While efforts to fight healthcare fraud are addressed in both Senate reform bills, more is needed still at the federal level to tackle fraud and abuse at both the public and private sector levels, said Sen. Patrick Leahy (D-VT), chairman of the Senate Judiciary Committee, at a hearing on Wednesday on "Effective Strategies For Preventing Health Care Fraud."
"The scale of healthcare fraud in America today is staggering," Leahy said in testimony opening the hearing. According to conservative estimates, "about 3% percent of the funds spent on healthcare are lost to fraud more than $60 billion dollars a year," he said. In the Medicare program, the Government Accountability Office estimates that more than $10 billon dollars was lost to fraud just last year, he added.
"Whether it is federal dollars or private dollars, fraud is draining billions and billions away from providing effective healthcare. We must work together to ensure that we have tough and effective measures in place to prevent healthcare fraud and provide accountability," said Leahy, who after the hearing introduced a new bill calling for strengthening the "government’s capacity to investigate and prosecute waste."
The committee was informed of new efforts by the Department of Health and Human Services to eliminate fraud by HHS Deputy Secretary Bill Corr. For instance, the Centers for Medicare and Medicaid Services (CMS) is in the final stages of building an integrated data repository (IDR) that "will for the first time in Medicare’s history bring all Medicare claims data together in one centralized data repository," Corr said.
Using the IDR, CMS is expected to go beyond the "current practices of application and claims review" by using new technology to identify irregularities in claims data—such as "unusual, clinically inconsistent, or high volume billings."
One important tool to help fight durable medical equipment (DME) fraud is competitive bidding for suppliers, Corr said. In one effort that became effective in early October 2009, most DME suppliers participating in the Medicare program are now required to have both a surety bond and accreditation from a deemed accrediting organization.
"Most non physician suppliers of durable medical equipment are required to obtain a $50,000 or higher surety bond—thus deterring illegitimate suppliers from enrolling in Medicare," Corr said. This combination of the surety bond and accreditation requirements helps ensure that CMS is only doing business with legitimate partners and expel fraudulent suppliers from the program.
Assistant Attorney General Tony West spoke about the results of the Health Care Fraud Prevention and Enforcement Prevention Action Team—better known as "HEAT"—which is the combined HHS and Department of Justice effort announced this past May to combat healthcare fraud and abuse. Strike forces are now operating in South Florida, Los Angeles, Detroit, and Houston.
The HEAT initiative, for instance, was involved in the case last month in which Pfizer and its subsidiary agreed to pay $2.3 billion to resolve civil and criminal liability claims resulting from the promotion of certain pharmaceutical products.
But while the initiative is new, the collaborative effort has been ongoing between the two departments since 1997. During that time, more than $15 billion has been returned to the federal government, West said.
During questioning from the senators, West acknowledged that it was "important to look at the problem of fraud in healthcare as a holistic problem—not just as a public problem or not just as a public sector problem."
In the bill being introduced by Leahy and Sen. Ted Kaufman (D-DE), they were looking to increase federal antifraud spending by $20 million per year through 2016. They also call for improvements to the federal sentencing guidelines and to forfeiture, money laundering, and obstruction statutes.