DEFICIT REDUCTION ACT OF 2005 REPORT TO CONGRESS 
FOR FISCAL YEAR 2006 
 
DEPARTMENT OF HEALTH AND HUMAN SERVICES 
OFFICE OF INSPECTOR GENERAL 
 
Table of Contents 
 
 
Section  Title  Page 
 
  1  Introduction  1 
 
  2  Overview of OIG   1 
 
  3  Summary of DRA Provisions That Affect OIG  4 
 
  4  History of OIG Involvement in Medicaid Oversight   6 
 
  5  OIG Oversight of the Medicaid Program During FY 2006  6 
 
  6  Medicaid Oversight in FY 2007 and Beyond  19 
 
 
Appendix A  List of Audits and Evaluations of Medicaid in FY 2006 
 
Appendix B  List of Planned Medicaid Work From the FY 2007 OIG Work Plan
  SECTION 1: INTRODUCTION 
 
This report fulfills the Department of Health and Human Services (HHS), Office of Inspector 
Generals (OIG) statutory requirement to report on the use and effectiveness of funds provided 
through section 6034 of the Deficit Reduction Act of 2005 (Pub. L. 109-171, DRA).  
Specifically, this report summarizes the OIGs Medicaid related oversight activities during fiscal 
year (FY) 2006.  In addition, this report includes an overview of Medicaid integrity work that 
OIG anticipates undertaking during FY 2007.   
 
 
SECTION 2:  OVERVIEW OF OIG 
 
Organization of OIG 
 
The mission of the OIG, as mandated by Public Law 95-452 (as amended), is to protect the 
integrity of HHS programs, as well as the health and welfare of the beneficiaries of those 
programs.  The OIG has a responsibility to report both to the Secretary and to the Congress 
program and management problems and recommendations to correct them.  OIG accomplishes 
its statutory responsibilities through audits, evaluations, investigations, legal services, and, when 
appropriate, with criminal and civil enforcement actions, as well as administrative sanctions, 
such as the imposition of civil monetary penalties, assessments, and exclusions.  OIG is 
organized into the following component offices to carry out these activities:  
 
  Office of Audit Services (OAS) - OAS conducts and oversees financial and 
performance audits of departmental programs and operations to determine 
whether objectives are being achieved; to determine which aspects of programs 
need to be performed more efficiently; and to identify systemic weaknesses that 
give rise to fraud, waste, or abuse.  OAS audits are conducted in accordance with 
the Government Auditing Standards.  OAS also provides leadership and direction 
in carrying out the mandates of the Chief Financial Officers Act of 1990 and the 
Government Management Reform Act of 1994 relating to financial statement 
audits. 
 
  Office of Evaluation and Inspections (OEI) - OEI conducts national evaluations to 
provide HHS, Congress, and the public with timely, useful, and reliable 
information on significant issues.  Specifically, these evaluations focus on 
preventing fraud, waste, or abuse and promoting economy, efficiency, and 
effectiveness in departmental programs.  To promote impact, the reports also 
present practical recommendations for improving program operations. 
  Office of Investigations (OI) - OI conducts investigations of fraud and misconduct 
to safeguard the Departments programs and protect its beneficiaries.  OI 
concentrates its resources on criminal investigations, but its activities are also 
aimed at deterring fraud and abuse by identifying systemic weaknesses and 
vulnerabilities that can be mitigated through corrective management actions, 
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  regulation, or legislation and by pursuing criminal convictions and recovering 
damages and penalties through civil and administrative proceedings. 
 
  Office of Counsel to the Inspector General (OCIG) - OCIG coordinates OIGs 
role in the judicial and administrative resolution of fraud and abuse cases 
involving HHS programs, including the litigation and imposition of administrative 
sanctions, such as program exclusions and civil monetary penalties and 
assessments; the global settlement of cases arising under the Civil False Claims 
Act (FCA); and the development and monitoring of corporate integrity 
agreements (CIAs) for certain providers that have settled their FCA liability with 
the Federal Government.  OCIG also develops and promotes industry-specific 
voluntary compliance program guidance and issues special fraud alerts to the 
public, special advisory bulletins, and advisory opinions regarding the application 
of OIGs sanction authorities.  OCIG is responsible for developing new, and 
modifying existing, safe harbor regulations under the anti-kickback statute.  
Finally, OCIG provides general legal services to OIG components, including 
advice and representation on HHS programs and operations, administrative law 
issues, and criminal procedure. 
 
  Office of Management and Policy (OMP) - OMP provides mission support 
services to the Inspector General and OIG components by formulating and 
executing the budget, issuing grants to State Medicaid Fraud Control Units 
(MFCU), developing administrative policies, disseminating OIG information in 
the form of publications, and managing information technology and human 
resources.  OMP also executes and maintains an internal quality assurance 
system, which includes quality control reviews of OMP processes and products, 
to ensure that OIG policies and procedures are followed effectively and function 
as intended. 
 
OIG accomplishes its mission through a network of offices, including a headquarters in 
Washington, DC, and Baltimore, MD, multiple regional offices, and approximately 90 field 
offices.  In total, more than 80 percent of OIG resources are deployed in regional and field 
offices.   
 
OIG staff at all locations work closely with the Department, its Operating and Staff Divisions, 
the Department of Justice (DOJ) and other agencies in the Executive Branch, Congress, and the 
States to bring about systemic changes, successful prosecutions, negotiated settlements, and 
recovery of funds. 
 
OIG Budget 
 
The funding that supports the oversight activities that OIG conducts is divided among a single 
discretionary budget authority and multiple mandatory authorities.  OIGs discretionary funding 
is used for oversight of all HHS programs and offices except for Medicare and Medicaid 
(including the State Childrens Health Insurance Program), which are funded separately under 
the Health Care Fraud and Abuse Control Program (HCFAC) and the Medicaid Integrity 
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  Program (MIP).  Following are summaries of the two Acts that provide OIG with funding for 
oversight of health care and, in particular, of the Medicaid program: 
 
  HCFAC Program.  The Health Insurance Portability and Accountability Act of 
1996 (Pub. L. 104-191, HIPAA) established a Health Care Fraud and Abuse 
Control Program under the joint direction of the Attorney General and the 
Secretary of HHS, acting through the HHS Inspector General.  HIPAA 
appropriates monies from the Medicare Trust Fund in amounts that the HHS 
Secretary and Attorney General jointly certify as necessary to finance antifraud 
activities, up to ceilings fixed by the Act.  Certain of these funds are, by law, set 
aside for OIG activities . . . with respect to Medicare and Medicaid.  (Social 
Security Act, 1128C(a)(1), SSA)  HIPAA also requires the Attorney General and 
the HHS Secretary to submit a joint annual report to Congress identifying 
expenditures and accomplishments under the law.  (SSA, 1817(k)(5))  These 
reports are available on the Web sites of both agencies at 
http://oig.hhs.gov/reading/publications.html and 
http://www.usdoj.gov/dag/pubdoc.html respectively.  Since FY 1997, HCFAC has 
been the primary source of funding for health care fraud investigations and 
prosecutions by both OIG and DOJ.   
 
  MIP.  The DRA established the MIP through which OIG receives enhanced 
funding for fraud and abuse control activities with respect to the Medicaid 
program.  (42 U.S.C. section 1396(c))  This funding is provided annually from 
FY 2006 though FY 2010 in addition to OIGs HCFAC resources and is available 
until expended. 
 
Table 1 presents a summary of OIGs recent funding history and current estimates of its future 
funding commitment for Medicaid oversight.   
 
Table 1:  Summary of OIGs Financial Expenditures  
Related to Medicaid Oversight, FY 2004  FY 2008  
(Dollars in Thousands) 
 
Funds  Estimated Funding   Estimated 
Estimated  Availability  Utilization  Total 
Fiscal  Medicaid  Medicaid 
Year  Percentage*  HCFAC  MIP  HCFAC  MIP1  Funding 
2004  19  $160,000  --  $30,400  --  $30,400 
2005  23  $160,000  --  $36,800  --  $36,800 
2006  28  $160,000  $25,000 $44,800  --  $44,800 
2007  30  $165,920  $25,000 $27,350  $30,000  $57,350 
2008  32  $169,238  $25,000 $29,400  $33,500  $62,900 
* FY 2007 and FY 2008 are estimated as percentages of the combined HIPAA/HCFAC and       
   DRA/MIP funding streams. 
                                                 
1   OIG did not begin spending MIP funds until FY 2007 because the funding was not available until mid-year FY 2006.  
3
   
As illustrated in Table 1, a significant portion of OIGs HCFAC funds has been used for 
Medicaid oversight in recent years.  As OIG starts spending its MIP funding in FY 2007, it can 
enhance the depth and scope of Medicaid integrity work it undertakes.  Because there is an 
overlap among the activities funded by the HCFAC and MIP sources, however, OIG work 
activities relating to Medicaid may draw on funding from both sources, especially with respect to 
investigations and subsequent prosecutions, where it is difficult  sometimes impossible  to 
accurately segregate HCFAC- and MIP-funded Medicaid enforcement activities.  For example, 
even if OIG conducted a given investigation exclusively with MIP funds, the subsequent 
prosecution of that case would draw upon DOJs own HCFAC money, so the matter would be in 
both the annual HCFAC and DRA reports.  The overlap is compounded when an investigation 
involves fraud in both Medicaid and other Federal health care programs, such as Medicare, as is 
often the case.  For these reasons, this report does not artificially divide accomplishments 
between the two funding sources; OIGs successes are typically the result of the combined 
funding from both resources.   
 
In addition, much of OIGs audit, evaluation, and investigation work requires more than 1 year to 
yield results.  As a consequence, many of the accomplishments summarized in this report reflect 
the results of work performed over several years that culminated in OIG results in FY 2006.   
 
 
SECTION 3:  SUMMARY OF DRA PROVISIONS THAT AFFECT OIG 
 
Sections 6001, 6031, and 6034 of the DRA include provisions that require OIG to conduct 
mandatory activities including specified audits and evaluations as well as annual reporting on 
overall Medicaid activities.  These sections are summarized below: 
 
  Section 6001:  Federal Upper Payment Limit for Multiple Source Drugs and 
Other Drug Payment Provisions.  This section required OIG to, by no later than 
June 1, 2006, (1) review the requirements for, and manner in which, average 
manufacturer prices (AMP) are determined under section 1927 of the SSA and 
(2) submit to the Secretary of HHS and Congress recommendations for changes in 
such requirements or manner as the Inspector General determines to be 
appropriate.   
 
  On May 30, 2006, OIG issued an audit report entitled Determining Average 
Manufacturer Prices for Prescription Drugs Under the Deficit Reduction Act of 
2005 (A-06-06-00063), which fulfilled the statutory requirement of this section.  
The AMP is used in the calculation of Medicaid rebates paid by drug 
manufacturers, and pursuant to the DRA, the AMP became the basis of Medicaid 
reimbursement limits for drugs subject to the Federal upper payment limits.  In 
this report, OIG found that some AMP requirements were unclear and that 
manufacturers methods of calculating AMPs were inconsistent.  Consistent with 
OIGs findings, industry groups also emphasized the need to clarify certain AMP 
requirements and raised additional issues related to the implementation of DRA 
provisions.  OIG recommended that the Secretary direct the Centers for Medicare 
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  and Medicaid Services (CMS), in promulgating the AMP regulation, to clarify 
requirements in regard to the definition of retail class of trade and the treatment of 
pharmacy benefit manager rebates and Medicaid sales, and to consider addressing 
issues raised by industry groups.  OIG also recommended that the Secretary direct 
CMS to issue guidance that specifically addresses the implementation of the 
AMP-related reimbursement provisions of the DRA and to encourage States to 
analyze the relationship between AMP and pharmacy acquisition cost before 
using AMP for their reimbursement methodology. 
 
  Section 6031:  Encouraging the Enactment of State False Claims Acts.  This 
section provides a financial incentive for States to enact FCAs that establish 
liability to the State for the submission of false or fraudulent claims to the States 
Medicaid program.  If a States FCA is determined to meet certain enumerated 
requirements, the Federal share of Medicaid recoveries under the State FCA will 
be reduced by 10 percentage points, or in other words, the State will be allowed to 
keep an extra 10 percent of such recoveries. 
 
  Specifically, for a State to be eligible for the 10 percentage point increase in its 
share of false claims recoveries, the State law relating to false and fraudulent 
claims must be determined by OIG, in consultation with the Attorney General, to 
meet the following criteria:  (1) establish liability to the State for false or 
fraudulent claims described in the FCA with respect to Medicaid expenditures, 
(2) contain provisions that are at least as effective in rewarding and facilitating 
qui tam actions as those in the FCA, (3) contain a requirement for filing an action 
under seal for 60 days with review by the State Attorney General, and (4) contain 
a civil penalty that is not less than the amount authorized by the FCA.  The 
provision was effective beginning January 1, 2007.  
 
  On August 21, 2006, OIG published in the Federal Register its guidelines for 
evaluating State FCAs under the requirements of section 6031 of the DRA.  This 
notice was developed in consultation with DOJs Civil Division.  In the notice, 
OIG invited the States to request review of their FCAs.  Since the publication of 
the Federal Register notice, OIG has received requests to review both existing and 
proposed State laws.   
 
  As of March, 2007, OIG has provided written responses to 12 States and 
approved 5 of the State laws  those passed by Massachusetts, Illinois, Tennessee, 
Virginia, and Hawaii  for the DRA incentive.  OIG made these determinations in 
consultation with DOJs Civil Division.  The response letters are published on the 
OIGs Web site, http://www.oig.hhs.gov.   
 
  Section 6034:  Medicaid Integrity Program.  This section establishes MIP and 
requires the Secretary to enhance the capacity of CMS to conduct oversight of 
Medicaid expenditures.  The section further establishes that, from FY 2006 
through FY 2010, $25 million shall be appropriated to OIG for the Medicaid 
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  activities of OIG in addition to any other amounts appropriated or made available 
for Medicaid oversight.  Such funds shall remain available until expended.   
 
  This section also requires OIG to submit to Congress a report that identifies the 
use and effectiveness of the use of such funds no later than 180 days after the end 
of each fiscal year.   
 
 
SECTION 4:  HISTORY OF OIG INVOLVEMENT IN MEDICAID OVERSIGHT 
 
In the 10-year period from FY 1997 through FY 2006, the total Federal Medicaid expenditures 
increased 59 percent from $100 billion to $156 billion.2  As funding increased, so too did the 
programmatic and operational complexities involved in administering the program.  In response 
to the rapid growth in the Medicaid program, OIG has committed to effective oversight of the 
program through the wide range of audit, evaluation, investigative, and legal services activities it 
undertakes each year.   
 
Additional information on the content and results of OIGs prior work activities related to 
Medicaid oversight is contained in past OIG Semiannual and HCFAC reports to Congress and 
the joint OIG-DOJ MFCU report.  These documents are available on the OIG Web site at 
http://www.oig.hhs.gov/publications.html.   
 
 
SECTION 5:  OIG OVERSIGHT OF THE MEDICAID PROGRAM DURING FY 2006 
 
This section includes information on the Medicaid oversight activities conducted by OIG during 
FY 2006.  Many of the Medicaid enforcement actions and collections cited in this report will 
also be included in the total figures set forth in the OIG Semiannual and the annual HCFAC 
reports.   
 
Audit and Evaluation Reports 
 
During FY 2006, OIG issued 364 audit and 59 evaluation reports.  Of these, 70 audits and 
9 evaluations were related specifically to Medicaid.  Table 2 on the following page provides a 
summary of the health care sectors that these audits and evaluations addressed.   
 
                                                 
2 Table 8.6Outlays for Mandatory and Related Programs in Constant (FY 2000) Dollars: 1962-2012.  Historical 
Tables:  Budget of the U.S. Government Fiscal Year 2008. Washington: GPO, 2007. 
6
  Table 2: OIGs Medicaid Audit, and Evaluation  
Reports Issued in FY 2006 
 
Reports 
Healthcare Sectors  Issued 
Medicaid Services  31 
Medicaid Hospitals  17 
Medicaid Long Term and Community Care  9 
Medicaid Information Systems Controls  8 
Medicaid Drug Reimbursement  4 
Medicaid/State Childrens Health Insurance Program  4 
Medicaid Mental Health Services  2 
Medicaid Administration  3 
Medicaid Hurricane Response  1 
Total     79  
 
As a result of OIGs FY 2006 audits and evaluations of the Medicaid program, $503 million in 
costs were questioned and $137 million in potential savings of funds put to better use were 
identified.  Furthermore, management action on OIG recommendations, some of which were 
outstanding at the beginning of the FY 2006, resulted in audit disallowances of $279 million. 
 
A complete list of the audit and evaluation reports is contained in Appendix A of this document.  
The complete text of all reports, excluding the Medicaid Information Systems Controls reports, 
which are considered sensitive, can be accessed through the Reports section of the OIG Web site 
at http://www.oig.hhs.gov/reports.  Below are highlights of the findings contained in several of 
these Medicaid reports.   
 
  Review of Targeted Case Management Services Rendered by the Massachusetts 
Department of Social Services During Federal Fiscal Years 2002 and 2003  
Medicaid pays for targeted case management services to assess Medicaid 
beneficiaries service needs, refer beneficiaries to needed services, and monitor 
the services.  It does not pay for direct social services to which beneficiaries have 
been referred.  In this review, OIG found that Massachusetts included the costs 
for direct social services in the rates used to claim reimbursement for targeted 
case management services.  OIG recommended that the State refund the resulting 
$87 million Federal overpayment and work with CMS to determine the 
allowability of the remaining $13.5 million Federal share claimed.  The 
$13.5 million claimed may have already been reimbursed under other Federal 
programs.  (A-01-04-00006) 
 
  Medicaid Upper Payment Limit Calculations in Three States  The Federal upper 
payment limit is an estimate of the amount that would be paid for Medicaid 
services under Medicare payment principles.  As part of a series of reviews, OIG 
found that three States had made large Medicaid overpayments to hospitals and/or 
nursing facilities because the States had not calculated the upper payment limits in 
compliance with Federal regulations and State Medicaid plans.  OIG 
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  recommended that Alabama and New York refund a total of approximately 
$69.1 million to the Federal Government and that Mississippi work with CMS to 
resolve approximately $171 million in potential Federal overpayments.   
(A-04-03-02027; A-04-03-02025; A-02-03-01021)  
 
  Medicaid Hospital Outlier Payments in Four States  Some States make outlier 
payments to hospitals when the cost of treating a Medicaid inpatient is 
extraordinarily high compared with the average cost of treating comparable 
conditions.  As part of a series of reviews, OIG found that New York, North 
Carolina, Ohio, and Pennsylvania did not use accurate hospital cost-to-charge 
ratios to convert allowable billed charges to outlier payments.  As a result, the 
outlier payments exceeded estimated costs.  If the States had used more accurate 
cost-to-charge ratios, the States could have saved $147 million in Medicaid 
expenditures.  (A-02-04-01022; A-07-04-04038; A-05-04-00064; A-03-04-00211) 
 
  Medicaid Disproportionate Share Hospital Payments  Section 1923 of the SSA 
requires that States make Medicaid disproportionate share hospital (DSH) 
payments to hospitals that serve disproportionate numbers of low-income patients 
with special needs.  The Omnibus Budget Reconciliation Act of 1993 limits these 
payments to a hospitals uncompensated care costs, which are the annual costs 
incurred to provide services to Medicaid and uninsured patients less payments 
received for those patients.  This limit is known as the hospital-specific DSH 
limit. 
 
  DSH payments to a hospital in New Jersey exceeded the hospital-specific limits 
by $171.4 million ($85.7 million Federal share).  The States consultant 
erroneously included $169.2 million in appropriations to a medical school in its 
calculations of the hospitals DSH limits. This amount was not DSH-eligible and 
should not have been included in the DSH limit calculations.  In addition, the 
State claimed $2.2 million of duplicate DSH expenditures. 
 
  OIG recommended that the State refund $85.7 million to the Federal Government, 
adhere to Federal law and State plan requirements when submitting future DSH 
claims for Federal reimbursement, and review consultants work to ensure the 
veracity of future Medicaid claims.  The State partly agreed.  (A-02-04-01004) 
 
  Medicaid School-Based Health Claims and Service Payment Rates 
 
  Health Claims in New Jersey  Under Federal and State law and the Medicaid 
State plan, New Jersey school children who are eligible for the States Medicaid 
school-based health program must receive a health professionals prescription or 
referral to receive speech, physical, or occupational therapy and nursing services.  
Individuals who provide such services must meet Federal qualification standards.  
Of New Jerseys 150 school-based claims sampled, 109 did not comply with these 
requirements.  Deficiencies occurred because the State did not provide guidance 
regarding Federal Medicaid requirements and school health providers failed to 
8
  comply with other State guidance they had received.  In addition, the State did not 
adequately monitor school-based health claims for compliance.  OIG estimated 
that approximately $51 million in Federal Medicaid funding to New Jersey was 
unallowable. 
 
  OIG recommended that New Jersey refund the $51 million and emphasize to 
school districts the need to comply with Federal and State requirements.  New 
Jersey did not concur with OIGs financial adjustment but agreed to work with 
CMS concerning approximately $1 million in set-aside claims arising from the 
States lack of guidance and/or compliance.  (A-02-03-01003) 
 
  Payment Rates in Kansas  Kansas did not develop its payment rates for 
Medicaid school-based health services pursuant to Federal requirements and the 
State plan.  Kansas used incorrect indirect cost rates and service utilization data to 
develop the payment rates.  As a result, the payments to school districts for 
FY 1998 through FY 2003 were incorrect and Kansas received $18.5 million of 
overpayments. 
 
  OIG recommended that Kansas refund $18.5 million to the Federal Government, 
calculate and refund all overpayments that occurred subsequent to the audit 
period, and develop and implement adequate internal controls to ensure that future 
Federal claims for school-based services are consistent with Federal requirements 
and the State plan.  Kansas concurred with two of the recommendations but did 
not address the recommendation to calculate and refund overpayments subsequent 
to the audit period.  (A-07-05-01018) 
 
  Nursing Home Emergency Preparedness and Response During Hurricanes  
Federal regulations require Medicare- and Medicaid-certified facilities to maintain 
written plans and procedures to meet all potential emergencies and to train 
employees in emergency procedures.  An OIG review found that, nationwide, 
94 percent of nursing homes met Federal standards for emergency plans and 
80 percent for sufficient emergency training in 2004-2005.  Among selected 
nursing homes in Gulf States affected by four recent hurricanes, however, all 
experienced problems whether evacuating or sheltering in place. 
 
  OIG recommended that CMS consider strengthening Federal certification 
standards for nursing home emergency plans by including requirements for 
specific elements of emergency planning, and that CMS encourage 
communication and collaboration between State and local emergency entities and 
nursing homes.  CMS concurred with these recommendations and is exploring 
ways to strengthen Federal certification standards for emergency preparedness 
and to promote better coordination among Federal, State, and local emergency 
management entities.  (OEI-06-06-00020) 
 
  Generic Drug Utilization in State Medicaid Programs  Prescription drug costs 
are one of the largest and fastest growing Medicaid expenditures.  Congress and 
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  CMS have expressed support for using generic drugs to contain prescription drug 
costs.  An OIG evaluation found that, in 2004, Medicaid demonstrated high 
utilization of generic drugs.  The level of generic drug utilization was affected by 
how often generics were dispensed when generic substitutes were available 
(generic substitution) as well as by physicians prescribing habits.  On average, 
generics were dispensed 89 percent of the time when generic substitutes were 
available.  This compares favorably with a 90-percent private sector benchmark.  
However, 41 percent of prescriptions were for drugs that have no generic 
substitutes, limiting opportunities to dispense generics. 
 
  OIG concluded that many States may have already achieved much of the possible 
gains in generic utilization through increasing generic substitution.  States may 
realize greater gains by encouraging the prescribing of drugs that have generic 
equivalents, rather than single-source drugs with no generic alternatives.  Such 
efforts should be undertaken with caution to ensure that beneficiaries retain access 
to appropriate treatment.  OIG suggested that CMS consider providing 
information and technical assistance to States that wish to further increase generic 
drug utilization.  (OEI-05-05-00360) 
 
  Nursing Home Complaint Investigations  The nursing home complaint process is 
the front-line response system for addressing problems raised by residents, their 
families, and nursing home staff.  An OIG evaluation found that State agencies 
did not investigate some of the most serious nursing home complaints within the 
required timeframe, including 7 percent of complaints alleging immediate 
jeopardy and 27 percent of complaints alleging actual harm.  OIG also found that 
CMS oversight of nursing home complaint investigations is limited.  CMS 
conducts few Federal Oversight and Support Surveys (FOSS), which allow CMS's 
regional offices an opportunity to observe a State agencys complaint 
investigation process.  However, CMS guidance states that State agencies should 
provide CMS with at least 2 weeks advance notice of scheduled surveys, thus 
limiting the use of the FOSS for the most serious nursing home complaints.   
 
  OIG recommended that CMS require State agencies to meet the 10-day timeframe 
for investigating complaints involving actual harm, increase oversight of the State 
agencies, and offer additional training on the ASPEN Complaints/Incidents 
Tracking System to its regional offices as well as to State agencies.  OIG also 
recommended that CMS remove the 2-week advance notice period for FOSS.  
(OEI-01-04-00340) 
 
Investigations and Legal Services 
 
In addition to conducting audits and evaluations, OIG investigates allegations of criminal and 
civil wrongdoing through its OI in conjunction with DOJ and conducts administrative 
enforcement and litigation and provides technical support through its OCIG.  As a result of these 
activities, OIG reported over $3 billion in monetary receivables to both Federal and non-Federal 
10
  entities in FY 2006.  Of that amount, $621 million was specifically identified as restitutions or 
recoveries to be returned to Federal and State Medicaid programs.   
 
The OIGs enforcement work and industry guidance are often designed to have broad impact on 
Federal health care programs.  In large part, OIGs industry outreach and enforcement efforts 
affect other health care programs, not just Medicaid.  Table 3 presents a summary of the 
investigative, enforcement, and industry outreach related to Medicaid that OIG conducted during 
FY 2006.   
 
Table 3: OIGs Medicaid-Related Investigations and Legal Services  
in Which There Was a Medicaid Component in FY 2006 
 
OIG Activity Area*  Number 
Enforcement    
  Medicaid Cases Worked  905 
  Total Medicaid Cases Opened  346 
  Joint Investigations Worked With State MFCUs   543 
  Criminal Convictions  127 
  Civil Actions  91 
  Program Exclusions  Imposed  3,425 
  Program Exclusions  Appeal Proceedings  96 
  Civil Monetary Penalty Cases  25 
  Emergency Medical Treatment and Labor  21 
  Act  Patient Dumping 
  CIAs  New  97 
  CIAs  Monitored3  419 
Outreach   
  Advisory Opinions  15 
* Matters listed here are not necessarily Medicaid-specific.  Many  
        also involve fraud against other health care programs. 
 
 
Criminal and Civil Enforcement 
 
In FY 2006, OIG opened 346 Medicaid-related cases for investigation of criminal or civil 
wrongdoing and participated in 127 successful criminal convictions and 91 civil actions.   
 
One of the most common types of fraud perpetrated against Medicaid and other Federal health 
care programs involves filing false claims for reimbursement.  DOJ has authority to pursue false 
claims through the civil FCA, but the successful resolution of such matters often involves the 
combined investigative efforts and resources of OIG, State MFCUs, and a variety of other law 
enforcement agencies.   
 
                                                 
3  This number includes 17 quality-of-care CIAs representing more than 1,250 facilities funded primarily by Medicaid.  
11
  Providers that enter settlements resolving potential liability under the FCA often agree to enter 
CIAs with OIG to avoid program exclusions and to be permitted to continue participating in 
Medicaid and other Federal health care programs.  Such agreements are monitored by OIG and 
require the providers to either create or enhance existing compliance programs.  As such, the 
agreements may prevent or reduce fraudulent behavior in Medicaid and in other Federal health 
care programs in which the provider may participate.   
 
In FY 2006, the Governments enforcement of FCA cases resulted in over $2.7 billion in 
investigative receivables, representing civil and administrative settlements or civil judgments 
related to Medicaid and other Federal health care programs.  Some successful actions as well as 
notable criminal enforcement actions are described below:   
 
Criminal Enforcement 
 
  An oncologist in Tennessee was found guilty by a Federal jury, and was 
sentenced to 15 years and 8 months in jail and ordered to pay $432,000 in 
restitution for her scheme to provide partial doses of medications to chemotherapy 
patients and for lying to a Federal agent about the scheme.  An investigation and 
comprehensive analysis of records revealed that the oncologist billed for 
substantially more chemotherapy and related medications than she actually 
purchased from manufacturers.  The oncologist instructed her staff to give 
patients partial doses of Procrit but to indicate on patients charts that full doses 
were provided.  Diluted doses of chemotherapy drugs Taxol and Camptosar were 
also administered to patients.  This investigation involved OIG and the Tennessee 
MFCU.  
 
  A physician in Texas was sentenced to 11 years and 3 months in prison and 
ordered to pay $14.4 million in joint and several restitution for his role in 
defrauding the Medicare and Medicaid programs.  Beginning in August 1999, the 
physician caused the submission of false claims to Medicare for physical therapy 
evaluations and services.  As part of the scheme, the physician received payments 
for signing patient charts so that clinic owners could fraudulently bill Medicare 
and Medicaid.  In 2001, the physician became involved in another scheme related 
to the submission of claims for services he provided to beneficiaries who were 
unlawfully referred to him for motorized wheelchairs.  The beneficiaries were 
transported to his clinic for the purpose of having motorized wheelchairs 
authorized.  The physician performed medical services, many of which were 
unnecessary, then prepared and signed certificates of medical necessity 
authorizing the motorized wheelchairs.  Some beneficiaries never saw the 
physician or qualified for wheelchairs. 
 
  A durable medical equipment company owner involved in the above-referenced 
wheelchair scheme was sentenced to 5 years and 3 months incarceration, 
ordered to pay $478,000 in restitution to the Medicaid program, and held jointly 
responsible for paying $4.2 million of the joint and several restitution ruling.  In 
addition, two individuals paid to recruit Medicare and Medicaid beneficiaries 
12
  were sentenced for their roles in the scheme.  One was sentenced to 12 months 
and 1 day in prison, and the other was sentenced to 6 month home detention. 
 
Civil Enforcement 
 
False claims submitted in violation of the FCA or Civil Monetary Penalties Law give rise to 
OIGs permissive exclusion authority under 42 U.S.C. 1320a-7(b)(7).  As part of the resolution 
of these cases, OIG often negotiates compliance obligations, including CIAs, with health care 
providers and other entities.  A provider or entity consents to these obligations in exchange for 
OIG's agreement not to seek an exclusion of that health care provider or entity from participation 
in Medicaid and other Federal health care programs.  Providers who settle these cases generally 
deny that they were liable or that they committed the alleged conduct. 
 
The typical term of a CIA is 5 years.  Although many CIAs have common elements, each 
agreement addresses the specific facts of the conduct at issue and is tailored to comport with the 
capabilities of the provider.  The agreements often attempt to accommodate and recognize many 
of the elements of preexisting voluntary compliance programs established by the providers.  
Examples of CIAs issued in FY 2006 include the following: 
 
  Tenet Healthcare Corporation, operator of the nations second largest hospital 
chain, entered into a global civil settlement to resolve a number of investigations 
for alleged unlawful billing practices, improper outlier payments, kickbacks, and 
other conduct.  Tenet agreed to pay the Government $900 million plus interest 
and enter into a 5-year CIA to resolve its liability under the FCA and related 
authorities.  Over $788 million of the settlement is attributable to claims related to 
outlier payments that were based on inflated charges Tenet billed for inpatient and 
outpatient care.  More than $47 million will resolve Tenets liability for allegedly 
paying a kickback to physicians for patient referrals and for billing Medicare for 
services that were ordered or referred by a physician with whom Tenet had a 
financial relationship.  Another $46 million is attributed to allegations that in 
order to increase its reimbursements, Tenet submitted claims that assigned 
diagnosis related group (DRG) codes that were improper or were not supported by 
patient records, a practice known as upcoding.  Over $10 million of the 
settlement amount was returned to both Federal and State Medicaid programs.   
 
  As part of the resolution of its civil and administrative liability, Tenet agreed to a 
5-year CIA in September 2006.  Under the CIA, Tenet will implement a 
comprehensive compliance program and engage independent review 
organizations to review its DRG claims, outlier payments, physician relationships, 
and clinical quality management.  The CIA also includes unprecedented 
provisions requiring the Quality, Compliance and Ethics Committee of Tenets 
Board of Directors to review the effectiveness of Tenets compliance program. 
 
  Serono, S.A., along with its U.S. subsidiaries, Serono, Inc., Serono Holdings, Inc., 
and Serono Laboratories, Inc. (collectively known as Serono), agreed to enter a  
13
  global criminal, civil, and administrative settlement that included the payment of 
$704 million plus interest and a 5-year CIA.  Over $390 million of the settlement 
amount was returned to both Federal and State Medicaid programs.  The global 
settlement resolved allegations that Serono engaged in the illegal promotion of its 
AIDS-related drug Serostim and offered and paid illegal remunerations to 
physicians and pharmacies to induce them to prescribe and/or purchase Serostim.  
The company also used an unapproved medical device as a marketing tool to 
diagnose AIDS-wasting syndrome, the condition that Serostim was approved to 
treat. 
 
  American Healthcare Management, Inc. (AHM), its individual owners, and three 
affiliated nursing homes agreed to pay the Government $1.25 million to settle 
allegations of submitting false and fraudulent nursing home billings to Medicare 
and Medicaid for poor quality of care.  From January 1998 through June 2001, the 
Government alleged that because of staffing limitations, numerous residents of 
the nursing homes suffered from dehydration and malnutrition, went for extended 
periods of time without being cleaned or bathed, and developed preventable 
pressure sores.  In addition, the Government alleged that instances of elopements 
of residents from the facilities occurred, a resident was found covered with ants, 
and a resident was physically abused by a staff member.  As part of the 
settlement, AHM and the three nursing homes agreed to permanent exclusions, 
and the principal owner agreed to a 20-year exclusion from participation in 
Federal health care programs.  The other owner agreed to certify annually that he 
had no involvement in Medicare or Medicaid, and that if he did opt to bill those 
programs, he would enter a CIA at that time.   
 
  SmithKline Beecham Corporation, doing business as GlaxoSmithKline, agreed to 
pay the Government $149 million plus interest to resolve its liability associated 
with certain pricing and marketing practices for Zofran and Kytril, two antiemetic 
drugs used primarily in conjunction with oncology and radiation treatment to 
prevent nausea.  Over $16 million of the settlement amount is expected to be 
returned to both Federal and State Medicaid programs.  The Government alleged 
that during different times between 1994 and 2002, GlaxoSmithKline engaged in 
a scheme to set and maintain fraudulent and inflated prices for the drugs knowing 
that Federal health care programs, including Medicaid, established reimbursement 
rates based on those prices.  The inflated prices were substantially higher than the 
prices paid by the majority of GlaxoSmithKlines customers, and the company is 
alleged to have used the spread between the inflated prices and actual acquisition 
costs in marketing and selling the drugs to customers, causing the customers to 
submit false and fraudulent claims.  The Government also alleged that, with regard 
to Kytril, GlaxoSmithKline engaged in a scheme to encourage customers to pool 
leftover product from multiple vials of Kytril to create an extra dose of the drug.  
The extra doses were then allegedly administered to patients and rebilled to 
Federal health care programs.  As part of the settlement, GlaxoSmithKline agreed 
to enter into a 5-year addendum to its existing CIA with OIG. 
 
14
  Administrative Sanctions 
 
Program Exclusions 
 
Through the legal authorities contained in sections 1128 and 1156 of the SSA, OIG established a 
program to exclude individuals and entities from participation in Medicaid, Medicare, and other 
Federal health care programs.  OIG maintains a list of all currently excluded parties called the 
List of Excluded Individuals/Entities from Federal health care programs.  The bases for 
exclusion include convictions for program-related fraud, patient abuse, State licensing board 
actions, default on Health Education Assistance Loans, and violation of existing CIAs.  Many of 
these are acts committed against the Medicaid program or its beneficiaries. 
 
During FY 2006, OIG excluded 3,425 individuals and entities from participating in Medicaid, 
Medicare, and other health care programs.  These exclusions can have the effect of reducing 
potential fraud that may be committed by the excluded entities against similar Federal health care 
programs.   
 
Examples of program exclusions in FY 2006 include: 
 
  Maryland  A psychiatrist was excluded for a minimum of 25 years for his 
conviction related to a health care fraud scheme and was sentenced to 18 months 
home detention and ordered to pay $305,000 in restitution.  The psychiatrist 
caused an estimated loss of $1.7 million to the Medicaid program. 
 
  New York  A clinic owner/operator was excluded for a minimum of 15 years as a 
result of his conviction for filing false claims with the Medicaid program.  The 
owner/operator was sentenced to 1 year in jail and ordered to pay $245,000 in 
restitution. 
 
  Florida  OIG excluded South Beach Community Hospital (formerly South Shore 
Hospital and Medical Center) from participation in Medicare, Medicaid, and other 
Federal health care programs.  The exclusion resulted from the hospitals material 
breach of the terms of a CIA that the hospital negotiated with OIG in 2002 as part 
of the resolution of a FCA case against the hospital.  OIG determined that South 
Beach was in material breach for its repeated failure to submit timely, complete, 
and accurate required reports and its failure to implement fully the Independent 
Review Organization requirements of the CIA.  South Beach also neglected to 
notify OIG, as required under the CIA, of its sale to new owners, who are also 
subject to the terms of the CIA.  OIG determined that South Beachs repeated and 
egregious failure in this case to abide by the terms of its CIA necessitated that the 
OIG, for the first time, seek exclusion for such a violation. 
 
Emergency Medical Treatment and Labor Act (42 U.S.C. 1395dd) 
 
The Emergency Medical Treatment and Labor Act (EMTALA) requires of all hospitals that 
receive Federal funding through Medicaid and other Federal health care programs that if any 
15
  individual . . .  comes to a hospital and the hospital determines that the individual has an 
emergency medical condition, the hospital must provide either (A) within the staff and facilities 
available at the hospital, for such further medical examination and such treatment as may be 
required to stabilize the medical condition, or (B) for transfer of the individual to another 
medical facility.  This statute is designed to ensure patient access to appropriate emergency 
medical services regardless of the patients health insurance coverage status. 
 
In FY 2006, OIG collected $680,000 in civil monetary penalties, representing collections from 
19 hospitals and one physician under EMTALA.  The following are examples of settlements 
involving alleged violations of that statute: 
  Citizens Memorial Hospital (CMH), Missouri, agreed to pay $75,000 to resolve 
its liability for civil monetary penalties under EMTALA.  OIG alleged that CMH 
failed to provide appropriate medical screening examinations to three patients 
who went to CMHs emergency department with various medical conditions, 
including a baby with life-threatening acute bronchitis and exacerbated asthma; a 
woman whose intestines were protruding from a loose C-section incision; and a 
teenage boy who complained that he could not move, stand, walk, or feel his 
limbs.  
 
  Poudre Valley Health System, Poudre Valley Hospital (PVH), Colorado, agreed 
to pay $55,000 to resolve its liability for civil monetary penalties under the patient 
dumping statute. OIG alleged that PVH failed to transport to its emergency 
department and failed to provide an appropriate medical screening examination to 
a deaf, nonverbal, and developmentally disabled male.  Two days after being 
turned away, the man died at home of hypovolemic shock caused by gastritis with 
erosion, ulcers, and gastric hemorrhage. 
 
 
Medicaid Fraud Control Units 
 
In addition to conducting its audits, evaluations, investigations and providing legal services, OIG 
is also responsible for oversight of Federal grants to State MFCUs.  In FY 2006, OIG oversaw 
the distribution of $159 million to MFCUs in 48 States and the District of Columbia.  During this 
same time period, OIG participated in 536 joint investigations with MFCUs and opened 345 
investigations into potential fraud involving the Medicaid program.   
OIG has an additional responsibility to oversee MFCUs.  Section 1902(a)(61) of the SSA, as 
amended by section 13625 of the Omnibus Budget Reconciliation Act of 1993, required OIG to 
develop performance standards for assessing MFCUs.  The standards are to assess the 
effectiveness and efficiency of MFCUs and enable OIG to determine whether the MFCUs are 
carrying out their duties and responsibilities in an effective manner and in accordance with 
applicable law.  These standards were created in consultation with the MFCU community and 
made effective on September 26, 1994.  In FY 2006, OIG conducted 12 onsite reviews of 
MFCUs.  
16
  Outreach 
 
Joint Audits of Medicaid  Federal and State Partnership 
 
OIG works closely with State auditors in reviewing the Medicaid program.  To this end, a 
partnership plan was developed to foster joint reviews and provide broader coverage of the 
Medicaid program.  Since its inception, the partnership approach has ensured more effective use 
of scarce audit resources by both the Federal and the State audit sectors in 25 States.   
 
Reports issued to date have resulted in identification of more than $263 million in Federal and 
State savings and have led to joint recommendations for savings and improvements in internal 
controls and computer systems operations at the Federal and State levels. 
 
Advisory Opinions 
 
In accordance with section 205 of HIPAA, OIG, in consultation with DOJ, issues advisory 
opinions to outside parties regarding the interpretation and applicability of certain statutes 
relating to Federal health care programs.  This authority allows OIG to provide case-specific 
formal guidance regarding the application of the anti-kickback statute and safe harbor provisions 
and other OIG health care fraud and abuse authorities. 
 
In Advisory Opinion 06-15, OIG considered an agreement between a corporation (Requestor) 
and a State Medicaid agency (the Agency), under which Requestor would develop and 
implement a disease management program that included pay-for-performance payments to 
physicians.  For Requestor to comply with State law, the Agency required that Requestor 
disburse the incentives to Medicaid providers participating in the program in the form of checks 
drawn on a bank account owned by Requestor.  Despite the appearance that Requestor was 
making payments to physicians by issuing pay-for-performance program checks drawn on 
Requestors bank account, OIG found that Requestors duties as a payment administrator for the 
Agencys pay-for-performance program did not implicate the anti-kickback statute because the 
payments were not made with Requestors money and Requestor did not have control or 
discretion over the payments.  Moreover, because the payments did not reflect the use of 
Requestors products or services, Requestor was not using another partys funds to disguise 
payments for referrals.  
 
In Advisory Opinion 06-06, OIG evaluated a citys request for proposal (RFP) concerning 
emergency ambulance services in the city.  The city required each bidder to propose a per 
response payment to the city for each call in which the city provided first responder services.  
Under the RFP, the successful bidder agreed to charge uninsured city residents for only basic life 
support and transportation services and also agreed to replenish without charge certain supplies 
used by the city in providing first responder services.  OIG determined that although the 
proposed arrangement could implicate the anti-kickback statute, OIG would not impose 
sanctions because the arrangement was only one part of a comprehensive regulatory scheme to 
manage emergency medical services; it was established pursuant to an open and competitive 
bidding process; it would only partially reimburse the city for its costs; and the compensation 
would inure to the public benefit.  In addition, OIG noted that the proposed arrangement did not 
17
  pose an increased risk of overutilization or increased costs to Federal health care programs 
because ambulance services are paid by Medicare and Medicaid based on fee schedules, and the 
successful bidder remained obligated to bill for such services in accordance with applicable 
payment and coverage rules. 
 
Other OIG Activities Enhancing Medicaid Integrity 
 
OIG has undertaken a diverse array of other activities to enhance its capacity to fight fraud, 
waste, and abuse in Medicaid and develop the capacity of its Federal and State partners in 
conducting their Medicaid oversight responsibilities.  Specifically, during FY 2006, OIG:  
 
  Cosponsored a conference with DOJs Office of Legal Education on Medicaid 
fraud enforcement entitled HHS Seminar on Strengthening OIG Response to 
Medicaid Fraud  Developing Successful Investigations.  The conference was 
designed for Federal agents and attorneys with backgrounds in health care fraud 
and included 130 attendees and speakers from OIG, the Government 
Accountability Office (GAO), MFCUs, State Attorneys General, U.S. Attorneys 
Offices, and DOJ.  
 
  Seminar topics included:  
 
o  Medicaid Vulnerabilities  The GAO Perspective, 
o  Federal and State False Claims Acts,  
o  Investigative Tools,  
o  Drug Diversion,  
o  Kickbacks,  
o  Case Resolution,  
o  Challenges to Collaboration:  A Panel Discussion,  
o  Nursing Home Fraud:  Financial Fraud and Failure of Care,  
o  Trying a Fraud Case:  Lessons Learned; Home Health Care Fraud,  
o  Medical Transportation Fraud,  
o  Hospital Medicaid Fraud, and 
o  Pharmaceutical Cases. 
 
  Established an OIG MIP workgroup to plan OIGs Medicaid oversight work and 
coordinate with CMS on matters of mutual interest.  The group meets with the 
CMS Medicaid Integrity Group at least once each month to strengthen existing 
relationships, improve coordination and collaboration efforts between OIG and 
CMS, and offer technical assistance to the CMS Medicaid Integrity Group.  
 
 
18
  SECTION 6:  MEDICAID OVERSIGHT IN FY 2007 AND BEYOND 
 
At the beginning of each fiscal year, OIG publishes its Work Plan to highlight the areas in which 
the office expects to conduct oversight work during the coming year.  In addition to being a 
planning document, the work plan also serves as a method for focusing public attention on the 
areas deemed important and identified as particularly vulnerable to fraud, waste, and abuse.   
 
Throughout the course of each fiscal year, the OIG work actually undertaken changes as a result 
of a number of factors.  Some activities announced in the Work Plan may shift from high to low 
priority or may be postponed until future years as a result of the changing focus of Congress, the 
Secretary, OIG, or an intervening emergency or in response to trends identified in other related 
work.  As such, OIGs work planning is an evolving process that enables OIG to remain 
adaptable to the changing priorities of its stakeholders.  
 
Appendix B of this report identifies more than 80 new Medicaid audits and evaluations that OIG 
anticipates undertaking during FY 2007 in addition to those activities that were undertaken but 
not completed in prior fiscal years.  Although most Work Plan items will be initiated in FY 2007, 
many will not be completed within the fiscal year.  Some of these reviews increase the scope and 
depth of prior OIG work by conducting follow-up activities; others expand into new and 
emerging areas of interest.  Detailed summaries of OIGs anticipated work activities for FY 2007 
can be found in the OIG Work Plan, which is located in the Publications section of the OIG Web 
site at http://www.oig.hhs.gov/publications. 
 
In addition to conducting the activities contained in the FY 2007 Work Plan, OIG will continue 
to undertake investigations of allegations of criminal and civil wrongdoing committed against the 
Medicaid program along with other activities focused on enhancing Medicaid enforcement and 
fraud prevention. These activities include the following:  
 
  A nationwide MFCU outreach, coordination, and training initiative.  The initiative 
is an ambitious plan to bring together senior leadership and investigators from 
OIG, CMS, and State MFCUs to build on existing relationships and optimize the 
joint investigative potential and utilization of review in the Medicaid program.  
OIG is planning meetings in New York, Boston, Dallas, Philadelphia, and Atlanta 
during FY 2007. 
 
  The meetings will span 2 to 3 days and involve a number of presentations from 
OIG, State MFCU directors, and CMS representatives involved with the Medicaid 
Integrity Group, Medicare-Medicaid data match program (Medi-Medi), and 
Medicare Part D.  The meetings will be organized so that Federal and State 
investigators can share best practices from casework examples to increase their 
awareness of successful investigative techniques and identify areas where 
partnership and collaboration can enhance the quality and efficiency of 
investigations. 
 
  In FY 2008, OIG plans to expand this outreach effort to additional State partners 
nationwide. 
19
   
  OIG plans to begin working with CMS, State MFCUs, and the National 
Association for Medicaid Program Integrity to improve the capacity of the three 
organizations to make proper referrals based on a shared understanding of the 
elements of successful investigations.  
 
  OIG will conduct its biannual training conferences to help the MFCUs meet their 
training needs.  The purpose of these training conferences is to provide guidance 
on issues and concerns that relate directly to the oversight responsibilities of 
OIG.  Topics such as OIGs Federal oversight role, Federal reporting 
requirements, and budget administration will be addressed during the 
conferences.  The FY 2007 training will take place in Chicago, Illinois, from 
July 30 through August 2, 2007.   
 
Together, the varied and far-reaching activities that OIG undertakes each year position the 
Federal Government to better monitor the integrity of funds appropriated to HHS for the 
operation of Medicaid and more than 300 other departmental programs.  In so doing, OIG serves 
Congress, the Department, and the American public by improving the solvency of all 
Government-sponsored health and human services programs. 
20
  Appendix A:  List of Audits and Evaluations of Medicaid in FY 2006 
 
The following section contains report titles and reference numbers for OIGs Medicaid-related 
audit and evaluation reports issued during FY 2006.  The full reports are available on the OIG 
website at http://www.oig.hhs.gov.  
 
 
Medicaid Hospitals 
 
Review of Medicaid Support for Graduate Medical Education in Minnesota During Fiscal Year 
2000 (A-05-04-00071) 
 
Medicaid Graduate Medical Education in Texas (A-06-06-00027) 
 
Review of Medicaid Support for Graduate Medical Education in Iowa (A-07-04-03055) 
 
Review of Medicaid Support for Graduate Medical Education in Ohio During Fiscal Year 2000 
(A-05-05-00032) 
 
Review of Medicaid Support for Graduate Medical Education in the State of Michigan  
(A-05-05-00018) 
 
Review of Medicaid Disproportionate Share Hospital Payments to University Hospital, 
University of Medicine and Dentistry of New Jersey:  July 1, 1995, Through June 30, 2001  
(A-02-04-01004) 
 
Medicaid Hospital Outlier Payments in New York for State Fiscal Years 1998 Through 2002  
(A-02-04-01022) 
 
Medicaid Outlier Payments at Inpatient Hospitals in Texas (A-06-04-00051) 
 
Review of Georgia's Medicaid Cost Outlier Payments (A-04-04-00009) 
 
Review of Ohio's Medicaid Hospital Outlier Payments for State Fiscal Years 2000 Through 2003 
(A-05-04-00064) 
 
Medicaid Hospital Outlier Payments in North Carolina for State Fiscal Years 1998 Through 
2002 (A-07-04-04038) 
 
Audit of New York States Medicaid Upper Payment Limits for Non-State Government Inpatient 
Hospitals and Nursing Homes (A-02-03-01021) 
 
Review of Alabamas Medicaid Upper Payment Limit Calculations for Hospitals and Nursing 
Facilities (A-04-03-02027) 
 
21
  Review of Mississippis Medicaid Upper Payment Limit Calculations for Hospitals and Nursing 
Facilities (A-04-03-02025) 
 
Review of the Methodology for Calculating the Upper-Payment-Limit for Inpatient Hospitals by 
the Massachusetts Office of Medicaid for State Fiscal Year 2003 (A-01-03-00009) 
 
Medicaid Hospital Outlier Payments in Pennsylvania for State Fiscal Years 1998-1999 Through 
2002-2003 (A-03-04-00211) 
 
Audit of Selected States' Medicaid Disproportionate Share Hospital Programs (A-06-03-00031) 
 
 
Medicaid Long Term and Community Care 
 
Review of Durable Medical Equipment Providers' Medicaid Claims for Residents of Assisted 
Living Programs (A-02-05-01017) 
 
Medicaid Payments for Beneficiaries With Concurrent Eligibility in Michigan and Ohio - 
Michigan Department of Community Health (A-05-06-00020) 
 
Medicaid Payments for Beneficiaries with Concurrent Eligibility in Ohio and Michigan, Ohio 
Department of Job and Family Services (A-05-06-00021) 
 
Review of Targeted Case Management Services Rendered by the Massachusetts Department of 
Social Services During Federal Fiscal Years 2002 and 2003 (A-01-04-00006) 
 
Review of Medicaid Claims for Assisted Living Program Beneficiaries Who Are Hospitalized  
(A-02-05-01003) 
 
Audit of Hawaii's Medicaid Expenditures for Nursing Facility Services for the Period July 1, 
2003, Through June 30, 2004 (A-09-05-00058) 
 
Nursing Home Enforcement:  Application of Mandatory Remedies (OEI-06-03-00410) 
 
Nursing Home Enforcement:  State Compliance With Referral Requirements (OEI-06-03-00400) 
 
Nursing Home Enforcement:  Complaint Investigations (OEI-01-04-00340) 
 
 
Medicaid Mental Health Services 
 
Review of Medicaid Community Mental Health Provider Services in Illinois (A-05-05-00055) 
 
Review of Kansas's Mental Health Center Medicaid Administrative Cost for the Quarters Ended 
December 31, 2002, and March 31, 2003 (A-07-05-03063) 
 
22
   
Medicaid/State Childrens Health Insurance Program 
 
Review of Medicaid Claims Made by Lake Grove Schools in New York (A-02-06-01001) 
 
Resolution of Audit Findings on States' Beneficiary Eligibility Determinations for Medicaid and 
the State Children's Health Insurance Program (A-07-06-03073) 
 
Review of the Adequacy of New Jersey Controls for Preventing Duplicate Medicaid and State 
Children's Health Insurance Program Payments (A-02-04-01011) 
 
Determining If Children Classified as SCHIP Medicaid Expansion Meet Eligibility Criteria  
(OEI-07-03-00221) 
 
 
Medicaid Drug Reimbursement 
 
Determining Average Manufacturer Prices for Prescription Drugs Under the Deficit Reduction 
Act of 2005 (A-06-06-00063) 
 
Follow-up Audit of the Medicaid Drug Rebate Program in Colorado (A-07-05-04048) 
 
Dual Eligibles Transition:  Drug Access Under Prescription Drug Plans Formularies  
(OEI-05-06-00090) 
 
Generic Drug Utilization in State Medicaid Programs (OEI-05-05-00360) 
 
 
Medicaid Services 
 
Review of Medicaid School-Based Services in Kansas - Bundled Rate Development  
(A-07-05-01018) 
 
Medicaid School-Based Services in Kansas - Adjustment of the Bundled Rates (A-07-06-01030) 
 
Review of Medicaid Claims for School-Based Health Services in New Jersey (A-02-03-01003) 
 
Review of School-Based Health Services in Kansas (A-07-03-00155) 
 
Review of Medicaid School-Based Services in Kansas  Application of Bundled Rates  
(A-07-04-01003) 
 
Review of Family Planning Service Costs Claimed by Pennsylvanias Medicaid Managed Care 
Program (A-03-03-00214) 
 
23
  Review of Family Planning Service Costs Claimed by Delawares Medicaid Managed Care 
Program (A-03-03-00220) 
 
Audit of Vermont's Medicaid Payments for Family Planning Services Reimbursed at Enhanced 
Rates for the Period October 1, 2003 Through September 30, 2004 (A-01-05-00002) 
 
Audit of Medicaid School-Based Services in Texas (A-06-02-00047) 
 
Review of Vermont's Accounts Receivable System for Medicaid Provider Overpayments  
(A-01-06-00002) 
 
Review of Administrative Costs for Community Mental Health Centers in Indiana  
(A-05-04-00081) 
 
Review of Medicaid School-Based Administrative Costs in Minnesota From July 1, 2003, 
Through June 30, 2004 (A-05-05-00040) 
 
Review of Arkansass Reporting of Medicaid Overpayments Collected by Contractors  
(A-06-06-00023) 
 
Review of The Maine Claims Management System (A-01-05-00007) 
 
Missouri Medicaid Payments for Skilled Professional Medical Personnel (A-07-05-03066) 
 
Audit of the Kentucky Medicaid Agency's Buy-In of Medicare Parts A and B (A-04-05-03003) 
 
Review of Louisiana's Accounts Receivable System for Medicaid Provider Overpayments  
(A-06-06-00036) 
 
Audit of Illinois' Medicaid Payments for Skilled Professional Medical Personnel for the Period 
October 1, 2003 Through September 30, 2004 (A-05-05-00051) 
 
Nebraska Medicaid Payments for Skilled Professional Medical Personnel (A-07-05-03067) 
 
Review of Texas's Accounts Receivable System for Medicaid Provider Overpayments  
(A-06-05-00041) 
 
Iowa Medicaid Payments for Skilled Professional Medical Personnel (A-07-05-03062) 
 
Review of University of Massachusetts Administrative Cost Claims Under the Medicaid 
Program for the Period From July 1, 2002 Through June 30, 2004 (A-01-04-00012) 
 
Review of Montana's Accounts Receivable System for Medicaid Provider Overpayments for the 
Period October 1, 2002, Through September 30, 2004 (A-07-05-03064) 
 
24
  Review of Medicaid Administrative Costs Claimed Through Maryland's Statewide Cost 
Allocation Plan (A-03-05-00202) 
 
Review of Arkansas's Accounts Receivable System for Medicaid Provider Overpayments  
(A-06-05-00039) 
 
Review of New Jerseys System for Medicaid Provider Overpayments (A-02-04-01009) 
 
Audit of LaPorte Consortiums Administrative Costs Claimed for Medicaid School-Based 
Services (A-06-02-00051) 
 
Review of Floridas Accounts Receivable System for Medicaid Provider Overpayments  
(A-04-03-06003) 
 
Review of Hawaii's Medicaid Management Information System Expenditures for the Period 
July 1, 2002, Through December 31, 2004 (A-09-05-00052) 
 
Audit of Ohio's Medicaid Payments for Skilled Professional Medical Personnel for the Period 
October 1, 2002 Through September 30, 2003 (A-05-04-00078) 
 
Review of Medicaid Provider Overpayments in North Dakota (A-07-05-03065) 
 
Medicaid Administration 
 
Audit of Selected States' Medicaid Payments for Services Claimed To Have Been Provided to 
Deceased Beneficiaries (A-05-05-00030) 
 
Factors Impacting Referral of Suspected Medicaid Fraud Cases:  State Medicaid Agency and 
Medicaid Fraud Control Unit Experiences (OEI-07-04-00180) 
 
Review of the Centers for Medicare and Medicaid Services Medicaid Financial Management 
Oversight (OEI-06-04-00480) 
 
Medicaid Information Systems Controls 
 
Information System Controls Over Medicaid Claims Processing - Florida (A-04-04-05010)  
 
Information System Controls Over Medicaid Claims Processing - Louisiana (A-06-05-00030) 
 
Information System Controls Over Medicaid Eligibility - Louisiana (A-06-05-00031) 
 
Information System Controls Over Medicaid Claims Processing - Oklahoma (A-06-06-00024) 
 
General Controls for Medicaid Claims Processing - Colorado (A-07-05-02706) 
 
General Controls for Medicaid Eligibility - Colorado (A-07-05-02707) 
25
   
General Controls for Medicaid Claims Processing - California (A-09-04-00045) 
 
General Controls for Medicaid Claims Processing - Oregon (A-09-05-00078) 
 
 
Medicaid Hurricane Response 
 
Nursing Home Emergency Preparedness and Response During Recent Hurricanes 
(OEI-06-06-00020) 
 
 
 
26
  Appendix B:  List of Planned Medicaid Work From the FY 2007 OIG Work Plan 
 
The following section contains Medicaid-related audit and evaluation work that OIG plans to 
conduct during FY 2007.  For access to the summaries of the objectives of each report please 
visit the Publications section of the OIG website at http://www.oig.hhs.gov.  
 
 
Medicaid Hospitals 
 
Hospital Outlier Payments (OAS; W-00-04-31069; W-00-05-31069) 
 
Disproportionate Share Hospital Payments  
(OAS; W-00-04-31001; W-00-05-31001; W-00-05-39023)  
 
Hospital Eligibility for Disproportionate Share Hospital Payments (OAS; W-00-05-31084) 
 
 
Medicaid Long Term and Community Care 
 
Billing for Medicaid Nursing Home Patients Transferred to Hospitals (OAS; W-00-07-31201) 
 
Community Residence Claims (OAS; W-00-07-31087) 
 
Assisted Living Facilities (OAS; W-00-04-31076; W-00-05-31076) 
 
Targeted Case Management (OAS; W-00-05-31082; W-00-06-31082) 
 
Home and Community Based Services Administrative Costs (OAS; W-00-03-39003; W-00-04-
39003; A-04-03-03025; A-04-03-03026; A-04-04-04006) 
 
Home and Community Based Services:  Erroneous Medicaid Payments After a Beneficiarys 
Death (OEI; 00-00-00000) 
 
Home and Community Based Services:  Erroneous Medicaid Payments During a Beneficiarys 
Institutionalization (OEI; 00-00-00000) 
 
Medicaid Payments for Medicare-Covered Home Health Services (OEI; 07-06-00641) 
 
 
Medicaid Mental Health Services  
 
Community Mental Health Centers (OAS; W-00-04-39020; W-00-05-39035; W-00-05-31099) 
 
Medicaid Supplemental Mental Health Payments to Prepaid Inpatient Health Plans  
(OAS; W-00-06-31098; A-07-06-04067) 
 
27
  Medicaid Outpatient Mental Health Services:  Appropriateness of Payments  
(OEI; 00-000-00000) 
 
Restraint and Seclusion in Childrens Psychiatric Residential Treatment Facilities  
(OEI; 00-00-00000) 
 
Early and Periodic Screening, Diagnostic and Treatment of Mental Health in Medicaid Managed 
Care Plans (OEI; 00-00-00000) 
 
Medicaid Outpatient Mental Health Services That Exceed State Utilization Criteria  
(OEI; 07-06-00390) 
 
 
Medicaid/State Childrens Health Insurance Program 
 
Detecting and Investigating Fraud and Abuse in State Childrens Health Insurance Programs 
(OEI; 06-04-00380) 
 
Accuracy of State Childrens Health Insurance Program Enrollment Data (OEI; 00-00-00000) 
 
 
Medicaid Prescription Drugs  
 
Review of the Average Manufacturer Price (OAS; W-00-07-31202)   
 
Review of CMSs Oversight of the Medicaid Drug Rebate Program (OAS; W-00-07-31203)   
 
Pharmacies Ability To Purchase Drugs at Average Manufacturer Price (OAS; W-00-07-31204)   
 
Drug Rebate Reviews in States (OAS; W-00-07-31205) 
 
Medicaid Drug RebatesComputation of Average Manufacturer Price and Best Price  
(OAS; W-00-03-31042) 
 
Indexing the Generic Drug Rebate (OAS; W-00-04-31073) 
 
Examining Fluctuations in Average Manufacturer Prices (OEI; 03-06-00350) 
 
States Use of New Drug Pricing Data in the Medicaid Program (OEI; 03-06-00490) 
 
Overprescribing of OxyContin and Other Prescription Drugs (OAS; W-00-06-31075) 
 
Zero Dollar Unit Rebate Amounts (OAS; W-00-07-31106) 
 
Dispute Resolution in the Medicaid Prescription Drug Rebate Program (OEI; 00-00-00000) 
 
28
  Medicaid Prescription Drug Program:  Impact of Unit of Measure Inconsistencies  
(OEI; 05-07-00050) 
 
Potential Medicaid Savings From Timely FDA Approval of Generic Drugs (OEI; 04-06-00600) 
 
Deficit Reduction Act of 2005:  Impact on the Medicaid Federal Upper Limit Program  
(OEI; 03-06-00400) 
Medicaid Services 
 
Family Planning Services (OAS; W-00-04-31078; W-00-05-31078; W-00-06-31078) 
 
Medicaid Payments for Transportation Services (OAS; W-00-06-31121; OEI-00-00-00000) 
 
Improper Pediatric Dental Medicaid Payments (OEI; 04-04-00210) 
 
Medicaid Laboratory Tests (OAS; W-00-07-31206) 
 
School-Based Health Services (OAS; W-00-03-31050; W-00-03-31061; W-00-04-31051; 
W-00-04-31062; W-00-05-31017; W-00-06-39002; W-00-06-31017; W-00-05-39024; W-00-05-
39041) 
 
Adult Rehabilitative Services (OAS; W-00-03-31028) 
 
Medicaid Adult Day Health Service Payments for Ineligible and Absent Beneficiaries  
(OEI; 00-00-00000) 
 
Outpatient Alcoholism and Substance Abuse Services (OAS; W-00-07-31079) 
 
Freestanding Inpatient Alcoholism Providers (OAS; W-00-06-31107) 
 
Medical Services for Undocumented Aliens (OAS; W-00-06-31108) 
 
Inappropriate Medicaid Payments for Personal Care Services  
(OEI; 07-06-00620; OAS; W-00-05-31035) 
 
Medicaid Payments for Therapy Services (OEI-00-00-0000) 
 
States Provider Safeguards for Medicaid Personal Care Services (OEI-07-05-0250)  
 
 
Medicaid Administration 
 
Contingency Fee Payment Arrangements (OAS; W-00-04-31045; W-00-05-31045;  
W-00-06-31045) 
 
29
  Usefulness of Medicaid Statistical Information (MSIS) Data for Combatting Medicaid Fraud, 
Waste, and Abuse (OEI-00-00-0000) 
 
Upper Payment Limits  Flow of Funds (OAS; W-00-07-31207) 
 
Medicaid Payments for Services Provided Under Section 1115 Demonstration Projects  
(OAS; W-00-07-31208) 
 
Medicaid Payments for Services Provided Under Section 1915(b) Managed Care/Freedom of 
Choice Waivers (OAS; W-00-07-31125; OEI; 00-00-00000) 
 
Medicaid Payments for Services Provided Under Section 1915(c) Home and Community Based 
Service Waivers (OAS; W-00-06-39045; W-00-06-31124; OEI; 00-00-00000) 
 
Identification of Potential Abusive Claims Volumes (OAS; W-00-07-31209) 
 
Medicaid Payments Made for Ineligible Managed Care Members (OAS; W-00-07-31212) 
 
Medicaid Third-Party Liability (OAS; W-00-07-31213; A-06-07-00000) 
 
Additional Medicaid Payments to High-Volume Providers (OAS; W-00-07-31214;  
A-06-07-00000) 
 
Medicaid Administrative Charges by Other State Agencies (OAS; W-00-07-31215) 
 
Medicaid Provider Tax Issues (OAS; W-00-04-39019; W-00-06-39019; W-00-06-31094) 
 
State-Employed Physicians and Other Practitioners (OAS; W-00-04-31081; W-00-06-31081;  
W-00-06-39030) 
 
Skilled Professional Medical Personnel (OAS; W-00-05-31077; W-00-06-31077) 
 
Physician Assistant Reimbursement (OAS; W-00-07-31089) 
 
Medicaid and State Childrens Health Insurance Program Payment Error Rate Measurement 
(OAS; W-00-07-31216) 
 
Medicaid Accounts Receivable (OAS; W-00-04-31047; W-00-05-31047; W-00-06-31047) 
 
Impact on the Medicaid Program of Certified Public Expenditures (OAS; W-00-06-31110) 
 
Edits on Medicaid Payment (OAS; W-00-07-31111) 
 
Medicaid Asset Transfers and Estate Recovery Provision for Nursing Home Care  
(OAS; W-00-06-31113) 
 
30
  Medicaid Payments for County Administrative Services (OAS; W-00-05-39025; W-00-05-
39026; W-00-05-39037) 
 
Medicaid Buy-In (OAS; W-00-05-39027; W-00-07-00000) 
 
Medicaid Eligibility in Multiple States (OAS; W-00-06-31114)  
 
Medicaid Administrative Costs (OAS; W-00-06-39044; W-00-06-31123) 
 
Potential Medicaid Savings for Medical Equipment (OEI; 04-05-00290) 
 
Payments to Medicaid Durable Medical Equipment Providers (OEI; 04-06-00480) 
 
Medicaid Fee-for-Service Payments for Beneficiaries Enrolled in Managed Care  
(OEI; 07-05-00320) 
 
OIG Exclusions Program  State Referrals to the Office of Investigations (OEI; 01-06-00300) 
 
Medicaid and SCHIP Eligibility Determinations (OAS; W-00-05-31100; W-00-06-31100) 
 
Medicaid Encounter Data:  Completeness and Accuracy of Medicaid Managed Care Encounter 
Data (OEI; 07-06-00540) 
 
Ensuring External Quality Review Organizations Meet Federal Requirements  
(OEI; 01-06-00510) 
 
Medicaid Provider Enrollment Safeguards:  Medicaid Equipment Providers (OEI-04-05-00180) 
 
Suspected Medicaid Fraud Referrals (OEI-07-04-00181) 
 
 
Medicaid Information Systems Controls 
 
Review of CMS Compliance With FISMA for FY 2007 (OAS; W-00-07-41020) 
 
Health Information Technology in Medicare and Medicaid  Privacy and Security Issues  
(OAS; W-00-04-41021) 
 
State-Based Controls Over Medicaid Payments and Program Eligibility (OAS; W-00-04-40019; 
W-00-07-0000) 
 
Oversight of System Conversions, Redesigns, and Transitions of State Medicaid Management 
Information Systems (OAS; W-00-07-41027) 
 
Medicaid Management Information System  Business Associate Agreements  
(OAS; W-00-04-41028) 
31
   
Security Planning for CMS Systems Under Development (OAS; W-00-06-41001) 
 
Duplicate Payments for Medicaid Services (OAS; W-00-06-31109) 
 
 
Medicaid Hurricane Response 
 
Medicaid Services and Payments Under Hurricane Katrina Waivers (OEI; 05-06-00140) 
 
Hurricane Katrina  Duplicate Medicaid Payments to Providers (OAS; W-00-06-31117) 
 
Hurricane Katrina  Medicaid Payments for Evacuees (OAS; W-00-07-31216) 
 
Hurricane Katrina  Uncompensated Care Costs (OAS; W-00-07-31219) 
 
Hurricane Katrina  Duplicate Medicaid Payments to Managed Care Organizations  
(OAS; W-00-07-31217) 
 
 
32