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Office of the Press Secretary

For Immediate Release May 3, 1995


      Initiative a Product of Vice President's Effort to Reinvent 

President Clinton announced today a three-pronged crackdown on fraud and abuse in Medicare and Medicaid -- an outgrowth of Vice President Gore's effort to reinvent government.

"These initiatives are the right way to control health care costs and protect Medicare for our senior citizens," the President said. "They will help ensure that Medicare dollars, on which so many of our seniors rely, go to the people who deserve them."

These initiatives represent a fundamental change in how the federal government targets fraud and waste in Medicare and Medicaid, the government's two main health care programs.

While they intensify the government's efforts to prosecute wrongdoers, the initiatives also enhance the incentives for investigators to attack fraud by allowing them to reinvest a portion of the recoveries they collect to finance future fraud investigations. In addition, they create a more stable funding source for Medicare program-integrity activities in order to prevent fraud and abuse before it occurs.

HHS estimates that each $1 spent on anti-fraud activities will recover $6-$8 for the federal government and deter fraud that could be worth millions of dollars more.

"Cracking down on fraud and abuse will save millions of taxpayer dollars and protect Medicare for senior citizens," the Vice President said. "There could be no more important result of our efforts to create a government that works better and costs less."

Of the three initiatives:

First, Health and Human Services Secretary Donna Shalala, with the help of Attorney General Janet Reno, will launch a partnership of federal and state agencies to crack down on Medicare and Medicaid fraud, waste, and abuse associated with home health agencies, nursing homes, and durable medical equipment suppliers.

The anti-fraud project, "Operation Restore Trust," will first focus on five states -- New York, Florida, Illinois, Texas, and Florida -- where nearly 40 percent of all Medicare beneficiaries live.

This operation builds on the success of an anti-fraud effort in Medicare that last year generated the largest federal health care settlement in history, with $379 million in government savings. It involved efforts by a team of HHS and Justice officials, state representatives, and Medicare contractors to investigate illegal treatments of patients at psychiatric hospitals across the nation.

Second, HHS will create a new, more stable budget mechanism to fund Medicare program-integrity activities, such as the Medicare secondary payer program, medical reviews, and audits.

And third, the HHS Office of Inspector General (IG) will receive enhanced authority to retain a portion of its recoveries from Medicare and Medicaid fraud and waste activities to support and enhance future investigations and prosecution activities.

Currently, the HHS IG spends an estimated $18 million a year on health care fraud investigations. The new "Health Care Fraud Reinvestment Fund" will add about $2 million a year.