those of us who spent our career in uniform will be eternally grateful. he was a counselor to presidents and adviser to the senior military officers. he will inspire for many years to come and we will miss him but we will always be grateful to him for his example of life towards his family towards the country and towards humanity. thank you. [applause] different perspective than today's speakers since i was not one of jack's colleagues on the hill. but for nearly a quarter of a century i worked with him from the executive branch focusing on the great national security

challenges our country faced. from our earliest contacts, i will always remember and be grateful for jack's personal efforts on behalf of the afghan resistance fighting the soviets, as jerry lewis talked about. efforts to help bring about the collapse of an evil empire and bring about the end of the cold war. over the last three or so years, i had the opportunity to work with jack on defense department appropriations. we met privately on a regular basis and had more we met privately on a regular basis and had more laughs than you might have thought. one of his great qualities was that he was always candid about where he stood and what he thought. you could always tell when he was getting ready to cut a deal because his eyes would begin to twinkle. [laughter] in october 2008, about a month before the election, jack and i were meeting alone and he showed me a press article he had marked up. it was a piece speculating about

whether senator obama, if he won with asked me to stay stay at defense and if he did whether i would agree. in his inimitable way jack put his hand on my arm and said if he asked, you have to do it. i say, i want you to stay. coming from jack, that had a real impact on me. even though i was somewhat edited his language for this occasion. [laughter] and all of our dealings and over his entire time in congress, it was always clear that jack's first priority and his loyalty belong to the men and women serving our country and the intelligence community and especially in the military. he would do anything to make sure the troops had what they needed. i will greatly miss jack, just as this congress and the country on ole ms. miss an uncommon patriot and one of the truest and most steadfast friends of for america's men and women in

uniform. thank you. [applause] >> ladies and gentlemen, the speaker of the united states house of representatives, the honorable nancy pelosi. >> mr. vice president, members of the president's cabinet, members of the united states senate, visiting to our side, specially the two senators from pennsylvania, senator specter and senator casey we are honored by your presence. to the many colleagues and friends of jack murtha but especially to his family, to choice and the family, thank you joyce back for sharing jack murtha with us. mr. young said he knew jack very well and they worked together for a long time but they never socialize together.

check never socialized. [laughter] he went home to joyce machen every night. many of us who are gathered here have the privilege of calling jack murtha colleague. many also had the privilege of calling him friends. and so we gather today to mourn the loss of a friend, a dear friend and celebrate the life of a person who was a great legislator, a courageous soldier and a public servant to the end. a couple of weeks ago, a couple of planes holding members of congress, family and staff went to johnstown to pay our respects to jack murtha. we went there to console and we were consoled.

we saw the tremendous outpouring of love and respect for jack murtha. thousands of people stood in the snow in line to wait their turn to say goodbye. again, members of the president's cabinet came to the service, and the president of the united states, william jefferson clinton, was there. i hope it was a comfort to the family that so many people at every level of our society appreciated jack's contribution, mourn your loss and are praying for you at this sad time. i had the privilege of speaking at jack's service and i told the people at johnstown about the pennsylvania corner. important to note there were no other named locations in the house chamber. pennsylvania corner was a place where jack held court.

he was flanked by his two lute tenants on the west, mike oil on the east, bob brady. senior member mr. kanjorski and then all of his pals around him. members came from across the country and across the aisle to pay their respects, to get jack 's blessing and what they were up to. he always gave them friendship. he always gave them advice. sometimes he gave them support. [laughter] for two weeks since he left us, the flag that brady gave to joyce and the family has been sitting there in memory of jack, his leadership, especially of his patriotism. seeing the outpouring of support in pennsylvania, and seeing it here today, recalls to mind ecclesiastics that i mentioned in johnstown.

now let us praise great men, the heroes of our nation. they have led the people either counsel and their knowledge of the laws. from their fund of wisdom, they gave instruction. their bodies are buried in peace and their names will live forever. that people will tell of their wisdom and the congregation will continue to sing their praise. wouldn't jack murtha's grandmother, wouldn't she be proud of the difference that jack murtha made, that he would meet that standard. on this earth to make a difference. others have reference that. he made a difference in so many ways, but it was interesting as we all traveled with them whether it was abroad to the theaters of war or to bethesda

naval medical center or walter reed, and as mr. young has referenced, he was so interested in the soldiers. he could identify with them and speak to them as one who had served in the military, but also his affection for them was as a father. my favorite time was when they knew he was coming they would be all excited and this and that in one day the door was closed and they said, the patient is not ready yet and we waited a moment and the door opened, they opened the door and there was the patient, standing in full salute of jack murtha wearing a steelers jersey. [laughter] jack loved that. jack loved that. jack was a man of great kurds recognize by receiving the prestigious john f. kennedy pro-files encourage award. he won that for the courage it took for him, a person committed

to our national security, a person who loved everyone of our men and women in uniform, the courage it took for him to speak out against the war in iraq. in doing so, he taught us very clearly to make the distinction between war and the warrior. jack believed believe that our national strength certainly was measured in our military might and the morale and well-being of our troops but also that it was measured in the well-being of the american people, and so while others have acknowledged his many, how well decorated he was as a war hero and service man, he was also well recognized and decorated and received many awards for measuring the strength of our country again in the well-being of our country by air people, by his leadership on investments in breast cancer,

prostate cancer, diabetes, hiv/aids, you name it. jack recognized the role recognize the role that research played a make in america healthier and stronger or co- jack's, the motto of the marines which he was very proud, )-right-paren? he visited brian in iraq and how proud he was of seeing him there him of all of our troops and all of his family that came together sempre fi, semper fidel is. that was not only the motto of the marines that he was so proud to be a part of but the motto of his life. always faith and always faithful to his family, his love of joyce was so helpful bowl. it was so wonderful and it was such a joy to behold. that is why he was going every night not socializing with bill

young or the rest of us for that matter. i feel quite certain that the caliber of person that he was, the specialness of his personality, the obedience to his grandmother to make a difference, his patriotism to his country, the love of his family, his mastery of the legislative process, made jack murtha very special or co-i am quite certain that we will never see his like again. but i also mentioned when i was in pennsylvania something about jack that those of us who knew him here knew was very important to him. he loved this institution. and he loved it as others have the knowledge,. i think that love was kindled by his friendship with tip o'neill.

he loves tip o'neill. he loves telling us stories about tip o'neill. tip was his mentor. tip was his friend. tip love to this institution and together they made progress for our country. they made friends with each other, and as a special part of who jack murtha was. i too have a flag. this flag was flown over the capitol, joyce, the minute that we heard that jack had left us. on behalf of the congress of the united states, i want to present it to you in recognition of jack 's leadership and patriotism. every day that he was here he honored the pledge we took in the morning. with liberty and justice for all. how appropriate that god bless america was the song that was on today. god truly blessed america with a

leadership and the life of jack murtha. thank you. [applause] [applause] >> ladies and gentlemen the vice president of the united states, the honorable united states, the honorable joseph biden junior. >> joyce, thank you for allowing me to be here. to the murtha plan,-- clan, your dad was one helluva guy. high in a strange way, having committed the cardinal sin of owing straight to the united

states senate when i was 29 years old, not having had the honor of serving in the house, don't have the day to day connection with jack that all these guys had. but i was there at the beginning and at the end. i was a 31-year-old kid and i was a citizen -- make a united states senator for about a year and i got a phonecall. i got a phonecall from a guy named murtha. film i didn't know. never heard of. and he told me that he was running a special election in johnstown, and he said he knew i was from scranton, thought i understood the ethic of his district are little bit and would i come in and campaign for him. and i did. there may have been others who campaigned then, i don't recall but i remember when i went in, he was ahead by about five .71

by 100 and 22 votes. [laughter] so i know i can't hurt him now. [laughter] the reason i came safely this time i know there was nothing i could do to hurt him now. my son hunter was with me and hunter always hears me tell war stories and tell stories about jack. i might add the first guy i has asked to visit me in the residence i now have, the vice president's residence, to talk about iraq and afghanistan with jack. jack came over and spent about two hours with me sitting on the porch, because they wanted his advice. but, my son hunter is with me and cons, look around at the congressman that are here. there is a lot of congressman here. but everyone of the folks that i know whose reputation unwritten not formal reputations based on

the personal kurds, their guts, their gumption, their ethic, the fact that they are fighters, their sense of personal commitment. you know it goes from bobby brady. bobby one of the regrets i had, i used to kid, growing up in scranton, i tell you what would have been a hell of a neighborhood to grow up and if you in a few and if you and jack lived in the neighborhood because you both could have lived in your neighborhood in philly and we could have slipped in his. it is the same ethic, it is about an ethic, the ethic you have or co-it is more than about character. a lot of people have character. not enough. but few people have that intangible thing. my mom calls it the sixth sense. there is something about some people who you just know they will get your back. they will take your back.

i know i'm not supposed to be this informal as vice presidents, but the jack that i knew, that jack that i loved, the jack that i respected, all the things that were said about jack today are all true and i recognize them. at the part i liked about him the best, the part that i liked about him the best, he was one standup son of the gun. he is just a standup guy, man. he knew what it meant to give at the office. he was a guy paul when he made a deal and his circumstances changed at home, and it would hurt him to keep it, like the guys here in this front row. he would say i get it, i made a deal and a deal to deal with the deal. it hurts me, i am keeping the deal. it is a scranton ethics, a claim on ethics, a johnstown ethic.

you know, this ethic of a lot of you sitting out here. danny i don't know anybody more personal courage than you but jack was kind of like you. jack could stand up when it wasn't popular. he would stand up and defend individuals when it wasn't popular. you talk about how jack was a great soldier, and he was. and i can remember, thinking about it, i remember going out to campaign for him, general, and i did a little bio. i wanted to know about this guy running the special election to have been running johnstown car wash before this time and what was the deal about this guy? i learned this guy when he was playing football at washington and jefferson college, he got

his start in birth and when he found out the reason he got the birth was the guy was an upperclassman was going to korea and that is the only reason he was going to get to start, he left and enlisted and wanted to go to korea. sort of the ethic that you know, if i am getting this job because someone else is make in the sacrifice i should not benefit from the sacrifice. kind of basic stuff, kind of basic step that we stuff that we don't talk about very much. but it is that special stuff. it is the stuff that makes so many of you so different from other people. danny did not get to go to fight in korea. became a drill sergeant and the experience served him very well and the house. [laughter] but here he was, comes along

later and he decides the vietnam war, he still wants to fight for his country. now, i don't know for a fact joyce but guessing i can picture the conversation going like so-and-so has gone and so-and-so has gone and so until it's gone and mary lost her husband and mrs. smith lost her son and i am sitting here. that is the stuff, the fables about how people, we like to think of our country, made up of men and women like that but that was jack. that was jack. i was graduating into vietnam in 68 and there weren't a whole lot of people lining up ready to go, and here jack reserved, he decided he wants to go.

well, you know, he had to file a petition. he got the petition and he showed his mettle. he was a man that always was fighting for opportunity. he fought for his country, but he never stopped fighting when he got back here but it wasn't a fight out of anger and resentful is. it was a fight about this is just right. it wasn't complicated in my experience. it wasn't complicated stuff. it is right or it is wrong. if it is right you have to do something about it. i also remember thinking that when i was out there and 74, if any man reflected his district it was jack. marcy talked about you all remember the movie deer hunter, but the deer hunter country. that was jack.

i mean he reflected again, the ethic of his district. like so many of your districts, that people are here. he was made of the same stuff of the people he served with, and actually grew up with. throughout his career people try to pigeonhole him. i remember people would say, because i had differing views the chairman of the foreign relations committee, actually served longer than jack and served longer than most of you here in the united states congress. and they said how can you be such good friends with jack? this guy is hawk. this guy is a hot. remember when i almost lost your election for you in the beginning? i was the first guy to campaign dumm. no wonder they were so resilient, they made it through

my campaign but all kidding aside, the thing that always struck me about jack was people didn't really understand it was as nancy said, as the speaker said, it was about the warrior, not the war. it was about his country, about the warrior. and what did jack do? jack came out against the war in iraq. people were surprised when jack called from the marines investigating what happened to even because he was such a defender of the marines. i think what people didn't get about jack, it was all about honor, duty and protecting his murray and, not just protecting them physically, protecting their honor. to jacket was about honor. to jack, at least from my perspective, the jack i met in 1974, that is what his opposition to the war was about.

it was about this sense of protecting these kids that he cared so much about. you know, i remember going into very recently, and i'm not going to mention the young man's name, but i spent christmas at walter reed. and, a lot of the troops as you well know, guys and women go there. there were about 14 kids who could not come down to christmas dinner so i went to each of their rooms. there was one kid, both legs gone, part of one arm and he had one of those triangles above his bed. i walked in and he was asleep so i said to the nurse-- no, he really wants to see you. and the kid pulled himself up on

his triangle and said sir, i am sorry i can't stand, and then he said to me, it you know congressman murtha? let me tell you something. i think that the ethic that jack murtha exemplified here is the stuff that is most admired by the american people and the stuff of which we sort of sing songs about. talk about jack's corner, pennsylvania corner, like i said i have never served here but the way i kind of looked at it without knowing, except on two occasions, being able to come to the corner when i came over to

do business, you allowed us from the upper chamber to traverse into god's country, i always thought, it was not so much, not so much who was in jack's corner , but whose corner jack was in. you know, 1977, the johnstown flood, i was the head of the, it used to be called the public works community before it was the environmental public works and i had the subcommittee so i flew to jonestown. there was only one man in america who could have gotten any notice chairman obey, other than dan flood at that moment. and it was jack murtha. everybody else was talking about what they were going to do and

high was holding hearings about disaster relief in getting money. and i asked where was congressman murtha. privately. and i was told that he had just commandeered a military helicopter, and because he was told he could no longer wade through the water in the places he wanted to go, and he was going out spot to spot, giving direct aid and trying to pull people out of trouble. when the bethlehem steel plant closed, he was the first guy to convince bethlehem steel to keep the plant open for another year and fought like the devil to find places for those 10,000 votes he lost a job. because of jacket was more than a steel plant closing. it was a way of life shutting down. it was an ethic that was being lost. it was about dignity and about respect. ladies and gentlemen, you all

know and you can tell 1000 stories about jack, more than i can tell but i didn't have to be around him as much as you were to know the man that he was. i didn't have to be around him as much as you were to know that as nancy said, we are not going to see his like again. you know i think of jack, there is a civil war poet, guy named richard watson gilder who like jack's great grandfather fought in the civil war and the world something that could've been put on jack's tombstone. he said, better than honor and glory and histories iron pan, was the thought of duty done and love of his fellow man. i don't know anybody that did his duty better than jack.

i don't know anybody who cared about his neighborhood more than jack. at the end of the day, when i think of jack i think of neighborhood, i think of neighborhood ethnic. i think of a guy who gives when people's interests are at stake and stood tall throughout his whole career. my dad were alive guys, and you beautiful child, he would look at all three of you and say you have got good blood, kid, you have got good blood. [applause] >> before we adjourn, i would hope that we could all join and express our gratitude, love

respect and appreciation to joyce murtha and their family for sharing jack with us. [applause] [applause] [applause] >> ladies and gentlemen, reverend daniel coughlin will now delivered the benediction. >> please remain standing.

trusting in god, we have shared stories and memories of john and now we come to a final moment. parting always moves the heart. the mind travels everywhere. the heart moves slowly. this assembly will disburse with some sorrow and some regret, but also with deeper commitments and deeper belief because of jack murtha. they god have mercy a god of mercy who gathered us together today, who again will gather us in the joy of his kingdom. therefore, as we go forward, let us walk with the commitment of peace. let us console one another with

faith and left our chair the, our love for one another be known around this world. into your hands father of mercy, we commend our brother and the sure and certain hope that together with all who have died, he will rise again on the last day. we give you thanks for the blessings that you have bestowed upon him, his family and his corps core that are faithful. and this body, which he took such great pride. they are signs to us all of your goodness and continued care for us or go merciful lord turned toward us and listen to our prayers. open the gates of paradise to your servant and help us to remain to comfort one another

with assurances of faith, deeper dedication and service of others , and our faith trust that you will join us all together once again in your holy spirit. merciful lord we know the anguish of the sorrowful, but you are ever attended most of all to the brokenhearted. hear your people who cry to you in their needs and strengthen us and strengthen this nation and they hope of your lasting goodness. it turned all rest granted to him lord and that perpetual light shine upon him. may he rest in peace. amen. peace to you all. >> ladies and gentlemen thank you for joining us today. please remain at your seats for th departure of the official party.

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>> now a senate hearing on alleged waste, fraud and abuse in the medicare prescription drug program. tom carper of delaware chairs the governmental affairs subcommittee on federal financial management. >> will come one and all, specially to our witnesses who have joined us, to those who went to high school in delaware and those who did not. to those whose last name rhymes with the word that legislators fear, that his veto and in the congress or in the state legislatures, to those in our audience we are glad that you are here. today we are going to hear from several witnesses about the medicare prescription drug program. something i voted to create and we are going to hear about not just the good that it is doing and i understand it is a program that roughly 85% of the folks who use it think it is a good

program and a program coming under budget for the last four years and that is all well and good. it is not a perfect program. to a certain vulnerabilities to waste fraud and abuse has two other programs of this nature. the witnesses today will tell an important story. i was surprised when i first heard about the gao inspector general report showing that the critical and basic antifraud safeguards for the medicare prescription drug program were not in place, at least not yet, putting the program at a higher risk to waste and fraud. let me say one of the interesting things about being on this committee, homeland security and government affairs committee is the opportunity to delve into literally every corner of the federal government to look at programs where we don't especially-- do an especially good job for taxpayers and people we work for to put a spotlight on those and to look for problems where we can do a better job and sometimes to look at the-- as

they are not serving the purpose for which we are actually paying for them to serve. and, this is a program we are going to talk about, the medicare prescription drug program that helps keep people out of hospitals, saves lives and it is a very good thing for our citizens. it is also as i said earlier susceptible to waste and well we don't want to diminish the positive aspects of the probe when we want to focus on what we can do better and as my staff eras heard me say time and again everything i do i know i can do better and one of my favorite sayings is if it isn't perfect, make it better and as good as this program is it is not perfect and we can make it better and we want to do it. is especially important we have that focus in a day and age when we as a nation just in the last eight years, we basically doubled our nation's debt. think about that. in eight years we increased our death by as much as we did in the first roughly 208 years.

pretty amazing is that? we are on track to do that again in less your support to do it for a good things. the president has called for a free zone's discretion beginning october 1 and called for creating our pointed folks to serve bipartisan. entitlement spending and revenues and it is important we look at other spending that is going on to see how we can provide benefits and do so maybe for not much more money or maybe even less money. the safeguards that we have in place are important and the safeguards maybe we need to have in place are not only important to protect taxpayer money but important for us to avoid diversion of prescription drugs for criminal activity and support drug addiction. medicare and she as you issue ns a critical component of the health care for nation. i am told it is almost

45 million seniors participating in medicare. think about that, 45 million folks in this country participate in medicare. the prescription drug program which we know affectionately as medicare part d. began in january 2006 and we are now into her fifth year. roughly 85% of the people in the program like the program and 27 million seniors participating , basically after under budget for four years in a row. as insisted that for no program is perfect. during its first years the program went through some serious growing pains. there a still many seniors experiencing problems however medicare part d. is here to stay congressman insures that $50 billion a year we spend works effectively and cost effectively. as we are all aware congress congress anti-american people are in the midst of an important conversation about our nations health care system. there has been some disagreement about exactly what needs to be done. wasn't that a nice way to

understate that there has been some disagreement about exactly what needs to be done but almost everyone agrees the cost of our system must get under control. i with a bunch of students, high school students across the world in dover delaware the other day and i had a chance to spend time with them. several were from japan. one of the questions they asked is how did your health care system get so screwed up? they meant why is it that you spend roughly twice as much as the rest of the world yet with what worse results? that is a case in japan. they spent half of what we do for health care coverage, get better results and they cover everybody. and we don't-- they can't be that smart and we can't be that dumb. we have to figure out how to do this and compete better against them globally and here at home. there has been a lot of talk around here about trying to bend the cost curve of health care. i have used that term once or twice myself. there a number of reasons for

the rising health care costs over the past few decades. it is clear prescription drugs are one of the drivers of that increase. the benefits of modern pharmaceuticals are evident, but so were the cost. 1985 until the average american spent about $90 a year, $90 a year for prescription medicines. today we spend over $700 a year. that is an increase of 740%. having said that they are medicines we can take today to save lives and keep people out of hospitals and having to be in clinics on a regular basis. is the cost really worth it? we can arguably say in many cases it is but of of course eliminating fraud is important in a straightforward way and lowering costs for prescription drugs. unfortunately health care is too often the focus of criminals who take advantage of our system and whether they care is provided through government programs or through the private sector, tends to defraud the system are and fortunately on the rise.

u.s. attorney general eric holder estimates medicare fraud totals around $60 billion a year. and estimate echoed by others in law enforcement fraud. $60 billion a year. that is not all in the prescription drug program but some of this. the second estimate in the program is the level of improper payments each year. the federal government with the estimates of overpayments, under payments, undocumented expenditures and other mistakes and fraud experienced by each agency. the total for the last fiscal year 2009 was almost $100 billion in improper payments. medicare has the largest reported chair of that total at about 36 billion, roughly one third of improper payments for medicare. unfortunately the department of health and human services has not been able to determine the level for the prescription for

programs of the amount wasted in part d. is largely unknown. and that is something we are anxious to do, to get under control. quiet the rise in medicare fraud? as when willie sutton, an infamous 20th century bank robber was asked why do you rob banks? he would always reply, that is where the money is in there is a lot of money in medicare. unfortunately a fair amount of criminal activity. there is another reason and the drugs themselves, the drug problem of addiction to over-the-counter medications. the problem of medicare prescription drugs fraud is more than just a loss of taxpayer money. it is also about harm to her system when fraud results and drugs diverted to legally use. we have a chart that demonstrates the impact. senator mccaskill, welcome. it is good to see you. you are just in time to s-sierra first chart of the day.

you are looking here at growth from 1994 to 2004 and the prescription drug abuse up by 8% and at a time when the use of drugs, it looks like is up 60% and our population is growing by about 12%. so, that is a good picture for us to keep in mind. the only thing, as i was saying the only thing that is outpaced this number is the-- in fact more americans abuse prescription drugs than-- listen to this. senator klobuchar, i get to start my day with you and come close to ending my day with you. more americans abuse prescription drugs than the that number the number who abuse cocaine, the number who abuse heroin, hallucinogens, ecstasy and inhale its combined. in fact they were one out of

five teenagers in america that using a prescription drug. one out of five. aside from our financial responsibility we have a social responsibility to ensure that our public health care system isn't used for further intensified, and subsidizing public health crisis. in a previous report focused on a similar problem with medicaid, the gao reports to the subcommittee some major sources of fraud and abuse involving controlled substances. binder stan some of the same techniques are used with medicare. the first broad technique included beneficiaries, a practice known as dr. shopping in which recipients go to six or more doctors for the same type of drug. in these cases beneficiaries are feeding their addiction are selling the pills for on the street. drug dealers make a profit while the government unfortunately taxpayers foot the bill. brought an abuse of prescription

drugs also appears to be getting beyond the grave. in prescriptions when prescriptions are received by dead ted beneficiaries are britain by did doctors. the department of health and human services specifically the center for medicare, centers for medicaid and medicare services established oversight schemes to prevent the medicare prescription drug program and it is been-- sometimes called-- protecting the program from fraud is a team effort involving federal workers in medicare involving the law enforcement at both the state, federal and local level. medicare prescription drug plans, pharmacies and doctors and beneficiaries themselves. as they recovered governor i understand the challenges that come along with running a major program like medicare. but as many of us have heard, in this room even today, it is not perfect. let's make it better and we share responsibility to do that

with the medicare prescription drug program. our witnesses are going to report to us today not only in the current challenges of waste fraud and abuse in the program but still help us identify some solutions. before they do that look me let me yield to senator mccaskill for whatever she would like to say in thank you for your commitment to ferreting out waste, fraud and abuse including in the medicare prescription drug program. >> thank you mr. chairman for holding this hearing. i was particularly interested in your comments about prescription drugs than the and the abuse of prescription drugs. it has become a common fact that in many communities in this country heroin is not cheaper than oxycontin on the streets. which gives you some idea of what is going on with oxycontin. it is a serious and significant opiate that is highly addictive, that has been widely prescribed.

my lay opinion in a per greatly prescribed, and right now for kids that are on heroin, it is cheaper for them to get the heroin than the oxycontin which by the way the oxycontin feels very similar to heroin. so, it is a serious, serious issue in the oversight of prescription drugs is incredibly important and i look forward to drilling down a better oversight of this program. it is a wildly expensive program for this country. by 2018 we are going to be spending $3000 or recipients and 90% of all the money spent on this program comes right out of the federal treasury and of course there is never been an attempt to pay for that with any kind of offsets or pay-fors. it was all put on the credit card when it was passed, which is i find highly ironic. some of the righteous

indignation from my friends on the other side of the aisle about how dare the federal government intern to a new entitlement program run by the government without paying for it or that is expensive when that that's that is exactly what's medicare d was. so i think it is time we take a hard look at this program and as to whether or not the taxpayers are getting the bang for their buck, whether we are requiring the competition that brings value to the taxpayers for this and whether, if we are doing an aggressive enough job of finding the cheaters. we all know they are out there. are we investing enough to find the cheaters? and, the abusers that are taking advantage of this very generous government probe and. thank you mr. chairman. >> thank you senator mccaskill. senator klobuchar. >> thank you as a special guest to join this committee for one our outward like cinderella. i am actually a member of the gg

sherry committee and have taken a particular interest in medicare and medicaid fraud, just because $1 when dollars are so tight and people can hardly afford to pay the premiums it is just outrageous that we are losing about $60 billion going out of the system to places that it should never go. >> was this an issue that you had in your previous work? pie did. as a prosecutor we have beefed-up our white-collar fraud area and we did a lot of this medicaid medicare fraud. it was always the most vulnerable people getting ripped off in the money is going to storefronts with names that don't even provide any services. the other thing i learned since coming to the senate and being on the judiciary committee is a lot of this fraud takes place in certain hotspots they called them in the department of justice, certain areas that have the least efficient health care systems are not only is the government not chucking but rather companies don't work together well enough so there's just no check on this kind of fraud.

a sickly they are robbing the american taxpayers of money. i've introduced a bill called the improved act, which required the direct deposit of all payments made to providers under medicare and medicaid. medicare regulations are ready required to read depositing or electric funds transfer but these regulations have not been uniformly enforced and lacks verification and identification requirements and check cashing stores make it easy for scammers to commit fraud and disappear without a trace. this bill would start off with medicaid and codified the existing medicare. has been endorsed by the national district attorneys and national association. to really make this health care system work we are going to have to root out the fraud to deter the fraud from happening in the first place a thank you for holding this hearing and allowing me to sit in. >> we are glad to have you here. thanks for your previous work in this and bringing that experience to bear here with us today.

i'm going to briefly introduce our witnesses. we will be joined by other members of our committee. i'm told we will have a series of votes that start any minute now and we will have to two boats and what we will do is probably go from 10 minutes or so after the boats began and somehow we will recess briefly and slip out, do two boats back to back and come right back. our first witness today, kathleen king director of health care team at jal where she is responsible for leading studies of the health care system specializing in medicare management and prescription drug her bridge. ms. king is over 25 years experience in administration. we thank her for being here today and i learned she is from, grew up in wilmington delaware from one of the hide-- find a schools around. next witness, robert vito regional inspector general for evaluations and inspections at the department of health and human services. mr. vito works in the inspector general's philadelphia office

and his leadership has been credited with billions in savings for the medicare program. or next final witness here on this panel is mr. jonathan blum, blum. pronounced like palm. director of the centers for medicare management and the acting director of the center for drug and health plan choice. the senators have widgets in the hundreds of billions of dollars and are responsible for the regulation of payment of fee-for-service providers in medicare prescription drug programs. we thank mr. blum for being with us today and look forward to his testimony. ms. king what are you go ahead. stick close to five minutes and if you go well beyond that we may have to go in both. >> mr. chairman members of the many thank you so much for having me appear today to talk about gao's work on medicare part d especially work on fraud

waste and abuse in medicare part d. as you know medicare part d is a voluntary outpatient prescription drug program that is administered by cms with contracts to private health insurers and farmers and benefit managers. in 2009 there were over 27 million enrollees and $51 billion in expenditures. gao has considered medicare to be high risk since 1990, because of its size, scope and complexity and therefore its former ability to fraud and abuse. the mma, medicare modernization act which created part d required all sponsors, those who provide part t benefits to private companies, to have programs in place to prevent fraud, waste and abuse from occurring. and cms, the centers for medicare and medicaid services issued regulations requiring sponsors to have compliance plans detailing their plans to prevent and detect fraud, waste

and abuse. those plants planted seven required elements that reflect industry best practices. i am not going to name all of those elements here today. they are in my written statement that they include things like having written policies, effective lines of communication, having a compliance officer that reports to senior management. after the implementation of medicare part d, we were asked to look at the compliance plans offered by the sponsors and cms' oversight of those planted we issued a report in july 2008, that is the basis for my statement today also we did speak to cms recently to updated. is part of our work we looked at by a sponsors that provided part d benefits to more than one third of beneficiaries. and we went on-site, our team went on-site, spoke to individuals, review documents and kick the tires if you will. and what we found in that study,

that of the five sponsors, that they hadn't all implemented the seven elements of a requirement plans. five had completely implemented three of ailments and from there at very downward. we also found at that time that cms' oversight of the process was limited. for example in 2000 and eight, we found that oversight was limited to review of the initial plans that sponsors submitted as part of their application tommy and in 2006 cms issued what is called chapter 9, which is their guidance to plans on how to implement their compliance plans or cut the plants were not required to update their compliance plans after that dates nor were they required to update them for the 20007 and 2008 years. turning to audits, we found that cms did not do the audits that is specified in its 2005 oversight strategy.

there were a number of audits supposed to be done, 10 by medics and i think you would hear from medics later in 2005 and 2006 and 35 and 2006 and 2007. at that point in 2006 cms had the resource constraints doing part to an increase in the number of plans participating in part d, did not enable them to do all of the audits that they had planted to switch some audits from on-site audits to desk audits which involved a review of documents in papers sent by the part d plans. to update our report for this presentation today, we spoke to cms again, and they told us that recently, between 2000 and eight in 2009, that the medics had conducted 16 audits, desk audits

of the part d's compliance plans and after that decided that they wanted to do to on-site audits, and as part of that they found some deficiencies and cms decided at that point that they should do more on-site audits. as of today they have not decided exactly how many they should do. cms also updated issued a proposed regulation in 2009, to update its instructions to plans on how to fill out and how to do their compliance plans because they found that not all the sponsors understood them and they told us recently that they expect this regulation be made final very shortly. that concludes my prepared statements and i am happy to answer any questions. ..

>> with the creation of the party benefit provides an opportunity to use the knowledge regained all the years of fighting for it in the medicare and medicaid program. to that end we should use this opportunity to design a system that works to prevent fraud and the improper payments rather than recover the funds after the money

has been spent. plan sponsors and medicare drug integrity contractors known as medics play key roles of this ever. since the inception of part d leu ag has the of the body of work that comes up with the. >> accuracy that each of these groups have in place and me found while some safeguards have been in place since inception others were employed in a limited capacity and some remain unimplemented. to put it simply, there is more work to be done by plan sponsors and the medics progress the administrator of the benefit, cms plays a primary role to detect fraud, waste, and abuse of the developing a safeguard strategy too not address the accord nation and lacks the details that would turn a from a broad strategic concept into useful management tool. although cms required t9

sponsors to have compliance and provided guidance under development agency has yet to finalize any audit to make sure the plants are comprehensive and effective despite the fact that oig is sponsors' compliance did not address all cms requirements profound searches sponsors only had brought or missing when a more are required elements with internal in deterring -- internal monitoring procedures part of the 217 requires sponsors to initiate corrective action we found many plan sponsors have identified central fraud did not do so. even more disturbing is the fact 20 percent of the sponsors did not identify a central days single incident of fraud, waste, and abuse for govett would be remarkable but seems highly unlikely for addition to rely no plans to target of fraud and inappropriate

payments, a cms has publicly stated by using state of the art systems, agency and medics would prevent problems before they occur which is a goal but it we found that rather than using the techniques cms and medics relied largely on complaints. weill they have their place they are by their definition reactive rather than proactive. unfortunately the medics to engage in more proactive measures because they did not have access to the part d pharmacy data until the second year of the program and did not get the data on the position services until the third year her the third year when the metics investigated potential fraud they did not have the authority to direct the obtain information such as prescription and related medical information from pharmacy, pharmacy benefit managers and prescribing physicians. finally, the medical taste medics would authorize the

compliance plans there were not given the approval to do so. it is up to cms to address the issues we found and to accomplish this task we recommend cms has a comprehensive integrity plan and also needs to conduct audits in a timely manner and establish mechanisms to hold sponsors accountable is also the medics from directly obtaining information they need from pharmacies and benefit managers and physicians. most importantly, finally we recommend all key players have more data analysis of claims and payment information and embrace proactive methods of fraud detection per rican assure you part d will be a major focus of oig we're currently performing additional review some of which will likely identify improper part d

payments that might have them preventive there were stronger protection and prevention programs. there is more to be done to insure the integrity of the t. bear program and we stand ready to assist them in their efforts and i am happy to answer any questions you may have. >> you have to wait a few minutes because we will recess and come back and 20 minutes and then you are on deck and we thank you for your patience. thank you. we are in recess. [inaudible conversations]

>> that is enough sun. [laughter] -- but we had some boats and may have more later on bit they do for your patience 84 joining us today. >> thank you chairman darfur and thank you for the opportunity to talk about cms efforts and strategies to improve performance and the quality to elevate the overall accountability's accountability of part d program. the administration cms is committed to ensure we have the best possible program possible and we understand

that we have a tremendous responsibility and a tremendous obligation to ensure that we will provide benefits consistent with the law and protect taxpayer dollars in venture beneficiaries of the high quality program they expect. want to highlight a few points from the testimony but the happy to answer any questions you may have. first i want to highlight party is tremendously complex. we have 4,000 different contracts that provide part d benefits prepare plans sadr stand-alone, a comprehensive, hmo, but part d benefit is delivered by 4,000 different entities and require cms to develop many different strategies to oversee the program to make sure all 4,000 contracts of the same consistent dahlias and goals that cms has. the second play down one to

emphasize that in order to manage the very large program and deliver by 4,000 different contracts, we use a range of different data to ensure that we are monitoring the program and understanding issues and acting and issues and being as proactive as possible. cms has quality metrics and prescription drug claims and monetary position complaints and cms responds very quickly to any issues the data sources tell us. cms also has a very aggressive and robust audits strategy. 2009 it conducted 348 targeted and routine audits and ensure that bid submitted are accurate and ensure that plans follow our rules and that plans to understand our rules and payments are accurate and

that beneficiaries receive the services they are entitled. but again, thus go and complexity, cms us to dedicate resources as part of the as possible and target resources as prudently as possible but are committed to overseeing their audits through desk and on-site a strategy to make sure we have the best possible program. cms has shifted to a more performance based system that we target our audit resources to those party plans at present the highest probability. we don't just do random audits but we target those to the plan represents the biggest of vulnerability to the program. undertaking several new initiatives to strengthen our ability to oversee the program cms, as mentioned in the fall proposed 70 new

regulations to improve oversight of part d program we hope to finalize and teenine simpler for beneficiaries to understand and insure cms has more tools to hold plans more accountable to teenine and also make sure we have the strongest possible compliance strategy's both operated by our t9 contractors but also cms. it tends to finalize these rules to be effective for the contract year. we have heard the concerns regarding our contractors the so-called medics. cms has changed the way we contract and we have a new strategy and a new focus and i am confident we will see even better results from these metic contractors. lastly, we're working very

hard to complete the positive error rate for the part d program is a high priority for you and the congress and also for the president. we have completed three components to the five part composite in error rate and expect to produce all five components to have the part d error rate by the end of next year. last, the president has made fraud, waste, and abuse one of his highest priorities for the medicare program. he has proposed historic and new resources to root out and fight to medicare fraud and abuse also part c and part d. it is true in the past cms lacked resources to do sufficient oversight and auditing but i am confident that with the resources we have that congress has given

cms the we have sufficient resources to address concerns of the past. cms has more to do but we have made tremendous progress but have more work to do. we have several concerns we're working very hard to redress. concerns about marketing practices by part d plants and working very hard to ensure that they market their plans to beneficiaries, the communications are accurate, responsible and not -- and appropriate. we have response to providing clinical access and also concerns about plans that have aggressive growth strategy is. those that grow the fastest seem to present the highest vulnerability so cms will target more resources towards those as they seem to be growing. with fact all be happy to answer any questions you may

have. >> thank you mr. blum. i have a question but i would invite other witnesses to respond. has been undergrad it and a graduate student i studied economics i have always been intrigued, i finally got the hang of it but one thing that always intrigued me is the market forces to shape good policy behavior. there were hard times with federal agencies actually selling the surplus property within their per year. they would just hold onto it pay the utility bills, security costs and find out that for the most part agencies of they go to the trouble fixing of the property, the money goes back to the treasury and it can be hell to pay for the cost. but then the a is different.

babies and% of the sale proceeds use it to fix up property. another example is a health care bill that is passing the senate and the house or in now. but trying to incentivize people and companies if they stop smoking and high blood pressure and cholesterol bring it down and keep it down. how do that? one idea is to allow the employees at stop smoking and lose weight and control cholesterol and blood pressure to receive premium discounts up at 30% if they do the right things for themselves and a group under which they are insured. another example under federal law, it used to be if you were a whistle-blower, you work for mr. vito and the worker of his company for the federal

government, they are kirk's. [laughter] that is a big leap of faith. but they improperly bill and take money that they don't deserve come and you are an employee. you know, about it coming at you report it. you blow the whistle and he will try to fire you. your history. self not only to incentivize to be whistle-blowers but why don't we at least try to protect them to get their job back and recover the lost wages. then we decided to go a step further if you are a whistle-blower done malaysia job projected in your respective there's a recovery you can participate receiving between 15 and 30% of the recovery from the federal treasury. i was told this week the irs may have a similar arrangement with votes to our reporting tax fraud or e

evasion and money recovered recovered, some participation or seven reward can be provided to those. we can have all the stuff we're talking here about federal agency trying to make sure people there doing their job the part of me says one of the way to make sure that that is happening is to actually incentivize pope -- balks if they are aware of fraud to read -- report it. nido levy go to citizens if you have done everything but also actually improve and enhance their own financial or economic situation by participating in the art recovery. could you respond to the idea as something that my work corrects all of you i am thinking how that approach might be implemented with respect to identifying fraud in medicare part d and number one reduce the huge deficits and never to strengthen the

medicare trust fund and a number three try to do this in a way with the effective market forces and policing poor's. >> you take the first shot. >> thank you for the question. it was a long question. [laughter] >> i think the greatest challenge cms has with part d benefit to ensure that all contractors that have contracts of the program share consistent goals and a share consistent values with cms in those eyes to our ensure the beneficiaries in the best possible way, but also the taxpayer dollars are used as prudently as possible. cms has more work to do and create a stronger culture of accountability. we have to insure our contractors understand they share the same

responsibilities best the cms. we're open to every idiot to promote that accountability. i interstate and you have legislation to require to report fraud by a part d. that requires congress to give cms that authority but i think any to solve that cms can add to regulation nor congress can provide to ensure that our contractors your the front lines for the part d benefit share the same values that you have an cms has. >> i will come back to you for follow-up spiegel it. >> i believe that is happening in the medicare program already.

>> senator we're having trouble hearing you. >> is the better? >> some of our largest settlements. >> i am sorry i do not like acronyms. >> that is when a whistle-blower, someone who works in a company realizes the company has done something wrong then they either come to the government or they segmented and say there is a problem here. we would like you to be aware and see if you would like to join with us in going after this case. of some of the largest settlements we have ever achieved have come from those actions. >> what you are suggesting

is something that is working and can work very well. >> thank you. >> ms. king? >> please make sure your microfinance nine rican hear you now. >> i think one of the most effective strategies on fraud and abuse to prevent it from occurring in the first place, i think we would really encourage the front end things like having effective compliance plans in place and the cms oversee them carefully because it is much more effective to prevent fraud they and from paying and chasing. >> i suggest maybe bree nidal of the above. i am joined by senator mccain. what i am pursuing is to figure how we incentivize folks to go out to and help

us identify of the fraud that is occurring. whistle-blowers and those that reach financial recovery with the government they can purchase of 85930% and the irs has a similar program of the things recovered because of tax evasion. and also with the sale getting to keep part of the proceeds and looking for ways to use economic forces to do a better job. we're not doing a great job has you know, part by real to you if you have a statement go-ahead your job and with questions. >> thank you, mr. chairman bert by apologize to the witness is. we have the votes we were interrupted and i thank you for all of you for taking your time here to help us with this very important

issue i ask them a statement be part of the record, mr. chairman. mr. blum as a and a stand at the medicare prescription drug improve my and modernization act requires all part d sponsors have a program to detect and prevent fraud, waste, and abuse. cms regulations established to require more comprehensive compliance part d plan sponsors. cms contracted as you know, with medical drug integrity country church-- contractors to audit the compliance grants. 16 desperate audits were conducted late 20008/2009. asea must determine the value in monitoring the oversight efforts was limited. cms is now engaging the medics to conduct comprehensive on site audits and expects to have 20th 30 completed this year.

we are in agreement so far? >> yes senator specter according to the inspector general however although medics were given orders to conduct a compliance plan orders but not the authorization to proceed. why where did they given the authorization? does i mean cms paid for audits never done? >> thank you for the question senator. it is my a understanding that in the past, the cms or its contractors and medics undertook the audits through just got its act the audits focused on reviewing plans and to they have compliance plans in place? they have been found to have limited value by to our reminded is one thing to check back but another to go on-site to the part d plan to make sure they have the

programs in place and education and process these in place. so they can complete 16 audits in the past but decided not to issue final reports but we have changed that process to be more on site and audits to share the same and values as cms. >> when will the start? >> the process has started now. we're finalizing plans going forward and i expect us to fell our obligation and also to make sure that our contractors and medics share in that as well. secondly cms is an a process to finalize new regulations to give us more oversight on these compliance plans to further define what plans have to follow and also to

have a tighter regulatory process to have stronger processes in place. >> t tear is in its fifth year of operation. >> i cannot speak to the past but i can speak to the future or the president. we're very much committed to the fell. >> who does speak for the past? if you don't? who does? >> again. >> your predecessor? >> correct. >> ms. king do you have a comment? >> senator, i think we recommended in 2008 as cms conducted these audits. they have started them. rethink we believe that audits and on-site audits as

we conducted when we did our worker helpful and have a strong prefect. >> you have confidence that now in the fifth year of operations we will get it right? >> senator, we're not always an aberration israel's speculate about the future will look at the evidence before us. >> and the evidence before you indicates? >> we have spoken to cms about their plans to do on-site audits in there in the process of making final regulation rules to clarify their authority. i have no reason to think they are not going to do what they aren't saying they will do. but we can to make a judgment about its completion effected this until after it has happened. >> can i suggest

mr. chairman six months from now we can get a report from the gao and maybe you can tell us what the evidence is then? >> yes. >> do either of you have a comment on this? >> i want to tell you that we have been doing this work and we believe prevention is the best way to make of fraud, waste, and abuse. w. prevented is set of systems that the payments that are problematic before they go out before they occur. >> dander stan prevention is vital but finding out whether the prevention has been carried out? >> we agree. we started doing the audits 2006 to see if the applied -- plan had compliance. we found out they didn't. they have them but not all

of the elements in river not certain if they were there protecting the program. we recommended at that time cms to audits in 2006. we continue to follow up through 2009 to see if they did that. >> what did you see? >> barren unsuccessful in meeting but we ask them to do that is why we continue to follow-up to make sure it happens. we are just like you. >> mr. chairman the reason why i am focusing attention on this, as you know, , this issue was discussed and agreed upon by the president and of all members that there. my only applies is in the fifth year of operations i think we have the right to expect what we're finding out today. i am not blaming you

personally or anybody else but it seems the fifth year in operation we have given the acceptance that there is significant fraud, waste, and abuse that can be limited. the president talks about eliminating $500 billion with fraud, waste, and abuse that right now i don't have a lot of confidence that we have the procedures in place to really significantly impact that. i hope i am incorrect in that impression up to date but i am encouraged by the comments of the witnesses. there are a lot of other areas to discuss but lacy senator mccaskill here also and i thank you for the time and think the witness is. >> your idea of coming back in six months is a good one turquoise think the idea of us having a hearing nablus the same witnesses or others to see what kind of progress is being made because the

last four or five years ago we have made is not enough pork i hear the focuses to say had we incentivize financially? to help identify the five and make sure we read afford it. they say that is well and good but they need to do the cost recovery at the end everything needs to be in between. senator mccaskill? >> des was really my materials for this hearing i have led the moments where i read this intense and i said what? then i read it again and said what? a you kidding? twenty-four of the 86 medicare day sponsors 24 advent 862008 did not report to one incident of fraud.

okay. and i believe in santa claus and the tooth fairy. if you believe that many of these sponsors that are saying no incidents of fraud, then the auditor in me says of kcal amaya they are high risk and we're on that. i know the aig report is what talked about this. one of the things in the report that i noticed is we don't even require them. we suggest that they report fraud. are you kidding me? we are giving them 90% of the money for this program right out of the general treasury and we are not even requiring that these people report fraud? mr. blum is that a regulation to be proposed is that something we need to do two say they are required to report every incident of fraud they believe is occurring? >> senator before you

respond. >> we have offered legislation that i hope will be if we end up taking a sidecar approach in terms of adding to the senate pass health care bill letter the elements would be to require friday reported. i don't think we have the ability in this legislation too also provide the incentives as we do for whistle-blowers and a the irs. i am interested in doing that but i am sorry to interrupt. >> to have the ability of people we give that much money without a lot we should be allowed to them by regulation the cannot leave choir than to report friday was will give them a gun to go to the bank's. >> we have voluntary reporting choir ms. but it seems awkward to have some things through regulation that is voluntary. to be a regulation should be required.

cms has concluded that cms could change its regulations to have the mandatory reporting requirements the cms would not have the authority to enforce it. to our conclusion congress has to give us the authority to enforce to make the change meaningful. we could change the regulation but we could not in force us that says congress passed to give us the authority. >> that is depressing to me but that is something that would take a lot to require people that we're giving money to to tell us if they think there is broad going on. i don't argue the point* but if we try to get a fixed, that is terrific. we talk a lot about what fraud and abuse of like to get the reaction of gao on the issue of waste.

we have a mind numbing a number of two races out there for seniors broker if somebody has to take a look retort plan 42 is the best. if somebody has to take another drug may be planned 21 is the best for them and there can be a real difference in cost savings depending on which plan has negotiated the best price for which drug is covered in each of the mind numbing the number of choices. do we have any date systems systems -- data systems whether or not seniors have made the best choice based on what their prescription needs are? what may preface the question and i look forward to your answers, it is not that i am interested in what seniors are taking but if they have not made the best choice coming guess who pays for it? we are paying for a progress

there and completely the wrong plan and they could save 50% by switching the plan, 45% of the money up too 45% comes directly at of the united states treasury. what chance have been made to identified -- identify by data points that massive amount of waste in the system that is enriching the profits of these pharmaceutical companies? >> senator, if i may, i will give you a long answer that i hope answers your question that i am not aware of any data systems and actually capture brother seniors are making the best choice is. cms has a plan finder that enables people to go to a website and figure out which drugs the best meat their needs. we don't know how many do that but there is also a provision and a lot that has

to do with people who are duly eligible for medicare and medicaid. in some cases they are subsidized plans they down pay a premium and over one years been a prepay 100% of those cost? >> yes. we are. basically. if those plans go above the average, the people in those plans are randomly assigned to other plans. and there are things called intelligent assignment where you can figure out what would be the best plan for them but the law requires random assignment. sell it. >> so the law says it is okay if we place mrs. johnson the plan that will make her plan twice as expensive because you are required to do a randomly? >> not twice as expensive because they are reassigned below a certain level but that person might be

reassigned to a plan that does not best we their drug needs. >> but they could be reassigned to a plan that would cost the united states government more than it should because that plan has not negotiated a good deal with a given drug company that recipient might need more of. >> exactly. yes. >> there are provisions in some of the health reform bills that would address this issue is. >> thing to mr. chairman. >> i am glad you're here. welcome a. >> thank you very much and allowing me to be here. i am focused on this issue on this judiciary committee and i continue to be astounded we lose so much money when budgets are tight and losing $16 billion every year on medicare and medicaid fraud. of this thinking and senator mccaskill was saying lobbying net of banc one of my favorite story is one guy

did ride -- rob a bank and passed the note and the note to was his own check with his address and his name. a lot of these people when you look at the 90% negative fraud cases that mr. vito was referring to they are just associated with seven companies it is not just a low hanging fruit but falling and rolling on the ground. based on these findings it would appear the resources at cms might be best utilized by focusing on the food analogy of a few bad apples. this cms have the ability to focus on prevention efforts on companies that appear to have increased incidence of fraud? >> thank you for the question. believe a lot of things play into this question. first of all, they don't get those statistics of they

would never know. we got them because we wanted to find out. what we we're trying to learn about, we knew that complaint plans nobody was doing the review some renews cms had no idea how well the plans where or how effective the word to detect fraud, waste, and abuse. we tried to get that to be done but that was not done. another way to attack it was to go get the information from the plan sponsors to figure out how much they have detected. there's a lot of things that go into that. but if you don't know how well the plan compliance plans are working and you see those statistics, then it makes you really wonder what needs to be done and how do focus on the ones that are reporting a large numbers are not the ones that are reporting in the numbers? all. do you see what i am trying to say?

when you get those together you can target you are saying if you have a compliance program not identifying fraud, waste, and abuse with internal monitoring and no reported incidents for investigations, and then you know, that is a place to look. >> are we targeting them now? i know we're trying to put a bunch of tools in place with the health care bill and electronically but water redoing right now? ms. king area where of any enforcement action being taken against the sponsors? is that going on write now? bill macmillan and the scope of our work. jon may be able to answer that. >> cms has a range of tools that uses to enforce our requirements with corrective action plans, enrollment suspensions, termination and worst-case scenario. i am not personally

satisfied with the burmese reported. cms niece to do better and identify plants that represent the highest risk to the program. we're targeting resources to those plans that have biased risk and they should consider lands in reporting fried giving the indication in resources need to be applied. we move to the strategy to apply of their resources to those plans the present the greatest of all the ability to have a range of different did to identify the vulnerabilities but this is the areas cms should explore. >> to help sell when we talk about some much money i think people would be outraged when you're agency came and testified, it she developed a hot spots that have to look debt that for what these hotspots are not just the plans but the type

of provision services? >> cms agrees that we have geographic areas of the country that seem to be higher areas answer 10 services that tend to be higher in dedicating more resources toward those hotspots and three talked about operation and he a new partnership working with the department to justice and that i g2 target those parts of the country that have the greatest vulnerability to the program at large. >> it does seem if you could get some wind your major people prosecuted or some major money in the sense of message and right now we don't have that. people think they can rip people off and read that wind and of those examples but i know it feels like people are just trying to diagnose the symptoms and not treat them at. >> we agree.

the administration i believe has taken the unprecedented action in the past year to dedicate more resources to request more resources from the congress and take a historic and new investment in operation heat and it has proven successful. we have more inventions and cms in the past does not share and what affirmation with at the partners and the secretary and tippy the secretary have been cleared to work and partnership with the idea of a cinder from a justice to address the concerns you are raising. >> last year the investigation from medicare claims contained in a burst of an estimated 1,650,218,200 deceased positions and 385,000 or 300,000 the equipment in

every case said the kaman they wear unwitting instruments that made money from and solace group -- troops would be doing two combat criminals using this type of fraud with? >> i am not aware of these diseased providers with part d but we do know it is an issue with the traditional fee-for-service program. part of the strategy is to use data analysis and much different ways but to focus on the front end but it is claims processing, data sharing. >> making sure everything is electronically deposited and going to the right place? >> absolutely.

cms in the past has had barriers to the data sharing, analysis come up working as hard as we can to break those down the be as prudent -- confident as we can. >> the key for joining us. i want to ask in the but if we want to recover these moneys to prevent the fraud from occurring, we get the money is that have been defrauded and take money from the medicare trust fund or from the taxpayer pockets. we need to incentivize somebody to help recover the money. one of the things we do in the medicare program, the last, using a recovery of auto contractors in texas, florida, and place in

nephew. we try to track down fraud. the first year there was almost nothing the second year of little bit and last i heard $700 million of three states. i believe that should be to extend that to all 50 states and can you tell us what type of timetable? also their recovery should keep anywhere around 10% of the moneys they required. but can you confirm that? >> we determined the last program is still very success of -- successful. they are contractors. they are allowed to keep a share of recovery and right now prove eight focused on the fee-for-service program with part d. it is mike understanding that on a nationwide basis that cms agrees that the pilot was successful that

contractors to the program are a very interesting idea and something congress should consider. today the contractors have not focused on the traditional fee-for-service programs from i do need congressional authorization to allow the recovery audit contractors to work and of fields? >> rainie the authorization to extend. >> can you come back on the record please with that? >> if i come back to rethink ms. king and also to 15 prepare testimony described only 16 audits and that it took two years. is it 86? i think you also referred 24,000 plans.

the 16 audits involve 86 sponsors crack separate audited? help me explain that. >> i might be able to help. maybe i can confirm for the record. >> if there were 16 audits that is not worth the paper they're written on. >> the sponsors are at the corporate level. they have contracts than they have plans. they are relatively small number of sponsors i think 86 is about that number. >> is that right? >> that sounds correct. >> but when you get down to john there are sponsors then contracts and they can have multiple plans and so that is how you get down at the 4,000. but most of the compliance programs are at the

corporate level so they would be at the sponsor of level and i believe that would go at the 86. >> 16 negative 86 and this was after one false start when the original plan never have been? >> now we hear cms will redo the first 16 audits and then the new administration is making a stronger and more serious effort to audit the fraud complaints. but i think we're at the starting gate. that's what it sounds like. is that a correct characterization? >> i think it is fair to characterize it that we are creating and implementing a new strategy for our audits with the compliance plans. i think it is fair to say in

the past cms dedicated the resources toward the audits and we have changed at and thanks to congress, we have new resources for part d oversight and have adequate -- have adequate resources for the compliance. it is also true in the past it was conducted through reduce. we found those to be very limited in value. working with them at six answer criticism and very good suggestions by gao and i g they believe they should be conducted on site and make sure that they don't have the documentation in place but the process and the system and the education program and executives understand the rules. to remind we have to do

these on sites and plenum plays process these to do on-site audits and that is the current strategy. >> one last question i yield to senator mccain. i and a stand reporting 36 billion high degree at almost 100 billion of improper payments but the good news agencies are starting to identify and report next we have to go recover the money that has been improperly paid if there is recovery to be had. but $36 billion figure for medicare in 2009 did not include payments for prescription drug of medicare. when will medicare and medicaid services of improper care? and when i heard before

anecdotally is saying 2012 and that just seems like a long way into the future. if that is indeed what you're going to tell us i hope you can work with our committee and the congress and others to find a way to speed up the process. is that we were looking at? bana we're on track by the end of next year so before 2012 by the end of 2011. we are placing a very high priority on the work and we understand congress and did ministration in order to correct issues need to understand what the issues are. we have completed three of the components and working very hard to finish the last two to have the five part composite error rate reported by the end of next year. >> so by the end of the next calendar year? >> correct. >> very simple terms you

complete the five components what does that mean? it is a reporting system why don't improper payments? not getting the money but it is being reported? >> the way cms currently is proceeding is a five parched error rate. the first part is complete is regarding how well cms systems pay the claims. we have a very low error rate less than 1%. the second component is to measure accurately we deal with the subsidies. again it is a less than 1%. the third component is to measure accurately cms makes payments to eligible beneficiaries that qualify and that hovers about 1%. so relative fee-for-service those three components have very low air raids but that is not the full picture it also has to be accurate

through part d plans to claims and how accurately to the report rebates they collect from a pharmaceutical manufacturers? we will see more data to the intensive process and cms in a decade the resources to complete the two components timely. we did allocate those. >> thank you. we have decay those resources to those last two components. i don't have the estimate and i cannot tell you arrange they will be but we are very much committed to providing that congress with a five part composite. >> thank you very much. >> very briefly if i could try to put this into perspective, mr. blum my information in 2009 cms estimates 21 billion in an improper payments

fee-for-service and 12 billion medicare advantage that is a little over $36 billion. what is the total payment that was made medicare fee-for-service in medicare advantage? i am trying to figure out the percentage of improper payments. >> currently i believe i will give you accurate figures for the record, i believe medicare $450 billion on the traditional fee-for-service program and medicare advantage of cms pays 130 billion to a private part c plans and on part d we spend 50 billion for the part d contractors for the error rate reported last fall is 7.8%. parsee is higher, 14 .6%.

>> what could be that disparity between is 7.8 1015 point* six? >> peake has the fee-for-service program and part c are so different because we pay on part blamed -- her claim and part c is said different measure to calculate the error rate. for the fee-for-service program contractors audit the claims to make sure there is documentation to support those claims. the error rate is not a fraud rate but is a breakdown of how accurate according to a cms fee-for-service rules were the claims paid? one part c that is per member per month but those plans report also service data because that is the combined status and what cms has found is the health

status reported plans does not match the documentation and dave provide to support those claims. >> my understanding 87% potential fraud and abuse were identified their external sources? is that a little disturbing? eighty-seven% should be identified by people who were doing their duty? >> cms has used contractors in the past for the majority of the reviews for the back end reduce to measure and identify fraud. we as an agency believe our role is to prevent fraud before it happens. >> but a plan to emphasize again, if there is no one who would disagree with trying to eliminate fraud before it happens but it is obviously happening.

and it is obviously not being detected when only 13% of the detections are done by the agency itself and 87% arden by others is since. mr. blum, there is no one that disagrees we should try to prevent a but we know it occurs so do you think you should be focusing more attention on that side of the equation rather than relying on patriotic citizens to identify a set of the fraud and abuse? >> i agree the agency has a responsibility and a role to make sure that every claim to the extent possible is paid accurately. we have dedicated and the congress has given cms new resources and the president requested a resources and we have changed the way cms interacts with

law-enforcement agencies to ensure they also have access to the same information that we have. i agree the agency can do more and has done more and will continue to do more. >> finally, it ms. king ready is satisfied retaking the necessary steps to address this problem seriously? . .

they get nine to 12% of the monies they recover and that is pretty good and i want is to look long and hard at what we are doing with first of all to compensate them for blowing whistles and we need to take a

risk and make sure we can, i'll believe we will get passed legislation this year and maybe even this month that says we encourage folks to report fraud and in the case of medicare part d were medicare, where we require them to and come back later on to share with some way to incentivize them to do that not just because it is something they have to do. one last question i have for mr. vito. we will take it easy on you mr. vito so the last question your testimony describes the importance of data analysis, what some call datamining and medicare drug contractors are tasked with proactively analyzing the purchases, costs and distribution of medications to root out the waste, fraud and abuse, but the medics did very little i am told according to your testimony. could you comment more on the situation and why this work is critical and where i think we

will soon hear from them and they are going to testify they have increased their proactive data analysis and does this indicate an improvement and should more be accomplished in kenmore be accomplished? >> largely their efforts of identifying fraud was based on the complaints, which in fact is something that happened already. their strategy at cms and the medics was to use proactive data analysis to identify the problems and prevent them a four they occurred. that largely did not happen, because the medics who were tasked to do that did not have the data to do that analysis. >> can you tell us why they didn't have the data? >> i cannot tell you why specifically they didn't. that would be a question for cms but when we went to them and asked them,. >> when you say them? >> when we went to the medics as part of our medic review we said

let us see the product of data analysis. let us see what you are doing to detect fraud waste and abuse because for example, you put out information today about people who are abusing drugs. if you had proactive data analysis you might be able to find that. you might be able to see that happening and when you see that happening then you can prevent it at that time rather than waiting until after-the-fact when something bad might happen besides just paying the money. so there are significant benefits. cms recognize how important it is to do that proactive data analysis and they wanted to get it done but they just had problems implementing it in making it happen. now we are told that the medics have the data and they are actually utilizing that data to do proactive data analysis. we are also in the trust verification work as well, so our goal will always be to find out if exactly that is happening.

what you need now is you have the data. now they have to start utilizing the data to the best way that they would be able to get the best benefit out of it. cms has to be monitoring them to make sure, helping them to make sure that they are able to get that done and we will as well. >> the last question before we excuse this panel is, every now and then i ask witnesses to come as we try to drill down and try to find out where we can save some money, and ask the witnesses to say what can the branch of our government be doing better? we talked about the agencies and everything we do we can do better and i know it is true for me and i suspected this for all of us. what's should be legislative branch be doing on this committee in particular to make sure one we are preventing fraud from occurring and the second place to the extent it is identified and three make sure we stop it and for that we cover

much of the money as they can for the trust funds and for the taxpayers. what more should we be doing? ms. king? >> senator i think oversight hearing such as this draw attention to these issues and point out. >> i hope so. >> where improvements can be made and you know we are always available to do further investigations into issues like this so we would be happy to assist you in that. >> good, take us. senator king alluded to that and we would like to follow-up with that. >> as it relates specifically to this hearing and this work one of the areas that we saw is that the medics did not have the opportunity to directly go to the pharmacy, they pbm's the plan benefit managers as well as did not have the opportunity to go to the physicians directly. we see that if you would provide some legislation in that area that would help them a call bush that and help them be able to

get their investigations and do better work. >> thanks for that. mr. blum would you comment on the point that mr. vito just made an and add whatever you would like. >> i agree that congress can help cms share information, give access to information both with cms deafened also with the various partners that we used to help us oversee the program, but i think there are some very important provisions pending now on health reform that will give cms more tools to oversee and to strengthen the part d program. one provision that the house passed bills give cms more authority to reject plan bids. today we have very limited authority. plans have to meet certain screens, have to meet certain checks but at the end of the day cms has few opportunities to

reject part d plan bids altogether. having that tool will give cms more ability to promote the best possible part d contractors and i think that is one area that congress can help cms. >> good. alright, we appreciate your being here. we appreciate your testimony and we realize, i think we are making some progress. and we are not making enough as you know. and i feel, and i think my colleagues feel a certain passion to wanting to step this up to the next level, from our and ended your end as well. this is one we will continue to follow-up on to see how we are doing and see if we are making progress and to find out what you will need to be doing particularly cms and find out what we need to be doing to support and encourage those efforts of thank you very much for joining us today and that--

with that we will invite our second panel. thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> i will ask the committee to come back to order, the audience. welcome to our second panel, mr. apple. our first witness is mr. howard apple, president of safeguard services. safeguard service is one of the contractors that provides compliance for fraud waste and abuse center for medicare and medicaid services. our second witness at the panel, at the desk today is dr. christian jensen, the the chief executive officer of quality health strategies. i understand it is another of our contractors that provide oversight for the medicare part d program. welcome and you are both recognize. try to give us your statement at

five minutes apiece roughly and if you go over that it would be fine but much over that i will have to renew in. we are going to have a meeting at 5:00 that starts with the finance committee so we will jump right in. let's have you give your testimony and then we will ask questions. mr. apple you are recognized. >> thank you senator and i will have a written record for the statement. this will be an abbreviated one. mr. chairman and distinguished members chairman and distinguished members of the subcommittee thank you for the opportunity to discuss safeguard services role in helping cms combat fraud and abuse in the medicare prescription program. my name is howard apple and i'm the president of safeguard services. for background enactment of the etiquette modernization act of december 8, 2003 were presented the largest chance for medicare since its inception by creating a new prescription drug benefit for medicaid beneficiaries which is part d. the beginning of september 2006 cms geographically divided the

united states and awarded contracts united states and awarded contracts to three medicare part d contractors, the medics. there was medics north, south and west. each medic was responsible for performing program safeguard functions to detect, deter and prevent fraud waste and abuse and to medicaid fuller abilities associated with the part d benefit services provided within their geographic jurisdiction. sgs was awarded the contract which consisted of 24 of the states and world in the u.s., the district of columbia and the u.s. virgin islands. in september 2008 cms reduced number of meta-contractors to two organizations resulting in the reassignment of medic west h. the medics north and south. medic north's jurisdiction included 35 states for u.s. territories in the district of columbia. additionally be taos was supporting the center for drug and health plan efforts to address they new or emerging they were merging areas of compliance and enforcement

related to advantage part c, part d in the program of volunteers that carefully elderly for the states and territories. under the medics north contract for cms sgs responsibility included allegations or suspicions of fraud waste and abuse in the part d program within our jurisdiction. complaints were received from a variety of sources. the majority of complaints were received via the cms's toll-free part d hotline and through cms's tracking module. typically complaints about telemarketing scams and appropriate enrollment or just in rome and within the plan, explanation of benefit errors, and proper marketing practices and drug diversion. additional responsibilities included innovative techniques to identify potential fraud waste and abuse fulfilling requests for information from one person agencies and conducting compliance audits for part d sponsors. in october 2009 sgs contract was

modified and cms decided to rely on the responsibilities of them medics functionally rather than geographically curb. medic north became a mission of providing a nationwide support the cpc's compliance to bridge the gap between compliance and enforcement activities matched by the program compliance and oversight group and cpc a nationwide fraud waste and abuse task and managed by the program integrity group. our responsibilities now include providing audit technical assistance conducting plan sponsor readiness and compliance assessment, investigating complaints against agency brokers involving violations of medicare regulations and monitoring and evaluating sponsors compliance plans in the effectiveness of those plans. or just want to read a few accomplishments we have had today. from december 2006 through

november 14 of 2009 we handled, we received over 10,000 calls via the toll-free hotline. we handle over 3000200 complaints from beneficiaries. we initiated over 1100 investigations and referred over 120 instances of fraud and abuse to the oig and other law enforcement agencies. we also fulfilled 300 requests of information such as part d data from law-enforcement agencies and referred over 170 agents brokered misconduct cases to insurance commissioners. these accomplishments resulted from developing a collaborative a constructive relationship with cms and all organizational levels which we continue to foster through weekly meetings ad hoc meetings and conference calls. thank you mr. chairman for the honor of speaking to you today and i would be happy to answer

any questions that you are members of the system committee may have. >> thanks for your testimony. i will ask you to suspend for just a moment. i am getting a phonecall that i need to take and we will recess for two minutes. don't go away. i will be back. [inaudible conversations] [inaudible] >> thank you very much. i am dr. christian jensen, the

ceo of quantity health strategies or qhsr to which is a nonprofit corporation. health integrity is one of qhsr 's subsidiaries and has a medicare drug integrity contract. are written testimony that we have submitted contains many more details on our experience with medicare program integrity contracts, but i want to note that we are also the holder of the zone program integrity contract for a region four, which includes the southwest and for task orders one in five of the audit medicaid integrity contract. the history of these contracts has been well covered by a mr. apple, and cms as the program has evolved, has taken some important steps to try to improve the integrity of medicare and medicaid.

there are some unique differences between medicare fee-for-service and medicare managed care programs, and medicare part d and that was alluded to by mr. blum, the complexity of medicare part d. the data systems and the data itself are much less mature with medicare part d. and the risk model is much more complex. it includes cost-sharing, risk sharing and coverage gaps and so forth. and there has been, as our ready has been alluded to, a lack of direct access of the medics to downstream providers. for example we were not able to get physician and pharmacy records. for most of the time of our existence. i would like to share with you

that the oig report represented a picture of the medics as of the end of calendar year 2008. and, during 2000 and nine, many of the challenges and the difficulties that we had encountered in bringing this program to successful maturation were overcome. eyesight a few. medicare part b. mack data access was obtained in late 2008. during 2009, and that is what these numbers alluded to, about 2500 call-center complaints call center complaints were received and processed. 138 calls were processed for law-enforcement. 121 fraud referrals were made to

law enforcement. 157 referrals were made to state insurance commissioners. warty seven proactive analyses were from all sources are now open, and 267 investigations resulted from proactive analyses. with 28% of all our investigations during 2009 resulting from proactive analysis. 12 referrals have resulted from our proactive analyses and we have 203 investigations from proactive analysis, which are still underway. also during 2009, health integrity focused great efforts on trying to ensure that the law-enforcement community and that plans were fully educated concerning the differences and the subtleties and the financial

impact of part d fraud. and as a result, we have seen three part d indictments in 2009 and 2010. we have had a great deal of success and collaborating with plan sponsors. we have established part c and part d plan working groups. they meet quarterly. they include lot of force meant. they include the plan sponsors and for example, the referrals that we received from plan sponsors went up from 90 and 20072396 in 2009, and we have artie had 244 in the first two months of 2010. health integrity has only been a national benefit integrity magic since october 2009, 5 months. but, already this national

experience has strengthened our ability to identify new and emerging regional fraud schemes, to identify existing national scope issues, and to focus on fraud and its prevention through vulnerability reporting, fraud alerts and other measures and i would like to thank senator carper in the subcommittee for this opportunity and i am pleased to answer any questions. >> thanks dr. jensen. you, and in your statement, you mentioned, i will paraphrase but i think he said we had a great deal of success and i think for dating was the word you use, coordinating with plan sponsors in the question i would ask of both of you, how do you measure success in the work that you do? >> you talked about in your statements, referrals and investigations begun. how do you measure success?

sometimes in our schools we measure success not by whether kids make progress at the end of the school year but we can't success on whether they show up and whether there is disciplinary actions. >> one measure of success although it is perhaps a progress or a process measure, rather than an outcome measure because we are not at the outcome stage yet with many of these investigations by the number of referrals and their dramatic increase from the plans. somebody is getting that message that the medics are here and that they can handle these complaints or referrals that they receive about fraud, and that there is a responsibility on the part of the plans to make those referrals. >> mr. apple how do you measure

success? >> there are two ways of measuring success. you can look at quantity and say, we referred to as many cases this many cases to law enforcement. but what i look at more and what my team looks put my team looks out more from metrics are the quality of our work, the quality of our work. so, for example, if in one year we referred 10 cases to law enforcement, and five of them ended up not being accepted because they didn't believe the quality of the work was that good as a benchmark. if the next year we find 100% of our cases work separate because of quality that is one benchmark to me of success, and at sgs we truly, the mantra is not quantity. the mantra really is quality of work. when we refer cases to law enforcement we request

information. if we get a letter back from law enforcement saying that was very helpful, that saved us tons of hours of work to get this case through, that timmy is a to me is a measure of success. >> is there some way that we are measuring success in the work that you all do? where we actually quantify dollars that we have prevented from being defrauded from the program more dollars we have recovered that were fraudulently diverted? is that part of the measurement of success? >> that is then there is of course the return on investment issue. and, what cms puts into funding is contractors. what are they getting back and what are the taxpayers getting back for that? that is a difficult thing to measure sometimes when you have a lot of variables. >> i mentioned earlier the

program that we are in running in three states with recovery, audit contractors were recovered $700 million. that is pretty easy to say this problem is working and they get nine to 12% as a percentage of their preferred compensation for their efforts but you know we can say, in three states six or $700 million is a good way to measure success. it would be nice to know out of wife. what i am looking for is a way to quantify your efforts in the efforts you have described here and in ways that are relevant to us as the six or seven hundred million dollar. >> i was going to say, sgs does more than just medic work. we are also, our programs safeguard contractors in several states. let me just digress a little bit from the medic if i may. in the other programs and they

safeguard contracted we are prohibited by cms from looking, from measuring success by return on investments. the reason being, it is we don't want to be perceived as bounty hunters. so in other words you don't want to just say we referred 50 cases to law enforcement and not really but that the quality of our work. but, in the z. pack independent safeguard contract we know how much we cover. there is a mechanism for us to know how much we recovered and that is one way of knowing a return is far greater than the expense of running our programs. i have behind me the program director and doug, i believe you have told me we have no way of getting their records to know how much was recovered on the medic part d. >> feel free to come to the

table and identify yourself for the record please. pull your chair up. >> for the record my name is doug. and they. >> what is your last name? >> quays. and the program director for what is now the compliance of enforcement medic. weise to be medic north as mr. apple referred to. the problem is because of the intricacies of the, and the ways that the part d and part c. programs are paid in a captivated rate it is difficult to quantify the loss to the government. it is not like part a and b where somebody submits a claim and get paid so much for a claim. instead they get paid a monthly rate per member to administer the plan, and then they did, the sponsors that a certain amount and say this is how much we think we can quantify.

we can provide in this plan for the beneficiary so it is very difficult to quantify the laws. that is why it is difficult russ to turn around and showed the return on investment by referral. at this point we have been referring law enforcement to cms for assistance in trying to quantify the amount. on our referrals. >> let me just add onto that what i was saying, under part a in part b program very different mechanisms to see at tricks. number one, you could stop payments from going out the door. you could put repayment edits in. you can meet recovery of overpayments so that is a more effective way of knowing what was recovered in what your return was. you do not have that in the medic program. >> all right. dr. jenson. >> okay, they are anecdotal or isolated reports. so for example, we conducted an investigation into allegations

about a pharmacist in a southern state submitting high claims were false claims for high-cost hiv and antipsychotic drugs. the investigation revealed that particular pharmacist had submitted $200,000 worth of prescriptions to medicare part d which were never provided to the beneficiaries or prescribed by the physicians. that pharmacist was taken out of practice. that perhaps is one example of a saving. another also took place in a prominent southern state, where a pharmacy billed medicare part d for medications that were never rendered to beneficiaries nor prescribed by physicians which totaled over $1 million. between february 4, 2008 in june 26, 2009.

and, the owner of the pharmacy was indicted in the southern district of that state on charges that he owns two pharmacies which build many -- make medicare for approximately 20 million and received $6 million in payments. he was sentenced to incarceration but senator there are other values to this program which cannot be measured in dollars. i . out also an investigation of a physician and a nurse practitioner who were overprescribing controlled substances than our current ache analgesic drugs. known drug traffickers were seen going into the office and as a result of his prescribing, 10 patients died of overdoses of

prescription drugs. that dr. was indicted october 2000 and eight on 14 counts that alleged her actions led to the death of three patients in 2006. her trial is set for next month. and, the director of an assisted living facility, who stole controlled substances from chronically ill patients for her own personal use. she was indicted on 11 counts of false statements relating to health care matters. and, those things are important perhaps but it is difficult to measure them in money. >> okay, thank you. a question really for both dr. jensen and mr. apple. let me give you a couple of questions. your comments and your testimony that suggested some improvements on several fronts, identified by the gao in the inspector

general. medics i believe are supposed to ensure the anti-fraud complaints were in order and being implemented correctly. yet the center for medicare and medicaid for prevented you from starting-- at least that is what i'm told. would you say your progress and auditory started once you were given the authority to audit the anti-fraud plans of the sponsors? second, why were you not given the authority before 2008, and finally are their current-- you are awaiting permission to begin? >> i could start with that. quite frankly we did not know why we were not given the authority. we were just told we were not able to conduct audits until i believe it was october 12000 and 8 and again, this is the customer telling us this and we

follow what the task order required of us. we believe that, we believe as we do more on its. >> sir, my last question, are there current audits that you are awaiting permission to begin? >> as i speak here today, we are conducting an on-site audits under the new program, and expanded order and we are told that many more are being implemented. >> my question was are their audits you are awaiting permission to be getting? >> no, because we do not request permission from cms. they tell us which orders they want conducted. this is directed by cms. >> we did wealthy had the authority to do 10 knots which work as audits, and i would say that we too were prepared to do many more audits. the medics were ready to carry

out that responsibility but the orders did not calm. and, of the 10 desk audits we did, we did find some areas of weakness but the desk audits are subject to the criticisms that have been made already here this afternoon. >> let me just interrupt you if i may. describe in terms that everybody can understand what a desk audits is, describe the audits you want to be conducting. >> the desk audits itself was essentially, you asked for information from the sponsor. >> been? >> being? >> sgs. >> as just dance for? >> safeguard services, that is my company, safeguard services and a request would be made for plans to provide the data to

prove that they were meeting the seven elements required to be a sponsor. the difference between god and what sgs is doing now is now we are going on site and we are looking at the effectiveness of their pro-grams, of their compliance programs and this would be the best example senator. on a desktop audit, sgs might receive information that proved training sessions were provided on the following dates, a, b, c and d. when you go on sites you could get extra records like attendance records. how many people actually attended? let me see that curriculum you provided the attendees to make sure it is relevant to the work you are doing so you really can delve into the effectiveness and not just a fact that they check

the box and had compliance. >> dr. jensen, the same questions. the kind of thought it that you think you ought to be doing. >> in my view, an on-site audits as has many advantages over the desk audits. an opportunity to verify on sites directly and experientially what has been stated in a document. >> okay. and, do you feel you have the ability to go on-site and conduct the kind of on-site audit that is more appropriate? >> mr. chairman the audits we are doing now are much more effective and my team believes that these audits will be very effective. >> the division of labor tweener to medics believes that responsibility now with

mr. apple's organization. >> okay. one of the questions i asked the first panel i asked them to tell us what we needed to be doing to enable them to do a better job and they gave us a couple of ideas and we explored other ideas during the course of their testimony. but, in terms of what you need to have in order to be, to unleash they fully effective, what do you need in terms of change in attitude, change in direction, change in regulation, change in legislation? what do you need to unleash a sin nominal i guess that's an assaulting the fraud that is occurring in this program? >> mr. chairman i come from a background of law enforcement. i have a long history of law enforcement and you made a reference to willie sutton robbing the bank because that is where the money is. medicare fraud is a little bit different and that fraud many times his paper driven and i

will tell you that anytime you have medicare fraud, if you have sufficient data you will find that fraud proactively or reactively, and with that as a basis, my comments would be the more data that can be available to the medics are better off the medics will be. additionally, if the medics were allowed to obtain medical records directly, rather than going through the sponsors, i believe that would be beneficial and third, something that was not addressed is what the medics are able to look at the a in b data, the fact is that psc that do the a in b are not allowed to look at the d data and i believe the more people, the more investigators that can wrap their hands around data and crime problems you will get a better picture and more productive results. >> we are going to write you and ask you to reiterate that and

amplify on the points you made in writing. >> i would be delighted. >> i echo what mr. apple says particularly with respect to data. one of the reasons we are here and some of the criticisms which have been made of the program have been made, or because of are because of the lack of data in a timely way. the larger the database, the greater the potential for identifying fraud and that is what i i am enthusiastic about. anything that the legislative branch can do to facilitate, that would be greatly appreciated. >> okay. i think those answer my questions. at anything that either of you want to add to what has been

said? also, not just for this conversation we have had with you on this panel, but looking back to a conversation with their first three guests, just to reflect on that anything that you would like to underline, specially noteworthy? >> i think airings like this are so essential. it makes us all better and i appreciate the ability to be able to participate in this hearing. thank you mr. chairman. >> and annie points? >> no, you think every one of their points were on line. i don't think i could add to anything that they said already about being redundant. >> redundant and in a setting like this redundancy is actually good. we are talking about billions of dollars we are trying to capture. >> one thing that mr. vito mentioned and what i said is to give more data to the plans, and also to require that the

sponsors report fraud, waste and abuse and not make it voluntary. >> okay. >> and, in retrospect concerning the testimony from the previous panel, it is important to remember that that was a snapshot in time. that was at the end of 2008, and here we are a good year pass that, and senator carper there has been a lot of progress and a lot of upward movement and a lot a lot of lot of successes since then. >> would you say we still have some to go? >> absolutely. in your own words, anything can be improved on. >> i agree. it is not enough to be good. we have to be great and continue to get better. >> we appreciate you being here today. thanks for your preparation and take us for your responses to

her our questions. thank you for coming out of the audience to come to the witness table and some of our colleagues or unable to join us today and will submit questions in writing. i will be submitting a couple of questions in writing as well. members have two weeks to submit their questions to file conclusion of today's hearing and i would ask that when you receive those questions you respond promptly and again thank you. we do look forward to improved further work that is being done. thanks very much. the hearing is adjourned. [inaudible conversations]

for more information about health care go to c-span's health care webpage. watch president obama said that at the white house with doctors from wednesday and watch republican senate leader mitch mcconnell's response to the president's proposals. you can read the president's letter to congress sent out this week. is at visit c-span.org/health care.

>> afghanistan was one of the topics at a hearing on the 2011 budget request for usaid, the agency for international development. in the past eight years, the united states has allocated $51 billion to rebuild and stabilize afghanistan. the head o usaid testifies at this hour and 15 minute hearing. howard berman of california chairs the foreign affairs committee.

>> the committee will come to order. we have to adjourned today's hearing shortly before 11:00 a.m. so members can attend the memorial service for our late her late colley, john murtha. you been there relatively short time we have to spend with their distinguished witness i will limit opening statements to myself and the ranking member. all other members may submit statements for the record. dr. shah i am very pleased to welcome you for your first formal appearance before this committee and your first time testifying before the congress as usaid administrator. less than two weeks after being sworn and you remade the obama administration's.person in responding to the almost unimaginable tragedy in haiti. dealing with the crisis of that magnitude will be a tall order no longer-- and by all accounts you stepped up to the task with great aptitude. prior to your confirmation,

usaid had been without a permit that that is trader for an extended period so we are particularly, we particularly appreciate the leadership you have demonstrated an experience in dynamism you bring to the job. are ferc is today's on the president's fiscal year 2011 budget request and specifically the policies and programs for development that usaid is responsible for designing and implementing. secretary clinton has rightfully identified diplomacy and development as two key pillars of our national security along with defense. we make it a priority to reduce poverty and alleviate human suffering around the world because it is the morally right thing to do and because of perplexed the compassion and generosity of the american people by foreign assistance programs also serve our economic and national security interest. poor and unstable countries make unreliable trading partners, offer weak markets for u.s.

goods and services. conflict lawlessness and extremism that threaten u.s. interests find fertile ground in the places where basic human needs are not being met and fundamental human rights are not respected. done done right development assistance is a sound investment in the better and safer world. on of my legislative priorities is to reform our foreign assistance laws and programs to ensure that aid reaches those who need it most and that it is delivered with maximum effectiveness and efficiency. our development assistance should they not only to improve the lives of poor people but to build the human capacity and economic and political institutions that will sustain these gains. i look forward to working with u.s. to write legislation to replace the outdated and cumbersome legal structure we currently have with one designated to meet the needs of the 21st century. the administration is now in the midst of two reviews that will have some bearing on this process. the porch quadrennial diplomacy

development review board qddr, seeks to define the capabilities that are needed and to match resources with priorities. the presidential study director known as psd seven will we hope reduce a national strategy for global development that establishes clear and specific objectives for united states policies and programs consistent with the millennium development goals. we should strive to achieve those goals not only in countries where the risk of violent extremism is most pronounced but everywhere the children go hungry, women die in childbirth for lack of skilled assistance assistants and assistance and community server averaged by preventable disease. i am particularly gratified the president's budget places an emphasis on global health, food security and climate change. these are areas where the international community faces significant challenges and where we know how to make a real difference. they build on one of the great

foreign-policy legacies of the previous administration. the present emergency plan for aids relief or pepfar. to ensure that ours assistance is as effective as possible we must elevate and strengthen usaid. i applaud secretary clinton's call to rebuild usaid into the world's premier development agency. we also must make good on president bush's pledge to double the size of the usaid foreign service, goal president obama has also a address. to put the budget numbers in perspective the entire international affairs budget account and only about a third of that 1% is allocated to development and humanitarian programs. one overarching goal of our assistance is to reduce the need for putting american soldiers in harm's way. about 18% of the entire international affairs budget and about 60% of the growth since last year is for the front-line states of iraq, afghanistan and

pakistan. by building schools, training police and increasing agricultural production we help lay the foundation for a more stable future in these volatile nations. is investment well worth making considering the savings and long-term cost in american blood and treasure. with this in mind the increases for fiscal year 2011 are quite modest and i think extremely well justified. dr. shah we appreciate having you here this morning and look forward to your testimony but first i would like to turn to the ranking member ileana ros-lehtinen for any opening murder mark she might want to make. >> thank you as always, take us for the opportunity and dr. shah i join in welcoming you to our foreign affairs committee for the recent tragedy in haiti and the intense of rapid efforts to help the people of that devastated country. you have had a bracing introduction to your current position and as i had said to you in the side room, you have represented our humanitarian

country so well and i commend you for an exemplary usaid mission in haiti. you hit the ground running, so we wish you well in all of your endeavors on behalf of our nations and those it seeks to help throughout the world. i am however disappointed that the congressional budget justification for your agency is not yet available so it places us at a disadvantage today in discussing the fiscal year 2011 budget requests for a.i.d., because we lack that information. but necessity is the mother of invention. the past year has seen a dramatic deterioration and our nation's economic position. should the president's proposed budget for fiscal year 2011 be adopted without any changes, the debt created in next year a bungled equal an additional $4000 owed by every man, woman

and child and in the united states. this on top of the $40,000 that each american already effectively does through the public debt. we are now borrowing at a rate of about $4 billion a day to keep our government in operation. this is not the best position for our country to be in. in light of the situation i recommended to secretary clinton last week that although our aid programs are not a major part of the overall budget, we need to find places where we can slow down or freeze spending. we have this opportunity to foster innovation or co-i believe that the seeds for this of the patient are already contained in some of aig's programs. they just need to be expanded to allow us to move away from more assistance programs that work through wasteful and often corrupt bureaucracies abroad and

so often create dependency and breed stagnation among recipient countries. instead of continuing with such tremendous reliance on a.i.d.'s traditional development assistance for example we might instead consider moving quickly to expand our development credit assistance program, which had a far less cost, leverages tremendous private funding in pursuit of our development goals. in line with that, we might also consider expanding a.i.d.'s global development alliance's program, an approach that is once again built on leveraging private funds and pursuing development goals without creating a dependency in other countries. in short we have to do more with less. there are additional and the patients out there, many of them based on technological advances of the past two decades of which

a.i.d. is either already experimenting with or should consider and i will cite some examples. improvements in marketing by small-scale farmers and shop owners in impoverished countries by means of cell phone alerts. the development also of affordable, small-scale clean energy power generators that can be run off the electrical grid in remote areas. also small-scale vouchers for farmers allowing them to break free from the control by huge bureaucratic and often corrupt ministries in obtaining seed and other farm inputs. aig is working in many areas that we need to think how we can intensify and to focus on such small-scale programs which can unleash individuals creativity rather than continuing to interact with unaccountable your credit government agencies abroad. and we should also consider ways to multiply the impact of such

small-scale programs wherever possible, implementing the approach used in our microfinance, microcredit programs were even the poorest beneficiaries are expected to repay some of their assistance to corporate groups that can then in turn provide such assistance to others. small businesses and individual opportunities are what help america grow into the prosperous country that we are long before there was a period of development. it is time to revisit our long-standing views and theories on how to help the impoverished around the world become self-sustaining and prosperous. i hope that the challenges of addressing our fiscal deterioration here at home will lead us to truly explore ways to be more efficient, accomplish our goals and at less cost but with more benefit for those who deserve our help and i thank you

again dr. shah for what you have done in haiti. i know you were standing up already a new program in chile under far different circumstances but i congratulate your entire team at usaid. >> thank you ms. ros-lehtinen and now i'm happy to introduce mr. raj shah, the international development. prior to his confirmation as administrator he served for about six months as undersecretary of agriculture for research, education and economics and chief scientist. a medical dr. and health economist by training, dr. shah previously spent seven years with the gates foundation, holding leadership positions in its agricultural development and global health programs. dr. shah, your entire statement will remain part of the record and we look forward to hearing

your testimony. >> thank you. chairman berman, ranking member ros-lehtinen, members of the committee, i am honored to join me today in support of the president's fiscal year 2011 foreign operations budget request. in the interest of time please allow me to summarize the key points of my testimony and submit the full text for the record. as you know just days after my swearing in the people of haiti were struck by tragedy of almost unimaginable proportions. this past week week in chile suffered a devastating earthquake as well. our thoughts and prayers as are yours, or with the people are with the people of chile in haiti as we provide humanitarian relief and assistance. in the aftermath of the earthquake in haiti president obama designated a two-liter overall response and charger government with mounting a swift, aggressive and coordinated effort. in that capacity usaid coordinated multiagency effort with the the departments of state, defense, homeland

security health and human services agriculture and many other federal partners. with these partners we launched the largest and most successful international search-and-rescue effort after created a robust urban food distribution system that reads more than 3 million individuals with critical food supplies, greatly increased the nations of the structure especially at the ports and the airport and coordinated medical assistance support including direct treatment for more than 30,000 patients and performed hundreds of surgeries, saving lives and limbs. haiti faces along a steep road to recovery and as the operations transition from rescue to recovery, we will continue to stand by the people of haiti and appreciate the support of this committee and congress for doing so. at the same time we will not lose sight of the other priorities including the important work that usaid does to help other countries achieve their development goals in the critical need to strengthen our capacity and accountability in pursuit of this mission. the investments we make today

are a bulwark against current and future threats and a down payment for future of peace and prosperity around the world. is president obama said in oslo last december, security does not exist when people do not have access to enough food or clean water or the medicine and shelter they need to survive. secretary clinton strongly shares this view and has asked us to elevate development to stand with diplomacy and defense as part of our nation's foreign-policy. together with other government agencies usaid is examining our resources and capabilities to determine how best to achieve these development objectives. we are doing soon to the directive on u.s. development policy they quadrennial diplomacy and development review after consultations with congressional committees that are pursuing foreign assistance reform. the fiscal year 2011 budget request will support development priorities that contributes directly to our national security