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National Health Care Fraud Summit

Bethesda, MD - January 28, 2010

Good morning. I want to join Deputy Secretary Corr and Incoming Acting Deputy Attorney General Grindler in welcoming you here today.

We’re here because this administration has zero tolerance for criminals who steal from taxpayers, endanger patients, and jeopardize Medicare’s future. At a time when many families are scraping together every last dollar to pay their medical bills, fraud, waste, and abuse in our health care system are unacceptable.

Today, the President has asked us to put these criminals on notice. Attorney General Holder and I have convened this unprecedented Summit, featuring leaders from the public and private health care sectors, because we believe that the problem of health care fraud is bigger than either government, law enforcement or the private industry can handle alone. We will need all of us working together to solve it. In the fight to prevent, find, catch, and prosecute these crooks, we want every good idea we can get.

Everyone here has something to offer because health care fraud is a national problem. It affects federal programs like Medicare, state programs like Medicaid, and private insurance companies. We’re all vulnerable because we’re all part of a health care system that has been undergoing rapid growth. Between 1970 and today, America’s annual health care spending has gone from $75 million to over $2.5 billion. That has produced significant benefits for patients. But it’s also created a much bigger target for criminals. And a much bigger challenge for investigators. The difference between catching fraud then and now is the difference between trying to find a penny in a bathtub and trying to find a penny in a swimming pool.

It’s not that we didn’t take steps to improve our ability to detect and prosecute fraud during those 40 years. We did. But the problem grew faster than our solutions. We fell behind, and Americans paid the price. Today, Medicare, Medicaid and private insurance companies all pay out billions of dollars in fraudulent claims, and charge Americans higher premiums to pay for it. When a criminal sends a false claim to an insurer, he’s stealing from all of us. And there are other victims too, like the patients who get fake or unnecessary treatments from crooked health care providers who bill insurers for the full amount.

From the perspective of this administration, what’s even worse is that health care fraud violates two sacred trusts: our promise to taxpayers that we will spend their money wisely and our promise to seniors and all Americans that we will do everything we can to protect Medicare for this generation and generations to come. To keep that trust, we knew that we had to act now.

So last May, President Obama instructed Attorney General Holder and me to create a new Health Care Fraud Prevention and Action Task Force, which we call HEAT for short. HEAT is an unprecedented partnership that brings together high-level leaders from both departments so that we can share information, spot trends, coordinate strategy, and develop new fraud prevention tools.

Let me give you one example of how HEAT is already changing the way we fight fraud. Ten years ago, when you found out about a fraud scheme, it was usually because you got a tip from an informant. That’s still a useful law enforcement tool. But with more than four and a half million claims being paid out every working day from Medicare alone, we can’t afford to sit around and wait for tips to come in. We needed to be more proactive.

So as part of our new partnership with the Justice department, we’re developing tools that will allow us to identify criminal activity analyzing suspicious patterns in claims data. Medicare claims data used to be scattered among several databases belonging to different contractors. If we wanted to find out how many claims had been made for a certain kind of wheelchair, we had to go look in several different places. But now, we’re combining all Medicare paid claims data into a single, searchable database. (And we pay over $1B in claims every day!) Which means for the first time ever, we’ll have a complete picture of what kinds of claims are being filed across the country, and where they’re being filed from.

We’re also getting smarter about the analyzing claims in real time. Using new tools and methods, we can spot trends, whether it’s in geographic areas or in the type of billings. And once you start looking at this data, what you find is shocking. There are counties where claims for one kind of treatment are ten times higher than the county next door with no reasonable explanation. For example, we were recently able to see that Miami Dade County, which is home to two percent of Medicare home health patients, has ninety percent of home health patients receiving more than $100,000 in care each year. When you see numbers like that, you don’t need a PhD in statistics to know something is going on.

In a few minutes, you’re going to hear from Attorney General Holder about how we’re using this information to crack down on criminals. One of our most effective tools has been our unique Strike Force teams, which are made up of federal prosecutors, FBI agents, and agents from my department’s Office of the Inspector General who know more about fighting health care fraud than just about anybody.

But prosecuting fraud is only half of our strategy. The most effective way to protect taxpayers’ money is to stop fraud from happening in the first place. That’s why we also have an aggressive new focus on prevention. One good example is what we’re doing to stop fraudulent claims for durable medical equipment. That’s the category that includes everything from wheelchairs to diabetes test strips, and it used to be very appealing to criminals because it was relatively easy to set up a fake storefront. All you had to do was rent a room, put some equipment on the shelves, get a phone line and you were set.

But in the last year, we’ve made it a lot harder for crooks to run this scam. First, we’re conducting more random site visits. Second, we created a new, mandatory accreditation process for durable medical equipment providers. Now, before you can become a Medicare provider, you have to go through a rigorous third-party review process where they make sure you have the correct licenses, the right insurance, and enough business capital. The days when you could just hang a shingle and start billing Medicare are over. We’re also requiring these suppliers to post a $50,000 bond, so that if we do catch them committing fraud, we’re guaranteed to recover some if not all of their illegal gains.

These are just some of the steps we’re taking to prevent, catch, prosecute, and discourage fraudsters. We’re realistic about what we can accomplish. There’s some fraud and waste in every business. But our goal is to make the chances of getting caught so great and the consequences so high that the vast majority of crooks get scared away. To do that, we’ve also enlisted the group that’s more passionate about defending Medicare than any other: seniors themselves.


Since 1997, my department has funded an organization called the Senior Medicare Patrol. The Patrol is made up of seniors who are tired of seeing Medicare threatened by crooks and have decided to do something about it. So they volunteer to go out to senior centers and adult day care centers and educate their neighbors about how to read Medicare statements, identify fraudulent claims, and report them to the correct authorities. In the last twelve years, they’ve reached over twenty million Americans. The way we look at it, that’s like having over twenty million undercover cops on the street. The more seniors know how to recognize fraud, the more criminals are going to be nervous about trying to cheat them.

When you add these efforts up, we believe we’ve done more to fight health care fraud in 2009 than in any year in our country’s history. But to end fraud, we need to make an even bigger commitment. That’s why the President is making an historic investment in anti-fraud efforts in his budget next week that, combined with other changes, will result in billions in savings.

We know that the funds we commit to fighting fraud are some of the best investments our country makes, returning several dollars back in savings for every dollar we invest in fighting fraud, taking money out of the pockets of criminals and returning it to the Trust Funds to stabilize Medicare and keep our trust with taxpayers.

Building on the investments, the President made in fraud fighting in last year’s budget, he will request $561 million in the 2011 budget, an 80 percent increase in discretionary funds to support programs like the Strike Forces, which are realizing impressive results by prosecuting criminals and returning dollars back to the taxpayers. And we’re adding new programs to strengthen our ability to prevent fraud from ever occurring.

This is a personal priority of the President’s and a personal priority of mine. When American families are struggling to make every dollar count, we need to be even more vigilant about how their money is spent.

But for these resources to have the biggest impact, we’ll have to combine them with the best strategies. That’s where this Summit fits in. Today is an incredible opportunity for some of our leading experts to learn from their peers in the private sector and vise versa. We’ll have a chance to swap best practices for screening providers and analyzing claims. We’ll also be able to discuss trends in suspicious claims and emerging fraud hotspots. Most important, I hope that we’ll begin to develop the relationships that can be the basis of long-term cooperation between the public and private sectors. I think I speak for everyone in this room when I say: we’re willing to work with anyone if it helps us keep patients safe, lower health care premiums, and secure Medicare for the generations to come.

When we took office a year ago, we saw that the old way of fighting fraud wasn’t working. Our resources weren’t keeping up with the problem. Our technology wasn’t keeping up. The criminals who committed health care fraud were getting organized, but our response was often still fragmented among departments that didn’t have easy ways to share information with each other. As you heard from President Obama last night, these are exactly the kind of tough problems that this administration is committed to taking on.

When we see an opportunity to safeguard Americans’ tax dollars, or protect Medicare’s future, or ensure patients get the right treatments, we’re going to act. And when we act, we won’t be afraid to make hard choices, break down silos, use new technologies…and yes, find new partners. And speaking of new technologies, I should also mention that to get the latest on how we’re fighting health care fraud, you should go to our new website:

The last thing I want to say is that this is the first national health care fraud summit, but I hope it will not be the last. One thing we know about the criminals who commit fraud is that they are not complacent. They are always probing our health care system for its weak points and coming up with new schemes to exploit them. So if we are going to defeat this national problem, we need to be just as active, creative, and determined as they are. I think this conference is a huge step in that direction.

So I want to thank all of you again for traveling from every part of the country to be here today. I hope we have some productive discussions and that everyone leaves with at least a few new ideas. And no matter what details are in the strategic plan that comes out of this summit, I can already tell you that the message for the criminals who steal from our health care system is going to be clear: your days are numbered.

And now, to talk more about this unprecedented gathering and our efforts to fight fraud in the federal government, I’d like to introduce my partner in the fight against health care fraud, Attorney General Eric Holder.