Senators Carper, Coburn and Congressmen Roskam, Carney Lead Bipartisan Effort to Combat Billions of Dollars in Waste, Fraud and Abuse in Medicare and Medicaid

Press Release

Today, Senate Homeland Security and Governmental Affairs Committee Chairman Tom Carper (D-Del.) and Ranking Member Tom Coburn (R-Okla.), together with Reps. Peter Roskam (R-Ill.) and John Carney (D-Del.), introduced bipartisan legislation to combat and prevent waste, fraud and abuse in Medicare and Medicaid. The "Preventing and Reducing Improper Medicare and Medicaid Expenditures Act of 2013," or the PRIME Act, would address a set of problems that lead to billions of dollars lost to waste and fraud in Medicare and Medicaid every year. In the Senate, the PRIME Act is cosponsored by Senators Michael Bennet (D-Colo.), Chris Coons (D-Del.), Amy Klobuchar (D-Minn.), Mary Landrieu (D-LA), Claire McCaskill (D-Mo.) and Mark Warner (D- Va.). In the House of Representatives, the bill is cosponsored by Representatives Ron Barber (D-AZ), Randy Hultgren (R-IL), Tom Reed (R-NY), and Kurt Schrader (D-OR).

Among its provisions, the PRIME Act would: enact stronger penalties for Medicare and Medicaid fraud; curb improper or mistaken payments made by Medicare and Medicaid; establish stronger fraud and waste prevention strategies within Medicare and Medicaid to help phase out the practice of "pay and chase;" curb the theft of physician identities; expand the fraud identification and reporting work of the Senior Medicare Patrol; take steps to help states identify and prevent Medicaid overpayments; and improve the sharing of fraud data across state and federal agencies and programs.

"Medicare and Medicaid are two of our nation's most critical safety-net programs that millions of our most vulnerable Americans -- the poor, the elderly, and the disabled -- depend on every day for life saving healthcare," said Chairman Carper. "We have a solemn responsibility to ensure that these programs have the resources they need to provide quality care and services, and part of that effort means cracking down on vulnerabilities in these programs that put taxpayer dollars at risk for waste, fraud, and abuse. The PRIME Act is what I like to call a win-win for those of us who are concerned about protecting Medicare and Medicaid by ensuring that these programs have the resources to provide excellent care for beneficiaries and that taxpayer dollars are spent responsibility and effectively. Put simply, this bipartisan legislation builds on previous reforms by enacting additional common sense measures to better protect Medicare and Medicaid against instances of waste, fraud, and abuse."

"Americans who rely on Medicare and Medicaid expect Congress to work together to reduce waste and fraud," Dr. Coburn said. "Improper payments divert scarce resources away from those most in need. I'm pleased there is a bipartisan consensus to address this issue by making substantial improvements to restore the integrity of these programs. Our proposal builds off the recommendations of numerous health care experts to establish policies that would deter organized fraud by strengthening penalties for criminals, enhancing abuse reporting programs, and promoting data sharing. Our proposal gained significant support in the last Congress from both sides of the aisle, and I look forward to working with both my Republican and Democratic colleagues further to ensure our health care programs are accountable and transparent."

"This is the kind of bipartisan, good government solution the American people desperately want from Washington," said Representative Roskam. "The problem of Medicare fraud is an urgent one -- we cannot continue to allow these critical programs to be fleeced because of carelessness or criminals gaming the system. The program's current pay-and-chase model pays out even suspicious Medicare claims, costing taxpayers billions of dollars. By combining 21st century technology and common sense solutions, the PRIME Act can help stop fraudsters in their tracks and make Medicare and Medicaid more financially stable for the long term. The PRIME Act is the right move for our nation's seniors and protects the programs that so many rely on."

"These days, finding areas where Democrats and Republicans can agree isn't always easy. But cracking down on waste, fraud and abuse is something we can all get behind," said Congressman Carney. "The PRIME Act strengthens Medicare and Medicaid and protects seniors from becoming victims of fraud. This bill puts in place straightforward mechanisms to shore up areas of Medicare and Medicaid where we know taxpayer dollars are at risk."

Below are some solutions the Medicare & Medicaid PRIME Act proposes to save taxpayer dollars:

Prevent Medicare Thieves from Pretending to be Doctors

Problem: Law enforcement officials have reported incidences where "dead" doctors have prescribed drugs and billed Medicare, which are clear warning signs of identity theft. The Government Accountability Office (GAO) has found Medicare beneficiaries that were going to six or more doctors and multiple pharmacies for the same type of controlled substance drug, including highly addictive prescription painkillers. In these cases, beneficiaries were either feeding their pain-killer addiction or illegally selling the medication. Drug dealers made the profit, while the federal government footed the bill, costing millions of taxpayer dollars.

Solution: The PRIME Act would make it more difficult for bad actors to misuse Medicare provider billing information, such as physician identification numbers, used to inappropriately prescribe drugs. The legislation requires that the Center for Medicare and Medicaid Services and law enforcement take steps to curb the use of stolen physician identities.

Encourage Seniors and Other Beneficiaries to Report Possible Fraud And Abuse in Medicare and Medicaid

Problem: Medicare and Medicaid beneficiaries are a key "front line" force that should partner with federal officials and law enforcement to reduce fraud and abuse. For example, one way to detect payment errors and possible fraud, is by engaging seniors to learn how to review their quarterly Medicare statements that list their doctor visits and other services for possible mistakes.

Solution: Under current law, the Senior Medicare Patrol, a team of volunteers and staff, assist Medicare beneficiaries with many issues, ranging from billing or coding errors to identifying potential fraud, abuse, or waste of Medicare and Medicaid funds. The PRIME Act builds on this program by requiring Medicare officials to improve outreach to our nation's seniors in order to engage even more Medicare beneficiaries in the fight against waste and fraud, especially through the work of the Senior Medicare Patrol. It also expands the program to include Medicaid beneficiaries, and improves a federal reward system for fraud tips.

Phase-Out the Medicare "Pay and Chase" Policy

Problem: Each year, Medicare makes tens of billions of dollars in improper payments, which are overpayments and other errors. In order to identify and recoup the overpayments, Medicare has a Recovery Audit Contracting (RAC) program, which has private contractors comb the lists of Medicare reimbursements to find improper payments. During a pilot program, Medicare recovered roughly $1 billion in Medicare improper payments in just five states. Since then, the RAC program was implemented nationwide in 2009 and recoveries have grown steadily, reaching about $2.3 billion in fiscal year 2012.

Solution: The PRIME Act helps to prevent improper payment from happening in the first place by requiring that the Centers for Medicare and Medicaid Services closely track the overpayments identified by the Recovery Audit Contractors, and implement solutions to address them such as closing loopholes, stopping patterns of double billing, and other steps.

Incentivize Medicare Contractors to Avoid Overpayments and Errors

Problem: Last year the Medicare fee-for-service programs made almost $30 billion in improper payments, a 8.5 percent error rate. Medicare reimbursement to hospitals, physicians, medical supply companies and other providers are handled by private bill-paying companies. However, these private companies' contract fees are not linked to avoiding payment errors.

Solution: The PRIME Act incentivizes contractors to avoid errors and overpayments by establishing penalties for not meeting specific payment accuracy goals. The objective is to shrink the improper payment rate by improving payment accuracy and taking other critical steps to reduce incorrect payments. By incentivizing the contractors to avoid errors and overpayments in the first place, the PRIME Act will help reduce improper payments and save scarce taxpayer dollars.

Increase Penalties for Fraudulent Use of Patient or Provider Information

Problem: Bad actors who trying to cheat the Medicare and Medicaid regularly obtain lists of beneficiary and provider identification numbers, and sell them to other criminals to perpetuate fraud.

Solution: The PRIME Act outlaws the fraudulent purchase, sale or distribution of Medicare and Medicaid beneficiary identification numbers and creates stiff penalties for these crimes to help prevent wholesale fraud, especially by organized crime rings.

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