“While the majority of healthcare providers are honest and well-intentioned, a minority of providers who are intent on abusing the system can cost taxpayers billions of dollars,” said Morris in prepared testimony. “Healthcare fraud schemes commonly include billing for services that were not provided or were not medically necessary, purposely billing for a higher level of service than what was provided, misreporting costs or other data to increase payments, paying kickbacks, and/or stealing providers’ or beneficiaries’ identities.”


The perpetrators of these schemes, said Morris, range from street criminals, who believe it is safer and more profitable to steal from Medicare than trafficking in illegal drugs, to Fortune 500 companies that pay kickbacks to physicians in return for referrals.


Morris told the committee that healthcare fraud was not “limited to blatant fraud by career criminals and sham providers.” He said major corporations such as pharmaceutical and medical device manufacturers and institutions such as hospitals and nursing facilities have also committed fraud, sometimes on what he described as a “grand scale.”


“Waste of funds and abuse of the healthcare programs also cost taxpayers billions of dollars. In fiscal year (FY) 2009, the Centers for Medicare & Medicaid Services (CMS) estimated that overall, 7.8 percent of the Medicare fee-for-service claims it paid ($24.1 billion) did not meet program requirements,” Morris told the committee. “Although these improper payments do not necessarily involve fraud, the claims should not have been paid. For our part, OIG reviews claims for specific services, based on our assessments of risk, to identify improper payments.”


Morris reported that an OIG audit uncovered $275.3 million in improper Medicaid payments (Federal share) from 2004 to 2006 for personal care services in New York City. As another example, an OIG evaluation of payments for facet joint injections (a pain management treatment) found that 63 percent of these services allowed by Medicare in 2006 did not meet program requirements, resulting in $96 million in improper payments.


“Combating healthcare fraud requires a comprehensive strategy of prevention, detection, and enforcement,” said Morris. “Based on this experience and our extensive body of work, we have identified five principles of an effective healthcare integrity strategy.”


The integrity strategy includes what Morris described as five principles. These include the following:


1. Enrollment: Scrutinize individuals and entities that want to participate as providers and suppliers prior to their enrollment or reenrollment in the health care programs.


2. Payment: Establish payment methodologies that are reasonable and responsive to changes in the marketplace and medical practice.


3. Compliance: Assist health care providers and suppliers in adopting practices that promote compliance with program requirements.


4. Oversight: Vigilantly monitor the programs for evidence of fraud, waste, and abuse.


5. Response: Respond swiftly to detected fraud, impose sufficient punishment to deter others, and promptly remedy program vulnerabilities.


“The Affordable Care Act includes provisions that reflect these program integrity principles and that we believe will promote the prevention and detection of fraud, waste, and abuse in the healthcare system,” said Morris. “Provisions in section 6402 of the Affordable Care Act will enhance OIG’s effectiveness in detecting fraud, waste, and abuse by expanding OIG’s access to and uses of data for conducting oversight and law enforcement activities.”

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