DOCUMENT RESUME Oz-47 - (A1732734J [Proposed Legislaticn to Strengthen the Capability of the Government to Detect, Prosecute, and Punish Fraudulent Activities under the Medicare and Medicaid Programs]. HRo-77-65; B-142983. March 10, 1977. 7 pp. Report to Rep. Harley O. Staggers, Chairman, House Committee on Interstate and Foreign Commerce; by Robert F. Seller, Acting Comptroller General. Issue Area: Law Enforcement and Crime Prevention (s00); Health Programs (1200). Contact: Human Resources Div. Budget Function: Law Enforcement and Justice: Federal Law Enforcement and Prosecution (751); Health: General Health Financing Assistance (555). Organization Concerned. Department of Health, Education, and Welfare. Congressional Relevance: House Committee on Interstate and Foreign Commerce. Authority: Social Security Amendments of 1967, sec. 229 (P.L. 90-243). Social Security Act. H.R. 3 (95th Cong.). H. Rept. 90-544. S. hept. 90-744. Several revisions would improve H.R. 3, 95th Congress, the purpose of which is to strengthen the capability of the Government to detect, prosecute, and punish fraudulent activities under the Medicare and Medicaid programs. Findings/Conciusions: Sections 3 and 8 of the bill, which relate to the disclosure of ownership and financial information and disclosure, by providers or owners convicted of certain offenses, should be conformed to apply to the same programs since they appear to be applicable to many of the same providers and organizations. Section 5, which rela'.es to changes in the Professional Standards Review Organizations (PSROs), should be modified to include a statement that the General Accounting Office has access to all PSRO records for the purpose of any audit, investigations examination, analysis, review, or evaluation authorized by law ,ilth respect to titles V, XI, XVIII, cr XIX of the Social Security Act. This section should also be modified to require the annual report to Congress on the DSRO program to report the results of PSRO effectiveness assessments that were made by the Department of Health, Education, and Welfare and the actions taken or proposed to be taken to improve the effectiveness of the PSROs so assessed. Section 11 of the proposed legislation should merely prohibit Federal sharing in State Medicaid expenditures which result from State laws or contracts which exclude or limit insurance benefits because an individual is eligible for Medicaid. (SCI -- 14298: VAR MAR 1· W 1O.177 -The Honorable Barley 0. Staggers Chairman, Committee on Interstate and Foreign Commerce House of Representatives Dear Mr. Chairman: This is in response to your letter dated February 24, 1977, requesting our comments on H.R. 3, 95th Congress, the purpose of which is to strengthen the capability of the Government to detect, prosecute, and punish fraudulent activities under the Medicare and Medicaid programs, and for other purposes. Our comments on E.R. 3 follow. Sections 3 and 8 -. Disclcsure of Ownership atl, Financial Information and Disclosure rD Providers of Ownerl Convicted oi Certain Offenres These two sections appear to be closely related. They would apply to many of the same providers and organizations participating in one or more of the programs authorized by the various titles of the Social Security Act. However, section 3 applies to programs established under titles XVIII (Medicare), XIX (Medicaid), and V (Maternal and Child Health and Crippled Children's Services) while section 8 applies to programs established under titles XVIII, XIX, and XX (Social Services). Thus, each section applies to a title not included in the other section. The rationale for the differences in the titles to which the two sections apply is not clear to us since the provisions of both sections appear to be applicable to many of the same providers and organizations. Therefore, we suggest tnat sections 3 and 8 be conformed to apply to the same programs. Section 8(e) sets the effective date of the provisions relating to disclosure of criminal convictions of owners of providers. Section 8(e) states that tnese provisions apply to contracts, aareerents, and arrangements entered into and approvals aiven to applications or requests made after the first oay of the fourth month after enactment. Many providers, particularly institutional providers, nave aoreements with HR.D-7 I - B-14298 3 the programs which do not terminate until terminated by one of the parties. Many of these providers must be periodically recertified as eligible to participate in the program but do not necessarily apply for or request recertification. Be- cause of these circumstances, it is possible that providers currently participating in one or more of the programs, whose present or future owners ate subsequently convicted of an applicable crime, might not have to disclose this fact to the Secretary. Therefore, we suggest that section 8(e) be modified to include language requiring disclosure at the time of recertification. Section 5 - Amendments Related to Professional Statndards Review Organization1 Section 5(b)(2) would amend section 1154 of the Social Security Act to allow the Secretary to extend the conditional designation of a PSRO for an additional period not to exceed PSRO has been un- 24 months if he finds that the conditional requiLed able to satisfactorily perform all of its duties and functions. On June 17, 1976, in a letter to the Secretary, Be questioned the legality, of HEW plans to extend the coindi- tional status of a PSRO beyond the existing legislatively mandated maximum 24-month period. This amendment would legalize the action taken by HEW in June 1976 to extend th, conditional status of 14 ?SROs beyond the 24-month period. The intent of section 5(b)(2) appears to be to allow condi- tional PSROr additional time in which to dL;elop so that they can meet requirements and be certified as qualified PSROs. Presumably, under present law, if the Secretary could not designate a PSRO as qualifieu after 24 months in conditional status, he would have to terminate the agree- ment with the PSRO and begin the selection process again. take However, the law is silent as to the action HEW should 24 months if a PSRO cannot be designated as qualified after as a conditional PSRO. Tne proposed amendment is also silent as to what should be done after the 24-month extension. As pointed out above, HEW decided to extend tne period of conditional status of 14 PSROs when their 24-month conditional period expired in June 1976. We believe that the law should address the issue of what action HEW should take if, after the 24-month extension, the Secretary cannot aesignate a PSRO as - 2- B-142983 qualified and we suggest that section 5(b)(2) be modified accordingly. Such a modification could prevent BEW fror continuing a PSRO in conditional status for a numbe: of years without it ever becoming aualified and fully meeting the intent of the PSRO legislation. Section 5(e). would amend the Social Security Act to make it clear that PSRO determinations regarding the medical necessity of services and the appropriateness and quality of medical servicers shall be final and binding on the Medicare and Medicaid programs. We believe that section 5(e) will clarify the existing PSRO legislation and emphasize the need to prevent duplication of PSRO review activities by organi- zations and agencies administering the Medicare and Medicaid programs. If section 5(e) is enacted, providers and program recipients would retain their hearing and appeal rights con- cerning PSRO determinrations while the Federal and State Governments would have to accept these determinations and could not overrule them. Since the States fund a substantial portion of their Medicaid programs, many of them nave expressed concern about having to accept PSRO determinations. In an effort to ease this concern, HEW has issued proposed recula- tions allowing the States and Medicare intermediaries ay-, carriers to utilize a monitoring system to evaluate condi- tion&l PSRO effectiveness and communicate their findings to ahe Secretary for his action. We believe that authority for such a monitoring system should be formalized in the law to make it clear that that course is available to the States ab a method of ensuring that State funds are properly expended. Section 5(i) would nmend the Social Security Act to clarify t.ie types of information PSROs can disclose and-the agencies to which the information can be disclosed. This section authorizes the Secretary (li to recognize Federal and State agencies responsible for identifying and investi- gating fraud and abuse under the act and agencies responsible for health planning'and (2) to establish the types of informa- tion PSROs should provide to these various agencies. During our study of the PSRO program, we have encountered some resistance from PSROs in providing us access to the records we need to evaluate tne efficiency, economy, and effectiveness of the program. The PSROs and HEW are apprenensive about pro- viding GAO witn medical records which identify any patient, physician, or nospital. We believe it-is necessary for GAO to B-142983 have access to all of the records of PSROs in order to fulfill our responsibilities to the Congress. Therefore, we suggest that section 5(i) be modified to include a statement-that the Ge:neral Accounting Office has access to all PSRO records for the putpose of any audit, investigation, examination, analysis, re- view, or evaluation authorized by law with respect-to titles V, XI, XVUII,-or XIX.df the Social Security Act. Al.o, such a moiudfication should make clear that the sanctions appli;.cable .u the improper disclosure of PSRO data by agencies receiving such data would also apply to the General *Accounting Office except for referrals of any possible cases of illegal activity to tnose Federal and State agencies recognized by the Secretary as having responsibility for identifying and investigating cases or patterns of fraud and abuse. Section 5(1) would amend the Social Security Act by adding a section which describes the types of information which must be i:ncluded in the Secretary's annual report to the Congress on the PSRO program. We believe that section 5(1) should be modi- fied to include a requirement to report the results of PSRO effectiveness assessments tiat were made by HEW and the actions taken or proposed to be taken to improve the effectiveness of the PSROs so assessed. This wo.ld provide the Congress with addi- tional information on the effectiveness of the PSRO program. Section 11 - Medicaid as Pavor of Last Resort Section 11 of B.R. 3 would add section 1902(a)(38) to the act which would require a State's Medicaid plan to provide that no expenditure would be made under the plan for care or -services' which another party would have been obligated to pay under a State law or a contract, except that the State law or the con- tract liblits or excludes payment for care or services covered by Medicaid and provided to Medicaid eligibles This proposed provision could have the effect of the State Medicaid plan overruling or at least conflicting with a Stace law or a con- tract. -In addition, if a State cnhooses r:ot to have such a conflict, the failure to include the provision re4uired by proposed section 1902(a)(38) in the State Medicaid plan could have the effect of precluding Federal participation in the' entire Medicaid program Decause tne Secretary could not approve the plan. - 4- B-142983 We believe it would be preferable to include such a provision in section 1903, which deals with Federal payment. to Statest prohibiting Pederal sharing in expenditures for care or services which meet these circumstances. Tnis would -eliminate tile possibility tnat a State plan would be required to be in conflict with a State law and also eliminate the possibility that a'State's inability to comply with the provi- sion would prevent the Fecretary from approving the State's Medicaid plan. Our concerns in this area are based on information de- veloped in a review of HEE and State compliance with rec- tion 1902(a)(25) of the Social Security Act, which we expect to report on shortly. Section 1902(a)(25) requires that State plans must provide that the Etate or local agency administering the Medicaid program take ali reasonable measures to ascertain the legal liability of third parties to pay for care and services provided to Medicaic recipients. The section &asorequires that where the State or local agency knows 'chat a third party has such a legal liability, the liability will be treated as a resource of the individual receiving Medicaid benefiLs. In addition, when third party liability is found to exist after Medicaid benefits have been provided, the State or local agency must seek reim- bursement to the extent of such liability. Section 1902(a)(25) of the Social Security Act was added by section 229 of the Social Security Amendments of 1967 (Public Law 90-248). The legislative history of the law, as contained in the reports of the Bouse Committee on Ways and Means (H.R. Report No. 90-544, August 7, 1967) and th-e Senate Committee on Finance (S. Report No. 90-744, November 14, 1967) indicates that the Congress did not want the Medicaid program to pay for the cost of medical care necessitated by injury or illness for which someone else was obligated to pay. Thus, we believe it was in- tended that liable third parties would be the primary resource for medical payments for eligible recipients and that Medicaid would be used when other resources were not available, or were exhausted. However, we have identified instances where States have allowed Medicaid to De treated as the primuary resource -for payments in lieu of insurance companies. Section 11 of H.R. 3 essentially seeks to address such situations. For example, Hawaii nas a no-fault automobile insurance law which provides that no-fault medical benefits be aid secondarily to public assistance ,aws. As a result, the 5 B-14298 3 automobile medical insurance coverage in not treated as a liable third party in BHawaii, and Medicaid is considered as the primary resource. Bawaii's no-fault motor vehicle insurance statute was- enacted in 1974 and provided, in essence, that a person who is injured Ln an automobile accident is entitled to payment and for the cost of his or her medical care, rehabilitation,The other benefits up to a maximum of $15,000 per person. State, however, had not taken steps to collect no-fault in- .surance benefits applicable to automobile accident victims :who received Medicaid services on account of their injuries. Because the 1974 law did not clearly exclude the availa- bility of no-fault coverage to Medicaid recipients, we ques- tioned this practice. The Office of the State Attorney General, in March 1976, advised us that to guarantee that public assistance recipients obtain no-fauJ;. coverage as required by the State law, the State Legislature required that insurers provide policies to welfare recipients at no cost. In exchange for this free coverage, the legislature intended that benefits undcr the no-fault policies would be secondary to benefits available under the Social Security Act. According to the State Attorney General, the 1974 State law was not an attempt to substitute Medicaid for exist- ing insurance liability because if the State, through Medicaid, had not continued to assume responsibility for medical care to welfare recipiepn-sr the no-fault insurance contract would probably not nave existed. Apparently to resolve the problems raised by our questions, the Hawaii Legislature, in hay 1976, enacted a bill which amended the no-fault insurance law as it relates to public assistance re- cipients. In essence, Lne State law now specifically provides -that the medical coverage under no-fault insurance is not applicable to recipients of public assistance. In addition to the Bawaii situation, we noted that in Oklahoma, the State Insurance Commissioner ias approved health ..-- insurance policies which contain a provision that limits the insurance Zompanies' liability to the amount not paid by Medicaid. Because the practice of States excluding or limiting third- party coverage for individuals eligible for public assistance can blunt the impact of HEW's recent initiatives to maximize 6- B-1429 83 costs, we support -third-party pavments and to redu)ce Medicaid our understanding section 11 of i.R. 3 as a reaffi.rmation of third parties'rather of the congressional intent that liable primary resource for than Medicaid De considered as the medical costs. excluding Medi- Bowever, because State laws and contracts not.De appropriate would caid eligibles exist, we believe it plans to conflict to require States to modify their Medicaid We believe that if with such existing laws and contracts. the position that the Committee wants to clearly establish resort, it would be >Medicaid is to be the payor of last sharing in State Medi- preferable to merely prohibit-Federal laws or contracts caid expenditures that result from State which exclude or limit insurance benefits because an individual is eligible for Medicaid. 11 of the bill We also note that the language of section law or contract could be :suggests the possibility that a State a direct reference to a limitation or -drafted that would avoid is eligible for or receives exclusion bcause an individual be accomplished by care under a Medicaid plan. This could on entitlement to benefits basing the limita:ion or exclusion Act Programs such as Sup- under other related Social Security Families with Dependent plemental Security Income or Aid to the language on line 17 Children. Therefore, we suggest that "contract which has page 35 be revised to read as fellow;: such obligation because the effect of limiting or excluding *s ** * p I trust that these commentsonwill be of assistance to the H.R. 3. We would be happy Committee in its deliberations specific changes in to work with you or your staff to develop -the bill zeflecting our comments. Sin rely yours';"' atdh Comptroller General of the United States
Proposed Legislation to Strengthen the Capability of the Government to Detect, Prosecute, and Punish Fraudulent Activities under the Medicare and Medicaid Programs
Published by the Government Accountability Office on 1977-03-10.
Below is a raw (and likely hideous) rendition of the original report. (PDF)