HHS Office of Inspector General  
Semiannual  Report to Congress |  Fall 2015  





TOhe IDeGpar tmOenrt  ogf Haealnth  aindz Haumtani Soervnice s (HHS)  Office  of Inspector General  (OIG) provides  
independent and objective oversight that promotes economy, efficiency, and effectiveness in  the 
programs and  operations  of HHS.  OIGs program integrity and  oversight activities  are shaped  by  
legislative and budgetary requirements, and adhere  to professional standards established by the  
Government Accountability Office, the Department of  Justice (DOJ), and the Inspector  General  
community.  OIG carries out  its  mission to protect the integrity  of HHS programs and the health and  
welfare  of the people served by those programs through a nationwide network  of audits, investigations,  
and evaluations conducted  by the following operating components with assistance from OIG counsel   
and management:    
 




S The Office of Audit Services (OAS)  provides auditing services for HHS, either by conducting audits with 
its own audit resources or by overseeing audit work done by others.  Audits examine the  performance  
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of HHS programs,  its grantees and contractors, all of the aforementioned,  in carrying out their  
responsibilitiesand are intended to provide independent assessments of HHS programs and 
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operations.  These assessments help reduce waste, abuse, and mismanagement, promoting economy  
and efficiency throughout HHS.  
  
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The Office of Evaluation  and Inspections (OEI)  conducts national evaluations to provide HHS, Congress, 
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and the public with timely,  useful, and reliable information on significant issues.  These evaluations  
O focus on  preventing fraud, waste, and abuse,  promoting economy, efficiency,  and effectiveness in HHS  
programs.  OEI reports also present practical recommendations for improving program operations.  
   The Office of Investigations (OI)  conducts criminal, civil, and administrative investigations of fraud   
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and misconduct related to HHS programs, operations, and beneficiaries.  With investigators working   
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in every State and the District  of Columbia, OI actively coordinates with DOJ and other Federal, State,  
and local law enforcement authorities.   OIs  investigative efforts often lead to criminal convictions,  
administrative sanctions, or civil monetary penalties (CMPs).  
  
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The Office of Counsel to the Inspector General (OCIG)  renders  general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and provides  all legal  support for OIGs internal  
I
operations.  OCIG represents  OIG in all civil and administrative  fraud and abuse cases involving HHS  
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programs, including the False  Claims Act, program  exclusion, and CMP cases.  In  connection with these  
cases, OCIG also negotiates and monitors corporate integrity agreements.  OCIG renders  advisory  
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opinions, issues compliance program guidance, publishes fraud alerts, and provides other guidance   
to the health care industry on the anti-kickback statute and other OIG enforcement authorities.  
Executive Management (EM)  is composed of the Immediate Office of the Inspector General and the 
  
M Office of Management and Policy.   EM is responsible for overseeing the activities of OIGs  components;  
setting vision and direction, in collaboration with the components, for OIGs priorities and strategic 
planning; ensuring effective management of budget, finance, information technology,  human 
E resources, and other operations; and serving as a liaison with HHS, Congress, and other stakeholders.   
EM plans, conducts, and participates in a variety of cooperative projects within HHS and with other  
Government agencies.     HHS Office of Inspector General  
Semiannual  Report to Congress |  Fall 2015  
A Message  From the 
This Semiannual Report to  Congress, submitted pursuant to  the Inspector  
General Act of  1978, as amended, summarizes the activities of the Office of  
Inspector  General  
Inspector General (OIG), Department  of Health and Human Services (HHS  or 
the Department),  for  the 6-month period that ended September 30,  2015.   Daniel R. Levinson  
Ins pector General  
OIGs mission is to protect  the integrity of HHS programs, as well as the health  
and welfare  of program beneficiaries.   The work we perform to accomplish that  
mission directly affects an important  measure of Government effectiveness:   
the improper payment rate.  The improper payment rate, however, is more  
than just a  measure of  error; improper payments can  degrade the integrity of  
Government programs.   
OIG investigations, audits,  and evaluations can help the Department reduce  
improper payments by providing information and recommendations designed  
to  ensure that the Department can pay  the right person the right amount for  
the right reasons and lessen the negative impact of improper payments.   
Our work identifies improper payments, which sometimes may be caused by  
fraud, but may also indicate questionable billing patterns that could lead to  
waste or signal other problems, such as low quality  of care.   During this  
reporting  cycle,  OIG participated in the largest nationwide Strike Force 
operation in history.   This operation involved  over  $700  million in potential   
false billings to Medicare and Medicaid and resulted in charges against  243  
defendants.  In a  recent report,  OIG also identified 329 general dentists and   
6  orthodontists in Californias Medicaid program  who  had questionable billing  
patterns  and received  $117.5  million in  2012.  The patterns indicated that  
providers  may be performing unnecessary procedures to increase profits and,   
in so doing, may be  exposing patients to harm from  medically unnecessary  
services.     
OIG reports recommend improvements to correct problems  that contribute to  
improper payments  or policies that contribute to wasteful spending.  One such  
report identified prepayment edits that Medicare contractors could implement  
to prevent overpayments for selected  outpatient drugs.  This report resulted in  
the majority  of  Medicare contractors educating providers to prevent similar  
future overpayments.  Another report found that the payment  system  for skilled  
nursing facilities creates incentives for  these facilities  to bill for the highest level 
of therapy and recommended that the Centers for Medicare & Medicaid  
Services reevaluate this system.      
OIG  endeavors  to examine new programs early in their implementation  to  
pinpoint potential issues to curb or  reduce the  magnitude of improper  
payments.  For  example, as the Department continued its implementation  of  
the health insurance  marketplaces,  OIG identified specific high-risk areas, such   HHS Office of Inspector General  
Semiannual  Report to Congress |  Fall 2015  
as  eligibility  and contractor oversight, that warranted  heightened attention to  
better  ensure the integrity  of these new programs.  A  related  report from  this  
cycle found that internal controls did not effectively  ensure the accuracy  of 
nearly  $2.8 billion in aggregate financial assistance payments  made  to insurance  
companies offering plans on  the  health  insurance marketplaces.   With that  
information, the Department and other stakeholders can identify appropriate  
steps to address the risks identified by OIG.      
OIG recognizes  that individual vulnerabilities may also signal systemic issues in a 
program  or across  multiple  programs.  In June  2015, OIG released a Portfolio  
Report summarizing findings of OIG investigations, audits, evaluations, and  
legal guidance  regarding  Medicare Part D.   The Portfolio  Report offered  
recommendations to address systemic weaknesses in  the use  of data to identify  
vulnerabilities, as well as in the  oversight provided by  plan sponsors, program  
integrity contractors, and CMS.  In September  2015, OIG issued a  report that  
evaluated  13 awarding agencies within the  Department.  We found limitations  
in the  variety of sources  of information and communication that granting  
officials use to  mitigate grantee risks.  Those findings raise concerns about  
whether granting officials across  multiple programs have all available  
information to assess and  mitigate risks relating to poor performance  and  
misuse of grant funds, which could lead to a higher risk of improper payments.  
Since  its establishment  in 1976, OIG has worked diligently with its partners to  
protect HHSs vital health and human services programs by, in part, addressing 
the negative impacts of improper payments.  Since that time,  OIGs  mission has  
expanded because  of the rapidly changing health care economy and the 
Departments  $1 trillion portfolio in programs and  operations.  The  
achievements  of  this  office  would not be possible without the dedication and  
professionalism of all OIG employees.  Once again, I would also like to express  
my  appreciation to Congress and to the  Department for their sustained  
commitment to supporting the important work of our  office.  
Daniel R. Levinson 




Inspector General 



  HHS Office of  Inspector General   Page i  
Semiannual Report to Congress |  Fall 2015  
The Department  of Health  and Human Services  (HHS or the Department) Office  of Inspector General 
(OIG) Semiannual  Report to Congress  (Semiannual Report) describes significant problems, abuses,  
Highlights  
deficiencies, and investigative  outcomes  on  the administration  of HHS programs and operations that  
were disclosed during the  reporting period.   This edition addresses  work completed during the  second  
half of fiscal year (FY)  2015 (April  to  September) and summarizes  key accomplishments during the  
period.       
Accomplishments  
For  FY 2015, OIG reported  expected recoveries  of over  nearly $3.35  billion,  consisting  of nearly $1.13  
billion  in audit receivables, and over  $2.22 billion in investigative receivables,  which include  over $286.6  
million in non-HHS investigative receivables resulting from  our work in  areas such as the States shares of  
Medicaid restitution.   
Also during FY  2015, OIG  reported  925  criminal actions against individuals or entities that  engaged   
in crimes against HHS programs; it also  reported  682  civil actions,  which include false claims and   
unjust-enrichment lawsuits filed in Federal district court, civil monetary penalties  settlements, and  
administrative recoveries related to provider self-disclosure matters.   We  also reported exclusions  of  
4,112  individuals and entities from participation in  Federal health care programs.   HHS Office of Inspector General   Page ii  
Semiannual Report to Congress |  Fall 2015  
OIG  Investigative  Receivables  (FY  2011-15) 
(in billions) 
$6.0  
$5.0  
$4.6  
$4.1  
$3.0  
$2.2  
$2.B  
FY  2011   FY  2012   FY  2013   FY  2014   FY  2015   HHS Office of Inspector General   Page iii  
Semiannual Report to Congress |  Fall 2015  
OIG  Criminal  and  Civil  Actions  (FY  2011-15)  
960   971  
925  
800  
778  
723  
682  
600  
533  
472  
400  
382  
367  
200  
FY  2011   FY  2012   FY  2013   FY  2014   FY  2015  
Criminal  Actions   Civil  Actions  
Strike Force  and other  fraud  accomplishments  
The Health Care Fraud Prevention and Enforcement Action  Team (HEAT)  was started in 2009 by HHS and  
the U.S. Department of Justice to strengthen programs and  to  invest in new resources and  technologies  
aimed at preventing and combatting health care fraud, waste, and abuse.  HEAT has continued to  
identify and hold accountable those  who seek to defraud Medicare and Medicaid.  
Medicare Fraud Strike Force teams, a key component  of HEAT,  coordinate law enforcement operations  
conducted jointly by Federal, State, and local law enforcement entities.   The teams have a record of  
successfully analyzing data to quickly identify, investigate, and prosecute fraud.   Launched in March  
2007, the  Strike Force  model  now operates  in Miami, Florida; Los  Angeles, California;  Detroit, Michigan;  
southern  Texas;  Brooklyn,  New  York; southern Louisiana; Tampa, Florida; Chicago, Illinois; and Dallas,  
Texas.   During  FY 2015, Strike Force efforts  resulted in  the filing of charges  against 232 individuals  or 
entities, 225  criminal actions, and over $357.8  million in investigative receivables,  as  shown on the   
next page.     HHS Office of Inspector General  Page iv 
Semiannual Report to Congress | Fall 2015 
 
Strike Force Criminal Actions (FY 2011 -15) 
300   
 
251 
250 
 
200 
   181  183 
150 
100 
50 
0 
FY 2011  FY 2012  FY 2013  FY 2014  FY 2015 
  HHS Office of Inspector General   Page v  
Semiannual Report to Congress |  Fall 2015  
Strike  Force  Investigative  Receivables  (FY  2011-15)  
(in  millions) 
$441  
450  
400  
$357  
350   $333  
300  
250   $224 
200  
$151  
150  
100  
50  
0  
FY 2011   FY 2012   FY 2013   FY  2014   FY 2015  
Strike Force case examples    
Fraudulent Part  D claims    Nationwide  
In June 2015, a nationwide  takedown led by the Medicare Fraud Strike Force resulted in charges against  
243 defendants, including doctors, nurses, and  other licensed  medical  professionals.  These defendants  
were charged in  various health care fraud-related  crimes, including conspiracy to  commit health care  
fraud,  violations of the  anti-kickback statute,  money laundering, and aggravated identity  theft.  The 
charges  were  based on  a variety of alleged  fraud schemes; these involved  various medical treatments  
and services, including home health care,  psychotherapy, physical and  occupational therapy, durable  
medical equipment,  and pharmacy fraud.   More  than 44 of the defendants were  charged with fraud  
related to  the  Medicare prescription drug benefit program, known  as Part D,  the fastest-growing  
component of the Medicare program.   According to court documents,  the defendants participated in  
alleged schemes to submit  claims  to Medicare and  Medicaid for treatments that  were medically  
unnecessaryand  often never provided.   In many cases, patient recruiters, Medicare beneficiaries, and  
other co-conspirators allegedly were paid cash kickbacks in return for supplying beneficiary information  
to providers.   The  providers then submitted  fraudulent bills to Medicare for services that  were  medically  
unnecessary  or never performed.   The takedown, the largest in Strike Force history, was  part of a  HHS Office of Inspector General   Page vi  
Semiannual Report to Congress |  Fall 2015  
coordinated operation  across  17  districts  and  potentially  involved over $700  million in false billings to  
Medicare and Medicaid.  
Fraudulent  health care claims    Southern Texas Strike Force  
Earnest Gibson III, Earnest  Gibson IV,  Mohammad Kahn, and Regina Askew  were  sentenced  to a  
combined  117  years of incarceration.  They  were also  ordered to pay  more than  $46  million in joint and  
several restitution after being convicted  of conspiracy  to commit health care fraud  and  conspiracy to pay  
and  receive kickbacks. Gibson III and Gibson IV also  were convicted  of conspiracy to commit  money  
laundering.   The  scheme involved more than  $158 million  in  false  claims  to Medicare  for  partial 
hospitalization  program (PHP) services  that were medically unnecessary, not eligible for  reimbursement,  
and were not provided.   To facilitate the scheme, the defendants  offered and paid kickbacks, including 
cash, cigarettes, and food, to patient recruiters, group  home  owners, and assisted living facility  owners in  
exchange for sending Medicare beneficiaries  to  Riverside General Hospital  and its  satellite facilities.   
Here,  the  patients watched television, played games, and engaged in other non-PHP activities rather  
than receive  the  PHP services for which  the hospital billed Medicare.   
Michigan    Oncologist Farid Fata was sentenced to  45 years in prison and  ordered to forfeit  more  than  
$17  million after pleading guilty to charges of health care fraud, conspiracy to pay or receive kickbacks,  
and money laundering.   Fata, who  owned and operated the cancer treatment  clinic Michigan  
Hematology Oncology, P.C., admitted  that he prescribed and administered aggressive chemotherapy,  
cancer treatments, intravenous iron, and  other infusion therapies to  553 patients  who did not need  
these  therapies, in order to increase his billings to  Medicare and  other  insurance companies.   He then  
submitted fraudulent claims to Medicare and  other insurers for  these unnecessary treatments.   In total,  
Fata submitted approximately  $34  million in fraudulent claims to  Medicare and private insurance  
companies.  
Prescription Drug Fraud Scheme  
New York    Kevin Lowe  was convicted  of conspiracy to  distribute and possess with intent to distribute  
oxycodone.   Lowe owned  and operated  Astramed,  a  series of purported medical clinics  with multiple  
locations in the Bronx, New York.   Astramed  doctors were paid cash in exchange for writing tens of  
thousands of medically  unnecessary  prescriptions  for large  quantities of oxycodone.   These prescriptions  
were then filled at pharmacies by co-conspirators who, in turn, resold and distributed the drugs  at vastly  
inflated rates.  Patient recruiters would bring beneficiaries to the clinic,  where they would  receive  a 
doctor  visit that  typically lasted  just  a minute or two  without any  actual physical examination, but  
consistently resulted in a  prescription for a large dose  of oxycodone.   On a daily basis, crowds  of up to  
100 people  gathered outside the clinics waiting to see one of the doctors and receive a prescription for  
oxycodone.   The patient would often  be escorted by a patient recruiter,  or crew member,  to a  
pharmacy to fill the prescription.   The crew  member  would then pay the patient and take possession   
of and ultimately sell the oxycodone on  the street.  In  total, Astramed issued approximately 31,500  
medically unnecessary prescriptions for oxycodone, comprising nearly 5.5  million  tablets with a street  
value of  up to  $165  million.   Lowe  is awaiting sentencing  in  November 2015.   HHS Office of Inspector General   Page vii  
Semiannual Report to Congress |  Fall 2015  
International Health Care Fraud Scheme  
Miami    Mirna Blanco  was  sentenced  to 2  years in prison and ordered to  pay $16 million  in  joint and  
several restitution after pleading guilty to conspiracy to commit health care fraud and wire fraud.   Blanco  
submitted fraudulent  Medicare  and Medicaid  enrollment applications for  beneficiaries, which claimed  
that the beneficiaries resided in Florida.   However, these applicants actually resided in Nicaragua and   
the Dominican Republic.   To  falsely represent that the foreign residents lived in Florida,  Blanco and her  
co-conspirators  used  nonresidential addresses, addresses belonging to the  relatives and friends  of  these  
foreign residents, and addresses  associated  with  the defendants.   
Inefficient  payments, policies,  and practices  
Medicare and Medicaid policies  or practices sometimes result in inefficiencies when unintended  
loopholes  or  other inherent problems invite  exploitation or hinder consistent payment determinations.  
Improper payments  occur  when the programs do not effectively prevent, deter, identify, or address  
inappropriate  and abusive  billing by providers and suppliers.  Some, but not all, abusive billing   
is fraudulent.    
Examples of our  work follow:  
Texas Paid Millions for Unallowable  Medicaid Orthodontic Services  (A-06-11-00048



 
http://oig.hhs.gov/oas/reports/region6/61100048.pdf)  June 2015


 

Texas did not ensure that  requests for prior authorization of Medicaid orthodontic services were  
approved in accordance  with State Medicaid guidelines.  We estimated  that Texas paid at least $133.4  
million  for unallowable orthodontic services.  Of 106 sampled orthodontic  prior-authorization requests,  
89  were improperly approved:   78 did not qualify for orthodontic services, and  11 did not have sufficient  
documentation to determine whether they qualified.   
Medicare Part B Overpaid Millions for  Selected Outpatient  Drugs  (A-09-14-02024 




http://oig.hhs.gov/oas/reports/region9/91402024.asp)  July 2015 



 
Medicare contractors in 13  jurisdictions  overpaid providers $35.8 million for selected outpatient drugs  
from July 1, 2009, through  June 30, 2012.  For  88 percent of the overpayments, providers  billed either 
incorrect  units of service or, otherwise,  a combination  of incorrect units  of service and incorrect  
Healthcare  Common Procedure Coding System codes.  The  Medicare claims processing systems did not  
have sufficient prepayment edits in place to  prevent all overpayments.  CMS  said that,  as of May 4, 2015,  
Medicare contractors had recovered  63 percent of the $35.8 million in  overpayments, and 10  of  the  
13  Medicare contractors had used the  results of our  audits in ongoing provider education activities.   
Missouri Claimed Unallowable Federal Reimbursement for  Some Medicaid Physician-Administered  
Drugs  (A-07-14-06051   http://oig.hhs.gov/oas/reports/region7/71406051.pdf)  April 2015  
Missouri did not always comply  with Federal Medicaid requirements for billing drug manufacturers for 
rebates for physician-administered drugs.  Missouri did not collect the  National Drug Codes (NDCs)  that  
were required for it to invoice  manufacturers for rebates associated with about $34.8  million in  
physician-administered drugs.  In addition,  Missouri did not capture the utilization and coding data  
necessary to collect  rebates for all physician-administered drugs.  Without the NDCs,  we were unable to  
determine whether Missouri improperly claimed Federal reimbursement for an  additional $13.2 million   HHS Office of Inspector General   Page viii  
Semiannual Report to Congress |  Fall 2015  
for other physician-administered drug claims.  Federal  reimbursement for covered outpatient drugs  
administered by a physician is not available to States that do not comply  with Federal requirements  
for capturing data to bill and collect rebates.   
Questionable Billing for Medicaid Pediatric Dental Services in California  (OEI-02-14-00480



 
http://oig.hhs.gov/oei/reports/oei-02-14-00480.pdf)  May 2015



  
We identified  329 general dentists and  6  orthodontists in California with questionable billing.  Medicaid  
paid these providers $117.5  million for pediatric dental services in 2012.   These  335 dental providers 
representing 8 percent of the California general dentists and orthodontists we reviewedprovided 
either  a large number of services or certain services  to an extremely large number of  children, among 
other practices.  Half of the dental providers  with questionable billing worked for  dental chains.  The  
California Department of Health Care Services  concurred with all of our recommendations,  which were  
for the State agency  to:  
	 			 increase its  monitoring  of dental providers to identify  patterns  of questionable billing; 
	 			 closely  monitor billing by providers in dental chains; 
	 			 review its payment processes for orthodontic services; and 
	 			 take  appropriate action  against the dental providers identified as having questionable billing. 
Questionable  Billing  and Geographic Hotspots  Point  to Potential Fraud and Abuse in Medicare 
Part D  (OEI-02-15-00190   http://oig.hhs.gov/oei/reports/oei-02-15-00190.pdf)  June 2015 
Spending for Part  D drugs,  especially commonly abused opioids, has grown substantially.   We identified  
questionable billing by  1,400 pharmacies  that  may indicate fraudulent activity.   Each  of these  pharmacies  
billed for extremely high amounts for one or more  of our billing measures.   We also identified  
geographic hotspots for certain drugs that point to possible fraud and abuse.   These findings and  
previous  OIG work demonstrate that more needs to be done to address fraud and abuse in Part  D.   This  
goal  requires CMS to fully implement  OIGs previous  recommendations, which  are summarized in  the 
OIG portfolio  highlighted below.   
Ensuring the Integrity of Medicare Part D  (OEI-03-15-00180   http://oig.hhs.gov/oei/reports/oei-03-
15-00180.pdf)  June 2015    
This portfolio presents an  overview  of OIG investigations, audits,  evaluations, and legal guidance related  
to  Part D.  It synthesizes numerous OIG reports that have identified weaknesses in Part D program  
integrity, and provides updates  on  Departmental  efforts to address these weaknesses.  In particular,  OIG 
has identified weaknesses in the use of data to identify vulnerabilities, as well as  in the  oversight by all 
parties responsible for protecting Part  D:   CMS,  Part  D plan  sponsors,  and  the  Medicare Drug Integrity  
Contractor.   OIG  has made recommendations to strengthen Part  D program integrity, and progress has  
been made.  However,  Part D remains vulnerable to fraud, as  evidenced by  ongoing investigations.   To  
fully  protect Part  D from fraud, waste, and abuse, CMS should take further action and implement  OIGs 
previous recommendations  including:   
	 			 require plan sponsors  to report all potential fraud and  abuse to CMS, the Medicare Administrative 
Contractor, or  both; 
	 			 expand drug utilization review programs to  include additional drugs susceptible to  fraud, waste, and abuse;  
	 			 implement an edit to  reject prescriptions written  by  excluded providers;  HHS Office of Inspector General   Page ix  
Semiannual Report to Congress |  Fall 2015  
			 	 seek authority to  restrict  certain beneficiaries to a limited number of pharmacies  or prescribers; 
			 	 develop and implement a  mechanism to  recover payments from plan sponsors when  law 
enforcement agencies do not accept case referrals; and 
			 	 determine the  effectiveness of plan  sponsors fraud and abuse detection programs. 
Quality of  care  and  beneficiary protection  
Gaps in program safeguards intended to ensure  medical necessity, patient safety,  access to services, and  
quality of care present significant challenges to the  Medicare and  Medicaid programs.   OIG is committed  
to continuing its quality-of-care and beneficiary protection  oversight across all HHS programs and  
services.  Examples of our work  follow:  
CMS's  Reliance on New  York Qualification Requirements Could Not Ensure  the Quality of Care  
Provided to Medicaid Beneficiaries Receiving Home Health Services  (A-02-11-01013  
http://oig.hhs.gov/oas/reports/region2/21101013.pdf)  May 2015  
CMS's  Reliance on New Jersey Qualification Requirements Could Not Ensure  the Quality of Care  
Provided to Medicaid Beneficiaries Receiving Home Health Services  (A-02-11-01019  
http://oig.hhs.gov/oas/reports/region2/21101019.pdf) June 2015  
CMS could not rely  on New Yorks or New Jerseys qualification requirements  to  ensure quality  of care  
was provided to  Medicaid  beneficiaries  receiving home health services.   Some New York and New Jersey  
home health agencies did not meet certain Federal and State requirements for employee health  
screenings and  training, among other issues.   We estimated that  $31.9 million in Federal Medicaid  
reimbursement was associated with HHA workers  who did not  meet Federal and State  requirements  
($27.9  million in New  York  and $4  million in New Jersey).  
The Medicare Payment  System for Skilled Nursing Facilities Needs  to Be Reevaluated 



 
(OEI-02-13-00610   http://oig.hhs.gov/oei/reports/oei-02-13-00610.pdf)  September 2015 




The findings of this and prior OIG reports demonstrate the need for CMS to reevaluate the skilled  
nursing facility (SNF) payment system.   Medicare payments for  therapy greatly exceeded SNFs costs for  
therapy.   Combined with the  current  method  of paying for therapy,  this large difference between therapy  
payments and costs creates a strong financial incentive for SNFs to bill for higher levels  of therapy than  
necessary.   Under this system, SNFs increasingly billed  for the highest level of therapy  even though key  
beneficiary characteristics remained largely the  same.   Increases in SNF billingparticularly for the  
highest level of  therapyresulted in  $1.1 billion in  Medicare payments in  FYs 2012 and  2013.   Payment  
reform could save Medicare billions  of dollars and encourage SNFs to provide services that are better  
aligned with beneficiaries  care needs.    
CMS  concurred with  our  recommendations  to:  
	 			 evaluate the  extent to  which Medicare payment rates for therapy should be reduced; 
	 			 change the method  for paying for therapy; 
	 			 adjust Medicare payments  to  eliminate any increases that are unrelated  to beneficiary 
characteristics;  and 
	 			 strengthen  oversight of SNF billing.  HHS Office of Inspector General   Page x  
Semiannual Report to Congress |  Fall 2015  
Providers Terminated From  One State  Medicaid Program Continued Participating in Other States  
(OEI-06-12-00030   http://oig.hhs.gov/oei/reports/oei-06-12-00030.pdf)  August 2015   
The Affordable Care Act (ACA) requires States to  terminate providers who were already  terminated for  
cause in another State, yet  States face challenges complying with this mandate.   OIG found continued  
participation from providers terminated in  one State in other States  Medicaid program,  specifically,  
about one-third  of providers continued to  receive  payments for services provided to  Medicaid  
beneficiaries  after being terminated for cause.   Continued participation of providers after their 
terminations for cause presents a vulnerability to Medicaid and raises concern  that these providers could  
continue to treat  Medicaid  beneficiaries.   This report built on previous  work that found weaknesses in  
the CMS process for sharing termination information  among the States.  OIG found that not all State  
Medicaid agencies were  reporting to the database and that not all submitted records  met  the definition  
of a for cause termination.  
CMS  concurred with  our  recommendations from  both reports  to:  
				  require  each State  Medicaid agency to report all providers terminated for cause; 
				  ensure that the shared information contains only records that  meet  CMSs criteria for terminated for 
cause; 
				  work with States to develop uniform  terminology to clearly denote terminations for cause; 
				  require that State Medicaid programs  enroll all providers participating in Medicaid managed care; 
and 
				  furnish guidance to State  Medicaid agencies that termination is not contingent  on the providers 
active licensure status. 
Affordable  Care  Act implementation  
The Patient Protection and  Affordable Care Act  (ACA) of 2010, as amended  by  the Health  Care and  
Education Reconciliation Act of 2010,  made changes to HHS programs and enacted a range  of new  
programs that affect the Department.  Our work related to the ACA  encompasses the health insurance  
marketplaces,  Medicaid  expansion, use  of State establishment grants, and financial assistance payments.  
IT Security  
Public Summary Report: The Centers for  Medicare  &  Medicaid Services' Implementation of Security  
Controls Over  the  Multidimensional Insurance Data Analytics System Needs Improvement   
(A-06-14-00067  http://oig.hhs.gov/oas/reports/region6/61400067.asp)  September 2015   
Regarding  CMSs Multidimensional Insurance  Data Analytics System (MIDAS) and consumers  personally  
identifiable information  (PII) data in the systems and databases  we reviewed, CMS had not  accomplished  
the following  tasks: disabled unnecessary generic accounts in its test  environment, encrypted user  
sessions, conducted automated vulnerability assessments that simulate known attacks,  or used  a shared  
read-only account for access to the database  housing the PII. Serving as a central repository for 
insurance-related data,  Multidimensional Insurance  Data Analytics System  is intended to provide   HHS Office of Inspector General   Page xi  
Semiannual Report to Congress |  Fall 2015  
reporting and performance metrics to HHS for various  initiatives mandated by the Affordable  Care Act.  
Our database vulnerability  scans identified  22 high,  62 medium, and  51  low vulnerabilities.   
Financial Assistance Payments  
CMS's  Internal Controls Did Not Effectively Ensure the  Accuracy of  Aggregate Financial Assistance  
Payments Made  to Qualified Health Plan Issuers  Under  the Affordable Care Act  (A-02-14-02006   
http://oig.hhs.gov/oas/reports/region2/21402006.pdf)  June 2015  
CMS did not effectively ensure the accuracy  of nearly  $2.8 billion in aggregate financial assistance  
payments made to insurance companies under the Affordable Care Act during the first 4 months that 
these payments were made.   CMSs reliance on issuer attestations did not  ensure that  advance cost-
sharing reduction payment  rates identified as  outliers  were appropriate;  CMS did not have systems in  
place to ensure that financial assistance payments were made  on behalf of confirmed  enrollees and in  
the correct amounts and to ensure that State marketplaces could submit enrollee eligibility data for  
financial assistance payments.  Also,  CMS did not always follow its guidance for calculating advance  cost-
sharing reduction  payments and does not plan to perform a timely  reconciliation  of these payments.   
Consumer Operated and Oriented Plan  
Actual Enrollment and Profitability Was  Lower Than Projections Made by  the Consumer Operated  
and Oriented Plans and Might Affect Their Ability to Repay Loans  Provided Under the Affordable  
Care Act  (A-05-14-00055   http://oig.hhs.gov/oas/reports/region5/51400055.pdf) July  2015  
The Consumer Operated and Oriented  Plan (CO-OP)  program, established by  the Affordable  Care  Act,  
directs  the Secretary of HHS to provide loans to help establish new consumer-governed, nonprofit health  
insurance issuers,  or CO-OPs, in every State.   Factors such as low enrollments  and net losses could limit  
the ability of some CO-OPs  to repay startup and solvency loans and to  remain viable and sustainable.   
Member enrollment for 13  of the 23 CO-OPs that provided health insurance in 2014  was considerably  
lower than  the CO-OPs initial projections,  and as such, 21 of the 23 CO-OPs had incurred net  losses as of  
December 31,  2014.   Although CMS recently placed four CO-OPs  on enhanced  oversight or corrective 
action plans  and two CO-OPs on  low-enrollment-warning notifications, CMS had  not established  
guidance or  criteria to assess whether a CO-OP was viable  or  sustainable.   
Enrollment  
Not All of the  Federally Facilitated Marketplace's Internal Controls Were Effective  in Ensuring That  
Individuals Were  Properly  Determined Eligible  for Qualified Health Plans and Insurance Affordability  
Programs  (A-09-14-01011   http://oig.hhs.gov/oas/reports/region9/91401011.pdf) August 2015  
The Federal marketplace had deficiencies related to  verifying applicants eligibility for qualified health  
plans and  related to  resolving and expiring inconsistencies.   (Expiring an inconsistency means  making a  
determination about an applicants eligibility generally on the basis  of available data sources when a 
marketplace is unable to resolve the inconsistency.)   The Federal marketplace  (1)  resolved  
inconsistencies related  to annual household income based on  applicants responses to income   HHS Office of Inspector General   Page xii  
Semiannual Report to Congress |  Fall 2015  
discrepancy questions, using a higher threshold than  the threshold used  to initially verify income and 
(2) extended inconsistency  periods indefinitely for the  CY 2014 coverage period  based  on applicants 
good-faith efforts to  obtain required documentation. 
Contracting  
 CMS Did Not Always Manage  and Oversee Contractor  Performance for the Federal Marketplace 
 as  Required by  Federal Requirements  and Contract  Terms  (A-03-14-03001  
 http://oig.hhs.gov/oas/reports/region3/31403001.pdf)  September 2015 
In contracts awarded for  the development, implementation, and  operation  of the  Federal 
marketplace, contracting  officers and contracting officers representatives did not always  manage and 
oversee  contractor  performance as  required by Federal requirements and contract terms.  Moreover, 
CMS did  not always comply  with Federal regulations.   For example,  contractor delays and performance 
issues  were not always identified; contractor-incurred unauthorized costs  that increased the cost of 
the contract; contracting  officers in  all Government agencies did not have access to contractor past-
performance  evaluations  when making contract awards; or  critical deliverables  and management 
decisions were  not  properly documented.    HHS Office of Inspector General   Page xiii  
Semiannual Report to Congress |  Fall 2015  
 
 
Oversight  of  HHS  grants  
HHS is the largest  grant-making  organization in the Federal Government, and its funding of health and  
human services programs touches  the lives  of almost  all Americans.   The size and scope of  Departmental 
awards make  the operating effectiveness  of these grants  crucial  to  the success of  programs designed to  
improve  the health and well-being of the public.  Yet, OIG has noted  weaknesses  in the oversight of  
grantees  year after year.    
An  example of  our work follows:  
  HHS Oversight of Grantees  Could Be Improved Through Better Information-Sharing 



 
(OEI-07-12-00110   http://oig.hhs.gov/oei/reports/oei-07-12-00110.pdf)  September 2015 




Awarding agencies grant officials use  various sources  of information and communication to  mitigate  
grantee risks.  However, grant officials noted limitations in some instances.   Our findings raise concerns  
about whether awarding agencies grant  officials have all available information  to assess and mitigate  
risks relating to poor performance and misuse  of grant funds.  The  HHS  Assistant  Secretary for Financial  
Resources concurred with  all three of our  recommendations,  which included:  
 				 analyzing whether to implement the use of integrated  databases that contain adverse information  
on grantees past performance;   
 				 establishing a  departmentwide  source of adverse information from audits  of grantees; and   
 				 facilitating departmentwide information-sharing about grantees that have past performance issues.  
 
  HHS Office of Inspector General   Page xiv  
Semiannual Report to Congress |  Fall 2015  
 
OIG  participation in  congressional hearings  
09-11-2015    Strengthening Medicaid  Program Integrity  and Closing Loopholes    
Testimony  of John Hagg,  Director of Medicaid  Audits, Office of Inspector  General,  
U.S.  Department  of Health  and Human Services  before the House Committee on  
Energy  and Commerce,  Subcommittee on  Health  
 
 
 
07-28-2015   "Continuing Concerns with the  Federal Select  Agent Program: Department of Defense  
Shipments of Live Anthrax"  
Testimony of  Gregory Demske, Chief Counsel to the Inspector General, Office  of 
Counsel to  the Inspector General, Office of Inspector  General, U.S. Department 
of Health and Human Services before the House Committee on  Energy and  
Commerce, Subcommittee  on Oversight and Investigations  
 
 
07-14-2015    Medicare Part D: Measures Needed to Strengthen Program  Integrity     
Testimony of  Ann Maxwell,  Assistant Inspector General, Office of Evaluation and  
Inspections, Office of Inspector  General, U.S.  Department  of Health and Human  
Services before the House  Committee  on Energy and  Commerce, Subcommittee  
on Oversight and Investigations   
 
 
 
  HHS Office of Inspector General   Page xv



 
Semiannual Report to Congress |  Fall  2015



 
 
Contents  
Highlights  .......................................................................................................................................................  i 




Centers for Medicare &  Medicaid Services ................................................................................................... 1 




CMS  oversight of Medicare  contractor performance  ...............................................................................  1 




Contractor overpayments and errors  ...................................................................................................  1 




Medicare cost reports reconciliation  ....................................................................................................  3 




Contractor administrative and pension costs  .......................................................................................  4 




Ensuring Medicare Integrity ......................................................................................................................  4 




Medicare payments, policies, and quality  ....................................................................................................  5 




Medicare questionable  claims and payments...........................................................................................  5 




Medicare payments, policies, and practices  .............................................................................................  7 




Medicare quality of care and beneficiary access  ......................................................................................  8 




Medicaid payments, policies, and quality ................................................................................................... 10 




Improper and unallowable State claims for Federal reimbursement ..................................................... 10 




Medicaid payments, policies, and practices  ........................................................................................... 15 




Medicaid quality of care and beneficiary access  .................................................................................... 17 




Medicaid managed  care    Encounter data  ............................................................................................. 18 




Legal and investigative activities related to  Medicare and Medicaid ......................................................... 19 




Patient harm  ....................................................................................................................................... 20 




Quality of care ..................................................................................................................................... 21 




Prescription drugs ............................................................................................................................... 21 




Identity theft ....................................................................................................................................... 22 




Home health  ....................................................................................................................................... 23 




Physicians ............................................................................................................................................ 23 




Personal care services ......................................................................................................................... 24 




Electronic  health records  .................................................................................................................... 24 




Kickbacks ............................................................................................................................................. 25 




Pharmacies .......................................................................................................................................... 25 




Laboratories  ........................................................................................................................................ 25 




Pharmaceutical companies ................................................................................................................. 26 




Hospitals.............................................................................................................................................. 26 




Psychiatric and  psychological services ................................................................................................ 26 




Community mental  health center ....................................................................................................... 27 




Durable medical equipment  ............................................................................................................... 27 




International health care fraud scheme  ............................................................................................. 28 




Health care fraud prevention and enforcement ..................................................................................... 28 




HEAT provider compliance  training ..................................................................................................... 28 




 
  HHS Office of Inspector General   Page xvi



 
Semiannual Report to Congress |  Fall  2015



 
 
Medicare Fraud Strike Force ............................................................................................................... 28 




Other criminal and civil enforcement activities ...................................................................................... 30 




Special Assistant U.S. Attorney Program ............................................................................................. 30 




Corporate Integrity Agreements ......................................................................................................... 30 




OIGs Most Wanted Fugitives .............................................................................................................. 30 




OIG  Hotline Operations ....................................................................................................................... 31 




State  Medicaid Fraud Control Units ........................................................................................................ 32 




OIG oversight of State Medicaid Fraud Control Units ......................................................................... 32 




OIG onsite reviews  of MFCUs.............................................................................................................. 32 




Advisory opinions and other industry guidance  ..................................................................................... 33 




Sanction authorities and  other administrative actions ........................................................................... 33 




Program exclusions ............................................................................................................................. 34 




Suspensions and debarments ............................................................................................................. 35 




Civil Monetary Penalties Law .............................................................................................................. 36 




Patient Dumping  ................................................................................................................................. 36 




Provider self-disclosure protocol  ............................................................................................................ 37 




Public health  agencies and  enforcement activities .................................................................................... 39 




Public  health agencies ............................................................................................................................. 39 




Food and Drug Administration ............................................................................................................ 39 




Health Resources and Services Administration  .................................................................................. 39 




Indian Health Service  .......................................................................................................................... 40 




National Institutes  of Health ............................................................................................................... 40 




Substance Abuse and Mental Health Services Administration ........................................................... 40 




Information Technology Infrastructure and  Operations Office .............................................................. 41 




Public health-related  legal actions and  investigations ............................................................................ 41 




Health Education Assistance Loan  Program ........................................................................................ 41 




HEAL Exclusions ................................................................................................................................... 42 




Human services agencies and enforcement activities ................................................................................ 43 




Administration for Children and Families ................................................................................................ 43 




Family child day care  centers and State health and safety requirements  .......................................... 43 




Child support enforcement  activities ...................................................................................................... 45 




OIG investigations ............................................................................................................................... 45 




Engaging the public in capturing deadbeat parents  ........................................................................... 45 




IT infrastructure reviews  ......................................................................................................................... 46 




Other HHS-related reviews  ......................................................................................................................... 47 




Grants and Contracts............................................................................................................................... 47 




Improper payments and  misuse of grant funds .................................................................................. 47 




Misuse of grant funds case examples ................................................................................................. 49 




Small Business Innovative Research Program ..................................................................................... 49 




 
  HHS Office of Inspector General   Page xvii



 
Semiannual Report to Congress |  Fall  2015



 
 
Recovery Act  retaliation complaint investigations .............................................................................. 50 




Hurricane Sandy .................................................................................................................................. 50 




Office for Civil Rights ............................................................................................................................... 50 




Contract audits .................................................................................................................................... 51 




OIG reviews of non-Federal audits .......................................................................................................... 52 




Other reporting requirements and reviews ............................................................................................ 54 




Government Charge Card Abuse Prevention Act ................................................................................ 54 




Legislative and regulatory reviews ...................................................................................................... 54 




Affordable Care Act implementation  ...................................................................................................... 55 




Marketplaces....................................................................................................................................... 55 




Medicaid  payment suspension  ........................................................................................................... 58 




Information technology  ...................................................................................................................... 58 




Establishment grants ........................................................................................................................... 59 




Community Health Center  Fund  ......................................................................................................... 60 




Eligibility .............................................................................................................................................. 60 




Consumer Operated and  Oriented Plan.............................................................................................. 61 




Appendixes .................................................................................................................................................. 63 




Appendix A:  Savings decisions supported by OIG recommendations  ................................................ 64 




Appendix B:  Monetary recommendations .......................................................................................... 69 




Appendix C:  Peer review results  ......................................................................................................... 75 




Appendix D:  Summary  of Sanction authorities ................................................................................... 77 




Appendix E:  Reporting requirements in   the Inspector  General Act of 1978  ..................................... 80 




Appendix F: Anti-kickback statuteSafe harbors ............................................................................... 82 




 
 
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General   Page xviii  
Semiannual Report to Congress |  Fall 2015  
 
Selected Acronyms  
ACA   		  Patient Protection and Affordable Care Act of 2010, P.L. No. 111-148   
(as  amended by the Health Care Education and Reconciliation Act of 2010)  
ACF  	 	  Administration for Children and Families  
CBO  		 Congressional  Budget Office  
CIA 	 	  corporate integrity agreement  
CMP  		   civil monetary  penalty  
CMPL  		   Civil Monetary Penalties Law  
CMS   		  Centers for Medicare &  Medicaid Services  
CO-OP 	 	   Consumer Operated and  Oriented Plan   
CY 	 	  calendar year  
DME  		   durable  medical equipment  
DOJ  	 	  Department of Justice  
EHR	 	    electronic  health record  
EMTALA	 	    Emergency Medical Treatment and Labor Act,  9121  of the   
Consolidated  Omnibus Reconciliation Act  of 1985, P.L.  No. 99-272  
FBI  		 Federal Bureau  of Investigation  
FCA  		   False Claims Act  (31 U.S.C.   37293733)  
FDA  		   Food and Drug Administration  
FISMA 	 	   Federal Information Security Modernization Act   
FY  		   fiscal year  
HEAT 	 	   Health Care Fraud Prevention and Enforcement Action Team  
HEAL   		  Health Education Assistance Loan  
HHA 	 	  home health agency  
HIPAA  		   Health  Insurance  Portability and Accountability Act  of 1996, P.L. No. 104-191HHS  
Department of Health and  Human Services  
HRSA  		   Health Resources and Services Administration  
ITIO 	 	  Information Technology Infrastructure and Operations Office  
marketplaces  		   health insurance exchanges  
MA  		   Medicare Advantage  
MAC  		   Medicare Administrative Contractor  
MFCU  	 	  Medicaid Fraud Control Unit  
NDC 	 	   National Drug Code   
NIH 	 	   National Institutes  of Health  
OIG  		   Office  of Inspector General  
OMB  		   Office of Management  and Budget  
PHP 	 	  partial hospitalization program   
SNF  	 	  skilled nursing facility  
TANF  	 	 Temporary Assistance for Needy  Families  
 
  HHS Office of Inspector General   Page 1  
Semiannual Report to Congress |  Fall 2015  
 





CCMenS  oteverrss igfohtr o Mf Meeddiiccaarre  ec o&nt rMacetodr  ipcearfiodr mSaenrcve i ces  
The Centers for Medicare & Medicaid Services (CMS)  relies  on contractors to administer the Medicare 
program and is  responsible for overseeing the contractors performance.  Medicare contractors are  
responsible for administering more  than a half-trillion  dollars in benefits each  year.  Medicare  
Administrative Contractors  (MACs) process  Parts A and B claims; Medicare Advantage (MA) plans provide  
managed care services under Part C; Part  D plans provide prescription drug coverage under Part  D; and  
various benefit integrity contractors serve to protect  Medicare from fraud,  waste, and abuse.  
Contractor overpayments and errors   
  Incorrect Place-of-Service  Claims  Resulted in Potential  Medicare Overpayments Costing Millions   
(A-01-13-00506   http://oig.hhs.gov/oas/reports/region1/11300506.pdf) May 2015  
Physicians did not always correctly code nonfacility places  of service  on  Part B claims submitted to, and  
paid by, Medicare contractors nationwide.   Medicare contractors  potentially overpaid  physicians  about  
$33.4  million for incorrectly coded services provided from January  2010 through  September  2012.   
Physicians performed  these services in facility locations but incorrectly coded the services as having  
been performed in nonfacility locations.   
CMS concurred  with all  of  our recommendations, which were to:  
 				 direct its  Medicare contractors to recover or monitor the recovering  of $33.4  million in potential 
overpayments;  
 				 continue to educate physicians and billing personnel  on the importance  of internal controls to  
ensure the correct place-of-service coding;  and  
 				 expand and strengthen efforts  to perform coordinated data matches of nonfacility-coded physician  
services and facility  claims  and  to identify physician services that  are at a high risk for place-of-
service miscoding  and  recover overpayments.  
  First Coast  Service Options,  Inc., Paid Some Unallowable Sleep  Study Claims  (A-04-13-07039   
http://oig.hhs.gov/oas/reports/region4/41307039.pdf)  May 2015  
First Coast Service Options, Inc., the  MAC  for Jurisdiction 9  (Florida, Puerto Rico,  and the U.S. Virgin  
Islands)  made some payments to providers for sleep study services that  were not  in accordance with  
Medicare reimbursement requirements.   Of the 100 sampled beneficiaries, First  Coast made payments  
that did not meet  Medicare requirements for 61 beneficiaries, resulting in  overpayments totaling  
$68,000.   We estimated that First Coast overpaid  providers  about  $15.7  million for sleep study services  
during our audit period.   These errors occurred because First Coast did not have  adequate claim-
processing edits to prevent the incorrect payment of  Medicare claims  or because providers  did not  
understand the  Medicare requirements.  
 
  HHS Office of Inspector General   Page 2  
Semiannual Report to Congress |  Fall 2015  
 
First Coast  concurred with all of our  recommendations,  which were to:  
 				 recover $68,000 in identified overpayments;   
 				 develop and implement claim-processing edits  that would prevent payment  of incorrectly billed  
polysomnography services;  and   
 				 use the results of this audit in its provider education activities.   
  Medicare Part B Overpaid Millions for Selected Outpatient  Drugs  (A-09-14-02024


 
 
http://oig.hhs.gov/oas/reports/region9/91402024.pdf) July 2015 




Medicare contractors in 13  jurisdictions  overpaid providers $35.8 million for selected outpatient drugs  
during our audit period (July 1, 2009,  through June 30, 2012).   For  88  percent of  the overpayments,  
providers billed  either incorrect units of serviceor a combination  of incorrect units of service and  
incorrect Healthcare Common Procedure Coding System codes.   The  Medicare claims processing systems  
did not have sufficient prepayment edits in place to prevent all  overpayments.   The 13 Medicare  
contractors  concurred  with our recommendations in the individual reports to recover  the identified  
overpayments and  to  use  the results of our audits in  ongoing provider  education.   CMS informed us that,  
as of  May 4, 2015,  Medicare contractors had  recovered 63 percent  of the $35.8  million in  overpayments,  
and  10 of the 13 Medicare contractors  had  used the  results  of  our audits  in ongoing provider education  
activities.  
CMS concurred with our recommendations,  which were  to:  
 				 ensure that Medicare contractors collect the remaining overpayments identified in our individual 
reviews;   
 				 continue to educate providers on correct billing of  outpatient drugs;   
 				 instruct  Medicare contractors to review payments to  providers for outpatient drugs billed after our 
audit period,  which could  represent overpayments of $11.5 million;  and   
 				 continue to implement prepayment edits for additional outpatient drugs.  
  CGS Administrators, LLC,  Made Medicare  Payments for Diabetic Test Strips  When Beneficiaries Had 
Not Nearly Exhausted Previously Dispensed  Supplies  (A-09-14-02015   
http://oig.hhs.gov/oas/reports/region9/91402015.pdf) July 2015  
CGS Administrators, LLC, made payments  in  2012 to suppliers that dispensed diabetic test strips  when  
the beneficiaries had not nearly  exhausted test  strips  previously dispensed  by different suppliers.   We 
estimated  that $7.6 million, or  74 percent,  of  the $10.3  million that CGS paid to suppliers may have been  
unallowable for Medicare  reimbursement.   
CGS did not  concur with our recommendation,  which were  to:  
 				 identify  for review  those claims submitted by  multiple suppliers with  overlapping  service dates for 
test  strips dispensed to  the same beneficiary.   Implementing this edit could have  saved Medicare an  
estimated $7.6 million  for CY  2012.   
 
  HHS Office of Inspector General   Page 3  
Semiannual Report to Congress |  Fall 2015  
 
Medicare  cost  reports  reconciliation  
  Cahaba Government Benefit Administrators,  LLC,  Did Not Always Refer  Medicare Cost Reports and 
Reconcile Outlier Payments  (A-05-11-00019   http://oig.hhs.gov/oas/reports/region5/51100019.pdf) 
March 2015  
  Novitas  Solutions, Inc. (Formerly Highmark Medicare  Services, Inc.),  Did Not Always



  
Refer Medicare Cost Reports and Reconcile Outlier  Payments  (A-05-11-00023



  
http://oig.hhs.gov/oas/reports/region5/51100023.pdf) March 2015 




  First Coast  Service Options,  Inc., Did Not Always Refer  Medicare Cost Reports and Reconcile Outlier  
Payments  (A-05-11-00022   http://oig.hhs.gov/oas/reports/region5/51100022.pdf) March 2015  
  Palmetto Government  Benefits Administrator  Did Not  Always Refer  Medicare Cost Reports and 
Reconcile Outlier Payments in Jurisdiction 11  (A-07-10-02775   
http://oig.hhs.gov/oas/reports/region7/71002775.pdf)  April 2015  
  National Heritage Insurance Corporation Did Not Always Refer  Medicare Cost Reports and  
Reconcile Outlier Payments  (A-05-11-00024   http://oig.hhs.gov/oas/reports/region5/51100024.pdf) 
April 2015  
  CGS Administrators, LLC,  Did Not Always Refer  Medicare Cost Reports and Reconcile Outlier  
Payments  (A-07-13-02791   http://oig.hhs.gov/oas/reports/region7/71302791.pdf)  May 2015  
Medicare contractors  Cahaba Government Benefit Administrators,  Novitas Solutions,  First Coast Service  
Options,  Palmetto  Government Benefits,  National Heritage Insurance Corporation,  and  CGS  
Administrators  did  not always  refer Medicare cost reports  whose  outlier payments qualified for 
reconciliation to CMS.   In addition, the six contractors  did not always reconcile the outlier payments  
associated with cost reports whose  outlier payments qualified for reconciliation.   The financial impact to  
Medicare of the unreconciled outlier payments and cost reports was  about  $10.2 million (Cahaba), $3.6 
million (Novitas Solutions), $6.3 million  (First Coast), $48.2 million  (Palmetto), $25.6  million (National 
Heritage Insurance),  and $18.7  million (CGS).   Medicare supplements basic prospective payments for  
inpatient hospital services  by  making  outlier payments for unusually high-cost cases.   Medicare  
contractors refer hospital cost  reports to  CMS for reconciliation  of outlier payments.   
Cahaba and Novitas generally concurred, and First  Coast and National Government Services, Inc. (NGS)  
(the  Medicare contractor that assumed National Heritages responsibilities)  partially  concurred with  our  
recommendations  to:  
 				 review the cost reports  that qualified for referral, and  if applicable, determine  whether the cost  
reports  may be reopened, reconcile the  associated  outlier payments,  and refund the amounts due to  
Medicare and due to providers;  
 				 reconcile the outlier payments associated  with the cost reports  that were referred and, if applicable;  
 				 determine whether these cost reports  may be reopened, work  with CMS to reconcile the associated  
outlier payments, finalize these cost reports,  and ensure the return  of funds to  Medicare and to  the 
providers;  
 				 work  with CMS to resolve  the  outlier paymentsthat is,  $114,000 (Cahaba),  $747,000 (First Coast),  
$1.1 million  (Palmetto),  and $236,099 (NGS)  that we could  not recalculate;  
 
  HHS Office of Inspector General   Page 4  
Semiannual Report to Congress |  Fall 2015  
 
 				 ensure that control procedures are in place so that all  cost reports  with qualifying outlier payments  
are referred and reconciled; and  
 				 review all cost reports submitted since the end  of  our audit period,  and ensure that those whose  
outlier payments qualified  for reconciliation are referred and reconciled in accordance with Federal  
guidelines.  
Palmetto disagreed with  our recommendations.  However,  CGS did not concur  with our  
recommendations to reconcile outlier payments.  
Contractor administrative and  pension  costs  
  National Government  Services Claimed Allowable Administrative Costs for  Fiscal Year 2010 and the  
First Quarter of Fiscal Year  2011  Under  Medicare  Contract 00130  (A-05-14-00024   
http://oig.hhs.gov/oas/reports/region5/51400024.pdf)  August 2015  
National Government Services  of Indianapolis, Indiana, claimed allowable administrative costs  of  
$51.4 million  for  FY 2010 and  the  first  quarter of FY 2011  under Medicare Part  A contract 00130.   
Accordingly, this report contained no recommendations.  
  National Government  Services, Inc., Understa  ted Its Allocable Pension Costs for Calendar Years 2006  
Through 2009  (A-07-14-00453   http://oig.hhs .gov/oas/reports/region7/71400453.pdf)  May 2015  
National Government Services, Inc., a Medicare contractor, understated its allocable pension costs for  
the Medicare  and  the Other  segments by  $1.6  million and $5.0  million, respectively, for  CYs  2006  
through 2009.  
NGS  concurred with our  recommendations to:  
 				 increase the Medicare segment  pension costs used to calculate its indirect cost  rates by   
$1.6 million  for  CYs 2006 through 2009 and  
 				 increase the Other segment  pension costs used to calculate its indirect cost rates by $5.0 million  
for CY 2006.  
Ensuring Medicare  Integrity  
  Ensuring the Integrity of Medicare Part D 



 
(OEI-03-15-00180   http://oig.hhs.gov/oei/reports/oei-03-15-00180.pdf)  June  2015



  
This portfolio presents an  overview of Office  of Inspector General (OIG) investigations, audits,  
evaluations, and legal guidance related to  Part D.  It synthesizes numerous  OIG reports  that have  
identified weaknesses in  Part D program integrity, and  provides updates  on  Departmental efforts to  
address these  weaknesses.  In particular, OIG has identified weaknesses in the use of data to identify  
vulnerabilities, as well as in the  oversight by all parties responsible for protecting  Part  D:   Part  D plan  
sponsors, the Medicare Drug  Integrity  Contractor, and CMS.   OIG has  made recommendations to  
strengthen Part  D program  integrity, and progress has  been made.  However,  Part D remains vulnerable  
 
  HHS Office of Inspector General   Page 5  
Semiannual Report to Congress |  Fall 2015  
 
to fraud, as  evidenced by  ongoing OIG  investigations.   To fully protect  Part  D from fraud, waste, and  
abuse, CMS should  take further action and implement  OIGs previous recommendations including:  
 				 require plan sponsors  to report all potential fraud and  abuse to CMS, the Medicare Administrative  
Contractor, or  both;  
 				 expand drug utilization review programs to include additional drugs susceptible to fraud,  waste, and  
abuse;   
 				 implement an edit to  reject prescriptions written  by  excluded providers;   
 				 seek authority to  restrict  certain beneficiaries to a limited number of pharmacies  or prescribers;   
 				 develop and implement a  mechanism to  recover payments from plan sponsors  when law  
enforcement agencies do not accept case referrals; and  
 				 determine the  effectiveness of plan  sponsors fraud and abuse detection programs.  
  Performance  Data for the Senior Medicare Patrol  Projects:  July 2015  Performance Report



  
(OEI-02-15-00100   http://oig.hhs.gov/oei/reports/oei-02-15-00100.pdf)  July  2015


 
 
The Senior Medicare Patrol projects receive grants from the Administration for  Community Living to  
recruit and  train retired professionals and  other  senior  citizens to recognize and report instances  or  
patterns  of health care fraud.   In 2014, the 53  projects  had 5,294 active volunteers, a slight decrease 
from 2013.   The volunteers  conducted  slightly fewer group  education sessions (14,692), but conducted  
significantly  more one-on-one counseling sessions (202,862).   Results attributable to their efforts  
included $661,333 in  expected Medicare and Medicaid recoveries and total savings to beneficiaries and  
others of  about $80,000.  
MMeeddiciacrea rqeue  pstaioynmabelen ctlasi,m  ps oalnidc  pieaysm, aenntds   quality  
  CMS Should Use Targeted Tactics to Curb Questionable and Inappropriate Payment s for Chiropractic 
Services  (OEI-01-14-00200   http://oig.hhs.gov/oei/reports/oei-01-14-00200.pdf)  September  2015    
In 2013, $76  million in  Medicare payments for chiropractic services  were questionable, half of which  
were paid to just  2 percent  of chiropractors.   Medicare inappropriately paid  $20  million for chiropractic  
services  that lacked a primary diagnosis covered by  Medicare.   These findings raise concerns about  
CMSs ability to  curb improper payments for chiropractic services.  CMS concurred with  our 
recommendations to:   
 				 develop and use measures  to identify questionable payments for chiropractic services;  
 				 take appropriate action  on  the chiropractors with questionable payments;  
 				 collect  overpayments based on inappropriately paid claims; and   
 				 ensure that claims are paid only for  Medicare-covered  diagnoses.    
 
  HHS Office of Inspector General   Page 6  
Semiannual Report to Congress |  Fall 2015  
 
CMS did not concur with our recommendation to  establish a more reliable control for identifying active  
treatment,  citing  significant obstacles and stating that  new  medical review requirements would address  
our concerns; we disagree  because the requirements  target a narrow group  of  chiropractors  who are not  
necessarily receiving payments for maintenance therapy.    
  Questionable Billing and Geographic Hotspots  Point  to Potential Fraud and Abuse in Medicare   
Part D  (OEI-02-15-00190   http://oig.hhs.gov/oei/reports/oei-02-15-00190.pdf)  June  2015   
Spending for Part  D drugs,  especially  commonly abused opioids, has grown substantially.   We identified  
questionable billing by  1,400 pharmacies  that  may indicate fraudulent activity.   Each of these pharmacies  
billed for extremely high amounts for one or more  of our billing measures.   We also  identified  
geographic hotspots for certain drugs that point to possible fraud and abuse.   These findings and  
previous  OIG work demonstrate that more needs to be done to address fraud and abuse in Part  D.   This  
goal  requires CMS to fully implement  OIGs previous  recommendations, which  are summarized in an OIG  
portfolioEnsuring the Integrity of  Medicare  Part D  (OEI-03-15-00180).  
  Questionable Billing for Medicare Ophthalmology Services  (OEI-04-12-00280



  
http://oig.hhs.gov/oei/reports/oei-04-12-00280.pdf)  September  2015



  
While  most providers did not demonstrate questionable billing on any  of  our  measures in  2012,   
4 percent  of providers billing Medicare for ophthalmology services demonstrated  at least one of our   
nine measures of questionable billing.   Overall, Medicare paid these  1,726 providers $768  million for 
ophthalmology services in  2012, of which  $171 million was for services associated with the  measures  on  
which these providers demonstrated questionable billing.   The findings in this report raise concerns  that  
certain providers  may be billing for services that are not  medically necessary or  were never 
provided.   CMS  concurred with  our recommendations  to:  
 				 increase monitoring of billing for ophthalmology services  and   
 				 review providers  with questionable billing for ophthalmology services identified  by this evaluation  
and take  appropriate action.  
  Inappropriate Payments and Questionable Billing for  Medicare Part B Ambulance Transports   
(EI-09-12-00351  http://oig.hhs.gov/oei/reports/oei-09-12-00351.asp)   September  2015    
We found that Medicare paid $24  million in  the first half  of  2012 for ambulance transports  that did not  
meet certain program requirements justifying payments, and that about  one in five ambulance  suppliers  
had questionable billing.  Our findings indicate that inappropriate,  questionable billing for ambulance  
transports poses vulnerabilities to  Medicare program integrity.   Our report made  five recommendations.   
CMS  concurred or partially concurred with  our recommendations to:  
 				 determine whether a temporary  moratorium  on ambulance supplier enrollment in additional 
geographic areas is  warranted;  
 				 require ambulance  suppliers to include the National  Provider Identifier  (NPI) of the certifying  
physician on transport  claims that require certification;   
 				 implement new claims processing  edits or improve existing edits to prevent inappropriate payments  
for  ambulance transports;   
 				 increase its  monitoring  of ambulance billing; and   
 
  HHS Office of Inspector General   Page 7  
Semiannual Report to Congress |  Fall 2015  
 
 				 determine the  appropriateness of claims billed  by  ambulance suppliers identified in the report and  
take appropriate action.   
Medicare payments,  policies, and practices 
 
  The Medicare Payment  System for Skilled Nursing Facilities Needs  to Be Reevaluated 



 
(OEI-02-13-00610   http://oig.hhs.gov/oei/reports/oei-02-13-00610.pdf) September  2015
 


  
The findings of this and prior OIG reports demonstrate the need for CMS to reevaluate the skilled  
nursing facility (SNF) payment system.   Medicare payments for  therapy greatly exceeded SNFs costs for  
therapy.   Combined  with  the current method  of paying for therapy,  this large difference between therapy  
payments and costs creates a strong financial incentive for SNFs to bill for higher levels  of therapy than  
necessary.   Under  this system, SNFs increasingly billed  for the highest level  of therapy  even though key  
beneficiary characteristics remained largely the same.   Increases in SNF billingparticularly for the  
highest level of  therapyresulted in  $1.1 billion in  Medicare payments in FYs 2012 and  2013.   Payment 
reform could save Medicare billions  of dollars and encourage SNFs to provide services that are better  
aligned with beneficiaries  care needs.   CMS concurred with  our  recommendations  to:  
 				 evaluate the extent to  which Medicare payment rates for  therapy should be reduced;  
 				 change the  method for paying for therapy;   
 				 adjust Medicare payments  to  eliminate any increases that are unrelated  to beneficiary  
characteristics;  and   
 				 strengthen  oversight of SNF billing.    
  Skilled Nursing Facility Billing for Changes  in Therapy: Improvements  Are Needed  (OEI-02-13-00611   
http://oig.hhs.gov/oei/reports/oei-02-13-00611.pdf)  June  2015   
OIG has recommended  that CMS  reevaluate and change the  way it pays SNFs for  therapy services.  This  
review identified concerns  about SNF billing for  changes in therapy  that should be addressed if CMS  
continues its current payment system.  In FYs 2011 and 2012, CMS introduced three types of SNF therapy  
assessments to more quickly capture when beneficiaries start therapy,  end therapy, and decrease  or 
increase therapy.   However, SNF billing for changes in  therapy increased only slightly.   In addition, SNFs  
used assessments  very differently when decreasing therapy  than when increasing it, costing Medicare  
$143  million over 2  years.   Further, SNFs frequently used the new start-of-therapy assessment 
incorrectly.   For example, SNFs often used a start-of-therapy  assessment but billed for no therapy during 
the stay.   CMSs new policies are complex and create challenges for effective  oversight.   CMS concurred 
with  our recommendations  to:  
 				 reduce the financial incentive for SNFs to use assessments differently when decreasing and  
increasing therapy and      
 				 strengthen the  oversight of SNF billing for changes in therapy.  
  Medicare Payments for Clinical Laboratory Tests  in 2014:   Baseline Data  (OEI-09-15-00210



  
http://oig.hhs.gov/oei/reports/oei-09-15-00210.pdf)  September  2015



   
Medicare Part B paid $7.0  billion for clinical laboratory  (lab)  tests  in 2014.   The top  25  lab tests, based on  
Medicare payments,  accounted for $4.2 billion of the  total payments for lab tests.   The Protecting  Access  
 
  HHS Office of Inspector General   Page 8  
Semiannual Report to Congress |  Fall 2015  
 
to  Medicare Act of 2014 requires reform of the payment system for lab  teststhe first such reform in  3  
decades.   To provide oversight, Congress  mandated that OIG  monitor Medicare payments for lab tests  
and the new payment system.   As part  of the  mandate, OIG is  required  to publicly  release an annual 
analysis  of the top 25 lab tests based  on  Medicare payments.   This data brief provides baseline data on  
the top 25 lab  tests for 2014, 3 years before the new payment system goes into  effect  in 2017.   Our data  
brief contains no recommendations.  
  Implementing OIG Recommendation Could Have Reduced Payments



  
for DME  Infusion Drugs by Hundreds  of Millions  of Dollars  (OEI-12-15-00110


 
 
http://oig.hhs.gov/oei/reports/oei-12-15-00110.pdf)  April  2015


 

We found that  Medicare  expenditures for infusion drugs administered in conjunction with durable  
medical  equipment could have been  reduced  by $251  million in  an 18-month period if the average sales  
price-based payment  methodology previously recommended  by  OIG had been implemented in April  
2013.   Our findings illustrate that  Medicares payment  methodology for durable medical  equipment  
(DME) infusion  drugs, which  relies on  average wholesale prices (AWPs), which were  list prices  
published in 2003, has resulted in payments  that bear  little  or no resemblance to  provider acquisition  
costs.    Specifically, at least  42 percent of DME infusion drugs  had Medicare payment amounts  that were  
more than  twice their  estimated acquisition  costs.   In contrast, approximately  one-quarter of these drugs  
had payment amounts  that were below costs.   This report contains no recommendations.  
  Overlap Between Physician-Owned Hospitals and Physician-Owned Distributors  (OEI-01-14-00270   
http://oig.hhs.gov/oei/reports/oei-01-14-00270.pdf)  August 2015   
In response to a  request from CMS to conduct  additional analysis based on  our 2013  report  Spinal  
Devices Supplied by Physician-Owned Distributors: Overview of Prevalence and Use  (OEI-01-11-00660   
http://oig.hhs.gov/oei/reports/oei-01-11-00660.asp),  we identified one physician with an  ownership  
interest both  in  1 of the 12 physician-owned hospitals  we examined  and  in  a physician-owned  
distributorship that sold spinal devices  to that hospital.  However, we cannot determine  whether  this  
was the only physician  with such  ownership interests because data to identify such interests is not  
readily available.   This work demonstrated the limited  transparency of  ownership  information for spinal  
device suppliers and, to a lesser  extent, hospitals.  This  analysis  did not include any recommendations.  
Medicare  quality of  care  and beneficiary access  
  Home Health Agencies Conducted Background Checks  of Varying Types 



 
(OEI-07-14-00130   http://oig.hhs.gov/oei/reports/oei-07-14-00130.pdf)  May  2015 




All home health agencies (HHAs) conducted background checks  on prospective employees; however,  our  
review of six employees with convictions for  crimes against persons found that three have convictions  
that appearbased  on available datato disqualify them  from employment in  HHAs.  Our findings raise  
concerns  about whether  HHA  employees undergo a  minimum level  of background screening.  CMS  
concurred with our  recommendation:  
    to promote  minimum standards in background check  procedures.  
  Part D Plans  Generally  Include Drugs Commonly  Used by Dual Eligibles  (OEI-05-15-00120



  
http://oig.hhs.gov/oei/reports/oei-05-15-00120.pdf)  June  2015 




 
  HHS Office of Inspector General   Page 9  
Semiannual Report to Congress |  Fall 2015  
 
Overall, we found that  the  rate of Part  D plan formularies inclusion of the drugs commonly used by dual  
eligibles is high, with some variation.   Because some variation exists  in Part D  plan  formularies  inclusion  
of the commonly used drugs and in their application  of utilization  management  tools to these drugs,  
some dual  eligibles  may need to use alternative methods to access the drugs  they take.   This report did  
not make recommendations.  
  CMSs  Reliance on Puerto  Ricos Certification Surveys Could Not Ensure  the Quality of Care Provided 
to Medicare Hospice Beneficiaries by Servicios Suplementarios de Salud, Inc.  (A-02-11-01028   
http://oig.hhs.gov/oas/reports/region2/21101028.pdf) June 2015  
CMSs reliance on Puerto Ricos certification surveys could not ensure the quality  of hospice care that 
Servicios Suplementarios de Salud, Inc., provided to  Medicare beneficiaries.   Servicios  did not always  
meet certain Federal and Commonwealth  requirements for professional licensing and certification,  
criminal background checks, health certificates, and  training.   Of  170 workers, 130 workers  personnel  
records did not contain documentation to  support  compliance with  one  or more  of the  requirements.   
Servicios also  did not have any personnel  records for five workers who provided direct care to Medicare 
beneficiaries.   Puerto Ricos  most recent certification survey did not find any of the types  of deficiencies  
we  identified.   So  CMSs reliance on  State and Commonwealth surveys could not  ensure quality  of care  
or  adequate protection  of  Medicare beneficiaries.  
Although Puerto  Rico did not address our findings,  CMS concurred with our  recommendation,   
which was:  
 				 to  work with  Puerto Rico  to ensure  that Servicios  meets all Federal and Commonwealth  
requirements for professional licensing and certification, criminal background checks, health  
certificates, and training.   
  CMSs  Reliance on Accreditation Surveys Could Not Ensure  the Quality of Care Provided 


 

to Medicare Hospice Beneficiaries by The Community  Hospice, Inc.  (A-02-11-01027



  
http://oig.hhs.gov/oas/reports/region2/21101027.pdf) June 2015 




CMSs reliance on accreditation surveys could not ensure the quality  of hospice care that The Community  
Hospice, Inc., provided to  Medicare beneficiaries.   Community did not  meet certain Federal and State  
requirements for  criminal background checks, health assessments, professional licensing and experience,  
training, and performance  evaluations.   Of  the  100 workers in our random sample, Community could not  
document that 51 complied with 1 or more of these requirements.   We estimated that 194 workers  were 
not in  compliance  with Federal and State requirements.  
The April 2009 Community  Health Accreditation  Partner  (CHAP) accreditation survey did not find any of 
the deficiencies  we  identified, so  CMSs reliance  on CHAP surveys could not ensure quality of care  or  
adequate protection  of  Medicare beneficiaries.   
CMS concurred with our recommendation, which was to:  
 				 work  with  CHAP and New York to  ensure that Community  meets all Federal and State requirements  
for criminal background checks, health assessments, professional licensing and  experience,  training,  
and performance evaluations.   
New York  stated that it has  no  oversight authority  over CHAP and that it does not  survey  Community.  
 
  HHS Office of Inspector General   Page 10  
Semiannual Report to Congress |  Fall 2015  
 
  CMSs  Reliance on Puerto  Ricos Certification Surveys Could Not Ensure  the  Safety  of Medicare  
Beneficiaries Who Received Home Health Care Services Provided by St. Lukes Home Health 
AgencyJuana Diaz  (A-02-11-01030   http://oig.hhs.gov/oas/reports/region2/21101030.pdf) 
September 2015  
CMSs reliance on Puerto  Ricos  certification surveys  of St. Lukes Home Health Agency-Juana Diaz  could  
not fully ensure the safety  of Medicare beneficiaries.   None  of the 43 Juana  Diaz employees had a  
certification from  Puerto Rico indicating that he or she was not a registered sex offender.   
Puerto Rico conducted a  validation survey  of Juana  Diaz on July  21, 2010.   However, surveyors did not  
determine whether Diaz had verified  the sex offender  status  of its employees.   
Puerto Rico acknowledged  that this  discrepancy  occurred because the health  department did not have 
procedures for periodically  reviewing the enacted Commonwealth laws.   Therefore, an administrative 
order  was not created in a  timely  manner  to  require the survey unit to incorporate compliance with sex  
offender registration  requirements in the certification  surveys.  
CMS  concurred with our  recommendation, which  was  to:   
 				 work with  Community Health Accreditation  Partner and Puerto Rico to  ensure  that Juana Diaz and  
other HHAs meet Commonwealth requirements for  ensuring that their  employees are not registered  
sex offenders.   
MImperdoipcear  iadnd p uanyalmloweanbtlse  ,S ptaotel  icclaiiemss,  faonr Fde dqeuraal  lity  
reimbursement  
  Washington State  Did Not  Always Verify Correction of  Deficiencies Identified During Surveys   
of Nursing Homes Participating in Medicare  and Medicaid  (A-09-13-02039)  July 2015  
The Washington State Department of Social and Health Services, Aging and  Long-Term Support  
Administration, Residential Care Services  Division  (State agency), did not always verify nursing homes  
correction of deficiencies identified during surveys in  2012  in accordance with  Federal  requirements.   For  
the 100 sampled deficiencies, the State agency verified the nursing homes correction  of  30 deficiencies  
but did not have documentation supporting that it had verified the nursing homes correction  of the  
remaining 70  deficiencies.   We estimated that the State agency did not verify nursing homes correction  
of deficiencies in  accordance with  Federal requirements for 1,164 (84 percent)  of the 1,390 deficiencies  
identified during surveys in 2012.   
Washington concurred with our recommendations that it:  
 				 provide guidance and training to its surveyors and establish standardized practices for  them   
to follow;  
 
  HHS Office of Inspector General   Page 11  
Semiannual Report to Congress |  Fall 2015  
 
 				 improve internal controls  over retaining documentation to support that it has verified the correction  
of deficiencies;  and  
 				 follow all Federal requirements to appropriately  verify and document nursing homes correction  of 
deficiencies before certifying their substantial compliance with Federal participation requirements.  
  Missouri Claimed Unallowable Federal Reimbursement for  Some Medicaid Physician-Administered  
Drugs  (A-07-14-06051   http://oig.hhs.gov/oas/reports/region7/71406051.pdf)  April 2015  
Missouri did not always comply  with Federal Medicaid requirements for billing drug manufacturers for 
rebates for physician-administered drugs.   To collect these rebates, States submit to  the manufacturers  
the National Drug Codes (NDCs) for  all single-source and the top 20  multiple-source physician-
administered drugs.   Federal reimbursement for covered outpatient drugs administered by a physician   
is not available to States that do not comply  with Federal requirements for capturing data to bill and  
collect rebates.  
Missouri did not collect  the NDCs (from claims submitted by providers) that were  required for it  to  
invoice  manufacturers for rebates associated  with about $34.8 million in physician-administered drugs.   
In addition,  Missouri did not capture the utilization and coding data necessary to  collect rebates for all 
physician-administered drugs.   Without the NDCs, we were unable to determine  whether  Missouri  
improperly claimed Federal reimbursement for an additional $13.2  million for other  physician-
administered drug claims.  
Missouri  did not concur with  our recommendations,  which were to:  
 				 refund $34.8  million for drug claims  that were ineligible for Federal reimbursement;   
 				 work with  CMS  to determine the portion of the $13.2 million for other outpatient  physician-
administered drug claims  that were ineligible for Federal reimbursement and refund that amount;   
 				 work with  CMS  to determine and refund the unallowable Federal reimbursement for physician-
administered drugs claimed without NDCs and not billed for  rebates after December 31,  2011; and   
 				 update its system edits to require NDCs for payment  on all drug claims to ensure  that all drugs  
eligible for drug  rebates are invoiced.   DSS did not concur with any of our  recommendations.  
  Iowa Claimed Unallowable  Federal Reimbursement for Some Medicaid Physician-Administered 
Drugs  (A-07-14-06049   http://oig.hhs.gov/oas/reports/region7/71406049.pdf)  July 2015  
Iowa did not always comply with Federal Medicaid requirements for invoicing drug manufacturers for  
rebates for physician-administered drugs.   To collect these rebates, States submit to  the manufacturers  
the NDCs for all single-source and the top 20  multiple-source physician-administered drugs.   Federal  
reimbursement  for covered outpatient drugs administered by a physician is not available  to States that  
do not comply with Federal requirements for capturing data to invoice and collect rebates.  
Iowa did not did not submit utilization data  to manufacturers for rebates  associated with  $174,000 in  
physician-administered drugs.   We were unable to determine whether Iowa improperly claimed Federal 
reimbursement for an additional $111,000 for other physician-administered drug claims that  were not  
for single-source drugs  or top-20 multiple-source drugs.   
Iowa  concurred with our recommendations to:  
 				 refund $174,000 for claims  for physician-administered  drugs that were  ineligible for Federal 
reimbursement;   
 
  HHS Office of Inspector General   Page 12  
Semiannual Report to Congress |  Fall 2015  
 
 				 work with  CMS  to determine the unallowable portion of the  $111,000 for other claims for outpatient  
physician-administered drugs that were ineligible for Federal reimbursement  and refund that  
amount;   
 				 work  with CMS to  determine and refund the unallowable Federal reimbursement for physician-
administered drugs that were not invoiced for rebates  after December 31,  2012; and   
 				 strengthen  the States  internal controls to ensure  that all physician-administered  drugs eligible for 
rebates are invoiced.   
  New Jersey Claimed Medicaid Hospice Services That  Were Not in Compliance With Federal and State  
Requirements  (A-02-11-01014   http://oig.hhs.gov/oas/reports/region2/21101014.pdf) April 2015  
New Jersey  claimed Federal Medicaid reimbursement for some hospice services that did not comply  with  
Federal and State requirements.   Of the  150 beneficiary-months  in our  random sample, 108  complied  
with Federal and State requirements, but 42 did not.   We estimated  that New Jersey  improperly claimed  
at least $8.4  million in Federal Medicaid reimbursement for hospice services that did not  meet Federal 
and State requirements.   
The deficiencies  occurred because New Jersey  did not  monitor hospices for compliance with certain  
Federal and State requirements until  after  our audit period,  when the State  implemented a postpayment 
review process for hospice  services.  
New Jersey did not  comment on our recommendations that it:  
 				 refund $8.4  million and   
 				 continue to  monitor hospices to ensure that  they comply with  Federal  and State requirements.  
  Texas Paid Millions for Unallowable  Medicaid Orthodontic Services  (A-06-11-00048



  
http://oig.hhs.gov/oas/reports/region6/61100048.pdf) June 2015 




Texas did not ensure that  requests for prior authorization of Medicaid orthodontic services were  
approved in accordance  with State Medicaid guidelines.   We estimated that Texas  paid  at least  
$133.4 million  (Federal share) for unallowable orthodontic services.   Of 106 sampled orthodontic   
prior-authorization requests, 17 were  approved in accordance with State Medicaid guidelines and   
89 were not.   Of the 89 improperly approved prior  authorizations,  78 did not qualify for orthodontic  
services and  11 did not have sufficient documentation  to determine whether they qualified.   
Texas provided information on actions that  it had taken or planned to take to address our  
recommendations, which were  to:  
 				 refund  $133.4 million;   
 				 determine and refund the  Federal share  of any additional amounts related to  orthodontic prior  
authorizations that  Texas  improperly claimed after our audit period;  and   
 				 monitor  the  orthodontic program to ensure that it is in compliance  with State  Medicaid guidelines.   
  Connecticut Claimed Unallowable Medicaid Payments for Targeted Case  Management



  
Services Provided to Individuals With Chronic Mental Illness  (A-01-14-00001



  
http://oig.hhs.gov/oas/reports/region6/61100048.pdf)  August 2015 




 
  HHS Office of Inspector General   Page 13  
Semiannual Report to Congress |  Fall 2015  
 
Connecticut  did  not  always claim Federal Medicaid reimbursement for  targeted  case  management (TCM)  
services in accordance with Federal and State requirements.   The monthly payment rates that 
Connecticut calculated included costs that  (1) had already been  accounted for in  a different service cost  
base  and, therefore,  should not have been included in  the payment rate calculation or (2)  were  
overstated.   Connecticut also included potentially unallowable costs in its payment rate calculations,  
which may have  overstated its claims for  Federal  Medicaid reimbursement.   
Connecticut  concurred with our recommendations that it:  
 				 refund $958,000  to the Federal Government,   
 				 adjust future payment rates for  targeted  case management  services and work  with CMS to  
determine the unallowable Medicaid payments that should be refunded,  
 				 establish controls to  ensure that the payment rate  methodology used to claim  Medicaid  
reimbursement for targeted  case management  services is in accordance  with Federal and State  
requirements, and   
    improve  controls used to detect and prevent duplicate payments.   
Connecticut did not concur with  our recommendations that it:    
 				 provide  additional documentation to CMS that shows  how much of the  $43  million in potentially  
unallowable costs is allowable  or refund  $23 million.  
  Missouri Claimed Unallowable and Unsupported Medicaid Payments for Group Home Habilitation 
Services  (A-07-14-03201   http://oig.hhs.gov/oas/reports/region6/61100048.pdf) August  2015  
Missouris  Medicaid payment rates for group home habilitation services provided  and paid for during 
State FYs 2011  through 2013 were not  always in accordance with  Federal requirements.  Specifically,  
Missouri  included room-and-board costs in  some of its payment rates for group home habilitation  
services.   Because this practice is prohibited under Federal requirements,  the associated payments were 
unallowable.   In addition, the State agency could not  provide  supporting documentation for  some of its  
payment rates, and as a result we could not determine whether  those payment rates included  room-
and-board costs.  
Missouri agreed with our  recommendations that it:  
 				 follow Federal requirements  by ensuring that room-and-board costs are  excluded  when determining 
the payment rates for group home habilitation services and   
 				 follow  Federal  requirements by  maintaining supporting documentation to show how payment rates  
for group home habilitation services  are calculated.    
Missouri disagreed with our recommendations  that it:  
 				 refund $3 million to the Federal Government;  
 				 obtain  supporting documentation from  the group home providers for the unsupported  Medicaid  
payments of $39.1 million;  and   
 				 recalculate any payment rates that include  room-and-board costs, apply any recalculated payment  
rates to actual claims, and  refund any additional unallowable amount.  
 
  HHS Office of Inspector General   Page 14  
Semiannual Report to Congress |  Fall 2015  
 
  Some of New Jerseys Claims for Personal Care  Services Did Not  Comply With Federal and State  
Requirements  (A-02-13-01022   http://oig.hhs.gov/oas/reports/region6/61100048.pdf) August 2015  
New Jersey claimed at least $32.2 million in unallowable Medicaid reimbursement for personal care  
services during the period  August 1,  2008, through December 31,  2011,  that did not  meet Federal and  
State requirements.   Of the 100 claims in our random sample,  83 claims complied  with Federal and State  
requirements, but 17 claims did not.   
New Jersey partially  concurred with our  recommendation that it:  
    refund $32.2 million to the  Federal Government.



      
New Jersey described actions it had taken to address  our recommendation that it:


 

 				 issue guidance to the provider community  regarding Federal and State requirements for  claiming 
Medicaid reimbursement for personal care services.  
  North Carolina Received Millions in Unallowable Bonus Payments  (A-04-14-08035



  
http://oig.hhs.gov/oas/reports/region4/41408035.pdf)  July 2015 




Congress appropriated  $3.225 billion for qualifying States to receive performance bonus payments for  
FYs 2009 through  2013 to offset the costs  of increased  enrollment of children in  Medicaid.   
Most  of the bonus payments that North Carolina received for the audit period were not allowable in  
accordance with Federal requirements.   Most  of the data used in North Carolinas bonus payment  
calculations were in accordance with Federal requirements.   However, North Carolina overstated its FYs  
2011  through 2013 current enrollment in its bonus  requests to CMS because it included individuals who  
did not qualify.   As a result, CMS  overpaid North Carolina $34.8  million in bonus payments.   
North Carolina disagreed  with our recommendation that it refund  $34.8 million.  
  Texas  Made Incorrect  Medicaid Electronic Health Record Incentive Payments  (A-06-13-00047   
http://oig.hhs.gov/oas/reports/region6/61300047.pdf)  August 2015  
Texas made incorrect electronic health record  (EHR) incentive payments  to 38 hospitals totaling $15.3  
million.   Texas  overpaid  26  hospitals a total of $13.9  million and underpaid 12 hospitals a total of $1.4  
million, for a net  overpayment of $12.5  million.   Because the  hospital calculation is computed  once and  
then paid out  over 3 years,  payments made after December 31, 2014,  will also be  incorrect.   The 
adjustments to these payments total  $163,000.   
Texas did not agree or disagree  with our recommendations that it:  
 				 refund $12.5 million in net  overpayments made to the 38 hospitals and adjust the 38 hospitals  
remaining incentive payments to account for the incorrect calculations (which  will result in future  
cost  savings of $163,000);  
 				 review the calculations for  the hospitals we did not review to determine whether payment 
adjustments are needed and refund any  overpayments;   
 				 review supporting documentation for the numbers provided in the cost reports and ensure that the  
correct cost report periods  are used; and   
 				 provide guidance to the hospitals about what costs and services  should be included and excluded.   
 
  HHS Office of Inspector General   Page 15  
Semiannual Report to Congress |  Fall 2015  
 
Texas provided information on corrective actions taken and actions to be implemented.   Although we did  
not  verify  that Texas took these actions, it is our  opinion that  the actions described could address  our  
findings and recommendations.   
  South Carolina Claimed Some Unallowable Room-and-Board Costs Under the Intellectual


 
 
and Related Disabilities Waiver for  State Fiscal Year  2010  (A-04-14-04019



  
http://oig.hhs.gov/oas/reports/region4/41404019.pdf)  April 2015 




South Carolina claimed Federal Medicaid reimbursement of $1.6  million during State  FY  2010 for  
unallowable room-and-board costs under the Intellectual and  Developmental  Disabilities waiver   
program and did not reduce its  Federal  reimbursement by $7.9  million for an  overpayment settlement.   
South Carolina claimed unallowable room-and-board costs because  it  (1) did not  have  adequate controls  
to ensure that it  followed either applicable Federal law and guidance  or its  own  guidance  and  (2) did not  
detect errors or  misstatements on the cost reports.  
South  Carolina agreed with our recommendations to:   
 				 refund  to the  Federal Government $1.6 million;   
 				 ensure that  the State removes room-and-board-related administrative costs from the cost reports;   
 				 implement  the use of a uniform cost reporting process;   
 				 strengthen its cost report review processes to detect errors and to ensure compliance with Federal  
regulations;   
 				 report as a credit the  overpayment of $7.9  million that South Carolina identified in July 2010; and   
 				 develop and implement controls to ensure that, after being  notified of an overpayment,  the State  
reports the  overpayment as a credit in a  timely manner.   
  Massachusetts  Made  Claim Adjustments in Accordance With Federal  Time Limit Regulations   
(A-01-15-00001   http://oig.hhs.gov/oas/reports/region1/11500001.pdf)  June 2015  
Massachusetts  reported  209,167 claim adjustments, totaling  $9.1  million, in accordance with Federal 
regulations pertaining to the time limit to claim payment for expenditures.   Accordingly, this report  
contains no recommendations.  
Medicaid payments, policies, and practices  
  Questionable Billing for Medicaid Pediatric Dental Services in California  (OEI-02-14-00480



  
http://oig.hhs.gov/oei/reports/oei-02-14-00480.pdf)  May  2015



  
We identified 329  general dentists  and 6 orthodontists in California with questionable billing.  Medicaid  
paid these providers $117.5  million for pediatric dental services in 2012.   These  335 dental providers 
representing 8 percent of California general dentists and orthodontists we reviewedprovided a large  
number of services  or provided certain services to an  extremely large number of children.  Half of the  
dental providers with questionable billing worked for dental chains.   The California Department  of Health  
Care Services  concurred with all of our recommendations, which  were  for the State to:  
 				 increase its  monitoring  of dental providers to identify  patterns  of questionable billing;  
 
  HHS Office of Inspector General   Page 16  
Semiannual Report to Congress |  Fall 2015  
 
 				 closely  monitor billing by providers in dental chains;  
 				 review its payment processes for orthodontic services; and   
 				 take  appropriate action  against the dental providers identified as having questionable billing.  
  Medicaid Rebates for Brand-Name Drugs Exceeded Part  D Rebates by a Substantial Margin   
(OEI-03-13-00650   http://oig.hhs.gov/oei/reports/oei-03-13-00650.pdf)  April 2015  
We found that  total rebates under Medicaid were substantially higher than total  rebates under Medicare  
Part  D.  Also,  Medicaids net unit costs  (i.e., the pharmacy reimbursement amounts minus rebates)  were  
much lower than net unit costs under Part  D in  2012 for the 200  selected brand-name drugs.   Further,  
more  than half of Medicaid rebates  owed by manufacturers for selected brand-name  drugs were  
attributed to  the inflation-based add-on rebates.   This report did not contain any  recommendations.   
  States  Collection of Rebates for Drugs Paid Through Medicaid Managed Care Organizations Has  
Improved  (OEI-05-14-00431   http://oig.hhs.gov/oei/reports/oei-05-14-00431.pdf)  September  2015  
Nearly all States that pay for drugs through Medicaid  managed care  organizations (MCOs) collected  
rebates for  these drugs between July 1,  2013, and June 30,  2014, as required by  ACA.  This  finding 
represents a significant improvement from previous  OIG findings.  However,  some States are not  
collecting  all eligible  MCO  rebates,  which results in States and the Federal government failing to  realize  
all of  the savings  they are  owed under the Medicaid Drug Rebate  Program.  CMS should continue  to  
work to ensure that  all States are invoicing and collecting all eligible MCO rebates.  
  New York  Did Not Have Evidence Available in Readily Reviewable Form  to  Support That It  
Reimbursed Medicaid Diabetic Testing Supply Rebates  to the  Federal Government  (A-02-13-01002   
http://oig.hhs.gov/oas/reports/region2/21301002.asp) June 2015  
New  York  officials informed us that New York  reported  $65.1  million in recorded rebates from diabetic  
testing supply  manufacturers for the 8 quarters  on Line 49 (Other Care Services)  of Form CMS-64  but  did  
not provide documentation to  support  that this  amount related to diabetic  testing supply rebates.  
According to New  York  officials, New York did not have  support for the $65.1  million in rebate collections  
that it reported because of  limited  staff resources available during those quarters  to effectively track and  
report on rebates as they  were being  collected.  
New  York agreed with our  recommendation that it:  
 				 ensure that  the Federal share  of all Medicaid diabetic  testing supply rebates collected after  
 June 30, 2012, are  reported on Form CMS-64,  and   
 				 have supporting documentation compiled in readily reviewable  form when  the State  files  
 these claims.   
  Maryland Claimed Unallowable Medicaid Costs for Residential Habilitation Add-on 


 

Services Under Its Community Pathways Waiver Program  (A-03-13-00202 



 
http://oig.hhs.gov/oas/reports/region3/31300202.asp) June 2015 




Maryland did not always comply  with Federal requirements when it claimed  Medicaid costs for add-on  
services under its Community  Pathways  waiver program (waiver).   Maryland did  not implement its  
waiver as approved by CMS.   Rather,  Maryland claimed $34  million for provider claims for add-on 
services for beneficiaries who did not  meet  the  waivers level-of-need requirement for  those services.  
 
  HHS Office of Inspector General   Page 17  
Semiannual Report to Congress |  Fall 2015  
 
The waiver allowed add-on services for beneficiaries  who  met  three requirements, including a level of  
need of  5  on Marylands Individual Indicator Rating Scale.   However,  Maryland did not consider  the  
beneficiarys level-of-need  score when approving add-on services.   
Maryland  did not concur with our recommendations,  which were to:  
 				 refund to  the Federal Government  $34  million and   
 				 claim add-on service costs  only for beneficiaries  who  meet waiver requirements.  
  Providers  Did Not Always Reconcile Patient Records With Credit Balances and Report



  
and Return the  Associated Medicaid Overpayments to State  Agencies  (A-04-14-04029



  
http://oig.hhs.gov/oas/reports/region4/41404029.pdf)  August 2015 




We  reviewed  Medicaid credit balances in  eight States  and eight providers in each State.   Providers  (i.e.,  
acute care hospitals, nursing facilities, or certain  non-institutional providers) did  not always reconcile  
patient records with  credit  balances and report and return the associated  Medicaid overpayments to the  
State agencies.   Of the 1,102 patient records  with credit balances  that we reviewed in 8 States,  538 did  
not contain  Medicaid  overpayments; however,  564 contained Medicaid  overpayments totaling $264,000  
($170,000 Federal share).   We estimated that the eight States in  our review could realize an additional  
recovery of $25 million  ($16.8 million Federal share) from our audit period and could obtain future  
savings if they enhanced  their efforts to recover overpayments in provider accounts.  
CMS concurred with our recommendation that it:  
 				 issue Medicaid regulations  to clarify the requirements  of the  ACA  that  parallel its proposed Medicare  
rules and require that States ensure that providers  exercise reasonable diligence to identify, report,  
and  return overpayments.  
Medicaid quality of care and beneficiary  access  
  Providers Terminated From  One State  Medicaid Program Continued Participating in Other  States  
(OEI-06-12-00030   http://oig.hhs.gov/oei/reports/oei-06-12-00030.pdf)  August 2015  
ACA  requires States to terminate providers who were already terminated for cause in another State, yet  
States face challenges complying with this mandate.   OIG  noted  (1)  continued participation from  
providers terminated in  one State in  other States Medicaid programs and  (2)  about one-third received  
payments for services provided to  Medicaid beneficiaries after the providers terminations for cause.   
Continued participation  of providers after their terminations for cause presents  a vulnerability to  
Medicaid and raises concern that these providers could continue to treat Medicaid beneficiaries.  This  
report built  on previous work that found weaknesses in the CMS process for sharing termination  
information among the States.   OIG found  that not all  State Medicaid agencies were reporting to the  
database and that not all submitted records met the  definition of a  for cause  termination.  
CMS  concurred with our  recommendations from both  reports to:  
 				 Require each State Medicaid agency to report all providers terminated for cause;  
 				 Ensure that the  shared information contains only records that  meet  CMSs criteria for terminated   
for cause;  
 
  HHS Office of Inspector General   Page 18  
Semiannual Report to Congress |  Fall 2015  
 
 				 Work with States to develop uniform  terminology to clearly denote terminations for cause;  
 				 Require that State Medicaid programs  enroll all providers participating in  Medicaid managed care;  
and   
 				 Furnish guidance to State  Medicaid agencies that termination is not contingent  on the providers  
active licensure status.   
  CMSs  Reliance on New Jersey Qualification Requirements Could Not Ensure  the Quality   
of Care  Provided to Medicaid Beneficiaries Receiving Home Health Services  (A-02-11-01019   
http://oig.hhs.gov/oas/reports/region2/21101019.pdf)  June 2015  
CMS could not rely  on New Jerseys qualification requirements to  ensure  that quality  of care and  
adequate protection was provided  to Medicaid beneficiaries receiving home health services.   
Of the  150  claims in our sample, HHA  workers associated with 112  claims  met Federal and State  
qualification requirements; however,  workers associated with  the remaining 38 claims did not.   We  
estimated that home health workers did not meet qualification requirements for 73,260  of  the 289,185  
claims covered by  our review and that the Federal Government reimbursed New Jersey $4  million for  
these services during our audit period (January  1,  2007, through July  31, 2008).  
New Jersey declined to comment, but CMS concurred with  our recommendations that the agency:   
 				 work with New Jersey to reinforce guidance to HHAs  on  worker qualification requirements and   
				  direct New Jersey to improve its  monitoring of HHAs to ensure  compliance with worker qualification  
requirements.   
  Review of Intermediate  Care Facilities in New  York With High Rates of Emergency



  
Room Visits by Intellectually Disabled Medicaid Beneficiaries  (A-02-14-01011



  
http://oig.hhs.gov/oas/reports/region2/21401011.pdf)  September 2015


 

Intermediate Care  Facilities in New York  with high rates of emergency  room (ER)  visits by intellectually  
disabled Medicaid beneficiaries under their care reported on these visits, as required, and potential 
neglect  or abuse was reported and investigated by the Office for People  With  Developmental Disabilities  
or the New York State  Justice Center for the Protection of People  with Special  Needs.   However,  the vast  
majority of ER  visits we reviewed resulted from  circumstances  associated with the  Medicaid  
beneficiaries underlying  medical conditionsnot from neglect  or abuse.   Accordingly, this report  
contained no recommendations.  
We initiated this review in response to a congressional  request to review the care  of intellectually  
disabled Medicaid beneficiaries in group homes.  
Medicaid managed  care    Encounter  data  
  Not All States Reported Medicaid Managed Care Encounter  Data as Required  (OEI-07-13-00120   
http://oig.hhs.gov/oei/reports/oei-07-13-00120.pdf)  July  2015  
We found that 8  of  the 38 States  we reviewed did not report encounter data from  any managed care 
entities  by  the required deadline; an additional 11  States did not report encounter data for all  managed  
 
  HHS Office of Inspector General   Page 19  
Semiannual Report to Congress |  Fall 2015  
 
care entities.  Our findings  raise concerns about CMS  enforcement of the requirement that States  submit 
encounter data.  CMS concurred with both  of  our recommendations, which  were  to:  
 				 use  CMS  authority  to  withhold appropriate  Federal funds from States that fail to submit encounter  
data until those States  report encounter data as required  and  
 				 monitor encounter data to  ensure they are reported for all managed care  entities.  










Legal and investigative activities 
OIG investigates allegations of fraud,  waste, and abuse in all of the  Departments  programs.  Our largest  
body  of work involves investigating matters related to  the Medicare and  Medicaid  programs, such as  
related to  Medicare and Medicaid 
patient harm; billing for  services  not  rendered, medically unnecessary services,  or services more  
extensive than those  actually provided; illegal billing, sale, diversion, and  off-label marketing of 
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;  
 				 HHAs  and personal care services;  
 				 ambulance transportation;   
 				 DME;  and  
 				 diagnostic radiology and laboratory testing.    
OIG also conducts investigations involving  organized criminal activity, including medical identity theft   
and fraudulent medical schemes established for the sole purpose of stealing dollars from Medicare,  
Medicaid, and  other Federal health care programs.  OIG investigators  are seeing  an increase in health  
care providers and patients engaging in these health care fraud schemes.   Those  who participate in   
these schemes may face heavy fines, jail time, and  exclusion from participating in  Federal health   
care programs.   
In addition to investigating Medicare and Medicaid fraud, OIG investigates fraud,  waste, and abuse in  
other HHS  operating divisions, including the Indian Health Service, Administration for Children  and  
Families, Health Resources  and Services Administration, and Administration for Community Living.   OIG  
also investigates potential misuse of grants and contracts funds awarded by the  National  Institutes of  
Health, Centers for Disease Control and Prevention, Substance Abuse and  Mental  Health Services  
Administration, and other  HHS agencies  (HHS is  the largest grantmaking  organization and  one of  the 
largest contracting agencies  in  the Federal Government).  Under certain  circumstances, OIG investigates  
noncustodial parents  who fail to pay court-ordered child  support.   Additionally,  OIG 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  
health care programs involves filing false claims for reimbursement.   False  claims  may be pursued under  
 
  HHS Office of Inspector General   Page 20  
Semiannual Report to Congress |  Fall 2015  
 
Federal and State  criminal statutes and, when appropriate, under the False Claims  Act  or the  Civil 
Monetary Penalties Law.  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,  or  negotiated settlement agreements.   Investigative  outcomes take many forms, including  
incarceration, restitution, fines, penalties, forfeitures,  assessments, and  exclusion of individuals or 
entities from participation in all Federal health care programs.   Frequently used exclusion and penalty  
authorities are described in  Appendix  D of this  report  and on our Web site at:  
http://oig.hhs.gov/fraud/enforcement/cmp/.  
For all OIG investigations,  the  charges contained in an  indictment or other charging document are merely  
accusations.  A  defendant is presumed innocent unless and until proven guilty.  
For April 1 to September 30, 2015,  we  reported  378 criminal and 347 civil actions against individuals  or 
entities  that engaged in health  care-related offenses.   We also  reported over $756.9 million  in  
investigative receivables due to HHS and  over $139.4  million in non-HHS  investigative receivables,  
including civil and administrative settlements  or civil judgments related  to Medicare, Medicaid, and  
other  Federal, State, and private health care programs.1   
Below are recently completed actions and settlements organized by allegation  or  subject type:   
Patient harm  
Michigan    Oncologist Farid Fata was sentenced to 45 years in prison and  ordered to forfeit more than  
$17 million  after he  pleaded  guilty to charges of health care fraud, conspiracy to  pay or receive  
kickbacks, and  money laundering.   Fata  owned and  operated the cancer treatment clinic  Michigan  
Hematology Oncology, P.C., which had several locations in Michigan.   Fata admitted that he prescribed  
and administered aggressive chemotherapy, cancer treatments, intravenous iron,  and other infusion  
therapies to  553 individual  patients who did not need  these  therapies, in order to increase his billings to  
Medicare and other insurance companies.   He  then submitted fraudulent claims to  Medicare and other  
insurers for  these unnecessary treatments.   In  total, Fata submitted  about  $34 million in fraudulent  
claims  to Medicare and private insurance companies.   Fata also  admitted  to soliciting kickbacks from  
Guardian Angel Hospice and Guardian Angel Home Health Care in exchange for his referral of patients  
to those facilities.   
Virginia   Gina Bradley and  Melissa Forester were  each sentenced  to 4 months  of  home confinement and  
ordered to perform  100 hours of community service after pleading guilty to  making false statements  
related to health care matters.   Bradley was the  director of nursing for the Brian  Center Health and  
Rehabilitation Center (Brian Center), an SNF  in  Weber City, Virginia.   The investigation revealed  that, due  
largely to a lack  of staffing and funding from the corporate  owner,  a number of Brian Center residents  
suffered from neglect and failure of care, causing patients to develop unnecessary pressure sores and  
                                                           
1  The accomplishments  reported in the Semiannual Report to Congress: April 1    September 30, 2014, under  Legal and 
investigative activities related to Medicare and Medicaid, represents accomplishments related to all programs.  The correct 
information as it relates to healthcare only is as follows:   For April  1 to September 30, 2014, we reported 440 criminal and   
263 civil actions against individuals or entities that engaged in  health-care-related offenses.   We also reported over $958.4 
million in investigative receivables due  to  HSS and over $294.5 million in non-HHS investigative receivables, including civil   
and administrative settlements or civil judgments  related to Medicare,  Medicaid,  and other Federal, State, and  private  health  
care programs.  
 
  HHS Office of Inspector General   Page 21  
Semiannual Report to Congress |  Fall 2015  
 
forcing  many  residents to live in unsanitary conditions.   Bradley  supervised the nursing staffs care and  
treatment of residents,  including Medicare patients  who developed pressure ulcers; she caused nursing 
staff to neglect the pressure ulcers and  minimize the seriousness of the pressure  ulcers in medical  
records.   One patient  was  transported to  an emergency room with  a wound dressing that was found to  
be full of feces, and the wound itself was severely infected.   The patient later  died.   Forester was  the 
Brian Centers wound  care nurse under Bradleys supervision.   Forester made multiple false  entries on  
treatment administration  records,  indicating that she  provided  essential resident care that was not 
actually rendered, and  that  she provided resident care on days  when she was not  working.   Brian Center 
closed in August 2012 after failing multiple special focus facility surveys and after CMS cancelled its  
Medicare Provider Agreement.   Brian Centers  Corporate  Owner Avi Klein,  Regional Vice  President Alicia 
Dietrich, and  Administrator Vickie  Cox all pleaded guilty to  racketeering  charges.   Cox was sentenced to 6  
months in prison, while  Klein and Dietrich were each sentenced to  4  months  of home confinement and  
400 hours  of community service.  Klein also must  pay  about  $1.6 million  in restitution and fines.  In  
addition,  Klein agreed to be excluded  from participating in all Federal health care programs for 50 years.  
Quality of  care  
California   Country Villa Service Corp, d/b/a Country  Villa Health Services, and  the ARBA Group, Inc., CF  
Watsonville East, LLC and CF Watsonville West,  LLC entered into separate settlement agreements worth  
a combined $3.8  million to  resolve allegations  of  false claims  for materially substandard or worthless  
services.  The United States  alleged that  employees at  Country Villa Watsonville East Nursing Center and  
Country Villa Watsonville  West Nursing Center persistently  overmedicated elderly and vulnerable  
residents  of their facilities, causing  infection,  sepsis,  malnutrition, dehydration, falls, fractures, pressure  
ulcers, and for some beneficiaries, premature death.   In addition to the  settlements, the CF  Watsonville  
companies entered  into a 5-year corporate  integrity  agreement (CIA)  with  OIG, under which they will  
retain  a quality monitor chosen by OIG to  perform quarterly reviews of the facilities quality and  
compliance systems.   
Prescription  drugs  
New York    Kevin Lowe  was convicted  of conspiracy to  distribute and possess with intent to distribute  
oxycodone and  was convicted of conspiracy to distribute and possess with intent to distribute  
oxycodone.   The charge carries a maximum sentence  of 20 years in prison.   Lowe owned  and operated  
Astramed,  a series of purported  medical clinics  with  multiple locations in the Bronx, New York.   Astramed  
doctors were paid cash in exchange for writing tens  of  thousands of medically  unnecessary  prescriptions  
for large  quantities of oxycodone.   These prescriptions were then filled at pharmacies by co-conspirators  
who, in turn,  resold and distributed the drugs at  vastly inflated rates.   Patient recruiters would bring 
beneficiaries to the  clinic, where  they would receive a doctor visit  that typically  lasted  just a minute or 
two and involved no actual physical examination, and consistently resulted in a prescription for a large  
dose of oxycodone.   Crowds of up  to  100 people gathered daily  outside the clinics, waiting to see  one of  
the doctors and  receive a prescription for  oxycodone.   The patient would often  be escorted  by a  
patient recruiter,  or crew  member, to a pharmacy to fill the prescription.   The  crew member would  then  
pay the patient and take possession of and ultimately sell the oxycodone on the street.   Astramed also  
provided  oxycodone prescriptions  to drug addicts and  dealers for a fee,  typically in excess  of  $1,000 in  
cash.   In total, Astramed issued approximately  31,500  medically unnecessary prescriptions for  
 
  HHS Office of Inspector General   Page 22  
Semiannual Report to Congress |  Fall 2015  
 
oxycodone,  comprising  nearly  5.5 million tablets with a street value of up  to $164  million.   More  than 20 
defendants    including doctors, clinic  employees, and  drug traffickers    have previously pleaded guilty to  
their participation in the scheme.  
Michigan    Jamall Gibson  was sentenced  to 12  years  and 7  months in jail, and  ordered to pay  $10,100 in  
restitution and finesafter pleading guilty to conspiracy to distribute and  possess with intent to  
distribute controlled substances.   Sierra Walker was sentenced to  1 year and  1  month in jail, and ordered  
to pay $400,000 in joint and several restitution after pleading guilty to conspiracy to pay health care  
kickbacks.   According to the investigation, Gibson and his co-conspirators  obtained OxyContin pills and  
other controlled substances in Detroit,  Michigan, for distribution to  Portsmouth,  Ohio, and elsewhere.   
Gibson and his co-conspirators also had Medicare patients attend "patient parties" to obtain  
prescriptions for OxyContin pills and other medically unnecessary controlled drugs, which were then  
diverted for illegal street sales.   Walker and her co-conspirators acted as patient recruiters,  recruiting and  
paying Medicare beneficiaries and subjecting them to  physician visits.  Their action resulted  in fraudulent  
billings to  Medicare for medically unnecessary health  care  visits and prescriptions for controlled and  
non-controlled substances,  which  were subsequently billed  to Medicare.  
California   Artak Ovsepian was sentenced to 15  years  in prison and  ordered to pay $9.1 million in joint  
and several restitution after being convicted  on charges of conspiracy to commit  health care fraud,  
aggravated identity  theft, conspiracy  to misbrand pharmaceutical drugs, false statements to the Federal 
Government, and conspiracy to use other persons identification documents in furtherance  of fraud.   
Ovsepian and his co-conspirators operated  Manor Medical Imaging, Inc., located  in Glendale,  California,  
where they  employed an unlicensed  medical practitioner to write bogus prescriptions using a physicians  
name and license number.   They also had close relationships with pharmacies and a fraudulent drug 
wholesale company, which  were used to funnel prescription drugs back to the pharmacies participating  
in the scheme.   As  such, patient recruiters brought beneficiaries to  Manor Medical in exchange for cash  
or other  inducements.   The patients received prescriptions for antipsychotic  medications, and  
sometimes other  drugs.  This occurred  even though  either they  were not  evaluated by a physician or  
there was no  medical need for the medications.   The patients were then driven to a pharmacy  where,  
under the supervision of the driver, they filled their prescriptions and then gave the drugs to the driver.   
The drugs were  eventually  sold  on the black  market or redistributed to pharmacies, where they could be  
rebilled to  Medicare and Medi-Cal as new  bottles of drugs.   In addition to recruiting beneficiaries,  
Ovsepian and his co-conspirators also stole  the identities of beneficiaries.  They  used their information to  
generate fraudulent prescriptions.   Ten of Ovsepians co-conspirators were previously sentenced to a  
combined 28  years and  3  months in prison.  
Identity  theft  
Florida   Adam  Parrish  was sentenced to 6 years in prison and  ordered to pay  $351,358 in joint and  
several restitution after pleading guilty to conspiracy to commit health care fraud, aggravated identity  
theft, and  obtaining a controlled substance with another  persons  Drug Enforcement Agency  (DEA)  
registration  number.   Parrish admitted that he and his  co-conspirators, including Delmer Parrish,  
submitted claims for  reimbursement from Medicare,  Medicaid, and TRICARE for  prescriptions  that were  
neither  filled  nor provided  to beneficiaries  or recipients, including prescriptions for patients that had not  
been written or authorized  by a licensed physician.   Specifically,  Parrish and his co-conspirators wrote  
prescriptions for beneficiaries and recipients  who  were deceased,  wrote prescriptions using the 
identification  of individuals enrolled in Federal health  care programs  without their knowledge  or 
 
  HHS Office of Inspector General   Page 23  
Semiannual Report to Congress |  Fall 2015  
 
consent, and forged  the initials and used  the  DEA registration number  of a physician without his  
knowledge or  consent.   Parrish and others used Sunshine Pharmacy and Sunshine  Solutions in Naples,  
Florida, to further their unlawful scheme to defraud the Government.   Delmer Parrish, who was a 
licensed pharmacist and  owner  of Sunshine  Pharmacy, previously pleaded guilty to conspiracy to commit  
health care fraud and was sentenced to  2  years in prison.   
Florida   Gladys and  Mario  Fuertes were sentenced to  a combined 30  years and  9  months of  
incarceration, and  ordered  to pay  over $1.2 million in joint and several restitution and  forfeitureafter 
being convicted of conspiracy to commit health care fraud, health care fraud, and obstructing a health  
care fraud investigation.   Gladys Fuertes was also convicted  on aggravated identity theft.   Evidence at  
trial showed  that Gladys  and her husband, Mario, established and operated a sham clinic, Gables  
Medical and Therapy Center.  They also  employed unlicensed  medical professionals to bill Medicare for 
HIV services  that were never rendered.   The clinic used billing numbers of  other  medical professionals  
without their  knowledge to submit  the fraudulent  claims.   The couple also paid co-conspirators to recruit  
Medicare beneficiaries  to obtain  their Medicare identification numbers,  instructing  the beneficiaries to  
enroll into a targeted Medicare  Part C &  D plan.   Co-conspirators also assisted in filling fraudulent  
prescriptions for controlled substances, such as oxycodone,  which were billed and reimbursed  by  
Medicare.  They then purchased the pills from the Gables patients, later selling  them  on the street.   In  
addition, the investigation found that the couple instructed Gables patients to lie to law enforcement 
agents, and they altered  Medicare billing documentation after learning that  their clinic was under  
investigation.   
Home  health  
Florida   Felix  Gonzalez was sentenced to  9 years and  5  months  of imprisonment  and ordered to pay   
$21  million in  restitution after pleading guilty to conspiracy to commit health care fraud.   Gonzalez 
owned and  operated AA Advanced  Care, Inc., a Florida business that purportedly provided home health  
care and physical therapy services to  Medicare beneficiaries  who  were not eligible for those services.   
According to the investigation, Gonzalez and his co-conspirators paid patient recruiters to place  
beneficiaries at AA Advanced.  The recruiters then  sent the beneficiaries to doctors to  obtain  
prescriptions for home health services that were not medically necessary and  were not provided.   
Gonzalez and his co-conspirators caused patient documentation to be falsified to bill Medicare  about  
$32  million for the fraudulent services.   From  about  January 2006 to March  2009, AA Advanced  
submitted claims  to  Medicare for home health services purportedly provided to  about  900 beneficiaries.   
Gonzalez was an OIG Most  Wanted Fugitiveuntil he returned  to  the United States in September  2014  
and was arrested.  
Physicians  
New York    Mahesh Kuthuru was sentenced to a  year-and-a-half of imprisonment and ordered to pay  
$84,265 in restitution after  pleading guilty to charges of healthcare fraud and unlawful distribution  of  
controlled substances.   Kuthuru was a physician  who  owned and operated  Upstate Pain  Management,  
which had two  offices in New York, as well as  Desert  Pain Management in  Las Vegas, Nevada.   Kuthuru  
admitted that, between  January 2010 and September 2011, he submitted claims  to  Medicare that falsely  
reflected that he personally provided  or directly supervised  other licensed  medical professionals to  
provide treatment or services to patients in the New York offices.   In actuality, during these  times  
 
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Kuthuru  either  was practicing at his Las Vegas office  or was  out  of the country.   In  addition, clerical staff 
at the Upstate  Pain  Management offices partially filled out prescription forms and  then  sent the forms to  
Kuthuru  in Las Vegas to sign and  return.  Staff then dated and provided the prescription to patients,  even  
though the patients did not see a  medical professional  on these particular visits.   This health care fraud  
scheme  was discovered in the early stages thanks  to a  joint effort with the Federal Bureau of 
Investigation (FBI), DEA, and State and local law enforcement.   
Personal care  services  
Illinois    Alicia Davis and her mother,  Patricia Davis, were each sentenced to  3  years of probation and  
ordered to pay  $49,146  in  joint and several restitution  after pleading guilty  to health care fraud.   
According to the investigation,  Patricia and Alicia Davis, along  with  Patricias  other daughter, Michelle  
Calhoun, submitted Illinois  Department of Human Resources Home Services time  sheets  that  falsely  
represented dates, times, and hours  for  providing personal care services to Calhouns husband, a  
Medicaid recipient.   Calhoun pleaded guilty  to participating in the scheme and is  awaiting sentencing.   
Pennsylvania    Dawn Smith was sentenced to 1 year and 9  months in  jail and  ordered to pay $103,402   
in restitution after pleading guilty to conspiracy to commit false claims and false statements relating to  
health care.   Smith was enrolled  with the Medicaid Attendant Care Waiver program as a personal care  
attendant.   The investigation related  that Smith submitted time sheets  to the Medicaid program for  
attendant care services that she did not provide.   Smith also submitted attendant care  time sheets to   
the Medicaid program for care  purportedly provided by her associates.   However, those  Medicaid  
services  were also not provided.   
Electronic  health  records  
Texas    Joe Dell White was  sentenced  to 1  year and 11 months in jail, and ordered to pay $4.4  million in  
restitution after pleading  guilty to  making a  false statement.   White was the  chief financial officer  at  
Shelby Regional Medical Center, where he oversaw  the implementation  of  electronic health records  
(EHRs)  for the hospital.  He  was responsible for  certifying  that the hospitals  EHR platform  met 
meaningful use  requirements to qualify for incentive  payments under Medicares EHR Incentive  
Program.   However, during FY 2012, Shelby Regional did not  meaningfully use the  EHR platform, despite  
an attestation from  White  that it did.   Instead, with Whites knowledge, the hospital staff  only  minimally  
used the  EHR platform and  continued using paper records and charts  as well as  older, uncertified  
technology.   In an effort to  meet the  required  thresholds for  meaningful use  and  to  obtain EHR  incentive  
payments from CMS, White directed  others to  manually input data from paper records and  other  
sources into Shelby Regionals EHR system,  often  times many months after the patients were discharged  
from the  hospital.   White also created a user ID  for a hospital  representative, without the 
representatives knowledge or approval, and used  that ID to falsely  attest to CMS that the information  
provided about its EHR usage was  true, accurate, and  complete.   White falsely  certified to CMS that 
Shelby Regional  met the meaningful use requirements, even  though he was fully  aware that Shelby  
Regional used  the EHR system  sparingly and did not  meet the criteria for incentives.   As a result of  
Whites conduct, Shelby Regional received a  $785,655  EHR incentive payment from CMS in FY  2012.   
 
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Semiannual Report to Congress |  Fall 2015  
 
Kickbacks  
California   NuVasive Inc.,  agreed to pay $13.5  million to  resolve allegations that  the company promoted  
its CoRoent System for surgical uses that were not approved or cleared by the Food and Drug 
Administration (FDA)  and paid kickbacks to induce physicians to use its CoRoent System.   The United  
States alleged that, between 2008 and 2013, NuVasive promoted its CoRoent System for  certain surgical  
uses, including for use in treating two complex spine deformities:  severe scoliosis  and severe  
spondylolisthesis.   Because these specific uses  were not approved or cleared by  the FDA,  the claims  
submitted to  Medicare and Medicaid from physicians  and hospitals for  these spine surgeries were not  
eligible for reimbursement.   Brought to  market in 2005, CoRoent implants are used mainly in minimally  
invasive spinal operations.   As originally  indicated, the  devices  were to be used for intervertebral body  
fusion or as partial vertebral body  replacement devices.   The United States also  alleged that NuVasive  
knowingly  offered and paid illegal remuneration to certain physicians to induce  them  to use the CoRoent 
System in spine fusion  surgeries, in  violation of the Federal anti-kickback statute.   The alleged illegal 
remuneration  consisted of promotional  speaker  fees, honoraria, and  expenses  for  physicians attendance  
at events sponsored by a group that  was allegedly created, funded, and  operated  by NuVasive.  
Pharmacies  
Wisconsin and  Rhode Island    PharMerica Corporation entered into  two settlements for a total of $31.5  
million  to resolve claims  that it  violated the  False  Claims  Act and the  Controlled  Substances  Act.  
PharMerica is a long-term care pharmacy that dispenses  medications to residents of long-term care  
facilities, including nursing homes and skilled  nursing  facilities.  It  operates  about  95 pharmacies in the  
United States.   PharMerica allegedly  dispensed and billed Medicare for  Schedule II controlled substances  
without a valid prescription.   The prescriptions  were allegedly invalid because  they did not have a 
prescribers signature, or in the case of emergency dispenses, the prescriptions  were not based  on an  
oral  prescription  from the prescriberfollowed  by  a  written prescription with the prescriber's signature  
within 7 days.   In addition to the settlement amount,  PharMerica  entered  into a CIA with  OIG that 
includes PharMericas  board retaining  a compliance  expert for 2 years.   It also includes  retaining  an  
independent review organization to perform a prescription  review  to ensure that all claims submitted to  
Medicare  Part  D plans for controlled substances are based on  valid  prescriptions  and comply with  
Controlled  Substances  Act requirements.  
Laboratories  
New Jersey    Three physicians were sentenced, during this reporting period, after pleading guilty to  
charges related to a test-referral kickback scheme.   According to  the investigation, Biodiagnostic  
Laboratory Services  Inc.  (BLS) solicited and paid bribes to physicians in  exchange  for referring patient  
blood specimens to  the laboratory.   As part of the kickback scheme, BLS entered into sham consulting  
agreements, sham rental and service agreements, and offered cash  and other inducements, such as  
third-party businesses,  credit card payments, and  valuable items (cars and electronics).   BLS used the 
patient blood specimens to submit  more than  $100  million in claims to  Medicare  and private insurers.   
During this reporting period, physicians Eugene  Desimone, Franz Goyzueta,  and Anthony Deluca  
admitted to accepting  about  $1,500 or more  a  month in return for referring patient blood specimens.   
The three were sentenced  to a combined  7 years and  2  months in jail, and  ordered to pay a combined  
 
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Semiannual Report to Congress |  Fall 2015  
 
$434,300 in restitution.   BLS owner David Nicoll pleaded guilty to conspiracy to commit bribery and  
money laundering, and is awaiting sentencing.   
Pharmaceutical  companies  
Pennsylvania    Shire Pharmaceuticals  LLC agreed to pay $56 million to  resolve  allegations that it  
promoted Adderall XP as  clinically superior to  other attention deficit hyperactivity  disorder drugs based  
on its  mechanism of action  and its ability to normalize patients.   This occurred  despite a lack of clinical 
data to support the  claims.   Shire  Pharmaceuticals  allegedly  suggested to  doctors that treatment with  
Adderall XP would help prevent certain issues linked to this disorder, such as poor academic  
performance, loss of employment, criminal behavior,  traffic accidents, and sexually transmitted disease.   
Shire also promoted the drug for the treatment  of conduct disorder, an indication for use which  was not  
FDA- approved, was  not  a medically accepted indication, and was not covered by State  Medicaid  
programs.   Shire allegedly  made promotional claims and marketed other drugs (Vyvanse,  Daytrana,  
Lialda, Pentasa) when  there was insufficient clinical data to support the claims.   In addition, certain Shire  
sales representatives  knowingly and improperly  made  phone calls and drafted letters to Medicaid to  
assist physicians  with  the prior authorization process for Shire drug prescriptions.   These prior  
authorization services  were conducted  to induce physicians to prescribe Shire drugs that were paid   
for by Medicaid.   
Hospitals  
Georgia   The Medical Center  of Central Georgia, Inc.  entered into a $20  million settlement agreement 
with the United States to resolve allegations under the False  Claims  Act.   The Medical Center  is located in  
Macon, Georgia, and is the  second largest hospital in  the State.   From January 2004  through August  
2008,  the Medical Center  allegedly submitted false  claims to  Medicare for medically unnecessary  
inpatient admissions, including zero-day stays, one-day stays, cardiac stays with a procedure, and cardiac  
stays  without a procedure.   Specifically, these services  should have been billed as  outpatient  or 
observation services  due  to the absence of medical necessity for inpatient services.   In addition to  the  
settlement agreement,  the Medical  Center  entered into a  5-year CIA  with OIG that requires this hospital  
to retain  an independent review  organization to conduct two reviews:   (1) a claims review  of a 
population of  paid  claims determined by OIG in its sole discretion each year, and  (2) an inpatient   
medical necessity  and appropriateness review  of inpatient admissions during the  third, fourth, and   
fifth reporting periods.  
Psychiatric and  psychological services  
Arkansas    Health Management Associates, Inc. and 14 hospitals formerly  owned and operated by  
Health  Management  entered  into a $15 million settlement agreement with the United States to resolve  
allegations  under the  False  Claims  Act.  The United States alleged that the HMA hospitals, located in  
seven states, individually contracted with Allegiance  Health Management to provide  outpatient  group  
psychotherapy to  Medicare patients in  exchange for paying Allegiance a percentage of the amounts  
reimbursed by Medicare.   Allegiance is a post-acute healthcare management company based in  
Louisiana.   From January 1, 2005, through  December 31, 2013,  the  Health Management  hospitals  
 
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Semiannual Report to Congress |  Fall 2015  
 
allegedly submitted claims  to  Medicare for intensive  outpatient psychotherapy services that Allegiance 
provided to patients  where the services did not qualify for  Medicare reimbursement because (1) the 
patients condition did not  qualify for  intensive outpatient psychotherapy; (2)  the patients treatments  
were not provided pursuant to an individualized treatment plan designed to help the patient address  
specific  mental health needs and reach achievable goals;  (3) the patients progress was not being  
adequately  tracked or documented;  (4)  the patient received an inappropriate level of treatment;  or   
(5)  the therapy provided was primarily recreational or diversional in nature,  and  was not therapeutic.   
Community  mental  health  center  
Florida   Ruben Busquets  was sentenced  to 4  years in prison and  ordered to pay  $13.6  million in joint  
and several restitution  after pleading guilty to conspiracy to commit health care fraud.   Busquets was a  
licensed  mental health counselor who worked as a therapist for Health Care Solutions Network, Inc., in  
Florida.   Busquets admitted that he provided intensive therapy to mental health patients who were 
ineligible to  receive the therapy  or could not benefit from partial hospitalization program (PHP) services,  
including patients suffering from dementia,  mental retardation, and Alzheimers disease.   During his  
employment, Busquets was  aware that patient medical records were created  weeks  or  months after  the 
patients were admitted  to  Health  Care Solutions  for purported  PHP treatment; these records were used  
to support false billings to  Medicare and Medicaid.   Busquets signed fabricated  PHP therapy notes and  
other medical records, used to support the false claims.   During his  employment,  Busquets and his co-
conspirators submitted  about  $31  million in false  claims to  the Medicare and Florida Medicaid programs.   
Durable  medical equipment  
California   Adeline Ekwebelem was sentenced to  6  years and 6  months in prison and ordered to pay  
$3.4  million in joint and several restitution after being  convicted of conspiracy to  commit health care  
fraud, health care fraud, and  illegal remunerations for  health care referrals.   According to the  
investigation, Ekwebelem paid marketers to solicit beneficiaries for his company,  Adelco  Medical 
Distributors, Inc., a durable medical equipment (DME)  supplier located in Gardena, California.   
Ekwebelem and his co-conspirators then  offered the beneficiaries  medically unnecessary power 
wheelchairs, hospital beds, orthotics, and other DME for free.   The beneficiaries  would be  taken to see  
physicians who would create fraudulent patient files.   These files  included DME  prescriptions and  false  
statements in face-to-face  examination forms, purporting to support  the  medical need for the DME,  
even though the physicians did not  examine  the beneficiaries.   The physicians  would then direct the  
beneficiaries back to Adelco to fill the prescriptions for the  DME.   Both Ekwebelem and the physicians  
would bill Medicare for DME, office  visits,  or  diagnostic tests that were  either medically unnecessary  or 
were not provided.   One  of the physicians, Charles Okoye,  was previously sentenced to 2  years in prison  
and ordered to pay  over $930,000 in restitution.   
California   Olufunke  Fadojutimi  was sentenced to 4  years in prison and  ordered  to pay $4.3  million in  
joint and several restitution after being convicted  of  conspiracy  to commit health care fraud, health care  
fraud, and laundering of monetary instruments.   Fadojutimi  was a registered nurse who  owned and  
operated Lutemi  Medical Supplies,  a DME company located in Carson, California.  According to  the  
investigation,  Fadojutimi and her co-conspirators used cash and checks to pay illegal kickbacks to recruit  
Medicare beneficiaries for power wheelchairs and  other  DME, to which  the beneficiaries did not have a  
legitimate medical need.   Fadojutimi and her co-conspirators also paid illegal kickbacks to a physician in  
 
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Semiannual Report to Congress |  Fall 2015  
 
exchange for writing false prescriptions  and documents for the  DME, which  were  then used to  
fraudulently bill Medicare.   
International health  care  fraud scheme  
Miami    Mirna Blanco was sentenced to  2 years  in prison and ordered to pay  $16  million in  joint and  
several restitution after pleading guilty to conspiracy to commit health care fraud and wire fraud.   Blanco  
was employed  by Florida Healthcare Plus, Inc. as well as  by Axis Le Professional Medical Group Corp.  and  
Rodney Montoya  Corp.  Florida Healthcare  was a health  maintenance  organization in Florida, while Axis  
Le and Rodney  Montoya contracted with  Florida Healthcare  and other organizations  as a medical 
services provider.   According to  the investigation, Blanco,  manager of social services  at  Florida 
Healthcare,  submitted fraudulent  Medicare  and Medicaid  enrollment applications for  beneficiaries  that 
claimed that  the beneficiaries  resided in Florida.   However, these applicants actually resided in Nicaragua 
and the Dominican Republic.   Blanco and her co-conspirators used nonresidential  addresses, addresses  
belonging to the relatives  and friends of  these foreign  residents,  and addresses associated with the 
defendantsto falsely represent that  the foreign residents lived in Florida.   In addition to Blanco, five  
defendants connected to this health care fraud scheme  were sentenced  to a combined 10  years and   
3  months in prison and  ordered to pay $16  million in restitution, joint  and several.  
Health care  fraud prevention  and  enforcement  
On May 20,  2009, former HHS Secretary Kathleen Sebelius and Attorney General Eric Holder announced  
the creation of the Health  Care Fraud  Prevention and  Enforcement Action Team (HEAT), an interagency 
effort focused specifically  on combating health care fraud.  HEAT includes  senior officials from  HHS and 
the Justice Department who are strengthening programs, as well as investing in new resources and  
technologies, to prevent and combat fraud, waste, and abuse.  
HEAT  provider  compliance  training  
OIG provides free training on our  Web site  for health  care providers, compliance  professionals, and  
attorneys.  OIGs Provider Compliance Training was an initiative developed as part  of HEAT in 2011  that  
continues to reach  the health care community  with OIGs message  of compliance  and prevention via 
free, downloadable, comprehensive training materials and podcasts.  OIGs  HEAT  provider compliance  
training resources can be accessed at http://oig.hhs.gov/newsroom/video/2011/heat_modules.asp.   
Medicare Fraud Strike Force   
Medicare Fraud Strike Force teams began in 2007 in an effort  to combine  the resources  of Federal, State,  
and local law  enforcement  entities  to prevent and combat health care fraud, waste, and abuse.   These 
Strike Force teams are partnerships  among  OIG and HHS, Department of Justice (DOJ), U.S. Attorneys  
Offices,  the FBI,  and State and local law  enforcement  with a common goal: to successfully analyze health  
care fraud data and investigative intelligence to quickly identify fraud and bring prosecutions.   Strike 
Force teams currently  operate in nine areas:  Miami, Florida;  Los Angeles, California; Detroit,  Michigan;  
 
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Semiannual Report to Congress |  Fall 2015  
 
southern Texas;  Brooklyn,  New  York; southern Louisiana; Tampa, Florida; Chicago, Illinois; and   
Dallas, Texas.  
Examples of Medicare Fraud Strike Force cases are  shown below.  
Southern  Texas Strike Force    Earnest Gibson III, Earnest Gibson IV, Mohammad Kahn, and Regina Askew  
were sentenced to a combined  117  years of incarceration; they were also  ordered to pay more than  $46  
million in  joint and  several  restitution after being convicted  of conspiracy  to commit health care fraud  
and  conspiracy to  pay  and receive kickbacks.  Gibson III and Gibson IV were also convicted  of conspiracy  
to commit  money laundering.   The  scheme  involved the  submission of more than  $158 million in  false  
claims to  Medicare  for  PHP services that were medically unnecessary, not  eligible for reimbursement,  
and were not provided.   To facilitate  the scheme, the defendants  offered and paid kickbacks, including 
cash, cigarettes, and food, to patient recruiters, group  home  owners, and assisted living facility  owners in  
exchange for sending Medicare beneficiaries  to  Riverside General Hospital  and its  satellite facilities,  
where the  patients  watched television, played games,  and engaged in other non-PHP activitiesrather  
than receive  the  PHP services for which  the hospital billed  Medicare.   
Detroit Strike Force    Three defendants were sentenced to a combined  20  years and 8  months in  jail, and  
they were ordered  to pay  more  than $22 million in joint and several restitution after being convicted of  
conspiracy  to commit health care fraud and  other charges.   Abdul Al-Jumail and  Mohammed Sadiq  
jointly operated  several  HHAs  in Michigan, while Abduls daughter Jamella co-operated a  HHA.  
According to the investigation, the three defendants, along with  their co-conspirators, paid kickbacks and  
bribes to recruiters and  others for beneficiary information that  would be used to falsely bill Medicare  
millions for home health services that  were  medically  unnecessary and not performed.   The conspirators  
fabricated patient files and  medical documents  to give  the false impression that  medical services billed  
to  Medicare were legitimate.   After learning  of her fathers arrest, Jamella directed and participated in  
the burning of patient charts and records to cover her false billings to Medicare.   Firas Alky, who jointly  
operated several of the home health care facilities,  was indicted in September 2012, but investigators  
believe that he fled the country.   Alky is  one  of OIGs Most  Wanted Fugitives.  
Miami Strike Force    Alexander Lara  was sentenced to 10 years in prison and ordered to pay $13 million  
in joint and several restitution after pleading guilty to conspiracy  to commit health care fraud.   Lara 
owned Longcare Home Health Corporation, a Miami-based business that purportedly provided home  
health and therapy services to Medicare beneficiaries.   Lara admitted  that he and his co-conspirators  
billed Medicare for, among  other things,  expensive physical therapy and home health care services that 
were not medically necessary or  were not provided.   Laras primary  role  was to  manage and supervise  
patient recruiters and  other personnel and  to  coordinate, plan,  organize, and  oversee the  submission of  
false claims to  Medicare.   Lara and his co-conspirators  also paid kickbacks and bribes to co-conspirators  
in doctors' offices and clinics in  exchange for providing home health and therapy prescriptions.   From  
about  January 2009 to  November  2014,  Longcare submitted  more  than $13 million in claims to  Medicare  
for home health services that were not necessary or were not provided.   Eight defendants who  
participated in the fraud scheme were previously sentenced to a combined  53  years and 7  months  in jail.   
 
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Other  criminal  and  civil enforcement  activities  
Special Assistant  U.S. Attorney Program   
During this reporting period, OIG and  DOJ continued their participation in a program in  which OIG  
attorneys, some of  whom are Special Agents, serve as  Special Assistant U.S. Attorneys.   OIG attorneys  
are detailed full time  to  DOJs Criminal Division, Fraud  Section, for temporary assignments, including  
assignments to the Medicare 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  on  the fraudulent billing of medical equipment   
and supplies, infusion therapy, and physical therapy as well as  on other  types of Medicare  and   
Medicaid fraud.   
Corporate Integrity Agreements   
Many health care providers elect to settle  their cases before litigation.   As  part of the settlements,  
providers  often agree to enter into CIAs  with OIG to avoid  exclusions from  Medicare,  Medicaid, and  
other  Federal health care programs.   Under a CIA, a provider commits to  establishing a program and  
taking other specified steps to  ensure future compliance with Medicare and Medicaid rules.   The  
compliance programs are designed, in part, to prevent future fraud.   OIG  monitors providers compliance  
with these agreements  and  may impose penalties on entities that fail to comply with the requirements  
of their CIAs.   Many  civil settlements include CIAs with OIG.  Examples of these CIAs are included in the 
case narrative section.   
A related case example follows:  
Illinois    LifeWatch Services, Inc., a durable  medical equipment supplier, agreed  to pay  $737,572  to settle  
allegations that it  knowingly submitted false  claims to  Medicare from February 21, 2013 through June  
30,  2014 for cardiac monitoring services.   Specifically,  OIG alleged that LifeWatch  submitted claims  to  
Medicare for  ambulatory  cardiac  telemetry services  for which the  medical record documentation did not  
support that the physician  had ordered  these telemetry  services.   The settlement  resolves  a reportable  
event submitted by LifeWatch as required under its CIA.   LifeWatch  entered into the CIA in March  2012  
as part  of an  $18.5  million  civil settlement with  the United States, resolving allegations that, among  
other things,  the supplier  submitted claims to  Medicare for cardiac monitoring services that were not  
medically necessary, and encouraged the use  of  more expensive cardiac  monitoring devices  when a less  
expensive device was sufficient to meet the patients needs.  
OIGs Most Wanted Fugitives  
Garnering national and international attention, the  OIG Most Wanted Fugitives  Web site has greatly  
assisted  our efforts  to capture fugitives charged with  defrauding Federal health care programs and  
stealing millions of taxpayer dollars.   The Most Wanted Fugitives  Web  site is continuously updated and  
features a profile  for each fugitive, as well as an  online tip form and a hotline number for individuals to  
 
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Semiannual Report to Congress |  Fall 2015  
 
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 http://oig.hhs.gov/fraud/fugitives.  
One of the OIGs  Most  Wanted Fugitives is Armando "Ana" Zamora, who  was indicted  in  July 2004  on  
charges  of health care  fraud conspiracy and health care fraud.   Investigators believe that Zamora and her  
co-conspirators received  about  $550,000 in  reimbursement from Medicare for the  cost of DME  and  
other  related items and services that were either  medically unnecessary  or were  never provided.   
Zamora and Aurora Estevez established Health South  Medical Supply  Corporation, a DME company in  
Miami-Dade County, Florida.   According to the indictment,  Zamora,  Estevez,  and their co-conspirators  
acquired  Medicare beneficiary information,  which Health South allegedly used to  prepare fraudulent  
Medicare claims.   The defendants also acquired the identification numbers  of doctors to help further  the  
fraud.   Zamora, Estevez, and their co-conspirators falsely represented  that doctors had treated patients;  
that doctors had prescribed DME, including custom-fitted orthotics,  and other related  items and  services  
for patients; and  that such  DME had been delivered to Medicare beneficiaries.   Estevez pleaded guilty  
and was sentenced in January 2005 to  2 years in jail and ordered to pay  $505,704 in restitution, joint  and  
several.   Zamora fled the United States and is believed to be residing in Central or South America.   She  
remains a fugitive at large.   
Because  of the success of  OIGs Most Wanted Fugitives  Web site,  OIG launched its Child Support  
Enforcement webpage.   Updated frequently, this page  includes information  on OIGs role in investigating 
parents who fail to pay court-ordered child support and information on OIGs  Most Wanted Deadbeat 
parents.   These parents put an unnecessary strain  on the children and their custodial parents as well  as  
on agencies that enforce these matters.   Examples are  provided in  the  Human Services Reviews section  
of this  Semiannual Report.  
OIG  Hotline Operations  
The  mission of OIG Hotline  Operations is to assist OIG in protecting  the integrity  of all HHS programs and  
agencies.  Strategically placed within  the Office of Investigations (OI), OIG Hotline Operations serves as  
the public face of OIG  through  the analysis and processing of complaints and  of information received  
through  various available hotlines and numbers, including, but not limited to,   OIGs  Fraud, Waste and  
Abuse Hotline; OIGs Fugitive Hotline; and the CDCs Select Agent and Import Permit Hotlines.   
Constantly working to improve  outcomes and  results,  OIG Hotline Operations uses state-of-the-art  
approaches and current technology to best address all  matters received.  
 
OIG Hotline  Activity   
Contacts Received:  04/01/15   09/30/15  
Total Calls Received               57,636  
(Total Operator-Assisted Calls:  10,784)  
Total Non-Call Matters Received            6,736  
Total Contacts2                                   64,372  
Total Complaints Evaluated                   17,816  
                                                           
2  A contact is the total number  of instances  in which  a person contacts OIG Hotline Operations, regardless   
of the nature of the contact, and receives service through automated or manual means.  
 
  HHS Office of Inspector General   Page 32  
Semiannual Report to Congress |  Fall 2015  
 
State  Medicaid Fraud  Control  Units   
OIG oversight  of  State Medicaid Fraud Control Units    
Medicaid Fraud Control Units  (MFCUs)  are key partners with  OIG in the fight against fraud, waste, and  
abuse in State Medicaid programs.  OIG has  oversight  responsibility for MFCUs and administers grants  
that provide Federal funding  for  unit  operations.  The Federal Government reimburses 75  percent 
of  the  costs of operating  an MFCU; the States contribute the remaining 25 percent.  MFCUs investigate 
and prosecute Medicaid provider fraud and  Medicaid  patient abuse and neglect in health care facilities  
or board and care facilities.   MFCU accomplishment data and onsite  reviews for FY 2015  will be reported  
in OIGs spring 2016  Semiannual Report.     
OIG onsite reviews  of MFCUs    
OIG has developed  12 performance standards for use  in assessing the operations  of MFCUs.  A  copy of  
the MFCU performance standards, most  recently revised in June 2012,  may be found on the  OIG  Web  
site.  Periodicallyabout  every 5 yearsOIG conducts an in-depth onsite  review  of each  MFCUs  
operations as  related to  these  12 performance standards and  assesses compliance with laws,  
regulations, and OIG policy  guidance.  OIG issued reports of onsite reviews  of the  following  MFCUs  
during the reporting period.  The full  reports are available on  our Web site.    
  Rhode Island State  Medicaid Fraud Control Unit: 2014  Onsite Review  (OEI-02-14-00580



  
http://oig.hhs.gov/oei/reports/oei-02-14-00580.asp)  September  2015



  
  Alabama State Medicaid Fraud Control Unit: 2014  Onsite Review  (OEI-06-13-00660



  
http://oig.hhs.gov/oei/reports/oei-06-13-00660.pdf)  April  2015 




  Maine State Medicaid Fraud Control Unit:  2015  Onsite Review  (OEI-07-15-00140



  
http://oig.hhs.gov/oei/reports/oei-07-15-00140.pdf)  September  2015



   
  Ohio State Medicaid Fraud Control Unit: 2014 Onsite Review  (OEI-07-14-00290



  
http://oig.hhs.gov/oei/reports/oei-07-14-00290.asp)  April  2015 




  Hawaii State  Medicaid Fraud Control Unit:  2014 Onsite  Review  (OEI-09-14-00540



  
http://oig.hhs.gov/oei/reports/oei-09-14-00540.asp)  September  2015



    
  Georgia State Medicaid Fraud Control Unit:  2015  Onsite Review  (OEI-07-15-00090 



 
http://oig.hhs.gov/oei/reports/oei-07-15-00090.asp)  September  2015



    
  District of  Columbia State  Medicaid Fraud Control Unit:  2015  Onsite Review  (OEI-07-14-00660   
http://oig.hhs.gov/oei/reports/oei-07-14-00660.pdf)  September  2015     
Examples of joint efforts  with MFCUs:  
Texas    William Owuama was sentenced to  5  years  of incarceration, and ordered  to  pay $3.9 million  in  
joint and several restitution after pleading guilty  to conspiracy to commit healthcare fraud and  violate  
 
  HHS Office of Inspector General   Page 33  
Semiannual Report to Congress |  Fall 2015  
 
the  anti-kickback statute.   Owuama owned and directed Wilmar Healthcare Systems.   Florida Holiday  
Island, a co-conspirator,  worked at  Wilmar and was paid for recruiting  Medicare beneficiaries  and  
transporting them to Wilmar, where they were paid cash for  each  visit  they  made to the office.   Owuama  
admitted that Wilmar typically billed  Medicare and Medicaid for a battery  of diagnostic  vestibular tests  
three  times a week for months, and in some cases, years.   These tests, however,  were either not actually  
performed, not  medically necessary,  or were not directly  overseen by a physician.   Wilmar used a former 
licensed physician to bill for the tests,  although  the physician was incarcerated  on tax-related charges at  
the time he was supposedly seeing the patients and  ordering  the tests.   Island  also  pleaded guilty to  
conspiracy  to commit healthcare fraud and violate the  anti-kickback statute, and was  sentenced to  13  
months of home confinement and ordered to pay  $1.9  million in joint and several restitution.   This case  
was worked jointly  with the FBI and  the  Texas MFCU.   
Massachusetts   Punyamurtula Kishore  was sentenced to  1  year in jail, and  ordered to pay $9.3  million in  
joint and several restitution  after pleading guilty  to Medicaid kickbacks,  Medicaid false claims,  and  
larceny.   Kishore  also agreed to surrender his  medical license.   Kishore owned  and  managed Preventive 
Medicine  Associates, Inc., a network  of 29  medical branches and laboratories throughout  Massachusetts.   
According to the investigation, Kishore induced  owners of  sober houses with bribes and kickbacks  to  
send their  residents urine  drug screening business to  his laboratories for testing.   Sober houses, also  
known as half-way houses,  are alcohol- and drug-free living environments for people in recovery.   
Residents at these sober houses  were typically  screened  three  times  per week.   Kishore  then  
fraudulently billed Medicare and Medicaid millions  of dollars for these urine  drug  screening  tests, even  
though the patients were never treated by providers at Preventative Medicine.  Thomas Leonard and  
John Coughlin, two  owners of sober houses who provided screening  tests to  this entity  in return  for  
payments, were  each sentenced to 2  years in prison.   This case  was worked jointly with the  
Massachusetts  Attorney Generals Office, Medicaid Fraud Division.   
Advisory opinions and other  industry guidance   
As part  of OIGs continuing efforts  to promote the highest level  of  ethical and lawful conduct by the  
health care industry, we issue advisory  opinions and  other guidance to  educate industry and other  
stakeholders  on how  to avoid fraud, waste, and abuse.   Developed in consultation  with DOJ,  advisory  
opinions  are issued to requesting parties  on the interpretation  and applicability  of certain statutes  
relating to Federal health care programs.   The Health Insurance Portability and Accountability Act  of 
1996,   205, allows OIG to  provide case-specific formal guidance on  the application of the anti-kickback  
statute  and safe harbor provisions and  on  other OIG health care fraud and abuse  sanctions.   From April 
1, 2015,  to September  30,  2015, OIG received  21 requests for advisory  opinions and issued 8  opinions.  
Sanction  authorities and other administrative  actions   
Various Federal laws provide  the authority  to impose administrative sanctions for fraud and abuse as  
well as  on  other activities that pose a risk to Federal health care programs and their beneficiaries.   
Sanctions  include  the exclusion of  individuals  and entities from  Federal health care programs and the  
imposition  of civil monetary penalties (CMPs) for submitting false claims to a Federal health care  
program  or for violating the anti-kickback statute;  the Stark Law; or the Emergency  Medical Treatment 
and Labor Act (EMTALA), also known as  the patient dumping statute.   During this  semiannual reporting 
 
  HHS Office of Inspector General   Page 34  
Semiannual Report to Congress |  Fall 2015  
 
period, OIG imposed 2,437  administrative sanctions in  the form  of program  exclusions  or administrative  
actions for alleged fraud  or abuse or other activities  that posed a risk to Federal health care programs  
and their beneficiaries.   Exclusion and penalty authorities are described in Appendix D and  on  our  Web  
site at http://oig.hhs.gov/fraud/enforcement/cmp.   
Program exclusions   
The Social Security Act,   1128 (42 U.S.C.  1320a-7),  provides several grounds for excluding individuals  
and entities from participation in Medicare, Medicaid,  and other Federal health care programs.   
Exclusions are required for  individuals and entities convicted of the following  types of criminal offenses:   
(1)  Medicare  or Medicaid fraud; (2) patient abuse  or neglect; (3) felonies for other health care fraud;  and  
(4)  felonies for illegal manufacture, distribution, prescription,  or dispensing of controlled substances.    
OIG is authorized to  exclude individuals and entities  on several  other grounds, including misdemeanors  
for other health care fraud  (other than  Medicare or Medicaid) or for illegal manufacture, distribution,  
prescription,  or dispensing of controlled substances;  suspension  or revocation  of  a license to provide  
health care for reasons bearing on professional competence, professional performance, or financial 
integrity; provision of unnecessary  or substandard  services; submission of false  or fraudulent claims to a 
Federal health care program; or engaging in unlawful kickback arrangements.  
The ACA  added another basis for imposing a permissive exclusion, that is, knowingly making, or causing 
to be made, any false statements or omissions in any  application, bid, or contract to participate as a  
provider in a Federal health care program, including managed care programs under Medicare and  
Medicaid, as well as  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  to  Federal district   
and appellate courts regarding the basis for and the length of the  exclusion.  
Exclusions case  examples follow:  
Massachusetts   Michael Galatis was excluded for a minimum  period  of 38 years  based on his conviction  
for conspiracy  to commit health care fraud, health care fraud, and  money laundering.   Galatis owned  the  
home health agency MJG  Management, d/b/a  At Home VNA.  According to the  investigation, Galatis  
recruited patients to his facility and trained his nurses  to complete forms to  make it appear as if the  
recruited patients  were homebound and in need  of skilled nursing services.   However, in actuality,  the  
patients were not homebound and did  not  need skilled nursing services.   Galatis  submitted false claims  
to  Medicare for the purported home health and  other related services.  He also  diverted the proceeds  
from  the fraud for his  own  personal use and  benefit.   As a result  of his conviction, Galatis  was sentenced  
to 7 years  and 8 months in  prison and ordered to pay  about  $7  million in restitution.   
Michigan    Pharmacist  Waleed Yaghmour was excluded for a minimum period of  18  years based  on his  
conviction for conspiracy to distribute and possess with intent to distribute controlled substances and  
monetary transactions in property derived from specified unlawful activity.   Yaghmour owned  and  
operated Sav-Mart Pharmacy  in Detroit,  Michigan.   He conspired  with  other individuals to bring him  
fraudulent prescriptions, to which he dispensed  controlled  substances with no legitimate  medical 
purpose.   Yaghmour then  received cash payments for  illegally dispensing the controlled substances.    
He was sentenced to  6  years of incarceration.   
 
  HHS Office of Inspector General   Page 35  
Semiannual Report to Congress |  Fall 2015  
 
Indiana    Lance Anglin was  excluded for a minimum period of 20  years based on his conviction for 
criminal deviate conduct.   While working in a group home, Anglin instructed a mentally  retarded patient  
to perform oral  sex on  him in  the  group homes  living room.   As a result  of his conviction, Anglin was  
sentenced to  10 years of  incarceration.  
Florida   Sircy Sacerio  was  excluded for a minimum period of 15  years based on his conviction   
for conspiracy to  commit mail fraud and mail fraud.   Sacerio worked as a receptionist/office  
assistant/registered chiropractic assistant for a chiropractic center that submitted fraudulent claims for  
chiropractic and  massage treatments for individuals  who participated in staged automobile accidents.   
Sacerio helped recruit individuals to participate in  staged automobile accidents, instruct those recruited  
on how  to participate in the accident and  on  how to collect police reports,  and told them  what clinics  
they should go to for treatment (even  though treatment was not needed).   In addition, Sacerio prepared  
fraudulent insurance documentation for chiropractic  and massage therapy treatments for  those involved  
in the staged accidents, knowing  that the treatments  were not medically necessary  or received.   The 
false claims were then submitted to  various automobile insurance companies.   As a result  of his  
conviction, Sacerio  was  sentenced to  4  years in prison  and ordered to pay  about  $1.1 million  in  
restitution.   
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, that have misused  
grant funds, or that 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 from participating 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.    
Two debarment examples  follow:  
Missouri   Cheryl A. White,  former chief executive officer of Southeast Missouri Health  Network, was  
debarred for a 5-year period based on her conviction for criminal conspiracy.   Southeast Missouri  Health  
is a nonprofit,  federally  qualified health center  that provides health services in six counties in southeast  
Missouri.  Between  2004 and 2009,  White submitted false statements to the Government in order to  
obtain Federal  grant  funds on  Southeast Missouri Healths behalf from the Health  Resources and  
Services Administration.  Once the funds were secured, White further abused her position  of trust by  
personally using and allowing her employees  to use this nonprofit health centers  funds to purchase  
personal items and services, such as household furniture, clothing,  and a designer wallet.  Moreover,  
White took  various  measures to  obstruct auditors from discovering her improper business practices.   
Based  on her scheme,  White was sentenced to  2  years  and 9  months of incarceration, and ordered  to  
pay over $103,000 in restitution.  
 
  HHS Office of Inspector General   Page 36  
Semiannual Report to Congress |  Fall 2015  
 
Indiana    Christina Lynn-Wright, director of fiscal operations for the Indiana Association for Child Care  
Resource and Referral,  was  debarred for a 3-year period based on her criminal theft conviction.   Indiana  
Association  is  an indirect recipient of Federal grant funds from  the Administration  for Children and  
Families,  and its mission is  to perform advocacy services for local families to  ensure the availability  of 
high-quality and affordable child care.  Lynn-Wright used her position of trust to  write  88  association  
checks totaling  over $160,000  to herself for her  own personal use and benefit.   She  was sentenced to   
2  years  of home detention  and ordered to pay  $161,477 in  restitution.  
Civil Monetary  Penalties Law   
The Civil  Monetary Penalties Law  (CMPL) authorizes  OIG to impose administrative  penalties  on and  
assessments against a person who, among other things, submits,  or causes to be  submitted, claims  to a  
Federal health care program that the person  knows  or should know are false  or fraudulent.   During this  
semiannual reporting period, OIG concluded cases involving more  than $31.9  million in CMPs and  
assessments.   
The following are case examples:  
New Jersey    Sandoz, Inc.  agreed to pay  $12.6 million  to settle  allegations that it  misrepresented drug 
pricing data to the  Medicare  Program.   Sandoz, a division of Novartis  Pharmaceuticals and one of the  
worlds largest generic  drug manufacturers, markets hundreds of generic  medications in the United  
States.   Under Federal law,  drug makers  must report both accurate and  timely  average sales price  
information to CMS.  CMS uses this information  to set payment amounts for  most drugs covered under  
Medicare Part B.  OIG alleged that Sandoz failed to submit accurate  average  sales price  data to  CMS for 
each quarter  from January  2010  through March 2012.   OIG previously pursued CMPs against Sandoz for  
late reporting  of drug pricing information to CMS.   That case was  settled in December  2011 with Sandoz  
agreeing to  a $230,000 settlement.   The 2015 Sandoz settlement is the largest  ever under OIGs drug 
price reporting CMP authority.  
Florida   Timothy Fennell,  a licensed  mental health counselor, agreed to pay $120,000 to settle 
allegations that he submitted false claims to Medicare for psychotherapy and  other services rendered at 
his former company, Lakemont Clinic.   OIG alleged that Fennell used the provider information of an  
Orlando-area physician to  enroll in Medicare  and  submit  claims for services that  were  neither  rendered  
nor  supervised by a  physician.   Fennell also agreed  to  be excluded for 12  years.   
Iowa    Accurate Home  Care, LLC agreed to pay $334,651 for allegedly  violating  the CMPL.   OIG 
contended that from October 12,  2010,  through June 25, 2013, Accurate billed for  items and services  
provided  by an excluded nurse.   As part  of the settlement, Accurate certified  that  it has in place policies  
and procedures  to prevent  the hiring of,  or contracting with, any excluded individual  or entity.  
Patient  Dumping     
Some  of the CMPL cases that OIG resolved between April 1,  2015, and September 30,  2015, were 
pursued under the Emergency Medical Treatment and Labor Act  (EMTALA), a statute designed to prevent  
hospitals from denying emergency care to patients  and to  ensure patient access to appropriate  
emergency medical services.   
 
  HHS Office of Inspector General   Page 37  
Semiannual Report to Congress |  Fall 2015  
 
A case example  follows:  
Kansas    Newton Healthcare Corporation d/b/a Newton Medical Center  (NMC) agreed to pay $45,000 to  
resolve its liability under EMTALA.   OIG alleged that NMC failed  to provide an adequate  medical 
screening  examination for  a patient who arrived at its  emergency department 38  weeks pregnant and  
complaining  of abdominal and lower back pain.   OIG contended that NMC did not record  the patients  
medical  history,  take any  vitals, conduct fetal monitoring, test for fetal movement, or perform any exam  
on the patient.   Instead,  OIG alleged that  NMC instructed the patient to leave and see her personal  
physician.   The patient left  NMC by private vehicle and  arrived  at the emergency  department of another  
hospital, where she was admitted and delivered a stillborn baby.  
Provider self-disclosure protocol   
OIG is committed to assisting health care providers and suppliers in detecting and preventing fraud  and 
abuse.   Since  1998, we have made available comprehensive guidelines describing the protocol for  
providers to  voluntarily submit to  OIG self-disclosures of fraud, waste, or abuse.  The  provider self-
disclosure protocol gives providers an  opportunity to  minimize the potential costs and disruption that a  
full-scale OIG audit or investigation  might entail if fraud were uncovered.  The self-disclosure also allows  
the provider to negotiate a fair monetary settlement and potentially avoid being  excluded  from  
participating  in Federal health care programs.   
The protocol guides providers and suppliers through the process of structuring a  disclosure to OIG  about  
matters that constitute potential violations  of Federal laws.  After making an initial disclosure, the  
provider or  supplier is  expected to thoroughly investigate the nature  and cause  of the  matters uncovered  
and  to  make  a reliable assessment  as to  their  economic impact.  OIG  evaluates  the reported results  of  
each internal investigation  to determine the appropriate course of action.   The self-disclosure guidelines  
are available  on the OIG Web site at  https://oig.hhs.gov/compliance/self-disclosure-info/index.asp.  
During this semiannual reporting period, self-disclosure cases resulted in  over $46.8  million in HHS  
receivables.  
These are  examples of provider  self-disclosure settlements:  
Georgia   Theratech, Inc.,  self-disclosed to  OIG that it  submitted claims  to  Medicare for transcutaneous  
electrical nerve stimulators (TENs)  units and related supplies without adequate documentation.   
Specifically, Theratech, a durable medical  equipment  supplier, disclosed that from July  1,  2008, through  
March  31, 2014, it submitted claims for TENs units without a detailed physician  order and without  
adequate clinical documentation from the patients  medical record to support  medical necessity and  
coverage.   Theratech agreed to pay $6,646,911  to resolve its liability under the CMPL.   
Alabama   Vantage Oncology,  LLC,  Radiation Oncology Services  of America, Inc. (ROSA),  ROSA of  
Southern  Alabama, LLC,  and ROSA of Eastern Shore, LLC (collectively,  Vantage)  and Gulf Coast Cancer 
Center,  Monroeville Radiation-Oncology, P.C.,  South Alabama Radiation  Oncology, P.C.,  Eastern  Shore  
Radiation Oncology, P.C.,  and William Hixon, M.D. (collectively, Gulf Coast) concurrently disclosed to  
OIG that  they submitted claims to  various  Federal health care programs for radiation oncology services  
at five different radiation oncology centers in southern Alabama that were not provided  as claimed.  
Specifically, Vantage and  Gulf Coast disclosed that, between  December 13, 2007,  and  December 13,  
2013, they filed claims to  Medicare,  Medicaid,  and  other Federal health care programs  for radiation  
 
  HHS Office of Inspector General   Page 38  
Semiannual Report to Congress |  Fall 2015  
 
oncology  and related  serviceswithout appropriate physician supervision  or timely physician  review, or 
both. Vantage and  Gulf Coast agreed to pay  $9,561,998 and $2,557,824, respectively, to  resolve their  
liability  under the CMPL.   
Texas    Wael Asi,  M.D., P.A., d/b/a Respiratory and Sleep Disorder Specialists (RSDS), self-disclosed that  it  
submitted claims  to  Medicare for services performed  at a joint venture facility that does not participate 
in the Medicare program.   Specifically, RSDS disclosed  that, between June  2013  and September  2014, it  
treated 202 Medicare patients at the nonparticipating joint venture sleep lab and  billed those services to  
Medicare under RSDSs National Provider Identifier  (NPI) number as though the services had been  
performed at a Medicare participating facility.   RSDS agreed to pay $152,821 to resolve its liability under 
the CMPL.   
New Jersey    Premier Urology Associates, LLC self-disclosed that  it  improperly submitted  claims to  
Medicare, Medicaid, and TRICARE.   Specifically, Premier disclosed that it  (1)  submitted claims where the 
services  were provided by  a physician assistant and failed to meet  incident to physician supervision  
requirements; (2)  submitted claims using Modifier 25 for evaluation and management  (E&M)  services, 
where medical record documentation did not support the separate E&M service charge;  and (3)  
submitted separate claims for services,  when  the services were already covered by global surgical 
package  claims  submitted by Premier.   Premier agreed to pay $266,882 to resolve its liability under  
the CMPL.  
   
 
  HHS Office of Inspector General   Page 39  
Semiannual Report to Congress |  Fall 2015  
 
Public health agencies and  
ePunbfloicr  hceeamlthe  angetn acicetsi  vities  
Food and Drug Administration  
  FDA Has  Made  Progress on Oversight and Inspections  of Manufacturers of Generic Drugs 



 
(OEI-01-13-00600   http://oig.hhs.gov/oei/reports/oei-01-13-00600.pdf)  May  2015



  
We found that  the FDA has  increased preapproval inspections for manufacturers  of generic drugs and  
has made progress toward  other inspection-based performance goals.   However,  FDA did not conduct all 
requested preapproval inspections and has not  yet used its authority to request records in lieu or in  
advance of an inspection.   These findings highlight areas where FDA can improve  oversight  over 
manufacturers  of generic drugs.   FDA concurred with  all three of our  recommendations,  which were  to:  
 				 conduct outstanding preapproval  inspections of manufacturers of  generic  drugs;  
 				 ensure compliance with the requirement for  manufacturers of generic drugs  to register 



 
with FDA;  and 




 				 use its  authority to request records in lieu of or in advance of an inspection.  
Health  Resources  and  Services Administration  
  Information Security at the  Health Resources and Services Administration Needs Improvement  
Because Controls Were Not Fully Implemented and Monitored (A-18-14-30430   
http://oig.hhs.gov/oas/reports/region1/181430430.pdf)  April 2015  
We assessed  the adequacy of  Health Resources  and Services Administration  (HRSA)  information security  
controls.   Specifically, we reviewed controls  over inventory  management, patch  management, antivirus  
management,  event management, logical access,  encryption, configuration management, Web  
vulnerability  management,  and Universal Serial Bus port control management.   
We found that HRSA had not fully implemented  or  monitored  some information security controls.   This  
report summarized our  recommendations because  of  the sensitive nature  of  the information discussed.   
We  provided  more detailed recommendations to HRSA.  
HRSA  concurred  or partially concurred  with all 18 of our detailed recommendations.   
 
 
 
  HHS Office of Inspector General   Page 40  
Semiannual Report to Congress |  Fall 2015  
 
 
Indian  Health Service  
  OIG Site Visits to Indian Health Service Hospitals in the Billings, Montana Area (OEI-09-13-00280   
http://oig.hhs.gov/oei/reports/oei-09-13-00280.pdf)  August  2015    
During our  onsite reviews,  we  observed that Blackfeet Community Hospital and Crow/Northern  
Cheyenne Hospital  faced staffing and service limitations that impacted patient care.   To address the  
challenges, Blackfeet  Community  contracted  with individual providers to supplement  the services  
provided directly by hospital staff; it used Purchased/Referred  Care funds when patient-required services  
that could not be provided  directly from hospital staff.   Crow used short-term contracts to provide  
services in its emergency department;  used  Purchased/Referred  Care  funds,  on  a limited basis,  to pay for 
patient services that were not available from IHS providers;  and maintained transfer agreements with  
four other hospitals to link  patients to the services they needed.   Our observations highlight long-
standing challenges in IHS facilities  that affect IHS beneficiaries access to care.   Our report contains no  
recommendations.  
National Institutes of  Health  
  NIH Postaward Grant Administration and Oversight Could Be Improved  (OEI-07-11-00190



  
http://oig.hhs.gov/oei/reports/oei-07-11-00190.pdf)  August  2015
 



We found that National Institutes  of Health  (NIH) grant files  were largely complete, but weaknesses  
existed in the oversight of grantee progress.  Specifically, we found weaknesses in  NIHs review of  
progress reports.  Effective oversight of grant funds is crucial to the success of programs designed  
to improve public health and well-being.  NIH concurred with both of our recommendations,  which   
were to:  
 				 confirm  that  grants management  staff ensure timely submission of required  awardee  reports  and   
 				 revise the  NIH Policy Manual and  Award Worksheet  Report  to require a brief narrative  that 
documents awardee progress  and  whether any  change in research goals  may influence continued  
funding.  
Substance  Abuse and Mental  Health  Services Administration  
  SAMHSA Has Improved Outcome Reporting for  the Substance Abuse  Prevention and Treatment



 
Block Grant  (OEI-04-12-00160   http://oig.hhs.gov/oei/reports/oei-04-12-00160.pdf)  June  2015



  
We found that  the Substance Abuse and  Mental Health Services Administrations  (SAMHSA) efforts   
to improve outcome measurement for the Substance Abuse Prevention and Treatment Block Grant  
program achieved nearly complete reporting compliance by the grantees in our  review.   We  also found  
that SAMHSA conducted onsite reviews and provided  technical assistance to  program  grantees, in part   
to improve the reporting of outcomes.  This  memorandum report does not contain recommendations.   
 
  HHS Office of Inspector General   Page 41  
Semiannual Report to Congress |  Fall 2015  
 
Information  Technology  Infrastructure and  
Operations Office  
  The Information Technology Infrastructure and Operations Office Had Inadequate Information 
Security Controls  (A-18-14-30420   http://oig.hhs.gov/oas/reports/region1/181430420.pdf)  
April 2015  
We assessed the adequacy  of the Information  Technology Infrastructure and  Operations Offices (ITIO)  
information security controls at a selection  of  HHSs operating divisions that  are  managed by ITIO.   
Specifically, we reviewed controls  over inventory management, patch  management, antivirus  
management,  event management, logical access,  encryption, configuration management, Web  
vulnerability management,  and Universal Serial Bus port control management.   We found that ITIO had  
not fully implemented  or monitored some information security controls.   This report summarized  our 
recommendations because of  the sensitive nature of the information discussed.   We  provided  more  
detailed recommendations  to ITIO.  
ITIO  concurred with  all our detailed  recommendations.  
Public  health-related  legal  actions  and  investigations  
Health  Education  Assistance  Loan  Program  
OIG excludes individuals who have defaulted  on Health Education Assistance Loan (HEAL) loans from  
participation in  Federal health care programs.  Under the HEAL program,  which stopped  making loans in  
1998, the Health Resources and Services Administration (HRSA) guaranteed commercial loans to  
students seeking  education in health-related fields.3   The students are allowed  to 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 indebtedness.  After PSC has  
exhausted efforts to  secure repayment  of a debt, it declares an individual in default.  The Social Security  
Act permits  exclusion  thereafter of such individuals from  Medicare,  Medicaid, and all other Federal 
health care programs for nonpayment  of the loans.   
Exclusion  means  that the individual may not receive  reimbursement under these programs for  
professional services rendered, nor  may any  other provider receive reimbursement for services  ordered  
or prescribed by  the  excluded individual.  OIG is responsible for  excluding individuals who have defaulted  
on HEAL loans from participation in Federal health care programs.  
                                                           
3  The  HEAL program, noted in previous semiannual reports,  was permanently transferred from HHS to the U.S.  
Department of Education as required by the Consolidated Appropriations Act of 2014 (Pub. L. 113-76).  The transfer  
was  completed on July 1, 2014.    
 
  HHS Office of Inspector General   Page 42  
Semiannual Report to Congress |  Fall 2015  
 
HEAL  Exclusions    
During this semiannual reporting period,  seven  individuals and related entities were  excluded as a result  
of PSC  referral of their cases to OIG.   Individuals who have been  excluded as  a result 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 debts are repaid  and they  may not appeal the exclusions.   
After being excluded for nonpayment  of  their HEAL debts, a  cumulative  2,596 individuals chose to  enter  
into settlement agreements or completely repay their  debts.   That figure includes 26 individuals who  
entered into such settlement agreements or completely repaid  their debts during this semiannual  
reporting period.   More than $205 million is being repaid through settlement agreements  or through  
complete repayment.   Of that amount,  $3.3  million is  attributable  to this semiannual reporting period.  
Practitioners  in two States  entered into settlement agreements to  repay the amounts indicated:  
    Puerto Rico    Medical  Doctor  - $28,423  
    Florida   Chiropractor - $19,777  
   
 
  HHS Office of Inspector General   Page 43  
Semiannual Report to Congress |  Fall 2015  
 
Human services agencies and 
eAdnmfoinriscteramtioenn  fot ra Cchtilidvrietni eansd     Families  
Family  child  day care  centers and  State health and safety  requirements  
  Some  Pennsylvania Family  Child Day Care Home Providers  Did Not Always Comply With State Health 
and Safety Requirements  (A-03-14-00250   http://oig.hhs.gov/oas/reports/region3/31400250.pdf) 
May 2015  
Pennsylvania did not always ensure that providers  that received Child Care and  Development Funds  
(Administration for Children and Families, or  ACF)  complied with applicable State  requirements related  
to  child  health and safety.   Three providers complied  with the State requirements, but  17 did not comply  
with 1 or more of the State requirements.   Sixteen  providers did not comply with  requirements  related  
to the physical conditions of their facilities,  14 providers did not comply  with administrative  
requirements, and 4 providers did not comply  with requirements to  obtain criminal history and child  
protection reports.   In addition,  one provider falsified  the renewal application by  certifying that there 
were no prohibited criminal charges pending.   We determined  that the provider  had pending criminal  
charges including, but not limited  to, corruption  of  minors and child endangerment.  When we advised  
Pennsylvania  of the pending charges, it immediately suspended this provider.   
Pennsylvania  concurred with our recommendations that it:  
 				 correct the specific health  and safety issues with the  providers noted in this report;  
 				 implement policies and practices to ensure that inspections  of family  child day care homes are  
conducted before children  are placed into care and  that at least  one annual unannounced  onsite  
visit is conducted in accordance with new Federal requirements;   
 				 develop and implement State regulations  to  require that criminal background checks are conducted  
at least once every  5  years  in accordance with new Federal requirements;   
 				 ensure that providers  obtain required criminal background checks and child protection  reports;  and   
 				 ensure adequate  oversight  by reducing inspector caseloads.  
  Some  Pennsylvania Child Day Care Centers  Did Not Always Comply With State Health and Safety  
Licensing Requirements  (A-03-14-00251   http://oig.hhs.gov/oas/reports/region3/31400251.pdf) 
September 2015  
States  must  perform an initial onsite  monitoring visit and at least one annual unannounced onsite  visit  of 
providers that have received  Child Care and  Development Fund  subsidies.   States  must  also  maintain  an  
inspector-to-provider  ratio  sufficient to ensure timely inspections.  
 
  HHS Office of Inspector General   Page 44  
Semiannual Report to Congress |  Fall 2015  
 
Pennsylvania conducted the required inspections at all three of the providers that we reviewed and  
ensured that they complied with the administrative and background check requirements.   However, all 
three providers did not comply  with requirements related  to the physical conditions  of their child day  
care centers.   Pennsylvania lacked a sufficient number of inspectors to identify all areas  of 
noncompliance.   Pennsylvanias average inspector-to-provider  ratio  was 1:143, which far  
exceeds the 1:50  ratio  recommended by Child Care Aware  of America.   
Pennsylvania concurred with our  recommendations that  it:  
 				 Correct the specific health  and safety issues with the  providers noted in this report, and   
 				 ensure more thorough onsite monitoring of  provider  compliance  with  health  and safety  
requirements  by reducing licensing inspectors caseloads.   
The Commonwealth of  Puerto Rico  did  not ensure that  providers that received  Child Care  and  
Development Fund subsidies complied  with State plan requirements related to the health and safety   
of children.  Although  Puerto Rico  conducted  the required inspections at all three providers  that we  
reviewed,  we found potentially hazardous conditions at the  locations of  the  three providers,  and two   
of the providers did not comply  with requirements to  obtain background checks  on workers.   
  Puerto Rico Child Day Care  Centers Did Not Always Comply With Commonwealth Health and  
Safety Requirements (A-02-14-02001   http://oig.hhs.gov/oas/reports/region2/21402001.pdf) 
September 2015  
Puerto  Rico concurred with our  findings, which led to  our  recommendations that it:  
 				 establish binding health and safety requirements for  all CCDF providers in  Puerto  Rico law   
or regulation, in accordance with  the State plan;  
 				 have procedures in place to ensure that providers receive adequate  training on health and safety  
requirements;  
 				 develop a single comprehensive, specific  checklist to aid in  the  monitoring  of providers for  
compliance with health and safety requirements, and  provide all centers with the checklist;  
 				 correct the specific health  and safety issues with the three providers noted in this report; and  
 				 ensure  that  providers employ  only individuals  with proper background certification.  
  New York Improperly Claimed Some Child Care and Development Targeted Funds  (A-02-12-02012   
http://oig.hhs.gov/oas/reports/region2/21202012.pdf) July 2015    
New  York did not comply with Federal requirements for the use of almost $3.9 million in Child Care  
Development Fund targeted funds for  FYs  2007 through 2009.   New York improperly claimed  $2.3  million  
of inadequately supported  targeted funds, and improperly  obligated $1.5 million  of targeted funds after  
the obligation period had ended.   These errors  occurred because the State agency did not have adequate  
fiscal controls and accounting procedures in place to  ensure that  expenditures complied with Federal  
requirements.  
New  York  generally disagreed with our  recommendations,  which were that it:  
	 			 refund $3.9  million  to  the Federal Government and   
 
  HHS Office of Inspector General   Page 45  
Semiannual Report to Congress |  Fall 2015  
 
 				 establish fiscal controls and accounting procedures  to  ensure that targeted funds  are used in  
compliance with Federal requirements.   
Child support  enforcement activities  
OIG investigations    
OIG works to address  referrals of egregious child support  enforcement  cases with  appropriate  
investigative and prosecutorial action  by collaborating  with ACFs Office of Child Support Enforcement,  
DOJ, U.S.  Attorneys Offices, the U.S. Marshals Service,  and Federal, State, and local partners.  OIG  
investigations  of child support  enforcement cases nationwide resulted in  23 criminal actions and court-
ordered restitution and settlements  of  over  $1.4  million during this semiannual reporting period.   
Engaging the  public  in capturing deadbeat parents  
Because of  the  success of OIGs  Most Wanted Fugitives  Web site,  OIG launched its Most Wanted  
Deadbeat Parents  Web site.   The site identifies parents who fail to pay court-ordered child support for  
their children,  thereby  putting  an  unnecessary strain on  the  children and  their  custodial parents  as well 
as on agencies that enforce these matters.  The site, updated frequently, includes information  on OIGs  
role in pursuing parents who fail to pay court-ordered  child support.  OIGs Most  Wanted  Deadbeat  
Parents  Web site is at:   https://oig.hhs.gov/fraud/child-support-enforcement/index.asp.  
The following are examples of child support enforcement cases:  
New York    Scott Persson  was  sentenced  to 5 years of probation  and ordered to pay $136,868 in  
restitution after pleading guilty to failure to pay past due child support obligation.   Persson was originally  
ordered to pay  child support in August 1999.   However, according to  the investigation, despite  the fact  
that he owned and  operated a successful catering service in the Los Angeles, California, area, he failed to  
make  proper child  support payments.   Persson  was arrested in June 2013 in Los Angeles.  At  the time of  
his arrest,  he admitted  that he worked off  the books  to hide his money from his  ex-wife, to  whom he 
owed court-ordered child  support.   
New York    Kurtiss Tomasovich entered into a deferred prosecution agreement in which he  will pay  
$189,938 in restitution, representing the amount owed in child support arrears  for his three children.   
Tomasovich  was arrested in May  2014 for willfully failing to pay  child support, despite having sufficient  
assets to  make the required child support payments.   According to the investigation, Tomasovich and his  
second wife  purchased and developed property in Florida, including constructing a pool and tennis court  
at their residence.   Tomasovich also published two books  titled  "This Time Around" and "Knowledge and  
Passion  - A Handbook for American  Living," which included a  writeup  in which  Tomasovich claims he  
"became a millionaire at 30 and floated above the streets instead  of treading through them."   He also  
started  a website for people to pledge to "be good Americans" and stated  that "I  will hold  myself 
personally accountable and  to do the right things."  
 
  HHS Office of Inspector General   Page 46  
Semiannual Report to Congress |  Fall 2015  
 
Alabama   Mark Sims  was  sentenced  to 5  years of probation and ordered to pay  $120,451 in restitution  
after pleading guilty  to failure to pay  child support.   Sims  was  ordered to pay child support in  2003 to the  
custodial parents of  his two minor children.   However, he had not made any payments in  over 2 years.   
IT infrastructure  reviews  
  Public Summary Report: Penetration Test of the Administration for Children and  




Families Computer Networks and External Web Applications  (A-18-14-30330 



 
http://oig.hhs.gov/oas/reports/region1/181430330.pdf) September 2015 




We assessed the ACF networks  exposure to cyberattacks by performing penetration testing of its  
network and Internet-facing systems.   Although we did not  obtain unauthorized  access to the ACF  
network, we identified issues that could lead to a cyber security incident involving ACF systems and data,  
given enough time and persistence by  malicious computer hackers.   We identified vulnerabilities in two  
primary areas:  selected  external Web applications and wireless networks.   ACFs information technology  
investments include systems that support operations for grants  management, child support  
enforcement, foster care and adoption programs, and Head Start programs.  
This report summarized  our recommendations because of the sensitive nature of  the information  
discussed.   We  provided  more detailed recommendations to ACF.  
ACF  concurred with  all of  our detailed recommendations.  
 
  HHS Office of Inspector General   Page 47  
Semiannual Report to Congress |  Fall 2015  
 
OGrtahntesr  a nHdH CoSn-trreacltast  ed  reviews  
 
HHS is the largest  grantmaking  organization  in the United States  and one of the largest Federal 
contracting agencies.   In FY 2015, HHS awarded  over $400 billion in grants and  over $21 billion in  
contracts across all program areas.   OIGs direct annual discretionary appropriation funding is used to  
conduct program integrity  and enforcement activities  on  the  over 100 public  health and human services  
programs carried out by  over 70,000 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.   Recent congressional  appropriations increased OIGs discretionary  
funding for public health and human services  oversight.   
Improper  payments  and misuse of  grant funds  
  U.S.  Department of Health and Human Services  Met Many Requirements of the Improper   
Payments  Information Act  of 2002 but  Did Not Fully Comply for Fiscal Year 2014  (A-17-15-52000   
http://oig.hhs.gov/oas/reports/region1/171552000.pdf)  May 2015  
OIG is required to review and report on HHSs annual  Agency Financial Report and Other Accompanying 
Information (AFR) to determine compliance with the Improper  Payments Information Act of 2002 (IPIA)  
as amended by the Improper Payments Elimination and Recovery Act of  2010.   (IPIA will refer to  the 
Act  as amended by the  2010 Act.)   In addition, under the Disaster Relief Appropriations Act, all programs  
receiving  related  funds  must report  and calculate  an improper payment estimate.   
HHS followed  the guidance, and in general, the  methodologies used by HHS to  estimate improper  
payments  were  reasonable and valid, resulting in reasonable  estimates.   HHS also reported information  
on its  efforts to recapture improper payments and the results of those actions.   
However, HHS did not fully  comply with several IPIA requirements in that it did not perform some risk  
assessments of payments;  did not publish an improper payment estimate for  the  Temporary Assistance  
for Needy Families (TANF)  program; did not publish corrective action plans for  TANF; did not  meet  
improper payment rate reduction  targets for four of the six programs for which it  reported reduction  
targets in the FY 2013 AFR (Medicare Fee-for-Service  [FFS], Medicaid,  Foster Care,  and Child Care  
Development Fund); and did not report an improper payment rate of less  than 10 percent for one  of the  
eight programs deemed  susceptible to improper payments (Medicare  FFS) and two  of the seven  
programs deemed susceptible to improper payments  under the   Disaster Relief Appropriations Act  
(Administration for Children and Families Social Services Block  Grants and Substance Abuse and  Mental  
Health Services Administration Grants). In addition,  HHS  has not been in compliance with the IPIA for  
four  consecutive FYs for TANF and  three  consecutive FYs for Medicare FFS.  
 
 
 
  HHS Office of Inspector General   Page 48  
Semiannual Report to Congress |  Fall 2015  
 
HHS provided a  status of actions it has  taken in response to our recommendations,  which were:  
 				 to fully address all of our recommendations from prior years, including the need to provide an  
improper payment estimate for TANF,  meet improper  payment rate reduction targets, and  reduce  
improper payment error rates to below 10 percent and  
 				 to address a new requirement  under OMBs guidance, conduct risk assessments  of payments   
to employees  and  charge  card payments as part  of its  risk assessment process for 2015.  
  The Fraud Prevention System Increased Recovery and Prevention of Improper  Medicare



  
Payments, but Updated Procedures Would Improve Reported Savings  (A-01-14-00503



  
http://oig.hhs.gov/oas/reports/region1/11400503.asp) June 2015 




OIG  must certify  the actual  and projected savings with  respect to improper payments recovered and  
avoided and the return  on investment related  to HHSs use of the Fraud Prevention System  (FPS)  for each  
of its first  three  implementation years.   
In the third implementation year, HHS complied  with  the statutory requirements.  We  certified $133.2  
million  of actual and projected savings and a return  on investment  of $2.84 for every dollar spent  on the  
FPS.   We also  certified the  $454  million in unadjusted  savings that the FPS identified.  
HHS conducted an  evaluation of the cost-effectiveness and feasibility  of applying  predictive analytics  
technology  to Medicaid and the Childrens Health Insurance Program  (CHIP) and  determined  that it is not  
cost-effective and  feasible,  at this time, to systematically  expand the FPS to  Medicaid and CHIP in all 
States.   Although HHS has  made significant progress  to address the challenges  of measuring actual and  
projected  savings, HHSs written directives to its contractors were not sufficient to  ensure that the  
contractors could identify and report the most accurate estimate of FPS savings.  
CMS concurred with our recommendation to:  
 				 provide its contractors with improved  written instructions  on how to attribute the FPS   
savings accurately and better document the contribution of the FPS leads toward  achieving 
administrative actions.   
  HHS Oversight of Grantees  Could Be Improved Through Better Information-Sharing 


 

(OEI-07-12-00110   http://oig.hhs.gov/oei/reports/oei-07-12-00110.pdf)  September  2015



  
Awarding agencies grant officials use  various sources  of information and communication to  mitigate  
grantee risks.  However, grant officials noted limitations in some instances.   Our findings raise concerns  
about whether awarding agencies grant  officials have all available information  to assess and mitigate  
risks relating to poor performance and misuse  of grant funds.   The HHS  Assistant  Secretary for Financial  
Resources concurred with  all three of our  recommendations,  which included:  
 				 analyzing whether to implement the use of integrated  databases that contain adverse information  
on grantees past performance;   
 				 establishing a departmentwide source of adverse information from audits  of grantees; and   
				  facilitating departmentwide information-sharing about grantees that have past performance issues.  
 
  HHS Office of Inspector General   Page 49  
Semiannual Report to Congress |  Fall 2015  
 
Misuse of  grant  funds  case examples  
Puerto Rico    Elba Bonilla-Bayon was sentenced to 5  years  of probation,  600 hours of unpaid community  
service, and  ordered to pay $754,248 in restitution and assessment after pleading guilty to theft of  
government property.   Bonilla-Bayon  was the president of Programa Avance En  Puerto  Rico, a delegated  
agency/grantee of ACF  and  USDA grant funds.   Bonilla-Bayon admitted  that she stole and/or converted  
for her personal use  over $750,000 in Federal funds from Head Start/Early Head  Start (HHS),  Child Care  
Development Fund (HHS),  Child and Adult Care Food (USDA), and the American Recovery and  
Reinvestment Act (HHS) programs.   The investigation revealed  that Bonilla-Bayon unlawfully  negotiated  
and/or converted at least  93 checks for her  own personal use.   
Mississippi   Linda Harvey-Irvin was sentenced to  7  years and 1  month in jail and  ordered to pay  
$531,236 in joint and several restitution after pleading guilty to theft  or bribery concerning programs  
receiving Federal  funding.   Harvey-Irvin  was the deputy director of the non-profit organization  
Mississippi Gulf Coast Community Action Agency, a Head Start and American Recovery and Reinvestment  
Act grantee.   According to the investigation, Harvey-Irvin embezzled  Gulf Coast  funds by  entering into  
consulting work  contracts on  behalf of GCCAA with Markuntala Croom, the  owner of Croom  
Management Services.   Croom, who  was paid  $750 per day for every day she was under contract with  
Gulf Coast, would in turn pay a portion  of  the proceeds received from  this community action agency  to  
Harvey-Irvin.  Much of the  work purportedly conducted by Croom  was, in fact, fictitious  or not  actually  
performed.   Croom  received more  than $500,000 for the purported consulting work.  She  paid Harvey-
Irvin close  to $70,000 as a reward for hiring her.   In addition to her arrangement  with  Croom, Harvey-
Irvin also rigged the bidding process for construction  work paid for by  Gulf Coast  to ensure  that Donald  
Walton,  owner of Walton Construction,  would be awarded virtually all the contracts he bid  on.   Walton  
Construction  received over $130,000 from  Gulf Coast, and  in turn,  Walton paid Harvey-Irvin  about  
$31,000 as a  reward for  winning the bids.   Both Croom and  Walton pleaded guilty to theft  or bribery  
concerning programs receiving Federal funding and were sentenced to 4 years and 9  months and  3 years  
and 1  month in jail, respectively.   
Montana    Three  members of the Rocky Boy Health Board Clinic in Box Elder,  Montana, were sentenced  
to a combined  3 years in prison and  ordered to pay a combined $131,948 in restitution after being 
convicted on different embezzlement schemes.   Rocky Boy  is a health facility for the Chippewa Cree  Tribe  
community  and receives funds from  the Indian Health  Service.  According to the investigations,  Rocky  
Boy  Finance  Manager Theodora Morsette regularly accessed  tribal coffers for payments  over and above  
her salary and supplemental compensation package.   Rocky Boy  director Fawn Ann Tadios  expended  
tribal travel funds from the health clinic  to purportedly  make site  visits  to the  Yankton  Indian Health  
Service facility in South Dakota when, in  actuality, she  was  visiting her incarcerated husband.   Wilford  
Sunchild, the director for  Rocky Boys  Wellness Center, deposited tribal funds in an account  over  which  
he had control and then  withdrew the funds for his  own  personal use.   The investigations were 
conducted as part  of Operation Smoke and  Mirrors, a joint  operation  among  OIGs Office of 
Investigations,  Office  of Audit, and Office of Evaluation and Inspections.   
Small Business  Innovative  Research  Program   
The National Defense Authorization Act for  Fiscal Year  2012,   5143, requires OIG  to annually report  on  
the number of cases that were referred to it related to  fraud, waste,  or abuse in the Small Business  
Innovative Research/Small  Business Technology Transfer (SBIR/STTR) programs well as on  the action(s)  
 
  HHS Office of Inspector General   Page 50  
Semiannual Report to Congress |  Fall 2015  
 
taken in  each case, the justification for not taking action on a case, and an  accounting of funds used to  
address  program  waste, fraud, and abuse.  In  our November  2014 report delivered to  the three 
Congressional  oversight committees, we reported that OIG spent about  $236,860  in  salaries on oversight  
related to  the SBIR/STTR program.  HHS referred 13 new SBIR/STTR cases to OIG in FY 2014.   OIG will 
include the  2015 report information in  our  spring 2016  Semiannual Report.  
Recovery Act retaliation  complaint  investigations  
The American Recovery and Reinvestment Act (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 Reports  to  Congress the retaliation complaint investigations that 
they decided not to conduct or continue during the reporting period.    
OIG did not discontinue  or decline to conduct any Recovery Act  whistleblower retaliation complaint  
investigations during this  reporting period.  
Hurricane  Sandy  
  Medical Reserve Corps Volunteers in New  York and New  Jersey During Superstorm Sandy.


 
  
(OEI-04-13-00350   http://oig.hhs.gov/oei/reports/oei-04-13-00350.pdf)  May  2015



  
We found that  Medical Reserve Corps (MRC) stakeholders reported challenges and successes during 
Superstorm Sandy that were most frequently associated with communication, shelter  staffing, and  
shelter  operations.  Although our review was limited  to the MRC response in New York and New  Jersey,  
these reported challenges  highlight issues that other  States  may encounter while using MRC volunteers  
during future incident responses.  Conversely, the successes that MRC  stakeholders identified  may  
highlight practices for States, including New York and  New Jersey, to  improve their future responses.    
The HHS  Assistant Secretary for Preparedness and Response concurred  with  our three recommendations  
to  work with States and localities to strengthen plans for:  
    volunteer communication;  
    shelter staffing;  and   
    shelter operations.  
Office  for  Civil  Rights  
  OCR Should Strengthen Its  Oversight of Covered Entities Compliance with the HIPAA Privacy  
Standards  (OEI-09-10-00510   http://oig.hhs.gov/oei/reports/oei-09-10-00510.pdf)  September  2015   
The Office for Civil Rights (OCR)  should strengthen its  oversight of covered  entity  compliance with  Health  
Insurance Portability and Accountability Act  (HIPPA)  Privacy standards.  OCR primarily investigates  
possible noncompliance in  response to complaints and has not fully implemented an audit program to  
proactively identify noncompliance.   In  addition,  OCR did not include complete documentation  of  
 
  HHS Office of Inspector General   Page 51  
Semiannual Report to Congress |  Fall 2015  
 
corrective actions in 26 percent  of cases, and  29 percent of staff reported rarely  or never checking  
whether covered entities had been previously investigated.  Finally, OCRs case-tracking system had  
limited search  functionality.   These findings highlight the need for OCR to strengthen its  oversight of  
covered entities safeguarding of health information.   OCR concurred  with all five  of our  
recommendations, which  include:  
 				 fully implement a permanent audit program;  
 				 maintain complete documentation  of corrective action in OCRs case-tracking system;  
 				 develop an  efficient  method in OCRs case-tracking system to search for and track covered entities  
histories of being investigated;  
 				 develop a policy requiring OCR staff to  check whether covered entities have  been previously  
investigated;  and   
 				 continue to  expand  outreach and education  efforts to covered entities.  
  OCR  Should Strengthen Its Followup of Breaches of Patient Health Information  Reported by Covered 
Entities (OEI-09-10-00511   http://oig.hhs.gov/oei/reports/oei-09-10-00511.pdf)  September  2015   
OCR should strengthen its followup  of breaches  of protected health  information (PHI)  that covered  
entities  report to  OCR.  OCR had incomplete documentation  of corrective action in 23 percent of cases,  
did not record small-breach information in its case-tracking system, and did not  investigate small 
breaches during the period of  our review from September 23,  2009, to March  31,  2011.  Further,  39  
percent of OCR staff  reported  rarely or  never  checking whether covered entities  reported prior breaches  
during breach investigations.  These findings raise questions about  whether OCR is identifying systemic  
weaknesses  resulting in breaches and whether covered entities  are addressing the problems that  led to  
the breaches.   OCR concurred with all five  of our recommendations, which include:  
 				 maintain complete documentation  of corrective action in  OCRs  case-tracking system;  
 				 enter small-breach information into  OCRs  case-tracking system  or a searchable database linked to it;  
 				 develop  an efficient method  in  OCRs  case-tracking system to search for covered entities that  
reported prior breaches;  
 				 develop a policy requiring OCR staff to  check for prior breaches; and  
 				 continue  to  expand  outreach and education  efforts to covered entities.  
Contract  audits  
Pursuant to the National  Defense Authorization Act for  Fiscal Year  2008,   845,  OIGs appointed under  
the Inspector General Act  of 1978 are required to submit,  as part  of their Semiannual Report(s) to  
Congress information  on final, completed contract audit reports issued to the contracting activity.  This  
information must  contain significant audit findings  issued during the period covered by the semiannual  
report.   This requirement is pursuant to  Section 5  of such Act.   
OIG did not issue final reports  meeting  845 criteria during this semiannual period.    
   
 
  HHS Office of Inspector General   Page 52  
Semiannual Report to Congress |  Fall 2015  
 
OIG  reviews of non-Federal audits  
OIG reviews audits conducted by non-Federal auditors  of entities  receiving Federal awards.   In this  
semiannual period,  OIGs National External Audit Review Center reviewed  694 reports covering   
$2 trillion  in audited costs.   Federal dollars covered by  these audits totaled  $624.5 billion, of  which   
about  $285 billion  were HHS funds.  
Office of Management and  Budget Circular A-133  establishes audit requirements  for State and local 
governments, colleges and  universities, and nonprofit  organizations receiving Federal awards.   Under  
this circular, covered  entities  must conduct annual  organizationwide  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.    
OIGs oversight of  non-Federal audit activity informs  Federal managers about the soundness  of 
management  of Federal programs.  This oversight  also  identifies any significant 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 table  below.  
Non-Federal Audits


 

April 1,  2015, through September 30,  2015 




  Number 
Not requiring changes or    
        635  
having minor changes  
Requiring major changes             55  
Having significant   
            4  
technical inadequacies  
Total           694  
The 694  reports included 1,836  recommendations for improving management  operations.   In addition,  
these audit reports provided information for  14  OIG special memorandums that identified concerns for 
increased monitoring  by management.  
 
  HHS Office of Inspector General   Page 53  
Semiannual Report to Congress |  Fall 2015  
 
  Public Summary Report: The Centers for  Medicare  &  Medicaid Services Implementation of  Security  
Controls  Over the  Multidimensional  Insurance Data Analytics System Needs Improvement   
(A-06-14-00067   http://oig.hhs.gov/oas/reports/region6/61400067.pdf) September 2015  
Although CMS had implemented controls to secure the Multidimensional Insurance Data Analytics  
System (MIDAS) and consumer  PII data in the systems  and databases we reviewed, we identified areas  
for improvement in  MIDASs  information security controls.   The  MIDAS is  a central repository for  
insurance-related data intended to provide reporting  and performance metrics to HHS for  various  
initiatives mandated by the Affordable  Care Act.   At the time of  our fieldwork, CMS had  neither  disabled  
unnecessary generic accounts in its test environment,  encrypted user sessions, conducted automated  
vulnerability  assessments that simulate known attacks,  nor used a shared read-only account for access  
to the database that contained the PII.  
In addition to the information security  control vulnerabilities mentioned  above, our database  
vulnerability  scans identified 22 high,  62 medium, and  51 low  vulnerabilities.   We made 
recommendations  relevant to  the issues we identified.  
CMS  concurred with  all of our  recommendations.   CMS reported  that it  remediated all vulnerabilities   
and addressed all findings we identified before we issued our final report.   We have since reviewed the  
supporting  documentation and  verified CMSs remediation.  
   
 
  HHS Office of Inspector General   Page 54  
Semiannual Report to Congress |  Fall 2015  
Public Summary Report:  Penetration Test of the Administration  for Children 



 
and Families Computer Networks and External Web Applications  (A-18-14-30330 



 
http://oig.hhs.gov/oas/reports/region1/181430330.pdf) September 2015 




We assessed the ACF networks  exposure to cyberattacks by performing penetration testing of its  
network and Internet-facing systems.   Although we did not  obtain unauthorized  access to the ACF  
network, we identified issues that could lead to a cyber security incident involving ACF systems and data,  
given enough time and persistence by  malicious computer hackers.   We identified vulnerabilities in two  
primary areas:  selected  external Web applications and wireless networks.   ACFs information technology  
investments include systems that support  operations for grants  management, child support  
enforcement, foster care and adoption programs, and Head Start programs.  
This report summarized  our recommendations because of the sensitive nature of  the information  
discussed.   We  provided  more detailed recommendations to ACF.  
ACF concurred  with all  of  our detailed recommendations.  
Other reporting requirements and  reviews  
Government Charge Card Abuse Prevention Act  
Letter to Office of  Management and Budget  Director  to Meet Requirements



  
of Government Charge Card Abuse Prevention Act of 2012 Regarding Agency  Progress 




Implementing Recommendations on Charge-Card-Related Findings  (A-04-14-06175



  
http://oig.hhs.gov/oas/reports/region4/41406175.pdf) January 2015 




This letter report describes  the progress  that HHS has  made in implementing previous purchase  and  
travel card  audit recommendations and the status of  OIGs annual risk assessment.  The letter was issued  
to  meet the requirements  of the Government Charge  Card Abuse Prevention Act of 2012  (P.L. No.  112-
194) (Charge Card Act)  to report to the OMB Director  on agency progress in the implementation  of 
recommendations on  charge  card-related findings.  In  addition, while not required for this report,  we 
also  explain how we intend to conduct  required annual risk assessments of agency purchase cards. 
Legislative and  regulatory reviews  
Pursuant to the Inspector  General Act,  4(a)(2), OIG is required  to review  existing and proposed  
legislation  and regulations  on  HHSs programs and  operations and  to  make recommendations  concerning 
their  impact on  program  economy and  efficiency  or the prevention and detection of fraud, waste,  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.      HHS Office of Inspector General   Page 55  
Semiannual Report to Congress |  Fall 2015  
				  Our  Semiannual  Report to Congress  describes findings and recommendations from 
recently completed reviews, many of which focus  on  existing laws and regulations. 
(http://oig.hhs.gov/reports-and-publications/semiannual/index.asp) 
				  Our  Compendium of Priority Recommendations  describes priority findings and 
recommendations from past periods that  remain to be implemented. 
(http://oig.hhs.gov/reports-and-publications/compendium/index.asp) 
				  Our annual  Work Plan, published at the start  of each fiscal year, provides  citations 
to laws  and regulations that are the  subject  of  ongoing or future reviews. 
(http://oig.hhs.gov/reports-and-publications/workplan/index.asp) 
We  also review proposed legislation and  regulations related to HHS programs and operations.  HHS  
routinely involves us and its operating and  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.  
Affordable Care Act  implementation  
OIG continues to review programs implemented pursuant to  the Patient Protection and Affordable Care 
Act of 2010, as amended by the Health Care and  Education Reconciliation  Act  of 2010 (ACA).  OIGs ACA  
oversight strategy focuses  on the health insurance  marketplaces,  reforms in the  Medicare and Medicaid  
programs, and public health programs.  Key focus areas for  our  marketplace oversight  include  payment  
accuracy,  eligibility,  management and administration,  and security.  In developing our work plan, we  
coordinate with  the Government Accountability Office and other Federal and State  oversight agencies.     
Examples of  our  recent ACA reviews  follow.  
Marketplaces  
Early Alert:  Without Clearer Guidance, Marketplaces  Might Use Federal


 
 
Funding Assistance for Operational Costs When Prohibited by  Law  (A-01-14-02509



  
http://oig.hhs.gov/oas/reports/region1/11402509.pdf)  April 2015 




The ACA  establishes a clear prohibition that private health insurance  marketplaces cannot use grant  
funds to support  ongoing operations after January 1, 2015.   We  have concerns that,  without more  
detailed guidance from CMS, State-based marketplaces (state marketplaces)  might have used, and  might  
continue to use, establishment grant funds for operating expenses after January  1, 2015, contrary  to law.  
Some  state marketplaces  face uncertain operating revenues in 2015 and  in  future years.  Thus, there  a 
risk that state marketplaces  might use establishment  grant funds to cover operational costs.  
We encouraged CMS to: 
		 		 consider developing and publishing clear guidance on what constitutes (1)  operational costs and 
(2) design, development, and implementation costs;  HHS Office of Inspector General   Page 56  
Semiannual Report to Congress |  Fall 2015  
				  review  state marketplace  plans for using establishment grant funds to ensure that the guidance 
addresses real-world examples;  and 
				  monitor state marketplaces  use  or potential use  of establishment grant funds for operational costs 
and take  appropriate action. 
CMSs  Internal Controls Did Not Effectively Ensure the  Accuracy of Aggregate Financial Assistance 
Payments Made  to Qualified Health Plan Issuers Under the Affordable Care  Act  (A-02-14-02006 
http://oig.hhs.gov/oas/reports/region2/21402006.pdf) June 2015 
CMSs internal controls did  not effectively ensure the accuracy  of nearly  $2.8 billion in aggregate  
financial assistance payments made to insurance companies under the  ACA  during the  first 4 months  
that these payments were made.   CMSs reliance  on issuer attestations did not ensure that advance cost-
sharing reduction (CSR) payment rates identified as  outliers were appropriate.   Moreover, CMS did not  
have systems in place to ensure that financial assistance payments  were  made  on behalf  of  confirmed  
enrollees and  in the correct amounts  and that  State marketplaces  could  submit  enrollee eligibility data 
for financial assistance payments.  Furthermore,  CMS  did not always follow its guidance for calculating  
advance CSR payments and does not plan to perform a timely  reconciliation of these payments.  
CMS concurred or generally  concurred with all our  recommendations that it:  
				  correct these internal control deficiencies  by  requiring  its Office of the Actuary to  review and 
validate  qualified health plan (QHP)  issuers actuarial support for index rates that CMS identifies 
as outliers; 
				  implement  computerized systems  to maintain confirmed enrollee and payment information  so  that 
CMS does not have to rely  on QHP issuers  attestations in calculating payments; 
				  implement  a computerized system so State marketplaces can submit  enrollee eligibility data; 
				  follow  CMS  guidance for calculating estimated  advance CSR payments;  and 
				  develop  interim reconciliation procedures to address potentially inappropriate  CSR payments. 
Not All Internal Controls Implemented by the New  York Marketplace Were Effective in Ensuring 
That Individuals Were Enrolled in Qualified Health Plans According to Federal Requirements 
(A-02-14-02020   http://oig.hhs.gov/oas/reports/region2/21402020.pdf) September 2015 
Not all of the New  York health insurance  exchanges (marketplace) internal controls were effective in  
ensuring that individuals were  enrolled  in QHPs  according to Federal requirements.   QHPs are private  
health insurance plans  that each  marketplace recognizes and certifies as  meeting  certain participation  
standards and covering a core set  of benefits.  
In CY 2014,  certain internal controls  were effective, such as the controls for verifying the applicants  
Social Security number through the Social Security Administration.   However, the internal controls were  
not always effective for verifying annual household income, resolving inconsistencies in eligibility data,  
and verifying eligibility for  minimum  essential coverage through employer-sponsored insurance (ESI)  and  
ensuring that insurance affordability programs were authorized  only for individuals who do not have ESI.  
New York concurred with all  of  our recommendations  to:  
				  modify its  eligibility and  enrollment system to always  verify annual household income properly; 
				  use existing system functionality to resolve inconsistencies in eligibility data;  HHS Office of Inspector General   Page 57  
Semiannual Report to Congress |  Fall 2015  
 
 				 ensure that  the State  follows requirements to  verify applicants eligibility for minimum essential 
coverage  through ESI and that applicants who are eligible for minimum  essential coverage through  
ESI are not determined eligible for advance premium  tax credits and cost-sharing reductions;  and  
 				 redetermine, if necessary, the eligibility  of the sample  applicants for whom we determined that  
verifications were not performed according to Federal requirements.  
  CMS Did Not Always Manage and Oversee Contractor  Performance for the Federal


 
 
Marketplace as Required by Federal Requirements and Contract Terms (A-03-14-03001



  
http://oig.hhs.gov/oas/reports/region3/31403001.pdf)  September  2015


 

We reviewed 20  of  62 contracts that CMS identified as awarded for the development, implementation,  
and operation  of the Federal marketplace  to determine the contract requirements for monitoring and  
overseeing contractor performance.   Contracting officers and contracting officers representatives did  
not always  manage and  oversee contractor performance as required  by  Federal requirements and  
contract terms.   CMS did not always comply  with Federal regulations regarding designation and  
certification requirements for contracting  officers  representatives.   Also, contracting records did not  
always include  all critical contract deliverables  and other management and  oversight documentation.  
Because CMS did not always provide adequate contract management and  oversight for Federal 
marketplace contracts,  a number  of issues ensued:  contractor delays and performance issues  were   
not always identified, a contractor incurred unauthorized costs that increased the cost of  the contract,  
contracting  officers in all Government agencies did not have access to contractor past-performance  
evaluations when making contract awards,  and critical  deliverables and  management decisions were   
not properly documented.  
CMS concurred with our recommendations that it:  
 				 direct contracting  officers and contracting  officers  representatives to comply with Federal  
regulations and contract terms  by  ensuring that all contract deliverables  are  received and are used in  
their contract management and oversight;   
 				 direct acquisition personnel not to  authorize additional work  on contracts until  the work is approved  
by the contracting officer  and properly funded;   
 				 direct contracting  officers to prepare and submit contractor past-performance  evaluations at least  
annually and at the conclusion of the contract;   
 				 direct contracting  officers to designate and authorize contracting  officers  representatives in writing  
and identify their specific duties, responsibilities, and limitations for each contract they  manage  and  
oversee;  and  
 				 require all acquisition personnel to disclose their past-employment relationships.  
  CMS Did Not Identify All Federal Marketplace Contract Costs and Did Not Properly Validate   
the Amount  to Withhold for Defect Resolution on the  Principal Federal  Marketplace Contract   
(A-03-14-03002   http://oig.hhs.gov/oas/reports/region3/31403002.pdf)  September 2015  
CMS did not accurately identify all obligations and expenditures related to the  Federal marketplace.   We  
reviewed  the 62 contracts that CMS identified as awarded for  the development, implementation, and  
operation of the Federal marketplace to determine the contract requirements for the processing and  
payment of contractor invoices.   For  six  of the contracts, CMS  recorded  $24.3 million of obligations and  
$22.9  million of expenditures;  but  it  did not identify  either  as being related to the Federal marketplace.   
 
  HHS Office of Inspector General   Page 58  
Semiannual Report to Congress |  Fall 2015  
 
Consequently, CMS is unable to accurately account for and report to interested stakeholders  the amount  
spent on  the development, implementation, and operation  of the Federal marketplace.  
Generally, contractors invoiced and CMS paid Federal  marketplace contracts correctly.   Although CMS  
withheld fixed fees that CGI Federal identified as being related  to defect resolution and rework, CMS did  
not  validate the accuracy  of the amount ($267,000).   CGI Federal  Inc. did not agree that the work was  
related to correcting defects or  rework, and CMS had  not  made  a final decision about the fixed-fee  
payment that it withheld.   At the time  of our review, CGI Federal had not filed a certified claim under the  
Contract Disputes Act.  
CMS agreed with our  recommendation that it:   
 				 include  all relevant contract costs  when it identifies  total obligations and  expenditures related  to the 
design, development, and  operation of the Federal marketplace.   
CMS did not agree  with  our recommendation that it  review  all charges  submitted by  CGI Federal for the 
federally facilitated  marketplace contract and  that it make a final determination on the appropriate  
amount to withhold for correcting defects by  validating the $267,000  withheld for the fixed  fee.   
Medicaid payment suspension  
  Ohio Did Not Always Comply With the Requirements of the Affordable  Care Act



  
in its Review of Cases of Credible Allegations of Medicaid Fraud  (A-05-14-00008 



 
http://oig.hhs.gov/oas/reports/region5/51400008.asp)  March 2015 




Ohio  did not always comply with the  requirements  of  the  ACA  in its review of cases for which  there were 
credible  allegations of fraud between July 1, 2011, and June 30, 2013.   Of the 401 cases for which  Ohio  
found credible allegations  of fraud by  Medicaid providers,  the State  provided good cause  to not suspend  
payments in 321 cases.   For the remaining 80 cases,  Ohio  suspended payments to the Medicaid  
providers but continued to  pay claims associated with  24  of  the  80 cases  and received Federal  
reimbursement totaling  about  $97,000.   
Ohio concurred with our recommendation, which was to:  
 				 properly suspend all Medicaid payments to a provider when  the State  determines that there is a  
credible allegation  of fraud  in accordance with Federal requirements.  
Information  technology  
  California Implemented Security Controls Over  the Web Site and Databases for Its Health Insurance  
Exchange but Could Improve Protection of Personally Identifiable Information  (A-09-14-03005   
http://oig.hhs.gov/oas/reports/region9/91403005.pdf)  April 2015  
Covered California, Californias health insurance  exchange, implemented security  controls  over the  Web  
site and databases for its health insurance  exchange,  but improvements are needed to fully comply with  
Federal requirements and to increase protection  of PII.  
 
  HHS Office of Inspector General   Page 59  
Semiannual Report to Congress |  Fall 2015  
 
We  reviewed Covered Californias information  security controls in place as of June 2014.   Covered  
California had implemented security controls, including policies and procedures, to protect PII on  its   
Web site and databases.  But  the exchange  had not performed a  vulnerability scan in accordance  with   
Federal requirements.   Also, Covered Californias security plan did not  meet some  of CMSs minimum  
requirements for protection of marketplace systems,  and Covered California did  not have secure settings  
for some user accounts.   
Covered California concurred with all our detailed recommendations.  
  Public Summary Report: The Centers for  Medicare  &  Medicaid Services Implementation of   
Security Controls Over the  Multidimensional Insurance Data Analytics System Needs Improvement   
(A-06-14-00067   http://oig.hhs.gov/oas/reports/region6/61400067.pdf) September 2015   
Although CMS had implemented controls to secure  the Multidimensional Insurance Data Analytics  
System (MIDAS) and consumer  PII data in the systems  and databases we reviewed, we identified  areas  
for improvement in  the MIDAS  information security controls.   The  MIDAS is a central repository for  
insurance-related data intended to provide reporting and performance metrics to  HHS  for various  
initiatives mandated by the  ACA.  At the time of our fieldwork, CMS had not disabled unnecessary  
generic accounts in its test environment, had not encrypted user sessions, had not conducted  
automated  vulnerability assessments  that simulate known attacks,  or  used a  shared read-only account  
for access  to the database that  contained the PII.  
In addition to the information security control vulnerabilities  mentioned above,  our database  
vulnerability  scans identified 22 high,  62 medium, and  51 low  vulnerabilities.   We made related  
recommendations to address the issues we identified.  
CMS  concurred with  all of our  recommendations.   CMS reported that it  remediated all vulnerabilities and  
addressed all findings we identified before we issued  our final report.   We have since reviewed the  
supporting  documentation and  verified CMSs remediation.  
Establishment  grants   
  Maryland Misallocated Millions to Establishment Grants for  a Health Insurance Marketplace   
(A-01-14-02503   http://oig.hhs.gov/oas/reports/region1/11402503.pdf)  March 2015  
Maryland did not allocate costs to its  establishment grants and Medicaid in accordance with  Federal  
requirements, the terms and conditions of the  establishment grants, and its  Cost Allocation Plan.   
Maryland allocated a total of $76.6  million to its  establishment grants on  the basis of a cost allocation  
methodology that (1) did not prospectively use updated or better data  when available and (2) included a 
material defect.   As a result, Maryland  misallocated  $28.4  million in costs to  the establishment grants  
instead of to  Medicaid.  
Maryland did not concur with our  recommendations to:  
 				 refund $15.9 million that was misallocated to cooperative agreements;   
 				 refund $12.5 million that was misallocated to establishment grants; and   
 				 immediately  amend the Cost  Allocation Plan  and the Advance Planning Document for July 1  through  
December 31,  2014, so that allocated costs correspond to  the relative benefits received.  
 
  HHS Office of Inspector General   Page 60  
Semiannual Report to Congress |  Fall 2015  
 
 				 develop a written policy that explains how to calculate cost allocations and that  emphasizes using  
updated and actual data and   
 				 oversee operations to ensure the identification and correction  of enrollment projection errors,   
the use  of better or updated enrollment data, and the  application of these data  to allocate costs.  
Community  Health Center Fund  
  Lone Star Circle of Care Complied With Federal Requirements Related to Its 



 
Affordable Care Act-Funded Community Health Center Fund Grant  (A-06-14-00058



  
http://oig.hhs.gov/oas/reports/region6/61400058.pdf)  April 2015 




  East Harlem Council for Human Services, Inc., Complied With Federal Requirements Related   
to Its Affordable Care Act-Funded Community Health Center Fund Grant  (A-02-14-02021   
http://oig.hhs.gov/oas/reports/region2/21402021.pdf)  May 2015  
  Chase Brexton Health Care  Complied With the Requirements of a Community


 
 
Health Center Grant Funded Under the Affordable Care Act  (A-03-14-03303



  
http://oig.hhs.gov/oas/reports/region3/31403303.pdf)  May 2015 




  Community of Hope Generally Complied With the Requirements of a Capital


 
 
Development Grant Funded Under  the Affordable  Care  Act  (A-03-14-03304



  
http://oig.hhs.gov/oas/reports/region3/31403304.pdf) August 2015


 

We  are conducting a series  of reviews  of certain grants  for  expansion and construction projects  
administered by HRSA and  awarded under the  ACA-funded Community Health Center Fund because of  
the risks  associated with them.   Lone Star Circle  of Care, East Harlem Council for  Human Services, Inc.,  
and Chase Brexton Health  Care had adequate financial management controls  over capital development  
grant funds, followed procurement standards in accordance with  Federal requirements,  met reporting  
requirements in accordance with  their individual grants terms and conditions, and claimed  allowable  
costs for construction.   East Harlem and Chase Brexton also generally  met grant-established project  
milestone dates.   Although  Lone Star did not  meet its grant-established project  milestone dates, it had  
reasonable justification for  the delays that occurred.   Accordingly, these reports contained no  
recommendations.  
Community  of Hope, in the District  of Columbia, generally complied  with applicable Federal  
requirements  and the  terms and conditions  of the grant.   However, Community of Hope did not  request  
approval before  making significant changes in its approved budget.   
HRSA concurred  with  our recommendation that it work with  Community  of Hope  to  ensure compliance  
with grant terms and conditions, including approval for the re-budgeting of approved costs.   
Eligibility  
  Not All of the  Federally Facilitated Marketplaces Internal Controls Were Effective in Ensuring That  
Individuals  Were Properly Determined Eligible for  Qualified Health Plans and Insurance Affordability  
Programs  (A-09-14-01011   http://oig.hhs.gov/oas/reports/region9/91401011.pdf) August 2015  
 
  HHS Office of Inspector General   Page 61  
Semiannual Report to Congress |  Fall 2015  
 
Certain  Federal marketplace  controls  over eligibility for qualified health plans (QHPs) were effective, such  
as the controls for verifying applicants incarceration  status, but  other controls  were not.   The Federal  
marketplace had deficiencies related to  verifying applicants eligibility and  to  resolving and expiring  
inconsistencies.   (Expiring an inconsistency  means  making a determination about an applicants  
eligibility generally on the  basis of available data sources  when a marketplace is  unable to  resolve the  
inconsistency.)   
We also  identified procedures related  to  resolving inconsistencies  that could be improved.   The Federal  
marketplace (1)  resolved inconsistencies  related to annual household  income on the  basis of applicants  
responses to income discrepancy questions, using a higher threshold than the threshold used to initially  
verify income and (2)  extended inconsistency periods indefinitely for the  CY  2014 coverage  period on  the  
basis of applicants  good-faith efforts to  obtain  required documentation.  
CMS concurred with all of  our recommendations that it:  
 				 take action  to  improve the Federal marketplaces internal controls  related to verifying applicants  
eligibility and  to  resolving and expiring inconsistencies  addressing  the specific  deficiencies we  
identified;   
				  redetermine, if necessary, the eligibility  of the sample  applicants for whom we determined that  the 
verification of eligibility and resolutions and  the expiration of inconsistencies were not performed  
according to Federal requirements; and   
				  improve procedures related to resolving inconsistencies.   
Consumer  Operated and Oriented Plan   
 Actual Enrollment and Profitability Was  Lower Than Projections Made by  the Consumer Operated  
and Oriented Plans and Might Affect Their Ability to Repay Loans  Provided Under the Affordable   
 
Care Act  (A-05-14-00055   http://oig.hhs.gov/oas/reports/region5/51400055.pdf)  July 2015 
The Affordable Care Act established the Consumer Operated and Oriented  Plan (CO-OP)  program and  
directed  the Secretary of HHS to provide loans to help  establish new consumer-governed, nonprofit 
health insurance issuers, or CO-OPs, in  every State.   Factors such  as low enrollments and net losses   
could limit the ability  of some CO-OPs  to repay startup and solvency loans and to remain  viable and  
sustainable.    
Most of the 23 CO-OPs we  reviewed had  not  met their initial program enrollment  and profitability  
projections as  of  December 31, 2014.   Member enrollment for  13 of the 23 CO-OPs  that provided health  
insurance in 2014  was considerably lower than the CO-OPs  initial projections,  and  21 of the 23  CO-OPs 
had incurred net losses as  of  December 31,  2014.   Although CMS recently placed four CO-OPs on  
enhanced  oversight or corrective action plans and two CO-OPs on  low-enrollment  warning notifications,  
CMS had not established guidance or criteria to assess whether  a CO-OP was viable  or sustainable.  
CMS concurred with our recommendations that it:  
 				 continue to place underperforming CO-OPs  on enhanced  oversight  or corrective action plans,   
 				 work with State insurance regulators to identify  and correct  underperforming CO-OPs,  
 
  HHS Office of Inspector General   Page 62



 
Semiannual Report to Congress |  Fall  2015



 
 
 				 provide guidance or establish criteria to determine  when a CO-OP is no longer viable or sustainable,  
and   
 				 pursue available remedies for recovery  of funds from terminated CO-OPs.    
 
  HHS Office of Inspector General   Page 63  
Semiannual Report to Congress |  Fall 2015  
 
A   Savings  Decisions  Supported  by OIG  Recommendations



  
Appendixes  
B   Questioned Costs and Funds  to  Be Put to Better Use 




C



  Peer  Review  Results



 
D   Summary of Sanction Authorities



 
E   Reporting Requirements in the Inspector General Act of 1978 




F  Anti-Kickback Statute    Safe Harbor



 
   
 
  HHS Office of Inspector General   Page 64  
Semiannual Report to Congress |  Fall 2015  
 
Appendix A:  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  Office of Inspector General (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, nearly $20.6 billion was attributed   
to  FY  2015.   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  below 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   
Estimated  
Savings  
OIG Recommendations   Policy Decisions   (millions)  
Medicare Part  C Prepayments.    Section 3201  of the Patient Protection and   $16,700  
Modify monthly  capitated payments   Affordable Care  Act (ACA)  reduced the  
to a level fully supported by empirical  Medicare Advantage (MA)  benchmark  
data.  The  recommendation reflected   percentages  that are applied  to Medicare  
findings in OIG report  number   fee-for-service, resulting  in cost savings  for  
A-14-00-00212.   Medicare  Part C  as compared to prior law.   
CBO estimated  Part  C savings through  
FY  2019, including $16.7  billion for FY  2015.  
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.4    
                                                           
4   One implementation decision related to a nationwide quality bonus payment demonstration, which GAO found 
would reduce MA  savings.  (See  U.S.  General Accountability Office,  Medicare Advantage:  Quality Bonus Payment  
 
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Estimated  
Savings  
OIG Recommendations   Policy Decisions   (millions)  
Excessive Medicaid Payments to   New Yorks  Medicaid  State Plan   $799  
New York  Developmental Centers.    Amendment 12-03, effective April 1, 2013,  
 
Ensure that New Yorks  Medicaid   limits payment to costs with projected  
daily rate for State-operated   annual savings of nearly  $799  million.  
developmental centers meets the 
Federal requirement that payment  
for services be consistent with  
efficiency and economy.   The  
recommendation reflected  findings in  
OIG report number A-02-11-01029.  
Part B Drugs  Average Sales Price.   Section  112 of the Medicare,  Medicaid,  and   $300  
Adopt an  alternate calculation of   State Childrens Health Insurance Program  
 
volume-weighted average sales price   (SCHIP) Extension Act of 2007  establishes a 
(ASP) that is consistent with the  revised  method for calculating volume-
results set forth in section   weighted ASPs for Medicare Part B drugs  
1847A(b)(3) of the Social Security Act.    that comports  with OIGs recommendation.   
The recommendation reflected   CBO estimated  savings  of $300 million  for 
findings in OIG report number OEI- FY 2015.    
03-05-00310.  
Reductions in Medicare Bad Debt   Section 3201  of the Middle Class Tax   $900  
Reimbursement.   Seek legislative  Extension and Job Creation Act  of  2012  
 
authority to eliminate (or reduce)   applied percentage reductions in bad debt  
Medicare payments  to hospitals for   reimbursement to all providers eligible to  
bad debt associated with   receive bad debt reimbursement.   CMS  
beneficiaries failure to pay their  estimated savings to Medicare of $10.92  
deductibles and coinsurance.   The   billion over  10 years with $900 million  
recommendations reflected findings   attributed to FY 2015.   (77  Fed. Reg. 67523,  
in OIG report number A-14-90-00339   November 9, 2012.)  
and  subsequent reviews.  
Medicaid Third-Party Liability.    Section 6035  of the Deficit Reduction Act  $260  
Determine  whether legislation is   (DRA)  made several changes to strengthen  
 
needed to  explicitly include   Medicaids third-party liability provisions,  
pharmacy  benefit management   including clarification regarding pharmacy  
companies in the Medicaid  definition   benefit managers.   The section also  
                                                           
Demonstration Undermined by High Estimated Costs and Design Shortcomings  [GAO-12-409R   
http://www.gao.gov/products/GAO-12-409R].)  The other  was a change in policy about how HHS calculates  the 
fee-for-service rate against which MA payments are benchmarked that would increase the savings associated with 
the reduced benchmark.  (See CMSs Medicare Advantage Rate Announcement from April 1, 2013.)  
 
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Estimated  
Savings  
OIG Recommendations   Policy Decisions   (millions)  
of "third party," require third parties   requires States to ensure that health  
to  match their eligibility files with   insurers provide requested  coverage data;  
Medicaids eligibility files, and allow   accept the States right of recovery; and  
Medicaid up to  3 years to recover   agree, conditionally, not to  deny a claim  
payments  from  liable third parties.    solely  on the basis  of date  of submission of 
The recommendations reflected   the claim  when the claim is submitted by  
findings in OIG report number    the State within a 3-year period beginning 
OEI-03-00-00030.   on the date of service.   CBO estimated  
savings  of $260 million  for FY  2015.    
Additional Rebates for Brand-Name   Section 2501(d)  of the ACA, as amended  by   $200  
Drugs With Multiple Versions.   OIG  section 1206(a) of the Health Care and  
 
recommended  that CMS continue to   Education Reconciliation Act of 2010,  
seek legislative authority to modify   addresses this issue.   CBO estimated  
the rebate formula calculation to   savings  of $200 million  for FY  2015.    
ensure  that manufacturers cannot  
circumvent additional rebates by  
bringing  new  versions of existing  
brand-name drugs to  market.   The 
recommendation  reflected findings  in  
OIG report number A-06-09-00033.   
Capped Rental Durable Medical   Section 5101  of the DRA revised the  $300  
Equipment.   Eliminate the  payment rules for capped  rental equipment  
 
semiannual maintenance  payment   to require that ownership of the item  
allowed for capped rental equipment,   transfer to  the beneficiary  after the   
pay only for repairs that are needed,   13th  month and that Medicare pay   
eliminate the 15-month rental   for maintenance services  on a cost-
option, and convert rentals to   reimbursement basis.   CBO estimated  
purchases after the 13th  month.   The   savings  of $300 million  for FY  2015.    
recommendations reflected findings  
in  report number OEI-03-00-00410.    
Medicare Secondary Payer.   Section  111 of the Medicare,  Medicaid,  and   $100  
Implement stronger followup   SCHIP  Extension  Act of 2007  amended the 
 
procedures  for employers who  fail to   Medicare secondary payer  provisions  of the  
respond to data requests, exercise   Social Security Act,    1862(b), to provide for 
civil monetary penalty authority, and   mandatory reporting for various categories.   
seek necessary legislative authority   CBO estimated savings of $100  million for 
for  mandatory data reporting.   The  FY 2015.  
recommendations reflected findings   
in the following OIG reports:   
 
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Estimated  
Savings  
OIG Recommendations   Policy Decisions   (millions)  
A-02-98-01036  
A-02-02-01037  
A-02-02-01038   
A-04-01-07002   
A-09-89-00100   
Rebates for Physician-Administered  Section 6002  of the DRA requires States to   $20  
Drugs.   Encourage States to take  provide for  the collection and submission of  
 
action  to collect rebates on physician- utilization data needed to secure rebates  
administered drugs,  especially single- for physician-administered drugs  and  
source drugs.   States should either   provides that  the utilization data for single  
use  National Drug Codes (NDC)   source and specified  multiple-source  
instead of procedure codes or link   physician-administered drugs be submitted  
procedure codes to NDCs for single- using NDC numbers  (unless the Secretary  
source drugs.   The recommendations   specifies an alternative coding system).   
reflected findings in OIG report   CBO estimated savings of $20  million for   
number OEI-03-02-00660   FY 2015.    
Medicare Payments  for Vacuum   Section 203  of the Achieving a Better    $44.4  
Erection Systems.   Seek legislative  Life Experience Act of 2014  implements  
 
authority to include vacuum  erection   changes to treat VES prosthetic devices   
systems (VES) in the Competitive   and related accessories as statutorily  
Bidding program and then implement   noncovered in the same manner that  
a National Mail-Order Competitive  erectile dysfunction drugs  are treated in  
Bidding program for VES.  The   Medicare Part D.  CBO estimated  savings   
recommendation reflected  findings in   of  $444 million over 10 years.  
OIG report number A-07-12-05024.  
Payments for Prescription Drugs   CMS issued  a final rule  about the Contract   $73  
Provided to Incarcerated  Year 2015  Policy and  Technical Changes to  
Beneficiaries.   Work with  prescription   the Medicare Advantage and the Medicare  
drug plan sponsors to identify and   Prescription Drug programs.  The  eligibility  
resolve improper  Medicare  Part D   requirements to  enroll in Medicare  
payments made for prescription   Advantage  and Part  D are outlined  in  
drugs provided to incarcerated   Sections 1851(a)(3)(B) and  1860D-
beneficiaries.  The recommendation   1(a)(3)(A) of the Act.   To enroll in  Medicare  
reflected findings in OIG report   Advantage, a beneficiary must be entitled  
number A-07-12-06035.   to  Part A and enrolled in Part B.   To enroll in  
Part  D, a beneficiary must be entitled  to  
Part A and/or enrolled in  Part B.   An  
 
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Estimated  
Savings  
OIG Recommendations   Policy Decisions   (millions)  
incarcerated beneficiary  still meets the  
eligibility requirements for Part A and Part  
B.  In order to implement  the exclusion  
from  Medicare coverage for incarcerated  
individuals,  CMS explicitly excluded  
facilities in  which beneficiaries are  
incarcerated.  CMS estimated savings  of 
$1.6 billion  over 10 years with $73  million  
attributed to FY 2015.   (79  Fed. Reg. 100,  
May 23,  2014)  
Excessive Medicaid Payments to   Agreement between  CMS and  the State of   $850  
New York  State.   Ensure that  New  York, dated March  20, 2015, to repay 
expenditures  related to   $1.95  billion over 12 years with  $850  
developmental centers and other   million attributed to FY  2015.  
intermediate care facilities  and any  
revised payment methodology be 
consistent with efficiency and  
economy.   The recommendation  
reflected findings in OIG report  
number  A-02-11-01029,   
A-02-13-01008  and other reviews.    
Administration for  Children and Families  programs  
Estimated  
Savings  
OIG Recommendations   Policy Decisions   (millions)  
$34  
Triennial  Reviews  of Child Support   Section 7302  of the DRA required States   
Orders and Medical Support by   to adjust child support orders of families  
Parents.   Ensure that more periodic   enrolled in the Temporary  Assistance for  
reviews are initiated and take action to   Needy Families  program every  3  years.   
increase medical support by parents.    Section 7307 requires States to assess the  
The recommendations reflected   ability  of either or both parents to provide  
findings in OIG report number    medical support for their children.  CBO  
OEI-05-98-00100.   estimated savings (combined) of  
$34  million for FY  2015.   
   
 
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Appendix B:  Monetary recommendations  
The tables  below  summarize the Office of Inspector Generals (OIG)  monetary recommendations and  the 
Department of Health and  Human Services (HHS) responses.  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  with  the 
Supplemental Appropriations and Rescissions Act of 1980.    
Table 1   Audit Reports  With Questioned Costs  
  Dollar Value   Dollar Value  
Reports   Questioned   Unsupported  
Section 1        
Reports for  which no  management decisions had   226   $514,720,000   $23,745,000  
been made by the beginning of the reporting  
period  1  
Reports issued during the  reporting period   66   $638,799,000   $  34,101,000  
  Total  Section 1   292   $1,153,519,000   $57,846,000  
Section 2        
Reports for  which  management decisions were       
made during the reporting period  2, 3  
  Disallowed costs   189       $583,405,000*      $9,637,000  
  Costs not disallowed   6             $50,648,000   $1,385,000  
  Total Section 2   195   $634,053,000   $11,022,000  
       
*Audit receivables (expected recoveries).        
 
Section 3        
Reports for  which no  management decisions had   97   $519,466,000   $46,824,000  
been made by the end  of  the reporting period   
(Sec. 1 minus Sec.  2)  
Section 4         
Reports for  which no  management decisions were  50   $177,682,000   $19,406,000  
made within 6  months of  issuance  4  
 
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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  an  action was taken  to implement an OIG  recommendation through reductions in outlays,  
deobligation  of funds, and/or avoidance  of unnecessary  expenditures.   Table  2 reports HHS program  
officials decisions to take action  on these audit recommendations.    
Table 2   Audit Reports  With  Funds  to Be Put to Better Use  
 
Reports   Dollar Value  
Section 1      
Reports for  which no  management dec isions had  been  made by the   15   $15,895,206,000  
beginning of  the reporting period  1  
Reports issued during the  reporting period   7   $68,068,000  
  Total Section 1   22   $15,963,274,000  
     
Section 2      
Reports  for which management  decisions  were ma de during the      
reporting period  2  
Value of recommendations  agreed to       
by management  
  Based on  proposed management  action   9   $105,795,000  
  Based  on proposed legislative action      
     
Value of recommendations  not agreed to  by  management  
2   $713,764,000  
  Total Section 2   11   $819,559,000  
     
Section 3      
Reports for  which no  management decisions had been made by the   11   $15,143,715,000  
end of  the reporting period  3  (Sec. 1  minus Sec. 2)   
 
 
 
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End NotesTable 1  
1The opening balance was  adjusted upward by $44.6  million because  of  a reevaluation of previously  
issued recommendations.    
2Revisions to previously reported  management decisions:  
 				 A-01-08-00511  Review of Separately Billed  Laboratory  Tests Submitted  by Spectra Laboratories for 
Medicare Beneficiaries  with End-Stage  Renal Disease  Receiving  Dialysis at Fresenius Medical Care  
North Americas  Facilities.   Subsequent review by CMS determined that  the provider was  over paid.   
Unallowable  cost totaling  $1,729,254 was refunded.   
 				 A-04-01-00005 Audit of Medicaid Fee-for-Service Payments to Local  Education Agencies in North  
Carolina  for the Period  July 1,  1999 to  June  30, 2000.   Upon further review of methodology and  
States supporting documentation, CMS determined that the  $2,785,151 in questioned cost  was  
allowable.   
 				 A-09-09-00030 Review  of Medicaid Personal Care Services Claimed by  Washington State.   
Subsequent review of the State Agencys payment system  by  CMS  reduced  the disallowed   
cost by $5,781,607.  
 				 Not detailed are net reductions to previously disallowed management decisions totaling   
$  1.3 million.   
3Included are management decisions to disallow $32.5 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.  
4Because of administrative delays, some of  which were beyond management control, resolution  of the 
following 50 audits was not completed  within 6 months of issuance  of the reports.  Agency  
management has  informed us, however,  that the agency is  working to resolve the outstanding  
recommendations before the end of the next semiannual reporting period:   
CIN: A-01-02-00006 	  	 REVIEW OF RATE SETTING  METHODOLOGY FOR MEDICAID SCHOOL BASED  
HEALTH SERVICES  - CT, MAY 2003, $32,780,146  
CIN: A-01-14-02503 	  	 REVIEW OF MD STATE AGENCY PROCESSES FOR  DESIGN & IMPLEMENTATION OF  
THE STATE'S HEALTH INSURANCE EXCHANGE, MAR 2015,  $28,400,000  
CIN: A-07-13-01125 	  	 MEDICARE PART C UNLAWFULLY PRESENT  ENROLLEES,  APR 2014, $26,150,043  
CIN:  A-01-12-02507 	  	 REVIEW OF  CONNECTICUT'S TITLE IV-E ADOPTION ASSISTANCE MAINTENANCE  
PAYMENTS, NOV 2013,  $17,499,083  
CIN: A-06-13-00038 	  	 CHILD  CARE DEVELOPMENT FUND: TARGETED FUNDS REVIEW  IN TEXAS,  AUG  
2014, $14,967,129  
CIN: A-04-12-00085 	  	 ACCURACY  OF MEDICAID  COLLECTIONS REPORTED  BY THE  GEORGIA  
DEPARTMENT OF COMMUNITY HEALTH, APR 2014, $10,915,180  
CIN: A-03-12-00004 	  	 REVIEW OF  HORIZON'S  2009 AND  2010 BONA FIDE SERVICE FEES, MAR 2013,  
$4,344,417  
 
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CIN: A-05-13-00014   		 OHIO EXCEEDED  THE 5-PERCENT LIMIT FOR CLAIMING CHILD CARE 
DEVELOPMENT FUND ADMINISTRATIVE EXPENDITURES, NOV 2013,  $3,164,630  
CIN: A-07-12-03175  	 	 REVIEW OF CCDF TARGETED FUNDS IN NEBRASKA, APR 2013,  $2,965,913  
CIN: A-03-13-00024  	 	 REVIEW OF NEW ORLEANS REGIONAL PHYSICIAN  HOSPITAL ORGANIZATION,  
INC.'S  2009, 2010, AND  2011 BONA FIDE SERVICE FEES, APR  2014, $2,880,698  
CIN: A-03-13-00025   		 REVIEW OF UAB HEALTH  SYSTEM'S  2009, 2010,  AND  2011 BONA FIDE SERVICE  
FEES, JAN 2014,  $2,812,109  
CIN: A-03-13-00026   		 REVIEW OF USABLE MUTUAL'S (ARKANSAS BLUE  CROSS BLUE SHIELD) 2009,  
2010, AND  2011 BONA  FIDA SERVICE FEES, JAN  2014, $2,763,821  
CIN: A-03-11-00002   		 REVIEW OF NEW ENGLAND JOINT ENTERPRISE 2009  DIR REPORTS, APR  2012,  
$2,710,732  
CIN: A-03-12-00006   		 REVIEW OF TAHMO'S 2009 AND 2010 BONA FIDE SERVICE FEES,  MAR  2013,  
$2,355,532  
CIN: A-03-13-00020   		 REVIEW  OF CAPITAL DISTRICT PHYSICIANS' HEALTH  PLAN, INC.'S 2009, 2010,  
AND 2011 BONA FIDE SERVICE FEES, JAN 2014, $2,070,605  
CIN: A-03-12-00007   		 REVIEW OF  ARCADIAN'S  2009 AND 2010 BONA  FIDE SERVICE FEES, FEB 2013,  
$2,048,967  
CIN: A-03-12-00005 		   REVIEW OF  WINDSOR'S  2009 AND 2010 BONA  FIDE SERVICE FEES, JAN 2013,  
$1,948,737  
CIN: A-03-13-00018   		 REVIEW OF  AMERIGROUP  CORPORATION'S 2009,  2010, AND 2011 BONA  FIDE  
SERVICE FEES, JAN 2014, $1,943,251  
CIN: A-03-13-00019   		 REVIEW OF  BLUECROSS  BLUESHIELD OF  SOUTH CAROLINA'S 2009, 2010, AND  
2011  BONA FIDE SERVICE FEES, DEC 2013, $1,799,096  
CIN: A-07-11-06013   		 INDIRECT COSTS CLAIMED  AS DIRECT COSTS  - UNIVERSITY OF COLORADO 
DENVER, JUN 2013,  $1,419,524  
CIN: A-03-12-00008   		 REVIEW OF XL HEALTH  DIR, JAN 2013,  $1,410,342  
CIN: A-01-12-01501   		 REVIEW OF SAMHSA COSTS  CLAIMED AT LATIN  AMERICAN HEALTH INSTITUTE,  
BOSTON, MA, APR 2013, $1,261,328  
CIN: A-03-13-00021  	 	 REVIEW OF FALLON COMMUNITY HEALTH PLAN'S  2009, 2010, AND 2011  BONA  
FIDE SERVICE FEES, JAN  2014, $1,079,578  
CIN: A-05-12-00089  	 	 THE COUNCIL ON RURAL  SERVICE PROGRAMS,  INC., CLAIMED  UNALLOWABLE  
HEAD START COSTS, NOV  2013, $1,074,352  
CIN: A-03-13-00022  	 	 REVIEW OF MD CARE, INC.'S 2009, 2010, AND 2011 BONA FIDE SERVICE FEES,  
JAN 2014, $1,040,501  
CIN: A-03-13-00023  	 	 REVIEW OF  NATIONAL RURAL ELECTRIC  COOPERATIVE ASSOCIATION'S 2009,  
2010, AND  2011 BONA  FIDE SERVICE FEES, JAN  2014, $957,921  
CIN: A-02-11-02020  	 	 REVIEW OF ACTION FOR  A BETTER  COMMUNITY,  INC. CSBG ARRA COSTS  
CLAIMED BY  NEW YORK  STATE, SEP  2013, $795,608  
CIN:  A-09-11-01007  	 	 REVIEW OF  CSBG RECOVERY ACT COSTS CLAIMED BY HI FOR HCAP, FEB 2013,  
$513,649  
 
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CIN: A-04-13-01024   ALLOWABILITY OF SELECTED COSTS CHARGED TO FEDERAL GRANTS AND  
CONTRACTS UNC, JUN 2014,  $352,843      
CIN: A-07-12-06035   REVIEW OF MEDICARE PART  D PAYMENTS FOR INCARCERATED BENEFCIARIES,  
JAN 2014, $325,903  
CIN: A-01-11-02510   REVIEW OF CT CSBG RECOVERY ACT COSTS CLAIMED, APR 2013,  $314,605  
CIN: A-01-10-02505   RESULTS OF LIMITED SCOPE REVIEW OF CTE,  INC., MAY  2011, $293,870  
CIN: A-02-11-02015   REVIEW OF  INSEC, INC. CSBG ARRA COSTS CLAIMED BY THE  COMMONWEALTH  
OF PUERTO RICO, APR  2013, $285,412  
CIN: A-02-11-02017   NEW JERSEY CLAIMED UNALLOWABLE COMMUNITY  SERVICES  BLOCK GRANT  
COSTS INCURRED BY CHECK-MATE INC., UNDER THE  RECOVERY  ACT, AUG 2014,  
$246,359  
CIN: A-09-09-00045   RISK  ADJUSTMENT DATA  VALIDATION  OF PAYMENTS MADE  TO PACIFICARE OF  
CALIFORNIA FOR CALENDAR YEAR 2007 (CONTRACT H0543), NOV  2012,  
$224,388  
CIN: A-06-12-00057   CHILD  CARE DEVELOPMENT FUND: TARGETED FUNDS REVIEW  IN LOUISIANA,  
SEP 2013,  $221,578  
CIN: A-05-12-00012   REVIEW OF  IL CSBG  RECOVERY ACT COSTS CLAIMED - ROCKFORD,  JUL 2013,  
$205,296  
CIN: A-06-09-00012   RISK  ADJUSTMENT DATA  VALIDATION  - PACIFICARE H4590, MAY 2012, $183,247  
CIN: A-04-11-01004   NORTHEAST FLORIDA COMMUNITY ACTION AGENCY, INC.S CSBG FUNDS 
AWARDED UNDER  THE AMERICAN RECOVERY AND  REINVESTMENT ACT OF  
2009, SEP 2012,  $165,795  
CIN: A-04-11-01008   FLORIDA'S ADMINISTRATION OF CSBG RECOVERY ACT  PROGRAM AND COSTS  
CLAIMED BY  CENTRAL FLORIDA COMMUNITY ACTION AGENCY, INC., APR 2013,  
$160,404  
CIN: A-07-11-02766   REVIEW OF  WY  CSBG RECOVERY ACT COSTS CLAIMED - CARBON COUNTY, AUG  
2013, $143,588  
CIN: A-09-11-01013   REVIEW OF OREGON'S HOUSING AND COMMUNITY  SERVICES DEPARTMENT,  
APR 2013,  $115,911  
CIN: A-06-11-00058   REVIEW OF CSBG ARRA  COSTS CLAIMED BY CROWLEY'S RIDGE DEVELOPMENT  
COUNCIL, AUG 2012, $115,420  
CIN: A-07-12-02779   REVIEW OF NATRONA COUNTY CSBG  RECOVERY ACT COSTS CLAIMED, JUN 2013,  
$104,971  
CIN: A-02-10-01044   MEDICAID CLAIMS SUBMITTED BY NEW YORK STATE UNDER ITS  
DEVELOPMENTAL DISABILITIES WAIVER PROGRAM  - REST OF STATE PROVIDERS,  
JAN 2015, $79,328  
CIN: A-02-11-02000   DIRECT COST REVIEW - SUNY ALBANY, OCT  2011, $27,384  
CIN: A-09-11-01014   REVIEW OF  CSBG RECOVERY ACT COSTS CLAIMED BY HI FOR THE HAWAII 
COUNTY ECONOMIC OPPORTUNITY COUNCIL, JUL  2012, $22,602  
CIN: A-05-11-00053   THE COLUMBUS URBAN  LEAGUE CLAIMED SOME UNALLOWABLE COSTS TO 
HEAD START, SEP  2012, $13,102  
CIN: A-07-13-03194   REVIEW OF CCDF TARGETED FUND IN COLORADO,  DEC 2014, $4,543  
 
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CIN: A-03-12-00250   AUDIT OF LANCASTER COUNTY COMMUNITY ACTION PROGRAM, NOV 2013,  
$2,813  
 
TOTAL CINS:   50  
TOTAL AMOUNT:   $177,682,000  
End NotesTable 2  
1  The opening balance  was  adjusted upward by $41,000 because of reevaluation  of previously issued  
recommendations.   
2  Revisions to  previously reported management  decisions:  
 				 A-09-12-02085  Medicare Could Have Saved Millions if  Organ Procurement Organizations Had 
Correctly Reported Procurement of  Double Lungs As  Two Organs.   Costs incurred  by the OPO are 
passed on  to the  Certified Transplant Centers and hospitals.   Subsequent review by CMS  
determined  that revisions in policy and procedures would not result in cost savings totaling 
8,900,900.    
3 Because of  administrative  delays, some of  which were beyond management control, 5 of the 11 audits  
open at the 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:  
 
CIN: A-05-12-00020   COMPARISON OF SURGICAL SERVICES PROVIDED IN  THE ASC SETTING  TO OTHER  
OUTPATIENT SETTINGS,  APR  2014, $15,000,000,000  
CIN: A-02-10-01044   MEDICAID CLAIMS SUBMITTED BY NEW YORK STATE UNDER ITS  
DEVELOPMENTAL DISABILITIES WAIVER PROGRAM - REST OF STATE PROVIDERS,  
JAN 2015, $76,738,116  
CIN: A-04-12-06154   REVIEW OF HOSPITAL OUTPATIENT PAYMENTS  FOR ESTABLISHED PATIENTS,   
MAR 2014,  $7,536,964  
CIN: A-04-13-06168   REVIEW OF MEDICARE OUTPATIENT PAYMENTS FOR CLINIC VISITS OF  
ESTABLISHED PATIENTS  CY 2012,  DEC  2014, $4,555,929  
CIN: A-05-06-00023   UNDISTRIBUTABLE  CHILD SUPPORT COLLECTIONS  - MN, SEP  2006, $28,240  
 
TOTAL CINS:   5  
TOTAL AMOUNT:   $15,088,859,000  
   
 
  HHS Office of Inspector General   Page 75  
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Appendix C:  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 the 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).  The required information follows.  
Office of Audit Services peer review  results  
During this semiannual reporting period,  one  review involving the Office of Audit Services  (OAS)  was  
completed.      
OAS   Date   Reviewing Office   Office Reviewed  
May 2015   Department of  HHS OIG, OAS  
Transportation  
 
The system of quality control for the audit organization of  HHS OIG in effect  for the year ending September  
30,  2014, 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  
May 2012   HHS OIG, OAS   U.S. Environmental   
Protection Agency (EPA)  
 
The system of quality control for the audit organization of EPA OIG in effect for the year ending September  
30, 2011, has been suitably designed and complied with to provide EPA 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.   EPA OIG received  
a peer review rating of pass.  
 
(Peer Review Results continued  on next page)    
 
  HHS Office of Inspector General   Page 76  
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Office of  Investigations peer review results   
During this semiannual reporting period, HHS OIGs  Office  of Investigations (OI) did not conduct a peer  
review  of another OIG.   A peer review  of  OI by the Department of Labor OIG was conducted during this  
reporting period.   The final  report from this peer  review was not issued  by  the time this  Semiannual  
Report to Congress  was published.  
   
 
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Appendix D:  Summary  of Sanction  authorities  
  
The Inspector General Act of 1978, as amended, specifies requirements for semiannual reports to be 
made  to  the Secretary for transmittal to Congress.  A selection  of other authorities appears below.  
Program  Exclusions  
The Social Security Act,   1128 (42 U.S.C.   1320a-7),  provides several grounds for excluding individuals  
and entities from participation in Medicare, Medicaid,  and other Federal health care programs.   
Exclusions are required for  individuals and entities convicted of the following  types of criminal offenses:   
(1)  Medicare  or Medicaid fraud; (2) patient abuse  or neglect; (3) felonies for other health care fraud;  and  
(4)  felonies for illegal manufacture, distribution, prescription,  or dispensing  of controlled substances.    
OIG is authorized  to  exclude individuals and entities  on several  other grounds, including misdemeanors  
for other health care fraud  (other than  Medicare or Medicaid) or for illegal manufacture, distribution,  
prescription, or  dispensing of  controlled  substances; suspension or  revocation  of a license to provide  
health care for reasons bearing on professional competence, professional performance, or financial 
integrity; provision of unnecessary  or substandard  services; submission of false  or fraudulent claims to a 
Federal health  care program; or engaging in unlawful kickback arrangements.  
The ACA  added another basis for imposing a permissive exclusion, that is, knowingly making, or causing 
to be made, any false statements or omissions in any  application, bid, or contract to participate as a 
provider in a Federal health care program, including managed care programs under Medicare and  
Medicaid, as well as  Medicares prescription drug program.  
Providers subject to  exclusion are granted due process rights.  These  rights  include a hearing before an  
administrative law judge and appeals to the HHS Departmental Appeals Board and  the Federal district  
and appellate courts regarding the basis for and the length of  the  exclusion.  
Civil Monetary  Penalties Law  
The Civil Monetary Penalties Law  (CMPL)  of the  Social Security  Act,  1128A (42  U.S.C.   1320a-7a),  
imposes penalties,  assessments, and  exclusion from participation in  Federal health care programs for 
engaging in certain activities.  For example, a person who submits,  or causes to be  submitted, to a  
Federal health care program a claim for items  and services that  the person knows, or should know, is  
false or fraudulent is subject to a penalty  of up to  $10,000 for each item  or service falsely or fraudulently  
claimed,  an  assessment of up  to three  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)).  
 
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The ACA  added  more grounds for imposing CMPs.  These include, among other  types of  conduct,  
knowingly  making,  or causing to be made, any false statements  or omissions in any application, bid,  or 
contract  to participate as a  provider in a  Federal health care program (including Medicare and Medicaid  
managed care programs and Medicare Part D);  the  ACA  authorizes a penalty  of up to  $50,000 for each  
false statement, as well as  activities relating to fraudulent marketing by  managed  care  organizations,  
their employees, or their agents.   
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 $25,000 against small hospitals (fewer than 100 beds) and up  
to  $50,000 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  $50,000  
from a responsible physician for each negligent  violation of any  of the section 1867  requirements and, in  
some circumstances,  may exclude a responsible physician.  
Anti-Kickback Statute  and Civil False  Claims  Act  Enforcement  Authorities  
The Anti-Kickback Statute    The Anti-Kickback  Statute  authorizes penalties against anyone who  
knowingly and  willfully solicits, receives, offers,  or pays remuneration, in cash  or in kind, to induce  or in  
return for (1) referring an individual to a person  or an  entity for the furnishing, or  arranging for the  
furnishing, of any item or service payable under the Federal health care programs or (2) purchasing,  
leasing, or ordering, or arranging for or recommending the purchasing, leasing,  or  ordering,  of any good,  
facility, service,  or item payable under the Federal health care programs.   Social Security Act,   1128B(b)  
(42 U.S.C.  1320a-7b(b)).  
Individuals and entities that engage in unlawful referral or kickback  schemes may  be subject to criminal  
penalties under the general criminal anti-kickback statute; a CMP under  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  False Claims Act  (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  $5,500  and $11,000 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.  
 
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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.  
 
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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 Issues"   
section    
Section 5      
(a)(1)   Significant problems, abuses, and deficiencies   Throughout  this report  
(a)(2)   Recommendations with  respect to significant  Throughout  this report  
problems, abuses, and deficiencies  
(a)(3)   Prior significant recommendations  on which   OIG  Compendium of  
corrective action has not been completed   Unimplemented 
Recommendations  
(a)(4)   Matters referred to  prosecuting   "Legal and Investigative  
Activities" section  
authorities  
(a)(5)   Summary of instances in  which information   None  
requested  by  OIG was refused  
(a)(6)   List of audit reports   Submitted to the Secretary  
under separate cover  
(a)(7)   Summary of significant reports   Throughout  this report  
(a)(8)   Statistical Table 1    Reports With Questioned Costs   Appendix  A  
(a)(9)   Statistical Table 2    Funds  Recommended To    Appendix  A  
Be Put to Better Use  
(a)(10)   Summary of previous audit reports  without   Appendix  A  
management decisions  
(a)(11)   Description and explanation of revised    Appendix  A  
management decisions  
(a)(12)   Management decisions  with which the    None  
Inspector General  disagrees  
(a)(13)   Information required by the  Federal Information   Reported annually in the  
Security  Modernization Act (FIMSA)   spring Semiannual Report  
to Congress, "Other  HHS-
Related Issues" section  
 
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Section   Requirement   Location  
(a)(14)-(16)   Results of  peer  reviews of HHS-OIG conducted by   Appendix C  
other  OIGs  or  the date of the last peer review,  
outstanding recommendations from peer reviews,  
and peer reviews conducted by HHS-OIG of other  
OIGs  
Other  reporting requirements  
Section   Requirement   Location  
845   Significant contract audits required to be  reported   "Other HHS-Related Issues"  
pursuant to the National  Defense Authorization Act   section  
for  FY  2008 (P.L. No.  110-181),   845.  
205   Pursuant to  HIPAA  (P.L. No. 104-191),   205, the  Reported annually in the  
Inspector General is required to solicit proposals   fall Semiannual Report.  
annually via a Federal Register notice for developing   Appendix F  
new  and modifying existing safe harbors  to the anti-
 
kickback statute of the Social Security Act,   1128(b)  
and for  developing special fraud alerts.   The  
Inspector General is also required to  report annually  
to Congress on the status  of the proposals received  
related to new or modified  safe harbors.  
1553   Pursuant to the American Recovery and   "Other HHS-Related Issues"  
Reinvestment Act of 2009,   1553, OIG reports to   section  
Congress the  retaliation complaint investigations it  
decided not to conduct  or continue during the  
reporting period.  
 
 
 
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Appendix F:  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 the  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 health care programs and their beneficiaries from abusive  practices.  
   
 
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Public  proposals for  new and  modified safe harbors  
In response to the  2015  annual solicitation,  OIG received the following proposals  related to  safe harbors:   
Proposal     OIG Response  
A new safe harbor protecting gainsharing     OIG is not adopting this suggestion at this  
distributions  within accountable care   time.  Whether a safe harbor is appropriate  
organizations and clinical integration networks   and feasible  to protect  gainsharing  
or initiatives.   distributions broadly for accountable care  
organizations and clinical integration networks  
or initiatives  requires further study.   
Modification  of the employee safe harbor (42     OIG is not adopting this suggestion.   The 
C.F.R.  1001.952(i))  to include non-employee  employee safe harbor at 42 C.F.R.   
contractual arrangements  with physicians in   1001.952(i) is based upon a statutory  
accountable  care organizations or other  exception to the anti-kickback statute (section  
innovative healthcare delivery systems.   1128B(b)(3)(B)  of  the Act, 42 U.S.C.  1320a-
7b(b)(3)(B)), which is limited to bona fide  
employment relationships.  A separate safe 
harbor at  42 C.F.R.  1001.952(d) applies to  
personal services and  management contracts.   
Whether an additional safe harbor is  
appropriate specifically for contractual 
arrangements with physicians in accountable  
care organizations  or  other innovate  
healthcare delivery systems requires   
further study.  
A new safe harbor for on-line  tools to enhance     OIG is not adopting this suggestion.   While the 
transparency and provider-selection  so the  proposal states that  there is no practical way  
public can view profiles and rankings of  for hospitals to fund an  on-line tool to  make  
practitioners  and providers, including hospital   such data readily available  to patients without  
medical staff members willing to participate in   raising anti-kickback concerns, it is  not clear 
the tool.   why this should be so.  Questions about  the  
application of the anti-kickback  statute to such  
arrangements should be addressed  on a case-
by-case basis, such as under the advisory  
opinion process.  
A new safe harbor to protect community     OIG is not adopting this suggestion.   The 
benefit and patient safety initiatives which   examples given do not necessarily  implicate  
provide  an incidental benefit to referral  the anti-kickback statute.   To the extent that  
sources.   Examples given are health fairs,   a hospital or other entity is  concerned  that 
immunization campaigns and sharps-disposal  specific arrangements implicate the anti-
and removal.     kickback statute because  of incidental benefit  
to providers, questions about its application  
should be addressed  on a case-by-case basis,  
such as under the advisory  opinion process.  
 
 
  HHS Office of Inspector General   Page 84  
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Proposal     OIG Response  
A new safe harbor to protect and encourage     OIG is not adopting this suggestion at this  
arrangements that support patient adherence  time, as it requires further  study.  
to a  treatment regimen that has been  
recommended by the  patients healthcare 
provider.  
Modification  of the safe harbor applicable to     OIG is not adopting this suggestion.   The risks  
price  reductions offered to eligible  managed   associated with payments involving  Medicare  
care  organizations (42 C.F.R.  1001.952(t)) to   Part  D PDPs  differ from those involving  
protect payments involving  Prescription Drug  managed care  organizations.  Whether a  
Plans (PDPs)  serving the Medicare Part D   separate safe harbor protecting remuneration  
program.   involving Medicare  PDPs  is appropriate  
requires further study.  
New  safe harbors for CMS-approved     OIG is not adopting this suggestion at this  
innovation initiatives regarding financing,   time.  Waivers  of certain fraud and abuse laws,  
payment, and service delivery in the Medicare   including the anti-kickback  statute, have been  
and Medicaid programs.     issued or are being considered as needed in  
connection with specific  models  sponsored by  
the Centers for Medicare and Medicaid  
Innovation.   See  section 1115A(d)(a)(1) of  the  
Act.   Whether safe harbors  are appropriate for  
the types of  arrangements involved  in these  
demonstrations requires further study.    
Modification of  the  group purchasing   
OIG is not adopting this suggestion.   The group  
organization safe harbor (42 C.F.R.   
purchasing  organization safe harbor at 42  
1001.952(j)) to amend the  definition of group  
C.F.R.   1001.952(j) is based on a statutory  
purchasing organization and to impose certain  
exception to the anti-kickback statute (section  
additional requirements to  qualify for safe  
1128B(b)(3)(C) of  the Act, 42 U.S.C  1320a 
harbor protection.  
7b(b)(3)(C)).   Whether  the proposed  
modifications to  the safe harbor are consistent  
with the statutory  exception and otherwise 
appropriate requires further study.  
   
 
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Proposal     OIG Response  
A new safe harbor for remuneration that    
On October  3,  2014, OIG issued a Notice  of  
would provide  the same protection under the  
Proposed Rulemaking soliciting comments  
anti-kickback statute as the protection  offered  
regarding the implementation of the  
by the  exception to the civil monetary  
referenced exception to the definition of  
penalties law (CMPL) applicable to beneficiary  
remuneration for purposes of  the CMPL.  See 
inducements, for remuneration which  
79 Fed.   Reg. 59717.  Comments  were due by  
promotes access to care and poses a low risk  
December 2, 2014 and are being considered at 
of harm to patients and Federal health care  
this time.   OIG is considering whether a safe  
programs.  See Section 1128A(i)(6)(F) of  the  
harbor to the anti-kickback statute is  
Act, 42 U.S.C   1320a7a(i)(6)(F).  
appropriate  to  protect the remuneration to  
beneficiaries in  the same circumstances.  Any  
such safe harbor would  be  proposed in a new  
notice of proposed rulemaking.   In the  
meantime, questions about the application  of  
the anti-kickback  statute to such arrangements  
should be addressed  on a case-by-case basis,  
such as under the advisory  opinion process.  
 
A new safe harbor to protect payments  made  OIG is not adopting this suggestion at this  
under the terms  of a risk-sharing contract,    time, as it requires further  study.  In the 
in which financial consequences are assigned   meantime, questions about the application  of  
to a party based  on clinical or economic   the anti-kickback  statute to such arrangements  
outcomes targets  and whether  they are   should be addressed  on a case-by-case basis,  
achieved with the use  of specified drugs,   such as under the advisory  opinion process.    
devices,  equipment or medical supplies.    
 
Modification  of the safe harbor  for waiver   OIG is considering  modifying this safe harbor 
of beneficiary coinsurance  and deductible   or proposing a new safe harbor to address   
amounts (42 C.F.R.   1001.952(k) to  extend   the concerns described in this proposal.  
protection to reductions or waivers offered to  
American Indians and Alaskan Natives (AI/ANs)  
eligible  for Indian Health Service services.  
 
A new safe harbor or safe harbors protecting   OIG is considering whether to promulgate a  
exchanges or transfers  of  value among Indian   safe harbor that would address the concerns  
health care providers;  transfers of  value from   described in this proposal.   In the meantime,  
an  Indian health care provider to AI/ANs   questions about  the application  of the anti-
eligible for or receiving services from that   kickback statue to such arrangements  should  
provider; arrangements for the  exchange,   be addressed on  a case-by-case  basis, such   
transfer, or sharing of medical care  facilities   as under the advisory  opinion process.    
and resources between an  Indian health care  
provider and other health care providers; and  
certain  transfers  of goods, items, services,  
notations,  or loans from an individual or entity  
to an Indian health care provider.