Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
A MESSAGE FROM THE INSPECTOR 
GENERAL
           
 
I am pleased to present the enclosed Semiannual Report to 
Congress summarizing significant work of the Office of 
Inspector General (OIG), Department of Health and Human 
Services (HHS or the Department) for the reporting period 
April 1, 2018, to September 30, 2018.   
OIG continues to fulfill its crucial mission for the American 
people by providing objective, actionable information and 
recommendations to improve fiscal stewardship and quality 
of services provided by HHS programs and by holding those 
who harm HHS programs accountable.  During this reporting 
period, we issued a seminal Hospice Portfolio report to spur 
improvements in the quality and integrity of care that 
hospices furnish to Medicare beneficiaries at the end of their 
lives.  We also published a rollup report, based on reviews in 
five States that found troubling deficiencies in treatment 
planning and medication monitoring for children in foster 
care who were treated with psychotropic medications.  We 
intensified our oversight of the HHS Office of Refugee Resettlements (ORRs) Unaccompanied Alien 
Children Program, with a focus on the care of children residing in ORR facilities and the reunification of 
separated children and their parents.  Furthermore, OIG testified before Congress on strategies for 
combating Medicare and Medicaid fraud and overpayments and on ensuring quality of care and resident 
safety in nursing homes.   
OIGs enforcement work continues to produce impressive results.  During fiscal year 2018, OIG reported 
expected investigative recoveries of $2.91 billion, criminal actions against 764 individuals or entities that 
engaged in crimes against HHS programs, exclusion of 2,712 individuals and entities, and civil actions 
against 813 individuals or entities.  Key to these successes are our strong partnerships with the Department 
of Justice, Medicaid Fraud Control Units, and other Federal, State, and local agencies.  
This reporting period saw continued progress in OIGs work combating the opioid epidemic.  More than 
one-quarter of the 601 defendants in the June 2018 Health Care Fraud Takedown were charged with 
opioid-related conduct.  Further, OIG published a toolkit setting out OIGs data-driven methodology for 
identifying beneficiaries at high risk of misuse of opioids.  It is our hope that Federal, State, local, and 
private entities will use this toolkit to identify at-risk patients who may need case management or other 
followup.  The Centers for Disease Control and Prevention recently posted the toolkit on its website.  
OIG employs modern data, tools, and technology to support our multi-disciplinary workforce in providing 
efficient and effective oversight of HHSs over $1 trillion in health and human services programs.  We focus 
on achieving positive outcomes in established priority areas such as the opioid epidemic, Medicaid fraud, 
the safety of children, and home- and community-based services, as well as emerging areas such as 
cybersecurity and the shift to value-based care.  We remain a nimble organization well prepared to 
address emergent oversight needs, including emergency preparedness and response.  
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Since our establishment in 1976, OIG has worked collaboratively with our partners to oversee and protect 
the integrity of the Departments programs.  This work relies on the dedication, professionalism, and 
expertise of OIG employees.  OIG appreciates the continued recognition, commitment, and support of 
Congress and the Department for our vital work.  
 
 
 
 
 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
TABLE OF CONTENTS 
OIGs Approach to Driving Positive Change  1 
Highlights of OIG Accomplishments  4 
OIG Participation in Congressional Hearings  11 
Selected Acronyms and Abbreviations  12 
Centers for Medicare & Medicaid Services  13 
Legal and Investigative Activities Related to the Medicare and Medicaid Programs  29 
Public Health Agencies  455 
Other HHS-Related Reviews and Investigations  566 
Appendix A: Questioned Costs and Funds to Be Put to Better Use  611 
Appendix B: Savings Decisions Supported by OIG Recommendations  666 
Appendix C: Peer-Review Results  69 
Appendix D: Summary of Sanction Authorities  711 
Appendix E: Reporting Requirements in the Inspector General Act of 1978  744 
Appendix F: Reporting Requirements in the Inspector General Empowerment Act of 2016  76 
Appendix G: Anti-Kickback StatuteSafe Harbors  83 
 
 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
OIGs Approach to Driving Positive Change 
 
THE DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS) Office of Inspector General (OIG) provides 
independent and objective oversight that promotes economy, efficiency, and effectiveness in HHS 
programs and operations.  OIGs program integrity and oversight activities are shaped by legislative and 
budgetary requirements and adhere to professional standards established by the Government 
Accountability Office (GAO), the Department of Justice (DOJ), and the Inspector General community.  
Through a nation-wide network of audits, investigations, and evaluations, OIG carries out its mission to 
protect the integrity of HHS programs and the health and welfare of the people served by those programs.  
OIGs work is conducted by three operating componentsthe Office of Audit Services, the Office of 
Evaluation and Inspections, and the Office of Investigationswith assistance from the Office of Counsel to 
the Inspector General and Mission Support and Infastructure.  
 
OIG Organization 
 
Office of Audit Services (OAS) 
OAS conducts audits of HHS programs and operations through its own resources or by overseeing 
audit work done by others.  Audits examine the performance of HHS programs and/or of HHSs 
grantees and contractors in carrying out their respective responsibilities and provide independent 
assessments of HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote the economy, efficiency, and effectiveness of programs and 
operations throughout HHS.  
 
Office of Evaluation and Inspections (OEI)  
OEI conducts national evaluations to provide HHS, Congress, and the public with timely, useful, and 
reliable information on significant issues.  These evaluations focus on preventing fraud, waste, and 
abuse and promoting economy, efficiency, and effectiveness in HHS programs.  OEI reports also 
present practical recommendations for improving program operations.   
 
Office of Investigations (OI)   
OI conducts criminal, civil, and administrative investigations of fraud and misconduct related to 
HHS programs, operations, and beneficiaries.  With investigators working in almost every State, the 
District of Columbia, and Puerto Rico, OI coordinates with DOJ and other Federal, State, and local 
law enforcement authorities.  OI also coordinates with OAS and OEI when audits and evaluations 
uncover potential fraud.  OIs investigative efforts often lead to criminal convictions, administrative 
sanctions, or civil monetary penalties (CMPs).   
 
Office of Counsel to the Inspector General (OCIG)   
OCIG provides legal services to OIG, rendering advice and opinions on HHS programs and 
operations and providing all legal support for OIGs internal operations.  OCIG represents OIG in all 
1 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
civil and administrative fraud and abuse cases involving HHS programs, including False Claims Act 
(FCA), program exclusion, self-disclosure, and CMP cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements (CIAs).  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the healthcare industry about the anti-kickback statute and other OIG enforcement 
authorities.   
 
Mission Support and Infastructure (MSI)  
MSI is composed of the Immediate Office of the Inspector General and the Office of Management 
and Policy.  MSI is responsible for coordinating OIG activities and providing mission support, 
including setting vision and direction for OIGs priorities and strategic planning; ensuring effective 
management of budget, finance, human resource management, and other operations; and serving 
as a liaison with HHS, Congress, and other stakeholders.  MSI plans, conducts, and participates in a 
variety of cooperative projects within HHS and with other Government agencies.  MSI provides 
critical data analytics, data management, and information technology (IT) infrastructure that 
enables OIG components to conduct their work efficiently and effectively.  
 
OIG Strategic Publications
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HHS OIG Strategic Plan 
As delineated in OIGs Strategic Plan for 20142018, OIGs approach to protecting the integrity of 
HHS programs has four key goals: (1) to fight fraud, waste, and abuse; (2) to promote quality, 
safety, and value; (3) to secure HHS programs future; and (4) to advance excellence and 
innovation.  These goals drive OIGs work planning for audits and evaluations as well as OIGs 
2 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
approach to enforcement.  These goals also serve as a starting point for OIGs own assessment of 
its effectiveness. 
 
OIG Work Plan 
OIGs Work Plan sets forth various projects that OIG plans to undertake during the fiscal year (FY) 
and beyond.  Projects listed in the Work Plan span HHSs operating divisions, which include the 
Centers for Medicare & Medicaid Services (CMS); public health agencies such as the Centers for 
Disease Control and Prevention (CDC) and the National Institutes of Health (NIH); and human 
services agencies such as the Administration for Children and Families (ACF) and the 
Administration for Community Living (ACL).  The Work Plan also includes oversight of State and 
local governments use of Federal funds as well as the administration of HHS.  Some of the projects 
described in the Work Plan are statutorily required. 
 
OIGs Top Unimplemented Recommendations 
OIG drives positive change not only by identifying risks, problems, abuses, and deficiencies, but 
also by recommending solutions to address them.  OIG maintains a list of recommendations it has 
made to address vulnerabilities detected in its reviews, and it keeps track of whether these 
recommendations have been implemented.  OIG systematically follows up on its recommendations 
with the relevant HHS programs.  From among the recommendations that have not been 
implemented, OIG identifies the top recommendations that, if implemented, are likely to garner 
significant savings and improvements in quality, efficiency, and effectiveness.  OIG compiles these 
recommendations in the Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs: Top 
Unimplemented Recommendations (previously known as the Compendium of Unimplemented 
Recommendations). 
 
OIGs Semiannual Report to Congress  
OIGs Semiannual Report(s) to Congress (Semiannual Reports) describe OIGs work on identifying 
significant problems, abuses, deficiencies, remedies, and investigative outcomes relating to the 
administration of HHS programs and operations that were disclosed during the reporting period.  
In the report below, we present OIG expected recoveries, criminal and civil actions, and other 
statistics as a result of our work for the entire FY 2018.  We also highlight some of our work 
completed during this semiannual reporting period, April 1, 2018, through September 30, 2018.  
 
Top Management and Performance Challenges Facing HHS 
To focus HHSsattention on the most pressing issues, each year OIG identifies the Top Management 
and Performance Challenges facing HHS.  These top challenges arise across HHS programs, and 
they cover critical HHS responsibilities that include delivering quality services and benefits; 
exercising sound fiscal management; safeguarding public health and safety; and enhancing 
cybersecurity. 
 
3 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Highlights of OIG Accomplishments 
 
HHS OIGS SEMIANNUAL REPORT TO CONGRESS (Semiannual Report) describes OIGs work identifying 
significant risks, problems, abuses, deficiencies, remedies, and investigative outcomes relating to the 
administration of HHS programs and operations that were disclosed during the reporting period.  In the 
highlights section below, we present OIG expected recoveries, criminal and civil actions, and other statistics 
as a result of our work  during FY 2018.  Throughout FY 2018, OIG issued 163 audit reports and 45 
evaluations, resulting in 578 new recommendations issued to HHS operating divisions.  HHS operating 
divisions also implemented 420 recommendations during FY 2018. 
 
We also highlight our most significant work completed during this semiannual reporting period, April 1, 
2018, through September 30, 2018.  During the semiannual reporting period, OIG issued 80 audits and 32 
evaluations, resulting in 320 new recommendations issued to HHS operating divisions.  Additionally, HHS 
operating divisions implemented 236 audit and evaluation recommendations during the semiannual 
reporting period. 
 
Identifying Improper Payments and Opportunities for Savings in HHS Programs
Highlights of OIG Audit Accomplishments 
OIG oversight of HHS programs ensures integrity, effectiveness, and efficiency.  For FY 2018, OIG reported 
expected audit recoveries of $521 million and issued reports with $2 billion in questioned costs.  For 
example, OIG identified unauthorized financial assistance payments to health plan issuers totaling $939.3 
million and $180 million in unallowable Medicaid reimbursements for specialty mental health services.  In 
FY 2018, OIG also issued reports with $823 million in funds put to better use.  This included, for example, a 
recommendation that CMS work with Medicare contractors to establish periodic reviews of claims for 
replacement positive airway pressure device supplies, which could have saved Medicare an estimated $631 
million over a 2-year period. 
 
Fighting Fraud in HHS ProgramsHighlights of Enforcement Accomplishments 
OIG remains at the forefront of the Nations efforts to fight fraud in HHS programs and hold wrongdoers 
accountable for their actions.  Fraud increases not only HHS costs, but also risk and potential harm to 
beneficiaries.  During FY 2018, OIG reported the following:  
  Expected investigative recoveries of $2.91 billion 
  Criminal actions against 764 individuals or entities that engaged in crimes against HHS 
programs 
  Exclusion of 2,712 individuals and entities from Federal healthcare programs 
  Civil actions against 813 individuals or entities 
 
To combat healthcare fraud, OIG partners with DOJ, State Medicaid Fraud Control Units (MFCUs or Units), 
and other Federal, State, and local law enforcement agencies.  These partnerships include the Medicare 
Fraud Strike Force teams, which detect, investigate, and prosecute healthcare fraud through a coordinated 
and data-driven approach.  For instance, OIG, along with our State and Federal law enforcement partners, 
4 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
participated in an unprecedented nation-wide healthcare fraud takedown in June 2018.  More than 600 
defendants in 58 Federal districts were charged with participating in healthcare-related fraud schemes 
totaling $2 billion. 
 
Recent examples of significant enforcement accomplishments include the following:   
  An owner of a Florida pharmacy was sentenced to 15 years in prison and ordered to pay $54.5 
million for a prescription drug fraud scheme.  The owner operated multiple pharmacies, which 
he used to pay kickbacks and bribes in exchange for prescriptions, as well as submit false 
claims for prescription compounded medications to private insurance companies, Medicare, 
and Tricare. 
  Two co-conspirators connected with clinics in Brooklyn, NY, were sentenced for their role in a 
$48.5 million healthcare fraud scheme.  The defendants paid cash kickbacks to patients to 
induce them to attend the clinics, and then submitted fraudulent claims to Medicare and 
Medicaid for services that were induced by prohibited kickback payments to patients or that 
were unlawfully rendered by unlicensed staff.   
 
Preventing and Treating Opioid Misuse 
 
Addressing the opioid abuse epidemic is a top priority for 
OIG released a toolkit to assist our 
OIG.  OIG has a longstanding and extensive history of 
public- and private-sector partners with 
investigative and oversight work focused on the national 
combating the opioid crisis through 
epidemic of prescription drug abuse, including opioid 
data analysis.   
abuse.  We investigate opioid fraud and diversion cases and 
use advanced data analytics and tools to detect suspected 
problems for further review.  During this semiannual reporting period, OIG officials twice testified about 
our work curbing the opioid epidemic.  First, we appeared before the Senate Committee on Finance, 
Health Care Subcommittee, to discuss efforts to prevent opioid overutilization and misuse in Medicare and 
Medicaid.  Second, we appeared before the Senate Special Committee on Aging to discuss preventing and 
treating opioid misuse among older Americans.  Other significant OIG work during this semiannual 
reporting period includes the following: 
 
OIG participated in the largest ever national healthcare fraud takedown of providers engaged in opioid-
related fraud.  Of over 600 individuals charged in conjunction with the June 2018 takedown, 162 
defendants, including 76 doctors, were charged for their roles in prescribing and distributing opioids and 
other dangerous narcotics.  In addition, between July 2017 and June 2018, OIG issued exclusion notices to 
587 individuals based on their conduct related to opioid diversion and abuse.   
 
OIG reported on the extent to which Medicare Part D beneficiaries receive extreme amounts of opioids or 
appear to be doctor shopping and also released a toolkit to assist our partners with combatting the 
opioid crisis through data analysis.  OIGs data analytics capabilities supported our criminal enforcement 
related to opioids.  For instance, OIG analyzed Medicare Part D data to identify opioid prescribing patterns 
and, coinciding with the national takedown, released a data brief highlighting that about 15,000 
beneficiaries appeared to be doctor shopping.  Those beneficiaries received high amounts of opioids, 
5 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
received their opioids from multiple prescribers and 
pharmacies, and did not have cancer or were not in hospice 
OIGs review of five states found that 
care.  Further, OIG found that almost 300 prescribers engaged 
one in three children in foster care 
in questionable opioid prescribing by ordering opioids for the 
who were treated with psychotropic 
highest number of beneficiaries at serious risk of opioid misuse 
medication did not receive required 
or overdose.  In addition, OIG released an analysis toolkit in 
treatment planning or medication 
June 2018 to assist our public and private sector partners with 
monitoring.  OIG recommended that 
analyzing their own prescription drug claims data to identify 
ACF develop a comprehensive strategy 
certain patients who are at risk of opioid misuse or overdose.  
to improve States compliance in this 
(See reports at OEI-02-18-00220 and at OEI-02-17-00560.) 
area. 
 
OIG identified the number of Medicaid beneficiaries in Ohio 
who are at serious risk of opioid misuse or overdose and prescribers who ordered opioids for more of 
these beneficiaries than their peers.  OIG completed the first State-specific Medicaid review focused on 
curbing the opioid epidemic.  We found that that more than 700 beneficiaries in Ohio are at serious risk of 
prescription opioid misuse or overdose and that nearly 50 prescribers stood out by ordering opioids for 
more of these beneficiaries than other prescribers.  (See report at OEI-05-18-00010.) 
 
Protecting the Health and Safety of Children in HHS Programs 
 
HHS programs provide critical health and human services to children in its care through programs such as 
the Unaccompanied Alien Children (UAC) program, foster care, and the Child Care and Development Fund 
(CCDF).  OIG has found that some States and providers have not met certain requirements to ensuring the 
health and safety of children in their care.  Significant OIG work during this semiannual reporting period 
includes the following: 
 
OIG conducted site visits to 45 facilities as part of our ongoing initiative to identify vulnerabilities in the 
Office of Refugee Resettlement (ORR) facilities efforts to protect UAC in their care.  OIG began an 
expansive, multidisciplinary project during this reporting period focusing on the care and well-being of 
UAC residing in ORR facilities, including the subset of children who were separated and deemed ineligible 
for reunification.  To date, we have conducted site visits of 45 ORR facilities across the country, and we are 
analyzing the data we collected.  Results of our work will be available in the next reporting period. 
 
Some ORR grantees may not have complied with health and safety requirements to ensure the safety of 
UAC in ORRs care.  OIG found that Florence Crittenton Services of Orange County, Inc., did not meet 
safety standards in its release of some children to sponsors without conducting required background 
checks to ensure sponsors were vetted.  Additionally, although Heartland Human Care Services, Inc., 
generally met applicable safety standards for the care and release of children in its custody, OIG found 
instances when it lacked appropriate supervision and monitoring of children in some classrooms and did 
not have documentation assuring that required records were provided upon childrens release to sponsors.  
(See reports at A-09-16-01005 and at A-05-16-00038.)   
 
6 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Some States did not adequately ensure that children in foster care received required medication 
monitoring and case management services.  OIGs review of five States found that none fully complied 
with State requirements for treatment planning and medication monitoring for children in foster care 
receiving psychotropic medication.  (See report at OEI-07-15-00380.)  In a separate review, OIG found that 
the State of Ohio did not always comply with requirements to maintain documentation that children 
residing in group homes received case management services and that case workers were qualified to 
provide services.  (See report at A-05-16-00022.) 
 
State CCDF providers did not always take steps to ensure the health and safety of children in their care.  
Select New York City CCDF providers did not comply with applicable health and safety requirements for 
children, including having potentially hazardous physical conditions at provider locations and not 
complying with background check requirements for employees.  (See report at A-02-16-02003.)  
Additionally, while the States of Illinois, Georgia, Colorado, New Hampshire, and Nevada implemented 
most new CCDF criminal background check requirements, some remain unimplemented due to challenges 
such as unavailable finances and staff to process the checks.  (See reports on Illinois at A-05-17-00047, 
Georgia at A-04-18-03578, Colorado at A-07-17-06076, New Hampshire at A-01-18-02500, and Nevada at 
A-09-17-01003.) 
 
Ensuring Quality and Integrity in Medicares Hospice Program  
 
OIG is committed to ensuring that beneficiaries receive 
OIG is focused on improving quality of 
quality care and to safeguarding the hospice benefit from 
care in Hospice settings.  During the 
fraud, waste, and abuse.  OIG has produced numerous 
last reporting period, OIG issued a 
evaluations and audits of the hospice program, including in-
range of recommendations to CMS to 
depth looks at specific levels of care and settings.  OIG has 
help patients better access quality care 
also conducted criminal and civil investigations of hospice 
and strengthen program integrity. 
providers, leading to the conviction of individuals, monetary 
penalties, and civil False Claims Act settlements.   
 
OIG has identified significant vulnerabilities in the Medicare hospice program affecting quality of care and 
program integrity.  OIG released a portfolio in July 2018 that highlights key vulnerabilities and makes 15 
recommendations for protecting beneficiaries and improving the program.  The portfolio synthesizes OIGs 
body of work on the Medicare hospice benefit.  Among its findings, OIG found that hospices do not always 
provide needed services to beneficiaries and sometimes provide poor quality care.  Inappropriate billing 
and fraud by hospice providers cost Medicare hundreds of millions of dollars.  In addition, OIG found that 
the current payment system creates incentives for hospices to minimize their services and seek 
beneficiaries who have uncomplicated needs.  (See portfolio at OEI-02-16-00570.) 
 
A large hospice chain entered into a settlement agreement for providing services to patients who were not 
terminally ill.  During this reporting period, a large hospice chain, Caris Healthcare LLC and Caris 
Healthcare, L.P. (collectively, Caris) entered into a settlement agreement to resolve allegations that, from 
April 1, 2010, through December 31, 2013, Caris submitted false claims and improperly retained payments 
7 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
from Medicare for services provided to patients who were ineligible for hospice benefits because they 
were not terminally ill.  Caris agreed to pay $8.5 million to resolve its alleged liability. 
 
Improving Financial Management and Reducing Improper Payments in Medicare 
The 2018 Annual Report by Medicares Board of Trustees estimates that the Trust Fund for Medicare Part A 
(hospital insurance) will be depleted by 2026.  It also projects that spending for Medicare Part B (medical 
insurance) will grow by almost 8.2 percent over the next 5 years, with the growth in spending outpacing 
that of the U.S. economy, which is projected to grow by 4.7 percent during that same time.  To ensure 
continued beneficiary access to care, prudent financial management and reductions in improper payments 
are integral to the future of the Medicare program.  Significant OIG work during this semiannual reporting 
period includes the following: 
 
OIG estimates that Medicare paid inpatient rehabilitation facilities (IRFs) $5.7 billion for care that did not 
meet Medicares necessary and reasonable care coverage requirements.  OIG found that some hospitals 
did not comply with Medicare coverage and documentation requirements for inpatient rehabilitation 
facilities (IRFs).  Based on a medical review of a sample of IRF claims, we estimate that in 2013 Medicare 
paid IRFs nation-wide $5.7 billion for care to beneficiaries that did not meet requirements.  (See report at 
A-01-15-00500.) 
 
OIG estimated Medicare overpayments of $630 million for replacement positive airway pressure devices.  
OIG has a broad range of work identifying areas where Medicare requirements for services were not met.  
Within this reporting period, two areas of substantial savings include our work that found that most 
Medicare claims that durable medical equipment suppliers submitted for replacement positive airway 
pressure device supplies did not comply with Medicare requirements.  Based on our analysis, we estimate 
that Medicare made overpayments of almost $631.3 million.  (See reports at A-05-16-00058, at A-01-15-
00500, and at A-04-17-04056.)   
 
Protecting the Integrity of the Medicaid Program 
 
Protecting the integrity of Medicaid is a key focus in OIGs 
OIG found that some MCOs 
goal to fight fraud, waste, and abuse.  We make 
identified and referred few cases of 
recommendations to CMS and States to correct problems 
suspected fraud and abuse to the 
and mitigate program risks, and we work closely with State 
State.  And when MCOs did take 
MFCUs to combat Medicaid fraud.  OIG officials twice testified 
action against providers suspected of 
on Medicaid issues during this reporting period.  First, OIG 
fraud or abuse, they did not typically 
testified to the Senate Committee on Homeland Security and 
inform the State.  OIG recommended 
Governmental Affairs on potential solutions to addressing 
State improvement in these areas.     
Medicaid fraud and overpayments.  Second, OIG testified to 
the House Committee on Oversight and Government Reform, 
Subcommittee on Government Operations and Subcommittee on Intergovernmental Affairs, regarding 
Medicaid improper payments.  Below are some examples of significant OIG work during this semiannual 
reporting period. 
 
8 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
OIG identified noncompliance in Californias Medicaid agency claims for specialty mental health services.  
When reviewing Californias Medicaid spending for specialty mental health services, OIG found that 
California did not always comply with Federal and State requirements when claiming Federal 
reimbursement for specialty mental health services expenditures.  Based on our sample results, we 
estimated that California claimed at least $180.6 million in unallowable Federal reimbursement.  (See report 
at A-09-15-02040.) 
 
OIG raised concern about program integrity in Medicaid managed care.  Managed care organizations 
(MCO) play an increasingly important role in fighting fraud and abuse in Medicaid, yet we found that 
weaknesses exist in their efforts to identify and address fraud and abuse.  During this reporting period, OIG 
reported that although the number of cases varied widely, some MCOs identified and referred few cases of 
suspected fraud or abuse to the State.  (See report at OEI-02-15-00260.) 
 
Protecting Health and Safety in Adult Day Care Facilities 
HHS programs provide critical health and human services to 
OIG found that adult day care facilties 
adults receiving care at adult day care facilities and other 
in three States had numerous health 
providers.  OIGs work has found that some providers, such 
and safety violations.  OIG 
as adult day care facilities, have not met certain 
recommended that States correct the 
requirements to ensure the health and safety of adults in 
identified violations, improve provider 
their care.  In some cases, OIG has engaged in enforcement 
training programs, and take other steps 
actions against these providers.  Significant OIG work during 
to ensure future compliance. 
this semiannual reporting period includes the following: 
 
OIG found that most adult day care facilities reviewed in four States did not comply with health and safety 
requirements.  OIG identified 200 instances of noncompliance with health and safety administrative 
requirements in facilities providing adult day care in Minnesota, 105 in Illinois, and 564 in Mississippi.  
Instances of noncompliance occurred for reasons such as lack of sufficient training on State requirements 
and budget reductions.  OIG recommended that these States correct the identified instances of 
noncompliance and improve oversight of staffing, training, and administration.  (See reports on Minnesota 
at A-05-17-00009, Illinois at A-05-17-00028, and Mississippi at A-04-17-00116.) 
 
OIG engaged in enforcement actions against providers who were inflicting harm on patients or allegedly 
denying them access to safe and quality healthcare.  In one case, a medical center entered into a $90,000 
settlement agreement with OIG to resolve allegations that it violated the Emergency Medical Treatment 
and Leave Act (EMTALA) by failing to provide an adequate medical screening examination and treatment 
for a patient and transferring him to another hospital, where his condition worsened and he later expired.  
In another case in Alabama, one doctor plead guilty to healthcare fraud and unlawful distribution of a 
controlled substance, and was sentenced to 5 years in prison and ordered to pay $15 million in restitution.  
The doctor was convicted of running an insurance scam at his clinic in which he administered unnecessary 
medical tests and procedures and prescribed controlled substances without a legitimate medical purpose 
to patients.   
 
   
9 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Ensuring Quality and Integrity in Programs Serving American Indian/Alaska Native 
(AI/AN) Populations 
 
OIG continues its oversight of programs serving AI/AN 
OIG identified significant gaps in the 
populations to ensure effective grants administration 
quality of care found at a tribal Federally 
oversight and ensuring the quality and safety of services.  
qualified health center, such as an absence 
For instance, OIG hosted a compliance and quality 
of clinical or administrative protocols.  OIG 
training for over 200 individuals representing Indian 
has recommended that the health center 
Health Service (IHS) facilities, Tribes, Tribal organizations, 
put into place measures to ensure and 
and other key stakeholders in May 2018.  The purpose of 
improve quality of care.   
the training was to increase knowledge about 
compliance and internal controls of Tribes and IHS 
officials and staff who carry out IHS programs.  OIG also conducts audits of tribal grantees and healthcare 
providers focused on these issues.  Two such audits issued during this reporting period are described 
below. 
 
OIG found that the Fort Peck Tribes did not properly administer some Low-Income Home Energy 
Assistance Program (LIHEAP) grant funds.  Specifically, OIG found that the Fort Peck Tribes did not 
properly administer $436,765 of Low-Income Home Energy Assistance Program (LIHEAP) grant funds in 
compliance with Federal laws, regulations, and guidance for FYs 2011 through 2015.  The Fort Peck Tribes 
did not have policies and procedures or other internal controls in place to prevent these errors.  (See 
report at A-07-18-04106.) 
 
OIG found that the Passamaquoddy Tribes Pleasant Point Health Center did not always meet health and 
safety requirements.  For instance, the Pleasant Point Health Center did not always have a physician who 
provided medical direction for the center, clear lines of authority and responsibility between medical and 
administrative decision making, and other medical and non-medical policies and procedures needed to 
comply with Federal and Tribal health and safety requirements. OIG has recommended measures to 
improve oversight by a medical director in addition to stronger administrative safeguards. (See report at 
A-01-17-01500.) 
   
10 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
OIG Participation in Congressional Hearings 
 
Date  Witness  Testimony/Committee 
09/06/2018  Ruth Ann Dorrill, Regional Inspector  Examining Federal Efforts to Ensure Quality of 
General  Care and Resident Safety in Nursing Homes, 
House Committee on Energy and Commerce, 
Subcommittee on Oversight and Investigations 
07/17/2018  Gloria L. Jarmon, Deputy Inspector  Combating Fraud in Medicare: A Strategy for 
General for Audit Services  Success, House Committee on Ways and Means, 
Subcommittee on Oversight 
06/27/2018  Brian P. Ritchie, Assistant Inspector  Medicaid Fraud and Overpayments: Problems and 
General for Audit Services   Solutions, Senate Committee on Homeland 
Security and Governmental Affairs 
05/29/2018  Maureen Dixon, Special Agent in  Examining Efforts to Prevent Opioid 
Charge, Philadelphia Regional  Overutilization and Misuse in Medicare and 
Office, Office of Investigations   Medicaid, Senate Committee on Finance, Health 
Care Subcommittee 
05/23/2018  Gary Cantrell, Deputy Inspector  Preventing and Treating Opioid Misuse Among 
General for Investigations  Older Americans, Senate Special Committee on 
Aging 
05/15/2018  Ann Maxwell, Assistant Inspector  Examining Oversight Reports on the 340B Drug 
General for Evaluation and  Pricing Program, Senate Committee on Health, 
Inspections   Education, Labor, and Pensions 
04/12/2018  Megan H. Tinker, Senior Advisor for  Improper Payments in State Administered 
Legal Review Office of Counsel to  Programs: Medicaid, House Committee on 
the Inspector General   Oversight and Government Reform, Subcommittee 
on Government Operations and Subcommittee on 
Intergovernmental Affairs 
 
 
 
11 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Selected Acronyms and Abbreviations  
 
ACA  Patient Protection and Affordable Care Act 
ACF  Administration for Children and Families 
ACL  Administration for Community Living 
CDC  Centers for Disease Control and Prevention 
CIA  corporate integrity agreement 
CMP  civil monetary penalty 
CMS  Centers for Medicare & Medicaid Services 
CCDF  Child Care and Development Fund 
DHS  Department of Homeland Security 
DOJ  Department of Justice 
DME  durable medical equipment 
EMTALA  Emergency Medical Treatment and Labor Act 
FCA  False Claims Act 
FDA  Food and Drug Administration 
FY  fiscal year 
GAO  Government Accountability Office 
HHS  Department of Health and Human Services 
HIPAA  Health Insurance Portability and Accountability Act of 1996 
HRSA  Health Resources and Service Administration 
IHS  Indian Health Service 
LIHEAP  Low-Income Home Energy Assistance Program 
MCO  managed care organization 
MFCU  Medicaid Fraud Control Unit 
NIH  National Institutes of Health 
OAS  Office of Audit Services 
OCIG  Office of Counsel to the Inspector General 
OEI  Office of Evaluation and Inspections 
OI  Office of Investigations 
OIG  Office of Inspector General 
OMB  Office of Management and Budget 
SAMHSA   Substance Abuse and Mental Health Services Administration 
SNF  skilled nursing facility 
12 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Centers for Medicare & Medicaid Services 
 
Medicare Program Reports and Reviews 
 
Financial Management and Improper Payments  
 
CMS Paid Practitioners for Telehealth Services That Did Not Meet Medicare Requirements (A-05-16-
00058), April 2018 
 
Medicare paid a total of $17.6 million in telehealth payments in 2015, compared with $61,302 in 
2001.  Medicare telehealth payments include a professional fee, paid to the practitioner performing 
the service at a distant site, and an originating-site fee, paid to the facility where the beneficiary 
receives the service.  We analyzed 2014 and 2015 (our audit period) telehealth claims and found 
that more than half of the professional telehealth claims paid by Medicare did not have matching 
originating-site facility fee claims.  Therefore, we focused our review on telehealth claims billed 
through a distant site that did not have a corresponding originating-site fee.  
 
CMS paid practitioners for some telehealth claims associated with services that did not meet 
Medicare requirements.  For 31 of the 100 claims in our sample, telehealth services did not meet 
requirements.  The deficiencies that we identified occurred because CMS did not ensure that: 
(1) there was oversight to disallow payments for errors for which telehealth claim edits could not be 
implemented: (2) all contractor claim edits were in place; and (3) practitioners were aware of 
Medicare telehealth requirements.  
 
CMS concurred with our recommendations that it: (1) conduct periodic postpayment reviews to 
disallow payments for errors for which telehealth claim edits cannot be implemented; (2) work with 
Medicare contractors to implement all telehealth claim edits listed in the Medicare Claims 
Processing Manual; and (3) offer education and training sessions to practitioners on Medicare 
telehealth requirements and related resources.   
 
Most Medicare Claims for Replacement Positive Airway Pressure Device Supplies Did Not Comply 
with Medicare Requirements (A-04-17-04056), June 2018 
 
Most Medicare claims that durable medical equipment (DME) suppliers submitted for replacement 
positive airway pressure (PAP) device supplies did not comply with Medicare requirements.  Of the 
110 claims in our sample that Medicare paid in 2014 and 2015, 86 claims did not comply with 
Medicare requirements.  Based on our sample results, we estimated that Medicare made 
overpayments of almost $631.3 million for replacement PAP device supply claims that did not meet 
Medicare requirements. 
 
These overpayments occurred because CMS oversight of replacement PAP device supplies was not 
sufficient to ensure that suppliers complied with Medicare requirements or to prevent payment of 
13 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
claims that did not meet those requirements.  Without periodic reviews of claims for replacement 
supplies, Medicare contractors were unable to identify suppliers that consistently billed claims that 
did not meet Medicare requirements or to take remedial action. 
 
CMS concurred with our recommendations that it: (1) recover the portion of the overpayments of 
$13,414 associated with the sample claims that are within the 4-year reopening period; (2) work 
with Medicare contractors to establish periodic reviews of claims for replacement PAP device 
supplies and take remedial action for suppliers that the contractors find consistently bill claims that 
do not meet Medicare requirements, which could have saved Medicare an estimated $631.3 million 
over a 2-year period; and (3) instruct the Medicare contractors to exercise reasonable diligence to 
investigate and return any identified overpayments, in accordance with the 60-day rule, and to 
identify and track any returned overpayments.  
 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities 
(OEI-06-16-00380), June 2018 
 
We found that CMS allowed $18.4 million in Medicare payments for inappropriate claims for DME 
provided during skilled nursing facility (SNF) stays not covered by Medicare, and may also have 
allowed additional inappropriate claims for DME provided in Medicaid-only nursing facilities.  CMS 
requires facilities to provide DME as a standard part of nursing care, and does not permit separate 
Medicare payment for DME except when Medicaid-only nursing facilities serve as beneficiary 
homes.  CMS uses two payment edits designed to identify and reject inappropriate claims, but 
neither edit rejected the claims because SNFs and DME suppliers did not submit full and accurate 
information required for processing.  CMS concurred with our recommendations to:  
  strengthen oversight of place-of-service codes by developing a process to determine whether 
DME claims with home as the place of service fit the circumstances permitting separate 
payment; 
  assess the costs and benefits of strengthening oversight of no-payment bills by developing a 
process to identify noncovered stays when SNFs do not submit no-payment bills; and  
  assess the costs and benefits of collecting and maintaining information regarding the level of 
care provided by Medicaid-only nursing facilities.  
 
The MEDIC Produced Some Positive Results but More Could be Done to Enhance its Effectiveness 
(OEI-03-17-00310), July 2018 
 
While the Medicare Drug Integrity Contractors (MEDIC) reported recoveries resulted in a positive 
return on investment ($3 in recoveries for every $1 invested in 2017), CMS has no measures that 
specifically assess the MEDICs effectiveness.  CMS directed the MEDIC to devote more resources 
to proactive data analysis and administrative actions in 2014 and 2015, which led to a sharp 
increase in proactive data analysis, but a decrease in the MEDIC resources available to follow up on 
the results of these analyses.  As a result, there have been fewer MEDIC investigations and referrals 
to law enforcement agencies, including OIG.  Through its increased proactive analyses, the MEDIC 
was able to identify thousands of high-risk leads involving drugs, including opioids, to plan 
sponsors from 2014 through 2017.  The impact of these activities, however, cannot be measured, as 
14 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
plan sponsors are not required to report to CMS the actions taken in response to these leads.  In 
addition, MEDIC staff described numerous barriers that limit the MEDICs overall impact.   
 
CMS concurred with the following recommendations to: 
  require plan sponsors to report fraud and abuse incidents and the corrective actions taken to 
address them to a centralized system; 
  provide the MEDIC with centralized access to all Part C encounter data;  
  clarify the MEDICs authority to require records from pharmacies; pharmacy benefit managers; 
and other entities under contract with Part C and Part D plan sponsors; and 
  establish measures to assess the MEDICs effectiveness. 
 
CMS did not concur with the recommendation to require that Part C and Part D providers and 
pharmacies enroll in Medicare.  Additionally, CMS did not concur or non-concur with the 
remaining recommendation to provide the MEDIC with the authority to require medical records 
from providers who prescribe Part D prescription drugs but are not under contract with plan 
sponsors.  
 
Setting Medicare Payment Rates for Clinical Diagnostic Laboratory Tests: Strategies to Ensure Data 
Quality (OEI-09-17-00050), July 2018 
 
The Protecting Access to Medicare Act of 2014 (PAMA) requires CMS to set Medicare Part B 
payment rates for clinical diagnostic laboratory tests (lab tests) using private sector payment rates.  
Under PAMA, labs report private payer rates for lab tests to CMS every 3 years.  To provide 
oversight, PAMA mandated that OIG monitor Medicare payments for lab tests and CMSs 
implementation of the new payment system.  CMS issued new payment rates for lab tests that took 
effect on January 1, 2018.  Payment rates decreased for 75 percent of lab tests, which are generally 
in line with savings estimated in previous OIG reports.  During the initial implementation of the new 
payment system, labs experienced some one-time challenges complying with the new data-
reporting requirement.  However, CMSs limited data quality assurance efforts present an ongoing 
risk and we identified strategies to help CMS ensure that future payment rates are based on 
complete and accurate data.  Our report contains no recommendations. 
 
Medicare Improperly Paid Providers for Nonemergency Ambulance Transports to Destinations Not 
Covered by Medicare (A-09-17-03018), July 2018 
 
Medicare made improper payments of $8.7 million to providers for nonemergency ambulance 
transports to destinations not covered by Medicare.  The majority of the improperly billed claim 
lines (59 percent) were for transports to diagnostic or therapeutic sites, other than a physicians 
office or a hospital, that did not originate from SNFs.  As of the publication of this report, the total 
improper payment amount of $8.7 million included claim lines outside of the 4-year claim-
reopening period. 
 
CMS concurred with our recommendations that it: (1) direct the Medicare contractors to recover 
the portion of the $8.7 million in improper payments made to providers for claim lines that are 
15 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
within the claim-reopening period; (2) for the remaining portion of the $8.7 million, which is 
outside of the Medicare reopening and recovery periods, instruct the Medicare contractors to 
notify providers of potential improper payments so that those providers can exercise reasonable 
diligence to investigate and return any identified similar improper payments, and identify and track 
any returned improper payments; (3) direct the Medicare contractors to review claim lines for 
nonemergency ambulance transports to destinations not covered by Medicare after our audit 
period and recover any improper payments identified; and (4) require the Medicare contractors to 
implement nation-wide prepayment edits to ensure that payments to providers for nonemergency 
ambulance transports comply with Federal requirements. 
 
Medicare Improperly Paid Providers for Items and Services Ordered by Chiropractors (A-09-17-
03002), July 2018 
 
Medicare payments for selected items and services ordered by chiropractors did not comply with 
Federal requirements.  Specifically, for calendar years (CY) 2013 through 2016, Medicare improperly 
paid providers $6.7 million.  Medicare overpaid providers because CMSs claim-processing edits 
were not fully effective in preventing overpayments.  CMS did not begin using these edits to deny 
claims until January 2014.  Of the improper payments for our audit period, 89 percent were for 
items and services provided before CMSs implementation of the edits. 
 
CMS concurred with our recommendations that it: (1) direct the Medicare contractors to recover 
the portion of the $6.7 million in overpayments to providers for claims that are within the 
reopening period; and (2) instruct the Medicare contractors to notify providers of potential 
overpayments so that those providers can exercise reasonable diligence to investigate and return 
any identified similar overpayments and identify and track any returned overpayments.  CMS did 
not concur with our recommendation that it revise the claim-processing edits to ensure that all 
claims for items and services ordered by chiropractors are denied. 
 
Medicare Made Improper and Potentially Improper Payments for Emergency Ambulance Transports 
to Destinations Other Than Hospitals or Skilled Nursing Facilities (A-09-17-03017), August 2018 
 
Medicare payments to providers for emergency ambulance transports did not comply or 
potentially did not comply with Federal requirements.  Specifically, for CYs 2014 through 2016, 
Medicare made improper and potentially improper payments totaling $1.9 million: (1) improper 
payments of $975,154 for transports to destinations that were not covered by Medicare for either 
emergency or nonemergency ambulance transports: and (2) potentially improper payments of 
$928,092 for transports that may not have met Medicare coverage requirements or might have 
been paid by Medicare as nonemergency ambulance transports.  
 
CMS concurred with our recommendations that it direct the Medicare contractors to: (1) recover 
improper payments for emergency ambulance transports within the 4-year claim-reopening 
period; and (2) review claim lines that are within that period for emergency ambulance transports 
any improper payments identified.  CMS also concurred with our recommendations related to: 
(1) returning any identified improper payments outside of the reopening period: (2) reviewing and 
16 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
recovering any improper payments for emergency ambulance transports to destinations not 
covered by Medicare after our audit period; and (3) addressing two procedural recommendations. 
 
Medicare Improperly Paid Hospitals Millions of Dollars for Intensity-Modulated Radiation Therapy 
Planning Services (A-09-16-02033), August 2018 
 
Payments for outpatient intensity-modulated radiation therapy (IMRT) planning services did not 
comply with Medicare billing requirements.  Based on our sample results, we estimated that 
Medicare overpaid hospitals nation-wide as much as $21.5 million for complex simulations billed 
during our audit period (CYs 2013 through 2015).  In addition, we identified $4.2 million in potential 
overpayments for other IMRT planning services that were not included in our sample.  In total, 
Medicare overpaid hospitals as much as $25.8 million during our audit period.  For IMRT planning 
services billed in the 2 years after our audit period (for CYs 2016 and 2017), we identified an 
additional $3.7 million in potential overpayments for complex simulations and $1.7 million for other 
IMRT planning services.  In total, Medicare overpaid hospitals as much as $5.4 million after our 
audit period. 
 
CMS concurred with our recommendations that it: (1) implement an edit to prevent improper 
payments for IMRT planning services that are billed before (e.g., up to 14 days before) the 
procedure code for the bundled payment for IMRT planning is billed, which could have saved as 
much as $25.8 million during our audit period and as much as $5.4 million in the next 2 years; and 
(2) work with the Medicare contractors to educate hospitals on properly billing Medicare for IMRT 
planning services. 
 
Many Inpatient Rehabilitation Facility Stays Did Not Meet Medicare Coverage and Documentation 
Requirements (A-01-15-00500), September 2018 
 
IRFs did not comply with all Medicare coverage and documentation requirements specified for 
reasonable and necessary care.  For 175 of 220 stays that we sampled, which corresponded to 135 
IRFs, medical record documentation did not support that IRF care was reasonable and necessary in 
accordance with Medicares requirements.  Based on our sample results, we estimated that 
Medicare paid IRFs nation-wide $5.7 billion in 2013 for care to beneficiaries that was not 
reasonable and necessary. 
 
CMS concurred with our recommendations that it: (1) educate IRF clinical and billing personnel on 
Medicare coverage and documentation requirements and work with providers to develop best 
practices to improve internal controls; (2) increase oversight activities for IRFs, such as postpayment 
medical review; (3) work with the Office of Medicare Hearings and Appeals to ensure that Medicare 
coverage and documentation requirements for IRF care are fairly represented at administrative law 
judge hearings; and (4) re-evaluate the IRF payment system.   
 
Medicare Payments for Clinical Diagnostic Laboratory Tests in 2017: Year 4 of Baseline Data (OEI-09-
18-00410), September 2018 
 
17 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Medicare paid $7.1 billion under Part B for lab tests in 2017, a total that changed very little over 4 
years.  The top 25 tests by Medicare payments totaled $4.5 billion and represented 64 percent of 
all Medicare payments for lab tests in 2016.  More than half of payments for the top 25 tests went 
to 1 percent of labs.  
 
Congress mandated that OIG monitor Medicare payments for lab tests and publicly release an 
annual analysis of the top 25 lab tests by Medicare payments.  The new payment system for lab 
tests took effect on January 1, 2018, and resulted in significant changes to the Medicare payment 
rates for lab tests.  This data brief, like those before it, will provide baseline statistics that OIG will 
use to measure the effects of changes to the payment system when data from 2018 become 
available.  Our data brief contains no recommendations. 
 
Quality of Care, Safety, and Access 
 
Round 2 Competitive Bidding for Oxygen: Continued Access for Vast Majority of Beneficiaries (OEI-
01-15-00041), May 2018 
 
We found that Medicare payments for oxygen equipment and contents continued for the vast 
majority of beneficiaries in both Round 2 bidding areas and nonbidding areas, indicating that the 
Competitive Bidding Program likely did not disrupt their access.  The percentage of beneficiaries 
for whom Medicare payments did not continue was slightly higher in Round 2 bidding areas than 
in nonbidding areas, which may or may not indicate disruptions in receiving needed oxygen 
equipment and contents for a very small proportion of beneficiaries.   
 
This report is part of a series examining the effect of Round 2 Competitive Bidding on Medicare 
beneficiary access to DME.  Other reports in the series examined beneficiary access to enteral 
nutrition supplies and continuous positive airway pressure devices and respiratory assist 
(CPAP/RAD) devices and related supplies. 
 
Round 2 Competitive Bidding for Enteral Nutrition: Continued Access for Vast Majority of 
Beneficiaries (OEI-01-15-00042), May 2018 
 
We found that Medicare payments for enteral nutrition supplies continued for the vast majority of 
beneficiaries in both Round 2 bidding areas and nonbidding areas, indicating that the Competitive 
Bidding Program likely did not disrupt their access.  The percentage of beneficiaries for whom 
Medicare payments did not continue was slightly higher in Round 2 bidding areas than in 
nonbidding areas, which may or may not indicate disruptions in receiving needed enteral nutrition 
supplies for a very small proportion of beneficiaries.   
 
This report is part of a series examining the effect of Round 2 Competitive Bidding on Medicare 
beneficiary access to DME.  Other reports in the series examined beneficiary access to CPAP/RAD 
devices (continuous positive airway pressure devices and respiratory assist devices) and related 
supplies and to oxygen equipment and contents. 
18 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and 
Payment Denials (OEI-09-16-00410), September 2018 
 
High overturn rates when beneficiaries and providers appeal denials, and CMS audit findings about 
inappropriate denials, raise concerns that some beneficiaries and providers may not be getting 
services and payment that Medicare Advantage Organizations (MAOs) are required to provide.  
These findings are particularly concerning because beneficiaries and providers almost never use 
the appeals process designed to ensure access to care and payment.  CMS concurred with our 
three recommendations to: 
  enhance its oversight of MAO contracts including those with extremely high overturn rates 
and/or low appeal rates and take corrective action as appropriate;  
  address persistent problems related to inappropriate denials and insufficient denial letters in 
Medicare Advantage; and 
  provide beneficiaries with clear, easily accessible information about serious violations by 
MAOs.   
 
Opioid Use in Medicare Part D Remains Concerning (OEI-02-18-00220), June 2018 
 
We found that nearly one in three beneficiaries received a prescription opioid through Medicare 
Part D in 2017, a slight decrease from 2016.  Overall Part D spending for opioids also decreased, 
from $4.0 billion in 2016 to $3.4 billion for opioids in 2017.  This decrease was due in part to 
declining prices.  Almost 460,000 beneficiaries received high amounts of opioids in 2017, fewer 
than in 2016.  Of these, about 71,000 beneficiaries were at serious risk of opioid misuse or 
overdose, also fewer than in 2016.  These 71,000 beneficiaries received extreme amounts of opioids 
or appeared to be doctor shopping.  Moreover, almost 300 prescribers had questionable 
prescribing patterns for beneficiaries who are at serious risk.  Ensuring the appropriate use and 
prescribing of opioids is essential to protecting the health and safety of beneficiaries and the 
integrity of Part D.  The severity of the opioid crisis makes it imperative that HHS, including CMS 
and OIG, continues to work together to develop new strategies to address this epidemic.   
 
Part D Plans Generally Include Drugs Commonly Used by Dual Eligibles: 2018 (OEI-05-18-00240), 
June 2018 
 
Overall, we found that the rate of Part D plan formularies inclusion of the drugs commonly used 
by dual eligible (i.e., individuals who are eligible for both Medicare and Medicaid) is high, with 
some variation.  Because some variation exists in formularies inclusion of these drugs and in their 
application of utilization management tools to the drugs, some dual eligibles may need to use 
alternative methods to access the drugs they take.  This report did not make recommendations. 
   
19 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Analysis Toolkit: Calculating Opioid Levels to Identify Patients at Risk of Misuse or Overdose (OEI-02-
17-00560), June 2018 
 
This toolkit provides detailed steps for using prescription drug claims data to analyze patients 
opioid levels and identify certain patients who are at risk of opioid misuse or overdose.  It is 
based on the methodology that OIG has developed in our extensive work on opioids.  It is 
intended to assist our partners, such as Medicare Part D plan sponsors, private health plans, and 
State MFCUs, with analyzing their own prescription drug claims data to help combat the opioid 
crisis.   
 
Vulnerabilities in the Medicare Hospice Program Affect Quality Care and Program Integrity: An OIG 
Portfolio (OEI-02-16-00570), July 2018 
 
Hospice use has grown steadily over the past decade, with Medicare paying $16.7 billion for this 
care for 1.4 million beneficiaries in 2016.  However, OIG has identified vulnerabilities in the program.  
OIG found that hospices do not always provide needed services to beneficiaries and sometimes 
provide poor quality care.  Also, beneficiaries and their families and caregivers do not receive 
crucial information to make informed decisions about care.  Further, hospices inappropriate billing 
costs Medicare hundreds of millions of dollars.  Lastly, the current payment system creates 
incentives for hospices to minimize their services and seek beneficiaries who have uncomplicated 
needs.  Our findings make clear that more must be done to protect Medicare beneficiaries and the 
integrity of the program.   
 
CMS concurred with the following recommendations to: 
  develop other claims-based information and include it on Hospice Compare (a website that 
allows public users to compare hospice agencies based on the quality of care they 
provide); 
  work with its partners, such as hospitals and caregiver groups, to make available consumer-
friendly information explaining the hospice benefit to beneficiaries and their families and 
caregivers; 
  analyze claims data to identify hospices that engage in practices or have characteristics that 
raise concerns; 
  take appropriate actions to follow up with hospices that engage in practices or have 
characteristics that raise concerns; 
  increase oversight of general inpatient care claims and particularly focus on general inpatient 
care provided in SNFs, given the higher rate at which these stays were inappropriate; and 
  implement a comprehensive prepayment review strategy to address lengthy general inpatient 
care stays so that beneficiaries do not have to endure unnecessarily long periods of time in 
which their pain and symptoms are not controlled. 
 
CMS did not concur with the following recommendations to: 
  analyze claims data to inform the survey process; 
  analyze deficiency data to inform the survey; 
20 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
  include on Hospice Compare deficiency data from surveys, including information about 
complaints filed and resulting deficiencies; 
  develop and execute a strategy to work directly with hospices to ensure that they are 
providing drugs covered under the hospice benefit as necessary and that the cost of drugs 
covered under the benefit are not inappropriately shifted to Part D; 
  assess the current payment system to determine what changes may be needed to tie 
payments to beneficiaries care needs and quality of care to ensure that services rendered 
adequately serve beneficiaries needs; 
  adjust payments based on these analyses, if appropriate, to ensure that the payment system is 
aligned with beneficiary needs and quality of care; and 
  modify the payments for hospice care in nursing facilities.  
 
CMS neither concurred nor nonconcurred with the recommendation to seek statutory authority to 
establish additional, intermediate remedies for poor hospice performance.  Additionally, we 
clarified and combined two recommendations to state that CMS should ensure that a physician is 
involved in the decisions to start and continue general inpatient care. 
 
Questionable Billing for Compounded Topical Drugs in Medicare Part D (OEI-02-16-00440), August 
2018 
 
We found that Medicare Part D spending for compounded topical drugs was 24 times higher in 
2016 than it was in 2010 and that nearly 550 pharmacies had questionable Part D billing for 
compounded topical drugs in 2016.  This explosive growth and identification of pharmacies raises 
concerns about fraud and abuse.  CMS concurred with our recommendations to:  
  clarify Part D policies for coverage of compounded topical drugs and use of utilization 
management tools; 
  conduct additional analysis on compounded topical drugs; 
  conduct training for Part D sponsors on fraud schemes and safety concerns related to 
compounded topical drugs; and 
  follow up on pharmacies with questionable Part D billing and the prescribers associated with 
these pharmacies.  
 
Program Integrity 
 
2017 Performance Data for the Senior Medicare Patrol Projects (OEI-02-18-00130), May 2018 
 
The Senior Medicare Patrol (SMP) projects receive grants from ACL to recruit and train retired 
professionals and other senior citizens to prevent, recognize, and report healthcare fraud, errors, and 
abuse.  In 2017, the 53 SMP projects had a total of 6,130 active team members who conducted a total 
of 26,429 group outreach and education events, reaching an estimated 1.9 million people.  In 
addition, the projects had 226,261 individual interactions with, or on behalf of, a Medicare 
beneficiary.  The projects reported $2,010,475 in expected Medicare recoveries, which came primarily 
from one project that prompted law enforcement to open an investigation that resulted in a 
21 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
settlement with a hospice company.  The SMP projects also reported $211,749 in cost avoidance and 
$44,468 in savings to beneficiaries and others.   
 
Payment Policy and Trends 
 
Open Payments Data: Review of Accuracy, Precision, and Consistency in Reporting (OEI-03-15-
00220), August 2018 
 
The Open Payments program promotes transparency by making available to the public the 
financial relationships that physicians and teaching hospitals have with applicable manufacturers 
and group purchasing organizations.  Of 11.9 million records published on the Open Payments 
website for 2015, less than 1 percent were missing required data elements.  Although the Open 
Payments data elements reported to CMS were complete overall, we did identify records that 
contained inaccurate, imprecise, or inconsistent information.  The Open Payments program can 
benefit the public only if the data reported are complete and accurate.  As such, potential issues 
with these data may undermine the public benefit of this program.  CMS concurred with the 
following recommendations to: 
  ensure that records contain all required data;  
  strengthen validation rules and revise data-element definitions so that actual drug and device 
names must be reported; 
  revise the definition of the device-name data element so that the information reported is 
required to be more specific; and 
  ensure that manufacturers and group purchasing organizations report valid national drug 
codes for drugs. 
 
Drug Pricing and Reimbursement 
 
CMSs Policies and Procedures Were Generally Effective in Ensuring That Prescription Drug Coverage 
Capitation Payments Were Not Made After the Beneficiaries Dates of Death (A-07-16-05088), April 
2018 
 
CMS had policies and procedures in place that were generally effective in ensuring that capitation 
payments to Medicare Advantage organizations prescription drug plans and stand-alone 
prescription drug plans (collectively referred to as sponsors) for Medicare Part D coverage were 
not made on behalf of deceased beneficiaries after the individuals dates of death. These policies 
and procedures generally ensured that CMS did not make improper capitation payments on behalf 
of deceased beneficiaries when its data systems indicated at the time of a monthly capitation 
payment that the beneficiaries in question had died.  
 
CMS did not, however, identify and recoup all improper capitation payments.  As of March 7, 2017, 
CMS had not recouped $1.1 million associated with 65,398 separate capitation payments.  For our 
audit period, these improper payments represented .0004 percent of the total capitation payments 
22 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
made to sponsors and .097 percent of the total adjustments that CMS made after receiving 
information on beneficiaries dates of death. 
 
CMS concurred with our recommendations that it: 1) use the information in this report to recoup 
the $1.1 million in capitation payments to sponsors for Medicare Part D coverage on behalf of 
deceased beneficiaries; and 2) continue to implement system enhancements to identify, adjust, and 
recoup improper capitation payments in the future.  
 
Increases in Reimbursement for Brand-Name Drugs in Part D (OEI-03-15-00080), June 2018 
 
We found that Part D reimbursement for brand-name drugs increased at a pace greater than the 
rate of inflation while utilization for these drugs decreased.  Specifically, total reimbursement for all 
brand-name drugs in Part D increased 77 percent from 2011 to 2015, while utilization decreased 
17 percent across the 5 years.  Continued increases in reimbursement for brand-name drugs may 
have long-term effects on Medicare and its beneficiaries, especially those beneficiaries who need 
access to expensive maintenance drugs.  This data brief did not include recommendations.  
 
Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2016 Average Sales Prices 
(OEI-03-18-00120), August 2018 
 
Based on 2016 data, CMS lowered Part B reimbursement for 16 drugs, saving Medicare and its 
beneficiaries $13.1 million over 1 year.  This finding highlights the success of OIGs mandated 
quarterly comparisons of average sales prices with average manufacturer prices and 
implementation of CMSs current price-substitution policy.  OIG continues to recommend that CMS 
expand the price-substitution criteria.  CMS did not concur with this recommendation and believes 
that more experience with the price-substitution policy is needed before it can be expanded. 
 
Medicaid Program Reports and Reviews  
 
Financial Management and Improper Payments 
 
Texas Did Not Make Increased Primary Care Provider Payments and Claim Reimbursement in 
Accordance With Federal Requirements (A-06-15-00045), April 2018 
 
Texas did not always make increased Medicaid payments to providers and claim reimbursement in 
accordance with Federal requirements.  Of the $721 million in Federal funds that it received, Texas 
inappropriately received $20.7 million because it: (1) incorrectly claimed the 100-percent matching 
rate for payments that were only eligible for the regular matching rate; and (2) made payments 
that were unallowable. 
 
Additionally, we are setting aside $1.1 million in Federal funds Texas received for payments that 
exceeded the providers actual billed charges.  Providers did not complete the billed charges field 
23 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
for some payment data with meaningful amounts, so we could not determine the correct payment 
amounts for the data. 
 
Texas concurred with our recommendation that it work with CMS to determine the portion of the 
$1.1 million it received for payments that exceeded providers billed charges that should be 
refunded to the Federal Government.  Texas did not indicate concurrence or nonconcurrence with 
our recommendation that it refund $20.7 million to the Federal Government.   
 
Most of New Yorks Claims for Federal Reimbursement for Monthly Personal Emergency Response 
Service Charges Did Not Comply with Medicaid Requirements (A-02-15-01019), April 2018 
 
New York provides Personal Emergency Response Services (PERS) to eligible Medicaid beneficiaries 
through contracts negotiated between local social services districts (local districts) and PERS 
providers.  Payment for PERS includes a monthly service charge for monitoring agency services. 
 
For 87 of the 100 claims in our sample, New York claimed Federal reimbursement for PERS monthly 
service charge claims that did not comply with Medicaid requirements.  Based on our sample 
results, we estimated that New York improperly claimed at least $5.5 million in Federal Medicaid 
reimbursement.  New Yorks ineffective oversight of the PERS program leaves the program 
vulnerable to misuse of Federal funds and could potentially place beneficiaries at risk of harm. 
 
New York did not indicate concurrence or nonconcurrence with our recommendations that it 
refund $5.5 million to the Federal Government and strengthen its monitoring activities of local 
districts for compliance with Medicaid requirements.  New York described actions it was taking or 
planned to take in response to each of our recommendations. 
 
New York Claimed Federal Reimbursement for Consumer-Directed Personal Assistance Services That 
Did Not Meet Medicaid Requirements (A-02-16-01026), June 2018 
 
New Yorks consumer-directed personal assistance program (CDPAP) includes personal care, home 
health, and nursing services.  New York claimed Federal Medicaid reimbursement totaling more 
than $579 million for CDPAP services provided from January 2012 through June 2016. 
 
For 27 of 120 sampled claims, New York claimed Federal reimbursement for CDPAP services claims 
that did not meet Medicaid requirements.  New York also claimed reimbursement for services 
provided after a 6-month authorization period had lapsed.  This occurred because New York did 
not effectively monitor the CDPAP for compliance with certain CDPAP requirements. 
 
Based on our sample results, we estimated that New York improperly claimed at least $74.8 million 
in Federal Medicaid reimbursement during our audit period.  New Yorks lack of effective 
monitoring of the CDPAP leaves the program vulnerable to misuse of Federal funds and could 
potentially place beneficiaries at risk of harm. 
 
24 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
New York did not indicate concurrence or nonconcurrence with our recommendations that it 
refund $74.8 million to the Federal Government, reinforce guidance related to CDPAP 
documentation and billing requirements, and improve its monitoring of the CDPAP to ensure 
compliance with requirements.  New York described the actions it was taking or planned to take in 
response to each of our recommendations. 
 
Virginia Did Not Claim Some Medicaid Administrative Costs for Its Medallion 3.0 Waiver Program in 
Accordance With Federal Requirements (A-03-17-00200), June 2018 
 
Of the $220 million (Federal share) in administrative costs claimed for Virginias waiver program in 
State FYs 2016 and 2017, Virginia correctly claimed $211.2 million (Federal share).  However, we 
found that Virginia claimed $7.7 million (Federal share) in unallowable waiver program 
administrative costs not identified in its Cost Allocation Plan (CAP).  In addition, Virginia incorrectly 
claimed $1.2 million (Federal share) in administrative costs that were misclassified as waiver 
program administrative costs.  The misclassified expenditures did not directly benefit the waiver 
program but directly benefited a separate public welfare program, Virginias Childrens Health 
Insurance Program (CHIP).  
 
Virginia did not concur with our recommendation that it refund to the Federal Government $7.7 
million for administrative costs that were not identified in the CAP and concurred with our 
recommendation that it reclassify $1.2 million (Federal share) in administrative costs that directly 
benefited Virginias CHIP program and not the waiver program.  
 
Weaknesses Exist in Medicaid Managed Care Organizations Efforts to Identify and Address Fraud 
and Abuse (OEI-02-15-00260), July 2018 
 
We found that MCOs play an increasingly important role in fighting fraud and abuse in Medicaid, 
yet weaknesses exist in their efforts to identify and address fraud and abuse.  Although the number 
of cases varied widely, some MCOs identified and referred few cases of suspected fraud or abuse 
to the State in 2015.  In addition, MCOs took actions against providers suspected of fraud or abuse 
but did not typically inform the State, including when MCOs terminated provider contracts for 
reasons associated with fraud or abuse.  Finally, MCOs did not always identify and recover 
overpayments, including those associated with fraud or abuse.  At the same time, selected States 
employ a number of strategies to address MCOs weaknesses and improve MCO efforts.   
 
CMS concurred with the following recommendations to:  
  improve MCO identification and referral of cases of suspected fraud or abuse; 
  increase MCO reporting of corrective actions taken against providers suspected of fraud or 
abuse to the State; 
  clarify the information MCOs are required to report regarding providers who are terminated 
or otherwise leave the MCO network; 
  identify and share best practices about payment retention policies and incentives to increase 
recoveries; 
  improve coordination between MCOs and other State program integrity entities;  
25 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
  ensure that MCOs provide complete, accurate, and timely encounter data; and 
  monitor encounter data and impose penalties on States for submitting inaccurate or 
incomplete encounter data.  
 
CMS did not concur with our recommendation to standardize reporting of referrals across all 
MCOs in the State.  
 
California Claimed Millions of Dollars in Unallowable Federal Medicaid Reimbursement for Specialty 
Mental Health Services (A-09-15-02040), August 2018 
 
California did not always comply with Federal and State requirements when claiming Federal 
reimbursement for specialty mental health services (SMHS) expenditures.  Based on our sample 
results, we estimated that California claimed at least $180.6 million in unallowable Federal 
reimbursement. 
 
California claimed unallowable Federal reimbursement because its oversight was not effective in 
ensuring that its SMHS claims complied with Federal and State requirements.  Although California 
issued guidance and provided training and technical support to its county-run managed care 
mental health plans (health plans), the plans continued to report to California unallowable 
expenditures as allowable expenditures.  In addition, although Californias triennial reviews were 
effective in identifying unallowable expenditures, California did not ensure that adequate corrective 
action was taken.  We found repeat deficiencies at some health plans. 
 
California agreed with our recommendation that it strengthen its oversight of the health plans to 
ensure that SMHS claims comply with Federal and State requirements.  California disagreed with 
our recommendation that it refund to the Federal Government $180.6 million for unallowable 
Federal reimbursement claimed for SMHS expenditures. 
 
California Created a Medicaid Program Vulnerability by Reporting Placeholders That Did Not 
Represent Actual Expenditures Supported by Documentation (A-09-15-02027), August 2018 
 
California reported SMHS placeholders totaling $47.5 million for FY 2013 that did not represent 
actual expenditures supported by documentation.  California did not have policies and procedures 
to ensure that supporting documentation for the placeholders was: (1) available at the time the 
Form CMS-64 (the CMS-64) was filed; and (2) retained.  Californias reporting of placeholders 
created a program vulnerability: California could have withdrawn funds related to the unsupported 
placeholders that CMS had not acted to defer before the 60-day deadline as required by Federal 
regulations or to disallow.  According to its placeholder record, California reported for FY 2013 
additional placeholders totaling $1.2 billion for other types of Medicaid expenditures. 
 
California agreed with our recommendations that it: 
  report adjustments on the CMS-64 to reduce SMHS placeholder amounts by the $47.5 million 
that did not represent actual expenditures supported by documentation;  
26 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
  work with CMS to resolve the $1.2 billion of additional Medicaid placeholders reported for 
FY 2013 and any placeholders reported for prior and later FYs and determine whether 
adjustments should be made;  
  develop and implement policies and procedures to ensure that supporting documentation for 
reported placeholders is available at the time the CMS-64 is filed and that the supporting 
documentation is retained; and  
  report on the CMS-64 only actual expenditures that are supported by documentation.  
 
Alaska Received Millions in Unallowable Bonus Payments (A-04-17-08059), August 2018 
 
Under the Childrens Health Insurance Program Reauthorization Act of 2009, Congress 
appropriated $3.2 billion for qualifying States to receive bonus payments to offset the costs of 
increased enrollment of children in Medicaid.  Some of the bonus payments that Alaska received 
for the audit period were not allowable in accordance with Federal requirements.  While most of 
the data used in Alaskas bonus payment calculations were in accordance with Federal 
requirements, Alaska overstated its FYs 2009 through 2013 current enrollment in its bonus requests 
to CMS because it included individuals who did not qualify because of their basis-of-eligibility 
category.  As a result of the overstated current enrollment numbers, CMS overpaid Alaska almost 
$8.9 million in bonus payments. 
 
Alaska did not concur with our recommendation that it refund almost $8.9 million to the Federal 
Government. 
 
Quality of Care, Safety, and Access 
 
Opioids in Ohio Medicaid: Review of Extreme Use and Overprescribing (OEI-05-18-00010), July 2018 
 
We found that more than 700 beneficiaries are at serious risk of prescription opioid misuse or 
overdose and that nearly 50 prescribers stood out by ordering opioids for more of these 
beneficiaries than other prescribers.  Our results underscore the tenacity of the opioid crisis and the 
importance of Ohios ongoing commitment to addressing it.  We encourage Ohio to continue its 
ongoing efforts to explore new strategies to address its opioid crisis and look for ways to improve 
its existing strategies.   
 
Minnesota Did Not Comply with Federal Waiver and State Requirements for All 20 Adult Day Care 
Centers Reviewed (A-05-17-00009), May 2018  
Illinois Did Not Comply with Federal Waiver and State Requirements at 18 of 20 Adult Day Service 
Centers Reviewed (A-05-17-00028), July 2018  
Mississippi Did Not Comply with Federal Waiver and State Requirements at All 20 Adult Day Care 
Facilities Reviewed (A-04-17-00116), August 2018 
 
Minnesota, Illinois, and Mississippi did not comply with Federal waiver and State requirements in 
overseeing providers that serve vulnerable adults receiving adult day care services.  In Minnesota, 
27 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
we found 200 instances of noncompliance with health and safety and administrative requirements 
at all 20 of the centers we reviewed.  In Illinois, we found 105 instances of noncompliance at 18 of 
the 20 centers we reviewed.  In Mississippi, we found 564 instances of noncompliance at all 20 of 
the centers we reviewed. 
 
Minnesota said that the instances of noncompliance occurred because low staffing levels did not 
allow State licensors to make relicensing visits every 2 years.  Additionally, Minnesota and the 
centers indicated that there was a need to develop templates for administrative records that the 
State requires.  
 
Illinois said that most instances of noncompliance occurred because center personnel did not have 
sufficient training on State requirements.  Although Illinois offers initial training to new centers, 
more State-led training is needed for established centers. 
 
According to Mississippi, budget reductions and low auditor staffing levels limited its oversight and 
monitoring of provider facilities, staffing, and training, and the lack of State licensing requirements 
contributed to provider noncompliance.  
 
Minnesota, Illinois, and Mississippi concurred with our recommendations that they: (1) ensure that 
the instances of noncompliance with health and safety and administrative requirements are 
corrected; and (2) improve their oversight of staffing, training, and administration.  
 
Drug Pricing and Reimbursement 
 
CMS Did Not Always Provide Accurate Medicaid Unit Rebate Offset Amounts to State Medicaid 
Agencies (A-07-17-06074), May 2018 
 
CMS did not always provide accurate Medicaid unit rebate offset amounts (UROAs) to States from 
2010 through 2014 in accordance with Federal guidance.  (Under the Medicaid drug rebate 
program, drug manufacturers enter into rebate agreements with the Federal Government and pay 
rebates to States.  Amounts collected by the States that are attributable to increased rebates 
mandated by recent legislationUROAsare applied against the amounts that the Federal 
Government pays to the States.)  
 
CMS did not update the quarterly UROA information that it sent to the States to include changes 
to the UROAs when covered drugs best prices changed but the unit rebate amounts stayed the 
same.  The States would have used these incorrect UROA amounts to calculate rebates, which 
would have resulted in incorrect rebate amounts being claimed.  
 
CMS concurred with our recommendation that it conduct periodic matches that would compare 
the UROA information sent to States to the Medicaid drug rebate system to ensure that CMS is 
sending accurate rebate information. 
28 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Legal and Investigative Activities Related to the 
Medicare and Medicaid Programs  
   
OIG investigates allegations of fraud, waste, and abuse in all HHS programs.  Our largest body of work 
involves investigating matters related to the Medicare and Medicaid programs, such as patient harm; 
billing for services not rendered, medically unnecessary services, or upcoded services (i.e., services billed 
for at a level higher than warranted); illegal billing, sale, and diversion of prescription drugs; the marketing 
of off-label uses for prescription drugs; and solicitation and receipt of kickbacks, including illegal payments 
to patients for involvement in fraud schemes and illegal referral arrangements between physicians and 
medical companies.   
 
Specific case types include fraud schemes related to:  
  controlled and noncontrolled prescription drugs,  
  home health agencies and personal care services,  
  ambulance transportation,  
  DME, and  
  diagnostic radiology and laboratory testing.   
 
OIG also conducts investigations regarding organized criminal activity, including medical identity theft and 
fraudulent medical schemes established for the sole purpose of stealing Medicare dollars.  Investigators 
are opening an increasing number of cases against healthcare providers and patients who engage in these 
healthcare fraud schemes.  Those who participate in the schemes may face heavy fines, jail time, and 
exclusion from participation in Federal healthcare programs.   
 
In addition to investigating Medicare and Medicaid fraud, OIG investigates fraud, waste, and abuse in 
other HHS programs, including ACF, IHS, Health Resources and Services Administration (HRSA), and ACL.  
OIG investigates potential misuse of grants and contract funds awarded by CDC, NIH, the Substance 
Abuse and Mental Health Services Administration (SAMHSA), and other HHS agencies.  Under certain 
circumstances, OIG investigates noncustodial parents who fail to pay court-ordered child support.  OIG 
also investigates allegations of employee misconduct, whistleblower reprisals, and wrongdoing by HHS 
agency officials.   
 
One of the most common types of fraud perpetrated against Medicare, Medicaid, and other Federal 
healthcare programs involves filing false claims for reimbursement.  False claims may be pursued under 
Federal and State criminal statutes and, when appropriate, under the FCA.  Depending on the types of 
fraud or other violations involved, OIG investigations may culminate in criminal or civil court judgments 
and decisions, administrative sanctions and decisions, and/or negotiated settlement agreements.  
Investigative outcomes take many forms, including incarceration, restitution, fines, penalties, forfeitures, 
assessments, and exclusion of individuals or entities from participation in all Federal healthcare programs.  
Frequently used exclusion and penalty authorities are described on our website at 
http://oig.hhs.gov/fraud/enforcement/cmp/. 
29 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
During this semiannual reporting period, we reported 305 criminal and 449 civil actions against individuals 
or entities that engaged in offenses related to healthcare.  We also reported over $1.4 billion in 
investigative receivables due to HHS and more than $284.5 million in non-HHS investigative receivables, 
including civil and administrative settlements or civil judgments related to Medicare, Medicaid, and other 
Federal, State, and private healthcare programs.   
 
The following recently completed actions and settlements are organized by subject area. 
 
Prescription Drugs 
The following case example involves prescription drugs: 
 
  AlabamaDr. Rassan Mohammad Tarabein was convicted of charges resulting from his pain 
management clinic.  Tarabein operated the Eastern Shore Neurology and Pain Center in 
Daphne, Alabama, where he offered services relating to neurology and pain management, 
such as spinal injections.  Tarabein admitted that, from around 2004 to May 2017, he ran an 
insurance scam in which he induced patients to visit his clinic so he could bill for medically 
unnecessary tests and procedures.  The purpose of Tarabeins admitted scheme was to 
maximize personal financial gain by fraudulently seeking payments from healthcare benefit 
programs including Medicare and Medicaid.  Specifically, Tarabein admitted to violating 
traditional standards of medical care in a number of ways, including by administering 
unnecessary injections and attempting to inject patients in places where they were not 
experiencing pain; telling patients that they had to receive spinal procedures and diagnostic 
testing in order to receive prescriptions for controlled substances; prescribing controlled 
substances without a legitimate medical purpose; and failing to monitor his patients vital 
signs during and after procedures, putting them at risk for complications.  Tarabein pleaded 
guilty to healthcare fraud and unlawful distribution of a controlled substance, and was 
sentenced to 5 years in prison and ordered to pay $15 million in restitution.  
 
Pharmaceutical Companies  
The following case example involves a pharmaceutical company: 
 
  New YorkPfizer Inc. (Pfizer) entered into a civil settlement to resolve its FCA liability 
associated with donations it made to a 501(c)(3) foundation, which operated funds that pay the 
copayments of certain patients, including Medicare patients.  Specifically, Pfizer resolved 
allegations that, from 2012 through 2016, it used the foundation as a conduit to pay the 
copayments of Medicare patients taking Sutent, Inlyta, and Tikosyn, in violation of the Anti-
Kickback Statute.  Pfizer agreed to pay $23.85 million and entered into a 5-year CIA with 
provisions relating to arrangements and interactions between Pfizer and any third-party patient 
assistance program to which Pfizer donates.  The CIA also requires Pfizer to implement controls 
and monitoring designed to promote true independence from any patient assistance program 
to which it donates. 
30 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
Home Health  
The following case example involves home health: 
 
  VirginiaHope In-Home Care, LLC (Hope), a provider of Medicaid in-home healthcare services, 
entered into a settlement agreement to resolve allegations that it submitted false claims to the 
Virginia Medicaid Program.  The agreement resolves allegations that, from January 1, 2011, to 
September 30, 2013, Hope submitted claims to Medicaid that were false or fraudulent for the 
following reasons: 1) Hope employed and submitted claims for uncertified personal care aides 
who were ineligible to provide services; 2) Hope falsified documents and statements in order to 
qualify ineligible beneficiaries for services; 3) Hope made false statements in prior authorization 
requests in order to obtain approval and reimbursement for non-reimbursable respite services; 
4) Hope engaged in phantom billing by billing for services that were not performed; and 5) 
Hope hired family members of Medicaid beneficiaries as personal care aides and submitted 
ineligible claims for compensation for care provided by those family members.  Hope agreed 
to pay $3.3 million to resolve its FCA liability. 
 
Durable Medical Equipment  
The following case example involves DME: 
 
  TennesseeSix co-conspirators connected with Jaspan Medical Systems (Jaspan), a California 
based DME supplier, were convicted of charges resulting from their involvement in a scheme to 
defraud Medicare, Medicaid and Tricare.  The defendantsJaspan manager Bryan Mitchell 
Bailey and sales staff Sandra and Calvin Bailey, Cindy Mallard, and Brenda and Dennis 
Sensingwere sentenced to a combined 20 years and 9 months in prison, and ordered to pay 
$2.1 million in restitution.  The investigation found that the defendants marketed power 
wheelchairs to patients and represented them as paid fully by Medicare, and at no cost to the 
patients.  An extensive network of illegally paid recruiters was used to find eligible patients.  
After finding the patients, the defendants falsified documents to make it appear that the 
patients qualified for the equipment.  Bailey and his co-defendants also enlisted a local 
physician and nurse practitioner to order the equipment without the required physical 
examinations to determine if the equipment was medically necessary.  Illegal kickbacks were 
paid to the medical providers to facilitate this scheme.  Many patients testified that they never 
used the power wheelchairs, and that the power wheelchairs were too large to be used in their 
homes.  Most of the patients could walk, drive vehicles, and care for themselves without the 
need for a power wheelchair.   
 
Laboratories  
The following case example involves a laboratory: 
 
  KentuckyCompliance Advantage, LLC (CAL) entered into a settlement agreement to resolve 
allegations that CAL fraudulently billed Medicare and Medicaid for specimen validity testing 
31 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
(SVT) conducted on urine specimens and knowingly failed to return the overpayment amount 
after being notified that SVT was a non-covered service.  Specifically, SVT is a control process 
used to analyze a urine specimen to ensure that it has not been diluted or adulterated.  It was 
alleged, and CAL specifically admitted, that CAL submitted claims for SVT with dates of service 
from January 14, 2013, through November 2, 2016, using CPT Codes 81003, 32570, 83986, and 
84311.  In March 2016, CAL was notified that SVT is a non-covered service and that it had been 
wrongfully paid for claims for SVT services (including notice of the amount of the 
overpayments).  However, despite knowing of the existence and amount of overpayments for 
SVT, and knowing of its statutory obligation to return such overpayments, CAL failed to return 
the overpayments to Medicare and Medicaid.  CAL agreed to the entry of a judgment of $2.8 
million against it for violating the reverse false claims provision of the FCA. 
 
Transportation  
The following case example involves transportation: 
 
  FloridaLiberty Ambulance Service, Inc. (Liberty) entered into an FCA settlement agreement to 
resolve allegations that it submitted false claims to Medicare for transportation 
services.  Specifically, the settlement agreement resolves allegations that, from June 29, 2005, 
to January 5, 2016, Liberty billed for: (1) Non-Emergency Advanced Life Support (ALS) services 
when only the less expensive Non-Emergency Basic Life Support (BLS) services were medically 
reasonable and necessary; (2) emergency services for hospital-to-hospital transports and 
scheduled transports when only the less expensive Non-Emergency services were medically 
reasonable and necessary; (3) Non-Emergency BLS or ALS services for ambulance transports 
that were not medically necessary because transportation by other means was not 
contraindicated; and (4) emergency transports to residences when only the less expensive 
Non-Emergency services were medically reasonable and necessary.  Liberty agreed to pay $1.2 
million and entered into a 5-year CIA. 
 
Nursing Homes  
The following case example involves a nursing home: 
 
  TennesseeSignature Healthcare, LLC (Signature), a company that operates approximately 115 
SNFs, entered into an FCA settlement to resolve allegations associated with its submission of 
false claims to Medicare for unnecessary rehabilitation therapy.  Specifically, the settlement 
agreement resolves allegations that, from January 1, 2011, through September 30, 2015, 
Signature billed the highest reimbursement level (Ultra High Resource Utilization Group) for 
patients for periods exceeding 30 days.  Signatures corporate policies and practices allegedly 
encouraged the provision of unnecessary therapy untethered to the individual clinical needs of 
patients.  Additionally, the settlement agreement resolves allegations that, from January 1, 2011, 
and June 1, 2013, Signature improperly submitted Pre-admission Evaluation Certifications that 
were photocopied or had forged physician signatures to illegally obtain reimbursement from 
Tennessees Medicaid program.  Signature agreed to pay $30 million to resolve its potential 
liability and entered into a company-wide 5-year CIA.  The CIA requires a Rehab Review and a 
32 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Therapy Systems Assessment. 
 
Mental Health  
The following case examples involves mental health: 
 
  North CarolinaShephard Lee Spruill II, president of Carolina Support Services, and his co-
defendants engaged in a multistate healthcare fraud conspiracy.  Others involved in the 
conspiracy were behavioral health provider Terry Lamont Speller, his biller, Donnie Lee Phillips, 
II, and another Medicaid provider named Reginald Saunders.  According to court documents, 
from July 2013 through June 2014, Spruill, Speller, and Phillips billed Medicaid for various 
outpatient health services that were not performed.  To perpetrate the scheme, Spruill supplied 
hundreds of patient names and identifiers to Speller, who in turn had Phillips bill the North 
Carolina Medicaid Program for millions of dollars in fictitious mental health services.  Spruill, 
Speller, and Phillips split the fraud proceeds, with Spruill receiving his share in the form of 
fictitious, no-document loan repayments.  Spruill appeared before a federal grand jury and lied 
about his involvement with Speller, falsely claiming that he had no business relationship with 
Speller.  Speller, Phillips, and Saunders were previously sentenced to a combined 31 years and 
11 months in prison.  Spruill pleaded guilty to conspiracy to commit healthcare fraud and 
perjury and was sentenced to 8 years in prison and ordered to pay $5.9 million in restitution, 
joint and several with his co-defendants. 
 
  South CarolinaEarly Autism Project, Inc. (EAP), South Carolinas largest provider of behavioral 
therapy for children with autism, entered into an FCA settlement agreement resolving 
allegations that: (1) between January 1, 2009, and December 31, 2016, EAP submitted claims 
payable by the South Carolina Medicaid Waiver program for Early Intensive Behavioral 
Intervention therapy services by Consultants and Lead Therapists that either misrepresented 
the services provided or where services were not provided at all; and (2) between April 1, 2012, 
and July 9, 2016, EAP submitted claims to the Defense Health Agency for one-on-one Applied 
Behavioral Analysis therapy services that either misrepresented the services provided or where 
services were not provided at all.  EAP agreed to pay $8.8 million, and ChanceLight, Inc., for 
itself and on behalf of EAP, its wholly-owned subsidiary, entered into a 5-year CIA. 
 
Physicians  
The following case example involves a physician:  
 
  New YorkHealth Quest Systems, Inc., Health Quest Medical Practice, P.C. ("HQMP''), Health 
Quest Urgent Medical Care Practice, P.C., ("HQUC") (collectively "Health Quest''), and Putnam 
Health Center ("PHC") entered into a settlement agreement to resolve their FCA liability.  From 
April 1, 2009, through June 23, 2015, Health Quest submitted claims for evaluation and 
management services but did not sufficiently document the services to support the level of 
service billed.  As a result, the services were billed two levels higher than supported by the 
medical record.  From April 1, 2011, through August 2014, Health Quest submitted claims for 
home health services that lacked sufficient medical records to support the claim, including 
33 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
documentation of a face-to-face encounter with a physician.  From March 1, 2014, through 
December 31, 2014, Health Quest subsidiary hospital, PHC, submitted allegedly false claims for 
inpatient and outpatient services referred to PHC by two orthopedic physicians, in alleged 
violation of the Physician Self-Referral Law.  The two physicians had a direct financial 
relationship with PHC for providing administrative services and received compensation from 
PHC.  The United States alleged their compensation exceeded the fair market value for the 
services, and thereby violated the Physician Self-Referral Law, which prohibits a hospital from 
billing Medicare for certain services referred by physicians with whom the hospital has an 
improper compensation arrangement.  The United States further alleged that one purpose of 
the excessive compensation was to induce the above referrals to PHC, in violation of the Anti-
Kickback Statute.  Health Quest and PHC agreed to pay $15.6 million and enter into a 5-year 
CIA. 
 
Hospices  
The following case example involves hospice care:  
 
  TennesseeCaris Healthcare LLC and Caris Healthcare, L.P. (collectively, Caris), a for-profit 
hospice chain, entered into a settlement agreement to resolve allegations that, from April 1, 
2010, through December 31, 2013, Caris submitted false claims and improperly retained 
payments from Medicare for services provided to patients who were ineligible for hospice 
benefits because they were not terminally ill.  Caris agreed to pay $8.5 million to resolve its 
alleged liability. 
 
Hospitals  
The following case example involves a hospital: 
 
  CaliforniaPrime Healthcare Services, Inc., Prime Healthcare Foundation, Inc., 14 hospitals 
owned and operated by the Prime entities, and Primes owner, Prem Reddy, M.D. (collectively, 
Prime and Dr. Reddy) entered into a settlement agreement to resolve allegations that Prime 
and Dr. Reddy submitted false claims to Medicare for medically unnecessary inpatient hospital 
stays from January 1, 2006, through September 20, 2013, and for upcoding inpatient diagnoses 
from January 1, 2006, through December 31, 2014.  Prime and Dr. Reddy collectively agreed to 
pay $65 million to resolve their FCA liability.  Prime and Dr. Reddy also entered into a 5-year 
CIA, which includes a Claims Review and Inpatient Medical Necessity Review.  
 
Clinics  
The following case example involves a clinic: 
 
  Iowa and FloridaHealogics, Inc. (Healogics) entered into two FCA settlement agreements to 
resolve allegations that: (1) from January 1, 2010, through December 31, 2015, Healogics 
submitted claims to Medicare for hyperbaric oxygen therapy that was not medically reasonable 
and/or necessary; and (2) from January 1, 2012, through June 30, 2017, Healogics, on behalf of 
34 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
its Healogics Specialty Physicians Program, submitted claims to Medicare, Medicaid, and Tricare 
for evaluation and management services that improperly included modifier-25, which indicated 
that a significant, separately identifiable evaluation and management service was performed 
when, in fact, it was not.  Healogics agreed to pay more than $17.8 million to resolves its liability 
and entered into a 5-year CIA.  The CIA addresses Healogics distinct lines of business, 
including provisions related to both its employees and its independent contractors. 
 
Healthcare Fraud Prevention and Enforcement 
 
HEAT Provider Compliance Training  
OIG provides free training on our website for healthcare providers, compliance professionals, and 
attorneys.  OIGs Provider Compliance Training was an initiative developed as part of HEAT in 2011 
that continues to reach the healthcare community with OIGs message of compliance and 
prevention via free downloadable comprehensive training materials and podcasts.  OIGs provider 
compliance training resources can be accessed at https://oig.hhs.gov/compliance/compliance-
guidance/index.asp. 
 
Medicare Fraud Strike Force Activities  
In 2007, Medicare Fraud Strike Force teams began an effort to combine resources of Federal, State, 
and local law enforcement entities to prevent and combat healthcare fraud, waste, and abuse.  
These partnerships among OIG and HHS, DOJ, U.S. Attorneys Offices, the Federal Bureau of 
Investigation, and State and local law enforcement have a common goal: to successfully analyze 
healthcare fraud data and investigative intelligence to quickly identify fraud and bring 
prosecutions.  Strike Force teams operate in 11 areas: Miami and Tampa, Florida; Dallas and 
Houston, Texas; Los Angeles, California; Detroit, Michigan; Brooklyn, New York; Baton Rouge and 
New Orleans, Louisiana; Chicago, Illinois; and Newark, New Jersey/Philadelphia, Pennsylvania; 
along with a Corporate Strike Force located in Washington, D.C. 
 
In June 2018, OIG and our Federal and State law enforcement partners led the largest healthcare 
fraud takedown in history.  More than 600 defendants in 58 Federal districts were charged with 
participating in fraud schemes involving about $2 billion in false billings to Medicare and Medicaid.  
Since the last takedown, OIG also issued exclusion notices to 587 doctors, nurses, and other 
providers based on conduct related to opioid diversion and abuse.  For more information on this 
takedown, visit our Strike Force website at https://oig.hhs.gov/newsroom/media-
materials/2018/takedown/.  During this semiannual reporting period, Strike Force efforts resulted in 
the filing of charges against 186 individuals or entities, 68 criminal actions, and more than $217.2 
million in investigative receivables. 
 
The following case examples involve Strike Force cases: 
 
  FloridaNicholas Borgesano owned and operated numerous pharmacies and shell companies 
that he and his co-conspirators used to execute a fraud scheme involving prescription 
35 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
compounded medications.  Borgesano acquired and controlled multiple pharmacies, including 
A to Z Pharmacy.  He admitted using these pharmacies to cause the submission of false claims 
for prescription compounded medications, chiefly pain creams and scar creams, to private 
insurance companies, Medicare, and Tricare.  Borgesano admitted that he manipulated billing 
codes in the reimbursement claims and submitted claims for pharmaceutical ingredients they 
did not have.  He also paid kickbacks and bribes in exchange for prescriptions and patient 
identifying information used to further the scheme, including to a physician in exchange for 
the physician signing prescriptions for patients he never saw.  Borgesano admitted using A to 
Z Pharmacy as the hub of his operation on behalf of all his pharmacies.  He disbursed 
proceeds of the fraud scheme through a variety of methods, including by check and wire 
transfer to co-conspirators shell companies and through the purchase of assets.  Borgesano 
pleaded guilty to conspiracy to commit healthcare fraud and conspiracy to engage in 
monetary transactions in property derived from specified unlawful activity, and was sentenced 
to 15 years in prison and ordered to pay $54.5 million, joint and several. 
 
  New YorkTwo co-conspirators connected with Prime Care on the Bay LLC and Bensonhurst 
Mega Medical Care P.C. in Brooklyn, New York, were convicted of charges resulting from their 
involvement in a scheme to defraud Medicare and Medicaid.  The defendantsPrime Care 
and Bensonhurst manager Tatyana Schevchuk, and shell company owner Anna Dougherty
were sentenced to a combined 1 year and 6 months in prison, and ordered to pay $17.6 
million, joint and several.  The investigation found that the defendants paid cash kickbacks to 
patients to induce them to attend the two clinics.  The defendants then submitted fraudulent 
claims to Medicare and Medicaid for services that were induced by prohibited kickback 
payments to patients or that were unlawfully rendered by unlicensed staff.  The defendants 
wrote checks from the clinics bank accounts to third-party companies, which purported to 
provide services to the clinics, but which in fact were not providing services, and the payments 
were instead used to generate the cash needed to pay the illegal kickbacks to patients.  Ten 
defendants involved in the scheme were previously sentenced to a combined 13 years, 6 
months, and 2 days in prison.  Schevchuk, Dougherty, and their 10 co-defendants were 
ordered to pay a total of $48.5 million in restitution, joint and several. 
 
Other Criminal and Civil Enforcement Activities  
 
Special Assistant U.S. Attorney Program  
During this reporting period, DOJ and OIG continued their participation in a program in which OIG 
attorneys, some of whom are special agents, serve as special assistant U.S. attorneys.  These OIG 
attorneys are detailed full time to the fraud section of DOJ's Criminal Division for temporary 
assignments, including assignments to the Health Care Fraud Strike Force.  Other attorneys 
prosecute matters on a case-by-case basis.  Both arrangements offer excellent litigation training for 
OIG attorneys and enhance collaboration between the departments in their efforts to fight fraud.  
Under this program, OIG attorneys have successfully litigated important criminal cases relating to 
the fraudulent billing of medical equipment and supplies, infusion therapy, and physical therapy, as 
well as other types of Medicare and Medicaid fraud. 
36 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
  
Most Wanted Fugitives Listed on OIGs Website 
The OIG Most Wanted Fugitives website continues to garner national and international attention 
and has greatly assisted in helping to capture fugitives charged with defrauding Federal healthcare 
programs and stealing millions of taxpayer dollars.  The Most Wanted Fugitives website is 
continually updated and features a profile for each fugitive as well as an online tip form and a 
hotline number for individuals to report fugitive-related information to OIG, in English or Spanish, 
24 hours a day, 365 days a year.  The Most Wanted Fugitives list can be accessed at 
https://oig.hhs.gov/fraud/fugitives/. 
 
The following is a case example involving a captured fugitive:  
  One of OIGs Most Wanted Fugitives, Etienne Allonce, was captured during this reporting 
period.  Etienne Allonce has been a fugitive for more than 10 years and was recently 
apprehended and taken into U.S. custody after being expelled from Haiti.  He is being 
detained and will face charges stemming from his indictment.  In December 2007, Allonce and 
his wife, Helene Michel, were indicted on charges of healthcare fraud. Allonce and Michel were 
owners of Medical Solutions Management, Inc. (MSM), a durable medical equipment (DME) 
company operating out of Hicksville, New York. Tri-State Surgical Supply (Tri-State) is a DME 
company that has a contract with numerous nursing homes in Long Island, Queens, and 
Brooklyn, to provide Medicare and Medicaid covered DME supplies to residents.  According to 
the indictment, MSM employees allegedly posed as sub-contractors for Tri-State in order to 
gain access to several nursing homes.  Once they entered the nursing homes under false 
pretenses, MSM employees allegedly accessed medical charts (containing private information 
protected by The Health Insurance Portability and Accountability Act of 1996 or HIPAA) for 
residents who required specialized wound care. MSM then allegedly billed Medicare Part B 
and/or and Medicaid for wound care supplies that were never ordered or provided.  It is also 
believed that MSM employees stole original documents containing HIPAA information from 
medical charts in facilities to "manufacture" fraudulent MSM charts in an effort to legitimize 
their medical billings.  After Michel and Allonce were indicted on healthcare fraud charges for 
their participation in the scheme, Allonce fled the United States to avoid prosecution and was 
believed to be residing in Haiti.  In April 2013, Michel was convicted on charges of healthcare 
fraud and wrongful disclosure of individually identifiable health information.  She was 
sentenced to 12 years of incarceration and ordered to pay more than $4.4 million in 
restitution. 
 
HHS OIG Hotline 
Part of OIGs Office of Investigations, the hotline is the public-facing division for OIGs intake and 
evaluation of fraud tips.  The mission of the HHS OIG Hotline is to support OIGs oversight responsibilities 
in safeguarding the integrity of all programs and personnel under HHSs purview and protecting them 
from fraud, waste, and abuse.  The hotline achieves its mission through its staffs dedication to timely 
intake and analysis of information received from various sources, such as the Report Fraud link on the 
37 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
HHS OIG website.  During this semiannual reporting period, the OIG Hotline reported expected recoveries 
of $27 million as a direct result of cases originating from hotline complaints. 
 
OIG Hotline Activity (04/01/1809/30/18) 
 
Contacts to 1-800-HHS-TIPS phone line, including  60,390 
callers seeking information  
Total tips evaluated   11,152  
Tips referred for action   8,096  
Closed; no basis provided for further action   4,148  
Closed; no HHS violation   523  
 
Sources of tips referred for action   
 
Phone   3,051  
OIG website   3,618  
Letters/faxes   1,200 
Other  227 
 
State Medicaid Fraud Control Units  
 
OIG Oversight of State Medicaid Fraud Control Units 
State MFCUs are key partners with OIG in the fight against fraud, waste, and abuse in State 
Medicaid programs.  OIG has oversight responsibility for MFCUs and administers grants that 
provide Federal funding for their operations.  The Federal Government reimburses 75 percent of 
the costs of operating all existing MFCUs, which are in 49 States and the District of Columbia.  
MFCUs investigate and prosecute Medicaid provider fraud and patient abuse and neglect in 
healthcare facilities or board and care facilities.  
 
As part of training and technical assistance to the MFCUs, OIG issued a toolkit, Statistical Sampling: A 
Toolkit for MFCUs, in September 2018, which will assist MFCUs (and other law enforcement agencies) in 
effectively and correctly using statistical sampling to determine the overpayment amount in cases with a 
large number of claims (See OEI-12-18-00160). 
OIG Onsite Reviews of MFCUs   
In addition to an annual recertification review of each MFCU, OIG conducts reviews of a sample of 
MFCUs.  OIG evaluates MFCU operations based on 12 performance standards and assesses 
compliance with laws, regulations, and OIG policy guidance.  During the reporting period, OIG 
issued reports of onsite reviews of the following MFCUs:  
38 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
  Tennessee Medicaid Fraud Control Unit: 2017 Onsite Inspection (OEI-12-17-00230), June 2018 
  New Hampshire Medicaid Fraud Control Unit: 2017 Onsite Review (OEI-09-17-00200), September 
2018 
  New York Medicaid Fraud Control Unit: 2017 Onsite Inspection (OEI-12-17-00340), September 
2018 
  New Jersey Medicaid Fraud Control Unit: 2017 Onsite Review (OEI-06-17-00520), September 
2018 
 
The following case example involves OIGs joint efforts with MFCUs:  
 
  TexasMkrtich Yepremian and his co-defendants engaged in a $13 million conspiracy to 
falsely bill Medicare and Medicaid for medically unnecessary diagnostic tests.  According to 
court documents, from January 2006 through July 2015, Yepremian ran several false clinics in 
Houston and Conroe, Texas.  He paid marketers to bring patients to the clinics for a battery of 
diagnostic tests and blood work, regardless of medical need.  Yepremian paid the marketers 
approximately $100 for each patient brought to his clinics; in turn, the marketers paid the 
patients approximately $50 each.  Yepremian employed a physician who approved the testing 
and allowed his physician number to be used in the Medicare billing process to support the 
tests.  Yepremian pleaded guilty to conspiracy to commit healthcare fraud and kickbacks and 
was sentenced to 10 years in prison and ordered to pay $9.0 million in restitution, joint and 
several.  Seven defendants involved in the scheme were previously sentenced to a combined 7 
years 4 months and 2 days in prison, and ordered to pay $5.5 million in restitution, joint and 
several.  One additional defendant is awaiting sentencing.  This case was worked jointly with 
the Federal Bureau of Investigations and MFCU.  
  
Advisory Opinions and Other Industry Guidance  
Advisory opinions, which are developed in consultation with DOJ, are issued to requesting parties 
regarding the interpretation and applicability of certain statutes relating to Federal healthcare programs.  
The Health Insurance Portability and Accountability Act of 1996 (HIPAA),  205, allows OIG to provide case-
specific formal guidance on the application of the anti-kickback statute and safe harbor provisions and 
other OIG healthcare fraud and abuse sanctions.  During FY 2018, OIG received 41 requests for advisory 
opinions and issued 14 advisory opinions.  OIG also rescinded one advisory opinion in FY 2018.  On August 
27, 2018, OIG issued a for Information (RFI) seeking input from the public on how to address any 
regulatory provisions that may act as barriers to coordinated care or value-based care as well as other 
related topics.  
 
Sanction Authorities and Other Administrative Actions  
Various Federal laws provide authorities the ability to impose administrative sanctions for fraud and abuse 
as well as other activities that pose a risk to Federal healthcare programs and their beneficiaries.  Sanctions 
include the exclusion of individuals and entities from Federal healthcare programs and the imposition of 
CMPs for submitting false and fraudulent claims to a Federal healthcare program or for violating the anti-
kickback statute, the physician self-referral law (commonly referred to as the Stark Law), or EMTALA, also 
39 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
known as the patient dumping statute.  Sanctions also include referrals for suspension and debarment in 
cases of grant and contract fraud. 
 
During this semiannual reporting period, OIG imposed 1,247 administrative sanctions in the form of 
program exclusions or administrative actions for alleged fraud or abuse or other activities that posed a risk 
to Federal healthcare programs and their beneficiaries.  
 
Exclusion and penalty authorities are described in Appendix D and on our website at 
http://oig.hhs.gov/fraud/enforcement/cmp/index.asp.  
 
Program Exclusions 
During this semiannual reporting period, OIG excluded 1,124 individuals and entities from 
Medicare, Medicaid, and other Federal healthcare programs.  Most of the exclusions resulted from 
convictions for crimes relating to Medicare or Medicaid, patient abuse or neglect, financial 
misconduct, controlled substances, or as a result of license revocation.  OIG completed the 
deployment of a new service for MFCUs to report convictions through a central web based portal 
for exclusion.  OIG is also responsible for reinstating providers who apply and have met the 
requirements of their exclusions.  For a list of excluded individuals and entities, see 
https://exclusions.oig.hhs.gov/. 
 
The following case examples involve program exclusions: 
 
  Michigan  Dr. Lawrence Gerard Nassar was excluded based on his convictions on multiple 
counts of criminal sexual conduct.  From about July 1998 to about May 2015, Dr. Nassar 
sexually abused patients in his position as the lead doctor for the USA Womens gymnastics 
team.  It was his job to medically treat the gymnasts on the team, and during those treatment 
sessions, Dr. Nassar would sexually touch the victims.  Nassar was sentenced to 40 to 175 
years in prison based on his conviction in the 30th Judicial Circuit Court of Ingham County, 
Michigan, and 40 to 125 years in prison for his conviction in the 56th Judicial Circuit Court of 
Eaton County, Michigan.  Dr. Nassar was also convicted in the United States District Court of 
Western Michigan of receipt and attempted receipt of child pornography, possession of child 
pornography and destruction and concealment of records and tangible objects.  In addition, 
Dr. Nassars license to practice as an osteopath was revoked by the Michigan Department of 
Licensing and Regulatory Affairs.  OIG excluded Nassar for a minimum period of 75 years; OIG 
had previously excluded Dr. Nassar in 2017 based on his suspension from the Michigan 
Department of Health and Human Services.   
 
  California  Psychiatrist Samuel H. Albert engaged in a conspiracy to defraud the Office of 
Workers Compensation Program (OWCP).  According to court documents, from about 
January 2008 to about March 2014, Dr. Albert engaged in a conspiracy to defraud the OWCP, 
which is a component of the Department of Labor, through the submission of millions of false 
claims.  Dr. Albert and his co-conspirators would create templates and patient reports 
purportedly reflecting patients status, history, treatment, or progress that would be submitted 
40 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
to OWCP randomly.  These created records would then be used to bill OWCP for false claims 
for services that were never provided.  Dr. Albert pleaded guilty to conspiracy to commit 
healthcare fraud and was sentenced to 10 months in prison and ordered to pay approximately 
$2.3 million in restitution.  OIG excluded Albert for a minimum period of 15 years.   
 
Suspensions and Debarments  
Suspensions and debarments are administrative tools used by HHS and other Federal agencies to 
protect the Government from individuals and entities that have engaged in contract fraud, have 
misused grant funds, or are otherwise not presently responsible.  Because these are 
Government-wide sanctions, an individual or entity that has been suspended or debarred by HHS 
or any other agency is ineligible to participate in any future funding opportunities across the 
Federal Government for a specified period of time.   
 
OIG refers individuals and entities that have potentially engaged in grant or contract fraud or 
misconduct to the HHS Suspension and Debarment Official, who is responsible for determining 
whether to impose a suspension or debarment.  OIG continues to develop a robust Suspension 
and Debarment program and uses this tool to protect Government programs against fraud, waste, 
poor performance, and noncompliance with contract provisions or applicable law.  
 
The following case examples involve debarment:  
 
  Montana Zachary Brooke Roberts and Martin Gasper Mazzara engaged in a scheme to steal 
funds from the Chippewa Creek Tribe.  Roberts and Mazzara, through a backdated and 
inflated 15 percent fee agreement, were paid over $3.5 million from the Chippewa Cree Tribe.  
Roberts and Mazzara then funneled money from Nevada back to Montana to Ideal 
Consulting.  Ideal Consulting was a shell company used to distribute payments to tribal 
officials.  This scheme was created to conceal from the tribal people the $1.2 million in 
kickbacks to the tribal officials.  These tribal officials were eventually sentenced for receiving 
bribes from Roberts and Mazzara.  Roberts and Mazzara engaged in the scheme by inflating 
their invoices for consulting services from 10 percent to 15 percent, submitting those false 
invoices to the Chippewa Cree Tribe, and then funneling and concealing the 5 percent that 
went back to the shell company of Ideal Consulting.  To perpetrate the scheme, Roberts and 
Mazzara generated false invoices from Encore Services, LLC, and they also accepted false 
invoices from Ideal Consulting. Roberts and Mazzara were convicted for conspiracy to commit 
wire fraud, and both were sentenced to 1 year and 8 months in prison and ordered to pay 
$700,000 in restitution, joint and several.  Roberts and Mazzara were debarred for 3 years on 
the basis of an OIG referral to HHS.  
 
  TennesseeCarolyn McCain-Davis was employed at Meharry Medical College (MMC) as a 
grants development specialist and was responsible for approving invoices and processing 
payment requests relating to MMCs employees and vendors.  MMC receives funding from 
HHS through NIH.  McCain-Davis admitted that from about August 2009 to about May 2013, 
she devised and carried out a scheme to defraud the United States by submitting false 
invoices, as an agent for MMC, from companies that were not legitimate vendors, nor was a 
41 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
service provided to MMC.  The false invoices were often submitted under the names of 
companies set up by McCain-Davis, and she approved the submitted payment requests and 
directed payments to bank accounts under her control.  McCain-Davis also processed 
reimbursement payments to herself for expenses that were never incurred and intercepted re-
imbursement payments to other employees, forged the signatures of the payees and 
deposited those checks into bank accounts under her control or under the control of a close 
relative.  McCain-Davis pleaded guilty to embezzling funds from a Federal program while 
employed at MMC and was sentenced to 1 year and 1 day in prison and ordered to pay 
restitution of $133,578.  McCain-Davis was debarred for 3 years on the basis of an OIG referral 
to HHS.  
 
Civil Monetary Penalties Law (CMPL) 
The CMPL authorizes OIG to impose administrative penalties, assessments, and exclusions 
against a person who, among other things, submits, or causes to be submitted, claims to a 
Federal healthcare program that the person knows, or should know, are false or fraudulent.  
The exclusions statute also authorizes OIG to exclude a person who violates the CMPL.  During 
this semiannual reporting period, OIG concluded cases involving more than $30.5 million in 
CMPs and assessments. 
 
Affirmative Litigation 
The CMPL authorizes OIG to use its administrative remedies to affirmatively pursue cases.  OIG 
may also exclude under the exclusions statute for engaging in conduct that violates the CMPL.  
When OIG excludes under the exclusions statute for engaging in conduct that violates the 
CMPL, it is known as an affirmative exclusion. 
 
The following case example involves an affirmative litigation case under the CMPL: 
 
  OklahomaComanche County Hospital Authority d.b.a. Comanche County Memorial Hospital 
(CCHA), agreed to pay $566,806 to resolve its potential liability under the CMPL related to 
allegations that CCHA submitted claims to Medicare for emergency ambulance transportation 
to destinations such as SNFs and patient residences that should have been billed at the lower 
non-emergency rate.  Additionally, during the course of OIGs investigation, CCHA discovered 
and disclosed that it submitted claims to Medicare for emergency ambulance transportation 
that were not medically reasonable or necessary.  CCHA also disclosed that it submitted claims 
to Medicare for transports where the documentation for the transport was not consistent with 
the patients condition, and therefore did not support the documented medical necessity for 
the transport.  This settlement resulted from OCIGs collaboration with OIGs Consolidated 
Data Analysis Center.  OIG has settled eight affirmative CMPL cases based on this conduct 
since September 2016. 
 
42 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Patient Dumping  
Some of the CMPL cases that OIG resolved during this semiannual reporting period were pursued 
under EMTALA, a statute designed to prevent hospitals from denying emergency care to patients 
and to ensure patient access to appropriate emergency medical services.   
 
The following case example involves EMTALA: 
 
  IowaEffective April 30, 2018, Covenant Medical Center (Covenant) entered into a $90,000 
settlement agreement with OIG to resolve allegations that it violated EMTALA when it failed to 
provide an adequate medical screening examination and stabilizing treatment for a patient 
and then inappropriately transferred him to another hospital.  The patient, a 54-year-old man, 
arrived by ambulance to Covenants Emergency Department (ED) complaining of shortness of 
breath, chest pain, and diaphoresis.  The ED physician screened the patient and consulted the 
on-call cardiologist.  The patients condition worsened, and he was intubated.  On advice of 
the on-call cardiologist, the ED physician began transcutaneous pacing.  The ED physician did 
not request that the on-call cardiologist come to the ED, nor did the on-call cardiologist go to 
the ED to examine and treat the patient.  The ED physician requested transfer to a nearby 
hospital for placement of a transvenous pacemaker.  The patient was transferred to the 
receiving hospital nearly three hours after he had gone to Covenants ED.  The receiving 
hospital placed a transvenous pacemaker on the patient, but he died shortly after.  OIG 
alleged that Covenants on-call cardiologist was capable of providing a transvenous 
pacemaker. 
 
Self-Disclosure Programs  
Healthcare providers, suppliers, or other individuals or entities subject to CMPs can apply for 
acceptance into the Provider Self-Disclosure Protocol, a program created in 1998 for voluntary 
disclosure of self-discovered evidence of potential fraud.  The self-disclosure program may give 
providers the opportunity to avoid costs or disruptions associated with Government-directed 
investigations and civil or administrative litigation.  
 
Application processes for two additional self-disclosure programs were recently added to the OIG 
website for HHS contractors and grantees.  The OIG contractor self-disclosure program provides 
contractors the opportunity to self-disclose when they have potentially violated the FCA or other 
Federal criminal laws prohibiting fraud, conflict of interest, bribery, or gratuity.  This self-disclosure 
process is available only to those with a Federal Acquisition Regulation-based contract with HHS.  
The OIG Grant Self-Disclosure program is available for application by HHS grantees or HHS grant 
subrecipients and provides the opportunity for voluntary disclosure to OIG of potential fraud.  OIG 
evaluates the reported results of each internal investigation under the provider self-disclosure 
protocol to determine the appropriate course of action.  The self-disclosure guidelines are available 
on the OIG website at https://oig.hhs.gov/compliance/self-disclosure-info/index.asp.  During this 
semiannual reporting period, provider self-disclosure cases resulted in more than $25.8 million in 
HHS receivables. 
 
43 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
The following case examples involve provider self-disclosure settlements: 
 
  TennesseeAfter self-disclosing conduct to OIG, BenchMark Rehabilitation Partners, LLC, 
BenchMark Growth Partners, LLC, BenchMark Premier Partners, LLC, BenchMark East Partners, 
LLC, BenchMark Development Partners, LLC, and BenchMark West Partners, LLC (collectively, 
BenchMark), agreed to pay more than $3.1 million to resolve its alleged liability under the 
CMPL.  Specifically, OIG alleged that BenchMark submitted claims to Medicare and Tricare for 
time-based outpatient rehabilitation therapy services provided to Medicare and Tricare 
beneficiaries when BenchMarks therapists did not provide constant attendance or direct one-
on-one contact because the therapy services were provided concurrently with another 
Medicare or Tricare beneficiary. 
 
  TexasAfter self-disclosing conduct to OIG, HVHC LLC, Visionworks of America, Inc., Visionary 
Properties, Inc., Visionworks, Inc., Empire Vision Center, Inc. (collectively, Visionworks), agreed 
to pay more than $3.6 million to resolve its alleged liability under the CMPL.  Specifically, OIG 
alleged that Visionworks paid excess remuneration to certain optometrists in the form of 
space and equipment leases that were below fair market value and/or by failing to collect one 
or more rental amounts under space and equipment leases, in violation of the Anti-Kickback 
Statute. 
 
Corporate Integrity Agreements  
Many healthcare providers elect to settle their cases before litigation.  As part of the settlements, 
providers often agree to enter into CIAs with OIG to avoid exclusions from Medicare, Medicaid, 
and other Federal healthcare programs.  Under a CIA, a provider commits to establishing a 
program and taking other specified steps to ensure future compliance with Medicare and Medicaid 
rules.  The compliance programs are designed, in part, to prevent future fraud.  OIG monitors 
providers compliance with these agreements and may impose penalties on entities that fail to 
comply with the requirements of their CIAs.   
 
The following case example involves CIA enforcement: 
 
  MassachusettsIn May 2017, eClinicalWorks, LLC (ECW), one of the nations largest vendors 
of electronic health records software, agreed to pay $155 million and entered into a CIA to 
resolve ECWs alleged FCA liability when ECW concealed from its customers that its software 
did not comply with the requirements for meaningful use certification.  Among other 
obligations, the CIA requires ECW to retain an independent software quality oversight 
organization, which evaluates ECWs software quality control systems, to provide notice to its 
customers of any safety related issues, and to maintain on its customer portal a 
comprehensive list of such issues and any steps users should take to mitigate potential patient 
safety risks.  Pursuant to its authority under the CIA, OIG issued a $132,500 stipulated penalty 
on July 5, 2018, for ECWs failure to timely report patient safety issues to OIG as reportable 
events. 
44 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Public Health Agencies  
 
Public Health Agencies Reports and Reviews  
 
Centers for Disease Control and Prevention 
  
Entities Generally Met Federal Select Agent Program Internal Inspection Requirements, but CDC 
Could Do More to Improve Effectiveness (OEI-04-15-00431), June 2018 
 
We found that although most entities in our review conducted internal inspections as required, 
these inspections may not always be as thorough or well documented as they should be and that 
unclear inspection requirements and insufficient training challenge both the Division of Select 
Agents and Toxins (DSAT) ability to oversee entities internal inspections and entities ability to 
conduct them.  Entities internal inspections are one critical safeguard to help protect public health 
and safety from select agent and toxin incidents, so it is important that CDC facilitate thorough, 
well documented entity inspections to ensure their effectiveness.  CDC concurred with our 
recommendations to: 
  clarify the internal inspection requirements;  
  clarify the procedures for DSAT inspectors to assess entity compliance;  
  for DSAT inspectors, develop and provide additional training; and 
  for entities, develop and provide additional training and guidance. 
 
Presidents Emergency Plan for AIDS Relief 
The Presidents Emergency Plan for AIDS Relief (PEPFAR) was authorized to receive $48 billion in 
funding for the 5-year period beginning October 1, 2008, to assist foreign countries in combating 
HIV/AIDS, tuberculosis, and malaria.  CDC awards PEPFAR funds to and works with ministries of 
health and other partners in 60 countries to combat HIV/AIDS globally.  Additional funds were 
authorized to be appropriated through 2018. 
 
The National Institute of Health in Mozambique Did Not Always Manage and Expend the Presidents 
Emergency Plan for AIDS Relief Funds in Accordance With Award Requirements (A-04-16-04051), 
April 2018 
The South African National Department of Health Did Not Always Manage and Expend the 
Presidents Emergency Plan for AIDS Relief Funds in Accordance With Award Requirements (A-04-17-
01002), May 2018 
 
Based on our sample results, we concluded that Mozambique and South Africa did not always 
manage and expend PEPFAR funds in accordance with award requirements.  
 
Mozambique was unable to reconcile its accounting records to the $8.5 million that it claimed on 
its Federal Financial Report (FFR) for the audit period.  Mozambique claimed unsupported 
45 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
personnel costs and classified transactions in the wrong budget category.  Finally, Mozambique did 
not have a functioning accounting system and did not have a time and attendance system. 
 
South Africa did not provide adequate supporting documentation, such as invoices or attendance 
rosters, or it paid unallowable value-added taxes with PEPFAR funds.  Additionally, South Africa did 
not accurately identify expenses between cooperative agreements in its financial management 
reporting system, did not submit an accurate FFR, and filed one of its FFRs more than 5 months 
late.  Furthermore, South Africa did not implement corrective actions for one of the nine 
recommendations from our prior audit.  
 
Mozambique partially concurred with our recommendation that it refund to CDC $431,458 of 
unallowable expenditures.  It did not specifically concur with our recommendations that it: (1) 
implement an accounting system that allows it to accurately account for Federal funds; (2) work 
with CDC to determine the allowability of the $1.3 million in personnel costs expended during the 
audit period; and (3) address other policy and procedural recommendations.  Mozambique did 
describe actions it had taken or planned to take to address three recommendations. 
 
South Africa did not specifically concur with our recommendations that it: (1) refund to CDC 
$12,374 for transactions that were not adequately documented; (2) work with CDC to obtain 
$343,930 of value-added taxes reimbursement; and (3) address recommendations from our prior 
audit, as well as procedural and policy issues in this audit. 
 
Food and Drug Administration 
 
FDA Should Further Integrate Its Review of Cybersecurity into the Premarket Review Process for 
Medical Devices (OEI-09-16-00220), September 2018 
 
We found that FDA could take steps to more fully integrate its review of medical devices 
cybersecurity risks and controls before clearing or approving devices for marketing in the United 
States.  Researchers have shown that FDA-cleared or FDA-approved medical devices that use 
wireless, Internet, and network connectivity may be susceptible to cybersecurity threats, such as 
ransomware and unauthorized remote access, if they lack adequate security controls.  FDA 
concurred with our recommendations, including to: 
  promote the use of presubmission meetings to address cybersecurity-related questions; 
  include cybersecurity documentation as a criterion in FDAs Refuse-To-Accept checklists; and 
  include cybersecurity as an element in the Smart template, which FDA uses to guide its 
reviews of submissions. 
 
Indian Health Service 
 
The Indian Health Services Controls Were Not Effective in Ensuring That Its Travel Card Program 
Complied with Federal Requirements and Its Own Policy (A-07-16-05091), April 2018 
 
46 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
IHSs travel card program, under which IHS employees are to use Government charge cards for 
nearly all payments of expenses related to official Government travel, did not always comply with 
Federal requirements and IHSs own policy.  We identified 16 transactions (out of the 151 sampled 
transactions) that did not comply with Federal requirements and IHS policy regarding proper travel 
card use.  These errors occurred because, although IHS had controls in place to educate 
cardholders on the requirements for the use of the travel card, the controls did not always prevent 
misuse of the travel card.  Additionally, whereas IHS had controls in place to monitor cardholders, 
those controls did not always identify noncompliance.  
 
IHS concurred with our recommendations to: 1) re-emphasize the requirements for the use of the 
travel card to ensure that all travel cardholders are aware of the requirements; and 2) ensure that 
travel card usage is adequately monitored for compliance with the travel card requirements.  
 
The Indian Health Services Controls Were Not Effective in Ensuring That Its Purchase Card Program 
Complied with Federal Requirements and Its Own Policy (A-07-16-05090), July 2018 
 
IHSs purchase card program, under which IHS employees are to use Government purchase cards 
for payments of expenses related to official Government needs, did not always comply with Federal 
requirements and IHSs own policy.  We identified 25 transactions (out of the 136 sampled 
transactions) that were in error because they did not comply with Federal requirements and IHSs 
policy either for proper purchase card use or for supporting documentation.  These errors occurred 
because IHSs controls for the administration of its purchase card programcontrols that included 
monitoring as well as educating cardholderswere not adequate to ensure that transactions 
complied with Federal requirements and IHSs policy. 
 
IHS concurred with our recommendations that it strengthen controls to ensure that purchase 
cardholders comply with Federal requirements and IHSs own policy by adequately monitoring 
purchase card usage and ensuring that all IHS purchase cardholders complete the required training 
on the use of the purchase card.  
 
The Passamaquoddy Tribe's Pleasant Point Health Center Did Not Always Meet Federal and Tribal 
Health and Safety Requirements (A-01-17-01500), July 2018 
 
In certain cases, the Federal Government permits Tribes to administer their own healthcare 
programs through Federally Qualified Health Centers, which receive Federal funding but limited 
Federal oversight in recognition of the independent Nation status of the Tribes.   
 
The Passamaquoddy Tribe at Pleasant Point did not always meet Federal and Tribal health and 
safety requirements for the quality of care at the Passamaquoddy Tribes Pleasant Point Health 
Center (PPHC).  PPHC did not always have a physician who provided medical direction for the 
health center, clear lines of authority and responsibility between medical and administrative 
decision-making, medical policies and procedures (including pain-management treatment 
prioritization for opioid prescription and compliance monitoring), and other policies and 
procedures needed to comply with requirements. 
47 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
The Passamaquoddy Tribe at Pleasant Point concurred with our recommendations, including that 
it: (1) ensures PPHC is under the medical direction of a physician; (2) establishes clear lines of 
authority and responsibility between medical and administrative decision-making; and (3) develops 
and implements medical policies. 
 
The Indian Health Service Did Not Always Resolve Audit Recommendations in Accordance With 
Federal Requirements (A-07-17-03227), September 2018 
 
IHS did not always resolve OIG audit recommendations in a timely manner during FYs 2015 and 
2016.  Specifically, IHS resolved 138 of the 651 recommendations that were outstanding during FYs 
2015 and 2016.  However, it did not resolve 123 of the 138 recommendations (89.1 percent) within 
the required 6-month resolution period.  In addition, as of September 30, 2016, IHS had not 
resolved 513 audit recommendations that were past due for resolution.   
 
IHS concurred with our recommendations that it follow, and where necessary update, its policies 
and procedures related to the non-Federal and Federal audit resolution processes; promptly 
resolve the 513 outstanding audit recommendations that were past due as of September 30, 2016; 
follow the reconciliation process that it implemented at the end of our audit period; and give 
higher priority to audit resolution in accordance with Federal requirements.  IHS also described 
corrective actions that it had taken or planned to take.   
 
National Institutes of Health 
 
The University of Alabama at Birmingham Overstated Chilled Water Costs in Its Facilities and 
Administrative Cost Proposal (A-04-14-00095), May 2018 
 
In its FY 2010 Facilities and Administrative (F&A) cost proposal, the University of Alabama at 
Birmingham (UAB) included $8.6 million in chilled water costs that were not in accordance with 
Federal requirements.  As a result, UABs negotiated F&A rate was inflated by 1 percent per year for 
FYs 2012 through 2015, and it potentially received as much as $5.9 million in overpayments from 
the Federal Government.  
 
We recommended that UAB work with the Departments Cost Allocation Services to determine the 
portion of the $5.9 million that was unallowable under Federal requirements, refund the 
unallowable portion (including any interest) to the Federal Government, and ensure that 
appropriate officials review future proposals for compliance with Federal requirements before 
submission.  UAB acknowledged that it overstated chilled water costs but disagreed with the 
amount.  
 
The National Institutes of Health, Division of Financial Advisory Services Did Not Always Establish 
Final Indirect Cost Rates in Accordance With Federal Requirements (A-04-17-04059), May 2018 
 
48 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
NIHs Division of Financial Advisory Services (DFAS) did not always establish final indirect cost rates 
for applicable organizations in accordance with Federal requirements during our audit period.  
DFAS had procedures to assess the allowability, allocability, and reasonableness of proposed 
indirect costs and identified unallowable costs that were excluded in its negotiations of rate 
agreements.  However, DFAS did not always obtain adequate data demonstrating that: (1) 
organizations proposed indirect costs were allowable, allocable, and reasonable in accordance 
with the Federal Acquisition Regulation (FAR); and (2) proposed direct cost bases were appropriate 
for the fair distribution of indirect costs to cost objectives; DFAS may not have established indirect 
cost rates as promptly as practical after receiving proposals; and DFAS used indirect cost rate 
ceilings in situations not covered by the FAR. 
 
DFAS did not always comply with Federal requirements for establishing indirect cost rates because 
neither NIH nor HHS had adequately defined the extent of DFASs roles and responsibilities as a 
cognizant Federal agency for indirect cost rates.  
 
NIH did not concur with our recommendations that DFAS clarify its roles and responsibilities as a 
cognizant Federal agency for indirect cost rates and update its policies and procedures to comply 
with Federal requirements.  
 
Legal Actions and Investigations Related to Public Health Agencies 
 
Health Education Assistance Loan Program  
OIG excludes from Federal healthcare programs individuals who have defaulted on Health 
Education Assistance Loan (HEAL) loans.  Under the HEAL program, which stopped making loans in 
1998, HRSA guaranteed commercial loans to students seeking education in health-related fields.  
The students can defer repayment of the loans until after they graduate and begin to earn income.  
Although HHSs Program Support Center (PSC) takes steps to ensure repayment, some loan 
recipients do not resolve their debt.  After PSC has exhausted efforts to secure repayment of a 
debt, it declares an individual in default.  The Social Security Act permits that thereafter, such 
individuals may not receive reimbursement under Medicare, Medicaid, and all other Federal 
healthcare programs for nonpayment of the loans.   
 
HEAL Exclusions   
During this semiannual reporting period, 10 individuals and related entities were excluded because 
of a PSC referral of their cases to OIG.  Individuals who have been excluded because of default may 
enter into settlement agreements whereby the exclusions are stayed while they pay specified 
amounts each month to satisfy their debts.  If they default on these settlement agreements, they 
may be excluded until the entire debt is repaid, and they may not appeal the exclusions.   
 
After being excluded for nonpayment of their HEAL debts, 2,745 individuals chose to enter into 
settlement agreements or completely repay their debts.  That figure includes 17 individuals who 
entered into such settlement agreements or completely repaid their debts.  More than $218 million 
49 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
is being repaid through settlement agreements or through complete repayment.  Of that amount, 
more than $2.5 million is attributable to this semiannual reporting period. 
 
The following examples are settlement agreements.  These practitioners entered into settlement 
agreements to repay the amounts indicated: 
  GeorgiaTammie Small, chiropractor: $165,780 
  TexasLemuel L. Clanton, medical doctor: $86,565 
 
Human Services Agencies Reviews and Enforcement Activities 
 
Administration for Children and Families 
 
Heartland Human Care Services, Inc., Generally Met Safety Standards, But Claimed Unallowable 
Rental Costs (A-05-16-00038), September 2018 
 
Heartland Human Care Services, Inc. (Heartland), generally met applicable safety standards for the 
care and release of UAC in its custody.  Heartland met State licensure requirements and 
requirements for inspections, performed adequate oversight, and followed guidance when 
reviewing background investigations for employees who care for the children.  However, we 
observed one classroom where the staff-to-child supervision ratio was significantly less than 
required, and we observed one classroom and hallway that lacked required monitoring equipment.  
We also found that some Heartland case files were missing documentation assuring that required 
records were provided upon the childs release to a family member or other sponsor.   
 
Heartland claimed allowable expenditures for 119 of 120 transactions reviewed in our stratified 
random sample.  For one transaction, it did not comply with Federal regulations related to less-
than-arms-length lease agreements.  We also identified rental costs on two additional less-than-
arms-length leases that exceeded the amount allowable for such leases.  The three leases resulted 
in unallowable rental costs of $665,333 and associated indirect costs of $103,127. 
 
Heartland agreed with our recommendations that it adhere to classroom staffing-to-child ratios in 
accordance with State regulations and maintain childrens case file documentation in accordance 
with ORR policy.  Heartland did not agree with our recommendation that it refund $768,460 to 
ORR for unallowable costs incurred under the less-than-arms-length lease agreements and limit 
future rental costs under less-than-arms-length lease agreements to the amount that would be 
allowed under Federal regulations.   
 
Florence Crittenton Services of Orange County, Inc., Did Not Always Meet Applicable Safety 
Standards Related to Unaccompanied Alien Children (A-09-16-01005), June 2018  
 
Florence Crittenton Services of Orange County, Inc. (Crittenton), did not always follow ORR policies 
on background checks or adequate documentation.  We reviewed a sample of 100 children in 
Crittentons care whom it had discharged during FYs 2014 and 2015.  Crittenton released an 
50 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
estimated 2 percent of UAC in its care to sponsors without conducting all required background 
checks and so could not be assured that sponsors were properly vetted.  We also estimated that 
Crittenton did not properly document the care and release of approximately 9 percent of children 
released to sponsors in FYs 2014 and 2015.  Without adequate documentation in the case files, ORR 
could not be assured that Crittenton had followed ORR policies.  In addition, without accurate 
information on the number of released children, ORR did not have assurance that Crittenton 
ensured program integrity and that every child Crittenton released was accounted for.  
 
Crittenton did not indicate concurrence or nonconcurrence with our recommendations that it: 
  ensure that all required background checks are conducted and documented;  
  provide periodic training to staff on maintaining documentation related to public records 
checks;  
  increase oversight of its quality review for UAC case files to ensure that all required 
documentation is maintained in the files;  
  develop policies and procedures for obtaining necessary documentation in the case files for 
children transferred from another shelter care provider; and  
  develop a process to document the information used to prepare its quarterly performance 
reports and verify the informations accuracy. 
 
Some New York City Childcare Providers Did Not Always Comply with Health and Safety 
Requirements (A-02-16-02003), June 2018 
 
New York State did not ensure that selected New York City providers that received funding from 
the CCDF complied with applicable State and local requirements related to the health and safety of 
children.  We found potentially hazardous physical conditions at all 11 locations operated by the 3 
providers that we reviewed.  Moreover, we found that the providers did not comply with 
requirements to obtain background checks on employees.  The instances of noncompliance 
occurred because New York State had no written procedures regarding monitoring of legally 
exempt providers compliance with physical condition and background check requirements.  In 
addition, New York States requirement that providers access a child abuse and maltreatment 
system to perform one required background check was inconsistent with current State law. 
 
New York State concurred with our recommendations that it ensure that the health and safety 
issues noted in our report are corrected, develop written procedures to ensure that legally exempt 
providers compliance with physical condition and background check requirements is regularly 
monitored, and seek a change to State law to allow providers access to the child abuse and 
maltreatment system or take other steps to ensure that required background checks are 
completed.  
 
Illinois Implemented Most New Criminal Background Check Requirements for Childcare Providers, 
but Challenges Remain for Unimplemented Requirements (A-05-17-00047), June 2018  
Georgia Implemented Most New Criminal Background Check Requirements for Childcare Providers, 
but Challenges Remain for Unimplemented Requirements (A-04-18-03578), July 2018  
51 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
New Hampshire Implemented Most New Criminal Background Check Requirements for Childcare 
Providers, but Challenges Remain for Unimplemented Requirements (A-01-18-02500), July 2018 
Colorado Implemented Many New Criminal Background Check Requirements for Childcare Providers, 
but Challenges Remain for Unimplemented Requirements (A-07-17-06076), September 2018  
Nevada Implemented Some New Criminal Background Check Requirements for Childcare Providers, 
but Challenges Remain for Unimplemented Requirements (A-09-17-01003), September 2018 
 
Illinois, Georgia, New Hampshire, Colorado, and Nevada implemented most of the new criminal 
background check requirements established under the Child Care and Development Block Grant 
Act.  However, certain criminal background check requirements for childcare providers remained 
unimplemented in each State as of March 1, 2018.  The States had until September 30, 2018, to 
implement those requirements, but significant challenges will delay full implementation until 2019 
or 2020.   
 
Illinois challenges include unavailable finances and staff to process the background checks, data 
system limitations, and required changes to State laws or policies and procedures.   
 
Georgia said that there does not appear to be a solution for resolving the issue of complying with 
the inter-State criminal background check requirement because other States do not have an 
incentive to respond to an applicants request or Georgias request for background check 
information.  Another significant challenge is the cost of providing supervision of provisional 
childcare staff while background check results are pending.   
 
New Hampshires and Colorados challenges include unavailable finances and staff to process the 
background checks, data system limitations, and required changes to State laws or policies and 
procedures.  Nevadas challenges include decentralization of the background check processes.  
(Background checks are conducted by different entities, depending on the provider type.) 
 
The Administration for Children and Families Did Not Always Resolve Audit Recommendations in 
Accordance With Federal Requirements (A-07-17-03225), July 2018 
 
ACF did not always resolve audit recommendations in a timely manner during FYs 2015 and 2016.  
During FYs 2015 and 2016, it did not resolve 1,392 of the 1,570 recommendations (88.7 percent) 
within the required 6-month resolution period.  In addition, as of September 30, 2016, ACF had not 
resolved 678 audit recommendations that were past due for resolution.  The dollar amounts 
associated with these past-due recommendations totaled $36.5 million.  Without resolving all audit 
recommendations in a timely manner, ACF runs the risk of noncompliance with Federal 
requirements and mismanagement of Federal funds.  
 
ACF concurred with our recommendations that it:  
  follow its policies and procedures to ensure that management decisions are issued within the 
required 6-month resolution period;  
  resolve the 678 outstanding audit recommendations that were past due as of September 30, 
2016;  
52 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
  follow its recently implemented procedures by reconciling each month the OIG stewardship 
reports with ACFs internal audit tracking and monitoring system and following up on any 
differences noted; and  
  give higher priority to audit resolution so that the audit resolution process is conducted in 
accordance with Federal requirements. 
 
Safety of Children in Foster Care 
 
Ohio Did Not Always Comply with Requirements Related to the Case Management of Children in 
Foster Care (A-05-16-00022), May 2018 
 
Ohio did not always comply with State requirements for maintaining documentation that Title IV-E-
eligible children residing in group homes received required case management services and that 
case workers were qualified to provide those services.  As a result, Ohio did not always have 
assurance that caseworkers provided all the required case management services appropriate for 
each child; were qualified to provide those services; and received the required criminal records 
checks.  Without adequate documentation in the case files and caseworker personnel files, Ohio 
could not be assured that children received necessary case management services from qualified 
caseworkers.  
 
Ohio concurred with our recommendations that it:  
  ensure that the appropriate internal controls are in place for maintaining the required 
documentation in the case files to substantiate that children in foster care are receiving the 
necessary services;  
  improve controls to ensure that critical incidents involving children in foster care residing in 
group homes are reported timely to the county agencies;  
  ensure that the county agencies maintain the required documentation in the caseworkers 
personnel files; and  
  implement controls to ensure that the appropriate criminal record checks are completed for 
the caseworkers upon hire and that the minimum training requirements are met and 
documented.  
 
Treatment Planning and Medication Monitoring Were Lacking for Children in Foster Care Receiving 
Psychotropic Medication (OEI-07-15-00380), September 2018 
 
None of the five States we reviewed fully complied with their own State requirements for treatment 
planning and medication monitoring for children in foster care receiving psychotropic medication.  
Improved compliance and stronger State requirements will help protect children who are at risk for 
inappropriate treatment and inappropriate prescribing practices.   
 
ACF did not concur with the first recommendation and concurred with the second 
recommendation to: 
53 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
  develop a comprehensive strategy to improve States compliance with requirements related to 
treatment planning and medication monitoring for psychotropic medications; and 
  assist States in strengthening their requirements for oversight of psychotropic medications by 
incorporating suggested professional practice guidelines for monitoring children at the 
individual level. 
 
Low-Income Home Energy Assistance Program 
 
The Fort Peck Assiniboine and Sioux Tribes Improperly Administered Some Low-Income Home Energy 
Assistance Program Funds for Fiscal Years 2011 Through 2015 (A-07-18-04106), August 2018 
 
For FYs 2011 through 2015, the Fort Peck Assiniboine and Sioux Tribes (known collectively as the 
Fort Peck Tribes) did not administer $436,765 of LIHEAP grant funds in compliance with Federal 
laws, regulations, and guidance.  These errors occurred because the Fort Peck Tribes did not have 
policies and procedures or other internal controls in place to prevent the errors.  The improperly 
administered LIHEAP grant funds could have been used to provide eligible households additional 
benefits, or the Fort Peck Tribes could have used them for other purposes such as crisis situations, 
residential weatherization, or energy-related home repairs.  
 
The Fort Peck Tribes disagreed with most of our findings but did not comment on our 
recommendations to refund $436,765 to the Federal Government and make procedural changes 
related to the development and implementation of internal controls and policies and procedures.   
 
Health Resources and Services Administration 
 
HRSA Helped Health Centers with Elevated Risks and Can Continue to Take Additional Steps (OEI-
05-14-00470), May 2018 
 
We found that HRSA intervened in multiple ways to help health centers reduce elevated risks, and 
while many health centers were able to do so, HRSA missed opportunities to further help these 
health centers.  These findings raise concerns because HRSAs ability to provide comprehensive 
oversight is key to ensuring that medically underserved patients can access healthcare and that 
unnecessary risks to Federal grant funds are limited.  HRSA outlined actions it took in response to 
our study that are consistent with our recommendations to:  
  ensure that it uses its risk management interventions as intended, and   
  explore additional steps it could take to help health centers reduce their elevated financial 
risks. 
  
Child Support Enforcement Activities 
 
OIG Investigations   
OIG investigates noncustodial parents who violate 18 U.S.C.  228 by failing to pay court-ordered 
child support.  OIG works with ACFs Office of Child Support Enforcement; DOJ; U.S. Attorneys 
54 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Offices; the U.S. Marshals Service; and Federal, State, and local partners to address egregious child 
support enforcement cases with appropriate law enforcement and prosecutorial action.  During this 
semiannual reporting period, OIG investigations of child support enforcement cases nation-wide 
resulted in 8 criminal actions and court-ordered restitution and settlements of $859,107.   
 
The following case examples involve child support enforcement: 
 
  MichiganIn August 1989, Joseph Stroup was ordered to pay child support for his four 
children in the amount of $100 per month.  However, as a result of telling the court he was 
unemployed and medically disabled, his support was reduced to $14 per month.  In 1996, the 
court learned that Stroup was operating a successful Internet business, which he ultimately 
sold for more than $2 million.  The child support order was subsequently modified to account 
for the unreported income.  From June 1996 to present, Stroup failed to pay any further child 
support.  Stroup had been a fugitive for nearly 20 years and was recently located in Calgary, 
Canada, based on a tip from a Canadian national who identified the fugitive on the HHS OIG 
Child Support Enforcement website.  Stroup pleaded guilty to failure to pay child support and 
was sentenced to 2 years in prison and ordered to pay $533,624 in restitution. 
   
  South DakotaIn July 1997, Joshua J. Layman was ordered to pay $172 per month for the 
support of his child.  Layman only sporadically made payments to the custodial parent of his 
child, and last made a payment in 2012.  Layman pleaded guilty to felony failure to pay legal 
child support and was sentenced to 5 years of probation, 6 months in a residential re-entry 
center, and ordered to pay $20,774.60 in restitution. 
 
Engaging the Public in Capturing Deadbeat Parents 
Because of the success of OIGs Most Wanted Fugitives website, OIG launched its Most Wanted 
Deadbeat Parents website.  The site identifies parents who fail to pay court-ordered child support 
for their children and thereby put an unnecessary strain on the custodial parents and the children 
as well as on agencies that enforce these matters.  The site, which is updated frequently, includes 
information on OIGs role in pursuing parents who fail to pay court-ordered child support.  OIGs 
Most Wanted Deadbeat Parents website can be found at https://oig.hhs.gov/fraud/child-support-
enforcement/index.asp.   
   
55 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Other HHS-Related Reviews and Investigations 
 
Grants and Contracts 
HHS is the largest grant-making organization and one of the largest contracting agencies in the Federal 
Government.  In FY 2018, HHS awarded more than $500 billion in grants and over $20 billion in contracts 
across all program areas.  OIGs direct annual discretionary appropriation funding is used to conduct 
program integrity and enforcement activities with regard to the more than 100 public health and human 
services programs carried out by more than 80,00 employees around the world.  The size and scope of 
departmental awards make their operating effectiveness crucial to the success of programs designed to 
improve the health and well-being of the public. 
 
Reviews 
 
Grant Fraud Investigations 
The following case examples relate to misuse of grant funds: 
 
  MarylandMassTech, Inc., its former CEO Arnold Lee, and its former CFO Richard Lee 
(collectively, MassTech), entered into an FCA settlement agreement to resolve allegations 
that, from January 2010 through December 2017, it falsely represented and certified to the 
National Science Foundation, National Aeronautics and Space Administration, and the NIH 
that MassTech was a Small Business Concern eligible to receive Small Business Innovation and 
Research (SBIR) awards.  The certifications were allegedly false because MassTech was 
improperly affiliated with another company, Science and Engineering Solutions, Inc. (SESI), 
which had too many employees to qualify for SBIR grants. Evidence of this improper affiliation 
included common ownership and management between MassTech and SESI, a shared 
physical location, and shared employees.  MassTech agreed to pay $1.9 million to resolve its 
FCA liability. 
 
  OregonOregon Health and Sciences University (OHSU) entered into an FCA settlement 
agreement to resolve OHSU's FCA liability for charging improper costs to several NIH grants 
between January 1, 2005, and November 30, 2017.  OHSU is a large research university that 
operates, among other centers, the Oregon National Primate Research Center (ONPRC) and 
the Vaccine Gene Therapy Institute (VGTI).  ONPRC and VGTI both receive grants from NIH.  In 
particular, the agreement resolves allegations that VGTI submitted claims for drawdowns from 
grants that improperly applied ONPRC's indirect cost rates, which were higher than the 
standard university indirect cost rates.  This conduct resulted in OHSU receiving excess indirect 
cost recoveries.  In addition, OHSU improperly retained and used program income generated 
by ONPRC under the NIH grant.  Program income is gross income earned as a result of the 
NIH grant and must be used in a manner specified by NIH to support the grant purpose.  
Further, OHSU mischaracterized costs related to equipment and depreciation resulting in the 
calculation of an erroneous indirect cost rate which was applied to certain Federal awards, 
56 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
resulting in excess indirect cost recoveries.  OHSU agreed to pay $1.32 million to resolve its 
liability. 
 
Small Business Innovative Research Program  
The National Defense Authorization Act for Fiscal Year 2012,  5143, requires OIG to report annually 
on the number of cases referred to OIG to fraud, waste, or abuse in the Small Business Innovation 
Research/ Small Business Technology Transfer (SBIR/STTR) program.  OIG must also report on the 
actions taken in each case; justification for not taking action on a case; and an accounting of funds 
used to address waste, fraud, and abuse in this program.  In our November 2017 report delivered 
to the three congressional oversight committees, we reported that OIG spent approximately 
$446,016 in salaries on oversight related to the SBIR/STTR program.   
 
Recovery Act Retaliation Complaint Investigations  
The Recovery Act,  1553, prohibits non-Federal employers that have received Recovery Act 
funding from retaliating against employees who disclose evidence of mismanagement of Recovery 
Act funds or any violation of law related to Recovery Act funds.  OIGs are required to include in 
their Semiannual Report the retaliation complaint investigations that they decided not to conduct 
or continue during the reporting period.  During this semiannual reporting period, OIG closed 0 
investigations in which 0 instances of whistleblower retaliation were identified, declined 0 
investigations, in which 0 instances of retaliation were identified, and received an extension on 1 
whistleblower retaliation investigation.  
 
Contract Audits 
Pursuant to the National Defense Authorization Act for FY 2008,  845, OIGs appointed under the 
Inspector General Act of 1978 are required to submit, as part of their semiannual report, pursuant 
to section 5 of the Inspector General Act, information on final completed contract audit reports 
issued during the period to the contracting activity.  This information must contain significant audit 
findings.   
 
OIG Reviews of Non-Federal Audits  
OIG reviews audits conducted by non-Federal auditors of entities receiving Federal awards.  During 
this semiannual reporting period, OIGs National External Audit Review Center reviewed 639 
reports covering $2.3 trillion in audited costs.  Federal dollars covered by these audits totaled 
$744.1 billion, of which about $409 billion were HHS funds.   
Office of Management and Budget (OMB) Circular A-133 and the more recent uniform guidance at 
2CFR200 Subpart F establishes audit requirements for State and local governments, colleges and 
universities, and nonprofit organizations receiving Federal awards.  Under the circular and uniform 
guidance, covered entities must conduct annual organization-wide single audits of all Federal 
money they receive.  These audits are conducted by non-Federal auditors, such as public 
accounting firms and State auditors.  OIG reviews the quality of these audits and assesses the 
adequacy of the entities management of Federal funds.  
57 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
OIGs oversight of non-Federal audit activity informs Federal managers about the soundness of 
management of Federal programs and identifies any significant areas of internal control weakness, 
noncompliance, and questioned costs for resolution or follow-up.  We identify entities for high-risk 
monitoring, alert program officials to any trends that could indicate problems in HHS programs, 
and profile non-Federal audit findings of a particular program or activity over time to identify 
systemic problems.  We also provide training and technical assistance to grantees and members of 
the auditing profession.  OIG maintains a process to assess the quality of the non-Federal reports 
received and the audit work that supports the selected reports.  
OIGs reports on non-Federal audits reviewed during this reporting period are categorized in the 
following table. 
 
Non-Federal Audits, April 1, 2018, through September 30, 2018 
 
Not requiring changes or having minor changes   596 
Requiring major changes  41 
Having significant technical inadequacies  2 
 Total Number of Non-Federal Audits  639 
 
The 639 reports included 1,928 recommendations for improving management operations.  
In addition, these audit reports provided information for 31 OIG special memorandums that 
 
identified concerns for increased monitoring by management.
 
Other Reporting Requirements and Reviews  
 
Legislative and Regulatory Reviews  
Pursuant to the Inspector General Act,  4(a)(2), OIG is required to review existing and proposed 
legislation and regulations relating to HHSs programs and operations and make recommendations 
concerning their impact on economy and efficiency or the prevention and detection of fraud and 
abuse.  Most audits and other reviews that we conduct are designed to test compliance with 
and/or assess the administration and oversight of existing laws and regulations.  Our reports of 
such reviews describe findings, which include questioned costs, inefficiencies, vulnerabilities to 
fraud, inconsistencies, errors in application, or weaknesses in oversight or supporting systems.  Our 
corresponding recommendations tell HHS and its operating or staff divisions what administrative, 
regulatory, or legislative actions we believe are needed to effectively respond to the findings.  Our 
regularly published core publications reflect the relationship between our work and laws and 
regulations.  
 
58 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
  Our Semiannual Report to Congress describes findings and recommendations from recently 
completed reviews, many of which focus on existing laws and regulations.   
  Our Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs: Top Unimplemented 
Recommendations describes priority findings and recommendations from past periods that 
remain to be implemented.   
  Our Work Plan provides citations to laws and regulations that are the subject of ongoing or 
future reviews. 
We also review proposed legislation and regulations related to HHS programs and operations.  
HHS routinely involves OIG and HHS operating divisions and other HHS staff divisions in the review 
and development of HHS regulations through a well-established HHS process.  Our audits, 
evaluations, and investigations are sometimes cited in regulatory preambles as influencing HHS 
regulations.  In addition, we provide independent, objective technical assistance on a bipartisan, 
bicameral basis to congressional committees and members who request it.  
 
Health Insurance Marketplaces   
Key focus areas for our oversight of the Health Insurance Marketplaces include payment accuracy, 
eligibility, management and administration, and security.  In developing our work plan, we 
coordinate with GAO and other Federal and State oversight agencies.   
 
Colorado Did Not Always Comply with Federal Requirements When Expending Federal Establishment 
Grant Funds Allocated for Its Shared Eligibility System Costs (A-07-16-02804), April 2018 
 
Connect for Health Colorado (Colorado marketplace), the health insurance exchange established 
by Colorado under the Patient Protection and Affordable Care Act (ACA), did not always comply 
with Federal requirements when expending Federal establishment grant funds allocated for Shared 
Eligibility System (SES) costs.  
 
SES costs were not always properly allocated to the Colorado marketplace because it did not have 
written policies that explained how to develop a Cost Allocation Plan (CAP) based on relative 
benefits received and because it did not maintain documentation for the cost allocation ratio.  In 
addition, the marketplace did not have adequate internal controls to ensure that these costs were 
properly allocated to it by the Colorado Department of Health Care Policy and Financing (HCPF) 
using the cost allocation ratios in effect for the appropriate CAP period. 
 
The Colorado marketplace neither agreed nor disagreed with our recommendations that it: 
(1) develop and implement a cost allocation methodology and written policies, reinforced by 
adequate internal controls, that explain how to develop a CAP, how to provide formal input to 
HCPF and CMS during the development of cost allocation ratios, and how to adequately document 
the development of those ratios; and (2) develop and implement written policies and procedures 
to ensure that future Federal grant award costs are allocated to it in accordance with Federal 
requirements. 
 
59 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
The Colorado Health Insurance Marketplaces Financial Management System Did Not Always 
Comply with Federal Requirements (A-07-17-02808), July 2018 
 
The Colorado marketplace did not always comply with Federal requirements with respect to the 
administration of its financial management system for the establishment grant funds it was 
awarded.  Specifically, the marketplace improperly transferred grant costs totaling almost 
$2 million.  The marketplace also transferred costs between grants that may not have been 
allowable, in part, due to a lack of certifications that the new charges were correct.  In addition, the 
marketplace made payments that were unallowable because the marketplace used grant funds 
from its first two grants to pay for expenditures outside of those grant periods.  The marketplace 
also engaged in a number of financial management procedures and practices that did not provide 
for effective control over and accountability for establishment grant funds. 
 
The Colorado marketplace did not agree with our recommendation that it refund to the Federal 
Government $2 million in improperly transferred costs and $568,987 in payments related to 
obligations that were not incurred during the grant period.  It agreed with our recommendations 
that it: (1) work with CMS to certify the cost transfers associated with the remaining expenditures; 
(2) ensure that each expenditure transferred was allowable; (3) refund any unallowable 
expenditures to the Federal Government; and (4) address procedural recommendation regarding 
the development and implementation of written policies and procedures for the administration of 
the marketplaces financial management system. 
 
CMS Did Not Always Accurately Authorize Financial Assistance Payments to Qualified Health Plan 
Issuers in Accordance With Federal Requirements During the 2014 Benefit Year (A-02-15-02013), 
August 2018 
 
Of the 140 policies in our sample, CMS did not accurately authorize financial assistance payments 
in accordance with Federal requirements for 26 policies.  For five policies, CMS authorized 
potentially improper financial assistance payments to qualified health plan (QHP) issuers that did 
not provide documentation to support that enrollees had paid their premiums, a requirement for 
receiving these payments.  Based on our sample results, we estimated that CMS authorized 
improper financial assistance payments totaling almost $434.4 million for 461,127 policies that were 
not in accordance with Federal requirements and authorized potentially improper financial 
assistance payments totaling almost $504.9 million for 183,983 policies during the 2014 benefit 
year.  In 2016, CMS fully transitioned QHP issuers operating through the Federal marketplace to an 
automated payment system that makes financial assistance payments on an individual policy-level 
basis. 
 
CMS partially concurred with our recommendations that it: (1) work with the U.S. Department of the 
Treasury and QHP issuers to collect improper financial assistance payments; and (2) work with 
Treasury and QHP issuers to resolve potentially improper financial assistance payments.  CMS 
concurred with our recommendation that it clarify guidance with QHP issuers on Federal 
requirements for terminating an enrollees coverage when the enrollee fails to pay his or her 
monthly premium.   
60 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Appendix A: Questioned Costs and Funds to 
Be Put to Better Use 
 
The following tables summarize OIGs monetary recommendations and HHS responses to them.  This 
information is provided in accordance with the Inspector General Act,  5(a)(8) and (a)(9) (5 U.S.C. App.  
5(a)(8) and (a)(9)), and the Supplemental Appropriations and Rescissions Act of 1980.  
 
Audit Reports with Questioned Costs 
As defined by the IG Act, the term questioned cost means a cost that is questioned by OIG because of: 
(1) an alleged violation of a provision of law, regulation, contract, grant, cooperative agreement, or other 
agreement or document governing the expenditure of funds; (2) a cost that is not supported by adequate 
documentation at the time of the audit; or (3) the expenditure of funds for the intended purpose is 
unnecessary or unreasonable.  Questioned costs that HHS program officials have, in a management 
decision, sustained or agreed should not be charged to the Government are disallowed costs.  Superscripts 
indicate end notes that follow the tables below. 
 
Table 1Audit Reports with Questioned Costs 
Number of  Dollar Value  Dollar Value 
Description  Reports  Questioned  Unsupported 
Section 1          
Reports for which no management decisions had 
been made by the beginning of the reporting 
period1  155  $1,037,381,000  $38,786,000 
Issued during the reporting period  41  $1,345,749,000  $504,902,000 
Total Section 1  196  $2,383,130,000  $543,688,000 
Section 2        
Reports for which management decisions were 
made during the reporting period2, 3        
Disallowed costs  136  *$333,565,000  $14,698,000 
Costs not disallowed  6  $84,500,000  $23,265,000 
Total Section 2  142  $418,065,000  $37,963,000 
*Audit receivables (expected recoveries)       
Section 3        
Reports for which no management decisions had 
been made by the end of the reporting period 
(Section 1 minus Section 2)  54  $1,965,065,000  $505,725,000 
Section 4        
Reports for which no management decisions were   
made within 6 months of issuance4  24  $644,289,000  $823,000 
 
61 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Audit Reports With Funds Recommended To Be Put to Better Use  
The phrase recommendations that funds be put to better use means that funds could be used more 
efficiently if management took action to implement an OIG recommendation through reductions in 
outlays, deobligation of funds, and/or avoidance of unnecessary expenditures.  Table 2 reports HHS 
program officials decisions to take action on these audit recommendations.   
 
Table 2Audit Reports with Funds Put to Better Use 
Number of 
Description  Reports  Dollar Value 
Section 1       
Reports for which no management decisions had been made by 
the beginning of the reporting period1  8  $16,460,871,000 
Reports issued during the reporting period  3  $666,138,000 
Total Section 1  11  $17,127,009,000 
Section 2      
Reports for which management decisions were made during the 
reporting period      
Value of recommendations agreed to by management      
Based on proposed management action  5  $1,300,979,000 
Based on proposed legislative action  0  $0 
Value of recommendations not agreed to by management     $0 
Total Section 2  5  $1,300,979,000 
Section 3      
Reports for which no management decisions had been made by 
the end of the reporting period2 (Sec. 1 minus Sec. 2)  6  $15,826,030,000 
 
End Notes 
Table 1 End Notes 
1 The opening balance was adjusted upward by $54.6 million because of a reevaluation of previously 
issued recommendations.  
2 Revisions to previously reported management decisions: 
  A-02-16-01004 Fox Rehabilitation Claimed Unallowable Medicare Reimbursement for Outpatient 
Therapy Services.  CMS conducted a subsequent review and concluded that the medical records 
complied with Medicare coverage and payment requirements.  As result, CMS nonconcurred with the 
previously sustained amount of $29,902,452. 
 
  A-02-07-01028 Review of Medicaid Outpatient Drug Expenditures in the State of New York for the Period 
October 1, 2003, Through September 30, 2005.  Due to additional documentation provided by the State 
and the age of the remaining records in question, CMS reduced the previously sustained amount by 
$16,189,125. 
 
62 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
  A-01-12-02507 Connecticut Often Did Not Comply with Federal Adoption Assistance Requirements.  ACF 
reduced the sustained amount by $6,921,914 due to the receipt of additional documentation from the 
State. 
 
  A-07-14-06057 Utah Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-
Administrated Drugs.  CMS made an agreement with the State resulting in a refund of $554,807.  As a 
result, the original sustained amount was reduced by $3,832,477. 
 
  Not detailed are reductions to previously disallowed management decisions totaling $5.7 million.   
3 Included are management decisions to disallow $38.5 million in questioned costs that were identified by 
non-Federal auditors in audits of State and local governments, colleges and universities, and nonprofit 
organizations receiving Federal awards conducted in accordance with Office of Management and Budget 
Circular A-133.  OIG is currently ensuring that work performed by these non-Federal auditors complies with 
Federal audit standards; accordingly, OIG tracks, resolves, and reports on recommendations in these audits. 
4 Because of administrative delays, some of which were beyond management control, resolution of the 
following 24 audits were not completed within 6 months of issuance of the reports; however, agency 
management has informed us that the agency is working to resolve the outstanding recommendations 
before the end of the next semiannual reporting period. 
 
Audits Not Completed Within 6 Months of Issuance 
Audit CIN  Audit Title 
A-02-15-01010  New Jersey Claimed Hundreds of Millions in Unallowable or Unsupported Medicaid 
School-Based Reimbursement, November 2017, $300,452,930 
A-02-14-02017  New York Misallocated Costs to Establishment Grants for A Health Insurance 
Marketplace, November 2016, $149,654,512 
A-09-16-02034  Medicare Improperly Paid Providers for Specimen Validity Tests Billed in Combination 
with Urine Drug Tests, February 2018, $66,309,751 
A-01-14-02503  Maryland Misallocated Millions to Establishment Grants for A Health Insurance 
Marketplace, March 2015, $28,400,000 
A-04-14-07050  Kentucky Misallocated Millions to Establishment Grants for A Health Insurance 
Marketplace, February 2017, $25,530,429 
A-02-15-02008  New York Did Not Comply with Federal Grant Requirements for Allocating and 
Claiming Marketplace Contract Costs, December 2017, $20,415,344 
A-07-15-04226  Not All of Missouri's Child Care Subsidy Program Payments Complied with Federal 
and State Requirements, November 2017, $19,076,167 
A-01-15-02500  Vermont Did Not Properly Allocate Millions to Establishment Grants for A Health 
Insurance Marketplace, September 2016, $11,243,006 
A-02-14-02024  Newark Preschool Council, Inc., Did Not Always Comply with Head Start 
Requirements, February 2017, $9,950,556 
A-02-14-02012  Visiting Nurse Service of New York Budgeted Costs That Were Not Appropriate and 
Claimed Some Unallowable Hurricane Sandy Disaster Relief Act Funds, November 
2016, $3,771,672 
63 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
A-07-11-06013  The University of Colorado Denver Did Not Always Claim Selected Costs Charged 
Directly to Department of Health and Human Services Awards In Accordance With 
Federal Regulations, June 2013, $1,419,524 
A-05-14-00045  The Minnesota Marketplace Misallocated Federal Funds and Claimed Unallowable 
Costs, November 2016, $1,279,677 
A-07-16-04230  The Three Affiliated Tribes Improperly Administered Low-Income Home Energy 
Assistance Program Funds for FYs 2010 through 2014, July 2017, $1,221,425 
A-05-12-00089   The Council on Rural Service Programs, Inc., Claimed Unallowable Head Start Costs, 
November 2013, $1,074,352 
A-02-15-01014  New York Did Not Comply with Federal Grant Requirements for Claiming 
Marketplace Contract Costs to Medicaid and the Childrens Health Insurance Program, 
March 2018, $954,521 
A-09-14-01007  Nevada Misallocated Costs for Establishing a Health Insurance Marketplace to Its 
Establishment Grants, February 2016, $893,464 
A-06-16-07007  BCFS Health and Human Services Did Not Always Comply with Federal Requirements 
Related to Less-Than-Arm's Length Leases, February 2018, $658,248 
A-07-16-04233   The Turtle Mountain Band of Chippewa Indians Improperly Administered Some Low-
Income Home Energy Assistance Program Funds for Fiscal Years 2010 Through 2013, 
September 2017, $587,248 
A-04-16-04044  The Ministry of Health and Social Welfare National AIDS Control Program Did Not 
Always Manage and Expend PEPFAR Funds in Accordance With Award Requirements, 
August 2017, $495,379 
A-04-13-01024  The University Of North Carolina At Chapel Hill Did Not Always Claim Selected Costs 
Charged Directly to Department of Health and Human Services Awards In 
Accordance With Federal Requirements, June 2014, $352,843 
A-01-10-02505  Results of Limited Scope Review Of CTE, Inc., May 2011, $239,975 
A-04-15-04039  Mild may Uganda Did Not Always Manage the Presidents Emergency Plan for Aids 
Relief Funds In Accordance With Award Requirements, March 2017, $170,386 
A-06-11-00058  Crowley's Ridge Development Council, Inc., Claimed Unallowable Costs Under a 
Recovery Act Grant, August 2012, $115,420 
A-09-11-01014  Hawaii Claimed Unallowable Community Services Block Grant Costs for Hawaii 
County Economic Opportunity Council's Expenditures Under the Recovery Act, July 
2012, $22,602 
TOTAL CINS:    24  
TOTAL AMOUNT:  $644,289,431 
 
 
Table 2 End Notes 
1 The opening balance had no prior period adjustments of previously issued recommendations. 
2 Because of administrative delays, some of which were beyond management control, 4 of the 6 audits open at end of 
the period were not resolved within 6 months of issuance of reports.  OIG is working with management to reach 
resolution on these recommendations before the end of the next semiannual reporting period. 
64 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
Audits Open at End of the Period 
 
Audit CIN  Audit Title 
 
A-05-12-00020  Medicare And Beneficiaries Could Save Billions If CMS Reduces Hospital Outpatient 
  Department Payment Rates for Ambulatory Surgical Center-Approved Procedures to 
Ambulatory Surgical Center Payment Rates, April 2014, $15,000,000,000 
 
A-03-14-00010  CMS Did Not Adequately Address Discrepancies in The Coding Guidelines for 
  Kwashiorkor, November 2017, $102,000,000 
  A-03-13-03002  HHS Did Not Identify and Report Antideficiency Act Violations, May 2017, 
$49,445,025 
 
A-09-16-02034  Medicare Improperly Paid Providers for Specimen Validity Tests Billed in Combination 
  with Urine Drug Tests, February 2018, $12,146,760 
  TOTAL CINS:  4  
  TOTAL AMOUNT:  $15,163,591,785 
   
65 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Appendix B: Savings Decisions Supported by 
OIG Recommendations 
 
The table below lists policy decisions reflected in legislation, regulations, or other directives from prior 
years that are supported by OIG recommendations and for which cost savings were estimated, usually by 
third parties, such as the Congressional Budget Office (CBO) or HHS actuaries.  Of the savings estimated 
for the decisions below, $25.6 billion was attributed to FY 2018.  This figure reflects the most recent 
available savings estimates issued by the third-party appraiser; actual savings may be higher or lower.   
 
After laws involving HHS programs are enacted, OIG analyzes the laws to identify the provisions that 
comport with our prior recommendations, that is, whether our recommendations support the decisions 
that were made.  A similar process occurs with respect to administrative decisions in regulations or other 
directives or agreements, e.g., modifications to Medicaid State Plans.  Most of the decisions reported in 
this appendix reflect ways in which funds could be put to better use, such as reductions in Federal 
spending or the avoidance of unnecessary or inappropriate expenditures, or both.   
 
To quantify the value of administrative decisions, we use estimates developed by, or in consultation with, 
HHS operating or staff divisions.  To quantify the value of legislative decisions, we generally use estimates 
developed by CBO.  CBO projects the annual increases or reductions in Federal spending that it expects 
would result from enacting the legislation.  The policy decisions shown on the table beginning on the next 
page mirror not only OIGs recommendations but also the contributions of others, such as HHS staff and 
operating divisions, congressional committees, and the GAO.  
 
 Centers for Medicare & Medicaid Services (CMS) Programs 
OIG Recommendations  Policy Decisions  Estimated 
Savings 
(millions) 
Medicare Lab Test Payment Rates  Section 216 of the Protecting Access to Medicare Act of  $400 
Seek legislation that would allow CMS to  2014 (PAMA) changed the way that Medicare sets 
establish lower payment rates for lab tests.   payments for clinical lab tests.  PAMA requires that 
The recommendation reflected findings in  Medicare set payments for lab tests based on the median 
OIG report numbers OEI-07-11-00010 and  rates paid by private payers, updated every 3 years using 
OEI-05-08-00400.  data reported by labs.  Previously, Medicare based lab 
test payments on lab charges from 1984 to 1985, 
adjusted annually for inflation.  CBO estimated savings of 
$3.9 billion over 10 years with $400 million attributed to 
FY 2018. 
Medicare Part C Prepayments  Section 3201 of the ACA changed the Medicare  $23,200  
Modify monthly capitated payments to a  Advantage benchmark percentages that are applied to 
level fully supported by empirical data.   Medicare fee-for-service and imposed a cap on the 
The recommendation reflected findings in  benchmarks, resulting in cost savings for Medicare Part C 
OIG report number A-14-00-00212.   as compared to prior law.  CBO estimated Part C savings 
66 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
through FY 2019, including $23.2 billion for FY 2018.  CBO 
produced its estimate in 2010, prior to two significant 
implementation decisions by HHS that affect the actual 
savings; however, neither CBO nor HHS has calculated a 
revised estimate. 
Reductions in Medicare Bad Debt  Section 3201 of the Middle Class Tax Extension and Job  $1,210 
Reimbursement    Creation Act of 2012 applied percentage reductions in 
Seek legislative authority to eliminate (or  bad debt reimbursement to all providers eligible to 
reduce) Medicare payments to hospitals  receive bad debt reimbursement.  CMS estimated savings 
for bad debt associated with beneficiaries  to Medicare of $10.92 billion over 10 years with $1.21 
failure to pay their deductibles and  billion attributed to FY 2018.  (77 Fed. Reg. 67450, 67523 
coinsurance.  The recommendations  (November 9, 2012)) 
reflected findings in OIG report number 
A-14-90-00339 and subsequent reviews. 
Payments for Prescription Drugs Provided  CMS issued a final rule about the Contract Year 2015  $129 
to Incarcerated Beneficiaries    Policy and Technical Changes to the Medicare Advantage 
Work with prescription drug plan  and the Medicare Prescription Drug programs.  The 
sponsors to identify and resolve improper  eligibility requirements to enroll in Medicare Advantage 
Medicare Part D payments made for  and Part D are outlined in Sections 1851(a)(3)(B) and 
prescription drugs provided to  1860D-1(a)(3)(A) of the Act.  To enroll in Medicare 
incarcerated beneficiaries.  The  Advantage, a beneficiary must be entitled to Part A and 
recommendation reflected findings in OIG  enrolled in Part B.  To enroll in Part D, a beneficiary must 
report number A-07-12-06035.  be entitled to Part A and/or enrolled in Part B.  An 
incarcerated beneficiary is not precluded from meeting 
the eligibility requirements for Part A and Part B, but in 
general, no Medicare Payment is made for these 
individuals.  CMS promulgated regulations to require Part 
D plans to disenroll incarcerated beneficiaries.  CMS 
estimated savings of $1.6 billion over 10 years with $129 
million attributed to FY 2018.  (79 Fed. Reg. 29844, 29953 
(May 23, 2014)) 
Medicare Payments for Vacuum Erection  Section 203 of the Achieving A Better Life Experience Act  $44.4 
Systems    of 2014 implements changes to treat VES prosthetic 
Seek legislative authority to include  devices and related accessories as statutorily noncovered 
vacuum erection systems (VES) in the  in the same manner that erectile dysfunction drugs are 
Competitive Bidding program and then  treated in Medicare Part D.  CBO estimated savings of 
implement a National Mail-Order  $444 million over 10 years. 
Competitive Bidding program for VES.  
The recommendation reflected findings in 
OIG report number A-07-12-05024. 
Additional Rebates for Brand-Name Drugs  Section 2501(d) of the ACA, as amended by section  $300 
with Multiple Versions    1206(a) of the Health Care and Education Reconciliation 
OIG recommended that CMS continue to  Act of 2010, addresses this issue.  CBO estimated savings 
seek legislative authority to modify the  of $300 million for FY 2018.   
rebate formula calculation to ensure that 
manufacturers cannot circumvent 
additional rebates by bringing new 
versions of existing brand-name drugs to 
67 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
market.  The recommendation reflected 
findings in OIG report number A-06-09-
00033. 
Medicaid Provider Reimbursement for  In December 2015, the Consolidated Appropriations Act,  $275 
Durable Medical Equipment  2016 section 503, Congress added section 1903(i)(27) to 
OIG recommended that CMS seek  the Social Security Act (the Act) which prohibits federal 
legislative authority to limit State Medicaid  Medicaid reimbursement to States for certain DME 
DME reimbursement rates to Medicare  expenditures that are, in the aggregate, in excess of what 
program rates and encourage further  Medicare would have paid for such items.  The 
reduction of Medicaid reimbursement  requirement was scheduled to effect January 1, 2019.  The 
rates through competitive bidding or  21st Century Cures Act Section 5002 moved up the 
manufacturer rebates.  OIG also  effective date to January 1, 2018 when it was passed in 
recommended that that CMS work with  December 2016.  CBO estimated savings of $275 million 
State Medicaid agencies to determine  for FY 2018. 
whether the use of manufacturer rebates   
and lower provider reimbursement rates 
could achieve net savings for the purchase 
of test strips.  The recommendations 
reflected findings in OIG reports A-05-15-
00025 and A-05-13-00033. 
Excessive Medicaid Payments to New York  Agreement between CMS and the State of New York,  $100 
State  dated March 20, 2015, to repay $1.95 billion over 12 years 
Ensure that expenditures related to  with $100 million attributed to FY 2018. 
developmental centers and other 
intermediate care facilities and any revised 
payment methodology be consistent with 
efficiency and economy.  The 
recommendation reflected findings in OIG 
reports A-02-11-01029, A-02-13-01008, 
and other reviews.   
 
 
68 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Appendix C: Peer-Review Results 
 
Peer-Review Results 
The Inspector General Act of 1978, as amended, requires OIGs to report the results of peer reviews of their 
operations conducted by other OIGs, the date of the last peer review, outstanding recommendations from 
peer reviews, and peer reviews conducted by an OIG of other OIGs in the semiannual period.  Peer reviews 
are conducted by member organizations of the Council of the Inspectors General on Integrity and 
Efficiency (CIGIE).  Recently CIGIE has approved a new peer-review process for Inspection and Evaluation 
units within OIGs across the Federal Government, including at HHS OIG, the implementation of which will 
begin in 2018. 
 
Office of Audit Services  
During this semiannual reporting period, no peer reviews involving OAS were completed.  Listed 
below is information concerning OASs peer-review activities during prior reporting periods. 
 
OAS  Date  Reviewing Office  Office Reviewed 
March 2018  United States Postal  HHS OIG, OAS 
Service OIG 
The system of quality control for the audit organization of HHS OIG in effect for the year ending 
September 30, 2017, has been suitably designed and complied with to provide HHS OIG with 
reasonable assurance of performing and reporting in conformity with applicable professional 
standards in all material respects.  Federal audit organizations can receive a rating of pass, pass 
with deficiencies, or fail.  HHS OIG received a peer-review rating of pass. 
 
OAS  Date  Reviewing Office  Office Reviewed 
December 2015  HHS OIG, OAS  U.S. Department of Agriculture 
(USDA) OIG 
The system of quality control for the audit organization of USDA OIG in effect for the year 
ending March 31, 2015, has been suitably designed and complied with to provide USDA OIG with 
reasonable assurance of performing and reporting in conformity with applicable professional 
standards in all material respects.  Federal audit organizations can receive a rating of pass, pass 
with deficiencies, or fail.  USDA OIG received a peer-review rating of pass. 
   
   
69 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Office of Investigations  
During this semiannual reporting period, no peer review involving OI was completed.  Listed below 
is information concerning OIs peer-review activities during prior reporting periods.  
 
OI  Date  Reviewing Office  Office Reviewed 
  August 2017  HHS OIG, OI  U.S. Postal Service OIG 
 
The system of internal safeguards and management procedures for the investigative function of 
the U.S. Postal Service OIG in effect for the year ending September 30, 2015, was in full compliance 
with the quality standards established by CIGIE and the Attorney Generals guidelines. 
 
OI  Date  Reviewing Office  Office Reviewed 
  August 2015  DOL OIG  HHS OIG, OI 
 
The system of internal safeguards and management procedures for the investigative function of 
HHS OIG in effect through June 2014, was in full compliance with the quality standards established 
by CIGIE and the Attorney Generals guidelines.  
 
Office of Evaluation and Inspections 
During this semiannual reporting period, we conducted two peer reviews in accordance with the 
Council of the Inspectors General on Integrity and Efficiency (CIGIE) Guide for Conducting Peer 
Reviews of Inspection and Evaluation Organizations of Federal Offices of Inspector General (January 
2017).  The onsite visits for these reviews were conducted from October 2 through November 17, 
2017.   
 
The External Peer Review Team (Team) conducted a primary review of the extent to which the 
Inspection and Evaluation (I&E) components of the Department of Defenses Office of Inspector 
General (DoD OIG) adhered to seven standards described in CIGIEs Quality Standards for 
Inspection and Evaluation (Blue Book), specifically:  Quality Control, Planning, Data Collection and 
Analysis, Evidence, Records Maintenance, Reporting, and Followup.  A supplemental review 
focused on two additional Blue Book standards:  Timeliness and Independence. 
 
The Team determined that the DoD OIG I&E components policies and procedures generally met 
the Blue Book standards addressed in these peer reviews.  In addition, the ten reports reviewed for 
these peer reviews generally met the applicable Blue Book standards. 
 
The draft reports, issued August 20, 2018, set forth specific findings, recommendations, and 
observations identified during the reviews.  DoD OIG management officials provided a response to 
our draft reports in which they agreed with our two recommendations.  Their response was 
 
incorporated into the final reports issued September 25, 2018. 
70 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Appendix D: Summary of Sanction Authorities 
 
The Inspector General Act of 1978, as amended, specifies requirements for semiannual reports to be made 
to the HHS Secretary for transmittal to Congress.  A selection of other authorities appears below.  
 
Program Exclusions 
The Social Security Act,  1128 (42 U.S.C.  1320a-7), provides several grounds for excluding individuals and 
entities from participation in Medicare, Medicaid, and other Federal healthcare programs.  Exclusions are 
required (mandatory exclusion) for individuals and entities convicted of the following types of criminal 
offenses: (1) Medicare or Medicaid fraud; (2) patient abuse or neglect; (3) felonies for other healthcare 
fraud; and (4) felonies for illegal manufacture, distribution, prescription, or dispensing of controlled 
substances.   
 
OIG is authorized (permissive exclusion) to exclude individuals and entities on several other grounds, 
including misdemeanors for other healthcare fraud (other than Medicare or Medicaid); suspension or 
revocation of a license to provide healthcare for reasons bearing on professional competence, professional 
performance or financial integrity; provision of unnecessary or substandard services; submission of false or 
fraudulent claims to a Federal healthcare program; or engaging in unlawful kickback arrangements.  
 
The ACA added another basis for imposing a permissive exclusion, that is, knowingly making, or causing to 
be made, any false statements or omissions in any application, bid, or contract to participate as a provider 
in a Federal healthcare program, including managed care programs under Medicare and Medicaid, as well 
as Medicares prescription drug program.  
 
Providers subject to exclusion are granted due process rights.  These include a hearing before an 
administrative law judge and appeals to the HHS Departmental Appeals Board and Federal district and 
appellate courts regarding the basis for and the length of the exclusion.  
 
Civil Monetary Penalties Law 
The CMPL of the Social Security Act, 1128A (42 U.S.C.  1320a 7a), imposes penalties, assessments, and 
exclusion from participation in Federal healthcare programs for engaging in certain activities.  For example, 
a person who submits, or causes to be submitted, to a Federal healthcare program a claim for items and 
services that the person knows, or should know, is false or fraudulent is subject to a penalty of up to 
$15,270 for each item or service falsely or fraudulently claimed, an assessment of up to 3 times the amount 
falsely or fraudulently claimed, and exclusion.  
 
For the purposes of the CMPL, should know is defined to mean that the person acted in reckless 
disregard or deliberate ignorance of the truth or falsity of the claim.  The law and its implementing 
regulations also authorize actions for a variety of other violations, including submission of claims for items 
or services furnished by an excluded person; requests for payment in violation of an assignment 
agreement; violations of rules regarding the possession, use, and transfer of biological agents and toxins; 
and payment or receipt of remuneration in violation of the anti-kickback statute (42 U.S.C.  1320a 7b (b)).   
71 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
The ACA added more grounds for imposing CMPs.  These include, among other types of conduct, 
knowingly making, or causing to be made, any false statements or omissions in any application, bid, or 
contract to participate as a provider in a Federal healthcare program (including Medicare and Medicaid 
managed care programs and Medicare Part D); the ACA authorizes a penalty of up to $55,262 for each 
false statement, as well as activities relating to fraudulent marketing by MCOs, their employees, or their 
agents.   
 
The 21st Century Cures Act (enacted on December 13, 2016) added more grounds for imposing CMPs, 
assessments, and exclusion from Federal healthcare programs for fraudulent conduct in an HHS grant, 
contract, or other agreement.  OIG may assess CMPs of up to $10,000 per claim and assessments of up to 
3 times the amount claimed for knowingly presenting a false or fraudulent claim.  In addition, OIG may 
impose a penalty of up to $50,000 and assessments of up to 3 times the amount of funds at issue: (1) for 
each instance of knowingly making a false statement in a document required to be submitted in order to 
receive funds under an HHS contract, grant, or other agreement; (2) for knowingly making or using a false 
record or statement that is material to a false or fraudulent claim; and (3) for knowingly making or using a 
false record or statement material to an obligation to pay or transmit funds or property owed to HHS.  OIG 
may impose a penalty of up to $10,000 per day and assessments of up to 3 times the amount at issue for 
knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation owed to HHS 
with respect to an HHS grant, contract, or other agreement.  Finally, HHS OIG may impose a penalty of up 
to $15,000 per day for failing to grant timely access to OIG upon reasonable request for audits or to carry 
out other statutory functions in matters involving an HHS grant, contract, or other agreement.   
 
Patient Dumping 
The Social Security Act, 1867 (42 U.S.C.  1395dd), provides that when an individual goes to the 
emergency room of a Medicare-participating hospital, the hospital must provide an appropriate medical 
screening examination to determine whether that individual has an emergency medical condition.  If an 
individual has such a condition, the hospital must provide either treatment to stabilize the condition or an 
appropriate transfer to another medical facility.  
 
If a transfer is ordered, the transferring hospital must provide stabilizing treatment to minimize the risks of 
transfer and must ensure that the receiving hospital agrees to the transfer and has available space and 
qualified personnel to treat the individual.  In addition, the transferring hospital must effect the transfer 
through qualified personnel and transportation equipment.  Further, a participating hospital with 
specialized capabilities or facilities may not refuse to accept an appropriate transfer of an individual who 
needs services if the hospital has the capacity to treat the individual.  
 
OIG is authorized to collect CMPs of up to $52,414 against small hospitals (fewer than 100 beds) and up to 
$104,826 against larger hospitals (100 beds or more) for each instance in which the hospital negligently 
violated any of the section 1867 requirements.  In addition, OIG may collect a penalty of up to $104,826 
from a responsible physician for each negligent violation of any of the section 1867 requirements and, in 
some circumstances, may exclude a responsible physician.  
72 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
Anti-Kickback Statute and Civil False Claims Act Enforcement Authorities 
 
The Anti-Kickback Statute 
The anti-kickback statute authorizes penalties against anyone who knowingly and willfully solicits, 
receives, offers, or pays remuneration, in cash or in kind, to induce or in return for: (1) referring an 
individual to a person or an entity for the furnishing, or arranging for the furnishing, of any item or 
service payable under the Federal healthcare programs; or (2) purchasing, leasing, or ordering, or 
arranging for or recommending the purchasing, leasing, or ordering, of any good, facility, service, 
or item payable under the Federal healthcare programs (Social Security Act,  1128B(b) (42 U.S.C.  
1320a-7b(b)).  
 
Individuals and entities that engage in unlawful referral or kickback schemes may be subject to 
criminal penalties under the general criminal anti-kickback statute; a CMP under OIGs authority 
pursuant to the Social Security Act,  1127(a)(7) (42 U.S.C.  1320a-7a); and/or program exclusion 
under OIGs permissive exclusion authority under the Social Security Act,  1128(b)(7) (42 U.S.C.  
1320a-7(b)(7)).  
 
The False Claims Act 
Under the FCA, as amended by the False Claims Amendments Act of 1986 (31 U.S.C.  37293733), 
a person or an entity is liable for up to treble damages and a penalty between $10,957 and $21,916 
for each false claim it knowingly submits, or causes to be submitted, to a Federal program.  
Similarly, a person or an entity is liable under the FCA if it knowingly makes or uses, or causes to be 
made or used, a false record or statement to have a false claim paid.  The FCA defines knowing 
to include not only the traditional definition but also instances in which the person acted in 
deliberate ignorance or reckless disregard of the truth or falsity of the information.  Under the FCA, 
no specific intent to defraud is required.  Further, the FCA contains a qui tam, or whistleblower, 
provision that allows a private individual to file a lawsuit on behalf of the United States and entitles 
that whistleblower to a percentage of any fraud recoveries.  The FCA was again amended in 2009 
in response to recent Federal court decisions that narrowed the laws applicability.  Among other 
things, these amendments clarify the reach of the FCA to false claims submitted to contractors or 
grantees of the Federal Government.   
73 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Appendix E: Reporting Requirements in the 
Inspector General Act of 1978  
 
The reporting requirements of the Inspector General Act of 1978, as amended, are listed in the following 
table along with the location of the required information.  
 
Section  Requirement  Location 
Section 4 
(a)(2)  Review of legislation and regulations  Other HHS-Related 
Reviews and 
Investigations section   
Section 5 
(a)(1)  Significant problems, abuses, and deficiencies  Throughout this report 
(a)(2)  Recommendations with respect to significant problems,  Throughout this report 
abuses, and deficiencies 
(a)(3)  Prior significant recommendations on which corrective  Solutions to Reduce Fraud, 
action has not been completed  Waste, and Abuse in HHS 
Programs: Top 
Unimplemented 
Recommendations 
(previously known as the 
Compendium of 
Unimplemented 
Recommendations) 
(a)(4)  Matters referred to prosecutive authorities  Legal and Investigative 
Activities Related to the 
Medicare and Medicaid 
Programs section 
(a)(5)  Summary of instances in which information requested by  None for this reporting 
OIG was refused  period 
(a)(6)  List of audit reports  Submitted to the Secretary 
under separate cover 
(a)(7)  Summary of significant reports  Throughout this report 
(a)(8)  Statistical Table 1Reports with Questioned Costs  Appendix A 
(a)(9)  Statistical Table 2Funds Recommended To Be Put to  Appendix A 
Better Use 
(a)(10)  Summary of previous audit reports without management  Appendix A 
decisions, in which no establishment comment was returned 
within 60 days, and in which there are any outstanding 
unimplemented recommendations 
74 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Section  Requirement  Location 
(a)(11)  Description and explanation of revised management  Appendix A 
decisions 
(a)(12)  Management decisions with which the Inspector General  None for this reporting 
disagrees  period 
(a)(13)  Information required by the Federal Information Security  Reported annually in the 
Management Act.   spring Semiannual Report, 
Other HHS-Related 
Reviews and 
Investigations section 
(a)(14)-(16)  Results of peer reviews of HHS OIG conducted by other  Appendix B 
OIGs or the date of the last peer review, outstanding 
recommendations from peer reviews, and peer reviews 
conducted by HHS OIG of other OIGs 
(a)(17)  Investigative statistical tables  Appendix E 
(a)(18)  Metrics description for statistical tables  Appendix E 
(a)(19)  Investigations on senior Government employees  Appendix E 
(a)(20)  Description of whistleblower retaliation instances  Appendix E 
(a)(21)  Description of attempts to interfere with OIG independence  Appendix E 
(a)(22)  Description of closed and nondisclosed reports and  Appendix E 
investigations regarding senior Government employees 
 
Other Reporting Requirements 
 
Section  Requirement  Location 
845  Significant contract audits required to be reported pursuant  Other HHS-Related 
to the National Defense Authorization Act for FY 2008  Reviews and 
(P.L. No. 110-181),  845.  Investigations section 
205  Pursuant to HIPAA (P.L. No. 104-191),  205, the Inspector  Reported annually in the 
General is required to solicit proposals annually via a Federal  fall Semiannual Report, 
Register notice for developing new and modifying existing  Appendix G 
safe harbors to the anti-kickback statute of the Social   
Security Act,  1128(b) and for developing special fraud 
alerts.  The Inspector General is also required to report 
annually to Congress on the status of the proposals received 
related to new or modified safe harbors. 
1553  Pursuant to the American Recovery and Reinvestment Act of  Other HHS-Related 
2009, P.L. No. 111-5,  1553, OIG reports to Congress the  Reviews and 
retaliation complaint investigations it decided not to 
Investigations section 
conduct or continue during the period. 
75 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Appendix F: Reporting Requirements in the 
Inspector General Empowerment Act of 2016 
 
The Inspector General Empowerment Act of 2016 (IGEA) establishes new reporting requirements for the 
Semiannual Reports.  These requirements amend portions of  5 of the Inspector General Act.  The 
requirements are below in italics, followed by OIGs responses.  
 
Each Inspector General shall, not later than April 30 and October 31 of each year, prepare 
semiannual reports summarizing the activities of the Office during the immediately preceding six-
month periods ending March 31 and September 30.  Such reports shall include, but need not be 
limited to- 
(10) A summary of audit, inspection, and evaluation reports issued before the commencement of the 
reporting period- 
(A) for which no management decision has been made by the end of the reporting period (including 
the date and title of each such report), an explanation of the reasons such management decision has 
not been made, and a statement concerning the desired timetable for achieving a management 
decision on each such report;  
 
For audit, inspection, and evaluation reports issued from FY 2011 through FY 2018, OIG had 91 
reports with overdue final management decisions.1 
 
OIG is unable to provide reasons and timetables for each of these overdue management decisions, 
due to the volume and that OIG did not historically track this information.  
 
(B) for which no establishment comment was returned within 60 days of providing the report to the 
establishment; and  
 
For draft reports that include recommendations, OIG typically requests establishment comments 
within 30 days.  In some instances, OIG grants extensions when requested and appropriate.  When 
OIG does not receive establishment comments or a request for extension within the 30-day 
timeframe, OIG typically issues the report and notes the lack of establishment comments.   
 
For this semiannual reporting period, OIG had no reports with comments exceeding 60 days.   
 
(C) for which there are any outstanding unimplemented recommendations, including the aggregate 
potential cost savings of those recommendations.  
 
 
1 OIG can track the status of management decisions for all reports back to FY 2011.  OIG can track the status of management 
decisions for audit reports back to FY 1990.  We have identified 6 additional audit reports with overdue management decisions 
from FY 1990 through FY 2010.   
76 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
OIG is actively tracking 1,133 unimplemented open recommendations made in reports issued since 
FY 2011.  Given the volume of recommendations OIG makes each year, the table below reflects 
summary data by FY: 
 
FY (2011 Number of Reports  Number of  Dollar Value of   
2018)  with Unimplemented  Unimplemented  Aggregate Potential 
 
Recommendations  Recommendations  Cost Savings 
 
2011  15  27  $434,404,003 
 
2012  30  36  $397,825,976 
2013  41  77  $264,181,505   
2014  35  69  $15,170,192,492 
 
2015  44  88  $359,882,015 
 
2016  51  132  $193,929,887 
 
2017  60  247  $1,896,324,293 
2018  114  457  $2,527,665,306   
Totals  390  1,133  $21,244,405,477 
 
 
OIG annually produces a Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs: Top 
Unimplemented Recommendations (previously known as the Compendium of Unimplemented 
Recommendations) which constitutes OIGs response to a specific requirement of the Inspector 
General Act, as amended ( 5(a)(3)).  It identifies significant recommendations with respect to 
problems, abuses, or deficiencies for which corrective actions have not been completed.  It also 
includes an appendix listing OIGs significant unimplemented recommendations, which represent 
opportunities to achieve expected impact through cost savings, improvements in program 
effectiveness and efficiency, or increasing quality of care and safety of beneficiaries.  In OIGs view, 
these recommendations would most positively impact HHS programs in terms of cost savings 
and/or quality improvements and should therefore be prioritized for implementation.   
 
 (17) Statistical tables showing- 
(A) the total number of investigative reports issued during the reporting period; 
(B) the total number of persons referred to the Department of Justice for criminal prosecution during 
the reporting period; 
(C) the total number of persons referred to State and local prosecuting authorities for criminal 
prosecution during the reporting period; and 
(D) the total number of indictments and criminal informations during the reporting period that 
resulted from any prior referral to prosecuting authorities; 
77 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
Total number of investigative reports issued during the reporting period,  0 
including Management Implication Reports and Investigative Advisories 
Total number of persons referred2 to Federal prosecuting authorities for  1,301 
criminal prosecution during the reporting period3   
Total number of persons referred to State and local prosecuting authorities  179 
for criminal prosecutions during the reporting period  
Total number of Federal indictments and criminal informations during the  524 
reporting period that resulted from any prior referral to prosecuting 
authorities 
Total number of State and local indictments and criminal informations during  123 
the reporting period that resulted from any prior referral to prosecuting 
authorities 
 
(18) A description of the metrics used for developing the data for the statistical tables under 
paragraph (17);  
 
Regarding (17)(A), OIG considers Investigative Reports as Management Implication Reports 
and Investigative Advisories.  A Management Implication Report identifies systemic 
weaknesses or vulnerabilities within HHS programs, which are generally identified during the 
course of an OIG investigation and could lead to fraud, waste, or abuse.  It provides 
recommendations to correct or minimize the problem.  Corrective actions may require 
administrative, procedural, policy, regulatory, or legislative change.  When a Management 
Implication Report is issued to an HHS OPDIV or STAFFDIV, it is generally signed by the 
Inspector General.  Investigative Advisories are similar documents that bring renewed attention 
to an identified HHS issue and are generally signed by the Deputy Inspector General for 
Investigations.  
 
Regarding (17)(B) and (C), OIG defines this measure as the term "presentations" to both 
Federal and State/local prosecuting jurisdictions as the representation of the work we do.  For 
example, when OIG opens an investigation, it evaluates the complaint and decides whether to 
"present" the matter for prosecution.  Generally, if the case has prosecutorial merit, and is 
accepted for Federal prosecution, OIG works with DOJ as the primary investigative agency, as 
opposed to referring the matter to DOJ without further involvement on OIG's part.  OIG works 
with State and local prosecutorial authorities in addition to working with DOJ.  
 
Regarding (17)(D), the table above provides the number of indictments/criminal informations 
during the semiannual reporting period, including sealed indictments/criminal informations.  
However, the information cannot be limited to only those that occurred as a result of a 
 
 
2 A referral includes OIG presentations to DOJ and/or State/local prosecutorial authorities.   
3  OIG counts persons as both individuals and entities.   
78 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
presentation in a previous period.  In certain situations, the presentation and charging dates 
are in the same reporting period.  
 
 (19) A report on each investigation conducted by the Office involving a senior Government employee 
where allegations of misconduct were substantiated, including a detailed description of- 
(A) the facts and circumstances of the investigation; and 
(B) the status and disposition of the matter, including- 
(i) if the matter was referred to the Department of Justice, the date of the referral; and 
(ii) if the Department of Justice declined the referral, the date of the declination; 
 
To respond fully to this subparagraph, OIG would need to make a finding of misconduct.  However, 
OIG does not make findings regarding its investigations relating to substantiated allegations of 
departmental employee misconduct.  Our reports relay the facts obtained during the investigations 
(e.g., parties involved, dates of events) related to any substantiated allegations.  At the conclusion 
of an OIG investigation related to substantiated allegations concerning possible employee 
misconduct, OIG provides a report to management in the employing agency.  The agency 
management makes determinations of employee misconduct.  The disposition of the matter and 
any resulting administrative actions are taken by the agency.   
 
However, we request from the agency a copy of an SF-50 documenting a personnel action, if one is 
taken.  To the extent that we have information regarding subsequent administrative action, OIG can 
provide that information.  However, because there are sometimes settlement agreements that may 
impact the final action, OIG may not have a complete record of the disposition of the investigation.  
Accordingly, such information might be more efficiently and effectively provided directly by the 
employing agency.   
 
For this section, OIG describes investigations during this reporting period, both criminal and 
administrative, involving senior Government employees for whom allegations of misconduct were 
substantiated.  The descriptions below include a level of detail appropriate for each investigation, 
depending on whether the case details were available in public documents.  During this reporting 
period, OIG investigated two senior Government employees for misconduct, and OIG determined 
the allegations to be substantiated, but no prosecution resulted.  Descriptions of the investigations 
are below.  
 
DOJ  DOJ 
DOJ  Referral  DOJ  Declination 
Description of Investigation  Status  Disposition  Referral  Date  Declination  Date 
A proactive analysis revealed an 
Eighteen months 
IP address associated with the 
in prison 
transfer of child exploitation 
Closed  suspended; 3  Yes  9/6/2016  N/A  N/A 
material on peer-to-peer 
years supervised 
networks, which was also used 
probation with 
for VPN access to HHS networks. 
79 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
special conditions, 
and court costs.  
Removal. 
Request for assistance was 
received from the Montgomery 
County, Maryland Department of 
Police regarding an investigation 
Closed  Removal.  No  N/A  N/A  N/A 
of a HRSA employee who has 
been allegedly communicating 
with an undercover detective 
posing as a male teenager. 
 
20) A detailed description of any instance of whistleblower retaliation, including information about 
the official found to have engaged in retaliation and what, if any, consequences the establishment 
imposed to hold that official accountable; 
 
For departmental agencies, OIG conducts investigations and gathers facts related to whistleblower 
complaints.  Before 2015, OIG made no determinations as to whether retaliatory action had been 
taken.  However, to better facilitate the report review process, OIG changed its process in 2015 to 
include findings in its reports as to whether it was more likely than not that whistleblower 
retaliation had occurred.  While OIG now includes these findings in its reports, it does not make 
recommendations as to what, if any, corrective action(s) should be taken.   
 
During the time period from April 1, 2018, through September 30, 2018, OIG did not issue any 
reports that included findings of retaliation. 
 
When determining the level of detail to provide for a description of any instance of whistleblower 
retaliation, OIG is always mindful of the risk that a detailed description of the allegation could 
inadvertently reveal the whistleblowers identity, thus having a chilling effect on future 
whistleblowers.  
 
(21) A detailed description of any attempt by the establishment to interfere with the independence of 
the Office, including- 
(A) with budget constraints designed to limit the capabilities of the Office; and 
(B) incidents where the establishment has resisted or objected to oversight activities of the Office 
or restricted or significantly delayed access to information, including the justification of the 
establishment for such action; and 
 
Although there have been instances in which HHS agencies have questioned OIG oversight 
activities or have not provided all information in the precise content, format, and timeline as 
requested, OIG has not identified any instances in which HHS interfered with the independence of 
OIG during this reporting period.  OIG would immediately notify Congress if it were unable to 
resolve these issues within HHS.   
80 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
 
(22) Detailed descriptions of the particular circumstances of each- 
(A) inspection, evaluation, and audit conducted by the Office that is closed and was not 
disclosed to the public; and 
 
The table below lists evaluation and audit reports for this semiannual reporting period that did not 
result in public reports.  However, in some circumstances, a public summary of these nonpublic 
reports was published.   
 
Nonpublic Reports by Category, April 1, 2018, to September 30, 2018 
 
Number of 
Category/Description 
Reports 
IT security reviews (involve IT systems, e.g., penetration test audits)  5  
Homeland security issues (involve particularly sensitive topics, e.g., bioterrorism, 
  
emergency preparedness, and classified or potentially classified information) 
Recipient Capability Audits (primarily in Head Start/Early Head Start programs)    
Reimbursable audits performed for other Federal agencies (primarily contract 
  
audits) 
Confidential or proprietary information (e.g., Medicare Part B drug 
  
claims/imaging services, Medicare investment income) 
Medicare Adverse Event Reviews (required by law not to disclose)    
Medicare Prescription Drug Event Reviews    
Other    
HHS technical assistance reports4    
Finance-related attestation reviews  2  
   Total  7  
 
(B) Investigation conducted by the Office involving a senior Government employee that is closed and 
was not disclosed to the public.  
 
In section 5(a)(19), we detail investigations of senior Government employees in which allegations 
were substantiated.  Those investigations are all closed and none have been disclosed to the 
public.  OIG interprets section 5(a)(22)(B) as requiring reporting on investigations with either 
substantiated or unsubstantiated allegations.  As such, we refer to our section 5(a)(19) response to 
address investigations of senior Government employees in which allegations were substantiated 
that were closed and not disclosed to the public.  Our section 5(a)(22)(B) response describes 
 
 
4 OIG routinely provides technical assistance to HHS.  Generally, that technical assistance is not part of a formal report and is not 
formally tracked.  However, in some limited circumstances, OIG does provide technical assistance in a formal report, and only that 
category of technical assistance is reflected in this table.   
81 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
investigations during this reporting period, both criminal and administrative, involving a senior 
Government employee in which OIG did not substantiate allegations of misconduct.   
 
When determining the level of detail to provide for the investigations described above, OIG is 
mindful of the risk that a detailed description of the investigation could inadvertently reveal the 
subjects identity.  During this reporting period, OIG investigated one senior Government 
employees for misconduct, but OIG determined the allegations to be unsubstantiated.  
Descriptions of the investigations are below.  
 
Description of Investigation  Status  Disposition  DOJ  DOJ  DOJ  DOJ 
Referral  Referral  Declination  Declination 
Date  Date 
It was alleged that a chief operating 
officer kept a former director on the 
payroll for three months after the 
No 
individual resigned.  The chief 
evidence 
operating officer allegedly 
Closed  to support  No  N/A  N/A  N/A 
instructed a management official to 
allegations
secretly move the former director 
. 
without alerting other 
administrative officials across the 
agency. 
A senior Government employee was  No 
alleged to have changed their duty  evidence 
location to receive per diem and  Closed  to support  Yes  12/2016  Yes  12/2016 
other travel benefits such as plane  allegations
tickets to travel home each week.  . 
A senior Government employee was  No 
alleged to have conflicts of interest  evidence 
with contractors, abused their  Closed  to support  Yes  05/2016  Yes  05/2016 
authority, and mismanaged  allegations
personnel matters.  . 
No 
A senior Government employee was  evidence 
alleged to have colluded with a  Closed  to support  No  N/A  No  N/A 
contractor to escalate billing costs.  allegations
. 
A senior Government employee was  No 
alleged to have falsely grown their  evidence 
division into an office to acquire  Closed  to support  No  N/A  No  N/A 
grants and Senior Executive Service  allegations
title.  . 
 
 
 
82 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
Appendix G: Anti-Kickback StatuteSafe 
Harbors 
 
Pursuant to the Health Insurance Portability and Accountability Act (HIPAA),  205, the Inspector General is 
required to solicit proposals annually via a Federal Register notice for developing new and modifying 
existing safe harbors to the anti-kickback statute, section 1128B(b) of the Social Security Act and for 
developing special fraud alerts.  The Inspector General is also required to report annually to Congress on 
the status of the proposals received related to new or modified safe harbors.  
 
In crafting safe harbors for a criminal statute, it is incumbent upon OIG to engage in a complete and 
careful review of the range of factual circumstances that may fall within the proposed safe harbor subject 
area to uncover all potential opportunities for fraud and abuse by unscrupulous providers.  Having done 
so, OIG must then determine, in consultation with DOJ, whether it can develop effective regulatory 
limitations and controlsnot only to foster beneficial or innocuous arrangements but also to protect the 
Federal healthcare programs and their beneficiaries from abusive practices. 
 
Public proposals for new and modified safe harbors  
In response to the 2017 annual solicitation, OIG received the following proposals related to safe harbors: 
 
Proposal  OIG Response 
New safe harbors to facilitate coordinated  On August 27, 2018, OIG issued a RFI seeking input from 
care and promote alternative payment  the public on how to address any regulatory provisions 
models so physicians can pursue integration  that may act as barriers to coordinated care or value-
options that are not hospital driven.   based care as well as other related topics, which 
encompasses the subjects presented in this proposal.  See 
83 Fed. Reg. 43607.  Comments are due by October 26, 
2018, and will be considered at that time.  OIG is 
reviewing the comments received.  In the meantime, 
questions about the application of the anti-kickback 
statute to specific arrangements should be addressed on 
a case-by-case basis, such as under the advisory opinion 
process. 
New or modified safe harbors for incentive  On August 27, 2018, OIG issued a RFI seeking input from 
payment arrangements between hospitals  the public on how to address any regulatory provisions 
and other providers operating under current,  that may act as barriers to coordinated care or value-
proposed, and new CMS alternative payment  based care as well as other related topics, which 
models.  encompasses the subjects presented in this proposal.  
See 83 Fed. Reg. 43607.  OIG is reviewing the comments 
received.  In the meantime, questions about the 
application of the anti-kickback statute to specific 
83 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
arrangements should be addressed on a case-by-case 
basis, such as under the advisory opinion process.  
Modify the existing Cooperative Hospital  OIG is considering modifying this safe harbor to address 
Services Organization (CHSO) safe harbor  the concerns described in this proposal.  
(42 C.F.R.  1001.952(q)) to clarify that the 
safe harbor protects only CHSO 
arrangements that involve the provision of 
items or services that are components of the 
direct or indirect overhead costs associated 
with the inpatient or outpatient hospital 
services of nonprofit patron-hospitals. 
New safe harbors to protect value-based  On August 27, 2018, OIG issued a RFI seeking input from 
purchasing and payment arrangements that  the public on how to address any regulatory provisions 
bundle products and related services, to  that may act as barriers to coordinated care or value-
protect value-based care including value- based care as well as other related topics, which 
based risk-sharing network arrangements,  encompasses the subjects presented in this proposal.  
and to protect value-based price adjustments  See 83 Fed. Reg. 43607.  OIG is reviewing the comments 
with clinical or cost-related outcome-based  received.  In the meantime, questions about the 
assurances.   application of the anti-kickback statute to specific 
arrangements should be addressed on a case-by-case 
basis, such as under the advisory opinion process. 
A new safe harbor to protect arrangements  On August 27, 2018, OIG issued a RFI seeking input from 
that support patient adherence to a  the public on how to address any regulatory provisions 
prescribed treatment or medication regimen.  that may act as barriers to coordinated care or value-
based care as well as other related topics, which 
encompasses the subjects presented in this proposal.  
See 83 Fed. Reg. 43607.  OIG is reviewing the comments 
received.  In the meantime, questions about the 
application of the anti-kickback statute to specific 
arrangements should be addressed on a case-by-case 
basis, such as under the advisory opinion process. 
New safe harbors that permit sharing and  On August 27, 2018, OIG issued a RFI seeking input from 
donating items and services related to  the public on how to address any regulatory provisions 
cybersecurity, with an emphasis on training  that may act as barriers to coordinated care or value-
and education services, software, and  based care as well as other related topics, which 
technology.   encompasses the subjects presented in this proposal.  
See 83 Fed. Reg. 43607.  OIG is reviewing the comments 
received.  In the meantime, questions about the 
application of the anti-kickback statute to specific 
arrangements should be addressed on a case-by-case 
basis, such as under the advisory opinion process. 
Modify the current managed care safe  On August 27, 2018, OIG issued a RFI seeking input from 
harbor (42 C.F.R.  1001.952(t)) to add  the public on how to address any regulatory provisions 
Medicare Part D Sponsors to the list of  that may act as barriers to coordinated care or value-
84 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
eligible MCOs and to modify the definition of  based care as well as other related topics, which 
items and services to include care  encompasses the subjects presented in this proposal.  
coordination, case management, chronic  See 83 Fed. Reg. 43607.  OIG is reviewing the comments 
care and disease management, support for  received.  In the meantime, questions about the 
transitioning patients between different care  application of the anti-kickback statute to specific 
settings, and discharge planning.  arrangements should be addressed on a case-by-case 
basis, such as under the advisory opinion process.  
New or modified safe harbors to protect  OIG is not adopting this suggestion. Financial assistance 
donations to independent charitable  programs could vary greatly and should be addressed 
foundations and to enable financial  on a case-by-case basis, such as under the advisory 
assistance from both charitable entities and  opinion process. 
directly from drug manufacturers.  
A new safe harbor to protect the infrequent  OIG is not adopting the suggestion to protect a health 
and nominal incentives given by a health  plans gifts to network providers because it does not 
plan to a network providers office or staff,  satisfy the criteria for modifying or establishing safe 
such as a token of nominal amount or lunch  harbor provisions, such as fostering access to healthcare 
for the office, as recognition for efforts  services or improving the quality of healthcare services. 
associated with the delivery of preventative  However, to the extent efforts associated with 
care.    encouraging the delivery of preventive care might be 
enhanced through safe harbors for coordinated care, on 
August 27, 2018, OIG issued a RFI seeking input from the 
public on how to address any regulatory provisions that 
may act as barriers to coordinated care or value-based 
care as well as other related topics.  See 83 Fed. Reg. 
43607.  OIG is reviewing the comments received.  In the 
meantime, questions about the application of the anti-
kickback statute to specific arrangements should be 
addressed on a case-by-case basis, such as under the 
advisory opinion process. 
New safe harbors to extend anti-kickback  OIG does not have authority to change the scope of 
statute waivers for Medicare Shared Savings  activities permitted under the MSSP.  Regarding a safe 
Program (MSSP) accountable care  harbor to protect activities and initiatives outside of the 
organizations to additional activities and care  MSSP, on August 27, 2018, OIG issued a RFI seeking 
initiatives, and to protect all accountable care  input from the public on how to address any regulatory 
organizations and other organizations  provisions that may act as barriers to coordinated care 
implementing alternative payments models,  or value-based care as well as other related topics, which 
and to protect clinically and financially  encompasses the subjects presented in this proposal.  
integrated programs.  See 83 Fed. Reg. 43607.  OIG is reviewing the comments 
received.  In the meantime, questions about the 
application of the anti-kickback statute to specific 
arrangements should be addressed on a case-by-case 
basis, such as under the advisory opinion process. 
Make permanent the regulatory safe harbor  On August 27, 2018, OIG issued a RFI seeking input from 
for donation and financial support of  the public on how to address any regulatory provisions 
85 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2018, through September 30, 2018
 
 
electronic health record software (42 C.F.R.   that may act as barriers to coordinated care or value-
1001.952(y)) and expand the scope of  based care as well as other related topics, which 
covered technologies under the safe harbor.  encompasses the subjects presented in this proposal.  
See 83 Fed. Reg. 43607.  OIG is reviewing the comments 
received.  In the meantime, questions about the 
application of the anti-kickback statute to specific 
arrangements should be addressed on a case-by-case 
basis, such as under the advisory opinion process. 
 
86