INTRODUCTION
Good morning, Mr. Chairman and Members of the Subcommittee. I am
pleased to be here today to discuss HCFA's efforts to curb Medicare waste,
fraud and abuse through information technologies. Ensuring the integrity of
the Medicare and Medicaid programs is a key priority of this Administration.
Promoting program integrity is a vital element of every policy decision. The
President has been vocal in his commitment to the importance of taking
strong measures to guarantee that our nation's safety net programs remain
healthy and secure for this and future generations. With this in mind, I would
like to discuss the role of technology in HCFA's antifraud and abuse strategy,
other fraud and abuse initiatives, the Medicare Transaction System (MTS) and
the lessons we have learned from it.
COMBATING FRAUD AND ABUSE
This Administration can be proud of its success in combating waste, fraud,
and abuse. Health care has become a target for unscrupulous individuals.
Both private industry and government are employing a variety of tools to
combat fraud and abuse. Since 1992, we have made tremendous progress in
protecting the fiscal integrity of the Medicare program. An example is the
HCFA initiated partnership with the enforcement agencies targeting fraud and
abuse in those five states that account for nearly 40 percent of all Medicare
and Medicaid beneficiaries. This two-year project, Operation Restore Trust,
encompassed a wide range of projects aimed at eliminating fraud schemes and
identifying vulnerabilities in the Medicare programs. The reforms enacted in
the Balanced Budget Act of 1997 and the Health Insurance Portability and
Accountability Act of 1996 provide significant new tools to further assist us.
But I think we all know that equally tremendous challenges he ahead. Our
goal is to ensure that the Medicare and Medicaid programs have the necessary
arsenal to combat fraud and abuse.
The Administration is pursuing a strategy intended to deter fraud and abuse
on every front -prevention, early detection, collaboration and enforcement.
Prevention is the best means we have to guarantee the initial accuracy of both
claims and payments, and to avoid having to "pay and chase", a lengthy,
uncertain and expensive process. Early detection is a second key ingredient
of our approach. We can identify patterns of fraudulent activity early by
using data to monitor the billing patterns and other indicators of the financial
status of providers, promptly identifying and collecting overpayments, and
making appropriate referrals to law enforcement.
Close collaboration with our partners in the law enforcement arena is one way
we can maximize our success. A lesson learned through Operation Restore
Trust is the importance of working closely with the states, the Department of
Justice, including the FBI, the Inspector General and the private sector to
share information and tactics about fighting fraud and abuse.
Finally, when we find "bad apples" among our many good providers, we
must take enforcement action against them, including suspension of payment,
exclusion from the program, disenrollment, collection of overpayments, and
imposition of civil money penalties. Investing in prevention, early detection
and enforcement has a proven record of returns to the Medicare Trust Fund.
In FY 1995, every dollar spent by our Medicare contractors using these
methods yielded $14 in return.
Our prevention, early detection and enforcement strategies are aided by using
the best technology available. In combating fraud and abuse in Medicare,
HCFA needs to rely on the best technology available to detect fraudulent
providers and deter them from abusing the Medicare Trust Funds.
HCFA TECHNOLOGIES TO FIGHT FRAUD AND ABUSE
Developing technologies to fight fraud and abuse is a formidable challenge.
Because of the complexity of the programs, the multiplicity of providers and
the numerous opportunities for abusers to "game" the system, no single piece
of technology solves all fraud and abuse problems. Our range of anti-fraud
mechanisms include software to detect aberrant patterns of health care
utilization, tools to prevent duplicative payments and mechanisms to identify
fraudulent providers
Medicare Transaction System
Because of the Committee's special interest in MTS, I want to discuss HCFA's
original plans to develop a single integrated claims processing system which
would have added to HCFA's current tools for fighting fraud and abuse. As
originally conceived, MTS would have provided HCFA with a single system
to streamline Medicare claims processing, integrate data for Medicare Parts A
and B, track beneficiary entitlement and insurance information, achieve better
financial oversight, and incorporate managed care. As you can see, MTS
would have augmented our current fraud and abuse efforts, but MTS also
would have fulfilled other goals that were important to HCFA, such as
complying with the CFO Act, continuing to make managed care payments,
and supporting customer service functions. We are currently reevaluating the
appropriate way to continue HCFA's efforts in pursuing these goals.
MTS and Fraud and Abuse
In terms of fraud and abuse, MTS was designed as a shared system (with
combined Part A and Part B data), which would assist in fraud efforts by
integrating all claims information, and permitting more "real time" access to
data. Under the old claims processing system, obtaining provider data would
mean querying 8 operational systems -- with 70 contractors at 34 data centers.
It could take significant time and resources to find comprehensive information
about a type of service for a beneficiary to build a case showing a pattern of
fraudulent billing.
Through our work on MTS we are now one step closer to achieving shared
data among our
myriad of contractors, an important part of our effort to detect fraud and
abuse because we will be able to track claims data across both Part A and Part
B. As a result of the MTS development efforts, we will consolidate existing
contractor systems into standard Part A, Part B, and DME systems by the year
2000. We have awarded contracts to the Electronic Data Systems (EDS)
Corporation for maintenance and installation of the Part B standard system
and to the Viable Information Processing Systems (VIPS) Corporation for the
standard DME system.
To date, 20 Part A intermediaries have been transitioned to the Florida Shared
System and the remaining 20 will be transitioned by next August. Three of
the four DME contractors are using VIPS now and the transition for the fourth
will be completed by July 1998. Eight Part B carriers are using the EDS
system now and the remaining 24 will be using the system by August 2000.
Consolidation of contractor systems is an exceptional accomplishment for
HCFA in terms of achieving administrative efficiencies and we will continue
to oversee this development to ensure - that the transitions take place on
schedule and within cost.
MTS and Project Management
In terms of project management, I would now like to discuss the MTS project
and lessons that HCFA has learned from it. In your letter of invitation yon
asked us to discuss the problems around the development of MTS. MTS was
designed to house all information on beneficiaries, providers, payments and
services on a single database. The project was much more complex than
either HCFA or the contractor had originally anticipated. Although we had
specifically defined goals, there were significant unknown variables. It was
anticipated that the proposed MTS electronic claims system would
consolidate and standardize a complex universe of discrete software
programs. In the absence of a single integrated system, 80 contractors were
using several different systems to process approximately 800 million claims
annually with unique, idiosyncratic, and often proprietary software. This
made it difficult for HCFA to consolidate data necessary to analyze, monitor
and act on fraudulent and abuse situations.
In January, 1994, HCFA entered into a $19.4 million contract with GTE for
development of MTS. Although the contract was the result of competitive
bidding, there were very few bidders for the task. The scope of the original
contract was to collect and codify requirements for the system, to develop
alternative proposals for the architecture of the system, and ultimately to
develop the software system based on the requirements and the selected
alternative. In the cyberworld, the term "requirements" refers to
comprehensive specifications of the intended product, its structure, and the
timetable, much in the way a blueprint is used in house construction. The
original schedule was very aggressive, anticipating a fully operational MTS
by September, 1999, and providing for simultaneous work on the whole
project, rather than separating the project into smaller tasks.
In the two years following the contract start date, work progressed at a slower
pace than was anticipated. It became clear that both HCFA and GTE had
underestimated the complexity, of creating this system. By the spring of
1996, HCFA and GTE agreed that the contract needed to be renegotiated in
recognition of the project's complexities; these renegotiations were completed
In September 1996. There were several aspects of the renegotiation: the work
was divided into 6 smaller segments or "releases" and the revised schedule
extended the completion date to May 2000. The complexity of the project
was recognized both in the revised schedule and by the increase in the overall
amount of the contract from $19 million to $92 million. The revised contract
also included specific performance. measures or standards negotiated by
HCFA and GTE which would be used to monitor contract performance as the
work progressed.
As work on the contract continued in late 1996, HCFA monitored GTE's
performance using the new standards approved by both parties. When a
review of GTE's performance in spring 1997 showed that the project was still
behind schedule, HCFA issued a "stop work order" for all activities except
managed care. The managed care system was the first product we wanted
delivered and as such, was at a more advanced stage in the development
process. By focusing on a single phase, we hoped GTE would be more
successful in meeting performance requirements. The purpose of the stop
work order was to allow HCFA to evaluate how to move forward on the
project. As various alternatives were considered, HCFA officials consulted
extensively within HFIS and with OMB.
In addition to input from HHS and OMB, HCFA continued to review and
evaluate recommendations from the General Accounting Office (GAO), most
notably in a report issued in May 1997. Advice was also solicited from the
Information Technology Review Board (ITRB), a multi-agency group of
Information Technology managers chartered by ONIB to review large
information technology projects. A common theme in the advice provided to
HCFA was the recommendation that the work be divided into smaller, self-contained incremental
pieces which could be more easily managed. On the
basis of the performance measures, HCFA notified GTE on August 15 of the
decision to terminate the contract. We are now rethinking how we will
achieve the goals that prompted MTS.
There have been a lot of numbers quoted in the press lately about the cost of
MTS. Let me take a moment to clarify them. At the beginning of 1997, we
estimated that we would spend $102 million for MTS contracts -- $92 million
for the GTE software contract and $1 0 million for smaller contracts for
services such as independent verification and validation and testing support.
As of September 9, GTE reported to HCFA that it had incurred costs of about
$45 million. As of that date GTE has submitted vouchers to HCFA for about
$41 million which HCFA has paid. This means, to date, HCFA has spent
approximately $41 million on the software contract.
HCFA has obtained other tangible products from the NITS effort including a
system design to meet the needs of a completely redesigned managed care and
fee-for-service transaction system; and a high-level set of requirements (what
the system must do) for the entire Medicare environment, including both fee-for-service and
managed care, covering both current and future capabilities.
The requirements development work, even that which has not been
completed, will be useful to us in whatever way we choose to proceed.
As I mentioned before, HCFA has received advice from many sources about
management of
technology projects. That advice, along with HCFA's experiences in the
project, have formed a
valuable set of lessons learned.
- more aggressively oversee the integrity of the system's architecture,
the transition efforts and the millennium change;
- to do more complete integrated project planning and project management;
- to ensure the adoption and adherence to a rigorous system development
methodology;
- to complete requirements before moving to later stages of software;
- to divide work into small, incremental pieces which can be more easily
managed;
- to completely analyze alternatives and return on investment before moving
forward; and
- to use the contract management process as a management tool.
HCFA has taken to heart the advice of the GAO, the information resource
management experts in OMB and HHS, and the ITRB. Some examples of
how HCFA is incorporating these lessons learned into improving our
approach to future technology initiatives are:
- We are adding the use of a systems integrator and an independent
validation and verification contractor to the systems transition and
millennium efforts;
- We are creating an integrated project plan that includes not only the
requirements development but also other HCFA-critical activities such
as the Balanced Budget Act, millennium, and systems transitions. This
will allow us to understand the relationships between projects and
manage the overall environment more effectively;
- For the completion of the managed care requirements, we are
following a methodology which has been proven successful in the past,
and from which we will expect similar rigorous processes for future
contracts;
- Before we more forward with the managed care requirements, we will
conduct a complete analysis of the alternatives of next steps and
document the process, and then will proceed according to results of
our analysis-,
- We will evaluate each piece of work relative to its manageability, risk,
and cost benefit, as well as the resource demands of other work being
done by HCFA;
- We will submit the documented results of our analysis to the
investment review process for evaluation and decision; and
- We will continue to use such performance indicators as the "earned
value" concept to assist us in monitoring and decision-making. This is
a way of measuring the progress of the contractor's efforts against an
established baseline.
Looking back, MTS has been a difficult and complex project. HCFA and
GTE had anticipated that greater documentation of contractor systems would
have existed. This lack of documentation at the contractors added difficulty,
time and cost to the project. But, as I've mentioned, HCFA has learned many
valuable lessons and will use these lessons learned with MTS when
developing future technologies. The question that remains to be answered is
how HCFA plans to go forward. HCF A is working very hard to start from
first principles: compile data, analyze it, and then make our decisions. Then,
later this fall, after fully consulting with OMB and GAO, we will discuss with
you our new plans to address the problems we still need to solve. Whatever
we decide, we can assure you that each component of the plan will meet OMB
guidance for funding information systems investments and the requirements
of the Information Technology Management Resource Act.
Preventing Erroneous Payment
HCFA contractors currently have state of the art systems that enable us to
make proper payments and prevent fraudulent claims from ever being paid.
We are constantly searching for ways to update and improve our contractor's
claims processing technologies.
Extensive Use of Edits -- Our contractors process over 800 million claims a
year. Using our standard systems, these claims are subjected to a rigorous
prepayment electronic screening process to verify beneficiary information,
provider information, utilization history, procedure and diagnosis, and
coordination of benefits. Each computer instruction which verifies
information on a claim is called an edit.
These edits are performed to determine beneficiary information such as if the
patient is enrolled in Medicare, and if all co-payments and deductibles have
been met. Our contractors also perform a series of edits to determine if the
provider is eligible and is in good standing with the Medicare program.
Claims are then edited for utilization history. For example, our contractor's
systems will only pay one claim in a patient's lifetime for an appendectomy.
Many claims are also checked to verify if the procedure being billed for is
appropriate for the diagnosis. Finally, our contractors coordinate benefits to
determine if a beneficiary has other coverage that is primary to Medicare. In
total our contractors have thousands of these edits in place which perform a
comprehensive review of each claim before Medicare payment is made for a
service.
Correct Coding Initiative --- Implemented in 1996, the Correct Coding
initiative began with a contract to evaluate all physician coding and
recommend policy for how codes should be billed, including which codes
should be bundled prior to payment when separately billed. Unbundling
occurs when physicians incorrectly use multiple procedure codes when
describing individual components of a service instead of a single,
comprehensive procedure code which describes the entire service. Our
carriers have installed approximately 93,000 computerized coding edits which
check each claim for "unbundled" services and prevent a payment from being
made. The project has resulted in approximately $200 million in savings in
the first year of implementation.
Commercial Off-the-Shelf Software (COTS) -- The committee has expressed a
special interest in commercial off-the-shelf software (COTS) to do some of
this editing. We are currently studying COTS and it may become a part of
our arsenal. In 1996, HCFA selected GPG (GMIS Products Group) to test a
commercially available software application know as "Claims Check" which
is designed to evaluate physician claims and reduce erroneous or abusive
billing on a prepayment basis.
We are currently testing this software at one of our contractors to evaluate the
underlying policy of edits, the customization needs, savings, and the
installation and integration issues. We have completed a preliminary
comparison of COTS and the Medicare claims processing system by taking
one month's claims and running them through both systems. The COTS
product as a stand alone system identified $2.3 million of claims for denial
and the Medicare contractor system identified $2.7 million. Our goal when
we began this evaluation was to achieve maximum savings by integrating the
COTS claims editing software into the Medicare claims processing system--in
effect achieving the best of both worlds. However, it has been very difficult
to achieve this integration. When our final evaluation is completed later this
fall, we will make a decision about how we can best use claims editing
technology to ensure that claims are paid correctly and most cost effectively.
Detecting Aberrant Patterns of Health Care Utilization
HCFA is constantly seeking means to assure that we avoid paying for
improper claims. This is an area where we work very closely with the
agencies that have responsibility for enforcement actions.
Enhanced HCFA Customer Information System (WIS) --- The HCIS has been
used in one of our most successful anti-fraud programs, Operation Restore
Trust, which began as a collaborative demonstration project with the
Department of Justice and State Medicaid AntiFraud Units. The HCIS
enables HCFA and its contractors to view provider or service utilization data
at several levels including the national, the state, contractor, provider type, or
individual provider. For example, if I were trying to find out how many times
a certain service had been billed in a state, I could obtain that information
through the HCIS database immediately. This capability allows the rapid
identification and analysis of factors contributing to aberrant data. As a
result, audits or reviews can be focused, rapidly and inexpensively, on a
particular level.
HCFA first used HCIS last year to identify a number of skilled nursing
facilities with potential
problems in Miami, Florida. The project identified over $2 million in
overpayments and mandated
corrective action plans from the problem providers. To date, over $24 million
in overpayments have been identified in these reviews. The OIG and the DOJ
also both routinely request information from HCIS to assist them with their
cases.
Statistical Analysis Contractors --- Since 1993, HCFA has supported a
dedicated statistical analysis contractor, Palmetto Government Benefits
Administrator, Inc., to support our four Durable Medical Equipment Regional
Contractors (DMERCs). The contractor produces ongoing analysis of trends,
utilization rates, billing patterns, referral patterns and related information at
the national and regional levels. As an example, through their analysis the
contractor has identified fraudulent billing practices for nebulizers and related
drugs, and many abusive practices for incontinence supplies, surgical
dressings, parenteral & enteral nutrition and urological supplies. The
DMERCs have made changes in their payment policies that have saved the
Medicare program in excess of $200 million. The changes related to
Nebulizers alone resulted in a savings of $40 million. They have also used
this data to trigger provider reviews, support fraud investigations, and target
enrollment verification activities.
Detecting Fraudulent Providers
An important tool in our technology arsenal is a data system that maintains a
centralized record
of information about perpetrators of fraud that can be accessed and shared by
all of our partners.
Fraud Investigation Database --- Since 1996, the Fraud Investigation
Database has provided a comprehensive nationwide system devoted to
accumulating fraud and abuse information. It represents all cases Medicare
contractors have referred to law enforcement, chronology of events for each
case, and disposition of each case. The database also contains the Office of
the Inspector General excluded provider list. Currently this database is
available to HCFA, the Office of the Inspector General, Department of
Justice, including the FBI, U.S. Postal Inspector, and Medicaid Fraud Control
Units. For example, two cases, one involving a provider of diagnostic
services and the other involving ambulance services became national
investigations because of the FID. Local Medicare contractors queried the
FID and noticed that diagnostic and ambulance services were under
investigation in several jurisdictions across the country. The contractors were
able to consolidate their investigative efforts and pursue two national cases.
The FID has also served as a valuable resource to investigators and attorneys
as they begin new cases. Through the FID, they can search for past, similar
cases, and gather information about the investigation, prosecution and
disposition of similar cases. HCFA will use this database as another tool for
analyzing patterns to help in prevention and detection activities.
RESEARCH ON FRAUD DETECTION TECHNOLOGIES
Those who prey on the Medicare Trust Funds are ever resourceful. As a
result, HCFA must seek out new ways of detecting fraudulent claims and
preventing their payment. The previously described program integrity
initiatives will help us to remain abreast of the latest technology, but
We need to be looking even further ahead. One effort on this front, which I
know this committee
has been very interested in, s our research agreement with Los Alamos
National Laboratories.
In 1995, HCFA entered into an 2-year interagency agreement with he
Department of Energy to use the expertise of Los Alamos National
Laboratory to develop a ground-breaking new claims review approach that
differs from existing methodologies. The ultimate goal of this new
technology is to know on a prepayment basis, the likelihood that a claim
coming in the door is suspect. This kind of research is bold and promising,
but like all basic research, one whose payoff is not certain. Our hope is that
the product of this project will be a prototype system of dynamic algorithms
and features that have been tested and refined to detect fraud, waste, and
abuse in prepayment environments
The prototype methodology uses mathematical models and algorithms in
combination with provider and beneficiary profiles containing "features" or
pieces of information that reliably pinpoint fraud and abuse from the
incredible volume of data. The work of Los Alamos to date has been to
determine and construct the features of each type of profile, conduct statistical
and mathematical analyses on our massive claims database, and to test the
prototype with contractors to see if the complicated models match up with
reality. Through our work with Los Alamos, we hope to demonstrate that it is
possible to build an automated prepayment mechanism that can identify
suspicious incoming claims.
The Los Alamos prototype on physician claims has already been tested in the
State of Florida. These results will help Los Alamos to fine-tune and improve
their methodology. Further testing has also begun on the prototype in the
State of New York. We expect results from the provider verification by the
end of the year.
HCFA is now entering into a new interagency agreement for further research
work. It contemplates several phases over four years. Ultimately, Los
Alamos will provide a software design or blueprint for incorporating their
prototype into our claims processing systems. "le Los Alamos may be our
future, today we require our contractors to use software to help them analyze
claims data, to identify trends and patterns and to profile providers. HCFA's
requirements have fostered the development and improvement of several
different types of software.
OTHER FRAUD PREVENTION ACTIVITIES
HCFA has not looked solely to technology to build our arsenal to fight fraud,
waste and abuse.
We are employing a number of on-going innovative strategies along other
fronts as well.
Home Health Moratorium
The steadily increasing volume of investigations, indictments, and convictions
against home
health agencies has led to a great deal of publicity and concern about home
health care fraud. In
response to this concern, earlier this month President Clinton and Secretary
Shalala announced
an unprecedented moratorium on the entry of any new home health agencies
into Medicare. The moratorium is designed to reduce the likelihood of "fly-by-night" operators
entering the program while HCFA strengthens its
requirements, thus preventing fraud, waste and abuse.
While the temporary moratorium is in effect, the Department of Health and
Human Services will implement program safeguards included in the Balanced
Budget Act, and work on important changes in requirements for home health
agencies. For example, DHHS will implement the statutory requirement that
home health agencies post at least a $50,000 surety bond before they are
certified. Additionally, a related rule will require new agencies to have
enough funds on hand to operate for the first three to six months. These
requirements will establish the financial stability of home health providers.
During this six-month moratorium, the Department will also develop more
stringent standards against fraud. New regulations will include requirements
for more business information from home health agencies and experience
based on serving a minimum number of patients prior to Medicare
certification. W e are in the process of completing a final regulation to
require home health agencies to conduct criminal background checks of the
aides they hire, and to be more accountable for the care they provide. In
conjunction with this regulation, new videos and brochures will be designed
to teach beneficiaries how to detect and report fraud and abuse.
These changes will not only str engthen the payment safeguards we already
have in place, but will expand and enhance them. There will always be
unscrupulous providers and questionable billing practices --- but with the
tools provided to us in the BBA and our new, stricter standards, we will have
the ability to be one step ahead of them.
Medicare Integrity Program (MIP)
This program, enacted in the Health Insurance Portability and Accountability
Act of 1996, authorizes the Secretary to promote the integrity of the Medicare
program by entering into contracts with eligible entities to carry out activities
such as audits of cost reports, medical and utilization review, and payment
determinations. MIP provides a stable source of funding for HCFA's program
integrity activities, and gives us authority to contract for these activities with
any qualified entity, not just those insurance companies who are currently our
fiscal intermediaries or carriers.
The Medicare Integrity Program strengthens the Secretary's ability to deter
fraud and abuse in the Medicare program in a number of ways. First, it
creates a separate and stable long-term funding mechanism for program
integrity activities. Historically, Medicare contractor budgets had been
subject to fluctuations of funding levels from year to year. Such variations in
funding did not have anything to do with the underlying requirements for
program integrity activities. This instability made it difficult for HCFA to
invest in innovative strategies to control fraud and abuse. Our contractors
also found it difficult to attract, train, and retain qualified professional staff,
including clinicians, auditors, and fraud investigators. A dependable funding
source allows HCFA the flexibility to invest in new and innovative strategies
to combat fraud and abuse. It helps HCFA shift emphasis from post-payment
recoveries on fraudulent claims to pre-payment strategies designed to ensure
that more claims are paid correctly the first time.
Second, by permitting the Secretary to use full and open competition rather
than requiring that HCFA contract only with the existing intermediaries and
carriers to perform MIP functions, the government can seek to obtain the best
value for its contracted services. Prior law limited the pool of contractors that
could compete for contracts, thus, we were not always able to negotiate the
best deal for the taxpayers or take advantage of new ways to deter fraud and
abuse. Using competitive procedures, as established in the Federal
Acquisition Regulations System (FARS), we expect to attract a variety of
offerors who will propose innovative approaches to implement
MIR.
Third, MIP permits HCFA to address potential conflict of interest situations.
We will require our contractors to report situations which may constitute
conflicts of interest, thus minimizing the number of instances where there is
either an actual, or an apparent, conflict of interest. By invoking the FAR in
establishing multi-year contracts with an expanded pool of contractors, we
will be able to avoid potential conflicts of interest and obtain the best value.
Also, by permitting us to develop methods to identify, evaluate and resolve
conflicts of interest, we can create a process to ensure objectivity and
impartiality when dealing with our contractors. This is a concern particularly
when intermediaries and carriers are also private health insurance companies
processing Medicare claims.
We are currently developing regulations to implement MIP, and we are also
working on a statement of work for competitive contracts. As we transition
work from one of our contractors, Aetna (which is terminating its Medicare
work), we are testing a new contracting relationship in several Western States
that will separate out (and consolidate) payment integrity activities from
claims processing. This will give us valuable experience as we prepare to
implement MIR.
Operation Restore Trust (ORT)
The Operation Restore Trust (ORT) project was the first comprehensive effort
at collaboration between HCFA and law enforcement agencies. This two-year
demonstration project, which was launched by the President in May 1995 and
concluded on March 31, 1997, was designed to demonstrate new partnerships
and new approaches in finding and minimizing fraud in Medicare and
Medicaid. As a demonstration project, ORT targeted four areas of high
spending growth: home health agencies, nursing homes, DME suppliers, and
hospices. Since more than a third of all Medicare and Medicaid beneficiaries
are located in New York, Florida, Illinois, Texas, and California, ORT efforts
were targeted at these five states. Although the demonstration is over, we are
continuing to use the principles we learned.
Fraud and Abuse Control Program
The program integrity activities of the Medicare contractors initiate many of
the cases subsequently developed by the Office of Inspector General and
Federal Bureau of Investigation, and support their prosecution by the
Department of Justice. Using monies made available through the Fraud and
Abuse Control Fund, established in HIPAA, we expanded our successful ORT
efforts using the State survey agencies to be our "eyes and ears" in the field
and to report back to the contractors whether providers are meeting Medicare
billing as well as quality requirements. We have used this model successfully
with our expanded home health surveys in the 5 Operation Restore Trust
(ORT) States.
Approximately $1.8 million was allocated to HCFA for "Project ORT"
through HIPAA's Fraud and Abuse Control Program, to enhance the program
integrity activities that involve collaboration with State certification agencies.
Eighteen States are participating in a total of 26 HIPAA funded projects,
allowing us to survey approximately 300 providers for both certification and
reimbursement issues. These enhanced surveys will be made of providers of
home health services, skilled nursing services, outpatient physical therapy
services, and laboratory services, as well as psychiatric services in both
hospitals and community mental health centers. Many of these surveys are
modeled after the home health agency and skilled nursing facility surveys
conducted during ORT.
Benefit Notices
A final, and equally important, program integrity priority for HCFA is
beneficiary information. As a product of our claims payment system, HCFA
sends each beneficiary a Explanation of Medicare Benefits (EOMB)
statement. These statements detail actions that Medicare has taken on claims
filed in their behalf We have learned that better-informed customers can
actually help fight fraud and abuse. We currently receive and investigate an
overwhelming number of inquiries from beneficiaries alerting us to
questionable services on their statements. All of our carriers have 1-800
numbers which appear at the bottom of the EOMB encouraging beneficiaries
to call with questions about their claims. By expanding our consumer
information programs, we are ensuring that Medicare beneficiaries receive
current, easy-to-understand, and unambiguous information in a timely
manner, so that they may assist us in identifying improper claims and
erroneous bills. A well-informed beneficiary can save us Medicare and
Medicaid funds by alerting our investigators and claims reviewers to potential
fraud, waste, and abuse of taxpayers' dollars.
CONCLUSION
The world changed dramatically with the proliferation of computer
technology after World War II, and requests are now being made for laptop
computer use in Congressional sessions. There is no going back; as the
Luddites learned in the last century, technology marches on and HCFA has
consistently been in the vanguard in exploring advanced computer systems.
We have taken an important step forward in acknowledging the fact that an
effective, cost efficient and standardized claims processing system is essential
for the Medicare program.
No ambitious enterprise was ever completed without its share of snags and
setbacks. Discouraging though they may be, these seemingly undesirable
setbacks serve to guide us along to the proper course, which especially in the
realm of complex computer technology, is a dynamic and evolving process.
Technological capabilities which were merely hypothetical a decade ago are
now used on a daily basis, and innovative answers to software limitations are
constantly surfacing.
HCFA is committed to aggressively pursuing technology that can and will
prevent improper
payments, detect fraudulent activities earlier and aid in the battle against
health care fraud and abuse. We have learned from our experiences in
developing the MTS project, and we are now prepared to forge ahead
incorporating the lessons we have learned into our technology plan. I
appreciate Congressional interest in these important endeavors and look
forward to working with this committee to find new- and innovative
approaches to fighting fraud and abuse.