officials and the proposal we unveiled last week has been a result of that dialogue. again, there is not agreement on it, but we remain hopeful that the administration will allow the state of indiana to continue to build on the healthy indiana plan, and in effect build on our commitment to medicaid reform in the state of indiana. so that's how we characterize the discussions, but they have been ongoing. we are in a comment period right now where we have unveiled a proposal. the law requires us to collect comments from across the state of indiana, and then we will be submitting the waiver formally sometime next month it then i expect the discussions will continue their, but we believe the proposals we unveiled last week is the right proposal for the people of indiana and we

also believe it is a good-faith proposal that i think will serve the people of our state well for many years to come. we will seek the maximum allowable time under the law for that waiver. let me say as i close, and then i will finish the formal program but i can catch up with some of you afterwards if you want. i served 12 years in the congress and i served the better part of a year and a half -- i have become more convinced every day that the cure for what ails our country is going to come more from the nations state capitals than it ever will from the nation's capital. at the very core of this waiver request is my belief that many of the most intractable issues facing our country, including health care, can best be solved

by giving the states the freedom and flexibility to design programs that can solve the challenges the people of their state are facing in those areas. so we will continue those discussions with federal officials. i'm hopeful that we will be able to expand the healthy indiana plan in a way that will serve the people of our state, will close the coverage gap but will do it in a way that continues to advance principles of empowerment, personal dignity, consumer driven health care in our state and maybe be an example to other people around the country. thank you all very much. [applause] [captions copyright national cable satellite corp. 2014] [captioning performed by national captioning institute] >> next a house hearing on

medicare fraud then q&a. live at 7:00 a.m. your calls and comments on ""washington journal"." c-span brings you live coverage of president obama on memorial day participating in the annual ceremony of the tomb of the unknown soldier. today, live beginning at 11:00 a.m. eastern on c-span. >> you can take c-span wherever you go with our free c-span radio app for your smartphoner tablet. listen to all three c-span tv channels or c-span radio any time. you can tune in menu want. play podcasts from our signature shows like afterwards, communicators, and q&a.

download your free app online for your iphone, android or blackberry. >> on tuesday, a house oversight subcommittee held a hearing on medicare program oversight and management. according to the g.m.o., officials from senators and the government accountability office from human and health service unless is two hours and 25 minutes.

>> the subcommittee hearing on energy policy hearing called medicare mismanagement oversight from the effort to recapture misimaginationed fund. first americans have the right to know that washington takes from them is well spent. our duty in the oversight reform government is to protect these rights. taxpayers have a right to get from their government. we will work tireless to deliver the facts to the american people and bring general reform. this is the mission. medicaid currently pays one fifth of all health care services provided nationwide making it the largest single purchaser in the country. unfortunately, every year the medicaid program wastes money on

fraud and tests and procedures. in to 13, $50 billion was lost to improper payments, an increase of $5 billion in 2012. gsm o. has related medicare as a high risk since 1990 in part due to the program's acceptability to this waste, that makes up 77% total identified by the federal government last year. fraud represents a significant amount to the programs finances. at presence the trust fund has been in deficit since 2008 and they predict the fund will be depleted by 2026. the services have the responsibility to maintain the integrity of medicare. like the health care prevention action team, which operates

medicare strike forces to combater. traders who steal identities and falsify billing documents. a risk-based screening to identify supplies. in april 2014, fingerprinted background checks will be conducted on high-arise providers. c.m.s. is admit straighting to identify fraudulent claims for review. they rely on four types of combat. these contractors such as audit contractors or review claims to identify overpayments. g.o. and others found these efforts sometimes overlap in requirements are not uniform.

providers and beneficiaries are given the opportunity to appeal. this third level is by law judges at appeals. there is currently a massive backlog of over 460-pounding 460,000 appeals. it could take up to 28 months during which providers have their money held by the government. not many businesses can survive having their businesses held for 28 months while they wait to decide if they are going to get reimbursed. nancy griswold was to testify but she was unable to fall throw on that. we have kathleen king, director

at the health care office. and the doctor, deputy administrator and program integrity to see how c.m.s. can improve oversight. i look forward to their testimony. we must do more to strengthen the integrity overall particularly medicare given its enormous size and scope. clearly, more needs to be done to recover $50 billion in overpayments. today's hearing will provide subcommittee for clarity in these areas. it cannot drive up the expenses for seniors.

>> morning. thank you, chairman lankford for holding the hearing. i agree that reducing waste and fraud and abuse in the medicare program is critically important not only to protect taxpayer funds but it is important to protect the health of of seniors and adult population. we have 10,000 seniors aging into the medicaid program each day this year. it is more than important than ever to keep the medicare promise alive for jen rievtion future americans. i'm grateful to have you here on behalf of the inspector general to speak about the o.i.g.'s efforts to do that. they prosecute some of the worse instants of health care fraud. providers billing for services that were never provided and

providers who order unnecessary or, in fact, harmful procedures. the health care fraud and abuse program under the attorney general and the secretary, the health and human services department is a model for inner agency cooperation and coordination. in fiscal year 2013, the program recovered $4.3 billion in fraughted settlements. this is remarkable. i look forward to hearing from the assistant inspector general on how this was achieved and what can be done to strengthen the program going forward. these bad actors represent a small fraction of all providers. the vast majority of providers are not fraudsters and are deeply dedicated to the care of their patient. given the size and complexity of medicare theme, overpayments are going to occur and c.m.s. must

be individual leapt in recouping them. well meaning providers are entitled to have their claims issued fair so they can focus on the core mission of providing care. i have some serious concerns that the current system of post payment audits, are resulting in a significant burdens on some providers, particularly smaller entities. they have more difficulty complying with requests for medical documentation and may not have the resources to even appear over payment determinations. the backlog in the office of medicare hearings and appeals only makes the matters worse as the supplies do not have the luxury to to be waiting months to

have their cases adjudicated. in new mexico's first district the first access to care is paramount in my mind. if a provider or supplier is forced to cut back services as a result of an audit, thing is a lose-lose situation for everyone, particularly as we work to build access to care, particularly preventive care. c.m.s. announce they will implement several changes that will be effective with the next contract. i will look forward to hearing about improving the oversight. i hope you will also address some of tissues we both raised regarding the burden on medicare providers and with a particular focus on the smaller providers or providers in rural and frontier states like mine and the impact that has on the

beneficiaries who are working to access those services. i also look forward to hearing from all of the witnesses what c.m.s. is doing to move away from the pay and chase model to a proactive mod that will identifies improper payments upfront. such a model spares taxpayers resources that could be better spent on providing care, which in the long run shores up medicare for future expwren rations. with that, mr. chairman, i yield back. >> thank you mr. chairman for holding this hearing. thank you for continuing to high highlight that we need to make sure that the american taxpayer's money is well protected. this particular hearing is of importance to me primarily because i have some constituents that have been caught up in this

a.l.j. backlog. as the ranking member just testified, it can be extremely difficult on small businesses. the request for a particular company in my district threatens to put them out of business, yet, all they want is a fair hearing. i shared this with the chairman and shared some of my concerns where we are and in his own opening statements he talked about the fact that we have a 28-month backlog. well actually, it is worse than that. if you look at the real numbers that today if we hired according to the budget request from c.m.s., it would take 10 years to work through this bag backlog. a million appeals and they have been getting better year after

year, yet, what we do is we have a policy of where we're saying you're guilty until proven innocent. we're all against waste fraud and abuse. what we must make sure of is we do it under the rule of law and we have laws that guidelines guidelines that are there. there is a law right now that says if we ask -- if a constituent asks are for a hearing that the law says they should have some kind of adjudication and a decision within 90 days and, yet, according the the website for c.m.s., we're not opening the mail for weeks and months and months and months.

we've got to do better than this and in this, we don't take those who are innocent and put them out of business. i say that because if our overturn rate was not that great, we would ivet haven't wouldn't have a problem. over 50% of them are being overturned. we have over 50% of the people who are innocent, who are having to wait years for a decision and in that, we must do better and we must find a better way to address this. i look forward to hearing your testimony on all of these things and i thank you mr. chairman. >> i thank you for your work and your research that has gone into this. i'm glad to receive the testimony of our three witnesses. all witnesses are sworn in before they testify.

please rise and raise your right hand.. you affirm that the testimony you're going to give is the truth, the whole truth and nothing but the truth. thank you for being here. mr. richie is the inspector general for evaluation at h.h.s. thank you all for being here and thanks for your testimony today. we've all received your written testimony. it will be part of your permanent record. we will be glad to receive your oral testimony in order to allow for discussion, i ask you to limit your opening remark to five minutes. you will see the clock in front

of you. >> mr. chairman and members of the subcommittee, thank you for inviting me to talk about our work in medicare and improper payments. c.m.s. has made progress to reduce improper payments but there is additional action they should take. i want to focus my remark on three areas, provider enrollment, prepayment claims review and post payment claims review. with respect to provider enrollment c.m.s. implemented payment protection and affordable care act to strengthen the enrollment process so fraudulent providers are prevented in enrolling. c.m.s. has performed moratorium on providers and contracted for finger-based background checks

for high-risk providers. however, c.m.s. has not completed certain actions, which would be helpful in fighting fraud. it has not yet published regulations to require disclosures of information taken against providers, such a payment suspensions and it has not published regulations establishing the core element of compliance programs or requirements for surety bonds for certain times of at-risk providers. with respect to review of claims for payment, medicare uses prepayment review to deny payment for claims that should not be paid and post payment review to recover improperly paid claims. prepayment reviews are typically automated systems that could prevent improper payment systems. for example, some prepayment

edits check to see if the claim is filled out properly and that the provider is enrolled in medicare. others check to see if the service is covered by medicare. we found some weaknesses in the use of prepayment edits and made a number of recommendations to c.m.s. to promote implementations regarding national policies and increase widespread use with local contractors. c.m.s. agreed with our recommendations and taken steps to implement most of them. post payment claims reviews may be automated like prepayment reviews or complex, which means trained staff review, medical documentation to determine if the claim was proper. c.m.s. uses four types of contractors to provide post payment respreups we recently

finished work and found differences that can impede efficiency and effectiveness by increasing administrative burden on providers. for example the minimum number of days that contractors must give providers to respond to documentation of a service range from 35-70 days. we rerecommend that we make these more efficient consistent. c.m.s. is taking steps to implement them. we have further work on the post payment review contractors to exam if c.m.s. has strategies to coordinate their work and if contractors comply with c.m.s. guidelines.

less than 1% of all claims, the numbers of post payment reviews have increased. from 2011-2012, the number of reviews increased 1.5 million to 2.3 million. this is one factor contributing to a backlog and delays in revolving appeals by judges. we've been asked to exam the appeals process, the reason for the increase, the effects on the providers and contractors, and options to streamline the process. in conclusion, because medicare is such a large and complex program, it is vulnerable to fraud and abuse. given the level of improper payments we asked c.m.s. to use all of authority to identify and

recouping improper payments. thank you. >> thank you. >> thank you. chairman lankford, ranking members and members of the subcommittee, thank you for the invitation to discuss the medicare program inintegrititiests. we share the subcommittee's commitment in ensuring that taxpayer dallass are spent on legitimate services. our program through the lens of my experience who fundamentally cares about the health of airports. our health care system should offer the best health care possibly. c.m.s. is committed to protecting taxpayer dollars by recovering wasted or fraudulent services. that helps to extend the life of the trust fund. but efforts extend beyond

dollars. it is fundamentally about protecting our beneficiaries and ensuring we have the resources to provide for their care. as part of our responsibility, the taxpayers to see their resources are used appropriately, c.m.s. has an obligation to perform audits and other you're sight tools as a part of these efforts. i would like to make three points today. first, we are having real impact in reducing waste abuse, and fraud. we reduce provider burden. finally, we continue to improve to meet our mission. on the first point we're seeing success from our efforts. through medical review activities in fiscal 13 alone $5.6 payments were prevented from being paid or were returned. we saved $7.5 billion over the last several years from payment edits, which prevented bad payments being made.

c.m.s. performed medical review. recovery auditors have recovered $7 billion to the medicare trust fund since the start of the program in 2010. our antifraud activities have also had impact. last year, they returned $4 billion to the trust fund. we have revoked over 17,000 since the passage of the affordable care act. we recognize they can pose burdens on providers. we strive to balance our responsibility to limit the burden these can place. we use tools such as educationallests and contractor oversight to minimize burden when we can. we engage in dialogue to improve our programs. in the next round of recovering

c.m.s. is making changes on the program based on feedback from stake hold theirs we believe will lead to an efficient program. we utilize other approaches such as prior authorization while granting more security to the provide community. we will listen to stake holders to make improvements to our programs. we appreciate the committee's interest in ensuring that c.m.s. is improving its efforts to know that congress and the public expect tang eligible results. in july 2013 c.m.s. imposed moore or the ya for the first time in geographic areas that have been prone to high amounts of fraud. we invoked the privileges of home health agencies in the miami area.

we are also continuing to work with law enforcement in these hot spot areas. c.m.s. is using private seconder tools to stop improper payments. since june 2012, we have advanced analytics on a streaming national basis. we stopped or identified $100 many million in in inproper payments. we began to use the private sector tool to address an area of improper payments. in 2012, c.m.s. began a demonstration in seven states to require prior authorize. this demonstrated in a decrease in expenditures. 66% in the states and over 50% in the nondemonstration states. support from the community has been significant. many have requested that c.m.s.

expand. we have made progress to address progress but more work is needed to prevent improper payments and fraud. i look forward to answer questions on how we can improve our commitment while protecting beneficiaries to high quality care. thank you. >> good morning, chairman lankford. ranking members and other distinguishes members of the subcommittee. thank you for the opportunity to discuss i.g.'s work. improper payments cost medicare beneficiaries about $50 billion a year. recovering these lost dollars and more action is needed from c.m.s. its contractors and the department. c.m.s. needs to better ensure that medicare makes impromer

payments. when improper payments do occur c.m.s. needs to identify them. it needs to develop ways to stop improper payments. the medicare appeals system needs to be fundamentally changed to ensure efficient, effective and fair outcomes for the program its beneficiaries and providers. my written testimony elab rates on oig's work and recommendations. this morning i will focus on four key points. first, c.m.s. must do a better job ensuring that payments are accurate. for example, c.m.s. needs to better protect medicare and beneficiaries from inappropriate prescriptions and billing for drugs. we found that part d paid millions for drugs from those

with no authority to press scribe. second when -- >> you might check your microphone there. is it still lit up there? >> second. improper payments occur c.m.s. needs to do four things, identify, recover, assess and address. c.m.s. contracts recovery daughterors to identify improper payments. in 2010 and 2011 audits resulted in over $7 million in payments record. c.m.s. also assesses the rack findings to find out why. it then must address these issues to prevent future improper payments. my third point is c.m.s. needs to better ensure its contractors perform effectively. c.m.s. contractors recover and

protect medicare from fraud and abuse. oig has consistently raised concerns. c.m.s. needs to assess performance more effectively and take action when contractors fail to meet standards. finally the medicare appeal system needs to be changed. even before the recent surge in appeals oig raised concerns about the administrative law judge. alj's overturn prior decisions more than half the time. alj is very widely amongst themselves. this happens partly because medicare policies are not clearly. we recommend clarifying and coordinated training on all levels of appeals. administrative inefficiencies also contribute to the problem. we recommend that paper files be standardized and made electronic. in closing, more needs to be done to reduce and recover

improper payments, ensure effectively performance and improve the appeals process. oig is committed to finding solutions to produce waste, and improve the program. thank you for your time and i welcome the your questions. >> thank you all. recognize myself for five minutes for first round of questioning. let me set some context during my time. if a provider will have something reviewed let's talk through the process and set context for everyone on this. go back to the statement about the pay and chase side of this. so this is the post payment has occurred. how will someone find out that they're going to be checked inspected, whatever it may be, post payment for any kind of claim? what's step one? how will they be notified? >> they get a letter from a

contractor. >> would that be a rak? >> it could be a medicare administrative contractor it could be the sert contractor. which pulls a sample of random claims to estimate the improper payment rate or it could be a v pick, zone program integrity contractor who is looking specifically for potential fraud. >> let's take a physical therapy clinic, stand alone, seeing patients, mixture of insurance, private pay and medicare. you're saying that one physical therapy clinic could receive a request to pull a file from any one of those four or those four -- unique four entities? >> they could receive a request from any one of the four. >> is it possible that all four of them will make a request during any year? >> it's not supposed to happen.

>> is it possible? >> theoretically. but highly unlikely. >> so how are they notified them if one does it or could do or three? you're saying all four unlikely. >> the racs are not supposed to review those done by other providers. >> to the same provider or to the same case? >> a duplicative case is considered the same file for the same service. >> could a provider get a review from all four of those different folks, different cases but that provider itself get reviews from four different groups of people from medicare? >> possible but unlikely. >> so what about from two or three of those? four is unlikely but is it possible from two? >> yes. like for example they might get a review from a rak and from a crert who is estimated the improper rate.

>> how many files are they pulling at that point? one or a sampling? how many? >> they're pulling one. i believe. you know, overall the rak did over 1 million reviews. but when they're rehave youing, you know, for a provider, they're pulling for that service. >> go back to our physical therapy clinic. they're not going to reach in and randomly grab one case. are they? they're going to pull a sampling for them to review? >> no. i don't believe so. >> so how do they select which patient files a review? >> well, in the case of a rac, c.m.s. tells the rac what kind of issues they can look at. they work together with c.m.s. and c.m.s. approves the types of issues. >> so they go in and make the request of a senior citizen

type of client that's there. they're not just pulling one patient. are they? they may pull 10? 20? >> i believe the claims are investigated on an individual basis. >> the provider. when they get noisks. >> they will get noifings of a claim. a claim. i'm sorry. correction. there could be more than one but there is a limit. >> that's what i'm trying to get is what is that limit? does anyone know the number on that? how many are they trying to pull for a rac audit? >> there are numerous contractors that can. each contractor has, set in statute they are supposed to do the job they're doing. the contractor's functions are different. the sert is to go in there and determine the improper payment rate it's not primarily looking

at the provider. it has to do the medical record audit to zerm whether an improper payment has occurred. but its function is to evaluate our services. so while numerous contractors can touch providers, we also try to coordinate not tu touching the same claim or provider too often. we have set limits for rack contractors so that they can touch a provider and request a particular sampleling based on the size of the providers themselves. >> so how large is that sampling? >> a hypothetical example might be a smaller provider that sends in say 10,000 claims a year. a r.a.c. would be permitted to obtain no more than 20 to 25 claims at a time and no more frequently than every 45 days. >> so they could come in every 45 days and pull to to 25. correct? different files and say we're not going to pay these until we

get a chance to check them? correct or not correct? >> i think conceiveably that's correct. but again we do provide oversight to ensure that we are not burdening individual providers or entities during the course of these processes. >> i have exceeded my time. we'll come back to that. i do want to come back to that statement that we're not burdening individual providers. i could name you several dozen in my district that would beg to differ on that statement. you will find to greater advocates for the tax payers and going after fraud than us on this panel but we also don't want to lose providers to seniors and drop out. i won't take medicare any more because it becomes so burdensome for them. with that i recognize mr. grishham. >> thank you, mr. president. and i'm going to do a couple things.

i want to follow up on a couple of things that chairman lanchingeford said. that balance is really tricky. and given that this committee clearly wants to focus on waste fraud and abuse even if the medicare program and every other health care program was flush and that wasn't our being efficient and worrying about having senior visses available for a growing population. our job is to make sure that every tax dollar is being used the way it was intended. and we want bad actors and bad providers barred from this system and all others. no question about that. we also recognize that you have to do a dupes system and we appreciate that. but the due process system is clearly broken because if you're waiting years and without payment or having that payment removed, that's not due process. and i would agree too that we have created a very burdensome administrative environment. it's not just a federal,

although that is federally operated. remember that most of these programs take medicare, medicaid, they're serving dual eligibles. they're being touched, auditted, administratively regulated by state and some states with a whole different variety of private entities. so these small sometimes small providers are spending an incredible amount of time being administratively reviewed and these recovery audits given that there is a contingency fee where they're being incentive vised to identify issues and problems creates a pretty ripe environment for what i think you have today, which is we've now with the office of medicare hearings and appeals we've recently announced that we're going to suspend the ability of providers to have their appeals heard by administrative law judges. the decision was made as a result of a massive backlog of appeals awaiting an a.l.j.

hearing, which by the medicare hearings and appeals' own admission has grown from 92,000 to over 460,000 in just two years. now, i understand that the office of medicare hearings and appeals is not part of c.m.s. i also understand that your office oversees these contractors including the r.a.c.'s whose audits are the cause of many if not most of these appeals. given the long wait times for getting anappeal heard wouldn't it be pursuant to suspend audits until the claims backlog is cleared? and i want you to touch that there are other ways to make sure that we are preventing fraud more than just the rmpt a.c. audits. >> sure. thank you. so i would start at just agreeing with you that it is a

real challenge in program integrity to make sure we're doing our job, protecting the trust fund, and at the same time doing as much as we can to lower the burden on providers and make sure there are no access to care issues for our beneficiaries. i think it is also important to kind of focus on the amount of burden that we are placing on the system through our activities. as pointed out earlier we audit far less than 1% of the claims we receive. with respect to r.a.c.'s in particular there are clearly appeals that occur from r.a.c. audit's but the overall rate of appeal -- the overturn rate from all of the overdeterminations is about 7% in the latest publicly available data. if you look at just appeals initiated after after an overpayment determination by a r.a.c., the overpayment rate is about 14%. so i do think that the appeals process is important for

providers. it allows them an opportunity to represent their claims, represent their interests and it provides an important check and balance on our approach. as far as the third level of appeal that involves the a.l.j. as you pointed out that is not directly under our control. we have been working with the department to devise strategies for that backlog. what is directly under our control are the first two levels of appeal and i can tell you that both the overturn rate is not substantially high in those areas and they are being -- and the appeals are being heard in a timely fashion. there are numerous other kind of strategies that we've taken to try to decrease the appeals. i want to afford you your time so i am happy to go into them if you would like. >> i appreciate that except that i would certainly make the statement that -- and you've heard this theme throughout this hearing. we had providers who would differ with you about these administrative burdens and whether 14% is reasonable in

terms of what they can manage in terms of cash flow for their patients and staff. andled also say many of the smaller providers couldn't afford to appeal. so i'm not sure if this data is really relevant and what strategies have you undertaken to identify how many providers certainly come to me -- who would love to appeal because they believe they've been wronged or there's an administrative error but don't have the ability to do so. also i would say fear intimidation and retaliation and just pay or do whatever it is that they're asked to do at the next level. and i'm way over time. so if you could respond to that and then i will come back. >> sure. in addition to appeals, there are other controls that we have implemented over our contractors. we do determine what areas r.a. c.'s can look at. they have to get permission from a board at c.m.s. before they enter into any particular audit area. that is a type of oversight. we have an independent valid

contractor who looked behind the r.a.c.'s themselves to determine whether they are making these determinations accurately. and all of the r.a.c.'s have achieved a well over 90% accuracy. i think the incentive structure itself actually invent vises getting it right. so r.a.c. ds do get paid on a contingency basis but if they lose on appeal they lose the contingency fee. i think that's enormous to make sure they're making the right determinations in the first place. i said it was a 14% overturn rate. that is in part a. since a lot of our issues you identified. >> so the answer is, however, we don't know how many providers are unable to appeal and there's no test to determine you have one side of the data equation and i'm not sure that's accurate as a result. so i appreciate that you're

looking at these tests. and i'll yield back but i would like to explore that further. >> we will in the second round. let me make one quick statement as well. you mentioned that there is the incentive for r.a.c.'s to limit that because they lose their contingency fee on appeal. let me give you an illustration. you can put one hook or five hooks in the water. you may only catch one fish but you will watch more, more often. and if a r.a.c. decides they are going to grab 20 cases and hope they win 10 they may only win 10 but if it's close, we may win it we may not win it. that's helpful to the r.a.c. in their contingency fee that's not hex to the provider. i rec we'll talk about that a little bit more. >> do you have any

differentiation in your facts with regard to small providers and large providers and their overturn rates? >> i don't think the data differentiates in terms of the appeals data i'm not aware of data that differentiates between small and large. the point i made earlier is that we do have different requirements of the contractors when they look to audit a smaller provider versus a larger one. there is different medical records request requirements to limit that burden being placed especially on smaller providers. >> i represent rural arizona and so i would like to see some type of movement to try to make that accountable. when you said an overturn rate with part a, what about part b? >> you know, i'm actually not aware of -- i don't have the figure in front of me. we can connect with your office to get you a part b overturn rate. >> i think that's important because most of those are actually institutions not individual providers.

would you agree? >> i think the part -- let me make sure i heard you correct sir. i believe the part a claims are the ones that tend to be more institutional, hospitals and part b can tend to be individual providers or groups of providers. >> ms king from your oversight aspect do you see maybe a change that you would recommend for methodology instead of looking at the provider as being guilty in an aspect kind of atmosphere like that? do you see a better way of handling this? >> i don't actually think that the post payment review starts off with the provider is guilty. i think it's not a criminal matter. it's a matter of either an overpayment or an underpayment. and i do think that c.m.s. has a responsibility of stewards of the trust funds to make sure that claims are paid properly

and as part of that i think they need to do as much as they can effectively on the prepayment side but i also think that they need to look at the post payment side. that being said, we have found some instances in which the requirements are posing administrative burdens on providers and we have recommended that c.m.s. reduce not the requirements but the differences across contractors so that providers have a better understanding of what they're required to do. >> from the standpoint of that process is there a way that we could actually identify maybe frequent fliers? do we have a frequent flier list? state boods kind of do this. we're kind of replicating something that state boards do.

>> well, i think we take a different approach. so the spectrum of program integrity is long and there are folks on one side that are totally legitimate providers that are trying to abide by our rules that are honest and they are the vast majority of providers. on the other side a much smaller subset are potential criminals or people trying to rob the program. so we do take -- i would argue that the various approaches that we have to overseeing the program integrity issues do try to take into account where our risk really lies. part of why we can take an audit base or post pay approach for the vart majority of providers is because they are legitimate and an audit is a reasonable approach for them. we do take a much more risk based approach on the fraud side that can ratchet up the intentty how we look at a provider. i think that's appropriate for providers that are pushing the line potentially even commiting

criminal activities. we try on the other side of the house to take a much more fact-based approach. we look at issues that are big national issues where we know there are improper payments and then we'll do deeper analyses to determine which providers to look at but it tends to be focused on where are improper payments occurring. it isn't ratcheting up on a single provider. >> but wouldn't it be more efficient in regards to looking at -- having some type of a profiling aspect? in state boards you have a list of the most of your problems are with 10% of the population. >> right. and i think the comparison to state boards -- i would just remind you that state boards are often dealing with the most difficult of cases. they're the ones on the right side of the house where these are providers that are commiting potentially criminal or negligent activities. so they're dealing with

probably the worst actors. we do that with a similar set of actors. what we are looking at perhaps again to try to decrease the potential burden from these audits is not ratcheting up but looking at solution that is might ratchet down. so as providers get audits and it turns out there are not a lot of errors we can perhaps audit threm less. we're looking into to see if we can implement that. >> as of when? when will that occur? because that is one of the recommendation that is hovers out there. how does someone prove basically i'm a good actor and i don't get someone contantly coming in to check them all the time? >> there are a number of solutions we're looking at the r.a.c. is currently in a pause state where we are working on the next round of procurements. we are looking at the statement of work taking into account a lot of opinions and input that we've gotten from stakeholders including providers and trying to solution how r.a.c.'s can

still meet jobs and obligations and decrease that burden. >> let me come back. when? >> i couldn't promise you an exact date. >> you said something that providers can think about next year, two years, ten years from now? >> well, i think we are working on the procurement now and we hope to complete it in the next few months. so it will be i think it remains to be seen if that's a change that can be pursued in the near term or -- >> so that change is still under discussion. at this point. to figure out i've got a good actor there? >> it's one of many solution that is we're looking at. again, we've heard a lot of input from the provider community and we're trying to take action where we can. >> we'll come back to that. >> thank you very much, mr. chairman. listening this morning it gets a little frustrating when we're up here because it seems like despite the fact that we all come from different communities

and are sharing very clear examples of why the approach that's being taken isn't working, we continue to get pushback and basically reiterating the same points without any clear determination of when things will improve. and on behalf of the constituents i represent in nevada medicare is violetly important to their quality of life. i'm talking about the beneficiaries here. and when someone who is medicare eligible can't see an ob/gyn in my community because there are no providers who will accept them because of issues ranging from the reimbursement rate to the delay in being paid for services rendered to other compliance issues.

it makes me want to know what can we do now? in the short term, to be able to move this forward? medicare is a bedrock of our program. people rely on these services. we have providers who about a third or more of their patients are typically medicare covered. and as my colleague ms. grishham explained, it also typically includes medicaid or other paid sources as well. so when you layer that burden on the provider, it is tough to provide services. that's what we're hearing. so after speaking to several

stakeholders in nevada particularly hospitals and medical providers, all around the las vegas valley -- and i also include some of the rural counties in nevada which are woefully underserved by enough providers, the accountability of the recovery audit contractor program seems questionable at best. and i don't understand how you continue something that doesn't even -- hasn't even been properly evaluated. while these programs have a noteworthy mission of seeking out improper payments of medicare services, it seems there are potentially per verse incentives to these r.a.c.'s. in 2010, the r.a.c. program was expanded to all 50 states and made permanent. now, again i don't know how you start something, don't evaluate it and then expand it

to 50 states first of all. in 2013, over 192,000 claims were filed by these auditors to the office of medicare hearings and appeals contributing to a backlog of over 357,000 claims. the recovery audit contractor programs as i said may have been well intentioned but there have been unintended consequences. so acting deputy inspector rimpie in your testimony, you include a long rist of policy recommendations for c.m.s. to address. you reported that 72% of denied hospital claims at the third level of ad1kwr50udication are overturned ultimately in favor of the hospitals. what recommendations have you offered c.m.s. and this committee to address the concerns that r.a.c.s are, no pun intended, dramatically racking up the number of claims

backlog? >> i think first we have offered recommendations both in the rac area and in the appeals area. i think it's important while they're so intertwined to consider those separate in some ways to in a r.a.c. work all the work that we have that we're talking about was before this current backlog but we've seen things that we still think are relevant in the r.a.c. work we did see in 2010 and 2011 that they were helping, as i mentioned in my testimony. we need to make appropriate payments and when inappropriate payments are made they need to be recovered. only they did recover $1.3 billion in 2010 and 2011 and 6% of them were appealed. when they're appealed there's a high overturn rate. clearly something needs to be done. i would point to our a.l.j. work. because for the system to really work and where the backlog is we think the biggest recommendation that we have is

medicare policies are not clear. and i think all fraud is certainly improper payments but all improper payments are not fraud and most of these providers are not commiting fraud they just don't understand a complex system. they're trying to submit claims that's complicated and we saw 56% of a.l.j.'s overturn and that's due to different interpretations of the policies, different sources they were doing there. >> so are there a set of recommendations dealing with the medicare policies? >> in our recommendations because there's so many, it's mainly to clarify select the policies that need to be clarified, clarify those and then educate people in the policies to create less overpayments and appeals in the process. for instance in my written testimony i talk about our home health work. we found with the recent face to face requirement that if a physician is certifying that you're eligible for home health they have to have a face to face encounter. we found 2 billion in improper

payments in 2011 and 12 and a third of the claims didn't meet the requirements. we didn't think a third were fraudulent. it's because these are complex policies. as people get used to them it will probably go down. but to make them more clear we think is really a key to keeping the appeals backlog lower. >> ok. i know my time is up for this round so i will come back. >> as i chairman of the full committee, chairman icea. >> thank you for holding this important hearing. the gentleman from nevada and i don't always agree. but every once in a while there's a nuance of agreement from this extreme to that extreme of the dais and this is one where i think the entire committee is frustrated and chairman lanchingeford's bork on this in addition to enc i think really shows how bad things are. and let me just give you two questions and then we'll go into comments. doctor, let me just ask you and

for the i.g., new york state ose us $15 billion in overpayments. they flat billed more than the c.m.s. maximum for medicaid for -- and we held hearings more than a year ago. what have you done to get 15 billion back while in fact you're sending out hoords of people to harass doctors with a less than stellar success rate of success in accuracy in the audits? what have you done to get back from a state that knowingly billed far greater than the rate and it's $15 billion? it's ten years worth of your recovery? any answers? >> sir that is an area that we are looking at now. >> you're looking at it. $15 gl and you're looking at it. >> at the request of the question, we have -- we are currently taking on an evaluation of new york state. we're waiting to get the findings and release the results after which time i think we can have a conversation about how to

proceed. >> newspapers make it abundantly aware the numbers speak for itself because they're hard numbers of what was sent out versus the maximum allowed in law and you're looking at it more than a year later. >> sir, i think these evaluations do take time. they are rigorous. they're designed to be rigorous. >> oh, they do? do you know how many doctors have had to stop their practices and answer nothing but questions because you take their money and then they try to get it back? isn't that correct? >> i wouldn't characterize it as stopping their practices. >> i'm telling you doctors in some cases have to stop their practices because the audits are incredibleably detailed and they don't get their money back until they prove their innocence. so let me gowgo through this again. you have the right to stop payments in new york state based on a good faith belief they got over 15 billion and they can spend liegeance of

time arguing while they get to keep far more than they were supposed to receive? >> i would have to look at whether or not we have that authority sir. >> why don't you look into it. and while you're looking into it pursuant to congressional action under the small business jobs act you owe c.m.s. and subsequently we get a copy of it you owe a report the second year report on predictive modeling. don't you? >> yes, we do. >> and you have owed it since october. >> i believe the report is actually been due since earlier this year. but i take your point. >> no, you don't take my point. we just did away with a whole bunch of reports by congressional action ran it through the house. the senate may have already acted on it because we do ask for reports we don't always need. but we didn't just ask for this report. we ordered the executive branch to deliver it. it is extremely important because the kinds of thing that is the gentleman from nevada were talking about auditors

going out half you know what being wrong and on appeal often being dramatically overturned even to zero dollars in some cases after physicians and clinics go through a great process. that much of that would go away if your predictive modeling went and looked for the fraud where it was most likely occurred. are you concerned that chase manhattan can see your credit card perhaps being misused and calls you but the organization that you're auditting has no such capability? >> that's definitely a concern. we do think that the fraud prevention system has taken steps and shows promise. i know tying to the other question with our r.a.c. work the other thing c.m.s. does is they identify vulnerabilities if there's cumulative issues and they need to address those vulnerabilities and assess them. so one of our recommendations was to do that because we have

found once they identify and recover you need to set up the safeguards to prevent them from occurring in the future. >> has the ig looked into the excess payments requested by and given to the state of new york for that this committee earlier had as to whether or not any criminal charges could be brought? >> i'm not aware of that. i don't believe we've looked at criminal charges. i do know that we have -- >> but they knowingly overcharged more than the maximum. and then they cross-funded that payment to other services not even covered by c.m.s. in many cases. so the question is, is it worth taking a look to see whether or not the thread of criminal -- threat of criminal just might get new york to return $15 billion in excess payments, ten time what your audit that is we're talking about here today in part are revealing? >> personally yes i think it's worth it. i'm not the enforcement person

but my office and audit we've done a whole series of audits in new york that we've shared with the committee and i can go back to the office and talk to our investigators about this and our counsel and look into it. >> well, mr. chairman, i appreciate you giving me a little extra time. i will say that i'm deeply concerned that reports required by congress that ultimately are necessary in order to improve the system are clearly done but are being held back so they can be sort of looked at again and again. this is the politicing of releases. and i would only suggest to the chairman that we have the authority to compel the work document fs we need to if that report doesn't come in a timely fashion from here on. and i yield back. >> just before i yield, this was a pending question from the chairman. when? will that report come? we know it's months late. when? >> as you know the small business jobs act requires us to not only produce a report

but to have results >> when? >> we are in the process of working with the oig to achieve that certification. that is taking some time. i hope to release it as soon as we can. >> that doesn't answer a when. >> i cannot give you a specific time frame. >> can you give me is it a week or a decade? >> it's less than a decade sir. >> how much less? >> what i -- >> this report all of us want. it matters because it deals with what we're all dealing with, pw providers trying to shift us to where we all want to go. when? is it a month? two monthings? this is a simple question from the chairman. when? >>ically not give you a specific date. however, i think what's important for the committee and for the american people and public transparency is that we not only release a report but that we release it with certification from the ig so that people can trust the numbers and base future decisions upon a certified

report. i think the importance of that is clear. so we are working to achieving that. >> mr. chairman, only because the doctor did say public transparency. public transparency would be releasing all of the work documents that show the reason for the delay, the discussion, the political correspondance, the loop to the white house that occurs on each of these reports. i rather doubt we'll get that transparency. >> mr. chairman, would you yield? >> i would yield. >> doctor, it's a pretty simple question. if you can't give ause precise date, is it three months, is it six months? and what's holding it up? >> as i mentioned, again, it's -- we are working closely with the office of inspector general as required under law to try to achieve certification for the report. i think the importance of that is very clear so that people can not only get a report but can trust the numbers that are in the report. >> you know, we're not stupid up here. we understand when people are trying not to answer a

question. so if you would, be kind enough to answer the question. is it three months away, is it six months i away and what's holding it up? >> i cannot give you a specific date. the reason i cannot is because it's a process that is being worked in collaboration between c.m.s. and the office of inspector general. >> well, you can give us a precise date. you need to maybe ask someone else. but we expect to know. we have the right to know. if there's a problem holding it up we have a right to know what's holding it up. >> it isn't an issue of holding up a report. >> do you have a draft report that is complete? is it just being agreed to by various parties that then makes it available to the to be released? >> again >> just answer the question. >> our >> answer the question. >> we are working >> is the draft complete? >> there is a draft report that is -- that utilizes a

methodology to ar i've at savings numbers that the office of inspector general is reviewing or in the process of reviewing. we hope to be able to release that report in the next month or two. ically not be more specific than that. >> that's a lot better than earlier. >> ms. duckworth. >> thank you. i would like to follow up a little bit on what the chairman of the full committee mr. issa was talking about these rmp ac dauts. i agree that combating medicare waste and fraud is a critical goal. as much as $50 billion are wasted each year due to fraud waste and abuse in both medicare and medicaid and we need to go after that. but it has also become clear to me that the well intentioned erds efforts are not working and are badly in need of reform. i want to talk specifically about how these audits affect the ortsdzotic and prosthetic industry and the patient that is they serve.

i have personally heard from providers all over the country many of whom are small businesses how they're being targeted by overzealous and misdirected audit that is are threatening to put them out of business. they're having to wait years and carry hundreds of thousands of dollars on the books that they're not getting paid for and these businesses simply cannot survive this. taken collectively the stain on the industry undermines access to critical services. oftentimes these businesses are the only providers of prosthetics and ortsdzotics in their local area which now means the patients cannot get access and must go out without the limbs and medical equipment they need for their lives. the volume of audits has led to a huge backlog for providers who feel they have been wrongly denied payment for legitimate services. i'm particularly concerned that c.m.s. has chosen to deal with this backlog by suspending for two years the ability of providers to appeal decisions at the administrative law judge

level. with a.l.j. siding fully with providers in over half our decisions it's simply unacceptable to deal with a problem by denying the providers due process. they're continuing the dauds. you're taking the money by not paying them and saying you have no right of appeal. you have to wait over two years. you're going to drive these hard working americans these small business owners out of business and leave all of their patients out there without the limbs and equipment they need in order to live their lives. at the public hearing on this issue, the chief administrative law judge gave an explanation of how the office of the medicare hearings and appeals of their position really offered no short term remedies that would restore the right of a due process to providers. if you are going to suspend the hearing by two years, then

suspend the r.a.c. audits for two years. give them their money back and collect it two years later. it seems blatantly unfair and un-american to take their money and not give them the right to due process. does c.m.s. have any plans to restore fairness to the system for our providers? >> so just to clarify the outset the third level of appeals are the administrative law judges level is outside the jurisdiction and c.m.s. while we have direct oversight over is the first two levels of appeal. everybody is afforded any overdetermination whether by a mack rack or other contractors. they're afford that had opportunity to make sure that the audits are being conducted appropriately and the right determinations are being arrived at. >> what's the backlog? how long are they waiting for to get into the appeal process and getting it resolved? >> the first two levels the second of which is an independent level of appeal or

oversight, the oig is actually published a report that shows that there is no substantial backlog at if first two levels of appeal. the issue arrives later and on average we are within the time frames that are required of us. i would say in addition with respect to the ortsdzotics and prosthetics issue this is clearly an important area. and if there are issues of access to care, with respect to specific beneficiaries or companies, i'm happy to work with you on that. that is a priority for us. so -- >> i will have them come in and sit down and talk with you. let me ask so what you're telling me is the third level of appeals is holding everything up and they've suspended for two years the right to due process. and even though this is being caused by the audits that c.m.s. is continuing to conduct it's not your fault it's someone else's fault but you're still going to shove more people into the system who now have no access to this. i mean it's kind of convenient

don't you think you're pushing people into this system but on the other hand you're saying it's not our fault that they can't get through the third level. what are you doing to work with the administrative law judges to fix the delay in the appeal process? >> we've taken a number of approaches to ensure that number one the audits are being conducted appropriately and then wrr we can to help address appeals issues. we are actively working with them on their backlog and trying to arrive at solutions in conjunction with them. i think on the front end where we have again more direct oversight and authority we've implemented certain strategies to ansure that the audits are being conducted correctly that they're being achieved with high accuracy. as just one example we do have a validation contractor that looks behind the racks to make sure they're following c.m.s. requirements. rules, guidelines. and all of the r.a.c.'s have achieved a well above 90% accuracy rate.

i think that goes a long way to ensure they're being monitored. and while providers will always have and should have the opportunity to appeal we want to make sure the initial determination is accurate. >> not when over 50% are being overturned on appeal. i'm out of time mr. chairman. >> i would like to ask unanimous consent there's a statement sent to us by the american ortsotic association. scuke it be submitted to the record. wousm. >> i want to follow up. because you're acting like you have nothing to do with this backlog. and i think that's unfair characterization. do you not agree? you have nothing to do with the backlog? >> i think clearly providers would not have a lot to appeal if we didn't enforce our rules and deny certain payments. >> well, let's look at this. the inspector general's report. and they said that the overturn

rate at the appellate level is anywhere between 50 -- depend ong how you read it between 56 to 76% according to the oig and so those don't get to that adjudication level without you doing something. isn't that correct? >> we clearly do i think we have a number of steps. >> you have to review them first before they get here. and they get overturned between 56 to 76% of the time according to this report in 2010. >> not only do we -- >> so you do have part of the reason why we have a backlog because it's on the front end you're just denying claims and denying claims. i've talked to physicians, i've talked to hospitals, i've talked to health care providers. and they say the first fair hearing they get is at the administrative law side of things and that what happens is

you guys are just denying them and you're saying it's tough. you have to pay it. and wait for your turn in the cue to get the hearing. do you think that's fair? >> i don't think that's a correct characterization. >> let me ask another question. this comes from the hfsgove website. and you all changed that within the last 30 days. it's been changed. and what this says is that the average processing time for appeals are decided in 356 days. would you agree with that? for fiscal year 2014. >> if you're talking about the third level i couldn't comment on their data. >> well, this is fiscal -- this is on your site, the average appeals time is 356 days. would you agree with that? >> for fiscal year 2014? >> i think if that's what the data shows then that's cha what it shows. >> how would we know that? 2014 hasn't even ended yet.

it doesn't end until september 30th so how would you know this? >> sir i'm not what you're looking at. >> it's on your site. we can give you a copy of it. somebody in your office knows because you've changed it within the 30 days because what you were saying is that they were not being assigned for 28 and i'll give you, 28 months. they weren't being assigned and that's been changed. who changed it? >> i think all of the issues that you're describing, hopefully this is accurate, is that they are really the third level of appeal or alj levels sort of issues. what i stated earlier is that we have oversight of the first two levels and we are abiding by time lines required. >> h moms and dads back home they could care less about the internal divisions. they see it as all part of c.m.s. they see it as one and the same. they see it as the government. so here we are for the budget request that we've got that

says the backlog is going to reach 1 million. at what point does it become a crisis? at what point? when does it become a crisis? when do you start putting companies out of business because you already already. when does it become a crisis that you're willing to do something about? this is your document. 1 million backlog by the end of this year. so is that a crisis? >> well, sir if there are individual companies being put out of business by these audits we do have phlegmibility. >> i've already called on behalf of some of my constituents. and that would be a great response but it's not true. because you know what, i've dealt with jonathan blum, i've called to make sure that kathleen sebelius knew about it. i've called the white house. and you say too bad. so what do i tell the moms and dads who are going to lose their job because they do not get a fair hearing? what do we tell them? >> well, we sir are able to do

what we are authorized to do. so whether it's an alternative payment arrangement or something else working with the provider -- >> you've got five years for an alternative fife years. i know this stuff i've been studying it for the last six months five years. so if the backlog is ten years whether or not what do they do? they just pay it? because right now at a million people at a million appeals, the best rate that we've had from the adjudicators is 79,000 a year. and even with your budget increase that would still be a 10-year delay. that's a taking in my book. would you wait for ten years for your salary? yes or no? >> we do whatever we are authorized to do in terms of working with providers to make the system less burdensome so we can stretch out payments we can change things in individual cases but we cannot overstep the authority. >> but something changed.

something changed. because you know what? the audits went from 150 a week to 15,000 a week. so what did you change? because it's in your documents. i will be glad to give that to you too. eist worse than that. it went from 1200 to 15,000 appeals a week. what did you change? >> i think it's important to level on this. it is our obligation to audit. we have improper payment that is you've heard about. it is our obligation to go after those improper payments to try to reduce those rates and make recoveries where possible or where they should be made. an obligation created in law. and we audit far less than 1% of all claims that we receive. in fact all of the overpayment determinations made by r.a.c.'s in the latest available data account for less than one days of claims that come -- >> my time has expired i would

like one answer to this. the law says that they need a decision in 90 days. is that law being violated and who makes the choice on what laws we enforce and what laws we ignore? the law says 90 days. >> i cannot comment on the processes that are outside the jurisdiction of c.m.s. >> this is in your jurisdiction. i will be glad to give you a copy. this talks about qualified independent contractors which is under yours. and then the a.l.j. is after that. 90 days after that. >> as far as the second level of appeal at the qualified independent contractor level there is recent reporting from the oig that shows that we are remaining on tract as far as the expectations of how long it takes to go through that appeal. >> jauntsen blum said you changed something in 2012. what did you change? >> sir i was not part of that conversation. >> do you know of any changes that heaped in -- i'm out of time i yield back.

i apologize. >> i would like unanimous consent to have ranking member spheres opening statement be into the record without objection. >> thank you. and i apologize for my late arrival. we had a memorial service at arlington cemetery for service women and i felt compelled to be there. so i apologize for not being here for your opening statements. let me say at the outset, i've had local hospitals that have gotten embroiled in the r.a.c. situation. i have a hospital theats teetering on bankruptcy right now. and the r.a.c. experience has exacerbated it. but i also think it's really important for those of us who sit on this committee to recognize that we have an obligation beyond just beating up on those who come before us like this to recognize that if

we want to fix the backlog we've got to pay for it. there's a backlog because in 2007 r.a.c. claims amounted to 20,000. today that number is 192,000 a year. that's ten times what it was in 2007. and we have not added one single person to respond to those claims. so if we want to deal with this backlog, if we want to erase it we've got to recognize that you cannot expect people to do ten times the work with the same number of work hours. now, let me start with mr. richie if i could. you've had a pretty remarkable run in terms of the efforts by

the health care fraud and abuse program which resulted in 4.3 billion in recoveries to the treasury in 2013. that represents an 8:1 return. is that the highest level of recovery to date? >> yes, that is. >> and how is that achieved? >> we partner with our other partners in enforcement to fight fraud waste and abuse through investigation, through audits, through the evaluations that we've done. the recoveries that were reported in fiscal 2013 were record recoveries. >> i think in your testimony you reference that sequestration will result in a 20% reduction in oig's medicare and medicaid oversight capabilities. is that correct? >> unfortunately, yes. >> so what does that mean in terms of what you're going to do and what we're going to see

in terms of waste fraud and abuse being properly handled? >> for our office, it's not good. it means less investigations less audits, less evaluations. i'm not a budget expert but i live this every day. i'm acting in charge of our evaluation. in this point 2012-2013 outlays went up 20% and my office has had to reduce our focus by 20%. it's really challenging given we have a $50 billion improper payment, that it means less investigators, evaluators on the ground to handle this. so i've been working in ig, for 27 years. i've never felt as challenged to see what the growing responsibility how we go about doing this. >> so should we just roll out a red carpet for the fraudsters

of this country? >> i would certainly hope not. in our office we try to do a risk assessment to pick the best topics. we certainly make our budget requests and for us personally the best thing would be to fully fund our budget request to get us back on target. it's definitely decreased. we've gone down by 250 full time employees by that time. we've had to stop evaluations and audits, stop following up on investigation leads. >> so would you -- is it safe to say that because of the reduction there are investigations that haven't moved forward that probably would have resulted in savings to the tax payers in this country? >> absolutely. i mean, investigations and audits both that we have to make tough choices every day for what we start and can't starred. it's been a very difficult time in sort of looking at this. i think you're making tough choices with things that look very good you do a risk assessment and feel there's so

much to look at but you only have so many resources and those are declining and we've had a hiring freeze for two years and people have left through buyouts so we've been reducing. >> give us an example of the kind of case that you've had to let drop by the wayside. i mean, do you drop cases that are just so big that it would take so many resources? so are the big fraudsters getting away with it more than the little fraudsters? >> well, i'm not -- in our daut and evaluation officings so i'm not there. i do know our investigation office told me they closed 220 complaints since 2012. i think it's a mix. we try to do the best risk assessment we can and put resources on the biggest case bus certainly we can't afford to do all those. i know our strike force activities have been a big success and our strike force cities we've had a reduction in resources. so it's been across the board in every aspect of the ig's enforcement. >> my time's expired.

i'll follow up with the second round. >> i thank the chairman. and ms. king i appreciate this g.a.o. report that you put out. i want to go to the first complete page. this is the second paragraph the lator half of it. i'll read it to catch everybody up. for example c.m.s. has hired contractors to determine whether suppliers have valid licenses, meet medicare standards and are at legitimate locations. c.m.s. has contracted for fingerprint based criminal checks that it has identified as high risk. however, not complemented other screening actions authorized by the affordable care act that could further strengthen provider enrollment. could you help enlightening me where you think they have not implemented other actions to strength tn process? >> i think there are a few things that we point out. one is in relation to shurt bonds establishing a regulation regarding shurt bonds for certain types of providers.

one is in not publishing a regulation that has to do with disclosure of past actions that have been taken against providers such as payment suspensions. >> so doctor why not do that? >> i think these are great ideas. when we have really appreciated the agency has appreciated working with the g.a.o. on ferretting out where our vulnerabilities and weaknesses are and trying to do something about them. there is nothing wrong with these recommendations. we continue to have conversations. we have to prioritize -- >> why haven't you done it? we're trying to get rid of the waste fraud and abuse and authorized by the law why haven't you done that? >> absolutely. it isn't i think a disagreement over the objectives. we have done a lot in the last couple of years to really beef up our approach to to provider enrollments and screening. some of the stuff is coming on line. so there's bands of

limitations. >> is there a prioritized list or summary that you could share with the committee so we understand what you are prioritizing what you're doing what you're not doing? >> i think you're clearly seeing some occurring. >> where do i find that? is that something you can provide the committee? >> i don't know that we have a list. i'm happy to have -- >> can you create a list? >> um >> we're trying to get some transparency which you say you're in favor of but what you're doing or not doing the g.a.o. is saying you're not doing all that you could do. i'm sure you've got to make some choices. i want to understand what you have prioritized and what you're doing and not doing. is that fair to put that on a piece of paper and share that with the congress? >> perhaps it would be use. to get your insights drrsh wait. you want me to write your agency i'll write it for you. but g.a.o.'s making recommendations. authorized by the law to do these things. i want to see what you're doing

or not doing. i'm not looking for a 700 page report. i'm looking forward a couple page summary to understand what you're implementing and what you're not. you've got to have some sort of document. i didn't expect to spend five minutes asking if you had a prioritized list of what you're working on. is that something you can or cannot provide the congress? >> we'll work with your office and provide it. >> when is a reasonable time to get that document? you come up with a date. >> can you give me a few weeks to do it? >> sure. pick a date. >> we'll get back to your office within a month. >> the end of june. >> perfect. >> thank you very much. one of the things that i've been working on that i'm worried about are these providers are we engaging in allowing people to have serious delinquent tax debt to be engaged in this process? this is a big governmentwide problem i see is that we have contractors out there who have serious drink went tax debt yet we hand them new additional

contracts and allow them to continue to be involved and engage. and i don't expect you to understand the answer to that question but that's something else that i personally and i think the committee would benefit from understanding. what are the policies that you have there? what are -- it should be a key indicator to me that if you're unable to pay your federal taxes why do we continue to contract and give you more and more business? the president's been in support of this when he was senator obama. i think this is a very bipartisan thing. this committee has dealt with a bill very specific to that. if you could also provide me information about what you do with that. and the answer may be we don't do anything with that. i would just like to know the answer to that question. can we also shoots for the end of june that you give me that information? is that fair? >> i think that's fair. but i think just to comment on that a little bit. we have -- there's all kinds of information that we could conceiveably collect from providers. i think the question often that we have is what information can we collect that is actionable for us. so there are some clear bright

lines in the program. if you don't have the right license to practice medicine in the state in which you want to enroll then you don't get to enroll in that state. there are certain other types of disqualfirs like certain felony convictions. so it makes a lot of sense to include as much ritch risk assessment and analysis as one could to look at providers but there's really just a subset of potential risks that pushes over a line and allows to take action. if a providers -- >> i'm also worried about the contractors that you're engaging that are supposed to ride herd on this that are supposed to help you engage with these people. those are some of the specifics that i would like to see as well. it's not just -- not just talking about the providers and the contractors it's your contract rg with in order to make these things happen. >> thank you, chairman. i yield back. >> thank you. for the second round for questioning. during this question time there's full interaction

there's no clock running this time period if you have interaction. also for our witnesses if you have specific things that you want to get into the conversation you're free to be able to initiate the topic and conversation to make sure you're clear. our goal of this conversation is to make sure that we bring all the issues out and find the areas that need to be resolved and what the time line for those things. so you're free to bring issues up as well. i want to reaffirm, let me take first crack at a few things here. i want to reaffirm again this panel is include ds to how do we deal with fraud. there's $50 billion in unaccounted for money possible overpayments in fraud. we affirm that we are pursuing that fraud. that is the taxpayer dollar and it's essential. both the solvency of the program long term and for the taxpayer. so continue to do that. i think the frustration is that prepayment side of this we all know that's the direction it should go. so we're not having to chase. that's why we want to know the report, we want to know what's happening at this point how we

get ahead of this in the days ahead so we're not having to constantly go back to gooed providers and say we're going to hold some of your dollars. many of these may have a two or three or four percent profit rate. and for them to have a portion of their cases pulled and not paid for for an indefinite period of time as they go through the appeals process is untenable to them. so i want you to hear from me and from us we're not opposed to going after fraud we're opposed to the method. there have been changes. we're proposing additional changes in this. to say what can we do to to help expedite this process and to make sure when it's right and is overturning the appeals they get their money faster and have fewer people engaged. we're gone through the revalidation process. is that complete at this point for providers nationwide revalidated the providers and we've done fingerprinting background is that complete?

what stage is that in? >> so the revalidation process initiated puts us on a five-year cycle. i believe the latest numbers is we have reval dated over 77770,000 providers that puts us -- 770. >> i think that's about right. >> then the prepayment pursuit of fraud. we have a report that's due to us obviously we've discussed coming in the next couple of months to give us the details and progress on that then we move into the post payment. do you want to make any comments on the prepayment side? >> well, i think just that clearly the affordable care act did provide us a lot of authorities to make changes on the prepayment front. such as payments suspensions which we are now able to leverage against the worst actors. the only point i would make congressman is that

differentiate what we do when we are going after potential fraudsters sort of criminals the worst actors from those providers the vast majority that are perhaps producing waste or producing inefficiency in medicare not quite following our rules but to have the intention to follow our rules rrks trying to actually do their best. i would just ask to sort of keep this framework in mind because it determines for us what tools we utilize with that they're not overly per jortty. i think payment suspension is the great tool for the worst actors. and though it is prepayment it is not legitimate because it suspends all the payments. >> you're doing the same thing it's the hammer thapts down even for the high risk areas where there's a moratorium. some of those may have a deficiency of number of good companies that are actually providing. if we continue to have more people entering into medicare there is a need for providers. and so even on the moratorium occurs that's a pretty incredible hammer for that region to say there's lots of

small businesses that won't start up during that time period that could be legitimate providers. >> it is. i agree with you, sir, it is a notable piece of authority that we implementd with a lot of care and over time. so it took us years to go from having the authority in the ampt c.a. to actually implementing it for the first time. i would say the areas that we tried to address both the geography as well as home health services as well as ambulance services are areas we knew there was a lot of market sault ration there's very little concern though we have been looking at it continuously about access to care. home health in texas and south florida are areas a lot of agreement with the office of inspector general, department of justice, state medicaid agencies that there's just a lot of market salt ragse three to five times the numbers of providers than on average. so while access to care is clearly something we care about and we are looking at in real time to make sure the moratorium does not have a

negative impact we are not seeing it in those areas. >> one last thing the four appeals. time line for everyone the length of time. you said they're on schedule. let's talk about pale number one. someone has an problem. the appeal is to who and how long does that take? >> so i believe the first level of appeals providers have 120 days to file the appeal and then there's a 60 day time limit for the decision to be achieved on the appeal. >> so they filed it right away. let's talk about your end. their responsibility is their responsibility. so you have 60 days to respond. correct? >> correct. >> who is that that's responded? they're appealing to who? >> i believe in almost all cases it's the m.a.c. contractor. >> so you've got the r.a.c. folks make a decision and then the m.a.c. folks making the response on the appeal.

correct snrrect. >> you're saying that's on time. >> correct. >> they disagree. they come in. who is that? >> the second level goes to the qualified administrative contractor. the q.a.c. we have 60 days to make a decision on the appeal. >> and you're saying that is on time as well? >> i have average times below the 60-day mark correct sort of 53 and 54 days for most appeals. >> and do you have the overturn rate on both of those? >> it would depend on the specific audit. so is there a particular audit that you're referring to? >> either one. the first or the second level. >> in r.a.c. audits? >> yes, sir. >> i would have to look. >> i think while i'm looking i think the overall overturn rate between parts a and b are about 6 to 7% that's in the latest

data. >> you're just talking through the first? that's what we're trying to figure. we've yet to see a cumulative number. >> i believe -- so i believe that the 6 and 7% numbers are all the way through are ever overturned. >> i'm trying to figure thaw out because the latest numbers we've seen are between 56 and 70 some odd% overturned just in that level. >> so if i could perhaps explain a little bit. so the r.a.c. make determinations i think the latest public data is 1.6 roughly 1.6 million claims were found to have contain some kind of overpayment. providers then make a decision about whether or not to appeal those overpayment determinations. and basically at every level of appeal as you go from one two and three the number of claims going to the next level comes down. and the overturn rate might

vary between the levels. so i'm not finding the number right away but i think at the first two levels -- so at the first two levels we're seeing a nine percent over turn rathe for the r.a.c.'s in specific. >> both or each one? >> at the first level of appeal, 9% for part a. >> part b? >> 3%. >> all right. and for the second level ooch pale? -- appeal? >> at the second level for part a it's 14.9%. >> so 15% basically. and then part b? >> point 5%. i'm not shumplet i have just the percentage of r.a.c.

appeals that make it to the second level but i don't have the overturn rate. we can get that to you. >> that's unknown. and then after that? they've done 60 days in the first one, second one and then they disagree with that and now we're headed to the a.l.j.'s which is now could take 10 years to get to that spot. depending on the perspective you get. we've heard 28 months but that's pretty ambitious based on the number of people in the cue that have been handled. i know you've said it's not your responsibility. we will visit with chief a.l.j.'s on this but that's the next level. and the fourth level is what? then what? >> there is another level that they can go to which is i think at federal district court level. the departmental appeals board and then the federal district court. >> so that's a fifth level. >> correct. >> thank you.

>> i guess my question is so let's look at part b.d.m. only. what's the overturn rate for that? >> which would include ortsdz -- some of the other stuff. well i've got a report here from your office prepared on april 2, 2014. it says that the overturn rate is about 52%. is that correct? is this report correct? from your office. would it be about 52% for overturn rate? >> i think it really depends on what document and what level you're looking at. if you look at all claims again it's about 7.5% of all overpayment determinations. >> we're talking about on the appellate part. this is office of medicare hearings and appeals. their report.

so those hearings and appeals it says that the overturn rate is 52% is either fully favorable or partially favorable. 27 was unfavorable. with that it would indicate that the overturn rate is much higher than what you would indicate on v.m.e. >> there's a calculated overturn rate at each level. what i calculated just gives you the overturn rate for those levels. >> i may not be very sophisticated. how does your report say 52% here? where's the difference? help me understand that. >> generally as you go up at the various levels of appeals providers make decisions about whether or not they're going to appeal. what we see are some general trends. so providers do tepid to -- the number of claims appealed at each level does tend to drop and the overpayments or the overturn rate can increase. so at the third levpl of

appeal, the overturn rate i can totally agree with what's on your piece of paper that it probably does approach 50%. but at lower levels of appeal given that there's more claims appealed and fewer decided at in the provider's favor. >> so out of the 1 million in backlog that your budget request talked about how many of those would you anticipate based on this rate are going to be overturned? out of the 1 million back logged appeals going to a.l.j.? >> i think that's an individual case to case -- >> it is but based on historical evidence how many would be overturned? >> 020 thourblings of them. based on -- 520,000 of them based on these numbers? >> based on those numbers. >> so let me ask you one other question. is the american hospital association -- they have r.a.c. facts.

per r.a.c. track, 47% of hospital denials are appealed. and quote almost 70% of these appeals are overturned. is that incorrect? >> i can't really speak to their data, sir. what we know -- we track the data of course very closely internally our numbers would not agree with that. if you look at the first level of appeal for part a. we see about a 5% appeal rate. >> if i could interject. there's a problem here. why is it that if you've got enough money to go to the third appeal with the a.l.j., if you could hold out that long, if you're not a single provider, if you're a big hospital if you can hold out if you go to the a.l.j. you've got a 60 to 70% chance of winning. why wouldn't everyone just go to that ooch pale process if they can afford it?

so the question i have is, why the discrepancy? what do you know about the a.l.j. system that allows for such huge swings in the determination? >> what we looked at again is prior to the backlog but i think it's still relevant we looked at the a.l.j.'s and at the time found a 56% overturn rate. this is 2010 data for the prior level the qualified independent contractor there was a 20% overturn rate. the big differences that we saw -- i mentioned earlier the unclear medicare policies we think are a trigger to this. at the a.l.j. level we found they tend to interpret them less strictly than at the quick level because they're confusing, complex policies and open to different interpretations. the other thing at the quick level it's more specialized they have specific people looking only at part a, part b, and clinicians reviewing that.

whereas at the a.l.j. level they're dealing with everything that comes their way and they're relying on documentation and testimony of the treating physician to make their decisions. so the process is different. we've also seen the case files are different. i mean it's more of an administrative thing. but the things that they're maintaining and holding in the case file is different from level to level and creates some of the inefficiencies. the a.l.j. level is still on paper. they have to print it out and send it to the a.l.j. they also get the paper file the records maybe from the contractor and trying to sort those two out. so some of our recommendations are definitely to clarify the medicare policies but also to create one system that's electronic. >> so if i understand you correctly, tat quick level there's very specialized know precisely what they're looking for and they make their determinations because they're trained to look for certain things i guess. i guess that's part of what

you're saying. >> correct. we didn't assess and make a judgment of which levels are better. but at the q.i.c. they have clinicians looking at it and if an appeal comes in specific to part a or b it goes there whereas the a.l.j.'s have overing. >> and they're aren't clinicians and they're using discretion in terms of interpreting the law. >> in terms of interpreting the law and relying more on the treating physician's testimony and evidence whereas at the quick level they're relying more on their own clinicians to interpret the documentations. >> go ahead. >> congressman, it speaks to a couple larger issues. and i want to get back at what tr real overturn rates? are we targeting collectly and what can we do to improve the ssms so we're not harming good providers which means we're harming just the beneficiaries going after fraudulent and wasteful behavior?

medicare is an incredibly complex system. and the reality is that if we don't start dealing up front with the medicare complexities, we're not -- if we can chase this all day long and go from one extreme to the other and we're going to find significant flaws in our ability to hold providers accountability and to support providers to do a better job. and what we haven't done in this conversation is i'm as concerned as anyone else about getting it wrong and overpayments. i'm also very concerned that your part a providers or large providers, your part b providers even if we might have hot spots that they can't afford to go through this process. so in that regard your data is skewed for one group and i'm not trying to villify one group over another but hospitals, large hospitals and large hospitals grules can afford to wait a decade potentially.

smaller hospitals can't cl not. i want to get back to maybe a couple of things. one and then yield back. can you give us some recommendations -- yeah talked about the predictive modeling. you said we're identifying prescription practices that are clearly problematic. is there a way to be targeting those areas and is there a way to start targeting areas where we've got real issues with access? because c.m.s. has a responsibility to assure access. we're only doing one side of this here we're eliminating potentially access. no response about that. >> i'm sorry could you clarify recommendations for what? >> you identified in your tome that there are areas that you've identified that we could start looking at much more directly. we could do predective modeling in terms of where folks

commonly make mistakes and where we've got potential fraud. and two you identified in that discussion, i don't know that it was tied to the predictive modeling per se but you've identified prescription practice that is are clearly problematic. you said i think that you've got folks who are not prescriptioners as an example, prescribing medications for beneficiaries. what aren't we to discussed more in those areas? and then someone else to talk to me about what we're doing if you've got hot spots for fraud what are you doing to shore up mistakes so that we don't lose those providers by providing better education and support to those providers and creating in low access areas, what are you doing to ensure you don't lose providers? >> thanks for clarifying. we make those type of recommendations all the time. we have a series of report that is we call questionable billing reports over which i referred to in the testimony, finding questionable press scribers,

farm sizz and home health agencies. in all of those cases we take the ones that we've identified that are extreme outliars based on the statistical test and see if they want to further pursue because these look after that we send them to c.m.s. and c.m.s. will share with their contract tors take appropriate action and we always recommend that they take the kind of questionable criteria that we have and implement. i know the fraud prevention system is starting to build some of that in. i think specific to the example you mentioned on the press scribers we saw 5 million in a year press scribed by people without authority to press scribe massage therapists and things. just yesterday i believe because it was late last night i got it but c.m.s. actually issued or published a final rule that requires press scribers of part b drugs to enroll in the medicare fee for service programs starting next june, 1 of 2015 and this is

going to allow c.m.s. the plans and the medicare program integrity contractors to verify that they actually have the authority to prescription because now they aren't massage therapist isn't billing medicare but they could write the prescription for drugs that we found that were pretty severe. so that problem will be fixed based on this rule. so we are working with c.m.s. to get some of the recommendation combsplemented. but i think it's a combination of doing things like that and implementing edits on a prepaid basis to try to stop future improper payments. >> i think what we're interested in is to get that information to the committee so we know when so that we can weigh in on how you're balancing these issues and if the chairman doesn't mind can we get something on the access. what are you doing to assure that small providers aren't discriminated even further in this process because of the size of the provider and the capacity of the provider? and have you thought about treating them differently like

we have tiered regulatory environments? what is your thought about making sure that access is protected? >> again, and i appreciate the question. that is an extremely important area for us. so as far as teering providers, we do currently tier providers by size. we have medical records request limits specifically for the r.a.c. contractors based on the side of the provider. i also mentioned earlier a sort of future solution where we would ratchet down the number of reviews that a particular provider would face if the reviews are generally in their favor. in other words, they're basically following the ruse. we are putting that solution into our r.a.c. procurement process right now so it will be part of the r.a.c.'s going forward. in addition to that we do take, if there are overpayment determinations we have a process for the provider to work with us and change the payment rate in order to still

meet our requirements and still meet the requirements of the law but to be able to afford them a longer opportunity so that we don't put providers out of business unnecessarily. i would also say just on the front end we are undertaking a lot of efforts to better educate providers about our specific payment policies. you know, i think the face to face or the home health agency face to face requirement is a good example of that where the improper payment rate is very high because of this new requirement providers need to be brought up to speed and we are trying to do both specific audits that will look at that issue in order to educate both the home health agencies and the related prescribing providers. we also have just more general educational materials that providers can take advantage of. we also try to be very transparent on the front end about what audits we're conducting. so once a new audit area is improved we put that information on a website that provide kers look at to shore

up their own self-zauts make sure their programs are working and be prepared for audits this those areas. we hope all of this helps to make the process more open. >> and if it doesn't what do yo do to assure access? >> so i think part of it is just we have an open door policy for providers so we do want to hear about the short comings of these programs if there's an access issue. >> you don't think providers by and large are going to be concerned about that open door policy particularly in the context of audits and your efforts for fraud waste and abuse? because when i was the secretary of health and age i, i was often -- i appreciate that mindset. we are here to help you. and by golly no one believes that so i didn't really find that to be an environment that was very productive, particularly when somebody came to us and in fact they were fraudulent and we did our job. and so that certainly preclude that had kind of relationship. can you please collect data for

us if you don't already and provide it to the committee so that i can see, we can see what the percentage of small providers that are are engaged in any level of these appeals versus the large providers? >> and i think we can do that and i think it would be helpful to work out a kind of definition for small provider that we could focus on. >> and the last thing i would say and i'm trying the patience of this committee and i'm sure our witnesses but i would again this committee wants you to ferret out fraud and to stop those bad actors and actually move those to criminal prosecutions and to prevent those folks from ever being able to engage in any of our health care systems or any government contracting ever again. that serious about fraud. and we also want waste addressed. but i'm getting very concerned really about that access issue and that this was completely imbalanced. i would like you to consider and mitigate that by telling us what the risks are about changing the withholding of

payments for the third level of appeal taking into conversation those, a new definition potentially or refined definition for small providers and to entertain that maybe come back to us in writing about what that would look like. thank you. >> i would -- the passion of which you heard me today is not meant to be directed at you. it's a passion based on a number of people back in my district that potentially will lose their jobs. i for one nor you do i believe you want them to lose their jobs because we have a system that is broken. when the chairman called this hearing it was really a hearing about making sure that those who steal from seniors -- because that's really what this is about is fraud. those who steal from seniors get caught. but in the process there are a lot of potentially innocent people that are getting caught up in that drag net that we have to find a better system to

do that. i would ask you to submit to this committee if you would, two legislative changes if you're saying that your hands are tied what are the legislative changes that you would support and recommend for this committee to perhaps have the chairman introduce where we can fix it to make sure that we do go after waste fraud and abuse but those that are innocent don't have to wait forever to get that innocent verdict? and in the meantime, potentially go out of business? and i yield back to the chairman and thank his patience and his foresight in having this particular hearing. >> let me ask a couple questions. it goes back to what you were saying as well. good actors we want to keep. our seniors need to know in my neighborhood, in my community, in my town in my count there is a good actor that's there. we have all talked to folks i'm sure you are aware as well on

several areas. i had last weekend a gentleman that came to talk to me that wanted to tell me about the last year of his life because he was a dureable medical equipment provider. was. he's now been put out of business. he was a good guy. he was willing to meet the price that was out there made publicly available in the competitive bidding process but was not allowed to actually join into that because as this group knows well, when the competitive bid was put out he didn't get the bid you're out. and not just out. you can't join in even at the new low price. you're just out of business. he's one of those that came to me and said i just want to tell you about the last year of my life when my family business went out of business and closed down a company and laid off employees and here's what that looked like. i have individual providers that come to me and say i had a group of files grabbed, not being paid for, that are going

through the appeals process and i'm fighting my way through that and as i'm fighting my way through that i had another group of files that was grabbed. and now i'm fighting through those. and i'm on a different time period. and i'm not making payroll. i understand the comment of saying it's 1% or 2% of files. but if they start getting a set grabbed and then 60, 90 days later another set zpwrabbed when they're still unresolved from the previous one they're not going to make pay roll for these smaller companies. these are very real issues. we want medicare providers to be there. we want our seniors to have access. we want individual health care folks to know if you take care of seniors the bills will be paid. that sesh certainty is disappearing at this point and that's a bad formula for where we are five years, six years

from now. that's why the urgency is extremely important that we get ahead of fraud than chasing it. we're also hurting companies that are the good actors trying to do it right. we are all for shutting down bad actors aggressively going after that. but when the good actors made a mistake, made an error now they're having a difficult time making pay roll on it, we're losing the good guys. and that's going to hurt us long term. so let me shift a little bit. with the r.a.c. audits we talked briefly earlier about this. the incentive for them to, if there's a question that this is going to get lost in an appeal for them to not pull that. for them to actually work with them. i will tell you probably heard the term as well many of the hospitals and providers call them bounty hunters. they come in, land go through stuff, until they find something. because they get paid based on what they find. so the incentive is not to be able to sit down with someone

and say you made a mistake on this. the incentive is i got you. and i'm going to get paid. that's a bad relationship that's forming between our government and the people that we're supposed to serve. now we've got a set up environment is the incentive is not to work with someone but to punetively pull a file. that's a whole different set of relationships there. so the question is how do we get back to the int centive with the r.a.c. folks to be helpful rather than punitive but we still go after fraud? do you have an idea on that? >> sir if i might the other types of contractors that do post payment reviews, the m.a.c.'s, the c.e.r.t. and the d.p.i.k.s are not paid on the basis. the payments for the r.a.c.'s were actually established by law. how they were melt so that, if

you're concerned about the incentives, it's something to consider. >> i think that's a very helpful point. i would also say we do provide -- so let me make two points on this. one is we do provide oversight to the r.a.c.'s. the characterization that they might be on a fishing expedition or making judgments just to receive the incentive payment i think is not accurate because we do again do that validation work behind them to make sure that their accuracy rate is very high. >> but is there an incentive to be helpful while they're there to teach someone how to do this better or is the incentive to pull it? >> i think there's two that work in the favor of providers. one is the r.a.c.'s are equally incentivized to provide underpayment to providers. they get the same contingency fee that they return money to a proidvirer as they would when they make an overpayment determination. the second is we have made it a

priority in the program for dautors to use education as a too long. so when deficiencies are identified they can communicate those to providers and hopefully providers can rectify that deficiency going forward. >> are they paid for the education? >> the r.a.c.'s are not but the m.a.c. contractors do work very closely with providers in all their regions to teach them about

try to jews along the way they do identify educational needs or clarity deficiencies that we can address through other contractors or directly. >> thank you very much. mr. chairman thank you for this hearing. when -- perhaps because medicare is necessarily costly program i say necessarily we do the best we can to provide maximum care for the elderly when they are ill. there is particularly concern

when there are reports and there are always quite sensational reports of fraud or particular abuses in the program. i note that the affordable health care act gave the c.m.s. several new at least expanded authorities to deal with fraud. i would be very interested in hearing about how you deal with those at higher risk and how you deal with them when they apply -- when it applies to providers and suppliers who are newly enrolling and those who want to revalidate their participation in the program. >> sure. thank you for the question. so as a result of the affordable care act we have been required to implement a whole new approach to provider enroltment and screening that

takes into account the risk level of that category of provider. higher risk categories of provider like saying newly enrolling or home health agencies are subject to greater scrutiny. that can include everybody certainly gets certain data analytical work to make sure that providers of all types have the right license, have the ability to prackniss their provider category. higher levels also include site visits criminal background checks fingerprinting. as a result of those activities. >> had you done fingerprinting before? >> we are just bringing on line. we procured that contractor last month and we are -- >> for all providers or for these high risk? >> the highest risk providers will be subject to the fingerprinting requirement. as a result of those activities, we have revoked and through the revalidation process we have revoked over 17,000 providers since the aca and deactivated an additional 260,000.

>> for what kinds of abuse ors fraud or is it fraud? >> all manner of activities. really wherever they do not meet our requirements. so lack of appropriate lice sensesure. the certain felony convictions. failure to disclose information required on the medicare application or to report that accurately. >> so would they be barred -- criminally barred? >> the action that is we take are governed by the authorities we have. revication allows us to remove these providers for i believe up to a maximum of three years based on the infringement. beyond that law enforcement has exclusion authority that last force longer and is more sort of widespread in its impact. and we do work with law enforcement on utilizing that. >> have you had occasion to pro vide -- to refer a number of these to law enforcement? >> we actively work with law enforcement on referrals but

also even prior to referral. i think we've given law enforcement an unprecedented access to c.m.s. data real time access to our system the same that we utilize in our analytical work and then as cases develop we are in regular connection with law enforcement about case that is they may be interested in and ultimately do make formal referrals that they can choose to seenth. we work with them on the entire investigational process as they deem necessarily to provide additional data or any assistance that we can. >> i'm interestd in this temporary moratorium. this is apparently a new authority under the aca for new medicare providers and suppliers. what would evoke that and how does it work? >> sure. so since the a.c.a. we have implemented essentially two phases of the more toria. essentially against home health agencies or newly enrolling home health agencies and newly enrolled emambulance suppliers in a few different geographies

across the country. before this was a big step because it is a i think a notably important piece of authority that we are granted. before implementing it we worked very closely with law enforcement to make sure we were looking at the right geographies and provider types. we worked with state medicaid agencies and across the agency to ensure that we were going after the right areas and also not having or potentially would have a dill tier yuss effect on access to care. what we ultimately chose both the geographies and provider types were markets sat rate bid these provider types roughly 3 to 5% higher in home health agencies and ambulance suppliers than the average geography across the country. so far the more toria has been in place for the first phase put in july of last year, a second phase in january. we continue to monitor both cost issues as well as access to care and we have not noted any access issues thuzz far.

i would say the moratorium has been a useful tool. i believe law enforcement finds it a useful tool as essentially a pause in the program so no new providers enter a geography and bad actors can be rooted out. just as examples of work that we've done we have revoked over 100 home health agencies in miami alone. more than half of those during the moratorium period and 170 revications of ambulance suppliers in texas. >> how do you keep beneficiaries from being affected? particularly with that large number in one location? >> that is absolutely a priority of ours. we started by choosing areas that were very sat rate tot begin with. these are not areas where access to home health services or ambulance services was threatened in any way. even med pack had agreed that both of these provider types as well as the geographies were appropriate to go after. since implementing them we have stayed in constant contact with

the are prevented from being enrollment is very effective strategy. >> thrauch. >> let me run through some

quick questions and we're nearing the end. so the end is near. i want to confirm again the percent of patient files pulled for a r.a.c. audit. you've used the 1% number several times. is that accurate or 1% or less? >> the 1% actually is not just the r.a.c. audits. it's all the post payment audits. >> that's in every category whether they be durable medical equipment, physical therapy, hospitals, labs. in every category it's 1% or less? >> yes. are the aggregate number is less than 1%. >> that's what i'm asking. are there categories that are higher considered more high risk and more pulled in in that category? >> i don't know the answer to that. >> doctor? >> i can't answer the claim question. but in terms of prioritization, we clearly do focus on high improper payment rate areas. guest: that's a requirement of the contractor itself. of the program that we focus on

areas where the improper payment rate is much higher than other areas. so you would expect to see greater portion of audits than say for example durable medical equipment or home health agency services because those are where a lot of improper payments -- >> that's what i'm trying to figure is that category higher than 1% of what's pulled? >> you know, we can look into this but i believe that most of the r.a.c. audits are focused on the part a side. even though that the rate -- the rate of improper payments is higher in durable medical equipment and home health providers but the actual dollar amounts of the improper payments are higher. >> sure. larger bill as well part a is going to be larger than part b and most of the smaller providers. so i would understand that. but it may be large to them. so if you've got a again go back to the physical therapy clinic privately owned fewer patients there it may be a big deal to them to have 2% of their files pulled than it would be to a hospital.

or is this just general overhead. you mentioned as well about good actors in this. the possibility -- and i heard a lot of variances of that to put into maybes, possible. we're look at statements in it for good actors out there. once they've gone through they proved to do well they didn't have a lot of inaccuracies how do we slow down the process so again coming to an entity that set up to do compliance now more than to take care of people? where are we on that? give me the process. >> sure. so one solution that's been proposed is to lower the volume of medical record that could go to a provider that in previous requests has had a low denial or overpayment determination rate. that i think is a good idea. we've heard it from a number of sources and we are implementing that approach in our next round of r.a.c. contracts precisely so that providers that have been audited that have done

well and shown that they're following the rules will face fewer dauds and lower volumes going fourd forward. >> is that less frequency or grabbing a smaller number of files? they're coming just as often maybe doing just half of 1% or rather 1% or coming every two years? >> i would have to confirm. i know that the volume per audit will be decreased but i have to confirm if the frequency would also be. >> i would recommend both are important. especially to part b folks. they're trying to run a business and if they prove to be good actors in this the frequency matters to them when they have to stop obviously the volume that is being withhe would not being paid makes a big difference making payroll but it's also extremely important they're able to focus on their business and not every 60 days 90 days have to stop and do another one if they're following the rules. so i would recommend to you both. has there been a study to look

at the compliance cost for the providers? mr. richie mentioned before around $700 million has been recovered this year is that correct? >> yes. >> do we know what the compliance cost is? >> not to my knowledge. >> most of the regulations out there when they're prom gated there's an estimated compliance cost for the promgation of the rule has to go through based on the number of requirements. the question is do we now know with more certainty what the actual compliance cost is? where would i get that? >> i'm not aware that such a study has been done. we have not done one. >> i'm not aware of it. >> i can look because when it was originally it would have had to be an initial estimate put out at that time as well. i'll pull that and we'll work through that on our side. then last set of questions here on this.

the pause in the r.a.c.'s. we've had a conversation that when there's an intermediary change very typically the old starts losing employees quickly and still maintaining all the audits with fewer staff and that company is leaving. the other company is trying to fire up and get ready so it's very slow but the speed can be the same across that. the old intermediary can't keep up and the new can't keep up and you've got a drag in response time. so my question is can we reduce the number of r.a.c.s? if the authority exists to do that where is the authority to slow down the process to allow us to catch up on this backlog somewhat? so we'll continue to do this but we've got to slow this down. because if we're approaching 1 million files sitting out there with more still