Fiscal Year 2009 
Office of Inspector General 
Medicaid Integrity Report
 
 
 
 
March 2010 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Daniel R. Levinson 
OIG
 
Inspector General 
Department of Health & Human Services  _________________________________________________________________________________ 
 
A Message From the 
Office of Inspector General 
Introduction 
We are pleased to present the Fiscal Year 2009 Office of Inspector General Medicaid Integrity 
Report. 
The Deficit Reduction Act of 2005 (DRA) included several provisions that built on existing 
efforts to strengthen Medicaid program integrity.  Pursuant to the DRA, the Department of 
Health & Human Services (HHS) Office of Inspector General (OIG) annually reports on the 
use of funds appropriated to it under DRA section 6034 and the effectiveness of the use of 
such funds.  Accordingly, this report describes OIGs funding streams and highlights OIGs 
Medicaid related accomplishments for FY 2009.     
Federal and State Medicaid Integrity Partnership 
Medicaid, established under Title XIX of the Social Security Act, is a joint FederalState 
program that supports States coverage of medical care and other support services for 
designated categories of lowincome individuals.  For fiscal year (FY) 2009, Medicaid 
enrollment was estimated at 51.7 million beneficiaries, and total Federal and State Medicaid 
costs were approximately $380.9 billion, of which the Federal share was $250.9 billion.   
The Federal Government pays a share, known as the Federal Medical Assistance 
Percentage (FMAP), of each States Medicaid costs.  Because Medicaid is a matching 
program, improper payments by States to providers virtually always result in 
corresponding improper Federal payments, whether payments for medical services or for 
administrative cost reimbursement.  States have considerable flexibility in structuring their 
Medicaid programs within broad Federal guidelines governing eligibility, provider 
payment levels, and benefits.  As a result, Medicaid programs vary widely from State to 
State.  The Federal and State governments jointly monitor the integrity of the Medicaid 
program. 
Centers for Medicare & Medicaid Services (CMS).  HHSs CMS has a key role in Medicaid 
program integrity as the Federal program manager.  It is responsible for overseeing each 
States comprehensive State Medicaid Plan to ensure State compliance with Federal laws, 
regulations, and departmental policies, including the detection, development, and referral 
of suspected fraud cases.  CMS is required to review State Agency performance through 
onsite reviews and examination of case records.   
Medicaid State Agencies.  State Agencies are responsible for establishing policies, computer 
systems and edits to process Medicaid claims, and for conducting analyses of providers 
patterns of practice (datamining).  Federal regulations require State Agencies to conduct 
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FY 2009 Office of Inspector General Medicaid Integrity Report  i  _________________________________________________________________________________ 
 
preliminary investigations when they identify questionable practices or receive complaints 
of suspected Medicaid fraud or abuse.  Overpayments that are not the result of fraud 
generally remain in State Agencies jurisdiction for collection.     
Medicaid Fraud Control Units (MFCUs).  State MFCUs investigate and prosecute provider 
fraud and patient abuse and neglect.  They integrate the skills of criminal investigators, 
attorneys, and auditors to carry out their mission.  Fortyeight States and the District of 
Columbia have established MFCUs.  Most are in States Attorney General offices.  When the 
results of preliminary investigations by State Agencies present reason to believe that fraud 
has occurred, typically State Agencies must refer the matters to the States MFCUs for 
further investigation.   
Federal grants reimburse States for the operation of MFCUs at 90 percent of costs for the 
first 3 years after initial certification and 75 percent thereafter.  The Social Security Act, 
 1903(q)(6), requires that MFCUs be single identifiable entities of the State government and 
be certified annually by HHS as meeting Federal requirements, including location within 
State government, staffing, roles, and responsibilities.  The Secretary of HHS delegated to 
OIG the responsibility for administering the Federal grants for MFCUs operations.  OIGs 
responsibilities for oversight of the funding and operation standards of MFCUs include 
certification and recertification, monitoring their overall performance and productivity, and 
ensuring that they devote their fulltime efforts to Medicaidcovered health care fraud and 
patient abuse 
Office of Inspector General.  Protecting the integrity of all HHS programs, including 
Medicaid, is at the core of OIGs mission.  Accordingly, OIG initiates audits, evaluations, 
and investigations of the expenditure of Medicaid dollars and the operation of the 
Medicaid program as appropriate.  OIG frequently partners with CMS, State Agencies, 
MFCUs,  the National Association of MFCUs (NAMFCU), State and local law enforcement, 
the HHS Administration on Aging, State Long Term Care Ombudsmen, the FBI, and the 
Department of Justice (DOJ) on Medicaid integrity matters.  For example, OIG participates 
in joint investigations with MFCUs, particularly when Medicare is also involved. 
Types of Medicaid Improper Payments 
OIGs audit and evaluation reviews often reveal improper State and/or Federal 
Medicaid payments, which may arise for a number of reasons, including clerical errors, 
misinterpretations of rules, or poor record keeping.  Improper payments include 
overpayments and underpayments and are generally adjusted or collected 
administratively.  The following are common categories of improper payments. 
  Unsupported services.  Providers must maintain records that are sufficient 
to justify diagnoses, admissions, treatments performed, and continued care.  
When records are insufficient or missing, claims reviewers cannot determine 
whether services billed were actually provided to beneficiaries, the extent of the 
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FY 2009 Office of Inspector General Medicaid Integrity Report  ii  _________________________________________________________________________________ 
 
services, or their medical necessity.  An item or service that is not adequately 
documented should not be billed to Medicaid. 
  Medically Unnecessary Services.  The documentation in the medical records leads 
to an informed decision by a claims reviewer that the medical services or products 
received were not medically necessary.   
  Incorrect Coding.  Standard coding systems are used to bill State Medicaid 
programs for services provided.  In a coding review, reviewers determine whether 
the documentation submitted by providers supports a lower or higher 
reimbursement code than was actually submitted. 
  Noncovered Costs or Services.  These are costs or services that Medicaid will not 
reimburse because they do not meet the States reimbursement rules and 
regulations.  A Federal share would not be paid for such costs or services.    
  ThirdParty Liability.  Medicaid inappropriately pays claims, and is generally not 
reimbursed, for beneficiaries who have other sources of payment, such as private 
insurance. 
Types of Fraudulent Activities 
Some of the billings and related practices that are determined to be improper are 
also determined to be fraudulent.  Fraudulent behavior may arise, for example, when 
enrollment procedures for providers are inadequate, internal controls are deficient, 
payment rates are excessive (inviting fraudulent or abusive behavior), or when especially 
vulnerable beneficiaries can be exploited easily.  The types of fraudulent schemes in 
Medicaid in many ways mirror those of Medicare: 
  Billing for Services Not Provided.  This is one of the most common types of fraud.  
Examples include a provider who knowingly bills Medicaid for a treatment or 
procedure that was not actually performed, such as blood tests when no samples 
were drawn or xrays that were not taken. 
  False Cost Reports.  A nursing home owner or hospital administrator may 
intentionally include inappropriate expenses not related to patient care on cost 
reports submitted to Medicaid. 
  Illegal Remunerations (Kickbacks).   A provider (such as a nursing home operator) 
may conspire with another health care provider (such as a physician or ambulance 
company) to share a part of the monetary reimbursement the health care provider 
receives in exchange for the referral of patients.  Such kickbacks include not only 
cash, but vacation trips, automobiles, and other items of value.  The practice results 
in encouraging unnecessary tests and services to be performed for the purpose of 
generating additional income to the referring source and to the provider of the 
service.   
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FY 2009 Office of Inspector General Medicaid Integrity Report  iii  _________________________________________________________________________________ 
 
Scope of This Report 
While the responsibility for detecting improper payments and investigating fraud and 
abuse in the Medicaid program is shared between the Federal and State governments, this 
report focuses on findings from OIG reviews and legal and investigative activities and 
outcomes that derive wholly or in part from OIGs appropriated resources.  
Much of the information in this report and its appendixes was drawn from OIGs three core 
publications: 
  FY 2009:  Office of Inspector General Semiannual Report(s) to Congress 
  Office of Inspector General FY 2010 Work Plan 
  March 2010:  Compendium of Unimplemented Office of Inspector General 
Recommendations 
See also the State Medicaid Fraud Control Units Annual Report. 
 
The publications are available on OIGs Web site at: 
http://www.oig.hhs.gov/publications.asp 
 
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FY 2009 Office of Inspector General Medicaid Integrity Report  iv  _________________________________________________________________________________ 
 
Table of Contents 
 
Funding for Program Integrity.........................................................................................................1 
Heath Care Fraud and Abuse Control Program.......................................................................1 
Medicaid Integrity Program.........................................................................................................1 
Medicaid Fraud and Abuse Supplemental Appropriation......................................................2 
Allocation of Statutory Funding Streams...................................................................................2 
Overlap Among Oversight Activities.........................................................................................2 
Highlights of Findings From Audits and Evaluations..................................................................3 
Hospital Claims and Payments....................................................................................................3 
Federal Share of Inpatient Hospital Services Improperly Claimed at Enhanced Rate 
for Family Planning...................................................................................................................3 
Medicaid Funds Paid to Ineligible Indiana Psychiatric Hospital.......................................4 
No Accounting for How Two Pennsylvania Medical Schools Used Redirected 
Disproportionate Share Hospital Payments..........................................................................4 
Home, Community, and LongTerm Care.................................................................................4 
More Than 24 Hours in a Day Billed for Personal Care Services in Four States..............4 
Some New York City Personal Care Services Claims Did Not Meet Requirements 
for Payment................................................................................................................................5 
Ohio Paid Multiple Providers for Single Occurrences of the Provision of LongTerm
Care Services..............................................................................................................................5 
LongTermCare Cost Reimbursements to Utah Set Aside for Adjudication...................5 
Other Medicaid Services Claims..................................................................................................6 
Laboratory Services Fully Covered by Medicare but Also Paid by Medicaid..................6 
Georgia Improperly Claimed Federal Share for Excluded Services for Juvenile 
Inmates of Public Institutions..................................................................................................6 
Michigan Claimed Some Family Planning Services Twice.................................................6 
Federal Share of Clinics and Practitioners Services Improperly Claimed at 
Enhanced Rate for Family Planning Services........................................................................7 
Colorados Supplemental Mental Health Services Payments Found Unallowable.........7 
West Virginia Retroactive Claims for SchoolBased Services Not Exempt 
From 2Year Filing Period Rule...............................................................................................8 
Indiana Did Not Report $23.4 Million in Medicaid Overpayments...................................8 
Requirements for Targeted Case Management Services Claims Not Met........................8 
Medicaid Prescription Drug Programs.......................................................................................9 
Most Drug Categorizations Accurate, but Potential Problems Found..............................9 
Reviews Revealed Noncompliant Expenditures for Outpatient Prescription 
Drug Products............................................................................................................................9 
Medicare Part D and Medicaid Pharmacy Reimbursement..............................................11 
Amounts Compared for Selected Drugs..............................................................................11 
State Claims for Administrative Costs......................................................................................11 
New Mexico Claimed Enhanced Rate for Administrative Costs Improperly 
Allocated, Not Meeting Other Federal Requirements........................................................11 
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FY 2009 Office of Inspector General Medicaid Integrity Report  v  _________________________________________________________________________________ 
 
Some Indirect Administrative Costs Claimed by New York Lacked Supporting 
Documentation........................................................................................................................12 
Allowability of Connecticuts CommunityBased Administrative Cost Claims 
Uncertain..................................................................................................................................12 
Medicaid Administration...........................................................................................................12 
HHSs Calculations of Recovery Act Medicaid Funds Found Compliant......................12 
Survey of State Agencies Describes Safeguards, Investigative Activities for 
Nonemergency Medical Transportation Services...............................................................13 
Medicaid Statistical Information System Usefulness Limited by Missing 
Encounter Data........................................................................................................................14 
Medicaid Statistical Information System Data Found Inadequate for Detecting 
Medicaid Fraud, Waste, and Abuse......................................................................................14 
Gulf Coast HurricaneRelated Reviews....................................................................................14 
Medicaid State Agencies Uncompensated Care Claims Generally Compliant in One 
State, Mostly Unallowable in Another.................................................................................14 
Highlights of Legal and Investigative Activities.........................................................................16 
Advisory Opinions......................................................................................................................16 
Provider SelfDisclosure Protocol..............................................................................................17 
Program Exclusions.....................................................................................................................17 
Criminal and Civil Enforcement................................................................................................18 
Pharmaceutical Manufacturers and Distributors................................................................18 
Laboratories..............................................................................................................................20 
Nursing Homes........................................................................................................................21 
Durable Medical Equipment Suppliers................................................................................21 
Practitioners..............................................................................................................................22 
Medicaid Fraud Control Units...............................................................................................22 
Joint Federal and State Investigations..................................................................................22 
Conclusion.........................................................................................................................................24 
Appendix A:   Audit and Evaluation Reviews Completed in Fiscal Year 2009......................25 
Appendix B:   FY 2010 Work in Progress and New Starts..........................................................32 
Appendix C:   Opportunities for Medicaid  Cost Savings and Program Improvements.......39 
Appendix D:   Deficit Reduction Act Requirements...................................................................41 
Appendix E:   Acronyms and Abbreviations...............................................................................44 
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FY 2009 Office of Inspector General Medicaid Integrity Report  vi  _________________________________________________________________________________ 
 
Fiscal Year 2009 
Medicaid Integrity Report 
Funding for Program Integrity 
In fiscal year (FY) 2009, the Office of Inspector General (OIG) of the Department of Health 
& Human Services (HHS) received funding to oversee the integrity of Medicaid activities 
from three sources:1 the Health Care Fraud and Abuse (HCFAC) program, created by the 
Health Insurance Portability and Accountability Act of 1996 (HIPAA); the Medicaid 
Integrity Program (MIP), created by the Deficit Reduction Act of 2005 (DRA); and the 
Supplemental Appropriations Act of 2008. 
Heath Care Fraud and Abuse Control Program   
The HCFAC program was established by HIPAA to be under the joint direction of the 
Attorney General and the Secretary of HHS, acting through the Inspector General.  Funds 
are appropriated in amounts that the Secretary and Attorney General jointly certify as 
necessary to finance antifraud activities, up to ceilings fixed by the legislation.  Certain of 
these funds are, by law, set aside for OIG activities . . . with respect to Medicare and 
Medicaid.2  HIPAA also requires the Attorney General and the Secretary of HHS to submit 
a joint annual report to Congress identifying expenditures and accomplishments under the 
law (Social Security Act,  1817(k)(5)).  These reports are available on the Web sites of both 
agencies at:  http://oig.hhs.gov/reading/publications.html and  
http://www.usdoj.gov/dag/pubdoc.html.  
Since FY 1997, the HCFAC program has been the primary source of funding for Medicare 
and Medicaid fraud investigations and prosecutions by OIG and the Department of Justice 
(DOJ).  Beginning in FY 2009, OIG began receiving discretionary funding in support of 
HCFAC activities through an allocation adjustment.  Such adjustments are intended to 
provide additional administrative funding for current program integrity activities. 
Medicaid Integrity Program   
Section 6034 of the DRA established the MIP, through which OIG receives enhanced 
funding for fraud and abuse control activities with respect to the Medicaid program 
(section 6034(c)).  This funding was to be provided annually from FY 2006 though FY 2010 
in addition to OIGs HCFAC resources and is available until expended.  Specific DRA 
requirements that pertain to OIG are described in Appendix D. 
                                                      
1 Funding for Medicaid oversight appropriated to OIG by the American Recovery and Reinvestment Act of 2009 
(Recovery Act) is not included in this report. 
2 The Social Security Act,  1817(k)(3)(A).   
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FY 2009 Office of Inspector General Medicaid Integrity Report  1  _________________________________________________________________________________ 
 
Medicaid Fraud and Abuse Supplemental Appropriation 
The Supplemental Appropriations Act of 2008, P.L. No. 110252, provided additional 
funding to OIG to reduce fraud and abuse in the Medicaid program under Title XIX of the 
Social Security Act.  This funding, which was provided for FY 2009 in addition to other 
amounts appropriated for Medicaid oversight, is available until expended.  It is referred to 
in this report as Medicaid fraud and abuse (MFA) funding.   
Allocation of Statutory Funding Streams 
The table that follows illustrates OIGs allocation of statutory funding streams for Medicaid 
integrity oversight for FY 2005 through FY 2009. 
 
Allocation of Statutory Funding Streams for 
Medicaid Integrity Oversight, FY 2005  FY 2009 
(Dollars in Millions) 
 
Statutorily Mandated  Estimated  
Funding Provided to  Estimated OIG  Percentage of OIG 
OIG for Health Care  Obligations for  Estimated Total  Health Care 
Oversight  Medicaid Oversight  OIG Obligations  Oversight 
Fiscal  HIPAA/  MIP &  HIPAA/ MIP &  for Medicaid  Obligations for 
Year  HCFAC  MFA3  HCFAC  MFA4  Oversight   Medicaid Integrity 
2005  160    36.8    36.8  23 % 
2006  160  25  44.8    44.8  28 % 
2007  165.9  25  24.6  24.8  49.4  26 % 
2008  169.7  25  32.5  28.3  60.8  31 % 
2009  177.2  50  46.9  30.95  77.8  34 % 
Note:  Numbers are approximate because of rounding. 
The table illustrates that a sizable portion of OIGs HCFAC funds has been used for 
Medicaid oversight in recent years.   
Overlap Among Oversight Activities 
Because there is an overlap among the oversight activities funded by HCFAC, MIP, and 
other sources, OIG work relating to Medicaid may draw on funding from more than one 
source.  For investigations and subsequent prosecutions, it is particularly difficult 
                                                      
3 In FY 2009, OIG was appropriated $25 million for Medicaid oversight through the Supplemental 
Appropriations Act of 2008. 
4 OIG began FY 2007 with $25 million of unspent MIP funds that were appropriated during FY 2006.  
These funds are being used to fund OIGs continued Medicaid oversight from FY 2007 through FY 2010. 
5 In FY 2009, OIG received a 26percent increase in funding available for Medicare and Medicaid program 
integrity activities.  Because of this significant increase, and consistent with the purpose of the funding, OIG 
intends to manage oversight activities over multiple years.  In FY 2009, OIG obligated $9.4 million in MIP 
funding and $21.5 million in MFA funding. 
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FY 2009 Office of Inspector General Medicaid Integrity Report  2  _________________________________________________________________________________ 
 
(sometimes impossible) to accurately segregate enforcement activities by funding stream.  
For example, even if OIG conducts a given investigation exclusively with MIP funds, the 
prosecution of that case could draw upon DOJs HCFAC money and the matter would be 
reportable pursuant to the requirements of both the HCFAC and MIP programs.  An 
overlap could also occur when an investigation involves fraud in Medicaid and other 
Federal health care programs, such as Medicare, as is often the case.  For these reasons, this 
document does not artificially divide accomplishments between the funding sources; OIGs 
Medicaid successes are typically the result of the combined funding from available 
resources.   
In addition, OIGs audit, evaluation, and investigation work often requires more than 
1 year to yield results.  As a consequence, many of the accomplishments summarized in 
this document reflect the results of OIG work over several years that culminated in FY 2009.  
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Highlights of Findings From Audits and Evaluations 
OIGs audits and evaluations monitor payments, processes, program administration, and 
information systems.  In addition to identifying misspent funds, OIGs reviews are always 
intended to bring about program improvements and thus help reduce the cost of providing 
necessary services to Medicaid beneficiaries.  In addition to its audits, OIG has an 
evaluation function that seeks to find ways to improve the program.  These evaluations 
focus on whether the Medicaid program is managed properly and pays a fair price in the 
health care marketplace.  The following are highlights of the findings of OIGs audits and 
evaluations issued in FY 2009 and summarized in OIGs Semiannual Report(s) to Congress, 
which, along with the full text of the reports, are posted on OIGs Web site at 
http://www.oig.hhs.gov. 
Hospital Claims and Payments  
Hospitals  >  Inpatient Family Planning Services 
Federal Share of Inpatient Hospital Services Improperly Claimed at Enhanced 
Rate for Family Planning  
New York improperly claimed enhanced 90percent Federal reimbursement for inpatient 
family planning claims submitted by hospitals.  Of the 173 claims in our sample, 3 qualified 
as family planning services and could be claimed at the enhanced 90percent Federal 
reimbursement rate.  However, the remaining 170 claims could not be claimed as family 
planning services or could be claimed only in part as family planning services.  Based on 
our sample results, we estimated that the State received $2.6 million in unallowable Federal 
Medicaid reimbursement.  Review of Inpatient Hospital Claims Billed as Family Planning 
Services Under the New York State Medicaid Program.  (A020601007)  April 2009   
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FY 2009 Office of Inspector General Medicaid Integrity Report  3  _________________________________________________________________________________ 
 
Hospitals  >  Conditions of Participation Not Met   
Medicaid Funds Paid to Ineligible Indiana Psychiatric Hospital  
From July 1, 1996, through June 30, 2007, Indiana paid $26.2 million ($16.3 million Federal 
share) to a hospital that was not eligible to receive Medicaid payments for inpatient 
psychiatric services.  The hospital did not meet Federal Medicaid eligibility requirements 
because it did not demonstrate compliance with two special Medicare Conditions of 
Participation (CoP) requirements.  Review of Medicaid Participation Eligibility for One Indiana 
Stateowned Psychiatric Hospital for the Period July 1, 1996, Through June 30, 2007.   
(A050700076)  March 2009 
Hospitals  >  Program Compliance Could Not Be Determined 
No Accounting for How Two Pennsylvania Medical Schools Used Redirected 
Disproportionate Share Hospital Payments  
For State FYs 20052006 and 20062007, we reviewed whether three hospitals associated 
with universities in Pennsylvania retained Medicaid disproportionate share hospital (DSH) 
payments that are authorized by the Centers for Medicare & Medicaid Services CMS to 
ensure that services are provided to the medical assistance population and help offset 
medical education costs incurred.  We determined that two of the three hospitals did not 
retain their DSH payments but instead redirected payments totaling $35.1 million (Federal 
share) to their university medical schools.  Because the two hospitals did not require the 
medical schools to account for how they used the funds, we could not determine whether 
the schools used the DSH funds in compliance with the State Plan Amendments.  Review of 
State Plan Amendments Authorizing Disproportionate Share Hospital Payments by Pennsylvania 
to Hospitals of StateRelated Universities.  (A030700222)  February 2009 
Home, Community, and LongTerm Care 
Personal Care Services  >  Billing Practices Create Vulnerabilities   
More Than 24 Hours in a Day Billed for Personal Care Services in Four States 
In our review of Medicaid payments for personal care services (PCS) made by State 
Medicaid programs from October 1 through December 31, 2005, we found that 4 of 5 States 
paid 871 claims to providers that had billed for more than 24 hours of PCS in a day.  PCS
such as dressing, bathing, cooking, and light housekeepinghelp beneficiaries stay in their 
homes rather than receive constant care in more expensive institutional settings.  A related 
OIG report issued in August 2008 focused on Medicaid payments for beneficiaries with 
overlapping institutional and PCS claims.  Additional findings of this review included the 
following:  (1) Medicaid programs in all 5 States paid 2,324 PCS claims, totaling $3 million, 
which were associated with billings of between 16 and 24 hours of services per day, and 
(2) 3 State Medicaid programs allowed providers to bill for PCS in date ranges that 
included days on which no services were provided, a practice that makes it difficult to 
identify the number of PCS hours billed on any given day in a date range.  MedicaidFunded 
Personal Care Services in Excess of 24 Hours per Day.  (OEI070600621)  October 2008 
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FY 2009 Office of Inspector General Medicaid Integrity Report  4  _________________________________________________________________________________ 
 
Personal Care Services  >  Federal and State Program Requirements  
Some New York City Personal Care Services Claims Did Not Meet Requirements 
for Payment 
New York State improperly claimed Federal Medicaid reimbursement for some personal 
care claims submitted by providers in New York City during calendar years (CY) 2004 
through 2006.  Of the 100 claims in our random sample, 80 complied with Federal and State 
requirements but 18 did not.  We could not determine whether the two remaining claims, 
which involved services under the States Consumer Directed Personal Assistance Program 
(CDPAP), complied with Federal and State requirements.  Based on our sample results, we 
estimated that the State improperly claimed $275.3 million in Federal Medicaid 
reimbursement during the audit period.  Review of Medicaid Personal Care Services Claims 
Made by Providers in New York City.  (A020701054)  June 2009 
LongTerm Care  >  State Controls, Policies, Procedures Caused Overpayments 
Ohio Paid Multiple Providers for Single Occurrences of the Provision of Long
TermCare Services 
In our review of Ohios Medicaid claims for payments to longtermcare (LTC) providers, 
we determined that the State overpaid more than $18 million ($10.5 million Federal share) 
from FYs 19992005 for LTC services claimed by more than one provider for the same 
services to the same beneficiary on the same date.  As of the start of our audit in July 2007, 
the State had reported and refunded $8.4 million ($4.9 million Federal share) of the 
unallowable payments through adjustments, decreasing its Medicaid claims for prior 
quarters on its report to CMS for the quarter ended June 30, 2005.  However, the State had 
not reported and refunded $9.6 million ($5.6 million Federal share).  Review of Ohio Medicaid 
LongTermCare Payments to Two Providers for the Same Beneficiaries for the Same Dates of 
Services From October 1, 1998, Through September 30, 2005.  (A050700074)  October 2008 
LongTerm Care  >  Accuracy of Federal Share Could Not Be Determined   
LongTermCare Cost Reimbursements to Utah Set Aside for Adjudication 
Utah did not ensure that payments made under nonrisk contracts for LTC services were 
equal to or less than the upper payment limits (UPL).  Under a nonrisk contract, the 
contractor (1) is not at financial risk for changes in utilization or for service costs incurred 
that are equal to or less than the upper payment limits specified in Federal regulations and 
(2) may be reimbursed by the State for the incurred costs, subject to specified limits.  
Because the State could not ensure that the costs claimed for LTC services were equal to or 
less than UPLs, we were unable to express an opinion on the $27.4 million of Federal 
reimbursement that the State received for the costs of LTC services from July 1, 2000, 
through December 31, 2005.  Therefore, we set aside these costs for adjudication by CMS.  
Review of the LongTerm Care, Managed Care Program Costs Claimed by the Utah Department of 
Health.  (A070802719)  May  2009 
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FY 2009 Office of Inspector General Medicaid Integrity Report  5  _________________________________________________________________________________ 
 
Other Medicaid Services Claims  
Laboratory Services  >  Potential Improper Payments   
Laboratory Services Fully Covered by Medicare but Also Paid by Medicaid 
We determined that Medicaid programs in 8 of 11 selected States spent a total of 
$1.3 million in potential improper payments for clinical diagnostic laboratory services that 
were provided on an assignmentrelated basis (i.e., Medicare payment was accepted as 
payment in full) to dual eligibles in FYs 2005 and 2006.  Dual eligibles are beneficiaries who 
are enrolled in Medicare Part A and/or Part B and are also entitled to some Medicaid 
benefits.  State Medicaid programs should not pay for any portion of outpatient clinical 
diagnostic laboratory services that were provided on an assignmentrelated basis to dual 
eligibles who are enrolled in Medicare Part B.  Potential Improper Medicaid Payments for 
Outpatient Clinical Diagnostic Laboratory Services for DualEligible Beneficiaries.   
(OEI040700340)  April 2009 
Inmates of Public Institutions  >  Services  Excluded From Federal Share 
Georgia Improperly Claimed Federal Share for Excluded Services for Juvenile 
Inmates of Public Institutions 
For Federal FYs 2003 and 2004, the Georgia Medicaid agency inappropriately claimed 
$3.8 million ($2.3 million Federal share) in costs relating to noninpatient medical services 
provided to juvenile inmates of public institutions because neither the Georgia Department 
of Juvenile Justice nor the Medicaid agency had adequate controls to ensure that those 
services were excluded from Federal financial participation.  Review of Medicaid Services to 
Incarcerated Juveniles in the State of Georgia for Federal Fiscal Years 2003 and 2004.   
(A040600026)  May 2009 
Family Planning Services  >  System Error Caused Duplicate Payments 
Michigan Claimed Some Family Planning Services Twice 
For FYs 2006 and 2007, Michigan claimed and received $1.1 million ($1 million Federal 
share) in unallowable reimbursement for family planning services that it claimed more 
than once.  Our review showed that some services were claimed twice on behalf of the 
same beneficiaries on the same dates of service.  The State reported the claims twice 
because the computer system that it used to report family planning services 
inappropriately compiled the same claim data from a report that identified family planning 
services for all places of service and another report that identified services only at family 
planning clinics.  Family Planning Services Claimed Twice in Michigan for October 1, 2005, 
Through September 30, 2007.  (A050800064)  June 2009 
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FY 2009 Office of Inspector General Medicaid Integrity Report  6  _________________________________________________________________________________ 
 
Family Planning Services  >  Services Not Eligible for Enhanced Rate 
Federal Share of Clinics and Practitioners Services Improperly Claimed at 
Enhanced Rate for Family Planning Services  
In our review of New Yorks claims for Federal Medicaid reimbursement for family 
planning services from April 2003 through March 2007, we estimated that the State 
improperly received $17.2 million for improperly claiming enhanced 90percent Federal 
reimbursement.  The rates for the Federal share of the Medicaid program were 
52.95 percent and 50 percent for New York during our audit period.  Under Federal law, a 
State may provide family planning services and supplies to individuals of childbearing age 
who are eligible under the State Medicaid plan and receive enhanced 90percent Federal 
reimbursement for items and procedures that are clearly furnished or provided for family 
planning purposes.   
Our findings included the following:  (1) of our 119 sampled claims, 17 qualified as family 
planning services that were eligible for enhanced 90percent Federal reimbursement; (2) of 
the 102 claims that did not qualify for the 90percent Federal reimbursement rate, 33 were 
not eligible for any Federal Medicaid reimbursement, including 27 claims for abortion 
procedures, and 63 were eligible for reimbursement at the applicable matching rate of 50 or 
52.95 percent; and (3) the remaining six claims were unallowable for reasons including lack 
of adequate or required documentation.  Review of Clinic and Practitioner Claims Billed as 
Family Planning Services Under the New York State Medicaid Program.  (A020701037)  
November 2008 
Mental Health Services  >  Contract, Documentation Errors 
Colorados Supplemental Mental Health Services Payments Found Unallowable 
In our review of Colorados supplemental Medicaid payments made from 20012004 for 
mental health services provided to foster care children in child placement agencies, we 
determined that these payments were not fully consistent with Federal and State 
requirements.  Because of unanticipated stresses on Medicaid funding for these services, 
the State began making supplemental payments (i.e., payments in addition to the monthly 
capitation payments) to its contracted mental health assessment and service agencies 
(MHASA) in 2001.  Of the $23 million ($11.7 million Federal share) in supplemental 
payments, $3.3 million Federal share was unallowable because the State had not obtained, 
as required, CMSs approval of contracts covering the supplemental payments for a portion 
of the audit period.  In addition, the State did not provide documentation that the 
remaining $8.4 million Federal share in supplemental payments had been removed from 
the capitation payments that the State made to MHASAs.  Review of Colorado Medicaid 
Mental Health Capitation and Managed Care Program.  (A070604067)  October 2008 
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FY 2009 Office of Inspector General Medicaid Integrity Report  7  _________________________________________________________________________________ 
 
SchoolBased Services  >  Timely Filing Requirements Not Met 
West Virginia Retroactive Claims for SchoolBased Services Not Exempt 
From 2Year Filing Period Rule 
West Virginia did not fully comply with Federal requirements for an exemption to the 
2year limit for filing retroactive claims for Medicaid schoolbased services.  A portion of 
the States retroactive claim, $4.1 million Federal share, fell outside the required 2year 
filing period because it related to expenditures made by the State in the quarters ending 
December 31, 2000, through June 30, 2001.  Of this amount, $2.3 million Federal share 
related to new cost components that were not in the original rates used to calculate the 
claims for schoolbased services and did not reflect the settlement of previously identified 
costs.  As a result, the $2.3 million Federal share was not exempt from the 2year time limit 
and was unallowable.  The remaining $1.8 million Federal share met the requirements for 
an exemption because it reflected the settlement of previously identified salary and fringe 
benefit costs.  Review of Timeliness of West Virginias Retroactive Claims for Medicaid School
Based Services.  (A030600201)  April 2009 
Rehabilitation Option Services  >  Overpayments, Interest Not Reported to CMS 
Indiana Did Not Report $23.4 Million in Medicaid Overpayments  
In our review of Indianas Medicaid Rehabilitation Option Program for FYs 20002005, we 
found that the State did not report overpayments of $23.4 million ($14.5 million Federal 
share) and interest earned on the overpayments totaling $130,000 ($82,000 Federal share) in 
accordance with Federal requirements.  States are required to refund the Federal share of 
Medicaid overpayments and to report to CMS any interest earned on overpayments each 
quarter.  Review of Indianas Reporting Fund Recoveries for the Medicaid Rehabilitation Option 
Program on the Form CMS64 for Fiscal Years 2000 to 2005.  (A050700072)  October 2008 
Targeted Case Management Services  >  Claims Unsupported, Insufficiently Documented 
Requirements for Targeted Case Management Services Claims Not Met  
Pennsylvanias claims for targeted case management (TCM) services did not always 
comply with Federal and State requirements.  Federal law authorizes State Medicaid 
agencies to provide case management services to Medicaid beneficiaries.  These services are 
referred to as TCM when they are furnished to specific populations in a State.  Based on our 
review of 375 claims in 100 sampled beneficiarymonths, 36 claims included in 
15 beneficiarymonths were unallowable because the services were unsupported by case 
records or insufficiently documented.  We estimated that as a result, during CYs 2003 
through 2005, the State claimed $11.9 million ($6.5 million Federal share) in unallowable 
TCM costs.  Review of Pennsylvanias Medicaid Payments for Targeted Case Management Services 
for Calendar Years 2003 Through 2005.  (A030600202)  September 2009 
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FY 2009 Office of Inspector General Medicaid Integrity Report  8  _________________________________________________________________________________ 
 
Medicaid Prescription Drug Programs 
Prescription Drugs  >  Drugs Not FDA Approved, Not Correct in AMP file  
Most Drug Categorizations Accurate, but Potential Problems Found 
We found that manufacturers typically categorize their drugs in the average manufacturer 
price (AMP) file in the same manner as national compendia.  However, our manual review 
of drug categorizations identified (1) a potential problem with Medicaid payment for drugs 
that do not have the Food and Drug Administrations (FDA) approval and (2) instances in 
which certain drugs appear to have been categorized incorrectly in the AMP file, 
potentially resulting in a loss of rebates for States.  Accuracy of Drug Categorizations for 
Medicaid Rebates.  (OEI030800300)  July 2009 
Prescription Drugs  >  Program Requirements Not Met 
Reviews Revealed Noncompliant Expenditures for Outpatient Prescription 
Drug Products  
In separate reviews of Medicaid outpatient prescription drug expenditures, we found that 
States had claimed Federal reimbursement for expenditures that did not fully comply with 
Federal requirements.  Medicaid generally covers outpatient drug products if the drug 
manufacturers have rebate agreements with CMS and pay rebates to the States.  Under the 
Medicaid drug rebate program, CMS provides the States with a quarterly Medicaid drug 
tape, which lists all covered outpatient drug products; indicates each drug products 
termination date, if applicable; and specifies whether FDA has determined the drug 
product to be less than effective.  CMS guidance instructs the States to use the tape to verify 
coverage of drug products for which they claim reimbursement.  Our findings were as 
follows: 
  California  For FYs 2004 and 2005, California claimed $24 million Federal share for 
unallowable Medicaid expenditures, which included $21 million in unsupported 
drug expenditures and $3 million in drug expenditures that were not eligible for 
Medicaid coverage because the drugs were dispensed after their termination dates.  
The State also claimed $10.9 million Federal share for drug products not listed on 
the quarterly drug tapes for which the State did not provide conclusive evidence 
that the drugs were eligible for Medicaid coverage.  Review of Medicaid Outpatient 
Drug Expenditures in California for Fiscal Years 2004 and 2005.  (A090700039)   
April 2009 
  Michigan  Michigan claimed Medicaid reimbursement for $106,000 Federal share 
in FY 2005 for outpatient expenditures for drug products that were not eligible for 
Medicaid coverage because they were dispensed after their termination dates or 
were less than effective.  In addition, the State claimed $2.9 million Federal share for 
drug products that were not listed on the CMS quarterly drug tapes.  Because the 
State did not verify whether the drugs missing from the tapes were eligible for 
Medicaid coverage, these drug expenditures may not be allowable for Medicaid 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  9  _________________________________________________________________________________ 
 
reimbursement.  Review of Medicaid Outpatient Expenditures in Michigan for the Period 
October 1, 2004, Through September 30, 2005.  (A050800048)  June 2009 
  New York  New York State claimed Medicaid reimbursement for $1.2 million 
Federal share in FYs 2004 and 2005 for outpatient expenditures for drug products 
that were not eligible for Medicaid coverage because they were dispensed after their 
termination dates, were less than effective, or were inadequately documented.  The 
State also claimed $16.2 million Federal share for drug products that were not listed 
on the CMS quarterly drug tapes.  Because the State did not verify whether the 
drugs missing from the tapes were eligible for Medicaid coverage, these drug 
expenditures may not be allowable for Medicaid reimbursement.  Review of Medicaid 
Outpatient Drug Expenditures in the State of New York for the Period October 1, 2003, 
Through September 30, 2005.   
(A020701028)  May 2009 
  Tennessee  In our review of Tennessees claims for reimbursement of Medicaid 
outpatient drug expenditures for FYs 20042005, we determined that of the 
$4.5 billion ($3 billion Federal share) claimed, $8 million Federal share represented 
expenditures for drug products that were not eligible for Medicaid coverage 
because their termination dates had passed or because the drugs were determined 
to be less than effective.  An additional $13.2 million Federal share represented 
expenditures for drug products that were not listed on CMSs quarterly drug tapes.  
Because the State did not verify that the drugs missing from the tapes were eligible 
for Medicaid coverage, some of the expenditures may not have been allowable for 
Medicaid reimbursement.  Review of Medicaid Outpatient Drug Expenditures in 
Tennessee for the Period October 1, 2003, Through September 30, 2005.  (A040700027)  
November 2008 
  Pennsylvania  Our review of Pennsylvanias claims for reimbursement of 
Medicaid outpatient drug expenditures for FYs 2004 and 2005 found that the State 
had not fully complied with Federal requirements.  Of the States $1.96 billion 
($1.1 billion Federal share) in Medicaid outpatient claims, $4.4 million Federal share 
represented expenditures for drug products that were not eligible for Medicaid 
coverage because, for example, the drugs were terminated or the drug expenditures 
were not supported by adequate documentation.  An additional $5.9 million Federal 
share represented expenditures for drug products that were not listed on the 
quarterly drug tapes.  Because the State had not verified whether these drugs were 
eligible for Medicaid coverage, the drug expenditures may not have been allowable 
for Medicaid reimbursement.  Review of Medicaid Outpatient Drug Expenditures in 
Pennsylvania for the Period October 1, 2003, Through September 30, 2005.   
(A030700203)  October 2008 
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FY 2009 Office of Inspector General Medicaid Integrity Report  10  _________________________________________________________________________________ 
 
Prescription Drugs  >  Pharmacy Reimbursement 
Medicare Part D and Medicaid Pharmacy Reimbursement 
Amounts Compared for Selected Drugs 
In our comparison of Part D and Medicaid pharmacy reimbursement for 40 singlesource 
and 39 multiplesource drugs in the third and fourth quarters of 2006, we found that Part D 
and Medicaid pharmacy reimbursement amounts for most of the singlesource drugs that 
we reviewed were similar.  However, Medicaid reimbursement amounts for the multiple
source drugs that we reviewed were typically higher than the Part D amounts.  Our study 
compared only the amounts reimbursed to pharmacies by Part D and Medicaid; it did not 
compare total program expenditures, nor did it examine the impact of rebates or post
pointofsale price concessions. 
For the five States selected for our review, we found that the Medicaid and Part D 
ingredient cost reimbursement amounts were similar for singlesource drugs.  In all five 
States, the average Medicaid ingredient costs exceeded the average Part D ingredient costs 
for most multiplesource drugs under review.  In addition, Medicaid dispensing fees were 
substantially higher than average Part D dispensing fees for both the singlesource and 
multiplesource drugs under review.   
Congress took action to reduce multiplesource drug prices in the Medicaid program 
through provisions in the DRA.  These provisions would have expanded the number of 
drugs subject to Federal upper limits (FUL) and reduced the FUL amounts for these 
multiplesource drugs.  These provisions would have also granted States access to AMP 
data, which, in turn, would have allowed States to base Medicaid drug reimbursement on 
AMPs.  However, a Federal judge issued a preliminary injunction to prevent the 
implementation of AMPbased FULs and AMPbased Medicaid reimbursement amounts.  
Therefore, Federal upper limits and Medicaid reimbursement amounts are still based on 
published prices, which previous OIG work found to result in inflated payments for 
multiplesource drugs.  CMS agreed with the methodology and concurred with the 
findings in the report.  (OEI030700350)  February 2009 
State Claims for Administrative Costs 
Administrative Costs  >  Multiple Issues  
New Mexico Claimed Enhanced Rate for Administrative Costs Improperly 
Allocated, Not Meeting Other Federal Requirements 
In our review of New Mexicos claimed Medicaid administrative costs for the quarter 
ending September 30, 2004, we found that the State claimed $1.5 million ($1.1 million 
Federal share) of unallowable costs consisting of $1.1 million ($883,000 Federal share) for 
costs claimed because of errors in compiling the Form CMS64 and $374,000 ($187,000 
Federal share) resulting from errors in the random moment timestudy base that was used 
to allocate eligibility fieldworker costs.  The State also claimed $509,000 at unallowable 
enhanced Federal funding rates.  Although these costs were eligible for Federal 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  11  _________________________________________________________________________________ 
 
reimbursement at the standard 50percent Federal share rate, they did not meet the 
guidelines for a 90percent enhanced Federal share rate.  Therefore, the State improperly 
received $128,000 in enhanced funding.  Also, we could not determine what portion of 
$772,000 ($386,000 Federal share) in salary costs for medical assistance workers and 
temporary assistance for needy families (TANF) and what portion of $8.5 million ($6.4 
million Federal share) in TANF transition costs were allowable because these costs 
benefited other programs.  Review of New Mexicos Medicaid Administrative Costs for the 
Quarter Ended September 30, 2004.  (A060700072)  December 2008 
Administrative Costs  >  Calculations Undocumented, Not Reviewed 
Some Indirect Administrative Costs Claimed by New York Lacked Supporting 
Documentation  
The New York Office of Mental Retardation and Developmental Disabilities (OMRDD) did 
not maintain documentation to support its indirect administrative cost rate calculations.  
The New York State Department of Health (DOH) did not review OMRDDs administrative 
costs before claiming them on the Form CMS64.  As a result, $8.1 million ($4 million 
Federal share) of the $9.7 million ($4.8 million Federal share) in indirect administrative 
costs that DOH claimed from January 1, 2003, through June 30, 2006, was unallowable.  
Review of Medicaid Indirect Costs Submitted by the New York State Department of Health on 
Behalf of the Office of Mental Retardation and Developmental Disabilities.  (A020601028)  
March 2009 
Administrative Costs  >  Deviations From Acceptable Practices, Documentation Issues 
Allowability of Connecticuts CommunityBased Administrative Cost Claims 
Uncertain 
In this CMSrequested review of Connecticuts claims for communitybased Medicaid 
administrative costs for State FY 2004, we found that the States $9.3 million claim may not 
have fully complied with Federal requirements.  The State claimed reimbursement from 
CMS for administrative case management activities provided by contracted organizations 
that provide mental health and related services.  Because the State made omissions and 
deviated from acceptable practices when calculating its claim and was unable to provide 
adequate documentation, we were unable to express an opinion on the claims allowability.  
Review of Connecticuts Community Based Medicaid Administrative Claim for State Fiscal Year 
2004.  (A010600008)  February 2009 
Medicaid Administration 
Recovery Act Funds  >  Calculations in Accordance With Law 
HHSs Calculations of Recovery Act Medicaid Funds Found Compliant 
In two reviews during this semiannual period, we evaluated HHSs compliance with 
certain provisions of the Recovery Act, which provides fiscal relief to States to protect and 
maintain State Medicaid programs in a period of economic downturn.  For the recession 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  12  _________________________________________________________________________________ 
 
adjustment period (October 1, 2008, through December 31, 2010), the Recovery Act 
provides $87 billion in additional Medicaid funding based on temporary increases in States 
Federal Medical Assistance Percentages (FMAP),  which vary depending on States relative 
per capita incomes.   
  The first review found that the Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) calculated the temporary FMAP increases for the first 2 quarters 
of FY 2009 for the 50 States and the District of Columbia in accordance with the 
Recovery Act.  ASPE provided these FMAP increases to CMS for use in determining 
the amount of Federal funds to award to States through the Medicaid grant process.  
Review of the Calculations of Temporary Increases in Federal Medical Assistance 
Percentages Under the American Recovery and Reinvestment Act.  (A090900075)  
May 2009 
  The second review found that for the first two quarters of FY 2009, CMS calculated 
the additional Medicaid funding awarded under the Recovery Act in accordance 
with the Social Security Act and the Recovery Act.  Based on its calculations, CMS 
made available to States about $15.2 billion for the first two quarters of FY 2009.  
Review of the Calculation of Additional Medicaid Funding Awarded Under the American 
Recovery and Reinvestment Act.  (A090900080)   
July 2009 
Program Integrity  >  Nonemergency Medical Transportation Services  
Survey of State Agencies Describes Safeguards, Investigative Activities for 
Nonemergency Medical Transportation Services   
In a survey of State Medicaid Agencies, we found that States concentrate their Medicaid 
nonemergency medical transportation (NEMT) safeguard activities on screening providers, 
requiring prior approval for services, and implementing methods to prevent and detect 
improper payments.  If a State detects evidence of potential fraud and abuse, it must refer 
those cases to the State Medicaid Fraud Control Unit (MFCU) or other law enforcement 
agency, such as a local district attorney, for investigation.  OIG also found that State 
MFCUs investigated 509 NEMT fraud and abuse cases from 2004 to 2006, with the most 
common types involving billing for services not rendered, unspecified overbilling, and 
upcoding.  Of the 509 cases reported by State MFCUs, 73 percent were closed and the 
remaining 27 percent were open at the time the State MFCUs submitted data to OIG during 
the second half of 2007.  Among the closed cases, 40 percent were dismissed because the 
allegations were unsubstantiated after investigation and another 18 percent were 
investigated and closed without prosecution.  Twelve percent of closed cases resulted in 
criminal convictions, and parties agreed to settlements in another 10 percent of closed 
cases.  Fraud and Abuse Safeguards for State Medicaid Nonemergency Medical Transportation 
Services.  (OEI060700320)  May 2009 
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FY 2009 Office of Inspector General Medicaid Integrity Report  13  _________________________________________________________________________________ 
 
Medicaid Data Systems  >  Data Requirements Not Enforced 
Medicaid Statistical Information System Usefulness Limited by Missing 
Encounter Data 
We found that all 40 States with capitated Medicaid managed care collect encounter data 
from managed care organizations (MCO).  CMS guidance states that the Medicaid 
Statistical Information System (MSIS) must include encounter data to be representative of 
Medicaid beneficiaries because over 65 percent of Medicaid beneficiaries receive all or part 
of their health care services through Medicaid managed care.  However, although all States 
with Medicaid managed care are collecting encounter data from MCOs, CMS accepted 
MSIS submissions without encounter data from 15 States.  The usefulness of the MSIS is 
limited by the absence of encounter data, and CMS staff members indicated that encounter 
data are needed to measure what Medicaid is paying for.  Medicaid Managed Care Encounter 
Data:  Collection and Use. (OEI070600540)  May 2009 
Medicaid Data Systems  >  Data Not Timely, Accurate, or Comprehensive   
Medicaid Statistical Information System Data Found Inadequate for Detecting 
Medicaid Fraud, Waste, and Abuse 
We determined that the MSIS data were not timely, accurate, or comprehensive for 
detection of fraud, waste, and abuse.  The MSIS is the only source of nationwide Medicaid 
claims and beneficiary eligibility information.  CMS collects the MSIS data directly from 
States to, among other things, assist in detecting fraud, waste, and abuse in the Medicaid 
program.  We determined that during FYs 2004 through 2006, the MSIS data were an 
average of 1.5 years old when they were released to all users.  In addition, CMS did not 
fully disclose or document information about the accuracy of MSIS data.  As of June 2009, 
the MSIS had not captured many of the data elements that can assist in fraud, waste, and 
abuse detection.  Our results indicate opportunities for States and CMS to reduce the 
timeframes for file submission and validation, respectively.  Opportunities exist for CMS to 
improve the documentation and disclosure of error tolerance adjustments and expand State 
Medicaid data collection and reporting to assist in fraud, waste, and abuse detection.  MSIS 
Data Usefulness for Detecting Fraud, Waste, and Abuse.  (OEI040700240)  August 2009  
Gulf Coast HurricaneRelated Reviews  
HurricaneRelated Funding  >  State Agency Administration  
Medicaid State Agencies Uncompensated Care Claims Generally Compliant in 
One State, Mostly Unallowable in Another  
Pursuant to the Social Security Act,  1115, CMS authorized certain States to operate an 
uncompensated care pool (UCCP) to reimburse providers for medically necessary services 
provided to Hurricane Katrina evacuees and affected individuals and to Hurricane Rita 
evacuees without other coverage.  We evaluated UCCP reimbursement in two States. 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  14  _________________________________________________________________________________ 
 
  Alabama  For services supplied through January 31, 2006, by five providers that 
received high UCCP reimbursement, the State generally claimed reimbursement in 
accordance with the approved section 1115 demonstration and UCCP plan.  
However, we found that nine claims totaling $27,000 were unallowable because the 
individuals who received the services were not from an area affected by Hurricane 
Katrina or Rita, had health care coverage under other programs, or did not provide 
addresses that could be used to establish eligibility.  One other claim totaling 
$16,000 was allowable as a UCCP claim, but the State inappropriately used this 
claim in its Medicaid DSH calculation.  Allowability of Alabamas Hurricane Katrina
Related Uncompensated Care Claims.  (A040803040)  March 2009  
  Louisiana  Louisiana did not always claim reimbursement for services provided 
by a hospital in accordance with Federal and State laws and regulations or with the 
approved provisions of the UCCP plan.  Of the $8.3 million in costs claimed as of 
December 31, 2006, for services provided by the hospital, $7.7 million was 
unallowable.  The State claimed the unallowable costs because it (1) did not have 
procedures to ensure that it claimed uncompensated care costs only for services 
covered under the Medicaid plan,  (2) did not instruct the hospital to analyze its 
uncompensated care claims to determine whether payments had been received 
from other sources, (3) relied on the hospital to verify that the costs claimed were 
based on actual inpatient days, and (4) did not have procedures to ensure that it 
identified all duplicate claims.  Review of Southeast Louisiana Hospitals Hurricane
Related Uncompensated Care Claims.  (A060800023)  July 2009 
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FY 2009 Office of Inspector General Medicaid Integrity Report  15  _________________________________________________________________________________ 
 
Highlights of Legal and Investigative Activities 
 
In addition to conducting audits and evaluations of Medicaid, OIG investigates allegations 
of criminal and civil wrongdoing in Medicaid and, in conjunction with DOJ and others, 
conducts administrative enforcement and litigation and provides technical support for such 
efforts.  OIGs enforcement work and industry guidance are often designed to have broad 
impact on Federal health care programs.  In large part, OIGs industry outreach and 
enforcement efforts affect other health care programs as well as Medicaid.  The following 
table presents a summary of OIGs investigative, enforcement, and industry outreach 
activities during FY 2009 related to Medicaid.   
 
OIGs MedicaidRelated Investigations and Legal Services in FY 2009 
 
OIG Activity Area6  Number 
Enforcement    
Medicaid Cases Worked  1,390 
Joint Investigations Conducted With State MFCUs  987 
Total Medicaid Cases Opened  511 
Criminal Convictions  222 
Civil Actions7  103 
Program Exclusions  Imposed  2,556 
Program Exclusions  Appeals Filed  74 
Civil Monetary Penalty Actions  25 
Emergency Medical Treatment and Labor Act 
6 
Actions (aka Patient Dumping) 
Corporate Integrity Agreements  New  42 
Corporate Integrity Agreements  Monitored  408 
Outreach  
Advisory Opinions  24 
Advisory Opinions 
In accordance with section 205 of the HIPAA, OIG, in consultation with DOJ, issues 
advisory opinions to outside parties regarding the interpretation and applicability of 
certain statutes relating to Federal health care programs.  OIG provides casespecific formal 
guidance on the application of the antikickback statute and safe harbor provisions and 
other OIG health care fraud and abuse sanctions.  OIG advisory opinions for Medicare and 
Medicaid are available at:  http://oig.hhs.gov/fraud/advisoryopinions.asp. 
                                                      
6 Matters listed here are not necessarily Medicaid specific.  Many also involve fraud against other health care 
programs. 
7 The category Civil Actions does not include civil monetary penalty (CMP) actions. 
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FY 2009 Office of Inspector General Medicaid Integrity Report  16  _________________________________________________________________________________ 
 
Provider SelfDisclosure Protocol 
OIG makes available comprehensive guidelines describing the process for providers to 
voluntarily submit to OIG selfdisclosures of fraud, waste, or abuse.  OIGs Provider 
SelfDisclosure Protocol gives providers an opportunity to minimize the potential costs 
and disruption that a fullscale OIG audit or investigation may entail if fraud is uncovered.  
In doing so, the selfdisclosure also enables the provider to negotiate a reasonable monetary 
settlement and potentially avoid being excluded from participation in Federal health care 
programs.  The protocol guides providers and suppliers through the process of structuring 
a disclosure to OIG about matters that constitute potential violations of Federal laws (as 
opposed to honest mistakes that may have resulted in overpayments).  After making an 
initial disclosure, the provider or supplier is expected to thoroughly investigate 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 Federal health care programs).  OIG evaluates the 
reported results of each internal investigation to determine the appropriate course of 
action.  The selfdisclosure guidelines are available on the OIG Web site at: 
http://www.oig.hhs.gov/fraud/selfdisclosure.asp.   
The following are Medicaidrelated examples: 
Michigan  Courtyard Manor of Farmington Hills, Inc. (Courtyard Manor), an adult foster 
care facility, agreed to pay $1.7 million to resolve its Civil Monetary Penalties Law (CMPL) 
liability for receiving Federal health care program funds while being subject to a 10year 
exclusion from participation in all Federal health care programs.  The company also agreed 
to an additional 2year exclusion.  The original exclusion, imposed in August 2002, was the 
result of a May 2001 no contest plea to a charge of involuntary manslaughter after the death 
of a Courtyard Manor resident.  As disclosed under OIGs Provider SelfDisclosure 
Protocol, Courtyard Manor discovered in May 2007 that it had contracted with several 
agencies that were funded, in part, by the Michigan Medicaid Program. 
Louisiana  Walgreen Louisiana Co. (Walgreen) agreed to pay $1,053,774 to settle its 
liability under OIGs CMPL authority for allegedly employing an individual that Walgreen 
knew or should have known was excluded from participation in Federal health care 
programs.  As reported under OIGs Provider SelfDisclosure Protocol, Walgreen 
submitted to Medicare, Medicaid, and TRICARE claims for prescriptions filled by an 
excluded pharmacist who had applied for his job using his middle name, thereby allegedly 
obscuring his excluded status.  However, if Walgreen had checked his pharmacy license, as 
it is required to do, it would have uncovered his first name, under which he was excluded.  
The State of Louisiana was a party to the settlement agreement and released its 
administrative claims.  
Program Exclusions 
During FY 2009, OIG excluded 2,556 individuals and entities from participating in 
Medicare, Medicaid, and other Federal health care programs.  Most of the exclusions 
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FY 2009 Office of Inspector General Medicaid Integrity Report  17  _________________________________________________________________________________ 
 
resulted from convictions for crimes relating to Medicare or Medicaid, for patient abuse or 
neglect, or as a result of license revocation.  A Medicaid example follows: 
Rhode Island  John Montecalvo, a nursing home executive, was excluded for a 
minimum of 17 years based on two convictionsone for equity skimming and the other 
for embezzlement, conspiracy, and patient neglect.  From January 1998 to May 2004, 
Montecalvo used funds that had been issued by the Department of Housing and Urban 
Development (HUD) for the operation of nursing homes for purposes other than what was 
reasonable and necessary.  He was sentenced to 24 months of incarceration and was 
ordered to pay $780,539 in restitution.  In a related State case, Montecalvo was sentenced to 
10 years in prison with 9 years suspended, to be served concurrently with the Federal 
sentence, for his involvement in a Medicaid fraud scheme and for failing to provide 
treatment and care to patients at a nursing home.   
Criminal and Civil Enforcement 
One of the most common types of fraud perpetrated against Medicare, Medicaid, and other 
Federal health care programs involves filing false claims for reimbursement.  False claims 
may be pursued under Federal and State criminal statutes and, in appropriate cases, under 
the civil False Claims Act Amendments of 1986 (FCA).   
The successful resolution of false claims often involves the combined investigative efforts 
and resources of OIG, FBI, MFCUs, and other law enforcement agencies.  OIG is 
responsible for assisting DOJ in bringing and settling cases under the FCA.  Many 
providers elect to settle their cases before litigation.  As part of their settlements, providers 
often agree to enter into integrity agreements with OIG to avoid exclusions from Medicare, 
Medicaid, and other Federal health care programs.  Such agreements are monitored by OIG 
and require the providers to enhance existing compliance programs or establish new ones.  
The compliance programs are designed, in part, to prevent a recurrence of the fraudulent 
conduct. 
During FY 2009, the Governments enforcement efforts resulted in 515 criminal actions and 
387 civil actions against individuals or entities that engaged in healthcarerelated offenses.  
These efforts resulted in $3 billion in HHS and $985.7 million in nonHHS investigative 
receivables, including civil and administrative settlements or civil judgments related to 
Medicare; Medicaid; and other Federal, State, and private health care programs.  Some of 
the notable enforcement actions are described below.  Summaries are organized by the 
sector of the health care industry involved or by the nature of the offense. 
Pharmaceutical Manufacturers and Distributors 
Pennsylvania  Eli Lilly and Company (Lilly) entered into an approximately $1.4 billion 
global criminal, civil, and administrative settlement to resolve allegations that it illegally 
marketed its antipsychotic drug Zyprexa.  Under the civil settlement agreement, Lilly 
agreed to pay the Federal Government $438,171,544 and participating States up to 
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FY 2009 Office of Inspector General Medicaid Integrity Report  18  _________________________________________________________________________________ 
 
$361,828,456 to resolve FCA allegations that by marketing Zyprexa for certain uses 
unapproved by FDA, it caused false claims for payment to be submitted to Federal health 
care programs, such as Medicaid, from September 1999 to the end of 2005.  The civil 
allegations were originally brought in four separate qui tam lawsuits.  Lilly also agreed to 
pay a criminal fine of $515 million and forfeit assets of $100 million.  In its plea agreement, 
Lilly admitted that from September 1999 to March 31, 2001, it promoted Zyprexa for 
unapproved uses in elderly populations as treatment for dementia, including Alzheimers 
dementia.  Lilly entered a 5year Corporate Integrity Agreement (CIA) with several unique 
provisions, including (1) a requirement that Lilly notify doctors about the settlement and 
provide a means by which the physicians may report questionable conduct by sales 
representatives; (2) a requirement that Lilly post on its Web site information about 
payments made to physicians; and (3) flexible audit provisions, which allow for additional 
audits to be conducted throughout the term of the CIA at OIGs discretion and with limited 
advance notice.  The CIA also provides for increased accountability by Lillys board of 
directors and management in the form of an annual resolution by a board committee and 
annual certifications from managers about compliance. 
Texas  Abbott Laboratories Inc. (Abbott), an Illinoisbased pharmaceutical company, 
agreed to pay the State of Texas and the Federal Government a total of $28 million in a 
Medicaid fraud settlement to resolve its civil liabilities related to the false pricing of certain 
intravenous drugs and blood products.  Under Texas law, drug manufacturers 
participating in Medicaid are required to report their wholesale and other prices to the 
Medicaid program.  These prices are the basis on which the Texas Medicaid program 
calculates reimbursement to Medicaid providers.  The Government alleged that Abbott 
falsified price reports and inflated its prices for products that it submitted to the Texas 
Medicaid program.  As a result of the alleged illegal pricing, Texas Medicaid allegedly 
overreimbursed providers for Abbotts drugs. 
Minnesota  Walgreen Co. (Walgreen) agreed to pay the United States $9.9 million to 
resolve allegations that it overcharged the Medicaid program in Minnesota, Michigan, 
Florida, and Massachusetts for prescription drugs by charging Medicaid for the difference 
between the Medicaidnegotiated amounts and the thirdparty primary insurernegotiated 
amounts for the drugs.  The Government alleged that Walgreen charged Medicaid a larger 
amount when it should have charged Medicaid only for the copay after the primary 
payers payment.  In addition to agreeing to the monetary settlement, Walgreen agreed to 
enter into an amendment to its June 2008 CIA.  Under the amendment, Walgreen must train 
its pharmacists about the importance of billing Medicaid appropriate amounts and hire an 
independent review organization to annually audit its Medicaid claims in each of the four 
States. 
Kentucky  Verlon Lane Pierce, a pharmacist, was sentenced to 6 months of home 
detention on charges of health care fraud and the sale of prescription drug samples.  In 
addition, Pierce paid the United States $850,000 as a forfeiture of proceeds from the 
criminal activity.  He also paid the United States $495,606 in an FCA settlement, making the 
combined criminal and civil recovery $1,345,606.  In his guilty plea, Pierce admitted that 
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FY 2009 Office of Inspector General Medicaid Integrity Report  19  _________________________________________________________________________________ 
 
from January 1, 2001, through December 1, 2004, he defrauded health care benefit 
programs, including Medicaid, by unlawfully billing those programs for pharmaceutical 
drug samples provided to patients.  Pierce also admitted that he unlawfully purchased, 
sold, and traded prescription drug samples.  Pierces activities occurred in connection with 
his business, Medicine Arts Pharmacy. 
South Carolina  The Medicine Dropper, Inc., and its pharmacist owners, John Frank 
Weeks and Derrelyn B. Weeks (collectively, Medicine Dropper), agreed to pay the United 
States $500,000 plus interest to resolve allegations of violating the Controlled Substances 
Act (CSA) (enacted as Title II of the Comprehensive Drug Abuse Prevention and Control 
Act of 1970) and applicable regulations and to settle allegations of violating the FCA for 
submitting false claims to Medicaid for prescriptions for three Medicaid recipients.  The 
Government alleged that Medicine Dropper filled invalid Ketamine prescriptions and filled 
prescriptions that were not for a legitimate medical purpose.  As part of the resolution of 
this matter, Medicine Dropper agreed to adopt reasonable and customary policies to 
prevent the use of its pharmacy for doctor shopping, fill prescriptions using the correct 
Drug Enforcement Administration (DEA) number for the physician, ensure that all 
required elements of a prescription are present before dispensing, and no longer dispense 
Ketamine products. 
Laboratories 
New York  Quest Diagnostics Incorporated (Quest) and its wholly owned subsidiary, 
Nichols Institute Diagnostics (NID), entered a $302 million global criminal and civil 
settlement to resolve allegations raised in a qui tam complaint concerning various types of 
diagnostic test kits that NID manufactured, marketed, and sold to laboratories throughout 
the country between May 1, 2000, and April 30, 2006.  As part of the criminal resolution, 
NID pleaded guilty to a felony misbranding violation of the Federal Food, Drug, and 
Cosmetic Act of 1938 (FDCA) relating to NIDs Nichols Advantage Intact Parathyroid 
Hormone Immunoassay, a test used by laboratories throughout the country to measure 
parathyroid hormone (PTH) levels in patients.  As part of the plea, NID agreed pay a 
criminal fine of $40 million.  Quest also entered into a nonprosecution agreement with the 
United States.  As part of the civil settlement, Quest, as the parent company of NID, agreed 
to pay $262 million plus interest to resolve FCA allegations relating to the Advantage Intact 
PTH assay and four other assays manufactured by NID that allegedly provided inaccurate 
and unreliable results.  Quest also agreed to pay various State Medicaid programs about 
$6.2 million to resolve similar civil claims.  Quest entered a 5year CIA that requires it to 
hire two independent reviewers.  Quests board of directors (board) is required to hire a 
compliance expert to determine how compliance concerns are communicated to senior 
management and the board.  The company is required to retain an independent review 
organization to review Quests compliance with FDA Quality System Regulation and 
labeling requirements. 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  20  _________________________________________________________________________________ 
 
Nursing Homes 
Texas  Regency Nursing and Rehabilitation Centers, Inc. (Regency), agreed to pay 
$4 million plus interest to resolve its potential FCA liability for violations allegedly 
committed at 10 of its nursing facilities in south, central, and east Texas.  The allegations 
included submitting claims to Medicare and Medicaid for skilled services that were not 
medically necessary and/or were for patients who did not qualify for the claimed services.  
The Government also alleged that Regency falsely certified on its cost reports that all 
services had been provided in accordance with all applicable laws and regulations. 
District of Columbia  Grant Park Care Center (GPCC), a 296bed skilled nursing facility, 
agreed to pay the United States and the District of Columbia $2 million to settle FCA 
allegations.  GPCC is owned and managed by Centennial HealthCare Corporation; Grant 
Park Nursing Home Limited Partnership; Grant Park Management LLC; and eight other 
corporate entities (collectively, Centennial).  Centennial is one of the largest nursing home 
owners in the United States. 
The United States alleged that from January 1998 through December 2007, Centennial 
submitted claims to the Medicare and Medicaid programs for services that failed to meet 
the needs of the residents at GPCC in one or more of the following areas:  resident nutrition 
and hydration; needs assessments and evaluations; care planning and nursing 
interventions; medication management; fall prevention and management; and pressure 
ulcer care, including the prevention and treatment of wounds.  The United States also 
alleged that Centennial understaffed GPCC during the covered period with knowledge that 
resident care would be compromised. 
As part of the settlement, Grant Park Nursing Home Limited Partnership and Grant Park 
Management, LLC, agreed to enter into a 5year CIA with OIG that required them to 
establish a detailed compliance program and retain an independent monitor to assess their 
quality assurance and quality improvement systems. 
Durable Medical Equipment Suppliers 
Texas  Aniekan Jonathan Ekwere, owner of Coastal Medical Supply, was sentenced to 18 
months of incarceration and ordered to pay $702,963 in restitution for health care fraud and 
conspiracy to commit health care fraud.  Through his durable medical equipment (DME) 
company, Ekwere submitted claims to Medicare and Medicaid for reimbursement of 
motorized wheelchairs.  In most cases, Ekwere provided Medicare and Medicaid recipients 
in Texas and Louisiana with less expensive scooters or nothing at all.  As part of his 
scheme, Ekwere paid Jude Akpan, an employee of one of Texass largest notforprofit 
hospital systems, for fraudulent prescriptions, certificates of medical necessity, and 
Medicare patient information.  Akpan was sentenced to 5 years probation and ordered to 
pay restitution of $19,221, joint and several with Ekwere, for receiving illegal kickbacks. 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  21  _________________________________________________________________________________ 
 
Practitioners 
Maryland  Virginia Vought Acree, a Statelicensed clinical specialist in child and 
adolescent psychiatric and mental health nursing, was sentenced to 36 months of 
imprisonment and ordered to pay restitution in the amount of $390,000 after her guilty plea 
to health care fraud.  Acree falsely billed Medicare, Medicaid, and private health care plans 
for services that she did not provide on hundreds of occasions from January 2003 to 
November 2007.  Acree often billed for facetoface psychotherapy services on dates when 
she was on vacation in other States or countries or attending outoftown conferences. 
Medicaid Fraud Control Units 
MFCUs are key partners in the fight against fraud, waste, and abuse in State Medicaid 
programs.  In FY 2009, HHS awarded $189.8 million in Federal grant funds to 50 State 
MFCUs, which employed a total of 1,835 individuals.8  Collectively, in FY 2009, the MFCUs 
reported 26,744 total investigations, of which 17,090 were related to Medicaid fraud and 
9,654 were related to patient abuse and neglect, including patient funds cases.  These cases 
resulted in 1,539 individuals being indicted or criminally charged, including 960 for fraud 
and 579 for patient abuse and neglect, including patient funds cases.  In total, 1,331 
convictions were reported in FY 2009, of which 819 were related to Medicaid fraud and 512 
were related to patient abuse and neglect, including patient funds cases.  For civil and 
criminal cases handled by the 50 MFCUs, $1.3 billion was recovered to the program.  This 
translates to a return on investment of $5.23 per $1.00 contributed by both the Federal and 
State governments for the operation of the MFCUs.  The total number of civil judgments 
and settlements for the FY was 642.  
The MFCUs refer to OIG a significant number of cases for possible exclusion from 
participation in Medicare, Medicaid, and other Federal health care programs.  In FY 2009, 
of the 2,556 OIG exclusions, 793 were based on referrals made to OIG by MFCUs. 
Joint Federal and State Investigations  
Indiana  Gabriele Reginald Harden was sentenced to 41 months of imprisonment and 
ordered to pay restitution of $1,683,412, after a guilty plea to health care fraud and money 
laundering.  Harden owned and operated a mobile dental unit, Dental Express, which 
operated out of a recreational vehicle and focused primarily on lowincome Medicaid
eligible children.  The mobile unit arranged for visits, typically to inner city schools, day 
care facilities, and subsidized housing projects.  He routinely billed Medicaid for fillings 
when sealants were actually applied to primary teeth, a procedure not covered by 
Medicaid.  He also improperly billed for xrays that were not taken at the direction of a 
                                                      
8 With the exception of the total grant award and exclusion information, which are maintained by OIG, these 
totals are based on information supplied by the MFCUs and have not been independently verified by OIG.  The 
MFCUs maintain separate case information for patient abuse and neglect as well as for patient funds cases, 
which were included by OIG as a single total.   
 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  22  _________________________________________________________________________________ 
 
dentist, were not diagnostic, or were developed long after the patients were seen on the 
mobile unit.  Harden had ceased billing for sealants as fillings because of mounting 
pressures from staff and an investigation in Ohio, but he restarted the scheme after the staff 
had either quit or been fired.  The investigation involved OIG, FBI, the Internal Revenue 
Service (IRS), and the Indiana MFCU. 
Indiana  Dennis Lennartz was sentenced to 43 months of incarceration and ordered to pay 
$964,852 in restitution for his guilty plea to health care fraud.  The investigation revealed 
that Lennartz received payments from Medicaid by having his business partner bill for 
transportation services purportedly provided to Medicaid beneficiaries from August 2006 
through December 2008.  Lennartz had obtained about 160 Medicaid numbers of nursing 
home patients with developmental disabilities and used the numbers to submit the false 
claims to Medicaid.  Lennartz, who was previously convicted of health care fraud, hid his 
involvement in the scheme by having the Medicaid provider number registered to one of 
his former employees.  The investigation involved OIG, the FBI, and the Indiana MFCU. 
Texas  Brothers Mazen and Wesam Abdallah were each sentenced to 30 months 
imprisonment and were ordered to pay $637,425 in joint and several restitution for their 
involvement in a scheme to defraud Medicare and Medicaid.  After a 5week trial in which 
more than 50 witnesses testified, a jury convicted the brothers of conspiracy to commit 
health care fraud and convicted Wesam Abdallah of additional charges of health care fraud 
and an antikickback violation.  The Abdallahs owned and operated Americare Medical 
Service (Americare), an ambulance company that specialized in transporting dialysis 
patients to and from their treatments.  Many of the patients did not qualify for 
transportation and either had no prescriptions or used prescriptions on which the doctors 
signatures were photocopied or procured by tricking doctors into signing the prescriptions.  
In addition, the Abdallahs recruited patients using public transportation manifests that 
they had purchased and by paying kickbacks to patients.  Defendants Ayad Fallah and 
Murad Almasri, who owned and operated Americare before selling it to Mazen Abdallah, 
were previously sentenced pursuant to their guilty pleas to conspiracy.  Fallah and Almasri 
were each sentenced to time served and ordered to pay $1,660,113 in joint and several 
restitution.  A third previous owner of Americare was also charged but remains a fugitive.  
The investigation involved OIG, FBI, IRS, and the Texas MFCU. 
Rhode Island  Carmine DeTomasis, a pharmacist and coowner of Prime Drug, Inc. 
(Prime Drug), was sentenced to 1 year and 1 day of incarceration and ordered to pay 
$404,125 in joint and several restitution for illegally buying and selling pharmaceuticals and 
defrauding health care insurers.  DeTomasiss codefendant, Louis Romanelli, was 
sentenced to 30 months of imprisonment for his role in the scheme.  DeTomasis supplied 
Romanelli with the drug Vicodin, which Romanelli then sold on the street.  Prime Drug 
also purchased HIV/AIDS drugs and controlled prescription drugs from beneficiaries 
through Romanelli at onethird the cost of the purchase price from a legitimate drug 
wholesaler.  Upon receiving the prescription drugs from Romanelli, Prime Drug 
repackaged them for redistribution to Medicare Part D and Medicaid beneficiaries at the 
full reimbursement rate.  DeTomasis also submitted false reimbursement claims to health 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  23  _________________________________________________________________________________ 
 
insurance carriers for prescription drugs that the store had not dispensed.  Also implicated 
in the scheme was former North Providence Police Officer Paul Vittorio, who had warned 
Romanelli that he might be under investigation and suggested that Romanelli move his 
operation.  Vittorio also admitted trying to influence the testimony of a grand jury witness.  
Vittorio was sentenced to 5 months of imprisonment and ordered to pay a fine of $17,627 
for misprision of a felony, tampering with a witness, and making false statements.  The 
investigation involved OIG, FDA, the Rhode Island MFCU, the U.S. Postal Inspection 
Service, IRS, and DEA.   
Maryland  Chesapeake Youth Center (CYC), a former residential treatment center for 
adolescents, agreed to pay $259,120 to resolve its potential FCA liability.  The United States 
alleged that from January through July 2005, CYC submitted or caused to be submitted 
claims to Medicaid for inpatient adolescent psychiatric services that were not provided or 
were substandard or worthless.  The investigation involved OIG, the Maryland MFCU, and 
the Civil Division of DOJ. 
Conclusion 
OIGs Medicaid oversight generally takes the form of a continuous stream of projects that 
may require more than 1 year to yield results.  The use of funding in 1 year often bears fruit 
in future years.  Accordingly, the accomplishments highlighted in this document reflect the 
results of OIG work over time that culminated in FY 2009.  Also, in the first three 
appendixes to this report, we list (1) titles of Medicaid audit and evaluation reports issued 
in FY 2009; (2) FY 2010 Medicaid work in progress and planned starts; and (3) open 
Medicaid recommendations that, if implemented, could save Federal tax dollars and 
improve HHS programs.  The final two appendixes describe the DRA requirements that 
pertain to OIG and provide a list of acronyms and abbreviations used in the report.   
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  24  _________________________________________________________________________________ 
 
Appendix A:   
Audit and Evaluation Reviews 
Completed in Fiscal Year 2009 
Medicaid Hospitals 
Review of Inpatient Hospital Claims Billed as Family Planning Services Under the New 
York State Medicaid Program (A020601007) 
Review of State Plan Amendments Authorizing Disproportionate Share Hospital Payments 
by Pennsylvania to Hospitals of StateRelated Universities (A030700222) 
Review of Pennsylvanias Determination of Medicaid Disproportionate Share Hospital 
Eligibility for StateOperated Institutions for Mental Diseases (A030800202) 
Review of Medicaid Participation Eligibility for One Indiana StateOwned Psychiatric 
Hospital for the Period July 1, 1996, Through June 30, 2007 (A050700076) 
Review of Medicaid Inpatient Hospital Transfer Payments in Indiana for October 1, 2003, 
Through September 30, 2006 (A050700081) 
Review of Medicaid Credit Balances at Lakeview Hospital, as of February 1, 2008  
(A050800026) 
Review of Medicaid Inpatient Hospital Transfer Payments in Michigan for October 1, 2003, 
Through September 30, 2006 (A050800045) 
Review of Medicaid Credit Balances at Weiss Hospital as of February 29, 2008  
(A050800049) 
Review of Medicaid Credit Balances at Mercy Hospital as of April 1, 2008  
(A050800063) 
Review of Medicaid Credit Balances at Hennepin County Medical Center as of March 31, 
2008 (A050800065) 
Review of Medicaid Credit Balances at St. Joseph Hospital as of June 30, 2007  
(A050800089) 
Review of East Louisiana State Hospitals HurricaneRelated Uncompensated Care Claims 
(A060700024) 
Review of Southeast Louisiana Hospitals HurricaneRelated Uncompensated Care Claims 
(A060800023) 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  25  _________________________________________________________________________________ 
 
Review of Medicaid Credit Balances at Scripps Memorial Hospital Encinitas as of 
December 31, 2008 (A090900056) 
Review of Medicaid Credit Balances for Kuakini Medical Center as of December 31, 2008 
(A090900072) 
Review of Hawaii Medicaid Credit Balances for Kapiolani Medical Center at Pali Momi as 
of December 31, 2008 (A090900073) 
Review of Medicaid Credit Balances at Oroville Hospital as of February 28, 2009  
(A090900077) 
Review of Medicaid Credit Balances at French Hospital Medical Center as of February 28, 
2009 (A090900079) 
Medicaid Home, Community, and Nursing Home Care 
Review of Connecticuts Community Based Medicaid Administrative Claim for State Fiscal 
Year 2004 (A010600008) 
Review of Connecticuts Community Based Medicaid Administrative Claims for State 
Fiscal Years 2005 and 2006  
(A010800003) 
Partnership Review of Medicaid Claims Processed by Cerebral Palsy and Stavros for 
Personal Care Attendant Services Provided to Beneficiaries During Inpatient Stays  
(A010800001) 
Review of Medicaid Overpayments at Greenwood Center in Maine for Calendar Years 2004 
Through 2006 (A010800006) 
Review of Medicaid Overpayments at Varney Crossing Nursing Care Center for Calendar 
Years 2004 Through 2006 (A010800008) 
Review of Medicaid Overpayments at Ledgeview Living Center for Calendar Years 2004 
Through 2006 (A010800010) 
Review of Medicaid Overpayments at North Country Associates, Inc., for Calendar Years 
2004 Through 2006 (A010800011) 
Review of Medicaid Overpayments at Victorian Villa Rehabilitation and Living Center for 
Calendar Years 2004 Through 2006 (A010800012) 
Review of Medicaid Personal Care Services Claims Made by Providers in New York City 
(A020701054) 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  26  _________________________________________________________________________________ 
 
Review of Ohio Medicaid LongTermCare Payments to Two Providers for the Same 
Beneficiaries for the Same Dates of Services From October 1, 1998, Through September 30, 
2005 (A050700074) 
Review of Section 1915(c) Mental Retardation or Related Conditions Waiver Services at 
ACR Homes, Inc., From July 1,2004, Through June 30, 2005 (A050800025) 
Review of Social Security Act Section 1915(c) Waiver Payments for Home and Community
Based Services at Search Developmental Center, July 1, 2004, Through June 30, 2005  
(A050800060) 
Review of New Mexico Developmental Disabilities Home and CommunityBased Services 
Waiver (A060700097) 
Review of Texas Medicaid Payments for Medicare Coinsurance of DualEligible 
Beneficiaries in Skilled Nursing Facilities (A060800006) 
Collaborative Effort To Identify Overlapping Claims for DualEligible Beneficiaries 
Receiving Medicare Part A and Medicaid Long Term Care Services in Texas  
(A060800053) 
Review of The Long Term Care, Managed Care Program Costs Claimed by the Utah 
Department Of Health (A070802719) 
Review of Medicaid Credit Balances at Colorado State Veterans Home at Fitzsimons  
(A070902751) 
Review of Medicaid Credit Balances at Boulder Manor Nursing Home (A070902755) 
Review of Medicaid Credit Balances at Sunny Vista Living Center (A070902756) 
Review of Medicaid Credit Balances at Pioneers Memorial Healthcare District as of 
December 31, 2008 (A090900054) 
Nursing Home Corporations Under Quality of Care Corporate Integrity Agreements  
(OEI060600570) 
Medicaidfunded Personal Care Services Billed in Excess of 24 Hours a Day  
(OEI070600621) 
Medicaid and Medicare Home Health Payments for Skilled Nursing and Home Health 
Aide Services (OEI070600641) 
Other Medicaid Services 
New Hampshire Medicaid Payments for Skilled Professional Medical Personnel at the 
Enhanced Rate from October 1, 2004 Through September 30, 2006 (A010700011) 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  27  _________________________________________________________________________________ 
 
Review of Clinic and Practitioner Claims Billed as Family Planning Services Under the New 
York State Medicaid Program (A020701037) 
Review of Family Planning Claims Submitted by Selected Providers Under the New York 
State Medicaid Program (A020901015) 
Review of Timeliness of West Virginias Retroactive Claims for Medicaid SchoolBased 
Services (A030600201) 
Review of Pennsylvanias Medicaid Payments for Targeted Case Management Services for 
Calendar Years 2003 Through 2005 (A030600202) 
Review of Medicaid Services to Incarcerated Juveniles in the State of Georgia During 
Federal Fiscal Years 2003 and 2004 (A040600026) 
Family Planning Services Claimed Twice in Michigan for October 1, 2005, Through 
September 30, 2007 (A050800064) 
Family Planning Services Claimed by Michigan During October 1, 2005, Through 
September 30, 2007 (A050900050) 
Medicaid Payments Made for Nonemergency Services Provided to Undocumented Aliens 
and Legal Aliens Restricted to Emergency Services in Texas (A060700108) 
Review of Colorado Medicaid Mental Health Capitation and Managed Care Program  
(A070604067) 
Iowa Medicaid Payments Claimed for Childrens Remedial Services (A070803112) 
Improper Medicaid Payments for Outpatient Laboratory Services to Dual Eligible 
Beneficiaries (OEI040700340) 
Fraud and Abuse Safeguards for State Medicaid Nonemergency Medical Transportation 
Services (OEI060700320) 
Medicaid Prescription Drugs 
Review of Medicaid Outpatient Drug Expenditures in Connecticut for the Period October 1, 
2003, Through September 30, 2005 (A010700003) 
Audit of Controls Over Collecting Rebates on Single Source Drugs Administered by 
Physicians in Massachusetts (A010800005) 
FollowUp Audit of the Medicaid Drug Rebate Program in Rhode Island (A010800009) 
FollowUp Audit of the Medicaid Drug Rebate Program in New Hampshire  
(A010800013 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  28  _________________________________________________________________________________ 
 
Review of Medicaid Outpatient Drug Expenditures in the State of New York for the Period 
October 1, 2003, Through September 30, 2005 (A020701028) 
Review of New Jerseys Compliance With the Reimbursement of State Costs for Provision 
of Part D Drugs Medicare Demonstration Project Requirements  
(A020801007) 
Review of Medicaid Outpatient Drug Expenditures in Pennsylvania for the Period October 
1, 2003, Through September 30, 2005 (A030700203) 
Review of Medicaid Outpatient Drug Expenditures in Tennessee for the Period October 1, 
2003, Through September 30, 2005 (A040700027) 
FollowUp Audit of the Medicaid Drug Rebate Program in West Virginia  
(A030800200) 
FollowUp Review of the Medicaid Drug Rebate Program in Mississippi (A040707023) 
FollowUp Review of the Medicaid Drug Rebate Program in Georgia (A040707027) 
FollowUp Review of the Medicaid Drug Rebate Program in South Carolina  
(A040807004) 
FollowUp Review of the Medicaid Drug Rebate Program in Ohio (A040807005) 
Review of Medicaid Outpatient Drug Expenditures in Michigan for the Period  October 1, 
2004, Through September 30, 2005 (A050800048) 
Review of Medicaid Outpatient Drug Expenditures in Texas for the Period October 1, 2003, 
Through September 30, 2005 (A060700092) 
Review of Medicaid Outpatient Drug Expenditures in California for Fiscal Years 2004 and  
2005 (A090700039) 
FollowUp Audit of the Medicaid Drug Rebate Program in Nevada (A090800026) 
FollowUp Audit of the Medicaid Drug Rebate Program in Alaska (A090800051) 
Review of Californias Compliance With Demonstration Project Requirements for 
Reimbursement of State Costs for Provision of Medicare Part D Drugs (A090800056) 
Comparing Pharmacy Reimbursement: Medicare Part D to Medicaid (OEI030700350) 
Accuracy of Drug Categorizations for Medicaid Rebates (OEI030800300) 
A Comparison of Medicaid Federal Upper Limit Amounts to Acquisition Costs, Medicare 
Payment Amounts, and Retail Prices (OEI030800490) 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  29  _________________________________________________________________________________ 
 
Outlier Average Manufacturer Prices in the Federal Upper Limit Program  
(OEI030700740) 
Medicaid Administration 
Review of Medicaid Graduate Medical Education Revenue in New York State  
(A020401015) 
Review of Medicaid Indirect Costs Submitted by the New York State Department of Health 
on Behalf of the Office of Mental Retardation and Developmental Disabilities  
(A020601028) 
Review of North Carolinas Accounts Receivable System for Medicaid Provider 
Overpayments (A040607009) 
Allowability of Alabamas Hurricane KatrinaRelated Uncompensated Care Claims  
(A040803040) 
Review of Indianas Reporting Fund Recoveries for the Medicaid Rehabilitation Option 
Program on the CMS64 for Fiscal Years 2000 to 2005 (A050700072) 
Review of New Mexicos Medicaid Administrative Costs for the Quarter Ended September 
24, 2004 (A060700072) 
Centers for Medicare & Medicaid Services Resolution of Audit Recommendations  
(A070704112) 
Audit of the Indian Health Service Headquarters Cost Statement for Fiscal Year 2005  
(A090700054) 
Review of the Calculations of Temporary Increases in Federal Medical Assistance 
Percentages Under the American Recovery and Reinvestment Act (A090900075) 
Review of the Calculation of Additional Medicaid Funding Awarded Under the American 
Recovery and Reinvestment Act (A090900080) 
Review of Missouris Medicaid Management Information System Expenditures for the 
Period October 1, 2004, Through September 30, 2007 (A070804122) 
Medicaid Managed Care Encounter Data:  Collection and Use (OEI070600540) 
Medicaid Information Systems, Data Management, and Security 
Information Technology General Controls Audit of the State of Michigan Medicaid Claims 
Processing System (A050700013) 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  30  _________________________________________________________________________________ 
 
Audit of General Controls for South Dakota Medicaid Claims Processing and Eligibility 
Determinations (A070800241) 
FollowUp Audit of General Controls for Medicaid Claims Processing for Missouri 
Department of Social Services (A070900276) 
Usefulness of Medicaid Statistical Information System Data for Detecting Fraud, Waste, 
and Abuse (OEI040700240) 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  31  _________________________________________________________________________________ 
 
Appendix B:   
FY 2010 Work in Progress and New Starts 
This appendix lists the working titles of Medicaidrelated audit and evaluation projects 
included in the Office of Inspector Generals (OIG) fiscal year (FY) 2010 Work Plan 
designated as work in progress (as of October 1, 2009) or as new starts to begin during FY 
2010.  The work will be conducted by OIGs Office of Audit Services (OAS) and Office of 
Evaluation and Inspections (OEI).  Summaries of the objectives and context of each project 
are provided in the FY 2010 Work Plan, which is available in the Publications section of 
the OIG Web site at:  http://www.oig.hhs.gov/publications.asp. 
Medicaid Hospitals 
State Medicaid Agency Policies to Deny Payment for HospitalAcquired Conditions   
(OEI; 000000000; expected issue date:  FY 2010; new start)  
Hospital Outlier Payments  
(OAS; W000931069; W001031069; various reviews; expected issue date:  FY 2010; 
work in progress) 
Provider Eligibility for Medicaid Reimbursement  
(OAS; W001031301; various reviews; expected issue date:  FY 2010; work in progress) 
Medicaid Disproportionate Share Hospital Payment Distribution  
(OAS; W000931302; W001031302; various reviews; expected issue date:  FY 2010; 
work in progress) 
Supplemental Payments to Private Hospitals 
(OAS; W001031126; various reviews; expected issue date:  FY 2010; work in progress) 
Potentially Excessive Medicaid Payments for Inpatient and Outpatient Services 
(OAS; W000931127; W001031127; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaid Home, Community, and Nursing Home Care 
Community Residence Rehabilitation Services  
(OAS; W000831087; W000931087; W001031087; various reviews; expected issue date:  
FY 2010; work in progress) 
Targeted Case Management 
(OAS; W000531082; W000831082; W000931082; W001031082; various reviews; 
expected issue date:  FY 2010; work in progress) 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  32  _________________________________________________________________________________ 
 
Medicaid Payments to Continuing Day Treatment Providers 
(OAS; W000931128; W001031128; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaid Home Health Agency Claims 
(OAS; W000931304; W001031304; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaid Payments for Personal Care Services 
(OAS; W000831035; W000931035; W001031035; various reviews; expected issue date:  
FY 2010; work in progress) 
Compliance With States Requirements for MedicaidFunded Personal Care Service 
Attendants 
(OEI; 070800430; expected issue date:  FY 2010; work in progress) 
Medicaid Payments for MedicareCovered Home Health Services 
(OAS; W000931305;W001031305;  various reviews; expected issue date:  FY 2010; 
work in progress) 
State and Federal Oversight of Home and CommunityBased Services in 
Assisted Living Facilities 
(OEI; 090800360; expected issue date:  FY 2010; work in progress) 
State and Federal Oversight of Home and CommunityBased Services  
(OEI; 020800170; expected issue date:  FY 2010; work in progress)  
Medicaid Adult Day Health Service Payments for Ineligible and Absent Beneficiaries  
(OEI; 090700500; expected issue date:  FY 2010; work in progress) 
Oversight of Nursing Home Minimum Data Set Data 
(OEI; 000000000; expected issue date:  FY 2011; new start) 
Transparency Within Nursing Facility Ownership 
(OAS; W001031130; various reviews; expected issue date:  FY 2010; work in progress) 
States Administration and Use of Civil Monetary Penalty Funds in Medicaid Nursing 
Homes  
(OEI; 000000000; expected issue date:  FY 2010; new start 
Medicaid Nursing Home Patients:  Quality of Care  
(OAS; W001031330; various reviews; expected issue date:  FY 2010; new start) 
Medicaid Incentive Payments for Nursing Facility QualityofCare Performance Measures  
(OAS; W001031331; various reviews; expected issue date:  FY 2010; new start) 
 
___________________________________________________________________________________________________ 
FY 2009 Office of Inspector General Medicaid Integrity Report  33  _________________________________________________________________________________ 
 
Medicaid Waiver Administrative Costs  
(OAS; W001031332; various reviews; expected issue date:  FY 2010; new start) 
Medicaid Prescription Drugs  
Timely Submission of Average Manufacturer Price Data  
(OEI; 030900060; expected issue date:  FY 2010; work in progress) 
Calculation of Average Manufacturer Prices 
(OAS; W001031202; various reviews; expected issue date:  FY 2011; new start) 
Recalculation of Base Date Average Manufacturer Prices     
(OEI; 000000000; expected issue date:  FY 2010; new start)   
States Medicaid Drug Claims 
(OAS; W001031203; various reviews; expected issue date:  FY 2010; work in progress)  
Federal Upper Payment Limit Drugs  
(OAS; W001031333; various reviews; expected issue date:  FY 2011; new start) 
Pharmacy Prescription Drug Claims  
 (OAS; W000931318; various reviews; expected issue date:  FY 2011; work in progress) 
Medicaid Payments for Drugs Not Approved for Use by Children  
(OAS; W001031131; various reviews; expected issue date:  FY 2011; new start) 
Medicaid ThirdParty Liability for Prescription Drug Payments 
(OAS; W001031134; various reviews; expected issue date:  FY 2010; work in progress) 
Compound Drugs 
(OAS; W000831317; W000931317; W001031317; various reviews; expected issue date:  
FY 2010; work in progress) 
Additional Rebates of BrandName Drugs 
(OAS; W000931306; W001031306; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaid Reimbursement for Unapproved Drugs 
(OEI; 030800500; expected issue date:  FY 2010; work in progress) 
The Deficit Reduction Act of 2005:  Impact on Medicaid Rebates for Authorized Generic 
Drugs  
(OEI; 000000000; expected issue date:  FY 2010; new start) 
 
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FY 2009 Office of Inspector General Medicaid Integrity Report  34  _________________________________________________________________________________ 
 
States Accountability Over Medicaid Drug Rebate Programs 
(OAS; W000831205; W000931205; W001031205; various reviews; expected issue date:  
FY 2010; work in progress) 
Update of States Collection of Medicaid Rebates for PhysicianAdministered Drugs    
(OEI; 030900410; expected issue date:  FY 2010; work in progress)   
Medicaid Claims for Drugs Purchased Under Retail Discount Generic Programs  
(OEI; 000000000; expected issue date:  FY 2010; new start)  
Review of Medicaid Reimbursement to 340B Entities  
(OEI; 050900320; expected issue date:  FY 2010; work in progress) 
HighCost HIV/AIDS Drugs  
(OAS; W001031334; various reviews; expected issue date:  FY 2011; new start) 
Pharmacy Benefit Carve Out  
(OAS; W001031335; various reviews; expected issue date:  FY 2011; new start) 
Reporting Lowest Accepted Reimbursement Rates  
(OAS; W001031336; various reviews; expected issue date:  FY 2011; new start) 
States Use of the Average Manufacturer Price To Establish Medicaid Pharmacy 
Reimbursements  
(OEI; 000000000; expected issue date:  FY 2010; new start) 
ZeroDollar Unit Rebate Amounts for Drugs in Medicaids Drug Rebate Program  
(OEI; 000000000; expected issue date:  FY 2010; new start) 
Other Medicaid Services 
Medicaid Dental Services 
(OAS; W000931135; W001031335; various reviews; expected issue date:  FY 2010; 
work in progress) 
Family Planning Services 
(OAS; W000931078; W001031078; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaid Payments for Transportation Services 
(OAS; W000831121; W000931121; W001031121; various reviews; expected issue date:  
FY 2010; work in progress) 
Early and Periodic Screening, Diagnostic, and Treatment Services  
(OEI; 050800520; expected issue date:  FY 2010; work in progress) 
 
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FY 2009 Office of Inspector General Medicaid Integrity Report  35  _________________________________________________________________________________ 
 
Payments to Terminated and/or Excluded Medicaid Providers and Suppliers  
(OAS; W001031337; various reviews; expected issue date:  FY 2010; new start) 
Medicaid Claims With Inactive or Invalid Physician Identifier Numbers  
(OAS; W001031338; various reviews; expected issue date:  FY 2010; new start) 
Rehabilitative Services 
(OAS; W000831028; W001031028; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medical Services for Undocumented Aliens 
(OAS; W000731108; W000831108; W000931108; W001031108; various reviews, 
expected issued date:  FY 2010; work in progress) 
Medicaid Payments for Personal Emergency Response Services  
(OAS; W001031339; various reviews; expected issue date:  FY 2010; new start) 
Medicaid Physical and Occupational Therapy Services:  Appropriateness of Payments  
(OEI; 000000000; expected issue date:  FY 2011; new start) 
Medicaid Administration 
Contingency Fee Payment Arrangements 
(OAS; W000731045; W000831045; W000931045; W001031045; various reviews; 
expected issue date:  FY 2010; work in progress) 
Medicaid Payments for Services Under Section 1915(b) Managed Care Freedom 
of Choice Waivers 
(OAS; W000831125; W000931125; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaid Managed Care Fraud and Abuse Safeguards  
(OEI; 000000000; expected issue date:  FY 2010; new start) 
Medicaid Managed Care Marketing Practices  
(OEI; 000000000; expected issue date:  FY 2010; new start) 
Sections 1915(b) and (c) Concurrent Waivers  
(OAS; W000831309; W001031309; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaid Payments for Services Provided Under Section 1915(c) Home and Community
Based Service Waivers 
(OAS; W000931124; W001031124; various reviews; expected issue date:  FY 2010; 
work in progress) 
 
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FY 2009 Office of Inspector General Medicaid Integrity Report  36  _________________________________________________________________________________ 
 
Enrollment of Excluded Medicaid Providers 
(OEI; 090800330; expected issue date:  FY 2010; work in progress) 
State Agencies Redeterminations of Medicaid Eligibility 
(OAS; W000931140; W001031140; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaid Administrative Costs  
(OAS; W000831123; W001031123; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicare/Medicaid Credit Balances  
(OAS; W000931311; W001031311; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaid Management Information System Costs 
(OAS; W000831312; W000931312; W001031312; various reviews; expected issue date:  
FY 2010; work in progress) 
State BuyIn of Medicare Coverage 
(OAS; W000931220; W001031220; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaid Services to Incarcerated Juveniles 
(OAS; W000731222; W001031222; various reviews; expected issue date:  FY 2010; 
work in progress) 
Medicaids AllInclusive Rate for Reimbursement to the Indian Health Service 
(OEI; 000000000; expected issue date:  FY 2011; new start) 
States Effort To Improve ThirdParty Liability Payment Collections in Medicaid    
(OEI; 000000000; expected issue date:  FY 2010; new start) 
States Use of the Public Assistance Reporting Information System to Reduce Medicaid 
Benefits Received From More Than One State  
(OEI; 000000000; expected issue date:  FY 2010; new start) 
States Compliance With Estate Recovery Provisions of the Social Security Act  
(OAS; W000931113; W001031113; various reviews; expected issue date:  FY 2010; 
work in progress)  
Medicaid Claims That Exceed Timely Filing Requirements  
(OAS; W001031340; various reviews; expected issue date:  FY 2010; new start) 
State Medicaid Agencies Reclassification of NonFederal Claims  
(OAS; W001031341; various reviews; expected issue date:  FY 2010; new start) 
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FY 2009 Office of Inspector General Medicaid Integrity Report  37  _________________________________________________________________________________ 
 
Feasibility of Applying Medicare National Correct Coding Initiative Edits to Medicaid 
Claims  
(OAS; W001031342; various reviews; expected issue date:  FY 2010; new start) 
States Efforts in Medicaid Enrollment, Outreach, and Retention  
(OEI; 000000000; expected issue date:  FY 2010; new start)   
Medicaid Information Systems and Data Security  
Medicare and Medicaid Security of Portable Devices Containing Personal Health 
Information at Contractors and Hospitals  
(OAS; W001041014; various reviews; expected issue date:  FY 2010; new start) 
Medicare and Medicaid Health Information Data Privacy  
(OEI; 000000000; various reviews; expected issue date:  FY 2011; new start)  
Medicaid Management Information Systems Business Associate Agreements  
(OAS; W001041015; various reviews; expected issue date:  FY 2010; new start) 
Medicaid Security Controls Over State WebBased Applications 
(OAS; W001041016; various reviews; expected issue date:  FY 2010; new start) 
Medicaid Security Controls at the Mainframe Data Center That Processes States Claims 
Data 
(OAS; W000740019; expected issue date:  FY 2009; work in progress) 
Childrens Health Insurance Program 
Medicaid and Childrens Health Insurance Program Citizenship Requirements 
(OAS; W000931224; W001031224; various reviews; expected issue date:  FY 2010; 
work in progress) 
Childrens Health Insurance Program Administrative Costs 
(OAS; W000931226; W001031226; various reviews; expected issue date:  FY 2010; 
work in progress) 
Dually Enrolled Beneficiaries in a State 
(OAS; W001031314; various reviews; expected issue date:  FY 2010; work in progress) 
Medicaid and Childrens Health Insurance Program Payment Error Rate Measurement  
(OAS; W001040036; various reviews; expected issue date:  FY 2010; new start) 
Compliance With Payment Error Rate Measurement Program:  Medicaid and Childrens 
Health Insurance Program Eligibility Determinations   
(OAS; W001040038; expected issue date:  FY 2010; new start) 
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FY 2009 Office of Inspector General Medicaid Integrity Report  38  _________________________________________________________________________________ 
 
Appendix C:   
Opportunities for Medicaid  
Cost Savings and Program Improvements 
 
This appendix lists Medicaidrelated recommendations included in the March 2010 
Compendium of Unimplemented Office of Inspector General Recommendations (Compendium).  
These recommendations, if implemented, could result in cost savings and program 
improvements.  The recommendations are based on work conducted by the Office of 
Inspector Generals (OIG) Office of Audit Services (OAS) and Office of Evaluation and 
Inspections (OEI).  The Compendium contains explanations of the recommendations listed 
below and is available on OIGs Web site at:  http://www.oig.hhs.gov/publications.asp  
OIG relies on the Department of Health & Human Services (HHS) management and 
governmentwide policymakers to decide which program recommendations are 
implemented.  Although many OIG recommendations are directly implemented by 
organizations within HHS, some are acted on by States that collaborate with HHS to 
administer, operate, and/or oversee designated programs such as Medicaid.  HHS and the 
States sometimes do not immediately implement OIGs recommendations for various 
reasons, including administrative complexities, the current policy environment, or a lack of 
statutory authority.  In such cases Congress may step in to incorporate OIGs 
recommendations into legislative actions, many of which result in substantial funds being 
made available for better use or in program improvements.   
Federal and State Partnership  
Limit Enhanced Payments to Cost and Require That Medicaid Payments Returned by 
Public Providers Be Used To Offset the Federal Share 
Improper Payments 
Ensure Compliance With Requirements for Medicaid SchoolBased Health Services  
Identify Duplicate Medicaid and Medicare Home Health Payments  
Enforce Federal Medicaid Payment Policies for Personal Care Services  
Prescription Drugs  
Ensure That Medicaid Reimbursement for BrandName Drugs Accurately Reflects 
Pharmacy Acquisition Costs 
Encourage States To Align Medicaid Generic Drug Pharmacy Reimbursements With 
Pharmacies Acquisition Costs 
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FY 2009 Office of Inspector General Medicaid Integrity Report  39  _________________________________________________________________________________ 
 
Review Impact of New Federal Upper Limit Calculations 
Establish a Connection Between the Calculations of Medicaid Drug Rebates and Drug 
Reimbursements  
Provide More Guidance to Drug Manufacturers To Better Implement the Medicaid Drug 
Rebate Program  
Implement an Indexed BestPrice Calculation in the Medicaid Drug Rebate Program 
Extend Additional Rebate Payment Provisions to Generic Drugs 
Identify Drugs That Are Ineligible for Federal Payments Under Medicaid  
Medicaid Administration 
Enforce Federal Requirements for Submission of Medicaid Managed Care Encounter Data  
Establish a National Medicaid Credit Balance Reporting Mechanism 
Advise States of Their Authority To Collect From Noncustodial Parents With the Ability To 
Contribute Toward Their Childrens Medicaid or Childrens Health Insurance Program 
Costs 
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FY 2009 Office of Inspector General Medicaid Integrity Report  40  _________________________________________________________________________________ 
 
Appendix D:   
Deficit Reduction Act Requirements  
Sections 6001, 6031, and 6034 of the Deficit Reduction Act of 2005 (DRA) include provisions 
that require the Department of Health and Human Services (HHS), Office of Inspector 
General (OIG), to conduct specified activities, as well as to report annually on overall 
Medicaid activities.  These sections are summarized below. 
Section 6001:  Federal Upper Payment Limit for Multiple Source 
Drugs and Other Drug Payment Provisions  
Effective January 1, 2007, section 6001 required the Centers for Medicare & Medicaid 
Services (CMS) to change its Federal upper limit (FUL) calculations (i.e., the method of 
setting limits on what the Federal Government would reimburse Medicaid State agencies 
for prescription drug payments) to base the limits on average manufacturer price (AMP) 
and to provide AMP data to States on a monthly basis beginning July 1, 2006.  This section 
also required OIG to, by no later than June 1, 2006, (1) review the requirements for, and 
manner in which, AMPs are determined under section 1927 of the Social Security Act and 
(2) submit to the Secretary of HHS and Congress recommendations for changes in such 
requirements or manner as the Inspector General determines to be appropriate. 
OIGs Related Actions.  On May 30, 2006, OIG issued a report entitled Determining Average 
Manufacturer Prices for Prescription Drugs Under the Deficit Reduction Act of 2005 
(A060600063), which fulfilled this statutory requirement.  In this report, OIG found that 
existing requirements for determining aspects of AMP were unclear and that 
manufacturers methods of calculating AMPs were inconsistent.  OIG recommended that 
the Secretary direct CMS to clarify requirements in regard to the definition of retail class of 
trade and the treatment of pharmacy benefit manager rebates and Medicaid sales and to 
consider addressing issues raised by industry groups.  OIG also recommended that the 
Secretary direct CMS to issue guidance that specifically addresses the implementation of 
the AMPrelated reimbursement provisions of the DRA and to encourage States to analyze 
the relationship between AMP and pharmacy acquisition cost before using AMP for their 
reimbursement methodology. 
OIG continued to address topics related to the FUL for multiple source drugs and other 
drug payment provisions by issuing an evaluation report in June 2007 entitled 
Deficit Reduction Act of 2005:  Impact on the Medicaid Federal Upper Limit Program, (OEI0306
00400).  Although not required by the DRA, OIG completed an additional evaluation report 
that compared FUL payment amounts to other prices in August 2009 entitled A Comparison 
of Medicaid Federal Upper Limit Amounts to Acquisition Costs, Medicare Payment Amounts, and 
Retail Prices, (OEI030800490).  Similar to its previous work, OIG found that the FUL 
payment amounts calculated under the current method continue to be substantially higher 
than other payment amounts which cause Medicaid to overpay for certain drugs.        
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FY 2009 Office of Inspector General Medicaid Integrity Report  41  _________________________________________________________________________________ 
 
Other Related Actions.  In July, 2007, CMS issued a final regulation at 72 Fed. Reg. 39142, 
which implemented the requirements of the DRA by establishing a new method of 
calculating FULs, based on AMPs and aimed at reining in inflated drug product payments.  
The rule was to take effect on January 1, 2008.  However, in December 2007, a Federal 
district court issued a preliminary injunction prohibiting CMS from implementing the new 
FULs.  While this prohibition is in effect, CMS continues to calculate FUL amounts based on 
the previous formula (i.e., 150 percent of the lowest published price).  The Patient 
Protection and Affordable Care Act (P.L. No. 111148),  2503, changes the basis of the FUL 
amount to that of AMP which could reduce Medicaid payment for multiple source drugs. 
However, further analysis is required to determine the effect of the change.   
Section 6031:  Encouraging the Enactment of State False Claims Acts   
Effective January 1, 2007, this section provides a financial incentive for States to enact false 
claims acts (FCA) that establish liability to the States for the submission of false or 
fraudulent claims to the States Medicaid programs.  If a States FCA is determined to meet 
certain enumerated requirements, the Federal share of Medicaid recoveries under the State 
FCA will be reduced by 10 percent, increasing the States share by 10 percent. 
Specifically, for a State to be eligible for the 10percent increase in its share of false claims 
recoveries, the State law relating to false and fraudulent claims must be determined by 
OIG, in consultation with the Attorney General, to meet the following criteria:  it establishes 
liability to the State for false or fraudulent claims described in the FCA with respect to 
Medicaid expenditures; it contains provisions that are at least as effective in rewarding and 
facilitating qui tam actions as those in the FCA; it contains a requirement for filing an action 
under seal for 60 days with review by the State Attorney General; and it contains a civil 
penalty that is not less than the amount authorized by the FCA.  Following are OIGs 
related actions:  
  On August 21, 2006, OIG published in the Federal Register (71 Fed. Reg. 48552) its 
guidelines for evaluating State FCAs under the requirements of section 6031 of the 
DRA.  This notice was developed in consultation with the Department of Justices 
(DOJ) Civil Division.  In the notice, OIG invited the States to request review of their 
FCAs.     
  During FY 2008, OIG provided written responses to 10 States and approved 4 of the 
State lawsthose passed by California, Georgia, Indiana, and Rhode Islandfor 
the DRA incentive.  OIG made these determinations in consultation with DOJs 
Civil Division.  
  During FY 2009, OIG provided written responses to three States and approved two 
of the State lawsthose passed by Wisconsin and Michiganfor the DRA 
incentive.  OIG made these determinations in consultation with DOJs Civil 
Division.  The response letters are published on OIGs Web site at 
http://www.oig.hhs.gov.  
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FY 2009 Office of Inspector General Medicaid Integrity Report  42  _________________________________________________________________________________ 
 
Section 6034:  Medicaid Integrity Program   
This section establishes the Medicaid Integrity Program (MIP) and requires the Secretary to 
enter into contracts to enhance the capacity of CMS to conduct oversight of Medicaid 
expenditures.  The programs activities include:  review of the actions of individuals or 
entities furnishing items or services for which a Medicaid payment may be made; audit of 
claims for payment for items or services furnished or for administrative services rendered; 
and education of service providers, managed care entities, beneficiaries, and other 
individuals with respect to payment integrity and quality of care.   
The section further establishes that from FY 2006 through FY 2010, $25 million shall be 
appropriated to OIG for the Medicaid activities of OIG in addition to any other amounts 
appropriated or made available for Medicaid oversight.  Such funds shall remain available 
until expended.  This section also requires OIG to identify to Congress the use and 
effectiveness of OIGs use of such funds no later than 180 days after the end of each FY.  
This document responds to that requirement for FY 2009. 
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FY 2009 Office of Inspector General Medicaid Integrity Report  43  _________________________________________________________________________________ 
 
Appendix E:   
Acronyms and Abbreviations 
 
The following is a list of selected acronyms and abbreviations used in this publication. 
 
AMP  average manufacturer price  
AoA  Administration on Aging 
ASPE  Assistant Secretary for Planning and Evaluation 
CDPAP  Consumer Directed Personal Assistance Program 
CIA  corporate integrity agreement  
CMPL  Civil Monetary Penalties Law 
CMS  Centers for Medicare & Medicaid Services 
CoP  Conditions of Participation 
CSA  Controlled Substances Act, included in the Comprehensive Drug Abuse 
Prevention and Control Act of 1970,  P.L. No. 91513 
CY  calendar year 
DEA  Drug Enforcement Administration 
DME  durable medical equipment 
DOJ  Department of Justice 
DRA  Deficit Reduction Act of 2005, P.L. No. 109171  
DSH  disproportionate share hospital  
FCA  False Claims Amendments Act of 1986, P.L. No. 99562 
FDA  Food and Drug Administration 
FDCA  Federal Food, Drug, and Cosmetic Act of 1938, P.L. No. 75717 
FMAP  Federal Medical Assistance Percentage 
FUL  Federal upper limit 
FY  fiscal year 
HCFAC  Health Care Fraud and Abuse Control Program 
HHS  Department of Health and Human Services    
HIPAA  Health Insurance Portability and Accountability Act of 1996, P.L. No. 104191 
HUD  Department of Housing and Urban Development 
IRS  Internal Revenue Service 
LTC  longterm care 
MCO  managed care organization 
MFA  Medicaid fraud and abuse funds 
MFCU  Medicaid Fraud Control Unit 
MHASA  mental health assessment  and service agencies 
MIP  Medicaid Integrity Program 
MIPPA  Medicare Improvements for Patients and Providers Act of 2008, 
P.L. No. 110275 
MSIS  Medicaid Statistical Information System 
NAMFCU  National Association of MFCUs 
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FY 2009 Office of Inspector General Medicaid Integrity Report  44  _________________________________________________________________________________ 
 
NEMT  nonemergency medical transportation 
OAS  Office of Audit Services  
OEI  Office of Evaluation and Inspections  
OIG  Office of Inspector General 
PCS  personal care services 
PTH   parathyroid hormone 
TANF  Temporary Assistance for Needy Families 
TCM  targeted case management 
UCCP  uncompensated care pool 
UPL  upper payment limit   
 
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FY 2009 Office of Inspector General Medicaid Integrity Report  45