[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
IMPROPER PAYMENTS IN STATE- ADMINISTERED
PROGRAMS: MEDICAID
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON
GOVERNMENT OPERATIONS
AND THE
SUBCOMMITTEE ON
INTERGOVERNMENTAL AFFAIRS
OF THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
APRIL 12, 2018
__________
Serial No. 115-106
__________
Printed for the use of the Committee on Oversight and Government Reform
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
http://oversight.house.gov
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U.S. GOVERNMENT PUBLISHING OFFICE
32-668 PDF WASHINGTON : 2018
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Committee on Oversight and Government Reform
Trey Gowdy, South Carolina, Chairman
John J. Duncan, Jr., Tennessee Elijah E. Cummings, Maryland,
Darrell E. Issa, California Ranking Minority Member
Jim Jordan, Ohio Carolyn B. Maloney, New York
Mark Sanford, South Carolina Eleanor Holmes Norton, District of
Justin Amash, Michigan Columbia
Paul A. Gosar, Arizona Wm. Lacy Clay, Missouri
Scott DesJarlais, Tennessee Stephen F. Lynch, Massachusetts
Virginia Foxx, North Carolina Jim Cooper, Tennessee
Thomas Massie, Kentucky Gerald E. Connolly, Virginia
Mark Meadows, North Carolina Robin L. Kelly, Illinois
Ron DeSantis, Florida Brenda L. Lawrence, Michigan
Dennis A. Ross, Florida Bonnie Watson Coleman, New Jersey
Mark Walker, North Carolina Raja Krishnamoorthi, Illinois
Rod Blum, Iowa Jamie Raskin, Maryland
Jody B. Hice, Georgia Jimmy Gomez, Maryland
Steve Russell, Oklahoma Peter Welch, Vermont
Glenn Grothman, Wisconsin Matt Cartwright, Pennsylvania
Will Hurd, Texas Mark DeSaulnier, California
Gary J. Palmer, Alabama Stacey E. Plaskett, Virgin Islands
James Comer, Kentucky John P. Sarbanes, Maryland
Paul Mitchell, Michigan
Greg Gianforte, Montana
Vacancy
Sheria Clarke, Staff Director
William McKenna, General Counsel
Drew Baney, Professional Staff Member
Kelsey Wall, Professional Staff Member
Sarah Vance, Health Care, Benefits, and Administrative Rules
Subcommittee Staff Director
Julie Dunne, Government Operations Subcommittee Staff Director
Sharon Casey, Deputy Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Government Operations
Mark Meadows, North Carolina, Chairman
Jody B. Hice, Georgia, Vice Chair Gerald E. Connolly, Virginia,
Jim Jordan, Ohio Ranking Minority Member
Mark Sanford, South Carolina Carolyn B. Maloney, New York
Thomas Massie, Kentucky Eleanor Holmes Norton, District of
Ron DeSantis, Florida Columbia
Dennis A. Ross, Florida Wm. Lacy Clay, Missouri
Rod Blum, Iowa Brenda L. Lawrence, Michigan
Bonnie Watson Coleman, New Jersey
------
Subcommittee on Intergovernmental Affairs
Gary Palmer, Alabama, Chairman
Glenn Grothman, Wisconsin, Vice Jamie Raskin, Maryland, Ranking
Chair Minority Member
John J. Duncan, Jr., Tennessee Mark DeSaulnier, California
Virginia Foxx, North Carolina Matt Cartwright, Pennsylvania
Thomas Massie, Kentucky Wm. Lacy Clay, Missouri
Mark Walker, North Carolina Vacancy
Mark Sanford, South Carolina
C O N T E N T S
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Page
Hearing held on April 12, 2018................................... 1
WITNESSES
Mr. Tim Hill, Deputy Director, Centers for Medicaid and CHIP
Services, U.S. Department of Health and Human Services
Oral Statement............................................... 5
Written Statement............................................ 8
Ms. Megan Tinker, Senior Advisor for Legal Review, Office of
Counsel, Office of Inspector General, U.S. Department of Health
and Human Services
Oral Statement............................................... 28
Written Statement............................................ 30
Ms. Carolyn Yocom, Director of Health Care, U.S. Government
Accountability Office
Oral Statement............................................... 43
Written Statement............................................ 45
The Honorable Daryl Purpera, CPA, CFE, Louisiana Legislative
Auditor
Oral Statement............................................... 68
Written Statement............................................ 70
Mr. Andy Schneider, Research Professor of the Practice, Center
for Children and Families, Georgetown University
Oral Statement............................................... 78
Written Statement............................................ 80
APPENDIX
Hearing Follow-up Response submitted by Ms. Yocom, Government
Accountability Office.......................................... 110
Hearing Follow-up Response submitted by Mr. Schneider, Georgetown
University Center for Children and Families.................... 113
IMPROPER PAYMENTS IN STATE-ADMINISTERED PROGRAMS: MEDICAID
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Thursday, April 12, 2018
House of Representatives
Subcommittee on Government Operations Joint with
Subcommittee on Intergovernmental Affairs
Committee on Oversight and Government Reform
Washington, D.C.
The subcommittees met, pursuant to call, at 10:00 a.m., in
Room 2154, Rayburn Office Building, Hon. Mark Meadows, chairman
of the Subcommittee on Government Operations, presiding.
Present: Representatives Meadows, Palmer, Grothman, Jordan,
Walker, DeSantis, Connolly, Raskin, Maloney, DeSaulnier,
Norton, and Lawrence.
Mr. Meadows. The Subcommittee on Government Operations and
the Subcommittee on Intergovernmental Affairs will come to
order, and without objection, the presiding members are
authorized to declare a recess at any time.
I would like to thank the gentleman from Alabama, Mr.
Palmer, for his leadership on this particular issue, and
certainly for the ranking members, Mr. Connolly and Raskin. We
appreciate all of you being here.
As we look at the hearing today examine once again improper
payments, particularly within Medicaid, it is very simple that
as we look at the payments that should not have been and were
made for the incorrect amounts. These issues encompass the
entire Federal government, and, in fact, improper payments are
a huge problem. The GAO estimates that there is over $1
trillion in improper payments since the Fiscal Year 2003. And,
again, that is $1 trillion since 2003.
In Fiscal Year 2017 alone, the government got it wrong to
the tune of $141 billion in improper payments. This amount of
money is indeed staggering. As they say back home, eventually
this adds up to real money, and so it is incumbent upon all of
you as we look at the testimony today to hopefully highlight
how we are going to address this issue. For some of you, this
is, Ms. Tinker, your first rodeo here. We will try to make sure
that it is not memorable in a negative way, and so welcome.
The Department of Health and Human Services accounts for
the largest amount of improper payments with over $90 billion.
The Medicaid Program accounts for over $36 billion, or 40
percent, of the HHS improper payments. And if we think about
that number, $36 billion in taxpayer dollars that are
unaccounted for for one Federal program, it is not only
staggering, but you start to look at and say why are we not
addressing it.
One of the keys to addressing improper payments and
restoring program integrity for the Medicaid issue is having
complete, accurate, and timely data. Screening Medicaid
providers with better data could prevent some of the improper
payments that are made to bad actors. And I also want to stress
that because we look at this, there are times when we have
improper payments. There are times when some of those things
are not indeed fraudulent. They are not bad actors. They
perhaps are a result of our bureaucratic network that we have.
I would be interested in hearing that. I am one that believes
that every improper payment is not necessarily because of a bad
actor.
And yet when we look at this, Ms. Tinker, you are from HHS
OIG. You have illustrated the importance of providing screening
in your testimony, but describing some of the cases in
Virginia, in North Carolina. And in the Virginia case, one
individual participated in a scheme to defraud the special
caregiver program covered by Medicaid by submitting timesheets
for services that were not actually provided. Those are the
kind of things that we do need to go after. This individual was
in jail at the time, so it is amazing how creative they were
getting from the jail cell, and a simple check of his status
could have stopped the fraud, and yet somehow that did not
happen.
In North Carolina, a mental health facility operator
defrauded Medicaid by submitting at least $2.5 million in
fraudulent claims for services never provided to the
beneficiaries with developmental disabilities. Now, to support
these fraudulent claims, this individual used stolen
beneficiary information from a company he previously co-owned
that was no longer operational. And this could have been
stopped with better data and a site visit.
And when we look at these kinds of things, you would say,
well, these should be easy operational checks that in the
private sector if you were writing checks, you would actually
say, well, if we are going to write a $2.5 million check, you
would want to make sure that it was for legitimate purposes.
So, we need to look at it, and I am going to challenge all of
you to look at this as if it were your own money because indeed
it is. It is the people's money, and sometimes we forget when
we are looking at this that it is a mom and dad, and an aunt
and uncle, and, quite frankly, people who pay the taxes each
and every day that we have an obligation, a stewardship, that
we have to oversee.
You know, Obamacare's dramatic expansion of Medicaid has
further highlighted the need for better data to determine
eligibility. And if we are going to make sure that Medicaid
dollars are going to those programs that they are designed to
cover, we need to also look at detecting improper payments and
fraud, and we need complete and accurate national data on
Medicaid.
So, for almost 20 years after Congress directed States to
submit such data, the transformed Medicaid statistical
information is still a work in progress after 20 years. And so,
it is incumbent that we come together today. I see my time has
run out in terms of my opening statement, but we look forward
to hearing from all of you. And with that, I will recognize the
ranking member, Mr. Raskin, for his opening statement.
Mr. Raskin. Mr. Chairman, thank you very much, and thanks
for that very fine opening statement, and thanks to all of our
witnesses for testifying today.
Medicaid provides comprehensive, affordable care to more
than 70 million Americans regardless of their preexisting
health conditions. And I want to start just by identifying the
fact that that is an historic achievement and triumph that we
have a Medicaid system that is addressing the health needs of
so many Americans. Roughly 40 percent of the beneficiaries are
children, including nearly half of all kids with special
healthcare needs, and 1 in 4 children in my home State of
Maryland. 1 in 5 Medicare beneficiaries relies on Medicaid for
long-term care and other benefits. Thanks to the ACA's Medicaid
expansion, 12 million more Americans have gained health
coverage for the very first time.
Today's hearing focuses on improper payments--excuse me--
which include overpayments, underpayments, and legitimate
payments with paperwork errors, as well as fraudulent payments.
This year's improper payment rate, I understand, was 10.1
percent. One dollar of an improper payment is a dollar too
much, whether it is a dollar at Medicaid, or the VA, or the
Pentagon, or whatever program it might be, and we can all agree
that 10 percent is just too high. But solving that problem must
take into account the fact that all 50 States administer their
own Medicaid programs, and they all have their own challenges
maintaining program integrity. It is a large and decentralized
system, and it can be leaky.
So, all 50 State Medicaid agencies along with the Federal
Centers for Medicare and Medicaid Services must work together
to lower the rate of improper payments, not only in the
interest of preserving our tax dollars, but also because fraud
and inefficiency threaten the stability of Medicaid and deprive
enrollees of the benefits that they rightfully rely on.
Fortunately, the ACA gave CMS new program integrity tools to
fight fraud, including enhanced provider screening
requirements, and I am eager to hear about people's
perspectives on that today.
We should reject the notion that errors in Medicaid justify
slashing Federal funding, or undermining the Federal/State
financing structure, or imposing work requirements on Medicaid
beneficiaries. I think all of these are a non-sequitur.
I hope we will use this hearing as an opportunity to learn
from the experts gathered today how we can improve the Medicaid
Program, and I would like to close simply by sharing an
experience of one of my constituents, Alaina from Silver
Spring, whose family relies on Medicaid. Her daughter has
serious medical conditions affecting her heart, her lung, her
airways, and her kidneys. She spent the first 5 months of her
life in an ICU and had three major surgeries before she could
use a ventilator and oxygen tank, which allow her now finally
to breathe to this day. But she must see over a dozen
specialists to receive the care that she needs. When Alaina's
daughter left the hospital at 5 months old, she had incurred
over $3 million in medical bills, an amount which would be
higher today, and it includes medical supplies and equipment,
medications, additional procedures, and more. Alaina and her
family have depended on Medicaid and the ACA to save their
family from financial ruin and to save her daughter's life.
This story reminds of why Medicaid is so important, why we
have to do everything we can to strengthen this vital program,
and to guarantee that every dollar is going actually to service
the beneficiaries of the program. I hope this hearing brings us
closer to this goal, and I thank you very much, Mr. Chairman,
for convening the meeting.
Mr. Meadows. I thank the gentleman. The chair will
recognize the gentleman from Alabama, Chairman Palmer.
Mr. Palmer. Thank you, Mr. Chairman. Today's hearing marks
the continuation of the committee's close look at the rising
problem of federal improper payments. As we watch the national
debt continues to decline, improper payments grow with it. As
Chairman Meadows pointed out, since 2003, we have sent out a
trillion dollars in improper payments. I would only add to that
that that is a trillion dollars plus interest. We have been
operating in deficit all those years, so every dollar that we
sent out improperly was a borrowed dollar.
Every year, the Federal government loses billions of
taxpayer dollars because of improper payments, dollars that
were intended to fund programs that serve the people that are
improperly paid out or managed. In my questions I will address
this a little bit more.
The Government Accountability Office has been unable to
render an opinion on the Federal government's consolidated
financial statement since 1997 due in part to the Federal
government's inability to adequately account for and reconcile
its financial activities. GAO has also stated with respect to
improper payments that absent changes, the Federal government
continues to face an unsustainable long-term fiscal path. This
is the reason we are here today. We want to try to figure out a
way to solve this.
As Chairman Meadows cited, the Federal government reported
$141 billion in improper payments last year, Fiscal Year 2017,
a $4 billion increase from just 2 years ago. Over two-thirds of
these erroneous payments originated from the Department of
Health and Human Services. Rapid growth and improper payments
is largely attributed to the Medicaid Program, which is the
focus of this hearing. Medicaid is a federally funded, State
administered program that covers over 73 million people. The
program represents about a sixth of the national healthcare
economy and accounts for over $36 billion in improper payment.
I think it was about $36.7 billion to be precise. The GAO has
placed the Medicaid Program on its high-risk list every year
since 2003. That makes 15 years and counting.
State partners are on the front lines of defense against
these erroneous payments. However, the Centers for Medicare and
Medicaid Services plays a critical role in monitoring and
supporting State efforts to reduce and recover improper
payments. Although the States have great flexibility in
implementing Medicaid, they are constrained by lack of Federal
guidance and overwhelmed by the vast and increasing enrollment
from expansion of the program under Obamacare. Diligent and
bipartisan oversight is imperative in order to curb Medicaid's
current trajectory as the fastest-growing source of improper
payments.
Today we will hear from our witnesses about current efforts
to strengthen Federal and State partnerships in the Medicaid
Program and make an attempt to ensure program integrity. To
achieve the necessary reform of Medicaid, only a whole of
government oversight approach will safeguard the faith and
credit of American taxpayers.
I thank the witness for coming today, and I look forward to
hearing their testimony. I yield back.
Mr. Meadows. I thank the gentleman from Alabama. I am now
pleased to introduce our witnesses: Mr. Tim Hall, deputy
director at the Center for Medicaid and CHIP Services,
Department of Health and Human Services. Welcome, Mr. Hill. Ms.
Megan Tinker, senior advisor for legal review in the Office of
Counsel to the Inspector General, Department of Health and
Human Services. Welcome, Ms. Tinker. Ms. Carolyn Yocom,
director of health care at the Government Accountability
Office. Welcome. The Honorable Daryl Purpera, legislative
auditor for the State of Louisiana, and I believe you are
accompanied by Mr. Wesley Gooch, special assistant for
healthcare audit, who will also be sworn in. And Mr. Andy
Schneider, research professor of practice at the Center for
Children and Families at Georgetown University, McCourt School
of Public Policy. That is a mouthful, Mr. Schneider. Welcome.
Welcome to you all.
Pursuant to committee rules, all witnesses will be sworn in
before they testify, so if you will please stand and raise your
right hand.
Do you solemnly swear or affirm that the testimony you are
about to give is the truth, the whole truth, and nothing but
the truth, so help you God?
[Chorus of ayes.]
Mr. Meadows. All right, thank you. You may be seated. Let
the record reflect that all witnesses answered in the
affirmative.
In order to allow time for discussion, please limit your
testimony to 5 minutes. However, your entire written testimony
will be made part of the record. And as a reminder, the clock
in front of you will show the remaining time during your
opening statement. The light will turn yellow which means you
had better speed up, you got 30 seconds left, and red means
that you are subject to being gaveled down at any time,
hopefully in a light tap first, and then a stronger tap later.
But we also ask you to press the button in front of you to turn
on your microphone before speaking.
So, Mr. Hill, we will go ahead and recognize you for 5
minutes.
WITNESS STATEMENTS
STATEMENT OF TIM HILL
Mr. Hill. Great, thank you. Chairman Meadows and Palmer,
Ranking Member Raskin, members of the subcommittee. Thank you
for the invitation and the opportunity to discuss CMS' efforts
to prevent and reduce improper payments in Medicaid. We share
your commitment to ensuring that spending for Medicaid is
devoted to the care and the well being of the beneficiaries
that we serve and is not wasted through error or fraud.
In that regard, we greatly appreciate the ongoing work by
the OIG and the GAO to highlight potential vulnerabilities in
these important programs. And similarly, I want to recognize
the work of this committee on these important issues,
particularly with respect to Medicaid reimbursements and
financing issues. I want to use my time this morning to
highlight some of the foundational work we do here at CMS to
promote the integrity of the Medicaid Program and then spend a
little time emphasizing some of the new initiatives and
approaches that this Administration has initiated in this area.
In terms of our foundational work, I like to think of our
efforts as resting on a three-legged stool. The first leg of
the stool is measurement. Our primary tool in this regard is
the Payment Error Rate Measurement Program, or PERM. Using
PERM, we measure and report on improper payments in Medicaid.
The information we get from this program, in addition to just
measuring and giving us a measure, actually helps us identify
the underlying cause of payment error. What is it that is
driving the error rate? Using this information, we can drive
States to implement corrective actions to reduce improper
payments and to prevent them in the future.
The second leg of the stool is partnership. We work with
our State partners to provide the information, the resources,
and the technical assistance they need to implement programs to
safeguard Medicaid. The best illustration of our efforts in
this area is our Medicaid Integrity Institute established in
collaboration with the Department of Justice where we bring
together State employees, CMS policy experts, our law
enforcement partners, and other stakeholders to collaborate and
share best practices while simultaneously staying up to date on
emerging program vulnerabilities.
The final leg of the stool is a robust financial oversight
activities to ensure that when States ultimately claim for a
Federal match on their expenditures, Federal Medicaid funds are
spent lawfully and appropriately. We use specialized
accountants and financial management analysts to review State
claims each quarter using trend analysis, environmental
scanning, and the results of external audits to find anomalies,
and request additional documentation or justifications for
spending when necessary. We also engage in State-specific
reviews, going on site to State Medicaid programs to ensure
that State expenditures and corresponding claims for Federal
funds are allowable. Last year we worked with States to resolve
$2.7 billion in questionable costs through this program.
Under the leadership of Secretary Azar and Administrator
Verma, we are building on this foundation to further enhance
and strengthen our oversight efforts. As you know, this
Administration is fully committed to providing as much
flexibility as possible to States to help them structure
Medicaid programs that work for the people and the situations
of their State. In return for this flexibility, we will be
holding States accountable in new and important ways.
For example, for the first time ever, we are implementing a
Medicaid scorecard to measure and report on Medicaid
performance across three pillars: health systems, Federal
administrative performance, and state administrative
performance. Driving improvement using the scorecard is
integral to our efforts to safeguard Medicaid from unnecessary
and wasteful spending.
Underpinning the scorecard initiative is the implementation
of the Transformed Medicaid Information System, or T-MSIS. The
data we collect in T-MSIS will drive the analytics that will
help us and States improve health outcomes and improve program
integrity. I am happy to report that as of today, T-MSIS
includes the data for 98 percent of the beneficiaries we serve,
and we expect the remaining data, which represents one State,
to be live in the system shortly.
In terms of oversight of State financing problems, we have
closed off financing loopholes that some States have used to
generate Federal dollars to support State programs that are
best support with State-only dollars. Finally, we are
bolstering our ongoing efforts to ensure that States are
appropriately determining eligibility for beneficiaries in the
expansion population. While we have significant existing
controls in this area, we are concerned by recent OIG findings
about State implementation of eligibility systems as well as
the findings of our own review of State managed care rates for
beneficiaries in the expansion group. The issue is a top
priority for this Administration and the CMS administrator, and
moving forward, CMS will continue to enhance our oversight
efforts to make sure States are appropriately enrolling
beneficiaries and that the Federal government is bearing only
its fair share of the cost for Medicaid.
We look forward to continuing to work with our States and
oversight partners and other stakeholders to improve efforts to
reduce the improper payment rate in Medicaid. I thank you, and
I am happy to take your questions.
[Prepared statement of Mr. Hill follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Meadows. Thank you, Mr. Hill.
Ms. Tinker, you are recognized for 5 minutes.
STATEMENT OF MEGAN TINKER
Ms. Tinker. Good morning, Chairman Meadows and Palmer,
Ranking Members Connolly and Raskin, and other distinguished
members of the subcommittees. I am Megan Tinker of the Office
of the Inspector General. Thank you for inviting me to discuss
improper payments in Medicaid and the need for robust national
Medicaid data.
Medicaid is a $574 billion program that touches the health
and welfare of 69 million Americans. In 2016, Medicaid
estimated improper payments totaled $36 billion. Today I will
highlight recommendations that OIG has made to help States and
CMS secure the data necessary to reduce improper payments.
OIG's work clearly shows that in order to gain the full
benefit of 21st century data analytics, Medicaid needs
comprehensive national data. We recommend that CMS and States
focus on OIG's core program integrity principles: prevention,
detection, and enforcement. First, prevent improper payments by
using data to keep bad actors and ineligible beneficiaries from
participating in Medicaid. Second, detect improper payments by
using data to identify potential fraud, waste, and abuse. And
third, enforce, take swift and appropriate enforcement actions
to correct problems and prevent future harm.
Our work shows that States often lack the necessary data to
prevent bad actors from participating in Medicaid. Doing so
effectively can reduce and prevent improper payments. For
example, OIG has raised concerns that States are not conducting
required provider screenings such as criminal background
checks. Preventing improper payments also means ensuring
Medicaid only serves eligible beneficiaries. OIG's review of
three States found that their enrollment data systems sometimes
lacked the ability to reliably make proper eligibility
determinations, which could result in incorrect payments.
Quality data are vital to decreasing improper payments and to
ensuring a high-performing Medicaid program.
CMS has made progress in implementing T-MSIS, which is the
Transformed Medicaid Statistical Information System. T-MSIS is
a national system to aggregate Medicaid claims data. As of this
month, as Mr. Hill said, almost all States are reporting data
to T-MSIS. However, there is more to do to make sure that the
data can be used effectively to prevent and detect improper
payments and fight fraud, waste, and abuse.
Improper payments and fraud do not respect State borders.
Without complete and uniform national data, fraud schemes
affecting multiple States are difficult to detect because we
cannot see the whole picture. Utilization and spending patterns
may not appear problematic until compared with other States.
CMS must remain vigilant and ensure that States are
consistently reporting data elements to T-MSIS, and that those
are the data elements that will best inform program integrity
efforts.
In addition, an ever-increasing number of Medicaid patients
receive some or all of their services through managed care.
OIG's work has shown that States' Medicaid managed care data
was incomplete when submitted to CMS. As a result, both Federal
and State governments lack the transparency to ensure proper
oversight.
OIG has seen the benefits of data in identifying and
targeting bad actors in Medicare. For example, last summer the
Medicaid Fraud Strike Force used comprehensive Medicare data,
including data on opioid prescribing, to conduct the largest
national healthcare fraud takedown in history. Over 400
individuals were charged for their alleged participation in
healthcare fraud screens, responsible for $1.3 billion in fraud
losses across numerous States. We cannot replicate this type of
enforcement action in the Medicaid Program because we still
lack comprehensive national Medicaid data.
It remains to be seen whether T-MSIS will live up to its
potential. That is why it is critical that CMS persist in
ensuring the availability of complete, accurate, and timely
national Medicaid data. Such data are essential to preventing,
detecting, and decreasing improper payments, and to the
efficiency and effectiveness of the Medicaid Program.
Thank you for the opportunity to testify this morning. I am
happy to answer any questions you may have.
[Prepared statement of Ms. Tinker follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Meadows. Thank you, Ms. Tinker.
Ms. Yocom, you are recognized for 5 minutes.
STATEMENT OF CAROLYN YOCOM
Ms. Yocom. Chairman Meadows, Chairman Palmer, Ranking
Members Connolly and Raskin, and members of the subcommittee, I
am pleased to be here to discuss oversight efforts in Medicaid.
This joint Federal/State program financed healthcare services
for over 70 million low-income and medically needy individuals,
including children and people who are elderly or disabled.
Medicaid is a significant component of Federal and State
budgets with nearly $600 billion in estimated outlays for 2017.
Due to concerns about the adequacy of oversight, Medicaid has
been on our list of high-risk programs since 2003.
The partnership between the Federal government and States
is a central tenet of the Medicaid Program. Within broad
Federal requirements, States have flexibility to design and
implement Medicaid based on their unique needs. The overall
program is overseen at the Federal level by CMS. However,
despite oversight efforts by CMS, overall improper payments
continue to increase from $29 billion to $37 billion between
Fiscal Year 2015 and 2017.
My statement today will focus on three broad areas critical
to improving Medicaid oversight: addressing data challenges,
strengthening Federal oversight, and improving and expanding
Federal and State collaboration.
First, data challenges. CMS oversight relies on State-
reported data that address multiple aspects of Medicaid,
including expenditures and utilization of services. We and
others have reported that insufficiencies in these data have
affected CMS' ability to ensure proper payments and
beneficiaries' access to care. We have raised concerns about
the usefulness of state-reported data due to issues with
completeness, accuracy, and timeliness.
To address these longstanding concerns, CMS has worked to
develop a reliable national repository, T-MSIS. Implementing T-
MSIS as has been and will continue to be a significant
multiyear effort. Nearly all States are reporting some T-MSIS
data. While recognize this progress, more work is needed before
CMS or States can use T-MSIS for program oversight. For
example, it remains unclear when all States will report
complete and comparable T-MSIS data, and how CMS and States can
use these data to improve the program.
Second, strengthening program oversight. Our work has
identified other areas where CMS should take action. CMS has
implemented many of our related recommendations, yet additional
actions are needed to further strengthen program oversight.
First, our work has identified risks associated with
provider enrollment and beneficiary eligibility. Continuing to
develop strategies to address these risk and monitor progress
will improve CMS oversight and reduce improper payments.
Second, additional oversight is needed to ensure that Medicaid
beneficiaries are able to access necessary healthcare services.
This is particularly critical for beneficiaries who rely on
long-term services and supports as well as behavioral needs,
including treatment for those with opioid use disorders. It is
important to note that Medicaid is the largest payer for both
long-term and behavioral healthcare.
Third, collaboration between the Federal government and the
States. Identifying and sharing program integrity practices is
critical, and there are challenges, but also some successes,
here. In March 2017, we reported that collaborative audits in
which CMS worked with States in partnership have great
potential, but they are limited in their current use. We
recommend that CMS take steps to remove barriers that limit
State participation in these audits. In 2016, CMS, GAO, and a
select group of State audit officials met to discuss future
collaboration and specific areas of concern in Medicaid.
Involving the State auditors in program oversight adds an
important arsenal to reducing improper payments in Medicaid.
Lastly, in 2012, CMS created the Healthcare Fraud
Prevention Partnership to study and share healthcare-related
information on fraud, waste and abuse. Participants have told
us that the partnership helped them identify potentially
fraudulent providers and foster information sharing.
Chairman Meadows and Palmer, Ranking Members Raskin and
Demings, and members of the subcommittee, this concludes my
prepared statement, and I will be pleased to answer any
questions you might have.
[Prepared statement of Ms. Yocom follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Meadows. Thank you, Ms. Yocom.
Mr. Purpera, is that how you say it? You can go ahead and
correct me. Everybody does.
Mr. Purpera. That is how you say it.
Mr. Meadows. Okay, all right. Well, the gentleman from
Louisiana is recognized for 5 minutes.
STATEMENT OF HONORABLE DARYL PURPERA
Mr. Purpera. Thank you, sir. Mr. Chairman and members,
Daryl Purpera, legislative auditor for Louisiana. I really come
to speak with you specifically today about the underutilization
of State auditors across our Nation in the fight against fraud,
waste, abuse, and improper payments.
I have heard it mentioned here 2 times today that it is a
$36 billion problem. I want to remind everyone that is Federal
dollars. There is an additional $20 billion or so of State
dollars that are also being misspent.
I want to talk to you specifically about how the State
auditors roll. State auditors are required by the Single Audit
Act to audit the Medicaid Program, so that is one of our jobs
responsibilities. We get our instructions from the OMB through
what is called a compliance supplement. That is kind of the
audit program, what are we to do. And I want to talk to you
about some inadequacies in this.
The Medicaid Program has as a key determination point for
eligibility is the income component based upon modified
adjusted gross income of the recipient. However, the compliance
supplement, the document that we are to operate under,
specifically tells the State auditor that we are not to test
Medicaid eligibility based upon modified adjusted gross income.
Now, the rationale behind that is because CMS has some other
oversight mechanisms. Well, in the State of Louisiana, that
other oversight mechanism is part of this pilot program, but
that task was given to our department of health. So, you have
the department who is administering the program auditing itself
when it comes to eligibility using the modified adjusted gross
income. That is a scope limitation for the auditor, a
significant departure from auditing procedures.
State auditors also do not have access to data that we
need, specifically Federal tax information. Access to the
Federal tax information is restricted by 26 USCA 6103, Federal
law. We have access to the tax data when we are auditing our
Department of Revenue. So, if my auditors are auditing our
Department of Revenue, we have got the Federal tax data. But if
I am auditing over at the Department of Health and Hospitals
looking at my Medicaid Program, now I cannot use the very thing
that I can use over here on my right hand. I cannot let my left
hand see it. So, it is a counterproductive restraint upon us.
Furthermore, the Federal regulations do not require the
examination of Federal tax data when making eligibility
determinations. We learned that 25 States actually use Federal
tax data, but the remainder do not use the Federal tax data.
But since we are basing the program on modified adjusted gross
income, I would think it would be wise to use the Federal tax
data. The other databases that we are using do not encompass
all income categories. For example, it does not include self-
employment, farming and fishing, rents, royalties, retirements,
pensions, and alimony, and many other things. And so, we are
kind of operating the program with our hands tied behind our
back.
I also want to talk to you about what I believe is the
costly effect of the reasonable compatibility standard. The
reasonable compatibility standard came about with the
Affordable Care Act, and it is a policy or a rule of the CMS.
And what it does it allows an individual to attest to an income
when they are applying for Medicaid, and the State agency is to
verify that income by using electronic data sources such as
wage data. And so, if they attest to, say, 138 percent of
Federal poverty limit and that is my attested-to income, but
the State looks over at the wage data and sees that the
individual makes, let's say 150 percent of Federal poverty
limit, in the State of Louisiana, we use a reasonable
compatibility standard of 25 percent. That individual is going
to be deemed eligible even though their income is higher than
the 138 percent. And so, I believe that's a standard that not
only creates a significant problem for auditors because we
really can't see where the line is anymore, but it's also we've
extended the upper limit of Medicaid eligibility by doing that.
Now, why are these issues important to me? Let me tell you
why they're important. In 2017, our State formed the Medicaid
Fraud Task Force. I chair that committee. It's a legislative
committee. We did a test, and we took 860,000 individuals,
basically our adult population, and we asked our Department of
Revenue, because I can't get the data. We asked our Department
of Revenue to compare what the individuals put on their
Medicaid application, compare it to their tax returns. Eighty-
three thousand individuals came back as they had a tax return
income of $20,000 or more different than what was on their
Medicaid application. We can't make any conclusions from that,
but it does point to a significant risk that there is a
problem. In addition, 48 percent of the applicants had
household sizes for their tax returns different than their
Medicaid. Now, I realize the rules are a little different, but
they're very much the same.
I believe that we need to be looking for new audit
approaches, and the State auditors needs to be right in the
middle of this. Currently, dollars are flowing from the Federal
government to our attorney generals to prosecute fraud, but
very few dollars are going to our State auditors all around our
Nation to help prevent and detect these improper payments
before they happen.
Thank you, gentleman. I'll take any questions you have.
[Prepared statement of Mr. Purpera follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Meadows. Thank you so much.
Mr. Schneider, you are recognized for 5 minutes.
STATEMENT OF ANDY SCHNEIDER
Mr. Schneider. Thank you, Mr. Chairman, and good morning,
Ranking Members Connolly and Raskin, and members of the
subcommittees. I'm Andy Schneider, a research professor of the
practice at the Center for Children and Families. The Center is
an independent, nonpartisan policy and research organization
based in the McCourt School of Public Policy at Georgetown
University. Our mission is to expand and improve high-quality,
affordable health coverage for America's children and families,
particularly those with low and moderate incomes. I want to
emphasize I'm here in my individual capacity, and my views do
not necessarily represent the views of Georgetown University.
Thank you for the invitation to testify. I'm especially
honored to be here. I had the privilege of serving as chief
health counsel to the full committee in 2007 and 2008, and I
know from that experience how important the oversight efforts
of this committee's members and staff can be to making
government work better. And thank you for holding this hearing
which I think is in the best tradition of government oversight.
Medicaid is an enormously important health insurer for
America's low-income children and families. A growing body of
research, added to just this week by analysts at America's
Health Insurance Plans, demonstrates that Medicaid is working
well for children and adults alike, giving them access to care
and preventive services at levels similar to those who have
commercial coverage. All that said, Medicaid is not perfect. It
can and should be improve by, among other things, reducing the
rate of improper payments. And I hope today's hearing will get
us to that result.
I want to make three quick points. First, Medicaid's 10.1
percent improper payment rate is too high, and it needs to come
down. There is a clear path forward to bringing it down, a path
that the Office of Inspector General is also urging this
morning, which is to fully implement the provider screening and
enrollment requirements that are already on the books. By
identifying bad actors, keeping them out of the program,
provider screening and enrollment will protect children and
families and other Medicaid beneficiaries from substandard
care, at the same preventing the theft or diversion of Federal
and State funds from their intended use.
Secondly, I want to underscore a point made by Mr. Hill.
Payments made to fraudulent providers are clearly improper, but
improper payments are not the same as fraud. Fraud is a
deception or misrepresentation made by a person or entity with
the intent of receiving an unauthorized payment. Improper
payments in contrast are payments that should not have been
made or that were made in an incorrect amount. They include
payments made to providers who have defrauded the program, but
they also include unintentional documentation errors,
noncompliance with provider screening, and enrollment
requirements.
The way to reduce fraud as well as improper payments
generally is to screen providers before allowing them to treat
Medicaid beneficiaries and bill the Medicaid Program. And that
is true whether you are in a fee-for-service or in a managed
care mode.
My last point is that Medicaid is a successful health
insurer for 4 in 10 of our Nation's children, in large measure
because of its Federal/State financing partnership. And as GAO
testified this morning, CMS can improve that partnership by
improving its expenditure and utilization data and
strengthening its oversight. Disrupting that partnership by
capping Federal Medicaid payments to States will not improve
the oversight, it will not prevent fraud, and it will not
reduce improper payments. Instead, it will put low-income
children and families at severe risk for rationing of care.
I look forward to your questions.
[Prepared statement of Mr. Schneider follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Meadows. Thank you, Mr. Schneider. Thank you all for
your insightful testimony. And as I mentioned earlier, your
entire written testimony, if you did not cover it orally, will
be made part of the record. I will now recognize my good friend
and the gentleman from Virginia, the ranking member, Mr.
Connolly, for his opening statement.
Mr. Connolly. I thank the chair, and in the interest of
time, I am going to forego my formal opening statement. I echo
some of what we just heard from the panelists, particularly Mr.
Schneider. A, Medicaid works. It does its job: 76 million
Americans, 43 percent of them children, benefit from Medicaid,
and it looks like we are going to expand those numbers.
In my home State of Virginia, we are on the brink of a
bipartisan agreement to finally expand Medicaid pursuant to the
Affordable Care Act, which will now bring healthcare to 400,000
people in Virginia, and by the way, bring $400 million net to
the coffers of the State of Virginia, allowing to reinvest in
healthcare and other needed investments. So, that is a good
thing, and we will become, I believe, the 33rd State to expand
Medicaid, States led by both Republicans and Democrats.
But secondly, the point Mr. Schneider just made, and I know
echoed by our panelists. But the improper payment part of
Medicaid is too high. Ten percent is not tolerable, and we have
got to work to get that number down. And that will include
actually implementing the regulations and screenings already on
the books, but it also means law enforcement has got to get
more involved. We need U.S. attorneys involved. We need
attorneys general to be involved. We need to beef up Medicaid's
own self-policing to bring that number down because every
dollar that is an improper payment is a dollar foregone. It is
a dollar not invested in healthcare. It is a dollar that
detracts from the important core mission of Medicaid.
And finally, I would say, Mr. Chairman, working with you
and others over the years on this committee, you know, there
are two things this committee needs to focus on or can focus on
that I think would make a material difference in reducing the
debt, neither of which involve new taxes, neither of which
involve, you know, cutting critical investments. And one is
improper payments, about $142 billion a year. Multiply that
times 10, and you get $1.4 trillion. Now we are talking real
money. And the other is uncollected taxes, which have now
grown, by starving the IRS over the years, to over $450 billion
a year. You combine those two, we are at almost $6 trillion
over 10 years, and I for one would be willing to commit that
every one of those dollars we, in fact, recover I would devote
to debt reduction because they are dollars we do not have now.
And that would be a good down payment on the national debt over
a 10-year period.
And it seems to me there is some potential bipartisan
common ground. You know, we would have to make some
investments, but these are two things we can do something
about, and there is no downside to addressing them. And so, I
thank you, Mr. Chairman, for having a hearing on the Medicaid
piece today, and I look forward to having the opportunity to
hear more from our expert panelists. And, again, thank you for
your leadership, Mr. Chairman.
Mr. Meadows. I thank the gentleman for his comments, and I
would like to stress obviously today we are looking at
Medicaid, but there is a huge improper payment issue with the
Department of Defense as well. And so, at times where sometimes
one program looks ideologically to be aligned more with one
side than the other, I can assure you in a bipartisan manner,
we are willing to tackle those. And I thank the spirit in which
the ranking member offered that.
The chair is going to recognize the chairman of the
subcommittee, Mr. Palmer, for a series of questions at this
time. So, he is recognized for 5 minutes.
Mr. Palmer. Thank you, Mr. Chairman. Mr. Hill, Medicaid
payments are made to States based on the number of people
eligible in each State and the State maintenance of effort
match. In other words, CMS has a reasonable estimate of how
much funding to request from Congress on an annual basis. Given
that for the last 2 years Medicaid improper payments have
exceeded $36 billion, does CMS inflate its funding request to
include improper payments? Is that just part of your overhead?
Mr. Hill. I would not say that we directly, that the
measure of improper payments goes into the formula to say what
we are going to ask for. It is much more of an actuarial
analysis of the trends over time and what we think we are going
to need in the next year given economic and other forecasts.
So, I think it is baked there, and I think that is the point
that folks have made across the board here, that because
improper payments are in the baseline it is inflated, and to
the extent that we could reduce improper payments, we would
recoup some savings.
Mr. Palmer. Well, you had a number of recommendations for
correcting this. Ms. Tinker, thank you for being here. Welcome
to OGR. How many recommendations has HHS inspector general made
to CMS to establish a deadline for complete and accurate TMS
data?
Ms. Tinker. We have one recommendation that ----
Mr. Palmer. Yeah, please turn that on.
Ms. Tinker. We have one recommendation ----
Mr. Meadows. You better hit that button or--no.
[Laughter.]
Ms. Tinker. We have one recommendation that is currently
still on the books for CMS to set a deadline for the completion
the T-MSIS system.
Mr. Palmer. How about GAO, Ms. Yocom?
Ms. Yocom. We also have a recommendation. It is a little
more detailed in terms of establishing some steps and some
dates along the way. We think taking a step-by-step approach
would be helpful rather than saying we are going to get this
all done by X date.
Mr. Palmer. Yeah, I agree with that. I think it is a
process, and I think it is multifaceted. It is reading the
GAO's last report that I got on it that indicates, and this
would be true across the Federal government, but I think it
would be applicable to CMS, is about 20 percent of the improper
payments is a result of antiquated data systems. And one of the
things that concerns me is the antiquated data systems is an
issue that we can resolve. Obviously, we will have to spend
some additional funding.
But, Mr. Purpera, in dealing with this between the State
and Federal level, is that an issue, because one of the things
we are saying is that State systems do not always match up with
Federal systems. You have a communication issue with that. Is
that a problem?
Mr. Purpera. Mr. Chairman, data is a problem. It is a
considerable problem because are not dealing with finding a
needle in a haystack here. We are dealing with finding needles
in fields of haystacks. So, we have to have good data from the
State level on up, and it extremely hard for my office to get
data sometimes from the managed care operators.
For example, we keep talking about the improper payment
rate being 10 percent, but that number I would tell you is
considerably understated because it includes managed care at
.03 percent, which clearly we are not looking at the full
spectrum there.
Mr. Palmer. Well, Ms. Yocom, in the last GAO report that I
saw, there were 18 Federal programs that were reported. Among
those were the managed care side of Medicaid. So, and I agree,
in talking with Mr. Dudero about this, he thinks the $141
billion is understated because of the failure of programs such
as the managed care side of Medicaid report.
Ms. Yocom. Yeah, the estimation of managed care is focused
on a very narrow piece of information. It is focused on what
did the contract say that you would pay on a per capita basis
and was the person who you paid for eligible for Medicaid. It
does not look at whether or not the services were provided at
all or whether they were necessary or anything else.
Mr. Palmer. Well, that is an administrative issue ----
Ms. Yocom. It is.
Mr. Palmer.--because the report also showed that you had
failure to verify eligibility, failure to do proper
documentation. That was about 52 percent of the improper
payments.
Ms. Yocom. Yes.
Mr. Palmer. And one other question in the last few seconds
I have is on the fraud. Is fraud more an issue at the Federal
level, people fraudulently billing the Federal government for
Medicaid payments, or is it more at the State level? Where is
the fraud most likely to occur? And, Ms. Tinker, if you know
the answer to that, you can respond as well.
Ms. Tinker. We see fraud at both the Federal and the State
level in the Medicaid Program because it is a shared program
between both the Federal government and the State.
Mr. Palmer. So, when someone files a fraudulent claim, they
file it at the State level, which when the State makes a
payment it includes Federal dollars, or is it possible that
they file it directly with the Federal government?
Ms. Tinker. Directly with the State government.
Mr. Palmer. Directly with the State. Thank you very much. I
yield back.
Mr. Meadows. I thank the gentleman from Alabama. The chair
recognizes Ranking Member Raskin for 5 minutes.
Mr. Raskin. Mr. Chairman, thank you very much. Let me
follow up on Mr. Palmer's question. Ms. Yocom, your testimony
includes a statement that between May of 2015 and December of
2017, 11 different recommendations were made by the GAO to CMS
about improvements that could be made in terms of ferreting out
fraud, but your testimony also says that these recommendations
have not been adopted yet by CMS. And I am wondering, I do not
know, Mr. Hill, if you could speak to that, why were they not
adopted, and what is the hold up there?
Mr. Hill. So, I would need to go back, and unfortunately, I
do not know specifically the 11 recommendations. I know as a
general matter, sometimes the recommendations that are offered
require a change in regulation. Not often, but sometimes in
statute. And the other issue in Medicaid unlike in Medicare
because it is a shared partnership with the State, many of the
recommendations that we have to implement, we have to do in
partnership with our State partners. And so, we have talked a
lot, for example, about provider enrollment and screening.
We can require States to do that initial guidance and tell
States they need to be doing a better job, but the actual on-
the-ground implementation of screening, for example, takes
place at the State. So, the shared partnership, I think, does
introduce some level of slowness to our response.
Mr. Raskin. Okay. Well, I would be interested in following
those recommendations because, you know, lots of times we have
great hearings, and then recommendations come out, and then we
do not see anything happen. So, I would love to see the follow
through on that.
So, I wonder if somebody would dig down deeper into this
whole question of fraud. Is most of the fraud provider-based
fraud, or is it actually people who are impersonating
beneficiaries, or fabricating information on applications? I
mean, what is the nature of the fraud component of the problem?
And I do not know, Mr. Schneider, Mr. Purpera, yeah.
Mr. Schneider. So, I do not know that I am the most
qualified person to speak to this.
Mr. Raskin. Okay.
Mr. Schneider. You already have some experts on this who
have the data, right?
Mr. Raskin. Okay, let us take Mr. Purpera and Mr. Hill.
Mr. Purpera. Thank you, sir. I think I can approach it from
the State level. At the State level, our attorney general
offices, they have the Medicaid fraud control units, so they
are looking at fraud. But the funds that flow from the Federal
government to operate those units are strictly for provider
fraud. My attorney general, if he were sitting here today,
would tell you he would very much like to work in the area of
recipient fraud, but right now he is prevented from doing so.
Now, my office focuses not just on fraud, but we focus on
fraud, waste, abuse, the whole gamut. And, you know,
strategically, what we want to do is make recommendations to
improve the process going forward.
But I can tell you this. In the past, and as I heard about
other recommendations, there have been times when I have
written findings on my department of health that says, ``for
the 8th consecutive year,'' and then the finding. And that
seems to me where there is part of the problem is holding the
agencies accountable and somehow forcing the changes that are
needed to prevent the waste and abuse.
Mr. Raskin. Thanks. Mr. Hill?
Mr. Hill. I would say that in terms of the type of fraud
that we see, and I have worked in Medicaid and I have worked in
Medicaid, the key to the kingdom is a card, is an eligibility
card. So, we do not see a lot of fraud of an individual
beneficiary saying I am going to lie on my taxes to get
Medicaid. They will get eligible, and then typically what we
will see is they will then be in cahoots. There will be some
sort of scheme with a Medicaid beneficiary or Medicare
beneficiary and a group of providers to generate fictitious
billings or fraudulent billings, and it is much more of a ----
Mr. Raskin. A collective activity. It is more than a
conspiracy.
Mr. Hill. Yeah, they are smarter than we are many times,
and they have found ways to ping and game our systems. And
typically, once somebody gets eligibility, they are able to, if
they are so inclined, defraud us using nefarious providers to
bill and get paid.
Mr. Raskin. Okay, yes, Ms. Yocom.
Ms. Yocom. I would just add that if you can screen and
enroll and ensure that your providers act in good faith, you
have managed most of the fraud. A beneficiary alone trying to
commit fraud needs a complicit provider, so focusing attention
on ensuring good screening and enrollment processes is
critical.
Mr. Raskin. Great. Okay. My final question is about data.
Everybody seems to agree that a much more comprehensive data
system is going to be essential lower that 10 percent rate. Are
there legislative changes that need to be made, or can all of
this be done through regulatory action? Mr. Hill.
Mr. Hill. In terms of collecting data from States and us
aggregating the data, we do not see it as a statutory problem.
If you want to write a check and give us more money, we are
always happy to sort of have more infrastructure. But the issue
really is compliance with States and us working with States to
get the data in at the Federal level that they already have at
the State level, so it is not really a statutory issue from our
perspective.
Mr. Raskin. Thank you. Yield back, Mr. Chair.
Mr. Meadows. I thank the gentleman. The chair recognizes
himself for 5 minutes for a series of questions. Ms. Tinker,
let me come to you. As we look at this transformed medical
statistical information system, or, I guess, ``T-MSIS,'' as
they would say, how significant are your concerns about the
quality of the information in there?
Ms. Tinker. We have significant concerns about the quality
of the data.
Mr. Meadows. Okay. Let me give it to you in a different
way. On a scale of 1 to 10, with 10 being the most highest,
most concern, what number would you give it?
Ms. Tinker. That is a pretty difficult question to answer
as the ----
Mr. Meadows. And that is why I am here, so ----
[Laughter.]
Ms. Tinker. How I would answer is while we are very pleased
that States are reporting and data now, and almost all are
there, that that really means that we are really at the
starting line and not at the finish line in terms of building
T-MSIS. We are still looking to see that the data has the
quality necessary to perform program integrity efforts,
specifically that all States report all data, and secondly,
that when States are reporting that data, that it is actually
uniform, that all States interpret the data pieces the same
way.
Mr. Meadows. Right, yeah. Ms. Tinker, you have been well
coached, and so I am going to give you another piece of advice.
When I ask a question on 1 to 10, you might as go ahead and
answer it because I am not going to stop until you answer. So,
on a scale of 1 to 10 with ``10'' being most concern, what
number would you give it?
Mr. Hill. I would give it a 7.
Mr. Meadows. Thank you, Ms. Tinker. Mr. Hill, in your
statement I think you said that 98 percent of those that should
be reporting are reporting. Is that correct?
Mr. Hill. That is correct.
Mr. Meadows. And so, would you say 98 percent is a good
percentage?
Mr. Hill. It is.
Mr. Meadows. Oaky. Out of the 98 percent based on the
statement that Ms. Tinker gave me with a 7 being a concern, how
much of the 98 percent data can you actually use?
Mr. Hill. Right. I mean, I share Ms. Tinker's concern. I
would not say we are necessarily at the starting line. We are
probably midfield. But it is absolutely the case that the first
thing that we had to accomplish was get the States to report.
We now have them to report. The next challenge for us is being
sure that, as described, the data is uniform, that we can use
it, that States are reporting ----
Mr. Meadows. So, can you use it today?
Mr. Hill. We are using it today. We were ----
Mr. Meadows. Can you use it accurately today?
Mr. Meadows. I would not want to rely a whole lot of policy
analysis on the data that we have because we have just started
----
Mr. Meadows. So, that means that we got 98 percent
compliance of un-useful data.
Mr. Hill. Right, and the ----
Mr. Meadows. Do you not see a problem with that?
Mr. Hill. I see a program that we had to continue ----
Mr. Meadows. I see your staff behind you. They are nodding
that there is a real problem with that. And so, as we look at
that, how do you fix that, I mean, because for you to come and
say, well, we got a 98 percent compliance rate, we really do
not have a 98 percent compliance rate because Ms. Yocom and Ms.
Tinker both in their testimony have shown the quality of the
data is worthless. So, if the quality of data is worthless, why
are we focusing on a compliance rate of 98 percent?
Mr. Hill. I would not characterize the data as worthless
first. And as I said ----
Mr. Meadows. But you just said you cannot use it.
Mr. Hill. Well, I think it is important to understand how
we build data systems, right? So, this is not an information
system that we are using to process and pay claims like the
States are. We are asking States to aggregate their claims data
and give it to us to put in a database that we can use to do
analytics. The first step in that process is for them to build
that interface, to give us that data, and to put it into T-
MSIS, and that is where we have it. Until we ----
Mr. Meadows. But the ranking member--hold on.
Mr. Hill. Yeah.
Mr. Meadows. I am running out of time. The ranking member
and I have the Data Act. We have a number of other systems when
we look at that. We have a dashboard on FITARA, which, you
know, is the Connolly-Issa bill. Is that correct? So, when we
look at that, bad data going in makes those systems worthless,
and you say that it is not worthless, but at the same time,
asking them to comply is a real problem.
So, let me shoot real quickly to another area. It appears
that $1.2 billion worth of improper payments actually come from
three States. Is that correct, Ms. Tinker, $1.2 billion in
estimated improper payments came from three different States?
Ms. Tinker. We did find beneficiary eligibility errors in
three States--California, New York, and Kentucky--totaling $1.2
billion.
Mr. Meadows. All right. So, what can we do to fix this? I
mean, if it is three States, I would say that was a target rich
environment, that we can focus on those three States.
Ms. Tinker. The main causes of the errors we found were
human errors and eligibility system inability to actually
perform the functions it needed to. The recommendations that we
made to States were three: one that where we found errors they
do the redeterminations necessary; two, that they put policies
and procedures in place to properly train people so that we
could decrease the human errors; and third, that they update
their systems so that they could better talk to other data
systems to get the correct information to make those
determinations.
Mr. Meadows. So, Mr. Hill, are you going after the $1.2
billion?
Mr. Meadows. The $1.2 is identified as potential
overpayment. There was not a recommendation to collect it
because ----
Mr. Meadows. Well, let me give you a recommendation.
Collect it. I mean, it is the American taxpayers' dollars. I
mean, is it your sworn testimony here today is because you did
not get a recommendation to collect ----
Mr. Hill. No.
Mr. Meadows.--$1.2 billion in improper payments, you are
not going after it?
Mr. Hill. No, the recommendations were to fix the system in
California ----
Mr. Meadows. So, are you going after it or not?
Mr. Hill. We are not issuing a disallowance to California
----
Mr. Meadows. Okay. I want you to report back to this
committee in 30 days on why you decided to ignore $1.2 billion
in improper payments and decided not to collect it.
Mr. Hill. Yep.
Mr. Meadows. All right.
Mr. Meadows. All right. The chair recognizes the ranking
member, Mr. Connolly, for a generous 6 minutes.
Mr. Connolly. I thank the chair, and let me echo what the
chairman just said, Mr. Hill. I mean, on a bipartisan basis, we
simply cannot say that, well, we have lost that if for no other
reason besides the fact that this is taxpayer money, but also
if we are going to get serious about improper payments, we got
to get serious about improper payments. How about we start now?
And people have to know they cannot get away with it, that
mistakes will be corrected, and fraud or abuse will be pursued
vigorously. And we are prepared to back you up on a bipartisan
basis, but we need you to do it. So, I strongly support the
chairman's recommendation that we review, if not rescind, the
decision not to pursue that $1.2 billion.
Let me ask a question about how much we know about the
data. Ms. Yocom, Ms. Tinker, Mr. Hill, how much of Medicaid
improper payments is fraud? How much of it is fraud because in
Medicare, for example, Mr. Hill, we know it is about $50
billion a year in fraud in Medicare. And correct me if I am
wrong, most of it is provider fraud as you pointed out. It is
not individual beneficiaries committing fraud, though some may
be involved, but it is actually, and this is always hard for
the public to believe, that doctors cheat. They lie. They
steal. Not all doctors of course, but a handful of bad actors,
but it adds up to a lot of money. A lot of money.
So, in Medicaid, how much of the total improper payment we
are looking at is fraud, because one has to disaggregate the
kinds of improper payments because there are different
strategies. You know, if it is overpayment because we messed it
up, you know, we thought you were eligible and you were not, we
thought you qualified for this additional benefit, but you did
not or you did, that can be addressed through management,
personnel, and technology.
Fraud is different. That has a law enforcement element to
it which I am going to get to. But in order to know how we
marshal our resources to get at the improper payments, we got
to be able to accurately say this much is fraud. So, what
percentage of total Medicaid improper payments is fraud?
Mr. Hill. My understanding in the way we measure improper
payments now, you cannot disaggregate it. It does not measure
fraud for a variety of reasons. As you just described, it
measures compliance errors, it measures where documentation is
missing. Sometimes when you look at a fraudulent claim, it is
going to look perfect, right? It would not show up as an error
because a fraudulent provider is going to make sure that they
get it through the system in a way that it will get paid. And
so, it is a much more complicated analysis to make the
determination on whether it is fraud involving law enforcement
partners and others.
So, it is my understanding we do not have a measure, you
know, a rigorous measure as we do with the Payment Error Rate
Measurement Program for fraud in Medicaid, which is why we
spend time with our law enforcement partners and in partnership
with our States to identify it in an investigatory way. But it
is not something that we can use the PERM Program to address.
Mr. Connolly. It is distressing to hear you say that
because I do not how you have a coherent, let alone effective,
countermeasure to improper payments. I mean, ideally want to
bring improper payment to zero.
Mr. Hill. Right.
Mr. Connolly. Now, we know that we are never going to quite
reach zero, but we certainly can do better than $142 billion a
year. But I cannot devise a strategy that is efficacious if I
cannot disaggregate fraud from administrative errors or
technical error in the computer. Ms. Yocom, help us. Can GAO
help Mr. Hill disaggregate that global number so that we are
dealing with its component parts and developing efficacious
strategies?
Ms. Yocom. Yeah, I do not have good news in terms of a
percentage. However ----
Mr. Connolly. Oh, Ms. Yocom, come on. If there was one
person in this room I thought would bring me good news, it was
you.
[Laughter.]
Ms. Yocom. However, we do have a fraud risk framework that
we have put together and have looked at CMS' practices to
prevent fraud, and we have found that those are lacking. There
are things that CMS could be doing to better look strategically
across its programs and to coordinate within its program in
order to better prevent fraud.
Mr. Connolly. Well, let me make an informal request of GAO,
and I am sure my colleagues, Mr. Meadows, Mr. Palmer, and Mr.
Raskin, as respective chairman and ranking member would join in
the request. We need you to get back to us in developing
methodologies in disaggregating the improper payment global
number so that we can better devise strategies.
Mr. Meadows. I concur with the ranking member, and so I
would ask within 60 days if you can come back to this committee
with a plan to do that, Ms. Yocom, once you check with your
colleagues.
Mr. Connolly. Because I do not know how we do it
rationally, frankly, if we cannot have that kind of analytical
tool.
Mr. Connolly. My final question because I do not want to
impose on my good friend and brilliant thespian, who makes
Shakespeare happy every time she appears on stage, Eleanor
Holmes Norton. But before that, I mean, Mr. Purpera is here
from Louisiana and doing his job at the State level. But an
observation: I do not think we are using U.S. attorneys all
that well for fraud, and I will give you an example. I know of
one example personally, but a few years ago the U.S. attorney
in Boston decided to make Medicaid fraud a very high priority,
and guess what happened? Her office alone identified and mostly
recovered $3 billion. One office because she made it a
priority.
There are 99 U.S. attorneys, and my sense it is kind of up
to the individual U.S. attorney whether this is a priority or,
you know, we will look for it if we see it and find it, maybe
we will do something about it, as opposed to saying, no, one of
our top five this year or top three or whatever it might be is
going to be fraud, Medicare fraud, Medicaid fraud. Any of you
want to comment on that, I mean, because I think that is an
underutilized tool as well that could really make a difference
in reducing improper payments. Ms. Tinker.
Ms. Tinker. We believe that obviously working closely with
our partners in the U.S. attorneys office is extremely
important. And, in fact, when you look at the return on
investment in 2017, there were $4.7 billion in expected
recoveries, over 881 criminal actions, and 826 civil actions.
But an additional important part in Medicaid is our work with
the Medicaid Fraud Control Units.
In 2017 in our Medicaid Fraud Control Unit annual report,
we found that $1.8 billion had been recovered as a result of
the efforts of Medicaid fraud control units across the country,
including 1,500 convictions, 1,100 exclusions, meaning
providers who no longer able to participate in Federal
healthcare programs, and over 961 civil settlements and
judgments. We are very proactive in working to prevent fraud
and to bring bad actors ----
Mr. Connolly. So, my time is up, but what you are saying to
us is you are happy with the cooperation you are getting from
U.S. attorneys.
Ms. Tinker. There is always more we can be doing without a
doubt.
Mr. Meadows. So, Ms. Tinker, I want to follow up on that.
If you will help us identify perhaps those U.S. attorney
districts where you get more help, it would help us, you know,
to the ranking member's concern. If you could help us do that.
I mean, that is not a formal request, but if you will get that
as part of the report back. And I see your staff nodding
behind. So, I feel we are in good shape.
The gentleman from Ohio is recognized for 5 minutes.
Mr. Jordan. Mr. Hill, how many Americans are on the
Medicaid Program?
Mr. Hill. I think we have 70 million roughly.
Mr. Jordan. Seventy million?
Mr. Hill. Yep.
Mr. Jordan. And what has happened to that number since
Obamacare and the Medicaid expansion?
Mr. Hill. Under the Medicaid expansion, we added about
roughly 11 million people to Medicaid.
Mr. Jordan. So, it increased, you know, fairly
significantly.
Mr. Hill. Mm-hmm.
Mr. Jordan. All right. So, of the 70 million, how many of
those 70 million are able-bodied adults?
Mr. Hill. Well, in general, the expansion was expanded to
adults, childless adults, and so I would venture to guess that
the majority of the folks in the Medicaid expansion are folks
who otherwise would not have been covered either as a ----
Mr. Jordan. So, it is safe to say the 11 million is
probably all in that category.
Mr. Hill. Right.
Mr. Jordan. And some of the previous 59 million were
probably in that category as well, even though Medicaid
initially started off for disabled kids and different things.
Mr. Hill. Right.
Mr. Jordan. Those kinds of populations. It is fair to say
that there was some portion of the 59 million prior to
Obamacare who were able-bodied adults as well.
Mr. Hill. To the extent States have expended to that group,
yes.
Mr. Jordan. The number we have heard is 28 million able-
bodied folks in the Medicaid population. Do you think that is
accurate?
Mr. Hill. I am not familiar with that number.
Mr. Jordan. Okay. All right. But it is something more than
11 million.
Mr. Hill. Presumably, yes.
Mr. Jordan. All right. Of that 11 million, do you know how
many are working? How many have a job?
Mr. Hill. I mean, the data suggests that a large proportion
of the folks who are on Medicaid who can work, in other words,
who are not disabled or a caretaking parent, are working. I do
not have the specific number.
Mr. Jordan. The Kaiser Foundation says 40 percent of that
able-bodied adult population in the Medicaid Program are not
working. Do you think that is accurate?
Mr. Hill. I would need to go back and look at the Kaiser
data.
Mr. Jordan. That is a big number, though, right.
Mr. Hill. Are not working, correct.
Mr. Jordan. That is a darn big number. Now, the Democrats
sent a letter a couple months ago that said we should not even
think about work requirements for able-bodied adults getting
taxpayer money in largely the Medicaid expansion program. Do
you agree with that?
Mr. Hill. Well, as you know, the Administration is pursuing
a number of waivers under our authority to promote community
engagement. We have got a number of States that we have already
approved.
Mr. Jordan. I am asking you. Do you agree with that? Do you
think we need a work requirement for the program?
Mr. Hill. Well, it is the Administration's policy that we
are pursuing work request and community engagement for States
who believes that that works for their Medicaid system.
Mr. Jordan. Yeah. How about you, Ms. Yocom? Do you think we
need to do that?
Mr. Hill. Well, I think we need to carry out ----
Mr. Jordan. Well, I am going to ask some other people.
Mr. Hill. Well, as others have said, right, we are here
representing the Administration, and I am representing the
Administration's position.
Mr. Jordan. How many waivers have you given thus far to
States to implement a work requirement for the Medicaid
expansion population or for anyone on Medicaid, able-bodied?
Mr. Hill. Three. Kentucky, Indiana, and Arkansas are the
first three States that we have approved waivers for.
Mr. Jordan. Anyone else asked?
Mr. Hill. There are a number of States in the pipeline.
Mr. Jordan. How many?
Mr. Hill. I think a total of 10 or 11 States have expressed
interest, and they are all in various stages of review right
now.
Mr. Jordan. How long does it take to get the approval?
Mr. Hill. Well, you know, overcoming and sort of getting
our policy squared away, once we got the first waiver approved,
they can go through relatively quickly, anywhere from, you
know, 3 months, 6 months, 9 months. Sometimes the waivers are
packaged up with other innovations that the State wants to
pursue that are not necessarily ----
Mr. Jordan. It takes 9 months for you guys to okay. The
State says we want to make people who are able-bodied folks,
and the State says we want to acquire a work component, maybe a
work study component, maybe a training component. And you take
9 months for you to give them the thumb's up to do that?
Mr. Hill. Well, we try and do it as quickly as we can
depending upon what the State is asking for and how complex
their waiver is.
Mr. Jordan. Of that 40 percent of this at least 11 million
number--I think it is closer to 28 million--who are able-bodied
and non-working, how many of them are younger folks? How many
are under 35, under 40?
Mr. Hill. Well, I think that able-bodied or that expansion
population is 19 to 65, anywhere from 19 up to 65. I do not
know the distribution of how many are in what age category.
Mr. Jordan. Again, I think most of it from what we have
seen in other studies, most of them are younger folks. So, you
got younger folks, able-bodied in the program. States coming to
you saying we would like to impose a work requirement, and you
are telling me it takes 9 months to give them the thumb's up.
Mr. Hill. I am telling you we work as fast as we can to get
the wavers approved depending on how complex they are coming
from the State.
Mr. Jordan. And, again, refresh my memory. How many States
have asked for the waivers thus far?
Mr. Hill. We have approved three, and I think there are 11
in the pipeline.
Mr. Jordan. Eleven have asked. Do you know how long ago
some of these States asked?
Mr. Hill. Most of them have all been since last January.
Some were in the previous Administration.
Mr. Jordan. Well, this is important. I mean, you talk to
taxpayers across the 4th District of Ohio, my guess is
taxpayers even in the Democrat districts who sent this letter
saying do not do this, a bunch of taxpayers would say this
makes so much sense particularly when so much of the population
who are in Medicaid who are able-bodied are younger folks. The
fact that there is not a work component just boggles people's
minds. So, I would just encourage you to work a little faster
and get those waivers approved, and make sure this happens.
With that, I yield back.
Mr. Hill. Thank you.
Mr. Meadows. Before I recognize the gentlewoman the
District of Columbia, I want to make sure we clarify your
testimony because I think you said it one way, and the
gentleman from Ohio came back. There has been 14 States who
have requested the waiver. You have granted three. Eleven are
in the hopper. Is that correct?
Mr. Hill. That is correct.
Mr. Meadows. Okay.
Mr. Hill. The 11, I would need to go back and just be sure
it is precisely 11, but roughly 11.
Mr. Meadows. Okay.
Mr. Connolly. Mr. Chairman, could I just piggyback on your
clarification? One of those pending States is Tennessee. Is
that correct?
Mr. Hill. I believe so, yes.
Mr. Connolly. And Tennessee has estimated that this work
waiver requirement would actually cost $18.5 million to
implement, and they have asked permission to use TANF money,
taking sort of from Peter to pay Paul, to do that. Is that
correct?
Mr. Hill. I know that I have seen reports on how Tennessee
wants to finance their work requirements.
Mr. Connolly. Right.
Mr. Hill. I am really not in a position to get into what
they have requested.
Mr. Connolly. And while philosophically we may agree or
disagree on this, is there any reason to believe that a work
requirement has anything to do with waste, fraud, and abuse in
reducing improper payments? Is there a connection?
Mr. Hill. I am not sure that I have drawn the connection
myself. I mean, we believe the community engagement and getting
folks into work ----
Mr. Connolly. Thank you.
Mr. Hill.--promote health.
Mr. Connolly. Thank you, Mr. Chairman.
Mr. Jordan. Mr. Chairman? Mr. Chairman?
Mr. Meadows. Yes.
Mr. Jordan. The work requirement has everything to do with
treating taxpayers with respect. Able-bodied adults. Many of
these folks are young, many of them single men, and you do not
have to do anything to get free healthcare from the taxpayer.
So, it has everything to do with treating the people who pay
for this with respect they deserve. That is why it is so
critical. And, oh by the way, it might actually help the
recipient. That is why we are for it.
Mr. Meadows. All right. The chair recognizes his allowance
of a colloquy that came up without the intention of that. So,
the chair is going to recognize, no intention of colloquy from
the gentleman from Virginia. The chair recognizes the
gentlewoman from the District of Columbia for a generous 5
minutes.
Ms. Norton. I thank my good friend. Mr. Chairman, he is
always fair to me. That was just a debate in case you wondered
what was just happening there. I want to thank my good friend
from Virginia, the ranking member, for mentioning our work
together, making fun of members of committee with Shakespeare.
Every year it is one of the highlights ----
Mr. Meadows. Does the gentlewoman want to strike down his
words?
[Laughter.]
Mr. Connolly. No, she does not.
Ms. Norton. On the contrary. I am a part of this play
acting, Democrats and Republicans, and I must say it makes us
understand that not all play acting occurs from this podium.
Just let me say something about a waiver in order to allow
people to work right here. I would welcome a waiver for people
who are not working in the District of Columbia on Medicaid,
and with that waiver I would need in this knowledge economy
from the agencies who grant the waiver, help in finding jobs
for people in the District of Columbia who are on Medicaid who
are not working. I have not found them as I go around my
district. I do not know if this happens in yours, but if you
want a job here, and you do not have a high school education,
then you need training. You need what the Federal government is
not offering such people.
Most of the people on Medicaid are elderly, disabled, or
children. So, let us understand who we are talking about. What
I do not understand is the definition of terms. Once we get a
term, it just begins to be used as if everybody understood what
it means. ``Improper payment rate'' has been used over and over
again. I thank you, Mr. Hill, for clarifying that that does not
mean deliberate fraud.
And one of the things I would ask the chairman to do is to
call for a task force of U.S. attorneys to work with the
Agency. I do not think you are equipped to tell us what is
fraud and what is not fraud. I state that as a member of the
District of Columbia Bar that you need help, particularly since
you are not even able to disaggregate. That is very, very
unfortunate because we are using ``improper payments'' to cover
all payments. And that is not very professional here, and it
will not help you to uncover those improper payments. So, let
us find out what we mean.
In HHS's 2017 financial report, and here I am quoting,
``Improper payments are not necessarily expenses that should
not have occurred.'' So, why do we not just start there? Can
you explain how payments are categorized as improper, and how
improper payments could be legitimate payments? Any of you,
please help us clarify what we are talking about here.
Mr. Hill. I will start, and we can let others jump in, and
we can turn back to our three-State audit in California,
Kentucky, and New York where we are looking at eligibility
systems failures. And it can be the case that a State has not
complied with all the rules that we have established for
verifications, for checking income, for determining whether or
not a person was eligible. If they have not completed those
system checks, we would count that eligibility decision as an
error, and that would be a payment error.
Ms. Norton. So, that is an error, not fraud.
Mr. Hill. Right, but in fact ----
Ms. Norton. Improper because it is an error.
Mr. Hill. Right, but it does not mean necessarily that all
those payments should not have been made. So, for example, when
a State in those instances would have gone back and done their
redetermination, actually fulfilled the checks that they were
supposed to have fulfilled, and found that the person was, in
fact, eligible, the payment would have been made. So, it is an
improper payment because the State has not complied, but it may
not necessarily ----
Ms. Norton. And, of course, the State may at a later date
correct the mistake.
Mr. Hill. Right, similarly with providers who ----
Ms. Norton. And we are talking about some people who do not
have a high school education, some people are elderly, some
people may have given the wrong data, some people may not have
had the right data. Mr. Chairman, that was really my basic
point, to try to clarify what we are talking about here, to
understand that the Agency itself has not, in fact, been able
to decide whether we are talking about fraud or not.
Every member of this body has women, children, elderly, the
majority of the people we are talking about may have committed
errors. But it would be terrible to categorize them together
with, as Mr. Hill says, there are very few people who set out
to lie on their forms, whether they are income tax or other
forms, and, therefore, commit fraud. And so, Mr. Chairman, I
call upon the committee again, if you would, at least as a
pilot to ask some U.S. attorneys to join with some members of
the Agency so that they can begin to, in fact, go after fraud.
And I would be glad to have my district be one of those, who
would work with the Agency on actual fraud so then you could
come back and give us a report on progress you are making.
I am outraged if there is actual fraud at a time when we
are seeing cuts of all kinds in-services, and in Medicaid, and
all kinds of threats to cover exactly the kind of services and
benefits to women, children, the elderly, and disabled as are
involved in Medicaid. So, a task force would help us clarify
what we mean. I do not think we can ask the Agency, which is
not a law enforcement agency, to do this on its own.
Mr. Meadows. Well, I think the gentlewoman's perspective on
that, as she might have recalled in my opening statement, we do
know that fraud is part of the problem because of ----
Ms. Norton. Granted.
Mr. Meadows.--what happened in Virginia and what happened
in North Carolina that I highlighted in my opening statement.
And so, in doing that, I think it is incumbent upon us before
we get the U.S. attorneys involved, and, Ms. Tinker, I have
already asked you to help us identify those. But it is
incumbent on Mr. Hill, it is about quality data. And the truth
is it is not as much the beneficiaries, as Ms. Yocom has
pointed, as those that are actually providing that. That is
where the fraud comes from, so it is not actually as much your
individual constituents as maybe a constituent who is providing
the service where the greatest amount of fraud happens. And so,
I think if you can help us, Mr. Hill, highlight that.
I think the gentleman from Wisconsin, Mr. Grothman, is now
recognized for 5 minutes.
Mr. Grothman. Thank you. I am not sure how many cuts there
are, but I worry about cuts to amend, too. A couple question
here. First of all, for Mr. Purpera, as far as Louisiana is
concerned, we talk about over time going for fee-for-service to
managed care. I would like you to comment the degree to which
that will, in addition to other benefits, reduce fraud.
Mr. Purpera. Well, one thing to understand, sir, is that
under managed care, our liability is 100 percent from day one.
So, under fee-for-service, we enroll someone and they become a
recipient, but there are no payments made until they actually
go and see a physician or get a prescription.
Mr. Grothman. Correct.
Mr. Purpera. But under managed care, their liability
becomes first day it is 100 percent. As to fraud, I can only
speak for Louisiana at the moment and maybe 25 other States
that do not use income tax data to verify the eligibility role.
But realize when you apply for Medicaid, it is very much based
upon income, and the only thing that most of these States have
to check is the wage data. Wage is data is very limited. It
does not include all kinds of self-employment types of income.
And so, you know, I guess we have talked several times
today about fraud as only on kind of on the provider side. I am
not so sure about that, but I do not know that we know either
because we are not really looking.
Mr. Grothman. Right. Well, I guess the question is there is
a feeling with regard to medical costs in general that maybe
less procedures would be done on managed care than fee-for-
service. And given that some of the fraud is from the provider
side, there would be less opportunity for fraud there. I guess
that is what I'm trying to get you to say, or do you think that
is true or not?
Mr. Purpera. Well, I do believe, I think it was the State
of Washington, their auditor issued a report saying that for
every dollar in improper payment that went into the system
under managed care, it came back in the form of a dollar and a
quarter in increased per member per month later on. So, that
kind of data is out there. In other words, a bad payment today
can result in increased payments later in ----
Mr. Grothman. So, you do not think that managed care would
be necessarily a benefit is what you are telling me.
Mr. Purpera. Would be, sir?
Mr. Grothman. Would necessarily be a benefit. You do not
buy into the idea that managed care would ----
Mr. Purpera. No, sir, I am not saying it would not be. I
think that the data on that is still out. In my State, we are
looking or continuously looking at what are the actual costs in
counter costs of our managed care partners as compared to the
PM/PMs that we are paying, you know, the money that we are
sending them. And we are looking at that gap and trying to
determine what is the extent of that gap.
The major portion of that, I am not saying this is fraud,
but it is based upon the actuarial assumptions that go into
developing the per month/per month. In Louisiana, for example,
the normal rate for a Medicaid recipient PM/PM, let us say,
$350. It is around there. But under expansion, it is $500.
Mr. Grothman. Okay.
Mr. Purpera. Now, I do not think we have really come to
understanding why it jumped so much.
Mr. Grothman. Okay. Another question kind of follow-up on
what a couple people have said in the past, obviously Medicaid
is a huge benefit, and unless you do not get out at all, I
think you know that people are intentionally holding down their
income because they want to keep their Medicaid, which is
understandable. It is such a generous program. Either they are
making less, or maybe just reporting less income, which is
maybe what you were referring to, because you want to hold
under a given amount.
Does anybody have any comments on that? Are there any
people even beginning to make an estimate on the amount of
income that the economy is losing as people either work less or
find a way to work for cash to keep this generous benefit?
Anybody given it any thought? Mr. Purpera, that is why we like
you. You are always thinking.
Mr. Purpera. Yeah. So, let me just say this. I do not have
any statistics on ----
Mr. Grothman. I mean, it is obvious that it is going on to
a degree because you hear about it if you talk to people.
Mr. Purpera. If you just strictly want to talk about the
fraud perspective, and I am not trying to give any degree of
how many people are committing fraud in this perspective. At
least in Louisiana and 25 other States, they have to reduce
their income because are not looking. The program is not
looking, right? We are looking at their wages. So, if they are
self-employed, they are a home building contractor, they can
make as much money as they want to. We do not know the answer
to that, and our State departments are not going to know the
answer to that.
In addition to that, the way the regulations are written
right now, I have got one of the applications in my briefcase
back here. It says what did you make this month, and what was
your income this month? Well, so if you have cyclical incomes
it really gets crazy as to whether or not they are eligible or
not eligible.
Mr. Grothman. Yeah, and I was not aware of that. You can
tell me this. If I am somebody who is working 60 hours a week
from March 1st to November 30th, and I go in and apply for
Medicaid on January 1st, how long do I get Medicaid for?
Mr. Purpera. In my State, they would ask you what was your
income in the previous month.
Mr. Grothman. Correct.
Mr. Purpera. And then you are going to be based upon that.
And then in addition to that, you are going to be enrolled in
the system primarily for a year. Now, you have a responsibility
to report any time that you increase your income, but we are
talking about fraud, right? So, if we are talking about fraud,
then that individual is not going to report.
Mr. Grothman. Okay. And in the case I said, and thank you,
Mr. Chairman, for indulging me. In my example, if I am a guy,
say, involved in construction and I am making a 80 grand a year
every year from March 1st to November 30th, and I apply on
January 1st and I am found eligible, as a practical matter, if
I just let the Medicaid run and never report anything until the
end of the year, am I ever going to get caught or is anything
bad ever going to happen to me?
Mr. Purpera. Unless you are honest about what you make, I
do not believe you will because in 25 States, they are not
using tax data. In addition to that, let me just point out,
because we are basing it on modified adjusted gross income,
which is a number that looks a whole bunch like tax data, then
in your construction company, if you buy a new piece of
equipment that year and decide to pull a 1079 deduction and
write off more that year in your depreciation, then you may be
living off $100,000, but you qualify for Medicaid.
Mr. Grothman. Thank you. Do you think we should require all
States to use tax data?
Mr. Purpera. I absolutely.
Mr. Meadows. You can answer the question, the gentleman
from Wisconsin has exceeded my gracious timeframe.
Mr. Grothman. That is why. It was such a good question.
Mr. Meadows. You can very quickly answer the question and
we will close out.
Mr. Purpera. I absolutely, sir. Absolutely do.
Mr. Purpera. Thank you.
Mr. Meadows. All right. I thank the gentleman from
Wisconsin. The chair recognizes the gentleman from Virginia for
his closing remarks.
Mr. Connolly. I thank the chair, and, again, I think this
hearing is a good piece of work in trying to get at both
methodology for accounting for improper payments,
disaggregating them so that we can devise strategies working
together to effectively reduce it. I do think it is important
in listening sometimes to some of the rhetoric, you know,
overwhelmingly people who take advantage of Medicaid need it.
They are not gaming the system. They are not takers. They are
not con men. They are families who are trying to make sure they
have access to healthcare.
And what we also know is that when people have that access,
society benefits. There are not free riders. People get
healthier, can live more productive lives, can become
taxpaying, contributing members of society. So, healthcare is
an investment. We do not want anyone cheating. We do not want
people stealing. We do not want people defrauding. But let us
not overstate the extent of the problem. Medicaid is there for
a very good reason and it has worked.
Ms. Norton. Would the gentleman yield for a moment?
Mr. Connolly. Of course.
Ms. Norton. I just wanted to inject another bipartisan note
here because my colleague who just spoke, who just asked
questions indicated, and I am glad the chairman allowed him to
ask the question, whether or not using tax forms would be
better than having people report, for example, on a monthly
basis what their income is, or even self-report.
I must say in terms of whether hearings are designed to get
to remedies, unless I hear something and we need another time
for this, perhaps another hearing, or perhaps they could even
respond to the chairman's request for information on why tax
forms would not be a better way to get at the notion of the
actual income of people so that we could get at Medicaid fraud.
And I yield back to my good friend.
Mr. Connolly. I thank my friend for that, and I think she
makes a very good point. We have heard testimony here. No one
has said there is massive individual fraud going on because
people are gaming the system in terms of their income, reported
income. There may be examples of that, and we want to try our
best to perfect the system. But I want to go at the
institutional problems first because that is where the real
money is, and every dollar we save at that level can be
invested in the program for people in need. And so, you know,
until and unless we have testimony that would corroborate the
need for such a thing because of wrongdoing by large numbers of
individuals, let us focus at the problem at hand that we have
heard testimony from, including from the Administration.
And, again, I want to thank my friend, Mr. Meadows, for
this thoughtful hearing, and I know we are going to have others
on improper payments. This committee is committed to addressing
this issue and working with the executive branch to do so and
with our friends at GAO to develop methodologies to better
capture the nature of the problem. And I thank the chair.
Mr. Meadows. I thank the gentleman for his remarks. A few
housekeeping items and follow-ups that I would like to add. Mr.
Schneider, you have been over there to my right. Normally I
focus on my right. Today I did not. And in doing that, if you
could actually give us a list of the top three recommendations
that you either personally or in your official capacity could
make to us on possibly implementing areas to address this
improper payment issue. If you could do that from an
intellectual standpoint. Are you willing to do that and get to
the committee?
Mr. Schneider. I am, Mr. Chairman. I did provide some
recommendations in my written statement. Do you want additional
ones?
Mr. Meadows. Three additional ones above your opening
written statement if you can, and I guess what I am saying is
based on the testimony you have heard today, critiquing it from
an intellectual standpoint, if you can do that, that would be
very helpful so I can be very specific with that request.
Mr. Schneider. I would be happy to, Mr. Chairman.
Mr. Meadows. All right, thank you.
Mr. Meadows. Mr. Hill, let me come back to you one area,
and it gets back to the quality of the data that we talked
about with the reporting system and the data that obviously is,
according to Ms. Yocom and Ms. Tinker, is less than what we
would want it to be, and I think from your testimony, less than
what you would want it to be. We have had a number of deadlines
that seem to get extended in terms of compliance. So, what I
need from you is really a plan, and I will give you, is 45 days
enough to come up with a plan on how we can date specific look
at how you are going to implement and improve that quality,
exponentially I might add, from where it is today. Is 45 days
enough to get back to this ----
Mr. Hill. Yep.
Mr. Meadows.--with date-specific targets on when you are
going to do that so it addresses that?
Mr. Hill. It is a fair question.
Mr. Meadows. Thank you, Mr. Hill.
Mr. Meadows. And so, for all of you, thank you. And thank
you for the thoughtful way that you have answered these
questions. Hopefully this has not been as painful as some
oversight hearings that you either may have been a part of. I
know from a CMS standpoint, hopefully this is better. I look
back in the back and she is smiling, but there have been some
that have been a little bit more contentious in the past. And
thank you all.
And if there is no further business before the committees,
the committees stand adjourned.
[Whereupon, at 11:46 a.m., the subcommittee was adjourned.]
APPENDIX
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