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Grassley Fights Fraud in Medicare and Medicaid

WASHINGTON ñ Senator Chuck Grassley today introduced legislation to build on key reforms to fight fraud in Medicare and Medicaid. The measure comes the day of a Senate Finance Committee hearing exploring ways to fight health care fraud.

“These are huge programs with billions of dollars going out in fraud each year,” Grassley said. “The bad actors are getting bigger and bolder all the time. They’re able to stay out of law enforcement’s reach too often. It says a lot when you hear organized crime has gotten into health care fraud because it’s so profitable. It’s time to try new things. Stopping bad payments before they go out instead of trying to collect them after the fact is common sense. More transparency about billing and payments increases public understanding of where tax dollars go. The bad actors might be dissuaded if they knew their actions were subject to the light of day. Congress should act quickly to pass the reforms out of respect for taxpayers and on behalf of program beneficiaries.”

Grassley said his bill includes provisions that would:

ï limit tax dollars lost to fraud by giving the government more time to pay Medicare providers when fraud, waste and abuse are suspected than is allowed under the existing pay-and-chase model;

ï enhance coordination among federal agencies responsible for fighting medical identity theft, in which thieves use personal and health insurance information to bill for medical treatment and prescription drugs fraudulently;

ï stop payments for illegal, unapproved drugs;

ï beef up enforcement capabilities by expanding the range of individuals subject to penalties; and

ï require Medicare claims and payment data to be available to the public by provider name for the first time, similar to other federal spending disclosed on

Grassley said the Strengthening Program Integrity and Accountability in Health Care Act of 2011 is comprised of reforms with bipartisan support. Grassley led the development of a number of fraud-fighting provisions during the bipartisan work in the Senate in the last Congress on comprehensive health care legislation. Some of the items were enacted, but others were not and are included in Grassley’s new bill. He also introduced the Medicare payment reform measure in the last Congress.

The federal government spent $502 billion on Medicare and $379 billion on Medicaid in fiscal year 2009. It is estimated between $40 billion and $70 billion was lost to fraud that year.

The federal False Claims Act is one of the most effective tools against health care fraud. Grassley authored a major update of this law, in 1986, with Rep. Howard Berman of California. Since then, the law has recovered more than $28 billion and deterred billions of dollars in additional fraud against the taxpayers. The whistleblower provisions that were created by the 1986 update are among the most successful elements of the False Claims Act. This year, the False Claims Act brought in $3 billion in recoveries, with $2.5 billion from health care fraud cases, and nearly $2.4 billion of the recoveries thanks to the qui tam whistleblower provisions.

Grassley also is working to ensure that the civil recovery of public dollars that otherwise would be lost to fraud is buttressed by a robust criminal prosecution. At the end of last year, he asked the Attorney General and the Secretary of Health and Human Services to account for the falling number of criminal prosecutions. He also intends to introduce legislation this year to require the Attorney General to report details of False Claims Act settlements to Congress. “It’s a matter of accountability,” Grassley said.

Grassley is Ranking Member of the Judiciary Committee, with jurisdiction over the Justice Department and federal False Claims Act matters. He is a senior member and former Chairman and Ranking Member of the Finance Committee, with jurisdiction over federal health care programs.

A summary of the Strengthening Program Integrity and Accountability in Health Care Act follows.

The bill text is available here.

Grassley’s statement at today’s Finance Committee hearing is available here.

The Strengthening Program Integrity and Accountability in Health Care Act of 2011

Summary of Provisions

Sec. 1. Short Title; Table of Contents

Sec. 2. Enhanced Medicare and Medicaid Program Integrity Provisions

Payment Suspensions CMS and its contractors currently have the discretionary authority to withhold payment in whole or in part if there is reliable evidence of an overpayment or fraud. CMS regulations stipulate the procedures CMS and its contractors must follow when deciding to suspend payment. The provision would make this discretionary authority mandatory and require the Secretary to suspend payments to a provider or supplier pending a fraud investigation, except in cases when there is a determination that such a suspension is not supported by good cause.

Extension of Time to Pay Claims Under current law, payments must be made for clean claims within 14 to 30 days. This is known as the “prompt payment rule.” The provision would require the Secretary to extend the time that Medicare payments must be made to providers if there is a determination of the likelihood of fraud, waste and abuse. OIG would also have to make recommendations at least annually on what categories of providers would warrant an extension of the time period in the prompt payment rule, and CMS would have to respond to these recommendations.

Sec. 3. Requirements for the Transmission of Management Implication Reports by the HHS OIG

A Management Implication Report (MIR) is a document the HHS Office of Inspector General (OIG) produces identifying systematic weaknesses or vulnerabilities in federal programs to fraud, waste, or abuse, and recommending ways to correct or minimize them. Often detected in the course of an investigation, these identified weaknesses can exceed the parameters of the investigation and represent fraud, waste, or abuse across the federal healthcare system. This provision would require the OIG to inform Congress when it transmits MIRs to the Secretary and requires the Secretary to respond to OIG within 90 days.

Sec. 4. Medical ID Theft Information Sharing Program and Clearinghouse

Medical identity theft contributes to a significant portion of health care fraud. This provision would require the Secretary to establish an information-sharing program with the Federal Trade Commission (FTC), which maintains identity theft complaints received by both the FTC and the Social Security Administration. The Secretary would be required to establish methods to identify and detect medical identity theft and establish responses to warning signs of medical identity theft.

Sec. 5. Permissive Exclusion from Federal Health Care Programs Expanded to Individuals and Entities Affiliated with Sanctioned Entities

HHS OIG has the authority to exclude health care providers from participation in Federal health care programs. Exclusions are mandatory under certain circumstances, and permissive in others (i.e., HHS OIG has discretion in whether to exclude an entity or individual). This provision would subject individuals who have had past ownership or control interests with sanctioned entities or past ownership or control interests with an affiliated entity of sanctioned entities to the OIG’s permissive exclusion authority. The provision would explicitly apply to MA, PDP, and Medicaid managed care plans as well as their participating providers and suppliers

Sec. 6. Public Availability of Medicare Claims Data

This provision would require the Secretary to issue regulations to make Medicare claims and payment data available to the public in accordance with privacy, security, and disclosure laws in a manner similar to other federal spending disclosed on

Sec. 7. Medicaid Exclusion from Participation Relating to Certain Ownership, Control, and Management Affiliations

Medicaid law requires states to exclude individuals or entities from Medicaid participation when a state is directed to do so by the Secretary, and to deny payment for any item or service furnished by the individual or entity. States are required to exclude these individuals and deny payment for a period specified by the Secretary.

The measure would require Medicaid agencies to exclude individuals or entities from Medicaid participation if the entity or individual owns, controls, or manages an entity that: (A) has unpaid or unreturned overpayments during the period as determined by the Secretary or the state; (B) is suspended, excluded, or terminated from participation in any Medicaid program; or (C) is affiliated with an individual or entity that has been suspended, excluded, or terminated from Medicaid participation during the period. This provision would be effective January 1, 2011.

Sec. 8. Payment for Illegal Unapproved Drugs

This provision would ensure that the Medicaid program does not provide reimbursement for covered outpatient drugs that are not approved by the Food and Drug Administration (FDA) under a new drug application (NDA), an abbreviated new drug application (ANDA), or drugs grandfathered under prior FDA determinations. The Social Security Act currently prohibits the reimbursement of illegal, unapproved drugs which fall outside the definition of a “covered outpatient drug”. However, Medicaid continues to make payments for illegal, unapproved drugs. For example, in 2008 it was reported that nearly $198 million were paid in reimbursements for unapproved drugs from 2004-2007.

This provision would prohibit a state from making a payment for any covered outpatient drug unless the state first verifies with the FDA that such a covered outpatient drug is being legally marketed. It also would require the FDA to establish a public registry of all drugs that are not approved under an NDA or ANDA and include the drug, the person who listed the drug, and the authority that does not require the drug to receive approval via an NDA or ANDA.

Sec. 9. Requiring Individuals or Entities that Participate in or Conduct Activities under Federal Health Care Programs to Comply with Certain Congressional Requests

This provision would require individuals and entities that participate in federal health care programs to comply with requests for documents, information, or interviews by the chairmen or ranking members of committees of jurisdiction. |

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