▶ 0:16:26Good morning. The subcommittee on oversight and investigations will now come to order. The chair now recognizes himself for five minutes for an opening statement. Welcome to today's hearing. Entitled common schemes real harm. Examining fraud in medicare and medicaid. Recent criminal prosecutions and continued allegations of fraud in the state of minnesota's medicaid and other benefit programs have shone a spotlight on how vulnerable these programs are. Americans are outraged.
▶ 0:16:56Any amount of waste, fraud, or abuse of resources and taxpayer funds is too much. But it's particularly alarming when it happens on a scale as large as what's being uncovered in minnesota. What's happening in minnesota's medicaid program is critical and worth discussing, but it is just the tip of the iceberg. Medicare and medicaid fraud is common.
▶ 0:17:22It's happening nationwide, and it has been egregious for decades. Some estimates place annual medicare and medicaid fraud losses at $100 billion annually. This is only a conservative estimate, because fraud can only be accounted for if it's detected. The government accountability office placed medicare on its inaugural high risk list in 1990, and has remained there ever since.
▶ 0:17:49Medicaid has also joined medicare on the high risk list. In 2003. The department of health and human services office of the inspector general has also sounded the alarm on the unsustainable rate of waste, fraud and abuse. We have to adjust and address this issue. Here are just some of the examples of the fraud schemes that we are seeing today in these programs.
▶ 0:18:14In new york, an adult daycare owner defrauded medicaid over $68 million through illegal patient referral, kickbacks and bribery schemes. In arizona, a man based in pakistan and united arab emirates allegedly billed arizona medicaid $650 million in a fraud scheme targeting the homeless and native americans seeking substance abuse treatment.
▶ 0:18:42In another case last year, seven defendants across arizona and nevada were charged in connection with an alleged $1.1 billion medicare fraud scheme for medically unnecessary amniotic wound allografts, commonly known as skin substitutes. And just a few weeks ago, a florida laboratory owner pleaded guilty to a $52 million in medically unnecessary genetic tests billed on behalf of medicare beneficiaries.
▶ 0:19:12In all of these cases, patients suffer from unnecessary, inadequate or a complete lack of medical care. In other cases, patients are unknowingly victims of identity theft or misleading marketing practices perpetrated by these fraudsters. And as highlighted in one of the above examples, nation states and oversee criminal gangs are also targeting medicare and medicaid.
▶ 0:19:41Recent medical criminal indictments and convictions show the trend is getting worse and exemplify the scale of the fraud. It has been said that healthcare fraud is becoming easier and more lucrative than the illicit drug trade. Patients will suffer if these healthcare programs cannot continue on responsible fiscal paths. It is our duty in congress to protect these programs for our most vulnerable americans.
▶ 0:20:06American taxpayers place hundreds of billions of dollars into medicare and medicaid. We must do better to protect these programs from fraud that is draining them of billions of dollars annually. We applaud law enforcement efforts that investigate fraud and prosecute fraud.
▶ 0:20:26But we can save more, more money by detecting and preventing fraud before it even occurs, rather than paying and chasing funds after they have already been dispensed to the criminals. The increased focus on this subject from doctor oz, the administrator of cms, has also been an important improvement over the previous administration. I want to thank our witnesses for being here today. Your knowledge about this important topic will help us understand the challenge of medicare and medicaid.
▶ 0:20:56As our witnesses will testify today, these are real, legitimate fraud schemes. With that, I now recognize our ranking member of the subcommittee, miss clark, for her opening statement. >> thank you very much, Mr. chairman. And good morning, everyone. If we really want to get serious about fraud, the administration needs to stop terrorizing our communities.
▶ 0:21:24Red line after red line has been crossed by this administration. First, rene good was shot and killed by a federal agent while out protecting her neighbors. Instead of investigating her killing, steven mary miller, secretary noem and vice president vance claimed that rene was carrying out domestic terrorism.
▶ 0:21:42Then alex preddie, who worked as a va icu nurse, was shot multiple times and killed by two federal agents while he was protecting a woman that officers had shoved to the ground. Secretary noem called him a domestic terrorist, and steven miller called him an assassin. This past week, journalist don lemon and georgia forte were arrested just for reporting on a protest at a church.
▶ 0:22:10Several protesters were also arrested in the white house. Not content with merely arresting, these individuals even released an altered photo of one of them to make it appear as if she was crying. An individual in ice custody sustained eight skull fractures that ice officer said were caused by running into a wall, but medical officials said that the patient's injuries could not have been caused by running into a wall.
▶ 0:22:38I said that another man who died in ice custody was attempting suicide and staff was trying to save him, but we learned later from his autopsy that he was actually suffocated when he was held down by guards in a detention facility. It's it is lie after, lie after lie from this administration, and it is only getting worse. Our children are not safe.
▶ 0:23:03Uh, a five year old boy was used by federal agents as bait to lure out members of his family and community from their house. The other day, children in portland were tear gassed while participating in a peaceful protest. And it's not just happening in cities. Recent video from rural minnesota show masked federal agents pulling in front of the vehicle of an observer, getting out with guns drawn and aiming them at the driver. That's just a sampling of the ha's that we've seen.
▶ 0:23:35And these are only the ones that we know about because brave citizens have been out there on the streets recording. I can only imagine how many more abuses are happening away from the cameras. No one is exempt from the tyranny of this administration. And any of my colleagues who think they or their constituents are somehow immune from this administration's flailing cruelty. Better wake up quickly because it could be your community next. Now, what does all this have to do with fraud?
▶ 0:24:06Don't ask me. Ask attorney general bondi, who has justified the continued presence of federal agents in minnesota minneapolis due to the existence of fraud in that state? In a letter she sent on january 24th, attorney general bondi tried to extort minnesota by seeking voter data and other sensitive records in exchange for relief from federal terror.
▶ 0:24:31And in doing so, she referenced the letter sent by community committee republicans in investigating fraud in minnesota. It was truly a dark day when this committee's reputation is used to justify the oppression of american communities. Our country was founded by people who stood up to the tyranny of a mad king across the ocean. But now the tyranny and madness is coming from inside the house, specifically the white house.
▶ 0:25:02We have seen image after image and video after video of outrageous abuses, any of which could have scandalized any other administration. But for this administration, there's clearly no bottom and totally inability to feel shame. I can assure you that when democrats are back in charge, we will not sit by silently while the president runs roughshod over the constitution and the american people. And to the people of minnesota and other communities who are living in fear.
▶ 0:25:30I want you to know that on my side of the aisle, we hear you, we see you, and we will keep fighting for you. With that, Mr. chairman, I yield back the balance of my time. >> thank you. The chair now recognizes the chairman of the full committee, Mr. guthrie, for five minutes for an opening statement. >> thank you. Uh, thank you, chairman joyce. I appreciate you for holding this hearing. And I really appreciate our witnesses being here today.
▶ 0:25:58Today's hearing sounds the alarm on the tremendous loss of taxpayer dollars to fraud and the real consequences for patients, providers and the public trust. Together, medicare and medicaid provide health coverage to more than 140 million americans, including seniors, people with disabilities, low income families, pregnant women and children. These programs are lifelines, not abstract budget figures.
▶ 0:26:26When they are exploited and plundered, americans lose access to care, confidence in the system, and resources intended to improve those health outcomes. Each year, tens of billions of dollars are lost to fraud, waste and abuse. But financial loss is not only the consequence of these fraud schemes.
▶ 0:26:43When providers billed for services never rendered, or criminals fled medicare or medicaid with fake claims, the system becomes harder to oversee, less responsive to legitimate patients, and financially unstable. Health care costs rise for everyone, and trust in these critical programs erode. Operation gold rush illustrates the growing scale of the problem. This recent nationwide enforcement action by the department of justice was the largest health care fraud takedown in history.
▶ 0:27:16This operation targeted several health care fraud schemes, leading to criminal charges against 324 defendants in 50 federal districts and 12 state attorneys general offices across the us. The various schemes involved over one, excuse me, $14.6 billion in intended loss.
▶ 0:27:3629 of those defendants were charged for their roles in transnational criminal organizations that use stolen identities of over 1 million americans, spanning all 50 states, to submit over 10 billion in fraudulent claims to medicare for durable medical equipment that patients never ordered or received. Many seniors learned that their medicare or other personally identifiable information had been compromised only after being denied legitimate care.
▶ 0:28:05This is not an administrative error. It was organized crime exploiting our nation's health care programs. We must ensure taxpayer dollars are used for quality health care, not siphoned off by criminal enterprises. Republicans took steps in this and h.r. One, and we must continue the effort to preserve medicare and medicaid for those who need these programs. I look forward to hearing from our witnesses. I appreciate you all taking the time to be here today. And with that, Mr.
▶ 0:28:34Chairman, I appreciate this hearing, and I will yield back. >> thank you. The chair recognizes the ranking member of the full committee, Mr. pallone, for five minutes for an opening statement. >> thank you, Mr. chairman. As anyone who has been around long enough knows, fraud is a very real persistent challenge. Fraud happens in both red states and blue states, but the word fraud has unfortunately become a convenient excuse for republicans to just do just whatever they want.
▶ 0:29:00Their solution to combating elusive claims of fraud in medicaid was cutting millions of americans off of their health coverage, and instead giving money to companies like deloitte to push eligible beneficiaries off the medicaid rolls. Republicans big, ugly bill is cutting $1 trillion from our health care system, while also stripping health care away from 15 million americans and closing hospitals and nursing homes all around the nation. And now fraud is being invoked as a justification for federal agents terrorizing communities.
▶ 0:29:32The trump administration is using claims of fraud in state programs, including medicaid, as an excuse to recklessly deploy department of homeland security. Dhs officials from immigration and customs enforcement, ice and customs and border protection in minneapolis, minnesota. But it has become clear that this was purely a pretext for the administration to continue targeting the states and cities. President trump views as political adversaries.
▶ 0:29:55Instead of providing assistance to minnesota and other states in protecting federally funded programs from waste, fraud, and abuse. The trump administration has mobilized to take drastic, punitive measures that do nothing to harm the bad actors that perpetrate waste, fraud, and abuse, and instead harm the people who count on these programs for their health care and their livelihood. In december, the department of homeland security began operation metro surge in minnesota with the alleged purpose of cracking down on fraud and illegal immigration.
▶ 0:30:27Since that time, two innocent minnesotans, rene good and alex petty, have been shot and killed by federal agents, and countless more have been terrorized and traumatized. Rene good was shot multiple times, and federal agents on the scene refused to allow a doctor who was on site to administer first aid. Rather than investigating the shooting, the department of justice instead pushed prosecutors to investigate rene good and her widow. At least 14 federal prosecutors, as of today have resigned in protest. All told, the minnesota U.S.
▶ 0:30:56Attorney's office, which handles these fraud cases or prosecutions, is at half its strength. Alex was an icu nurse who worked at a va hospital. Video shows he was trying to assist and protect a woman who had been shoved by an agent when he himself was tackled by multiple agents and then shot by two of them. These are two lives lost in a matter of weeks, due to the unjustified invasion of federal forces into an american city, on the pretext of addressing fraud, and the republicans on this committee are complicit.
▶ 0:31:27Last month, attorney general the attorney general bondi sent a letter to minnesota governor tim walz seeking to extort sensitive health and voter data in exchange for federal forces withdrawing. In her letter, she cited to an investigation by committee republicans as a justification. Now, the department of homeland security operations in minneapolis must cease immediately for the safety of all, and a thorough, independent investigation must be conducted into these two murders.
▶ 0:31:54It's also time for the trump administration to begin work with the states and communities that investigate and prosecute fraud, instead of providing assistance to minnesota and other states in protecting federally funded programs from waste and abuse. The trump administration has mobilized to take drastic, punitive measures that do nothing to harm the bad actors. As I've said before, it's also, after all, when it comes to taking real, productive steps to prevent and punish fraud. The republicans fail to do so.
▶ 0:32:23Committee republicans have ignored our request for a hearing to examine trump's firing of at least 17 inspector generals, including the inspector general of the department of health and human services. Inspector generals are the very people who work to prevent and detect fraud and abuse in our federal agencies, and republicans have silently stood by as trump fired 17 of them. Now, republicans also refused to join us in raising concerns when dodge pushed out career staff at the hhs office of the inspector general.
▶ 0:32:50And they haven't said a thing about trump continuing to pardon criminals who were convicted of medicare and medicaid fraud. If you want to get serious about waste, fraud and abuse, start with president trump and the harm he's doing to our nation. His federal agents are laying waste to our communities. His actions are making fraud worse, not better. And he is abusing his authority every day. And with that, Mr. chairman, I yield back the balance of my time. >> the gentleman yields. That concludes members opening statements.
▶ 0:33:18The chair would like to remind members that pursuant to the committee rules, all members written opening statements will be made part of the record. We want to thank our witnesses for being here today and for taking time before to testify before the subcommittee. You will have the opportunity to give an opening statement, followed by a round of questions from members. Our witnesses today are jessica guay, vice president and co-founder, integrity advantage. Kailyn wooten, president, national association of state medicaid fraud control units.
▶ 0:33:49Steven nuckles, chief executive officer, coastal carolina healthcare, the treasurer and former board chair of the national association of accountable care organizations. And jessica tilghman, government contracts advisory council distinguished professor, lecturer in government contracts, law practice and policy at the george washington university law school. We appreciate all of you being here today, and I look forward to hearing from you.
▶ 0:34:15You're aware that this committee is holding an oversight hearing, and when doing so, has the practice of taking the testimony under oath. Do you have an objection to testifying under oath? Seeing no objection, we will proceed. The chair advises you that you are entitled to be advised by counsel pursuant to house rules. Do you desire to be advised by counsel during your testimony today? Seeing none, please rise. Raise your right hand.
▶ 0:34:43Do you promise to tell the truth, the whole truth and nothing but the truth, so help you god? Seeing the witnesses answered in the affirmative. You are now sworn in and under oath, subjected to the penalties set forth in title 18, section ten 001 of the united states code. With that, we now recognize miss gay for five minutes to give an opening statement. >> chairman john joyce. Chairman. Guthrie.
▶ 0:35:12Ranking member. Pallone. Ranking member. Clark. Members of the subcommittee. Thank you for having me here today. My name is jessica gay. I'm currently the vice president and co-founder of integrity advantage and the president of the maryland chapter of certified fraud examiners. For over 15 years, I've partnered with more than 60 payers across medicare, medicaid, commercial plans, chip programs, conducting fraud, waste and abuse detection, analysis, and investigations.
▶ 0:35:38The health care industry is about $5.3 trillion spent in 2024, and we estimate as high as $500 billion of that is fhwa. We process nearly 30 million claims a day across well over 1000 payers, with varying rules, coverage determinations, and data elements. Oversight of this magnitude is bound to need attention. Fhwa is not a victimless crime.
▶ 0:36:01Unnecessary services expose patients to real medical risk, while fraudulent billing drains resources intended for those who legitimately need it. Patient harm occurs through unnecessary or unsafe for the sake of reimbursement. Overall, patients suffer in reduced access and we are the patients. The taxpayers are also the patients, you know, in this scenario, payers, we're paying for it twice.
▶ 0:36:24We're paying for the fhwa that is on top of the already big spend, as well as the rising costs for our individual health care and the honest providers whose reputation suffer as fraud undermines the trust of our health care system. Common schemes in this area, some of which were already addressed, include. Advanced or applied. Excuse me, behavioral analysis services. These are a huge issue across medicaid fraud.
▶ 0:36:50And we see missing records, completely unqualified staff billing that is inconsistent with authorizations, treatment plans that are not tailored to these member's needs and excessive services. Non-emergency medical transportation continues to be an issue as well. We have trips to nowhere, inflated mileage, and upcoding to higher services. Home and community based services also continue to be a big issue.
▶ 0:37:11We see falsified state authorizations, round the clock services for low acuity diagnoses, including hypertension, and billing for one on one when delivering care to many patients in one home. Laboratory services and genetic testing continue to be a problem. We mentioned skim substitutes, which is really a highly targeted area due to excessive units. I've seen payments for secondary payers up to $30,000 for one member, and that's after medicare already paid their portion. Uh, dme continues to be an issue.
▶ 0:37:42These are not isolated issues to one state or one payer. They are discussed consistently across national platforms and anti-fraud forums. Of course, we have a lot of challenges and anything this big and we could do better. Uh, some of the things that I would recommend is a look at policy. I would invite fraud professionals to the table as we design policy and we think about benefit coverage, uh, we have a different perspective. We tend to think about the holes as a fraud professional.
▶ 0:38:07Uh, but generally we see inadequate state, federal and plan level policies that result in inconsistent and unenforceable coverage rules. Uh, we need to strengthen our frameworks with clear coverage guidelines and federal defaults. In the event that states or plans lack sufficient definition. We need resources. And I'm not just talking people, whether that's people, process technology, things are changing and the fraudsters are winning. We need to keep up with that. And we need some collaboration there.
▶ 0:38:34And and therefore efficiency between the state, the federal, the commercial players, uh, whether that's through data and joint investigations. And for those that know me, I'm just bringing up data as the last point. But data is a big issue in healthcare fraud. We have complicated data and poor data, uh, criteria in general. It's very inconsistent and hard to understand with limited visibility into provider credentialing, sanctions, and improved tracking of rendering personnel. Healthcare harms patients.
▶ 0:39:02It undermines legitimate providers, it drains taxpayer resources and increasingly funds sophisticated criminal networks with stronger policy, better technology, and enhanced collaboration, we can significantly reduce the waste and protect the integrity of our health care system. I'll give you my time back. >> thank you, miss wooten. You are now recognized for five minutes for your opening statement. >> Mr. chairman. Chairman. Guthrie. Ranking member. Clark, ranking member, pallone.
▶ 0:39:31And members of the committee, thank you for this opportunity to testify. My name is caitlin wooten, and I am testifying as president of the national association of medicaid fraud control units, known as nafcu. I also serve as director of the medicaid fraud control unit in utah, or mfcu. And with me today are vice president f edward kirby, who also serves as the director in north carolina, and barbara zellner, executive director of nafcu.
▶ 0:40:01Chairman joyce, you recently said insuring medicaid program integrity is critical to preserving access to vital health care services for those that need it most. Every dollar stolen from the medicaid program by fraudsters is taken from children, pregnant women, the elderly and people with disabilities. We agree medicaid fraud control units are state based law enforcement agencies established in the late 1970s to address these exact concerns.
▶ 0:40:29Our two fold mission is to investigate and prosecute fraud committed by providers against the medicaid program and resident or patient abuse, neglect, and misappropriation of patient funds. To address these problems, mafucci utilized both criminal and civil enforcement actions. The actions are often filed in state courts, but mafucci attorneys may be cross designated as special assistant U.S. attorneys or spouses and prosecuted in federal court.
▶ 0:40:57As a salsa, I value the opportunity to partner closely with the U.S. attorney's office and federal agencies such as oig, fbi, dea, and others who investigate health care fraud. State program integrities are also critical for identifying and referring provider fraud cases, and numerous state partners refer cases of abuse and neglect. At times, mfcu cases overlap with cases of abuse and neglect.
▶ 0:41:26For example, a mfcu receives a referral for allegations of neglect and an investigation shows that the resident was indeed neglected. It would not be complicated in that scenario to charge an aide or a nurse for the direct care, for lack of care for that resident, but have to dig deeper nowadays and hold higher level staff accountable for funds being shuttled off to profits rather than resident care.
▶ 0:41:54Understaffing so prevalent that employees cannot provide adequate care and other schemes. Only through these complex cases are we able to hold the real perpetrators accountable and improve nursing home conditions. I have been a registered nurse since 1984. It was not until late in life that I became an attorney and started working for a mfcu. At first, I believe that providers must have gotten into health care for the right reasons, and then gone astray and committed fraud.
▶ 0:42:24While that is likely true for some defendants, what we are now seeing is far more sinister. Companies are being created for the purpose of committing fraud. For example, last year the directors in the western region met to share fraud schemes and collaborate on ways to combat fraud. Through these conversations, we learned of a substance use disorder fraud that started in nevada, where multiple people were convicted. Then it moved to arizona.
▶ 0:42:51In in arizona, those providers could not treat patients because they had been excluded by oig. So instead, they taught others how to commit fraud. Uh, arizona has charged and convicted many people there, but as we met, we realized it's unusual. Unusual when we have open criminal investigations to share the name of fraudsters or potential defendants. But we became aware that this environment is now different.
▶ 0:43:19We became aware that it was the only way to get on top of these schemes is to be able to collaborate more openly. As a result, we have collaborated and now have open cases in numerous states. In utah, we have six open cases with the same parties that were involved in arizona and nevada. Nam fuku o nam fuku creates this a bipartisan forum for all to collaborate and train staff how to identify and prosecute fraud.
▶ 0:43:47Nam fuku has also coordinated a large number of multi-state federal investigations since 92. These cases have resulted in over $12 billion to the medicaid program. The return on investment is invaluable.
▶ 0:44:02In march of 25, hhs oig published the medicaid fraud control unit annual report and reported a total of 1151 convictions, 1042 individuals excluded from federal programs, 493 civil judgments totaling 1.4 billion. Again, chairman joyce and committee members, thank you for this opportunity to testify, and we are proud to be part of the efforts aimed at solving these problems. >> thank you, Mr. knuckles.
▶ 0:44:32You are now recognized for five minutes for your opening statement. >> chairman. Guthrie, chairman john joyce ranking member, pallone, ranking member, clarke and members of the subcommittee. Thank you for the opportunity to testify today. My name is steven knuckles, and I serve as the chief executive officer of coastal carolina healthcare, an independent, physician led practice in eastern north carolina. I'm also a board member of the national association of acos.
▶ 0:44:56I view fraud, waste, and abuse through two lenses as a rural medical practice where fraudulent billing disrupts patient care and as an aco, accountable for both costs and quality. Fraud is not an abstract budget problem. In operation gold rush, authorities stopped a transnational scheme that used stolen identities and purchased dme companies to bill 10.6 billion in fraudulent claims. Medicare largely did not pay, but coordination of beneficiary protections fell short.
▶ 0:45:25Here are the consequences. First, direct patient harm when fraudulent claims appear in a beneficiary's record, legitimate, medically necessary items can be delayed or denied because coverage appears to be exhausted. For example, one of our patients needed a therapeutic diabetic shoes, but medicare records showed shoes had already been provided by an out of state supplier, which our patient never received. The supplier was no longer operational, and the patient ultimately had to pay out of pocket for the shoes. That is the harm.
▶ 0:45:54Legitimate care denied because fraudulent billing contaminated the record. Second, increased cost to the health care system. When cms follows department of justice guidelines and pays suspected fraudulent claims into escrow while an investigation proceeds, supplemental insurers are required to pay those claims. The operation gold rush indictment indicated that medicare supplemental insurers paid roughly $900 million to dme companies involved.
▶ 0:46:21Those costs are passed along to beneficiaries to hire supplemental insurance premiums. Third, hindering the growth and adoption of value based care and acos. Acos are charged with improving quality while managing total cost of care. Yet, in traditional medicare acos and treating clinicians do not have the same practical tools that medicare advantage plans use to prevent fraud, such as prior authorization, prepayment review, and supplier controls.
▶ 0:46:50Instead, acos operate a pay and chase environment. We can identify and report suspected patterns, counsel patients, but we often see the same. Billing continues for months with no visibility into enforcement.
▶ 0:47:03This uncertainty is especially serious for acos in two sided risk, where we repay cms if spending exceeds the benchmark provided my practice is in the 100% risk aco reach track in 2025, we identified 6.3 million in suspected fraudulent dme claims from six companies and our arizona market. These claims were more than $1,000 per beneficiary per year. That's triple triple the national average for dme from just a few years ago.
▶ 0:47:33Yet we don't know if these claims were paid, held in escrow or whether we will be held financially responsible for them. That uncertainty undermines confidence in the model and discourages participation in value based care. And if organizations like ours are forced to exit, we would have to end successful programs that have rooted out fraud, reduce wasteful spending, and likely our community average over time would revert back up and would roughly increase 25% in our market even after operation gold trust gold
▶ 0:48:04Rush fraud continues to harm medicare beneficiaries, acos and taxpayers. My written statement highlights several ways where my colleagues at other acos have seen ongoing fraud over the past year, including concerning spikes in durable medical equipment, billing and misuse of skin substitutes to improve coordination and beneficiary protection. After detection, we recommend the following.
▶ 0:48:25First, close the reporting feedback loop, acknowledge reports, provide case status and notify impacted acos and secondary payers when high confidence fraud is detected. Second, create rapid notification and beneficiary friendly record correction process. Third, strengthen dme supplier integrity. One simple way to do this would be to require surety bonds as a way to accomplish this.
▶ 0:48:53Lastly, hold acos harmless for fraud outside their control by excluding fraud, waste and abuse from expenditures. Acos are willing to reduce wasteful spending and to deliver better care. But we need timely information and aligned accountability so that fraud is stopped before it harms patients and those trying to do the right thing. Thank you. >> thank you, Mr. knuckles. Miss tubman, you are recognized for five minutes for your opening statement.
▶ 0:49:23>> thank you, chairman joyce, ranking member clarke, chairman, guthrie, ranking member, pallone and members of the subcommittee. Thank you for the opportunity to testify today. My name is jessica tillman. And in addition to leading the government procurement law program at gw law school, I also teach a course on anti-corruption and compliance. I begin every semester with a simple reminder no system is immune to misconduct.
▶ 0:49:47And when programs are large, complex, and responsible for trillions in public spending, the risk of abuse increases. That understanding shapes the oversight architecture of medicare and medicaid. These programs assume misconduct will occur and are designed with multiple layers. To address this persistent challenge, inspectors general, the government accountability office, the department of justice, whistleblower incentives and state fraud control units overlap by design.
▶ 0:50:19That structure avoids a single point of failure and creates multiple detection and enforcement channels to give the government the best chance at preventing, detecting and mitigating fraud. But redundancy only helps to deter fraud when three other conditions are present, the oversight bodies coordinate, they have stable capacity, and they are credibly independent. When any one of those breaks, the system becomes slower, more fragmented and easier to exploit.
▶ 0:50:47The evidence shows the system can deliver results when it is appropriately resourced and coordinated. Last year, the false claims act recovered $6.8 billion, more than 5.7 of which was from health care and the 2025 national healthcare fraud takedown. 324 defendants were charged in schemes involving alleged intended losses exceeding $14 billion. Those results reflect important enforcement work, but they also illustrate a reoccurring pattern.
▶ 0:51:16We tend to focus public attention on episodic, high profile surges. Those surges can be valuable, but they do not substitute for the routine controls that prevent everyday losses. In my experience, many of the most important solutions are, frankly, not that glamorous. Robust data infrastructure, risk based screening and verification practices, and the implementation of open gao and ig recommendations.
▶ 0:51:45That is also what sustains public confidence, because people trust systems that apply rules consistently and do the basics well. With that frame, I want to highlight three areas where the system remains particularly vulnerable. First, there are well known verification gaps in enrollment and prepayment screening programs must balance access and program integrity. The solution must be risk based, stronger front end controls where feasible, and targeted post payment tools when they're not.
▶ 0:52:15Technology is also part of that verification story. Advanced analytics and ai can strengthen detection and verification, but only with strong data infrastructure, transparent governance and meaningful safeguards. But the same tools that help in the fight against fraud can also be used against it. In the 2025 national healthcare fraud takedown, doj charged defendants who allegedly used ai generated audio to fabricate beneficiary consent, underscoring how quickly bad actors adapt.
▶ 0:52:44Second, some services are harder to validate because they lack the built in controls of facility based care. Telehealth has no physical presence. Home health occurs in private homes. Durable medical equipment is shipped directly to patients. In these settings, a single encounter may generate multiple claims, and verification is increasingly more difficult. Third, managed care distributes program integrity responsibility across states and plans.
▶ 0:53:11More than 70% of medicaid beneficiaries receive care through managed care arrangements. When responsibility is diffuse, accountability depends on clear referral pipelines and feedback loops. Audits have flagged gaps in referrals, coordination and follow through, and those gaps are not confined to any one state. These vulnerabilities highlight a deeper oversight challenge.
▶ 0:53:37Fraud, waste and error are often treated as interchangeable, but they are not. Fraud is a legal conclusion requiring proof of intent. Recklessness can trigger false claims act liability. Improper payments may result from documentation gaps or administrative error. Each of these issues is important, but each requires a distinct remedy. When every error is labeled fraud, we risk misdiagnosing the problem in applying the wrong solution. I'll close with this.
▶ 0:54:04Medicare and medicaid already have robust oversight structures. The question is whether those structures are functioning as designed. Deterrence requires redundancy, coordination, stable capacity, and credible independence. Thank you. I look forward to your questions. >> I thank you all for your testimony. We will now move to questioning. I will begin and recognize myself for five minutes. Mr.
▶ 0:54:28Nuckles beyond durable medical equipment, ill intentioned providers are increasingly turning a profit by ordering expensive wound care supplies, also known as skin substitutes. Why are skin substitutes vulnerable to fraud and abuse? >> that's a great question.
▶ 0:54:47Um, I think the main reason that we've seen so much fraud in this is the large profit margins that providers have make when they utilize these products under the fda clearance. Um, the prices are not set by medicare. Uh, and they have increased substantially. We in the aco community have brought this issue, uh, up to cms and to others for multiple times. We've asked for local coverage determinations, uh, to come in on this.
▶ 0:55:15Uh, the good news is that secretary oz has a decisive, uh, program that he implemented for starting january 1st. And from the industry observers that I've talked to and other providers, I believe this problem is solved. >> so you referenced that what happened, uh, january 1st was moving to skin substitutes to have a flat rate with the goal of reducing the fraud that had driven the high costs.
▶ 0:55:39Again, can I ask you for the record to reiterate, do you believe that this reform will reduce fraudulent or excessive billing for these services, for skin substitutes. >> will absolutely reduce it, and I believe it will eliminate it. >> miss gay, are there fraud, waste and abuse risks in state medicaid programs and providers are allowed to self-attest to becoming a ruled. >> I do believe um.
▶ 0:56:06>> I will say most of my experience is not working directly with the states, but with managed care organizations and medicare advantage plans. Um, but I do think that there needs to be additional oversight in our self-reporting across the board for eligibility, both for provider participation as well as member eligibility. >> do you think that there's increased risk of fraud in state medicaid programs that provide services that are billed hourly, such as personal care services or adult daycare? >> absolutely.
▶ 0:56:36>> new york's consumer directed personal assistance program is under scrutiny, due in large part to the increases in spending and the lack of provider oversight in cdphp. Individuals hire their own caregivers, including immediate family members, that are paid through a fiscal intermediary to provide assistance with daily living activities. In one case, a man signed up to be a personal caregiver for ten relatives to get away with this scheme.
▶ 0:57:05This man's brother posed as their mother, a recipient of medicaid, home care services herself, and other welfare benefits. However, there's a little detail that was missed. She lives in bangladesh and she lived in bangladesh. Bangladesh for the entire time. This man was eventually caught and convicted for his crimes. Miss gay, are you aware of other state medicaid programs with similar program design to cpap for personal or home care services? Yes.
▶ 0:57:35What are the issues that you have identified with how this program and the category with that structuring has opened the door to so much overt fraud? >> I think one of the things that that we see that might be helpful. So oftentimes these personal care services are being rendered by somebody that doesn't have an mpi.
▶ 0:57:54And mpi is your national provider id that you are supposed to use to bill, um, when you are if I am setting up care for for my mother, I don't have one of those ids. And that billing goes under a tin for an organization that I might be working with. So there's a discrepancy or a challenge, I guess, in how we look at that. Claims file data. And there's also disparate data sources.
▶ 0:58:16So if I am working through one mco for one member and another mco for another member, they can't see that I'm rendering services to multiple members, nor can they potentially see that it's me individually rendering those services at all. Um, so there really is some some data issues. I think our system was initially more designed for providers and practitioners that were billing services, and now that we're extending those services with good intention, we're creating other limitations in our ability to to fight back.
▶ 0:58:46>> miss wooten, the hhs office of inspector general, has recently begun a targeted review of fraud, waste and abuse in medicaid, non-emergency medical transportation programs. In some cases, we have seen these non-emergent medical transportation providers bill for impossible amounts for the daily service, such as scores of unique trips that cover thousands of miles in a single single day, which we know is unachievable. What aspects of these programs open the door for fraud.
▶ 0:59:17>> and thank you. Because individuals are performing services where they're, you know, you're not in a hospital where there's administrators overseeing the program and knowing if the services occurred. Yet you operate on a basis of trust. And we do see a great deal in the area of non medical or on medical non-emergency transport. We see them billing for group rates or individual rates.
▶ 0:59:41When groups are being transported, we see them billing for um toll fees and other charges that were never incurred. We see ghost trips, patients were never involved and I think it is because they're a one on one type service or one on a small group that it's difficult to oversee. >> thank you. My time is expired. I now recognize the ranking member, miss clark, for her five minutes of questioning. >> thank you very much, Mr. chairman. I want to thank all of our witnesses today.
▶ 1:00:07Your testimony really centers us where we need to be, where we in a climate that we could actually get something done around this. However, federal immigration agents are terrorizing communities and children across this country. Their reports of school busses being pulled over while transporting students and being followed stop after stop to and from school.
▶ 1:00:32Families are avoiding public spaces, keeping their children home from school and missing doctor's appointments. This experience of living in terror as kids can follow children through adulthood. Hard working americans and immigrants are afraid to go to their jobs restaurants, grocery stores, businesses, particularly now in minneapolis, are struggling to make ends meet due to the pervasive fear that has gripped their community.
▶ 1:00:58All of this is due to the actions of an administration trying to justify its brutality, particularly against immigrants and minorities, as a response to fraud. First, on december 31st, 2025, post on a post on truth social, president trump said much of the many minnesota fraud, up to 90%, is caused by people who came into our country illegally.
▶ 1:01:25Low lives like these can only be a liability to our country's greatness. Send them back where they came from. Second, on december 19th, 2025, deputy chief of staff stephen miller appeared on fox news and said we should not be shocked when you import a population whose primary occupation is pirate, then they're going to come here and steal everything we have.
▶ 1:01:54Third, on january 6th, 2026, post on x by the department of homeland security stated the largest dhs operation is happening right now in minnesota. Potus trump and secretary noem have rallied dhs law enforcement personnel to keep americans safe and eradicate fraud. We're not leaving until this problem is solved. I ask for unanimous consent for these three documents. The december 31st, 2025 truth social post.
▶ 1:02:21The transcript segment of the december 19th, 2025 fox news interview, and the stephen miller january 6th, 2026 dhs post on x to be entered into the record. Mr. chairman. >> yes, ma'am. Thank you. >> thank you, miss tillman. One of the things that both you and miss wooten raise in your testimony is the importance of whistleblowers in rooting out fraud.
▶ 1:02:51I'm deeply concerned that whistleblowers will not come forward if they think that the federal government is going to use their allegations as part of an agenda that terrorizes immigrant communities. Why is it important for potential whistleblowers to have confidence that the federal government will use their allegations and evidence to root out fraud, rather than cynically use it to advance a partizan agenda? >> thank you for your question. Um, whistleblower. You need to turn on. Your mic.
▶ 1:03:21>> I think I actually turned it off. Uh, whistleblower instructions or whistleblower regimes depend on, uh, confidence and comfort that when, uh, credible allegations are reported that they'll be kept confidential, uh, that the individual will be secure, uh, and that they believe that a response will be taken in relation to their reporting. So so those are important across the board, whether it's a government employee or it's a private citizen. >> thank you, miss wooten.
▶ 1:03:51Similarly, it is important for whistleblowers to have confidence in the intentions of the federal law enforcement. What happens when that confidence is lost? >> as with any whistleblower, they need to be comfortable coming forward, telling the truth and helping with the issue, not being focused on side issues. And those whistleblowers are vital because they often have inside information, whether they're transnational or not. They they bring in information they may have seen firsthand with the provider, they may have experienced a fraud.
▶ 1:04:20And we need all whistleblowers to feel safe to come in and report those fraud so we can work with them to investigate. >> again, I appreciate all of your expertise, and I thank you for testifying today. I have one last document document to enter into the record. This is the statement from the family of alex pretti, issued after alex was murdered in cold blood in the streets of minneapolis. It says alex was a kind hearted soul who cared deeply for his friends and family.
▶ 1:04:47Also, the american veterans for whom he cared. As an icu nurse at the minneapolis va hospital. Alex wanted to make a difference in this world. Unfortunately, he will not be with us to see his impact. I ask for unanimous consent for this statement to be entered into the record. >> so ordered. >> I yield back. Thank you, Mr. chairman. >> gentlelady yields. The chair now recognizes the gentleman from idaho, Mr. folger, for his five minutes of questioning.
▶ 1:05:17>> thank you, Mr. chairman. And to the panel. Thank you for your input today. I'd like to say that I enjoyed it, but, um, not necessarily enjoys right word, but we need to hear it. And, uh, it's important information. So thank you. Question for Mrs. gaye. First, I'm from the state of idaho. Sometimes may not be the, uh, the first state you think about when there might be fraud, but that is kind of the basis of my question.
▶ 1:05:40Have you noticed any trends where, uh, states might get targeted or regions might get targeted as a function of potentially them having a lower barrier for entry, or maybe perceived as not being as likely to be audited. >> absolutely. Um, fraud. >> we we talk a lot in the industry how it can be regionally generated. Um, it tends to start in one particular area.
▶ 1:06:02And then I don't know if they're all hanging out, talking to each other or how that spreads, but it does tend to start in certain populations, um, and then branch out from there based on controls. But certainly flying under the radar could be. >> something that happening. Okay. >> oh, absolutely. >> not surprising. I'm going to go to to miss wooten here next. But either miss wooten miss gay, if you have a comment what if the what if the bad actors foreign. It's a foreign actor.
▶ 1:06:29Um, uh, how much of that or do you see that? And if so, what kind of a challenge does that bring to potentially, um, pursuing that, uh, that fraud, if it's perpetrated by a foreign actor? >> certainly states have seen both fraud cases perpetrated by foreign and by, uh, us citizens or people in the us and, uh, from our perspective as being a medicaid fraud control unit, it makes no difference.
▶ 1:06:57We look at difference, we look at allegations, try to identify is there something we can do about them? Is the dollar amount something we can pursue? Um, uh, you know, is are we going to be able to get value back for the medicaid program? Do we have the laws in place to prosecute whatever type of fraud is referred? And we move forward with that investigation? >> specifically, the laws is kind of what I was trying to get some clarification on.
▶ 1:07:20Um, it's it's more gray, uh, pursuing a or foreign act or is it are the laws in place necessary? The tools you need? >> um, the tools are in place. If the bad actor is in there or or your own state. Right. We can use our state laws and go after that person. Uh, victims are also at risk when people commit fraud and we work regardless of what what their background is or what the risks are, I think there are state laws that we can follow and hold people accountable.
▶ 1:07:50>> okay. Thank you for that. Mrs. garg, back to you, if I may, um, what are some common fraud schemes that you run across? Just top 2 or 3, maybe? >> yeah. I mean, I think some of the biggest ones as, as I already mentioned, but, um, the applied behavioral analysis is a huge scheme that we continue to see across particularly medicaid, um, non-emergency transportation. I mean, we see labs, we see, um, a lot of the, the home and community based services.
▶ 1:08:17And these are broad range and they vary based on the state, what their regulation is, what services are covered. Um, that takes up a lot of our case time right now as an organization, um, working with these home and community based, because these are not practitioners, these aren't physicians that are rendering services. So we see non-licensed individuals. It's very hard for us to know what's actually happening. And for myself and my organization, we see per data, per health plan and not necessarily aggregated data across. >> okay.
▶ 1:08:47So that part of that next question, what's the trigger. What some of the indicators you see. What are the red flags. >> yeah I mean some of the indicators are impossible days when we're looking at that feels impossible. And I'm just looking at one health plan in an area. I'm not considering all the other services that that provider may be rendering. Um, so impossible day is a big one. Outlier analysis is a is a huge tool of ours. >> okay. So I'm going to go to miss wooten. But again, either either one of you if you have input on this, but how have these schemes evolving changing.
▶ 1:09:18What are you uh, more sophisticated, less sophisticated, more blatant. Uh, how are these schemes changing? Uh, over, over time? And how are we tracking that? >> throughout the time I've been with medicaid fraud, what we see changing most is, as I mentioned, these are not for the large part, uh, providers who are just doing a fraudulent act now and then. These are people who are committed to committing fraud. They're working on it. Um, we see that fraud schemes cross state lines for far more than they used to.
▶ 1:09:47Uh, that's why we need to collaborate to find out what's going on. Anytime we hear of a fraud, each state goes back, sees what they can find, and then we collaborate. Um, I think that the it's difficult, as we've put in some provisions into healthcare that are beneficial, like electronic medical records and, and different devices that make it easier for a provider. It's also more difficult on our end to be able to see is it a legitimate document, because electronic medical records can print off an amazing medical record that looks like a full service was done?
▶ 1:10:15Whereas in the past, if you'd had to write out that note, you might have seen what was really performed. >> thank you. Thank you for your input. Feedback, Mr. chairman, I yield back. >> the gentleman yields. The chair now recognizes the gentlewoman from colorado, Mr. get for her five minutes. >> thank you so much, Mr. chairman. And I want to thank everybody for coming today. All of us are concerned about fraud in medicare and medicaid.
▶ 1:10:37Um, I, I when we do these markups of these bills and we have these debates so frequently, uh, people, people talk about fraud in these programs as if it's the beneficiaries who are committing the fraud. So, miss wooten, I would like to ask you, what is the percentage of fraud in medicaid that's carried out by providers versus the fraud that's carried out by patients themselves? >> thank you. I appreciate that question.
▶ 1:11:07Medicaid fraud control units. And thus we only are have the authority to pursue provider fraud unless the fraud is perpetrated in collaboration with a recipient. >> right. But how much of of the fraud would you say is committed by the providers versus the patients? >> I couldn't speak to the amount for the individuals. Exactly, but I would say far more is committed by providers, and the large dollar amounts are going to the large types of providers. >> the large types of providers. Yeah.
▶ 1:11:37And, you know, states like all of our states are constantly on the lookout for fraud. And and miss gay, I would agree with you in colorado, what we're finding lately, a lot of that fraud is from transportation. Um, just last week there was a huge, uh, coding, uh, discovery in colorado that showed that some people were getting $650 for a transportation under medicaid versus what should have been
▶ 1:12:07$65. Last spring, colorado's official actions uncovered a ring that improperly charged coloradoans millions of dollars for non-emergency transportation, resulting in blocking $25 million in fraudulent payments. And and I'd like to put in the record a denver post article from june 21st, 2026. Thanks.
▶ 1:12:31Um, so, miss tallman, um, you said that adequate fraud investigation requires coordination on all levels of government, is that correct? >> yes, that's correct. >> and one of those levels is the federal government. Is that also correct? >> yes, that is correct.
▶ 1:12:53>> now, at the federal level, the department of health and human services inspector general was one of at least 17 igs terminated in the first days of this administration. So, miss tillman, I would also suspect that you and probably the rest of the panel would agree that when you're going to hire inspectors general, they need to be qualified for the job, and they themselves need to be, um, not committing fraud, is that right? >> yes, of course. >> of course.
▶ 1:13:23Now, the inspector general who used to be there was a respected professional who honorably served in hhs for over two decades. He was replaced by thomas mark bell, who was once forced out of a virginia state government job for misspending taxpayer dollars. And I would ask unanimous consent to, um, put into the record this washington post article dated june 17th, 1997, about Mr. bell. So ordered. Thank you.
▶ 1:13:52Now, miss tallman, about how many fewer employees are at the hhs office of inspector general now than there were at the beginning of this administration. >> um, well, I don't have the exact number. I believe in the oig office. It is. It is in the dozens. >> it's about 200. And I would ask unanimous consent or I'm. I would ask unanimous consent to put a new york times article, uh, dated.
▶ 1:14:18January 9th, 2026 into the record. So ordered. That's a loss of more than 10% of the employees in the office responsible for keeping watch for waste, fraud and abuse in hhs.
▶ 1:14:35So, um, miss wooten, I want to ask you, our states and medicaid fraud control units better to detect and respond to fraud when the hhs, ig office is fully staffed and well resourced. >> certainly in all areas of fraud. To research it, we need a team of individuals who can work together to do that. And when there's a shortfall on one side or the other, we collaborate and make sure that we find the resources we can use to combat fraud. >> thank you.
▶ 1:15:03Last month, department of justice prosecutors who were leading the fraud, um, investigations in minnesota that the chairman talked about resigned in protest after they were directed to investigate the widow of rené good, who was murdered by ice agents in minnesota. And just yesterday, an additional eight prosecutors in minnesota U.S. attorney's office left in protest, leaving the office with fewer than 20 staffers. And so, Mr.
▶ 1:15:30Chairman, if if everybody's going, who's supposed to be doing this, enforcement's going to leave, I don't think that it's going to help very much to try to investigate waste, fraud and abuse. And I yield back. >> gentle lady yields. The chair now recognizes the gentlelady from tennessee, doctor harshbarger, for her five minutes of questioning. >> thank you, Mr. chairman, and thank you to the witnesses for being here today. Uh, I'll start with miss wooten. Our civil and criminal penalties sufficient to deter repeat offenders who commit medicaid fraud. >> they are.
▶ 1:16:00If we can find the scope of fraud that we're looking for. Um, unfortunately, you're sometimes finding the tip of the iceberg, but then we can prevent that fraud from continuing, and that helps. Um, there are also penalties. I think the oig exclusion that doesn't allow them to bill medicare medicaid sometimes is more, um, impacts a provider more than a civil or a criminal. Fine. Um, but we try to use all of the tools as we come back. >> as long as they check that database.
▶ 1:16:29Um, is there evidence that repeat offenders can enroll as providers in medicaid programs in other states after enforcement actions? And if so, why? >> um, if the enforcement action has excluded them on the oig exclusion, you would at least have remedies if they attempted to practice because they are not allowed to build government programs. It's more difficult if there are pre-filing resolutions and those are not public or criminally in a criminal database. >> absolutely.
▶ 1:16:57Do, um, medicaid fraud control units can communicate and share information with one another to identify repeat offenders and recurring schemes? >> absolutely. We, uh, we meet regularly, we meet with multiple. We also meet with federal partners. Um, three weeks ago, I was with cms, dea, fbi, oig, all trying to get on top of this. And we even conduct trainings specific to certain types of fraud and teach nurses, auditors, investigators and attorneys how to combat fraud. >> there has to be red flags.
▶ 1:17:28And people know if you've been in the healthcare industry, I guess this is Mrs. gay or miss wooten. Uh, is physician participation or authorization required to perpetrate medicaid or medicare fraud schemes? Mr. >> um, if the proper controls are put into place, um, then yes, but oftentimes those controls are are skirted in some way or another. >> they totally are. >> um. >> I would say another role of the. Besides, I'm investigating and prosecuting.
▶ 1:17:57We make program recommendations to the state medicaid agency. And often those are to say, we believe this code or this practice may open doors to allow fraud. And we make program recommendations on how that can be improved. So we're trying to solve the future, not just convict the past. >> totally. >> um. >> are all providers that commit fraud doing so willingly, or are there physicians that unknowingly participate in these schemes?
▶ 1:18:24Because not every physician or provider who's in charge of something knows what's being built? >> I think that's the difficult part of the investigation. You're trying to figure out who is culpable and who maybe didn't understand. Right. It's shocking sometimes when a physician will say that they didn't understand the billing, but they seem to understand the service and getting through med school and everything else. But there are certainly innocent victims who get caught up in these schemes, I would say, particularly in nursing homes.
▶ 1:18:54Many of those staff members and providers want to do a great job, and they're unaware that the money is being siphoned off to investors or to other uses. >> yeah. Um, given that physicians are meant to examine and know the patient before authorizing orders, how many providers or do you have a percent of these providers who unwillingly know about these? And really, the that authorized the fraudulent orders for, say, dme or, uh, testing? >> that's a great question.
▶ 1:19:21And it's difficult sometimes because if a name appears on an order, it appears they've ordered it, and it takes boots on the ground to go out and interview them and say, here's your is this your signature? What have you done here? Right. Um, and all of the programs where there's not oversight in house. I owned a home health agency for many years, and, um, there's a lot of trust goes into sending your staff into a home, getting a doctor's order from someone who's not in the home at the same time.
▶ 1:19:44Um, so there are avenues that they can beat, and we try to study what's what's required in different types of health care so that we can figure out where could you commit fraud? >> you could use ai models to kind of I mean, there's there's many ways to do it. But thank you, miss gay. What aspects of current telehealth regulations can be exploited by criminals to perpetrate medicare or medicaid fraud?
▶ 1:20:06Because I will be controlling the, you know, changing the rules on on telehealth pretty soon and extending those things. So where where do we need to look at for the loopholes? >> yeah, I think we we've reduced, um, barriers to care during covid. And I'm not sure that all of those went back up. And some of that is to the convenience of many of us. We've probably experienced telehealth and been pleased that we didn't have to go out, um, for those services.
▶ 1:20:32But when we reduce those barriers, oftentimes we do open it back up to fraud. >> across state lines. You know, I think that was a big deal when we did that for covid. And I can see how. >> absolutely and if I may, about rendering providers. You know, one of the things that when I was talking to my team about, like the so many solutions that we'd like to bring up, um, we have often talked to rendering providers and they have no idea that they are complicit in a particular scheme. And and sometimes these are retired providers.
▶ 1:20:58There is not any type of feedback loop to somebody with a current mpi saying that you've been billing under these ten. So when we look at dme or labs or those such things, they really don't have any indication until they get a letter, either from an organization like mine or miss wooten to say, what do you mean? And how do you mean? And so that is absolutely like an area that's frustrating. >> well, my time is up, so I'll yield back. Mr. chairman. Thank you guys. >> the gentlelady yields votes have been called.
▶ 1:21:25We will recess the hearing and reconvene ten minutes after the last vote. The subcommittee now stands in recess.
▶ 1:23:34>> for. One.
▶ 1:24:21More.
▶ 1:45:55And.
▶ 1:58:12So in that case. Mr. >> the committee will now come to order. The chair now recognizes the chairman of the committee. Oh, I'm sorry, Mr. tonko, for his five. Mr. tonko from new york. As soon as we let him get seated, uh, from new york for his five minutes of questioning. >> thank you, Mr. chair.
▶ 1:58:39And, uh, sorry to be a little delayed here. Um, let me be clear. We all support rooting out fraud, but that's not what has been happening under this trump administration. Instead, today, republicans are attempting to use fraud claims to legitimize the trump administration's lawlessness in american cities. While the resulting harm might be unprecedented. This strategy is not new.
▶ 1:59:07This whole congress, republicans have levied massively overbroad allegations of fraud to justify their deeply unpopular policies. Republicans have stretched the word fraud beyond recognition. One way they have done so is by conflating things that routine administrative errors or improper payments with illegal and deceptive behavior. Professor, can you walk us through the difference between improper payments and fraud?
▶ 1:59:38Please? >> uh, yes. And thank you for the question. Uh, improper payments, all fraudulent payments are improper, but not all improper payments are fraudulent. And in fact, when we see the data points, if you have over $90 billion of improper payments, about 77% of that is administrative error and not actual intentional fraud. >> I thank you for that. And in your testimony, you shared that treating improper payments as fraud, quote, distorts reality.
▶ 2:00:07Why is it important for congress to treat improper payments as distinct from illegal fraud? And what are the consequences of not treating the two separately? >> one of the biggest consequences is that labels drive remedies. So if you label everything as fraud and you don't make the distinction, you'll be directing scarce resources towards the wrong conduct.
▶ 2:00:29>> and one consequence of distorting claims of fraud in medicare and medicaid is that it undermines the public's belief in the integrity of federal programs. How can using the term fraud as a catch all mislead the public? And why is that so damaging for public confidence in government programs? >> so again, ultimately, you want to make sure you are crystal clear with the labels that you're using.
▶ 2:00:52Because if the taxpayers are led to believe that 100% of their taxpayer dollars are going towards fraud, it causes them to lose confidence and faith in the government operations. >> and professor, you also shared that oversight of federal programs must remain credible and durable across administrations, and that failures can diminish public confidence in oversight findings.
▶ 2:01:16How can instability at agencies responsible for monitoring fraud undermine the public's confidence in the integrity of government programs? And why is that indeed harmful? >> ultimately, we want to see stability in how federal programs are being operated because it makes them credible and makes them more capable, and it also ensures that they have the capacity to adequately address these issues.
▶ 2:01:37If if taxpayers believe that some of these things have been disrupted, that, again, would cause the belief that them to lose confidence in their government operations and the spending of taxpayer dollars. >> I thank you for that. You know, I think all of our witnesses, you know, we need to ensure that the public does not lose confidence in the ability of federal programs to help them and their families.
▶ 2:02:02Obviously, these programs are rooted in a sense of mission that they are there to serve people truly in need. And, uh, if we're to destroy that by lack of confidence or other dynamics, we, in fact, have lost the battle to do well, uh, to the program. That means preserving the mechanisms that ensure good governance and making certain that fraud allegations are indeed levied accurately and responsibly. Um, with that, Mr. chair, I yield back. >> the gentleman yields.
▶ 2:02:30The chair now recognizes the chairman of the entire committee, Mr. guthrie, for his five minutes of questioning. >> thank you. Well, I just sitting here trying to think where splitting hairs over the word fraud. When? What's going on? What? Minnesota. What's going on in los angeles? Uh, gosh, if that doesn't undermine confidence in the system, nothing else does. And do we not call it fraud because it might undermine confidence in the system?
▶ 2:02:56It's, you know, $14 billion being taken, uh, people, uh, identity being stolen on medicare or seniors. So when they go to get the product that they desire, that they deserve, they can't get it because somebody gotten paid for it under their name. I mean, my goodness, we're going to try to redefine the word fraud to not include that. I'm not sure what why we're sitting here. It's just a dumbfounded miss gay.
▶ 2:03:20The things that you've seen that we're talking about in in minneapolis, that's happened in minnesota and what's happened in los angeles is that would you define that as fraud? Aren't these people purposely setting up fake accounts so they can get money? That and not serving anyone? I think that would have to be fraud. I don't think that's improper. >> um, interestingly. So I, I can never we don't use the f word often is what I say in my line of work because I'm not law enforcement or, you know, can't, uh, you know, speak for the law.
▶ 2:03:49Um, however, it is hard not to see fraud when there there's very clear intent, um, proving that intent is often what is what is difficult. >> okay. So, miss wooten, your organization, you have people that are, are are police. You have your law, your law, law enforcement.
▶ 2:04:07So what would you define these what you're seeing in minneapolis and what we've seen in with the somali population particularly and in los angeles with, uh, domestic medical equipment, would you define that as fraud, or is there some kind of law school term we need to use to, to try not to call people fraud when they're being fraud fraudulent? >> yeah. Given that the information I have about those states is what I've read in the news, I it's difficult to address those exact investigations.
▶ 2:04:33However, medicaid fraud control units look at fraud and we call it fraud. We do not have authority to look at waste and abuse. Uh, we are specifically designated people refer to us a case and they say, here's a credible allegation of fraud, or we data mine and find what appears to be an outlier. We only pursue investigations if we think they're credible. Um, but we do learn from other states. And yes, the schemes that we see there, um, we see schemes in our own states where it's definitely fraud.
▶ 2:05:01Companies, like I said before, set up for with the sole purpose of committing fraud, um, substance use disorder providers who never had a real provider provide services even though they're so desperately needed. But I think in this conversation, we're fortunate that we focus on fraud. We call it fraud, we prosecute and litigate fraud. >> so it's fair. I had a physician one time showed me that he had medicaid money, medicare money, uh, reclaimed because he didn't put the time down. He did the service, although he did the service, just didn't have the paperwork.
▶ 2:05:32Absolutely correct. That's not what we're talking about. That's absolutely not what we're talking about here, is it? >> absolutely. I get. >> we're talking about foreign entities in some cases, setting up dummy accounts to take money out of the medicaid and medicare system, which seems like everybody in this room would want to want to get rid of, because it takes money away from people who really deserve it and understand why we're splitting hairs on the definition when we have this kind of crime going on.
▶ 2:05:57So would you like to talk about miss gatto as well, people setting up these entities just to take money from the taxpayers? >> yes. And I'd want to say absolutely. We do see, um, some of the fraud you're describing. We also see domestic individuals stepping in who are not appropriate. They're not providers, and they're billing medicaid and medicare. So we see it across the gamut. But yes, it harms the system. >> so how do they set up systems to get money if they're not providing care? >> so um, they use. >> that rhetorically because I know they do it.
▶ 2:06:25So what what are they doing? >> okay. So you they set up a company. You don't necessarily have to be a healthcare provider to own a company, home health agency, substance use disorder clinic, nursing home. And then maybe and some of the people at the lower level are doing what they think they're supposed to do as services. But the reality is, those lower level people don't know what the medicaid regulations are and the medicare regulations are.
▶ 2:06:48And so the people who are supposed to be billing and knowing the process and who signed the provider agreements, there are no therapists involved in some of these behavioral health schemes there. >> for billing for therapy. And you don't have therapists. Would that be fraud? >> absolutely. >> as miss gay, would you agree that would be fraud? >> absolutely. >> so so what are you seeing? I mean, we're now we're it looks like that's what this hearing's turned into, trying to define what fraud is. And I think fraud should be prosecuted. >> absolutely.
▶ 2:07:14And so our role so most of the work that I do is directly for the mco and ma plans. And they work then with law enforcement to refer these and to get the the official stamp of the of the fraud. >> do you see more fraud in states and medicaid particularly that don't have mcos or medicaid? If it's just bill for service, medicaid or medicare, do you see more fraud in that versus when the private insurance market is trying to change? >> I see a lot of mco fraud a lot. Across all. Yeah. And not not the not the plans committing the fraud.
▶ 2:07:43Let me be clear. Um, but we we see a lot in the states that we're working with that is through the managed care organizations. Um, and the difficulty to stop those. But it is many of the cases that we are working now are with law enforcement and are being prosecuted for, for such things. >> thank you. Well, I see my time has expired. So thank you for your time. Appreciate it. >> gentleman yields the chair now recognizes the ranking member of the committee Mr. pallone for his five minutes of questioning. >> thank you, Mr. chairman.
▶ 2:08:09The the terror and violence we're witnessing in minneapolis is the extreme result of congressional republicans unwillingness to hold the trump administration accountable in the use of fraud as a justification for every cut to programs is really getting old. Today's hearing is yet another attempt by republicans to convince the public that they are generally concerned about fighting fraud, even though they've been silent. While very the very individuals responsible for fighting fraud were fired, pushed out, or resigned in protest.
▶ 2:08:39But let me go to miss tillman. You say in your testimony that overstating fraud has the potential to, quote, stigmatize program participants. Could you talk about the risks to programs and program participants when fraud is overstated or action against fraud is taken preemptively? >> yes. Thank you for the question. Um, first, I also want to just be clear.
▶ 2:09:01There is definitely a lot of fraud out there, but the reason that we want to be clear about our labels is, again, because different things have different consequences. Fraud can result in imprisonment. False claims act can result in substantial liability financially. And then, of course, some of the other types of things, including improper payment, should have greater resources than directing being directed to oversee those processes to result in fewer improper payments.
▶ 2:09:26So so the risk to that and the risk to the integrity of the entire system, uh, happens when we're not appropriately directing the appropriate remedies to the appropriate act. >> and then what? When fraud is exaggerated or overstated, how might that impact the efforts of investigators and prosecutors who are trying to root out actual illegal fraud? >> so, again, we have finite and scarce resources within the federal government, state governments, and of course, all the actors across the entire landscape.
▶ 2:09:55And so you want to make sure you're being efficient with taxpayer dollars and how you're directing those resources. >> and then. Well, thank you. But in the case of minnesota, the trump administration is withholding as much as billions of dollars in funding that the state relies on to provide health care to residents. And it appears poised to take similar action in many other states. They're doing that despite the numerous improvements that minnesota has been implementing to prevent and prosecute fraud across the board.
▶ 2:10:24And this is only going to end up hurting americans who need care. Already, the white house has directed federal agencies to review nearly all federal funding for 14 states in dc that supported vice president harris in the 2024 presidential election. So, miss tillman, again, what are effective approaches that can be taken to prevent and prosecute fraud without unfairly punishing americans who rely on those programs?
▶ 2:10:50>> so, you know, ultimately, each what you want to do is look at things from an institutional level. We know that fraud occurs in all 50 states, uh, and then in territories as well. And so the goal is to make sure that we're not, uh, not seeing what's behind us. We're so focused on some, some aspects that we don't look at the entire system as a whole. So that would be critical is to make sure we're accounting for all of these risk areas, which, by the way, are in all states, uh, so that again, we're not misdirecting resources. >> well, thank you.
▶ 2:11:19Uh, miss wooten, in your testimony, you refer to federal, state and local partnerships as vital. Could you talk about how partnerships and collaboration, rather than hostility between federal and state partners, could help fight fraud? It's about a minute and a half left. >> okay, I can speak to partnerships. They're invaluable. And, um, examples would be as fraudsters are no longer staying within one state, they're crossing state lines.
▶ 2:11:45We have limited jurisdiction as a state prosecutor, state investigator, and we rely on those federal partners, whether it's the fbi's health care task force, whether it's the hhs, oig, they are able to take what we can provide the resources we have, but they can also cross state lines, and we can involve other states in that. So they are they are critical. State partners are invaluable in the area of patient safety and protection, because they are the ones who get complaints of abuse, neglect and exploitation.
▶ 2:12:13And we we work those cases as well more at the state level. >> well thank you. I just think we're at a dangerous moment in our country. The committee republicans are amplifying the trump administration's reckless rhetoric, rhetoric targeting minnesota and los angeles. And I don't think fraud is a partizan issue just doesn't happen in blue states. We should all want to go after actual fraudsters.
▶ 2:12:35However, using the facade of fraud prevention as a weapon to hurt people who did not vote for president trump is really unconscionable. And the trump administration must be held accountable, and the republican majority should not be providing the administration with excuses for harming even more americans, in my opinion. But I yield back. Mr. chairman. >> the gentleman yields. The chair now recognizes Mr. allen for his five minutes of questioning.
▶ 2:13:02>> uh, thank you, chair joyce, for holding this important hearing on fraud in medicare and medicaid. I thank the witnesses for being here to testify is critical. We examine how bad actors use medicare and medicaid to manipulate the system, and that it has negative impacts for beneficiaries and taxpayers alike. My hope is we can look for solutions on how to prevent this in the future.
▶ 2:13:26Uh, mister knuckles, uh, as an accountable care organization, you're incentivized to lower health care costs for medicare patients. What impact do fraudulent claims have on an aco's ability to make health care more affordable for seniors? >> um, thank you, representative allen, for that question.
▶ 2:13:48So, uh, as an accountable care organization, you know, we are responsible for the costs medicare shares with us, the claims that they pay on behalf of our patients that are assigned to us by the program. Uh, so if our spending, you know, overshoots the budget, we have to pay medicare back in the current program they're at, we're at we are 100% at risk. So we talk about the risk and harm to the to the taxpayers. In this case, the risk and harm is to provider groups like us that are trying to do the right thing.
▶ 2:14:15We're trying to, you know, uh, give higher quality care and we're trying to reduce wasteful spending. We work within our community to do that. And so if these fraudulent claims are paid out and we don't have control over it, we report it to the federal government. More of us are going to leave the program. We've been able to reduce costs in our community by 25% over group from where we were in the past, compared to the counterfactual.
▶ 2:14:37If these claims keep going out and we're held accountable for claims for fraud over which we have no control, then we'll have no choice but to leave the program and costs for the overall entitlement programs are going to go up, and so we want to keep those costs low. Uh. Thank you. >> okay, great. Thank you. Uh, miss wooten, uh, from my understanding, it's not uncommon for fraudsters.
▶ 2:15:01Fraudsters to target medicaid, to commit fraud, to take advantage of vulnerable populations, such as the homeless or those with substance abuse disorders. How does medicaid fraud harm these patient populations? >> in so many ways, it's difficult for many of the patients in those populations to seek services for what can be a very difficult diagnosis, to let people know that you're truly an addict, and when they don't receive the services they need, not only is medicaid wasting money paying for them, but that person still needs the treatment at the end of that,
▶ 2:15:32So it becomes neglect as well. Um, so it's a very difficult population to work with. And we have difficult laws federally that make it difficult to get some of the medical records without jumping through hoops. But we need to because this population needs to be treated good. >> thank you. Um, miss gay, uh, in your experience, can fraud be prevented if the government and regulators lowered information barriers and increased increased scrutiny on certain providers? >> absolutely. Yeah.
▶ 2:16:00I think, uh, there's a gap in our credentialing process, uh, across the board as far as, you know, letting practitioners into programs, um, and keeping up with the screening. It's a big job. But most organizations that I work with, they're screening their providers, um, once every three years. And that's just not often enough to deter, uh, the bad players out there. >> um. Well, obviously, uh, you know, we have news coming out on this every day.
▶ 2:16:25And, uh, you know, the public is, uh, really, uh, uh, discouraged about the way people are, uh, using these programs, uh, in a fraudulent and abusive way. So, um, we've got to get to the bottom of it. And, uh, I thank you for your work. And, uh, certainly congress needs to help you in any way we can. Thank you. And I yield back. >> the gentleman yields.
▶ 2:16:54The chair now recognizes the gentleman from texas, Mr. crenshaw, for his five minutes of questioning. >> thank you, Mr. chairman. Thank you, everyone, for for for being here. Um, uh, miss gay, when when we talk about medicare and medicaid, you know, we're not talking about just paperwork errors, right? We're talking about really actual people being harmed, whether those are seniors, kids or or the disabled. And and your experience when it comes to fraud in federal health care programs, it's not a victimless crime, is it?
▶ 2:17:23It directly harms beneficiaries. So I'm just drawing on your experience across medicare, medicaid and the commercial plans. Why is it that medicare and medicaid, some are so much more vulnerable to fraud than private insurance? It look, fraud is a crime. Also waste. You know, I like to differentiate between these two terms. Sure. But both. Yeah. >> yeah. I mean, I think one there's just scope and span. Um, medicaid in particular is difficult because each plan has varying regulations and guidance, um, as well as benefit coverage determinations.
▶ 2:17:55So it gets more difficult at the state level. Um, there's a saying, you know, if you've worked for one medicaid plan, you've worked for one medicaid plan. And so that certainly offers some challenges there. I think there's also, um, I don't know, personally, I can say I don't often read my eobs. Um, but I think, you know, that goes down to in certain populations where whether they don't have access to a computer, they don't even mail these eobs out. We talked a little about the homeless population. Where would that go? I'm not exactly sure.
▶ 2:18:23So do you even know what's being billed under your medicaid or your medicare number? Um, it's just a difficult process to wrap around. It's it's complicated from a data standpoint. >> yeah. I think, you know, the more we waste, um, on on people who really are not even eligible for it in the first place, the less space there is for people, it's designed for that. That's a, you know, that doesn't get said enough. Um, and I guess my next question, I mean, who really bears the brunt of of the harm, uh, you know, is it the system?
▶ 2:18:52I mean, yeah, a little bit. Right. Because the taxpayers are on the hook. So the system is is hurt. Uh, but it's also it's really the patients, you know, for for all the reasons we just stated. Right. Absolutely. Can their care become delayed or or we've heard providers just will won't even take medicaid anymore. Um, now, you know, so what's the solution here? I mean, some, some argue stronger oversight would just, would actually threaten access to care.
▶ 2:19:22So but based on your experience, what actually happens when to access when when fraud is is not controlled. That gets to, you know, again who bears the brunt of this. >> yeah I mean I think there certainly the patient harm attribute you mentioned, you know not getting the care that you need. And miss wooten brought up, uh, you know, said treatment facilities and we dealt with some cases with, um, aca enrollments.
▶ 2:19:45And by the time we verified with cms that those were eligible recipients, um, they the health plan was already on the hook for one, two, $3 million. Um, were these patients even receiving the care in some case? Yes. In other cases, they had no idea that they were in, um, a facility for such treatment. And I think to miss wooten's point with having that stigma now you have somebody that doesn't even have that challenge, but that is now on their record.
▶ 2:20:10And even worse, those that do that are getting subpar treatment, um, at a very exorbitant rate and still not getting better. >> yeah. I mean, this gets to in my time left. You know what I'm asking y'all? What what the solutions are. I mean, how do you tackle fraud, waste, and abuse in a way that helps the patients and the taxpayer? Um, and I guess anybody can answer that question.
▶ 2:20:32Uh, maybe, miss wooten, you know, since, uh, giving given your role on the national association of state medicaid fraud control, like what's maybe what are some what are some of the worst two questions? What are some of the worst examples you've seen. And then again, like how how do we fix this. That goes to anybody? >> I think one example I would use as a nurse that was most shocking to me was hospice fraud. You have individuals who, um, need this, uh, this care at the end of life that is so valuable.
▶ 2:21:01But we see hospice schemes where patients are enrolled. They may be in a facility enrolled. They don't even know they're put on hospice. But hospice is not just a billed service. Hospice declares that they are terminally ill. It discontinues the treatments they need for preventative care. And if they don't even know they're on hospice, essentially, their healthcare plan has been changed. Just because somebody is trying to defraud medicaid, that is, in my mind, the most egregious.
▶ 2:21:27But I worry a lot about nursing homes right now because as as we're all aging, especially me, um, the facilities are not operating in a way that always that verifies that patients are going to get or residents in that situation are going to get the care they need. And it becomes terrifying because people need care. We need patients to feel safe going to their providers.
▶ 2:21:50And most providers are amazing, but we've got to be able to share these schemes so that somebody knows what's being billed on their behalf. And I think in medicaid, not having explanations of benefits makes it very difficult for them to be part of the conversation and solution. >> so an explanation. I'm out of time, but an explanation of benefits seems like a a solution kind of kind of rabbit hole that we should dive into at a later point. Thank you.
▶ 2:22:17>> the gentleman yields the chair now recognizes the gentleman from texas, miss fletcher, for her five minutes of questioning. >> well, thank you, chairman joyce and ranking member clarke for holding today's hearing. Thank you to our witnesses, uh, for your time today. Like many of my colleagues, I'm also in two hearings at the same time. Um, but I appreciate you being here. And and to follow along with several of the things I've heard, which I want to get into, um, in just a minute.
▶ 2:22:42But I do want to note that this subcommittee has an important job. And our purpose on the oversight and investigation subcommittee is to protect our communities, to protect the rights of our citizens, um, and to make sure that what we see, um, in the executive branch and beyond, um, is not overreaching and certainly is not violating the rights of americans.
▶ 2:23:07And I think it's fair to say, um, in face of the lawlessness that we are seeing, um, across the country right now, that this congress as a whole has failed to conduct necessary oversight over the last year, seating congress's authority to the executive branch and rubber stamping, uh, the president's agenda, even when it's unlawful and even when it's unconstitutional.
▶ 2:23:35And I'm concerned from some of the comments that I've heard from this hearing already today, as I've been following it, that this hearing is designed to support the trump administration's use of claims of fraud in state programs, including medicaid and medicare. Um, to recklessly deploy.
▶ 2:23:53Ice agents, um, to cities and states to cut necessary funding and to make fraud prevention and detection more difficult rather than less difficult. Um, and there's a lot there's a lot to say there. There's a lot going on, but we have limited time.
▶ 2:24:12So certainly I understand that the medicaid system in states and the medicare system are not without real challenges, uh, substantive challenges, and that there is opportunity for real fraud to occur. Um, and certainly we know that it has occurred, you know, in administration, after administration, there have been professionals whose sole job it is to monitor, oversee and root out fraud and abuse, to prosecute cases against those who are committing it.
▶ 2:24:41And what we've seen is that early on in this administration, the trump administration fired most of those people who were responsible for doing this work. Um, so we know that to detect this fraud, we really need, um, experts in the field. We need responsible, nonpartisan investigations. And that's just not happening in this administration, and it's not happening in this congress.
▶ 2:25:04Um, so, uh, I, we have limited time, of course, and I do want to get to a couple of questions, uh, for miss tillman in your testimony, you you mentioned the risk of resource management or mismanagement when, uh, we don't have reliable data to look at when, uh, the incidents of fraud as it is defined or inflated.
▶ 2:25:29Um, and so can you just talk a little bit more about how it leads to a misuse of resources and so that you can have just a long time to answer? Sort of the second part of like, how does that interfere with our job here in terms of proper oversight and reform? And what are the things that we should be thinking about, looking at and asking for so that we can properly utilize resources and properly conduct oversight? >> thank you for the question.
▶ 2:25:55So, you know, ultimately, uh, oversight is is only going to function well if it is, you know, independent, well resourced, highly capable. And then there's a coordinated effort amongst all the individuals that are responsible for rooting out fraud, waste and abuse in the system. So that's the baseline expectation. Uh, the loss of data. Data is everything. I think you've heard this already from several of the other witnesses today, that that data quality is a problem. And that's actually been something that's been highlighted by both the ig and gao, uh, routinely.
▶ 2:26:26Um, so that's an issue that needs to be addressed. And the final thing I'll say is there's a very great starting point for congress right now, and which is all the many unimplemented gao and ig recommendations. And so when necessary, even providing some sort of timeline to the agencies for completing some of those unimplemented recommendations. And so there's a whole long list, but there's an easy place for people to start. And it's written down in available right now. >> well thank you. I think that's extremely helpful. And we have limited time here.
▶ 2:26:55So the other thing I want to ask is one of the things we saw at the very beginning of this administration last year was the efforts from elon musk and others to go through and cut, um, personnel. Can you talk with the 15 seconds we have left about, um, how those recommendations from geo can be implemented if we're firing the people who are responsible for doing the work? >> so certainly, I think, um, most of us can all get behind the idea of efficiency.
▶ 2:27:20Um, but, uh, ideally, when we're dealing with oversight processes, we want to make strategic and more targeted cuts. And so since a lot of this was through buyouts, um, riffs and other mechanisms, um, incentivize retirements, I think if it's not as targeted as it could be, um, that necessarily doesn't reach the efficiency we would hope when we're dealing with, uh, employment, uh, issues involving the federal government. >> well, thank you so much. I've gone over my time, Mr.
▶ 2:27:50Chairman, I yield back. >> gentleman lady yields. The chair now recognizes the gentleman from alabama, Mr. palmer, for his five minutes of questioning. >> thank you, Mr. chairman. Uh, this is something that I've worked on almost from the first day in congress, uh, on the budget committee working to get the budget committee to include in the budget accounting for improper payments and the reduction of that.
▶ 2:28:14Uh, I just looked at a report that indicates that the gao says that the fraud could be between 200 and 30 3 to 521 billion annually.
▶ 2:28:28And that's a stunning number, considering that we budget on ten year windows, that you're talking 2.3 trillion to 5.2 trillion plus interest, because we're operating in deficit, we're borrowing that money to send it out, uh, improperly or and in some cases, fraudulently, as we're seeing, played out in states like minnesota and california and other places.
▶ 2:28:51Um, one of the things on the medicare side and the medicaid side that should be, in my opinion, fairly easy to address, and that is the failure to verify eligibility. That's one of the biggest reasons that payments are going out, uh, fraudulently. Uh, director wooten, uh, is that something you think that that we can that we can fix?
▶ 2:29:18>> so, as I mentioned earlier, um, the medicaid fraud control units only have authority to pursue provider fraud and fraud committed in collusion with a recipient. But we do partner, um, when we have cases that involve that collusion, we work with the recipient fraud and try to solve that angle as well. But our primary focus is on provider fraud. >> would that include making sure that terminated medicaid providers are no longer enrolled in medicaid programs across state lines? >> absolutely.
▶ 2:29:48And a lot of that work is done through various state program integrity units, where they're looking for ways to abuse and whether or not they have a case to refer for fraud. So those efforts are going on in their critical. >> how about authorizing state auditors to access certain personal data, like taxpayer identification numbers, to eliminate, uh, duplicative enrollments in medicaid? >> there needs to be a system to identify duplication, for sure, whether it's medicaid numbers or other numbers. But for sure, that needs to be done.
▶ 2:30:18Nobody benefits when fraud is committed or when money is wasted. >> well, I do, uh, think and I think we would have bipartisan agreement on this, that congress could do a whole lot more in writing our laws and and the guidance much better to help states ensure that that, uh, they can, can manage the money without as much fraud and, and waste.
▶ 2:30:41Uh, one of the other things that that I've been focused on and I've had many discussions, uh, with uh, uh, gene dodaro, uh, comptroller general about this is antiquated data systems. Uh, we have, uh, federal agencies that their data systems are antiquated. They don't communicate. Uh, that is another source of of improper payments. Um, what would you suggest on that?
▶ 2:31:09>> I would suggest that we need to find a way to be able to use all of the data. As we're investigating and deciding whether fraud has occurred. An example of that, if a provider has submitted claims for services that exceed a 24 hour day, we call that an impossible day. But often we're limited to the medicaid data we can get from our own states. And then we work with oig to get medicare claims data. And that makes the day even more suspicious.
▶ 2:31:36But there's got to come a day where we can be able to use third party payers and private payers, because those impossible days would just be so blatant. Nobody would question that it's fraud. >> well, one of the suggestions been made is for the treasury department that operates that do not pay, uh, business center, uh, for for them to be able, uh, to do their prepayment verification, medicaid and assist reduce the improper payments and fraudulent activities and, and to have
▶ 2:32:06Some way to collaborate with the states on that. I don't know if the states have access or the training necessary to use a resource like the do not pay system. Right? >> right. And maybe access is even the bigger issue. We have separate systems. We do the best we can with personnel to to tie those systems together. But I think, as I said, any time that we could have more access and more education on tools that would help us all combat fraud, it would be invaluable. >> we need to do audits on on a more regular basis.
▶ 2:32:34And one of the suggestions I made to to general dodaro is that rather than be punitive in our actions toward agencies with high improper payment rates, that maybe we think about if they can reduce their their improper payment rate, that we use the savings to, to bring their data systems in the 21st century, which is kind of a novel idea, I yield back. >> the gentleman yields. The chair now recognizes the gentlelady from massachusetts, miss trahan, for her five minutes of questioning. >> uh, thank you, mister chair.
▶ 2:33:04And thank you to the witnesses today. I have to say, there is a perverse irony in today's hearing. Uh, republicans tout their big bill as a fraud crackdown while president trump quietly pardons major medicare and nursing home fraudsters involving tens of millions of dollars stolen from taxpayers. Look, no one disputes that fraud, waste and abuse exists in our health care system.
▶ 2:33:25We see it in medicare advantage, where insurers up code diagnoses that don't exist to inflate payments and pad shareholder profits at taxpayer expense. But when it comes to the real fraudsters, this administration has granted impunity. Last may, president trump granted clemency to lawrence duran, who stole $87 million from medicare. In november, the president pardoned a nursing home operator after just three months of a three year sentence.
▶ 2:33:53Despite stealing from taxpayers while neglecting elderly residents in his care. Uh, professor, what message is sent to fraudsters? When the president of the united states pardons people convicted of serious medicare and medicaid fraud? >> thank you for your question. Uh, well, I can't speak to any particular case. I can simply say that one of the features of enforcement is the importance of deterrence.
▶ 2:34:17And so, uh, certainly when individuals are considering whether or not they're going to commit fraud, they will look to whether or not the government is actively enforcing its laws. Um, and they will look to some of these cases and it and it might be a factor in deciding whether or not the system could be credible or reliable. Uh, but again, I wouldn't speak to a specific case. >> thank you. I nope, I appreciate you stating the obvious. This claim that republicans are serious about fighting fraud just doesn't appear to hold up in practice.
▶ 2:34:49Um, the big ugly bill doesn't target fraud. It cuts health care for americans while delivering tax breaks to the wealthiest, uh, in our country. Instead of going after large scale fraud schemes, republicans imposed complex work reporting requirements that force states to build costly new infrastructures. The government accountability office has found state spending anywhere from 10 million to more than $270 million just to set up and run these systems in georgia.
▶ 2:35:17When the state imposed these red tape requirements on its residents, more than 80% of spending went to administration and system upgrades rather than patient care. With enrollment falling and little to no impact on employment. And the real winners, I think, are clear. I mean, just days after the bill was signed into law, the ceo of equifax publicly celebrated as a profit opportunity.
▶ 2:35:38While eligible patients face new paperwork barriers, private data vendors stand to make millions administering requirements we already know don't work. Professor tiltman rather than investing in fraud enforcement, medicaid work requirements rely heavily on private companies to build and run verification systems. What oversight risks does this pose?
▶ 2:36:02When the rules are vague and taxpayer dollars are flowing to contractors with limited public accountability? >> well, I think ultimately the whole goal of an entirely effective oversight system is to prioritize your money by risk. And that works not only for the federal government or state governments, but also private entities who make risk based decisions. So ultimately, I would recommend to anybody looking on how to reform a system to look where your biggest risks are and then focus your enforcement and attention activity there.
▶ 2:36:33>> that seems logical. Um, and, you know, we've run this experiment work reporting requirements haven't reduced fraud. They haven't meaningfully increased employment, and they've drained millions into administrative systems instead of care. If the goal is actually protecting taxpayer dollars, what guardrails would work without pushing eligible people off of their coverage?
▶ 2:36:57>> so I think looking at it from an institutional perspective, again, I think one of the recommendations I had was the many unimplemented recommendations by gao and I and the ig. Um, one of the bigger areas we see, and especially it's been touched upon today, uh, with, with mcos is the diffuse responsibility and ensuring that when weaknesses are identified, like lack of referrals or lack of feedback loops or lack of training at the state and local level, that we follow up on those recommendations to address some of those weak points within the system.
▶ 2:37:29>> thank you. I yield back. >> the gentlelady yields the chair now recognizes the vice chairman of the committee, Mr. balderson, for his five minutes of questioning. >> thank you, Mr. chairman. Thank you all for being here today. My first question is for Mr. nuckolls. Um. Our medicaid, medicare and medicaid beneficiaries are provided with clear, actionable information on how to detect and report suspected fraud.
▶ 2:37:57>> um, not by organizations like us, but it is available, you know, online. If they were to go to the right websites. >> okay. What information can be shared with them that would allow for better detection and reporting of suspected fraud? >> I think the in my experience, that medicare beneficiaries have done a good job reporting fraud when they see it. Uh, the real question is what happens after they report it and see it in the actions that take place or don't take place? >> thank you. Next question is for miss gay.
▶ 2:38:25Um, my understanding is the timeline from the moment fraud occurs until it is identified and resolved is far too long. How long does it typically take for a fraud examiner to identify a suspected fraud? In a post-payment review? >> we see an average case take about a year.
▶ 2:38:45Um, by the time we, um, do conduct the data analysis, your investigation, conduct member surveys, request records, review those records, and then give the appropriate appeal timeframe. Um, it's it's usually between nine months and a year before we have really credible allegations of fraud, at which point we can pull in our law enforcement partners. It can happen sooner than that. In a great case. Sometimes it is as soon as we get it, it is glaring.
▶ 2:39:12Um, other times it takes even longer as we try and peel back the networks of who owns what and what is connected. >> it's kind of a follow up with and how long does it take to then investigate the identified fraud? >> once it's identified as fraud, that goes to law enforcement. And I back off. >> thank you. Um. >> my next question is for, uh, miss wooten. Um, as the leader of the state medicaid fraud control unit, how quickly are you able to identify the instances of fraud?
▶ 2:39:39And then a follow up would be and how successful are these units at recovering fraudulent payments once they have gone out the door. >> the speed of an investigation and a prosecution depend on many issues. Um, and if it's a if a, say, a patient calls in and they say my provider did not see me and I found out they build, that can go very quickly. If we're just looking at one provider in the scheme that I described in my written testimony with behavioral health, we don't want to just get the one patient, one provider situation.
▶ 2:40:09We're trying to find out, are there related companies, how high in the organization does it go. Because that's where the true fraud and a lot of money is there. Those can take a long time. Um, and I'm sorry, will you repeat the second question? >> I can. And how successful are these units at recovering fraudulent payments once they have gone out the door? >> so we of course, diligently try. Unfortunately, some of these fraudsters have spent the money or the money has gone elsewhere, and it's difficult to track.
▶ 2:40:35But we work closely with our single state agencies, our medicaid programs, to let them know that if we no longer need, say, a law enforcement exception for payment suspension, if we think we're going to do some kind of an operation that could be jeopardized if the provider becomes aware of the investigation, then we ask them to give us a little time to do that. But once the providers are aware we're looking at them or we've done everything we need to do, we can notify the medicaid program that we no longer need that exception.
▶ 2:41:03And if they can suspend payments, those payments can come in much better. We can get much more back. >> thank you. Well done. Um, follow up to, uh, also, Mrs. wooten, our fraudsters using emerging technology such as artificial intelligence to deal with these medicaid fraud schemes. >> um, yes, we see that evidence, um, across the nation, and we've been bringing in speakers on, um, on that topic to try to educate us.
▶ 2:41:32It's frightening. As you watch presentations on how quickly an mri or an x ray can be altered, and we need to be able to determine which is the correct one. So we're trying to combat fraud with tools, but we need more tools. >> um, it's a great point. And I mean, I will ask you, I mean, are you all doing anything to adapt to figuring out this ai piece in the fraudulent? With that, yes.
▶ 2:41:57>> it varies by state how much we've been able to use it, but these presentations are showing us how we could use them to look at medical records and at least identify that their cookie cutter records, that every patient there has the same diagnoses, same treatment. And I think that will be able to be done sooner rather than later. But we may, you know, we're going to have to have more resources to be able to combat fraud where they're altering images or, or falsifying surgeries or that kind of a thing.
▶ 2:42:24But our association, like I said, is committed to learning this. And we've been bringing in speakers for about the last three years. >> thank you very much, Mr. chairman, I yield back. >> the gentleman yields. The chair now recognizes the gentlelady from washington, doctor schreyer, for her five minutes of questioning. >> thank you, Mr. chairman. Thank you, madam ranking member, and thank you to all the witnesses for being here today and for your work.
▶ 2:42:49Um, I'm really happy that this committee is taking on the issue of fraud, an issue that we all want to crack down on. Fraud and abuse hurts patients, honest providers, as we've heard a lot today and the taxpayer. And this is not a partizan issue. Um, but right now, fraud is being weaponized by this administration only against blue states.
▶ 2:43:11I'm sure you have noticed it is being used as a pretext for cutting funding to 14 states, all of which happen to be run by democrats. Criminals should be prosecuted whether they are in red states or blue states. And we have heard over and over again in this hearing from all of you that it happens everywhere. It happens in red and blue states. And so I just want to say that I am tired of the weaponization.
▶ 2:43:39I am ready to work with my republican colleagues on common sense ways to improve oversight so that we can truly root out fraud everywhere. Um, but other than when it's politically convenient, this administration's also made it harder to investigate medicare and medicaid fraud. Just four days into his presidency, president trump illegally fired 18 inspectors.
▶ 2:44:02Generals we've talked about these are the very people responsible for rooting out fraud and abuse in federal programs. And they are independent, nonpartisan officials. And president trump fired them in favor of his highly political and highly ineffective dosage, would slash programs indiscriminately.
▶ 2:44:22Um, and one of the igs that he fired was the highly respected, highly experienced hhs inspector general who oversaw and was in the process of doing a lot of crackdowns on this type of fraud. And then, of course, about a year later, he was replaced by thomas bell, who himself has a very concerning history of misuse of taxpayer dollars. This is hardly the right man for the job.
▶ 2:44:49Um, so if we want to root out fraud, uh, I suggest for this committee that a great place to start is medicare advantage, because that is where a lot of the really big dollars are being wasted. And medicare advantage is a type of medicare plan that contracts with private insurance companies, as you know, to deliver care.
▶ 2:45:08Uh, this is a public private partnership, um, that was initially championed by republicans as a great way to use the private market to save money to administer health care. Um, they thought more efficiently, but it turns out it just has not saved americans money. It allows massive insurance companies like unitedhealth group to swindle the taxpayers by making their patients look sicker than they actually are, so they can make more money per patient.
▶ 2:45:36And we taxpayers end up footing the bill. Um, in fact, a 2024 inspector general report found that taxpayers spend billions of dollars in overpayments to medicare advantage companies each year based on unsupported diagnoses for ma enrollees. That was a quote. Um, professor tobin, thank you for being here today, and I really appreciate your comments.
▶ 2:46:02Uh, on the record of enforcement of rules being a great deterrent for other fraud, I think that's an important lesson and also a very obvious, uh, lesson for anybody in here who is a parent. Um, what specifically more do you think hhs could be doing to strengthen accountability for managed care plans like medicare advantage? >> uh, thank you for your question.
▶ 2:46:32Uh, so, uh, again, I and I feel like I've said this a few times, there are some unimplemented recommendations, uh, from the gao and ig that relate to that plan. In particular, there's a long list. You can go online. They have actual tracker, uh, that that identifies them. But I think would be the most useful in terms of oversight.
▶ 2:46:50There is one thing I will raise, though, particularly because so much of the recoveries from this year's false claims act, uh, were related to health care, and a big priority has been managed care, uh, from fca enforcement. Right now, there's an 11th circuit case on appeal, uh, challenging the constitutionality of the qui tam components of the false claims act, which is a huge driver of $5.3 billion, um, of these false claims act recoveries.
▶ 2:47:18Um, so, congress, it would behoove congress to pay close attention to the outcome, because if the qui tam relator whistleblower provisions and incentives go away, I think we're going to see significantly reduced, uh, anti-fraud, uh, or not anti-fraud, but false claims act activity. >> I really appreciate those comments. I will keep a very close eye on that case. It sounds like it will have, um, gigantic ramifications. Thank you. I'll yield back. >> the gentlelady yields. The chair now recognizes the gentleman from georgia, Mr.
▶ 2:47:48Carter, for his five minutes of questioning. >> thank you, Mr. chairman. And thank all of you for being here. I'll preface my remarks by by telling you that I'm professionally I'm a pharmacist and I have dealt with hospices in, in my career. In fact, one of my businesses, um, was entirely dedicated to hospices and nursing homes and personal care homes. So I've got a lot of knowledge, a lot of experience.
▶ 2:48:09And I will tell you, during the 90s, um, I serviced the the only hospice in savannah, georgia, and it seemed like overnight they proliferated and exploded and all of a sudden we had 12 and 13 and 14 and 15. And I always wondered what happened there. What how did this happen?
▶ 2:48:28Now, I'm not saying that ♪they were all committing fraud, but what I am saying is that they called on to the fact that they could make a lot of money and, and, and we saw the proliferation of it. And I'm concerned about what's happening. What I've heard is happening, particularly in california, where the state auditors have reported an unprecedented surge in home health and hospice fraud. My wife's a physical therapist, and she worked home health as well. So I'm this is this is why I ask, and I appreciate you letting me wave on to to this committee, Mr.
▶ 2:48:59Chairman. So this is, um, well, I'm very interested in this, but in a shocking example, auditors found that 112 hospice providers operating out of a single physical address, 112 holy cow. As a result, hospice agencies in la county alone likely overbilled medicare by over by $105 million in just one year.
▶ 2:49:22Uh, let me tell you, there's a special place in hell for people who commit fraud with hospice. Special place. This is something we've got to to look at. And it looks like it's not just an isolated problem. It looks like it's a problem in a lot of different places. And that's why I want to ask you, miss wooten, have you, um, have you seen instances of copycats where fraudsters see a successful fraud scheme happening in one location, so they try to replicate it?
▶ 2:49:51Um, the same fraud elsewhere? >> absolutely. We definitely see replicated fraud schemes and hospices. An excellent example. I share your concerns about home health and hospice, because I owned a home health agency for many years, and I didn't even choose to be a hospice because those there were specialized agencies that could handle that part, and we would refer to them under the right circumstances.
▶ 2:50:13What we now see, though, hospices who are admitting patients who are not terminally ill, patients who don't know they were put on hospice, patients who maybe aren't getting treatments that they need, because the hospice philosophy, as you know, is for comfort care, not for treating illnesses. So, um, in our state, we have seen the same thing in utah that the hospices have exploded. Now, I'm not saying they're all fraudulent either, but absolutely, fraudsters learn from fraudsters and it's an area we have to investigate. >> do you share this information with other states?
▶ 2:50:43Whenever you find out that there's, you know, a certain scheme going on? >> absolutely. That is the value of our national association. All 50 states and the three territories work together to share schemes. And, um, we talk more openly than I think we had to even several years ago, because we need to know who are these people and how do we get on top of it? How do we collaborate? Uh, we we teach training programs.
▶ 2:51:07Right now, we have a group over at our main office who are preparing on nursing home fraud, and they're creating a curriculum to teach how to identify that. >> for us. I'm telling you, special place in hell for these people. Um, let me let me shift gears here. I want to talk about something else that I'm interested in. That's skin substitute pricing and cost. Um, over the past two years alone, medicare part b expenditures for skin substitutes have skyrocketed from roughly 400,000,000 in 2022 to more than 10 billion.
▶ 2:51:34Hear me, 400,000,000 in 2022 to more than 10 billion with a b in 2024. That's a staggering 640%. Again, they see this happening man. Like buzzards just coming together. So I, I introduced the skin substitute access and reform act.
▶ 2:51:55And this targets runaway pricing and inappropriate prescribing through program integrity reforms that target the top 3% of providers, generating nearly two thirds of the medicare skin substitute billing with program integrity reforms and setting a payment rate at a sustainable level that protects patient access. I'm concerned. And, Mr. knuckles, I'm going to ask you this one.
▶ 2:52:18I'm concerned that the approach of setting a very low payment rate without specifically targeting problematic, problematic providers may be harming patients. From your perspective, does an artificially low reimbursement rate risk restricting access for legitimate patients and providers? >> uh, thank you very much for the question. Uh, representative carter, um, from where I sit on the business side of things, I can tell you that, uh, that no one will give skin substitutes.
▶ 2:52:47Patients will not receive skin substitutes based on the current, uh, regulations that were passed by the secretary and the hhs. >> that's what I'm. >> hearing you. Whether it's comparable or better than existing treatments, you would have to ask a physician. >> we don't want to swing that pendulum too far. I mean, we got to correct it, but you got to be careful not to swing it too far. So would a more targeted program integrity approach be a better way to do it?
▶ 2:53:12>> um, I don't know that I'm qualified to say that because I just, I don't know, I know this the current program will cease, uh, almost all skin substitutes from being exactly. >> and see, again, I don't want that to happen. And I don't think anybody wants it to happen. We ought to be targeting those those bad actors and how we can get to them. Thank you, Mr. chairman, again, for letting me sign on to this. And thank you all for being here. And I yield back. >> the gentleman yields the chair now recognizes the gentleman from california, Mr. mullen, for his five questions, five minutes of questioning.
▶ 2:53:42>> thank you, Mr. chair. Thank you all for being here today at face value. Fraud and government programs is an important topic for this subcommittee to consider. We have a responsibility to ensure federal programs under our jurisdiction are being implemented as intended by congress, and that federal dollars are going to communities that need assistance. However, we cannot discuss healthcare fraud without discussing the deeply troubling actions by this administration in the name of addressing fraud.
▶ 2:54:10The trump administration has deployed ice agents to minnesota under the guise of at least partially addressing medicaid fraud. We have all seen with our own eyes that this mission is leading to the killing of american citizens and terrorizing innocent families, but what is the majority on this committee chosen to do while american citizens are being executed by their own government on american soil, they open an investigation on minnesota's medicaid program.
▶ 2:54:36Miss wooten cms is specified in its comprehensive medicaid integrity plan that individual states are empowered to best address program integrity challenges with cms supporting. And yet, the federal government is attempting to take the lead on fraud allegations in minnesota out of nowhere. Miss wooten, do you believe we can get better outcomes in medicaid fraud investigations and enforcement actions when local, state and federal agencies closely collaborate?
▶ 2:55:05And why would that be the case? >> that collaboration is critical because fraudsters are not just in one state doing one particular fraud. They travel from state to state, and the states don't have the tools to cross state boundaries. We don't have authority to prosecute or investigate in those states. We collaborate closely with federal partners. They are integrally involved with us. In fact, hhs oig pays 75% of everything we do so we can collaborate.
▶ 2:55:29So we need to put all the tools we possibly can in this toolbox to combat fraud. That would include state, federal and local partners. >> I do appreciate that. In your experience leading fraud against investigations, could you tell us does the department of homeland security just part department of homeland security, typically play any role in investigating medicaid fraud? No. Okay.
▶ 2:55:54So-called fraud is also being used by this administration as a catch all excuse to cut health care spending and punish states that didn't vote for the president. In h.r. One, the republicans big, ugly bill, they cut $1 trillion in health care spending to supposedly address waste, fraud and abuse. Um, but when you look past their messaging, this bill is stripping 15 million americans of their health care coverage and giving a tax break to corporations and billionaires.
▶ 2:56:23There are also countless examples of this administration freezing or canceling federal dollars for political reasons. Just a month ago, the department of homeland. Department of health and human services froze child care and family assistance grants going to five states with democratic governors, including my home state of california. They claim it was to ensure program integrity and fiscal responsibility. But families relying on these programs are hurt in the process.
▶ 2:56:45So, miss telepan, uh, as you highlighted in your testimony, fraud on some level is inevitable, but well resourced oversight can successfully detect and address widespread issues. So my question is, is unilaterally freezing billions of dollars in assistance a smart, targeted way to address fraud, especially when it comes at the expense of ripping essential health services away from beneficiaries? And what are some more effective approaches? >> um, thank you for your question.
▶ 2:57:14I haven't examined that. Uh, those specific states, uh, particularly in preparation for this hearing. But I will say this, ultimately, once you are completely shutting down programs, whether it's cutting off contractors from their access to contracts, shutting down spending in certain areas in a kind of blanket way, um, it can it may be able to stop any type of fraud, but it could also harm innocent individuals as well.
▶ 2:57:40And so what we typically would say is you'd want to have a response that's proportional to what you're detecting. And while I wouldn't be able to say without examining those particular states what that is, um, generally when we see either fully excluding from a program completely ceasing funding something or again, kicking certain contractors or companies out of a system, um, usually that is the nuclear option. Um, and so ultimately, again, people I usually like to recommend, uh, a scalpel instead of a sledgehammer. >> thank you for that.
▶ 2:58:09I just want to wrap up by saying I'm deeply concerned about the weaponization of allegations of fraud to enact a political agenda. And I know that my colleagues on this side of the aisle and I will not stop calling out that hypocrisy. And, mister chair, appreciate the time, and I yield back. >> the gentleman yields. Seeing there are no further members wishing to ask questions, I would like to thank our witnesses again for being here today.
▶ 2:58:33I ask unanimous consent to insert in the record the documents included on the staff hearing documents list, without objection, so ordered pursuant to committee rules. I remind members that they have ten business days to submit additional questions. For the record, I ask the witnesses submit their response within ten business days. Upon receipt of the questions, members should submit their questions by the close of business on wednesday, february 18th. Without objection, the subcommittee is adjourned.