4/23/2013. Senate Finance Committee Overview Healthcare Priorities for 113 th Congress Fraud and Abuse Issues Final Thoughts

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1 The Evolving Congressional Healthcare Landscape Kimberly Brandt The Evolving Congressional Healthcare Chief Oversight Counsel Landscape: Outlook Fall 2012/Spring 2013 Senate Finance Committee Minority Staff Kimberly Brandt Chief Oversight Counsel Senate Finance Committee, Minority Staff Agenda Senate Finance Committee Overview Healthcare Priorities for 113 th Congress Fraud and Abuse Issues Final Thoughts Senate Finance Committee: What is it and What does it do? 3 1

2 Public Opinion of Congress A Public Policy Polling survey released in mid January showed that 9 percent of the public held a favorable opinion of Congress, while 85 percent held an unfavorable view. Congress is less popular than cockroaches, root canals and colonoscopies, On the bright side, Congress came out of the survey in higher standing than gonorrhea, the Kardashian family, and actress Lindsay Lohan. 4 Senate Finance Committee Chairman Max Baucus (MT) and Ranking Member Orrin Hatch (UT) 24 total members including Chair and Ranking Member (13 Ds and 11 Rs) One of the most powerful committees in Congress: Oversees over 50% of Federal budget Confirms over 80 Presidential nominations 5 Finance Committee Jurisdiction All proposed legislation, messages, petitions, memorials, and other matters relating to the following subjects: Bonded debt of the United States, except as provided in the Congressional Budget Act of Customs, collection districts, and ports of entry and delivery. Deposit of public moneys. General revenue sharing. Health programs under the Social Security Act and health programs financed by a specific tax or trust fund. National social security. Reciprocal trade agreements. Revenue measures generally, except as provided in the Congressional Budget Act of Revenue measures relating to the insular possessions. Tariffs and import quotas, and matters related thereto. Transportation of dutiable goods. 6 2

3 Finance Committee Jurisdiction of Department of Health and Human Services Centers for Medicare & Medicaid Services [Medicare Parts A & B; Medicare Advantage (Part C); Medicare Drug Program (Part D); Medicaid; Children s Health Insurance Program (CHIP)] Administration for Children and Families (w/health, Education, Labor and Pension Committee) [TANF; Child Welfare Services; Child Support & Paternity; JOBS program; Foster Care & Adoption Assistance; Maternal & Child Health Title XX Social Services Block Grant Program; Child Care and Development Block Grant; Independent Living Program; Promoting Safe and Stable Families] National Institutes of Health and Food and Drug Administration where there is crossover with items covered by Medicare/Medicaid Office of the Inspector General 7 Finance Committee Activities Related to Department of Health and Human Services Legislative Hearings Markups and approval of legislation such as the Patient Protection and Affordable Care Act (PPACA) and the Sustainable Growth Rate (SGR) or Doc Fix Oversight Hearings Fraud, waste and abuse issues Implementation of PPACA Confirmation Hearings Secretary of HHS CMS Administrator Inspector General of HHS 8 Changes in Composition Senators Conrad, Bingaman, Kyl and Snowe have all retired and Senator Coburn opted not to stay on Committee. Senator Kerry became Sec. of State. They were replaced by Senators Brown (OH), Bennet (CO), Casey (PA), Isakson (GA), Portman (OH) and Toomey (PA). 9 3

4 Priorities for 113 th Congress Three big policy areas: Healthcare (PPACA) implementation Tax Reform Entitlement Reform 10 Priorities for 113 th Congress Several Key Nominations: CMS Administrator hearing held Treasury Secretary hearing held, confirmed HHS and IRS General Counsels hearing held IRS and SSA Commissioners waiting on nominees US Trade Representative waiting on nominee 11 Senate Finance Investigations: Physician Owned Distributorships (PODs) Report on PODs issued by Finance Committee Minority staff in June 2011 and letters to CMS and OIG were sent by Senators Baucus, Hatch, Grassley, Kohl and Corker asking them to look at issues related to PODs. Concerns related to proliferation of business models that seemed to put personal profit first and patient safety and/or Medicare program solvency second. 12 4

5 PODs, Cont. OIG letter from Senators asked them to examine sufficiency of legal guidance on this issue. OIG responded stating they felt their legal guidance was sufficient, but agreeing to do a study looking at POD activity. Letter to CMS requested that PODs be included in any reporting and transparency requirements promulgated in final Sunshine regulations. CMS included PODs in both proposed and final Sunshine rules. 13 PODs, cont. Over past 18 months, staff from Finance and Aging Committees have met with dozens of stakeholders on this issue and listened to compelling arguments both pro and con POD. On March 26, 2013, OIG issued a Special Fraud Alert concerning PODs concluding that the arrangements were inherently suspect and that to ensure they were legally viable would require strict scrutiny. Still waiting on study from OIG 2013 Work Plan regarding billing for spinal fusion surgeries and PODs. 14 Healthcare Priorities in the 113 th Congress 15 5

6 PPACA Issues Still at Forefront Focus shifting from repeal and replace to targeted repeal (CLASS Act eliminated in end of year and others like IPAB are targets). Expect continued efforts to defund d parts of PPACA most recently over $1 billion cut from exchange related Co-Op loan program in fiscal cliff deal. Numerous ongoing oversight efforts related to PPACA provisions. 16 PPACA Implementation: Exchanges 33 states in federally facilitated and state partnership exchanges, 18 state/dc run exchanges. Key Issues: timeliness, data transmission, security of data, enrollment outreach and education, cost of premiums, state and federal readiness. Will insurers play? What premiums will they charge? Will people sign up for the exchanges even if the premiums end up being higher? Will CMS be ready to go live on 10/1/13? 17 PPACA Implementation: Costs Administration budget proposal states that $5.8 billion will be spent from setting up state based exchanges. HHS needs an additional a $2 billion for the federal exchanges in The amount to run the state-based exchanges is more than double what the administration estimated a year ago. 18 6

7 PPACA Implementation: Regulatory Oversight High level of interest in the regulations being promulgated as a result of PPACA. Focus on transparency of regulatory process, economic o c and operational o a burdens associated with implementation, and role Congress should play in regulatory process. Regulatory reform and regulatory burden issues will continue to be area of focus. 19 PPACA Implementation: Medicaid Issues Closely watching Medicaid expansion related to PPACA state burden, cost implications Medicaid/exchange c a enrollment e issues: many had hoped for a single application and eligibility process for both Dual Eligible Issues especially related to PAPCA implementation for as many as 9 million duals cost, potential for abuse 20 PPACA Implementation: Delivery Reform Accountable Care Organizations (ACOs): will they control costs better and by how much? HHS says over 250 ACOs covering about 4 million Mcare recipients. Some evidence shows shift to ACOs happening faster than expected, but no real proof yet that ACOs are able to control costs. 32 health systems participating in Pioneer ACO program threatened to quit program in late February saying that the metrics used to calculate their bonuses are too strict. 21 7

8 PPACA Implementation: Health Technology HHS has given states more than $3.5 billion in grants to build the technology infrastructure to operate health insurance exchanges. IRS and HHS systems are technologically insufficient and at least $300 million is needed this year to ensure the IRS system is ready to meet basic needs for exchanges. 22 PPACA Implementation: Meaningful Use and Electronic Health Records One year delay until early 2014 to reach the next stage of meaningful use of electronic health records (EHRs). Delay represents ese a second tactical ca retreat eat by the Administration on EHRs. The first was that they largely removed the requirement for ACOs to use EHRs. Cost implications of this are huge, compliance will be an issue 23 Entitlement Reform In response to mounting concern about the nation s rising debt and deficit, discussion about spending reductions in mandatory yprograms, such as Social Security, Medicaid, and Medicare are on the table. Vastly different approaches put both by each party. Each set of these proposals recommends reducing the growth in Medicare spending over time. 24 8

9 Entitlement Reform, cont. Medicare is now projected to run out of money in 2024, five years earlier than last year's estimate. The Social Security trust funds are projected to be drained in 2036, one year earlier than the last estimate. Once the trust funds are exhausted, both programs can only collect enough money in payroll taxes to pay partial benefits. 25 Entitlement Reform: Why Is It Such a Big Issue? They serve a lot of people (48 million on Medicare this year and an estimated 69 million on Medicaid during 2011, including 9 million people covered by both programs, known as dual eligibles). They deliver benefits people greatly value. Their beneficiaries often have political clout, especially Medicare beneficiaries because seniors are much more likely to vote than the rest of us are. 26 Physician Payment Issues Key issue for Members of Congress on both sides of the aisle as Congressional Budget Office has said it will cost $330 billion over 10 years to fix. Lots of potential solutions, but no clear answer as to how to solve the doc fix issue. Got patched once again in fiscal cliff deal, but agreement is permanent fix needed. 27 9

10 Competitive Bidding for DME House legislation introduced last Congress to repeal the CMS DME competitive bidding program citing concerns that the program would push small businesses out of the marketplace and diminish seniors quality of care. CMS delayed the originally scheduled start date for round two of the competitive bidding program for durable medical equipment for six months, until the summer of Winners just announced late March Fraud and Abuse Issues Are on The Rise 29 Fraud and Abuse Issues Will Be Key Focus in 113 th Congress Focus will be on: Implementation of health reform anti-fraud provisions, Additional budget need for anti-fraud initiatives; and Administration efforts to reduce improper payments

11 Why so much focus on F/W/A? It is where the money is estimates are that as much as $60B in fraud alone exists in the Medicare/Medicaid programs Last fall the Institute tute of Medicine e issued a report saying that the healthcare system as a whole has over $750B in fraud/waste/abuse 31 Strict Scrutiny from 112 th Congress Demands for detail on program integrity resource spending Concerns over appropriate measures for predictive analytics Requests for information on PSC/ZPIC performance and evaluation Demands for greater transparency around CMS communications with providers, especially physicians Concerns about provider enrollment process, and application of ACA suspension/moratoria authorities Finance Committee White Paper Solicitation In May 2012, six Members of the Senate Finance Committee (Baucus, Hatch, Carper, Coburn*, Wyden and Grassley) issued a call for white papers from the health care community asking for Fraud/Waste/Abuse ideas. *Sen. Coburn has since left the Finance Committee. Received nearly 200 submissions over 2000 pages of paper! Released high level summary of submissions in January available at and today releasing more detailed analysis of the recommendations from nearly 150 submissions

12 34 Finance Committee White Paper Overview The May 2012 solicitation letter requested input from stakeholders in three areas: program integrity reforms, payment reforms, and enforcement reforms. Most stakeholders did not differentiate between program integrity and payment reforms. Based on our review of the 146 white papers, we identified the following five broad themes: improper payments, beneficiary protection, audit burden, data management, and enforcement. 35 Figure 2: Frequency of Recommendations by Topic Areas and Contributing Stakeholders Beneficiary Improper Payment Audit Burden Enforcement Data Management Topics Protection Number of papers with recommendations addressing topic Numb ber of white papers Other Contractors Beneficiary Advocacy Groups Anti Fraud Entities Suppliers Providers/Insurers Percent of papers with recommendations addressing topic 76% 39% 24% 24% 22% 36 12

13 Finance Committee White Paper Solicitation The 5 themes varied across different types of stakeholders. Most of the papers discussing audit burden were e submitted by providers and suppliers (83 percent). Most of the papers discussing data management were submitted by contractors (58 percent). 37 GAO Request on CMS Audits A bi-partisan, bi-cameral group of 12 Members of Congress requested that GAO conduct a study of the various Medicare audits being conducted by CMS (RACs, MACs, ZPICs, and CERT). Does not include Medicaid at this time. Goal is for GAO to assess the efficiency and effectiveness of CMS audit process. 38 GAO Request, cont. What process does CMS use to determine whether the contractors audit criteria and methodologies are valid, clear and consistent? How does CMS coordinate among these contractors t to ensure they are not duplicative? Are providers subject to multiple audits and, if so, how frequently does that occur? Does CMS have a strategic plan to coordinate and oversee all of the audit activities and, if so, how is the plan implemented and overseen? 39 13

14 PPACA Implementation: Program Integrity Provisions CMS has not implemented or is not using several key tools from PPACA: Moratorium authority Mandatory compliance programs Ordering and referring (set to go live this summer) Surety bond requirements are not being enforced (OIG report showing virtually no enforcement of surety bond requirement and minimal collections) 40 Reducing Improper Payments Congress exercising vigilant oversight in ensuring CMS is reducing improper payments. Administration had set goal of reducing Medicare improper payments by 50% by July 2012 this was not met. Error rates are still high 70% and above for certain DME. Efforts to fight fraud are also tied to improper payment reduction as it puts more money back into the Medicare trust fund. 41 Data Issues Still Top Concern Implementation of CMS Fraud Prevention System and how effective it is in deterring fraud, waste and abuse has been focus of Members. Eliminating barriers to sharing data and exploring ways to better consolidate and mine data are top priorities for many Members

15 Final Thoughts Healthcare reform and fraud/waste/abuse will continue to be key issues for the foreseeable future. Entitlement tte e t reform eo and budget issues will also shape the debate. Next two years are going to be very active and unpredictable, but could end up having a significant impact on the healthcare system as a whole. 43 Contact Contact Information Kim_brandt@finance.senate.gov 202/ Kim_Brandt@finance.senate.gov finance.senate.gov 202/ /