Health Subcommittee Examines How to Prevent Health Care Waste, Fraud, and Abuse

November 28, 2012

WASHINGTON, DC – The Health Subcommittee, chaired by Rep. Joe Pitts (R-PA), today examined current anti-fraud measures employed by the Centers for Medicare and Medicaid Services (CMS) and discussed potential new approaches to fraud prevention. The Government Accountability Office (GAO) has repeatedly designated Medicare and Medicaid as being at “high risk” for fraud, abuse, and improper payments. With some estimates predicting the Medicare program could go bankrupt as soon as 2017, the committee focused on new approaches to address these substantial and ongoing threats.

“In May of this year, the Department of Justice brought charges against 107 individuals who bilked Medicare for over $452 million,” said Pitts. “Just seven individuals in Louisiana were responsible for over $225 million of this fraud. In a separate case in February, a single Dallas doctor was arrested for making $350 million in false claims. In February 2011, 114 individuals who had bilked over $240 million were arrested in another crackdown. All told, that billion dollars in improper payments represents less than two percent of the estimated $60 billion annually lost to waste fraud and abuse.”

Pitts continued, “As bad as that number is on its own, I want to put it into context. The Medicare program is running out of money – the CMS Actuary predicts the program could be insolvent in just five years. One area of reform that I hope we can tackle in a bipartisan way is the area of fraud and abuse in the Medicare program. The federal government has made strides recently to improve catching fraudulent providers and beneficiaries, and I commend them for their efforts. However, at the same time, they have largely failed to implement mechanisms that would prevent fraudulent payments from being made in the first place. Prosecuting offenders does not get back all the money they stole.”

During the hearing, Kathleen King, Director of Health Care for the Government Accountability Office noted, “CMS has not implemented some of the key strategies we identified in our prior work to help CMS address challenges it faces in preventing fraud.” The strategies the GAO cited included “strengthening the provider enrollment processes and standards, improving pre- and post-payment claims review, and developing a robust process for addressing vulnerabilities.” King added that the administration has not met their goal of reducing improper payment rates by half by 2012.

Rep. Phil Gingrey, M.D. (R-GA) highlighted that the current health care law includes several anti-fraud provisions; however, the administration has failed to employ several of the safeguards required in the law. Gingrey concluded, “The administration owes us an accounting of the reasons why to date seven of the eight provisions have not been implemented.”

Alanna Lavelle, Director of Special Investigations for Wellpoint, Inc., highlighted several solutions, such as: establishing a restricted recipient program in Medicare Part D for those beneficiaries displaying a pattern of improper use; locking dual eligibles with evidence of drug-seeking behavior into one managed care plan; lifting the Minimum Loss Ratio (MLR) calculation; and improving coordination and cooperation among CMS, DOJ, and all stakeholders.

Lavelle added, “The most effective way to address health care fraud and abuse is to forge a close and active partnership between private health plans, government agencies, and the provider community. It is only through cooperation and collaboration between the public and private sectors that health care fraud and abuse can be meaningfully addressed.”

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