. Im. Thank you, Chairman Carper, Members of the
Subcommittee, for inviting me here to testify. As chief
executive officer of Performant Financial Corporation, I am
happy to say that for over 33 years we have actually worked for
Federal and State agencies to help improve their fiscal and
economic responsibility and accountability. Our first contract
with CMS began in 2005. We were awarded the MSP demonstration
project, and while we had California, which was one of the
three States, we did recover 90 percent of the MSP dollars. We
have had two other contracts with CMS, and we are currently a
recovery audit contract for Region A.
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\1\ The prepared statement of Ms. Im appears in the appendix on
page 81.
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Since February of 2009, we have invested millions of
dollars into our own organization to support the recovery audit
contract. And what we have learned thus far is actually fairly
consistent with what we know from our work with many Federal
and State agencies, including Department of Education and the
Department of the Treasury.
One, seed money is critical to help an agency prepare for a
smooth implementation. Budgeting is a critical issue we
recognize which is addressed in this contract by the self-
funding allowance, but, frankly, more resources were needed up
front to establish the program infrastructure and assure that
CMS could dedicate organizational resources to the contract
start.
Two, contingency fee structures can be and are very
effective for recovery audit contracts. Sometimes this concept
is misunderstood. The parties being audited describe this as a
bounty when, in fact, it is a widely accepted program commonly
deployed by private companies, including providers of health
care. It is one of the best ways to recoup dollars at a value
proposition because in contingency fee contracting, the value
actually equals recovered dollars minus the fees. Therefore,
recovery becomes the lever to drive value. And successful
recovery contracts in our experience at both the Federal and
State level are not necessarily low-priced, but they are a
fixed fee, and so technical competency becomes the decision
factor in a vendor selection process. And the most successful
recovery contracts require that vendor partners continue to
invest in the process to drive greater results over time and to
provide continuous improvement efforts and feedback to the
client.
Third, outreach and education of all constituents is a best
practice that has been applied to this recovery audit contract.
Many of these overpayment errors are inadvertently made, but
still represent billions of Medicare dollars erroneously
disbursed. To educate and help providers, CMS has urged us and
we have committed to extend great efforts to create and
maintain outreach programs to the provider community. There is
a continuous feedback of learning and education with providers
that we have committed to.
Fourth, collaborative efforts between the parties is a best
practice, and by this I mean due to the newness of this
recovery audit contract, there should be a spirit of
collaboration between CMS and the vendor partners, and among
vendor partners, like us, who are encouraged to provide direct
feedback to CMS. This process is a discussion loop to try for
greater consistency and uniformity in processes and enables
continuous improvement in the contract as it matures.
Fifth, the recovery audit concept we believe can be
successfully applied to many other areas of the Federal
Government, including Medicare Parts C, D, and Medicaid.
Clearly, there are very unique challenges to each of these
areas of health care, including disparate technological
platforms, budgetary constraints at the State levels and
elsewhere, and differing current practices which should be
understood and assessed. That said, it is our belief that Part
D is a fairly intrinsic part of Part A and B claims and can be
added to this RAC contract. Many government programs, including
Medicare and Medicaid, employ various types of preventative
programs. To be fair, CMS has a number of preventative programs
in order to help guide and educate the provider groups. But as
an added process, recovery audit contracts can capture dollars
lost just due to errors.
As an example, Senator, Medicare processes 1.2 billion
transactions per year. Provider groups have turnover in people
or expertise, and there is an inherent difficulty in
implementing changing reimbursement rules into systems in a
timely manner. It all causes error that may never be completely
addressed in a preventative way, irrespective of how strong the
preventative program is. And that is why recovery audit
contracts create value to the Federal agency. This kind of
contracting is often deployed by providers in the health care
community who also have very strong preventative programs, but
they also will have a recovery audit kind of process on the
back end to capture any lost dollars.
This RAC contract implementation we believe is just
beginning, but has great potential to succeed in returning
dollars to CMS. Moreover, we think the application of recovery
audit contracting across other Federal agencies has very strong
potential and will be successful if best practices and key
lessons from contemporaries are applied.
Chairman Carper, thank you very much for the opportunity to
testify today.
Senator Carper. Thank you, Lisa Im.
And next, Andrea Benko. Welcome. Please proceed.
TESTIMONY OF ANDREA BENKO,\1\ PRESIDENT AND CHIEF EXECUTIVE
OFFICER, HEALTHDATAINSIGHTS, INC.
Ms. Benko. Chairman Carper, thank you very much for
inviting me to testify before this very important hearing and
for your efforts to prevent and recover government payment
errors. I am president and CEO of HealthDataInsights (HDI). HDI
is a technology-drive health care services company that
specializes in claims integrity. Our customers include both
public and private payers of health care services. The company
employs sophisticated proprietary software tools, database
queries, and complex review strategies to retrospectively
analyze 100 percent of a payer's claims data. We have an
experienced, robust, physician-led clinical team and quality
management team who review more than $300 billion in annual
claims paid data each year. We focus our efforts on the honest
end of the spectrum of waste, fraud, and abuse; that is,
overpayments and underpayments due to improper billing and
other sources of error.
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\1\ The prepared statement of Ms. Benko appears in the appendix on
page 84.
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HDI participated in the RAC demonstration program that
corrected over $1 billion in improperly paid claims. During the
demonstration we identified 41 percent of the total findings
while working with only 31 percent of the data. HDI is the
national RAC in Region D, which includes the 17 Western States
and three U.S. Territories. We also serve as the payment error
measurement review contractor, which establishes the error rate
for the Federal Medicaid program.
I would like to thank CMS for the progress made to date on
the implementation of the national RAC program and acknowledge
the challenges of implementing a program that requires
cooperation among a vast number of contractors while managing
the potential provider impact and the quality of the audit
programs.
While the national program performance to date has been
encouraging, there are a number of ways to achieve greater
success. Based on lessons learned, HDI has the following
recommendations:
First, we strongly urge Congress to establish target
recovery goals of at least 50 percent of an agency's identified
payment error as estimated in the annual reports. For example,
based on the 2009 Medicare fee-for-service error rate, the
annual recovery goal would be $12 billion for this program,
half of the projected error rate as established by the
Comprehensive Error Rate Testing (CERT) program of $24 billion.
Second, claims adjustment processes to recover the improper
payments identified must be expedited and expanded to
materially benefit the trust fund. Currently, automated mass
adjustment processes to adjudicate incorrectly paid claims are
in development, and until those are implemented, we need to
increase the manual throughput to accelerate returns to the
trust.
Third, expansion of the quality and scope of reviews is
necessary. To the extent that RACs are allowed to review
inpatient claims and other new issues more quickly, we believe
returns to the Medicare Trust Fund will rapidly increase.
Another issue to consider is the current limitation on the
ability to request medical records from providers within the
RAC program.
Fourth, CMS has conducted major finding discussions with
contractors to determine strategies to reduce improper payment
types, and this should be implemented as this recovery program
is rolled out in all agencies.
Fifth, Medicare's provider network is a key component to
the delivery of quality health care, and as such, our efforts
are sensitive to providers. All constituents of health care
delivery systems desire claim payment integrity and accuracy.
Claims should be paid according to policies and fee schedules.
No more, no less. This creates a sentinel effect of ensuring
that providers continue to maintain solid billing and treatment
practices. Medicare policies, coverage requirements, and
guidelines, which have been so carefully developed over
decades, are evidence-based, proven protocols for delivering
patient care that ensure quality.
Our final recommendation is to leverage the success of the
Medicare RAC program by extending it to other government health
care payers. While there is a mandate that a RAC-like project
be implemented in Medicaid as well as Parts C and D, we believe
that the benefit to the government, when data is aggregated. If
data can be audited and analyzed for an entire region for
Medicare fee-for-service, Medicaid, and Part D, we can identify
more improper payments through better data quality, more
significant statistical analysis, and the impact on the
provider can be effectively managed via one coordinated program
that maximizes the return to the trust fund and minimizes the
impact on the provider networks. The government would also
benefit by expanding the RAC to the Federal Employees Health
Benefit (FEHB) Program , the VA, and TRICARE.
In summary, we believe at HDI that there is a tremendous
opportunity to ensure claim payment integrity and quality and
to realize literally hundreds of billions of dollars over the
next 10 years in recoveries for the government.
Thank you.
Senator Carper. Good. Thanks. And thanks for mentioning the
Federal Employees Health Benefit Plan, the potential there, and
the VA as well.
Mr. Rolf, welcome. Please proceed.
TESTIMONY OF ROBERT ROLF,\1\ VICE PRESIDENT FOR HEALTHCARE BPO,
CGI FEDERAL, INC.
Mr. Rolf. Thank you, Chairman Carper, Ranking Member
McCain, and Members of the Subcommittee. My name is Robert
Rolf. I am vice president for CGI Federal, an information
technology and business process services company that has been
partnering with government for nearly 35 years.
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\1\ The prepared statement of Mr. Rolf appears in the appendix on
page 90.
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In my role, I am responsible for CGI's efforts to implement
the Recovery Audit Contractor program in Region B, a seven-
State region in the Midwest, as well as similar audit and
recovery efforts that CGI performs for its State government and
commercial clients. It is my pleasure to appear today before
you at this hearing to examine the use of RACs in the Medicare
program.
Under CGI's contract with CMS, we are tasked with the
identification of improper payments made to hospitals,
physicians, clinics, and other providers of services under
Medicare Parts A and B. This work involves conducting audits of
paid claims using both automated and manual review processes
intended to identify provider overpayments and underpayments.
Although most of this work involves catching improper payments
on the back end, CGI fully supports all efforts to prevent such
payments from happening in the first place. We currently assist
CMS in the development of an improper payment prevention plan,
a mission that CGI takes very seriously.
As a result of CGI's experience with the RAC program, I
would like to share a few observations about this important CMS
program and some lessons learned about recovery audit efforts
with the Subcommittee.
First, transparency and communication are critical to the
success of the program. It is important that RACs provide
transparent information to Medicare providers regarding the
program, the issues under investigation, and the basis for an
improper payment determination.
Second, the RAC program promotes continuous process
improvement for claims processing and payment. CGI participates
along with the other RACs in major finding discussions with
CMS. This process informs CMS of areas representing the
greatest vulnerability to the program, along with
recommendations for corrective action.
Third, there is the potential for this contingency approach
to expand to other areas across government. Several legislative
provisions in the Affordable Care Act expand the RAC program to
Medicaid as well as Medicare Parts C and D. And now, thanks to
your leadership, Chairman Carper, along with Ranking Member
McCain and Senators Lieberman, Collins, McCaskill, and Coburn,
CGI believes that with the final passage of the Improper
Payments Elimination and Recovery Act, combined with OMB fiscal
year 2012 budget guidance, we will focus agency attention on
this topic in an unprecedented fashion across the entire
Federal Government.
When expanding into new areas for recovery audit, it is
important to note that while there are many similarities, there
will be some differences in approach from the existing RAC
program. One common lesson learned from any recovery audit
program, whether in health care claims or other payment areas,
is the need for a robust process to recover funds identified by
a RAC as improper.
Companies such as those before you today are adept at
analyzing and identifying improper payments out of the millions
of transactions that occur in programs each year. However,
without the necessary infrastructure to recover the funds, the
government will be slow to realize the benefit a RAC program
can bring.
CGI prides itself on combining cutting-edge technology with
years of domain experience in creating valuable solutions for
our clients. We are especially proud of our ability to deliver
successfully on the RAC program by featuring our health care
expertise and broad experience in audit recovery programs. More
than that, CGI remains passionate about the opportunity to
partner with CMS and hopefully other Federal agencies in one of
the most critical good-government efforts underway today.
I appreciate the chance to appear before you today, and I
would be pleased to answer any questions you have.
Senator Carper. Thanks, Mr. Rolf. Mr. Bahl.
TESTIMONY OF ROMIL BAHL,\1\ PRESIDENT AND CHIEF EXECUTIVE
OFFICER, PRGX GLOBAL, INC.
Mr. Bahl. Thank you, Mr. Chairman.
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\1\ The prepared statement of Mr. Bahl appears in the appendix on
page 93.
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Mr. Chairman, Senator McCain, distinguished Members of the
Subcommittee, PRGX very much appreciates the opportunity to
testify before this Subcommittee, and it is my privilege to
represent our team here today. We are gratified by the
Subcommittee's efforts to tackle the problem of improper
payments, most recently, of course, the passage of the Improper
Payments Elimination and Recovery Act of 2010.
The act removes major impediments to successful recovery
audits and, most importantly, incents agencies by allowing them
to keep a portion of the funds recovered. This act, coupled
with the expansion of recovery audits included in the recent
health care legislation, more than doubles the levels of
auditable Federal spending. We are excited about this expansion
and look forward to competing for the opportunity to recover
more taxpayer dollars.
While the rules for the expansion to Medicare Parts C and D
and Medicaid across the 50 States will not be known until CMS
and the States issue their solicitations and launch formal
procurement processes, we are convinced that the application of
proven recovery audit capabilities to these other areas of
Medicare and Medicaid will yield great returns. Recovery audit
potential has also been advanced by the administration's
emphasis, including the President's personal endorsement, of
the recovery audit process.
PRGX is the global leader in recovery audit and the pioneer
of a new category of services we term ``profit discovery.'' Our
services: Audit, analytics and advice, are key elements of
successful financial management in large private enterprises
and in government agencies. We also have one of the longest
track records in recovery auditing for the Federal Government.
Based on our 40-plus years of experience since pioneering
the recovery audit industry, we believe there are four key
success factors for a government agency to run an effective
audit: One, an effective program champion; two, a broad scope
audit; three, strong motivation, certainly with no
disincentives; and, four, a capable recovery audit services
partner.
In doing our work, we abide by a number of key principles:
Integrity, confidentiality, security, and always value for our
clients. Also, we are sensitive to the providers and other
vendors we work with and, in fact, one of our key metrics is
provider abrasion or vendor abrasion.
It is part of our commitment to our clients, including CMS,
that we are fair in all our dealings with the hospitals, the
physician groups, and all other providers as we audit on behalf
of the taxpayer.
It may also be worthwhile to mention that there are three
key pillars to how we approach recovery audit. As we have said
for long at our company, first, we make sure that the juice is
worth the squeeze. Our very heavy, front-loaded investments
demand a high confidence that we can deliver results.
Second, we turn over big rocks before the pebbles. We do
not spend dollars to chase dimes, nor should the American
taxpayer.
And, finally, we focus a lot of effort on getting it right
the first time. Our focus on accuracy is paramount and is
demonstrated by PRGX having the lowest percentage of findings
overturned on appeal during the Medicare RAC demonstration
program.
We bring this expertise and commitment to our work with CMS
and the provider community to optimize recoveries as a core
part of their overall program integrity efforts. As an auditor
in three of the four recovery audit regions, we have a broad
and unique perspective on the processes and the errors that
take place.
The same methodical, careful implementation that CMS is
using with its national Medicare RAC program should also be
emulated in other Federal agencies, and now it can be, given
the means provided in your recent legislation.
PRGX's Medicaid recovery audit experience incorporates many
of the lessons we have learned from the Medicare RAC program.
Our estimates suggest that recoveries in Medicaid alone could
be more than $1.35 billion annually.
Our recommendations for the national Medicaid expansion
include the following: Create a set of guidelines for process
automation and streamlining of appeals to get each State's
Medicaid recovery audit program up and running quickly; and,
further, the audit concepts that have already been approved for
the national Medicare RAC program could be carried over to
fast-track State Medicaid recovery audit programs, thereby
reducing duplication of effort, reducing provider confusion.
Error rates for Medicare Parts C and D also suggest great
potential for recoveries, and we are eager to begin helping CMS
identify and recover these funds. We suggest focusing the
recovery audit effort on the transactions between the Medicare
Advantage and prescription drug plans and the provider. This is
where the complexity lies. This is where the errors occur.
Because Medicare Part C and Part D plans are administered
by private enterprises that bear the actuarial risk, the
recovered funds in any fiscal year could accrue back to the
plans, thereby providing them the appropriate incentive to
implement effective recovery audit programs. But CMS should
then use the adjusted costs to revise future annual premiums,
thereby effectively bending the health care cost curve going
forward.
The lessons learned from the Medicare RAC program, the new
authorities and incentives provided in legislation, and a
renewed emphasis by the Executive Branch have set the stage for
great strides in tackling improper payments. We are proud, sir,
to be part of these efforts.
I would now be happy to answer any questions you may have.
Thank you again.
Senator Carper. Thank you all.
How many of you have testified before, before the House or
Senate? Raise your hand. So this is the first time. That is
good. Well, you did a very nice job. Very nice job.
You have the benefit of being the second panel, and you
have had a chance to listen to the first panel. And I do not
want to spend a lot of time on this, but I would like to ask
each of you to maybe take 30 seconds or so, anything you want
to reflect on that you heard from the first panel that you
think should be underlined, emphasized, maybe should question,
but just go back to what you heard in that first panel and let
me hear from you. Ms. Alexander, I do not want to pick on you,
but if there is anything you would like to just reflect on and
react to the first panel's comments.
Ms. Alexander. Some final remarks, actually, that Deb
Taylor was making with regard to the correction of some of the
identified improper payments. I do support what she was saying,
that some of them are much more easily addressed than others.
Some of these errors can be fixed with, adjustments to computer
edits and things like that, very easy and very efficient to
address. But, other the root cause of some of these errors is
much more complicated. And, we have been in the recovery audit
business for a very long time, and most of our business is
repeat business. I would assume it is the same for my
colleagues here at this table.
I think that the notion that you can completely fix and
make errors go away is something that needs to be considered.
Senator Carper. All right. Thank you.
Ms. Im, a reflection on anything that you heard that you
want to just emphasize.
Ms. Im. Sure. Again, I think I just want to speak to the
error correction and the prevention piece of it, sir. A good
recovery audit program will continually find areas for
opportunity for improvement, and I think that is what makes us
good partners, is if we continue to find room for improvement.
So, again, to the extent that 100 percent prevention is in a
perfect world, we as partners to CMS can help continue to
improve that process over time.
Senator Carper. OK, thank. Ms. Benko.
Ms. Benko. I have to add to that, because we have been
doing health care auditing for 25 years, and we do not find the
same things today that we found 5 years ago. When something
gets fixed something else pops up because there are new
treatments, there are new ways of billing, there are all kinds
of new things.
The other issue is that, a lot of emphasis this morning was
put on correcting vulnerabilities, and in the new program, the
more dollars that we can recover, the more opportunity to
identify vulnerabilities. The program is slowly ramping up. So
as it ramps up, there will be more opportunity, and I think if
we can accelerate the ramp-up, that would be to all of our
benefit.
Senator Carper. Good. Thank you. Mr. Rolf.
Mr. Rolf. I was intrigued by the discussion concerning the
Part D error rates, and the issue that I see is you can attack
both these--what we are doing now in the Part A and B program,
separate from the errors that were discussed earlier today on
the Part D side. But the real synergies that you are going to
achieve is when you can compare across both of those programs,
analyze the data across both of those programs, and identify a
third set of errors that are independent from each other.
So while it was significant, the discussion that was had
this morning, I think there is an untapped opportunity there to
be able to discover additional improper payments by integrating
the reviews between the Parts A and B and the D.
Senator Carper. All right. Thanks. Mr. Bahl.
Mr. Bahl. Mr. Chairman, if I could first, sort of two
reactions to this morning. As a taxpayer, as a good corporate
citizen, I know my PRGX team would join me in saying that I was
gratified. The obvious interest and passion to fix
overpayments, whether they are, erroneously done or whether
there is actual fraudulent misconduct conducted, was absolutely
terrific.
Without saying anything different from what the other
panelists have said, I do think focusing on fixing the gaps as
you go along is crucial, sir. I will tell you that after 40
years of recovery auditing in this industry, we believe
entirely so--and this is true right across the private sector
for all our clients--that they do not only want us to fix
recoveries. They want us to give them simplified, improved
operating environments, to be strategic partners with them, to
close those gaps that are causing those errors all the time. It
is increasingly not a differentiator. It is increasingly table
stakes for a recovery auditor to audit a client, to be able to
fix those errors as we go. And so we look forward to being
involved in that.
Senator Carper. OK. I pressed our witness from CMS on a
timeline. I said, ``Give me a timeline for''--we do not have
the chart up, but for the vulnerabilities that have been
addressed--I think 40 percent of them have been, about 60
percent have not been. And as you suggest, Ms. Alexander, some
of them are easy, some of them are not. And maybe a couple of
them require legislation.
But I said before, if we do not have a timeline, if we do
not have a date that we are trying to get something done or
something close to that, then these kinds of things just
stretch out forever.
Also, I questioned our witnesses about how realistic is it
to expect to expand cost recovery in Parts C and D by the end
of this year, how realistic is it to expect for us to have it
done in 50 States. And let me just come back to that second
part, the expansion of C and D by the end of this year,
December 31st, and the expansion of this capability in all 50
States. How realistic is that? And I am concerned--I was
encouraged by what I heard on Parts C and D, not so encouraged
on what I heard about the States. As an old Governor, a former
Governor, a recovering Governor, I can appreciate a little bit
why that might be.
Anybody have any thoughts on the expansion, how realistic
are we in our expectations? Please, Mr. Rolf.
Mr. Rolf. Chairman Carper, regarding the expansion and the
time frames, I agree with you that work tends to expand the
time allotted, and it is a statement within my company that
what gets measured gets done. And so I would agree with you the
time frames need to be set, and they need to be aggressive time
frames to move forward.
Regarding the specific areas of expansion to C and D and
into Medicaid, many of us up here today have experience in
those areas now working with Medicare Advantage plans, working
in the Medicaid arena, have the experience to be able to
quickly move into those types of programs. I think it would be
difficult given the current state of Federal procurement time
frames, I think that the chance for the agency to be able to
meet those time frames is to leverage existing contract
vehicles they have in place today.
Senator Carper. All right. Thank you. Mr. Bahl.
Mr. Bahl. Thank you, Mr. Chairman. You know, if I could be
so bold as to quote what you quoted, I think, just a few months
ago, you quoted Willie Sutton, did you not, sir? There is money
there, right? There is over $600 billion just of auditable
spend, and we must get after it.
I think one of the potential issues that is in front of the
CMS is while Medicaid expansion should be relatively easy
because it is very sort of RAC-style, right, fee-for-service,
and the question is only will there be 50 independent
procurements with the States or not. I mean, that I think can
roll out quickly.
There is some complexity with respect to Parts C and D,
sir. Those are obviously run by private enterprises that bear
the actuarial risk, and so, our suggestions specifically in
that--just like what you did in S. 1508, you provided for some
incentives for the government agencies. That sort of incentive,
therefore, has to be provided to the plans, the plan
administrators themselves.
And so while we must audit where the money is in the
transactions set between those plans and the providers, we
believe that we give back, right, the recoveries in any given
year back to those private players so that they are incented.
But then the CMS is incented, as I said before, to bend the
cost curve, to use that adjusted amount each year to apply
their SGI and other cost increases.
Senator Carper. All right. Thank you.
Ms. Benko, Ms. Im, Ms. Alexander, any other comment on this
point?
Ms. Benko. We are be ready to take on additional work with
the Medicaid and the Part D plans absolutely quickly. We know
where the errors are. We could incorporate that into the work
we are already doing with the Medicare Part A and B, and it
could happen this year. It is more CMS has to set out a goal of
what they want to accomplish and make it happen.
Senator Carper. OK. Thank you. Ms. Im.
Ms. Im. Chairman Carper, I would agree with what Andrea has
said, and, moreover, the type of infrastructure and alignment
that CMS has to do in order to engage a vendor because of all
of the multiple partners requires that they leverage what work
has already been done. So our experience has been that these
are no small tasks for any agency to face, and for CMS to
expand current contracts feels a lot more effective and
efficient than to actually go out and have to do another whole
stream of procurements and technological matching. So it
certainly sounds a bit self-serving, but we are prepared also
to take on additional work based on this being a recovery audit
contract, very prepared to help CMS make continuous
improvements in Part D, and C as well.
Senator Carper. Good. Thanks. Ms. Alexander, a comment?
Ms. Alexander. I agree that a coordinated approach would be
the most efficient under the time frame that has been
established. I also think that they should move forward and
segment the eligibility and the other payer liability type
recovery work separately from the type of recovery audit
contracting overpayment work that we are doing currently.
Senator Carper. OK. Thank you.
I am going to ask each of you to take a shot at this
question. I am supposed to be someplace else right about now,
and so I am going to be mercifully brief with you. But this is
a good panel. I hate to let you go too soon. But I have a
question, again, for each of you.
Some of you included in your testimony specific
recommendations, I think at least the first three witnesses,
maybe others, but specific recommendations--I do not know if we
asked for them. Did we ask for our witnesses to give us
specific recommendations for improving the program? But you
did, and we appreciate that.
Do you all believe that CMS should establish a goal for the
collection of improper payments? I think I know the answer to
that question, but do you agree that they ought to set a goal
for collection of improper payments? Sort of describe that goal
for us, if you would. Like if you were in their shoes and you
were setting a goal, what might that goal be? How might you set
it? What would you keep in mind in setting the goal? And I
think that sort of thing is maybe done more often in the
private sector than the public sector. But we need to set some
goals here, and I think we need to set some timelines. But just
respond to that, if you all would. I do not care in what order
you respond.
Ms. Benko. I will start.
Senator Carper. Please.
Ms. Benko. If I was running CMS, I would look at the CERT-
identified error rate because that is the error rate that can
be recovered. It is on the honest end of fraud, waste, and
abuse.
Senator Carper. You say the ``honest end.''
Ms. Benko. It is mistakes. It is not a criminal intent
where you are never going to get the money back because the
person has taken the money and left the country. The money is
still here. The providers are still participating in Medicare.
So I would look at that CERT error rate, which is, I believe,
in 2009 $24 billion of errors. And then I would look at how am
I going to be impacting the providers and the beneficiaries and
the quality of care, and I would balance it.
So I would set at least half of that as a goal, that I
should be--and ultimately I would want to recover all of it,
but I would say at least half of that should be able to be
recovered. I mean, you saw $1 billion recovered from three
States. It is definitely doable on a national program.
Senator Carper. OK. Thanks.
Anyone else? Please, Mr. Rolf.
Mr. Rolf. Chairman Carper, I would agree with Andrea. I
would also say that, as she pointed out, since $1 billion was
recovered in States representing approximately 25 percent of
the program, a minimum threshold should be, in rolling it out
to the rest of the country, should be to achieve what was
achieved during that program. So a floor should be at least $4
billion.
Senator Carper. OK. Thank you. Mr. Bahl.
Mr. Bahl. Mr. Chairman, there is not a whole lot to add to
that. The only thing I would say, because you specifically
asked what else should one keep in mind, and I do think that
what we are asking the agency to do--in this particular case,
it is the CMS--in terms of managing those provider abrasion
levels and so forth that I was so key on earlier, have to be
kept in mind. And so I think, somewhat of a slow and steady
approach to ramps is OK, but then absolutely, I could not agree
more with Rob. Our number is closer to five on that chart than
it is four.
Senator Carper. All right. Thanks. Ladies, anything you
want to add before we----
Ms. Alexander. The only thing I would add is there are two
pieces to goals, right? There is the quantitative goals, the
financial goals, which are very, very important in creating
alignment and the resources and the objectives of reaching
those financial goals. But equally as important are the
qualitative goals around things that are important to making
the program a success beyond just the numbers. So, goals have
to really reflect both qualitative and quantitative pieces.
But the projects that, have strong alignment between a
client and a contractor are where those goals are clearly
understood so that everybody is marching along toward the same
goal line.
Senator Carper. OK. Thanks. Ms. Im, anything else you want
to add?
Ms. Im. Mr. Chairman, the only thing I would add is in a
collaborative effort, which we believe this should be, those
numbers will not be absolute over time, but will continue to
change with feedback and learning from the RAC contract.
Senator Carper. OK. All right.
If 2 weeks goes by and you do not hear any questions, you
are free and clear, at least from my colleagues and me. My
guess is that you will probably hear some questions from us,
and I appreciate your willingness to respond to some of my
questions today.
I said earlier I am a boomer. I was born in 1947. A lot of
people were born that year and the years that followed that as
well. There are a lot of us, and it is amazing how--I try to
work out just about every day of my life, and one of the places
I work out is the YMCA. We have great YMCAs in Delaware. I
usually work out at one of them before I get on the train and
come on down here. But you would be surprised how many people
say to me, ``Do you think Social Security will still be there
when I am ready for it? Do you still think we will have a
Medicare program when I am eligible for it?'' And I say, ``You
bet we will. And we are determined to make sure that you do.''
I was on the phone this morning with Erskine Bowles, as I
said earlier, just talking through some of the entitlement
programs and what we might do and sharing with him a little bit
of the work that you are doing and the promise that I think it
holds for our broader Federal Government. But I come back to--
Dr. Coburn said that he thought maybe 1 percent of the claims
paid by a private health insurance company there is fraud
involved. It sounds pretty low, especially if you are looking
at Medicare and these fraud numbers look to be anywhere from
about 8 percent to maybe 15 percent. I cannot believe that they
are that good and that we are that bad.
But whether it is 8 percent or 10 percent or 12 percent, we
can do a lot better than that, and we really need to. So when
those people who are at the YMCA or on the train or down in
southern Delaware at the beaches, when they say, ``Well, is
Medicare going to be there for me?'' I will say, ``You bet it
is.'' And one of the ways we are going to make that happen is
what you are doing.
I think it is really--and Peter Tyler, who has helped me
with putting this hearing together, one of the points that he
keeps coming back to is a really good one--is it is not just
important that you figure out how to go out and recover some of
this money. It is important that you figure out how to provide
less--what do you call it? ``Provider abrasion,'' I think that
is the term that you used--and we actually have learned from
the first several years of the program how we can interact
better with hospitals and doctors and nurses and other
providers. But a big part of this is actually having identified
the other vulnerabilities and for CMS to take that seriously
and aggressively and go out and address those rather than must
keep making those same mistakes. Three hundred million dollars
year after year after year, that adds up pretty quick.
I am a recovering State treasurer, too. When I was elected
State treasurer, I was 29, and in the State of Delaware, nobody
wanted to run as a Democrat, so I got to run because nobody
wanted to. And at the time we had the worst credit rating in
the country. We were tied for dead last with Puerto Rico. They
were embarrassed to be in our company. Delaware was very good
at the time at overestimating revenues and underestimating
spending, and that is how we got the worst credit rating in the
country. We had all the money in the State-owned bank that was
about to go under, and we had $40,000 of FDIC insurance on it.
We had no cash management system, and nobody would lend us any
money. And I got to be State treasurer. And from an early age,
I have been interested in trying to figure out how to spend our
taxpayers' money wisely.
And with respect to Medicare, we actually do spend
taxpayers' money from the employers and the employees who pay
into the fund, for the most part. There are some general fund
monies as well. But a lot of the spending that we do in our
government today is not taxpayer money. It is money that we
just borrow from the Chinese or from the Japanese, from the
Brits, and from anybody else, the folks that have all that oil
who turn around and lend us money.
We have to be smarter than that, and with your help we are
going to be. In fact, I think we already are.
Thank you very much, and with that, this hearing is
adjourned.
[Whereupon, at 12:31 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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