office of
inspector general
U.S. Department of Health and Human Services
Semiannual Report
to Congress
April 1  September 30, 2014 HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014   
 
 
A Message From the  
This Semiannual Report to Congress, submitted pursuant to the Inspector 
GIennesrapl Aectc oft 1o97r8,  aGs aemnenederd,a sulm marizes the activities of the Office of 
 
Inspector General (OIG), Department of Health and Human Services (HHS or 
Daniel R. Levinson 
the Department), for the 6-month period that ended September 30, 2014.   
Inspector General 
Combating fraud, waste, and abuse across more than 100 Department programs is our mission.  In this 
reporting period, we have recommended legislative fixes that could save Medicare billions of dollars and 
published notable Medicare and Medicaid work that resulted in significant monetary returns and 
improvements in adherence to Federal requirements.  OIG has continued to work diligently with its 
partners to fight fraud.  Our partnership with other Federal, State, and local law enforcement entities as 
part of the Health Care Fraud Prevention and Action Team (HEAT) continues to produce strong results, 
with over $440 million in investigative receivables for this reporting period alone.  Our fraud-fighting 
efforts in non-Centers for Medicare & Medicaid Services programs continue, and this report includes 
results about investigative efforts to combat grant fraud in Indian Health Service programs.   
One important area of focus for OIG is promoting the economy, efficiency, and effectiveness of the 
Patient Protection and Affordable Care Act (ACA) programs.  Several reports generated during this 
reporting period included recommendations to strengthen the integrity of the new health insurance 
marketplaces.  Two reports provided a first look at enrollee eligibility verifications, a critical component 
of marketplace operations.  Our examination of the effectiveness of enrollment procedures and 
safeguards revealed deficiencies in internal controls that may have limited certain marketplaces ability 
to prevent the use of inaccurate or fraudulent information when determining qualified health plan 
eligibility.  Another report examined the process for resolving inconsistencies between applicants self-
attested application information and other data and revealed that, at the time of our work, marketplaces 
were unable to resolve most inconsistencies.  A third recent report found that selected marketplaces 
generally protected personally identifiable information, but could improve some information security 
controls.  Collectively, these reports demonstrate OIGs commitment toward providing timely 
information to the Department as it works to implement and improve marketplace operations.   
OIGs ongoing and planned reviews will assess the Departments implementation and operation of ACA 
programs and progress toward achieving goals.  Additional marketplace work is examining, among other 
things, expenditures, Department management and administration of marketplace programs, and 
information technology security.  Additional priority areas for ACA oversight include Medicare and 
Medicaid reforms and new public health grant programs.   
I would once again like to express my appreciation to Congress and to the Department for their 
sustained commitment toward improving the efficiency and effectiveness of HHS programs.   
 
Daniel R. Levinson 
Inspector General   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014   
 
 
 
 
 
 
 
 
 
 
 
 
 
http://oig.hhs.gov  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page i 
 
 
The Department of Health and Human Services (HHS) Office of Inspector General (OIG) 
HSemiiganhnualli Rgephortt sto  Congress (Semiannual Report) describes significant problems, abuses, deficiencies, 
and investigative outcomes relating to the administration of HHS programs and operations that were 
disclosed during the reporting period.  This edition addresses work completed during the second half of 
fiscal year (FY) 2014 (AprilSeptember) and summarizes key accomplishments during the period.      
Fiscal Year 2014 accomplishments 
 
During FY 2014, OIG reported expected recoveries of over $4.9 billion consisting of nearly $834.7 million 
in audit receivables and about $4.1 billion in investigative receivables, which include about $1.1 billion in 
non-HHS investigative receivables resulting from our work in areas such as the States shares of Medicaid 
restitution.   
OIG reported 971 criminal actions against individuals or entities that engaged in crimes against HHS 
programs and 533 civil actions, which include false claims and unjust-enrichment lawsuits filed in Federal 
district court, civil monetary penalties settlements, and administrative recoveries related to provider 
self-disclosure matters.  We also reported exclusions of 4,017 individuals and entities from participation 
in Federal health care programs. 
Medicare Fraud Strike Force accomplishments 
 
The Health Care Fraud Prevention and Enforcement Action Team (HEAT) was started in 2009 by HHS and 
the Department of Justice to strengthen programs and invest in new resources and technologies to 
prevent and combat health care fraud, waste, and abuse.  HEAT has continued with increasing 
momentum to identify and hold accountable those who seek to defraud Medicare and Medicaid. 
Medicare Fraud Strike Force teams coordinate law enforcement operations conducted jointly by Federal, 
State, and local law enforcement entities.  The teams, now a key component of HEAT, have a record of 
successfully analyzing data to quickly identify and prosecute fraud.  The Strike Force began in 
March 2007 and is operating in nine major cities.  During this FY, Strike Force efforts resulted in the filing 
of charges against 228 individuals or entities, 232 criminal actions, and $441 million in investigative 
receivables.  The effectiveness of the Strike Force model is enhanced by interagency collaboration.   
Strike Force nationwide takedown   
During this reporting period, a nationwide Strike Force takedown resulted in charges against 90 
individuals who were involved in different health care fraud schemes.  These individuals, including 
doctors, nurses, and other medical professionals, allegedly participated in schemes involving 
approximately $260 million in false claims billed to Medicare.  The defendants charged are accused of 
various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of 
the anti-kickback statute, and money laundering.  The charges are based on a variety of alleged fraud 
schemes involving various medical treatments and services, including home health care, mental health  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page ii 
 
 
services, psychotherapy, physical and occupational therapy, durable medical equipment, and pharmacy 
fraud. 
According to court documents, the defendants allegedly participated in schemes to submit claims to 
Medicare for treatments that were medically unnecessary and/or were never provided.  In many cases, 
court documents allege that patient recruiters, Medicare beneficiaries, and other co-conspirators were 
paid cash kickbacks in return for supplying beneficiary information to providers, which enabled the 
providers to then submit fraudulent claims to Medicare for services that were medically unnecessary or 
never performed.  The Strike Force takedown occurred in Detroit, Michigan; Miami and Tampa, Florida; 
Houston, Texas; Brooklyn, New York; and Los Angeles, California. 
Medicare wasteful payments, policies, and practices 
 
Medicare Part A covers certain inpatient services, such as those provided in hospitals and skilled nursing 
facilities and some home health services.  Part B covers certain other medical services, equipment, 
supplies, and drugs that Part A does not cover.  Health care providers and suppliers bill Medicare.  The 
claims are processed by Medicare contractors.  Part D is Medicares optional prescription drug program 
through which private insurance companies and other plan sponsors offer prescription drug coverage to 
Medicare beneficiaries.  Waste is a broad term that applies to situations in which Medicare pays more 
than it should.  Policies or practices sometimes result in waste when unintended loopholes or other 
inherent problems invite exploitation or hinder consistent payment determinations.  Medicares 
supporting systems and practices sometimes result in waste by hindering timely and appropriate 
payment adjustments.   
Part D Beneficiaries With Questionable Utilization Patterns for HIV Drugs (OEI-02-11-00170)  
Almost 1,600 Medicare Part D beneficiaries had questionable utilization patterns for human 
immunodeficiency virus (HIV) drugs in 2012, at a cost of $32 million.  These beneficiaries had no 
indication of HIV in their medical histories, received an excessive dose or supply of HIV drugs, received 
HIV drugs from a high number of pharmacies or prescribers, or received contraindicated drugs (i.e., HIV 
drugs that should not be used in combination with one another).  These patterns may indicate that a 
beneficiary is receiving inappropriate drugs and diverting them for illegal sale, that a pharmacy is billing 
for drugs that a beneficiary never received, or that a beneficiarys identification number was stolen.   
Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs 
(OEI-05-12-00540)  
We identified the safeguards that pharmaceutical manufacturers have in place to prevent copayment 
coupons from being used to purchase drugs paid for by Medicare Part D and determined that their 
safeguards may not stop all coupons from being used for Part D covered drugs.  These findings raise 
concerns that copayment coupons may encourage Part D beneficiaries to purchase higher cost brand 
drugs instead of lower cost, equally effective alternative drugs.  This could increase costs for Part D plans, 
the Part D program, and Part D beneficiaries.  Additionally, manufacturers may be liable under the 
anti-kickback statute if they offer coupons to induce the purchase of drugs paid for by Part D or any 
other Federal health care program.    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page iii 
 
 
OIGs Special Advisory Bulletin affirmed that pharmaceutical manufacturers are at risk of sanctions if 
they fail to take appropriate steps to ensure that their copayment coupons do not induce the purchase 
of items or services covered by Federal health care programs, including, but not limited to, drugs 
covered by Part D.  For this reason, manufacturers may engage industry stakeholders and Centers for 
Medicare & Medicaid Services (CMS) in an effort to identify a solution to ensure that coupons are not 
used for drugs covered by Part D.  CMS should cooperate with industry stakeholder efforts to improve 
the reliability of pharmacy claims edits and make coupons transparent.   
Medicare and Beneficiaries Could Save Billions If CMS Reduces Hospital Outpatient Department 
Payment Rates for Ambulatory Surgical Center-Approved Procedures to ASC Payment Rates (A-
05-12-00020) 
Medicare and its beneficiaries could save $12 billion during calendar years (CYs) 2012 through 2017 if 
CMS reduces hospital outpatient department payment rates for ambulatory surgical center (ASC)-
approved procedures to the same level as ASC payment rates.  When outpatient surgical procedures that 
do not pose significant risk to patients are performed in an ASC instead of an outpatient department, the 
payment rates are generally lower.  
Medicare Part B Prescription Drug Dispensing and Supplying Fee Payment Rates Are 
Considerably Higher Than the Rates Paid by Other Government Programs (A-06-12-00038) 
Medicare Part B would have saved more than $100 million in 2011 if its rates for dispensing and 
supplying fees for certain drugs were aligned with the rates that Part D or State Medicaid programs paid.   
Medicare and Medicaid improper claims and payments 
Medicare and Medicaid make improper payments (a form of wasteful spending) when the programs do 
not effectively prevent, deter, identify, or address inappropriate and abusive billing by providers and 
suppliers.  Some, but not all, abusive billing is fraudulent.  Health care providers and suppliers bill 
Medicare directly for reimbursement.  For the Medicaid program, health care providers and suppliers are 
paid by the States; the States then report the amounts to CMS to receive the Federal share.   
Limited Compliance With Medicares Home Health Face-to-Face Documentation Requirements 
(OEI-01-12-00390) 
For 32 percent of home health claims that required face-to-face encounters, the documentation did not 
meet Medicare requirements and physicians inconsistently completed the narrative portion of the 
face-to-face documentation.  This resulted in $2 billion in payments that should not have been made.   
Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 
(OEI-04-10-00181) 
Medicare inappropriately paid $6.7 billion for claims for evaluation and management (E/M) services in 
2010 that were incorrectly coded and/or lacking documentation, representing 21 percent of Medicare 
payments for E/M services that year.  E/M services are 50 percent more likely to be paid for in error than 
other Part B services, and most improper payments result from errors in coding and from insufficient 
documentation.    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page iv 
 
 
Pennsylvania's Gross Receipts Tax on Medicaid Managed Care Organizations Appears To Be an 
Impermissible Health-Care-Related Tax (A-03-13-00201) 
Pennsylvanias Gross Receipts Tax on Medicaid managed care organizations appears to be a health-care-
related tax that is impermissible for Medicaid funding.  Through this tax, Pennsylvania collected $1.76 
billion from its Medicaid managed care organizations over 3 years and used that money to pay some of 
its share of capitation payments.   
Medicare Inappropriately Paid Hospitals Inpatient Claims Subject to the Postacute Care 
Transfer Policy (A-09-13-02036) 
Medicare inappropriately paid hospital inpatient claims subject to its postacute care transfer policy, 
resulting in overpayments totaling approximately $19.5 million over 4 years.  Medicare overpaid the 
hospitals because the Common Working File edits related to postacute care transfers were not working 
properly.   
HHS Met Many Requirements of the Improper Payments Information Act of 2002 but Was Not 
Fully Compliant (A-17-14-52000) 
HHS met many requirements of the Improper Payments Information Act of 2002 (IPIA) as amended by 
the Improper Payments Elimination and Recovery Act of 2010 but did not fully comply with it for FY 
2013.  We did not identify any new issues in this, OIGs third, report on HHSs compliance with the IPIA, 
but continue to recommend that the Department improve its compliance with the IPIA.   
Affordable Care Act implementation 
The Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education 
Reconciliation Act of 2010, made changes to HHS programs and enacted a range of new programs that 
affect the Department.  Our work has encompassed and will continue to encompass Health Insurance 
Exchanges (Marketplaces), Medicaid expansion, use of State establishment grants, and the use of startup 
and solvency loans for Consumer Operated and Oriented Plan Loans.  
Certain Internal Controls Implemented by the Federal, California, and Connecticut Marketplaces 
To Meet Applicable Federal Requirements Were Less Than Effective (A-09-14-01000) 
Not all internal controls implemented by the Federal, California, and Connecticut Marketplaces were 
effective in ensuring that individuals were enrolled in qualified health plans (QHPs) according to Federal 
requirements.  The deficiencies in internal controls that we identified may have limited the 
Marketplaces ability to prevent the use of inaccurate or fraudulent information when determining 
eligibility of applicants for enrollment in QHPs.   
Marketplaces Faced Early Challenges Resolving Inconsistencies With Applicant Data (OEI-01-14-
00180) 
From October through December 2013, Marketplaces were unable to resolve most inconsistencies, 
which they reported most commonly as citizenship and income, although each applicant can have 
multiple inconsistencies.  Specifically, the Federal Marketplace was unable to resolve 2.6 million of 
2.9 million inconsistencies because the CMS eligibility system was not fully operational.    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page v 
 
 
Oversight of HHS grants 
 
HHS is the largest grant-making organization in the Federal Government, and its funding of health and 
human services programs touches the lives of almost all Americans.  The size and scope of Departmental 
awards make their operating effectiveness crucial to the success of programs designed to improve the 
health and well-being of the public.  Yet OIG has noted weaknesses in the oversight of grantees year 
after year.  
Grant fraud in Indian country  
In a collaborative effort by OIGs Office of Investigations, Office of Audit Services, Office of Evaluation 
and Inspections, and Office of Counsel to the Inspector General, OIG has conducted a grant project 
called the Indian Country Grant Fraud Initiative.  The project involves the review of various HHS grant 
programsprimarily the Low Income Home Energy Assistance program (LIHEAP), Temporary Assistance 
for Needy Families program, and Head Start programoverseen by HHS operating divisions (OpDivs), 
such as the Administration for Children and Families, the Indian Health Service, and the Health 
Resources and Services Administration.  The project has exposed a number of fraudulent schemes, 
including theft and embezzlement; bribery of tribal officials and grantees; provision of false information 
on applications by recipients; unauthorized or inflated salaries (paid to staff, family, and friends); wages 
paid without work being conducted or completed; and use of grant funds for personal travel. 
The Indian Country Grant Fraud Initiative has resulted in 31 Federal criminal indictments, 20 convictions, 
and court-ordered restitutions ranging from $10,000 to $1.7 million.  Several Federal law enforcement 
agencies are also assisting in the initiative, including OIGs from the Environmental Protection Agency and 
the Departments of the Interior, Housing and Urban Development, and Agriculture; the Internal Revenue 
Service Criminal Investigation Division; and the Federal Bureau of Investigation.   
Laws Prohibit the Use of HHS Grant Funds for Lobbying, but Limited Methods Exist To Identify 
Noncompliance (OEI-07-12-00620) 
All awarding agencies reported using Federal and departmental sources of guidance regarding the 
prohibitions on the use of grant funds for lobbying.  However, limited methods exist to identify 
noncompliance with lobbying prohibitions.   
Vulnerabilities in the HHS Small Business Innovation Research Program (OEI-04-11-00530)   
Although it was not required to do so, HHS did not consistently collect information on, or assess the 
commercial success of, Small Business Innovation Research Program awards and therefore cannot 
determine whether the program is meeting one of its primary goals.  We found that 31 percent of 
awardees had questionable or unverified eligibility for at least one requirement, and none of the 
awarding OpDivs completed a required check for duplicative awards across other Federal agencies.   
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page vi 
 
 
OIG participation in congressional hearings 
 
 
04/14/2014  Gloria Jarmon, Deputy Inspector General for Audit 
Services, testified before the House Committee on 
Ways and Means, Subcommittee on Health: Ideas 
to improve Medicare oversight to reduce waste, 
fraud, and abuse.  Testimony.   
Gloria Jarmon, Deputy Inpector General 
for Audit Services 
     
05/20/2014  Jodi D. Nudelman, Regional Inspector General for 
Office of Evaluation and Inspections, testified before 
the House Committee on Ways and Means, 
Subcommittee on Health: Current hospital issues in 
the Medicare program.  Testimony. 
 
Jodi D. Nudelman, Regional Inspector 
General, Office of Evaluation and 
Inspections 
     
05/20/2014  Brian P. Ritchie, Acting Deputy Inspector General for 
Evaluation and Inspections, testified before the 
House Committee on Oversight and Government 
Reform, Subcommittee on Energy Policy, Health Care 
and Entitlements: Medicare mismanagement:  
 
Oversight of Federal Government efforts to  Brian P. Ritchie, Acting Deputy 
Inspector General for Evaluation and 
recapture misspent funds.  Testimony. 
Inspections 
     
06/25/2014  Gary Cantrell, Deputy Inspector General for 
Investigations, testified before the House Committee 
on Energy and Commerce, Subcommittee on 
Oversight and Investigations: Medicare Program 
 
Integrity:  Screening Out Errors, Fraud, and Abuse.   Gary Cantrell, Deputy Inspector 
Testimony.  General for Investigations 
     
07/16/2014  Kay Daly, Assistant Inspector General, Office of Audit 
Services, and Joyce Greenleaf, Regional Inspector 
General, Office of Evaluation and Inspections, 
testified before the House Committee on Energy and 
Commerce, Subcommittee on Health: Failure To   
Kay Daly, Assistant Inspector General, 
Verify: Concerns Regarding PPACA's [Patient  Office of Audit Services, and Joyce 
Protection and Affordable Care Act] Eligibility  Greenleaf, Regional Inspector General, 
Office of Evaluation and Inspections 
System.  Testimony.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page vii 
 
 
     
07/29/2014  John Hagg, Director of Medicaid Audits, Office of 
Audit Services, testified before the House 
Committee on Oversight and Government Reform, 
Subcommittee on Energy Policy, Health Care and 
 
Entitlements: Examining the Federal Government's  John Hagg, Director of Medicaid Audits, 
Failure to Curb Wasteful State Medicaid Financing  Office of Audit Services 
Schemes.  Testimony. 
     
07/31/2014  Statement for the Hearing Record.  OIG submitted a 
statement for the record to the Senate Special 
Committee on Aging: Admitted or Not?  The Impact 
of Medicare Observation Status on Seniors.  
Statement. 
 
 
 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page viii 
 
 
 
 
 
 
 
 
 
   
http://oig.hhs.gov  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page ix 
 
 
Contents 
 
Selected Acronyms ................................................................................ xiv
 
 
Centers for Medicare & Medicaid Services .............................................. 1
 
CMS records and information systems security and functionality ............................................ 1 
Fraud Prevention System .................................................................................................... 1 
Medicare payments, policies, and quality ................................................ 2
 
Medicare improper claims and payments ................................................................................. 2 
Entitlement-terminated beneficiaries ................................................................................ 2 
Unlawfully present beneficiaries ........................................................................................ 2 
Beneficiaries confined in mental health facilities ............................................................... 3 
Certification of rural health clinics ...................................................................................... 3 
HospitalsPostacute care transfer policy .......................................................................... 4 
HospitalsOutlier payments .............................................................................................. 4 
Improper paymentsEvaluation and management services ............................................. 5 
Questionable billingHIV drugs ......................................................................................... 5 
Questionable billingElectrodiagnostic tests .................................................................... 6 
Questionable billingClinical laboratory services .............................................................. 6 
Medicare wasteful payments, policies, and practices ............................................................... 6 
Ambulatory surgical center-approved procedures ............................................................. 6 
Long-term care hospitalsInterrupted-stay policy ............................................................ 7 
Compounded drugsPayment and oversight .................................................................... 7 
Part B drugsPrice data ..................................................................................................... 8 
Part D drugsCopayment coupon use ............................................................................... 9 
Diabetes test strips ............................................................................................................. 9 
Dual eligibles ..................................................................................................................... 10 
Medicare quality of care .......................................................................................................... 10 
Home health ..................................................................................................................... 10 
Medicaid payments, policies, and quality .............................................. 12
 
Improper State claims for Federal reimbursement ................................................................. 12 
Inpatient supplemental payments .................................................................................... 12  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page x 
 
 
Withdrawal of excessive Medicaid funds .......................................................................... 12 
Incorrect Medicaid claims adjustments ............................................................................ 13 
Incorrect Medicaid incentive payments............................................................................ 14 
Overpayment collections .................................................................................................. 14 
Federal medical assistance percentage funds .................................................................. 16 
Health-care-related tax ..................................................................................................... 16 
Residential habilitation services ....................................................................................... 16 
Physician-administered drugs ........................................................................................... 17 
Inpatient hospital services ................................................................................................ 18 
Family planning services ................................................................................................... 18 
Continuing day treatment services ................................................................................... 19 
Medicaid wasteful policies and practices ................................................................................ 20 
Recovery of overpaymentsAcute-care hospitals ........................................................... 20 
Questionable billingDental and orthodontic services ................................................... 20 
Public Assistance Reporting Information System .............................................................. 21 
Offshore outsourcing of administrative functions ............................................................ 21 
Drug rebate dispute resolution ......................................................................................... 21 
Childrens Health Insurance ProgramBonus payments ................................................. 22 
Medicaid quality of care and patient safety ............................................................................ 22 
Nursing facilitiesReporting allegations of abuse or neglect .......................................... 22 
Unqualified nursing home workers ................................................................................... 22 
Unqualified hospice workers ............................................................................................ 23 
Legal and investigative activities related to Medicare and Medicaid .... 24
 
Health care fraud prevention and enforcement .......................................... 25 
Medicare Fraud Strike Force teams .................................................................................. 25 
Strike Force examples ....................................................................................................... 26 
Other criminal and civil enforcement activities ........................................... 27 
Special Assistant U.S. Attorney Program ........................................................................... 27 
Most wanted fugitives listed on OIGs Web site ............................................................... 28 
Recently completed actions and settlements .............................................. 28 
Home health ..................................................................................................................... 28 
Pharmacies ........................................................................................................................ 29 
Personal care services ....................................................................................................... 29 
Hospitals............................................................................................................................ 30 
Identity theft ..................................................................................................................... 30  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page xi 
 
 
Physicians .......................................................................................................................... 31 
Mental health services ...................................................................................................... 31 
Hospice care ...................................................................................................................... 32 
Durable medical equipment ............................................................................................. 32 
Transportation ................................................................................................................... 33 
Chiropractor ...................................................................................................................... 34 
State Medicaid Fraud Control Units ............................................................. 34 
OIG oversight of State MFCUs ........................................................................................... 34 
OIG onsite reviews of MFCUs ............................................................................................ 34 
Joint investigations with MFCUs ....................................................................................... 35 
Advisory opinions and other industry guidance .......................................... 36 
Sanction authorities and other administrative actions ................................ 36 
Program exclusions ........................................................................................................... 36 
Suspensions and debarments ........................................................................................... 37 
Corporate integrity agreements........................................................................................ 38 
Civil Monetary Penalties Law ............................................................................................ 39 
Patient dumping ................................................................................................................ 40 
Provider self-disclosure protocol ................................................................. 41 
Public health agencies and enforcement activities ................................ 43
 
Office of the Assistant Secretary for Administration ............................................................... 43 
Office of Security and Strategic Information security controls ......................................... 43 
Office of the Assistant Secretary for Financial Resources ....................................................... 43 
Small Business Innovation Research Program .................................................................. 43 
Lobbying prohibitions on grant funds ............................................................................... 44 
Internal controls for Hurricane Sandy disaster relief funds .............................................. 44 
Office of the Assistant Secretary for Health ............................................................................ 44 
Office for Human Research Protections oversight ............................................................ 44 
Office of the Assistant Secretary for Preparedness and Response ......................................... 45 
Hospital emergency preparedness and response ............................................................. 45 
Office of the National Coordinator for Health Information Technology ................................. 45 
Electronic health recordstesting and certification ........................................................ 45 
Centers for Disease Control and Prevention ........................................................................... 46  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page xii 
 
 
Presidents Emergency Plan for AIDS Relief ...................................................................... 46 
National Institutes of Health ................................................................................................... 47 
National Institute of Environmental Health SciencesSuperfund appropriations .......... 47 
Public-health-related legal actions and investigations ................................. 47 
Health Education Assistance Loan Program ...................................................................... 47 
Human services agencies and enforcement activities ........................... 49
 
Administration for Children and Families ................................................................................ 49 
Child day care centersLicensing requirements .............................................................. 49 
Child care home providersLicensing requirements ....................................................... 49 
Child Care and Development FundControl deficiencies ................................................ 50 
Child Care Subsidy program claimsControl deficiencies ............................................... 51 
Head StartEnrollment .................................................................................................... 51 
Community Services Block GrantsMonitoring and reporting ....................................... 51 
Administration for Community Living ..................................................................................... 52 
Senior Medicare Patrol ..................................................................................................... 52 
Child support enforcement activities ........................................................... 52 
OIG investigations ............................................................................................................. 52 
Engaging the public in capturing deadbeat parents ......................................................... 53 
Other HHS-related reviews ..................................................................... 54
 
Financial reporting and improper payment reduction ................................. 54 
University of South FloridaUnallowable costs ............................................................... 54 
Compliance with the Improper Payments Information Act .............................................. 54 
Grants and contracts .................................................................................... 54 
Grant fraud ........................................................................................................................ 54 
Hurricane Sandy grant and contract vulnerabilities.......................................................... 56 
Small Business Innovative Research Program ................................................................... 56 
Recovery Act retaliation complaint investigations ............................................................ 56 
Contract audits .................................................................................................................. 56 
OIG reviews of non-Federal audits ............................................................... 57 
Other reporting requirements and reviews ................................................. 58 
Legislative and regulatory reviews .................................................................................... 58  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page xiii 
 
 
Affordable Care Act implementation ........................................................... 58 
Marketplaces..................................................................................................................... 59 
Annual fee on prescription drug companies ..................................................................... 60 
Appendixes .................................................................................................. 61 
Appendix A:  Savings decisions supported  by OIG recommendations............................. 62 
Appendix B:  Questioned costs and funds recommended to be put to better use .......... 67 
Appendix C:  Peer review results ...................................................................................... 75 
Appendix D:  Summary of sanction authorities ................................................................ 76 
Appendix E:  Reporting requirements in the Inspector General Act of 1978 ................... 78 
Appendix F:  Anti-kickback statuteSafe harbors ............................................................ 80 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page xiv 
 
 
 
SACAe  lected acPartieont nProytecmtion san d Affordable Care Act of 2010, P.L. No. 111-148 (as 
amended by the Health Care Education and Reconciliation Act of 2010) 
ACAP  Alameda County Associated Community Action Program 
ACF  Administration for Children and Families 
AFI  Assets for Independence (Program) 
ASC  ambulatory surgical center 
ASFR  Office of the Assistant Secretary for Financial Resources 
ASP  average sales price 
ASPR  Office of the Assistant Secretary for Preparedness and Response 
ATCB  Authorized Testing and Certification Body 
ATSDR  Agency for Toxic Substances and Disease Registry 
CCDF  Child Care and Development Funds 
CBO  Congressional Budget Office 
CDC  Centers for Disease Control and Prevention 
CHIPRA  Childrens Health Insurance Program Reauthorization Act 
CIN  clinically integrated network 
CIGIE  Council of the Inspectors General on Integrity and Efficiency 
CME  continuing medical education 
CMN  certificate of medical necessity 
CMP  civil monetary penalty 
CMPL  Civil Monetary Penalties Law 
CMS  Centers for Medicare & Medicaid Services 
CSBG  Community Services Block Grant 
CWF  Common Working File 
CY  calendar year 
DME  durable medical equipment 
DOJ  Department of Justice 
DRA  Deficit Reduction Act of 2005, P.L. No. 109-171 
EHR  electronic health record 
E/M  evaluation and management 
EMTALA  Emergency Medical Treatment and Labor Act, 9121 of the Consolidated 
Omnibus Reconciliation Act of 1985, P. L. No. 99-272 
Energy/LIHEAP  Energy/Low Income Home Energy Assistance Program 
ERRP  Early Retiree Reinsurance Program 
FBI  Federal Bureau of Investigation 
FCA  False Claims Act (31 U.S.C.  37293733) 
FFP  Federal financial participation 
FMAP  Federal medical assistance percentages 
FPS  Fraud Prevention System 
FY  fiscal year 
GAO  Government Accountability Office 
HEAT    Health Care Fraud Prevention and Enforcement Action Team  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page xv 
 
 
HEAL  Health Education Assistance Loan 
HIPAA  Health Insurance Portability and Accountability Act of 1996, P.L. No. 104-191 
HHA  home health agency 
HHS  Department of Health and Human Services 
HRSA  Health Resources and Services Administration 
IHS    Indian Health Service 
IPIA  Improper Payments Information Act of 2002, P.L. No. 107-300 
IPERA  Improper Payments Elimination and Recovery Act of 2010, P.L. No. 111-204 
IRS  Internal Revenue Service 
LTCH  long-term-care hospital 
Marketplaces  health insurance exchanges 
MA  Medicare  Advantage 
MAC  Medicare Administrative Contractor 
MFCU  Medicaid Fraud Control Unit 
MMIS  Medicaid Management Information System 
NDC  National Drug Code 
NIH  National Institutes of Health 
NIST  National Institute of Standards and Technology 
NLR  National Level Repository 
OCS    Office of Community Services 
OHRP  Office of Human Research Protections 
OIG  Office of Inspector General 
OMB  Office of Management and Budget 
ONC  Office of the National Coordinator for Health Information Technology 
OpDiv    Operating Division (of HHS) 
OPPS  Outpatient Prospective Payment System 
PARIS  Public Assistance Reporting Information System 
PEPFAR  Presidents Emergency Plan for AIDS Relief 
PHI  protected health information 
PII  personally identifiable information 
PMS  Payment Management System 
PSC  Program Support Center (HHS) 
QHP  qualified health plan 
RHC  rural health clinic 
SBHS  school-based health services 
SBIR  Small Business Innovation Research (Program) 
SBIR/STTR  Small Business Innovation Research /Small Business Technology Transfer 
(Program) 
SCHIP  State Childrens Health Insurance Program 
SUPPORT  Surfactant,  Positive Pressure, and Oxygenation Randomized Trial 
TIGTA  Treasury Inspector General for Tax Administration 
VAT  value-added tax 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 1 
 
 
CMS records and information systems security 
Centers for Medicare & Medicaid Services  
and functionality 
Fraud Prevention System 
  The Fraud Prevention System Identified Millions in Medicare Savings, but the Department Could 
Strengthen Savings Data by Improving Its Procedures.  A-01-13-00510.  2014 June.   
In the second implementation year of the Fraud Prevention System (FPS), we certified $54.2 million of 
actual and projected savings in the Medicare fee-for-service program, $210.7 million in unadjusted 
savings, and a return on investment of $1.34 for every dollar spent on the FPS.  The Department is 
evaluating whether to expand the use of the FPS in Medicaid, but its procedures were not always 
sufficient to ensure that its contractors provided and maintained reliable data to always support FPS 
savings.  The Department agreed with our recommendations, which were:  
  provide contractors with written instructions on how to determine when savings from an 
administrative action should be attributed to the FPS and  
  require contractors to maintain documentation to support how an FPS lead contributes to an 
administrative action.   
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 2 
 
 
Medicare improper claims and payments 
Medicare payments, policies, and quality 
Entitlement-terminated beneficiaries 
  Medicare Improperly Paid Providers Millions of Dollars for Entitlement-Terminated Beneficiaries Who 
Received Services During 2010 Through 2012.  A-07-13-01127.  2014 April. 
Medicare made improper payments totaling almost $18.4 million for beneficiaries who received medical 
services during calendar years (CYs) 2010 through 2012 whose entitlement to Medicare had been 
terminated because CMSs data systems did not indicate until after a claim had been processed that a 
beneficiarys entitlement to Medicare had been terminated and CMSs controls were not adequate to 
detect and recoup the improper payment.  CMS did not have policies and procedures to review 
information for these beneficiaries on a postpayment basis that would have detected the improper 
payments. 
Although CMS did not agree, we continue to recommend that CMS:  
  ensure that Medicare contractors recoup the almost $18.4 million in improper payments,  
  implement policies and procedures to detect and recoup improper payments when entitlement 
termination information is received on previously paid Medicare claims, and  
  identify these types of improper payments after our audit period but before implementation of 
policies and procedures and ensure that Medicare contractors recoup the improper payments.  
Unlawfully present beneficiaries 
  Medicare Improperly Paid Medicare Advantage Organizations Millions of Dollars for Unlawfully 
Present Beneficiaries for 2010 Through 2012.  A-07-13-01125.  2014 April. 
Medicare made improper payments to MA organizations totaling more than $26 million for unlawfully 
present beneficiaries for CYs 2010 through 2012.  The Medicare Advantage (MA) organizations could not 
prevent enrollment or disenroll beneficiaries already enrolled because CMS did not provide them with 
the requisite unlawful-presence data.  CMS agreed or partially agreed with our recommendations, which 
were: 
  implement policies and procedures to notify MA organizations of unlawful-presence information and 
thereby prevent enrollment in MA organizations, disenroll beneficiaries already enrolled, and recoup 
any improper payments;  
  identify and recoup improper payments made to MA organizations for unlawfully present 
beneficiaries after our audit period and until policies and procedures have been implemented; and 
  recoup $26 million in improper payments in accordance with legal requirements.   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 3 
 
 
Beneficiaries confined in mental health facilities 
  The Centers for Medicare & Medicaid Services Paid Medicare Advantage Organizations for Services 
Provided to Beneficiaries Confined in Mental Health Facilities for Court-Ordered Purposes.   
A-07-13-06043.  2014 June. 
CMS made payments to Medicare Advantage organizations totaling more than $1 million on behalf of 
beneficiaries who were confined in mental health facilities by court order under a penal code during 
2011 and 2012.  CMS policy permits Medicare payments to be made on behalf of confined beneficiaries 
enrolled in Medicare Advantage but not on behalf of those enrolled in Part A or Part B. 
Although CMS did not agree, we continue to recommend that to be consistent with the relevant 
provisions of Medicare Part A and Part B, CMS: 
  revise the Medicare Managed Care Manual to prohibit Medicare Advantage payments made on 
behalf of beneficiaries who have been confined in mental health facilities by court order under a 
penal code, which could have resulted in savings totaling more than $1 million for the 2-year period 
we reviewed. 
 
  The Centers for Medicare & Medicaid Services Provided Medicare Part D Coverage to Beneficiaries 
Confined in Mental Health Facilities for Court-Ordered Purposes.  A-07-13-06041.  2014 July. 
CMS accepted prescription drug event records from Medicare Part D sponsors totaling over $12.6 million 
on behalf of beneficiaries who were confined in mental health facilities by court order under a penal 
code during 2006 through 2011.  This occurred because CMS policy permits Medicare payments to be 
made on behalf of confined beneficiaries enrolled in Part D but not on behalf of those enrolled in Parts A 
or B.  CMS agreed with OIGs recommendation that to be consistent with the relevant provisions of 
Medicare Parts A and B, CMS: 
  revise the Medicare Prescription Drug Benefit Manual to prohibit Part D payments made on behalf of 
confined beneficiaries, which could have resulted in savings associated with $12.6 million in gross 
drug costs that CMS accepted for the 6-year period we reviewed. 
Certification of rural health clinics 
  CMS Has Yet To Enforce a Statutory Provision Related to Rural Health Clinics.  OEI-05-13-00290.  2014 
September. 
Approximately 12 percent of rural health clinics (RHCs) no longer met the location requirements in 2013.  
Pursuant to the Balanced Budget Act of 1997, these RHCs should continue to qualify as RHCsand 
receive enhanced reimbursementonly if they are determined to be essential providers.   
Although CMS did not indicate whether it agreed or disagreed, we continue to recommend that CMS: 
  issue regulations to ensure that RHCs determined to be essential providers remain certified as RHCs.   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 4 
 
 
HospitalsPostacute care transfer policy 
  Medicare Inappropriately Paid Hospitals Inpatient Claims Subject to the Postacute Care Transfer 
Policy.  A-09-13-02036.  2014 May. 
Medicare inappropriately paid hospital inpatient claims subject to its postacute care transfer policy, 
resulting in overpayments totaling approximately $19.5 million over 4 years.  Medicare overpaid the 
hospitals because the Common Working File (CWF) edits related to postacute care transfers were not 
working properly.  CMS agreed or partially agreed with our recommendations, which were:  
  correct the CWF edits and ensure that they are working properly;  
  educate hospitals on the importance of reporting the correct patient discharge status codes on 
transfer claims, especially when home health services have been ordered; 
  direct the Medicare contractors to recover the approximately $19.5 million in identified 
overpayments in accordance with CMSs policies and procedures; and 
  direct the Medicare contractors to identify any transfer claims on which the patient discharge status 
was coded incorrectly and recover any overpayments after our audit period. 
HospitalsOutlier payments 
  TrailBlazer Health Enterprises Did Not Always Refer Medicare Cost Reports and Reconcile Outlier 
Payments as Required.  A-07-10-02776.  2014 June. 
TrailBlazer Health Enterprises did not always refer cost reports whose outlier payments qualified for 
reconciliation to CMS or always reconcile the outlier payments associated with cost reports whose 
outlier payments qualified for reconciliation.  At least $2.8 million should be recouped from health care 
providers and returned to Medicare.     
Novitas, which assumed TrailBlazers responsibilities, described corrective actions that it had taken or 
planned to take in response to the following recommendations:  
  review cost reports that had not been settled and should have been referred to CMS for 
reconciliation but were not, take appropriate actions to refer these cost reports, request CMS 
approval to recoup at least $2.8 million and associated interest from health care providers, and 
refund that amount to the Federal Government; 
  review cost reports that were referred to CMS and had outlier payments that qualified for 
reconciliation and work with CMS to reconcile the $32.4 million in associated outlier payments; 
  work with CMS to resolve the $6.8 million in outlier payments associated with claims that we could 
not recalculate; 
  ensure that control procedures are in place so that all cost reports whose outlier payments qualify 
for reconciliation are correctly identified; referred; and, if necessary, reopened before the 3-year 
reopening limit; 
  ensure that policies and procedures are in place so that it reconciles all outlier payments in 
accordance with Federal guidelines; and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 5 
 
 
  review all cost reports submitted since the end of our audit period and ensure that they are referred 
and reconciled in accordance with Federal guidelines.  
Although Novitas disagreed, we continue to recommend that Novitas: 
  review cost reports that had been settled, had exceeded the 3-year reopening limit, and should have 
been referred to CMS for reconciliation but were not; determine whether these cost reports may be 
reopened; and work with CMS to resolve $6.6 million in funds and associated interest from health 
care providers that may be due to the Federal Government. 
Improper paymentsEvaluation and management services 
  Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010.   
OEI-04-10-00181.  2014 May. 
We found that Medicare inappropriately paid $6.7 billion for claims for evaluation and management 
(E/M) services in 2010 that were incorrectly coded and/or lacking documentation, representing 21 
percent of Medicare payments for E/M services that year.  E/M services are 50 percent more likely to be 
paid for in error than other Part B services, and most improper payments result from errors in coding 
and from insufficient documentation.  CMS agreed or partially agreed with the following 
recommendations: 
  educate physicians on coding and documentation requirements for E/M services and 
  follow up on claims for E/M services that were paid for in error. 
Although CMS did not agree, we continue to recommend that CMS: 
  continue to encourage contractors to review E/M services billed for by high-coding physicians. 
Questionable billingHIV drugs 
   Part D Beneficiaries With Questionable Utilization Patterns for HIV Drugs.  OEI-02-11-00170.  2014 
August. 
Almost 1,600 Medicare Part D beneficiaries had questionable utilization patterns for human 
immunodeficiency virus (HIV) drugs in 2012, at a cost of $32 million.  These beneficiaries had no 
indication of HIV in their Medicare histories, received an excessive dose or supply of HIV drugs, received 
HIV drugs from a high number of pharmacies or prescribers, or received contraindicated drugs (i.e., HIV 
drugs that should not be used in combination with one another).  CMS agreed with the following 
recommendations:  
  expand sponsors drug utilization review programs, 
  expand sponsors use of beneficiary-specific controls, 
  restrict certain beneficiaries to a limited number of pharmacies or prescribers, 
  increase monitoring of beneficiaries utilization patterns, and 
  follow up on questionable utilization patterns. 
Although CMS did not agree, we continue to recommend that CMS:  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 6 
 
 
  expand the Overutilization Monitoring System to include additional drugs susceptible to fraud, 
waste, and abuse and 
  follow up on questionable utilization patterns. 
Questionable billingElectrodiagnostic tests 
   Questionable Billing for Medicare Electrodiagnostic Tests.  OEI-04-12-00420.  2014 April. 
In 2011, 4,901 physicians had questionable billing for Medicare electrodiagnostic tests totaling 
$139 million; approximately 20 percent of these physicians received comparative billing reports in 2011 
on the basis of their 2010 billing for electrodiagnostic tests.  The highest total questionable billing for 
Medicare electrodiagnostic tests in 2011 was from physicians in the New York, Los Angeles, and Houston 
areas.  CMS agreed or partially agreed with our recommendations, which were: 
  take appropriate action regarding physicians whom we identified as having inappropriate or 
questionable billing, 
  increase monitoring of billing for electrodiagnostic tests, and 
  provide additional guidance and education to physicians regarding electrodiagnostic tests. 
Questionable billingClinical laboratory services 
  Questionable Billing for Medicare Part B Clinical Laboratory Services.  OEI-03-11-00730.  2014 
August.   
In 2010, over 1,000 labs exceeded the thresholds (i.e., had unusually high billing) for 5 or more measures 
of questionable billing for Medicare lab services.  Medicare allowed $1.5 billion across all labs for claims 
associated with questionable billing.  CMS agreed with all of our recommendations, which were: 
  review the labs identified as having questionable billing and take appropriate action,  
  review existing program integrity strategies to determine whether these strategies are effectively 
identifying program vulnerabilities associated with lab services, and  
  ensure that existing edits prevent claims with invalid and ineligible ordering-physician numbers from 
being paid.   
Medicare wasteful payments, policies, and practices 
 Ambulatory surgical center-approved procedures 
  Medicare and Beneficiaries Could Save Billions If CMS Reduces Hospital Outpatient Department 
Payment Rates for Ambulatory Surgical Center-Approved Procedures to Ambulatory Surgical Center 
Payment Rates.  A-05-12-00020.  April 2014. 
Medicare saved almost $7 billion during calendar years (CYs) 2007 through 2011 and could potentially 
save $12 billion from CYs 2012 through 2017 because ambulatory surgical center (ASC) rates are  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 7 
 
 
frequently lower than outpatient department rates for surgical procedures.  In addition, Medicare could 
generate savings of as much as $15 billion for CYs 2012 through 2017 if CMS reduces outpatient 
department payment rates for ASC-approved procedures to ASC payment levels for procedures 
performed on beneficiaries with low-risk and no-risk clinical needs.  When outpatient surgical 
procedures that do not pose significant risk to patients are performed in an ASC instead of an outpatient 
department, the payment rates are generally lower.  
Although CMS did not agree, we continue to recommend that CMS:  
  seek legislation that would exempt the reduced expenditures as a result of lower outpatient 
prospective payment system (OPPS) payment rates from budget neutrality adjustments for 
ASC-approved procedures and 
  if Congress passes the budget-neutrality exemption for the reduced expenditures, CMS should: 
  reduce OPPS payment rates for ASC-approved procedures on beneficiaries with no-risk or 
low-risk clinical needs in outpatient departments and then 
  develop and implement a payment strategy in which outpatient departments would 
continue to receive the standard OPPS payment rate for ASC-approved procedures that must 
be provided in an outpatient department because of a beneficiarys individual clinical needs. 
Long-term care hospitalsInterrupted-stay policy 
  Vulnerabilities in Medicares Interrupted-Stay Policy for Long-Term Care Hospitals.  OEI-04-12-00490.  
2014 June. 
We identified several vulnerabilities in the Long-Term Care Hospitals (LTCH) interrupted-stay policy, 
including inappropriate payments, financial incentives to delay readmissions, and potential 
overpayments to co-located LTCHs.  These findings raise concerns about whether financial incentives, 
rather than beneficiaries' medical conditions, may have influenced some LTCHs' readmission decisions.  
CMS agreed with the following recommendations, contingent on receiving more information from OIG:  
  review existing safeguards to determine whether additional action is needed to prevent future 
inappropriate payments for interrupted stays and  
  take appropriate action on inappropriate payments and overpayments we identified.  
Although CMS did not agree, we continue to recommend that CMS:  
  conduct additional analysis to determine the extent to which financial incentives influence LTCHs' 
readmission decisions,  
  develop a system to enforce the 5-percent readmission threshold, and  
  take appropriate action regarding LTCHs exhibiting certain readmission patterns.  
Compounded drugsPayment and oversight 
  Compounded Drugs Under Medicare Part B:  Payment and Oversight.  OEI-03-13-00270.  2014 April. 
Our April 2014 report found that neither CMS nor Medicare Administrative Contractors (MACs) tracked 
the number of claims for compounded drugs under Part B or the corresponding amounts paid, and the  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 8 
 
 
Part B claims did not contain information that can be used to systematically identify claims for 
compounded drugs.  The inability to track claims for compounded drugs and identify the compounding 
pharmacies that produce these drugs prevents CMS and MACs from taking steps to stop payments for 
compounded drugs that are produced in violation of the Federal Food, Drug, and Cosmetic Act.  CMS 
agreed or conditionally agreed with the following recommendations: 
  establish a method to identify Part B claims for compounded drugs and 
  explore the possibility of conducting descriptive analyses of Part B claims for compounded drugs. 
Although CMS did not agree, we continue to recommend that CMS:  
  explore the possibility of requiring providers to identify on the Part B claim the pharmacy that 
produced the compounded drug. 
Part B drugsPrice data 
  Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs.  OEI-12-13-
00040.  2014 July.   
At least one-third of the more than 200 manufacturers of Part B drugs did not submit average sales 
prices (ASPs) for some of their products in the third quarter of 2012, despite being required to do so; 
an additional 45 manufacturers were not required to report ASPs that quarter.  Furthermore, for a small 
number of drugs, inaccuracies in CMSs ASP files may have affected Medicare payments.  CMS agreed 
with the following recommendations:  
  continue to assist OIG in identifying and penalizing manufacturers that do not meet ASP reporting 
requirements;  
  ensure the accuracy of product information for national drug codes listed in the background and 
crosswalk files; and  
  finalize the implementation of automated ASP-related procedures by using processes related to 
average manufacturer price as a model, and subsequently require all manufacturers to submit ASPs 
through the automated system. 
Although CMS did not agree, we continue to recommend that CMS:  
  seek a legislative change to directly require all manufacturers of Part B drugs to submit ASPs. 
 
  Medicare Part B Prescription Drug Dispensing and Supplying Fee Payment Rates Are Considerably 
Higher Than the Rates Paid by Other Government Programs.  A-06-12-00038.  September 2014.   
Medicare Part B could save millions of dollars annually if its rates for dispensing and supplying fees for 
certain drugs were aligned with rates that Medicare Part D and State Medicaid programs pay.  We 
estimated that if Part B rates had been the same as the average Part D rates, Part B would have saved 
$110.9 million in 2011.  We also estimated that if Part B rates had been the same as the average State 
Medicaid program rates, Part B would have saved $106 million. 
Although CMS did not agree, we continue to recommend that CMS:  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 9 
 
 
  amend current regulations to decrease the Part B payment rates for dispensing and supplying fees to 
rates similar to those of other payers, such as Part D and Medicaid. 
Part D drugsCopayment coupon use 
  Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs.   
OEI-05-12-00540.  2014 September. 
We identified the safeguards that pharmaceutical manufacturers have in place to prevent copayment 
coupons from being used to purchase drugs paid for by Medicare Part D and determined that their 
safeguards may not stop all coupons from being used for Part D-covered drugs.  These findings raise 
concerns that copayment coupons may encourage Part D beneficiaries to purchase higher cost brand 
drugs instead of lower cost, equally effective alternative drugs.  This could increase costs for Part D plans, 
the Part D program, and Part D beneficiaries.  Additionally, manufacturers may be liable under the 
anti-kickback statute if they offer coupons to induce the purchase of drugs paid for by Part D or any 
other Federal health care program.  CMS concurred with our recommendation, which was: 
  cooperate with industry stakeholder efforts to identify a solution to prevent coupons from being 
used to purchase drugs paid for by Part D. 
Diabetes test strips 
  Medicare Market Share of Mail Order Diabetes Test Strips From JulySeptember 2013.   
OEI-04-13-00680.  2014 June. 
Twenty-two suppliers submitted claims for at least 43 types of mail order diabetes test strips for the 
3-month period of July to September 2013.  Two types of diabetes test strips accounted for 
approximately 45 percent of the Medicare mail order market share, and three types accounted for 
59 percent.  CMS may consider these data when determining whether subsequent rounds of suppliers' 
mail order diabetes test strip bids comply with the Medicare Improvements for Patients and Providers 
Act requirement for suppliers to demonstrate that their bid covers at least 50 percent, by volume, of all 
types of mail order diabetes test strips.  This report did not contain recommendations. 
  Medicare Market Shares of Mail Order Diabetes Test Strips Immediately Prior to the National Mail 
Order Program.  OEI-04-13-00681.  2014 June.   
One hundred fifty-two suppliers submitted claims for at least sixty-two types of mail order diabetes test 
strips for the 3-month period of April to June 2013.  Two types of diabetes test strips accounted for 
approximately 34 percent of the Medicare mail order market share, and four types accounted for 51 
percent.  CMS may choose to use these data to evaluate the effect of the Competitive Bidding Program 
on brand choice.  This report did not contain recommendations. 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 10 
 
 
Dual eligibles 
  Iowa Has Shifted Medicare Cost-Sharing for Dual Eligibles to the Federal Government.   
OEI-07-13-00480.  2014 April.   
We found that Iowa had made State Supplementary Payments of $1 per beneficiary per month to a 
group of about 41,000 dual eligibles, at a cost of approximately $500,000 to the State, resulting in 
$39 million in Federal Financial Participation (FFP) payments to the State.  Iowa's $1 payments are not 
intended as income assistance; instead, they were created for the express purpose of obtaining FFP for 
Medicare Part B premiums.   
Although CMS did not indicate whether it agreed or disagreed, we continue to recommend that CMS: 
  seek a legislative change to prevent States from using State Supplementary Payments to shift 
Medicare Part B premium costs for full-benefit dual eligibles to the Federal Government and require 
States to submit more detailed eligibility information. 
 
  Part D Plans Generally Include Drugs Commonly Used by Dual Eligibles: 2014.  OEI-05-14-00170.  
2014 June. 
In our June 2014 mandated report, we found Part D plan formularies included an average of 96 percent 
of the 195 drugs commonly used by dual eligibles, and formularies applied utilization management tools 
to 28 percent of the unique drugs we reviewed.  These results are largely unchanged from the findings 
from our 2013 mandated annual report.  Pursuant to the Patient Protection and Affordable Care Act 
(ACA), OIG must annually issue a report regarding the extent to which formularies used by Part D plans 
include drugs commonly used by full-benefit dual-eligible individuals.  This report did not contain 
recommendations. 
Medicare quality of care  
Home health  
  Limited Compliance With Medicares Home Health Face-to-Face Documentation Requirements.   
OEI-01-12-00390.  2014 April. 
We found that for 32 percent of home health claims that required face-to-face encounters, the 
documentation did not meet Medicare requirements and physicians inconsistently completed the 
narrative portion of the face-to-face documentation.  This resulted in $2 billion in payments that should 
not have been made.  CMS agreed with our recommendations, which were:  
  consider requiring a standardized form to ensure that physicians include all elements required for 
the face-to-face documentation, 
  develop a specific strategy to communicate directly with physicians about the face-to-face 
requirement, and  
  develop other oversight mechanisms for the face-to-face requirement.   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 11 
 
 
 
  State Background Check Requirements for HHAs.  OEI-07-14-00131.  2014 May.   
We found that 41 States require home health agencies (HHAs) to conduct background checks on 
prospective employees; of the 10 States that have no background check requirement, 4 States reported 
that they have plans to implement background check requirements in the future.  Thirty-five States 
specify convictions that disqualify individuals from employment, and 16 States allow an individual who 
has been disqualified from employment to submit an application to have his/her conviction(s) waived.  
This information may be useful to CMS as it administers the Nationwide Background Check Program and 
to States that are considering establishing or enhancing background-check requirements for HHA 
employees.  This report did not contain recommendations. 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 12 
 
 
Improper State claims for Federal reimbursement 
Medicaid payments, policies, and quality 
Inpatient supplemental payments  
  Colorado Claimed Unallowable Medicaid Inpatient Supplemental Payments.  A-07-13-04206.   
2014 April. 
Colorado claimed almost $2.7 million in unallowable Medicaid inpatient supplemental payments during 
fiscal year (FY) 2012.  This occurred because Colorado did not ensure that the payment amounts 
authorized in its State plan for the Medicaid inpatient supplemental payments program were the actual 
amounts used to make payments.  Colorado agreed with all of our recommendations, which were: 
  refund almost $2.7 million to the Federal Government,  
  determine the amount that the State agency incorrectly paid after our audit period and refund that 
amount to the Federal Government, and 
  ensure that the payment amounts specified in its CMS-approved State plan are the amounts used to 
make payments.  
Withdrawal of excessive Medicaid funds  
  Alabama Withdrew Excessive Federal Medicaid Funds for Fiscal Years 2010 Through 2012.  A-06-13-
00026.  2014 September. 
For FYs 2010 through 2012, Alabama obtained $18.9 million more in Federal funds than it expended.  
These inappropriate Medicaid withdrawals occurred because Alabama miscalculated and overstated the 
Federal share of expenditures, paid for overdrawn balances in previous years Payment Management 
System (PMS) accounts, and withdrew funds for expenditures of another federally funded program.  
Alabama described actions that it has taken to address these recommendations: 
  work with CMS to determine whether the $4 million withdrawn for FY 2013 Medicaid expenditures 
should be refunded to the Federal Government and ensure that funds are withdrawn from the 
appropriate PMS account; 
  establish procedures to compare withdrawn Federal funds with actual net Medicaid expenditures;  
  review CMSs calculations of final grant awards for accuracy;  
  investigate reasons for account balances, particularly if CMS has not finalized the funds and the 
funds are to be used to pay for overdrawn balances in other PMS accounts; and 
  separate Medicaid expenditures from other federally funded program expenditures when calculating 
Medicaid withdrawals. 
Although Alabama did not agree, OIG continues to recommend that Alabama:  
  refund $14.8 million to the Federal Government.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 13 
 
 
 
  Some of New Yorks Claims for Medicaid Supported Employment Services Were Unallowable.  A-02-
13-01004.  2014 September. 
New York claimed at least $23 million in Federal Medicaid reimbursement for supported employment 
services that were unallowable because of multiple errors by providers in billing, providing, 
documenting, and claiming services and in beneficiary eligibility.  New York partially agreed with our 
recommendations, which were: 
  refund $23 million to the Federal Government and 
  ensure that it complies with certain Federal and State requirements by requiring providers to: 
  claim reimbursement only for documented supported employment services,  
  provide supported employment services only to beneficiaries for whom there is a completed 
and approved care and supported employment plan,  
  claim reimbursement at the appropriate level-of-support billing rate, 
  ensure and document that all beneficiaries approved for supported employment services 
have been assessed and evaluated to need the required level of care, and 
  ensure that all beneficiaries receiving similar services from the Education Department are 
not claimed under its waiver programs. 
 
  Washington Received Millions in Unallowable Bonus Payments.  A-04-14-08028.  September 2014. 
Washington received $19.5 million in unallowable performance bonus payments under the Childrens 
Health Insurance Program Reauthorization Act for FYs 2009 through 2012.  Washington overstated its FYs 
2009 through 2012 current enrollment in its bonus requests to CMS because it included individuals who 
did not qualify because of their basis-of-eligibility code. 
Although Washington disagreed, OIG continues to recommend that Washington: 
  refund $19.5 million to the Federal Government and 
  ensure that future requests for Childrens Health Insurance Program Reauthorization Act bonus 
payments include only qualifying children to comply with Federal requirements. 
Incorrect Medicaid claims adjustments 
  Massachusetts Did Not Always Make Correct Medicaid Claim Adjustments.  A-01-13-00003.  
2014 September. 
Massachusetts used incorrect Federal medical assistance percentages (FMAPs) because it processed 
adjusted claims as new expenditures for both public and private providers, resulting in an overpayment 
of $106 million from October 2008 through December 2010.  Massachusetts partially agreed with our 
recommendations, which were:  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 14 
 
 
  refund $106 million to the Federal Government and    
  ensure that it processes future adjustments in accordance with Federal requirements. 
Incorrect Medicaid incentive payments 
  Louisiana Made Incorrect Medicaid Electronic Health Record Incentive Payments.  A-06-12-00041.  
2014 August. 
Louisiana made incorrect Medicaid electronic health record incentive payments of $4.4 million.  
Incorrect payments included both overpayments and underpayments, for a net overpayment of 
$1.8 million.  These errors occurred because of errors in the instructions for calculating incentive 
payments, errors in the calculations, clerical errors, the lack of system edits to prevent overpayments, 
and Louisianas failure to reconcile its CMS-64 cost report with the CMS National Level Repository (NLR).  
Louisiana agreed with our recommendations, which were: 
  refund to the Federal Government $1.8 million in net overpayments made to the 20 hospitals, adjust 
the 20 hospitals remaining incentive payments to account for the incorrect calculations, review the 
calculations for the hospitals not included in the 25 we reviewed to determine whether payment 
adjustments are needed, and refund any overpayments identified;  
  modify the hospital calculation worksheet to state that inpatient nonacute-care services should be 
excluded from the discharge lines of the incentive payment calculation, correct the formula to 
calculate the discharge-related amounts, ensure that the correct cost report periods are used, and 
review supporting documentation for the numbers provided in the cost reports;  
  modify the patient-volume worksheet to clarify that inpatient dischargesnot bed-daysshould be 
used in the patient-volume calculation and review the patient-volume calculation for the other 
hospitals not included in the 25 we reviewed to determine whether they met the patient-volume 
requirement and refund any overpayments identified if the patient-volume requirement is not met;  
  refund to the Federal Government $3,250 in overpayments made to 13 professionals, implement 
system edits to prevent payments that exceed threshold amounts, and ensure that personnel are 
knowledgeable about the electronic health record (EHR) program requirements; and 
  work with CMS to ensure that the 13 professional incentive payments not posted to the NLR are 
posted and establish a policy to reconcile the CMS-64 report to the NLR each quarter. 
Overpayment collections  
  Maryland Underreported the Federal Share of Medicaid Overpayment Collections.  A-03-11-00208.   
2014 April. 
From 2009 through 2010, Maryland underreported the Federal share of Medicaid overpayment 
collections by $42.3 million because it applied the incorrect FMAP to its calculations of overpayments.  
Maryland did not develop and implement effective internal controls to ensure accurate reporting of its 
collections and reimbursements related to Medicaid overpayments.  Maryland agreed with the following 
recommendations:  
  apply the correct FMAP when reporting Medicaid overpayment collections and adjustments and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 15 
 
 
  develop and implement internal controls that will enable Maryland to correctly report Medicaid 
overpayment collections and refund the proper Federal share.  
Although Maryland did not agree, OIG continues to recommend that Maryland:  
  refund to the Federal Government almost $30.3 million in underreported Federal share for 
collections and adjustments reported for our audit period and 
  refund to the Federal Government $12 million in underreported Federal share for adjustments 
reported outside our audit period.  
 
  Georgia Did Not Always Accurately Report and Refund the Federal Share of Medicaid Collections for 
Calendar Years 2008 Through 2011.  A-04-12-00085.  2014 April. 
For CYs 2008 through 2011, Georgia underreported approximately $10.9 million (Federal share) of 
Medicaid collections to be refunded to the Federal Government.  Generally, Georgia did not refund the 
correct Federal share because it did not maintain adequate documentation supporting the FMAPs used 
to calculate the Federal share of collections.  Georgia agreed with the following recommendation:   
  develop and implement internal controls to ensure that it adequately supports specific-period 
FMAPs used to calculate the Federal share of collections refunded.    
Although Georgia did not agree, OIG continues to recommend that Georgia:  
  refund approximately $10.9 million to the Federal Government. 
 
  Kansas Improperly Received Medicaid Reimbursement for School-Based Health Services.  A-07-13-
04207.  2014 August. 
For the Medicaid school-based health services (SBHS) program, Kansas received $10.7 million in Federal 
reimbursement for services provided from July 1, 2009, through June 30, 2010, that was not reasonable, 
allowable, and adequately supported in accordance with Federal and State requirements.  These errors 
occurred because Kansas did not have adequate policies and procedures to monitor the SBHS program 
and to ensure that it claimed all costs in accordance with applicable Federal and State requirements.   
 
Although Kansas did not indicate whether it agreed, OIG continues to recommend that Kansas: 
  refund $10.7 million to the Federal Government for unallowable SBHS costs and 
  strengthen policies and procedures to monitor the SBHS program and ensure that  
(1) SBHS costs are accurate and supported and (2) it claims all SBHS costs in accordance with 
applicable Federal and State requirements.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 16 
 
 
Federal medical assistance percentage funds 
  New Jersey Did Not Comply With Recovery Act Requirements for Receiving Increased Federal 
Medicaid Assistance.  A-02-11-01039.  2014 July. 
 
To comply with the political subdivision requirement in the American Recovery and Reinvestment Act of 
2009 (Recovery Act), New Jersey should redistribute approximately $45.2 million in increased Federal 
Medicaid assistance to its counties and local school districts.  New Jerseys political subdivisions 
contributed a greater percentage of the non-Federal share of Medicaid expenditures during the 
recession-adjustment period than during the base period because New Jersey did not adjust its 
requirements for these contributions to ensure compliance with the political subdivision requirement 
before New Jersey accessed increased FMAP funds.  New Jersey partially agreed with the Office of 
Inspector Generals (OIG) recommendations to redistribute approximately $45.2 million in increased 
FMAP funding to its political subdivisions to comply with the political subdivision requirement.   
Health-care-related tax  
  Pennsylvanias Gross Receipts Tax on Medicaid Managed Care Organizations Appears To Be an 
Impermissible Health-Care-Related Tax.  A-03-13-00201.  2014 May. 
Pennsylvanias Gross Receipts Tax on Medicaid managed care organizations appears to be a health-care-
related tax that is impermissible for Medicaid funding.  Through this tax, Pennsylvania collected $1.76 
billion from its Medicaid managed care organizations over 3 years (State FYs 20092012) and used that 
money to pay some of its share of capitation payments.  CMS generally agreed with the following 
recommendation:   
  clarify CMSs policy concerning permissible health-care-related taxes with all States.   
Although CMS did not agree, OIG continues to recommend that CMS: 
  determine whether the tax on Medicaid managed care organizations is an impermissible health-
care-related tax and, if so,  
  offset almost $1.76 billion in Gross Receipts Tax revenue from State Medicaid expenditures 
from State FY 20092010 through State FY 20112012 and 
  offset Gross Receipts Tax revenue from Medicaid expenditures when determining the 
Federal share of Pennsylvanias Medicaid program expenditures after State FY 20112012. 
Residential habilitation services 
  New York Claimed Unallowable Room-and-Board Costs Under Its Developmental Disabilities Waiver 
Program.  A-02-12-01031.  2014 May.   
New York claimed approximately $60.8 million in Federal Medicaid reimbursement over a 3-year period 
for unallowable room-and-board costs for residential habilitation services provided at State-operated 
residences under New Yorks developmental disabilities waiver program.  New York did not develop and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 17 
 
 
implement effective internal controls to ensure accurate reporting of its collections and reimbursements 
related to Medicaid overpayments. 
Although New York disagreed, or did not indicate whether it agreed, OIG continues to recommend that 
New York:  
  refund approximately $60.8 million to the Federal Government and 
  ensure that New York excludes all unallowable room-and-board costs from indirect costs used in 
payment rate calculations for residential habilitation services.  
Physician-administered drugs  
  Oregon Claimed Unallowable Federal Medicaid Reimbursement by Not Billing Manufacturers for 
Rebates for Some Physician-Administered Drugs.  A-09-12-02080.  2014 April. 
  Idaho Did Not Bill Manufacturers for Rebates for Some Medicaid Physician-Administered Drugs.  A-
09-12-02079.  2014 April. 
  Nebraska Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-Administered 
Drugs.  A-07-13-06040.  2014 August.  
  The District of Columbia Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-
Administered Drugs.  A-03-12-00205.  2014 August. 
We reviewed States compliance with Federal Medicaid requirements for billing manufacturers for 
rebates for physician-administered drugs.  Oregon claimed $2.3 million in Federal reimbursement that 
was unallowable and $1.1 million that may have been unallowable in 2010; Idaho did not bill 
manufacturers for rebates associated with $2.6 million in paid claims for physician-administered drugs in 
2010; Nebraska claimed $2.5 million over 3 years in Federal reimbursement that was unallowable and 
$869,000 that may have been unallowable; and the District of Columbia claimed $2.4 million over nearly 
3 years in Federal reimbursement that was unallowable and $983,000 that may have been unallowable.  
Because all four States did not capture National Drug Codes (NDCs) or did not bill the manufacturers for 
rebates, they improperly claimed Federal reimbursement.  All four States agreed or partially agreed to: 
  refund to the Federal Government $2.3 million (Oregon), $2.4 million (Nebraska), and $2.4 million 
(the District) for claims for physician-administered drugs that were ineligible for Federal 
reimbursement and 
  work with CMS to determine and refund the unallowable Federal reimbursement for physician-
administered drugs claimed without NDCs and not billed for rebates.  
Oregon, Idaho, and the District of Columbia agreed or partially agreed to: 
  improve rebate processes to ensure that all physician-administered drugs eligible for rebates are 
processed for rebates. 
Oregon and the District of Columbia agreed or partially agreed to: 
  work with CMS to determine the unallowable portion of the other physician-administered drug 
claims that were ineligible for Federal reimbursement and refund that amount. 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 18 
 
 
Idaho agreed to: 
  work with CMS to determine the amount that should be billed to manufacturers for rebates 
associated with the $2.6 million ($1.8 million Federal share) in claim lines for physician-administered 
drugs and 
  bill manufacturers for rebates associated with the claims lines for physician-administered drugs that 
were incorrectly excluded from the rebate process after CY 2010. 
Although Nebraska disagreed, OIG continues to recommend that Nebraska: 
  work with CMS to determine the unallowable portion of the $869,000 for other claims for outpatient 
physician-administered drugs that were ineligible for Federal reimbursement and refund that 
amount. 
Inpatient hospital services  
  Virginia Improperly Claimed Federal Reimbursement for Most Reviewed Medicaid Payments to 
Piedmont Geriatric Hospital.  A-05-12-00056.  2014 July. 
  Virginia Improperly Claimed Federal Reimbursement for Most Reviewed Medicaid Payments to 
Catawba Hospital.  A-05-12-00055.  2014 July. 
Most of Virginias claims for Federal reimbursement for payments to Piedmont Geriatric Hospital and 
Catawba Hospital for inpatient hospital services it provided to patients aged 65 or older were not in 
accordance with Federal requirements because the two hospitals did not demonstrate compliance with 
the special Medicare Conditions of Participation (CoP).  Virginia claimed $36.9 million (Piedmont) and 
$17.4 million (Catawba) in unallowable Federal reimbursement because it believed that the hospitals 
had met the requirements for the inpatient hospital services it provided to these patients. 
Although Virginia did not agree, or did not indicate whether it agreed, OIG continues to recommend that 
Virginia: 
  refund $36.9 million and $17.4 million to the Federal Government for its share of payments to 
Piedmont and Catawba, respectively, for inpatient hospital services provided on dates outside the 
regulatory gap period;  
  work with CMS to determine whether Virginia should refund an additional $2.5 million and $1.2 
million to the Federal Government for its share of payments to Piedmont and Catawba, respectively, 
for inpatient hospital services provided on dates during the regulatory gap period; and 
  ensure that it claims Federal reimbursement for Medicaid payments for inpatient hospital services 
provided in institutions for mental diseases only if those institutions can demonstrate compliance 
with the special Medicare CoP. 
Family planning services 
  California Improperly Claimed Enhanced Federal Reimbursement for Medicaid Family Planning 
Services Provided in Central Los Angeles County.  A-09-13-02012.  2014 July.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 19 
 
 
  California Improperly Claimed Enhanced Federal Reimbursement for Medicaid Family Planning 
Services Provided in East Los Angeles County.  A-09-13-02019.  2014 July. 
  California Improperly Claimed Enhanced Federal Reimbursement for Medicaid Family Planning 
Services Provided in Southeast Los Angeles County.  A-09-13-02047.  2014 August. 
  California Improperly Claimed Enhanced Federal Reimbursement for Medicaid Family Planning 
Services Provided in Orange County.  A-09-13-02044.  2014 July. 
California claimed at least $9.1 million for FY 2011 in unallowable enhanced Federal reimbursement for 
Medicaid family planning services provided in central, east, and southeast Los Angeles County.  California 
claimed at least $2.2 million for FY 2012 in unallowable enhanced Federal reimbursement for Medicaid 
family planning services provided in Orange County.  The overpayments occurred because Californias 
Medicaid Management Information System (MMIS) lacked edits to prevent family-planning-related 
services from being claimed at the 90-percent rate.  Also, California did not have billing procedures to 
ensure that it claimed reimbursement at the 90-percent rate only for services clearly provided for family 
planning purposes. 
California agreed or partially agreed with the OIG recommendations to refund the unallowed 
$11.3 million in total Federal reimbursement to the Federal Government and provided information on 
actions that it had taken or planned to take to address OIGs recommendations to:   
  establish billing procedures to ensure that only services clearly provided for family planning 
purposes are claimed for reimbursement at the 90-percent rate and 
  establish MMIS edits to ensure that claims from the Family Planning, Access, Care, and Treatment 
program meet Federal and State requirements for reimbursement at the 90-percent rate and at the 
regular FMAP for family-planning-related services. 
Continuing day treatment services 
  New York Claimed Nonhospital-Based Continuing Day Treatment Services That Were Not in 
Compliance With Federal and State Requirements.  A-02-12-01011.  2014 July. 
We estimated that New York improperly claimed at least $18.1 million in Medicaid reimbursement for 
nonhospital continuing day treatment (CDT) services.  Certain providers did not comply with Federal and 
State regulations, and New York did not adequately monitor the CDT program for compliance with 
certain Federal and State requirements.   
Although New York did not agree, or did not indicate whether it agreed, OIG continues to recommend 
that New York: 
  refund $18.1 million to the Federal Government, 
  issue guidance to the provider community regarding Federal and State requirements for claiming 
Medicaid reimbursement for nonhospital CDT services, and 
  improve New Yorks monitoring of the CDT program to ensure compliance with Federal and State 
requirements.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 20 
 
 
Medicaid wasteful policies and practices 
Recovery of overpaymentsAcute-care hospitals 
  Acute-Care Hospitals in Texas Did Not Always Reconcile Invoice Records With Credit Balances and 
Refund to the State Agency the Associated Medicaid Overpayments.  A-06-11-00060.  2014 May. 
On the basis of our review of eight acute-care hospitals, we estimated that Texas could recover an 
additional $15.3 million ($10.5 million Federal share) from hospitals and obtain future savings if it 
enhanced its efforts to recover Medicaid overpayments in hospitals accounts.  The eight hospitals did 
not identify and refund Medicaid overpayments because Texas did not require them to exercise 
reasonable diligence in determining whether overpayments had been made.  Texas agreed with our 
recommendations, which were:  
  refund the $18,000 Federal share to the Federal Government for overpayments paid to the selected 
hospitals and  
  enhance its efforts to recover additional overpayments, estimated at $15.3 million ($10.5 million 
Federal share), from hospitals and realize future savings by requiring and ensuring that hospitals 
exercise reasonable diligence in reconciling patient account credit balances and refunding the 
associated Medicaid overpayments within a specified time period. 
Questionable billingDental and orthodontic services 
  Questionable Billing For Medicaid Pediatric Dental Services in Louisiana.  OEI-02-14-00120.   
2014 August.   
We identified 26 general dentists and 1 oral surgeon in Louisiana with questionable billing; these 
providers were extreme outliers when compared to their peers.  Medicaid paid these providers 
$12.4 million for pediatric dental services in 2012.  The Louisiana Department of Health and Hospitals 
agreed with our recommendations, which were: 
  enhance its monitoring of dental providers to identify patterns of questionable billing and  
  take appropriate action on the dental providers identified as having questionable billing.   
 
  Texas Did Not Ensure That the Prior-Authorization Process Was Used To Determine the Medical 
Necessity of Orthodontic Services.  A-06-12-00039.  2014 July.   
Texas did not ensure that the prior-authorization process was used to determine the medical necessity of 
orthodontic services under State Medicaid guidelines.  These deficiencies occurred because Texas did 
not ensure (1) that the State contractor properly reviewed each prior-authorization request for medical 
necessity and (2) that the State contractors dental director followed Medicaid policies and procedures 
when determining the medical necessity of orthodontic services.  Texas partially agreed with OIGs 
recommendations to provide proper oversight of the orthodontic prior-authorization process to ensure 
that:  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 21 
 
 
  it is used to determine medical necessity and 
  personnel making the prior-authorization decisions follow the appropriate State Medicaid policies 
and procedures. 
Public Assistance Reporting Information System  
  Public Assistance Reporting Information System:  State Participation in the Medicaid Interstate 
Match Is Limited.  OEI-09-11-00780.  2014 July.   
States participation in the Public Assistance Reporting Information System (PARIS) Medicaid Interstate 
Match program is limited, and States reported that they needed more guidance from CMS.  The PARIS 
Medicaid Interstate Match is an important tool that has the potential to reduce improper Medicaid 
payments by identifying beneficiaries who are enrolled in multiple State Medicaid programs.  CMS 
agreed with our recommendation, which was:  
  issue guidance to States on the requirement for participating in the Medicaid Interstate Match.  
Offshore outsourcing of administrative functions 
  Offshore Outsourcing of Administrative Functions by State Medicaid Agencies.  OEI-09-12-00530.   
2014 April.   
Only 15 of 56 Medicaid agencies have some form of State-specific requirement that addresses the 
outsourcing of administrative functions offshore; 11 Medicaid agencies allow such outsourcing, and each 
maintains Business Associate Agreements with contractors to safeguard protected health information 
(PHI).  Seven of the eleven Medicaid agencies reported outsourcing offshore through subcontractors, but 
none reported sending PHI offshore.  This report did not contain recommendations. 
Drug rebate dispute resolution 
  Medicaid Drug Rebate Dispute Resolution Could Be Improved.  OEI-05-11-00580.   
2014 August.   
Twenty-nine of thirty-one States that could provide data estimated that only a small percentage of 
rebate dollars were disputed.  However, surveys of selected States revealed that the lack of high-quality 
data made it difficult for States to prevent and resolve disputes.  CMS agreed or partially agreed with all 
of our recommendations, which were: 
  work with States to improve the quality of claims data submitted by providers and pharmacies, 
  help States obtain better data on ineligible drugs,  
  facilitate States submission of standardized claims data, and 
  establish a stronger role in dispute resolution.  
  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 22 
 
 
Childrens Health Insurance ProgramBonus payments 
  Louisiana Received More Than $7.1 Million in Unallowable Bonus Payments.  A-04-14-08029.   
2014 July. 
Louisiana received more than $7.1 million in unallowable performance bonus payments under the 
Childrens Health Insurance Program Reauthorization Act (CHIPRA) for FYs 2009 through 2011.  If 
Louisiana had calculated its current enrollment correctly, the current enrollment would not have 
exceeded baseline enrollment by an amount sufficient for Louisiana to qualify for bonus payments.  
Louisiana agreed with our recommendations, which were:  
  refund $7.1 million to the Federal Government and 
  ensure that future requests for CHIPRA bonus payments include only qualifying children to comply 
with Federal requirements. 
Medicaid quality of care and patient safety
 
Nursing facilitiesReporting allegations of abuse or neglect 
  Nursing Facilities Compliance With Federal Requirements for Reporting Allegations of Abuse or 
Neglect.  OEI-07-13-00010.  2014 August.   
We found that 85 percent of nursing facilities reported at least one allegation of abuse or neglect to OIG 
in 2012, and 76 percent of nursing facilities maintained policies that address Federal regulations for 
reporting both allegations of abuse or neglect and investigation results.  It is both required and expected 
that nursing facilities will report any and all allegations of abuse or neglect to ensure resident 
safety.  CMS agreed with all of our recommendations, which were to ensure that nursing facilities:  
  maintain policies related to reporting allegations of abuse or neglect; 
  notify covered individuals of their obligation to report reasonable suspicions of crimes; and 
  report allegations of abuse or neglect and investigation results in a timely manner and to the 
appropriate individuals, as required.   
Unqualified nursing home workers 
  CMSs Reliance on Californias Licensing Surveys of Nursing Homes Could Not Ensure the Quality of 
Care Provided to Medicare and Medicaid Beneficiaries.  A-09-12-02037.  June 2014. 
CMSs reliance on Californias licensing surveys of nursing homes could not ensure the quality of care 
provided to Medicare and Medicaid beneficiaries.  CMS agreed with all of our recommendations, which 
were that CMS work with the State agency to ensure that: 
  nursing homes (1) implement and follow adequate policies and procedures for employee health 
examinations and (2) request approval for optional service units,  
  the State agency conducts all required licensing surveys and reviews employee health examination 
records during those surveys, and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 23 
 
 
  the State agency improves licensing survey procedures for (1) reviewing employee health 
examination records and the three required components and (2) determining whether optional 
service units operated by the nursing homes are approved and optional services are listed on the 
licenses. 
Unqualified hospice workers 
  CMSs Reliance on Illinois Licensure Requirements Could Not Ensure the Quality of Care Provided to 
Medicaid Hospice Beneficiaries.  A-05-12-00028.  2014 June.   
We estimated that $13.4 million ($8.2 million Federal share) in Medicaid payments for Illinois hospice 
care services were provided by unqualified hospice workers.  CMSs reliance on Illinois licensure 
requirements could not ensure quality of care and could not ensure that adequate protection was 
provided to Medicaid hospice beneficiaries.  CMS agreed with the following recommendations, and 
Illinois had no comment: 
  work with Illinois to ensure that hospices meet the State licensure requirements for hospice workers 
and 
  consider working with Illinois to modify its hospice payment conditions by implementing provisions 
similar to Illinois licensure requirements for hospice workers. 
 
  CMSs Reliance on Ohio Licensure Requirements Did Not Always Ensure the Quality of Care Provided 
to Medicaid Hospice Beneficiaries.  A-05-12-00086.  September 2014.   
CMSs reliance on Ohio licensure requirements did not always ensure the quality of care provided to 
Medicaid hospice beneficiaries.  We estimated that 15,550 of the 103,668 claims covered by our review 
were associated with unqualified hospice workers.  CMS and Ohio generally agreed with the following 
recommendations: 
  work with the Ohio Department of Job and Family Services and the Ohio Department of Health to 
ensure that hospices meet Ohio licensure requirements for hospice workers and 
  consider working with the Ohio Department of Job and Family Services to modify its hospice 
payment conditions by implementing provisions similar to the Ohio licensure requirements for 
hospice workers. 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 24 
 
 
Legal and investigative activities 
For April 1 to September 30, 2014, we reported 506 criminal and 267 civil actions against individuals or 
entities that engaged in health-care-related offenses.  We also reported $1.26 billion in investigative 
related to Medicare and Medicaid 
receivables due to the U.S. Department of Health and Human Services (HHS) and $300.7 million in non-
HHS investigative receivables, including civil and administrative settlements or civil judgments related to 
Medicare; Medicaid; and other Federal, State, and private health care programs.  
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, when appropriate, under the False Claims Act.  Depending on 
the types of fraud or other violations involved, OIG investigations may culminate in criminal or civil court 
judgments and decisions, administrative sanctions and decisions, and/or negotiated settlement 
agreements.  Investigative outcomes take many forms, including incarceration, restitution, fines, 
penalties, forfeitures, assessments, and exclusion of individuals or entities from participation in all 
Federal health care programs.  Frequently used exclusion and penalty authorities are described in 
Appendix D of this Semiannual Report and on our Web site at:  
http://oig.hhs.gov/fraud/enforcement/cmp/. 
 
Chart 1: ActionsAll programs 
 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 25 
 
 
Chart 2:  ReceivablesAll programs 
 
 
(Includes non-HHS receivables, e.g., States share of Medicaid restitution.) 
Health care fraud prevention and enforcement 
Medicare Fraud Strike Force teams 
Medicare Fraud Strike Force teams began in 2007 in an effort to combine the resources of Federal, State, 
and local law enforcement entities to prevent and combat health care fraud, waste, and abuse.  These 
Strike Force teams are partnerships between OIG and HHS, Department of Justice (DOJ), U.S. Attorneys 
Offices, the Federal Bureau of Investigation (FBI), and State and local law enforcement with a common 
goal:  to successfully analyze health care fraud data and investigative intelligence to quickly identify fraud 
and bring prosecutions.  Strike Force teams currently operate in nine areas:  Miami, Florida; Los Angeles, 
California; Detroit, Michigan; Houston, Texas; Brooklyn, New York; southern Louisiana; Tampa, Florida; 
Chicago, Illinois; and Dallas, Texas.  
Chart 3:  IndictmentsStrike Force  Chart 4:  Criminal ActionsStrike Force 
      HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 26 
 
 
 
Chart 5:  ReceivablesStrike Force 
 
 
 
From April 1, 2014, to September 30, 2014, Strike Force efforts resulted in the filing of charges against 
134 individuals or entities, 125 criminal actions, and $147 million in investigative receivables. 
Strike Force examples 
Florida  Michele Petrie was the director of the outpatient facility at Hollywood Pavilion, LLC, which 
purportedly provided mental health services to Medicare beneficiaries.  According to court documents, 
Petrie and her co-conspirators arranged for illegal bribes and kickbacks to be paid to patient brokers in 
return for referring Medicare beneficiaries to Hollywood Pavilion.  Petrie and her co-conspirators then 
caused the submission of fraudulent claims through Hollywood Pavilion and billed the Medicare program 
millions of dollars for services that were medically unnecessary and for services provided to patients 
who were not eligible for treatment.  In an attempt to conceal the fraud, Petrie and her co-conspirators 
caused false, inaccurate, and misleading information to be included in patient files and related 
documents for Medicare beneficiaries who were purportedly receiving mental health treatment at 
Hollywood Pavilion.  Petrie was convicted on charges of conspiracy to commit health care and wire fraud, 
wire fraud, and conspiracy to pay and receive kickbacks in connection with a Federal health care benefit 
program.  She was sentenced to 6 years in prison and was ordered to pay $39 million in joint and several 
restitution. 
New York  Elaine Kim was the office manager at URI Medical Service, PC, while Gilbert Kim was the 
office manager at Sarang Medical, PC.  URI and Sarang purportedly provided physical therapy, electric 
stimulation treatment, and other medical services to Medicare beneficiaries.  According to the 
indictment, from approximately March 2007 through May 2012, Elaine and Gilbert Kim and their co-
conspirators artificially increased demand for medical services by providing Medicare beneficiaries with 
free goods and services, such as massages, facials, lunches, gift cards, and recreational classes.  They 
then submitted false claims to Medicare for medical services, such as office visits, physical therapy, 
lesion destruction, and electrical stimulation treatment, which were medically unnecessary, were not 
provided, and otherwise did not qualify for reimbursement.  Once the beneficiaries arrived at the clinics, 
they were required to give their Medicare numbers to staff and to see a doctor, regardless of medical 
need, in order to receive the free nonmedical inducements.  Gilbert and Elaine Kim acted as patient 
recruiters and were paid for referring beneficiaries to the clinics.  During this reporting period, Elaine and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 27 
 
 
Gilbert Kim both pleaded guilty to conspiracy to commit health care fraud.  Elaine Kim was sentenced to 
12 months in jail, and both defendants were ordered to pay $5.9 million in joint and several restitution. 
In addition, Elaine and Gilbert Kim were excluded from participating in any Federal health care programs 
for 18 and 10 years, respectively.  
Michigan  Louisa Thompson owned and operated TGW Medical, Inc., and Caldwell Thompson Manor, 
Inc., two businesses that purportedly provided psychotherapy services.  Checarol Robinson owned and 
operated P&C Adult Day Center, LLC, which also purportedly provided psychotherapy services.  According 
to the indictment, Thompson, a licensed social worker, and other co-conspirators signed patient charts 
and progress notes for individual and group psychotherapy sessions purportedly performed at TGW, 
Caldwell Thompson, and P&C that were not medically necessary and were not performed.  Thompson 
used her own provider number as well as the provider number of another social worker at TGW to cause 
the three clinics to bill Medicare approximately $20 million for psychotherapy visits.  Thompson pleaded 
guilty to conspiracy to commit health care fraud and was sentenced to 3 years and 4 months of 
incarceration and was ordered to pay $5 million in joint and several restitution.  In addition, Thompson 
was excluded from participating in any Federal health care programs for 20 years.  Robinson previously 
pleaded guilty to conspiracy to commit health care fraud and health care fraud and was sentenced to 3 
years and 4 months of incarceration and was ordered to pay $599,438 in joint and several restitution.  
Other criminal and civil enforcement activities  
Special Assistant U.S. Attorney Program  
During this reporting period, DOJ and OIG continued their participation in a program in which OIG 
attorneys, some of whom are Special Agents, serve as Special Assistant U.S. Attorneys.  OIG attorneys are 
detailed full time to DOJs Criminal Division, Fraud Section, for temporary assignments, including 
assignments to the Medicare Fraud Strike Force.  Other attorneys prosecute matters on a case-by-case 
basis.  Both arrangements offer excellent litigation training for OIG attorneys and enhance collaboration 
between the Departments in their efforts to fight fraud.  Under this program, OIG attorneys have 
successfully litigated important criminal cases relating to the fraudulent billing of medical equipment and 
supplies, infusion therapy, and physical therapy, as well as other types of Medicare and Medicaid fraud.  
A related case example follows. 
North Dakota  Hovakim John Mkhitarian was an organizer, leader, and manager of a multi-million-dollar 
health care fraud conspiracy.  According to court documents, Mkhitarian recruited co-conspirators to 
open false-front Medicare provider businesses in several states across the country.  He then used stolen 
physician and beneficiary identities to submit false claims to Medicare.  As part of the scheme, 
Mkhitarian and his co-conspirators hired handlers who were in charge of recruiting and driving foreign 
students around the country to incorporate false-front providers, rent commercial mailboxes, and open 
bank accounts on behalf of the scheme.  The scheme targeted Russian-speaking students traveling under 
the Summer Work and Travel Program.  Mkhitarian and his co-conspirators funneled Medicare payments 
through check-cashing businesses and gold dealers in order to conceal the source and ownership of 
unlawful proceeds of the fraud.  Medicare paid the false-front providers approximately $6.4 million in 
claims reimbursement.  Mkhitarian pleaded guilty to conspiracy to commit health care fraud and faces a 
maximum sentence of 10 years, restitution of $3.1 million, and criminal forfeiture of all proceeds of the 
scheme.  Mkhitarians cousin, Hovakim David Mkhitarian, pleaded guilty to conspiracy to commit health  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 28 
 
 
care fraud and was sentenced to 7 months in prison.   Levon Gevorgyan, who was hired as a student 
handler, pleaded guilty to conspiracy to commit health care fraud and is awaiting sentencing.  
Most wanted fugitives listed on OIGs Web site  
The OIG Most Wanted Fugitives Web site continues to garner national and international attention and 
has greatly assisted in helping to capture fugitives charged with defrauding Federal health care programs 
and stealing millions of taxpayer dollars.  The Most Wanted Fugitives Web site is continuously updated 
and features a profile and statistics for each fugitive, as well as an online tip form and a hotline number 
for individuals to report fugitive-related information to OIG, in English or Spanish, 24 hours a day, 365 
days a year.  The Most Wanted Fugitives list can be accessed at http://oig.hhs.gov/fraud/fugitives.  
During this reporting period, three fugitives were captured.     
Most Wanted Fugitive Vivian Yusuf was arrested in June 2014 at Houston International Airport after 
arriving on a flight from Nigeria.  In March 2011, Yusuf was indicted on charges of conspiracy to commit 
health care fraud, health care fraud, and aggravated identity theft.  Investigators believe that Yusuf and 
her co-conspirators billed Medicare more than $3.4 million for durable medical equipment (DME) that 
was neither medically necessary nor prescribed by a physician.  Yusuf owned and operated Ivy Health 
Care Supply, a DME company based in Stafford, Texas.  According to court records, Yusuf and her co-
conspirators allegedly improperly acquired Medicare patient information and forged physicians' 
signatures on prescriptions and certificates of medical necessity (CMNs).  They also altered prescriptions 
and CMNs after they had been signed by physicians.  The defendants then billed Medicare for power 
wheelchairs, orthotic equipment, and other medical supplies that were not prescribed or otherwise 
authorized by a physician, were not medically necessary, and were not requested by the beneficiaries.  
Investigators believe that Yusuf and her co-conspirators falsely billed Medicare for nearly 800 Medicare 
patients, located primarily in Texas and Louisiana.   
Because of the success of OIGs Most Wanted Fugitives Web site, OIG launched its Most Wanted 
Deadbeat Parents Web site at:  http://oig.hhs.gov/fraud/child-support-enforcement.  The site identifies 
parents who fail to pay court-ordered child support for their children and, as a result, place an 
unnecessary strain on the custodial parents and the children, as well as on agencies that enforce these 
matters.  Examples are provided in the "Human Services Reviews" section of this Semiannual Report.  
Recently completed actions and settlements 
Home health 
Louisiana  Amedisys, Inc., and Amedisys Holding, LLC (collectively, Amedisys), agreed to pay $150 
million to settle allegations under the False Claims Act.  Amedisys is a for-profit national company that 
provides home health care services, including nursing care and physical, speech, and occupational 
therapy, primarily to Medicare beneficiaries.  Amedisys allegedly billed Medicare for home health care 
services provided to patients who were not homebound and to those who lacked a need for skilled 
nursing and/or skilled therapy services.  Amedisys also allegedly billed Medicare for services provided to 
patients without regard to medical necessity and overbilled Medicare by upcoding patients diagnoses.  
In addition to the settlement, Amedisys agreed to enter into a comprehensive 5-year corporate integrity 
agreement (CIA) with OIG.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 29 
 
 
Texas  Nick Patzakis was a doctor of osteopathic medicine and medical director for the home health 
agencies Jackson Home Healthcare, Inc. (JHH), and Prestige Health Services, Inc. (PHS).  Valdie Jackson 
was the director of JHH, while Valnita Turner was a registered nurse, PHSs director of nursing, and 
director of the home health agencies Houston Compassionate Care, Inc. (HCC) and Texas Comprehensive 
Healthcare Resources, Inc. (TCHR).  Jarvis Thomas worked at a local hospital.  According to the 
indictment, Thomas accessed hospital files without authorization and obtained personal health 
information of hospital patients, which he then provided to Jackson in return for payment.  Jackson 
shared the information with others, including Turner and employees of TCHR.  Employees of TCHR then 
used the stolen information to contact beneficiaries and solicit them for home health care services, 
including falsely stating that the beneficiaries physicians referred them for a home health evaluation 
when, in fact, the physicians never made a referral, did not establish a plan of care, and were unaware 
that the beneficiaries were being contacted by a home health agency.  JHH, PHS, and HCC then billed 
Medicare more than $12 million for home health services allegedly provided to beneficiaries who had 
been solicited.  However,  the services did not qualify for payment because the patients:  (1) were not 
under the care of a physician who had established the plan of care, (2) were not confined to the home, 
and (3) were not in need of skilled nursing care.  The four defendants were sentenced to a combined 
13 years and 7 months in prison and were ordered to pay more than $5.5 million in joint and several 
restitution.  
Pharmacies 
Illinois  Sears Holdings Corporation and Kmart Corporation (collectively, Kmart) agreed to pay $3.3 
million to settle allegations that Kmart offered and paid remuneration in the form of gift cards and 
coupons to beneficiaries of Federal health care programs to induce the beneficiaries to transfer or fill 
their prescriptions at Kmart pharmacies.  The Government alleged that, as a result of this conduct, Kmart 
violated the False Claims Act by submitting improper claims for payment to Medicare, TRICARE, the 
Veterans Affairs program, and Medicaid.  Sears wholly owns Kmart, which operates retail stores 
containing pharmacies throughout the United States. 
Personal care services 
Illinois  During this reporting period, 11 individuals were arrested and 15 individuals were federally 
charged for allegedly submitting false timesheets for work not performed as personal assistants through 
the Illinois Home Services Program, a State Medicaid waiver program.  The individuals charged allegedly 
submitted or assisted in submitting fraudulent timesheets for hours in which the personal assistant was 
working another job or was otherwise out of the area or for a time when the disabled customer was 
hospitalized or otherwise not using the services.  Those charged included Jason Greene, who allegedly 
submitted false timesheets for at least 300 hours of work performed during times he was incarcerated, 
and Michelle Calhoun, who allegedly submitted false timesheets for services that were never performed.  
Vermont  Four defendants who were involved in different personal care services schemes to defraud 
the Vermont Medicaid program were sentenced during this reporting period.  According to court 
documents, Kammy McDonald claimed she provided more than 350 hours of personal care services to 
an adult with physical disabilities in the disabled adults home.  However, at the time these services were 
purportedly rendered, McDonald allegedly was working at a convenience store.  Brooke Scott was 
employed as the caregiver for a minor child with special needs.  He allegedly submitted timesheets for 
more than 500 hours of care when, in fact, the child was actually in day care.  Denise Wildasin was the 
employer of record and allegedly approved Scotts timesheets, knowing they were false.  Tasha Gaudette  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 30 
 
 
was employed as the caregiver for a minor child with special needs.  In that capacity, Gaudette allegedly 
submitted timesheets for more than 400 hours of care purportedly provided after the child moved to a 
new residence and she no longer provided care.  The four defendants were sentenced to a combined 
9 years and 6 months of incarceration (each defendant received a suspended sentence) and were 
ordered to pay a combined $34,031 in restitution, penalties, and fines. 
Hospitals 
Florida  Halifax Hospital Medical Center and its wholly owned staffing agency, Halifax Staffing, Inc. 
(collectively, Halifax), agreed to pay $85 million to resolve allegations that Halifax entered into certain 
prohibited contracts with oncologists and neurosurgeons in violation of the Stark Law and caused the 
submission of false claims.  The Government alleged that between 2004 and 2010, Halifax entered into 
employment contracts with neurosurgeons that greatly exceeded fair market value and varied with the 
volume and value of the referrals or other business generated.  Between 2004 and 2010, the 
neurosurgeons generated more than $35 million in Medicare business for the hospital.  Halifax allegedly 
paid the neurosurgeons through a number of means that were not properly documented in contracts, 
including:  (1) $100,000 annually for unspecified amounts of call coverage, (2) a car allowance in excess 
of $1,000 a month, (3) payments well in excess of the Medicare fee schedule for certain categories of 
patients, and (4) bonuses based upon work that was performed by nurses or physician assistants.  The 
Government also alleged that Halifax entered into employment contracts with oncologists that included 
operating margin bonuses that were based on the volume or value of the referrals or other business 
generated by the physicians.  The Government alleged that because of the prohibited relationship 
between Halifax and these physicians, the claims that Halifax submitted for their referrals were false.  As 
part of the settlement, Halifax entered into an enhanced CIA with OIG that includes requiring Halifax to 
retain an independent compliance expert to provide annual reviews of the effectiveness of its 
compliance program and to hire a Legal Independent Review Organization to review Halifaxs contracts 
with physicians and other health care providers.   
Kentucky  Ashland Hospital Corporation d/b/a Kings Daughters Medical Center (KDMC) agreed to pay 
$40.9 million to resolve allegations that it violated the Stark Law and the False Claims Act.  Specifically, 
the Government alleged that KDMC paid several cardiologists compensation that was commercially 
unreasonable and exceeded fair market value and that KDMC submitted claims to Medicare and 
Medicaid for medically unnecessary coronary stents and cardiac catheterizations.  In addition to agreeing 
to payment of the settlement amount, KDMC agreed to enter into a comprehensive 5-year CIA with OIG 
that includes enhanced provisions to address patient care issues and KDMCs relationships with referral 
sources.  
Identity theft 
North Carolina  Victoria Brewton operated a series of after-school and summer childcare programs and 
recruited Medicaid beneficiaries to enroll in the programs with the promise to their families that the 
programs were free for Medicaid recipients.  According to court documents and court proceedings, 
Brewton, who was not licensed or qualified to provide mental and behavioral health services and was 
not a Medicaid-approved provider, then stole the Medicaid numbers of some of the children and families 
who enrolled in the programs and falsely billed Medicaid for mental and behavioral health services that 
were never provided.  Brewton used the provider numbers of other licensed therapists, some of whom 
did not know their information had been compromised, to falsely bill Medicaid for millions of dollars.    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 31 
 
 
Rodnisha Cannon worked as a patient recruiter for Brewton before opening her own after-school and 
summer childcare programs.  Cannon ran a similar scheme, whereby she used the Medicaid provider 
numbers of other companies and individual therapists to submit false claims to Medicaid totaling 
millions of dollars for mental and behavioral health services that were never provided.  For example, 
Cannon hired a licensed clinical social worker, but the social worker worked for Cannon for only a single 
day.  Cannon stole the social workers provider information and used it to submit more than $800,000 in 
false claims to Medicaid for services never provided, including claims with dates of service before the 
social worker was hired by Cannon.  Brewton and Cannon were sentenced to a combined 17 years and 
9 months in prison and were ordered to pay a combined $10.1 million in restitution, joint and several.  
Cannon was also excluded from participating in any Federal health care programs for 28 years.  
Physicians 
West Virginia  Allen Saoud was a doctor of osteopathic medicine who owned the dermatological 
practices AGS, Inc., and Central West Virginia Dermatology Associates, Inc.  Between May 1998 and June 
2004, Saoud allegedly submitted false claims to Medicare and Medicaid.  He reached a settlement with 
the United States in August 2005 that included his voluntary exclusion from all Federal health care 
programs for 10 years.  According to the investigation, after his voluntary exclusion, Saoud arranged an 
elaborate scheme to hide his involvement with his dermatology clinics and continue billing and receiving 
payment from Medicare and Medicaid, which included sham sales of the clinics.  Saoud later lied in 
Federal bankruptcy court, lied to a Federal investigator, stole the identity of another physician, and 
obstructed an Internal Revenue Service (IRS) investigation.  Saoud was convicted by a jury on charges of 
health care fraud, bankruptcy fraud, identity theft, and the filing of false tax returns. He was sentenced 
to 8 years and 3 months of incarceration and was ordered to pay $265,330 in restitution and a 
$2.6 million fine.  
Texas  Valley Heart Consultants, PA (VHC); Carlos David Mego, MD; and Subbarao Yarra, MD, agreed to 
pay $3.9 million to resolve allegations that they violated the False Claims Act.  VHC is a cardiology 
practice owned by Mego and Yarra that is based in McAllen, Texas.  The Government alleged that VHC, 
Mego, and Yarra billed Medicare Part B for:  (1) nuclear stress tests administered in part by unlicensed 
personnel; (2) unnecessary echocardiograms, carotid Doppler tests, and coronary angiographies; (3) 
nuclear stress tests that were administered and interpreted so far below the standard of care as to be 
worthless; and (4) physical examinations that were performed in such a superficial manner as to be 
worthless.  In addition to payment of the settlement amount, VHC, Mego, and Yarra agreed to enter into 
a 3-year CIA with OIG that includes both quality-of-care and claims reviews.  
Mental health services 
Michigan  Glenn English acted as the owner and Chief Executive Officer of New Century Adult Day 
Program Services, LLC.  Gregory Lawrence was a Medicare provider and director at New Century, while 
Richard Hogan, Donald Berry, Felicia Marsh, and Jamie Moreau worked at New Century.  According to 
evidence presented at trial, English and his co-conspirators lured mentally disabled residents of local 
adult foster care homes, as well as people seeking narcotic drugs, to New Century with the promise that 
they could see a doctor who would prescribe them the narcotics they wanted if they signed up for New 
Centurys psychotherapy program.  New Century used the signatures and Medicare information of these 
individuals to claim that it was providing them psychotherapy when, in fact, it was not.  Additionally, the 
evidence at trial showed that English directed New Century employees to fabricate patient records to 
make it appear that psychotherapy was provided and to pre-sign sign-in sheets for months at a time in  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 32 
 
 
order to bill Medicare for services not rendered.  Between March 2010 and April 2012, New Century 
billed Medicare approximately $3.2 million for psychotherapy services.  English, Hogan, and Marsh were 
sentenced to a combined 14 years of incarceration and were ordered to pay more than $2.1 million in 
restitution, joint and several.  Lawrence and Moreau previously pleaded guilty to conspiracy to commit 
health care fraud and are awaiting sentencing.  Berry passed away before his trial concluded. English, 
Hogan, and Marsh were all excluded from participating in any Federal health care programs for 25, 18, 
and 5 years, respectively.   
New York  Mikhail Presman was a licensed psychiatrist formerly employed by the Department of 
Veterans Affairs.  According to court documents, Presman billed Medicare approximately $4 million for 
home treatment of beneficiaries.  However, many of those visits never occurred.  On a number of 
occasions, Presman submitted claims to Medicare for home medical visits at locations within New York 
City, even though he was physically located in China at the time of these purported home visits.  
Additionally, he submitted claims to Medicare for 55 home medical visits to beneficiaries who were 
actually hospitalized on the date of the purported visits.  Presman pleaded guilty to health care fraud, 
was sentenced to a year-and-a-half in jail, and was ordered to pay $1.2 million in restitution.  In addition, 
he was excluded from participating in any Federal health care programs for 15 years.  
Hospice care 
Pennsylvania  Matthew Kolodesh controlled and operated Home Care Hospice, Inc. (HCH), a for-profit 
hospice provider that purportedly provided hospice services for patients at nursing homes, hospitals, 
and private residences.  According to the indictment, Kolodesh and his co-conspirators billed Medicare 
more than $14 million for alleged services provided by HCH, even though (1) some patients were 
ineligible for hospice care and (2) some services were billed at a higher reimbursement level, but still not 
provided to the patients.  In order to increase HCHs patient census, Kolodesh authorized payments to 
certain physicians and other health care professionals as an incentive to refer patients to HCH and to 
certify that they were appropriate for hospice care, even though they were not eligible.  He also paid 
physicians and other health care professionals to serve as HCH medical directors, hospice physicians, and 
advisors when, in reality, the contracts for these positions were to mask payments for patient referrals.  
Kolodesh directed employees to maintain ineligible patients who were not terminally ill on hospice care, 
in some instances for more than 1 year, and he authorized the fabrication of supporting documentation 
for patient files to substantiate approximately $12.8 million in fraudulent claims billed to Medicare.  
Kolodesh was found guilty by a jury on charges of conspiracy to commit health care fraud, health care 
fraud, money laundering, and mail fraud.  He was sentenced to 14 years and 8 months in prison and was 
ordered to pay $16.2 million in restitution, joint and several.  To date, 10 other defendants have been 
sentenced to a combined 8 years in prison in connection with this scheme.  
Durable medical equipment 
California  Susanna Artsruni was the owner and managing employee of Midvalley Medical Supply, 
based in Van Nuys, California.  Artsruni also worked as an office manager under a different name at the 
Vermont Clinic in Los Angeles.  According to the indictment, Artsruni; co-conspirator Erasmus Kotey, who 
worked at the Vermont Clinic as a physicians assistant; and others recruited and transported Medicare 
beneficiaries to the Vermont Clinic, often with the promise of free, medically unnecessary DME.  Some 
of these beneficiaries lived hundreds of miles away.  The beneficiaries were often prescribed DME, such 
as motorized wheelchairs and orthotics, and underwent medically unnecessary tests, including nerve 
conduction tests and ultrasounds.  Artsruni used the patient information obtained from beneficiaries at  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 33 
 
 
the Vermont Clinic to bill for medically unnecessary DME prescriptions through her DME company, 
Midvalley.  Artsruni pleaded guilty to health care fraud and money laundering, was sentenced to 6 years 
and 4 months of incarceration, and was ordered to pay $9.6 million in joint and several restitution.  In 
addition, Artsruni was excluded from participating in any Federal health care programs for 30 years.  
Kotey pleaded guilty to charges of health care fraud and conspiracy to commit health care fraud and is 
awaiting sentencing.  
New York  Rubin Kaykov owned and operated the purported DME company, Triangle R Inc., based in 
Queens, New York.  Roman Bortnik worked for Triangle R but also had his own purported DME wholesale 
company, Tracey Drive Medical Supply Co.  However, according to the indictment, the listed street 
address for Tracey Drive Medical was actually a location in which a hair salon operated.  According to the 
indictment, Kaykov and Bortnik billed Medicare and Medicaid millions of dollars for DME, including 
motorized wheelchairs, that was never provided to patients and/or was more expensive than the DME 
that was actually provided to patients.  Kaykov, Bortnik, and their co-conspirators prepared fraudulent 
documentation that appeared to legitimize their billings, including hundreds of forged and phony 
medical prescriptions for DME, at times even forging the signatures of patients and fraudulently altering 
documentation related to those patients.  Both Kaykov and Bortnik pleaded guilty to charges of health 
care fraud and were sentenced to 2 years and 2 years and 6 months of incarceration, respectively.  Both 
defendants were also ordered to pay $1 million in joint and several restitution. 
Transportation 
California  Alex Kapri was the president and chief executive officer of Alpha Ambulance, Inc., a 
purported ambulance transportation company located in Los Angeles, California.  Aleksey Muratov acted 
as the vice-president and chief financial officer of Alpha.  According to the indictment, Kapri, Muratov, 
and other co-conspirators provided ambulance transportation services to Medicare beneficiaries, 
knowing that their medical conditions did not necessitate the transportation services.  The co-
conspirators instructed Alpha employees to document a reason justifying ambulance transportation 
services on run sheets even if a justification did not exist.  Employees were also told not to write certain 
words, such as chair, walk, or sit, on the run sheets because Medicare would not pay for ambulance 
services if those words were present.  Between June 2008 and July 2012, Alpha submitted approximately 
$49 million in claims to Medicare for purported ambulance transportation and related services.  Kapri 
and Muratov both pleaded guilty to conspiracy to commit health care fraud.  They were sentenced to a 
combined 15 years and 3 months in jail and were ordered to pay $1.6 million in joint and several 
restitution.  
Pennsylvania  Anna Mudrova owned and operated Penn Choice Ambulance, Inc., a purported 
ambulance transportation company based in Philadelphia, Pennsylvania.  According to court records, 
Mudrova and her co-conspirators transported by ambulance Medicare beneficiaries who could walk or 
be safely transported by other means, falsely representing to Medicare that these patients required 
transportation by ambulance.  The defendants also targeted and recruited patients who attended 
dialysis treatment, which is typically required 3 times per week, thereby allowing Penn Choice to bill 
extensively for these patients.  Ambulatory patients were directed to get onto a stretcher when they 
were able to walk or be moved via wheelchair.  Penn Choice often transported two patients in an 
ambulance at the same time; one sat on a stretcher and the other on a jump seat.  In addition, at least 
one patient rode in the front passenger seat.  To induce Medicare beneficiaries to be transported by 
Penn Choice even though such ambulance transport was not medically necessary, the defendants paid 
beneficiaries kickbacks of between $100 and $500 a month.  Penn Choice billed Medicare approximately  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 34 
 
 
$3.6 million for these false claims, which resulted in a more than $1.5 million loss to Medicare.  Mudrova 
pleaded guilty to conspiracy to commit health care fraud, was sentenced to 8 years in prison, and was 
ordered to pay $1.8 million in joint and several restitution.  Three other defendants were sentenced to a 
combined 9 years in prison in connection with this scheme.   
Chiropractor 
California  Houshang Pavehzadeh was the owner of Sylmar Physician Medical Group, Inc., a 
chiropractic clinic located in a strip mall in San Fernando Valley, California.  According to court 
documents, Pavehzadeh billed Medicare for chiropractic manipulations purportedly provided to 
beneficiaries when, in fact, the treatments were either merely massages and were not reimbursable by 
Medicare or were never actually provided.  In an effort to conceal his fraud from OIG investigators, 
Pavehzadeh falsely reported to the Los Angeles Police Department that he had been carjacked and that 
the requested patient files had been stolen.  Pavehzadeh billed Medicare more than $1.7 million for 
purported chiropractic treatments between 2005 and 2012, for which he was paid more than $1 million.  
Pavehzadeh pleaded guilty to health care fraud, was sentenced to 5 years and 3 months in jail, was 
ordered to pay $1 million in restitution, and had more than $300,000 in assets seized. 
State Medicaid Fraud Control Units  
OIG oversight of State MFCUs  
Medicaid Fraud Control Units (MFCUs or Units) are key partners with OIG in the fight against fraud, 
waste, and abuse in State Medicaid programs.  OIG has oversight responsibility for MFCUs and 
administers grants that provide Federal funding for Unit operations.  The Federal Government 
reimburses 75 percent of the costs of operating a Unit; the States contribute the remaining 25 percent.  
MFCUs investigate and prosecute Medicaid provider fraud and patient abuse and neglect in health care 
facilities or board and care facilities.  MFCU accomplishment data and onsite reviews for FY 2014 will be 
reported in OIGs spring 2015 Semiannual Report.    
OIG onsite reviews of MFCUs   
OIG has developed 12 performance standards for use in assessing the operations of MFCUs.  A copy of 
the MFCU performance standards, most recently revised in June 2012, may be found on the OIG Web 
site.  Periodicallyapproximately every 5 yearsOIG conducts an in-depth onsite review of each Unit to 
evaluate its operations as related to the 12 performance standards and to assess compliance with laws, 
regulations, and OIG policy guidance.  OIG issued reports of onsite reviews of the following MFCUs from 
April through September 2014.  The full reports are available on our Web site. 
  Connecticut State Medicaid Fraud Control Unit:  2013 Onsite Review OEI-07-13-00540 2014 SEP. 
  Mississippi State Medicaid Fraud Control Unit:  2014 Onsite Review OEI-09-13-00700 2014 AUG. 
  Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review OEI-07-13-00250 2014 JUL. 
  Nebraska State Medicaid Fraud Control Unit:  2014 Onsite Review OEI-07-14-00060 2014 JUN. 
  Utah State Medicaid Fraud Control Unit:  2013 Onsite Review OEI-09-13-00490 2014 APR.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 35 
 
 
  Texas State Medicaid Fraud Control Unit:  2013 Onsite Review OEI-06-13-00300 2014 APR. 
Joint investigations with MFCUs 
Examples of joint efforts with MFCUs include the following: 
South Carolina  Truman Lewis owned and operated Helping Hands Youth and Family Services, a 
business that purportedly provided rehabilitative behavioral health services to Medicaid beneficiaries.  
Trumans brother Norman and his wife Melanie also worked in various management roles at Helping 
Hands.  According to court records, Helping Hands management directed employees to fabricate and 
sign progress notes for mentoring services allegedly performed by other Helping Hands employees or 
former employees when, in fact, these services were not provided.  Employees were also told by 
management that Medicaid was being billed 40 hours per week for each full-time employee for services 
rendered; management instructed employees to draft notes to support 40 hours of reimbursable 
services.  Employees who did not draft the notes to those specifications were threatened that they 
would not be paid.  Between January 2009 and October 2010, Medicaid paid more than $8.9 million to 
Helping Hands for services purportedly rendered.  Truman, Norman, and Melanie Lewis used these funds 
to purchase certificates of deposit, luxury vehicles, mobile homes, real estate, and other personal items.  
Truman and Norman Lewis were sentenced to a combined 17 years and 6 months in jail and were 
ordered to pay $3.3 million in restitution, joint and several. Melanie Lewis pleaded guilty and was 
ordered to pay $210,020 in restitution.  Truman, Norman, and Melanie Lewis were also excluded from 
participating in any Federal health care programs for 30, 25, and 5 years, respectively.  This case was 
worked jointly with the IRS and the South Carolina MFCU.  
Georgia  Schella Hope, a licensed dietitian, owned and operated Hope Nutritional Services, LLC (HNS).  
HNS purportedly provided nutrition services and counseling almost exclusively for children, most of 
whom were enrolled in the Government-funded Head Start program.  Co-conspirator Arlene Murrell was 
a licensed dietician who owned and operated Quality Nutrition Services (QNS), which also purportedly 
provided nutrition services and counseling to children in Head Start.  According to evidence presented at 
trial and at sentencing, from 2005 through 2011, Hope misappropriated the identities of thousands of 
children who were enrolled in Head Start programs located throughout the State of Georgia.  Once Hope 
obtained the identities of these children, she fabricated patient files, falsified prescriptions from doctors, 
and submitted $4 million worth of bogus claims to Medicaid for nutritional services that were not 
provided.  As the co-conspirator, Murrell allowed Hope to submit false and fraudulent claims under her 
provider number at QNS and transferred payment to Hope when Medicaid reimbursed her 
company.  The evidence further showed that Hope used the money she stole from Medicaid to pay for 
luxury automobiles, designer clothing, and luxury vacations, among other things.   
Hope was found guilty by a jury on charges of conspiracy, health care fraud, aggravated identity theft, 
and money laundering.  She was sentenced to 16 years in prison and was ordered to pay $4.3 million in 
restitution, joint and several.  Murrell pleaded guilty to one count of conspiracy and was ordered to pay 
$159,273 in joint and several restitution.  In addition, Hope and Murrell were excluded from 
participating in any Federal health care programs for 45 and 5 years, respectively.  This case was worked 
jointly with the FBI, the Georgia MCFU, and the Georgia Department of Community Health.   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 36 
 
 
Advisory opinions and other industry guidance  
As part of OIGs continuing efforts to promote the highest level of ethical and lawful conduct by the 
health care industry, we issue advisory opinions and other guidance to educate industry and other 
stakeholders on how to avoid fraud, waste, and abuse.  Advisory opinions, which are developed in 
consultation with DOJ, are issued to requesting parties regarding the interpretation and applicability of 
certain statutes relating to Federal health care programs.  The Health Insurance Portability and 
Accountability Act of 1996,  205, allows OIG to provide case-specific formal guidance on the application 
of the anti-kickback statute and safe harbor provisions and other OIG health care fraud and abuse 
sanctions.  From April 1, 2014, to September 30, 2014, OIG received 26 requests for advisory opinions 
and issued 6 opinions. 
Sanction authorities and other administrative actions  
Various Federal laws provide authorities to impose administrative sanctions for fraud and abuse, as well 
as other activities that pose a risk to Federal health care programs and their beneficiaries.  Sanctions 
include the exclusion of individuals and entities from Federal health care programs and the imposition of 
civil monetary penalties (CMPs) for submitting false and fraudulent claims to a Federal health care 
program or for violating the anti-kickback statute; the Stark Law; or the Emergency Medical Treatment 
and Labor Act (EMTALA), also known as the patient dumping statute.  
During this semiannual reporting period, OIG imposed 2,360 administrative sanctions in the form of 
program exclusions or administrative actions for alleged fraud or abuse or other activities that posed a 
risk to Federal health care programs and their beneficiaries.  Exclusion and penalty authorities are 
described in Appendix D and on our Web site at http://oig.hhs.gov/fraud/enforcement/cmp.  
Program exclusions  
During this semiannual reporting period, OIG excluded 2,297 individuals and entities from Medicare, 
Medicaid, and other Federal health care programs.  Most of the exclusions resulted from convictions for 
crimes relating to Medicare or Medicaid, for patient abuse or neglect, or as a result of license revocation. 
OIG is also responsible for reinstating providers who apply and have met the requirements of their 
exclusions.  For a list of excluded individuals and entities, see:  http://exclusions.oig.hhs.gov.  Case 
examples follow. 
Texas  Physician Christopher Duntsch, a specialist in neurological surgery, was excluded on the basis of 
the revocation of his medical license to practice in the State of Texas, for so long as his license remains 
revoked.  The Texas Medical Board revoked Duntschs license after finding that his treatment of several 
patients represented a pattern of failing to follow appropriate preoperative planning standards and 
failing to recognize and respond to complications during surgery and postoperatively.  One patient 
suffered complications from surgery performed by Duntsch that resulted in excessive blood loss and 
quadriparesis.  Another patient suffered a complication of retroperitoneal hemorrhage that was not 
addressed by Duntsch.  A third patient suffered excessive blood loss during surgery and had bone 
removed unnecessarily, which resulted in injury to the vertebral artery.  Those issues led to a series of 
events that included a stroke, which ultimately resulted in the patients death.  Duntsch also failed to 
manage severe post-operative complications suffered by a fourth patient, including an esophageal injury 
and a retained sponge, which was evident during an early post-operative x-ray.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 37 
 
 
Oregon  Frederick Field, an anesthesiologist, was excluded for a minimum period of 50 years on the 
basis of his conviction of 11 counts of first-degree sexual abuse and one count of first-degree rape.  From 
about September 2007 to about July 2011, Field engaged in sexual contact and sexual intercourse with 
patients who were incapacitated and under the influence of anesthetics at the time.  Field was 
sentenced to 23 years and 4 months of incarceration, and his medical licenses were permanently 
surrendered and revoked in the States of Oregon and California, respectively.  
Iowa  David Gierlus, a doctor of osteopathic medicine, was excluded for a minimum period of 18 years 
on the basis of his conviction for distribution of hydrocodone.  Gierlus intentionally distributed 
hydrocodone to a patient for other than a legitimate medical purpose and outside the course of 
professional medical practice.  Without performing a thorough physical examination and without 
determining the cause of the patients pain, Gierlus prescribed a stronger dose of hydrocodone than he 
had previously prescribed for the patient.  Gierlus was sentenced to 8 years of incarceration.  In addition, 
he surrendered his license to practice in the State of Iowa. 
Michigan  Chiradeep Gupta, who held ownership interests in various home health agencies and entities 
that provided contract physical therapy services to those agencies, was excluded for a minimum period 
of 40 years on the basis of his conviction for health care fraud conspiracy.  From about August 2007 to 
about September 2009, Gupta conspired with others to submit false and fraudulent claims to Medicare.  
Gupta and others fabricated medical and billing documents, which reflected or supported that physical 
therapy had been provided when, in fact, the therapy was not medically necessary or was not provided.  
Gupta was sentenced to 10 years in prison and was ordered to pay approximately $10.1 million in 
restitution, joint and several.    
New York  Physician Gustave Drivas was excluded for a minimum period of 50 years on the basis of his 
conviction for conspiracy to commit health care fraud and health care fraud.  From about March 2005 to 
about July 2010, Drivas participated in a scheme in which cash kickbacks were paid to Medicare 
beneficiaries to induce them to receive medically unnecessary physician services, physical therapy, and 
diagnostic testing.  Drivas was sentenced to 12 years and 7 months of incarceration and was ordered to 
pay approximately $50 million in restitution, joint and several.  In addition, Drivass licenses to practice 
medicine in New York and New Jersey were both revoked, and the New York State Office of the Medicaid 
Inspector General excluded Drivas from participation in Medicaid. 
Suspensions and debarments 
Suspensions and debarments are administrative tools used by HHS and other Federal agencies to protect 
the Government from individuals and entities that have engaged in contract fraud, that have misused 
grant funds, or that are otherwise not presently responsible.  Because these are Governmentwide 
sanctions, an individual or entity that has been suspended or debarred by HHS or any other agency is 
ineligible from participating in any future funding opportunities across the Federal Government for a 
specified period of time.  
OIG refers individuals and entities that have potentially engaged in grant or contract fraud or misconduct 
to the HHS Suspension and Debarment Official, who is responsible for determining whether to impose a 
suspension or debarment.  OIG continues to develop a robust Suspension and Debarment program and 
uses this tool to protect Government programs against fraud, waste, poor performance, and 
noncompliance with contract provisions or applicable law.  In FY 2014, OIG made 20 referrals to the 
Suspension and Debarment Official for consideration.    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 38 
 
 
Below are two examples of suspensions and/or debarments: 
New York  Pedro Espada, an ex-New York State senator, was found guilty on four counts of stealing 
Federal Health Resources and Services Administration funds from a health care clinic.  In a separate trial, 
the ex-senator and his son pleaded guilty to tax fraud and other outstanding charges.  Espada was 
sentenced to 5 years in prison and was ordered to pay more than $480,000 in restitution.  His son was 
sentenced to 6 months in prison.  HHS currently has the two individuals and three associated entities 
under a suspension. 
Pennsylvania  Eight co-conspirators who participated in a scheme to defraud the Low Income Home 
Energy Assistance Program (LIHEAP) were debarred from participation in Government programs for a 
period of 3 years.  The debarment was based on criminal convictions on charges of contributing to a 
scheme to defraud LIHEAP by falsifying information in order to obtain payments from the program that 
they were not entitled to receive. 
Corporate integrity agreements  
Many health care providers elect to settle their cases before litigation.  As part of the settlements, 
providers often agree to enter into CIAs with OIG to avoid exclusions from Medicare, Medicaid, and 
other Federal health care programs.  Under a CIA, a provider commits to establishing a program and 
taking other specified steps to ensure future compliance with Medicare and Medicaid rules.  The 
compliance programs are designed, in part, to prevent future fraud.  OIG monitors providers compliance 
with these agreements.  OIG may impose penalties on entities that fail to comply with the requirements 
of their CIAs, as shown in the examples below: 
Tennessee  CSHM, LLC, formerly known as FORBA Holdings and Church Street Health Management 
(CSHM), agreed to be excluded for 5 years on the basis of its alleged material breaches of its CIA.  CSHM 
manages and operates the national chain of Small Smiles Dental Centers, which provides services 
primarily to children on Medicaid.  CSHMs corporate predecessor entered into the CIA in 2010 as part of 
the resolution of a False Claims Act case involving allegations that the company provided dental services 
to children on Medicaid that were medically unnecessary or failed to meet professionally recognized 
standards of care.   
This exclusion marked the culmination of a series of alleged failures by CSHM and its corporate 
predecessors to comply with its CIA.  Since the 2010 settlement, OIG had repeatedly cited CSHM and 
taken actions to address alleged violations of the CIA, including imposing stipulated penalties and forcing 
the divestiture of one of CSHMs clinics.  Despite these actions, CSHM remained in material breach of its 
CIA, and OIG issued Notices of Intent to Exclude to the company in December 2013 and January 2014.  
Specifically, OIG found that CSHM had, among other things, failed to report serious quality-of-care 
reportable events; take corrective action; or make appropriate notifications of those events to the State 
dental boards, as required by the CIA.  Although CSHM represented to OIG that it would cure the 
material breaches, OIG determined through meetings with CSHM and its Board of Directors and review 
of its written submissions that CSHM had failed to cure the material breaches and proceeded with the 
exclusion.   
Florida  OIG imposed stipulated penalties totaling $15,000 against Exactech, Inc., on the basis of the 
device manufacturers failure to comply with certain requirements of its CIA.  Specifically, Exactech failed 
to (1) timely screen new Covered Persons to ensure that they were not excluded or otherwise  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 39 
 
 
ineligible to participate in the Federal health care programs, (2) distribute revised policies and 
procedures to Covered Persons whose job functions related to those policies and procedures, and (3) 
provide copies of Exactechs Code of Conduct and anti-kickback statute policies and procedures to 
parties entering into new or renewed agreements with Exactech. 
Florida  OIG imposed stipulated penalties totaling $5,000 against American Sleep Medicine, Inc. (ASM), 
on the basis of its failure to satisfy certain reporting requirements under its CIA.  Specifically, ASM failed 
to timely notify OIG of two incidents involving probable violations of the Anti-Kickback Statute that had 
been reported to ASMs internal compliance hotline.    
Civil Monetary Penalties Law  
The Civil Monetary Penalties Law (CMPL) authorizes OIG to impose administrative penalties on and 
assessments against a person who, among other things, submits, or causes to be submitted, claims to a 
Federal health care program that the person knows or should know are false or fraudulent.  During this 
semiannual reporting period, OIG concluded cases involving more than $14.4 million in CMPs and 
assessments.  The following are case examples. 
New Jersey  Joseph A. Raia, M.D., agreed to pay $1.5 million for allegedly violating the CMPL.  OIG 
alleged that Raia submitted or caused the submission of thousands of false and fraudulent claims to 
Medicare for physical therapy and rehabilitation services that he had purportedly rendered.  Raia was 
the owner and chief operating officer of Grafton Medical Center, P.C., and Joseph A. Raia, M.D., P.C., as 
well as an employee of a physician group practice with multiple locations in Brooklyn, New York.  OIGs 
investigation revealed that Raia failed to perform or directly supervise physical therapy and related 
services billed under his Medicare provider number while he was either out of the country or out of the 
State in which the services were being performed.  Raia also improperly used chiropractors to provide 
physical therapy services incident to his professional services at his New Jersey practice location.  In 
addition to agreeing to payment of the settlement amount, Raia agreed to be excluded from 
participation in Medicare, Medicaid, and all other Federal health care programs for 15 years.  This 
represents the largest CMP settlement that OIG has ever obtained against an individual physician.         
Texas  Medicus Laboratories, LLC agreed to pay $5 million for allegedly violating the CMPL.  OIG 
contended that Medicus submitted claims to Medicare that it knew or should have known were false by 
(1) using Modifier 59 to bill for multiple units of a particular drug test when applicable rules only 
permitted for a single unit to be billed per patient encounter; and (2) billing for certain urinalysis codes 
when the testing was for screening purposes only and was not medically reasonable and necessary.  In 
addition to payment of the settlement amount, Medicus agreed to enter into a 5-year CIA with OIG.  This 
settlement was the result of a cooperative effort between OIGs Office of Audit Services and its Office of 
Counsel to the Inspector General as part of a cross-component initiative focusing on the urine drug 
testing industry.   
Mississippi  Harpers Hospice Care, Inc., agreed to pay $150,000 for allegedly violating the CMPL 
provisions applicable to kickbacks.  OIG alleged that, over a period of approximately 5 years, Harpers 
Hospice paid prohibited remuneration to a local physician in the form of medical directorship fees.  
Harpers Hospice allegedly provided the remuneration to the physician in exchange for the physicians 
referral of patients to Harpers Hospice for hospice services and pre-signing blank prescription forms for 
patients treated by Harpers Hospice.   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 40 
 
 
Texas  CVS Pharmacy, Inc., agreed to pay $1,216,147 for allegedly violating the CMPL.  OIG contended 
that CVS Pharmacy knowingly presented or caused to be presented false or fraudulent claims by billing 
both Medicare Part B and Medicare Part D plan sponsors for immunosuppressant drugs provided to the 
same beneficiary on the same date of service.    
Arizona  An Arizona research university agreed to pay $165,000 to resolve its CMPL liability for violating 
the select agent regulations.  OIG alleged that the university failed to (1) maintain current and accurate 
inventory records regarding certain select agents held in long-term storage and (2) implement biosafety 
and containment procedures commensurate with the risks associated with the select agents and toxins 
in its possession.  Further, OIG contended that the responsible official did not ensure compliance with 
the governing regulations.  
Patient dumping  
Some of the CMPL cases that OIG resolved between April 1, 2014, and September 30, 2014, were 
pursued under EMTALA, a statute designed to prevent hospitals from denying emergency care to 
patients and to ensure patient access to appropriate emergency medical services.  Examples follow. 
Indiana  St. Vincent Jennings Hospital agreed to pay the maximum penalty of $25,000 to resolve its 
liability under EMTALA.  OIG alleged that St. Vincent failed to provide an appropriate medical screening 
examination to a patient who arrived via ambulance at St. Vincents emergency department.  The patient 
was in critical condition with extremely low blood pressure and likely required amputation for a wound 
on his foot that had necrotizing fasciitis and had become gangrenous.  The emergency department 
physician met the ambulance outside and, rather than examining the patient or providing any medical 
treatment to stabilize the patients condition, instructed the ambulance to transport the patient to 
another hospital, where the patient ultimately died.  
Iowa  Gregory A. Bohn, M.D., agreed to pay $35,000 to resolve his liability under EMTALA.  OIG alleged 
that Bohn, an on-call surgeon at Trinity Bettendorf, failed to timely respond after an emergency 
department physician paged him to perform surgery on a patient found to have an emergency medical 
condition.  The patient arrived at Trinity via ambulance complaining of lower abdominal pain and having 
experienced a blackout episode while vomiting.  Bohn did not come to Trinitys emergency department 
until approximately 1 hour and 40 minutes after being paged and, upon arrival, refused to treat or 
examine the patient.  As a result of Bohns actions, Trinity was forced to transfer the patient to another 
hospital for surgery. 
California  Olive View  UCLA Medical Center agreed to pay $40,750 to resolve its liability under 
EMTALA.  OIG alleged that Olive View failed to provide an appropriate medical screening examination to 
a patient who arrived at the hospitals emergency department with signs of appendicitis and abdominal 
pain that the patient rated at a 10 on a 10-point scale.  Despite the patients severe pain and symptoms, 
he was forced to wait several hours to receive an examination.  After waiting 6-and-a-half hours, the 
patient left to seek care at another hospital, where he was diagnosed with acute appendicitis with a 
large peritoneal abscess and had to undergo an immediate laparoscopic appendectomy.   
Florida  Mercy Hospital, a campus of Plantation General Hospital, agreed to pay $45,000 to resolve its 
EMTALA liability.  OIG alleged that Mercy failed to provide an appropriate medical screening examination 
for a 3-week-old baby who arrived at Mercys emergency department with her mother and father.  
Earlier that morning, the babys parents had discovered that she was not eating well, felt cold, looked  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 41 
 
 
blue in the lips, and had an oral temperature of 91 degrees.  Mercys emergency department staff failed 
to respond to the low temperature, ordered no further testing, insisted that the baby was stable, and 
told the parents to visit another hospital closer to their home if they had further problems.  On the way 
home from Mercy, the baby became unconscious in the car.  The baby required critical care treatment at 
a second hospital for a necrotic bowel, which had led to cardiac arrest, kidney injury, and potential 
hypoxic injury to the babys brain.     
Provider self-disclosure protocol  
OIG is committed to assisting health care providers and suppliers in detecting and preventing fraud and 
abuse.  Since 1998, we have made available comprehensive guidelines describing the protocol for 
providers to voluntarily submit to OIG self-disclosures of fraud, waste, or abuse.  The provider self-
disclosure protocol gives providers an opportunity to minimize the potential costs and disruption that a 
full-scale OIG audit or investigation might entail if fraud were uncovered.  The self-disclosure also allows 
the provider to negotiate a fair 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.  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.  OIG evaluates the reported results of each 
internal investigation to determine the appropriate course of action.  The self-disclosure guidelines are 
available on the OIG Web site at http://oig.hhs.gov/compliance/self-disclosure-info.  
During this reporting period, self-disclosure cases resulted in $23 million in HHS receivables.  The 
following are examples of provider self-disclosure settlements. 
California  Ukiah Valley Medical Center self-disclosed to OIG that it potentially violated the anti-
kickback statute through its development and operation of an ASC.  The ASC was a joint venture 
between Ukiah Valley and a group of physicians.  Ukiah Valley disclosed that it provided improper 
remuneration to the joint ventures physician-investors during the start-up and operation phases.  Ukiah 
Valley agreed to pay $1,692,588 to resolve allegations that this arrangement violated the CMPL 
provisions applicable to kickbacks.   
West Virginia  Amedisys, Inc., self-disclosed to OIG that two of its wholly owned subsidiaries, Amedisys 
West Virginia, LLC, and Tender Loving Care Health Care Services of West Virginia, LLC, submitted false or 
fraudulent claims for hospice services to Medicare and Medicaid.  Amedisys disclosed that both facilities 
billed for hospice care where the underlying certification documents did not meet Federal health care 
program requirements.  Specifically, contracted medical directors at both facilities pre-signed blank 
medical forms, including certificates of terminal illness and face-to-face visit forms, which were later 
completed by Amedisys staff members.  Amedisys agreed to pay $1,974,812 for allegedly violating the 
CMPL.   
Massachusetts  Harvard Vanguard Medical Associates, Inc., self-disclosed to OIG that it improperly 
billed Medicare Part B, Medicares Atrius Health Pioneer Accountable Care Organization, and the 
Massachusetts Medicaid program for psychotherapy services performed by one of its physicians.  Over a 
period of approximately 5-and-one-half years, Harvard Vanguard submitted claims for psychotherapy  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 42 
 
 
services provided by the physician that did not meet applicable coverage requirements.  Harvard 
Vanguard agreed to pay $168,687 for allegedly violating the CMPL.   
New York  Americare Certified Special Services, Inc., self-disclosed to OIG that it submitted false claims 
to Medicare for (1) home health services that were not rendered and (2) services that were furnished by 
home health aides who did not receive the requisite training or who lacked a home health aide 
certification.  These home health aides posed as individuals who were properly trained and certified, and 
Americare failed to identify any problems with their qualifications.  Americare agreed to pay $44,593 for 
allegedly violating the CMPL.   
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 43 
 
 
Public health agencies and enforcement 
Office of the Assistant Secretary for Administration 
activities 
Office of Security and Strategic Information security controls 
  Security Controls Over the Implementation of Personal Identity Verification Cards at HHS Were 
Inadequate Due To Lack of Some Essential Information Security Requirements.  A-18-12-30410.  2014 
July. 
At HHS, security controls over the implementation of Homeland Security Presidential Directive 12, which 
requires a standard for and use of secure and reliable forms of identification for Federal employees and 
contractors, were inadequate because essential information security requirements were not 
implemented.  We recommended that the HHS Office of Security and Strategic Information (OSSI) 
implement necessary corrective actions to resolve the findings we identified in the areas of enrollment 
and issuance, deactivation of identification cards, security over system access, security management, 
physical security, and Web site vulnerabilities.  OSSI agreed with 14 recommendations and did not agree 
with 4.  The recommendations are summarized because of the sensitive nature of the information.  We 
provided more detailed recommendations to OSSI. 
Office of the Assistant Secretary for Financial Resources 
Small Business Innovation Research Program 
  Vulnerabilities in the HHS Small Business Innovation Research Program.  OEI-04-11-00530.   
2014 April. 
Although it was not required to do so, HHS did not consistently collect information on, or assess the 
commercial success of, Small Business Innovation Research (SBIR) Program awards and therefore cannot 
determine whether the program is meeting one of its primary goals.  We found that 31 percent of 
awardees had questionable or unverified eligibility for at least one requirement, and none of the 
awarding Operating Divisions (OpDivs) completed a required check for duplicative awards across other 
Federal agencies.  We recommended that: 
  HHS create a central office to oversee the SBIR program, 
  OpDivs  track and assess the commercial success of SBIR projects, 
  OpDivs ensure compliance with eligibility requirements, and 
  OpDivs improve procedures to check for duplicative awards. 
The Office of the Assistant Secretary for Financial Resources (ASFR) did not indicate whether it agreed 
with each of our recommendations.  However, ASFR agreed that additional coordination and oversight  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 44 
 
 
across participating OpDivs is warranted and agreed that HHS must ensure that applicants meet SBIR 
eligibility requirements.   
Lobbying prohibitions on grant funds 
  Laws Prohibit the Use of HHS Grant Funds for Lobbying, but Limited Methods Exist To Identify 
Noncompliance.  OEI-07-12-00620.  2014 July. 
Our report found that all awarding agencies reported using Federal and departmental sources of 
guidance regarding the prohibitions on the use of grant funds for lobbying.  However, limited methods 
exist to identify noncompliance with lobbying prohibitions.  ASFR agreed with our recommendations, 
which were: 
  facilitate Departmentwide information sharing among awarding agencies about methods to identify 
the use of grant funds for prohibited lobbying activities and  
  centralize on its Web site the guidance pertaining to the prohibitions on the use of grant funds for 
lobbying.   
Internal controls for Hurricane Sandy disaster relief funds 
  The Department of Health and Human Services Designed Its Internal Controls Over Hurricane Sandy 
Disaster Relief Funds To Include Elements Specified by the Office of Management and Budget.  A-02-
13-02010.  2014 July. 
HHS designed its internal controls for overseeing Hurricane Sandy disaster relief funds to include the 
following elements specified by the Office of Management and Budget (OMB):  additional levels of 
review, monitoring and oversight of grant recipients, OIG collaboration, and review and resolution of 
audit findings.  HHS also implemented internal controls to address the management of unexpended 
grant funds.  HHSs internal controls for measuring and reporting improper payments were under 
development during our audit period, so we were unable to assess whether these controls addressed 
OMB requirements.  This report contained no recommendations. 
Office of the Assistant Secretary for Health 
Office for Human Research Protections oversight 
  The Office for Human Research Protections Evaluation of the Surfactant, Positive Pressure, and 
Oxygenation Randomized Trial.  OEI-01-14-00560.  2014 September. 
We found that Office of Human Research Protections (OHRP) followed its procedures and exercised its 
discretion throughout its evaluation of the Surfactant, Positive Pressure, and Oxygenation Randomized 
Trial (SUPPORT).  OHRPs activities to ensure institutions compliance are not codified in Federal statute 
or regulations; rather, they appear in compliance procedures issued by the agency.  These procedures 
give OHRP considerable discretion in how it conducts such evaluations.  Our report does not contain any 
recommendations.   
  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 45 
 
 
  OIG Review of Allegations of Interference in OHRP Compliance Determination for SUPPORT.  
OIG-12-14-04.  2014 September. 
Our review found that OHRPs initial compliance determination triggered extensive scientific debate 
within HHS and that the National Institutes of Health (NIH) and other officials encouraged OHRP to 
reverse or revise its determination.  We found no directive or order to OHRP from NIH or any other 
official to take a particular policy or scientific position.  Our research disclosed no law, regulation, or 
written policy that prohibits or restricts the kind of consultation that occurred here or would make such 
consultations improper.  Our report does not contain any recommendations.    
Office of the Assistant Secretary for Preparedness and Response 
Hospital emergency preparedness and response 
  Hospital Emergency Preparedness and Response During Superstorm Sandy.  OEI-06-13-00260.  
2014 September. 
Most hospitals in declared disaster areas sheltered in place during Superstorm Sandy, and 7 percent 
evacuated, but 89 percent of hospitals in these areas reported experiencing substantial challenges in 
responding to the storm.  Prior to the storm, most hospitals received emergency-related deficiency 
citations from hospital surveyors, some of which related to the challenges reported by hospitals during 
Superstorm Sandy.  The Office of the Assistant Secretary for Preparedness and Response (ASPR) and CMS 
agreed with our recommendations, which were to:  
  continue to promote Federal, State, and community collaboration in major disasters; and 
  examine existing policies and provide guidance regarding flexibility for reimbursement under 
disaster conditions. 
Office of the National Coordinator for Health Information Technology 
Electronic health recordstesting and certification 
  The Office of the National Coordinator for Health Information Technologys Oversight of the Testing 
and Certification of Electronic Health Records.  A-06-11-00063.  2014 August. 
The Office of the National Coordinator for Health Information Technologys (ONC) oversight of 
authorized testing and certification bodies (ATCBs) did not fully ensure that electronic patient 
information in the currently available EHR applications was secure and protected.  If insecure systems 
have been certified by an ATCB, providers and patients may have a false sense of security and assurance.  
Although ONC disagreed, OIG continues to recommend that ONC: 
  require the ATCBs to develop procedures to periodically evaluate whether certified EHRs continue to 
meet Federal standards, 
  require the ATCBs to develop a training program to ensure that their personnel are competent to 
test and certify EHRs and to secure proprietary or sensitive EHR information, and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 46 
 
 
  work with the National Institute of Standards and Technology (NIST) to strengthen EHR test 
procedure requirements so that the ATCBs can ensure that EHR vendors incorporate common 
security and privacy features into the development of EHRs. 
Centers for Disease Control and Prevention 
Presidents Emergency Plan for AIDS Relief 
  The University of Zambia School of Medicine Did Not Always Manage Presidents Emergency Plan for 
AIDS Relief Funds or Meet Program Goals in Accordance With Award Requirements.  A-04-13-04010.  
2014 April. 
  The Republic of Zambia, Ministry of Health, Did Not Always Manage the Presidents Emergency Plan 
for AIDS Relief Funds or Meet Program Goals in Accordance With Award Requirements.   
A-04-13-04004.  2014 June. 
  The Federal Democratic Republic of Ethiopia, Ministry of Health, Did Not Always Manage Presidents 
Emergency Plan for AIDS Relief Funds or Meet Program Goals in Accordance With Award 
Requirements.  A-04-13-04015.  2014 September. 
Of the $209,000 in judgmentally selected Presidents Emergency Plan for AIDS Relief (PEPFAR) 
expenditures that we reviewed from the University of Zambia School of Medicine, approximately 
$77,000 was not allowable.  Of the $516,000 PEPFAR expenditures we reviewed from the Republic of 
Zambia, Ministry of Health, about $291,000 was not allowable.  Of the $717,800 in judgmentally 
selected expenditures that we reviewed from the Federal Democratic Republic of Ethiopia, Ministry of 
Health, $295,000 was not allowable.  These errors occurred because the University and both Ministries 
of Health did not have adequate policies and procedures.  The University and the Zambian Ministry of 
Health agreed or partially agreed with the following recommendation:  refund to the Centers for Disease 
Control and Prevention (CDC) approximately $77,000 (University) and approximately $291,000 (Zambian 
Ministry of Health) in unallowable expenditures.  All three agreed or partially agreed with the following 
recommendations: 
  file amended financial status reports, 
  work with CDC to resolve whether the value-added tax (VAT) was an allowable expenditure under 
the cooperative agreement, 
  develop and implement adequate policies and procedures, and 
  submit its annual financial audit report in a timely manner to the applicable U.S. agency. 
The Zambian Ministry of Health also agreed with the following recommendations: 
  apply for a VAT exemption with the Republic of Zambia Government and 
  implement a financial management system that complies with Federal regulations. 
Although the Ethiopian Ministry of Health disagreed, OIG continues to recommend that it:  
  refund to CDC $295,000 in unallowable expenditures.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 47 
 
 
National Institutes of Health 
National Institute of Environmental Health SciencesSuperfund appropriations 
  The National Institute of Environmental Health Sciences Generally Administered Its Superfund 
Appropriations During Fiscal Year 2013 in Accordance With Federal Requirements.  A-04-14-04024.  
2014 September. 
The National Institute of Environmental Health Sciences administered its Superfund appropriations 
during FY 2013 in accordance with Federal requirements.  Accordingly, this report contains no 
recommendations. 
Public-health-related 
legal actions and investigations 
Health Education Assistance Loan Program 
OIG excludes individuals who have defaulted on Health Education Assistance Loan (HEAL) loans from 
participation in Federal health care programs.  Under the HEAL program, which stopped making loans in 
1998, the Health Resources and Services Administration (HRSA) guaranteed commercial loans to 
students seeking education in health-related fields.1  The students are allowed to defer repayment of the 
loans until after they graduate and begin to earn income.  Although HHSs Program Support Center (PSC) 
takes steps to ensure repayment, some loan recipients do not resolve their indebtedness.  After PSC has 
exhausted efforts to secure repayment of a debt, it declares an individual in default.  Thereafter, the 
Social Security Act permits exclusion of such individuals from Medicare, Medicaid, and all other Federal 
health care programs for nonpayment of the loans.  
Exclusion means that the individual may not receive reimbursement under these programs for 
professional services rendered, nor may any other provider receive reimbursement for services ordered 
or prescribed by the excluded individual.  OIG is responsible for excluding individuals who have defaulted 
on HEAL loans from participation in Federal health care programs. 
HEAL exclusions   
During this semiannual reporting period, 41 individuals and related entities were excluded as a result of 
PSC referral of their cases to OIG.  Individuals who have been excluded as a result of default may enter 
into settlement agreements, whereby the exclusions are stayed while they pay specified amounts each 
month to satisfy their debts.  If they default on these settlement agreements, they may be excluded until 
the entire debt is repaid and they may not appeal the exclusions.  
After being excluded for nonpayment of their HEAL debts, 2,554 individuals chose to enter into 
settlement agreements or completely repay their debts.  That figure includes 20 individuals who entered 
                                                            
1 The HEAL Program, noted in previous Semiannual Reports to Congress, was permanently transferred from HHS to 
the U.S. Department of Education as required by the Consolidated Appropriations Act, 2014 (Pub. L. 113-76).  The 
program transfer was completed on July 1, 2014.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 48 
 
 
into such settlement agreements or completely repaid their debts from April 1 through September 30, 
2014.  More than $200 million is being repaid through settlement agreements or through complete 
repayment.  Of that amount, $1.5 million is attributable to this semiannual reporting period. 
Practitioners in five States entered into settlement agreements to repay the amounts indicated: 
Florida  Dentist - $246,522 
California  Osteopath - $58,355 
Georgia  Podiatrist - $57,425 
Wisconsin  Chiropractor - $56,537 
New York  Dentist - $25,911 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 49 
 
 
Human services agencies and 
Administration for Children and Families 
enforcement activities 
Child day care centersLicensing requirements 
  Some Connecticut Child Day Care Centers Did Not Always Comply With State Health and Safety 
Licensing Requirements.  A-01-13-02506.  2014 April. 
  Some Michigan Child Care Centers Did Not Always Comply With State Health and Safety Licensing 
Requirements.  A-05-13-00053.  2014 August. 
  Some Maine Child Day Care Centers Did Not Always Comply With State Health and Safety Licensing 
Requirements.  A-01-13-02503.  2014 August. 
  Some Louisiana Child Day Care Centers Did Not Always Comply With State Health and Safety 
Licensing Requirements.  A-06-13-00036.  2014 August. 
The child care center providers in these four States did not always comply with applicable State licensing 
requirements to ensure the health and safety of children (2 out of 3 providers reviewed in Connecticut, 
3 out of 3 in Michigan, 16 of 20 in Maine, and 4 of 4 in Louisiana).   
We found several types of errors, and the States generally agreed with the following recommendations: 
  ensure through more frequent and thorough onsite monitoring that providers comply with health 
and safety requirements and 
  ensure that all providers employees who provide direct services to children have had criminal 
records and child abuse and neglect registry checks. 
Michigan, Maine, and Louisiana generally agreed with the following recommendations: 
  consider State regulatory changes to ensure that unannounced inspections are required to be 
conducted at least annually, 
  ensure adequate oversight by reducing licensing inspectors caseloads, and 
  require providers to complete specific training requirements related to health and safety regulations. 
Child care home providersLicensing requirements 
  Some Michigan Child Care Home Providers Did Not Always Comply With State Health and Safety 
Licensing Requirements.  A-05-13-00031.  2014 July. 
  Some Maine Family Child Day Care Home Providers Did Not Always Comply With State Health and 
Safety Licensing Requirements.  A-01-13-02507.  2014 August. 
  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 50 
 
 
  Some Louisiana Family Child Day Care Home Providers Did Not Always Comply With State Health and 
Safety Requirements.  A-06-13-00037.  2014 August. 
The licensed family and group child care homes (home providers) that we reviewed in three States did 
not always comply with applicable State licensing requirements to ensure the health and safety of 
children (20 home providers of 20 reviewed in Michigan, 16 of 18 in Maine, and 20 of 20 in Louisiana).  
We found several types of errors, and the States generally agreed with all of our recommendations, 
which were: 
  ensure through more frequent onsite monitoring that home providers comply with health and safety 
regulations, 
  ensure adequate oversight by reducing licensing inspectors caseloads, 
  ensure that home providers obtain required criminal record checks and protective services checks 
for all child care employees who provide direct services to children, and 
  develop a mandatory training program to improve home provider compliance with health and safety 
regulations. 
Child Care and Development FundControl deficiencies 
  Arizona Improperly Claimed Some Child Care and Development Targeted Funds.  A-09-12-01004.  
2014 April. 
Arizona claimed $2.2 million of unallowable Child Care and Development Fund (CCDF) targeted funds for 
FY 2009.  Better monitoring would have revealed that the targeted funds were not being obligated and 
liquidated according to the timeframes specified in Federal requirements.  Arizona concurred with the 
following recommendation: 
  address monitoring of the obligation and liquidation of CCDF targeted funds.   
Although Arizona did not agree, OIG continues to recommend that Arizona:   
  refund to the Federal Government $2.2 million for CCDF targeted funds that were not properly 
obligated and liquidated. 
 
  Texas Improperly Claimed Some Child Care and Development Funds.  A-06-13-00038.  2014 August. 
Texas did not comply with Federal requirements for the use of almost $15 million in CCDF targeted funds 
for FY 2010.  The State agency did not have policies and procedures in place to ensure that only 
expenditures that improve the quality of child care are reported and to adequately oversee the 
obligation and liquidation of targeted funds.  Texas agreed with the following recommendations: 
  refund to the Federal Government $32,600 for targeted funds that were incurred before the start of 
the funding period and  
  refund to the Federal Government $25,000 for targeted funds that were not liquidated in the 
required timeframe. 
Although Texas disagreed, OIG continues to recommend that Texas:  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 51 
 
 
  refund to the Federal Government $14.9 million for expenditures that were not for targeted fund 
activities or work with the Administration for Children and Families (ACF) to determine whether any 
of the $14.9 million was allowable and 
  develop policies and procedures to (1) ensure that it claims only the enhanced portion of payments 
made to providers that have exceeded licensing standards and (2) strengthen monitoring of CCDF 
targeted funds to ensure that expenditures are properly obligated and liquidated. 
Child Care Subsidy program claimsControl deficiencies 
  Not All of Kansass Controls for Its Child Care Subsidy Program Claims Were Effective.   
A-07-12-03182.  2014 July. 
We estimated that approximately $40.9 million ($26.1 million Federal share) of Kansass Child Care 
Subsidy program claims could have had one or more of the control deficiencies that we identified.  These 
deficiencies left the Child Care Subsidy program vulnerable to fraud, waste, and abuse.  Kansas agreed 
with our recommendations, which were:  
  ensure that providers maintain accurate attendance records, 
  require that citizenship and qualified alien status of all applicants be verified and documentation of 
that verification be maintained, and 
  require that the ages of all clients be verified and documentation of that verification be maintained. 
Head StartEnrollment  
  The U.S. Virgin Islands Department of Human Services May Not Have Provided Head Start Services to 
the Neediest Children.  A-02-12-02002.  2014 June. 
The U.S. Virgin Islands may not have ensured that the neediest children received priority when filling 
Head Start enrollment slots because it (1) entered inaccurate information in its Child Output Planning 
Assessment, (2) did not retain documents used to determine whether enrollees were eligible, and (3) did 
not meet the required enrollment level for children with disabilities.  We estimated that nearly 1 child in 
every 10 enrolled in the Head Start program as of August 31, 2010, received more priority selection 
points than they should have, potentially placing them in the Head Start program ahead of needier 
children on the programs waiting list.  The Virgin Islands generally agreed with our recommendations, 
which were:  
  ensure that financial eligibility determinations are based on accurate information, 
  retain a record of the documents reviewed and relied upon to determine whether a child is eligible, 
and 
  ensure that the enrollment and/or waiver requirements are met for children with disabilities.   
Community Services Block GrantsMonitoring and reporting 
  The Office of Community Services Did Not Fully Comply With Federal Monitoring and Reporting 
Requirements for the Community Services Block Grant Program.  A-01-13-02505.  2014 June.    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 52 
 
 
The Office of Community Services (OCS) did not fully comply with Federal monitoring and reporting 
requirements for the Community Services Block Grant (CSBG) program for FYs 2010 through 2012.  OCS 
did not adequately establish individual accountability or processing times for each step to develop, 
review, and issue reports to States and Congress efficiently and effectively in a timely and relevant 
manner.  ACF detailed corrective action it has taken to address our recommendations, which were:  
  issue all delayed evaluation reports and annual CSBG reports expeditiously, 
  strengthen and implement (1) policies and procedures over report preparation and issuance and 
(2) controls over monitoring and reporting requirements, 
  incorporate data submission deadlines in cooperative agreements with vendors, and 
  ensure management stability and communication to oversee the effective implementation of the 
recommendations from the Government Accountability Offices (GAO) 2006 report and this review.   
Administration for Community Living 
Senior Medicare Patrol 
  Performance Data for the Senior Medicare Patrol Projects:  June 2014 Performance Report.   
OEI-02-14-00140.  2014 June. 
In the 54 Senior Medicare Patrol (SMP) projects during 2013, active volunteers increased by 5 percent, 
one-on-one counseling sessions increased 31 percent, and expected Medicare and Medicaid recoveries 
increased by 50 percent.  However, total savings to beneficiaries and others decreased and cost 
avoidance on behalf of Medicare, Medicaid, beneficiaries, and others increased.  The projects may not 
be receiving full credit for savings attributable to their work.  This report did not contain 
recommendations. 
Child support enforcement activities 
OIG investigations   
OIG investigates noncustodial parents who fail to pay court-ordered child support.  OIG works with the 
Office of Child Support Enforcement; DOJ; U.S. Attorneys Offices; the U.S. Marshals Service; and Federal, 
State, and local partners to address egregious child support enforcement cases with appropriate law 
enforcement and prosecutorial action.  OIG investigations of child support enforcement cases 
nationwide resulted in 36 criminal actions and court-ordered restitution and settlements of $3.58 million 
during this semiannual reporting period.  The following are examples of child support enforcement 
cases: 
New York  Child support enforcement Most Wanted Fugitive Raihan Chowdhury was sentenced to 5 
years of probation and was ordered to pay $1.5 million in restitution after pleading guilty to a charge of 
failure to pay child support.  According to court documents, Raihan allegedly abandoned his wife and 
three children and fled the country.  He allegedly sold the family home in secret and left the family 
homeless when they returned back from a vacation.  In October 2012, after reentering the country, 
Raihan was arrested and taken into custody on his outstanding Federal arrest warrant.   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 53 
 
 
Missouri  Child support enforcement Most Wanted Fugitive Randy Lee Essary was sentenced to 1 year 
and 9 months in prison and was ordered to pay $170,891 in restitution after pleading guilty to willful 
failure to pay child support.  According to court documents, Essary left the country in 2007 and was 
working as a Senior Vice President of a hotel company in the Philippines.  He stopped making child 
support payments for his son in 2005, and was arrested when he reentered the United States in 2012. 
Washington  Todd Mazur was sentenced to 5 years of probation and was ordered to pay $137,615 in 
restitution after pleading guilty to failure to pay child support obligations.  Mazur was ordered to pay 
child support to the custodial parent of his three children.  He had not made child support payments 
since 2001.   
Engaging the public in capturing deadbeat parents 
Because of the success of OIGs Most Wanted Fugitives Web site, OIG launched its Most Wanted 
Deadbeat Parents Web site.  The site identifies parents who fail to pay court-ordered child support for 
their children and thereby put an unnecessary strain on the custodial parents and the children, as well as 
on agencies that enforce these matters.  The site, which is updated frequently, includes information on 
OIGs role in pursuing parents who fail to pay court-ordered child support and has a reporting button to 
turn in deadbeat parents.  OIGs Most Wanted Deadbeat Parents Web site is at:  
http://oig.hhs.gov/fraud/child-support-enforcement.   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 54 
 
 
Financial reporting and improper payment reduction 
Other HHS-related reviews 
University of South FloridaUnallowable costs  
  The University of South Florida Did Not Always Claim Costs in Accordance With Federal 
Regulations.  A-04-12-01016.  2014 April. 
The University of South Florida did not always claim costs charged directly to HHS awards in accordance 
with Federal regulations and NIH guidelines.  We estimated that, of $24.8 million in transactions, the 
University charged at least $6.4 million in unallowable transactions and related facilities and 
administrative costs to HHS awards during FYs 2010 and 2011.  These unallowable transactions occurred 
because the University did not provide adequate oversight to ensure consistent compliance with Federal 
regulations. 
Although the University did not agree, OIG continues to recommend that the University:  
  refund $6.4 million to the Federal Government and 
  enhance oversight of charges to Federal awards to ensure consistent compliance with Federal 
regulations. 
Compliance with the Improper Payments Information Act 
  HHS Met Many Requirements of the Improper Payments Information Act of 2002 but Did Not Fully 
Comply for FY 2013.  A-17-14-52000.  2014 April. 
HHS met many requirements of the Improper Payments Information Act of 2002 (IPIA) as amended by 
the Improper Payments Elimination and Recovery Act of 2010 (IPERA) but did not fully comply with it for 
FY 2013.  We did not identify any new issues in this, OIGs third, report on HHSs compliance with the 
IPIA, but continue to recommend that the Department improve its compliance with the IPIA.  HHS 
agreed with OIGs reemphasizing of the prior recommendations to: 
  report an improper payment estimate for Temporary Assistance for Needy Families and 
  reduce error rates below 10 percent. 
Although HHS disagreed, OIG continues to reemphasize the prior recommendation that HHS publish 
improper payment target rates for the Childrens Health Insurance Program. 
Grants and contracts 
Grant fraud 
HHS is the largest grantmaking organization and the third largest contracting agency in the Federal 
Government.  In FY 2013, HHS awarded over $345 billion in grants and over $19 billion in contracts 
across all program areas.  Approximately $90 billion in grant awards were for programs other than  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 55 
 
 
Medicare or Medicaid.  OIGs direct annual discretionary appropriation funding is used to conduct 
program integrity and enforcement activities with regard to the over 100 public health and human 
services programs carried out by over 70,000 employees around the world.  The size and scope of 
departmental awards make their operating effectiveness crucial to the success of programs designed to 
improve the health and well-being of the public.  Recent appropriations increased OIGs discretionary 
funding for public health and human services oversight.   
Misuse of Grant Funds Examples: 
Montana  The Blackfeet Tribes Po'Ka Project was a multi-million-dollar grant program funded by the 
Substance Abuse and Mental Health Services Administration (SAMHSA) and was developed to help 
troubled Native American youth.  The grant was designed for the tribe to provide in-kind matching 
contributions to continue to secure Federal payments, with the idea that the PoKa Project would 
ultimately become self-sufficient and continue to survive on its own once Federal funding ended.  
However, the in-kind commitment could not be honestly met, and various tribal officials began inflating 
the figures related to in-kind contributions, assigning values to nonexistent and illegitimate 
"contributions," and manufacturing fraudulent invoices and records to support fictional or inflated 
contributions.  Several witnesses, whose names were used as in-kind contributors, denied preparing or 
signing the invoices and denied contributing time or goods to the Po'Ka Project, at least in the amounts 
claimed.  An OIG audit determined that $4.6 million in claims for grant payments paid to the tribe on the 
basis of Po'Ka's in-kind contribution were unsupported, inflated, or completely falsified.   
In addition, the former director and assistant director of the PoKa Program embezzled from the program 
in several ways, from travel fraud to misuse of Po'Ka credit cards, to exorbitant claims of overtime.  They 
also reached an agreement with the grant's national evaluator, an outside observer whose job was to 
monitor the projects progress, to approve significant payments to the evaluator, who would in turn kick 
back a sizable portion of what was provided to him.  During this reporting period, Francis Onstad, the 
PoKa Programs former director; Delyle Augare, the PoKa Programs former assistant director; and 
Katheryn Sherman, a former PoKa staffer who handled the in-kind invoicing for the program, were 
sentenced to a combined 7 years and 10 months in jail in connection with their participation in this 
scheme and were ordered to pay a combined $1.1 million in restitution.  
California  Nanette Dillard and her husband Paul Daniels worked for the Alameda County Associated 
Community Action Program (ACAP).  As the Executive Director of ACAP, Dillard submitted false 
information to HHS in order to receive grant money from ACF.  Specifically, Dillard falsely certified that 
ACAP possessed the required non-Federal matching funds in order to receive more than $426,000 in 
grant money from the Assets for Independence (AFI) program.  Dillard was convicted at trial on charges 
of grand theft by false pretenses, a public officer crime, and preparing false documentary evidence.  
Daniels, the ACAP grants manager who was also involved in the scheme, was convicted at trial on 
charges of grand theft by false pretenses and a public officer crime.  Both Dillard and Daniels were 
sentenced to 5 years of probation and were ordered to pay $308,587 in restitution, joint and several.   
South Dakota  Samone Milk was the executive secretary for the Oglala Sioux Tribes Energy/Low Income 
Home Energy Assistance Program (LIHEAP).  According to court records, from May through December 
2009, Milk schemed with her co-conspirators to steal funds belonging to the Oglala Sioux Tribe.  Milk and 
others drafted fake invoices and quotes for contract work purportedly to be completed by co-
conspirators.  Milk facilitated the processing of these documents through the Energy/LIHEAP Program.  
In turn, checks were issued by the tribes Treasurers Office to pay for the fraudulent invoices.  Milk and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 56 
 
 
her co-conspirators received the checks, cashed them, and divided the funds among themselves for their 
own purposes.  Milk pleaded guilty to conspiracy to commit theft concerning programs receiving Federal 
funds; was sentenced to 1 year and 2 months in jail; and was ordered to pay $109,135 in restitution, 
joint and several.  
Hurricane Sandy grant and contract vulnerabilities  
Hurricane Sandy struck the United States near Atlantic City, New Jersey, on October 29, 2012.  It was the 
second costliest hurricane in U.S. history and caused immense devastation.  The storm affected 24 States 
and caused an estimated $71 billion in damage.  Disaster areas were declared from the Northeast to the 
mid-Atlantic and as far west as Wisconsin: a total of 12 States and Washington, DC.  The storm ravaged 
over 150,000 homes and destroyed businesses and public assistance facilities.  Vital services rendered by 
some HHS programs were disrupted by the hurricane.  Additionally, various NIH research facilities with a 
physical presence on the east coast were damaged by the storm.  OIGs goal is to make sure that people 
who need health and human services get the best care and resources to recover from disasters.  OIG 
must make sure that the recovery money goes to the right people.  After any major disaster like 
Hurricane Sandy, we must try to prevent fraud, waste, and abuse by ensuring that limited resources are 
used properly. 
As part of our oversight with regard to Hurricane Sandy, we developed a series of videos that provide 
important guidance to HHS grant and contract officers, informing them of their roles and responsibilities, 
as well as risk areas, when making awards to grantees or contractors.  The videos also provide tips to 
help grantees and contractors use funds effectively and appropriately.  The videos are available on our 
Web site at http://oig.hhs.gov/newsroom/podcasts/2014/sandy/. 
Small Business Innovative Research Program  
The National Defense Authorization Act for Fiscal Year 2012,  5143, requires OIG to annually report on 
the number of cases that were referred to it related to fraud, waste, or abuse in the Small Business 
Innovative Research/Small Business Technology Transfer (SBIR/STTR) program; the actions taken in each 
case; justification for not taking action on a case; and an accounting of funds used to address waste, 
fraud, and abuse in this program.  In our December 2013 report delivered to the three Congressional 
oversight committees, we reported that OIG spent approximately $295,504 in salaries on oversight 
related to the SBIR/STTR program.  HHS referred two new SBIR/STTR cases to OIG in FY 2013. 
Recovery Act retaliation complaint investigations 
The Recovery Act,  1553, prohibits non-Federal employers that have received Recovery Act funding 
from retaliating against employees who disclose evidence of mismanagement of Recovery Act funds or 
any violation of law related to Recovery Act funds.  OIGs are required to include in their Semiannual 
Report(s) to Congress the retaliation complaint investigations that they decided not to conduct or 
continue during the reporting period.  During this reporting period, OIG closed one investigation because 
of the lack of evidence surrounding the allegations. 
Contract audits 
Pursuant to the National Defense Authorization Act for Fiscal Year 2008,  845, Inspectors General 
appointed under the Inspector General Act of 1978 are required to submit, as part of their Semiannual  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 57 
 
 
Report(s) to Congress pursuant to section 5 of such Act, information on final, completed contract audit 
reports issued during the period to the contracting activity containing significant audit findings.  OIG did 
not issue final reports meeting section 845 criteria during this semiannual period. 
OIG reviews of non-Federal audits  
OIG reviews audits conducted by non-Federal auditors of entities receiving Federal awards.  In this 
semiannual period, OIGs National External Audit Review Center reviewed 1,302 reports covering 
$2.4 trillion in audited costs.  Federal dollars covered by these audits totaled $794.3 billion, of which 
about $369.6 billion were HHS funds. 
OMB Circular A-133 establishes audit requirements for State and local governments, colleges and 
universities, and nonprofit organizations receiving Federal awards.  Under this circular, covered entities 
must conduct annual organization-wide single audits of all Federal money they receive.  These audits 
are conducted by non-Federal auditors, such as public accounting firms and State auditors.  OIG reviews 
the quality of these audits and assesses the adequacy of the entities management of Federal funds.   
OIGs oversight of non-Federal audit activity informs Federal managers about the soundness of 
management of Federal programs and identifies any significant areas of internal control weakness, 
noncompliance, and questioned costs for resolution or followup.  We identify entities for high-risk 
monitoring, alert program officials to any trends that could indicate problems in HHS programs, and 
profile non-Federal audit findings of a particular program or activity over time to identify systemic 
problems.  We also provide training and technical assistance to grantees and members of the auditing 
profession.  OIG maintains a process to assess the quality of the non-Federal reports received and the 
audit work that supports the selected reports.  OIGs reports on non-Federal audits reviewed during this 
reporting period are categorized in the following table. 
 
Non-Federal Audits, April 1, 2014, through September 30, 2014 
Number of Non-Federal Audits: 
  Not requiring changes or having minor changes    1,249 
  Requiring major changes  49 
  Having significant technical inadequacies  4 
Total  1,302 
 
The 1,302 reports included 3,289 recommendations for improving management operations.  In addition, 
these audit reports provided information for 37 OIG special memorandums that identified concerns for 
increased monitoring by management.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 58 
 
 
Other reporting requirements and reviews 
Legislative and regulatory reviews  
Pursuant to the Inspector General Act,  4(a)(2), OIG is required to review existing and proposed 
legislation and regulations relating to HHSs programs and operations and make recommendations 
concerning their impact on economy and efficiency or the prevention and detection of fraud and abuse.  
Most audits and other reviews that we conduct are designed to test compliance with, and/or assess the 
administration and oversight of, existing laws and regulations.  Our reports of such reviews describe 
findings, which include questioned costs, inefficiencies, vulnerabilities to fraud, inconsistencies, errors in 
application, or weaknesses in oversight or supporting systems.  Our corresponding recommendations tell 
HHS and its operating or staff divisions what administrative, regulatory, or legislative actions we believe 
are needed to effectively respond to the findings.  Our regularly published core publications reflect the 
relationship between our work and laws and regulations.    
  Our Semiannual Report to Congress describes findings and recommendations from recently 
completed reviews, many of which focus on existing laws and regulations.   
  Our Compendium of Priority Recommendations describes priority findings and recommendations 
from past periods that remain to be implemented.   
  Our annual Work Plan, which is published at the start of each fiscal year, provides citations to laws 
and regulations that are the subject of ongoing or future reviews. 
We also review proposed legislation and regulations related to HHS programs and operations.  HHS 
routinely involves us and its OpDivs and other staff divisions in the review and development of HHS 
regulations through a well-established HHS process.  Our audits, evaluations, and investigations are 
sometimes cited in regulatory preambles as influencing HHS regulations.  In addition, we provide 
independent, objective technical assistance on a bipartisan, bicameral basis to congressional committees 
and members who request it. 
Affordable Care Act implementation 
OIG continues to perform reviews on the ACA.  The ACA made changes to HHS programs and enacted a 
range of new programs that affect the Department, such as the Early Retiree Reinsurance Program 
(ERRP).  The rollout of the Health Insurance Exchanges (Marketplaces) is a substantial management 
challenge to HHS.   
OIGs current focus is on areas such as eligibility systems, payment accuracy, contractor oversight, data 
security, and consumer protection.  Our substantial body of work underway was developed in 
coordination with GAO and other Federal and State oversight agencies.  It is focused on identifying risks 
and vulnerabilities to the Marketplaces to ensure efficient and effective operation and to minimize waste 
and abuse of funds.  Our work has encompassed and will continue to encompass other aspects of ACA 
implementation, such as Medicaid expansion, use of State establishment grants, and the use of startup 
and solvency loans for Consumer Operated and Oriented Plan Loans.   
Following are examples of recent Affordable Care Act reviews.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 59 
 
 
Marketplaces  
  Not All Internal Controls Implemented by the Federal, California, and Connecticut Marketplaces Were 
Effective in Ensuring That Individuals Were Enrolled in Qualified Health Plans According to Federal 
Requirements.  A-09-14-01000.  2014 June. 
The deficiencies in internal controls that we identified may have limited the Marketplaces ability to 
prevent the use of inaccurate or fraudulent information when determining eligibility of applicants for 
enrollment in QHPs.  CMS agreed with our recommendations, which were that:  
  CMS, Covered California, and Access Health CT take action to improve internal controls related to 
(1) verifying identity of applicants and entering application information, (2) determining applicants 
eligibility for enrollment in QHPs and eligibility for insurance affordability programs, and 
(3) maintaining and updating eligibility and enrollment data; and 
  CMS work with Covered California and Access Health CT to implement our recommendations.   
 
  Marketplaces Faced Early Challenges Resolving Inconsistencies With Applicant Data.   
OEI-01-14-00180.  2014 June. 
From October through December 2013, Marketplaces were unable to resolve most inconsistencies, 
which they reported most commonly as citizenship and income, although each applicant can have 
multiple inconsistencies.  Specifically, the Federal Marketplace was unable to resolve 2.6 million of 2.9 
million inconsistencies because the CMS eligibility system was not fully operational.  CMS agreed with 
both of our recommendations, which were: 
  develop and make public a plan on how and by what date the Federal Marketplace will resolve 
inconsistencies and  
  conduct additional oversight of State Marketplaces to ensure that they are resolving inconsistencies 
according to Federal requirements.  
 
  An Overview of 60 Contracts That Contributed to the Development and Operation of the Federal 
Marketplace.  OEI-03-14-00231.  2014 August. 
Across the 60 contracts related to the development and operation of the Federal Marketplace, nearly 
$800 million had been obligated for the development of the Federal Marketplace as of February 2014.  
The purposes of the contracts ranged from health benefit data collection and consumer research to 
cloud computing and Web site development, and the original estimated values of these contracts 
totaled $1.7 billion.  This report is the first in a series that will address the planning, acquisition, 
management, and performance oversight of Federal Marketplace contracts, as well as various aspects of 
Federal Marketplace operations.  This report did not contain recommendations. 
  Health Insurance Marketplaces Generally Protected Personally Identifiable Information but Could 
Improve Certain Information Security Controls.  A-18-14-30011.  2014 September. 
 
This is an overview of the results of three reviews of the security of certain information technology at 
the Federal, Kentucky, and New Mexico Health Insurance Marketplaces.  Although CMS had  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 60 
 
 
implemented controls to secure Healthcare.gov and consumer personally identifiable information (PII) in 
the Federal Marketplace, we identified areas for improvement in its information security controls.  
Kentucky had sufficiently protected PII on its Marketplace Web sites and databases in accordance with 
Federal requirements, but opportunities to improve database access and information security controls 
remain.  Although New Mexico management had implemented security controls, policies, and 
procedures to prevent vulnerabilities in its Web site, database, and supporting information systems, its 
information technology policies and procedures did not always conform to Federal requirements to 
secure sensitive information stored and processed by the New Mexico Marketplace.  The three 
Marketplaces agreed with our recommendations that the Marketplaces management address the 
findings identified in the individual reports. 
Annual fee on prescription drug companies  
  Annual Fee on Branded Prescription Drug Companies Under the Affordable Care Act.   
OEI-03-12-00560.  2014 April. 
Between September 2011 and December 2013, the Federal Supplementary Medical Insurance (Medicare 
Part B) Trust Fund received all but $938,000 of the total $8.1 billion amount the ACA provides from 
branded prescription drug companies for the first 3 fee years.  To the extent that the fees were not in the 
Trust Fund, the Trust Fund may have missed an opportunity to earn interest income on these fees.  Our 
results indicate that it may be beneficial for CMS to periodically monitor the status of the fees from 
branded prescription drug companies and to contact the Department of the Treasury if CMS finds that 
the full amount to be collected under the ACA each year has not been received.  This report did not 
contain recommendations. 
 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 61 
 
 
Appendixes 
 
Appendix A:  Savings decisions supported  by OIG recommendations............................. 62 
Appendix B:  Questioned costs and funds recommended to be put to better use .......... 67 
Appendix C:  Peer review results ...................................................................................... 75 
Appendix D:  Summary of sanction authorities ................................................................ 76 
Appendix E:  Reporting requirements in the Inspector General Act of 1978 ................... 78 
Appendix F:  Anti-kickback statuteSafe harbors ............................................................ 80 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 62 
 
 
Appendix A:  
Savings decisions supported by OIG recommendations 
 
The table below lists policy decisions reflected in legislation, regulations, or other directives from prior 
periods that are supported by OIG recommendations and for which cost savings were estimated, usually 
by third parties, such as the Congressional Budget Office (CBO) or HHS actuaries.  Of the savings 
estimated for the decisions below, nearly $15.7 billion was attributed to FY 2014.  This figure reflects the 
most recent available savings estimates issued by the third party appraiser; actual savings may be higher 
or lower. 
After laws involving HHS programs are enacted, OIG analyzes them to identify the provisions that 
comport with our prior recommendations, i.e., our recommendations support the decisions that were 
made.  A similar process occurs with respect to administrative decisions in regulations or other directives 
or agreements (e.g., modifications to Medicaid State Plans).  Most of the decisions reported in this 
appendix reflect ways in which funds could be put to better use, such as reductions in Federal spending 
and/or avoidance of unnecessary or inappropriate expenditures.   
To quantify the value of administrative decisions, we use estimates developed by, or in consultation 
with, HHS operating or staff divisions.  To quantify the value of legislative decisions, we generally use 
estimates developed by CBO.  CBO projects the annual increases and/or reductions in Federal spending 
that it expects would result from enacting the legislation.  The decisions below mirror not only OIGs 
recommendations, but also the contributions of others, such as HHS staff and operating divisions, 
congressional committees, and the GAO. 
 
Centers for Medicare & Medicaid Services (CMS) programs  
Estimated 
Savings 
OIG Recommendations  Policy Decisions  (millions) 
Medicare Part C Prepayments.  Modify  Section 3201 of the Patient Protection and  $13,100 
monthly capitated payments to a level  Affordable Care Act (ACA) reduced the 
fully supported by empirical data.   Medicare Advantage (MA) benchmark 
The recommendation reflected findings  percentages that are applied to Medicare 
in OIG report number  fee-for-service, resulting in cost savings for 
A-14-00-00212.  Part C as compared to prior law.  CBO 
estimated Part C savings through FY 2019, 
including $13.1 billion for FY 2014.  CBO 
produced its estimate in 2010, prior to two 
significant implementation decisions by 
HHS that affect the actual savings; however, 
neither CBO nor HHS has calculated a  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 63 
 
 
Estimated 
Savings 
OIG Recommendations  Policy Decisions  (millions) 
revised estimate.2  
Excessive Medicaid Payments to New  New Yorks Medicaid State Plan  $799 
York Developmental Centers.  Ensure  Amendment 12-03, effective April  1, 2013, 
that New Yorks Medicaid daily rate for  limits payment to costs with projected 
State-operated developmental centers  savings of nearly $1.2 billion in FYs 2013 
meets the Federal requirement that  and 2014 ($399 million for FY 2013 and 
payment for services be consistent with  $799 for FY 2014).  The State expects to 
efficiency and economy.  The  issue another amendment for FYs 2015
recommendation reflected findings in  2017 with additional savings for those 
OIG report number A-02-11-01029.  years, projected at $799 million per year. 
Part B Drugs Average Sales Price.   Section 112 of the Medicare, Medicaid, and  $300 
Adopt an alternate calculation of  State Childrens Health Insurance Program 
volume-weighted average sales price  (SCHIP) Extension Act of 2007 establishes a 
(ASP) that is consistent with the results  revised method for calculating volume-
set forth in section 1847A(b)(3) of the  weighted ASPs for Medicare Part B drugs 
Social Security Act.  The  that comports with OIGs recommendation.  
recommendation reflected findings in  CBO estimated savings of $300 million for 
OIG report number OEI-03-05-00310.  FY 2014. 
Reductions in Medicare Bad Debt  Section 3201 of the Middle Class Tax  $600 
Reimbursement.  Seek legislative  Extension and Job Creation Act of 2012 
authority to eliminate (or reduce)  applied percentage reductions in bad debt 
Medicare payments to hospitals for bad  reimbursement to all providers eligible to 
debt associated with beneficiaries  receive bad debt reimbursement.  CMS 
failure to pay their deductibles and  estimated savings to Medicare of $10.92 
coinsurance.  The recommendations  billion over 10 years with $600 million 
reflected findings in OIG report number   attributed to FY 2014.  (77 Fed. Reg. 67523, 
A-14-90-00339 and subsequent  November 9, 2012.) 
reviews. 
                                                            
2  One implementation decision related to a nationwide quality bonus payment demonstration, which GAO found 
would reduce MA savings.  (See GAO-12-409R.)  The other was a change in policy about how HHS calculates the 
fee-for-service rate against which MA payments are benchmarked that would increase the savings associated with 
the reduced benchmark.  (See CMSs Medicare Advantage Rate Announcement from April 1, 2013.)  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 64 
 
 
Estimated 
Savings 
OIG Recommendations  Policy Decisions  (millions) 
Medicaid Third Party Liability.   Section 6035 of the Deficit Reduction Act  $240 
Determine whether legislation is  (DRA) made several changes to strengthen 
needed to explicitly include pharmacy  Medicaids third-party liability provisions, 
benefit management companies in the  including clarification regarding pharmacy 
Medicaid definition of "third party,"  benefit managers.  The section also 
require third parties to match their  requires States to ensure that health 
eligibility files with Medicaids eligibility  insurers provide requested coverage data; 
files, and allow Medicaid up to 3 years  accept the States right of recovery; and 
to recover payments from liable third  agree, conditionally, not to deny a claim 
parties.  The recommendations  solely on the basis of date of submission of 
reflected findings in OIG report number  the claim when the claim is submitted by 
OEI-03-00-00030.  the State within a 3-year period beginning 
on the date of service.  CBO estimated 
savings of $240 million for FY 2014.   
Additional Rebates for Brand-Name  Section 2501(d) of the ACA, as amended by  $200 
Drugs With Multiple Versions.  OIG  section 1206(a) of the Health Care and 
recommended that CMS continue to  Education Reconciliation Act of 2010, 
seek legislative authority to modify the  addresses this issue.  CBO estimated 
rebate formula calculation to ensure  savings of $200 million for FY 2014. 
that manufacturers cannot circumvent 
additional rebates by bringing new 
versions of existing brand-name drugs 
to market.  The recommendation 
reflected findings in OIG report number 
A-06-09-00033. 
Capped Rental Durable Medical  Section 5101 of the DRA revised the  $300 
Equipment.  Eliminate the semiannual  payment rules for capped rental equipment 
maintenance payment allowed for  to require that ownership of the item 
capped rental equipment, pay only for  transfer to the beneficiary after the 13th 
repairs that are needed, eliminate the  month and that Medicare pay for 
15-month rental option, and convert  maintenance services on a cost-
rentals to purchases after the 13th  reimbursement basis.  CBO estimated 
month.  The recommendations  savings of $300 million for FY 2014. 
reflected findings in report number 
OEI-03-00-00410.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 65 
 
 
Estimated 
Savings 
OIG Recommendations  Policy Decisions  (millions) 
Medicare Secondary Payer.  Implement  Section 111 of the Medicare, Medicaid, and  $100 
stronger followup procedures for  SCHIP Extension Act of 2007 amended the 
employers who fail to respond to data  Medicare secondary payer provisions of the 
requests, exercise civil monetary  Social Security Act,  1862(b), to provide for 
penalty authority, and seek necessary  mandatory reporting for various categories.  
legislative authority for mandatory data  CBO estimated savings of $100 million for 
reporting.  The recommendations  FY 2014. 
reflected findings in the following OIG 
 
reports:  
A-02-98-01036  
A-02-02-01037  
A-02-02-01038  
A-04-01-07002  
A-09-89-00100 
Rebates for Physician-Administered  Section 6002 of the DRA requires States to  $15 
Drugs.  Encourage States to take action  provide for the collection and submission of 
to collect rebates on physician- utilization data needed to secure rebates 
administered drugs, especially single- for physician-administered drugs and 
source drugs.  States should either use  provides that the utilization data for single 
National Drug Codes (NDC) instead of  source and specified multiple-source 
procedure codes or link procedure  physician-administered drugs be submitted 
codes to NDCs for single-source drugs.   using NDC numbers (unless the Secretary 
The recommendations reflected  specifies an alternative coding system).  
findings in OIG report number OEI-03- CBO estimated savings of $15 million for 
02-00660.  FY 2014. 
 
Administration for Children and Families programs 
Estimated 
Savings 
OIG Recommendations  Policy Decisions  (millions) 
Triennial Reviews of Child Support  Section 7302 of the DRA required States to  $29 
Orders and Medical Support by  adjust child support orders of families 
Parents.  Ensure that more periodic  enrolled in the Temporary Assistance for 
reviews are initiated and take action to  Needy Families program every 3 years.   HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 66 
 
 
increase medical support by parents.   Section 7307 requires States to assess the 
The recommendations reflected findings  ability of either or both parents to provide 
in OIG report number OEI-05-98-00100.  medical support for their children.  CBO 
estimated savings (combined) of $29 million 
 
for FY 2014.   
 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 67 
 
 
Appendix B:  
Questioned costs and funds recommended to be put to better 
use 
The following tables summarize the OIGs monetary recommendations and the Departments) responses 
to them.  This information is provided in accordance with the Inspector General Act,  5(a)(8) and 
(a)(9), (5 U.S.C. App.  5(a)(8) and (a)(9)), and the Supplemental Appropriations and Rescissions Act of 
1980.   
 
Audit reports with questioned costs  
Questioned costs are those questioned by OIG audits because of an alleged violation of a provision of a 
law, regulation, contract, grant, or other agreement governing the expenditure of funds.  Costs are 
questioned because the expenditure was not supported by adequate documentation or because the 
expenditure was unnecessary or unreasonable.  OIG includes those questioned costs that HHS program 
officials, in a management decisions, have agreed should not be charged to the Federal Government, 
commonly referred to as disallowed costs, as part of the expected recoveries in the Accomplishment 
section at the beginning of the Semiannual Report.  Superscripts indicate end notes. 
 
Table 1 follows. 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 68 
 
 
Table 1  Audit reports with questioned costs 
  Dollar Value  Dollar Value 
Reports  Questioned  Unsupported 
Section 1       
Reports for which no management decisions had  208  $841,951,000  $25,138,000 
been made by the beginning of the reporting 
period1 
Reports issued during the reporting period  86  $553,549,000  $0   
  Total Section 1  294  $1,395,500,000  $25,138,000 
 
Section 2       
Reports for which management decisions were       
made during the reporting period2, 3  
  Disallowed costs  168  $539,713,000*     $0 
  Costs not disallowed               4    $18,190,000   $0 
  Total Section 2  172  $557,903,000  $0 
       
Section 3       
Reports for which no management decisions had  122  $837,597,000  $25,138,000 
been made by the end of the reporting period (Sec. 
1 minus Sec. 2) 
 
Section 4        
Reports for which no management decisions were  61  $365,266,000  $25,138,000 
made within 6 months of issuance4 
*Audit receivables (expected recoveries).  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 69 
 
 
Audit reports with funds recommended to be put to better use  
The phrase recommendations that funds be put to better use means that funds could be used more 
efficiently if management took action to implement an OIG recommendation through reductions in 
outlays, deobligation of funds, and/or avoidance of unnecessary expenditures.  Table 2 reports HHS 
program officials decisions to take action on these audit recommendations.   
Table 2  Audit reports with funds to be put to better use 
  Reports  Dollar Value 
Section 1     
Reports for which no management decisions had been made by the  14  $1,698,579,000 
beginning of the reporting period1 
Reports issued during the reporting period  5  $15,076,723,000 
  Total Section 1  19  $16,775,302,000 
Section 2     
Reports for which management decisions were made during the     
reporting period 
Value of recommendations agreed to      
by management 
  Based on proposed management action  6  $675,449,000 
  Based on proposed legislative action  0  $0 
 
1  $250,145,000 
Value of recommendations not agreed to by management 
  Total Section 2  7  $925,594,000 
Section 3     
Reports for which no management decisions had been made by the  12  $15,849,708,000 
end of the reporting period2  (Sec. 1 minus Sec. 2)  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 70 
 
 
End Notes 
Table 1 End Notes 
1 The opening balance was adjusted downward by $125.1 million because of a reevaluation of previously 
issued recommendations.  
2 Revisions to previously reported management decisions: 
  A-02-07-01054 Review of Medicaid Personal Care Services Claims Made by Providers in New York 
City.  As a result of the Department of Justices settlement with New York City involving personal care 
service, the OIG recomputed the total disallowance for 12 unallowable claims.  Disallowed cost was 
reduced by $155,554,525.    
  A-09-11-02024 Nevada Improperly Claimed Federal Reimbursement for Medicare Part B Premiums 
Paid on Behalf of Medicaid Beneficiaries.  The State provided documentation to support the amount 
claimed on the CMS-64 report.  The $73,678,263 questioned costs were determined to be allowable. 
  A-02-09-01023   Review of Medicaid Claims Submitted by Continuing Day Treatment Providers in 
New York State.  CMS and OIG subsequent review of additional documentation provided by the State 
determined that $15,959,797 of questioned costs were allowable.   
  A-05-09-91337 State of Indiana.  Upon settlement of the cost report, the State determined that the 
provider received overpayment totaling $7,239,238.  An adjustment was made by CMS reducing 
disallowed cost by $9,137,265.    
  A-07-11-03171 Missouri Claimed Federal Reimbursement for Unallowable Personal Care Services 
Claims.  Subsequent review of documentation provided by State reduced medical eligibility error 
rate.  Disallowed costs were reduced by $3,633,229.    
  Not detailed are net reductions to previously disallowed management decisions totaling 
$21,118,823. 
 
3 Included are management decisions to disallow $34.2 million in questioned costs that were identified 
by non-Federal auditors in audits of State and local governments, colleges and universities, and nonprofit 
organizations receiving Federal awards conducted in accordance with Office of Management and Budget 
Circular A-133.  OIG is currently responsible for ensuring that work performed by these non-Federal 
auditors complies with Federal audit standards; accordingly, OIG tracks, resolves, and reports on 
recommendations in these audits. 
4 Because of administrative delays, some of which were beyond management control, resolution of the 
following 61 audits was not completed within 6 months of issuance of the reports; however, agency 
management has informed us that the agency is working to resolve the outstanding recommendations 
before the end of the next semiannual reporting period:  
  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 71 
 
 
CIN: A-01-13-00505  REVIEW OF DUPUY ORTHOPAEDICS' PROPOSED GLOBAL PAYMENT TO MEDICARE 
FOR REVISION SUGERIES RELATED TO THE DUPUY ASR HIP RECALL, JUL 2013, 
$98,200,000 
CIN: A-07-12-01116  REVIEW OF MEDICARE PAYMENTS FOR UNLAWFULLY PRESENT BENEFICIARIES, 
JAN 2013, $91,620,548 
CIN: A-07-12-01113   MEDICARE IMPROPERLY PAID PROVIDERS MILLIONS OF DOLLARS FOR 
INCARCERATED BENFICIARIES WHO RECEIVED SERVICES DURING 2009- 
THROUGH 2011, JAN 2013, $33,587,634 
CIN: A-01-02-00006  REVIEW OF RATE SETTING METHODOLOGY FOR MEDICAID SCHOOL BASED 
HEALTH SERVICES - CT, MAY 2003, $32,780,146 
CIN: A-07-12-06038  REVIEW OF MEDICARE PART D PAYMENTS FOR UNLAWFULLY PRESENT 
BENEFICIARIES, OCT 2013, $28,990,718 
CIN: A-01-12-02507  REVIEW OF CONNECTICUT'S TITLE IV-E ADOPTION ASSISTANCE MAINTENANCE 
PAYMENTS, NOV 2013, $17,499,083 
CIN: A-01-11-00534  NATIONWIDE REVIEW OF INPATIENT REHABILITATION FACILITIES PATIENT 
ASSESSMENT INSTRUMENTS FOR CALENDAR YEARS 2009 AND 2010, SEP 2012, 
$7,700,700 
CIN: A-03-12-00004  REVIEW OF HORIZON'S 2009 AND 2010 BONA FIDE SERVICE FEES, MAR 2013, 
$4,344,417 
CIN: A-01-11-02500  REVIEW OF MASSACHUSETTS' TITLE IV-E ADOPTION ASSISTANCE COSTS FOR 
FEDERAL FISCAL YEARS 2006 THRU 2008, AUG 2011, $4,242,540 
CIN: A-05-13-00014  OHIO EXCEEDED THE 5-PERCENT LIMIT FOR CLAIMING CHILD CARE 
DEVELOPMENT FUND ADMINISTRATIVE EXPENDITURES, NOV 2013, $3,164,630 
CIN: A-07-12-03175  REVIEW OF CCDF TARGETED FUNDS IN NEBRASKA, APR 2013, $2,965,913 
CIN: A-03-13-00025  REVIEW OF UAB HEALTH SYSTEM'S 2009, 2010, AND 2011 BONA FIDE SERVICE 
FEES, JAN 2014, $2,812,109 
CIN: A-03-13-00026  REVIEW OF USABLE MUTUAL'S (ARKANSAS BLUE CROSS BLUE SHIELD) 2009, 
2010, AND 2011 BONA FIDA SERVICE FEES, JAN 2014, $2,763,821 
CIN: A-03-11-00002  REVIEW OF NEW ENGLAND JOINT ENTERPRISE 2009 DIR REPORTS, APR 2012, 
$2,710,732 
CIN: A-03-12-00006  REVIEW OF TAHMO'S 2009 AND 2010 BONA FIDE SERVICE FEES, MAR 2013, 
$2,355,532 
CIN: A-03-13-00020  REVIEW OF CAPITAL DISTRICT PHYSICIANS' HEALTH PLAN, INC.'S 2009, 2010, 
AND 2011 BONA FIDE SERVICE FEES, JAN 2014, $2,070,605 
CIN: A-03-12-00007  REVIEW OF ARCADIAN'S 2009 AND 2010 BONA FIDE SERVICE FEES, FEB 2013, 
$2,048,967 
CIN: A-03-12-00005  REVIEW OF WINDSOR'S 2009 AND 2010 BONA FIDE SERVICE FEES, JAN 2013, 
$1,948,737 
CIN: A-03-13-00018  REVIEW OF AMERIGROUP CORPORATION'S 2009, 2010, AND 2011 BONA FIDE 
SERVICE FEES, JAN 2014, $1,943,251  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 72 
 
 
CIN: A-03-13-00019  REVIEW OF BLUECROSS BLUESHIELD OF SOUTH CAROLINA'S 2009, 2010, AND 
2011 BONA FIDE SERVICE FEES, DEC 2013, $1,799,096 
CIN: A-05-12-00021  REVIEW OF CDC'S OVERSIGHT OF PEPFAR FUNDS PROVIDED TO AURUM IN 
SOUTH AFRICA FOR 2009-10, AUG 2013, $1,690,605 
CIN: A-02-11-02007  LONG ISLAND CHILD AND FAMILY DEVELOPMENT SERVICES, INC.S FINANCIAL 
MANAGEMENT SYSTEM DID NOT ACCURATELY DISCLOSE HEAD START PROGRAM 
RESULTS, MAY 2012, $1,489,093 
CIN: A-07-11-06013  INDIRECT COSTS CLAIMED AS DIRECT COSTS - UNIVERSITY OF COLORADO 
DENVER, JUN 2013, $1,419,524 
CIN: A-03-12-00008  REVIEW OF XL HEALTH DIR, JAN 2013, $1,410,342 
CIN: A-01-12-02500  REVIEW OF CONNECTICUT'S TITLE IV-E ADMINISTRATIVE/TRAINING COSTS AND 
MAINTENANCE PAYMENTS, DEC 2012, $1,316,684 
CIN: A-01-12-01501  REVIEW OF SAMHSA COSTS CLAIMED AT LATIN AMERICAN HEALTH INSTITUTE, 
BOSTON, MA, APR 2013, $1,261,328 
CIN: A-03-13-00021  REVIEW OF FALLON COMMUNITY HEALTH PLAN'S 2009, 2010, AND 2011 BONA 
FIDE SERVICE FEES, JAN 2014, $1,079,578 
CIN: A-05-12-00089  THE COUNCIL ON RURAL SERVICE PROGRAMS, INC., CLAIMED UNALLOWABLE 
HEAD START COSTS, NOV 2013, $1,074,352 
CIN: A-03-13-00022  REVIEW OF MD CARE, INC.'S 2009, 2010, AND 2011 BONA FIDE SERVICE FEES, 
JAN 2014, $1,040,501 
CIN: A-03-13-00023  REVIEW OF NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION'S 2009, 
2010, AND 2011 BONA FIDE SERVICE FEES, JAN 2014, $957,921 
CIN: A-02-12-02003  ECONOMIC OPPORTUNITY COMMISSION OF NASSAU CO., INC. CLAIMED SOME 
UNALLOWABLE HEAD START COSTS, SEP 2013, $879,876 
CIN: A-02-11-02020  REVIEW OF ACTION FOR A BETTER COMMUNITY, INC. CSBG ARRA COSTS 
CLAIMED BY NEW YORK STATE, SEP 2013, $795,608 
CIN: A-02-11-02005  LIMITED HEAD START REVIEW OF INCLUDED EDUCATIONAL SERVICES, JUL 2012, 
$588,830 
CIN: A-09-11-01007  REVIEW OF CSBG RECOVERY ACT COSTS CLAIMED BY HI FOR HCAP, FEB 2013, 
$513,649 
CIN: A-01-11-02505  NEON - HEAD START LIMITED SCOPE REVIEW - ALLOCATING OF COSTS - ARRA, 
JAN 2012, $406,434 
CIN: A-07-12-06035  REVIEW OF MEDICARE PART D PAYMENTS FOR INCARCERATED BENEFCIARIES, 
JAN 2014, $325,903 
CIN: A-01-11-02510   REVIEW OF CT CSBG RECOVERY ACT COSTS CLAIMED, APR 2013, $314,605 
CIN: A-01-10-02505  RESULTS OF LIMITED SCOPE REVIEW OF CTE, INC., MAY 2011, $293,870 
CIN: A-02-11-02015  REVIEW OF INSEC, INC. CSBG ARRA COSTS CLAIMED BY THE COMMONWEALTH 
OF PUERTO RICO, APR 2013, $285,412 
CIN: A-05-12-00023   REVIEW OF CDC'S OVERSIGHT OF PEPFAR FUNDS PROVIDED TO SOUTHERN 
AFRICAN CATHOLIC BISHOPS' CONFERENCE FOR JUNE 1, 2009 TO MAY 31, 2010, 
JUL 2013, $235,130  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 73 
 
 
CIN: A-09-09-00045  RISK ADJUSTMENT DATA VALIDATION OF PAYMENTS MADE TO PACIFICARE OF 
CALIFORNIA FOR CALENDAR YEAR 2007 (CONTRACT H0543), NOV 2012, 
$224,388 
CIN: A-06-12-00057  CHILD CARE DEVELOPMENT FUND: TARGETED FUNDS REVIEW IN LOUISIANA, 
SEP 2013, $221,578 
CIN: A-05-12-00012  REVIEW OF IL CSBG RECOVERY ACT COSTS CLAIMED - ROCKFORD, JUL 2013, 
$205,296 
CIN: A-05-12-00024  NATIONAL HEALTH LABORATORY SERVICE DID NOT ALWAYS MANAGE 
PRESIDENTS EMERGENCY PLAN FOR AIDS RELIEF FUNDS OR MEET PROGRAM 
GOALS IN ACCORDANCE WITH AWARD REQUIREMENTS, AUG 2013, $185,768 
CIN: A-06-09-00012  RISK ADJUSTMENT DATA VALIDATION - PACIFICARE H4590, MAY 2012, $183,247 
CIN: A-04-11-01004  NORTHEAST FLORIDA COMMUNITY ACTION AGENCY, INC.S CSBG FUNDS 
AWARDED UNDER THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 
2009, SEP 2012, $165,795 
CIN: A-04-11-01008  FLORIDA'S ADMINISTRATION OF CSBG RECOVERY ACT PROGRAM AND COSTS 
CLAIMED BY CENTRAL FLORIDA COMMUNITY ACTION AGENCY, INC., APR 2013, 
$160,404 
CIN: A-04-11-03538  HEAD START HIGH RISK GRANTEE - MOBILE COMMUNITY ACTION AGENCY, INC., 
DEC 2011, $147,587 
CIN: A-07-11-02766  REVIEW OF WY CSBG RECOVERY ACT COSTS CLAIMED - CARBON COUNTY, AUG 
2013, $143,588 
CIN: A-09-09-01007  REVIEW OF IDAHO'S TITLE IV-E ADOPTION ASSISTANCE COSTS FOR FEDERAL 
FISCAL YEARS 2006 THRU 2008, JUL 2009, $124,046 
CIN: A-09-11-01013  REVIEW OF OREGON'S HOUSING AND COMMUNITY SERVICES DEPARTMENT, 
APR 2013, $115,911 
CIN: A-06-11-00058  REVIEW OF CSBG ARRA COSTS CLAIMED BY CROWLEY'S RIDGE DEVELOPMENT 
COUNCIL, AUG 2012, $115,420 
CIN: A-07-12-02779  REVIEW OF NATRONA COUNTY CSBG RECOVERY ACT COSTS CLAIMED, JUN 2013, 
$104,971 
CIN: A-05-12-00022  THE SOUTH AFRICAN NATIONAL DEPARTMENT OF HEALTH DID NOT ALWAYS 
MANAGE PRESIDENTS EMERGENCY PLAN FOR AIDS RELIEF FUNDS OR MEET 
PROGRAM GOALS IN ACCORDANCE WITH AWARD REQUIREMENTS, AUG 2013, 
$77,790 
CIN: A-06-11-00057   AUDIT DEVELOPMENT - VIETNAM PEPFEAR REVIEWS, JUN 2013, $47,708 
CIN: A-09-12-01000  REVIEW OF CSBG RECOVERY ACT ADMINISTRATIVE COSTS CLAIMED BY HI OFFICE 
OF COMMUNITY SERVICES, JUN 2012, $34,861 
CIN: A-02-11-02000  DIRECT COST REVIEW - SUNY ALBANY, OCT 2011, $27,384 
CIN: A-09-11-01014  REVIEW OF CSBG RECOVERY ACT COSTS CLAIMED BY HI FOR THE HAWAII 
COUNTY ECONOMIC OPPORTUNITY COUNCIL, JUL 2012, $22,602 
CIN: A-04-13-04005  REVIEW OF UNIVERSITY TEACHING HOSPITAL-ZAMBIA COOPERATIVE 
AGREEMENT 5U2GPS001932-2, MAR 2014, $13,554  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 74 
 
 
CIN: A-05-11-00053  THE COLUMBUS URBAN LEAGUE CLAIMED SOME UNALLOWABLE COSTS TO 
HEAD START, SEP 2012, $13,102 
CIN: A-03-12-00250  AUDIT OF LANCASTER COUNTY COMMUNITY ACTION PROGRAM, NOV 2013, 
$2,813 
 
TOTAL NUMBER OF REPORTS: 61 
TOTAL AMOUNT:  $365,266,000 
Table 2 End Notes 
1The opening balance was adjusted upward by $ 16.8 million because of reevaluation of previously 
issued recommendations.  
2 Because of administrative delays, some of which were beyond management control, 7 of the 12 audits 
open at the end of the period were not resolved within 6 months of issuance of reports.  OIG is working 
with management to reach resolution on these recommendations before the end of the next semiannual 
reporting period: 
 
CIN: A-01-12-00507  ACUTE-CARE INPATIENT HOSPITAL TRANSFERS TO INPATIENT HOSPICE CARE, 
MAY 2013, $602,519,187 
CIN: A-07-11-05017  NATIONWIDE REVIEW OF PART D INVESTMENT INCOME, APR 2013, 
$111,244,413 
CIN: A-06-10-00059  REVIEW OF HOSPICE COVERED DRUGS NATIONWIDE, JUN 2012, $33,638,137 
CIN: A-07-12-05024  REVIEW OF MEDICARE PAYMENTS FOR VACUUM ERECTION DEVICES, DEC 2013, 
$18,000,000 
CIN: A-04-12-06154  REVIEW OF HOSPITAL OUTPATIENT PAYMENTS FOR ESTABLISHED PATIENTS, MAR 
2014, $7,536,964 
CIN: A-05-06-00023  UNDISTRIBUTABLE CHILD SUPPORT COLLECTIONS - MN, SEP 2006, $28,240 
CIN: A-09-09-01007  REVIEW OF IDAHO'S TITLE IV-E ADOPTION ASSISTANCE COSTS FOR FEDERAL 
FISCAL YEARS 2006 THRU 2008, JUL 2009, $17,764 
 
TOTAL NUMBERS OF REPORTS:  7 
TOTAL AMOUNT:   $772,984,705 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 75 
 
 
Appendix C:  
Peer review results 
 
The Inspector General Act of 1978, as amended, requires OIGs to report the results of peer reviews of 
their operations conducted by other OIGs, the date of the last peer review, outstanding 
recommendations from peer reviews, and peer reviews conducted of the OIG by other OIGs in the 
semiannual period.  Peer reviews are conducted by member organizations of the Council of the 
Inspectors General on Integrity and Efficiency (CIGIE).  The required information follows. 
Office of Investigations peer review results  
During this semiannual reporting period, HHS OIGs Office of Investigations (OI) conducted a peer review 
of the Treasury Inspector General for Tax Administration (TIGTA).  A peer review of OI was not conducted 
during this reporting period.  Listed below is information concerning OIs peer review of TIGTA.  
The system of internal safeguards and management procedures for the investigative function of TIGTA, in 
effect through June 2014, were in full compliance with the quality standards established by CIGIE and 
the Attorney General's guidelines. 
 
 
OI  Date  Reviewing Office  Office Reviewed 
June 2014  HHS-OIG, OI  TIGTA 
 
 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 76 
 
 
Appendix D:  
Summary of sanction authorities 
 
The Inspector General Act of 1978, as amended, specifies requirements for semiannual reports to be 
made to the Secretary for transmittal to Congress.  A selection of other authorities appears below. 
Program exclusions 
The Social Security Act,  1128 (42 U.S.C.  1320a-7), provides several grounds for excluding individuals 
and entities from participation in Medicare, Medicaid, and other Federal health care programs.  
Exclusions are required for individuals and entities convicted of the following types of criminal offenses:  
(1) Medicare or Medicaid fraud; (2) patient abuse or neglect; (3) felonies for other health care fraud; and 
(4) felonies for illegal manufacture, distribution, prescription, or dispensing of controlled substances.   
OIG is authorized to exclude individuals and entities on several other grounds, including misdemeanors 
for other health care fraud (other than Medicare or Medicaid) or for illegal manufacture, distribution, 
prescription, or dispensing of controlled substances; suspension or revocation of a license to provide 
health care for reasons bearing on professional competence, professional performance, or financial 
integrity; provision of unnecessary or substandard services; submission of false or fraudulent claims to a 
Federal health care program; or engaging in unlawful kickback arrangements. 
ACA added another basis for imposing a permissive exclusion, that is, knowingly making, or causing to be 
made, any false statements or omissions in any application, bid, or contract to participate as a provider 
in a Federal health care program, including managed care programs under Medicare and Medicaid, as 
well as Medicares prescription drug program. 
Providers subject to exclusion are granted due process rights.  These include a hearing before an 
administrative law judge and appeals to the HHS Departmental Appeals Board and Federal district and 
appellate courts regarding the basis for and the length of the exclusion. 
Civil Monetary Penalties Law 
The Civil Monetary Penalties Law (CMPL) of the Social Security Act,  1128A (42 U.S.C.  1320a-7a), 
authorizes OIG to impose penalties, assessments, and exclusion from participation in Federal health care 
programs for engaging in certain activities.  For example, a person who submits, or causes to be 
submitted, to a Federal health care program a claim for items or services that the person knows or 
should know is false or fraudulent is subject to a penalty of up to $10,000 for each item or service falsely 
or fraudulently claimed, an assessment of up to three times the amount falsely or fraudulently claimed, 
and exclusion. 
For the purposes of the CMPL, should know is defined to mean that the person acted in reckless 
disregard or deliberate ignorance of the truth or falsity of the claim.  The law and its implementing 
regulations also authorize actions for a variety of other violations, including submission of claims for 
items or services furnished by an excluded person; requests for payment in violation of an assignment 
agreement; violations of rules regarding the possession, use, and transfer of biological agents and toxins; 
and payment or receipt of remuneration in violation of the anti-kickback statute (42 U.S.C. 
 1320a-7b(b)). 
The ACA added more grounds for imposing civil monetary penalties (CMPs).  These include, among other 
conduct, knowingly making, or causing to be made, any false statements or omissions in any application, 
bid, or contract to participate as a provider in a Federal health care program (including Medicare and  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 77 
 
 
Medicaid managed care programs and Medicare Part D).  The ACA authorizes a penalty of up to $50,000 
for each such false statement.  The ACA also authorizes the imposition of CMPs for activities relating to 
fraudulent marketing by managed care organizations, their employees, or their agents.  
Patient dumping 
The Social Security Act,  1867 (42 U.S.C.  1395dd), provides that when an individual goes to the 
emergency room of a Medicare-participating hospital, the hospital must provide an appropriate medical 
screening examination to determine whether that individual has an emergency medical condition.  If an 
individual has such a condition, the hospital must provide either treatment to stabilize the condition or 
an appropriate transfer to another medical facility. 
If a transfer is ordered, the transferring hospital must provide stabilizing treatment to minimize the risks 
of transfer and must ensure that the receiving hospital agrees to the transfer and has available space and 
qualified personnel to treat the individual.  In addition, the transferring hospital must effect the transfer 
through qualified personnel and transportation equipment.  Further, a participating hospital with 
specialized capabilities or facilities may not refuse to accept an appropriate transfer of an individual who 
needs services if the hospital has the capacity to treat the individual. 
OIG is authorized to collect CMPs of up to $25,000 against small hospitals (fewer than 100 beds) and up 
to $50,000 against larger hospitals (100 beds or more) for each instance in which the hospital negligently 
violated any of the section 1867 requirements.  In addition, OIG may collect a penalty of up to $50,000 
from a responsible physician for each negligent violation of any of the section 1867 requirements and, in 
some circumstances, may exclude a responsible physician. 
Anti-kickback statute and  
civil False Claims Act enforcement authorities 
The anti-kickback statute  This statute authorizes penalties against anyone who knowingly and willfully 
solicits, receives, offers, or pays remuneration, in cash or in kind, to induce or in return for (1) referring 
an individual to a person or an entity for the furnishing, or arranging for the furnishing, of any item or 
service payable under the Federal health care programs or (2) purchasing, leasing, or ordering, or 
arranging for or recommending the purchasing, leasing, or ordering, of any good, facility, service, or item 
payable under the Federal health care programs.  Social Security Act,  1128B(b) (42 U.S.C.  1320a-
7b(b)). 
Individuals and entities that engage in unlawful referral or kickback schemes may be subject to criminal 
penalties under the anti-kickback statute; a CMP under OIGs authority pursuant to the Social Security 
Act,  1127(a)(7) (42 U.S.C.  1320a-7a); and/or program exclusion under OIGs permissive exclusion 
authority under the Social Security Act,  1128(b)(7) (42 U.S.C.  1320a-7(b)(7)). 
False Claims Act  Under the False Claims Act (FCA) (31 U.S.C.  37293733), a person is liable for up to 
treble damages and a penalty between $5,500 and $11,000 for each false claim knowingly submitted, or 
caused to be submitted, to a Federal program.  Similarly, a person is liable under the FCA if knowingly 
making, using, or causing to be made or used, a false record or statement to have a false claim paid. 
The FCA defines knowing to include not only the traditional definition but also instances in which the 
person acted in deliberate ignorance or reckless disregard of the truth or falsity of the information.  
Under the FCA, no specific intent to defraud is required.  Further, the FCA contains a qui tam, or 
whistleblower, provision that allows a private individual to file a lawsuit on behalf of the United States 
and entitles that whistleblower to a percentage of any fraud recoveries. 
    HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 78 
 
 
Appendix E:  
Reporting requirements in the Inspector General Act of 1978 
 
The reporting requirements of the Inspector General Act of 1978, as amended, are listed in the following 
table along with the location of the required information.     
 
Section  Requirement  Location 
Section 4     
(a)(2)  Review of legislation and regulations  "Other HHS-Related Issues"  section   
Section 5     
(a)(1)  Significant problems, abuses, and deficiencies  Throughout this report 
(a)(2)  Recommendations with respect to significant  Throughout this report 
problems, abuses, and deficiencies 
(a)(3)  Prior significant recommendations on which  OIG Compendium of Priority 
corrective action has not been completed  Recommendations 
(a)(4)  Matters referred to prosecutive authorities  "Legal and Investigative Activities" 
section 
(a)(5)  Summary of instances in which information  None 
requested by OIG was refused 
(a)(6)  List of audit reports  Submitted to the Secretary under 
separate cover 
(a)(7)  Summary of significant reports  Throughout this report 
(a)(8)  Statistical Table 1  Reports With Questioned  Appendix B 
Costs 
(a)(9)  Statistical Table 2  Funds Recommended To  Appendix B 
Be Put to Better Use 
(a)(10)  Summary of previous audit reports without  Appendix B 
management decisions 
(a)(11)  Description and explanation of revised  Appendix B 
management decisions 
(a)(12)  Management decisions with which the  None  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 79 
 
 
Section  Requirement  Location 
Inspector General disagrees 
(a)(13)  Information required by the Federal Financial  Reported annually in the spring 
Management Improvement Act of 1996  Semiannual Report to Congress, 
"Other HHS-Related Issues" section 
(a)(14)-(16)  Results of peer reviews of HHS-OIG  Appendix C 
conducted by other OIGs or the date of the 
last peer review, outstanding 
recommendations from peer reviews, and 
peer reviews conducted by HHS-OIG of other 
OIGs. 
 
Other reporting requirements 
Section  Requirement  Location 
845  Significant contract audits required to be  "Other HHS-Related Issues" section 
reported pursuant to the National Defense 
Authorization Act for fiscal year 2008 (P.L. No. 
110-181),  845. 
205  Pursuant to the Health Insurance Portability  Reported annually in the fall 
and Accountability Act (P.L. No. 104-191),  Semiannual Report.   
 205, the Inspector General is required to  Appendix F 
solicit proposals annually via a Federal 
 
Register notice for developing new and 
modifying existing safe harbors to the anti-
kickback statute of the Social Security Act, 
 1128(b), and for developing special fraud 
alerts.  The Inspector General is also required 
to report annually to Congress on the status 
of the proposals received related to new or 
modified safe harbors. 
1553  Pursuant to the American Recovery and  "Other HHS-Related Issues" section 
Reinvestment Act of 2009,  1553, OIG 
reports to Congress the retaliation complaint 
investigations it decided not to conduct or 
continue during the period.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 80 
 
 
Appendix F:  
Anti-kickback statuteSafe harbors 
 
Pursuant to the Health Insurance Portability and Accountability Act (HIPAA),  205, the Inspector General 
is required to solicit proposals annually via a Federal Register notice for developing new and modifying 
existing safe harbors to the anti-kickback statute of the Social Security Act,  1128(b), and for developing 
special fraud alerts.  The Inspector General is also required to report annually to Congress on the status 
of the proposals received related to new or modified safe harbors. 
In crafting safe harbors for a criminal statute, it is incumbent upon the OIG to engage in a complete and 
careful review of the range of factual circumstances that may fall within the proposed safe harbor 
subject area to uncover all potential opportunities for fraud and abuse by unscrupulous providers.  
Having done so, OIG must then determine, in consultation with DOJ, whether it can develop effective 
regulatory limitations and controls not only to foster beneficial or innocuous arrangements but also to 
protect the Federal health care programs and their beneficiaries from abusive practices. 
   
Public proposals for new and modified safe harbors 
In response to the 2013 annual solicitation, OIG received the following proposals related to safe harbors: 
 
Proposal  OIG Response 
   
A new safe harbor protecting free continuing  OIG is not adopting this suggestion.  The concept of 
medical education (CME) programs offered  free programs could vary greatly and should be 
by hospitals to physicians.  addressed on a case-by-case basis, such as under the 
advisory opinion process. 
A new safe harbor that would permit health  OIG is considering the adoption of a safe harbor that 
care providers and suppliers in certain  would protect the waiver of cost-sharing obligations 
circumstances to compensate individuals in  and possibly other incentives to participants in clinical 
clinical trials and to provide services related  trials sponsored by certain Federal Government 
to the clinical trials at no cost, including the  entities. 
waiver of cost-sharing obligations.  HHS Office of Inspector General 
Semiannual Report to Congress | Fall 2014  Page 81 
 
 
Proposal  OIG Response 
   
A new safe harbor protecting clinically  The issues raised in the proposal require further study. 
integrated networks (CINs) entry into 
 
contracts with commercial third party payors 
for value-based payments, including pay-for-  
performance bonuses and shared savings 
 
awards for high quality and cost-effective 
health care.