United States-Japan Extended Deterrence Dialogue

Office of the Spokesperson

The United States and Japan held a bilateral Extended Deterrence Dialogue by video teleconference on April 30, 2021.  The Dialogue provided an opportunity for our two governments to hold in-depth discussions on regional security, Alliance defense posture, nuclear and missile defense policy, and arms control issues.  Since 2010, it has provided a forum for U.S.-Japan Alliance officials to discuss how to maintain and strengthen deterrence as part of our security and defense cooperation.  The dialogue’s longevity attests to the unwavering U.S. commitment to the defense of Japan through the full range of its capabilities, including nuclear weapons.

Acting Principal Deputy Assistant Secretary of State for Arms Control, Verification and Compliance Alexandra Bell, and Department of Defense Principal Director for Nuclear and Missile Defense Policy Brad Clark, co-chaired the meeting for the Government of the United States.  Deputy Director General for North American Affairs, Ministry of Foreign Affairs, Arima Yutaka and Deputy Director General for Defense Policy, Ministry of Defense, Yamato Taro co-chaired for the Government of Japan.

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    Hospital outpatient departments perform a wide range of procedures, including diagnostic and surgical procedures, which may use drugs that Medicare considers to function as supplies. If the drug is new, and its cost is high relative to Medicare's payment for the procedure, then hospitals can receive a separate “pass-through” payment for the drug in addition to Medicare's payment for the procedure. These pass-through payments are in effect for 2 to 3 years. When the pass-through payments expire, Medicare no longer pays separately for the drug, and payment for the drug is “packaged” with the payment for the related procedure. The payment rate for the procedure does not vary by whether or not the drug is used. Medicare intends this payment rate to be an incentive for hospitals to furnish services efficiently, such as using the most cost-efficient items that meet the patient's needs. Examples of Types of Drugs that Medicare Considers to Function as Supplies GAO's analysis of Medicare data showed that higher payments were associated with six of seven selected drugs when they were eligible for pass-through payments versus when their payments were packaged. For example, one drug used in cataract removal procedures was eligible for pass-through payments in 2017. That year, Medicare paid $1,824 for the procedure and $463 for the drug pass-through payment—a total payment of $2,287. If a hospital performed the same cataract removal procedure when the drug was packaged the following year, there was no longer a separate payment for the drug. Instead, Medicare paid $1,921 for the procedure whether or not the hospital used the drug. Of the seven selected drugs, GAO also reviewed differences in use for four of them that did not have limitations on Medicare coverage during the time frame of GAO's analysis, such as coverage that was limited to certain clinical trials. GAO found that hospitals' use of three of the four drugs was lower when payments for the drugs were packaged. This was consistent with the financial incentives created by the payment system. In particular, given the lower total payment for the drug and procedure when the drug is packaged, hospitals may have a greater incentive to use a lower-cost alternative for the procedure. Hospitals' use of a fourth drug increased regardless of payment status. The financial incentives for that drug appeared minimal because the total payment for it and its related procedure was about the same when it was eligible for pass-through payments and when packaged. Other factors that can affect use of the drugs include the use of the drugs for certain populations and whether hospitals put the drugs on their formularies, which guide, in part, whether the drug is used at that hospital. The Department of Health and Human Services reviewed a draft of this report and provided technical comments, which GAO incorporated as appropriate. Medicare makes “pass-through” payments under Medicare Part B when hospital outpatient departments use certain new, high-cost drugs. These temporary payments are in addition to Medicare's payments for the procedures using the drugs. They may help make the new drugs accessible for beneficiaries and also allow Medicare to collect information on the drugs' use and costs. The Consolidated Appropriations Act, 2018 included a provision for GAO to review the effect of Medicare's policy for packaging high-cost drugs after their pass-through payments have expired. This report describes (1) the payments associated with selected high-cost drugs when eligible for pass-through payments versus when packaged, and (2) hospitals' use of those drugs when eligible for pass-through payments versus when packaged. GAO reviewed federal regulations on pass-through payments and Medicare payment files for all seven drugs whose pass-through payments expired in 2017 or 2018 and that were subsequently packaged. All of these drugs met Medicare's definition for having a high cost relative to Medicare's payment rate for the procedure using the drug. GAO also reviewed Medicare claims data on the use of the drugs for 2017 through 2019 (the most recent available). To supplement this information, GAO also interviewed Medicare officials, as well officials from 11 organizations representing hospitals, physicians, and drug manufacturers, about payment rates, use, reporting, and clinical context for the drugs. For more information, contact James Cosgrove at (202) 512-7114 or cosgrovej@gao.gov.
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  • Abusive Tax Schemes: Offshore Insurance Products and Associated Compliance Risks
    In U.S GAO News
    Federal law provides certain tax benefits for transactions involving genuine insurance products, including insurance products held offshore. While taxpayers may lawfully hold offshore insurance products, they contain features that make them vulnerable for use in abusive tax schemes. For example, offshore insurance products can be highly technical and individualized, making enforcement challenging, according to Internal Revenue Service (IRS) officials. Furthermore, insurance is not defined by federal statute, potentially making a determination of what constitutes genuine insurance for federal tax purposes unclear. Offshore micro-captive insurance products, which are made by small insurance companies owned by the businesses they insure, may be abused if the corporate taxpayer improperly claims deductions for payments made to a micro-captive for federal tax purposes. Courts have applied certain considerations to determine whether these deductions can be claimed. For example, one consideration is whether the insurance legitimately distributes risk across participating entities. IRS officials said they expend significant resources reviewing these schemes because of the varied ways insurance companies may work. Offshore variable life insurance products, which are insurance policies with investment components over which the insured has certain control, may be abused if the individual taxpayer fails to meet IRS reporting requirements or pay appropriate federal income taxes. Federal regulations require that taxpayers with certain foreign life insurance accounts report this information to IRS and the Financial Crimes Enforcement Network. The structure of life insurance products may vary and taxpayers are required to pay taxes based on the underlying type of financial product the policy represents. The figure below shows how noncompliance may occur when taxpayers use life insurance and micro-captive insurance in abusive tax schemes. Abusive Use of Micro-captive and Life Insurance When structured in abusive ways, insurance products held offshore can be designed to aid in unlawful tax evasion by U.S. taxpayers. Two products that IRS has recently warned have the potential for such abuse include micro-captive insurance and variable life insurance policies. GAO was asked to review how taxpayers may abuse offshore insurance products. This report describes (1) how offshore insurance tax shelters provide opportunities for income tax abuse; (2) how offshore micro-captive insurance is used and how it is used in abusive tax schemes; and (3) how offshore variable life insurance is used and how it is used in abusive tax schemes. GAO reviewed IRS tax and information return forms, relevant U.S. case law and IRS guidance, academic and trade publications, and applicable statutes and regulations. GAO also interviewed IRS officials and professionals in the tax preparation and insurance industries. For more information, contact Jessica Lucas-Judy at (202) 512-9110 or LucasJudyJ@gao.gov.
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    Acting United States Attorney General Monty Wilkinson, FBI Director Christopher Wray and President Joe Biden’s Homeland Security Advisor Dr. Elizabeth Sherwood-Randall led a United States Government delegation to Fort Lauderdale, Florida today that attended the funeral service for fallen FBI Special Agent Laura Schwartzenberger. 
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  • Substance Use Disorder: Reliable Data Needed for Substance Abuse Prevention and Treatment Block Grant Program
    In U.S GAO News
    According to Substance Abuse and Mental Health Services Administration (SAMHSA) data, the number of substance use disorder (SUD) treatment facilities and services increased since 2009. However, potential gaps in treatment capacity remain. For example, SAMHSA data show that, as of May 2020, most counties did not have all levels of SUD treatment available, including outpatient, residential, and hospital inpatient services; nearly one-third of counties had no levels of treatment available. Stakeholders GAO interviewed said it is important to have access to each level for treating individuals with varying SUD severity. Availability of Substance Use Disorder Treatment Levels, by County, as of May 2020 SAMHSA primarily relies on the number of individuals served to assess the effect of three of its largest grant programs on access to SUD treatment and recovery support services. However, GAO found the agency lacks two elements of reliable data—that they be consistent and relevant—for the number of individuals served under the Substance Abuse Prevention and Treatment Block Grant (SABG) program. For example, grantee reporting includes individuals served outside of the program, which limits this measure's relevance for program assessment of access. SAMHSA plans to implement data quality improvements for the SABG program starting in fiscal year 2021. However, the agency has not identified specific changes needed to improve the information it collects on individuals served. As SAMHSA moves forward with its plans, it will be important for it to identify and implement such changes. Doing so will allow SAMHSA to better assess whether the SABG program is achieving a key goal of improving access to SUD treatment and recovery services or whether changes may be needed. Treatment for SUD—the recurrent use of substances, such as illicit drugs, causing significant impairment—can help individuals reduce or stop substance use and improve their quality of life. SUDs, and in particular drug misuse, have been a persistent and long-standing public health issue in the United States. Senate Report 115-289 contains a provision for GAO to review SUD treatment capacity. This report, among other things, describes what is known about SUD treatment facilities, services, and overall capacity; and examines the information SAMHSA uses to assess the effect of three grant programs on access to SUD treatment. GAO analyzed national SAMHSA data on SUD treatment facilities and providers, and reviewed studies that assessed treatment capacity. GAO also reviewed documentation for three of SAMHSA's largest grant programs available to states, and compared the agency's grant data quality to federal internal control standards. Finally, GAO interviewed SAMHSA officials and stakeholders, including provider groups. GAO is recommending that SAMHSA identify and implement changes to the SABG program's data collection efforts to improve two elements of reliability—the consistency and relevance—of data collected on individuals served. SAMHSA concurred with this recommendation. For more information, contact Alyssa M. Hundrup at (202) 512-7114 or HundrupA@gao.gov.
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  • COVID-19: HHS Should Clarify Agency Roles for Emergency Return of U.S. Citizens during a Pandemic
    In U.S GAO News
    What GAO Found At the beginning of the COVID-19 pandemic, the U.S. returned, or repatriated, about 1,100 U.S. citizens from abroad and quarantined them domestically to prevent the spread of COVID-19. The Department of Health and Human Services (HHS) experienced coordination and safety issues that put repatriates, HHS personnel, and nearby communities at risk. This occurred because HHS component agencies—the Administration for Children and Families, the Office of the Assistant Secretary for Preparedness and Response, and the Centers for Disease Control and Prevention—did not follow plans or guidance delineating their roles and responsibilities for repatriating individuals during a pandemic—an event these agencies had never experienced. While they had general repatriation plans, there was disagreement as to whether the effort was in fact a repatriation. This led to fundamental problems for HHS agencies and their federal partners, including at the March Air Reserve Base quarantine facility in California where the first repatriated individuals were quarantined prior to widespread transmission of COVID-19 in the U.S. These problems included the following: Lack of clarity as to which agency was in charge when the first repatriation flight from Wuhan, China, arrived at the quarantine facility, which caused confusion among the HHS component agencies. Coordination issues among HHS component agencies resulted in component agencies operating independently of each other, and led to frustration and complications. HHS's delay in issuing its federal quarantine order, during which time a repatriate tried to leave the quarantine facility. HHS personnel's inconsistent use of personal protective equipment (PPE), and HHS officials' disagreement on which agency was responsible for managing infection prevention and control. An HHS official also directed personnel to remove their PPE as it created “bad optics,” according to an HHS report that examined the repatriation effort. The National Response Framework, a guide to how the U.S. responds to disasters and emergencies, instructs agencies to understand their respective roles and responsibilities, know what plans apply, and develop appropriate guidance for emergency responses. Until HHS revises or develops new plans that clarify agency roles and responsibilities during a repatriation in response to a pandemic, it will be unable to prevent the coordination and health and safety issues it experienced during the COVID-19 repatriation response in future pandemic emergencies. HHS also did not include repatriation in its pandemic planning exercises. As a result, agencies lacked experience deploying together to test repatriation plans during a pandemic, which contributed to serious coordination issues. GAO has previously reported that exercises play an important role in preparing for an incident by providing opportunities to test response plans and assess the clarity of roles and responsibilities. Until HHS conducts such exercises, it will be unable to test its repatriation plans during a pandemic and identify areas for improvement. Why GAO Did This Study HHS provides temporary assistance to U.S. citizens repatriated by the Department of State (State) from a foreign country because of destitution, illness, threat of war, or similar crises through the U.S. Repatriation Program. In January and February 2020, HHS assisted State in repatriating individuals from Wuhan, China, and the Diamond Princess cruise ship in Yokohama, Japan, to the U.S. HHS quarantined repatriates at five Department of Defense (DOD) installations to ensure they did not infect others with COVID-19. GAO was asked to examine HHS's COVID-19 repatriation efforts to ensure the health and safety of those involved in the response. This report examines HHS's coordination and management of its COVID-19 repatriation response. GAO reviewed relevant documentation from HHS, State, and DOD related to repatriation planning, including documentation on pandemic planning exercises. GAO also interviewed officials from HHS, State, and DOD.
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    A Canadian national pleaded guilty today to conspiracy to bring aliens to the United States for private financial gain in connection with his role in a scheme to smuggle aliens from Sri Lanka through the Caribbean and into the United States.
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    The Department of Justice announced today that it has filed a lawsuit alleging that a property manager in Chicopee, Massachusetts violated the Fair Housing Act by subjecting female tenants to sexual harassment.
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    A Palm Beach County, Florida doctor was arrested and charged with conspiring to commit health care fraud and wire fraud for his alleged participation in a massive years-long health care fraud scheme throughout Palm Beach County, billing for fraudulent tests and treatments for vulnerable patients seeking treatment for drug and/or alcohol addiction.
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