HHS OIG Semiannual Report to 
Congress 
April 1, 2016  September 30, 2016 
                                                         
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page i 
 
 
OIG Organization  
THE DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS), Office of Inspector General (OIG) provides 
independent and objective oversight that promotes economy, efficiency, and effectiveness in 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 (GAO), the Department of Justice (DOJ), and the Inspector General 
community.  OIG carries out our 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.  Our work is conducted by the following operating components with assistance from 
OIG counsel and management. 
The Office of Audit Services (OAS).  OAS conducts audits of HHS programs and operations through its 
own resources or by overseeing audit work done by others.  Audits examine the performance of HHS 
programs and/or its grantees and contractors in carrying out their respective responsibilities and are 
intended to provide independent assessments of HHS programs and operations.  These assessments 
help reduce waste, abuse, and mismanagement and promote the economy, efficiency, and effectiveness 
of programs and operations throughout HHS. 
The Office of Evaluation and Inspections (OEI).  OEI conducts national evaluations to provide HHS, 
Congress, and the public with timely, useful, and reliable information on significant issues.  These 
evaluations focus on preventing fraud, waste, and abuse and promoting economy, efficiency, and 
effectiveness in HHS programs.  OEI reports also present practical recommendations for improving 
program operations.   
The Office of Investigations (OI).  OI conducts criminal, civil, and administrative investigations of fraud 
and misconduct related to HHS programs, operations, and beneficiaries.  With investigators working in 
almost every State, the District of Columbia, and Puerto Rico, OI coordinates with DOJ and other Federal, 
State, and local law enforcement authorities.  OI also coordinates with OAS and OEI when audits and 
evaluations uncover potential fraud.  OIs investigative efforts often lead to criminal convictions, 
administrative sanctions, or civil monetary penalties (CMPs).   
The Office of Counsel to the Inspector General (OCIG).  OCIG provides general legal services to OIG, 
rendering advice and opinions on HHS programs and operations and providing all legal support for OIGs 
internal operations.  OCIG represents OIG in all civil and administrative fraud and abuse cases involving 
HHS programs, including False Claims Act, program exclusion, self-disclosure, and CMP cases.  In 
connection with these cases, OCIG also negotiates and monitors corporate integrity agreements (CIA).  
OCIG renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page ii 
 
 
provides other guidance to the health care industry about the anti-kickback statute and other OIG 
enforcement authorities.   
Executive Management (EM).  EM is composed of the Immediate Office of the Inspector General and 
the 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 (IT), 
human 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 2016  Page iii 
Highlights of Our Accomplishments 
HHS OIGS SEMIANNUAL REPORT TO CONGRESS (Semiannual Report) describes OIGs work on 
identifying significant problems, abuses, deficiencies, remedies, and investigative outcomes relating to 
the administration of HHS programs and operations that were disclosed during the reporting period.  In 
the highlights section below, we present OIG expected recoveries, criminal and civil actions, and other 
statistics as a result of our work for the entire FY 2016.  We also highlight in this section some of our 
work completed during this semiannual reporting period, April 1, 2016, to September 30, 2016.  
OIG Numbers At-A-Glance 
For FY 2016, OIG reported expected recoveries of more than $5.66 billion consisting of nearly $1.2 billion 
in audit receivables1 and about $4.46 billion in investigative receivables.2  The investigative receivables 
include about $953 million in non-HHS investigative receivables, resulting from our work in areas such as 
the States shares of Medicaid restitution.  
Also during FY 2016, OIG reported 844 criminal actions against individuals or entities that engaged in 
crimes against HHS programs.  Additionally, OIG reported 708 civil actions, which include false claims and 
unjust-enrichment lawsuits filed in Federal district court, CMP settlements, and administrative recoveries 
related to provider self-disclosure matters.  Our CMP recoveries have increased almost five-fold over the 
past 3 years.  We also reported exclusions of 3,635 individuals and entities from participation in Federal 
health care programs.   
Health Care Fraud Strike Force Teams and Other Enforcement Actions 
The Health Care Fraud Prevention and Enforcement Action Team (HEAT) was started in 2009 by HHS and 
DOJ to strengthen programs and invest in new resources and technologies aimed at preventing and 
combating health care fraud, waste, and abuse.  HEAT has continued to identify and hold accountable 
those who seek to defraud Medicare and Medicaid.  Health Care 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.  
1 Audit receivables derive from OIG audits in which there were questioned costs and HHS program officials have agreed those 
questioned costs should not be charged to the Federal Government.  Questioned costs relate to expenditures that OIG found in 
their audits were not supported by adequate documentation or because the expenditure was unnecessary or unreasonable.   
2 Investigative receivables are expected recoveries from criminal actions, civil and administrative settlements, civil judgments,
or administrative actions that resulted wholly or in part from an OIG investigative activity. This does not represent actual 
collections but rather the amount of money that was ordered or agreed upon to be returned or paid to HHS and other Federal, 
State, and private individuals and entities.    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page iv 
 
 
The Strike Force model 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 2016, Strike Force efforts resulted in the filing of charges against 255 individuals or entities, 
207 criminal actions, and $321 million in investigative receivables.  Below are examples of our Strike 
Force efforts during this semiannual reporting period: 
Largest National Health Care Fraud Takedown Results in Charges Against 301 Individuals 
In June 2016, the Health Care Fraud Strike Force led an unprecedented nationwide sweep in 36 Federal 
districts, with the assistance of 24 State Medicaid Fraud Control Units (MFCU).  The sweep resulted in 
criminal and civil charges against 301 individuals, including 61 doctors, nurses, and other licensed 
medical professionals, for their alleged participation in health care fraud schemes involving 
approximately $900 million in false billings.  For more information on this takedown, visit our Strike 
Force website at https://oig.hhs.gov/fraud/strike-force/highlights.html?width=600&height=540. 
Home Health Agency Owner Sentenced to 20 Years in Prison for Falsely Billing Medicare  
Khaled Elbeblawy was the owner and manager of three Miami-area home health agencies.  According to 
evidence presented at trial, Elbeblawy and his co-conspirators purported to provide home health 
services to Medicare beneficiaries, which were not medically necessary and often not provided.  
Elbeblawy and his co-conspirators paid kickbacks to doctors, patient recruiters, and staffing groups in 
return for referring beneficiaries to the home health agencies.  Elbeblawy was convicted of conspiracy to 
commit health care fraud and wire fraud and conspiracy to defraud the United States and pay health 
care kickbacks.  He was sentenced to 20 years in prison and ordered to pay $36.4 million in restitution, 
joint and several.   
Quality of Care 
As Americans continue to live longer and with more chronic medical conditions, it is important that our 
Medicare and Medicaid beneficiaries, some of whom are our most vulnerable citizens, receive high-
quality health care.  OIG endeavors to ensure that providers offer HHS beneficiaries adequate quality 
care in the appropriate setting.  The following are examples of our quality of care work during this 
semiannual reporting period: 
Connecticut and Massachusetts Critical Incident Reporting 
We are performing reviews in several States in response to a congressional request concerning a number 
of deaths and cases of abuse of developmentally disabled residents of group homes.  We found that 
Connecticut and Massachusetts did not comply with Federal waiver and State requirements for critical 
incidents involving developmentally disabled Medicaid beneficiaries living in group homes.  A critical 
incident is any actual or alleged event or situation that creates a significant risk of substantial or serious 
harm to the physical or mental health, safety, or well being of a beneficiary.  Connecticut did not 
adequately safeguard 137 of 245 developmentally disabled Medicaid beneficiaries and Massachusetts 
did not adequately safeguard 146 out of 334 beneficiaries because the systems of reporting and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page v 
 
 
monitoring critical incidents did not work as expected.  Neither State ensured that: (1) group homes 
reported all critical incidents to the appropriate agencies; (2) data on all critical incidents were obtained, 
analyzed, or reported; and (3) all reasonable suspicions of abuse or neglect were reported.  Connecticut 
also did not ensure that group homes always reported incidents at the correct severity level.  Both States 
concurred with our recommendations. 
West Carroll Care Center Did Not Always Follow Care Plans for Residents Who Were Later Hospitalized 
with Potentially Avoidable Urinary Tract Infections  
We found that the nursing home West Carroll Care Center did not always provide services to its residents 
in accordance with their care plans, as required by Federal regulations, before they were hospitalized 
with urinary tract infections.  Specifically, the Nursing Home staff did not monitor and document 
residents hydration status, monitor and document residents conditions, or include appropriate progress 
notes for residents required by their care plans.  West Carroll agreed to implement its newly developed 
policies and procedures requiring that its nursing staff follow residents care plans and the director of 
nursing or a designee conduct reviews to ensure that the nursing staff follows residents care plans.  
West Carroll stated that it has implemented corrective actions. 
Prescription Drugs 
Part D is the fastest growing component of the Medicare program, and Medicaid expenditures for 
prescription drugs are also increasing, influenced by Medicaid expansion and increasing expenditures for 
expensive specialty drug costs.  HHSs oversight of its prescription drug programs faces numerous 
challenges, affecting beneficiary and community safety and the integrity of the benefit itself.  In addition, 
pharmaceutical fraud and drug diversion are also major concerns on the rise.  The following are 
examples of our prescription drug work during this semiannual reporting period: 
High Part D Spending on Opioids and Substantial Growth in Compounding Drugs Raise Concerns 
Medicare Part D spending for commonly abused opioids exceeded $4 billion in 2015, and spending for 
compounded topical drugs increased more than 3,400 percent since 2006.  This data brief builds on 
OIGs June 2015 data brief, which described trends in Part D spending and identified questionable billing 
by pharmacies.  It updates information on spending for commonly abused opioids and provides data on 
the dramatic growth in spending for compounded drugs.  OIG will continue to conduct investigations and 
reviews to address the ongoing problems created by opioid abuse and the emerging problems linked to 
compounded drugs.  The Centers for Medicare & Medicaid Services (CMS) has taken steps to combat the 
problems associated with commonly abused opioids, such as identifying outlier prescribers.  However, 
the data brief concluded that CMS needs to take additional action, including fully implementing OIGs 
previous recommendations.  CMS also needs to assess the implications of the compounded drug trends 
identified in this data brief and take action where needed to protect the integrity of the program.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page vi 
 
 
Recommendation Followup:  CMS Should Address Medicares Flawed Payment System for DME 
Infusion Drugs  
This review, following up on an earlier recommendation, investigated the impact of the current Part B 
payment methodology on provider reimbursement rates for two vital drugs:  pump-administered insulin 
and milrinone lactate.  We found that in 2015 Medicare paid suppliers 65 percent less than their cost for 
pump-administered insulin  hindering beneficiary access to the drug.  Using the same reimbursement 
methodology, Medicare paid suppliers of milrinone lactate, an infusion drug used to treat congestive 
heart failure, 20 times the drugs cost, thereby creating incentives for overutilization and improper 
billing.  Therefore, OIG continued to recommend that CMS take action to ensure that payment amounts 
for infusion drugs more accurately reflect provider acquisition costs. 
Pharmaceutical Company Enters into $784.6 Million Settlement Agreement 
Wyeth Inc. and Pfizer Inc. (the current owner of Wyeth) reached a $784.6 million settlement agreement 
with the United States to resolve allegations that Wyeth reported false pricing information and 
underpaid rebates that were due under the Medicaid drug rebate program.  The Government alleged 
that Wyeth failed to report deep discounts that it offered to hospitals for bundled sales of oral and 
intravenous versions of the drug Protonix.  This conduct allegedly led Wyeth to report false pricing 
information to CMS and underpay rebates due to the States.  
Provider Enrollment Safeguards and Oversight 
To ensure that Medicare and Medicaid can continue to serve our Nations most vulnerable populations 
well into the future, it is critical to protect the financial integrity of these programs.  One way to protect 
programs is through strong enrollment safeguards and robust ownership disclosure requirements.  These 
forms of provider verification can fully identify information regarding the providers with whom HHS does 
business and can prevent ineligible providers from ever entering the Medicare or Medicaid programs.  
Strong provider safeguards at the beginning of the enrollment process, along with ongoing verification 
throughout to ensure that enrolled providers continue to meet Medicare and Medicaid requirements, 
allow CMS to better protect beneficiaries from harm and reduce to improper payments. 
OIG examined both provider enrollment screenings and provider ownership databases in the Medicare 
and Medicaid programs and found that these screening tools can be effective mechanisms to ensure that 
illegitimate providers do not participate in either the Medicare or Medicaid programs, and to ensure that 
ineligible or disenrolled providers do not engage in fraudulent or abusive activities.  CMS concurred with 
all OIG recommendations in all four reports analyzing provider screening and provider ownership 
disclosure (see below).  The following are examples of our most recent provider enrollment work during 
this semiannual reporting period: 
  Enhanced Enrollment Screening of Medicare Providers:  Early Implementation Results:  We 
found that CMS needs to strengthen implementation of its new enhanced enrollment  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page vii 
 
 
screening tools, which are intended to prevent illegitimate providers from enrolling in 
Medicare. 
  Medicare:  Vulnerabilities Related to Provider Enrollment and Ownership Disclosure:  We 
found vulnerabilities that could allow potentially fraudulent providers to enroll in the 
Medicare program and limit CMSs ability to provide adequate oversight.  
  Medicaid:  Vulnerabilities Related to Provider Enrollment and Ownership Disclosure:  We 
found that few State Medicaid programs requested that providers disclose all Federally 
required ownership information, that 14 State Medicaid programs reported that they did not 
verify the completeness or accuracy of provider ownership information, and that 14 State 
Medicaid programs reported that they did not check all required exclusions databases, 
which could allow providers with excluded owners to enroll in Medicaid.  
  Medicaid Enhanced Provider Enrollment Screenings Have Not Been Fully Implemented:  
We found that State implementation of risk-based screening for Medicaid providers is 
incomplete, and that screening substitution and fingerprint-based criminal background 
checks remain challenges.  
False Billings/Improper Payments 
HHS policies or practices sometimes result in inefficiencies when unintended loopholes or other inherent 
problems invite exploitation or hinder consistent payment determinations.  Improper payments and false 
billings occur when the programs do not effectively prevent, deter, identify, or address inappropriate and 
excessive billing by providers and suppliers.  The following are examples of our improper payment work 
during this semiannual reporting period: 
Medicare Improperly Paid Millions of Dollars for Unlawfully Present Beneficiaries for 2013 and 2014  
In response to a congressional request regarding improper payments to unlawfully present beneficiaries, 
we found that when CMSs data systems indicated that at the time a claim was processed the beneficiary 
was unlawfully present, CMS followed its policies and procedures to prevent payment.  However, when 
CMS's data systems did not indicate until after a claim had been processed that a beneficiary was 
unlawfully present, CMS did not follow its policies and procedures to detect and recoup payment.  CMS 
determined that beneficiaries were liable for these improper payments, but it did not notify Medicare 
contractors to initiate recoupment activities.  CMS concurred with our recommendations.  
HIV Clinic Owner Ordered to Pay $12.2 Million in Restitution for Health Care Fraud 
Jorge Juvier was the owner and operator of multiple HIV/AIDS clinics in New York that purportedly 
provided injection and infusion treatments to Medicare-eligible HIV/AIDS patients.  According to court 
documents, however, these clinics were, in reality, health care fraud mills.  As part of the scheme, Juvier 
and his co-conspirators paid patients cash kickbacks for coming to the clinics; coached patients on lying 
to clinic doctors to enable fraudulent billing; and billed Medicare for medications that were never 
administered, administered at incorrect dosages, or were medically unnecessary.  Juvier was sentenced  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page viii 
 
 
to over 5 years in prison and ordered to pay $12.2 million in restitution, joint and several, for his guilty 
plea to conspiracy to commit health care fraud.   
Grants Oversight 
HHS is the largest grant-making organization in the Federal Government, with more than $400 billion 
awarded in FY 2016.  Responsible stewardship of these program dollars is vital to public health and well-
being.  Operating a financial management and administrative infrastructure that employs appropriate 
internal controls to minimize risk and protect resources remains a challenge for HHS.  The following are 
examples of our grants oversight work during this semiannual reporting period: 
More Effort is Needed to Protect the Integrity of the CCDF Block Grant Program 
Past work on the Child Care and Development Fund (CCDF) block grant program identified fraud, found 
improper payments, and exposed health and safety concerns at childcare facilities.  This recent report 
focused on how States and the Administration for Children and Families (ACF) ensure the integrity of the 
CCDF block grant program and the results of States program integrity activities.  This review found that 
States differed in the scope of their CCDF program integrity activities and varied substantially in the 
degree to which they conducted specific program integrity activities.  Not all States performed important 
antifraud activities, and few States notified ACF and other States about suspected fraud.  ACF does not 
have a process to ensure that States carry out planned program integrity activities nor does it collect 
information about the results of these activities.  ACF concurred with all of our recommendations.  
CDC Did Not Award Presidents Emergency Plan for AIDS Relief Funds for 2013 in Compliance with 
Applicable HHS Policies  
We found that the Centers for Disease Control and Prevention (CDC) did not award Presidents 
Emergency Plan for AIDS Relief (PEPFAR) funds for FY 2013 in compliance with HHS and internal policies.  
We sampled 30 Funding Opportunity Announcements (FOAs) and found that, in some of the CDC FOA 
reviews that culminated in awards, CDC did not comply with one or more HHS or internal policies.  As a 
result, CDC did not always adequately document its funding decisions to award $1.9 billion over the 5-
year project period, may have considered applications that it should not have considered, and 
sometimes treated applicants inconsistently.  CDC concurred with our recommendations that it: (1) 
conduct quality assurance reviews of FOAs and funded grant applicant information to monitor 
compliance with HHS and internal policies when awarding PEPFAR funds and (2) address specific 
deficiencies that we identified in our review.  
Health Information Technology 
In support of its mission and operations, HHS maintains and uses expanding amounts of sensitive 
information.  Complete, accurate, and timely data can help ensure efficient operations of HHS and its 
programs, as well as support proactive program oversight.  Similarly, the American health care system 
increasingly relies on health information technology (health IT) and the electronic exchange and use of  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page ix 
 
 
health information.  Health IT, including electronic health records (EHRs), offers opportunities for 
improved patient care, more efficient practice management, and improved overall public health.  
However, HHS continues to face a number of significant challenges in this information-rich environment.  
The following are examples of our health IT work during this semiannual reporting period: 
Hospitals Largely Reported Addressing Requirements for EHR Contingency Plans 
This evaluation provides information about the status of hospitals contingency plans in light of evolving 
threats, including cyberattacks such as ransomware, to their electronic health information systems.  We 
found that almost all hospitals reported having written EHR contingency plans, and most reported that 
their plans addressed four Health Insurance Portability and Accountability Act (HIPAA) requirements as 
well as recommended practices.  This review provides baseline information on hospitals contingency 
plans at a time when awareness of cybersecurity threats is growing, and reinforces previous OIG 
recommendations to the Office for Civil Rights (OCR) concerning its audit program, among others.   
Public Summary Report:  Wireless Penetration Test of Centers for Medicare & Medicaid Services' Data 
Centers 
We performed a wireless penetration test of select CMS Data Centers and facilities to determine 
whether CMSs security controls over its wireless networks were effective.  We found that, although CMS 
had security controls that were effective in preventing certain types of wireless cyberattacks, we 
identified four vulnerabilities at selected CMS Data Centers and facilities in security controls over its 
wireless networks.  The vulnerabilities were collectively and, in some cases, individually significant.  
Although we did not identify evidence that the vulnerabilities had been exploited, exploitation could 
have resulted in unauthorized access to and disclosure of personally identifiable information, as well as 
disruption of critical operations.  In addition, exploitation could have compromised the confidentiality, 
integrity, and availability of CMSs data and systems.  We promptly shared detailed information with CMS 
about our preliminary findings.  CMS concurred with our recommendations that it improve its security 
controls to address the wireless network vulnerabilities we identified. 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page x 
OIG Participation in Congressional Hearings 
09/28/2016  Abhijit Dixit, Special Agent in OIGs Office of 
Investigations, testified before the House Committee 
on Ways and Means:  Subcommittee on Oversight: 
Health Care Fraud Investigations 
9/14/2016  Gloria Jarmon, Deputy Inspector General for Audit 
Services, testified before the House Committee on 
Energy and Commerce:  Subcommittee on Oversight 
and Investigations and Subcommittee on Health: 
The Affordable Care Act on Shaky Ground: Outlook 
and Oversight 
5/24/16  Ann Maxwell, Assistant Inspector General for 
Evaluation and Inspections, testified before the 
House Committee on Energy and Commerce: 
Subcommittee on Oversight and Investigations: 
Medicare and Medicaid Program Integrity: 
Combatting Improper Payments and Ineligible 
Providers  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page xi 
Table of Contents 
Centers for Medicare & Medicaid Services ............................................. 1 
Legal and Investigative Activities Related to Medicare and Medicaid ... 19 
Public Health Agencies Reviews and Enforcement Activities ................ 34 
Human Services Agencies Reviews and Enforcement Activities ............ 38 
Other HHS-Related Reviews and Investigations .................................... 43 
Appendixes ........................................................................................... 48 
Appendix A: ........................................................................................... 49 
Appendix B: ........................................................................................... 53 
Appendix C: ........................................................................................... 59 
Appendix D: .......................................................................................... 61 
Appendix E: ........................................................................................... 64 
Appendix F: ........................................................................................... 66  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page xii 
Selected Acronyms and Abbreviations 
 ACA Patient Protection and Affordable Care Act 
 ACF Administration for Children and Families 
 CDC Centers for Disease Control and Prevention 
 CIA corporate integrity agreement 
 CHIP Childrens Health Insurance Program 
 CMP civil monetary penalty 
 CMS Centers for Medicare & Medicaid Services 
 CY calendar year 
 DME durable medical equipment 
 DOJ Department of Justice 
 EHR electronic health record 
 FBI Federal Bureau of Investigation 
 FDA Food and Drug Administration 
 FY fiscal year 
 GAO General Accountability Office 
 HHS Department of Health and Human Services 
 HIPAA Health Insurance Portability and Accountability Act 
 HRSA Health Resources and Services Administration 
 MAC Medicare Administrative Contractors  
 Marketplaces health insurance exchanges 
 MFCU Medicaid Fraud Control Unit 
 NIH National Institutes of Health 
 OCR Office of Civil Rights 
 OIG Office of Inspector General 
 OMB Office of Management and Budget  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 1 
Centers for Medicare & Medicaid Services 
The Medicare Program 
CMS Oversight of Medicare Contractor Performance
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 one-half 
of a trillion dollars in benefits each year.  Medicare Administrative Contractors (MACs) process Parts A 
and B claims; Medicare Advantage 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. 
Medicare Payments, Policies, and Practices 
Recommendation Followup:  CMS Should Address Medicares Flawed Payment System for DME 
Infusion Drugs (OEI-12-16-00340), September 2016 
This review, following up on an earlier recommendation, built on previous OIG findings by illustrating the 
impact of the current Part B payment methodology on provider reimbursement rates for two vital drugs:  
pump-administered insulin and milrinone lactate.  Unlike most other Part B drugs, Medicare payment 
amounts for DME infusion drugs are still based on list prices  known as average wholesale prices  from 
2003.  In February 2013, OIG issued a report to CMS recommending that the agency address payment 
issues associated with DME infusion drugs.  Because CMS had not taken steps to address our 
recommendation, and payments continued to be misaligned with drug costs, OIG revisited this issue in a 
2015 report. 
In updating the two prior studies, we found that in 2015 Medicare paid suppliers 65 percent less than 
their cost for pump-administered insulin  hindering beneficiary access to the drug.  Using this same 
reimbursement methodology, Medicare paid suppliers of milrinone lactate, an infusion drug used to 
treat congestive heart failure, 20 times the drugs cost, thereby creating incentives for overutilization and 
improper billing.  Therefore, OIG continued to recommend that CMS take action to ensure that Medicare 
payment amounts for DME infusion drugs more accurately reflect provider acquisition costs.  The agency 
could choose to seek a legislative change that would require payments for DME infusion drugs to be 
based on average sales price.  CMS could also choose to use its existing authority to include DME 
infusion drugs in the competitive bidding program as soon as possible. 
Incomplete and Inaccurate Licensure Data Allowed Some Suppliers in Round 2 of the Durable Medical 
Equipment Competitive Bidding Program That Did Not Have Required Licenses (A-05-13-00047), May 
2016 
To address market changes and increasing Medicare Part B expenditures for DME items, Congress 
required CMS to implement a Medicare competitive bidding program.  The Medicare Improvements for 
Patients and Providers Act of 2008 contains a broad mandate requiring OIG to assess the process used  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 2 
 
 
by CMS to conduct the competitive bidding and subsequent pricing determinations that are the basis for 
the single payment amounts under Rounds 1 and 2 of the competitive bidding program.  In addition, we 
received congressional requests to look into complaints that some suppliers that were offered contracts 
for Round 2 of the competitive bidding program may not have met licensure requirements under the 
awarded contracts.  Our objective was to determine whether suppliers that received contracts in Round 
2 of the DME competitive bidding program and about whom CMS received complaints met licensure 
requirements.  
We found that some contract suppliers in Round 2 of the Competitive Bidding Program had not met all 
of the competitive bidding licensure requirements.  Specifically, of the 146 suppliers covered in our 
audit, 63 did not meet licensure requirements for some of the competitions for which they received a 
contract.  Additionally, 14 suppliers need to be further researched by CMS and its contractors to 
determine if they met State licensure requirements.  CMS concurred with our recommendations to:  (1) 
complete the research required to determine whether 14 suppliers had a proper license and make a 
licensure determination regarding those suppliers, and (2) identify all applicable State licensure 
requirements to prevent suppliers that do not have all currently required licenses from receiving 
contracts in future rounds of the competitive bidding program.  CMS did not concur with our 
recommendation to work with State licensing boards to better coordinate, identify, and maintain an 
accurate and complete licensure database of currently required State licenses. 
Medicare Compliance Review of Home Health VNA for 2011 and 2012 (A-01-13-00518), August 2016 
This review was part of a series of reviews of home health agencies (HHAs).  Using computer matching, 
data mining, and data analysis techniques, we identified certain types of home health claims that were 
at risk for noncompliance with Medicare billing requirements.  We determined that Home Health VNA 
(the Agency), located in Lawrence, Massachusetts, did not comply with Medicare billing requirements 
for 105 of the 497 home health claims we reviewed.  As a result, the Agency received net overpayments 
of $314,000 for calendar years (CYs) 2011 and 2012.  Specifically, the Agency incorrectly billed Medicare 
because beneficiaries were not homebound; beneficiaries did not require skilled services; 
documentation from the certifying physicians was missing or insufficient to support the services the 
Agency provided; or, in one instance, a claim contained an incorrect payment code.  
We estimated that the Agency received overpayments of at least $15.5 million for the audit period.  This 
overpayment amount includes claims with payment dates outside of the 3-year recovery period.  The 
Agency did not concur with our recommendations to:  (1) refund to the Medicare contractor $6.3 million 
in estimated overpayments for claims incorrectly billed that are within the 3-year recovery period; (2) 
work with the contractor to refund net overpayments outside of the 3-year recovery period, which we 
estimate to be $9.1 million for our audit period, in accordance with the 60-day repayment rule; (3) 
identify claims in subsequent years that did not meet Medicare payment requirements and refund any 
associated overpayments; and (4) take steps to strengthen its procedures.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 3 
 
 
Medicare Improperly Paid Hospitals for Beneficiaries Who Had Not Received 96 or More Consecutive 
Hours of Mechanical Ventilation (A-09-14-02041), June 2016 
A previous OIG review found that hospitals did not fully comply with Medicare requirements for billing 
inpatient claims with certain Medicare Severity Diagnosis-Related Groups (MS-DRGs) that required 
beneficiaries to have received 96 or more consecutive hours of mechanical ventilation.  A subsequent 
OIG review found that claims with longer lengths of stay were also at risk for billing errors.  Our objective 
was to determine whether Medicare payments to hospitals for inpatient claims with certain MS-DRGs 
that required 96 or more consecutive hours of mechanical ventilation complied with Medicare 
requirements.  We found that, for 63 of the 200 claims we reviewed, Medicare payments to hospitals 
were assigned incorrectly to MS-DRGs 207 and 870, resulting in $1.5 million in overpayments.  We 
estimated that the hospitals received overpayments of $3.7 million for claims with a potential procedure 
length of 4 days or fewer and overpayments of $15.9 million for claims with a potential procedure length 
of 5 days.  
CMS concurred with our recommendations that it:  (1) ensure that the Medicare contractors recover the 
$1.5 million; (2) revise the length-of-stay edit to take into account the mechanical ventilation start date 
for claims with a potential procedure length of 4 days or fewer, which could result in savings of an 
estimated $3.7 million over a 2-year period; (3) provide additional guidance to hospitals on the correct 
billing of mechanical ventilation claims, emphasizing correct billing of claims with a potential procedure 
length of 5 days, which could result in savings of an estimated $15.9 million over a 2-year period; (4) 
review the remaining nonsampled claims and recover the overpayments to the extent feasible and 
allowed under the law; and (5) direct the Medicare contractors to review any claims for which procedure 
code 96.72 was used with a potential procedure length of 5 days or fewer and recover any overpayments 
after our audit period.  
Medicare Improperly Paid Millions of Dollars for Unlawfully Present Beneficiaries for 2013 and 2014  
Mandatory Review (A-07-15-01159), September 2016 
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) requires CMS to establish policies 
and implement claims edits to ensure that payments are not made for Medicare services rendered to 
individuals who are not lawfully present in the United States (unlawfully present). OIG must report on 
CMSs activities to ensure that Medicare payments are not made for unlawfully present beneficiaries. We 
found that, when CMSs data systems indicated that at the time a claim was processed the beneficiary 
was unlawfully present, CMS followed its policies and procedures to prevent payment. However, when 
CMS's data systems did not indicate until after a claim had been processed that a beneficiary was 
unlawfully present, CMS did not follow its policies and procedures to detect and recoup payment. CMS 
determined that beneficiaries were liable for these improper payments, but it did not notify Medicare 
contractors to initiate recoupment activities.  Our review included 14,530 claims that were paid on 
behalf of 481 unlawfully present beneficiaries with $9.3 million in associated Medicare payments during 
CYs 2013 and 2014.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 4 
 
 
CMS concurred with our recommendations to direct its Medicare contractors, to the maximum extent 
feasible, to initiate recoupment activities:  (1) against the 481 unlawfully present beneficiaries on whose 
behalf Medicare made $9.3 million in improper payments, and (2) for improper payments made after 
our audit period on behalf of any beneficiaries who are detected to be unlawfully present. 
Enhanced Enrollment Screening of Medicare Providers:  Early Implementation Results (OEI-03-13-
00050), April 2016 
To bill for services provided to beneficiaries, providers must enroll in Medicare and periodically 
revalidate this enrollment.  Effective enrollment screening is an important tool in preventing Medicare 
fraud.  CMS has sought to enhance the enrollment screening process with new antifraud tools, such as 
placing providers in risk categories, increasing site visits, requiring fingerprinting if applicable, 
implementing an Automated Provider Screening system, and denying enrollment to providers whose 
owners have existing Medicare overpayments.  Our study examined CMSs early implementation of new 
screening tools intended to prevent illegitimate providers from enrolling in Medicare. 
We found that CMS needs to strengthen the implementation of its new enhanced enrollment screening 
tools.  We also found that CMSs enrollment data system does not contain the information needed for 
effective oversight and evaluation of the enhancements to the enrollment screening process.  
Maintaining a robust enrollment process is an important tool in preventing Medicare fraud and ensuring 
the programs integrity.  CMS concurred with all of our recommendations to:  (1) monitor contractors to 
determine whether they are verifying information on enrollment and revalidation applications as 
required, (2) validate that contractors are appropriately considering site visit results when making 
enrollment decisions, (3) revise and clarify site visit forms so they can be more easily used by inspectors 
to determine whether a facility is operational, (4) require the National Site Visit Contractor to improve 
quality-assurance oversight and training of site visit inspectors, and (5) ensure that CMSs enrollment 
data system contains the complete and accurate data needed to execute and evaluate CMSs enrollment-
screening enhancements.      
Medicare: Vulnerabilities Related to Provider Enrollment and Ownership Disclosure (OEI-04-11-00591), 
May 2016 
CMS can prevent inappropriate payments, protect beneficiaries, and reduce time-consuming and 
expensive pay and chase activities by ensuring that providers that intend to engage in fraudulent or 
abusive activities are not allowed to enroll in Medicare.  For CMS to identify potentially fraudulent 
providers, as well as those that may be associated with excluded individuals or entities, providers must 
disclose accurate and timely information about their owners.  For selected providers, we compared 
three sets of owner names:  (1) those on record with CMS for Medicare enrollment purposes, (2) those 
submitted by providers directly to OIG, and (3) those on record with State Medicaid programs.  When 
we compared names, we found that over three-quarters of Medicare providers had owner names on 
record with CMS that did not match those that providers submitted to OIG.  Further, nearly all providers 
in our review had owner names on record with CMS that did not match those on record with State  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 5 
 
 
Medicaid programs.  Additionally, 2 of the 11 CMS contractors did not check all required exclusions 
databases, which could allow providers with excluded owners to enroll in the Medicare program.  Taken 
together, these findings reveal vulnerabilities that could allow potentially fraudulent providers to enroll 
in the Medicare program and limit CMSs ability to provide adequate oversight.   
CMS concurred with our four recommendations to:  (1) review providers that submitted nonmatching 
owner names and take appropriate action, (2) educate providers on the requirement to report changes 
of ownership, (3) increase coordination with State Medicaid programs on the collection and verification 
of provider ownership information in Medicare and Medicaid, and (4) ensure that its contractors check 
exclusions databases as required.  
High Part D Spending on Opioids and Substantial Growth in Compounding Drugs Raise Concerns (OEI-
02-16-00290), June 2016 
Medicare Part D spending for commonly abused opioids exceeded $4 billion in 2015, and spending for 
compounded topical drugs increased more than 3,400 percent since 2006.  These striking trends raise 
concerns about misuse as well as fraud.  This data brief builds on OIGs June 2015 data brief, 
Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D, 
which described trends in Part D spending and identified questionable billing by pharmacies.  It updates 
information on spending for commonly abused opioids and provides data on the dramatic growth in 
spending for compounded drugs.  OIG will continue to conduct investigations and reviews to address the 
ongoing problems created by opioid abuse and the emerging problems linked to compounded 
drugs.  CMS has taken steps to combat the problems associated with commonly abused opioids, such as 
identifying outlier prescribers.  However, the data brief concluded that CMS needs to take additional 
action, including fully implementing OIGs previous recommendations.  CMS also needs to assess the 
implications of the compounded drug trends identified in this data brief and take action where needed 
to protect the integrity of the program. 
CMS is Taking Steps to Improve Oversight of Provider-Based Facilities, but Vulnerabilities Remain (OEI-
04-12-00380), June 2016 
We reviewed CMSs oversight of provider-based billing to ensure that only facilities that met provider-
based requirements were receiving higher payments allowed by the provider-based designation.  Under 
Medicare, payments for services performed in provider-based facilities are often more than 50 percent 
higher than payments for the same services performed in a freestanding facility.  This increased cost is 
borne by both Medicare and its beneficiaries.  We found that, nationwide, nearly half of hospitals owned 
at least one provider-based facility.  While CMS is taking steps to improve its ability to monitor provider-
based billing, vulnerabilities associated with provider-based billing remain.  In addition, more than three-
quarters of the 50 hospitals we reviewed that had not voluntarily attested for all their off-campus 
provider-based facilities owned off-campus facilities that did not meet at least one requirement.  Finally, 
CMS reported challenges with the provider-based review process primarily because of difficulties  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 6 
 
 
obtaining documentation.  These findings demonstrate continued vulnerabilities associated with 
provider-based billing.  
CMS partially concurred with our first recommendation to implement systems and methods to monitor 
billing by all provider-based facilities, but it did not concur with our second recommendation to require 
hospitals to submit attestations for all their provider-based facilities.  CMS concurred with our other two 
recommendations to ensure that regional offices and MACs apply provider-based requirements 
appropriately when conducting attestation reviews and take appropriate action against hospitals and 
their off-campus provider-based facilities that we identified as not meeting requirements. 
Quality of Care and Beneficiary Access 
Adverse Events in Rehabilitation Facilities:  National Incidence Among Medicare Beneficiaries (OEI-06-
14-00110), July 2016 
This report is part of a series on adverse events in health care settings, defined as harm resulting from 
medical care.  Previous OIG work identified harm rates of about 30 percent in both acute-care hospitals 
and skilled nursing facilities, with an attendant toll on patient health and taxpayers costs, the latter 
amounting to billions of dollars annually.  This report extends our work by evaluating care provided in 
rehabilitation (rehab) hospitals, which are post-acute providers that specialize in intensive rehabilitative 
care for patients recovering from illness, injury, or surgery.  We found that 29 percent of Medicare 
beneficiaries experienced adverse or temporary harm events during their rehab hospital stays, resulting 
in temporary harm, prolonged stays or transfers to other hospitals, permanent harm, life-sustaining 
intervention, or death.  Physician reviewers determined that almost half (46 percent) of these events 
could have been prevented.  Nearly one-quarter of the patients who experienced these harm events 
were transferred to an acute-care hospital for treatment, with an estimated cost to Medicare of more 
than $7.7 million in a single month.   
We recommended that the Agency for Healthcare Research and Quality (AHRQ) and CMS raise 
awareness of patient safety issues in rehab hospitals and seek to reduce patient harm.  This effort should 
include:  (1) creating a list of potential adverse events that occur in rehab hospitals and (2) adding 
information about potential adverse events in quality guidance to rehab hospitals.  CMS and AHRQ 
concurred with our recommendations.   
Nationwide Analysis of Common Characteristics in OIG Home Health Fraud Cases (OEI-05-16-00031), 
June 2016 
Home health has long been recognized as a program area vulnerable to fraud, waste, and abuse.  During 
our review, we analyzed Medicare claims data from CYs 2014 and 2015 to assess the national prevalence 
and distribution of selected characteristics commonly found in OIG-investigated home health fraud 
cases.  We identified home health agencies (HHAs) and supervising physicians that were statistical 
outliers with regard to those characteristics in comparison to their peers nationally.  We also identified  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 7 
 
 
geographic hotspots that were either statistical outliers compared to other areas nationally or 
contained significant numbers of HHA or physician outliers. 
We identified a substantial number of providersover 500 HHAs and over 4,500 physiciansthat were 
outliers in comparison to their peers nationally with respect to multiple characteristics commonly found 
in OIG-investigated cases of home health fraud.  While our analysis does not demonstrate that these 
providers were engaged in fraudulent activity, they may warrant further scrutiny.  We also identified 27 
geographic hotspots in 12 Statesi.e., areas where characteristics commonly found in OIG-investigated 
cases of home health fraud are prevalent.  Many of these hotspots are areas already recognized as 
having high rates of Medicare fraud.  Along with OIGs existing body of work, these results demonstrate 
that home health fraud in Medicare continues to warrant scrutiny and attention from OIG, its law 
enforcement partners, and CMS. 
West Carroll Care Center Did Not Always Follow Care Plans for Residents Who Were Later Hospitalized 
With Potentially Avoidable Urinary Tract Infections (A-06-14-00073), June 2016 
An OIG study found that in Federal FY 2011, nursing homes transferred about one-quarter of their 
Medicare beneficiary residents to hospitals for inpatient admissions.  Medicare spent $14.3 billion on 
these hospitalizations.  One of the most frequent reasons for those hospitalizations was a urinary tract 
infection (UTI), a condition that a CMS study found is generally preventable and manageable in the 
nursing home setting.  We reviewed West Carroll Care Center (the Nursing Home) because about 75 
percent of its resident hospitalizations from October 1, 2011, through May 14, 2013, occurred because 
of conditions a CMS-sponsored study found to be associated with potentially avoidable hospitalizations.  
A UTI was the most frequent reason for the hospitalizations.  We found that the Nursing Home did not 
always provide services to its residents in accordance with their care plans, as required by Federal 
regulations, before they were hospitalized with UTIs.  Specifically, the Nursing Home staff did not 
monitor and document residents hydration status, monitor and document residents conditions, or 
document residents urine appearances as their care plans required.  
During our audit, the Nursing Home developed policies and procedures requiring that the director of 
nursing or a designee conduct reviews to ensure that the nursing staff follows residents care plans.  We 
recommend that the Nursing Home implement its newly developed policies and procedures requiring 
that its nursing staff follow residents care plans and the director of nursing or a designee conduct 
reviews to ensure that the nursing staff follows residents care plans.  The Nursing Home agreed with our 
findings and stated that it has implemented corrective actions. 
The Medicaid Program 
Payments, Policies, and Practices 
To fund their Medicaid programs, States receive Federal grant awards that pay for the Federal share of 
their Medicaid medical and administrative expenditures.  OIG conducts audits on States withdraws of  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 8 
 
 
Federal Medicaid funds to determine whether a State submitted an improper claim for Federal 
reimbursement and, therefore, may owe money back to the Federal Government.  If a State disagrees 
with our recommendation to refund questioned costs identified in an audit, CMS still has the authority 
to recoup those costs.  
Medicaid Enhanced Provider Enrollment Screenings Have Not Been Fully Implemented (OEI-05-13-
00520), May 2016 
To bill for items and services provided to beneficiaries, providers must enroll, and periodically revalidate 
this enrollment, in Medicaid.  To protect Medicaid against ineligible and fraudulent providers, the Patient 
Protection and Affordable Care Act (ACA) requires States to screen Medicaid providers according to their 
risk for fraud, waste, and abuse using enhanced screening procedures.  To help States meet the demands 
of applying enhanced screening to all new and existing providers, CMS allows States to substitute 
Medicare or other State Medicaid agency or Childrens Health Insurance Program (CHIP) screening 
results for their own.  This review determined the extent to which States have screened high- and 
moderate-risk providers using risk-based screening.  We found that State implementation of risk-based 
screening for Medicaid providers is incomplete.  Most States report not having fingerprint-based criminal 
background checks while waiting for the requirement to take effect.  We also found that screening 
substitution is challenging for many States.   
CMS concurred with all of our recommendations to:  (1) assist States in implementing fingerprint-based 
criminal background checks for all high-risk providers, (2) assist States in overcoming challenges in 
conducting site visits, (3) enable States to substitute Medicare screening data by ensuring the 
accessibility and quality of Medicare data, (4) develop a central system where States can submit and 
access screening results from other States, (5) strengthen minimum standards for fingerprint-based 
criminal background checks and site visits, and (6) work with States to develop a plan to timely complete 
their revalidation screenings. 
Medicaid:  Vulnerabilities Related to Provider Enrollment & Ownership Disclosure (OEI-04-11-00590), 
May 2016   
States can prevent inappropriate payments, protect beneficiaries, and reduce time-consuming and 
expensive pay and chase activities by ensuring that providers that intend to engage in fraudulent or 
abusive activities are not allowed to enroll in Medicaid.  Our review determined the extent to which 
States requested and verified provider ownership information and checked exclusions databases.  We 
found that few State Medicaid programs requested that providers disclose all Federally required 
ownership information.  In addition, 14 State Medicaid programs reported that they did not verify the 
completeness or accuracy of provider ownership information.  We also found that 14 State Medicaid 
programs reported that they did not check all required exclusions databases, which could allow 
providers with excluded owners to enroll in Medicaid.  Additionally, we found that most providers in our 
review had names on record with State Medicaid programs that did not match the names that providers 
submitted to OIG.  Further, nearly all providers in our review had names on record with State Medicaid  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 9 
 
 
programs that did not match those on record with CMS.  Taken together, these findings reveal 
vulnerabilities that could allow potentially fraudulent providers to enroll in State Medicaid programs and 
that limit States ability to provide adequate oversight.   
CMS concurred with our seven recommendations to:  (1) work with State Medicaid programs to identify 
and correct gaps in their collection of all required provider ownership information, (2) provide guidance 
to State Medicaid programs on how to verify the completeness and accuracy of provider ownership 
information, (3) require State Medicaid programs to verify the completeness and accuracy of provider 
ownership information, (4) ensure that State Medicaid programs check exclusions databases as required, 
(5) work with State Medicaid programs to educate providers on the requirement to report changes of 
ownership, (6) work with State Medicaid programs to review providers that submitted nonmatching 
owner names and take appropriate action, and (7) increase coordination with State Medicaid programs 
on collecting and verifying provider ownership information in Medicaid and Medicare. 
Colorado Received Millions in Unallowable Bonus Payments (A-04-15-08039), August 2016 
Under the Children's Health Insurance Program Reauthorization Act of 2009, Congress appropriated 
$3.225 billion for qualifying States to receive performance bonus payments (bonus payments) for 
Federal FYs 2009 through 2013 to offset the costs of increased enrollment of children in Medicaid.  We 
found that some of the bonus payments that Colorado received for FYs 2010 through 2013 were not 
allowable in accordance with Federal requirements.  Colorado overstated its FYs 2010 through 2013 
current enrollment in its bonus requests to CMS because it included individuals who did not qualify.  As a 
result, CMS overpaid Colorado $38.3 million in bonus payments.  Colorado did not concur with our 
recommendation that it refund $38.3 million to the Federal Government.  
Washington State Claimed Federal Medicaid Reimbursement for Inpatient Hospital Services Related to 
Treating Provider-Preventable Conditions (A-09-14-02012), September 2016 
Provider-preventable conditions (PPCs) are certain reasonably preventable conditions caused by medical 
accidents or errors in a health care setting.  Federal regulations effective July 1, 2011, prohibit Medicaid 
payments for services related to PPCs.  We conducted this review to determine whether Washington 
State (Washington) was in compliance with the new regulations for inpatient hospital services.  We 
found that Washington claimed Federal Medicaid reimbursement for inpatient hospital services related 
to treating certain PPCs.  From July 2012 through December 2013, we identified 463 claims that 
contained PPCs and: (1) a present-on-admission indicator code (POA code) indicating that the condition 
was not present on admission, (2) a POA code indicating that the documentation in the patients medical 
record was insufficient to determine whether the condition was present on admission, or (3) no POA 
code.  Washington did not determine the unallowable portion of $18.3 million ($10.8 million Federal 
share) that was for services related to treating PPCs and should not have been claimed for Federal 
Medicaid reimbursement.  We set aside this amount for resolution by CMS and Washington.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 10 
 
 
Washington concurred with our recommendations that it work with CMS to determine what portion of 
the $10.8 million claimed was unallowable for Federal Medicaid reimbursement and refund to the 
Federal Government the unallowable amount; refund to the Federal Government its share of any 
unallowable amounts for those paid claims reviewed; and ensure that its policy and procedure requiring 
a retrospective clinical review are fully implemented and effective in prohibiting unallowable payments 
for inpatient hospital services related to PPCs.  Washington did not concur with our recommendation 
that it review paid claims before our audit period for certain inpatient hospital services to determine 
whether payments should be adjusted for any claims that contained PPCs that had certain POA codes or 
were missing POA codes. 
The Medicaid Program Could Have Achieved Savings If Oregon Had Applied Medical Loss Ratio 
Standards Similar to Those Established by the Affordable Care Act (A-09-15-02033), April 2016 
The objective of this review was to determine potential Medicaid program savings if Oregon required its 
Medicaid coordinated-care organization (CCO) plans to meet medical loss ratio (MLR) standards for its 
non-expansion population similar to those established by the ACA.  The ACA set a standard for the 
amount of premium revenue that certain commercial health insurers and Medicare Advantage plans can 
spend on costs other than health-care-related expenses, which is known as the MLR.  Insurers that do 
not meet these standards must pay rebates.  Some States have applied similar standards to their 
contracts with Medicaid managed-care organizations.  The Federal Government is entitled to the Federal 
share of the net amount recovered by a State with respect to its Medicaid program. 
We determined that Medicaid could have saved $10.1 million ($6.4 million Federal share) during CY 2014 
if Oregon had required its Medicaid CCO plans to meet MLR standards similar to those established by the 
ACA for those individuals who did not enroll through the Medicaid expansion program.  Oregon 
concurred with our recommendation that it incorporate MLR standards into its contracts with Medicaid 
CCO plans for its non-expansion population.  
State Governments May Unduly Benefit Financially From Publicly Owned but Privately Operated 
Entities (A-06-16-08005), August 2016 
During our audit of Alabamas hospital certified public expenditures (CPEs) program for FY 2010, we 
noticed that Alabama had claimed, for FYs 2010 and 2011, more than $5 million in Federal funds related 
to CPEs for three hospitals that appeared to be private hospitals.  The three hospitals were owned but 
not operated by State or local governments.  Alabama's definition of a public hospital indicates that a 
facility only has to be owned by a public entity, regardless of whether the facility is operated by a public 
entity or whether State or local government funds are used in its operation.  As a result, Alabama 
received more than $5 million in Federal funding by claiming CPEs from the three hospitals, even though 
no State or local government funding was used to operate the hospitals. 
We are concerned that the Federal Government is matching funds from private entities with no true 
State or local government funds involved and that State Governments can benefit financially from  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 11 
 
 
publicly owned but privately operated entities because the Federal Government has not provided a clear 
definition of public funds or contributing public agency.  We suggest that CMS consider requiring 
that, to certify public expenditures as the States share of Medicaid expenditures, an entity be operated 
by a unit of government. 
Utah Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-Administered 
Drugs (A-07-14-06057), May 2016 
We conducted a review to determine whether States are complying with Federal Medicaid requirements 
for billing manufacturers for rebates for physician-administered drugs.  For a covered outpatient drug to 
be eligible for Federal reimbursement under Medicaids drug rebate requirements, manufacturers must 
pay rebates to the States for the drugs.  States generally offset the Federal share of these rebates against 
their expenditures and bill the manufacturers for rebates to reduce the cost of drugs to the program.  
However, previous OIG reviews found that States did not always bill and collect all rebates due for drugs 
administered by physicians.  We found that Utah did not invoice manufacturers for rebates associated 
with $4.4 million in physician-administered drugs and $1.2 million that did not have national drug codes 
in the utilization data or may have been otherwise ineligible for Federal reimbursement.  
Utah concurred with our recommendations that it strengthen its internal controls to ensure that all 
physician-administered drugs eligible for rebates are invoiced and that it work with CMS to determine 
and refund the unallowable portion of Federal reimbursement for physician-administered drugs.  Utah 
did not concur with our recommendations that it refund to the Federal Government $4.4 million for 
claims for physician-administered drugs that were ineligible for Federal reimbursement and work with 
CMS to determine the unallowable portion of the $1.2 million and refund that amount. 
Texas Did Not Always Calculate Physician Supplemental Payments Made to the University of Texas 
Health Institutions in Accordance With Federal and State Requirements (A-06-11-00004), August 2016 
Our objective was to determine whether the State agency calculated supplemental payments made to 
the University of Texas (UT) health institutions in accordance with Federal and State requirements.  We 
determined that the State agency did not always calculate supplemental payments made to the UT 
health institutions in accordance with Federal and State requirements.  Specifically, the supplemental 
payment calculations included overstated Medicare equivalent fees for claims that included payment 
modifiers and diagnostic test modifiers, Medicaid services that were performed by ineligible providers, 
and Medicaid services that did not have Medicare equivalent fees.  As a result, the State agency claimed 
$57.9 million in unallowable supplemental payments made to the UT health institutions from May 1, 
2004, through September 30, 2007.  
Texas stated it would review the physician supplemental payment calculation, refund the Federal share 
of any improper payments, and work with the UT health institutions in response to our recommendation 
that it refund to the Federal Government the $57.9 million in improper supplemental payments made to 
the UT health institutions.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 12 
 
 
New York Overpaid Certain Medicaid Mental Health Services Providers (A-02-13-01021), June 2016 
During a prior review of a Medicaid-funded mental health program in New York State, we observed that 
some providers were paid more than the Medicaid base rate for certain services.  These providers 
participated in the State's Comprehensive Outpatient Program Services (COPS) and Community Support 
Program (CSP) programs and, as program participants, received supplemental (add-on) payments subject 
to annual payment thresholds in exchange for offering enhanced services to Medicaid beneficiaries.  
During this review, we identified overpayments due to the Federal Government totaling $8.1 million 
(Federal share) from 2009 through 2012 for providers in New Yorks COPS and CSP programs.  Although 
New York had credited to the Federal Government its share of reviewed overpayments that New York 
identified, New York continues to work to collect the $92 million in final report overpayments due the 
Federal Government and $27.4 million in preliminary report overpayments for 2003 through 2008.  
Further, New York said that $2.7 million due to the Federal Government in other overpayments made 
during this period were not collectable because of provider bankruptcy or business closure.  
New York agreed with our recommendations that it:  (1) refund $8.1 million for COPS and CSP 
overpayments for the period 2009 through 2012, (2) continue working to collect the additional 
overpayments for the period 2003 through 2008 and return $27.4 million to CMS, (3) identify any 
overpayments made between December 2012 and October 2013 and refund the applicable Federal 
share, and (4) exhaust all legal efforts to collect the $5.4 million ($2.7 million Federal share) in 
overpayments that New York indicated were not collectable because of provider bankruptcy or business 
closure.  
New Jersey Did Not Adequately Oversee Its Medicaid Nonemergency Medical Transportation 
Brokerage Program (A-02-14-01001), July 2016 
Medicaid pays for nonemergency medical transportation (NEMT) services that a State determines to be 
necessary for beneficiaries to obtain medical care.  Because OIG has consistently identified this area as 
vulnerable to fraud, waste, and abuse, OIG has conducted audits in multiple States since 2006.  We 
selected New Jerseys NEMT services program for review because, in 2009, New Jersey transitioned from 
a fee-for-service program to one managed by a transportation broker.  We determined that New Jersey 
did not adequately oversee its Medicaid NEMT brokerage program.  As a result, we estimated that 
2,538,674 claims totaling $64.7 million did not comply with certain contract provisions and State 
requirements and 480,290 claims totaling $11.3 million for services may not have complied.  In addition, 
providers noncompliance with certain contract and State requirements for the licensing and 
qualifications of vehicle safety and transport personnel could have jeopardized the health and safety of 
Medicaid beneficiaries.  
New Jersey generally agreed with our recommendation that it improve its oversight and monitoring of its 
Medicaid NEMT brokerage program by requiring the contractor to strengthen its procedures to ensure 
that:  (1) vehicles used to transport Medicaid beneficiaries meet New Jersey requirements, (2) transport 
personnel are licensed and qualified, (3) prior authorization is obtained and medical necessity  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 13 
 
 
documented for beneficiaries who require certain transportation services, (4) transportation providers 
maintain required insurance coverages, (5) beneficiaries receive Medicaid-eligible medical services on 
the date of transportation, and (6) NEMT services are adequately documented.  New Jersey did not 
directly agree or disagree with our recommendation that it ensure that its contract with the 
transportation broker contains provisions that:  (1) consider improper claims submitted by 
transportation providers to the transportation broker when developing future capitated rates paid by 
New Jersey and (2) provide a means for New Jersey to recoup funds from the transportation broker 
when contract provisions and State requirements are not meta measure that, if incorporated, could 
result in cost savings for Medicaid. 
Alabama Claimed Millions in Unallowable School-Based Medicaid Administrative Costs (A-04-13-
00094), July 2016 
In prior reviews of school-based and community-based administrative costs that States allocated to 
Medicaid using random moment sampling (RMS), we identified significant overpayments.  As part of our 
Medicaid risk assessment, we noted that the Alabama Medicaid Agency (Alabama) did not have an 
approved public assistance cost allocation plan (CAP).  However, for Federal FYs 2010 through 2012, 
Alabama claimed school-based administrative costs, which are public assistance costs, totaling almost 
$150.5 million (almost $75.3 million Federal share).  We conducted this audit because of the significant 
amount that Alabama claimed, its lack of an approved CAP, and our prior findings related to costs that 
States allocated to Medicaid using RMS.  
We found that the $150.5 million ($75.3 million Federal share) that Alabama claimed in school-based 
Medicaid administrative costs for FYs 2010 through 2012 was unallowable.  Alabama claimed these costs 
without submitting for Division of Cost Allocation review its public assistance CAP and certain 
amendments and, consequently, without having an approved CAP.  Instead, Alabama claimed costs 
based on various versions of its implementation guides and plans that were being considered by and 
negotiated with CMS.  Alabama also used statistically invalid RMS in allocating costs to Medicaid, and it 
did not maintain adequate support to validate its sample results and related extrapolations.  
Alabama generally disagreed with our recommendations that it:  (1) refund $75.3 million to the Federal 
Government, (2) submit to CMS for review and approval its CAP and amendments, (3) ensure that its 
CAP addresses the statistical validity issues we identified, (4) implement policies and procedures to 
ensure that its RMS complies with Federal requirements for statistical validity, (5) maintain adequate 
support for its school-based administrative costs allocated to Medicaid, and (6) review school-based 
Medicaid administrative costs claimed after our audit period and refund unallowable amounts. 
Alabama Did Not Comply With Federal and State Requirements for Claiming Medicaid Certified Public 
Expenditures for Federal Fiscal Year 2010 (A-06-15-00004), July 2016 
Public entities (e.g., public hospitals) may certify that they have spent funds on Medicaid items or 
services that are eligible for Federal matching funds.  These funds are referred to as certified public  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 14 
 
 
expenditures (CPEs) and may be claimed as the States share of Medicaid expenditures.  The Alabama 
Medicaid Agency (Alabama) made a $123.5 million adjustment to Medicaid hospital CPEs in Federal FY 
2011 that more than doubled the CPEs claimed for FY 2010.  We found that Alabama did not comply 
with Federal and State requirements for claiming $209.5 million ($162.5 million Federal share) in CPEs 
for FY 2010.  Alabama incorrectly claimed $27.5 million ($21.3 million Federal share) because it made 
errors in its CPE calculation.  We are setting aside the remaining $182 million ($141.2 million Federal 
share) Alabama claimed because it did not calculate the CPEs in accordance with the CMS-approved 
State plan.  Of that amount, $55.3 million ($42.8 million Federal share) resulted from Alabama 
inappropriately applying a market inflation factor to 2010 costs, which essentially increased those costs 
to 2013 levels. 
Alabama partially concurred with our recommendation that it work with CMS to determine whether any 
portion of the $141.2 million in Federal share related to CPEs that were not calculated in accordance 
with the State plan should be refunded to the Federal Government, particularly the $42.8 million Federal 
share associated with the increase from the application of the market inflation factor.  Alabama did not 
concur with our recommendation that it refund to the Federal Government the $21.3 million that 
related to the errors Alabama made when calculating CPEs.  
Quality of Care and Beneficiary Access 
Connecticut Did Not Comply With Federal and State Requirements for Critical Incidents Involving 
Developmentally Disabled Medicaid Beneficiaries (A-01-14-00002), May 2016 
Also,  
Massachusetts Did Not Comply With Federal and State Requirements for Critical Incidents Involving 
Developmentally Disabled Medicaid Beneficiaries (A-01-14-00008), July 2016 
We are performing reviews in several States in response to a congressional request concerning the 
number of deaths and cases of abuse of developmentally disabled residents of group homes.  We found 
that Connecticut and Massachusetts did not comply with Federal waiver and State requirements for 
critical incidents involving developmentally disabled Medicaid beneficiaries living in group homes.  
Connecticut did not adequately safeguard 137 of 245 developmentally disabled Medicaid beneficiaries 
living in group homes that we reviewed, and Massachusetts did not adequately safeguard 146 out of 
334.  Neither State ensured that: (1) group homes reported all critical incidents to the appropriate 
agencies; (2) data on all critical incidents were obtained, analyzed, or reported; and (3) all reasonable 
suspicions of abuse or neglect were reported.  Connecticut also did not ensure that group homes always 
reported incidents at the correct severity level. 
Both States concurred with our recommendations that they work with the appropriate State agencies to:  
(1) train staff of those agencies and group homes on how to identify and report critical incidents and 
reasonable suspicions of abuse or neglect, (2) develop a data-exchange agreement and related analytical 
procedures to ensure access to the Medicaid claims data to detect unreported and unrecorded critical 
incidents, (3) update Department of Developmental Services policies and procedures to clearly define  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 15 
 
 
and provide examples of potential abuse or neglect that must be reported, and (4) ensure that any 
potential cases of abuse or neglect that are identified as a result of new analytical procedures are 
investigated as needed.  Massachusetts concurred with our recommendation that it develop and provide 
training for staff of the State and group homes to ensure that action steps are identified in the incident 
reports to prevent similar critical incidents. 
Health Information Technology 
Arizona Made Incorrect Medicaid Electronic Health Record Incentive Payments to Hospitals (A-09-15-
02036), August 2016 
Also the following: 
California Made Incorrect Medicaid Electronic Health Record Incentive Payments to Hospitals (A-09-
16-02004), September 2016;   
New Jersey Made Incorrect Medicaid Electronic Health Record Incentive Payments (A-02-14-01009), 
August 2016;   
Oklahoma Made Incorrect Medicaid Electronic Health Record Incentive Payments to Hospitals (A-06-
15-00032), August 2016;   
Ohio Made Incorrect Medicaid Electronic Health Record Incentive Payments (A-05-13-00043), August 
2016;   
Pennsylvania Made Correct Medicaid Electronic Health Record Incentive Payments to Hospitals (A-03-
15-00403), August 2016;   
Washington State Made Incorrect Medicaid Electronic Health Record Incentive Payments to Hospitals 
(A-09-16-02015), September 2016; and  
West Virginia Made Incorrect Medicaid Electronic Health Record Incentive Payments to Hospitals (A-
03-14-00406), August 2016 
Medicare and Medicaid EHR incentive programs promote the adoption of EHRs.  As an incentive for 
using EHRs, the Federal Government makes payments to providers that attest to the meaningful use of 
EHRs.  Because the incentive payment is calculated once and then paid out in the future, incorrect 
incentive payments mean that future payments will also be incorrect.  We audited eight States for 
varying time periods. 
We found that Arizona made incorrect Medicaid EHR incentive payments that resulted in a net 
overpayment of $14.8 million, California made a net overpayment of $22 million, New Jersey made a net 
overpayment of almost $2.3 million, Oklahoma made a net overpayment of $680,000, Ohio made a net 
overpayment of $524,000, Washington State made incorrect EHR incentive payments totaling $9.2 
million, and West Virginia made incorrect EHR incentive payments totaling $296,000.  Pennsylvania 
made incentive payments in accordance with Federal and State requirements.  
New Jersey, Oklahoma, Ohio, Washington, and West Virginia concurred, acknowledged, or partially 
concurred with our recommendations that they refund to the Federal Government the Federal share  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 16 
 
 
received for the net overpayments.  California, New Jersey, Ohio, Washington, and West Virginia 
concurred, acknowledged, or partially concurred with our recommendations that they review and 
adjust, if needed, remaining incentive payments of the hospitals in our samples to account for the 
incorrect calculations and those of other hospitals not included in our samples.  California and 
Washington agreed or partially concurred with our recommendation that they review supporting 
documentation to help identify any errors in incentive payment calculations. 
Oklahoma did not concur or nonconcur with our recommendations that it determine whether payment 
adjustments are needed for hospitals not in our audit and refund the Federal share received for any 
overpayments identified and educate hospitals to ensure that they follow Federal and State 
requirements for calculating their incentive payments.  California disagreed with our recommendation 
that it refund the Federal share received for the overpayments.  Arizona did not agree with our findings, 
which led to our recommendations that it:  (1) refund $14.8 million of the Federal share received for  net 
overpayments, (2) adjust remaining incentive payments of the hospitals in our audit to account for the 
incorrect calculations, (3) review the calculations for the hospitals not included in our audit to determine 
whether payment adjustments are needed and refund to the Federal Government the Federal share 
received for any overpayments identified, (4) educate hospitals to ensure that they follow Federal and 
State requirements for calculating their incentive payments, and (5) review supporting documentation 
provided by all hospitals to help identify any errors in their incentive payment calculations.  We did not 
have any recommendations for Pennsylvania. 
Public Summary Report:  Wireless Penetration Test of Centers for Medicare & Medicaid Services Data 
Centers  (A-18-15-30400), August 2016 
We performed a wireless penetration test of select CMS Data Centers and facilities to determine 
whether CMSs security controls over its wireless networks were effective.  We found that, although CMS 
had security controls that were effective in preventing certain types of wireless cyberattacks, we 
identified four vulnerabilities at selected CMS Data Centers and facilities in security controls over its 
wireless networks.  The vulnerabilities were collectively and, in some cases, individually significant.  
Although we did not identify evidence that the vulnerabilities had been exploited, exploitation could 
have resulted in unauthorized access to and disclosure of personally identifiable information, as well as 
disruption of critical operations.  In addition, exploitation could have compromised the confidentiality, 
integrity, and availability of CMSs data and systems.  We promptly shared detailed information with CMS 
about our preliminary findings.  CMS concurred with our recommendations that it improve its security 
controls to address the wireless network vulnerabilities we identified. 
Public Summary Report:  Washington State Implemented Security Controls Over the Web Site and 
Database for Its Health Insurance Exchange but Could Improve Protection of Personally Identifiable 
Information (A-09-15-03005), June 2016 
Our objective was to determine whether the Washington Health Benefit Exchange (Washington 
marketplace) had implemented security controls to protect personally identifiable information on its  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 17 
 
 
website and database in accordance with Federal requirements.  We determined that the Washington 
marketplace had implemented many security controls, including policies and procedures, to protect 
personally identifiable information on its website and database.  However, it did not always comply with 
Federal requirements.  The Washington marketplace had not adequately secured its website and 
database and had not performed a vulnerability scan in accordance with Federal requirements.  In 
addition, the Washington marketplaces plan of action and milestones did not meet some of CMSs 
minimum requirements for protection of marketplace systems.  The Washington marketplace concurred 
with all our recommendations that it implement our detailed recommendations that address the specific 
findings we identified.  
Public Summary Report:  Information Technology Control Weaknesses Found at the Minnesota Health 
Insurance Exchange (A-06-15-00035), September 2016 
Our objective was to determine whether MNsure, Minnesotas State-based marketplace, had 
implemented security controls to protect personally identifiable information on its website, database, 
and other supporting information systems in accordance with Federal and State requirements.  We 
determined MNsure had implemented security controls, policies, and procedures intended to prevent 
vulnerabilities in its web applications (website), database, and other supporting information systems.  
However, it did not always comply with Federal and State IT requirements when it implemented those 
security controls, policies, and procedures, which increased MNsures risk that personally identifiable 
information could have been exposed.  Specifically, MNsure had not formalized procedures for analyzing 
and sharing information about vulnerabilities and had vulnerabilities related to penetration testing and 
website monitoring procedures.  Additionally, our website and database vulnerability scans identified 
numerous weaknesses.  Although we did not identify evidence that the vulnerabilities had been 
exploited, exploitation could have resulted in unauthorized access to and disclosure of personally 
identifiable information, as well as disruption of critical marketplace operations.  The vulnerabilities 
were collectively and, in some cases, individually significant and could have potentially compromised the 
integrity of the marketplace.   
We recommended that MNsure implement necessary corrective actions to address the specific security 
vulnerabilities that we identified during this audit.   
The Department of Health and Human Services Security Management Practices for Computer Systems 
With Access to Personally Identifiable Information (A-18-16-30150), August 2016 
HHS and its operating divisions (OPDIVs) have developed logical access policies and practices based on 
the National Institute of Standards and Technology standards.  HHS and its OPDIVs use logical access 
controls to access all covered systems.  HHS and its OPDIVs reported to us that multifactor 
authentication is required by privileged users to access nearly all of its covered systems, which includes 
the use of a personal identity verification card at the network/system level.  Seven of HHS's 588 (about 1 
percent) covered systems do not require privileged users to provide additional authentication to access 
those covered systems.  The majority of OPDIVs have developed policies and procedures to conduct  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 18 
 
 
inventories of software and licenses associated with covered systems.  HHS and its OPDIVs use a variety 
of tools to monitor and detect exfiltration and other threats.  All entities, including contractors that 
provide services to HHS, are required to follow HHS information security management practices for all 
covered systems. 
Hospitals Largely Reported Addressing Requirements for EHR Contingency Plans (OEI-01-14-00570), 
July 2016 
Disruptions, such as natural disasters or technical malfunctions, can make EHRs unavailable to hospital 
staff.  Prior OIG work found that, for example, hospitals experienced substantial challenges responding 
to the effects of Superstorm Sandy, which included damage to health information systems and curtailed 
access to patient medical records.  More recently, cyberattacks on hospitals have similarly prevented or 
limited access to EHRs.  OCR enforces the HIPAA Security Rule, which requires all covered entities to have 
a contingency plan for responding to disruptions to electronic health information systems.  
This evaluation provides information about the status of hospitals contingency plans in light of evolving 
threats to their electronic health information systems.  We found that almost all hospitals reported 
having written EHR contingency plans and most reported that their plans addressed four HIPAA 
requirements as well as recommended practices.  This review provides baseline information on 
hospitals contingency plans and reinforces previous OIG recommendations to OCR concerning its audit 
program, among others.   
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 19 
Legal and Investigative Activities Related to 
Medicare and Medicaid 
OIG investigates allegations of fraud, waste, and abuse in all HHS programs.  Our largest body of work 
involves investigating matters related to the Medicare and Medicaid programs, such as patient harm; 
billing for services not rendered, medically unnecessary services, or upcoded services; 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,
 home health agencies 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 Medicare dollars.  
Investigators are seeing an increase in individuals, including both 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 programs, including ACF, Indian Health Service, Health Resources and Services Administration 
(HRSA), and Administration for Community Living.  OIG also investigates potential misuse of grants and 
contracts funds awarded by CDC, National Institutes of Health (NIH), Substance Abuse and Mental 
Health Services Administration, and other HHS agencies.  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 
Federal and State criminal statutes and, when appropriate, under the False Claims Act (FCA).  Depending 
on the types of fraud or other violations involved, OIG investigations may culminate in criminal or civil 
court judgments and decisions, administrative sanctions and decisions, and/or negotiated settlement 
agreements.  Investigative outcomes take many forms, including incarceration, restitution, fines,  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 20 
 
 
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 on our 
website at: http://oig.hhs.gov/fraud/enforcement/cmp/.  
From April 1, 2016, to September 30, 2016, we reported 381 criminal and 311 civil actions against 
individuals or entities that engaged in health-care-related offenses.  We also reported over $1.62 billion 
in investigative receivables due to HHS and over $607.4 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.  
The following are recently completed actions and settlements organized by allegation or subject type: 
Quality of Care 
Kentucky  Dr. Jaime Guerrero was the owner and operator of Advanced Pain Management.  According 
to court records, from November 2009 through May 2014, Dr. Guerrero distributed and dispensed 
narcotics to patients without a legitimate medical purpose and beyond the bounds of professional 
practice, leading to a patients death.  In addition, Dr. Guerrero falsely billed the health care benefit 
programs by submitting claims for office visits at a higher code than the services provided.  Dr. Guerrero 
was sentenced to 8 years and 4 months in prison and ordered to pay $827,000 in restitution for his guilty 
plea to conspiracy to unlawfully distribute and dispense Schedule II and III controlled substances, health 
care fraud, and money laundering.   
Pharmacy 
Florida  From November 2012 through February 2015, Zuzette De La Rua and her husband, Angel 
Sanchez, owned and operated three pharmacies in Miami, Florida.  According to the investigation, 
Sanchez, De La Rua, and others committed fraud by paying kickbacks to patients and recruiters and for 
billing Medicare for medications not delivered to Medicare beneficiaries.  Maria Sabater received 
compensation for recruiting patients to obtain pharmaceutical drugs at the pharmacies.  De La Rua and 
Sabater pleaded guilty to conspiracy to commit health care fraud and were sentenced to a total of 6 
years and 6 months in prison and ordered to pay $5.9 million in restitution, joint and several.  Sanchez 
pleaded guilty and is awaiting sentencing. 
Florida  Sandy De La Fe, Jose Teijeiro, and Michel Cabral co-owned Goldenway Pharmacy Discount, Inc. 
(Goldenway), a retail pharmacy.  From October 2011 through May 2013, the defendants conspired to 
defraud Medicare by submitting false claims for prescription drugs by using Medicare beneficiaries ID 
numbers and forged doctors signatures for medication that was either unnecessary or not provided.  
The conspirators also paid recruiters to entice Medicare beneficiaries to fill their prescriptions at 
Goldenway.  De La Fe is a Cuban national who had been an OIG Most-Wanted Fugitive following his 
indictment in 2013 until his arrest in January 2016.  De La Fe was sentenced to 1 year and 10 months in 
prison and ordered to pay $2.8 million in restitution, joint and several, for his guilty plea to conspiracy to  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 21 
 
 
commit health care fraud.  Teijeiro and Cabral were previously sentenced to a combined 16 years and 1 
month in prison. 
Home Health 
District of Columbia  Florence Bikundi and her husband, Michael Bikundi, Sr., were the owners of the 
home health agency Global Healthcare, Inc.  According to evidence presented at trial, Florence 
fraudulently gained approval as a provider in the Medicaid program.  From August 2009 through 
February 2014, the Bikundis led a scheme to bill Medicaid for services that were not provided, creating 
phony time sheets, patient files, and employment files.  The Bikundis were sentenced for health care 
fraud, money laundering, and other charges stemming from this scheme.  Florence was sentenced to 10 
years in prison, while Michael was sentenced to 7 years in prison, and they were ordered to pay $80.6 
million in restitution, joint and several.  Six defendants involved in the scheme were previously 
sentenced to a combined 6 months in prison and ordered to pay $1.21 million in restitution, joint and 
several.  One additional defendant has pleaded guilty and is awaiting sentencing. 
Transportation 
New York  New York City Fire Department (FDNY) agreed to pay $4.3 million to resolve its liability under 
the False Claims Act.  FDNY self-disclosed that, from October 2008 to October 2012, its billing contractor 
submitted claims to Medicare for emergency ambulance transport services FDNY knew were not 
medically necessary.  These claims were submitted to obtain a formal denial to facilitate reimbursement 
from secondary insurers and/or beneficiaries.  However, Medicare erroneously paid these claims, in part 
because FDNY coded them in a manner that was not consistent with the Medicare claims processing 
manual.  FDNY failed to return the Medicare reimbursements it falsely received.  
Durable Medical Equipment  
Utah  Orbit Medical is a DME supplier specializing in power wheelchairs.  According to the investigation, 
the owner of Orbit, Jacob Kilgore, along with sales representatives Morgan Workman, David Evans, and 
Hunter Hartman, conspired to bill Medicare for power wheelchairs for which beneficiaries did not 
qualify.  Specifically, they altered physician records and signatures in order for Medicare beneficiaries to 
qualify for and receive the wheelchairs, and for Orbit to receive payment.  All four defendants pleaded 
guilty to health care fraud conspiracy and were sentenced to a combined 5 years and 10 months in 
prison and ordered to pay restitution of $6.2 million, joint and several.   
Laboratory 
Tennessee  OPKO Health, Inc., Prost-Data, Inc., d/b/a OURLab, and Jonathan Oppenheimer, M.D., 
entered into a settlement agreement to resolve allegations that, from June 2007 to January 2015, the 
defendants submitted false claims to Medicare for drug testing that was referred to OURLab and, 
subsequently, to OPKO by physicians and physician practice groups to whom OURLab and Oppenheimer 
donated money toward the purchase of EHR systems, in violation of the anti-kickback statute and the  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 22 
 
 
Limitation on Certain Physician Referrals. The defendants also allegedly submitted false claims to 
Medicare and TRICARE by billing for a non-covered form of fluorescence in situ hybridization (FISH) 
testing, the OURVision test, from June 2012 to January 2015.  The defendants agreed to pay $9.3 million, 
joint and several, to resolve their liability under the False Claims Act.   
Radiology 
New Jersey  Kirtish and Nita Patel were the owners of Biosound Medical Services (Biosound) and Heart 
Solutions (Heart), which provided mobile diagnostic testing services, such as ultrasounds, 
echocardiograms, and neurological testing.  From 2006 to 2014, the Patels embarked on a fraud scheme 
whereby they forged thousands of test results that should have been interpreted by an appropriate 
medical doctor.  Instead of paying the interpreting physician a reading fee, the Patels created test 
interpretations and falsely affixed a medical doctors signature to the report.  Those reports were then 
used by the referring providers to make medical decisions based upon those falsely reported results. 
The Patels were sentenced to a combined 14 years and 10 months in prison and ordered to forfeit $4.8 
million for their guilty plea to health care fraud.   
Clinics 
New York  Jorge Juvier was the owner and operator of multiple HIV/AIDS clinics in New York that 
purportedly provided injection and infusion treatments to Medicare-eligible HIV/AIDS patients.  
According to court documents, however, these clinics were health care fraud mills.  As part of the 
scheme, Juvier and his co-conspirators paid patients cash kickbacks for coming to the clinics; coached 
patients on lying to clinic doctors to enable fraudulent billing; and billed Medicare for medications that 
were never administered, administered at incorrect dosages, or were medically unnecessary.  Juvier was 
sentenced to 5 years and 3 months in prison and ordered to pay $12.2 million in restitution, joint and 
several, for his guilty plea to conspiracy to commit health care fraud.  Two other defendants involved in 
the scheme were previously sentenced to a combined 8 years and 3 months in prison and ordered to pay 
$9 million in restitution, joint and several. 
Maryland  Dr. Paramjit Ajrawat and his wife Sukhveen Ajrawat co-owned and operated Washington 
Pain Management Center.  According to evidence presented at trial, from January 2011 through May 
2014, the Ajrawats filed claims for procedures that were not performed.  Specifically, they performed 
less expensive procedures but falsely billed for procedures that provided higher reimbursement 
amounts.  The Ajrawats also submitted claims for procedures that had not been performed at all, and 
caused the alteration or destruction of patient files to conceal the scheme from auditors and law 
enforcement.  The charges against Mrs. Ajrawat were dismissed after her death.  Paramjit Ajrawat was 
sentenced to 9 years and 3 months in prison and ordered to pay $3.1 million in restitution after a Federal 
jury found him guilty of health care fraud, false statements relating to health care matters, obstruction of 
justice, and wire fraud.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 23 
 
 
Kickbacks 
Massachusetts  Hollister Incorporated (Hollister) and Byram Healthcare, Inc. (Byram), entered into a 
settlement agreement to resolve allegations that Hollister and other manufacturers entered into 
arrangements with Byram, a DME supplier, to allegedly market ostomy products that violate the anti-
kickback statute.  Specifically, Hollister and Byram entered into conversion campaigns whereby 
Hollister agreed to pay Byrams marketing costs, often by lowering the product price, in return for 
Byrams agreement to recommend or even require that customers switch to the manufacturers 
products.  Hollister also paid certain bonuses, called spiffs, directly to Byrams marketing employees 
(and in one case regional vice presidents) as a means of incentivizing Byrams employees to convert 
customers to Hollisters products.  Byram also solicited kickbacks from Hollister in the form of a $200,000 
per year cost defrayment of Byrams product catalogue.  The defendants agreed to pay a total of $20.9 
million to resolve their liability under the False Claims Act.   
Hospital 
South Carolina  Lexington County Health Services District, Inc., d/b/a Lexington Medical Center (LMC) 
entered into a settlement agreement to resolve allegations that LMC had compensation arrangements 
within the meaning of the Stark law in the form of asset purchase arrangements and employment 
arrangements with certain physicians that did not satisfy all the requirements of any applicable 
exception to Starks referral and billing prohibition.  These alleged problematic arrangements led LMC, 
which operates the Lexington Medical Center hospital and associated office-based clinics, to submit 
fraudulent claims to Medicare for designated health services referred by these physicians in violation of 
the False Claims Act.  LMC agreed to pay $17 million and enter into a CIA with OIG to resolve its liability 
under the False Claims Act.   
Pharmaceutical Company 
Massachusetts  Wyeth Inc. and Pfizer Inc. (the current owner of Wyeth), entered into a settlement 
agreement to resolve allegations that Wyeth reported false pricing information and underpaid rebates 
that were due under the Medicaid drug rebate program.  Specifically, between 2001 and 2006, Wyeth 
Inc., allegedly failed to report to CMS the correct best price for its product Protonix.  Protonix is a proton 
pump inhibitor used to treat symptoms of, among other things, acid reflux.  The Government alleged 
that Wyeth failed to report deep discounts that it offered to hospitals for bundled sales of oral and 
intravenous versions of Protonix.  This conduct allegedly led Wyeth to report false pricing information to 
CMS and underpay rebates due to the States for Protonix.  Wyeth Inc. and Pfizer agreed to pay $784.6 
million to resolve their liability under the False Claims Act. 
Psychiatric and Psychological Services 
Texas  Sharon Iglehart was a psychiatrist at Riverside General Hospital (Riverside).  According to 
evidence presented at trial, from 2006 until 2012, Iglehart and others engaged in a scheme to defraud 
Medicare by submitting through Riverside approximately $158 million in false claims for partial  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 24 
 
 
hospitalization program (PHP) services, an intensive outpatient treatment for severe mental illness.  
Beneficiaries for whom Riverside billed Medicare did not receive PHP services; in fact, beneficiaries 
rarely saw a psychiatrist and did not receive intensive psychiatric treatment at all.  A jury convicted 
Iglehart of conspiracy to commit health care fraud, health care fraud, and making false statements 
relating to health care matters.  She was sentenced to 12 years in prison and ordered to pay $6.3 million 
in restitution.  Six defendants involved in the scheme were previously sentenced to a combined 120 
years in prison and ordered to pay $46.7 million in restitution, joint and several.  Six additional 
defendants either pleaded guilty or were found guilty and are awaiting sentencing.  
Health Care Fraud Prevention and Enforcement 
On May 20, 2009, former HHS Secretary Kathleen Sebelius and former 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 DOJ and HHS who are strengthening programs and investing in new resources and technologies to 
prevent and combat fraud, waste, and abuse. 
HEAT Provider Compliance Training  
OIG provides free training on our website 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 provider compliance training 
resources can be accessed at:  http://oig.hhs.gov/compliance/provider-compliance-training/index.asp. 
Health Care Fraud Strike Force Activities  
Health Care 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 partnerships between OIG and HHS, DOJ, U.S. Attorneys Offices, FBI, and State and local law 
enforcement have a common goal:  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; Houston, Texas; Brooklyn, New York; 
southern Louisiana; Tampa, Florida; Chicago, Illinois; and Dallas, Texas.  
From April 1, 2016, to September 30, 2016, Strike Force efforts resulted in the filing of charges against 
168 individuals or entities, 107 criminal actions, and more than $204.2 million in investigative 
receivables. 
Below are examples of Strike Force cases: 
Florida  Khaled Elbeblawy was the owner and manager of three Miami-area home health agencies.  
According to evidence presented at trial, from approximately 2006 to 2013, Elbeblawy and his co- HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 25 
 
 
conspirators purported to provide home health services to Medicare beneficiaries that were not 
medically necessary and often were not provided.  Elbeblawy and his co-conspirators paid kickbacks to 
doctors, patient recruiters, and staffing groups in exchange for referring beneficiaries to his home health 
agencies.  Elbeblawy was convicted of conspiracy to commit health care fraud and wire fraud and 
conspiracy to defraud the United States and pay health care kickbacks.  He was sentenced to 20 years in 
prison and ordered to pay $36.4 million in restitution, joint and several.  One other defendant involved in 
the scheme was previously sentenced to 8 months in prison and ordered to pay $49,000 in restitution, 
joint and several, and another defendant has pleaded guilty and is awaiting sentencing. 
Florida  Dr. Henry Lora and Isabel Medina co-owned the medical clinic Merfi Corp.  Lora, who was also 
the medical director, admitted that in exchange for kickbacks and bribes, he and his co-conspirators 
ordered home health care and other services for Medicare beneficiaries that were not medically 
necessary and also falsified patient records to make it appear as if the beneficiaries qualified for these 
services.  Lora was sentenced to 9 years in prison and ordered to pay $30.2 million in restitution for his 
guilty plea to conspiracy to commit health care fraud and conspiracy to defraud the United States, 
namely, to receive health care kickbacks and make false statements regarding health care matters.  
Medina was previously sentenced to 9 years in prison and ordered to pay $8.4 million in restitution, joint 
and several.  
Other Criminal and Civil Enforcement Activities  
 
Special Assistant U.S. Attorney Program 
During this reporting period, DOJ and OIG continued their participation in a program in which OIG 
attorneys, some of whom are Special Agents, serve as Special Assistant U.S. Attorneys.  These OIG 
attorneys are detailed full time to DOJs Criminal Division, Fraud Section, for temporary assignments, 
including assignments to the Health Care Fraud Strike Force.  Other attorneys prosecute matters on a 
case-by-case basis.  Both arrangements offer excellent litigation training for OIG attorneys and enhance 
collaboration between the Departments in their efforts to fight fraud.  Under this program, OIG 
attorneys have successfully litigated important criminal cases relating to the fraudulent billing of medical 
equipment and supplies, infusion therapy, and physical therapy, as well as other types of Medicare and 
Medicaid fraud. 
Below is a related case example: 
Texas  Dr. Augustine Egbunike owned PrimeCare Medical Associates, while Loretta Mbadugha owned 
Bayou Rehab and Family Services, Inc.  Both companies purportedly provided vestibular diagnostic 
testing, which is used to evaluate a person for vertigo or dizziness.  From 2006 to 2010, the conspirators 
falsely billed Medicare and Medicaid for numerous, unnecessary vestibular diagnostic tests.  The 
evidence demonstrated that the testing was either not performed, not medically necessary, or not 
performed by licensed individuals.  Both defendants pleaded guilty to conspiracy to commit health care  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 26 
 
 
fraud.  Egbunike was sentenced to 4 years and 9 months in prison and ordered to pay $2 million in 
restitution, joint and several.  Mbadugha was sentenced to 2 years and 6 months in prison and ordered 
to pay $404,157 in restitution, joint and several.  One other defendant involved in the scheme was 
previously sentenced to 2 years and 9 months in prison and ordered to pay $896,100 in restitution, joint 
and several. 
Most Wanted Fugitives Listed on OIGs Website  
The OIG Most Wanted Fugitives website continues to garner national and international attention and has 
greatly assisted in helping to capture fugitives charged with defrauding Federal health care programs and 
stealing millions of taxpayer dollars.  The Most Wanted Fugitives website is continually updated and 
features a profile for each fugitive as well as an online tip form and a hotline number for individuals to 
report fugitive-related information to OIG, in English or Spanish, 24 hours a day, 365 days a year.  The 
Most Wanted Fugitives list can be accessed at https://oig.hhs.gov/fraud/fugitives/index.asp.  During this 
reporting period, four fugitives were captured.  
One of OIGs Most Wanted Fugitives who was captured during this reporting period was Robert Allen 
Lopez.  Lopez pleaded guilty to Medicare fraud in 1995 and then went on the run for 20 years, fleeing 
the country before sentencing.  According to the indictment, from July 1991 through June 1994, Lopez 
and others conspired to defraud Medicare by filing false claims and structuring cash transactions to 
evade Federal currency-reporting requirements.  The fraudulent claims totaled more than $4 million.  
OIG investigators found that Lopez established numerous companies in Miami, using sham owners to 
conceal that he was the true owner.  These companies filed false Medicare claims on behalf of 
beneficiaries for services that were either medically unnecessary or were not provided.  Lopez also 
recruited friends and relatives to assist him as sham owners.  He directed them to open bank accounts 
where the fraudulently obtained Medicare reimbursements were deposited.  To avoid reporting 
requirements for cash transactions exceeding $10,000, it is believed that Lopez directed the sham 
owners to make structured cash withdrawals from the accounts.  OIG investigators found that Lopez 
established numerous companies in Miami, using sham owners to conceal that he was the true owner.  
These companies filed false Medicare claims on behalf of beneficiaries for services that were either 
medically unnecessary or were not provided.  Lopez fled the country and was arrested in Nicaragua.  He 
is currently in custody and will face charges stemming from his indictment. 
Because of the success of OIGs Most Wanted Fugitives website, OIG launched its Most Wanted 
Deadbeat Parents website at https://oig.hhs.gov/fraud/child-support-enforcement/index.asp.  The site 
identifies parents who fail to pay court-ordered child support for their children; as a result, an 
unnecessary strain is placed on the custodial parents and the children as well as on agencies that enforce 
these matters.  Examples are provided in the Human Services Reviews section of this Semiannual Report. 
HHS OIG Hotline  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 27 
 
 
The mission of the HHS OIG Hotline is to support OIG in oversight responsibilities to safeguard the 
integrity of all programs and personnel under purview of HHS and protect them from fraud, waste and 
abuse.  We achieve this through our dedication to timely intake and evaluation of information received 
from various sources, such as the Report Fraud website portal on the HHS OIG Internet page and 
telephone calls to 1800HHSTIPS.  Strategically located within the Office of Investigations, the OIG 
Hotline is the public facing division for the intake of fraud tips.  The OIG Hotline is motivated by the 
constant awareness that our work impacts all Americans, including some of our most vulnerable citizens, 
such as the elderly and others who are often unable to help themselves. 
OIG Hotline Activity (4/1/169/30/16): 
Total HHS TIPS Received via Phone-Evaluated for Action:  11,196 
Total HHS TIPS Received via Phone  Referred:  8,957 
Total HHS TIPS Received via Internet:  5,201  
Total HHS TIPS Received via Letters/Faxes:  1,697 
Total Viable HHS TIPS Evaluated:  11,196 
Total Contacts to the HHS OIG Hotline Calls:  15,855 
State Medicaid Fraud Control Units  
OIG Oversight of State 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 a 
Unit; the States contribute the remaining 25 percent.  MFCUs investigate and prosecute Medicaid 
provider fraud and patient abuse and neglect in health care facilities or board and care facilities. 
Medicaid Fraud Control Units Fiscal Year 2015 Annual Report (OEI-07-16-00050), September 2016 
OIGs MFCU FY 2015 Annual Report highlights statistical achievements from the investigations and 
prosecutions the 50 MFCUs conducted in FY 2015. OIG found that nearly one-third of the 1,533 MFCU 
convictions involved personal care services attendants.  Fraud cases accounted for 71 percent of the 
MFCU convictions.  MFCUs reported 731 civil settlements and judgements, with pharmaceutical 
manufacturers making up over a third of its settlements.  Additionally, MFCUs reported $744 million in 
criminal and civil recoveries.  OIG also found that, in FY 2015, MFCUs reported the highest number of 
convictions in the last 5 years, and OIG exclusions resulting from its conviction referrals have grown since 
2011.  Civil settlements and judgments have decreased modestly over the last 5 years, and civil recovery  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 28 
 
 
amounts have decreased significantly.  Finally, many MFCUs made operational improvements in 
response to OIG recommendations. 
OIG Onsite Reviews of MFCUs   
In addition to an annual recertification review of each MFCU, OIG conducts periodic in-depth reviews of 
a sample of MFCUs.  OIG evaluates MFCU operations in accordance with 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:  
  Maryland State Medicaid Fraud Control Unit:  2016 Onsite Review, OEI-07-16-00140, September 
2016. 
  North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review, OEI-07-16-00070, 
September 2016. 
  South Dakota State Medicaid Fraud Control Unit:  2016 Onsite Review, OEI-07-16-00170, 
September 2016. 
  Washington State Medicaid Fraud Control Unit:  2016 Onsite Review, OEI-09-16-00010, August 
2016. 
  Virginia State Medicaid Fraud Control Unit:  2015 Onsite Review, OEI-07-15-00290, August 2016. 
  Massachusetts State Medicaid Fraud Control Unit:  2015 Onsite Review, OEI-7-15-00390, June 
2016. 
  Pennsylvania State Medicaid Fraud Control Unit:  2015 Onsite Review, OEI-07-15-00360, June 
2016. 
  Florida State Medicaid Fraud Control Unit:  2015 Onsite Review, OEI-07-15-00340, June 2016. 
  Oklahoma State Medicaid Fraud Control Unit:  2014 Onsite Review, OEI-06-14-00630, April 
2016. 
The following is a case example of joint efforts with MFCUs: 
Virginia  Beth Palin and Joseph D. Webb, Jr., were the owners of Bristol Laboratories LLC.  According to 
the investigation, from May 2009 to April 2012, Palin and Webb conspired with Dr. Charles Wagner to bill 
medically unnecessary and excessive urine drug screen (UDS) tests to Federal and private health 
insurances.  Wagner was an opioid addiction therapy doctor who directed all of his patients to be tested 
at Bristol.  Investigators found that Palin and Webb determined the types of drug screens that were 
ordered and their frequency.  Patients who were uninsured would have a basic UDS; however, insured 
patients would have much more expensive testing performed.  Dr. Wagner died during the course of this 
investigation and was not charged.  Palin and Webb, Jr., were each sentenced to 3 years in prison and 
ordered to pay $1.4 million in restitution, joint and several, for their guilty plea to conspiracy to commit 
health care fraud and health care fraud.  This was a joint investigation with the Virginia Medicaid Fraud 
Control Unit.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 29 
 
 
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.  Advisory opinions, which are developed in 
consultation with DOJ, are issued to requesting parties regarding the interpretation and applicability of 
certain statutes relating to Federal health care programs.  HIPAA,  205, allows OIG to provide case-
specific formal guidance on the application of the anti-kickback statute and safe harbor provisions and 
other OIG health care fraud and abuse sanctions.  From April 1, 2016, to September 30, 2016, OIG 
received 20 requests for advisory opinions and issued 6 advisory opinions.  
Sanction Authorities and Other Administrative Actions  
Various Federal laws provide authorities the ability to impose administrative sanctions for fraud and 
abuse as well as other activities that pose a risk to Federal health care programs and their beneficiaries.  
Sanctions include the exclusion of individuals and entities from Federal health care programs and the 
imposition of CMPs for submitting false and fraudulent 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 period, OIG imposed 2,092 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 website at http://oig.hhs.gov/fraud/ enforcement/cmp/index.asp. 
Program Exclusions  
During this semiannual reporting period, OIG excluded 1,973 individuals and entities from Medicare, 
Medicaid, and other Federal health care programs.  Most of the exclusions resulted from convictions for 
crimes relating to Medicare or Medicaid, for patient abuse or neglect, or as a result of license revocation.  
OIG is also responsible for reinstating providers who apply and have met the requirements of their 
exclusions.  For a list of excluded individuals and entities, see https://exclusions.oig.hhs.gov/.   
The following are examples of program exclusions: 
California  Hsiu Ying Lisa Tseng was a doctor of osteopathy.  According to court documents, Tseng 
prescribed massive quantities of controlled substances to patients with no legitimate need.  Tseng was 
sentenced to 30 years in prison based on her conviction of second degree murder, unlawful controlled 
substance prescription, and obtaining a controlled substance by fraud.  In addition, her license to 
practice as a doctor was suspended by the Osteopathic Medical Board of California.  OIG excluded Tseng 
for a minimum period of 50 years.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 30 
 
 
Florida  Enemisis Torres was the owner and registered representative of Comprehensive Care Clinic 
(CCC).  Torres conspired with CCC employees to pay kickbacks to Medicare beneficiaries for allowing 
them to use their Medicare information for fraudulent purposes.  Torres was sentenced to 4 years and 3 
months in prison and ordered to pay $20 million in restitution based on his conviction of conspiracy to 
commit health care fraud and wire fraud.  OIG excluded Torres for a minimum period of 55 years.   
Suspensions and Debarments  
Suspensions and debarments are administrative tools used by HHS and other Federal agencies to protect 
the Government from individuals and entities that have engaged in contract fraud, misused grant funds, 
or are otherwise not presently responsible.  Because these are Governmentwide 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. 
The following are debarment examples:  
South Dakota  Samone Milk, Heather Garcia, Joe Garcia, and Wayne Cortier were each involved in the 
Oglala Sioux Tribe.  According to the investigation, the defendants organized a scheme to divert Oglala 
Sioux Tribe/Low Income Home Energy Assistance Program funds from legitimate projects.  On at least 30 
occasions, they fraudulently generated documents such as requests for assistance, invoices, and 
vouchers on behalf of real or fictional tribal members, and they unlawfully converted the Federal funds 
for their own personal use.  The defendants were each convicted of conspiracy to commit theft 
concerning programs receiving Federal funds and were debarred for a 3-year period based on OIG 
referrals to the Department.  
Mississippi  Linda Harvey-Irvin was the deputy director of the Mississippi Gulf Coast Community Action 
Agency (GCCAA), a nonprofit organization partially funded by Federal grants, which are used to fund the 
Head Start preschool program.  Harvey-Irvin accepted bribes from Donald Walton, owner and operator 
of Walton Construction, in exchange for construction contracts worth more than $400,000.  Harvey-Irvin 
was also charged in a second indictment with accepting bribes from Markuntala Croom, owner and 
operator of Croom Consulting, in exchange for awarding more than $520,502 in consulting work to 
Croom.  Walton paid Harvey-Irvin $31,000 in kickbacks as a reward for his contracts, and Croom paid 
Harvey-Irvin $69,911 in kickbacks as a reward for her contracts.  All three defendants were convicted of  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 31 
 
 
theft or bribery concerning programs receiving Federal funds and were debarred for a 3-year period 
based on an OIG referral to the Department. 
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.  
The following is a CIA example: 
Louisiana  Amedisys, Inc., entered into a settlement agreement to resolve allegations that it submitted 
claims for home health services provided at six different locations that were medically unnecessary 
and/or in violation of other Medicare requirements.  Amedisys reported this conduct to OIG under the 
terms of its CIA and agreed to pay $4.6 million to resolve their liability.  
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 $38.4 million in CMPs and 
assessments.  
The following is a CMP example: 
California  Enloe Medical Center (Enloe) entered into a settlement agreement to resolve allegations 
that it submitted claims for emergency ambulance transportation to destinations such as skilled nursing 
facilities and patient residences that should have been billed at the lower non-emergency rate.  Enloe 
agreed to pay $570,912 to resolve its liability. 
Patient Dumping  
Some of the CMPL cases that OIG resolved between April 1, 2016, and September 30, 2016, 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.   
The following are EMTALA case examples:  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 32 
 
 
Georgia  Grady Memorial Hospital Corporation d/b/a/ Grady Health System (Grady) entered into an 
agreement to resolve allegations that it failed to provide an adequate medical screening examination 
and stabilizing treatment to a patient.  Specifically, a patient was extracted from his apartment by a 
SWAT team and brought to Gradys emergency department (ED) by a police officer because of 
complaints of suicidal and homicidal ideations.  While at Grady, two Licensed Professional Counselors 
(LPCs) evaluated the patient and determined that the patient should be held involuntarily for further 
evaluation and treatment.  Approximately 5 hours after the patients arrival in the ED, the ED physician 
discharged the patient without consulting the LPCs or the on-call psychiatrist.  Grady agreed to pay a 
penalty of $40,000 to resolve its potential liability under EMTALA.  
Tennessee  Regional One Health (ROH) entered into an agreement to resolve allegations that it failed to 
provide an adequate medical screening examination and stabilizing treatment to a patient.  Specifically, 
OIG alleged that a patient with complaints of sudden pain in the lower right quadrant of his abdomen 
presented to ROH, and ROH failed to fully evaluate the severity and cause of the patients emergency 
medical condition and did not provide stabilizing treatment for sepsis before ROH transferred the patient 
to another hospital.  The patient died of septic shock and respiratory failure within a week of his transfer 
by ROH.  ROH agreed to pay a penalty of $45,000 to resolve its potential liability under EMTALA.                                                                
Self-Disclosure Programs  
Health care providers, suppliers, or other individuals or entities subject to CMPs can apply for 
acceptance into the Provider Self-Disclosure Protocol, a program created in 1998, to voluntarily disclose 
self-discovered evidence of potential fraud.  The self-disclosure program may give providers the 
opportunity to potentially avoid costs or possible disruptions associated with Government-directed 
investigations and civil or administrative litigation.  Application processes for two additional self-
disclosure programs were recently added to the OIG website for HHS contractors and grantees.  The OIG 
contractor self-disclosure program enables contractors the opportunity to self-disclose when they have 
potentially violated the False Claims Act or other Federal criminal laws prohibiting fraud, conflict of 
interest, bribery, or gratuity.  This self-disclosure process is available only to those with a Federal 
Acquisition Regulation-based contract with HHS.  The OIG Grant Self-Disclosure program is available for 
application by HHS grantees or HHS grant sub-recipients and provides the opportunity for voluntarily 
disclosure to OIG of potential fraud.  OIG evaluates the reported results of each internal investigation 
under the provider self-disclosure protocol to determine the appropriate course of action.  The self-
disclosure guidelines are available on the OIG website at https://oig.hhs.gov/compliance/self-disclosure-
info/index.asp.  During this semiannual reporting period, self-disclosure cases resulted in more than 
$39.1 million in HHS receivables.   
The following are examples of provider self-disclosure settlements: 
California  Five Star Quality Care-CA, LLC d/b/a Lancaster Healthcare Center entered into an agreement 
with OIG to resolve allegations that, during the period of January 2010 through July 2014, it submitted  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 33 
 
 
claims for skilled nursing services without proper certifications and recertifications for services, 
establishment and content of therapy plans, and/or maintenance of clinical records.  In addition, during 
the period of September 2014 through December 2014, it paid remuneration to a medical director for 
referrals.  The company agreed to pay $8.6 million to resolve its liability under the CMPL for conduct it 
disclosed to OIG.  
Virginia  Planned Parenthood Health Systems, Inc. (Planned Parenthood), entered into an agreement 
with OIG to resolve allegations that, between November 2004 and February 2015, it submitted claims to 
Medicaid in North Carolina, South Carolina, Virginia, and West Virginia for services using a provider 
number different than the medical professional who provided the services and billed for the services of 
non-physician practitioners who were not properly enrolled in their State Medicaid program.  Planned 
Parenthood agreed to pay $1.5 million to resolve its liability under the CMPL for conduct it disclosed to 
OIG.  
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 34 
Public Health Agencies Reviews and 
Enforcement Activities 
Centers for Disease Control and Prevention 
Presidents Emergency Plan for AIDS Relief 
The Presidents Emergency Plan for AIDS Relief (PEPFAR) program was authorized to receive $48 billion in 
funding for the 5-year period beginning October 1, 2008, to assist foreign countries in combating 
HIV/AIDS, tuberculosis, and malaria.  Additional funds were authorized to be appropriated through 2018.  
OIG is required to provide oversight of PEPFAR.  To meet this requirement, OIG has conducted a series of 
audits of CDCs PEPFAR grant administration and of organizations receiving PEPFAR funds from CDC.   
The Centers for Disease Control and Prevention Did Not Award Presidents Emergency Plan for AIDS 
Relief Funds for 2013 in Compliance With Applicable HHS Policies (A-04-14-04021),  May 2016 
Also, Medical Access Uganda Limited Generally Managed the Presidents Emergency Plan for AIDS 
Relief Funds in Accordance With Award Requirements (A-04-15-04040), June 2016 
We found that CDC did not award PEPFAR funds for FY 2013 in compliance with HHS and internal 
policies.  For all 30 Funding Opportunity Announcements (FOAs) in our judgmental sample, CDC did not 
comply with one or more HHS or internal policies in some awards.  As a result, CDC did not always 
adequately document its funding decisions to award $1.9 billion over the 5-year project period and may 
have considered applications that it should not have or treated applicants inconsistently.  CDC concurred 
with our recommendations that it:  (1) conduct quality assurance reviews of FOAs and funded grant 
applicant information to monitor compliance with HHS and internal policies when awarding PEPFAR 
funds, and (2) address specific deficiencies that we identified in our review.  
CDC awarded PEPFAR funds of $105 million for September 30, 2011, through September 29, 2014, to 
Medical Access Uganda Limited (Medical Access).  Medical Access expended $103.8 million during that 
period.  Medical Access managed PEPFAR funds in accordance with award requirements except that it 
used these funds to pay $751,000 in value-added tax (VAT) that the Ugandan Government has not 
reimbursed.  This payment of VAT and lack of reimbursement occurred because of a disagreement over 
the interpretation of a provision of a bilateral agreement in effect between the United States and the 
Government of Uganda.  CDC believed that grantees were exempt from the payment of VAT and that the 
exemption would occur through reimbursement.  However, the Government of Uganda recognized only 
State Department purchases as exempt or reimbursable of VAT under the bilateral agreement.  Medical 
Access concurred with our recommendation that it work with CDC to obtain $751,000 in VAT 
reimbursement from the Ugandan Government. 
Centers for Disease Control and Preventions Property System Data Were Neither Accurate Nor 
Complete (A-04-14-03546), June 2016  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 35 
 
 
CDC has various types of accountable property stored in the United States and overseas.  As of 
September 30, 2013, CDCs property system showed that CDC had 60,241 property items with a total 
cost of $451 million.  Our audit of data in the property system determined that the data were neither 
accurate nor complete in FY 2013.  Of the 250 items we sampled from the system, we located 245.  CDC 
had classified the remaining five items as missing.  We also found 14 items that were not barcoded or 
accurately recorded in the system.  We estimated that $29.2 million of CDC property was at risk of being 
lost or misplaced.  CDC did not record in the system all newly acquired property.  Of 128 sampled 
payments that CDC made for property, CDC incorrectly barcoded and added to its system property items 
associated with 114 payments.  We estimated that the cost of property purchased ($96.7 million) was 
understated by approximately $5.9 million.  Also, although CDC performed a monthly reconciliation of its 
system, the reconciliation was not complete because it included only property items with costs of 
$25,000 or more, so CDC excluded 95 percent of its property items (41 percent of inventory costs in the 
system).  Furthermore, CDC did not always remove from its system property that it had identified as 
missing, so the cost of property included in the system could be overstated by as much as $23.1 million.  
CDC concurred or partially concurred with our recommendations that it:  (1) complete Reports of Survey 
within HHSs 90-day time limit and remove property from the system that the Reports of Survey identify 
as missing; and (2) ensure that all property is added correctly to the system, that the system is 
reconciled, and that the system is adjusted to resolve any discrepancies.  CDC did not concur with our 
recommendation that it ensure that existing property is barcoded and correctly identified in the system.  
World Trade Center Health Program:  Review of Medical Claims (A-02-14-02008), September 2016 
The World Trade Center Health Program (WTCHP) was established in January 2011 and is administered 
by CDC through its National Institute for Occupational Safety and Health (NIOSH).  Under the WTCHP, 
pharmacy benefits and medical services are provided to eligible responders and survivors with certified 
health conditions related to the September 11, 2001, terrorist attacks.  OIG is required to review WTCHP 
expenditures to detect inappropriate billing and payment for services.  For this review, we found that not 
all of CDCs internal controls were effective in ensuring that claims for WTCHP pharmacy benefits and 
medical services were paid in accordance with Federal requirements.   
CDC generally concurred with our recommendations that it:  (1) establish a procedure for collecting and 
transmitting New York Metro area members prescription drug insurance coverage information to 
pharmacy benefit managers (PBMs) for benefits coordination, (2) establish a procedure to ensure that 
Nationwide Network members prescriptions are written by authorized WTCHP prescribers, (3) require 
PBMs to establish procedures to prevent the authorized number of refills from being exceeded, (4) 
establish a procedure for ensuring that pharmacy benefit claims are reimbursed at or below appropriate 
payment rates, and (5) determine whether medical service claims processed before October 22, 2012, 
were reimbursed at or below the appropriate payment rate and recoup any overpayments.   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 36 
 
 
Food and Drug Administration 
Early Alert: The Food and Drug Administration Does Not Have an Efficient and Effective Food Recall 
Initiation Process (A-01-15-01500), June 2016 
FDA generally relies on firms to voluntarily recall harmful articles of food.  Before 2011, FDA did not have 
the authority to require a firm to recall certain articles of food.  However, in 2011 FDA gained the 
authority to order a firm to recall certain articles of food after FDA determines that there is a reasonable 
probability that the food is adulterated or misbranded and that it will cause serious adverse health 
consequences or death to humans or animals. 
Our ongoing audit of FDAs food recall program found that FDA did not have an efficient and effective 
food recall initiation process that helps ensure the safety of the Nations food supply.  Specifically, FDA 
did not have policies and procedures to ensure that firms or responsible parties initiated voluntary food 
recalls promptly.  As a result, consumers remained at risk of illness or death for several weeks after FDA 
was aware of a potentially hazardous food in the supply chain.  We suggest that FDA update its policies 
and procedures to instruct its recall staff to establish set timeframes for FDA to request that firms 
voluntarily recall their products and for firms to initiate voluntary food recalls. 
National Institutes of Health 
The National Institute of Environmental Health Sciences Generally Administered Its Superfund 
Appropriations During Fiscal Year 2014 in Accordance With Federal Requirements (A-04-15-04035), 
April 2016 
The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 established the 
Hazardous Substance Response Trust Fund, commonly known as the Superfund.  NIHs National Institute 
of Environmental Health Sciences (NIEHS) receives an annual Superfund appropriation to carry out 
functions mandated by the Act.  The Act also requires OIG to audit all uses of the fund in the prior fiscal 
year.  The objective of this audit was to determine whether NIEHS administered its Superfund 
appropriations during FY 2014 in accordance with applicable Federal requirements.  
We found that NIEHS generally administered its Superfund appropriations during FY 2014 in accordance 
with applicable Federal requirements.  However, it did not always obligate Superfund appropriations in 
accordance with applicable Federal laws.  Specifically, NIEHS improperly used $7,500 from expired 
Superfund appropriations.  NIEHS improperly used expired Superfund appropriations because it did not 
follow its standard operating procedure on the use of prior-year funds.  By not ensuring that obligations 
were made within the 1-year period of availability, NIEHS violated Federal appropriations law.  If 
appropriate FY funding is not available to correct the improper obligations, an Antideficiency Act 
violation will have occurred.  NIEHS partially concurred with our recommendation that it, as applicable, 
deobligate the $7,500 of improper obligations and obligate $7,500 using available appropriations from 
the correct fiscal year or determine whether any Antideficiency Act violations occurred and take 
appropriate action.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 37 
 
 
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, 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.  
HEAL Exclusions 
During this semiannual reporting period, 48 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 debt is repaid and they may not appeal the exclusions.  
After being excluded for nonpayment of their HEAL debts, 2,637 individuals chose to enter into 
settlement agreements or completely repay their debts.  That figure includes 20 individuals who entered 
into such settlement agreements or completely repaid their debts during this semiannual reporting 
period.  More than $209 million is being repaid through settlement agreements or through complete 
repayment.  Of that amount, more than $2.2 million is attributable to this semiannual reporting period. 
The following are settlement agreement examples.  These practitioners entered into settlement 
agreements to repay the amounts indicated:  
  Ohio:  Dentist  $281,872 
  California:  Medical Doctor  $124,177 
  Florida:  Medical Doctor  $116,633 
  California:  Medical Doctor  $52,343   
                                                           
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, 2014 (Pub.  L. 113-76).  The transfer 
was completed on July 1, 2014.    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 38 
Human Services Agencies Reviews and 
Enforcement Activities 
Administration for Children and Families 
Hurricane Sandy  Response Preparedness and Oversight of Funds 
Hurricane Sandy made landfall on October 29, 2012, devastating portions of the mid-Atlantic and 
northeastern United States and leaving victims of the storm and their communities in need of disaster 
relief aid.  On January 29, 2013, the President signed into law the Disaster Relief Appropriations Act of 
2013, P.L. No. 113-2 (Disaster Relief Act), which, in part, provided HHS with approximately $800 million in 
funding ($759.5 million after sequestration, of which $577.2 million was allocated to ACF) for disaster 
response and recovery and other expenses directly related to Hurricane Sandy.  The Disaster Relief Act 
mandated OIG to perform oversight, accountability, and evaluation of programs, projects, or activities 
supported with Disaster Relief Act funds.   
Superstorm Sandy Block Grants:  Funds Benefited States Reconstruction and Social Service Efforts, 
Though ACFs Guidance Could Be Improved (OEI-09-15-00200), September 2016 
Five States received almost $475 million in Social Services Block Grant (SSBG) funding to help cover social 
service and reconstruction expenses resulting directly from Superstorm Sandy.  When Congress made 
funds available to States to help pay for expenses related to Superstorm Sandy, Congress noted that such 
funds were susceptible to significant improper payments.  This evaluation examined States 
experiences using Superstorm Sandy SSBG funds and ACF oversight of these funds.  We found that 
although Sandy SSBG funds assisted States recovery, ACFs guidance limited the effectiveness of State 
planning and use of the funds.  The initial deadline that ACF established did not allow States the time 
they needed to use the Sandy SSBG funds.  States also reported wanting more direction from ACF on 
allowable Sandy SSBG activities and more clarity about the type of documentation that ACF would 
expect during program integrity reviews.  To take full advantage of available funding for future disasters, 
States and grantees must receive appropriate guidance about when funds expire, how they may use the 
funds, and what documents or other evidence they must maintain for program integrity purposes.  
Nonetheless, ACF worked closely with States as they planned and implemented their activities and 
conducted required reviews of States use of the Sandy SSBG funds.   
ACF concurred with all of our recommendations to:  (1) take additional steps to ensure, within the scope 
of the legislation, that States are given an appropriate amount of time to expend any future 
supplemental SSBG awards; (2) conduct a post-grant review to identify lessons learned and best 
practices; and (3) prepare guidance about supplemental SSBG documentation requirements.  
New York Implemented Effective Internal Controls Over Hurricane Sandy Social Services Block Grant 
Funds and Appropriately Budgeted and Claimed Allowable Costs (A-02-14-02009), May 2016   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 39 
 
 
ACF awarded $235.4 million in Disaster Relief Act funding to New York for Social Services Block Grant 
(SSBG) activities, including social, health, and mental health services for individuals and for the repair, 
renovation, and rebuilding of health care, mental health, and childcare facilities.  We found that New 
York implemented effective internal controls over the awarding, monitoring, and reporting of Hurricane 
Sandy SSBG funds and appropriately budgeted and claimed allowable costs as of March 31, 2014.  
Accordingly, this report does not contain recommendations.   
Bayview Nursing and Rehabilitation Center Claimed Allowable Hurricane Sandy Disaster Relief Act 
Funds (A-02-15-02010), April 2016 
We reviewed New Yorks awarding of approximately $2.8 million of Disaster Relief Act funds to Bayview 
Nursing and Rehabilitation Center (Bayview) for construction and equipment expenses resulting from 
Hurricane Sandy.  We found that Bayview claimed allowable Hurricane Sandy Disaster Relief Act costs.  
Specifically, Bayview used Disaster Relief Act funds to offset costs it had incurred repairing its facility and 
replacing damaged equipment before receiving its Disaster Relief Act grant award.  Accordingly, this 
report does not contain recommendations.   
Columbia University Claimed Allowable Hurricane Sandy Disaster Relief Act Funds (A-02-15-02007), 
May 2016 
NIH awarded $299,000 to Columbia University (Columbia) to replace research resources lost or damaged 
by Hurricane Sandy.  We found that Columbia claimed allowable Hurricane Sandy Disaster Relief Act 
costs for the period January 31, 2014, through February 28, 2015.  Accordingly, this report does not 
contain recommendations. 
Childcare and Head Start Programs 
ACF provides Federal grants through several programs, including Head Start and the Child Care and 
Development Fund (CCDF).  CCDF (authorized by the Child Care and Development Block Grant Act and 
the Social Security Act  418) assists low-income families, families receiving temporary public assistance, 
and families transitioning from public assistance to obtain childcare so that they may work or obtain 
training or education.   
Child Care and Development Fund 
More Effort Is Needed to Protect the Integrity of the CCDF Block Grant Program (OEI-03-16-00150), 
July 2016 
The CCDF block grant program is a FederalState partnership to provide eligible, low-income families 
with help paying for childcare at a provider of their choice.  Within the CCDF program, OIG has previously 
identified fraud, found improper payments, and exposed health and safety concerns at childcare 
facilities.  This report focuses on how States and ACF ensure the integrity of the CCDF block grant 
program and the results of States program integrity activities.  We found that States differed in the 
scope of CCDF program integrity activities and varied substantially in the degree to which they 
conducted specific program integrity activities.  Not all States performed important antifraud activities,  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 40 
 
 
and few States notified ACF and other States about suspected fraud.  Many States reported no results or 
did not know the results of their CCDF program integrity efforts in 2015, including their numbers of 
program violations and errors, referrals to law enforcement, and client and provider disqualifications.  
States identified payment error rates ranging from less than 1 percent to 36 percent, but almost half of 
the States did not expect to recover any improper payments identified as a result of their error rate 
reviews.  States identified limitations in technology, resources, and coordination as top challenges to 
ensuring CCDF program integrity.  In its oversight of State activities, ACF focuses more on technical 
assistance than compliance.  ACF does not have a process to ensure that States carry out planned 
program integrity activities nor does it collect information about the results of these activities.   
ACF concurred with all of our recommendations to:  (1) request that States examine the effectiveness of 
their program integrity and fraud fighting activities, (2) examine with States the benefits of expanding 
program integrity and fraud fighting activities, (3) establish routine communication to share program 
integrity and fraud-fighting best practices, and (4) determine the feasibility of requiring all States to 
report information about the results of their program integrity and fraud-fighting activities. 
Head Start 
Head Start Grant Recompetition:  Early Implementation Results Suggest Opportunities for 
Improvement (OEI-12-14-00650), August 2016 
The Head Start program is the largest Federal investment in early childhood education.  The Improving 
Head Start for School Readiness Act of 2007 required ACF to begin awarding 5-year grants for Head Start 
and to require grantees that ACF determines are not providing a high-quality and comprehensive Head 
Start program to recompete or participate in open competition for funding renewal.  In response, ACF 
began to implement the Designation Renewal System (DRS), which uses seven trigger conditions to 
assess a subset of grantees (known as a cohort) each year and determine which grantees will be required 
to recompete.  
We reviewed ACFs DRS for Head Start grantees and assessed the early results of Head Start grant 
recompetition.  In late 2011, ACF began assessing grantees through the DRS to determine which grantees 
would have their grants automatically renewed and which would be required to participate in open 
competition for renewala process known as recompetition.  We found that one-third of grantees 
were required under the DRS to recompete for funding renewal.  Grantees DRS determinations were not 
linked to the number of Head Start enrollees they served, the types of areas (i.e., rural or urban) where 
their centers were located, the proportion of their enrollees who were from non-English-speaking 
families, or the proportion of their enrollees who were from very poor households.  Of grantees required 
to recompete, approximately three-quarters had their grants renewed for an additional 5-year term.  
More than half of these grantees were the sole applicants for their respective grants.  We also found that 
DRS determinations were largely inconsistent with other ACF performance data.  Additionally, few 
grantees with lower performance on a hybrid of 10 DRS and non-DRS performance measures left the  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 41 
 
 
Head Start program through the DRS and recompetition processes.  Overall, 92 percent of Head Start 
grantees had their grants renewed. 
We recommend that ACF proactively monitor grantees performance results to verify that grantees 
designated under the DRS for automatic, noncompetitive renewal perform better than their peers.  
Additionally, ACF should take steps to increase the number of applicants for recompeted grants.  ACF 
concurred with both recommendations. 
Child Support Enforcement Activities 
OIG Investigations   
OIG investigates noncustodial parents who fail to pay court-ordered child support.  OIG works with ACFs 
Office of Child Support Enforcement; DOJ; U.S. Attorneys Offices; the U.S. Marshals Service; and Federal, 
State, and local partners to address egregious child support enforcement cases with appropriate law 
enforcement and prosecutorial action.  During this reporting period, OIG investigations of child support 
enforcement cases nationwide resulted in 16 criminal actions and court-ordered restitution and 
settlements of $956,546. 
The following are examples of child support enforcement cases: 
Pennsylvania  In July 2002, Mark Matsinger was ordered to pay $1,300 per month for the support of his 
two children.  Matsinger made inconsistent payments to the custodial parent of his children; his last 
payment was made in 2006.  Matsinger was sentenced to 812 months in prison (time served), 6 months 
of location monitoring, and ordered to pay $170,000 in restitution after pleading guilty to willful failure 
to pay child support.  In addition, Matsinger pleaded guilty to mail fraud and was ordered to pay $40,002 
to the Social Security Administration.   
Virginia  Between 1999 and 2016, Raymond Dyrek Payne unlawfully failed to pay child support for his 
minor children, and he was placed on the OIG Child Support Enforcement Most Wanted list in January 
2015.  Payne moved from State to State knowingly eluding payments by working under aliases and 
fraudulent Social Security numbers while convincing businesses in several States that he had professional 
training in various fields including a country music singer/songwriter, pastry chef, real estate agent, 
graphic artist, and brewmaster.  Payne has no professional training or certifications.  He was sentenced 
to 5 years of supervised probation and ordered to pay restitution in the amount of $67,087 following a 
guilty plea for failure to pay child support.   
Engaging the Public in Capturing Deadbeat Parents 
Because of the success of OIGs Most Wanted Fugitives website, OIG launched its Most Wanted 
Deadbeat Parents website.  The site identifies parents who fail to pay court-ordered child support for 
their children and thereby put an unnecessary strain on the custodial parents and the children as well as 
on agencies that enforce these matters.  The site, which is updated frequently, includes information on  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 42 
OIGs role in pursuing parents who fail to pay court-ordered child support.  OIGs Most Wanted Deadbeat 
Parents website is at https://oig.hhs.gov/fraud/child-support-enforcement/index.asp.    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 43 
Other HHS-Related Reviews and 
Investigations 
Grants and Contracts 
HHS is the largest grant-making organization and one of the largest contracting agencies in the Federal 
Government.  In FY 2016, HHS awarded more than $463.5 billion in grants and over $21.1 billion in 
contracts across all program areas.  OIGs direct annual discretionary appropriation funding is used to 
conduct program integrity and enforcement activities with regard to the more than 100 public health 
and human services programs carried out by more than 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 appropriations increased OIGs 
discretionary funding for public health and human services oversight. 
Grant Fraud Investigations 
The following are case examples related to misuse of grant funds: 
Kentucky  Vesta Brue is the owner, president, and chief executive officer of Care Team Solutions LLC 
(Care Team), and LifeTechniques, Inc. (LifeTechniques).  LifeTechniques and Care Team allegedly 
submitted applications to NIH to obtain Small Business Innovation Research grants to fund the 
development of various medical devices, and were awarded five grants.  The Government alleges that 
Brue, on behalf of LifeTechniques and Care Team, created phony invoices that grossly overstated 
expenses and manufactured products in China when all products were supposed to be produced 
domestically.  As a result of these false claims, NIH paid Federal grant funds to LifeTechniques and Care 
Team to which neither company was entitled.  Brue, Care Team, and LifeTechniques agreed to pay $4.5 
million, joint and several, to resolve their liability under the False Claims Act.   
Illinois  Bishop Herman Jackson was the owner and pastor of the Ark of Safety Apostolic Faith Temple.  
He and his wife Jannette Faria operated three daycare centers from 2002 to 2011 and received childcare 
subsidies from ACF Block Grants.  The investigation found that Jackson enrolled children who did not 
financially qualify to receive subsidized daycare services.  Also, many of the children attended daycare 
for a short period of time but were continuously billed long after they stopped attending.  In addition, 
some children never attended.  Jackson and Faria were found guilty of mail fraud, wire fraud, and false 
statements.  Jackson was sentenced to 5 years in prison, and Faria was sentenced to 1 year and 1 month 
in prison.  Both were ordered to pay $896,590 in restitution, joint and several.   
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 with relation to fraud, waste, or abuse in the Small Business  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 44 
 
 
Innovative Research/Small Business Technology Transfer (SBIR/ STTR) program.  OIG must also report on 
the actions taken in each case; justification for not taking action on a case; and an accounting of funds 
used to address waste, fraud, and abuse in this program.  In our December 2015 report delivered to the 
three congressional oversight committees, we reported that OIG spent approximately $236,239 in 
salaries on oversight related to the SBIR/STTR program.  HHS referred two new SBIR/STTR cases to OIG in 
FY 2016.  
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.  During this reporting period, OIG 
did not close any investigations. 
Contract Audits 
Pursuant to the National Defense Authorization Act for FY 2008,  845, OIGs appointed under the 
Inspector General Act of 1978 are required to submit, as part of their Semiannual Reports to Congress 
pursuant to section 5 of such Act, information on final completed contract audit reports issued during 
the period to the contracting activity containing significant audit findings.  OIG issued no final reports 
meeting  845 criteria during this semiannual period.  
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 595 reports covering $2.1 
trillion in audited costs.  Federal dollars covered by these audits totaled $689 billion, of which about 
$366 billion were HHS funds.  
Office of Management and Budget (OMB) Circular A-133 and the more recent uniform guidance at 
2CFR200, Subpart F establishes audit requirements for State and local governments, colleges and 
universities, and nonprofit organizations receiving Federal awards.  Under this circular and uniform 
guidance, 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 and identifies any significant areas of internal control weakness, 
noncompliance, and questioned costs for resolution or followup.  We identify entities for high-risk 
monitoring, alert program officials to any trends that could indicate problems in HHS programs, and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 45 
profile non-Federal audit findings of a particular program or activity over time to identify systemic 
problems.  We also provide training and technical assistance to grantees and members of the auditing 
profession.  OIG maintains a process to assess the quality of the non-Federal reports received and the 
audit work that supports the selected reports.  
OIGs reports on non-Federal audits reviewed during this reporting period are categorized in the 
following table. 
Non-Federal Audits, April 1, 2016, through September 30, 2016 
Number of Non-Federal Audits: 
579 
Not requiring changes or having minor changes 
16 
Requiring major changes 
0 
Having significant technical inadequacies 
Total  595 
The 595 reports included 2,137 recommendations for improving management operations.  In addition, 
these audit reports provided information for 20 OIG special memorandums that identified concerns for 
increased monitoring by management. 
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), 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 relating to HHSs programs and operations and make recommendations 
concerning their impact on economy and efficiency or the prevention and detection of fraud and abuse.  
Most audits and other reviews that we conduct are designed to test compliance with and/or assess the 
administration and oversight of existing laws and regulations.  Our reports of such reviews describe  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 46 
 
 
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. 
  Our Semiannual Report to Congress describes findings and recommendations from recently 
completed reviews, many of which focus on existing laws and regulations.   
  Our Compendium of Unimplemented Recommendations describes priority findings and 
recommendations from past periods that remain to be implemented.   
  Our annual Work Plan and Mid-Year Update provides citations to laws and regulations that are the 
subject of ongoing or future reviews. 
We also review proposed legislation and regulations related to HHS programs and operations.  HHS 
routinely involves us and its operating and other 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.  
Implementation of Health Insurance Marketplaces 
OIG continues to review programs implemented pursuant to the 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 GAO and other Federal and State oversight agencies.  
State-Based Marketplaces 
The ACA requires the establishment of a health insurance exchange (marketplace) in each State and the 
District of Columbia.  A marketplace is designed to serve as a one-stop shop at which individuals get 
information about their health insurance options; are evaluated for eligibility for a qualified health plan 
and, when applicable, eligibility for insurance affordability programs; and enroll in the qualified health 
plan of their choice.  A previous OIG review found that not all internal controls implemented by the 
Federally Facilitated Marketplace and the State marketplaces in California and Connecticut were 
effective in ensuring that individuals were enrolled in qualified health plans according to Federal 
requirements.  The review below is part of an ongoing series that looks at seven State marketplaces 
across the Nation and determines whether their marketplaces internal controls were effective in 
ensuring that individuals were enrolled in qualified health plans according to Federal requirements. 
Vermont Did Not Properly Allocate Millions to Establishment Grants for a Health Insurance 
Marketplace (A-01-15-02500), September 2016  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 47 
 
 
We found that Vermont did not always follow Federal requirements on allocating costs to its 
establishment grants for implementing a health insurance marketplace and drawing down establishment 
grant funds.  Vermont allocated $10.5 million using a cost allocation methodology that included a 
material defect, may not have allocated $13.9 million in costs in accordance with the relative benefits 
that each grant program received, and drew down establishment grant funds that exceeded actual 
program costs by $736,000. 
Vermont did not fully address our first recommendation but stated it would work with CMS to determine 
the appropriate action to amend its Cost Allocation Plan and either refund $10.5 million or work with 
CMS to determine the appropriate allocation to the establishment grants. 
Payments and Policies 
Conversions of Startup Loans Into Surplus Notes by Consumer Operated and Oriented Plans Were 
Allowable but Not Always Effective (A-05-16-00019), August 2016 
CMS established loan agreements with Consumer Operated and Oriented Plans (CO-OPs) to provide 
startup and solvency loan funding.  CMS issued a memo to the CO-OPs in July 2015 allowing the CO-OPs 
to convert startup loans into surplus notes.  A surplus note is a bondlike instrument issued to provide 
needed capital.  Under the terms of a surplus note, CO-OPs are not required to make any repayment on 
the surplus note that could lead to financial distress or default.  We determined that the CO-OPs 
complied with CMS guidance and applicable accounting principles when converting startup loans into 
surplus notes.  However, CMS did not adequately document the potential impact of the conversions on 
the Federal Governments ability to recover the loan payments if the CO-OPs were to fail.  Although the 
conversions provided increased levels of capital and surplus, 4 of the 12 CO-OPs approved for 
conversions ceased operations within 6 months after the conversion.  Despite the conversions allowing 
CO-OPs to record the startup loans as capital and surplus instead of debt, risk-based capital percentages 
were at levels below the CMS requirement of 500 percent for four of the eight operational CO-OPs as of 
December 31, 2015.  
CMS concurred with our recommendations that it perform the following steps prior to approving 
additional conversions of startup loans to surplus notes:  (1) document any potential negative impact 
from changes in distribution priority and (2) quantify the likely impact on the Federal Governments 
ability to recover loan payments.     HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 48 
Appendixes 
A  Savings Decisions Supported by OIG Recommendations 
B  Monetary Recommendations 
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 
Semiannual Report to Congress | Fall 2016  Page 49 
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 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 $22.1 billion was attributed to FY 2016.  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 
OIG Recommendations  Policy Decisions  Estimated 
Savings 
(millions) 
Medicare Part C Prepayments.   Section 3201 of the ACA changed the Medicare  $19,200 
Modify monthly capitated payments  Advantage benchmark percentages that are 
to a level fully supported by empirical  applied to Medicare fee-for-service and imposed 
data. The recommendation reflected  a cap on the benchmarks, resulting in cost 
findings in OIG report number A-14- savings for Medicare Part C as compared to prior 
00-00212.   law.  CBO estimated Part C savings through FY 
2019, including $19.2 billion for FY 2016.  CBO 
produced its estimate in 2010, prior to two 
significant implementation decisions by HHS that  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 50 
 
 
affect the actual savings; however, neither CBO 
nor HHS has calculated a revised estimate. 
Excessive Medicaid Payments to New  New Yorks Medicaid State Plan Amendment   $799 
York Developmental Centers.    12-03, effective April 1, 2013, limits payment to 
Ensure that New Yorks Medicaid daily 
costs with projected annual savings of nearly 
rate for State-operated 
$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  $400 
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-weighted 
results set forth in section  ASPs for Medicare Part B drugs that comports 
1847A(b)(3) of the Social Security Act.   with OIGs recommendation.  CBO estimated 
The recommendation reflected  savings of $400 million for FY 2016.   
findings in OIG report number OEI-03-
05-00310. 
Reductions in Medicare Bad Debt  Section 3201 of the Middle Class Tax Extension  $1,060 
Reimbursement.    and Job Creation Act of 2012 applied percentage 
Seek legislative authority to eliminate 
reductions in bad debt reimbursement to all 
(or reduce) Medicare payments to 
providers eligible to receive bad debt 
hospitals for bad debt associated with 
reimbursement.  CMS estimated savings to 
beneficiaries failure to pay their 
Medicare of $10.92 billion over 10 years with 
deductibles and coinsurance.  The 
$1.06 billion attributed to FY 2016.  (77 Fed. Reg. 
recommendations reflected findings 
67,450, 67,523 (November 9, 2012)) 
in OIG report number A-14-90-00339 
and subsequent reviews. 
Additional Rebates for Brand-Name  Section 2501(d) of the ACA, as amended by  $200 
Drugs With Multiple Versions.    section 1206(a) of the Health Care and 
OIG recommended that CMS 
Education Reconciliation Act of 2010, addresses 
continue to seek legislative authority 
this issue.  CBO estimated savings of $200 
to modify the rebate formula 
million for FY 2016.   
calculation to ensure that  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 51 
 
 
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. 
Medicare Secondary Payer.   Section 111 of the Medicare, Medicaid, and  $200 
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.  CBO 
seek necessary legislative authority  estimated savings of $200 million for FY 2016. 
for mandatory data reporting.  The 
recommendations reflected findings 
in the following OIG reports:  
A-02-98-01036 
A-02-02-01037 
A-02-02-01038  
A-04-01-07002  
A-09-89-00100 
Medicare Payments for Vacuum  Section 203 of the Achieving a Better   $44.4 
Erection Systems.    Life Experience Act of 2014 implements changes 
Seek legislative authority to include 
to treat VES prosthetic devices and related 
vacuum erection systems (VES) in the 
accessories as statutorily noncovered in the 
Competitive Bidding program and 
same manner that erectile dysfunction drugs are 
then implement a National Mail-
treated in Medicare Part D.  CBO estimated 
Order Competitive Bidding program 
savings of $444 million over 10 years. 
for VES.  The recommendation 
reflected findings in OIG report 
number A-07-12-05024. 
Payments for Prescription Drugs  CMS issued a final rule about the Contract Year  $90 
Provided to Incarcerated  2015 Policy and Technical Changes to the 
Beneficiaries.   
Medicare Advantage and the Medicare  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 52 
 
 
Work with prescription drug plan  Prescription Drug programs.  The eligibility 
sponsors to identify and resolve  requirements to enroll in Medicare Advantage 
improper Medicare Part D payments  and Part D are outlined in Sections 1851(a)(3)(B) 
made for prescription drugs provided  and 1860D-1(a)(3)(A) of the Act.  To enroll in 
to incarcerated beneficiaries.  The  Medicare Advantage, a beneficiary must be 
recommendation reflected findings in  entitled to Part A and enrolled in Part B.  To 
OIG report number A-07-12-06035.  enroll in Part D, a beneficiary must be entitled to 
Part A and/or enrolled in Part B.  An incarcerated 
beneficiary is not precluded from meeting the 
eligibility requirements for Part A and Part B, but 
in general, no Medicare Payment is made for 
these individuals. CMS promulgated regulations 
to require Part D plans to disenroll incarcerated 
beneficiaries.  CMS estimated savings of $1.6 
billion over 10 years with $90 million attributed 
to FY 2016.  (79 Fed.  Reg.29,844, 29,953 (May 
23, 2014)) 
Excessive Medicaid Payments to New  Agreement between CMS and the State of New  $100 
York State.    York, dated March 20, 2015, to repay $1.95 
Ensure that expenditures related to 
billion over 12 years with $100 million attributed 
developmental centers and other 
to FY 2016. 
intermediate care facilities and any 
revised payment methodology be 
consistent with efficiency and 
economy.  The recommendation 
reflected findings in OIG reports A-02-
11-01029,  
A-02-13-01008, and other reviews.   
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 53 
Appendix B 
Monetary Recommendations 
The tables below summarize OIGs monetary recommendations and 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  146  $644,920,000  $19,315,000 
been made by the beginning of the reporting 
period1 
Reports issued during the reporting period  67  $320,514,000  $55,000  
Total Section 1  213  $965,434,000  $19,370,000 
Section 2 
Reports for which management decisions were 
made during the reporting period2, 3  
Disallowed costs  120  *$575,846,000  $1,169,000   
Costs not disallowed  6   $26,868,000  $0 
Total Section 2  126  $602,714,000  $1,169,000 
*Audit receivables (expected recoveries).
Section 3 
Reports for which no management decisions had  87  $362,720,000  $18,201,000 
been made by the end of the reporting period (Sec. 
1 minus Sec. 2) 
Section 4 
Reports for which no management decisions were  46  $151,589,000  $18,145,000 
made within 6 months of issuance4 
Audit Reports With Funds Recommended To Be Put to Better Use  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 54 
 
 
The phrase recommendations that funds be put to better use means that funds could be used more 
efficiently if management took action to implement an OIG recommendation through reductions in 
outlays, deobligation of funds, and/or avoidance of unnecessary expenditures.  Table 2 reports HHS 
program officials decisions to take action on these audit recommendations.  
Table 2  Audit Reports with Funds To Be Put to Better Use 
  Reports  Dollar Value 
Section 1     
Reports for which no management decisions had been made by the  5  $15,020,135,000 
beginning of the reporting period1 
Reports issued during the reporting period  7  $37,149,000 
  Total Section 1  12  $15,057,284,000 
     
Section 2     
Reports for which management decisions were made during the     
reporting period 
Value of recommendations agreed to      
by management 
  Based on proposed management action  1  $6,388,000 
  Based on proposed legislative action    $0 
     
Value of recommendations not agreed to by management  1  $28,000 
  Total Section 2  2  $6,416,000 
     
Section 3     
Reports for which no management decisions had been made by the  10  $15,050,868,000 
end of the reporting period2 (Sec. 1 minus Sec. 2) 
 
End Notes 
Table 1 End Notes 
1 The opening balance was adjusted upward by $211.3 million because of a reevaluation of previously 
issued recommendations.  
2 Revisions to previously reported management decisions: 
  A-01-13-00506 Nationwide Review of Place of Service Coding for Physician Services Processed by Part 
B Contractors for Calendar Years 2010 through 2012.  Subsequent review by CMS determined that 
the $1,408,649 of the $7.3 million were allowable cost. 
  A-04-12-07032 Medicare Compliance Review at JFK Medical Center.  Subsequent review by CMS of 
the OIGs extrapolation led to a downward adjustment in unallowable claims totaling $4,183,075.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 55 
 
 
  A-05-14-00023 Review of Illinois Medicaid Payments for Drug Herceptin.  Subsequent review by CMS 
determined additional offsets, increasing disallowed cost by $496,038. 
  A-06-14-00022 Outpatient Dental Claims  National Government Services.  Subsequent review by 
CMS determined most of the claims identified were canceled by providers, reducing disallowed cost 
by $1,973,933. 
  Not detailed are net reductions to previously disallowed management decisions totaling $5.6 
million. 
3 Included are management decisions to disallow $39.9 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 OMB Circular A-133.  OIG is 
currently ensuring that work performed by these non-Federal auditors complies with Federal audit 
standards; accordingly, OIG tracks, resolves, and reports on recommendations in these audits. 
4 Because of administrative delays, some of which were beyond management control, resolution of the 
following 46 audits was not completed within 6 months of issuance of the reports; however, agency 
management has informed us that the agency is working to resolve the outstanding recommendations 
before the end of the next semiannual reporting period:  
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-02-12-02016  PUERTO RICO IMPROPERLY CLAIMED SOME CHILD CARE AND DEVELOPMENT 
TARGETED FUNDS, JAN 2016, $12,471,385 
CIN: A-09-14-02037  REVIEW OF INPATIENT BONE MARROW AND STEM CELL TRANSPLANTS, FEB 
2016, $4,574,228 
CIN: A-03-12-00004  REVIEW OF HORIZON'S 2009 AND 2010 BONA FIDE SERVICE FEES, MAR 2013, 
$4,344,417 
CIN: A-02-12-02012   NEW YORK IMPROPERLY CLAIMED SOME CHILD CARE AND DEVELOPMENT 
TARGETED FUNDS, JUL 2015, $3,827,836 
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-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  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 56 
 
 
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-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-06-15-00013  MEDICARE OUTPATIENT DENTAL CLAIMS - FCSO (JN), MAR 2016, $1,065,486 
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-09-14-01007  REVIEW OF NEVADA HEALTH EXCHANGE ESTABLISHMENT GRANTS, FEB 2016, 
$893,464 
CIN: A-09-11-01007   REVIEW OF CSBG RECOVERY ACT COSTS CLAIMED BY HI FOR HCAP, FEB 2013, 
$513,649 
CIN: A-04-13-01024  ALLOWABILITY OF SELECTED COSTS CHARGED TO FEDERAL GRANTS AND 
CONTRACTS UNC, JUN 2014, $352,843 
CIN: A-03-15-00006   CORNERSTONE HOSPITAL OF BOSSIER CITY INCORRECTLY BILLED MEDICARE 
INPATIENT CLAIMS WITH KWASHIORKOR, MAR 2016, $321,971 
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  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 57 
 
 
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-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-02-14-02013  LINK2HEALTH SOLUTIONS, INC., BUDGETED COSTS THAT WERE NOT 
APPROPRIATE AND CLAIMED SOME UNALLOWABLE HURRICANE SANDY 
DISASTER RELIEF ACT FUNDS, MAR 2016, $54,822 
CIN: A-04-14-04028  AUDIT OF NC DHHS PPHF GRANTS AND COOPERATIVE AGREEMENTS AWARDED 
BY CDC, JAN 2016, $50,485 
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 
TOTAL CINS:   46 
TOTAL AMOUNT:  $151,589,000 
Table 2 End Notes 
1The opening balance had no prior period adjustments of previously issued recommendations.  
2 Because of administrative delays, some of which were beyond management control, 4 of the 10 audits 
open at end of the period were not resolved within 6 months of issuance of reports.  OIG is working with 
management to reach resolution on these recommendations before the end of the next semiannual 
reporting period:   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 58 
 
 
CIN: A-05-12-00020  Comparison of Surgical Services Provided in the ASC Setting to Other Outpatient 
Settings, APRIL 2014, $15,000,000,000 
CIN: A-07-13-02795  Review of Palmetto Medicare Outlier Processing Timeliness for J1, JUL 2015, 
$15,792,301 
CIN: A-09-14-02037  Review of Inpatient Bone Marrow and Stem Cell Transplants, FEB 2016, 
$3,821,519 
CIN: A-04-14-04028  Audit of NC DHHS PPHF Grants and Cooperative Agreements Awarded by CDC, 
JAN 2016, $493,401 
TOTAL CINS:   4 
TOTAL AMOUNT:  $15,020,107,000    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 59 
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  
During this semiannual reporting period, no peer reviews involving the Office of Audit Services (OAS) 
were completed.  Listed below is information concerning OASs peer review activities during prior 
reporting periods. 
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 
December 2015  HHS OIG, OAS  U.S. Department of Agriculture 
(USDA) 
The system of quality control for the audit organization of USDA OIG in effect for the year ending 
March 31, 2015, has been suitably designed and complied with to provide USDA OIG with 
reasonable assurance of performing and reporting in conformity with applicable professional 
standards in all material respects.  Federal audit organizations can receive a rating of pass, pass with 
deficiencies, or fail.  USDA OIG received a peer review rating of pass. 
Office of Investigations 
During this semiannual reporting period, no peer reviews involving Office of Investigations (OI) were 
completed.  Listed below is information concerning OIs peer review activities during prior reporting 
periods. 
OI  Date  Reviewing Office  Office Reviewed 
August 2015  DOL-OIG  HHS OIG, OI  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 60 
 
 
The system of internal safeguards and management procedures for the investigative function of HHS 
OIG in effect for the year ending September 30, 2015, was in full compliance with the quality 
standards established by CIGIE and the Attorney General's guidelines. 
 
OI  Date  Reviewing Office  Office Reviewed 
June 2014  HHS OIG, OI  TIGTA 
 
The system of internal safeguards and management procedures for the investigative function of 
TIGTA in effect through June 2014 was in full compliance with the quality standards established by 
CIGIE and the Attorney General's guidelines. 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 61 
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 include a hearing before an 
administrative law judge and appeals to the HHS Departmental Appeals Board and Federal district and 
appellate courts regarding the basis for and the length of the exclusion. 
Civil Monetary Penalties Law 
The CMPL of the Social Security Act, 1128A (42 U.S.C.  1320a-7a), imposes penalties, assessments, and 
exclusion from participation in Federal 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.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 62 
 
 
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)). 
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  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 63 
 
 
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, as amended by the False Claims Amendments Act of 
1986 (FCA) (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. 
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. 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 64 
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  Throughout this report 
deficiencies 
(a)(2)  Recommendations with respect to  Throughout this report 
significant 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 prosecutive authorities  Legal and Investigative Activities 
section 
(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  Appendix A 
Questioned Costs 
(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 FISMA  Reported annually in the spring 
Semiannual Report to Congress, 
Other HHS-Related Issues section 
(a)(14)-(16)  Results of peer reviews of HHS OIG  Appendix B 
conducted by 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  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 65 
 
 
Other reporting requirements 
Section  Requirement  Location 
845  Significant contract audits required to be  Other HHS-Related Issues section 
reported pursuant to the National Defense 
Authorization Act for FY 2008 (P.L. No. 110-
181),  845. 
205  Pursuant to HIPAA (P.L. No. 104-191),  205,  Reported annually in the fall 
the Inspector General is required to solicit  Semiannual Report.   
proposals annually via a Federal Register  Appendix F 
notice for developing 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 section 
Reinvestment Act of 2009,  1553, OIG 
reports to Congress the retaliation 
complaint investigations it decided not to 
conduct or continue during the period. 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 66 
Appendix F 
Anti-Kickback Statute  Safe Harbors 
Pursuant to 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. 
Public proposals for new and modified safe harbors  
In response to the 2065 annual solicitation, OIG received the following proposals related to safe harbors: 
Proposal  OIG Response 
A new safe harbor that would allow non- OIG is not adopting this suggestion at this time, as it 
unit-based rebate arrangements between  requires further study.  In the meantime, questions 
biopharmaceutical manufacturers and  about the application of the anti-kickback statute to 
payers to promote arrangements tying  such arrangements should be addressed on a case-by-
pricing of drugs to value and protect the  case basis, such as under the advisory opinion process. 
provision of data analytic support to 
Medicare and Medicaid providers and 
suppliers. 
A new safe harbor that would permit value- OIG is not adopting this suggestion at this time, as it 
based purchasing arrangements between  requires further study.  In the meantime, questions 
biopharmaceutical manufacturers and  about the application of the anti-kickback statute to 
purchasers that would promote patient  such arrangements should be addressed on a case-by-
outcome-based pricing, indication-specific  case basis, such as under the advisory opinion process. 
pricing, and patient-specific pricing models. 
A new safe harbor to protect financial  OIG is not adopting this suggestion at this time, as it 
arrangements between payers, providers,  requires further study.  In the meantime, questions  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 67 
 
 
and/or manufacturers to support coverage  about the application of the anti-kickback statute to 
and payment methodologies that reward or  such arrangements should be addressed on a case-by-
penalize items and services based on their  case basis, such as under the advisory opinion process. 
achievement of value and/or cost savings.  
Parties would be permitted to provide 
investments to design agreements and 
infrastructure, monitor patient outcomes, 
and analyze clinical information. 
A new safe harbor to protect and encourage  OIG is not adopting this suggestion at this time, as it 
arrangements that support patient  requires further study.  In the meantime, questions 
adherence to a treatment regimen that has  about the application of the anti-kickback statute to 
been recommended by the patients health  such arrangements should be addressed on a case-by-
care provider.  case basis, such as under the advisory opinion process.  
Extend existing safe harbor for donation and  OIG is not adopting the suggestion to extend the safe 
financial support of EHR software, related  harbor.  With respect to modifying the safe harbor to 
technology, and training beyond 2021 and  ensure the range of relevant and appropriate 
modify safe harbor to ensure the range of  technologies are included based on the evolving 
relevant and appropriate technologies are  technological environment, we are not adopting this 
included based on the evolving technological  suggestion at this time, as it requires further study.   
environment. 
A new safe harbor for financial  OIG is not adopting this suggestion at this time.  
arrangements that involve risk sharing and  Waivers of certain fraud and abuse laws, including the 
gainsharing in alternative payment models  anti-kickback statute, have been issued or are being 
when appropriate safeguards are in place.  considered as needed in connection with the Medicare 
Shared Savings Program and specific models sponsored 
by the Centers for Medicare and Medicaid Innovation.  
See Fraud and Abuse Waivers available at 
https://oig.hhs.gov/compliance/accountable-care-
organizations/index.asp.  Whether safe harbors are 
appropriate for the types of arrangements involved in 
these demonstrations requires further study. 
A new safe harbor to broadly protect  OIG is not adopting this suggestion at this time.  
participants of Centers for Medicare and  Waivers of certain fraud and abuse laws, including the 
Medicaid Innovation programs from liability  anti-kickback statute, have been issued or are being 
under the anti-kickback statute.  considered as needed in connection with specific 
models sponsored by the Centers for Medicare and 
Medicaid Innovation.  See Fraud and Abuse Waivers 
available at 
https://oig.hhs.gov/compliance/accountable-care-
organizations/index.asp.  Whether safe harbors are 
appropriate for the types of arrangements involved in 
these demonstrations requires further study. 
A new safe harbor to permit incentive  OIG is not adopting this suggestion at this time.  
payment arrangements, including direct or  Waivers of certain fraud and abuse laws, including the  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2016  Page 68 
 
 
indirect monetary remuneration or financial  anti-kickback statute, have been issued or are being 
arrangements to support startup costs and  considered as needed in connection with the Medicare 
support contributions, between hospitals  Shared Savings Program and specific models sponsored 
and other providers who participate in  by the Centers for Medicare and Medicaid Innovation.  
advanced payment models, as defined by  See Fraud and Abuse Waivers available at 
CMS.  https://oig.hhs.gov/compliance/accountable-care-
organizations/index.asp.  Whether safe harbors are 
appropriate for the types of arrangements involved in 
these demonstrations requires further study. 
Modification of the personal services and  OIG is not adopting this suggestion at this time, as it 
management contracts safe harbor to deem  requires further study.  Waivers of certain fraud and 
incentive payment arrangements between  abuse laws, including the anti-kickback statute, have 
providers participating in alternative  been issued or are being considered as needed in 
payment models to be set in advance,  connection with the Medicare Shared Savings Program 
consistent with fair market value, and not  and specific models sponsored by the Centers for 
determined in a manner that takes into  Medicare and Medicaid Innovation.  See Fraud and 
account the volume or value of referrals or  Abuse Waivers available at 
other business generated between the  https://oig.hhs.gov/compliance/accountable-care-
parties, when the compensation  organizations/index.asp.  Whether modification of the 
methodology is based on the achievement  personal services and management contracts safe 
of objective, evidence-based, quality  harbor is appropriate for the types of arrangements 
measures and cost savings.    involved in these demonstrations requires further 
study. 
A new safe harbor that would protect items  OIG is not adopting this suggestion at this time.  We 
and services provided to patients by a health  note that, on a related point, some arrangements under 
care provider or supplier that are reasonably  the proposal may be covered by the exception to the 
related to a patients medical needs.  definition of remuneration for purposes of the civil 
monetary penalties law (CMPL) at section 1128A.  A 
final rule regarding the implementation of an exception 
to the definition of remuneration for purposes of the 
CMPL under section 1128A(i)(6)(F) of the Act, 42 U.S.C. 
1320a-7a(i)(6)(F) is under review.  OIG is considering 
whether a safe harbor to the anti-kickback statute is 
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.