Opening Statement - Assessing the Fiscal Integrity of Medicare and Medicaid

The purpose of today’s hearing is to assess the fiscal integrity of the Medicare and Medicaid programs. 

This is the third in a series of hearings the Government Organization Subcommittee has held this Congress focusing on issues within Medicare and Medicaid.  Last July, the Subcommittee held a hearing on improper payments made through the Medicare program. 

In December, we heard testimony from Richard West, a disabled Vietnam War veteran who had to file a whistleblower lawsuit before the government would investigate his Medicaid provider.  When the government finally did investigate, it resulted in a $150 million settlement, the largest recovery ever in home health care fraud.

We have learned from these hearings that there are significant problems concerning Medicare and Medicaid program integrity. 

Medicare and Medicaid are both extremely susceptible to waste, fraud, and abuse.  Due to their vulnerability to fraud and improper payments, both programs appear regularly on the “high-risk list” compiled by the Government Accountability Office (GAO).

In Fiscal Year 2011, the Department of Health and Human Services (HHS) identified $64.8 billion in improper payments for both these programs.  This amounts to over 56 percent of all improper payments identified by the government for that year. 

Due to the size and complexity of Medicare and Medicaid, strong oversight and accountability is imperative. 

Congress has given funding to the Centers for Medicare and Medicaid Services (CMS) since 1996 to implement several program integrity initiatives for Medicare and Medicaid.  Additionally, CMS works in outside partnerships with private contractors and several federal and state entities to identify and prosecute Medicare and Medicaid related fraud.  However, CMS has still had difficulty improving the fiscal integrity of these programs. 

One significant area of concern is data quality.  Reliable, accurate data is essential to prevent fraud, waste, and abuse in Medicare and Medicaid.  Unfortunately, reports have consistently shown that CMS’s many data systems are uncoordinated, ineffective and underutilized.

In 2006, CMS initiated two additional data systems to improve data quality and access.  However, GAO issued a report finding that both systems were inadequate and that only seven percent of program officials actually used the programs to analyze data.   GAO also could not find any evidence of financial benefits in implementing the new systems, despite the fact that CMS has been using them for over five years.

There are also problems with state-reported data.  Many states are not reporting all required data, and there are often lag times of up to a year between when states report data and when CMS receives and verifies it.  The Office of the Inspector General for HHS (HHS OIG) also found that much of the information that was reported in these systems is not useful for fraud, waste, and abuse detection.

In April 2012, the HHS OIG uncovered even more problems with CMS’ program integrity initiatives when it released its report on the Medicare-Medicaid Data Match Program.  This program is supposed to allow State and Federal Government agencies to analyze Medicare and Medicaid data jointly to identify potential fraud, but the HHS OIG found that the program costs more to run than it saves.  CMS claims to have made significant strides in enhancing the effectiveness of the program, but has not produced any evidence of these changes.  

GAO and HHS OIG have both made numerous recommendations to CMS to improve program integrity for Medicare and Medicaid, but many of these recommendations have not been implemented.  Our hearing today will review these recommendations and examine why CMS has not followed them. 

The American people deserve a government that safeguards their tax dollars and spends them wisely.  Unfortunately, CMS has not effectively overseen Medicare and Medicaid, which has led to billions of dollars of waste each year.  We must do more to strengthen the integrity of these programs and increase the accountability of government spending. 

I look forward to hearing the testimony of our witnesses today about how best this task can be accomplished.