House Ways and Means Subcommittee on Oversight Holds Hearing on Health Care Fraud Investigations

On Wednesday, September 28, 2016, the House Ways and Means Oversight Subcommittee held a hearing on Health Care Fraud Investigations. During the hearing, Congressmen and women examined how the federal government investigates and prosecutes fraud and improper payments, with a special focus on the Medicare program. The Subcommittee heard testimony from officials with the U.S. Department of Justice (DOJ), the Office of Inspector General (OIG), and Health Integrity, LLC.

Each witness spoke to the importance of inter-agency collaboration and two of the witnesses highlighted their involvement in, and knowledge of, the case of Dr. Farid Fata, who was sentenced to forty-five years in prison in 2015 for subjecting 553 of his patients to medically unnecessary cancer treatments, defrauding Medicare and private insurers of roughly $34 million.

Opening Statements

Subcommittee Chairman Peter Roskam referred to the Dr. Fata case as “one of the most egregious examples” demonstrating how health care fraud not only has an impact on taxpayers, but can also actively harm patients, noting, “several patients who were perfectly healthy ended up dying because of his actions.” Roskam asked Congress to consider how painkillers are arriving on the black market and the impact that fraud may be having on the national opioid epidemic.

Witness Testimony

Barbara McQuade

Ms. McQuade is the United States Attorney for the Eastern District of Michigan, and she testified before the Subcommittee on behalf of the DOJ. In her testimony, Ms. McQuade described how the agency partners with colleagues at both the OIG and Centers for Medicare and Medicaid Services (CMS), as well as federal courts and the Federal Bureau of Investigation (FBI), to prosecute health care fraud. She noted that the DOJ’s criminal enforcement efforts are “at an all-time high.”

Abhijit Dixit

Mr. Dixit, a Special Agent within the OIG’s Office of Investigations, gave the Subcommittee a field agent’s perspective on fraud investigations. He testified that during Fiscal Years 2013 through 2015, OIG investigations resulted in 2,856 criminal actions, 1,447 civil actions, 11,343 program exclusions, and over $10.9 billion ordered or agreed to be paid back to government programs.

Scott Ward

Mr. Ward is a Senior Vice President of Health Integrity, LLC, a nonprofit Medicare and Medicaid contractor for CMS and certain states. Health Integrity employs “statisticians, data analysts, predictive modeling specialists, medical directors, registered nurses, certified coders, subject matter experts, communication specialists, auditors, investigators, and business analysts” to combat fraud. He testified about the work Health Integrity and its parent program, Quality Health Strategies, Inc., does to support CMS in “protecting the integrity of the Medicare and Medicaid programs.”

Discussion

Impact of Fraud

Representative Tom Reed brought up the fact that improper payments amount to roughly $60 billion per year, in Medicare alone. While there is some debate as to what percentage of that total is accounted for by actual fraud versus incorrect billing, he noted that the number is three times the federal budget for NASA and twice the amount the government spends to fund the National Institutes of Health (NIH).

Representative Jason Smith discussed with Ms. McQuade whether patient harm is considered or quantified when determining settlement amounts in civil cases. She stated that there are a number of ways to identify damages, and patient harm is among a wide spectrum of factors considered. Representative Jim Renacci shared that he hears from providers that they struggle against false accusations of fraud, citing one example where a particular practice spent more money defending themselves against false claims than they had in revenue that year.

Predictive Data Analytics

Representative Rice and Representative George Holding expressed doubts as to the effectiveness of the predictive data analysis used by OIG and Health Integrity. Rep. Holding asked Mr. Dixit, “how was [Dr. Fata] able to elude your sophisticated data analysis for so long?” Mr. Dixit responded, noting that the analytics can only identify outliers and reiterated the importance of “boots on the ground” in the form of more agents and resources so jurisdictions can respond to data leads more efficiently and effectively.

Mr. Ward noted that there are some gaps in the system data, for example, a delay in the Social Security system’s database. He believes that Health Integrity could more effectively detect fraud with enhanced access to data from the Internal Revenue Service (IRS), the State Department, and immigration records.

Conclusion

As the Subcommittee continues to move forward, they will likely have to wrestle with tension between data analysis and manpower. Chairman Roskam noted that he will continue his work on a Secure ID bill that seeks to reduce fraud through the use of chip technology, thereby making Medicare cards more secure.

The Medicare system is large and complex, and the size and complexity make it very vulnerable to fraud. The Subcommittee understood that it is an important mission to protect honest providers and their patients. Ranking Member Lewis noted, “in our fight against fraud, we must be mindful, we must be careful, and we must put Medicare patients first. Patients must continue to have access to necessary medical treatments. We must do all we can to preserve their choice of doctors and hospitals.”