Federal healthcare fraud fighters thought they were getting a multimillion-dollar bonus when President Clinton signed landmark insurance reform legislation last month.
But thanks to lawmakers looking to shore up a squeezed federal budget, the government's principal healthcare fraud sleuths may wind up with no new money to fund their investigations.
The Kassebaum-Kennedy health insurance reform legislation approved last month by Congress and Clinton was supposed to add millions to federal anti-fraud efforts. The measure earmarked more than $100 million in fiscal 1997, which begins Oct. 1, and nearly $120 million in fiscal 1998 for anti-fraud activities. It would not have to go through the usual laborious and risky congressional appropriation process.
Some $60 million to $70 million of the new money was to go directly to HHS' inspector general's office, the government's chief healthcare fraud investigative arm.
At the time, many Washington officials thought the money would be added to the inspector general's office. The office's annual budget is roughly equal to $60 million.
But Congress, in attempting to keep spending down and pay for other projects, now is moving to use the Kassebaum-Kennedy money as the inspector general's sole funding source and wipe out any other appropriations to the office.
The House already has passed a fiscal 1997 HHS appropriation bill that eliminates the normal funding for the inspector general's office. The Senate is scheduled to take up the measure as early as this week. Officials said the Senate, facing the same budget pressures, is likely to scratch the inspector general's funding.
According to spokeswoman Judy Holtz, the inspector general's office was counting on the new money in fiscal 1997. She said the funds would have built up the investigative staff and given the agency "a presence in all 50 states."
The inspector general now has offices in 26 states. Over the past four years, the total staff at the inspector general's office has declined to fewer than 925 from 1,400, including a decrease of nearly 150 criminal investigators, Holtz said.
Next March, HHS will end its two-year "Operation Restore Trust" program that has brought together HHS, the U.S. Justice Department and other federal and state officials to target fraud and abuse in the home health, nursing home and medical equipment industries in five states. HHS Inspector General June Gibbs Brown said last year that federal officials would seek to expand the successful framework of Operation Restore Trust across the country if extra funds could be found.
Both the White House and the insurance bill's sponsors had touted the new funding, which Sen. Nancy Kassebaum (R-Kan.) said would "allow federal officials to take strong action against fraud and abuse."
According to the Congressional Budget Office, every dollar spent under the bill would return as much as $10 in savings to federal health programs.
Architects of the health reform legislation were counting on such returns to partially pay the cost of some other provisions in the legislation, such as a demonstration program to test controversial medical savings accounts. Those accounts, which individuals could use to pay for routine medical expenses, were backed by Republicans and opposed by Democrats.
However, there is some opposition in the Senate to reducing spending for fraud and abuse. Sen. William Cohen (R-Maine), who was responsible for much of the fraud-and-abuse language included in the Kassebaum-Kennedy bill, has vowed to push for more funding to combat fraud and abuse in fiscal 1997.