H.R. 2480, Inspector General for Medicare and Medicaid Act of 1995; H.R. 3224, the Health Care Fraud and Abuse Prevention Act of 1996; and H.R. 1850, Health Fraud and Abuse Act of 1995 : joint hearing before the Subcommittee on Human Resources and Intergo

236 Pages·1997·12.5 MB·English

by  United States. Congress. House. Committee on Government Reform and Oversight. Subcommittee on Human Resources and Intergovernmental Relations

Lf*/ ***** &ar%l I Coyrtp /
ftljKc,
H.R. 2480, INSPECTOR GENERAL FOR MEDICARE AND MEDIC-
AID ACT OF 1995; H.R. 3224, THE HEALTH CARE
FRAUD AND ABUSE PREVENTION ACT OF 1996; AND
H.R. 1850, HEALTH FRAUD AND ABUSE ACT OF 1995
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON HUMAN RESOURCES
AND INTERGOVERNMENTAL RELATIONS
AND THE
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY
OF THE
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTH CONGRESS
SECOND SESSION
ON
H.R. 2480
TO ESTABLISH AN OFFICE OF INSPECTOR GENERAL FOR THE
MEDICARE AND MEDICAID PROGRAMS
ON
H.R. 3224
TO IMPROVE FEDERAL EFFORTS TO COMBAT FRAUD AND ABUSE
AGAINST HEALTH CARE PROGRAMS, AND FOR OTHER PURPOSES
AND
H.R. 1850
TO IMPROVE FEDERAL ENFORCEMENT AGAINST HEALTH CARE FAUD
AND ABUSE
MAY
2, 1996
Printed for the use of the Committee on Government Reform and Oversight
U.S. GOVERNMENT PRINTING OFFICE
42-506CC WASHINGTON : 1997
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-055441-1
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, Jr., Pennsylvania, Chairman
BENJAMINA. GILMAN, NewYork CARDISS COLLINS, Illinois
DAN BURTON, Indiana HENRYA. WAXMAN, California
J. DENNIS HASTERT, Illinois TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jr., WestVirginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, NewYork
STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, NewYork
ILEANA ROS-LEHTINEN, Florida JOHN M. SPRATT, Jr., South Carolina
WILLIAM H. ZELIFF, Jr., New Hampshire louise Mcintosh slaughter, New
JOHN M. McHUGH, New York York
STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida GARYA. CONDIT, California
PETER BLUTE, Massachusetts COLLIN C. PETERSON, Minnesota
THOMAS M. DAVIS, Virginia KAREN L. THURMAN, Florida
DAVID M. MCINTOSH, Indiana CAROLYN B. MALONEY, NewYork
JON D. FOX, Pennsylvania THOMAS M. BARRETT, Wisconsin
RANDY TATE, Washington BARBARA-ROSE COLLINS, Michigan
DICK CHRYSLER, Michigan ELEANOR HOLMES NORTON, District of
GIL GUTKNECHT, Minnesota Columbia
MARKE. SOUDER, Indiana JAMES P. MORAN, Virginia
WILLIAM J. MARTINI, New Jersey GENE GREEN, Texas
JOE SCARBOROUGH, Florida CARRIE P. MEEK, Florida
JOHN B. SHADEGG, Arizona CHAKA FATTAH, Pennsylvania
MICHAEL PATRICK FLANAGAN, Illinois BILL BREWSTER, Oklahoma
CHARLES F. BASS, New Hampshire TIM HOLDEN, Pennsylvania
STEVEN C. LaTOURETTE, Ohio ELIJAH CUMMINGS, Maryland
MARSHALL "MARK" SANFORD, South
Carolina BERNARD SANDERS, Vermont
ROBERT L. EHRLICH, Jr., Maryland (Independent)
James L. Clarke, StaffDirector
Kevin Sabo, General Counsel
Judith McCoy, ChiefClerk
Bud Myers, Minority StaffDirector
(ID
Subcommittee on Human Resources and Intergovernmental Relations
CHRISTOPHER SHAYS, Connecticut, Chairman
MARKE. SOUDER, Indiana EDOLPHUS TOWNS, New York
STEVEN SCHIFF, New Mexico TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland BERNARD SANDERS, Vermont (Ind.)
THOMAS M. DAVIS, Virginia THOMAS M. BARRETT, Wisconsin
DICK CHRYSLER, Michigan GENE GREEN, Texas
WILLIAM J. MARTINI, New Jersey CHAKA FATTAH, Pennsylvania
JOE SCARBOROUGH, Florida HENRY A. WAXMAN, California
MARSHALL "MARK" SANFORD, South
Carolina
Ex Officio
WILLIAM F. CLINGER, Jr., Pennsylvania CARDISS COLLINS, Illinois
Lawrence J. Halloran, StaffDirector
Kate Hickey, Professional StaffMember
Robert Newman, Professional StaffMember
Thomas M. Costa, Clerk
Cheryl Phelps, Minority Professional StaffMember
Subcommittee on Government Management, Information, and Technology
STEPHEN HORN, California, Chairman
MICHAEL PATRICK FLANAGAN, Illinois CAROLYN B. MALONEY, New York
PETER BLUTE, Massachusetts MAJOR R. OWENS, New York
THOMAS M. DAVIS, Virginia JOHN M. SPRATT, Jr., South Carolina
JON D. FOX, Pennsylvania PAUL E. KANJORSKI, Pennsylvania
RANDY TATE, Washington COLLIN C. PETERSON, Minnesota
JOE SCARBOROUGH, Florida TIM HOLDEN, Pennsylvania
CHARLES F. BASS, New Hampshire
Ex Officio
WILLIAM F. CLINGER, Jr., Pennsylvania CARDISS COLLINS, Illinois
J. Russell George, StaffDirector
MarkUncapher, Professional StaffMember and Consel
Andrew G. Richardson, Clerk
David McMillen, Minority Professional StaffMember
(in)

CONTENTS
Page
Hearingheld onMay2, 1996 1
TextofH.R. 2480 5
TextofH.R. 3224 9
TextofH.R. 1850 70
Statementof:
Foreman, Darrell, Home Health Care Market Group, Health Industry
Distributors Association; and Rick Doherty, chair, Legislative Policy
Committee, NationalAssociationforMedicalEquipmentServices 148
Mangano, Michael, principal Deputy Inspector General, Department of
Health and Human Services 114
Quinn, Hon. Jack, a Representative in Congress from the State ofNew
York 102
Letters, statements, etc., submittedfortherecordby:
Clinger, Hon. William F. Jr., a Representative in Congress from the
StateofPennsylvania, prepared statementof J. 92
Doherty, Rick, chair, Legislative Policy Committee, IsTational Association
forMedicalEquipmentServices, prepared statementof 162
Foreman, Darrell, Home Health Care Market Group, Health Industry
DistributorsAssociation, prepared statementof...A 151
Green, Hon. Gene, a Representative in Congress from the State ofTexas,
prepared statementof 212
Horn, Hon. Stephen, a Representative in Congress from the State of
California, prepared statementof 3
Maloney, Hon. Carolyn B., a Representative in Congress from the State
ofNewYork, prepared statementof 211
Mangano, Michael, principal Deputy Inspector General, Department of
Health and Human Services, prepared statementof 119
Morella, Hon. ConstanceA., a Representative in Congress from the State
ofMaryland, prepared statementof 209
Quinn, Hon. Jack, a Representative in Congress from the State ofNew
York, prepared statementof 105
Shays, Hon. Christopher, a Representative in Congress from the State
ofConnecticut, prepared statementof 89
Towns, Hon. Edolphus, a Representative in Congress from the State
ofNewYork, prepared statementof 97
(V)

H.R. 2480, INSPECTOR GENERAL FOR MEDI-
CARE AND MEDICAID ACT OF 1995; H.R.
THE HEALTH CARE FRAUD AND
3224,
ABUSE PREVENTION ACT OF 1996; AND H.R.
HEALTH FRAUD AND ABUSE ACT OF
1850,
1995
THURSDAY, MAY 2, 1996
House of Representatives,
Subcommittee on Human Resources and Intergov-
ernmental Relations, joint with the Subcommit-
tee on Government Management, Information,
and Technology, Committee on Government Re-
form and Oversight,
Washington, DC.
The subcommittees met, pursuant to notice, at 10 a.m., in room
2154, Rayburn House Office Building, Hon. Stephen Horn and Hon.
Christopher Shays (chairmen ofthe subcommittees) presiding.
Present: Representatives Horn, Shays, SchifF, Davis, and Towns.
Ex officio present: Representative Clinger.
,Also present: Representative Hastert.
Staff present: J. Russell George, staff director and counsel; Mark
Uncapher, professional staff member and counsel; and Andrew G.
Richardson, clerk, Subcommittee on Government Management, In-
formation, and Technology; Lawrence J. Halloran, staff director
and counsel; Kate Hickey, and Robert Newman, professional staff
members; and Thomas M. Costa, clerk, Subcommittee on Human
Resources and Intergovernmental Relations; and David McMillen,
Cheryl Phelps, and Mark Stephenson, minority professional staff
members.
Mr. Horn. A quorum being present, this joint session ofthe Sub-
committee on Government Management, Information, and Tech-
nology and the Subcommittee on Human Resources and Intergov-
ernmental Relations will come to order.
This morning's hearing will consider several legislative proposals
designed to combat waste, fraud, and abuse in the Medicare and
Medicaid programs. In November 1995, our subcommittees held a
joint hearing that considered, among other matters, how existing
information technology processes could be incorporated into the
Medicare claims system to more effectively identify fraud.
As part of our subcommittee's oversight responsibilities under
the Inspectors General Act, the Government Management Sub-
committee has also previously received testimony from the Inspec-
(1)
2
tor General for the Department ofthe Health and Human Services
concerning health care fraud.
The General Accounting Office has estimated that, as a result of
fraud and waste, the losses to the Federal Government amount to
approximately 10 percent ofthe over $34 billion spent each year on
Medicare and Medicaid programs. These losses, over $34 billion
each year, are a truly staggering sum. Despite the efforts of many
agencies whose goal is uncovering these abuses, we all know that
far too much remains undetected.
In that regard, this hearing will consider three legislative propos-
als: H.R. 3224, the Health Care Fraud and Abuse Prevention Act
of 1996, was introduced on March 29 by Representative Steven
Schiff and Human Resources Subcommittee Chairman Chris
Shays, who will preside over much ofthis morning's hearing. Their
bill modifies legislation that they previously introduced which
would have expanded law enforcement tools for combating health
care fraud.
H.R. 1850, the Health Care Fraud and Abuse Act, was intro-
duced last summer by the ranking member of the Human Re-
sources Subcommittee, Representative Ed Towns of New York. It
is intended to improve coordination among agencies with fraud de-
tection responsibility. H.R. 2480 was introduced by Representative
Jack Quinn, who is on his way here, and that was introduced last
October. It would establish a new Inspector General for Medicare
and Medicaid programs.
Each ofthese bills seeks to enhance the effectiveness ofthe man-
agement of the Medicare and Medicaid programs. They would pro-
vide new deterrence weapons to the Department of Health and
Human Services and the Department of Justice in their fight
against fraud. With a problem this serious, we are very receptive
to good ideas.
Our witnesses include Representative Quinn of New York; Mi-
chael Mangano, the Deputy Inspector General of the Department
of Health and Human Services; Darrell Foreman, the representa-
tive ofthe Home Health Care Market Group ofthe Health Industry
Distributors Association; and Rick Doherty, a spokesman for the
National Association for Medical Equipment Services.
We thank each ofyou for joining us and we look forward to your
testimony later today.
It is my pleasure now to yield to my co-chair ofthis hearing, the
distinguished Member from Connecticut, Representative Chris-
topher Shays.
Mr. Shays.
[The prepared statement of Hon. Stephen Horn and the texts of
H.R. 2480, H.R. 3224, and H.R. 1850, follow:]
3
ONEHUNDREDFOURTHCONGRESS
Congress of tfje Hmteti States eJ.OdOMoUHiBpEUhMvScsP/tNBToAOw"SnfsJKSNLAESUCWXGTH--ToxbEkR•
IMcHUOiNEW'Oft* %ouzeoffceprcsentat.be*
COMMITTEE21O57NRGaOyVbuErRnNHMoEuNsTeROfEfFiOceRMBuiAlNdiDngOVERSIGHT C•E4ALAVREBOSOAMALNA«OrSABNMJ8->OOSISJAAEARAEHLo5EDa1TM
MINNESOTA Washington,DC20515-6143
jU<jMCSAOOITmHJECEM.AtHVN^RtSAEALCES£MECLAh.SaRSP*udBOAMTeEuOTABOHO'RBBA"OBtKE-OSjBCLIBUSNKECAGITHRIHFNSTINLENADZEJAFWEINOBLNAWNFOOHANAOBAAGHJBlMAEOCOPNSASSSHEOI"CRN'EOhIS; MAA*J€°0€NMOTEYN_T2I»:225-50-.
OPENINGSTATEMENTBY
THEHONORABLESTEPHENHORN,CHAIRMAN
SUBCOMMITTEEONGOVERNMENTMANAGEMENT,
INFORMATIONANDTECHNOLOGY
MAY2,1996
THISMORNING'SHEARINGWILLCONSIDERSEVERALLEGISLATIVEPROPOSALS
DESIGNEDTOCOMBATWASTE,FRAUDANDABUSEINTHEMEDICAREANDMEDICAID
PROGRAMS.
INNOVEMBER1995OURSUBCOMMITTEESHELDAJOINTHEARINGTHAT
CONSIDERED,AMONGOTHERMATTERS,HOWEXISTINGINFORMATIONTECHNOLOGY
PROCESSESCOULDBEINCORPORATEDINTOTHEMEDICARECLAIMSSYSTEMTOMORE
EFFECTIVELYIDENTIFYFRAUD. THEGOVERNMENTMANAGEMENTSUBCOMMITTEEHAS
ALSOPREVIOUSLYRECEIVEDTESTIMONYFROMTHEINSPECTORGENERALFORTHE
DEPARTMENTOFHEALTHANDHUMANSERVICESCONCERNINGHEALTHCAREFRAUD,AS
PARTOFOURSUBCOMMITTEE'SOVERSIGHTRESPONSIBILITIESFORTHEINSPECTOR
GENERALACT.
THEGENERALACCOUNTINGOFFICEHASESTIMATEDTHATLOSSESTOTHEFEDERAL
GOVERNMENT,ASARESULTOFFRAUDANDWASTE,AMOUNTTOAPPROXIMATELY10
PERCENTOFTHEOVER$340BILLIONSPENTEACHYEARONTHEMEDICAREANDMEDICAID
PROGRAMS. THOSELOSSES,OVER$34BILLIONEACHYEAR,AREATRULYSTAGGERING
SUM. DESPITETHEEFFORTSOFMANYAGENCIESTASKEDWITHUNCOVERINGTHESE
ABUSES,WEALLKNOWTHATFARTOOMUCHREMAINSUNDETECTED.
4
INTHATREGARDTHISHEARINGWILLCONSIDERTHREELEGISLATIVEPROPOSALS:
H.R.3224,"THEHEALTHCAREFRAUDANDABUSEPREVENTIONACTOF1996,"
INTRODUCEDONMARCH29THBYREPRESENTATIVESTEVENSCHIFFANDHUMAN
RESOURCESSUBCOMMITTEECHAIRMANCHRISSHAYS. THEIRBILLMODIFIES
LEGISLATIONTHATTHEYPREVIOUSLYINTRODUCEDWHICHWOULDHAVEEXPANDED
LAWENFORCEMENTTOOLSFORCOMBATINGHEALTHCAREFRAUD.
H.R.1850,"THEHEALTHCAREFRAUDANDABUSEACT,"WASINTRODUCEDLAST
SUMMERBYTHERANKINGMEMBEROFTHEHUMANRESOURCESSUBCOMMITTEE,
REP.EDTOWNS. ITISINTENDEDTOIMPROVECO-ORDINATIONAMONGAGENCIES
WITHFRAUDDETECTIONRESPONSIBILITY.
H.R.2480WASBEENINTRODUCEDBYREP.JACKQUINNLASTOCTOBER,ANDWOULD
ESTABLISHANEWINSPECTORGENERALFORTHEMEDICAREANDMEDICAID
PROGRAMS.
EACHOFTHESEBILLSSEEKSTOENHANCETHEEFFECTIVENESSOFTHE
MANAGEMENTOFTHEMEDICAREANDMEDICAIDPROGRAMS. THEYOFFERNEW
DETERRENCEWEAPONSTOTHEDEPARTMENTOFHEALTHANDHUMANSERVICESANDTHE
DEPARTMENTOFJUSTICEINTHEIRFIGHTAGAINSTFRAUD. WITHAPROBLEMTHISSERIOUS,
WEARERECEPTIVETOGOODIDEAS.
OURWITNESSESINCLUDEREP.QUINNOFNEWYORK;THEDEPUTY INSPECTOR
GENERALOFTHEDEPARTMENTOFHEALTHANDHUMANSERVICES,MICHAELMANGANO;A
REPRESENTATIVEOFTHEHOMEHEALTHCAREMARKETGROUPOFTHEHEALTHINDUSTRY
DISTRIBUTORSASSOCIATION,DARRELLFOREMANANDASPOKESMANFORTHENATIONAL
ASSOCIATIONFORMEDICALEQUIPMENTSERVICES,RICKDOHERTY.
WETHANKYOUALLFORJOININGUS,ANDWELOOKFORWARDTOYOURTESTIMONY.