it clear that those that our province of china they're feeling a bit in letting b uy themselves unable to do businessremorse, in china because china's aggressive protection of the ther nothi industry they lost their old jobs americans want to work as places anymore anyway this is a anywa pretty by eve of u.s. manufacturing only california in population of texas twice the our sta population make more than we do. if we we are not just talking about those are really important we are talking about jobs and clean c energy and alsoon supplies. ..liation, we welcome this debate. i want my colleagues to come to the floor. some of the 19 that opposed moving this bill forward. when they say china will start this will start a trade war. they talk about world trade organization compliance, they talk about retaliation. the fact is china has been playing that trade war for ten

years. the american people have been patient as administration after administration continues to talk but fails to act. patience -- our patience is up as u.s. businesses are undercut, more u.s. jobs are eliminated. the bill is about our economic competitiveness where everyone is competing in the market by the same set of i've been to maybe 150 manufacturing plants in my state in the last three or four years. i know american businesses can compete. i know american workers can compete. just make the playing field level. f1619 will help us do that. mr. president, i yield the floor. prescription drug abuse by beneficiaries of medicare costs taxpayers nearly $150 million in 2008. a senate panel is looking into that next on c-span2.

>> now, a hearing on prescription drug abuse in the medicare part d program. according to a government report one individual received prescriptions from 87 different 2krs in a one -- doctors in a one year period.

this senate governmental affairs subcommittee is an hour and 45 minutes. senator tom carper of delaware is a chairman. >> it's good to see all of you. thanks to our witnesses for joining us. thank you to our ranking republican for joining us, good morning. glad you're here. we engaged here in washington, and across the country in a conversation about our nation's deficit and debt and the cost of federal programs. the conversation has been serious and at times heated. unfortunately, we have to reach a consensus on a plan to detract from the financial challenges we face. we can all agree upon stopping the fiscal bleeding caused by waste, fraud, by abuse. this is a small subcommittee, but for years, we've been singularly focused on how the federal government can get better results for less money or

better results for the same amount of money whether the chairman is tom carper. working with partners like gao omb, and other federal government watchdog groups, we try to maximize oversight, and i believe we've begun to make a real impact. we drilled down on how the government wastes millions annually maintains properties or buildings we neither want nor need. we examine billions agencies waste on 125 million avoidable and improper payments made to participants in programs and even to dead people. we focus on technology projects 245 have gone billion of dollars overbudget without ever delivering any real benefit. one issue we looked # at is the enormous amount of fraud, waste, and abuse that perpetrated

within medicare and medicaid. these programs provide life saving programs to our citizens but criminals figured out how to use this for their own gain. two months ago we held a hearing in this room. 234 that hears, gao had tens of thousands of providers involved in fraudulent or abusive purchases of controlled substances through the program. after the hearing we asked the accountability government officer to see if something similar was going on with medicare part d prescription program. ben -- beneficiaries are abusing the system to fuel their own addictions or sell them on the street. gao auditors looked at our

prescriptions paid for in part d in 2008. combing over a billion records they found over 170,000 part d beneficiaries apparently engaged that year in the practice commonly known as doctor shopping. they have gone to five or more doctors to obtain prescriptions for the same drug. in one case a beneficiary received prescriptions from 87 different medical practitioners in that one year, 2008. in another case. the beneficiary received three years worth of oxcodome pills from 58 prescribing doctors in just one year. we need to be honest about what these findings mean. they mean federal dollars intend to address the health needs of the elderly and poor are used to feed addictions or pad the wallets of drug dealers.

this is clearly unacceptable. according to gao, the control cms put into place to stop this abuse have not done the trick. our new plan put in place to combat doctor shopping. if a part d plan sponsor suspects one is doctor shopping they send a letter to the doctors who have been visited. the letter is sent along with a self-addressed envelope in which the doctors can send a response to the sponsor's concerns. in some cases doctors stop giving the doctor shopping patients prescription, and in other cases they won't. sometimes the letters go unanswered. gao made several recommendations to cms on how to tight -7b up controls of the program. included among these recommendations is a suggestion that ben rich ris be limited to one doctor and one pharmacy, and approach many states use in their medical programs.

i look forward to hearing more about this suggestion today from our witnesses. perhaps vument of gao's work cms issued new guidance to part d planned sponsors. this suggests plans deny beneficiaries at the point of sale if they suspect abuse. this is important change and, again, i want to hear more about that as welt. i work with senator coburn, senator brown and others to work on bipartisan legislation that curves waste in medicaid and in medicare. our legislation s1251 continues a set of important steps to rain in those trying to defraud the federal health care programs. there's precisions including strengthening the prescription drug monitoring programs and requiring closer coordination between cms, oversight contractors, the dea drug

enforcement agency, and state and local law enforcement. our proposal requires the list of doctors who can prescribe control substances like painkillers will maintained, up to date, and accurate. as many 6 you know, 12 of our colleagues serve on a bipartisan joint committee tasked by the rest of us with coming up with a plan to put our fiscal house in order. if at some point that committee in congress as a whole come to an agreement for a meaningful plan to address our challenges we have to address ones like the ones we're talking about here today. as i close, i want to comment on prescription drug abuse. the dangers associated with a misuse of prescription drugs have become known in the past few years as celebrities and other public figures succumbing to the lethal effects. the less widely publicized

include children who abuse the same drugs. children abuse them at an alarming rate. one out of seven teenagers, one out of seven teenagers reportedly abused or is abusing prescription drugs today. this is a drug problem that can impact any american hope with a medicine cab innocent. as a father, i find this news especially, especially troubling, and i want to make this point so it's clear. while there's a financial cost to fraud and abuse paid for by medicare and we cannot iring nor the miewm cost as well, description drug abuse is the phackest growing addiction in the united states. the difference between a street drug like cocaine and a prescription painkiller is did in many cases as this hear's previous work shows, the federal government is often paying to feed this addiction with

taxpayer money. avoid from our financial imperative then, we have a miranda rule em pertive to ensure the public health care system is not misused to further subsidize a public health crisis. i don't have the full list. turn it oifer to senator brown. i don't have a full list of the illegal drugs whose cost their street sales if you add it up are actually still less than the value of the prescription drugs the controlled substances that are being shopped and sold. it includes cocaine, what else? >> heroin. >> heroin. any others? >> heroin. >> cocaine heroin and others. think about it. how big is the problem? add up heroin and cocaine sales and other illegal drug, add them up, and the total is less than involved in the sale of these

controlled substances. it's a imig problem. it's a problem we're beginning to address and will learn more today about how to further address it. with that having been said, senator brown, thank you. >> thank you for this hearing. this is something, mr. chairman, i was working on a task force back in massachusetts on these types of abuses, especially just the rampant drug problem with our youth and among others with these substances. we certainly got into the issue itself and we're trying to put our nation on a path of fiscal stability. folks, you know all what's going on. you know we're trying to find a way to do it better. it's been an honor to be on the

committee to tackle these issues and try to do it better. i have strong support for the medicare prescription drug programs. they are important programs. they provide benefits to our seniors. we have to protect the programs because nay are looking to be changed, and if we weed out fraud and abuse we'll have more money in the system to give back to the people who need it the most, and the sush committee is releasing a gao report i think was asked to be done by senator carper and exposes the outrageous practice that taxpayer dollars are potentially funding through the medicare part d program, illicit drug dealing, and they report highly of this problem. as the senator noted one medicare recipient, as you know

visited 58 different doctors to obtain 3,655 pills, equivalent to a 6,000 day supply, and this equates to a street value of almost $300,000. many of the highlighted addictive prescription narcotics find their way into the streets hurting communities, kids families, and the doctor shopping 19 primary way -- is the primary way they get around the lawful use of these medications. in only a very small percentage of medicare part d beneficiaries, 1.8% participate in this behavior. though the percentage is small that's still 170,000 people abusing the system according to gao, costing the taxpayers approximately $148 million an -- annually. that's real money, folks. i've tried to keep an open mind

and find ways without throwing bombs at all you know, as to like where's there is the break down, and the key to find out is where's the break down? where do we fix it? they pay huge amounts in unneeded drugs and doctor visits, but it takes a high human toll and we know what that involves. this prescription drug abuse is one of the nation's fastest growing drug problems and categorized by centers of disease control as an epidemic. we have to do everything we can to control a stronger oversight over the substances. they are being used to fuel addiction and abuse and it's really, with all do respect, mr. chairman, unconsciousble what's happening. we held several important hearings some, i think, have

just been fascinating, the things i learned through your leadership and i commend the chairman for holding them but this one, i don't think there's none more important than this one quite frankly. looking forward to beginning with the hearing and, mr. chairman, i appreciate you bringing it up. thank you. >> you bet and thank you for your statement. you have a perfect attendance record here with me. i asked my staff for a sentence from a briefing memo about how big a problem the abuse of prescription drugs is. here's a sentence from the briefing memo. it was not in my statement. "it is estimated 7 million americans abuse prescription drugs every year. that's more than the number of people abusing cocaine heroin,

hallucinogens, ecstasy and inhalants combined #." combines. well, we welcome our witnesses. how many of you testified before this subcommittee before? all right. thanks for coming back. we appreciate that. first witness is gregory kutz, director of audits and special investigations unit. mr. kutz spent 20 years at gao to uncover abuse of american credit cards, abuse in hurricane katrina and many other issues. he testified before, and i thank him for being with us today.

i hope you don't charge on a per visit basis. we are grateful for your help. next witness is dr. jonathan blum deputy administrator and director of medicare at the centers for medicare and medicaid services known as cms. mr. blum oversees the prescription drug program and was an adviser to one of our good friends and colleagues, senator max baucus. our final witness is louis saccoccio and executive director of the national health care antifraud association. he and his group worked to increase awareness and improve the protection and prevention of health care fraud. i also understand that he is

former navy jag lawyer and graduate of the naval academy and was a tour as a legal officer on the carrier of the usst-hawk. is that correct? good for you. a navy guy, a jag guy next to me. we're in good company. thank you for that service and thank you for being here today. folks, you know the drill. take five minutes for the statement. if you go over a little, that's okay. if you go way over that's not okay, and we'll bring you back in. >> thank you for the opportunity to discuss medicare part d. in 2009 i testified before this committee on doctor shopping with medicaid. this testimony will highlight the results of the investigation of doctor shops in medicare part d. two parts first i'll discuss the findings and second i'll discuss

recommendations. first, we found indications of doctor shopping for 14 classes of frequently abused prescription drugs including vicodin, rid lin, and oxycotin as examples. they requiredded the same class of prescription drug from five or more prescribers during 2008. this represents about 1.8% of the ben rich -- beneficiaries acquiring these classes of doctors and they showed indication of doctor shopping. the cost of the drug was $140 million excluding the costs of office visits. we have 48 egregious cases to the drug integrity contractor for further investigation. the report documents the facts related to ten individuals that were doctor shopping. many of these individuals had prior criminal histories.

this was not a random sample in the results from these ten cases cannot be projected to all 170,000 cases. examples 245 you both -- that you both mention in the work of the ten cases include a california man receiving a 10 # -- 1075 day supply of a painkiller from 21 different prescribers. a georgia man received a 1679 day supply of painkillers and other drugs from different prescribers and pharmacies. another worm received a supply from 11 different prescribers. the graphic in your package which i have in my hand here looks like this, illustrates an actual case from our

investigation. as you can see between september 8 and september 19 this individual received three supplies. these prescriptions were obtained from three prescribers and pharmacies. in cases like this, the prescribers told us that they were unaware that their patients were receiving the same prescription drugs from other prescribers. our recommendations to address doctor shopping are consistent with those used in the medicaid program as you mentioned, mr. chairman, and also in the private sector. first, we recommend that cms cur the use of a restricted recipient program. this program limits no system abusers to one prescriber, one pharmacy, or both. since abusers never face consequences and will not be removed from part d this lock-in program provides a valid

mechanism to protect taxpayer interests. second if a restricter recipient program is implemented, cms should consider enhancing the share offing information on the doctor shoppers between the drug plans. this is necessary to prevent abusers from circumventing controls by just switching drug plans. third and finally because of cms concerns about the legal authority to make these change we recommend that cms considers congressional authority as necessary to implement the recommendations. in conclusion, medicare dollars used to finance prescription drug abuse in our nation. gao is hopeful that congress and cmf uses this report to improve the integrity and safety of the medicare part d program. mr. chairman and ranking member brown, that ends my statement, and i look forward to your questions. >> thank you for the statement and thank you for the work that

boxed it up. mr. blum. >> chairman and senator brown i'd like to thank you and the committee to ensure the focus of the medicare part d program stays as strong as possible. today, the medicare part d program provides benefits to more than 29 million beneficiaries. there's more than 3400 plans, and medicare beneficiaries may choose from a multitude of plans to deliver their benefits. the 345 seniority receives benefits in drug plans, that is, private plans that only provide out-patient drug benefits. by many measures the part d program is a great success. overall, costs have risen more slowly an the original projections, and a mar joyty of beneficiaries report being satisfied with this benefit but we know that the benefit is not

perfect. while the program is stronger today an ever before, we know there's vulnerabilities that must be addressed. i want to tharng the gao for highlights the potential of abuse in the program specifically related to controlled substances. we have reviewed carefully the gao's report and its recommendations, and we agree with the gao that the misuse of controlled substances is a growing problem to the medicare part d program. it is difficult to quantify the extent of the problem but we agree the problem can do more to curve potential fraud and abuse. at a time of scarce resources and significant budget deficits, we must ensure every federal dollar is spent as wisely as possible. since the part -- program is relatively new to date our focus has been to ensure the medicare beneficiaries receive the drugs they are entitled to. the medicare part d program pays

plans, a payment and works to make sure the part d plan provides drugs consistent with the program's requirements. our compliance efforts in recent years have been focused on the underunitlyization of drugs. we have audit resources to ensure they receive the drugs they need at the point of sale. we placed sanctions on part d plans that failed to deliver benefits consistent with the law and our regulations, but the part d program reached a new state of maturity that we now need to shift the focus. we cannot just focus on the under ewe utilization. to this end, we have taken the following steps. first, last week cms put out new guidance to plans to ensure they are putting into place more comprehensive drug review programs to ensure they are

screening for misuse of controlled substances and other drugs. if clinical reviews reveal misuse we'll instruct part d to stop payment and report fraud to law enforcement. yesterday, cms proposed new rules for the part c and d programs to ensure that the prescriber have a number if put on all part d drug claims. this will ensure 245 we can cruise more sophisticated 2k5 that analysis and spot those prescribers that present vulnerabilities to the part d program. cms also shares concerns over the high use of antipsychotic medications given to beneficiaries in nursing homes. there's evidence that the financial relationships between long term care pharmacies and drug manufacturers can lead to this overunitlyization. there's rules that addresses possible steps to address this overprescribing. cms is also using data much more

proactively. again, our data analysis and data mining to date have been focused on plans that may discourage the appropriate prescribing denying our beneficiaries needed drugs. our data analysis will now also include proactively focusing on drug overutilization. cms should consider a program where it restricts prescribing of controlled substances to a single physician dispensed by a single pharmacy. cms does not believe that such a measure employed by state medicaid program would work well in the part d program. part d in its current farm cannot restrict a beneficiary to a single physician or pharmacy. cms believes that the responsibility to prevent part d drugs rests with part d sponsors. we must be concerned that

beneficiaries do not face undo restrictions to december medications. beneficiaries seeing many doctors have complicate the health care needs or may be victims to a dysfunctional health care delivery system. any program to our belief to curve overuse and misuse and over utilization requires strong review and judgment to ensure those in need do not go without or face arbitrary restrictions. we'll continue to follow these principles. thank you for the opportunity to testify today, and i look forward to your questions. >> yep, thank you very much to your testimony. we look forward to asking you questions. >> thank you, good morning, chairman carper and ranking member brown. the amount of dollars spent on health care continues to grow. in 2009, $250 billion were spent on prescription drugs, and by the year 2020, that spending is

projected to double reaching more than 500 billion. the amount of health care dollars spent on prescription drugs continues to add as that amount grows. the problem of diversion will also continue to grow as a segment of the total health care flood program. while doctor shopping by efficients is the primary focus in the gao report released today, prescription drug diversion takes many forms. perpetrators undertake a multifaceted path for high volume and large profit on the streets with the costs of the drugs frontally bilt to ensure public and private. the money lost through fraud to the payment of a bogus claim is just part of the financial impact. in the process of obtaining a prescription 5 patient generates claims for medical

services and ensurers have necessary drugs but related emergency room visits in-patient hospital stays physicians clinics, and testing all based on injuries illness, and conditions in order to a prescription 6789 there's the additional costs associated with treating the addictions and overdoses arising from this behavior. more importantly the financial losses due are compounded by parties sickness or sometimes death. the office of national drug control policy calls prescription drug abuse the nation's fastest growing drug problem and they classify the drug abuse as an epidemic. of course prescription drug use itself is not necessarily indicating fraud, but the drugs are obtained through fraud. a example of the human hole of this problem was clear in

kansas. in october 2010, a kansas physician and his wife, o licensed nurse who acted as the office manager was sentenced to 30 and 3 # years of -- 33 years of prison respectively for distributing pain medications to parties who overdosed. a four year investigation of the pill mill showed overprescribing of controlled substances. more than 100 drug overdoses requiring visits to wichita emergency rooms and the deaths of 68 persons, a link to the case as well as more than 4 million dollars of medicaid and private insurance claims. the jury convicted the couple finding them to direct to the death of several patients. this is a dangerous crime that yields terrible results including death. they acknowledged this as a trend for the last several years and anti-fraud efforts identify

drug abuse by patients. we have example of how two insurers use monitoring, letter knowifications to -- notifications to prescribers with success. eta supportings monitoring programs to help identify fraud and ensure patient safety. they recommend that state investments in the monitoring programs be incentivized whenever possible. also they recommend that taking full advantage the opportunities and information sharing among prescription drug monitoring programs for states sharing borders with one another. for instance, in august 2011 kentucky governor steve bashir anowdgessed the formation of an interstate task force with border states committed to targeting fraudulent or abusive prescription drug activities in those states.

also encouraged by the memorandum dated september 28th to the part d sponsors asking for comments how the medicare part d program with more successfully exert control of payment for inappropriate overutilization of drugs. in response, eta suspects that many part d sponsors will suggest a restricted recipient program be considered to curve drug seeking behavior. thank you for the opportunity to testify this morning, and i look forward to any questions you may have. >> thank you very much. that was great testimony. let me start off by saying one of the things we focus most on in this committee is finding out results. we are not interested in process. we're interested in having the ability to measure results and we focus on success and how do we measure success? probably remember me mentioning not in this room, but the

finance committee hearing a couple of months ago we're having a hearing on deficit reduction and there were four or five really smart people there. one was dr. allen blinder who now teaches at princetop. he used to be the vice chairman of the federal reserve when alan greenspan was chairman. he was forced to testify and he said you know the 800-pound gorilla in the room on deficit explosion is health care costs. unless you do something about that, the rest is window dressing. when it came to me to ask questions, i said doctor, you said health care costs 1 the gorilla in the room and how it's imperative we do something about that. i said, do you have any advice for us today? he said, i'm not a health economist or an expert in that but here's my advice. find out what works, do more of

that. that's all he said. find out what works and do more of that. is the corollary to find out what doesn't work and do less of that? that would be true. in the spired of finding what works and doing more of that let's talk about what works and what happens to be, i think you mentioned humana and steps they are taking. we have experiences in medicaid some saying if you take these controlled substances you use one doctor and pharmacy to court reporting school it. talk to us what is working and how we might take those ideas and incorporate them in terms of legislation or regulatory approach. mr.kutz, lead us off. >> this has been sketch in medicaid. there's 30-40 states with a variety of the one prescriber, one pharmacy, or both or some are two actually, and that has been proven in those states to

be sketch in medicaid. >> let me interrupt for a moment. mr. bl, murks, in your -- blum you said dressing the problem would not necessarily work in medicare part d.. take a minute to explain that. >> sure. state med carry -- medicaid program works differently. there's one fee-for-service program where they have complete view of the pharmacy benefit. the part d program by statute works differently than state pharmacy benefits. we have 2400 different plans that provide the day-to-day transactions of the pharmacy benefit. to our view, because the wide di fission to part d benefits designed by statute, to our minds, we have to have the plans themselves provide the review, the oversight to ensure drugs are dispensed consistent with

the law. >> okay. that's fine. stop there. briefly respond to that mr. blum said on this point if you would. >> we agree there needs to be a comprehensive thought prevention plan in place. regulations state that, and to me, that includes prevention, monitoring and some consequence at the end of the day for people who beat the system. if there's not a restriction in place, there's a hole in the comprehensiveness of the fraud prevention part of it. the belief is probably they will not get caught. 23 they get caught there's no consequences. i believe it's important that any prevention program you've got to have consequences at the end of the day for people who might detour them. >> all right. thanks. go ahead, what else in terms of what works? >> one of the things we've seen in some states is prescription drug monitoring monitoring is doctors have access and they know before they write the

prescription that their patient is seeing other doctors or prescribers for the same thing. if you think about the first step in the process the writing of the prescription, you can perhaps prevent some of the prescriptions being written by having realtime data available for the prescribers to look at for their patients. the next step is the point of sale at the pharmacy, and i know cms agrees that it's very important to focus on information the pharmacist has before the drug is dispensed to see doctor shopping activity. the issue is when they get alerts at the pharmacy what are they going with it? are they using it to deny someone or someone walking out with the drugs even though there was an indicator set, there's a soft edit where they get the alert, but they don't have to do anything with it and they can walk out the door. to me that's important. monitoring is the third. cms promotes this. data mining and matching. we've done this here but much more comprehensive to me is

another element of a fraud prevention plan. >> good. mr. blum? >> i agree with everything mr. kutz said. we need to make sure that we are providing very strong guidance to the part d plans to take a more complete picture of a ben rich and they are giving pain medication needs. to date, we have systems set up that are much more transaction thal in nature. the point of sale that's in place, and we need to look or encourage part d plans to take a more complete picture so they can figure out whether or not beneficiaries are being prescribed medications that exceed good sound clinical judgment. i think it's important to point out that beneficiary seeing many physicians could have legitimate needs. they could be going to the er. they could be going to a clinic setting, and just being bounced around the health care system no fault of their owns. to our minds any system in place to stop doctor shopping and

abuse needs to be based within sound clinical judgment to make sure that we're stropping the bad believer but not preventing harm to beneficiaries who have legitimate needs or bounced around the health care system to no fault of their own. >> uh-huh. all right. go ahead, what's working out there? >> well, you know, it's a combination of several things. no single thing works by itself. you have to analyze data. look at what's happening out there. cms and the fee-for-service area is moving towards predictive modeling. you have to do that to figure out what's going on then you need to take action. now, the action should include notification to the physicians that are prescribing the drugs. also notification to the patients themselves and then looking to those patients to see if they do have a problem, maybe trying to get them into the programs that address the problem, but i think the other big piece of it is a restrictive

recipient program, a lock-in program, where under certain circumstances allowing for utilization and conditions that need a lot of pain medication, that you lock the folks in. that doesn't mean they don't have access to the drugs. for example the humana example they lock them into a pharmacy with multiple locations, so it's not just, hey, you have to go to this one pharmacy down the street. you can go to a different location, but you are locked into that one pharmacy. i think that should be seriously be considered. given the right circumstances with the right parties that, hey, we're not making a didn't on this otherwise, we need to take that additional step. >> all right good. senator brown, thank you very much. >> there's a case among others

where in 2008 alone a beneficiary received 5923 codine pill after going to 11 doctors that's a 150 day supply in one year. the beneficiaries did it to his or her doctor that the pattern of abuse was a case of mistaken identity, but that's not the case and it's doubtful the person could consume those narcotics in that time frame. what was going on here? >> well, we did not interview all of the people. eight of the ten had prior criminal histories. we don't carry weapons so we don't interview people that are potentially dangerous. drug abuse is going on and potential drug dealing going on in that case. >> well and i agree because i hear the word "diversion" and that's drug dealing and it's clear what's happening. the person is shopping around getting the drugs, and selling them, and taking advantage of

basically tax free public benefit programs and receiving government funded health care and as you can see from our chart, case one, the street value is almost $500,000 and in case 2, it's near $300,000. there's a break down but i don't know you, mr. chairman, but i have kids, and i remember those ear infections. you know, you have to get whatever it is they need, and god forbid you left it somewhere or you -- it was like getting fbi clerns to get another -- clearance to get another prescription for an ear infection, but there's instop stances like this of people doctor shopping. aren't these people paying co-pays or like a system in place where there's a mean record locater that says this person has been to 11 doctors

for the same issue. isn't there something in place? >> there is. there's monitoring plans and the planned sponsor send letters, however, all the doctors can do really is kick the party out. some have the letters and say i know the person's in pain. i kept prescribing it even though they went to ten other doctors. >> that makes no sense. >> that doesn't prevent it from continuing. >> that makes no sense. you have letters sent out, and a doctor sees the letter, and yet he or she continuings to prescribe medication because the person's in pain. isn't there a realization that, gosh, these people are abusing drugs and they could be dealing drugs. isn't there an obligation for the doctors to find out what's going on, and isn't there an affirmative obligation once the letters are sent to take it a step further, you know, call the doctor, you know refer it to law enforcement. i mean, a liter, i mean, gosh,

there's so many papers every day. i mean is it really working 1234 >> i would say mixed results, but not working to prevent it from happening. several of them kicked people out of the programs because they violated the pain management agreement. others prescribed it. we didn't look at the doctors because the doctors are part of the problem in what they do. look at the drugs they prescribed, and it does raise question, and it raises questions at the pharmacy. if you get the printout of the drugs, they paid cash for others and got it from other places. they are looking for multiple sources, and as you said, that indicates potential dealing. >> but the findings don't come as a surprise to cms, and i mean in 2009 hhosaig cited drug dealing by beneficiaries as referenced is the top type of

potential fraud and abuse referred to the inspector general's office. what did you find in your investigation with cms's guidance to planned sponsors in response to a beneficiary's who is doctor shopping? >> well, some of the sponsors are recipient programs. they asked the sponsors if they could do it, and it's in the chapter vii of the regulations that a lock in program like that is prohibited at this appointment, so and whether that's illegal or a policy issue, i think, you know, mr. blum can answer that question. it's something -- i believe it's still a valid part of a comprehensive plan and i agree with the other witnesses who said not one thing alone says you have stuff at the beginning monitoring at the end and people have believe there's a chance to be caught and 23 they get caught there's consequences. >> what's amazing is there's always an angle. everybody has an angle to screw the government, and you know out of taxpayer money, and

whether it's dealing with, you know waste, fraud and abuse, and contracting, whether it's dealing with these sorts of things not selling government property or holing it back just doing things so inefficiently it's mind boggling, and so mr. blum, just following up on you knowing that according to the responses to a case where a beneficiary is improperly obtained, there's planned sponsors to issue a letter to the doctor and since issuing this guidance to doctors to send a letter, have you seen a decline in cases of beneficiaries doctor shopping or prescription drug dealing? if so, what's the decline? what's the result been? >> i think quite honestly, senator, we are hearing about an overall increase in a potential

overutilization misuse of controlled substances. >> it's been increased? >> cms fully agrees that our response must be stronger. >> so the letter's not working? >> and that's why -- >> is the letter not working 1234 >> i believe that we are seeing more complaints coming into the front contractors. and there's more reports -- >> if the letter went out and cases are increases, then it's not working. >> i believe -- >> yes or no is it working or not? >> i don't know to be honest but what i know is there's complaints coming in of doctor shopping. those cases are referred to law enforcement, and we are concerned regarding the potential overuse of controlled substances. >> let me tell you, it's not working, okay? that's why we are here because it's not working. i would encourage you to do more than just send a letter. >> we are, senator.

>> if you need help or guidance or additional, you know help from us, great, let us know, 3wu sending a letter when we talk about millions of taxpayer dollars makes no sense to me. mr. kutz, as you know, the dea administrators special licenses to doctors enabling them to prescribe these narcotic drugs and in preparing for the hearing, the staff talked about the dea's relationship with the cms to curve the tragic abuse and the dea had very little relationship with cms and does not even know who the medicare drug integrity contractorfuls much less -- contractor was much less share information with them. how important is it to be working with the deo or sharing information about potential doctor shopping with the dea? >> i would hope somebody knows

who the medic is. apparently the person they talked to did not, but there's a relationship and coordination since dea looks at large cases, and dea is looking at schedule one, the cocaine, the marijuana, and heroin, and those types of things but better coordination with them if it's not happening 1 something -- some of these could be big cases, and even the individuals the ten, they might be part of a bigger network and so sharing of information would be useful here. >> you know, we ran into problems about ten years ago when we failed to share information. it's obviously different but it's still bearing to learn a lesson that we need to provide information if the dea and nobody puts their foot down and i would encourage whoever is not communicating to start to do it. i would like a second round if we could. >> maybe three. >> [inaudible] >> all right. thanks very much. i want to come back to you if i

could, mr. blum, and we talked about your office putting out a memo to medicare part d planned sponsors to prevent doctor shopping in the program, and i think it's probably in response to the gao study that was released last week at least in part in response to the gao study we requested that was released last week and for the hearing we have today. i'm told that the memo that went out last week does not actually direct the planned sponsors to make changes. the memo only asks for ideas and suggestions, and i'm also toll the memo left many potential experts and stake holders out of the process. for example, i don't believe it was distributed to pharmacies or to law enforcement.

mr. blum, i think it's critical that we put into place concrete steps to stop this form of abuse and waste to the extent that we can. when do you plan to establish a change of rules or other new proceed procedures? >> i think it's a fair statement that we put out our guidance to plans for the opportunity to solicit comments and we want to understand from a part d planned sponsors themselves how to best implement the policy goals that we have to address and respond more quickly than in the past to the overuse and the misuse of controlled substances and other drugs. as i said during my testimony we have to strike the careful balance, and so in stopping the behavior of senator brown points out in his chart, that is clear fraud that needs to be stopped

but at the same time that there are legitimate beneficiaries who have legitimate pain needs, and we have to find the right balance and the egregious behavior that makes no since but others who have five physicians may have legitimate health care needs. we are open to all ideas and your suggestion to share information is a good one that we'll follow up on, but we have to make sure that law enforcement best supportings our work that pharmacists the physician community is at the front line of the transactions, but i think it's fair to say we are open to every idea that strikes the right balance between stopping the behavior that's clearly grand and illegal, but at the same time, making sure beneficiaries have access to the medications they need. we are also concerned about antipsychotics, other drug

class, and to our minds can't just focus just on controlled substances but all classes with potential misuse. >> all right. i appreciate that response, 10 in that case, sounds like cms is prepared to district that memo that you put out last week to others including law enforcement and pharmacies? >> they are. they are public document, and so i think we have to do a better job to ensure the entire public can see them. they are public documents and we'll do our best to be sure they are shared more widely. >> include law enforcement and pharmacies. >> absolutely. >> having said that, i also want to note that centers for medicare and medicare services just yesterday timized some new -- finalized new rules -- >> proposed rules. >> proposes rules okay take one important step to help curve

fraud and starting next year part d planned sponsors have to cop firm the prescription was written by the physician something we discussed at a similar hearing last year here. it's a good example of cms, i think, taking action, and i hope it can be repeated with many of the ideas that we're talking about here today, so that's good news. question, if i can, for mr. kutz and mr. blum if i could. part d benefit is made up of two beneficiaries, those eligible because they are over 65 and eligible for medicare and those who are eligible because of disability or low income under the age of 65, and the gao found 70% of the ben beneficiaries were low income? >> 120,000 of the 170,000. they were just indicators and

disability. >> what do you think those findings might mean? >> well, one of the things it's not the over 65's that are doing this which is something people look at medicare assume that. >> folks in the medicare part d program if they are 65 and older, they are not there because they are disabled and up able to work but they are there because it's traditional medicare. they can only change their benefit plan is it annually? >> not in the low income they they can only change annually. >> others in the low category or disabled population, they can change monthly; right? >> right. >> that would be ripe for abuse. >> right and that's the risk here of you know, if you stop it happening at one plan, we recommended that sharing between

the plans of the known abuse ores is something for cms to consider. >> let me ask you if i could does the cms believe the ability to change plans monthly for those particular beneficiaries is an idea that congress should revisit? do we do that in the law? i presume that's the actual law we adopted five or six years ago. >> the ability for low income beneficiaries to change plans month to month was through cms guidance and not through the legislation. the history is when cms set up the new part d program authorized by the congress, there's lots of concerns regarding low income beneficiaries being transitioned from drug formulas offered by state programs to over part d forms that mirrored commercial forms. as a beneficiary protection, the agency now allows low income beneficiaries to change plans month-to-month given they have

oftentimes very complicated health care needs and very complicated drug regimens that the agency's goal is not to interfere with those health care needs. that being said, this policy -- >> unintended consequence here? >> that's one unintended consequence forbely that the operational frame work we operate under for those to game the system could change plans month-to-monthment i think we have to find the right balance between protecting consumer access and also stopping those that intend to defraud the program, but the current policy that the agency is to promote low income ben beneficiaries to change plans month to month. ..

to strike a careful balance of one. i think we are too careful to be honest with you. i think with 170,000 people abusing the system according to my information, could be more or less but clearly there is an issue and i know that in the

september 28 memo they admit that the new contractor responsible for identifying the investigating medicare part b fraud of the fight excessive utilization of trucks considers these patterns of drug diversion, drug-dealing. since the contractor identified this outrageous fraud how many cases have actually been referred to the inspector general for prosecution? >> micha understanding i have to refer to the law enforcement but by an understanding is that every case that was revealed when after patterns of behavior in the neighborhood of 50 to 60 cases was referred to the medic and those cases were all investigated and some were referred and i think they have

decided to pursue a handful of those cases through a law enforcement channel. but according to the data that i have they continue to receive growing complaints regarding misuse and to fulfill the obligation to refer those cases to law enforcement. i think it's also important to break down the 170,000 figure that you cite. the four potential reasons for that number. one is that there is a diversion or drug dealing going on and one is the beneficiaries are fueling their own addiction. three is the clinical need and fourth is the victim's to the system to i don't believe the report has broken down the number to those categories. >> you see the dysfunctional health care system. >> we have a very uncoordinated health care system that we are

looking to reform but those who are seeing multiple in physicians might be going to the er or deferred physicians because they don't have a regular source of primary care so that's not the fault of the beneficiary. it's been a quitter you going to implement its acquiring more drugs that are clinically necessary? when will those safeguards be put in? >> our strategy is to solicit comments take that comment and work as fast as we can. >> you just fix it. just fix it. i mean, we are talking hundreds of millions of dollars of taxpayer money into the money for other things quite frankly. >> my understanding is some of the cases pointed out by the gao arnove true fraud and illegal behavior and some of those cases are legitimate health care needs joseph and they have to find the right balance. >> fraud and illegal behavior,

the person that would need some care and coverage of the understand that. but we are talking about tax payer funded drugs that are probably being used to care for the individual but the rest is being served in the black market or just sold to friends or neighbors or what ever so i get the fact we have to treat everybody reasonable and make sure the care -- obviously if they are doing that, there is a deeper problem that i think supersedes the actual pain that they are and and i think you have to take the gloves off old but instead of seeking and requesting you have to dictate and come up with some suggestions of your own. i mean from a as to how to fix it it seems pretty straightforward you have to have a check and balance, top to bottom review of everything you are doing on the check and

balance and when you have any indication that there is any type of abuse you have to go right for the jugular and make sure that it doesn't happen. there is going to be a sharing of information. i would encourage you and your department and the people responsible and i know there's good hard-working people over there. i get that but we have a real problem here. we wouldn't be here if we didn't have a problem white, researcher mant? we are all the years. you get the two guys that work together the best to try to find solutions not just throwing bombs but find out where the problems are and try to find a way to kind of get to the bottom of it to put money back into the system that can be used for people who legitimately care and respect for the care and coverage they get from the american taxpayer because quite frankly there are other folks

that don't have those luxuries and benefits and they are hurting in the help, too. >> if you know where i'm at and where the chairman is that too we just have to do it better. we are in this together. i appreciate your bringing this forward mr. sherman once again. i appreciate it and held to the floor. >> certainly the work of the gao we have a place called on land and i don't know if anybody in the audience reaction people have been there with their kids and it's great fun for the children including our age but one is called. something pops up to knock it down and another one pops up and -- [laughter]

in any event, in terms of whether the issue happens to the abuse of prescription drugs even the drug trade and people one kunkel substance is worth it happens to be surplus property or wasted i.t. systems, you name it. there's plenty out there. we will see this in the subcommittee as long as i get to serve under and continue to focus on these. i want to come back if i can i think you mentioned a couple, himeno and will point to the co -- humana. what are they doing to address these challenges? >> they do several things. the first thing is they take a look at their prescription drug claims and certain categories of the control types of substances and then the heavy 333 program.

>> a lot of three's. islamic to the extent you have three per scribers and pharmacies and actual prescriptions filled over the course of a year it will then take a closer look at that particular case and if necessary send out notifications to the physicians involved letting them know that there could be potentially abusive behavior going on. after a further look at those cases may be putting those folks into a walk-in type of program where they are restricted to one particular pharmacy in order to attain those types of drugs and they see some success with that talking to amana they've seen a decrease in the amount of prescription drugs at these particular patient when they do that. wellpoint had a similar program and a program now where the look of individuals that, at ten

prescription over a 90 day period and they carve out again going to mr. blood's point about the cases where patients do need those particular drugs could the of so the course of things like oncology or ms and they carved the result but then they look of those prescriptions over the 90 days and again, they notify the press scribers and to those individuals on a locked in a program and the other thing they do is they look at the geography because even with the prescription drug monitoring programs it's important folks living in states across the border and avoid those types of programs the states have they will do that. if the need to travel outside certain geographic areas to go to others to get drugs, they will do that. one of the things they do is they look at is the patient traveling to a long distance in order to see a provider in order

to get a prescription? they also look at things like prescribe purse prescribing outside of their area of expertise. so if you have certain types of doctors prescribing a lot of pain medication drugs that isn't really working in the area where you would expect that type of prescribing they would take a look at that. i'm sure that cms has similar edits and to the extent the sponsors in part da lot of home have those types of edits as it goes back to a combination of things. what we were told is that companies like humana and wellpoint would like to use those programs. we are not allowed to and medicare to read estimate mr. bloom i'm going to ask you to just react if you will to what was just explained what they are doing at the humana and

will point. >> they raised in the testimony the notion that it plans to look more comprehensively at the entire case of the beneficiary that is very consistent with where we would like the program to go that our party sponsors the taking into account much more comprehensive drug utilization reviews they are seeing the history of the patient's care to make sure the total drug is being dispensed over the course of a given benefit period are consistent. we & oncology patience have legitimate care needs and many beneficiaries have very unique geographic circumstances that at this time we do not believe that the program would work well on the part of the program. to our strategy and believe we have to have clinical judgment clinical review drive those behaviors and when the sponsor our hope is when the sponsors

see for starting that cannot be justified by clinical review and judgment those payments are cut off. our sponsors don't carry guns so we have to be for those to law enforcement but our responsibility is number one to make sure there is good clinical judgment and then that we are providing the necessary direction to the plan for the clear cases to the law enforcement for investigation and follow-up. >> would you respond? >> i would agree some of these 170,000 we mentioned are not necessarily doctor shopping. there are some people that go to two or three or four the would meet the definition so that number is a soft number. you have to investigate 170,000 to know what is happening. koppel the sponsors told us the same thing. several told us they would like

to do a lot and if they have the infrastructure in place, again i still think that they should consider this as a valid part of the back end of the process which if you think that it feeds into the front and if you're only allowed one pharmacy it's hard we have people that go to 45 pharmacies if you are locked into one pharmacy we are not dealing the drugs we are just trying to better control your behavior and again you have to have a safety net for the people say you don't lock the people all of the program. we certainly agree with that. >> mr. blum is it the cms position that restricted recipient programs approved a mechanism to the use and medicaid board not minimize program issues and medicare part b that seems to be what you are saying but in response to the comment for the plan's sponsors cns put out i believe last week do you think there's a chance the plan sponsors would asked

that the restricted recipient program actually be put into place some might be and if so what cms's position change? >> we are certainly open to all ideas, and based upon the conversation and the testimony today that we will certainly take a second look to make sure that we are thinking about the programs correctly. if they are confident they can put these programs into place in a way that prevents fraud that doesn't restrict necessary care we would consider to be open to this idea. i think in the correct judgment that we think that more comprehensive drug utilization review is the best strategy right now and we agreed that a broad data sharing and data analytics would give new tools to help support law enforcement but the cms will continue to stay open to all ideas and we are very much committed to

making sure the tax payer dollars on things being spent as wisely as possible. -- before. dr. mr. kutz if i could according to the report released by the gao the cost of the drugs that were likely to interrupt was close to $150 million. i think it was for one year. >> 2008. >> could you talk about that figure and how does the gao come up with it? >> it was using i guess we had the claims data and information from the national identifiers for the pri scribers and social security data national drug code information we used for the 14 clauses of drugs and we simply went in and did the data lines to see who was going to have more per scribers for the same class of drug what it was a generic brand or name-brand like choxy cone versus oxycontin they would be within the same class

is our understanding so that's how we actually organize the data and then the information was for five or more and we got that there's a lot of people that have used three, four, five, six. it seems that there is a consensus in the three to six area. we had to use six and we did medicaid before and others state audits five is in the ballpark for the indicator that there is a potential further review necessary. >> okay. >> is there any way to factor in the costs through the taxpayer price of this abuse? >> it's all tax payer. this also affects the beneficiaries who aren't doctor shops that would presumably increase their share of paying for this and we didn't include the office i think mentioned some of these people went to emergency rooms to get their drugs. >> and didn't you mention that? >> we saw evidence of that also

and medicaid in some cases they would go to another way to get assad to get a full month they might give enough to get you through a few days and there's been a i assume medicare has to pay for the cost of the emergency room visit in that particular case. >> talking about $148 million in 2008 does that include doctors' offices >> it doesn't include offices and emergency room visits, nope. >> mr. saccoccio, i had no idea how much -- but to what we're talking about millions of dollars may be more. some information we have seen as for every prescription drug say that was obtained through abusive purposes. it may have as many as $14 behind that, and -- >> see that again. >> 14-1. say that the drug costs $20 to obtain before the office visits

to emergency room visits to talk about a ratio of 14-once every abusive drug that you may have seen the cost could be that much higher because of the additional services they go along with obtaining so you go to the emergency room and say i hurt my leg and need to get a drug there is a cost of medicare or medicaid or insurers pay for the emergency room visit that goes along with that little prescription you get as you are walking out the door to get that drug. >> even if it were four times higher it would be like $600 million in the egg year. >> we didn't take them because of their cost and as you mention the cost of the society is the bigger issue we pick them because the street value of oxycontin is several thousand dollars for one prescription xu that gets into some of the of the factors to consider here but working with you and your staff we looked at the 14 drugs that we thought were the most dangerous and most highly it used in the country right now.

>> if i could come as you know i work with tom coburn senator coburn and others on the committee to try to write legislation aimed at curbing waste and fraud in both medicare and medicaid we've introduced bipartisan legislation to s1251i mentioned earlier in my statement medicare and medicaid fighting fraud and abuse save taxpayer dollars that's a mouthful, isn't it? the is no good acronym for about one will be pleased to know. but the legislation contains a number of ideas i think that the directly impact the diversion of drugs from medicare prescription drug program for example the legislation aims to help states is the bush and strength programs and also helps to stop

identity theft of physicians to prescribe control of the substances and one of the terms of third this year it is a master that final. people say what is the master def 50 and i say that is a list you need to appear on because it does, it means that you are dead. we have doctors whose names appear because they are dead and writing prescriptions and we have beneficiaries whose names appear in the master the final and they still receive benefits even though they are dead and we know the reality that just can't be right and the beneficiaries cannot be receiving benefits, but one of the cornerstones is closer coordination and a information sharing among medicare officials and their staff. medicare oversight contractors and private partners and drug

plan sponsors and as well as local, state and federal law enforcement and i would ask if i could mr. blum, you think that these provisions or the legislation would help to curb to some extent drug division from medicare? and secondly, do you believe such is better communications and data sharing with law enforcement can prove beneficial? >> if i had a chance to carefully review the legislation that he introduced and i think that there are some very good ideas that would improve both the party program and the medicare program over all, and i think that it's fair to say that any barriers that can be taken down for data sharing and for data analysis what would prove very beneficial to the program the program had been built in silos. we have the physician data systems and hospital data systems and parts of the data systems that have prevented a very sophisticated data analysis

we don't always have the feedback loops between the program law enforcement and law enforcement act to the program and those are barriers we need to break down in the legislation and i think would be helpful continue that effort but now we have much more sophisticated data systems and we have part a and part d claims in the datasets we are moving to make sure that the pri scriber number is part of the drug claim so we can see where they start from much more easily and i think any effort to be much more proactive in the focus and to put in place procedures of space will serve the program well and also to facilitate the feedback between the programs and the law enforcement and the oversight agencies to make sure that we are acting when we can the report that came to our attention is a great work of the gao leads us to take steps. the more that we can continue that you that program would be

better off. >> mr. saccoccio did you want to as willem? >> the information sharing is critical to be successful and what is between federal agencies come between federal agencies and state agencies or between the private and public sector, so to the extent that the legislation endorses the idea it's is important and analyzing that is all well and good but once you get the information you need to do something for it and it's important bodily to keep it in a little sly from the others involved in the fights i think it's critically important.

>> when we hold these hearings i describe the way i try to give speeches and i'd like to give a speech i like to tell people what i'm going to tell them and i told them. it's almost like a diamond. i don't do that as well. at these hearings i like to give each of you a chance to make some comments at the end given what he may have fought of going to do that here in a little bit. another question i oftentimes like to ask is what implications flow from this hearing for those of us in the legislative branch and a lot of times we talk about our responsibility to provide a good oversight and to in many

cases work with the gao in order to find behavior that is financially wasteful and to put a spotlight on that and in some cases if you put a spotlight on the good behavior, too and possibly reinforce the behavior. i would ask each of you in terms of what we are doing or not doing what should we may be doing more or less of to get us to the point we are getting better results for less money. mr. kutz? >> with having the hearings like this talking about concrete solutions this is a jewel down from the normal and proper payment we talked at higher level having to build up like this i think are good what's really going on behind the numbers this is a tiny little piece of your bigger fraudulent and proper payment story and each one of those little pieces of that have concrete solutions that could be implemented so this is an example of that so

this hearing is very good legislative the fed is determined the restricted recipe is something they are considering they may need assistance with legislation that something from the standpoint you may need to help with there is no one piece of a solution to the discussion today of the fraud solution primm includes front-end, monitoring and something happening at the back end and all those things working together in a feedback loop so if someone rips off the program you utilize that so that they don't do it again at the front end and so i feel that there is a combination of things that could be done to address dr. at shopping. >> implications and the legislative branch what can we do to be helpful and what should we do less of? >> we as an agency and overall strategy is to be much more productive with the dialysis and with more sophisticated monitoring and oversight to the data to find clues and to find trends that are troubling.

we don't have all the resources that we could to do this kind of monitoring the more that we can have outside experts to bring things to our attention that our work doesn't miss a surly highlight but i think the more that we did have other analytical shops and arms go into our data relationships that are troubling that's better for the program and that's the best of all i have right now. >> what can we be doing on our side over here? >> first thing with respect to this particular issue gets back to the restricted recipient program i don't know if there is a statutory restriction with respect to that end to the extent the legislative fix may be the way to go in order to allow the cms because we have relieved that once they are now after the sponsors i think the sponsors are going to come back and recommend some sort of

walking program will cms have the authority to do that on the health care fraud i think one of the critical things as resources it for the fbi for cms to implement the predictive modeling that we are doing now in such a way that allows them to do that job effectively because it is an effort that you just can't do in one year or two years it has to be an effort that continues over the course of many years if you're going to start driving this stuff down because it's not going to happen overnight. so i think the funding the affordable care act provided some solid funding in the anti-fraud area for the fbi inspector general both of the front end with respect to data and analytics and preventing the money from dillinger of the poor in the first place and then to the extent to investigating that and taking the appropriate to of

the crew judicial on the back end. >> we were talking about better outcomes talk about five years about the time the party program was introduced for a number of years and she lived and where water florida and she had mentioned in her later years and arthritis and heart failure it is just a number of problems that sometimes happen to us when we get older she was thinking five or six doctors i sister and i would take turns to visit with her and we have folks who literally within her home around-the-clock baby a latter part of her life fiber six doctors are prescribing as many as 15 different prescriptions and none of them ever talk to each other and they didn't have electronic health records for my mom and her situation so no one

is really monitoring to see which medicines were compatible with others and which ones were not. walgreens.com ze of the future i was in chicago a couple of weeks ago and they do pretty amazing things in the pharmacy and a day as well as other pharmacies especially the chain pharmacy got very good at being able to look at the government since the person is taking to decide which ones are compatible and which ones are not and we are doing a lot better job and work with electronic of records some of which we funded through the stimulus act and some of which we are funding through the affordable care act. talk to us a little bit if you will about how can we do a better job of using electronic of records has it become more widespread, how can that help us and dealing with this particular issue? >> my team that is what we do

with the that and so it is very powerful over the years we've identified hundreds of thousands of potential cases of fraud and abuse across the government so i would say data is a powerful tool month not just for investigators but management to oversee and in this particular case to present and identify fraud. >> aside from the fact this is a legal, aside from the fact we're running out of money in the medicare trust fund by about 2020 or maybe even sooner if we don't leave things on autopilot what is the interest of the financial interest john of the prescription drug managers and reducing the incidence of this kind of activity? are they better off if it continues or not?

i like to harness market forces and rather than to pass the legislation and have regulation how we harness the market forces in the situation to reduce this kind of behavior or can we? >> one of our challenges on the part of the program is that most of the beneficiaries in the part the benefit receive benefits from have relationships to other parts of the benefits who are in a comprehensive health plans like the medicare and vantage plans more comprehensive benefit structure and i think the challenge for the program and the congress is for us to think about ways to incident part de plans to think about consistent goals that the program has. we know that the care coordination not just for the pharmacy benefits burt for all of our health care benefits are

the best strategy we have to reduce the cost but also improve care for the beneficiaries which accomplish that through the account will care organizations and for the care coordination and primary-care medical homes passed but the challenge with the speed of the stand alone part d programs providing the bulk of the benefits to the beneficiaries and so we have to build much more stronger relationships with our stand alone part d plans to ensure they are providing benefits that are consistent with the overall strategy is that we have for the medicare program. >> mr. saccoccio in terms of harnessing the market forces to incentivize without the wally how might we do that in this instance? >> coordination of care is critical in to mr. blum's point

to the extent that you have a stand-alone part de program at the ministry a drug benefit in medicare and maybe using a p.m. to do that but is not at the same time doesn't necessarily pay out anything or monitor the other care that the individual was receiving then you have a disconnect between perhaps the prescription side of things and the actual medical care they are receiving that may be receiving for reasonable medicare fee-for-service one of the advantages for the part c program medicare advantage is the person is in a health plan that can look tall aspects of what is happening and being able to control that. what he sees a lot of states are moving away from the medicare fee-for-service to manage care for medicaid as well so you get the coordination of care that

coordination is critical and i think maybe they are under the affordable care act to move in that direction as well to try to the folks in situations where the care is the least coordinated we are providers are speaking to each other and your example about i know my mother as well to keep a list of all medication she is on issues to catch a hospital or anything we showed that less because it's up to about ten or so she sued for six different doctors and it's not clear to me that anybody is talking they are not really talking to each other the medicare fee-for-service. >> market forces and using that as a way to reduce this abuse. >> i'm no expert at that issue but when we did our work we were not looking at it but some of the pharmacies seem somehow culpable on what is happening in

that if you actually got a printout of an individual who got into the pharmacy and the different drugs that they had gotten come all the different prez scribers and in fact they were going with cash the of the drugs with cash they didn't seem too concerned where the pharmacies with what was going on so perhaps it's because there would be a revenue source cut off to kick someone of your pharmacy to respect the financial incentives might be working just the opposite. >> i can't say that just as an observation this is something we saw when i looked at the printouts it was pretty striking someone would have noticed. >> some of the doctors even though they got the letters from the drug sponsors of the patients are going to other numerous doctors for the same drug they kept prescribing and they didn't do anything about it so that was just another observation i don't know how what they're incentives are and with the malpractice kind of liability is the that is another observation.

>> we're getting closer to the end but before i ask you to give a closing statement bring great insight into these issues anyway but tell me where you think there's a consensus of what to develop a consensus and where we think there's a consensus on what working now and the next steps forward to address this what you think the consensus wisecracks in this arena. semidey fears the consensus that first of all there's an enormous problem the problem may be greater than what the gao report revealed if you look from a national perspective medicare part b looking at that piece from the national perspective prescription drew diversion is

an enormous issue there's consensus on the concept you can't go after this problem to solution upfront solutions to keep it from happening in the first place to the extent you find the problem you need to notify and the prescribed zinni to notify the patient and try to get the patient if you think there's an addiction problem treatment that patient needs to control it and go walking program is restricted recipient program is probably what cms is going to hear a lot from the party's sponsors. so i think you could do those login programs in such a way that it does not interfere with the receiving of drugs needed by patients that actually need them

>> where do you think the consensus lies, feel free to repeat if you agree with him. >> i do agree with a prior statement i think there's a consensus that we have a growing problem with in the part b program of misuse and abuse and consensus at this table that we need stronger responses there's consensus me to work with our plan sponsors to figure the best strategies we're not cutting off access to those beneficiaries who have need there's a consensus that we need to export the recommendations from the gao more fully but from cms's perspective there is no lack of concern that this is a growing problem for the medicare part of the program and hopefully

mr. chairman there is no concern that we are not going to do everything we can to ensure that we are stopping the program while preventing those who need to have access to the drugs they need. >> thank you. mr. kutz, where do you think the consensus lies? >> this is a nationwide problem you pointed out clearly in the statistics you pointed out this goes beyond that and we saw evidence of that the source was not just medicare part b the comprehensive approach is necessary that includes more than just one type of activity. the importance of the data mining and data to this and breaking down the silas we have in our government with the health care systems of the data can freely be shared. we have an agreement if there's a program in place you need to make sure you have a safety net for the individuals that would have legitimate needs to make sure they don't get shut out of the program. >> give an example of that.

>> he would want to put someone on the restrictive recipient program if they're going to five or more doctors for the legitimate reasons he's got to have proven the case that they are in fact doctor shopping in an abusive way so i think that is what we are talking about and i would agree on that. >> you're welcome to take a minute or two to help with the benediction or the closing and what he would have us take away from this hearing. it's been quite a good hearing. mr. saccoccio? >> a hard look should be to get the restricted programs i think they can be done in such a way that they take into account the valid needs of the folks that need to do pain medications i think they've come along to the trading folks recognizing pain as a major issue and to be able to manage pain for patience with certain conditions but at the

same time i think that we could do it in such a way that cuts down significantly on the abuse obviously we're not going to take away all of the abuse but you can cut down on it and i think these types of programs have a lot of promise. >> mr. blum? >> just in closing to think you and the committee for having the hearing of cms that over site helps us where we can improve the part b program and i think the party program to our belief is stronger for the beneficiaries that has been during its five or six year history but at the same time there are vulnerability is we have to make sure the vulnerabilities are close down while maintaining the goal we have for the party program to insure the beneficiaries have drug benefits that will improve their health and provide access so in general closing figure for the attention of for commissioning the report that was very helpful for us there

were definite to do is for us to follow up on the conversation to look back on that fall about. >> we will welcome that. >> thank you taha for inviting us with it for working with your senator brown's chief of staff and the nature of a hearing. >> thanks. stat. >> and you for your testimony and your response and a special thanks to the giglio for helping us with our oversight responsibilities and a great partner we are grateful to you and your colleagues on a wide range of issues and it's hard to believe ten or 11 years ago balanced budgets three or four of them in a row in the 1890's it's hard to believe finding yourselves looking instead of the sea of blocking like to marry within years ago looking in the sea of red ink the two or

$3 trillion there is red ink just as far as the eye can see. some folks think there may be the two-way street is published and there's ways to cut spending and another is to raise taxes and increase revenues and there's a priest to more and that is to grow the heck out of the economy and watch them do some good of all legislation in the next week or two which will help the exports. another way is to get every nook and cranny of the federal government. and i like to say you've heard me say before everything i do i like you do better. ample the medicaid defense programs, thomas programs, tax expenditures, everything we do for the culture of thrift and this is just one more piece of

that. my boys are 21 and 23. they are pretty sure that medicare and social security aren't going to be there for them when they are 65 or 67 or 69-years-old. a lot of young people in their generation feel the same way. i think part of my responsibilities to make sure those benefits are there and they are more cost-effective in providing the safety net that we need as we advance and our years. so i think that there is a bit of a better results for less money and we can't continue to spend $1.3 trillion a year but we don't have the rest of the world will stop and we are finding that in places like

greece. i appreciate the opportunity to begin at cms coming and we apply those efforts. we want to do a whole lot better and we want to help you do a whole lot better. i think we can take a look at humana and some of these others and see what we can learn from them up. i've never been good at holding the gotcha hearings. we always like to hear on this side of the subcommittee always bipartisan but i like to hold hearings looking for an answer a series of answers to get to better results for less money and today i think we've taken some good progress in that direction. we think you all and i think the -- we ask our staff but i think that our colleagues have a couple of weeks, is it a couple of weeks? our other colleagues in the committee, subcommittee have a couple of weeks it can still submit questions in writing and i would ask that you respond and

we are going to -- we are not going to go away on this issue we are going to stay and to know that he will, too we are making great progress on this. thank you and with that this hearing is adjourned.

now two house panels look at the evolution of drug cartels in mexico and whether they should be designated as foreign terrorist organizations. the house foreign affairs and homeland security subcommittees offer to discuss a program that invites counter drug assistance and equipment to the mexican government. this is two hours. >> the subcommittee will come to order. i'd first like to start to say i ask unanimous consent that the gentleman from texas the amount

to sit in today's hearing. without objection, so ordered. that was a close call. [laughter] >> that was a close call. i first went to thank everyone especially our witnesses for joining us today. after recognizing myself and the ranking member for five minutes each for our opening statements, the chairman mccall and the ranking member for five minutes each for their opening statements. we will then proceed directly to hearing testimony from our distinguished witnesses, the full text of the written statements will be inserted into the record without objection members may have five days to submit statements and questions for the record. after we hear from our witnesses individual members will be recognized for five minutes each for questions and i now

recognize myself five minutes for my opening statement. two weeks ago for expert witnesses testified in this hearing room. to experts explained in an insurgency is raging along our southern border. the effort to focus on the fact that violence and crime in mexico have taken a unique term and the u.s. response has not followed. all agree the situation has evolved and fragment into violent criminal control over parts of mexico. it is clear that today mexico represents a unique situation requiring the development of its own specific classifications to successfully combat the authority of this expanding criminal control. today i will continue to make the case that mexico is facing a criminal insurgency.

the attack on the state are clear. the criminal organizations are capturing the allegiance of the possible economic and social programs and as they undermine institutions the have no desire to replace them. is this the insurgency in mexico a threat to the space governments then we have seen in any other insurgency scenarios. these transnational criminal organizations are employing increasingly grew some terrorist tactics to carry out their threats the potential threat of criminal organizations controlling our southern border creates grave national security and economic implications from the united states. that is why the united states begin funding the mary duff initiative to improve the situation in mexico we

experience more threats and violence from our border region today than we did four years ago it america initiative as been successful and to raise first establishing deeper cooperation between the united states and mexico, and that is clear. and number to come removing the major drug kingpins in accordance with the goals of the mexican government. unfortunately, the game is changed to read the reality in mexico is the u.s. assistance has lagged while the traditional cartels evolves into the diversified transnational criminal organizations perpetrating the insurgent tactics to protect their assets. after four years of the merida initiative from border region of mexico is more violent today than four years ago. the reduction in violence while maintaining a full attack on the criminal organizations and

strengthening the institutions to prosecute and punish them is required in order to regain control. this is the basis of the counter insurgency strategy that i outlined in the prior hearing. the united states should support a targeted yet comprehensive strategy that works with mexico to secure one keep population center at a time but in order to build and support vital infrastructure and social development for lasting results. the counterinsurgency measures must include one, and all u.s. agency plan including the treasury department, department of justice cia u.s. immigration and customs enforcement, the state department and others to aggressively attack the criminal networks and the u.s. and mexico.

to come once and for all we must secure the border between the united states and mexico doubled in border patrol agents fully funding and delivering on the needed border protection equipment such as additional unmanned aerial vehicles and the completion of a double layer of security fence and urban hard to enforce areas of the border and three, we must take key steps to ensure local population support the government and the role of law over the cartel's such as by promoting the culture of lawfulness programs. as i stated before the current u.s. policy with mexico does not seriously address the national security challenges we face. it is time that we recognize the need for the counter insurgency strategy that can combat the evolution and the resilience of mexico's transnational criminal organizations. this is a severe threat and requires a serious response.

i look forward to hearing from our experts from the department of homeland security, the department of justice represented by the dea and the state department on how the situation on the ground has evolved, the impact on u.s. personnel and their activities and tactical ways to squash this criminal insurgency. i now would like to recognize mr. keating for eight opening statement. >> thank you mr. chairman and for holding today's subcommittee as a member of both the committees on foreign affairs and homeland security i appreciate the opportunity to jointly examine this very important topic. i combined presence indicates the extent to which we take the security of the southern border seriously and we look for to western hemisphere subcommittee on this topic. mr. chairman we are here today to examine the progress of the

merida initiative and halting the flow of violence related to criminal activities of mexican drug trafficking organizations also known as dto. moving illegal drugs and weapons across the southwest border the bortolotti of the dto is overshadowed. a number of facts relative to the discussion today. as we see tangible solutions to the increasing level of violence in mexico with us remember those responsible particularly for violence against women are not distinctive in the mexican military is not always impartial could this mexico is an ally of but we cannot take the law enforcement in black and white. with minimum control for corruption and impunity if mexico it's difficult to decipher who exactly is committing the crimes in the two widely publicized cases cited by the robert f. kennedy center for justice and human rights to

indigenous women were raped by soldiers from the mexican army and the municipality of in 2002. however, to this day the state has refused to admit that these women were raped after nearly a decade these cases were finally transferred to the civilian courts but these two cases are not isolated incidents in the violence perpetrated by the military. the national human rights commission says its received more than 5,000 complaints about the alleged abuse by the military since of the offensive against the drug kings began in 2006. i note this not to discredit our ally president calderon or the merida initiative. since both of them have led to reform and the mexican judicial

system but for the purpose of the ceiling by one to go with a complete picture of what is happening on the ground in mexico and with president calderon is up against. at that time that we are tightening our belts we must monitor funding to the mexican police and military closely was we had suffering to the people and fortunately have nowhere to turn. for this reason i strongly support the training assistance we provide the mexican military along with strong oversight mechanisms the u.s. and mexico have made strides in developing strong working relationships with diplomatic levels down to field agents patrolling both sides of the southwest border. at present more than 17,500 border patrol agents 1,200 national guardsmen for deployment along the border in looker 250 immigration customs enforcement special agents are

assigned to secure the border. this does not mean did insurgence along the border do not exist and more work has to be done. however, a of this is the highest number of personnel to ever protect the border and these numbers represent a step in the right direction. in fact more effort and resources are deployed along the southwest border today than ever before. by the end of fiscal year 2011 according to the state department the u.s. will have invested almost $900 million in the clubbing and training to advance the merida initiative and assist our neighbors south of the border. since fiscal year 2008, the u.s. has contributed approximately $1.6 billion overall to the initiative while mexico has allocated 26 billion to promote public safety and security within its own borders. furthermore, a new effort is being implemented to strike the mexican civil society institution by offering training

and technical assistance. .. >> with proper oversight this can lead to real set. it's vital we work closely with the personnel to ensure they have resources they require to continue partnering with mexico to fulfill the goals of the initiative while combating crime

and injustice on all sides. i yield back. >> i thank the gentleman, and i'd like to recognize the chairman for his opening statement. >> thank you, chairman mack for agreeing to hold this important joint hearing op a very important issue facing our neighbor and friend to the south that is mexico. i also want to thank the ranking members keithing -- keating and angle for participating as well. men, women, and children have been murdered by insur gents. a gubernatorial candidate, u.s. citizens, and law enforcement officers. local governments are harassed and intimidated while the bodieses of those who stand up against these terrorists are hung from bridges and tossed into the streets. i'm not speaking of al-qaeda or

the taliban but describing the acts of the mexican drug cartels. mexico's president declared war on the drug cartels after taking office in 2006. he described violence in his country as a challenge to the state and an attempt to replace the staid. he said in response to the recent casino royale firing claiming 53 lives he said, "we are facing true terrorists." in 2008, the united states launched the initiative to assist mexico in its war against the drug cartels. over 1.5 billion has been appropriated, but to date only a third has been delivered. according to reports the initiative lacks essential goals, performance measure, and accountability. this raises serious issues.

what's the strategy and plan to help mexico win the war? is it now time to move beyond? what do agencies need from congress to accomplish this mission we all agree is so vital not only to mexico's national security, but to ours 1234 united states' efforts need to be re-examine the. re-examined. there are been attempted to kill u.s. state and federal law enforcement officials. i have the privilege to travel and meet with our troops in ike and afghanistan, but during one visit to el paso intelligence center, i requested to go into warez. i was told they could not guarantee my safety. 6,000 people had been killed there alone. i did visit but we were given the same security measures we received in iraq, afghanistan, and pakistan. the cartels not only breached the border but creating safe

havens across the border including in my home state of texas. 24 is a report by generals barry and robert scales. they also say the cartels are using prisons and recruitment centers and cities in the united states for drug operations. both generals will testify before my subcommittee next week. additionally a very recent report from the department of justice reveals the drug cartels operate in more than 1000 cities across the united states -- 1,000 cities. they control distribution of most heroin, marijuana methamphetamines, and roar narcotics. this is a threat to national security and should be treated as such. i introduced legislation requiring the state department classified drug cartels as foreign terrorist organizations similar to what president clinton did to the fair and fark

in columbia. this would deny them any assistance. the legislation must be tied to fighting the cartels both here in abroad using every means available. the drug cartels intimidate and coerce the population. they affect the conduct of the government and threaten the security of the united states. look at the definition and also under federal law this is a very essence of terrorism. there is a real war happening along our border, and the enemy is covertly infiltrating our cities. we have to take the threat seriously and take decisive action. in closing, i wanted to point out two more events. recently during rush hour the drug cartel dumped 35 bidses in the intersection of the city of vary cruise. five severed heads were put in a

sack and placed at a primary school after they threatened to attack elementary schoolteachers if they did not pay half their wages to the drug cartels. i split to you, mr. chairman that they are terrorizing the population. i submit to you these drug cartels are terrorizing the schools and the children in those schools, and with that i yield back. >> thank you very much, chairman mccaul and i'd like to turn now to mr. engle for his opening statement. >> thank you, mr. chairman. this is the second of hearings in the important initiative. i welcome all witnesses here especially my friend bill brownfield who's been doing wonderful work. good to see all three of you and very respected. i want to commend chairman mack for taking the opportunity to conduct oversight on this

foreign and domestic policy, and i'm happy to be here today. no more important relationship not united states and latin america than the one we have with mexico. we share a border almost 2,000 miles long a rich and intertwined history, deep cultural connections and economies that are now interwoven and mutually dependent, yet, today serious problems extend to both sides of the border. the drug trade, which had once been the domain mostly of nations moved north. it's taken hold no mexico and damaged the northern parts of central america. as i stated in the first of the hearings, i wanted to be clear that the united states stands with our friends to the south in the fight against narco-trafficking. i'm disturbed of the horrors carried out. they are brutal criminals who prey on people in the u.s. and ravage communities in new mexico and elsewhere.

we are complete agreement their a, -- actions are illegal dangerous and hideous. i'm not sure we can call them insurgents in terrorism. i'm not sure that describes what's going on in mexico. there's the overthrow of a government using arms and conflict dod defines tornado watch as a calculated use of unlawful violence or threat of violence intended to coerce or intended to purr suede governments with goals in 34reu8 religious or ideological. the drug gangs don't have goals, just wanting to make money peddling narcotics. it's not exactly terrorism and not exactly insurgent sigh, but

it's no less awful. we, in the united states have a real stake in trying to get at them in trying to defeat them. i think mr. mccaul's examples of what we've seen with these people are capable of is something we, in the united states obviously, have a very important stake in. i mentioned before when i mentioned before about the definition of terrorism because i'm concerned if we were to put these groups on the terrorist list would the gun dealer who provides them weapons, the drug abuser who buys the drugs, or the banks who loan money be prosecutor -- prosecutable is unclear but i think adding them to the terrorism list raises serious questions to explore in the hearing. it doesn't mean we have to go after them any less. in fact, we need to do everything we can, but i raise this because i just think it's

important before we jump and call them terrorists or insurgents. i think we need to be careful. among the other questions i'd like the witnesses to discuss today is one, whether we're down enough at home to reduce demand for drugs. i said many, many times when i chaired this committee and as ranks member, that if we didn't use the drugs, they wouldn't be a need for these people to do what they do. how can we slow the flow of weapons into new mexico? i think we should discuss that today. is the assistance moving fast enough? we had a problem with that in the past. i think that's important to concentrate on, and finally how are u.s. authorities coordinating on the border with mexican authorities. mr. chairman i'm very happy that we're having this hearing. i think these issues are very important. i think our goals are io identical. we need to see these criminals and these thugs brought to

justice. we need to stop it, and we have a stake in it just as much as mexico does, and i yield back. >> thank you, mr. chairman engel, and i'd now like to introduce our witnesses. first the honorable william r. brown field. ambassador brownfield is the secretary of international narcotics and law enforcement affairs. prior to this appointment, he served as u.s. ambassador to colombia from august 2007 to august 2010 and before serving in colombia, he served as u.s. ambassador to venezuela and chile. thank you so much for being here today. benson is the administrator of the drug enforcement administration. he served as a special agent in charge of the atlanta field

division directing and leading federal drug enforcement operations throughout the state of georgia, north carolina south carolina and tennessee. additionally mr. denson served as a special agent in charge of the seattle field division, and third is mr. marico -- did i say that right? >> [inaudible] >> silver, mr. silver is the acting assistant secretary for international policy at the u.s. department of homeland security. prior to her appointment, she served as policy adviser for innovation, higher education, and economic development to then governor janet napolitano. before that, she was special adviser to the president and director of strategic projects for the office of the president at arizona state university. thank you, all, very much for being here. i would now like to turn to

ambassador brown field and recognize him for five minutes. thank you. >> thank you, mr. chairman. mr. chairman ranking members, members of the foreign fairs and homeland security committees. thank you for the opportunity to appear before you today. i have a run statement for the record which i have submitted and would like to offer a brief oral summary. mr. chairman i do not intend to spend your time describing the origin history and purpose of the initiative. you know them better than i do. i'll say this has been more of a partnership between two governments than a traditional foreign assistance program, that the congress has been generous in funding it, and that the initiative delivered concrete

successes over the past four years. since 2009, more than 33 high level cartel leaders have been removed or arrested. this compares with one in the proceeding six years. thanks to the merida initiative there's 14 additional helicopters, hundreds of sweeps of equipment, and more than 150 canine teams. more than 52,000 mexican police and prosecutors received some professional training under the merida initiative. by the end of this year we will have delivered more than $900 million worth of equipment and training to mexico with more than $500 million delivered this year alone. there is no doubt in my mind

that the united states is better and safer today thanks to our support to the merida initiative. ladies and gentlemen, merida is in transition where we once had specialized training. we concentrated on building strong federal institutions and now we concentrate more on state and municipal institutions, and we will focus our support in northern mexico where the violence is greatest and we have shared border security interest. mr. chairman the merida initiative was not engraved in stone, but a living strategy that's modified adjusted, and corrected as circumstances change on the ground and we learn lessons. some of those lessons came from the united states congress and came from members 234 this very

-- in this very chamber. it is a valuable idea to integrate efforts against drugs organized crime, and terrorism into a unified hole lis tick approach to -- holistic approach to support the merida initiative. we have learned lessons from other theaters of operations around the world that can and should be integrated into our merida efforts, but mr. chairman, there's two lessons we did not have to learn because we already knew them. the first is that merida is a cooperative agreement between the u.s. and mexico with the government of mexico in charge of all activities within their territory. if we do not work together with the mexican government, then we accomplish little for either the american or mexican people, and second, as i learned the hard way during my years in colombia,

is the lesson of strategic patience. i'm an optimist, mr. chairman, and i believe we've already made serious progress under this initiative, but it took our two nations many years to get into this situation, and it's going to take us some years to get out of it. i thank you, mr. chairman, and i look forward to your questions. >> thank you, mr. ambassador, and now mr. benson is recognized for five minutes. >> good afternoon, honorable chairman ranking members and dwieshed members of the foreign affairs and homeland security commissions. thank you for the opportunity to speak with you today on a subject of critical importance. i'm rodney benson, and i have the privilege of serving as the drug enforcement administration's chief of intelligence. during my 28 year career with dea, i witnessed firsthand the evolution of mexican drug

trafficking organizations from marijuana suppliers in the 80s to clommian cartels in the late 80 #s and early 1990s to one of the primary and most violence actors in the global drug market today. from my supervisory position on the southwest border to coordinating multijurisdictional and transnational at the headquarters level, and my position as special agent in charge in offices as diverse as seattle and atlanta, i witnessed the remarkable spread of trafficker influence throughout the united states and around the world. currently, we enjoy unprecedented levels of corporation and coordination with our mexican counter parts and we greatly appreciate the unwaiverring commitment and leadership of the mexican president. it's critical in sustaining

mexican security forces against a formidable enemy. dea has benefited with working with better equipped and better trained police officers and prosecutors. they administered the division of technical material and educational support to our tireless partners resulting in the dismantling and fracturing of several dto's and encouraging partners in mexico to go forward on law enforcement reforms. information sharing between our two nations with the goal of capturing mexico's most violence and prolific traffickers has never been robust. as thee groups splintered into legalist factions, we see the surrogate bosses lack not only the discipline of their elders and former leaders but the international connections and influence to realize the accustomed level of profit. some might call the resulting

behavior anarchy and dea recognizes that extreme seemingly arbitrary criminal violence begs a label when some of the violence is directed at government officials, police officers soldier, and civilians, and despite groups resorting to tactics like bombs and beheadings this is just greed and rivalry. the members of the desperate organizations are not fighting in the name of ideology, philosophy, or religion or for political power and influence but to eliminate competition settle scores and increase profits. extortion, kidnapping, oil pipeline theft, prostitution, carjacking robbery and media pie ranking piracy bolster drug revenue and are the activities of organized crime.

funding from the merida initiative was critical in the transformation of the federal police agency and the training of police officers and prosecutors at our levels. in june of last year, our lawmakers passed some of the most effective antimoney laundering legislation in the country's history, and the results of our bilateral efforts acclaim a portion of the estimated $18 billion to $39 billion of drug profits crossing our border are improving exponentially. proving the effectiveness of mexico's state is tantamount for its success. it's in this area of remarkable cooperation that u.s. efforts have been matched or exceeded by our partners in mexico. we're committed to our partners and must continue to support endeavors to bring security to mexico and its citizens supporting the merida initiative

and president as well as the next administration in mexico 1 the only option. thank you again, for the privilege of speaking to you on behalf of the men and women of the drug enforcement administration, and i'll gladly respond to any questions you might have. >> thank you very much mr. benson. ms. silver you are recognized for five minutes. >> thank you very much. first, i want to thank you for your continued support and for the opportunity to speak to you today on the merida initiative. its inception in 2007 and secretary napolitano supports merida funded programs. while the state department has responsibilities for dispersing

funds, dhs and other partners participate heavily in implementing specific programs. this approach is consistent with the didn't of state's development review which states "given the national security implications of security sector assistance state will express the department of justice homeland security, to implement state programs involving tornado terrorism or capacity building and other industries, and we're pleased to provide that with mexico." there's types of engagement that coast guard and others had had in particular to the merida initiative. we work on training to procuring qimght paid for by the initiative. we believe dhs's use neck skills contributed greatly to the merida initiative. i want to note that merida

initiative marked a change in the nature and extent of mexico on security and law enforcement issues. we saw this at the policy level and on the ground. as part of the shift it led to a significant reframing and reorganization of much of our bilateral engamingment. it's now framed around four pillars. we focus on pillar three, creating a 21st century border. during the state visit president obama and calderon noted the work accomplished under pillar three. their joint statement set a policy vision articulating that "the 21st century border must ensure the safety and security of residents and communities along both sides of the border." they affirm the interest of mexico and the united states to allow entry into the countries of people who pose a threat to national security. the 39's board of vision shows

the need to manage the border and manage it in a holistic fashion. this policy vision requires moving beyond guarding the line between the united states and mexico. the border and interior are linked as was pointed out. at the board enand interior should be kemp complementary and coordinated using all agency counterpart. it's necessary, but this should be more of a comprehensive approach. through this approach, we need to engage domestically at the board earn and abroad to secure the united states. we also need to leverage opportunities working with the foreign partners to intercept and utilize threats before they reach the u.s. border. there's more places and more

countries interconnected with networks in trade and trfl every day. it means vulnerabilities or gaps anywhere across the globe, and our neighbor mexico, have the about to affect activity thousands of miles away, here in the united states. it must include efforts to secure global and trade efforts. this highlights the importance of collaboration and tribal governments as well as private sector partners. it's built on approaches to ensure beth academic competitiveness and national security. we cannot let commerce grind to a halt. dhs supports the -- from the congress, and your support of the merida initiative. the united states and mexico are closer now than we have been. while challenges remain, there's a strong foundation of cooperation to build. we look forward to working with congress to achieve the goals

and with our mexican partners. thank you again for the opportunity to testify. i'm happy to take any questions you may have. >> thank you very much ms. silver, and i now recognize myself for five minute questions. first of all let me make this perfectly clear. the people of the united states and of mexico have a very shared interest in this. the people of mexico and the people of the united states have similar desires and that is for the ideas of freedom, security, and prosperity. this hearing today is to get at some of the questions about where we've been which have been documented, but have we diagnosed the problem correctly and what do we do moving forward? first i have a baseline question here for all of you and

hopefully i can get a yes or no. i know that might be difficult for some of you but please try. have the drug cartels in mexico evolved in their criminal activities and level the violence since 2007? ambassador? >> i'll start, mr. chairman. they evolved, but they are smaller, more numerous more diverse, and as a consequence, they are a different kind of strategic and tactical problem to address than they were four years ago. >> thank you. mr. benson? >> and yes chairman, we've seen that evolution expansion, some of the cartels splint oring, and then essentially more criminal groups we're targeting. >> thank you. >> i concur with that. they are more fragmented. there's on the ground small group, and the law enforcement challenge is different. >> okay.

ambassador brownfield according to the cia, and i quote, "insurgent activities include k guerrilla warfare terrorism and political motivation like propaganda recruitment, and international activity." do you agree the cartels in mexico are engaging in the activities listed by the cia? >> it's a label, mr. chairman but i will not question whether certain organizations are doing certain things, although to be honest, i can make the same comment about organizations in the united states as well. >> but you don't deny that the cartels are engaged in guerrilla warfare, terrorism, and political mobilization such as propaganda recruitment and international activities? >> i accept that individuals of some organizations are doing sometimes in some places this activity. i do not suggest it's systematic

nationwide or institutional. >> well it's -- let me just -- we can go to -- we have a slide here. guerrilla warfare. there's examples of federal police officers attacked in mexico. next slide. terrorism -- you have a gunman killed 52 people and burned the casino in mexico, and i believe the president himself, indicated that that was terrorism. political mobilization, you have a candidate for governor who was assassinated in june 2008 -- or june 28 2010. you have political protests increasing awareness surrounding the war on drugs, and, again, then you have next slide propaganda and recruitment. you have cartels holding -- happy children's day and at the same time, recruiting and

offering better pay and health care so i would go towards that and then there's international activity which we have all talked about here today, so i'm having a little of a 45rd time understanding the reluctancy in saying that the activities that the cartels are showing do fit the definition, the cia talks about activities as an insurgency. >> i don't question your facts mr. chairman, nor your motivation. you and i have exactly the same objective in mind here. if, on the other hand your asking me do i see exactly the same thing here as in other parts of the world we described as insurgency, they are different. >> i'm not asking about other parts of the world. i'm asking specifically about whether or not the cartels are partaking in insurgent activity as outlined that we just did. the last question here.

the department of homeland security and department of defense are addressing trafficking in the united states and border protection programs but separate from the merida initiative. wouldn't it make since to have a coordinated u.s. strategy to meet strategic u.s. goals in mexico? ambassador, if you want to take a shot at that. >> sure although, we have to work our way through, just as you do when you are melding what your subcommittee does with what mr. mccaul's subcommittee does, we have to address the issues of a domestic issue like a foreign issue but the answer to your question is yes. >> thank you. do you agree there's an evolution in the violation by the cartels? you can agree that there's been insurgent activities in mexico from the cartels, and that we need to have a coordinated u.s. strategy to meet the strategic goals. mr. benson, do you agree with

that? >> chairman, i think right now we have a very robust inner agency targeting effort. as we target mexican organized crime here, and that intelligence that's generated is shared very timely to our counterparts in mexico, and our goal obviously being to impact that largest piece of the organization as possible and we can want to do that as the ambassador mentioned on some of these captures that we had over the last couple of years, unprecedented targets that's created these small out groups has been a great stress. >> thank you and my time expired. i'd now like to recognize mr. engel for five minutes for questions. >> thank you very much, mr. chairman. you know again, i don't want to get into semantics but it's important that we define these

things. i want to read something that mexican ambassador wrote on april 11th of this year in the "dallas morning news," and i quote him. "these transnational organizations are not terrorist organizations. they are very criminal violent groups that are well structured and financed. they pursue a single goal. they want to maximize profits and do what businesses do, hostile takeovers and pursue mergers and acquisitions. they use violence to protect their competition from other competitors as well as from our two governments efforts to roll them back. there's no political motivation or agenda whatsoever beyond their attempt to defend their illegal business. misunderstanding the challenge we face leads to wrong policies and bad policymaking. if you label these organizations as terrorists, you will start to -- you will have to start

calling drug consumers in the u.s. financiers of terrorist organizations and gun holders providers to terrorists." starting with ambassador can you drug abuse the implications of labeling the mexican dto's as terrorist groups. do you agree? >> he obviously is a very wise man, doesn't speak for the united states government or for me. he does speak for the government of mexico. i think his reasoning is pretty sound, congress mapp and that is to say we have to -- we have to look through just the label, and we have to think through what the implications of the law would be. i agree with virtually all of the suggestions that the facts are consistent with the label. i then say that is only half of our job. the next half is to assess what is the implication of us making this determination? it does have plich nature?

what does it give us that's more than we have? these are the questions that i think we should ask as well as whether the specific agents of this organization, in fact are consistent with the acts of an insurgency or terrorist organization. >> mr. benson? >> as targeted operations in the northern border, across the southeast, the northeast, it's been targeting organized criminal gangs, cartel representatives, and linking that back to those leaders back in mexico. we do clearly show in intelligence that we generate here in the united states, and we target -- they are clearly taking direction from their leadership south of the border.

>> so is the ambassador right? do you agree with the statements that i road that he wrote? >> as a career special agent, i view those mexican trafficking groups as organized criminals, organized crime. >> from our perspective we view them as organize the crime. -- organized crime. it's less the label, but what the label implies operationally for us and for us, the law enforcement tools we have are best suited to the job we see at hand. >> thank you. the original statement jointly issued by the u.s. and mexican governments in october of 2007 and the merida initiative, and i remember it well because i chaired the subcommittee then. it said that reducing demand in the united states is a major go of the program. without demand in this country it's clear that there wouldn't be significant narco-criminal

problem in mexico, colombia, or elsewhere. since fy of 2004 reduction increased to 2 billion but why not do more to increase demand for it in the u.s.? are we living up to or original commitment to fight demand? if we don't deal with demand at home aren't we treating the symptoms and not the disease ambassador? >> i'll start on this, congressman, although, as you know i look externally opposed it internally. obviously, it's a simple matter to say if there's no demand there's no supply because you're not supplying any demand. it's much more complicated than that as we know. we have been addressing this internal drug consumption problem in the united states in a serious way for nearly 50 years. we have not been sitting on our hands. we spend more money on this than any nation on the planet. it is intreg grated into our

policy and i offer a foreign affairs suggestion as well and that is let us not assume that when the day arrives that we have solved our drug problem, the foreign drug supply problem is going to disappear. it will not -- evidence exhibit number one is u.s. cocaine demand has reduced some 50% over the last six or seven years as the production of cocaine disappeared 60%? no, it has not. the producers sought out new markets, and it goes to new locations. they are in it for the money, and they will create new markets if other markets are denied to them. >> my time is up. i don't know if anyone wants to jump in quickly? >> somebody have a quick answer to this? >> i would just say that every agent in the off time, i mean,

is that constant time frequently where agents are going to our local schools and many, many outside events on demand reduction because that obviously is an important component looking at the drug abuse problem in the u.s.. >> thank you mr. engel. >> thank you. >> i now recognize mr. mccaul for 5 minutes for questions. >> thank you. i commend all three witnesses for your dedication and service to the country in a very challenging time. i think we don't pay enough attention to this issue. i know, ambassador k you're the expert, and you've been on the issue for decades. you're ambassador to colombia and we recently went down to colombia to visit with the president down there to talk about what warton didn't with plain colombia, and president clinton designated the farq as a

foreign terrorist organization. this is more than just a label. it's not just a label. it's a designation that provides authorities. it's a designation that provides tools to combating them by freezing bank assets in the united states but prosecuting with a 15 year advancement to anybody who aids and abets a terrorist, by allowing us to -- unlike the kingpin you just go after the head this allows you to go after the body of the organization, and in addition, it's not just a person in the united states. it can be a foreign national which i think is critical. jurisdiction is beyond the united states, and i justmented to -- just wanted your experience, ambassador, and being down there in colombia, and watching that successful operation tell us how this foreign terrorist organization designation can you tell me whether that was helpful? >> very fair question, mr. chairman and i'll offer you a

couple observations. first, i have absolutely no objection to having placed the farq eln and the militaries on the fto list, and participated 234 that process in 1999 and 2000 and i believe 2001. it was helpful to the extent that it got at their support network. i don't think it had a direct immediate impact on them inside colombia because the guys in the camps and jungles were not worried a great deal about their designation, but their external support structure was, in fact affected, and, in fact their external support structure was small enough that you were able to verify who they were and go after them. that was helpful. being able to call them terrorists was helpful. being able to assert every time we talk about the hostages they were keeping in jungle camps and referring to them as terrorists was helpful, being able to say,

we the european union the canadians, and there may have been another government had all put them on the same list was helpful. i don't deny it. it was helpful in colombia, and i do not, and i said it once, and i'll say it again, you and i have exactly the same objective. the question is how are we going to get there. >> i think that's a fair assessment. the definition under federal law 1 -- is to intimidate or coerce a civilian population or government by extortion, kidnapping political assassination. you know, when i look at what's going on down there it seems to me they fall squarely within that definition, and i wanted to, i mean, maybe it is semantics, mr. engel, but this law would provide special authorities to help win the war. he described the violence in the country as a challenge to the

state, an attempt to replace the state. that sounds like more than just organized crime. in the recent casino fire, he says that we're facing true terrorists, so mr. benson i appreciate everything you do at the dea, and your agents particularly down you know in mexico and central america. i mean they are really in the line of fire. in your testimony, you have under here, the threat to governance, the threat to governance. those who organize finance and control drug trafficking thrive in areas where government control is weak. they are looking as the al-qaeda and taliban does for failed states. i argue guatemala is on the verge of being a failed state. in mexico city, 25 farmers' heads were cut off the other day. they are looking for safe havens

and looking to manipulate the governments. more troubling is the fact these murders were done to intimidate the population and influence the government, to intimidate the public and influence the government. again, going back to the definition under the law, to intimidate and influence. they terrorize civilians and the mexican people. there's no question about it. the example of the school bus trying to extort money from teachers and throwing heads in the front of the school. yeah this is beyond some al-qaeda's worst tactics. there's a problem down there and i guess the debate we're having is how best to handle that. i want to allow you, mr. benson, to respond.

>> they want to instill the fear in the public to prevent the government from increasing their operation tempo and targeting. the government is having that continued success, and they are reverting to these vicious acts to instill that fear, so in my opinion, we need to keep that operational tempo going forward both in the united states and in moment koa what we're -- mexico what we're doing now, and those successes we've highlighted, 23 -- if we continue hurting the leadership simultaneously with the information going back quickly, that will result in positive success down the road. >> i agree. the partnership is key. i don't know if we have a second round. are we? okay. for the record, i'd like to put in the record the response to the news to the letter described by mr. engel that these are not just businessmen making money. they are more than that. they are killers, and they do

terrorize, and with that i yield back. >> thank you, mr. chairman mccaul, and i'd like to recognize mr. keating five minutes for questions. >> thank you, mr. chairman. ambassador brownfield made note to the fact that merida is in transition and moved from equipments in goods and training, and i just want to ask a question in that regard and also make an aside that you know, in 2010 we with held 15% of merida funds with compliances and basic human rights. i want to ask you gsh r -- i'll jump to this -- what extent to people in local communities, indoing nows community -- indigenous communities feel comfortable going to the police to report crimes? >> congressman, obviously, it depends upon the community, and there is a difference between the military and the police. the military does not tend to be

local. they obviously have it from somewhere else for the mission of whatever duration. the police is local and are members of the community. in some communities in mexico, the community is uncomfortable reaching out to the authorities seeing them as part of the problem rather than part of the solution. in others i suspect that is different. one ning that i would -- one thing i would suggest to you fairly strongly however is since the merida initiative more mexican communities have seen their law enforcement and military as part of the solution rather than the problem than they did before merida. >> thank you. i just want to follow-up, too. how have women been impacted by the violence the drug cartels and by cases also like inez and valetina, the very forces there to protect them harmed them and then ignored allegations of

rape. >> two part answer and two part question in my judgment. women have been inordinately affected by drug cartels 234 their attempts to intimidate through violence, extortion and through threats the communities and the institutions because of the belief that by threatening the female population, they will have greater impact than threatening, killing or otherwise abusing males. the second part of your question deals with the institutions that are supposed to be protecting them and obviously every time you have a case an incident in which the institution that is held responsible for protecting that community, in fact goes to the dark side and becomes part of the problem. you've taken a giant step back, and it takes years sometimes to restore the confidence in the institution. >> yeah. do you think withholding funds specifically geared to that is a deterrent to that?

what's going to change that? >> i'll offer you my view with which you have every right not to agree with completely. congressman, in my judgment, there's many way to attack the issue. some of them are direct and frontal. with hold funding until or put specific training components into the program that says you will be trained on human rights trained on respect for women and children, whatever that may be. part of it is indirect. you build institutions prosecutors, and even special courts that are designed specifically to address this issue, but in my personal opinion, the most important thing we can do is professionalize across the board throughout the nation mexican law enforcement. when you have more professional, more competent, better trained law enforcement officers just trained in law enforcement they are far less likely to commit that sort of abuse and that

kind of kits against holding too much of the funding in a bay because that 15% is obviously 15% that for that period of time is not being used for that training purpose. i swing either way depending on the day and what i had for lunch. >> well, that doesn't do any good if there's not oversight to bring it to the surface. what are we doing and the american taxpayers funding many of the initiatives? what are we doing to make sure this is being rooted out and we discover this and then through training or oversight? how are we going to find that out? are we doing a good enough job in that regard? >> my own view is i give us between a c-plus and b-minus now, but i do that with any

program of this size that we're just getting started. your problems will almost always occur in the first two or three years of the massive programs. i don't care whether it's iraq afghanistan, mexico colombia, that's where the biggest number of problems are. we're out of that period now. you have a right to ask of us what is our specific e scrabbluation -- evaluation and oversight mechanisms, and i believe that's the challenge for this year that we're still in and next year. part of the problem we have to work our way through is how we work this with the government of mention koas because at the -- mexico because at the end of the day this is our police -- their police and their military. i hope you call me up and haul me over the coals in another six months time on just that issue because i'm hopeful we'll have a much better clearer, and more precise story to tell by that

time. >> thank you. i'm over my time if you could in writing, forward to me not just the grade, but what actions and oversight you're going to implement and the look at the grade afterwards. thank you. >> thank you and just for the record mr. ambassador, we'll be happy to call you back and rake you over the coals. [laughter] i'd now like to recognize mr. bill racus for five minutings. >> thank you very much, mr. chairman. i expressed deep concern regarding reports that the united states participated in multiple acts of gun walking. we've seen it in the case of fast and furious, allowing firearms to pass in the possession of criminal and other third party organizations south of our border. i strongly support efforts to

disrupt criminal syndicates that traffic firearms, of course, and drugs, and conduct illegal activities. however, when those efforts serve to fuel criminal enterprises throughout the provision of firearms, they must be stopped. it's extremely troubling that the united states government would willfully allow weapons to be acquired by dangerous criminals and drug trafficking organizations in direct intervention. can the panel explain for the committee what efforts your agencies are currently taking to enforce current laws and to ensure that we are not allowing weapons to fall into the hands of mexican drug cartels and criminal organizations. please? >> congressman, when i look at drug trafficking and drug trafficking and violence go

hand-and-hand, and as we target those representatives deployed to the united states we encounter weapons frequently, and we seize those weapons, and we do that continuously throughout operations throughout the country. >> we are constantly on the lookout in the southwest border and the region for weapons that are southbound. we've instituted checks of rail and of cars that far out strip anything we've done in the past for that reason, and we'll continue to do so. >> and finally if i can add on from our end congressman, and that's the external side, what we do on the southern side of the border, we are working to support both training for mexican law enforcement and military in terms of identification of and how to do investigations of ill illicit firearms and illegal firearms,

and second we support tieing them in to our own electronic tracing systems that we have whereby we can track through serial numbers and other identifying data, a firearm to give the mexican institutions access to that same system. >> thank you. my next question, the safety of the men and women in uniform rerains obviously my top concern, and i demand those on the front line of the battle get the training resources, and support they need to do their job as safely as effectively as possible. we must act to gain operational control of the border. to do anything less would be a disservice to the border personnel leaves the door open to which criminals, drug smugglers, human traffickers, and terrorists can destroy the fabric of our society. while the merida initiative

bolsters the accountability and professionalism of the mexican police at the federal level, corruption among local police forces is cited as a key reason why the drug cartels are able to continue exploiting the product to the united states where they turn a blind eye or actively work for the cartels, corrupt police police officers enail the drug gains to remain a national opposed to a regional threat. i have my question is on this matter is two-fold. how does the merida initiative address the issue of corruption among local police officers if merida does not address this issue, what action do you recommend to the committee to counter the corrupt police officers -- corrupt police forces on what the initiative is to accomplish? question for the panel. >> let me start, congressman

and i start by the last sentence i offered in my testimony, and it took us many years 20 get into the situation it 4r take years to get out and corruption clearly falls into that category. what are we doing now? first, attempting to professionalize. first the federal police forces and increasingly in the future the state and local police forces because a professional law enforcement institution is less likely to be corrupt than a non-professional one. second, we're supporting the development internal investigating capability, a municipal, state, or federal police institution individuals within the police force whose job is to monitor investigate, and sanction corrupt members of the institution. third, we are ensuring they have salaries you can live on.

if your sally is $15 a month it's like likely you supplement that through exterm income. if it's $1,000 a month, it's 985 less likely a month you'll trying to supplement it. finally, working with the attorney generals office of mexico and working with the state attorneys general to ensure public prosecution that is visible to everyone in the community of corruption officials and office that there by sends a signal that corruption will not be tolerat tolerated. >> how much progress has been made? >> it depends where you are and what the institution is you are dealing with. i'll talk about the one i believe have teen the greatest progress in this record, and that is the full police of the ssp, an institution that before the merida initiative