Statements and Speeches

“Today we will hear from several witnesses about preventing and recovering waste and fraud in Medicare. The witnesses who’ve joined us today will tell an important story.  Medicare is a critical component of health care in our nation, with over 45 million seniors participating. 

 “As a recovering Governor, I understand the unique challenges that come along with running a major program.  Unfortunately, Medicare has seen its share of problems. Of course, no program is perfect.  But Congress must ensure sure that the more than $460 billion we spend through Medicare to address the health care needs of our nation’s seniors is spent effectively and efficiently.

“Medicare is on the Government Accountability Office’s list of government programs at ‘high risk’ for waste, fraud and abuse. There are several differing estimates of waste and fraud within the Medicare program.  The Office of Management and Budget, for example, has reported $36 billion in improper payments by the Medicare program according to data gathered from fiscal year 2009. 


“However, this figure does not include information about payments for the Medicare Prescription Drug Program as the administration is still struggling to determine the amounts of wasteful spending for that part of Medicare. Meanwhile, U.S. Attorney General Holder estimates that Medicare fraud likely totals about $60 billion dollars each year. 


“So what has Congress and the executive branch done to address these very real problems with waste and fraud? Let me start with some good news.


“In 2003, Congress mandated a recovery auditing contractor demonstration program to examine Medicare fee for service payments.  Through recovery auditing, internal auditors or outside contractors are employed to go through an agency’s books essentially line by line to identify and recover payments made erroneously, such as duplicate payments or payments for medical procedures that never happened.  This innovative tool is widely used in the private sector. And now we have seen successful use by the federal government with Medicare.


“The Recovery Audit Contractor program for Medicare began as a demonstration program in March 2005 with three states, California, Florida and New York, and was later expanded to include Massachusetts and South Carolina. And the program has been successful.


“During the first year of the demonstration program, $54 million was returned to the Medicare trust fund.  In year two, $247 million was recovered.  I believe the total amount of money recovered and put back into the Medicare program reached almost a billion dollars.


“The program was so successful that Congress has now mandated its expansion to all 50 states.  This expansion is already well underway.


“There is also a provision in the recently-enacted health care law, the Patient Protection and Affordable Care Act, to expand the program to include Medicare Advantage, the Medicare Prescription Drug Program and Medicaid. 


“The sooner the full program is up and running, the sooner we can recover millions of dollars – probably billions of dollars - in additional overpayments and put them to more effective use. 


“There is an added benefit to an expansion of recovery auditing. The Recovery Audit Contracting pilot program has identified dozens of vulnerabilities in the Medicare payment system that can lead to waste and fraud. 


“According to the Centers for Medicare and Medicaid Services, the contractors hired to recoup overpayments identified ongoing vulnerabilities that could lead to future overpayments totaling more than $300 million.   So not only did the contractors recover almost a billion dollars in overpayments in the three year pilot program, they also identified problems in the system that, if addressed, will avoid billions of dollars in future errors and fraud.


“Our witnesses from the Government Accountability Office will describe today how the Centers for Medicare and Medicaid Services, the agency which oversees Medicare, could do more to use the work of the recovery audit contractors to address overpayments. GAO noted 58 vulnerabilities identified through the demonstration program, representing $303 million in overpayments.  That is good, and useful.


“However, according to the GAO, the Centers for Medicare and Medicaid Services only actually addressed 23.  That leaves 35 vulnerabilities - representing $231 million in annual overpayments - awaiting action.   The GAO also stated that CMS has not established “steps to assess the effectiveness of any action taken” to date to reduce the vulnerabilities by their auditors. I look forward to hearing more about this issue from our witnesses.


“The second issue for today’s hearing will focus on the Medicare Prescription Drug Program. An audit by the inspector general at the Department of Health and Human Services discovered that that Medicare does not have a strong process to ensure valid identification numbers on reimbursed prescriptions under the drug program.  What does that mean? 


“When a beneficiary brings in a prescription for medication he or she has been prescribed, the pharmacy is required to enter a provider identifier showing that an actual doctor or some other authorized provider correctly okayed the prescriptions.  Apparently, 18 million prescription drug claims contained invalid prescriber identifiers in 2007, representing more some $1.2 billion in Medicare spending.


“The Inspector General concluded ‘it appears that CMS … and Part D plans do not have adequate procedures in place’ to ensure valid prescription identification. 

“Our witness will report today on not only the current challenges of waste and fraud that I have outlined in the Medicare program, but identified solutions. I look forward to their testimony.”