Statement of
June Gibbs Brown
Inspector General
March 28, 2000
Office of Inspector General
Department of Health and Human Services
Good Afternoon, Mr. Chairman. I am June Gibbs Brown, Inspector General of the Department of Health and Human Services (HHS). The mission of the Office of Inspector General (OIG) is to identify ways to improve HHS programs and operations and protect them against fraud, waste, and abuse. We do this by conducting independent and objective audits, evaluations, and investigations, which provide timely, useful, and reliable information and advice to Department officials, the Administration, the Congress, and the public. In carrying out our mission, we work with the Department and its operating divisions, the Department of Justice (DOJ), other Federal and State agencies, and the Congress to bring about systemic improvements in HHS programs and operations, and to prosecute and/or recover funds from those who defraud the Government.
OIG FUNDING SOURCES
The Office of Inspector General has two separate funding sources. First, we receive funding from the Health Care Fraud and Abuse Control (HCFAC) program, established by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) which funds our Medicare and Medicaid anti-fraud and abuse activities. From the $182 million appropriated for HCFAC Program in FY 2001, the OIG will receive between $120 million and $130 million. Actual allocation of the FY 2001 HCFAC Program resources, as required by law (HIPAA), will be determined jointly by the Secretary of HHS and the Attorney General.
We also receive a discretionary appropriation which is used to fund our oversight of all other HHS programs and operations, such as public health, children and families, aging, and departmental management. The OIG's discretionary budget request for FY 2001 is for 306 FTE and $33.8 million, an increase of $2.4 million above the FY 2000 operating level. This increase provides for annualization of the January 2000 pay raise, the anticipated January 2001 pay raise, other mandatory and inflationary costs and the planned expansion of the Child Support Enforcement Task Force.
APPROACHES
We pursue a number of approaches to deal with fraud, waste, and abuse in HHS programs. Our comprehensive program of audits and evaluations are designed to detect problems in the early stages and to define their nature and magnitude. When we find problems, we recommend corrective action. In contrast, our program of investigations is designed to identify, investigate, and prosecute cases of suspected fraud. Such cases often arise from whistleblowers who report direct knowledge of illegal practices, from beneficiaries who report questionable billings, through the DOJ, and from our own reviews and analysis. We seek appropriate remedies, such as restitution, fines, penalties, settlements, and convictions. In addition, we exclude the most egregious abusive providers from participating in Medicare and other Federal health care programs.
In recent years, we have expanded our effectiveness by partnering with other HHS offices, other Federal agencies, State and local governments, and the health care provider community to achieve common goals. For example, we work with the Administration for Children and Families' Office of Child Support Enforcement and Federal, State, and local law enforcement agencies to recover delinquent child support payments from runaway parents.
As another example, we work with the Health Care Financing Administration (HCFA) to extract data from its information systems to spot areas where Medicare may be paying too much, or where "billing spikes" indicate possible abuse. HCFA's contractor fraud units and medical reviewers assist us in detecting and evaluating false billings and schemes. We also work side-by-side with the FBI, the U.S. Attorneys, other Offices of Inspector General, and State and local law enforcement officials to investigate potential fraud cases and curb abusive behavior. In addition, we often join with State officials to review Medicaid issues.
I am pleased to add that we work increasingly with representatives of the health care provider community to develop reasonable and voluntary compliance guidelines for insuring accurate billings to the Medicare program. We also enlist the support of Medicare beneficiaries. We encourage the beneficiaries to carefully review their health care bills. When they spot a possible improper item, a service or product not received, for example, we ask them to call their health care provider. If that fails to "clear up" the matter, we suggest they call their Medicare contractor, and then, if still unsatisfied, to report a suspected fraud to the OIG hotline. Our OIG hotline currently receives about 11,000 calls each week.
FY 1999 ACCOMPLISHMENTS
The heightened focus on fraud and abuse by my office, HCFA, the FBI, the DOJ, the Congress, and others, is yielding substantial recoveries, savings, and program improvements. During Fiscal Year 1999, we excluded more than 2,976 abusive or fraudulent individuals and entities from doing business with Medicare, Medicaid, and other Federal and State health care programs. The 1999 accomplishments include 401 convictions of individuals or entities that engaged in crimes against departmental programs, and 541 civil actions. We increased convictions by nearly 20 percent in 1997, another 16 percent in 1998, and by almost 54 percent in 1999.
We reported overall savings of $12.6 billion for Fiscal Year 1999. This is comprised of $251.5 million in audit disallowances, $407.7 million in investigative receivables, and $11.9 billion in savings from implemented legislative or regulatory recommendations and actions to put funds to better use. The savings that result from our recommendations that are implemented into law or regulation, and independently scored by the Congressional Budget Office or HCFA, represent taxpayer or Medicare Trust Fund dollars that will not be spent.
Medicare and Medicaid Accomplishments:
Last month, my office reported the results of our fourth annual projection of improper payments made for Medicare fee-for-service claims. Over the four years we have conducted this review, the improper payment rate declined by 42 percent, from a midpoint of $23.2 billion (14 percent) in 1996, to $13.5 billion (7.97 percent) in FY 1999--a drop of $9.7 billion. Many Medicare watchers attribute at least part of this downward trend to the increased oversight and enforcement efforts of our office, HCFA, DoJ and the FBI that were made possible by the steady funding stream created by HIPAA. According to the Medicare Trustees and the Congressional Budget Office, these fraud and abuse efforts contributed to Medicare's record low inflation rate (estimated at a negative .7 percent for FY 1999) and the extension of the viability of the Trust Fund until 2015. This year, we found a slight, but statistically insignificant, increase in the error rate, reflecting a pause in the decline of improper payments. Although we are heartened by the overall accomplishment, the level of improper payments is still too great a loss for taxpayers to suffer. It is not a time to let down our guard on Medicare. We are also working with three pilot States to establish what the error rate is for Medicaid.
A cornerstone of our prevention efforts has been the development of compliance program guidance to encourage and assist the private health care industry in the fight against fraud and abuse. The guidance is developed in cooperation with the provider community and identifies steps that health care providers may voluntarily take to improve their adherence to Medicare and Medicaid rules. We have published eight compliance guidance documents covering hospitals, clinical laboratories, home health agencies, third-party billing companies, durable medical equipment, hospices, Medicare + Choice organizations, and nursing facilities. We have recently invited comments on our draft guidance related to individual physicians and small group practices.
In FY 1999, we reported an all-time high of 303 health care related convictions and 534 health care related civil actions. About $369 million was returned to the Medicare trust funds in 1999 as a result of anti-fraud activities, and an additional $4.7 million was recovered as the Federal share of Medicaid restitution. The HIPAA funded many types of anti-fraud and program quality efforts in Medicare, including: False Claims Act settlements; patient anti-dumping enforcement under the Emergency Medical Treatment and Active Labor Act; reviews of quality of care in nursing homes; hospital quality oversight; and mental health services, including partial hospitalization programs in community mental health centers. In FY 1999 we increased our collaboration with others through implementing self-disclosure protocols, conducting a joint roundtable with the health care industry on compliance, increasing data sharing with the FBI, and stepping up our Federal-State Medicaid audit partnerships. To date, we have audit partnerships in 22 States. Between 1994 and the end of 1999, these joint activities with the States generated about $145 million in Federal and State savings.
Other HHS Programs Accomplishments:
Our work on the Department's programs other than Medicare and Medicaid focused on quality of services and identifying ways to deliver services more effectively and efficiently. In these programs, we reported 98 convictions; 7 civil actions; and savings, disallowances, and receivables of $345 million. The FY 1999 non-Medicare and Medicaid projects that were funded through our discretionary appropriation included reviews and investigative activities related to: (1) State compliance with Title IV-E Foster Care Eligibility requirements; (2) Child Support Enforcement; increased child support collections; (3) paternity establishment; (4) the Centers for Disease Control (CDC) Chronic Fatigue Syndrome (CFS) program; (5) Indian Health Service (IHS) Contract Health Service program; (6) Institutional Review Boards; (7) distribution of organs for transplantation; (8) Office of Community Services (OCS) grants; (9) Interstate Compact on the Placement of Children; (10) States' child care certificate systems; and (11) the Food and Drug Administration's (FDA's) handling of adverse drug reactions. We also used a portion of the discretionary budget for expanding the toll-free hotline. Following are examples of our discretionary work:
PROJECTS PLANNED OR UNDERWAY
Almost 80 percent of our resources in FY 2001 are provided from the HCFAC account and will
be dedicated to Medicare and Medicaid audits, evaluations, and enforcement activities. The
Health Care Financing Administration (HCFA), which manages Medicare and Medicaid, has
more than $325 billion in budget authority in FY 2000 and estimates almost $350 billion in
budget authority in FY 2001. The remaining 20 percent of our resources are provided by the
discretionary budget and will be used to audit, evaluate, and investigate the Department's other
300 plus programs, which account for $69.4 billion of budget authority in FY 2000 and about
$78 Billion in FY 2001.
Medicare and Medicaid Projects:
The Medicare related subjects for which we have projects planned or underway that should be completed within the FY 2000 through 2001 period include: improper hospital discharges and transfers; pneumonia upcoding by hospitals; managed care issues; non-covered services in Community Mental Health Centers; end-stage renal disease services; and compliance program monitoring. We expect our case load of corporate integrity agreements in connection with settlements to increase to over 475 by the end of FY 2000.
We also intend to review Medicare contractor operations and administrative costs; physician payments; critical care services in hospitals; outpatient prescription drugs; impact of the Balanced Budget Act reforms on home health; nursing homes and the implementation of the skilled nursing facilities prospective payment system; and will audit costs incurred and claimed by the Peer Review Organizations.
The Medicaid related subjects for which we have projects planned or underway that should be completed within the FY 2000 through 2001 period include: payments for mutually exclusive procedure codes, durable medical equipment for beneficiaries in nursing facilities, outpatient psychiatric services, and potentially excessive claims. We will examine Medicaid payments to intermediate care facilities for the mentally retarded, payments for personal care services, and payments for pharmacy claims from liable third parties. We will continue to work more closely with State auditors under our Partnership Plan. The OIG will also review managed care issues; disproportionate share hospital payments; and outpatient prescription drugs.
In addition, the OIG will review HCFA's major systems initiatives and investments; implementation of transaction standards; State Medicaid Management Information System for Medicaid and the Children's Health Insurance Program; and protection of critical infrastructures.
Public Health Projects:
The Public Health related subjects for which we have projects planned or underway that should be completed within the FY 2000 through 2001 period include: FDA's biennial inspections requirement; FDA's oversight of blood safety consent decrees; FDA's bioterrorism program; drug advertising; FDA's contract audits; HIV/AIDS; follow-up on controls over physical security at CDC; Health Resources and Services Administration (HRSA) technical assistance; managed care reporting to the National Practitioner Data Bank; IHS's health service providers; IHS' compacting and contracting process; Cherokee Nation's compact of self-governance charges; IHS Equal Employment Opportunity program; Tribal use of Federal discount drug program; and NIH laboratory security.
Other Public Health subject areas for which work is planned or underway include: NIH handling, storage, and disposal of equipment exposed to hazardous materials; NIH cooperative agreements with the pharmaceutical industry; the cancer information service; external quality review of psychiatric hospitals; patient abuse reporting; asthma prevention; recruiting human subjects for NIH clinical trials; human-subject protections in gene therapy research; Children's Health Insurance Program (CHIP); disclosure statements submitted by universities; and investigations of public health fraud.
Administration for Children and Families Projects:
The subjects related to programs of the Administration for Children and Families for which we have projects planned or underway that should be completed within the FY 2000 through 2001 period include: operation of the Temporary Assistance to Needy Families (TANF) programs; child care; child care and Head Start; increasing collections in the Child Support Enforcement program; child welfare, child protection and child development systems; child welfare; developmental disabilities; immigrants and public benefits; and maintaining fiscal and program integrity of refugee and community services programs.
Administration on Aging and General Departmental Projects:
The subjects related to programs of the Administration on Aging and general departmental issues for which we have projects planned or underway that should be completed within the FY 2000 through 2001 period include: services for the aged; program income under the Older Americans Act; State funds and revenue; financial statement auditing; and performance measurement.
CONCLUSION
Mr. Chairman, this concludes my testimony. I appreciate this opportunity to report to you on what we are accomplishing with our resources and what we plan to accomplish with the funding we are requesting. I welcome your questions.