U.S. Department of Health and Human Services 
Office of Inspector General 
Medicaid Integrity
 
Program Report
  
 
for Fiscal Year 2013
 
     
 
      
 
O  
IG  
March 2014 
   
 
 
 
 
 
 
 
 
 
 
 
 
http://oig.hhs.gov  HHS Office of Inspector General  Page i 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Contents 
 
FY 2013 Funding for  Medicaid Integrity Activities .................................. 1
 
Funding sources for Medicaid oversight ............................................................................. 1 
Oversight Activities ............................................................................................................. 1 
Allocation of Statutory Funding Streams ............................................................................ 2 
FY 2013 results from  funding in multiple years ...................................... 2
 
Information systems and data security ............................................................... 3 
Transformed Medicaid Statistical Information System (T-MSIS) ............................ 3 
State claims for the Federal share of Medicaid ................................................... 4 
Federal and State requirements for payment ..................................................................... 4 
Home health services .............................................................................................. 4 
Rehabilitative services............................................................................................. 4 
School-based transportation services ..................................................................... 5 
Hospital Outlier Payments ...................................................................................... 5 
Personal care services (PCS) .................................................................................... 6 
Traumatic brain injury (TBI) services ....................................................................... 7 
Assisted living facility (ALF) ..................................................................................... 7 
State stewardship over policies and payments ................................................................... 8 
Medicaid beneficiary identification numbers ......................................................... 8 
Cost allocation methodologies and related issues ................................................. 8 
Unallowable administrative costs ......................................................................... 10 
Improper rates and reporting errors ..................................................................... 10 
Hospital eligibility issues ....................................................................................... 12 
Identification of excluded providers ..................................................................... 13 
Identification of third-party liability for payment ................................................. 13 
Recovery of the Federal share of Medicaid overpayments ............................... 14 
State oversight of provider reconciliations of credit balances ............................. 14 
State recoveries of improper payments and refunds of the Federal share .......... 15 
CMSs recovery of OIG-identified overpayments .................................................. 15  HHS Office of Inspector General  Page ii 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Medicaid Wasteful Policies and Practices ......................................................... 16 
Payments for prescription drugs ....................................................................................... 16 
Medicaid Federal upper limit (FUL) amounts ....................................................... 16 
State Maximum Allowable Cost Programs ............................................................ 16 
Payments for blood glucose test strips and other medical equipment and supplies ....... 17 
Beneficiary eligibility and access to care ........................................................... 18 
Home Health Care Restrictions of Eligibility ..................................................................... 18 
Medicaid legal and investigative activities ........................................................ 19 
OIG oversight of State Medicaid Fraud Control Units ....................................................... 19 
MFCU funding and accomplishments in FY 2013 ................................................. 19 
FY 2013 onsite reviews of MFCUs ......................................................................... 19 
Joint investigations with MFCUs ........................................................................... 20 
Other Medicaid-related criminal and civil actions ............................................................ 21 
Exclusions from program participation ............................................................................. 24 
Appendixes ........................................................................................... 27
 
 
Appendix A  FY 2013 Medicaid Audit and Evaluation Reports  
Appendix B  OIG Priority Recommendations From Previous Fiscal Years  
Appendix C  FY 2014 Medicaid Work Plan  
    HHS Office of Inspector General  Page iii 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Selected Acronyms and Abbreviations 
ALF  assisted living facility 
AMP  average manufacturer price 
AWP  average wholesale price 
CDT  continuing day treatment 
CHIP  Childrens Health Insurance Program 
CMS  Centers for Medicare & Medicaid Services 
CPE  certified public expenditure 
CoP  Conditions of Participation 
DOJ   Department of Justice 
DSH  disproportionate share hospital 
DRA  Deficit Reduction Act of 2005 
DUR  drug utilization review  
EPSDT  Early and Periodic Screening, Diagnosis, and Treatment  
FBI  Federal Bureau of Investigation 
FBT  family-based treatment 
FDA  Food and Drug Administration 
FMAP  Federal Medical Assistance Percentage 
FOIA  Freedom of Information Act 
FFS  fee for service 
FUL  Federal upper limit 
HCBS  home- and community-based services 
HCFAC  Health Care Fraud and Abuse Control  
HHA  home health agency 
HHS  Department of Health and Human Services 
HIPAA  Health Insurance Portability and Accountability Act 
IEP  individualized education plan 
MCE  managed care entity 
MCO  managed care organization 
MFCU  Medicaid Fraud Control Unit 
MIP  Medicaid Integrity Program 
MSIS  Medicaid Statistical Information System 
NCCI  National Correct Coding Initiative 
NPI  national provider identifier 
OIG  Office of Inspector General 
OMB  Office of Management and Budget 
PARIS  Public Assistance Reporting Information System   
PCS  personal care services 
PHP  partial hospitalization program 
RCC  residential care center 
RMS  random moment sampling 
RMSS  random moment sampling system 
RMTS  random moment time study 
SAU  school administrative unit 
UPL  upper payment limit  HHS Office of Inspector General  Page iv 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
 
 
 
 
 
   
 
  http://oig.hhs.gov 
  HHS Office of Inspector General  Page 1 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
 
FY 2013 Funding for  
Medicaid Integrity Activities 
Funding sources for Medicaid oversight 
During fiscal year (FY) 2013, the Office of Inspector General (OIG) of the Department of 
Health and Human Services (HHS) used funding from two sources to oversee the integrity of Medicaid 
activities:  the Health Care Fraud and Abuse Control (HCFAC) program, created by the Health Insurance 
Portability and Accountability Act of 1996 (HIPAA), and the Medicaid Integrity Program (MIP), created by 
the Deficit Reduction Act of 2005 (DRA).  Following are descriptions of each funding source.  
Heath Care Fraud and Abuse Control Program.  The HCFAC program was established by HIPAA to be 
under the joint direction of the Attorney General and the Secretary of HHS, acting through the Inspector 
General.  Funds are appropriated in amounts that the Secretary and Attorney General jointly certify as 
necessary to finance antifraud activities, up to ceilings fixed by the legislation.  Certain of these funds 
are, by law, set aside for OIG activities ... with respect to Medicare and Medicaid.1  HIPAA also requires 
the Attorney General and the Secretary of HHS to submit a joint annual report to Congress identifying 
expenditures and accomplishments under the law (Social Security Act,  1817(k)(5)).  The report 
is available on our Web site at:  http://oig.hhs.gov/reports-and-publications/hcfac/index.asp.  
Since FY 1997, the HCFAC program has been the primary source of funding for Medicare and Medicaid 
fraud investigations and prosecutions by OIG and the Department of Justice (DOJ).  Beginning in FY 2009, 
OIG began receiving discretionary funding in support of HCFAC-related activities to provide additional 
resources for program integrity work. 
Medicaid Integrity Program.  The DRA,  6034(c), established the MIP, through which OIG received 
enhanced funding for fraud and abuse control activities with respect to the Medicaid program (section 
6034(c)).  This funding was provided annually from FY 2006 through FY 2010 in addition to OIGs HCFAC 
resources and is available until expended.  In FY 2013, MIP funds were still available but were fully 
expended by the end of the year.   
Oversight Activities   
Because there is an overlap among the HHS program oversight activities funded by HCFAC, MIP, and 
other sources, our work may draw on funding from more than one source.  For investigations and 
prosecutions, it is particularly difficult (sometimes impossible) to accurately segregate enforcement 
activities by funding stream.  For example, even if we conduct an investigation exclusively with MIP 
funds, the prosecution of that case could draw upon DOJs HCFAC funding and the matter would be 
reportable pursuant to the requirements of both HCFAC and MIP.  An overlap could also occur when an 
investigation involves fraud in Medicaid and other Federal health care programs, such as Medicare, as 
is often the case.   
                                                           
1 Social Security Act,  1817(k)(3)(A).    HHS Office of Inspector General  Page 2 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
For these reasons, this document does not artificially divide accomplishments among funding sources; 
our Medicaid successes are typically the result of combined funding from available resources.   
Allocation of Statutory Funding Streams 
The table below illustrates that a sizable portion of OIGs obligated funding has been used for Medicaid 
oversight in recent years. 
Dollars in Millions 
Funding Appropriated  Estimated OIG  Estimated 
to OIG for Health Care  Obligations for  Percentage of OIG 
  Oversight  Medicaid Oversight  Estimated Total  Health Care 
Fiscal  HIPAA/  MIP & Other  HIPAA/  MIP &  OIG Obligations for  Oversight Obligations 
Year  HCFAC  HCFAC  Other  Medicaid Oversight  for Medicaid Integrity 
2006  $160  $25  $45    $45  28 % 
2007  $166  $25  $25  $29  $53  28 % 
2008  $170  $25  $33  $29  $62  31 % 
2009  $196  $81  $34  $31  $65  29 % 
2010  $209  $25  $42  $34  $76  32% 
2011  $228  $0  $37  $38  $76  28% 
2012  $226  $0  $53  $19  $72  28% 
2013  $213  $0  $73  $2  $75  30% 
Note:  Numbers have been updated for FY 2013 and are approximate because of rounding. 
 
 
FY 2013 results from  
funding in multiple years 
Our audit, evaluation, legal, and investigative work often requires more than a year to yield results.  
Investigative activities in particular may require multiple years to achieve convictions, sentencing, 
settlements, and/or exclusions.   As a consequence, many of the results summarized in this document 
reflect OIGs funding and work over multiple years that culminated in FY 2013.  We have organized the 
FY 2013 output into the following categories: 
  Information systems and data security 
  State claims for the Federal share of Medicaid 
  Recovery of the Federal share of Medicaid overpayments 
  Medicaid wasteful policies and practices 
  Beneficiary eligibility and access to care 
  Legal and investigative activities  HHS Office of Inspector General  Page 3 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
The appendixes provide lists of FY 2013 final audit and evaluation reports, priority recommendations 
carried forward from prior periods, and summaries of Medicaid work in progress and planned new starts 
in FY 2014. 
The following audit, evaluation, and investigative results were previously reported in our 
Semiannual  Reports to Congress during FY 2013.  
 
Information systems 
and data security 
Transformed Medicaid Statistical Information System (T-MSIS) 
The Medicaid Statistical Information System (MSIS) is Medicaids only nationwide Medicaid eligibility and 
claims database.  The transformed MSIS (T-MSIS) is a continuation of past attempts by the Centers for 
Medicare & Medicaid Services (CMS) to improve the MSIS.  The data are intended for use in analytical 
research, program integrity, planning, budgeting, and policy analyses associated with Medicaid.  Our 
September 2013 report raised concerns about States abilities to submit complete and accurate data to 
the T-MSIS.  Evidence from our review indicates continued problems with completeness, accuracy, and 
other issues. 
  Early Outcomes Show Limited Progress for the Transformed Medicaid Statistical Information System.   
OEI-05-12-00610.  2013 SEP. 
Establish a deadline for when national T-MSIS data will be available; ensure that States submit required 
T-MSIS data; and ensure that T-MSIS data are complete, accurate, and timely upon T-MSIS 
implementation. 
See also: 
  2014 MARHigh-Risk Security Vulnerabilities Identified During Reviews of Information Technology General 
Controls at State Medicaid Agencies.   A-07-14-00433. 
  2012 JUN Testimony of Ann Maxwell, Regional Inspector General for Evaluation and Inspections, Before the  
U.S. Senate Committee on Homeland Security and Governmental Affairs Subcommittee on Federal Financial 
Management, Government Information, Federal Services, and International Security.  Saving Taxpayer Dollars 
by Curbing Waste and Fraud in Medicaid.  (Testimony.)  
  2009 AUGMSIS Data Usefulness for Detecting Fraud, Waste, and Abuse, OEI-04-07-00240. 
    HHS Office of Inspector General  Page 4 
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State claims for the 
Federal share of Medicaid 
The Federal Government and States share the cost of Medicaid.  To receive a Federal share of Medicaid, 
States must ensure that in each instance, pertinent Federal and State standards, conditions, and other 
requirements must be met, including those pertaining to coverage specifications, quality of care, 
eligibility of beneficiaries, and provider qualifications.  The Office of Inspector General's (OIG) Medicaid 
reviews of State claims for Federal reimbursement generally focus on whether one or more of such 
requirements were met and were appropriately documented prior to the States submitting the claims 
for reimbursement. 
Federal and State requirements for payment     
Home health services 
New YorkProvider noncompliance.  New York improperly claimed Federal reimbursement for home 
health services payments (about $31.4 million Federal share) that were unallowable.  In 15 percent of 
selected claims, we found one or more deficiencies including lack of physician review of plans of care, no 
plans of care, insufficient documentation, unallowable place of service, and insufficient staff training.  
The Social Security Act,  1905(a)(7), authorizes home health services.  Home health services are 
provided to beneficiaries at their places of residence pursuant to their physicians orders and written 
plans of care that the physicians are to review every 60 days. 
New York CityProvider noncompliance.   The State improperly claimed Federal reimbursement for 
New York City home health services payments (about $69.1 million Federal share) that were 
unallowable.  We found a lack of physician review of plans of care and one instance in which a provider 
was unable to document that the service was provided. 
  New York State Improperly Claimed Medicaid Reimbursement for Some Home Health Services Claims 
Submitted by Certified Home Health Agencies.  A-02-11-01008.  2013 SEP. 
  New York Improperly Claimed Medicaid Reimbursement for Some Home Health Services Claims Submitted by 
Certified Home Health Agencies in New York City.  A-02-10-01022.  2012 NOV. 
New York should issue guidance to Medicaid home health agencies in the State on Federal and State 
requirements for physicians orders and plans of care and refund the Federal share of unallowable 
payments to the Federal Government. 
Rehabilitative services 
New YorkProvider noncompliance.  New York improperly claimed Federal reimbursement for 
rehabilitative services payments (about $27.5 million Federal share) that were unallowable.  Our review 
of New Yorks family-based treatment (FBT) rehabilitation services for recipients between the ages of 5  HHS Office of Inspector General  Page 5 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
and 19 found that 84 percent of selected claims had one or more deficiencies.  The deficiencies occurred 
because FBT rehabilitation providers did not fully comply with State regulations, authorizing physicians 
were not familiar with applicable State regulations and program requirements, and the State did not 
adequately monitor providers for compliance with certain Federal and State requirements.  The Social 
Security Act,  1905(a)(13) and 42 CFR  440.130(d) authorize optional rehabilitative services for the 
maximum reduction of physical or mental disability and restoration of an individual to the best possible 
functional level. 
  New York Improperly Claimed Medicaid Reimbursement for Family-Based Treatment Rehabilitation Services.   
A-02-10-01024.  2013 MAR. 
If New York does not close the FBT program,, it should provide guidance to the provider community on 
State regulations, provide guidance to physicians on State regulations and program requirements, and 
improve its monitoring and oversight to ensure compliance.  New York should refund the Federal share 
of unallowable payments to the Federal Government.  
School-based transportation services 
New Hampshireprovider calculation errors and incorrect State guidance to providers.  New 
Hampshire improperly claimed Federal reimbursement for school-based transportation services 
payments (about $2.7 million Federal share) that were unallowable.  The payments were made to school 
administrative units (SAUs).  Of 115 items in a random sample, 78 items had 1 or more transportation 
services associated with school-based transportation services that were not reimbursable by Medicaid.  
The deficiencies occurred because the SAUs calculated costs on the basis of incorrect mileage, billed 
costs that exceeded the amount detailed in the supporting documentation, or had inadequate or no 
supporting documentation.  In addition, New Hampshire issued incorrect guidance to SAUs on the basis 
of its misunderstanding of Federal requirements and did not adequately monitor the claims submitted 
by SAUs.  The Social Security Act, 1903(c), permits Medicaid payment for medical services provided to 
children through a childs individualized education plan (IEP).   
  New Hampshire Did Not Always Correctly Claim Medicaid Payments for School-Based Transportation Services.   
A-01-11-00008.  2012 OCT. 
New Hampshire should strengthen its oversight of the New Hampshire Medicaid to Schools program to 
ensure that claims for school-based transportation services comply with Federal and State requirements 
and issue new guidance on school-based transportation that is consistent with Federal requirements.  
New Hampshire should also refund the Federal share of unallowable payments to the Federal 
Government and work with CMS to review Medicaid payments made to SAUs after our audit period and 
refund any overpayments. 
Hospital Outlier Payments 
Wisconsin and IndianaProvider data entry errors.   In separate reviews, we found that Wisconsin and 
Indiana claimed Federal reimbursement for unallowable high-dollar outlier payments (about $2.1 million 
Federal share) that the States made to hospitals for inpatient services.  The hospitals had submitted  HHS Office of Inspector General  Page 6 
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incorrect charges, which they attributed to data entry errors.  In Wisconsin, 22 percent of the high-dollar 
payments we reviewed were unallowable; in Indiana, 92 percent were unallowable.  When hospitals 
charges exceed thresholds, the States make what is known as outlier payments.  Outlier payments are 
intended to protect hospitals against large financial losses associated with high-cost cases and generally 
result in unusually high-dollar Medicaid payments. 
  Wisconsin Claimed Medicaid Reimbursement for High-Dollar Inpatient Services That Were Unallowable.   
A-05-11-00037.  2013 JUN.   
  Indiana Claimed Medicaid Reimbursement for High-Dollar Inpatient Services That Were Unallowable.   
A-05-11-00040.  2013 SEP. 
Wisconsin and Indiana should use the results of the audits in their provider education activities related 
to data entry procedures and refund the Federal share of unallowable payments to the Federal 
Government. 
Personal care services (PCS)   
OIG PCS PortfolioProvider noncompliance and inconsistent program policies.  A November 2012 OIG 
Portfolio report summarized the results of over 20 reports pertaining to PCS.  With regard to quality of 
care and beneficiary safety, we reported that program safeguards intended to ensure medical necessity, 
patient safety, and quality were often ineffective.  We also reported inconsistent standards for, and 
monitoring of, the qualifications of PCS attendants and problematic provider billing practices.  PCS cover 
nonmedical services supporting activities of daily living, which may include bathing, dressing, light 
housework, meal preparation, and transportation.  (See OIGs November 2012 Spotlight on PSC services, 
available on our Web site at http://oig.hhs.gov.) 
  MedicaidPersonal Care Services PortfolioTrends, Vulnerabilities, and Recommendations for Improvement.   
OIG 12-12-01.  2012 NOV. 
CMS should establish minimum Federal PCS attendant qualification standards applicable to all PCS 
reimbursed by Medicaid; require States to either enroll all PCS attendants as providers or require all PCS 
attendants to register with their State Medicaid agencies and assign each attendant a unique identifier; 
require that PCS claims include the specific date(s) when services were performed and the identity of the 
rendering PCS attendants; and issue operational guidance for claims documentation, beneficiary 
assessments, plans of care, and supervision of attendants. CMS should also issue guidance to States 
regarding adequate prepayment controls, consider whether additional controls are needed to ensure 
that PCS are allowable and are actually provided, and take action to provide States with data suitable for 
identifying overpayments for PCS claims during periods when beneficiaries are receiving institutional 
care paid for by Medicare or Medicaid. 
MarylandProvider noncompliance.  Maryland improperly claimed Federal reimbursement for PCS 
payments (about $10.8 million Federal share) that were unallowable.  Our April 2013 report revealed 
deficiencies related to unqualified PCS attendants, unapproved or missing plans of care, unauthorized 
services, and undocumented services.  HHS Office of Inspector General  Page 7 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
  Maryland Improperly Claimed Personal Care Services Provided Under Its Medicaid Home and Community-
Based Services Waiver for Older Adults.  A-03-11-00201.  2013 APR. 
Maryland should work with the States Department of Aging to improve controls over PCS claims to 
ensure compliance and refund the Federal share of unallowable payments to the Federal Government. 
See also: 
  West Virginia Improperly Claimed Some Personal Care Services Under Its Medicaid State Plan.  A-03-11-00204.  
2012 OCT.   
Traumatic brain injury (TBI) services 
New Yorkprovider noncompliance and program management deficiencies.  New York improperly 
claimed Federal reimbursement for TBI payments (about $54 million Federal share) that were 
unallowable because the services were provided to beneficiaries not qualified for nursing home level of 
care and/or services were not documented and/or were not provided in accordance with a plan of care.  
Some eligibility assessments were conducted by uncertified individuals and/or were not properly 
documented.  Additional TBI payments were potentially unallowable; however the data were insufficient 
to determine beneficiary eligibility for such services. 
  New Yorks Claims for Medicaid Services Provided Under Its Traumatic Brain Injury Waiver Program Did Not 
Comply With Certain Federal and State Requirements.  A-02-10-01043.  2013 MAY. 
New York should require its contracted development centers to ensure and document that all 
beneficiaries approved for TBI services have been assessed by certified individuals and are eligible for 
the services, require adequate training for assessors on the Federal and State requirements, require 
providers to ensure that they document the services billed and claim reimbursement only for allowable 
ones, refund the Federal share of unallowable payments to the Federal Government, and work with CMS 
to resolve other claims for which payment may have been unallowable.  
 Assisted living facility (ALF) 
Seven StatesProvider noncompliance, ineffective oversight.   We found that 77 percent of 
beneficiaries in seven selected States received home- and community-based services (HCBS) in ALFs that 
were cited for one or more deficiencies with regard to State licensure or certification requirements.  
Other deficiencies involved missing or insufficient plans of care.  As part of a 35-State review, we 
specifically analyzed seven selected States with the highest numbers of beneficiaries receiving HCBS in 
ALFs:  Georgia, Illinois, Minnesota, New Jersey, Oregon, Texas, and Washington.  ALFs are State-regulated 
and -monitored residential long-term-care options that provide or coordinate oversight and services to 
meet the residents individualized scheduled needs, on the basis of the residents assessments and 
service plans and their unscheduled needs as they arise.2  We did not attempt to identify the payment 
amounts associated with the deficiencies.   
                                                           
2 Assisted Living Workgroup, Assisted Living Workgroup Report to the U.S. Senate Special Committee on Aging, 
2003.    HHS Office of Inspector General  Page 8 
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  Home and Community-Based Services in Assisted Living Facilities.  OEI-09-08-00360.  2012 DEC. 
CMS should issue guidance to State Medicaid programs emphasizing the need to comply with Federal 
requirements for covering HCBS.  
State stewardship over policies and payments 
This section describes gaps and vulnerabilities in States program oversight and management practices 
that inappropriately inflate State and/or Federal costs of Medicaid.  
Medicaid beneficiary identification numbers 
New YorkSystems interface deficiency.  New York improperly claimed Federal reimbursement for 
payments (about $7.3 million Federal share) to managed care organizations (MCOs) that were 
unallowable because the payments were duplicative.  Some beneficiaries enrolled in Medicaid managed 
care had more than one Medicaid identification number, and New Yorks eligibility systems did not 
identify the potential beneficiary matches between the systems.  We reviewed payments New York 
made to different MCOs for the same beneficiary and found that MCOs received duplicate monthly 
Medicaid payments for the beneficiaries.  We also found that New York made eligibility errors.   
  New York State Made Unallowable Medicaid Managed Care Payments for Beneficiaries Assigned Multiple 
Medicaid Identification Numbers.  A-02-11-01006.  2013 APR.    
New York should ensure that no beneficiary is issued multiple Medicaid identification numbers or 
develop one eligibility system that could be used to determine whether applicants are enrolled in any 
medical or public assistance program throughout New York State and require local departments of social 
services to ensure that applicants provide valid SSNs when required and maintain documentation to 
support eligibility determinations.  New York should refund the Federal share of unallowable payments 
to the Federal Government. 
See also: 
  2014 JANNew York State Made Unallowable Medicaid Fee-for-Service Payments for Beneficiaries Also 
Enrolled in Medicaid Managed Care.  A-02-12-01007. 
  2012 MAYMedicaid Rates for New York State-Operated Developmental Centers May Be Excessive.  
A-02-11-01029.   
  2014 MARMedicaid Rates for Residential Habilitation Services Provided at New York State-Operated 
Residences Are Excessive.  A-02-13-01008. 
Cost allocation methodologies and related issues 
WisconsinState noncompliance.  Wisconsin improperly claimed Federal reimbursement for payments 
(about $22.8 million Federal share) to residential care centers (RCCs) that were unallowable because the 
State used a noncompliant cost allocation methodology and used estimates that it could not adequately 
support.  The State also claimed unsupported administrative costs as an add-on to the RCC service costs.   HHS Office of Inspector General  Page 9 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Wisconsin had contracted with a consultant to develop initiatives to target new revenues that might be 
available to the State.     
  Wisconsin Improperly Claimed Federal Medicaid Reimbursement for Most Residential Care Center Payments.  
A-05-07-00036.  2013 SEP. 
Wisconsin should work with CMS to identify payment and allocation methodologies for claiming 
allowable Medicaid RCC costs and refund the unallowable amounts to the Federal Government. 
ArizonaState noncompliance.  Arizona improperly claimed Federal reimbursement for Medicaid 
school-based administrative costs (about $11.6 million Federal share) that were unallowable because the 
random moment timestudies (RMTS) methodology that Arizona used to allocate costs to Medicaid was 
not fully consistent with Federal requirements and the State did not always maintain the required 
supporting documentation.  Also, the 2004 State guide included incorrect guidance that allowed its 
contractor to discard sample items.  We set aside an additional $18.8 million for CMS resolution.  Federal 
regulations provide that random moment sampling (RMS), which uses RMTS, is an acceptable method 
for allocating costs to Federal awards when employees work on multiple activities.  The methodology 
must meet acceptable statistical sampling standards, including that the results must be statistically valid.     
  Arizona Improperly Claimed Federal Reimbursement for Medicaid School-Based Administrative Costs.   
A-09-11-02020.  2013 JAN. 
Arizona should strengthen controls to ensure that all required documentation to support the RMTS 
methodology is maintained and the RMTS methodology is consistent with Federal requirements.  Also, 
Arizona should refund to the Federal Government the unallowable school-based administrative costs, 
work with CMS to determine the allowability of the amount we set aside for further analysis, and refund 
to the Federal Government any amount determined to be unallowable.  We also recommend that 
Arizona review periods after our audit period and make appropriate financial adjustments for any 
unallowable school-based administrative costs claimed. 
FloridaState noncompliance.  Florida improperly claimed Federal reimbursement for administrative 
costs (about $2.2 million Federal share) that were unallowable because RMS observation forms were not 
completed as specified and the RMS coordinators review did not detect the noncompliance.  As a result, 
the Medicaid administrative costs were overstated.  Further, an additional $20 million was questionable 
because of several vulnerabilities that we identified in the RMS statistical sampling methods.  Florida 
claimed a 50-percent Federal share for the Medicaid portion of the administrative costs of the States 
Agency for Persons With Disabilities (APD), including costs allocated on the basis of APDs quarterly 
random moment sampling (RMS).  These and other deficiencies are addressed by the recommendations 
below. 
  Florida Claimed Some Medicaid Administrative Costs That Did Not Comply With Program Requirements.   
A-04-10-00076.  2013 MAR. 
Florida should require APD to amend its cost allocation plan to ensure that APDs RMS gives appropriate 
consideration to all hours worked by employees, properly accounts for invalid responses and 
nonresponses, and requires observation forms to include the sampled position numbers.  Florida also 
should refund the unallowable amount to the Federal Government; ensure that APD follows pertinent  HHS Office of Inspector General  Page 10 
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procedures defined in its cost allocation plan and work with CMS to determine what portion of the 
remaining Federal share of costs was allowable under Federal requirements. 
Unallowable administrative costs 
PennsylvaniaState noncompliance.  Pennsylvania improperly claimed Federal reimbursement for 
administrative costs of the Pennsylvania Regional Housing Coordinator Initiative (about $1.9 million 
Federal share) that were unallowable because the services did not directly relate to the administration of 
Medicaid services.  The claimed costs represented indirect services, such as the provision of information, 
referrals, training, and technical assistance, to support housing programs, including programs that 
provided housing services to Medicaid beneficiaries.   
  Pennsylvania Claimed Unallowable Medicaid Administrative Costs for the Regional Housing Coordinator 
Initiative.  A-03-11-00210.  2012 DEC. 
Pennsylvania should discontinue all future claims for Regional Housing Coordinator Initiative costs, 
refund the Federal funds claimed for unallowable Initiative costs, and refund the Federal share of 
unallowable Initiative costs claimed after our audit period. 
Improper rates and reporting errors 
CaliforniaServices not eligible for the enhanced rate for family planning.  California improperly 
claimed Federal reimbursement (about $5.7 million Federal share) for services at a 90-percent enhanced 
rate for family planning when they should have been claimed at the regular rate.  The difference 
between the 90-percent rate and the regular rate was unallowable.  The 90-percent rate was 
unallowable because the primary purpose of the visits was not family planning, the charges were for 
followup visits properly reimbursed at the regular rate, or the supporting documentation was 
insufficient.  We also found claims that contained either no procedure code or a procedure code that 
was not approved by CMS for reimbursement at the 90-percent rate.  
  California Improperly Claimed Enhanced Federal Reimbursement for Medicaid Family Planning Services 
Provided in San Diego County.  A-09-11-02040.   2012 DEC. 
California should establish billing procedures to ensure that only services whose primary purpose is 
family planning are claimed for reimbursement at the 90-percent enhanced rate, and should establish 
Medicaid Management Information System edits to ensure that family planning claims meet Federal and 
State requirements for reimbursement at the 90-percent enhanced rate and at the regular rate for 
followup visits.  Also, California should refund the unallowable Federal enhanced reimbursement to the 
Federal Government. 
 
ArkansasServices not eligible for the enhanced rate for family planning.  Arkansas improperly 
claimed Federal reimbursement (about $1.9 million Federal share) for services at a 90-percent enhanced 
rate for family planning when they should have been claimed at the regular rate.  The difference 
between the 90-percent rate and the regular rate was unallowable.  The payments were inappropriate  HHS Office of Inspector General  Page 11 
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because they exceeded limits specified in the States allocation methodology and resulted from the 
States errors in compiling the family planning expenditures and from errors in the computer 
programming used to identify costs, i.e., infant delivery costs were incorrectly classified as family 
planning expenditures as a result of the programming errors. 
  Arkansas Inappropriately Received Medicaid Family Planning Funding for Federal Fiscal Years 2006 Through 
2010.  A-06-11-00022.  2013 JAN. 
Arkansas should review its pertinent computer programming; submit documentation to CMS supporting 
the reasonableness of the percentages used in allocations; and establish review procedures to ensure 
that expenditures are correctly compiled, assigned, and claimed.  Arkansas should also refund to the 
Federal Government the family planning Federal share, work with CMS to determine the allowable 
portion of the family planning Federal share that it received for allocated sterilization costs, review the 
claim-level data of quarters that we did not analyze, identify infant delivery costs incorrectly classified, 
and refund overpayments to the Federal Government. 
 
MissouriState errors in reporting payments for family planning services.  Missouri improperly 
claimed Federal reimbursement for costs of Medicaid family planning sterilization procedures (about 
$1.5 million Federal share) that were unallowable.  The amount claimed was overstated because of two 
types of errors the State made on the Form CMS-64.  The excess Federal reimbursement occurred 
because the State agencys adjustment processwhich was designed to identify costs for family 
planning sterilization procedureswas ineffective. 
  Missouri Did Not Always Correctly Claim Costs for Medicaid Family Planning Sterilization Procedures for 
Calendar Years 2009 and 2010.  A-07-12-01117.  2013 JUN. 
Missouri should ensure that future expenditures for family planning sterilization procedures are correctly 
claimed to CMS, refund the Federal share of payments we estimated to be unallowable, review family 
planning sterilization procedures for quarterly reporting periods after our audit period, and refund the 
Federal share of any unallowable payments. 
 
MissouriErrors in reporting payments for intermediate care facility (ICF) services.  Missouri 
improperly claimed Federal reimbursement for State-operated intermediate care facilities payments 
(about $7.2 million Federal share) that were unallowable because Missouri claimed the same payments 
twiceduring the quarter ended December 2010 and again during the quarter ended March 2011.  
Missouris controls did not specify that the State perform reconciliations of payments to claimed costs to 
ensure that it did not claim duplicate or unsupported Medicaid payments on its CMS-64 report. 
  Missouri Claimed Unallowable Medicaid Payments for Individuals With Intellectual and Developmental 
Disabilities in Intermediate Care Facilities.  A-07-12-03180.  2013 JUN.    
Missouri should develop and implement sufficient internal controls and procedures, including those 
pertaining to reconciliations of payments to claimed costs, and refund the Federal share of payments we 
estimated to be unallowable.  HHS Office of Inspector General  Page 12 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
See also: 
  Missouri Did Not Always Correctly Claim Costs for Medicaid Family Planning Drugs for Calendar Years 2009 and 
2010.  A-07-12-01118.  2014 JAN. 
Hospital eligibility issues 
Disproportionate share hospitals 
New JerseyState noncompliance.  New Jersey improperly claimed disproportionate share (DSH) 
payments (about $50 million Federal share) for five hospitals that did not meet Federal eligibility 
requirements for such payments during our audit period.  For a hospital to receive DSH payments, the 
State must properly classify the hospital as a DSH.  New Jersey stated that it claimed DSH payments for 
the hospitals because it misinterpreted Federal regulations on DSH eligibility.  Under the DSH program, 
the State agency is required to make special payments to hospitals that serve a disproportionate share of 
low-income and/or uninsured patients.  The State did not ensure that the hospitals were eligible for DSH 
before claiming the amounts for Federal reimbursement. 
  The New Jersey Department of Human Services Claimed Medicaid Disproportionate Share Hospital Payments 
to Five Hospitals That Did Not Meet Federal Eligibility Requirements.   
A-02-09-01017.  2012 NOV. 
New Jersey should ensure that all hospitals designated as DSHs meet Federal eligibility requirements for 
DSH payments.  The State should also refund the Federal share of unallowable payments to the Federal 
Government. 
State-Owned Psychiatric Hospitals 
MissouriState noncompliance.  Our review of one of Missouris nine State-owned psychiatric hospitals 
found that the State improperly claimed Federal reimbursement (about $21.3 million Federal share).  
The reimbursement was unallowable because the selected State-owned hospital did not demonstrate 
compliance with the special Medicare Conditions of Participation (CoP).  For States to claim Federal 
Medicaid reimbursement for inpatient psychiatric services and DSH payments to psychiatric hospitals, 
the hospitals inpatient services must meet the Federal definition of such services.  The definition 
includes that the providers demonstrate compliance with the basic Medicare CoP generally applicable to 
all hospitals and two special Medicare CoP applicable to psychiatric hospitals.  The State did not ensure 
that the State-owned facility was eligible for Federal reimbursement for inpatient psychiatric services 
and DSH payment.  
  Missouri Improperly Claimed Federal Reimbursement for Most Reviewed Medicaid Inpatient Psychiatric 
Hospital Service and Disproportionate Share Hospital Payments to Hawthorn Childrens Psychiatric Hospital.  
A-05-12-00050.  2013 JUN  
IndianaState noncompliance.  Indiana improperly claimed Federal reimbursement for payments 
(about $12.8 million Federal share) for two of its six State-owned psychiatric hospitals.  For a different 
review period, Indiana also improperly claimed Federal reimbursement for payments (about $7.5 million 
Federal share) for a third State-owned psychiatric hospital.  Our reviews found that the State-owned 
facilities did not demonstrate the required compliances with CoP.  Indiana did not ensure that its  HHS Office of Inspector General  Page 13 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
facilities were eligible for Federal Medicaid reimbursement before claiming reimbursement for inpatient 
psychiatric services. 
  Indiana Improperly Claimed Federal Reimbursement for All Reviewed Medicaid Inpatient Psychiatric Hospital 
Service Payments to Evansville State Hospital.  A-05-12-00041. 2013 JUN. 
  Indiana Improperly Claimed Federal Reimbursement for All Reviewed Medicaid Inpatient Psychiatric Hospital 
Service Payments to Logansport State Hospital.  A-05-12-00042.  February 2013. 
  Indiana Improperly Claimed Federal Reimbursement for Most Medicaid Inpatient Psychiatric Hospital Service 
and Disproportionate Share Hospital Payments to Evansville Psychiatric Childrens Center.   
A-05-12-00040.  2013 MAY.   
 
Missouri and Indiana should ensure that Federal reimbursement for the subject payments to psychiatric 
hospitals is claimed only if the hospitals can demonstrate compliance with the basic and special 
Medicare CoP, refund the Federal share of the improperly claimed amount to the Federal Government, 
and work with CMS to resolve other claims for which payment may have been unallowable. 
Identification of excluded providers 
CaliforniaState noncompliance.  California improperly claimed Federal reimbursement for payments 
(about $1.2 million Federal share) that were unallowable because the items or services provided were 
associated with excluded providers.  The State did not implement policies and procedures to determine 
whether excluded providers were listed on claims.  OIG may exclude certain individuals and entities from 
participation in federally funded health care programs, including Medicaid.  With a limited exception for 
certain emergency care, such programs should not pay for items or services to the excluded provider, to 
anyone who employs or contracts with the excluded provider, or to any hospital or other provider where 
the excluded provider furnished items or services during the period of exclusion. 
  California Made Unallowable Medicaid Payments for Items and Services Furnished, Ordered, or Prescribed by 
Excluded Providers.   
A-09-11-02016.  2013 APR. 
California should ensure that it does not pay for items or services furnished, ordered, or prescribed by 
excluded providers by developing and implementing policies and procedures to monitor agencies that 
enroll providers or process Medicaid claims to ensure compliance with CMS guidance that reviews be 
conducted monthly to identify excluded providers and determine whether any providers (i.e., furnishing, 
ordering, or prescribing) listed on claims are excluded and deny those claims.  California should refund 
the Federal share of payments we estimated to be unallowable and work with CMS to resolve other 
claims for which payments may have been unallowable. 
Identification of third-party liability for payment 
Pursuant to our review, States estimated that about $4 billion remained at risk of not being recovered 
because Medicaid paid for costs that were the responsibility of other payers.  Medicaid is intended to be  HHS Office of Inspector General  Page 14 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
the payer of last resort.  Millions of Medicaid beneficiaries have additional health insurance through 
third-party sources, such as Medicare, TRICARE, or other Government or private payers.  Improved State 
processes and congressional action seem to have had some positive effect, but continued vigilance is 
needed.  States continue to report longstanding challenges when trying to identify other insurance 
coverage.  The recommendations in our January 2013 report should help States better identify liable 
third parties, recover improper Medicaid payments, and return the Federal share of the payments to the 
Federal Government. 
  Medicaid Third-Party Liability Savings Increased, But Challenges Remain.  OEI-05-11-00130.  2013 JAN. 
CMS should work with States to address longstanding challenges working with third parties to identify 
insurance coverage and recover payments, address States challenges with 1-year timely filing limits for 
Medicare and TRICARE, and strengthen enforcement mechanisms designed to deal with uncooperative 
third parties. 
See also: 
  North Carolina Medicaid Overpaid Hospitals for Some Inpatient Services That Medicare Paid, A-04-11-06137. 
2013 MAY.  
  South Carolina Medicaid Overpaid Hospitals for Some Inpatient Services That Medicare Paid.  A-04-11-06145.  
2014 FEB. 
 
Recovery of the Federal share of 
Medicaid overpayments 
Principles and standards for determining allowable costs incurred by State and local governments under 
Federal awards are established by 2 CFR pt. 225 (Office of Management and Budget (OMB) Circular A-87, 
Cost Principles for State, Local, and Indian Tribal Governments).  Pursuant to 2 CFR  App. A, C.1.c., to be 
allowable, costs must be authorized or not prohibited by State or local laws and regulations.      
State oversight of provider reconciliations of credit balances 
North Carolina.  State and provider noncompliance with overpayment requirements.  One method for 
identifying overpayments is to examine credit balances in provider accounts.  Our review in North 
Carolina identified overpayments associated with unresolved credit balances at selected providers 
totaling about $10,000 (about $7,000 Federal share).  On the basis of the results, we estimated that 
North Carolina could realize a Statewide recovery of at least $1.2 million (at least $902,000 Federal 
share) from our review period and obtain future savings if it enhanced its efforts to recover 
overpayments in provider accounts.  The selected providers reviewed did not identify and report 
Medicaid overpayments because the State agency did not require providers to exercise reasonable 
diligence in reconciling invoice records with credit balances to determine whether overpayments existed. 
  Noninstitutional Providers in North Carolina Did Not Reconcile Invoice Records With Credit Balances and Report 
the Associated Medicaid Overpayments to the State Agency.  A-04-11-04016.  2012 NOV.  HHS Office of Inspector General  Page 15 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
North Carolina should realize future savings by requiring providers to exercise reasonable diligence in 
reconciling invoice records with credit balances and reporting the associated Medicaid overpayments to 
the State.  Also, North Carolina should refund the Federal share of the overpayments we identified to the 
Federal Government and enhance its efforts to recover the additional overpayments we estimated from 
our review period. 
See also: 
  GeorgiaAcute Care Hospitals in Georgia Did Not Always Reconcile Invoice Records With Credit Balances and 
Report the Associated Medicaid Overpayments to the State Agency.  A-04-12-04021.  2013 FEB.  
  MissouriNursing Facilities in Missouri Did Not Reconcile Invoice Records With Credit Balances and Report the 
Associated Medicaid Overpayments to the State Agency.  A-07-11-03169.  2013 JAN. 
  CaliforniaNoninstitutional Providers in California Did Not Always Reconcile Invoice Records With Credit 
Balances and Refund to the State Agency the Associated Medicaid Overpayments, A-09-12-02047.  2013 JUL. 
State recoveries of improper payments and refunds of the Federal 
share 
Florida.  Noncompliance with collection and reporting requirements.  Our audit covered nearly $22.3 
million (about $12.2 million Federal share) in State-identified Medicaid overpayments for ineligible 
individuals during the period July 1, 2007, through June 30, 2010.  Of this amount, the State collected 
almost $2.5 million ($1.4 million Federal share) but had not collected nearly $19.8 million ($10.8 million 
Federal share).  The State did not return the Federal share of either the collected or uncollected amounts 
to CMS.  In addition, the State collected more than $1.5 million (about $850,000 Federal share) of 
overpayments subsequent to our audit period, from July 1, 2010, through June 30, 2012, that it did not 
report to CMS. 
  Florida Medicaid:  Millions in Overpayments Not Refunded.  A-04-11-08007.  2013 MAR. 
Florida should improve coordination to report State-identified Medicaid overpayments and collections.   
It should refund the Federal share of amounts collected during our audit period and during the 2 fiscal 
years following our audit period.  It should work with CMS to determine whether it should refund the 
Federal share of recipient overpayments identified but not collected. 
CMSs recovery of OIG-identified overpayments 
As of December 2012, CMS had not collected $225.6 million of $1.2 billion in Medicaid overpayments to 
States that OIG had identified.  When CMS concurs with a recommendation to collect overpayments, it 
may sustain (agree to collect or offset) either the entire amount or a different amount.  If the overpaid 
State agrees in writing with OIG or CMS to refund the overpayment, the State should refund it to the 
Federal Government.  If the State does not agree, CMS should follow other procedures to resolve the 
OIG recommendations.  HHS Office of Inspector General  Page 16 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
  Medicaid overpaymentsThe Centers for Medicare & Medicaid Services Collected the Majority of Medicaid 
Overpayments but Millions Remain Uncollected.   
A-05-11-00071.  2013 FEB. 
CMS should review and address delays in resolving OIG audit recommendations and promptly pursue 
corrective actions, maintain adequate documentation to support the collection of overpayments in 
accordance with OMB Circular A-50 and CMS Standard Operating Procedures, educate the States about 
their responsibility to report overpayments on the correct line of the CMS-64 to improve oversight of the 
reporting process, and collect the remaining amount we identified as due the Federal Government. 
 
 
Medicaid Wasteful Policies 
and Practices 
Wasteful spending occurs when Federal or State Medicaid laws, policies, methodologies, and practices 
fail to ensure that program costs are consistent with efficiency and economy; reasonableness; and 
Medicaids role as a high-volume, prudent payer in the health care marketplace.  Actions to reduce 
Medicaid costs through changes in policies and practices generally provide mutual benefit to States and 
the Federal Government.     
Payments for prescription drugs  
Medicaid Federal upper limit (FUL) amounts 
We found that FUL amounts based on average manufacturer prices (AMPs) were 61 percent lower than 
FUL amounts based on published prices, e.g., average wholesale price (AWP) at the median.  AMP-based 
FULs exceeded sampled pharmacy acquisition costs by 43 percent in the aggregate. 
  Analyzing Changes to Medicaid Federal Upper Limit Amounts.  OEI-03-11-00650.  2012 OCT. 
CMS should complete the implementation of the post-Affordable Care Act AMP-based FUL amounts for 
drug reimbursements. 
State Maximum Allowable Cost Programs 
States may achieve additional cost savings by using different Maximum Allowable Cost (MAC) pricing 
formulas and inclusion criteria.  For example, we estimated that by using Wyomings methodology as a 
model, 39 of 45 States could have saved about $483 million on their Medicaid generic drug costs in the 
first half of 2011.  The use of more aggressive pricing formulas and inclusion criteria could achieve 
additional cost savings.  
  Medicaid Drug Pricing in State Maximum Allowable Cost Programs.  OEI-03-11-00640.  2013 AUG.  HHS Office of Inspector General  Page 17 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
CMS should complete the implementation of the post-Affordable Care Act FUL amounts and encourage 
States to reevaluate their Maximum Allowable Cost pricing programs for additional cost-saving 
opportunities. 
Payments for blood glucose test strips 
and other medical equipment and supplies 
 
New York.  For a 1-year audit period, we estimated that the New York Medicaid program could have 
saved an additional $5.9 million (36 percent) on diabetes test strips through competitive bidding.   
  The New York State Manufacturer Rebate Program Significantly Reduced Medicaid Costs for Home Blood-
Glucose Test Strips But Could Achieve Additional Reductions.  A-02-11-01042.  2013 JUL. 
 
New Jersey.  For a 1-year audit period, we estimated that fee-for-service savings of $1.8 million to 
$2.7 million and managed care savings of $3.1 million to $4.5 million during the same period could be 
achieved.  Our recommendations could result in a reduction of 46 to 68 percent in the price of test strips 
paid under the New Jersey Medicaid fee-for-service program and a reduction of 49 to 70 percent in the 
price paid by the Medicaid MCOs. 
  New Jersey Medicaid Program Could Achieve Savings by Reducing Home Blood-Glucose Test Strip Prices.   
A-02-12-01010.  2013 SEP. 
 
Illinois.  For one State fiscal year (SFY), we estimated that Illinois could have saved an additional 
$8.5 million.  On average, Medicares rates were about 40 percent less than the State's Medicaid rates. 
  Illinois Significantly Reduced Medicaid Costs for Home Blood-Glucose Test Strips But Could Achieve Additional 
Reductions.  A-05-12-00009.  2013 MAY. 
 
Ohio.  For a 1-year audit period, the Ohio Medicaid program could have saved an estimated $3 million 
on selected durable medical equipment items.  We estimated that the State agencys cost could have 
been reduced to about $7.4 million (from $10.5 million). 
  The Ohio Medicaid Program Could Significantly Lower Payment Rates for Selected Durable Medical Equipment 
and Supplies.  A-05-12-00038.   2013 APR. 
 
Texas.  If Texas had used Medicares competitive bidding payment amounts for the Dallas/Fort Worth 
area during the 1-year review period, it could have saved about $2 million (State and Federal shares 
combined) on 30 selected medical equipment and supplies items. 
  Medicaid DMEPOS Costs May be Exceeding Medicare Costs in Competitive Bidding Areas.   
OEI-06-13-00470.  2013 SEP.  HHS Office of Inspector General  Page 18 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Recommendations from the above reports: 
  New York should establish a competitive bidding program similar to that in the Medicare program for 
the purchase of test strips. 
  New Jersey should establish a competitive bidding program similar to that in the Medicare program 
for the purchase of test strips, reduce the Medicaid fee-for-service reimbursement rate for test strips 
to be comparable to the average retail price, or work with Medicaid MCOs to adjust payment rates 
for test strips to the average retail price or to Medicare competitive payment rates. 
  Illinois should lower the net cost of test strips through changes to its provider reimbursement rates. 
  Ohio should establish competitive bidding that functions similar to Medicares Competitive Bidding 
Program for the purchase of selected durable medical equipment and supply items. 
  Texas.  Further analysis is needed to better understand the full potential of limiting Federal 
reimbursement for State Medicaid spending on medical equipment and supplies to Medicare 
payment rates. 
See also: 
  The California Medicaid Program Could Significantly Lower Payment Rates for Selected Durable Medical 
Equipment.  A-09-13-02028.  2014 MAR. 
  OIG Spotlight article.  Diabetes Test Strips.  2014 MAR. 
  State Medicaid Agencies Can Significantly Reduce Medicaid Costs for Diabetic Test Strips.  A-05-13-00033.  
2014 MAR. 
  The Minnesota Medicaid Program Could Significantly Lower Payment Rates for Selected Durable Medical 
Equipment and Supplies.  A-05-13-00015.  2014 JAN. 
  State Medicaid Program Efforts to Control Costs for Disposable Incontinence Supplies.  OEI-07-12-00710.  
2014 JAN. 
 
Beneficiary eligibility 
and access to care 
Home Health Care Restrictions of Eligibility 
We identified 11 States with policies in their Medicaid State Plans or other written policy documents that 
improperly restrict eligibility for the mandatory home health benefit to homebound individuals:  
Alabama, Arkansas, Indiana, Montana, Nebraska, New Mexico, North Dakota, Pennsylvania, South 
Dakota, Utah, and West Virginia.  The report encourages CMS to finalize its pertinent regulation, after 
which it could consider issuing guidance specific to home health services and homebound eligibility  HHS Office of Inspector General  Page 19 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
restrictions, explaining why such restrictions are improper.  In July 2000, CMS released a State Medicaid 
Director letter stating that although Medicare requires beneficiaries to be homebound to qualify for 
home health services, imposing a homebound requirement on Medicaid home health benefits violates 
CMSs interpretation of Medicaid regulations related to amount, duration, and scope of services and 
comparability of services.  In July 2011, CMS published a Notice of Proposed Rulemaking to codify its 
interpretation, but it remains to be implemented.  (76 Fed. Reg. 41032, 41033, and 41038 (July 12, 
2011).  The report did not include formal recommendations to CMS.   
  Some States Improperly Restrict Eligibility for Medicaid Mandatory Home Health Services.  OEI-07-13-00060.  
2013 JUL. 
 
Medicaid legal and 
investigative activities 
OIG oversight of State Medicaid Fraud Control Units 
Medicaid Fraud Control Units (MFCUs or Units) are key partners with OIG in the fight against fraud, 
waste, and abuse in State Medicaid programs.  HHS OIG oversees 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.   
MFCU funding and accomplishments in FY 2013  
In FY 2013, combined Federal and State expenditures for the operation of 50 MFCUs (including 1 in 
Washington, DC), totaled about $231.5 million.  The MFCUs employed 1,912 individuals.  Collectively, in 
FY 2013, MFCUs reported 15,590 investigations, of which 12,366 were related to Medicaid fraud and 
3,224 were related to patient abuse and neglect, including misappropriation of patients private funds.  
The cases resulted in criminal charges against or indictments of 1,588 individuals, including 1,197 for 
fraud and 391 for patient abuse and neglect, including patient funds cases.  In total, 1,341 criminal 
actions were reported in FY 2013, of which 991 were related to Medicaid fraud and 350 were related to 
patient abuse and neglect, including patient funds cases.  Civil judgments and settlements for FY 2013 
totaled 879 and monetary recoveries in civil cases totaled over $1.5 billion.  (Medicaid Fraud Control 
Units FY 2013 Annual Report.  OEI-06-13-00340.  Appendix C.  2014 MAR.)  See also Medicaid Fraud 
Control Units 2013 Statistics Interactive Map and Chart on our Web site. 
FY 2013 onsite reviews of MFCUs   
OIG has developed 12 performance standards for use in assessing the operations of MFCUs.  A copy of 
the MFCU performance standards, most recently revised in June 2012, may be found on the OIG Web 
site.  Periodicallyapproximately every 5 yearsOIG conducts an in-depth onsite review of each Unit to 
evaluate its operations as related to the 12 performance standards and to assess compliance with laws,  HHS Office of Inspector General  Page 20 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
regulations, and OIG policy guidance.  OIG issued reports of onsite reviews of the following MFCUs 
during FY 2013.  The full reports are available on our Web site. 
  Arkansas State Medicaid Fraud Control Unit:  2013 Onsite Review.  OEI-06-12-00720.   2013 SEP.     
  Idaho State Medicaid Fraud Control Unit:  2012 Onsite Review.  OEI-09-12-00220.  2013 APR.     
  Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review.  OEI-07-12-00510.  2013 JUN.     
  Louisiana State Medicaid Fraud Control Unit:  2012 Onsite Review.  OEI-09-12-00010.  2012 DEC.   
  New Hampshire Medicaid Fraud Control Unit:  2012 Onsite Review.  OEI-02-12-00180.  2012 OCT.   
  New Jersey Medicaid Fraud Control Unit:  2013 Onsite Review.  OEI-02-13-00020.  2013 SEP.     
  South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review.  OEI-09-11-00610.  2012 OCT.     
  Tennessee State Medicaid Fraud Control Unit:  2012 Onsite Review.  OEI-06-12-00370.  2013 APR.     
Joint investigations with MFCUs 
Following are examples of OIGs joint investigations with MFCUs that reached conclusion in FY 2013. 
CaliforniaPhysician.  According to court documents, Tustin Hospital paid marketers to recruit patients 
and transport them to the facility.  Dr. Kenneth Thaler admitted the patients; then he and the hospital 
billed Medicare for inpatient services, even when such services were not medically necessary.  Thaler 
admitted that many of the recruited patients had been coached to recite false symptoms and that he 
falsified medical records to justify the admissions of some patients.  On average, Thaler admitted 
approximately 60 patients per month to the hospital.  Thaler was sentenced to 1 year and 1 day in prison 
and ordered to pay about $11 million in restitution after pleading guilty to conspiracy to receive 
kickbacks.  This was a joint investigation with the Internal Revenue Service, the FBI, and the Bureau of 
Medi-Cal Fraud and Elder Abuse.   
CaliforniaHospital chief financial officer.  Vincent Rubio was Chief Financial Officer of a hospital in 
Tustin, California.  According to court documents, Rubio oversaw the issuance of checks to companies 
owned by co-conspirators for the referral of recruited beneficiaries admitted to the hospital.  The 
hospital executed sham consultant contracts with these companies to conceal the fact that the 
hospital was making kickback payments to them for the referrals.  The hospital then billed Medicare and 
Medi-Cal for hospital stays and related services provided to the recruited beneficiaries, including 
admissions that were medically unnecessary.  Medicare and Medi-Cal paid the hospital more than 
$10.5 million in reimbursement for these false claims.  Rubio was sentenced to 8 months of home 
confinement and ordered to pay about $10.6 million in restitution after pleading guilty to charges of 
conspiracy to pay kickbacks for patient referrals, causing an act to be done, and subscription to false tax 
returns. This was a joint investigation with the Internal Revenue Service, the Federal Bureau of 
Investigation (FBI), and the California MFCU. 
IdahoOptometrist.  Christopher Card was a licensed optometrist who owned, managed, and provided 
care at Total Vision, P.A.  According to the plea agreement, Card fraudulently billed Medicaid, Medicare, 
and other health care benefit programs for false diagnoses, including glaucoma, acquired color 
deficiency (color blindness), tension headaches, macular degeneration, treatment of eye injuries, and  HHS Office of Inspector General  Page 21 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
removal of foreign objects from the eye.  Card also billed for testing that did not occur and for testing 
results that were falsified or altered.  Eighteen patients identified in the original indictment were 
diagnosed by Card as having glaucoma or glaucoma-related conditions.  All were subsequently examined 
by other doctors, and only one patient was found to have glaucoma or glaucoma-related diseases.  The 
patients named in the original indictment represented only a fraction of those for whom Card falsely 
billed health insurance companies.  Card was sentenced to 3 years in prison and ordered to pay 
$1 million in restitution and a $100,000 fine after pleading guilty to charges of executing a scheme to 
defraud health care benefit programs.  This was a joint investigation with the FBI, the Idaho Medicaid 
Fraud and Program Integrity Unit, and the Railroad Retirement Board OIG. 
Maine Podiatrist.  John Perry was a licensed podiatrist who owned and operated Atlantic Foot & Ankle, 
P.A., in Portland, Maine.  According to court records, Perry prescribed controlled substances, including 
oxycodone, knowing that these substances were being further distributed by his co-conspirators.  Perry 
would charge up to $500 or more for each oxycodone prescription.  Perry wrote prescriptions without 
any medical purpose; in the names of people to whom he never provided medical care; and in exchange 
for money and other controlled and illegal substances, including cocaine, for his personal use.  Perry also 
wrote prescriptions with no legitimate medical purpose outside his medical office, including at bars and 
a strip club.  Perry fabricated patient charts in his office to cover his improper prescriptions and then 
submitted false claims for these prescriptions to MaineCare.  Perry was sentenced to 8 years of 
imprisonment and ordered to pay $7,580 in restitution and a $900 fine after pleading guilty to charges of 
conspiracy to possess with intent to distribute oxycodone; health care fraud, aiding and abetting; and 
unlawful distribution of oxycodone.  This was a joint investigation with the Drug Enforcement 
Administration, the FBI, and the Maine MFCU. 
Other Medicaid-related criminal and civil actions 
The following are other examples of FY 2013 criminal and civil actions involving Medicaid.  Medicaid 
investigations sometimes involve other programs as well, such as Medicare, and may involve multiple 
investigative resources, such as FBI and State and local enforcement entities. 
ConnecticutDrug abuse counselor.   According to published reports, Alan Bradley was a certified 
alcohol and drug abuse counselor who obtained the Medicaid identification numbers of various 
Medicaid clients and used the identification numbers to submit hundreds of claims to Connecticuts 
Department of Social Services.  The claims alleged that Bradley provided 75- to 80-minute individual 
psychotherapy sessions to these Medicaid clients at his office in Norwalk, Connecticut.  However, 
hundreds of the counseling sessions never occurred, and during the time for which he billed Medicare 
for many of them, Bradley was actually living and attending school in Florida.  Bradley was sentenced to 
2 years in prison and ordered to pay nearly $152,000 in restitution after pleading guilty to charges of 
health care fraud.  In addition to receiving his sentencing, Bradley was suspended from participating in 
the Medicaid program.     
District of ColumbiaOwner/officer of advocacy center.  According to the indictment, Jacqueline 
Wheeler was part-owner and chief executive officer of the Health Advocacy Center, Inc. (HAC), in 
Washington, DC, which purportedly was an advocate for improving health care delivery to the 
community.  About October 2002, HAC entered into an agreement with District of Columbia Medicaid to 
provide health care services to DC Medicaid beneficiaries.  Wheeler owned two apartments that were 
rented by HAC patients who had alcohol and/or drug addictions.  Wheelers employees transported 
many of the patients to HAC, where they often slept, watched television, and occasionally received drug  HHS Office of Inspector General  Page 22 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
and alcohol counseling.  From these visits, Wheeler submitted more than $6 million in claims to D.C. 
Medicaid for manual therapy and other services that did not meet Medicaid requirements for payment.  
Wheeler was sentenced to 6 years and 3 months of incarceration and ordered to pay about $3.1 million 
in restitution after being convicted of charges related to health care fraud. 
FloridaCommunity mental health centers.  Health Care Solutions Network, Inc. (HCSN), operated 
community mental health centers in Florida (HCSN-FL) and North Carolina (HCSN-NC).  These facilities 
allegedly provided partial hospitalization program (PHP) services to individuals suffering from mental 
illness.  According to court documents, HCSN-FL personnel fabricated patient medical records to support 
false and fraudulent billing to Medicare and to Florida Medicaid.  A majority of the fabricated notes were 
created at the HCSN-FL facility for patients admitted to the PHP HCSN-NC facility.  The defendants either 
submitted, or caused the submission of, about $56 million in false and fraudulent claims.  As of FY 2013, 
12 defendants had been sentenced for their roles in the health care fraud schemeWondera Eason, 
Paul Layman, Dana Gonzalez, Gema Pampin, Alexandra Haynes, Armando Gonzalez, John Theon, Daniel 
Martinez, Serena Joslin, Ivon Perez, Raymond Rivero, and Sarah Keller were sentenced to a combined 
70 years of incarceration and ordered to pay $186 million in joint and several restitution.  
IllinoisBogus personal care services assistant.  According to the indictment, Cynthia Harmon and 
Daniel Geary defrauded the State of Illinois Medicaid program by falsely claiming and taking payments 
for personal assistant services that were not actually performed.  Between February and March 2012, 
Geary purportedly provided personal care services to Harmon, a Medicaid recipient, at her home.  
However, Harmon was incarcerated during the time that the services were claimed to have been 
provided.  Geary completed home services time sheets falsely stating that he performed 44.5 hours of 
personal assistant services for Harmon; he then billed Medicaid for the hours and received $821 in 
reimbursement.  Geary and Harmon were each sentenced to time served (4 months and 25 days for 
Harmon and 4 months and 11 days for Geary) and ordered to pay $421 after pleading guilty to false 
statements relating to health care matters.   
IndianaOwner of day care service.  Carol Woodard owned Gideons Gate, which purportedly provided 
tutoring and day care services to indigent and school-age children.  Woodard admitted that she executed 
a scheme to defraud Indiana Medicaid by filing more than 2,400 illegitimate reimbursement claims for 
psychological services that she had not performed.  Woodard conspired with a previously convicted 
defendant, who provided Medicaid recipients personal identifiers to Woodward, which she then used in 
false billings.  Woodard was sentenced to 6 years and 8 months of incarceration and ordered to pay 
more than $1.9 million in restitution after pleading guilty to health care fraud.   
IowaDentist.  Dennis Schuller practiced dentistry in Cedar Rapids, Iowa.  According to court records, 
Schuller allegedly billed Medicaid from August 2008 through June 2010 for exams performed by a 
hygienist as though a dentist had performed the exams.  He billed for medically unnecessary 
proceduresfor individual x-rays when whole mouth x-rays had been performed, for occlusal guards 
(mouth guards) that were not medically necessary, and for the use of desensitizing medication on 
patients when this medication was not medically necessary.  Schuller agreed to pay $100,000 to settle 
allegations that he submitted, or caused to be submitted, false claims for payment to Medicaid.   
MichiganPharmacy owner.  According to the indictment, Babubhai Patel was a licensed pharmacist 
who either owned or controlled 26 pharmacies in Michigan.  Patel concealed his ownership and control 
over many of his pharmacies through the use of straw owners.  Patel offered and paid kickbacks, bribes, 
and other inducements to prescribers in exchange for their writing fraudulent prescriptions for patients  HHS Office of Inspector General  Page 23 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
with Medicare, Medicaid, and private insurance and directing the patients to fill their prescriptions at 
one of Patels pharmacies.  Patel and his pharmacists billed Medicare and other insurers for dispensing 
the medications, despite the fact that the medications were medically unnecessary and/or had not been 
provided.   Since January 2009, Patels pharmacies dispensed approximately 250,000 doses of Oxycontin, 
4.6 million doses of Vicodin, 1.5 million doses of Xanax, and 6,100 pint bottles of codeine cough syrup.  
Patels pharmacies falsely billed Medicare and Medicaid approximately $57.8 million for medications 
purportedly provided to beneficiaries over the course of the scheme.  Patel was sentenced to 17 years in 
prison and ordered to pay $18.9 million in restitution, joint and several.  By the end of FY 2013, 26 
defendants had been convicted for their roles in the widespread scheme to defraud Medicare and 
Medicaid.  Nineteen additional defendants were awaiting sentencing.   
MinnesotaBeneficiary.  James and Cynthia Hood fraudulently applied for several types of government 
benefits, including Medicaid and Social Security.  According to court records, the Hoods, along with their 
three children, moved to Minnesota from Louisiana in 2005 after Hurricane Katrina.  From January 2006 
to April 2011, the couple stole approximately $480,000 in State and Federal Medicaid benefits and Social 
Security benefits.  During the application process for these benefits, Cynthia Hood made false 
statements, including that she did not have any assets and that she lived separately from her husband.  
However, investigators determined that she had substantial assets and lived with her husband James 
Hood and that James Hood had investments worth over $11 million.  James Hood was sentenced to 3 
years and 6 months of imprisonment after pleading guilty to charges of theft of public money, health 
care fraud, and mail fraud.  Cynthia Hood was sentenced to 3 years of probation after pleading guilty to 
false statements for use in determining rights to a Social Security benefit and mail fraud.  Both were 
ordered to pay $483,312 in restitution, joint and several, and were fined $500,000.  
New YorkMental health facility.  Westchester County Health Care Corporation (WCHCC) WCHCC 
operates the freestanding mental health facility Westchester Behavioral Health Center (BHC).  From 
August 2001 through June 2010, WCHCC allegedly submitted false certifications to Medicaid stating that 
claims for services at BHC complied with applicable regulations.  WCHCC allegedly billed for professional 
services by uncredentialed nurse practitioners; billed for services rendered without required progress 
notes, physician signatures, or other supporting records; billed for hospital stays without the required 
certification or recertification of medical necessity; routinely failed to collect copayments from 
psychiatric inpatients to induce use of services; and offered potential kickbacks to private-practice 
physicians in return for patient referrals.  The investigation also revealed that BHC allegedly billed 
Medicaid for psychiatric services without creating or maintaining treatment plans and progress notes.  
WCHCC agreed to pay $7 million to resolve allegations that it violated the FCA.   
TexasState Employee fraud.  The investigation revealed that Texas Medicaids Medical Transportation 
Program (MTP) employees obtained the Medicaid numbers and personally identifiable information of 
Medicaid recipients, including friends and family members, to submit false MTP claims for transportation 
services that had not been provided or were unnecessary.  According to the indictment, the defendants 
fraudulently obtained reimbursement checks, cashed the checks, and either kept the money or divided it 
among the co-conspirators.  Several other defendants were previously sentenced in this case.  In total, 
19 defendants were ordered to pay more than $247,000 in restitution and fines and were sentenced to a 
combined 6 years of incarceration.  Juanita Leyva, Arlene Rodriguez, Edward Devally, Leticia Orosco, 
Michelle Aguilar, Patricia Cortez, and Loretta Cortez all were sentenced on charges related to the 
scheme.   As a result of the investigation, a new MTP director was appointed, the program was 
restructured, and new policies were put in place.    HHS Office of Inspector General  Page 24 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
TexasBeneficiary/recruiter fraud.  According to court documents, Robert Baker was a Medicare 
beneficiary who, from March 2007 through April 2012, visited Adom Rehabilitation Services, Inc., and 
Healthcare and Wellness Medical Clinic, Inc.  These clinics purportedly provided medical services, such as 
physical therapy, diagnostic testing, and mental health services.  However, Baker did not have a medical 
need for the services; rather he would allow his Medicare benefits to be billed in exchange for cash.  
Baker also was paid cash to recruit Medicare and Medicaid beneficiaries to the clinics.  The owners and 
operators of the medical clinics then submitted claims to Medicare for payment using Medicare 
information from Baker and his co-conspirators.  The owner and operator of the clinics, along with two 
clinic employees, were previously sentenced for their roles in the scheme.  Baker was sentenced to 1 
year and 6 months of incarceration and ordered to pay $173,653 in restitution, joint and several, after 
pleading guilty to conspiracy to violate the anti-kickback statute.   
TexasBogus physical therapist.   According to court documents, Godwin Nzeocha worked for City 
Nursing Services of Texas, Inc., where he signed his name as the provider of physical therapy services on 
City Nursing patient files, including blank treatment data forms, progress notes, and daily physical 
therapy records.  However, Nzeocha was not licensed, trained, or otherwise qualified to provide physical 
therapy to patients.  During the time Nzeocha worked at City Nursing, the company billed Medicare and 
Medicaid approximately $3 million for physical therapy services that had not been provided.  Nzeocha, 
who was an OIG Most Wanted Fugitive, was arrested by Nigerian authorities in 2011 and extradited to 
the United States in June 2012 to face health care fraud charges.  Nzeocha was sentenced to 9 years and 
1 month of incarceration and ordered to pay more than $26 million in restitution, joint and several, after 
pleading guilty to charges of conspiracy to commit health care fraud and money laundering.   
Exclusions from program participation 
OIG may exclude individuals and entities from participation in Medicare, Medicaid, and all other Federal 
health care programs for many reasons, some of which include program-related convictions, patient 
abuse or neglect convictions, licensing board disciplinary actions, or other actions that pose a risk to 
beneficiaries or programs.  (Social Security Act,  1128,  1156, and other statutes.)  Exclusions are 
generally based on referrals from Federal and State agencies. We work with these agencies to ensure the 
timely referral of convictions and licensing board and administrative actions.  In FY 2013, OIG excluded 
3,214 individuals and entities from participation in Federal health care programs.  Searchable exclusion 
lists are available on OIGs Web site at:  http://exclusions.oig.hhs.gov/  
The following are examples of program exclusions in FY 2013. 
FloridaChiropractor.  Joseph Burrell Wagner, Jr., a chiropractor, billed, and caused bills to be sent to, 
Medicare, Medicaid, and private insurers for services that were rendered by him or his staff as though 
they were medical doctors.  Wagner used the name of a medical doctor to fraudulently bill for services 
that had never been performed or provided by the medical doctor.  In addition, he conspired with others 
to distribute and dispense schedule III and IV controlled substances.  As a licensed chiropractor, Wagner 
was not permitted to prescribe, distribute, or dispense controlled substances.  As a result of these 
crimes, Wagner was sentenced to 15 years and 8 months of incarceration and ordered to pay more than 
$2 million in restitution.  The Florida Board of Chiropractic Medicine ordered the relinquishment of 
Wagners license to practice as a chiropractor.  Wagner was excluded for a minimum period of 40 years 
on the basis of his convictions for health care fraud; conspiracy to illegally distribute and dispense, and 
cause to be distributed and dispensed, schedule III and IV controlled substances; and aiding and abetting 
transactional money laundering.    HHS Office of Inspector General  Page 25 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
FloridaPain clinic owner/operator.  From November 2007 to about September 2011, Juan De Dios 
Gomez owned and operated a pain clinic for the purpose of obtaining false prescriptions for oxycodone 
and oxymorphone for beneficiaries of Medicare, Medicaid, and private health care prescription drug 
insurance plans.  The drugs were not medically necessary.  Gomez would offer kickbacks, bribes, and 
inducements to beneficiary recruiters so they would bring beneficiaries to his pain clinic.  The court 
sentenced Gomez to more than 16 years of incarceration and ordered him to pay $15 million in 
restitution.  Gomez was excluded for a minimum of 50 years on the basis of his convictions for 
conspiracy to possess with intent to distribute oxycodone and oxymorphone, attempt to possess with 
intent to distribute oxycodone, and conspiracy to commit health care fraud.   
LouisianaClinic owner.  Vadim Mysak, was an owner, manager, and technician of several medical 
clinics.  Mysak and his co-conspirators were involved in a scheme to defraud Medicare and Medicaid 
through fraudulent billing for diagnostic tests that were not medically necessary or had not been 
performed.  On the basis of this scheme, Mysak was convicted on charges of conspiracy to commit 
health care fraud and conspiracy to commit money laundering.  He was sentenced to 4 years and 1 
month of incarceration and ordered to pay more than $6 million in restitution, joint and several.  Mysak 
was excluded for a minimum period of 25 years on the basis of his conviction.  Mysak was also excluded 
from participation in Medicaid by the Louisiana Department of Health and Hospitals. 
WashingtonPhysician.  Alfred Chan was a medical doctor who specialized in hematology and oncology.  
He and his wife Judy operated the Alfred H. Chan, M.D., P.C., Clinic in Lakewood, Washington, until the 
clinic closed in February 2011.  According to court documents, the Chans allegedly defrauded Medicare, 
Medicaid, and other Federal health care programs by intentionally submitting false and inaccurate claims 
for medications and services.  Specifically, the Chans allegedly billed for quantities of drugs greater than 
those actually administered to patients, overstated chemotherapy drug infusion times, and double-billed 
for medications.  They also falsified the patient charts to support the fraudulent billing.  Chan agreed to 
pay $3.1 million to resolve allegations under the FCA.  As a result of this conduct, Chan agreed to be 
excluded for a period of 15 years.  In January 2012, Chans license to practice as a physician and surgeon 
in the State of Washington was indefinitely suspended. 
 
  HHS Office of Inspector General  Page 26 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
 
 
 
 
 
 
http://oig.hhs.gov 
 
 
  HHS Office of Inspector General  Page 27 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
 
Appendixes 
Appendix A  FY 2013 Medicaid Audit and Evaluation Reports  
Appendix B  OIG Priority Recommendations From Previous Fiscal Years  
Appendix C  FY 2014 Medicaid Work Plan  
 
 
    HHS Office of Inspector General  Page 28 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
 
 
 
 
 
 
   
 
  h ttp://oig.hhs.gov  HHS Office of Inspector General  Page 29 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Appendix A 
Fiscal Year 2013 audit and 
The majority of reports listed in this appendix are available on the Office of Inspector General (OIG) Web 
site at https://oig.hhs.gov.  To access the reports, query on the report number shown after each title. 
evaluation reports 
Reports not posted to the Web site may be requested through the Freedom of Information Act (FOIA).  
To make a request under FOIA, please use the following link: https://oig.hhs.gov/foia/submit.asp. 
Medicaid hospital audits 
  New Jersey Department of Human Services Claimed Medicaid Disproportionate Share Hospital Payments to 
Five Hospitals That Did Not Meet Federal Eligibility Requirements, A-02-09-01017. 
  New York Claimed Hospital-Based Continuing Day Treatment Services That Were Not in Compliance With 
Federal and State Requirements, A-02-11-01038. 
  North Carolina Medicaid Overpaid Hospitals for Some Inpatient Services That Medicare Paid, A-04-11-06137. 
  GeorgiaAcute Care Hospitals in Georgia Did Not Always Reconcile Invoice Records With Credit Balances and 
Report the Associated Medicaid Overpayments to the State Agency, A-04-12-04021. 
  Wisconsin Claimed Medicaid Reimbursement for High-Dollar Inpatient Services That Were Unallowable,  
A-05-11-00037. 
  Indiana Claimed Medicaid Reimbursement for High-Dollar Inpatient Services That Were Unallowable,  
A-05-11-00040. 
  Indiana Improperly Claimed Federal Reimbursement for Most Medicaid Inpatient Psychiatric Hospital Service 
and Disproportionate Share Hospital Payments to Evansville Psychiatric Childrens Center, A-05-12-00040. 
  Indiana Improperly Claimed Federal Reimbursement for All Reviewed Medicaid Inpatient Psychiatric Hospital 
Service Payments to Evansville State Hospital, A-05-12-00041. 
  Indiana Improperly Claimed Federal Reimbursement for All Reviewed Medicaid Inpatient Psychiatric Hospital 
Service Payments to Logansport State Hospital, A-05-12-00042. 
  Missouri Improperly Claimed Federal Reimbursement for Most Reviewed Medicaid Inpatient Psychiatric 
Hospital Service and Disproportionate Share Hospital Payments to Hawthorn Childrens Psychiatric Hospital,  
A-05-12-00050. 
  Oklahoma Improperly Claimed Federal Reimbursement for Most Reviewed Medicaid Inpatient Psychiatric 
Hospital Service and Disproportionate Share Hospital Payments to Childrens Recovery Center, A-05-12-00052. 
  Missouri Incorrectly Claimed Federal Reimbursement for Inpatient Claims With Sterilization and Delivery 
Procedures for Calendar Years 2009 and 2010, A-07-12-01121.  HHS Office of Inspector General  Page 30 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Medicaid home, community, and nursing home care audits 
  Massachusetts Medicaid Payments to Millbury Health Care Center Did Not Always Comply With Federal and 
State Requirements, A-01-12-00010. 
  Rhode Islands Managed Care Contract Settlements With Neighborhood Health Plan of Rhode Island Did Not 
Always Comply With Federal and State Requirements, A-01-12-00011. 
  Massachusetts Medicaid Payments to Essex Park Rehabilitation and Nursing Center Did Not Always Comply 
With Federal and State Requirements, A-01-12-00015. 
  Massachusetts Medicaid Payments to Weymouth Health Care Center Did Not Always Comply With Federal and 
State Requirements, A-01-12-00016. 
  Massachusetts Medicaid Payments to Healthbridge Management Did Not Always Comply With Federal and 
State Requirements, A-01-13-00001. 
  Medicaid Hospice General Inpatient Payments to Home and Hospice Care of Rhode Island Did Not Always Meet 
Federal and State Requirements, A-01-13-00002. 
  Massachusetts Medicaid Payments to Golden Living Centers Did Not Comply with Federal and State 
Requirements, A-01-13-00007. 
  New York Improperly Claimed Medicaid Reimbursement for Some Home Health Services Claims Submitted by 
Certified Home Health Agencies in New York City, A-02-10-01022. 
  New York State Improperly Claimed Medicaid Reimbursement for Some Home Health Services Claims 
Submitted by Certified Home Health Agencies, A-02-11-01008. 
  Maryland Generally Complied With Requirements for Medicaid Payments Made to Multi-Medical Center for 
Nursing Facility Services, A-03-11-00151. 
  Maryland Improperly Claimed Personal Care Services Provided Under Its Medicaid Home and Community-
Based Services Waiver for Older Adults, A-03-11-00201. 
  West Virginia Improperly Claimed Some Personal Care Services Under Its Medicaid State Plan, A-03-11-00204. 
  VirginiaNursing Facilities in Virginia Generally Reconciled Account Records With Credit Balances and 
Reported the Associated Medicaid Overpayments to the State Agency, A-03-11-00211. 
  Wisconsin Improperly Claimed Federal Medicaid Reimbursement for Most Residential Care Center Payments, 
A-05-07-00036. 
  Illinois Did Not Always Properly Claim Medicaid Reimbursement for Hospice Claims, A-05-12-00029. 
  LouisianaReview of Louisiana Medicaid Personal Care Services Provided by Immaculate Heart of Mary-PCS 
Audit, A-06-09-00106. 
  MissouriNursing Facilities in Missouri Did Not Reconcile Invoice Records With Credit Balances and Report the 
Associated Medicaid Overpayments to the State Agency, A-07-11-03169. 
  Missouri Claimed Federal Reimbursement for Unallowable Personal Care Services Claims Submitted by The 
Whole Person, Incorporated, A-07-11-03170.  HHS Office of Inspector General  Page 31 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
  Washington State Claimed a Small Amount of Unallowable Medicaid Reimbursement for Home Health Services 
That Exceeded the Maximum Allowable Number of Reimbursable Visits, A-09-12-02056. 
Medicaid prescription drug claims audits 
  Oklahoma Complied With the Federal Medicaid Requirements for Billing Manufacturers for Rebates for 
Physician-Administered Drugs, A-06-12-00059. 
  California Improperly Claimed Enhanced Federal Reimbursement for Medicaid Family Planning Drugs and 
Supplies Provided in San Diego County, A-09-12-02077. 
Other Medicaid services audits 
  New Hampshire Did Not Always Correctly Claim Medicaid Payments for School-Based Transportation Services, 
A-01-11-00008. 
  Maine Improperly Claimed Medicaid Payments for School-Based Health Services Submitted by Portland School 
Department, A-01-11-00011. 
  Massachusetts Generally Implemented Recommendations From Prior Review of Claims for Hospital Outpatient 
Clinical Laboratory Services, A-01-12-00005. 
  Connecticut Generally Implemented Recommendations From Prior Review of Medicaid Payments for Clinical 
Laboratory Services, A-01-12-00014. 
  New York Improperly Claimed Medicaid Reimbursement for Family-Based Treatment Rehabilitation Services,  
A-02-10-01024. 
  New Yorks Claims for Medicaid Services Provided Under Its Traumatic Brain Injury Waiver Program Did Not 
Comply With Certain Federal and State Requirements, A-02-10-01043. 
  New York State Manufacturer Rebate Program Significantly Reduced Medicaid Costs for Home Blood-Glucose 
Test Strips But Could Achieve Additional Reductions, A-02-11-01042. 
  New Jersey Medicaid Program Could Achieve Savings By Reducing Home Blood Glucose Test Strip Prices,  
A-02-12-01010. 
  Maryland Claimed Costs for Unallowable Room and Board and Other Residential Habilitation Costs Under Its 
Community Pathways Waiver Program, A-03-12-00203. 
  North CarolinaNoninstitutional Providers in North Carolina Did Not Reconcile Invoice Records With Credit 
Balances and Report the Associated Medicaid Overpayments to the State Agency, A-04-11-04016. 
  Florida Generally Ensured That Providers Complied With Selected State Durable Medical Equipment Enrollment 
Requirements, A-04-12-07034. 
  Tennessee Incorrectly Reported Costs for Individuals With Intellectual and Developmental Disabilities,  
A-04-12-08016. 
  Ohio Medicaid Program Could Significantly Lower Payment Rates for Selected Durable Medical Equipment and 
Supplies, A-05-12-00038.  HHS Office of Inspector General  Page 32 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
  Arkansas Inappropriately Received Medicaid Family Planning Funding for Federal Fiscal Years 2006 Through 
2010, A-06-11-00022. 
  Missouri Did Not Always Correctly Claim Costs for Medicaid Family Planning Sterilization Procedures for 
Calendar Years 2009 and 2010, A-07-12-01117. 
  Missouri Claimed Unallowable Medicaid Payments for Individuals With Intellectual and Developmental 
Disabilities in Intermediate Care Facilities, A-07-12-03180. 
  California Made Unallowable Medicaid Payments for Items and Services Furnished, Ordered, or Prescribed by 
Excluded Providers, A-09-11-02016. 
  Arizona Improperly Claimed Federal Reimbursement for Medicaid School-Based Administrative Costs, A-09-11-
02020. 
  California Improperly Claimed Enhanced Federal Reimbursement for Medicaid Family Planning Services 
Provided in San Diego County, A-09-11-02040. 
  Hawaii Did Not Adequately Monitor Implementation of Some Risk-Sharing Contract Provisions for the QUEST 
Expanded Medicaid Managed Care Program, A-09-11-02054. 
  CaliforniaNoninstitutional Providers in California Did Not Always Reconcile Invoice Records With Credit 
Balances and Refund to the State Agency the Associated Medicaid Overpayments, A-09-12-02047. 
Medicaid administration audits 
  New Jerseys Medicaid Expenditure Claim Was Supported by Actual Recorded Expenditures, A-02-10-01013. 
  New Jersey Did Not Always Claim Medicaid Reimbursement for Medicare Part B Premiums in Accordance with 
Federal Requirements, A-02-10-01025. 
  New York State Made Unallowable Medicaid Managed Care Payments For Beneficiaries Assigned Multiple 
Medicaid Identification Numbers, A-02-11-01006. 
  New York Complied With Federal Requirements to Report Federal Overpayment Collections for the Quarter 
Ended September 30, 2011, A-02-12-01020. 
  Pennsylvania Claimed Unallowable Medicaid Administrative Costs for the Regional Housing Coordinator 
Initiative, A-03-11-00210. 
  Florida Claimed Some Medicaid Administrative Costs That Did Not Comply With Program Requirements,  
A-04-10-00076. 
  Florida Medicaid:  Millions in Overpayments Not Refunded, A-04-11-08007. 
  Kentucky Substantially Met Money Follows the Person Program Requirements, A-04-12-06152. 
  Alabama Received Millions in Unallowable Performance Bonus Payments Under the Childrens Health 
Insurance Program Reauthorization Act, A-04-12-08014. 
  The Centers for Medicare & Medicaid Services Collected the Majority of Medicaid Overpayments but Millions 
Remain Uncollected, A-05-11-00071.  HHS Office of Inspector General  Page 33 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
  Texas Did Not Always Comply With Federal and State Requirements Regarding the Medicare Buy-In Program, 
A-06-10-00070. 
  Arkansas Generally Supported Its Claim for Federal Medicaid Reimbursement, A-06-10-00098. 
  Iowa Did Not Properly Pay Some Medicare Part A and Part B Deductibles and Coinsurance, A-07-12-03178. 
Medicaid information technology audits 
  Audit of IT Controls for USB devices at Ochsner Medical Center, A-06-12-00017.  
  Audit of IT Controls for USB devices at Saint Francis Hospital, A-06-12-00020.  
  Review of General Controls at North Dakota Department of Human Services, A-07-11-00368.  
  Audit of General Controls for Medicaid Eligibility Determinations and Claims Processing at the North Dakota 
Information Technology Department, A-07-12-00372.  
  Audit of IT Controls for USB Devices at Mercy Health, A-07-12-00400.  
  Audit of IT Controls for USB Devices at Cox Health, A-07-12-00401.  
  Audit of IT Controls for USB Devices at BJC HealthCare, A-07-12-00402.  
  Review of LA Care's information system general controls over its Medi-Cal managed-care claims processing 
system, A-09-12-03001.  
  IT Audit - Audit of IT controls over USB devices at Georgetown Hospital, A-18-12-30070.  
State Medicaid Fraud Control Unit (MFCU) evaluations 
  Arkansas Medicaid Fraud Control Unit:  2013 Onsite Review, OEI-06-12-00720. 
  Idaho State Medicaid Fraud Control Unit:  2012 Onsite Review, OEI-09-12-00220. 
  Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review, OEI-07-12-00510. 
  Louisiana State Medicaid Fraud Control Unit:  2012 Onsite Review, OEI-09-12-00010. 
  New Hampshire State Medicaid Fraud Control Unit:  2012 Onsite Review. OEI-02-12-00180. 
  New Jersey State Medicaid Fraud Control Unit:  2013 Onsite Review, OEI-02-13-00020. 
  South Carolina State Medicaid Fraud Control Unit:  2012 Onsite Review, OEI-09-11-0061. 
  Tennessee State Medicaid Fraud Control Unit:  2012 Onsite Review, OEI-06-12-00370. 
Other program evaluation reports 
  Early Outcomes Show Limited Progress for the Transformed Medicaid Statistical Information System,  
OEI-05-12-00610. 
  Analyzing Changes to Medicaid Federal Upper Limit Amounts, OEI-03-11-00650.  HHS Office of Inspector General  Page 34 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
  Medicaid Drug Pricing in State Maximum Allowable Cost Programs, OEI-03-11-00640. 
  Medicaid Third-Party Liability Savings Increased, But Challenges Remain, OEI-05-11-00130. 
  Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in Competitive Bidding Areas, OEI-06-13-00470. 
  Home and Community-Based  Services in Assisted Living Facilities, OEI-09-08-00360. 
  Some States Improperly Restrict Eligibility for Medicaid Mandatory Home Health Services, OEI-07-13-00060. 
  Most States Anticipate Implementing  Eligibility and Enrollment Requirements  by 2014, OEI-07-10-00530. 
    HHS Office of Inspector General  Page 35 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Appendix B 
 
Priority Medicaid recommendations 
The priority Medicaid recommendations below are carried forward from final reports issued prior to 
ffisrcoal myear  p(FYr) e20v13i.o  Tuhes fu fll irespcoratsl a rye eavaailrabsle on the Office of Inspector General's (OIG)  Web site at 
www.oig.hhs.gov.  The recommendations were designated as priorities in OIGs March 2014 
Compendium of Priority Recommendations, which covers all HHS programs through FY 2013 and is also 
available on the OIG Web site at http://oig.hhs.gov/reports-and-publications/compendium/. 
Federal share of MedicaidEnsure that State claims and practices do not inappropriately 
inflate Federal reimbursements.   
Key OIG Report  Specific Recommendations 
Review of Medicaid Enhanced    The Centers for Medicare & Medicaid Services (CMS)  should provide 
Payments to Local Public  States with definitive guidance for calculating the Federal upper 
Providers and the Use of  payment limit (UPL), which should include using facility-specific UPLs 
Intergovernmental Transfers.    that are based on actual cost report data and 
A-03-00-00216.  2001 SEP. 
  require that the return of Medicaid payments by a county or local 
government to the State be declared a refund of those payments and 
thus be used to offset the Federal share generated by the original 
payment.   
Medicaid drug pricingAssist States to better align drug reimbursements with pharmacy 
acquisition costs. 
Key OIG Reports  Specific Recommendations 
Review of Drug Costs to    CMS should provide the results of this review to States for their use 
Medicaid Pharmacies and Their  when they consider changes to their pharmacy reimbursement 
Relation to Benchmark Prices.    methodologies, including those for single-source drugs, brand-name 
A-06-11-00002.  2011 OCT.  multiple-source drugs, and generic multiple-source drugs. 
Replacing Average Wholesale    CMS should develop a national benchmark that accurately estimates 
Price:  Medicaid Drug Payment  acquisition costs and encourage States to use it in determining Medicaid 
Policy.  OEI-03-11-00060.   reimbursement for prescription drugs.   
2011 JUL. 
Additional Analyses of the Actual    CMS should encourage States to adopt a multitiered payment system to 
Acquisition Cost of Prescription  bring pharmacy reimbursement more in line with the actual acquisition 
Drug Products.  A-06-02-00041.   cost of drug products.   
2002 SEP. 
    HHS Office of Inspector General  Page 36 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Ensure that Medicaid Information Systems are fully functional. 
Key OIG Report  Specific Recommendation 
Medicaid Managed Care    CMS should enforce existing Federal requirements that States include 
Encounter Data:  Collection and  encounter data in Medicaid Statistical Information System (MSIS) 
Use.  OEI-07-06-00540.   submissions.   
2009 MAY. 
Address Medicaid managed care fraud and abuse concerns. 
Key OIG Report  Specific Recommendations 
Medicaid Managed Care:  Fraud    CMS should require that State contracts with managed care entities 
and Abuse Concerns Remain  (MCEs) include methods to verify with beneficiaries whether services 
Despite Safeguards.    billed by providers were received and 
OEI-01-09-00550.  2011 DEC. 
  update guidance to reflect concerns expressed by MCEs and States.   
Medicaid home- and community-based care settingsEnsure that service providers comply 
with quality and safety requirements. 
Key OIG Reports  Specific Recommendations 
MedicaidOversight of Quality    CMS should provide additional guidance to states to help ensure that 
of Care in Medicaid Home and  they meet the assurances,  
Community-Based Services 
Waiver Programs.      require states that do not meet one or more assurances to develop 
OEI-02-08-00170.  2012 JUN.  corrective action plans,  
  require at least one onsite visit before a waiver is renewed and develop 
detailed protocols for such visits, and 
  make information about state compliance with the assurances available 
to the public.   
PreventionEnsure that States improve utilization of preventive screening services for 
eligible children. 
Key OIG Report  Specific Recommendations 
Most Medicaid Children in Nine    CMS should require States to report vision and hearing screenings,  
States Are Not Receiving All 
Required Preventive Screening    collaborate with States and providers to develop effective strategies to 
Services.  OEI-05-08-00520.   encourage beneficiary participation in screenings,  
2010 MAY. 
  collaborate with States and providers to develop education and 
incentives for providers to encourage complete medical screenings, and  
  identify and disseminate promising State practices for increasing 
childrens participation in screenings and providers delivery of complete 
medical screenings.    HHS Office of Inspector General  Page 37 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Appendix C 
 
Medicaid projects in 
The projects below represent the objectives of work in progress and planned new starts for fiscal year 
(OFYI) G201s4.   FThYe o b2je0cti1ve4s w eWre eoxtrrakct ePd flraomn the Office of Inspector General's (OIG) FY 2014 Work 
Plan, published in January 2014.  Pertinent context information and citations for each project are 
available in the complete Work Plan, which is available on OIGs Web site at:   
http://oig.hhs.gov/reports-and-publications/workplan/index.asp#current. 
Medicaid Prescription Drug Reviews 
  States' use of Medicaid drug utilization review to reduce the inappropriate 
dispensing of opioids  
Compliance With Requirements.  We will review the education and enforcement actions States have 
taken on the basis of information generated by their drug utilization review (DUR) programs related 
to inappropriate dispensing and potential abuse of prescription opiates.  (OEI; 05-13-00550; 
expected issue date:  FY 2014; work in progress) 
  States methods for resolving rebate disputes with manufacturers  
Compliance With RequirementsWe will review the causes of and resolutions to Medicaid rebate 
disputes with manufacturers and the methods States use to resolve them.  (OEI; 05-11-00580; 
expected issue date:  FY 2014; work in progress) 
  Manufacturer compliance with AMP reporting requirements  
Compliance With Requirements.  We will review manufacturer compliance with average 
manufacturer price (AMP) reporting requirements and determine what percentage of manufacturers 
complied with the requirements.  We will also determine whether stepped-up enforcement actions 
by the Centers for Medicare & Medicaid Services (CMS)  and OIG are reflected in increased 
compliance by manufacturers.   (OEI; 03-14-00150; expected issue date:  FY 2015; work in progress) 
  States collection and reporting of rebates  
Compliance With Requirements.  We will determine whether the increased amount of manufacturer 
rebates for brand-name and generic drugs were collected by States and reported to the Federal 
Government, as required.  We will also determine the amount of supplemental drug rebates that 
States collected during a selected period.  (OEI; 03-12-00520; expected issue date:  FY 2014; work in 
progress; Affordable Care Act)  HHS Office of Inspector General  Page 38 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
  Rebates for new formulations of existing drugs  
Compliance With Requirements.  We will review drug manufacturers compliance with Medicaid 
drug rebate requirements for drugs that are new formulations of existing drugs.  We will also 
determine whether manufacturers have correctly identified all of their drugs that are subject to a 
recent change in law.  (OAS; W-00-14-31451; various reviews; expected issue date:  FY 2015; 
new start; Affordable Care Act) 
  States collection of rebates on physician-administered drugs  
Compliance With Requirements.  We will determine whether States have established adequate 
accountability and internal controls for collecting Medicaid rebates on physician-administered drugs.  
We will assess States processes for collecting national drug code information on claims for 
physician-administered drugs and subsequent processes for billing and collecting rebates.   
(OAS; W-00-12-31400; W-00-13-31400; W-00-14-31400; various reviews; expected issue date:  
FY 2014; work in progress) 
  Medicaid payments for multiuse vials of Herceptin (new) 
State ClaimsWe will review States claims for the Federal share of Medicaid payments for the drug 
Herceptin, which is used to treat breast cancer, to determine whether providers properly billed the 
States for the drug.  We will determine whether providers claims to States were complete and 
accurate and were billed in accordance with the regulations of the selected States.  (OAS; 
W-00-14-31476; various reviews; expected issue date:  FY 2014; new start) 
  Atypical antipsychotic drugs prescribed for children in Medicaid  
Quality of Care and Safety.  We will determine the extent to which Medicaid claims for atypical 
antipsychotic drugs were for treatment of children aged 18 years and younger.  We will determine, 
on the basis of medical record reviews, the extent to which the atypical antipsychotic drug claims 
were for uses and indications not listed in one or more of the approved drug compendia.  We will 
also determine the extent to which the medical reviews identified concerns about the treatment of 
the children with the prescribed drugs related to dosage, duration of treatment, indications for use, 
monitoring, side effects, reactions to combinations of drugs (polypharmacy), and patient age.  (OEI; 
07-12-00320; expected issue date:  FY 2014; work in progress) 
Home Health Services and Other CommunityBased Care 
  Home health servicesprovider and beneficiary eligibility 
Billing and Payments.  We will review home health agency (HHA) claims to State Medicaid programs 
to determine whether the billing providers met applicable criteria to provide home health services 
to Medicaid beneficiaries.  We will also determine whether the beneficiaries met the criteria to 
receive such services.  (OAS; W-00-12-31304; various reviews; expected issue date:  FY 2015; work in 
progress)  HHS Office of Inspector General  Page 39 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
  Adult day health care services  
Billing and Payments.  We will review Medicaid payments by States for adult day care services to 
determine whether the providers complied with Federal and State requirements.  (OAS; 
W-00-12-31386; W-00-13-31386; various reviews; expected issue date:  FY 2014; work in progress)   
  Continuing day treatment mental health services  
Billing and Payments.  We will review Medicaid payments to continuing day treatment (CDT) mental 
health services providers to determine whether their claims were adequately supported.  Our review 
will follow up on a State Commissions findings of unsubstantiated claims.  (OAS; W-00-12-31128; 
W-00-13-31128; various reviews; expected issue date:  FY 2014; work in progress) 
  Room and board costs associated with home- and community-based services (HCBS) 
program payments  
State ClaimsWe will determine whether selected States claimed Federal reimbursement for 
unallowable room and board costs associated with services provided under home- and community-
based services (HCBS) programs.  We will determine whether HCBS payments included the costs of 
room and board and identify the methods the States used to determine the amounts paid.  (OAS; 
W-00-13-31465; various reviews; expected issue date:  FY 2014; work in progress) 
  Home health servicesScreenings of health care workers  
Quality of Care and SafetyWe will review health-screening records of Medicaid HHAs health care 
workers to determine whether they were screened in accordance with Federal and State 
requirements.  (OAS; W-00-11-31387; W-00-12-31387; various reviews; expected issue date:  
FY 2014; work in progress) 
  Medical equipment and suppliesOpportunities to reduce Medicaid payment rates for 
selected items  
Policies and Practices.  We will determine whether opportunities exist for lowering Medicaid 
payments for selected items of medical equipment and supplies.  We will also determine the amount 
of Medicaid savings that could be achieved for selected items through rebates, competitive bidding, 
or other means.  (OAS; W-00-13-31390; various reviews; expected issue date:  FY 2014; new start)  
  Transportation servicesCompliance with Federal and State requirements 
Billing and Payments.  We will review Medicaid payments by States to providers for transportation 
services to determine the appropriateness of the payments for such services.  (OAS; W-00-12-31121; 
W-00-13-31121; various reviews; expected issue date:  FY 2015; work in progress) 
  Questionable billing for outpatient mental health services by medicaid providers 
Billing and Payments.  We will review State payments for Medicaid outpatient mental health services 
to identify questionable billing patterns.  We will also review combined Medicaid and Medicare 
claims data to identify additional questionable billing patterns.  (OEI; 07-13-00320; expected issue 
date:  FY 2014; work in progress)  HHS Office of Inspector General  Page 40 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
  Health-care-acquired conditionsProhibition on Federal reimbursements 
Billing and Payments.  We will determine whether selected States made Medicaid payments for 
health-care-acquired conditions and provider-preventable conditions and quantify the amount of 
Medicaid payments for such conditions.  (OAS; W-00-14-31452; various reviews; expected issue 
date:  FY 2015; new start; Affordable Care Act) 
  Dental services for childrenInappropriate billing  
State Claims.  We will review Medicaid payments by States for dental services to determine whether 
States have properly claimed Federal reimbursement.  (OAS; W-00-11-31135; W-00-12-31135; 
various reviews; expected issue date:  FY 2014; work in progress) 
  Family planning servicesClaims for enhanced Federal funding 
State Claims.  We will review family planning services in several States to determine whether States 
improperly claimed enhanced Federal funding for such services and the resulting financial impact 
on Medicaid.  (OAS; W-00-11-31078; W-00-12-31078; W-00-13-31078; various reviews; expected 
issue date:  FY 2014; work in progress) 
  Access to pediatric dental care for children enrolled in Medicaid 
Quality of Care and Safety.  We will review billing patterns of pediatric dentists and their associated 
clinics in selected States and describe the extent to which children enrolled in Medicaid received 
services from them.  (OEI; 02-12-00330; 02-14-00120; various reviews; expected issue date:  
FY 2014; work in progress) 
  Utilization of preventive screening services for children enrolled in Medicaid  (new) 
Quality of Care and Safety.  We will determine what steps CMS has taken to address OIGs 
recommendations to improve the provision of Medicaid Early and Periodic Screening, Diagnostic, 
and Treatment (EPSDT) services and what obstacles it faces in implementing these 
recommendations.  We will also determine whether the underutilization of EPSDT services continues 
to be a challenge for children enrolled in Medicaid.  (OEI, 05-13-00690; expected issue date:  FY 
2014; work in progress) 
State Management of Medicaid  
  State use of provider taxes to generate Federal funding  
Funding Mechanisms.  We will review State health-care-related taxes imposed on various Medicaid 
providers to determine whether the taxes comply with applicable Federal requirements.  Our work 
will focus on the mechanism States use to raise revenue through provider taxes and determine the 
amount of Federal funding generated.  (OAS; W-00-13-31455; various reviews; expected issue date:  
FY 2014; work in progress)  HHS Office of Inspector General  Page 41 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
  State compliance with Federal Certified Public Expenditures regulations  
Funding Mechanisms.  We will determine whether States are complying with Federal regulations for 
claiming Certified Public Expenditures (CPEs), which are normally generated by local governments as 
part of their contribution to the coverage of Medicaid services.  (42 CFR  433.51 and 45 CFR 
 95.13.)  (OAS; W-00-13-31110; various reviews; expected issue date:  FY 2014; work in progress)   
  State allocation of Medicaid administrative costs  
State ClaimsWe will review administrative costs claimed by several States to determine whether 
they were properly allocated and claimed or directly charged to Medicaid.  (OAS; W-00-10-31123; 
W-00-11-31123; W-00-13-31123; various reviews; expected issue date:  FY 2014; work in progress) 
  State-operated facilitiesReasonableness of payment rates  
State ClaimsWe will determine whether Medicaid payment rates to State-operated facilities are 
reasonable and the Federal share is claimed in accordance with Federal and State requirements.  We 
will determine in selected States the extent to which payments to such providers may be excessive.  
(OAS; W-00-12-31398; W-00-13-31398; various reviews; expected issue date:  FY 2014; work in 
progress) 
  State cost allocations that deviate from acceptable practices  
State ClaimsWe will review public assistance cost allocation plans and processes for selected 
States to determine whether the States claimed Medicaid costs that were supported and allocated 
on the basis of random moment sampling systems (RMSS) that deviated from acceptable statistical 
sampling practices.  (OAS; W-00-13-31467; various reviews; expected issue date:  FY 2015; work in 
progress)  
  Enhanced Federal Medical Assistance Percentage (new) 
State Claims.  We will review States Medicaid claims to determine whether the States correctly 
applied enhanced Federal Medical Assistance Percentage (FMAP) payment provisions of the 
Affordable Care Act.  (OAS; W-00-14-31480; various reviews; expected issue date:  FY 2015; new 
start; Affordable Care Act) 
  Medicaid eligibility enrollmentNational error rates 
State Claims.  We will determine the extent to which States improperly enrolled individuals in 
Medicaid programs who did not meet eligibility criteria and estimate national enrollment error rates.   
For FY 2014, the national enrollment error rates will be estimated for newly enrolled Medicaid 
beneficiaries in States that expanded their Medicaid programs pursuant to the Affordable Care Act 
and in States that did not.  We will also identify issues that contributed to enrollment errors.   
(OEI; 00-00-0000; expected issue date:  FY2015; new start; Affordable Care Act). 
  Medicaid eligibility determinations in selected States (new) 
State Claims.  We will review Medicaid eligibility determinations in selected States.  For each State 
selected, we will calculate a Medicaid eligibility error rate.  We will focus on eligibility determinations  HHS Office of Inspector General  Page 42 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
for beneficiaries who are newly eligible for Medicaid pursuant to the Affordable Care Act and 
beneficiaries who were eligible for Medicaid prior to the eligibility expansion.  We will also 
determine the amount of payments associated with beneficiaries who received incorrect eligibility 
determinations.  (OAS; W-00-14-31140; various reviews; expected issue date: FY 2015; new start; 
Affordable Care Act) 
  State Medicaid monetary drawdownsReconciliation with Form CMS-64  
State AdjustmentsWe will review the Medicaid monetary drawdowns that States received from 
the Federal Reserve System to determine whether they were supported by actual expenditures 
reported by the States on the Form CMS-64.  (OAS; W-00-12-31456; W-00-13-31456; various 
reviews; expected issue date:  FY 2014; work in progress) 
  State reporting of Medicaid collections on Form CMS-64  
State Adjustments.  We will determine whether States accurately captured Medicaid collections on 
their Form CMS-64 and returned the correct Federal share related to those collections.   
(OAS; W-00-12-31457; W-00-13-31457; various reviews; expected issue date:  FY 2014; work in 
progress) 
  Estate recoveriesCompliance and reporting of recovered costs  
State AdjustmentsWe will determine whether States complied with requirements to recover 
Medicaid costs from deceased Medicaid beneficiaries estates.  We will also determine whether 
States properly reported any such recoveries to CMS.  (OAS; W-00-12-31113; W-00-13-31113; 
various reviews; expected issue date:  FY 2014; work in progress) 
  State use of incorrect FMAP for Federal share adjustments (new) 
State Adjustments.  We will review States Medicaid claims records to determine whether the States 
used the correct FMAP when processing claim adjustments reported on the Form CMS-64.  (OAS; 
W-00-14-31460; various reviews; expected issue date:  FY 2015; work in progress) 
  State actions to address vulnerabilities identified during CMS reviews  
Program Integrity.  We will review corrective actions that State Medicaid agencies have implemented 
to address the findings and recommendations from State Medicaid program integrity reviews 
conducted by CMS.  We will determine why States have not implemented all corrective actions, 
examine the followup CMS performed to ensure that corrective actions were taken by States, and 
examine the evidence CMS reviews to ensure that corrective actions were implemented.  (OEI; 
00-00-00000; expected issue date:  FY 2015; new start) 
  State terminations of providers terminated by Medicare or by other States  
Program Integrity.  We will review States compliance with a new requirement that they terminate 
their Medicaid program providers that have been terminated under Medicare or by another State 
Medicaid progam.  We will determine whether such providers are terminated by all State Medicaid 
programs in which they are enrolled, assess the status of the supporting information-sharing system, 
determine how CMS is ensuring that States share complete and accurate information, and identify  HHS Office of Inspector General  Page 43 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
obstacles States face in complying with the termination requirement.  (OEI; 06-12-00030; expected 
issue date:  FY 2014; work in progress; Affordable Care Act) 
  Recovering Medicaid overpaymentsCredit balances in Medicaid patient accounts  
Overpayment Recovery.  We will review providers patient accounts to determine whether there are 
Medicaid overpayments in accounts with credit balances.  (OAS; W-00-12-31311; W-00-13-31311; 
various reviews; expected issue date:  FY 2014; work in progress)   
  State collection and verification of provider ownership information   
Program IntegrityWe will determine the extent to which States and CMS collect and verify 
required ownership information for provider entities enrolled in Medicare and Medicaid.  We will 
also review States and CMSs practices for collecting and verifying provider ownership information 
and determine whether States and CMS had comparable provider ownership information for 
providers enrolled in both Medicaid and Medicare.  (42 CFR  455.104.)  (OEI; 04-11-00590, 
04-11-00591, 04-11-00592; expected issue date:  FY 2015; work in progress) 
  States experiences with enhanced provider screening 
Program Integrity.  We will review States progress toward rescreening or revalidating all Medicaid 
providers by 2016.  We will assess how States are complying with the mandate to conduct enhanced 
screening; determine how many providers are enrolled in both Medicare and Medicaid; and 
determine whether States can use screenings from Medicare, other State Medicaid programs, and 
the Children's Health Insurance Program (CHIP).   (OEI; 05-13-00520; expected issue date FY 2015; 
work in progress; Affordable Care Act) 
  Provider payment suspensions during pending investigations of credible fraud 
allegations (new) 
Program Integrity.  We will review payments to providers with allegations of fraud deemed credible 
by States.  We will also review States suspension of payments processes.  We will determine if select 
Medicaid State agencies are in compliance with required provisions.   (OAS; W-00-14-31473; various 
reviews; expected issue date:  FY 2015; new start; and  OEI; 09-14-00020; expected issue date:  
FY 2015; work in progress;  Affordable Care Act) 
  Reviews of State Medicaid Fraud Control Units  
Program Integrity.  We will review the overall management, operations, and performance of a 
sample of Medicaid Fraud Control Units (MFCU).  We will identify effective practices and areas for 
improvement in MFCU management and operations.  (OEI; 00-00-00000; various reviews; expected 
issue date: FY 2014; work in progress). 
  States and Territories without Medicaid Fraud Control Units (new) 
Program Integrity.   We will determine whether each of the U.S. territories, none of which currently 
operate a MFCU, have sought an exemption as part of their State Medicaid plan as required by 
section 1902(a)(61) of the Social Security Act.  We will also determine whether North Dakota, the 
only State without a MFCU and which received an exemption in 1994, continues to operate under  HHS Office of Inspector General  Page 44 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
the conditions that supported the States exemption.  (OEI; 00-00-00000; expected issue date:  
FY 2015; new start)  
Medicaid Information System Controls and Security  
  Inactive or invalid provider identifier numbers  
Payment Controls.  We will review Medicaid claims to determine the extent to which State agencies 
have controls in place to identify claims associated with inactive or invalid national provider 
identifiers (NPIs), including claims for services alleged to have been provided after the dates of the 
referring physicians deaths.   
(OAS; W-00-13-31338; various reviews; expected issue date:  FY 2015; work in progress)  
  Duplicate payments for beneficiaries with multiple Medicaid identification numbers  
Payment Controls.  We will review duplicate payments made by States on behalf of Medicaid 
beneficiaries with multiple Medicaid identification numbers and identify States procedures or other 
controls for preventing such payments.   (OAS; W-00-12-31374; W-00-13-31374; various reviews; 
expected issue date:  FY 2014; work in progress) 
  States use of PARIS data matching to reduce improper payments  
Payment Controls.  We will review Public Assistance Reporting Information System (PARIS) 
enrollment data and determine the extent to which States use PARIS to prevent improper Medicaid 
payments made on behalf of beneficiaries who are simultaneously enrolled in more than one State.  
(OEI; 09-11-00780; expected issue date:  FY 2014; work in progress) 
  National Correct Coding Initiative edits and CMS oversight (new) 
Payment Controls.  We will review selected States implementation of National Correct Coding 
initiative (NCCI) edits for Medicaid claims and describe CMSs oversight of NCCI edits.   
(OAS; W-00-13-31459; various reviews; expected issue date:  FY 2014; work in progress; and OEI; 00-
00-00000; expected issue date:  FY 2015; work in progress, Affordable Care Act) 
  CMS oversight of States Medicaid information systems security controls (new) 
System Security Controls.  We will determine the adequacy of CMSs oversight of States Medicaid 
system and information security controls, including the policies, technical assistance, and security 
and operational guidance provided to the States.  For selected States, we will use OIGs automated 
assessment tools to assess controls for their information system networks, databases, Web-facing 
applications, logical access, and wireless access.  We will also review general controls, such as 
disaster recovery plans and physical security.  (OAS, W-00-13-40019; W-00-14-40019; various 
reviews; expected issue date:  FY 2014; work in progress and new start)  HHS Office of Inspector General  Page 45 
Medicaid Integrity Program Report | Fiscal Year 2013     
 
 
Medicaid Managed Care 
  Medicaid managed care reimbursement (new) 
State Payments to MCOs.  We will review States managed care plan reimbursements to determine 
whether managed care organizations (MCOs) are appropriately and correctly reimbursed for services 
provided.  We will ensure that the data used to set rates are reliable and include only costs for 
services covered under the State plan as required by or costs of services authorized by CMS.  (42 CFR 
438.6(e).)   Also, we will verify that payments made under a risk-sharing mechanism and incentive 
payments made to MCOs are within the limits set forth in Federal regulations.  ContextPrevious 
GAO work found that CMSs oversight of States rate setting required improvement  and that States 
may not audit or independently verify the MCO reported data used to set rates.  (GAO-10-810.)  
(OAS; W-00-14-31471; various reviews; expected issue date:  FY 2015; new start) 
  Medical loss ratioManaged care plans refunds to States 
Adjustments to State Payments.  We will review managed care plans with contract provisions that 
require a minimum percentage of total costs to be expended for medical services (medical loss ratio) 
to determine whether a refund was made to the State agency when the minimum medical loss ratio 
threshold was not met.  We will also determine whether plan expenses were properly classified as 
medical or administrative.  (OAS; W-00-13-31372; various reviews; expected issue date:  FY 2015; 
work in progress) 
  Completeness and accuracy of managed care encounter data  
Data Collection and Reporting.  We will determine the extent to which complete Medicaid managed 
care encounter data are included in Medicaid Statistical Management Systems (MSIS).  We will also 
identify factors that enable States and Medicaid managed care entities to collect and report MSIS 
encounter data or prevent them from performing these functions.  Finally, we will assess CMSs 
oversight of the reporting of MSIS encounter data.  (OEI; 07-13-00120; expected issue date:  FY 2015; 
work in progress; Affordable Care Act) 
  Medicaid managed care entities identification of fraud and abuse  
Program IntegrityWe will determine whether Medicaid MCOs identified and addressed potential 
fraud and abuse incidents.  We will also describe how States oversee MCOs efforts to identify and 
address fraud and abuse.  (OEI; 02-13-00640; expected issue date:  FY 2015; new start) 
  Beneficiary access to services under medicaid managed care  
Beneficiary Protections.  We will review Medicaid managed care provider networks and describe 
the extent to which managed care beneficiaries have access to services.  We will also describe State 
standards for ensuring access to primary and specialty care and will determine the extent to which 
States identify and address problems with access to care in their managed care plans.   
(OEI; 02-11-00320; 02-13-00670; expected issue date:  FY 2014; work in progress; Affordable 
Care Act)  HHS Office of Inspector General  Page 46 
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  Medicaid managed care beneficiary grievances and appeals process  
Beneficiary Protections.  We will review the extent to which States monitor Medicaid MCOs 
grievances and appeals systems for compliance with Federal requirements.  (OEI; 00-00-00000; 
expected issue date:  FY 2014; new start) 
  Oversight of managed care entities marketing practices  
Beneficiary Protections.  We will review State Medicaid agencies oversight policies, procedures, and 
activities to determine the extent to which States monitor Medicaid MCOs marketing practices and 
compliance with Federal and State contractual marketing requirements.  We will also determine the 
extent to which CMS ensures that States comply with Federal requirements involving Medicaid MCO 
marketing practices.  (OEI; 00-00-00000; expected issue date:  FY 2015; new start)