The Evolving Congressional Healthcare Landscape: Outlook Fall 2012/Spring 2013

1. The Evolving Congressional Healthcare Landscape The Evolving Congressional Healthcare Landscape: Outlook Fall 2012/Spring 2013 Kimberly Brandt Chief Oversight Counsel Senate Finance Committee Minority Staff Kimberly Brandt Chief Oversight Counsel Senate Finance Committee, Minority Staff

2. Agenda • Senate Finance Committee Overview • Fraud and Abuse Issues of Note • What to Expect Next

3. Senate Finance Committee: What is it and What does it do?

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 1974. • 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 1974. • Revenue measures relating to the insular possessions. • Tariffs and import quotas, and matters related thereto. • Transportation of dutiable goods.

6. 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. Priorities for 113th Congress Three big policy areas: • Healthcare (PPACA) implementation • Tax Reform • Entitlement Reform

10. Priorities for 113th 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. 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. Fraud and Abuse Issues Are on The Rise

15. Fraud and Abuse Issues Will Be Key Focus in 113th 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.

16. 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 of Medicine issued a report saying that the healthcare system as a whole has over $750B in fraud/waste/abuse

17. Strict Scrutiny from 112th 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

18. 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 www.finance.senate.gov and today releasing more detailed analysis of the recommendations from nearly 150 submissions.

20. 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.

22. Finance Committee White Paper Solicitation • The 5 themes varied across different types of stakeholders. • Most of the papers discussing audit burden were submitted by providers and suppliers (83 percent). • Most of the papers discussing data management were submitted by contractors (58 percent).

23. 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.

24. 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 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?

25. 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)

26. 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.

27. 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.

28. Final Thoughts • Healthcare reform and fraud/waste/abuse will continue to be key issues for the foreseeable future. • Entitlement reform 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.

29. Contact Information Contact Information Kim_brandt@finance.senate.gov 202/224-4515 Kim_Brandt@finance.senate.gov 202/224-4515 Kim_Brandt @ finance.senate.gov 202/224-4515