Copyright 1999 Federal News Service, Inc.
Federal News Service
APRIL 28, 1999, WEDNESDAY
SECTION: IN THE NEWS
LENGTH:
2646 words
HEADLINE: PREPARED TESTIMONY OF
MICHAEL
F. MANGANO
PRINCIPAL DEPUTY INSPECTOR GENERAL
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
OFFICE OF INSPECTOR GENERAL
BEFORE THE
HOUSE APPROPRIATIONS COMMITTEE
LABOR, HEALTH AND HUMAN
SERVICES AND EDUCATION SUBCOMMITTEE
SUBJECT - FISCAL YEAR 2000 BUDGET
REQUEST
BODY:
Introduction
Good Afternoon,
Mr. Chairman. I am Michael F. Mangano, Principal Deputy Inspector General of the
Department of Health and Human Services. The Office of Inspector General (OIG)
identifies ways to improve HI-IS programs and operations and protect them
against fraud, waste, and abuse. We do this by conducting independent and
objective audits, evaluations, and investigations, which provide timely, useful,
and reliable information and advice to Department officials, the Administration,
the Congress, and the public. In carrying out our mission, we work with the
Department and its operating divisions, the Department of Justice (DO J), other
Federal and State agencies, and the Congress to bring about systemic
improvements in HHS programs and operations, and to prosecute and/or recover
funds from those who defraud the Government.
OIG Funding Sources
The
Office of Inspector General has two separate funding sources: (1) the Health
Care Fraud and Abuse Control (HCFAC) program, established by the Health
Insurance Portability and Accountability Act of 1996 (Public law 104-191) which
funds our Medicare and Medicaid antifraud and abuse activities, and (2) a
discretionary appropriation which is used to fund all other OIG work, such as
public health, children and families, aging, and departmental management.
The OIG's discretionary budget request for FY 2000 is for 292 FTE and $31.5
million, an increase of $2.5 million above the FY 1999 operating level. This
increase provides for annualization of the January 1999 pay raise, the
anticipated January 2000 pay raise, other mandatory and inflationary costs and
expansion of the Child Support Enforcement Task Force. From the $158 million
appropriated for HCFAC Program in FY 2000, the OIG will receive between $110
million and $120 million. Actual allocation of the FY 2000 HCFAC Program
resources will be determined by the Secretary of HHS and the Attorney General.
At least 78 percent of our resources in FY 2000 will be dedicated to
Medicare and Medicaid audits, evaluations, and enforcement activities. Our
recent work continues to show that Medicare is not always a prudent purchaser of
health care goods and services and is inherently vulnerable to making improper
payments, but we are pleased to say that there is measurable progress.
Approaches
We pursue a number of approaches to deal with fraud, waste,
and abuse in HHS programs. Our comprehensive program of audits and inspections
is designed to detect problems in the early stages and to define their nature
and magnitude. When we find problems, we recommend corrective action. In
contrast, our program of investigations is designed to identify, investigate,
and prosecute cases of suspected fraud. Such cases often arise from
whistleblowers who report direct knowledge of illegal practices; from
beneficiaries who report questionable billings, and from our own reviews. We
seek appropriate remedies, such as restitution, fines, penalties, settlements,
and convictions. In addition, we exclude the most egregious abusive providers
from participating in Medicare and other Federal health care programs.
In
recent years, we have expanded our effectiveness by partnering with other HHS
offices, other Federal agencies, State and local governments, and the health
care provider community to achieve common goals. For example, we work with the
Health Care Financing Administration (HCFA) to extract information from its data
systems to spot areas where Medicare may be paying too much, or where "billing
spikes" indicate possible abuse. HCFA's contractor fraud units and medical
reviewers assist us in detecting and evaluating false billings and schemes. We
also work side-by-side with the FBI, the U.S. Attorneys, other Offices of
Inspector General, and State and local law enforcement officials to investigate
potential fraud cases and curb abusive behavior. In addition, we often join with
State officials to review Medicaid issues.
I am pleased to add that we work
increasingly with representatives of the health care provider community to
develop reasonable and voluntary compliance guidelines for insuring accurate
billings to the Medicare program. We also enlist the support of Medicare
beneficiaries. For example, we recently launched a major outreach campaign with
HCFA, the Administration on Aging (AOA), DOJ, and the American Association of
Retired Persons (AARP) to encourage senior citizens to identify improper
Medicare payments. We encourage the beneficiaries to carefully review their
health care bills. When they spot a possible improper item, a service or product
not received, for example, we ask them to call their health care provider. If
that fails to "clear up" the matter, we suggest they call their Medicare
contractor, and then if unsatisfied, to report a suspected fraud to the OIG
hotline.
Accomplishments
The heightened focus on fraud and abuse by my
office, HCFA, the FBI, the DOJ, the Congress, and others, is yielding
substantial recoveries, savings, and program improvements. Last month, my office
reported the results of our third annual projection of improper payments made
for Medicare fee-for-service claims. We found that in a two-year period the
improper payment rate declined by almost half, from a midpoint of $23.2 billion
(14 percent) in 1996, to $12.6 billion (7.1 percent) in FY 1998--a drop of $10.6
billion. Although there is reason to be encouraged by the substantial decline,
$12.6 billion is still too great a loss for taxpayers to suffer.
During
Fiscal Years 1997 and 1998, we reported more than $1.2 billion in fines and
restitutions which have been deposited into the Medicare Trust Fund. We also
excluded more than 5,700 individuals and entities from doing business with
Medicare, Medicaid, and other Federal and State health care programs--up from
2,846 exclusions in the previous two years. The 1998 accomplishments include 261
convictions of individuals or entities that engaged in crimes against
departmental programs, and 927 civil actions. We increased convictions by nearly
20 percent in 1997, and another 16 percent in 1998.
We have a record savings
of $11.6 billion for Fiscal Year 1998. This is comprised of $146 million in
audit disallowances, $515 million in investigative receivables, and $10.9
billion in implemented legislative or regulatory recommendations and actions to
put funds to better use. The savings that result from our recommendations that
are implemented into law or regulation represent dollars that will not be spent.
A cornerstone of our prevention efforts has been the development of
compliance program guidance to encourage and assist the private health care
industry to fight fraud and abuse. The guidance is developed in cooperation with
the provider community and identifies steps that health care providers may
voluntarily take to improve their adherence to Medicare and Medicaid rules.
So far, we have issued guidance for clinical laboratories, hospitals,
home health agencies, and third party billers. We have also solicited input from
the nursing home and durable medical equipment industries on appropriate
guidance for their industries. We had already established mandatory corporate
integrity plans to be followed by health care providers that enter into
agreements in settlement of liabilities under the False Claims Act. At the close
of 1998, our office was monitoring approximately 350 agreements; 231 of these
were entered into in 1998.
Another area of emphasis for us in Fiscal Year
1998 relates to patient dumping. The Emergency Medical Treatment and Active
Labor Act, the anti-dumping statute, requires that an emergency medical
screening examination and appropriate stabilizing treatment be provided to
patients who present themselves at the emergency department of a Medicare
participating hospital, regardless of whether the patient is covered by
Medicare, another insurer, or is uninsured. We are currently investigating over
150 cases of alleged patient dumping. In Fiscal Year 1998, we settled 54 cases,
imposing $1.83 million in civil monetary penalties and requiring the performance
of certain community outreach obligations. By contrast, in Fiscal Year 1997 we
settled 13 cases and imposed just under $500,000 in civil monetary penalties for
violations in this area.
FY 1998 Highlights
Many other accomplishments
have been achieved in our oversight of HHS and its programs. These include the
following:
Federal Financial Accountability. We continue to work with the
Department in its efforts to achieve full financial accountability. Our 1998
audit of the department-wide consolidated financial statements for Fiscal Year
1997, noted an improvement in the Department's financial reporting; that is, our
opinion on its financial statements was upgraded from a disclaimer for 1996, to
a qualification for 1997. Although, again, our opinion on the FY 1998 statements
was qualified, the number of exceptions has been reduced two: (1) continuing
problems with Medicare contractor accounts receivable and (2) preparation of the
newly required statements of budgetary resources, financing and custodial
activity. With respect to the Medicare accounts receivable, the Medicare
contractors do not maintain adequate documentation to support reported accounts
receivable activity of $23 billion or provide adequate audit trails. Regarding
the statements of budgetary resources, financing, and custodial activity,
prepared by the Department for the first time for FY 1998, we note that certain
operating divisions did not have all their accounting records available so we
could complete all necessary audit procedures related to activity reported in
these statements.
Year 2000 Readiness. The HI-IS Secretary has declared that
resolving the Department's Y2K problems is JOB 1. We have ongoing review of the
Department's level of readiness to become Year 2000 compliant. Our work has
revealed that Medicare can be singled out as especially vulnerable with regard
to the Year 2000 (Y2K) problem. In order to properly and efficiently pay
Medicare bills, it will be necessary for the Health Care Financing
Administration (HCFA) not only to correct millions of lines of its own computer
programs to make them Y2K compliant, but to ensure that the computer programs of
the 75 private insurance companies, who serve as Medicare intermediaries and
carriers, and who pay almost a billion claims a year, are updated as well. We
recently surveyed a sample of health care providers (i.e. hospitals, nursing
homes, home health agencies, durable medical equipment suppliers, and
physicians) and found that about half of our sample reported that their billing
and medical records systems are Y2K ready. Less than half have developed
contingency plans, and less than half received certification or guarantees that
external vendor systems were Y2K compliant, but few had actually tested data
exchange with external vendors. HCFA is not responsible for overseeing the
readiness of these provider systems. Our regular reporting provides HCFA and
provider associations with current data that can be used to target outreach
efforts to providers.
Partial Hospitalization Services. "Partial
hospitalization" services are intensive outpatient psychiatric services intended
for acutely ill individuals who would otherwise require hospitalization. Between
1993 and 1997, Medicare payments for these services increased 482 percent, from
$60 million to $349 million. In our national review, we found that more than 90
percent of Medicare claims for partial hospitalization services at community
mental health centers were unallowable or highly questionable. Reviews by both
OIG and HCFA discovered that Medicare was paying for services for beneficiaries
who had no history of mental illness or who suffered from mental conditions that
would not qualify them for program benefits. Also, Medicare was paying for
services that were recreational and diversionary rather than therapeutic in
nature. HCFA responded promptly with an action plan to recover overpayments,
terminate non- compliant centers, increase their scrutiny of new providers, and
intensify medical claims review.
Child Support Enforcement. It is a Federal
offense for a non-custodial parent residing in a different State than the
children to willfully avoid paying his or her court-ordered child support
obligations. Since 1995, we have opened over 650 cases and arrested 159
subjects. As a result of these efforts, 105 individuals have been convicted and
over $7.5 million ordered in restitution. In conjunction with the Office of
Child Support Enforcement, my office has established a multi-agency,
multi-jurisdictional task force whose purpose is to identify, investigate, and
prosecute the most egregious criminal non-support matters at both the State and
Federal levels. To date, this task force, coveting the States of Illinois,
Michigan, and Ohio, has opened over 400 investigations and arrested 197
individuals. These arrests have resulted in 175 convictions and restitution
ordered in the amount of $3.7 million.
We are also continuing our audits and
evaluations in the area of child support enforcement, focusing primarily on ways
to improve paternity establishment, gain greater support from public assistance
clients in establishing support orders, improving States' methods of reviewing
and adjusting child support orders, and improving medical support coverage in
support orders. With efforts such as these, we are able to lessen the effect on
the welfare system by enforcing support from the family members who are capable
of providing it rather than compelling custodial parents to draw support from
public funds.
Institutional Review Boards. We released four final inspection
reports that addressed the role of institutional review boards (IRBs) in
protecting human subjects participating in clinical research. We concluded that
IRBs were reviewing too much, too quickly, with too little expertise. They were
conducting minimal continuing reviews of approved research, facing conflicts
that threaten their independence, and providing little training for clinical
investigators and board members. The Department generally agreed with our
findings and will address these issues with the provider community.
Other
Work Planned or Underway
Some of the non-Medicare projects planned or
underway that should be completed within the next 12 months include:
Post-Market Drug Surveillance by FDA. We are continuing to assess FDA's
system for obtaining, analyzing, and responding to adverse drug event reports.
We expect to issue a report in June.
FDA Biennial Inspections Requirement
for Drug and Device Manufacturers. We will examine FDA's ability to inspect drug
and device manufacturers every two years.
Child Support Enforcement Impact
on Reducing Welfare Payments. We are examining whether States effectively use
available methods to enforce collection of child support payments.
GPRA Data
Collection Methods and Systems, Our work will focus on assessing data collection
methods and controls over the systems used to produce the data being reported.
Ryan White. We are examining the evaluation systems used by Ryan White
grantees in titles I and II and the AIDS Drug Assistance Program
(ADAP) to monitor program compliance, measure client outcomes,
and measure the overall program effectiveness. NIH Oversight of Extramural
Inventions. We are evaluating National Institutes of Health procedures for
ensuring that grantees disclose new inventions developed with NIH grant funds
and give the Government a license for use.
Mr. Chairman, this concludes my
testimony. I appreciate this opportunity to report to you on what we are
accomplishing with our resources and what we plan to accomplish with the funding
we are requesting. I welcome your questions.
END
LOAD-DATE: April 29, 1999
