>> it used to be investing in china are rare candor foreign companies got a better deal from the regulatory and incentives in point* and my understanding is that is no longer the case. the regulations are beefed up so the regulations that the company's fee from america are not as lucrative it a more. would you concur? >> it is slightly too broad because every time a company or investment is the same so it may not have as much with intellectual property. other finding a profitable to do business there but some cost more than it is worth. >> i would probably disagree

with the characterization there was the tone where we were successful making money in china my father did business in china with nuclear radiation detectors and thought it was stacked against him every watch people who came to china every ready bought hot one she would sell half a billion shoes but the hope was always that the chinese economy would return to the plate toch it became a more level playing field and more predictability with the regulatory system. what we're finding now is it is becoming more predatory and capricious as they try to force the indigenous innovation not content to let the western multinationals and that has created a very unweaving playing field and frankly

unfair activity that is in violation of the did buteo commitments. >> how big does the problem and need to get the floor there is a demand from the american people? we estimate today a law estimate of three or 400 billion how much the floors of a conservative effort. >> it is an illustration. >> i yield back. >> average even argue at decade it go when some of the issues are decided in the house and senate that the public was always said of these two institutions but i have watched this from my days in the house with

npr with american corporations and relationships in china and at the time i remember i french that said their remorse corporate jets that weeks leading up to the vote they and 85 in his memory and at that point* i am not sure hour large companies interest in china matched up with our national interest as a nation and i think perhaps it is more that way and a note of caution as american companies, to the governing and say we need help that we keep in mind we should be there for them it is important that we match those because i remember being lobbied that this makes so much sense to pass it then to years later he moved production that all of

the competitors there because the new set of rules and that song was sung far too many times and in north carolina in did hayek -- ohio so thank you for your work for your lifetime and continued working and service for our country. i will call the next panel known more commonly as of watching online campaigns against censorship and was awarded by the french national recognition of his efforts in contribution to promote with the issa to live technology and with the city of human rights and the vice president in ears africa and global programs at the national endowment for democracy where she used

-- studied were travel since the tv and the member of this 80 i policy working group ben policy foreign relations with king and the threats of a changing world and it served of member the bordet of amnesty international and five years was of volunteer from 9399 served two terms of the virginia commission on civil rights and i asked if he would join us and thank you very much. and you also have a translator. please proceed. >>

[speaking chinese] >> translator: thank you mr. senator. i am here to testify about the cyberattacks that occurred over the last few years. >> species became today's. >> translator: september 2009 i discovered that my age e-mail account was set up for for reducing and it would forward all my e-mail as i received to another e-mail account and not under my control. this was the first ever

realized that my e-mail was attacked. >> [speaking chinese] >> translator: february february 2011 and the so-called revolution broke in china and a first city online cause for mass gatherings with public venues in major cities across china and at the time i was working and living in hong kong starting at that time all of my electronic communications including telephone and the internet products and services were under severe attack. >> [speaking chinese]

on june 2nd 2011 i discovered a rather sophisticated hacking was used against my e-mail account. i received the e-mail with the subject we would like you to participate. of the e-mail provided that

it disguised on the link in the account would authorize other users to present. when i reported this to google's, they responded they were not even aware of such attacks. the content of the male has to do with the well-known chinese author for the campaign for the election to local congress of the people's representatives and was sent to days for the -- before the. >>host: massacre june 4th. i believe the hacking was political and most likely enactive the government and i reported the hacking process and published it on you to -- you to the. >> [speaking chinese]

>> translator: on june, 2011 with the human rights meeting in geneva was part of the geneva program i gave a speech for citizens who were persecuted because of the revolution. on june 8 >> [speaking chinese]

>> translator: after i gave the speech and before i left it geneva my phone begin to receive a large volume of incoming calls. my phone was attacked in such a manner between june and august of 2011 and heaviest on july 31st, i received 311 calls in one day. all the calls hung up after the reing and i did a study of the calls between late july and the august and i found that hackers had a very regular time when they start working in when they went off work. it was not a random person acting alone. >> species veejays species

speaking chinese speeeighteen in july 2011 my wife and my son and other relatives were published online including the numbers of my wife and my sons travel permits. this information is not what people can easily access. >> [speaking chinese]

>> translator: for about one year starting april april 2011, i identify persons on twitter that had the information using software to filter the trash i found the heaviest attack took place on april 25, a 2012. a staggering 590,000 spam post within 24 hours and then identified persons also posted a vicious post and defaming me online at the rate of over 10,000 times per day. as far as i know, the office has also been similarly attacked. >> [speaking chinese]

>> translator: starting august 24, 2011 my e-mail account was spam with an astonishing number of messages. in mid march 2012 it was as high as five gigabytes per hour.

miss this were a personal attack more than 20 could attack might account simultaneously to reach that volume so therefore it was an organized attack. they also put my name in the garbage messages to make it harder for me to filter them and i reported it to google through a third-party and a google's offical contacted me and they made specific efforts to deal with the attack on me but to the results were not that great. >> speaking speaking janie's. >> translator: identified persons who published hundreds of articles online and i believe that was an organized campaign to destroy my personal

reputation. >> [speaking chinese] >> translator: at 4:00 p.m. attacks on twitter angie mail stop simultaneously this also shows these were organized behavior's. >> spaking speaking chinese. [speaking chinese] >> could you wrap up in the next minute? >> we are just about done.

from april 2009 to the present time we received an untold number of females and turgid e-mail sand from the system that i successfully broken to myself 192 people that were objects of attack included chinese dissidents and foreign journalist reporting in china. and also in the background with the telephone harassment i believe. >> [speaking chinese] >> translator: i hope the

u.s. congress and government will recognize cyberattacks against human-rights defenders and persecution and to impose sanctions on the organizations, companies and their employees who engage in such malicious activities. thank you. >> thank you. >> the chinese and tibetan human rights activist working for exile sever hacking reaches across state boundaries to exercise fundamental political freedoms that we should join in democratic countries and to be under the same cyberattacked it means that they are not able to reduce the access free communication in the public square and the success to hamper the ability of these groups to do their work early results from specific targeting and the use of hacking skills. some examples, first, they

have to contend with realtime interference with their communications. and those having misspelled e-mail's they misspelled their own name it is a giveaway but now they obtain genuine e-mail's to send them on within hours which greatly increases plausibility especially when they're related to the ongoing conversation or upcoming event or conference. i have one example there was at least one incident when a staff member received an immediate reply from a colleague that turned out to be the work of a hacker. >> to talk about the jamming of his telephone it have been to with jamming of the land lines of the office

telephone lines in during the same time which was the sensitive political anniversary of the july july 5th riots, the web site was down and there was the massive spam in attack with 15,000 males and rica and also innovation dealing with this was the first-ever documented attacked now this is getting to the smart phone and the tablets in fact, one research company has issued a report saying in march the first use of spear fishing e-mail to succeed in damaging and jury users equipment. and it did have to do with the league of human rights having sent an e-mail to

speakers who attended the conference and the sender of this from a to ben in activist the bellaire attached extracted data about the phone itself and the phone numbers, the model and the contacts on the phone and call logs and text messages and location. the sophistication of all these attacks reveal the investment of resources and active this note and upgrading is devoted to this campaign including increased knowledge of social network and we should note the nature of the political targeting june 4th in

july 5th and others in as we look at the targeted hacking why is it such potent tax six to impede the work of the activist? because of the practical effects. and then if it compromises the ability to help refugees. >> gan to recover from the of cyberattacks and erases the fighting is accost list back of systems and undermines cooperation of national organizations that the media is frustrated with

these fake and malicious e-mail's and hacking interference and it increases see your even for those living in free countries it is making people afraid to be in touch with each other to have solidarity and other outside of china didn't want to compromise their strategies or the confidential in duration and certainly to communicate with people inside china was the potential for harassment and address. this portfolio of the facts under ranging on negative generating credibility to the panoply of tactics by authoritarian regimes and now globalized is the unqualified condemnation. thank you. >> thank you for your courage to speak out i know

you are a new york and i also know you have a wife and son and if you are speaking out does in danger in any way or exposes you to any problems please let us know we will help you in any way that we can i think is speak for all members of this activity in institutionally please keep us informed of any potential retribution. thank you for that. my question is why didn't they just shut you down? >> [speaking chinese] >> translator: in 2011 i was awarded a human rights award in france and since then i have not been able to return to china and i was

working in hong kong so that is why today i am able to sit here to tell you my story. >> [speaking chinese] >> translator: late last year they refused to renew my a hong kong permit that is why i came to new york. >> thank you. ms. greve it seems that also thank you for your last comments about the training resources and increasing costs to instill fear. is seems a number of u.s. companies are reluctant to speak out because of fear of economic retribution the of the chinese government that

they could levy against them. with civil society both inside and outside china, to talk about the year, explore that a little bit that they may speak out of whatever they might want to do in response? >> the number of groups report with the documentation the witnesses are afraid to speak it is for the cyberage but talky about stealing intellectual property know the you have spoken out your family can suffer so there as it -- is

the effect of silence the of individual victims to speak up and it makes it very hard for a journalist for human-rights groups to provide the data and documentation. >> what u.s. lawmakers do to help these civil court society organizations and human rights groups? >> i believe the work of the national endowment supported by the appropriation is one lifeline. we do grant those that do their best and they have many to have the ability to travel to each other so some kind of offsetting of the financial cost cowhide is the least done to my organization to help human rights defenders and

certainly the voices of those in china not just impeded of the normal work but also under the security apparatus when they raise their voices it is very gratifying to be recognized with the justice of their cause. >> doesn't always matter when we walked the line to judge others speaking at all and does that sometimes jeopardize people whom we defend individually in support of a chinese citizen? does that cut both ways and is that something we should always do? doesn't always help them? >> it is a good idea to ask. the individual or advisers but most of the time time, activist tell us when they're ready to stand up and be counted, it can only

help them to have solidarity around the world based on universal values after all. >> thank you mr. chairman. the key for your testimony i would like to get some idea that of what is enforced against the chinese citizens to expose human rights and how they're targeted in china. >> [speaking chinese]

>> translator: the internet hacking cybersecurity is only one problem they face. in real life their problem is there physical security it appears the internet ability could be invaded and it could be monitored. so on and so forth with. >> five day pervasive across the country? doesn't matter where in china? >> [speaking chinese]

>> translator: the internet attacking is probably the most prominent and they are suffering more but e-mail like fishing is very common and widespread and as for disappearance there might be of middle difference in some provinces it may be a little bit from elsewhere but also very common. >> faq as it relates to religious practices can you see there is greater

openness and more than others with the officials church, is it demanded with the underground church to living greater freedom in some areas? >> [speaking chinese] [speaking chinese]

>> translator: as far as i knew just the greater northern area internal religious persecution is very, very serious. of course, , all know what happens but in the southern province religious persecution may be a little more mild but it depends on what your standard is. if this is universal values with the persecution even them milder provinces are still very severe. >> thank you for your testimony. as relates to these organizations, you said to appreciate the support of

our government and i find myself in a predicament sometimes while addressing the chinese chamber i have spoken to and others and how director i am and i know general brown offered some but how like to get a better feel how you could counsel me to address the human rights issues and concerns to -- so i could have the greatest impact. my challenge has been to be understanding with 25 years of experience to work with the underground church in that country and the appreciation for what they have gone through. and i want to be directed as i can without losing them in the discussion and my argument has been that people of faith are the most dependable and moral and

ethical people that they could be constructed inside their own government given the reports of pervasive problems with crime and other issues inside of government so i think alan like more input how you help us as legislators to bring better focus and light to this issue to put pressure on the chinese government. >> even the work of this commission approves there is extensive detailed undeniable all documentation and the court is just fall yet to release the exposure does not bring the facts to the forefront so with the opportunity sometimes people come from china are not aware are sometimes believe

active government propaganda forces outside china who need this the spear the good name of china but i think the column repetition of back sass to have a place in the work of documentation has a role and also the question of the long term or the short term you don't get the media response but you have to stand for what is right long term a. >> figure mr. chairman the time is late so i will be brief i have been in a number of hearings where we have heard about human rights abuses in china as it continues and comet ms. greve if you could comment we understand when congress takes an active role under guidance of the chairman or others, when we say we will not tolerate human rights

abuses committed does not necessarily change its but those that are suffering suffer less when may highlight it. is there a time coming instead of a threat, we truly mean what we say in on not tolerate those abuses that are commonplace but when we highlight its, does it become less in china? >> numerous prisoners and said how important it was political leaders and people in charge of their institutions knew that other people were speaking up on their behalf improved treatment and health and so on and of course, has passed to come with commercial rule of law of the transformation of chinese society and this is where the long-term

change will come and the american institutions and of for liberty and universal values by itself cannot change the situation is passed to come from within china and i believe it should be to invest as much as possible to strengthen those who have the right principles and you are in a position to ship the institution to have the greatest french chef for those people for the sake of the future of china. >> but that message be one we will not yield and tell this is dealt with a and i yield back. >> the record will stay open for one week if any panelist as anything you want juice segment and we may have written questions if you could dance to those as quickly as possible and thank you for speaking out and for being here.

[inaudible conversations]

>> without sherman maybe lincoln would have been nominated but would that have won the election but went on to win the center george mclellan who had a lot of momentum and was writing letters to sherman and others as if he expected to become president and suddenly he ticket tranten and he did not save one week -- one word but willing to adjust smile he went into one whole but he came up another path and all is good. william tecumseh sherman saved the ever i cannot think of anybody of the time who could have done that.

sp back the hearing will come to order and we will welcome the witnesses. apologize for being late but thank you for being here and your preparation today. over colleagues are coming in from across the country

this afternoon we will be joined as me perceived. we will hear from several witnesses about the medicare prescription drug program and the vulnerability of waste fraud and abuse. medicare as we know is a critical component of health care of our nation and prescription drug programs which you know, as part d began in 2006 now in the seventh year the overall abuse program has been positive more than 31 million citizens participating. of but to ensure a $60 billion per year program works efficiently. but unfortunately medicare part d is not as effective cory efficient as it could be when it comes to prevent waste and fraud in each year listing overpayments and

underpayments was the and documented expenditures with the mistakes made by each agency and its total of the fiscal year 2012 has more than $100 billion and medicare has the largest reported share of that total at 44 point* $3 million and with medicare prescription drugs alone was close at $2 billion. in addition, the focus of criminals to take advantage of the system. whether care is provided for government programs, a fence -- trying to defraud the system is on the rise and there are tens of millions of dollars and we cannot afford to tolerate this level of waste in our health care program. as everyone knows we ways record budget deficits with water coming down. giving a the data in the problems our country faces

and the tough work ahead of us to address those challenges to frankly a of the inexplicable issues. but during a subcommittee hearing that ray chaired in 2011 and dr. coburn was there as well because he has a great interest but the gao testified 170,000 beneficiaries from five for more medical practitioners that was almost $150 million and two egregious examples they receive prescriptions from 58 different medical practitioners.

also a similar study shows the same problem with medicaid. it involves recipients going to multiple documents with the same type of drug and the beneficiaries are almost fleeing a tradition but they don't use on the screen and then to reap profits from the federal dorfman foots the bill but the problem with prescription drug bride is where the loss of taxpayer dollars but also what it takes on people and there is a great concern one at a seven high-school seniors has a user is abusing prescription drugs and in fact, more americans abuse prescription drugs than those who use cocaine or heroin or hallucinogens or ecstasy and inhalers combined. to we have a jury here? said a prayer rid of health and human services the

centers for medicated medicaid services has established oversight procedures to protect the medicare prescription drug problem and it is a team effort involving medicare officials and law enforcement at the federal, state, and local level in this one negative market medicare prescription drugs and beneficiaries and unfortunately based on today's testimony there is still a lot more work to do. on thursday but that was the medicare part d. for example, prescription drugs of the high abuse potential on average only 2 percent of most general practitioners prescriptions constituted 78 percent for one general practitioner identified in the report.

his physician prescribing three painkillers such as morphine and out and it was so the 872 pharmacies in 47 states including long. and even a more clear failure of oversight to a stretcher general reports they were paying for prescription drugs not paid to describe those but by people with no authority to dusk -- prescribing all and apparently 4,001 negative 400,000 totaling those dollars were those that appear to be masai's therapist, at computers that had to do with home related compares. we will see the land -- the list to my left the most expensive finding is 29,000

were for controlled substances. one time writing some their prescriptions of commonly abused painkillers but obviously they show a clear indication of fraud and abuse as a recovering governor i understand the challenges to run a major program like medicare but we simply have to do a better job to oversee the medicare prescription drug program for our will continue to work with my colleagues in the industry should and to make sure that cost of monitoring results and finding ways with almost everything that we do. a key part shows program managers sharpening their pencils along with private sector partners to start with harmful waste and fraud in we must use every tool available to make sure the

health care programs health the one negative help those who need medication rather than profiteering. i worked in the latest series of common sense issues and take an important step to air their trust and once again with that the return to the ranking member for his comments he would like to make. >> welcome to each of you. this ig report is pretty revealing and. >> and it seems to be the case most often and i questioned so what is wrong with the recommendations that it fits in with common-sense and if we come

back in the they are doing what they should do but we should clean house everywhere. this is just another layer in a continuing saga of not applying common sense and oat recommendations to fix problems. silent for to hearing the testimony and it is not just a problem of wasted dollars but wasted lives that medicare is allowing through cms and the fact the people have the identification in medicare and we have a contractor that is knight catching fraud or revealing fraud or not prosecuting fraud and it just says that we raise that money basted what we have seen in the report versus what the contractor has done. so we could say way to go

you actually look at what you did to put it into action and we will not see the sick and. >> coming from the state of new jersey my neighbor it is an honor to have you join as here in the u.s. senate and normally we give an opening statement but this is a special day for you are a coming from the attorney general? >> yes. >> would you please make a brief statement we are happy to have you here on our team. >> thank you. i would say we took a lot of steps in new jersey to recognize how catastrophic the prescription and drug issue is a and the chairman talked about the fact that we think of heroin and cocaine as things that kill people we realize now

prescription drug abuse is killing more people than those so while be with in this state that tells us these drug czar safe, we don't use them as we're supposed to in those who give us the drugs or doing it for the right reason silent for word to this conversation to continue as it is important to the safety of everyone that lives here to. >> our first panelist in whose name is frequently butcher did i will try not to do it today but? >> joseph? with the d.a., because of the office of diversion and

control of incense, but to work with the pharmaceutical industry and international government, state government and with local law enforcement with the degree in pharmacy and also detroit college of law at michigan state university. we're glad you're here today. john, very nice to see you but what is said to be responsible to oversee regulations and private plans participate in medicare prescription drug program and he would defy is you that they're working on and prescription drugs so is

also the analyst said the benefit of this committee before we welcome your present testimony today. i think i got to introduce to witnesses and they thank you will be looking at the testimony and one is carry can travel and the others in this juror 98. the eastern says the deputy a selective director very investigations particular was use of data analysis and health care fraud protection and to with computer information signed with university of maryland. that is for the violations

and inspection in san doing to in 1987 including chief of medicare and medicaid and to which was complete to political science and thank you both for joining us today. >> finally, of on a. >> feed to richter spatial investigations, a real point* out large health care companies them could have a larger prescription drug program. after 24 months of service with the fbi. >> 25 years of service including fighting health care fraud and by a terrorism in share of the health care act with the

rest amaze their qualified to testify in we are grateful to you to be here today. that being said, we appreciate you being here. >> we will ask you to summarize your testimony within five minutes. if you go beyond that is a cave you go way beyond, it is on. >> afternoon and senators. on behalf of the men and women of the uh huh teeeight thank you for the opportunity to discuss the epidemic of pharmaceutical of use and abuse of prescription drugs continues to plague the nation and an alarming rate with a gender in socio-economic status

instead the show higher levels of abuse and the adverse consequences resulting from abuse according to the most recent national survey 2011 there were approximately 6.1 million people over the age of 12 using prescription drugs for nonmedical reasons over the last month and the devastating effects demonstrated by 2013 which repealed 150% of increase through the off seco down and to fit to most but as they are diverted aunt and used many of the dose are found for the center for disease control and now 4,329 people died of a drug overdose in 2010 nearly 60 percent of the drug overdose deaths from the

pharmaceutical drug. of seco down and methadone for every overdose. . .

providing continuing education to pharmacists and ticks. we just finishedded a controlled substance manufacturing training, training almost 400 corporate representatives. we present at state and local community meet examination law enforcement programs throughout the country. accumulation of unwanted and unused prescription drugs and in the household medicine cabinet provides easy access for abuse, accidental ingestion and illegal distribution. has increased in the use of prescription substances. these events have resulted in the destruction of approximately 2.8 million pounds of unwanted prescription drugs.

dea is finalizing an authorization of different ways for americans to dispose of unwanted medications in a secure manner. we continue to identify, target, and investigator violators of controlled substances. who do not comply with the csa and its regulations. not in compliance with the -- imminent danger of public health and safety. when the system breaks down, internet drug distribution screams from years ago, and operating in florida, georgia, tennessee today. dea rigorously purr suze administrative, civil actions against companies that fail to

comply with the regulation. on june 11, 2013, walgreens corporation, agreed to pay the largest civil fine in dea history of $80 million. after dea'd administrative action, and the investigation by the dea and the united states attorney on six retail pharmacies in florida and a distribution center. we will -- all distribution chain, from manufacturing, wholesalers, retailers, pharmacists, practitioners, are being closely scrutinized to ensure compliance with the act. controlled substance pharmaceuticals are obtained throw welfare fraud or medicare abuse. and it weakens the integrity of the system of distribution. while these violations generally occur outside of the de a's

jurisdiction there are occasions when dea agents and investigators welfare fraud. and they share the information. the fbi, and other state and local enforcement regulatory bodies. the information-sharing relationships reflect the fact that the fbi and others have investigated or are working on ad hoc basis. this facilitates information sharing and allows investigators to draw upon each other's expertise when conducting investigations and avoiding duplication of effort. in conclusion, i want to assure you that the dea is working enclosesly with federal, state, and local partners. as part of the administration's

comprehensive approach to combating prescription drug abuse. the dea needs means the control and enforcement for needs for access to legitimate use. i look forward to your questions. >> mr. blum. >> chairman, ranking member, thank you for inviting us to testify at this hearing and for your focus on the program. i want to assure that's community that we take very seriously the concerns been raised today. not only does inappropriation preparation -- it places people in harm's way. sincerely thank them for their oversight to help us get through the program. we have taken many steps to -- and should do more to take further steps.

to be sure, the medicare program is stronger than ever. it has dramatically lowered medicare benefits for out of pocket costs since 2006 due to strong management by cms and plan partners the total costs and the benefit was passed in 2003 in many respects sets the standards. however, it's also -- operating a program, plan sponsors present vulnerabilities and like all payers, public and private, the rapid growth in payments of schedule 2 pain medication. we know one agency cannot -- and it will take resources from the federal, state, and private sector to solve the problem. cms sees its role as the following. number one to leverage its data

resources of complete claims to spot -- and share the information with our partners. number two, to hold sponsors, subscribers, pharmacists, accountable for prescribing. those that violate our standards should expect to no longer have a relationship win the medicare program. three. to support this committee and the progress in enacting further legislation to give the federal government more tools to address prescribing fraud. over the past several years we have made important changes 0 tower policies and operations, reflected in the 2009 claim files. specifically cms has changed our rules to require all prescribers of -- already in the first

quarter of 2013, 99.6, 99.6, for compliance with this requirement. cms now requires all plans for controlled substances to be checked for a valid dea number. cms now requires -- the beneficiary taking controlled substances. plans must now verify that benefits exceed certain levels of prescription, being managed by a physician or, two cut off at the point of sale. to date this program has cut off 37 well-riz. -- beneficiaries and we expect this to grow and expanded to other medications. we can identify pharmacies

earlier in the process. a comprehensive risk of high, risk pharmacy for further review and scrutiny. we plan to take more action. for example, cms is considering proposing new regulation that would require all subscribers to validate as medicare providers. number two, cms is considering new regular reagan that would expand the scope of the -- to provide greater access to prescriber records. cms will expand the plans, they're submitted claims for controlled substances greater than norms should expect further compliance action and potential

financial penalties in closing, i do believe further legislation may be needed to curb controlled substance abuse. some plan sponsors have recommended locking in some patients to one pharmacy to receive controlled substancesment we believe it is time for congress to consider the potential change. cms stands ready to help the committee make the program as strong as possible. >> another idea would require our action because a this is a shared responsibility. at it an all hands on deck issue. mr. cantrell, figure this out. >> good afternoon, chairman harper, ranking member coburn. we appreciate the opportunity to speak to you today about prescription drugs and diversion in medicare programs. in addition to the medicare dollars stolen there are few areas of welfare fraud will we see such a direct and devastating impact on patient.

the cdc characterizes it as an epidemic and too much of the time the bill is paid by medicare. this is a drug trade subsidized by taxpayers. bringing the criminals to justice is a top priority for oig. our prescription drug fraud investigations every quad tripe bulled in the last years. of particular concern are those prescription drugs that result in park deaths, often associated with sham pain clinics or pill mills. one clinic was associated with the deaths of over 60 patients. the doctor and his wife, who was a nurse and the office manager, were sentenced to over 30 years in prison in order to pay back $114 million for their crimes. prescription drawing fraud also often involves sophisticated criminal enterprises. one case involved a licensed pharmacist who opened 20 pharmacies.

he listed physician pharmacists and patient recruiters to defraud medicare, medicaid, and private health insurance. he paid kickbacks to physicians to rite bad -- write bad prepreparations. that pharmacy was sentenced to 17 years in prison and ordered to pay back $17 million. oig also investigates matters involving expensive noncontrolled substances. one example, pharmacy billed for antipsychotic respiratory and cardiac drugs but never dispensed the drugs. the perpetrators of this scheme were sentenced to five years in prison and ordered to pay back 4-point million. these cases illustrate what happens when greed and profit trump patient care. now my colleague, stewart -- stuart wright will discuss how to push the problem. >> i'm stuart wright, in the

office of inspector general. i appreciate the opportunity to talk about our most recent work examine pry description drug billing and part d. our written statement outlines this work in more detail. a basic safeguard in any medical care is ensuring the care is ordered by an appropriate medical professional. this report shows this saveguard is not always operating effectively. in 2009 prescriptions were ordered by individuals who did not have authority to prescribe, including individuals such as mass sandal therapists, tapered, dental high generalist contractors responsible for home repairs. we even found that interpreters, veterinarians ordered prescriptions. in addition, we reviewed ten states in depth and found that medicare inappropriately paid for drugs ordered by unauthorized prescribers such as

counselors, social workers and chiropractors. medicare made more than 26 million for these drugs. senator harper, tens of thousands of these prescriptions for controlled substances. vulnerabilities in part d are not limited to subcareers. we investigated questionable prescribing patterns in total medicare paid 352 million for drug ordered by these physicians in 2009. these physicians were extreme outliars and prescribed very differently than their peers. some ordered extremely high persons of oxycodone and morphine in one example medicare pate $9.7 million for one california physician's prescriptions. this is 151 times more than the average prescriber. we also found 24 doctors who ordered more than 400 prescriptions for at least one of their patients.

in another review we found approximately 2600 retail pharmacies that bill far outside the norm. medicare paid a total of $5.6 billion in 2009 to these pharmacies. while some billings may be appropriate or may be due to billing errors these patterns raise flags that warrant further review. this demonstrate that basic checks need to be done routinely by medicare in addition to conducting claims analysis, since the inception of part d we have identified vulnerabilities we found that some plan sponsors did not identify any fraud and abuse cases and the medic has not identified potential fraud and abuse. taken together, our findings consistently demonstrate the need to strengthen part d monitoring and oversight. our written statement highlights a number of recommendations including, require sponsors to verify the prescribers have the authority to prescribe drugs.

strengthen the medicses and sponsors monitoring of prescribe experts pharmacies. require sponsors to refer to special fraud abuse cms. develop a measure to recover inappropriate part d claims, provide education training for prescribers, including reports with information about their prescribing patterns in conclusion, more needs to be done to ensure patient safety and prevent fraud, waste, and buoy. cms and plan sponsors need to conduct more rigorous oversight and monitoring. the oig will bring all of the oversight and enforcement tools at our dispostal. thank you for your interest in this important issue. we would be happy to answer any questions. >> we'll have some. welcome. please. mess lavelle. chairman, ranking member, and senator, i am alanna lavelle,

director of special investigateses in wellpoint. and i'm also in the antifraud association. thank you for the opportunity to provide input and recommendations on prescription drug abuse in the healthcare delivery system. one of the significant stranges we have is the data available from integrated systems. this allows the able to see the entire health care spectrum and the spot trends trends and outls such as an overprescribing physician or a patient receiving several prescriptions from several providers or pharmacies. to combat fraud and abuse we have a fraud and abuse prevention team, a special investigations unit. i am one of their lead investigators overseeing a team in the southeast region. the siu is staffed with former federal state and law enforcement agents and medical professionals and have a debt a

-- data analysis team. today some of the top fraud and abuse schemes we see in prescription drug coverage include the practice often referred to as doctor shopping,-individuals obtain prescriptions for frequently abused drugs from multiple prescribers and then fill them at different pharmacies, often times provide providers provided pharmacies are involved in the see. bogus providers. the providers that all they may have national identifier numbers which are usually stolen or purchased, do not actually perform services for real patients but bill insurers, and pain management doctors overprescribing pain medications. wellpoint has 160 investigations open involving medicare part d. wellpoint siu refers every part d case and part d and c antifraud contractor, and wellpoint has the second highest

number of referrals to nationwide. our goal is to prevent healthcare fraud and abuse for the benefit of our members' health to meet this goal we have developed a number of different programs. first we have our controlled substance utilization monitoring program and medicaid breiviked program. through these programs we're helping identify those who are ebb gauged in or contributing to prescription drug abuse or drug diversion. for our medicaid plans we have implemented the restricted recipient program. we identify a member who within a three-month period visited three or mother prescribing providers, three or more pharmacies and filled ten or more controlled substance prescriptions without a confirmed underlying medically necessary condition. to come bad fraud and abuse, such as oxycotin, they are

locked into using only one primary care%, one retail pharmacy of their choice and one hospital. our case managers work directly with providers and members and to date this program has saved lives and many millions of dollars in emergency department visit as i lope for the drug-seeking behavior. we have a prepayment review program to investigate practices. wellpoint has implemented two such prepaid provider programs in which the most agee just billers who, after being educated and refusing to modify their billing behavior, are placed on flagged prepayment review. in that case the provides must bill us win paper claims and paper medical record sod we can determine whether the procedures build for are reflect fled the records. third, we have recently contracted with a vendor to do predictive modeling, using

advanced neural network technology to identify previously unknown and emerging fraud and abuse provider or member schemes. suspect providers and claims are reviewed to identify potential fraud, waste, or abuse, and investigated thoroughly. since we began using this tool civics months ago the siu as opened 200 investigations. we will prevent this year in 2013, over $13 million in inappropriate payments by having placed a system edit for year-end drug testing abuse by providers which is one of the largest collateral abuses spawned by the prescription drug abuse in the u.s. the overall return on investment at this time is well over 15 to one. and finally, we take a multifaceted approach to identifying bogus providers who do not actually perform services for real patients. our provider database team

alerts the investigator to the presence of new labs, pharmacies, and durable medical equipment suppliers, and we perform a full background check as well as a drive-by of a provider's office space. in just the last six months we have identified and stopped payment to 63 bogus pharmacies through our collaboration with our pbn express scrips resulting in a savings of 2.1 million. based on our experience in combating healthcare fraud and abuse we offer the following recommendations. first, we are supportive of giving cms the authority to establish a restricted recipient program and medicare part d for those beneficiaries displaying a pattern of misutilization. second, -- >> is that another way of saying there's a lock-in? josh yes, that's correct. second we rem that eligible beneficiaries with evidence of drug-seeking behavior should be

locked into one managed care plan rather than continued to be allowed to switch plans on a monthly basis to avoid detext. -- detext. we support better coordination and cooperation among cos, doj, and all stakeholders, and all expensed for health insurer antifraud and abuse programs should be included as activities that improve healthcare quality, and the medical loss ratio calculation for both commercial health insurers as well as medicare advantage, since they reduce waste, reduce the cost of healthcare and enhance patient safety by helping identify and remove providers engaging in unsafe and fraudulent practices in conclusion i would like to thank the committee for the opportunity to testify today on behalf of wellpoint on this critical issue and pledge our support in any efforts to make the healthcare system financially viable and safer for our members. >> thanks.

put this in context. we focus on -- your colleague whose name i believe is pronounced -- [inaudible] >> i'll work on that. i put this in context. our budget deficit is down, down from $1.4 trillion four years ago, so 650 bill. which is $1.4 trillion. about four years ago. that's improvement. the biggest piece of our deficit is healthcare costs, and the -- probably medicaid and rather than cutting benefits that are doing good, what we have to do

is to look for every bit of money that is just wasted. spent inefficiently, fraudulently, and that brings us to today's hearing. got some numbers up here on this. 2009 numbers in medicare -- money that medicare paid apparently inappropriately for prescription drugs that year, that we're aware of. 4 0,000 prescriptions that year, some 29,000 controlled substance prescriptions, involving nearly 15,000 subscribers, causing a lost to the taxpayer office -- that understates the situation. we never -- we're not going to do that today. i just want to impart a sense of urgency weapon don't -- urgency. we don't have the money to waste it. whether it's 100 billion or 200 billion we don't have the now spend.

i support the medicare prescription drug. i voted for it. our people were concerned it wouldn't be a good benefit. didn't like the way it was crafted, go way over budget. it hasn't gone way over budget, and it costs 60 billion a year? something like that. a little more than that. and most everybody, 5% of the folks that use it, like it. those are better favorable numbers than i have at home and probably among my kole legs as well. having- -- colleagues. having said that, we have to -- everything we have to do we have to -- this will give us a little built of a to-do list. what was the first -- i want to ask everybody to react to and it figure out who is responsible. go ahead allow discussion. >> the first one was to establish restricted recipient

program in medicare part d, or a lock-in program. >> don't we have that in medicaid, most states in medicaid? where someone is thought to be maybe an abuser, they say you can have one doctor, one pharmacy, and that's it, and maybe that requires the assent of the federal government. i don't know that it does. it seems strange we have that lock-in provision in medicaid but not medicare. so your reaction to that recommendation? >> again, it's also out the scope of my authority, but -- ven be very brief. >> as far as diversion goes, it's a fantastic idea. if i'm not mistaken, the lock-in program is being used in ohio, if i'm not mistaken. the ohio board of pharmacy investigates publish the board of pharmaciment --

>> i'm told a number of states -- we'll fine out how many. mr. blum. >> i think the medicaid program has a lock-in program. that's based on their own. put in place, lock-in program. the program in its turn construct runs the benefit threw many party plans. this is an area that congress would have to authorize. die think it's time that congress consider this change. i think that congress would have to set out the threshold, which beneficiaries do. others are required to lock in and we're happy to work with this committee, and the drug utilization review program that cms put in place could serve as a model for when by-riz hit the threshold. >> mr. cantrell. >> any legislation that would help us explore ways to prevent doctor shopping and some of the

patients we encounter in our cases actually are paid kickbacks to participate in schemes. so in situations like that, explore ways to prevent that kind of activity. >> mr. wright. >> agreed and there's maybe two different kinds of lock-ins under scruggs, one is to lock beneficiaries in a particular plan and the other we woo be to lock them within a specific prescriber or pharmacy. we think both of those should be considered. >> all right. good. what is your second point, miss lavell? >> that was the dual eligibles. evidence of drug-seeking behavior that bounce from one managed care plan to another on a monthly basis, and we at wellpoint are not allowed to tell cigna or aetna that someone is coming from our plan is going to be a problem for them as well. just because of the hipaa requirements. >> what can we do within the constraints of hipaa? anyone, please? what can we do?

>> congress can clearly provide greater authority for the information to be shared. there's always a balance with privacy and controlling of payment. this is another area i would think the congress can give more permission for the data-sharing and gathering. >> what was the next one, please? >> the third was to support better coordination and cooperation among cms, doj all stakeholders. >> all right. oig, i'll -- react to that one for us, if you would. >> we're very much in favor of better coordination, communication. we are coordinating very, very well. we have the healthcare fraud prevention partnership that has been established. it's in its infancy but we are supportive of private-public partnerships for debt a -- data sharing where we can. >> number four.

>> the last one was to recommend that all expenses for health insurance and fraud and abuse programs be included as activities that improve healthcare quality in the medical loss ratio. right now they are not. >> anyone want to react to that? mr. blum? is it doctor blum? mr. blum? i always want to call you doctor. >> mr. blum. i think the -- believes and insurance commissioners that it's part and parcel to what a plan should be doing. it's not part of the benefit cost but the cost of a well-managed program. cms does permit collection to count toward the log if you find the right balance between the plan procedures that are part and parcel to running a plan, but we do allow plans to

accomplish collection. >> miss lavell, a pretty good to-do list. not just the legislative branch but a bunch of us, including folks that are not in congress and are not cms. all right. doctor? >> mr. blum, let me just kind of get you on the record a little firmer here. cms supports the modification of part d program to establish a lock-in? >> i'd like to say to you, senator, we have no official position but i believe that it is time for congress to consider this change. >> cms doesn't have a position on that? >> i'm speaking for cms and i believe it's a time for congress to consider it. it's not part of the president's 2014 budget submission but i think it's time for congress to make this change. >> so, would your recommendation back up the change at cms that

would go along with congress writing the bill that would do that? >> yes, and we're happy to support this committee. >> second point, would cms also go back up the chain and support a loosening of the hipaa rules so insurers can protect patient temperatures and long-term will being by allowing the exchange of drug can seek can behavior. >> we have to have greater data sharing to spot outlyers and i support that change. >> if wrote a bill that would a low awe little bitty hole for the insurance industry that are managing this to share the data on drug-seeking behavior to the next managed care plan, there wouldn't be an option from cms? >> have to see the details, obviously -- >> in principle. >> in principle, yes. >> all right. tell me do you think that cms gets $14 million worth of value

a year from the program in. >> i think the medic program can be improved, and i think we want the medics to be active, want the medics to be pro-active. and it's just one piece of a strong cms oversight practice. i do think that medic can be -- process can be improved and to be more pro-active and take more action. i think data analysis is one piece. if it's what you do with the data. we have to have action and many steps beyond law enforcement action. but i agree with you that we can improve. >> they had 21 referrals last year for $14 million to -- for prosecution. and you just heard wellpoint talk about the hundreds that they've done in the last six months. explain to me why we're not getting more value out of the medic program? >> my understanding is that the

way the program works today is that once the referral is made, it has to meet certain thresholds for law enforcement to take action, and what i think you want to see is the same principle we have in the part b program. there's different levels. and so for behavior that is not -- that doesn't meet the law enforcement prosecutorial threshold, but is still outlier behavior, believe that the program should defend that position, move to paper claims and the same processes that wellpoint talked about. cms will be holding our plan and contractors to that standard. i think one change that we can consider is rather than having prescribers self-declare what their background are, according to the -- have them formally be enrolled to the medicare program similar to part b, and that's a change we plan to make. >> when do you plan to make that change?

>> typically we put out rules in the fall, and that is in the process right now. >> so, we're going to put out rules rules and -- this time next year we might see a change? >> i think might, hope, and might -- the data for 2012-202013 will see a lower number than what the oig found and cms will continue to make changes to our rules to bring that number down close to zero. my hope is that the changes cms has made, put -- beyond the claim, holding our contractor to higher degrees of accountable and we'll see lower numbers. >> so, that no firm date. people are going to continue to die. right? under this program. and we're going to put out rules

in the fall. why wouldn't we put owl rule -- put out rules now? >> i think we are taking steps to respond to the findings. for example, we have shared those pharmacies that are outliers to all our plans for action today. cms needs to balance the burdens placed on prescribers who aren't part of the medicare program today that need to come into the medicare program for validation and oversight and that's a process they can't turn on overnight. we have to go through proposed rulemaking but one more step the agency can take to achieve better results. >> you have plenty of paperwork to do. i understand that would you commit to this committee to give -- based on the recommendations ooig to give us a report every three months for the next four quarters on where you are in complying with their recommendations, since you

readily accept their recommendations are things you ought to do? >> absolutely. my understanding is that we have and we're happy to commit to whatever process -- >> will you publish that report so doesn't just come to the committee? >> well did he ever to how you want the report done. >> if we get it, i'll make it public. i think -- one of our problems in government is we see a problem and then our rules of government make it to where we can't save the lives of the next 1600 people who will die from a prescription drug overdose because we're not managing the part d program through cms effectively and that's not a very good excuse for us to not -- and i'm not talking about you. i'm talking about us, too -- to not tomorrow start making these changes. when you're talking about lives, you're talking about money, and you're also talking about not just lives that are snuffed out. you're talking about lives that are destroyed. and people going to prison because we've made it easy to game the system.

so i hope your committed. as you can tell from my opening statement i i'm disgusted with the medic program. i don't think your getting enough out of it. i plan to send letters to follow up on it. don't think we're getting value out of the $14 million, and my hope is you'll ride the contractors so we get value. my time is up. >> senator. >> thank you, mr. chairman. thanks for your testimony here today. i know from my experiences as attorney general what a catastrophic impact that's epidemic has on the people that live in my state, i'm sure throughout the country. what i don't appreciate as much is the impact it has on seniors in a different way they're particularly vulnerable to people who are trying to game the system, as dr. coburn talked about. and what i -- i opened this question to any of you who feel

competent to answer it -- what part of the particular focuses on this population that is clearly vulnerable, they trust their doctors, want to get better. some of them have long term illnesses and some cases it's easier to try to medicate your way out of the illnesses than to talk with the family and get to the heart of what is going on: are there relationships between, for example, assisted care facilities nursing homes that are particularly problematic in this area that lead to this kind of abuse? >> i don't know i can directly answer the question, but with regards to the vulnerable population, the elderly being in nursing homes and some of these drugs being very powerful, we did do a random review of antipsychotic drugs used in the nursing home setting, and found that 88% of them were prescribed against the black box warning,

clearly raising health concerns, and based on the medical record review we found 51% of the claims shouldn't have been paid by medicare. so, when we did that kind of in-depth review, and that vulnerable setting, we did in fact find substantial problems. >> miss lavelle we talk about doctor shopping as part of this problem, and my own experience, seeing the typical population that engage in this behavior. is that a problem among the senior -- possible layings population? >> when i speak of doctor shoppers, they're under 65. usually social security disable. we just referred eight cases last week and all of them are under 65. >> okay. do you have any statistics or information that toe tell us -- to tell us use the permanent -- percentage that are over 65

engaging in this behavior? >> i don't have the number but i can get that for you. >> pain clinics and pill mills. mr. -- are the senior population exposed more than other patients? >> i don't believe so. pain clinic cases that it i've reviewed generally are a younger population of drug-seekers. they're not going there -- these rogue payments they're going to get medication to feed their addiction. so it's not medical care april. more drug distribution. >> mr. blum, i'd like to ask you about the enrollment process. what factors do you think provide the greatest deterrence in keeping out the types of physicians we don't want

involved in these programs? >> what we learned is that we have to 0 do two things at the same time. we have to validate physicians' credentials and has to be periodic, and one of most important changes that the congress made, they're asking to require -- there are many prescribers who are legitimate but aren't formally part of the medicare system. for example, dentists. one of the most commonly frequent prescribers of pain medication. so, i believe that every physician who is writing scrips for the program needs to be enrolled, in the medicare system so we can validate we're not relying on self-reporting, we can verify those who are truly massage therapists versus those who are just self-reporting as massage therapists. that's a change but i believe that the program needs to make. it's going to place new burdens

on physicians and i'm sure this congress will have publishback from the medical community. but i do believe it's time we move to a different framework. >> mr. rannazzisi. we worked in new jersey with the dea to establish drop box programs where people can take unused prescriptions prescriptid of them so that other family members can't abuse them. in your experience, how effective do you think those programs havin' getting at the potential problem of legitimately prescribed prescription drugs to a grandparent being used inappropriate by one of the younger members of the household? >> we have taken the position that those medications, once they're expired or unneeded, need to get out of that household. that's why we have these nationwide takeback programs. in april we took in almost

376 tons of pharmaceuticals in the last takeback program. i think we're in the process of drafting the final regulations for takeback, so we may have these drop boxes available throughout the country, in certain authorized locations, and i think that will go a long way to preventing such tragedies as what we have seen in the past. >> nationwide, what percentage of the states participate in the program, the drop-box program? >> well, currently the only drop-box programs allowed are ones in law enforcement facilities. precinct houses or headquarters, but i can't tell you exactly how many because law enforcement agencies are exempt from the statute so they can put their drop boxes in the facilities

without reporting to dea. >> but anecdotally. we talk about it in new jersey, you get the sense that many states are getting involved in these programs or not? >> yes, i believe quite a few states are getting involved in the program. some states have their own program. i believe north dakota has their own program. >> thank you. thank you, mr. chairman. >> thankthank you. >> mr. blum, is the cms aware of actions by state medical boards and redescription -- restriction of license organize disciplinary procedures. >> data sharing needs to improve. >> does cms share with providers -- insurance providers -- when you have taken somebody off their eligibility to be able to prescribe or treat medical patients? >> the vulnerability that i can

see that we need to do a better job -- >> do you do it? >> we will be doing it. >> but you don't do it now. >> no. >> do you ever give the other providers a list of problematic providers -- i'm talking insurance provider -- a list of problematic people under review for -- that are under suspicion of being a bad actor? the ones you suspect of fraud. >> that cms is? one change we have made, senator, is that we now share those outlier pharmacies. we'll be expanding the list. >> how about outlier physicians. >> that will about change. >> have to do a rulemaking on that? >> yes. >> so there are things you can do immediately to share with the other providers, part d providers, as well as other

insurers. >> and cms pledges to this committee that we'll take those kind of changes -- certain changes require rule-making. requires all physicians to enroll in the medicare program that prescribe the part d some changes are management changes, that we'll continue to act on. >> ms. lavell,y your testimony you said plan sponsors -- information collect mid agency is rarely shared with the private pairs and cms does not share information on revoked providers. you just heard some good news. and a commitment to this committee.

wellpoint's unit refers every part b case to the medic and wellpoint has the second highest number of referrals. what have we seen from that? >> that's one of the issues we have with the medic. we're very collaborative with them. often refer cases over-but then we are never advised as to what type of action is ever taken. >> so, that's something that needs to be fixed as well. >> that would be very helpful to us. >> mr. blum, that would you think of that? >> i think a small fraction of those cases that get referred to law enforcement are taken. often times there is a beneficiary who is complicit and i think we all on the federal government are hesitant to take

action against by-riz who are complicit, and i think it's time we share the information and hold the part b medic to a higher degree of accountability, and part of the issue is that the process relies on referrals be taken by law enforcement and that's not sufficient. >> just because i choose not to prosecute doesn't mean somebody didn't violate the law. >> right. >> doesn't mean somebody should be banned from having medicare provider status. so you agree with that. >> i do. >> how often do you see medicare participants running in this program as far as pill mills? i was asked by my colleague from new jersey, how often are older patients used as part of the scam, not wanting drugs but

buying drugs, using their medicare number and they're provider to get the drugs? >> we're seeing they're not aware this is happening. through identity theft, their history numbers are used to bill medicare and they're not aware of it. so that's often the case. similar to the dea and wellpoint's experiencing are we see lots of younger by-riz involved in some of the pill mill type investigations who are interested in getting the drugs. >> so all you have to have is a social security number? >> in essence. >> which you can fraudulently provide. so, let's another reason why we should take social security numbers off the medicare role, since that's what is at risk. mr. chairman, thank you for this hearing. i have to be on the floor but i would just tell you, we need to -- our staff need to follow up on this. well have a commitment from mr. blum in terms of quarterly reports on the recommendations

and i hope the chanes are made and hope to work together with you on legislation and solve some problems. >> you bet. thank you, dr. coburn. i want to back up a little bit. we have been talking about what we can do in the legislative branch, at cms, what we can do in the law enforcement community. we haven't talk aft all about the roles of parents in this. parents are family members, extended family members. talk about that, and what are some states or communities doing a good job regarding the family problem. anybody know? can't just be the government. when we say all haps on decks, includings all hand, including parents. >> when we talked about antipsychotic drugs we made part of the story that families needed to be more involved,

especially when beneficiaries are in nursing homes and are not necessarily aware of everything that is being prescribed on their behalf. we did very much make the opinion that this is something that everybody needed to contribute in terms of correcting. >> others? >> let me just -- raise your hand. how many of you are parents? everybody. everybody. you have to have your professional hat on. put on your parent hat if you want. >> medicare perspective, medicare beneficiaries, the average is 12 scrips per beneficiary. plan does a lot of farm see review. beneficiaries themselves -- congress authorized the affordable care act, that medication management be part of the annual wellness, and having that independent screen and check on the multitude of the

prescription beneficiaries take is one important step in the overall process. i do think there are voices here that should be at the table to speak about overprescribing. having the physician community to get much more engaged. having the pharmaceutical manufacturers getting more engaged. one of the reasons payer are cease into much growth in these medications is the marketplace is being needed with these medications. and so payeres can damage so mush, beneficiary can do so much. congress can do much but there other voices need to be involved, physician community, pharmaceutical manufacturers to make sure that a multifaceted strategy is developed. >> i don't think i heard you mention parents. >> parents, too, absolutely. >> go ahead. anybody else, please?

mr. rannazzisi. >> one of the biggest problems is that parents don't understand the dangers of these drugs and they're not talking to their children about these drugs. just two years ago we attempted to do a parents program at the second largest school district in the country. we made sure that it was adequately marketed, with e-mail blasts and news reports and we had 11 parents or 14 parents show up. a huge venue. i'm not a so sure that they understand and i'm not so sure parents really understand how bad these these drugs are and how badly abused these drugs are. we work with community coalitions all the time. we partner with community coalitions on the takeback programs. we hand out literature. we try to go to every community meeting we're invited to. in the end, i think you're

right, the parents don't get involved, we'll only see tragedy over and over again. >> anybody else? >> i have a daughter that was a lacrosse player. er to her acl, had surgery, sent home with a scrip of hydrocodone and her first day back in school as a sophomore she had several students approach her and ask her if they could buy her pills. so, it's in our backyard, and it's they're insidus -- insidious, so we went in the school and did parent-teacher conferencing and we actually partnered with fbi and dea agents, we did some awareness type of workshops, because even if you have a baby-sitter over, they look in the prescription cabinet and it's that pervasive

in society right now. >> anybody, any other parents want to say anything on that's one? >> education and outreach to parents as mr. rannazzisi mentioned before. we welcome the opportunity to join them in outreach efforts, whether it be patients or prescriber community. i think that is the front line of defense in preventing these problems from happening in the first place. >> the good news here is that parents may be -- don't have to worry as much about the kids being on heroin or cocaine. or ecstasy. the bad news is, as you say, it's pretty insidious, and one of the reasons why we're having this hearing is to figure out what we can do collectively. law enforcement, cms, insurance companies, providers,

legislative branch, what we can do, and we need to send a message do the parents. it's not good. it's not good for the kids. as the father of three boys, men, and they -- grandkids, needs to get their heads wrapped around this and understand what is going on here. they have an obligation here as well. we have to be a partner. they have to be a partner as well. i want to go back to some of the steps that cms has already taken, steps you have taken, steps you're about to take, and then the third area would be steps that are call called for in the president's 2014 budget proposal. what you have already done you think its helping can what you're about to do and what would you like to do? >> i think a couple things. i think our focus so far has

been to put in place requirements for our partner plans to do much more comprehensive drug utilization reviews. it's not sufficient to just simply look at the point of sale pharmacy to. need to look over the full year see prescription abuses of. for the pharmacy that exceed a certain level, contact those physicians -- those patients' physicians to make sure they're being well-managed. if they're not, the plans are expected to put in place -- on those beneficiaries doing drug-seeking behaviors. i've seen changeness the law and changes that this committee has urged now requires every drug claim made by any partner plan to have the provider's number on

it so we can track, do analysis, identify that those scrips are legitimate. we also hold our partner plans to a higher degree of accountability. that's the current work we're doing. and the outlier analysis we're sharing with our partners. cms is moving into new areas. believe it's time for us to build a bigger universe of oversight. not all prescribers in the part d program but all prescribers in the part d program. cms will be holding medic to a higher degree of accountability and much more intense reviews to do more comprehensive looks. the president's budget has called for ways to promote greater part b data sharing. one of the limitations right now

with state monitoring programs is they're all separate systems that don't talk to each other. we know that drug-seeking behavior costs the state thousands and costs health insurance plans. many are cash-paying customers so part b changes alone won't stop the cash-paying customer. one proposal for the president's budget is to provide assistance to drug monitoring programs run by states to share data and build common data sets. ...

>> it also includes parents and families but let me go back to the first question. what can those of us in the legislative branch or rescinded his station to to provide help for you? is like swimming against the tide pahari of. >> one of the most frustrating things that i

see is when there are tools available to the community the upper scribers, dispensers and they're not using them. they could help us a long run by just using those programs. if there is any way congress could push the states to do that because right now is a very good programs have less than 15% to a prescribed ears using them. >> why do you think that is? >> were the reasons i hear is said to have enough time but that statement tells me you don't have enough time to provide patient care because in the end it is another diagnostic tool. wouldn't you want to know if you're patient is seeing four different doctors if you are prescribing methadone and you have others that are the prescribing how the drug is distributed in the body? would it you wanted know that? inseams if this tool is

available in 49 states or legislature in plus as a practitioner a physician or pharmacists you want to know what the patient is doing. it is not just payments half through british air and you will go to seven doctors at a time for the same illness. 5a zap practitioner i would want to know exactly what the patient was doing the yet in many states with the exception of new york, kentucky and tennessee , has a mandatory review of the pd mp before prescribing in the of their states and not just using them.

>> we certainly agree we should explore increased utilization of monitoring programs and even in the potential to stop the prescribing or over prescribing and doctor shopping taking place. we have seen people leave the state to cross state lines to find places is easier to noone get the drugs. we see that routinely and we are encouraged by some of the data sharing that has been committed to today and we think that will pay dividends down the road public to mention our office who is responsible for overseeing this huge program is shrinking in the face of the growth of medicare and medicaid. based on expiring funding streams we're set to lose roughly 400 bodies out of 1800 at the peak in 2012 and that is severely limiting our ability to expand

oversight. >> the reduction in? >> excuse me around 1400. >> the reason is what? >> expiring sending streams and sequestration has added to that but we're already seeing these with the program and others. we're operating with a reduced budget in the face of the growing program and last year alone our office had 1200 complaints duke to a lack of resources those were complaints that came through the door of we didn't have the resources to investigate further if it was viable and that number is not going down. >> the next question which focuses on state efforts to combat abuse and diversion. some of you have mentioned

in your testimony today this serious efforts made to combat prescription and waste and fraud at the state level but for example,, the prescription drug monitoring program established and operated by state peppermints had success to root out fraud and monitoring programs to help identify and prevent abuses and that was encouraged to hear from today's testimony 46 states have operational monitoring programs and the three states have enacted those sand when we got in this issue we found were states could do that have this program and to the credit of the governor and legislature they jumped all

over it. that is the good news. and maybe three of the four states were operational. could you comment on the effectiveness of the us state run programs including waste and fraud and ordered the important next steps to ensure the program's become more effective over time? >> one of cover biggest points out wellpoint is a little corner in the state of virginia known as roanoke civic that is where i grew up. >> we have pharmacies where we often see up to 15 license plates from the outlying states and reno that they have to build mills and impacting part d

with the commercial plan as with the commercial plan as well as medicaid and working with the state law enforcement agencies to get them prosecuted. we have been successful with referrals but again a major problem in that part of this day in refocusing on that. los angeles county is the other hot spot. >> loan note virginia, and that is a hot spot? >> we have often asked matt and baby the gentleman from dea knows more but i have often been told that is a spillover from the coal mining days and we have a real pain point* in that part of the world so we try to lock in as many as we

can't do reefer all the pills for prosecution. >> and huge you refer them to? >> it depends. usual leaves virginia state troopers pick up those cases the u.s. attorney offices have taken quite a few of the pain in his we are providers which we referred transix you as jury dealers in white jackets. very egregious. we have had calls from the coroner's office advising us that the 14th body has come in above a particular prescribe for and they did not know who else to call but they knew they had to cross insurance so it is that big of a problem. >> in terms of the next up to redo plan additional the aeration work looking at the review program then and is thus likely but we will to

refuse then returned bone negative determine which ones are effective and in addition we continue to the issues with medicare data and it is important to have clique -- complete and accurate that that has been hysterically to bill that we continue to work the issue will flee kidding toussaint point* that will enable us to look yet medicates and that just state-by-state. >> i will just reiterate rethink the prescription drug monitoring program does serve as a great deterrent to this type of activity and of all states had a similar level of programs then we might prevent some of this crossing state lines to avoid them. also to mention in rehab the

medicaid fraud control unit that we work with with their involvement in this effort is important to. >> and given the steps we're taking in at cms to reduce the possibility that they're paying for medications and will not solve the problem. drugs are very inexpensive and they'll take further steps to bring the rate down at zero they will shift to said cash transactions which means other data sources will be necessary to respond for those drugs seeking behavior's and i think the state drug program provide a tremendous resource. data has to be shared and across analyze because beneficiaries and schemes to cross state lines but just

focusing on part d will not solve the problem given the cost they are very inexpensive then they will shift to cash. >> going back to the pd mp is the connectivity between the states and if they are not interconnected you will not get a full picture of dr. shopping the national association of boards of pharmacy is currently in the connecting states better interconnected right now and it prevents these people from going across the border to indiana to kentucky, ohio , it will show up on your pdmp but as far as going into the rural area because they're comfortable. when they started in florida

they really didn't have a regulatory infrastructure to prevent them from spreading. as soon as law enforcement started to pass statutes. now a year in tennessee. we will find them and it is not that they have lots of patience with that is where they're comfortable. a few look at the active pain clinic you will see license plates from a will for the place. when we did the florida plane -- pain clinic there lyses plates from massachusetts. to talk about here when and parents now writing about that but we're seeing more

and more throughout the country with children of your young adults cannot afford the prescription drugs so the street value for hydro codon was only $5 may be $7 tablet that when you talk about this single entity thirties' borer the others there are between 30 and $80 a tablet in once you are addicted you cannot afford that have multiple tablets per day so we see both rural and urban areas the kids moving to heroin. it will be a problem if we don't get a handle on the opiated use in the united states. >> could i follow up?

one of the things i will do at a hearing of this nature is to ask to give the openings cement but are there points you want to reiterate? that will be fine others said that it needs to be seconded door reemphasized and do you have advice for us? to some closing thoughts that should be mentioned for the first time that would be helpful? >> name interested to do learn about the steps the da takes and to hope it is accurate and up-to-date. a key preventive step to

curb fraudulent division section as proxy content is to have an active list by end is stand ted teeeight only had access to u.s. thank complete list of people who have died at the death mask hamas but the steps and have been taken to ensure the registry of providers is accurate and up-to-date. and there are additional steps under considers it -- consideration in may need the support i thought we

rule looking at the complete system every year just looking at a partial system and not getting informational like to get back to the committee. >> i am told we have access to the public file but not the more complete file maintained by the us us say and we will watch you to respond in writing if you would. i have a short closing statement of my own but first i will go back to the witnesses say and thank you for being here and for your work. and it is not easy. none of us has the solution and there is no silver bullet that we have to make sure they're identified and putting them to produce. >> i appreciate the words to

give us great hope we will have changes in the future. i also appreciate the work that the fraud prevention partnership has been doing and the people in the room here that have been instrumental to bring the private and public and agencies to gather and i have great hope we will have a very successful partnership going forward. we have work to do and second, i want to reiterate and point* out the paradigm is changing for wellpoint we no longer want to pay and jays but we get $0.30 back on the dollar but the paradigm for us is prevention to stop the dollar's from going out the door. with that i want 2.0 with the medical loss ratio we're only allowed credit for

collections which is counter intuitive to the new paradigm. so it actually encourages recovery is because that is the only credit we get. so with the new paradigm we hope there may be some change seeing activities to give us credit for some of the work that we do with the tools that we use. >> thank you for that point*. >> in closing a bike to make three points one come it is extremely important to follow through with the recommendations made specifically deemed at the sponsors for example, we have recommended the sponsors be required to refer fraud and abuse to the medic. currently that is only voluntary. there is a series of recommendations aimed specifically at the medic in terms of the ability to get it pharmacy's sampras scribers that they don't

currently have and the recommendations in terms of doing more proactive data analytics and lastly just in general to revamp and strengthen that medic function is crucial to what we have been talking about today. the second point* are the resource issues that fully funding the office of the budget request is crucial for oversight activities and we are slated to be down 200 staff by the end of the year and on track of 400 staff by the end of 2015. fiat office plans that we return $8 reverie dollar invested in us to the extent of staff leaves they will no longer contribute to their return on investment. >> but also in this respect you're asking us to support the president's budget? >> correct.

and conducting oversight hearings is crucial to shed light on these problems to get all the players in line to do something about it. >> thank you. >> i want to think future man kirchner to hold the hearing is a great idea to talk and hold solutions and we already mentioned the resource issues so you can mention again. [laughter] repetition is good. i will say you may have heard of the strike force team that tackles medicare and fraud in nine cities across the country and was a very successful model to tackle all site of on negative all types of medicare fraud and remove like to expand that focus to other areas of the program and of the country and additional resources included in the president's budget we could do that sort of thing it is a top

priority

>> there are about 1400 monuments dating back to the 1890's and 1890's and as the man who fought are getting older we want to make sure what they did is remembered in we will do that by building monuments. in modern times we have other ways to commemorate things like that the back in those days that is how they commemorated the cerebus. a monument to the soldiers, to their leaders so they help us to interpret the story. they are placed on the ground where they won in most the monuments are union monuments for victory and quite honestly by the time

the war ends there is not a lot of money to build the monument to especially in the northern states.

>> i had a feeling we would have a big turnout for this one. [laughter] lee tried tuesday on the news and we are today. having seen his name in the paper a lot lately and the winner of two pulitzers and the book about vice president genie also a best seller also named one of the books of the year from "the

washington post" and "time" magazine and of course, he was the first story about edward snowden. right over here we have david to has been done to pulitzer teams and you worked there 30 years? he is probably worked at one place long the than anyone on this panel. [laughter] and he has two books about the obama administration and the most recent is confront and conceal and you had information in that book that had not been known before from the outset? so you have some experience with at and jim lewis here at cs i s is the knowledge to expert on cyberwar and security and using his

career from his ph.d. in chicago. very long was amazed that we will just stop there. i just want to ask you to start off with a threshold question why "the washington post" let you publish the story? >> i will speak for myself and i think it does represent the view on this. why wouldn't we? we have a situation in which the congress passed the law that said was quite opaque in the executive could make highly classified interpretation of what the law says and then it creates a program that goes to the court that works only in highly classified ways with

no other party present it makes a secret movie and it draws a boundary around where should the limit be between intelligence gathering and privacy and civil liberties? that is a conversation we have not had the opportunity to debate among the general public. on foundational questions of power to talk about the mutual transparency of citizens and the government government, i think there were lots of things that needed to be approached and the confirmation of that comes that it has been extended and a serious public debate about where they should be. >> did you have any concerns national security might be damaged was what you

published? >> i did. over my career in journalism covering stories quite a few times i saw how hard boundary and i had a conversation with the government about their concerns and we have conversations this time. i would say i will not hand you this document but here's the day and title and author and you can find it. and between 21 and 27 we will not even think about that. >> this is the way he presented it to the post? >> yes. when i came to the post to my had a similar conversation and said you will make your own decisions because i worked there full time 21 years that i came back on contract. you'll make your own decisions we were willing to

publish and started the conversation this is what i would not publish. >> what he did with his story is that different from what you did? of course, we learn for the first time about some of the cyberward abilities united states had that were not known. did you go to the same process? >> very similar. but i commend the enterprise with the way that he handled it that was extremely responsible. the difference was with the story that really what published at the time was the olympic games which was code name for offensive

operation but the first sophisticated use and the overall averages was very similar to roy just heard it is the case restrain personal privacy and the surveillance for that and when the government draws the line is all done in secret and in many cases you have to ask the question, how much of this needs to be secret because it keeps operational details? then i think we all understand and how much of this are fundamental to be debated by the u.s. public? because it is done in their name. i think they're responsible way to do that is to go to the government to say this

is what i have that i do see that would endanger the ongoing operation. but we're willing to sit down to hear that. and i did that night took off the table with the conversation and then in other cases, there were responsible people who made the case and i found over the years that usually once you get involved with that conversation, you can narrow the subject matter pretty quickly. at the moment you have got the story they're not simply going to say we just will not discuss it to.

>> why does the press come to an understanding that many people in the united states have a and is disputed by others a dead don't think there are any absolutes. the u.s. government like to say if it is classified in should never be published but the fact is almost everything that you rightabout with national security is classified at some point*. you cannot write about our wayans nuclear weapons program or north korea or dealings with china without running into something. i a didn't have documents better when the mother's -- but with those documents have different parts of the classification.

>> jim, you have seen these kinds of situations before from both inside and outside the government. what do you think of this story? >> a think i am the only one who has been inside said to speak and i just went through my five-year review. i could just be in the post but no doubt people are a little depressed but we will rebuild. in this case i agree that to if they had given information to begin with it would be easier to manage the public reaction that the same time and offer more transparency the program needs to continue so i hope the debate does not lead us into a silly compromise with

a new advisory board i think that would be a mistake. >> let me ask you at the top some of the claims that he could listen and if we had the number. i had people and those to vastly overstated his abilities. do you think so? tim mcdowell of the television shows where they showed the ops center in the cia and they say get me video on st. peter's square then it pops up. [laughter] come on. technically it is possible to target someone to get their phone calls but there are many, many legal constraints and to have to work with these with how difficult it is. it is not that easy. the bill issues and it is not like the movies.

>> would you think he overstated? if think he is overselling and he had a product and it looks like he was dangling come to me in freeing money and i will give you the good stuff. i think he was overselling. >> i am not his lawyer or add piquet and i only print what do i think it is true and could verify. i was sure he was wrong about this and what he is right about for sure is the legal constraints are either line sets of, moved so as the principal point* is that there has been built up a remarkable apparatus touching every american households even though and

that the main constraints right now are what the code says are what the policies are and what we do know is conformance accumulate power over time and there is one reason but everytime you tend to have a one-way valve for reasons that are stated in good faith and i honestly believe it change the boundaries. >> how can someone go to work with a situation like this in a position like this. word to their only three? and somehow get away with what he apparently did currency know he got away with some stuff but it does not seem likely that it

seems it is not a good situation. >> i really want to defend those with the support but it does sound like there was a glitch. [laughter] but just to move aside looking at simple things to make your network more of a secure is too restricted minister peter privileges because they can do whatever they want and that was probably the mistake. >> basically he is the it die a that when the computers break down that is the guy and he knows a buddy's password? >>. [laughter] but is that basically his job? >> someone described him as the help desk. >> there is a lot of stuff out there that i essentially

is trivializing him and his credentials but he worked at the hawaii large branch of the threat operations center. but also in charge of defending the system coming he got there to watch out for here is intrusions' and also told me that there were fire walls for fleeces that were not supposed to. >> is there any suggestion suggestion, i know it is your source but is there any suggestion that he took the job for the sole reason to

the with these last ones were and -- working with from overtime and he never told me he took a job to carry out his plan but it is looking like that more and more. >> what do we make of the fact that once he does this and goes to hong kong then russia and this is not your standard whistle-blower. >> a lot of people would argue he is not at all if you think he is not probably determines how you come down on the first question why the press publishes this and what kind of person he is and so forth. but this comes to an interesting context of a moment with a new president in china and the return of a

previous president and from russia and both in a separate summit meetings in the past week and a half and both of whom showed a particular willingness to stand up to say this is not my problem and perhaps with the budgets the united states and with the chinese they wanted to get the problem of their plate. the prospect of however long the process to a guy got they believed from chinese officials who expressed this would be a fairly lengthy process that woody wrote the relationship that the time and that of they decided

they will get him out but then it would be somebody else's problem then it turned out to be vladimir putto. [laughter] >> do you think it might have been a day already got everything they needed. right out of the stories. >> i do know a little bit about the in talk and he was not a defender of it. did he have access? yes. does it cover rigged to the chinese are the russians? no. one of the problems he found us duffy was trying to give was public interest was not really a surprise to a foreign intelligence service >> he has given a good

reason to believe he is in possession of materials that could do extraordinary damage by disclosing things that a foreign targets don't know in principle but he is not interested in tossing that out to the public record but to fostering the debate because there is speculation that are doing so now i would not give thoughts on that but i would take a substantial that and i know more about the promotions they took and i think it would be difficult to do without. >> do you think he has done any harm? >> it is hard thing to a

church from the outside some of the board techniques and so i'm. then it was not a surprise and the information of more surprising to the american people than the russian or the chinese. [laughter] the piece that i read about said the fire risk that out in 2010 and the iranians already have the code. and they knew somebody had been attacking the system but they did not think it was the us wes. then the question is but that is of through the important thing and when i look over the documents that

bart published in the guardian, a four some of them why was this document classified at all? one example one of the most interesting was one was called presidential direction of richmond the inside that fall and basically it lays out the conditions under which the united states would make use of the defense of cyberor offense. and each paragraph is confidential or the entire document and is something like that. i said i am almost certain with the declassified briefings almost all of the

major details and there were some smaller sayings but the big issues we had been briefed on. but to give me that justification why this document was classified? and i got back because it was in the interest of the united states. that is classified. [laughter] so many of these to raise the fundamental question which is which is it government find itself in the position today it is said to the world we have a central repository where all phone call dated is held on for five years because even if a terrorist and to the movies they think we can trace the call in 22nd so why couldn't that have been

published at which point* the public concern for other countries is authorized the use of italics very cyberrobins but nobody wants to it engage in that debate because not with all of us. >> maybe it should not opener close the conversation by improve the public to pay and it could do some damage to national security but jfk great e-ruling to say no so bear no burden. it is a trade-off between self-government and self-defense and it begins with six fundamental guiding

principles and the fourth one i don't dismiss the security that is a bald and even when a country or organization has reason to think that but you could compare it to the elevated care -- elevator can read that we all don't believe all the time as a plea would like to have our photograph but you stop thinking about it and and stop worrying about it so it is very clear that the prescription kits but the largest communication divides that

it is clear and explicit in the markings and portions is the listing of the companies like facebook and crew will antioch noone that is the number one in there and what i have officials if the harm you envision insist a private companies taking a market lost to tell their people that they don't like what they're doing that is why. that is a high reason they're the interstates and make you want to publish. >> what can we do? you have a better fix on this than any of us here in des remember before talking before the debate and you said some of the things that

we can do is amazing but there is a difference of the capability which is one of the questions that comes up but we do have but tell them i would like to know. [laughter] >> okay it is fair to say that after september 11 and there is a lot of effort to integrate intelligence sources and whenever the things most useful is you captured from afghanistan who was that person talking to? and we really need to know this but essentially you

need your phone bill. you may have unhappy surprises so with the ability to collect your combined humid staff captured on the battlefield that is where it comes from now. thinking of the debate in the '90s but then they became excited with the global system to collect with a big investigation in the european commission and they concluded it is not so bad. that is where we will end up here. there are trade-offs and more transparency but. >> i told him we would fight albright. [laughter] >> there is a legitimate program -- problem but it is

those that spies overseas and so when you get to the scene that what you care a lot about in addition there is barriers so set to pick up the pocket letter in afghanistan with the e-mail addresses and phone numbers numbers, that is rare you get the individuals to say the rate we can do that we have to show the owners that the information that you

want is relevant to and authorized to settle lobar. and what people call data mining they're looking for the unknown subject, so with the headed relationships to start with one contact so is the best finish of growth but remember this 6 degrees of separation it would encompass the whole planet.

it is such an old technique is to classified. you to do this to use male or envelopes and of course, there is one person i you know, to say what is the network? and you have to look to people who are not known and could not get them and the administration is miffed because they went out of their way to do this in the constitutional safe manner. not public enough but a technique that goes back to the 19th century. [laughter] >> i am is agreement this month it is used a lot of the mistake that it was

classified had to remain classified in did does raise the questions to when they wrote their story so the story was wiretaping is to ask the question why could the government have described this program? to this same kind of exposure and whether or not it needed to be classified and rediscover looking at the wiretapping we were told of the damage to be done. >> there is one reason they don't want that to the

transparency. for what we're looking at the program looking at all of it matt a data as e-mail and video and voice over it. >> to talk about the metadata does that mean they get the e-mail message? >> no. not the content the president said don't worry we're not reading your e-mail just looking at who you send it to, from, when but it is called the and i

if you gave me the tories right now based on the current management techniques, i will subject myself to either one month of having someone look at my a phone calls or might metadata never take a content in the second you could listen to me and read my notes but that would be much less even though the law says otherwise but with metadata hugo who someone is talking to, when, where to, when, where, then associate that with everyone because they get all of yours and they can tell whether you have a medical condition or the extra marital affair or thinking of leaving your job or i am not saying they're doing that but but they're holding

it. >> that does not make sense because there is a limited the number of analysts in economic as so much. a priority number one is not your sex life. it might be interesting. [laughter] but priority never one is the proliferation of dates but there are not that many analysts. nobody is reading your staff. the issa it that in his writing is not a good says those it would not surprise me in the least. nsa? no. that is the difference. but it is not a perfect world not the 19th century every and republic where man and dinosaurs co existed but we're we have these trade-offs and then for the

attended the luggage. >> did you like boston? >> when you connect the phone numbers is that somewhere recorded to fight back? >> with a ton of fun -- telephone conversation? you're talking to, where, and they use it for leeds to go get it under the surface. once they have a personal interest prospectively they can see some realtime or get

terabytes of year-old communications stored on servers on cruel and so on. >> but once they start to then they can listen to. >> with a started working on this long time ago from the state department they kept talking about the bit bucket. what the heck it? . .