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Medicare Fraud Fight Would Be Harmed by House GOP Cuts, CMS Says

By Jane Norman, CQ HealthBeat Associate Editor

February 15, 2011 – Medicare and Medicaid's top fraud buster told a Senate panel that cuts in current year spending proposed by House Republicans would imperil the government's ability to reduce fraud, waste, and abuse in the public health programs.

Peter Budetti, director of the Center for Program Integrity at the Centers for Medicare and Medicaid Services, said that a spending reduction would be a "major impediment" for the agency. New initiatives could not be started and planned enhancements to data systems could not go forward, he said. It would force the government to fall back to a "pay and chase" mode rather than trying to prevent fraud in the first place, he said.

Senators at the Labor-HHS-Education subcommittee hearing also were intrigued by the idea of creating secure, tamper-free ID cards that could be used by Medicare beneficiaries similar to those now used by members of the military.

Sen. Mark Kirk, R-Ill., taking part in his first-ever hearing of the subcommittee, displayed one of the new ID cards issued by the Defense Department and said that they are being used by some 20 million members of the military and, to date, none have been connected to fraudulent use.

The hearing focused on fighting waste and fraud in Medicare and Medicaid, a perennial topic but one that Democratic Sen. Tom Harkin of Iowa, chairman of the subcommittee, said has never been more urgent. Spending on these programs is rising and the nation faces record deficits, Harkin said. President Obama in his 2012 fiscal year budget proposed $581 million in discretionary funds to fight health care fraud and waste.

In fiscal 2009, the subcommittee appropriated $198 million in discretionary funds for fraud prevention and enforcement and that rose to $311 million in 2010, said Harkin. If Congress had passed the omnibus spending bill, it would have risen to $471 million, he said.

"Unfortunately, House Republicans seem determined to undermine these efforts," said Harkin, and a continuing resolution for current-year spending proposed by the GOP would reduce the $471 million omnibus spending level by $160 million.

"That is penny-wise, pound-foolish budgeting," said Harkin, because cutting down on waste and fraud is said by government officials to return $7 to the government for every $1 spent.

In proposing their cuts, Republicans have said it's necessary for the government to pare back spending and it has to begin with the current year.

Budetti said the increased funding has been essential, including paying for regional fraud summits and new computer programs that can help identify complex Medicare fraud schemes. The agency also relies on senior patrols made up of beneficiaries who help identify fraud in their communities.

"Eliminating the problem requires a long-term, sustained commitment," he said.

Tony West, assistant attorney general in the civil division of the Justice Department, said that DOJ recognizes the urgency of fighting health care fraud not just because it wastes money but because it harms the programs' integrity. He said that since January 2009, the civil division, working with HHS, has recovered more than $8.5 billion in health care fraud cases, more than in any other two-year period.

But senators wondered if more accurate identification of beneficiaries might help even more. Kirk, holding up one of the military ID cards, said the Medicare card is outdated. The military "common access" cards, which Kirk said cost about $8 each, include a head shot photo, signature, computer chip and bar codes. "To my knowledge DoD has yet to find a counterfeit version of this," said Kirk. The cost of producing such cards might be offset by the benefits in reducing fraud, he said.

Budetti said CMS is open to the idea and has begun exploring it. "We are in the process of looking into exactly what you just mentioned. Over the years this has been looked at," said Budetti. "The emphasis, in my opinion, has been largely on the costs of switching over. I think it is time, as you mentioned, that we also look at what the payoff would be of doing exactly that and decide whether that is a good investment." He said the Center for Program Integrity recently launched a limited pilot study on the benefits of using card reading technology.

Kirk said that if the government already has 20 million of such cards in use for the military, it should be possible to extend the program to the more than 40 million Medicare beneficiaries. The subcommittee could fund a project on such cards or direct CMS to look into the idea, he said.

Harkin appeared interested, and pointed out Medicare cards are not even used much now other than to supply a provider with an ID number. Budetti said "this would not be a simple overnight change or an inexpensive one" but "it's definitely worth thinking about."

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