so that could be a. let's not worry about the science and math and technology. let's try to help people, and that way we can actually help our country think it's a much. and also, the last point, i want you to test like so you get used to this so when you come up here in a few you just that you've had the training. >> the gentleman yield back. thank you, claudia and samantha. do they call you stand for samantha? good testimony. at this time i recognize the gentleman from california, mr. rohrabacher for as much as five minutes as he wants to use. >> thank you very much, mr. chairman. and let me just note that i did not do well in math and science when i was a kid. i wish i would have, and i think i might've done better in math and science that i wouldn't be here today. [laughter]

so, but i want you to know, the only sight of that story is that it did not become a lawyer. [laughter] in fact, when i ran for congress the first time my most effective slogan was, vote for dan, at least he's not a lawyer. so with those dashed and i want to segue into the kids with this. the bottom line is that kids can see what our priorities are in our society. and they notice that lawyers are the ones with the nice houses, and nice cars, and a lot of times they see the engineers as not having such a nice reward for this profession that they have chosen. i believe that the way we get more engineers and more scientists and such is we pay them better. and how we pay them better is we just make sure that we,

especially, we make sure that our own children have the opportunities to do, to get good jobs that pay well. and start to bring up other issues, but the fact is we seem to be bringing people from all over the world in order to depress the wages of our engineers and our scientists. but instead we should be elevating the pay of those people who are teaching science, and those people who get into science and engineering. so, that's just a couple thoughts. i also am a little bit concerned that movie stars and athletes, you know, they make huge amounts of money and everybody knows that. and people will begrudge an inventor, the money he gets from a patent. i mean, the fact is it is a good thing for someone to invent

something that changes the lives of so many people, and for that person to benefit by making a lot of money from a patent is a good thing. and you would not believe how much we've got here. the powers that be are coming down on these small inventors for insisting they get a royalty for what they have invented. and there's a big patent fight looming right now in congress where some of us are trying to protect the little guy, the small inventor. and other people, a lot of interest here, who are, you know, protecting the interest of some big corporate leader who started off as a lawyer, of course. [laughter] but with that said, i think that we can make scientists and inventors cool. and i want to ask the kids whether or not, you know, our engineers and scientists, people who are engaged in these type of

things, are they considered cool by your fellow classmates now? know they're not. icy handshake. what about you, some of your classmates look as someone as an indie our scientists as someone who is cool or what? >> well, as my mom does a magic show, but it's really engineering. all my classmates are like that's so awesome. >> all right, there you go. hey dude, that's a great. [laughter] jack, what about you? what do your fellow students think about? is it cool to be an engineer or scientist? >> my dad, he's an aerospace engineer and whenever i tell my friends about it, they would always be transiting about that. they thought was cool i could see a rocket launch. they thought engineers are pretty cool. >> okay, all right.

claudia? >> well, you know, i'm in the school the seventh grade time where it depends on what you mean by cool. [laughter] i guess, ms. attard when the first are the unit showed us in pensions that were -- we knew who the inventors were, and after she gave us the names and we said yeah, that's kind of cool. and then, of course, before our time a little, she showed me her first bill nye the science guy tv show. so i think that's what really triggered our minds by integrating the competition into our school kind of -- are people who went home, they went on google, a tight end who invented the microwave, and to come to school the next day and share with everyone. so i guess it kind of was okay. >> all right. alison? >> i go to high school which is a very science oriented high

school, and we are kind of nerdy. so i don't know if we really represent everyone, but to become an engineer, a lot of kids aspire to be a scientist, and a lot of our parents are scientists or engineers, doctors. and everyone admires their parents so much. and they think everyone really admires, and we think it is cool. >> being admired is cool. let me just say, i admire each of you. and my heroes are people who have come up with things that have changed people's lives for the better. and too many times kids hear only the negative side, how horrible things are getting. well, you should also know and be taught about what great opportunities we had to make things better pick your the kids are going to make it better. so congratulations for participating in these wonderful

projects. all the good things are going to do now for the rest of your life. thank you. >> the gentleman stein has expired. -- the gentleman stein has expired are going to be a quick story. i guy was making a speech that i hate all lawyers, i hate all lawyers, they are all geeks. and again in the crowd since i object to that. he said i'm sorry, i did mean to to offend you. did i offend you? know, i'm a geek. >> thank you, mr. chairman. and to the ranking member, i feel there has to be some attention because as my colleagues know, i spent several years as assistant engineer working on the spaceflight program at goddard space flight center, and then i became a law and now i am in congress. [laughter] a lot of attention going on out there. but i'm just so excited to see all of you here, you're educated, your mentors, your parents, and, of course, the students.

and i think when we ask ourselves, you know, i'm going to be okay in the next generation, and next decades, i think we look at young people ending up that we are going to be just fine. because we'll be in your hands. so thank you very much for your participation today and your testimony. like the ranking member and our chairman, education investing in the fields is really important to me. i mean, i feel all across this country that it's really clear that the challenges, the future going to be solved by us grabbing a hold of technology for the 21st century, and the way that we do that is to educate in our s.t.e.m. fields. you know, although i know that some of my colleagues have expressed concern about whether the same kinds of things can take place in a public school setting versus a private school

setting, i think it takes the collection of that to happen. and i think as parents, and i know as a parent that my goal was just to find the best place for my child to be educated. because i always described that our children are not science experiments, but they are works in progress. and what works for one child may not work for another even though i recognize that the vast majority of this country shown are going to be educated in our public schools pics we have to figure out a way that we can get that right in the s.t.e.m. fields. in my congressional district in my state we are home to some of the best science and technology supported by government and our private sector, any place in our country. we are home to the goddard space flight center, and nasa's premier program around the earth scientists. and know if that helps us figure out our weather and climate across the country and around the world.

the national institute of health and bethesda, maryland, is so much good work is coming out of there, and the national institute of standards and technology. and i know i look to all of these agencies and the various private sector, corporations to develop around there to also have a robust relationship with our school system, and with our young people. because i think it's important for us to figure out how we take some of the private sector energy that you mention, dr. lozano, and that we channel that into a relationship with our schools. and that's not always an easy relationship because sometimes we create barriers that make it difficult for those who are in the s.t.e.m. fields and profession to participate actively in our school system. so i think we have to figure out ways that we can better encourage those things. i just really have, and there's a bell, i'm not at a time yet,

really just one question for the students. and what each of you can tell me the other things that you do in addition to your work around science that contributes to your learning, whether it is art or music and sports that means that we are really developing old children. -- whole children. go right ahead. >> i do swimming one hour a day, monday, tuesday, wednesday, thursday, saturday morning with a diving all the time. i just finished the soccer season, so now i'm watching tv. [laughter] >> all right. well, thank you. jack, what about? >> i play piano. i take chinese. occasionally i will play flag football. and my swimming season is just about finished.

and me and two other teammates are on a robotics team. >> congratulations. claudia? >> i go to summer camp in the summer. i do a lot of acting and musical, and i play a little tennis. i do a lot of extracurricular stuff at school. a lot of community service, an action to a little bit of circus performing arts, to. >> actually. thank you. alison. >> i do a lot of arts and that helps me visually, and that helped me on the project with realizing what everything would look like and how it would be structured. i placed fourth, i played tennis, i swim and play the piano. >> thank you all very much for being here. and i think what that indicates is that we have a lot to do to educate the whole child, in addition to what we're trying to develop in the science and s.t.e.m. fields. thank you. >> the gentlelady yield's backer

time, and i think all the witnesses for their very valid the testimony, all of you. and your input. the members of committee might have additional questions for any of you. we'll ask you to respond to those in writing, if they write to you. the record will remain open for two weeks for additional comments from members. and i want to recognize mrs. johnson for a minute, however she needs a quick response. recognize you at this time, and then i will dismiss your. >> thank you, mr. chairman. i want to say to alison and claudia, jack and marcelo, and samantha, and all the rest of you that i have not learned your lanes, you have been a spark in my life this morning. because we struggle so hard to try to pinpoint what direction we need to go to make sure that this quality education is available. and you are letting us know that

you are some of the examples of what we strive for. and so i want to thank you, thank all the teachers and parents who are here. we really honestly do depend on you to carry our future. and i just want to thank you for what you are doing, and keep it up, and encourage many more to join you. thank you. >> well said, and thank you. the gentlelady yield's backer time. let me remind everyone that the science fair and all these teams and the projects are in the rayburn building from -- that's on the first four. i'm going to be there, and i'm going to try to ask jack if you miss the girls more than he did the boys or the boys more than he did the girls. [laughter] so i have some good questions to ask you, jack. i hope i see you down there. the way the witnesses are excuse, this hearing is adjourned. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] >> the c-span congressional directory is a complete guide to the first session of the 112th congress.

>> forty-eight years later the marvin luther king jr. memorial will be dedicated on the national mall and will have live coverage starting at 11 a.m. eastern on c-span. the 30-foot sculpture of dr. king stand alongside a 450-foot granite wall with more than a dozen of dr. king's quotes. we will bring it alive dedication of the memorial on sunday as weather permits. the u.s. parks service is that hurricane irene could cause dangerous weather here in washington postponing the ceremony. >> "washington journal" continued a weeklong look at medicare. the discussion was on medicare advantage privately run medicare insurance plan similar to hmos. you can see live coverage of the

conversation each morning at 9:15 a.m. eastern on c-span and again on c-span to each evening at 7:15 p.m. eastern. >> notice the color of the bourbon. that pretty and the color that

you see is all coming from the inside of the barrel. this char is where bourbon gets all its color and a lot of its flavor. currently they discovered over 200 chemicals just in the old from the barrel. >> is wicked we would have at frankfort, kentucky, on book tv and american history tv. throughout the weekend look for the history and literary lives of kentucky's state capital. on book tv on c-span2. c-span3 a visit to buffalo trace this to become one of only four distilleries in operation during prohibition. for medicinal purposes, of

course. and the first two state houses burned to the ground. stop by the third, the old state capitol. booktv and american history tv and frankfort, kentucky, this weekend on c-span2 and 3. spent last week the obama administration delayed new rules aimed at preventing airline pilots from exhaustion. up next we hear from randolph babbitt, head of the federal aviation administration. he address of the airline pilots association annual air safety conference to discuss airline security and the new rules. his remarks are about 15 minut minutes. >> thank you. oh, my. thank you. lee, thank you for the incredible gracious introduction.

really super. i appreciate it. this is really great to see all of you here tonight. i have been up on this podium with different formats before but it's always great to be back you. i literally came straight from the airport. i was in mexico this morning, and meeting on safety issues with our colleagues from canada and mexico. we had a productive meeting preparing for an upcoming icao meeting. but it is always great to come home, and although i can't say that a lot of places, i speak this is all for me. it's great to be here with all of you. [applause] >> a lot of what i do now i don't get to go and see this many friendly faces. so particularly nice. but as we get started i would want to take a second here and i want to thank alpa and general and lee moak in particular for being our allies in so many fronts, especially during the last drawing four to six weeks. as you know, i think most of you

are aware, we have been through a very challenging time with our laps and reauthorization. that authorization failed to be continued, and the subsequent effects of that was we had to furlough 4000 faa employees. we had issued stop work orders. these are, all these work orders came from funds that come out of our airport trust fund and lead issue more than 250 of those across the country. we also had to ask people working on contracts can we simply had no ability, while the money was in the trust fund we have no ability to issue the checks. that affected 70,000 jobs in the construction industry. all this was over a political fight. so these jobs certainly affected what we do. it certainly affected people in the construction trades. it affected their broader economy. and all of those people, when

you put 75,000 people out of work and stop another 250 contracts, it has a consequence. and it was very unfortunate that congress did not have the wisdom. we also lost $400 million in uncollected airline ticket taxes. this is money that would've gone into the trust fund. this is the money that was build, design, collected and designed to build our infrastructure. this is what is building our next generation of air traffic control system. we didn't collect the money because we didn't have the authority. we've had 21 short-term extensions in the last four years. and i will tell you here without any reservation that parceling the money to run the faa out of 21 different times instead of a five or six-year reauthorization that we would not expect is actually no way for us to run the finest and safest aviation and transportation system in the world. it's not. thank you. [applause]

it makes it very difficult for us to do any kind of long range planning wind literally this last extension only goes to the 16th. we been extended three weeks. tell someone who is building a $5 billion airport improvement project that will take seven years that they can go out and borrow three weeks worth of my and see how much concrete you can buy and maybe you can pay for one apron. there's no way to do our business. we certainly need to have a longer citation by congress, becomes increasingly aware to me and increasingly important that congress needs to understand that are, in fact, real costs and real consequences associated with failing to we authorize the faa. it's not just the short-term things. the restart cause, the cost of moving equipment in and out of these projects. we have several of the vendors that we work with went bankrupt. these are small companies. these projects are designed not only to improve our

infrastructure but designed to stimulate the economy. and two weeks with a payroll and you're out of business. so our current expiration, authorization expires on the 16th, and i am here to tell you that i'm going to make a lot of racket that we cannot have another one of these furloughs. this can't happen again. we have people working literally without knowing what they're going to get paid. summer safety expect there's. they went ahead and did their job not known if he would get a paycheck. it was amazing to me, but we will do everything that we can do to prevent congress from using the faa as a bargaining chip when they have their larger political disagreements. [applause] i think we all recognize the company, or the country is in a pretty difficult economic time. we all appreciate that and we at the faa have tried to do more with less. we know we have to do more with less. there's also i understand, there

can be political disagreements, but there is a forum for political disagreements. it's called the house floor year it's called the senate floor. you can go there and debate, have processes and procedures, and you saw the issues on those floors. but again, i found it absolutely unconscionable that you could take a political fight and use as political leverage the livelihoods of 75,000 people to push a political agenda. it's just not right. so stay tuned. we will see what happens when they come back after august. let me go back. i said it before. alpa has been an ally on a great number of many fronts. one of those important front and a new industry and is a very important front, it certainly has been for me over the years, and that's the issue of fatigue. i've been pushing for a lifetime into the time changes since i was president of alpa back in the '90s. that sounds old by set that way, doesn't it? back in the '90s. [laughter]

the rule is now, in its final stages. we are working aggressively to get it out as soon as possible. we are committed to making certain that pilots are rested, fit, and had allocated amount of time that they need to be rested and ready to go to work when they report for duty. it's been a long time in coming, very close to it now. we also want to have the best trained and the best prepared pilots in the world. and the current training wheels we're working on to make sure that pilots have the right skills and experience. we are dedicated, the faa, the one level of safety and we want to make certain that all pilots have the right qualifications, qualifications and experience, background to handle any situation they might encounter. and that only comes through good train. skills and experience are the bedrock of any good piloting career. but also dedication to professionalism is a key important piece of that. and i really want to thank alpa for having played such a big

role in helping us at the faa keep the message and the issue of professionalism writeup on the front burner and write in everybody's line of sight. labor organizations have a very special ability to reach their members and motivate them in a way that no one else can. you can motivate them lived by the professional standards you have generated. you help us and have helped us, not just alpa, i'm proud that all professional pilot unions stepped up to the plate and help us recognize and reinforce with codes of ethics and codes of behavior. alpa has been key in helping us achieve one level of safety. and to continue the effort, you know, we need to create and expand and have these standards spread internationally. we need something we can all count on, and a standard we know will be uniform across the globe. we've had a lot of successes in working together in the past, some very important areas. certainly the commercial aviation safety team, cats, for

those of you who are just year i'm going to sound like i'm reciting parts of the alphabet. asap, all of these are important programs and all of them have one thing in common. they give us data. data is going to be the key for tomorrow. the things that we're going to find by analyzing data and moving forward and acting upon them for training and safety improvements will be the key to the future. we have gone from a forensic approach in order to improve safety but far more data-driven, preventative approach of identifying trends, making changes to mitigate potential hazards. and you know what? we have improved safety. we also have to international standards through icao, and that's another area where alpa has and continues to lend its expertise, to give us wiser decisions and better safety changes, again, to stand ago. icao standard set the foundation

on an international basis for safety. and they believe that's where our next set of significant safety improvements can be made. we have made significant progress there, but we have a lot more to do and our continued action will improve aviation safety literally for generations to come. as we move from a ground-based navigation and radar surveillance system literally in the last century, we move forward into the next generation creating international standards that are in harmony will become even more critical. it's up to us to make certain that those standards are molded properly and that they help us lead the way. as a former president of alpa, let me shift gears for second year, itv safety award for a number of years. and i have to tell you, it's one of the things that you do in alpa, this is one of the great evenings. this is what alpa is all about. it doesn't say schedule with safety up there. it's a cute slogan.

it truly is the core of the airline pilots association. ..

>> doing the right thing instinctively because they're so well trained and the training they've had through their careers and training most of us hope we will never have to use. so i want to give particular congratulations to the crew of alaska flight 68, captain stephen cleary and first officer michael hendricks. also congratulations toss the crew of the airtran flight 91, first officer bill. i'd also like to thank the safety security pilot assistant winners. i think ha's going to be pete frye and mimi thompkins to their dedication for furthering our profession and supporting fellow pilots. i met mimi, and i probably shouldn't even say how far back it was, mimi, because i'll date both of us -- [laughter] yeah, it was back a few years.

okay, we'll just say it, it was 25 years ago. [laughter] but i'm sure that most of you know that mimi was the first officer on aloha 243 which was a stunning operation and an incredible display of coordination in the cockpit and airmanship. but it also shed light on something else, and that was our need for critical incident response. and her involvement for 25 years now is a testament to the dedication of alpa representatives. tonight's winners are incredibly high-caliber individuals, their actions are a testament to quick thinking and also the improvements that we have made and the improvements that you have helped bring about in training. we've made over the years so that people are equipped to handle these situations. today almost nothing can happen in the cockpit that a poi loot hasn't -- pilot hasn't been there in some type of simulated training. in closing, i want to say a few more words about

professionalism. i've pondered the meaning of professionalism for some time, and i think we really show professionalism not just when we're dealing with an emergency, but we also demonstrate it probably more when everything is going perfectly fine. when things are smooth, that's not when a professional relaxes. a professional never relaxes but still conducts the business in an orderly fashion. and that reminds me of the sage advice that an old friend of mine was given when the captain, his father was captain jim waugh. he passed away earlier this year. he had a 43-year career, and his son, jim, was vice president of flight safety international. and he shared some of his dad's maxims with me, and like most of us, you hear a lot of things from the older pilots, and as you get older, you realize they were worth listening to. so in closing i'd like to share what he had to say. jim said his dad was always full of advice, you know, like, you know, always read the

instructions before you assemble something, and put away the tools so that you're not fumbling for something like a flash lightening in the dark when you have an emergency. but his dad's first and foremost be maxim apply today the cockpit, and i thought enough of it to bring it here tonight. he said, quote: honor the trust that the passengers have placed in the you by being vigilant and by being fully prepared for each flight. and at the completion of a flight, always leave the cockpit in a safe configuration so if the next crew is in a hurry, they won't hurt themselves. [laughter] simple advice, good advice. with more than 14,000 hours myself, it's something i listen to as well. it's a good one. we could all stand to remember some of the basics in areas like that. so i want to thank all of you for the kind invitation to be here tonight. i always enjoy coming back and seeing so many familiar faces. congratulations again to the winners. my sincerest appreciation to all

of you for what you do, what you have done for making this safest air transportation system in the world bar none. thank you. [applause] [applause] >> sunday marks the anniversary of dr. martin luther king jr.'s i have a dream speech at the march on washington. 48 years later, the martin luther king jr. memorial will be dedicated on the national mall, and we'll have live coverage starting at 11 a.m. eastern on c-span. the 30-foot sculpture of dr. king stands alongside a 450-foot granite wall with more than a dozen of dr. king's quotes. we'll bring you the live dedication of the memorial on sunday as weather permits. the u.s. park service says that

hurricane irene could cause dangerous weather here in washington postponing the dedication ceremony. >> washington journal continues a weeklong look at medicare. today the discussion was on medicare advantage, privately-run medicare insurance plan similar to hmos. you can see live coverage of the conversation each morning at 9:15 eastern on c-span and again here on c-span2 each evening at 7:15 eastern. and following that at 8 p.m. eastern it's booktv prime time. tonight book parties, and we begin with ann coulter and her book, "demonic." then michael moore on his upcoming memoir. at 9:10 eastern, juan williams signing copies of his book, "muzzled," and at 9:25 eastern, armstrong williams at a book party for his book, "reawakening virtues." ♪

[background sounds] >> notice the color of the bourbon, that pretty amber color that you see is all coming from the char on the inside of the barrel. this char is where bourbon gets all of its color and a lot of its flavor. currently, they've discovered over 200 chemical flavors just >> this weekend we highlight frankfurt, kentucky, on booktv and american history tv. throughout the weekend look for the history and literary life of kentucky's state capital. on booktv on c-span2, vice,

violence, corruption and urban renewal. douglas boyd or frankfurt's crawfish bottom. and kent masterson brown on the life of soldier john potter. of only four distilleries in operation during prohibition. for medicinal purposes, of course, and the first two statehouses burnt to the ground. stop by the third, the old state capitol. booktv and american history tv in frankfurt, kentucky, this weekend on c-span2 and 3. >> according to a recent report, there were $48 billion in improper medicare payments for fiscal year 2010. michelle snyder, medicare's deputy chief operating officer, testified before a house oversight and government reform subcommittee on efforts to curb improper payments, trade and waste. other witnesses include the health and human services

inspector general and the government accountability office health issues director. this is about 90 minutes. [background sounds] >> this hearing of the, excuse me, subcommittee on government organization efficiency and financial management will come to order. first, appreciate everyone's patience and understanding with both the change in time from 9:30 to 10 and also a slightly late start as we were wrapping up our conference meeting in the capitol. the purpose of today's hearing is to continue this committee's examination of improper payments made by the federal government. in 2010 the government estimates that there was $48 billion in improper payments within medicare program. this figure represents approximately 38% of all identified improper payments made by the federal government in fiscal year 2010. and it's likely only a partial

accounting of medicare's total amount of improper payments. medicare is considered a high-risk program by the government accountability office. it is known to be susceptible to fraud, waste and abuse. last year the medicare fee-for-service program reported more improper payments than any other federal program. many of these improper payments are a direct result of insufficient internal controls and financial management. the centers for medicare and medicaid services process almost five million claims every day relying on automated systems to identify improper claims. most claims are paid without any individual review of the claim or the medical records associated with it. this leads to improper payments resulting from claims without sufficient documentation, insufficient or fraudulent documentation, incorrectly coded claims or services that are not deemed reasonable or necessariment cms has been

making efforts to better identify and decrease the amount of improper payments within medicare. 2009, cms filed the recommendations of the office of the inspector general to implement more thorough methodology. using this new methodology, cms identified more improper payments for 2009 and 2010. cms is also working to calculate improper payments made through medicare part d, the prescription drug program. cms has not previously calculated the improper payments from part d and will do so for the first time for the current fiscal year, 2011. cms also plans to increase its oversight of part d by performing more audits including on-site audits and face to face evaluations. cms has also announced it will evaluate the fraud and abuse programs put in place by third party insurance companies administering part d. cms' efforts to increase oversight are certainly commendable. however, more must be done to

strengthen internal controls, especially in cms' contract management. 2006, cms began using contractors to identify and recover improper payments. the recovery audit contractors have identified numerous vulnerabilities in cms' programs. unfortunately, cms has only taken steps to address about 40% of these significant vulnerabilities. gao has also found pervasive deficiencies in the cms' contract management, internal controls. gao issued nine recommendations to improve internal controls in 2009, but a year later it found that cms had only taken steps to address two of the recommendations. improper payments cost taxpayers billions of dollars each year. this hearing is part of a continued effort by this committee to prevent improper payments and other instances of waste, fraud and abuse in government. i certainly welcome the opportunity to hear from our witnesses today on cms' progress to identify and prevent improper

payments into medicare and would conclude with just a, um, a focus that given the ongoing debate with deficit reduction, the ongoing debate over the debt limit and the broad picture of spending here in washington, how we need to do better with the american people's money, when we're looking at debt reduction plans that talk about reducing spending by $10, $20, $30 billion in the coming years and then we have what we know of, at least $125 billion each and every year that are improperly made by the federal government, almost 40% of which is identified within the medicare program, we have a lot of work to do. we're grateful for the witnesses being here today who will help us in this partnership approach to getting this work done and going forward in a positive light. and with that, i yield to the ranking member from new york, former chairman of the full

committee, mr. towns. >> thank you very much to chairman issa and chair of the full committee and to you, chairman platts, for the subcommittee. um, we should be clear about one thing: improper payments by medicare or think other agency may be overpayments or underpayments. they may be fraudulent payments or valid payments lacking proper documentation. they could also in inaccurate payments for valid charges. in today's context of a looming breach of the federal debt ceiling, it might be tempting to view medicare's improper payments as an easily medicare improper payments as an easily identifiable budget savings. but that is not the case. solving the problem of improper

payments does not necessarily translate to government savings or a lower federal deficit. still, eliminating improper payments is the right thing to do, and we should do it. i think we can all agree on that. i thank chairman platts for holding this hearing, and i thank our witnesses, of course, inspector general levinson and ms. snyder and ms. daly and ms. king for sharing their expertise with us today. according to gao government-wide improper payments total approximately $125 billion in 2010. medicare alone accounted for nearly 48 billion of those, as my colleague indicated. that is almost 40% of the improper payments in the entire government. i find these figures deeply troubling, and that is why we look forward to hearing from our witnesses today. president obama has taken many

positive steps towards reducing improper payments since the beginning of his administration. in 2009 the president signed executive order 13520 which sought to increase transparency in and agencies' accountability regarding improper payment. in 2010 the president also issued two memorandums that instructed omb and agencies to make it a priority not only to find improper payments, but to recapture the money that was paid. additionally, the administration announced last year that the centers for medicaid and medicare services will cut the fee-for-service plan improper payments rate in half by 2012. i certainly would like to hear more about cms' progress in this matter. mr. levinson of the inspector

general's office is one of the watchdog agencies that is responsible for identifying problems and be recommending solutions for improper payments in medicare. gao is the other watchdog. between these two and independent innovations by cms, i am looking forward to hearing about how and when we can eliminate improper payments. i'm encouraged at the progress that the the administration has made in the last two years in reducing improper payments. wherever it is that this committee -- whatever it is that this committee needs to do to assist in the terms of the reduction, i'll let you know that we stand ready to do just that. thank you very much for being here, and i look forward to your testimony. thank you. i yield back. >> thank the gentleman. members, we'll have seven days to submit opening statements and extraneous materials for the record to get to our witnesses,

unless any other member wanted to make a brief opening statement. if not, we'll move to our witnesses. we're honored to have four distinguished public servants here with us today beginning with daniel levinson, the inspector general of the united states department of health and be human services. he also serves on the executive council of the council of the inspectings general on efficiency where he co-chairs the committee on inspection and evaluation. also delighted to have michelle snyder, deputy chief operating officer for the centers for medicare and medicaid services where she is responsible for leading cms' improvement initiatives for promoting excellence in operations. and from the government accountability office we have kay daly, director of management and assurance for the office where her responsibilities include financial management systems, improper payments, contracting cost analysis and health care financial management issues. along with ms. daly, kathleen

king, and ms. king won't be making an opening statement but is available for questions as part of today's hearing. ms. king is the director of health care for the government accountability office and is responsible for leading studies of the health care system and specializes in medicare management and prescription drug coverage. pursuant to the rules of the committee, all witnesses are sworn in before every hearing, so if i could ask each of our witnesses to stand and raise your right hand. do you solemnly swear or affirm that the testimony you're about to give this committee will be the truth, the whole truth and nothing but the truth? thank you. you may be seated, and let the record reflect that the witnesses all answered in the affirmative. um, we will, um, set the clock for about five minutes. um, we do have your written testimony, and it'll be made part of the record. if you can stay as close to the five minutes, if you need to go over a little bit, that's certainly fine, and we look forward to then getting into questions. mr. levinson, general levinson,

if you'd like to begin, please. >> good morning, chairman platts, ranking member towns, chairman issa and other members of the subcommittee, thank you for the opportunity to testify about oig's efforts to monitor and help to reduce medicare improper payments. in 2010 cms reported medicare errors totaling nearly $48 billion. my written statement describes in more detail oig's work analyzing cms's estimates and our targeted reviews of medicare improper payments. my testimony this morning summarizes oig's recommendations in this area. although our recommendations are tailored to specific vulnerabilities, the actions we recommend to cms fall into the following four categories; increased prepayment and postpayment review of claims, strengthen program requirements to address vulnerabilities, increase oversight and validation of supporting

documentation and education and issue more guidance to providers. oig has consistently recommended that cms enhance both prepayment and postpayment review of claims. for example, oig's analysis of claims for diabetes testing supplies identify $209 million in improper payments. prepayment edits could help reduce improper claims for these testing supplies. in certain areas cms should strengthen program requirements to address integrity vulnerabilities. for example, we have recommended that cms establish a payment cap on chiropractic claims to prevent improper payments more maintenance therapy. we also have recommendations to verify that requirements are being met. for example, oig found that medicare spent $95 million on claims for power wheelchairs that were either medically unnecessary or lacked sufficient

dock -- documentation. one of our recommendations is that cms review records from sources in addition to the wheelchair suppliers such as the prescribing physician. provider education is also critical to insuring compliance and protecting beneficiaries. we found that 82% of hospice claims for beneficiaries in nursing facilities did not meet at least one medicare coverage requirement. requirements that are in place to protect beneficiaries' health and well being. medicare paid about $1.8 billion for these claims. we recommended that cms provide hospices with guidance on the rules for certifying terminal illness and a checklist of items that must be included in the plans of care. for our part in provider education, this year oig conducted free training seminars in six cities to educate providers on fraud risks and

share compliance best practices. we also published a road map for physicians to provide guidance on complying with fraud and abuse laws, and i have copies of this available this morning for each and every member. although not all improper payments are fraudulent, all payments resulting from fraud are improper. and our efforts to combat fraud are achieving historic results. oig investigations resulted in $3.8 billion in court-ordered fines, penalties, restitution and settlements in 2010. to prevent improper payments from there compromising the medicare trust fund, oig refers credible evidence of fraud to cms to implement payment suspensions, helping to turn off the spigot to prevent payment for fraudulent claims. improper payments cost taxpayers billions of dollars each year.

the executive order on reducing improper payments states that the federal government must make every effort to confirm that the right recipient receives the right payment for the right reason at the right time. oig is committed to this goal, and thank you for the support of our mission. i would be happy to answer your questions. >> thank you, general levinson. ms. snyder? >> good morning. thank you, chairman platts, ranking member towns and chairman issa, for being with us today and members of the subcommittee for this opportunity to discuss the service's efforts to reduce improper payments to medicare. cms is committed to reducing the amount of improper payments and the rate and insuring that our programs pay the right amount for the right service to the right person in a timely manner. like other large and complex programs, medicare is susceptible to improper payments. in accordance with the improper

payments information act, cms calculates a rate for the medicare program annually. while these improper payments represent a fraction of total program spending, any level of improper payment is unacceptable, and cms is aggressively working to reduce errors. there is confusion about what improper payments are and what they are not. improper payments are errors that generally result from one of the following situations; the provider fails to submit any documentation or submits insufficient documentation to support the service paid, the provider incorrectly codes the service on the claim, or the documentation submitted by the provider shows that the services provided were not reasonable or necessary. improper payments do not always represent an unnecessary loss of funds, rather an indication of errors either by the filer in the providing the claim or inappropriate billing for that service. improper payments are usually not fraudulent. cms is committed to reducing improper payments, and we have developed where corrective

actions to eliminate these improper payments in the future. the traditional fee-for-service program represents the majority of medicare spending. this program is administered by cms through contracts with private companies that process close to five million claims each day or approximately 1.2 billion claims in a discall year. cms uses the comprehensive error rate testing process to estimate an improper payment rate for the fee-for-service program. between 2009 and 2010, cms was able to reduce the improper payment rate by 1.9% from 12.4% in 2009 to 10.5% in 2010. the program provides valuable information to assist in the development of corrective actions to reduce improper payments in the future. we believe the best way to address these documentation problems is through robust provider implementation and outreach efforts, performing more review of medical records and enhance systems edits and

automated analytic tools. some of our recent provider education efforts include the development of comparative billing reports, issuance of compliance reports and conducting routine forums to discuss documentation requirements. we also recently implemented nationally the national recovery audit program. this program allows recovery auditors on a contingency fee basis to underover payments and -- underpayments and overpayments. the permanent audit program has corrected a total of 685 million in improper payments in a 12-month period. the program also provides valuable information about areas where increased education and outreach is needed and where prepayment medical review is most productive. these tools also assist in the development of automated edits to reject claims where medical services are physically impossible or medically unlikely. in the medicare parts c and d, they differ significantly from the medicare fee-for-service program and require different approaches to measure and

address improper payments. cms prospectively pays monthly cap tated program for each enrolled beneficiary. these per-person payments are risk adjusted on a beneficiary's health status. the part c improper payment rate in fiscal 2010 was 14.1%, a reduction of 1.3% from the fiscal year 2009 rate of 15.4. most of the part c improper payments are the results of errors related to the fact that the sporting medical records submitted do not include the necessary diagnosis data to support the cms risk-adjusted payment. again, we're working very close hi to implement a number of audit strategies in the medicare part c and in the medicare part d program. this year we're happy to report that in november of this year we will be reporting a composite part d rate which will be the first time we have reported the rate, and we believe that the information as we've gone through the establishment of that error will help us to start to push that error down because of what we've learned through

that measurement process. we have a number of strategies in place that i will be happy to talk about as we proceed through this hearing this morning. i would also like to assure you that we're examining techniques used by the private sector, by insurance companies and others to better inform our efforts to combat improper payments. we're eager to learn from successful private sector efforts to reduce errors and have, indeed, begun to form partnerships across the health care sector to insure that we have the best information we can to make a difference in the medicare program and to help them, also, learn from our experiences and what is a very large payment program. while cms has made significant progress in reducing waste and errors in our programs, we understand that more work remains. i am confident that the systems controls and ongoing corrective actions that cms is undertaking plus the help of our partners in the office of the inspector general and other parts of the department will help us in continuing this undertaking that will result in continued

reductions in improper payments. i look forward to working with the subcommittee to assure that cms carries out this important work and to answer any questions that you may have. thank you. >> thank you, ms. snyder. ms. daly? .. that should not have been made or was made in an incorrect

amount and includes both overpayments and underpayments. for fiscal year 2010, hhs reported an estimate of almost 40 billion improper payments in medicare and the $40 billion estimate improper payments is attributable to medicare fee-for-service in medicare advantage. from the governmentwide perspective, the medicare program does represent about 30% of the 125 million in improper payments reported by the 20 federal agencies that covered 70 programs. hhs has estimated amount of improper payments for medicare is incomplete because it has yet to record a comprehensive as that for the medicare prescription drug nsa. that program had reported outlays of about $59 billion in fiscal year 2010. and as ms. snyder just indicated, hhs expects to record the prescription drug benefit in fiscal year 2011. it is important to recognize

that the rda going in and improper payments reported by hhs in fiscal year 2010 is not an estimate of fraud in medicare. reported in improper payments include many types of overpayments, underpayments and payment not adequately documented. in addition, because the improper payments estimation process is not designed to detect or measure the amount of fraud in medicare, there maybe five that exists in the program that is not encompassed in the improper payment estimate. in 2010, cms created the center for program integrity to serve as a focal point for our national medicare program integrity issues. the cpi, as it is known as responsible for addressing program integrity issues and vulnerabilities that lead to improper payments and they collaborate with other cms component to develop and implement a comprehensive strategic plan objectives and measures to carry out the

program integrity mission and goal. cms has begun a number of initiatives related to find strategies that have been identified in our previous reporting. these strategies are key to reducing medicare improper payments. however, cms still faces significant challenges in designing and implementing internal controls to prevent or detect and recoup improper payments. effective implementation of the prior recommendations they made, some provisions and recently enacted laws in recent guidance related to these five key strategies developer media fraud, waste, abuse and improper payments in the medicare program. the five key strategies are strengthening provider enrollment standards empress teachers, improving prepayment review of claims, focusing posting that claims review on the most honorable areas, improving oversight of contractors and developing a robust process for addressing identified owner abilities.

for example, having mechanisms in place to resolve vulnerabilities that lead to improper payments is key to effective program management. but our work has shown that cms has not yet established an adequate process during this recovery audit demonstration project or in planning for the subsequent recovery audit national program to ensure that the vulnerabilities have been identified were promptly resolved. in conclusion, with the amount of estimated improper payments in the unknown amount of fraud, waste and abuse in the program come is critical to act quickly and decisively to reduce them. as the implements recently enacted laws and other issues that is then brought up for medicare, cms has an opportunity to use new tools to help further address fraud, waste, abuse and improper payments in this program. chairman platts, ranking member towns another numbers, dates

completely prepared statement. i'd be happy to answer any questions you might have. >> thank you him and his daly and two other witnesses for testimony and will now move into questions and i'll yield myself i've minutes for that purpose. when we first acknowledge the effort, ms. snyder, of cms and we appreciate you and your colleagues there dutiful in trying to identify and prevent improper payments and be good stewards of the american taxpayers money, one -- i don't know if it's a caution or reflection, in your written testimony, you reflect -- your statement is what improper payments represent a fraction of total program spending, any amount of improper payments is unacceptable in the mess is aggressively working to reduce these errors. i would tell you how i read that is only a fraction and any amount, as if this is ace all about. well, 40 billion is coming you are right, about 10% or so of

total cms expenditures. that is a huge amount of money and it's not just any amount. it is a huge amount. and so, i don't want to minimize efforts to prevent it, but we are talking about when i share back home that the total number for the whole government that we know of is estimated $125 billion every year. you know, my constituents think i misspoke and so only take about about an individual program, medicare, that is about 38% of that, it is staggering. one of the issues in your testimony and i appreciate and each of you really reference here today or in your written testimony that when we hear improper payments, we ain't fraud. we think the worst. and we do appreciate that's not the case.

a lot of this is insufficient documentation in the wrong documentation. is there an estimate of the 48 billion that is fraud related , either in overbilling or duplicate billing or fraudulent, you know, go spilling? is there an estimate of that%? >> sir, if you would allow me before answer that, my mom is a medicare beneficiary and i hear exactly what she said to me when i go home. it's a big number. >> she actually asked me lots of questions when she gets her statement of what is all this? >> exactly, sometimes you don't want to go home for thanksgiving. but in relation to estimation for your fraud rate, one of the toughest problems we've had a cms is to find a methodology that allows us in a scientific way and in a replica wave to estimate when amount of the

improper payment is really fraud is something we struggled with. we've gone to the private sector, talk to them and said how do you estimate five? reluctant literature. when people make comments, we look behind to say how did you measure it because we want to do that? what we found is there isn't a methodology. so our center for program integrity has started out a new program. they just awarded a contract and we're going to try to estimate levels of fraud. we're going to start the two areas that we believe are fraud prone. we know they are fraud prone because of the good work that has often been done in terms of investigation by the office of the inspector general from the accounting office. those are durable medical equipment areas and home health. just because of the work over the years, we know there are huge issues here. so we are hoping we are going to be able to actually say here is a methodology that will work, then you can apply to different kinds of service categories and

that's made an actual fraud rate. we hope to have that work done over the next six to eight months. we've invited the u.n. to be part of the board that helps develop this methodology and we really hope we'll be successful because we think it's something that will not only work for cms, but is going to work for the her as well. if we develop something that works on the wilshire. >> i appreciate the challenge of having that methodology. you have what your actual fraud numbers were for 2010 that you found hey, these were fraudulent. what amount in overtime, going back quite >> i can send in for the record the number of collections we have cases that went to the department of justice. we have investigations at the oig where we have collect it dollars that. it amounts to many hundreds of millions of dollars that come

from those particular cases. that's a specific case. >> rather than estimating going forward, what is the track record that you know was fraudulent in say the last two years? 08, 09, or 10. how much money did we know was fraudulent because we cut the perpetrators of the fraud quite >> exactly appeared it is in the hundreds of millions of dollars. >> per year quite >> probably over the three-year period. particularly we've shown the task force's but the opposite of the inspector general, department of justice by their particular dollars that have come back to us from those things and from those that duty. so is several million dollars over the three-year period. i don't want to give you a wrong number. >> whatever the number is, this hundreds of millions, we know that is a portion of what the actual fridays.

that is what we have caught and been been able to identify. again, we are talking real money here that we need to go after. in addition to blood-alcohol administration problems, other types of improper payments. so with that coming up to the gentleman from new york, ranking member for five minutes. >> thank you very much, mr. chairman. let me ask with a background check of restraint and not, we think it would cut down on the amount of waste, fraud and abuse if restraint and the background check initially. >> i assume you're talking about providers in the medicaid program. >> that suggestion that has come to us again usually the general accounting office is cited as a possibility as his the office of inspector general. what we have found this vestries

to backtrack, we can't abuse is to keep bad actors under the program from the very beginning. part of keeping bad actors under the program from the very beginning of taking sure we do appropriate provider provider certification and screening. part of that is taking a look at a map occasion and looking to make sure you have a license. had he been debarred somewhere else? heavy laster license somewhere else? argued need a real operation? do you have a real building number? going through screening criteria for never giving the person a medicare provider number is one of the best ways to precede, absolutely. we are in that process right now of where we recertify the 1.4 elegant providers that participate in the medicare program and we hope to have that mostly done or at least a large part -- a largely underway by 2013. but absolutely, there are certain kinds of providers where we recently have said in regulation that we do want to

have the opportunity to do background checks, do fingerprinting, to take a look at them through that scope. in fact, we recently hired a contractor who will start to take information about providers, particularly in areas where we know we've had problems in start to look at all the kinds of public information that we have about the to bring together and take a look and say it is somebody medicare should be doing business with? yes, sir, it's an excellent technique and we are employing it. >> sera, if i might add, we agree that keeping the bad actors out as one of the most effect ways to prevent fraud and lots of improper payments in the program. there are provisions in the affordable care act that gives cms considerable authority to strength in the process than they have in fact separated providers into different categories of risk with home health and global medical equipment being in the highest

category. they have strength and ability to look at providers getting into the program. and that's somewhat the way of him going to look what is going on there. >> let me ask right down the line grow fast in the context that we are talking about this morning. correction, what does that really mean when you talk about making a correction? what does it mean to you? >> mr. towns, the executive order states that had with the goal is for every dollar expended and that is to get it ready. and if there is missing information, if their record is not complete, there's simply no assurance that the dollars spent are appropriately spent. so what not send, it is an error. is it necessarily fraud? no. those are two very different concepts. i would underscore that some of

the most successful sophisticated frauds reveal no improper payments at all because the paper record is so well done. so while the improper payment amount is likely to include cases of fraud, it would be counterintuitive to think that they don't. it doesn't really capture a fraud figure. >> ms. snyder. >> snyder. >> snyder. >> to what mr. to what mr. levinson is named that when you look at the claim filed, we've got several million a day going through the system, that when you look behind the face of that record, what you will find is the justification for the expenditure and you give folks every opportunity to make sure the record is correct before you declare it an improper payment. so it is a matter -- to us, it means the service occurred. it was an appropriate service

that occurred in the right setting and that we paid you the right amount for it. and if that is not the case, then it is an improper payment and it needs to be correct day. you need to bill me correctly and make sure you're providing service in the right place. use of providers need to do the right thing. you're a partner with the medicare program. ms. daly. >> i will have to act as some the sentiments that pain to write documentation, making sure the patient is due for the services and soap are thorough very important in all of that needs to be done correctly in each step of the process. so they can all done right the first time is allotted time enough for and avoid what is, referred to as the page is found, worth it not done correctly the first time, it is considered to be payable and we have to spend time and effort to make corrections.

>> and fair, to add onto that, i think when we talk about corrective action, what we are thinking about it than a vulnerability has identified and you know that people are doing things that they shouldn't, that you put a process in place to try to prevent them in the future come either by strengthening your enrollment standards, strengthening your prepay audit for doing it on postpaid. >> mr. chairman, my time has expired. but let me ask you this one question. if you have a situation where a group comes to you and say, well this is a problem. i mean, can you make that adjustment? for instance, i was looking in terms of the power wheelchairs. i know there have been some issues that they've been raising over and over again, which seems to be a kind of concern. but nobody is responding to a.

do you respond when a group comes and says this is a problem in luck and it's a legitimate problem? can you then make an adjustment? >> let me take a stab at that one first because it is a particularly interesting one to me about the power wheelchair. the first place we go is to look at what is the statutory requirement of the benefit, of that benefit category. how has it been defined? for power wheelchairs, it is part of what is called a homebound benefit, which was established in statute. it basically says he got to be will to use that power wheelchair inside your home. you have to be unable to walk more than three to four steps in that the confines of your apartment, your house, whatever it may be. so when you take a look at that and folks come to you in the day well, you know, this power wheelchair enhances my life because it lets me go to the mall, church and in may, however

it might allow you to get outside the walls of your apartment, that certainly is a valuable aid to the quality of that individual's life. however, if you look at the statue behind it and the legal requirements, by definition, you don't meet the requirements of the law in order for the power wheelchair to be provided to you. so that's a particularly tough one because yeah, one handy look at it in a fury that your somebody's daughter come you go wouldn't say my mom i could really use this. however, the ability to do something about that is limited by what is in statute. that particular example appeared in second place to he looked to see if there's a regulatory policy around this. is there any ability that makes sense to make some change? and then he took tickets are booked to say, is this a matter of policy that we've interpreted? that we put something in place. so how much room do you have to work with that particular group of providers or that service to

change it. so it is a pretty -- i was a pretty rigorous process. we do listen to folks. they come in, look to see what makes the best sense for the beneficiary. but we makes the best sense in terms of the long regulation in place that sort of found that particular benefit category. one of the things we found on wheelchairs, when we look back we have a high error rate they are and is pretty much the reason i described. it does not satisfy the definition of the benefit. so, we are looking at ways that we can put him controls in place on the very front end of it so that where not again pain and she's been for wheelchairs, power wheelchairs and power mobility devices that don't meet the requirements of the benefit. >> thank you, yes. former chairman -- promote you.

chairman from oklahoma, mr. lankford for five minutes. enacted in actuality for what you do. my mom is also a medicare recipient. people serving behind the scenes. she will never be able to thank you get what you do us a great service to a lot of people appear we appreciate that and the dedication you put into it. let me mention a couple things that come back for people. like you i go home on thanksgiving. that will talk about his medicare fraud and friends issues found in into an thing she perceives to be fraud in august aims. let me flip to the other side of it. i also hear from heris in hospitals who are very frustrated with audit contractors. there is a perception in their mind that they walk through the door and they are guilty and they're going to either until they prove they are guilty, no matter how long it takes. they understand they are paid by

the paperwork and so they are going to stay and dig through and i am nurse who was in a hurry, who did not put the date on the form and they will get fined for it. and they fight and fight and fight and sometimes for years to process, where this code was that kids and now suddenly at his nod and they are getting hammered and thousands and sometimes millions of dollars and nine when the other good providers. i am talking good hospitals. how do we fix this? they hate the federal government because those contractors that lock-in know their enemy and they're going to stay until they make money off them. they are not there for their benefit. they were were there for a benefit as things, but the hospitals is on the good guy and how come i am getting hammered? how do we fix that? >> sir, we did in the valuation of the demonstration of the recovery of the program and i think we did identify some

missteps in terms of some of the initial actions that were taken. and it is our understanding that cms has been dictated a process, a committee inside of cms that has to approve the issues that they will undertake. >> that is not trickle down actually yet. as i can tell you in the last couple weeks i've been in communication with yet another house but that is fighting to this thing. it is about to come in through their door and they are determined to find something wrong, and they will. they are not happy at all because they are adding a ton of additional staff in compliance areas for things that are not fried. there are a misstep on some name and my understanding is these contract tours are paid, even if later they determine that it wasn't true. it really was correct. >> that was the case in the demonstration, but it's not the case in the national program. if something is overturned on

appeal, then the rock does not get paid. >> how do we develop this relationship because they are no longer our friend. >> i think one of the things that cms -- we have heard that, so the good news is that is not new news, but is a continuing can learn. in the demonstration, which went on for three years and we learned a lot of things that we learned about better by having to manage contractors as some of the things that ms. king has reference about a committee processes as legitimate before you go after somebody? been making that clear to the contractors that if this is overturned on appeal, whatever, you're going to pay us the money back than the provider get the money back. so it's not the you are not going to get looked at. we heard recently what i call someone to watch the rack, a validation contractor if you will, but do spot checks of the contract is work to say where you inappropriately aggressive?

really cannot go wrong things? to choose standard accounting practices? i think it's really again a continuing education and outreach. we have regular scanning forms with our provider community. one of the topics always on those calls and we get hundreds of providers who call into those foreign. we talk about the issues with the program and we have encouraged folks. we have sad, if you think your rack in your area is overaggressive, if you have continuing problems, let us know. we'll look into it. in reference to the particular hospital you just mentioned, i'd be very happy if you'll give me the name of that hospital. we will reach out to them in the to see if it is just a matter of what i will call hard feelings because they don't like the program. whether or not the correction corrective actions reach out and not sending in just redoubling efforts to make sure folks understand the intention of this

really is making sure again that your pain appropriately. i'd be happy to reach out to the community. >> i completely agree that the good thing to be aggressive in that process, but they perceive it is very much a guy got in the smallest minutia of going after it. this hospital has talked about it. the one most recently did not want me to bring it in him because they feel like they were the punitive action coming against them even harder next time. they are careful to say we are cautious on how we move in that because there's so much power on us now and are functioning in operation. this is not one of your large major hospitals, but a good charitable hot though. that's no way to live and operate. i want you to stay aggressive on it. this system is not working for them at all. >> if i cannot a couple things notwithstanding that were beyond your time, we actually will be

looking at the process in our office of looking at cms oversight of the rags. i wouldn't want my comments to be part of some effort to say racks are necessarily a bad idea. but as our work starts in this area, there are a couple of observations that are worth putting into the mix as we try to understand the pros and cons of racks. one issue is that the rack process is a model of pay and chase because the money has already gone out the door. so racks are trying to recover money that msn certainly is good. but it is a continuation of a model that the government is trying to get away from. we are trying to the problems before they leave. the other is in just a brief work we've been able to do the first few years with iraq

process, rack referred to cases of potential fraud, cms and the three years of the demonstration between 05 and 08. even though they found a billion dollars in improper payments. so it is important to understand that the tempted me to be aligned in a way so that while improper payments are identified , in the least intrusive and most good way, that it also is a process that should reveal where fraud occurs in because of racks don't see any money come from identifying fraud commanders cases when it referred -- >> were catching paperwork. >> disincentive in a sense potentially to refer cases of fraud because they are taken out of the universe of improper payments. so i think these are the kinds of very important issues that

need to be teased out as we've looked at the rack program. >> thank you, mr. chairman. thank you for allowing a couple extra moment. >> i thank the gentleman and i would assist the assault at the gentleman's comments because your term of bounty hunter is also what i hear and whether it be for a minute or two shin or individual providers, where they feel that they are not -- in the united states were in a center proven guilty, but they are of wrongdoing in trying to approve the six months ago when they treated the patient, they did do it by the book this six months ago when they treated the patient, they did do it by the book this six months ago when they treated the patient, they did do it by the book a of assuming their innocence. i very much appreciate your they did do it by the book of assuming their innocence. i very much appreciate your questions and comments and associate vice up with you. i yield to the gentleman from tennessee, mr. cooper. >> thank you, mr. chairman.

the title is $40 billion of improper payments that artery parse that another better understanding because apparently relatively small percentage of that is fraudulent, but also possible to have fraudulent payment not covered by the 48 billion. i'd like to ask what percentage are overpayments as opposed to underpayments or missed payments. essentially what we do want to put a figure at 40 billion can we talk about the quality of the red tape. good quality of the red tape doesn't show up in the 48 billion number. if there is a flaw in the red tape, then it's in the 40 billion. so i'm guessing and perhaps i'm wrong but most of the 40 billion are still overpayment. >> the vast majority. >> yes, that is really the concern to taxpayers. it is interesting to me in your data, when you compare fee-for-service problems with

managed care problems, but actually managed care problems are slightly higher. at this point. and you would think with managed care you would get better management and more quality red tape. that's not true yet. will be fascinating but medicare part d numbers are now that you're finally able to evaluate them. to put this in context, people also need to know that fee-for-service problems usually indicate overpayments and over utilization of service is, were sometimes managed care problems indicate under utilization of services, denial of care. though it is completely different human result, one enters the taxpayer, the other entries payment. again, to put it in context, we have a hearing this morning that the pentagon. i think the pentagon is still number one on the geos list of high risk government agencies because they've never been auditable. after decades of trying, they are still not even close to

being able to be auditable. and when the bulls defense and commission asked hominy contractors the pentagon has, the official response was somewhere between 1,000,010,000,000. so i am no way justifying medicare and, that is astonishing when you can't tell within an ordinary magnitude you payees fire. so somebody has to write a contact or a check. the other concern is medicaid, which is not nearly centralizes medicare because it is burned out data that gives you at least 50 different opportunities to have keys to mismanagement amount of accountability and fraud and improper payments. so one of the fundamental issues untouched on, it has paid people very promptly under the federal

pay act that creates a situation of pay and chase. in the health care area, you have the slowest players on the planet. and the private sector, five insurance companies stretch out your accounts receivable for 180 days or longer. meanwhile, the federal government steps up and pays even 30 days. that makes the process of precertification tov. but no one has ever written a thank you note for pain and 30 days. they take that for granted. meanwhile, even the gao set up to fate emd companies and was able to scam the system. so a lot of folks in the small business community and provider community do not want to stay thank you are coming through with payment within 30 days. but that creates a situation where we have to go chase the proper payment. i am in no way defending the

bounty hunters, but sometimes federal government isn't easy touch too. and i thought has to be starting to pop away. i am glad you are improving your system so you're able to get a better handle on that. i see that my time is about to expire, mr. chairman. maybe i should just out there. be not anything the gentleman. the first of s-4 to be dutiful with the time is appreciated. i would comment with the issue of fraud is we don't really know what percentage, so we don't know with a small percentage. we don't know because it's not geared to single out fraud. i don't know that we can say it is a small percentage of the improper payment number. even if it is just 10%, that is still close to $5 billion. we don't really know what the percentage is. that's why ask for what's

identified as we know what for certain was fraud in the past three years, to start to look at the issue and have it better identified. also, your point about the the department of defense is well-made and we are looking at a hearing for fall on dvd and issues you touched on. so we are god to work with you because to the challenges gao is well recognized that department. with that i yield to mr. connolly. >> thank you, mr. chairman. i want to thank everyone for being here tonight to the testimony. my parents have been major consumers, unfortunately, of medicare for about 25 years girdwood were voting last year, my dad did to me, you need to know in those 25 years -- i'm talking major, major, major stuff, never once has there been an error. never once have they had to be

reminded to meet an obligation. never once have they arbitrarily denied something that was important to us. in sharp contrast to the private insurance system. speaking for us, we are two very satisfied customers. and by the way, it has allowed them come in their 80s now, with autonomous, productive lives managing their health care, frankly because of medicare. so what remember that as a context as we now look at a feature of medicare that is not so good. and i think we have to begin with accepting the fact that $40 billion is a staggering sum of money. it is unacceptable for two reasons. we put the taxpayers to be sent in about it. it's their money. secondly, frankly it feeds into the narrative, which i reject that we can't afford medicare. what do you mean we can't afford it? if we start -- we could get 48

times 10 community huge significant chunk of saving in the program that doesn't touch benefits. and so, it is critical that we get our arms around this. now, nothing happens without being measured. ms. snyder, have we in fact set an ambitious goal, the dark always to get the zero and the other milestones and metrics allow us to do that. >> yes, sir, the administration has been incredibly aggressive goal, to cut the error rate in half by 2012. so we would be right around 6%. again, most folks will argue and get to 6%, it's going to cut in half to 3%. so this claimed sample --a think one of the difficulties in driving down the error rate is that you put interventions and plays against a sample that was

drawn and evaluated. you put in intervention and plays and within three months of the intervention been in place, you start drawing a sample again of claims. so it is the ability for interactions to take a five think is one of the greatest challenges in terms of driving down the raid. that will make it tough, but we know we are on the hook to do it and we will do our best to get there. >> i would simply say nothing happens without large government. i really would like to see you come back here with very ambitious stretch goals, understanding getting to zero as a noble poets never attainable. we will have far more dramatic and positive results. >> if i could, just in response to what you're saying. be not quickly. >> it is important to note that the claims are the ones that are the biggest dollar ones in the

hospital and patience. spokes in there, we hear you. >> i want to sneak into my questions. in the connected data, medicare advantage compared to fee for to fee for service surprisingly is 35% higher in improper payments. why is that? >> medicare advantage, when we look behind the numbers i'm not, what we found is we pay a decapitated rate. it is based on a risk score. some of the risk on inside your file your money. into this claimed come you to have documentation that says you're a sick guy and they need to pay you more for it. when we started looking behind the patient panels, what we found is there wasn't documentation necessarily that said you were a really sick guy. when i figure out what your cavity that payment is, that it should be a higher rate. and so, when we look at that, some of that was missing documentation, similar to fee for service. the part of it is trying to

determine what the score a few well, of a particular plan and what the rate adjustment should be against the patient panels should not be as sick as reported. the amount to some of the measures we took in the health care reform help you in that regard respect to medicare advantage? >> i think the risk adjustment pieces and knowing how to look inside of that and those metrics coming out of the affordable care act will be very useful to us. we are taking those and trying to pose a series of audit, take the measurements, go against the audit and figure out what to reputation should be. >> mr. chairman, given the incredible generosity, we do on the the question. i don't think it's a long one. it is my impression in talking to the u.s. attorney's office is that medicare fraud has increasingly moved up in a priority for them and consumes a

lot of their time in terms of training charges against organized fraudulent, you know, activity on medicare. mr. levinson, ms. snyder, ms. daly, is my anecdotal data and what is your office to ensure that while we don't want to be bounty hunters, people are deliberately organize them and orchestrating fraud against the united states, government and tax beanies to be brought to justice, what's the interaction with the data? >> mr. connelly, the interaction is robust and especially over the last several years as these anti-frustrate forces had taken hold of cities around the united states, there has been a very vicious effort to root out the systemic health care fraud, especially if it exists in places like south florida, los

angeles, parts of the gulf states, new york, detroit. and that is in large part why you are hearing more about it. more resource desired ended. it does require a careful coordination between the justice department as the prosecutors and oig is the investigators. let me put in a plug for this is founded on our part by the health care antifraud account established and had the and has grown and it certainly has helped us recover more than $6 for every dollar put into the fund, back to the trust fund and the treasury. so it has been very successful does far and we are continuing to build on that. a very critical part of the fraud does have to do with enrollment, making it too easy for folks masquerading as health care providers to get into the

program, get a provider number. title vi does strengthen that will enrollment process in a way so that if we can get that initial piece, if we can keep the wrong people out of the program in the first instance, that makes a huge impact i believe on the fraud problem and health care. >> thank you pretty much for your indulgence. >> you're welcome. i yield to the lady from the district of columbia, ms. of three. >> thank you very much. this was very informative, particular when you get into what his actual fraud. i'd like to break down what overpayments really mean. do they mean cheating? to damien miscalculating? do they mean paperwork? when i hear overpayments -- if you remember the general public, that you say somebody is putting

in for too much money relative to the service provided. what is your view of that any of you? >> congresswoman norton, i would like to clarify that overpayments can mean all of the things mentioned. it could be for the wrong amount. it could be a duplicate payment. it could be a payment made to somebody who wasn't eligible to receive it. it could be somewhat eligible to receive it. again, they receive the wrong amount. it could be any number of us under contractual, statutory or regular restrictions for that payment. so it has a broad swath sayer of what you can cut. >> i understand the limitations of statistics, but i must say that reporting these numbers in this way does that to what i think mr. conley was referring to. when people hear a word like overpayments, they reach for of

course they are used to that meeting. they don't even think about in terms of their own overpayments of their credit card bill. they think the government is overpaying people who should not be paid. i would urge you to find a category. it would make them understand how much overpayment comes from off-season, from deliberate -- that's what i think would turn the public off for than anything else. yes, want the rest of it to be reported, but it does a disservice to the most popular and perhaps the most important federal program especially since not everybody not here in the congress, with words that i recognize this may put a different burden on you, but i

do think it is a burden words -- were taking on. and i ask you to look at that. ms. king. >> you know, it is a difficult thing to do because if you are talking about malfeasance or fraud, that is illegal to mentioned and involves a deliberate attempt. >> and you're doing pretty well. i thought your statistics on referral of cases to the u.s. attorney. the public is interested in wrongdoing, ms. king. yes, they are interested in fakes, too because they hold the government accountable for being efficient. but the first thing they are interested in doing is somebody cheating us with this program? i would add how impossible it is to get a definition that we spread a statistically valid

notion. but that is why only ask you to look at. i do have a question. i was just perplexed about medicaid part d. but only in january, where you are beginning to -- but the government beginning -- this is the first of these really large programs. looking for my piece of paper that came up at me, the government was beginning to look at overpayments or for part d, the tribe program. would you please -- what have we been doing with that program, which has been -- what is it six years? that program must be -- we have not been doing the same kind is -- i work on overpayment, underpayments, if better for

part d that we've been doing for the rest of medicare? >> well, why don't i try to answer that? i'm sure my colleague from the gao can help me out on the fun. i don't think that we would say we have a wicked error in the program. what we have done the simplest three and a half of the four years figuring out what you should report to separate the components of the measurement. in fact, we have looked to for different aspects of the part d program and found error in all four of those aspects. three of them, which were around like low income subsidy payments, actual competitions within the system that pays drug and if it sells, was well under 8% and a half to 2%. the area that seems to be driving the part d drug benefit again comes back to if you go to the point is that it is the more the beneficiary goes in to get her, their prescription filled,

but is not at the pharmacy is supporting documentation for that order to be filled. what we found with the terms the prescription, that was the biggest issue. it was a documentation of the point of service. i think that number -- i hope i have this right, with around 13%. that was the biggest number inside part d. >> but that is the same issue, offering documentation for the rest of medicare. in january 2011, cms awarded a contract to identify payment and recruit payment in medicare part d. now, that program wasn't paid for. unlike the health care alliance, which we just passed. so that means the taxpayers have been really paying through the you know what for this one for errors. but is your testimony that it has taken us that long to develop basis then for doing the

very same thing you are doing with the rest of medicare? >> i think my testimony on that was late in the error rate program, you want to make sure you are getting it right because again it is partnership with the provider. >> i commend you. this is the administration that is not just been here for a couple of years. i am not sure if in prayer hearings there were reports on progress to measure medicare part d in the same way we measure other parts of medicare. have there been quite as the congressmen kept informed or has this just popped to because we have been working on it and the ability to report it to the congress? >> i think we as part of the improper payment types are required to report on all of our programs. certainly in risk of being high risk agency because of the medicare program generally, any major new programs it comes to

cms, we would look and be required to report an error rate on it has taken us a little while to get there. the good news is there'll be a good error rate with their financial statements. >> can ask them a question on this? will you be able to go back or will this reporting began as those coming in now, 2011 or 2010? how far back will you be able to go on error rates? >> just forward in part d. >> bennies for five or six years people got off scott free. i understand startups, so i'm certainly not blaming you, but my goodness come you can imagine and perhaps some of the information, some of that experience will help us to develop going forward how to better track at d-day. thank you very much. we'll never get back the money. >> i think the gentlelady. liberated note i would highlight on part d was passed, the

estimates of its costs have been about 40% lower than what was initially anticipated. but there is a path it is message there about how the program is being operated. i yield myself five minutes for questions. i have a couple follow-ups on my colleagues. mr. lankford talking about the audit contractors and ms. king, you reference that it is a contingent fee approach, but if what they find is overturned on appeal, then iraq's are not allowed to keep that. that assumes there is an appeal made. i guess my question is, how easy is an appeal down? what is the cost of doing a? what i am wondering is if somebody has made improper payments, are they going to weigh, give up the money, don't

bother doing an appeal. so the rack still get paid even though it may not have been a legitimate improper payment. >> is sort of a tough question to answer, although it ain't initially and i presumed in the national program are sort of going after big ticket items. so if you are a provider and an impatient will service and there's a lot of money on the line, i would think you're more likely to appeal than not. >> ms. snider, i don't know if you have anything to add on that? >> i was just going to say i was a there have been a robust appeals process. the provider community hasn't been shy about pushing back. when they have pushed back, can we look at it and it's resulted in certain changes and nurses and to help folks actually get the billing right on the front end. the ultimate of this would be if we are doing it right, moving

from a pay and chase environment to pay a right to begin with, ultimately rack contractors would be much more limited set of interventions because we would pay rate to begin with. >> in as we talk here today, one of the aspects is the certification of the providers that they are legitimate medical providers in the ranking member talked about that as well. you mentioned recertify all providers. can you expand what does that involve and how quick a press has is it to decertify all providers? >> well, we are going to do it in stages. we are starting out if you're a new provider coming into medicare, then there are those more stringent requirements on the front end. do we sort of divided it into different groups. new folks coming in. people who are already medicare providers about 1.4 million providers. but we have done is we've hired

a contractor to help us with that. we have put automated application so that people can come back and give us the date of information, like going places, physical locations, all the things that help us determine whether you are legitimate provider. we party starts on this recertification of a plan to have 100% of the community either completed in terms of recertify were significantly underweight they january 2013. said there is very specific project grants in house and program integrity was once before that it dvd. we've done something like 25 newsletters and articles for the provider community. we've been doing open reform to say this is coming. this is what we need you to do to work with them. and after going through this process of recertification or just in general, if you find a provider who is not legitimate,

can you expand on how you perceive them or how you work with the department of justice as they have been fraudulent and what type of penalties usually would be pursued. >> it's a new guy, we don't defend the billing number or we give them a temporary doing number, which means in three months we have to make sure they are indeed a good guide. that is sort of like limiting a stop-loss day. that's one of the new policies in place. the other is if we go through looking at recertification, we has to send people out to do face-to-face visits with folks, particularly in areas where we know there isn't a problem. we always go back to the medical suppliers. it's not best that we do face-to-face is that, but we will show up randomly over a period of time to make sure that you are indeed a legitimate provider. the other thing we have come in the new tool that we are more than willing to use his

suspension of payment if need be, which is different than the philosophy in the past. the philosophy for medicare all along was we take any willing provider. that is not change because as you stated early on, $38 billion is a big number. so we refer people immediately. i think it is in like 40 providers in the last quarter over to the opposite of the inspector general to say take a look at this. we may sometimes continue payments be a fun force that. so there are number of ways that we are stopping, you know, payment to the can went with for these limiting the damage. >> one of the issues you mention which is important as face-to-face and recognized that within your own entity, the ability to have a face-to-face without the 1.4 million providers, something that i don't know if it is better than what data, but perhaps because

this sounds at about a two-year process to go through recertification of everybody, is one every 10 years we have an entire fleet of individuals in the street doing a census, where they literally are walking the neighborhood in every town, every city in this country is to partner -- it is safe to be simple at first, but that when they are in the neighborhood, if medicare partners with the census bureau say, we have these 10 providers say they are located at these locations on this neighborhood, as you go through the neighborhood, just go and make a visit to confirm that there is an entity they are operating. you know, it is going to be using a resource that's already walking this week. so sadly we are eight years trying -- nine years away from the next census, but something every 10 years, somebody showing of any provider's location so

yet, there is the doctor's office and another way to complement in weed out the bad guys. so i'm the outreach -- a lot of average has been taught that with providers. my question, and you mention your mom, if my mom is also a medicare beneficiary, with services provided, she gets the statements provided and looks down and look at -- she is extremely grateful for the services provided in the payment of those services. but she looks down the list and try to say, well, might be supposed that the cost. she looks at the cost of other care and is overwhelmed by how much easier this was in total costs. is there an effort in the statements? and i should have paid closer attention to my mom's command that clearly says that something is not right on here, is it easily identified as 800 number?

that part of every statement? >> yes, sir, we have statements that ran all the time on the notices of beneficiary payments to say things to say things that give you the question, call 1800. ..

so absolutely -- >> that's great to hear. in the tens of millions of partners who can help on the front lines identifying in bringing it to your attention. final question for you if you have questions or comments there's the issue of the unnecessary services and general, you talked about this and your testimony in both services the redeemed not medically necessary attacks payers are paying out the medicare beneficiaries are paying 20 per cent on average for that, something they don't need and perhaps it is not safe because they went through a procedure that they didn't need and were put at risk in getting that service. if you referenced the six month period and the tens of millions of dollars related to medically unnecessary. can you expand on what your recommendations were to try to address that aspect of improper

payments where cms is in responding to your recommendations? >> medically unnecessary it is crucial that there be the documentation in order to demonstrate that indeed this was exactly the kind of service or product that was actually needed by the patient, by the beneficiary. so, as you point out, this is a burden that is placed on both taxpayers and the beneficiaries when you don't have that medical necessity determination, and i think the power wheelchair for example is a pretty good one because there are different types of power will shares and obviously the more sophisticated or going to be more expensive and the paperwork doesn't

demonstrate, and when you look at the actual beneficiary, there is no reason to provide a premium kind of town or wheelchair that has features that really aren't necessary. well, that is a cross obviously for the government and the beneficiary and it raises questions about gaining the entire system. so i think that's just an example, and of course this does constitute a significant portion of the improper payments. >> your perspective on the proper payments and to try to prevent the up front rather than chasing after. >> i think for us one of the best ways to prevent it is if we find the decision services are unnecessary services we take that and then translate that into an exit that goes into the front part of the payment system. we literally have over 1,000 edits that are in the claims

payment system. part of those are to push a cleanout as it appears on the diagnosis code and the service has been requested if it doesn't match it takes it out. so again, you don't pay it. the wheelchair's of a good example but another good example is for instance people with sores there is a special kind of what they call master service and often what we find is it is appropriate for certain masters to be prescribed, but what happens is they go to what i call the deluxe, the person who is really got significant source and needs that kind of surface to do well rather than going to a different kind of searches that may be appropriate to the medical condition of that person. so, it's not reasonable and necessary the services necessary but what actually gets prescribed for the person is in reasonable and necessary. so if we start to see kickups in the payment and this is part of

the front end of the data analysis and start to see it to get in a particular time of the category than what you do is you start to look behind that to say okay, what is going on here? there should be a service of some sort that is the intensity of the service is actually one that should occur and if we can toss that back and we do it again with all kinds of leaves then we go back and put that into it in the front end of the system to shut it down. >> thank you. >> any other questions? i yield to the gentleman. >> thank you. when the gao made nine recommendations come and you actually implemented two of them, is there any reason you have not implemented the other seven or responded to them in some kind of way? >> on that one we are actually setting up dealing with the colleagues next week because

when we looked inside of it we thought we'd closed seven of the nine. i think partly what has happened is used on some internal kinds of things in terms of policy statements and training and development that quite frankly we have not shared with the gao so we think we are a lot closer to having the bulk of the recommendations close. i think like i said next week we are sitting down with them to give them some documentation that we've done. we totally rewritten the training manual. part of this is the contract to close out and how one of it over head of how juan tracks the costs, allocation system and a bunch of very technical contracting kind of work. i think the one open recommendation that we are totally in agreement about is that is about $4 billion worth of contract and activity we do. there's a question of about $88 million of incurred costs. when we went through those cost

contracts, we believed we were at a point that probably $86 million of that is actually allowable we think it is about 2 million in the end that is not. we put some of those though in terms of we call the interim audit to look at them where we want to do more intense looking we really do give different numbers at different times and we work through that audit process, but i really think we are a lot closer to having the bulk of those clothes and i look forward to seeing the gao would go through that. there's an internal policy document that we did not share with them that we should that's sitting right now with the office of the general counsel and the financial management which addresses a number of the weaknesses. my guess is a will get us most of the way there. i think there will be areas where cms will be making a position that we believe we are willing to enter the business risk on this and resources in it. gao may or may not agree with that but we certainly need to look through that but i feel

that we are closer to close the and not. >> congressman towns, i appreciate the opportunity to discuss this and i agree with what ms. snyder said. we have not received documentation to confirm whether or not they had indeed taken the actions that we had recommended related to the contract weaknesses we identified, and we are very encouraged to be having meetings with them to review what steps have they taken to address issues such as having appropriate contract close out come in approving their invoice procedures, all of these are critical to protecting and making sure those contract actions are legitimate. >> we really appreciative the recommendations we got from gop we think we can strengthen our controls by asking and they are happy and glad to do that.

we were to glad to have the benefit of that review. >> let me just say this talking to the administrators in the health care field which they are saying electronic records might solve a lot of problems do you feel that that is the case? >> would further complicate the problem? >> i don't think we know for sure yet. it is too soon to tell. certainly we are going to provide better documentation, and so there should be better documentation on file, and so that would be a positive step. but i think before there's further implementation we have an opportunity to look at i don't think we can say that it would solve the problem for sure

>> thank you very much, mr. chairman. i yield back. thank the gentleman. before we wrap up here just a couple other quick things. one, just to follow-up on mr. towns internal controls and contract management aspects as well, i'm glad to hear we are further along than maybe we thought we were in that area. and just hearing the testimony today we have the recovery of its contractors and validation contractors to make sure, and even when there's an improper payment identified by the audit they don't collect and i forget the proper term that actually do the collections, so we have a lot of contractors. as a managing those contractors is the key if we are going to get a true handle of the proper payments and so that partnership between cms and gao in the

office is critical here. also, just to follow on i want focus on leges ms. norton appreciate this is an ongoing effort that we are in the year of the first we will have a good assessment of part de and proper payments, and if we apply a rough average of the fee-for-service part c, ten, 12, 14%, we are still talking $546 billion perhaps of improper payments in part d on top of what has already been identified so important to have that effort to move forward as it is and to the full power to address those. so in wrapping up i guess i would emphasize one, but i think just about all of us hoped to convey is the importance of what you do and the gratitude of our constituents for medicare and

ensuring that our seniors are getting the medical care that they need and that we do right by them and want to recognize them for their efforts and the partnership between all entities represented. cms, the oig office, the gao. i hope the three of you and the three of your entities in the office will see this committee in a very positive partnership manner because that is what the intent of this hearing is. again, you reference not playing dhaka that's certainly not what mr. towns and -- i sometimes forget the reference because i've been chairman with him as my ranking member on two occasions now he's been the chairman with me on his ranking member. the bottom line is we have a shared focus which is just to have good government and to partner with all of our colleagues in the government to

achieve that and so that is clearly what comes through our intent of this hearing in going forward for the partner and how we can further partner in the months and years to come especially if there is legislative issues, and one that was mentioned for the statutory language with the power wheelchair's and we have to start there. and if there are issues that you identify at cms that perhaps the intent of congress is not fulfilled accurately or appropriately by the way the statute was written verses what you think you were trying to do, you are probably going to learn that before us because of implementing the statute. to come back to our committee on the ways and means and energy with medicare and medicaid, but to again partner which congress, and that's what we are hoping to

do in every aspect and at the end of the day this subcommittee's focus is to really do our best to ensure that every dollar of the american people's hard-earned funds are sent to washington and handled and used in a responsible and accountable fashion. i know that is where all three or four of you ms public service or after and we are appreciative of the efforts and look for to going forward in a positive way. we will keep the record open for seven days for any additional information. one specific is that those numbers under actual fraud dollars identified in the past three years the would be great and look forward to the continued at the committee level with members and their staff on how we can work with you. with that, the hearing stands adjourned.

[inaudible conversations] [inaudible conversations]

the 30-foot sculpture stands alongside a 450-foot wall with more than a dozen of dr. king's quotes. we will bring you the live dedication of the memorial on sunday as well as weather permits. the u.s. park service says hurricane irene could cause dangerous weather in washington postponing the dedication ceremony.

♪ >> notice the color of the bourbon. that pretty amber color that you see is all coming from the char on the inside of the barrells. this char is where bourbon gets all of its color and a lot of its flavor. currently they discovered over char from the barrells.

we are taking a look at medicare. up next a discussion on medicare

advantage privately run insurance plan paid for bye medicare funds. this is about 40 minutes. >> host: all this week on c-span we are going to be taking . look at medicare as part of our week-long series in the lase tur of the washington journal. yesterday we looked at the history of medicare. tomorrow the topic is medicare part b, and then on at the fiscal health of medicare and proposals to bring down the costs. today, a look at medicare advantage and privately run insurance plans. let's begin with what is medicare advantage and how does it differ from traditional medicare? guest: medicare advantages in a way of getting medicare benefits, but instead of the government paying advisers to a private plan. when you do that, you are guaranteed the same benefits that medicare covers, but if

there is any savings they have as a result of care management of how they are paid, they can go back in extra benefits. typically, beneficiaries have gotten additional benefits or less cost sharing by joining in medicare advantage plan. there are a narrower range for so providers because they usually have a provider network. host: how does that work? guest: once per year, you look at the choices and you can join a private plan. when your new to medicare, you can join the and if your circumstances plan come -- change, you can join. there are different plans different to most ppo's. the beneficiary looks at it every fall, usually between october 15th-december 7th and they will look at the types of

plans. you were committed for one year, although there is a little bit of an opportunity in january to disenroll and go back to fee- for-service. you get all of your benefits plus or supplemental, so you do not have to take a gap policy. if you're going to get the drug benefits, part d, you can get that through the plan, and there are a few exceptions. host: of does it cost more docks guest: -- does it cost more? guest: it depends. there are a small number of medicare advantage plans that could offset some of those premiums. the plans can charge extra for the benefits package. a lot of them, these days, have a $0 premium, but that varies and it depends.

you could be paying extra for that plan, but it combines gap coverage and part d. host: medicare advantage is a private hmo-ppo plan to pay for hospitalization, doctor visits, and prescription drugs. some plans offer dental and vision as well. it is funded through general revenues and premiums paid by those enrolled. it was established in 1997. guest: the predecessor does go back. there was always an attempt to have an option, if there were in the private sector, so even in the beginning there were work around to allow plans like kaiser to get in. in the 1980's there was an hmo program. in 1997, the managed care expanded to include other types

of plans. and has continued over time, but it has not had as large a role as it does now. host: you mention the kaiser. what are some of the others? guest: kaiser, he managed -- humana, united, blue cross, blue shield, aetna. there are a lot of big local plans that could be important in different markets. host: 48 million medicare beneficiaries. that makes up about 36 million traditional, and then in medicare advantage there are 12 million. by the big difference? guest: people voluntarily choose what they want. historically, people who have had the employer-based coverage or who are also eligible for medicaid have been less likely to be in medicare vantage

because there is a disadvantage to being there because their employer is already paying them and it gets complicated to do so. probably about 33% of beneficiaries, or more than that now, maybe 40% now, who do not have those types of coverage at least get their part d coverage through medicare advantage. people have less choice in providers and medicare has been popular. people like to stay in the traditional program, but increasingly people find there may be an advantage for them financially so they join the medicare advantage plan. host: here is a map of the country according to the kaiser foundation. the darker states colored have the most people enrolled in medicare advantage by state in 2011. when we talk about costs, $116

billion in 2010 was the cost for medicare advantage. 22% of medicare spending and 9% higher than traditional medicare. why is the cost more? what was the objective in the beginning? guest: it changed over the beginning. there were supposed to spend 95% of what it cost people to give medicare coverage for the fee- for-service people in the same county. over time, it has changed. people were concerned about rural counties and access to private plans. there were concerned about urban counties where payments were lower. a variety of different things happened. then, in 1990 -- then in 2003, the medicare modernization act, the government said that at a minimum it would be 100% of fee- for-service and that the rate of

inflation had increased. for a variety of reasons, that were both intentional and unintentional, the price went up to about 114% of fee-for- service. now under the new act there are trying to bring that back down slowly on a phased basis of it is closer to 100%. it is likely to vary depending on one count to you live in -- on what county you live in. if you are in the lowest payment county, you can go down to 115% of fee-for-service thomas of the government is trying to shrink that 109% because the original concept was that it should save money or not cost any more. host: off of twitter --

guest: there is a big debate about how they efficient they are. they are paid more than traditional managed care. certain plants, largely the hmo oxime -- plans, the hmo's, they are on average more efficient than medicare but the other plans cost more than medicare and there is a lot of variation across the country. host: before we go to the con calls, i want to show two different perspectives. we begin with senator lamar alexander and his viewpoint. >> 25% of all americans that are on medicare have chosen medicare advantage because it provides the option for increased dental care, vision care, hearing coverage, reduced hospital deductibles, and benefits. this is helpful to low-income and minority americans. it is helpful to people in rural

areas. host: that was senator lamar alexander. i want to give the democratic perspective who says it is inefficient and costs more. let's see what he has to say. >> you have got to squeeze the inefficiencies out of this medicare advantage program were the original idea of a medicare hmo's it would be that they would be lower than fee-for- service and it was going to cost medicare on a 95% of it fee-for- service. that is not what happened in the prescription drug bill. it got reversed. host: marsha gold? guest: there is a big debate between the parties about the value of private plans and how much we should pay for them.

i think both parties probably think there is a reason to have an option for a private plan because it exists otherwise and gives beneficiaries traces. the question is how much to pay for them and how much value they add. republicans tend to think that competition and choice is good so there are not as bothered by paying more for them because they think it will get people there. the democrats are not convinced they are any better or maybe not even as good as traditional medicare and they do not want to pay more. one of the issues of extra benefits is it because medicare has limitations which is why people buy the gap coverage. should we fix the entire medicare program to get better benefits there? agreed -- or do you have to join a private plan to get better benefits? host: democrat from north bergen, new jersey.

good morning. thank you for reading. go ahead. caller: i have regular medicare and aarp. they sent a letter to my bank, and i pay $100 in medicare, then i pay part d, then i have a copay of $7 for my medication. after the pharmacies it's $7 a month. host: what's your question? caller: what is the best plan? i don't know. they talk about how much they are paying and if i put 2 adn 2

together besides what i pay medicare, i pay $400 per month extra. guest: that is the dilemma. your situation is not at all unusual. the kaiser family foundation has some numbers about how much people paper medical care. you can look at a private plans to see if that would save you any money. there is a website the federal government has, medicare.gov, and a 1-800 number you can call. one of the problems congress is facing is that they do not have a lot of money but medicare beneficiaries do not have money. how do we deal with the dilemma? host: medicare.gov is the

website. we go next to a republican in new york. jerry? caller: thank you very much. i have some familiarity because i have gone through four levels of appeal on the coverage of continuous glucose monitoring for diabetes. the coverage is denied because medicare says it is precautionary. to me, that does not make any sense. i have two questions. how do regulations come about? i understand there is the medicare regulation. my second question is that the medicare subsidy they provide to the insurance companies, my understanding is that runs $13,000 per year per member. if that is the case, it seems like the incentive would be to minimize the payment to maximize the profits.

host: here is one tweet. guest: on the last question, and insurance companies under medicare, which are regulated, and have pretty much the same profit level or not any more than they get in the commercial lines of business. for the most part, savings go back to the beneficiaries in the extra benefits. every year, medicare reviews the bids for those plans and tries to make sure that there are there. in terms of the specific questions that you have come you may want to look in the end "medicare and you" handbook which lays out the appeal rights. they are fairly extensive, but i also know that i have heard many complaints from people who find

them still confusing and get frustrated when something in their doctor thinks they want, they cannot get. i cannot answer your specific questions, but i can appreciate why it may get frustrating. host: there are over 120 pages in this pamphlet. guest: there are people you can call the help you when you do not want to read all that stuff. you can call the 1-800 number for medicare and each state has an office on aging you can go in and talk to people. there are an advocacy groups like the medicare rights center and other places to help people understand their particular situation. host: the answer to this next week may be in this handbook.

guest: that is a hard one to answer because there are specifics. generally, you are required to cover all of the medicare benefits, whether you are in the advantage plan or another plan. it should be identical between the two. cost sharing is a load to bear. there have been concerns in the past that some plants have had high cost sharing for certain things that are high cost like things that may have to do with chemotherapy. cms, the center for medicare and medicaid services, has clamped down on those and now there is more protection. generally, you should be able to get things, but like anything else, everyone's situation is different and it is important to consider the specific health plan you are in and talk to your doctors and other providers to see what plan is likely to be best for your situation.

there is an open enrollment. coming up in the fall, that is a good opportunity to. host: we're talking about medicare advantage in our guest is marsha gold from the mathematics of. what is a mathematical policy research? guest: we are a nonpartisan group that does research on public policy issues. host: frank become republican, from ohio. caller: if medicare's their privately run plan, why is it when i go to the veterans administration that they do not pay anything towards any benefits i have or for any care? they charge my medicare instead of v.a. and i am 100% disabled from world war ii. years ago, they took over everything.

now they charge everything, medicare, to my v.a. guest: when there are a lot of these programs and people may be on several of them, there is often a question of which program pays first and which is the right way to do this in the things have changed over time. your situation is an example of the government and congress deciding that certain expenses copers to medicare and then the va will pick up the difference to stretch the dollars out of the va. the website and in the handbook they explain that in more detail, but that is why that happens. host: spring town, taxes, democratic caller. -- springtown, texas. caller: i tried medicare advantage, and if you have any

chronic illnesses, you're really suggesting yourself -- subjecting yourself. it was atrocious. it did not want to file on it. to me, i could not wait to get back to traditional medicare and i found it has worked out better for me to save my independence to go to whatever specialist i think, like to go to rather than somebody on a list. host: why did you initially decide to do medicare advantage? caller: i felt for the propaganda. we're going to give you dental, vision, there is a health club membership, blah, blah, blah.

you try to use it, and it is nothing. host: you're going where? caller: to the doctors and hospitals who are the low bidders to get on the list. host: what did your doctors say about medicare advantage? caller: of course, they like it pretty well. not all of them like it. it just kind of depends. i found that it was very, very inconvenient. i was being forced into hospitals and doctors that i heard a terrible things about. host: you had an hmo and not a ppo? caller: i do not know what you

call it. i do not even remember the name of it now. i had to use a list, only these hospitals, only these doctors, and so on. the doctor, for instance, that i saw for my heart had a terrible reputation, but i guess he was just the low bidder. guest: i think what you point out is probably a good example of the importance of being really educated as a consumer. there are a lot of plans and your experience is one. other people have had other experiences. some like them, some not. some plans are better than others. unfortunately, i think the level of sophistication you need it to look at some of these things is quite extensive. you really need to understand which providers are in there,

what the benefits are, and make good choices for yourself. that is pretty demanding. i can appreciate that being difficult. i am sorry you had experience. the government tries to post what their experiences are, but that is an important reason why some people have argued to make sure that the traditional medicare programs stay there and people have choices not today private plan if they do not want to. host: medicare vantage is the topic this morning and part of our series this week looking at all aspects of medicare. thursday, we will look at the cost of medicare and how to bring them down which is the subject in a piece this morning in "the new york times." "cut medicare, help patients."

they go on mentioned procedures where there are areas where this new super committee should look up and those are topics they can bring up on thursday. next in colorado, an independent college. go ahead. caller: i just want to propose a solution to medicare and social security. i call it word, an acronym for

"work, retire, and die." have 10 years of political benefits plus a living allowance, like social security. but pays for anything, mayo clinic and a stanford medical center, you want it, you got it. then i near 75th birthday, you lose all government benefits. i do not think we can afford to keep everyone alive until their 100. it is a noble goal, but it will bankrupt us. host: marsha gold? guest: that is a question of philosophy more than a fact. there are quite a few people who would disagree with you. there are lots of ways one can solve health care costs and a lot of them debate as to the best way to do that. host: panama city, florida. doug? you are on the air.

caller:. you for taking my call. there was a woman being so negative about the advantage plan. i have been on medicare advantage from the beginning. i investigated and checked it out. it is a fantastic program. in five years, i have probably saved maybe $12,000 that i would have had to pay into medigap. my little brother is paying si $200-$300 more. i have had open heart surgery. no one could have more heart problems that i have come and i have fantastic care. it is a great program. there are some major problems when you are 65 and you should always go to medicare advantage.

host: when you're looking at traditional medicare verses medicare advantage, what about your situation made you think it was better for you? caller: over the course of one year, something major happened to me, the most i would have to take out my pocket would be $2,500. if i had medicare and it did not have the gap coverage, i could not afford it, if i had a major operation, like i did come up a heart attack, it would have cost me $40,000 approximately. with this, it cost me $2,500. gold?marsha guest: a lot of people only look at the premiums. i think that is a mistake.

it is important to look at the benefits. there is a lot of savings or getting in your case which has been the biggest attraction to it for some people. it may turn out they would be better off with medigap. the premium is higher, but have more financial protection. there is another issue which is that the government is probably better at figuring out ways to pay providers lower amounts, but the private plans may have more flexibility to innovate and do interesting things with care management. this is more a reality in some places than others, but the hope is that they can really coordinate care better and do things better. they're trying to do that now in the traditional medicare program, but the article you mentioned earlier in "the new york times," it was talking about how to get smarter, not just cut costs, but delivering

care that people need, keep them healthy, and focus on things that matter the most. that is still a dilemma on and one that a lot of policy makers, i think, denounced up to the plate enough. it is very easy to say that the bad guys are doing this or that we will have death panels, but there is some very difficult issues ahead. host: another debate ahead is the prescription drug portion, part d, which is our topic tomorrow. in "usa today." surveys show 13%-17% have added a bit special category and are more than likely to adopt them given that specialty drugs are in development. it goes on to say --

that will be the topic tomorrow around 9:15 a.m. eastern. an independent in lafayette, louisiana. caller: i am a physician. many of my patients are of medicare age. the big problem is the the administration of the plan is too costly in my opinion. they should limit the amount of the cost that goes into the administration and allow the funding to triple -- trickle down. we have a lot of patients that are not very well-educated and they get into really bad plans. in my office, i am unable to really help them get into a

better plan. host: why is it they're getting into clans that do not fit them? why you think that is? caller: marketers. they promised them all kinds of things. host: here is the medicare advantage cost breakdown. you mentioned the administrative costs are too much. 83% to medical expenses,% to administrative costs, and 7% profits -- 10% to administrative. guest: you can debate how much should go to administrative costs. there is a requirement that will go into place to require a 85% of the expenses to go back to medicare benefits or care management. they are trying to work on

those. they have been trying to work on some of the abuses in marketing where they occur. i sympathize as a position -- as a physician in try to do right by our patients. it is a difficult situation to be in and most doctors do not have the time to do with. the government has set up counseling programs that mentioned earlier where beneficiaries can get help, but there is only a little bit of money for them and there are an awful lot of choices. generally people rely on their neighbors or adult children. one thing the government is trying to face is how much choice to you give people marks you want to give them some choices, but you want to make it simple enough that it is manageable for people, especially people who may not have that much help literacy or be able to manage -- health literacy.

it is difficult even for me to understand the choices. host: joe is wondering why people cannot opt out of medicare. guest: one of the things that i am not sure how people realize is how on even medicare expenditures are. usually most people make about the same. a very small percentage of people account for large percentage of the health care costs because they are more sicken have chronic conditions. intent thousand dollars may be a boondoggle to someone, but for someone else -- $10,000 may be a boondoggle for some. it would be an income transfer and it would defeat the purpose of medicare, to give everyone some access, and really protect

you if you get sick and have a lot of medical expenses. host: another tweet. republican in phoenix, arizona. go ahead. caller: the morning. you go to the doctor and they hand you a sheet for the diagnostic tests and you go to a blood test place india three tauruses. whether you will pay, not pay, take the test, so i call medicare to find out what tests they cover and they would not tell me. is there a database somewhere where you can look up and determine whether or not certain tests are covered? guest: most of them are covered. if you look at the cut medicare and you" handbook it lists and were you can call for more information. in some of the private plans,

there may be some approvals the need to do before hand, and but in traditional medicare, most things are covered, but you can check and see what is excluded. it depends if it is medically necessary and there are some rules to decide that. host: democratic caller from georgetown, texas. caller: thank you for taking my call. i am very opposed to medicare advantage. i agree with the man that called earlier. there is incentives being given to the insurance companies, between $11,000 and $13,000 per year. most of the people that get on our low income because of all the marketing. they do not understand it. and they are not receiving very good medical care on it. another thing is that they offer them incentives to not pay their monthly premium. that is why a lot of them got on

because they do not take the premium out of their social security so they can get their entire social security check. talking to the more educated people that i know on it, they are very against it and they switch back. the other people are just unaware that they are not receiving the medical care. i hear the administrative costs of these private companies is about 30%. host: marsha gold? guest: the administrative costs are higher than medicare, but people debate how much higher. i do not believe it is 30%. maybe in medigap. it is a tough question. the research being done, and it is not as extensive as we would like to comment generally shows things to be a bit of a wash. sometimes the private hands -- the private plans look better. it depends how the measures are

done. the real truth is that there is a lot of the variability across the plans. there is a lot of variability in provider quality. you really have to do your homework. the government has been trying to impose quality standards and improvement rates. you should make your opinions known to legislators because some of this is a value judgment as to what we should provide. people are trying to provide them permission and there have been mixed experiences. host: off of twitter. guest: biggest expanded under the health reform bill. there has been some expansion in coverage of preventive care

thinking it will save money. i am not sure the cbo that scored these things and gives it that much credit for savings because it is a long-term issue, but it is something that policy has been moving towards. the of the debate is people who are disabled and qualify for social security. there are some people who argue that they now have to wait two years to get on medicare and it may be a good idea to cover them sooner so that medicare will not have to pick up all of the expenses that they may not have gotten from care. there is the hope, i think, that the reform bill as it goes into effect will mean that more people are coming on to medicare having been covered before in their earlier years and therefore will not have a lot of expenses. there is often a gap between it stopped working earlier and get on medicare. host: last call, a republican,

from greenville, n.c. caller: i have the advantage plan with humana, a ppo. i researched it to make sure that all of my physicians took it because i am in the hospital every six months. for an angiogram, i pay $50 copaiba verses when i would have to pay with medicare which would be 20%. my last angiogram is $54,000. my advantage plan works very well. i also have that vision and dental. i have used my vision, and i enjoy my advantage plan. my doctor appointments are $15 and my neurosurgeon is also in raleigh, n.c., have to drive 90 miles. host: how did you hear about medicare advantage? but sold you? caller: looking through what medicare offered and then what

he man offered. i save a lot of money. i get all of my drugs for free except for a few that i still have to pay for, but mostly all of my drugs are free and i am on nine of them. it works well for me. i am hearing is going away when obama's plan comes through. guest: it is not going away. there is nothing that changes medicare as it stands now. the coverage expansion with the health reform act is for people who do not have coverage now, not for people on medicare. host: last week. [laughter] guest: all i can say is that there have been complaints periodically by the advertising that goes on for medicare advantage plans. some of them do have a lot of

truths. the government has really tried to regulate it. i think the sense that things are better now. it is not everyone, but certain plans. it is a lesson for health reform and other things that even if you have private plans .. unworkable.