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Statement by
William Corr, J.D., 
Deputy Secretary
U.S. Department of Health and Human Services (HHS)

Effective Strategies for Preventing Health Care Fraud - Oral Testimony 

Senate Committee on the Judiciary
United States Senate

Wednesday, October 28, 2009

Chairman Leahy, Senator Sessions and Members of the Committee. Thank you for the opportunity to testify about the joint DOJ-HHS Task Force on Health Care Fraud, and in particular, Project HEAT,  which was created by Secretary Sebelius and Attorney General Holder on May 20.

The President’s creation of a Cabinet-level task force demonstrates his commitment to keeping fraud out of federal health programs. Our joint efforts have sped up prosecutions and increased recovery of funds lost to fraud. 

Health care fraud is a serious challenge to the integrity of Medicare and Medicaid. Our response to it needs to be strong and aggressive. And it will be because we are in a better position than ever before to fight health care fraud. Our collaboration has resulted in the use of new methods of data analysis to learn the profiles of criminals entering the programs, including regions of the country where they are most prevalent, and the types of payments from Medicare and Medicaid that are most vulnerable to fraud. Using this new information, our strike forces are more effective and we can pursue policy changes and develop innovative methods of preventing fraud. 

For example, when the strike force in Miami focused on fraudulent claims for durable medical equipment, and the Centers for Medicare and Medicaid Services instituted more rigorous reviews of claims and providers, the result was a 63 percent reduction in DME claims in South Florida. This represents a decrease in claims of $1.75 billion in one year alone.

Fraud and abuse is not limited to federal health insurance programs. Health care fraud is a national problem requiring collaboration among public and private health Organizations. Our colleagues at DOJ tell us they see the same fraud schemes in the private sector we are seeing in Medicare and Medicaid. Criminals who commit health care fraud are becoming more sophisticated and are often parts of organized crime enterprises.

The best efforts of the public and private sectors will be required to substantially reduce health care fraud. Therefore, the DOJ-HHS joint health care fraud task force will plan and convene a national summit on health care fraud. We will invite participants from every affected group, including private insurers, beneficiaries, law enforcement and providers. The summit will bring fresh ideas and collaborations that we believe will result in more effective methods of preventing, detecting and prosecuting fraud.

The collaboration between HHS and DOJ is primarily funded through the Health Care Fraud and Abuse Control Program. Since its inception, HCFAC-funded activities have resulted in the return of $13.1 billion to the Medicare Trust Fund. The investigative and prosecutorial activities performed by the HHS OIG and DOJ with HCFAC resources have a return on investment averaging $6 for each $1 spent over the last three years.  In fact, their work yielded a nearly $8 to $1 return in FY 2008 alone.  The cost avoidance activities performed by the Medicare Integrity Program under HCFAC, such as prepayment restrictions and claims audits, have a return on investment averaging $13 for each $1 spent over the last three years. 

The success of the HCFAC program would not have occurred without the outstanding efforts of the HHS Office of Inspector General, which has provided essential investigative and auditing services.

Experts agree that the most effective way to eliminate fraud is to stop it before it ever starts.  Some of the most important work of the HEAT task force and its partners is focused on enhancing the fraud prevention programs in Medicare and Medicaid.  

Our focus on durable medical equipment is an example. DME fraud appears to be the most prevalent type of criminal activity in Medicare and Medicaid, particularly in hot spots like South Florida. Using authorities provided by Congress, we are requiring DME providers to post surety bonds, be certified by nationally-recognized accreditation organizations and submit to a new rigorous competitive bidding process. This unprecedented level of preenrollment screening will be complemented by on-site inspections of new providers and greater scrutiny of suspicious claims. DME is the first step in our strategy to add more rigor to the fraud prevention efforts across the board.

CMS is instituting other prevention measures as well. For the first time in Medicare’s history, by year’s end, CMS will bring all Medicare claims data together in one centralized data repository. CMS, the IG, and the strike forces will be able to use sophisticated, new technology to review claims data for aberrations any place across the country.

In summary, we are adding resources to existing programs and evaluating funding needs for the future; and we are coordinating efforts across the government, led by the joint DOJ-HHS task force, with great initial success.  HHS is building new prevention programs to stop fraud before it happens; and using new analytical techniques to identify and then strike against individuals and criminal organizations that have targeted Medicare and Medicaid. With the continued support of the President, this Committee and the entire Congress, and joining forces with the private sector, we can continue our success in the war against health care fraud.

Last revised: November 23,2009