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Office of Inspector General 
Semiannual Report to the Congress 
April-September 2003
 
U.S. Department of Health and Human Services
Office of Inspector General
330 Independence Avenue, S.W.  Washington, D.C. 20201
U.S. Department of Health and Human Services
 This semiannual report and other OIG materials may be 
accessed on the Internet at http://oig.hhs.gov   Message from the Inspector General 
The advent of the 25th anniversary of the Inspector General Act of 1978 is 
an appropriate opportunity to review and renew our commitment to the mission of 
the Inspectors General. Established in 1976 as the first statutory Office of Inspector 
General (OIG), our office served as the model when Congress established OIGs 
throughout the Federal Government by passing the Inspector General Act of l978. 
As the Inspector General community has grown and evolved to perform an ever-
widening array of critical functions, so, too, has this office.  In so doing, we have 
amassed an impressive record of accomplishment. 
The success of this office comes as no surprise to me.  While serving as 
the Acting Principal Deputy Inspector General, I have been consistently impressed 
with the tremendous intelligence, talent and dedication of the entire staff.  I am 
incredibly proud to be a part of this OIG team and want to share with you some of 
our achievements. 
Our current fiscal year savings totalover $23 billionrepresents a 
record high. We take our responsibility to the American taxpayer very seriously 
and our savings total demonstrates our commitment.  A true measure of our success, 
however, must include the impact that our work has on the quality of life across 
the Nation. To that end, we have continued to move forward with zealous deter

mination to protect the health and welfare of HHS program beneficiaries, ensuring 
that they receive high quality care and service. Areas that we have scrutinized 
and for which we have made significant recommendationsprescription drugs, 
quality of care in nursing homes, home health care, durable medical equipment, 
protection of patient data, and child support enforcementall continue to be 
subjects of intense interest. 
In light of recent world events, our vision has broadened to encompass 
activities that have global implications.  Our bioterrorism preparedness initiative 
remains a priority.  We are working closely with the Department and the States to 
eliminate security vulnerabilities and increase our capability to detect and respond 
to a bioterrorism threat.  We have made numerous recommendations to remedy 
existing weaknesses, to prevent the development of further vulnerabilities, and to 
protect the health and safety of our citizens. And, as nations of the world have 
joined together to work collaboratively on other issues of global importance, we 
have made significant contributions in such areas as HIV/Aids and clinical trial 
research. We stand ready to continue to provide support appropriately. 
In all, our accomplishments speak to the scope and diversity of our 
responsibilities, the clarity of our vision, and the depth of our commitment to 
OIGs mission.  We celebrate this occasion with resolution to work with the 
Department to surpass past performance in the year to come, and we applaud all 
Inspectors General for their achievements over the years. 
Dara Corrigan 
Acting Principal Deputy Inspector General   Highlights

Summary of Accomplishments 
For fiscal year 2003, OIG reported savings of over $23 billion, 
comprised of $21.656 billion in implemented recommendations and other 
actions to put funds to better use, $334 million in audit receivables, 
$71 million in additional recoveries, and $988 million in investigative 
receivables. (Details pp. 46, 51, and 55.) 
In addition, for this fiscal year, OIG reported exclusions of 3,275 
individuals and entities for fraud or abuse of the Federal health care 
programs and/or their beneficiaries, 576 convictions of individuals or 
entities that engaged in crimes against departmental programs, and 243 
civil actions, which include all False Claim Act and unjust enrichment 
suits filed in district court, all Civil Monetary Penalty Law settlements 
and all administrative recoveries related to provider self-disclosure matters. 
(Details pp. 14 and 51.) 
Bioterrorism 
As part of its bioterrorism preparedness initiative, OIG continued 
to assess security at a number of departmental laboratories and at external 
laboratory facilities that receive HHS funds. These reviews focused on 
facilities that handle select agents because these substances could 
potentially be used in a bioterrorist attack.  Additional work has been 
initiated in the areas of accountability for bioterrorism preparedness 
funding at the State and local levels, State progress in developing and 
implementing laboratory response networks, and State health departments 
legal authorities to respond to bioterrorism.  (Details p. 28.) 
I
 Prescription Drugs 
Zeneca, Inc., and AstraZeneca Pharmaceuticals LP agreed to pay 
the Government nearly $355 million plus interest as part of a global settle 
ment agreement to resolve its criminal and civil liabilities relating to the 
marketing and pricing of its prostate cancer drug Zoladex. 
(Details p. 19.) 
In order to resolve their respective liabilities to the Government 
and other entities, Bayer Corporation agreed to pay $257 million plus 
interest as part of a joint civil and criminal settlement, and GlaxoSmithKline 
agreed to pay $88 million in a civil settlement.  The settlements resolved 
allegations that the pharmaceutical manufacturers underpaid rebates due to 
the States under the Medicaid drug rebate program. 
(Details pp. 19 and 20.) 
Nursing Home Trends 
In its continuing look at nursing homes, OIG found that the 
average number of deficiencies per nursing home has increased from 
5.1 to 6.2. However, States lack consistency in determining types and 
numbers of deficiencies.  OIG also found that the number of nursing home 
complaints reported to the National Ombudsman Reporting System in 
creased approximately 28 percent from 1996 to 2000.  The most common 
complaintregarding resident carehas remained consistent. 
In addition, although OIG found that skilled nursing facilities 
generally are in compliance with Federal requirements regarding social 
worker credentials, issues concerning resident care plans remain. 
(Details pp. 2 and 34.) 
Organ Donation 
An OIG inspection report documented wide variation in donor 
consent rates among organ transplant centers.  It highlighted the potential 
to increase the number of organ donors.  Had 18 transplant centers with 
the lowest consent rates obtained consent at the average rate of another 
172 centers, they would have realized 130 more donorsresulting in an 
estimated additional 450 life-saving organs.  (Details p. 29.) 
II
 Organ Donation Continued 
The University of Chicago and Northwestern Memorial hospitals 
entered settlement agreements to resolve allegations of improperly 
diagnosing, hospitalizing, and placing candidates ahead of others waiting 
for organs in the transplant region. (Details p. 22.) 
Foster Cares Use of Medicaid Services 
OIG is producing a series of inspection reports which will help 
determine the extent to which foster care children in different States have 
access to health care services provided under Medicaid. The initial report 
found that few of the sampled children who have coverage are receiving 
Medicaid services. Caseworkers and caregivers indicate that they are not 
informed about the Medicaid program and have received very little 
training in Medicaid services. (Details p. 36.) 
Postacute Care Transfer Policy 
The postacute care transfer policy was intended to more 
appropriately reimburse hospitals for short stays followed by patient 
transfers to postacute care settings. During the first 2 years of the policy, 
OIG estimated that Medicare overpaid prospective payment system 
hospitals by approximately $116 million.  Most of these overpayments 
resulted from claims that were erroneously coded as discharges to home 
rather than transfers to postacute care.  A system alert that will compare 
inpatient claims with subsequent postacute claims is needed as a long-term 
remedy.  (Details p. 4.) 
III
 Table  of  Contents

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

Nursing Home Deficiency Trends .......................................... 2

Psychosocial Services in Nursing Facilities ................................... 2

Unique Physician/Practitioner Identification Number Registry.................... 3

Diagnosis-Related Group Payment Window .................................. 4

Postacute Care Transfer Policy ............................................ 4

Home Health Services After Hospital Discharge ............................... 5

Health Plan Cost Reports ................................................. 5

Home Dialysis Payments ................................................. 6

Medicare Contractor Pension Assets ........................................ 6

Medicare Part B Data Transactions ......................................... 6

School-Based Health Services ............................................. 7

Residents of Institutions for Mental Diseases  ................................. 9

Mental Health Drug Expenditures ......................................... 10

Disproportionate Share Hospital Payments .................................. 10

Medicaid Managed Care Payments ........................................ 12

Outreach ............................................................. 12

Industry Guidance ............................................... 12

Compliance Activities ............................................ 12

Provider Self-Disclosure Protocol .................................. 13

Federal and State Partnership:  Joint Audits of Medicaid ....................... 14

OIG Administrative Sanctions ............................................ 14

Program Exclusions ............................................. 15

Suspension and Debarment Actions ................................. 15

Civil Monetary Penalties Law...................................... 17

Kickbacks ..................................................... 17

Civil Penalties for Patient Dumping ................................. 18

Criminal and Civil Enforcement .......................................... 18

Prescription Drugs  .............................................. 19

Durable Medical Equipment Suppliers ............................... 20

Hospitals ...................................................... 22

Nursing Homes ................................................. 23

Home Health ................................................... 23

Practitioners  ................................................... 23

Medicaid Fraud Control Units ............................................ 24

IV
 Public Health Agencies. ................................................ 27

California Bioterrorism Preparedness Funds ................................. 28

Other Antibioterrorism Activities  ......................................... 28

Variation in Organ Donation Among Transplant Centers ....................... 29

New Drug Applications ................................................. 29

Hemophilia Treatment Centers  ........................................... 30

Health Education Assistance Loan Defaults ................................. 31

Financial Statement Audit ............................................... 32

Misuse of Public Health Grant Funds  ...................................... 32

Administrations for Children and Families and on Aging ..................... 33

State Ombudsman Data:  Nursing Home Complaints  .......................... 34

Refunding Aid to Families With Dependent Children Overpayments  ............. 34

Child Support Enforcement Customer Service  ............................... 35

Noncustodial Parents Contributions to Medicaid Costs ........................ 35

Foster Cares Use of Medicaid Services .................................... 36

Child Support Enforcement .............................................. 37

Task Forces .................................................... 37

Task Force Table ................................................ 38

Investigations .................................................. 39

Misuse of ACF Grant Funds  ............................................. 40

General Oversight ..................................................... 41

Results Act ........................................................... 42

Florida Pension Fund ................................................... 43

International Merchant Purchase Authorization Card Program ................... 43

Non-Federal Audits .................................................... 44

Resolving Recommendations ............................................. 45

Table 1:  Reports With Questioned Costs ............................. 46

Table 2: Funds Recommended to Be Put to Better Use .................. 47

Legislative and Regulatory Review and Development ......................... 48

Review Functions ............................................... 48

Development Functions .......................................... 48

V
 Employee Fraud and Misconduct  ......................................... 50

Additional Audit Recoveries ............................................. 51

Investigative Prosecutions ............................................... 51

Appendices ........................................................... 53

Appendix A:  Savings Achieved Through Policy and Procedural Changes 
Resulting From Audits, Investigations and Inspections ............ 55

Appendix B:  Unimplemented Office of Inspector General Recommendations 

to Put Funds to Better Use  ................................. 59

Appendix C:  Unimplemented Office of Inspector General Program and 

Management Improvement Recommendations .................. 65

Appendix D:  Notes to Tables 1 and 2 .................................... 71

Appendix E:  Reporting Requirements of the Inspector General Act of 1978, 
as Amended ............................................. 87

Appendix F:  Summary of Sanction Authorities  ............................ 89

Appendix G:  Status of Public Proposals for New and Modified Safe Harbors 

to the Anti-Kickback Statute Pursuant to Section 205 of the Health 
Insurance Portability and Accountability Act of 1996 ............. 91

Appendix H:  Performance Measure Reports ............................... 95

Appendix I:  Office of Inspector General Component Descriptions ............. 97

Please Note: Figures throughout the text have been 
rounded for reporting purposes. 
VI
 Centers for Medicare
 & Medicaid Services 
The Centers for Medicare & Medicaid Services (CMS) administers 
the Medicare and Medicaid programs.  Financed by the Federal Hospital 
Insurance Trust Fund, Medicare Part A provides hospital and other insti 
tutional insurance for persons aged 65 or older and for certain disabled 
persons. Medicare Part B (Supplementary Medical Insurance) is an optional 
program which covers most of the costs of medically necessary physician 
and other services and is financed by participants and general revenues. 
The Medicaid program provides funding to States for medical care 
and other support and services for low income children, senior citizens and 
people with disabilities. State expenditures for medical assistance are 
matched by the Federal Government using a formula that measures per 
capita income in each State relative to the national average.  The State 
Childrens Health Insurance Program (SCHIP) expands health coverage to 
uninsured children whose families earn too much for Medicaid, but too 
little to afford private coverage. 
The Office of Inspector General (OIG) devotes significant resources 
to investigating and monitoring the Medicare and Medicaid programs. 
These activities have helped ensure the cost-effective delivery of health 
care, improved its quality, and reduced the potential for fraud, waste, and 
abuse. In addition, these efforts have often led to criminal, civil, and/or 
administrative actions against perpetrators of fraud and abuse. 
OIG also reports on the audits of CMS financial statementswhich 
presently account for almost 82 percent of Department of Health and 
Human Services (HHS) outlays.  In addition to issuing an opinion on the 
statements, auditors assess compliance with Medicare laws and 
regulations and the adequacy of internal controls.  Centers for Medicare & Medicaid Services 
NURSING HOME DEFICIENCY TRENDS    
OIG examined trends in State agency data on nursing home deficiencies 
and the consistency of survey and certification processes. In 2001, 89 percent 
of nursing homes were found to have at least one deficiency, an increase from 
81 percent in 1998. Total deficiencies increased by 46 percent to over 94,000, 
and the average number of deficiencies per nursing home rose from 5.1 to 6.2.  In 
addition, wide variation was found among States in the proportion of deficiency-
free nursing homes and in average deficiency rates.  OIGs review of the survey 
       process revealed that States differ in how 
Proportion of Nursing Homes that Received        they determine numbers and types of 
Any Deficiency, 1998-2001 by Percentages 
deficiencies. Factors contributing to the 
variability in deficiency citation were 
inconsistent survey focus, unclear guide
lines, the lack of a common review pro
cess for draft survey reports, and high 
surveyor staff turnover.
 These findings indicate that further 
work is needed at Federal and State 
levels to ensure consistency of the 
Medicare nursing home survey and 
certification process. Specifically, OIG 
recommended that CMS continue to 
improve its guidance to State agencies 
on citing deficiencies by providing 
guidelines that are both clear and explicit 
and to work with States to develop 
common review criteria for draft survey reports.  CMS concurred with the 
recommendations.  (OEI-02-01-00600) 
PSYCHOSOCIAL SERVICES IN NURSING FACILITIES    
This study sought to determine whether Medicare skilled nursing facility 
residents are receiving psychosocial services in compliance with Federal require
ments.  The inspection was based on a review of the medical records of 299 
nursing home residents and credentials of the social workers in their facilities, 
interview data from social workers, nursing home administrators, and State 
   Indicates performance measure.  Details can be found in Appendix H. 
2  Centers for Medicare & Medicaid Services
surveyors, and an analysis of Online Survey and Certification Reporting System
facilities are in compliance with the Federal rule regarding social worker cre-
dentials.  However, not all their residents have care plans that address all of their
psychosocial needs, and 46 percent of them do not receive all the psychosocial
services outlined in their care plans.  OIGs medical record
review data, combined with social worker reports, provide
Social Worker Education 
evidence that there is less than full compliance with the
in Smaller Facilities
requirement that facilities provide medically
related social services to attain or maintain the
Graduate 31%
highest practicable physical, mental and
psychosocial well-being of each
resident.  In order to address these
Associates/High School 5%
concerns and to ensure that
residents are receiving necessary
Undergraduate
and appropriate care, OIG recommended No Documents 13% 51%
that CMS strengthen oversight processes
associated with the psychosocial service portion of the
resident assessment and the resulting care plans.  CMS concurred.
(OEI-02-01-00610)
UNIQUE PHYSICIAN/PRACTITIONER 
       IDENTIFICATION NUMBER REGISTRY 
This inspection found that over half of the providers in the active Unique
Physician/Practitioner Identification Number database had at least one practice
setting record with inaccurate information.  It also found that 44 percent of billing
numbers have never been or are no longer used to bill Medicare.  Nine percent of
providers could not be contacted by mail due to incorrect or insufficient address
information.  Record layout and data entry instructions may adversely affect the
accuracy of data.
CMS intends to use these unique identifiers to enumerate the planned
National Provider System.  The national provider identifiers contained in this new
system are expected to enhance CMSs ability to safeguard Medicare and its
beneficiaries against fraud, abuse, and inappropriate payments.  Inaccuracies in
the current database will undermine the usefulness of the new one.  OIG recom-
mended that CMS correct inaccurate and incomplete information in the current
system and deactivate practice settings that are not used.  CMS concurred with the
recommendations.  (OEI-03-01-00380)
3 Centers for Medicare & Medicaid Services
  DIAGNOSIS-RELATED GROUP PAYMENT WINDOW
Under the inpatient prospective payment system, hospitals are reimbursed
a predetermined amount for inpatient services furnished to Medicare beneficiaries
depending on the classification of their illness under a diagnosis-related group.
Nonphysician outpatient services, such as laboratory tests, rendered up to 3 days
before the hospital admission are required to be included in the prospective
payment.  Although the intent of the 3-day payment window was to prevent
separate reimbursement for preadmission services, OIG estimated that, for 10
diagnosis-related groups, Medicare reimbursed providers about $37 million for
preadmission services rendered 4 to 14 days before admission.  Beneficiaries paid
an additional $35 million in coinsurance and deductibles for these services.
OIG therefore recommended that CMS consider proposing legislation to
expand the payment window to cover preadmission services rendered up to 14
days before admission.  CMS agreed but cautioned that such action could increase
beneficiaries health risks should providers perform diagnostic tests outside this
payment window in order to receive separate reimbursement.  (A-01-02-00503)
  POSTACUTE CARE TRANSFER POLICY
To more appropriately reimburse hospitals for short inpatient stays followed
by patient transfers to postacute care settings, the Balanced Budget Act of 1997
adjusted Medicare prospective payments through the postacute care transfer policy. 
This report points out that Medicare systems had no controls or edits to detect
excessive payments to prospective payment system hospitals for claims that were
erroneously coded as discharges to home rather than transfers to postacute care. 
As a result, based on a statistical sample, OIG estimated that Medicare paid approx-
imately $61 million in excessive diagnosis-related group payments to hospitals in
fiscal year (FY) 2000.  Combining this estimate with its previous $55 million 
estimate for erroneous FY 1999 payments, OIG estimated that CMS overpaid
hospital claims by approximately $116 million during the initial 2-year period of
the postacute care transfer policy. 
In addition to recommending financial adjustments and identification of
overpayments made after the audit period, OIG recommended that CMS, as a
long-term remedy, establish an alert mechanism in the Common Working File to
compare applicable inpatient claims with subsequent postacute claims.  This
4 Centers for Medicare & Medicaid Services
 will allow potentially erroneous inpatient hospital claims to be detected,
reviewed, and appropriately adjusted on an ongoing basis.  CMS generally
concurred.  (A-04-02-07005)
HOME HEALTH SERVICES AFTER HOSPITAL DISCHARGE
Under the Medicare home health prospective payment case mix
adjustment, home health agencies may receive higher payments if their services
were not preceded by an inpatient hospital discharge within 14 days of the home
care.  This report points out that home health agencies sometimes received these
higher payments when they did not meet the criteria specified in the prospective
payment case mix adjustment.  Based on a statistical sample, OIG estimated that
overpayments made by one regional home health intermediary amounted to about
$1.9 million during FY 2001.  The overpayments occurred, and recovery was not
initiated, because home health clinicians did not always identify all facilities that
had discharged the beneficiary within the 14 days preceding the home health
episode and because the intermediary had not established postpayment controls to
detect these incorrect claims.
OIG recommended that the intermediary recover the overpayments
identified in the sampled claims, identify and recover additional overpayments in
OIGs universe of claims, direct home health agencies to strengthen billing
controls, and periodically analyze postpayment data to detect improperly billed
claims.  The intermediary generally agreed.  (A-01-03-00500)
HEALTH PLAN COST REPORTS
This report points out that a cost-based health maintenance organization
overstated Medicare claims in both 1999 and 2000 by about $8.2 million.  In
addition, the organization was not in compliance with the financial disclosure
requirements for related-party administrative costs totaling about $14 million for
both years. 
OIG recommended that the organization file amended Medicare cost
reports, decreasing the amount claimed by $8.2 million.  OIG also recommended
that the organization adhere to the reporting requirements for disclosing signif-
icant related-party transactions, make sure that duplicate payment controls are
functioning properly, and file amended Medicare cost reports for errors affecting
prior years.  The organization generally concurred with the recommendations.
(A-06-02-00034)
5 Centers for Medicare & Medicaid Services
HOME DIALYSIS PAYMENTS
Medicare beneficiaries may be paying more than they need to for home
dialysis.  In calendar year 2000, Medicare reimbursed durable medical equipment
suppliers up to $480 more for continuous cycling peritoneal dialysis kits when
supplied under one method of payment as compared to other payment options.  As 
a result, Medicare and beneficiaries paid $15.3 million more than necessary for
the supply kits.  Another problem relates to the fact that home dialysis benefi-
ciaries must select a method of receiving dialysis supplies.  Medicare procedures
state that home dialysis claims should not be processed without documentation
indicating beneficiaries choices.  However, Medicare allowed $9.5 million in
claims without the documentation.
OIG recommended that CMS change reimbursement limits, ensure proper
documentation exists, review claims, and collect any incorrect amounts.  CMS
generally concurred.  (OEI-07-01-00570)
MEDICARE CONTRACTOR PENSION ASSETS
Since its inception, Medicare has paid a portion of the annual contributions
made by fee-for-service contractors to their pension plans.  CMS requires that
contractors separately identify the pension assets for the Medicare segment of
their activities.  Any gains in pension assets should be credited to the Medicare
program when the Medicare segment of a pension plan closes or terminates.
An OIG review of a terminated contractor in Iowa identified excess
pension assets totaling $1.4 million that should be remitted to the Medicare
program.  The contractor disagreed with OIGs recommendation to remit the
funds.  At another contractor, located in Maryland, OIG found that Medicare
segment assets were understated by $6.8 million.  The contractor concurred with
OIGs recommendation to increase its segment assets by that amount.
(A-07-02-03022; A-07-02-03033)
MEDICARE PART B DATA TRANSACTIONS
OIG issued a report based on a study of whether Medicare part B
providers expect to comply with the electronic data transaction standards and
code sets mandated by the Health Insurance Portability and Accountability Act of
6 Centers for Medicare & Medicaid Services
1996.  Although most providers reported a moderate to high level of confidence
that they will be in compliance by October 2003, 47 percent of the providers listed
one or more barriers to compliance.  The most common barriers are trading
partners and vendors not being ready, carriers and third party payers not being
compliant, and the cost of implementation.  Overall, providers whose compliance
date is October 16, 2003, state that they are making progress toward achieving
compliance, but they remain concerned that external entities may not be fully
compliant, and this would affect their ability to implement the transaction
standards.  (OEI-09-02-00422)
SCHOOL-BASED HEALTH SERVICES
The objective of these multistate reviews was to determine whether
Medicaid payments for school-based health services and administrative claims
were in accordance with Federal regulations.
This audit found that monthly school-based health
  Connecticut
service rates were overstated by at least 50 percent,
resulting in excess Federal reimbursement of about
$32.8 million for a 4-year period.  In addition, the State did not have ade-
quate procedures to verify that the cost data submitted by local education
agencies were allowable and allocable for reimbursement under the pro-
gram.  OIG recommended a financial adjustment and procedural improve-
ments.  The State did not agree to the financial adjustment but recognized
the need to change the methods used to develop reimbursement rates. 
(A-01-02-00006)
OIG estimated that during 1 year, eight selected
  Massachusetts
local education agencies submitted at least
$3 million (Federal share) of ineligible claims.
Problems included insufficient documentation to show that prescribed
services were provided, services rendered by providers that lacked re-
quired qualifications, and claims submitted for absent students.  OIG
recommended, among other things, that the State improve its training and
technical assistance, provide better monitoring, and refund the Federal
share.  The State agreed with the procedural recommendations, but dis-
agreed with any portion of the refund related to service documentation and
provider qualifications.  (A-01-02-00009)
7 Centers for Medicare & Medicaid Services
During a 3-year period, seven of the eight special
  New Jersey
service school districts in New Jersey were improp-
erly reimbursed for transportation services, and the
State improperly claimed an estimated $1.2 million of Federal Medicaid
funds for these services.  In OIGs opinion, the improper payments were
caused primarily by a lack of effective administrative and prepayment
controls to prevent reimbursement for transportation services.  OIG recom-
mended that the State refund the $1.2 million to the Federal Government,
identify and return any improper Federal funding claimed after the audit
period, and periodically review the recently implemented transportation
edit to ensure that it is functioning as intended.  State officials concurred. 
(A-02-02-01022) 
In this report, OIG estimated that the State claimed
 Oklahoma
unallowable costs totaling $2.3 million (Federal
share) of which $1.1 million was attributable to the lack
of referrals for occupational and speech therapy services.  OIG also could
not reasonably determine whether school districts met the $2.8 million
State share requirement due to calculation errors, inclusion of inappro-
priate expenditures, and use of inappropriate funding sources.  Other areas
of concern included reimbursement rates, billing agency involvement, and
providers qualifications.  Recommendations called for financial adjust-
ments and internal control improvements.  The State generally agreed with
the recommendations.  (A-06-01-00083)
OIG estimated that the States inadequate monitoring
Washington
and improper implementation of the program resulted
in unallowable claims totaling $2.3 million (Federal
share) during a 1-year period.  Unallowable costs were claimed for services
not covered or improperly documented under Medicaid, for billing fees
that were not reimbursable, and for services provided to ineligible children. 
In addition, the reimbursement rates included transportation costs for all
special education students, regardless of whether transportation was medi-
cally necessary.  OIG recommended that the State refund the Federal
share, improve its methods for determining whether costs are allowable
and supported, and make other procedural changes.  The State generally
disagreed.  (A-10-02-00008)
OIG estimated that the State and the school-based
 Wisconsin
service providers claimed and received at least
$315,000 in Federal Medicaid funding for costs not
8 Centers for Medicare & Medicaid Services
allowed or supported by adequate documentation during a 1-year period. 
OIG recommended that the State work with CMS to establish the appro-
priate indirect cost rate, refund the overpayment, and require providers to
implement effective internal controls to ensure that school-based services
are properly provided, billed, and documented.  The State generally
agreed.  (A-05-02-00023)
RESIDENTS OF INSTITUTIONS 
        FOR MENTAL DISEASES
The objective of these reviews was to determine if controls were in place
to preclude States from claiming Federal Medicaid funding for certain residents 
of psychiatric hospitals that are institutions for mental diseases.  Federal Medicaid
funding is not permitted for 21- to 64-year-old residents even if they are temporarily
released to acute care hospitals for medical treatment.  For residents under the age
of 21, Federal funding is permitted only for inpatient psychiatric services.
This review showed that controls were not in place to
  Maryland
effectively preclude the State from claiming unallow-
able Federal funding.  During a 3-year period, the
State improperly claimed $1.3 million on behalf of residents at three State
institutions.  In addition, the State improperly claimed $801,000 for resi-
dents of 12 institutions under a Medicaid waiver which allowed expendi- 
tures, subject to certain limitations, for managed care enrollees residing in
institutions for mental diseases.  OIG recommended that the State refund
$2.1 million and make several procedural changes.  The State generally
disagreed with OIGs findings and recommendations.  (A-03-00-00214) 
State policy was to not claim Federal funding for
 New Jersey
crossover claims (Medicare to Medicaid) for inpatient
psychiatric services provided to 21- to 64-year-old
residents of private and county-operated psychiatric hospitals that were
institutions for mental diseases.  However, OIG determined that from
December 1, 1991, through May 20, 2002, the State improperly claimed
$896,000 of Federal funding.  OIG recommended that the State refund this
amount to the Federal Government, identify and return any improper
Federal funding claimed after the audit period, and periodically review the
crossover edit to ensure that it is functioning as intended.  State officials
generally concurred and instituted corrective actions.  (A-02-02-01017)
9 Centers for Medicare & Medicaid Services
This review found that, during a 3-year period, the State
   Texas
improperly claimed $1.3 million in Federal funds for
medical services provided to residents under age 21 at 37 
institutions for mental diseases.  The claims processing system used by the
States Medicaid contractor had no edits or mechanisms for detecting and
preventing these improper claims.  OIG recommended that the State refund
to the Federal Government the improperly claimed funds identified by the
audit, and any identified later, and work with the contractor to develop
system edits.  (A-06-03-00009)
MENTAL HEALTH DRUG EXPENDITURES
OIG evaluated the extent to which Medicaid pays more in net costs for
mental health drugs than other Federal purchasers.  The study revealed that as a
result of price differences, the 10 State agencies reviewed paid, on average,
between $47 million and $126 million more for the 25 drugs sampled than other
Federal purchasers.
To safeguard the Medicaid program from excessive payments and to
capitalize on potential savings, this report urged CMS to reconsider previous OIG
recommendations.  In past reports, OIG has recommended that CMS work with
States to pursue more efficient means of purchasing pharmaceuticals and initiate a
review of the Medicaid rebate program.  OIG also suggested that CMS share this
report with the States.  (OEI-05-02-00080)
DISPROPORTIONATE SHARE HOSPITAL PAYMENTS
Medicaid provides that States may make additional payments, called
disproportionate share hospital (DSH) payments, to hospitals for the uncom-
pensated costs of serving disproportionate numbers of low-income patients with
special needs.  The Omnibus Budget Reconciliation Act of 1993 mandates that
these payments not exceed the individual hospitals uncompensated costs.
OIG found that excess DSH payments totaling more
  California
than $252 million ($127 million Federal share) were 
made to 21 hospitals in California because the hospital-
specific limits were overstated.  The State used projected amounts instead
of actual incurred costs and payments, did not limit total operating expenses
to amounts allowable under Medicare, and inappropriately included bad
debts as additional operating expenses.  OIG also identified other issues 
pertaining to payments made to hospitals after closure, duplication of
10 Centers for Medicare & Medicaid Services
Medicaid managed care data, and internal controls in the States DSH
operations.  In addition to making other recommendations, OIG recom-
mended financial adjustments.  The State generally disagreed.
(A-09-02-00054)
In a second review focused on Los Angeles County, OIG found
that because the State overstated the hospital-specific limits, it made
additional excess DSH payments totaling over $195 million ($98 million
Federal share) to four hospitals.  The same types of problems as those
noted above were found in the methodology used to calculate the limits.
While the State disagreed with most of the findings, it indicated a willing-
ness to work with the Federal Government in resolving the $98 million in
excess Federal DSH payments.  (A-09-02-00071)
Pennsylvania made $671 million in DSH payments
 Pennsylvania
during the year reviewed.  Although these payments
generally conformed to the State plan, $533 million
of the payments were for services that were not otherwise eligible for Federal
Medicaid matching funds.  Thus, the State was able to shift $287 million
(the Federal share of $533 million) of State costs to the Federal Government. 
OIG was unable to determine whether the DSH payments exceeded hospital-
specific limits because Pennsylvania did not provide a complete accounting
of payments to each hospital and did not require hospitals to report their
uncompensated costs.  State officials said they had begun to correct these
shortcomings.  (A-03-01-00221)
This report points out that a medical center overstated its
 Virginia
uncompensated care costs in State FYs 1997 and 1998
by including unallowable physician practice plan costs
incurred by a related entity.  As a result, DSH payments exceeded uncom-
pensated care costs by $9.2 million ($4.8 million Federal share).  OIG
recommended that the State refund the $4.8 million and make procedural
corrections.  State officials generally disagreed.  (A-03-01-00226)
At a second Virginia hospital, OIG identified over $12 million in
unallowable costs included in the uncompensated care costs for FYs 1997
and 1998.  Unallowable costs consisted of physician practice plan costs
incurred by a related entity.  As a result, DSH payments for State FY 1997
exceeded uncompensated care costs by $12.2 million ($6.3 million Federal
share).  In addition to recommending a financial adjustment, OIG recom-
11 Centers for Medicare & Medicaid Services
mended revision of the methodology for computing uncompensated care
costs and compliance with CMSs DSH policy.  The State disagreed with
the findings.  (A-03-01-00222)
MEDICAID MANAGED CARE PAYMENTS
This report provides the results of OIGs review of Medicaid payments
made by New Mexico for enrollees of the state-wide Medicaid managed care
program.  The objectives of the review were to determine whether the payments
were correct and for eligible members and whether Medicaid payments made
under the fee-for-service program were for services already covered under the
managed care program.  The review found that the State made incorrect managed
care and fee-for-service payments totaling about $3.6 million. 
OIG recommended that the State refund the Federal share totaling about
$2.6 million, maintain accurate and complete eligibility information, and consider
revising its contracts with managed care organizations to allow for recovery of
overpayments beyond the 24-month limitation regardless of whether the organi-
zations provided services.  The State generally agreed with the findings and is
taking corrective action.  (A-06-02-00038)
   OUTREACH
         Industry Guidance
OIG has continued to issue advisory opinions, special fraud alerts, special
advisory bulletins, and other guidance as part of its ongoing effort to promote the
highest level of ethical and lawful conduct by the health care industry.  For the
period from April 1, 2003, through September 30, 2003, OIG received 32 advisory
opinion requests and issued 2 advisory opinions.
Compliance Activities
Because the great majority of providers are honest and wish to avoid fraud
and abuse issues, OIG is actively working with the private sector to develop methods
to prevent the submission of improper claims and inappropriate conduct.  OIG has
already initiated significant outreach efforts with the private sector to encourage
these compliance endeavors.  OIGs compliance program guidelines are available
on the Internet at http://oig.hhs.gov in the Compliance Tools and Fraud
Detection & Prevention sections.
12 Centers for Medicare & Medicaid Services
OIG has developed and released 11 compliance program guidances for: 
clinical laboratories, hospitals, home health agencies, third-party billing companies,
durable medical equipment, prosthetics, orthotics and supply industry, hospices,
Medicare+Choice organizations that offer coordinated care plans, nursing homes,
individual and small group physician practices, ambulance service providers, and
pharmaceutical manufacturers.  OIG is currently working on a revised guidance
for the hospital industry and is developing one for recipients of NIH research
grants.
Provider Self-Disclosure Protocol
In keeping with a longstanding commitment to assist providers and suppliers
in detecting and preventing fraudulent and abusive practices, OIG established a set
of comprehensive guidelines for voluntary self-disclosures, titled Provider Self-
Disclosure Protocol (the Protocol), available on the Internet at http://oig.hhs.gov
in the Compliance Tools section.  In addition, it can be found in 63 Federal
Register 58,399 (October 30, 1998). 
Essentially, the Protocol guides providers and suppliers through the process
of structuring a disclosure to OIG of matters that appear to constitute potential
violations of Federal laws (as opposed to innocent mistakes that may have resulted
in overpayments).  Pursuant to the Protocol, after making an initial disclosure, the
provider or supplier is expected to undertake a thorough internal investigation of
the nature and cause of the matters uncovered and make a reliable assessment of
their economic impact (e.g., an estimate of the losses to the Federal health care
programs).  OIG evaluates the reported results of each internal investigation to
determine the appropriate course of action.
To date, OIG has received 197 submissions.  Self-disclosure cases have
resulted in 41 recoveries and 26 settlements collectively totaling over $63 million. 
An example follows:
' CaliforniaCity of Hope National Medical Center and City of Hope
Medical Group, a physician practice, agreed to refund $1.6 million as
overpayments received in connection with claims submitted to Medicare,
Medi-Cal and California Childrens Services.  The overpayments resulted
from a lack of documentation of appropriate physician supervision, inap-
propriate use of modifiers, and lack of documentation in the medical
record to support the level of service billed.  The self-disclosure covers
claims submitted from October 1995 through September 1999.
13 Centers for Medicare & Medicaid Services
FEDERAL AND STATE PARTNERSHIP:
       JOINT AUDITS OF MEDICAID
One of OIGs major outreach initiatives has been to work more closely
with State auditors in reviewing the Medicaid program.  The Partnership Plan was
developed to foster these joint reviews and provide broader coverage of the
Medicaid program. The partnership approach has been an overwhelming success
in ensuring more effective use of scarce audit resources by both the Federal and
the State audit sectors.  To date, partnerships have been developed in 25 States. 
Reports issued to date have resulted in identifying over $262.8 million in Federal
and State savings and have led to joint recommendations for savings at the Federal
and State levels, as well as improvements in internal controls and computer
system operations.
The objectives of this joint audit were to determine
 New Jersey
whether payments to medical day care providers 
for health-related services were reasonable, related
to the programs of the States Department of Health and Senior Services,
and properly recorded in the accounting system from July 1, 2000, to
October 31, 2002.  Because State regulations did not adequately define the
population to be served or the types of medical conditions warranting
medical day care, auditors could not determine the reasonableness of the
payments.  In addition, New Jersey was unaware that 78 medical day care
providers had received $6 million in payments from the Department of
Agricultures Child and Adult Food program.  These payments represented 
reimbursement of costs that were also included in the States per diem
payments to the providers.  Further, as a result of inadequate controls over
provider reimbursements, the State may have made approximately
$619,000 (almost $310,000 Federal share) in improper payments. 
Additional claims totaling about $1 million ($500,000 Federal share) had
potential conflicts due to inconsistencies in providers billing methods. 
(A-02-02-01026)
OIG ADMINISTRATIVE SANCTIONS
During this reporting period, OIG administered 2171 (this number was
adjusted downward by 16 actions to correct an error in the number reported for the
period from October 1, 2002, through March 31, 2003) sanctions in the form of
program exclusions or civil actions for alleged fraud or abuse or other activities
14 Centers for Medicare & Medicaid Services
that posed a risk to Federal health care programs and their beneficiaries.  A de-
scription of these sanction authorities can be found in Appendix F.
Program Exclusions
During this reporting period, OIG excluded 2,034 individuals and entities
from participating in the Medicare and Medicaid programs, or other Federally-
sponsored health care programs.  Most of the exclusions resulted from convictions
for crimes relating to Medicare or Medicaid, for patient abuse or neglect, or as a
result of licensure revocation.  Examples include the following:
' MissouriA pharmacist and his pharmacy were excluded based on their
convictions for misbranding, tampering and diluting cancer drugs.  The
pharmacist was excluded for 50 years and the pharmacy for 25.  Their
convictions involved patient abuse or neglect and the submission of false
claims to Medicare.  They acted with reckless disregard and extreme
indifference resulting in serious bodily injury that was life-threatening to
multiple victims.  They also knowingly caused a physician receiving the
drugs to submit false claims to Medicare by not disclosing that the drugs
were diluted.  The court sentenced the pharmacist to 30 years in jail and
ordered both defendants to pay, jointly and severally, restitution of approx-
imately $10 million.  Additionally, the pharmacist surrendered his Kansas
license, and his Missouri license was revoked. 
Also in Missouri, a pathologist was indefinitely excluded after his
Wisconsin license was revoked for prescribing drugs over the Internet
without having performed physical examinations of the patients.  This
physician holds at least 29 professional health care licenses from other
States and the territory of Guam.  Several of those licenses have also been
sanctioned by the appropriate State authorities.
' AlaskaA physician was excluded for 20 years after being convicted on
234 counts ranging from forgery and theft of public funds from the Alaska
State Medicaid Program to the unlawful manufacture, distribution, pre-
scription, or dispensing of a controlled substance.  The Superior Court for
the State of Alaska sentenced him to 7 years in prison and ordered him to
pay approximately $240,000 in restitution.  His license to practice medicine
as a physician and surgeon was revoked in Alaska and Wisconsin. 
Suspension and Debarment Actions
In addition to OIGs authority to exclude health care providers and entities,
the Federal Government has the authority to disqualify other individuals and
entities from participating in business with the Government.  The Government may 
15 Centers for Medicare & Medicaid Services
disqualify these procurement (i.e., contractors and sub-contractors) and non-
procurement (e.g., grantees, loan and scholarship recipients) individuals and
entities through suspension and debarment actions.
A suspension action disqualifies a party from doing business with the
Federal Government for a temporary period of time, while debarment entails a 
fixed period of time.  Once a suspension or debarment action is taken, the
individual or entity is added to a Web-based list maintained by the General
Services Administration and is prohibited from receiving Federal funds.
In November 2002, OIG issued a policy directive concerning new
procedures for the referral of non-health care providers and entities for potential
government-wide suspension and debarment.  Under this policy, OIG may refer
these parties to the HHS Assistant Secretary for Administration and Management
for administrative action.  Since the directives issuance, OIG referrals have
resulted in the debarment of nine individuals and one company.  Examples of
recent debarment actions include the following: 
' PennsylvaniaThe former director of a non-profit financial institution
and his co-defendant were debarred for 8 years and 4 years, respectively.
They were previously sentenced in connection with a scheme involving the
misuse of HHS funds granted to the Empowerment Zone, a program de-
signed to create sustainable communities through the use of business tax
incentives and economic development programs in distressed urban com-
munities.  The director diverted program funds to his co-defendants
company and used funds for personal purchases. 
' New YorkA company licensed to provide drug prevention training, its
owner, its chief financial officer, and a printing company vendor were
each debarred for 3 years.  An HHS grantee, the company submitted false
invoices to SAMHSA seeking reimbursement for costs associated with
printing drug prevention literature that was never actually produced.  All
three individuals have been sentenced for their roles in the scheme.
' North CarolinaA former employee of the State of North Carolina
Department of Health and Human Services was debarred for 3 years.  The
employee caused the State to submit false claims to the HHS Title IV-E
foster care program for expenses incurred by an unrelated organization
with which she had a personal affiliation.  She also attempted to impede
the Federal investigation by concealing the fact that she had diverted grant
funds intended for foster care and adoptive children to herself and the
organization.  In addition, she was convicted of obstruction of justice.
16 Centers for Medicare & Medicaid Services
Civil Monetary Penalties Law
The Civil Monetary Penalties Law (CMPL) authorizes OIG to impose
administrative penalties and assessments against a person who submits claims to 
a Federal health care program that the person knows or should know are false or
fraudulent.  Civil monetary penalties and assessments may also be levied for other
conduct proscribed by statute.  During this reporting period, OIG collected 
$1.2 million in civil monetary penalties and assessments under the CMPL and
other authorities, including the CMPL provision for patient dumping and the
CMPL provision for kickbacks. 
' Various StatesDuring the current fiscal year, six physicians agreed to
pay almost $401,000 to resolve their respective liabilities associated with billings
for samples of the prostate cancer drug Lupron.  The physicians received the
samples from TAP Pharmaceutical Products Inc. (TAP) and are alleged to have
billed at least some of the samples to Medicare and other payors.  Five of the
physicians entered 3-year integrity agreements with OIG containing unique
provisions relating to drug samples.  This series of cases represents additional
enforcement activity following from the global settlement with TAP in FY 2002.
Kickbacks
Individuals and entities that engage in unlawful referral or kickback schemes
may be subject to criminal penalties under the Federal criminal anti-kickback
statute, civil monetary penalties under OIGs CMPL authority, and/or program
exclusion under OIGs permissive exclusion authority.  A description of these
enforcement authorities can be found in Appendix F.  The following are examples
of kickback enforcement actions during the reporting period:
' Puerto RicoA physician practice and its member physicians agreed to
pay the Government $200,000 to resolve their administrative liability.  
For over 3 years, the practice and its member physicians allegedly solicited
and received loans from the owner of a DME company and a pharmacy in
return for patient referrals.
' New YorkColumbia Memorial Hospital (Columbia Memorial) agreed to
pay the Government $25,000 to resolve its liability under a provision of
the CMPL.  From 1995 until 1999, Columbia Memorial allegedly solicited
and received discounts on hospital transports from an ambulance company
in return for referring certain ambulance business exclusively to the com-
pany.  This case represents the first civil monetary settlement with OIG of
a kickback swapping case involving discounted ambulance services and
conduct addressed by an OIG advisory opinion.
17 Centers for Medicare & Medicaid Services
Civil Penalties for Patient Dumping
Between April 1, 2003, and September 30, 2003, OIG collected civil
monetary penalties of approximately $345,000 from 14 hospitals and physicians
under the Emergency Medical Treatment and Labor Act, a statute designed to
ensure patient access to appropriate emergency medical services.  The following
are examples of settlements involving alleged violations of the patient anti-
dumping statute:
' CaliforniaKaiser Foundation Hospital-Sunset agreed to pay $20,000 
to resolve allegations that it refused to accept the transfer of a patient who
needed Kaisers specialized capabilities to stabilize an emergency medical
condition.  The cardiac surgeon allegedly refused to accept the transfer
because the patient was too unstable and was expected to die.  The patient
was sent to another hospital where he underwent successful surgery and
was discharged.
' VirginiaAn obstetrician agreed to pay $15,000 to resolve allegations
that he did not provide an appropriate medical screening examination or
stabilizing treatment to a pregnant woman.  The woman was transferred to
another hospital approximately one hour away in a private vehicle.  The
patient delivered her baby in the vehicle prior to reaching the second
hospital.
' TexasWest Oaks Hospital agreed to pay $33,000 to resolve allegations
that it refused to provide medical screening examinations and stabilizing
treatment to two patients.  The patients had psychiatric emergency medical
conditions and were potentially suicidal.
' OklahomaGriffin Memorial Hospital, a psychiatric hospital, agreed to
pay $80,000 to resolve allegations that it did not provide adequate medical
screening exams to several individuals who presented with psychiatric
complaints.  In addition, the hospital allegedly declined to accept transfer
of a patient that needed the hospitals specialized services.  In that case the
patient was accepted the following morning.
Criminal and Civil Enforcement
One of the most common types of fraud perpetrated against Medicare,
Medicaid and other Federal health care programs involves the filing of false
claims for reimbursement.  Such false claims may be pursued under the civil False
Claims Act and, in appropriate cases, may also be prosecuted under Federal and 
State criminal statutes.  A description of these enforcement authorities can be
18 Centers for Medicare & Medicaid Services
found in Appendix F.  The successful resolution of these matters often reflects 
the combined investigative efforts and resources of OIG, the FBI and other law
enforcement agencies.
One of OIGs responsibilities is to assist the Department of Justice (DOJ)
in bringing and settling cases under the civil False Claims Act.  Many providers
elect to settle their cases prior to litigation.  As part of their settlements, providers
often agree to enter integrity agreements with OIG in order to avoid exclusions
and be permitted to continue to participate in Medicare and other programs.  These
agreements are monitored by OIG and require the providers to establish compliance
programs.  The compliance programs are designed to prevent a recurrence of the
underlying fraudulent activities at issue.
In the six months ending September 30, 2003, the Government negotiated
to receive more than $637 million through False Claims Act civil settlements
related to the Medicare and Medicaid programs.  Some of these successful settle-
ments, as well as notable criminal enforcement actions, are described below. 
Summaries are organized by the sector of the health care industry involved or by
the nature of the offense.
Prescription Drugs
' DelawareZeneca, Inc., and AstraZeneca Pharmaceuticals LP
(AstraZeneca) agreed to pay nearly $355 million plus interest as part of a
global settlement to resolve its criminal and civil liabilities relating to the
marketing and pricing of its prostate cancer drug Zoladex.  AstraZeneca
pleaded guilty to conspiring to cause the submission of claims for payment
for samples of Zoladex that had been provided free of charge to urologists. 
The settlement also resolved allegations that the company improperly set
Average Wholesale Price and marketed the spread between reimbursement
and cost, causing Medicare and Medicaid to overpay for Zoladex; that it
paid illegal remuneration to induce the purchase of the drug; and that it
failed to pay proper rebates owed to States under the Medicaid drug rebate
program.  As part of the settlement, AstraZeneca entered a comprehensive
5-year corporate integrity agreement with OIG.
' ConnecticutBayer Corporation (Bayer) paid $257 million plus interest
as part of a global criminal and civil settlement relating to its sales of two
drugs, Cipro and Adalat, to a large health maintenance organization. 
Bayer pleaded guilty to a violation of FDA reporting requirements.  The
settlement also resolved allegations that Bayer failed to pay proper rebates
under the Medicaid drug rebate program.  The program requires that
19 Centers for Medicare & Medicaid Services
manufacturers report certain pricing information, including best price, to
CMS and that they pay rebates to the State Medicaid programs based on
the reported prices.  The United States alleged that Bayer failed to report
accurate best prices, and as a result, significantly underpaid rebates owed
to States and overcharged 340B program covered entities for the drugs. 
As part of the total resolution, Bayer agreed to a 3-year extension of a
corporate integrity agreement it entered with OIG as part of an earlier
settlement and agreed to pay the 340B covered entities $9 million.
' North Carolina/PennsylvaniaSmithKline Beecham Corporation, doing
business as GlaxoSmithKline, agreed to pay $88 million to resolve its
liability for alleged violations of Medicaid drug rebate program require-
ments for two of its drugs, Flonase and Paxil.  Like Bayer, GlaxoSmithKline
allegedly failed to report accurate best price information to CMS and, as a
result, allegedly underpaid rebates owed to the States and overcharged
340B program covered entities for the drugs.  GlaxoSmithKline agreed to
a comprehensive compliance agreement with OIG as part of the settlement
and agreed to pay the 340B covered entities $2.5 million.
' Florida/TexasThrough two separate settlement agreements, Dey L.P.
and Dey, Inc. (Dey), a pharmaceutical company located in California,
agreed to pay the State of Texas and the Federal Government a total of
$18.5 million.  The settlements resolved the companys civil liabilities
related to the false pricing of its respiratory-related drugs.  The Government
alleged that Dey falsified price reports for its products to the Texas
Medicaid program, which directly led to overpayments.
' OhioA registered nurse was sentenced to 5 years and 2 months in prison
and ordered to pay a $1,400 fine for theft of drugs.  While working at a
medical center, she stole various types of narcotics for her own use, then
altered patient charts and other records to conceal her crimes.  Many of the
drugs she diverted never reached the seriously ill patients for whom they
were prescribed.
Durable Medical Equipment (DME) Suppliers
' CaliforniaEndo Vascular Technologies, Inc. (EVT), a wholly-owned
subsidiary of Guidant Corporation (Guidant), a medical device manu-
facturer, agreed to pay $94 million as part of a global resolution of
criminal and civil liabilities.  Between 1999 and 2001, EVT manufactured
and allegedly introduced and delivered into interstate commerce an adulter-
ated and misbranded medical device and caused claims to be submitted for
it to the Medicare program.  The device was allegedly misbranded in that
20 Centers for Medicare & Medicaid Services
EVT failed to report, as required by law, information that the system may
have caused or contributed to deaths or serious injuries or that the system
had malfunctioned in a manner that would likely cause or contribute to
death or serious injury.  The Government further alleged that the system
was misbranded because it did not bear adequate directions for use.  In
addition to the settlement agreement, Guidant and EVT agreed to enter
into a comprehensive corporate integrity agreement.  The criminal portion
of this case was investigated by the Food and Drug Administrations
Office of Criminal Investigations.
' FloridaThe owner and operator of a group of DME companies was
sentenced to 7 years in prison and ordered to pay $14.8 million in
restitution, jointly and severally with other co-defendants, for his role in
two schemes to defraud Medicare and Medicaid.  In addition, the court
ordered a $14.8 million forfeiture against him in order to make restitution. 
He previously pleaded  guilty on behalf of six DME corporations that were
set up to launder money.  Despite a temporary restraining order, he and his
co-conspirators continued to fraudulently bill Medicare and Medicaid and
launder the proceeds of the fraud through offshore bank accounts.  The
conspirators involved in the scheme netted in excess of $25 million.  To
date, 28 defendants have been prosecuted, 26 of whom have been sen-
tenced.  In addition to the DME owner/operator, five of the co-
conspirators were sentenced this reporting period.  The cases against the
two remaining defendants will be adjudicated in the near future. 
' TexasA salesperson for a Medicare provider selling custom-made shoes
to diabetic patients was sentenced to 46 months in prison and ordered to
pay $1.4 million in restitution for health care fraud.  The salesperson forged
the names of physicians on certificates of medical necessity, resulting in
fraudulent Medicare payments to the company.
' AlabamaTwo DME owners and their companies, Med Care Rental of
Alabama, Inc., (formerly known as Home Medical Mart, Inc.) and Med
Care Rental of West Alabama, Inc., agreed to pay $30,000 to resolve their
liability for allegedly submitting false claims to Medicare between June 1995
and December 1998.  The Government alleged that the owners of the DME
companies submitted false claims to Medicare when they (1) upcoded
claims for certain DME, (2) failed to obtain and/or maintain certificates of
medical necessity for medical equipment, (3) continued to bill for medical
equipment after it had been picked up from patients, (4) attempted to obtain
physician signatures for orders and certificates after claims had already
been filed, and (5) forged physicians signatures and other documentation
during a documentation party that was held in January 1998.  The DME
21 Centers for Medicare & Medicaid Services
companies are defunct, and their owners agreed to be permanently excluded
from participation in Federal health care programs.
Hospitals
' IllinoisThe University of Chicago and Northwestern Memorial hospitals
agreed to pay the Government $115,000 and $24,000, respectively.  The
medical institutions entered these settlement agreements to resolve
allegations of improperly diagnosing, hospitalizing, and placing candidates
ahead of others waiting for organs in the transplant region.
' CaliforniaRedding Medical Center, Inc. (RMC) agreed to pay $54 million
for the alleged performance and billing of medically unnecessary cardiac
services at the hospital.  RMC is a wholly-owned subsidiary of Tenet
HealthSystems Hospitals, Inc., and its parent corporation Tenet Healthcare
Corporation, Inc.  The settlement resolves allegations that medically un-
necessary cardiac procedures and surgeries were performed at RMC and
billed to Medicare, Medicaid, and TRICARE from January 1997 through
December 2002.
' FloridaPublic Health Trust of Miami-Dade County, Florida, doing
business as Jackson Health System (JHS), agreed to pay $16.8 million to
resolve its liability for allegedly submitting false claims to the Florida
Medicaid program.  JHS operates a number of community clinics that 
provide health care services to economically disadvantaged areas of Miami. 
The Government alleged that during the period of 1999 through 2001, JHS
inappropriately billed Floridas Agency for Health Care Administration for
hospital facility fees for primary care services provided at their com-
munity clinics.  In addition to the settlement agreement, JHS agreed to
enter into a comprehensive 5-year corporate integrity agreement.
' PennsylvaniaAlbert Einstein Healthcare Network (AEHN), a teaching
hospital, agreed to pay $2 million to resolve its liability for submitting
inappropriate claims to the Medicare program.  The claims allegedly were
false because AEHNs employed physicians did not appropriately document
their presence during the provision of professional services by residents
and interns, and they submitted claims for improperly upcoded evaluation
and management services.
' Massachusetts The General Hospital Corporation, doing business as
Massachusetts General Hospital and Massachusetts General Physicians
Organization (collectively MGH), agreed to pay $75,000 to resolve False
22 Centers for Medicare & Medicaid Services
Claims Act liability.  The Government alleged that MGH improperly billed
and received reimbursement from Medicare for procedures performed by
resident physicians when an attending physician was not physically present
to supervise the procedures.
Nursing Homes
' WisconsinA registered nurse was sentenced to 33 months imprisonment
and ordered to pay $352,000 in restitution for health care fraud and illegal
kickback activity.  While excluded for a State Medicaid fraud conviction,
the woman owned and operated staffing agencies that supplied temporary
employees to nursing homes and other facilities treating Medicaid and
Medicare residents.  The nurse also provided services while excluded and
bribed schedulers at various nursing homes to obtain business.
Home Health
' ColoradoPoudre Valley Health Care, Inc., doing business as Poudre
Valley Hospital (Poudre Valley), agreed to pay $2.9 million for allegedly
submitting false cost reports to Medicare.  From January 1992 through
December 1997, Poudre Valley owned and operated a hospital-based and 
a freestanding home health agency.  During that time, Poudre Valley
allegedly submitted cost reports that included inflated costs and failed to
disclose related party transactions involving the two agencies.
Practitioners
' PennsylvaniaAn orthopedic surgeon and his billing company agreed to
pay the Government a total of $1.6 million to resolve their liability for
billing for surgery performed by residents when the surgeon was not in the
operating room.  In addition, the surgeon and his company entered into a
comprehensive 5-year compliance agreement.
' TexasAn internal medicine physician agreed to pay the Government
$900,000 and to enter into a 6-year compliance agreement for allegedly
submitting false claims to Medicare.  From January 1997 through
December 2001, the physician allegedly billed for medical services that
were not performed and were not medically necessary and allegedly
submitted claims that did not accurately reflect the services performed. 
23 Centers for Medicare & Medicaid Services
' New YorkA man was sentenced to 4 months in prison and ordered to
pay $233,000 in restitution for health care fraud.  Though he never
completed medical school, he claimed to be a physician and practiced
medicine.
MEDICAID FRAUD CONTROL UNITS
At present, 47 States and the District of Columbia have established
Medicaid Fraud Control Units (MFCUs) that investigate and prosecute providers
charged with defrauding the Medicaid program or abusing or neglecting patients. 
Three StatesIdaho, Nebraska and North Dakotahave sought and received
waivers from the requirement that all States operate MFCUs.  OIG annually
certifies each MFCU as eligible to receive Federal grant funds.  
During FY 2003, OIG provided oversight for and administration of
approximately $119.8 million in funds to the units.  Examples of cases worked
jointly with MFCUs are the following:
' OIG, the California MFCU, the Defense Criminal Investigative Service,
and the FBIAn otolaryngologist agreed to pay the Government 
$1 million and to be excluded for 15 years to resolve his civil liability 
for improperly billing Medicare, Medicaid, TRICARE and the Federal
Employee Health Benefits Program.  He also pleaded guilty to mail fraud
in connection with the scheme.  During a 5-year period, the otolaryngologist
routinely billed for surgical endoscopies that were not performed or were
upcoded from diagnostic endoscopies.  In addition, he billed for medically
unnecessary allergy, breathing and hearing tests. 
' OIG and the Wyoming MFCUA pharmacist was required to permanently
surrender his license and ordered to pay $53,000 in fines and penalties
after pleading guilty to State charges of obtaining property by false pre-
tenses.  Prior to sentencing, the pharmacist made restitution of $104,000 to
the State Medicaid program.  As owner and operator of a retail pharmacy,
he failed to maintain proper documentation for his Medicaid billings and
billed Medicaid for brand name prescriptions when he actually provided
generic medications.
' OIG, the Ohio MFCU, and the FBIA podiatrist was ordered to pay a
total of $65,000 in fines and restitution for false statements related to
health care matters.  He used multiple fraudulent billing schemes, including
upcoding, billing for services not rendered, billing the services of massage
24 Centers for Medicare & Medicaid Services
therapists as physical therapists, and forging documents to conceal fraud. 
While at several nursing homes, he also stole Medicare and Medicaid
numbers to submit fraudulent billings.
' OIG and the Illinois MFCUA pharmacist was ordered to pay $30,000 
in restitution for misprision of a felony for his role in stealing the drug
Serostim from a clinic, then selling it to bodybuilders in Missouri.  The
drug had been ordered for AIDS patients and billed through the Illinois
Department of Public Aid.
25 26      
Public Health Agencies
The activities conducted and supported by HHS public health
agencies represent this countrys primary defense against acute and
chronic diseases and disabilities.  These programs provide the foundation
for the Nations efforts in promoting and enhancing the continued good
health of the American people.  These divisions within the Department
include the following:
National Institutes of Health (NIH)
Food and Drug Administration (FDA)
Centers for Disease Control and Prevention (CDC)
Health Resources and Services Administration (HRSA)
Indian Health Service (IHS)
Agency for Toxic Substances and Disease Registry (ATSDR)
Agency for Healthcare Research and Quality (AHRQ)
Substance Abuse and Mental Health Services Administration (SAMHSA)
OIG continues to examine policies and procedures throughout
these agencies to determine whether proper controls are in place to guard
against fraud, waste, and abuse.  These activities include pre-award and
recipient capability audits.  This oversight work has provided valuable
recommendations to program managers for strengthening the integrity of
agency policies and procedures.
27 Public Health Agencies
CALIFORNIA BIOTERRORISM PREPAREDNESS FUNDS
Under the Public Health Preparedness and Response for Bioterrorism
Program, CDC provides grants to States and major local health departments to
improve their bioterrorism preparedness.  This review found that, contrary to the
cooperative agreement with CDC, California did not account for its $4.9 million
grant award by focus area for the 2 years ended August 30, 2001.  In addition, the
State could not adequately support program expenditures on financial status reports
submitted to CDC.  These problems were attributable to shortcomings in the
accounting system, procedures, and controls, as well as inadequate monitoring of
subrecipients.
OIG recommended, among other things, that the State determine, in
coordination with CDC, the amount of program funds expended in each focus
area, identify unallowable costs and unexpended amounts, adjust current and
future awards to provide appropriate levels of preparedness by focus area, and
make accounting system improvements.  The State concurred.  (A-09-02-01007)
OTHER ANTIBIOTERRORISM ACTIVITIES
As part of a broad bioterrorism preparedness initiative, OIG has assessed
security at facilities that handle select agents, which could potentially be used in a
bioterrorist attack.  Security reviews at laboratory facilities operated by CDC,
NIH, and FDA and at college and university laboratories have been completed. 
This work included an evaluation of universities compliance with the USA Patriot
Act of 2001, which prohibits access to select agents by restricted persons. 
Reviews to date reveal problems in each of the four security areas specified in
Department of Justice standards.  In addition, a report on CDCs implementation
of the regulation governing facilities that transfer and receive select agents noted
the need for improvement.
Accountability for bioterrorism preparedness funding has also received
attention.  OIG is assessing 17 States and localities systems to account for funds
under both HRSAs Hospital Bioterrorism Program and CDCs Bioterrorism
Cooperative Grant.  OIG also developed a model audit assessment tool for States
to use in determining how well their jurisdictions account for these funds. 
Additional work is underway on State progress in developing and implementing
laboratory response networks; reportable disease surveillance; State health
28 Public Health Agencies
departments legal authorities to respond to bioterrorism; and, at the Departments
request, progress in strengthening security at departmental laboratory facilities. 
(Various reports) 
VARIATION IN ORGAN DONATION                 
         AMONG TRANSPLANT CENTERS     
National Variation in Consent Rate Among
Transplant Centers (8/01-11/02)
OIG compared data on patients who were
medically eligible to be organ donors against the num-
Consent Number of  Percentage
ber of donors for whom consent to donate was given.  Rate Centers of Total
For 190 of the nations 255 transplant centers, OIG 
0-9.9% 2 1.1%
found that the rate of consent varied widely at the
national level, within geographic regions, and at 10-19.9% 4 2.1%
the organ procurement organization service area level. 
20-29.9% 12 6.3%
OIG found a slightly higher consent rate in hospitals
30-39.9% 22 11.6%
with a larger number of transplant programs and
operations. 40-49.9% 35 18.4%
However, of 190 transplant centers in the
50-59.9% 45 23.7%
analysis, 18 had a donor consent rate below 30 percent,
60-69.9% 40 21.1%
compared to a national average of 51 percent.  Had
these 18 transplant centers obtained consent at the 70-79.9% 17  8.9%
average rate of the other 172 centers (54 percent), they
80-89.9% 8  4.2%
would have realized 130 more donors beyond their
current performance, resulting in an estimated addi-  90-100% 5  2.6%
tional 450 life-saving organs.  (OEI-01-02-00210)
Total 190 100.0%
NEW DRUG APPLICATIONS
OIG issued a report on FDAs review process for new drug applications
(NDAs) carried out by the Center for Drug Evaluation and Research.  This report
is significant, particularly in light of the recent reauthorization of the Prescription
Drug User Fee Act that allows FDA to collect user fees for the review of NDAs
for another 5 years and establishes time lines for their review.  OIG found that the
NDA review process has several strengths contributing significantly to its effec-
tiveness.  Both reviewers and sponsors have confidence in the decisions FDA
makes.  Review times have dropped considerably.  FDA works more collaboratively
with sponsors and has taken several steps to enhance efficiency.
   Indicates performance measure.  Details can be found in Appendix H.
29 Public Health Agencies
However, OIG also found that workload pressures increasingly challenge
effectiveness of the review process.  These pressures make it difficult for reviewers
to conduct in-depth reviews, hold advisory committee meetings, raise scientific
disagreements, participate in professional development, and conduct research 
Number of Advisory Committees Held by FDAs
Center for Drug Evaluation and Research for New
Drug Applications
on drug development.  Three other factors also challenging the effectiveness of 
the process are the rush to finalize drug labels at the end of the review process,
reviewer uncertainty about what types of postmarketing commitments to request
from sponsors, and limited public disclosure regarding the basis for FDAs
decisions on NDAs.  OIG made multiple recommendations, including that FDA
take full advantage of the opportunities presented in the Prescription Drug User
Fee Act, which calls for FDA to conduct several studies aimed at improving the
process.  FDA generally concurred.  (OEI-01-01-00590)
HEMOPHILIA TREATMENT CENTERS
Administered by HRSA, the 340B program provides numerous Federal
grantees, including hemophilia treatment centers, with access to discounted
prescription drugs.  The centers earn program income by purchasing discounted
blood-clotting factor and related drugs and reselling them to patients.  OIGs
review, which was conducted at HRSAs request, determined that the six centers
visited generally used program income for patient care and related activities and
had established policies allowing patients to purchase drugs from the vendor of
their choice.  However, one center inappropriately used program income and
30 Public Health Agencies
overcharged Medicaid $613,000 because it did not adhere to Federal regulations
limiting reimbursement to the acquisition cost plus a reasonable dispensing fee
established by the State.
OIG recommended that HRSA develop program guidelines on the 
disposition of 340B program funds, better monitor centers participating in the
program, emphasize the need to follow Federal Medicaid reimbursement regu-
lations, and work with CMS to recover the overpayment.  HRSA generally agreed
with the findings and recommendations.  (A-03-01-00350)
HEALTH EDUCATION
       ASSISTANCE LOAN DEFAULTS
Through the Health Education Assistance Loan (HEAL) program, HRSA
guarantees commercial loans to students seeking education in health-related fields
of study.  The students are allowed to defer repayment of these loans until after
they have graduated and begun to earn an income.  Although the Departments
Program Support Center (PSC) takes all the steps that it can to ensure repayment,
there are loan recipients who ignore their indebtedness.
After PSC has exhausted all efforts to secure repayment of a debt, it declares
the individual in default.  Thereafter, the Social Security Act permits, and in some
instances mandates, exclusion from Medicare, Medicaid and all Federal health
care programs for nonpayment of these loans.  During the 6-month period from
April 1, 2003, to September 30, 2003, 47 individuals and related entities were
excluded as a result of PSC referral of their cases to OIG.
Individuals who have been excluded as a result of their default may enter
into settlement agreements whereby the exclusion is stayed while they pay specified
amounts each month to satisfy their debt.  If they default on these settlement
agreements, they can then be excluded until their entire debt is repaid, and they
cannot appeal these exclusions.  Some health professionals, upon being notified of
their exclusion, immediately repay their HEAL debts.
After being excluded for nonpayment of their HEAL debts, a total of 1,776
individuals have taken advantage of the opportunity to enter into settlement agree-
ments or completely repay their debts.  This figure includes the 73 individuals
who have entered into such a settlement agreement or completely repaid their
debts during this reporting period.  The amount of money being repaid through
settlement agreements or through complete repayment totals almost $126 million. 
Of that amount, $5 million is attributable to this reporting period.  In the following
examples, each individual entered into a settlement agreement to repay the
amount indicated:
31 Public Health Agencies
' A New York Dentist$297,000
' A South Carolina Physician$263,000
' A California Dentist$250,000
' An Ohio Dentist$200,000
' A Utah Chiropractor$199,000
FINANCIAL STATEMENT AUDIT     
To support its audit of the Departments FY 2002 financial statements,
OIG contracted with independent certified public accounting firms to audit the
financial statements of the major public health operating divisions.  During this
semiannual period, the accounting firm issued an unqualified opinion on
SAMHSAs FY 2002 financial statements, which means that they were reliable
and fairly presented.  No material weaknesses were noted in the system of internal
controls.  (A-17-02-00004)
MISUSE OF PUBLIC HEALTH GRANT FUNDS
OIG also investigates cases involving the misuse of HHS grant funds. 
Resolution of charges involving the improper use of funds granted by HHS public
health agencies occurred in the following examples during this reporting period:
' New MexicoThe former chief financial officer for an HHS and IHS
grantee was sentenced to 57 months in prison and ordered to pay $218,000
in restitution to the grantees insurance provider for theft or bribery
concerning programs receiving Federal funds.  During his employment,
the officer embezzled funds by charging improper and unauthorized
expenses to an official credit card and making unauthorized and improper
withdrawals or payments.
' LouisianaA former employee of a university was ordered to pay
$11,000 in restitution for embezzling NIH grant monies.  The employee
was responsible for wire transferring grant funds for the study of malaria
in infants and small children from the universitys stateside account to
their school abroad.  On six occasions, the employee instead transferred
the money into her personal bank account. 
   Indicates performance measure.  Details can be found in Appendix H.
32 Administrations for 
     Children and Families    
                     and on Aging
The Administration for Children and Families (ACF) provides
direction and funding for programs designed to promote stability, economic
security, responsibility, and self-support for the Nations families.  Some
of the major programs include Temporary Assistance for Needy Families
(TANF), Child Support Enforcement, Foster Care, Family Preservation
and Support, Head Start, and the Child Care and Development Block
Grant.
OIG reviews these programs.  Reports focus on ways to increase
the efficient use of program dollars; to more effectively implement programs;
to better coordinate programs among the Federal, State, and local govern-
ments; and to strengthen States financial management practices.
The Administration on Aging (AoA) awards grants to States for
establishing comprehensive community-based systems that assist the elderly
in maintaining their independence and in remaining in their homes as long
as possible.  Socially and economically disadvantaged elderly and low-
income minority elderly are targeted for assistance, including supportive
and nutrition services, education and training, low-cost transportation, 
and health promotion.  OIG has reported opportunities for program im-
provements to target the neediest for services, expand available financial
resources, upgrade data collection and reporting, and enhance program
oversight.
33 Administrations for Children and Families and on Aging
STATE OMBUDSMAN DATA:                               
       NURSING HOME COMPLAINTS     
Based on an analysis of nursing home complaint data reported in the
National Ombudsman Reporting System (NORS), this study found that, nation-
wide, from 1996 to 2000, the number of nursing home complaints reported into
NORS increased approximately 28 percent. 
TOP COMPLAINT CATEGORIES BY GROWTH
However, the types of complaints have not
changed significantly.  The highest frequency
1996 2000 Percent
Complaint Total Total Growth of nursing home complaints involve resident
care.  Local ombudsmen do not report all
Staff Turnover    330 1,015 207.6%
nursing home complaints into NORS, and
Dehydration 1,122 2,219  97.8% they do not report complaints uniformly.  This
is, in part, due to laws and policies which are
Infection Control    562 1,074  91.1%
not within AoAs or the ombudsmans control. 
Supervision 1,825 3,326  82.2% As a result, NORS data are not comprehensive
and should not be used to compare States to
Exercise Choice
&/or Civil Rights 2,211 3,803  72.0% one another with respect to the volume and
types of complaints.  OIG believes the con-
sistency of NORS data would be improved if
AoA shares the results of this report with State ombudsmen and continues to
clarify and refine the NORS process. 
In their comments on OIGs draft report, AoA agreed that a lack of
uniformity exists in States reporting under NORS.  AoA agreed with OIGs
recommendation to distribute the final report to the State ombudsmen and
highlight the complaint trends.  AoA also plans to conduct regional and State
training on the use of complaint codes.  (OEI-09-02-00160)
REFUNDING AID TO FAMILIES WITH                         
         DEPENDENT CHILDREN OVERPAYMENTS
Current Federal regulations require that States pursue Aid to Families with
Dependent Children overpayments before October 1, 1996, and make appropriate
refunds to the Federal Government.  This review, which was part of a nationwide 
   Indicates performance measure.  Details can be found in Appendix H.
34 Administrations for Children and Families and on Aging
initiative found that California did not follow program instructions issued
September 1, 2000, and had not refunded the Federal share of program recoveries
collected by Los Angeles County. 
The State agreed with OIGs recommendations to refund $24 million to
the Federal Government and to repay the Federal share of any overpayments
recovered after the audit period.  (A-09-02-00072)
CHILD SUPPORT ENFORCEMENT     
       CUSTOMER SERVICE     
An OIG inspection described parent perceptions of child support
enforcement customer service, based on telephone and office visit experiences
of parent respondents in four States.  Due to a shifting client base and the perfor-
mance initiatives under the Government Performance and Results Act,  the Office
of Child Support Enforcement has recently placed greater emphasis on States
providing effective customer service to parents.
OIG analyzed responses from 487 custodial and 196 noncustodial parents
in the four States.  Respondents reported a number of problems with service,
especially experienced by noncustodial parents, and only a modest level of
satisfaction.  OIG found that nearly all respondents had contacted the agency
through telephone calls and office visits, most often to gain information about
their cases.  OIG also found that direct contact with agency staff, whether by
telephone or in person, resulted in more positive experiences.  (OEI-06-02-00250)
NONCUSTODIAL PARENTS                                        
      CONTRIBUTIONS TO MEDICAID COSTS     
The objective of this eight-State initiative was to determine the number of
children under the child support enforcement program whose noncustodial parents
could contribute toward the childrens Medicaid costs and the amount they could
contribute.  The reviews focused on noncustodial parents for whom private medical
insurance was unavailable or unaffordable.  Federal legislation does not require
that such individuals provide medical support for their children.  To date, reports
have been issued on three States.
   Indicates performance measure.  Details can be found in Appendix H.
35 Administrations for Children and Families and on Aging
OIG identified an estimated 12,500 children whose
Connecticut
noncustodial parents could have contributed toward
part or all of their childrens Medicaid costs during a 
1-year period.  About $9.3 million could have been collected from these
parents, covering 67 percent of the Medicaid costs incurred by the State
and Federal Governments.  Although Connecticut law requires noncus-
todial parents to pay the costs of Medicaid benefits when private insurance
is unavailable or too costly, the State has encountered obstacles, such as 
conflicting court orders written under prior laws.  The State agreed with
OIGs suggestions for overcoming these obstacles.  (A-01-02-02502)
Over a 1-year period, an estimated $17.4 million
 North Carolina
could have been collected from the noncustodial
parents of 31,000 children to partially offset the 
Medicaid costs incurred by the State and Federal Governments.  Since
North Carolina currently has no mechanisms to require such payments, OIG
recommended that the State include this requirement in its child support
laws.  The State was receptive and planned to explore possible approaches. 
(A-04-02-00013)
OIG estimated that the noncustodial parents of more than
 Texas
60,000 children could have contributed $16.6 million toward
Medicaid costs totaling $36.9 million during a 1-year period. 
The State recently strengthened its laws to require that custodial parents
apply for benefits under Medicaid and that noncustodial parents contribute
medical support payments for their childrens Medicaid costs.  Court orders
written under prior laws, however, do not require such contributions.  Ac-
cordingly, OIG recommended that the State ensure that prior orders are
revised as they come up for modification, and the State agreed.
(A-06-02-00053)
FOSTER CARES USE OF MEDICAID SERVICES    
OIG assessed whether foster care children are receiving Medicaid health
care services in New Jerseythe first of eight States being evaluated.  An analysis
of 2 years of Medicaid claims for 50 foster children in New Jersey showed that
few of these children are receiving Medicaid services, particularly Early and
Periodic Screening Diagnosis and Treatment (EPSDT) services, although all the
children have coverage.  In addition, interviews with caseworkers and caregivers 
   Indicates performance measure.  Details can be found in Appendix H.
36 Administrations for Children and Families and on Aging
revealed that they are not informed about the Medicaid program, and they have 
received very little training in Medicaid services.  Also, most caseworkers and
caregivers did not receive their foster childs medical information and reported
difficulty finding Medicaid providers.
OIG recommended that ACF work with the State to provide more training
to caseworkers and caregivers on the Medicaid program, EPSDT, and managed
care.  OIG also recommended that ACF and CMS work with the State to promote
communication and to address the concerns of caseworkers and caregivers regard-
ing the lack of access to Medicaid providers.  Both ACF and CMS agreed with the
recommendations.  (OEI-02-00-00360)
CHILD SUPPORT ENFORCEMENT
OIG has made the detection, investigation and prosecution of absent
parents who fail to pay court-ordered child support a priority.  OIG continues to
work with the Office of Child Support Enforcement (OCSE), DOJ, U.S. Attorneys
Offices, U.S. Marshals Service, and other Federal, State and local partners to
develop procedures to expedite the collection of child support and to bring to
justice those who willfully disregard their obligations.
Since 1995, OIG has opened 2394 investigations of child support cases
nationwide, which have resulted in 812 convictions and court-ordered criminal
restitution and settlements of over $42.5 million.*
   Task Forces
In 1998, OIG and OCSE initiated Project Save Our Children, a criminal
child support initiative made up of multiagency, multijurisdictional investigative
task forces.  The task forces are designed to identify, investigate and prosecute
egregious criminal nonsupport cases both on the Federal and State levels through
the coordination of law enforcement, criminal justice and child support office
resources.
Central to the task forces are the screening units located in each task force
region and staffed by analysts and auditors from OIG and OCSE.  The units re-
ceive child support cases from the States, conduct preinvestigative analyses of
*Please note that in the OIG Semiannual Report covering the period from October 1, 2002, through
March 31, 2003, the figure given for convictions (1,727) was stated incorrectly.  The number
should have been reported as 727.
37 Administrations for Children and Families and on Aging
these cases through the use of databases, and then forward the cases to the investi-
gative task force units where they are assigned and investigated.  The task force
approach streamlines the process by which the cases best suited for criminal
prosecution are identified, investigated and resolved.
At this point, the task force units have received over 6750 cases from the
States.  As a result of the work of the task forces, 392 Federal arrests have been
executed and 331 individuals sentenced.  The total ordered amount of restitution
related to Federal investigations is over $17.5 million.  There have been 319
arrests at the State level and 292 convictions or civil adjudications to date,
resulting in over $12.3 million in restitution being ordered.
Task Force Table
      Task Force        Task Force                Task Force 
        Regions     Headquarters                    States
       Mid-Atlantic    Baltimore, Maryland Delaware, District of Columbia,
Maryland, Pennsylvania, Virginia,
West Virginia
       Midwest    Columbus, Ohio Illinois, Indiana, Michigan,
Minnesota, Ohio, Wisconsin
       Northeast    New York, New York New Jersey, New York, Puerto Rico
       Southeast    Atlanta, Georgia Alabama, Florida, Georgia,
Kentucky, Mississippi, North
Carolina, South Carolina, Tennessee
       Southwest    Dallas, Texas Arkansas, Louisiana, New Mexico,
Oklahoma, Texas
       West Coast    Sacramento, California Arizona, California, Hawaii, Nevada 
       New England    Boston, Massachusetts Connecticut, Maine, Massachusetts,
New Hampshire, Rhode Island,
Vermont
       Great Plains    Topeka, Kansas Iowa, Kansas, Missouri, Nebraska,
North Dakota, South Dakota
       Rocky Mountains    Denver, Colorado Colorado, Montana, Utah, Wyoming
       Pacific North    Olympia, Washington Alaska, Idaho, Oregon, Washington
38 Administrations for Children and Families and on Aging
Investigations
OIG investigations of child support cases, nationwide, resulted in 85
convictions and court-ordered criminal restitution of over $3.9 million during this
period.  Examples of the Federal arrests, convictions and sentences for failure to
pay child support include the following:
' ArizonaThe author of a book that teaches readers how to avoid or reduce
child support obligations was sentenced to 16 months in prison and ordered
to pay $165,000 in restitution.  His book also explains how to make one-
self appear poor, disappear completely, and resurface under a new identity. 
For over 9 years, he used his own vanishing techniques to avoid his
obligation.
' New JerseyA man was sentenced to 6 months home confinement, 5 years
probation and ordered to pay $69,000 in restitution.  A licensed pharmacist
who earned over $50,000 a year, the man owed support for his two children. 
He also failed to pay support or medical expenses for a third child prior to
the childs death.
' IowaA man was sentenced to 4 months home confinement, 5 years
probation and ordered to pay $35,000 in restitution.  Prior to sentencing,
he paid $10,000 toward his arrearage of $45,000.
' South DakotaA woman was sentenced to 6 months home confinement,
5 years supervised probation and ordered to pay $12,000 in restitution.  She
was indicted in August 2002 after failing to make any support payments
since 1998.
' VirginiaA former professional basketball player was sentenced for
failure to pay child support in two separate cases.  In the first case, he was
sentenced to 1 year supervised probation and ordered to pay his remaining
restitution of $2,000.  In the second case, he was sentenced to 2 years
probation and fined $1,000.  Since the beginning of the investigation, he
has paid almost $58,000 to satisfy both child support arrearages.  Although
he earned over $685,000 between 1999 and 2002, he had not made any
support payments since September 2000. 
39 Administrations for Children and Families and on Aging
MISUSE OF ACF GRANT FUNDS
In addition to investigating the misuse of public health grant funds (details
page 32), OIG also investigates cases involving the misuse of ACF grant funds.
Resolution of charges involving the improper use of these funds occurred in the
following examples during this reporting period:
' West VirginiaA former employee of the West Virginia Department of
Health and Human Resources was sentenced to 312 years incarceration and
ordered to pay $302,000 in restitution for mail fraud.  The employee embez-
zled more than $302,000 in funds, most of which came from Temporary
Assistance for Needy Families grants. 
Also in West Virginia, a former payroll specialist for an HHS
grantee was sentenced to 5 months imprisonment and ordered to pay
$42,000 in restitution for theft from an organization receiving Federal
funds.  The employee embezzled funds by writing herself checks from the
grantees Head Start account.
' South DakotaThe director of an HHS grantee that received funds to
care for children and their health was ordered to pay $4,000 in restitution
for embezzlement and theft from an Indian tribe and Indian tribal organi-
zation.  The director embezzled program funds by falsifying travel
vouchers.
' MichiganA daycare center administrator was sentenced to 2 years
incarceration and ordered to pay $1 million in restitution for mail fraud.
The administrator fraudulently used block grant funds provided by TANF
and the Child Care and Development Fund intended for operating daycare
facilities.  The investigation found that several of the daycare centers
billed for children who were not in the center when claimed and that one
center billed for child care when it was actually closed.
40      General Oversight  
The Office of the Assistant Secretary for Budget, Technology 
and Finance (ASBTF) is responsible for developing and executing the
Department of Health and Human Servicess (HHS) budget; ensuring that
HHS performance measurement and reporting are in compliance with the
Government Performance and Results Act; establishing and monitoring
departmental policy for financial management (including debt collection,
audit resolution, cost policy, and financial reporting); and developing and
monitoring HHS information technology policy (including IT security).
The Assistant Secretary is the Departments Chief Financial Officer and
oversees the Departments Chief Information Officer.  The Department
also has the responsibility, by virtue of the magnitude of its funding, to
negotiate the payment rates and methods that many outside entities, such
as State and local governments, charge for administering HHS and other
Federal programs.
The Office of the Assistant Secretary for Administration and
Management (ASAM) is responsible for HHS policies regarding human
resources, grants, and acquisition management.  This office also oversees
the Program Support Center, which provides a range of administrative
services, such as human resources, financial management, and adminis-
trative operations.
OIG has oversight responsibility for these activities at the
departmental level.  A related major responsibility flows from Office 
of Management and Budget Circular A-133, under which HHS is the
cognizant agency to audit the majority of Federal funds awarded to major
research schools, State and local government cost allocation plans, and
separate indirect cost plans of State agencies and local governments.  OIG
also oversees the work of non-Federal auditors of Federal money at some
6,700 entities, such as community health centers and Head Start grantees,
as well as at State and local governments, colleges and universities, and
other nonprofit organizations.  In addition, OIG is responsible for auditing
the Departments financial statements.
41 General Oversight
RESULTS ACT     
The Government Performance and Results Act (GPRA) of 1993 mandates
that Federal agencies establish strategic planning and prepare annual performance
plans.  These plans set measurable goals for the years accomplishments, and
annual reports compare actual performance with those goals.  OIGs work focuses
on measures related to mission-critical issues and areas at high risk of fraud, waste,
and abuse and includes assessments of data collection methods and controls over
the systems that produce performance data.  An ongoing objective of OIGs audits,
inspections, and investigations is to identify performance results and recommend
improvements.
OIGs reviews of Medicare fee-for-service payment errors relate directly 
to assessment of CMS-generated financial performance data.  CMS has used
OIGs annual estimate of the error rate as a basis for setting performance goals
and measuring performance.  For FY 2002, when CMSs goal was to reduce the
error rate to 5 percent, OIG reported an estimated 6.3-percent rate.  Beginning in 
FY 2003, CMS has assumed responsibility for developing the error rate through
Comprehensive Error Rate Testing and the Hospital Payment Monitoring Program,
and OIG will assess the validity and reliability of the estimate.
Additional OIG work focuses on programs and activities linked to other
HHS strategic goals.  For example, numerous reviews are evaluating the effective-
ness of the Departments bioterrorism preparedness efforts.  The results of these
reviews should prove useful in measuring progress toward the HHS goal to enhance
the ability of the Nations public health system to effectively respond to bioter-
rorism and other public health challenges.  To assess the Departments efforts to
improve the quality of health care services, OIG plans to review, among other
things, hospital quality oversight processes, hospital reporting of restraint-related
deaths, and the extent and type of patient safety data available to State medical
boards that could be shared with CMS and health care facilities to reduce pre-
ventable medical errors.  As a final example, OIG has several reviews planned
that address the HHS goal to improve the stability and healthy development of our
Nations children and youth.  Review areas include the child support enforcement
program, Head Start, and the foster care program.
   Indicates performance measure.  Details can be found in Appendix H.
42 General Oversight
FLORIDA PENSION FUND
This review found that during the 3 years ended June 30, 2002, Florida
used funds designated as retirement contributions solely to pay pension-related
expenses.  However, these contributions exceeded the amounts reasonable and
necessary to fully fund benefits by about $3 billion ($267 million Federal share). 
The State attributed the surplus primarily to exceptional investment performance
and took several steps to reduce the surplus.  However, the States rate stabiliza-
tion mechanism, established by statute, prevents the entire surplus from being
available for contribution rate reductions or benefit enhancements.  OIG believes
that the long-term continuation of this surplus violates Federal cost principles.
OIG recommended that the State reduce contribution rates to a level
necessary to fully fund pension expenses over the long term and amend, as neces-
sary, its rate stabilization mechanism.  As an alternative, the State may repay the
$267 million to the Federal Government and identify and repay the Federal share
of excess contributions for participating employers not included in OIGs review. 
State officials generally disagreed with the findings and recommendations. 
(A-04-02-00012)
INTERNATIONAL MERCHANT PURCHASE       
        AUTHORIZATION CARD PROGRAM     
This inspection sought to determine whether HHS employees properly
used the International Merchant Purchase Authorization Card (IMPAC) and
followed HHS guidelines and agency procedures.  OIG reviewed agency-specific
procedures as well as documentation for 400 randomly-selected IMPAC trans-
sactions.  The report did not identify any transactions that clearly indicated
misuse or purchases converted to personal use.  However, 44 percent of all
IMPAC trans- actions had either no evidence of approving official review,
insufficient purchase documentation, or lacked a recorded object class code. 
Some cardholders and approving officials actions demonstrated a lack of
understanding of agency procedures.
OIG recommended that the Office of the Assistant Secretary for
Administration and Management (ASAM), working through agency program
coordinators, ensure that cardholders and approving officials are in compliance
with the established guidelines, develop guidance where none exists, and provide
targeted training for cardholders and approving officials.  In its response to the 
   Indicates performance measure.  Details can be found in Appendix H.
43 General Oversight
Sample Control Weaknesses Increasing 
the Risk of Improprieties:
Inappropriately open accountsaccounts for 1,390 lost or expired cards remained open P 
Infrequent card usage790 of 6,823 accounts had no activity during CY 2001 P
Relationship of cardholders to approving officials7 accounts have the same person
listed as the cardholder and the approving official P
Span of control of approving officials19% of approving officials have responsibility for
5 or more accounts P
Approving official and cardholders not co-located17% of accounts have approving
officials with zip codes different from those of the corresponding cardholders P
report, ASAM noted that it would work closely with the Office of Management
and Budget to improve internal controls highlighted in the report.
(OEI-07-02-00510)
NON-FEDERAL AUDITS
OMB Circular A-133 establishes audit requirements for State and local
governments, colleges and universities, and nonprofit organizations receiving
Federal awards.  Under this circular, covered entities are required to have an
annual organization-wide audit which includes all Federal money they receive. 
These annual audits are conducted by non-Federal auditors, such as public
accounting firms and State auditors.  As cognizant auditor, OIG reviews the
quality of these audits and assesses the adequacy of the entitys management of
Federal funds.  In the second half of FY 2003, OIGs National External Audit
Review Center reviewed 918 reports that covered $685.5 billion in audited costs. 
Federal dollars covered by these audits totaled $198 billion, about $92.2 billion 
of which was HHS money.
OIGs oversight of non-Federal audit activity not only provides Department
managers with assurances about the management of Federal programs but also
identifies any significant areas of internal control weakness, noncompliance, and
questioned costs that require formal resolution by Federal officials.  By taking a
proactive stance, OIG identifies entities for high-risk monitoring and alerts pro-
gram officials to any trends that could indicate problems in HHS programs.  In
addition, OIG profiles non-Federal audit findings of a particular program or
44 General Oversight
activity over time to identify systemic problems.  As a further enhancement of
audit quality, OIG provides training and technical assistance to grantees and the
auditing profession.
To rely on the work of non-Federal auditors, OIG maintains a quality
control review process which assesses the non-Federal reports received and the
audit work that supports selected reports.  The non-Federal audit reports reviewed
and issued during this reporting period fall into the categories in the box below.
  Reports issued:
     Without changes or with minor changes       779
     With major changes   95
     With significant inadequacies   44
    
Total                                                      918  
The 918 reports included recommendations for HHS program officials
to take action on cost recoveries totaling $86.6 million, as well as 3,927 recom-
mendations for improving management operations.  In addition, these audit reports
provided information for 61 special memoranda which identified concerns for
increased monitoring by departmental management.
RESOLVING RECOMMENDATIONS
The tables that appear on the following pages are provided in accordance
with section 5 of the Inspector General Act and indicate the dollar value of actions
taken on OIG recommendations.  
In Table 1, Dollar Value Questioned costs are those challenged because
of violation of law, regulation, grant conditions, etc.  Dollar Value Unsupported
costs are those not supported by adequate documentation.  Additional audit 
recoveries are discussed on page 51.
Table 2 summarizes recommendations that funds be put to better use
through cost avoidances, budget savings, etc.  These costs are separate from the
amount ordered or returned as a result of OIG investigations.
45 General Oversight
Table 1:  Reports With Questioned Costs*
Reports Number of      Dollar Value Dollar Value
  Reports   Questioned  Unsupported
Section 1
For which no management 
decision had been made by 
the beginning of the reporting 
period1 474 $1,710,947,000 $251,166,000
Issued during the reporting 
period 101 $456,243,000 $82,025,000
          Total Section 1 575 $2,167,190,000 $333,191,000
Section 2
For which management 
decision was made during 
the reporting period2,3,4
     Disallowed costs $160,274,000 $4,400,000
     Costs not disallowed $18,035,000 $6,900,000
          Total Section 2 85 $178,309,000 $11,300,000
Section 3
For which no management 
decision had been made by 
the end of the reporting period
          Total Section 1 minus
          Total Section 2 490 $1,988,881,000 $321,891,000
Section 4
For which no management 
decision was made within 
6 months of  issuance5 392 $1,519,932,000 $151,993,200
*Details concerning footnotes can be found in Appendix D.
46 General Oversight
Table 2:  Funds Recommended to Be Put to Better Use*
Reports Number of      Dollar Value
   Reports
Section 1
For which no management decision had
been made by the beginning of reporting
period1 57 $9,163,001,000
Issued during the reporting period 10 $321,171,000
            Total Section 1 67 $9,484,172,000
Section 2
For which management decision was
made during the reporting period
Value of recommendations that 
were agreed to by management
Based on proposed 
management action 4 $531,993,000
Based on proposed 
legislative action 0 $0
Value of recommendations that 
were not agreed to by management 0 $0
            Total Section 2 4 $531,993,000
Section 3
For which no management decision had 
been made by the end of the reporting 
period2
            Total Section 1 minus
            Total Section 2 63 $8,952,179,000
*Details concerning footnotes can be found in Appendix D.
47 General Oversight
LEGISLATIVE AND REGULATORY
       REVIEW AND DEVELOPMENT
Review Functions
Section 4(a) of the Inspector General Act of 1978 requires that the Inspector
General review existing and proposed legislation and regulations and make recom-
mendations in this report concerning the impact on the economy and efficiency of
the administration of the Departments programs and on the prevention of fraud
and abuse.  In reviewing regulations and legislative proposals, OIG uses as the
primary basis for its comments the audits, inspections, investigations, and other
activities highlighted in this and previous semiannual reports.
Development Functions
OIG is responsible for the development and public announcement of a
variety of sanction regulations addressing civil money penalty and program
exclusion authorities administered by the Inspector General, as well as advisory
opinions and safe harbor regulations related to the anti-kickback statute.  During
this reporting period, OIG:
! Published proposed rulemaking designed to clarify the Secretarys 
authority to exclude providers and suppliers from Medicare and Medicaid
that charge the programs substantially in excess of their usual charges to
other customers.  The proposed rule specifically amends OIG exclusion
regulations at 42 CFR  1001 by setting forth definitions for the terms
substantially in excess and usual charges, and by clarifying the good
cause exception now contained in the regulations.
! Continued to develop final rulemaking designed to expand the existing
safe harbor for certain waivers of beneficiary coinsurance and deductible
amounts to benefit the policyholders of Medicare SELECT supplemental
insurance.  OIG proposed rulemaking was published in the Federal
Register on September 25, 2002 (67 FR 60202).
In addition, during this period, OIG continued to develop and publish
several Federal Register notices that reflect OIG policy and procedures with
regard to compliance program guidance, Special Fraud Alerts, Special Advisory
Bulletins and continued OIG regulations development.  Specifically, during this
period, OIG:
48 General Oversight
! Published final Compliance Program Guidance for Pharmaceutical
Manufacturers.  Through this final guidance, OIG set forth its general
views on the value and fundamental principles of compliance programs 
for pharmaceutical manufacturers and the specific elements that they
should consider when developing and implementing a compliance
initiative.  (May 5, 2003; 68 FR 23731)
! Developed and published a new OIG Special Advisory Bulletin addressing
contractual joint venture arrangements for the provision of items and ser-
vices previously identified as suspect in an earlier Special Fraud Alert on
Joint Venture Arrangements.  (April 30, 2003; 68 FR 23148)
! In accordance with the Departments Healthcare Integrity and Protection
Data Bank regulations, published a Federal Register notice setting forth an
adjustment in the user fees charged for queries submitted by authorized
entities to access the data bank.  (April 22, 2003; 68 FR 19838)
! In accordance with section 3506(c)(2)(A) of the Paperwork Reduction 
Act of 1995, published a Federal Register notice concerning information
collection activities related to the recertification application and annual
reporting requirements by State Medicaid Fraud Control Units. 
(March 26, 2003; 68 FR 14668)
! In compliance with requirements established by the Homeland Security
Act of 2002, published revisions to OIGs Privacy Act Systems of Records,
amending both OIGs Criminal Investigative Files and Civil and
Administrative Investigative Filesto add a new routine use provision
allowing for the disclosure of information to authorized officials within
the PCIE who are charged with the responsibility of conducting assess-
ment reviews of investigative operations.  (June 19, 2003; 68 FR 36827)
! Developed and published a Federal Register notice soliciting input and
recommendations for developing OIG compliance program guidance for
recipients of National Institutes of Health research grants. 
(September 5, 2003; 68 FR 52783) 
! Continued development of draft revised OIG compliance program 
guidance for the hospital industry to provide additional recommendations
on best practices for establishing an effective compliance program in the
hospital setting. 
49 General Oversight
! Continued development of an OIG Federal Register notice setting forth
revised standards for assessing the performance of State Medicaid Fraud
Control Units.  These revised standards will be used in the certification
and recertification of each unit and to determine if a unit is effectively and
efficiently carrying out its duties and responsibilities. 
EMPLOYEE FRAUD AND MISCONDUCT
Most of the persons employed by HHS are dedicated, honest civil servants. 
Occasionally, however, individuals violate their fiduciary responsibilities.  OIG
conducts or oversees investigations of serious allegations of wrongdoing by
Department employees, as in the following examples:
' MontanaAs the result of a joint investigation with the Department of
Interior, OIG, a former maintenance leader/supervisor for the Indian
Health Service (IHS), a former accounting technician for the Bureau of
Indian Affairs (BIA), and a former BIA supervisor were sentenced in
Montana this reporting period.  The two participated in a scheme involving
Government contractors and the misuse of government-issued credit cards. 
As part of the scheme, IHS and BIA employees accepted kickbacks in
exchange for giving preferential treatment to, and purchasing unnecessary
and overpriced supplies and services from, two Government contractors. 
Government credit card purchases were also structured by employees to
avoid the individual credit card daily purchase limit and to eliminate the
need to obtain competitive bids.  To date, a total of two civilian Government
contractors, three former IHS employees, and two BIA employees have
been sentenced in connection with the investigation.  In addition to the
seven people already convicted in this case, a BIA employee was charged
with accepting a bribe as a public official and arrested in South Dakota,
and a ninth BIA employee was charged in Wyoming with receipt of a
gratuity by a public official.  IHS also took administrative action against
six employees due to their lack of oversight in regard to purchasing or for
misuse of a Government credit card. 
' MarylandA former HHS file room clerk was sentenced to 1 year in
prison and ordered to pay $79,000 in restitution for conspiracy to commit
fraud in connection with identification information.  The employee con-
spired with her boyfriend to assume the identities of numerous HHS
50 General Oversight
employees by using their personal information to apply for and obtain credit
at various merchants.  The boyfriend was also sentenced for his role in the
scheme.
' New MexicoAn IHS procurement officer was ordered to pay $10,000 in
restitution for embezzlement.  During a 7-month period, the employee used
her Government credit card to make purchases for personal gain.
' South DakotaTwo former IHS employees were each ordered to pay
$3,000 in restitution for false claims and aiding and abetting in the sub-
mission of false claims.  The two submitted travel vouchers claiming
mileage for a personally owned vehicle and for individual lodging ex-
penses when they actually traveled together in a Government-owned
vehicle and shared lodging. 
ADDITIONAL AUDIT RECOVERIES
Based on OIG recommendations, the Department realized $31.8 million
in additional recoveries, beyond the disallowances reported in Table 1, during this
semiannual period.  As a result of an audit of Mutual of Omahas oversight of
Medicare acute care providers receiving periodic interim payments, CMS issued a
memorandum to all fiscal intermediaries summarizing OIGs findings and requir-
ing them to determine whether cost report settlements were calculated properly. 
In response, the fiscal intermediaries collected an additional $31.8 million in
overpayments.  (A-07-01-02616)
INVESTIGATIVE PROSECUTIONS
During this semiannual reporting period, OIG investigations resulted in 256
successful criminal actions.  Also during this period, 740 cases were presented for
criminal prosecution to DOJ and, in some instances, to State and local prosecutors. 
Criminal charges were brought by prosecutors against 285 individuals and entities.
In addition to terms of imprisonment and probation imposed in the judicial
processes, over $801 million was ordered or returned as a result of OIG investiga-
tions during this reporting period.  Civil settlements from investigations result- 
ting from audit findings are included in this figure.
51 52    Appendices
53 54 Appendix A
Savings Achieved through Policy and Procedural Changes Resulting from Audits,
Investigations and Inspections 
April 1, 2003, through September 30, 2003
The following schedule highlights savings resulting from Office of Inspector General (OIG) efforts
to prevent unnecessary obligations for expenditures of agency funds or to improve agency systems and
operations.  These achievements depend greatly on the contributions of others, such as partners within
the Department and elsewhere.  The amounts shown represent funds or resources that will be used more
efficiently as a result of documented measures taken by the Congress or by management in response to
OIG audits, investigations and inspections, including:  actual reductions in unnecessary budget outlays;
deobligations of funds; reductions in costs incurred or pre-award grant reductions from agency programs 
or operations; and reduction and/or withdrawal of the Federal portion of interest subsidy costs on loans or
loan guarantees, or insurance or bonds.
Legislative savings are annualized amounts based on Congressional Budget Office (CBO) estimates
consistent with CBO savings.  In keeping with OIG policy, savings from the Medicare provisions of the
Balanced Budget Act (BBA) of 1997 were adjusted downward to reflect CBO estimates for related pro-
visions of the Balanced Budget Refinement Act (BBRA) of 1999 and BIPA of 2000.  Administrative
savings are calculated by OIG using departmental figures, where available, for the year in which the
change is effected or for multiple years, if applicable.
Total savings from these sources amount to $9,981.8 million for this period.
           Savings
OIG Recommendation     Implementing Action            (millions) 
Centers for Medicare & Medicare Services
Medicare Home Health Payments: $5,340
CMS should restructure the payment Chapter I of Subtitle G of the BBA of 1997 (as amended
system for home health care to elim-  by the Omnibus Consolidated and Emergency Supple-
inate inappropriate incentives which mental Appropriations Act of 1998), which pertains to
unnecessarily increase cost and utili-  home health benefits, addresses OIGs concerns regarding
zation; prevent unscrupulous providers the need to restructure and control the payment system
from gaining entry into the program; for these services.  For example, it mandates that a pro-
and improve program controls, such as spective payment system be developed and that the total
eligibility deter minations and approval payments in fiscal year (FY) 2000 be equal to the amount
of plans of care and services. that would have been paid under the prior system if cost
(OEI-04-93-00260; OEI-09-96-00110; limits were reduced by 15 percent.  It also eliminated
A-04-96-02121) periodic interim payments to home health agencies.
Medicare Indirect Medical $1,990
Education: Section 4621 of the BBA (as amended by the BBRA of
CMS should base the indirect medical 1999) reduced the indirect teaching adjustment factor
education adjustment factor on the from 7.7 percent in FY 1997 to 7.0 percent in FY 1998;
level support by CMSs empirical data. 6.5 percent in FY 1999; 6.0 percent in FY 2000; and 
(A-07-88-00111) 5.5 percent in FY 2001 and thereafter. 
55 Appendix A
Medicaid Enhanced Payments to $1,300
Local Providers: On January 18, 2002, CMS issued a final rule that
CMS should reconsider capping the modified the Medicaid upper payment limit (UPL)
aggregate upper payment limit at 100 provisions to remove the 150 percent UPL for services
percent for all facilities rather than the furnished by non-State government-owned or operated
150 percent allowance for non-State- hospitals.  The rule became effective on May 15, 2002.
owned Government hospitals.
(A-03-00-00216))
Hospital Outpatient Policy:    $640
Congressionally mandated reductions Section 1351 of the Omnibus Budget Reconciliation Act
in hospital costs should be extended.  (OBRA) of 1993 mandated a reduction of 10 percent for
Hospitals should limit outpatient outpatient capital costs.  Sections 4521-4523 of the
department facility fees to the BBA of 1997 eliminated formula-driven overpayments
applicable ambulatory surgical center in FY 1998, extended reductions in payments for costs
(ASC) rate or reduce payments for of hospital outpatient services, and established a
outpatient department services to bring prospective payment system for hospital outpatient
them in line with ASC payments. services beginning FY 1999.
(A-14-89-00221; A-09-91-00070;
OEI-85-09-0046; OEI-09-88-01003)
Graduate Medical Education     $390
Payments: Sections 4623 and 4626 of the BBA provided for limits 
CMS should reevaluate Medicares in the number of residents counted for purposes of
policy of paying graduate medical Medicare GME payments and offered payments for
education (GME) costs for all voluntary reductions in the number of residents to limit
physician specialities and should Medicares share of GME costs.
consider submitting legislation to
reduce Medicares investment in GME
to arrive at a more representative and
accurate sharing of GME costs.
(A-06-92-00020)
Hospice Certification:       $80
CMS should restructure hospice benefit Sections 4441-4449 of the BBA contained provisions to
policies to curb inappropriate growth in control hospice payments and practices, such as
the program, particularly with regard to replacing the current unlimited fourth benefit period
the fourth benefit period. with an unlimited number of 60-day benefit periods
(OEI-05-95-00250; A-05-96-00023) (each requiring recertification).
Fraud and Abuse Provisions of the        $70
Balanced Budget Act: Subtitle D of the BBA contained a number of provisions
CMS should require durable medical that corresponded to and were supported by OIG work. 
equipment (DME) suppliers and home For example, the BBA authorized the Secretary to
health agencies to provide Social collect Social Security numbers and employer identifi-
Security numbers and employee cation numbers from entities under Medicare, Medicaid
identification numbers (OEI-04-96- and Title V; authorized the Secretary to refuse to enter
00240; OEI-09-96-00110); refuse to into contracts with physicians or suppliers that have
enter into a provider agreement with been convicted of felonies; authorized the exclusion of
any home health agency whose owners entities owned or controlled by the family or household
continued members of excluded individuals; authorized CMS to
56 Appendix A
Fraud and Abuse Provisions of the
Balanced Budget Act (continued): make inherent reasonableness adjustments up to 15
or principals have prior criminal percent to all Part B services except physician services;
records or are the relatives of owners of authorized up to five demonstration projects to be
a provider that had defrauded the completed by December 31, 2002, (one must be oxygen
Medicare program (OEI-09-96-00110);  and oxygen equipment) which can have multiple sites,
apply inherent reasonableness pro- to allow competitive bidding; and prohibited
visions when assessing the appro-  reasonable cost payments for items such as
priateness of Medicare payments (OEI- entertainment, gifts and donations, education expenses,
03-94-00392); authorize competitive and personal use of automobiles.  The BBA also
bidding as a means of providing required DME suppliers, home health agencies, and
Medicare services (OEI-03-94-00021; others to post surety bonds of a minimum of $50,000.
OEI-06-92-00866; OEI-03-96-00230);
and require DME suppliers and home
health agencies to post surety bonds as
a condition of participation. (OEI-04-
96-00240; OEI-09-96-00110).  Also,
clarify which general and administrative
and fringe benefit costs at hospitals and
home health agencies are related to
patient care; specifically, distinguish
between employee benefits and/or
perquisites to entertainment and patient
care, and specify that cost of enter-
tainment, goods or services for
personal use, alcohol, all fines and
penalties and associated interest, dues,
and membership costs associated with
civic and community organizations are
not allowable.
(A-03-92-00017; A-04-93-02067)
Hospital Sales:        $60
CMS should eliminate the requirement Section 4404 of the BBA eliminated the requirement
that Medicare adjust for gains and that Medicare make adjustments by setting the Medicare
losses when hospitals undergo changes capital asset sales price equal to the net book value.
of ownership.
(OEI-03-96-00170)
Rural Health Clinics:       $60
The oversight and functioning of the Section 4205 of the BBA extended the per-visit payment
current cost reimbursement system limits to provider-based clinics and stipulated that the
should be improved by implementing shortage area requirements designation be reviewed
caps on provider-based rural health triennially.
clinics and allowing States to do so, or
finding other ways to make reimburse-
ment between provider-based and
independent clinics more equitable.  In
addition, the certification process
should be modified to increase State in-
volvement and ensure more strategic
continued
57 Appendix A
Rural Health Clinics (continued):
placement of the clinics.  Recertifica-
tion should be required within a specific
time limit (for example, 5 years),
applying new criteria to document the
need and impact on access.
(OEI-05-94-00040)
Medicare Disproportionate Share:        $20
The disproportionate share adjustment Section 4403 of the BBA provided for the reduction of
should be reduced, if not eliminated, disproportionate share payments that hospitals would
without redistribution of the funds to otherwise receive by 1 percent in FY 1998, 2 percent in
prospective payment system hospitals. FY 1999, 3 percent in FY 2000, 4 percent in FY 2001, 
(A-04-87-01004) 5 percent in FY 2002, and 0 percent thereafter.
Payments for Ambulance Services:         $10
CMS should seek legislative authority Section 4531 of the BBA of 1997 made interim
to develop a fee schedule for ambulance reductions in ambulance payments by limiting the
transportation and examine the inherent allowed rate of increase and mandated the establish-
reasonableness of current allowable ment of a fee schedule by January 1, 2000.  Such fee
charges. schedule is to be set so that aggregate payments are
(OEI-05-95-00300) reduced by 1 percent.
Administration for Children and Families
Availability of Health Insurance for          $5.7
Title IV-D Children: The BBA of 1997 established Title XXI of the Social
Connecticut should either implement Security Act, known as the State Childrens Health
policies and procedures to require Insurance Program (SCHIP), to enhance Medicaid
noncustodial parents to pay all or part coverage provided to children and allow States to create
of the Medicaid costs for their depen- insurance options for families who exceed Medicaid
dent children or establish a state-wide resource and income limits.  Connecticut received CMS
health insurance plan that provides approval in April 1998 to initiate a child health program. 
reasonably priced comprehensive Under Connecticut law, applicants include noncustodial
coverage for children, with costs paid parents under court orders to provide health insurance.
by noncustodial parents.
(A-01-97-02506)
Various Operating Divisions
Results of Investigations:      $16.1
In addition to any restitution, fines, The operating division takes action, based on the results
settlements or judgments, or other of the OIG investigation, to suspend or terminate
monetary amounts resulting from payments to the offending individual or entity.
successful investigations, additional
monetary losses are avoided through
timely communication of the
investigative results to the operating
division.
58 Appendix B
Unimplemented Office of Inspector General Recommendations 
to Put Funds to Better Use
This schedule represents potential annual savings or one-time recoveries which could be realized
if Office of Inspector General (OIG) recommendations were enacted by the Congress and the Administration
through legislative or regulatory action, or policy determinations by management.  (In many cases, these
recommendations are beyond the direct authority of the departmental operating division.)  It should be
noted, however, that the Congress normally develops savings over a budget cycle which results in far
greater dollar impact statements.  Savings are based on preliminary OIG estimates and reflect economic
assumptions which are subject to change.  The magnitude of the savings may also increase or decrease as
some of the proposals could have interactive effects if enacted together.
More detailed information may be found in OIGs Red Book which can be accessed on the
Internet at http://oig.hhs.gov.
           Savings
OIG Recommendation Status           (millions)
Centers for Medicare & Medicaid Services
Excessive Medicare Payments for Prescription
Drugs: CMS concurred; it has attempted   $1,900
CMS should examine its Medicare drug administrative remedies to lower payments
reimbursement methodologies. for some drugs using inherent reasonable-
(OEI-03-00-00310; OEI-03-97-00292; ness, but Congress suspended use of this
OEI-03-97-00293; OEI-03-97-00390; authority pending issuance of Federal rule-
OEI-03-95-00420; OEI-03-94-00390) making.  In addition, legislation passed on
December 21, 2002, requires GAO to
complete a comprehensive drug-pricing
study before CMS can begin using average
wholesale pricing as a way to lower prices
for certain drugs.
Medicare Coverage of State and Local    $1,559
Government Employees: CMS agreed with the recommendation to
CMS should require Medicare coverage and mandate Medicare coverage for all State
hospital insurance contributions for all State and and local government employees.  How-
local employees, including those hired prior to ever, this proposal was not included in the
April 1, 1986.  If this proposal is not enacted, CMS Presidents FY 2003 budget.  CMS did not
should seek legislation making Medicare the agree with the recommendation to make
secondary payer for retirees of exempt State and Medicare the secondary payer.
local government agencies.  (A-09-88-00072)
Clinical Laboratory Tests:        $1,130*
CMS should develop a methodology and legislative CMS initially agreed with the first
proposal to pay for tests ordered as custom panels recommendation but not the second.  The
at substantially less than the full price for individual BBA required the Secretary to request that 
tests, and study reinstating the beneficiary the Institute of Medicine study Part B
coinsurance and deductible provisions for laboratory test payments.  CMS may use the
laboratory services as a means of controlling results to develop new payment
utilization.  (A-09-89-00031; A-09-93-00056) methodologies.
*This savings estimate would result from the copayment; the savings estimate for panels has yet to be determined.
59 Appendix B
Hospital Capital Costs:        $820
CMS should determine the extent that capital CMS did not agree with the
reductions are needed to fully account for hospitals recommendation.  Although the BBA of
excess bed capacity and report the percentage to the 1997 reduced capital payments, it did not
Congress. include the effect of excess bed capacity
(A-09-91-00070; A-14-93-00380) and other elements included in the base-
year historical costs.  The Presidents FY
2001 budget would have reduced capital
payments and saved $630 million in FY
2001 through FY 2005.
Medicare Payments for Mental Health Services:        $676
CMS should ensure mental health services are CMS concurred and has initiated some
medically necessary, reasonable, accurately billed, efforts, particularly regarding community
and ordered by an authorized practitioner by using a mental health centers.
comprehensive program of targeted medical reviews,
provider education, improved documentation
requirements, and increased surveillance of mental
health services.
(OEI-02-99-00140; OEI-03-99-00130;
A-04-98-02145; A-01-99-00507; A-01-99-00530)
Payment Policy for Medicare Bad Debts:        $340
OIG presented four options for CMS to consider, CMS agreed with the recommendation to
including the elimination of a separate payment for include a bad debt factor in the DRG rates. 
bad debts, the offset of Medicare bad debts against The BBA of 1997 provided for some
beneficiary Social Security payments, the limitation reduction of bad debt payments to providers. 
of bad debt payments to prospective payment The Benefits Improvement and Protection
system hospitals that are profitable, and the Act (BIPA) of 2000 subsequently increased
inclusion of a bad debt factor in the diagnosis- bad debt reimbursement.  However, addi-
related group (DRG) rates.  CMS should seek tional legislative changes are needed to
legislative authority to further modify bad debt implement the modifications that OIG
policies.  (A-14-90-00339) recommended.
Cost Effectiveness of Pay and Chase Methods         $185
for Medicaid Pharmacy Third-Party Liability CMS agreed that States cost-avoidance
Recoveries: waivers should be reexamined and is
CMS should determine whether States cost- directing the regional offices to reevaluate
avoidance waivers for pharmacy claims are meeting the waivers and determine if States are
the cost-effectiveness criterion.  CMS can ascertain paying and chasing claims without waivers. 
cost effectiveness by requiring States to track In addition, CMS is working with States
dollars that they pay and chase and the amounts that that currently cost-avoid pharmacy claims
they recover.  CMS should also review States and is developing guidance to assist them in
policies to determine if they are paying and chasing implementing cost avoidance.
pharmacy claims without waivers.
(OEI-03-00-00030)
Graduate Medical Education:        $157.3
CMS should revise the regulations to remove from CMS did not concur with the
a hospitals allowable graduate medical education recommendations.  Although the BBA of
(GME) base-year costs any cost center with little or 1997 and the BBRA of 1999 contained
no Medicare utilization and submit a legislative provisions to slow the growth in Medicare
continued spending on GME, OIG believes that 
60 Appendix B
Graduate Medical Education (continued):       
proposal to compute Medicares percentage of its recommendations should be imple-
participation under the former, more comprehensive mented and that further savings can be
system.  (A-06-92-00020) achieved.
Medicaid Reimbursement Methodology for        $140
HIV/AIDS Drugs: CMS no longer believes the recommended
CMS should review the current reimbursement change is necessary and believes that
methodology and work with States to more accu- reimbursement changes will occur through
rately estimate pharmacy acquisition costs for 16 revised AWPs, based on the Presidents
HIV/AIDS drugs examined and initiate a review of budget proposal for a legislative change that
Medicaid rebates for them.  (OEI-05-99-00611) would base the Medicaid drug rebate on the
difference between AWP and the best price
for a drug.
Medicaid Drug Rebate Program:       $123
The best price calculation in the Medicaid drug Disagreeing with the recommendation,
rebate program should be indexed to the consumer CMS believes that savings will be achieved
price index-urban.  (A-06-94-00039) through the Presidents budget proposal to
enact a legislative change that would base
the drug rebate on the difference between
the AWP and the best price for a drug.
Medical Equipment/Supply Claims Lacking         $91
Valid, Active UPINs: CMS concurred.  The agency planned to
CMS should create edits to identify medical implement an edit to reject claims listing a
equipment and supply claims that do not have a deceased physicians UPIN beginning in
valid and active unique physician identification April 2002 and later expand this to include
number (UPIN) listed for the ordering physician.  all inactive and invalid UPINs.
(OEI-03-01-00110)
Inpatient Psychiatric Care Limits:          $47.6 
CMS should develop new limits to deal with the CMS agreed with OIGs findings but stated
high cost and changing utilization patterns of that further analysis would be required
inpatient psychiatric services and apply a 60-day before any legislative changes could be
annual and a 190-day lifetime limit to all supported.
psychiatric care regardless of the place of service. 
(A-06-86-62045)
Medicare Orthotics:          $43 
CMS should take action to improve Medicare CMS generally concurred with OIGs
billing for orthotic devices.  CMS should also original recommendations.  The agency is
require standards for suppliers of custom-molded working on a proposed rule regarding
and custom-fabricated orthotic devices. orthotics and intends to put in place
(OEI-02-95-00380; OEI-02-99-00120; standards for custom orthotics.
OEI-02-99-00121)
Reimbursement for Hospital Beds:          $40
CMS should take immediate steps to reduce CMS concurred and is considering options
Medicare payments for hospital beds used in the to determine the best approach to achieve a
home.  This should include the elimination of the fair price for hospital beds.  The agency is
continued examining payment allowances and method- 
61 Appendix B
Reimbursement for Hospital Beds (continued):
first 3 months of rental. ologies at other payers and is reviewing
(A-06-91-00080; OEI-07-96-00221; data to determine if Medicare payments are
OEI-07-96-00222) excessive.  The BIPA of 2000 increased
DME payments by 3.7 percent for 2001. 
Expansion of the DRG Payment Window:          $37
CMS should consider proposing legislation to CMS agreed but cautioned that such action
expand the DRG payment window to include could increase beneficiaries health risks. 
admission-related services rendered up to 14 days OIG acknowledges the need to assess such
before an inpatient admission.  (A-01-02-00503) risks before proposing a legislative change.
End Stage Renal Disease Payment Rates:         $22*
CMS should reduce the payment rates for outpatient CMS agreed that the composite payment
dialysis treatments to reflect current efficiencies rates should reflect the costs of outpatient
and economies in the marketplace.  dialysis treatment in efficiently operated
(A-14-90-00215) facilities, and the BBA of 1997 required the
Secretary to audit the cost reports of each
dialysis provider at least once every 3 years. 
The BBRA of 1999 increased each compos-
ite rate payment for dialysis services
furnished during 2000 by 1.2 percent above
the payment for services provided on
December 31, 1999.  The BIPA of 2000
increased the rate for services provided in
2001 by 2.4 percent and required the
Secretary to develop a composite rate that
includes, to the extent feasible, payment for
clinical diagnostic laboratory tests and
drugs that are routinely used in dialysis
treatments but are currently separately
billable.  CMS has reported on the
feasibility phase of the project to develop a
composite rate.  Currently, work is focused
on developing options for a bundled
composite rate. 
Respiratory Assist Devices With a Back-Up        $11.5
Rate: CMS concurred.
CMS should reclassify bi-level respiratory assist
devices with a back-up rate from the frequent and
substantial servicing category to the capped
rental category under the durable medical device
benefit.  (OEI-07-99-00440)
Medicare Claims for Railroad Retirement         $9.1
Beneficiaries:   The Presidents FY 2003 budget did not
CMS should discontinue use of a separate carrier to include such a proposal.
process Medicare claims for railroad retirement
beneficiaries.  (A-14-90-02528)
*This estimate represents annual program savings of $22 million for each dollar reduction in the composite rate,
given the population of ESRD beneficiaries at the time of OIGs review.
62 Appendix B
Indirect Medical Education: TBD**
CMS should reduce the indirect medical education CMS agreed with the recommendation, and
(IME) adjustment factor to the level supported by the BBA of 1997, as amended by the BBRA
CMSs empirical data and initiate further studies to of 1999, reduced the IME adjustment to 
determine whether different adjustment factors are 5.5 percent in 2002 and thereafter.  OIG
warranted for different types of teaching hospitals. believes the factor should be further
(A-07-88-00111) reduced to eliminate any overlap with the
disproportionate share adjustment.
Medicare Secondary PayerEnd Stage Renal     TBD
Disease Time Limit:   CMS was concerned that an indefinite MSP
CMS should extend the Medicare secondary payer provision might encourage insurers to drop
(MSP) provisions to include end stage renal disease uneconomical services, namely facility
(ESRD) beneficiaries without a time limitation. dialysis and transplantation.  OIG continues
(A-10-86-62016)  to advocate that when Medicare eligibility
is due solely to ESRD, the group health
plan should remain primary until the
beneficiary becomes entitled to Medicare
based on age or disability.  At that point,
Medicare would become the primary payer.
Home Health Agencies:     TBD
CMS should revise Medicare regulations to require Although the BBA of 1997 included
the physician to examine the patient before ordering provisions to restructure home health
home health services. benefits, CMS still needs to revise
(OEI-04-93-00262; OEI-04-93-0026; Medicare regulations to require that
OEI-12-94-00180; OEI-02-94-00170; physicians examine Medicare patients
A-04-95-01103; A-04-95-01104; A-04-94-02087; before ordering home health services. 
A-04-94-02078; A-04-96-02121; A-04-97-01169; Subsequent to the BBA, OIGs four-State
A-04-97-01166; A-04-97-01170; A-04-99-01195) review found that unallowable services
continued to be provided because of
inadequate physician involvement.  While
agreeing in principle, CMS said it would
continue to examine both coverage rules
and conditions of participation to develop
the discipline necessary for ensuring proper
certification.  Also, CMS provided
additional payments for physician care plan
oversight and education for physicians and
beneficiaries. 
Connection Between the Calculation of Medicaid    TBD
Drug Rebates and Drug Reimbursement:
CMS should seek legislation that would require CMS agreed to pursue a change in the
participating manufacturers to pay Medicaid drug rebate program similar to that recom-
rebates based on average wholesale price (AWP) or mended.  The Presidents FY 2003 budget
study other viable alternatives to the current proposed a legislative change that would
program of using average manufacturer price base the drug rebate on the difference
(AMP) to calculate the rebates.  This legislation between the AWP and the best price for a
would have resulted in about $1.15 billion in drug. 
continued
**To be determined.
63 Appendix B
Connection Between the Calculation of Medicaid
Drug Rebates and Drug Reimbursement
(continued):
additional rebates for 100 brand-name drugs with
the highest total Medicaid reimbursements in
calendar years 1994-96.  (A-06-97-00052)  
Various Operating Divisions
Medicare Rates for Indian Health Service          $8.2
Contracted Health Services: IHS concurred with OIGs recommendations. 
The Indian Health Service (IHS) should revise its However, the proposal was not included in
legislative proposal to incorporate OIGs updated the Presidents FY 2003 budget.
savings figures and should identify elements to be
included in the implementing regulations.  Also,
IHS should continue to pursue the most favorable
rates at hospitals that have previously offered less
than Medicare rates and should strategically
identify and pursue other opportunities where lower
rates may be negotiated.  (A-15-97-50001)
Recharge Center Costs:          $1
The Assistant Secretary for Administration and The Department concurred and is working
Management should propose changes to OMB with OMB on a revision to A-21.  The
Circular A-21 to improve guidance on the financial proposed revision, which was published in
management of recharge centers.  The revision the Federal Register in August 2002, would
should include criteria for establishing, monitoring, require that adjustments to a recharge
and adjusting billing rates to eliminate accumulated centers billing rate take into account
surpluses and deficits; preventing the use of recharge overrecoveries and/or underrecoveries from
funds for unrelated purposes and excluding unal- previous periods.  Rate adjustments would
lowable costs from the calculation of recharge rates; be required at least every 2 years.  The final
ensuring that Federal projects are billed equitably; rule was expected to be issued in FY 2003. 
and excluding recharge costs from the recalculation
of facilities and administrative cost rates.
(A-09-96-04003)
64 Appendix C
Unimplemented Office of Inspector General Program
and Management Improvement Recommendations
This schedule represents Office of Inspector General (OIG) findings and recommendations which,  
if implemented, would result in substantial benefits.  The benefits relate primarily to effectiveness rather
than cost-efficiency.
More detailed information may be found in OIGs Orange Book which can be accessed on the
Internet at http://oig.hhs.gov. 
OIG Recommendation Status
Centers for Medicare & Medicaid Services
Accountability Over Billing and Collection of
Medicaid Drug Rebates: CMS concurred with the recommendation and set up a
CMS should ensure that States implement accounting reporting mechanism to capture rebate information. 
and internal control systems in accordance with  The agency still needs to ensure that States establish
Federal regulations for the Medicaid drug rebate adequate accounting and internal control systems to
program.  Such systems must provide for accurate, obtain reliable information. 
current, and complete disclosure of drug rebate
transactions and provide CMS with the financial
information it needs to effectively monitor and manage
the Medicaid drug rebate program.  (A-06-92-00029)
Fairly Presenting the Medicare Accounts
Receivable Balance: CMS hired consultants to assist in validating accounts
CMS should require Medicare contractors to receivable reported by Medicare contractors and
implement or improve internal controls and systems to provided comprehensive instructions to contractors.
ensure that reported accounts receivable are valid and For the long term, CMS is developing an integrated
documented. general ledger system as the cornerstone of its financial
(A-17-95-00096; A-17-97-00097; A-17-98-00098; management controls.
A-17-00-00500; A-17-00-02001; A-17-01-02001; 
A-17-02-02002)
Safeguards Over Medicaid Managed Care
Programs: Although CMS initially concurred with some specific
CMS should consider safeguards available to reduce recommendations, the agency believes that section
the risk of insolvency and to ensure consistent and 4706 of the BBA of 1997 sets forth congressional
uniform State oversight.  (A-03-93-00200) expectations on this issue in specifically requiring
managed care organizations to meet the solvency
standards established by the State for private health
maintenance organizations. 
Guidance to Drug Manufacturers to Better
Implement the Medicaid Drug Rebate Program: CMS did not concur, stating that the drug law
CMS should survey manufacturers to identify the and the rebate agreements already established a
various calculation methods used to determine average methodology for computing AMP.  OIG disagrees
manufacturer price (AMP).  CMS should also develop because the rebate law and agreements defined AMP
a more specific policy for calculating AMP which but did not provide specific written methodology for
would protect the interests of the Government and computing AMP.
which would be equitable to the manufacturers.
(A-06-91-00092) 
65 Appendix C
Accuracy of Carrier Payment Data:
CMS should conduct a review of carriers claims CMS stated that a review is under way to compare data
processing data to examine the scheduled date of contained in the National Claims History File with data
payment entered on claims sent to the Common at the carrier level.  In addition, CMS has approved
Working File (CWF).  If there is no correlation two new edits which will enforce the payment floor
between the claims payment date variable and the standards on claims sent to the CWF.
actual date of payment, CMS should define what data
should be entered into this field and how it should be
calculated, and/or revise the current variable definition
to clarify for National Claims History data users that
the scheduled date of payment is not an accurate
reflection of the actual claim payment date.  CMS
should also review the carriers claims processing data
to determine the accuracy of the information contained
in the CROWD system.  (OEI-03-00-00350)
Duplicate Payments for the Same Service by
Multiple Carriers: CMS concurred with OIGs recommendations and will
CMS should revise CWF edits to detect and deny re-examine existing criteria regarding duplicate editing
duplicate billings to individual carriers or to more than in the CWF system to determine the cost effectiveness
one carrier, or increase post-payment reviews if such of including the carrier number in the match criteria. 
edits are determined not to be cost effective. CMS entered a contract to study duplicate billing.
(OEI-03-00-00090; OEI-03-00-00091)
Inappropriate Payments for Blood Glucose Test
Strips: CMS concurred with the recommendations and noted a
CMS should alert suppliers of the importance of number of initiatives that have reduced the incidence
properly completed documentation to support their of improper payments in recent years.
claims for test strips; require suppliers to indicate
actual and accurate start and end dates on claim
forms; promote supplier concurrence and cooperation
with OIGs recently issued compliance guidelines; and
advise beneficiaries to report any instances of
fraudulent or abusive practices involving their home
blood glucose monitors, test strips, or related supplies
to their DMERCs.  (OEI-03-98-00230)
Educating Beneficiaries on Reducing Financial
Liability for DME: CMS concurred with OIGs recommendations and has
CMS should educate beneficiaries on ways to reduce undertaken a number of efforts to increase beneficiary
financial liability for medical equipment and supplies education and awareness about the consequences of
and re-evaluate Medicare fee schedules for ostomy assigned and nonassigned claims. 
supplies.  (OEI-07-99-00510)
Resident Assessment Instruments:
CMS should more clearly define minimum data set CMS generally concurred with OIGs recommendations
(MDS) elements and work with States to train nursing for improved data definitions and training, but did not
home staff.  OIG also recommend that CMS establish concur with the recommendation to establish an audit
an audit trail to validate the 108 MDS elements that trail.
affect facility reimbursement by Medicare. 
(OEI-02-99-00040; OEI-02-99-0041)
66 Appendix C
Assessments of Mental Illness:
OIG recommended that CMS work with States to CMS concurred with most of OIGs recommendations
improve the assessment of persons with serious mental and has made revisions to its training curriculum for
illness and use survey and certification to monitor nursing home surveyors.
compliance.  OIG also recommended that CMS define
specialized services that are to be provided by the State
to nursing home residents with mental illness.
(OEI-05-99-00700)
Nursing Home Residents With Serious Mental
Illness: Except for reporting MDS records by primary,
CMS should improve the quality and usefulness of its secondary, and tertiary diagnoses, CMS concurred with
data sources by requiring the use of a unique provider most of OIGs recommendations.  CMS does not feel
number across systems, requiring reporting of resident that adding space to the MDS to record diagnoses
data by age and diagnosis, and encouraging States to would solve the problem. 
use these data in demonstrating their progress in
placing disabled persons in the most integrated
settings.  OIG also recommends training to improve
data collection and accurate coding. 
(OEI-05-99-00701) 
Payments for Mental Health Services:
CMS should promote provider awareness of CMS generally concurred with the recommendations
documentation and medical necessity requirements, and plans to explore a variety of educational efforts
develop a comprehensive list of psychological testing and will refer the reports to the carrier clinical
tools that can be correctly billed, target problematic workgroup on psychiatric services.  Carriers will
services for pre-payment edits or post-payment medical conduct data analysis of psychological testing and
review, and encourage carriers to take advantage of the psychotherapy claims and will conduct medical review,
MDS, especially for its assessment of patient cognitive if indicated.
level.  (OEI-03-99-00130; OEI-02-99-00140)
Organ Donation:
CMS should revise the Medicare conditions for CMS concurred with the recommendations and
coverage for Organ Procurement Organizations indicated it will explore ways in which additional data
(OPOs) to make them more accountable for imple- can be used to assess OPO effectiveness and hospital
menting the new donation rule and require OPOs to compliance with the donation rule.  HRSA also
provide hospital-specific data on referrals and on organ concurred with the recommendations.
recovery.  HRSA should require that OPOs submit
hospital-specific data on referrals and on organ
recovery and support demonstration projects on how to
effectively train and make use of designated
requestors.  (OEI-01-99-00020)
Various Public Health Agencies
Oversight of Tissue Banking:
FDA should expedite publication of its regulatory The Deputy Secretary concurred that FDA should
agenda requiring registration of tissue banks, enhanced expedite its planned rulemaking activities related to
donor suitability screening and testing the use of good tissues, specifically the final rule to require registration
tissue practices.  FDA should set a realistic, yet  of tissue banks.  The Department also found consid-
aggressive date by which it would complete an initial erable merit in OIGs recommendation for an intensi-
continued fied inspection program directed towards entities
67 Appendix C
Oversight of Tissue Banking (continued):
inspection of all tissue banks.  FDA should determine that procure, process, and store human tissues.  In
the appropriate minimum cycle for tissue bank congressional testimony, FDA said that all three of the
inspections, and work with States and professional proposed rules have been published, and one rule
associations to determine in what areas oversight (Establishment Registering and Listing) was finalized. 
activities could be coordinated.  (OEI-01-00-00441) FDA also worked to inspect all 36 identified,
uninspected tissue banks.
Effectiveness of FDAs Adverse Event Reporting
System for Dietary Supplements: FDA agreed with the majority of OIGs
OIG recommends that FDA (1) facilitate greater recommendations and has taken several important
detection of adverse events by requiring dietary steps to implement them.  In June 2003, FDA
supplement manufacturers to report serious events to implemented a new adverse event reporting system
FDA for some products, (2) obtain more information called the Center for Food Safety and Applied
on adverse event reports by requiring manufacturers to Nutrition (CFSAN) Adverse Events Reporting System
register themselves and their products with FDA, (CAERS).  The CAERS replaces the old system, and
(3) notify manufacturers when FDA receives a serious FDA will use it to identify potential public health
adverse event report and develop a new computer issues associated with the use of a particular product. 
database to track and analyze adverse event reports, FDA now notifies manufacturers of a receipt an
(4) expedite the development and implementation of adverse event alleged to be caused by their product. 
good manufacturing practices for dietary supplement And in March 2003, FDA published proposed good
manufacturers, and (5) disclose more useful manufacturing practices for dietary supplements.
information to the public about dietary supplement
adverse events.  (OEI-01-00-00180)
Protection for Research Subjects in Foreign Clinical
Trials: FDA supported OIGs recommendations, but noted
FDA should examine ways to obtain more information that in most cases it did not have the resources to
about the performance of non-U.S. Institutional implement the recommendations.  OHRP concurs with
Review Boards (IRBs) and help those inexperienced the recommendations and emphasized that its new
IRBs build their capacities; encourage all non-U.S. Office of International Activities will serve as a focal
investigators participating in research to sign point and coordinating center for the Departments
attestations upholding human subject protections; and efforts to improve human subject protection.  FDA has
develop a database to track the growth and location of also contributed to international guidance, standards-
foreign research.  OHRP should exert leadership in development, and training through World Health
developing strategies to ensure adequate human subject Organization, Pan American Health Organization, and
protections for non-U.S. clinical trials funded by the several foreign regulatory authorities.
Federal Government and those that contribute data to
new drug applications.  (OEI-01-00-00190)
Managed Care Organizations Reporting to the
National Practitioner Data Bank: HRSA awarded a contract to PricewaterhouseCoopers
The Agency for Healthcare Research and Quality to look at the feasibility study for assessing compliance
should devote attention to the kind of educational and with the NPDB reporting requirements.  The feasibility
remedial efforts that could be directed to practitioners study addresses reporting by both hospitals and
who have been experiencing performance problems.  managed care organizations.
HRSA should conduct an outreach program to inform
managed care organizations of their reporting
responsibilities, and CMS should examine its
practitioner monitoring systems.  (OEI-01-99-00690)
68 Appendix C
Administration for Children and Families
Child Support Orders for Low-Income 
Noncustodial Parents: ACF is helping 10 States test approaches to serving
ACFs Office of Child Support Enforcement should young, never-married fathers who may have obstacles
work with States to emphasize parental responsibility to employment and who do not have a child support
and improve the ability of low-income noncustodial order.  ACF has granted a contract to determine how
parents to meet their obligations.  ACF should facilitate computerized income data can be used by local child
and support State experiments to test the payment support offices to independently verify the income of
effects of using various periods of retroactivity in noncustodial parents and be used in the establishment
determining the amount of support owed; facilitate and or modification of child support orders where income
support State experiences to test negotiating child documentation or verification is lacking or incomplete.
support debt owed to the States in exchange for
improved payment compliance.  (OEI-05-99-00391)
General Oversight
Cost Principles for Federally Sponsored Research
Activities: The Department circulated several draft iterations of
The Department should modernize and strengthen cost the hospital cost principles to internal users for
principles applicable to hospitals by either revising comment.  Many of the policies in the outdated
existing guidelines to conform with Office of principles have been incorporated and updated in the
Management and Budget (OMB) Circular A-21 or draft regulation.  The target date for issuing the draft
working with OMB to extend Circular A-21 coverage regulation as a notice of proposed rulemaking was no
to all hospitals.  (A-01-92-01528) later than September 30, 2002.  Once issued in final,
revised principles were to be issued.
69 70 Appendix D
Notes to Tables 1 and 2
Notes to Table 1
1The opening balance was adjusted upward $89 million.
2During the period, revisions to previously reported management decisions included:
CIN:  A-06-00-00026  Review of LA Compliance With Medicaid Hospital Specific:  Documentation
supporting the $4,150,405 in LSU Medical School overhead costs was submitted.
CIN:  A-02-01-65217  Puerto Rico Dept of the Family:  The Department of the Family (DOF)
requested a reconsideration of our disallowance.  The DOF auditors performed a review of the delegate
agencies and provided the Regional Office with documentation to support the findings in the amount of
$295,070.
Not detailed are revisions to previously disallowed management decisions totaling $396,215.
3Included are management decisions to disallow $61.1 million that was identified in non-Federal audit reports.
4During this reporting period, DCAA did not issue reports with monetary recommendations.
5A.
Due to administrative delays, many of which are beyond management control, resolution of the following
392 audits was not completed within 6 months of issuance; however, based upon discussions with
management, resolution is expected before the end of the next semiannual reporting period:
CIN: A-04-00-02171  REV AL MEDICAID INTERGOVERNMENTAL TRANSFERS-HOSP ENHANC,
MAY 2001,  $236,983,528 
CIN: A-06-00-00041  INCORRECTLY REPORTED PPS TRANSFERS-CMS/OIG PROJECT, NOVEMBER
2001,  $163,900,000 
CIN: A-06-00-00056  MEDICAID DRUGS-REVIEW OF REPACKAGED DRUGS EX FROM, MARCH
2001,  $108,000,000
CIN: A-04-99-05561  AUDIT ADMIN COST PROPOSALS FY95-98, BC/BS FL, JAX, JULY 2002, 
$101,671,328 
CIN: A-04-00-01220  IMPLE MEDICARES POSTACUTE CARE TRANSFER POLICY, OCTOBER 2001, 
$52,311,082 
CIN: A-04-98-00123  REVIEW FOSTER CARE PAYMENTS-CHILD CARE IN NC, APRIL 2001, 
$48,183,445 
CIN: A-01-00-00538  NATIONAL IDENTIFICATION OF SNF CONSOLIDATED BILLNG, JUNE 2001, 
$47,633,686 
CIN: A-07-01-02086  CARMICHAEL CPA REPORT- GALIC MEDICARE ADMIN COSTS, APRIL 2002, 
$42,481,466 
CIN: A-05-02-00083  REVIEW OF INELIGIBLE SNF PAYMENTS PROCESSED AT MUTUAL OF
OMAHA, MARCH 2003,  $41,500,000 
CIN: A-07-01-02093  MISSOURI DSH - UNALLOWABLE COSTS, AUGUST 2002,  $36,200,000 
CIN: A-01-00-00509  M/C PART B PAYMENTS FOR DME PROVIDED TO SNF PATIENTS, JULY 2001, 
$35,000,000 
CIN: A-04-00-65030  STATE OF SOUTH CAROLINA, JULY 2000,  $31,637,429 
CIN: A-02-01-01037  REVIEW OF DUPLICATE DHS PAYMENTS TO NEW JERSEY ACUTE CARE
HOSPITALS, FEBRUARY 2003,  $30,420,823 
CIN: A-05-02-00086  REVIEW OF INELIGIBLE SNF PAYMENTS PROCESSED AT ADMINASTAR
FEDERAL, MARCH 2003,  $25,300,000 
71 Appendix D
CIN: A-05-02-00087  REVIEW OF INELIGIBLE SNF PAYMENTS PROCESSED AT UNITED
GOVERNMENT SERVICES, MARCH 2003,  $23,300,000 
CIN: A-10-01-00001  REVIEW OF WA COMPLIANCE W/MEDICAID HOSP DSH PYMT, OCTOBER
2002,  $23,291,531 
CIN: A-07-01-00125  TRANSAMERICA (TOLIC) - PENSION SEGMENT CLOSING AUDIT, MAY 2002, 
$20,227,001 
CIN: A-09-01-00098  AUDIT OF KERN MEDICAL CENTER DISPROPORTIONATE SHARE HOSPITAL
PAYMENTS FOR FY 1998, SEPTEMBER 2002,  $19,446,435 
CIN: A-06-00-00051  AUDIT OF MEDICARE REHAB AGENCY COSTS IN TX, RHS, I, JUNE 2001, 
$18,394,465 
CIN: A-04-01-00006  AUDIT OF AT-RISK, CCDBG, CCDF & SSBG PAYMENTS FOR CHILD CARE -
NC, OCTOBER 2002,  $18,275,715 
CIN: A-05-01-00101  OHIO - TITLE IV-A AFDC OVERPAYMENTS, JUNE 2002,  $17,184,240 
CIN: A-05-01-00052  DME REVIEW IN INDIANA, OCTOBER 2001,  $16,377,560 
CIN: A-05-94-00064  MI BC/BS, AUDIT OF ADMIN COSTS, JUNE 1996,  $15,609,718 
CIN: A-05-02-00060  MICHIGAN TITLE IV-A AFDC OVERPAYMENT RECOVERIES, MARCH 2003, 
$15,289,444 
CIN: A-06-01-00035  COLLECTION OF AFDC OVERPAYMENTS, JANUARY 2002,  $13,800,000 
CIN: A-01-01-02502  REVIEW OF UNCOLLECTED AFDC OVERPAYMENTS, AUGUST 2001, 
$12,400,000 
CIN: A-05-02-00031  AFDC OVERPAYMENTS - WISCONSIN, AUGUST 2002,  $10,711,338 
CIN: A-01-01-00513  MEDICARE PT B PMT FOR DME I/P PRTL MNTH STAYS SNF, OCTOBER 2001, 
$10,500,000 
CIN: A-09-01-00085  AUDIT OF UCSDMC DISPROPORTIONATE SHARE HOSPITAL PAYMENTS FOR
SFYE 1998, SEPTEMBER 2002,  $7,999,212 
CIN: A-09-97-44262  STATE OF CALIFORNIA, APRIL 1997,  $7,300,000 
CIN: A-03-91-00552  INDEPENDENT LIVING PROGRAM - NATIONAL, MARCH 1993,  $6,529,545 
CIN: A-03-99-00052  ALLEGHENY/CHESAPEAKE ORF, SEPTEMBER 2001,  $5,540,344
CIN: A-04-00-02161  MEDICAID SCHOOL-BASED SERVICES IN NORTH CAROLINA, NOVEMBER
2001,  $5,344,160
CIN: A-07-99-02537  BC/BS OF MASSACHUSETTS, NOVEMBER 1999,  $5,270,461
CIN: A-05-96-00058  CLOSE-OUT AUDIT OF MEDICARE CONTRACT - BC/BS-MI, DECEMBER 1997, 
$5,226,443 
CIN: A-01-00-00506  DIAGNOSIS-RELATED GROUP PAYMENT WINDOW, JULY 2001,  $5,042,207
 CIN: A-01-97-00516  ADMIN COSTS-PART A&B, RAILROAD RETIRE BOARD, JUNE 1999,  $4,939,184 
CIN: A-05-01-00023  ADMINISTRATIVE COSTS REVIEW - ADMINASTAR FEDERAL, JANUARY
2002,  $4,694,863
CIN: A-02-00-01047  DEMO BSWNY - FINANCIAL, MARCH 2002,  $4,505,051
CIN: A-07-96-02001  MEDICARE PART B ADMIN COSTS AT BC/BS COLORADO, DECEMBER 1996, 
$4,483,104
CIN: A-07-98-01263  DENVER CMHC, MAY 2000,  $4,447,607 
CIN: A-07-00-00108  RURAL HEALTH CENTER REVIEW, OCTOBER 2001,  $4,088,929 
CIN: A-05-01-00068  PARTNERSHIP PLAN - ILLINOIS PHYSICIAN BILLING-FAMILY DYNAMICS,
JULY 2002,  $3,790,846 
CIN: A-02-01-02001  REVIEW OF SACWIS STATEWIDE PART II, FEBRUARY 2003,  $3,554,919 
CIN: A-04-01-05002 AUDIT MEDICAID PAYMENTS FOR CLINICAL LABORATORIES, JANUARY
2002,  $3,522,639 
CIN: A-07-00-00109 MEDICARE CONTRACT TERM. & SEG. CLOSING - GALIC, SEPTEMBER 2000, 
$3,505,560 
CIN: A-03-00-00002  TRIGON PT-A AND TERMINATION, SEPTEMBER 2001,  $3,464,705
CIN: A-02-95-01019  STAFF BUILDERS HOME OFFICE MEDICARE COST REV ORT, AUGUST 1998, 
$3,434,274 
72 Appendix D
CIN: A-05-93-00054  IL-ASSOCIATED INSURANCE GROUP-CONTRACT AUDIT, OCTOBER 1993, 
$3,355,560
CIN: A-07-99-01283  HMO - AFTER DEATH PAYMENTS, FEBRUARY 2000,  $3,250,000 
CIN: A-07-99-01298  DATE OF DEATH - 2, MAY 2001,  $3,200,000 
CIN: A-05-98-00042  ADMINISTAR INS CO - ADMIN. COSTS AUDIT, SEPTEMBER 1999,  $3,111,728
CIN: A-06-99-00057 AUDIT OF MEDICARE REHAB AGENCY SERVICES IN TX, RHS, IN, JANUARY
2001,  $3,097,201 
CIN: A-09-02-00061  REVIEW OF MEDICAL CLAIMS FOR PRIVATE IMD PATIENTS, DECEMBER
2002,  $3,083,389 
CIN: A-07-02-03007  COSTS CLAIMED FOR POST RETIREMENT BENEFITS BY TOLIC, MAY 2002, 
$3,060,873 
CIN: A-05-93-00013  MI-BC/BS-CONTRACT MEDICARE AUDIT, APRIL 1993,  $3,010,916 
CIN: A-09-98-50183  STATE OF CALIFORNIA, MARCH 1998,  $3,000,000 
CIN: A-07-01-00132  INDEPENDENCE BC - PENSION SEGMENT CLOSING AUDIT, FEBRUARY 2002, 
$2,913,129 
CIN: A-02-02-01018  FOLLOW-UP OF NYS OSC REPORT ON DUPLICATE SCHOOL HEALTH CLAIMS
- NYC BOE, DECEMBER 2002,  $2,821,459 
CIN: A-01-96-00508  MEDICARE ADMIN COSTS PARTS A&B AND RRB - TRAVELERS, MARCH
1996,  $2,803,260 
CIN: A-06-02-00038  CAPITATION PAYMENTS MADE UNDER NM MEDICAID PROGRAM, MARCH
2003,  $2,600,000 
CIN: A-05-97-00005  ADMINISTRATIVE COSTS CLAIMED UNDER MEDICARE A & B, FEBRUARY
1998,  $2,569,067
CIN: A-05-92-00026  ASSOCIATED INSURANCE CO - MEDICARE ADMIN, FEBRUARY 1992, 
$2,530,409 
CIN: A-09-02-72300  STATE OF CALIFORNIA, JULY 2002,  $2,400,000 
CIN: A-02-91-01006  BS OF WESTERN NY MEDICARE ADM CTS PORTER, SEPTEMBER 1991, 
$2,379,239 
CIN: A-04-00-01209  OUTPATIENT PSYCHIATRIC SERVICES AT HOLLYWOOD PAV HOSP, APRIL
2001,  $2,366,287 
CIN: A-03-99-00038  EDGEWATER PSYC HOSPITAL, MARCH 2001,  $2,348,604
CIN: A-04-97-01166  REV HOME HEALTH SERVICES BY STAFF BUILDERS HOME HEALTH, APRIL
1999,  $2,300,000 
CIN: A-07-97-01247  DUPLICATE PAYMENTS - HMO/FFS, OCTOBER 1999,  $2,300,000 
CIN: A-04-02-07007  MEDICAID FEE FOR SERVICE PAYMENTS FOR DUALLY ELIGIBLE MEDICARE
MANAGED CARE ENROLLEES, FEBRUARY 2003,  $2,231,100 
CIN: A-04-97-01170  REVIEW HOME HEALTH SERVICES BY MEDCARE HOME HEALTH SERVICES,
APRIL 1999,  $2,200,000 
CIN: A-09-01-00056  PACIFICARE-CALIFORNIA JAN 1998 INSTITUTIONAL PAYMENTS,
SEPTEMBER 2001,  $2,158,577 
CIN: A-07-01-68554  STATE OF NEBRASKA , JUNE 2001,  $2,113,388 
CIN: A-03-00-00214  MEDICAID CLAIMS FOR RESIDENTS OF IMDS - MD, MARCH 2003,  $2,093,729 
CIN: A-04-00-02162  REVIEW TREATMENT OF QUALIFIED DISCHRGS @ FCSO, FEBRUARY 2001, 
$2,042,060 
CIN: A-07-01-03001  BC/BS OF MN PENSION SEGMENT CLOSING, JANUARY 2003,  $2,003,341 
CIN: A-05-00-00034  PROVENA ST JOSEPH HOSPITAL-O/P PSYCH SERVICES, NOVEMBER 2000, 
$1,978,583 
CIN: A-05-02-00048  REVIEW OF MEDICAID DME CLAIMS - TEXAS, SEPTEMBER 2002,  $1,969,704 
CIN: A-04-97-01169  REVIEW HOME HEALTH SERVICES BY MEDTECH HOME HEALTH SERVICES,
APRIL 1999,  $1,900,000
CIN: A-06-96-00009  NEW MEXICO BC/BS ADMIN COST - CONTRACTED, NOVEMBER 1997, 
$1,879,366
73 Appendix D
CIN: A-01-02-72211  STATE OF CONNECTICUT, JUNE 2002,  $1,860,148 
CIN: A-02-02-01005  HORIZON BC/BS - REVIEW OF TERMINATION COST, JANUARY 2003, 
$1,832,896 
CIN: A-05-97-00014  GROUP HEALTH PLAN INC (HEALTHPARTNERS) INST BENES, JUNE 1998, 
$1,808,308 
CIN: A-05-95-00059  AUDIT OF ADMINISTRATIVE COSTS - BC/BS MICHIGAN, JANUARY 1997, 
$1,787,345 
CIN: A-01-02-00516  REVIEW OF POTENTIALLY EXCESSIVE MEDICARE PAYMENTS FOR
OUTPATIENT SERVICES UNITED GOVERNMENT SERVICES, MARCH 2003, 
$1,768,783 
CIN: A-09-00-00127  BC OF CALIF - MEDICARE ADMIN COSTS, DECEMBER 2002,  $1,677,822 
CIN: A-03-00-00007  REVIEW OF 1-DAY DISCHARGES - PA, APRIL 2001,  $1,649,411 
CIN: A-04-99-01196  OIG-HCFA JOINT REVIEW OF JMV MEDICAL CORP, DECEMBER 2000, 
$1,600,417 
CIN: A-03-00-00215  ANNABURG MANOR NURSING HOME COST REPORT, MARCH 2002,  $1,582,079 
CIN: A-03-96-00012  BC/BS M PT-B NON-RENEWAL COSTS, AUGUST 1998,  $1,557,459 
CIN: A-04-01-05011  REVIEW OF FLORIDA MEDICAID PAYMENTS FOR SERVICES PROVIDED TO
INMATES, OCTOBER 2002,  $1,450,077 
 CIN: A-07-02-03022  WELLMARK PENSION SEGMENT CLOSING, MARCH 2003,  $1,353,036 
CIN: A-09-96-00064  ORT - HOSPICE - CALIFORNIA, MARCH 1997,  $1,350,000
CIN: A-10-91-00011  WPS - KEYSTONE COMPUTER ACQUISITION, OCTOBER 1992,  $1,346,681
CIN: A-09-02-00057  REVIEW OF MEDICARE BAD DEBTS AT THE UNIV OF CA SAN FRANCISCO,
JULY 2002,  $1,338,058 
CIN: A-05-95-00042  BC/BSA ADMINISTRATIVE COSTS - CONTRACTED AUDIT, DECEMBER 1995, 
$1,333,598 
CIN: A-05-01-00064  REVIEW OF OUTPATIENT REHABILITATION CLAIMS REIMBURSED BY
MEDICARE DURING CALENDAR YEAR 1999, FEBRUARY 2002,  $1,235,892 
CIN: A-03-01-00251  AFDC OVERPAYMENTS - VIRGINIA, MARCH 2003,  $1,221,494 
CIN: A-09-02-00073  CA MEDICARE SETTLEMENT OF CROSSOVER BAD DEBTS - UGS, NOVEMBER
2002,  $1,221,035 
CIN: A-04-02-72903  STATE OF TENNESSEE, SEPTEMBER 2002,  $1,213,353 
CIN: A-05-00-00004  NEW CENTER COMMUNITY MENTAL HEALTH CENTER, JUNE 2000, 
$1,181,000 
CIN: A-05-00-00049  PARTNERSHIP PLAN - IL HOSPITAL TRANSFERS, JUNE 2001,  $1,150,113 
CIN: A-02-97-01026  EDDY VNA (#337152) HHA ELIGIBILITY REVIEW, SEPTEMBER 1999,  $1,131,593 
CIN: A-05-98-00050  FOLLOW-UP MEDICAID CLINICAL LABORATORIES, JULY 1999,  $1,097,036 
CIN: A-06-01-00044  AUDIT OF ADMINISTRATIVE COSTS PART A & PART B - TRAILBLAZER
BC/BS, APRIL 2002,  $1,091,848 
CIN: A-02-94-01029  HOSPICE ELIGIBILITY RVW IN PR - SAN GERMAN - ORT, JUNE 1995, 
$1,070,814 
CIN: A-09-98-00052  CALIFORNIA MEDICAL REVIEW INC (CA PRO), JANUARY 1999,  $1,067,991 
CIN: A-05-94-00047  NATIONWIDE INS, MEDICARE PART B ADMIN COSTS, SEPTEMBER 1995, 
$1,049,309 
CIN: A-05-01-00037  BC/BS OF MN ADMIN COSTS - LEON SNEAD & CO, JUNE 2001,  $1,037,090 
CIN: A-01-98-00500  PAYMENT EDITS FOR PSYCHIATRIC AT MA PART B CARRIER, SEPTEMBER
1998,  $1,000,000 
CIN: A-09-94-01010  CLOSEOUT AUDIT - CONT NO N01-ES-75196 (STRATAGENE), MARCH 1994, 
$983,208 
CIN: A-06-02-00027  TEXAS MEDICARE BAD DEBT COLLECTIONS, OCTOBER 2002,  $919,331 
74 Appendix D
CIN: A-02-02-01017  IMD - REVIEW OF INPATIENT PSYCHIATRIC CLAIMS AT NJS PRIVATE AND
COUNTY PSYCH HOSPITALS, MARCH 2003,  $896,072 
CIN: A-04-00-01210  REVIEW TREATMENT - QUALIFIED DISCHRGS-BC/BS GA, DECEMBER 2000, 
$891,000 
CIN: A-05-92-00060  CONTRACTOR AUDIT - BC/BS - ADMIN, FEBRUARY 1993,  $879,609 
CIN: A-02-97-01034  DR PILA FOUNDATION HOME CARE PROGRAM (PONCE), SEPTEMBER 1999, 
$857,208 
CIN: A-07-98-02533  TRAVELERS FACP, DECEMBER 1998,  $854,214 
CIN: A-04-01-05004  REVIEW MEDICARE CLAIMS FOR DEPORTED BENEFICIARIES, MARCH 2002, 
$836,711 
CIN: A-06-99-00013  MEDICARE PART A ADMIN NM BC/BS, DECEMBER 1999,  $817,487 
CIN: A-02-98-01040  NIAGARA CTY DEPT OF HEALTH-#337001 - HHS ELIG REVIEW, DECEMBER
1999,  $807,679 
CIN: A-09-01-00094  PACIFICARE CORPORATE JANUARY 1998 MEDICARE INSTITUTIONAL
STATUS, FEBRUARY 2002,  $786,003 
CIN: A-05-01-00073  REVIEW OF ADMINISTRATION OF RYAN WHITE (AIDS) FUNDS - INDIANA,
MAY 2002,  $784,499 
CIN: A-07-99-00981  ASSIST REVIEW OF MEDICARE A/R HCFA RO DENVER, JANUARY 2000, 
$754,926 
CIN: A-06-01-00027  REVIEW PALMETTOS HH-PPS RAP POLICIES & PROCEDURES, SEPTEMBER
2001,  $743,917 
CIN: A-05-02-00041  INDIANA MEDICAID HOSPITAL PATIENT TRANSFERS, JANUARY 2003, 
$730,061 
CIN: A-09-00-00103  PACIFICARE HMO - MEDICARE DUAL ELIGIBLES, MAY 2001,  $720,858
CIN: A-05-91-00136  COMMUNITY MUTUAL INS CO ADMIN COSTS, AUGUST 1992,  $720,668 
CIN: A-07-02-03035  COSTS CLAIMED FOR PRBS BY WELLMARK, FEBRUARY 2003,  $717,106 
CIN: A-03-02-72100  EAST COAST MIGRANT HEAD START PROJECT, JUNE 2002,  $701,523 
CIN: A-09-97-00078  PHYSICIAN BILLINGS DR SPENCER, JANUARY 1999,  $683,264 
CIN: A-02-01-01007  REVIEW OF ADMINISTRATIVE COST AT COOPERATIVA (CARMICHAEL & CO,
CPA), MAY 2002,  $679,487 
CIN: A-06-01-00090  PREAWARD - APASS MAINTAINER DATA PROCESSING SERVICES-ABC/BS,
SEPTEMBER 2001,  $678,651 
CIN: A-05-00-64226  NA-ILLINOIS DEPT OF PUBLIC AID, MAY 2000,  $654,017
CIN: A-01-98-00503  PSYCHIATRIC OUTPT SERVICES AT THE FRANKLIN MED CTR, NOVEMBER
1998,  $646,517 
CIN: A-01-99-00535  AUDIT OF M/C PART A ADMIN COSTS - ANTHEM BC/BS CT, AUGUST 2000, 
$621,256 
CIN: A-07-03-02660  REVIEW OF MULTIPLE PROCEDURES IN THE SAME SESSION NHIC-CAL,
JANUARY 2003,  $618,273
CIN: A-04-00-00138  MEDICAID ESCHEATED WARRANTS - FLORIDA, JANUARY 2002,  $613,891 
CIN: A-06-98-00066  ORT REVIEW OF ULTIMATE HOME HEALTH CARE INC, OCTOBER 1999, 
$602,982
CIN: A-04-94-01078  MONITORING ADMIN COST - AUDIT MEDICARE P B BC/BS SC, JULY 1994, 
$594,092 
CIN: A-04-93-01069  MONITORG ADMIN COST AUDIT MEDICARE PART A BC/BS SC, JULY 1994, 
$590,844 
CIN: A-04-01-01007  GA BC/BS MEDICARE PART A ADMINISTRATIVE COST AUDIT, NOVEMBER
2001,  $575,471 
CIN: A-09-00-00067  COLLEGE HOSPITAL - O/P PSYCH SERVICES, APRIL 2001,  $567,888 
CIN: A-06-02-00026  REV OF MEDICAID CLAIMS MADE FOR AGED 21-64 YR OLD RESIDENTS,
JANUARY 2003,  $555,341 
CIN: A-09-01-00055  REVIEW OF IMD CLAIMS - STATE OF CALIFORNIA, MARCH 2002,  $551,394 
75 Appendix D
CIN: A-07-02-03015  BC/BS OF MN PENSION COSTS CLAIMED FOR MEDICARE REIMBURSEMENT,
FEBRUARY 2003,  $550,083 
CIN: A-05-02-72811  COMMUNITY ACTION OF GREATER INDIANAPOLIS INC , AUGUST 2002, 
$547,899 
CIN: A-07-02-03029  WELLMARK - PENSION COSTS CLAIMED FOR MEDICARE REIMBURSEMENT,
FEBRUARY 2003,  $547,053 
CIN: A-10-01-00011  REVIEW OF WASHINGTON MEDICAID SCHOOL BASED HEALTH SERVICES -
REIMBURSMENT OF ADMINISTRATION CLAIMS, MAY 2002,  $527,102 
CIN: A-05-02-00063  REVIEW OF MEDICAID DME PAYMENTS - KENTUCKY, MARCH 2003,  $511,397 
CIN: A-05-00-00011  LIBERTYVILLE MANOR SNF - THERAPY SERVICES, SEPTEMBER 2001, 
$506,937 
CIN: A-05-99-00062  AMERICARE PHYSICAL THERAPY SERVICES, DECEMBER 2000,  $503,619 
CIN: A-09-99-56858  HAWAII DEPT OF HUMAN SERVICES, FEBRUARY 1999,  $502,000 
CIN: A-03-92-16229  STATE OF PENNSYLVANIA, MARCH 1992,  $496,876 
CIN: A-05-02-72298  STATE OF WISCONSIN , AUGUST 2002,  $491,120 
CIN: A-01-02-73084  STATE OF MAINE , SEPTEMBER 2002,  $489,321 
CIN: A-07-01-03004  TRIGON BC/BS - PENSION SEGMENT CLOSING AUDIT, JULY 2002,  $487,254
CIN: A-05-01-67384  MICHIGAN DEPT OF COMMUNITY HEALTH , FEBRUARY 2001,  $481,693 
CIN: A-05-03-74102  STATE OF OHIO, MARCH 2003,  $439,556 
CIN: A-07-01-00120  REVIEW OF UNFUNDED PENSION COST AT BC/BS OF OK, JULY 2001,  $413,800 
CIN: A-05-97-00013  PACIFICARE OF CA-HMO INSTITUTIONAL STATUS PROJECT, APRIL 1998, 
$407,784 
CIN: A-04-03-74904  EAST COAST MIGRANT HEAD START PROJECT, FEBRUARY 2003,  $394,443 
CIN: A-02-01-67912  STATE OF NEW YORK, MARCH 2001,  $389,536 
CIN: A-05-00-00030  CONTRACTED AUDIT-NATIONWIDE INS-MEDICARE ADMIN, OCTOBER 2000, 
$385,081 
CIN: A-04-00-01208  OUTPATIENT CLINIC COSTS, CORAL GABLES HOSPITAL, FL, FEBRUARY
2001,  $384,295 
CIN: A-04-02-02014  MEDICAID CLAIMS FOR IMD RESIDENTS UNDER AGE 21, FEBRUARY 2003, 
$362,931
CIN: A-06-01-00087  AUDIT OF OBSERVATION SERVICE BILLING BY PRESBYTERIAN HOSP OF
DALLAS, JUNE 2002,  $361,832 
CIN: A-05-02-70413  SOKAOGON CHIPPEWA COMMUNITY MOLE LAKE BAND, JUNE 2002, 
$345,125 
CIN: A-07-03-02653  REVIEW OF MULTIPLE ASC PROCEDURES IN SAME SESSION BC/BS
ARKANSAS, JANUARY 2003,  $344,883 
CIN: A-01-99-00518  PSYCHIATRIC OUTPATIENT SERVICES AT DANBURY HOSPITAL, MAY 2000, 
$342,168 
CIN: A-10-01-00005  AUDIT OF ADMIN COSTS AT MEDICARE NORTHWEST, SEPTEMBER 2001, 
$332,274 
CIN: A-07-01-02630  REVIEW OF MUTUALS SETTLEMENT OF HHA COST REPORTS, JANUARY
2002,  $319,949 
CIN: A-05-01-00096  PAYMENTS TO INTER VALLEY FOR INSTITUTIONAL BENEFICIARIES, MAY
2002,  $319,355 
CIN: A-05-02-00023  SCHOOL-BASED MEDICAID ADMIN & SERVICE COSTS - WISCONSIN, MARCH
2003,  $315,474 
CIN: A-03-03-72652  NATIONAL ASSOCIATION FOR EQUAL OPPORTUNITY IN HIGH, OCTOBER
2002,  $313,256 
CIN: A-02-02-01026  NEW JERSEY PARTNERSHIP - NURSING HOME DAY CARE SERVICES, MARCH
2003,  $309,500 
76 Appendix D
CIN: A-06-01-00028  AUDIT OF OBSERVATION SERVICE BILLINGS BY PPS HOSPITALS,
FEBRUARY 2002,  $298,549 
CIN: A-07-01-02625  CLAIMS FOR MULTIPLE PROCEDURES PERFORMED IN THE SAME
OPERATIVE SESSION (ASC), FEBRUARY 2003,  $291,715 
CIN: A-02-02-01031  MEDICARE BAD DEBTS AT MONTEFIORE MEDICAL CENTER, JANUARY
2003,  $283,345 
CIN: A-05-96-00069  CPA AUDIT OF HOOPER HOLMES HHA G&A - OI CASE OPEN, FEBRUARY
1998,  $280,515 
CIN: A-06-97-00015  NEW MEXICO PRO CLOSE OUT AUDIT, SEPTEMBER 1999,  $268,844 
CIN: A-09-94-30178  STATE OF ARIZONA, JUNE 1994,  $267,021 
CIN: A-09-00-00089  COMMUNITY URGENT CARE MEDICAL GROUP, NOVEMBER 2001,  $266,236 
CIN: A-05-02-00026  REVIEW OF GME/IME COSTS IN INDIANA, DECEMBER 2002,  $263,884 
CIN: A-03-98-00027  KHPW/INSTITUTIONAL STATUS/MEDICARE, NOVEMBER 1998,  $263,573 
CIN: A-07-03-02662  REVIEW OF MULTIPLE ASC PROCEDURES IN THE SAME SESSION NORDIAN,
DECEMBER 2002,  $258,112 
CIN: A-04-02-00010  AUDIT OF EWCDCS OFFICE OF COMMUNITY SERVICES DISCRETIONARY
GRANT, AUGUST 2002,  $250,000 
CIN: A-05-01-00094  PAYMENTS TO KAISER OF OAKLAND FOR INSTITUTIONAL BENEFICIARIES,
OCTOBER 2002,  $229,656 
CIN: A-04-00-01222  CAPITAL HEALTH PLAN, COST-BASED MANAGED CARE PLAN, SEPTEMBER
2001,  $221,952
CIN: A-01-00-00549  BETH ISRAEL AUDIT OF OUTPATIENT PHARMACY SERVICES, MARCH 2001, 
$221,905 
CIN: A-05-99-00067  WPS PART B ADMINISTRATIVE COSTS, NOVEMBER 2000,  $221,644 
CIN: A-01-01-00523  REVIEW OF OUTPATIENT PHARMACY SERVICES AT NOBLE HOSPITAL,
NOVEMBER 2001,  $216,797 
CIN: A-02-01-65217  PUERTO RICO DEPT OF THE FAMILY, DECEMBER 2000,  $213,264 
CIN: A-10-03-73757  STATE OF ALASKA, OCTOBER 2002,  $211,272 
CIN: A-02-01-01019  DEMO BSWNY - CASH MANAGEMENT, OCTOBER 2002,  $208,271 
CIN: A-05-96-00052  ORT ASSIST-ANCILLARY COSTS - NW COM HOSP, JUNE 1997,  $206,508 
CIN: A-06-96-00064  ORT SNF RESEARCH AT METHODIST HOSPITAL, JANUARY 1997,  $200,000 
CIN: A-07-01-02631  REVIEW OF HOSPITAL OBSERVATION BEDS, MAY 2002,  $197,773 
CIN: A-02-02-69503  PUERTO RICO DEPT OF THE FAMILY, SEPTEMBER 2002,  $190,123 
CIN: A-07-03-02656  REVIEW OF MULTIPLE ASC PROCEDURES IN SAME SESSION KANSAS,
DECEMBER 2002,  $190,106 
CIN: A-04-01-00002  TITLE IV-E FOSTER CARE PAYMENTS - CHILD CARE CLAIMS-NC-2,
NOVEMBER 2001,  $186,282 
CIN: A-03-01-00555  PDPI INC - HEAD START, JUNE 2001,  $185,577 
CIN: A-07-02-03016  TRANSAMERICA SUPPLEMENTAL PENSION PLAN COSTS, MARCH 2002, 
$180,244 
CIN: A-05-02-73374  STATE OF OHIO, SEPTEMBER 2002,  $179,797 
CIN: A-04-01-07004  OI ASSIST: SELF DISCLOSURE AUDIT OF HEALTHPRIME, INC, APRIL 2002, 
$169,401 
CIN: A-10-01-00006  REVIEW OF OREGON MEDICAID SCHOOL BASED HEALTH SERVICES -
REIMBURSEMENT OF DIRECT SERVICES, AUGUST 2002,  $166,671 
CIN: A-07-01-02094  SURVEY OF OUTPATIENT OBSERVATION SERVICES, OCTOBER 2002, 
$165,125 
CIN: A-03-98-00034  FREESTATE HP/INSTITUTIONAL STATUS/MEDICARE, MARCH 1999,  $156,987 
CIN: A-01-02-00515  REVIEW OF MEDICARE BAD DEBTS AT THE BAYSTATE MEDICAL CENTER,
JANUARY 2003,  $151,787 
CIN: A-09-01-00084  VISTA DEL MAR NEPHROLOGY GROUP, NOVEMBER 2001,  $151,566 
77 Appendix D
CIN: A-07-03-02664  REVIEW OF MULTIPLE ASC PROCEDURES IN SAME SESSION TRAILBLAZERS,
DECEMBER 2002,  $140,202 
CIN: A-05-00-00031  CONTRACTED AUDIT OF UGS - MEDICARE ADMIN COSTS, NOVEMBER 2000, 
$138,182 
CIN: A-08-03-74616  OGLALA SIOUX TRIBAL DEPT OF PUBLIC SAFETY, MARCH 2003,  $136,764 
CIN: A-09-99-52846  INTER-TRIBAL COUNCIL OF CALIFORNIA INC, FEBRUARY 1999,  $136,360 
CIN: A-02-98-01002  IPRO CLOSEOUT AUDIT - CPA CONTRACT MONITORING, DECEMBER 1998, 
$135,492 
CIN: A-02-00-01019  HORIZON BC/BS (LEON SNEAD & CO, CPA, SEPTEMBER 2001,  $134,584 
CIN: A-05-00-00060  MEDICA FOLLOW-UP, REIMB RATES FOR INSTI BENES, JUNE 2001,  $133,795 
CIN: A-06-00-00014  REV OF INFUSION THERAPY CLAIMS @ DOCTORS HEALTHCAR, JUNE 2000, 
$132,238 
CIN: A-07-03-02661  REVIEW OF MULTIPLE ASC PROCEDURES IN SAME SESSION NHIC, JANUARY
2003,  $129,748 
CIN: A-02-01-04000  INTERIM AUDIT OF RUTGERS CONTRACT # SP0103-96-D-, JANUARY 2002, 
$125,415 
CIN: A-03-01-00219  NATIONAL ASSOCIATION OF POTECTION & ADVOACY -NAPAS, SEPTEMBER
2001,  $123,280 
CIN: A-02-03-70759  PUERTO RICO DEPT OF THE FAMILY, NOVEMBER 2002,  $122,718 
CIN: A-05-01-00069  MERITER - MC/MA CREDIT BALANCES, JULY 2002,  $122,713 
CIN: A-05-01-00091  PAYMENTS TO UNITED HC OF FLA FOR INSTITUTIONAL BENEFICIARIES,
SEPTEMBER 2002,  $121,023 
CIN: A-02-02-71384  STATE OF NEW YORK , MARCH 2002,  $118,773 
CIN: A-05-97-00023  KAISER FOUNDATION-HMO INSTITUTIONAL STATUS PROJECT, APRIL 1998, 
$116,096 
CIN: A-02-96-02001  INTERNATIONAL RESCUE COMMITTEE - REFUGEE PROGRAM, JANUARY
1998,  $114,631 
CIN: A-03-99-00003  AETNA-US HEALTHCARE/INSTITUTIONAL STATUS/MEDICARE, JULY 1999, 
$113,993 
CIN: A-09-02-71247  WATTSHEALTH FOUNDATION INC, APRIL 2002,  $113,000 
CIN: A-03-01-00001  EASTERN SHORE AMBULANCE CO, AUGUST 2001,  $110,417 
CIN: A-07-03-02665  REVIEW OF MULTIPLE ASC PROCEDURES IN SAME SESSION WISCONSIN
PHY SERVICES, JANUARY 2003,  $106,363 
CIN: A-03-02-00202  MD MEDICAID ESCHEATED WARRANTS, JANUARY 2003,  $102,453 
CIN: A-02-99-58263  PUERTO RICO OFFICE OF THE GOVERNOR OFFICE OF CHILD, JULY 1999, 
$101,199 
CIN: A-09-01-00080  NEPHROLOGY ASSOCIATES MEDICAL GROUP - RIVERSIDE, NOVEMBER
2001,  $100,788 
CIN: A-05-01-00079  PAYMENTS TO BLUE CARE MID-MI FOR INSTITUTIONAL BENEFICIARIES,
JUNE 2002,  $100,692 
CIN: A-07-03-02658  REVIEW OF MULTIPLE ASC PROCEDURES IN SAME SESSION EMPIRE,
JANUARY 2003,  $100,600
CIN: A-05-00-65775  STATE OF WISCONSIN, SEPTEMBER 2000,  $98,586 
CIN: A-07-99-01287  WELLMARK ADMIN COSTS 98, NOVEMBER 1999,  $95,990 
CIN: A-09-97-00066  WALTER MCDONALD - INDIRECT COST RATE AUDIT, MARCH 1998,  $95,733 
CIN: A-09-01-00096  AUDIT OF VERMONT SLAUSON ECONOMIC DEVELOPMENT CORP GRANT
AWARD NUMBER 90EE0153, DECEMBER 2001,  $95,560 
CIN: A-09-98-00065  CSBG DISC GRANT #90EE004901 - LATINO RESOURCES, JANUARY 1999, 
$95,102 
CIN: A-01-99-00507  NAT-WIDE REF OPNT PSYCH SERVICES AT ACUTE CARE HOSPITALS,
MARCH 2000,  $94,716 
78 Appendix D
CIN: A-10-97-00003  BCWAAK-ADM COSTS REMOTE NETWORK ACTIVITIES FY93&94, FEBRUARY
1998,  $94,643 
CIN: A-04-02-02009  MEDICAID IMDS - PRIVATE FACILITIES IN FLORIDA, SEPTEMBER 2002, 
$92,726 
CIN: A-07-95-01164  MEDICARE ADMIN COSTS - GENERAL AMERICAN, DECEMBER 1995,  $89,929 
CIN: A-06-00-00013  REVIEW OF INFUSION THERAPY CLAIMS @ SPRING CREEK N, JUNE 2000, 
$89,288 
CIN: A-03-02-03307  CONTRACT CLOSE OUT AUDIT OF CDC CONTRACT # 200-91-0901,
NOVEMBER 2002,  $88,929 
CIN: A-01-01-00503  REVIEW OF O/P MEDICAL SUPPLIES AT MERCY HOSPITAL, JULY 2001, 
$88,904 
CIN: A-05-01-00090  PAYMENTS TO AETNA OF FOR INSTITUTIONAL BENEFICIARIES, JULY 2002, 
$87,516 
CIN: A-07-00-00118  REVIEW OF KANSAS RURAL HEALTH CENTER, MAY 2001,  $87,493 
CIN: A-08-99-56914  RURAL AMERICA INITIATIVES, JULY 1999,  $87,468 
CIN: A-04-01-01006  MBC/BS MEDICARE PART A ADMINISTRATIVE COST AUDIT, NOVEMBER
2001,  $87,042 
CIN: A-04-02-72118  STATE OF NORTH CAROLINA , MAY 2002,  $84,932 
CIN: A-05-01-00071  PAYMENTS TO HUMANA-KC FOR INSTITUTIONAL BENEFICIARIES,
DECEMBER 2001,  $84,808 
CIN: A-10-01-67562  KENAITZE INDIAN TRIBE , MARCH 2001,  $79,533 
CIN: A-04-94-02080  FINALIZATION OF BCBSFL DATA MATCH, JUNE 1995,  $79,316 
CIN: A-04-01-02003  REVIEW FLORIDA MEDICAID CLAIMS - IMDS, MARCH 2002,  $78,880 
CIN: A-05-01-00089  ADDITIONAL BENEFITS REVIEW ON MANAGED CARE ORGANIZATION,
OCTOBER 2002,  $77,000 
CIN: A-04-96-01137  PARTIC PART OF HCFA SURVTEAM - DAYTONA NURSG-ORT, DECEMBER
1996,  $76,130 
CIN: A-01-99-00530  NATIONWIDE REV OF O/P PSYCH SERVICES @ PSYCH HOSPITALS,
DECEMBER 2000,  $75,413 
CIN: A-04-02-72213  STATE OF FLORIDA, JUNE 2002,  $73,239
CIN: A-01-00-00503  REVIEW OF MEDICARE OUTLIER PAYMENTS-MASS GENERAL, DECEMBER
2000,  $73,019 
CIN: A-04-01-02008  ANCILLARY CLAIMS PAID FOR MEDICAID BENEFICIARIES WHILE IN IMDS,
JULY 2002,  $71,406 
CIN: A-05-02-72301  STATE OF INDIANA, JULY 2002,  $69,889 
CIN: A-04-03-73667  MANATEE OPPORTUNITY COUNCIL INC, OCTOBER 2002,  $63,321 
CIN: A-05-01-00086  PAYMENTS TO HMO OF NE PA FOR INSTITUTIONAL BENEFICIARIES, MAY
2002,  $62,432 
CIN: A-05-99-00045  KAISER HEALTH PLAN OF OHIO - INSTITUTIONAL STATUS, MAY 2000, 
$61,177
CIN: A-05-02-72716  SOKAOGON CHIPPEWA COMMUNITY MOLE LAKE BAND, SEPTEMBER 2002, 
$60,378 
CIN: A-05-96-00072  MI DEPT OF COMMUNITY HEALTH/MEDICAID LAB SERVICES, AUGUST 1997, 
$59,956 
CIN: A-06-01-68876  STATE OF LOUISIANA, JUNE 2001,  $59,914 
CIN: A-01-96-00505  CFO AUDIT OF HCFAS FINANCIAL STATEMENTS, JULY 1997,  $59,327 
CIN: A-02-00-62534  CITY OF NEW YORK NEW YORK, JANUARY 2000,  $58,309 
CIN: A-05-96-00051  ORT ASSIST-ANCILLARY COSTS - ST JOSEPH, JUNE 1997,  $58,008 
CIN: A-09-97-00059  HEALTH SERVICES ADVISORY GROUP, INC PRO - AZ, MAY 1997,  $57,925 
CIN: A-07-97-01206  PENSION - WASHINGTON/ALASKA - UNFUNDED, MARCH 1997,  $54,000 
CIN: A-01-02-00507  REVIEW OF OUTLIER PAYMENTS MADE TO EASTERN MAINE
MEDICALCENTER, JANUARY 2003,  $53,091 
79 Appendix D
CIN: A-06-00-00053  OIG HCFA NEBULIZER PROJECT - NATIONAL ERROR RATE, OCTOBER 2001, 
$52,550 
CIN: A-08-00-60687  SOUTH DAKOTA FOUNDATION FOR MEDICAL CARE, NOVEMBER 1999, 
$52,536 
CIN: A-04-00-01223  REV MGMT FEES - ONCOLOGY CLINIC-PKWY REGL MCAL, OCTOBER 2001, 
$52,000 
CIN: A-04-02-68936  STATE OF TENNESSEE, JUNE 2002,  $50,717 
CIN: A-05-00-00059  TITLE XIX - MEDICAID ESCHEATED WARRANTS, MARCH 2001,  $50,162 
CIN: A-02-02-70019  SENECA NATION OF INDIANS, DECEMBER 2001,  $50,083 
CIN: A-09-95-00095  HEALTH SERVICES ADVISORY GROUP, INC (HSAG), DECEMBER 1995,  $49,585 
CIN: A-03-93-03306  SURVEY RESEARCH ASSOC CACS NO1-ES-45067, DECEMBER 1993,  $48,779 
CIN: A-03-03-72398 CHILD WELFARE LEAGUE OF AMERICA INC, OCTOBER 2002,  $48,589 
CIN: A-07-00-00106  PENSION SEGMENTATION AUDIT AT BC/BS OF OKLAHOMA, JULY 2001, 
$45,508 
CIN: A-05-03-73739  STATE OF OHIO, NOVEMBER 2002,  $43,836 
CIN: A-09-99-52845  INTER-TRIBAL COUNCIL OF CALIFORNIA INC, FEBRUARY 1999,  $43,315 
CIN: A-09-99-57306  PICAYUNE RANCHERIA OF THE CHUKCHANSI INDIAN TRIBE, SEPTEMBER
1999,  $43,159 
CIN: A-07-01-00121  REV OF PEN COSTS FOR MED REIMB FOR BC/BS OF OK, JULY 2001,  $42,463 
CIN: A-01-02-71892  STATE OF VERMONT, APRIL 2002,  $42,037 
CIN: A-03-99-00017  PSU - HERSHEY/PHY CREDIT BALANCES/MEDICARE, DECEMBER 1999, 
$41,712 
CIN: A-10-02-72331 IDAHO MIGRANT COUNCIL INC, JULY 2002,  $40,541 
CIN: A-05-00-00017  INDIANA MEDICAID TRANSPORTATION SERVICES, MARCH 2001,  $39,735 
CIN: A-05-03-72703  TRI-COUNTY OPPORTUNITIES COUNCIL, NOVEMBER 2002,  $38,374 
CIN: A-07-98-53295  WINNEBAGO TRIBE OF NEBRASKA, SEPTEMBER 1998,  $36,808 
CIN: A-08-00-65136  STATE OF SOUTH DAKOTA, JUNE 2000,  $36,380 
CIN: A-03-00-00010  PS GEISINGER HMO/INSTITUTIONAL STATUS/MEDICARE, JANUARY 2001, 
$35,639 
CIN: A-10-03-74366  FIRST AME CHILD & FAMILY CENTER, JANUARY 2003,  $35,162 
CIN: A-02-00-65502  ABYSSINIAN DEVELOPMENT CORP, AUGUST 2000,  $34,737 
CIN: A-09-01-00050  BALBOA NEPHROLOGY MEDICAL GROUP, APRIL 2001,  $32,568 
CIN: A-03-99-00008  BC/BS OF DELAWARE - PART A, JANUARY 2000,  $32,176 
CIN: A-07-97-01199  BC/BS NEW MEXICO UNFUNDED PENSION COST, FEBRUARY 1997,  $31,372 
CIN: A-05-02-69155  STATE OF WISCONSIN, DECEMBER 2001,  $30,900 
CIN: A-05-03-74268  BCMW COMMUNITY SERVICES INC, JANUARY 2003,  $30,796 
CIN: A-04-01-01005  REVIEW DUPLICATE MEDICARE FEE-FOR-SERVICE PAYMENTS AT CAPITAL
HEALTH PLAN, NOVEMBER 2001,  $30,293 
CIN: A-06-02-00018  GRADUATE MEDICAL EDUCATION COST AT METHODIST HOSPITAL IN
HOUSTON, JUNE 2002,  $30,230 
CIN: A-03-00-00209  STATE SURVEY AND CERTIFICATION COSTS - VA, AUGUST 2001,  $29,298 
CIN: A-01-02-71527  STATE OF MASSACHUSETTS, APRIL 2002,  $29,260 
CIN: A-08-03-73541  SOUTH DAKOTA FOUNDATION FOR MEDICAL CARE, JANUARY 2003,  $28,573 
CIN: A-03-98-03301  AAUAP - INCURRED COST REVIEW - HHS 105-95-7011, APRIL 1998,  $28,289 
CIN: A-10-02-69837  NATIVE VILLAGE OF TYONEK, DECEMBER 2001,  $26,848 
CIN: A-06-00-00020  REV OF INFUSION THERAPY CLAIMS @ VISTA CONTINUING, JUNE 2000, 
$25,008 
CIN: A-05-03-70349  MICHIGAN FAMILY INDEPENDENCE AGENCY, MARCH 2003,  $24,949 
CIN: A-03-00-00004  GUTHRIE CLINIC/PHYSICIAN CREDIT BALANCES/MEDICARE, DECEMBER
1999,  $23,759 
80 Appendix D
CIN: A-06-02-70732  UNITED STATES-MEXICO BORDER HEALTH ASSOCIATION, JANUARY 2002, 
$23,483 
CIN: A-06-02-71744  SENECA-CAYUGA TRIBE OF OKLAHOMA, MARCH 2002,  $21,376 
CIN: A-04-00-01206  BC/BS NC - MEDICARE PART A ADMIN COST AUDIT-CARMICHAEL,
SEPTEMBER 2000,  $21,302
CIN: A-05-01-00078  PAYMENTS TO HEALTH NET-TUCSON, AZ - FOR INSTITUTIONAL
BENEFICIARIES, APRIL 2002,  $21,233
CIN: A-05-02-72480  HANSEL NEIGHBORHOOD SERVICE CENTER INC, SEPTEMBER 2002,  $20,266 
CIN: A-09-02-00092  CA MEDICARE SETTLEMENT OF CROSSOVER BAD DEBTS - MUTUAL OF
OMAHA, JANUARY 2003,  $20,248 
CIN: A-06-02-72610  STATE OF OKLAHOMA, AUGUST 2002,  $19,992 
CIN: A-05-02-70624  STATE OF OHIO, JANUARY 2002,  $19,970 
CIN: A-04-01-67441  CATAWBA INDIAN NATION, APRIL 2001,  $19,204 
CIN: A-05-01-00100  PAYMENTS TO FALLON HEALTH FOR INSTITUTIONALIZED BENEFICIARIES,
MAY 2002,  $18,842
CIN: A-04-97-01163  VIMI MEDICARE PRO CONTRACT AUDIT, SEPTEMBER 1997,  $18,758 
CIN: A-05-01-00095  PAYMENTS TO HUMANA OF ARIZONA FOR INSTITUTIONAL BENEFICIARIES,
JUNE 2002,  $18,645 
CIN: A-03-01-00018  WASHINGTON HOSPITAL CENTER GRADUATE MEDICAL EDUCATION
COSTS, MAY 2002,  $18,000 
CIN: A-03-97-00007  NE HEALTH CARE QUALITY FOUNDATION/CCAS/N HAMPSHIRE, MARCH
1997,  $17,045 
CIN: A-07-00-00117  REV OF PENSION COSTS FOR MED REIMB BC/BS OF ND, JANUARY 2001, 
$16,863 
CIN: A-01-99-55594  STATE OF VERMONT, NOVEMBER 1998,  $16,623 
CIN: A-01-97-44143  BRANDEIS UNIV, JANUARY 1997,  $16,602 
CIN: A-03-03-74306  HEBREW HOME OF GREATER WASHINGTON INC, DECEMBER 2002,  $16,441 
CIN: A-06-01-68297  NATIVE AMERICAN CENTER OF RECOVERY INC, MAY 2001,  $16,314 
CIN: A-01-02-70440  UNIV OF MASSACHUSETTS, JANUARY 2002,  $16,031
CIN: A-10-00-59080  NORTON SOUND HEALTH CORP, DECEMBER 1999,  $15,000 
CIN: A-05-01-00044  MINNESOTA MEDICAID PERSONAL CARE SERVICES REVIEW, APRIL 2002, 
$14,844 
CIN: A-06-00-65680  STATE OF TEXAS, AUGUST 2000,  $14,698
CIN: A-03-97-00008  NE HEALTH CARE QUALITY FOUNDATION/CCAS/VERMONT, MARCH 1997, 
$14,596 
CIN: A-09-00-00104  PACIFICARE OF CALIFORNIA - INSTITUTIONAL STATUS, MARCH 2001, 
$14,278 
CIN: A-09-96-00050  CFO - HCFA 1996, NOVEMBER 1997,  $13,924 
CIN: A-02-01-01009  HORIZON BC/BS - REVIEW OF FACP, JANUARY 2003,  $13,651 
CIN: A-05-03-73921  NATIONAL ASSOCIATION OF LOCAL BOARDS OF HEALTH, NOVEMBER
2002,  $13,317 
CIN: A-03-03-72847  DISTRICT OF COLUMBIA DEPT OF HEALTH, OCTOBER 2002,  $12,850
CIN: A-06-03-74511  SOUTHERN UNIV SYSTEM, FEBRUARY 2003,  $12,693 
CIN: A-07-02-04002  FY 2002 CFO/CMS/MEDICARE ERROR RATE MUTUAL OF OMAHA, OCTOBER
2002,  $12,070 
CIN: A-05-03-00012  FROEDTERT MEDICAID CREDIT BALANCES, FEBRUARY 2003,  $12,066 
CIN: A-05-01-00070  PAYMENTS TO GHP MCO/ST LOUIS FOR INSTITUTIONAL BENEFICIARIES,
JANUARY 2002,  $11,089 
CIN: A-03-01-00513  IRSA - KOSOVO ASSISTANCE GRANT 90-ZK-0002/01, DECEMBER 2001,  $10,913 
CIN: A-05-02-00037  REVIEW OF FOSTER CARE PLACEMENT AGENCY ADMINISTRATIVE COSTS,
FEBRUARY 2003,  $10,609 
CIN: A-03-02-71608  SUPPORTIVE CHILD ADULT NETWORK INC, APRIL 2002,  $10,561
81 Appendix D
CIN: A-09-02-71757  PYRAMID LAKE PAIUTE TRIBE, MAY 2002,  $9,857 
CIN: A-10-97-00002  GROUP HEALTH INSTITUTIONALIZED, NOVEMBER 1997,  $9,769 
CIN: A-06-02-00032  CMS FY 01 MEDICARE ERROR RATE - ARK BC/BS REPORT, NOVEMBER 2002, 
$9,655 
CIN: A-02-01-02003  FORDHAM UNIVERSITY - DISCRETIONARY GRANT REVIEW, MAY 2002, 
$9,451 
CIN: A-02-01-66887  PUERTO RICO ADMINISTRATION OF CHILDREN & FAMILIES, FEBRUARY
2001,  $9,000 
CIN: A-05-01-67360  MICHIGAN FAMILY INDEPENDENCE AGENCY, FEBRUARY 2001,  $8,708 
CIN: A-03-03-74002  MINORITY ACCESS INC, NOVEMBER 2002,  $8,113 
CIN: A-07-97-01231  PROWEST-DOSHI WASHINGTON, JUNE 1997,  $8,027 
CIN: A-03-02-72715  DISTRICT OF COLUMBIA DEPT OF HEALTH, JULY 2002,  $7,851 
CIN: A-05-01-68270  LAKE COUNTY COMMUNITY ACTION PROJECT, MAY 2001,  $7,614 
CIN: A-03-98-00045  TEMPLE UNIV/PHYSICIAN CREDIT BALANCES/MEDICARE, JULY 1999,  $7,280 
CIN: A-01-97-49174  BRANDEIS UNIV, AUGUST 1997,  $7,068 
CIN: A-06-01-69130  STATE OF TEXAS, SEPTEMBER 2001,  $6,484 
CIN: A-07-95-01167  PENSION COSTS CLAIMED NEBRASKA BC/BS, JANUARY 1996, $6,075
CIN: A-01-02-00502  REVIEW OF INTERNAL CONTROL PROCEDURES A RENEX DIALYSIS CLINICS
OF NORTH ANDOVER AND AMESBURY FOR THE ADMINISTRATION OF
EPOGEN FOR CALENDAR YEAR 1999, SEPTEMBER 2002,  $6,016 
CIN: A-06-97-48062  SER-JOBS FOR PROGRESS NATIONAL INC, MAY 1997,  $5,924 
CIN: A-01-03-74569  CYTEL SOFTWARE CORP, JANUARY 2003,  $5,089 
CIN: A-01-02-72476  UNIV OF MASSACHUSETTS, SEPTEMBER 2002,  $5,012 
CIN: A-15-02-20006  REVIEW OF CDC COOPERATIVE AGREEMENT AND HRSA RYAN WHITE
ACTIVITIES AT HEALTH EDUCATION RESOURCE ORGANIZATION (HERO),
INC (BALTIMORE EMA/BALTIMORE CITY HEALTH DEPT), MARCH 2003, 
$5,010 
CIN: A-01-00-60299  INDIAN TOWNSHIP TRIBAL GOVERNMENT PASSAMAQUODDY TR, JANUARY
2000,  $4,597 
CIN: A-02-03-73189  UNIVERSIDAD CENTRAL DEL CARIBE INC, FEBRUARY 2003,  $4,543 
CIN: A-05-03-73584  ERIE-HURON COUNTIES COMMUNITY ACTION COMMISSION IN, DECEMBER
2002,  $4,480 
CIN: A-04-01-68839  STATE OF FLORIDA, JUNE 2001,  $4,169 
CIN: A-02-03-74893 WOMENS COALITION OF ST CROIX INC, MARCH 2003, $4,113 
CIN: A-07-02-04001  FY-2002 CFO/CMS MEDICARE ERROR RATE NORIDIAN (ND B/C), OCTOBER
2002,  $3,999 
CIN: A-04-97-01162  HMSA MEDICARE PRO CONTRACT AUDIT, SEPTEMBER 1997,  $3,871 
CIN: A-09-01-00067  EAST BAY NEPHROLOGY MEDICAL GROUP, AUGUST 2001,  $3,418 
CIN: A-03-01-03303  JOHNS HOPKINS UNIVERSITY/KPMG/NIDA/N01DA-3-7301, FEBRUARY 2001, 
$3,347 
CIN: A-05-02-69215  ONEIDA TRIBE OF INDIANS OF WISCONSIN, OCTOBER 2001,  $3,109 
CIN: A-02-01-66889  PUERTO RICO ADMINISTRATION OF CHILDREN & FAMILIES, FEBRUARY
2001,  $3,103 
CIN: A-03-95-03318  TRANS-MANAGEMENT SYSTEMS 105-92-1527 (CCO), MAY 1996,  $3,016 
CIN: A-02-01-66888 PUERTO RICO ADMINISTRATION OF CHILDREN & FAMILIES, FEBRUARY
2001,  $2,883 
CIN: A-07-98-02502  CT BC/BS PENSION COSTS CLAIMED, MARCH 1998,  $2,725 
CIN: A-03-98-51505  ALLIEDSIGNAL TECHNICAL SERVICES CORP, APRIL 1998,  $2,722 
CIN: A-01-97-45487  ABT ASSOCIATES INC, JANUARY 1997,  $2,596 
CIN: A-03-97-43996  ACTUARIAL RESEARCH CORP, OCTOBER 1996,  $2,561 
CIN: A-09-01-00068  ROLLUP REPORT CALIFORNIA INPATIENT HEMODIALYSIS SERVICES,
MARCH 2002,  $1,858
82 Appendix D
CIN: A-07-97-01232  PROWEST - DOSHI ALASKA, JUNE 1997,  $1,473 
CIN: A-07-00-02082  REVIEW OF A COST HMO - IOWA, FEBRUARY 2002,  $1,006 
5B.
The following audits are open pending the resolution of the contractors termination audit, related
termination agreements and pending lawsuits:
CIN: A-07-96-01176  MEDICARE EXCESS PENSION ASSETS - BC MICH, NOVEMBER 1996, 
$11,904,263 
CIN: A-07-92-00579  BC/BS OF MICHIGAN INC - UNFUNDED PENSION COSTS, OCTOBER 1992, 
$2,535,698 
CIN: A-05-93-00057  MI-BC & BS OF MI-CONTRACT AUDIT, JULY 1993,  $1,409,954 
Notes to Table 2
1The opening balance was adjusted upward by $51.9 million.
2Management decision has not been made within 6 months on 28 reports.
Discussions with management are ongoing, and it is expected that the following audits will be resolved by
the next semiannual reporting period:
CIN: A-03-00-00203  PA/INTERGOVERNMENTAL TRANSFERS/MEDICAID, FEBRUARY 2001, 
$3,700,000,000 
CIN: A-05-00-00056  MEDICAID INTERGOVERNMENTAL TRANSFERS - IDPA, MARCH 2001, 
$1,870,000,000 
CIN: A-06-00-00023  MEDICAID PHARMACY/PHYSICIAN ACTUAL ACQUISITION COS, AUGUST
2001,  $1,080,000,000 
CIN: A-10-00-00011  MEDICAID INTERGOVERNMENTAL TRANSFERS - WA STATE, MARCH 2001, 
$475,000,000 
CIN: A-06-01-00069  EVALUATION OF LEGISLATION TO INCREASE MEDICAID HOSP-SPEC DSH
PAYMENT LIMITS, DECEMBER 2001,  $380,000,000 
CIN: A-06-01-00041  AUDIT OF THE TX DISPROPORTIONATE SHARE HOSP PROG PAYMENT
METHODLOGY, FEBRUARY 2003,  $319,200,000 
CIN: A-01-99-00507  NAT-WIDE REF OPNT PSYCH SERVICES AT ACUTE CARE HOSPITALS,
MARCH 2000,  $224,466,692 
CIN: A-04-00-02165  REVIEW OF AL MEDICAID INTERGOVERNMENTAL TRANSFERS, MARCH
2001,  $147,500,000 
CIN: A-06-00-00053  OIG HCFA NEBULIZER PROJECT - NATIONAL ERROR RATE, OCTOBER 2001, 
$133,960,552 
CIN: A-04-00-02169  REV AL MEDICAID INTERGOVERNMEN'TAL TRANSFERS-HOSPITAL
ENHANCE, MAY 2001,  $63,000,000 
CIN: A-01-99-00530  NATIONWIDE REV OF O/P PSYCH SERVICES @ PSYCH HOSPITALS,
DECEMBER 2000,  $56,936,287 
CIN: A-07-98-02534  EMPIRE BC/BS PENSION PLAN TERMINATION, MARCH 2000,  $38,626,351 
83 Appendix D
CIN: A-02-03-73313  CITY OF NEW YORK ADMINISTRATION FOR CHILDRENS SERVICES,
JANUARY 2003,  $22,203,439 
CIN: A-02-01-67912  STATE OF NEW YORK, MARCH 2001,  $19,000,000 
CIN: A-01-99-00506  FOLLOW-UP REVIEW OF SEPRTLY BILLABLE ESRD LAB TESTS, JANUARY
2001,  $12,200,000 
CIN: A-06-99-00060  REVIEW OF AN HMO UNDERPAYMENT CLAIM OF 21 MILLION, JUNE 2001, 
$12,191,579 
CIN: A-01-00-00502  REV OF EXORBITANT MEDICARE PAYMENTS FOR O/P SERVICES, MAY 2001, 
$12,100,000 
CIN: A-03-91-00552  INDEPENDENT LIVING PROGRAM - NATIONAL, MARCH 1993,  $10,161,742
CIN: A-07-96-01177  MEDICARE POST RETIREMENT CLAIM BC MICH, NOVEMBER 1996,  $8,978,998 
CIN: A-06-99-00045  MEDICARE LEFT AGAINST MEDICAL ADVICE DISCHARGES, MARCH 2002, 
$6,800,000 
CIN: A-03-00-00007  REVIEW OF 1-DAY DISCHARGES - PA, APRIL 2001,  $6,300,000 
CIN: A-01-97-02506  REVIEW OF THE AVAIL OF MEDICAL COVERAGE/CSE SUPPORT, JUNE 1998, 
$5,704,585 
CIN: A-05-01-00052  DME REVIEW IN INDIANA, OCTOBER 2001,  $4,400,000 
CIN: A-06-00-00073  REV OF MGR CARE ADDTL BENEFITS FOR CY 00 OF NYLCAR, MARCH 2002, 
$4,000,000 
CIN: A-02-02-01026  NEW JERSEY PARTNERSHIP - NURSING HOME DAY CARE SERVICES, MARCH
2003,  $3,500,000 
CIN: A-04-98-01188  REVIEW ADMIN COSTS @ MEDICARE MANAGED RISK PLAN, AUGUST 1999, 
$2,559,357 
CIN: A-05-00-00083  REVIEW OF MEDICAID DME CLAIMS - MICHIGAN, OCTOBER 2001,  $2,500,000 
CIN: A-05-02-00066  REVIEW OF RFP CMS-02-001/ELH1, MAY 2002,  $1,885,793 
CIN: A-09-95-00095  HEALTH SERVICES ADVISORY GROUP, INC (HSAG), DECEMBER 1995, 
$1,389,723 
CIN: A-05-01-00031  WI MEDICAID - DME, OCTOBER 2001,  $1,250,000 
CIN: A-07-99-01298  DATE OF DEATH - 2, MAY 2001,  $700,000 
CIN: A-05-02-00082  BID PROPOSAL FOR 1-800 MEDICARE HOTLINE ADMINISTRATION, AUGUST
2002,  $609,950 
CIN: A-05-02-00080  SINAI - MC/MA CREDIT BALANCES, JANUARY 2003,  $515,942 
CIN: A-05-03-00021  CIMRO PRO PRE-AWARD AUDIT FOR NEBRASKA, NOVEMBER 2002,  $504,650 
CIN: A-03-99-00052  ALLEGHENY/CHESAPEAKE ORF, SEPTEMBER 2001,  $467,646 
CIN: A-05-00-00057  REVIEW OF MEDICAID MUTUALLY EXCLUSIVE CODES - OH, NOVEMBER
2001,  $450,000 
CIN: A-03-00-00010  PS GEISINGER HMO/INSTITUTIONAL STATUS/MEDICARE, JANUARY 2001, 
$306,269 
CIN: A-05-01-00074  REVIEW OF BID PROPOSAL RFP HCFA-01-0003, JUNE 2001,  $282,049 
CIN: A-03-99-00038  EDGEWATER PSYC HOSPITAL, MARCH 2001,  $208,731 
CIN: A-07-97-01230  OFMQ - DOSHI OKLAHOMA, JUNE 1997,  $203,510 
CIN: A-07-97-01231  PROWEST-DOSHI WASHINGTON, JUNE 1997,  $163,552 
CIN: A-01-02-73084  STATE OF MAINE , SEPTEMBER 2002,  $149,082 
CIN: A-05-02-00023  SCHOOL-BASED MEDICAID ADMIN & SERVICE COSTS - WISCONSIN, MARCH
2003,  $144,909 
CIN: A-07-02-00143  MEDICAID REVIEW OF DECEASED RECIPIENTS- MISSOURI, MARCH 2003, 
$118,362 
CIN: A-05-01-00070  PAYMENTS TO GHP MCO/ST LOUIS FOR INSTITUTIONAL BENEFICIARIES,
JANUARY 2002,  $98,698 
CIN: A-02-96-02001  INTERNATIONAL RESCUE COMMITTEE - REFUGEE PROGRAM, JANUARY
1998,  $90,528
84 Appendix D
CIN: A-05-02-00089  REVIEW OF RFP CMS-500-97-0408/0008, NOVEMBER 2002,  $84,457 
CIN: A-03-01-00022 UNITED HOSPITAL CENTER BAD DEBT REVIEW, JULY 2002,  $42,328 
CIN: A-07-97-01232  PROWEST - DOSHI ALASKA, JUNE 1997,  $21,218 
CIN: A-05-96-00069  CPA AUDIT OF HOOPER HOLMES HHA G&A - OI CASE OPEN, FEBRUARY
1998,  $17,555 
CIN: A-07-95-01164  MEDICARE ADMIN COSTS - GENERAL AMERICAN, DECEMBER 1995,  $16,632 
CIN: A-01-97-00526  PSYCHIATRIC OUTPATIENT SERVICES, MARCH 1998,  $7,245 
CIN: A-01-98-00506  PSYCHIATRIC OUTPATIENT AT NEWTON-WELLESLEY HOSPITAL, MARCH
1998,  $1,120 
85 86 Appendix E
Reporting Requirements of the Inspector General Act of 1978, as Amended
The specific reporting requirements of the Inspector General Act of 1978, as amended, are listed
below with reference to the page in the semiannual report on which each is addressed.  Where there are no
data to report under a particular requirement, the word none appears in the column.  A complete listing
of audit and inspection reports is being furnished to the Congress under separate cover.  Copies are
available upon request.
      Section of the Act       Requirement                 Page
Section 4(a)(2) Review of legislation and regulations 48
Section 5
(a)(1) Significant problems, abuses and deficiencies Throughout
(a)(2) Recommendations with respect to significant problems,
abuses and deficiencies Throughout
(a)(3) Prior significant recommendations on which corrective
action has not been completed Appendices B & C
(a)(4) Matters referred to prosecutive authorities 51
(a)(5) Summary of instances where information was refused None
(a)(6) List of audit reports Under separate cover
(a)(7) Summary of significant reports Throughout
(a)(8) Statistical Table 1Reports With Questioned Costs 46
(a)(9) Statistical Table 2Funds Recommended to Be Put to
Better Use 47
(a)(10) Summary of previous audit reports without management
decisions Appendix D
(a)(11) Description and explanation of revised management
decisions Appendix D
(a)(12) Management decisions with which the Inspector
General is in disagreement None
87 88 Appendix F
Summary of Sanction Authorities
The Inspector General Act of 1978 (Public Law 95-452), as amended, sets forth specific
requirements for semiannual reports to be made to the Secretary for transmittal to the Congress.  
A selection of other authorities appears below:
Program Exclusions
Section 1128 of the Social Security Act (42 U.S.C.  1320a-7) provides several grounds for
excluding individuals and entities from participation in Medicare, Medicaid and other Federal health 
care programs.  Exclusions are required for individuals and entities convicted of the following types 
of criminal offenses:  (1) Medicare or Medicaid fraud; (2) patient abuse or neglect; (3) felonies for other
health care fraud; and (4) felonies for illegal manufacture, distribution, prescription or dispensing of
controlled substances.  OIG has the discretion to exclude individuals and entities on several other
grounds, including:  misdemeanors for other health care fraud (other than Medicare or Medicaid) or for
illegal manufacture, distribution, prescription or dispensing of controlled substances; suspension or
revocation of a license to provide health care for reasons bearing on professional competence, professional
performance, or financial integrity; provision of unnecessary or substandard services; submission of false
or fraudulent claims to a Federal health care program; and engaging in unlawful kickback arrangements.
Providers who are subject to exclusion are granted due process rights, including a hearing before
an HHS administrative law judge and appeals to the HHS Departmental Appeals Board and the Federal
district and appellate courts, regarding whether the basis for the exclusion exists and the length of the
exclusion is reasonable. 
Patient Dumping
Section 1867 of the Social Security Act (42 U.S.C.  1395dd) provides that when an individual
presents to the emergency room of a Medicare-participating hospital, the hospital must provide an appro-
priate medical screening examination to determine whether that individual has an emergency medical
condition.  If an individual has such a condition, the hospital must provide either treatment to stabilize the
condition or an appropriate transfer to another medical facility.
If a transfer is ordered, the transferring hospital must provide stabilizing treatment to minimize
the risks of transfer and must ensure that the receiving hospital agrees to the transfer and has available
space and qualified personnel to treat the individual.  In addition, the transferring hospital must effect the
transfer through qualified personnel and transportation equipment.  Further, a participating hospital with
specialized capabilities or facilities may not refuse to accept an appropriate transfer of an individual who
needs services if the hospital has the capacity to treat the individual.
OIG is authorized to collect civil monetary penalties of up to $25,000 against small hospitals 
(less than 100 beds) and up to $50,000 against larger hospitals (100 beds or more) for each instance in
which the hospital negligently violated any of the section 1867 requirements.  In addition, OIG may col-
lect a penalty of up to $50,000 from a responsible physician for each negligent violation of any of the
section 1867 requirements and, in some circumstances, may exclude a responsible physician.
89 Appendix F
Civil Monetary Penalties Law
Under the Civil Monetary Penalties Law (CMPL), section 1128A of the Social Security Act, 
42 U.S.C.  1320a-7a, a person is subject to penalties, assessments, and exclusion from participation in
Federal health care programs for engaging in certain activities.  For example, a person who submits to a
Federal health care program a claim for items and services that the person knows or should know is false
or fraudulent is subject to a penalty of up to $10,000 for each item or service falsely or fraudulently
claimed, an assessment of up to three times the amount falsely or fraudulently claimed, and exclusion. 
For the purposes of the CMPL, should know is defined to mean that the person acted in
reckless disregard or deliberate ignorance of the truth or falsity of the claim.  The CMPL also authorizes
actions for a variety of other violations, including submission of claims for items or services furnished by
an excluded person, requests for payment in violation of an assignment agreement, and payment or receipt
of remuneration in violation of the anti-kickback statute (42 U.S.C.  1320a-7b(b)).  The authority to
bring CMPL cases has been delegated to the Inspector General. 
Anti-Kickback Statute
The anti-kickback statute authorizes penalties against anyone who knowingly and willfully
solicits, receives, offers or pays remuneration, in cash or in kind, to induce or in return for (1) referring an
individual to a person or entity for the furnishing, or arranging for the furnishing, of any item or service
payable under the Federal health care programs; or (2) purchasing, leasing or ordering, or arranging for or
recommending the purchasing, leasing or ordering of any good, facility, service or item payable under the
Federal health care programs (Section 1128B(b) of the Social Security Act, 42 U.S.C.  1320a-7b).
Individuals and entities that engage in unlawful referral or kickback schemes may be subject to
criminal penalties under the general criminal anti-kickback statute, civil monetary penalties under OIGs
CMPL authority (Section 1128A(a)(7) of the Social Security Act, 42 U.S.C.  1320a-7a) and/or program
exclusion under OIGs permissive exclusion authority (Section 1128(b)(7) of the Social Security Act, 42
U.S.C.  1320a-7(b)(7)).
False Claims Act
Under the Federal civil False Claims Act (FCA), 31 U.S.C.  3729-3733, a person or entity is
liable for up to treble damages and up to $11,000 for each false claim it knowingly submits or causes to
be submitted to a Federal program.  Similarly, a person or entity is liable under the FCA if it knowingly
makes or uses, or causes to be made or used, a false record or statement to have a false claim paid.
The FCA defines knowing to include not only the traditional definition, but also instances
when the person acted in deliberate ignorance of the truth or falsity of the information or in reckless
disregard of the truth or falsity of the information.  Under the FCA, no specific intent to defraud is
required.  Further, the FCA contains a qui tam or whistleblower provision that allows private individuals
to file suit on behalf of the United States and entitles that whistleblower to a percentage of any fraud
recoveries.
90 Appendix G
Status of Public Proposals for New and Modified Safe Harbors 
to the Anti-Kickback Statute Pursuant to Section 205 of the 
Health Insurance Portability and Accountability Act of 1996
Pursuant to section 205 of the Health Insurance Portability and Accountability Act of 1996 (HIPAA),
Public Law 104-191, the Inspector General is required annually to solicit proposals (via Federal Register
notice) for modifying existing safe harbors to the anti-kickback statute and for developing new safe
harbors and special fraud alerts.
In crafting safe harbors for a criminal statute, it is incumbent upon OIG to engage in a complete
and careful review of the range of factual circumstances that may fall within the proposed safe harbor
subject area, so as to uncover all potential opportunities for fraud and abuse by unscrupulous providers. 
Having done so, OIG must then determine, in consultation with the Department of Justice, whether it can
develop effective regulatory limitations and controls that will not only permit beneficial or innocuous
arrangements, but also protect the Federal health care programs and their beneficiaries from abusive
practices.
In response to the 2002 annual solicitation, OIG received the following proposals related to safe
harbors:
Proposal       OIG Response
New safe harbor for certain practices related to OIG received a substantial number of public comments
economic credentialing of physicians by hospitals. from a cross-section of interested parties in response to
OIGs specific solicitation of comments on this topic.
The public comments variously suggest issuance of
different types of guidance; some comments suggest
that OIG take no action.  OIG is reviewing the
comments.
New safe harbor for refill reminder and other OIG is not adopting this suggestion.  The arrangements
pharmacy compliance programs funded by described are subject to abuse and should be evaluated
pharmaceutical manufacturers.  on a case-by-case basis, such as under the advisory
opinion procedures.  Several of the matters raised in
the suggestions are addressed in OIGs recent
Compliance Program Guidance (CPG) for
Pharmaceutical Manufacturers.
New safe harbor for continuing medical education OIG is not adopting this suggestion.  The arrangements
(CME) and non-CME programs sponsored by medical described pose a risk of abuse under the anti-kickback
societies, but financed by pharmaceutical statute and should be evaluated on a case-by-case
manufacturers. basis, such as under the advisory opinion procedures. 
Pharmaceutical manufacturer-funded educational
programs are addressed in OIGs recent CPG for
Pharmaceutical Manufacturers.
New safe harbor for programs that assist patients and OIG is not adopting this suggestion.  Existing OIG
providers with cost-sharing amounts owed for costly guidance makes clear that a providers non-routine,
drug therapies.  unadvertised waiver of coinsurance based on an
individualized, good faith assessment of a patients
financial need is permissible.  However, having
continued reviewed several other kinds of coinsurance support 
91 Appendix G
arrangements, OIG has determined that such arrange-
ments may pose a risk of abuse under the anti-kickback
statute and should be evaluated on a case-by-case
basis, such as under the advisory opinion procedures.
Modification of the ambulatory surgical center (ASC) OIG is considering this suggestion.
safe harbor to address protection of start-up multi-
specialty ASCs that otherwise comply with the current
safe harbor conditions.
Modification of the Medicare SELECT safe harbor to These suggestions require further study.  In September
cover (i) coinsurance waivers for inpatient services 2002, OIG issued a notice of proposed rulemaking to
negotiated between a hospital and an ERISA employee make certain modifications to the safe harbor.  The
welfare benefit plan that covers retirees and (ii) Part B public comments to that rulemaking are under review.
waivers for employer group plans.
New safe harbor for inducements offered to OIG is considering this suggestion.
beneficiaries that fit in an exception to the beneficiary
inducements statute at section 42 U.S.C. 1320a-
7a(a)(5).
Modification of the existing shared risk exception to OIG is considering this suggestion.
cover (i) second tier contractors of Federally-qualified
health centers (FQHCs) and (ii) the TriCare program.
Modification of the discount safe harbor to include a OIG is considering this suggestion.
discount obtained by a commercial health plan that
does not file claims with the Federal health care
programs, where the discount otherwise meets the safe
harbor conditions.
Modification of the managed care safe harbors at 42 OIG is not adopting this suggestion.  The issues raised
C.F.R. 1001.952(l) and (m) to cover coordinated care in the suggestion were considered in connection with
plans, private fee-for-service plans, and entities the interim final safe harbor for shared risk arrange-
contracting under risk-based demonstration authorities. ments.  Managed care arrangements that do not fit in
an existing safe harbor may pose a risk of abuse and
are best addressed on a case-by-case basis, such as
through the advisory opinion procedures. 
Modification of the safe harbor for waivers of OIG is not adopting this suggestion.  The arrangements
beneficiary coinsurance to cover routine waivers of described pose a risk of abuse under the anti-kickback
coinsurance for emergency ambulance services statute and should be evaluated on a case-by-case
reimbursed under the Medicare ambulance fee basis, such as under the advisory opinion procedures. 
schedule. Moreover, except in limited circumstances, the
suggestion appears contrary to the Medicare coverage
and payment rules for emergency ambulance services.
New safe harbor for transfers of remuneration between OIG is not adopting this suggestion.  The arrangements
entities under common ownership or control. described pose a risk of abuse under the anti-kickback
statute and should be evaluated on a case-by-case
basis, such as under the advisory opinion procedures. 
In addition, given the range of potential arrangements
covered by the suggestion, it would not be feasible to
craft an appropriate set of safeguards.
92 Appendix G
In addition to the proposals in the preceding table (some of which duplicate proposals from past
years), OIG has had under consideration a number of suggestions reported in prior years.  The following
table updates the status of those suggestions:
Proposal OIG Response
New safe harbor for de minimis gifts to beneficiaries OIG is not adopting this suggestion because of the risk
who refer new customers. of abuse, particularly in light of the statutory prohi-
bition against offering inducements to Medicare or
Medicaid beneficiaries in section 1128A(a)(5) of the
Social Security Act.
New safe harbor for certain fee-for-service OIG is developing a proposed rule on this suggestion.
arrangements between FQHCs  and other providers,
practitioners, and suppliers.
Modification of the existing safe harbors to conform OIG is considering this suggestion with respect to the
them to the final regulations under the physician self- group practice safe harbor.  With respect to other safe
referral statute published by CMS on January 4, 2001. harbors, the statutes generally serve somewhat
different purposes and conforming the safe harbors to
the self-referral exceptions may not be appropriate. 
OIG may consider making some conforming changes,
if appropriate, once the self-referral regulations are
completed in their entirety.
New safe harbors analogous to the new self-referral OIG is considering this suggestion. 
exceptions created by the above-referenced CMS
regulations (e.g., compliance training, incidental
benefits, non-monetary compensation).
New safe harbor for isolated transactions matching the OIG will consider this suggestion after CMS issues
exception in the physician self-referral statute. final self-referral regulations on the subject.
Modification of the existing shared risk exception to As noted in the preceding table, OIG is considering
cover second tier contractors of FQHCs. this suggestion.
Modification of the safe harbor for ASCs jointly OIG is considering this suggestion.
owned by hospitals and physicians to add conditions
under which a hospital would not be in a position to
make or influence referrals.
Modification of the ASC safe harbor to clarify whether OIG is considering this suggestion.
an ASC can require investors to comply with safe
harbor conditions.
Modification of the ASC safe harbor to clarify (i) the OIG is considering these suggestions.
use of pass-through entities to hold ownership
interests and (ii) the treatment of physician investors
who invest at different times.
New safe harbor for rural health networks operating This suggestion requires further study.
pursuant to the Medicare Rural Hospital Flexibility
Program.
93 Appendix G
New safe harbor for arrangements that comply with This suggestion requires further study.
section 513 of the IRS Code pertaining to the provision
of certain supporting goods and services by tax-exempt
hospitals to other tax-exempt hospitals. 
Modification of the discount safe harbor to clarify its This suggestion requires further study.
application to discounts applied to a manufacturers
full product line.
Modification of the discount safe harbors reporting This suggestion requires further study.
requirements. 
94 Appendix H
Performance Measures
Performance measures are used to evaluate the achievement of a program goal, such as the
efficiency of an immunization program measured by the number of inoculations provided per dollar of 
cost.  OIG has identified some items throughout this report as performance measures by following the
item with the symbol   .  In OIGs opinion, the audits, inspections and investigations identified with the
performance measure symbol offer management information about whether some aspect or all of the
programs or activities reviewed are achieving their missions and goals.  These proposals are provided to
management for their consideration as they develop their performance measures.  
The reports listed in each of the following sections warrant the performance measure symbol:
Centers for Medicare & Medicaid Services:
Nursing Home Deficiency Trends
Psychosocial Services in Nursing Facilities
Public Health Agencies:
Variation in Organ Donation Among Transplant Centers 
Financial Statement Audit
Administrations for Children and Families and on Aging:
State Ombudsman Data:  Nursing Home Complaints
Child Support Enforcement Customer Service
Foster Cares Use of Medicaid Costs
General Oversight:
Results Act
International Merchant Purchase Authorization Card Program 
95 96            Appendix I
                Office of Inspector General Components
Office of Audit Services (OAS)provides all auditing services for HHS, either through its
own resources or by overseeing audit work of others.  Audits examine the performance of
HHS programs and/or its grantees and contractors in carrying out their respective responsibilities
and are intended to provide independent assessments of HHS programs and operations in
order to reduce waste, abuse and mismanagement and to promote economy and efficiency
throughout the Department. 
Office of Investigations (OI)conducts criminal, civil and administrative investigations of
allegations of wrongdoing in HHS programs or to HHS beneficiaries.  Investigative efforts lead
to criminal convictions, civil judgements and settlements, administrative sanctions, and/or civil
monetary penalties.  OI serves as liaison to the Department of Justice on all matters relating to
investigations of HHS programs and personnel.  OI also oversees State Medicaid Fraud Control
Units that investigate and prosecute fraud and patient abuse in the Medicaid program.
Office of Evaluation & Inspections (OEI)conducts short-term management and program
evaluations that focus on issues of concern to the Department, the Congress and the public.  
OEI generally focuses on programs with significant expenditures of funds and services to
program beneficiaries or in which important management issues have surfaced.  The findings
and recommendations contained in the reports generate rapid, accurate, and up-to-date
information on the efficiency, vulnerability and effectiveness of departmental programs.
Office of Counsel to the Inspector General (OCIG)provides legal services to OIG,
rendering advice and opinions on HHS programs and operations, imposes program exclusions
and civil monetary penalties on health care providers and litigates those actions within the
Department.  OCIG also represents OIG in the global settlement of cases arising under the civil
  False Claims Act, develops and monitors corporate integrity agreements, develops compliance
program guidances, and renders advisory opinions on sanctions to the health care community.
Office of Management and Policy (OMP)provides mission support services to the IG and
other components.  OMP formulates and executes the budget, develops policy, disseminates OIG
information to the news media and public, liaises with the Department, Congress, and external
organizations and manages information technology resources.  OMP also conducts and
coordinates reviews of existing and proposed legislation and regulations to assess implications
and economic consequences for HHS programs and operations. 
97