State of the Union 2000


January 22, 2000

In his radio address today, President Clinton will highlight the success of the Administration's efforts to combat Medicare fraud and will announce a new initiative to fortify those efforts. In the wake of this week's landmark recovery of over $480 million by the Justice Department in the criminal fraud case against a national Medicare provider, the White House today will release two reports documenting the success of the Administration's current anti-fraud efforts. The reports find that because of the Administration's work: (1) nearly $500 million was returned to the federal government during FY 1999, a 65 percent increase over the previous year, and (2) the inappropriate payment of approximately $5.3 billion in claims was prevented over the past year. The President today will also unveil a new $48 million investment to ensure a swift and coordinated response to suspected fraud, waste or abuse by Medicare contractors.

MAJOR VICTORY THIS WEEK AGAINST FRAUDULENT MEDICARE PROVIDER. On Wednesday, the Department of Justice, together with the Department of Health and Human Services, announced that it had achieved a $486 million settlement with a national health provider that had been bilking the Medicare program. The company at fault had used Medicare and other government health insurance programs to pay for hundreds of needless tests and unnecessary nutritional therapies for patients. In addition, company customers received financial rewards, such as trips to Canada and lavish dinners, for sending patients to certain lab facilities for tests - a violation of anti-kickback statutes. The total settlement amount will be returned to the Federal government over two years.

NEW REPORTS DOCUMENT SUCCESS OF ADMINISTRATION'S ANTI-FRAUD EFFORTS. Today, President Clinton will release a report, prepared jointly by the Departments of HHS and Justice, that documents the success of the Administration's current anti-fraud effort. He also will release a new report by HCFA documenting how program integrity activities have prevented inappropriate payments. Major findings of the reports include:

  • Anti-fraud activities returned almost $500 million to the federal government in 1999. In 1999, the federal government collected $490 million as a result of health care fraud prosecutions. Of that amount, almost $369 million — more than 75 percent of the total — was returned to the Medicare trust fund.
  • Cases are being closed successfully. The number of cases filed and defendants charged in criminal health care fraud cases during 1999 increased 16 percent from the previous year, and the number of defendants convicted during that time period increased by 21 percent.
  • Fraud prevention and program integrity activities are working. HCFA announced today that program integrity efforts prevented an estimated $5.3 billion from being inappropriately paid to providers in the last part of 1998 and the first part of 1999. In addition, a review of Medicare payment error rates showed a 45 percent drop in improper fee-for-service payments, totaling $10.6 billion over the last two years.
  • Fraudulent providers are being locked out of the system. During 1999, HHS barred 2,976 individuals and companies from participating in Medicare, Medicaid, or other federal health programs. These providers had been convicted of health care offenses (such as patient neglect and abuse, kickback offenses and fraudulent billing), or had lost a license to practice, or had committed some other form of professional misconduct.
  • Beneficiaries are protecting Medicare against fraud. In February of 1999, the Administration joined with the AARP to launch an initiative called "Who Pays? You Pay" to educate Medicare beneficiaries about how to identify and prevent Medicare fraud. Since the campaign kick-off, there have been over 300,000 calls to the HHS Hotline (1-800-HHS-TIPS), up from 76,000 calls in 1998.

NEW BUDGET INITIATIVE TO FORTIFY EFFORTS AGAINST FRAUD BY MEDICARE CONTRACTORS. Although these reports demonstrate that the Administration's fraud, waste, and abuse prevention efforts are more effective than ever, more still needs to be done. While Medicare contractors serve as HCFA's front line of defense against fraud, waste, and abuse, too many contractors do not protect the program as they are required to, and this results in payment of billions in inappropriate claims. To address this problem, President Clinton today will unveil a new initiative to fight fraud, waste, and abuse in the Medicare program as part of his FY2001 budget, which includes new legislative authority and invests $48 million to:

  • Improve the consistency and accuracy of Medicare payments. This new initiative will create a team of over 100 financial management specialists, one in the office of every Medicare contractor nationwide. These "fraud-fighters" will ensure a swift and coordinated response to suspected instances of fraud.
  • Implement new financial management computer systems. The FY 2001 budget will invest new funds to develop new financial management computer systems to accurately track payments and prevent claims processors and auditors from defrauding the program.
  • Ensure that Medicare receives the best value for its investments. The budget includes new authority for HCFA to bid competitively for contracting services, to ensure that the most qualified entity, with the most experience auditing and evaluating financial management systems, is hired to manage the flow of Medicare claims and prevent fraud. The budget will also include a new competitive pricing initiative designed to give Medicare more ability to use market-oriented purchasing techniques to buy services.

LONGSTANDING COMMITMENT TO FIGHTING FRAUD, WASTE, AND ABUSE. The new steps the President will take today build on the Clinton-Gore Administration's longstanding commitment to crack down on fraud, waste, and abuse. Since 1993, the Administration's efforts have saved taxpayers more than $50 billion, with the number of individuals convicted of health care fraud increasing by more than 410 percent. The Administration has assigned more federal prosecutors and FBI agents to fight health care fraud than ever before. Since the passage of HIPAA — which created a stable funding source for anti-fraud efforts — nearly $1.6 billion has been returned to the Medicare Trust Fund.

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