Semiannual Report to Congress, October 1, 2019, through March 31, 2020 — HHS-OIG
Summary
Semiannual Report to Congress from the Department of Health and Human Services, Office of Inspector General, for October 1, 2019, through March 31, 2020, introduced by Principal Deputy Inspector General Christi A. Grimm. For the period OIG issued 81 audit reports and 14 evaluation reports, identifying $605.2 million in expected recoveries, $288.4 million in questioned costs and $911.3 million in potential savings. Investigative work led to $1.51 billion in expected investigative recoveries and 443 criminal actions, and OIG excluded 903 individuals and entities from Federal health care programs. The message cites an audit finding $92.5 million in improper Medicare payments to suppliers of inhalation drugs and early COVID-19 work, including a Special Fraud Alert on COVID-19 and a dedicated system to report fraud schemes.
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
A Message From Christi A. Grimm, Principal Deputy Inspector General
I am pleased to submit this Semiannual Report to Congress
summarizing the activities of the Department of Health and Human
Services (HHS), Office of Inspector General (OIG), for the 6-month
period ending on March 31, 2020. This report describes OIG’s work
to detect and prevent fraud, waste, and abuse and to promote the
economy, efficiency, and effectiveness of HHS programs and
operations.
During this reporting period, OIG continued its priority work to
combat opioid-related fraud and provide valuable data to
policymakers on opioid prescribing and treatment services. An OIG
audit uncovered $92.5 million in improper Medicare payments to
suppliers of inhalation drugs, and an OIG investigation of a massive
sober home fraud scheme led to prison sentences for three
individuals. Other notable work included a report that found poor
interagency communication and internal management decisions
failed to protect children’s interests and left HHS unprepared for the zero-tolerance policy, and a review
that found the National Institutes of Health can do more to address concerns about foreign threats to the
confidentiality of the peer-review process. Our work recommended improvements to program integrity,
including stronger monitoring of incidents of abuse and neglect involving Medicaid beneficiaries with
developmental disabilities. The Semiannual Report more fully describes our portfolio of completed work
for the reporting period.
Along with other agencies across the Federal Government, OIG recently turned our attention to the
coronavirus disease 2019 (COVID-19) public health emergency. OIG is investigating and holding
accountable those who would exploit the emergency to defraud the public and HHS programs, including
through fraudulent marketing schemes for COVID-19 tests, identity theft, and submission of false claims for
payment. Building on longstanding work focused on emergency preparedness and response, OIG is
undertaking and planning oversight of HHS’s COVID-19-related programs to ensure that program
requirements are met to protect patient health and safety, that taxpayer funds invested to provide relief to
providers and care to patients are not misspent, and that critical infrastructure supporting an effective
emergency response is secure. OIG is working to provide the public and policymakers in HHS and
Congress with sophisticated analyses and relevant, reliable, and actionable data and information.
In March, OIG released our strategic plan for 2020–2025. We set three goals: to fight fraud, waste, and
abuse; to promote quality, safety, and value in HHS programs and for HHS beneficiaries; and to advance
excellence and innovation. In today’s rapidly changing health and human services environment, OIG will
continue to conduct the most consequential oversight work and optimize resources to deliver impactful
results. We do this through data-driven reviews and investigations, supported with modern auditing,
investigative, and evaluative methods, and a team of over 1,600 dedicated public servants. Impact.
Innovation. People focus. These are the core values that inspire OIG to serve the American public with
independent, objective oversight.
OIG appreciates the ongoing support of Congress and HHS for our important work.
Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Table of Contents
OIG’s Approach to Driving Positive Change 1
Highlights of OIG Accomplishments 5
OIG Participation in Congressional Hearings 14
Selected Acronyms and Abbreviations 15
Medicare and Medicaid Reports and Reviews 16
Legal and Investigative Activities Related to Medicare and Medicaid 35
Public Health and Human Service Agency Reports and Reviews 54
Legal and Investigative Activities Related to Public Health and Human Service Agencies 61
Other HHS-Related Reviews and Investigative Activities 63
Appendix A: Questioned Costs and Funds To Be Put to Better Use 67
Appendix B: Peer-Review Results 73
Appendix C: Summary of Sanction Authorities 76
Appendix D: Reporting Requirements in the Inspector General Act of 1978 79
Appendix E: Reporting Requirements in the Inspector General Empowerment Act of 2016 82
Appendix F: Anti-Kickback Statute—Safe Harbors 90
Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
OIG’s Approach to Driving Positive Change
THE DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS) Office of Inspector General (OIG) provides
independent and objective oversight that promotes economy, efficiency, and effectiveness in HHS
programs and operations. OIG’s program integrity and oversight activities are shaped by legislative and
budgetary requirements and adhere to professional standards established by the Government
Accountability Office (GAO), the Department of Justice (DOJ), and the Inspector General community.
Through a nationwide network of audits, investigations, and evaluations, OIG carries out its mission to
protect the integrity of HHS programs and the health and welfare of the people served by those programs.
OIG’s work is conducted by three operating components—the Office of Audit Services (OAS), the Office of
Evaluation and Inspections (OEI), and the Office of Investigations (OI)—with assistance from the Office of
Counsel to the Inspector General (OCIG) and Mission Support and Infrastructure (MSI).
OIG Organization
Office of Audit Services
OAS conducts audits of HHS programs and operations through its own resources or by overseeing
audit work done by others. Audits examine the performance of HHS programs and/or of HHS’s
grantees and contractors in carrying out their respective responsibilities and provide independent
assessments of HHS programs and operations. These audits help reduce waste, abuse, and
mismanagement and promote the economy, efficiency, and effectiveness of programs and
operations throughout HHS.
Office of Evaluation and Inspections
OEI conducts national evaluations to provide HHS, Congress, and the public with timely, useful,
and reliable information on significant issues. These evaluations focus on preventing fraud, waste,
and abuse and promoting economy, efficiency, and effectiveness in HHS programs. OEI reports
also present practical recommendations for improving program operations.
Office of Investigations
OI conducts criminal, civil, and administrative investigations of fraud and misconduct related to
HHS programs, operations, and beneficiaries. With investigators working in almost every State, the
District of Columbia, and Puerto Rico, OI coordinates with DOJ and other Federal, State, and local
law enforcement authorities. OI also coordinates with OAS and OEI when audits and evaluations
uncover potential fraud. OI’s investigative efforts often lead to criminal convictions, administrative
sanctions, or civil monetary penalties (CMPs).
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Office of Counsel to the Inspector General
OCIG provides legal services to OIG, rendering advice and opinions on HHS programs and
operations and providing all legal support for OIG’s internal operations. OCIG represents OIG in all
civil and administrative fraud and abuse cases involving HHS programs, including the False Claims
Act, program exclusion, self-disclosure, and CMP cases. In connection with these cases, OCIG also
negotiates and monitors corporate integrity agreements (CIAs). OCIG renders advisory opinions,
issues compliance program guidance, publishes fraud alerts, and provides other guidance to the
health care industry about the anti-kickback statute and other OIG enforcement authorities.
Mission Support and Infrastructure
MSI is composed of the Immediate Office of the Inspector General and the Office of Management
and Policy. MSI is responsible for coordinating OIG activities and providing mission support,
including setting vision and direction for OIG’s priorities and strategic planning; ensuring effective
management of budget, finance, human resource management, and other operations; and serving
as a liaison with HHS, Congress, and other stakeholders. MSI plans, conducts, and participates in a
variety of cooperative projects within HHS and with other Government agencies. MSI provides
critical data analytics, data management, and information technology (IT) infrastructure that
enables OIG components to conduct their work efficiently and effectively.
OIG Strategic Publications
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
HHS-OIG Strategic Plan
OIG’s Strategic Plan outlines the approach to protecting the integrity of HHS programs. The plan
has three key goals: (1) to fight fraud, waste, and abuse; (2) to promote quality, safety, and value in
HHS programs and for HHS beneficiaries; and (3) to advance excellence and innovation. These
goals drive OIG’s work planning for audits and evaluations as well as OIG’s approach to
enforcement. These goals also serve as a starting point for OIG’s own assessment of its
effectiveness.
OIG Work Plan
OIG’s Work Plan sets forth projects that OIG plans to undertake during the fiscal year (FY) and
beyond. Projects listed in the Work Plan span HHS’s operating divisions (OpDivs), which include
the Centers for Medicare & Medicaid Services (CMS); public health agencies such as the Centers for
Disease Control and Prevention (CDC) and the National Institutes of Health (NIH); and human
services agencies such as the Administration for Children and Families (ACF) and the
Administration for Community Living (ACL). The Work Plan also includes oversight of State and
local governments’ use of Federal funds as well as the administration of HHS. Some of the projects
described in the Work Plan are statutorily required.
OIG’s Top Recommendations
OIG drives positive change by not only identifying risks, problems, abuses, and deficiencies, but
also recommending solutions to address them. OIG maintains a list of recommendations it has
made to address vulnerabilities detected in its reviews, and it keeps track of whether these
recommendations have been implemented. OIG systematically follows up on its recommendations
with the relevant HHS programs. From among the recommendations that have not been
implemented, OIG identifies the top recommendations that, if implemented, are likely to garner
significant savings and improvements in quality, efficiency, and effectiveness. OIG compiles these
recommendations in the Solutions To Reduce Fraud, Waste, and Abuse in HHS Programs: OIG’s Top
Recommendations (previously known as the Compendium of Unimplemented Recommendations).
Top Management and Performance Challenges Facing HHS
To focus HHS’s attention on the most pressing issues, each year OIG identifies the Top
Management and Performance Challenges facing HHS. These top challenges arise across HHS
programs and cover critical HHS responsibilities, including delivering quality services and benefits,
exercising sound fiscal management, safeguarding public health and safety, and enhancing
cybersecurity.
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
OIG’s Semiannual Report to Congress
OIG’s Semiannual Report(s) to Congress (Semiannual Reports) describe OIG’s work on identifying
significant problems, abuses, deficiencies, remedies, and investigative outcomes relating to the
administration of HHS programs and operations that were disclosed during the reporting period.
In the report below, we present OIG expected recoveries, criminal and civil actions, and other
statistics as a result of our work for the semiannual reporting period of October 1, 2019, through
March 31, 2020. We also highlight some of our work completed during this semiannual reporting
period.
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Highlights of OIG Accomplishments
HHS-OIG’S SEMIANNUAL REPORT TO CONGRESS (Semiannual Report) describes OIG’s work identifying
significant risks, problems, abuses, deficiencies, remedies, and investigative outcomes relating to the
administration of HHS programs and operations that were disclosed during the semiannual reporting
period, October 1, 2019, through March 31, 2020. In this section, we highlight significant results from
selected audits, evaluations, and enforcement activities completed during the reporting period.
At-a-Glance Highlights
Statistic Semiannual Reporting Period
(10/1/2019–3/31/2020)
Audit Reports Issued 81
Evaluations Issued 14
Expected Audit Recoveries $605.2 million
Questioned Costs $288.4 million
Potential Savings $911.3 million
New Audit and Evaluation 273
Recommendations
Recommendations Implemented by 130
HHS Operating Divisions
Expected Investigative Recoveries $1.51 billion
Criminal Actions 443
Civil Actions 370
Exclusions 903
Results for the Semiannual Reporting Period
During this semiannual reporting period (October 1, 2019, through March 31, 2020), we issued 81 audit
reports and 14 evaluation reports. Our audit work identified $605.2 million in expected recoveries, as well
as $288.4 million in questioned costs (costs questioned by OIG because of an alleged violation, costs not
supported by adequate documentation, or the expenditure of funds where the intended purpose is
unnecessary or unreasonable). Our audit work also identified $911.3 million in potential savings for HHS—
funds that could be saved if HHS implemented all of OIG’s audit recommendations. During this reporting
period, OIG made 273 new audit and evaluation recommendations, which are crucial to encourage positive
change in HHS programs. Meanwhile, HHS operating divisions implemented 130 prior recommendations,
leading to positive impact for HHS programs and beneficiaries.
OIG also remains at the forefront of the Nation’s efforts to fight fraud in HHS programs and hold
wrongdoers accountable for their actions. Along with our partners DOJ, Medicaid Fraud Control Units
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
(MFCUs or Units), and other Federal, State, and local law enforcement agencies, we detect, investigate, and
prosecute fraud through a coordinated and data-driven approach. OIG’s investigative work led to $1.51
billion in expected investigative recoveries and 443 criminal actions during this reporting period. OIG also
took civil actions, such as assessing monetary penalties, against 370 individuals and entities, and excluded
903 individuals and entities from Federal health care programs.
OIG continues to focus on the most significant and high-risk issues in health care and human services. Our
mission is to provide objective oversight to promote the economy, efficiency, effectiveness, and integrity of
HHS programs, as well as the health and welfare of the people they serve. Below we highlight results from
selected OIG oversight and enforcement activities from the semiannual reporting period of October 1,
2019, through March 31, 2020, organized by subject area. A comprehensive list of OIG work during the
reporting period follows, and Appendices A–F provide data to meet the reporting requirements in the
Inspector General Act of 1978.
Preparing for and Responding to the COVID-19 Pandemic and Other Public
Health Emergencies
OIG plays a vital role in supporting the nation’s ability to prepare, respond, and recover from natural
disasters and public health emergencies. In response to the novel coronavirus disease 2019 (COVID-19)
pandemic, OIG immediately deployed law enforcement personnel in its Emergency Support Function No.
13 role to provide Federal public safety and security assistance to local, State, Tribal, territorial, and Federal
organizations. OIG staff protected quarantined patients at health care facilities and aided in the safe
transport of patients to and from health care facilities.
In addition, OIG rapidly launched a series of oversight and enforcement actions related to the COVID-19
pandemic. By mid-March, OIG had developed a dedicated system to report fraud schemes for COVID-19,
issued a Special Fraud Alert on COVID-19 to protect Medicare beneficiaries from identity theft, issued a
Policy Statement to waive cost-sharing requirements for telehealth services, and initiated an assessment of
CDC’s provision of COVID-19 test kits and its oversight of laboratory testing. For a complete listing of our
oversight and enforcement actions, please see OIG’s COVID-19 Portal. In addition, OIG made operational
and procedural changes to protect the safety and wellbeing of OIG employees and contractors while
continuing to fulfill our mission. OIG’s modern approach to oversight and effort will allow us to quickly
adapt and plan work responsive to the COVID-19 pandemic.
Prior to the COVID-19 pandemic, OIG continued its longstanding work focused on ensuring the safety of
nursing homes and ensuring health care facilities are prepared for a public health emergency. In 2016,
CMS updated its life safety and emergency preparedness regulations to improve protections for all
Medicare and Medicaid beneficiaries, including those residing in nursing homes. The regulatory updates
included requirements that nursing homes have expanded sprinkler systems and smoke detector
coverage; an emergency preparedness plan that is reviewed, trained on, tested, and updated at least
annually; and provisions for sheltering in place and evacuation. In response, OIG reviewed selected
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
nursing homes in California, Texas, Florida, and Missouri to determine whether the nursing homes
complied with Federal requirements for life safety and emergency preparedness.
OIG found deficiencies in all four States. Deficiencies varied among the States. Life safety deficiencies
generally related to building exits, fire detection and suppression systems, hazardous storage, smoking
policies, and electrical equipment maintenance, among others. Emergency preparedness deficiencies
generally related to written plans, emergency power, emergency communications, and training, among
others. OIG recommended that followup actions be taken with each nursing home to ensure that
corrective actions have been taken regarding the identified deficiencies. The States either agreed or
partially agreed with our recommendations. (See reports A-09-18-02009, A-06-19-08001, A-04-18-08065,
and A-07-18-03230.)
Protecting Unaccompanied Children in the Department’s Care
HHS, through ACF’s Office of Refugee Resettlement (ORR), is responsible for ensuring the shelter and care
of thousands of unaccompanied alien children who enter the United States without legal status. Most of
these children were transferred into ORR’s custody after initially being taken into custody at the border by
the Department of Homeland Security (DHS). ORR provides temporary shelter, care, and other related
services to children before they are released to sponsors (most often, family members). OIG has devoted
substantial efforts to protect the health and safety of children in ORR custody. Significant OIG work during
this semiannual reporting period related to ORR includes the following:
OIG found that poor interagency communication and internal management decisions that failed to protect
children’s interests left HHS unprepared for the zero-tolerance policy. This lack of preparation impeded
HHS’s ability to identify, care for, and reunify separated children. ACF needs to address the management
concerns that we identified to improve its operation of the Unaccompanied Alien Children (UAC) Program.
ACF agreed with our recommendations to address these issues. (See report OEI-BL-18-00510.)
Preventing and Treating Opioid Misuse
OIG continued its multidisciplinary approach to addressing the national opioid epidemic in this reporting
period. As Deputy Inspector General for Investigations Gary Cantrell described in his October 2019
testimony before the Senate Committee on Finance, OIG’s work covers both the prescribing and treatment
dimensions of the opioid crisis. OIG’s ongoing efforts to combat inappropriate prescribing and
distribution include investigations of “pill mills” that illegally dispense prescription opioids and the doctors
involved in the fraud. To address the treatment dimension, OIG’s multifaceted approach has included
evaluating access to drugs that treat opioid use disorder, overseeing Medicaid claims for treatment
services and HHS grants to States, and investigating of fraud schemes involving substance abuse treatment
centers. Significant OIG work during this semiannual reporting period includes the following:
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
OIG’s investigation helped convict a doctor of illegally prescribing and distributing large quantities of
prescription opioids. A provider was convicted on 861 Federal counts of drug distribution, including
distribution resulting in death, for operating a “pill mill” in Martinsville, Virginia. Patients travelled
hundreds of miles and paid cash to receive opioid prescriptions at his office, which regularly stayed open
after midnight and lacked basic medical supplies. Opioid prescriptions written by this provider caused
Medicaid and Medicare Part D to pay hundreds of thousands of dollars in suspected fraudulent claims.
This provider was sentenced to 40 years in prison.
OIG found that buprenorphine-waivered providers may not always be located in the areas where access to
treatment for opioid use disorder is most critical. Buprenorphine, a key drug used in medication-assisted
treatment (MAT) for opioid use disorder, can be prescribed in office settings only by providers that obtain
waivers from the Substance Abuse and Mental Health Administration (SAMHSA). Among the 1,100 U.S.
counties identified as having the greatest need for opioid use disorder treatment services, OIG’s analysis of
waivered providers showed that 56 percent likely had inadequate capacity to treat patients with
buprenorphine in an office setting. SAMHSA concurred with OIG’s recommendation to target efforts to
increase the participation of waivered providers in high-need counties. (See report OEI-12-17-00240.)
OIG found that the State of New York claimed Medicaid funds for opioid treatment program (OTP)
services that did not meet requirements. New York improperly claimed an estimated $39.3 million in
Federal Medicaid reimbursement for OTP services that did not comply with Federal and State
requirements. The improper claims identified by OIG occurred because providers had inadequate
documentation of services, did not ensure that services were provided in accordance with beneficiaries’
treatment plans, and did not maintain necessary signatures for services. OIG recommended that New York
refund the $39.3 million to the Federal Government and ensure that providers comply with requirements
for OTP services. (See report A-02-17-01021.)
OIG’s review of Federal grants to States for opioid response activities identified unspent funds and limited
data on a key metric. OIG found that over $300 million of grant funding for SAMHSA’s State Targeted
Response to the Opioid Crisis grant program remained unspent after 2 years, with 14 States having spent
less than half of their grant allocations. Additionally, while States reported using their grants to expand
access to treatment, SAMHSA did not track how many patients received MAT, the primary form of
evidence-based treatment. SAMHSA concurred with OIG’s recommendations to work with States to
address barriers to timely spending and require States to specifically report how many patients are
receiving MAT. (See report OEI-BL-18-00460.)
OIG investigated a massive sober home fraud scheme, leading to prison sentences for three individuals.
Three former co-owners and clinical directors of a group of purported substance abuse treatment centers
and sober homes were sentenced to prison for their roles in a $21 million health care fraud conspiracy.
According to court documents, the scheme involved submitting fraudulent claims for substance abuse
treatment services to several health insurance companies. The three conspirators pleaded guilty and were
sentenced to a combined 15 years and 4 months in prison and ordered to pay $4.2 million in restitution.
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
An electronic health record (EHR) vendor admits to kickback scheme aimed at increasing opioid
prescriptions. The vendor agreed to pay $145 million to resolve criminal and civil investigations relating to
its EHR software. The vendor admitted that it solicited and received kickbacks from a major opioid
company in exchange for utilizing its EHR software to influence physician prescribing of opioid pain
medications.
Fighting Fraud To Protect the Medicare and Medicaid Programs
In 2018, Medicare spent nearly $741 billion, and provided health coverage to 59.9 million beneficiaries.
OIG has sustained efforts to root out illegal activity that can unnecessarily raise costs for the Medicare
program or put beneficiaries at risk. Significant OIG work during this semiannual reporting period includes
the following:
OIG found that some providers may be using beneficiaries’ Medicare Part D eligibility information
improperly. OIG discovered that providers were taking advantage of gaps in CMS's program integrity in
Medicare Part D Eligibility Verification Transactions (E1 transactions). Because E1 transactions contain
beneficiary protected health information, we wanted to verify that the providers were appropriately using
E1 transactions for their intended purposes. The majority of providers used E1 transactions for some
purpose other than to bill for a prescription or determine drug coverage billing order. CMS agreed with
our recommendations to ensure that providers are using eligibility information properly. (See report
A-05-17-00020.)
A pharmaceutical company agreed to pay almost $12 million and enter into a CIA with OIG for violating
the anti-kickback statute. A pharmaceutical company entered into a $11.85 million False Claims Act
settlement with the United States to resolve allegations that it paid the copayments of Medicare patients
taking a certain drug to induce the patients to purchase, or their physicians to prescribe, the drug. The
pharmaceutical company agreed to pay $11.85 million to resolve its liability and entered into a CIA with
OIG in connection with the settlement.
OIG found that Medicare Part D does not have three key tools to protect against pharmacy fraud that are
available in other parts of Medicare. Three tools—pharmacy enrollment, revocation, and preclusion—
apply to pharmacies when they bill Medicare Parts B or C, but not when they bill Part D. CMS agreed with
our recommendations to allow Medicare Part D the ability to utilize these fraud prevention tools. (See
report OEI-02-15-00440.)
Ensuring Medicaid Program Integrity
Medicaid spending represents one-sixth of the of the national health care economy, and Medicaid serves
more people, including some of the Nation’s most vulnerable individuals, than any other Federal health
care program. A key component of OIG’s mission is to promote integrity and efficiency in Medicaid
through a nationwide program of audits, evaluations, inspections, investigations, and enforcement actions.
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
OIG testified about OIG’s Medicaid Program Integrity work at a congressional hearing. In October, Brian
Ritchie, Assistant Inspector General for Audit Services, testified at a congressional hearing before the
Senate Committee on Finance, Subcommittee on Health Care. The testimony addressed OIG’s work on
Medicaid beneficiary eligibility and OIG’s commitment to ensure that Medicaid pays the right amount, to
the right provider, for the right service, on behalf of the right beneficiary. (See OIG congressional
testimony.)
OIG found that States could do more to prevent terminated providers from serving Medicaid beneficiaries.
We found that nearly 1,000 terminated providers—or 11 percent of all terminated providers—were
inappropriately enrolled in State Medicaid programs. These providers were associated with $50.3 million
in Medicaid payments. Despite legislative requirements in the 21st Century Cures Act designed to
strengthen Medicaid program integrity, terminated providers continue to serve Medicaid beneficiaries.
Some of these providers were terminated for criminal convictions, licensure issues, and provider
misconduct, representing a risk to beneficiaries’ safety and their quality of care. CMS agreed with our
recommendations to help protect taxpayer dollars and the beneficiaries served by the Medicaid program.
(See report OEI-03-19-00070.)
OIG found that 23 States allowed unenrolled providers to serve Medicaid beneficiaries. We found that 23
States had not enrolled all Medicaid providers. When States do not enroll and screen providers, Medicaid
beneficiaries are exposed to potentially harmful providers. CMS agreed with our recommendations to
ensure that States enroll all providers. (See report OEI-05-19-00060.)
Ensuring Appropriate Use of HHS Funds
OIG reviews of the administration of Medicaid and Medicare are critical to ensuring that Medicare and
Medicaid funds are spent in accordance with payment rules and on behalf of eligible beneficiaries.
Significant OIG work during this semiannual reporting period includes the following:
OIG found billions of estimated Medicare Advantage (MA) payments from chart reviews raised concerns.
OIG found billions of estimated risk-adjusted payments supported solely through chart reviews raised
potential concerns about the completeness of payment data submitted to CMS, the validity of the
diagnoses on chart reviews, and the quality of care provided to beneficiaries. The risk adjustment program
helps to ensure that sicker beneficiaries have continued access to MA plans. Chart reviews can be a tool to
improve the accuracy of risk-adjusted payments. However, chart reviews—particularly those not linked to
service records—may provide MA organizations with opportunities to circumvent CMS face-to-face
requirements and inflate payments inappropriately. CMS agreed with our recommendations to address
the vulnerabilities associated with chart reviews, particularly unlinked chart reviews, as a mechanism. (See
report OEI-03-17-00470.)
OIG found that 60 hospitals received $3.5 billion in excessive outlier payments. These payments
represented a net of $502 million more than hospitals would have been paid if their outlier payments had
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
not been reconciled. CMS did not detect or recover these excessive outlier payments. CMS agreed with
our recommendation that it require reconciliation of all hospital cost reports with outlier payments during
the cost-reporting period. If this requirement had been in effect for the 60 hospitals in our review, CMS
would have saved approximately $125 million per year. (See report A-05-16-00060.)
OIG found that New Jersey claimed $63 million for unallowable Medicaid school-based administrative
costs. New Jersey improperly claimed $63.8 million after using a random moment sampling methodology
that did not comply with statistical sampling requirements and was not adequately supported. OIG
recommended that the State refund $63.8 million in Federal Medicaid payments and revise its random
moment sampling methodology to comply with Federal requirements. (See report A-02-17-01006.)
OIG found that Medicare improperly paid acute-care hospitals $54 million for inpatient claims. Medicare
improperly paid acute-care hospitals $54.4 million for 18,647 claims subject to Medicare’s post-acute-care
transfer policy. These hospitals improperly billed the claims by using incorrect patient discharge status
codes. Specifically, they coded these claims as discharges to home or to certain types of health care
institutions, rather than as transfers to post-acute care. CMS agreed with our recommendations that it
direct the Medicare contractors to recover the $54.4 million in identified overpayments. (See report
A-09-19-03007.)
OIG found that Medicare improperly paid suppliers $92.5 million for inhalation drugs. On the basis of our
sample results, we estimated that $92.5 million paid to suppliers was unallowable for Medicare
reimbursement. Medicare contractor oversight was not sufficient to ensure that suppliers complied with
documentation requirements. CMS agreed with our recommendations that it identify suppliers that
consistently bill for inhalation drugs that do not comply with Medicare documentation requirements,
perform reviews of those suppliers, collect the amount overpaid for unallowable claims, and educate them
on Medicare requirements for inhalation drugs. (See report A-09-18-03018.)
OIG found that New York State claimed Federal reimbursement for unallowable childcare subsidies. OIG
found that New York State claimed Federal reimbursement for childcare subsidy payments made to New
York City that did not comply with Federal and State requirements. Based on our sample results, we
estimated that New York State claimed Federal reimbursement of $24.7 million related to these
unallowable payments. During our audit period, New York City did not have controls in place to prevent
these unallowable payments. New York State agreed with our recommendation that it refund
$24.7 million in unallowable childcare subsidies claimed for Federal reimbursement and ensure that New
York City’s recently implemented program controls are properly functioning. (See report A-02-17-02010.)
Protecting Beneficiaries From Abuse, Neglect, and Unsafe Conditions
Protecting individuals served by HHS programs from abuse, neglect, and unsafe conditions is central to
OIG’s mission. Oversight work to ensure safety and well-being is particularly important for facilities and
home-based programs that care for children and other vulnerable populations. Significant OIG work
during this semiannual reporting period includes the following:
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Department of Health and Human Services, Office of Inspector General
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A pediatrician employed with the Indian Health Service (IHS) was sentenced to five consecutive life
sentences for multiple sex offenses against children. While employed with IHS in South Dakota, a
pediatrician sexually abused multiple Native American children between 1999 and 2011. The pediatrician
was sentenced to five consecutive life sentences in Federal prison and was ordered to pay $800,000 in
criminal fines and an $800 special assessment to the Federal Crime Victims Fund.
OIG found that IHS strengthened patient protection policies but still needs to fully integrate them into
practice and organizational culture. In response to several recent cases of health care providers abusing
patients under care at facilities, IHS strengthened patient protection policies. Although IHS’s policies are
consistent with those of other health care organizations, the policies have coverage gaps and are still early
in implementation. IHS agreed with our recommendations to continue to actively promote the policies in
practice and promote an organizational culture of transparency. (See report OEI-06-19-00330.)
OIG found that Pennsylvania did not adequately report and monitor incidents involving Medicaid
beneficiaries with developmental disabilities who resided in community-based settings. Specifically,
Pennsylvania did not have adequate controls to detect unreported 24-hour reportable incidents and did
not have controls in place to ensure that all beneficiary deaths were investigated and that all suspicious
deaths were referred to law enforcement. Pennsylvania agreed with our recommendations to improve its
controls regarding the reporting and monitoring of 24-hour reportable incidents involving Medicaid
beneficiaries with developmental disabilities residing in community-based settings. (See report
A-03-17-00202.)
Safeguarding the Security and Integrity of Medical Research
Congress, NIH, and Federal intelligence agencies have raised concerns about foreign and other threats to
the integrity of taxpayer-funded research and intellectual property. In FY 2020, OIG received $5 million in
congressional appropriations to conduct oversight of NIH grant programs and operations. OIG’s oversight
work is reviewing (1) intellectual property and cybersecurity protections, (2) compliance with Federal
requirements and NIH policies for grants and contracts, and (3) integrity of grant application and selection
processes. Significant OIG work completed during this semiannual reporting period includes the following:
OIG found that NIH had IT control weaknesses in its EHR system. Among the interests to Congress were
matters pertaining to cybersecurity protections and NIH compliance with Federal requirements. This
review found that NIH's information security policies and practices were not operating effectively to
preserve the security, confidentiality, integrity, and availability of its electronic health information systems.
This resulted in potential risks of unauthorized access, use, disclosure, disruption, modification, or
destruction. NIH agreed with recommendations to enhance its information security environment related
to its EHR system. (See report A-18-19-06003.)
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
OIG found that NIH can do more to address concerns about foreign threats to the confidentiality of the
peer-review process. Each year NIH relies on thousands of peer reviewers to review tens of thousands of
extramural grant applications, helping NIH determine the most promising research to fund. OIG found
that NIH enforces policies and procedures that protect confidential information in grant applications
handled by peer reviewers, but that it could do more to address the risk that undue foreign influence
poses to maintaining confidentiality. NIH agreed with our recommendations regarding developing a
measured, risk-based approach so that NIH can focus its oversight efforts on those circumstances or
reviewers shown to pose the greatest risk to peer review integrity. (See report OEI-05-19-00240.)
Promoting Information Sharing in the Drug Supply Chain
Drug diversion, counterfeiting, and the importation of unapproved drugs may result in potentially
dangerous drugs entering the drug supply chain, posing a threat to public health and safety. To enhance
the security of this supply chain, the Drug Supply Chain Security Act (DSCSA) requires trading partners in
the drug supply chain to create a record of each drug product transaction. The Food and Drug
Administration (FDA) can use these records to investigate and identify potentially harmful drug products,
prevent further distribution, and facilitate efficient recalls.
OIG found that ownership—but not physical movement—of selected drugs can be traced through the
supply chain. OIG found that drug product tracing information can be used to trace ownership, but not
physical movement, of selected drug products through the supply chain. Knowing which trading partner
owns a drug, where it is in the supply chain, and where it has been can help investigators from FDA do the
following: ensure that a potentially dangerous drug is removed the drug supply; identify breaches; and
protect patients from harmful, ineffective, and illegitimate drugs. FDA agreed with our recommendations
to continue establishing a system to trace drug product ownership through the supply chain to ensure the
security of the drug supply. (See report OEI-05-17-00460.)
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
OIG Participation in Congressional Hearings
Date Witness Testimony/Committee
10/24/2019 Gary Cantrell, Deputy Inspector “OIG's Efforts to Address the Prescribing and
General for Investigations Treatment Dimensions of the Opioid Crisis,” Senate
Committee on Finance
10/30/2019 Brian P. Ritchie, Assistant Inspector “Medicaid: Compliance with Eligibility
General for Audit Services Requirements,” Senate Committee on Finance,
Subcommittee on Health Care
11/14/2019 Statement for the Record “Caring for Aging Americans,” House Committee
on Ways and Means
2/27/2020 Suzanne Murrin, Deputy Inspector “Oversight of the Food and Drug Administration,”
General for Evaluation and House Committee on Appropriations,”
Inspections Subcommittee on Agriculture, Rural Development,
Food and Drug Administration, and Related
Agencies
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Selected Acronyms and Abbreviations
ACA Patient Protection and Affordable Care Act
ACF Administration for Children and Families
ACL Administration for Community Living
CDC Centers for Disease Control and Prevention
CIA corporate integrity agreement
CMP civil monetary penalty
CMS Centers for Medicare & Medicaid Services
CCDF Child Care and Development Fund
DHS Department of Homeland Security
DOJ Department of Justice
DME durable medical equipment
EMTALA Emergency Medical Treatment and Labor Act
FDA Food and Drug Administration
FY fiscal year
GAO Government Accountability Office
HHS Department of Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996
HRSA Health Resources and Services Administration
IHS Indian Health Service
LIHEAP Low-Income Home Energy Assistance Program
MCO managed care organization
MFCU Medicaid Fraud Control Unit
NIH National Institutes of Health
OAS Office of Audit Services
OCIG Office of Counsel to the Inspector General
OEI Office of Evaluation and Inspections
OI Office of Investigations
OIG Office of Inspector General
OMB Office of Management and Budget
SAMHSA Substance Abuse and Mental Health Services Administration
SNF skilled nursing facility
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Medicare and Medicaid Reports and Reviews
Medicare Program Reports and Reviews
Financial Management and Improper Payments
Medicare Allowable Amounts for Certain Orthotic Devices Are Not Comparable With Payments Made
by Select Non-Medicare Payers (A-05-17-00033), October 2019
Medicare allowable amounts for certain orthotic devices are not comparable with payments made
by select non-Medicare payers. For calendar years (CYs) 2012 through 2015, we estimated that
Medicare and beneficiaries paid $341.7 million more than select non-Medicare payers on 142
Healthcare Common Procedure Coding System (HCPCS) codes and $4.2 million less than select
non-Medicare payers on 19 HCPCS codes. Generally, Medicare allowable amounts are more than
select non-Medicare payer payments because CMS does not routinely evaluate pricing trends for
orthotic devices or payments made by select non-Medicare payers. Instead, CMS uses statutorily
mandated fee schedule payments that have an economic update factor applied to them annually.
We identified 95 of the 161 codes for which the Medicare allowable amounts could be adjusted
using existing legislative authority to make those amounts comparable with payments made by
select non-Medicare payers. For the remaining 66 codes, CMS would be required to seek new
legislative authority to make those adjustments.
CMS concurred with our recommendations that it (1) review the allowable amounts for 161 orthotic
device HCPCS codes and adjust the allowable amounts, as appropriate, using regulations
promulgated under existing legislative authority or, if the allowable amounts cannot be adjusted
using regulations promulgated under existing legislative authority, seek authority to align Medicare
allowable amounts for these items with payments made by select non-Medicare payers and (2)
routinely review Medicare allowable amounts for new and preexisting orthotic devices to ensure
that Medicare allowable amounts are in alignment with payments made by select non-Medicare
payers or pricing trends.
Medicare Improperly Paid Acute-Care Hospitals $54.4 Million for Inpatient Claims Subject to the
Post-Acute-Care Transfer Policy (A-09-19-03007), November 2019
Medicare improperly paid acute-care hospitals $54.4 million for 18,647 claims subject to Medicare’s
post-acute-care transfer policy. These hospitals improperly billed the claims by using incorrect
patient discharge status codes. Specifically, they coded these claims as discharges to home or to
certain types of health care institutions, such as facilities that provide custodial care, rather than as
transfers to post-acute care.
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Department of Health and Human Services, Office of Inspector General
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Medicare makes the full Medicare Severity Diagnosis-Related Group (MS DRG) payment to an
acute-care hospital that discharges an inpatient to home or certain types of health care institutions.
In contrast, Medicare pays an acute-care hospital that transfers a beneficiary to post-acute care a
per diem rate for each day of the beneficiary’s stay in the hospital. The total overpayment of
$54.4 million represented the difference between the amount of the full MS DRG payments and
the amount that would have been paid if the per diem rates had been applied.
CMS concurred with our recommendations that it direct the Medicare contractors to (1) recover the
$54.4 million in identified overpayments, (2) identify any claims for transfers to post-acute care in
which incorrect patient discharge status codes were used and direct the Medicare contractors to
recover any overpayments after our audit period, and (3) ensure that the Medicare contractors are
receiving the post-payment edit’s automatic notifications of improperly billed claims and are taking
action by adjusting the original inpatient claims to initiate recovery of the overpayments.
Medicare Made Hundreds of Thousands of Dollars in Overpayments for Chronic Care Management
Services (A-07-17-05101), November 2019
Physician and outpatient payments made by CMS for chronic care management (CCM) services
provided during CYs 2015 and 2016 did not always comply with Federal requirements, resulting in
$640,452 in overpayments associated with 20,165 claims. For these 20,165 claims, beneficiaries
were overcharged a total of up to $173,495 in cost sharing.
Further, we identified 37,124 claims totaling $1.2 million in potential overpayments for instances in
which a CCM service was billed by an outpatient facility, but a corresponding claim was not
submitted by a physician. We set aside these potential overpayments for review and determination
by CMS. Additionally, for these 37,124 claims, beneficiaries may have been overcharged a total of
up to $373,726 in cost sharing.
These errors occurred because CMS did not have adequate controls in place, including claim
system edits, to identify and prevent overpayments.
CMS concurred with our recommendations that it (1) recoup $640,452 from providers and instruct
providers to refund overcharges totaling up to $173,495 to beneficiaries; (2) review the 37,124
outpatient claims totaling $1.2 million in potential overpayments to determine whether the
outpatient facilities met the requirement to bill for CCM services and recoup any overpayments
from outpatient facilities and instruct the outpatient facilities to refund corresponding overcharges
to beneficiaries; and (3) implement claim processing controls, including system edits, to prevent
and detect overpayments for CCM services.
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
CMS Made an Estimated $93.6 Million in Incorrect Medicare Electronic Health Record Incentive
Payments to Acute-Care Hospitals, or Less Than 1 Percent of $10.8 Billion in Total Incentive Payments
(A-09-18-03020), December 2019
CMS did not always make Medicare EHR incentive payments to acute-care hospitals in accordance
with Federal requirements. The incorrect net incentive payments occurred because (1) the
Medicare administrative contractors (MACs) did not review the supporting documentation for all
hospitals to identify errors in the hospitals’ cost-report numbers used to calculate the incentive
payments and (2) CMS did not include labor and delivery services in the incentive payment
calculations, which resulted in hospitals receiving inflated incentive payments. Based on our
sample results, we estimated that CMS made incorrect net incentive payments of $93.6 million, or
less than 1 percent of the $10.8 billion in total incentive payments for our audit period.
CMS concurred with our recommendations that it (1) recover from acute-care hospitals the portion
of the $1.3 million in incorrect net incentive payments that are within the reopening period; (2) for
the remaining portion of the $1.3 million, which is outside of the recovery period, notify the acute-
care hospitals associated with the incorrect payments so that those hospitals can exercise
reasonable diligence to investigate and return any identified similar incorrect payments; (3) instruct
the MACs to review all hospitals’ supporting documentation to identify errors in the hospitals’ cost-
report numbers; and (4) revise the incentive payment calculations to include labor and delivery
inpatient bed-days.
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns (OEI-03-17-
00470), December 2019
Billions of estimated MA risk-adjusted payments supported solely through chart reviews raise
potential concerns about the completeness of payment data submitted to CMS, the validity of
diagnoses on chart reviews, and the quality of care provided to beneficiaries. Diagnoses that MA
organizations reported only on chart reviews—and not on any service records—resulted in an
estimated $6.7 billion in risk-adjusted payments for 2017. CMS based an estimated $2.7 billion in
risk adjusted payments on chart review diagnoses that MA organizations did not link to a specific
service provided to the beneficiary. Although limited to a small number of beneficiaries, almost
half of MA organizations reviewed had payments from unlinked chart reviews where there was not
a single record of a service being provided to the beneficiary in all of 2016. CMS concurred with
our recommendations, which were:
• Provide oversight of MA organizations that had payments resulting from unlinked chart
reviews for beneficiaries who had no service records in 2016;
• Conduct audits that validate diagnoses reported on chart reviews in the encounter data;
and
• Reassess the risks and benefits of allowing unlinked chart reviews to be used as sources of
diagnoses for risk adjustment.
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Quality of Care, Safety, and Access
Registered Nurses Did Not Always Visit Medicare Beneficiaries’ Homes at Least Once Every 14 Days
To Assess the Quality of Care and Services Provided by Hospice Aides (A-09-18-03022),
November 2019
Registered nurses did not always (1) visit hospice beneficiaries’ homes at least once every 14 days
to assess the quality of care and services provided by hospice aides or (2) document the visits in
accordance with Federal requirements. Of the approximately 189,000 high-risk date-pairs in our
sample, we identified (1) an estimated 99,000 instances in which the registered nurses did not make
the required supervisory visits at least once every 14 days and (2) an estimated 5,000 instances in
which supervisory visits were not documented in accordance with Federal requirements.
These deficiencies occurred because of hospices’ lack of oversight, scheduling errors, employee
turnover, and the registered nurses not being aware of the 14-day supervisory visit requirement.
As a result, there was no assurance that beneficiaries admitted to those hospices received the
appropriate care while in hospice care.
CMS concurred with our recommendations (1) that it promote hospices’ compliance with the
standard that requires registered nurses to visit hospice beneficiaries’ homes at least once every 14
days, which could include working with State survey agencies and accreditation organizations to
increase emphasis on this requirement, educating hospices about the requirements associated with
this standard, and making this standard a quality measure and (2) that it take action to ensure that
all registered nurses’ supervisory visits of hospice aides are documented in accordance with
applicable CMS regulations and interpretive guidelines.
Program Integrity
CMS’s Controls Over Assigning Medicare Beneficiary Identifiers and Mailing New Medicare Cards
Were Generally Effective but Could Be Improved in Some Areas (A-09-19-03003), January 2020
CMS’s controls were generally effective in ensuring that (1) beneficiaries were properly assigned
Medicare Beneficiary Identifiers (MBIs), (2) deceased beneficiaries were not mailed new Medicare
cards, and (3) payments were not made on behalf of deceased beneficiaries. However, in a small
percentage of cases, CMS’s controls did not prevent multiple MBIs from being assigned to
beneficiaries or prevent mailing of new Medicare cards to deceased beneficiaries. In addition, CMS
made improper payments of $2.3 million on claims for deceased beneficiaries.
Specifically, we found that CMS assigned to 22,662 beneficiaries 2 or more MBIs associated with
multiple enrollment records that contained the same SSN and date of birth. In addition, CMS
mailed 58,420 new Medicare cards after the beneficiaries’ dates of death. Finally, CMS made
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
improper payments for claims with dates of service after the beneficiaries’ dates of death. By
improving its controls, CMS can limit unintended consequences, such as claim processing errors
and inappropriate release of personally identifiable information.
CMS concurred with our recommendations that it (1) improve its system controls by checking the
Medicare Enrollment Database’s date-of-death information as close as reasonably possible to the
date that card mailing data are sent to the print/mail contractor to ensure that Medicare cards are
not mailed to deceased beneficiaries and (2) instruct the Medicare contractors to review incorrectly
collected deductible amounts that may have been for claims with dates of service after the
beneficiaries’ dates of death and initiate recoupment for amounts identified as improper payments.
Medicare Market Shares of Diabetes Test Strips From April Through June 2019 (OEI-04-19-00481),
January 2020
Non mail-order claims composed 85 percent of the total Medicare market for diabetes test strips
(DTS) during the time period we reviewed. The suppliers in our sample provided 25 types of DTS
to Medicare beneficiaries via non-mail order and 21 types of DTS via mail order. The suppliers in
our samples provided eight types of DTS to Medicare beneficiaries both via non-mail order and
mail order. The Medicare Improvements for Patients and Providers Act of 2008 prohibits CMS
from awarding contracts in the National Mail-Order Program to a supplier of DTS if the supplier’s
bid does not cover at least 50 percent, by volume, of all types of DTS provided to Medicare
beneficiaries. OIG’s analysis assists CMS in determining whether bidding suppliers meet this 50-
percent rule.
This report contains no recommendations.
The Majority of Providers Reviewed Used Medicare Part D Eligibility Verification Transactions for
Potentially Inappropriate Purposes (A-05-17-00020), February 2020
The majority of providers reviewed (25 of 30) used Medicare Part D eligibility verification
transactions (E1 transactions) for some purpose other than to bill for a prescription or determine
drug coverage billing order. On average, 98 percent of these 25 providers’ E1 transactions were
not associated with a prescription. We did not contact 10 providers because they were closed,
under investigation, or both. Fifteen providers submitted or hired other entities to submit E1
transactions for inappropriate purposes, which involved using a beneficiary’s protected health
information.
After our audit period, CMS took additional steps to monitor use of the eligibility verification
system and take appropriate enforcement action when abuse is identified.
The deficiencies we identified occurred because CMS had not yet (1) fully implemented controls to
monitor providers submitting a high number of E1 transactions relative to prescriptions processed
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Department of Health and Human Services, Office of Inspector General
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until after our audit period, (2) published clear guidance that E1 transactions are not to be used for
marketing purposes, and (3) limited nonpharmacy access.
CMS concurred with our recommendations that it (1) continue to monitor providers submitting a
high number of E1 transactions relative to prescriptions processed, (2) issue guidance that clearly
states that E1 transactions should not be used for marketing purposes, (3) ensure that only
pharmacies and other authorized entities submit E1 transactions, and (4) take appropriate
enforcement action when abuse is identified.
Key Medicare Tools To Safeguard Against Pharmacy Fraud and Inappropriate Billing Do Not Apply to
Part D (OEI-02-15-00440), March 2020
Part D does not have three key tools to protect against pharmacy fraud that are available in other
parts of Medicare: pharmacy enrollment, revocation, and preclusion. These three tools apply to
pharmacies only when they bill Parts B or C, not when they bill Part D. We continue to recommend
that CMS require pharmacies that bill Part D to enroll in the Medicare program. This was an
integral part of a previous recommendation that CMS has yet to implement. CMS concurred with
all three of our new recommendations, which were:
• Allow revocation of Medicare enrollment for inappropriate billing of Part D;
• Include on the Preclusion List pharmacies that inappropriately bill Part D; and
• Apply the Preclusion List payment prohibitions to pharmacies and other providers that
dispense Part D drugs.
Drug Pricing and Reimbursement
Medicare Improperly Paid Suppliers an Estimated $92.5 Million for Inhalation Drugs (A-09-18-03018),
October 2019
Not all suppliers complied with Medicare requirements when billing for inhalation drugs. For 81 of
the 120 sampled claim lines, suppliers complied with the requirements; however, for the remaining
39 claim lines, 22 suppliers did not comply with documentation requirements. We found the
following documentation-related deficiencies: incomplete, invalid, or missing detailed written
orders (28 claim lines); incomplete proof of delivery (6 claim lines); incomplete refill requests (6
claim lines); and medical records not provided (1 claim line). (The total exceeds 39 because 2 claim
lines had 2 deficiencies,)
Based on our sample results, we estimated that approximately $92.5 million paid to suppliers for
inhalation drugs was unallowable for Medicare reimbursement. Medicare contractor oversight was
not sufficient to ensure that suppliers complied with documentation requirements.
CMS concurred with our recommendations that it (1) instruct the Medicare contractors to recover
$36,825 in overpayments for the 39 unallowable claim lines and notify the 22 suppliers associated
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Department of Health and Human Services, Office of Inspector General
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with those 39 claim lines so that those suppliers can exercise reasonable diligence to investigate
and return any identified overpayments; (2) work with the durable medical equipment MACs to
expand their review of suppliers’ claims to include additional inhalation drugs; (3) provide
additional training to suppliers on Medicare documentation requirements for inhalation drugs; and
(4) identify suppliers that consistently bill for inhalation drugs that do not comply with Medicare
documentation requirements, perform reviews of those suppliers, collect the amount overpaid for
unallowable claims, and educate them on Medicare requirements for inhalation drugs.
CMS’s Implementation of a 2014 Policy Change Resulted in Improvements in the Reporting of
Coverage Gap Discounts Under Medicare Part D (A-07-16-06067), January 2020
The Coverage Gap Discount Program made manufacturer discounts equal to 50 percent of the
negotiated price of applicable, covered Part D drugs available to Medicare Part D beneficiaries
during CYs 2011 through 2018. Although CMS generally ensured that Part D sponsors accurately
reported Coverage Gap discounts, we identified instances in which sponsors should have reported
these discounts but did not. Specifically, for CYs 2013 and 2014, we identified $1.1 million in
Coverage Gap discounts that should have been invoiced to manufacturers but were not because
the discounts were not reflected in the prescription drug event (PDE) records submitted by
sponsors.
These discrepancies occurred because CMS did not always have the sponsor information it needed.
For that reason, CMS was not always able to accurately, and in a timely manner, identify
beneficiaries who were in the Coverage Gap. Effective January 1, 2014, a policy change enabled
CMS to more easily identify PDEs that should have reflected Coverage Gap discounts. After
implementation of the policy change, Employer Group Waiver Plans more accurately reported
Coverage Gap discounts.
CMS concurred with our recommendations that it (1) verify that Part D sponsors adjusted PDE
records for $658,396 in validated Coverage Gap discounts and, of this amount, instruct the
sponsors to remit $363,287 to the beneficiaries and (2) research the remaining records for which
we estimated missed Coverage Gap discounts totaling $406,755 and instruct Part D sponsors to
validate and adjust PDE records accordingly and remit applicable amounts to the beneficiaries.
Medicaid Program Reports and Reviews
Financial Management and Improper Payments
Texas Did Not Ensure That Its Managed-Care Organizations Complied With Requirements
Prohibiting Medicaid Payments for Services Related to Provider-Preventable Conditions
(A-06-16-01001), October 2019
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Texas did not ensure that its Medicaid managed-care organizations (MCOs) complied with Federal
and State requirements prohibiting payments to providers for inpatient hospital services related to
treating certain provider-preventable conditions (PPCs). For our audit period, we identified
Medicaid claims totaling $29.4 million that contained PPCs for five MCOs. Of this amount, we
determined that claims totaling $12.7 million were in compliance with Federal and State regulations
regarding nonpayment of PPCs. However, claims totaling $16.7 million were not in compliance.
Texas’s internal controls were not adequate to ensure that its MCOs complied with Federal and
State requirements. Specifically, Texas (1) did not have policies and procedures to determine
whether its MCOs complied with Federal and State requirements and provisions of the managed-
care contract relating to the nonpayment of PPCs and (2) did not ensure that the MCOs’ payment
rates were based only on services that were covered in the State plan.
Texas generally agreed with our recommendations that it (1) work with the five MCOs to determine
what portion of the $16.7 million is unallowable for Federal Medicaid reimbursement, (2) prohibit
payments for inpatient hospital services related to treating PPCs, (3) review all claims for inpatient
hospital services that were paid after our audit period, (4) strengthen its monitoring of its MCOs,
(5) ensure that all MCOs implement edits to appropriately reduce or deny claims for other PPCs,
(6) consider allowing liquidated damages to be imposed on the five MCOs, and (7) allow itself to
recoup funds from all MCOs when contract provisions and Federal and State requirements are not
met.
New Jersey Improperly Claimed Tens of Millions for Medicaid School-Based Administrative Costs
Based on Random Moment Sampling That Did Not Meet Federal Requirements (A-02-17-01006),
November 2019
The random moment sampling methodology New Jersey used to claim Medicaid school-based
administrative costs did not meet Federal requirements. Specifically, it did not comply with
statistical sampling requirements and was not adequately supported. Also, the methodology did
not comply with New Jersey’s approved cost allocation plan. In addition, New Jersey’s coding of
what school employees were doing during random moments was mostly incorrect or unsupported.
The random moment sampling methodology New Jersey used did not comply with Federal
requirements because New Jersey disregarded CMS guidance and assurances it made to CMS.
Therefore, we determined that New Jersey claimed $63.8 million in unallowable Federal Medicaid
reimbursement.
New Jersey disagreed with our findings but did not indicate concurrence or nonconcurrence with
our recommendations that it refund $63.8 million in Federal Medicaid payments and revise its
random moment sampling methodology to comply with Federal requirements, its implementation
plan, CMS guidance, and assurances it made to CMS.
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Department of Health and Human Services, Office of Inspector General
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More Than One-Third of New Jersey’s Federal Medicaid Reimbursement for Providing Community-
Based Treatment Services Was Unallowable (A-02-17-01020), January 2020
Of New Jersey’s 100 sampled claims for Federal Medicaid reimbursement of payments for
Programs of Assertive Community Treatment (PACT) services, 50 complied with Federal and State
requirements, but 50 did not. Of the 100 claims, 21 contained more than 1 deficiency. We also
identified potential quality-of-care issues related to PACT services. Specifically, PACT team
psychiatrists associated with 33 of our sample claims did not provide the minimum amount of face-
to-face psychiatric time required for their caseload. Also, despite defining the PACT program as
rehabilitative, New Jersey did not require periodic reauthorizations or reevaluations of beneficiaries’
program eligibility.
The deficiencies occurred because New Jersey did not inform PACT providers of all Federal and
State requirements for providing PACT services and did not adequately monitor or have
procedures in place to ensure that providers claimed PACT services in accordance with these
requirements.
Based on our sample results, we estimated that New Jersey improperly claimed at least
$14.9 million in Federal Medicaid reimbursement.
New Jersey disagreed with our recommendation that it (1) refund $14.9 million to the Federal
Government, agreed to (2) reinforce program guidance to PACT providers, partly agreed to
(3) improve its monitoring of the PACT program, and disagreed with our recommendation that it
(4) consider developing regulations for periodic reassessments to determine whether beneficiaries
continue to require PACT services.
New York Claimed Tens of Millions of Dollars for Opioid Treatment Program Services That Did Not
Comply With Medicaid Requirements Intended To Ensure the Quality of Care Provided to
Beneficiaries (A-02-17-01021), February 2020
New York claimed Federal Medicaid reimbursement for OTP services that did not comply with
Federal and State requirements. Of the 150 claims in our random sample, 115 claims complied with
Medicaid requirements, but 35 claims did not. In addition, of the 598 claims in our nonstatistical
sample, 299 claims were billed in error. Based on our sample results, we estimated that New York
improperly claimed at least $39.3 million in Federal Medicaid reimbursement for OTP services
during our audit period.
These improper claims occurred because providers (1) failed to maintain or provide documentation
of OTP services, (2) did not ensure that OTP services were provided in accordance with
beneficiaries’ treatment plans, and (3) did not maintain signatures for OTP services. Further,
although New York inspects providers to verify compliance with Federal and State Medicaid
requirements, it did not ensure that its oversight prevented the errors identified by our audit.
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Department of Health and Human Services, Office of Inspector General
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New York did not indicate concurrence or nonconcurrence with our recommendations that it
(1) refund $39.3 million to the Federal Government, (2) ensure that providers comply with Federal
and State requirements for providing and claiming reimbursement for OTP services, and
(3) implement procedures to detect and prevent duplicate claims for OTP services.
Michigan Made Capitation Payments to Managed Care Entities After Beneficiaries’ Deaths
(A-05-17-00048), February 2020
We estimated that Michigan made unallowable capitation payments totaling at least $39.9 million
($27.5 million Federal share) to managed care entities on behalf of deceased beneficiaries during
our audit period. Of the 100 capitation payments in our stratified random sample, Michigan made
99 unallowable payments totaling $117,746 ($79,348 Federal share).
The unallowable payments occurred because Michigan did not always identify and process
Medicaid beneficiaries’ death information. Although Michigan’s Medicaid Management
Information System (MMIS) and eligibility systems interfaced with State and Federal death files that
identify dates of death, Michigan did not always identify those dates of death in its MMIS system,
and the MMIS system and eligibility system did not share dates of death information with each
other. Michigan also did not recover payments caused by dates of death not promptly identified in
its MMIS system.
Michigan did not say whether it agreed or disagreed with our recommendations that it (1) refund
$27.5 million to the Federal Government; (2) identify and recover unallowable payments made to
managed care entities during our audit period on behalf of deceased beneficiaries, which we
estimated to be at least $39.9 million; (3) identify capitation payments made on behalf of deceased
beneficiaries before and after our audit period and repay the Federal share of amounts recovered;
(4) strengthen its policies and procedures for identifying deceased beneficiaries to ensure that
dates of death are recorded accurately and in a timely manner; and (5) ensure that capitation
payments are recovered when a date of death is retroactively entered.
New York Made Unallowable Payments Totaling More Than $10 Million for Managed Care
Beneficiaries Assigned Multiple Medicaid Identification Numbers (A-02-18-01020), February 2020
New York improperly claimed Federal Medicaid reimbursement for Medicaid beneficiaries who
were assigned more than one Medicaid identification (ID) number. Specifically, for 102 of the 103
beneficiary-matches in our sample, New York made managed care payments to different managed
care organizations for the same beneficiary for the same month under different Medicaid ID
numbers.
These errors occurred because (1) New York’s procedures for identifying whether a Medicaid
applicant had already been assigned a Medicaid ID number were not always followed, (2) system
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
queries were not adequate to ensure that all individuals with existing Medicaid ID numbers were
identified, and (3) staff did not use all available resources to ensure that qualified applicants were
not issued multiple Medicaid ID numbers.
Based on our sample results, we estimated that New York improperly claimed $11.5 million in
Federal Medicaid reimbursement for payments made on behalf of beneficiaries assigned more
than one Medicaid ID number. We reduced this estimate to $11.3 million because New York
recovered some managed care payments after the start of our audit.
New York did not specifically indicate concurrence or nonconcurrence with our recommendations
that it (1) refund $11.3 million to the Federal Government, (2) identify and recover improper
managed care payments made to different MCOs on behalf of beneficiaries with multiple Medicaid
ID numbers and repay the Federal share of the amounts recovered, and (3) strengthen its
procedures for determining whether an individual applying for Medicaid already has a Medicaid ID
number.
CMS Could Take Actions To Help States Comply With Federal Requirements Prohibiting Medicaid
Payments for Inpatient Hospital Services Related to Provider-Preventable Conditions
(A-09-18-02004), March 2020
In 2011, CMS issued Federal regulations prohibiting Federal Medicaid payments for services related
to PPCs. The goal of the regulations is to improve quality of care by prohibiting payments for
medical errors. Prior OIG audits of nine States found that none of them fully complied with Federal
requirements. This audit found that CMS could take actions to (1) verify that all State plans fully
comply with Federal requirements prohibiting Medicaid payments for inpatient hospital services
related to treating PPCs and (2) issue clarifying guidance to address specific areas in which States
did not comply with those requirements. If CMS does not verify that State plans fully comply with
Federal requirements and provide clear guidance on these requirements, States may continue to
struggle to prevent unallowable payments for PPCs and may not take measures to improve the
quality of inpatient hospital services through the prevention of medical errors.
CMS concurred with our recommendations that it verify that all State plans comply with Federal
requirements prohibiting payments for PPCs, issue a revised State plan preprint that contains all of
the provisions identified in Federal requirements, issue clarifying guidance to States to help ensure
that they identify and process claims containing PPCs correctly, understand how and when to apply
the “reasonably isolate” language in Federal regulations, make the necessary corrections to the
FY 2016 Medicare hospital-acquired conditions list, and work with States to ensure that their
systems and processes for identifying PPCs use all diagnosis codes reported by inpatient hospitals.
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Quality of Care, Safety, and Access
Pennsylvania Did Not Fully Comply With Federal and State Requirements for Reporting and
Monitoring Critical Incidents Involving Medicaid Beneficiaries With Developmental Disabilities
(A-03-17-00202), January 2020
Iowa Did Not Comply With Federal and State Requirements for Major Incidents Involving Medicaid
Members With Developmental Disabilities (A-07-18-06081), March 2020
Pennsylvania and Iowa did not fully comply with Federal Medicaid waiver and State requirements
for reporting and monitoring incidents involving Medicaid beneficiaries with developmental
disabilities who resided in community-based settings. Specifically, Pennsylvania did not (1) ensure
that community-based providers reported thousands of 24-hour reportable incidents within
required timeframes, (2) ensure that community-based providers and county and regional
investigators analyzed and investigated all beneficiary deaths, and (3) ensure that community-
based providers referred all suspicious deaths to law enforcement.
Iowa did not (1) ensure that community-based providers reported all major incidents to the State,
(2) ensure that community-based providers documented the resolution of reported major incidents
to prevent or diminish the probability of future occurrences, (3) review Critical Incident Reports to
determine trends, problems, and issues in service delivery, (4) ensure that community-based
providers report all member deaths to the State, and (5) report all known major incidents to CMS.
Pennsylvania concurred with six of our recommendations that it improve its controls regarding the
reporting and monitoring of 24-hour reportable incidents involving Medicaid beneficiaries with
developmental disabilities residing in community-based settings. Pennsylvania did not concur with
our recommendation that it record the 24-hour reportable incidents noted in our report.
Iowa concurred with our recommendations that it train community-based providers on how to
identify, report, and appropriately document the resolution of all major incidents; perform trend
analysis that identifies patterns and trends to assess the health and safety of members and
determine whether changes or staff training are needed to prevent recurrences of major incidents
and to reduce the number or severity of incidents; ensure that community-based providers report
to Iowa all member deaths; include all major incidents reported by MCOs in Iowa’s reports to CMS;
and develop and implement internal controls adequate to ensure full compliance with Federal and
State requirements.
New York’s Oversight of Medicaid Managed Care Organizations Did Not Ensure Providers Complied
With Health and Safety Requirements at 18 of 20 Adult Day Care Facilities Reviewed (A-02-18-01027),
March 2020
New York’s oversight of Medicaid MCOs did not ensure that 18 of the 20 adult day care services
providers we audited complied with Federal and State health and safety requirements. Specifically,
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Department of Health and Human Services, Office of Inspector General
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we found 476 instances of noncompliance with requirements for staff training, physical
environment and safety, emergency preparedness, and staff health status.
The instances of noncompliance occurred because the MCOs did not adequately monitor their
contracted providers to ensure compliance with health and safety requirements. Specifically, we
found that the survey tools and procedures used during the MCOs’ required annual site visits to
providers were not adequate. Further, New York’s oversight of the MCOs did not include
obtaining or reviewing the results of the site visits, which would be necessary to verify the MCOs’
compliance with health and safety requirements.
These deficiencies could have significantly impacted the health and safety of vulnerable Medicaid
beneficiaries.
New York did not indicate concurrence or nonconcurrence with our recommendations that it
(1) ensure that the MCOs work with their contracted adult day care services providers to correct the
476 instances of noncompliance with health and safety requirements that we identified, (2) require
MCOs to improve their site visit procedures to ensure compliance with health and safety
requirements detailed in New York’s CMS-approved MCO contract and New York’s regulations on
adult day care programs, and (3) obtain and review the results of MCO site visits at adult day care
facilities as part of its beneficiary health and safety monitoring activities.
Program Integrity
Most of the Non-Newly Eligible Beneficiaries for Whom Colorado Made Medicaid Payments Met
Federal and State Requirements, but Documentation Supporting That All Eligibility Requirements
Were Verified Properly Was Not Always in Place (A-07-18-02812), March 2020
Most of the Medicaid payments that Colorado made during our audit period were on behalf of
non-newly eligible beneficiaries who met Federal and State eligibility requirements. However,
Colorado made Medicaid payments on behalf of some non-newly eligible beneficiaries who may
not have met Federal and State eligibility requirements. Colorado correctly determined eligibility
and, therefore, correctly claimed Federal Medicaid reimbursement, on behalf of 135 of the 140
beneficiaries in our statistical sample. For the remaining five beneficiaries, Colorado had no
documentation (specifically, that it had performed annual verifications of resources) to support that
all eligibility requirements were verified properly during redeterminations as required by Federal
and State regulations and by Colorado’s State Medicaid plan. Although Colorado had policies and
procedures in place, it did not always follow them to ensure that redeterminations were properly
documented.
On the basis of our sample results, we estimated that Colorado made Medicaid payments of at
least $46.7 million ($23.8 million Federal share) on behalf of at least 3,603 potentially ineligible
beneficiaries.
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Colorado agreed with our recommendations that it redetermine, as appropriate, the current
Medicaid eligibility of the potentially ineligible sampled beneficiaries and ensure that (1) all
eligibility requirements, including those pertaining to resources, are properly verified during annual
redeterminations for all non-newly eligible beneficiaries and (2) information is maintained to
support that eligibility determinations were performed in accordance with Federal and State
requirements.
States Could Do More To Prevent Terminated Providers From Serving Medicaid Beneficiaries (OEI-03-
19-00070), March 2020
Nearly 1,000 terminated providers—or 11 percent of all terminated providers—were inappropriately
enrolled in State Medicaid programs or were associated with $50.3 million in Medicaid payments.
Despite legislative requirements in the 21st Century Cures Act designed to strengthen Medicaid
program integrity, terminated providers continue to serve Medicaid beneficiaries. Some of these
providers were terminated for criminal convictions, licensure issues, and provider misconduct,
representing a risk to beneficiaries’ safety and their quality of care. In addition, only eight States’
managed care contracts all clearly included the provision—required by the Cures Act—that
prohibits terminated providers from participating in Medicaid managed care networks. This
vulnerability may allow terminated providers to serve Medicaid beneficiaries and reduce States’
ability to limit these providers’ participation in Medicaid managed care networks.
CMS concurred with all six of our recommendations, which were:
• Recover from States the Federal share of inappropriate fee-for-service Medicaid payments
associated with terminated providers,
• Implement a method to recover from States the Federal share of inappropriate managed
care capitation payments associated with terminated providers,
• Follow up with States to remove terminated providers that OIG identified as inappropriately
enrolled in Medicaid,
• Confirm that States do not continue to have terminated providers enrolled in their
Medicaid programs,
• Safeguard Medicaid from inappropriate payments associated with terminated providers,
and
• Review States’ contracts with Medicaid managed care organizations to ensure that they
clearly and specifically include the required provision that prohibits terminated providers
from participating in Medicaid managed care networks.
Twenty-Three States Reported Allowing Unenrolled Providers To Serve Medicaid Beneficiaries (OEI-
05-19-00060), March 2020
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Department of Health and Human Services, Office of Inspector General
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We found that 23 States had not enrolled all Medicaid providers. Of the 27 States that reported
enrolling all providers, 16 reported lacking enrollment processes or enforcement controls to ensure
ongoing compliance with Federal provider enrollment requirements. When States do not enroll
and screen providers, Medicaid beneficiaries are exposed to potentially harmful providers.
CMS concurred with our recommendations, which were:
• Take steps to disallow Federal reimbursements to States for expenditures associated with
unenrolled MCO network providers, including seeking necessary legislative authority;
• Work with States to ensure that unenrolled MCO network providers do not participate in
Medicaid managed care and assist States in establishing ways to do so;
• Work with States to ensure that they have the controls required to prevent unenrolled
ordering, referring, or prescribing providers from participating in Medicaid fee-for-service;
and
• Work with States to ensure that they are complying with requirements to collect identifying
and ownership information on Medicaid provider enrollment forms.
Drug Pricing and Reimbursement
New York Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-Administered
Drugs (A-02-18-01011), February 2020
New York did not always comply with Federal Medicaid requirements for invoicing manufacturers
for rebates for physician-administered drugs. Specifically, New York did not invoice manufacturers
for rebates associated with $3.3 million (Federal share) in single-source and top-20 multiple-source
physician-administered drugs. Although New York’s policies and procedures require the collection
of utilization data necessary to invoice for rebates on all claims, its internal controls did not always
ensure that the data were used to invoice manufacturers to secure rebates.
Further, New York did not submit the drug utilization data necessary to secure rebates for claims
associated with all other physician-administered drugs. These drugs were included in claims
totaling $2.3 million (Federal share) that did not have drug codes and in claims totaling $714,777
(Federal share) that contained drug codes.
New York generally agreed with our recommendations that it (1) refund to the Federal Government
$3.3 million for single-source and top-20 multiple-source physician-administered drugs, (2) work
with CMS to determine the unallowable portion of the $3 million for other drug claims in question,
and (3) strengthen its internal controls to ensure that all physician-administered drugs eligible for
rebates are invoiced.
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Department of Health and Human Services, Office of Inspector General
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Centers for Medicare & Medicaid Services
The Centers for Medicare & Medicaid Services Could Improve Its Processes for Evaluating and
Reporting Payment Recovery Savings Associated With the Fraud Prevention System (A-01-15-00510),
October 2019
The Fraud Prevention System’s (FPS’s) adjusted savings for overpayment determinations and law
enforcement referrals were approximately 10 percent of the identified savings for its second and
third implementation years because (1) the MACs’ opportunities to collect FPS-identified
overpayments were often limited by both the time it took to get referrals from the Zone Program
Integrity Contractors and Program Safeguard Contractors (Contractors) and by unique challenges
in attempting to recover overpayments from providers and (2) CMS has not established a standard
process for the Program Integrity Contractors to estimate the value of law enforcement referrals.
CMS’s reported FPS savings and return on investment (ROI) after the third implementation year
gave stakeholders an incomplete picture of the FPS’s value because CMS has continued to rely
primarily on identified savings for its reporting. Historically, the overwhelming majority of the
identified savings from payment recovery administrative actions have not been recovered.
Reporting adjusted savings and the corresponding adjusted ROI in addition to identified savings
would provide a more complete picture of the value of the FPS.
CMS concurred with our recommendations that it (1) continue to work with the Contractors and the
MACs to develop strategies that improve timely coordination to give the MACs a better
opportunity to recover overpayments, (2) establish a uniform methodology for the Contractors to
use when reporting estimates for the value of law enforcement referrals, and (3) update the FPS’s
law enforcement referral adjustment factor.
Hospitals Received Millions in Excessive Outlier Payments Because CMS Limits the Reconciliation
Process (A-05-16-00060), November 2019
From FYs 2011 through 2014, CMS paid 60 hospitals that had received $3.5 billion in outlier
payments a net of $502 million more than the hospitals would have been paid if their outlier
payments had been reconciled. (We refer to this net amount as excessive outlier payments.) CMS
did not detect or recover these excessive outlier payments because the 236 associated cost reports
did not meet the 10-percentage-point threshold for reconciliation.
The cost reports did not meet CMS’s 10-percentage-point threshold because when hospitals
increased their charges at a rate higher than that of cost increases, this usually resulted in only a
small percentage-point change in their cost-to-charge ratios. CMS set the 10-percentage-point
threshold because it believed that the threshold would appropriately capture those hospitals
whose outlier payments would be substantially inaccurate when the hospital uses the ratio from
the contemporaneous cost-reporting period. Based on the estimated time and costs that we
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Department of Health and Human Services, Office of Inspector General
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received from 7 MACs, we estimate that the administrative burden on the MACs to reconcile the
236 cost reports that did not meet the 10-percentage-point threshold would be a minimum of
$11,800 and a maximum of $425,000 per year.
CMS concurred with our recommendation that it require reconciliation of all hospital cost reports
with outlier payments during a cost-reporting period. If this had been in effect for the 60 hospitals
in our review, CMS would have saved approximately $125 million per year.
The Centers for Medicare & Medicaid Services Did Not Identify and Report Potential Antideficiency
Act Violations for 12 Contracts Used To Establish the Federal Marketplace Under the Affordable Care
Act (A-03-16-03001), February 2020
CMS correctly obligated and expended funds for 62 of the 74 Federal marketplace contracts we
reviewed. For the remaining 12 contracts, CMS did not obligate and expend funds in compliance
with applicable laws and requirements.
These errors resulted in potential, unreported Antideficiency Act obligation violations totaling
$164.6 million ($155.9 million related to the Federal marketplace) and expenditure violations
totaling $22.4 million ($18.3 million related to the Federal marketplace). In addition, for three
contracts, CMS failed to record obligations totaling $2.9 million in a timely manner. Failure to
record obligations in a timely manner can result in Antideficiency Act violations.
CMS did not specifically concur with our recommendations that it (1) correct the bona fide needs
obligation violations totaling $164.6 million ($155.9 million related to the Federal marketplace) and,
if CMS is unable to correct those violations, report the Antideficiency Act violations; (2) correct the
bona fide needs expenditure violations totaling $22.4 million ($18.3 million related to the Federal
marketplace) and, if CMS is unable to correct those violations, report the Antideficiency Act
violations; (3) coordinate with HHS, in consultation with the Office of the General Counsel, to
develop guidance and train Office of Financial Management personnel on the correct process to
record obligations and expenditures to avoid potential Antideficiency Act violations; and
(4) develop automated controls in the Healthcare Integrated General Ledger Accounting System to
ensure that contract expenditures for each program year are paid using appropriate program-year
obligations.
California Should Improve Its Oversight of Selected Nursing Homes’ Compliance With Federal
Requirements for Life Safety and Emergency Preparedness (A-09-18-02009), November 2019
Life Safety and Emergency Preparedness Deficiencies Found at 18 of 20 Texas Nursing Homes
(A-06-19-08001), February 2020
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Department of Health and Human Services, Office of Inspector General
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Florida Should Improve Its Oversight of Selected Nursing Homes’ Compliance With Federal
Requirements for Life Safety and Emergency Preparedness (A-04-18-08065), March 2020
Missouri Should Improve Its Oversight of Selected Nursing Homes’ Compliance With Federal
Requirements for Life Safety and Emergency Preparedness (A-07-18-03230), March 2020
We reviewed selected nursing homes in California, Texas, Florida, and Missouri that received
Medicare funds, Medicaid funds, or both, to determine whether the nursing homes complied with
Federal requirements for life safety and emergency preparedness.
During our site visits in California, we identified deficiencies at all 19 nursing homes that we
audited. Specifically, we found 137 instances of noncompliance with life safety requirements and
188 instances of noncompliance with emergency preparedness requirements. In Texas, we
identified deficiencies at 18 of the 20 nursing homes that we audited. Specifically, we found 235
instances of noncompliance with life safety requirements and 55 instances of noncompliance with
emergency preparedness requirements. In Florida, we identified deficiencies at all 20 nursing
homes that we reviewed. Specifically, we found 100 instances of noncompliance with life safety
requirements and 87 instances of noncompliance with emergency preparedness requirements. In
Missouri, we identified deficiencies at all 20 nursing homes that we audited. Specifically, we found
178 areas of noncompliance with life safety requirements and 149 areas of noncompliance with
emergency preparedness requirements.
The identified deficiencies occurred because nursing homes lacked adequate management
oversight and had high staff turnover. In addition, California did not adequately follow up on
deficiencies previously cited, ensure that surveyors were consistently enforcing CMS requirements,
or have a standard life safety training program for all nursing home staff. Texas indicated that
building maintenance is challenging because of the advanced age of some buildings. Florida did
not have a standard life safety training program for all nursing home staff and generally performed
life safety surveys no more frequently than once every 12 to 15 months. Missouri did not
adequately follow up on deficiencies previously cited.
California partly agreed with our recommendations that it follow up with the 19 nursing homes to
ensure that corrective actions have been taken regarding the deficiencies we identified and ensure
that all surveyors consistently enforce CMS requirements. Texas agreed with our recommendation
that it follow up with the 18 nursing homes to verify that corrective actions have been taken
regarding the life safety and emergency preparedness deficiencies we identified. Florida partly
agreed with our recommendations that it follow up with the 20 nursing homes to ensure that
corrective actions have been taken regarding the deficiencies we identified, work with CMS on
developing life safety training for nursing home staff, and conduct more frequent surveys at
nursing homes with a history of multiple high-risk deficiencies and follow up to ensure that
corrective actions have been taken. Missouri generally disagreed with our recommendations that it
follow up with the 20 nursing homes to ensure that corrective actions have been taken, develop
standardized life safety training for nursing home staff, conduct more frequent surveys and
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
followup at nursing homes with a history of multiple high-risk deficiencies, and update facility-
specific plans.
The Federal Marketplace Properly Determined Individuals’ Eligibility for Enrollment in Qualified
Health Plans but Improperly Determined That an Estimated 3 Percent of Individuals Were Eligible for
Insurance Affordability Programs (A-09-18-01000), February 2020
For our sample of 110 of 7.5 million individuals, the Federal marketplace properly determined that
all 110 individuals were eligible for enrollment in qualified health plans and that 102 individuals were
eligible for insurance affordability programs. However, for the remaining eight individuals, the
marketplace improperly determined that three individuals were eligible and may have improperly
determined that five individuals were eligible.
On the basis of our sample results, for the 2018 coverage year, we estimated that the Federal
marketplace (1) improperly determined that 191,896 (3 percent) of the 7.5 million individuals were
eligible for insurance affordability programs and (2) may have improperly determined that 402,207
individuals (5 percent) of the 7.5 million were eligible for those programs. We also identified a
weakness in the Federal marketplace’s procedures related to determining eligibility for insurance
affordability programs.
CMS agreed with our recommendations that it ensure the Federal marketplace (1) corrects errors in
its eligibility and enrollment system, (2) establishes guidance to exclude income from other gains
on an individual’s Federal tax return, and (3) performs subsequent verifications for an individual
who failed to file taxes on time. CMS disagreed with our recommendations that it (1) redetermine
the eligibility of the eight sampled individuals who may not have been eligible, (2) ensure that the
Federal marketplace revises its written guidance so that it does not extend an individual’s
inconsistency period, and (3) require an individual to submit supporting documentation when he or
she attests to having filed a tax return to reconcile a previous year’s premium tax credit payments.
34
Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Legal and Investigative Activities Related to
Medicare and Medicaid
OIG investigates allegations of fraud, waste, and abuse in all HHS programs. Our largest body of work
involves investigating matters related to the Medicare and Medicaid programs, such as patient harm;
billing for services not rendered, medically unnecessary services, or upcoded services (i.e., services billed
for at a level higher than warranted); illegal billing, sale, and diversion of prescription drugs; the marketing
of off-label uses for prescription drugs; and solicitation and receipt of kickbacks, including illegal payments
to patients for involvement in fraud schemes and illegal referral arrangements between physicians and
medical companies.
OIG also conducts investigations regarding organized criminal activity, including medical identity theft and
fraudulent medical schemes established for the sole purpose of stealing Medicare dollars. Investigators
are opening an increasing number of cases against health care providers who engage in these health care
fraud schemes. Those who participate in the schemes may face heavy fines, jail time, and exclusion from
participation in Federal health care programs.
One of the most common types of fraud perpetrated against Medicare, Medicaid, and other Federal health
care programs involves filing false claims for reimbursement. False claims may be pursued under Federal
and State criminal statutes and, when appropriate, under the False Claims Act. Depending on the types of
fraud or other violations involved, OIG investigations may culminate in criminal or civil court judgments
and decisions, administrative sanctions and decisions, and/or negotiated settlement agreements.
Investigative outcomes take many forms, including incarceration, restitution, fines, penalties, forfeitures,
assessments, and exclusion of individuals or entities from participation in all Federal health care programs.
Frequently used exclusion and penalty authorities are described on our website at
http://oig.hhs.gov/fraud/enforcement/cmp/.
During this semiannual reporting period, we reported 412 criminal and 367 civil actions against individuals
or entities that engaged in offenses related to health care. We also reported over $1.3 billion in
investigative receivables due to HHS and more than $191.2 million in non-HHS investigative receivables,
including civil and administrative settlements or civil judgments related to Medicare, Medicaid, and other
Federal, State, and private health care programs.
Criminal and Civil Enforcement Activities Related to Medicare and Medicaid
The following recently completed actions and settlements are organized by the type of provider or entity
involved. Additional cases appear in the Medicare Fraud Strike Force Activities section below.
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Patient Abuse
The following case example involves patient abuse:
South Dakota—Dr. Stanley Patrick Weber was convicted of multiple sex offenses against
children. Evidence at trial established that Weber, while employed as a pediatrician with
the Indian Health Service at Pine Ridge, South Dakota, sexually abused multiple Native
American children between 1999 and 2011. Weber was sentenced to 5 consecutive life
sentences in Federal prison for the five aggravated sexual abuse charges, and 15 years on
each of the three counts of sexual abuse of a minor. All of these sentences are to be
served consecutively to each other, and also consecutive to his previous sentence in the
District of Montana of 18 years in Federal prison. Weber was also ordered to pay $800,000
in criminal fines and an $800 special assessment to the Federal Crime Victims Fund.
Prescription Drugs
The following case example involves prescription drugs:
Virginia—Dr. Joel Smithers was convicted on 861 Federal counts of drug distribution,
including distribution resulting in death, for operating a “pill mill.” Evidence presented at
trial showed Smithers opened an office in Martinsville, Virginia, in August 2015, and
prescribed controlled substances to every patient in his practice, resulting in over 500,000
Schedule II controlled substances being distributed. The drugs involved included
oxymorphone, oxycodone, hydromorphone, and fentanyl. A majority of those receiving
prescriptions from Smithers traveled hundreds of miles, one-way, to receive the drugs. His
office lacked basic medical supplies, his receptionist lived out of a back room during the
work week, and many patients slept outside and urinated in the parking lot. At trial, one
woman, who described herself as an addict, compared Smithers’ practice to pill mills she
frequented in Florida where she received medication without any kind of physical exam or
medical records. Patients who came to the office would wait up to 12 hours to see
Smithers, who regularly kept his office open past midnight. Smithers did not accept
insurance and took in over $700,000 in cash and credit card payments prior to a search
warrant being executed at his office on March 7, 2017. Smithers caused West Virginia
Medicaid to pay $469,220 and Medicare Part D to pay $775,479 in suspected fraudulent
prescriptions. Smithers was found guilty of 1 count of maintaining a place for the purpose
of illegally distributing controlled substances, 1 count of possession with the intent to
distribute controlled substances, and 859 counts of illegally prescribing Schedule II
controlled substances, and was sentenced to 40 years in prison.
Pharmacies
The following case example involves a pharmacy:
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Florida—A doctor, pharmacists, and marketers in a compounding pharmacy scheme were
sentenced for conspiring to pay and receive health care kickbacks for prescriptions for
compounded creams billed to TRICARE, Medicare, and private insurance. According to
court documents, in 2014 and 2015, the marketing firm Centurion was operated by Frank V.
Monte and Kimberly S. Anderson. Centurion employed sales representatives to market
compounded prescription medications, specifically, creams for pain and scars, to
beneficiaries of health care plans, especially TRICARE. In May 2014, Centurion entered into
an exclusive, illegal kickback arrangement with LifeCare pharmacy, owned by Carlos
Mazariegos and Benjamin Nundy, whereby Centurion and LifeCare agreed to share equally
in the profits from the claims paid by health benefit programs for compounded
medications prescribed to beneficiaries. Baldizzi agreed with Monte, Anderson,
Mazariegos, and Nundy, that, in exchange for kickbacks, he would write prescriptions for
compounded creams marketed by Centurion to TRICARE beneficiaries. Between May and
November 2014, LifeCare billed health insurers more than $12.4 million for compounded
cream prescriptions written by Baldizzi and marketed by Centurion. Even after LifeCare
closed and Baldizzi withdrew from the conspiracy, Centurion transferred the existing refills
from Baldizzi’s prescriptions to a new pharmacy, which filled the prescriptions and billed
TRICARE. In all, Centurion caused TRICARE to be billed more than $50 million for
compounded creams prescribed to patients that it had recruited. The five codefendants
involved in the scheme were sentenced to a combined 5 years, 6 months, and 2 days in
prison and ordered to pay $6.4 million in restitution.
Mental Health
The following case example involves mental health:
Ohio—Ryan P. Sheridan, owner and operator of Braking Point Recovery Center, was
convicted of charges from his involvement in a $48 million scheme to defraud Medicaid.
Sheridan was the sole owner of Braking Point Recovery Center, which operated drug and
alcohol rehabilitation centers in Austintown and Whitehall, Ohio, that provided detox,
intensive outpatient treatment, day treatment, and residential living rehabilitation. Sheridan
also owned and operated numerous other businesses, including Braking Point Health and
Fitness LLC and Braking Point Recovery Housing LLC, which owned recovery houses (or
“sober houses”) for individuals attempting to maintain abstinence from drugs and alcohol.
According to court documents, between January 12, 2015 and October 18, 2017, Sheridan
and his codefendants submitted or caused to be submitted billings to Medicaid for drug
and alcohol services that were: coded to reflect a service more costly than was actually
provided; without proper documentation; without proper assessment documents
containing valid diagnosis; billings for patients whose records did not contain diagnosis by
a physician; related to treatment at unlicensed inpatient beds; billings related to dispensing
of Suboxone, even though the treating physician did not have the authority to do so; for
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Department of Health and Human Services, Office of Inspector General
Semiannual Report to Congress—October 1, 2019, through March 31, 2020
case management services when, in fact, the clients were working out at Sheridan’s gym;
billings based on quotas provided to the nurses by the defendants to bill 4 to 5 hours of
treatment daily, even if the services were not medically necessary; billing for inpatient detox
and drug treatment services that were, in fact, provided in an outpatient setting, among
other violations. Sheridan and his codefendants developed a standard protocol of
distributing the same amount of Suboxone to every patient seeking drug treatment
immediately upon entering Braking Point’s detox program without being evaluated by a
properly licensed physician to determine the medical necessity for the use of
Suboxone. Sheridan had the treating physician use another physician’s DEA data waiver
license to dispense more than 3,000 doses of Suboxone in 2017 alone without the data
waiver physician having seen the patients. Sheridan pleaded guilty to 60 counts related to
health care fraud and controlled substances and was sentenced to 7 years and 6 months in
prison and ordered to pay $24.4 million in restitution, joint and several. Three defendants
involved in the scheme were sentenced to probation for their role.
Electronic Health Records
The following case example involves electronic health records (EHRs):
California—On January 26, 2020, Practice Fusion, Inc. (Practice Fusion), a health IT software
company, entered into a $113,374,962 False Claims Act settlement agreement with the
United States. The settlement agreement resolves allegations that Practice Fusion falsely
represented to its Office of National Coordinator Authorized Certification Body (ONC-ACB)
that its EHR software products met certification criteria under ONC’s Health IT Certification
Program. Practice Fusion knew that use of certified software is a requirement for eligible
health care providers to receive incentive payments under the CMS EHR Incentive Payment
Programs (aka the “Meaningful Use programs”). Consequently, Practice Fusion knowingly
caused eligible health care providers, who used certain versions of its EHR software, to
falsely attest to compliance with CMS requirements necessary to receive Medicare and
Medicaid incentive payments. In addition, the settlement agreement resolves allegations
that Practice Fusion knowingly and willfully solicited and received illegal remuneration from
pharmaceutical manufacturers, in exchange for influencing and implementing clinical
decision support (CDS) alerts in its EHR software, which did not always reflect accepted
medical standards, and were designed to increase prescriptions for their drug products in
violation of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b. These CDS alerts could
influence health care providers to prescribe the pharmaceutical manufacturers’ drugs
resulting in kickback tainted claims being submitted to Medicare, Medicaid, and TRICARE,
in violation of the False Claims Act. Practice Fusion has also executed a deferred
prosecution agreement (DPA) and agreed to pay over $26 million in criminal fines and
forfeiture. In the DPA, Practice Fusion admits that it solicited and received kickbacks from a
major opioid company in exchange for utilizing its EHR software to influence physician
prescribing of opioid pain medications.
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Laboratories
The following case example involves a laboratory:
South Carolina—On October 23, 2019, Myriad Genetics, Inc. (Myriad) entered into an
$8,250,000 settlement agreement with a Relator to resolve allegations that Myriad
inappropriately billed genetic testing, specifically their Integrated BRACAnalysis and their
myRisk test, using the wrong procedure codes and modifiers to obtain higher
reimbursement. Of the $8,250,000 settlement agreement, $3,513,849 is restitution for the
Medicare Part B program and $1,159,536 is payment to HHS due to multiple damages.
HHS OIG OI will be reimbursed $46,720 in investigative costs.
Home Health Agencies
The following case example involves home health agencies:
Florida—Rodolfo and Marta Pichardo were sentenced to prison for their roles in a
$38 million health care fraud and wire fraud scheme. According to court documents, the
Pichardos built a vast empire of fraud, consisting of at least six fraudulent home health
agencies, three fraudulent therapy staffing companies, and two fraudulent pharmacies.
Each of these entities purportedly provided home health services, therapy services, and
prescription drugs, respectively, to qualified Medicare beneficiaries, though in fact they did
not. From May 2010 through September 2016, the Pichardos and their co-conspirators
used this empire to submit more than $38 million in fraudulent claims to Medicare, for
which the trust-based program then paid out more than $33 million. The Pichardos then
used this money to purchase multiple properties, high-end vehicles, expensive jewelry,
plane tickets, vacations, cosmetic procedures, and more, both for themselves and their
family members. As part of the scheme, Rodolfo Pichardo offered and paid kickbacks, both
by cash and by check, to numerous patient recruiters, in exchange for the referral of
Medicare beneficiaries to home health agencies that he owned. The conspirators also
offered and paid cash kickbacks to owners and operators of multiple Miami-Dade medical
clinics, in return for acquiring medically unnecessary home health prescriptions for the
recruited Medicare beneficiaries. These prescriptions were then used by the Pichardos’
various home health agencies and pharmacies to bill Medicare for purported services and
pharmaceutical drugs that were provided to allegedly qualified Medicare beneficiaries.
Rodolfo and Marta were sentenced to a total of 23 years and 8 months in prison and
ordered to pay $33.8 million in restitution, joint and several with a codefendant. Four
defendants involved in the scheme were previously sentenced to a combined 12 years and
1 month in prison and ordered to pay $135,245 in restitution.
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DME Company
The following case example involves a DME company:
California—On December 19, 2019, ResMed Corp. (ResMed) agreed to pay more than
$37.5 million under a False Claims Act settlement agreement with the United States. The
settlement agreement resolves allegations that ResMed (1) provided DME companies with
free telephone call center services and other free patient outreach services that enabled
these companies to order resupplies for their patients with sleep apnea; (2) provided sleep
labs with free and below-cost positive airway pressure masks and diagnostic machines, as
well as free installation of these machines; (3) arranged for, and fully guaranteed the
payments due on, interest-free loans that DME supplies acquired from third-party financial
institutions for the purchase of ResMed equipment; and (4) provided non-sleep specialist
physicians free home sleep testing devices referred to as “ApneaLink.” ResMed agreed to
enter into a 5-year CIA with OIG in conjunction with the settlement.
Hospital
The following case example involves a hospital:
Kentucky—On October 30, 2019, Jewish Hospital and St. Mary’s Healthcare, Inc. d/b/a
Pharmacy Plus and Pharmacy Plus Solutions (collectively, Jewish Hospital) entered into a
$10,101,132 False Claims Act settlement agreement with the United States. The settlement
agreement resolves allegations that Jewish Hospital submitted claims to Medicare Part B for
prescriptions drugs that did not meet Medicare coverage requirements for a detailed
written order or did not contain documentation supporting the prescription refill. The
agreement also resolves allegations that Jewish Hospital provided improper remuneration
to Medicare beneficiaries in the form of free blood glucose testing supplies, and waiver of
copayments and deductibles for insulin.
Kickbacks
The following case example involves kickbacks:
South Dakota—On October 28, 2019, Sanford Health, Sanford Clinic, and Sanford Medical
Center (collectively, Sanford) entered into a $20,250,000 False Claims Act settlement
agreement with the United States. The settlement agreement resolves allegations that
Sanford knowingly submitted false claims to Federal health care programs predicated on
illegal kickbacks. Specifically, the United States alleged that a Sanford physician solicited
and received improper remuneration, including profit distributions, from various physician-
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Department of Health and Human Services, Office of Inspector General
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owned distributorships in exchange for the Sanford physician’s use of certain products.
Sanford agreed to enter into a 5-year CIA with OIG in connection with the settlement.
Nonprofit Organization
The following case example involves a nonprofit organization:
Massachusetts—The Assistance Fund, Inc. (TAF) entered into a civil settlement agreement
with the United States under which it agreed to pay $4 million. TAF is a nonprofit
foundation that receives funding from pharmaceutical manufacturers and then uses the
funds, less administrative fees, to cover the drug copay obligations of patients, including
Medicare patients. Through the settlement, TAF resolved allegations that it violated the
False Claims Act by enabling pharmaceutical manufacturers to pay kickbacks (in the form of
copayment assistance) to Medicare patients taking the drugs of drug manufacturers that
donated monies to TAF. More specifically, the United Sates alleged that TAF conspired
with three pharmaceutical manufacturers to enable them to pay kickbacks to Medicare
patients taking the manufacturers' drugs. TAF agreed to enter a 3-year Integrity
Agreement with OIG in connection with the settlement.
Nursing Home
The following case example involves a nursing home:
Nevada—On October 25, 2019, Encompass Health Corp. (formerly known as HealthSouth
Corporation); Encompass Health Rehabilitation Hospital of Henderson, LLC (EHRHH); and
Kenneth Bowman (Bowman) (collectively, Encompass) entered into a False Claims Act
settlement agreement with the United States. Encompass agreed to pay $4 million to
resolve allegations that Encompass filed improperly coded claims for Inpatient
Rehabilitation Facility (IRF) services provided at HealthSouth Henderson, Inc. (HHI).
Specifically, the United States alleged that Encompass, through HHI, submitted false claims
to Medicare because HHI had improperly assigned inaccurate and artificially low admission
Functional Independence Measure scores on Patient Assessment Instrument forms (IRF-
PAIs) for some of its patients, resulting in HHI receiving greater reimbursement for its
services for those patients than was warranted.
Occupational Therapy
The following case example involves occupational therapy:
New York—Dr. Paul Mathieu was sentenced for his participation in a $30 million scheme
to defraud Medicare and the New York State Medicaid Program. Between 2007 and 2013,
Mathieu falsely posed as the owner of three medical clinics, which were actually owned by
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a corrupt businessman, and falsely claimed that he had examined and treated thousands
of patients whom he had not in fact seen. Mathieu was convicted in on charges of health
care fraud, wire fraud, mail fraud, conspiracy to commit those offenses, and conspiracy to
make false statements in connection with a Federal health care program. Between 2007
and 2013, Aleksandr Burman owned and operated six medical clinics in Brooklyn that
fraudulently billed Medicare and Medicaid for medical services and supplies that were not
provided, were provided without regard to medical necessity, or were otherwise
fraudulently billed. Under New York State law, professional medical corporations must be
owned by a medical professional. To circumvent this requirement, Burman and Mathieu
agreed to have Mathieu pose as the true owner of a succession of three different clinics,
which Burman owned and operated for more than 5 years, from 2007 through 2013.
Throughout those years, Mathieu signed a variety of fraudulent documents that falsely
represented to banks, Medicare, Medicaid, and others that Mathieu was the sole owner of
The Medical Office of Paul J. Mathieu, P.C.; Sunlight Medical, P.C.; and Ocean View
Medical of Brooklyn, P.C. Burman also hired two other doctors, Ewald J. Antoine and
Mustak Y. Vaid, to pose fraudulently as the owners of three additional, related clinics.
Mathieu also came weekly to several of the clinics, where he signed stacks of false and
fraudulent medical charts, and issued referrals for expensive additional testing,
occupational therapy, and physical therapy. For the last 3½ years of the scheme, Mathieu
saw no patients at all, simply falsifying enormous stacks of phony medical records falsely
stating that he had seen and treated such patients. In addition to his role in the clinics,
Mathieu also wrote unneeded prescriptions for adult diapers and other incontinence
products, which prescriptions were filled at Universal Supply Depot, a medical supply
company also owned by Burman. Mathieu was so prolific in this regard that, throughout
the period of the fraud, he was the No. 1 top prescriber of adult diapers in the State of
New York. Mathieu continued to write such prescriptions, even after the medical clinics
closed after Medicare stopped paying any of the clinics’ claims. Mathieu was convicted
on charges of health care fraud, wire fraud, mail fraud, conspiracy to commit those
offenses, and conspiracy to make false statements in connection with a Federal health
care program and was sentenced to 4 years in prison and ordered to pay $16.3 million in
restitution, joint and several. Nine codefendants involved in the scheme were previously
sentenced to a combined 26 years and 8 months in prison.
State Agency
The following case example involves a state agency:
Louisiana—On November 4, 2019, the Louisiana Department of Health (LDH) entered into
a $13,442,550.96 False Claims Act settlement agreement with the United States. LDH is the
State agency that administers the Louisiana Medical Assistance Program, known as the
Louisiana Medicaid Program. The settlement agreement resolves allegations that LDH
falsely claimed expenditures in connection with long-term care, hospice, and adult day care
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services on four CMS-64 reports submitted to CMS. LDH’s conduct resulted in the state
receiving a higher amount of the Federal financial participation reimbursement, or Federal
share, than it was entitled to receive. In connection with the settlement, LDH agreed to
enter into a 3-year State Agency Compliance Agreement with OIG, the first-of-its-kind
compliance agreement with a Medicaid agency. The State Agency Compliance Agreement
will require LDH to engage an Independent Review Organization to conduct Quarterly
Medicaid Assistance Expenditures Reviews.
Medicare Fraud Strike Force Activities
In 2007, Medicare Fraud Strike Force teams began an effort to combine resources of Federal, State, and
local law enforcement entities to prevent and combat health care fraud, waste, and abuse. These
partnerships among OIG and HHS, DOJ, U.S. Attorneys’ Offices, the Federal Bureau of Investigation (FBI),
and State and local law enforcement have a common goal: to analyze health care fraud data and
investigative intelligence to quickly identify fraud and bring prosecutions. Strike Force teams operate in 11
areas: Miami and Tampa/Orlando, Florida; Dallas and Houston, Texas; Los Angeles, California; Detroit,
Michigan; Brooklyn, New York; Baton Rouge and New Orleans, Louisiana; Chicago, Illinois; and Newark,
New Jersey/Philadelphia, Pennsylvania; along with a Corporate Strike Force located in Washington, DC.
During this semiannual reporting period, Strike Force efforts resulted in the filing of charges against 86
individuals or entities, 118 criminal actions, and more than $262.4 million in investigative receivables.
In October 2018, DOJ announced the creation of a new initiative to combat the nation’s opioid
epidemic. The Appalachian Regional Prescription Opioid Strike Force covers 10 Federal judicial districts
in Alabama, Kentucky, Ohio, Tennessee, Virginia, and West Virginia. OIG’s Office of Investigations is
working closely with its law enforcement partners at DEA, FBI, and the Medicaid Fraud Control Units
(MFCUs) to provide investigative support. Cases involve physicians and pharmacies that are
responsible for medically unnecessary opioid prescriptions and dangerous drug combinations that are
being paid for by Medicare and Medicaid. In many instances, there are other allegations of
wrongdoing relating to kickbacks, health care fraud and quality of care, including patient overdoses
and deaths.
The following case examples involve Strike Force cases:
Florida—Raymond Shores was convicted of charges resulting from his involvement in a scheme to
defraud Medicare and TRICARE. Shores owned and operated several durable medical equipment
supplier companies in Florida, California, and Georgia, which included: Alliance Medical Supplies,
LLC; Empire Medical Equipment and Supplies, LLC; Hogan Prosthetics & Orthotics Inc.; Bradley
Healthcare Group, Inc.; Universal Healthcare Group DME, Inc.; Atlantic Coastal Medical Supplies,
LLC; and Arbor Medical Equipment, Inc. According to court documents, from approximately
November 2015 through March 2019, Shores and his codefendants payed kickbacks and bribes in
exchange for signed doctors’ orders for orthotic braces that were not medically necessary. The
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combined billed amount for both Medicare and TRICARE is $125.1 million and the combined paid
amount is $70.3 million. Shores pleaded guilty to conspiracy to commit health care fraud and was
sentenced to 6 years and 8 months in prison and ordered to pay restitution of $70.3 million (which
includes $69.6 million to Medicare Part B and $751,406 to TRICARE), joint and several with other
co-conspirators. Shores was also ordered to forfeit $35.1 million.
Florida—Three former co-owners and clinical directors of a group of purported substance abuse
treatment centers and sober homes were sentenced to prison for their roles in a conspiracy to
commit health care fraud and wire fraud in which the conspirators sought to obtain more than
$21 million. According to court documents, from June 2016 through April 2019, Ali Ahmed,
Sebastian Ahmed, and Mauren Morel submitted and caused others to submit, via interstate wire
communications, approximately $1.6 million in claims that falsely represented that various health
care benefits, primarily substance abuse Partial Hospitalization Program (PHP), Intensive Outpatient
Program (IOP), and Outpatient Program (OP) services, were medically necessary, prescribed by a
doctor, and provided by Jacob’s Well to insurance beneficiaries of Aetna, Blue Cross Blue Shield
(BCBS), Cigna, and UnitedHealthcare (UHC). As a result of such fraudulent claims, the insurance
companies made payments to the corporate bank accounts of Jacob’s Well in the approximate
amount of $320,301. Furthermore, during the same approximate time period, Ali Ahmed,
Sebastian Ahmed, and Hector Efrain Alvarez submitted and caused others to submit, via interstate
wire communications, approximately $21.8 million in claims which falsely represented that various
health care benefits, primarily substance abuse PHP, IOP, and OP services, were medically
necessary, prescribed by a doctor, and provided by Medi MD to insurance beneficiaries of Aetna,
BCBS, Cigna, Humana, and UHC. As a result of such fraudulent claims, the insurance companies
made payments to the corporate bank accounts of Medi MD in the approximate amount of $3.8
million. Ali Ahmed, Hector Efrain Alvarez, and Mauren Morel each pleaded guilty to conspiracy to
commit health care fraud and wire fraud and were sentenced to a combined 15 years and 4
months in prison and ordered to pay $4.2 million in restitution, joint and several.
Compliance Trainings
Health Care Provider Compliance Training
OIG provides free training on our website for health care providers, compliance professionals, and
attorneys. OIG’s Provider Compliance Training was an initiative developed in 2011 that continues to
reach the health care community with OIG’s message of compliance and prevention via free
downloadable comprehensive training materials and podcasts. OIG’s provider compliance training
resources are available at https://oig.hhs.gov/compliance/compliance-guidance/index.asp.
Indian Health and Human Services Compliance Training
In addition to the May 2018 compliance and quality training held in Oklahoma for more than 200
individuals representing IHS, Tribes, and Tribal health care and human services organizations, OIG
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participated throughout this semiannual reporting period in various HHS-sponsored conferences,
providing training on fraud prevention, internal controls, and compliance. OIG Indian health and
human services compliance training resources are available at https://oig.hhs.gov/AIAN.
Most Wanted Fugitives List
The OIG Most Wanted Fugitives website continues to garner national and international attention and has
greatly assisted in helping to capture fugitives charged with defrauding Federal health care programs and
stealing millions of taxpayer dollars. The Most Wanted Fugitives website is continually updated and
features a profile for each fugitive as well as an online tip form and a hotline number for individuals to
report fugitive-related information to OIG, in English or Spanish, 24 hours a day, 365 days a year. The
Most Wanted Fugitives list is available at https://oig.hhs.gov/fraud/fugitives/. During this semiannual
reporting period, one fugitive was captured.
The following is a case example involving a captured fugitive:
One of OIG’s Most Wanted Fugitives, Alejandro Diaz Gonzalez, was captured during this reporting
period. Gonzalez was involved in a scheme to fraudulently bill Medicare for services not rendered.
Gonzalez has been a fugitive since 2015 and was believed to have absconded to Cuba—he was
recently apprehended by authorities attempting to re-enter the United States through the Arizona
border.
Gonzalez became the owner of Humanly Home Health Care Agency (Humanly) in December 2014,
and a significant increase in billing occurred in conjunction with this change of ownership during
2014 and 2015. In 2014, the Medicare Program reimbursed Humanly approximately $246,097.61;
however, in March 2015, Medicare reimbursed Humanly approximately $856,478.47. A large
percentage of beneficiaries identified in these claims reside outside the service area for Humanly,
and numerous complaints were received regarding services not rendered. In November 2019,
Gonzalez pleaded guilty to five counts of health care fraud and was sentenced to 2 years and 6
months in prison and ordered to pay $1.3 million in restitution.
HHS-OIG Hotline
Part of OIG’s Office of Investigations, the hotline is the public-facing division for OIG’s intake and
evaluation of fraud tips. The mission of the HHS-OIG Hotline is to support OIG’s oversight responsibilities
in safeguarding the integrity of all programs and personnel under HHS’s purview and protecting them
from fraud, waste, and abuse. The hotline achieves its mission through its staff’s dedication to timely
intake and analysis of information received from various sources, such as the “Submit a Complaint” link on
the HHS-OIG website. During this semiannual reporting period, the OIG Hotline reported expected
recoveries of $21.7 million as a direct result of cases originating from hotline complaints.
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OIG Hotline Activity (10/1/2019–3/31/20)
Contacts to 1-800-HHS-TIPS phone line, including 47,261
callers seeking information
Total tips evaluated 16,394
Tips referred for action 11,780
Closed; no basis provided for further action 4,614
1
Closed; no HHS violation 506
Sources of tips referred for action
Phone 4,233
OIG website 5,381
Letters or faxes 1,130
Other 1,036
Medicaid Fraud Control Units
OIG Oversight of Medicaid Fraud Control Units
MFCUs are key partners with OIG in the fight against fraud, waste, and abuse in State Medicaid
programs. OIG has oversight responsibility for MFCUs and administers grants that provide Federal
funding for their operations. Currently, all 50 States, the District of Columbia, Puerto Rico, and the
U.S. Virgin Islands operate MFCUs. In this reporting period, OIG certified a new MFCU in North
Dakota. The Federal Government reimburses 90 percent of a MFCU’s total expenditures during the
first 3 years of operation and 75 percent thereafter. MFCUs investigate and prosecute Medicaid
provider fraud as well as patient abuse and neglect in health care facilities and board and care
facilities.
Medicaid Fraud Control Units Fiscal Year 2019 Annual Report (OEI-09-20-00110), March 2020
This annual report highlights statistics on the accomplishments of the 52 MFCUs in operation
during FY 2019. OIG found that the number of convictions in FY 2019 (1,527) remained consistent
with previous years. Forty-four percent of the 1,111 MFCU fraud convictions involved personal care
services attendants and agencies. Fraud cases accounted for 73 percent of the MFCU convictions,
1 Some of the closed complaints in this reporting period may have been evaluated or referred for action in a previous reporting
period.
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while 27 percent involved patient abuse or neglect. MFCUs were responsible for 658 civil
settlements and judgments, 25 percent of which involved pharmaceutical manufacturers. MFCUs
reported $1.9 billion in criminal and civil recoveries.
In an appendix to the report, OIG summarizes beneficial practices identified by OIG in its onsite
reports that may be useful to other MFCUs.
OIG Onsite Reviews of MFCUs
In addition to an annual recertification review of each MFCU, OIG conducts reviews of a sample of
MFCUs. OIG evaluates MFCU operations based on 12 performance standards and assesses
compliance with laws, regulations, and OIG policy guidance. During the reporting period, OIG
issued reports of onsite reviews of the following MFCUs:
Missouri Medicaid Fraud Control Unit: 2018 Onsite Inspection (OEI-12-18-00490), January
2020
Montana Medicaid Fraud Control Unit: 2019 Onsite Inspection (OEI-12-19-00170), March
2020
OIG Joint Casework With MFCUs
The following case example involves OIG’s joint efforts with MFCUs:
New York—Dr. Barry Sloan was convicted of manslaughter in the opioid death of a patient. As
part of his guilty plea, Sloan admitted that in August 2014, he issued to L.W. without medical
justification, two separate prescriptions for Subsys, a narcotic approved by the FDA to treat
intense pain in late-stage cancer patients. Four days later, L.W., an otherwise healthy young man,
filled the prescription issued to him by Sloan and died early the next morning after overdosing on
fentanyl. Sloan also admitted he knowingly provided false information to Healthfirst, a Medicaid
managed care company contracted by the State of New York to cover the cost of medical care
and prescriptions. Furthermore, Sloan admitted that between 2012 and 2016, he recklessly issued
prescriptions for controlled substances, including highly addictive opioids, to four other patients,
and that providing those prescriptions without medical justification caused a significant risk of
overdose and death to each of these patients. Sloan pleaded guilty to manslaughter in the
second degree, reckless endangerment, and criminal sale of a prescription for a controlled
substance by a practitioner and was sentenced to 4 to 9 years in prison. OIG investigated this
case with the New York MFCU.
Advisory Opinions and Other Industry Guidance
Advisory opinions, which are developed in consultation with DOJ, are issued to requesting parties
regarding the interpretation and applicability of certain statutes relating to Federal health care programs.
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The Health Insurance Portability and Accountability Act of 1996 (HIPAA), § 205, allows OIG to provide case-
specific formal guidance on the application of the anti-kickback statute and safe harbor provisions and
other OIG health care fraud and abuse sanctions. During this semiannual reporting period, OIG received 11
requests for advisory opinions and issued 3 advisory opinions.
Sanction Authorities and Other Administrative Actions
Various Federal laws provide authorities the ability to impose administrative sanctions for fraud and abuse
as well as other activities that pose a risk to Federal health care programs and their beneficiaries.
Sanctions include the exclusion of individuals and entities from Federal health care programs and the
imposition of CMPs for submitting false and fraudulent claims to a Federal health care program or for
violating the anti-kickback statute, the physician self-referral law (commonly referred to as the “Stark Law”),
or the Emergency Medical Treatment and Labor Act (EMTALA), also known as the “patient dumping
statute.” Sanctions also include referrals for suspension and debarment in cases of grant and contract
fraud.
During this semiannual reporting period, OIG imposed 968 administrative sanctions in the form of
program exclusions or administrative actions for alleged fraud or abuse or other activities that posed a risk
to Federal health care programs and their beneficiaries.
Exclusion and penalty authorities are described in Appendix C and on our website at
http://oig.hhs.gov/fraud/enforcement/cmp/index.asp.
Program Exclusions
During this semiannual reporting period, OIG excluded 903 individuals and entities from Medicare,
Medicaid, and other Federal health care programs. Most of the exclusions resulted from
convictions for crimes relating to Medicare or Medicaid, patient abuse or neglect, financial
misconduct, controlled substances, or as a result of license revocation. OIG completed the
deployment of a new service for MFCUs to report convictions through a central web-based portal
for exclusions. OIG is also responsible for reinstating providers who apply and have met the
requirements of their exclusions. For a list of excluded individuals and entities, see
https://exclusions.oig.hhs.gov/.
The following are case examples of program exclusions:
Texas—Dr. Howard Gregg Diamond was excluded for a minimum period of 50 years based
on his conviction of conspiracy to possess with the intent to distribute and dispense and
distributing and dispensing of controlled substances resulting in death, health care fraud,
and aiding and abetting. From approximately January 2010 to about April 2018, Dr.
Diamond prescribed controlled medications outside the scope of professional practice by
writing prescriptions that contained fentanyl, morphine, oxycodone, oxymorphone,
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methadone, hydrocodone, hydromorphone, alprazolam, zolpidem, carisoprodol and
diazepam. As a result of his prescribing practices, at least 7 patients died. In addition to his
prescribing issues, Dr. Diamond submitted and caused to be submitted, claims to Medicare
for services he did not provide. The court sentenced Dr. Diamond to 20 years of
incarceration and the Texas Medical Boar revoked his license.
Texas—Mario Rubio, a massage therapist, was excluded for a minimum period of 50 years
based on his conviction of sexual assault. During a massage therapy session, Rubio
touched the patient inappropriately to include sexually penetrating her while providing
massage therapy services. The court sentenced Rubio to serve 18 years of incarceration
and the Texas Department of Licensing and Regulation, Massage therapy program revoked
his license.
Suspensions and Debarments
Suspensions and debarments are administrative tools used by HHS and other Federal agencies to
protect the Government from individuals and entities that have engaged in contract fraud, have
misused grant funds, or are otherwise not presently responsible. Because these are
Government-wide sanctions, an individual or entity that has been suspended or debarred by HHS
or any other agency is ineligible to participate in any future funding opportunities across the
Federal Government for a specified period of time.
OIG refers individuals and entities that have potentially engaged in grant or contract fraud or
misconduct to the HHS Suspension and Debarment Official, who is responsible for determining
whether to impose a suspension or debarment. OIG continues to develop a robust Suspension
and Debarment program and uses this tool to protect Government programs against fraud, waste,
poor performance, and noncompliance with contract provisions or applicable law.
The following case example involves debarment:
Illinois—Thomas Draper was an agent with the Community Support System (CSS), also
known as ARC Support Systems. Draper used a credit card belonging to CSS to make
purchases for personal transactions totaling over $74,666. Draper pleaded guilty to one
count of Federal program theft and was sentenced to 10 months incarceration and ordered
to pay $74,666.92 in restitution.
Civil Monetary Penalties Law
The Civil Monetary Penalties Law (CMPL) authorizes OIG to impose administrative penalties,
assessments, and exclusions against a person who, among other things, submits, or causes to
be submitted, claims to a Federal health care program that the person knows, or should know,
are false or fraudulent. The exclusions statute also authorizes OIG to exclude a person who
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violates the CMPL. During this semiannual reporting period, OIG concluded cases involving
more than $16.9 million in CMPs and assessments.
Affirmative Litigation
The CMPL authorizes OIG to use its administrative remedies to affirmatively pursue cases. OIG
may also exclude under the exclusions statute for engaging in conduct that violates the CMPL.
When OIG excludes under the exclusions statute for engaging in conduct that violates the
CMPL, it is known as an affirmative exclusion.
The following case examples involve affirmative litigation under the CMPL:
Florida—On October 2, 2019, Physicians Group Services, P.A. (PGS) entered into a
$1,128,615.04 CMPL settlement agreement with OIG. The settlement agreement resolves
allegations that PGS received remuneration from Millennium Health, LLC f/k/a Millennium
Laboratories, Inc. (Millennium), in violation of the anti-kickback statute, 42 U.S.C. § 1320a-
7b. Specifically, OIG alleged that PGS received improper remuneration in the form of
point-of-care test (POCT) cups, which resulted in prohibited referrals. OIG further alleged
that the referrals were prohibited because the remuneration created a financial relationship
and PGS caused Millennium to present claims for designated health services that resulted
from the prohibited referrals, in violation of the Stark Law, 42 U.S.C. § 1395nn. This is one in
a series of cases the OIG has settled regarding the provision of free POCT cups from
Millennium. To date, the OIG has recovered over $2,175,000 as a result of these CMPL
settlements.
New York—On January 22, 2020, SeniorCare Emergency Medical Services, Inc. (SeniorCare)
entered into a $1,231,854.09 CMPL settlement agreement with OIG. The settlement
agreement resolves allegations that SeniorCare knowingly presented claims to Medicare
Part B for ambulance transportation to and from skilled nursing facilities (SNFs) where such
transportation was already covered by the SNF consolidated billing payment under
Medicare Part A.
Texas—On October 4, 2019, Ohio River Laboratories, LLC (ORL) entered into a $49,493.48
CMPL settlement agreement with OIG. The settlement agreement resolves allegations that
ORL submitted claims to Medicare for specimen validity testing (SVT), a non-covered
service. SVT is a quality control process that evaluates a urine drug screen sample to
determine whether it is consistent with normal human urine and to ensure that the sample
has not been substituted, adulterated, or diluted. This is one in a series of data-driven
cases the OIG has settled concerning SVT. To date, the OIG has recovered over
$2.4 million as a result of these CMPL settlements.
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Patient Dumping
Some of the CMPL cases that OIG resolved during this semiannual reporting period were pursued
under EMTALA, a statute designed to prevent hospitals from denying emergency care to patients
and to ensure patient access to appropriate emergency medical services.
The following case examples involve EMTALA:
Georgia—On November 22, 2019, Rockdale Medical Center (RMC) entered into a $70,000
settlement agreement with OIG. The settlement agreement resolves allegations that, based
on OIG's investigation, RMC violated EMTALA when it failed to provide a medical screening
examination, stabilizing treatment or proper transfer to a 79-year-old female. Specifically,
the patient presented to RMC's Emergency Department (ED) by ambulance after being
involved in a motor vehicle crash with multiple injured individuals. EMS contacted RMC's
ED for guidance about disposition of the injured individuals and the ED physician at RMC
directed that the patient be taken to a trauma center. When one of the ambulances arrived
in RMC's ambulance bay with the patient, a hospital nurse approached the ambulance and
told the driver that the patient was supposed to go to the trauma center. The ambulance
then transported the patient to the trauma center without the patient receiving a medical
screening examination. During the transport, the patient's condition deteriorated, and she
ultimately died at the receiving hospital.
Maryland—On February 10, 2020, Maryland General Hospital, Inc. d/b/a UM Medical
Center Midtown Campus (UMMC), entered into a $106,965 settlement agreement with OIG.
The settlement agreement resolves allegations that UMMC violated EMTALA, when it failed
to provide an adequate medical screening examination and stabilizing treatment for a 22-
year old female patient. Specifically, the patient presented to UMMC’s Emergency
Department (ED) on January 9, 2018, via ambulance. The patient was diagnosed with a
contusion of the face and lip abrasion, and was discharged. The patient refused to sign the
discharge forms, stated that she was homeless, and refused to exit the premises. The
patient was escorted by security off of UMMC’s property wearing only a hospital gown and
socks. The following day, the patient retuned to UMMC’s ED via ambulance after a
bystander called 911. The bystander found the patient at a bus stop outside the hospital in
30-degree weather. A nurse told the patient that she would need to go to a shelter if she
did not have a place to stay. The patient was then discharged without receiving a medical
screening examination or being stabilized.
Nevada—On December 26, 2019, St. Rose Dominican Hospital–Siena Campus (St. Rose)
entered into a $90,000 settlement agreement with OIG. The settlement agreement resolves
allegations that, based on OIG's investigation, St. Rose violated EMTALA when it failed to
provide an appropriate medical screening examination, stabilizing treatment and transfer
for a patient. On May 22, 2016, the patient presented to St. Rose's ED complaining of
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dizziness, black stool, yellow skin, and stiff muscles. He was transferred with low blood
pressure and without having received any blood products, and went into cardiac arrest and
died shortly after arriving at the receiving hospital.
Self-Disclosure Programs
Health care providers, suppliers, or other individuals or entities subject to CMPs can apply for
acceptance into the Provider Self-Disclosure Protocol, a program created in 1998 for voluntary
disclosure of self-discovered evidence of potential fraud. The self-disclosure program may give
providers the opportunity to avoid costs or disruptions associated with Government-directed
investigations and civil or administrative litigation.
Application processes for two additional self-disclosure programs were recently added to the OIG
website for HHS contractors and grantees. The OIG contractor self-disclosure program provides
contractors the opportunity to self-disclose when they have potentially violated the False Claims
Act or other Federal criminal laws prohibiting fraud, conflict of interest, bribery, or gratuity. This
self-disclosure process is available only to those with a Federal Acquisition Regulations (FAR)-based
contract with HHS. The OIG Grant Self-Disclosure Program is available for application by HHS
grantees or HHS grant subrecipients and provides the opportunity for voluntary disclosure to OIG
of potential fraud. OIG evaluates the reported results of each internal investigation under the
provider self-disclosure protocol to determine the appropriate course of action. The self-disclosure
guidelines are available on the OIG website at https://oig.hhs.gov/compliance/self-disclosure-
info/index.asp. During this semiannual reporting period, provider self-disclosure cases resulted in
more than $27 million in HHS receivables.
The following case examples pertain to provider self-disclosure settlements:
California—After it self-disclosed conduct to OIG, Central Coast In-Patient Consultants, Inc.
(CCIC) agreed to pay $750,000 for allegedly violating the CMPL. OIG alleged that CCIC
submitted claims for services provided by physicians to Medicare beneficiaries at a hospital
when those physicians were not properly enrolled in Medicare and when the names and
National Provider Identifier numbers of physicians who did not furnish the services were
used on claims submitted to and paid by Medicare for the services furnished by the non-
enrolled physicians.
Kansas—After they self-disclosed conduct to OIG, Opti-Vision, LLC (Opti-Vision) and Grene
Vision Group, L.L.C. (Grene), (collectively, "Opti-Vision and Grene") agreed to pay
$916,145.39 for allegedly violating the CMPL provision applicable to kickbacks. OIG alleged
that Opti-Vision and Grene received remuneration from an optical laboratory for the
purchase of membership interests in a group purchasing organization owned, in part, by
Opti-Vision in the form of installment payments made to Opti-Vision that were conditioned
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on Opti-Vision, through Grene, purchasing a certain amount of items from the optical
laboratory through the group purchasing organization.
Corporate Integrity Agreements
Many health care providers elect to settle their cases before litigation. As part of the settlements,
providers often agree to enter into CIAs with OIG to avoid exclusions from Medicare, Medicaid,
and other Federal health care programs. Under a CIA, a provider commits to establishing a
program and taking other specified steps to ensure future compliance with Medicare and Medicaid
rules. The compliance programs are designed, in part, to prevent future fraud. OIG monitors
providers’ compliance with these agreements and may impose penalties on entities that fail to
comply with the requirements of their CIAs.
The following case examples involve CIA enforcement:
South Carolina—After it disclosed conduct to OIG pursuant to its CIA, Drayer Physical
Therapy, LLC (Drayer) entered into a $81,455.97 settlement agreement with OIG. OIG
alleged that Drayer billed and received reimbursement from TRICARE for physical therapy
services that were provided by physical therapy assistants.
Texas—After it disclosed conduct to OIG pursuant to its CIA, Medi-Lynx Cardiac
Monitoring, LLC (Medi-Lynx) entered into a $71,595.27 settlement agreement with OIG.
OIG alleged that Medi-Lynx employed an individual that it knew or should have known was
excluded from participation in Federal health care programs.
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Public Health and Human Service Agency
Reports and Reviews
Public Health Agency Reports and Reviews
Food and Drug Administration
Ownership—But Not Physical Movement—of Selected Drugs Can Be Traced Through the Supply
Chain (OEI-05-17-00460), February 2020
Drug product tracing records required by the DSCSA do not always include information about the
drug’s owner or the drug’s physical path through the supply chain. Knowing which trading partner
owns a drug, where it is in the supply chain, and where it has been can help investigators from FDA
do the following: ensure that a potentially dangerous drug is removed the drug supply; identify
breaches; and protect patients from harmful, ineffective, and illegitimate drugs. FDA concurred
with all of our recommendations, which were:
• Follow up with the wholesale distributor that did not provide tracing information to OIG,
• Provide educational outreach to trading partners about required tracing information for
drug products and data standardization guidelines, and
• eek legislative authority to include information about a drug product’s complete physical
path through the supply chain on drug product tracing information.
Indian Health Service
Indian Health Service Has Strengthened Patient Protection Policies but Must Fully Integrate Them
Into Practice and Organizational Culture (OEI-06-19-00330), December 2019
In recent years, IHS has had a number of cases of health care providers abusing patients under
facility care, including a pediatrician who was convicted of multiple counts of child sexual abuse. In
early 2019, IHS updated its policies to prevent and address child sexual abuse by providers. We
found that IHS policies are consistent with those of other health care organizations, but the policies
have coverage gaps and are still early in implementation. IHS concurred with our
recommendations, which were:
• Extend policies to address more types of perpetrators, victims, and abuse;
• Ensure that the new incident reporting system is effective and addresses risks identified in
the current system;
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• Designate a central owner in IHS headquarters to ensure clear roles and responsibilities in
implementing patient protection policies, and responding to abuse reports;
• Continue to actively promote an organizational culture of transparency, and work to
resolve barriers to staff reporting of abuse; and
• Conduct additional outreach to Tribal communities to inform them of patient rights, solicit
concerns, and address barriers to reporting of patient abuse.
National Institutes of Health
The National Institutes of Health Submitted OIG Clearance Documents for Just Over One-Half of Its
Audit Recommendations, and the Remaining 225 Recommendations Were Unresolved as of
September 30, 2016 (A-07-19-03236), January 2020
NIH did not always resolve OIG audit recommendations in a timely manner during FYs 2015 and
2016. Specifically, NIH resolved 262 of the 487 audit recommendations that were outstanding
during FYs 2015 and 2016. However, it did not resolve 166 of the 262 recommendations
(63.4 percent) within the required 6-month resolution period. In addition, as of September 30,
2016, NIH had not resolved 225 audit recommendations that were past due for resolution. These
225 recommendations were procedural and did not involve dollar amounts such as recommended
disallowances.
NIH had some policies and procedures in place for audit resolution, and those policies and
procedures included references to the Federal criteria that require resolution of audit
recommendations within 6 months of the audit report’s issue date. However, those policies and
procedures did not differentiate between issuing a management decision (and submitting a related
clearance document) within the required 6-month resolution period and proceeding with
corrective action as rapidly as possible.
NIH concurred with our recommendations that it update its policies and procedures related to the
audit resolution process, to include issuing management decisions and submitting related
clearance documents to OIG—regardless of whether any corrective action has yet been taken—
within the required 6-month resolution period and promptly resolve the 225 outstanding audit
recommendations that were past due as of September 30, 2016.
National Institutes of Health Had Information Technology Control Weaknesses Surrounding Its
Electronic Health Record System (A-18-19-06003), February 2020
An outside auditor under contract with OIG, CliftonLarsonAllen LLP (CLA), found that NIH had
certain controls in place to secure electronic health record (EHR) information and information
systems. However, NIH's information security policies and practices were not operating effectively
to preserve the security, confidentiality, integrity, and availability of NIH's EHR information and
information systems, resulting in potential risks of unauthorized access, use, disclosure, disruption,
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modification, or destruction. At the time of the fieldwork, NIH located its alternative processing
site in the same geographic location as its primary site, had delayed software upgrades until
completion of system upgrades had been completed, and had not yet fully implemented the
automated tool that was intended to ensure that users and inactive accounts were deactivated
timely.
NIH concurred with CLA’s recommendations that NIH Clinical Center management (1) complete the
National Institute of Standards and Technology requirements for implementing an alternative
processing site that is a reasonable and viable option and identify, document, and implement
actions to mitigate risks of using existing alternative sites until a compliant alternative site is
established; (2) implement policies and procedures to ensure all software is upgraded or replaced
prior to end of life; and (3) ensure that the automated Clinical Research Information System User
Account Management tool is operating so that all changes to user privileges are authorized and
properly documented, and that inactive accounts are deactivated.
NIH Has Acted To Protect Confidential Information Handled by Peer Reviewers, But Could Do More
(OEI-05-19-00240), March 2020
We found that NIH has policies and procedures to protect the confidentiality of the peer-review
process, that it takes action against reviewers who disclose information, and that it actively
responds to instances of suspected undue foreign influence in peer review. However, we
concluded that NIH can do more to systemically and directly address concerns about foreign
threats to the confidentiality of the peer-review process. NIH concurred with all of our
recommendations, which were for it to:
• conduct targeted, risk-based oversight of peer reviewers using analysis of information
about threats to research integrity;
• update its training materials routinely to include information about breaches of peer
reviewer confidentiality and possible undue foreign influence;
• require all peer reviewers to attend periodic trainings about peer review integrity; and
• consult with Federal law enforcement and national security experts to determine what
additional steps it might take to identify and address potential risks to confidentiality of the
peer-review process, including possible undue foreign influence.
Substance Abuse and Mental Health Services Administration
Geographic Disparities Affect Access to Buprenorphine Services for Opioid Use Disorder (OEI-12-17-
00240), January 2020
Among the approximately 1,100 U.S. counties identified by OIG as having the greatest need for
opioid use disorder treatment services, 56 percent likely had inadequate capacity to treat patients
with buprenorphine in an office setting. This finding indicates that waivered providers may not
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always be found in the areas where access to treatment is most critical. Furthermore, although the
number of providers obtaining waivers to prescribe buprenorphine has increased significantly since
2002, this figure likely overstates the availability of buprenorphine treatment in these settings due
to (1) providers not treating up to their approved patient-limit capacity (i.e., up to 30, 100, or 275
patients) and (2) waivered providers are not evenly distributed across the nation. MAT couples
medication (such as buprenorphine, methadone, or naltrexone) with counseling and behavioral
therapies to treat opioid use disorder. The Buprenorphine Waiver Program allows qualified
providers to prescribe buprenorphine to patients in office settings rather than limiting this service
to specialized opioid treatment programs. SAMHSA concurred with our recommendation to target
its efforts to increase the participation of waivered providers in high-need counties.
SAMHSA’s Oversight of Accreditation Bodies for Opioid Treatment Programs Did Not Comply With
Some Federal Requirements (A-09-18-01007), March 2020
SAMHSA performed inspections at selected OTPs but did not (1) meet its goal for the number of
OTPs it would inspect, (2) take actions to address accreditation bodies' noncompliance with survey
requirements, or (3) determine whether OTPs complied with the Federal standards when patient
charts were incomplete. In addition, SAMHSA reviewed accreditation bodies' survey reports, but
the reports were inconsistent and did not contain sufficient information to determine whether the
OTPs met the Federal standards. Finally, SAMHSA's evaluations of accreditation bodies'
accreditation elements were not documented or retained. (An example of an accreditation
element would be accredited OTPs' commitment to continually improving their organizations and
service delivery to the people served.) Without improved oversight and proper documentation of
its evaluations, SAMHSA may not be able to adequately evaluate the performance of accreditation
bodies and ensure that OTPs are meeting the Federal opioid treatment standards.
SAMHSA concurred with our recommendations that it identify steps it can take to ensure that it
meets its goal for the number of OTPs it inspects each year, review the results of its inspections
and take action to address accreditation bodies’ noncompliance with survey requirements, ensure
that its compliance officers follow the Compliance Audit Guidance, work with the accreditation
bodies to standardize the survey reports to include not only surveyor teams’ information but also
OTPs’ compliance with each of the Federal opioid treatment standards, and comply with Federal
regulations and HHS policy for documenting and retaining its evaluations of accreditation
elements.
States’ Use of Grant Funding for a Targeted Response to the Opioid Crisis (OEI-BL-18-00460), March
2020
More than $300 million of grant funding for the State Targeted Response to the Opioid Crisis grant
program (STR grant program) remained unspent after 2 years. Fourteen States spent less than half
of their grant allocations. All but six States requested extensions—known as “no-cost
extensions”—that will allow them additional time to use their STR funding. Although States
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reported using their STR grants to expand access to treatment, SAMHSA did not track how many
patients received MAT, the primary form of evidence-based treatment. With an average of 130 U.S.
opioid-overdose deaths per day, it is paramount that SAMHSA and its State partners quickly and
effectively use Federal grant dollars to expand access to MAT. Given the lack of data, it is unclear
how successful the STR grant program was at achieving its goal of expanded access to MAT.
SAMHSA concurred with all of our recommendations, which were for it to:
• work closely with States and territories during the no-cost extension period to address
barriers to timely spending and to ensure that administrative cost caps are not exceeded
and
• require States that receive grants for OUD treatment to specifically report how many
patients are receiving MAT.
Human Services Agency Reports and Reviews
Administration for Children and Families
New York State Claimed Federal Reimbursement for Unallowable Childcare Subsidies Paid to New
York City (A-02-17-02010), October 2019
New York State claimed Federal reimbursement for childcare subsidy payments made to New York
City that did not comply with Federal and State requirements. Specifically, for 209 of our 210
sampled beneficiary-years, New York State paid New York City for partially unallowable childcare
subsidies related to (1) excessive program closure days or (2) the incorrect application of families’
calculated contributions toward childcare. On the basis of our sample results, we estimated that
New York State claimed Federal reimbursement of $24.7 million related to these unallowable
payments.
During our audit period, New York City did not have controls in place to prevent these unallowable
payments. New York City officials stated that they implemented controls to prevent these errors
from occurring after our audit period. The officials also stated that, for the final year of our 3-year
audit period, they manually corrected claims by applying families’ calculated contributions toward
childcare subsidies.
New York State, which is responsible for overseeing its Child Care and Development Fund (CCDF)
program, did not detect these claiming issues because its childcare subsidy reviews focused on
program eligibility, not on New York City’s claims for subsidy payments.
New York State concurred with our recommendations that it refund $24.7 million in unallowable
childcare subsidies claimed for Federal reimbursement and ensure that New York City’s recently
implemented CCDF program controls are properly functioning.
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Wateree Community Actions, Inc., Made Improvements but Still Requires Monitoring
(A-04-19-08069), February 2020
Our prior audit (A-04-14-04026) of Wateree Community Actions, Inc. (Wateree), for FYs 2012 and
2013, found that Wateree improperly managed some Federal funds related to HHS programs.
Wateree continued to experience financial management problems related to its Federal programs
because it misallocated funds or claimed duplicate Head Start program costs in violation of Federal
requirements, did not meet its non-Federal match requirement for Head Start, and continued to
file Federal and non-Federal reports inaccurately or late. However, Wateree resolved one prior OIG
audit finding and improved its financial condition.
These deficiencies occurred because Wateree did not have adequate cash management or other
controls. As a result, Wateree mismanaged $354,597 in Federal funds, is subject to a Federal funds
disallowance of $252,591, and may incur other administrative actions from ACF.
Since the end of our audit period, Wateree has taken steps to improve its cash management
system. After the initiation of our audit, Wateree repaid the unallowable amount.
Although Wateree did not directly agree or disagree with our recommendations, it described
actions taken or processes implemented to (1) monitor the non-Federal match it is receiving
throughout the budget year and, if needed, either request a waiver from ACF immediately upon
determining that it cannot meet its match requirements or adjust its Federal funds grant
expenditures accordingly and (2) ensure adequate controls are in place to prevent invoicing both
Head Start and the U.S. Department of Agriculture’s Child Nutrition programs for the same
expenses. We also made two procedural recommendations.
Opportunities for Williamson and Burnet Counties Had Ineffective Accounting Controls and Used
Unapproved or Questionable Cost Allocation Methods (A-06-18-02002), February 2020
Opportunities for Williamson and Burnet Counties (Opportunities) did not always account for costs
in accordance with Federal regulations. Specifically, Opportunities drew down grant funds without
an immediate cash need; did not track expenses in a way that provided for accurate, current, and
complete disclosure of the financial results of each Federal program; did not maintain internal
controls necessary to provide reasonable assurance that expenses were approved in accordance
with internal policies; used unapproved methods to allocate shared costs; and did not allocate
indirect costs to programs relative to the benefits received. In addition, Opportunities claimed
some unallowable costs.
Opportunities agreed with our recommendations that it (1) implement procedures designed to
ensure that Federal funds are drawn down only in the amounts needed to meet the immediate
cash requirements of its Community Service Block Grant and Low Income Home Energy Assistance
Program-related activities; (2) train its employees to properly use accounting software and follow
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policies and procedures for approval of expenses; (3) work with Cost Allocation Services to either
be released from the existing indirect cost rate or negotiate a current indirect cost rate for claiming
future indirect costs; (4) develop and implement a reasonable basis to allocate meal costs, kitchen
salaries, and central office expenses between the Head Start and Senior Nutrition programs in
accordance with the benefits received; and (5) refund $3,207 in unallowable costs.
Communication and Management Challenges Impeded HHS’s Response to the Zero-Tolerance Policy
(OEI-BL-18-00510), March 2020
Poor interagency communication and internal management decisions that failed to protect
children’s interests left HHS unprepared for the zero-tolerance policy. This lack of preparation
impeded HHS’s ability to identify, care for, and reunify separated children. ACF needs to address
the management concerns that we identified to improve its operation of the UAC Program. ACF
concurred with our recommendations, which were to:
• take steps to ensure that children’s interests are prioritized and represented in decisions
affecting the UAC Program, both internally and when engaging with interagency partners;
• modify or pursue formal agreements with DHS and the DOJ to ensure that it is receiving
information that supports its operation of and ability to provide care for children in the
UAC Program;
• improve communication to care provider facilities regarding interim guidance, operational
directives, and other instructions that are not immediately available in published policy
documents; and
• further improve its ability to identify and track separated children by reducing reliance on
manual processes.
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Legal and Investigative Activities Related to
Public Health and Human Service Agencies
Health Education Assistance Loan Program Exclusions
OIG excludes from Federal health care programs individuals who have defaulted on Health Education
Assistance Loan (HEAL) loans. Under the HEAL program, which stopped making loans in 1998, the Health
Resources and Services Administration (HRSA) guaranteed commercial loans to students seeking
education in health-related fields. The students can defer repayment of the loans until after they graduate
and begin to earn income. Although HHS’s Program Support Center (PSC) takes steps to ensure
repayment, some loan recipients do not resolve their debt. After PSC has exhausted efforts to secure
repayment of a debt, it declares an individual in default. The Social Security Act permits that thereafter,
such individuals may not receive reimbursement under Medicare, Medicaid, and all other Federal health
care programs for nonpayment of the loans.
During this semiannual reporting period, 12 individuals and related entities were excluded because of a
PSC referral of their cases to OIG. Individuals who have been excluded because of default may enter into
settlement agreements whereby the exclusions are stayed while they pay specified amounts each month to
satisfy their debts. If they default on these settlement agreements, they may be excluded until the entire
debt is repaid, and they may not appeal the exclusions.
After being excluded for nonpayment of their HEAL debts, 2,823 individuals chose to enter into settlement
agreements or completely repay their debts. That figure includes 19 individuals who entered into such
settlement agreements or completely repaid their debts. More than $228.3 million is being repaid through
settlement agreements or through complete repayment. Of that amount, almost $3.6 million is
attributable to this semiannual reporting period.
The following examples are settlement agreements. These practitioners entered into settlement
agreements to repay the amounts indicated:
• California—Drew Danchisin, Chiropractor—$123,326
• New Jersey—Kyunghoon Jung, Dentist—$146,040
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Child Support Enforcement Activities
OIG Investigations
OIG investigates noncustodial parents who violate 18 U.S.C. § 228 by failing to pay court-ordered
child support. OIG works with ACF’s Office of Child Support Enforcement; DOJ; U.S. Attorneys’
Offices; the U.S. Marshals Service; and Federal, State, and local partners to address egregious child
support enforcement cases with appropriate law enforcement and prosecutorial action. During this
semiannual reporting period, OIG investigations of child support enforcement cases nationwide
resulted in one criminal action and court-ordered restitution and settlement of $50,590.
Engaging the Public in Capturing Deadbeat Parents
Because of the success of OIG’s Most Wanted Fugitives website, OIG launched its Most Wanted
Deadbeat Parents website. The site identifies parents who fail to pay court-ordered child support
for their children and thereby put an unnecessary strain on the custodial parents and the children
as well as on agencies that enforce these matters. The site, which is updated frequently, includes
information on OIG’s role in pursuing parents who fail to pay court-ordered child support. OIG’s
Most Wanted Deadbeat Parents website can be found at https://oig.hhs.gov/fraud/child-support-
enforcement/index.asp.
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Other HHS-Related Reviews and Investigative
Activities
General Departmental
Risk Assessment of HHS Grant Closeout Procedures (A-04-19-08072), March 2020
We determined that an audit of HHS’s grant closeout process is not warranted at this time.
Overall, the risk that HHS will not meet Federal requirements for grant closeouts is low. The Office
of Assistant Secretary for Financial Resources (ASFR) and the HHS OpDivs have responded to the
Grants Oversight and New Efficiency Act requirements by taking significant steps to reduce the
HHS-wide backlog of open but expired grants and implementing controls to address the risk of a
recurrence of the backlog. Nevertheless, HHS still faces some challenges in mitigating the risks
associated with grant closeouts. Overall, we identified five sub-risk areas as low risk, three as
moderate risk, one as high risk, and zero as critical.
ASFR agreed with our recommendations that it work with Payment Management System (PMS)
personnel to improve HHS OpDiv grant management offices’ access to timely data; work with
OpDivs to ensure that personnel are trained in how to obtain and interpret the PMS reports
available to them; continue the grant remediation process to close remaining pooled accounts;
work with CMS to implement an electronic grant management system for the Center for Medicaid
and Children’s Health Insurance Program Services (CMCS) and the Center for Clinical Standards
and Quality, assign clear roles and responsibilities related to grant closeout activities at CMCS, and
clarify CMCS’s ability to close out its grants; and consider revising HHS regulations and the HHS
Grants Policy Administrative Manual to align closeout time limits for OpDivs with those specified in
Federal regulations.
Grants and Contracts
HHS is the largest grant-making organization and one of the largest contracting agencies in the Federal
Government. In FY 2019, HHS awarded more than $559 billion in grants and over $26 billion in contracts
across all program areas. OIG’s direct annual discretionary appropriation funding is used to conduct
program integrity and enforcement activities with regard to the more than 100 public health and human
services programs carried out by more than 80,00 employees around the world. The size and scope of
departmental awards make their operating effectiveness crucial to the success of programs designed to
improve the health and well-being of the public.
Grant Fraud Investigations
The following case examples relate to misuse of grant funds:
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Department of Health and Human Services, Office of Inspector General
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Michigan—Van Andel Research Institute (VARI) agreed to pay $5.5 million to resolve allegations
that it violated the False Claims Act by submitting Federal grant applications and progress reports
to NIH in which VARI failed to disclose Chinese government grants that funded two VARI
researchers. The settlement further resolves allegations that in a December 21, 2018, letter, VARI
made certain factual representations to NIH with deliberate ignorance or reckless disregard for
the truth regarding the Chinese grants. VARI is an independent research institute in Grand
Rapids, Michigan.
Pennsylvania—Dr. Melanie Millholland was sentenced for her role in a scheme to misuse Federal
grant funds. Between March 2015 and July 2017, Millholland was an employee of Phelix
Therapeutics LLC, a company receiving NIH grant funding. From about January 2017 to about
June 2017, Millholland embezzled approximately $383,790 from the company by forging checks
and fabricating invoices. Millholland pleaded guilty to embezzlement from an organization
receiving Federal benefits and was sentenced to 5 years of probation, which includes 6 months of
home detention and 500 hours of community service. Additionally, Millholland was ordered to
pay restitution of $343,790 and a $100 assessment.
Small Business Innovative Research Program
The National Defense Authorization Act for Fiscal Year 2012, § 5143, requires OIG to report annually
on the number of cases referred to OIG to fraud, waste, or abuse in the Small Business Innovation
Research/ Small Business Technology Transfer (SBIR/STTR) program. OIG must also report on the
actions taken in each case; justification for not taking action on a case; and an accounting of funds
used to address waste, fraud, and abuse in this program. In our December 2019 report delivered to
the three congressional oversight committees, we reported that OIG spent approximately $278,733
in salaries on oversight related to the SBIR/STTR program.
Recovery Act Retaliation Complaint Investigations
The Recovery Act, § 1553, prohibits non-Federal employers that have received Recovery Act
funding from retaliating against employees who disclose evidence of mismanagement of Recovery
Act funds or any violation of law related to Recovery Act funds. OIGs are required to include in
their Semiannual Report the retaliation complaint investigations that they decided not to conduct
or continue during the reporting period. During this semiannual reporting period, OIG did not
close, decline, or give extensions on any investigations of whistleblower retaliation.
Contract Audits
Pursuant to the National Defense Authorization Act for FY 2008, § 845, OIGs appointed under the
Inspector General Act of 1978 are required to submit, as part of their semiannual report, pursuant
to section 5 of the Inspector General Act, information on final completed contract audit reports
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issued during the period to the contracting activity. This information must contain significant audit
findings. OIG issued no final reports meeting § 845 criteria during this semiannual period.
OIG Reviews of Non-Federal Audits
OIG reviews audits conducted by non-Federal auditors of entities receiving Federal awards. During
this semiannual reporting period, OIG’s National External Audit Review Center reviewed 270
reports covering $471.6 billion in audited costs. Federal dollars covered by these audits totaled
$92.6 billion, of which about $45.3 billion were HHS funds.
Uniform guidance at 2CFR200 Subpart F establishes audit requirements for State and local
governments, colleges and universities, and nonprofit organizations receiving Federal
awards. Under the uniform guidance, covered entities must conduct annual organization-wide
“single audits” of all Federal money they receive. These audits are conducted by non-Federal
auditors, such as public accounting firms and State auditors. OIG reviews the quality of these
audits and assesses the adequacy of the entities’ management of Federal funds.
OIG’s oversight of non-Federal audit activity informs Federal managers about the soundness of
management of Federal programs and identifies any significant areas of internal control weakness,
noncompliance, and questioned costs for resolution or followup. We identify entities for high-risk
monitoring, alert program officials to any trends that could indicate problems in HHS programs,
and profile non-Federal audit findings of a particular program or activity over time to identify
systemic problems. We also provide training and technical assistance to grantees and members of
the auditing profession. OIG maintains a process to assess the quality of the non-Federal reports
received and the audit work that supports the selected reports.
OIG’s reports on non-Federal audits reviewed during this reporting period are categorized in the
following table.
Non-Federal Audits, October 1, 2019, Through March 31, 2020
Not requiring changes or having minor changes 255
Requiring major changes 11
Having significant technical inadequacies 4
Total Number of Non-Federal Audits 270
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Semiannual Report to Congress—October 1, 2019, through March 31, 2020
Other Reporting Requirements and Reviews
Legislative and Regulatory Reviews
Pursuant to the Inspector General Act, § 4(a)(2), OIG is required to review existing and proposed
legislation and regulations relating to HHS’s programs and operations and make recommendations
concerning their impact on economy and efficiency or the prevention and detection of fraud and
abuse. Most audits and other reviews that we conduct are designed to test compliance with
and/or assess the administration and oversight of existing laws and regulations. Our reports of
such reviews describe findings, which include questioned costs, inefficiencies, vulnerabilities to
fraud, inconsistencies, errors in application, or weaknesses in oversight or supporting systems. Our
corresponding recommendations tell HHS and its operating or staff divisions what administrative,
regulatory, or legislative actions we believe are needed to effectively respond to the findings. Our
regularly published core publications reflect the relationship between our work and laws and
regulations.
• This report, like our previous Semiannual Reports to Congress, describes findings and
recommendations from recently completed reviews, many of which focus on existing laws and
regulations.
• Our Solutions To Reduce Fraud, Waste, and Abuse in HHS Programs: OIG’s Top
Recommendations describes priority findings and recommendations from past periods that
remain to be implemented.
• Our Work Plan provides citations to laws and regulations that are the subject of ongoing or
future reviews.
We also review proposed legislation and regulations related to HHS programs and operations. In
addition, we provide independent, objective technical assistance on a bipartisan, bicameral basis to
congressional committees and members who request it.
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Appendix A: Questioned Costs and Funds To
Be Put to Better Use
The following tables summarize OIG’s monetary recommendations and HHS responses to them. This
information is provided in accordance with the Inspector General Act, §§ 5(a)(8) and (a)(9) (5 U.S.C. App. §§
5(a)(8) and (a)(9)), and the Supplemental Appropriations and Rescissions Act of 1980.
Audit Reports With Questioned Costs
As defined by the Inspector General Act, the term “questioned cost” means a cost that is questioned by
OIG because of (1) an alleged violation of a provision of law, regulation, contract, grant, cooperative
agreement, or other agreement or document governing the expenditure of funds; (2) a cost that is not
supported by adequate documentation at the time of the audit; or (3) the expenditure of funds for the
intended purpose is unnecessary or unreasonable. Questioned costs that HHS program officials have, in a
management decision, sustained or agreed should not be charged to the Government are disallowed
costs. Superscripts indicate end notes that follow the tables below.
Table 1: Audit Reports With Questioned Costs
Number
of Dollar Value
Description Reports Dollar Value Questioned Unsupported
Section 1
Reports for which no
management decisions had
been made by the beginning
of the reporting period1 86 $2,265,038,000 $563,160,000
Issued during the reporting
period 40 $288,390,000 $0
Total Section 1 126 $2,553,428,000 $563,160,000
Section 2
Reports for which
management decisions were
made during the reporting
period2, 3
Disallowed costs 53 *$605,182,000 $7,020,000
Costs not disallowed 2 $13,078,000 $0
Total Section 2 55 $618,260,000 $7,020,000
* Audit receivables (expected recoveries)
Section 3
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Reports for which no
management decisions had
been made by the end of the
reporting period
(Section 1 minus Section 2) 71 $1,935,168,000 $556,140,000
Section 4
Reports for which no
management decisions were
made within 6 months of
issuance4 37 $1,661,273,000 $556,140,000
Table 1 End Notes
1
The opening balance was adjusted upward by $59.1 million because of a reevaluation of previously issued
recommendations.
2
Revisions to previously reported management decisions:
• A-05-07-00036, Wisconsin Improperly Claimed Federal Medicaid Reimbursement for Most Residential
Care Center Payments. Subsequent review by CMS determined that the original finding amount was
allowable resulting in a decreased previously sustained amount by $22,839,628.
• A-06-15-00041, Texas Did Not Appropriately Spend Some State Balancing Incentive Payments Program
Funds. Subsequent review by CMS determined that the original finding amount was allowable
resulting in a decreased previously sustained amount by $11,982,826.
• A-03-17-00005, University of Wisconsin Hospital and Clinics Authority Incorrectly Billed Medicare
Inpatient Claims With Severe Malnutrition. Subsequent review by CMS determined that the original
finding amount was partially allowable resulting in a decreased previously sustained amount by
$1,873,716.
• A-05-15-00044, Medicare Compliance Review of NorthShore University Health System For 2013 And
2014. Due to subsequent review by CMS and the OIG, the amount sustained was reduced by
$1,007,913.
• Not detailed are reductions to previously disallowed management decisions totaling $976,000.
3
Included are management decisions to disallow $33 million in questioned costs that were identified by
non-Federal auditors in audits of State and local governments, colleges and universities, and nonprofit
organizations receiving Federal awards conducted in accordance with Office of Management and Budget
Circular A-133. OIG is currently ensuring that work performed by these non-Federal auditors complies with
Federal audit standards; accordingly, OIG tracks, resolves, and reports on recommendations in these audits.
4
Because of administrative delays, some of which were beyond management control, resolution of the
following 37 audits were not completed within 6 months of issuance of the reports; however, agency
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management has informed us that the agency is working to resolve the outstanding recommendations
before the end of the next semiannual reporting period.
Audits Not Completed Within 6 Months of Issuance
Audit CIN Audit Title
A-02-15-02013 CMS Did Not Always Accurately Authorize Financial Assistance Payments to Qualified
Health Plan Issuers in Accordance With Federal Requirements During the 2014 Benefit
Year, August 2018, $939,287,686
A-02-15-01010 New Jersey Claimed Hundreds of Millions in Unallowable or Unsupported Medicaid
School-Based Reimbursement, November 2017, $300,452,930
A-02-14-02017 New York Misallocated Costs to Establishment Grants for a Health Insurance
Marketplace, November 2016, $149,654,512
A-02-16-01022 New York May Not Have Complied With Federal and State Requirements Prohibiting
Medicaid Payments for Inpatient Hospital Services Related to Provider-Preventable
Conditions, May 2019, $50,256,025
A-09-17-03035 Medicare Improperly Paid Suppliers for Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies Provided to Beneficiaries During Inpatient Stays, November
2018, $34,014,796
A-02-16-02007 Lincoln Hall Boys’ Haven, an Administration for Children and Families Grantee, Did Not
Always Comply With Applicable Federal and State Policies and Requirements, February
2019, $29,807,160
A-01-14-02503 Maryland Misallocated Millions to Establishment Grants for a Health Insurance
Marketplace, March 2015, $28,400,000
A-04-14-07050 Kentucky Misallocated Millions to Establishment Grants for a Health Insurance
Marketplace, February 2017, $25,530,429
A-02-15-02008 New York Did Not Comply With Federal Grant Requirements for Allocating and
Claiming Marketplace Contract Costs, December 2017, $20,415,344
A-01-17-00506 Medicare Paid Twice for Ambulance Services Subject to Skilled Nursing Facility
Consolidated Billing Requirements, February 2019, $19,979,573
A-07-15-04226 Not All of Missouri's Child Care Subsidy Program Payments Complied With Federal and
State Requirements, November 2017, $19,076,167
A-01-15-02500 Vermont Did Not Properly Allocate Millions to Establishment Grants for a Health
Insurance Marketplace, September 2016, $11,243,006
A-02-14-02024 Newark Preschool Council, Inc., Did Not Always Comply With Head Start Requirements,
February 2017, $9,950,556
A-05-18-00030 Illinois Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-
Administered Drugs, June 2019, $4,065,188
A-02-16-02013 The Children's Village Inc., an Administration for Children and Families Grantee, Did
Not Always Comply With Applicable Federal and State Policies and Requirements, April
2019, $2,623,785
A-07-17-02808 The Colorado Health Insurance Marketplace’s Financial Management System Did Not
Always Comply With Federal Requirements, July 2018, $2,567,604
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A-02-17-02009 New York Did Not Provide Adequate Stewardship of Substance Abuse Prevention and
Treatment Block Grant Funds, March 2019, $1,800,212
A-07-19-00564 National Government Services, Inc., Claimed Some Unallowable Medicare Pension
Costs Through Its Incurred Cost Proposals, September 2019, $1,780,718
A-07-11-06013 The University of Colorado Denver Did Not Always Claim Selected Costs Charged
Directly to Department of Health and Human Services Awards in Accordance with
Federal Regulations, June 2013, $1,419,524
A-05-14-00045 The Minnesota Marketplace Misallocated Federal Funds and Claimed Unallowable
Costs, November 2016, $1,279,677
A-01-18-02501 Vermont’s Office of Child Support Needs Better Oversight of Its Administrative Costs
Claimed, September 2019, $1,058,309
A-07-19-00572 National Government Services, Inc., Claimed Some Unallowable Medicare Nonqualified
Plan Costs Through Its Incurred Cost Proposals, September 2019, $971,820
A-09-14-01007 Nevada Misallocated Costs for Establishing a Health Insurance Marketplace to Its
Establishment Grants, February 2016, $893,464
A-05-16-00038 Heartland Human Care Services, Inc. Generally Met Safety Standards, but Claimed
Unallowable Rental Costs, September 2018, $768,460
A-06-16-07007 BCFS Health and Human Services Did Not Always Comply With Federal Requirements
Related to Less-Than-Arm's-Length Leases, February 2018, $658,248
A-07-18-04106 The Fort Peck Assiniboine and Sioux Tribes Improperly Administered Some Low-Income
Home Energy Assistance Program Funds for Fiscal Years 2011 Through 2015, August
2018, $436,765
A-07-19-00561 Group Health Incorporated Understated Its Emblem Health Services Company, LLC,
Employees' Retirement Plan Medicare Segment Pension Assets as of January 1, 2015,
July 2019, $432,584
A-07-19-00563 National Government Services, Inc., Claimed Some Unallowable Medicare Nonqualified
Plans Costs Through Its Final Administrative Cost Proposals, September 2019, $426,123
A-07-19-00557 Group Health Incorporated Understated Its Cash Balance Pension Plan Medicare
Segment Pension Assets as of January 1, 2011, July 2019, $366,763
A-04-13-01024 The University of North Carolina at Chapel Hill Did Not Always Claim Selected Costs
Charged Directly to Department of Health and Human Services Awards in Accordance
With Federal Requirements, June 2014, $352,843
A-09-17-01002 Florence Crittenton Services of Orange County, Inc., Did Not Always Claim Expenditures
in Accordance With Federal Requirements, October 2018, $342,263
A-12-17-00002 The Office of the Secretary of Health and Human Services Did Not Comply With
Federal Regulations for Chartered Aircraft and Other Government Travel Related to
Former Secretary Price, July 2018, $341,616
A-07-19-00565 National Government Services, Inc., Claimed Some Unallowable Medicare
Supplemental Executive Retirement Plan Costs Through Its Incurred Cost Proposals,
September 2019, $268,633
A-05-18-00008 The Next Door Foundation Claimed Unallowable Indirect Costs and Did Not Document
the Funding Source of Program Expenditures in Accordance With Federal
Requirements, September 2019, $142,104
A-06-11-00058 Crowley’s Ridge Development Council, Inc., Claimed Unallowable Costs Under a
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Recovery Act Grant, August 2012, $115,420
A-04-17-07069 Medicare Payments to Providers for Polysomnography Services Did Not Always Meet
Medicare Billing Requirements, June 2019, $56,668
A-07-18-00551 National Government Services, Inc., Claimed Some Unallowable Supplemental
Executive Retirement Plan Costs Through Its Final Administrative Cost Proposals,
September 2019, $36,524
TOTAL CINS: 37
TOTAL AMOUNT: $1,661,273,000
Audit Reports With Funds Recommended To Be Put to Better Use
The phrase “recommendations that funds be put to better use” means that funds could be used more
efficiently if management took action to implement an OIG recommendation through reductions in
outlays, deobligation of funds, and/or avoidance of unnecessary expenditures. Table 2 reports HHS
program officials’ decisions to take action on these audit recommendations.
Table 2: Audit Reports With Funds Put to Better Use
Number of
Description Reports Dollar Value
Section 1
Reports for which no management decisions had been made by
the beginning of the reporting period 9 $15,625,113,000
Reports issued during the reporting period 8 $911,270,000
Total Section 1 17 $16,536,383,000
Section 2
Reports for which management decisions were made during the
reporting period
Value of recommendations agreed to by management
Based on proposed management action 4 $144,131,000
Based on proposed legislative action 0 $0
Value of recommendations not agreed to by management $0
Total Section 2 4 $144,131,000
Section 3
Reports for which no management decisions had been made by
the end of the reporting period1 (Sec. 1 minus Sec. 2) 13 $16,392,252,000
Table 2 End Notes
1
Because of administrative delays, some of which were beyond management control, 5 of the 13 audits open at end
of the period were not resolved within 6 months of issuance of reports. OIG is working with management to reach
resolution on these recommendations before the end of the next semiannual reporting period.
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Audits Open at End of the Period
Audit CIN Audit Title
A-05-12-00020 Medicare And Beneficiaries Could Save Billions If CMS Reduces Hospital Outpatient
Department Payment Rates for Ambulatory Surgical Center-Approved Procedures to
Ambulatory Surgical Center Payment Rates, April 2014, $15,000,000,000
A-04-17-07069 Medicare Payments to Providers for Polysomnography Services Did Not Always Meet
Medicare Billing Requirements, June 2019, $269,768,285
A-06-17-08004 Medicare Part D Is Still Paying Millions for Drugs Already Paid for Under the Part A
Hospice Benefit, August 2019, $160,800,000
A-03-13-03002 HHS Did Not Identify and Report Antideficiency Act Violations, May 2017, $49,445,025
A-09-18-03030 Medicare Incorrectly Paid Providers for Emergency Ambulance Transports From
Hospitals to Skilled Nursing Facilities, September 2019, $968,718
TOTAL CINS: 5
TOTAL AMOUNT: $15,480,982,000
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Appendix B: Peer-Review Results
The Inspector General Act of 1978, as amended, requires OIGs to report the results of peer reviews of their
operations conducted by other OIGs, the date of the last peer review, outstanding recommendations from
peer reviews, and peer reviews conducted by an OIG of other OIGs in the semiannual period. Peer reviews
are conducted by member organizations of the Council of the Inspectors General on Integrity and
Efficiency (CIGIE).
Office of Audit Services
During this semiannual reporting period, no peer reviews involving OAS were completed. Information
concerning OAS’s peer-review activity during a prior reporting period is also listed below.
OAS Date Reviewing Office Office Reviewed
April 2019 HHS-OIG, OAS U.S. Department of
Transportation (DOT) OIG
The system of quality control for the audit organization of DOT OIG in effect for the year ending
September 30, 2018, has been suitably designed and complied with to provide DOT OIG with
reasonable assurance of performing and reporting in conformity with applicable professional
standards in all material respects. Federal audit organizations can receive a rating of pass, pass
with deficiencies, or fail. DOT OIG received a peer-review rating of pass.
OAS Date Reviewing Office Office Reviewed
March 2018 U.S. Postal Service OIG HHS-OIG, OAS
The system of quality control for the audit organization of HHS-OIG in effect for the year ending
September 30, 2017, has been suitably designed and complied with to provide HHS-OIG with
reasonable assurance of performing and reporting in conformity with applicable professional
standards in all material respects. Federal audit organizations can receive a rating of pass, pass
with deficiencies, or fail. HHS-OIG received a peer-review rating of pass.
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Office of Investigations
During this semiannual reporting period, no peer reviews involving OI were completed. Listed below is
information concerning OI’s peer-review activities during prior reporting periods.
OI Date Reviewing Office Office Reviewed
October 2018 SSA OIG HHS-OIG, OI
The system of internal safeguards and management procedures for the investigative function of
HHS-OIG in effect for the year ending September 30, 2018, was in full compliance with the quality
standards established by CIGIE and the Attorney General’s guidelines.
OI Date Reviewing Office Office Reviewed
August 2017 HHS-OIG, OI U.S. Postal Service OIG
The system of internal safeguards and management procedures for the investigative function of
the U.S. Postal Service OIG in effect for the year ending September 30, 2015, was in full compliance
with the quality standards established by CIGIE and the Attorney General’s guidelines.
Office of Evaluation and Inspections
During this semiannual reporting period, no peer reviews involving OEI were completed. Information
concerning OEI’s peer-review activity during a prior reporting period is also listed below.
OEI Date Reviewing Office Office Reviewed
September 2019 HHS-OIG, OEI U.S. Department of Interior
(DOI) OIG
The DOI OIG Inspection and Evaluation component’s policies and procedures mostly met CIGIE’s
Quality Standards for Inspection and Evaluation (Blue Book) standards. We reviewed four reports:
two fully met the applicable Blue Book standards and two did not. DOI OIG concurred with
recommendations related to Evidence, Planning, and Data Collection and Analysis but did not
concur with recommendations related to Reporting.
OEI Date Reviewing Office Office Reviewed
September 2018 HHS-OIG, OEI U.S. Department of Defense
(DoD) OIG
The DoD OIG Inspection and Evaluation components’ policies and procedures generally met
CIGIE’s Quality Standards for Inspection and Evaluation (Blue Book) standards. In addition, the 10
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reports reviewed generally met the applicable Blue Book standards. Onsite visits for these reviews
were conducted from October 2, 2017, through November 17, 2017.
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Appendix C: Summary of Sanction Authorities
The Inspector General Act of 1978, as amended, specifies requirements for semiannual reports to be made
to the HHS Secretary for transmittal to Congress. A selection of other authorities appears below.
Program Exclusions
The Social Security Act, § 1128 (42 U.S.C. § 1320a-7), provides several grounds for excluding individuals and
entities from participation in Medicare, Medicaid, and other Federal health care programs. Exclusions are
required (mandatory exclusion) for individuals and entities convicted of the following types of criminal
offenses: (1) Medicare or Medicaid fraud; (2) patient abuse or neglect; (3) felonies for other health care
fraud; and (4) felonies for illegal manufacture, distribution, prescription, or dispensing of controlled
substances.
OIG is authorized (permissive exclusion) to exclude individuals and entities on several other grounds,
including misdemeanors for other health care fraud (other than Medicare or Medicaid); suspension or
revocation of a license to provide health care for reasons bearing on professional competence,
professional performance or financial integrity; provision of unnecessary or substandard services;
submission of false or fraudulent claims to a Federal health care program; or engaging in unlawful kickback
arrangements.
The ACA added another basis for imposing a permissive exclusion, that is, knowingly making, or causing to
be made, any false statements or omissions in any application, bid, or contract to participate as a provider
in a Federal health care program, including managed care programs under Medicare and Medicaid, as well
as Medicare’s prescription drug program.
Providers subject to exclusion are granted due process rights. These include a hearing before an
administrative law judge and appeals to the HHS Departmental Appeals Board and Federal district and
appellate courts regarding the basis for and the length of the exclusion.
Civil Monetary Penalties Law
The CMPL of the Social Security Act, 1128A (42 U.S.C. § 1320a 7a), imposes penalties, assessments, and
exclusion from participation in Federal health care programs for engaging in certain activities. For
example, a person who submits, or causes to be submitted, to a Federal health care program a claim for
items and services that the person knows, or should know, is false or fraudulent is subject to a penalty of
up to $15,270 for each item or service falsely or fraudulently claimed, an assessment of up to 3 times the
amount falsely or fraudulently claimed, and exclusion.
For the purposes of the CMPL, “should know” is defined to mean that the person acted in reckless
disregard or deliberate ignorance of the truth or falsity of the claim. The law and its implementing
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regulations also authorize actions for a variety of other violations, including submission of claims for items
or services furnished by an excluded person; requests for payment in violation of an assignment
agreement; violations of rules regarding the possession, use, and transfer of biological agents and toxins;
and payment or receipt of remuneration in violation of the anti-kickback statute (42 U.S.C. § 1320a 7b (b)).
The ACA added more grounds for imposing CMPs. These include, among other types of conduct,
knowingly making, or causing to be made, any false statements or omissions in any application, bid, or
contract to participate as a provider in a Federal health care program (including Medicare and Medicaid
managed care programs and Medicare Part D); the ACA authorizes a penalty of up to $55,262 for each
false statement, as well as activities relating to fraudulent marketing by MCOs, their employees, or their
agents.
The 21st Century Cures Act (enacted on December 13, 2016) added more grounds for imposing CMPs,
assessments, and exclusion from Federal health care programs for fraudulent conduct in an HHS grant,
contract, or other agreement. OIG may assess CMPs of up to $10,000 per claim and assessments of up to
3 times the amount claimed for knowingly presenting a false or fraudulent claim. In addition, OIG may
impose a penalty of up to $50,000 and assessments of up to 3 times the amount of funds at issue: (1) for
each instance of knowingly making a false statement in a document required to be submitted in order to
receive funds under an HHS contract, grant, or other agreement; (2) for knowingly making or using a false
record or statement that is material to a false or fraudulent claim; and (3) for knowingly making or using a
false record or statement material to an obligation to pay or transmit funds or property owed to HHS. OIG
may impose a penalty of up to $10,000 per day and assessments of up to 3 times the amount at issue for
knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation owed to HHS
with respect to an HHS grant, contract, or other agreement. Finally, HHS-OIG may impose a penalty of up
to $15,000 per day for failing to grant timely access to OIG upon reasonable request for audits or to carry
out other statutory functions in matters involving an HHS grant, contract, or other agreement.
Patient Dumping
The Social Security Act, §1867 (42 U.S.C. § 1395dd), provides that when an individual goes to the ER of a
Medicare-participating hospital, the hospital must provide an appropriate medical screening examination
to determine whether that individual has an emergency medical condition. If an individual has such a
condition, the hospital must provide either treatment to stabilize the condition or an appropriate transfer
to another medical facility.
If a transfer is ordered, the transferring hospital must provide stabilizing treatment to minimize the risks of
transfer and must ensure that the receiving hospital agrees to the transfer and has available space and
qualified personnel to treat the individual. In addition, the transferring hospital must effect the transfer
through qualified personnel and transportation equipment. Further, a participating hospital with
specialized capabilities or facilities may not refuse to accept an appropriate transfer of an individual who
needs services if the hospital has the capacity to treat the individual.
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OIG is authorized to collect CMPs of up to $53,484 against small hospitals (fewer than 100 beds) and up to
$106,965 against larger hospitals (100 beds or more) for each instance in which the hospital negligently
violated any of the section 1867 requirements. In addition, OIG may collect a penalty of up to $106,965
from a responsible physician for each negligent violation of any of the section 1867 requirements and, in
some circumstances, may exclude a responsible physician.
Anti-Kickback Statute and Civil False Claims Act Enforcement Authorities
The Anti-Kickback Statute
The anti-kickback statute authorizes penalties against anyone who knowingly and willfully solicits,
receives, offers, or pays remuneration, in cash or in kind, to induce or in return for: (1) referring an
individual to a person or an entity for the furnishing, or arranging for the furnishing, of any item or
service payable under the Federal health care programs; or (2) purchasing, leasing, or ordering, or
arranging for or recommending the purchasing, leasing, or ordering, of any good, facility, service,
or item payable under the Federal health care programs (Social Security Act, § 1128B(b) (42 U.S.C. §
1320a-7b(b)).
Individuals and entities that engage in unlawful referral or kickback schemes may be subject to
criminal penalties under the general criminal anti-kickback statute; a CMP under OIG’s authority
pursuant to the Social Security Act, § 1127(a)(7) (42 U.S.C. § 1320a-7a); and/or program exclusion
under OIG’s permissive exclusion authority under the Social Security Act, § 1128(b)(7) (42 U.S.C. §
1320a-7(b)(7)).
The False Claims Act
Under the False Claims Act, as amended by the False Claims Amendments Act of 1986 (31 U.S.C. §§
3729–3733), a person or an entity is liable for up to treble damages and a penalty between $11,181
and $22,363 for each false claim it knowingly submits, or causes to be submitted, to a Federal
program. Similarly, a person or an entity is liable under the False Claims Act if it knowingly makes
or uses, or causes to be made or used, a false record or statement to have a false claim paid. The
False Claims Act defines “knowing” to include not only the traditional definition but also instances
in which the person acted in deliberate ignorance or reckless disregard of the truth or falsity of the
information. Under the False Claims Act, no specific intent to defraud is required. Further, the
False Claims Act contains a qui tam, or whistleblower, provision that allows a private individual to
file a lawsuit on behalf of the United States and entitles that whistleblower to a percentage of any
fraud recoveries. The False Claims Act was again amended in 2009 in response to recent Federal
court decisions that narrowed the law’s applicability. Among other things, these amendments
clarify the reach of the False Claims Act to false claims submitted to contractors or grantees of the
Federal Government.
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Appendix D: Reporting Requirements in the
Inspector General Act of 1978
The reporting requirements of the Inspector General Act of 1978, as amended, are listed in the following
table along with the location of the required information.
Section Requirement Location
Section 4
(a)(2) Review of legislation and regulations “Other HHS-Related
Reviews and
Investigations” section
Section 5
(a)(1) Significant problems, abuses, and deficiencies Throughout this report
(a)(2) Recommendations with respect to significant problems, Throughout this report
abuses, and deficiencies
(a)(3) Prior significant recommendations on which corrective Solutions To Reduce
action has not been completed Fraud, Waste, and Abuse
in HHS Programs: Top
Unimplemented
Recommendations
(previously known as the
Compendium of
Unimplemented
Recommendations)
(a)(4) Matters referred to prosecutive authorities “Legal and Investigative
Activities Related to the
Medicare and Medicaid
Programs” section
(a)(5) Summary of instances in which information requested by None for this reporting
OIG was refused period
(a)(6) List of audit reports Submitted to the Secretary
under separate cover
(a)(7) Summary of significant reports Throughout this report
(a)(8) Statistical Table 1―Reports With Questioned Costs Appendix A
(a)(9) Statistical Table 2―Funds Recommended To Be Put to Appendix A
Better Use
(a)(10) Summary of previous audit reports without management Appendix A
decisions, in which no establishment comment was returned
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Section Requirement Location
within 60 days, and in which there are any outstanding
unimplemented recommendations
(a)(11) Description and explanation of revised management Appendix A
decisions
(a)(12) Management decisions with which the Inspector General None for this reporting
disagrees period
(a)(13) Information required by the Federal Information Security None for this reporting
Management Act. period
(a)(14)-(16) Results of peer reviews of HHS-OIG conducted by other Appendix B
OIGs or the date of the last peer review, outstanding
recommendations from peer reviews, and peer reviews
conducted by HHS-OIG of other OIGs
(a)(17) Investigative statistical tables Appendix E
(a)(18) Metrics description for statistical tables Appendix E
(a)(19) Investigations on senior Government employees Appendix E
(a)(20) Description of whistleblower retaliation instances Appendix E
(a)(21) Description of attempts to interfere with OIG independence Appendix E
(a)(22) Description of closed and nondisclosed reports and Appendix E
investigations regarding senior Government employees
Other Reporting Requirements
Section Requirement Location
845 Significant contract audits required to be reported pursuant “Other HHS-Related
to the National Defense Authorization Act for FY 2008 Reviews and
(P.L. No. 110-181), § 845. Investigations” section
205 Pursuant to HIPAA (P.L. No. 104-191), § 205, the Inspector Appendix F
General is required to solicit proposals annually via a Federal
Register notice for developing new and modifying existing
safe harbors to the anti-kickback statute of the Social
Security Act, § 1128(b) and for developing special fraud
alerts. The Inspector General is also required to report
annually to Congress on the status of the proposals received
related to new or modified safe harbors.
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Section Requirement Location
1553 Pursuant to the American Recovery and Reinvestment Act of “Other HHS-Related
2009, P.L. No. 111-5, § 1553, OIG reports to Congress the Reviews and
retaliation complaint investigations it decided not to Investigations” section
conduct or continue during the period.
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Appendix E: Reporting Requirements in the
Inspector General Empowerment Act of 2016
The Inspector General Empowerment Act of 2016 establishes new reporting requirements for the
Semiannual Reports. These requirements amend portions of § 5 of the Inspector General Act. The
requirements are below in italics, followed by OIG’s responses.
Each Inspector General shall, not later than April 30 and October 31 of each year, prepare
semiannual reports summarizing the activities of the Office during the immediately preceding six-
month periods ending March 31 and September 30. Such reports shall include, but need not be
limited to-
(10) A summary of audit, inspection, and evaluation reports issued before the commencement of the
reporting period-
(A) for which no management decision has been made by the end of the reporting period (including
the date and title of each such report), an explanation of the reasons such management decision has
not been made, and a statement concerning the desired timetable for achieving a management
decision on each such report;
For audit, inspection, and evaluation reports issued from FY 2011 through FY 2020, OIG had a total
of 113 reports with overdue final management decisions (FMD) as of the end of this reporting
period.2 The breakdown of those 113 reports by HHS operating division is as follows:
Operating Division Overdue FMDs
ACF 17
ACL 2
ASPR 1
CDC 4
CMS 48
FDA 2
IHS 12
NIH 7
OASH 1
OS 17
SAMHSA 2
2 OIG can track the status of management decisions for all reports back to FY 2011. OIG can track the status of management
decisions for audit reports back to FY 1990. We have identified three additional audit reports (one CMS, one FDA, one OS) with
overdue management decisions from FY 1990 through FY 2010.
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OIG is unable to provide reasons and timetables for each of these overdue management decisions,
due to the volume and that OIG did not historically track this information.
(B) for which no establishment comment was returned within 60 days of providing the report to the
establishment; and
For draft reports that include recommendations, OIG typically requests establishment comments
within 30 days. In some instances, OIG grants extensions when requested and appropriate. When
OIG does not receive establishment comments or a request for extension within the 30-day
timeframe, OIG typically issues the report and notes the lack of establishment comments.
For this semiannual reporting period, OIG had no reports with comments exceeding 60 days.
(C) for which there are any outstanding unimplemented recommendations, including the aggregate
potential cost savings of those recommendations.
OIG is actively tracking 1,253 unimplemented open recommendations made in reports issued since
FY 2011. Given the volume of recommendations OIG makes each year, the table below reflects
summary data by FY:
FY (2011– Number of Reports Number of Dollar Value of
2020) With Unimplemented Unimplemented Aggregate Potential
Recommendations Recommendations Cost Savings
2011 13 20 $446,994,129
2012 24 29 $397,437,195
2013 31 48 $235,963,777
2014 33 56 $15,142,396,350
2015 29 47 $333,957,018
2016 31 77 $191,370,339
2017 41 124 $1,116,136,306
2018 59 189 $2,214,327,855
2019 104 401 $1,263,918,211
2020 76 262 $1,007,060,034
Totals 441 1,253 $22,349,561,214
OIG annually produces a Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs: OIG’s Top
Recommendations (previously known as the Compendium of Unimplemented Recommendations),
which constitutes OIG’s response to a specific requirement of the Inspector General Act, as
amended (§ 5(a)(3)). It identifies significant recommendations with respect to problems, abuses, or
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deficiencies for which corrective actions have not been completed. It also includes an appendix
listing OIG’s significant unimplemented recommendations, which represent opportunities to
achieve expected impact through cost savings, improvements in program effectiveness and
efficiency, or increasing quality of care and safety of beneficiaries. In OIG’s view, these
recommendations would most positively impact HHS programs in terms of cost savings and/or
quality improvements and should therefore be prioritized for implementation.
(17) Statistical tables showing-
(A) the total number of investigative reports issued during the reporting period;
(B) the total number of persons referred to the DOJ for criminal prosecution during the reporting
period;
(C) the total number of persons referred to State and local prosecuting authorities for criminal
prosecution during the reporting period; and
(D) the total number of indictments and criminal information during the reporting period that
resulted from any prior referral to prosecuting authorities;
Total number of investigative reports issued during the reporting period, 0
including Management Implication Reports and Investigative Advisories
Total number of persons referred3 to Federal prosecuting authorities for 1,659
criminal prosecution during the reporting period4
Total number of persons referred to State and local prosecuting 203
authorities for criminal prosecutions during the reporting period
Total number of Federal indictments and criminal information during the 370
reporting period that resulted from any prior referral to prosecuting
authorities
Total number of State and local indictments and criminal information 150
during the reporting period that resulted from any prior referral to
prosecuting authorities
(18) A description of the metrics used for developing the data for the statistical tables under
paragraph (17);
Regarding (17)(A), OIG considers Investigative Reports as Management Implication Reports
and Investigative Advisories. A Management Implication Report identifies systemic
weaknesses or vulnerabilities within HHS programs, which are generally identified during the
3 A referral includes OIG presentations to DOJ and/or State/local prosecutorial authorities.
4 OIG counts “persons” as both individuals and entities.
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course of an OIG investigation and could lead to fraud, waste, or abuse. It provides
recommendations to correct or minimize the problem. Corrective actions may require
administrative, procedural, policy, regulatory, or legislative change. When a Management
Implication Report is issued to an HHS OpDiv or Staff Division, it is generally signed by the
Inspector General. Investigative Advisories are similar documents that bring renewed attention
to an identified HHS issue and are generally signed by the Deputy Inspector General for
Investigations.
Regarding (17)(B) and (C), OIG defines this measure as the term "presentations" to both
Federal and State/local prosecuting jurisdictions as the representation of the work we do. For
example, when OIG opens an investigation, it evaluates the complaint and decides whether to
"present" the matter for prosecution. Generally, if the case has prosecutorial merit, and is
accepted for Federal prosecution, OIG works with DOJ as the primary investigative agency, as
opposed to referring the matter to DOJ without further involvement on OIG's part. OIG works
with State and local prosecutorial authorities in addition to working with DOJ.
Regarding (17)(D), the table above provides the number of indictments/criminal information
during the semiannual reporting period, including sealed indictments/criminal information.
However, the information cannot be limited to only those that occurred as a result of a
presentation in a previous period. In certain situations, the presentation and charging dates
are in the same reporting period.
(19) A report on each investigation conducted by the Office involving a senior Government employee
where allegations of misconduct were substantiated, including a detailed description of-
(A) the facts and circumstances of the investigation; and
(B) the status and disposition of the matter, including-
(i) if the matter was referred to the Department of Justice, the date of the referral; and
(ii) if the Department of Justice declined the referral, the date of the declination;
To respond fully to this subparagraph, OIG would need to make a finding of misconduct. However,
OIG does not make findings regarding its investigations relating to substantiated allegations of
departmental employee misconduct. Our reports relay the facts obtained during the investigations
(e.g., parties involved, dates of events) related to any substantiated allegations. At the conclusion
of an OIG investigation related to substantiated allegations concerning possible employee
misconduct, OIG provides a report to management in the employing agency. The agency
management makes determinations of employee misconduct. The disposition of the matter and
any resulting administrative actions are taken by the agency.
However, we request from the agency a copy of an SF-50 documenting a personnel action, if one is
taken. To the extent that we have information regarding subsequent administrative action, OIG can
provide that information. However, because there are sometimes settlement agreements that may
impact the final action, OIG may not have a complete record of the disposition of the investigation.
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Accordingly, such information might be more efficiently and effectively provided directly by the
employing agency.
For this section, OIG describes investigations during this reporting period, both criminal and
administrative, involving senior Government employees for whom allegations of misconduct were
substantiated. The descriptions below include a level of detail appropriate for each investigation,
depending on whether the case details were available in public documents. During this reporting
period, OIG investigated no senior Government employees for misconduct.
(20) A detailed description of any instance of whistleblower retaliation, including information about
the official found to have engaged in retaliation and what, if any, consequences the establishment
imposed to hold that official accountable;
For departmental agencies, OIG conducts investigations and gathers facts related to whistleblower
complaints. Before 2015, OIG made no determinations as to whether retaliatory action had been
taken. However, to better facilitate the report review process, OIG changed its process in 2015 to
include findings in its reports as to whether it was more likely than not that whistleblower
retaliation had occurred. Although OIG now includes these findings in its reports, it does not make
recommendations as to what, if any, corrective action(s) should be taken.
During the time period from October 1, 2019, through March 31, 2020, OIG did not issue any
reports that included findings of retaliation.
When determining the level of detail to provide for a description of any instance of whistleblower
retaliation, OIG is always mindful of the risk that a detailed description of the allegation could
inadvertently reveal the whistleblower’s identity, thus having a chilling effect on future
whistleblowers.
(21) A detailed description of any attempt by the establishment to interfere with the independence of
the Office, including-
(A) with budget constraints designed to limit the capabilities of the Office; and
(B) incidents where the establishment has resisted or objected to oversight activities of the Office
or restricted or significantly delayed access to information, including the justification of the
establishment for such action; and
Although there have been instances in which HHS agencies have questioned OIG oversight
activities or have not provided all information in the precise content, format, and timeline as
requested, OIG has not identified any instances in which HHS interfered with the independence of
OIG during this reporting period. OIG would immediately notify Congress if it were unable to
resolve these issues within HHS.
(22) Detailed descriptions of the particular circumstances of each-
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(A) inspection, evaluation, and audit conducted by the Office that is closed and was not
disclosed to the public; and
The table below lists evaluation and audit reports for this semiannual reporting period that did not
result in public reports. However, in some circumstances, a public summary of these nonpublic
reports was published.
Nonpublic Reports by Category, October 1, 2019, Through March 31, 2020
Number of
Category/Description
Reports
IT security reviews (involve IT systems, e.g., penetration test audits) 1
Homeland security issues (involve particularly sensitive topics, e.g., bioterrorism,
0
emergency preparedness, and classified or potentially classified information)
Recipient Capability Audits (primarily in Head Start/Early Head Start programs) 0
Reimbursable audits performed for other Federal agencies (primarily contract
0
audits)
Confidential or proprietary information (e.g., Medicare Part B drug
0
claims/imaging services, Medicare investment income)
Medicare Adverse Event Reviews (required by law not to disclose) 0
Medicare Prescription Drug Event Reviews 0
Other 0
HHS technical assistance reports5 0
Finance-related attestation reviews 1
Total 2
(B) Investigation conducted by the Office involving a senior Government employee that is closed and
was not disclosed to the public.
In section 5(a)(19), we detail investigations of senior Government employees in which allegations
were substantiated. Those investigations are all closed and none have been disclosed to the
public. OIG interprets section 5(a)(22)(B) as requiring reporting on investigations with either
substantiated or unsubstantiated allegations. As such, we refer to our section 5(a)(19) response to
address investigations of senior Government employees in which allegations were substantiated
that were closed and not disclosed to the public. Our section 5(a)(22)(B) response describes
5 OIG routinely provides technical assistance to HHS. Generally, that technical assistance is not part of a formal report and is not
formally tracked. However, in some limited circumstances, OIG does provide technical assistance in a formal report, and only that
category of technical assistance is reflected in this table.
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investigations during this reporting period, both criminal and administrative, involving a senior
Government employee in which OIG did not substantiate allegations of misconduct.
When determining the level of detail to provide for the investigations described above, OIG is
mindful of the risk that a detailed description of the investigation could inadvertently reveal the
subject’s identity. During this reporting period, OIG investigated four senior Government
employees for misconduct, but OIG determined the allegations to be unsubstantiated.
Descriptions of the investigations are below.
Description of Status Disposition DOJ DOJ DOJ DOJ
Investigation Referral Referral Declination Declination
Date Date
Complaint alleged Closed. No evidence N/A N/A N/A N/A
that a Senior to support
Executive Service (SES) allegations.
employee and
members of his staff,
which included
another SES, violated
FAR when the SES
instructed contracting
companies to engage
in prohibited
personnel practices
when the SES
improperly used
Schedule A Excepted
Service Appointments
to hire family and
friends, and the SES
violated a court order
when the SES
instructed their staff
to not track children
that fell with the
court-ordered
definition of an
Unaccompanied
Minor.
A complaint alleged Closed. Allegations N/A N/A N/A N/A
that a senior determined
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Government to be
employee had unfounded
inappropriate sexual and un-
contact with a female proveable.
patient.
The Complaint Closed. No current N/A N/A N/A N/A
alleged that a senior criminal
Government allegations
employee was caught received, or
in 2011 or 2012 having actionable
sexual contact with a information
juvenile female while discovered.
employed in the
private sector. The
senior Government
employee then
resigned his
employment and
began working for the
Government. No
current sexual abuse
allegation was
received regarding
the senior
Government
employee while
employed by the
Government.
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Appendix F: Anti-Kickback Statute—Safe
Harbors
Pursuant to HIPAA, § 205, the Inspector General is required to solicit proposals annually via a Federal
Register notice for developing new and modifying existing safe harbors to the anti-kickback statute, section
1128B(b) of the Social Security Act and for developing special fraud alerts. The Inspector General is also
required to report annually to Congress on the status of the proposals received related to new or modified
safe harbors.
In 2018, OIG did not publish its typical December annual solicitation in the Federal Register.6 For 2018, OIG
issued a request for information (OIG RFI) regarding the Federal anti-kickback statute and beneficiary
inducements CMP, which published in the Federal Register on August 27, 2018.7 In the OIG RFI, we sought
feedback on ways in which OIG might modify or add new safe harbors to the Federal anti-kickback statute
and exceptions to the beneficiary inducements CMP definition of “remuneration” to foster arrangements
that would promote care coordination and advance the delivery of value-based care while also protecting
patients and taxpayer dollars against harms caused by fraud and abuse. Consequently, below OIG reports
on the proposals repeatedly set forth in numerous comments responding to the OIG RFI.
In crafting safe harbors for a criminal statute, it is incumbent upon OIG to engage in a complete and
careful review of the range of factual circumstances that may fall within the proposed safe harbor subject
area to uncover all potential opportunities for fraud and abuse by unscrupulous providers. Having done
so, OIG must then determine, in consultation with DOJ, whether it can develop effective regulatory
limitations and controls—not only to foster beneficial or innocuous arrangements but also to protect the
Federal health care programs and their beneficiaries from abusive practices.
Public proposals for new and modified safe harbors
In response to the OIG RFI, OIG received 359 comments from a variety of individuals and organizations.
Due to the number and variety of proposals for new and modified safe harbors set forth in the comments
received in response to the OIG RFI, we highlight some of the most common proposals below.
Although most commenters to the OIG RFI strongly asserted the need for regulatory reform to the anti-
kickback statute safe harbors, a number of commenters acknowledged that increased regulatory flexibility
6 See, e.g., OIG, Notification of intent to develop regulations, 81 Fed. Reg. 95,551 (Dec. 28, 2016), available at
https://www.govinfo.gov/content/pkg/FR-2016-12-28/pdf/2016-31170.pdf; OIG, Notification of intent to develop regulations, 82
Fed. Reg. 61,229 (Dec. 27, 2017), available at https://www.govinfo.gov/content/pkg/FR-2017-12-27/pdf/2017-27117.pdf.
7 OIG, Medicare and State Health Care Programs: Fraud and Abuse; Request for Information Regarding the Anti-Kickback Statute
and Beneficiary Inducements CMP, 83 Fed. Reg. 43,607 (Aug. 27, 2018), available at
https://oig.hhs.gov/authorities/docs/2018/RFI_Regarding_AKS_Beneficiary_Inducements_CMP.pdf.
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could create program integrity vulnerabilities or increase the risk of harms associated with fraud and abuse
and urged OIG to exercise caution and include adequate safeguards in any regulatory proposals.
Comments supporting regulatory reform encompassed a number of themes, including requests for:
• new safe harbors protecting financial arrangements among parties participating in alternative
payment models (APMs), value-based arrangements, and care coordination activities;
• safe harbor protection for financial arrangements with entities not participating in Innovation
Center models, including commercial and self-pay APM arrangements;
• additional protection for patient tools and supports, such as in-kind items and services to support
patient compliance with discharge and care plans, services and supports to address unmet social
needs affecting health, and expanded protections under the local transportation safe harbor;
• enhanced safe harbor protection for transfers of information technology, data, and cybersecurity
tools;
• modifications to the current “patchwork” fraud and abuse waiver framework for Innovation Center
models and the Medicare Shared Savings Program; and
• a variety of protections for pharmaceutical and medical device manufacturer arrangements,
including broad protections for drug and medical device manufacturer participation in value-based
contracts, pricing arrangements, warranty arrangements, and APMs, as well as protection for
coupons and other means of direct copayment assistance to Medicare Part D beneficiaries in
certain situations.
In the October 17, 2019, Federal Register, OIG issued a Notice of Proposed Rulemaking, “Revisions to the
Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary
Inducements” (OIG NPRM).8 The OIG NPRM includes proposals that may be responsive to certain of the
abovementioned requests for additional protections included in comments responding to the OIG RFI.
In particular, among other proposals, and subject to definitions and conditions set forth in the OIG NPRM,
the OIG NPRM includes the following proposals:
• three proposed new safe harbors for certain remuneration exchanged between or among
participants in a value-based arrangement (as further defined) that fosters better coordinated and
managed patient care: (i) care coordination arrangements to improve quality, health outcomes,
and efficiency (1001.952(ee)); (ii) value-based arrangements with substantial downside financial risk
(1001.952(ff)); and (iii) value-based arrangements with full financial risk (1001.952(gg)). These
proposed safe harbors vary, among other ways, by the types of remuneration protected (in-kind or
in-kind and monetary), the level of financial risk assumed by the parties, and the types of
safeguards included as safe harbor conditions;
8 OIG, Medicare and State Healthcare Programs: Fraud and Abuse; Revisions to Safe Harbors Under the Anti-Kickback Statute, and
Civil Monetary Penalty Rules Regarding Beneficiary Inducements, 84 Fed. Reg. 55,694 (Oct. 17, 2019), available at
https://www.govinfo.gov/content/pkg/FR-2019-10-17/pdf/2019-22027.pdf.
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• a proposed new safe harbor (1001.952(hh)) for certain tools and supports furnished under patient
engagement and support arrangements to improve quality, health outcomes, and efficiency;
• a proposed new safe harbor (1001.952(ii)) for certain remuneration provided in connection with a
CMS-sponsored model, which should reduce the need for OIG to issue separate and distinct fraud
and abuse waivers for new CMS-sponsored models;
• a proposed new safe harbor (1001.952(jj)) for donations of cybersecurity technology and services;
• proposed modifications to the existing safe harbor for EHR items and services (1001.952(y)) to add
protections for certain cybersecurity technology included as part of an EHR arrangement, to
update provisions regarding interoperability, and to remove the sunset date;
• proposed modifications to the existing safe harbor for personal services and management
contracts (1001.952(d)) to add flexibility with respect to outcomes-based payments and part-time
arrangements;
• proposed modifications to the existing safe harbor for warranties (1001.952(g)) to revise the
definition of “warranty” and provide protection for warranties for one or more items and related
services; and
• proposed modifications to the existing safe harbor for local transportation (1001.952(bb)) to expand
and modify mileage limits for rural areas and for transportation for discharged patients.
Comments to the OIG NPRM were due December 31, 2019, and are currently under consideration. No final
determination has been made that the arrangements described in the OIG NPRM’s proposals are, or
should be, exempt from liability under the anti-kickback statute. In addition, any final safe harbors would
provide only prospective protection. In the meantime, questions about the application of the anti-kickback
statute to specific arrangements should be addressed on a case-by-case basis, such as under the advisory
opinion process.
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