Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
E  P
XCLUDED  ROVIDERS IN 
 
M M C
  EDICAID  ANAGED  ARE 
 
E  
NTITIES
 
 
Daniel R. Levinson  
Inspector General 
 
February 2012 
OEI-07-09-00630   
   
Executive Summary:  Excluded Providers in Medicaid Managed Care Entities 
OEI-07-09-00630 
 
WHY WE DID THIS STUDY 
The Office of Inspector General (OIG) is authorized to exclude certain individuals and 
entities (providers) from participating in federally funded health care programs.  These 
programs, such as Medicaid managed care, are prohibited from paying for any items or 
services furnished, ordered, or prescribed by an excluded provider or paying anyone who 
contracts with an excluded provider.  Nationally, approximately 70 percent of Medicaid 
recipients receive some or all of their Medicaid services through managed care.  
However, little was known about how Medicaid managed care entities (MCE) prevent 
excluded providers from entering their provider networks, or how successful MCEs are in 
preventing excluded providers from entering their provider networks. 
 
HOW WE DID THIS STUDY 
For 12 selected MCEs in 10 States, we matched OIG exclusions data, including 
approximately 46,000 providers, and MCE provider network data, including 
approximately 277,000 providers, to identify excluded providers.  We also interviewed 
MCE and State Medicaid staff, and we reviewed contracts between MCEs and States to 
identify their safeguards to prevent excluded providers from enrolling in Medicaid.  
Finally, we asked each MCE to provide information on payments made to each excluded 
provider identified. 
 
WHAT WE FOUND 
Four of the twelve MCEs reviewed had 11 excluded providers enrolled in their provider 
networks in 2009.  Four of these providers were paid a total of $40,306 in 2009; the 
remaining seven providers received no payments during our review.  In 2009, 
approximately 46,000 individuals and entities were listed on OIGs exclusion list.  All 
12 MCEs and all 10 States reviewed had safeguards to identify excluded providers.  
Eleven of the twelve selected MCEs checked OIGs List of Excluded Individuals and 
Entities to identify excluded providers.  MCEs checked providers exclusion statuses at 
initial enrollment and rechecked them at varying frequencies ranging from monthly to 
every 3 years.  Six of the ten States required providers enrolled in MCE networks to first 
enroll in the State fee-for-service Medicaid program.  Two other States had databases that 
combined several sources of exclusion information available to their MCEs.  In the two 
remaining States, each provider was required to undergo an extensive background check 
as part of the provider enrollment process. 
 
WHAT WE RECOMMEND 
We recognize that the number of excluded providers that we identified is small.  CMS 
cited the small number of providers identified as its reason for not concurring with the 
recommendation made in the draft report.  We updated the final report, recommending 
that CMS periodically remind States of their obligation to ensure that no excluded 
providers receive Medicaid payments.  CMS could develop a State Medicaid Director 
letter that includes information from this report on how certain failures led to the 
inclusion of excluded providers in MCE provider networks.  
   
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................4 
Findings........................................................................................................8 
Four of the twelve MCEs reviewed had 11 excluded providers 
enrolled in their provider networks; 4 of these providers were  
paid a total of $40,306 .....................................................................8 
All 12 MCEs and all 10 States reviewed had safeguards to  
identify excluded providers; the specific safeguards varied  
among MCEs and States ................................................................10 
Recommendations ......................................................................................13 
Agency Comments and Office of Inspector General Response .....13 
Appendixes ................................................................................................15 
A:  Selected Medicaid Managed Care Entities ..............................15 
B:  Agency Comments ...................................................................16 
Acknowledgments......................................................................................18 
   
   
OBJECTIVES 
To determine the extent to which: 
1.  selected Medicaid managed care entities (MCEs) enrolled Office of 
Inspector General (OIG)-excluded individuals and entities in their 
provider networks in 2009; and 
2.  selected Medicaid MCEs and States have safeguards in place to 
prevent excluded individuals and entities from enrolling in their 
Medicaid managed care provider networks. 
BACKGROUND 
Medicaid Managed Care 
Nationally, approximately 70 percent of Medicaid recipients receive some 
or all of their Medicaid services through managed care.  Capitated 
managed care is the most common arrangement for Medicaid managed 
care.  Unlike claims for services paid on a fee-for-service basisin which 
State Medicaid programs pay providers for each service renderedin 
capitated managed care, State Medicaid programs pay MCEs a fixed rate 
per enrolled Medicaid beneficiary in exchange for all services included in 
the plan. 
Office of Inspector General Exclusions 
To protect patients and the integrity of federally funded health care 
programs such as Medicaid managed care, OIG is authorized to exclude 
certain individuals and entities (e.g., physician group practices, 
transportation companies, hospitals) from participating in such programs.1  
The bases for exclusions commonly include convictions for 
program-related fraud and patient abuse, and actions by licensing boards 
(e.g., suspension or revocation of a medical license).  When OIG excludes 
individuals or entities (providers), it notifies the excluded providers, the 
Centers for Medicare & Medicaid Services (CMS), and State Medicaid 
agencies in the States in which the providers were enrolled in Medicaid.  
OIG also reports the exclusion to a number of databases used for licensing 
and credentialing providers (described further below).  In 2009, 
approximately 46,000 individuals and entities were listed on OIGs 
exclusion list. 
Medicaid and other federally funded health care programs are prohibited 
from paying for any items or services furnished, ordered, or prescribed by 
 
1
 OIG exclusion authorities can be found in Sections 1128, 1128A, 1156, and 1867 of the Social Security Act. 
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an excluded provider.2  This prohibition applies to payments to the 
excluded provider and anyone who contracts with the excluded provider.  
The payment prohibition also applies to all administrative and 
management services furnished by an excluded provider, regardless of 
which entity submits the claim for reimbursement.  OIG can impose civil 
monetary penalties on entities that contract with excluded providers.3 
Limited exceptions allow payments for certain services (e.g., emergency 
services) furnished by excluded providers.  Additionally, States can 
request that the Secretary of Health and Human Services waive a 
providers exclusion from a State health program.4 
Sources of Exclusion Information 
OIG makes exclusion information available on its Web site.  OIG also 
provides exclusion information to a number of other agencies that in turn 
make the information available through databases they administer. 
List of Excluded Individuals and Entities (LEIE).  When OIG excludes a 
provider from participation in federally funded health care programs, it 
enters information about the provider into the LEIE, a database that houses 
information about all excluded providers.  This information includes the 
providers name, address, provider type, and the basis of the exclusion.  
The LEIE is available to search or download on the OIG Web site and is 
updated monthly.  To protect sensitive information, the downloadable 
information does not include unique identifiers such as Social Security 
numbers (SSN), Employer Identification numbers (EIN), or National 
Provider Identifiers (NPI). 
Excluded Parties List System (EPLS).  The General Services 
Administration (GSA) maintains the EPLS, which includes information 
regarding parties debarred, suspended, proposed for debarment, excluded, 
or otherwise disqualified from receiving Federal funds.  All Federal 
agencies are required to send information to the EPLS on parties they have 
debarred or suspended as described above; OIG sends monthly updates of 
the LEIE to GSA for inclusion in the EPLS.  The EPLS does not include 
any unique identifiers; it provides only the name and address of excluded 
entities.  If EPLS users believe that they have identified an excluded 
entity, they should confirm the information with the Federal agency that 
made the exclusion. 
 
2
 42 CFR Section 1001.1901. 
3
 42 U.S.C. 1320a-7a(a)(6). 
4
 The limited exceptions are described in 42 CFR  1001.1901(c); authority to grant waivers is set forth in 
 1128(d)(3)(B)(i) of the Social Security Act (42 U.S.C. 1320a-7(d)(3)(B)(i)). 
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Medicare Exclusions Database (MED).  CMS maintains the MED as a 
way of providing exclusion information to its stakeholders, including State 
Medicaid agencies and Medicare contractors.5  OIG sends monthly 
updates of the LEIE to CMS.  CMS uses the OIG updates to populate the 
MED (formerly Publication 69).  Unlike the LEIE and the EPLS, the MED 
includes unique identifiers (e.g., SSNs, EINs, NPIs), but is available only 
to certain users to protect sensitive information. 
National Practitioner Data Bank (NPDB).  The NPDB, maintained by the 
Health Resources and Services Administration, is an information 
clearinghouse containing information related to the professional 
competence and conduct of physicians, dentists, and other health care 
practitioners.  OIG reports exclusions to the NPDB monthly.  Although the 
NPDB includes unique identifiers, to protect sensitive information it is 
available only to registered users whose identities have been verified.  The 
NPDB will also include information that is in the Healthcare Integrity and 
Protection Data Bank (HIPDB) when the two data banks are 
consolidated.6  The HIPDB is also a source of exclusion information. 
State Sanctions and Licensure Databases.  States have authority to 
exclude providers from their Medicaid programs.7  Many States maintain a 
databaseoften called a State sanctions listof providers that they have 
excluded.  State sanctions lists may also include OIG-excluded providers.  
Many States also maintain databases of providers to whom they have 
issued licenses; if a provider loses his or her license because of exclusion, 
either by OIG or by a State, the licensing database reflects that status.  
Data included in these databases vary by State. 
CMS Guidance to State Medicaid Agencies 
In a State Medicaid Director letter dated May 16, 2000, CMS reminded 
States to check Publication 69 (the forerunner of the MED) to ensure that 
no excluded providers receive Medicaid payments.  A subsequent State 
Medicaid Director letter dated June 12, 2008, clarified that while States 
 
5
 The MED contains information on all OIG-excluded providers and is used by stakeholders of multiple CMS 
programs, including Medicaid managed care plans. 
6
 Section 6403 of the Patient Protection and Affordable Care Act (P.L. 111-148) amended  1128E of the Social 
Security Act to provide for consolidating the HIPDB information into the NPDB and terminating the HIPDB.  
Implementation was to occur not later than 1 year after enactment (March 23, 2010) or the effective date of final 
regulations, whichever occurred later.  Final regulations have not been issued as of the date of this report. 
7
 Under  1902(p)(1) of the Social Security Act (42 U.S.C. 1396a(p)(1)), a State may exclude a provider from 
the State Medicaid program for any reason that OIG could exclude a provider from Federal health care 
programs. 
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may delegate many provider enrollment or credentialing8 functions to 
MCEs, each State remains responsible for ensuring that it and its 
contracted MCEs do not pay an excluded provider for Medicaid-funded 
health care items or services.  Most recently, on January 16, 2009, CMS 
issued a State Medicaid Director letter advising States of their obligations 
to direct providers to screen their employees and contractors for excluded 
persons.  The letter advised States to communicate these obligations to 
providers on enrollment in Medicaid, to require compliance as a condition 
of enrollment, and to require providers to conduct monthly searches of 
OIGs LEIE. 
Related Studies 
Two previous OIG studies examined Medicare provider exclusions.  In 
August 2000, OIG reported that for a subset of excluded providers 
(1,594) for which unique numerical identifiers were available (Unique 
Physician Identification Number and/or SSNs), Medicare made improper 
payments totaling $35,833 to 21 physicians over the course of 1 year.  The 
study also found that Medicare contractor staff responsible for making 
payments to providers raised some concerns regarding the timeliness, 
completeness, and reliability of exclusion data.9  In May 2010, OIG 
reported that 188 OIG-excluded Medicaid providers had, prior to their 
exclusion, enrolled in 26 State Medicaid programs.  This study identified 
potential weaknesses in States provider enrollment procedures by 
examining whether these providers had questionable financial and 
criminal histories prior to enrolling in Medicaid.  Twenty-four of these 
188 excluded providers had histories of tax debt, criminal convictions, or 
false disclosures prior to enrolling as Medicaid providers.10  OIG 
concluded that additional reviews and oversight were warranted to ensure 
that Medicaid enrollment standards are sufficient to protect the program 
from fraud and abuse. 
METHODOLOGY 
We used mixed methods, including data matches, interviews, and reviews 
of contracts, to conduct this evaluation.  We conducted data matches to 
identify excluded providers.  We then interviewed MCE and State staff 
about the safeguards that prevent excluded providers from enrolling in 
Medicaid.  We also reviewed the contracts between the MCEs and the 
 
8
 Credentialing is a general term for the process of ensuring that a provider is qualified to participate in a 
particular program.  Specific qualifications vary by MCE and State, but credentialing generally includes 
checking a providers exclusion status, ensuring that a provider has a valid license, and verifying a providers 
education, training, criminal history, and ownership information. 
9
 Medicare Payments to OIG Excluded Physicians (OEI-07-98-00380). 
10
 Excluded Medicaid Providers:  Analysis of Enrollment (OEI-09-08-00330). 
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States for information relating to safeguards.  We looked for relationships 
between the presence of safeguards and the presence of excluded 
providers in each network, but found no such relationships.  Finally, we 
asked the MCEs to provide information on payments made to each 
excluded provider that we identified. 
Scope 
The data matches we conducted between the OIG exclusion data and MCE 
provider network data included all providers enrolled in the networks of 
the selected MCEs.  We did not independently verify whether these 
providers had contracts with the MCEs in question, nor did we determine 
whether the excluded providers that we identified had received payments 
from other federally funded health care programs, such as Medicare.  The 
OIG exclusion data used in these data matches included information on 
OIG-excluded providers; the data do not include State-excluded providers 
or providers listed on the EPLS or the NPDB but not also listed in the 
LEIE. 
This evaluation was limited to those enrolled in the provider networks of 
the MCEs selected for this study; in another study, we will evaluate the 
extent to which excluded individuals are employed by the reviewed 
providers.11 
Identification of OIG-Excluded Providers 
We collected OIG exclusion data representing all providers excluded at 
any time from January 1 through December 31, 2009.12  These data 
included providers whose exclusions began before or during the review 
period.  In addition to the periods of exclusion, OIGs exclusion data 
included each providers name, provider type, provider specialty, date of 
birth (for individual providers), address, State, SSN or EIN, Medicaid 
provider number, and/or NPI.  The data also included the dates of any 
reinstatements for the excluded providers. 
Selection of MCEs 
We selected 12 MCEs for inclusion in this study based on our review of 
data included in the 2008 National Summary of State Medicaid Managed 
Care Programs and the 2008 Medicaid Managed Care Enrollment 
 
11
 In this study, we determined whether the providers enrolled in the selected MCEs were excluded.  Providers 
who receive Medicaid funds are also required to screen their employees for excluded individuals, as stated in 
the State Medicaid Director letter dated January 16, 2009.  We will evaluate the extent to which excluded 
individuals are employed by the MCE providers in another study (OEI-07-09-00632).  Data collection for this 
evaluation began in January 2012. 
12
 This data was collected from the same database used to populate the LEIE; however, the SSNs and EINs that 
we obtained are not available in the downloadable version of the LEIE. 
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Report.13  We selected MCEs that represented a variety of covered 
services, operating authorities, and managed care types, as shown in 
Appendix A.14  We excluded primary care case management plans.15  The 
12 MCEs that we selected provided services in 10 States:  Alabama, 
California, Georgia, New York, Ohio, Oklahoma, Oregon, Tennessee, 
Texas, and Washington.  They represent 15.8 percent of total Medicaid 
national managed care enrollment in 2008.16 
Identification of MCE Providers 
From each selected MCE, we requested data on all providers that were 
enrolled in the MCEs provider network from January 1 through 
December 31, 2009.  These data included providers whose enrollment 
began before or during the review period.  In addition to beginning and 
ending dates of enrollment, these data included each providers name 
and/or business name, provider type, provider specialty, date of birth 
(if applicable), address, State, SSN or EIN, Medicaid provider number, 
and NPI. 
Identification of Excluded MCE Providers 
To identify any excluded providers that were enrolled in the selected 
MCEs provider networks, we matched the OIG exclusion data to the 
MCE provider network data, primarily using SSN or EIN.  If an SSN or 
EIN was not available for a particular provider, we attempted to match the 
OIG exclusion data and MCE provider network data using other 
identifying information, such as the Medicaid provider number, NPI, or 
name and date of birth.  For the excluded providers identified, we 
compared their exclusion dates and reinstatement dates, if any, to the 
beginning and ending dates of their enrollment in the selected MCE.  We 
also asked MCE officials: 
  how each excluded provider enrolled in their network; 
 
13
 The National Summary of State Medicaid Managed Care Programs  provides descriptions of all Medicaid 
managed care programs in all States.  The Medicaid Managed Care Enrollment Report provides enrollment data 
by State and by MCE for all Medicaid managed care programs in all States.  Both documents are published 
annually by CMS. 
14
 States can establish contracts with different types of MCEs to provide specific subsets of servicesfor 
example, covered services can be limited to inpatient, mental health, or transportation services.  Different 
sections of the Social Security Act authorize States to contract with different types of MCEs.  These sections are 
known as operating authorities. 
15
 Primary care case management (PCCM) is a system under which a State contracts to furnish case 
management services (which include the location, coordination, and monitoring of primary health care services) 
to Medicaid recipients.  We excluded PCCM plans from our study because in some cases States contract 
directly with the providers; a third-party plan is not always involved. 
16
Although the scope of our study is 2009, only 2008 data were available at the time of MCE selection.  In 
2009, the 12 selected MCEs represented 15.8 percent of national Medicaid managed care enrollment. 
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  whether each excluded providers services fit one of the limited 
exceptions, or if the excluded provider had been granted a waiver, and 
for documentation to support any exception or waiver; and 
  the total amount paid to each excluded provider for services to 
Medicaid recipients in 2009. 
Finally, we looked for trends or patterns in the characteristics of the 
excluded providers we identified in MCE provider networks, but we found 
no such trends or patterns. 
Identification of MCE Safeguards 
We conducted structured interviews with officials from the 12 selected 
MCEs to determine the extent to which they had implemented safeguards 
to ensure that excluded providers were not enrolled in their provider 
networks.  We also asked if they had difficulties or concerns regarding the 
exclusions data available to them.  We looked for relationships between 
MCE safeguards and the number of identified excluded providers in 
provider networks, but we found none. 
Identification of State Safeguards 
We conducted interviews with 1 or more Medicaid officials in the 
10 States in which the 12 selected MCEs operate.  These interviews 
identified the safeguards that States use to prevent excluded providers 
from enrolling in MCE provider networks and also identified difficulties 
or concerns State officials had with the exclusions data available to them.  
We looked for relationships between State safeguards and the number of 
excluded providers in MCE provider networks, but we found none. 
Review of Contracts 
We collected and reviewed copies of the contracts between the States and 
the selected MCEs for information relating to safeguards used to prevent 
excluded providers from enrolling in MCE provider networks.  We looked 
for relationships between contract requirements and the number of 
excluded providers in MCE provider networks, but we found none. 
Limitations 
We selected a purposive sample of 12 MCEs for this study.  The results 
can be applied only to the 12 MCEs that were reviewed; they cannot be 
projected to any other MCEs or States. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
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FINDINGS 
Four of the twelve MCEs reviewed had 11 excluded 
providers enrolled in their provider networks; 4 of 
these providers were paid a total of $40,306 
We identified 11 excluded providers in the networks of 4 MCEs.  A  
total of $40,306a State share of $19,755 and a Federal share of 
$20,551was paid to 4 of the 11 providers after the dates of their 
exclusions by 2 MCEs (i.e., MCEs 1 and 2 in Table 1 below).  We 
identified these providers by checking the 277,835 providers enrolled in 
the 12 selected Medicaid MCEs against the 45,432 OIG-excluded 
providers as of January 1, 2009.  Table 1 shows the amounts paid to the 
four providers.  The 11 excluded providers identified were as follows:  
5 physicians, 3 durable medical equipment (DME) suppliers, 
2 pharmacies, and 1 mental health clinic.  Their dates of exclusion ranged 
from December 18, 1997, to April 20, 2009. 
Table 1:  Payments to Excluded Providers  
Provider  Total Payments  State  Federal 
MCE 
Type  in 2009  Share  Share 
MCE 1  Physician (M.D.)  $26,044.12   $13,022.06  $13,022.06 
MCE 1  Physician (M.D.)  $11,100.58   $5,550.29  $5,550.29 
MCE 1  Physician (M.D.)  $372.10   $186.05  $186.05 
MCE 2  DME supplier  $2,788.75   $996.14  $1,792.61 
  Total:         $40,305.55   $19,754.54  $20,551.01 
Source:  MCE reports of payment information to OIG, 2009. 
Seven of the eleven excluded providers were enrolled in MCE provider 
networks, according to the data that MCEs gave us, but rendered no 
services and received no payments during the period of our review.   
For five of these seven providers, the corresponding MCEsMCEs 1 
and 3explained that the providers had joined their networks through 
their acquisitions of other MCEs and had not yet signed contracts with the 
new MCE, or the providers had simply not been removed from the 
enrollment data when their last contracts expired or were terminated.  It is 
unclear whether these providers would have been paid if they had 
submitted requests for reimbursement to the MCEs.  For the remaining 
two providers, staff from MCE 4 stated that they did not pay any claims 
but did not explain further. 
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Gaps in provider credentialing processes and LEIE 
information contributed to the enrollment of excluded 
providers 
The four MCEs that had excluded providers in their networks gave the 
following explanations about those enrollments. 
MCE 1.  This MCE confirmed that five physicians enrolled in its network 
were excluded.  Upon investigation, the MCE found that its credentialing 
department had correctly identified the excluded providers.  However, the 
information was not entered into the MCEs provider database.  This MCE 
reported that it has taken steps to streamline the process and create greater 
accountability to prevent excluded providers from enrolling in the 
network. 
MCE 2.  A second MCE confirmed that one DME provider enrolled in its 
network was excluded.  MCE officials explained that an external 
contractor credentials providers in the MCEs network, including checking 
providers exclusion status.  The contractor follows the guidelines of a 
national organization for improving health care quality in identifying what 
types of providers require credentialing.  The MCE explained that these 
guidelines do not require DME providers to be credentialed and, therefore, 
this provider was not credentialed upon enrolling in the network.  
Regardless of external organizations guidelines, this MCE was prohibited 
by its contract with the State from enrolling excluded providers in its 
Medicaid provider network. 
MCE 3.  A third MCE confirmed that two excluded DME providers and an 
excluded mental health clinic were enrolled in its provider network.  These 
three providers joined the MCEs network when it acquired another MCE 
in October 2005.  These providers contracts were assigned to the MCE as 
part of the acquisition.  The providers were not recredentialed during the 
acquisition, and therefore the MCE was not aware of their exclusion 
status. 
MCE 4.  The fourth MCE confirmed that two excluded pharmacies were 
enrolled in its network.  The MCE explained that it had mistakenly 
identified the pharmacies as false positive matches with the LEIE and 
had allowed them in its network despite their exclusion status.  The MCE 
further explained that the downloadable file from the OIG Web site does 
not contain unique identifiers such as a National Association of Boards of 
Pharmacy number or an NPI.  Therefore, the MCE matches records 
without such unique identifiers based on specific criteria.  The match 
criteria this MCE used for pharmacies are the first 10 characters of the 
pharmacy name and the ZIP Code, or the first 10 characters of the 
pharmacy address and the ZIP Code.  Comparisons between two databases 
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based on nonunique identifiers, such as names or portions of addresses, 
will likely produce false positive matches.  For example, common 
names, such as John Smith, are likely to appear in both databases even if 
the records associated with the name John Smith in each database 
reference different individuals.  Therefore, the comparison between the 
two databases will yield a match, but the match will be incorrecta false 
positive.  Officials from this MCE stated that each month, that staff must 
manually review approximately 100 matches based on names or addresses.  
Despite the additional steps necessary to confirm whether matches are 
false positives, this MCE was still obligated to confirm that no excluded 
pharmacies were enrolled in its network. 
The MCEs for all four networks in which we identified excluded providers 
reported that they have removed the providers from their networks. 
All 12 MCEs and all 10 States reviewed had safeguards 
to identify excluded providers; the specific safeguards 
varied among MCEs and States
 
All selected MCEs and the Medicaid agencies in 10 States had safeguards 
to prevent excluded providers from enrolling in their provider networks.  
In our review of the contracts between States and MCEs, we found that all 
contracts reiterated the prohibition on enrolling or using excluded 
providers in federally funded health care programs; however, the contracts 
did not specify how the MCEs should identify excluded providers to avoid 
enrolling them. 
MCE safeguards.  The safeguard most commonly used by the selected 
MCEs to prevent excluded providers from enrolling in their networks was 
checking the LEIE.  Eleven of the twelve selected MCEs checked the 
LEIE.17  Other databases that the 12 selected MCEs used to identify 
excluded providers included the EPLS, the MED, the NPDB, and the State 
sanctions or licensure databases.  MCE officials indicated that these 
databases are checked at providers initial enrollment and rechecked at 
varying frequencies ranging from monthly to every 3 years.  Tables 2 and 
3 show how many of the selected MCEs check each database, and how 
frequently these MCEs recheck each database for providers enrolled in 
their networks.  We did not identify any relationship between the 
databases checked, or the frequency at which they were checked, and the 
presence of excluded providers in a particular MCEs network. 
 
17
 The one MCE that did not check the LEIE provided only inpatient hospital services and enrolled only 
hospitals in its provider network.  Rather than have its staff check the exclusion status of each enrolled hospital, 
the MCE required that every enrolled hospital be accredited by the State hospital association.  One of the 
requirements for accreditation was not being excluded. 
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Table 2:  Number of MCEs Checking Databases at Initial Enrollment 
State 
NPDB/  Sanctions or 
  LEIE  EPLS  MED 
HIPDB  Licensure 
Database 
Checked  14  6  5  7  8 
Not checked  1  8  10  7  7 
No response  0*  1  0  1  0 
Source:  OIG interviews with selected MCEs, 2009. 
*Note:  The columns add up to a total of 15, rather than 12 MCEs.  This is because the MCE in Washington was 
separated into four regional plans, each with slightly varying safeguards in use. 
 
Table 3:  Frequency of MCEs Checking Databases After Initial Enrollment 
State 
NPDB/  Sanctions or 
  LEIE  EPLS  MED 
HIPDB  Licensure 
Database 
Monthly  9  4  4  1  4 
Yearly  2  0  0  0  0 
Every 3 years  3  2  1  4  3 
Upon receipt of 
0  0  0  2  1 
updates* 
Never  1  8  10  7  7 
Source:  OIG interviews with selected MCEs, 2009. 
*Note:  The NPDB and HIPDB offer a service to subscribers that supplies information on particular individuals as it is 
entered into the database.  Two MCEs took advantage of these services to receive in real time any information entered 
into these databases on all of their enrolled providers.  One State updated its State sanctions list in the same way, 
sending out updates to subscribers as they occurred. 
 
State safeguards.  Six of the ten States that contracted with the selected 
MCEs required that providers seeking enrollment in MCE networks first 
enroll in the States fee-for-service Medicaid program.18  The checks that 
these six States conducted on providers enrolling in the fee-for-service 
program were similar to those that MCEs conducted on providers 
enrolling in their networks.  In effect, providers in MCE networks in these 
 
18
 Two minor variations in this requirement were found among the six States.  In one State, approximately 
1 percent of providers enrolled in the MCE were not also enrolled as fee-for-service providers.  In another State, 
the only provider type that the MCE was allowed to enroll was community mental health centers (CMHCs).  
This State required CMHCs to undergo an extensive State licensing process, rather than requiring them to enroll 
in the fee-for-service Medicaid program. 
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six States underwent two complete checks, one conducted by the State and 
one conducted by the MCE.  Two other States maintained a State database 
that combined several sources of exclusion information (e.g., LEIE, MED, 
State sanctions list) and made these databases available to their contracted 
MCEs.  In the two remaining States, which contracted with MCEs to 
provide transportation services, each provider of transportation services 
was required to undergo a check for any exclusions and an extensive 
background check. 
OEI-07-09-00630   Excluded Providers in Medicaid Managed Care Entities  12 
   
   
RECOMMENDATIONS 
Our review identified 11 excluded providers in the networks of 4 of the 
12 MCEs that were included in this study.  Although Medicaid and other 
Federally funded health care programs are prohibited from paying for any 
items or services furnished, ordered, or prescribed by an excluded 
provider, 2 MCEs paid a total of $40,306 to 4 of these 11 providers.  
Although all 12 MCEs had safeguards to prevent excluded providers from 
enrolling in their networks, various factorssuch as gaps in the MCEs 
provider credentialing processesled to their inclusion in the networks. 
We recognize that the number of excluded providers that we identified is 
small.  Further, we note that CMS issued State Medicaid Director letters in 
2000, 2008, and 2009 reminding States of their obligation to ensure that 
no excluded providers receive Medicaid payments. 
To ensure that no excluded providers receive Federal health care funds 
through Medicaid managed care contracts, we recommend that CMS: 
Periodically remind States of their obligation to ensure that no 
excluded providers receive Medicaid payments 
To fulfill this recommendation, CMS could develop a State Medicaid 
Director letter as it has done in the past.  The letter could include 
information from this report on how certain failures led to the inclusion of 
excluded providers in MCE provider networks.  Such failures could 
include failure to communicate information about excluded providers 
between credentialing and enrollment staff; failure to check the exclusion 
status of all providers entering networks because of gaps in external 
organizations guidelines; or failure to check the exclusion status of 
providers entering networks as a result of one MCE acquiring another.  
Alternatively, CMS could include this information in the next State 
Program Integrity Review Summary report. 
We are reviewing the excluded providers we identified and the MCEs in 
which they were enrolled to determine appropriate action. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
In its written comments on the report, CMS acknowledged that continuing 
review and improvement is always needed and discussed ongoing CMS 
activities.  In response to the recommendation in the draft report, CMS 
stated that it does not concur that the particular suggestions contained in 
the report are warranted.  CMS also stated that the findings did not 
indicate any systemic failings and that the cost of implementing the 
OEI-07-09-00630   Excluded Providers in Medicaid Managed Care Entities  13 
   
   
OIG-suggested actions would outweigh the benefits that would accrue 
from those actions. 
In 2009, fewer than 46,000 of the millions of U.S. health providers were 
federally excluded, yet 11 of these excluded providers found their way 
into the handful of MCE provider networks we reviewed.  OIG does not 
exclude providers lightly; the 11 providers we identified were excluded 
because they were convicted of health care-related crimes.  Therefore, 
payments to these providers are more serious than simple payment errors.  
Furthermore, in its 2009, 2010, and 2011 State Program Integrity Review 
Summary reports, CMS highlighted effective practices as well as 
inadequacies in States processes to identify excluded providers both in 
fee-for-service Medicaid and Medicaid managed care.  This indicates that 
CMS is also seeking ways to identify and prevent excluded providers from 
participating in Medicaid. 
In the draft report, we recommended that CMS develop processes to allow 
MCEs to efficiently check their entire provider networks to prevent 
excluded providers from enrolling or remaining in their networks.  We 
revised the recommendation and the suggested actions to implement it 
based on CMS comments. 
We ask that in its final management decision, CMS indicate whether it 
concurs with our revised recommendation and suggested actions, and what 
steps, if any, it will take to implement the recommendation. 
The full text of CMSs comments can be found in Appendix B. 
OEI-07-09-00630   Excluded Providers in Medicaid Managed Care Entities  14 
   
   
APPENDIX A 
Table A-1:  Selected Medicaid Managed Care Entities 
Social 
Number of 
Name of Managed  Type of  Security Act 
State  Program Name  Covered Services  Enrollees in 
Care Entity  Managed Care  Operating 
2008 
Authority  
Partnership Hospital  Partnership Hospital  prepaid inpatient 
Alabama  inpatient hospital  1915(a)  484,288 
Program  Program  health plan 
Health Net 
Two-Plan Model  Community  managed care  1915(b), 
California  comprehensive   528,037 
Program  Solutions, Inc.- organization  1932(a)  
TPMP  
Two-Plan Model  LA Care Health  managed care  1915(b), 
California  comprehensive   741,817 
Program  Plan   organization  1932(a)  
Non-Emergency  Non-Emergency  prepaid 
nonemergency 
Georgia  Transportation  Transportation  ambulatory  1902(a)(70)   1,167,887 
transportation 
Brokerage Program  Brokerage Program  health plan 
Partnership Plan -  NYS Catholic  managed care 
New York  comprehensive   1115  270,393 
Family Health Plus  Health Plan   organization 
Full-Risk Managed Care  managed care 
Ohio  CareSource   comprehensive   1932(a)  607,118 
Program  organization 
prepaid 
nonemergency 
Oklahoma  SoonerRide  Logisticare, Inc.  ambulatory  1902(a)(70)   510,768 
transportation 
health plan 
managed care 
Oregon  Oregon Health Plan Plus  CareOregon, Inc.  comprehensive   1115  107,294 
organization 
managed care 
Tennessee  TennCare II  Americhoice  comprehensive  1115  525,185 
organization 
First Health 
pharmacy benefit 
Tennessee  TennCare II  Services  prescription drugs  1115  1,207,136 
manager 
Corporation 
managed care 
Texas  STAR  Amerigroup  comprehensive   1915(b)  333,423 
organization 
Integrated Mental Health  Regional Support  prepaid inpatient 
Washington  mental health   1915(b)  858,331 
Services  Network   health plan 
                 6,134,541 
     Total: 
Source:  2008 National Summary of State Medicaid Managed Care Programs; 2008 Medicaid Managed Care Enrollment Report. 
OEI-07-09-00630   Excluded Providers in Medicaid Managed Care Entities  15 
  APPENDIX B 
Agency Comments 
...v_ 
. 
""  '<0, 
~	
(  DEPARTMENT OF HEALTH" HUMAN SERVICES  Cente", for Medicare & Medicaid Services 
-.,"Sz\...o. 
Administrator 
Washington, DC 20201 
SEP 0 8 2011
DATE: 
TO: 	 Daniel R. Levinson 

Inspector General 

FROM: 	 Donald M, Berwick, M,D. 

Administrator 

SUBJECT: 	 Office ofInspector General (OIG) Draft Report: Excluded Providers in Medicaid 
Managed Care Entities (OEI-07-09-00630) 
TIle Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to comment 
on this subject OIG draft report, The purpose of the report was to determine the extent to which 
selected--(l) Medicaid managed care entities (MCEs) enrolled OIG-excluded individuals and 
entities in their provider networks in 2009; and (2) Medicaid MCEs and States have safeguards 
in place to prevent excluded individuals and entities from enrolling in Medicaid managed care 
provider networks, For 12 selected MCEs, the 010 matched OIG exclusions data and MCE 
provider network data to identify excluded providers, and then requested each MCE to provide 
information on payments made to those excluded providers. The 010 also interviewed MCE and 
State Medicaid staff, and reviewed contracts between MCEs and States to identify the safeguards 
which prevented excluded providers from enrolling in Medicaid programs, In total, 10 States 
were reviewed. 
The OIG's report found that four of the twelve MCEs reviewed had 11 total excluded providers 
enrolled in their provider networks. Seven did not bill and the remaining four ofthese 11 
excluded providers were paid a total of $40,306, The OIG report also found that all 12 MCEs 
and all 10 States reviewed had safeguards in place to identify excluded providers, although the 
specific safeguards varied among MCEs and States, 
OIG Recommendation 
The OIG recommended that CMS should work with the States to develop processes that allow 
MCEs to efficiently check their entire provider networks to prevent excluded providers from 
enrolling or remaining in their networks, 
The OIG also made the following suggestions as to how CMS could implement this 
recommendation: 
 	 CMS could encourage States to make the Medicare Exclusion Database (MED) available 
directly or indirectly (through States) to Medicaid MCEs, or by encouraging States to 
check MCE provider network data against the MED. The unique identifiers available in 
the MED could reduce errors associated with name-based matches necessitated by the 
OEI-O?-09-00630  Excluded Providers in Medicaid Managed Care Entities  16   
   
Agency Comments (Continued) 
 
OEI-07-09-00630   Excluded Providers in Medicaid Managed Care Entities  17 
   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Brian T. Pattison, Regional 
Inspector General for Evaluation and Inspections in the Kansas City 
regional office, and Deborah K. Walden, Deputy Regional Inspector 
General. 
Michala Walker served as the team leader for this study.  Other principal 
Office of Evaluation and Inspections staff from the Kansas City regional 
office who contributed to the report include Michael Barrett and 
Rae Hutchison; central office staff who contributed include Kevin Manley 
and Kevin Farber. 
OEI-07-09-00630   Excluded Providers in Medicaid Managed Care Entities  18 
   
   
Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is 
to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the 
health and welfare of beneficiaries served by those programs.  This statutory mission is carried out through 
a nationwide network of audits, investigations, and inspections conducted by the following operating 
components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with 
its own audit resources or by overseeing audit work done by others.  Audits examine the performance of 
HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are 
intended to provide independent assessments of HHS programs and operations.  These assessments help 
reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress, 
and the public with timely, useful, and reliable information on significant issues.  These evaluations focus 
on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of 
departmental programs.  To promote impact, OEI reports also present practical recommendations for 
improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and 
misconduct related to HHS programs, operations, and beneficiaries.  With investigators working in all 
50 States and the District of Columbia, OI utilizes its resources by actively coordinating with the 
Department of Justice and other Federal, State, and local law enforcement authorities.  The investigative 
efforts of OI often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and providing all legal support for OIGs internal 
operations.  OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS 
programs, including False Claims Act, program exclusion, and civil monetary penalty cases.  In 
connection with these cases, OCIG also negotiates and monitors corporate integrity agreements.  OCIG 
renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement 
authorities.