[Senate Hearing 107-123]
[From the U.S. Government Publishing Office]
S. Hrg. 107-123
MEDICARE ENFORCEMENT ACTIONS: THE FEDERAL GOVERNMENT'S ANTI-AGING
EFFORTS
=======================================================================
HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
JULY 26, 2001
__________
Serial No. 107-11
Printed for the use of the Special Committee on Aging
U.S. GOVERNMENT PRINTING OFFICE
75-039 WASHINGTON : 2001
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
SPECIAL COMMITTEE ON AGING
JOHN B. BREAUX, Louisiana, Chairman
HARRY REID, Nevada LARRY CRAIG, Idaho, Ranking Member
HERB KOHL, Wisconsin CONRAD BURNS, Montana
JAMES M. JEFFORDS, Vermont RICHARD SHELBY, Alabama
RUSSELL D. FEINGOLD, Wisconsin RICK SANTORUM, Pennsylvania
RON WYDEN, Oregon SUSAN COLLINS, Maine
BLANCHE L. LINCOLN, Arkansas MIKE ENZI, Wyoming
EVAN BAYH, Indiana TIM HUTCHINSON, Arkansas
THOMAS R. CARPER, Delaware PETER G. FITZGERALD, Illinois
DEBBIE STABENOW, Michigan JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri CHUCK HAGEL, Nebraska
Michelle Easton, Staff Director
Lupe Wissel, Ranking Member Staff Director
(ii)
?
C O N T E N T S
----------
Page
Opening Statement of Senator John Breaux......................... 1
Statement of Senator Larry E. Craig.............................. 2
Statement of Senator Susan Collins............................... 4
Panel I
Thomas Scully, Administrator, Centers for Medicare and Medicaid
Services, U.S. Department of Health and Human Services,
Washington, DC................................................. 6
Panel II
Leslie G. Aronovitz, Director, Health Financing and Public
Health, Health, Education and Human Services Division, U.S.
General Accounting Office, Washington, DC...................... 32
Stuart E. Schiffer, Acting Assistant Attorney General, Civil
Division, U.S. Department of Justice, Washington, DC........... 47
Lewis Morris, Assistant Inspector General for Legal Affairs,
Office of Inspector General, U.S. Department of Health and
Human Services, Washington, DC................................. 65
Panel III
Robert P. Charrow, Crowell and Moring, Washington, DC............ 98
Joseph diGenova, Special Counsel, American Hospital Association,
Washington, DC................................................. 116
James W. Moorman, Executive Director, Taxpayers Against Fraud,
Washington, DC................................................. 128
APPENDIX
Responses to Questions from Senator Larry Craig from the Center
for Medicare and Medicaid Services............................. 155
Response to a Question from Senator Susan Collions from the
Center for Medicare and Medicaid Services...................... 158
Response from Department of Health and Human Services............ 160
Statement from the Office of the Deputy Attorney General......... 169
Questions and Answers from Department of Justice................. 176
Additional information from the American Hospital Association.... 204
(iii)
MEDICARE ENFORCEMENT ACTIONS: THE FEDERAL GOVERNMENT'S ANTI-FRAUD
EFFORTS
----------
THURSDAY, JULY 26, 2001
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The committee met, pursuant to notice, at 10:03 a.m., in
room SD-124, Dirksen Senate Office Building, Hon. John B.
Breaux (chairman of the committee) presiding.
Present: Senators Breaux, Carper, Craig, Collins, and
Ensign.
OPENING STATEMENT OF SENATOR JOHN B. BREAUX, CHAIRMAN
The Chairman. The committee will please come to order.
Good morning, everyone, and thank you all for being with
us.
I would like to begin the hearing by thanking Senator Larry
Craig for his initiative in this area, started before the
changeover in the Senate. We are still trying to work in a
cooperative fashion in order to complete some of the things
that he took the lead on when he was chairman of this
committee, and we will, of course, continue to try to make sure
that these issues are addressed because they indeed are very
important. I also want to thank the witnesses who will be with
us this morning and look forward to hearing their testimony.
I think all of us in the Congress, and I know that I have
spent a great deal of time trying to do whatever is necessary
to improve the Medicare system. It is an incredibly important
system that provides medical coverage to over 40 million
Americans, and indeed in the future, it is going to be
increasingly important as the baby boom generation becomes
eligible for this very important program.
The challenges are great. I honestly think that we have to
make major changes in the system. One reason why we have
problems that we are addressing today is because of the fact
that the Medicare program which was designed in 1965 micro-
manages health care in this country. That is completely and
totally unacceptable in the 21st century as far as I am
concerned.
It is ludicrous for members of this committee and others to
have to sit on a regular basis and try to micro-manage how much
we pay for each product that each provider provides to the
seniors who are the beneficiaries. We cannot continue to do
that.
When we talk about adding a prescription drug program to
Medicare, it is truly inconceivable that somehow, Members of
Congress will sit and determine how much we are going to pay
for each pill.
Obviously, spending $270 billion a year to medical
providers to serve the needs of the beneficiaries is very
complicated. There are bound to be mistakes. Any time you have
that much money on the table, there are also bound to be people
who will try to scam the system--and some have done it very
successfully.
It is interesting that we have had people testify before
this committee who have actually had to be let out of the
penitentiary in order to come and testify, because they have
fraudulently misused some of the programs that the Government
and the taxpayers provide to serve the needs of people who have
health concerns.
That is not to say that that is reflective on the providers
at-large. There are literally millions of providers who play by
the rules, abide by the rules, and provide top-quality medical
services to the people of this country. American hospitals,
home health care providers, durable medical goods suppliers
all, by and large, play by the rules.
The question is how do we enforce the rules, and the
subject of the hearing today that Senator Craig has laid out
addresses some of these very important questions.
There have to be rules, and the rules have to be enforced,
because if we do not do that, we will obviously have chaos. So
the question is how do we enforce the rules in a way that is
fair to everyone and ultimately fair to the beneficiaries and
to the taxpayers. That is the challenge.
I would now like to recognize Senator Craig for any
comments that he might have.
STATEMENT OF SENATOR LARRY E. CRAIG
Senator Craig. Mr. Chairman, again let me thank you and
your staff for facilitating this hearing and working with
myself and my staff and the work that had been done prior to
you becoming the chairman and being willing to move forward on
the issue of Medicare enforcement.
Let me make it clear this morning that we must continue to
devote significant resources to combatting fraud in Medicare
programs. Those who violate the public trust I think have to be
punished to the fullest extent of the law.
Chairman Breaux has already outlined, I think, the complex
character of this issue and the fact that it is a substantially
large ticket item.
Having said that, however, I believe it is equally
important that we also take a step back and seriously evaluate
the full effects, both good and bad, of our Medicare
enforcement efforts. I know of no other person in the Senate
who has devoted as much time to making Medicare work as has
John Breaux. Now I am committed, as are many others, to working
with him to have a positive, functioning program for those who
are eligible and participants in it.
I began to listen to my seniors in Idaho as they expressed
to me their deep concern and the difficult time they were
having finding doctors who would accept new Medicare patients.
Physicians in turn generally identified three major reasons
for limiting Medicare participation--first, the complexity of
Medicare regulations; second, the alleged concerns about
payment rates; and third, the alleged unfairly aggressive
enforcement activities of Federal agencies.
Providers tell me they are deeply fearful of exposing
themselves to zealous audits or dramatic penalties for innocent
errors--errors which frequently result, ironically enough, from
the very complexity of the Medicare rules being enforced. We
want them enforced, but in the process, as Senator Breaux has
said, we have made them so complex in the business of micro-
managing that they may now be the problem.
Specifically, I have been hearing from physicians and other
health care providers in my State who are simply overwhelmed by
the documentation required for the Medicare program. Many are
also now so terrified--and that is the word they use--of being
caught up in an audit or enforcement action, that they are
spending significant resources, both in terms of money and
time, on compliance which has become a very major part of their
time.
Compliance officers, consultants, attorneys, internal
audits, endless documentation--these represent resources
diverted from patient care. I think we need to fight genuine
fraud--there is no question about it, and the chairman and I
have no disagreement there--but we also need to care for the
provider making the good faith effort to comply with the law,
and we should provide an environment where the provider does
not have to live in fear or chooses to not care for the
patients that he or she might otherwise have within their
health care system.
Through these inquiries, I hope the committee can begin to
assess whether fear of overzealous enforcement is justified. If
it is, we will correct the problem. If it turns out that the
providers' concerns are overblown, I want to hear that. I think
all of us are here this morning to listen to the witness panel
that this committee has assembled.
We need to take a hard look at the incentives that exist in
the system and ask whether they place too much emphasis on
money and collection and not enough on combatting true fraud.
We also need to look at overlaps of the authority exercised
by various Federal enforcement entities, principally, CMS, the
HHS Inspector General, and the Department of Justice. Where is
this overlap helpful, and where is it duplicative or even
coercive? Where does there need to be more coordination among
the agencies?
I am very pleased that the GAO is among our witnesses here
today. They will discuss the work that they are doing
currently. Following this hearing, I hope to work closely with
John and the committee and to engage with GAO in expanding and
deepening the inquiries on these important issues.
Mr. Chairman, enough said. I am pleased that our colleague,
Susan Collins, has joined us this morning. This is an issue
that is critical. We now have a Secretary, Secretary Thompson,
who announced last week that he is forming a group of experts
to look into ways in which we can reduce the burden on
providers without increasing costs or undermining the quality
of care. I am confident that if we work together collectively
as a team, this administration, this committee and our staffs,
and certainly CMS and others, can solve this problem.
Thank you.
The Chairman. Thank you, Senator Craig.
Senator Collins, do you have any opening comments?
STATEMENT OF SENATOR SUSAN COLLINS
Senator Collins. Thank you very much, Mr. Chairman.
Senator Craig, first let me apologize for swiping the
microphone from you prematurely. I thought that was your last
sentence. [Laughter.]
Mr. Chairman, Senator Craig, let me start by applauding
both of your efforts to strengthen the Medicare program by
ensuring that the Medicare trust fund is protected from those
who engage in fraud and abuse.
Under my chairmanship, the Permanent Subcommittee on
Investigations undertook an extensive investigation and held
several days of hearings over a 2-year period on the issue of
Medicare fraud. What we found was truly alarming. In one
instance, we found that career criminals posing as health care
providers were responsible for as many as 169 sham medical
entities, billing for services and equipment that were either
never provided at all or were not medically necessary.
We found cases of criminals who posed as health care
providers, stole beneficiaries' numbers, and then billed
Medicare for literally hundreds of thousands of dollars.
What was most striking to me, however, in those hearings
was the testimony of one felon who said that he used to be a
drug dealer, but he turned to Medicare fraud because it was
much more lucrative, much easier, and much safer. That was
really startling testimony.
According to the most recent report issued by the Office of
Inspector General, in fiscal year 2000, waste, fraud, abuse,
and other improper payments drained almost $12 billion from the
Medicare trust fund in fiscal year 2000. I know we would love
to have that money as we are working on Medicare reform and
prescription drug coverage.
I want to indicate that that figure is certainly an
improvement--a few years ago, it was up to $23 billion in
improper payments--but it is still a staggering amount of money
and far too high.
Those who commit Medicare fraud hurt legitimate health care
providers, cost taxpayers vast sums of money, weaken the
Medicare trust fund, deliver substandard services, and endanger
our elderly by not providing needed medical treatment.
However, I think it is very important to note--and Senator
Craig has made this point--that the vast majority of health
care providers are dedicated, honest professionals whose top
and indeed only priority is the welfare and health of their
patients. They too are just as appalled as we are by outright
criminals and unscrupulous providers who steal millions and
indeed billions of dollars from the Medicare program.
Sometimes errors--outright errors, not fraud--do occur, and
we must not harm those health care providers who inadvertently
commit billing mistakes. This is a complaint that I hear from
the physicians in my State regularly.
It is vital that those at the Centers for Medicare and
Medicaid Services be able to distinguish between honest and
innocent billing errors and outright fraud. It is also
important that Government agencies responsible for fighting
Medicare fraud coordinate their efforts to avoid unnecessary
duplication and that those providers who have been accused of
billing improprieties have an opportunity to appeal those
decisions in a timely manner.
Moreover, it is imperative that the Centers furnish health
care providers with the necessary tools to make certain the
claims they submit are correct. I hear numerous complaints
about the complexity of regulations and guidelines, and
physicians and other providers have told me that sometimes they
simply cannot even get an answer from the agency, no longer
known as ``HCFA''--I understand you get fined in the Department
if you call it by its previous name. The point is that the
Medicare program and its regulations have become increasingly
complex, and it is simply not fair to hold a provider who is
trying to comply with the law and the regulations accountable
if the agency has not properly disseminated the relevant
information, and given the kind of guidance that providers are
seeking.
I am very pleased that the new administrator, Mr. Scully,
who is with us today, as well as Secretary Thompson, have
expressed their intent to improve efficiency and expand
educational outreach and work more closely with providers.
I also believe that we need some legislative reforms in
this area, and I am pleased to be a cosponsor of the Medicare
Education and Regulatory Fairness Act.
Protecting the Medicare trust fund from unscrupulous
individuals is a serious responsibility. We must strike the
right balance. We must not be overzealous in our efforts and
harm innocent providers in the process while ensuring that
those who would rip off the Medicare fund are dealt with
severely.
Thank you, Mr. Chairman, Senator Craig, for holding these
hearings, and I appreciate the opportunity to give this
statement.
[The prepared statement of Senator Collins follows:]
Prepared Statement of Senator Susan Collins
Mr. Chairman, I applaud your efforts to ensure that the
Medicare trust fund is protected from those that seek to
unjustly enrich themselves by means of fraud and abuse. Under
my chairmanship, the Permanent Subcommittee on Investigations
conducted an extensive investigation into the abuses of
Medicare. In one instance, we found career criminals posing as
health care providers that were responsible for as many as 169
sham medical entities billing for services and equipment that
were either not provided or not medically necessary.
According to the most recent report issued by the Office of
Inspector General for the Department of Health and Human
Services, in fiscal year 2000, waste, fraud, abuse, and other
improper payments drained almost $12 billion from the Medicare
trust fund in fiscal year 2000. While that figure is certainly
an improvement from the $23 billion in improper payments that
the Inspector General reported a few years ago, it is still a
staggering amount of money, and far too high.
Those who commit Medicare fraud drive legitimate providers
out of business, cost taxpayers vast sums of money, deliver
substandard services, and endanger our elderly by not providing
needed treatment.
However, as I have pointed out on numerous occasions, the
vast majority of health care providers are dedicated, honest
professionals whose top priority is the welfare of their
patients. They, too, are surely appalled by the unscrupulous
providers and others who take advantage to steal millions of
dollars from the Medicare program.
Sometimes errors do occur and we must not harm those who
inadvertently commit billing mistakes. It is vital that those
at the Centers for Medicare and Medicaid Services (CMS) be able
to distinguish between innocent billing errors and fraud. It is
also important that the government agencies responsible for
fighting Medicare fraud coordinate their efforts to avoid
unnecessary duplication, and that those providers who have been
accused of billing improprieties have an opportunity to appeal
those decisions in a timely manner.
Moreover, it is imperative that CMS furnish health care
providers with the necessary tools to make certain that claims
are submitted correctly. The regulations and guidelines of the
Medicare program have become increasingly complex, and it is
unfair to hold providers accountable if the agency has not
properly disseminated the relevant information. Thomas Scully,
CMS Administrator, has expressed his intent to improve
efficiency and expand educational outreach at the agency, and I
look forward to his testimony.
Protecting the Medicare trust fund from unscrupulous
individuals is a serious responsibility but we must not be
overzealous in our efforts and harm innoncent providers in the
process.
Mr. Chairman, thank you for holding this morning's hearing.
The Chairman. Thank you very much, Senator Collins, for
your involvement and participation and your observations.
We are pleased to welcome as our first witness the
Administrator of CMS, the Center for Medicare and Medicaid
Services, Mr. Tom Scully. We deal with Mr. Scully on a regular
basis both in the Finance Committee and obviously on this
committee as well.
Previous to his service as Administrator, Mr. Scully was
head of the Federation of American Hospital Associations,
representing privately owned hospitals in the country. I think
that that knowledge and experience will be helpful in the
position that he holds now.
We are delighted to have you appear and look forward to
your testimony, Mr. Scully.
STATEMENT OF THOMAS SCULLY, ADMINISTRATOR, CENTERS FOR MEDICARE
AND MEDICAID SERVICES, U.S. DEPARTMENT OF HEALTH AND HUMAN
SERVICES, WASHINGTON, DC
Mr. Scully. Thank you, Mr. Chairman, and Senators Craig and
Collins, for having me here today.
I have worked with all of you for years, especially Senator
Breaux, I think, since I was in the first Bush Administration
trying to reform the health care system and make Medicare
better. I am glad that, after a long sabbatical, I have been
able to come back to the Government, and I look forward to
working with you.
I have, in fact, become one of the bigger creditors in the
Department, because I think I owe the Secretary a couple
hundred dollars for slipping back into ``HCFA'' myself. I have
to pay him a buck every time I refer to it as ``HCFA''--but I
am getting better.
Anyway, one of the first steps we took--and I will return
to the fraud, and in my view, balance, as Senator Collins
mentioned, is the key on that issue--but I want to run through
some of the things that we have changed at CMS, the agency
formerly known as HCFA, and why we have made some of the
changes and some of the things that we are actually doing.
Secretary Thompson, as you all know, was probably one of
the great HCFA-haters of all time, because as Governor of
Wisconsin, he was pretty frustrated and had a very bad
experience, he felt, with HCFA on Medicaid issues primarily.
But he is a very open-minded and creative guy, as you know, and
one of the best things he did, before I was even confirmed, was
to come up and spend a week at the then HCFA, now CMS, with me
in Baltimore. And he found out what I already know, which was
that the people up there are actually very dedicated and very
good. They really know the programs, they work hard, and they
really do try to do the right thing. But after years and years
of pounding, for a variety of reasons, some deserved and some
undeserved, they became kind of insular, and they are not
particularly good at explaining what they are doing and what
their policy rationales are.
We are going to push hard to change that, but one thing the
Secretary felt strong about, from going up there the first
week, was that HCFA's people are good, they do a good job, much
better than he had expected, but HCFA has a lot of baggage, and
he felt, as did I, that very few people outside the Beltway
knew what HCFA was. The States know Medicare; seniors love
Medicare; nobody liked HCFA. It is a small first step, but we
felt that if you are trying to change the image of the agency,
both internally in the way people think about the agency, and
externally in the way the country thinks about the agency, that
changing the name was a good idea.
We did seven focus groups around the country. We had an
employee contest within the agency, and came up with ``Centers
for Medicare and Medicaid Services,'' because that is what we
do--we provide services in Medicare and Medicaid--and we think
that that is more representative than HCFA. But deserved or
undeserved, HCFA had a bad name, and we think ``CMS''--it may
not help us a lot, but at least it is a little breath of fresh
air to get a clean start and try to show that we are determined
to change the agency.
It is a big agency. The budget of the agency, if you
combine Medicare and Medicaid, is $470 billion this year, which
is pretty big. The Medicare program alone is $240 billion. So
it is a big ship to turn, it is not easy to do, it is a complex
program, but we are determined to do it.
I just want to run through a few things before we get into
the fraud issues that we are focused on doing. In addition to
concerns about overzealous fraud efforts, we found a lot of
concern about the perception that CMS is insensitive and the
program is insensitive, to the issues that your hospitals, your
seniors, your doctors, and everybody around the country raise.
We have tried to make big efforts to address that.
There are three efforts that the Secretary announced last
week, and the Ways and Means Chairman, which I have worked with
them on. The first is basically to improve outreach outside the
Beltway, the second is to improve outreach inside the Beltway,
and the third is to stir up a little more creative thinking
within CMS.
It started out with the Secretary going to do field
hearings, and it ended up with me going to do field hearings.
We are going to start later this month doing outreach field
hearings around the country--we have already scheduled three in
late August in Montana, Arkansas, and Chicago--and we will
continue to do that as long as I can remain married and have a
family. We want to spend a fair amount of time out there,
trying to talk to people outside the Beltway, to tell them what
we are trying to do at CMS, make a much bigger effort to hear
what their problems are and how they want to fix the agency,
and to talk to people who actually run facilities, and doctors
who actually have to practice under these guidelines, to figure
out things that we can fix day-to-day.
The second, which we also announced last week, are seven
what we call our ``open door policy groups.'' There is one each
for physicians, hospitals and rural health, long-term care,
health plans, nurse and allied health professionals, home
health and hospice, and ESRD and dialysis. In each of those
groups--we had initial meetings last week--we are going to try
to meet with everybody involved. For instance, I picked the
long-term group to chair myself--I will be involved with all of
them--but I met last week, in the first meeting, with Ray
Scheppach, who is executive director of the NGA, who will co-
chair that group with me; with Chip Groveman, who runs the
biggest nursing association; with the SEIU, which is the
biggest nursing home union; the AARP, whom I have a great
relationship with and work with every day.
That was the beginning of figuring out how we can broaden
the scope and get virtually everybody with a significant
interest in long-term care to sit in a room and talk about what
we can work out. As you all probably know, it is not often that
the nursing homes and their unions agree on things, so my
expectation here is not to fix long-term care reform--although
I hope that will be an issue and we will talk about it--but
day-to-day, there are lots of problems with nursing homes,
hospitals, and dialysis clinics that we can fix, and there are
lots of burdens that we put up, as an agency, that we can tear
down and make better.
So my goal is to get everybody around the table with all
the different groups in Washington, come up with issues that we
can fix, and methodically churn through them and fix them. If
we can get to bigger reform issues, terrific, but day-to-day
managing the agency more efficiently, reducing the burdens, and
finding the right balance on a regulatory basis, is clearly the
goal here, and I think it will work.
As a former Hospital Association CEO, I sat around with the
AHA and the Catholic Health Association, the public hospitals,
and all the other groups every week and talked about our
issues, and somebody would eventually wander over to CMS/HCFA
and talk to them about it. So my view was why not have HCFA and
CMS in the room with these groups to begin with to understand
their problems up front and try to resolve them as they come
up. I expect that it will work--I do not see why it cannot--but
it is going to be an effort to engage every group from the
providers, patients, seniors, across the board earlier in our
decisionmaking process and find out what we can fix for them.
Third, the Secretary announced that he wanted to put
together a group of internal folks in CMS to get the CMS staff
to start coming up with new ideas to reduce regulatory burdens,
or at least make them better where they should be, and fewer
where they should be. I think some people perceive that as ``We
are from the Government, and we are here to help you.'' That is
not going to happen. We do have terrific staff, but to make
sure that I drove them to more creative ideas, I recruited a
doctor who ran the Alexandria Hospital emergency room for years
and now is an actual practicing physician in Northern Virginia,
running an emergency room every day, to come and work with us 1
day a month, and he is going to chair that group to try to push
our employees. He has to actually go back and explain to his
doctors and nurses and hospital colleagues every day what he
has come up with. His name is Bill Rogers, and he is a long-
time practicing physician in this area, and he actually has to
go back and run his emergency room every day. So I hope that
the combination of him coming in and meeting with some of our
more creative employees, and bringing back his ideas every day,
will get their juices going to come up with some new ideas to
reform the agency and make it work better.
We have also announced streamlining the regulatory process.
In another career, after I was thrown out of Government the
last time, I was a health care lawyer, and I know that I was
paid rather outrageous sums to read The Federal Register every
day to figure out what was going on. So one of my other ideas,
which we have also implemented, is that we are going to put out
a compendium of all the HCFA regs once each quarter. So for
instance, in the fourth quarter this year, we are going to
publish a list of everything that is going to come out in that
quarter--if it is not on that list, it will not come out--and
then, one day a month, we will publish all of our rules in The
Federal Register, so that if you are a provider, or a
physician, or a hospital, or a nursing home--anybody who is
interested in what CMS is doing across the board--one day a
month, you will have advance notice of what the regulatory
agenda is, and you will only have to look in The Federal
Register one day a month to figure out what is coming. It is a
small reform, but I think the perception of the outside world,
fairly or unfairly, is that CMS/HCFA has had regulatory
strafing runs, and you have to hire a full-time law firm just
to follow what we are doing. So the effort here is to reduce
that effort.
As far as responding to other needs, I think I have spoken
to all of you individually at various times. When I came into
OMB, I was the health care person at OMB in the White House in
the last Bush Administration for 4 years, and I remember when I
got there in 1989, I said ``The Medicare contractor system is
outrageous. We have 72 contractors. How can anybody possibly
manage this program? We are going to get it down to 10.'' And I
failed miserably and came back 10 years later, and we have 51
contractors.
I think one of the fundamental problems with the Medicare
program is that we have 51 contractors. It is a construct of
1965. It is crazy. It is one of the things that drove Secretary
Thompson crazy. When he went up to CMS, then HCFA, and learned
how it worked, he could not believe the way we contracted to
pay claims in Medicare. CMS does not pay claims. It is
generally the Blue Cross plans, Mutual of Omaha, EDS that pay
claims for us. It is a construct of a very antiquated system,
and we are determined, hopefully with your help, to pass
contractor reform this year, and our goal is to work
cooperatively with our existing contractors to find the best
ones, to get it down to 18 to 20 contractors nationally--they
will probably be the Blue Cross plans--to work with them on
better systems, to work with them on better, more responsive
rules for dealing with providers and patients, and to get to a
point where we have good, well-incentivized contractors.
Medicare contractors, for example, have cost-plus
contracts; they have no incentive--they do not make any money,
theoretically--I do not really believe that, and I do not think
anybody else does, either. It is like the old hospital-based
cost system. Theoretically, you do not have any profit
incentive in there, but the reality is that they shift costs
around. But there is very little incentive for our contractors
to really do a good job for us in the long run. We would like
to change that and restructure the Medicare contracting system
where we can come up with 18 to 20 good, well-motivated,
incentivized contractors that we like, that we work well with,
and give them the appropriate financial incentives to perform
for us. And I think that you will find that in the long run,
that may have as much to do with streamlining and improving the
Medicare payment system as just about anything else.
There is a variety of other things that we are involved in.
We have an educational effort this fall that I will touch on
which we have already announced and the appropriators have
supported. We are taking $35 million from our budget for a
Medicare education campaign for seniors. When I came into the
agency, our polling showed that seniors fundamentally do not
understand the Medicare program. It is not just
Medicare+Choice, which Senator Breaux and I have spent a lot of
time on over the years; it is also how to pick a nursing home,
and how to pick a dialysis clinic. All across the board, the
information that seniors have about what to get out of the
program is very limited.
So from October 15 to December 15, we are going to have a
$35 million advertising campaign to educate seniors about their
choices and get them to ask the right questions. The reason
that number was picked was because that is what a Presidential
campaign spends in 2 months, so the level of advertising effort
that you are going to see I think is going to be unprecedented,
and that is the goal.
Tied into that, you can imagine that if we tell seniors to
ask more questions, we need to be prepared to answer them,
so our 1-800-MEDICARE number is going to be tripled in size.
It is going to go from being 8 hours a day, 5 days a week to 24
hours a day, 7 days a week; and it is going to go from having
very basic information to having very localized information, so
if you call from Idaho Falls, or from New Orleans, you will
reach someone who can answer your specific questions about
where to go to pick a health plan, how to pick a nursing home,
which dialysis center you should go to, and a lot more consumer
information. That is our goal, and we certainly hope that
seniors will be very receptive to finding a lot more
information and a lot more help about how to use their Medicare
program.
This is a program that spends $240 billion a year, as I
said, and we firmly believe that spending $35 million on an ad
campaign, which works out to 90 cents per senior--and I can
tell you that, for better or for `worse, that is well within
what we are spending on every senior per day it will be a big
help in getting seniors more engaged in the program.
Shifting to Medicare fraud issues--which I know is part of
what you wanted to talk about, and I will wrap up quickly--I
was co-chair with then Deputy Attorney General Bill Barr--and
later, I guess he was Acting Attorney General--of the Fraud and
Abuse Tax Force in the first Bush Administration when I was at
OMB. And I would say that we were starting to ramp up on our
fraud and abuse efforts at that time and maybe, arguably, could
have done more, but I think some of the things that happened in
the last 7 or 8 years were probably positive. When I left the
Government in 1993, Medicare inflation was running about 15
percent, and Medicaid was running about 18 percent, and there
was clearly a lot of stuff going on in the program that should
not have gone on.
On the other hand, I would argue, over the last 8 years,
you could argue that the pendulum may have swung a little too
far, and we need to get it back in balance, and I think this
issue is really all about balance. I have very little desire to
preside over double-digit Medicare or Medicaid inflation again,
but Medicare inflation went from 15 percent in 1993 to negative
1 percent in 1999. There were a lot of things involved in that,
including the 1997 BBA, but part of it was fraud enforcement,
and there is no question that that had a behavioral impact on
everybody in the system. It has also scared people to death. I
personally believe that most providers are very good people,
but there are a lot of people out there who are doing the wrong
thing; and trying to find the balance is, I think, the
appropriate question here.
While I was out of the Government, I was chairman of the
compliance committees of two large corporations, and I can tell
you that in one, we spent $25 million putting together a
compliance plan, and in the other one, $30 million. I had a
good reaction with the Federal Government from that. I came in
and met with Mac Thornton and other people in the IG's office,
and they gave us a lot of guidance about how to put together
compliance plans, and I think it was helpful. But the fact is
that if you are a good provider, you do not get a lot of
feedback about what you are doing, so the people who are doing
the right thing, following the right incentives, and doing the
appropriate behaviors, really do not get much for it from the
Federal Government, and my own personal view is that one of my
goals while I am here is to find a way to incentivize good
people who are doing the right thing to continue to do it, and
to get appropriate reaction from the Federal Government, and to
focus our resources even more on the many people who are still
not behaving appropriately and are still gaming the Medicare
program.
So I think the issue here, as Senator Collins said, is
balance; it is finding a way to keep incentivizing CMS, the
Inspector General, and Justice to go after people who are
abusing the program--and there are clearly quite a few of
them--but also to make sure that people who are trying to do
the right thing and are spending a significant amount of
resources doing that get fair guidance from the Federal
Government and are treated fairly. And that is a tough balance
to come up with.
Mr. Chairman, thank you for having me.
[The prepared statement of Mr. Scully follows:]
[GRAPHIC] [TIFF OMITTED] T5039.001
[GRAPHIC] [TIFF OMITTED] T5039.002
[GRAPHIC] [TIFF OMITTED] T5039.003
[GRAPHIC] [TIFF OMITTED] T5039.004
[GRAPHIC] [TIFF OMITTED] T5039.005
[GRAPHIC] [TIFF OMITTED] T5039.006
[GRAPHIC] [TIFF OMITTED] T5039.007
[GRAPHIC] [TIFF OMITTED] T5039.008
[GRAPHIC] [TIFF OMITTED] T5039.009
[GRAPHIC] [TIFF OMITTED] T5039.010
[GRAPHIC] [TIFF OMITTED] T5039.011
[GRAPHIC] [TIFF OMITTED] T5039.012
[GRAPHIC] [TIFF OMITTED] T5039.013
[GRAPHIC] [TIFF OMITTED] T5039.014
The Chairman. Thank you very much, Mr. Scully, for your
presentation and for recognizing the challenge that you have in
running an agency as large and as complicated as the CMS system
is and the Medicare program in general.
Hopefully, maybe this year, Congress can actually modernize
the program and bring it into the 21st century and eliminate
many of the problems we have in the program that are
statutorily created by Congress.
Five years ago, GAO said we had about $23 billion in
improper payments. I think the current figure that we use is
about $11.9 billion in improper payments. That is still a huge
amount. We in the Congress are constantly faced with
presentations by concerned citizens who have legitimate
feelings and will tell us that there is too much fraud in the
program. Others will come in who are providers and tell us
there is too much enforcement. That is the conflict.
The question is how do we eliminate improper payments and
at the same time do it in a proper manner. That is really what
we are trying to do.
My question to start with is do you feel and does the
administration feel that the tools that are currently in place
are sufficient to get the job done. I mean, $11.9 billion is
far too much, but it is a lot less than it used to be, so there
are some signs of improvement. Do you need more tools, do you
need different tools, or is what we have in place now
sufficient--and if you could comment on whether what we have in
place now needs to be modified.
Mr. Scully. Well, Chairman Breaux, one thing I know from
spending 4 years at OMB is that I do not want to get shot for
making administration policy. My own opinion is--Janet
Rehnquist is the new IG nominee, hopefully to be soon
confirmed; she is someone I have known since college, and I
look forward to working with her. I have worked with a lot of
the Justice Department folks, including Senator Ashcroft back
when he was Governor Ashcroft in Missouri. I think really, the
issue about how you appropriately enforce the fraud laws is a
three-legged stool between CMS, and HHS; Inspector General, and
Justice. So I think I would like to sit down with the three of
us and figure out the appropriate strategy.
My personal opinion on this is that I think we have the
tools to do it. I think there has been a tendency--there is no
question that a lot of the fraud and abuse in the program has
been cleaned up in the last few years. I think you can debate
about whether $22 billion or $11 billion is legitimate, and
what comprises that number, but there is no question there have
been great gains made in the program.
I would also say, however, that I think the focus in our
fraud efforts has generally been on high-profile big systems,
and some of the real problems tend to be getting down to the
nitty-gritty of smaller providers. It is the nature of
enforcement efforts to go after the University of Pennsylvania
or to go after a big provider.
In my opinion, a lot of the behavior of the big providers
has been changed for the better. As I said, I was chairman of
the Oxford Health Plan Compliance Committee for the last 6
years--it did not exist when I came on the board 8 years ago--
and I was recruited to be the chairman of the compliance
committee for DaVita Health Care about a year ago, which did
not have one before that. In both cases, I spent a lot of money
and recruited a lot of people, to put together very
comprehensive compliance plans.
The good news from the last 8 to 10 years is that these
companies did not have compliance plans before. Now they have
compliance plans, and they are scared to death, for better or
for worse, of the Government, but they are doing the right
thing, and that is good, and I think that that needs to be
incentivized, and we need to keep doing that.
I personally think that we need to come up with some
structure in the Government, rather than just keeping people
scared. The reality is that we have relatively modest
enforcement tools. We only look at a small percentage of the
bills coming through the Medicare program. The number of people
we actually go after in the Government--if you look at
physicians, for instance, I think there were 25 physicians last
year who actually had significant action taken against them.
But the perception is that we are scaring people to death and
that we are not giving them guidance. To me, the goal is to
find the people who are doing the right thing, especially some
of these large hospital systems, physician practices, and
health care systems, who are trying to do the right thing, and
setting up significant compliance programs, find a way to give
them guidance, incentivize them to continue to do the right
thing and move on to the next tier of providers who, in my
experience, are the ones who probably have not gotten to the
more compliant stage yet. So I think we are doing a lot.
The Chairman. There are different approaches depending on
the cause of the improper payments. Some will argue that the
bulk of the improper payments is the result of mistakes that
are honest mistakes by providers. Others will say that it's
fraud--they are trying to scam the Government and to cheat the
Government, and they are keeping two sets of books or whatever.
Is there any way to quantify, of the almost $12 billion of
improper payments, what percentage is the result of fraudulent
activities on behalf of providers versus what may be labeled as
mistake, confusion, inability to understand the rules and
regulations?
Mr. Scully. I do not think I could pick a number out of
that. I would say that the $12 billion--and this is my opinion,
and I will probably have a fun discussion with the IG later--I
have always thought that those numbers were not all that solid,
and that is from my long experience in health care. I think it
would be difficult to show that.
There is clearly a lot of fraud going on in the system, but
out of $240 billion, there's $11 or $12 billion--I would say
that probably a third of that is fraud, and the rest is
probably billing mistakes. And Senator, as you know, if you go
back and look at the mid-nineties, some of it was fraud that
was incentivized by really bad policy. If you look at home
health, when I left the Government in 1992, home health
payments were $3 billion a year; I think they went up to $18
billion a year by 1997 and then back down to $9 billion. That
probably was not rational policy, and we incentivized a lot of
people who probably should never have been in the home health
business to get into the home health business. And if you look
at a lot of the volume of fraud over the years, a lot of those
people were in home health. Some of that was incentivized by
bad Federal policy.
There is certainly a lot of fraud there, but I believe that
some of the best policies to prevent fraud are capitating
programs, going to things like prospective payment for skilled
nursing facilities, going to prospective payment for
rehabilitation hospitals. We went to prospective payment for
outpatient last year. Setting up rules that are more rational
and incentivizing people to have more rational payment policies
has probably the biggest impact, and I personally think that
equally as important as aggressive fraud enforcement is to have
the Government set up rational payment rules that make it
easier to incentivize people to do the right thing. I think
that methodically, we are going through and doing that and
capitating these programs.
The Chairman. We went through this on the Finance Committee
in an effort to reform the Internal Revenue Service and how it
interacts with taxpayers in this country and have tried to
create a whole new relationship between the Internal Revenue
Service and the taxpayers so that American citizens are not
fearful and frightened and scared to death of their own
Government when it comes to dealing with it on matters of
financial concern.
I daresay we are probably going to hear from some providers
that that is the same kind of fear they have of the Medicare
program, that they live under the constant threat that they are
going to be prosecuted for honest mistakes.
Can you spell out how this administration and the Medicare
program--what kind of relationship do you think is appropriate
with the providers?
Mr. Scully. Well, as you know, Senator, I lived in the
provider world for the last 8 years, both as a lawyer and
running a hospital association. I think the key things with
providers--98 percent of them are trying to do the right thing,
and the key thing is to set rules that are understandable and
clear. If you look in the mid-nineties, you can determine what
was fraud and what was not fraud, but there are a lot of
things--I will give two examples.
One is you created DRGs in 1983, and then, people have
other facilities on a cost basis like nursing homes and
affiliated home health agencies. You can incentivize people,
but unless you make the rules extremely clear, they will push
the edge of the envelope, which a lot of people did, trying to
shift their costs to their home health agencies and nursing
homes. A lot of the cases of abuse in the program in the early
nineties came from that. I think we solved a lot of that with
new payment policies.
We have a big problem right now which the Justice
Department and the IG are very focused on, and I am very
focused on, which is that we pay--Congress has debated this for
years--we clearly on the outpatient side, pay acquisition costs
for devices and average wholesale prices for drugs that are
absurdly high. There is a great debate on whether that is a
kickback by definition or not. That is a policy issue. Congress
has looked at it for years and has not done anything about it.
On the merits, I think there is absolutely no question that we
are overpaying in those areas. Is that a question of cheating
the program? Arguably, it is. Is it a question of bad policy
that probably should be fixed by Congress? Arguably, I think it
is.
So I guess my No. 1 view is that most providers are trying
to do the right thing. Some of them are going to push the edge
of the envelope thinking they are doing the right thing, and
some are going to flat out be cheating the program. We need to
focus on making clear rules for people so they know exactly
what they are getting, and I think that is the key with
providers; and then, focus on enforcement efforts on the small
minority of people who are really illegitimate and trying to
cheat the program.
The Chairman. Thank you.
GAO will testify later that although CMS has taken positive
steps to move in the right direction with regard to restricting
and ultimately eliminating improper payments, weaknesses in
your communications with providers and your oversight of
contractors still exist. Can you comment on both of those
areas?
Mr. Scully. Yes. It is a complicated program, and I do not
want to criticize the previous administration. As you know, the
previous administrator is a good personal friend of mine. I
think there is an awful lot of stuff going on with the
different budget bills in the last 3 or 4 years. I think there
was an awful lot of restructuring that went on in HCFA that
made their lives more complicated. There were a lot of
challenges 2 or 3 years ago, and to be honest, coming in, my
challenges, administrative, with reacting to Y2K, reacting to
the BBRA, may be a little less than they were 2 or 3 years ago.
For whatever reason, I think the perception was that the
communication with providers was not that good. Clearly, that
is one of my No. 1 goals, communication with seniors and
providers to tell people what we are doing.
The Chairman. I take it the bulk of the communication with
providers is not through CMS and the providers but through your
third-party payers?
Mr. Scully. I would say the bulk of it is through third-
party payers, and I think we are making a big effort to improve
that through the FIs and the carriers as well. The bulk of the
enforcement is also done with them. The average person in
Louisiana who is running a home health agency is not going to
hear from me; they are going to hear from their local carrier,
local FI.
The Chairman. Can you do that without complicating the
system further? Are local providers going to have to deal with
CMS on these disputes as well as with their third-party
providers, or can you consolidate it in a manner that the
providers deal with one contact point on disputes and questions
about what are proper payments? If they are going to have to
deal with CMS and with their third-party provider, is that not
more work if that is in fact what happens?
Mr. Scully. Well, I think we have to be clear about what is
going to be paid for and what our rules are; that is the first
step. But if you want to have a frightening experience, you
should look at the appeals process for either seniors or
providers from CMS up to HHS. It is incredibly complicated.
Arguably, it was made more complicated last year by the BIPA
changes, and we would like to work with you to streamline it.
The Chairman. OK. If I am a hospital in Louisiana, and I
have questions about whether something is reimbursable and at
what rate it is reimbursable, in the future, is the best way
for that problem to be resolved by having that local hospital
deal directly with CMS, or deal directly with the third-party
provider?
Mr. Scully. They clearly get information from us about
national program policies, and hopefully, our regional offices
talk to them. But generally, I think every major hospital
usually has a very direct relationship with their fiscal
intermediary. So almost any hospital in Louisiana probably has
a day-to-day relationship with the fiscal intermediary, which
is their contractor, and they probably get a lot of information
from them.
I think the trouble comes, in a lot of cases, when they
appeal cases--whether you are a senior, whether you are a
doctor, or whether you are the hospital, when you appeal, the
process is long, and gruesome, and tortuous, and I think that
is where a lot of the unhappiness in providers comes from.
The Chairman. On the appeals process, as to what is covered
or not?
Mr. Scully. Yes, I think that is probably right in most
cases.
The Chairman. Are you planning to change that in any way,
and if so, how?
Mr. Scully. I would love to change that with your help this
year, as would the Secretary. We have some proposals that we
are talking to people on the Hill about in regard to
streamlining the process. Most of our appeals eventually come
up through ALJs, beneficiary appeals, that actually work for
the Social Security Administration, and the Inspector General--
who I hope will bring it up today--has been supportive of us
saying that we should phaseout those ALJs--probably 10 to 15
percent of the Social Security ALJs is Medicare claims. It is
not their primary focus. There is an enormous backlog. People
are very frustrated by it. I would like to find a happy way
with the Social Security Administration to phase our ALJs out
of Social Security and put them in Medicare, with people who
actually focus on Medicare appeals on a daily basis. That is
more on the beneficiary side.
When you come up as a provider, depending on--there are a
number of ways that you can come up through the system as a
provider. If it is an individual claim, you come up through the
carriers, through an appeals process that is very complicated.
If it is on your cost report, there is a totally separate
appeals process that comes up through something called the PRB,
provider reimbursement board. But it would be a frightening
organizational chart if I were to show it to you.
The Chairman. There are some efforts in Congress to deal
with this. Are you in a position to comment on the Medicare
Regulatory Education Fairness Act that Senators Murkowski and
Kerry have introduced?
Mr. Scully. Yes. I think it is a legitimate effort to make
some changes. I would say that we think a fairly significant
portion of that bill includes reasonable changes that we can
make, and a lot of them we are making. We have talked to both
the Finance Committee and the Ways and Means Committee about
it, because they have parallel efforts, to take some of those
ideas and fold them and be more responsive to providers and
physicians in our constituencies.
There is also a number of things in the bill--I will not go
through them one-by-one--that would significantly weaken our
enforcement efforts that I think would be a big mistake and
that we will not support.
The Chairman. And what would those be?
Mr. Scully. Well, I have a long list of them, but just to
give you one example, there is a provision in the MERFA bill
that I think is vague, that says essentially that if you turn
in a claim, let us say an pneumonia claim, and you are a
hospital, and you send the pneumonia claim and ask is this
claim OK, in theory, the rest of your pneumonia claims for the
rest of the year are unreviewable, which is clearly not a good
idea. If you send in one pneumonia claim and ask is this the
way we should bill, OK, fine, and then you basically have an
affirmative defense to say that nobody can look at those claims
for the rest of the year, that is not a rational policy
approach. I do not think it was intended to be that way. But
there are a number of things in the bill that would
significantly water down our enforcement capabilities.
The Chairman. Can you comment on the viability of the use
of the False Claims Act versus the appeals process with regard
to going after improper payments, and which is the proper
procedure and which is the best procedure?
Mr. Scully. That is a very complicated issue, and I will
give you my own opinion from being on the outside. As you know,
Senator Grassley feels very strongly about the False Claims
Act. I think it was originally created to deal more with
defense issues. I spent a lot of time in various roles talking
with Senator Grassley over the last couple of years, and I do
not think the False Claims Act should necessarily be changed or
watered down. In my opinion, the way it is utilized by the
Government, both inside and outside the Government, has
frequently not been appropriate. So to some degree, I think it
is a matter of giving more rational guidance to folks around
the country, not in my agency, about how to utilize the False
Claims Act.
The Chairman. All right. We may have some additional
questions, Mr. Scully, but we appreciate very much your being
with us today and will let you get back to CMS.
Mr. Scully. Mr. Chairman, I always enjoy working with you,
and I hope we can get a reform bill with a prescription drug
benefit done by the end of the year and fix CMS at the same
time.
The Chairman. We are working on it. Thank you very much.
Mr. Scully. Thanks.
The Chairman. I would like to welcome our next panel, which
will consist of Mr. Stuart Schiffer, Acting Assistant Attorney
General at the Department of Justice; Mr. Lewis Morris,
Assistant Inspector General for Legal Affairs at Department of
Health and Human Services, Office of Inspector General; and Ms.
Leslie Aronovitz, Director of Health Financing and Public
Health at GAO.
Folks, we welcome you and will be pleased to receive your
testimony.
Ms. Aronovitz, please proceed.
STATEMENT OF LESLIE G. ARONOVITZ, DIRECTOR, HEALTH FINANCING
AND PUBLIC HEALTH, HEALTH, EDUCATION, AND HUMAN SERVICES
DIVISION, U.S. GENERAL ACCOUNTING OFFICE, WASHINGTON, DC
Ms. Aronovitz. Mr. Chairman, I am pleased to be here today
as you discuss the administration of the Medicare program and
activities undertaken to safeguard the Medicare trust fund.
At the heart of effectively administering Medicare is CMS'
responsibility to protect the integrity of the program while at
the same time, ensure that providers, beneficiaries, and other
stakeholders are well-informed and treated fairly.
Last month's renaming of the Health Care Financing
Administration is indicative of the heightened attention being
placed on the agency that runs Medicare, and for good reason.
Medicare will always pose enormous management challenges,
primarily because of its size and extremely complex mission--
that of assuring access to and paying for needed medical
services for approximately 40 million beneficiaries, delivered
by almost one million providers.
In attempting to fulfill this mission responsibly, agency
actions may inevitably make it a target of parties who feel
disadvantaged or harmed by some of its decisions.
Since 1996, the HHS OIG has repeatedly estimated that
Medicare contractors inappropriately paid claims worth billions
of dollars annually. The depletion of Medicare's Hospital Trust
Fund and the projected growth in Medicare's share of the
Federal budget have focused attention on program safeguards to
prevent and detect health care fraud and abuse. It has also
reinforced the importance of having CMS and its contractors
develop and implement effective strategies to prevent and
detect improper payments.
As safeguard and enforcement actions have increased, so
have provider concerns about their interaction with CMS'
carriers and fiscal intermediaries. While most would agree that
these activities are part of CMS' fundamental stewardship
mission, individual physicians and representatives of medical
associations have made a number of serious charges--for
instance, that the information that they receive from CMS and
its contractors is poorly organized, difficult to understand,
often inaccurate and not always communicated promptly; that
contractors have inappropriately targeted them for claims
review and that they have been subject to excessive paperwork
demands of the medical review process; that contractors use
unfair methods to calculate Medicare overpayments; and that the
process to appeal denied claims is lengthy, and on successful
appeals, does not provide for interest for the period during
which the administrative appeal was pending.
We do not have any answers yet, but we are conducting
several studies which are underway to examine the regulatory
environment in which Medicare providers operate. Specifically
at the request of the House Committee on the Budget and the
Ways and Means Subcommittee on Health, we are reviewing the
adequacy of CMS' communications with providers. We are also in
the preliminary stages of a second study that examines how
claims are reviewed and how overpayments are detected to assess
the actions of contractors as they perform their program
safeguard activities.
CMS is faced with the challenge of protecting program
dollars while interacting with all program participants
including providers in a transparent and timely manner. Because
the Medicare claims administration contractors conduct the day-
to-day operations of the fee-for-service program and are the
primary face to providers, CMS' oversight of its contractors is
essential to assuring that Medicare is administered efficiently
and effectively.
Historically, the agency's oversight of its contractors has
been weak, and although it has made substantial improvements in
the past 2 years, our ongoing work suggests that there is quite
a lot of room for improvement in the area of provider
relations. You mentioned some of them; I would like to
elaborate a bit.
In our contractor communication study, our review of
several information sources such as bulletins, telephone call
centers, and internet sites found a disappointing performance
record. In regard to contractor bulletins, we found that many
of them contained lengthy discussions with overly technical and
legalistic language that providers may find difficult to
understand. These bulletins also omitted some important
information about mandatory billing procedures.
Similarly, we found that the calls we placed to telephone
call centers this spring were rarely answered appropriately.
For example, call center representatives provided an incomplete
or inaccurate answer 85 percent of the time. And it was not a
statistically valid sample, but it did involve 60 phone calls
to five call centers over a period of about 6 weeks.
We were also very clear to tell the call representatives
that we were from the General Accounting Office and that we
were interested in them answering the question as though we
were a provider.
Finally, in reviewing the websites of 10 carriers, we found
that they rarely met all of CMS' requirements, and they often
lacked user-friendly features such as site maps and search
functions.
We just heard from Mr. Scully about CMS' ambitious agenda
to develop a more transparent, responsive, and consistent
approach to interacting with its provider community. Some of
the activities included in this plan are underway or have been
ongoing for quite some time, but most of CMS' plans are just
being announced, and the details are yet to be revealed.
We are anxious to hear more about these efforts as we
formulate our recommendations for how CMS can do better as it
performs important activities to protect the integrity of
Medicare while striking a balance of simplicity and
responsiveness to the providers and others who participate in
the program.
That concludes my short statement. I would be more than
glad to answer any questions you have.
The Chairman. Thank you, Ms. Aronovitz. We will get to
questions in a moment.
[The prepared statement of Ms. Aronovitz follows:]
[GRAPHIC] [TIFF OMITTED] T5039.015
[GRAPHIC] [TIFF OMITTED] T5039.016
[GRAPHIC] [TIFF OMITTED] T5039.017
[GRAPHIC] [TIFF OMITTED] T5039.018
[GRAPHIC] [TIFF OMITTED] T5039.019
[GRAPHIC] [TIFF OMITTED] T5039.020
[GRAPHIC] [TIFF OMITTED] T5039.021
[GRAPHIC] [TIFF OMITTED] T5039.022
[GRAPHIC] [TIFF OMITTED] T5039.023
[GRAPHIC] [TIFF OMITTED] T5039.024
[GRAPHIC] [TIFF OMITTED] T5039.025
[GRAPHIC] [TIFF OMITTED] T5039.026
[GRAPHIC] [TIFF OMITTED] T5039.027
The Chairman. Mr. Schiffer.
STATEMENT OF STUART E. SCHIFFER, ACTING ASSISTANT ATTORNEY
GENERAL, CIVIL DIVISION, U.S. DEPARTMENT OF JUSTICE,
WASHINGTON, DC
Mr. Schiffer. Thank you, Mr. Chairman, and good morning.
I appreciate the opportunity to appear again before this
committee to discuss the Justice Department's efforts to combat
health care fraud.
I will state at the outset that although our testimony was
not prepared at all in collaboration with each other, I did not
find it surprising that there is substantial overlap between
the testimony of my colleague in the Inspector General's Office
and our own testimony, since we work in very close partnership
in investigating and prosecuting health care fraud cases. Of
course, for that reason, I will also feel free to refer any
difficult questions to Mr. Morris, on my left.
Health care fraud quite obviously directly affects the
Nation's most frail and elderly citizens, and of course,
nowhere is this more true than with respect to Medicare fraud,
which strips the trust fund of dollars intended for the care of
beneficiaries.
In a very real and direct sense--and Senator Collins
alluded to this--we think it is clear that such fraud is also
an offense against the vast majority of honest and dedicated
providers, as it decreases the pool of funds available to pay
for the good and proper services rendered by these providers.
My prepared statement discusses our use of the False Claims
Act, which is the principal tool we use certainly on the civil
side to recover funds defrauded from Government health care
programs. We firmly believe that our enforcement efforts are
carried out in a fair and evenhanded manner.
Three or 4 years ago, the hospital industry brought to our
attention concerns with a limited number of cases where certain
U.S. Attorneys' offices had not followed the procedures we
consider sufficient to lay a predicate for making allegation of
violations of the False Claims Act.
In response to those concerns, which were brought to our
attention and to Members of Congress, the Deputy Attorney
General issued guidelines that memorialize what we consider to
be our longstanding enforcement policies. We also formed
working groups with experienced Assistant U.S. Attorneys and
Department attorneys to coordinate and oversee these projects.
The General Accounting Office has monitored our compliance
with these guidelines and has reported that the guidelines are
being followed in a consistent manner at our U.S. Attorneys'
offices.
The False Claims Act is a relatively straightforward
statute. It applies to the knowing submission of false claims.
It does not and is not intended to punish innocent mistakes; it
is in no sense a trap for the unwary. Since its amendment 15
years ago, the Act has been used to recover literally billions
of dollars that have been defrauded from Government programs,
and we believe that the deterrent effect of our efforts has
safeguarded many more billions.
At my last appearance, I described many of the
collaborative efforts we have undertaken with other Federal,
State, and local agencies and with many dedicated private
sector groups which provide valuable service in combatting
fraud. I will not dwell on these today. Suffice it to say the
1996 Health Insurance Portability and Accountability Act
provided needed funding and encouragement for these
collaborative efforts to go forward and improve.
The Act itself provides a public sector/private citizen
partnership in giving monetary incentives and other safeguards
for private whistleblowers to file suits on behalf of the
United States. I think one of your later witnesses will speak
more extensively to the whistleblower provisions. I want to
assure the committee that our efforts to combat health care
fraud and to safeguard the rights of our elderly citizens and
of honest care providers will continue to be a high priority of
this administration.
I too look forward to taking your questions.
The Chairman. Thank you, Mr. Schiffer.
[The prepared statement of Mr. Schiffer follows:]
[GRAPHIC] [TIFF OMITTED] T5039.028
[GRAPHIC] [TIFF OMITTED] T5039.029
[GRAPHIC] [TIFF OMITTED] T5039.030
[GRAPHIC] [TIFF OMITTED] T5039.031
[GRAPHIC] [TIFF OMITTED] T5039.032
[GRAPHIC] [TIFF OMITTED] T5039.033
[GRAPHIC] [TIFF OMITTED] T5039.034
[GRAPHIC] [TIFF OMITTED] T5039.035
[GRAPHIC] [TIFF OMITTED] T5039.036
[GRAPHIC] [TIFF OMITTED] T5039.037
[GRAPHIC] [TIFF OMITTED] T5039.038
[GRAPHIC] [TIFF OMITTED] T5039.039
[GRAPHIC] [TIFF OMITTED] T5039.040
[GRAPHIC] [TIFF OMITTED] T5039.041
[GRAPHIC] [TIFF OMITTED] T5039.042
[GRAPHIC] [TIFF OMITTED] T5039.043
The Chairman. Mr. Morris.
STATEMENT OF LEWIS MORRIS, ASSISTANT INSPECTOR GENERAL FOR
LEGAL AFFAIRS, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF
HEALTH AND HUMAN SERVICES, WASHINGTON, DC
Mr. Morris. Good morning, Mr. Chairman.
Health care providers can reasonably expect the Federal
Government to provide clear and consistent guidance when
administering the Medicare program. At the same time, health
care providers reasonably must ensure that the care they
provide to Medicare beneficiaries and the claims they submit
conform to program requirements.
The Office of Inspector General is committed to continuing
its work with providers and the Centers for Medicare and
Medicaid Services to advance these mutual goals. The OIG's
mission to prevent and detect fraud, waste, and mismanagement
is carried out through a nationwide program of audits,
inspections, and investigations. With the increased resources
provided by the Congress in 1996, we and the Department of
Justice have sought to protect the integrity of the Medicare
trust fund by diligently pursuing health care fraud.
Our enforcement actions are taken against those who
knowingly submit false claims or otherwise intentionally engage
in misconduct. It is important to note that under the laws that
we help enforce, providers are not subject to nor do we pursue
civil or criminal penalties for innocent errors or negligence.
The Government's primary civil enforcement tools--the civil
False Claims Act and the civil monetary penalty laws--cover
only offenses that are committed with actual knowledge of the
falsity of the claim or reckless disregard or deliberate
ignorance of the falsity of the claim.
For criminal penalties, the standard is even higher--
criminal intent to defraud must be proven beyond a reasonable
doubt.
Thus our enforcement actions focus on those companies and
individuals who have clearly violated the law. Fortunately, the
great majority of providers want to bill the program correctly.
These providers are our allies in the fight against health care
fraud and abuse, and accordingly, we devote significant efforts
to educating providers about their compliance obligations.
As my written testimony describes in detail, the OIG issues
legally binding opinions regarding the lawfulness of specific
business arrangements, promulgates regulations that protect
certain business practices from being prosecuted under the
anti-kickback statute, publishes bulletins identifying conduct
the Inspector General considers suspect, and issues guidance to
implement voluntary compliance programs.
The American Hospital Association was instrumental in the
design of the Compliance Guide for Hospitals, and we are very
appreciative for its support.
Regrettably, despite these efforts, some providers continue
to knowingly abuse and defraud the Federal health care
programs. When individuals or entities are found to have
engaged in fraud, the OIG is responsible for determining
whether to exclude them from future participation in the
Federal health care programs.
This typically arises in connection with the settlement of
allegations of fraud between the provider and the Department of
Justice. In the appropriate circumstances, the OIG may offer to
waive its exclusion remedy in exchange for the provider
entering into a Corporate Integrity Agreement, or CIA.
The OIG has never required a CIA without evidence that the
provider has engaged in fraudulent conduct. Each CIA addresses
the specific facts of the particular case and is tailored to
the existing capabilities and structure of the health care
provider. It also considers any pre-existing voluntary
compliance measures of the provider. It allows that provider to
implement a CIA consistent with cost-effective auditing,
training, and reporting requirements.
In response to feedback from the health care industry, we
continually evaluate each element of the CIA, make
modifications as appropriate, to decrease the cost and burden
of operating under these agreements.
Additionally, we are seeking guidance from the provider
community by holding another of our series of roundtable
discussions with the health care industry. Specifically, on
July 30, representatives of health care providers that are
currently operating under CIAs will meet with the OIG in
Washington to discuss issues surrounding the implementation and
maintenance of compliance programs and CIAs.
Mr. Chairman, the OIG is committed to protecting the
integrity of the Federal health care programs and will continue
to work with health care providers to achieve this mission. Our
enforcement efforts will continue to focus on those providers
who have engaged in fraudulent conduct. We will also continue
to collaborate with providers to assist in their efforts to
comply with program requirements.
We appreciate the strong support we have received from the
Congress and your continued interest in this critically
important subject.
Thank you for the opportunity to testify. I would be
pleased to answer any questions.
[The prepared statement of Mr. Morris follows:]
[GRAPHIC] [TIFF OMITTED] T5039.044
[GRAPHIC] [TIFF OMITTED] T5039.045
[GRAPHIC] [TIFF OMITTED] T5039.046
[GRAPHIC] [TIFF OMITTED] T5039.047
[GRAPHIC] [TIFF OMITTED] T5039.048
[GRAPHIC] [TIFF OMITTED] T5039.049
[GRAPHIC] [TIFF OMITTED] T5039.050
[GRAPHIC] [TIFF OMITTED] T5039.051
[GRAPHIC] [TIFF OMITTED] T5039.052
[GRAPHIC] [TIFF OMITTED] T5039.053
[GRAPHIC] [TIFF OMITTED] T5039.054
[GRAPHIC] [TIFF OMITTED] T5039.055
The Chairman. Thank you all very much for your testimony
and your presentations.
Do you all have a memorandum of understanding between
Justice and OIG as far as how you operate, where you overlap,
and how you work together? Is there some kind of policy that
you have, or is everybody on their own?
Mr. Morris. In one particular area, there is actually a
statutory insurance that we do not overlap. When we bring civil
monetary penalty actions, which are administrative actions, to
pursue false or fraudulent conduct, we need to get the approval
of the Department of Justice before we can go forward with that
action. That ensures that we do not have overlapping
enforcement efforts.
In addition to that, we have a series of work groups, both
an executive level work group as well as individual working
groups focusing on particular national initiatives, where we
discuss both the underlying rules and regulations that we are
looking into and also ensure that there will be a consistent
application of our enforcement efforts across the country.
The Chairman. I would imagine that hospitals and providers
will probably say that they do not know who they have to deal
with--on the one hand, they are worried about Justice, and on
the other hand, they are worried about OIG. What can we tell
them to alleviate that concern? It seems like in some areas,
the OIG is involved in enforcement or investigation, and in
other areas, Justice is pursuing a criminal prosecution.
Is there anything we can say to providers to give them some
confidence that there is no overlap in these areas?
Mr. Schiffer. Most of our cases, Mr. Chairman, are resolved
on three fronts--any criminal investigation that has taken
place; consideration of civil remedies; and the administrative
sanctions or remedies that Mr. Morris testified about.
I do not think there is a consistent problem. To some
extent, we have to have separation between the criminal and
civil sides just to provide compliance with the ethical rules
and matters such as limits on the extent to which grand jury
information can be shared. But I do not think there are
recurrent situations where a provider does not know whether to
talk to the IG or the Justice Department, since in a typical
case, we are working together, and the provider can frankly
deal with either side of the house.
The Chairman. Thank you.
The American Hospital Association in their testimony coming
up, I think, will basically recommend that Congress give
hospitals a specific opportunity to challenge decisions made by
HHS and the Medicare program that they feel would be legally
questionable. Can you comment on that? I take it they would
like to have an opportunity to go to court and try to challenge
some of these policy decisions rather than go through some kind
of administrative process to appeal these decisions. Would that
have any effect on enforcement from your standpoint?
Mr. Schiffer. I think it could. I am reluctant to speak at
length about proposals that we have not seen specifically. I
think two things are separate. On one hand, I think providers
need to be able to obtain clear guidance and to make sure they
are not trapped by complex procedures. On the other hand,
unlike some of my colleagues in private practice who will be
testifying for the hospital associations, we have more business
than we need, and the Federal courts certainly have more
business than they need, and I think there is always a risk in
bringing premature challenges when you are not operating with
specific fact patterns where there really is a need for Federal
courts to address these issues.
So I would far prefer to see things simplified on the
administrative side so that such guidance can be obtained, as
opposed to encouraging yet more litigation in the Federal
courts.
The Chairman. Can anybody give me some kind of idea of how
much of the improper payments are pursued under the False
Claims Act versus other means of pursuing these improper
payments? Is the bulk of it under False Claims Act, or is the
bulk of it through internal OIG efforts? How do we do it? When
we have problems with improper payments, how do we pursue them
most of the time? Is there some kind of balance here?
Mr. Schiffer. Of course, the False Claims Act is only
directed at payments that are fraudulent in nature--payments
that constitute knowing presentation of false claims--and I am
not sure that I----
The Chairman. In other words, to pursue an action under the
False Claims Act, you have to show intent to defraud as opposed
to just a mistake?
Mr. Schiffer. Not so much as a criminal intent, but at
least a knowledgeable submission of a false claim. I am not
sure that I can do any better than Mr. Scully did in estimating
what percentage of improper claims are fraudulent as opposed
to----
The Chairman. Is there ever a case where an intent to
submit a false claim would not be criminal?
Mr. Schiffer. I am sorry?
The Chairman. Is there ever a case where an intent to
submit a false claim would not be criminal?
Mr. Schiffer. No--typically, those would be criminal cases.
What I am saying is that I am not sure I can give you an exact
dichotomy in terms of estimating percentage of claims that are
simply the result of erroneous submissions and those that are
fraudulent. I am not sure if Mr. Morris can do any better--but
we do not bring under the False Claims Act cases where we have
reason to believe these are negligent mistakes or simple
overpayments.
The Chairman. If you do proceed in that fashion and you
find out that this was not an intent to defraud but sloppy
bookkeeping or an honest mistake, do you kick it over to
somewhere else for collection?
Mr. Schiffer. We would do that, or we would attempt, in
conjunction with the agency, to collect the amount of the
overpayment--certainly not to collect penalties or multiple
damages.
The Chairman. Mr. Morris.
Mr. Morris. That is exactly right, and if I could just
elaborate that I think the vast majority of billing errors are
dealt with at the contractor level, and whether it is a
hospital or a physician, there is a frequent exchange of
information back and forth to reconcile the books. I think Mr.
Scully referenced the great familiarity that hospitals will
have with their contractors because of that.
As Mr. Schiffer said, the only types of cases that either
OIG or the Department of Justice get involved in is where there
is evidence of fraud; and if, during the investigation of that
allegation, it appears that there was not a knowing submission
of false claims, but in fact there were simply billing errors,
perhaps as a result of miscommunication of information by the
contractor, that ends the case from a fraud standpoint. Now,
the program is still owed money. If there had been overpayments
due to billing for unnecessary services or otherwise taking
money that the provider is not entitled to, it is important
that the trust fund get that money back, but that is not the
job of law enforcement, that is the job of the program.
The Chairman. Thank you.
I have other questions, but I want to recognize Senator
Ensign. Just one comment, Ms. Aronovitz. You talked about the
GAO doing spot-checks with telephone calls to the various
centers and that you got only an 85 percent satisfactory
response from those calls to the centers. I am surprised you
got that high a percentage when you identified yourself as
being from the Federal Government--``I am from the GAO, and I
would like to ask you a few questions.'' I am sure the poor
person on the other end probably went crazy trying to figure
out how to answer the question. It is like ``I am from the IRS
and I would like to ask you a few questions.'' I am not sure I
could answer the questions straight, without being scared to
death. [Laughter.]
Ms. Aronovitz. Well, maybe they were scared to death, or
maybe they were paralyzed, because in fact our results were
that only 15 percent of the time did they answer accurately and
completely.
The Chairman. Oh, it is 15 percent--85 percent incorrect.
Ms. Aronovitz. That is correct.
The Chairman. I would bet that if you had not told them
where you were from, you would have gotten a higher rate of
compliance.
Senator Ensign.
Senator Ensign. Thank you, Mr. Chairman.
I do not know how well you are going to be able to answer
these questions, but I am just tossing it out from an
enforcement standpoint. I spent 4 years in the House of
Representatives and was on the Health Subcommittee of Ways and
Means, so I was very involved in a lot of these issues
involving Medicare. When I would have town hall meetings with
our seniors--and I know that every Senator or Member of
Congress who has ever had a town hall meeting would agree--it
seems like every time you have seniors who stand up and talk
about how Medicare is being ripped off and so on. My question
is asked in light of trying to get feedback from you to help us
improve the regulations that we have put into place. In doing
my research, most of the cases that the seniors think are fraud
and abuse are just confusing regulation, because the State may
require something different than the Federal Government that is
different from what private insurance requires. And because of
the DRGs and various other things, it actually has nothing to
do with what is provided, yet the hospitals have to list out
what was provided.
In your investigations or requests for investigations, do
you know what percentage of investigations are due to cases
like that? In other words, they are not really cases of fraud
and abuse that you are able to dismiss. Do you keep track of
those kinds of things?
Mr. Morris. Perhaps I can answer it this way. The Office of
Inspector General runs a hotline which receives hundreds of
thousands of calls from senior citizens and their families,
because we encourage seniors to take a look at their bills; we
urge them to think of it like a VISA bill--if there is a charge
on there that you do not understand, ask someone. We, with the
AARP and others, have urged that it be a three-step process. If
you do not understand the bill, first ask the doctor, because
it may well be that you do not recognize the name of the
radiologist, but you got the x-ray. If you are not satisfied
with that explanation, talk to the Government contractor, the
carrier, who may explain, as you just elaborated that, ``Well,
it is a DRG bill, and that is the way it works.''
If you are still not satisfied after having asked those
questions, call our hotline. Of the folks who call our hotline,
a significant proportion of them--I daresay a majority--are
along the lines that you are raising. They are not fraud
issues. They are either misunderstandings of the rules; it is a
duplicate claim, but there is a reason for it, and it was
caught and not paid, and so on. Those matters are referred to
the contractors for clarification. They are not fraud.
But there are allegations that come through our hotline as
well as through qui tam relaters and other sources which
represent genuine intent to defraud our program.
Senator Ensign. Yes, and I have no doubt that any business,
I do not care what it is, whether it is a retail business,
whether it is the gaming business--most of the time when you
catch people stealing or ripping off, it is because the public
gives you the input. All the security measures in the world
that you have are not nearly as effective as if you have just
honest, ordinary citizens saying, ``Hey, I think there is
something wrong here.'' I think it is great that we continue
that. But my question to you--because I think it is critical,
because you are on the front lines seeing why the confusion is
happening--is it just something that Tom Scully has to write
new regulations, or whether we need to pass laws to try to
clear up some of that confusion. If you are having the same
things leading to the confusion every time perhaps your front
line workers are saying, ``The reason why this keeps happening
is because these regulations are stupid; they do not keep less
fraud from happening, but they lead to so much confusion among
seniors that we get a lot of these phone calls--'' which take
up resources on your hotline and various other things then we
need to do something. I guess that is the purpose for my
questions.
Ms. Aronovitz. I would just throw in that I am not sure how
much is attributed to this, but I think part of the confusion
on the part of seniors is a result of the complex nature of
health care today. I know that when my mother would come to me
with her explanation of Medicare benefits, she would get
confused because she would have lab tests that would have a
different organization name--it would be the laboratory--that
she had never heard of; or she would go to a provider whose
billing office was in a different location, and she would
insist that she did not go to a provider at that location.
There are many entities that are organized in a manner that
results in bills from different locations, and the time periods
are sometimes very confusing.
Also, sometimes she would literally just forget that she
had gone to two appointments in the same day for two unrelated
matters.
I think those are some of the typical things that do get
very confusing in just trying to use the health care system.
Despite this, I know that the Office of Inspector General
occasionally gets some pretty good leads, from alert seniors
who are perfectly correct.
Senator Ensign. And once again, we want to continue that.
We held a lot of hearings, and I remember the numbers back in
1977, I think, about the $23 billion in fraud and abuse, and 90
percent of it turned out to be clerical errors--not even that
the services had not been provided; it was just that the form
might not have been filled out, or maybe a signature, or
whatever.
The bottom line, I guess, when we are having to look at
these things is that we need feedback from you to help
streamline some of this stuff so the confusion is out of it.
However, we have also got to look at cost-benefit analysis of
what we are saving. We always hear these numbers, that every
dollar in investigation saves Medicare three dollars, or
whatever the numbers are. Most of the time, however, those
dollar estimates do not take into account the huge regulatory
burden that is put on all the providers and the extra people
that they have to hire. That is only the cost to the
Government; that is not necessarily the cost to the entire
health care system. We spend way too much money in our health
care system on administrative costs at all levels--private
sector, public sector, every level--and that money does not get
to proper health care, and that is I think what we should all
be about.
Mr. Morris. Perhaps I can try to answer this question, and
it is an excellent question. It is a source of a lot of concern
for us in the OIG as we work to put together compliance
measures to make sure that they are cost effective and that we
are not shifting money to paperwork and not being able to
provide better care.
It has been our experience--and this is now being borne out
by empirical studies, and the GAO also did some work in this
area--that providers that implement an effective compliance
program, train their people on proper coding, do internal
audits to make sure that the claims going out are correct, make
available vehicles so that if people have concerns, they can
bring them to the attention of management--all the aspects of
what we say represent an effective compliance program--are not
only doing the right thing by the program, which is important,
but they are also finding that it is reducing the number of
billing errors, it is reducing the number of undercodings--
claims which should actually be billed at a higher level,
legitimately, but because the billing folks did not understand
the rules, they inappropriately undercoded it. When the GAO
went out and talked to hospitals that were implementing
compliance programs, they asked them whether they thought this
effort was cost-effective, and if I could, I would like to read
from a report that the GAO issued back in 1999--and we would be
pleased to put it in the record.
``Almost all the hospitals in our study believed that their
liability under the fraud and abuse statute would be reduced as
a result of their compliance programs. For most of them, the
reduction in improper payments and they attendant liability is
a benefit that exceeds the cost of their compliance programs.''
And it goes on to talk about the other benefits.
I also mention that there was other empirical work being
done. A recent study published in one of the journals reports
on work done at St. Louis University Hospital, where clinicians
studied the rates of billing errors, underutilized codes, and
the like before and after a compliance program was put into
particular departments. They found that there was a reduction
in the number of billing errors, a reduction in the
undercoding, and an actual increase in revenues to the hospital
as a result of implementing the compliance program.
One reason why we worked so hard with the industry to build
these voluntary compliance programs is because we think they
not only protect the integrity of the trust fund, but they are
also good business.
Ms. Aronovitz. Since Mr. Morris did refer to our report, I
would like to add this. He is completely correct--I think the
hospitals that we went to were convinced that having a
compliance program for them was the right thing to do for a lot
of reasons.
However, while we tried to do a cost-benefit analysis to
see the cost of implementing all of the different elements in
their plans versus the benefit to those institutions. It was
impossible to get the costs associated with implementing a lot
of compliance plans for many reasons.
The costs associated with Corporate Integrity Agreements
are sunk costs; they are ones that are typically not revenue-
producing. They are things like having better training, having
a corporate compliance officer who is responsible for
overseeing the program, having a hotline, conducting different
activities to assure that employees inside the organization
could report any instances of questionable behavior. Those are
activities that the organization would not typically want the
board of directors to know they are spending relatively large
amounts of money on.
So, it was difficult, and I think it should be stated that
although hospitals were convinced that the money they invested
in compliance programs was definitely worthwhile, we could not
also say that it was cost-beneficial to do this.
Senator Ensign. Thank you.
The Chairman. Thank you, Senator Ensign.
Senator Craig.
Senator Craig. Mr. Chairman, thank you very much, and let
me apologize to the witnesses for having to step out. The good
news is that one of my staff people is going to be serving in
the administration, and I wanted to be there to introduce him
before the committee that is hearing him. The bad news is that
it took me away from this hearing which, as I mentioned in my
opening comments, I am very interested in.
Mr. Chairman, I know that you are going to hold the record
open, and I will refrain from asking Mr. Scully any questions
and will submit questions to him in writing that we can build
the committee record on.
The Chairman. Yes, without objection.
Senator Craig. I thank you for that.
Let me turn to you first if I may, Leslie. I am interested
in the report that your office issued on DOJ compliance with
guidelines related, of course, to the national civil
enforcement initiatives.
What prompted Congress to ask the GAO to review DOJ's
effectiveness in implementing its own civil guidelines? What
was the essence of that.
Ms. Aronovitz. Several years ago, the Department of Justice
and the Office of Inspector General received money through the
Medicare Integrity Program and through HIPAA to properly fund
and more aggressively pursue health care fraud control
activities. I think the provider community became much more
aware and concerned about some of these activities.
There was a lot of discussion at that time, and there was a
decision made by the Department of Justice that it should
elaborate on its own guidelines for performing investigations
for health care matters under the False Claims Act. My
understanding is that this Deputy Attorney General guidance was
in effect all the time, and it was something that had always
supposedly been followed, but it was a restatement of what the
policies were.
I think Congress was very concerned and very interested in
whether these two organizations might be too aggressive in
pursuing health care fraud activities, and we were asked to
assure that the Department of Justice was following its own
guidance--in other words, assuring the fairness of the
Department of Justice's interactions with providers in pursuing
the False Claims Act in regard to health care matters.
In fact, in our first year of overseeing the Department of
Justice, we found that there was somewhat of a variation in the
extent to which U.S. Attorneys' offices were following the
guidance, but in subsequent years, we have been able to give
the Department of Justice a clean bill of health.
Senator Craig. In what areas would you suggest there are
still improvements to be made?
Ms. Aronovitz. Do you mean with CMS' enforcement
activities?
Senator Craig. Yes.
Ms. Aronovitz. We have been very involved in looking at the
way that CMS and its contractors are overseeing safeguard
activities. There is more money devoted to assuring the
integrity of the trust fund. And I think there has been in
recent years, especially recently, a very strong emphasis on
beneficiary education. I think the group that has really
suffered has been in provider relations. When you talk about
the discretionary budget of CMS and how limited CMS officials
are in their ability to perform the many tasks they have to do,
I think that provider relations has clearly lost out. This is
an area that needs new focus, and I think this will happen,
based on some of the comments that the administrator made this
morning.
Senator Craig. In determining the intent in health fraud
cases, it seems that it would be important for investigators to
know what guidance the health care provider received from CMS
and its contractors. Has your office taken a look at the level
of coordination that occurs between CMS, OIG, and DOJ in
conducting health fraud investigations?
Ms. Aronovitz. We have not looked at that specifically and
in specific cases, but we are aware that the Department of
Justice and OIG are very careful in terms of looking at the
evidence before they pursue these cases.
We have not actually assessed the accuracy or the actual
evidence that they have used in recent years on individual
cases, so it might be that Mr. Morris or Mr. Schiffer could
answer that better.
Senator Craig. Gentlemen?
Mr. Schiffer. Senator, I think some evidence of the care we
take stems from whistleblower cases, so-called qui tam cases,
under the False Claims Act, where we are under a statutory
obligation to do at least some investigation of every one of
those cases that is instituted in the first instance by a
private party. And again, working in collaboration with the
Inspector General's Office, we actually intervene in somewhere
around one-fifth of those cases only--not always because there
was absolutely no evidence of fraud, for example, but where we
simply do not think evidence is sufficient for us to pursue
cases.
So, as I said earlier, we do not need the business; we
attempt to work collaboratively to make sure we are pursuing
cases where actual fraud is present.
Mr. Morris. If I could elaborate, the OIG, of course, is
the investigative arm in this process, and one of the standard
steps that an investigator takes when building a case is to
determine what is the requirement, and does the provider or the
target of the investigation know what that rules is, because
just from a practical standpoint as well as an equitable one,
if we cannot show that there is a standard to be held to and
the provider understood what the standard was, it is difficult
to show that they knowingly chose to violate it. And
regrettably, we have had cases where we thought we had a strong
fraud case, and as the case developed, as we pulled data, as we
interviewed witnesses, it became apparent that while what we
were seeing was perhaps outrageous--the trust fund was losing
great deals of money--we could not show that the provider had
been told what the standard was, and we could not show that the
provider then knowingly violated that standard. So that
regrettably, in cases like that, we just have to walk away, and
we do.
Senator Craig. And from your perspective, that was a result
of failing to educate, failing to provide the necessary
information to understand the effectiveness of that reg or the
implementation of that reg?
Mr. Morris. That is right. We can only pursue fraud cases--
and again, we have to stress that these are cases where the
target knows that it is committing fraud or is recklessly
indifferent to the truth of its dealings with us--if there is a
standard that we can show that they are aware of. As I said, we
have unfortunately had cases where the information provided by
the contractor is sometimes inconsistent, or other information
that comes to the provider leaves open the question of whether
they really clearly understood the rules.
Senator Craig. I see my time is up. I have some more
questions, but I will come back.
The Chairman. We will come back for another round.
Mr. Morris, the Hospital Association will argue that these
Corporate Integrity Agreements should be used only in cases of
fraud versus mistakes that are not intentional. What is your
position?
Mr. Morris. I absolutely agree. The Corporate Integrity
Agreement is implemented in cases where we in the Department of
Justice are resolving false claims. The Congress has given to
the Secretary, and the Secretary has delegated to us,
responsibility for deciding whether to exclude providers that
we have determined are untrustworthy, such as those submitting
fraudulent claims.
In those cases where we have some discretion, where we are
not mandated to exclude, we have to ask ourselves whether there
are ways to ensure that that provider's fraudulent behavior
will not recur and thus cause the trust funds to lose even more
money.
So the cases in which we sit down with a provider to talk
about implementing a Corporate Integrity Agreement are cases
where they are facing potential exposure to exclusion for their
fraudulent conduct, and they are also cases where the
Department of Justice or U.S. Attorneys' offices are going to
be settling a False Claims Act liability.
We do not pursue Corporate Integrity Agreement cases with
providers who just make innocent billing errors. We have plenty
of work without those.
Mr. Schiffer. I would only add, Mr. Chairman, that there is
a distinction between cases where HHS or Government agencies
have a right to insist on such agreements as a result of
fraudulent activities, and in many instances, where providers
on their own adopt compliance plans to ensure that their
business is being operated in a proper manner. Obviously, the
Government would never discourage such steps.
The Chairman. What would a Corporate Integrity Agreement
consist of in addition to the way a well-run hospital would
ordinarily conduct its business anyway?
Mr. Morris. There are only two elements that a Corporate
Integrity Agreement requires that an effective compliance
program would not have in place already. Those are, first, an
annual report to the OIG which reports on all the activities
that have been engaged in during the last year. It is really
quite comparable to what you would expect a compliance
department to report to the board of directors--here is the
trending that we have done, here are the errors we found and
what we have done about them, and so on.
The Chairman. But this report, instead of going to the
board, goes to HHS or----
Mr. Morris. Yes, to my office, the Office of Inspector
General. And we have a staff of attorneys and program analysts
who review each one of those annual reports, and if they see
questions or concerns, get back to the provider. We have a very
active dialog with each provider under a CIA so that if we see
issues or concerns developing, we can talk to them about them
early.
The other aspect of the CIA that you would not find in a
voluntary compliance program is our requirement that in some
instances, the provider hire an independent review
organization, or what we call an IRO, to conduct principally
two functions. One is in the first year of the compliance
agreement to assure us that all the elements that were set out
in the contract have been met--do they have a compliance
officer, do they have a hotline--it is basically a checklist.
The Chairman. How many hospitals in the country are
currently under CIA agreements?
Mr. Morris. The total number of CIAs that we have executed
is about 700. There are about 400 CIAs in place right now, and
I would say that the majority of those are with hospitals. That
is largely because due to a number of national project
initiatives we have done with the Department of Justice looking
at the improper billing of outpatient lab services and so on, a
large number of hospitals settled their False Claims Act
liability and as a condition of that, we required them to put
in certain compliance measures.
The Chairman. How long do they normally last?
Mr. Morris. The length of a CIA depends a little bit on the
facts of the case. On average, I would say 5 years. For many of
the cases where we have identified a more discrete problem, it
would be 3 years. For cases where we are dealing with a
provider that has settled fraud allegations in the hundreds of
thousands, if not millions of dollars, and we are concerned
that the integrity of the provider is so questionable, the CIA
could last as long as 8 years. But on average, I would say 5
years, and a significant number of them, 3 years.
I should also mention that one of the things that we were
very gratified by as we continued to work with the industry to
promote voluntary compliance is that in the more recent years,
providers with whom we negotiate CIAs have many of the
compliance measures we want in place already, and we give them
credit for that. We do not think it is wise to strip out what
they already have in place and working and put something else
in.
So we believe the CIAs are becoming less costly, less
burdensome, and in many cases, we are able to eliminate perhaps
the most costly aspect--the IRO--because the provider is able
to demonstrate that it has an effective internal audit system.
The Chairman. Senator Ensign, do you have any follow-up?
Senator Ensign. Thank you, Mr. Chairman.
Just following up on my previous line of questioning, going
more to the smaller providers, physicians' offices, and so on,
what percentage of your claims are for the smaller providers?
Mr. Morris. In terms of dollars or volume?
Senator Ensign. Either one, or both.
Mr. Morris. I would first have to acknowledge that since
the OIG does not run the program, the question is probably best
put to Mr. Scully.
I would say--and we would be glad to get back to you with
the hard numbers--that the dollar volume is, of course, highest
with hospitals. I would suspect that physicians, because they
do lots and lots of small dollar item services, may have the
largest volume of claims.
Senator Ensign. Do you have any feedback--or maybe the GAO
does--in your investigations, for the small provider,
obviously, you do not have as many people that you can put on
for administration, you do not have the kind of expertise that
maybe a hospital would have--what kind of feedback do you get
from the providers on being able to comply with some of these
things?
In other words, if you had a Corporate Integrity Agreement
with a small provider, what kinds of financial difficulties do
they have? Can they hire the lawyers to deal with you all? What
kind of hardship, even if they just get investigated,
especially when we were talking earlier that some of these are
false investigations--if they get investigated for a false
investigation, what kind of cost does that bring to them?
Ms. Aronovitz. I think Mr. Morris can address the issue of
the False Claims Act allegation, but just in the manner of
submitting claims and trying to obtain reimbursement on a daily
basis--I am talking now more just about participating in the
program generally--we have anecdotal information. We do not
have a sense for sure about small providers versus large ones.
But the small providers we do talk to seem to be very concerned
about the fact that they do not have the funds in their office
to hire the clerks and the in-house counsel and other entities
that can give them advice and assistance in terms of billing
rules.
In our work, we found that one of the major ways that a
small practice was learning about the rules was through hard
copy but also through using a website; and during our study,
the practice lost its internet provider in this rural
community, felt that it was at a disadvantage because they
could not get on the website and get questions answered that
way.
What we find to some extent is that in the larger
practices, some of the regulatory burden is self-induced--in-
house counsel--and it might be because they are very concerned
about the rules, and they want to make sure they follow the
rules--sometimes some of the burden is a result of in-house
counsel requiring the providers to do certain things. It might
not even be the statute, or CMS, or OIG, or anyone else, but
maybe just common practice in an entity. In a very small
practice, it gets more difficult to be able to incur those
costs.
Mr. Morris. I think I can answer in three ways. As to
physicians, we recognize that they have limited resources and
huge demands on their time for patient care. We have done a
number of things in the IG to try to address those concerns.
First, we put out a compliance guidance, a voluntary
guidance, for physicians and small group practices that lays
out the various steps that they should implement, but we stress
that they need to take into account the resources--that this is
not do it all at once, or do not do it at all--that they should
integrate these efforts into their program.
The most important component of that compliance is
training--having your billing people understand what the rules
are--and the contractors provide much of this training for
free. There are also consultants out there that will charge
quite a great deal of money, and we have concerns about that.
In addition, we thought we should talk to physicians
directly. It is one thing to post a guidance and another to
actually hear what people are saying. To that end, my staff and
other parts of the OIG go out and speak frequently to medical
societies, to trade groups, and explain what our vision of
integrity is, and we get a great deal of feedback. The speech
may be 45 minutes, but the follow-up is another 2 hours.
We also held a roundtable last summer here in Washington
and invited physicians from around the country--rural
practitioners, practitioners in big institutions--to come in
and basically give us a piece of their mind, and they spent a
full day doing that. They had lots of great suggestions on how
we could make our ideas, our compliance efforts, more
accessible and more usable. We actually wrote up a white paper
on their suggestions and put it on our website to encourage
physicians to give us even more ideas.
And finally to your question about Corporate Integrity
Agreements--and we do have Integrity Agreements with
practitioners, with physicians--recognizing that they cannot
afford compliance officers and all the elaborate bells and
whistles that perhaps a Columbia HCA can afford, we really
focus on training. The most important thing we want them to do
is get their billing people and those responsible for the
business end of dealing with us to understand the rules.
So we are very mindful of the cost, and we have worked very
hard to tailor the compliance obligations to the reality that
patients should come first.
Senator Ensign. And I realize that all of you are basically
on the enforcement end, but we as policymakers really have to
take a hard look at what we have to those--it is one thing to
do them at the hospitals where, with some of our regulations,
we are running up costs that should not necessarily be there;
but for these small practitioners, when people are telling me
that in small practices, they are hiring two and three people
just to help them comply with these new regulations. A couple
physician friends of mine are no longer taking Medicare
patients just because of the compliance aspects of it.
So we have got to be very careful, in the name of going
after fraud and abuse, that we do not end up really hurting the
system in the long run and having people not getting the
medical care that they need.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Ensign.
Without objection, I will put in the record a letter from
Ms. Janet Rehnquist, who is the nominee for Inspector General
at HHS, responding to a question from Senator Chuck Grassley on
the False Claims Act at her confirmation hearing. I think it
would be helpful to have that as part of our record, in which
she speaks to the importance of the False Claims Act.
We will also include a statement from Senator Grassley, who
is on this committee, as part of the record.
[Statement of Senator Grassley and Letter from Ms.
Rehnquist follows:]
[GRAPHIC] [TIFF OMITTED] T5039.056
[GRAPHIC] [TIFF OMITTED] T5039.057
[GRAPHIC] [TIFF OMITTED] T5039.058
[GRAPHIC] [TIFF OMITTED] T5039.059
[GRAPHIC] [TIFF OMITTED] T5039.060
The Chairman. I recognize Senator Craig for any questions.
Senator Craig. Mr. Chairman, thank you.
I have a couple more questions that I think need to be
asked, because what Senator Ensign has just said is of course
of great concern as we balance this effort so that we do not
run the provider away from the very people that they want to
provide health care for.
Let me, Stuart, speak to you for a moment if I could.
Mr. Schiffer. I have been enjoying the dialog on both sides
of me, Senator, but I would be glad to.
Senator Craig. GAO says that you are doing a better job of
implementing guidelines on the conduct of civil health fraud
investigations. Does DOJ have similar guidelines in regard to
how they conduct criminal investigations involving alleged
fraud?
Mr. Schiffer. The Department has long had in place broad
sets of prosecutorial guidelines. I am not personally familiar,
I must confess, with whether there were specific guidelines
directed to health care----
Senator Craig. I am specifically concerned about the search
and seizure side of this as it relates to guidelines, involving
doctors' offices and hospitals where patients might be
receiving care at the time.
Mr. Schiffer. Again, I do not know specifically if we have
search and seizure guidelines in the health care fraud area.
There are certainly guidelines applicable to search and
seizure.
The guidelines about which the General Accounting Office
has testified were adopted largely in response to some specific
instances that had been brought to the Department's attention
by both industry and by Members of Congress where predicate
procedures had not properly been followed in certain so-called
national projects. We did not think we were breaking new ground
with those guidelines, but we did believe and we were told that
it was important to put in writing procedures which have long
existed and to form working groups to oversee these guidelines.
Senator Craig. That is civil; right?
Mr. Schiffer. Yes, sir.
Senator Craig. But not criminal.
Mr. Schiffer. Not criminal.
Senator Craig. You cannot answer that.
Mr. Schiffer. I would be glad to get you a response in
writing, Senator.
Senator Craig. Would you do that, please?
Mr. Schiffer. Surely.
Senator Craig. And I would like to know if you have those
kinds of guidelines. That is an important part of all of this,
ultimately, where you are involved in the criminal
investigation as it relates to how those are conducted in those
situations.
I think that would be tremendously important.
I see that in your testimony, you mentioned the future use
of advanced technologies so that no provider is prosecuted or
penalized for simply unintentional billing errors or mistakes
lacking any evidence of intent to defraud.
You also announced that CMS and DOJ are launching new
interagency efforts to enhance the use of technology and high-
tech tools. I like the idea of making these determinations of
intent as accurate as possible--obviously, we all do. Could you
tell us more about these efforts and your timetable for
implementing the new technologies?
Mr. Schiffer. I am somewhat concerned, Senator, and worried
about laughter that may come from the back of the room from my
colleagues who are here, since I am one of the few remaining
computer-illiterates in the Department of Justice.
Mr. Morris is certainly here to answer questions on
technology----
Senator Craig. Stuart, I talk a good line, too, about
computers, but I lack knowledge.
Mr. Schiffer. I could only fit a computer or a television
set into my office, and I opted for the latter so I could use
C-SPAN and many of these hearings.
We talk about occurrences in the past, for example, where
people would look at a single spreadsheet and see billing for a
particular code of pneumonia, let us say, and would leap from
that to a conclusion that there must be fraud. We are now
looking for matches, we are looking for many more complicated
systems that will give us true indicia of fraud as opposed to
simply pursuing honest mistakes.
But my computer friend over here is about to answer the
question.
Mr. Morris. Thanks.
One of the reasons I went to law school was so I would not
have to understand this stuff--but perhaps I can give you an
example of how ``data-mining'' as it is often called, taking
the huge amount of information that comes through the Medicare
program and using technology, can help us.
Mr. Schiffer just referenced pneumonia. One of the national
projects that we have under way is looking at hospitals that
bill for a higher-coded level of pneumonia treatment than we
believe was appropriate. One reason why this was brought to our
attention was that by doing this data-mining, we came to see
that there were some hospitals for whom the use of this
particular pneumonia code was so disproportionate to demand we
do something more. In fact, in one case, a hospital in
Tennessee was using this higher-reimbursed code 93 percent of
the time, when the Centers for Disease Control would tell us
that we should see incidence of that type of pneumonia about
2.4 percent of the time.
What I want to stress here is that technology identifies a
potential problem. What we need to do then and what we did do
in all of these cases was to go onsite and pull medical records
to see if there was some other explanation--was there an
epidemic of pneumonia in that part of Tennessee, for example.
As it turned out in that case, medical experts looked at
the charts and found no documentation or justification for the
billing--and what is more, we discovered that consultants had
been out, marketing these billing maximization schemes and that
what was really going on here was not an epidemic of illness
but an epidemic of fraud.
So we use technology to identify potential problems, but a
lot of what we do requires shoe leather.
Senator Craig. In that instance of billing, I am assuming
there was a variety of categories----
Mr. Morris. Yes, sir.
Senator Craig [continuing.] Or levels of severity, or
whatever that would ultimately measure. So it was your
determination that this was an intent to defraud?
Mr. Morris. Well, we relied on medical experts to look at
the physician and the nurses' documentation in the charts, and
we start with the premise that the doctor knows what he or she
is ordering and accurately reflects that in the charts. When we
go to chart after chart, and we find no tests to confirm the
diagnosis as billed, when we actually find contraindicated
information that there was a less serious pneumonia, and when
we see this not once, not twice, but 93 percent of the time,
and when we add to that the presence of consultants or others
who have seen comparable schemes take place in other
hospitals--when you link all that together, as well as
interviews with people at the hospital, all of that put
together gives us evidence that they knowingly engaged in
fraud.
Senator Craig. Well, there are a good many more questions
that we would like to ask, and we are going to hold the record
open, so you may receive some in writing.
We thank this panel very much for your presence today.
Senator Craig [presiding.] Let us turn to our third and
last panel. Senator Breaux has had to step away for a few
moments, but I think he plans to return.
On the final panel, we have Robert Charrow, with Crowell
and Moring, a law firm here in Washington; Joseph diGenova,
special counsel to the American Hospital Association; and Jim
Moorman, representing Taxpayers Against Fraud.
Robert, we will start with you.
STATEMENT OF ROBERT P. CHARROW, CROWELL AND MORING, WASHINGTON,
DC
Mr. Charrow. Thank you very much, Senator Craig, for giving
me this opportunity to appear here.
For the record, although I am a partner at Crowell and
Moring, I am not appearing on behalf of any client. I was asked
by the committee to share some of my perceptions as someone
who, as a prior political appointee, is partially responsible
and shares some of the blame for the mess that we are dealing
with today.
Medicare is perhaps the single most complex Federal program
and it affects more Americans than any other program. I brought
with me a copy of the Social Security Act, which is the organic
legislation that has given rise to 1,300 pages of regulations
in The Code of Federal Regulations, and over 100,000 pages of
issuances, notices, and other documents published by CMS and
its carriers and intermediaries.
I would like to follow up on a theme raised by, Senator
Craig and his colleagues as well by Mr. Scully namely we are
all attempting to strike the proper balance between, on the one
hand, enforcement, and on the other hand, fairness.
One of the concerns that I have with the current system is
that its complexity makes it very difficult for anyone to
function properly. For example, when a physician calls me
because he or she has just received a letter or a visit from
the government, I ask ``Who paid you the visit?'' or ``Whom did
the letter come from?'' and they invariably say, ``Inspector
General.''
And I said, ``Really? The Inspector General of HHS?''
And they say, ``Well, no, but it was somebody.''
And when you stop and talk to them and look at the
materials, if they were smart enough to have gotten the card,
it turns out it is someone from the carrier or intermediary as
the case may be, depending on whether it is a hospital or a
physician. And frequently, there is no distinction drawn,
especially by small providers, between the carrier and fiscal
intermediary on the one hand, the regional office of the Health
Care Financing Administration--or, the CMS now--the central
office, the IG, or the FBI. They are all viewed as ``them''--
and then there is ``us''--and that is unhealthy.
The second point is that part of the reason why we see this
fear in the community--and there is really fear in the
community--of enforcement is not only because of the complexity
and, at times, erratic enforcement posture of the various
Federal agencies, but also the total lack of accountability.
Medicare is the only significant program lacking in effective
judicial review. There is no way for a provider to get into
court effectively.
The DRG system is not subject to judicial review. RBRVS
system, which is the fee schedule system, is not subject to
judicial review. The system by which wage index rates are set
for hospitals also is not subject to judicial review. And the
most astonishing thing is that as a result of a recent Supreme
Court decision, regulations issued by the Department of Health
and Human Services that govern CMS are no longer subject to
meaningful judicial review. That means that if you believe the
agency issued a rule in contravention of the Administrative
Procedure Act, it failed to solicit comments when it should
have, the basic tenets of the APA have been violated--you
cannot get into court, effectively. You have to go through a
labyrinth-like appeals process that could take anywhere from 2
to 10 years before you are eligible to see the inside of a
Federal district court. Most providers simply do not have the
wherewithal to undertake such a litigation.
If you are a regulator, it is much easier to issue rules if
there is no judicial review. If Congress makes one change, it
should be to uncouple the judicial review procedures that
govern HHS and CMS from the Social Security Act, Section
205(h). That uncoupling would go a long way toward creating
accountability and easing the fear at relatively modest cost to
the Government.
Thank you very much.
Senator Craig. Thank you very much for that testimony.
[The prepared statement of Mr. Charrow follows:]
[GRAPHIC] [TIFF OMITTED] T5039.061
[GRAPHIC] [TIFF OMITTED] T5039.062
[GRAPHIC] [TIFF OMITTED] T5039.063
[GRAPHIC] [TIFF OMITTED] T5039.064
[GRAPHIC] [TIFF OMITTED] T5039.065
[GRAPHIC] [TIFF OMITTED] T5039.066
[GRAPHIC] [TIFF OMITTED] T5039.067
[GRAPHIC] [TIFF OMITTED] T5039.068
[GRAPHIC] [TIFF OMITTED] T5039.069
[GRAPHIC] [TIFF OMITTED] T5039.070
[GRAPHIC] [TIFF OMITTED] T5039.071
[GRAPHIC] [TIFF OMITTED] T5039.072
[GRAPHIC] [TIFF OMITTED] T5039.073
[GRAPHIC] [TIFF OMITTED] T5039.074
[GRAPHIC] [TIFF OMITTED] T5039.075
[GRAPHIC] [TIFF OMITTED] T5039.076
Senator Craig. Now we turn to Joseph diGenova, special
counsel to the American Hospital Association.
Joe, welcome before the committee.
STATEMENT OF JOSEPH DIGENOVA, SPECIAL COUNSEL, AMERICAN
HOSPITAL ASSOCIATION, WASHINGTON, DC
Mr. diGenova. Thank you, Mr. Chairman. I am delighted to be
here.
I am Joseph diGenova, special counsel to the American
Hospital Association. The AHA represents nearly 5,000
hospitals, health systems, networks, and other providers of
care.
We absolutely, Mr. Chairman, appreciate the opportunity to
testify on enforcement activities related to the Medicare
program. It is a vital issue to providers in this country today
and one that we are deeply grateful that the committee is
addressing.
America's hospitals are committed to preventing,
uncovering, and eliminating health care fraud and abuse. That
is why hospitals across the Nation have voluntarily established
programs to ensure compliance with Medicare's complex and
confusing requirements--those two descriptions of it were
attested to by almost all the witnesses here today.
Our experience reinforces the view that billing issues are
usually billing mistakes. Fraud is the exception, and that too
was testified to here by Government representatives today.
That is why we continue to urge that the starting point for
any questions about a claim submitted by a hospital should be
the administrative process. If and only if there is
sufficient--and I underscore sufficient--indication of
potential fraud should a referral be made to law enforcement
authorities.
Our comments today will focus on the enforcement activities
of the OIG and the need to provide hospitals with direct access
to courts--a matter about which Mr. Charrow spoke at the end.
Hospitals are concerned with the way the OIG is exercising
its enforcement authority with regard to Corporate Integrity
Agreements as a condition of resolving billing issues and with
regard to its investigation of matters previously investigated
by the Department of Justice.
Our testimony today is in no way a challenge to the
integrity or the honesty of anyone at the Office of Inspector
General. We are talking about the open issues of how hospitals
have to work in a complex and confusing network of billing, the
most complex billing system in the world.
A Corporate Integrity Agreement, or a CIA as it is called,
is used in settling investigations by the OIG, and in return
for the OIG's agreement not to exclude someone as a provider
for the Medicare program--the most draconian penalty that can
befall any provider. It is viewed as a corrective action, and
its imposition is viewed as a penalty.
The AHA's members repeatedly tell us that the OIG's
insistence on a CIA impedes voluntary disclosures and the
resolution of billing disputes. A CIA should only be used in
the case of fraud, and indeed, Mr. Morris from the OIG's office
has said that that is their standard.
We actually have a different view of how that standard is
being applied, and it really becomes a question of how you
define fraud, apparently, because we believe--and certainly the
anecdotal evidence that we have seen leads us to believe--that
these CIAs are being required where there was no fraud but
rather billing mistakes.
If a hospital's own compliance program is insufficient to
prevent future billing irregularities, it should be improved
and requirements targeted to those specific areas--in other
words, a targeted CIA, not one that covers a whole hospital
where there are no problems in those other areas.
The imposition of a CIA imposes significant burdens and
costs on hospitals. The biggest cost factor is the requirement
that a hospital contract with an independent review
organization to perform reviews of the hospital's billings and
implementation of the CIA.
In addition to the compliance program issues, there are
legal issues related to the heightened reporting
accountability. For a provider, for example, who has not
violated the law itself and committed fraud, if you sign a
Corporate Integrity Agreement, there is a provision in there
that says that if you violate the Corporate Integrity
Agreement, you can be excluded from the Medicare program--a
provision which the law does not require, but nonetheless it is
in there, and of course, it is a burdensome threat that lives
with the life of the CIA, which are generally 5-year
agreements, which cost a lot of money to any organization, no
matter how big.
The DOJ and the OIG have concurrent jurisdiction over
fraudulent claims, which should provide flexibility to the
agencies for allocating resources in an investigation. Instead,
according to the evidence that we are gathering, it has
permitted the Office of Inspector General to second-guess
decisions of the Department of Justice. We are aware, for
example, of a situation in which the OIG is pursuing a hospital
and demanding hundreds of thousands of dollars in a hospital-
wide Corporate Integrity Agreement under its authority to
impose civil and monetary penalties.
The OIG is doing this despite an extensive and thorough
investigation by DOJ of the very same issues, DOJ's dismissal
of the case without taking any action whatsoever, and in spite
of the OIG's active participation in the OIG investigation.
Direct access to court is essential to provide fundamental
fairness for hospitals participating in the Medicare program.
In Shalala versus Illinois Council, the Supreme Court held that
claims related to the Medicare statute must go through an
administrative process before being brought to court.
Unfortunately for hospitals, that interpretation insulates HHS
from legal accountability, as Mr. Charrow indicated earlier,
for many of its actions and places hospitals in the position of
having to violate a regulation in order to challenge the
legality of HHS' decisions and policies. That means that the
price of admission to the court for hospitals is termination
from the Medicare program--or the risk of it--a price that no
hospital or community can risk.
The Medicare statute needs to be clarified so that when a
dispute challenges the legality of HHS' actions--not a specific
payment or claim for reimbursement, but rather, the policy or a
rule which has not necessarily followed a rulemaking
proceeding--that that dispute be brought to court for
resolution--again, not the resolution of a specific payment
claim, but the policy around that payment claim which
determines whether or not it is a proper payment.
Hospitals also need access--just to review--when there is
no process for resolving a dispute. The laboratory billing
investigation is a very good example of that. Hospitals across
the country were receiving demand letters from U.S. Attorneys
effectively accusing them of fraud and threatening law
enforcement proceedings.
As a special report commissioned by the AHA demonstrated,
the foundation for the investigation was legally flawed. And
indeed, as Mr. Schiffer testified to earlier, the Department
specifically issued guidelines for this whole area, because it
was concerned that the guidelines that it said had been verbal
or known among professionals were not being followed by
Assistant U.S. Attorneys all over the country. We have a report
on that which I will submit for the record; I think it would be
very helpful to the committee. And I want to give special
credit to former Deputy Attorney General Eric Holder, who
listened to the hospitals on this question, understood that
there were major problems out in the field, which is not
uncommon in these health care cases where regional offices and
U.S. Attorneys offices know what is going on but decide they
are going to do something differently from what is testified to
here in Congress or what is directed to by an administrative
agency.
When hospitals sought the court's protection in those
particular cases, the Government attempted to dismiss them out
of court, arguing that the hospitals had failed to go through
an administrative process. The 6th Circuit Court of Appeals
sided with the hospitals and held that the administrative
process----
Senator Craig. Are you moving toward wrap-up, Mr. diGenova?
Mr. diGenova. I am coming right to the end, Mr. Chairman.
Providers should be treated fairly, equitably, and in a
civil manner and granted appropriate due process rights. To
help hospitals achieve these rights we recommend the following,
Mr. Chairman.
First, Congress should limit the OIG's use of CIAs to
instances of intentional fraud. If a hospital's compliance
program has deficiencies, they should be remedied, but the OIG
should not be allowed to impose an overly burdensome and costly
CIA.
Second, the OIG should be prohibited from second-guessing
decisions made by DOJ and conducting duplicative
investigations. This need not preclude, obviously, the payment
of any overdue amounts. That can be handled through an
administrative process.
Third, Congress should enact legislation to give hospitals
and their providers a specific opportunity to challenge
Medicare policy decisions made by HHS that are legally
questionable.
Thank you.
Senator Craig. Thank you very much for that testimony.
[The prepared statement of Mr. diGenova follows:]
[GRAPHIC] [TIFF OMITTED] T5039.077
[GRAPHIC] [TIFF OMITTED] T5039.078
[GRAPHIC] [TIFF OMITTED] T5039.079
[GRAPHIC] [TIFF OMITTED] T5039.080
[GRAPHIC] [TIFF OMITTED] T5039.081
[GRAPHIC] [TIFF OMITTED] T5039.082
[GRAPHIC] [TIFF OMITTED] T5039.083
[GRAPHIC] [TIFF OMITTED] T5039.084
[GRAPHIC] [TIFF OMITTED] T5039.085
Senator Craig. Now let us turn to James Moorman, Executive
Director of Taxpayers Against Fraud.
Jim.
STATEMENT OF JAMES W. MOORMAN, EXECUTIVE DIRECTOR, TAXPAYERS
AGAINST FRAUD, WASHINGTON, DC
Mr. Moorman. Thank you, Senator.
We very much appreciate being given this opportunity to
testify. Taxpayers Against Fraud is a nonprofit public interest
organization dedicated to combatting fraud against the Federal
Government through the promotion of the False Claims Act and
its qui tam provisions. Unlike the other organizations which
have testified here today, we are a tiny organization and not
so well-known.
The qui tam provisions of the False Claims Act are those
provisions which allow whistleblowers with evidence of fraud
involving the Federal Government to bring suits on behalf of
the Government.
The False Claims Act is the primary tool of the Federal
Government for fighting health care fraud. The Civil Division
and the U.S. Attorneys Offices of the Department of Justice,
working with the Inspector General's Office of HHS, have
recovered billions of dollars in False Claims Act health care
fraud cases. Most of these cases were initiated originally by
whistleblowers as False Claims Act qui tam cases. When a
whistleblower reveals a fraudulent scheme to the Government
through a False Claims Act complaint, this permits the United
States to then undertake an investigation, win back the money
stolen, plus penalties, and deploy several other tools that
enhance the effectiveness of the anti-fraud effort.
As I said, many of the Government's most fruitful False
Claims Act investigations are based on information received
from the whistleblowers. Overall False Claims Act actions since
the Act was amended in 1986 have returned over $6 billion to
the Federal Government, and a substantial amount of that has
been in the health care fraud area.
Since September 30, 1986, the Government had recovered
$2.83 billion from defendants in health care False Claims Act
cases. This figure does not include the $745 million settlement
with Columbia HCA in December of 2000 and other recent health-
related settlements which pushed the healthcare recoveries well
past $3.5 billion. In 2000, 80 percent of the Government's
civil fraud recoveries were from qui tam cases.
There is evidence that the deterrent effect of the False
Claims Act is one of the significant causes in the noticeable
tapering off of the rise in Medicare costs in recent years.
False Claims Act actions undoubtedly play a very large role in
deterring fraud and saving the taxpayers money.
False Claims Act judgments have changed the attitude and
actions of providers and encouraged Government efforts to
correct systemic problems in the system and thus created
additional cost savings. The indirect savings of deterrence and
Government corrective activities are probably several times the
amount actually recovered directly from case judgments and
settlements. So, if you add the direct recoveries combined with
the indirect savings attributable to False Claims Act
deterrence, the taxpayers are receiving a very large benefit
indeed.
In conclusion, the False Claims Act and its qui tam
provisions are a vital component in any meaningful effort to
curtail and deter fraudulent overbilling to Medicare and
Medicaid. The fraudulent schemes uncovered by whistleblowers
have saved the Government billions of dollars.
The majority of honest health care providers have nothing
to fear from the False Claims Act, however, because the Act
does not punish mere mistakes. But there is an important
minority of bad actors in the health care industry who must be
deterred by vigorous enforcement of the False Claims Act. It is
our position that the Justice Department and OIG should do more
and not less to be responsive to whistleblowers. The Department
should join more qui tam cases and make a stronger effort to
work closely and cooperatively with the whistleblowers, the
people who bring them the bulk of their important health care
fraud cases.
In summary, I urge the committee to continue the tradition
established by Senator Grassley to encourage the Government to
work with whistleblowers to uncover fraud and protect the
public fisc.
Thank you, Senator.
[The prepared statement of Mr. Moorman follows:]
[GRAPHIC] [TIFF OMITTED] T5039.086
[GRAPHIC] [TIFF OMITTED] T5039.087
[GRAPHIC] [TIFF OMITTED] T5039.088
[GRAPHIC] [TIFF OMITTED] T5039.089
[GRAPHIC] [TIFF OMITTED] T5039.090
[GRAPHIC] [TIFF OMITTED] T5039.091
[GRAPHIC] [TIFF OMITTED] T5039.092
[GRAPHIC] [TIFF OMITTED] T5039.093
[GRAPHIC] [TIFF OMITTED] T5039.094
[GRAPHIC] [TIFF OMITTED] T5039.095
[GRAPHIC] [TIFF OMITTED] T5039.096
[GRAPHIC] [TIFF OMITTED] T5039.097
[GRAPHIC] [TIFF OMITTED] T5039.098
[GRAPHIC] [TIFF OMITTED] T5039.099
[GRAPHIC] [TIFF OMITTED] T5039.100
[GRAPHIC] [TIFF OMITTED] T5039.101
[GRAPHIC] [TIFF OMITTED] T5039.102
[GRAPHIC] [TIFF OMITTED] T5039.103
[GRAPHIC] [TIFF OMITTED] T5039.104
Senator Craig. Jim, thank you very much.
Gentlemen, let me thank you all for your testimony. I do
have several questions that I would like to ask of you.
Mr. Charrow, in your opinion, is there merit to the
assertion that health care providers are paying substantial
monetary penalties for innocent mistakes?
Mr. Charrow. In the form of settlements, yes. Most health
care providers who are subject to prosecution civilly under
either the False Claims Act or its administrative counterpart
at HHS cannot afford in many cases to go through the litigation
process, either because of the risks or the costs of the
litigation are too great they settle, even though many of them
believe, and their attorneys believe, that they did nothing
other than make an honest error.
Bear in mind that at the administrative level as opposed to
in court which is under the False Claims Act, the standard of
proof is much closer to actual negligence than it is under the
False Claims Act. So the OIG can make out a case
administratively where the OIG might not have been able to make
out that case in court under the False Claims Act.
So, yes, in answer to your question.
Senator Craig. From your experience working inside HHS and
in private practice--and maybe you have just given me the
answer, but let me finish asking the question--why do you think
the OIG is pursuing cases that DOJ is walking away from?
Mr. Charrow. Different standards.
Senator Craig. Different standards.
Mr. Charrow. Different standards--an easier standard
administratively. It does not have a jury to deal with, it does
not have a Federal judge to deal with. The calculus is very
different.
Senator Craig. What do you think of the proposed compliance
education efforts for providers described by Administrator
Scully?
Mr. Charrow. When I was a law professor, I had difficulty
teaching law studies to comprehend what was in a couple of
hundred pages. I do not know how Mr. Scully is going to teach
providers what is in 100,000 pages--especially when much of
what is in there is not written in a language that has been
discernible by any known linguist and frequently is at-odds
with some other materials in the same compendium.
Senator Craig. Well, I guess you have answered the balance
of the follow-up questions as it relates to efforts to deal
with the serious problem. That is one of the things that I most
often hear from providers is a clear attempt to understand what
is meant. And one of the great difficulties inside this beltway
is the bureaucratic ease that ultimately makes it to the
regulation that really is not very applicable or does not make
a lot of sense on the ground, and you literally have to go
through an educational process to comprehend--and now with the
volume that we have.
Senator Craig. What do you think it costs on average in a
typical case in terms of attorneys' fees to defend against
allegations that a provider has engaged in fraudulent billing
practices? Do you have any indication of that?
Mr. Charrow. If the provider is lucky, in the low six
figures. If we are talking about a small provider and a small
case, in the low six figures. If it is a large provider, a
hospital, it could be in the millions.
Senator Craig. Mr. diGenova, in the rare instance where
criminal enforcement actions occur involving providers, what do
you think needs to be in DOJ's guidelines related to the
issuance of search warrants involving hospitals that is not
there already?
Mr. diGenova. Mr. Chairman, thank you for the opportunity
to answer that question. First of all, our opposition to
certain enforcement actions by OIG and even by DOJ under the
False Claims Act several years ago was related to civil cases.
With regard to criminal cases, obviously, there is a higher
standard of evidence that is necessary, and probable cause for
a search warrant means that there is some evidence of fraud,
and therefore the warrant has to be issued by a judge.
What we would like to see and I think is absolutely
necessary particularly in light of HIPAA, which has underscored
the absolute importance of the privacy of medical records of
all types, is that the Justice Department have some form of
written guidelines for searches of health care facilities so
that they do not interfere with patient treatment during the
execution of the warrant, and second, that they do not
unnecessarily compromise confidential patient information in
medical records.
As you know, the Justice Department has guidelines for the
issuance of search warrants for lawyers' offices. That is
because of the nature of the attorney-client relationship and
the 6th Amendment right to counsel.
We think it would probably be a very good idea for the
Department to study and hopefully issue guidelines for the
issuance of search warrants and their execution at health care
facilities to protect privacy rights under HIPAA, to protect
generic privacy rights under the Constitution, and certainly to
protect confidential information relative to the doctor-patient
privilege.
Senator Craig. You have expressed reservations in the past
about arming inspector generals. Is there any instance where
you think it would be justifiable to arm investigators in a
health care matter?
Mr. diGenova. Mr. Chairman, I do not. I have been a critic
for some time of the basic issue of having OIGs throughout the
Government, not just in HHS, being permitted to carry weapons.
As you know, this practice was permitted a number of years ago,
sometime within the last 8 years, when the Deputy Attorney
General issued a memorandum essentially deputizing inspector
generals as deputy U.S. Marshals, thus giving them the right to
carry a weapon.
In matters involving fraud investigation, if it is a
criminal case, the FBI should be there anyway, and they have
guns, they are trained, they know how to use them; and I think
the fewer law enforcement people who have guns, especially
those who are not regularly using them and trained to, the
better off we all are.
I would like to see that memorandum from the Deputy
Attorney General rescinded, a study of the policy of arming
OIGs throughout the Government conducted, and a determination
made by Congress as to whether or not such a policy of arming
OIGs is a good idea for policy reasons, because as you know,
Senator, the wearing of a weapon in certain circumstances has a
coercive impact. If it is done during an audit having nothing
to do with a criminal case or anything else, it is not exactly
the best way I think to establish relationships between
individuals trying to engage in a partnership to clean up any
problems in the health care billing system.
Senator Craig. Maybe a question of both you and Mr.
Charrow. Mr. Morris of OIG asserted that OIG's efforts only
concerned true fraud and not matters involving innocence or
negligent error. In your experience, is this an actual
description of how the system actually works?
Mr. Charrow. All you have to do is read a semiannual
report. The Office of Inspector General is charged with
examining much more than merely fraud. It is charged with
examining fraud, waste, and mismanagement--the generic term is
``fraud, waste, and abuse.''
Waste and abuse is not a legal concept. It is in the eye of
the beholder. One person's waste and abuse is another person's
medical necessity.
Fraud, on the other hand, is a discrete legal concept, but
there, too, reasonable minds can differ, and I have seen cases
where the IG has thought this is a case of fraud, and I have
concluded, no, this is not a case of fraud.
So there are disagreements. It is not as clear-cut or as
black-and-white as Lew would lead you to believe.
Senator Craig. Mr. Moorman, I have heard it mentioned that
unless the Government joins in qui tam lawsuits, a majority of
them fail. Is this a true assertion, and if so, why is this the
case? I would ask that of you or anyone else on the panel who
might like to elaborate.
Mr. Moorman. That is basically correct, Senator. When the
Government joins the case, the case is successful most of the
time. When the Government does not join the case, it is an
uphill battle for the whistleblower.
The Justice Department obviously has an ability to put a
lot of resources and energy and the prestige of the Government
into a case that an individual whistleblower and his lawyer
could equal.
Because the Justice Department has not joined a case does
not mean it is not a good case, but let us face it, some
whistleblower cases are not good cases. So those cases tend to
fall by the wayside. But there is a definite advantage--a huge
advantage--for a whistleblower to have the Justice Department
on its side. In fact, most whistleblowers' lawyers will tell
you that the single most important thing that happens in their
False Claims Act case is the decision of the Justice Department
to join or not join the case.
Senator Craig. Yes?
Mr. diGenova. Senator, the reason for that, of course, is
if someone files a private lawsuit under qui tam as a relater,
they want the Government to take over the case, because the
Government will pay for the case. Once the Government decides
not to take the case, a private relater is not going to fund
the litigation, except in the rarest of instances, because the
discovery that would be involved would be exceptionally costly.
As Mr. Charrow has testified to, these cases can cost millions
of dollars, and only the Government really has those resources.
But I want to commend the Government for refusing to
intercede in qui tam cases where they are not warranted. I
think the Government should be very careful about whether or
not it chooses to put its name behind the allegations of a
private citizen where the incentive for the private citizen is
30 percent of the recovery against somebody--not that that is
bad per se, but certainly the Government ought to be very
careful--and I think they are, and the Department is to be
commended--before it takes over one of these cases, because we
also know that many of these allegations are totally unfounded,
and that some people are trying to extort settlements from
hospitals and other health care providers. And the Department
of Justice has been very good at figuring out which ones those
are. I think their 5 percent intervention number looks pretty
good to me, and I think it shows professionalism on the part of
the Department.
Mr. Moorman. May I correct something? The intervention rate
is about 20 or 21 percent and----
Mr. diGenova. I was quoting Mr. Schiffer's number.
Mr. Moorman. That was his number.
Mr. diGenova. I thought he said 5 percent. I apologize if
it is 20 percent.
Mr. Moorman. And the average whistleblower award in qui tam
cases is 16 percent, Senator.
Senator Craig. Does that include attorneys' fees--total
award?
Mr. Moorman. No. That is the whistleblower's average share
of the judgement. Also, some attorneys' fees are awarded in
addition to the relater's share, but that is usually a much
smaller number than what the relaters get.
Senator Craig. Mr. Charrow, do you wish to comment?
Mr. Charrow. I think the name of the game for the relator
is getting the Department of Justice to intervene. The
unfortunate aspect of the process is that frequently, it drags
on in some cases for up to 2 or 3 years. There are qui tam
cases still under seal where no decision has been made by the
Department of Justice, and those cases have been going on for 2
or 3 years in the health care area.
Mr. Moorman. I agree with Mr. Charrow that sometimes the
investigations take far too long.
I would say with regard to the resources that
whistleblowers put into these cases, it is a very inconsistent
thing. Sometimes the Justice Department encourages the
whistleblowers to participate very actively in the case, and
they put a lot of work into it. Sometimes the Justice
Department does not want the whistleblower's attorney to put
much effort into it, and they do not put much into it. But many
whistleblowers and their attorneys spend a huge amount of money
to pursue these cases. So it is not at all a question of just
turning the cases over to the Government, sir.
Senator Craig. Well, gentlemen, we thank you very much for
your time here today and your testimony.
The chairman intends to leave the record open for 2 weeks
for additional information and for questions that we may wish
to submit to you for additional comment.
Your testimony has been extremely valuable today as we sort
through all of this. I think that clearly, the intent of
Congress and our Government is to provide a health care system
that functions and functions well, certainly for the recipient
of it but also for those who are the providers of it.
I have been on both sides of this for a good many years in
the sense that I once tried to read Government regulations, and
I oftentimes found out that they were very difficult to read,
and now, in this area, I understand, of course, that they are
phenomenally complicated. So there does have to be a balance
here, and we have to try to strike that in doing so. At the
same time, shame on us if we provide a system that allows an
effort to defraud to do just that and to take valuable tax
dollars away from the citizens who might otherwise be delivered
health care because of it.
That is clearly the intent of this committee and our
efforts as we review these, as we know that we are moving
toward a time when there could well be a comprehensive overview
of Medicare and working with the new administration as they try
to reshape the new HCFA and the new CMS.
Thank you all very much for being with us today.
The committee will stand adjourned.
[Whereupon, at 12:27 p.m., the committee was adjourned.]
A P P E N D I X
----------
[GRAPHIC] [TIFF OMITTED] T5039.105
[GRAPHIC] [TIFF OMITTED] T5039.106
[GRAPHIC] [TIFF OMITTED] T5039.107
[GRAPHIC] [TIFF OMITTED] T5039.108
[GRAPHIC] [TIFF OMITTED] T5039.109
[GRAPHIC] [TIFF OMITTED] T5039.110
[GRAPHIC] [TIFF OMITTED] T5039.111
[GRAPHIC] [TIFF OMITTED] T5039.112
[GRAPHIC] [TIFF OMITTED] T5039.113
[GRAPHIC] [TIFF OMITTED] T5039.114
[GRAPHIC] [TIFF OMITTED] T5039.115
[GRAPHIC] [TIFF OMITTED] T5039.116
[GRAPHIC] [TIFF OMITTED] T5039.117
[GRAPHIC] [TIFF OMITTED] T5039.118
[GRAPHIC] [TIFF OMITTED] T5039.119
[GRAPHIC] [TIFF OMITTED] T5039.120
[GRAPHIC] [TIFF OMITTED] T5039.121
[GRAPHIC] [TIFF OMITTED] T5039.122
[GRAPHIC] [TIFF OMITTED] T5039.123
[GRAPHIC] [TIFF OMITTED] T5039.124
[GRAPHIC] [TIFF OMITTED] T5039.125
[GRAPHIC] [TIFF OMITTED] T5039.126
[GRAPHIC] [TIFF OMITTED] T5039.127
[GRAPHIC] [TIFF OMITTED] T5039.128
[GRAPHIC] [TIFF OMITTED] T5039.129
[GRAPHIC] [TIFF OMITTED] T5039.130
[GRAPHIC] [TIFF OMITTED] T5039.131
[GRAPHIC] [TIFF OMITTED] T5039.132
[GRAPHIC] [TIFF OMITTED] T5039.133
[GRAPHIC] [TIFF OMITTED] T5039.134
[GRAPHIC] [TIFF OMITTED] T5039.135
[GRAPHIC] [TIFF OMITTED] T5039.136
[GRAPHIC] [TIFF OMITTED] T5039.137
[GRAPHIC] [TIFF OMITTED] T5039.138
[GRAPHIC] [TIFF OMITTED] T5039.139
[GRAPHIC] [TIFF OMITTED] T5039.140
[GRAPHIC] [TIFF OMITTED] T5039.141
[GRAPHIC] [TIFF OMITTED] T5039.142
[GRAPHIC] [TIFF OMITTED] T5039.143
[GRAPHIC] [TIFF OMITTED] T5039.144
[GRAPHIC] [TIFF OMITTED] T5039.145
[GRAPHIC] [TIFF OMITTED] T5039.146
[GRAPHIC] [TIFF OMITTED] T5039.147
[GRAPHIC] [TIFF OMITTED] T5039.148
[GRAPHIC] [TIFF OMITTED] T5039.149
[GRAPHIC] [TIFF OMITTED] T5039.150
[GRAPHIC] [TIFF OMITTED] T5039.151
[GRAPHIC] [TIFF OMITTED] T5039.152
[GRAPHIC] [TIFF OMITTED] T5039.153
[GRAPHIC] [TIFF OMITTED] T5039.154
[GRAPHIC] [TIFF OMITTED] T5039.155
[GRAPHIC] [TIFF OMITTED] T5039.156
[GRAPHIC] [TIFF OMITTED] T5039.157
[GRAPHIC] [TIFF OMITTED] T5039.158
[GRAPHIC] [TIFF OMITTED] T5039.159
[GRAPHIC] [TIFF OMITTED] T5039.160
[GRAPHIC] [TIFF OMITTED] T5039.161
[GRAPHIC] [TIFF OMITTED] T5039.162
[GRAPHIC] [TIFF OMITTED] T5039.163
[GRAPHIC] [TIFF OMITTED] T5039.164
[GRAPHIC] [TIFF OMITTED] T5039.165
[GRAPHIC] [TIFF OMITTED] T5039.166
[GRAPHIC] [TIFF OMITTED] T5039.167
[GRAPHIC] [TIFF OMITTED] T5039.168
[GRAPHIC] [TIFF OMITTED] T5039.169
[GRAPHIC] [TIFF OMITTED] T5039.170
[GRAPHIC] [TIFF OMITTED] T5039.171
[GRAPHIC] [TIFF OMITTED] T5039.172
[GRAPHIC] [TIFF OMITTED] T5039.173
[GRAPHIC] [TIFF OMITTED] T5039.174
[GRAPHIC] [TIFF OMITTED] T5039.175
[GRAPHIC] [TIFF OMITTED] T5039.176
[GRAPHIC] [TIFF OMITTED] T5039.177
[GRAPHIC] [TIFF OMITTED] T5039.178
[GRAPHIC] [TIFF OMITTED] T5039.179
[GRAPHIC] [TIFF OMITTED] T5039.180
[GRAPHIC] [TIFF OMITTED] T5039.181
[GRAPHIC] [TIFF OMITTED] T5039.182
[GRAPHIC] [TIFF OMITTED] T5039.183
[GRAPHIC] [TIFF OMITTED] T5039.184
[GRAPHIC] [TIFF OMITTED] T5039.185
[GRAPHIC] [TIFF OMITTED] T5039.186
[GRAPHIC] [TIFF OMITTED] T5039.187
[GRAPHIC] [TIFF OMITTED] T5039.188
[GRAPHIC] [TIFF OMITTED] T5039.189
[GRAPHIC] [TIFF OMITTED] T5039.190
[GRAPHIC] [TIFF OMITTED] T5039.191
[GRAPHIC] [TIFF OMITTED] T5039.192
[GRAPHIC] [TIFF OMITTED] T5039.193
[GRAPHIC] [TIFF OMITTED] T5039.194
[GRAPHIC] [TIFF OMITTED] T5039.195
[GRAPHIC] [TIFF OMITTED] T5039.196
[GRAPHIC] [TIFF OMITTED] T5039.197
[GRAPHIC] [TIFF OMITTED] T5039.198
[GRAPHIC] [TIFF OMITTED] T5039.199
[GRAPHIC] [TIFF OMITTED] T5039.200
[GRAPHIC] [TIFF OMITTED] T5039.201
[GRAPHIC] [TIFF OMITTED] T5039.202
[GRAPHIC] [TIFF OMITTED] T5039.203
[GRAPHIC] [TIFF OMITTED] T5039.204
[GRAPHIC] [TIFF OMITTED] T5039.205
[GRAPHIC] [TIFF OMITTED] T5039.206
[GRAPHIC] [TIFF OMITTED] T5039.207
[GRAPHIC] [TIFF OMITTED] T5039.208
[GRAPHIC] [TIFF OMITTED] T5039.209
[GRAPHIC] [TIFF OMITTED] T5039.210
[GRAPHIC] [TIFF OMITTED] T5039.211
[GRAPHIC] [TIFF OMITTED] T5039.212
[GRAPHIC] [TIFF OMITTED] T5039.213
[GRAPHIC] [TIFF OMITTED] T5039.214
[GRAPHIC] [TIFF OMITTED] T5039.215
[GRAPHIC] [TIFF OMITTED] T5039.216
[GRAPHIC] [TIFF OMITTED] T5039.217
[GRAPHIC] [TIFF OMITTED] T5039.218
[GRAPHIC] [TIFF OMITTED] T5039.219
[GRAPHIC] [TIFF OMITTED] T5039.220
[GRAPHIC] [TIFF OMITTED] T5039.221
[GRAPHIC] [TIFF OMITTED] T5039.222
[GRAPHIC] [TIFF OMITTED] T5039.223
[GRAPHIC] [TIFF OMITTED] T5039.224
[GRAPHIC] [TIFF OMITTED] T5039.225
[GRAPHIC] [TIFF OMITTED] T5039.226
[GRAPHIC] [TIFF OMITTED] T5039.227
[GRAPHIC] [TIFF OMITTED] T5039.228
[GRAPHIC] [TIFF OMITTED] T5039.229
[GRAPHIC] [TIFF OMITTED] T5039.230
[GRAPHIC] [TIFF OMITTED] T5039.231
[GRAPHIC] [TIFF OMITTED] T5039.232
[GRAPHIC] [TIFF OMITTED] T5039.233
[GRAPHIC] [TIFF OMITTED] T5039.234
[GRAPHIC] [TIFF OMITTED] T5039.235
[GRAPHIC] [TIFF OMITTED] T5039.236
[GRAPHIC] [TIFF OMITTED] T5039.237
[GRAPHIC] [TIFF OMITTED] T5039.238
[GRAPHIC] [TIFF OMITTED] T5039.239
[GRAPHIC] [TIFF OMITTED] T5039.240
[GRAPHIC] [TIFF OMITTED] T5039.241
[GRAPHIC] [TIFF OMITTED] T5039.242
[GRAPHIC] [TIFF OMITTED] T5039.243
[GRAPHIC] [TIFF OMITTED] T5039.244
[GRAPHIC] [TIFF OMITTED] T5039.245
[GRAPHIC] [TIFF OMITTED] T5039.246
[GRAPHIC] [TIFF OMITTED] T5039.247
[GRAPHIC] [TIFF OMITTED] T5039.248
[GRAPHIC] [TIFF OMITTED] T5039.249
[GRAPHIC] [TIFF OMITTED] T5039.250
[GRAPHIC] [TIFF OMITTED] T5039.251
[GRAPHIC] [TIFF OMITTED] T5039.252
[GRAPHIC] [TIFF OMITTED] T5039.253
[GRAPHIC] [TIFF OMITTED] T5039.254
[GRAPHIC] [TIFF OMITTED] T5039.255
[GRAPHIC] [TIFF OMITTED] T5039.256
[GRAPHIC] [TIFF OMITTED] T5039.257
[GRAPHIC] [TIFF OMITTED] T5039.258
[GRAPHIC] [TIFF OMITTED] T5039.259
[GRAPHIC] [TIFF OMITTED] T5039.260
[GRAPHIC] [TIFF OMITTED] T5039.261
[GRAPHIC] [TIFF OMITTED] T5039.262
[GRAPHIC] [TIFF OMITTED] T5039.263
[GRAPHIC] [TIFF OMITTED] T5039.264
[GRAPHIC] [TIFF OMITTED] T5039.265
[GRAPHIC] [TIFF OMITTED] T5039.266
[GRAPHIC] [TIFF OMITTED] T5039.267
[GRAPHIC] [TIFF OMITTED] T5039.268
[GRAPHIC] [TIFF OMITTED] T5039.269
[GRAPHIC] [TIFF OMITTED] T5039.270
[GRAPHIC] [TIFF OMITTED] T5039.271
[GRAPHIC] [TIFF OMITTED] T5039.272
[GRAPHIC] [TIFF OMITTED] T5039.273
[GRAPHIC] [TIFF OMITTED] T5039.274
[GRAPHIC] [TIFF OMITTED] T5039.275
[GRAPHIC] [TIFF OMITTED] T5039.276
[GRAPHIC] [TIFF OMITTED] T5039.277