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66–676 PDF 2011

S. Hrg. 112–155 

NEW TOOLS FOR CURBING WASTE AND FRAUD 

IN MEDICARE AND MEDICAID 

HEARING 

BEFORE THE

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND 

INTERNATIONAL SECURITY SUBCOMMITTEE 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

OF THE

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MARCH 9, 2011 

Available via the World Wide Web: http://www.fdsys.gov 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

JOHN ENSIGN, Nevada 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL L. ALEXANDER, Staff Director 

NICHOLAS A. ROSSI, Minority Staff Director 

TRINA DRIESSNACK TYRER, Chief Clerk 

JOYCE WARD, Publications Clerk and GPO Detailee 

SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY 

THOMAS R. CARPER, Delaware, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

MARK L. PRYOR, Arkansas 

CLAIRE MCCASKILL, Missouri 

MARK BEGICH, Alaska 

SCOTT P. BROWN, Massachusetts 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

JOHN KILVINGTON, Staff Director 

BILL WRIGHT, Minority Staff Director 

DEIRDRE G. ARMSTRONG, Chief Clerk 

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(III) 

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 1 

Senator Brown .................................................................................................. 4 

Senator Klobuchar ............................................................................................ 7 

Senator Coburn ................................................................................................. 8 

Prepared statements: 

Senator Carper ................................................................................................. 43 

Senator Brown .................................................................................................. 47 

WITNESSES 

WEDNESDAY, MARCH 9, 2011 

Peter Budetti, M.D., Deputy Administrator and Director, Center for Program 

Integrity, Centers for Medicare and Medicaid Services .................................... 10 

Gregory Andres, Acting Deputy Assistant Attorney General, U.S. Department 

of Justice ............................................................................................................... 11 

Daniel R. Levinson, Inspector General, U.S. Department of Health and 

Human Services ................................................................................................... 13 

Kathleen King, Director, Health Care, U.S. Government Accountability Office 15 

Helen Carson, Volunteer Coordinator and Case Manager, Delaware Partners 

of Senior Medicare Patrol .................................................................................... 16 

ALPHABETICAL LIST OF WITNESSES

Andres, Gregory: 

Testimony .......................................................................................................... 11 

Prepared statement .......................................................................................... 67 

Budetti, Peter, M.D.: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 48 

Carson, Helen: 

Testimony .......................................................................................................... 16 

Prepared statement .......................................................................................... 118 

King, Kathleen: 

Testimony .......................................................................................................... 15 

Prepared statement .......................................................................................... 88 

Levinson, Daniel R.: 

Testimony .......................................................................................................... 13 

Prepared statement .......................................................................................... 79 

APPENDIX 

Questions and responses for the Record from: 

Mr. Budetti ........................................................................................................ 122 

Mr. Andres ........................................................................................................ 129 

Mr. Levinson ..................................................................................................... 135 

Ms. King ............................................................................................................ 140 

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(1) 

NEW TOOLS FOR CURBING WASTE AND 

FRAUD IN MEDICARE AND MEDICAID 

WEDNESDAY, MARCH 9, 2011 

U.S. SENATE, SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:33 p.m., in room 

342, Dirksen Senate Office Building, Hon. Thomas R. Carper, 

Chairman of the Subcommittee, presiding. 

Present: Senators Carper, Begich, Brown, Coburn, and 

Klobuchar. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. I always rap my gavel like that and say that 

the hearing will come to order, but this one is already in order. 

This is a remarkably well behaved panel and audience, as well. 

The press is in line over there. It is nice to see all of you. Welcome. 

Thanks for coming today. 

Sometimes our hearings are fairly timely, sometimes less so. But 

this is actually a hearing that is more timely than most. We are 

going to be voting, starting in about 30 minutes, on a Republican 

proposal, H.R. 1, to reduce budget deficits in the next half-year or 

so and even beyond and a Democratic alternative to that proposal. 

So this is something that we are focused on a great deal. And what 

we are going to be talking about here today is Medicare and Medicaid and our ability to get better outcomes for less money. How 

does that actually affect our debate in the Senate today and the 

folks that are served by Medicare and Medicaid? 

We still face in this country considerable economic challenges. 

The economy is coming back. We added about 230,000 private sector jobs last month and we are encouraged by that. That is the 

good news. The bad news is our national debt stands at about $14 

trillion. It has pretty much doubled in the last decade or so. 

One of the things we look at is debt as a percentage of Gross Domestic Product (GDP), and if you look at our debt as a percentage 

of GDP, it is about 65 percent. I think the last time it was that 

high was maybe the end of World War II. That is the highest it 

has ever been, so we are on treacherous, treacherous ground. 

Some other countries that run very high debt as a percentage of 

GDP are places like Greece and Ireland, and we are reminded what 

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2 

happened to them and their economy. So we are on some thin ice 

here. We need, clearly, to work on that, and hopefully we will find 

a way today to help out. 

A wide variety of ideas have been put forward on how to reduce 

our budget deficit and begin whittling down our debt. Last fall, a 

majority of the bipartisan Deficit Commission appointed by the 

President—and it is known as the Bowles-Simpson Commission for 

Erskine Bowles and former Senator Alan Simpson—provided us 

with a road map to reduce the cumulative Federal deficits over the 

next decade or so by about $4 trillion. A number of the steps that 

we would need to take to accomplish this goal are going to be painful. And while most Americans want us to reduce the deficit, determining the best path forward is not going to be easy. 

Many Americans believe that those of us here in Washington are 

not capable of doing some of the hard work we were hired to do, 

and that is to effectively manage the tax dollars with which we 

have been entrusted. They look at the spending decisions we made 

in recent years and question whether the culture here is broken. 

They question whether we are capable of making the kind of tough 

decisions that they and their families—our families—have to make 

on a regular basis for their own budgets. I do not blame people 

around the country for being skeptical. 

I think we need to establish a different kind of culture here in 

Washington when it comes to spending. A lot of people think what 

we have here is a culture of spendthrift. We need to replace that 

with a culture of thrift. We need to look in every nook and cranny 

of Federal spending, whether it is domestic programs, defense programs, entitlements, oh, gosh, tax expenditures, tax credits, tax deductions, we need to look at all of that and ask the question, is it 

possible to get better results for less money? And if that is not possible, is it possible to get better results for the same amount of 

money? 

Today, we are here to examine the steps that have been taken 

and should be taken to save literally billions of dollars in waste 

and fraud in Medicaid and Medicare. Medicare and Medicaid are, 

two vital programs that provide health care for a lot of our Nation’s 

seniors, people with disabilities, low-income children, among others. 

I was surprised to learn a number of years ago that the majority 

of money that we spend in Medicaid is not just for largely mothers 

and their children. The majority of money spent in Medicaid is for 

folks that spend down the value of their money, their assets, and 

they are, in many cases, folks who are going to end up in a nursing 

home, and a lot of money that we put into Medicaid helps to pay 

for those bills. 

But last year, Medicare paid about $509 billion, over half-a-trillion dollars, to care for some 47 million beneficiaries. Think about 

that. Over half-a-trillion dollars to pay for almost 50 million beneficiaries. Medicaid expenditures for the Federal Government and 

our States was an additional $381 billion, almost $400 billion. 

Those numbers are expected to grow as our population grows older. 

Americans’ increasing reliance over time on Medicare and Medicaid presents another opportunity for criminals to take advantage 

of lax anti-waste and anti-fraud controls, and they do try to take 

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3 

advantage, as we know all too well. Medicare made an estimated 

$47.9 billion in improper payments in fiscal year 2010. We have a 

chart that indicates that. 

One of our new laws that we passed last year, signed into law 

by President Obama, is one that says all Federal agencies have to 

keep track of improper payments, mostly overpayments. They have 

to report improper payments. They have to reduce improper payments. And they have to go out and recover the money from those 

improper payments. How much in Medicare last year alone? Almost $48 billion. How much in Medicaid last year alone? About $22.5 billion. So we are 

talking about real money here. And this does not even include an 

estimate for the Medicare prescription drug program. I think this 

is Medicare A, B, and C. I do not believe it includes Medicare Part 

D, which I am told could add even maybe another $5 billion to that 

total for improper payments. For Medicaid, the improper payments, 

again, totals about $22.5 billion. 

Moreover, Attorney General Eric Holder estimates that Medicare fraud totals as much as $60 billion each year—$60 billion just from 

fraud, criminal activities, largely—and Medicare and Medicaid continue to be on the Government Accountability Office’s (GAO’s) list 

of government programs at risk. The new At-Risk List has come 

out again just recently. They do it every year. But at risk for waste, 

fraud, and abuse. They have been on the list—Medicare, I think, 

and Medicaid have been on the list for maybe 20 years. 

As improper payments occur, as most of you know, when an 

agency pays a vendor for something it did not receive or maybe 

even pays them twice. It can occur when a doctor is reimbursed by 

Medicare for a procedure that never took place or perhaps one that 

was not necessary and should not have taken place at all. These 

kinds of mistakes occur every day across the country. What disturbs me about the problem here in the Federal Government is 

that we seem to make expensive, often avoidable mistakes at a rate 

much higher than a business or the average family would tolerate 

or could afford. 

So it is easy to see how urgent it is that we step up the pace of 

our efforts with Medicare and Medicaid, that we sharpen our pencils and eliminate to the best of our abilities the problems that lead 

to waste and fraud. Success in doing so will help us get closer to 

our deficit reduction goals. 

It will also lengthen the life of the Medicare Trust Fund, now 

forecast to run out of money, I think, in 2029. The changes we 

made in the health care reform law actually extended, if you will, 

the date that the Medicare Trust Funds run out of money by about 

another 8 years, I am thinking from 2017 to 2029, but we will get 

some confirmation of that. 

The good news is that we are seeing renewed commitment to 

curb waste and fraud in Medicare and Medicaid. President Obama 

and Secretary Sebelius have set a goal of reducing the Medicare 

fee-for-service improper rate by, get this, 50 percent by 2012. That 

is pretty ambitious, very aggressive. It represents the kind of goals 

that we need and we applaud that. 

Congress has also put Medicare waste and fraud in its sights. 

The Affordable Care Act, which was enacted about a year ago, inH605-41331-79W7 with DISTILLER

4 

cludes a number of provisions aimed at enhancing our efforts to 

fight waste, fraud, and abuse in Medicare and Medicaid. Central to 

the new law is a goal to obtain better results in health care for less 

money. Eliminating avoidable mistakes and cracking down on 

fraudsters will be an important element in achieving that goal. 

The new Affordable Health Care law calls for dramatically improving screening of Medicare providers. The measure also aims to 

stop payment to providers before payment is made when there is 

credible allegations of fraud. This ends a practice often called pay 

and chase in which a provider is paid and then chased down later 

once an error or fraud was detected. So the idea is to do something 

before we actually make that payment and have to begin the chase. 

The new law also extends Recovery Auditing Contracting (RAC), 

which involves the use of private contractors who comb agency 

books for improper payments and then seek to recover them. CMS 

has had considerable success with this tool in the past, recovering 

roughly $1 billion in Medicare fee-for-service improper payments in 

just five States, I believe, during a pilot project. That effort is now 

being expanded to all of Medicare and Medicaid and to all 50 

States. 

CMS is also working to implement other program changes, such 

as increased support for the Senior Medicare Patrol (SMP) and the 

strengthening of controls over the Medicare prescription drug program. The men and women who run Medicare and Medicaid are 

making strides in fixing many of the problems in those programs 

that lead to waste and fraud, but we have a long way to go. 

Today, we have been joined by a number of witnesses—five of 

them, in fact—who are each trying to do their part in the efforts 

underway. We have witnesses from law enforcement to describe 

how we catch fraudsters. We have witnesses to describe how we 

can prevent waste and fraud before it happens. We are also pleased 

to welcome this afternoon someone who works directly with seniors 

in Delaware to identify fraud through the Senior Medicare Patrol. 

We are here today in large part because I believe that we have 

a moral imperative to ensure that our Medicare and Medicaid 

beneficiaries have access to quality care and at the same time that 

the scarce resources that we put into those programs are well 

spent. Eliminating waste and fraud is the right thing to do, as well, 

both for the health of those two programs and for our Federal 

budget as a whole. Each and every one of us can agree on that 

point, and I hope on a great deal more. 

Now, with that having been said, let me turn, if I may, to Senator Brown, our Ranking Member on this Committee, for any comments that he would like to make. Senator Brown, welcome. 

Thanks for joining us. 

OPENING STATEMENT OF SENATOR BROWN 

Senator BROWN. Thank you, Mr. Chairman. I appreciate the opportunity to be here again and look forward to the hearing. 

Just looking at your chart, it is just amazing to me that we can 

have that amount of improper payments, because when you look 

at—I mean, just an example, you take the credit card industry, 

which has over $2 trillion in transactions per year, which is nearly 

the size of the health care sector, and there are more than 700 milH605-41331-79W7 with DISTILLER

5 

lion credit cards in circulation, there are millions of vendors and 

countless items that can be purchased with a credit card, yet the 

credit card fraud is a fraction of one percent. 

And I am shocked that the government cannot do it better. I 

mean, in doing the research and being on the Committee with Senator McCaskill, we dealt with a lot of these things and you hear— 

if you go through the historical records, you actually see that we 

are doing the same thing, like, 10 years later. There has been no 

change, really, substantial change. The numbers are bigger, and 

now here we are. We are expanding the program to the point 

where the opportunity for improper payments and waste, fraud, 

and abuse is just so much greater, it is scary. 

I have very deep concerns that—and we just keep talking and 

talking and talking about this stuff instead of somebody putting 

their foot down and saying, oh, yes, before we send the money out 

the door, we are going to find out if they are actually entitled to 

it. Oh my goodness. Is that not a novel idea. 

And I want to thank you for your leadership on this because I 

intend to make the oversight of our entitlement programs the primary objective of my tenure here on the Subcommittee. And as 

waste, fraud, and abuse undercuts the vitality of these programs. 

The people that need it most are not getting the money. I mean, 

just that alone—and that is just the tip of the iceberg. 

And I want to thank you, as we have spoken privately on this 

issue. I know how dedicated you are on these, and Senator Coburn 

and others. We care very deeply, Senator Klobuchar. That is why 

we are here to kind of bang away at this problem and fix it, especially when the dollars are so sparse. 

And experts estimate that there are potentially upwards of $100 

billion in fraud, waste, and abuse in Medicare and Medicaid combined. This is more than the Gross Domestic Product of three-quarters of the world’s countries, to put it in perspective, and with any 

large government program, Medicare and Medicaid are prime targets for those who want to commit waste, fraud, and abuse, and 

health care fraud is not a victimless crime, either. It inevitably 

translates into higher premiums and costs for everybody. 

The Patient Protection and Affordable Care Act (PPACA) expands Medicaid coverage, as we all know, by over 16 million people 

by 2019. That is a 32 percent increase over the current enrollment, 

and the cost of Medicaid expansion is expected to exceed $430 billion over the next 10 years. Well, if that happens, what happens 

to those numbers, Mr. Chairman? Are they going to stay the same? 

Are they going to go down? When does it get better? When do we 

start to focus on these things? 

I know there are a lot of good people here. They are new. But 

that is the problem. We just keep kicking the can down the road 

a little bit. It is very frustrating. 

I know the administration has introduced a variety of new program integrity measures into the law and I am greatly appreciative 

of that and it is intended, obviously, to reduce the amount of fraud 

in the health care program. Yet while an improvement, they are 

only a drop in the bucket in light of the incredible wave of health 

care spending, and the history of lax oversight in these programs 

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6 

does not give me much confidence right now and I believe that 

more needs to be done, and quite frankly, done very quickly. 

These issues, for example, the previous expansions of government health care benefits, such as those for Medicare Part D, also 

included new integrity measures for the Centers for Medicare and 

Medicaid Services (CMS). Unfortunately, their track record for implementing these new measures on a timely basis, I feel, and others, as well, that they are spotty, at best. Congress has extended 

the Part D prescription drug benefit in 2003, yet the GAO reported 

as recently as last year that the oversight of the $51 billion program was limited. I mean, we are talking billions. 

When I go back home and I say the numbers that we throw 

around here, they are just shocked that a billion is like a hundred 

bucks. Sometimes we lose track of what real money is. And when 

we are talking about cutting—what are we talking, Tom, about, 

$61 billion? Is that the House number? Well, it is right there, folks. 

It is right there. That is it right there. I mean, to put it into perspective, we would not have to do A if we could get B under control. 

Senator COBURN. We have to do both. 

Senator BROWN. Yes, thank you. I knew you would say that. We 

have to do both. I do not disagree with that. But before we can do 

one, can we not do the other? We can do something. 

The 2010 Department of Health and Human Service (HHS) Financial Audit revealed shortcomings in both the Department’s information technology (IT) and the financial systems. Now, there is 

a question whether they will be able to actually handle the robust 

increase of new demands placed on it by the Health Care Act. We 

cannot afford this wait and react approach any more. We have to 

be proactive, before the money gets out the door. I have never seen 

anything like it. Not only do we give them the money, then we 

have to pay someone to go chase the money. And then sometimes 

we will not only do that, we will renew their contracts and give 

them a bonus. What a job, if you can get it. 

So the implementation of an effective program integrity system 

must ensure effective deterrence against these potential criminals 

while also protecting providers from overly burdensome regulations. And this expansion of the government’s role is already 

straining our Nation’s already dire financial situation. 

I know that we have a lot of problems, folks, but I really do not 

want to hear today the same type of stuff. I mean, I have the historical records. I went down, and I am anxious to see what your 

testimony is so I can say, yes, back in 1992, they said the same 

thing, based on the previous report. 

So I appreciate the opportunity to speak and look forward to participating. 

Senator CARPER. Yes. I am just grateful that you are sitting here 

and that we are going to work on this together. 

One of the things that was different, in 1992, we did not know 

how much the improper payments were from agency to agency 

across the Federal Government. In 2002, we did not know what 

they were, either. Today, we know that improper payments for last 

year in the whole Federal Government, as best we could tell, without the Department of Defense (DOD), without Medicare Part D, 

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7 

was about $125 billion. We know from Medicare, it was about $48 

billion. That is not counting Part D. For Medicaid, it is $22.5 billion. We actually know that now. 

One of the things that is different, I would say to Senator Brown, 

my colleague—— 

Senator BROWN. Is you are here. 

Senator CARPER. No, that we are here. And Tom Coburn is here 

and Senator Klobuchar is here. 

But the thing that is different now, the Federal Government, 

agency by agency, is required to report their improper payments. 

They are required to stop them. We are going to evaluate the performance of managers within these Departments by the kind of job 

that they do in reducing improper payments. We are going to 

evaluate by what kind of job they do in going out and recovering 

improper payments. 

And finally, we have had the Administration come here and say 

on the record, and the President has already said this on the 

record, we want to reduce, cut in half, improper payments. Cut this 

number in half by 2012. That is encouraging. 

And the other thing that I hope is encouraging is we are going 

to be providing whatever help we can to enable you to meet that 

goal. We are also going to be here to make sure that you do meet 

the goal to the best of your ability. Senator Klobuchar. 

OPENING STATEMENT OF SENATOR KLOBUCHAR 

Senator KLOBUCHAR. Thank you very much, and I wanted to 

thank you, Chairman, for inviting me into this Subcommittee. 

Senator CARPER. It is almost like you are a Member. We like 

that. 

Senator KLOBUCHAR. Well, I feel quite at home, because looking 

at that fugitive chart, I feel like I am back in Judiciary, where we 

often have those charts, and I really appreciate the leadership you 

have shown in these areas. 

As we all know and as Senator Brown so strongly pointed out, 

one of the greatest contributors to wasteful government spending 

is fraud and abuse, and law enforcement authorities estimate that 

Medicare fraud costs about $60 billion every year. Last year, $4 billion was stolen from Federal health care programs, and that was 

recovered. 

As a former prosecutor, this really bothers me, and I also look 

at it as coming from a State that, while we have had some prosecutions—I actually worked on one where we secured the conviction of 

a woman for bribing a county official and fraudulently billing Medicaid for services that were never provided—but coming from a 

State that has a well-organized health care system with high quality, lower cost care, one of the things I know is that some of the 

hot spots—and I learned this term in Judiciary from some of our 

Justice Department people—the hot spots tend to be in areas 

where they have less organized health care systems. I know Florida 

has some hot spots down there. 

And that the answer to all of this is the work that we are going 

to be doing with Senator Carper and others, but it is also about 

doing a better job of having more organized health care systems, 

some of which we started out with in the health care bill, but a lot 

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8 

more work has to be done with how these delivery systems coordinate with each other so there are other watchdogs besides just the 

government. I believe that is why we have less fraud in Minnesota 

than in some of the other States. 

Another tool to use is that CMS must take steps to consolidate 

its databases, allowing for more data sharing and efficient use of 

technology. Creating these types of claims databases will help us 

better identify potential sources of fraud. 

I also introduced the Improve Act with Senator Snowe that requires electronic payments for Medicare and Medicaid. We were 

able to include this requirement for Medicare in the health care reform bill, but still more work needs to be done with the Medicaid 

bill, because you all know that if you have these electronic payments, you are not going to have these checks go to storefronts. 

Then you have to watch where the electronic payments go, but you 

can greatly reduce fraud with the electronic payments. 

So I want to thank the witnesses for being here. I look forward 

to hearing this update and look forward to working with Senator 

Carper and Senator Brown and others on this very important 

issue. Thank you. 

Senator CARPER. Always happy to welcome you. Thank you for 

your good work. 

Senator Coburn, you have been working these vineyards for at 

least 6 years here and I have been pleased to work with you on 

a bunch of that stuff. We are always delighted to have you here, 

Tom. Welcome. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Well, it is an appropriate time, Mr. Chairman, 

to have the hearing. I have seen Dr. Budetti and Inspector General 

Levinson more than I have my wife in the last week. [Laughter.] 

I saw them before the Finance Committee, as well. 

I would mention to you that Senator Carper and I are working 

on a very substantive addition on fraud, and we have been working 

on it for about 5 months, I think, and hopefully we will put that 

in front of the GAO and get their comments and in front of you before we release it. But we all know there are areas to go. 

My big problem is Medicare as it is currently designed is designed to be defrauded. I mean, if you just set at it, you could not 

set up much of a better system than this one to defraud it. I applaud some of the changes the administration is making. I applaud 

the Justice Department, where they have been aggressive in going 

after some of this. The more aggressive we are and the greater the 

consequences for defrauding or abusing or wasting Medicare dollars 

will send a signal. 

So I am pretty pleased with the direction we are going. I think 

you still need some more tools and look forward to working with 

you and thank you for being here. 

Senator CARPER. Dr. Coburn, thanks very, very much. 

Let me just briefly introduce our witnesses, if I may. 

Dr. Peter Budetti, no stranger to a bunch of us, is our first witness today. Dr. Budetti is the Deputy Administrator and Director 

for Program Integrity at the Centers for Medicare and Medicaid 

Services. He is responsible for program integrity policies and operH605-41331-79W7 with DISTILLER

9 

ations in both the Medicare and Medicaid programs. Dr. Budetti 

has a long history in the health care arena as a pediatrician, in 

government, and as Chairman of the Board of Directors of the Taxpayers Against Fraud, as well as a professor at the University of 

Oklahoma. We thank him for being with us today. 

I went to Ohio State. I understand you have an OSU in Oklahoma, too. 

Dr. BUDETTI. We have the real OSU. [Laughter.] 

Senator CARPER. The guy who used to be President of Ohio State 

is now the President of Oregon State University. I like to tell him 

he has one more to go, OSU and U State, and he would have the 

hat trick, so we will see. 

Greg Andres, our second witness, is from the Department of Justice (DOJ) and the Acting Deputy Assistant Attorney General in 

the Criminal Division. Mr. Andres oversees the Fraud Section, the 

Appeals Section, the Capital Case Unit, and the Organized Crime 

and Racketeering Section. You are a busy man. Mr. Andres has 

been involved in prosecuting many of the bad guys we will talk 

about today regarding Medicare fraud during his distinguished career at the Department of Justice. I would also note that Mr. Andres served in the Peace Corps in West Africa, and we thank you 

for that and we thank you for joining us today and for your service. 

Inspector General Daniel R. Levinson. Mr. Levinson is the Inspector General of the Department of Health and Human Services. 

Mr. Levinson has been Inspector General of Health and Human 

Services for nearly 7 years, leading the important work overseeing 

Medicare and Medicaid and other Department programs. Mr. 

Levinson has a long history of public service. We appreciate very 

much your being with us here today. 

And next is Kathleen King. Ms. King is a Director of the Health 

Care Team at the U.S. Government Accountability Office, affectionately known as GAO. Ms. King is responsible for leading various 

studies of our health care system, specializing in Medicare management and prescription drug coverage. Ms. King has over 25 years 

of experience in health policy and administration. I am happy to 

note that we learned in a previous hearing that Ms. King grew up 

in Wilmington, Delaware, graduated from Ursuline Academy High 

School. We thank her for being here today. You could only turn out 

well with that kind of background. 

Finally, we are delighted to welcome Ms. Helen Carson, who is 

a Volunteer Coordinator and Case Manager at the Delaware Senior 

Medicare Patrol. Ms. Carson came to work at the Senior Medicare 

Patrol after first seeking help from the program, then decided to 

work as a volunteer and was later hired on to help other volunteers. She is one of the people on the front lines fighting fraud in 

Delaware, and there are a lot of people like her around the country—not enough, though, I would say. But I note that her home 

town, again, is Wilmington, and she now resides near New Castle, 

a place where I bought my first home when I was just a pup coming out of the Navy. Ms. Carson, we are pleased to have you here 

today. 

All of you, welcome. Your entire testimony is going to be made 

part of the record. Feel free to summarize. If you go much more 

than 5 minutes, we will try to rein you in. We will start voting 

H605-41331-79W7 with DISTILLER

10 

1The prepared statement of Mr. Budetti appears in the appendix on page 48. 

probably around 3:00, but we will finish a couple of testimonies and 

then run and vote and come right back. 

Dr. Budetti, why do you not lead off. We are happy you are here. 

Thanks. 

TESTIMONY OF PETER BUDETTI,1 M.D., DEPUTY ADMINISTRATOR AND DIRECTOR, CENTER FOR PROGRAM INTEGRITY, CENTERS FOR MEDICARE AND MEDICAID SERVICES 

Dr. BUDETTI. Thank you very much, Chairman Carper, Senator 

Brown, Senator Klobuchar, Dr. Coburn, for this opportunity. I appreciate this opportunity to come and discuss with you what we are 

doing in the Centers for Medicare and Medicaid Services. 

Ever since I had the privilege of taking this job a little over a 

year ago, I have been asked two questions. Why do you let crooks 

into the programs? And why do you pay their claims when you 

think they are fraudulent? I am very pleased to be able to tell you 

that, with the tools that we have now and that we are putting into 

place under the Affordable Care Act and through other legislation, 

we are going to do things that will put a stop to both of those. We 

are going to keep out the bad guys without making things worse 

for the honest providers, and we are going to cut off payments that 

should not be made. 

Under the leadership of Secretary Sebelius, she reorganized the 

Centers for Medicare and Medicaid Services, realigned them into 

four Centers, one of which is the Center for Program Integrity. 

This consolidated Medicare and Medicaid Program Integrity together for the first time. This is a very important step, I believe, 

both organizationally and symbolically because it speaks to the seriousness of our anti-fraud efforts and it also provides notice to 

would-be fraudsters that we do, in fact, take this very seriously. 

Also, this reorganization has provided new opportunities for us 

to collaborate with our law enforcement partners, and so I believe 

we are indeed on the road that many of you alluded to, to making 

things different. 

I would like to draw your attention to our chart. I think you have 

copies of this. But this tells you exactly what we are doing in terms 

of moving from where we have been to where we are going. 

First of all, we want to move from what you mentioned, Mr. 

Chairman, the pay and chase mode, into preventing fraud, and the 

way that we are going to move to preventing fraud is to keep the 

people out of the program who should not be there and to cut off 

payments that we should not make. 

Second, we do not want to take a monolithic approach, a onesize-fits-all approach. We want to target our resources to the real 

problems, to identify the real problems, and to be focusing our efforts on the bad actors. 

Third, we are taking advantage of new technology and we are 

going to be moving quickly to take administrative action as well as 

referrals to law enforcement. 

Fourth, consistent with this administration’s commitment to 

transparency and accountability, we are developing performance 

measures that will spell out what we hope to achieve, what we will 

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11 

1The prepared statement of Mr. Andres appears in the appendix on page 67. 

achieve, and will lay out what our goals are and what we are going 

to accomplish. 

And five, we are actively engaging the private sector, our private 

partners, to work with us across the spectrum because we know 

that although the public programs are certainly targeted by scams 

and scam artists, so, too, are the private programs and we need to 

join together to fight against this. 

And finally, we are committed to coordinating and integrating 

the program activities across the Centers for Medicare and Medicaid Services in order to get more effective and more coordinated 

activities underway. 

To do this, we need to focus on several things. We need to do a 

better job of preventing bad actors from enrolling in Medicare. We 

need to act quickly in concert with our law enforcement partners 

to cut off payments that are fraudulent. And we need to do this— 

and I would stress this point—that as we crack down on those who 

would commit fraud, we are mindful of the necessity to be fair to 

health care providers and suppliers who are our partners in caring 

for beneficiaries, and to protect beneficiary access to necessary 

health care services. This requires striking the right balance between preventing fraud and other improper payments, but without 

impeding the delivery of critical health care services to beneficiaries. 

We will always respect the fact that the vast majority of health 

care providers and suppliers are honest people who provide critical 

health services every day to millions of beneficiaries and we are 

going to target our anti-fraud efforts on the people who would commit fraud while reducing the burden on legitimate providers and 

saving public funds. 

As this has proved to be a very good investment over the years. 

The Health Care Fraud and Abuse Control program (HCFAC) has 

had very substantial returns on investment over time. We know 

that the more that we look for fraud, unfortunately, the more we 

find, but the return on that investment has been very substantial 

and this year reached a new high. 

I appreciate this opportunity to discuss what we are doing with 

you and I look forward to working with you in the future. Thank 

you very much. 

Senator CARPER. Great. Thanks, Dr. Budetti. 

Mr. Andres, please. And what we will probably do is, once you 

have completed your testimony, three or four of us will run and 

vote, make two votes, and come right back. Please proceed. 

TESTIMONY OF GREGORY ANDRES,1 ACTING DEPUTY ASSISTANT ATTORNEY GENERAL, U.S. DEPARTMENT OF DEFENSE 

Mr. ANDRES. Chairman Carper, Senator Brown, and distinguished Members of the Subcommittee, thank you for inviting me 

to speak to you today about the Department of Justice’s efforts to 

combat health care fraud. I am privileged to appear before you on 

behalf of the Department of Justice. The Department of Justice is 

grateful to the Subcommittee for its leadership in this area and we 

appreciate the chance to testify here today. 

H605-41331-79W7 with DISTILLER

12 

Health care fraud is a significant law enforcement problem. The 

Federal Government spends billions of dollars every day to fund 

Medicare and other government health care programs, and taxpayers rightly expect these funds to be used to provide health care 

to seniors, children, the poor, and the disabled. Most medical professionals work hard to comply with the rules, but too many doctors, nurses, and others in the health care industry devote their energies elsewhere, to schemes that cheat taxpayers and patients 

alike and defraud Medicare and other government programs. 

At the Justice Department, together with our colleagues at the 

Department of Health and Human Services, we are fighting back. 

We investigate, we prosecute, and we secure prison sentences for 

hundreds of defendants each year, and we are recovering billions 

of dollars in stolen funds. With the additional resources provided 

to us by Congress over the past 2 years, we are making significant 

strides in this battle. 

In fiscal year 2010, we collectively recovered a record $4.02 bil- lion on behalf of taxpayers, $2.86 billion of which was deposited 

back into the Medicare Trust Fund. This represents a $1.47 billion, 

or 57 percent increase over the amount recovered in fiscal year 

2009, which was itself a record at that time. Indeed, over the past 

3 years, we have collectively recovered an average of $6.80 for 

every dollar of funding that Congress has appropriated for health 

care fraud enforcement. 

The Justice Department has a multifaceted litigation approach to 

fighting health care fraud with the Criminal Division, the Civil Division, the Civil Rights Division, the U.S. Attorneys Offices, and 

the Federal Bureau of Investigation (FBI) all contributing substantial resources to this effort. Allow me for a moment to focus on our 

criminal enforcement efforts. 

Criminal health care fraud enforcement is aimed at holding accountable doctors, nurses, health care providers, and others who 

conspire to cheat government health care programs, including 

Medicare and Medicaid. Today, our criminal enforcement efforts 

are at an all-time high. In fiscal year 2010, we brought criminal 

charges against 931 defendants, the most in any single fiscal year 

since the HCFAC program began, and approximately 16 percent 

more than in fiscal year 2009. Moreover, we secured 726 criminal 

health care fraud convictions, also the most in any year of the 

HCFAC program, and approximately 24 percent more than in fiscal 

year 2009. In short, the Justice Department is working hard and 

with great success to investigate and prosecute health care fraud 

wherever we find it. 

We have been fortunate to receive important new tools for fighting health care fraud. In the Patient Protection and Affordable 

Care Act of 2010, Congress made several important revisions and 

additions to Federal statutes that the Justice Department uses in 

health care fraud cases. These changes are likely to have and are 

already having a significant impact on our health care fraud enforcement efforts. 

For example, the Act clarifies that a defendant need not have 

been aware of a specific statutory provision in order to be convicted 

of violating the health care fraud statute or the Medicare anti-kickback statute. In addition, the Act directs the U.S. Sentencing ComH605-41331-79W7 with DISTILLER

13 

1The prepared statement of Mr. Levinson appears in the appendix on page 79. 

mission to make certain important changes to the Sentencing 

Guidelines that will increase sentences for health care fraud offenders. Finally, the Act provides significant additional funding for 

our collective health care fraud enforcement efforts. 

Prosecuting health care fraud is a high priority for the Department of Justice. Every day, every single day, Federal prosecutors 

and law enforcement agents at the Federal, State, and local levels 

are working hard to investigate and prosecute those intent on defrauding Medicare and Government health care programs, and we 

have been successful. 

Thank you for the opportunity to provide the Subcommittee with 

this overview of the health care fraud enforcement efforts. I look 

forward to answering any questions you may have. 

Senator CARPER. Good. Thanks so much. 

Mr. Levinson, go ahead and give us your testimony and then we 

will run to the vote. Thanks. Please proceed. 

TESTIMONY OF DANIEL R. LEVINSON,1 INSPECTOR GENERAL, 

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Mr. LEVINSON. Good afternoon, Chairman Carper and Members 

of the Subcommittee. Thank you for the opportunity to testify 

about the efforts of OIG and our partners to combat health care 

fraud, waste, and abuse. I appreciate your support for OIG’s mission to protect the integrity of HHS programs and their beneficiaries. 

OIG has been leading the fight against health care fraud for 

more than 30 years in collaboration with the Justice Department 

and CMS. Thanks in part to the HEAT Initiative, we are making 

strides in preventing fraud, catching and prosecuting criminals 

more quickly, and assisting well-intentioned providers in complying 

with the law. Our efforts will be bolstered by the additional funding provided through the Affordable Care Act for the Health Care 

Fraud and Abuse Control, or HCFAC, program. 

The HCFAC program is a prudent investment of taxpayer dollars. In fiscal year 2010, this program’s activities returned an unprecedented $4 billion in fraudulent and misspent funds. Over the 

past 3 years, for every dollar spent on the HCFAC program, the 

government has returned an average of $6.80. The Affordable Care 

Act further augments our program integrity efforts by addressing 

vulnerabilities, strengthening enforcement, and encouraging greater coordination among Federal agencies. 

Despite our successes, there is more to be done. Those intent on 

breaking the law are becoming more sophisticated and their 

schemes are more difficult to detect. Some fraud schemes go viral 

and they replicate quickly. They also migrate. As law enforcement 

cracks down on a particular scheme, the criminals may design it 

or relocate to a new city. When detected, some perpetrators have 

become fugitives, fleeing with stolen Medicare funds. 

To combat this fraud, the government’s response must be swift, 

agile, and well organized. My written statement describes in more 

detail our collaboration with CMS and DOJ, enhanced program integrity tools in the Affordable Care Act, and OIG fraud fighting iniH605-41331-79W7 with DISTILLER

14 

tiatives. This afternoon, I will highlight just a few of those initiatives. 

Our Medicare fraud strike forces are cracking down on criminals 

and fraud hot spots around the country. Since 2007, strike force operations have charged almost 1,000 individuals, involving more 

than $2.3 billion in Medicare billing. Just last month, strike force 

teams engaged in the largest Federal health care fraud take-down 

in history. The teams charged more than 100 defendants in nine 

cities, including doctors, nurses, and health care company owners 

and executives for fraud schemes involving more than $225 million 

in Medicare billing. 

OIG has referred credible evidence of fraud to CMS to implement 

payment suspensions, helping to turn off the spigot to prevent dollars from being paid for fraudulent claims. OIG excludes fraudulent 

or abusive providers from Federal health care programs, cutting 

them off from Federal funds. We are now focusing on holding responsible those individuals who are responsible for corporate misconduct. This exclusion authority is a powerful deterrent to corporate fraud. 

However, enforcement alone is not enough. We are also engaging 

health care providers to help prevent fraud and abuse. For example, we are conducting free training seminars in six cities this 

spring to educate providers on fraud risks and share compliance 

best practices. We recently published a Roadmap for New Physicians. It provides guidance on how doctors should comply with 

fraud and abuse laws in their relationship with payers, vendors, 

and fellow providers. 

We are also asking the public to help us track down Medicare 

fraud fugitives. We have posted online OIG’s Ten Most Wanted 

health care fraud fugitives, including photographs and details on 

their fraud schemes, and you can see our current ‘‘Most Wanted’’ 

list on display here today. We hope the public will help us bring 

these individuals to justice by reporting any information about 

their whereabouts to our Web site or fugitive hotline. 

In conclusion, OIG is committed to building on our successes, employing all oversight and enforcement tools available to us, and 

maximizing our impact to protect our health care programs, the 

people served by them, and American taxpayers. 

Thank you for your support, Mr. Chairman, and I welcome your 

questions. 

Senator CARPER. Thank you so much. 

We will take a break here. We will be back in about 15 minutes 

and, Ms. King, you will be on. You are the batter on deck. Thanks 

so much. [Recess.] 

All right. I think that is the voting for a while. We will hopefully 

have a chance to maybe complete this hearing. I sure hope so. 

We are back in session, and Ms. King, you are recognized. Please 

proceed. Thank you. 

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1The prepared statement of Ms. King appears in the appendix on page 88. 

TESTIMONY OF KATHLEEN KING,1 DIRECTOR, HEALTH CARE, 

U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. KING. Mr. Chairman, thank you for inviting me to speak 

with you today about provisions of recently enacted laws and agency actions that may help to reduce fraud, waste, and abuse in 

Medicare and Medicaid. 

Fraud represents intentional acts of deception with knowledge 

that the action or representation could result in an inappropriate 

gain. Waste includes inaccurate payments for services, while abuse 

represents actions inconsistent with the acceptable business or 

medical practices. An improper payment is any payment that 

should not have been made or was made in an incorrect amount 

and includes both overpayments and underpayments. 

I was asked to address whether recently enacted laws could help 

CMS in preventing fraud, waste, and abuse. Congress has recently 

passed a few laws, as you mentioned, the Improper Payments 

Elimination and Recovery Act, the Patient Protection and Affordable Care Act, and the Small Business Jobs Act, which provide additional authority and resources and impose new requirements designed to help CMS reduce improper payments. 

In previous work, we have identified five strategies to reduce improper payments. They are: strengthening provider enrollment and 

standards; improving prepayment review of claims; focusing postpayment review on those most vulnerable areas; improving oversight of contractors; and developing a robust process for addressing 

identified vulnerabilities. 

The provisions in PPACA, if properly implemented, could aid 

CMS’s efforts to reduce improper payments. We also note that CMS 

has not implemented some of our recommendations in this area, 

which we believe merit continued consideration. 

With respect to provider enrollment, the law contains multiple 

provisions designed to strengthen the enrollment process. It requires the Secretary of HHS to establish procedures for screening 

providers enrolling in Medicare, including assessing their potential 

risk levels. Moderate and high-risk providers may be subject to unannounced site visits. CMS has categorized home health agencies 

(HHA) and durable medical equipment (DME) suppliers as highrisk providers, which we believe is appropriate given our work in 

this area. 

The law also requires all providers to be subject to licensure 

checks, including across State lines, and it also authorizes the Secretary and the States to impose a moratorium on enrollment if they 

believe it is necessary to prevent fraud, waste, and abuse. 

With respect to prepayment review of claims, our work has 

shown that such reviews are essential to help ensure that Medicare 

pays correctly the first time. Conducting these reviews is challenging because of the volume of claims. Medicare pays approximately 4.5 million claims every business day and less than one percent of these claims are subject to review by trained medical personnel. 

The Small Business Jobs Act requires CMS to use predictive analytic technologies both to identify and prevent improper payments. 

H605-41331-79W7 with DISTILLER

16 

1The prepared statement of Ms. Carson appears in the appendix on page 118. 

By analyzing Medicare provider networks and billing patterns and 

beneficiary utilization patterns, these technologies may help CMS 

detect potentially fraudulent activity and conduct additional reviews before making payment. 

In addition, CMS is implementing a 2010 Presidential memorandum known as the ‘‘Do Not Pay’’ list, that directs agencies to 

consult these lists before making payments to ensure that payments are not made to providers who are dead or entities who have 

been excluded from Federal payment. 

We have also found that post-payment review is critical to identifying payment errors. Steps could be taken to improve post-payment review, including focusing these reviews on the most vulnerable areas and by adding recovery auditing. The law directed that 

CMS expand its Recovery Audit, or RAC program, to Medicare 

Parts C and D and to Medicaid. 

With respect to improving oversight of contractors, the law included new requirements for CMS to evaluate contractors receiving 

Medicare and Medicaid Program Integrity funding every 3 years, 

and for these contractors to provide performance statistics to the 

OIG and HHS on request. 

One area where more progress is needed is having a robust process for identifying vulnerabilities that lead to improper payments. 

Our work on the Medicare RAC program found that CMS had not 

established an adequate process to address these vulnerabilities. 

In conclusion, the enactment of these laws as well as agency actions gives CMS new tools for fighting fraud, waste, and abuse, but 

effective implementation of them is critical. 

Mr. Chairman, this concludes my prepared statement. I would be 

happy to answer any questions. Thank you. 

Senator CARPER. Great. Thanks so much. Thanks for your good 

work on this and all your help. 

Ms. Carson, welcome, Helen Carson. 

TESTIMONY OF HELEN CARSON,1 VOLUNTEER COORDINATOR 

AND CASE MANAGER, DELAWARE PARTNERS OF SENIOR 

MEDICARE PATROL 

Ms. CARSON. Good afternoon, Senator Carper and staff. Thank 

you for convening these hearings for the opportunity to present my 

testimony today. 

The National Senior Medicare Patrol has been very busy since its 

inception in the mid-1990s. In Delaware, the Senior Medicare program began in 1999. Today, there are 54 Medicare Patrol programs, one in every State as well as the District of Columbia. Senior Medicare Patrol programs recruit and train senior volunteers 

and Medicare beneficiaries to conduct outreach and education to 

their peers, caregivers, and professionals about Medicare and Medicaid fraud prevention. 

The goals of Senior Medicare Patrol are twofold. First, to educate 

and motivate consumers on how to prevent, detect, and report 

health care fraud, errors, and abuse, and second, to receive and 

prepare to refer appropriate complaints of potential health care 

fraud. 

H605-41331-79W7 with DISTILLER

17 

I would like to begin with my health care victimization story. 

After a history of cardiac issues, my husband had a heart attack 

in 2004 and was hospitalized. It was discovered he had a defective 

device controlling his heart. Costly errors by the hospital resulted 

in an original 2-day stay turning into 30 days of multiple testing, 

a serious operation, and intensive care. As a result of this situation, the impact of our lives amounted to my husband not being 

able to work, leaving us with large copayments, private hospital 

bills, and costly medication. We had no other choice but to refinance our home and use credit cards with minimal payments. Another major decision I made during this time period was to personally forego a year without medication for chronic conditions so that 

my husband could get life-saving medication. 

It was this experience that inspired me to learn about billing, to 

read Medicare Summary Notice (MSNs), and to help others with 

issues of health care error, fraud, and abuse. Medicare Summary 

Notice is a quarterly statement of service and supplies that providers and suppliers bill to Medicare. While trying to cope with this 

situation, I watched a Senior Medicare Patrol segment on television 

on how to address some health care issues. 

As a result, I became a Senior Medicare Patrol volunteer and 

now a part-time Volunteer Service Coordinator Case Manager for 

Delaware Partners of Senior Medicare Patrol. I became a self-advocate and now assist others in recognizing hospital billing errors 

and questionable medical service. I used to be one of those seniors 

who threw away the Medicare Summary Notice because I thought 

my insurance would take care of anything. Now, I know better and 

realize that the Medicare Summary Notice can be a big help in assisting with cases of potential Medicare fraud. 

There are many Medicare rules that are complicated and, therefore, seniors often do not understand the Medicare system. That is 

why the Senior Medicare Patrol reaches out to Medicare beneficiaries to inform and educate so seniors can be self-advocates, and 

report questionable health care issues back to the program. 

In Delaware, we are working on many complaints involving durable medical equipment providers. A senior resident contacted us 

about a durable medical equipment provider who was putting up 

flyers which advertised free durable medical equipment in a senior 

apartment building. The provider then came in and educated the 

seniors, pressuring at least one Medicare beneficiary to get an electric wheelchair for the future. This provider manipulated the individual to give out his Medicare number and supplementary insurance. As a result, this Medicare beneficiary has an electric wheelchair and fears that if he speaks with us, he may lose the wheelchair. This is potential fraud to the taxpayer and Medicare and a 

harm to the senior who feels caught in the fraudulent process. 

In another case, an assisted living beneficiary was billed for 

Medicare services not provided by a facility physician. These services included office visits to the physician and foot surgery. All the 

services were billed to Medicare and secondary insurance and the 

beneficiary. The beneficiary kept a log of services he received. He 

was then able to reconcile his record against the monthly Summary 

Notice. The beneficiary was fearing retaliation and charges from 

the assisted living facility and did not report the fraud until interH605-41331-79W7 with DISTILLER

18 

vention by Senior Medicare Patrol staff. The case was referred to 

law enforcement for investigation. 

Working with Senior Medicare program as a volunteer, and now 

as a team member, is the most rewarding job I have ever had. I 

help people who suffer the same problems that I faced, and some 

are much greater than mine. But the greatest gift is to see the 

smile on their face after you have helped a Medicare beneficiary 

who was victimized by health care fraud, abuse, or waste. I should 

know, because I have been a victim and have felt that sense of 

hopelessness. 

SMP volunteers know they do this work for satisfaction and not 

pay, and the impact of these volunteers’ efforts nationally has been 

impressive. Since it started in 1997, the Senior Medicare Patrol 

program has trained over 6,000 volunteers, handled over 141,000 

beneficiary complaints, and educated 2.9 million people to be selfadvocates. In addition, the program has saved Medicare, Medicaid, 

and beneficiaries close to $106 million through referral and resolution of beneficiary complaints. 

Thank you for inviting me to be a part of this panel. 

Senator CARPER. Great. Ms. Carson, thank you so much for sharing that with us. 

I just want to start my first question with you, if I may. How 

many people did you say have been trained to be part of the Senior 

Medicare Patrol? Did you say 6,000? 

Ms. CARSON. Yes. 

Senator CARPER. That is across the country? 

Ms. CARSON. No, 60. Sixty. 

Senator CARPER. Sixty-thousand? That is across the country? 

Ms. CARSON. That is across the country. 

Senator CARPER. Over the last, what, dozen or so years? 

Ms. CARSON. Seven years. 

Senator CARPER. Over these last 7 years. 

Ms. CARSON. Yes. 

Senator CARPER. OK. Do you think that is enough? 

Ms. CARSON. No. 

Senator CARPER. What might be enough? What should be our 

goal in terms of recruitment? 

Ms. CARSON. Well, what is going on in our State—I can only talk 

about Delaware—our senior population is growing in the Sussex 

County of Delaware. 

Senator CARPER. That is Southern Delaware for those who do not 

know. 

Ms. CARSON. Yes. Because we are a tax-free State, what is happening is that a lot of seniors are moving to the Sussex area of 

Delaware, and because of that, we are the seventh, I think—we 

have the seventh largest population of seniors in the Nation. 

Senator CARPER. Any idea how many—we have got 60,000 that 

we have trained. How many folks could we use to be part of the 

Senior Medicare Patrol? Could we use a couple hundred thousand 

across the country? 

Ms. CARSON. I think we can use that and more. 

Senator CARPER. Yes. And how would you suggest we go about 

recruiting them? 

H605-41331-79W7 with DISTILLER

19 

Ms. CARSON. Well, first of all, actually putting our program more 

out there, that people are aware that we are there, and that we 

have volunteers that are lawyers. We have volunteers that were 

former chemists. We have volunteers that are former hairdressers. 

We have—— 

Senator CARPER. Any former Senators? 

Ms. CARSON. Yes. [Laughter.] 

Senator CARPER. You will take us, too? 

Ms. CARSON. Yes, we will take you, too. 

Senator CARPER. All right. It is all well and good that Dr. 

Budetti and his folks are taking advantage of the new laws we 

have, whether it is improper payments and the kind of resources 

that are provided in the Affordable Care Act. It is all well and good 

we have the Government Accountability Office, GAO, doing their 

oversight. We have the IG helping us out on this stuff, and we are 

trying to do oversight. 

But boots on the ground—we need boots on the ground, as well, 

and one of our jobs is figuring out how to grow this operation to 

get more—we have tens of millions of senior citizens in this country and some of them are looking for things to do, worthwhile 

things to do with their time, and most of them do not even know 

this program was there. Maybe we could do a better job of acquainting them with that and making sure they have the opportunity to do what you have done with your life. Good. Thanks. 

I have a question—we have been joined by Senator Mark Begich 

from Alaska, one of how many Marks in the U.S. Senate? 

Senator BEGICH. There are five now. 

Senator CARPER. Five. There are more Marks in the U.S. Senate, 

ladies and gentlemen, than any other name. If you are not sure 

what a Senator’s name is, call him Mark and there is a pretty good 

chance you will nail it. [Laughter.] 

Senator BEGICH. You can join the caucus. [Laughter.] 

Senator CARPER. All right. We will see. 

My next question, if I can, is for Dr. Budetti. I want to talk about 

our work with the Medicare prescription drug program. We have 

a big problem with folks who were not supposed to be writing prescriptions to folks who should not have been getting them for controlled substances, and we, I think, are doing a better job of stopping that. 

Could you just talk about what we are doing? I think it is a success, something we have been very active in putting a spotlight on, 

and I think you all have reacted in a way that is appropriate. 

Would you just want to talk about it, please? 

Dr. BUDETTI. Yes, Senator. Thank you for that question. In the 

Medicare prescription drug program, we make our payments directly to the drug plans and then, of course, they pay for filling the 

actual prescriptions, and then they report to us certain information, which is what we use to oversee what they have been doing. 

In the reporting of that information, there have been identified 

problems with the identifiers that were used to track who it was 

that wrote the prescriptions. 

We have made a lot of progress in terms of shifting from less effective to more effective identifiers and we are very much interested in looking at making sure that we can track back to be sure 

H605-41331-79W7 with DISTILLER

20 

who the prescriber was of the prescription that was filled and make 

sure that it was appropriately prescribed, because we are paying 

for it through the drug plan. And so we are actively considering a 

rule that would move towards requiring the National Provider 

Identifier (NPI) be provided to us for us to be able to track that 

back. We do recognize that this is an area that needs attention and 

we are working on it very diligently. 

Senator CARPER. Good. Let me follow up by asking a related 

question to Mr. Levinson, if I could. Let me just ask you, do you 

believe that the new steps to control some of this fraud with respect to Medicare prescription use, do you think the things that Dr. 

Budetti has been talking about, are they on the right track? Are 

the things that he is talking about, are they the appropriate things 

that should be done? Are there other steps that ought to be taken? 

Mr. LEVINSON. Mr. Chairman, we think those are important 

steps, and indeed, the Part D program has vulnerabilities that 

need to be aggressively monitored and in many cases corrected. A 

very important part of our work is now and in the near future to 

look at how Part D sponsors, as well as the contractors who are 

supposed to oversee those sponsors, how they are doing their antifraud work to ensure that we can actually track the money better. 

Senator CARPER. All right. Have any of you ever worked for a 

credit card company? Did anybody ever work for a credit card company? 

Ms. CARSON. I have. 

Senator CARPER. Is there anything we can learn from credit card 

companies in the way that they go after fraud? I remember when 

MBNA was a big credit card bank in our State, now part of Bank 

of America, but I remember talking to the CEO of the company 

maybe 10 years or so ago and saying, why do you keep hiring all 

these folks from the FBI, people retiring from the FBI and other 

law enforcement services? And I said, what do they know about 

credit cards? And he said, they do not know a lot about credit 

cards, but they are pretty good on fraud. 

One of the things that we talked about at another hearing where 

Dr. Budetti and Senator Coburn and I were at not long ago was 

the idea of maybe putting together what we call a roundtable, 

which is sort of a hearing but it is an informal hearing, and bring 

in folks from the credit card industry who actually do this stuff 

every day. This is what they do 24/7 and are pretty good at it, to 

see what lessons we can learn from them, share with them what 

we are doing. Might that be a good idea? 

Ms. CARSON. I think it would be an excellent idea. Actually, I 

come from the credit card industry myself—— 

Senator CARPER. Do you? 

Ms. CARSON [continuing]. But I find that Medicare fraud and 

Medicaid fraud are quite different than what we were dealing with. 

It is much bigger. 

Senator CARPER. Yes. Maybe there are some lessons learned from 

the financial services, from the credit card industry that are transferable. We are going to try—Dr. Budetti, any comments, and then 

I am going to yield to Senator Brown. 

Dr. BUDETTI. Yes, Senator. As we have discussed, we are actively 

engaged with different private sector industries. We have looked at 

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21 

activities to fight fraud in the banking industry and in telecommunications. We are certainly interested in—we have a pilot 

project underway in DME where we are using swipe cards that will 

rely on credit card-like technology. We intend to build on that pilot 

to see what the results are and to move into this area in a way 

that we actually learn lessons first and then build on it. So this is 

something that we are delighted to continue this dialogue with you 

on, yes. 

Senator CARPER. Great. OK. Let us do that. 

All right. Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. It is good to be back. 

So I will just start with Mr. Andres, if we could. So you indicated 

that you, through the Justice Department, collected $4 billion of 

fraud through your Department and a couple of billion went back 

to, obviously, back into the program. Where did the rest of the 

money go? 

Mr. ANDRES. The difference between the $4 billion recovered and 

the $2.86 billion that went back to the Medicare fund is the question of how much has actually been collected. So the $2.86 billion 

is the amount. The $4 billion—— 

Senator BROWN. Oh, so you got judgments for $4 billion—— 

Mr. ANDRES. Exactly. 

Senator BROWN [continuing]. And you only collected that amount. 

Mr. ANDRES. That is correct. 

Senator BROWN. So in looking at the chart that the Chairman 

provided, I mean, we have substantially more billions and we have 

only collected $4 billion. Where is the difference in terms of the collection versus the actual improper payments? How do we get a better return on our dollar? 

Mr. ANDRES. Well, I mean, in terms of prosecuting additional 

people for fraud, at the Justice Department, unfortunately, we are 

more on the back end of the process, where the fraud has already 

occurred, and we are prosecuting people. We are seeking forfeiture 

to the extent possible. But as you can imagine, it is not as though 

criminals, once they are able to defraud the program, keep that 

money locked in a bank or place where we can necessarily get at 

it. A lot of times, the funds have been dissipated. So while judges 

order restitution and we seek forfeiture—— 

Senator BROWN. Yes, typical collection issues. 

Mr. ANDRES [continuing]. We are not able to always collect after 

a prosecution. 

Senator BROWN. So are you satisfied you have the tools and resources you need to continue on with your job? Is there anything 

that we in the Congress can do for you? 

Mr. ANDRES. So two things, Senator, and thank you for the question. In the Affordable Care Act, one of the provisions in the Act 

directed the Sentencing Commission to look at and revise the Sentencing Guidelines—— 

Senator BROWN. The Sentencing Guidelines to make it more—— 

Mr. ANDRES. Exactly, to increase it, and the Sentencing Commission has since made proposals, and so we would ask Congress to 

support those proposals. 

And the second—— 

H605-41331-79W7 with DISTILLER

22 

Senator BROWN. Have you reviewed those and you are satisfied 

with those? 

Mr. ANDRES. Yes, Senator. 

Senator BROWN. OK. I will look at them. 

Mr. ANDRES. Just to give you an example, they raised the—they 

will raise the jail time that is available for offenders in that category. So if you take an example of somebody who, for example, 

was involved in $23 million, or $20 to $25 million in fraudulent 

billing, the fact that they were involved in that amount of billing 

does not necessarily mean that they got that amount of money that 

they were actually paid. The guidelines now allow us to use the 

amount that they billed—— 

Senator BROWN. Right. 

Mr. ANDRES [continuing]. As opposed to the amount that they 

were paid—— 

Senator BROWN. OK. 

Mr. ANDRES [continuing]. And that is significant. 

Senator BROWN. So noted. OK. Number two? 

Mr. ANDRES. The second thing is that in the President’s budget, 

there is additional funding for our strike forces and for our health 

care fraud enforcement efforts. As one of the other witnesses mentioned, the return on investment is almost seven dollars for every 

dollar spent on health care fraud. 

Senator BROWN. OK. 

Mr. ANDRES. We are returning seven dollars. So to the extent 

that we are able to continue our current efforts in the strike force 

process and able to expand where appropriate, we think that the 

strategy we have in the strike forces is working, and as was mentioned, we have arrested almost a thousand people since the inception of the strike force program. 

Over the last year, we have had significant national arrests, one 

in July 2010. We arrested almost 90—more than 90 people. And 

then recently, in February, we arrested over 100 people in nine different cities. The fraudulent billing related to those arrests was 

over $200 million. In that same week, we had made other arrests 

in Miami and arrested another 20-some-odd defendants. And so the 

total billing related to the enforcement actions in that week alone 

was $400 million. So we think the strike force efforts are having 

great success, and we would like to be able to continue those efforts? 

Senator BROWN. Is there an opportunity for my office to meet 

with somebody in your office to get kind of briefed as to what you 

are doing? 

Mr. ANDRES. Certainly, Senator. 

Senator BROWN. All right. Thank you. 

So, Dr. Budetti, looking at—as I said, I went back. In 1992, 

HCFA, now CMS, it was reported by the GAO, testified at the 

House hearing that the lack of vigilance over contractor payment 

safeguard activities has left the program funds inadequately protected from loss and waste. So that was back in 1992. And currently, Medicare is designated by the GAO as a high-risk program 

and it has been so since the 1990s. 

Looking at the chart, once again, that I appreciate was brought 

forth, I mean, can you instill confidence that your organization will 

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23 

address these problems, and if so, like, what has been done that 

we can really—because we have four billion here, but is there not 

a mechanism—unless I am just totally lost here, is there not a 

mechanism to identify whether it is a legitimate claim and before 

it goes out the door so we are not chasing it? Is there not a way 

to do that? 

Dr. BUDETTI. Senator, thank you. We certainly share your concern about the magnitude of the issues that we are facing here—— 

Senator BROWN. And may I just interrupt one second—— 

Dr. BUDETTI. Yes. 

Senator BROWN [continuing]. And I will certainly let you answer. 

Dr. BUDETTI. Go ahead. Sure. 

Senator BROWN. We just voted on a budget over there to cut $51, 

$61 billion. It is right there. As I said earlier, I do not get it. 

Dr. BUDETTI. So, Senator, we really need to address two aspects 

of this problem, and I will briefly describe them. One is the numbers you are looking at up there, improper payments. Improper 

payments really span a spectrum from honest billing mistakes to 

other kinds of reasons why a payment should not have been made, 

and that requires one set of activities to deal with and we are certainly actively pursuing those. The other—— 

Senator BROWN. In what way are you actively pursuing it? 

Dr. BUDETTI. OK. Well, we are doing that on a variety of levels. 

One is to work with the provider community to make sure that 

when they submit a payment, it is submitted in the right way, it 

is documented, the service is provided at the right site. The vast 

majority of the improper payments that we have been measuring 

are—often involve services that a legitimate provider provided to 

an eligible beneficiary, but perhaps at the wrong site of service, 

perhaps as an inpatient instead of an outpatient. It might have 

lacked the appropriate documentation—— 

Senator BROWN. So you are saying that the amount here really 

is not—it is not illegal or fraudulent payments, they are just done 

improperly. We have to get the accounting squared away. So if that 

is what you are saying-—— 

Dr. BUDETTI. That is a big piece of—— 

Senator BROWN. All right. So how much out of that money is actually that scenario? 

Dr. BUDETTI. That is the second prong of what we need to address, which is the real fraud, and that is a major issue that we 

are addressing in a number of ways, and I would just like to touch 

on one aspect of what I believe you were getting at, which is the 

fact that we are now moving to use modern technologies, advanced 

analytics, to look at not just claims data, but to look at a wide 

range of data in a way that will allow us to predict where the problems are and to stop payments before they are made. That is what 

we need to do to really—— 

Senator BROWN. No, I agree. 

Dr. BUDETTI [continuing]. Put this to an end. We are in the process right now, and with the support that we got both from the Affordable Care Act and also the Small Business Jobs Act on the predictive analytics side, we are implementing programs and we are 

working with private contractors and using the best ideas from private industry, putting them into the context of the Medicare and 

H605-41331-79W7 with DISTILLER

24 

Medicaid programs, Medicare at first, to be able to do exactly what 

you are getting at, Senator, which is to spot these problems and 

not to make the payments in the first place. That is the best way 

to stop an improper payment, is to not make it—— 

Senator BROWN. It has been almost 20 years. It has almost been 

20 years that we have had this identified as high-risk designation 

by the GAO—20 years, and we are still talking about it. 

Dr. BUDETTI. It is a long time and I think we are turning the 

corner. I—— 

Senator BROWN. All right. How are you turning—— 

Dr. BUDETTI. I have been here—— 

Senator BROWN. How are you turning the corner? Tell me how 

you are turning the corner so I can feel good tonight when I leave. 

Dr. BUDETTI. I hope you will feel good about this, Senator. We 

are turning the corner because we are implementing the authorities in the Affordable Care Act that really give us new and expanded tools that we are going to use very diligently. For example, 

the advance screening to keep the bad guys out of the program; to 

spot them when they are in the program and to get rid of them; 

and, the new authority that when there is a credible allegation of 

fraud, and we do that in consultation with our law enforcement 

partners, we determine when an allegation is sufficiently credible, 

we can suspend payments. We have additional authorities to declare moratoria where there is no evident need for new suppliers 

or providers to come into the program. We are coordinating the 

Medicare and Medicaid screening processes and other tools together. We are expanding the Recovery Audit Contractor program 

into Medicare Parts C and D as well as into Medicaid. 

And backing all of that up is our development of the application 

of modern predictive analytics, looking at many, many different aspects of a health care situation all at the same time in order to 

know which claims represent the highest risk of fraud and not to 

pay them, to make sure that the money is never paid. So we want 

to keep the bad guys out and we want to stop the payments before 

they are made. 

We also have a variety of measures that we are taking specifically to cut the Medicare fee-for-service improper payment rate in 

half by 2012. That is a commitment the President has made and 

we are going to carry that out—— 

Senator BROWN. In half from this number right here? 

Dr. BUDETTI. That is correct, from the Medicare fee-for-service 

components of those numbers. That was the commitment. We are 

also, of course, working to cut the improper payments in the rest 

of Medicare as well as in Medicaid. But we have the specific commitment to—and in 2012, we will be accountable for reaching that 

goal. 

Senator BROWN. OK. I appreciate it. I will turn it back and then 

get back at you. 

Senator CARPER. Those are good questions. 

It is kind of confusing, because on the one hand we have the improper payments reports that come that are required under the legislation just passed and signed by the President last year while we 

have, I think, what Attorney General Holder says may be as much 

as $60 billion in fraud, criminal fraud. Improper Payments are not 

H605-41331-79W7 with DISTILLER

25 

necessarily criminal fraud activity, maybe some element of it, but 

for the most part, that is not the case. So we are going here on two 

tracks. 

I think our job, I would just say to my colleague, Senator Brown, 

our job is to ask what resources are needed, what authorities are 

needed to do the best that we can. The payoff is seven-to-one. For 

every dollar we invest, we get seven dollars in recovery. That is a 

pretty good return on the investment, to make sure that we are 

doing that, to ask our friends at GAO and our IGs to advise us and 

the agencies as we go forward in this area to recruit a whole lot 

of people like Ms. Carson to go out there and help us to identify 

this fraud and stamp it out as best we can. 

And then our responsibility is oversight, oversight, oversight. We 

will be back here certainly before 2012 to see how we are doing. 

But as Senator Brown says, if we can cut that number, you all can 

cut that number in half, that is real money. That is real money, 

and that is one—people say, we cannot do anything to reduce the 

growth of entitlement spending. Well, maybe we can, and this is 

one of the ways we can do that. 

All right. Senator Begich, and then back to Senator Klobuchar. 

Mark, nice to see you. 

Senator BEGICH. Thank you very much, Mr. Chairman. 

Let me ask, Mr. Budetti and Mr. Andres, let me, if I can, first 

ask two simple questions. If the Affordable Care Act was repealed, 

would it crimp the ability for you to do the work you need to do? 

Mr. ANDRES. There are numerous benefits to our—— 

Senator BEGICH. I do not need the detail, just the yes or no. 

Mr. ANDRES. Yes, and certainly in light of the changes to the sentencing and the funding. 

Senator BEGICH. Excellent. We just had a House resolution in 

front of us to reduce $57-point-some billion out of the Federal budget. Would that amendment affect either one of your divisions in 

any negative way for you to do the work you need to do on fraud? 

Mr. ANDRES. Senator, I do not know the specifics of that bill. 

Senator BEGICH. OK. 

Dr. BUDETTI. I would agree with that, but in commenting on the 

need for the Affordable Care Act provisions, Senator, certainly, as 

I have mentioned, those are very central to our efforts to fight 

fraud and abuse. 

Senator BEGICH. Excellent. Could you, just for the record, on 

H.R. 1 that we just rejected, could you have whoever in your appropriate divisions report back to us if that bill would have had an impact to you in the sense of ability to go after fraud and abuse? 

Mr. ANDRES. Certainly, Senator. 

Senator BEGICH. OK. Let me go to this number, if I can. The improper payments, my understanding is that it does not include 

Medicare Part D also in this, or does it? 

Ms. KING. It does not. 

Senator BEGICH. It does not. OK. So let us assume—I do not 

know what that number is, but let me make sure I clearly define 

improper payments. Once you go through the process of determining that the paperwork is filled out for some of these, that is 

not necessarily recovered money, that is just clarification of the 

right—I mean, when it is improper payment, it could be like me, 

H605-41331-79W7 with DISTILLER

26 

for example—not me, because I am not a provider, but when I go 

fill out my reimbursement to Aetna, they send back a form and 

say, you did not send us the right verification. Now, they may have 

sent me a check and still ask for the paperwork. That could be an 

improper payment on my end. But on the Medicare provider who 

may send in their information to get reimbursed but does not send 

in all the correct information, that is an example of a improper 

payment? 

Ms. KING. Yes. 

Dr. BUDETTI. That is—— 

Senator BEGICH. OK, either one. 

Dr. BUDETTI. Go ahead. 

Senator BEGICH. Yes. Nodding the head to say yes. So of this 

number, which may not be recoverable money because it is still 

paid, just they need to do their paperwork right, so it is not new 

money to the Treasury, but a percentage of this, if we go after the 

fraud that really is people who are abusing the system, what percentage would you guess of this number plus Medicare Part D is 

in that category of recoverable potential, knowing that some is— 

you can never squeeze it all out of someone when they have done 

it wrong because they have spent it. What is the percentage that 

you would estimate on this? 

Dr. BUDETTI. Senator, I would draw a little distinction here, 

which is improper payments are recoverable if they are identified 

and if there are resources to collect them. But the way that we 

measure improper payments right now is not designed to measure 

fraud. Fraud is elusive. Fraud is secretive. Fraud is hidden. Fraud 

is something that requires different ways of identifying it. So it 

really is not a question of what proportion of the improper payments are fraud. If the auditors, in measuring the improper payments, detect signs of fraud, they are required and they do report 

that to our anti-fraud contractors—— 

Senator BEGICH. I understand. Here is the dilemma I am trying 

to solve, and that is we use these big numbers—— 

Dr. BUDETTI. Yes. 

Senator BEGICH [continuing]. But that is not accurate. 

Dr. BUDETTI. It—— 

Senator BEGICH. In other words, unless you are telling me that 

all of this is recoverable to the Federal Treasury—— 

Dr. BUDETTI. It may be recoverable, but it does not mean that 

it will be avoided to be paid. Let me tell you what I mean. If, for 

example, if a beneficiary who is eligible for the program receives 

appropriate services from a legitimate provider—— 

Senator BEGICH. Right. 

Dr. BUDETTI [continuing]. But they get those services in the hospital and they could have been provided in the outpatient setting—— 

Senator BEGICH. Right. 

Dr. BUDETTI [continuing]. That money that was paid is recoverable. However, had those services been provided in the outpatient 

department, in other words, had they been a proper payment instead of an improper payment, we would have been responsible for 

making that proper payment good. And so the difference, if any, beH605-41331-79W7 with DISTILLER

27 

tween the payment for the inpatient service and the payment for 

the outpatient service is what the net to the Treasury would be—— 

Senator BEGICH. Right. I have got you. 

Dr. BUDETTI [continuing]. Or to the trust funds would be. 

Senator BEGICH. I have got you. Again—— 

Dr. BUDETTI. We could still recover the amount if we went after 

it. 

Senator BEGICH. Right, but you may have only a differential that 

you are requiring recoverable because you may have paid that inpatient—— 

Dr. BUDETTI. Under current rules, we recover the entire amount, 

but we are looking into exactly that and working on—our main 

thrust, though, is to make sure that the services are provided correctly in the correct setting—— 

Senator BEGICH. I understand that. 

Dr. BUDETTI [continuing]. And the documentation and the billing 

is proper in the first place to support this. 

Senator BEGICH. So let me—I am going to end this line, because—— 

Dr. BUDETTI. Sure. 

Senator BEGICH [continuing]. Honestly, it is—then what we are going to still be using, just so we are clear, that there is $60 billion 

of recoverable money, because—— 

Dr. BUDETTI. Yes. 

Senator BEGICH [continuing]. I think that is one of the struggles 

here for us, is what is—do we believe at the end of the day 30, 40 

percent of this number is really the hard nut that we are going to 

crack and go after in the sense of returning back to the Treasury? 

Dr. BUDETTI. What we need to focus on, Senator, is the fact that 

because some of that—a substantial amount of that—may be due 

to improper documentation, or a lack of documentation entirely, or 

provided in the wrong setting, we are still going to be providing the 

right services. So there may be a differential between what we 

could pay and what we would need to pay if the service were provided and billed for properly—— 

Senator BEGICH. The right way. 

Dr. BUDETTI [continuing]. But having said that, there is still the 

world of real fraud that we need to take on, and that is a major 

challenge to us and that is what we are intent on, as well, what 

we are intent on preventing. 

Senator BEGICH. You mentioned you are working with private 

contractors to try to go after the fraud and use new technology, 

which I think is great, and there is a ton out there. Credit card 

companies, as the Chairman indicated, they use a lot of it to figure 

out where there are situations occurring. What do you think your 

time table will be to really implement some of that new technology 

on the ground that has an impact, a real dollar impact? 

Dr. BUDETTI. We are in the process right now of looking at the 

solicitations that were out. The bids are in. We will be implementing the kinds of solutions that come in this year and we will 

have them integrated into our claims payment system, in part, this 

year. We will be phasing it in this year and the target is no later 

than the middle of next year that we would have it thoroughly integrated. So we are not just waiting until we get all the results. 

H605-41331-79W7 with DISTILLER

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Senator BEGICH. Understood. 

Dr. BUDETTI. We are going to integrate the findings as we get 

them. 

Senator BEGICH. So from a Committee perspective, when would 

you be able to say to the Committee, here is some update. Here is 

what we are seeing. Here is some positive news or here is some 

negative news, depending on how we look at it—— 

Dr. BUDETTI. Later this year, I think would be—— 

Senator BEGICH. Later this year? 

Dr. BUDETTI [continuing]. Would be the first phase. 

Senator BEGICH. OK. And I will just ask two quick questions. In 

regard to medical schools and the education that is going on, are 

you engaged in helping folks that are coming through the system 

now that will soon be providers how to deal with improper payments and Medicare fraud and those kinds of elements? Do you go 

to that level, or do you kind of—— 

Dr. BUDETTI. Senator, I think I will defer to my colleague, the 

Inspector General, on that count—— 

Senator BEGICH. OK. 

Dr. BUDETTI [continuing]. Because I know they have a major initiative on that front, if he does not mind. 

Senator BEGICH. OK. 

Mr. LEVINSON. Yes, thank you. And indeed, we have published 

a Roadmap for New Physicians in which we actually provide a very 

good, succinct summary of the major laws that are implicated in 

the Federal health care programs, everything from the physician 

self-referral law, the Stark Law, the exclusion statute, to give the 

incoming medical profession a sense of what is at stake, how to go 

about conducting their business in a way that conforms with our 

requirements. It has been very well received in the medical schools 

in which it has already been presented and before the medical associations, and it is part of our Health Care Fraud Summits that 

we have conducted this past year and we continue to do so this 

year, in which we do this kind of outreach to the medical community. It is a very important initiative and I am pleased to say it 

has been very well received. 

Senator BEGICH. Very good. And I will just end, Mr. Chairman, 

and say I do not know whose Web site it was, but when I was able 

to review the Top Ten Most Wanted in the fraud of Medicare, I 

want to commend whoever did that, I do not know if it is—there 

we go—I think it is a great thing to do. I know as a former mayor, 

one of the things we did with people who did not pay their bills, 

we put them on the web. It actually was so popular, it crashed the 

system three times over a weekend—not that people wanted to see 

if they were on it, they wanted to see who else was on it. But of 

$20 million, we collected almost $9 million in the first year, because people are not happy when other people are cheating the system. 

And so I thank you for that. I think that is a great system. I 

think you should continue to do whatever you can to put those 

‘‘Most Wanted’’ up, because people actually are intrigued by that 

and probably would be your best allies and your best enforcement 

arm. 

Thank you very much. 

H605-41331-79W7 with DISTILLER

29 

Senator CARPER. Thanks, Senator Begich. Senator Klobuchar. 

Senator KLOBUCHAR. Thank you very much, Mr. Chairman, and 

thank you to the witnesses. 

Dr. Budetti, many States are taking the initiative to set up allpayer claim databases similar to CMS’s integrated data repository, 

and I am working on legislation that actually would create a standard for the process for these other States so that we can expand 

the use of these databases. Do you feel that having databases combined with predictive analytics and other tools are a good way to 

combat fraud and abuse in the health care system? 

Dr. BUDETTI. Yes, Senator, and certainly working with the States 

to enhance the Medicaid data and to enhance the use of those data 

is a priority for us and we would be very interested in talking to 

you about that. 

Senator KLOBUCHAR. OK. Very good. Mr. Andres, you mentioned 

in your testimony that the average prison term for defendants convicted of health care fraud is over 40 months. How recent is that, 

over what span of time? 

Mr. ANDRES. I believe that is fairly recent, Senator. 

Senator KLOBUCHAR. Mm-hmm, because I remember at a previous hearing that most people convicted were not sent to jail and 

I think they served less than 3 years, and I think it has gone up 

by a few months. Do you feel that the current sentencing limits are 

enough of a deterrent? 

Mr. ANDRES. As I mentioned earlier, Senator, the Affordable 

Care Act directs the Sentencing Commission to examine the sentences for health care offenses and those proposals have now come 

through and will significantly increase sentences, and we believe 

that—or we would ask Congress to support the Sentencing Commission’s recommendations. 

If I could just address the 40-month issue in two ways. First, the 

average of 40 months may be a little misleading because the types 

of health care fraud cases that are included in that figure could 

vary widely—— 

Senator KLOBUCHAR. Mm-hmm. 

Mr. ANDRES [continuing]. From the beneficiary who was abusing the system to a health care provider who was billing $20 or $30 

or $40 million. So there is a wide range there, and so that number 

may be misleading. 

Let me say this. Our prosecutors are asking for jail time in appropriate cases, and I believe in many cases, we are getting significant jail sentences. To give you an example, in November 2010, a 

defendant and owner/operator of a Miami clinic was sentenced to 

10 years in prison for her role in a $22 million fraud. A doctor in 

Detroit was sentenced to 72 months in prison for writing prescriptions for unnecessary and non-rendered services. Another doctor 

was sentenced to 14 years in prison and ordered to pay $9.4 million 

in restitution for a scheme involving $18.3 million. 

So in appropriate cases, judges are certainly sending defendants 

to jail and they are sending them to jail for significant periods of 

time. 

Senator KLOBUCHAR. And I, in my former life as a prosecutor, I 

found, especially with these types of white collar crime cases, that 

sometimes the best thing you can do is just the example and that 

H605-41331-79W7 with DISTILLER

30 

you may not know of some other fraud going on, but then people 

get very nervous and either pay back money or change their ways, 

so thank you for that. 

Inspector Levinson, the OIG and DOJ’s Medicare Strike Force 

has expanded to include nine total hot spots of health care fraud, 

leading with Miami, Los Angeles, Detroit, Houston, Brooklyn, 

Baton Rouge, Tampa, Dallas, and Chicago. Could you talk about 

what makes a city a hot spot, and does the mention that I made 

of coordination of care, does that have anything to do with the low 

incidence of fraud? 

Mr. LEVINSON. Well, I think that over time, through our own experience as well as that of the Justice Department, it is clear that 

there are concentrated areas around the country where either ethnic groups, organized sense a vulnerability in a particular part of 

the program—very often it is within the area of DME, infusion 

therapy, home health is becoming a popular scam area—where the 

same kind of scheme is hatched and becomes very, in a sense, viral. 

And, of course, South Florida several years ago emerged as the 

hottest of hot spots and we concentrated on South Florida years 

ago to try to especially focus on the DME area with tremendously 

good results, not only in terms of investigation and prosecution, but 

billings for DME are way down as a result of that activity, indicating that there is real value to getting the word out, even as you 

do the work-—— 

Senator KLOBUCHAR. How about the question I asked on coordination of care? And this is related to delivery system reform, where 

you know what is happening with a patient. You have maybe one 

primary care provider and you have a group that works together. 

This is the model we tend to use in Minnesota. And my argument 

is that in itself, outside of the government and the work that Mr. 

Andres and others are doing, that it polices itself some. You need 

the government, as well, but it polices itself because there are 

other private sector people that are working with a group of people. 

Mr. LEVINSON. I am not sure whether any examination or study 

has been done about the impact of that in terms of the fraud area. 

Again, I am talking about those who really do not belong in the 

program in the first place. The fraud part of this exercise has so 

much to do with cleansing the program, and then the next step, of 

course, is strengthening the program, and I think there are important provisions in the Affordable Care Act on coordination that perhaps my colleague, Dr. Budetti, can speak about. 

Senator KLOBUCHAR. Right. I just—I want to point out that some 

of the areas that have the more coordinated care in our country are 

not included in your hot spot list, and there is more of a check on 

the system. 

Mr. Levinson, you mentioned the use of exclusion from Federal 

programs as a disincentive for executives and providers to commit 

fraud and corporate misconduct. In the consideration of whether or 

not someone should be excluded from the programs, are stronger 

civil and criminal charges also considered in addition to the exclusion? 

Mr. LEVINSON. Well, they do play a very, very important part in 

whether permissive exclusion goes forward. There are mandatory 

exclusions if someone is convicted of a felony, for example. But 

H605-41331-79W7 with DISTILLER

31 

within the context of permissive exclusions, the record of executives, of managers, is very important. 

Senator KLOBUCHAR. And your testimony also highlighted the 

steps CMS and OIG are taking to move away from the pay and 

chase model, focusing more on preventing fraud from occurring in 

the first place. How will CMS and OIG prevent a person who is denied payment in one area simply from relocating and doing it in 

another area? That is what we see with, like, Web sites and piracy. 

Do you want to answer that, Mr. Budetti? 

Dr. BUDETTI. I would be happy to, Senator. One of the provisions 

in the Affordable Care Act requires that if someone is excluded— 

is thrown out of the Medicaid program in one State, they also have 

to be similarly treated in all States. And, of course, if they are 

tossed out of the Medicare program, provided that the reasons for 

them being tossed out are the kinds of things that we are concerned about. If they just resigned without being under a cloud or 

they just decided to move from one State to another, that is not 

going to count. But if they are terminated in one State for cause, 

they are going to be terminated everywhere, and if they are terminated in Medicare, they are going to be terminated in all the 

States. 

And so we are working with the States to set up a system that 

will allow the identity of the people who are subject to this provision to be securely identified so that the right person will be identified across the country, so aimed at exactly what you are getting 

at. 

Senator KLOBUCHAR. OK. And thank you, Ms. King—my time is 

done here—for your testimony, and also, Ms. Carson, for telling 

your story. And if I could just ask one question, it would be how 

do you think we can help seniors and Medicare beneficiaries become more aware of potential fraud schemes? 

Ms. CARSON. Actually getting out and publicizing it, and also letting the seniors know that they do have forces on the ground that 

will help them. A lot of them that are in high-rises and nursing 

homes are not aware of what is going on unless we come out. We 

do presentations and we are educating them on the frauds that are 

happening around the country and also in our State. 

Senator KLOBUCHAR. Thank you very much. 

Senator CARPER. Thanks so much for those questions and for 

your work, good work in a lot of areas, really, a lot of areas. 

I want to come back to, if I can, a question for you, Ms. King, 

before too long, but not yet. I want to come back to Dr. Budetti. 

On the issue of Recovery Audit Contracting, and for folks that are 

not familiar with that, I actually used to do this, at the time I was 

Governor of Delaware, we had people who worked in the Division 

of Revenue. Their job in Delaware was to collect revenues that 

were owed to the State. And some cases, particularly for difficult 

monies to collect that were owed to the State of Delaware, we 

would hire contractors and their job was to go out and collect the 

money. They kept a percentage of that which they collected and 

that was their compensation. It worked well, and the Division of 

Revenue, rather than providing worse service, ended up providing, 

I think, better service and won the Quality Award for the State of 

Delaware my last year as Governor, so we are very proud of that. 

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32 

I am going to go back in time 4 or 5 years when the idea of using 

a similar approach with contractors doing recovery with respect to 

Medicare, and I think the idea was to do a demonstration focused 

on three States, I want to say California, maybe Florida, maybe 

New York. I think those are the initial three States that we did the 

demonstration for a couple of years, and then I think we expanded 

to a couple more States, maybe five, and then before the demonstration was over, I think we might have gone to 19 States. 

Then I think we had like what we used to call in the Navy a 

stand-down. We used to have a safety stand-down in our Navy air 

squadrons and we would not fly for a day or a couple of days, just 

focus on safety. For recovery Audit Contracting we had what I 

would call a stand-down for, I think for a year, to do sort of lessons 

learned. What did we learn from the demonstration that would enable us to collect more money, that would enable us to cause less 

intrusion, less confusion among the provider community. 

And then we went back and said, we are going to do this in all 

50 States. Now that we have learned from this demonstration, we 

are going to do it in all 50 States. My recollection was in the last 

year that we did the demonstration before the stand-down, we collected, or contractors collected over $300 million. I think it was 

over $300 million. And for the 4 years, I think they collected about 

maybe a billion dollars. 

And we are told that in the first year coming back, doing this in 

all 50 States that we can expect to collect less than $100 million. 

That just seems strange to me. And as we look at your improper 

payments of $48 billion, in order for us to get close to half of that, 

we are going to have to do a whole lot more, than the $100 million 

or $200 million. And I know that your focus is on prevention, so 

we do not pay and chase. But it seems to me we ought to be able 

to do a whole lot better in 50 States, looking at improper payments, 

Medicare Part A, Part B, Part C, Part D. The numbers just do not 

add up. 

Dr. BUDETTI. Senator, we certainly appreciate your leadership in 

this area, and I think, the program was just expanded to the Nation as a whole in 2010. That was the first full year, and a lot of 

that year was spent in implementing many of the lessons that were 

learned from the pilot program, getting feedback from the provider 

community, doing exactly what you said, which was standing down 

in some ways long enough to make sure that the program was implemented in a way that benefited from the pilot. 

So much of 2010 was spent with the initial stages of improving 

operations, of working with our partners, making sure that the program was up and running. So we do see that the recoveries are 

going back up again and we believe that we will be on track to 

reach the goals that were established. We are also in the process 

of—— 

Senator CARPER. And what were the goals? Could you just talk 

about the goals that were established? 

Dr. BUDETTI. I do not have the numbers in front of me, Senator—— 

Senator CARPER. Just roughly. 

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33 

Dr. BUDETTI. They are in the—I believe they were in the—for 3 

years, in the $300 to $500 million a year range, and we believe that 

we are on track to getting there. 

We also believe, as you said, that as we implement—we have already signed a contract for a Recovery Audit Contractor to look at 

overpayments and underpayments in the Part D program. We are 

right now finished collecting public comments on how to implement 

the other aspects that were in the Affordable Care Act on the Part 

C and Part D programs. And we have also been working very closely and diligently with the States to implement the Medicaid RACs 

in the States. 

So we are on track, I think, to get the full benefit out of the Recovery Audit Contractor program and we will be happy to keep 

tabs with you on how successful we are. 

Senator CARPER. We have had this conversation before, and I do 

not mean to beat a dead horse, but this is a lot of money. If we 

can collect through Recovery Audit Contracting a billion dollars in 

roughly 4 years out of anywhere from three to five States, and that 

was not Medicare Part A, Part B, Part C, Part D, but it was just 

maybe A and B, if we are adding C and D to that and we are adding another 45 States, we ought to be able to do a whole lot more 

than $300, $400, $500 million in the next several years. It just— 

it does not add up. 

Dr. BUDETTI. I certainly appreciate that, Senator. I think that 

some of the changes that were made in the program will take a 

while to be fully in place and to be implemented properly. And also, 

we are working with the provider community to correct many of 

the problems that led to the identification of an improper payment 

that could be recovered. Certainly, everybody’s goal is to eliminate 

that problem in the first place, not just to recover the funds after 

the fact. But we will be happy to, as I said, keep tabs on this with 

you. 

Senator CARPER. And we will keep tabs on it, as well. 

You mentioned Medicaid. Let me just touch bases on that. My 

understanding was that CMS will no longer require that States 

have Medicaid Recovery Audit Contractors in place by April 1 of 

this year. That is what I am told. And that the Medicaid program 

final rule will establish a new deadline, not April 1, but a new 

deadline. I am told that CMS has also dropped the March target 

for publishing the final rule and there has been no announcement 

of a new target date for the final rule. And I would just ask, when 

do you expect to see the final rule for Medicaid Recovery Audit 

Contracting? 

Dr. BUDETTI. Senator, we did publish the Notice of Proposed 

Rulemaking last fall and we did get a lot of feedback from both the 

States and from the provider community, in particular, on the way 

that the program would be implemented across the States and trying to assure that the Recovery Audit Contractors under Part A 

and B of Medicare, for example, were not completely different than 

the way that they are implemented under Medicaid. So we are taking a lot of considerations seriously as we design the program. 

But we are on track. We are working diligently, and although I 

can never talk about the exact date of a regulation that has not yet 

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34 

been published, I can tell you that we are working on getting this 

in final form very diligently and it will be forthwith. 

Senator CARPER. And I would like to take more comfort. I am not 

sure, but is the beauty in the eye of— 

Dr. BUDETTI. It will be in the short term, Senator—— 

Senator CARPER. OK. 

Dr. BUDETTI [continuing]. But since we are in the process of rulemaking, I am just not in a position to specify exactly what the content or timing would be just yet. 

Senator CARPER. Well, sooner rather than later. I hope you feel 

that sense of urgency and reflect it. 

Dr. BUDETTI. I feel that sense of urgency, sir. 

Senator CARPER. All right. Let me yield to Senator Brown. I have 

a couple more questions, and then we will come back to—I have at 

least one question for you, Ms. King, so do not go away. Senator 

Brown. 

Senator BROWN. Thank you, Mr. Chairman. I have been listening 

back at another meeting. The Chancellor of UMass-Lowell came 

out. 

Mr. Budetti, just to kind of reengage a little bit, the GAO designated Medicaid a high-risk program, in 2003, and under the Affordable Care Act, the cost of the Medicaid expansion is $430 billion over the next 10 years and the Federal Government is going 

to be responsible for 90 percent of that. 

On page ten of your testimony, you state that the return of the 

ROI for the Medicare Integrity program is 14 to one. Do you know 

what the ROI will be for the Medicaid Integrity program? 

Dr. BUDETTI. Senator, the Medicare Integrity program is something that we operate fully at the Federal level and the collections 

and the data are all something that is entirely under our purview. 

The activities in the Medicaid Integrity program itself and the various Medicaid activities that are designed to combat fraud and go 

after these kinds of problems are really a partnership between us 

and the States. We operate a number of activities. For example, we 

run the Medicaid Integrity Institute, which has trained a couple of 

thousand State employees in program integrity. And so that is one 

kind of activity that we do at the Federal level that is not really 

designed for us to have a direct return on investment like we can 

measure in the Medicare Integrity program. We also have, of 

course, auditors that do audit and do those audits based upon data 

that we collect from the States, but we do not have direct access 

to the kind of claims data that we do on the Medicare side. 

So it is really a partnership, and there are funds that are coming 

back to the States that we may or may not actually be able to identify easily for calculating our return on investments. But we are 

working on this. This is an issue before us. We are looking at the 

best way to go about calculating the return on investment on the 

Medicaid side. We firmly believe that what we have done is effective and is leading to recoveries, but it is much more complicated 

in the sense that it is a partnership with the States and there are 

a variety of activities that go on at the State level that we are not 

directly responsible for. 

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35 

Senator BROWN. So do you think you are effectively able to figure 

out if the money is effectively being spent or not and if it is being 

allocated in the right integrity activities? 

Dr. BUDETTI. Well, that for sure. We certainly believe that we 

are engaging with our States. We are moving to get the States and 

ourselves, as Senator Klobuchar referred to, to have better data 

available for this process. We are working with them on looking to 

the ways to use the data. We are working with the States on clusters of States working on issues that are important to them. We 

are revisiting this entire issue because we believe that the States 

are effective partners. 

States have a variety of activities that go on that we are not directly overseeing. For example, the Medicaid Fraud Control Units 

that generally are in the Attorneys Generals’ offices in the States 

are something that, although they are funded out of Medicaid operations, they are not directly controlled by us. 

Senator BROWN. That being said, have you noticed any differences, because, for example, in Massachusetts, we have 98 percent of our people already insured. Have you noticed any difference 

between the States like ours that are already kind of dealing with 

those issues and already have a health care plan in effect and, 

quite frankly, I think it is better than the Federal plan? Have you 

noticed a difference between our State and maybe other States that 

are not where we are? 

Dr. BUDETTI. I do not have any State-specific data at hand, Senator, but I would be happy to see whether we can find something 

for you—— 

Senator BROWN. No, just—not looking for anything. It is just a 

general, do you notice a difference, that is all. But if you cannot 

answer, that is fine. 

Dr. BUDETTI. I do not think I have anything to add to that, Senator. 

Senator BROWN. All right. I was looking for an ‘‘atta boy’’ for 

Massachusetts. [Laughter.] 

Man, I cannot give any more softballs than that. Simply, ‘‘Yes, 

Massachusetts is doing great, Senator.’’ OK. [Laughter.] 

Dr. BUDETTI. I am sure Massachusetts is doing great in 

many—— 

Senator BROWN. Oh, it is too late. [Laughter.] 

And just to follow up again, HHS’s fiscal year 2010 agency financial report estimates the national improper payment rate for Medicaid is 9.4 percent, with the Federal share being an estimated 

$22.5 billion. The same report stated that CMS faced challenges 

with State payment systems that had paper-only and aggregate 

claims. Changes in information systems, IT, obviously, at the State 

level during the course of the measurement cycle and wide variations of system designs and capabilities vary, from State to State. 

I know CMS is working with the States to modernize their IT. 

How long and how much money do you think it will take before the 

States achieve and kind of get on the same sheet of music when 

it comes to dealing with these types of issues? 

Dr. BUDETTI. Well, Senator, as I am sure you are aware, some 

States are far more advanced than others—— 

Senator BROWN. Like Massachusetts. [Laughter.] 

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I have you flustered, do I not? [Laughter.] 

Senator BROWN. Good. I am trying to throw you off, so—I am obviously teasing. I am glad everyone has a sense of humor. 

Dr. BUDETTI. I am looking for something here, Senator. 

Senator BROWN. All right. Good. 

Dr. BUDETTI. The States—the way that the States are running 

their programs does vary from State to State, and the way that the 

improper payments are measured in the States is on a three-year 

rotating cycle, so that 17 programs are studied and reported on annually. So when we reported the figure for this year, for the first 

time that we had 3 years of data to get a comprehensive national 

figure, that set the target for us for what we want to reduce. 

Now, what that means is that States typically have 2 years before the next time that they will be studied, because it is a threeyear rolling cycle. So that is the cycle that we expect the States to 

implement their improvement plans in, and it is in that kind of a 

cycle that we will know whether the States are improving. So—— 

Senator BROWN. May I interrupt for one second? 

Dr. BUDETTI. Yes, sir. 

Senator BROWN. So it is clear to me that the States are all different. It has been 40 years, basically, and we still do not have, 

like, a uniform national claims system where you can all be on the 

same sheet of music, same type of ‘‘keep it simple, stupid’’ type of 

philosophy where we just do it all the same and there is no 

miscommunication, there is no misunderstanding, there are no improper classifications. I mean, what type of problem, I guess, would 

it be to have a lack of uniform national claims kind of data system? 

Is there something you guys talk about at all, or—— 

Dr. BUDETTI. Well, Senator, as I said, the Medicaid program is 

a partnership with the States and the States have substantial flexibility. They are the ones who end up paying the claims and having 

the claims data to analyze. So we do need to work individually with 

all of the States and to make sure that we are doing something 

that is appropriate for a given State. 

On the other hand, as you mentioned, we do want the States all 

to get the maximum possible return on their program integrity investments and that is why we do things like our Medicaid Integrity 

Institute. We also do a variety of ways of communicating with the 

States so that they know what each other is doing and can learn 

from each other best practices. 

Senator BROWN. I have one final question. Thank you for your 

sense of humor. I appreciate it. It is not easy to come here. I appreciate everyone else laughing, too. 

So, Ms. King, I want to just touch base very quickly, because I 

know the Chairman has a question or two left. The expanded prescription Part D drug benefit program began in 2006, but it was 

not until 2010 that GAO indicated that CMS has made progress in 

the $51 billion program for waste, fraud, and abuse. Due to the nature and size and complexity, how confident are you that CMS will 

be able to implement in a timely manner a vastly more complex 

system to make sure that we are not having any of the fraud, 

waste, and abuse that we are kind of discussing here today in that 

program? 

H605-41331-79W7 with DISTILLER

37 

Ms. KING. Well, if I could elaborate a little bit on the Medicare 

Part D situation, CMS, before Part D went into effect, required the 

sponsors and the plans to have compliance programs, and in effect, 

that is sort of self-policing. CMS put forth elements that you have 

to have in your required compliance plan, so the plan is supposed 

to police themselves and they were, in effect, and they were 

checked. But what CMS did not do as soon as they said they would 

do is audit whether the compliance plans were working. 

Senator BROWN. Right. 

Ms. KING. So there is a little bit of a nuance there. 

Senator BROWN. No, I understand—— 

Ms. KING. And in the Affordable Care Act, there are requirements for providers to have compliance plans. So going forward, I 

think that there is going to be more on the provider community 

and providers as a group to take those things into account on the 

front end, so to share more in the responsibility. 

Senator BROWN. Thank you, Mr. Chairman. 

Senator CARPER. Thanks for all those questions and for helping, 

and your staff, as well, for helping us with this issue. 

This is not a partisan issue. We all know we have a huge debt. 

We need to bring it down. We have a problem with Medicare. We 

are running out of money somewhere down the line. We want to 

make sure that does not happen. And we want to put bad guys in 

jail and put the white hats, we want to make sure they get some 

credit. We appreciate the work that is being done on this. 

When I get to the end of my questions, the last question I will 

ask is for you to come back to us and give us advice and maybe 

one thing, and I will start maybe with you, Ms. Carson—not now, 

but in 7 or 8 minutes—come back and say, if the Congress could 

do one thing, the Legislative Branch, what can we do? What should 

we do to try to make sure that we do a better job with respect to 

these issues? Just be thinking about that, everybody here. 

All right. A question, if I could, for Mr. Andres, if I could. I think 

our Attorney General, Eric Holder, has been quoted as saying 

maybe the fraud on Medicare is as much as $60 billion. Let us just 

say it is half that. Let us just say it is, like, $30 billion. I do not 

think anybody knows what it is, but let us say it is only half that 

number, $30 billion. 

Last year, we reached a high-water mark, I think, the most recent year, where we recovered, what, about $4 billion, or we tried 

to recover as much as $4 billion, reported that. That would be the 

biggest recoveries we have ever made. Going forward, obviously, we 

want to stop the incidence of fraud in the first place, but can we 

expect next year—I think we have seen this growth, these recoveries grow from maybe $1 billion to $2 billion to $4 billion. Given 

the fact that there is a lot more out there, can we expect to see 

that number continue to rise? 

Mr. ANDRES. Senator Carper. 

Senator CARPER. And what can you do, what can we do to make 

sure that happens? I think one answer might be, if you are getting 

seven bucks back for every dollar that you have to invest, maybe 

we need to make sure that you can get those one dollars so you 

can get to seven. Maybe we ought to double that. But what can we 

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do, what do you need to do to make sure that we continue to increase that number of recoveries? 

Mr. ANDRES. Certainly support the President’s budget, which 

asks for additional funding for the Department of Justice. A lot of 

the money on the recovery side comes from the tremendous work 

from the Civil Division. The Civil Division is involved in False 

Claims Act and other related lawsuits in which they are suing 

pharmaceutical companies and going after a variety of different actors in the field. So a lot on the recovery side comes from the civil 

side as opposed to on the criminal side. 

Our recovery numbers on the criminal side, as I mentioned earlier, are a little harder because, again, we are involved in the arrest and prosecution and jailing of these individuals, but it is harder for us to actually collect money in many instances because the 

money is simply gone or we cannot get to it. 

Senator CARPER. All right. Ms. King, I have been saying I am 

going to ask you a question and the moment has come. Let me just 

see how I lead into this. I think—Dr. Coburn is gone now. He was 

instrumental in having GAO conduct a review, I think, that led to 

the release of a report that identified numerous duplicative government programs as well as ways that the Federal Government could 

cut costs and save money. I think we all realize that identifying duplication in the agency and improvements are critical at this time 

of economic challenge, at this time of high deficits, as well as trying 

to be better stewards. 

As an old recovering Governor, I understand the serious challenges that come along with running a major program like Medicare and Medicaid. We all know that our Medicare and Medicaid 

systems are not perfect. We have to find ways to make them better. 

So my question is basically this. We have discussed a number of 

the changes that are being made at CMS to fight fraud. As we look 

forward to the next steps, can you identify some best practices or 

other activities that CMS should consider to further prevent fraud, 

waste, and abuse in these programs? So beyond what is being done, 

how about some additional steps, next steps, to do even better? And 

are there additional statutory authorities that you need from Congress that would enable you, or enable them to do an even better 

job? 

Ms. KING. I think one thing that we would suggest that they 

could do a better job on at the moment is, and especially following 

up on the RAC program, to aggressively identify a process to look 

at what happens with the vulnerabilities so that they do not happen again. When we evaluated the RAC pilot program, we found 

out that they did not have a process like that in place, and going 

forward in the national program, I think that would be important. 

In terms of additional authorities—— 

Senator CARPER. Dr. Budetti, would you briefly respond to that 

comment, please? 

Dr. BUDETTI. Yes, Senator. We appreciate the comment from 

GAO and we are looking to do exactly that, to follow up on the 

vulnerabilities. We believe that we should learn from the findings 

of the Recovery Audit Contractors to correct those problems. 

Senator CARPER. All right. Thanks. 

Go ahead, Ms. King. 

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Ms. KING. I think in terms of new authorities, I think CMS has 

a really full plate at this point, so—— 

Senator CARPER. Is that true, Dr. Budetti? [Laughter.] 

Ms. KING [continuing]. And they have testified before that they 

feel like they have the tools necessary. But effective implementation of those authorities is going to be really important. 

The other thing that I think that was pointed out in the Coburn 

Report is, as you probably know, the Congress sets a lot of the payment policies in Medicare in law and I think it is important to look 

carefully at those policies to see that they are providing the right 

incentives to provide care effectively. 

Senator CARPER. All right. Thank you. 

Let me go to an issue involving contractor conflict of interest. Mr. 

Levinson, I think this involves some of the work that you all have 

been doing. But we are always trying to identify ways to 

incentivize government contractors for better performance as well 

as to try to remove some of the hindrances that they face. About 

a week or so ago, Senators Baucus, McCaskill, and I sent a letter 

to your office asking to review contracting oversight by CMS. The 

issues involved potential organizational conflicts of interest among 

the contractors hired, on one hand, to perform the Medicare claims 

reimbursements and those hired to oversee the process. I would 

just ask, is your office going to be able to examine the questions 

and the issues that we raised, and if you could respond to that, I 

would be very pleased. 

Mr. LEVINSON. Thank you, Mr. Chairman. We have received the 

letter and, indeed, we have ongoing work in the conflicts area that 

we believe overlaps to a certain degree with what the request is, 

and we look forward actually to working with your staff to see how 

we can align our work that was started some time ago with this 

fresh request, which we think in many respects will be very helpful, actually, in filling out our own work. So the answer is a very 

enthusiastic yes. 

Senator CARPER. All right. Good. 

And a follow-up, if I could, Dr. Budetti. Do you have any 

thoughts on the steps that CMS could take to improve the oversight of your Program Integrity contractors? 

Dr. BUDETTI. Senator, we certainly, just as you do, we take any 

conflict of interest issues very seriously. We do have processes in 

place to screen for conflicts of interest before contracts are awarded. We are always willing to take a second look at something so 

important and we look forward to continuing to do so. So we do 

take this very seriously. We believe we have good processes in 

place, but if we need to learn something, we are open to learning 

it. 

Senator CARPER. OK. Thank you. 

All right. Ms. Carson, I indicated I would have one last question 

for the whole panel and it is basically the same question. What can 

we do on the legislative side? This Federal Government, three 

branches, executive, judicial, and legislative, and we try to work together. I am actually quite pleased, in preparing for this hearing, 

to know as we try to reduce improper payments and try to reduce 

the incidence of fraud, as we try to recover additional monies that 

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have been defrauded from these programs, my sense is we are actually working as a team. The team works actually pretty good. 

We have GAO out there being a watchdog and coming up with 

a bunch of recommendations and telling us maybe some things that 

we need to be doing or some things that the folks at CMS need to 

be doing. 

We have the Department of Justice chasing the bad guys, putting 

them in jail, fining them, sending out a real strong message to people who are doing this stuff that if they keep it up, we will catch 

you. You will not be happy. And that is an important message, as 

well. 

And for Ms. Carson over here to say we have not just tens of 

thousands of our senior citizens out there, but maybe hundreds of 

thousands we can put out on the beat, some new cops on the beat, 

and they are all 65 or over, but if we got them out on the beat and 

helping us to beat back the bad guys. 

But what I really want to hear from you is what more—not so 

much what should the folks at the table and those you represent 

be doing, but is there anything, any advice, good advice you have 

to close with what more the Legislative Branch, the Congress, can 

be doing to help us do a better job on this front? 

Ms. CARSON. Well, when I was in banking, we had a tracking 

system called an Excessive Transaction Report. 

Senator CARPER. Excessive transaction? 

Ms. CARSON [continuing]. Report that we had, and what is going 

on in a day in which an alert is transmitted, with the fraud that 

is—and the new scams that are coming out in other cities? If we 

were alerted, we can educate the seniors to what is going on so 

that they can be best prepared to actually—they can be best prepared and we can be best prepared in educating them on what to 

look out for and also not to be taken in by any of the new scams 

that are coming about. 

Senator CARPER. All right. Thanks. I think we are going to want 

to follow up with you back in Delaware and figure out how—maybe 

we can be a model in getting a whole lot more folks involved in 

this. 

During the time I served as Governor for 8 years, we focused a 

lot on recruiting mentors. I wanted to recruit 10,000 mentors to 

work in our schools with kids on a voluntary basis and we hit the 

target. We actually still have thousands of people who mentor. I 

still mentor. That is something where we actually made a big difference in terms of quality of the education, students doing better 

in school, less disruption, just simply doing better academically. It 

did not cost really much money at all and we got a great return 

on that investment. Maybe we can figure out a way to leverage and 

get more of our seniors to sign up for the Patrol. Thank you. 

All right. Ms. King, I am always happy to work with all you folks 

at GAO. I had a nice chat with your new Comptroller General yesterday and it was very encouraging—a very encouraging conversation. But what else can we do at our end to help on this front? 

Ms. KING. I think effective oversight is really critical at this juncture, such as you are doing now. The Congress has taken a really 

active role in oversight of late and I think that is critical going forward, as well. 

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Senator CARPER. All right. Thank you. Mr. Levinson. 

Mr. LEVINSON. Mr. Chairman, of course, it would be very helpful 

to have strong continuing support for the HCFAC program. 

Senator CARPER. Talk about that. 

Mr. LEVINSON. Well, over the course of its history, it has been able to recover $14 billion, and as was pointed out earlier, those 

dollars are continuing to increase. The stakes are much larger and 

the HCFAC program really presents a very, very important vehicle 

for DOJ, OIG, CMS to work in a coordinated fashion to attack the 

fraud problem. So continued support of HCFAC, I would—— 

Senator CARPER. For the folks who are monitoring and following 

this hearing intently across the country, why do you not tell them 

what HCFAC actually means in words that they can understand. 

Mr. LEVINSON. It is the Health Care Fraud Account program that 

was established as part of the Kennedy-Kassebaum HIPAA law in 

the mid-1990s, and it created this dedicated account that is shared 

between the Departments of Justice and Health and Human Services to coordinate a multi-prong attack against health care fraud. 

And as I have said, it has produced very, very significant results. 

The return on investment continues to look even better. 

Senator CARPER. Good. 

Mr. LEVINSON. As a second more particular matter, on (b)(15) exclusion authority—— 

Senator CARPER. Say that again? 

Mr. LEVINSON. On (b)(15) exclusion authority that OIG exercises, 

there is bipartisan interest in Congress now on giving us additional 

authority under (b)(15) that would allow us to pursue, in the context of sanctioned entities, to pursue parent or sister corporations 

that, in effect, control or are working with the entity that has been 

excluded for—as a part of the sanction. 

Senator CARPER. OK. 

Mr. LEVINSON. We need to be able to pursue those who, in effect, 

are in or connected with the corporation that we have identified as 

committing a serious health care infraction. Giving us that authority would allow us to go up the corporate chain or be able to pursue 

other corporations in which individuals basically are working together. 

Senator CARPER. Good. That is one that—I think that is new to 

me. That is not something I have thought about before, so we appreciate that idea. 

Mr. LEVINSON. Thank you. 

Senator CARPER. Thanks. Mr. Andres, what can we do to help 

you guys do a better job? 

Mr. ANDRES. Chairman Carper, the President’s budget seeks an 

additional $63 million in discretionary funding for the Department 

of Justice, and we would use those funds to continue our law enforcement efforts. As we have testified here today, investment in 

health care fraud enforcement is a sound one, one that generates 

revenue, and we believe that supporting the budget would be instrumental to us continuing those efforts. 

Senator CARPER. All right. Thank you. 

Dr. Budetti, before you respond, let me just say, my colleagues 

and I have, frankly, asked a lot of questions, not easy questions, 

in some cases difficult questions. I am sure as we go forward there 

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42 

are going to be even more tough questions. But having said that, 

I just want to note that a very good and important step that you 

described. CMS implementing new requirements and controls will 

help curb waste and fraud from the Medicare prescription drug 

program. We are mindful of that. These steps directly address the 

findings of the IG that I released. That is just one of several in a 

series of solid progress. I just would like to say that. 

It is not enough just to pull somebody before a Committee and 

just say, well, why do you not do a better job? The important thing 

is, well, we have asked you to do a better job. We have provided 

the resources. We have asked you, how can we help you. We have 

provided the resources. And then we say we expect you to do a better job, and on a number of fronts, you are, and we want to make 

sure that continues and we are keeping up our share of the bargain. 

But any closing comment in terms of how we can help more? 

Dr. BUDETTI. Thank you very much for those kind words, Senator. I truly anticipate that we will be in the position to give you 

more reason to feel good about the investments that you have 

made. 

As far as going forward, well, first of all, we certainly appreciate 

everything that you and your colleagues in the Senate and in the 

Congress have done with providing us with the authorities and the 

expanded funding in the Affordable Care Act and other new authorities. Those are absolutely critical to what we are doing. 

Going forward, as my colleagues have said, the President’s budget for 2012 does propose additional spending that promises to save 

another $30 billion or more over the coming decade. So we continue 

to believe that it would be an ongoing wise investment to make, for 

the Congress to make. So if there is any one thing that I would 

mention, it would be for you to support the President’s budget request for 2012. 

But I also want to thank you, sir, for your leadership in this area 

and look forward very much to continuing to work with you. 

Senator CARPER. We look forward to it, as well. 

My thanks to each of you for joining us today, for preparing 

today, for the good work that you and your teams are doing. Let 

us just keep it up. 

I will close with this. I say this probably once or twice every day. 

Everything I do, I know I can do better. The same is probably true 

for all of us. And if it is not perfect, we need to make it better, and 

while we are doing better, better yet, I know we can all do better 

still. Let us just make sure that we do. 

Thank you so much. This hearing is adjourned. [Whereupon, at 

5:02 p.m., the Committee was adjourned.] 

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