Statement of Esther "Tess" Canja
Vice President, American Association of Retired Persons
and
Family Member of Medicare Fraud Victim

Testimony Before the Subcommittee on Health
of the House Committee on Ways and Means

Hearing on Health Care Waste, Fraud and Abuse

October 9, 1997

Good morning. I am Tess Canja from Port Charlotte, Florida. As Vice President and a member of the Board of Directors of the American Association of Retired Persons (AARP), I appreciate the opportunity to testify today about fraud and abuse in the health care system.

It is especially significant to me that I am here today - not only because of my role as a representative of AARP - but also because of the personal story I have to share.

MY PERSONAL EXPERIENCE WITH HEALTH CARE FRAUD

My mother, Linda Giovannone, suffered from Parkinson's Disease. In 1994, she was placed in a nursing home where she remained for two-and-a-half years before passing away. Although physically she was severely disabled, mentally she was very alert. As her daughter, I was very involved in her care. Not only did I oversee the providers who cared for her, but I also received her medical bills -- including those from Medicare. I intervened on her behalf, when necessary, with both providers and insurance carriers.

None of her stay in the nursing home, with the exception of the physical therapy she received, resulted in Medicare payments to the facility. However, separate Medicare Part B payments were made to providers who came into the nursing home. It is some of their charges to Medicare that I found troubling.

There are three situations, in particular, that I want to tell you about.

In the first case, my mother's personal physician no longer serviced the nursing home, so she became the patient of the nursing home's new medical director. After receiving notice of three billings to Medicare of approximately $40 each, I asked my mother how she liked her new doctor. Much to my surprise, she had never seen him.

I then decided to check her nursing home medical records for the dates the physician apparently saw her. In the records, there was a notation of "notes on file." I wrote a letter to the doctor suggesting that he had confused my mother for another patient since she had never seen him. I also asked if he could please reimburse Medicare and her supplemental insurance carrier for the amount billed since a mistake had obviously been made.

Soon afterwards, I received a reply by registered mail. The doctor stated that he had indeed seen my mother and that his notes from these visits were on file. By now, I was sure that there would be notes on file and did not pursue the matter further. Shortly, thereafter, he resigned as medical director.

A second situation involved care by a podiatrist. Let me make it clear that my mother did not need podiatry care, nor was it ordered by her primary physician. In addition, I regularly clipped my mother's fingernails and toenails. Yet, on two occasions that I particularly noted, a podiatrist came into the nursing home, clipped my mother's toenails and then billed Medicare for another service that was reimbursable.

The first time this happened, I left word with the nursing home staff that my mother did not need podiatry care. Yet, it happened again. Unfortunately, the second Medicare statement for this service - about $60 -- came in after my mother had died, so I did not pursue the matter further.

The last incident that I would like to share with you began when I received a Medicare statement for my mother's participation in a psychotherapy discussion group. During the time that she was allegedly benefiting from this discussion group, she was unable to speak, and therefore unable to participate. I discussed the situation with the social services director and my mother was removed from the group.

In all three of the situations I described, I believe the Medicare payments made were unwarranted. I can't help but wonder whether some of these may have been conscious acts to defraud the Medicare program.

THE BALANCED BUDGET ACT OF 1997

In discussing my story with the staff at AARP, they informed me that there were several new provisions in the Balanced Budget Act of 1997 that, had they been in place during my mother's nursing home stay, may have helped me during this difficult time, and probably would have saved the Medicare program some money.

For instance, the Balanced Budget Act includes a provision that requires the inclusion of a toll-free number on the Explanation of Medicare Benefits (EOMB) form to report suspected fraud and abuse. AARP staff tell me that the hotline number - 1-800-HHS-TIPS - has actually been in place and operating for several years. Yet, many beneficiaries and caregivers, like myself, have been unaware of its existence. Had this number been printed on my mother's Medicare bills at the time, I would have realized that there was someone I could call to report my suspicions.

Another provision that should be helpful to beneficiaries is one that allows a beneficiary to request from a provider an itemized bill for Medicare services. The provider would have 30 days from the date of the request in which to furnish the beneficiary with an itemized statement. If the statement showed services not provided or other billing irregularities, the beneficiary would then be able to request a review of the statement by the Secretary of Health and Human Services. Requiring providers to furnish itemized statements upon request will not only help the beneficiary - who, in some instances, may be making coinsurance payments for services not received - but will benefit the Medicare program as well if beneficiaries can alert the program to billing irregularities.

The Budget Act also contains a provision that requires hospitals to include information on their discharge planning evaluations that would inform beneficiaries of the availability of Medicare home health services and whether or not the hospital has a financial interest in any such agencies. By informing beneficiaries of the options available to them and the hospital's financial interests, patients will be in a better position to make the best choice for their care.

While the Balanced Budget Act includes a number of provisions that will help consumers participate in the fight against fraud, it also includes a number of provisions that should make it more difficult for providers to scam the system.

For instance, requiring certain groups of providers - such as durable medical equipment suppliers - to post a $50,000 surety bond if they wish to do business with Medicare should help to weed out unscrupulous providers from the legitimate ones. Similarly, requiring providers and suppliers to provide HCFA with their Social Security numbers and employer identification numbers to check for past fraudulent activity should cause scam artists to think twice before setting up business. In addition, requiring providers who submit claims for services provided in nursing homes to list the identification number of the nursing home on their claim form should make it much easier to track --and hopefully deter -- unscrupulous activities.

The budget bill gets tough with fraudulent providers by establishing a "three strikes and you're out" penalty. Any health care provider convicted of defrauding Medicare or any other federal health care program for the second time will be prohibited from participating in any federal health care program for 10 years. A provider who is convicted for a third time will be prohibited from participating in any federal health care program for life.

In addition, the Secretary of Health and Human Services will now have the option to deny participation in the Medicare program to any provider convicted of a felony - medical or otherwise.

Other penalties include excluding from participation in the Medicare program entities controlled by a family member of a sanctioned individual, and imposing new civil monetary penalties on persons who contract with an excluded provider, as well as on health plans which fail to report information on adverse actions required under the health care fraud and abuse data collection program.

AARP is pleased with these new "get tough" penalties. They send a strong message to unscrupulous providers that Medicare will not tolerate those who commit fraud and abuse against the system.

One aspect of the budget bill, however, that may prove to have the greatest impact in reducing the "incentive" to commit fraud is the establishment of prospective payment systems (PPS) for home health care, skilled nursing facility care, ambulance services and rehabilitation services. In particular, the new PPS for skilled nursing facility care should eliminate the incentive to provide unnecessary therapy services, as occurred in my mother's case.

Up until now, it has simply been too easy for providers of these types of care to abuse the system. For instance, some home health care providers have their home offices in high-cost urban centers while maintaining branch offices in low-cost rural areas. Since, under current law, payment is based on where the service is billed and not where the service is provided, some providers have billed Medicare from their urban location where the cost is much higher to provide a service - even if the service was actually provided in a rural area. In addition, the "reasonable cost basis" of providing the service varied greatly from provider to provider, as well as location to location.

The new payment systems should save the Medicare program millions by setting a fixed amount for each service regardless of location, with minor adjustments made for high cost areas. The new law also requires providers to submit claims based on the location of where the service is actually furnished, and not where the main office is located. AARP believes these new payment systems will be a major factor in reducing fraud and abuse.

THE NEED TO EDUCATE CONSUMERS

While the Balance Budget Act of 1997 provides significant legislative resources to aid both enforcement authorities and consumers in the fight against health care fraud, more still needs to be done.

Enforcement authorities - e.g., the Department of Health and Human Services Office of Inspector General, the Department of Justice, the Federal Bureau of Investigation - will continue to need additional financial resources to detect, investigate and prosecute unscrupulous providers.

Consumers, in particular, could be of tremendous assistance to the effort to reduce fraud and abuse if they only had more guidance. For instance, when I discovered irregularities in my mother's Medicare bills, I dealt directly with the providers. I did not notify Medicare of the suspicious billings for two reasons: 1) I didn't know who to call, and 2) I didn't know if it was worth going to the trouble to find out. The amount of the billings was so small compared to the millions I had read about in news reports, I believed at the time that no one would care. But I've begun to understand differently. With the limited financial resources enforcement authorities have, perhaps my phone call alone would not have made that big of a difference. However, my call plus another consumer's call and yet another call may have shown a pattern of abuse by a particular provider, thus triggering an investigation. Consumers need to know that their suspicions matter and that the government cares.

One of the best ways, I believe, to keep Medicare beneficiaries informed is through the new Medicare Summary Notice (MSN). I understand that production of this notice is currently limited to only a few states as a pilot project. Since Florida is one of these states, I am a lucky recipient of the MSN.

Let me begin by saying that the new Medicare Summary Notice is a major improvement over the current EOMB form. Though it is much easier to read and understand, the biggest difference is the information it contains. Not only does it encourage beneficiaries to help stop fraud, it provides examples of the types of fraud we should be looking for.

Consumers need to know how to properly audit their claims and what types of billing irregularities constitute fraud. Many beneficiaries consider the $5 aspirin to be fraud - while it is an extraordinary charge, it's not where consumers' attention should be focused. Rather, what consumers really need to know is what they should be suspicious about - such as double billing, charging for services not performed, or performing inappropriate or unnecessary services. Moreover, many do not know that waiving a Medicare patient's coinsurance is illegal.

Furthermore, consumers need to know how to avoid becoming unwitting participants in a scam. For example, many do not know that they should treat their Medicare or private insurance card like a VISA card. They don't know they should never give their beneficiary number out over the phone when they haven't initiated the call, or to someone who comes to their door, or in exchange for free medical services. They don't know to immediately report their card missing if it is lost or stolen.

If consumers were more aware of the types of fraud perpetrated they would be in a better position to avoid and report them. Yet many remain uninformed of the types of fraud that exist or whom to call if they suspect fraud.

The new summary notice not only helps educate consumers as to what types of fraud exist, but it also provides them - in bold type - with the HHS Inspector General's fraud hotline number: 1-800-HHS-TIPS. One number they can count on to report their suspicions. AARP believes the Medicare Summary Notice should formally replace the EOMB form and be made available beyond the pilot project to all Medicare beneficiaries.

Another problem, from the consumer's standpoint, that I would like to alert you to is the current requirement that providers have up to one year after providing a service to submit a claim for payment from the Medicare program. While this may not be a problem for the provider, at times it can create a problem for the consumer. After a year, it can be difficult for an individual to remember if the services billed were actually received or appropriate. For family caregivers, like myself, it can be difficult to check if a loved one received the services actually billed if an entire year has passed. It is especially difficult, as in my mother's case, if the patient died many months before the claims were received - particularly since the claims reflected services performed the previous year.

One of the biggest problems in involving consumers in the fight against health care fraud is the lack of knowledge they have that anything is being done by the government to root out fraud. Despite the major drive by enforcement authorities in the past few years, a recent survey by AARP indicates that 80 percent of Americans are unaware of any efforts to combat health care fraud. Of those who are aware, nearly one-third believe that such efforts have had no effect.

Consumers do, however, believe that something can be done to reduce fraud and are eager to join in this fight themselves. In the survey, nearly 85 percent said they would be more inclined to report health care fraud if they only knew more about it. Interestingly, though, the survey showed that offering a reward or monetary incentive would do little to increase the likelihood that consumers would report suspected fraudulent behavior. Consumers believe reporting fraud is their personal responsibility.

The public also believes that reducing fraud and abuse will increase the quality of their care and lower their costs, and that more can and should be done to reduce fraud in the health care system. Yet they remain cynical about the government's ability to fight it. The most positive findings in the survey pertain to the strong and nearly universal willingness of individuals to take personal responsibility for doing something themselves about health care fraud, as I tried to do in my mother's situation.

AARP is taking the information learned in this survey and crafting an education campaign to build on the positive attitudes that were revealed and to dispel the myths and misperceptions about health care fraud.

AARP does not see itself as acting alone in designing and implementing such a campaign. The Association plans to work with both the public and private sectors in this effort. Educating Americans about the extent of fraud - and about efforts already underway to combat it - is one of many steps to reducing fraud and abuse. This, in itself, is one aspect to lowering health care costs and increasing the quality of our nation's health care.

CONCLUSION

Mr. Chairman, thank you for inviting me to speak before the Subcommittee today. Clearly, there is a need and a desire for greater public education on health care fraud and abuse. If consumers were aware of the types of fraud being perpetrated, what to look for when reviewing their claims, and whom to call when they suspect fraud, not only would they be able to avoid being unwitting participants in a scam, but they would also become valuable partners in the fight to reduce health care fraud and abuse.

In compliance with House Rule XI, clause 2(g) regarding information of public witnesses, attached is AARP's statement disclosing federal grants and contracts by source and amount received in the current and preceding two years.