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Letter to Chairman Upton, Chairman Pitts, and Chairman Stearns

Letter

By:
Date:
Location: Unknown

Today Energy and Commerce Committee Ranking Member Henry A. Waxman, Oversight and Investigations Subcommittee Ranking Member Diana DeGette, and Health Subcommittee Ranking Member Frank Pallone, Jr. sent a letter to Energy and Commerce Committee Chairman Fred Upton, Oversight and Investigations Subcommittee Chairman Cliff Stearns, and Health Subcommittee Chairman Joseph R. Pitts requesting a hearing on a study released today by the HHS Inspector General indicating that private Medicare Advantage (MA) fail to effectively detect, prevent, and report Medicare fraud. The study finds that a significant percentage of MA organizations fail to report incidents of fraud and abuse and that reporting varies significantly among MA organizations.

February 24, 2012

The Honorable Fred Upton
Chairman
Committee on Energy and Commerce
U.S. House of Representatives
2125 Rayburn House Office Building
Washington, DC 20515

The Honorable Cliff Stearns
Chairman
Subcommittee on Oversight and Investigations
U.S. House of Representatives
2125 Rayburn House Office Building
Washington, DC 20515

The Honorable Joseph R. Pitts
Chairman
Subcommittee on Health
U.S. House of Representatives
2125 Rayburn House Office Building
Washington, DC 20515

Dear Chairman Upton, Chairman Pitts, and Chairman Stearns:

We are writing to request a hearing to examine the findings of a study released today by the HHS Inspector General that raises serious questions about the current efforts of private Medicare Advantage (MA) plans to detect, prevent, and report Medicare fraud. [1] The Inspector General found that a significant percentage of MA organizations failed to report any potential fraud and abuse incidents, that the "volume of potential fraud and abuse incidents identified by MA organizations varied significantly," and that "MA organizations lack a common understanding of key fraud and abuse program terms."[2] According to the Inspector General these findings "raise questions about whether all MA organizations are implementing their programs to detect and address potential fraud and abuse effectively." [3]

Under the MA program, private insurance companies contract with the Center for Medicare and Medicaid Services (CMS) to offer coverage for Medicare beneficiaries. In 2010, 24% of Medicare beneficiaries were enrolled in MA plans, accounting for $115 billion of Medicare's $504 billion in total costs.[4] The private MA plans are not able to provide care for seniors as efficiently as the traditional Medicare program. According to the Medicare Payment Advisory Commission, the federal government spends approximately 10% more per beneficiary under the MA program than under traditional fee-for-service Medicare.[5] The new IG report indicates one potential reason for the inefficiency of MA plans: their inability to effectively detect, prevent, and report fraud.

The IG collected data on the number of potential fraud and abuse incidents identified by MA organizations in 2009 and the number of subsequent inquiries, corrective actions, and referrals the plans undertook to address the potential fraud and abuse. The IG received data from 170 MA organizations accounting for 4,547 plans and 94% of all MA enrollees.[6]

The IG found that 19% of MA organizations (33 of 170) did not identify any potential fraud and abuse incidents in 2009. An additional 24 organizations identified no potential incidents of fraud in their Medicare Part D prescription drug plans and 11 organizations identified no potential incidents of fraud in their Medicare Part C plans.[7]

The IG's study also revealed dramatic variation in the volume of potential fraud incidents identified by MA organizations. Three organizations were responsible for 95% of the reported potential incidents -- nearly 1.4 million potential incidents -- with the remaining 134 organizations reporting only 5% of all fraud incidents, despite having a total enrollment of 9.9 million beneficiaries.[8]

The IG's study also revealed that MA organizations are not always taking appropriate steps to initiate inquires and corrective actions when they identify incidents of potential fraud. The IG found that 30 organizations did not initiate inquires despite identifying more than 18,000 potential fraud and abuse incidents. Sixty-four organizations did not initiate any corrective actions in response to nearly 8,300 incidents of potential fraud.[9]

The findings of the IG's study raise significant questions about whether MA plans are taking sufficient action to prevent fraud and abuse. These private plans' fraud prevention and reporting records contrast unfavorably with the traditional Medicare program. At an Oversight and Investigations Subcommittee March 2011 hearing, Members heard from CMS officials about successful steps taken under the Obama Administration to reduce Medicare waste, fraud, and abuse.[10] Many of these steps were made possible through new funding and new authority provided by the Affordable Care Act.

The findings of the IG indicate that MA plans are failing to screen for, prevent, and report fraud and abuse -- failures that would result in higher premiums and co-pays for enrollees, higher costs to taxpayers, and an overall increase in health system costs. We believe the Committee should examine why so many of these private plans appear to be unable to effectively identify and prevent fraud.

Last year, the Oversight and Investigations Subcommittee held a hearing to examine Administration efforts to reduce fraud and abuse in the traditional Medicare program, but we have not provided similar inquiry into private MA plans.[11] The Committee should rectify this oversight and convene a hearing to examine the IG's findings that appear to indicate that private MA plans are not effectively fighting Medicare fraud and abuse.

Sincerely,

Henry A. Waxman
Ranking Member

Diana DeGette
Ranking Member
Subcommittee on Oversight and Investigations

Frank Pallone, Jr.
Ranking Member
Subcommittee on Health

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