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REMARKS BY:	DONNA E. SHALALA, SECRETARY OF HEALTH AND HUMAN SERVICES
PLACE:		National Congress On Healthy Care Compliance, Washington, D.C.
DATE:		February 11, 1999

 Blowing The Whistle on Health Care Fraud


Thank you Brent for your gracious introduction, and for giving me this opportunity to open the 2nd 
Annual National Congress on Health Care Compliance.


I know you have many speakers today, so I'm going to follow the advice of a President who knew 
that public policy often rides to victory on public words.  Franklin Roosevelt said, the secret to giving a 
good speech is:  Be sincere.  Be brief.  Be seated.


I'm going to be all three.


But since this is Oscar time, I'd like to start by talking not about fraud - but about film.  Several 
weeks ago a member of my staff asked me to choose my favorite movie of 1998.  She brought this request 
to me on behalf of a national magazine that was chasing down Academy Award suggestions from 
prominent women.  My staff person thought she would make my life easier by giving me summaries of 
several recent movies.  She did that on the assumption that I hadn't seen any of them.  But, in fact, I had 
seen them all.

	
I tell you this story to make two points.


First, I think it's important for policymakers to live in the real world, to know what's on the minds 
of working Americans.  That means everything from popular culture to long term health care.  Second, I 
think that Hollywood has missed the boat.  	There are movies and television shows about almost every 
conceivable crime - and every conceivable crime fighter.  Except one:  The extraordinary battle being 
waged to prevent health care fraud when possible - and to prosecute it vigorously when necessary.


You are on the frontlines of this battle, and although Hollywood may not know who you are, this 
Administration and the American people certainly do.  You are guardians of our nation's sacred promise 
that seniors, the poor, and the disabled will have adequate health care.  Or as the President said in his State 
of the Union address, "We must fulfill our obligation to save and improve Medicare."


That's why the President is proposing to use one in six dollars of the surplus for Medicare for the 
next 15 years.  That will keep the Trust Fund solvent for two decades while we work out an even longer-
term solution.  We must make these changes because Medicare is facing a demographic time bomb.  As the 
President pointed out, the Baby Boom is about to become a Senior Boom.  There's not much we can do 
about the fact that the generation that grew up watching Leave it to Beaver is now watching its own 
children - and grandchildren - grow up.  But there is a great deal we can do about another threat to both 
Medicare and Medicaid.


Fraud and abuse are insidious cancers threatening the life of publicly funded health insurance.  
During the debate over the President's health care reform plan, I held town meetings across the country.  
At these meetings I found that not many people were interested in the President's plan.  Instead, they 
wanted to know when we were going to make war on waste and fraud.

I came back to the Department, and with strong support from Inspector General June Gibbs-
Brown, put together a team - and a plan - to fight waste, fraud and abuse.  


That plan was Operation Restore Trust.


We wanted to send a two-word message to every part of the health care industry:  We have zero 
tolerance for waste, fraud and abuse.  ORT began as a pilot project in 5 key states and quickly identified 23 
dollars in overpayments for every dollar spent looking for fraud.  We convinced the Office of Management 
and Budget to let us finance ORT with mandatory dollars - and expanded the program into a nationwide 
campaign.  OIG, HCFA, our General Counsel's office, the FBI, U.S. Attorneys and state Attorneys General 
are all part of Operation Restore Trust, and are all working together as a team in an increasingly 
sophisticated - and coordinated - assault on fraud.


Frankly, if the cheats think they're dealing with gumshoes, they're making a big mistake.  
Fighting fraud is now a high tech operation.  We're investing significant funds in high-speed computers 
and software so that our contractors - outside experts trained in the fine art of detecting fraud - have 
whatever they need to get the job done.  We're even doing a survey of private sector technology to make 
sure we keep ahead of the game.


As for whistleblowers, our message is simple:  If you call, we'll respond.


Let me emphasize: We start from the assumption that people in the health care business are 
scrupulous and honest, that you want what we want, good quality health care for all.  That's my belief:  
That the vast majority of providers go to work every day and do the right thing.


We also know that some of the problem is not fraud  - but sloppy billing and record keeping.  
Nevertheless, to every health care worker, manager and company that is cooking the books, skimming off 
the top, charging for services not performed or performing services that the patient doesn't need, our 
message is clear: We will find you.  We will prosecute you.  We will put you in jail, if necessary.  And we 
will return what you stole to the American taxpayers.


If anyone doubts that, just look at our record.


In the last two years, we returned more than 1.2 billion dollars to the Medicare Trust Fund.  
We've also excluded more than 5,700 individuals and entities from doing business with federal and state 
health care programs, and expanded funding for the Office of Inspector General so that it could open 15 
new field offices.  Since 1993, actions affecting just HHS health care programs have saved taxpayers 
almost 39 billion dollars, and led to a 240 percent increase in health care fraud convictions.  Just this week 
we were able to announce that improper Medicare payments to hospitals and other health care providers 
dropped dramatically last year.  The error rate in 1998 was 7.1 percent.  That's a remarkable 45 percent 
reduction in overpayments in just two years.


The growth rate of Medicare is also down sharply.  We may not be able to repeat last year's 
remarkably low rate of 1.5 percent.  Still, this is the first time in the history of the Medicare program that 
some of the decline in the rate of growth is officially attributed to our anti-fraud efforts.  As for the future, 
anti-fraud proposals in the President's new budget would save Medicare almost 3 billion dollars over the 
next five years.


So a comprehensive of strategy of better funding, tougher oversight and stricter enforcement are 
all contributing to the fight against fraud and abuse.


But beating fraud doesn't just require a strategy, it requires an infantry.  


And this battle has one of the best.



First, there are our lead fraud fighters in the Health Care Financing Administration and in Office 
of Inspector General, real people like Bruce Vladeck; his successor, the gifted Nancy Ann Min-DeParle at 
HCFA; and the best Inspector General in government, June Brown.  These leaders work closely with each 
other - and with our partners at Justice, the FBI, U.S. Attorneys, state Attorney's general, and other 
governmental officials.  Together, they have brought commitment, determination and skill to stamping out 
waste, fraud and abuse.


Second, there are countless citizens from all walks of life who - when they see fraud - step 
forward and help stop it.  Four years ago, an elderly woman came up to me and told me she "worked" for 
me.  I was a little skeptical, but I said, "That's great, what do you do.  She replied, `I'm one of your fraud 
busters.'"  We've already received over 48,000 tips on our Fraud and Abuse Hotline that warranted follow-
up.  


Our Administration on Aging has trained thousands of paid and unpaid volunteers to recognize 
and report fraud in nursing homes and other long term care settings.  We're about to launch a partnership 
with AARP in which AARP will ask beneficiaries to scrutinize their Medicare statements - and report 
questionable charges.  The AARP agreement is in addition to another new program that rewards citizens up 
to 1,000 dollars for reporting fraud and abuse in the Medicare program.


The third leg of our anti-fraud infantry is you - CEOs, health care compliance officers, lawyers, 
accountants and consultants, working from both inside and outside, to keep the system clean.  To stop the 
gaming.  To stop the looting.  To protect older Americans and the integrity of publicly funded health care 
for future generations.


You can't do this job alone.  And we don't expect you to.  


That's why our goal is to make your work easier and more effective - and to encourage all health 
care providers to voluntarily strengthen their internal controls.  Remember, when determining sanctions, 
penalties and exclusions, the Inspector General takes into account whether you have an effective 
compliance program in place.


To help make that possible, we have developed model compliance guidelines for clinical labs, 
hospitals, home health agencies and - just last November - third party billing companies.  


More voluntary guidelines are in the works for HMOs and medical equipment providers.  But we 
both know that implementing a compliance program is no guarantee of success.  Anti-fraud programs must 
be tailored to the specific needs of each provider - taking into account size, financial condition and prior 
history of non-compliance of the provider.


I started my remarks this morning by talking about movies.  And as I suggested, movies are 
usually about individual heroes.   My point is, we can't fight fraud and abuse solely on the macro level - 
with tougher laws and more oversight.  We have to wage this battle on the micro level too.  Every auditor.  
Every investigator.  Every general counsel.  Every accountant.  Every administrator.  Every provider - 
must be part of the fight against waste, fraud and abuse.


With that in mind, I want to pose three simple challenges to you - challenges that will help keep 
the abusers on the run - and out of business.


First, as we both know, when something sounds like a scheme - it usually is.  So, don't just be on 
the lookout for irregularities - listen for them too.  That means paying attention to what patients, family 
members and frontline health care workers are saying.  They may not have your expertise, but they are 
often the first to know - and the first to speak up. 


Second, maintain a steady focus on internal controls and good record keeping.  That certainly 
means following a policy of tough management and continuous audits.  But it also means spreading the 
word throughout your organizations that everyone - from support staff to senior staff - has a role to play in 
preventing over billing and sloppy billing.  If we can do away with the unintended mistakes, we will all be 
able to spend more time, money and expertise on the intended abuse.


My third challenge is that you continue to work with each other - and us.  Some of the most 
creative thinkers on how to fight fraud and abuse are right in this room.  You are the experts.  You are the 
experienced watchdogs.  You know the best practices.  And you can tell us where we need to clarify our 
rules.


So I hope the information sharing that lies at the heart of this meeting will continue long after you 
adjourn.  Similarly, I encourage you to work closely with HCFA and the Office of Inspector General.  
Government regulation is an important weapon in the fight against fraud.  So we have no intention of 
abandoning our oversight responsibility.  But oversight is best used - not as a club - but as a tool to 
promote our common goal of preventing fraud and abuse.  


That's why we favor voluntary compliance with all laws and regulations.  And that's why we're 
here to help you.  With advice.  With voluntary compliance guidelines.  And with answers to your 
questions.  That way, as our population ages - and the demands on Medicare and Medicaid expand in the 
next century - we will not only be saving precious dollars, we'll be saving precious lives. 


And that, after all, is what the fight we share against fraud is really all about.


Thank you.

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