Testimony of:  
Lewis Morris 
Chief Counsel 
Office of Inspector General  
U.S. Department of Health & Human Services  
______________________________________________________________________________ 
 
Good morning Chairmen Stark and Lewis, Ranking Members Herger and Boustany, and other 
distinguished Members of the Subcommittees.  I am Lewis Morris, Chief Counsel to the Inspector 
General for the U.S. Department of Health & Human Services (HHS).  I thank you for the 
opportunity to appear before you today to discuss new tools in the recently enacted Patient 
Protection and Affordable Care Act (Affordable Care Act or ACA) that will help to combat fraud, 
waste, and abuse in the health care system.   
 
Fraud, waste, and abuse cost taxpayers billions of dollars each year and put beneficiaries health 
and welfare at risk.  The impact of these losses and risks is exacerbated by the growing number of 
people served by these programs and the increased strain on Federal and State budgets.  With new 
and expanded programs under the Affordable Care Act, it is critical that we strengthen oversight 
of these essential health care programs.   
 
My testimony will describe OIGs strategy for strengthening the integrity of the health care system 
and how the Affordable Care Act significantly bolsters that effort.  It will also describe how OIG 
is using data, technology, and cutting edge techniques to advance the fight against health care 
fraud.  
 
Health Care Fraud, Waste, and Abuse Are Serious Problems Requiring Sustained 
Commitment To Fight Them 
 
Although there is no precise measure of health care fraud, we know that it is a serious problem 
that demands an aggressive response.  While the majority of health care providers are honest and 
well-intentioned, a minority of providers who are intent on abusing the system can cost taxpayers 
billions of dollars. 
 
Health care fraud schemes commonly include billing for services that were not provided or were 
not medically necessary, purposely billing for a higher level of service than what was provided, 
misreporting costs or other data to increase payments, paying kickbacks, and/or stealing providers 
or beneficiaries identities.  The perpetrators of these schemes range from street criminals, who 
believe it is safer and more profitable to steal from Medicare than trafficking in illegal drugs, to 
Fortune 500 companies that pay kickbacks to physicians in return for referrals.   
 
Many OIG investigations target fraud committed by criminals who masquerade as Medicare 
providers and suppliers but who do not provide legitimate services or products.  The rampant 
fraud among durable medical equipment (DME) suppliers in South Florida is a prime example.  In 
these cases, our investigations have found that criminals set up sham DME storefronts to appear to 
be legitimate providers, fraudulently bill Medicare for millions of dollars, and then close up shop 
and reopen in a new location under a new name and repeat the fraud.  The criminals often pay 
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House Committee on Ways and Means, Subcommittees on Health and Oversight     
June 15, 2010                                                                                                   kickbacks to physicians, nurses and even patients to recruit them as participants in the fraud 
scheme.     
 
The Medicare program is increasingly infiltrated by violent criminals, and our investigations are 
also finding an increase in sophisticated and organized criminal networks.  For example, in Los 
Angeles in 2008, six men were charged with running an organized crime ring that stole nearly $2 
million from Federal and private insurers.  These criminals stole money from Medicare and other 
insurers by stealing the identities of legitimate providers and then funneled these funds into other 
criminal enterprises, including illegal drug rings.  During the arrests in these cases, investigators 
seized weapons and ammunition, including assault rifles, submachine guns, and handguns, as well 
as bulletproof vests. 
 
Some fraud schemes are viral, i.e., schemes are replicated rapidly within geographic and ethnic 
communities.  Health care fraud also migrates:  as law enforcement cracks down on a particular 
scheme, the criminals may shift the scheme (e.g., suppliers fraudulently billing for DME have 
shifted to fraudulent billing for home health services) or relocate to a new geographic area.  To 
combat this fraud, the Governments response must also be swift, agile, and organized. 
 
Health care fraud is not limited to blatant fraud by career criminals and sham providers.  Major 
corporations such as pharmaceutical and medical device manufacturers and institutions such as 
hospitals and nursing facilities have also committed fraud, sometimes on a grand scale.  OIG has a 
strong record of investigating these corporate and institutional frauds, which often involve 
complex billing frauds, kickbacks, accounting schemes, illegal marketing, and physician self-
referral arrangements.  In addition, we are seeing an increase in quality-of-care cases involving 
allegations of substandard care.   
 
Waste of funds and abuse of the health care programs also cost taxpayers billions of dollars.  In 
fiscal year (FY) 2009, the Centers for Medicare & Medicaid Services (CMS) estimated that 
overall, 7.8 percent of the Medicare fee-for-service claims it paid ($24.1 billion) did not meet 
program requirements.  Although these improper payments do not necessarily involve fraud, the 
claims should not have been paid.  For our part, OIG reviews claims for specific services, based on 
our assessments of risk, to identify improper payments.  For example, an OIG audit uncovered 
$275.3 million in improper Medicaid payments (Federal share) from 2004 to 2006 for personal 
care services in New York City.  As another example, an OIG evaluation of payments for facet 
joint injections (a pain management treatment) found that 63 percent of these services allowed by 
Medicare in 2006 did not meet program requirements, resulting in $96 million in improper 
payments.   
 
OIGs work has also demonstrated that Medicare and Medicaid pay too much for certain services 
and products and that aligning payments with market costs could produce substantial savings.  For 
example, in 2007, OIG reported that Medicare reimbursed suppliers for pumps used to treat 
pressure ulcers and wounds based on a purchase price of more than $17,000, but that suppliers 
paid, on average, approximately $3,600 for new models of these pumps.  Likewise, in 2006, 
Medicare allowed approximately $7,200 in rental payments over 36 months for an oxygen 
concentrator that cost approximately $600 to purchase.  Beneficiary coinsurance alone for renting 
an oxygen concentrator for 36 months exceeded $1,400 (more than double the purchase price). 
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House Committee on Ways and Means, Subcommittees on Health and Oversight     
June 15, 2010                                                                                                    
OIGs Five-Principle Strategy Combats Health Care Fraud, Waste, and Abuse 
 
Combating health care fraud requires a comprehensive strategy of prevention, detection, and 
enforcement.  OIG has been engaged in the fight against health care fraud, waste, and abuse for 
more than 30 years.  Based on this experience and our extensive body of work, we have identified 
five principles of an effective health care integrity strategy.   
 
1.  Enrollment:  Scrutinize individuals and entities that want to participate as providers and 
suppliers prior to their enrollment or reenrollment in the health care programs. 
  
2.  Payment:  Establish payment methodologies that are reasonable and responsive to 
changes in the marketplace and medical practice. 
 
3.  Compliance:  Assist health care providers and suppliers in adopting practices that 
promote compliance with program requirements.   
 
4.  Oversight:  Vigilantly monitor the programs for evidence of fraud, waste, and abuse. 
 
5.  Response:  Respond swiftly to detected fraud, impose sufficient punishment to deter 
others, and promptly remedy program vulnerabilities. 
 
OIG uses these five principles in our strategic work planning to assist in focusing our audit, 
evaluation, investigative, enforcement, and compliance efforts most effectively.  These broad 
principles also underlie the specific recommendations that OIG makes to HHS and Congress.  The 
Affordable Care Act includes provisions that reflect these program integrity principles and that we 
believe will promote the prevention and detection of fraud, waste, and abuse in the health care 
system. 
 
The Affordable Care Act Enhances Health Care Oversight and Enforcement Activities 
 
The breadth and scope of health care reform alter the oversight landscape in many critical respects, 
and as a result OIG will assume a range of expanded oversight responsibilities.  The ACA 
provides us with expanded law enforcement authorities, opportunities for greater coordination 
with other Federal agencies, and enhanced funding for the Health Care Fraud and Abuse Control 
(HCFAC) program.  In addition, new authorities for the Secretary and new requirements for health 
care providers, suppliers, and other entities will also promote the integrity of the Medicare, 
Medicaid, and other Federal health care programs.  The following are a few examples of how the 
ACA will strengthen our oversight and enforcement efforts. 
 
Effective use of data and ensuring the integrity of information are critical to the success of the 
Governments anti-fraud efforts. 
 
Provisions in section 6402 of the Affordable Care Act will enhance OIGs effectiveness in 
detecting fraud, waste, and abuse by expanding OIGs access to and uses of data for conducting 
oversight and law enforcement activities.  For example, section 6402 exempts OIG from the 
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House Committee on Ways and Means, Subcommittees on Health and Oversight     
June 15, 2010                                                                                                   prohibitions against matching data across programs in the Computer Matching and Privacy 
Protection Act and authorizes OIG to enter into data sharing agreements with the Social Security 
Administration (SSA). 
 
The law also requires the Department to expand CMSs integrated data repository (IDR) to include 
claims and payment data from Medicaid, the Veterans Administration, the Department of Defense, 
the Social Security Administration and the Indian Health Service and fosters data-matching 
agreements among Federal agencies.  These agreements will make it easier for the Federal 
Government to help detect fraud, waste, and abuse.     
 
Further, the ACA recognizes the importance of law enforcement access to data.  Access to real-
time claims data  that is, as soon as the claim is submitted to Medicare  is especially critical to 
identifying fraud as it is being committed.  Timely data are also essential to our ability to respond 
with agility as criminals shift their schemes and locations to avoid detection.  We have made 
important strides in obtaining data more quickly and efficiently, and the Affordable Care Act will 
further those efforts.   
 
In addition to access to claims data, access to records and other information is critical to our 
mission.  Pursuant to section 6402 of the ACA, OIG may, for purposes of protecting Medicare and 
Medicaid integrity, obtain information from additional entities  such as providers, contractors, 
subcontractors, grant recipients, and suppliers  directly or indirectly involved in the provision of 
medical items or services payable by any Federal program.  This expanded authority will enable 
OIG to enhance our oversight of the Medicare and Medicaid programs.  For example, OIG audits 
of Part D payments can now follow the documentation supporting claims all the way back to the 
prescribing physicians.   
   
Ensuring the integrity of information is also crucial, and the Affordable Care Act provides new 
accountability measures toward this end.  For example, section 6402 authorizes OIG to exclude 
from the Federal health care programs entities that provide false information on any application to 
enroll or participate in a Federal health care program.  The ACA also provides new civil monetary 
penalties for making false statements on enrollment applications; knowingly failing to repay an 
overpayment; and failing to grant timely access to OIG for investigations, audits, or evaluations. 
 
The Affordable Care Act provides the Secretary with new authorities and imposes new 
requirements that are consistent with OIGs health care integrity strategy and recommendations.  
 
In addition to promoting data access and integrity, health care reform includes numerous program 
integrity provisions that support an effective health care integrity strategy.  Consistent with the 
OIGs five-principle strategy, these include authorities and requirements to strengthen provider 
enrollment standards; promote compliance with program requirements; enhance program 
oversight, including requiring greater reporting and transparency; and strengthen the 
Governments response to health care fraud and abuse.  
 
Section 6401 of ACA requires the Secretary to establish procedures for screening providers and 
suppliers participating in Medicare, Medicaid, and the Childrens Health Insurance Program 
(CHIP).  The Secretary is to determine the level of screening according to the risk of fraud, waste, 
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House Committee on Ways and Means, Subcommittees on Health and Oversight     
June 15, 2010                                                                                                   and abuse with respect to each category of provider or supplier.  At a minimum, providers and 
suppliers will be subject to licensure checks.  The ACA also authorizes the Secretary to impose 
additional screening measures based on risk, including fingerprinting, criminal background 
checks, multi-State database inquiries, and random or unannounced site visits.  These provisions 
address significant vulnerabilities that OIG has identified in Medicares enrollment standards and 
screening of providers and are consistent with recommendations that we have made to prevent 
unscrupulous providers and suppliers from participating in Medicare. 
 
Health care providers and suppliers must be our partners in ensuring the integrity of Federal health 
care programs and should adopt internal controls and other measures that promote compliance and 
prevent, detect, and respond to health care fraud, waste, and abuse.  OIG dedicates significant 
resources to promoting the adoption of compliance programs and encouraging health care 
providers to incorporate integrity safeguards into their organizations as an essential component of 
a comprehensive antifraud strategy.  For example, starting later this year, OIG will conduct 
compliance training programs for providers, compliance professionals, and attorneys.  This 
compliance training will bring together representatives from Federal and State agencies to address 
local provider, legal, and compliance communities.  The training will focus on methods to identify 
fraud risk areas and compliance best practices so that providers can strengthen their own 
compliance efforts and more effectively identify and avoid illegal schemes that may be targeting 
their communities. 
 
The Affordable Care Act authorizes the Secretary to require providers and suppliers to adopt, as a 
condition of enrollment, compliance programs that meet a core set of requirements, to be 
developed in consultation with OIG.  In addition, the ACA requires skilled nursing facilities and 
nursing facilities to implement compliance and ethics programs, also in consultation with OIG.  
These new requirements are consistent with OIGs longstanding view that well-designed 
compliance programs can be an effective tool for promoting compliance and preventing fraud and 
abuse.  These provisions are also consistent with recent developments in States that have made 
compliance programs mandatory for Medicaid providers.   
 
Consistent with OIG recommendations, the ACA also facilitates and strengthens program 
oversight by increasing transparency and reporting requirements.  The new transparency 
requirements will shine light on financial relationships and potential conflicts of interest between 
health care companies and the physicians who prescribe their products and services.  Specifically, 
section 6002 requires all U.S. manufacturers of drug, device, biologics, and medical supplies 
covered under Medicare, Medicaid, or CHIP to report information related to payments and other 
transfers of value to physicians and teaching hospitals.  This information will be made available 
on a public Web site.  The types of payments subject to disclosure have been the source of 
conflicts of interest and, in some cases, part of illegal kickback schemes in many of OIGs 
enforcement cases.  OIG already includes similar disclosure requirements in our corporate 
integrity agreements with pharmaceutical manufacturers as part of the settlement of these cases.  
The requirement of public disclosure of these payments will help the Government, as well as the 
health care industry and the public, to monitor relationships and should have a sentinel effect to 
deter kickbacks and other inappropriate payment relationships. 
 
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House Committee on Ways and Means, Subcommittees on Health and Oversight     
June 15, 2010                                                                                                   The quality of care in nursing homes also may improve with the increased transparency required 
by the Affordable Care Act.  Section 6101 requires nursing facilities and skilled nursing facilities 
to report ownership and control relationships.  Disclosure of these relationships is critical to 
facilitating better oversight of and responding to quality of care and other issues.  Historically, law 
enforcement has struggled to determine responsibility within an organizations management 
structure.  We have had to resort to resource-intensive and time-consuming investigative and 
auditing techniques to determine the roles and responsibilities of various management companies 
that are affiliated with a single nursing facility.  Establishing accountability is challenging in part 
because corporations sometimes intentionally construct byzantine structures that obscure 
responsible parties from view.  OIG has seen a variety of methods used to conceal true ownership, 
including establishing shell corporations, creating limited liability companies (LLC) to manage 
operations of individual homes, creating LLCs for real estate holdings, and creating affiliated 
corporations to lease and sublease among the various inter-owned corporations.  The new 
requirements for disclosure of ownership and control interests will help ensure that corporate 
owners and investment companies that own nursing homes will no longer be able to provide 
substandard care, deny responsibility, and leave underfunded shell companies to take the blame.  
 
Additional transparency provisions in the ACA will shine light on the administration of the 
Medicare and Medicaid programs.  Section 6402 will require Medicare and Medicaid program 
integrity contractors to provide performance statistics, including the number and amount of 
overpayments recovered, number of fraud referrals, and the return on investment of such activities, 
to the Inspector General and the Secretary.  This latter requirement is consistent with OIGs call 
for greater accountability in the performance and oversight of CMS program integrity contractors.   
 
In addition to strengthening the Governments ability to detect fraud and abuse, the Affordable 
Care Act strengthens the Governments ability to respond rapidly to health care fraud and hold 
perpetrators accountable.  For example, it expressly authorizes the Secretary, in consultation with 
OIG, to suspend payments to providers based on credible evidence of fraud.  Significantly, the 
ACA also increases criminal penalties under the Federal Sentencing Guidelines for Federal health 
care offenses and expands the types of conduct constituting Federal health care fraud offenses 
under Title 18 of the United States Code.  Put simply, criminals who commit health care fraud are 
going to be cut off from the Medicare Trust Funds faster, serve longer prison terms, and face 
larger criminal fines. 
 
Each of these integrity provisions advances the fight against fraud, waste, and abuse.  Further, we 
expect that the combined impacts of these new program integrity measures will be greater than the 
sum of the parts.  Preventing unscrupulous providers and suppliers from gaining access to the 
health care programs and beneficiaries is the first step in an integrated integrity strategy.  
Requiring compliance programs and providing guidance helps to ensure that those permitted to 
participate in the programs do not run afoul of the law or program requirements.  Expanded 
oversight and reporting requirements will help the Government, industry, and the public monitor 
the programs and identify potential fraud, waste, and abuse more quickly and effectively.  In 
combination, the ACAs new enforcement authorities and tools will help change the calculus 
undertaken by criminals when deciding whether to target Medicare and Medicaid by increasing 
the risk of prompt detection and the certainty of punishment.   
 
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House Committee on Ways and Means, Subcommittees on Health and Oversight     
June 15, 2010                                                                                                   Funding of the Health Care Fraud and Abuse Control Program is vital to the fight against fraud, 
waste, and abuse. 
 
In addition to providing new authorities and enforcement tools, the Affordable Care Act provides 
critical new funding that will enable OIG to expand and strengthen current enforcement and 
oversight efforts to combat fraud, waste, and abuse.   
 
The HCFAC program is a comprehensive effort, under the joint direction of the Attorney General 
and the Secretary of HHS, acting through OIG, designed to coordinate Federal, state and local law 
enforcement activities with respect to health care fraud and abuse.  The HCFAC program provides 
OIGs primary funding stream to finance anti-fraud activities such as:   
 
  support of Criminal and Civil False Claims Act investigations and enforcement;  
  support of administrative enforcement activities; 
  evaluations of Medicare contractor operations; 
  Medicare and Medicaid reimbursement for prescription drugs and other issues;  
  audits of payments to hospitals, home health agencies, Medicare Advantage plans, and 
Medicare Part D plans;  
  expansion of our use of technology and innovative data analysis to enhance our oversight and 
enforcement activities; 
  monitoring of providers under corporate integrity agreements; 
  issuance of advisory opinions and other guidance to the health care industry; and  
  establishment of Medicare Fraud Strike Force teams;1  
 
From its inception in 1997 through 2009, HCFAC Program activities have returned more than 
$15.6 billion to the Federal Government through audit and investigative recoveries, with a return 
on investment of more than $4 for every $1 invested in OIG, DOJ, and FBI investigations, 
enforcement, and audits.2   HCFAC-funded activities have a further sentinel effect, which is not 
captured in this return-on-investment calculation.  HCFAC-funded activities are a sound 
investment, and HHS and DOJ are receiving vital new HCFAC funding  $10 million per year for 
10 years in FYs 20112020 in ACA, and an additional $250 million spread across FY 20112016 
in the Health Care and Education Reconciliation Act of 2010.  With our share of this critical new 
funding, OIG will expand our Medicare and Medicaid investigations, audits, evaluations, 
enforcement, and compliance activities to support our health care program integrity efforts.   
 
New Health Care Delivery Models Will Require New Approaches to Fighting Fraud 
 
Experience has taught us that how health care programs pay for services dictates how the 
programs are defrauded.  For example, when Medicare pays on a fee-for-service basis, the 
incentive is to bill for excessive, unnecessary services.  When the program pays on a capitated 
basis, the incentives are reversed; unethical providers stint on needed care.  Health care reform 
                                                 
1 Medicare Fraud Strike Forces are a joint OIG-DOJ initiative used to fight concentrations of Medicare fraud in 
specific geographic hot spots.  Strike Force teams include special agents from OIG and FBI, DOJ prosecutors, and 
oftentimes State and local law enforcement officials. 
2 The $4 to $1 return on investment is a 3-year rolling average from 2006-2008, which is used to help account for the 
natural fluctuation in returns from investigative, enforcement, and audit activities. 
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House Committee on Ways and Means, Subcommittees on Health and Oversight     
June 15, 2010                                                                                                   legislation contains numerous provisions that encourage the evolution of delivery and payment 
models to improve quality and enhance efficiencies through greater integration, collaboration, and 
coordination among providers.  These models include, for example, accountable care 
organizations, medical homes, gainsharing, and bundled payment systems.  These new payment 
and delivery models will require a fresh examination of fraud and abuse risks.   
 
As these new models develop in the health care market, the existing fraud and abuse laws will 
remain important fraud-fighting tools.  However, some new arrangements may require new 
approaches to combating fraud, waste, and abuse.  Moreover, depending on their design and 
operation, some new arrangements may pose different risks that will need to be addressed.  These 
risks could include, for example, stinting on care, discrimination against sicker patients, 
misreporting quality and performance data, and gaming of payment windows to double bill for 
otherwise bundled services.  Further, industry stakeholders have raised concerns that existing 
fraud and abuse laws designed to restrain the influence of money on medical decisionmaking may 
complicate or impede certain reforms because the fraud and abuse laws generally restrict 
economic ties between parties in a position to generate Federal health care program business for 
each other.   
 
Innovative Use of Data Will Continue To Be Central to OIGs Program Integrity Efforts  
 
Health care fraud schemes have become more sophisticated and better able to morph quickly in 
response to anti-fraud initiatives.  Innovative uses of information technology have dramatically 
enhanced OIGs ability to respond to this challenge.  For example, OIG is capitalizing on 
technology to process and review voluminous electronic evidence obtained during our health care 
fraud investigations.  Using Web-based investigative software, OIG analyzes large quantities of 
email or other electronic documents more efficiently and identifies associations among emails 
contained in multiple accounts based on content and metadata.  This technology is enabling 
investigators to complete in a matter of days analysis that used to take months with traditional 
investigative tools.  Recently, OIG expanded the impact of this cutting-edge technology by 
making it available to our law enforcement partners for use in joint investigations.  
 
Efficient and effective analysis of claims data to detect fraud indicators also is shaping how we 
deploy our law enforcement resources.  OIG is using data to take a more proactive approach to 
identifying suspected fraud.  In 2009, OIG organized the multidisciplinary, multiagency Advanced 
Data Intelligence and Analytics Team (Data Team) to support the work of the Health Care Fraud 
Enforcement and Prevention Action Team (HEAT).  The Data Team, composed of experienced 
OIG special agents, statisticians, programmers, and auditors and DOJ analysts, combines 
sophisticated data analysis with criminal intelligence gathered from special agents in the field to 
more quickly identify health care fraud schemes, trends, and geographic hot spots.  For example, 
the Data Team has identified locations where billing for certain services is more than 10 times the 
national average.  The Data Teams analyses inform the deployment of Strike Force resources and 
selection of new locations to focus and leverage Government resources in the areas with 
concentrations of health care fraud.  Medicare Fraud Strike Forces have been established in seven 
fraud hot spots  Miami, Los Angeles, Detroit, Houston, Brooklyn, Tampa, and Baton Rouge. 
 
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House Committee on Ways and Means, Subcommittees on Health and Oversight     
June 15, 2010                                                                                                   As of May 31, 2010, our Strike Force efforts nationwide have charged over 550 defendants; 
obtained over 300 convictions; resulted in the sentencing of over 250 defendants; and secured over 
$260 million in court-ordered restitutions, fines, and penalties.  We believe that our Strike Forces 
also have had a marked sentinel effect.  Though deterrence is difficult to quantify, we have 
empirical evidence that our data-driven Strike Force model for investigating and prosecuting 
health care fraud has resulted in reductions in improper claims to Medicare.  Claims data showed 
that during the first 12 months of the Strike Force (March 1, 2007, to February 29, 2008), claim 
amounts submitted for DME in South Florida, a particularly hot spot for DME fraud, decreased by 
63 percent to just over $1 billion from nearly $2.76 billion during the preceding 12 months.  
 
OIG uses advanced data analytics and information technology in our evaluation and audit work as 
well as in our investigations.  OIG program evaluators use empirical analyses to identify patterns 
of potential fraud and abuse and alert CMS to these findings so that it can take appropriate fraud 
prevention and oversight measures.  For example, we recently analyzed all Medicare home health 
claims that were submitted and fully paid in 2008 to identify geographic areas that exhibited 
aberrant Medicare home health outlier payment patterns.  Our analysis found that Miami-Dade 
County accounted for more home health outlier payments in 2008 than the rest of the Nation 
combined.  We also found that 23 counties nationwide exhibited aberrant home health outlier 
payment patterns similar to that of Miami-Dade County but to a lesser extent. These findings 
demonstrate that home health services in Miami-Dade County, as well as other counties, warrant 
additional review as part of ongoing antifraud activities, such as HEAT.3 
 
OIG is currently conducting an analysis of national billing patterns of pharmacies, prescribers, and 
beneficiaries for Part D drugs in 2009.  Using claims data, we will identify questionable patterns 
that may suggest drug diversion, billing for drugs not provided, and other types of fraud.  We are 
conducting similar analyses for other services as well:  ongoing work on outpatient therapy 
services and independent diagnostic testing facilities will identify high-utilization counties and 
providers and identify claims with unusual characteristics suggestive of fraud.   
 
OIG is also using advanced data analysis techniques to monitor whether and how criminals are 
adapting their fraud schemes in response to the Governments program integrity efforts.  For 
example, in the coming months, we will issue a report analyzing how utilization of two specific 
inhalation drugs may have changed in the wake of Medicare program integrity efforts targeting 
one, but not the other, of the two drugs.  We are also using a combination of claims and sales data 
to determine whether the amount of the drug in question billed by South Florida suppliers and paid 
for by Medicare exceeded the total amount of the drug distributed for sale in the area.  By using 
innovative data analysis to detect unusual patterns, OIG is able to target high-risk services and 
geographic regions and make recommendations to address systemic vulnerabilities. 
 
To perform timely and independent audits and evaluations of the Medicare and Medicaid 
programs, OIG has established a data warehouse.   By bringing data from CMS into OIGs 
servers, the data warehouse improves expediency by providing OIG staff with direct access to 
                                                 
3 Aberrant Medicare Home Health Outlier Payment Patterns in Miami-Dade County and Other Geographic Areas in 
2008.  Issued December 2009.  Available online at:  http://oig.hhs.gov/oei/reports/oei-04-08-00570.pdf.  
 
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House Committee on Ways and Means, Subcommittees on Health and Oversight     
June 15, 2010                                                                                                   program data (rather than having to request data from CMS on a case-by-case basis); integrates 
claims data by type of service (e.g. inpatient, physician/suppler, prescription drugs) for cross-
service data analysis; and facilitates OIGs use of sophisticated data analysis tools.  In addition to 
claims data, we also obtain reference data (e.g., provider demographics, cost reports, 
beneficiary/recipient eligibility data, Drug Enforcement Administration active and retired 
registrants, the SSA Master Death file, and other health care-related resources).  Having more 
robust data and information enhances our ability to detect fraud and abuse.    
 
Despite having these essential tools in OIGs antifraud arsenal, we are acutely aware of the 
increasing sophistication of the criminals who are intent on exploiting the health care system.  We 
are committed to enhancing existing data analysis and mining capabilities and employing 
advanced techniques, such as predictive analytics and social network analysis, to counter new and 
existing fraud schemes.  As part of that commitment, we are developing a consolidated data access 
center, which will integrate business intelligence tools and data analytics into our fraud detection 
efforts.  It will also provide the opportunity to access, analyze, and share data  consistent with 
applicable privacy, security, and disclosure requirements  with our law enforcement partners. 
Such a centralized data access center will enhance the efficiency and coordination of our collective 
efforts by giving law enforcement agents an opportunity to put the pieces together and see the 
totality of the fraud scheme.   
 
Through this data-enhanced collaboration, law enforcement will be able to increase the numbers of 
credible investigative leads, recoveries, and avoidances of improper Medicare and Medicaid 
payments and detect emerging fraud and abuse schemes and trends.  In addition, these tools will 
support our effective targeting of audits and evaluations to identify program vulnerabilities and 
recommend systemic solutions.   
 
Conclusion 
 
Health care fraud, waste, and abuse cost taxpayers billions of dollars every year and require 
focused attention and commitment to solutions.  The Affordable Care Act provides additional 
authorities and resources that will significantly enhance our effectiveness in fighting health care 
waste, fraud and abuse.  Through the dedicated efforts of OIG professionals and our collaboration 
with HHS and DOJ partners, we have achieved substantial results in the form of recoveries of 
stolen and misspent funds, enforcement actions taken against fraud perpetrators, improved 
methods of detecting fraud and abuse, and recommendations to remedy program vulnerabilities.  
Thank you for your support of this mission.  I would be happy to answer any questions that the 
Committee may have. 
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House Committee on Ways and Means, Subcommittees on Health and Oversight     
June 15, 2010