Testimony of Prof. Timothy Westmoreland – Medicaid Oversight: Existing Problems and Ways to Strengthen the Program

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This statement was given by Professor Timothy Westmoreland on January 31st, 2017 to the Subcommittee on Oversight and Investigations, Committee on Energy and Commerce. Prof. Westmoreland is a Senior Scholar at the O’Neill Institute for National and Global Health Law and Visiting Professor at Georgetown University Law Center. Any questions or comments can be directed to Timothy.Westmoreland@georgetown.edu.

Mr. Murphy, Ms. DeGette, and Members of the Subcommittee, thank you for the invitation to speak to you today.

My name is Tim Westmoreland. I am a professor from practice at Georgetown University Law Center, where I teach health law, among other topics. I do want to be clear, however, that I am testifying in my personal capacity today and that the views I present are my own. I believe that the reason I was invited today is not because of my academic work but because I was the director of the Medicaid and CHIP programs during the last years of the Clinton Administration.

Because of that work, I take a backseat to no one on program integrity issues in the Medicaid program. When I took the Medicaid director job, combatting fraud and abuse was one of my top priorities. I worked closely with both the GAO and the OIG at that time and, in fact, have testified several times with them before the Congress. Ensuring program integrity is often a thankless task, but people who care about Federal programs have to work to ensure that Federal funds are well used.

Program integrity problems are, however, not new. Military contractors cheated the Union Army during the Civil War.[1] This gave rise to the False Claims Act of 1863,[2] sometimes known as “Lincoln’s Law.”[3] This law is still actively used to protect the Federal fisc, including on some occasions, the Medicaid program.[4] From at least 1863 onward, it is a truth universally acknowledged that any place where money is being spent—whether it be private, State, or Federal, and no matter how good the cause—there are bad actors trying to steal some of it.

Program integrity efforts are especially important in Medicaid. This is because billions of dollars are at stake as are the health and well-being of the most vulnerable people in America. Those bad actors who steal from this program are not engaged in a heist of luxury goods; they are stealing the very means of survival from people who have nowhere else to turn and from the honest doctors and hospitals who furnish needed services to them. This importance is well illustrated by the fact that at the same time the Affordable Care Act (ACA) expanded Medicaid coverage, it also made significant improvements in program integrity efforts (as the GAO and OIG each observe).

But, as important as combatting fraud and abuse in Medicaid is, policymakers should keep it in perspective. No statistic makes sense if you do not consider the denominator as well as the numerator. As big as they are, the numbers must be viewed as what they are and as a whole.

First, we should all be careful about our terms. Not all of what is labeled “improper payments” are fraud or even mistaken; many are appropriate but simply badly documented (and may even be underpayments), and the actual loss to the government is much smaller than it may appear.[5]

But, even so, the worst of the worst estimates using the broad term “improper payments” in Medicaid (including underpayments, overpayments, errors, and insufficient documentation) is 10%.[6] That is a bad number that should be dramatically reduced. But, keeping it in perspective, it is actually less than the overhead-and-profit costs that are routine in private health insurance, costs that do not represent the provision of needed health services but that are taken for granted.[7] [8]

Moreover, as the prepared statements of the GAO and OIG witnesses at today’s hearing have outlined, HHS has already implemented many efforts to address the more serious problems of program integrity. Some of the efforts are longstanding and some of them are just underway, but there are many activities focused on making sure that Medicaid is spending its money well and they are having an effect.

This is wrong. Program integrity problems are meaningful only when they are considered in the context of the many successes of Medicaid. Oscar Wilde defined a cynic as someone “who knows the price of everything and the value of nothing.”[10] In that vein, too often the discussion is just of the payments of Medicaid, when in fact you can understand the real value of the program only by looking at what it is paying for.

For example, the Medicaid Expansion of the ACA means that:

  • 11 million Americans have Medicaid coverage who did not have it three years ago.[11]
  • The percentage of people without insurance in America is at an all-time low of 8.9%.[12] Most people have their coverage through employer-sponsored insurance, and the Exchanges are covering millions more, but Medicaid is a major part of this improvement.
  • The burden of uninsured care in hospitals in Expansion States is down 39%,[13] and costs to those States are commensurately lower.[14]
  • Rural hospitals in Expansion States are at half the risk of closure of those in non-Expansion States.[15]
  • Community health centers are seeing 40% more patients.[16]
  • Unmet health care needs among low-income adults in Expansion States has declined by more than 10% and use of preventive services has increased.[17]
  • People with serious mental illness are 30% more likely to receive services in Expansion States.[18]
  • Services for opioid addiction are available to working-age adults, often for the first time.[19]
  • Financial security has been increased and personal debt has been lowered in Expansion States.[20] Medicaid expansion is also associated with a decline in personal bankruptcies.[21]

The Medicaid Expansion of the ACA has fundamentally repaired a longstanding mistake in the program. For almost 50 years, Americans could get help only if they were poor and something else: Poor and pregnant, poor and a child, poor and with a disability, poor and elderly. Just being poor and uninsured was not enough. People had to fit into some sort of category.

But this “categorical eligibility” has never made sense. Poor women need health insurance both before and after they have their babies. Poor children keep needing health insurance even when they turn 19. Poor people with chronic illnesses need health insurance before they become totally disabled. Poor older adults need health insurance when they’re 64, not suddenly when they are 65. The real problems are poverty and uninsurance. Categorical eligibility has irrationally rationed a sensible response.[22]

In the 32 States that have adopted the Medicaid Expansion, we are making this part of the American insurance system sensible and fair for vulnerable people. Please do not turn back this response.

Lincoln did not give up the Civil War because the government was sold bad mules. We do not stop buying drugs because drug-makers charged a fraudulent price.[23] We punish wrongdoers, correct the price, and get the treatment to people in need. That is what should be done here.

Don’t reverse all this progress by rationalizing that program-integrity problems demand wholesale legislative change in Medicaid. There are real babies in that bathwater.

The hearing documents can be found here.

[1] See L. Lahman, “Bad Mules: A Primer on the False Claims Act” (Oklahoma Bar Journal, April 9, 2005), available at http://www.okbar.org/members/BarJournal/archive2005/Aprarchive05/obj7612fal.aspx (“The Federal False Claims Act (FCA) was enacted in part because of bad mules. During the Civil War, unscrupulous early day defense contractors sold the Union Army decrepit horses and mules in ill health, faulty rifles and ammunition, and rancid rations and provisions among other unscrupulous actions.” [Citations omitted.])

[2] Now codified at 31 U.S.C. 3729 et seq., available at https://www.law.cornell.edu/uscode/text/31/3729

[3] See, e.g., “Celebrating the 150th Birthday of Lincoln’s Law” (Forbes, March 6, 2013), available at http://www.forbes.com/sites/realspin/2013/03/06/celebreating-the-150th-birthday-of-lincolns-law-privatized-fraud-fighting/#3135614a47da

[4] See, e.g., Department of Justice, “Justice Department Recovers over $3.5 Billion from False Claims Act Cases in Fiscal Year 2015” (Press release, December 3, 2015), available at https://www.justice.gov/opa/pr/justice-department-recovers-over-35-billion-false-claims-act-cases-fiscal-year-2015

[5] See PaymentAccuracy.gov at https://paymentaccuracy.gov/faq/; also “Medicaid and CHIP 2015 Improper Payments Report” (HHS, November 2015) available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicaid-and-CHIP-Compliance/Downloads/2015MedicaidandCHIPImproperPaymentsReport.pdf , saying “[T]hese errors do not necessarily represent payment to illegitimate providers who should have not been enrolled in Medicaid or CHIP and do not necessarily represent examples of abuse or fraud. Rather the majority of erroneous payments represented situations where information required for payment was missing from the claims or states did not follow the appropriate process for enrolling providers. Had such information been on the claims and/or had the state followed the correct enrollment process, the claims may have been payable.”

[6] See CMS, “Medicaid and CHIP 2015 Improper Payments Report,” id.

[7] D. Archer “Medicare is More Efficient than Private Health Insurance,” (Health Affairs Blog, September 20, 2011), available at http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/; cf. “The average adjusted [ACA Medical Loss Ratio] was 89.5% in the large group market, 85.0 percent in the small group market, and 78.8 percent in the individual market.” GAO, “Medical Loss Ratios” (GAO-12-90R, October 31, 2011) available at http://www.gao.gov/new.items/d1290r.pdf

[8] Indeed, the ACA’s imposition of a Medical-Loss Ratio that limits private insurance overhead and profit to as much as 15-20% was greeted with some controversy. See, T. Jost, “Implementing Health Reform: The Minimum Loss Ratio and Summary of Benefits and Summary of Benefits and Coverage” (Health Affairs Blog, May 13, 2012), available at http://healthaffairs.org/blog/2012/05/13/implementing-health-reform-the-minimum-loss-ratio-summary-of-benefits-and-coverage/

[9] See, e.g., “Health Care Fraud Abuse Annual Report: 2015” (HHS and DOJ, February 2016), available at https://oig.hhs.gov/publications/docs/hcfac/FY2015-hcfac.pdf; D. Heath, “Senate Report Recommends Ouster of Large Dental Chain from Medicaid” (Center on Public Integrity July 23, 2013), available at https://www.publicintegrity.org/2013/07/23/13029/senate-report-recommends-ouster-large-dental-chain-medicaid-program; K. Young and R. Garfield, “Spending and Utilization of Epi-Pen Within the Medicaid Program” (Kaiser Family Foundation (KFF), October 7, 2016), available at http://kff.org/medicaid/issue-brief/spending-and-utilization-of-epipen-within-medicaid/#footnote-199903-10;

[10] O. Wilde, “Lady Windermere’s Fan” (1892) in The Plays of Oscar Wilde (1988).

[11] R. Rudowitz, S. Artiga, and K. Young, “What Coverage and Financing is at Risk Under a Repeal of the ACA Medicaid Expansion?” (KFF, December 6, 2016), available at http://kff.org/medicaid/issue-brief/what-coverage-and-financing-at-risk-under-repeal-of-aca-medicaid-expansion/

[12] CMS, “Medicaid and CHIP: Strengthening Coverage, Improving Health (January 2017), available at https://www.medicaid.gov/medicaid/program-information/downloads/accomplishments-report.pdf

[13] R. Rudowitz and R. Garfield, “New Analysis Shows States with Medicaid Expansion Experienced Declines in Uninsured Hospital Discharges,” (KFF, September 2015), available at http://files.kff.org/attachment/issue-brief-new-analysis-shows-states-with-medicaid-expansion-experienced-declines-in-uninsured-hospital-discharges

[14] J. Perkins and I. McDonald, “50 Reasons Medicaid Expansion is Good for Your State” (National Health Law Program, January 2017).

[15] D. Bachrach, P. Boozang, A. Herring, and D. Reyneri, “States Expanding Medicaid See Significant Budget Savings and Revenue Gains” (State Health Reform Assistance Network, March 2016), available at http://statenetwork.org/wp-content/uploads/2016/03/State-Network-Manatt-States-Expanding-Medicaid-See-Significant-Budget-Savings-and-Revenue-Gains-March-2016.pdf

[16] J. Paradise, “Community Health Centers: Recent Growth and the Role of the ACA” (KFF, January 18, 2017), available at http://kff.org/report-section/community-health-centers-recent-growth-and-the-role-of-the-aca-issue-brief/

[17] CMS, supra, n. 12.

[18] B. Han, et al., “Medicaid Expansion Under the Affordable Care Act: Potential Changes in Receipt of Mental Health Treatment Among Low-Income Nonelderly Adults With Serious Mental Illness,” (American Journal of Public Health, October 2015), available at http://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2014.302521?url_ver=Z39.88-2003&rfr_id=ori%3Arid%3Acrossref.org&rfr_dat=cr_pub%3Dpubmed

[19] D. Bachrach, P. Boozang, A. Herring, and D. Reyneri, “Medicaid: States’ Most Powerful Tool to Combat the Opioid Crisis,” (State Health Network, July 2016), available at http://statenetwork.org/wp-content/uploads/2016/07/State-Network-Manatt-Medicaid-States-Most-Powerful-Tool-to-Combat-the-Opioid-Crisis-July-2016.pdf

[20] L. Hu, et al., “The Effect of the Patient Protection and Affordable Care Act’s Medicaid Expansions on Financial Well-Being” (National Bureau of Economic Research, April 2016), available at http://nber.org/papers/w22170.

[21] T. Gross and M. Notowidigdo, “Health Insurance and the Consumer Bankruptcy Decision: Evidence from Expansions of Medicaid” (Journal of Public Economics, March 2011), available at http://isiarticles.com/bundles/Article/pre/pdf/48303.pdf

[22] See, e.g., comment by Joe Parks, director of the Missouri Medicaid program, a State that has not expanded coverage: “The best way to get treatment if you’re addicted to drugs in Missouri is to get pregnant.” Bachrach, supra.

[23] Department of Justice, “GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud Allegations and Failure to Report Safety Data: Largest Health Care Fraud Settlement in US History” (Press Release, July 2, 2012), available at https://www.justice.gov/opa/pr/glaxosmithkline-plead-guilty-and-pay-3-billion-resolve-fraud-allegations-and-failure-report; see generally, Office of Inspector General (HHS), “OIG Compliance Program Guidance for Pharmaceutical Manufacturers” (April 2003), available at https://oig.hhs.gov/fraud/docs/complianceguidance/042803pharmacymfgnonfr.pdf

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Banning free soda refills: building on soda taxes to reduce obesity

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Late last week, the French government boosted its efforts to tackle obesity by banning free soda refills. The soda refill ban builds on a series on measures the French government has implemented to reduce consumption of unhealthy foods and beverages: there is a nation-wide tax on sweetened drinks, vending machines are banned in schools, and french fries may only be served once a week in school cafeterias. Inspired by the French government’s ongoing efforts to adopt a range of measures to reduce soda consumption, this post suggests additional measures US lawmakers can take to build on the momentum of soda taxes. Read More

Posted in Non-communicable diseases; Tagged: , , .


Reinstatement of the Mexico City Policy: History, Implications & Opposition

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This post was written by Brenna Gautam and Rebecca Reingold.

Image courtesy of Vox.

On January 23rd, President Trump signed a presidential memorandum reinstating the Mexico City Policy, also referred to as the “Global Gag Rule”: a restriction first introduced by Ronald Reagan that denies federal funding to NGOs that provide abortions, offer abortion counseling, or advocate for abortion rights in other countries. Arriving one day after the forty-third anniversary of Roe v. Wade and two days after women around the globe joined in Women’s March protests, this decision served as a cold, stark reminder of President Trump’s stance on reproductive health and rights abroad.

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Posted in Human Rights; Tagged: , , , , , , , , .


Informed Consent, Gendered Power Relations and the IACHR: the I.V. vs. Bolivia Case

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This post was written by Andrés Constantin. Andrés is an Adjunct Professor of law at Universidad Torcuato Di Tella. Any questions or comments can be directed to aconstantin@utdt.edu.

The right to health requires respect for the will of the individual person with respect to his or her own well-being. To that effect, informed consent should be regarded as an essential aspect of the right to health. In its recent judgment in the I.V. vs. Bolivia case, the Inter-American Court of Human Rights concluded that medical interventions without the patient’s consent violated the rights to personal integrity, to personal freedom, to dignity and to private life.

The facts of the case concerned the sterilization to which Mrs. I.V. was subjected in a public hospital in Bolivia on July 1, 2000. The surgery was performed without the informed consent of I.V. and resulted in her permanent and forced sterilization.

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Stand Up, Speak Up, Speak Out: The Dignity of Protest

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[This blog was originally posted on January 20 through the IMAXI Cooperative. Since then, the millions of people at Women’s Marches across the United States — and the world — offer much reason for hope that a great many people will stand up and speak up for the rights of all of us when they are under threat. Our readiness to protest, to stand for dignity, will need to persist, for reasons that extend far beyond any particular policy objective….]

“Our lives begin to end the day we become silent about things that matter.” — Martin Luther King, Jr.

“Show up, dive in, stay at it,” implored President Obama in his recent farewell address. In a different context, Congressman John Lewis (the civil rights leader best known for his courage in leading a peaceful 1965 march for voting rights, during which he was severely beaten by state troopers as the march got underway in Selma, Alabama), who serves as a moral compass for so many, including myself, also recently spoke of the need to “stand up, speak up, and speak out.”

I expect that over the next several years, in the United States, many people will be in the streets, standing up and speaking up, as the next administration takes charge amid widespread fear that it will seek to roll back a sweeping array of human right and social justice advances. Yet probably far more people who deeply oppose what appears to lie ahead will not join the marches, rallies, and other avenues of peaceful protest. One reason: quite understandably, they may feel – as many of those who decide to march or otherwise make their voices heard might feel as well – that those in power in Washington will pay them no heed. What good is protesting, they may wonder, if when they speak truth to power, no one listens?

Yet with good reason, such protests have long been at the core of social justice movements – and are at the heart of what we need to do when justice is on the line in the days and years ahead. I believe we need to speak out whenever we see injustice – even when there appears little chance that those who hold office will heed our call. Here are reasons why.

* Affirming the dignity of the oppressed: Like so many, I have heard the passion in the voices of people who belong to routinely disparaged communities, yet who still have the courage to speak out. Most recently it was at a rally to affirm the rights of immigrants I attended as part of a national day of action for immigrant rights. It was the voice of a Latina woman. She will be threatened with deportation if the next president rolls back protections for immigrants who, like her, entered the United States as children without proper documents (one of the Dreamers protected as part of the Obama Administration’s Deferred Action for Childhood Arrivals [DACA] program). She speaks out, insisting that in our country, justice will yet prevail. Her voice rings with determination and dignity, courage and conviction. She has, as we all have, the power to resist injustice. She has surely been told more than once that she does not count, that she is “illegal,” that she should keep quiet. Yet in standing tall, she declares that she does matter, that she is a person equal to every other person – and that no, no, she will not be silenced. Succeed or not in preserving DACA, this struggle for justice, her belief that she has the capacity – with all of us by her side – to make powerful forces bend to an almost sacred insistence on justice fills her with purpose. No doubt this not only lifts her spirits, but it also lights a flame within the core of her humanity that casts a light upon us all.

Image courtesy of IMAXI Cooperative.

And how much more impact she can have when tens, hundreds, thousands of people stand with her. It is no wonder that social justice movements are infused with insistent commitments to solidarity. That is why we stand together – those whose rights are under the greatest threat alongside those (like me) who have attained a certain level of privilege and who are not in immediate peril. When we stand in solidarity with immigrants, Muslims, and everyone else who may be directly harmed, told that they do not belong here, or that their lives don’t really matter – when we say, yes you belong, you are equal to everyone, you are as important as everyone – that message is itself of real value and consequence. Read More

Posted in Global Health, Human Rights, National Healthcare; Tagged: , , , , , , .


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The views reflected in this blog are those of the individual authors and do not necessarily represent those of the O’Neill Institute for National and Global Health Law or Georgetown University. This blog is solely informational in nature, and not intended as a substitute for competent legal advice from a licensed and retained attorney in your state or country.

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