H. Rept. 115-936 - FIGHTING FRAUD TO PROTECT CARE FOR SENIORS ACT OF 2018115th Congress (2017-2018)
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115th Congress } { Rept. 115-936
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
======================================================================
FIGHTING FRAUD TO PROTECT CARE FOR SENIORS ACT OF 2018
_______
September 10, 2018.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Brady of Texas, from the Committee on Ways and Means, submitted the
following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 6690]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 6690) to establish a smart card pilot program to
combat fraud, waste, and abuse and to protect beneficiary
identity under the Medicare program, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND...........................................4
A. Purpose and Summary................................. 4
B. Background and Need for Legislation................. 4
C. Legislative History................................. 5
II. EXPLANATION OF THE BILL..........................................5
A. Fighting Fraud to Protect Care for Seniors Act of
2018............................................... 5
III. VOTES OF THE COMMITTEE...........................................7
IV. BUDGET EFFECTS OF THE BILL.......................................8
A. Committee Estimate of Budgetary Effects............. 8
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 8
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 8
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......10
A. Committee Oversight Findings and Recommendations.... 10
B. Statement of General Performance Goals and
Objectives......................................... 10
C. Information Relating to Unfunded Mandates........... 10
D. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 11
E. Duplication of Federal Programs..................... 11
F. Disclosure of Directed Rule Makings................. 11
VI. CORRESPONDENCE..................................................12
VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........15
A. Changes in Existing Law Proposed by the Bill, as
Reported........................................... 15
VIII.ADDITIONAL VIEWS................................................19
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fighting Fraud to Protect Care for
Seniors Act of 2018''.
SEC. 2. MEDICARE SMART CARD PILOT PROGRAM.
Part E of title XVIII of the Social Security Act is amended by
inserting after section 1866E the following new section:
``SEC. 1866F. SMART CARD PILOT PROGRAM.
``(a) Implementation.--
``(1) In general.--Not later than 36 months after the date of
the enactment of this section, the Secretary shall establish a
pilot program (in this section referred to as the `pilot
program') to evaluate the feasibility of using smart card
technology under this title.
``(2) Smart card technology defined.--In this section, the
term `smart card technology' means the following:
``(A) Beneficiary smart card.--A machine readable,
tamper-resistant card (in this section referred to as a
`smart card') that includes an embedded integrated
circuit chip with a secure micro-controller (as defined
by the National Institute on Standards and Technology)
that enables the verification and secure, electronic
authentication of the identity of a Medicare
beneficiary at the point of service through a
combination of the smart card and a personal
identification number known by or associated with such
beneficiary.
``(B) Card reader technology.--Information technology
that enables a supplier and provider to authenticate
the identity of a Medicare beneficiary through
presentation of such a smart card and such components,
with such authentication to be reflected through the
use of a modifier or in another appropriate manner, as
determined by the Secretary, in the claims adjudication
process.
``(3) Program design elements.--The pilot program shall be
conducted for a period of 3 years consistent with the
following:
``(A) Selection of area.--In consultation with the
Inspector General of the Department of Health and Human
Services, the Secretary shall select at least 3
geographic areas in which the pilot program will
operate.
``(B) Selection of supplier and provider types.--In
consultation with the Inspector General of the
Department of Health and Human Services, the Secretary
shall select supplier and provider types that will be
required to participate in the pilot program (referred
to in this section as `participating suppliers and
providers'). In selecting such supplier and provider
types, the Secretary shall--
``(i) take into account the risk of fraud,
waste, and abuse (as described in section
1866(j)(2)(B)) with respect to the category of
provider or supplier) and other factors as
determined appropriate by the Secretary; and
``(ii) limit the pilot program to no more
than 2,000 suppliers and providers.
``(C) Supplier and provider hardship exemptions.--The
Secretary shall exempt from participation in the pilot
program a supplier or provider that either--
``(i) does not have access to card reader
technology (as described in paragraph (2)(B));
``(ii) does not have sufficient internet
access; or
``(iii) has a low volume (as determined by
the Secretary) of Medicare claims for which
payment is made under this title.
``(D) Smart card and smart card reader issuance.--
``(i) Beneficiary smart card issuance.--The
Secretary shall provide for, at no cost, the
issuance (and, if necessary, replacement) of
beneficiary smart cards described in paragraph
(2)(A) to all Medicare beneficiaries residing
in a geographic area in which the pilot program
is conducted under subparagraph (A).
Information that appears on Medicare cards used
outside the pilot program may appear on the
face of the beneficiary smart card.
``(ii) Supplier and provider smart card
reader issuance.--At the request of a
participating supplier or provider, the
Secretary shall provide for, at no cost, the
issuance to such supplier or provider of smart
card hardware and software necessary to
participate in the pilot program.
``(E) Information on operation of pilot program.--The
Secretary shall provide participating suppliers and
providers and Medicare beneficiaries who are furnished
items and services by such suppliers and providers,
with information on the operation of the pilot program,
including privacy protections described in subparagraph
(I).
``(F) Access to services outside the pilot program.--
``(i) Beneficiaries.--Medicare beneficiaries
who receive beneficiary smart cards may receive
items and services from suppliers and providers
not participating in the pilot program.
``(ii) Suppliers and provider claims.--
``(I) Suppliers and providers not
participating in pilot.--Suppliers and
providers not participating in the
pilot program may submit claims under
this title for items and services
furnished without use of smart card
technology to Medicare beneficiaries
who receive beneficiary smart cards.
``(II) Participating suppliers and
providers furnishing services to non-
participating beneficiaries.--Supplier
and providers participating in the
pilot program may submit claims under
this title for items and services
furnished to Medicare beneficiaries who
do not receive beneficiary smart cards.
``(G) Clarification on access to services without
smart cards.--In the case of a Medicare beneficiary who
receives a beneficiary smart card and does not present
such card at the time of receipt of items or services
from a participating supplier or provider, the
participating supplier or provider--
``(i) shall furnish such items or services to
such Medicare beneficiary as if such
beneficiary does present such card;
``(ii) may submit claims under this title for
such items or services; and
``(iii) shall provide, in accordance with
such manner, process, and timing as specified
by the Secretary, information to the Secretary
(through the contractor described in
subparagraph (H)) that such beneficiary
received such a smart card but did not have the
smart card at the time the items or services
were furnished.
``(H) Private sector implementation.--The Secretary
shall select, by using a competitive procurement
process in accordance with the provisions of chapter 1
of title 48, Code of Federal Regulations (or any
successor regulations), a private sector contractor to
implement and operate the pilot program.
``(I) Privacy protections.--The Secretary shall
ensure that the pilot program complies with applicable
Federal laws and regulations concerning individually
identifiable health information, including the Privacy
Act of 1974 and regulations promulgated under section
264(c) of the Health Insurance Portability and
Accountability Act of 1996 and such individually
identifiable information shall be exempt from
disclosure under section 552(b)(3) of title 5, United
States Code.
``(J) Mandatory participation.--Subject to
subparagraph (C), in the case of items or services
furnished by a provider or supplier included in a
supplier or provider type selected under subparagraph
(B) in a geographic area selected under subparagraph
(A), payment may only be made under this title for such
items or services during the period of the pilot
program if the provider or supplier is participating in
the pilot program.
``(K) Prohibition of smart card fees.--No
transaction, utilization, or other fees may be imposed
on Medicare beneficiaries or participating suppliers
and providers with respect to the use of smart cards
under the pilot program.
``(4) Stakeholder input.--
``(A) In general.--Not later than 6 months after the
date of the enactment of this section, the Secretary
shall convene a panel consisting of stakeholders
(including representatives of providers, suppliers,
technology vendors, Medicare beneficiaries, and claims
processing contractors) selected by the Secretary for
purposes of providing input to the Secretary on the
implementation of the pilot program (including on the
selection of areas and participants under subparagraphs
(A) and (B) of paragraph (3) and the development of
exemptions and requirements described in such
paragraph).
``(B) Nonapplicability of faca.--The Federal Advisory
Committee Act shall not apply to the panel convened
pursuant to subparagraph (A).
``(5) Definitions.--In this section:
``(A) The terms `supplier' and `provider' have the
meanings given the terms `supplier' and `provider of
services' in subsections (d) and (u), respectively, of
section 1861.
``(B) The term `Medicare beneficiary' means an
individual who is enrolled in the original Medicare
fee-for-service program under parts A and B and is not
enrolled in an MA plan under part C, an eligible
organization under section 1876, or a PACE program
under section 1894.
``(b) Reports to Congress.--The Secretary shall submit to Congress
the following reports:
``(1) Interim performance report.--Not later than 2 years
after the date the pilot program is implemented, an interim
report on the performance of such program.
``(2) Final performance report.--Not later than 18 months
after the date of the completion of the pilot program, a final
evaluation on the effectiveness of the pilot program. The
report shall include the following:
``(A) An evaluation of the effect of the pilot
program on potential fraud under the insurance programs
established under this title.
``(B) A description of any barriers to implementation
of the pilot program.
``(C) Participant feedback on the pilot program.
``(D) Recommendations regarding the future use of
smart cards to address fraud under this title.
``(E) Data on the information provided under
subsection (a)(3)(G)(iii).''.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 6690, the ``Fighting Fraud to Protect Care
for Seniors Act of 2018,'' as ordered reported by the Committee
on Ways and Means on September 5, 2018, establishes a three-
year pilot program to test the use of smart card technology in
the Medicare program.
B. Background and Need for Legislation
The Government Accountability Office (GAO) has designated
the Medicare program as high-risk for waste, fraud, and abuse.
One type of fraud scheme in Medicare occurs when a federal
health care program is billed by a third party (whether a
legitimate provider or not) using a beneficiary's or provider's
identification without the beneficiary's or provider's
knowledge. Experience in the financial services sector has
shown that smart card technology can help to combat credit card
fraud. As such, vendors of smart card technology have suggested
that one way to help limit this type of fraud in the Medicare
program would be to use smart card technology--credit card-like
devices that use integrated circuit chips to store and process
data--to authenticate the beneficiary at the point of service.
In 2016, the GAO performed an analysis of 739 health care fraud
cases and found that the use of smart cards could have affected
the entire case or the part of the case in about 165 cases, or
22 percent of the cases reviewed, which included schemes that
involved the lack of verification of the beneficiary or
provider at the point of service.
C. Legislative History
Background
H.R. 6690 was introduced on August 28, 2018, and was
referred to the Committee on Ways and Means and additionally
the Committee on Energy and Commerce.
Committee hearings
On June, 10, 2015, the full Committee held a hearing on The
President's Fiscal year 2016 Budget to review the President's
budget proposals during which this policy was discussed.
On March 24, 2015, the Subcommittee on Health held a
hearing on The Use of Data to Stop Medicare Fraud to review
ways to strengthen the integrity of the Medicare program.
Committee action
The Committee on Ways and Means marked up H.R. 6690, the
``Fighting Fraud to Protect Care for Seniors Act of 2018,'' on
September 5, 2018, and ordered the bill, as amended, favorably
reported (with a quorum being present).
II. EXPLANATION OF THE BILL
A. Fighting Fraud to Protect Care for Seniors Act of 2018
PRESENT LAW
Currently, Medicare beneficiary identification cards are
paper and are not required to contain smart card technology.
While the Medicare program has several programs in place to
combat fraud including the Fraud Prevention System, the Health
Fraud Prevention Partnership, prior authorization and temporary
moratoriums, and provider screenings, the Centers for Medicare
and Medicaid (CMS) mainly reviews claims after the payments are
made. This leads to CMS recouping the payment from the provider
after the improper payment is identified, commonly referred to
as ``pay and chase.'' In fiscal year 2017, improper payments to
Medicare providers, suppliers and plans resulted in nearly $45
billion in overpayments. A little more than half, $24 billion,
was actually recovered resulting in a monetary loss of $21
billion to the federal government due to improper payments.\1\
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\1\https://paymentaccuracy.gov/chart-engine/.
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REASONS FOR CHANGE
The pilot program established under H.R. 6690 aims to
evaluate the feasibility of using smart card technology in the
Medicare program, including such technology's ability to reduce
fraud, waste and abuse.
EXPLANATION OF PROVISIONS
Section 1: Short Title: ``The Medicare Common Access Card
Act of 2018''
Section 2: Medicare Smart Card Pilot Program.
Implementation: Not later than 36 months after the date of
enactment, the Secretary shall establish a pilot program to
evaluate smart card technology as a cost-effective fraud tool
in Medicare.
Smart Card Technology Defined: A beneficiary smart card is
defined as a machine-readable and tamper-resistant card that
includes an embedded integrated circuit chip with a secure
microcontroller, as defined by the National Institute of
Standards and Technology, that enables the verification and
secure, electronic authentication of a beneficiary's identity
at the point of service through a combination of the smart card
and a personal identification number known by or associated
with the beneficiary.
The card reader technology must enable a supplier and
provider to authenticate the identity of a Medicare beneficiary
through presentation of a smart card. The authentication may
occur through the use of a claim form modifier or in another
manner specified by the Secretary.
Program Design Elements: The Department of Health and Human
Services Office of Inspector General (HHS OIG) and the
Secretary are required to consult on the selection of the area
and of the supplier and provider types. The Secretary is
required to select at least three geographic areas; is limited
to no more than 2,000 providers and suppliers; and must take
into account the risk of fraud, waste and abuse when choosing a
provider or supplier. Additionally, the pilot program must be
conducted for three years.
Supplier and Provider Hardship Exemption: Providers and
suppliers may be exempt from the pilot program if the provider
or supplier does not have access to card reader technology,
does not have sufficient internet access, or has a low volume
of Medicare claims.
Smart Card and Smart Card Reader Issuance: At the request
of a supplier or provider, the Secretary is required to
provide, at no cost, smart card hardware and software necessary
to participate in the pilot program. The Secretary is required
to issue smart cards to beneficiaries residing in the
geographic area in which the pilot is operating, as well as
information on the operation of the pilot program, including
privacy protections. If lost, beneficiary smart cards shall be
replaced at no cost to the beneficiary.
Access to Services Outside of the Pilot Program: Nothing in
this bill prevents a beneficiary from receiving services from a
non-participating suppliers or providers or prevents a
nonparticipating supplier or provider from submitting Medicare
claims without the use of the smart card technology to
beneficiaries issued smart cards. Further, this bill does not
prevent a participating supplier or provider from providing
services to non-participating beneficiaries. If a beneficiary
does not present a smart card at the point of service to a
participating provider or supplier, the beneficiary cannot be
denied access to care, nor is the provider or supplier
prohibited from submitting a claim for the care provided.
Private Sector Implementation: The Secretary is required to
operate the pilot program through a competitive procurement
process. The Secretary is required to ensure that the pilot
program complies with existing privacy protections.
Mandatory Participation: Providers and suppliers in the
geographic areas chosen for the pilot program implementation
are required to participate if not exempted under the three
hardship exemptions contained in the legislation. Transaction,
utilization, or other fees are prohibited from being imposed on
Medicare beneficiaries or participating suppliers and
providers.
Stakeholder Input: The Secretary is required to convene a
stakeholder panel consisting of providers, suppliers, claims-
process contractors, and beneficiaries prior to the
implementation of the pilot.
Reports to Congress: Two reports are required under this
section: (1) an interim report on performance of the pilot is
due to Congress no later than two years after the pilot program
is implemented and (2) a final report on the performance of the
pilot is required to be submitted to Congress no later than 18
months after the date of the completion of the pilot program.
EFFECTIVE DATE
Pilot implementation: Not later than 36 months after the
date of enactment, the Secretary shall establish a pilot
program to evaluate smart card technology as a cost-effective
fraud tool in Medicare.
Stakeholder Input: Not later than 6 months after the date
of enactment, the Secretary is required to convene a panel
consisting of stakeholders (including representatives of
providers, suppliers, technology vendors, Medicare
beneficiaries, and claims processing contractors selected by
the Secretary for the purpose of providing input on the
implementation of the pilot program.
Interim Report: Not later than 2 years after the date of
the pilot program is implemented.
Final Report: Not later than 18 months after the date of
the completion of the pilot program.
III. VOTES OF THE COMMITTEE
In compliance with the Rules of the House of
Representatives, the following statement is made concerning the
vote of the Committee on Ways and Means during the markup
consideration of H.R. 6690, ``Fighting Fraud to Protect Care
for Seniors Act of 2018'', on September 5, 2018.
The vote on Mr. Reichert's motion to table Ms. Sewell's
appeal of the ruling of the Chair was agreed to by a roll call
vote of 23 yeas to 16 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Reichert................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Blumenauer... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Kind......... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Pascrell..... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Crowley...... ........ X .........
Ms. Black...................... X ........ ......... Mr. Davis........ ........ X .........
Mr. Reed....................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Kelly...................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Renacci.................... ........ ........ ......... Ms. Sewell....... ........ X .........
Ms. Noem....................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Holding.................... X ........ ......... Ms. Chu.......... ........ X .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
Mr. LaHood..................... X ........ .........
Mr. Wenstrup................... X ........ .........
----------------------------------------------------------------------------------------------------------------
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of H.R. 6690, the Fighting Fraud to Protect Care
for Seniors Act of 2018, on September 5, 2018.
The Chairman's amendment in the nature of a substitute was
adopted by a voice vote (with a quorum being present).
The bill, H.R. 6690, was ordered favorably reported as
amended by voice vote (with a quorum being present).
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 6690, as
reported. The Committee agrees with the estimate prepared by
the Congressional Budget Office (CBO), which is included below.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee states further that the bill involves no new or
increased tax expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 10, 2018.
Hon. Kevin Brady,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 6690, the Fighting
Fraud to Protect Care for Seniors Act of 2018.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Lara
Robillard.
Sincerely,
Keith Hall,
Director.
Enclosure.
H.R. 6690--Fighting Fraud to Protect Care for Seniors Act of 2018
Summary: H.R. 6690 would direct the Secretary of Health and
Human Services (HHS) to implement a pilot program for smart
cards in the Medicare program. CBO estimates that enacting H.R.
6690 would cost $40 million over the 2019-2023 period, assuming
the availability of appropriated funds.
Enacting the bill would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
CBO estimates that enacting H.R. 6690 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
H.R. 6690 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Estimated cost to the Federal Government: The estimated
budgetary effect of H.R. 6690 is shown in the following table.
The costs of the legislation fall within budget function 570
(Medicare).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------------------
2018 2019 2020 2021 2022 2023 2019-2023
----------------------------------------------------------------------------------------------------------------
INCREASES OR DECREASES (-) IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level............ 0 40 0 0 0 0 40
Estimated Outlays........................ 0 5 5 10 10 10 40
----------------------------------------------------------------------------------------------------------------
Basis of estimate: Cards that include integrated computer
circuitry are called smart cards and have many uses, including
banking, identification, and data storage. Smart cards also can
be used for health care coverage and payment purposes. In
France, for example, the carte vitale includes information
about coverage and benefits under the country's social
insurance system and a photo of the covered individual.
When individuals begin Medicare coverage, whether through
age or disability, they receive an identification card, which
is presented when receiving medical services and has an
identification number unique to the beneficiary. Medicare cards
are not smart cards and do not have any sort of technology,
like a computer chip, to furnish additional information about
the beneficiary, such as identity verification or previous
medical care.
H.R. 6690 would direct the Secretary of HHS to conduct a
pilot project for smart cards within the Medicare program.
Within 36 months, the Secretary would be required to select at
least three geographic areas in which to conduct the test. The
pilot would include no more than 2,000 suppliers and providers,
who would be selected partly because the category of services
provided is at high risk of fraud, waste, or abuse. Providers
could apply for a hardship exemption if participation was not
feasible because--for example, they lack Internet access. All
beneficiaries in the designated geographic areas would receive
a smart card, but could continue to receive services from
providers and suppliers not enrolled in the demonstration.
Based on discussions with and data from representatives of
the smart-card industry, CBO estimates that the demonstration
would cost about $40 million over the 2019-2023 period,
assuming the availability of appropriated funds. That estimated
cost includes a contract with a private-sector entity to
implement the demonstration, as well as costs for cards and
card readers, software, and other technical components. Among
the elements of the demonstration, CBO estimates that each card
would cost around $2.50 and card readers would cost around $1
million in total.
H.R. 6690 would give the Secretary considerable latitude in
implementing the demonstration within a relatively short
timeframe. CBO anticipates that the demonstration would be
designed in a way to allow implementation within 36 months and
to minimize any burden on providers or beneficiaries. CBO also
expects that the pilot program would focus on providers who
have a face-to-face interaction with beneficiaries for primary
or routine care--for example, general practitioners and
internists who see beneficiaries for scheduled office visits.
CBO aims to produce estimates that generally reflect the
middle of a range of the most likely budgetary outcomes that
would result if the legislation was enacted. Because H.R. 6690
gives the HHS Secretary considerable flexibility in designing
the smart card pilot program, it is possible that
implementation--and therefore costs--could be different from
what CBO estimates.
Pay-As-You-Go considerations: None.
Increase in long-term direct spending and deficits: CBO
estimates that enacting H.R. 6690 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2029.
Mandates: H.R. 6690 contains no intergovernmental or
private-sector mandates as defined in UMRA.
Estimate prepared by: Federal costs: Lara Robillard;
Mandates: Andrew Laughlin.
Estimate reviewed by: Tom Bradley, Chief, Health Systems
and Medicare Cost Estimates Unit; Susan Willie, Chief, Mandates
Unit; Theresa Gullo, Assistant Director for Budget Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives, the Committee made findings and
recommendations that are reflected in this report.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
E. Duplication of Federal Programs
In compliance with Sec. 3(g)(2) of H. Res. 5 (114th
Congress), the Committee states that no provision of the bill
establishes or reauthorizes: (1) a program of the Federal
Government known to be duplicative of another Federal program;
(2) a program included in any report from the Government
Accountability Office to Congress pursuant to section 21 of
Public Law 111-139; or (3) a program related to a program
identified in the most recent Catalog of Federal Domestic
Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
F. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (114th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
A. Changes in Existing Law Proposed by the Bill, as Reported
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
proposed by the bill, as reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italic, existing law in
which no change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
SOCIAL SECURITY ACT
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TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED
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Part E--Miscellaneous Provisions
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SEC. 1866F. SMART CARD PILOT PROGRAM.
(a) Implementation.--
(1) In general.--Not later than 36 months after the
date of the enactment of this section, the Secretary
shall establish a pilot program (in this section
referred to as the ``pilot program'') to evaluate the
feasibility of using smart card technology under this
title.
(2) Smart card technology defined.--In this section,
the term ``smart card technology'' means the following:
(A) Beneficiary smart card.--A machine
readable, tamper-resistant card (in this
section referred to as a ``smart card'') that
includes an embedded integrated circuit chip
with a secure micro-controller (as defined by
the National Institute on Standards and
Technology) that enables the verification and
secure, electronic authentication of the
identity of a Medicare beneficiary at the point
of service through a combination of the smart
card and a personal identification number known
by or associated with such beneficiary.
(B) Card reader technology.--Information
technology that enables a supplier and provider
to authenticate the identity of a Medicare
beneficiary through presentation of such a
smart card and such components, with such
authentication to be reflected through the use
of a modifier or in another appropriate manner,
as determined by the Secretary, in the claims
adjudication process.
(3) Program design elements.--The pilot program shall
be conducted for a period of 3 years consistent with
the following:
(A) Selection of area.--In consultation with
the Inspector General of the Department of
Health and Human Services, the Secretary shall
select at least 3 geographic areas in which the
pilot program will operate.
(B) Selection of supplier and provider
types.--In consultation with the Inspector
General of the Department of Health and Human
Services, the Secretary shall select supplier
and provider types that will be required to
participate in the pilot program (referred to
in this section as ``participating suppliers
and providers''). In selecting such supplier
and provider types, the Secretary shall--
(i) take into account the risk of
fraud, waste, and abuse (as described
in section 1866(j)(2)(B)) with respect
to the category of provider or
supplier) and other factors as
determined appropriate by the
Secretary; and
(ii) limit the pilot program to no
more than 2,000 suppliers and
providers.
(C) Supplier and provider hardship
exemptions.--The Secretary shall exempt from
participation in the pilot program a supplier
or provider that either--
(i) does not have access to card
reader technology (as described in
paragraph (2)(B));
(ii) does not have sufficient
internet access; or
(iii) has a low volume (as determined
by the Secretary) of Medicare claims
for which payment is made under this
title.
(D) Smart card and smart card reader
issuance.--
(i) Beneficiary smart card
issuance.--The Secretary shall provide
for, at no cost, the issuance (and, if
necessary, replacement) of beneficiary
smart cards described in paragraph
(2)(A) to all Medicare beneficiaries
residing in a geographic area in which
the pilot program is conducted under
subparagraph (A). Information that
appears on Medicare cards used outside
the pilot program may appear on the
face of the beneficiary smart card.
(ii) Supplier and provider smart card
reader issuance.--At the request of a
participating supplier or provider, the
Secretary shall provide for, at no
cost, the issuance to such supplier or
provider of smart card hardware and
software necessary to participate in
the pilot program.
(E) Information on operation of pilot
program.--The Secretary shall provide
participating suppliers and providers and
Medicare beneficiaries who are furnished items
and services by such suppliers and providers,
with information on the operation of the pilot
program, including privacy protections
described in subparagraph (I).
(F) Access to services outside the pilot
program.--
(i) Beneficiaries.--Medicare
beneficiaries who receive beneficiary
smart cards may receive items and
services from suppliers and providers
not participating in the pilot program.
(ii) Suppliers and provider claims.--
(I) Suppliers and providers
not participating in pilot.--
Suppliers and providers not
participating in the pilot
program may submit claims under
this title for items and
services furnished without use
of smart card technology to
Medicare beneficiaries who
receive beneficiary smart
cards.
(II) Participating suppliers
and providers furnishing
services to non-participating
beneficiaries.--Supplier and
providers participating in the
pilot program may submit claims
under this title for items and
services furnished to Medicare
beneficiaries who do not
receive beneficiary smart
cards.
(G) Clarification on access to services
without smart cards.--In the case of a Medicare
beneficiary who receives a beneficiary smart
card and does not present such card at the time
of receipt of items or services from a
participating supplier or provider, the
participating supplier or provider--
(i) shall furnish such items or
services to such Medicare beneficiary
as if such beneficiary does present
such card;
(ii) may submit claims under this
title for such items or services; and
(iii) shall provide, in accordance
with such manner, process, and timing
as specified by the Secretary,
information to the Secretary (through
the contractor described in
subparagraph (H)) that such beneficiary
received such a smart card but did not
have the smart card at the time the
items or services were furnished.
(H) Private sector implementation.--The
Secretary shall select, by using a competitive
procurement process in accordance with the
provisions of chapter 1 of title 48, Code of
Federal Regulations (or any successor
regulations), a private sector contractor to
implement and operate the pilot program.
(I) Privacy protections.--The Secretary shall
ensure that the pilot program complies with
applicable Federal laws and regulations
concerning individually identifiable health
information, including the Privacy Act of 1974
and regulations promulgated under section
264(c) of the Health Insurance Portability and
Accountability Act of 1996 and such
individually identifiable information shall be
exempt from disclosure under section 552(b)(3)
of title 5, United States Code.
(J) Mandatory participation.--Subject to
subparagraph (C), in the case of items or
services furnished by a provider or supplier
included in a supplier or provider type
selected under subparagraph (B) in a geographic
area selected under subparagraph (A), payment
may only be made under this title for such
items or services during the period of the
pilot program if the provider or supplier is
participating in the pilot program.
(K) Prohibition of smart card fees.--No
transaction, utilization, or other fees may be
imposed on Medicare beneficiaries or
participating suppliers and providers with
respect to the use of smart cards under the
pilot program.
(4) Stakeholder input.--
(A) In general.--Not later than 6 months
after the date of the enactment of this
section, the Secretary shall convene a panel
consisting of stakeholders (including
representatives of providers, suppliers,
technology vendors, Medicare beneficiaries, and
claims processing contractors) selected by the
Secretary for purposes of providing input to
the Secretary on the implementation of the
pilot program (including on the selection of
areas and participants under subparagraphs (A)
and (B) of paragraph (3) and the development of
exemptions and requirements described in such
paragraph).
(B) Nonapplicability of faca.--The Federal
Advisory Committee Act shall not apply to the
panel convened pursuant to subparagraph (A).
(5) Definitions.--In this section:
(A) The terms ``supplier'' and ``provider''
have the meanings given the terms ``supplier''
and ``provider of services'' in subsections (d)
and (u), respectively, of section 1861.
(B) The term ``Medicare beneficiary'' means
an individual who is enrolled in the original
Medicare fee-for-service program under parts A
and B and is not enrolled in an MA plan under
part C, an eligible organization under section
1876, or a PACE program under section 1894.
(b) Reports to Congress.--The Secretary shall submit to
Congress the following reports:
(1) Interim performance report.--Not later than 2
years after the date the pilot program is implemented,
an interim report on the performance of such program.
(2) Final performance report.--Not later than 18
months after the date of the completion of the pilot
program, a final evaluation on the effectiveness of the
pilot program. The report shall include the following:
(A) An evaluation of the effect of the pilot
program on potential fraud under the insurance
programs established under this title.
(B) A description of any barriers to
implementation of the pilot program.
(C) Participant feedback on the pilot
program.
(D) Recommendations regarding the future use
of smart cards to address fraud under this
title.
(E) Data on the information provided under
subsection (a)(3)(G)(iii).
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VIII. ADDITIONAL VIEWS
H.R. 6690 establishes a three-year pilot program to test
the use of smart card technology--credit card-like devices that
use integrated circuit chips to store and process data in the
Medicare program. The pilot program would be tested in at least
three geographic areas; is limited to no more than 2,000
providers and suppliers; and must take into account the risk of
fraud, waste, and abuse when choosing providers or suppliers to
participate in the pilot.
Democrats expressed concern about the cost-effectiveness of
such an approach. The Government Accountability Office (GAO)
has reviewed the potential of smart cards for the Medicare
program and issued several reports, which found that
integrating smart cards into Medicare would be a large,
expensive undertaking. GAO also found that smart card
technology would not have prevented the majority of fraud
schemes nor would it detect provider misrepresentation of
actual services provided, even if they verified the
beneficiary's and provider's presence.
Smart card technology would not have affected schemes in
which the beneficiary was not present or the verification of
the beneficiary and provider was not relevant to the scheme.
For example, the U.S. Department of Justice (DOJ) is moving
forward with a lawsuit claiming UnitedHealth Group wrongly
retained more than $1 billion from Medicare. Smart cards would
have had no effect on this fraudulent scheme. Likewise, with
providers that upcode patient severity to increase Medicare
revenue--false claims--would not be stopped by a smart card. In
a 2016 report, the GAO analyzed 739 health care fraud cases and
found that the use of smart cards would not have affected 574
cases (approximately 80 percent) and could have affected the
entire case for only 18 fraud cases (two percent).
Smart cards have not been shown to be more cost effective
in fighting fraud than current fraud-fighting activities and
would increase provider burden in a time when providers already
raise issues around electronic health records and other
technology-adoption burdens.
The return on investment (ROI) for the Health Care Fraud
and Abuse Control (HCFAC) program over the last three years
(2015-2017) is $4.20 returned for every $1.00 expended. The
broader program integrity activities in the Centers for
Medicare & Medicaid Services (CMS) returned $12.40 for every
$1.00 expended. The Administration has broad fraud-fighting
authority, and had it been determined that smart cards would be
more cost effective in fighting fraud, the Administration could
adopt such an approach. And in fact, the Administration does
not have all the funding it currently needs to fight fraud.
As a result of sequestration of mandatory funding in 2017,
there were fewer resources for the DOJ, the Federal Bureau of
Investigation, Department of Health and Human Service (HHS) and
the Inspector General of HHS to fight fraud and abuses against
Medicare, Medicaid, and other health care programs. A total of
$20.7 million was sequestered from the HCFAC program in fiscal
year (FY) 2017, for a combined total of $115.5 million in the
past five years. Rather than further siphoning off money for a
demonstration, Congress should instead shore up the existing
resources and fill the gaps in fraud-fighting funding that has
been cut in recent years.
The bill does not provide any funding for CMS to conduct
this demonstration, so the agency would need to take money
currently being used on existing activities and redirect it to
this demonstration. There is no estimate of the cost to
implement this demonstration, but it would include the cost of
purchasing and mailing smart cards (and replacement cards) to
beneficiaries, the cost of purchasing smart card readers for
providers, as well as potential transaction costs.
If this smart card demonstration was implemented on a broad
scale, there are a number of beneficiary access concerns. If
the beneficiary protections included in the pilot were not
continued, beneficiaries could potentially be denied or delayed
access to care. For example, if a beneficiary can only receive
services with a smart card present, a frail elder that forgets
or loses his/her card could potentially be denied services.
Cards could get misplaced as a beneficiary transfers between
home, a hospital, and post-acute care settings, which could
further delay access to necessary care.
Democrats offered one amendment, by Ms. Sewell of Alabama,
which would delay the implementation of this demonstration
until such time as the three years of solvency cut from the
Medicare Trust Fund as a result of the Republican actions,
including their tax law, is restored. Republicans have
repeatedly attacked Medicare, threatening health care for 58
million seniors and individuals with disabilities. While the
Affordable Care Act (ACA) added 12 years of additional solvency
to the Medicare Trust Fund, the effect of the Republican tax
bill signed into law in 2017 was to shorten the life of the
Trust Fund by three years.
The Republican agenda is directly attacking seniors and the
programs they depend on for health care. The Republican bill to
repeal the ACA cut $75 billion from Medicare. The Trump FY 19
budget proposed $532 billion in cuts from Medicare and $1.4
trillion from Medicaid. Republicans clearly have Medicare in
their crosshairs, continuing to put forward proposals to
dramatically cut the program that provides health care for
Americans over age 65. The Sewell amendment was ruled non-
germane and the point of order against it was sustained along
party lines.
Richard E. Neal,
Ranking Member.