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Report to Congressional Committees:
United States General Accounting Office:
GAO:
June 2003:
DEPARTMENT OF HEALTH AND HUMAN SERVICES:
Review of the Management of Inspector General Operations:
GAO-03-685:
GAO Highlights:
Highlights of GAO-03-685, a report to the Chairman and Ranking
Minority Member, Senate Committee on Finance and the Ranking Minority
Member, Senate Special Committee on Aging
why GAO Did This Study:
Janet Rehnquist became the Inspector General of the Department of
Health and Human Services (HHS) in August 2001. GAO was asked to
conduct a review of the Inspector Generals organization and assess
her leadership, independence, and judgment in carrying out the mission
of the Office of Inspector General (OIG). GAO examined indicators of
the OIGs productivity and compared them to the organizations past
performance. GAO also determined whether employee morale has been
sustained by surveying all OIG employees and comparing the results to
those obtained through an identical survey administered in 2002.
On March 4, 2003, the Inspector General resigned her office effective
June 1, 2003. However, in this report we refer to Ms. Rehnquist as
the Inspector General.
What GAO Found:
The credibility of inspectors general is largely premised on their
ability to act objectively and impartiallyboth in substance and in
perception. Some of the HHS Inspector Generals actionsincluding her
decision to delay a politically sensitive auditcreated the perception
that she lacked appropriate independence in certain situations. The
Inspector General exhibited serious lapses in judgment that further
troubled many OIG staff. For example, she inappropriately obtained a
firearm that she briefly possessed at her workplace and OIG
credentials that identified her as a law enforcement officer. The
Inspector General also initiated a variety of personnel changes in a
manner that resulted in the resignation or retirement of a significant
portion of senior management, disillusioned a number of higher level
OIG officials and other employees, and fostered an atmosphere of
anxiety and distrust. Ultimately, the collective effect of these
actions compromised her ability to serve as an effective leader of
HHSs Office of Inspector General.
Examining productivity trends is difficult because the work of the OIG
often involves multiyear efforts and the results recorded for a single
year are heavily dependent on work initiated in prior years.
Similarly, savings achieved in any one year can be attributable to the
culmination of efforts made over several years. Given these
constraints, GAO noted that productivity at the OIG over the last 3
years increased in some areas and declined in others. Overall savings
attributable to the OIGs effortsas reported in its semiannual
reports to the Congressincreased from $15.6 billion in fiscal year
2000 to $21.8 billion in fiscal year 2002. The number of individuals
convicted for violating HHS program statutes and regulationsanother
key indicator of the OIGs performancealso increased. On the other
hand, declines were noted in the number of settlements with providers
who submitted false claims to the government and the OIGs education
and outreach activities.
GAOs survey results showed that employees overall views of the
organization, management, and their personal job satisfaction
generally remained positive and relatively unchanged between 2002 and
2003. However, field office staff and those in lower level positions
were considerably more positive in their views of the organization
than their counterparts in headquarters and at the highest levels of
management. Two units in particularthe OIGs Office of Counsel and
the Office of Evaluation and Inspectionsalso had marked declines in
morale. Both reported significantly lower levels of trust and
confidence in the organization and less job satisfaction, compared to
1 year earlier.
The Inspector General generally disagreed with some of our findings.
In our response, we address why these findings raise concerns about
the management of the OIG. We also provided our draft report to the
Office of the HHS Secretary, but did not receive comments.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Examination of the Inspector General's Actions Regarding Independence
and Judgment:
Evaluation of OIG Productivity:
Measure of Employee Morale:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Insufficient Internal Controls Over the OIG's Credentialing
System:
Appendix III: Comments from the Inspector General:
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Acknowledgments:
Tables:
Table 1: Select OIG Performance Measures--Fiscal Year 1997 through
Fiscal Year 2002:
Table 2: Medicare Exclusions Imposed--Fiscal Year 1997 through Fiscal
Year 2002:
Table 3: Number and Amount of False Claims Act Settlements, Fiscal
Years 2000 through 2002A:
Table 4: Number and Amount of CMPs Imposed, Fiscal Year 1997 through
Fiscal Year 2002:
Table 5: Number of Active CIAs and Newly Negotiated CIAs for Fiscal
Year 1997 through Fiscal Year 2002:
Table 6: Testimonies, Speeches, and Other Presentations by Component
for Fiscal Years 2000, 2001, and 2002:
Table 7: Number and Percentage of OEI Projects That Were Begun in
Fiscal Years 2000, 2001, and 2002 and Canceled by February 28, 2003:
Abbreviations:
CIA: Corporate Integrity Agreement
CMP: Civil Monetary Penalty
CMS: Centers for Medicare & Medicaid Services
DOJ: Department of Justice
GSGeneral Schedule
HHS: U.S. Department of Health and Human Services
MOU: Memorandum of Understanding
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
OMP: Office of Management and Policy
PCIE: President's Council on Integrity and Efficiency:
United States General Accounting Office:
Washington, DC 20548:
June 10, 2003:
The Honorable Charles E. Grassley Chairman The Honorable Max Baucus
Ranking Minority Member Committee on Finance United States Senate:
The Honorable John Breaux Ranking Minority Member Special Committee on
Aging United States Senate:
This report responds to your October 21, 2002, letter asking us to
conduct a review of the Department of Health and Human Services (HHS)
Office of Inspector General (OIG). As agreed with your office, we
examined the activities at the OIG under the leadership of Inspector
General Janet Rehnquist, who took office in August 2001 and resigned
her office effective June 1, 2003.[Footnote 1] Accordingly, the
objectives of our review were to (1) assess the Inspector General's
leadership, independence, and judgment in carrying out the OIG's
mission, (2) identify changes in the OIG's productivity over the last 3
years, and (3) determine whether employee morale has been sustained
over the last few years.
To perform our review, we interviewed more than 200 current and former
OIG employees. We examined more than 8,000 pages of documents--
including OIG reports, internal studies, personnel records, and
policies and procedures. We also replicated a Web-based employee survey
conducted by the OIG in January 2002--administered in January and
February 2003--to assess any changes in employee views about their work
environment.[Footnote 2] In addition, to assess the level of
cooperation between the OIG and some of its law enforcement partners,
we spoke with officials from the Department of Justice (DOJ), Medicaid
Fraud Control Units from several states, and the National Association
of Medicaid Fraud Control Units. We also interviewed three current or
former inspectors general from other federal agencies to better
understand their role and the conduct expected of them. We performed
our review from October 2002 through May 2003 in accordance with
generally accepted government auditing standards. For a detailed
description of our scope and methodology, see appendix I.
Results in Brief:
During her tenure, the Inspector General took a number of actions that
damaged her credibility and ultimately created an atmosphere of anxiety
and distrust within certain segments of the OIG. Concerns regarding her
independence--including those arising from her decision to delay a
politically sensitive audit and her intervention in ongoing cases in
response to external requests--and personnel changes she initiated
among senior management, disillusioned members of her senior staff,
headquarters employees, and employees working in two OIG units. In
addition, the Inspector General's brief possession of a firearm at the
workplace and law enforcement credentials represented serious lapses in
judgment. We also believe that the Inspector General should have
devoted more attention to some aspects of OIG operations, such as a
major budgetary shortfall, which limited travel and training and
required senior managers to reallocate staff positions regardless of
where those positions were most needed.
Examining the productivity of the OIG in a given time period is
complex. The OIG engages in a variety of activities so that its
productivity involves several dimensions. Moreover, comparing success
from one year to the next is difficult because results are dependent on
work in the pipeline that was initiated in prior years. Given these
constraints, measures of the OIG's performance over the last 3 years
reveal gains in some productivity indicators and declines in others. On
one hand, overall savings attributable to its work increased from $15.6
billion in fiscal year 2000 to $21.8 billion in fiscal year 2002. On
the other hand, we identified some downward changes. For example, there
was a significant decline in the number of settlements with providers
who submitted false claims to the government. As a consequence, the
recoveries associated with these settlements also declined, from about
$974 million in fiscal year 2000 to about $519 million in fiscal year
2002. We also found that the OIG's outreach activities that increase
public and provider awareness of fraud and abuse problems in health
care, and the OIG's efforts to combat them, have dropped appreciably
since fiscal year 2001.
Employee views of the organization, management, and their personal job
satisfaction remained positive and relatively unchanged from 2002
through 2003, in the aggregate. However, we identified several groups
of OIG employees whose morale had been adversely affected during this
time period. In particular, there were considerably more negative views
expressed by those at headquarters and those in senior management
positions than their counterparts in the field and in lower level
positions. These groups were concerned with a range of issues including
the organization's respect for staff, clarity of goals, and
communication efforts. In addition, there were distinct declines since
2002 in the positive views of employees working in the evaluation unit
and the Office of Counsel. These groups had low levels of trust and
confidence in the organization and expressed a significantly lower
level of job satisfaction compared to 1 year earlier.
In written comments on a draft of this report, the Inspector General
disagreed with some of our findings related to her independence and
judgment, the agency's productivity, and employee morale. In our
response, we address why these findings raise concerns about the
management of the OIG. We also provided our draft report to the Office
of the HHS Secretary, but did not receive comments.
Background:
In 1978, Congress passed the Inspector General Act, creating Inspector
General offices in 12 federal agencies.[Footnote 3] This followed
growing reports of serious and widespread breakdowns in agencies'
internal controls. These new OIGs were established as independent and
objective offices within their respective agencies to promote economy,
efficiency, and effectiveness in government programs and operations and
to prevent and detect fraud and abuse. In addition, they were created
to keep agency heads and Congress fully informed about problems and
deficiencies in program operations, as well as needed corrective
action. Over the years, the act has been amended to increase the number
of inspectors general. The President, with the advice and consent of
the Senate, appoints inspectors general at cabinet-level departments
and other large agencies, including HHS. The inspectors general at
smaller, independent agencies and other federal entities are appointed
by the heads of their organizations and have essentially the same
authorities and duties as those appointed by the President. Presently,
there are 28 inspectors general appointed by the President and 29
appointed by their agency heads.
Inspectors general hold a unique place in the executive branch of
government. They report to and are subject to the general supervision
of their agency heads, but carry out their duties independently. In
addition, they have reporting obligations to both the heads of their
agencies and Congress.[Footnote 4] Those that are presidentially
appointed are among the few such appointees that are to be selected
"without regard to political affiliation and solely on the basis of
integrity and demonstrated ability."[Footnote 5] To help maintain their
independence and fulfill their mission--which often involves being
publicly critical of their own departments--inspectors general must
familiarize their departmental colleagues with their special role.
Because they are charged with independently protecting the integrity of
federal programs, inspectors general must be impartial in fact and
appearance. Government Auditing Standards,[Footnote 6] effective in
January 2003, call for auditors to "be free, both in fact and
appearance from personal, external, and organizational impairments to
independence." These standards also require that auditors "avoid
situations that could lead reasonable third parties with knowledge of
the relevant facts and circumstances to conclude that the auditor is
not capable of exercising objective and impartial judgment . . .."
Given that their independence and impartiality is so critical,
inspectors general need to be sensitive to how their actions might be
perceived and interpreted by their staffs, the administration,
Congress, and the public.
About 300 of the approximately 1,600 HHS OIG employees are employed in
its Washington D.C. headquarters. The remainder work in its 8 regional
offices and 85 field offices in all 50 states. The OIG consists of five
components, or major units, each headed by a deputy inspector general.
The office is led by 13 Senior Executive Service level employees, who
all work in headquarters, and about 60 GS-15 level employees.[Footnote
7] About two-thirds of the GS-15 employees are spread across the
various components in headquarters with the remaining third located in
the OIG's regional offices.
Consistent with the act, the OIG maintains the Office of Audit Services
(OAS) and the Office of Investigations (OI).[Footnote 8] They each
represent about 40 percent of the OIG's budget. OAS is responsible for
auditing a variety of HHS health care programs and generally spends
about 80 percent of its resources on projects related to the Medicare
and Medicaid programs.[Footnote 9] Its findings can result in program
improvements and the return of overpayments to the federal government.
In addition, OAS provides audit support to OI. OI investigators
typically pursue allegations of criminal conduct that they receive from
contractors that process Medicare claims, state Medicaid Fraud Control
Units, officials involved in administering HHS's many grant programs,
and others. When investigators find evidence of potential wrongdoing,
they refer the matter to DOJ for possible prosecution or the OIG may
opt to impose other sanctions.
The OIG has established three additional components to enable it to
fulfill its mission. The Office of Evaluation and Inspections (OEI)
conducts short-term management evaluations of HHS programs that
generally involve significant expenditures and services to
beneficiaries or in which important management issues have surfaced.
Its reports are expected to identify opportunities for improvement in
departmental programs. While OAS may audit the same federal programs
examined by OEI, the scope of OEI studies is typically broader and
would more likely involve the use of surveys, interviews, and other
qualitative research methods. A relatively small component, OEI
represents about 10 percent of the office's resources. The Office of
Counsel to the Inspector General (OCIG) provides legal services to the
OIG. Among other things, it renders advisory opinions to health care
providers and develops model industry guidance for compliance with
relevant laws and regulations. It also has several sanctions at its
disposal to penalize those who abuse HHS programs. Finally, the Office
of Management and Policy (OMP) is responsible for the administration of
the office, which includes overseeing the budget, supporting the
office's information technology needs, and working with the media. It
is also responsible for the OIG's human resource management activities,
but obtains significant personnel support from the department's
centralized Program Support Center. OCIG and OMP each represent about 5
percent of the OIG's budget.
The OIG plays an instrumental role in identifying and investigating
individuals and entities that may have abused HHS programs. It may make
referrals to DOJ for possible prosecution under applicable criminal
statutes. In addition, health care providers who violate federal laws
and regulations may face a variety of civil sanctions. The OIG may make
use of the False Claims Act[Footnote 10]--the federal government's
primary civil remedy for false or fraudulent claims--and refer such
matters to DOJ. The act imposes substantial penalties on those who
knowingly submit false claims to Medicare and other federal programs.
If a provider has filed a false claim that DOJ opts not to pursue
through the use of the False Claims Act, the OIG may impose other
sanctions, such as civil monetary penalties (CMP), against that health
care provider. CMPs are also imposed for other types of improper
conduct, such as violations of statutory prohibitions on "kickbacks" in
connection with patient referrals.[Footnote 11] The OIG also can assess
CMPs against hospitals for "patient dumping," that is, failing to
provide appropriate treatment to patients presenting a medical
emergency.[Footnote 12] The amount of the CMP imposed is related to
each provider's specific violation. The OIG may also exclude health
care providers from participating in Medicare, Medicaid, and other
federal health programs if they have, for example, been convicted of a
criminal offense related to Medicare--including health care fraud or
patient abuse and neglect--or had their license suspended or revoked.
OCIG may also opt to negotiate corporate integrity agreements with
health care providers.[Footnote 13]
Although the OIG focuses the majority of its attention on health care
programs, its activities extend to other areas as well. For example,
the OIG has made the detection, investigation, and prosecution of
absent parents who fail to pay court-ordered child support a priority.
The OIG works with other federal, state, and local agencies to expedite
the collection of these payments. Parents who repeatedly fail to honor
such obligations are subject to criminal prosecution. The OIG's recent
activities with respect to parents who have defaulted on their child
support payments resulted in 152 convictions and more than $7 million
in court-ordered criminal restitution in fiscal year 2002.
Examination of the Inspector General's Actions Regarding Independence
and Judgment:
We examined the independence that was reflected in the Inspector
General's decision-making during her tenure. In addition, we reviewed
personnel changes that she initiated and evaluated her judgment in
several instances. We interviewed appropriate staff, including the
Inspector General herself, and examined relevant documentation.
The Inspector General's Independence:
Current and former OIG headquarters employees frequently expressed
concerns about the Inspector General's independence. These concerns
centered on several incidents--some of which were widely reported by
the media. Employees also identified other audits and investigations
that they felt may have suffered from inappropriate management
intervention. We concluded that the following four incidents involved
actions on the part of the Inspector General that at least contributed
to the perception of a lack of independence.
Florida Pension Audit:
In the spring of 2002, the OIG was scheduled to begin an audit of the
Florida Retirement System. The objective was to evaluate whether the
state appropriately charged the federal government for the pension
expenses of state agency employees who help administer federal
programs. The auditors specifically wanted to determine whether funds
designated as federal contributions to the retirement system were used
to provide for pension expenses, and whether the federal contribution
rates were reasonable.
The OIG's first meeting to discuss this audit with Florida pension
officials was scheduled for April 16, 2002. The day before, the Chief
of Staff to the Florida governor placed an urgent call to the Office of
the HHS Secretary, requesting that the audit be delayed to accommodate
the new pension department director who was going to assume his
position in a few weeks. This call was ultimately referred to the
Inspector General, who instructed her Deputy for Audit Services to
delay the audit for a few days. The Inspector General subsequently
ordered a second delay until July. Due to subsequent scheduling
problems affecting both OIG and Florida pension staff, the audit team
did not begin its work until September 2002. Allegations made by OIG
employees and the media suggested that the federal government's
contributions to the Florida retirement system could be excessive and
that a report on these contributions might affect the outcome of the
Florida governor's race that November.
When asked about the incident, the Inspector General stated that she
agreed to temporarily postpone the audit until she could determine the
appropriate response to the request and did not have any involvement in
subsequent delays. She also insisted that audits are frequently
delayed, that her decision to delay the audit was not politically
motivated, and that, even if the audit had begun in April, it would not
have been completed before the election. She told us that, in
hindsight, she could have handled the situation differently by
referring the request to the Deputy for Audit Services, but she did not
believe she acted inappropriately in these circumstances.
We believe that the Inspector General did not appropriately investigate
the implications of her decision before agreeing to delay what
ultimately resulted in a report containing significant monetary
findings. First, Florida pension department officials could have known
that a substantial overpayment existed, and that a delay in the OIG's
audit could have benefited the state by changing the time frames used
to calculate the amount it owed. In fact, the draft report on the
Florida pension audit contains a finding that there were excessive
federal contributions totaling about $517 million, which the state will
be required to return or offset against the amount of future federal
contributions to the retirement fund. Second, given that the team was
scheduled to begin its work in April 2002 and had estimated that the
audit report would be drafted in 6 months, it is conceivable that the
report could have been available by election day, if the audit had
begun when originally planned. Finally, contrary to the Inspector
General's recollection, we found that she sent an e-mail message to her
Deputy for Audit Services in April 2002 instructing him to postpone the
audit until July 2002. The Inspector General acknowledged that,
although short delays in commencing audits are common, it was
admittedly unusual for a request for a delay to be directed to, and
resolved at, her level.
York Hospital:
In February 2000, the OIG alleged that York Hospital--located in York,
Pennsylvania--had submitted improper claims for services provided to
Medicare beneficiaries. The OIG had notified the hospital that it
planned to impose a CMP and was engaged in negotiations with the
hospital when the Inspector General assumed office.[Footnote 14] The
OIG attorneys had estimated that York Hospital's potential liability
was $726,000.
Soon after taking office, the Inspector General received a letter from
three members of Congress encouraging her to settle the case quickly.
According to the former Chief Counsel,[Footnote 15] the Inspector
General told him, "I hate this case; get rid of it." Feeling as though
they had to move fast, OIG attorneys lost the benefit of time--which
they explained is a key factor in resolving a case in the government's
favor--and quickly settled the matter. The former Chief Counsel also
noted that the settlement amount of $270,000 was far less than the
attorneys believed the government could have received had negotiations
proceeded as they had planned.
The Inspector General indicated that she in no way directed a
settlement or personally involved herself in the York Hospital
negotiations. She also stated that if her OCIG staff perceived that
they were under pressure to settle the case quickly, they
misinterpreted her instructions. She told us that she simply wanted to
settle this case in a timely manner.
Although the Inspector General said she did not intend to pressure her
staff, the former Chief Counsel told us that he and those responsible
for negotiating with hospital officials clearly perceived a sense of
urgency. He also told us that her staff perceived that timing, rather
than maximizing the settlement amount, was her main concern. We believe
that her staff acted accordingly, possibly against the government's
financial interest.
Lithotripsy Claims:
Two medical societies representing providers of lithotripsy[Footnote
16] services threatened to sue the Centers for Medicare & Medicaid
Services (CMS) over a regulation resulting in the denial of claims
submitted for payment to the Medicare program. The CMS regulation
implemented statutory restrictions on physician referrals to providers
in which the physicians have an ownership interest and included
lithotripsy services within the scope of these restrictions. The
medical societies maintained that Congress did not intend to include
lithotripsy services within the scope of the statute and intended to
litigate this matter, if a settlement could not be reached quickly.
A partner in the law firm representing the two medical societies, who
was also a friend of the Inspector General, contacted her for
assistance in expediting this case. The Inspector General directed her
former Chief Counsel to contact the law firm and begin negotiating the
matter, which was under the jurisdiction of CMS and not the OIG. The
former OIG Chief Counsel was hesitant to intervene until the
appropriate attorney representing CMS in this matter could be
consulted. Because CMS's attorney was unavailable for about a week, the
former Chief Counsel took no action during this time. According to the
former Chief Counsel, the Inspector General admonished him severely
when she discovered that he had not followed her instructions to
immediately contact the law firm.
The Inspector General asserted that her office had a legitimate role in
this matter. Although the issue was being disputed between the medical
societies representing the lithotripsy providers and CMS, the Inspector
General believed that her OCIG staff, which advised Congress on
physician referral matters, was in a unique position to resolve the
issue. She pointed out that she did not personally involve herself in
the matter, nor instruct her staff about how to resolve the issue.
Instead, she stated that her goal was to help resolve a matter in which
her attorneys had vast expertise.
Despite the OIG's expertise in this matter, we agree with the former
Chief Counsel that it would have been inappropriate for the OIG to
intervene by contacting the law firm to initiate discussions,
particularly in the absence of CMS's attorney. If the Inspector General
wanted OCIG's expertise to be offered to CMS, it would have made sense
for OCIG to contact CMS's attorney before proceeding. CMS's attorney
responsible for handling this matter told us that she would have been
troubled if the OIG had commenced discussions without her agency's
participation. Given the Inspector General's personal relationship with
the medical societies' attorney and the OIG's lack of jurisdiction in
the matter, her actions created the impression that she was more
interested in helping a friend than offering advice to CMS, which
called her independence into question.
Adjusted Community Rating Audit:
On February 20, 2001, the OIG sent its draft report on adjusted
community rate proposals for Medicare+Choice organizations[Footnote
17] to CMS for comment. This report was of potentially significant
interest to congressional committees, which were then considering the
adequacy of payments in the Medicare+Choice program. While OIG
guidelines generally provide up to 45 days for audited entities to
comment on its draft reports, the publication of this report was
delayed for 14 months while the OIG waited for comments from CMS.
Ultimately CMS agreed with the OIG's findings in written comments on
April 16, 2002.
Some employees alleged that the delay in issuing this report reflected
a lack of independence on the Inspector General's part. They suggested
that the Inspector General should have taken a more active role in
expediting the report's issuance. They pointed out that the CMS
Administrator initially disagreed with the draft report's findings and
hired a consultant to validate the OIG's results. According to these
employees, it took CMS more than a year to replicate the OIG's work and
determine that it agreed with the report's findings. OIG employees told
us that the Inspector General tolerated this situation because she was
unwilling to issue a relatively controversial report without the
benefit of CMS's agreement. The delay in issuing this report diminished
its usefulness because congressional committees were focused on other
concerns by the time the report was finalized.
The Inspector General stated that she was only vaguely familiar with
this project but was certain that she did not direct her audit team to
delay the report's issuance. Although she recalled that the CMS
Administrator initially disagreed with the report's conclusions, she
told us that she did not remember the specific time frames associated
with it.
Our evidence shows that the Inspector General's staff tried to enlist
her assistance in expediting CMS's comments to no avail. By permitting
CMS to delay the report's publication, the Inspector General created
the appearance among her staff of being unduly influenced by CMS. In
our view, a time sensitive report of congressional interest should
have, at the very least, garnered more of the Inspector General's
attention.
The Inspector General's Personnel Changes:
During the Inspector General's tenure, staff turnover among the OIG
senior headquarters staff has been considerable. Between September 2001
and November 2002, at least 20 OIG senior managers retired, resigned,
or were reassigned. Ten of these were Senior Executive Service[Footnote
18] employees, most of whom had over 25 years of government service and
had played an important leadership role at the OIG for many years. The
others were GS-15 employees who were instrumental in carrying out
specific office functions.[Footnote 19] The Inspector General's
representative characterized these changes as voluntary and beneficial
to the overall mission of the office. The Inspector General told us
that these changes were made to provide senior managers with new
insights into agency operations and to capitalize on the fresh
perspectives they could bring to their new jobs. However, we found that
the sudden and unexplained nature of many of the Inspector General's
actions resulted in a widespread perception of unfairness among her
staff. In addition, the promotion of a close advisor to the Inspector
General, to the position of Director of Public and Congressional
Affairs, raises a legal concern.
We found the circumstances surrounding the departures of eight senior
OIG managers to be particularly troubling. Four of these eight managers
who left the OIG or were detailed elsewhere were members of the Senior
Executive Service. One of the four took an early retirement after the
Inspector General proposed that the department assign him to a position
outside of his local commuting area with the assumption that he would
retire instead. Another retired after most of his responsibilities were
reassigned to another official or eliminated. A third resigned about 6
weeks after the Inspector General reassigned his job responsibilities
and directed that he not report to his office and instead spend his
time seeking new employment. Finally, one manager was detailed to a
temporary position within HHS and was also instructed not to return to
his OIG office. He is currently seeking new employment.
These four individuals told us that the Inspector General had not
informed them of specific deficiencies in their performance, given them
any opportunity to improve their performance, worked with them to find
a mutually satisfactory resolution to her concerns, or provided an
adequate rationale for her decisions to remove them from their
positions. Moreover, three of these managers told us that they were
shocked with the urgency she displayed when asking them to leave the
OIG, and two perceived that a single event ultimately led to the
Inspector General's decision to remove them. For example, in one
instance, a senior manager linked his removal to an incident in which a
problem had to be resolved in the Inspector General's absence. Although
he successfully contacted her and proposed a solution, she did not wish
to address the matter until her return to the office. He delayed taking
action, as she directed. However, according to this official, when the
Inspector General returned, she was angry and suggested that he had
tried to pressure her into accepting his proposed solution, essentially
excluding her from the decision-making process. Describing their
departures from the OIG, these four individuals told us that they felt
they had no alternative but to leave their positions. Other OIG staff
also told us that these four changes--all of which were initiated by
the Inspector General--were involuntary.
The other four individuals whose departures were particularly troubling
were GS-15 level managers from OMP, OCIG, OI, and the Inspector
General's Immediate Office.[Footnote 20] One manager resigned after
being reassigned twice within 9 months. According to several OIG
employees, the purpose of this manager's second reassignment was to
accommodate the Inspector General's preference that this manager no
longer work in the OIG headquarters building. The Inspector General
gave no explanation why she wanted this individual to work in a remote
location. A second was reassigned to an interagency task force for an
indefinite period after his position was abolished. The Inspector
General reportedly no longer wanted him in the OIG headquarters
building. The third individual was temporarily reassigned to a position
at another HHS agency and subsequently resigned. He told us that his
duties were curtailed following a briefing of congressional staff in
which he voiced an official OIG opinion that conflicted with that of
CMS. The fourth individual retired after being reassigned from the
Inspector General's Immediate Office to another component. Some staff
members perceived that the reassignment of this individual resulted, in
part, from her requesting--without the Inspector General's knowledge--
a gun safe to properly store a firearm that the Inspector General had
recently acquired. Like the reassignments at the senior executive
level, the Inspector General initiated these changes.
Some of the employees we interviewed were skeptical that these changes
were necessary and asserted that they actually damaged the
organization's effectiveness. Specifically, they were concerned with
the sheer number of personnel moves made in a relatively brief period
of time and that their new component heads lacked experience in the
areas that they were going to lead. They also expressed concerns about
the Inspector General's motivations because they felt that the changes
generally had not been adequately explained to the employees involved.
The abruptness of these changes and the lack of any overall explanation
for them heightened employees' mistrust. Although some employees were
supportive of the Inspector General's organizational changes or felt
unaffected by her actions, comments made during our interviews and in
our employee survey highlighted the frustration many employees--
especially at headquarters--felt due to the perception of unfairness
associated with these personnel changes. We found that the magnitude
and abruptness of the Inspector General's actions raised fear and
anxiety among her staff.
We asked the Inspector General about each of the individuals to obtain
her rationale in making these personnel decisions. The Inspector
General told us that she was concerned about the individuals' privacy
and that she was uncomfortable discussing the circumstances involving
these managers with us.
Finally, we identified one matter giving rise to a legal concern. We
obtained information suggesting that a member of the OIG's staff may
have been preselected for a GS-15 position as the Director of Public
and Congressional Affairs.[Footnote 21] Specifically, as explained
below, e-mail communication by one of the Inspector General's closest
advisors implies that a decision had been made to promote this employee
to the GS-15 level prior to the initiation of a competitive selection
process. Citing the individual's outstanding performance as a GS-14 in
the same office,[Footnote 22] the Inspector General had directed the
employee's supervisor to promote her to a GS-15 at the earliest
opportunity. Shortly thereafter, an advisor to the Inspector General
contacted the individual's supervisor and emphasized that the Inspector
General believed that it was important for the individual to have a GS-
15 in her current position. The advisor urged him to initiate the
promotion process so that the GS-15 would be effective on the date of
her eligibility for promotion, or soon thereafter. The advisor further
explained that the Inspector General had made a commitment when the
individual agreed to take the GS-14 position that she would be promoted
to a GS-15 one year later. In addition, the OIG included a "selective
placement factor" in the GS-15 position description, reportedly to
favor the employee. OIG staff told us that, although the GS-15 position
was advertised both inside and outside of the agency, there was a
widespread perception that the selection had already been made. This
perception may account for the fact that there was only one applicant
for the position. While the information we obtained raises concern
about a possible preselection, we have not conducted the type of
formal, factual inquiry that would ultimately be necessary to determine
whether the Inspector General's actions were unlawful.[Footnote 23]
The Inspector General's Judgment:
We identified several matters that raised concerns about the adequacy
of the Inspector General's leadership. Some employees questioned the
Inspector General's judgment in regard to her possession of a firearm
in the office, as well as law enforcement credentials. Others raised
concerns about the manner in which she conducted her business travel.
In addition, several employees interpreted some of the Inspector
General's actions as demonstrating a lack of interest in key office
operations.
Report by the President's Council on Integrity and Efficiency:
In the fall of 2002, the Integrity Committee of the President's Council
on Integrity and Efficiency (PCIE)[Footnote 24] received an allegation
that the Inspector General had improperly requested and obtained a
firearm from her Deputy Inspector General for Investigations.
Subsequently, the Integrity Committee received a second allegation that
the Inspector General had improperly obtained supervisory special agent
law enforcement credentials. After consulting with DOJ officials, who
declined to pursue these allegations, the Integrity Committee proceeded
with its investigation. The PCIE forwarded its report to the Deputy
Secretary of HHS on April 4, 2003.
The PCIE found that the Inspector General had obtained a firearm from
an OIG special agent and maintained it in her Washington, D.C. office
for a short period of time. An OIG Memorandum of Understanding (MOU)
with DOJ and the Federal Bureau of Investigation set forth a process
for deputizing OIG special agents to allow them to carry firearms, make
arrests, and execute warrants when carrying out their law enforcement
functions.[Footnote 25] However, the PCIE found that the Inspector
General had not met the job classification and training requirements
outlined in the MOU and had not been deputized. In an interview with
PCIE investigators, the Inspector General stated that she believed that
inspectors general were statutorily authorized to possess firearms and
that she had not reviewed the MOU for deputation of OIG special agents.
In regard to the second allegation, the PCIE found that the Deputy
Inspector General for Investigations obtained supervisory special agent
credentials for the Inspector General because she did not want the
Inspector General to have any difficulty gaining access to secured
areas in the event of a terrorist incident.[Footnote 26] The Inspector
General told PCIE investigators that other inspectors general did not
seem to know how to handle the issue of access to secured areas in the
event of a terrorist attack, but she had never asked them if they had
law enforcement credentials. She also told investigators that she had
the credentials in her possession for a short time, and returned them
to her Deputy for Investigations to store in a safe. (Before the PCIE
investigated this issue, concerns about the ease with which OIG
credentials could be obtained came to our attention. We examined the
internal controls for the credentialing system and identified several
weaknesses, which are described in appendix II. OIG officials have
since told us that they have taken steps to correct these weaknesses.):
The PCIE report identified several criminal statutes as relevant to the
allegations, including provisions of federal and District of Columbia
law concerning the possession of firearms, which are applicable to
those working in federal buildings. At the conclusion of the
investigation, DOJ officials advised the PCIE that it declined to
prosecute the Inspector General for any possible violations of criminal
statutes regarding the possession of a firearm or law enforcement
credentials. In addition, in the letter to the Deputy Secretary of HHS
accompanying its report, the PCIE advised that the Inspector General's
resignation mooted the need to take any administrative actions against
her. It also expressed deep concern about the actions of some OIG
employees who facilitated the Inspector General's acquisition of these
items.
The Inspector General's Travel:
Another issue that persistently surfaced during our review was
perceptions of the propriety of the Inspector General's business
travel. As the head of a large organization with offices nationwide,
the Inspector General is entitled--and expected--to periodically visit
these offices to provide oversight, guidance, and support to her staff.
In addition, the Inspector General may engage in other business-related
travel, such as attending conferences and meeting with provider
organizations and other external groups. Inspectors general--like other
government employees--are not prohibited from planning personal travel
in conjunction with their business trips. However, we spoke with
current and former inspectors general from other federal agencies, and
they told us that they generally refrain from including personal travel
with their business trips for fear of raising suspicion about their
motivation or integrity. While no one alleged that the Inspector
General violated travel regulations, some current and former officials
questioned her motivation for planning certain trips that included a
personal element, such as sightseeing activities--sometimes with two
senior OIG managers.
To better understand the purpose of the Inspector General's travel, we
examined all of the documentation related to her trips, including
travel orders, vouchers, and detailed itineraries prepared by her
office. We found that during the first 4 months of the Inspector
General's tenure she took four trips outside of the Washington D.C.
area. None of these trips included a personal element or any
companions. However, over the next 12 months, the Inspector General
traveled eight more times and included personal activities on half of
these trips. In addition, she invited one or two senior managers to
accompany her on six of these eight trips.
Three of the Inspector General's trips in particular raised concerns,
arising from a perception that this travel was motivated by other than
official duties. In some of these cases, large blocks of time could not
always be accounted for. For example, the Inspector General took one
trip to San Francisco and Phoenix that spanned 8 days and included 2
days of personal time on a weekend. In examining the business portion
of this trip, we were only able to determine that the Inspector General
made two half-hour speeches and traveled between these cities and
Washington, D.C. Further, in some cases, personal activities--sometimes
involving the participation of the two senior managers--were included.
While we did not validate the managers' activities on these trips
beyond their own assertions, we believe that it is appropriate for the
Inspector General to ask managers to accompany her as needed on
business-related travel. However, including her colleagues in her
personal activities during travel contributed to a perception that the
business reasons for these trips were pretexts and that the trips were
planned solely for nonbusiness purposes.
In responding to our inquiries regarding the Inspector General's
travel, she indicated that all of her trips were made for legitimate
business purposes. She also told us that she was not concerned with any
perceptions OIG employees may have had about her travel. Finally, in a
written response to our inquiry regarding approximately 3 days of
unaccounted time during her San Francisco and Phoenix trip, she
indicated that she spent her time performing office work and preparing
for one of her two speeches. She offered no other elaboration on her
business activity.
The Inspector General's Leadership in Resolving Budgetary Problems:
During our study, the Deputy Inspectors General were grappling with a
major budgetary shortfall due to aggressive hiring in fiscal year 2002,
lower than expected attrition throughout the OIG, and uncertain funding
levels for fiscal year 2003 that had yet to be resolved. Senior OIG
officials told us that they were concerned that, without a quick
solution, they might ultimately violate the Antideficiency
Act.[Footnote 27] In February 2003, the Deputy Inspectors General were
developing various proposals to react to their forecasted budget
shortfall. The deputies had severely limited travel, training, and
other human resource activities in their components. In addition, they
were reallocating staff positions to accommodate the budget--regardless
of where the positions were actually needed. Positions that became
vacant through attrition were transferred to the overstaffed
components. By gaining the vacant positions, the overstaffed components
were able to reduce the number of staff considered to be in excess in
their units.
Some of the deputies expressed strong resentment about the chaos this
situation caused within their components. For example, a relatively
small component that lost a key member of one of its functional teams
could not replace that individual, and instead had to continue to meet
mission goals with one fewer supervisor. Other component heads
explained that the lack of funds to perform routine duties in the field
affected morale and could impact long-term productivity.
This situation could have been avoided if OIG leadership had developed
a human resource hiring and development plan that contained realistic
budget projections and hiring goals that all deputies would have to
follow. Historically, the Inspector General's Principal Deputy was
responsible for ensuring that component heads worked together to carry
out such a plan, but the Principal Deputy position had been vacant for
months. As a result, component heads we spoke with felt that they did
not have the authority to fill the leadership void that developed in
this instance, and relied on the Inspector General to impose whatever
fiscal constraints were necessary to establish an equitable budget
allocation among the components. While the Inspector General expressed
concern about funding issues, she did not take aggressive steps to
remedy the situation. Although the deputies ultimately resolved their
financial situation, at the time of her resignation, the component
heads were still struggling among themselves with these budgetary
challenges.
Evaluation of OIG Productivity:
The OIG conducts a variety of activities that aim to improve program
operations, identify and recover overpayments, and investigate and
sanction those who violate statutes and regulations governing HHS
programs. Evaluating the effect of the Inspector General's recent
actions on productivity is difficult to assess in the short term. For
example, in addition to the decisions she made and the personnel moves
she initiated, a variety of other factors contribute to productivity.
Two factors make it impossible to reach an overall conclusion about OIG
productivity for any limited period of time. First, fluctuations in
performance are to be expected in any given year, given the multitude
of the OIG's activities. Second, it is difficult to compare performance
from one year to the next because the results in one period are heavily
dependent on work in the pipeline that was initiated in prior years.
For example, it could take 2 or 3 years from the time a project is
initiated until a recommendation is made and subsequently implemented;
investigating potential criminal activity and prosecuting the
individuals involved could take even longer. Many of the OIG's
productivity measures remain comparable to prior years or showed
increases, but we found that several other key indicators of
performance have declined since the Inspector General took office.
Savings, OAS Reports, and Convictions:
We analyzed a wide variety of performance measures to evaluate the
OIG's effectiveness and found that many of these measures indicated
that the OIG may be performing well, as table 1 shows. For example, in
its semiannual reports covering fiscal year 2002, the OIG identified
almost $22 billion in savings attributable to its work.[Footnote 28]
The OIG consistently reported increases in these savings since fiscal
year 1997. In addition, the number of OAS reports published has
increased each year since fiscal year 2000. Also, the number of
convictions resulting from the OIG's investigative referrals has
steadily increased over the last 6 years.
Table 1: Select OIG Performance Measures--Fiscal Year 1997 through
Fiscal Year 2002:
Savings (in billions of dollars); Fiscal year 1997: $7.6; Fiscal year
1998: $11.6; Fiscal year 1999: $12.6; Fiscal year 2000: $15.6; Fiscal
year 2001: $18.0; Fiscal year 2002: $21.8.
Number of OAS reports; Fiscal year 1997: 324; Fiscal year 1998: 187;
Fiscal year 1999: 207; Fiscal year 2000: 300; Fiscal year 2001: 311;
Fiscal year 2002: 333.
Convictions; Fiscal year 1997: 215; Fiscal year 1998: 261; Fiscal year
1999: 401; Fiscal year 2000: 414; Fiscal year 2001: 423; Fiscal year
2002: 517.
Source: HHS OIG.
[End of table]
OI officials, who told us that the number of convictions is an
important measure of their success, also said that they appear to be on
target in achieving even more convictions in fiscal year 2003. At the
midpoint of the current fiscal year--March 31, 2003--the OIG reported
320 convictions.
Although it is difficult to measure the "sentinel" effect of some of
the OIG's activities, it has taken steps to encourage lawful and
ethical conduct by the health care industry, which we believe should be
acknowledged. For example, in recent years the OIG has actively worked
with the private sector to develop compliance guidance to prevent the
submission of improper claims and to discourage inappropriate conduct
by providers. In March 2003, the OIG issued compliance guidance for
ambulance suppliers. This was followed by the publication of compliance
guidance for pharmaceutical manufacturers in April 2003.
Exclusions from Medicare:
Like convictions, the number of providers excluded from the Medicare
program is a strong indicator of OI effectiveness. Although the number
of exclusions imposed declined in fiscal year 2002, reversing a trend
of increases since fiscal year 1999, we were unable to determine
whether this decline reflects diminishing productivity. The OIG Chief
Counsel explained that, in 2002, the Department of Education became
responsible for processing most of the exclusions of health care
providers who had defaulted on the repayment of their federally funded
student loans. The Chief Counsel told us that in 2001, when the OIG
still had this responsibility, it excluded 518 providers who had
defaulted on these loans. In 2002--the transition year--the number of
such providers excluded by the OIG dropped to 166. Table 2 shows the
OIG's exclusions imposed since fiscal year 1997.
Table 2: Medicare Exclusions Imposed--Fiscal Year 1997 through Fiscal
Year 2002:
Fiscal year 1997: 2,719; Fiscal year 1998: 3,021; Fiscal year 1999:
2,976; Fiscal year 2000: 3,350; Fiscal year 2001: 3,756; Fiscal year
2002: 3,448.
Source: HHS OIG.
[End of table]
Settlements, Recoveries, CMPs, and CIAs:
We found declines in the use of sanctions available to the OIG. For
example, we noted reductions in the number of settlements and recovery
amounts that result from the OIG's False Claims Act referrals to DOJ.
Similarly, there were declines in the number of CMPs and CIAs recently
imposed. Table 3 shows that both the number of settlements and amount
of recoveries declined significantly in fiscal year 2002, compared to
fiscal years 2000 and 2001.
Table 3: Number and Amount of False Claims Act Settlements, Fiscal
Years 2000 through 2002A:
Number of settlements; Fiscal year 2000: 245; Fiscal year 2001: 248;
Fiscal year 2002: 161.
Amounts recovered (in millions); Fiscal year 2000: $974.0; Fiscal year
2001: $2,063.0[B]; Fiscal year 2002: $518.7.
Source: HHS OIG.
[A] The OIG was unable to provide comparable data for fiscal years 1997
through 1999.
[B] A substantial portion of the amount recovered in fiscal year 2001
is attributable to a single settlement of $875 million.
[End of table]
OIG officials told us that its False Claims Act cases are strongly tied
to DOJ's efforts to combat health care fraud, which have had to compete
with investigative resources dedicated to the September 11, 2001,
terrorist attacks. In addition, DOJ has reduced the number of its
national health care antifraud initiatives in recent years as well as
the number of individual cases that it pursues under the auspices of
each initiative. OIG officials also attribute this decline to its
increasing emphasis on program compliance, which the OIG believes has
had a sentinel effect on providers. Although the number of False Claims
Act settlements and recoveries have declined, DOJ officials and the
Medicaid Fraud Control Unit representatives we spoke to told us that
they were pleased with the quality of the support they received from
the OIG in pursuing abusive or fraudulent providers. However, several
of these officials were concerned that the OIG could not devote more
resources to assist them in their investigations.
Another important indicator of OIG productivity is the imposition of
CMPs. As shown in table 4, the number of these cases had a marked
decline since fiscal year 2000.
Table 4: Number and Amount of CMPs Imposed, Fiscal Year 1997 through
Fiscal Year 2002:
Number of CMP cases; Fiscal year 1997: 16; Fiscal year 1998: 58; Fiscal
year 1999: 67; Fiscal year 2000: 58; Fiscal year 2001: 30; Fiscal year
2002: 34.
Amount of CMPs (in millions of dollars); Fiscal year 1997: $0.5; Fiscal
year 1998: $2.2; Fiscal year 1999: $1.9; Fiscal year 2000: $9.7; Fiscal
year 2001: $1.1; Fiscal year 2002: $2.4.
Source: HHS OIG.
[End of table]
In explaining the declining number of CMPs imposed, OIG officials
offered two explanations. First, they told us that the increase in
convictions may account for the decline in CMPs, which are typically
imposed when more stringent penalties cannot be used. Because
convictions have recently increased, there would be fewer opportunities
to impose CMPs. Second, officials suggested that the office's previous
aggressiveness in pursuing patient dumping cases--which generally made
up between 65 and 90 percent of all CMPs imposed each year--has been a
strong deterrent. The officials also emphasized that patient dumping
cases have proven to be resource intensive. As a result, the OIG can
only afford to pursue the most egregious cases.
CIAs, typically negotiated in conjunction with False Claims Act
settlements, are also an indicator of the OIG's productivity. CIAs
consist of "integrity provisions" that are intended to ensure that a
provider's future transactions with Medicare and other federal health
care programs are proper and valid. Such provisions include
implementing an OIG-approved compliance program, use of an independent
review organization to annually review provider billings, and other
periodic monitoring and reporting requirements. Providers accept the
imposition of the CIAs and, in turn, OCIG agrees not to seek additional
administrative sanctions. As table 5 shows, the number of active CIAs,
as well as the number of newly negotiated CIAs, has declined since
2001.
Table 5: Number of Active CIAs and Newly Negotiated CIAs for Fiscal
Year 1997 through Fiscal Year 2002:
CIAs active at end of the fiscal year; Fiscal year 1997: 122; Fiscal
year 1998: 340; Fiscal year 1999: 418; Fiscal year 2000: 470; Fiscal
year 2001: 498; Fiscal year 2002: 324.
New CIAs negotiated during the fiscal year; Fiscal year 1997: 83;
Fiscal year 1998: 233; Fiscal year 1999: 138; Fiscal year 2000: 101;
Fiscal year 2001: 112; Fiscal year 2002: 63.
Source: HHS OIG.
[End of table]
OCIG officials attributed the most recent decline to several factors.
First, the number of civil False Claims Act settlements declined
between 2001 and 2002, resulting in fewer providers with whom to
negotiate CIAs. Second, in fiscal year 2002, OCIG began implementing
the Inspector General's November 20, 2001, "Open Letter to Health Care
Providers" regarding CIAs. CIAs had long been a concern of providers
because of the costs associated with implementing the specified
integrity provisions--such as retaining an independent review
organization each year to review a statistically valid sample of
billings. The November open letter announced that the OIG's policies
and practices regarding CIAs were being modified in response to those
concerns.
The letter noted, in part, that the OIG would no longer seek to
negotiate CIAs with every provider settling a False Claims Act case
with the government. In some situations, corporate compliance matters
would be negotiated separately, after settlement of the False Claims
Act case. The letter also indicated that the OIG would consider
increasing its reliance on providers' internal audit capabilities. For
example, some providers may not be required to retain an independent
review organization. Similarly, not all billing reviews would be
subject to statistically valid random sampling. Instead, these
providers would be able to self-certify compliance based on the error
rate indicated by reviewing an initial sample of their billings.
Further, the new approach to CIAs could also be applied to previously
negotiated CIAs. As a result, in fiscal year 2002, OCIG renegotiated 94
existing CIAs associated with False Claims Act settlements. The revised
CIAs contained "certification agreements," permitting providers to
self-certify their compliance with the specific provisions contained in
their agreements, instead of retaining an external review organization
for this verification.
Outreach and Education Activities:
We also found that there has been a considerable drop in the
testimonies and outreach and education activities performed by OIG
employees. Prior to the current Inspector General's tenure, the OIG
frequently provided assistance to congressional staff developing
legislative proposals related to HHS programs, offered informal advice
about program oversight, and testified at congressional hearings. In
addition, OIG employees routinely presented the results of their work
at conferences, meetings, and in other educational forums. However, as
shown in table 6, the number of testimonies and speeches and other
presentations by OIG employees revealed a significant decline in the
assistance provided during the last fiscal year--especially among OCIG
employees.
Table 6: Testimonies, Speeches, and Other Presentations by Component
for Fiscal Years 2000, 2001, and 2002:
Inspector General and Principal Deputy; Testimonies: Fiscal year 2000:
7; Testimonies: Fiscal year 2001: 3; Testimonies: Fiscal year 2002: 6;
Speeches and other presentations: Fiscal year 2000: 3;
Speeches and other presentations: Fiscal year 2001: 3; Speeches and
other presentations: Fiscal year 2002: 7.
OAS; Testimonies: Fiscal year 2000: 0; Testimonies: Fiscal year 2001:
1; Testimonies: Fiscal year 2002: 0; Speeches and other
presentations: Fiscal year 2000: 4; Speeches and other presentations:
Fiscal year 2001: 24; Speeches and other presentations: Fiscal year
2002: 17.
OI; Testimonies: Fiscal year 2000: 1; Testimonies: Fiscal year 2001: 0;
Testimonies: Fiscal year 2002: 0; Speeches and other
presentations: Fiscal year 2000: 25; Speeches and other presentations:
Fiscal year 2001: 93; Speeches and other presentations: Fiscal year
2002: 49.
OEI; Testimonies: Fiscal year 2000: 5; Testimonies: Fiscal year 2001:
4; Testimonies: Fiscal year 2002: 0; Speeches and other
presentations: Fiscal year 2000: 52; Speeches and other presentations:
Fiscal year 2001: 45; Speeches and other presentations: Fiscal year
2002: 32.
OMP; Testimonies: Fiscal year 2000: 0; Testimonies: Fiscal year 2001:
0; Testimonies: Fiscal year 2002: 0; Speeches and other
presentations: Fiscal year 2000: 0; Speeches and other presentations:
Fiscal year 2001: 0; Speeches and other presentations: Fiscal year
2002: 8.
OCIG; Testimonies: Fiscal year 2000: 1; Testimonies: Fiscal year 2001:
2; Testimonies: Fiscal year 2002: 0; Speeches and other
presentations: Fiscal year 2000: 58; Speeches and other presentations:
Fiscal year 2001: 49; Speeches and other presentations: Fiscal year
2002: 15.
Total; Testimonies: Fiscal year 2000: 14; Testimonies: Fiscal year
2001: 10; Testimonies: Fiscal year 2002: 6; Speeches and other
presentations: Fiscal year 2000: 142; Speeches and other presentations:
Fiscal year 2001: 214; Speeches and other presentations: Fiscal year
2002: 128.
Source: GAO analyses of HHS OIG data.
[End of table]
We spoke with several congressional staff working for committees with
jurisdiction over HHS programs who told us that they were not satisfied
with the level of support they were currently receiving from the OIG.
While formal requests for assistance were fulfilled, congressional
staff indicated that OIG employees no longer discussed issues with them
informally, as they had in the past. In our interviews, primarily at
headquarters, several OIG employees recognized that they were no longer
providing what congressional staff members considered to be a valuable
service and what they considered to be a meaningful part of their work.
OIG officials emphasized that their responsiveness to Congress is still
an extremely high priority. They explained that the Inspector General
instituted a more centralized approach to providing assistance to
congressional staff and other external groups than had her predecessors
in an attempt to ensure the quality and appropriateness of the
assistance provided. In response to the declining number of
testimonies, OIG senior officials told us that they are very willing to
appear at congressional hearings when they have relevant material to
present. However, they explained that the Inspector General does not
consider the number of testimonies to be a relevant performance
measure.
In regard to speeches and other presentations, the decline was partly
due to a policy change in the spring of 2002 that moved approval
authority for these activities from the individual component heads to
the Director of Public and Congressional Affairs. A lack of travel
funds for collateral activities in the first half of the fiscal year
also limited OIG's staff participation in discretionary events.
According to this Director, because she could not approve all of the
requests, she considered the nature and size of the audience, in
addition to the cost of the trip, in deciding whether approval would be
granted.
OEI Reports:
A number of employees of OEI told us that they have been frustrated
with the cancelation of projects since the Inspector General took
office. According to these individuals, many projects were well under
way at the time of their termination. Although OEI managers could not
tell us how many projects have been canceled under the current
Inspector General's tenure, they could tell us how many of the OEI
projects begun in fiscal years 2000, 2001, and 2002 were subsequently
canceled. As table 7 shows, 27 reports, or about 26 percent of reports
started in 2002, were canceled by the end of February 2003. According
to OEI management, although some projects have been canceled, the work
performed on these projects has been used by OEI teams involved in
related OEI projects.
Table 7: Number and Percentage of OEI Projects That Were Begun in
Fiscal Years 2000, 2001, and 2002 and Canceled by February 28, 2003:
Reports Started; Fiscal year 2000: 103; Fiscal year 2001: 80; Fiscal
year 2002: 103.
Number Subsequently Canceled; Fiscal year 2000: 18; Fiscal year 2001:
14; Fiscal year 2002: 27.
Percent Subsequently Canceled; Fiscal year 2000: 18; Fiscal year 2001:
18; Fiscal year 2002: 26.
Source: GAO analysis of HHS OIG data.
[End of table]
We followed up on several projects that recently had been canceled to
better understand management's rationale for doing so. Staff members
brought these projects to our attention during the course of our
work.[Footnote 29] In one instance, a project was canceled 7 months
after the team had conducted the exit conference with the agency. More
than 4,000 staff hours had been expended on this project, which
included three full-time and one part-time staff and a paid intern. The
Deputy Inspector General ultimately told the team that the report
lacked sufficient evidence and would not be presented to the Inspector
General for signature. Although the team subsequently prepared two
memoranda as substitutes for the report, no product was ever issued--
despite interest from the provider community and relevant agency.
We have learned that OEI projects continue to be canceled. For example,
in March 2003 the Inspector General took the unusual step of recalling
a draft report, which had been sent to the relevant agency for comment
in February 2003. Both the Deputy Inspector General for OEI and the
Inspector General approved this draft. Also in March 2003, a related
project, which had begun in fiscal year 2002, was canceled as the OEI
team prepared for an exit conference with the agency it had evaluated.
OEI management decided to combine the results of both projects into a
single report. Although the OEI staff involved with these projects
contend that they briefed management several times over the course of
these assignments, the Deputy Inspector General for OEI explained that
he made this decision once he realized there were inconsistencies
between the two projects that needed to be reconciled. As of late April
2003, no report had been published.
In conversations with the Inspector General and the Deputy for OEI, we
learned that they had been particularly concerned with the
appropriateness of criteria used by OEI staff in evaluations. They told
us that they were uncomfortable with the policy-oriented work that OEI
had done and were taking actions in the pipeline of OEI reports to
address what they viewed as shortcomings in the accuracy and
sufficiency of evidence in OEI products. The Deputy for OEI also
explained that they were providing training to all OEI staff on
evidence standards with the hope of improving the quality of future
projects. OEI managers and staff that we spoke to expressed surprise
and frustration at these concerns and pointed out that in the past, OEI
had been recognized and praised by Congress, the public, and the press
for its high-quality evaluation work.
Measure of Employee Morale:
Based on our survey and extensive interviews, we found in the aggregate
that employee views about the organization, management, and their
personal job satisfaction remained positive and relatively unchanged
between 2002 and 2003. However, we identified several groups of
employees whose morale was of concern, namely, employees working at
headquarters, those at the highest levels of management, and staff
working in two OIG components. Our analysis of open-ended survey
comments also revealed areas of dissatisfaction that were not fully
captured by other items on our survey.
Our survey and interviews found, in the aggregate, a high level of
satisfaction among OIG employees. Overall, positive responses to survey
items in both 2002 and 2003 averaged over 80 percent and no item
responses changed more than 5 percentage points between the 2 years.
Positive responses were especially prevalent both years for statements
such as "All things considered, my component is a good place to work"
(89 percent and 87 percent, respectively) and "I believe that my work
is important to the success of the component" (94 percent and 93
percent, respectively). Similarly, our interviews revealed an overall
high level of job satisfaction, typified by comments such as "I believe
my work makes a difference." Staff repeatedly cited their close
relationships with their immediate work groups and their involvement on
important issues as reasons for their job satisfaction. We also
identified some examples of improvement. For instance, in both the
survey and interviews, OI employees indicated there had been an
increase in communication with upper management in their component over
the last year.
We found that positive responses to most survey items were lower for
headquarters employees than for field staff. For example, we found that
there was a marked difference in positive responses--10 percentage
points--to the statement that "Everyone is treated with respect." We
also found a 14 percentage point difference in positive responses to
the statement, "I have confidence and trust in my organization." This
pattern of more positive responses from the field was consistent with
statements made during our interviews. Whereas many headquarters staff
expressed concern about the Inspector General's actions, most field
employees told us that they felt insulated from, and largely unaffected
by, the personnel and other changes that occurred in headquarters.
In addition, our survey indicated that senior management staff--
specifically members of the Senior Executive Service and GS-15
employees--were considerably more concerned than all other employees
about OIG leadership. While 88 percent of employees at the GS-14 and
lower levels agreed with the statement, "As an organization, the OIG
has clear goals," only 67 percent of the senior management staff--those
at the GS-15 level and members of the Senior Executive Service--
responded positively to that statement. Further, about 70 percent of
the employees at the GS-14 level and lower levels indicated that they
had confidence and trust in the organization. On the other hand, only
56 percent of senior managers agreed with that statement. In our
interviews, some senior management staff were extremely clear about,
and supportive of, the Inspector General's goals, but others expressed
confusion about the Inspector General's priorities for their
components. Many in senior management were disquieted by the decisions
that resulted in some of their colleagues retiring, resigning, or being
reassigned during 2002. These managers explained that they were
uncomfortable because they did not fully understand the motivations
behind the Inspector General's actions.
Our survey revealed a substantial deterioration in OEI employees' views
of the organization, management, and their personal job satisfaction.
For example, a statement focusing on whether "upper management clearly
communicates the goals of my component," elicited an almost 50
percentage point drop in positive responses between January 2002 and
February 2003 (compared to a 1 percentage point decrease in the
aggregate). Similarly, there was a 34 percentage point drop in positive
responses to the statement about being "fully informed about major
issues affecting my job" (compared to a 5 percentage point drop
overall). Finally, about 62 percent of OEI employees indicated a lack
of trust and confidence in their organization (compared to 30 percent
overall).
The decline in the overall climate in OEI can be linked to a number of
changes that profoundly affected the staff in that component. OEI staff
told us that they were negatively affected by the abrupt departure of
the Deputy Inspector General, decreased communications from
headquarters management, changes and delays in the report review
process, canceled projects, and a narrowing of the scope of their work.
In addition, OEI staff explained that they have been disappointed by a
decrease in the number of their assignments that has resulted in what
are considered to be "high-profile" products--those signed by the
Inspector General, those issued as standard blue-cover reports, and
those placed on the OIG's Web site.[Footnote 30]
Our employee survey also identified a distinct decline in positive
responses to survey items among OCIG employees--almost all of whom work
in headquarters. Of particular concern were answers to survey
statements addressing the adequacy of communication and job
satisfaction. For example, compared with 2002 survey results, there was
a 22 percentage point drop in positive responses to the statement about
being kept fully informed about major job issues. OCIG employees also
reported a 16 percentage point drop in positive responses to the item
"I am satisfied with my job" and a 12 percentage point drop in their
opinion that "everyone is treated with respect," compared with last
year's survey. Our results also showed that 54 percent of OCIG
employees lack trust and confidence in their organization. The decline
in the views of OCIG staff can, in part, be attributed to changes
implemented by the Inspector General, and the atmosphere of anxiety and
distrust that her actions created. OCIG employees expressed concern
about the circumstances under which the former Chief Counsel and other
senior managers left the OIG. In addition, we were told that the
curtailment of education and outreach activities and contact with
congressional committee staff had an adverse effect on OCIG employee
morale.
Finally, we analyzed the written comments that some employees opted to
write in the comment box provided on our survey. In total, 578 of the
1,451 survey respondents (40 percent) elected to write comments, which
allowed them to express opinions about issues that were not covered in
detail in our other survey items. Our analysis of these comments showed
that the majority were negative in tone (75 percent). Overall, the most
frequently mentioned categories were: morale (82 percent negative),
recent changes in headquarters management (61 percent negative),
sufficiency of training or equipment (85 percent negative), and quality
of headquarters management (80 percent negative). The demographic
characteristics of those who wrote comments were generally similar to
the overall sample of respondents, although those planning to leave the
OIG in the next 5 years and OEI staff were more likely to provide
comments than other survey respondents.
Agency Comments and Our Evaluation:
We met with officials from the OIG and the Office of the HHS Secretary
and briefed them on our findings. We also provided them with a copy of
our draft report. In written comments on a draft of this report, the
Inspector General disagreed with some of our findings and
characterizations of certain events. The Office of the Secretary did
not provide comments.
In reference to our discussion about the OIG's productivity, the
Inspector General stated that the OIG had achieved substantial
accomplishments under her leadership and direction and cited the
savings attributable to its work in fiscal year 2002. In addition, she
highlighted some of the OIG's nonmonetary achievements during her
tenure. As we noted in our draft report, many of the OIG's productivity
measures have remained steady or improved, including those cited in the
Inspector General's letter. However, we also pointed out that making a
conclusive determination regarding productivity in the short term is
extremely difficult because current savings are often the result of
efforts started in prior years. Our draft also identified declines in
other important areas, such as settlements and recoveries.
In addressing our findings related to employee morale, the Inspector
General pointed out that our survey of OIG employees showed that
employee morale remained positive and relatively unchanged during her
tenure. However, our survey also identified several groups of employees
whose morale was of concern. For example, senior managers were
considerably more disturbed than all other employees about OIG
leadership. Further, headquarters employees expressed less
satisfaction with the organization and leadership than their
counterparts in the field. While the majority of OIG staff are located
in field offices and generally were more satisfied with their work
environment than headquarters employees, they also felt less affected
by the changes instituted by the Inspector General than their
colleagues in headquarters. A striking exception to field office
employee satisfaction, as discussed in our draft, was staff in OEI,
whose dissatisfaction increased substantially compared to last year.
The Inspector General also took issue with our discussion of the
circumstances surrounding the delay in beginning the Florida pension
audit. We included this example of her decision-making in our draft
because we believe that it demonstrated a lack of awareness and
appreciation of the need for the Inspector General to closely safeguard
her independence. We believe it is imperative that an inspector general
perform due diligence when responding to external requests--
particularly where independence could be questioned. We continue to
believe that the Inspector General's decision to intervene at the
request of senior officials in the Florida governor's office and her
subsequent instructions to her staff to delay the audit created a
perception that her independence was compromised. The Inspector General
did not address the issue of her independence in her comments. Instead,
she disagreed with our suggestion that the OIG's report could have been
available prior to the November 2002 election, if the audit had begun 7
months earlier, in April 2002, as initially planned. While we cannot be
certain that the final report would have been issued by the election,
we believe that it is likely that the findings would have been made
public--particularly since the actual findings of the audit were
reported by the media in March 2003, 6 months after the work commenced.
Regarding the York Hospital matter, the Inspector General stated that
she discussed her concerns about the proposed settlement with her staff
and that she believed that seeking a larger settlement was not fair or
justifiable. However, during the course of our work, the Inspector
General told us that she did not direct a settlement or involve herself
in negotiations with the hospital. In any case, we believe that the
Inspector General's actions in response to a letter from several
members of Congress contributed to the perception that she was not
independent. The Inspector General stated in her comments that she
discussed this matter with her attorneys and determined the OIG's case
was weak. However, the former Chief Counsel and other OCIG attorneys
told us that when she instructed them to "get rid of" the case, she did
not address the specific facts or sufficiency of the evidence collected
in this matter. Further, the former OIG Chief Counsel did not share the
Inspector General's belief that this was a weak case, and told us that
he believed the government could have obtained a higher settlement,
absent any pressure to close the case quickly.
Concerning the OIG's delayed report on the adjusted community rate
proposals, the Inspector General pointed out that the report was
already delayed 7 months by the time she took office. While we
acknowledge this fact, in our view, the already lengthy delay should
have prompted her to take more aggressive action to either obtain CMS's
comments or publish the OIG's report without them. Although the
Inspector General stated that she relied on the advice of her senior
staff in delaying the issuance of this report, our evidence indicates
that some of her senior managers were very concerned that she took
little action to expedite CMS's comments. The Inspector General
indicated that she spoke to the CMS administrator regarding this
matter, but she did not indicate when this discussion occurred or how
CMS responded. However, the Inspector General did not indicate--nor did
we find any evidence to suggest--that she took more rigorous steps to
obtain CMS's comments, such as imposing a deadline for the publication
of the report, regardless of the status of the comments. The Inspector
General also stressed that the delay in publishing the OIG's report had
nothing to do with her independence. However, the fact that CMS
strenuously objected to the OIG's findings, and that CMS was allowed to
delay its comments for over a year, in our view, at least contributed
to the perception that the Inspector General was not independent. In
addition, the Inspector General disputed our statement that this report
was a time sensitive one of congressional interest. We disagree. During
the summer and fall of 2001, Medicare+Choice legislative proposals were
developed in both the House and Senate. Also congressional hearings
were held on the status of the Medicare+Choice progam, which included
the issue of adjusted community ratings.
Regarding our assessment of personnel changes in the OIG, the Inspector
General stated that her actions were appropriate and that the nature of
the Senior Executive Service encourages rotations among staff. While we
do not dispute the Inspector General's authority to reassign staff to
meet office needs, the manner in which she made these changes clearly
created an atmosphere of anxiety in the OIG. The Inspector General
stated that she explained the rationale for her decisions "over and
over again." However, our discussions with staff members revealed that
they did not understand why many of the changes had been made.
Moreover, most of the eight senior managers whose departures we found
particularly troubling told us that the Inspector General never
explained to them why she wanted them to leave their positions. The
Inspector General also commented that our employee survey suggested
that there were no widespread negative perceptions among staff
concerning her personnel decisions. We disagree with this observation
because our survey did not contain a question related to her personnel
changes. Instead, our survey focused on employee satisfaction within
their immediate work groups--most of which are in the field where the
consequences of the Inspector General's changes were least felt. The
Inspector General noted that most of the individuals who left the OIG
following her changes were in new positions that were "at least equal
to or better than" the ones they occupied at the OIG and that she
always promoted from within the organization. We do not think that the
current employment situations of these former staff members are
relevant to the Inspector General's personnel decisions, nor is her
practice of promoting other employees from within the organization.
In our draft report, we also discussed the OIG's budgetary
difficulties. In her comments, the Inspector General described her
efforts to respond to this situation, which primarily consisted of
directing one of her senior managers--who was in an acting deputy
position--to develop strategies for resolving the OIG's financial
problems and to work with other senior OIG managers to develop a
spending plan. While we would fully expect that the Inspector General
would want to call on her management team to confront the agency's
budgetary problems, our concern was that she personally played only a
minor role in resolving this matter, particularly in the absence of a
Principal Deputy. Given the Inspector General's limited personal
involvement, the OIG's senior management team lacked a leader with
sufficient authority to mediate any disagreements between them and to
take aggressive steps to identify appropriate solutions to the
organization's fiscal challenges.
Finally, the Inspector General's comments pointed out that OI had taken
steps to correct the deficiencies we noted in its credentialing system.
We acknowledged that corrective action has been initiated and this was
reflected in our draft report.
We have reprinted the Inspector General's letter in appendix III.
We are sending copies of this report to the Secretary of HHS, the HHS
Acting Principal Deputy Inspector General, the former Inspector
General, and other interested parties. We will also make copies
available to others upon request. In addition, this report will be
available at no charge on GAO's Web site at http://www.gao.gov. We will
also make copies available to others upon request.
If you or your staffs have any questions about this report, please call
me at (202) 512-7114. Additional GAO contacts and other staff members
who made key contributions to this report are listed in appendix IV.
William J. Scanlon
Director, Health Care Issues:
Signed by William J. Scanlon:
[End of section]
Appendix I: Scope and Methodology:
To conduct our review, we focused on three key areas--the leadership
exhibited by the current Inspector General, Janet Rehnquist, the
productivity of the Office of Inspector General (OIG) in recent years,
and employee morale. To do our work, we became familiar with the
organization and structure of the OIG and many of its policies and
procedures related to its budgeting, work planning, and report
processing activities. We also examined its personnel practices and
controls over certain OIG operations. As part of our efforts, we
interviewed over 200 current and former OIG employees--including the
Inspector General--and conducted a Web-based survey of all employees to
obtain their views about their work environment. We also interviewed
two current and one former inspectors general from other federal
agencies to better understand their unique role and the principles they
embraced to manage their offices.
Our review included the examination of more than 8,000 pages of
documents, including material related to the OIG's general policies and
procedures, human resource management, productivity measures, and
reporting standards. Many of these documents were given to us by OIG
managers and other employees. In addition, we requested--and were given
access to--the e-mail accounts of eight senior OIG managers. This
enabled us to retrieve selected messages that these individuals sent or
received for approximately a 6-month period on a wide variety of topics
affecting the management of the office. We also obtained documentation
from other organizations, including the President's Council on
Integrity and Efficiency (PCIE), which recently issued a report on some
of the Inspector General's actions.[Footnote 31]
Interviews with Current and Former Employees:
To obtain the views of OIG employees, we conducted a series of
semistructured interviews. These interviews relied on open-ended
questions regarding the Inspector General's leadership, productivity,
morale, and other OIG operations. We interviewed three categories of
employees--those who were selected randomly, those who volunteered for
interviews, and those we selected because of their knowledge or
position within the OIG.
The randomly selected staff were chosen for interviews from five of the
OIG's eight regional offices as well as employees in OIG headquarters.
This provided us with a broad geographic representation of OIG
employees. Our regional interviews were conducted in Atlanta, Boston,
Chicago, Dallas, and San Francisco. In order to afford confidentiality
to interviewees, we conducted our regional interviews in GAO offices in
those cities or in other non-OIG space. Some regional interviews were
also conducted by telephone. Headquarters staff were given the option
of being interviewed in either the OIG headquarters or GAO headquarters
building.
At each of the five regional offices we visited, we interviewed
approximately 20 randomly selected employees who ranged from the GS-7
through the GS-15 levels. One hundred and six randomly selected
regional staff members were interviewed in total. Interviewees were
selected using a stratified, random sampling technique. Employees from
the Office of Audit Services (OAS), the Office of Investigations (OI),
and the Office of Evaluation and Inspections (OEI) were included in our
random interviews at each regional location.[Footnote 32] We also
interviewed 32 randomly selected staff from the OIG's headquarters in
Washington, D.C. and in nearby field offices, including those in
Baltimore, Columbia, and Rockville, Maryland.
To supplement our random interviews and to enhance identification of
issues of concern to all OIG employees, regardless of their location,
we invited all employees, through an OIG officewide e-mail, to contact
us if they wished to participate in an interview. We received 28
requests for interviews and conducted many of these by telephone. We
generally used the same set of questions that were posed during the
random interviews.
In both the random interviews and in discussions with those employees
who requested to be interviewed, we asked individuals to bring to our
attention any topic that they felt was noteworthy but which our
questions did not address. Some interviewees provided us with
supporting documentation that they felt was relevant. In some
instances, interviewees were reluctant to provide us with documentary
evidence and were also concerned about confidentiality. In these
situations, we attempted to corroborate the information they shared
with us through other means, without jeopardizing their
confidentiality.
As our work progressed, we identified a number of individuals whom we
believed would be able to supply us with important information in areas
we had identified as potential areas of concern, including the
independence of the Inspector General, turnover among senior OIG
personnel, and changes in productivity and morale. In total, we
interviewed 44 such individuals, many of whom were current or former
OIG employees with first-hand knowledge about issues central to our
review.
Evaluation of the Inspector General's Independence:
To determine the extent to which policies and procedures were in place
to ensure that all OIG employees maintained a high degree of
independence, we reviewed existing OIG policies, procedures, and
protocols. We also reviewed guidance issued to the Inspector General
community by the PCIE and the Government Auditing Standards pertaining
to independence. We also discussed the OIG's protocols for responding
to requests for information or assistance from external entities with
selected current and former senior-level OIG officials. In addition, we
obtained information regarding specific instances concerning the
Inspector General's independence from interviews with current and
former OIG officials as well as the Inspector General.
Review of Personnel Information:
To evaluate recent personnel changes among OIG officials, we examined
detailed personnel information for 24 current or former OIG employees
who had resigned, retired, been reassigned, or promoted during the
Inspector General's tenure.[Footnote 33] We reviewed the official
personnel files for these individuals and collected relevant
information including their history of government service; time
employed by the OIG; and any awards, bonuses, and letters of
commendation that they had received. We also reviewed the performance
appraisals these individuals had received for the prior 3 years.
Finally, we reviewed documentation specifically concerning the
promotion of an OIG staff member to the position of Director of Public
and Congressional Affairs. Among other things, we examined relevant
position descriptions, job announcements, and e-mail communications. We
also interviewed OIG officials regarding this and other personnel
decisions made during the Inspector General's tenure.
Examination of the Inspector General's Travel:
To understand the purpose, frequency, and duration of the Inspector
General's travel, we examined the itineraries, travel orders, and
travel vouchers for all of the trips she had taken from August 2001
through November 2002. For trips for which the itineraries lacked
sufficient information about the Inspector General's business
activities, we requested additional information and discussed these
trips with the Inspector General. We also identified all OIG employees
that accompanied her when she traveled. We obtained similar travel
records for two senior staff members who accompanied the Inspector
General on several occasions and discussed their roles during these
trips with them.
Analysis of OIG Performance Measures:
To determine whether the OIG has experienced any changes in
productivity since the current Inspector General took office in August
2001, we reviewed OIG publications, such as its semi-annual reports, to
determine how savings, recommendations, and other performance
indicators changed since fiscal year 2000. From OAS and OEI, we
collected data about the number of projects initiated, reports
published, and reports canceled in fiscal year 2002. We compared these
data to the number of reports that were initiated, published, and
canceled from fiscal years 2000 and 2001--before the current Inspector
General's tenure.
To measure productivity in OI and OCIG, we reviewed data on
investigations, prosecutions, and convictions, and exclusions from
fiscal year 1997 through fiscal year 2002. We also examined relevant
monetary accomplishments including the number and amounts of fines and
penalties assessed, civil settlements and judgments, cost savings
claimed, and recoveries and court-ordered restitutions. Our review
included an examination of OCIG files pertaining to eight civil
monetary penalty cases. We also judgmentally selected 18 corporate
integrity agreements instituted since fiscal year 2000, to determine
the extent to which new policies outlined in the Inspector General's
November 20, 2001, open letter to providers had been implemented.
In addition, we discussed the OIG's productivity with some of its
partners in the law enforcement community to determine whether there
have been recent changes in the level of OI's or OCIG's support.
Specifically, we spoke to officials from the Department of Justice and
seven of its U.S. Attorneys' Offices. We also discussed this matter
with officials from Medicaid Fraud Control Units in California,
Florida, Illinois, and New York and a representative from the National
Association of Medicaid Fraud Control Units.
Finally, we assessed the OIG's productivity in terms of its outreach
and education activities. To do this, we collected information
regarding the number of speeches, presentations, and testimonies given
by various OIG employees. We also discussed this matter with OIG
employees and professional staff members at several congressional
committees with jurisdiction over Medicare and other federal health
programs.
Analysis of Web-Based Survey Results:
To elicit broad-based views of OIG employees on morale and other
issues, we conducted a Web-based survey. We solicited OIG employee
participation by e-mail, using an e-mail list provided by the OIG. We
first sent a notification e-mail alerting the employees to the upcoming
survey and to check for inaccurate e-mail addresses. We verified with
the OIG that the individuals whose e-mails were returned as "not
deliverable" were no longer active OIG employees. We then sent an
activation e-mail to each employee, containing a unique user name,
password, and instructions for accessing the survey on the GAO Web
site. We sent three follow-up reminder e-mails to nonrespondents.
Employees were given 1 month to complete the survey. Of the 1,621
employees on our list, 1,451 completed the survey for a response rate
of 90 percent.
The survey contained 29 items asking employees for their views on the
organization, management, and their personal job satisfaction. The four
possible responses were: strongly agree, somewhat agree, somewhat
disagree, and strongly disagree. The first 26 items on the survey were
identical to those from an employee survey conducted by the OIG in
January 2002, which we used as a basis for comparing our survey
results. We included three additional items: "Overall, the OIG is
improving as a place to work and make a difference," "I have confidence
and trust in my organization," and "In the last 15 months, morale in my
work group has improved." We also included seven demographic items and
provided an open-ended comment box. We included a final item for the
respondent to mark the survey as "Completed," which, if checked,
indicated that the respondent gave us permission to include his or her
responses in our analyses.
In total, 578 of the 1,451 survey respondents (40 percent) elected to
write open-ended comments. We coded 573 of the comments for tone
(positive, negative, neutral) and content. To code content, we used 36
categories related to morale, productivity, management, personnel
issues, independence, propriety, and other topics. The comments of
three respondents were not coded because they did not fit into any of
our coding categories. The comments of two additional respondents were
not coded because they did not mark their surveys as "Completed." The
unit of analysis was the comment--not the respondent. For example, if
one respondent made several comments that fell into different
categories, each comment was coded separately.
[End of section]
Appendix II: Insufficient Internal Controls Over the OIG's Credentialing
System:
In response to allegations that certain employees, including the
Inspector General, possessed improper credentials, we evaluated the
security of the OIG's credentialing system. OIG employees are issued
credentials that display their photographs, signatures, job titles,
and, in the case of OI investigators, their status as law enforcement
officers. Because adequate internal controls are key to preventing
mismanagement and operational problems, our evaluation centered on the
controls governing this computer-based system, physically located in
the OIG headquarters building. In addition, recent advances in
information technology have heightened the importance of ensuring that
controls over electronically stored information are frequently reviewed
and updated to minimize the threat of improper use. Changes in
information technology led to revisions in Standards for Internal
Controls in the Federal Government,[Footnote 34] which became effective
at the beginning of fiscal year 2000, to reflect new guidance for
modern computer systems. Our work revealed serious weaknesses in the
internal controls governing the OIG's credentialing system.
The physical security of the computer system used to produce
credentials was inadequate. The system was housed in a public file room
with unrestricted access. Because the room also contained a copier
machine, many individuals routinely entered the area. The system's
backup tapes were located in an unlocked drawer in the credentialing
system desk. In addition, we also found the stock paper containing the
agency's insignia, used in the production of all credentials, stored
unlocked in a cabinet in the same room.
In addition, we found deficiencies in the system itself, making it even
more vulnerable to misuse. For example, we found that neither the
computer's screen saver nor the credentialing software programs on the
computer were password protected, and the employee photo and signature
files were not adequately protected. The system also did not have the
capability to create a history log or audit trail to identify past
users. Given the system's unsecured location, we determined that the
system itself was easily susceptible to unauthorized access through the
use of several techniques, such as a device that could identify recent
keystrokes to capture the names of recent users and their passwords.
When we visited the credentialing room we found it empty, the computer
on, and the screensaver active. By touching the computer's mouse we
were able to cancel the screensaver and observed an open record on
display. We found that we could access, copy, modify, and delete
sensitive files including employee photos, digital signatures, and
personnel information with little likelihood of detection or system
recovery. It would also have been possible to create a false,
unauthorized set of credentials. OIG officials have since told us that
they have taken steps to correct these weaknesses.
[End of section]
Appendix III: Comments from the Inspector General:
DEPARTMENT OF HEALTH & HUMAN SERVICES	Office of Inspector General:
MAY 30 2003:
Leslie G. Aronovitz:
Director, Health Care-Program Administration and Integrity Issues
United States General Accounting Office 441 G Street, NW -Room 5A14
Washington, DC 20548:
GAO-03-685:
Dear Ms. Aronovitz:
I appreciate the opportunity to review and comment on the General
Accounting Office (GAO) assessment of the management functions of the
Department of Health and Human Services, Office of Inspector General
(OIG).
As you know, the real measure of management success is in productivity
and employee satisfaction. The GAO report shows that overall savings
attributable to OIG work increased from $15.6 Billion in fiscal year
2000 to $21.8 Billion in fiscal year 2002 - an increase of nearly 50%
in just two years. Further, the GAO report shows that employee morale
remains positive and relatively unchanged between 2002 and 2003 - with
89% and 87% respectively showing a high level of satisfaction with the
OIG, OIG management, and personal job satisfaction.
This organization has achieved substantial and varied accomplishments
under my leadership and direction. The accomplishments include: (1) the
largest ever settlements with major drug manufacturers for defrauding
the Medicare program; (2) innovative approaches in child support
enforcement in which 70 of the nation's most wanted deadbeat parents in
29 states were arrested in a two-day sweep; (3) rapidly assessing and
helping to strengthen the public health system after the tragic events
of September 11, 2001; and (4) development of a comprehensive strategy
to address substantial problems in the administration and oversight of
grants awarded by the Department.
Throughout my tenure as Inspector General, I have acted in the best
interest of the Department of Health and Human Services, the Office of
Inspector General and the American taxpayer, and I am proud of our
accomplishments. I am honored to have served as Inspector General and
to have contributed to an organization which has such a far-reaching
impact on the quality of life of all Americans.
I have attached an Exhibit to this letter, to be included in the record
and this report, that demonstrates that the GAO report consists largely
of opinions, speculation, hearsay, and pre-determined conclusions not
supported by the weight of the evidence.
Sincerely,
Janet Rehnquist
Inspector General:
Signed by Janet Rehnquist:
Attachment:
EXHIBIT TO GAO-03-685:
Florida Pension Audit, pp. 8-9:
The Inspector General Act of 1978 states that "it shall be the duty and
responsibility of each Inspector General .... to provide policy
direction for and to conduct, supervise, and coordinate audits....":
The report states that "... the team was scheduled to begin its work in
April, 2002 and had estimated that the audit would be drafted in six
months, it is conceivable that the report could have been available by
election day, if the audit had begun when originally planned.":
The key words in this statement are "estimated" and "conceivable". The
following facts speak for themselves. I authorized a delay until July,
2002. After further delays, which were authorized by career employees
in the field, the audit started in September, 2002. The draft report
was released to the State of Florida in March, 2003. The State
disagrees with the report on the extent of liability. As of May 30,
2003, fully 8 months after the audit started, the OIG has not issued
the final report. It is the final report, not the draft, that is
available to the public.
As demonstrated by historical information on 10 years of pension fund
audits which this office provided to the GAO, the average time from the
beginning of an audit to issuance of a final report was 509 days, or 16
months.
While a staff member in the Office of Audit Services "estimated" a
draft report might be completed in six months, that estimate was
optimistic and was an internal management tool used to manage the
project. In any event, the draft report would not have been issued to
the public. The facts, therefore, demonstrate that neither the planned
timing nor the issuance of the report had any bearing on the
gubernatorial election in Florida in 2002. Engaging in conjecture about
"conceivable" outcomes is hardly the purview of a typical GAO report.
York Hospital, pp. 9-10:
The report states: "The OIG attorneys had estimated that York
Hospital's potential liability was $726,000... the settlement amount of
$270,000 was far less than the attorneys believed the government could
have received...".
As you know, this matter was brought to my attention by a letter from
Senators Specter and Santorum and Representative Todd Platts. The
investigation was prompted by a qui tam relator alleging PATH
violations. The Department of Justice and OIG investigated the matter
for two years. The Department of Justice declined the case and the
relator was paid a $5,000 settlement. OIG decided to pursue the matter
administratively.
The OIG administrative demand letter states that the OIG alleged that
York had submitted improper claims seeking $296,469 in Medicare
reimbursement. This number was based on a projection derived from a
statistical sample. It is important to understand that the OIG was not
asserting that this was the amount of reimbursement received by York or
the amount of damages to the government from these improper claims.
In fact, based on the projection from the sample, the OIG believed that
the damages resulting fromYork's improper claims was less than
$200,000. While it is true that additional assessments could have been
imposed to increase the settlement amount, I discussed this matter with
my legal staff and determined that, due to the weak posture of the
case, it was not fair or justifiable to impose such substantial
additional assessments.
York had many defenses to the OIG's allegations, particularly the fact
that the allegations were several years old and had been declined by
the Department of Justice. In a hearing, an Administrative Law Judge
may have found no liability or found that the amount claimed was less
than what the OIG asserted. Without even considering York's defenses,
the York settlement of $270,000 was significantly more than the OIG's
initial estimate of loss to the government.
Adiusted Communitv Rating Audit, pp. 12-13:
The report states that "... the delay in issuing this report reflected
a lack of independence on the Inspector General's part.":
This conclusion is similarly not supported by the evidence. As the
report states, this matter was pending for seven months before I took
office. Both the Principal Deputy Inspector General and the Deputy
Inspector General for Audit Services made decisions to delay the
issuance of this report from February 2001 when it was issued in draft
through September 2001 when I was confirmed. In other words, the final
report was delayed a full 7 months before I took office.
The delay in issuing this report has nothing whatsoever to do with my
independence. Indeed, I relied heavily on the advice of the managers in
the Office of Audit Services, as well as the Principal Deputy Inspector
General. I personally contacted the Administrator of the Centers for
Medicare and Medicaid to discuss the status of CMS comments and the
need to receive them expeditiously.
The delays in receiving the CMS comments began long before I was
confirmed as the Inspector General. Soon after the draft was issued in
February 2001, CMS officials, including the Acting Administrator,
questioned (1) whether a summary report of the 55 individual audits was
justified based on the memorandum of understanding that was signed
between the OIG and CMS outlining how these audits were to be conducted
among other things, and (2) the validity and accuracy of the OIG
methodology followed in conducting the 55 audits and developing the
summary draft report.
Both the audit management staff and I decided it was important to have
the facts in the summary draft report correct in all respects. OTG
auditors suggested that it was prudent to wait for the comments from
CMS (which were going to be based on the results of a peer review of
the 55 audit audits and the resultant summary draft report contracted
for by CMS). Several meetings from March 2001 through late winter 2001
were held between OIG auditors, CMS staff and the consultant group
hired by CMS to evaluate the OIG audit work.
You also indicate this report was "... time sensitive report of
congressional interest." There is no basis for this assertion. Neither
my staff nor I were made aware of any particular congressional interest
in this topic. In fact, although the OIG attempted to generate
congressional interest on this issue, these efforts were not
successful.
Personnel Changes, pp. 13-16:
The report states: "... the sudden and unexplained nature of many of
the Inspector General's actions resulted in a widespread perception of
unfairness among her staff.... Some of the employees we interviewed
were skeptical that these changes were necessary and asserted that they
actually damaged the organization's effectiveness.":
The facts simply do not support this opinion or conclusion. First, it
is important to point out that the personnel actions I took were
appropriate, legal, well thought-out, and designed to match the skill
sets of individuals with their portfolios. I explained the rationale
for these actions over and over again. The very nature of the Senior
Executive Service allows for and encourages different assignments. To
further enhance the effectiveness of the organization, one SES
retirement permitted the reassignment of other SES staff to different
components. Second, the overwhelmingly positive results of the employee
survey by the GAO show that there was not a widespread negative
perception of my personnel decisions.
The report indicates that eight of the personnel actions were
"troubling." To the extent I thought appropriate, I explained to the
organization and to GAO that the basis for my decisions was to further
the changes and reforms I thought the organization needed to make. As
the head of the organization, I needed to have full confidence in my
top management team.
For the most part, the people who left the organization are in
positions that are at least equal to or better than those they occupied
in this office. For example, one of the SES staff is now employed by a
law firm in Washington, DC; and another is a Deputy Assistant Secretary
in the Administration of Aging in the Department.
Another key point is that in no instance was a career employee replaced
by a person outside the organization, much less a non-career employee.
In fact, I always promoted from within the OIG and took particular care
to hire and promote career employees who had experience in field
offices. It is my belief that the high morale in the field was at least
in part due to these management efforts.
Resolving Budgetary Problems, pp. 20-21:
The report states that the difficult budget situation "... could have
been avoided if OIG leadership had developed a human resource hiring
and development plan that contained realistic budget projections and
hiring goals...":
The Principal Deputy Inspector General and the Deputy Inspector General
for the Office of Management and Policy did, in fact, develop human
resource hiring and development plans during the spring of 2002. The
implementation of those plans created the difficult budget situation we
found ourselves in during 2003 when, as you note in the report, we
experienced lower than projected attrition rates, reduced funding from
the HCFAC account, and a number of Congressional continuing
resolutions.
In the Fall of 2003, I instructed my Acting Deputy Inspector General
for Management and Policy to work with the Department to expedite the
negotiations for the HCFAC funding with the Department of Justice, to
implement hiring freezes, travel and training restrictions, and work
with the senior management to develop a spending plan that would allow
us to continue mission critical functions.
Credentials, p. 18; Appendix 11:
Immediately after the Office of Investigations (01) became aware of the
noted deficiencies, an action plan was implemented to take corrective
measures to eliminate the system control weaknesses.
The OI has taken the following actions to improve credentialing system
security:
01 moved the credentialing system to a secure, physically-monitored and
locked room. The use of this room is restricted to two employees, both
of whom have a need for the credentialing system information. The
individuals responsible for its use continuously monitor this room
during normal business hours. The office is locked when the employees
are out of the office for any reason. During non-duty hours the room
where the system is housed is locked behind two sets of doors.
* The sensitive supplies and backup tapes associated with the
credentialing system are stored within the same room as the
credentialing system.
* The system software is now accessed by first entering a user name and
password. A time-out feature, currently set at two minutes of
inactivity, further enhances the system software security. Upon the
activation of the time-out feature, the system user must re-enter an
authorized user name and password to continue or begin using the
credentialing system.
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Leslie G. Aronovitz, (312) 220-7600 Geraldine Redican-Bigott, (312)
220-7678:
Acknowledgments:
Major contributors to this report were Enchelle D. Bolden, Helen
Desaulniers, Curtis Groves, Shirin Hormozi, Behn Kelly, Terry
Richardson, Christi Turner, and Anne Welch.
FOOTNOTES
[1] Although Ms. Rehnquist recently resigned, for purposes of this
report, we will refer to her as the Inspector General.
[2] We included three additional questions regarding employee morale
and trust, and obtained demographic information about respondents that
was not captured in the OIG's survey.
[3] Pub. L. No. 95-452, 92 Stat. 1101 (1978) (5 U.S.C. App. (2000)).
[4] The inspector general Act of 1978, as amended, requires that
Inspectors General report semiannually to the head of the department or
agency and Congress on the activities of the office during the 6-month
periods ending March 31 and September 30. The semiannual reports are
intended to keep the agency heads and Congress fully informed of
significant findings and recommendations initiated by the inspectors
general.
[5] 5 U.S.C. App.  3(a).
[6] U.S. General Accounting Office, Government Auditing Standards:
Amendment No. 3 Independence, GAO-02-338G (Washington, D.C.: Jan. 25,
2002). Although issued in 2002, this revised standard on independence
did not become effective until January 1, 2003, to allow audit
organizations sufficient implementation time. However, the previous
standard also stressed the importance of independence. For example, it
required auditors to "be free from personal and external impairments to
independence" and stated that auditors "should be organizationally
independent and should maintain an independent attitude and
appearance."
[7] The General Schedule (GS) is a personnel classification and pay system
used by the federal government. It includes a range of levels of
difficulty and responsibility for positions graded GS-1 through GS-15.
Senior Executive Service managers are subject to a different system of
promotion criteria and higher pay.
[8] Section 3(d) of the Inspector General Act requires each inspector
general to appoint an assistant inspector general for auditing and an
assistant inspector general for investigations.
[9] Medicare is the federal health insurance program that serves the
nation's elderly and certain disabled individuals. Medicaid is a
jointly funded, federal-state health insurance program for certain low-
income people.
[10] 31 U.S.C.  3729-3733.
[11] The antikickback provisions of the Social Security Act generally
prohibit persons from paying or soliciting remuneration in order to
induce another to refer business reimbursed under a federal health care
program. See 42 U.S.C.  1320a-7b(b).
[12] Under the Emergency Medical Treatment and Active Labor Act
(EMTALA), all hospitals that participate in Medicare are required to
screen--and if an emergency medical condition is present, stabilize--
any patient who comes to the emergency department, regardless of the
individual's ability to pay. See 42 U.S.C.  1395dd(a).
[13] Under corporate integrity agreements, providers agree to take
affirmative steps to improve compliance and report periodically to the
OIG. The OIG, in turn, agrees not to seek further administrative
penalties for the behavior in question.
[14] Prior to imposing a CMP, the OIG typically seeks to resolve the
matter through negotiations. The negotiation process allows the
government to obtain a monetary recovery and spares the provider from
having to admit liability. When a settlement is not pursued or cannot
be reached, the OIG must give the provider the opportunity for a
hearing.
[15] On January 8, 2003, the Inspector General waived the attorney-
client privilege pertaining to both her former and current Chief
Counsels concerning matters that arose during her tenure, except with
respect to open investigations pending before the grand jury, matters
under court seal, confidential sources, or other open inquiries.
[16] Lithotripsy is a procedure typically performed by urologists to
break up kidney stones without the need for surgery.
[17] Medicare+Choice was designed to expand Medicare beneficiaries'
health plan choices by encouraging the wider availability of HMOs and
other types of health plans, such as preferred provider organizations.
Adjusted community rate proposals detail the revenue that
Medicare+Choice organizations project is needed to cover contributions
to profit or reserves and the direct medical and administrative costs
of delivering services to enrollees.
[18] In several important areas, including reassignments and reductions
in grade, federal regulations allow greater flexibility for personnel
decisions regarding Senior Executive Service employees than for general
schedule employees. Under these regulations, the Inspector General had
more discretion with respect to Senior Executive Service-level managers
in the OIG than GS-15-level managers.
[19] The Inspector General made many of these changes by taking
advantage of opportunities presented to her when two of the Deputy
Inspectors General decided to retire.
[20] The Immediate Office provides direct support to the Inspector
General. It is not affiliated with the OIG's five components, and it
maintains a relatively small staff of about 10 employees.
[21] Preselection is prohibited under federal law. Specifically, under
5 U.S.C.  2302(b)(6), an employee with personnel authority may not
grant any preference or advantage not authorized by law, rule, or
regulation to any employee or applicant for employment (including
defining the scope or manner of competition or the requirements for any
position) for the purpose of improving or injuring the prospects of any
particular person for employment.
[22] One year before her promotion to a GS-15, this individual had been
promoted from a GS-13 position in OCIG to a supervisory GS-14 position
in the OIG's Office of Public and Congressional Affairs, following the
reassignment of the GS-15 staff person who had previously performed
similar duties.
[23] We are referring this matter to the Office of Special Counsel of
the Merit Systems Protection Board, which is tasked with investigating
such allegations.
[24] The PCIE, an organization composed primarily of the presidentially
appointed inspectors general, was created to address integrity,
economy, and effectiveness issues that transcend individual government
agencies, and increase the professionalism and effectiveness of
inspector general personnel throughout the government. The PCIE's
Integrity Committee is charged with receiving, reviewing, and
investigating allegations of administrative misconduct against
Inspectors General, and, in certain cases, members of their staffs.
[25] The PCIE report stated that under OIG policy employees could not
possess or carry firearms without being deputized, as set forth in the
MOU.
[26] The credentials stated that Ms. Rehnquist was a supervisory
special agent of the Office of Inspector General authorized to carry
firearms, execute warrants, administer oaths, make arrests, and perform
other duties as authorized by law and/or departmental regulations.
[27] Among other things, the Antideficiency Act prohibits agencies from
incurring financial obligations that exceed their available budget
authority. See 31 U.S.C.  1341(a).
[28] This amount consisted of almost $20 billion in savings related to
the implementation of OIG recommendations and other actions, $426
million saved as a result of OIG audits, and $1.5 billion recovered due
to OIG investigations.
[29] We could not determine whether these examples were representative
of the average amount of staff time expended on canceled projects, as
OEI does not retain these data.
[30] OEI products can be signed by the Inspector General or a variety
of individuals within the component. Products may also be issued as a
standard blue-cover report, a white-cover report, a memorandum, or, on
rare occasions, an e-mail. Reports signed by the Inspector General
receive the widest distribution and blue-cover reports are considered
the most prominent. In contrast, white-cover reports or memoranda
signed by a regional OIG official are considered to be of less
importance and may receive only minimal distribution.
[31] The PCIE's review focused on allegations that the Inspector
General improperly possessed a firearm and law enforcement credentials.
Before these allegations were brought to the attention of the PCIE, we
planned to examine these matters. However, once the PCIE commenced its
investigation, we agreed with our requestors to exclude these matters
from the scope of our work and report on the PCIE's findings.
[32] The OIG does not employ members of the Senior Executive Service in
its regional locations. In addition, the Office of Management and
Policy (OMP) and the Office of Counsel to the Inspector General (OCIG)
typically maintain only a few staff members in regional offices.
[33] We requested the official personnel files of 25 individuals but 1
file could not be located. We do not believe that this had a material
effect on our review.
[34] U.S. General Accounting Office, Standards for Internal Controls in
the Federal Government, (GAO/AIMD-00-21.3.1, November 1999).
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