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Office of the Press Secretary

For Immediate Release March 25, 1997
                           PRESS BRIEFING

The Briefing Room

1:04 P.M. EST

SECRETARY SHALALA: Thank you very much. Any questions? Hi, Helen.

Q How are you? Do you have to go through legislation for all of this?

SECRETARY SHALALA: Yes. What the President announced today we will be going for legislation. We did include some things as part of our budget process, but this is the legislative piece of going after fraud.

Q Isn't it a little late in the game?

SECRETARY SHALALA: No, these are the last pieces. Remember one of the things we talked about today was Operation Restore Trust, and as a result of a comprehensive effort by the Justice Department and the FBI, we learned some things about fraud, so what we learned is translated into legislation. Two main points there. One is to make it difficult for fraudulent people to get into the system in the first place. The second is to throw out those that have ripped us off before by getting their Social Security numbers and making it much tougher for them even to apply. And the third is to have very strong penalties when people do commit fraud in the system.

So what this does is take our experience out of Operation Restore Trust and translate it into legislation. We have been upping the ante in terms of going after fraud for some time.

Q How does a patient really know when they're being --

SECRETARY SHALALA: Well, it's interesting. Ask any senior citizen, and they've got all sorts of ideas. Part of the teams on Operation Restore Trust in Southern Florida included senior citizens that answered the hotline -- we had a hotline number attached -- they were at the other end of the phone. And you wouldn't be surprised at how experienced your citizens are and how they can take a shot at being able to detect that someone's charging them more or it looks like they're ripping off the system.

Q Can you talk about the surety bond regulation?

SECRETARY SHALALA: I actually can't. We're just finishing our work on the surety bond. There are two things that we're doing here. Number one is Social Security numbers. That makes it difficult for people who have committed fraud before in the Medicare-Medicaid system from getting in again. Right now, they can just go get a taxpayer identification number, easy to get, and we can't stop them. We're also giving me the authority to stop people who have been convicted of fraud other than health care fraud -- stopping them from getting in.

On the surety bonds, that's a way of making it obviously more expensive for people who just want to rip off the system. The states are just starting to test that idea. Florida has now tested it. We're putting it under review and we should have an announcement within the next two months about that.

Q On regulations?

SECRETARY SHALALA: That we have the authority to do within regulations. This is legislation that we talked about today.

Q In the summary, you talk about outlawing kickbacks. Aren't kickbacks already illegal? Are you doing more on that?

SECRETARY SHALALA: These are penalties on kickbacks. And again, these are civil penalties -- as opposed to going through the criminal justice system, these are civil penalties. What we've learned is the faster we can turn around on these things, the more effective we are. And so, you're seeing us fine tine our assurance system, and this is one example of that.

Q I wanted to ask you, in the budget, you've factored in about $9 billion over five years to save in fraud and abuse. Would you need this legislation in order to achieve that $9 billion, or would this add to the $9 billion that you've forecast?

SECRETARY SHALALA: This would add to the $9 billion. In combination, I think, we're now saying that everything we're doing -- what we've put in the budget, what we're doing by regulation and with this legislation -- will be around $10 billion. And that's what they're costing it out. It could turn out to be more than that. The governor, for example, probably thinks we're underestimating the effect of some of the things we learned out of Operation Restore Trust.

Q Do you have an expectation about Congress's appreciation for this legislation? You want to fix some things in Kennedy-Kassebaum -- do you think Congress will go along with you?

SECRETARY SHALALA: I think that they will. What Congress is waiting -- and Congress has been very sensitive in putting this legislation into Kennedy-Kassebaum in the first place. Remember, we started Operation Restore Trust, this comprehensive effort, with our demonstration authority. Once we demonstrated it, Congress put it into the legislation in Kennedy-Kassebaum. I have no reason -- I'm sure that some of these will be slightly -- I believe that we'll get 95 percent of what we're asking for.

Q As I understand it, Congress ordered the creation of an information clearinghouse in Kennedy-Kassebaum that has not been created yet. What would this initiative do that that would not -- the step that has not been taken, how would this augment that?

SECRETARY SHALALA: Congress -- we will get the information clearinghouse up. Congress put a date on when it should be up that they now know was unrealistic in terms of the ability of the states to get that system up. We will have it up and going. And this will add to that -- getting Social Security numbers may be the most important part of this package because it will allow us, we'll track people who have committed fraud before and allow us to keep them out of the system. So all of these things compounded are what have an effect, as opposed to going after a single bullet kind of solution. But we will put that system in place.

Q Do you foresee any kind of adverse impacts on ordinary recipients because of this -- delays or --

SECRETARY SHALALA: I actually see positive impacts on taxpayers, which is the most important step that we can take, to protect taxpayers' money, as well as on individual recipients. So many of our senior citizens when -- if you walk into southern Florida into a town meeting with me and start talking about fraud, they have stories. What we're doing is translating their stories into legislation and regulations to make sure that what they're getting is high quality, and that the government isn't being billed for what they're not providing in terms of quality health care. This is all about taxpayers.

Q How does the AMA feel about this?

SECRETARY SHALALA: Well, the AMA has a zero tolerance policy for fraud. They've said that over and over again and have been very supportive in general of our proposals. There may be one or two things here that they're not exactly enthusiastic about, but in general they have been among our strongest supporters, as have the AARP and most of the major health care providers in this country. No one wants to see misspending of money in the system.

This work, I hope, over the next couple of years will be able to demonstrate that it has an impact on the baseline of Medicare. When I first went to the Hill with ideas about going after health care fraud four years ago, Congress literally laughed. They said, well, we've heard that before from every administration. We are actually beginning to have a multibillion-dollar impact on the system, and I believe over the next two or three years it will start to have an impact on the baseline of Medicare. It's one of the many things this administration is doing to hold down the growth of the Medicare system.

Q Can you talk about where Operation Restore Trust will be expanded this year, to which other states and what the scope of it will be?

SECRETARY SHALALA: I think that the Inspector General would want me to say that basically we're taking the lessons from Operation Restore Trust and taking it national. So it's not a matter of going from the five states to all of the states, it's taking the lessons from Operation Restore Trust, this team effort. Last week, I sat with the U.S. Attorneys and talked to them because they're part of these teams. They will now receive resources from this strategy to be able to help us on health care cases, as will investigators from the FBI. So the resources are now provided for the team to go after fraud in the system.

I'll take one more question. Yes.

Q You've emphasized saving taxpayer dollars, but for a long time the administration has been considering a regulation that would cut overpayments to people who provide oxygen therapy, and some of your critics are saying that you're holding up because of politics on this and that there is a lot of money being wasted on that service. When are you going to introduce a regulation?

SECRETARY SHALALA: We have a long list of regulations, including that one, that will be popping out of the system, and that's just one of many, and all of these will be done before we finish the budget -- before we finish the budget process. But again, this legislation is the last major piece of an extraordinary effort to go after fraud in the system.

Thank you very much.

END 1:12 P.M. EST