Fiscal Year 2010 
Office of Inspector General 
Medicaid Integrity Report
 
 
 
 
March 2011 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Daniel R. Levinson 
OIG
 
Inspector General 
Department of Health & Human Services    Program Integrity Funding | Use and Effectiveness  
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Fiscal Year 2010 
Medicaid Integrity Report 
Funding for Program Integrity 
I N FISCAL YEAR (FY) 2010, the Office of Inspector General (OIG) of the Department of 
Health & Human Services (HHS) received funding to oversee the integrity of Medicaid 
activities from four sources:  the Health Care Fraud and Abuse (HCFAC) program, 
created by the Health Insurance Portability and Accountability Act of 1996 (HIPAA); the 
Medicaid Integrity Program (MIP), created by the Deficit Reduction Act of 2005 (DRA);  the 
Supplemental Appropriations Act of 2008 (P.L. No. 110252); and the American Recovery 
and Reinvestment Act of 2009 (Recovery Act).  
Heath Care Fraud and Abuse Control Program   
The HCFAC program was established by HIPAA to be under the joint direction of the 
Attorney General and the Secretary of HHS, acting through the Inspector General.  Funds 
are appropriated in amounts that the Secretary and Attorney General jointly certify as 
necessary to finance antifraud activities, up to ceilings fixed by the legislation.  Certain of 
these funds are, by law, set aside for OIG activities ... with respect to Medicare and 
Medicaid.1   
HIPAA also requires the Attorney General and the Secretary of HHS to submit a joint 
annual report to Congress identifying expenditures and accomplishments under the law 
(Social Security Act,  1817(k)(5)).  These reports are available on the Web sites of both 
agencies at:  http://www.oig.hhs.gov/publications/hcfac.asp  and  
http://www.usdoj.gov/dag/pubdoc.html.  
Since FY 1997, the HCFAC program has been the primary source of funding for Medicare 
and Medicaid fraud investigations and prosecutions by OIG and the Department of Justice 
(DOJ).  Beginning in FY 2009, we began receiving discretionary funding in support of 
HCFAC activities to provide additional resources for program integrity work. 
                                                      
1 The Social Security Act,  1817(k)(3)(A).   
 
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Medicaid Integrity Program   
Section 6034 of the DRA established the MIP, through which we received enhanced funding 
for fraud and abuse control activities with respect to the Medicaid program (section 
6034(c)).  This funding was to be provided annually from FY 2006 though FY 2010 in 
addition to our HCFAC resources and is available until expended.  Specific DRA 
requirements that pertain to our office are described in Appendix E. 
Other Medicaid Oversight Funding 
We receive funding to oversee the integrity of Medicaid activities from two other sources:  
the Supplemental Appropriations Act of 2008 and the Recovery Act.  The Supplemental 
Appropriations Act of 2008 provided additional funding to our office to reduce fraud and 
abuse in the Medicaid program under Title XIX of the Social Security Act (Medicaid).  This 
funding, which was provided for FY 2009 in addition to other amounts appropriated for 
Medicaid oversight, is available until expended.  It is referred to in this report as Medicaid 
fraud and abuse (MFA) funding. 
The Recovery Act provided funding to ensure proper expenditure of Federal funds under 
title XIX of the Social Security Act (Medicaid).  This funding, which was provided in 
FY 2009, is available until September 30, 2011.  
Overlap Among Oversight Activities 
Because there is an overlap among the oversight activities funded by HCFAC, MIP, and 
other sources, our work relating to Medicaid may draw on funding from more than one 
source.  For investigations and prosecutions, it is particularly difficult (sometimes 
impossible) to accurately segregate enforcement activities by funding stream.  For example, 
even if we conduct an investigation exclusively with MIP funds, the prosecution of that case 
could draw upon DOJs HCFAC money, and the matter would be reportable pursuant to the 
requirements of both the HCFAC and MIP programs.   
An overlap could also occur when an investigation involves fraud in Medicaid and other 
Federal health care programs, such as Medicare, as is often the case.  For these reasons, this 
document does not artificially divide accomplishments among funding sources; our 
Medicaid successes are typically the result of combined funding from available resources.   
Our audit, evaluation, and investigation work often requires more than a year to yield 
results.  As a consequence, many of the reviews and investigations summarized in this 
document reflect the results of our work over several years that culminated in FY 2010.  
 
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Allocation of Statutory Funding Streams 
The table that follows estimates our allocation of statutory funding streams for Medicaid 
integrity oversight for FY 2005 through FY 2010. 
 
Allocation of Statutory Funding Streams for 
Medicaid Integrity Oversight, FY 2005  FY 2010 
(Dollars in Millions) 
 
Statutorily Mandated  Estimated  
Funding Provided to  Estimated OIG  Percentage of OIG 
OIG for Health Care  Obligations for  Estimated Total  Health Care 
Oversight  Medicaid Oversight  OIG Obligations  Oversight 
Fiscal  HIPAA/  MIP &  HIPAA/ MIP &  for Medicaid  Obligations for 
Year  HCFAC  Other  HCFAC  Other  Oversight   Medicaid Integrity 
2005  160    36.8    36.8  23 % 
2006  160  25  44.8    44.8  28 % 
20072  165.9  25  24.6  24.8  49.4  26 % 
2008  169.7  25  32.5  28.3  60.8  31 % 
20093, 4  196.2  815  33.9  30.9  64.8  29 % 
2010  208.5  25  42.1  34.1  76.2  32% 
Note:  Numbers are approximate because of rounding. 
The table illustrates that a sizable portion of our HCFAC funds has been used for Medicaid 
oversight in recent years.   
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2 OIG began FY 2007 with $25 million of unspent MIP funds that were appropriated during FY 2006.  
These funds are being used to fund OIGs continued Medicaid oversight from FY 2007 through FY 2010. 
3 Figures have been revised from the FY 2009 publication to reflect revisions in the analysis of FY 2009 data.  
4 In FY 2009, OIG received a 42percent increase in funding available for Medicare and Medicaid program 
integrity activities.  Because of this significant increase, and consistent with the purpose of the funding, OIG 
manages oversight work over multiple years.   
5 In FY 2009, OIG was appropriated $25 million for Medicaid oversight through the Supplemental 
Appropriations Act of 2008 and $31.25 million for Medicaid oversight through the Recovery Act.  
 
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Use and Effectiveness of 
Program Integrity Funds 
To demonstrate the use and effectiveness of our funding, we are attaching appendixes that 
draw from our core publications that present Medicaidrelated accomplishments, work in 
progress, and open recommendations.  Our core publications are:  
  Office of Inspector General Semiannual Report to Congress 
  Office of Inspector General Work Plan 
  Office of Inspector General Compendium of Unimplemented Recommendations 
Appendix A 
We present in Appendix A the results of Medicaidrelated reviews and investigative 
outcomes completed in FY 2010 that were included in our Semiannual Report(s) to Congress 
(Semiannual Report) for FY 2010. 
The Inspector General Act of 1978 (P.L. No. 95452), as amended, requires that the Inspector 
General report semiannually to the Congress and the Secretary of HHS on activities and 
results during the 6month periods ending March 31 and September 30.  Our Semiannual 
Report describes waste, fraud, abuse, and other management issues arising from our 
completed work on HHS programs and operations during each period.  The report also 
describes our recommendations and activities to curb the vulnerabilities we find.  
Semiannual Reports are reliable sources for delineating our accomplishments and priorities 
in historical increments.   
Because our program oversight generally takes the form of a continuous stream of projects 
that require more than a year to yield results, our use of funding in a year often bears fruit 
in future years.  Therefore, accomplishments highlighted in Appendix A reflect projects that 
began in prior funding periods but were completed in FY 2010.  The funding we used in 
FY 2010 no doubt supported outcomes that will be realized in FY 2011 or beyond. 
Appendix B   
We present in Appendix B a list of Medicaid projects in progress at the end of FY 2010 that 
are described in the Office of Inspector General Work Plan (Work Plan) for FY 2011.  The list 
captures the longterm nature of many of our major initiatives, some of which result in 
multiple reviews and reports.  The list also includes Medicaidrelated work expected to start 
in FY 2011. 
 
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Appendix C   
In Appendix C, we list Medicaid recommendations that are included in the FY 2011  
Office of Inspector General Compendium of Unimplemented Recommendations (Compendium).  
The Compendium describes recommendations developed from work completed in prior 
periods, including in FY 2010 and other years in which DRA funding was received and 
used.  The Compendium summarizes the background, findings, management response, and 
status of recommendations that, when implemented, will save taxpayer dollars, put funds to 
better use, and/or improve HHS programs and operations and quality of care. 
Appendix D 
Appendix D, which is a complete list of our Medicaidrelated reports issued during FY 2010, 
differs from Appendix A in that Appendix A provides short summaries of items that were 
included in our Semiannual Reports for FY 2010.  Not all reports are summarized in the 
Semiannual Reports.  The full text of the publicly available reports listed in Appendix D can 
be accessed on our Web site by searching on the claim number that follows each title. 
Appendix E 
Appendix E describes the DRA provisions that apply to our office.  Sections 6001, 6031, and 
6034 include provisions that require the HHS OIG to conduct specified activities.  Section 
6001 requires us to review Federal upper payment limits for multiple source drugs and 
other drug payment provisions.  Section 6031 requires us to review State false claims acts to 
determine whether States would be eligible for 10percentagepoint increases in their shares 
of false claims recoveries.  Section 6034, which established our MIP funding, requires us to 
identify to Congress annually the use and effectiveness of our use of DRA funds.  This 
document responds to that requirement for FY 2010.  
Appendix F 
Appendix F defines selected acronyms and abbreviations used in this report and its 
appendixes. 
 
 
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  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | p. 5    Appendix A:  Medicaid Results From the FY 2010 Semiannual Reports to Congress 
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Appendix A: 
 
Medicaid Results From the 
FY 2010 Semiannual Reports to Congress 
 
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  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report    Appendix A:  Medicaid Results From the FY 2010 Semiannual Reports to Congress 
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Appendix A: 
 
Medicaid Results From the  
FY 2010 Semiannual Reports to Congress 
 
Audits and Evaluations....................................................... 1
 
Hospitals..........................................................................................................1 
States Uncompensated Care Reimbursements Found To Favor StateOwned Institutions...........1 
Massachusetts Supplemental Rate Payment Claims Failed to Meet Federal and State Plan 
Requirements..............................................................................................................................................2 
Home and CommunityBased Services.....................................................2 
Connecticuts CommunityBased Administrative Claims of $19.8 Million May Not Have Met 
Federal Requirements................................................................................................................................2 
Other Services, Equipment, and Supplies..................................................3 
Most Medicaid Children in Nine States Not Receiving All Required Preventive Screening 
Services........................................................................................................................................................3 
New Jersey SchoolBased Health Services Claims Not Fully Compliant...........................................3 
Estimated $21.3 Million Improper Federal Funding for Arizonas SchoolBased Health Services4 
Allocation Methodology Errors Caused Unallowable Federal Reimbursement Claims by 
Missouri.......................................................................................................................................................5 
New York State Improperly Claimed $3.8 Million Federal Share for Family Planning Services....5 
Prescription Drugs .........................................................................................6 
Compound Drug Expenditures in California May Not Be Eligible for Reimbursement.................6 
Some Outlier Average Manufacturer Prices in the Federal Upper Limit Program Were 
Inaccurate....................................................................................................................................................6 
 
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  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report    Appendix A:  Medicaid Results From the FY 2010 Semiannual Reports to Congress 
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Rebate Loophole for MultipleVersion BrandName Drugs Closed by New Law...........................7 
Medicaid Administration..............................................................................7 
States Imposed Few of Their Own Medicaid Enrollment Requirements...........................................7 
Sampling, Other Issues Prevented Clear Picture of Payment Error Rate Measurement Program.8 
California Unable To Reconcile Payment Error Rate Measurement Universes................................8 
Main Causes of Payment, Data Errors Identified..................................................................................9 
Michigan Did Not Report Medicaid Overpayments in Accordance With Regulations...................9 
Tennessees Medical Assistance Program Claim Was Adequately Supported...............................10 
New York in Compliance With the Recovery Acts Political Subdivision Requirement...............10 
Five States in Compliance With the Recovery Acts Medicaid Eligibility Requirements..............11 
Two States in Compliance With Recovery Acts PromptPay Requirements..................................11 
Results Mixed in Two States Compliance With the Recovery Acts Medicaid Expenditure Base 
Requirements............................................................................................................................................12 
New Jersey Complied With the Recovery Acts Reserve Fund Requirement.................................13 
State Medicaid Claims Correctly Computed Under the Recovery Act............................................13 
Other MedicaidRelated Issues..................................................................14 
Discrepancies Found in Hurricane Katrina HealthCareRelated Professional Workforce Supply 
Grants.........................................................................................................................................................14 
$3.4 Million in HurricaneRelated Uncompensated Care Claims in Louisiana Unallowable.......14 
Florida Claimed $5.3 Million for Concurrent Program Enrollees.....................................................15 
Legal and Investigative Activities ................................... 15
 
Criminal and Civil Enforcement................................................................16 
Pharmaceutical Companies....................................................................................................................16 
Hospitals....................................................................................................................................................17 
Home Health.............................................................................................................................................17 
Practitioners..............................................................................................................................................18 
Transportation Companies.....................................................................................................................18 
 
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  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report    Appendix A:  Medicaid Results From the FY 2010 Semiannual Reports to Congress 
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Medicaid Employee Fraud......................................................................................................................18 
Identity Theft............................................................................................................................................19 
Medicaid Fraud........................................................................................................................................19 
Medicaid Fraud Control Units...................................................................19 
Joint Investigations.......................................................................................20 
Provider SelfDisclosure Protocol..............................................................21 
Program Exclusions .....................................................................................22 
 
 
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  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report    Appendix A:  Medicaid Results From the FY 2010 Semiannual Reports to Congress 
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Appendix A: 
 
Medicaid Results From the  
FY 2010 Semiannual Reports to Congress 
 
Audits and Evaluations 
Audits and evaluations by the Office of Inspector General (OIG) monitor payments, 
processes, program administration, and information systems.  In addition to identifying 
misspent funds, OIGs reviews often bring about program improvements that help reduce 
the cost of providing necessary services to Medicaid beneficiaries.  Many reviews focus 
largely on whether the Medicaid program is managed properly and pays a fair price in the 
health care marketplace.  The following are highlights1 of the findings of OIG audits and 
evaluations that were included in OIGs Semiannual Report(s) to Congress for FY 2010, which, 
along with the full text of the reports, are posted on OIGs Web site at 
http://www.oig.hhs.gov. 
Hospitals 
Medicaid Hospitals  >  Disproportionate Share Hospital Program 
States Uncompensated Care Reimbursements Found To Favor 
StateOwned Institutions 
During Federal fiscal years (FY) 2003 through 2007, most of seven selected States (Kansas, 
Louisiana, Missouri, New Jersey, New York, North Carolina, and Texas) reimbursed State
owned institutions for mental disease (IMD) and other Stateowned hospitals the highest 
proportion of uncompensated care costs.  The Medicaid disproportionate share hospital 
(DSH) program requires States to make special payments, known as DSH payments, to 
hospitals that serve unusually large numbers of lowincome and/or uninsured patients.  
The Federal Government reimburses States for a percentage of their DSH payments.   
                                                      
1 The titles of the highlights in Appendix A differ from the titles in the Semiannual Reports, which more closely 
reflect the report titles.  Report titles are provided at the end of each highlight.  The full reports can be accessed 
by searching the OIG Web site using the report numbers that follow the report titles. 
 
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We classified hospitals in four categories:  Stateowned IMDs, other Stateowned hospitals, 
local public hospitals, and private hospitals.  In comparing DSH payments between hospital 
categories, we found that three of the seven States reimbursed Stateowned IMDs the 
highest proportion of uncompensated care costs; three other States reimbursed other State
owned hospitals the highest proportion of uncompensated care costs; and one State 
reimbursed private hospitals the highest proportion of uncompensated care costs.   
In analyzing the relationship between DSH payments and uncompensated care costs for all 
of the hospitals classified as DSH hospitals in the seven States, we found that, in the 
aggregate, Stateowned IMDs received DSH payments averaging 92 percent of their 
uncompensated care costs; other Stateowned hospitals received DSH payments averaging 
95 percent of their uncompensated care costs; local public hospitals received DSH payments 
averaging 69 percent of their uncompensated care costs; and private hospitals received DSH 
payments averaging 38 percent of their uncompensated care costs.  Review of Medicaid 
Disproportionate Share Hospital Payment Distribution (A070904150) June 2010. 
Medicaid Hospitals  >  Supplemental Rate Payments 
Massachusetts Supplemental Rate Payment Claims Failed to Meet Federal 
and State Plan Requirements 
Of the $337 million that Massachusetts claimed in Medicaid supplemental rate payments to 
one hospital company during FYs 2004 and 2005, $11.5 million ($5.75 million Federal share) 
was not claimed in accordance with Federal and State plan requirements.  Supplemental 
payments are in addition to the standard reimbursement made under the State agencys 
acute care hospital contract.  The excessive supplemental Medicaid payments occurred 
because the audited company did not follow procedures set forth in the State plan to 
calculate the payments.  We identified an additional $5.6 million ($2.8 million Federal share) 
in supplemental payments to a medical school affiliated with the company on which we 
were unable to express an opinion.  Review of Medicaid Supplemental Rate Payments to UMass 
Memorial Health (A010700013) December 2009. 
Home and CommunityBased Services  
 Medicaid Home and CommunityBased Services  >  Administrative Costs 
Connecticuts CommunityBased Administrative Claims of $19.8 Million 
May Not Have Met Federal Requirements 
In our review of communitybased Medicaid administrative costs that Connecticut claimed 
for State FYs 2005 and 2006, we found that claims totaling $19.8 million may not have fully 
complied with Federal requirements.  The State claimed reimbursement from the Centers 
for Medicare & Medicaid Services (CMS) for administrative case management activities 
provided by contracted organizations.  Because the State made omissions and deviations 
 
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from acceptable practices when calculating its claims and was unable to provide adequate 
documentation, we were unable to express an opinion on whether the claims should be 
allowed.  Review of Connecticuts Community Based Medicaid Administrative Claims for State 
Fiscal Years 2005 and 2006 (A010800003) September 2009. 
Other Services, Equipment, and Supplies 
Medicaid Services  >  Children  >  Health Screening 
Most Medicaid Children in Nine States Not Receiving All Required 
Preventive Screening Services 
Most children in nine selected States are not fully benefitting from Medicaids Early and 
Periodic Screening, Diagnostic, and Treatment (EPSDT) comprehensive screening services.  
Services provided under the EPSDT benefit are intended to screen, diagnose, and treat 
children eligible for EPSDT services at early, regular intervals to avoid or minimize 
childhood illness.  EPSDT services cover four healthrelated areas:  medical, vision, hearing, 
and dental.  Complete medical screenings under the EPSDT benefit must include the 
following five ageappropriate components:  a comprehensive health and developmental 
history, a comprehensive unclothed physical examination, appropriate immunizations 
according to age and health history, appropriate laboratory tests, and health education.     
This study focused on medical, vision, and hearing screenings.  We found that: 
  Seventysix percent, or 2.7 million children, in 9 States did not receive all of the required 
medical, vision, and hearing screenings.   
  Fortyone percent did not receive any required medical screenings.   
  More than half of children did not receive any required vision or hearing screenings.   
  Fiftyfive percent of children in the nine States received a medical screening during the 
study period.  Of these, 59 percent lacked at least one component of a complete medical 
screening.   
Officials from all nine selected States identified strategies to improve participation in the 
EPSDT and the completeness of medical screenings.  However, additional efforts are 
required.  Most Medicaid Children in Nine States Are Not Receiving All Required Preventive 
Screening Services (OEI050800520) May 2010. 
Medicaid Services  >  Children  >  SchoolBased Health Program 
New Jersey SchoolBased Health Services Claims Not Fully Compliant 
In two reviews, we found that New Jerseys claims for reimbursement of Medicaid school
based health services submitted by its billing agents did not fully comply with Federal and 
 
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State requirements.  In addition to meeting other Federal and State requirements, school
based health services must be (1) referred or prescribed by a physician or another 
appropriate professional, (2) provided by an individual who meets Federal and State 
qualification requirements, (3) fully documented, (4) actually furnished, and (5) documented 
in the childs individualized education plan.  During our audit periods, New Jersey 
contracted with separate billing agents to help administer its Medicaid schoolbased health 
services program under contingencyfeebased agreements.  The results of our reviews 
follow: 
Billing Agent ABased on our sample results for July 27, 2003, through October 4, 2006, we 
estimated that New Jersey was improperly reimbursed $8 million in Federal Medicaid 
funds.  Of the 100 schoolbased health claims in our sample, 51 did not comply with Federal 
and State requirements.  The 51 claims pertained to services that were not (1) provided or 
supported, (2) in compliance with referral or prescription requirements, (3) in compliance 
with Federal provider qualification requirements, or (4) documented in the childs plan.   
Review of New Jerseys Medicaid SchoolBased Health Claims Submitted by Maximus, Inc.  
(A020701051) April 2010. 
Billing Agent BBased on our sample results for April 6, 2005, through June 27, 2007, we 
estimated that New Jersey was improperly reimbursed $5.6 million in Federal Medicaid 
funds.  Of the 100 schoolbased health claims in our sample, 36 did not comply with Federal 
and State requirements.  The 36 claims pertained to services that were not (1) provided or 
supported, (2) in compliance with referral or prescription requirements, (3) in compliance 
with Federal provider qualification requirements, and (4) documented in the childs plan. 
Review of New Jerseys Medicaid SchoolBased Health Claims Submitted by Public Consulting 
Group, Inc. (A020701052) September 2010.  
Medicaid Services  >  Children  >  SchoolBased Health Program   
Estimated $21.3 Million Improper Federal Funding for Arizonas School
Based Health Services   
Arizona did not always claim Federal reimbursement for Medicaid schoolbased health 
services in accordance with Federal and State requirements.  Of the 100 sampled student
months from January 1, 2004, to June 30, 2006, 46 had 1 or more schoolbased health services 
that were not allowable.  Based on our sample results, we estimated that the State was 
improperly reimbursed at least $21.3 million in Federal Medicaid funds for schoolbased 
health services.  Medicaid pays for medical services provided to children under Part B of the 
Individuals with Disabilities Education Act of 2004 (IDEA) through a childs individualized 
education plan.  In addition to meeting other Federal and State requirements, schoolbased 
health services must be (1) actually furnished, (2) fully documented, (3) provided by an 
individual who meets Federal and State qualification requirements, (4) prescribed or 
referred by a physician or another appropriate professional, and (5) provided to eligible 
recipients.  Review of Arizonas Medicaid Claims for SchoolBased Health Services (A090700051) 
March 2010. 
 
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Medicaid Administrative Costs  >   SchoolBased Health Program   
Allocation Methodology Errors Caused Unallowable Federal 
Reimbursement Claims by Missouri  
Of the $15.3 million (Federal share) that Missouri claimed in Medicaid administrative costs 
for the St. Louis Public and Springfield school districts for FYs 2004 through 2006, $4.2 
million was unallowable for Federal reimbursement.  Medicaids schoolbased health 
program permits children to receive healthrelated services, generally without having to 
leave school.  States may be reimbursed for the administrative activities that directly 
support identifying and enrolling potentially eligible children in Medicaid.   
Missouris School District Administrative Claiming program uses a Department of Health 
& Human Services (HHS)approved time and activities allocation methodology to develop, 
on a statewide basis, the percentages of effort that employees spend on various Medicaid 
administrative activities.  Any errors associated with the allocation methodology and 
related sampling process affect all of the Missouri school districts.  We estimated that the 
combination of errors that we identified in our review of the St. Louis Public and Springfield 
districts also caused other Missouri school districts to receive $16.3 million in unallowable 
Medicaid payments for FYs 2004 through 2006.  We set aside for CMSs adjudication an 
additional $1.5 million for administrative costs claimed for the St. Louis Public and 
Springfield school districts and $3.9 million for administrative costs claimed for all other 
Missouri school districts.  Review of Missouri Medicaid Payments for the School District 
Administrative Claiming Program for Federal Fiscal Years 2004 Through 2006 (A070803107) 
March 2010. 
Medicaid Services  >  Family Planning 
New York State Improperly Claimed $3.8 Million Federal Share for Family 
Planning Services  
Based on our sample results, we estimated that New York received $3.8 million in 
unallowable Federal Medicaid reimbursement by improperly claiming enhanced 90percent 
Federal reimbursement for Medicaid family planning services claims that were submitted 
by selected providers.  Of the 105 claims in our sample, 50 qualified as family planning 
services and could be claimed at the enhanced 90percent Federal reimbursement rate.  
However, the remaining 55 could not be claimed as family planning services.  Of those 55 
claims, 51 were for services unrelated to family planning and 4 lacked documentation. The 
overpayment occurred because the selected providers incorrectly claimed services as family 
planning and the States Medicaid Management Information System (MMIS) edit routines 
did not adequately identify claims unrelated to family planning.  Review of Family Planning 
Claims Submitted by Selected Providers Under the New York State Medicaid Program  
(A020901015) September 2009.  
 
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Prescription Drugs 
Medicaid Prescription Drugs  >  Federal Share  
Compound Drug Expenditures in California May Not Be Eligible for 
Reimbursement 
Californias claims for reimbursement of Medicaid compound drug expenditures for 
FYs 2004 and 2005 did not fully comply with Federal requirements.  Of the $29.5 million 
(Federal share) reviewed, $383,000 represented expenditures for compound drug 
ingredients that were not eligible for Medicaid coverage because the drugs were dispensed 
after their termination dates.  In addition, the State claimed $1.3 million for compound drug 
ingredients that were not listed on the quarterly drug tapes and that may not have been 
eligible for Federal reimbursement.  Medicaid generally covers outpatient drugs if 
manufacturers have rebate agreements with CMS and pay rebates to the States.  Under the 
Medicaid drug rebate program, CMS provides States with a quarterly Medicaid drug tape, 
which lists all covered outpatient drugs, indicates each drugs termination date if applicable, 
and specifies whether the Food and Drug Administration (FDA) has determined the drug to 
be less than effective.  CMS guidance instructs the States to use the tape to verify coverage of 
the drugs for which they claim reimbursement.  Review of Medicaid Compound Drug 
Expenditures in California for Fiscal Years 2004 and 2005 (A090800034) March 2010. 
Medicaid Prescription Drugs  >  Federal Upper Limit  
Some Outlier Average Manufacturer Prices in the Federal Upper Limit 
Program Were Inaccurate  
We found that about 20 percent of average manufacturer prices (AMP) reported for the 
242 outlier drugs were inaccurate.  When the new AMPbased Federal upper limit (FUL) 
provisions are implemented, CMS will exclude the lowest AMP from the FUL calculation if 
it is more than 60 percent below the secondlowest AMP to ensure that at least two drug 
products are available at or below the FUL amount.  In January 2008, the lowest AMPs for 
242 FUL drugs met this criterion.  This study examined the accuracy of the AMP data 
submitted by manufacturers that would be used in the new FUL calculation, pending the 
lifting of the Federal courts injunction on its implementation.  
Inaccuracies in the reported data resulted in part from discrepancies in the unit of AMP 
submission that created the appearance of outliers.  Furthermore, some outlier AMPs are 
not accurate and would no longer be outliers if revised data were used.  Also, several outlier 
drug products are no longer sold by manufacturers and therefore should not be included in 
FUL calculations.  Outlier Average Manufacturer Prices in the Upper Limit Program  
(OEI030700740) September 2009. 
 
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Medicaid Prescription Drugs  >  Rebates 
Rebate Loophole for MultipleVersion BrandName Drugs Closed by New 
Law 
Our review found that of the top 150 brandname drugs for calendar year (CY) 2007 ranked 
by Medicaid reimbursement, 114 had more than 1 version.  For 65 of the 114, the prices of 
the earliest versions of the drugs exceeded their inflationadjusted prices when the new 
versions entered the market.  We calculated that, for CYs 19932007, States could have 
collected about $2.5 billion in additional rebates for the 65 brandname drugs if the baseline 
AMPs of the new versions had been adjusted (i.e., reduced) to reflect price increases in 
excess of inflation for the earliest versions.  
For a manufacturers covered outpatient drug to be eligible for Federal Medicaid funding, 
the manufacturer must enter into a rebate agreement that is administered by CMS and pay 
quarterly rebates to the States.  Federal law requires manufacturers to pay an additional 
rebate when the AMP for a brandname drug increases more than inflation.  We did not 
evaluate the drug manufacturers bases for developing the new versions of drugs identified 
in our review.  Because the Medicaid drug rebate program calculates rebates separately for 
each version of a drug, manufacturers could develop new versions of brandname drugs 
solely to avoid paying additional rebates when they substantially increase prices.  [Based on 
our review, we reported that the risk of manufacturers taking advantage of this potential 
loophole could increase over time.  That risk was effectively eliminated by enactment of 
section 2501(d) of the Patient Protection and Affordable Care Act of 2010, as amended by 
section 1206(a) of the Health Care and Education Reconciliation Act of 2010, together called 
the Affordable Care Act.]  Review of Additional Rebates for BrandName Drugs With Multiple 
Versions (A060900033) March 2010. 
Medicaid Administration 
Medicaid Administration  >  Provider Enrollment 
States Imposed Few of Their Own Medicaid Enrollment Requirements 
 Of 188 providers from 26 States who had been excluded by OIG after their enrollment, 
8 had disclosed false ownership information at the time of enrollment.  Another 8 of the 
188 had criminal convictions before they enrolled and committed health carerelated crimes 
after they enrolled.  Of the 188 excluded providers, 88 had Federal or State tax liens before 
or after they enrolled in Medicaid, and 24 had a history of tax debt, criminal convictions, or 
false disclosures before they enrolled.  
We examined the providers backgrounds before and after they enrolled to gather 
information related to potential weaknesses in States provider enrollment procedures.  In 
addition, we surveyed the 26 States that enrolled the 188 providers about the procedures 
they used to enroll the providers and the process they now use to enroll providers.    
 
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Pursuant to Federal regulations at 42 CFR  455.104 and 42 CFR  455.106, States require 
providers to disclose information on ownership and control of an entity and criminal 
convictions related to Federal health care programs.  However, the regulations do not 
require States to verify this information.  We found that States impose few enrollment 
requirements beyond those mandated by Federal regulations.  Over half of the excluded 
providers were subject to no State enrollment requirements beyond the Federal regulations 
when they enrolled in Medicaid.  Excluded Medicaid Providers: Analysis of Enrollment  
(OEI090800330) May 2010. 
Medicaid Administration  >  Payment Error Rate  
Sampling, Other Issues Prevented Clear Picture of Payment Error Rate 
Measurement Program 
We were unable to determine whether the Payment Error Rate Measurement (PERM) 
program produced a reasonable estimate of improper FY 2007 feeforservice (FFS) and 
managed care payments for Medicaid and the Childrens Health Insurance Program (CHIP) 
because (1) CMSs statistical contractor sampled payments from State universes that were or 
may have been incomplete or inaccurate, (2) the estimate of improper CHIP payments did 
not meet the required precision levels, and (3) CMS did not review States repricing actions. 
The Improper Payments Information Act of 2002 (IPIA) requires the head of a Federal 
agency with any program or activity that may be susceptible to significant improper 
payments to report to Congress the agencys estimates of the improper payments.  CMS 
developed the PERM program to comply with requirements for measuring improper 
Medicaid program and CHIP payments.  The PERM program has measured improper 
payments made in the FFS, managed care, and eligibility components of Medicaid and 
CHIP since FY 2007.  Oversight and Evaluation of the Fiscal Year 2007 Payment Error Rate 
Measurement Program (A060800078) May 2010. 
Medicaid Administration  >  Payment Error Rate 
California Unable To Reconcile Payment Error Rate Measurement 
Universes  
California was unable to reconcile the FY 2007 PERM universes to the quarterly 
Forms CMS64 and CMS21.  CMS developed the PERM program to comply with Federal 
requirements for measuring improper payments made in the FFS, managed care, and 
eligibility components of Medicaid and State CHIP in FY 2007 and future years.  The Office 
of Management and Budget (OMB) requires CMS to include the PERM results in its annual 
accountability report.  
We could not determine whether Californias managed care and FFS universes were 
complete and accurate because we were unable to reconcile these universes to Forms 
CMS64 and CMS21.  CMS regional officials said they had reconciled the forms to the 
 
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accounting records that the State used to support the forms.  However, those accounting 
records did not include detailed claim information.  State officials said that they could not 
reconcile the forms to the managed care or FFS universes, and the California state auditor 
found that Form CMS64 was not traceable to individual claims.  
Without reconciling the PERM universe to Forms CMS64 and CMS21, CMS is unable to 
show that it has complied with the requirements to produce a statistically valid estimate of 
improper payments.  Review of Californias Department of Health Care Services Fiscal Year 2007 
Payment Error Rate Measurement Universes (A060800050) March 2010. 
Medicaid Administration  >  Payment Error Types   
Main Causes of Payment, Data Errors Identified  
Of 1,356 PERM program medical review errors that we analyzed for FYs 2006 and 2007, 
4 types accounted for 78 percent of the errors and 95 percent of the net improper Medicaid 
overpayments.  The four error types were insufficient documentation, no documentation, 
services that violated State policies, and medically unnecessary services.  Of the 202 PERM 
program dataprocessing errors that we analyzed for the same period, 4 types accounted for 
8 percent of the errors and 64 percent of the net improper Medicaid overpayments.  The four 
error types were pricing errors, noncovered services, rate cell errors for managed care 
claims, and errors in the logic edits of claimprocessing systems.  The PERM program 
annually measures improper payments based on sampled Medicaid claims in 17 States and 
the District of Columbia; each jurisdiction is chosen once every 3 years.  Analysis of Improper 
Payments Identified During the Payment Error Rate Measurement Program Reviews in 2006 and 
2007 (A060900079) April 2010. 
Medicaid Administration  >  Federal Share   
Michigan Did Not Report Medicaid Overpayments in Accordance 
With Regulations 
In two reviews summarized below, we determined that Michigan did not report all 
Medicaid overpayments in accordance with Federal requirements.  Federal law requires 
States to refund the Federal share of a Medicaid overpayment made to a provider, and 
Federal regulations require States to refund the Federal share at the end of the 60day period 
following the date of discovery, whether or not the State has recovered the overpayment.   
FYs 2008 and 2009:  We estimated that Michigan did not report Medicaid overpayments 
totaling $2.3 million ($1.3 million Federal share) in accordance with Federal requirements.  
The State also did not report all Medicaid overpayments within the 60day requirement.  
Because the State did not report some overpayments and was not prompt in reporting 
others, the Federal Government incurred a potentially higher interest expense.  Review of 
Michigans Reporting Fund Recoveries for State Medicaid Programs on the Form CMS64 for 
Federal Fiscal Years 2008 and 2009 (A050900103) September 2010. 
 
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First quarter of FY 2010:   Our review found that for the quarter ended December 31, 2009, 
Michigan did not report $3 million ($2.2 million Federal share) in Medicaid overpayments in 
accordance with Federal requirements because of a clerical error.  The State did not properly 
report the overpayments because it had not developed and implemented internal controls to 
ensure that overpayments were reported on the Form CMS64.  Review of Michigans 
Reporting Fund Recoveries for State Medicaid Programs on the Form CMS64 for the First Quarter 
2010 (A051000061) September 2010. 
Medicaid Administration  >  Recovery Act 
Tennessees Medical Assistance Program Claim Was Adequately Supported 
We found that Tennessees claim for Federal reimbursement of expenditures on the 
Quarterly Medicaid Statement of Expenditures for the Medical Assistance Program for the 
quarter ended December 31, 2008, was adequately supported by actual recorded 
expenditures.  The American Recovery and Reinvestment Act of 2009 (Recovery Act) 
provides fiscal relief to States to protect and maintain State Medicaid programs during a 
period of economic downturn.  For the recession adjustment period (October 1, 2008, 
through December 31, 2010), the Recovery Act provided an estimated $87 billion in 
additional Medicaid funding based on temporary increases in States Federal medical 
assistance percentages (FMAP).  For the majority of Medicaid expenditures claimed, CMS 
reimburses States based on the FMAP, which varies depending on a States relative per 
capita income.  For the quarter ended December 31, 2008, Tennessees regular FMAP for 
Medicaid expenditures was 64.28 percent, and the temporarily increased FMAP was 
73.25 percent.  Review of the Quarterly Medicaid Statement of Expenditures for the Medical 
Assistance Program in Tennessee (A040904040) May 2010. 
Medicaid Administration  >  Recovery Act 
New York in Compliance With the Recovery Acts Political Subdivision 
Requirement  
New York State complied with the political subdivision requirement for receiving the 
increased FMAP under the Recovery Act.  The State did not require its social services 
districts (i.e., political subdivisions) to contribute a greater percentage of the nonFederal 
share of Medicaid expenditures than the percentage required under the State Medicaid plan 
on September 30, 2008.  A State is not eligible for the increased FMAP if it requires its 
political subdivisions to pay a greater percentage of the nonFederal share of Medicaid 
expenditures than the percentage required under the State Medicaid plan on September 30, 
2008.  Review of New York States Compliance With the Political Subdivision Requirement for the 
Increased Federal Medical Assistance Percentage Under the American Recovery and Reinvestment 
Act of 2009 (A020901029) May 2010. 
 
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Medicaid Administration > Recovery Act 
Five States in Compliance With the Recovery Acts Medicaid 
Eligibility Requirements 
Five States that we reviewed complied with Recovery Act eligibility requirements during 
the first three quarters of Federal FY 2009.  Pursuant to the Recovery Act, States generally 
are not eligible for FMAP increases for quarters during the recession adjustment period in 
which their Medicaid eligibility standards, methodologies, or procedures are more 
restrictive than those in effect on July 1, 2008.   
Louisiana, Minnesota, New Hampshire, and Rhode IslandIn all four States, the 
Medicaid eligibility standards, methodologies, and procedures during the audit period were 
not more restrictive than those in effect on July 1, 2008.  The full reports are:  
  Review of American Recovery and Reinvestment Act of 2009 Medicaid Eligibility Requirements 
in Louisiana (A060900100) April 2010;   
  Review of American Recovery and Reinvestment Act of 2009 Medicaid Eligibility Requirements 
in Minnesota (A051000014) May 2010;  
  Review of New Hampshires Compliance With the American Recovery and Reinvestment Act of 
2009 Medicaid Eligibility Requirements (A011000002) May 2010; and  
  Review of Rhode Islands Compliance With the American Recovery and Reinvestment Act of 
2009 Medicaid Eligibility Requirements (A010900007) May 2010.  
TexasTexas made one policy change after July 1, 2008, that resulted in more restrictive 
Medicaid eligibility standards, methodologies, and procedures during the audit period.  
However, in accordance with the Recovery Act, the State reinstated the less restrictive policy 
before July 1, 2009.  The State also made administrative policy changes that did not affect the 
eligibility process.  Review of American Recovery and Reinvestment Act of 2009 Medicaid 
Eligibility Requirements in Texas (A060900099) July 2010. 
Medicaid Administration  >  Recovery Act 
Two States in Compliance With Recovery Acts PromptPay Requirements 
With one exception that was resolved, we found New York and Pennsylvania to be in 
sufficient compliance with promptpay requirements for receiving an increased FMAP 
under the Recovery Act.  Federal regulations require States to pay 90 percent of all clean 
claims from practitioners within 30 days of the date of receipt.  A clean claim is one that can 
be processed without obtaining additional information from the provider or a third party.   
New YorkFor January 1 through June 30, 2009, New York State complied with the 
promptpay requirement for receiving an increased FMAP.  The State paid 100 percent of 
the 125,618,625 clean claims that it received from applicable providers within 30 days of the 
 
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date of receipt.  Review of New York States Compliance With the Prompt Pay Requirements for the 
Increased Federal Medical Assistance Percentage Under the American Recovery and Reinvestment 
Act of 2009 (A020901037) August 2010. 
PennsylvaniaPennsylvania complied with the promptpay requirement for receiving 
an increased FMAP for claims received on all days from February 16, 2009, through 
September 30, 2009.  In addition, all practitioner, nursing facility, and hospital claims 
received after May 31, 2009, met the requirements for an increased Federal share.  The State 
did not meet the 30day promptpay requirement for claims received on any day from 
January 20, 2009, through February 15, 2009, and for claims received on November 29, 2008, 
and December 13, 2008.  However, during our review, the State requested a waiver of the 
promptpay requirement for claims submitted by practitioners that were received by the 
State before February 18, 2009.  CMS granted the waiver.  Review of Pennsylvanias Compliance 
With the Prompt Payment Requirements of the American Recovery and Reinvestment Act of 2009.   
(A030900204) September 2010.  
Medicaid Administration  >  Recovery Act 
Results Mixed in Two States Compliance With the Recovery Acts 
Medicaid Expenditure Base Requirements 
Reviews in two States of the Recovery Acts Medicaid expenditure base requirements had 
mixed results.  Pursuant to the Recovery Act, States must have policies and procedures in 
place to segregate Medicaid expenditures that qualify for the temporarily increased FMAP 
during the recession adjustment period and to ensure that Medicaid expenditures that do 
not qualify are not claimed for reimbursement at the temporarily increased FMAP.  We 
reviewed two States compliance with this requirement from October 1, 2008, through 
March 31, 2009.  
ColoradoColorados $142 million in claims associated with the temporarily increased 
FMAP was computed using the Medicaid expenditure base specified in the Recovery Act, 
and the expenditures were supported by the States accounting records.  Colorado had 
policies and procedures in place to segregate Medicaid expenditures that qualified for the 
temporarily increased FMAP and to ensure that Medicaid expenditures that did not qualify 
were not claimed for reimbursement at the temporarily increased FMAP.  However, the 
State had not documented all of its policies and procedures.  Review of Colorados Claims 
Associated With the Increased Federal Medical Assistance Percentage Under the American Recovery 
and Reinvestment Act of 2009 (A070902767) March 2010.  
DelawareDelawares $60 million in claims associated with the temporarily increased 
FMAP was computed using the Medicaid expenditure base specified in the Recovery Act, 
and the expenditures were supported by the States accounting records.  The State had 
policies and procedures in place to segregate Medicaid expenditures that qualified for the 
temporarily increased FMAP and to ensure that Medicaid expenditures that did not qualify 
were not claimed for reimbursement at the temporarily increased FMAP.  The State had 
 
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correctly documented and disseminated these policies and procedures.  Review of Delawares 
Claims Associated With the Increased Federal Medical Assistance Percentage Under the American 
Recovery and Reinvestment Act of 2009 (A030900202) March 2010. 
Medicaid Administration  >  Recovery Act 
New Jersey Complied With the Recovery Acts Reserve Fund Requirement  
Our review found that New Jersey complied with the Recovery Act reserve fund 
requirement for receiving the increased FMAP.  The State did not use additional Medicaid 
funding to supplement any reserve account.  Under the Recovery Act, a State is not eligible 
for the increased FMAP if any amounts attributable (directly or indirectly) to such an 
increase are deposited in or credited to any reserve, or rainy day, fund.  
 Review of New Jerseys Compliance With the Reserve or Rainy Day Fund Requirement for the 
Increased Federal Medical Assistance Percentage Under the American Recovery and Reinvestment 
Act (A020901030) September 2010. 
Medicaid Administration  >  Recovery Act 
State Medicaid Claims Correctly Computed Under the Recovery Act 
We conducted audits of four States Medicaid claims associated with the increased FMAP 
under the Recovery Act.  The Act provides, among other initiatives, fiscal relief to States to 
protect and maintain State Medicaid programs during a period of economic downturn.  For 
the recession adjustment period (October 1, 2008, through December 31, 2010), the Act 
provides an estimated $87 billion in additional Medicaid funding based on temporary 
increases in States FMAPs.  The Federal Government pays its share of a States medical 
assistance expenditures under Medicaid based on the FMAP, which varies depending on 
the States relative per capita income.  
Our audits found that the four States claims associated with the temporarily increased 
FMAP were computed using the Medicaid expenditure base specified in the Recovery Act.  
These claims totaled $174 million in Alabama, $817 million in Florida, $276 million in 
Maryland, and $273 million in Missouri.  In all four States, expenditures were supported by 
accounting records, and policies and procedures were in place to segregate Medicaid 
expenditures that qualified for the temporarily increased FMAP and to ensure that 
Medicaid expenditures that did not qualify were not claimed for reimbursement at the 
temporarily increased FMAP.  Missouri said it would update its written policies and 
procedures for claiming the temporary increase in the FMAP.  The reports are: 
  Review of Alabamas Claims Associated With the Increased Federal Medical Assistance 
Percentage Under the American Recovery and Reinvestment Act of 2009 (A040906111)  
March 2010; 
 
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  Claims Associated With the Increased Federal Medical Assistance Percentage Under the 
American Recovery and Reinvestment Act of 2009 (A040906110) January, 2010;   
  Review of Marylands Claims Associated With the Increased Federal Medical Assistance 
Percentage Under the American Recovery and Reinvestment Act of 2009 (A030900203) 
January 2010; and 
  Review of Missouris Claims Associated With the Increased Federal Medical Assistance 
Percentage Under the American Recovery and Reinvestment Act of 2009  (A070902762) 
February 2010. 
Other MedicaidRelated Issues 
Other Issues  >  Gulf Coast Hurricanes 
Discrepancies Found in Hurricane Katrina HealthCareRelated 
Professional Workforce Supply Grants  
We were not able to express an opinion on $26 million that Louisiana awarded to health 
care professionals from March 1 through December 31, 2007, because we discovered after 
our fieldwork was complete that practitioner contracts may have been improperly signed.  
In addition, of the $5.3 million that the State awarded to 100 sampled recipients during the 
period, $1.4 million was not awarded to 20 recipients in accordance with grant terms.  Based 
on our sample results, we estimated that the State did not award $5.8 million of grant funds 
to 85 awardees in accordance with grant terms.  The $50 million Federal grant, which 
covered March 1, 2007, through September 30, 2012, funded payments to licensed health 
care professionals for their retention and recruitment in communities affected by Hurricane 
Katrina.  Review of the Hurricane Katrina HealthCareRelated Professional Workforce Supply 
Grant for the Greater New Orleans Area  (A060800026)  March 2010. 
Other Issues  >  Gulf Coast Hurricanes 
$3.4 Million in HurricaneRelated Uncompensated Care Claims in 
Louisiana Unallowable 
Louisiana did not always claim reimbursement for services provided by one hospital in 
accordance with Federal and State laws and regulations or with the approved provisions of 
the uncompensated care pool (UCCP) plan.  In response to Hurricane Katrina, the Deficit 
Reduction Act of 2005 (DRA) authorized Federal funding for the total costs of medically 
necessary uncompensated care furnished to evacuees and affected individuals without other 
coverage in eligible States.  CMS approved Louisianas UCCP plan to reimburse providers 
for medically necessary services provided to Hurricane Katrina evacuees and affected 
individuals and to Hurricane Rita evacuees who did not have other coverage.  
 
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Of the $3.7 million in costs claimed for services provided to 86 patients, $3.4 million was 
unallowable.  Louisiana claimed the unallowable costs because it (1) did not have 
procedures to ensure that it claimed uncompensated care costs only for services covered 
under the Medicaid plan; (2) relied on the hospital to verify that the costs claimed were 
based on actual inpatient days; (3) did not offset its uncompensated care claims by 
payments received from other sources on behalf of the patients; and (4) did not have 
procedures to verify that patients whose costs were claimed under the Hurricane Rita UCCP 
were, in fact, evacuees.  Review of Central Louisiana State Hospitals HurricaneRelated 
Uncompensated Care Claims (A060900084) May 2010. 
Other Issues  >  CHIP  >  Federal Share 
Florida Claimed $5.3 Million for Concurrent Program Enrollees  
Based on our sample results, we estimated that from April 1, 2007, through March 31, 2008, 
Florida claimed $5.3 million in Federal financial participation (FFP), or matching funds, for 
CHIP enrollees who were concurrently enrolled in CHIP and Medicaid for a total 65,121 
enrollmentmonths.  If an individual is eligible for Medicaid, he or she is ineligible for CHIP.  
The Federal Government uses enhanced FMAPs to determine the amount of FFP for State 
expenditures in CHIP.  The concurrent enrollments occurred primarily because (1) Medicaid 
enrollment can be retroactive for up to 3 months, during which time the individual may also 
have been enrolled in CHIP, and (2) the State agencys partners did not have adequate 
internal controls to prevent or correct concurrent enrollments promptly.  Review of 
Concurrently Enrolled State Childrens Health Insurance Program and Medicaid Beneficiaries in 
Florida From April 1, 2007, Through March 31, 2008 (A040903046) September 2010. 
Legal and Investigative Activities 
OIG provides industry guidance in concert with our enforcement activities.  For example, 
pursuant to section 205 of the Health Insurance Portability and Accountability Act of 1996 
(HIPAA), OIG, in consultation with DOJ, issues advisory opinions to outside parties 
regarding the interpretation and applicability of certain statutes relating to Federal health 
care programs.  This authority allows us to provide casespecific formal guidance on the 
application of the antikickback statute and safe harbor provisions and our other health care 
fraud and abuse sanctions.  OIG advisory opinions are available at:  
http://www.oig.hhs.gov/fraud/advisoryopinions.asp. 
Our industry outreach and enforcement efforts affect all Federal health care programs, 
including Medicaid.  OIG investigates allegations of criminal and civil wrongdoing in 
Medicaid and, in conjunction with the Department of Justice (DOJ) and others, conducts 
administrative enforcement and litigation and provides technical support for such efforts.  
Our enforcement work and industry guidance are often designed to have broad impact on 
Federal health care programs.   
 
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Criminal and Civil Enforcement   
One of the most common types of fraud perpetrated against Medicare, Medicaid, and other 
Federal health care programs involves filing false claims for reimbursement.  False claims 
may be pursued under Federal and State criminal statutes and, in appropriate cases, under 
the civil False Claims Act (FCA).   
The successful resolution of false claims often involves the combined investigative efforts 
and resources of OIG, the Federal Bureau of Investigation (FBI), Medicaid Fraud Control 
Units (MFCU), and other law enforcement agencies.  OIG is responsible for assisting DOJ in 
bringing and settling cases under the FCA.  Many providers elect to settle their cases before 
litigation.  As part of their settlements, providers often agree to enter into Corporate 
Integrity Agreements (CIA) with OIG to avoid exclusions from Medicare, Medicaid, and 
other Federal health care programs.  Such agreements are monitored by OIG and require the 
providers to enhance their compliance programs or establish new ones.  The compliance 
programs are designed, in part, to prevent a recurrence of the underlying fraudulent 
conduct. 
During FY 2010, the Governments enforcement efforts resulted in 552 criminal actions and 
371 civil actions against individuals or entities that engaged in healthcarerelated offenses.  
These efforts resulted in $3.2 billion in HHS and $570.2 million in nonHHS investigative 
receivables, including civil and administrative settlements or civil judgments related to 
Medicare; Medicaid; and other Federal, State, and private health care programs.  Some of 
the notable enforcement actions, and other related activities, are described below.  
Summaries are organized by the sector of the health care industry involved or by the nature 
of the offense. 
Pharmaceutical Companies 
New HampshireMylan Pharmaceuticals, Inc. (Mylan), and UDL Laboratories, Inc., agreed 
to pay $118 million plus interest to resolve allegations that the companies submitted false 
claims to the Medicaid program by underpaying rebates due to the States under the 
Medicaid Drug Rebate Program.  The amounts of the rebates are determined in part by 
whether a drug is considered an innovator drug or a noninnovator drug.  The rebate 
that must be paid for innovator drugs is higher than the rebate for noninnovator drugs.  
Mylan and UDL were alleged to have sold innovator drugs that were manufactured by 
other companies and classified the drugs as noninnovator drugs for Medicaid rebate 
purposes.  As a result of the improper classification of the drugs, the companies underpaid 
their rebate obligations under the Medicaid Rebate Program. 
MassachusettsOmnicare, Inc., a provider of pharmacy services to longtermcare (LTC) 
facilities, agreed to pay $98 million plus interest to resolve its FCA liability for allegedly 
engaging with several parties in kickback schemes that resulted in false or fraudulent claims 
being submitted to Medicare Part D and Medicaid.  One of the kickback schemes involved 
generic drug manufacturer IVAX Pharmaceuticals, Inc., and IVAX Corporation 
 
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(collectively, IVAX).  IVAX also entered into a settlement agreement with the 
Government, under which it agreed to pay $14 million plus interest to resolve its FCA 
liability for a kickback violation involving an $8 million payment to induce Omnicare to 
purchase $50 million in drugs from IVAX.  As a result of the kickback, Omnicare submitted 
false or fraudulent claims to Medicaid from January 2000 through June 2004.  Omnicares 
settlement also resolved liability related to kickback schemes it had with skilled nursing 
facilities (SNF) Mariner Health Care, Inc., and SavaSeniorCare Administrative Services, 
LLC, and with pharmaceutical manufacturer Johnson & Johnson.  The settlement with 
Omnicare resolves allegations made in five separate qui tam complaints.  Omnicare also 
entered into a 5year Amended and Restated CIA, which consolidates the terms set out in 
Omnicares preexisting CIA and First Amendment to the CIA effective in November 2006 
and October 2007, respectively.  IVAX also entered into a 5year CIA. 
MassachusettsAs part of a global criminal, civil, and administrative settlement, Biovail 
Corporation agreed to pay $24,775,172 to resolve its liability related to the marketing and 
promotion of the drug Cardizem, L.A., an extendedrelease version of a heart medication to 
control high blood pressure.  From 2003 to 2004, Biovail Pharmaceuticals, Inc. (BPI), a U.S. 
subsidiary of Canadabased Biovail, allegedly paid physicians and other medical prescribers 
up to $1,000 each to induce them to recommend and/or write prescriptions for Cardizem, 
L.A., thereby causing false and/or fraudulent claims for payment to be submitted to 
Medicaid.  Under the civil resolution, Biovail agreed to pay $2,528,782 plus interest to settle 
its potential FCA liability.  Under the criminal resolution, BPI pleaded guilty to conspiracy 
and kickback charges and was ordered to pay an assessment of $2,800 and a criminal fine of 
$22,243,590 (total $22,246,390).  In addition to the monetary settlement, Biovail agreed to 
enter a 5year CIA with OIG. 
Hospitals  
TexasSouth Texas Health System (STHS) agreed to pay $27.5 million and enter into a 
5year CIA to resolve its liability for violations of the Stark Law, antikickback statute, and 
the FCA.  STHS allegedly engaged in improper financial relationships, including medical 
directorships and leases, with seven doctors during various periods from January 1, 1999, to 
December 31, 2006.  STHS submitted claims to Medicare and Medicaid for services rendered 
to patients referred by these doctors to its hospitals. 
Home Health  
MichiganVisitingphysicians practices VPA, PC, and VPA of Texas, PLLC (collectively, 
VPA), agreed to pay $9.5 million and enter into a 5year CIA to resolve allegations under the 
FCA for submitting claims for unnecessary services to Medicare, TRICARE, and the 
Michigan Medicaid program.  VPA was alleged to have improperly billed for unnecessary 
home visits and care plan oversight services, unnecessary tests and procedures, and more 
complex evaluation and management (E&M) services than were actually provided. 
 
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Practitioners 
West VirginiaDr. John Sharp was sentenced to 36 months incarceration and ordered to 
pay $542,275 in restitution for health care fraud.  From May 1998 to January 2006, Dr. Sharp 
defrauded the Medicare, Medicaid, and West Virginia Workers Compensation programs by 
billing for services that were not rendered and causing the programs to pay higher rates of 
reimbursement than were warranted.  The investigation found that Dr. Sharp was given 
notice on several occasions that his billing practices were improper, yet he continued the 
fraudulent billings. 
MarylandPodiatrist Leon Booker agreed to pay $100,629 to resolve his liability under the 
FCA.  An OIG investigation determined that from January 1, 2005, to March 30, 2008, 
Booker falsely submitted claims for payment to Medicare and Medicaid by billing for E&M 
services even though no significant, separately identifiable E&M service was performed. 
Booker also billed for multiple procedures on the same day even though he performed no 
distinct and separate procedure on that day. 
Transportation Companies  
MaineAmbulance Service, Inc. (ASI) and Northern Maine Medical Center (NMMC) 
agreed to pay a total settlement amount of $1,032,000 to resolve their liability under the 
FCA.  ASI also entered into a 5year CIA with OIG.  The settlement resolves ASIs and 
NMMCs liability for allegedly submitting improper Advanced Life Support transport 
claims to Medicare and Medicaid between January 1, 2003, and December 31, 2005.  
Investigators found that an ASI employee was improperly billing and coding for ASIs 
services in 2003 and 2004.  In 2005, NMMC took over the billing and coding functions for 
ASI, and in doing so, hired the same ASI biller who had been improperly billing and coding.  
OIG concluded that ASI and NMMC failed to adequately supervise the employee or ensure 
that she was properly trained.  As a result of the investigation, NMMC terminated the 
employee. 
Medicaid Employee Fraud  
MinnesotaKim Austen was sentenced to 42 months incarceration and ordered to pay 
$903,896 in restitution to the Minnesota Department of Human Services after her guilty plea 
to health care fraud.  An investigation revealed that Austen, a unit supervisor at the 
department, embezzled State and Federal Medicaid funds between August 5, 2003, and 
September 10, 2008.  Austen created a fictitious vendor number in the States electronic 
accounting system under the name of her boyfriend.  Using this vendor number, Austen 
caused 23 paper checks and/or warrants to be manually drafted with her boyfriend as the 
payee.  The payments were taken from an expense account set aside to make advance 
payments to Medicaid providers.  Austen was authorized to approve these types of 
payments as part of her responsibilities at the department.  Austen picked up the checks 
drafted to her boyfriend directly from the Minnesota Department of Finance and deposited 
 
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them into two personal bank accounts, a joint savings account in her and her boyfriends 
names and a checking account in her name only. 
Identity Theft  
IowaDr. Douglas Dvorak was sentenced to 85 months incarceration and ordered to pay 
$71,375 in restitution for mail fraud, aggravated identity theft, and money laundering.  
Dr. Dvorak obtained names and dates of birth of Medicaid beneficiaries (primarily children) 
through family members and friends and used this information to bill the maximum 
number of chiropractic manipulation services allowed by Medicaid for each beneficiary per 
year.  In one example in 2006, he billed the annual maximum chiropractic services (24) on 
nearly consecutive days for premature twin newborns who were patients in a neonatal 
intensive care unit at the time of the purported services.  According to his friends and family 
members who provided the names and dates of birth to Dr. Dvorak, this information was 
provided as potential referrals and not as part of a criminal scheme.  The beneficiaries had 
never heard of Dr. Dvorak or received chiropractic services from him or any other 
chiropractor. 
Medicaid Fraud  
IdahoVanessa Cattanea was sentenced to 20 months incarceration and ordered to pay 
$1,054,259 in restitution after she was found guilty of aiding and abetting health care fraud.  
Cattanea was treatment director for Teton Family Services, a company, owned by Ronald 
Hamilton, that provided mental health services to children.  Between August 2002 and 
March 2006, Hamilton and Cattanea knowingly and fraudulently billed Medicaid for 
services performed by unlicensed staff members and for trips to Yellowstone National Park, 
Bear Lake, and Salt Lake City, which were not reimbursable Medicaid services.  Hamilton, 
who was also found guilty of health care fraud, died in March 2010.  
Medicaid Fraud Control Units  
Medicaid Fraud Control Units (MFCU) are key partners in the fight against fraud, waste, 
and abuse in State Medicaid programs.  In FY 2010, HHS awarded $193.6 million in Federal 
grant funds to 50 State MFCUs (including Washington, DC), which employed 1,827 
individuals.  
Collectively, in FY 2010, MFCUs reported 13,210 investigations, of which 9,710 were related 
to Medicaid fraud and 3,500 were related to patient abuse and neglect, including patient 
funds cases.  The cases resulted in 1,603 individuals being indicted or criminally charged, 
including 1,048 for fraud and 555 for patient abuse and neglect, including patient funds 
cases.  In total, 1,324 convictions were reported in FY 2010, of which 836 were related to 
Medicaid fraud and 488 were related to patient abuse and neglect, including patient funds 
cases. 
 
____________________________________________________________________________________________________ 
   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | A19     Appendix A:  Medicaid Results From the FY 2010 Semiannual Reports to Congress 
____________________________________________________________________________________________________ 
Joint Investigations 
PennsylvaniaPediatrician Dr. Saroj Parida was sentenced to 8 years incarceration and 
ordered to pay $7,116,423 in restitution after pleading guilty to charges of health care fraud, 
mail fraud, and forfeiture.  From 2003 through 2009, Dr. Parida submitted fraudulent claims 
to Medicaid, TRICARE, and private insurance companies for services not rendered.  The 
investigation involved OIG, the U.S. Postal Inspection Service, the Defense Criminal 
Investigative Service, the Pennsylvania Attorney Generals MFCU and Insurance Fraud 
Section, the South Carolina Attorney Generals MFCU and Insurance Fraud Division, and 
the Cumberland County, Pennsylvania, District Attorneys Office. 
South DakotaReed Hittle, physical therapist and owner of Precision Physical Therapy, 
Inc., was sentenced to 10 months home confinement and ordered to pay $119,260 in 
restitution for his guilty plea to charges of false statements relating to health care matters.  
Between January 2005 and July 2008, Hittle billed Medicare and Medicaid for physical 
therapy treatments on patients, documenting that he performed the treatments himself.  
However, many of the billed treatments were administered by an unlicensed and untrained 
assistant.  The investigation involved OIG, the FBI, and the South Dakota MFCU. 
TennesseeFORBA Holdings, LLC, agreed to pay $24 million plus interest and enter into a 
5year qualityofcare CIA to resolve its liability for violations of the FCA.  FORBA manages 
a chain of 68 pediatric dental clinics in 22 States and the District of Columbia commonly 
known as Small Smiles Centers. The settlement resolves allegations that FORBA caused 
false claims to be submitted to Medicaid programs for dental services performed on 
lowincome children insured by Medicaid.  The investigation revealed that, among other 
things, FORBA was alleged to have caused the submission of claims for reimbursement for 
dental services that were not medically necessary or did not meet professionally recognized 
standards of care.  The services billed to the Medicaid programs included performing 
pulpotomies (baby root canals), placing crowns, administering anesthesia, performing 
extractions, and providing fillings and/or sealants.  The investigation involved the OIG, the 
FBI, and the National Association of Medicaid Fraud Control Units (NAMFCU).  
FloridaSachin Amin, owner and managing pharmacist of The Rx Shop, was sentenced to 
18 months incarceration and ordered to pay $738,000 in restitution after pleading guilty to 
submitting false claims to Medicare and Medicaid.  From 2005 through 2007, Amin 
submitted false claims for prescription medications that were never dispensed.  The 
investigation involved OIG, the FBI, the Defense Criminal Investigative Service, the Office 
of Personnel Management (OPM), the Drug Enforcement Agency, the Florida Department 
of Law Enforcement, and the Florida MFCU. 
South CarolinaLalendra DeSilva and Carolina Pennington, coowners of the durable 
medical equipment (DME) company Helex, Inc., were sentenced for conspiracy to commit 
income tax fraud.  DeSilva was sentenced to 30 months incarceration and ordered to pay 
$201,984 in restitution, of which $112,000 is owed to the Medicaid program.  Pennington 
 
____________________________________________________________________________________________________ 
   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | A20     Appendix A:  Medicaid Results From the FY 2010 Semiannual Reports to Congress 
____________________________________________________________________________________________________ 
was sentenced to 1 year and 1 day of incarceration and ordered to pay $86,123 in restitution.  
The investigation revealed that Helex billed Medicaid for volume ventilators that 
beneficiaries never received.  DeSilva and Pennington bought a $415,000 home in cash 
without filing tax returns during Helexs first 2 years in operation.  The investigation 
involved OIG, the Internal Revenue Service (IRS), and the South Carolina MFCU. 
GeorgiaDr. Randy Lentz and physical therapist Scott Bowlin were sentenced after their 
guilty pleas to conspiracy to commit health care fraud.  Lentz was sentenced to 34 months 
incarceration and ordered to pay $248,755 in restitution, and Bowlin was sentenced to 19 
months incarceration and ordered to pay $19,839 in restitution.  Dr. Lentz owned and 
operated a Jesup gym that was in financial difficulty.  To keep the gym in operation, Dr. 
Lentz and Bowlin devised a scheme to bill Medicare and Medicaid for physical therapy 
services that were not provided; their alleged patients were simply working out in the gym.  
The investigation involved OIG, the FBI, and the Georgia MFCU.  
Rhode IslandDrs. Frank Lafazia and James Gallo entered into a settlement and release 
agreement with the Rhode Island MFCU.  Drs. Lafazia and Gallo agreed to pay $40,300 and 
$34,700, respectively, to settle allegations that they charged patients between $100 and $175 
in cash for office visits to obtain prescriptions for Suboxone, despite the fact that the patients 
were enrolled in Medicare and/or Medicaid.  The investigation determined that the 
physicians told beneficiaries that if they did not pay cash for each office visit, which 
typically lasted only a few minutes, they would not receive a prescription for Suboxone, 
which is used to help treat Opioid drug addiction.  Drs. Lafazia and Gallo also required 
Suboxone patients to sign agreements that stated the physicians would not bill any 
Suboxonerelated visits to Medicare or Medicaid, despite the fact that both physicians billed 
Medicare and Medicaid for services such as laboratory tests related to Suboxone treatment 
and office visits unrelated to Suboxone treatment.  There was no technical loss to the 
Medicare or Medicaid programs, and both physicians agreed to give full refunds to the 
beneficiaries who paid out of pocket for the Suboxone prescriptions.  The settlement amount 
also included expenses incurred in the joint OIGRhode Island MCFU investigation. 
Provider SelfDisclosure Protocol   
OIG makes available comprehensive guidelines describing the process for providers to 
voluntarily submit to OIG selfdisclosures of fraud, waste, or abuse.  OIGs Provider 
SelfDisclosure Protocol gives providers an opportunity to minimize the potential costs 
and disruption that a fullscale OIG audit or investigation may entail if fraud is uncovered.  
In doing so, the selfdisclosure also enables the provider to negotiate a reasonable monetary 
settlement and potentially avoid being excluded from participation in Federal health care 
programs.  The protocol guides providers and suppliers through the process of structuring a 
disclosure to OIG about matters that constitute potential violations of Federal laws (as 
opposed to honest mistakes that may have resulted in overpayments).  After making an 
initial disclosure, the provider or supplier is expected to thoroughly investigate the nature 
 
____________________________________________________________________________________________________ 
   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | A21     Appendix A:  Medicaid Results From the FY 2010 Semiannual Reports to Congress 
____________________________________________________________________________________________________ 
and cause of the matters uncovered and make a reliable assessment of their economic 
impact (e.g., an estimate of the losses to Federal health care programs).  OIG evaluates the 
reported results of each internal investigation to determine the appropriate course of action.  
The selfdisclosure guidelines are available on the OIG Web site at: 
http://www.oig.hhs.gov/fraud/selfdisclosure.asp.   
The following are Medicaidrelated examples: 
MassachusettsElder Service Plan of the North Shore (ESPNS) and East Boston 
Neighborhood Health Center (EBNHC) agreed to pay $308,709 and $200,962, respectively, 
to resolve their Civil Monetary Penalties Law (CMPL) liability for contracting with an 
excluded dentist, Dr. Steven Ramos, for dental services that he provided to Medicare and 
Medicaid beneficiaries.  Both parties had contracted with Dr. Ramos from May 2006 through 
February 2009.  EBNHC selfdisclosed to OIG that it had contracted with Dr. Ramos while 
he was excluded.  During the course of investigating EBNHCs selfdisclosure, OIG 
discovered that ESPNS had also contracted with Dr. Ramos. 
North CarolinaThe Neurological Institute, P.A., formerly known as Neurology 
Consultants of the Carolinas, P.A. (Institute), agreed to pay $181,851 to resolve its CMPL 
liability. The Institute disclosed to OIG that from October 1, 2003, through June 30, 2006, it 
improperly submitted claims to Medicare and Medicaid for (1) a physicians services (or an 
item or service incident to a physicians service) when the individual who furnished the 
service was not a physician, (2) services provided by Dr. T. Hemanth Rao when the services 
were not actually provided by Dr. Rao, and (3) services provided based on codes that the 
Institute knew or should have known would result in greater payments than were 
appropriate.  
Program Exclusions  
During FY 2010, OIG excluded 3,340 individuals and entities from Medicare, Medicaid, and 
other Federal health care programs.  Most of the exclusions resulted from convictions for 
crimes relating to Medicare or Medicaid, for patient abuse or neglect, or as a result of license 
revocation.  See http://exclusions.oig.hhs.gov/.    
 
For example: 
KansasShelley Harding, a certified alcohol and drug abuse counselor, owner, and 
operator of a counseling center in Kansas, was excluded for a minimum of 30 years based 
on her health care fraud conviction.  Between June 2001 and February 2006, Harding, doing 
business as A New Beginning, submitted materially false and fraudulent claims and caused 
others to submit materially false and fraudulent claims to Medicaid for communitybased 
drug and alcohol abuse services for 81 children.  Harding was sentenced to 24 months 
incarceration and ordered to pay $3,758,951 in restitution. 
 
____________________________________________________________________________________________________ 
   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | A22     Appendix A:  Medicaid Results From the FY 2010 Semiannual Reports to Congress 
____________________________________________________________________________________________________ 
OhioChiropractor Gregory Dew was excluded for a minimum of 60 years based on his 
conviction for rape, corruption of a minor, and gross sexual imposition.  The Ohio State 
Chiropractic Board permanently revoked his license, and the State Medical Board of Ohio 
permanently revoked his license to practice as a physician assistant.  The Ohio Department 
of Job and Family Services also terminated his Medicaid Provider Agreement.  Dew was 
sentenced to 43 years incarceration.  
 
 
____________________________________________________________________________________________________ 
   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | A23     Appendix B:  Medicaid Projects From the FY 2011 Work Plan 
____________________________________________________________________________________________________ 
 
 
 
 
Appendix B: 
 
Medicaid Projects 
 From the FY 2011 Work Plan
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report    Appendix B:  Medicaid Projects From the FY 2011 Work Plan 
____________________________________________________________________________________________________ 
 
 
Appendix B: 
 
Medicaid Projects  
From the FY 2011 Work Plan 
Medicaid Hospitals 
Hospital Outlier Payments 
(OAS; W001031069; W001131069; various reviews; expected issue date: FY 2011; work 
in progress) 
 
Provider Eligibility for Medicaid Reimbursement 
(OAS; W001031301; W001131301; various reviews; expected issue date: FY 2011; work 
in progress) 
 
Supplemental Payments to Private Hospitals 
(OAS; W001031126; W001131126; various reviews; expected issue date: FY 2011; work 
in progress) 
 
Potentially Excessive Medicaid Payments for Inpatient and Outpatient 
Services 
(OAS; W000931127; W001031127; W001131127; various reviews; expected issue date: 
FY 2011; work in progress) 
Medicaid Home, Community, and Nursing Home Care 
Community Residence Rehabilitation Services 
(OAS; W000831087; W000931087; W001031087; W001131087; various reviews; 
expected issue date: FY 2011; work in progress) 
 
Medicaid Payments to Continuing Day Treatment Providers 
(OAS; W000931128; W001131128; various reviews; expected issue date: FY 2011;  
work in progress) 
 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | B1  
    Appendix B:  Medicaid Projects From the FY 2011 Work Plan 
____________________________________________________________________________________________________ 
Medicaid Home Health Agency Claims 
(OAS; W000931304; W001031304; W001131304; various reviews; expected issue date: 
FY 2011; work in progress) 
 
Medicaid Payments for Personal Care Services 
(OAS; W000931035; W001031035; W001131035; various reviews; expected issue date: 
FY 2011; work in progress) 
 
Medicaid Hospice Services 
(OAS; W001131385; various reviews; expected issue date: FY 2011; new start.  
OEI; 000000000; expected issue date: FY 2012; new start) 
 
Medicaid Adult Day Care Services for Elderly Individuals Who Have 
Chronic Functional Disabilities 
(OAS; W001131386; various reviews; expected issue date: FY 2011; new start) 
 
Medicaid Adult Day Health Service 
(OEI; 090700500; expected issue date: FY 2011; work in progress) 
 
Appropriateness of Level of Care Determinations for Home and 
CommunityBased Services Waiver Recipients 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
State and Federal Oversight of Home and CommunityBased Services 
(OEI; 020800170; expected issue date: FY 2011; work in progress) 
 
State and Federal Oversight of Home and CommunityBased Services in 
Assisted Living Facilities 
(OEI; 090800360; expected issue date: FY 2011; work in progress) 
 
CMS Oversight of Accuracy of Nursing Home Minimum Data 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
Transparency Within Nursing Facility Ownership 
(OAS; W001131130; various reviews; expected issue date: FY 2011; new start) 
 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | B2  
    Appendix B:  Medicaid Projects From the FY 2011 Work Plan 
____________________________________________________________________________________________________ 
States Administration and Use of Civil Monetary Penalty Funds in 
Medicaid Nursing Homes 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
Medicaid Incentive Payments for Nursing Facility QualityofCare 
Performance Measures 
(OAS; W001031331; W001131331; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Medicaid Waiver Administrative Costs 
(OAS; W001031332; W001131332; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Health Screenings of Medicaid Home Health Care Workers 
(OAS; W001131387; various reviews; expected issue date: FY 2011; new start) 
Medicaid Prescription Drugs 
Calculation of Average Manufacturer Prices 
(OAS; W001131202; various reviews; expected issue date: FY 2011; new start) 
 
Recalculation of Base Date Average Manufacturer Prices 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
States Medicaid Drug Claims 
(OAS; W001031203; various reviews; expected issue date: FY 2011; work in progress) 
 
Federal Upper Payment Limit Drugs 
(OAS; W001131333; various reviews; expected issue date: FY 2011; new start) 
 
Pharmacy Prescription Drug Claims 
(OAS; W000931318; W001031318; W001131318; various reviews; expected issue date: 
FY 2011; work in progress) 
 
Medicaid Pharmacy Reimbursement 
(OAS; W001131388; various reviews; expected issue date: FY 2011; new start) 
 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | B3  
    Appendix B:  Medicaid Projects From the FY 2011 Work Plan 
____________________________________________________________________________________________________ 
Medicaid Payments for Drugs Not Approved for Use by Children 
(OAS; W001131131; various reviews; expected issue date: FY 2011; new start) 
 
Medicaid ThirdParty Liability for Prescription Drug Payments 
(OAS; W001031134; W001131134; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Compound Drugs 
(OAS; W001031317; various reviews; expected issue date: FY 2011; work in progress) 
 
The Deficit Reduction Act of 2005: Impact on Medicaid Rebates for 
Authorized Generic Drugs 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
States Collection of Medicaid Rebates for PhysicianAdministered Drugs 
(OEI; 030900410; expected issue date: FY 2011; work in progress) 
 
Medicaid Claims for Drugs Purchased Under Retail Discount Generic 
Programs 
(OEI; 000000000; expected issue date: FY 2011; new start) 
 
Review of Medicaid Policies and Oversight Activities Related to 340B 
Entities 
(OEI; 050900321; expected issue date: FY 2011; work in progress) 
 
HighCost HIV/AIDS Drugs 
(OAS; W001031334; W001131334; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Reporting Lowest Accepted Reimbursement Rates 
(OAS; W001131336; various reviews; expected issue date: FY 2011; new start) 
 
ZeroDollar Unit Rebate Amounts for Drugs in Medicaids Drug Rebate 
Program 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | B4  
    Appendix B:  Medicaid Projects From the FY 2011 Work Plan 
____________________________________________________________________________________________________ 
Medicaid Drug Pricing in State Maximum Allowable Cost Programs 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
States Efforts and Experiences With Resolving Medicaid Rebate Disputes 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
Changes in Prices for Medicaid BrandName Drugs 
(OEI; 031000260; expected issue date: FY 2011; work in progress) 
Other Medicaid Services 
Medicaid Dental Services 
(OAS; W001031135; W001131135; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Medicaid Payments for Physical, Occupational, and Speech Therapy 
Services 
(OEI; 071000370; expected issue date: FY 2011; work in progress) 
 
Rehabilitative Services 
(OAS; W001131389; various reviews; expected issue date: FY 2011; new start) 
 
Medicaid Medical Equipment 
(OAS; W001131390; various reviews; expected issue date: FY 2011; new start) 
 
Family Planning Services 
(OAS; W000931078; W001031078; W001131078; various reviews; expected issue date: 
FY 2011; work in progress) 
 
Medicaid SchoolBased Services 
(OAS; W001131391; various reviews; expected issue date: FY 2011; new start) 
 
Medicaid Payments for Transportation Services 
(OAS; W000931121; W001031121; W001131121; various reviews; expected issue date: 
FY 2011; work in progress) 
 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | B5  
    Appendix B:  Medicaid Projects From the FY 2011 Work Plan 
____________________________________________________________________________________________________ 
Payments to Terminated and/or Excluded Medicaid Providers and 
Suppliers 
(OAS; W001031337; W001131337; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Medicaid Claims With Inactive or Invalid Physician Identifier Numbers 
(OAS; W001131338; various reviews; expected issue date: FY 2011; new start) 
Medicaid Administration 
Contingency Fee Payment Arrangements 
(OAS; W000731045; W000831045; W000931045; W001131045; various reviews; 
expected issue date: FY 2011; work in progress) 
 
Early Results From Medicaid Integrity Contractors 
(OEI; 051000200, 051000210; expected issue date: FY 2011; work in progress) 
 
State Oversight of Provider Credentialing by Medicaid Managed Care 
Plans 
(OEI; 091000270; expected issue date: FY 2011; work in progress) 
 
Medicaid Managed Care Entities Marketing Practices 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
Excluded Providers in Medicaid Managed Care Entities 
(OEI; 070900630; expected issue date: FY 2011; work in progress) 
 
Medicaid Managed Care Fraud and Abuse Safeguards 
(OEI; 010900550; expected issue date: FY 2011; work in progress) 
 
Use of Prepayment Review To Detect and Deter Fraud and Abuse in 
Medicaid Managed Care 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
Medicaid Administrative Costs 
(OAS; W001031123; W001131123; various reviews; expected issue date: FY 2011;  
work in progress) 
 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | B6  
    Appendix B:  Medicaid Projects From the FY 2011 Work Plan 
____________________________________________________________________________________________________ 
Impact on the Medicaid Program of Certified Public Expenditures 
(OAS; W001131110; various reviews; expected issue date: FY 2011; new start) 
 
Medicaid Management Information System Costs 
(OAS; W001031312; W001131312; various reviews; expected issue date: FY 2011;  
work in progress) 
 
State BuyIn of Medicare Coverage 
(OAS; W001031220; W001131220; various reviews; expected issue date: FY 2011;  
work in progress) 
 
State Agency Oversight of Medical Loss Ratio Experience Adjustment 
(OAS; W001131372; various reviews; expected issue date: FY 2011; new start) 
 
States Effort To Improve ThirdParty Liability Payment Collections in 
Medicaid 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
States Reporting of Program Income From ThirdParty Reimbursements 
(OAS; W001031376; W001131376; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Medicaid Credit Balances 
(OAS; W001031311; W001131311; various reviews; expected issue date: FY 2011;  
work in progress) 
 
States Use of the Public Assistance Reporting Information System to 
Reduce Medicaid Benefits Received From More Than One State 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
Duplicate Medicaid Payments for Beneficiaries With Multiple Medicaid 
Identification Numbers 
(OAS; W001031374; W001131374; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Medicaid Managed Care Payments for Deceased Beneficiaries 
(OAS; W001131392; various reviews; expected issue date: FY 2011; new start) 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | B7  
    Appendix B:  Medicaid Projects From the FY 2011 Work Plan 
____________________________________________________________________________________________________ 
 
States Compliance With Estate Recovery Provisions of the Social Security 
Act 
(OAS; W000931113; W001031113; W001131113; various reviews; expected issue date: 
FY 2011; work in progress) 
 
Medicaid Services to Incarcerated Juveniles 
(OAS; W000731222; W001131222; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Medicaid Citizenship Documentation Requirements 
(OAS; W001031224; W001131224; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Payment Error Rate Measurement: Fiscal Year 2008 Error Rate 
(OAS; W001040045; W001140045; expected issue date: FY 2011; work in progress) 
 
Medicaid and Childrens Health Insurance Program Payment Error Rate 
Measurement 
(OAS; W001140046; various reviews; expected issue date: FY 2011; new start) 
 
Compliance With Payment Error Rate Measurement Program: Medicaid and 
Childrens Health Insurance Program Eligibility Determinations 
(OAS; W001040038; expected issue date: FY 2011; work in progress) 
 
Childrens Health Insurance Program Administrative Costs 
(OAS; W000931226; W001031226; various reviews; expected issue date: FY 2011;  
work in progress) 
 
Dually Enrolled Beneficiaries in a State 
(OAS; W001031314; various reviews; expected issue date: FY 2011; work in progress) 
 
State Compliance With CHIP Eligibility and Enrollment Notification and 
Review Requirements 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | B8  
    Appendix B:  Medicaid Projects From the FY 2011 Work Plan 
____________________________________________________________________________________________________ 
Medicaid Program Integrity Best Practices 
(OAS; W001131396; various reviews; expected issue date: FY 2011; new start) 
 
Medicare and Medicaid Data Matching Project 
(OEI; 090800370; expected issue date: FY 2011; work in progress) 
 
Collection and Verification of Provider Ownership Information by State 
Medicaid Agencies 
(OEI; 000000000; expected issue date: FY 2011; new start) 
 
Oversight of State Data Reporting 
(OEI; 000000000; expected issue date: FY 2012; new start) 
 
States Readiness to Comply With ACA Eligibility and Enrollment 
Requirements 
(OEI; 071000530; expected issue date: FY 2012; work in progress) 
Medicaid Information Systems and Data Security 
Medicaid Management Information Systems Business Associate 
Agreements 
(OAS; W001141015; various reviews; expected issue date: FY 2011; new start) 
 
Medicaid Security Controls Over State WebBased Applications 
(OAS; W001141016; various reviews; expected issue date: FY 2011; new start) 
 
Medicaid Security Controls at the Mainframe Data Centers That Process 
States Claims Data 
(OAS; W001040019; W001140019; expected issue date: FY 2011; work in progress,  
new start) 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | B9  
    Appendix C:  Medicaid Items From the March 2011 Compendium of Unimplemented Recommendations  
____________________________________________________________________________________________________ 
 
 
 
 
 
Appendix C: 
 
Medicaid Items From  
the March 2011 Compendium 
of Unimplemented Recommendations 
 
 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report    Appendix C:  Medicaid Items From the March 2011 Compendium of Unimplemented Recommendations  
____________________________________________________________________________________________________ 
 
 
 
Appendix C:   
 
Medicaid Items From  
the March 2011Compendium  
of Unimplemented Recommendations  
This appendix lists Medicaidrelated recommendations included in the March 2011 
Compendium of Unimplemented Office of Inspector General Recommendations (Compendium).  
These recommendations, when implemented,  will resul t  in cost savings and program 
improvements.  The recommendations are based on work conducted by the Office of 
Inspector Generals (OIG) Office of Audit Services (OAS) and Office of Evaluation and 
Inspections (OEI).  The Compendium contains explanations of the recommendations listed 
below and is available on OIGs Web site at:  http://www.oig.hhs.gov/publications.asp.  
OIG relies on the Department of Health & Human Services (HHS) management and other 
Government policymakers to implement our recommendations.  Many of our 
recommendations are directly implemented by organizations within HHS, and some are 
acted on by States that collaborate with HHS to administer, operate, and/or oversee 
designated programs, such as Medicaid.  HHS and the States sometimes do not immediately 
implement OIGs recommendations for various reasons, including administrative 
complexities, the current policy environment, or a lack of statutory authority.  In such cases, 
Congress may step in to incorporate OIGs recommendations into legislative actions, many 
of which result in substantial funds being made available for better use or in program 
improvements.   
Federal and State Partnership  
Limit Enhanced Payments to Cost and Require That Medicaid Payments Returned by Public 
Providers Be Used To Offset the Federal Share 
Improper Payments 
Ensure Compliance With Requirements for Medicaid SchoolBased Health Services  
Prevent Duplicate Medicaid and Medicare Home Health Payments  
Enforce Federal Medicaid Payment Policies for Personal Care Services  
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | C1    Appendix C:  Medicaid Items From the March 2011 Compendium of Unimplemented Recommendations  
____________________________________________________________________________________________________ 
 
Prescription Drugs  
Ensure That Medicaid Reimbursement for BrandName Drugs Accurately Reflects 
Pharmacy Acquisition Costs 
Encourage States To Align Medicaid Generic Drug Pharmacy Reimbursements With 
Pharmacies Acquisition Costs 
Establish a Connection Between the Calculations of Medicaid Drug Rebates and Drug 
Reimbursements  
Clarify and Improve Program Guidance to Drug Manufacturers on Average Manufacture 
Price Issues  
Implement an Indexed BestPrice Calculation in the Medicaid Drug Rebate Program 
Extend Additional Rebate Payment Provisions to Generic Drugs 
Identify Drugs That Are Ineligible for Federal Payments Under Medicaid  
Medicaid Administration 
Enforce Federal Requirements for Submission of Medicaid Managed Care Encounter Data  
Establish a National Medicaid Credit Balance Reporting Mechanism 
Advise States of Their Authority To Collect From Noncustodial Parents With the Ability To 
Contribute Toward Their Childrens Medicaid or Childrens Health Insurance Program 
Costs 
Improve Medicaid Childrens Access to Required Preventive Screening Services (New) 
 
 
 
____________________________________________________________________________________________________ 
  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | C2    Appendix D:  Audit and Evaluation Final Reports Issued in FY 2010 
____________________________________________________________________________________________________ 
 
 
 
 
 
Appendix D: 
 
Audit and Evaluation  
Final Reports Issued in FY 2010 
 
____________________________________________________________________________________________________ 
   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report     Appendix D:  Audit and Evaluation Final Reports Issued in FY 2010 
____________________________________________________________________________________________________ 
 
 
 
Appendix D: 
 
Audit and Evaluation Final Reports 
Issued in Fiscal Year 2010 
 
Appendix D, which is a complete list of our Medicaidrelated reports issued during FY 2010, 
differs from Appendix A in that Appendix A provides short summaries of the audits, 
evaluations, and investigative outcomes that were included in OIGs Semiannual Report(s) to 
Congress for FY 2010.  Not all of our reports are included in the Semiannual Reports.  The 
full text of the publicly available reports in the list below can be accessed on our Web site by 
searching on the claim number that follows each title.  The Web site is at: 
http://www.oig.hhs.gov.    
Medicaid Hospitals 
Review of Medicaid Supplemental Rate Payments to UMass Memorial Health Care, Inc., 
for Fiscal Years 2004 and 2005 (A010700013) 
 
Review of Medicaid Disproportionate Share Hospital Payments Made by Maine to the 
Riverview Psychiatric Center (A010900011)   
 
Review of Medicaid Disproportionate Share Hospital Payments Made By Connecticut to 
Hartford Hospital for Federal Fiscal Years 2007 and 2008 (A010900012) 
 
Review of Medicaid Settlement of the Medical University of South Carolina Medical Center 
for Fiscal Year Ended June 30, 2008 (A041006125) 
 
Review of Medicaid HighDollar Payments for Inpatient Services in Illinois From January 1, 
2006, Through September 30, 2007Hospitals With Fewer Than Five HighDollar Payments 
(A050900048) 
 
Review of Medicaid Disproportionate Share Hospital Payment Distribution 
 (A070904150) 
 
Review of Medicaid Credit Balances at Rideout Memorial Hospital as of July 31, 2009 
(A090900106) 
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Medicaid Home, Community, and Nursing Home Care 
Review of Medicaid Payments at Age Institute of Massachusetts, Inc. for State Fiscal Years 
2007 Through 2009 (A011000006) 
 
Review of Medicaid Payments at Cummings Healthcare LTC Group for State Fiscal Years 
2007 Through 2009 (A011000010) 
 
Audit of Gentiva Medicaid Home Health Agency Claims in Kentucky (A040906012) 
 
Review of Houston Companies Medicaid Cost Reports for Calendar Years 2003, 2004, and 
2005 (A050800053) 
 
Review of Medicaid Personal Care Service Claims Submitted by Independence First, Inc., 
and Claimed by Wisconsin From July 1, 2006, Through June 30, 2008 
 (A050900093) 
 
Review of Medicaid Personal Care Service Claims Submitted by Dane County Department 
of Human Services and Claimed by Wisconsin From July 1, 2006, Through June 30, 2008  
(A051000018) 
 
Review of Iowa Medicaid Payments for Home Health Agency Claims Paid to Iowa Home 
Care, LLC (A070901070) 
 
Review of Iowa Medicaid Payments for Home Health Agency Claims Paid to Ultimate 
Nursing Services of Iowa, Inc. (A070901078) 
 
Review of Iowa Medicaid Payments for Home Health Agency Claims (A071001081) 
 
Review of Nebraska Medicaid Payments for Home Health Agency Claims Paid to First Care 
Home Health of Eastern Nebraska, Inc. (A071001086) 
 
Review of Colorado Medicaid Payments for Home Health Agency Claims Paid to 
Professional Pediatric Home Care, Inc. (A071001088) 
 
Most Medicaid Children in Nine States Are Not Receiving All Required Preventive 
Screening Services (OEI050800520)   
Medicaid Prescription Drugs 
FollowUp Audit of the Medicaid Drug Rebate Program in Maine (A010900001) 
 
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Review of Vermonts Compliance With the Reimbursement of State Costs for Provision of 
Part D Drugs Medicare Demonstration Project Requirements (A011000600) 
 
Followup Review of the Medicaid Drug Rebate Program in Indiana (A040807006) 
 
Review of Additional Rebates for BrandName Drugs With Multiple Versions  
(A060900033) 
 
Review of Medicaid Compound Drug Expenditures in California for Fiscal Years 2004 and 
2005 (A090800034) 
 
Review of Californias Invoicing of Rebates for Medicaid Compound Drug Expenditures
Manual Claims (A090900055) 
 
 Drug Manufacturers Noncompliance With Average Manufacturer Price Reporting   
(OEI030900060)   
Other Medicaid Services 
Review of New Jerseys Medicaid Emergency Payment Program for Nonqualified Aliens  
(A020701038) 
 
Review of New Jerseys Medicaid SchoolBased Health Claims Submitted by Maximus, Inc. 
(A020701051) 
 
Review of New Jerseys Medicaid SchoolBased Health Claims Submitted by Public 
Consulting Group, Inc. (A020701052) 
 
Review of Early Intervention Services Costs Claimed by New Jersey to the Medicaid 
Program (A020801019) 
 
Review of Medicaid Funding for Emergency Services Provided to Nonqualified Aliens  
(A040707032) 
 
Review of Concurrently Enrolled State Childrens Health Insurance Program and Medicaid 
Beneficiaries in Florida From April 1, 2007, Through March 31, 2008 
 (A040903046) 
 
Review of Nonemergency Medical Transportation Costs in the State of Texas 
(Transportation Provided by Capital Area Rural Transit System) (A060800096) 
 
Review of Missouri Medicaid Payments for the School District Administrative Claiming 
Program for Federal Fiscal Years 2004 Through 2006 (A070803107) 
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Review of Selected Claims Included in the Kansas Medicaid Family Planning Program  
(A070904146) 
 
Review of Family Planning Pharmacy Claims Submitted by Selected Providers Under the 
State of Kansas Medicaid Program (A071004157) 
 
Review of Arizonas Medicaid Claims for SchoolBased Health Services (A090700051) 
Medicaid Administration 
Review of Medicaid Administrative Costs Claimed for the Massachusetts Department of 
Transitional Assistance (A010800014) 
 
Review of Rhode Islands Compliance With the American Recovery and Reinvestment Act 
of 2009 Medicaid Eligibility Requirements (A010900007) 
 
Review of New Hampshires Compliance With ARRA Medicaid Eligibility Requirements 
(A011000002) 
 
Review of Early Intervention Services Costs Claimed by New Jersey to the Medicaid 
Program (A020701053) 
 
Review of New Jerseys Medicaid Management Information System Expenditures for the 
Period January 1, 2006, Through December 31, 2007 (A020801015) 
 
Review of New York States Compliance With the Political Subdivision Requirement for the 
Increased Federal Medicaid Assistance Percentage Under the American Recovery and 
Reinvestment Act of 2009 (A020901029) 
 
Review of New Jerseys Compliance With the Reserve or Rainy Day Fund Requirement for 
the Increased Federal Medical Assistance Percentage Under the American Recovery and 
Reinvestment Act (A020901030) 
 
Review of New York States Compliance With the Prompt Pay Requirements for the 
Increased Federal Medical Assistance Percentage Under the American Recovery and 
Reinvestment Act of 2009 (A020901037) 
 
Review of Medicaid Management Information System Prepayment Edit in the District of 
Columbia (A030800208) 
 
Review of Delawares Claims Associated With the Increased Federal Medical Assistance 
Percentage Under the American Recovery and Reinvestment Act of 2009 (A030900202) 
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Review of Marylands Claims Associated With the Increased Federal Medical Assistance 
Percentage Under the American Recovery and Reinvestment Act of 2009 (A030900203) 
 
Review of Pennsylvanias Compliance With the Prompt Payment Requirements of the 
American Recovery and Reinvestment Act of 2009 (A030900204) 
 
Review of Floridas Developmental Disabilities Medicaid Administrative Claiming Costs for 
the Period October 1, 2003, Through September 30, 2006 (A040700028) 
 
Review of the Quarterly Medicaid Statement of Expenditures for the Medical Assistance 
Program in Tennessee (A040904040) 
 
Review of Floridas Claims Associated With the Increased Federal Medical Assistance 
Percentage Under the American Recovery and Reinvestment Act of 2009 (A040906110) 
 
Review of Alabamas Claims Associated With the Increased Federal Medical Assistance 
Percentage Under the American Recovery and Reinvestment Act of 2009 (A040906111) 
 
Review of the State of Wisconsins Reporting Fund Recoveries for Federal and State 
Medicaid Programs on the Form CMS64 for Fiscal Years 2006 and 2007 (A050800067) 
 
Review of Eligibility Redeterminations for Medicaid Beneficiaries in Cook County, Illinois, 
for the Period July 1, 2006, Through June 30, 2007 (A050800091) 
 
Review of Minnesotas Reporting Fund Recoveries for Federal and State Programs on the 
CMS64 for the Period October 1, 2005, Through December 31, 2008 (A050900022) 
 
Review of the State of Wisconsins Medicaid Management Information System Expenditures 
for the Period October 1, 2006, Through September 30, 2008 (A050900073) 
 
Review of Ohios Reporting Fund Recoveries for Federal and State Programs on the CMS64 
for Fiscal Years 2008 Through 2009 (A050900102) 
 
Review of Michigans Reporting Fund Recoveries for State Medicaid Programs on the Form 
CMS64 for Federal Fiscal Years 2008 and 2009 (A050900103) 
 
Review of Medicaid Overpayments Identified by the Illinois Division of Rehabilitation 
Services for Services Provided From December 1, 1999, Through December 31, 2008 
 (A051000013) 
 
Review of American Recovery and Reinvestment Act of 2009 Medicaid Eligibility 
Requirements in Minnesota (A051000014) 
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   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | D5      Appendix D:  Audit and Evaluation Final Reports Issued in FY 2010 
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Review of Michigans Reporting Fund Recoveries for State Medicaid Programs on the Form 
CMS64 for the First Quarter 2010 (A051000061) 
 
Audit of the Indian Health Service Fiscal Year 2005 Cost Statement for the Oklahoma City 
Area Office (A060700080) 
 
Review of Californias Department of Health Care Services Fiscal Year 2007 Payment Error 
Rate Measurement Universes (A060800050) 
 
Oversight and Evaluation of the Fiscal Year 2007 Payment Error Rate Measurement 
Program (A060800078) 
 
Review of Medicaid Payments for Services Claimed To Have Been Rendered to Deceased 
Recipients in Texas (A060900065) 
 
Analysis of Improper Payments Identified During the Payment Error Rate Measurement 
Program Reviews in 2006 and 2007 (A060900079) 
 
Review of Central Louisiana State Hospitals HurricaneRelated Uncompensated Care 
Claims (A060900084) 
 
Review of Medicaid Payments for Services Claimed To Have Been Rendered to Deceased 
Recipients in Louisiana (A060900089) 
 
Review of American Recovery and Reinvestment Act of 2009 Medicaid Eligibility 
Requirements in Texas (A060900099) 
 
Review of American Recovery and Reinvestment Act of 2009 Medicaid Eligibility 
Requirements in Louisiana (A060900100) 
 
Review of Medicaid Credit Balances at Arkansas Health Center as of June 30, 2009 
 (A060900102) 
 
Review of Medicaid Credit Balances at Northridge Healthcare and Rehabilitation as of 
June 30, 2009 (A060900105) 
 
Audit of the Indian Health Service Fiscal Year 2005 Cost Statement for the Navajo Area 
Office (A070802721) 
 
Review of the Reconciliation and Reporting of Medicaid NonRisk Contract Payments by 
the Utah Department of Health (A070902754) 
 
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Review of Missouris Claims Associated With the Increased Federal Medical Assistance 
Percentage Under the American Recovery and Reinvestment Act (A070902762) 
 
Review of Colorados Claims Associated With the Increased Federal Medical Assistance 
Percentage Under the American Recovery and Reinvestment Act of 2009 (A070902767) 
 
Audit of Indian Health Service Fiscal Year 2005 Cost Statement for the Phoenix Area Office 
(A090700086) 
 
Review of Medicaid Credit Balances at TriCity Medical Center as of February 28, 2009  
(A090900078) 
 
Review of California Medicaid Credit Balances for Kapiolani Medical Center at Pali Momi 
as of December 31, 2008 (A090900090) 
 
Review of Medicaid Credit Balances at Mercy San Juan Medical Center as of July 31, 2009 
(A090900107) 
 
Review of Medicaid Payments for Services Claimed for Deceased Beneficiaries in California 
(A090900110) 
 
Excluded Medicaid Providers:  Analysis of Enrollment (OEI090800330)  
 
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   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | D7      Appendix E:  Deficit Reduction Act Requirements 
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Appendix E: 
 
Deficit Reduction Act Requirements 
   
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  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report    Appendix E:  Deficit Reduction Act Requirements 
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Appendix E:   
 
Deficit Reduction Act Requirements  
Sections 6001, 6031, and 6034 of the Deficit Reduction Act of 2005 (DRA) include provisions 
that require the Department of Health & Human Services (HHS), Office of Inspector General 
(OIG) to conduct specified activities, as well as to report annually on overall Medicaid 
activities.  The sections are summarized below. 
Section 6001:  Federal Upper Payment Limits 
for Multiple Source Drugs and Other Drug 
Payment Provisions  
Effective January 1, 2007, section 6001 required the Centers for Medicare & Medicaid 
Services (CMS) to change its Federal upper limit (FUL) calculations (i.e., the method of 
setting limits on what the Federal Government would reimburse Medicaid State agencies for 
prescription drug payments) to base the limits on average manufacturer price (AMP) and to 
provide AMP data to States on a monthly basis beginning July 1, 2006.  This section also 
required OIG to, by no later than June 1, 2006, (1) review the requirements for, and manner 
in which, AMPs are determined under section 1927 of the Social Security Act and (2) submit 
to the Secretary of HHS and Congress recommendations for changes in such requirements 
or manner as the Inspector General determines to be appropriate. 
OIGs Related Actions.  On May 30, 2006, OIG issued a report entitled Determining Average 
Manufacturer Prices for Prescription Drugs Under the Deficit Reduction Act of 2005 
(A060600063), which fulfilled this statutory requirement.  In this report, OIG found that 
existing requirements for determining aspects of AMP were unclear and that 
manufacturers methods of calculating AMPs were inconsistent.  OIG recommended that 
the Secretary direct CMS to clarify requirements in regard to the definition of retail class of 
trade and the treatment of pharmacy benefit manager rebates and Medicaid sales and to 
consider addressing issues raised by industry groups.  OIG also recommended that the 
Secretary direct CMS to issue guidance that specifically addresses the implementation of the 
AMPrelated reimbursement provisions of the DRA and to encourage States to analyze the 
relationship between AMP and pharmacy acquisition cost before using AMP for their 
reimbursement methodology. 
OIG continued to address topics related to the FUL for multiple source drugs and 
other drug payment provisions by issuing an evaluation report in June 2007 entitled 
   
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Deficit Reduction Act of 2005:  Impact on the Medicaid Federal Upper Limit Program,  
(OEI030600400).  Although not required by the DRA, OIG completed an additional 
evaluation report that compared FUL payment amounts to other prices in August 2009 
entitled A Comparison of Medicaid Federal Upper Limit Amounts to Acquisition Costs, Medicare 
Payment Amounts, and Retail Prices, (OEI030800490).  OIG found, as in previous work, that 
the FUL payment amounts calculated under the current method continue to be substantially 
higher than other payment methods that are also causing Medicaid to overpay for certain 
drugs.   
Other Related Actions.  In July, 2007, CMS issued a final regulation at 72 Fed. Reg. 39142 
that implemented the requirements of the DRA by establishing a new method of calculating 
FULs, based on AMPs and aimed at reining in inflated drug product payments.  The rule 
was to take effect on January 1, 2008.  However, in December 2007, a Federal district court 
issued a preliminary injunction prohibiting CMS from implementing the new FULs.  While 
this prohibition was in effect, CMS continued to calculate FUL amounts based on the 
previous formula (i.e., 150 percent of the lowest published price).  Effective October 1, 2010, 
section 2503(a)(1) of the Affordable Care Act modified the previous statutory provisions for 
FULs under the DRA by revising the Social Security Act,  1927(e)(5), to establish FULs as 
no less than 175 percent of the weighted average of the most recently reported monthly 
AMPs.  CMS published a final rule at 75 Fed. Reg. 69591 (November 15, 2010) to withdraw 
those parts of the 2007 final rule that established upper limits for multiplesource drugs and 
revised the definition of AMP. 
Section 6031:  Review of State False Claims Acts   
Effective January 1, 2007, this section provides a financial incentive for States to enact false 
claims acts (FCA) that establish liability to the States for the submission of false or 
fraudulent claims to the States Medicaid programs.  If a States FCA is determined to meet 
certain enumerated requirements, the Federal share of Medicaid recoveries under the State 
FCA will be reduced by 10 percentage points, increasing the States share by 10 percentage 
points. 
Specifically, for a State to be eligible for the 10percentagepoint increase in its share of false 
claims recoveries, the State law relating to false and fraudulent claims must be determined 
by OIG, in consultation with the Attorney General, to meet the following criteria:  it 
establishes liability to the State for false or fraudulent claims described in the FCA with 
respect to Medicaid expenditures; it contains provisions that are at least as effective in 
rewarding and facilitating qui tam actions as those in the FCA; it contains a requirement for 
filing an action under seal for 60 days with review by the State Attorney General; and it 
contains a civil penalty that is not less than the amount authorized by the FCA.  Following 
are OIGs related actions:  
  On August 21, 2006, OIG published in the Federal Register (71 Fed. Reg. 48552) its 
guidelines for evaluating State FCAs under the requirements of section 6031 of the 
   
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DRA.  This notice was developed in consultation with the Department of Justices (DOJ) 
Civil Division.  In the notice, OIG invited the States to request review of their FCAs.     
  During FY 2008, OIG provided written responses to 10 States and approved 4 of the 
State lawsthose passed by California, Georgia, Indiana, and Rhode Islandfor the 
DRA incentive.  OIG made these determinations in consultation with DOJs Civil 
Division.  
  During FY 2009, OIG provided written responses to three States and approved two of 
the State lawsthose passed by Wisconsin and Michiganfor the DRA incentive.  OIG 
made these determinations in consultation with DOJs Civil Division.   
  In 2009 and 2010, the FCA was amended.  As a result of these amendments, OIG 
reviewed the 14 State laws that had previously been approved by OIG and determined 
that none still satisfy the requirements of section 6031 of the DRA.  OIG provided the 
States with a 2year grace period during which their laws will continue to be deemed 
compliant pending amendment and resubmission to OIG.  In March 2011, OIG sent 
letters to the 14 States.  OIG also provided written responses to 10 States that had 
submitted their laws for review.  OIG did not approve any of the 10 submitted laws.  
The letters to the 14 states and the response letters are published on OIGs Web site at 
http://www.oig.hhs.gov. 
  OIG has invited States to submit draft legislation for informal review and discussion 
prior to passage of the draft legislation.  
Section 6034:  Medicaid Integrity Program   
This section establishes the Medicaid Integrity Program (MIP) and requires the Secretary of 
HHS to enter into contracts to enhance the capacity of CMS to conduct oversight of 
Medicaid expenditures.  MIPs activities include:  review of the actions of individuals or 
entities furnishing items or services for which a Medicaid payment may be made; audit of 
claims for payment for items or services furnished or for administrative services rendered; 
and education of service providers, managed care entities, beneficiaries, and other 
individuals with respect to payment integrity and quality of care.   
The section further establishes that from FY 2006 through FY 2010, $25 million shall be 
appropriated to OIG for the Medicaid activities of OIG in addition to any other amounts 
appropriated or made available for Medicaid oversight.  Such funds shall remain available 
until expended.  This section also requires OIG to identify to Congress the use and 
effectiveness of OIGs use of such funds no later than 180 days after the end of each FY.  This 
document responds to that requirement for FY 2010. 
   
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  FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | E3     Appendix F:  Acronyms and Abbreviations 
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Appendix F: 
 
Acronyms and Abbreviations 
 
     
 
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   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report    Appendix F:  Acronyms and Abbreviations 
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Appendix F: 
 
Acronyms and Abbreviations 
The following is a list of selected acronyms and abbreviations used in this publication. 
 
AMP  average manufacturer price  
CCA  certification of compliance agreement 
CHIP  Childrens Health Insurance Program 
CIA  corporate integrity agreement 
CMP  civil monetary penalty  
CMPL  Civil Monetary Penalties Law 
CMS  Centers for Medicare & Medicaid Services 
CY  calendar year 
DME  durable medical equipment 
DOJ  Department of Justice 
DSH  disproportionate share hospital 
E&M  Evaluation & Management services 
EPSDT  Early and Periodic Screening, Diagnostic and Treatment 
FBI  Federal Bureau of Investigation 
FDA  Food and Drug Administration 
FFP  Federal financial participation 
FFS  fee for service 
FMAP  Federal Medical Assistance Percentage 
     
 
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   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | F1    Appendix F:  Acronyms and Abbreviations 
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FUL  Federal upper limit 
FY  fiscal year 
HCFAC  Health Care Fraud and Abuse Control program 
HEAT  Health Care Fraud Prevention and Enforcement Action Team 
HHS  Department of Health & Human Services    
IMD  institutions for mental disease 
IRS  Internal Revenue Service 
LTC  longterm care 
MFCU  Medicaid Fraud Control Unit 
MIP  Medicaid Integrity Program 
MMIS  Medicaid Management Information System 
OAS  Office of Audit Services  
OEI  Office of Evaluation and Inspections  
OIG  Office of Inspector General 
OMB  Office of Management and Budget 
OPM  Office of Personnel Management 
PERM  Payment Error Rate Measurement program  
SDAC  School District Administrative Claiming program 
SNF  skilled nursing facility 
UCCP  uncompensated care pool 
 
Other Abbreviations 
DRA  Deficit Reduction Act of 2005, P.L. No. 109171  
FCA  False Claims Amendments Act of 1986, P.L. No. 99562 
HIPAA   Health Insurance Portability and Accountability Act of 1996, P.L. No. 104191 
IDEA  Individuals with Disabilities Education Act of 2004, P.L. No. 108446 
     
 
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   FY 2010 | HHS Office of Inspector General Medicaid Integrity Report | F2    Appendix F:  Acronyms and Abbreviations 
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IPIA  Improper Payments Information Act of 2002, P.L. No. 107300 
Recovery Act  American Recovery and Reinvestment Act of 2009, P.L. No. 1115 
 
     
 
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