"Good morning, and welcome to the Ways and Means Subcommittee on Oversight's hearing on health care investigations and Medicare fraud. Fraud is a serious problem throughout health care, with some experts estimating that up to 10 percent of health care spending is made up of fraud. That would mean that in Medicare alone, the government is spending nearly $60 billion a year in fraudulent payments. That is a huge cost that is paid for by taxpayers. This hearing is a continuation of the Subcommittee's work over the past two years in trying to understand the causes and solutions to this massive problem.
"One aspect of the problem is that not only are taxpayers impacted, but many fraud schemes actively harm patients. One of the most egregious examples is the case of Dr. Fata, a well-known cancer doctor in Michigan. Dr. Fata purposely misdiagnosed people, telling them they had cancer, in order to provide them with treatments for which he would bill Medicare and private health insurance companies for millions of dollars. Several patients who were perfectly healthy ended up dying because of his actions.
"In other instances, fraudsters may bill Medicare for opioids and other prescription drugs and then sell them on the black market. Here, not only is the taxpayer footing the bill for unnecessary narcotics, this also contributes to the country's growing opioid and painkiller epidemic.
"Even when a fraudster does not physically harm someone, the fraud creates significant and long-term damage down the line. Many fraudsters steal beneficiaries' identities and use them to bill Medicare. Once a person's identify is stolen and used to improperly collect Medicare benefits, that person can be prohibited from accessing necessary care down the line because they're already in Medicare's system as receiving service.
"At the end of the day, if it can be done, fraudsters are finding a way to do it. At the beginning of this Congress, this Subcommittee held a hearing on Medicare fraud and improper payments from the ten-thousand-foot level. We heard from the Centers for Medicare and Medicaid Services, or CMS, about their methods to detect and prevent improper payments and the results were not reassuring. Despite the fact that Congress has given the agency expanded authority to stop payments before they are made, it continues to rely on pay-and-chase, or, making the payment and only checking after the fact to see if it was proper.
"One of the difficulties that we in Congress have when trying to legislate to reduce improper payments and fraud is how the budget process works. According to the Congressional Budget Office, or CBO, preventing the government from spending money improperly is not a savings, because the money never should have been paid in the first place. But this makes no sense in the real world, and its not how American families handle their household finances. The fact is: money IS going out the door, and there are steps Congress can take to stop these crimes and save taxpayers from having to pay billions in improper payments and fraud.
"Additionally, CBO does not take into account the costs that fraud incurs in addition to the stolen money. These costs include the amount of time and resources law enforcement needs to investigate and prosecute cases, attempting to retrieve the money already out the door in fraudulent payments, and repairing patient harm. And no one can deny that the drug crisis continues to grow. We've spent billions of dollars fighting the drug epidemic. Just a few months ago Congress passed CARA, the Comprehensive Addiction and Recovery Act, that authorizes $620 million over 10 years to help fight the opioid epidemic. It is a very important step, but we also need to focus on how health care fraud contributes to that problem.
"Last year, we got a closer look at some of the tools CMS uses to detect fraud. Members of the Subcommittee went up to CMS's Center for Program Integrity headquarters in Baltimore, Maryland. We got to see the Fraud Prevention System, CMS' predictive analytics program first hand and we were encouraged by what we saw.
"But we remain concerned that CMS continues to rely too much on pay and chase rather than preventing potentially fraudulent payments from going out the door. And we hope to see greater improvements going forward. At our hearing last year, I drew the comparison between how the private sector and the government investigate fraud. In the private sector, a credit card company can detect unusual behavior and guess that my credit card has been stolen almost instantaneously. A witness from VISA testified that their improper payment rate is less than one percent. But when I asked CMS why it can't do the same thing, the witness said it was because Medicare claims are more complex.
"I would argue the opposite is true, and if we use better data analysis and predictive analytics -- complex data can be used to identify fraud and improper payments faster. And that's important not only to save taxpayer dollars, but to save patients who are being harmed by these criminals.
"But no matter how good data analytics get, there will still be the need for investigations and law enforcement. That is the final piece of the puzzle and what we are focusing on today. We have an excellent panel of witnesses who can speak first-hand about their work in detecting, investigating, and prosecuting fraud cases. Two of our witnesses worked on the Dr. Fata investigation I referenced earlier, and thanks in part to their tenacious work, that particular fraudster has been sentenced to 45 years in prison.
"The work these witnesses do is incredibly important and I look forward to hearing from them."