New York Health Care Fraud Prevention Summit

Brooklyn, NY
November 5, 2010

Remarks as prepared for delivery

Thank you Peter and Loretta for your tireless work to protect taxpayer dollars and keep criminals out of our health care system

I also want to thank Dean Gerber and the entire Brooklyn Law Community for opening their doors to us today. 

And I am delighted to join my friend and partner in this important effort, Attorney General Eric Holder, to welcome everyone to today’s summit.

A little less than a year ago, Attorney General Holder and I came to Brooklyn to announce the expansion of our Medicare Fraud Strike Force operations. That day last December marked another step in what has become a steady and determined effort to stamp out fraud from our health care system.

The previous spring, May of 2009, President Obama asked Attorney General Holder and me to lead a new effort to target fraud and protect taxpayer dollars.

So together, we created a new Health Care Fraud Prevention and Enforcement Action Team, which we call HEAT – an unprecedented partnership bringing together Cabinet-level leaders from both departments to share information, spot trends, coordinate strategy, and develop new fraud prevention tools.

In January, we came together in Washington to host the first ever National Health Care Fraud Summit – convening government, law enforcement, providers and private insurance companies for the first time ever to share their best strategies for preventing and prosecuting fraud.

From there, we’ve taken this partnership on the road with a series of regional health care fraud summits.

This summer we went to South Florida and Los Angeles – regions where the high cost of Medicare fraud has weighed heavily, not just on countless individual victims and the local economy, but on our entire health care system.

Today, we’re back in Brooklyn. At the end of the month we’ll be in Detroit and there will be more regional summits to follow. We will continue building on the progress we’ve made working with patients to protect their information, working with providers to strengthen screening standards, and working with private insurers to share strategies about how to prevent fraud.

Earlier this year, we created a new center for Program Integrity at the Centers for Medicare and Medicaid Services led by Peter Budetti.

And we gave Peter some help when we passed the new health care law, the Affordable Care Act, which is secretly one of the strongest fraud prevention laws in American history. 

With this law, we’re making it easier for law enforcement officials to see health care claims data from around the country in one place, combining all Medicare-paid claims into a single, searchable database.

And we’re getting smarter about analyzing those claims in real time to flag potential scams, the same way your credit card company raises the alarm when they see unusual charges on your card.

We’re also targeting overpayments, which can be an appealing target for criminals.

For example, recent studies have shown that Medicare currently pays three to four times the amount paid by commercial insurers for certain medical supplies.

As a consequence of outdated government fee schedules, Medicare spends $3,600 for a power wheelchair that costs the supplier about $1,000. We pay $6,200 in rent over 36 months for an oxygen concentrator that costs the supplier less than $600.

So the Centers for Medicare and Medicaid Services is aggressively moving forward with a program that establishes competitive bidding among medical equipment suppliers. In the first round, businesses in nine areas around the country that want to work with Medicare beneficiaries must submit bids that  Medicare will use to set the amounts it pays for certain durable medical equipment, prosthetics, orthotics and supplies.

This week CMS awarded the new contracts and beginning in January, Medicare’s payments for supplies like wheelchairs and hospital beds in these nine regions will be more in line with market prices. Eventually, the program will extend nationwide.

This kind of competition is projected to create an average savings of 32 percent – or about $28 billion dollars in lower out-of-pocket costs for consumers and lead to surer footing for the Medicare program over the long run. 

And because all suppliers in the competitive program also have to meet strict customer service, quality and financial standards and be accredited by a Medicare-deemed national accreditation organization, it will be harder to simply hang up a shingle and start submitting claims.

Once they come in line with the rest of the market, those big payments will look a lot less like a big jackpot for criminals.

New initiatives like these will help. But the best defense against fraud is educated consumers.

You just saw the new television ad that we’re rolling out across the country asking everyone to stay wary and watchful, ask questions, and keep track of their medical bills and payments. 

In addition to US Attorney Ortiz and Special Agent Hackney, the ad also features two members of our Senior Medicare Patrol, Stan Cohen and Diane Caradeuc who are working in their communities, giving their friends and neighbors the tools to recognize, resist, and report fraud.

Across the country, more than 5,000 volunteers like Stan and Diane have already helped return more than $100 million to the trust funds over the years, creating a powerful deterrent for anyone thinking about trying to rip off seniors.

Today, we are also hosting events at senior centers across New York City, reaching out to Latino, Korean, and Russian communities to highlight the work that everyone can do to help fight fraud.

And with a $9 million grant recently announced to strengthen the Senior Medicare Patrol, we’re empowering even more seniors to protect themselves and their Medicare.

So, our law enforcement community, which now has new resources and better tools, is even stronger when it has seniors on its side looking out for fraud. And they’re stronger still when they work closely with health care providers.

As they care for patients in need, physicians stand on the frontlines of our health care system.

They work at that crucial intersection where patient, payer, vendor, and other physicians all come together. And that role comes with significant ethical and legal responsibility. Together, we want to make sure all physicians are trained and prepared to meet that responsibility from day one.

Our department’s Inspector General recently conducted a survey of all accredited medical schools and institutions offering physician residency and fellowship programs.

He found that, despite no Federal requirement, more than four out of ten medical schools reported providing instruction to students on Medicare and Medicaid fraud and abuse laws.

And more than two-thirds of institutions offering residency and fellowship programs reported teaching compliance with Medicare and Medicaid fraud and abuse laws.

That’s good news, but the survey also showed that nearly every single respondent is interested in finding additional tools and guidance in order to strengthen the instruction they provide.

So we’re doing our part:

Everyone here should have their own copy of a green packet titled “A Roadmap for New Physicians.” This program is going out to medical schools across the country and it explains the laws that apply to physicians so they can comply with federal law, avoid liability, and spot the signs of potential fraud.

Like investigators, and Medicare beneficiaries, we need physicians to be full partners in our effort to keep our health care system strong.

A lot has happened since we were here in Brooklyn a year ago.

We’ve put new tools in the hands of law enforcement agents. We’ve engaged new partners and incorporated some of their best strategies raised at summits just like this one.

We’ve made more arrests and recovered millions more in taxpayer money.

And what all of that means now, here in Brooklyn and across America, is that Medicare fraud is a lot harder to commit: More people are paying attention. They are better prepared, and better equipped. If you try, you’re even more likely to get caught; and when you do get caught, you’re going to pay the price. The risk is higher and the reward is far smaller.

I am exceptionally proud of the progress we’ve made. But we’re just getting started. And I look forward to seeing what ideas come out of your discussions.

I’d now like to introduce a great defender of the American people and our partner in fighting health care fraud, Attorney General Eric Holder.  Attorney General Holder…