Madam Speaker, I submit the following. Health Care/Medicare Congress spent the first part of this session enacting landmark health reform legislation that substantially reforms and strengthens the…
Madam Speaker, I submit the following.
Health Care/Medicare
Congress spent the first part of this session enacting
landmark health reform legislation that substantially reforms
and strengthens the Medicare program. As a result of this
legislation, CBO estimates net deficit reduction of $143
billion from 2010 to 2019, and deficit reduction of more than
$1 trillion in the next decade. In addition, the Medicare
Actuary estimates that the Medicare changes enacted in health
reform will extend the life of the Part A Trust Fund by 12
years--the largest extension in history. Finally, as a result
of the new law, national health expenditures per insured
person will fall by $1,400 by 2019.
The health reform law also includes extensive provisions to
aggressively reduce fraud, waste, and abuse in government
health programs. The Affordable Care Act (ACA) establishes
new authorities to enhance fraud-fighting when providers
first enroll in the program and during the pre- and post-
payment periods.
During the Medicare provider enrollment period, ACA
strengthens provider screening and disclosure requirements
and allows the Secretary to impose a moratorium on new
providers in areas of significant risk. These tools will help
keep fraudulent providers out of government programs before
they have a chance to act. In the pre-payment period, ACA
directs the Secretary to establish a program of increased
oversight for new providers and allows for the suspension of
payment, if deemed appropriate, to a provider or supplier.
For the post-payment and enforcement period, ACA establishes
new penalties for the submission of false data or false
claims and increases funding for proven fraud-fighting
programs used by the Office of Inspector General (OIG) and
the Department of Justice.
Taken together, these provisions reduce fraud, waste, and
abuse by improving payment accuracy, promoting efficiency,
and controlling spending within Medicare and other government
programs.
The Committee's efforts to achieve deficit reduction,
prevent fraud, promote efficiency, and control spending
within government programs extend beyond the ACA. The
Preservation of Access to Care for Medicare Beneficiaries and
Pension Relief Act of 2010 (P.L. 111-192) included two
provisions that address these goals. First, this law
clarifies the 3-day payment window for inpatient admissions
to ensure that all services related to the hospital admission
are included in the bundled payment. Absent this provision,
hospitals would likely have unbundled hospital payments
driving up Medicare spending. Second,
the law established a CMS-IRS data match to identify
potentially fraudulent providers. This provision authorizes
the Centers for Medicare and Medicaid Services (CMS) to
collaborate with the IRS to determine whether providers
enrolling or re-enrolling in Medicare have failed to file
Federal tax returns or have delinquent tax debts. In doing
so, the law helps to identify potentially fraudulent
providers earlier in the application process and allows the
Secretary to use this information in determining whether to
deny such application or to apply enhanced oversight to the
provider.
Following passage of health reform legislation, the
Committee has held and will continue to hold oversight
hearing on a number of issues, including:
Fraud, Waste and Abuse
While many of the HHS OIG recommendations from their annual
compendium were adopted in the ACA, combating fraud remains a
top priority for the committee. On June 15th, the Health and
Oversight Subcommittees held a joint hearing on combating
fraud, waste, and abuse. At this hearing, a representative of
the HHS Office of Inspector General discussed two new tools
that would improve OIG's ability to prevent criminals from
becoming providers in the Medicare program. The first
recommendation was to provide OIG with broader permissive
authority to exclude permanently from Medicare corporate
executives who have been involved in Medicare fraud. Second,
it was suggested that the OIG permissive authority could also
be expanded to better enable the OIG to reach parent
companies that may be hiding behind corporate shells.
On September 14, 2010, in response to these
recommendations, Health Subcommittee Chairman Representative
Stark and Ranking Republican Wally Herger introduced the
Strengthening Medicare Anti-Fraud Measures Act. The bill
would provide the OIG with this expanded permissive
authority. We are awaiting a CBO score of the legislation.
HITECH Implementation
Enactment of the American Recovery and Reinvestment Act of
2009 included the Health Information Technology for Economic
and Clinical Health (HITECH) Act, which created incentive
payments for providers that adopt and meaningfully use
electronic medical records. Increased adoption and meaningful
use of health information technology will arm providers with
information that is usually held only in paper records, lower
duplication rates of procedures, promote efficiency and
quality, and reduce waste as providers coordinate care
through improved exchange of clinical information. The Health
Subcommittee held an oversight hearing on implementation of
HITECH Act earlier this year and will continue to monitor the
program to ensure that the advance of health information
technology improves quality and efficiency of the delivery of
health care in the Medicare program.
Durable Medical Equipment competitive bidding process
The Medicare Modernization Act directed CMS to establish a
competitive bidding process for payment of durable medical
equipment, prosthetics, orthotics, and supplies (DMEPOS)
under Medicare. The first round of competitive bidding for
DME was delayed in 2008 because of implementation problems.
Later this year, CMS will award contracts under the first
round of the revised program. The Health Subcommittee will
examine whether CMS has adequately addressed problems with
the competitive bidding program and explore its potential
effect on beneficiaries' access to the program and supplier
participation.
Tax Provisions to Prevent Tax Avoidance and Fraud
Closing Foreign Tax Credit Loopholes
On August 10, 2010, the House passed H.R. 1586, the
Education Jobs and Medicaid Assistance Act by a vote of 247
to 161. The bill, signed into law the same day (P.L. 111-
226), included changes developed jointly by the Treasury
Department, the Committee on Ways and Means, and the Senate
Committee on Finance to curtail abuses of the U.S. foreign
tax credit system and other targeted abuses. Foreign tax
credits are intended to ensure that U.S.-based multinational
companies are not subject to double taxation. However, multi-
national corporate taxpayers have taken advantage of the U.S.
foreign tax credit system to reduce the U.S. tax due on
completely unrelated foreign income in a manner that has
nothing to do with eliminating double taxation. The bill
eliminated $9.6 billion of foreign tax credit loopholes.
Transfer Pricing
On July 22, 2010, the Committee on Ways and Means held a
hearing to begin initial discussions of the complex areas of
tax law that govern transfer pricing practices among related
parties (multinational corporations). Pursuant to a request
by the Committee in December 2009, the Joint Committee on
Taxation (JCT) undertook a study of transfer pricing issues.
Part of that study involved meetings with tax practitioners
and the IRS to gain a better understanding of how companies
can structure overseas operations to minimize U.S. taxes. The
JCT released a report summarizing its work, beginning with a
study of the issues and specific case studies to illuminate
the potential for income shifting through transfer pricing.
The Committee continues to investigate opportunities for
reducing tax avoidance by multinational corporations through
transfer pricing structures.
First-Time Homebuyer Program
The Housing and Economic Recovery Act of 2008 established
the First-Time Homebuyer Credit, which generally provided an
$8,000 tax credit to certain taxpayers for the purchase of a
home. The credit was extended and expanded by the American
Recovery and Reinvestment Act of 2009 and the Worker,
Homeownership, and Business Assistance Act of 2009
(Assistance Act). On October 22, 2009, the Subcommittee on
Oversight of the Ways and Means Committee held a hearing on
administration of the credit by the Internal Revenue Service
(IRS). At the hearing, the Treasury Inspector General for Tax
Administration (TIGTA) released a report finding instances of
fraud and abuse in the program. In response to the report,
TIGTA and the U.S. Government Accountability Office made
several legislative recommendations to improve administration
of the credit. On October 22, 2009, Oversight Subcommittee
Chairman John Lewis (D-GA) introduced H.R. 3901, the
Homebuyer Tax Credit Improvement Act of 2009, which provided
the IRS with additional authority to prevent fraudulent
claims and claims by minor children. On November 6, 2009,
H.R. 3901 was enacted into law as part of the Assistance Act
(P.L. 111-92).
Prisoner Tax Fraud
On September 27, 2008, the House passed H.R. 7082, the
Inmate Tax Fraud Prevention Act of 2008. This law allows the
IRS to exchange with officers and employees of the Federal
Bureau of Prisons certain tax return information with respect
to prisoners whom the Secretary has determined may have filed
false or fraudulent tax returns. This provision was enacted
into law on October 15, 2008. In June 2010, TIGTA released a
report estimating that about 1,300 prison inmates (more than
90 percent of whom were state prison inmates) claimed and
received more than $9 million in fraudulent first-time
homebuyer tax credits. On June 29, 2010, a provision to allow
the IRS to disclose tax return information to officers and
employees of State agencies charged with the administration
of prisons passed the House in H.R. 5623, the Homebuyer
Assistance and Improvement Act of 2010. On July 2, 2010, this
provision was enacted into law as part of the Homebuyer
Assistance and Improvement Act of 2010 (P.L. 111-198).
Tax Provisions to Promote Government Efficiency and Reform
Increase electronic filing of tax returns
The Internal Revenue Service Restructuring and Reform Act
of 1998 (RRA) established a goal for the IRS to receive at
least 80 percent of tax and information returns
electronically. For 2010, the overall electronic filing (e-
filing) rate is projected to reach approximately 59 percent.
To achieve the 80 percent goal, an estimated 40 million
additional returns need to be e-filed. On October 22, 2009,
Oversight Subcommittee Chairman John Lewis (D-GA) introduced
H.R. 3901, the Homebuyer Tax Credit Improvement Act of 2009,
which authorized the IRS to require tax return preparers to
file returns electronically in order to achieve additional
cost reduction and savings. On November 6, 2009, H.R. 3901
was enacted into law as part of the Worker, Homeownership,
and Business Assistance Act (P.L. 111-92). The Electronic Tax
Administration Advisory Committee, established by the RRA,
believes that this is the single most important initiative
that will enable the IRS to reach its 80 percent electronic
filing goal.
Removal of cell phones from listed property
In 1989, Congress passed a law requiring taxpayers to
substantiate the business use of cell phones. At that time,
cell phones were an expensive perk for executives. Cell
phones and similar equipment are now ingrained in daily
business practices at all levels. The Administration has
recognized that cell phone service in this country has
changed dramatically over the past decade and recommended
that the law be modernized to remove the special
documentation requirements for cell phones and reduce the
cost of administering and complying with the provision. On
April 15, 2010, a provision to eliminate the strict
substantiation rules on cell phones passed the House in H.R.
4994, the Taxpayer Assistance Act of 2010.
Repeal of the partial payment requirement on submissions of
offers-in-compromise. Offer-in-compromise (OIC) agreements
are an important collection alternative for the IRS and
taxpayers. Under current law, due to legislation passed in
2006, a taxpayer offering to settle a tax liability must make
a partial payment with submission of an OIC application. The
need to increase the usage of OIC agreements in situations of
economic hardship was raised at a February 2009 hearing of
the Subcommittee on Oversight of the Committee on Ways and
Means. On May 12, 2009, Oversight Subcommittee Chairman John
Lewis (D-GA) introduced H.R. 2343, a bipartisan bill that
would increase the likelihood that some amount of tax is
collected and promote continued tax compliance by repealing
the partial payment requirement. On April 15, 2010, a
provision to repeal the partial payment requirement passed
the House in H.R. 4994, the Taxpayer Assistance Act of 2010.
Study on delivery of tax refunds
The National Taxpayer Advocate (NTA) has stated that the
quickest and cheapest way to distribute tax refunds is
electronically rather than by paper checks in the
mail. However, a large number of taxpayers do not have bank
accounts. These taxpayers are not able to fully
participate in electronic filing because the IRS cannot
transmit their refunds to them electronically. The NTA
recommended that the Department of Treasury develop a
program to enable taxpayers to receive refunds on stored
value cards. On April 15, 2010, a provision to require the
Secretary of Treasury, in consultation with the National
Taxpayer Advocate, to conduct a study on the feasibility
of delivering federal tax refunds on debit cards, prepaid
cards, or other electronic means passed the House in H.R.
4994, the Taxpayer Assistance Act of 2010.
Study on timely processing and use of information returns
Under current law, the IRS processes tax returns before it
processes related information returns, such as Forms W-2 and
Forms 1099. The IRS does not match information on income tax
returns to information returns until after the filing season
has ended. There are two reasons for the delay: (1) the
deadline for filing information returns generally is March 31
and (2) the tax filing season begins in mid-January. A
provision to require the Secretary of Treasury to study, and
make recommendations on, the administrative and legislative
steps required to allow the IRS to receive information
returns before it processes income tax returns passed the
House in H.R. 4994, the Taxpayer Assistance Act of 2010.
Clarify that the bad check penalty applies to electronic payments
Taxpayers are subject to a penalty if their check or money
order in payment of their tax liabilities is not honored. On
April 15, 2010, a provision to ensure fair application of the
penalty by clarifying that the penalty applies to all
commercially acceptable instruments of payment (i.e.,
electronic payments) passed the House in H.R. 4994, the
Taxpayer Assistance Act of 2010. On July 2, 2010, this
provision was enacted into law as part of the Homebuyer
Assistance and Improvement Act of 2010 (P.L. 111-198).
Trade
The Trade Subcommittee is developing Customs and Border
Protection (CBP) reauthorization legislation addressing two
important oversight issues explored at a May 2010 hearing:
(1) correcting the agency's failure to collect antidumping
and countervailing duties; and (2) addressing cost overruns
and delayed implementation of the agency's new, modernized
computer system, the Automated Commercial Environment (ACE).
Combating the Evasion of Antidumping and Countervailing Duty Orders
The U.S. government loses hundreds of millions of dollars
every year when foreign companies employ fraudulent tactics
to evade U.S. antidumping and countervailing duty orders.
Such tactics include misrepresenting the country of origin of
imported products or mislabeling the types of products being
imported on Customs import documentation. The resulting
impact in the United States is two-fold. Not only is there
lost revenue to the government, but also American businesses
and workers are denied relief from the illegal trade
practices that the antidumping and countervailing duties are
designed to neutralize. The Trade Subcommittee is preparing
legislation to counter these kinds of practices and aims to
move that legislation shortly. This legislation: (1)
establishes clear, expeditious timeframes for CBP to
investigate and determine whether evasion is occurring; (2)
requires maximum cooperation between CBP and the Department
of Commerce in making and enforcing such determinations; and
(3) provides authority for CBP to collect unpaid duties and
assess penalties. This legislation will diminish
substantially the duties lost to evasion as well as the
corresponding harm to the U.S. industry.
Ensuring Efficient Use of Taxpayer Dollars in Further ACE Deployment
The Trade Subcommittee is preparing legislation that will
support the positive steps taken by CBP since its May 20th
hearing to get ACE deployment back on track and moving in the
right direction. ACE development to date has cost over $3
billion, and the system continues to have limited
functionality to attract a critical mass of users. Completion
of ACE promises significant benefits to CBP, businesses, and
workers alike, increasing U.S. competitiveness and saving
taxpayer dollars. The Trade Subcommittee is developing
legislation to ensure that: (1) ACE is completed
expeditiously and with strong functionality; and (2) the
funds invested in this project, going forward, are used
efficiently and effectively.
Social Security
In December of 2009, Congress enacted H.R. 4218, the No
Social Security Benefits for Prisoners Act of 2009 (P.L. 111-
115) to prevent retroactive Social Security and Supplemental
Security Income benefit payments from being issued to
individuals while they are in prison, along with
beneficiaries in violation of conditions of parole or
probation, or who are fleeing to avoid prosecution for a
felony or a crime punishable by sentence of more than one
year. The Social Security Act already barred payment of
monthly benefits to such individuals. This new law ensures
the prohibition applies to retroactive benefit payments as
well, and allows payments to be paid once the beneficiary is
no longer prohibited from receiving payments under the
provisions of this bill.
In response to a Social Security Administration Inspector
General report that as many as eight states use prison
industries to perform work that allows inmates access to
individual Social Security numbers, Chairman Pomeroy
introduced H.R. 5854, the No Prisoner Access to Social
Security Numbers Act of 2010. The bill would protect the
accuracy of Social Security records and help shield
individuals from identity theft and other potential crimes by
prohibiting federal, state, and local governments from
employing prisoners in any capacity that would allow inmates
access to full or partial SSNs of other individuals. The
Federal Bureau of Prisons already proscribes such work by
federal inmates by regulation. This bill would extend this
policy to all of the states.
In recent years, we have substantially increased funding
for program integrity at the Social Security Administration,
which will save billions of dollars in overpayments and
payments to people who have become ineligible for benefits.
Because the Social Security Administration uses innovative
predictive modeling techniques to identify cases with the
highest risk of an overpayment and targets those cases for
careful review, they are able to generate savings of as much
as $12 for every dollar invested in program integrity,
despite Social Security's already very low error rate. For
example, in 2008 their computer models allowed them to target
the beneficiaries most likely to have medically improved for
full eligibility reviews, saving $3.8 billion in Social
Security, Medicare, Medicaid, and SSI benefits. If SSA had
randomly selected cases for intensive review, they would only
have saved $900 million.
Because the return on investment is so significant, we plan
to work on legislation that will increase our investment in
Social Security's fight against fraud, waste, and abuse.
