Department  of  Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
SURVEILLANCE  AND  UTILIZATION 

REVIEW  SUBSYSTEMS 

CASE  REFERRALS  TO 

MEDICAID  FRAUD  CONTROL  UNITS 

* 
SERVQ~. 
I+ 
04 9  3,  JUNE  GIBBS  BROWN 
/  Inspector  General 
NOVEMBER  1996 
@XtW-OUUUl?n  EXECUTIVE  SUMMARY 
PURPOSE 
To assessthe effectiveness of the Surveillance and Utilization  Review Subsystems 
development  and referral  of fraud issues to Medicaid  Fraud Control  Units. 
BACKGROUND 
The Medicaid  statute authorizes funding  for States to foster development  and 
implementation  of the Medicaid  Management  Information  System (MMIS).  One of 
the sub components  of the MMIS  is the Surveillance and Utilization  Review 
Subsystem (WURS).  This subsystem applies automated  post-payment  screens to 
Medicaid  claims adjudication  to identify  aberrant billing  patterns, which may be fraud 
or provider  abuse.  The S/URS staff reviews systems output  and conducts preliminary 
reviews of providers  to determine  whether  they can substantiate a pattern  of fraud.  In 
such cases,they must refer  the matter  to the States fraud  control  unit  for 
investigation.  The Health  Care Financing Administration  (HCFA)  provides Federal 
oversight of the Medicaid  State agency, including  S/URS. 
The statute also authorizes Federal matching funds for the establishment  of State 
Medicaid  Fraud  Control  Units  (MFCUs).  Forty-six States have established such fraud 
units as of January  1996.  They investigate allegations of Medicaid  fraud  and patient 
abuse/neglect.  For the four  States not having MFCUs,  the Medicaid  State agency is 
responsible for  investigating  allegations and referring  these cases to State or Federal 
prosecutorial  authorities. 
For  this inspection  we obtained  data from  45 States and visited 7 of them to gain a 
better  understanding  of the interaction  between S/URS and MFCUs. 
FINDINGS 
The number  and percentage of suspected fraud referrals from  SKJRS has declined in 
the past 10 years. 
In calendar year  1985, the 36 MFCUs  received 996 potential  S/URS fraud  case 
referrals  or 34.7 percent of the total  MFCU  fraud workload.  In contrast, in  1994, 
S/URS for these same States referred  863 potential  fraud  cases,24 percent  of the total 
MFCU  fraud  workload,  and for 45 States S/URS referred  956 cases,24.6 percent  of 
the total  MFCU  workload,  a significant  decline.  MFCU  officials  are divided in their  opinion  concerning the extent and quality  of 
S/URS development  of suspected &aud cases. 
While  officials  from  four  MFCUs  stated that S/URS development  of cases is adequate, 
three commented  that these referrals  need improvement.  We found that  S/UEXSstaff 
differ  in their  method  for researching past complaints and developing current  fraud 
issues prior  to referring  these matters to the fraud units.  This can adversely affect the 
quality  of the referrals.  The MFCUs  cited the following  problematic  issues: 
0  the allegation  of fraud  is not clear; 
0  the allegation  is not developed enough to determine  if it is an isolated instance 
or a pattern  of practice; 
policies and/or correspondence at the State Agency is not clearly written, 
l 
therefore  adversely impacting  on establishing provider  intent;  and 
0  the S/UK3  electronic  and/or hard copy claims data needed to prove the fraud 
are not available. 
The S/URS employees have not received sufkient  training  to assure that  they develop 
and refer  suspected fi-aud allegations in a consistent and appropriate  manner. 
States S/URS staff cite inadequate  training  in the identification  and development  of 
fraud  allegations and edits. 
Five S/URS staffs have not received training  from  Medicaid  Fraud  Control 
l 
Units  on desired content or process for case referrals. 
Three  S/URS staffs have not attended any HCFA  fraud  or provider  abuse 
l 
training. 
The HCFA  does not routinely  monitor  S/LJRSdevelopment  to establish whether 
potential  fraud issues are being appropriately  and consistently ana@ed  and referred. 
Three  States report  that HCFA  did not conduct any review of their  S/URS operation, 
including  their  case development  and referral  process.  Four  States report  that HCFA 
reviewed it, however, three of these said it was simply a part  of the Systems 
Performance  Review  (SPR) which  did not include case reviews and agency feedback. 
RJTOMMENDATIONS 
Concerns regarding the effectiveness of MFCUs  are similar  to those discussed in our 
report  entitled  canierZ%d  Un&  OEI-6-94-00470.  As a result, we believe that a 
concerted effort  addressing both Medicare  and Medicaid  fraud units is called for. 
ii  We are proposing  a uniform  team approach.  We recommend  that HCFA,  in 
consultation  with  the Office  of Inspector  General should: 
Convene a Medicare  and Medicaid  fraud  and abuse task force to plan and implement 
improvements  in fraud unit  operations.  This would  include: 
b  Clarifying  goals and objectives for program  integrity  efforts. 
b  Establishing  guidelines for  developing suspected fraud  cases. 
b 	 Developing  a universal protocol  for  appropriately  referring  fraud  and abuse 
cases. 
b 	 Coordinating  data systems to ensure that data are reliable  and consistent across 
all entities in the fraud  and abuse fighting  network. 
Developing  a training  program  designed to educate program  integrity  personnel 
b 	
on procedures, case referrals  and best practices. 
Develop  and implement  a comprehensive evaluation system for S/uRs  case 

identification,  development  and referral  activities. 

HCFA  should consider establishing a system similar  to the one used to evaluate 

Medicare  contractors.  Once the system is established it should be incorporated  into 

periodic  HCFA  reviews of the Medicaid  State agency and the Systems Performance 

Review. 

AGENCY  COMMENTS 

We appreciate  all the positive steps that HCFA  has taken thus far to safeguard the 

Medicare  program  and we recognize the accomplishments of the Program  Integrity 

Group.  We are pleased that HCFA  has concurred with  our recommendations  and we 

look  forward  to working  with  HCFA  in their  implementation. 

We believe that the best approach would  be a collaborative  one involving HCFA  and 

OIG,  with  consultation  from  high performing  State Surveillance and Utilization 

Review Subsystem Units  (S/URS)  and carriers, to improve  program  integrity  activities 

at the carrier  and State level.  We suggest that this effort  focus on: 

0 	 Developing  and implementing  model practices to help carriers and S/URS 
decide which casesshould be developed for  medical review and overpayment 
recovery or for  referral  for  fraud. In addition,  existing protocols  should be 
implemented  for referral  of fraud  casesto appropriate  investigative entities  (the 
OIG  for  Medicare  casesand Medicaid  Fraud  Control  Units  for Medicaid 
cases). We believe that together we can increase overpayment  recovery 
... 
111  amounts and increase the number  of successful prosecutions by law 
enforcement  agencies. 
Revising current  contractor  performance  measures that reward carriers for 
overpayment  recovery but not for fraud  and abuse referrals  or efforts  to 
improve  claims processing safeguards. 
Identifying  the most effective practices which carrier  and State personnel use to 
eliminate  claims processing vuherabilities  that enable providers to defraud 
health  programs. 
We believe that achieving the goals both HCFA  and the OIG  have established for 

improving  program  integrity  functions  at the carriers and in the States can best be 

accomplished by these kinds of collaborative  efforts.  We look  forward  to working  with 

HCFA  to bring about further  measurable change. 

Concerning  the establishment  of a comprehensive system for HCFA  to evaluate 

S/URS case identification,  development  and referral,  we are pleased that HCFA  also 

concurs with  this recommendation.  We believe that this initiative  is very important  to 

the overall  integrity  of the Medicaid  program.  We are delighted to learn of HCFAs 

recent fraud  and abuse initiatives  and hope that the S/URS performance  evaluation 

system will  be implemented  as soon as practical.  We remain  committed  to 

collaborating  with  HCFA  in their  efforts to rapidly  develop and implement  this system. 

The full  text of HCFAs  comments is contained in Appendix  D. 

iv  TABLE  OF  CONTENTS 
PAGE 

EXECUTIVESUMMARY 

INTRODUCTION..  ...............................................  1 

FINDINGS  ......................................................  5 

Referrals  .....................................................  5 

l 
Case development  ..............................................  6 

l 
Training  ......................................................  7 

l 
l  Monitoring  ....................................................  8 

RECOMMENDATIONS  ............................................  9 

AGENCY  COMMENTS  ...........................................  11 

APPENDICES 

A:  MFCU  sources--GAO  sample States fraud  case referrals  CY  1994  .......  A-l 
B:  MFCU  sources--national data fraud case referrals  CY  1994 .............  B-l 
C:  MFCU  sources--sample States fraud case referrals  CY  1994  ............  C-l 
D:  Agency Comments  ...........................................  D-l  INTRODUCTION 
PURPOSE 
To assessthe effectiveness of the Surveillance and Utilization  Review Subsystems 
development  and referral  of fraud issues to Medicaid  Fraud Control  Units. 
BACKGROUND 
The Congress established the Medicaid  Program in 1965.  It is a State administered 
program,  which  receives Federal matching funds.  Each State is required  to designate 
the agency responsrble for  the management  of the Medicaid  program. 
In  1972, Congress enacted Public Law  92-603.  This law provides funding  to States to 
foster development  and implementation  of the Medicaid  Management  Information 
System (MMIS).  One of the sub components of the MMIS  is the Surveillance and 
Utilization  Review  Subsystem (S/URS).  This subsystem applies automated 
post-payment  screens to, Medicaid  claims adjudication  to identify  aberrant billing 
patterns, which  may be fraud  or provider  abuse.  The S/LJRS staff reviews systems 
output  and conducts preliminary  reviews of providers to determine  whether  they can 
substantiate a pattern  of fraud.  In such cases,they must refer the matter  to the 
States fraud  control  unit  for  investigation.  These units were designed to serve as 
major  contacts/analysis points for detection  and referral  of potential  fraud  and 
provider  abuse cases to assigned components within  the States that pursues 
investigation  of alleged criminal  fraud within  the Medicaid  Program, usually the 
Medicaid  Fraud  Control  Units  (MFCUs). 
Fedeml Ove  of SKIRS 
The Health  Care Financing Administration  (HCFA)  provides Federal  oversight of the 
Medicaid  State agency, including  S/URS.  It initially  reviewed quality  and quantity  of 
State agency referrals  to MFCUs  as part  of its overall State Assessment of the 
Agency.  It  discontinued  this component  of the review, as a result of 
Public Law  96-398, enacted in 1980, which mandated that all States have an approved 
MMIS  system by September  30, 1985.  The law also specified that HCFA  evaluate 
States system requirements  and performance  standards at least once every 3 years.  In 
1981, it implemented  the Systems Performance  Review (SPR) to comply with  this 
legislation.  The  review evaluates the system, including  the S/URS subsystem, and 
measures process performance  but not outcomes from  this process.  It  does not require 
formal  monitoring  or evaluation  of S/URS staffs development  and referral  of potential 
fraudulent  claims to MFCUs. 
1 
 Mkdicaid  Fmud  Conbd  Units 
In  1977, Congress enacted Public Law 95-142, which authorized  Federal  matching 
funds for  establishment  of State Medicaid  Fraud Control  Units.  Forty-six States have 
now established such fraud  units as of January 1996.  They investigate allegations of 
Medicaid  fraud and patient  abuse/neglect.  For the four  States not having MFCUs,  the 
Medicaid  State Agency is responsible for investigating allegations and referring  these 
casesto State or Federal  prosecutorial  authorities. 
To assure investigative independence, Congress prohibited  MFCUs  from  being part  of 
the same umbrella  organization  which contains the Medicaid  State agency. 
Generally,  they are located in the States Attorney  Generals offices and most perform 
both  investigatory  and prosecutorial  functions. 
Regulations  require  Medicaid  State agencies and MFCUs  to enter into  a 
Memorandum  of Understanding  in which the agencies agree to refer  all cases of 
suspected fraud to the unit.  In addition,  the agency must afford  the fraud  unit  access 
to their  records.  The S/URS is the entity within  the Medicaid  State agency that 
performs  these functions. 
In a prior  report,  titled  Referral bv Medicaid Agencies to Fraud  Control  Units, 
OAI-03-88-00170, October  1989, we assessedthe effectiveness of the process used by 
Medicaid  agencies to refer  possible fraud  casesto the MFCUs  and offered  suggestions 
for improvements.  In the report  we highlighted  the following  problems: 
0  low number  of State agency fraud referrals; 
lack of HCFA  monitoring  and oversight; and 
l 
the need for  additional  technical assistance. 
l 
We recommended  that the HCFA: 
0  hold State agencies accountable for making fraud referrals  by measuring and 
evaluating their  development  of these cases; 
0  assure that State agencies are provided  increased technical  assistance in the 
areas of identification  and referral  of potential  fraud  cases; and 
designate a coordinator  for technical assistance that would  coordinate  with  the 
l 
OIG. 
  Idaho, Montana,  Nebraska and North  Dakota  do not have MFCUs. 
2  In response to this report,  HCFA  opposed including  the review of S/URS 
development  and referral  of suspected fraud  casesas part  of the Systems Performance 
Review.  It has not implemented  the review as part of any State agency performance 
evaluation. 
The General Accounting  Office  in their  study, Medicaid: Results of Certified Fraud 
Control  Units, HRD-87-12FS,  October  1986, obtained information  concerning the 
volume  of referrals  from  Medicaid  State agencies to the fraud  units.  The report  cited: 
This is 996 of the 2,871 cases opened from  all sources that year or 34.7 percent  of the 
overall MFCU  workload.2 
li!lETHODoLoGY 
We researched Federal  laws, regulations,  and agency policies concerning development 
and referral  of allegations of Medicaid  fraud by S/URS to MFCUs.  In addition,  we 
developed and field  tested data collection  instruments which were administered  on-site 
to officials  of these agencies as part  of the preinspection  process.  We designed these 
instruments  to obtain  the following  information: 
States policies and procedures used to develop and refer allegations of 
l 
Medicaid  fraud  to the MFCU; 
the state of communication  between the MFCU  and S/URS; 
l 
0  the quantity,  quality  and source of training; 
deterrence  efforts; 
l 
barriers to effective development  and referral  of cases; 
l 
0  suggested improvements;  and 
0  statistics concerning case referrals,  case status and case outcomes. 
From  the universe of fraud  units, we excluded the five States, (California,  Florida, 
Illinois,  New York  and Texas) that participate  in the national  project,  opemrion 
Restore Zest:  since the OIG  is evaluating referrals to these units as part  of that 
project.  From  the remaining  States, we obtained fiscal year (FY)  1994 data.  This 
data included  the number  of casesreferred  by S/URS and the number  of fraud  unit 
2 	 There were 36 certified  Fraud Control  Units  by the end of calendar year 
(CY)  1985.  The  14 States not certified  were: Alaska, Georgia, Iowa, Kansas, 
Missouri,  Nebraska, Nevada, New Mexico, North  Dakota,  Oklahoma,  Oregon, 
South Carolina,  South Dakota,  and Wyoming. 
3  staff employed  during  each of the quarterly  reporting  periods.  We compared  this data 
to similar  data from  earlier years. 
To select the States for more intensive review, we arrayed them from  highest to lowest 
ratios of referrals  per unit  employee.  We selected a purposive sample of seven States, 
using the following  criteria: 
location  within  the array of States (upper  or lower half); 

l 
0  amount  of Medicaid  expenditures in the State; 

0  number  of Medicaid  beneficiaries  in the State; 

known  past or current problems  involving either the MFCU  or S/URS 

l 
operations  in States; and 
location  in the United  States, to account for any regional variances. 
l 
Using these criteria,  we purposively  selected four States from  the upper half  of the 
array (Michigan,  Tennessee, Virginia,  and Washington)  and three from  the lower  half 
of the array (Massachusetts, New Mexico,  and Utah). 
Using data collection  instruments, we personally interviewed  staff in MFCUs  and 
S/URS.  We then compiled  all of the information  into  a database and tabulated  the 
results.  Using this data, we prepared  summary information  which forms the basis for 
this inspection  report. 
We conducted our review in accordance with  the Qzu&y  Standard  for  Inspections 
issued by the Presidents Council  on Integrity  and Efficiency. 
4 
 FINDINGS 
Overall, we found  little  progress in quantity,  quality  and agency oversight of S/URS 
development  and referral  of suspected fraud  casessince our 1989 review. 
THE  NUMBER  AND  PERCENTAGE  OF SUSPECIED  FRAUD  REFERRALS 
FROM  S/URS HAS  DECLINED  INTHEPASTlOYEARS. 
For  CY  1994, S/URS in the 7 sampled States referred  268 cases,or 14 percent of the 
1,965 cases they reviewed, to the Medicaid  Fraud  Control  Units.  Of these, 30 percent 
of referrals  were accepted for full-scale investigation  and 59 percent were declined. 
The remaining  cases are pending initial  MFCU  evaluation. 
For this same period, we also compared referrals  received by MFCUs  from  Medicaid 
State agency S/URS and Medicaid  State agency-other for  the same States used by 
GAO  in their  1987 reports, for  all MFCUs  for  CY  1994, and our sample States for 
CY  1994 (Table  1). 
Table  1 
Comparison of Single State Agency Referrals to the MFCUs-19SS/l994 
GAOReport  MFCUReports  MFCU  Reports  Sample IWCUs 
FY1985  CY19!M  CY1994  CY1994 
(36 State!s)  w  -=I  (45 states)  (7 St-f9 
Total  Fraud Referrals:  996  863  956  284 
Total  Case Load:  2,871  3,597  3,882  1,199 
Percentage of Total 
Referrals:  34.7%  24%  24.6%  23.7% 
Each of these comparisons demonstrates a significant  decline in S/URS referrals  as 
reflected  in true numbers and in the percentage of total  MFCU  workload  when 
comparing  1994 data against 1985 results.  Appendices  A, B, and C expand upon the 
data displayed in Table  1 to show respectively: sources of fraud referrals  to Medicaid 
fraud  units in CY  1994 for the same 36 States that were used in the 1987 GAO  study; 
aligned data for  45 States that had fraud units in CY  1994; and data for the sample 
States used in this evaluation. 
3  The  GAO  report  used data for FY  1985. 
5  MFCU  OFFICIALS  ARE  DIVIDED  IN  THEIR  OPINION  CONCERNING  THE 
EXTEZNT AND  QUAIJTY  OF S/URS DEVELOPMENT  OF SUSPECIED  FRAUD 
CASES. 
We found  that S/URS staff differ  in their  method for  researching past complaints  and 
developing  current  fraud  issues prior  to referring  cases to the Medicaid  Fraud  Control 
Unit  as shown in Table  2. 
Table 2 
Development  of  Referrals 
states 
Using the 
Method  Process used  Process 
Medical  Records: 	 Examination  of Medical  records to  6 

substantiate claims. 
sampling: 	 Sample additional  claims from  the provider  5 

and/or conduct medical records review when 
appropriate. 
Pre-Payment  Review: 	 Place a provider  being investigated on 
Pre-Payment review.4 
Service Verification: 	 Contact beneficiaries  to determine  if services 
were rendered. 
Associate Previous corn laints and S/URS cases 
P
with  the current review. 
Refer  cases to the MFCU  without  development 
at the earliest indication  of fraud. 
This variance in development  can adversely affect the quality  of referrals.  While  four 
MFCUs  stated that  S/URS development  of casesis adequate, three commented  that 
these referrals  need improvement.  Problematic  referral  issues cited include: 
0  allegation  of fraud  is not clear; 
0  the S/URS  has not developed the allegation  beyond the initial  fraud  issue to 
determine  if this is isolated or a pattern  of practice; 
4 	 One State reported  that its claims system was incapable of implementing 
pre-payment  review, and that it could only suspend the providers  Medicaid 
billing  number. 
5 	 One State reported  that they cannot adequately research past provider 
complaints  and/or educational  efforts since there is not a central repository  for 
filing  provider  information,  educational contacts, and post S/URS development. 
6  0 	 the S/URS has not established through its files and correspondence that there is 
a basis that  the provider  knew, or should have known  that this method  of 
practice constituted  fraud; 
0  only the complaint  is sent with  little  if any supporting  documentation;  and 
0  the S/URS profiles  are inadequate, and the MFCU  has trouble  obtaining 
electronic  data. 
We received a number  of comments from  MJXUs  concerning S/UK3  case 
development.  These include: 
The MFCUs  identified  the following  as actions which would  make case referrals 
more effective and productive: 
provide  adequate and clear case summaries which succinctly describes the 
l 
analysis and basis for suspicion of fraud; 
0  sample additional  claims of a similar  type to see if they can establish a pattern 
of fraud  in similar  claims; 
provide  additional  data on total volume of claims, procedure  codes 
l 
in question, and analysis of other areas of the practice that appear aberrant;  and 
provide  copies of educational letters previously sent to providers. 
l 
The diversity of S/URS  development  methods and MFCU  recommendations  for 
improvement  highlights  the need for  adoption  of consistent standards for  development 
and referral  of these cases. 
THES/UR!3EMPIDYEESHAVENOTRECEIVEDSUFFICIENTTRAINlNGTO 
ASSURETHATTHl3YDEvELoPANDREFERSUSPECIEDFRAUD 
ALLEGATIONS  IN  A  CONSISIENT  AND  APPROPRIATJZ  MANNER. 
States S/URS staff cite inadequate training  in the identification  and development  of 
fraud  allegations and edits. 
Five S/URS staffs have not received training  from  Medicaid  Fraud  Control 
l 
Units  on desired content or process for case referrals. 
Three S/URS  staffs have not attended any HCFA  fraud  training. 
l 
7 
 States note that staff turnover  remains a consistent problem.  Therefore,  training  of 
new staff and periodic  refresher training  of all staff is vital to the S/URS units overall 
success. 
THE  HCFA  DOES  NOT  ROUTINEL  Y MONITOR  S,KJRSDEVELOPMJWI  TO 
ESTABLISHWHETHERPOTENTIAL  FRAUD  ISSUES ARE  BEING 
APPROPRIATELY  AND  CONSISIENTL  YANALYZEDANDREFERRED. 
Three  States reported  that  HCFA  did not conduct any review of their  S/URS 
operation,  including  their  case development  and referral  process.  Four  States report 
that HCFA  reviewed it, however, three of these said it was simply a part  of the 
Systems Performance  Review  (SPR) which did not include case reviews and agency 
feedback. 
The HCFA  designed the SPR as a performance  review of the Medicaid  Management 
Information  System @MIS),  including  the S/URS subsystem. Standard 6 of this 
review specifies: 
The S/URS  component  of the SPR remains an instrument  to measure how well  the 
Medicaid  Management  Information  System (MMIS)  identifies  potentially  fraudulent 
Medicaid  claims.  It  does not, however, evaluate how well S/URS staff develops output 
from  this system, or whether  issues are appropriately  referred  to the MFCUs  for 
full-scale investigation.  Our  1989 OIG  report  brought  this serious omission from 
HCFAs  oversight process to their  attention.  However,  HCFA  opposed using the SPR 
for this purpose and offered  no alternative  remedies.  RECOMMENDATIONS 
Efforts  by the OIG  and HCFA  to identify  and combat Medicaid  fraud  and abuse have 
intensified  over the past several years.  As part of these efforts, the Department  is 
piloting  a demonstration  program  entitled  OpemZionRestore 2hrst.  Under  this 
demonstration,  the OIG  in partnership  with  HCFA  emphasizes interdisciplinary 
teamwork  with  other  State and Federal  agencies as an important  component  to 
enhance fraud  and abuse activities. 
The HCFA  is focusing on improving  S/URS and MFCU  relations  and increasing 
cooperation  between the Medicare  and Medicaid  programs in the detection  and 
referral  of fraud  and abuse issues. As part of these efforts, they have formed  a 
permanent  Medicaid  fraud  and abuse coordinating  council which  serves as a forum  for 
problem  discussion/resolution,  training,  and information  exchange.  In addition,  they 
are cosponsoring with  the Office  of Managed Care, regional and national 
conferences/symposiums on fraud and abuse in managed care programs.  Further,  they 
are engaging in other  ongoing projects designed to examine compliance  and facilitate 
the exchange of fraud  and abuse information  among the Medicare  program,  Medicaid, 
S/URS and the MFCUs. 
We commend  HCFA  for its efforts to improve  fraud  referrals from  S/URS units to 
MFCUs.  However,  we believe HCFA  should expand these initiatives  and pursue 
additional  actions to facilitate  identification  and removal of barriers  that have 
hampered  case detection,  development,  and referral  activities. 
Concerns regarding  the effectiveness of MFCUs  are similar to those discussed in our 
report  entitled  canier  Fmz&  IX&r,  0El-054440470.  As a result, we believe that  a 
concerted effort  addressing both Medicare  and Medicaid  fraud units is called for.  We 
are proposing  a uniform  team approach.  We recommend that HCFA,  in consultation 
with  the Office  of Inspector  General  should: 
Convene a Medicare  and Medicaid  bud  aud abuse task force to plan and implement 
improvements  in fraud  unit  operations.  This would  include: 
b  Clarifying  goals and objectives for program  integrity  efforts. 
b  Establishing  guidelines for  developing suspected fraud cases. 
b 	 Developing  a universal protocol  for appropriately  referring  fraud  and abuse 
cases. 
b 	 Coordinating  data systems to ensure that data are reliable  and consistent across 
all entities  in the fraud and abuse fighting  network. 
b 	 Developing  a training  program  designed to educate program  integrity  personnel 
on procedures, case referrals  and best practices. 
9  Develop  and implement  a comprehensive evaluation  system for  S/URS case 
identikation,  development  and referral  activities. 
HCFA  should consider establishing a system similar  to the one used to evaluate 
Medicare  contractors.  Once the system is established it should be incorporated  into 
periodic  HCFA  reviews of the Medicaid  State agency and the Systems Performance 
Review. 
These protocols  should focus on deter-mining whether  S/URS development  and 
referral  of casesis in accordance with  Federal  laws, regulations,  HCFA  procedures 
and the Memorandum  of Understanding  with  the Medicaid  Fraud Control  Unit.  In 
addition,  the review should strive to identify  best practices that  could be shared with 
other  S/URS units and weaknesses that should be addressed by HCFA  and/or the 
Medicaid  State agency. 
10 
 AGENCY  COMMENTS 

We appreciate  all the positive steps that HCFA  has taken thus far to safeguard the 

Medicare  program  and we recognize the accomplishments of the Program  Integrity 

Group.  We are pleased that HCFA  has concurred with  our recommendations  and we 

look  forward  to working  with  HCFA  in their implementation. 

We believe that the best approach would  be a collaborative  one involving HCFA  and 

OIG,  with  consultation  from  high performing  State Surveillance and Utilization 

Review Subsystem Units  (SiURS)  and carriers, to improve  program  integrity  activities 

at the carrier  and State level.  We suggest that this effort  focus on: 

Developing  and implementing  model practices to help carriers and S/URS 
decide which  casesshould be developed for medical  review and overpayment 
recovery or for referral  for fraud. In addition,  existing protocols should be 
implemented  for referral  of fraud  casesto appropriate  investigative entities  (the 
OIG  for Medicare  cases and Medicaid  Fraud  Control  Units  for Medicaid 
cases). We believe that together we can increase overpayment recovery 
amounts and increase the number  of successful prosecutions by law 
enforcement  agencies. 
Revising current  contractor  performance  measures that reward carriers for 
overpayment  recovery but not for fraud and abuse referrals or efforts to 
improve  claims processing safeguards. 
Identifying  the most effective practices which  carrier  and State personnel use to 
eliminate  claims processing vulnerabilities  that  enable providers to defraud 
health  programs. 
We believe that achieving the goals both HCFA  and the OIG  have established for 

improving  program  integrity  functions  at the carriers and in the States can best be 

accomplished by these kinds of collaborative  efforts.  We look forward  to working  with 

HCFA  to bring  about further  measurable change. 

Concerning  the establishment  of a comprehensive system for HCFA  to evaluate 

S/URS case identification,  development  and referral,  we are pleased that HCFA  also 

concurs with  this recommendation.  We believe that this initiative  is very important  to 

the overall  integrity  of the Medicaid  program.  We are delighted to learn of HCFAs 

recent fraud  and abuse initiatives  and hope that the S/URS performance  evaluation 

system will  be implemented  as soon as practical.  We remain  committed  to 

collaborating  with  HCFA  in their  efforts to rapidly  develop and implement  this system. 

The full  text of HCFAs  comments is contained in Appendix  D. 

11 
 APPENDIX  A 
MFCU  Sources-GAO  Sample  States 
Fraud  Case Referrals 
CY  1994 
summary
Referral  Source  Total 
Single State Agency (Other)  177 
.:j: . ;.: ;:..;.. : : :.;::>i.$i ;:li,.;z:;,:::y~:i: :;::j;i:ii;J ,ii...j$i:gi,i:::$ j:jg:jjjjj::.: ;:::;:.:.:. ;: ,.;, ::.;,:;,y,.:.; .. :c,jj;:y::: ....:;.  ji....f. .:.: .:,\:.i::.....  j.1,j.;:.j :;,2<;:j:.I 1:y..;:.::: :.<:::.:I:.:.::.,,.:,:.;.,: :  ;:I   ..:::,,:. ;?:,
..::....,..>..&,: .. ,.:.:.,:.: .:: i:.,.:,,..,::::: : ,,.,,.,,,..,.:.: :,,::...:.::,, :.:+,:. :. ,.::..:... .j:.::.: :......::.:::,:.. .,.: :?.:):.:Yjij:ji:)::p::::j:i:,.i:.:.:,i:.:j;jjiii:
il:i~~~:i~~~~~f:~I~~~~g~t~on~~~:,~:j:::.~:~:,~,:: : l$:;~+~$~g:,y;::j:,:, ::~jj;:I,,~:$j:5:::~::::::~j~:~j:~:j~l:j~:::j,&~j-$::~i-~iji,::;~i~i+  g$:ygi::zk:g- i;::iii::Iii::::ii:.i:::iiIi::~~;~::,i ; 
::.,:.,.:.:. .. . : . . ... .  . .... . .j., :~..:... .~:. :.:.:~:,.,:,..:,,..,..,:,...,.,.,,,:,.,.,,. ..,:,,....,..,.:. ,. .:   :... . .  . :,.,::.. :::.:.:.:....,..,:.,..:.,:.A....:,..:..:....,:. :....,..,....,.....:,..  ....   ..  .:....   .,..... . .l....... ..... 
State Licensure  Authorities  100
.<..:.. .  .> . .  . .:,:.:.::::;.,:.:. : ;:::,:,:j:.::~;:::;).j:::):;:.,:::y,..l ::j:..:.::.\::j:,.:..:.:..:,.::. .:.:.j:.:,i::,.;.:j::.:i,.:~.:;.,i;..: ,. :.:j.,,:,.,...:j...,~:::,.,,..j:,.:..:.::,.,,.j.,;,l:::.::::/,:.. :.: .:j:::::.:.::,:.:..j::: : y:.., ..:.,:.~.,:.,.. .,,:+. .,.,., ,..:.  ..:, .: .:.:. .:x..... :  :,.:j~:Y::j;::.::./,.::. :j.~:.:::j;,...:.:I::  :: .:.:::Ii ::::.:;.,::::2::.:ji:,: :.:.::.:.:;::c.:: . :.::\.::.:.;T.:;j:. j1...j,...  :. ::.j . ::. :::. .  . ;::  j;,..j::y$:,..:.,:,;:,,:..:I;;  ::. :. :,>::~.j :.,;,l::j;.;l.: :.:.:::;.:.;:. .:::::.:,..::. .:..ii: ;:::.,::,: .  :.;::: ::.:;::yj>.:   , ;.,.,::,.:,.:: ..:,:i:::::.:.,... :,.... :::: , . .::...,,:.,. . ...j...:: .::j,: .j..: :,:;...q,,,:.:...:.:::.::.,..:.: ,.:.. . . .:.   :p,..:::::.  
::i~~~~~~~~~~~  ::jg;lii;~:ijj;i:;;j::,:lj i:i)..:,:j;j! :;:j,A ,:$, .,;~;i~~~:~~~5~;g~+:~;:~i!g:j:~:;: ,jj:;j:;ij:I :li:.jljjj:::~jj:~ji~:il~i:i,L~~p.::~  ~,:l;::i,:Ijj~:l:;~:l~j:::~j,i:i~;g: fi)g 
...:...,,:..:,:..: .,....;.... :>. . ..  3.. ,/......,..,.... ....... .:....::......>:. :.:y....,....:,.. ..... ,...,.:,  :.,.~..:  .::,:./,.::....:::. ...::: ..::,. ..~.);..:. .:(:..:,:,::.....,...., .,.,,.., .,... , .,..,,.. ,... .   .  ... .,.. . .. ..   .. ...  , .
Prosecutor 20 
..:. .. . .. :  ..:....:.::(:.,.::,.:.::..:.::......:, :,..:.:.~::..):..~ :.::...~.:..,.  . ..:::.:.::. .:  :::..::.:i.:. :::.:..:::.::::;:::::..\:,:.:..:.;,;	.:y:...r.;.:.. ::.: .;.; :,: ;.::.;,,:  ::+.:.: ;:.;.:::,:$, ,i:,,I1::,:.$, ::...... . :. . y. .   ::,:::.,:: :y,,,::::, ,.,,:  ..::::iy;:1y;::.;.:  . ::..:.:. . : . . :..  ,.  .,:,:.:.  .:. :....:..... .   :..:...;:::......:.     :  :,..,, .::.:.y.~::.:. :...y:::::...:.:.:.:.:.:;
Private Citizen  956 
,: ,+j,...,  ,..:..:,, : : :  :... .: ....,: ::::.: :::jy:...  . :::y.:: .  ::.:.:::.::.x:z .:
.,,..:..)::).:.:.  , , ),::::;:.:...... :..  .    :   :..:::,,:,.j. .:.. . , :.::......~  . :: .  ..::..::,:,:.,:,.,.. : .x::1::. :..:::j. ::::+ .:::.:::: F: :...:.:./... y:.: :.. .. .. ,  :::::.....:,:  .:.:....::.,:::..:  :::.:,,::,3::...y :. ::, I. ,i.,j::j.,.;j\j..::.:::, ::,:::: ::j.:j~::,::.:::.:...:::::.:...:::::.:.:f:(..:.:.:: .: i:,:,iIj:,;:::..: ::.j,.>..,..::.::,:,.. j:j:
i;:~; ~~~~~:j;~~~~~~,,::l:i:---i  ~:j,~.,l .~,;~:::,: ~:;:,:~:y;j~ . ....:~.: :::. j  ,:j ~:::j;,j~:.:i,:,,: ..~.:  :j~y,j,i:.~:;..i:::~li.::i,~$.i,l ..~;.$i,~::)i;.:I.;:ji :::i  ;j:i:qiI ~::;~;:.:::::;~:.i.i :: :.i:::j~j ,; j~j;:jj:.)::j :~:~:~:,:::: ~i..~:i::.lii.i.ii.::i:.i j:.:i:;j~+::.~:j.,-.j::~:.j:j: ,  ~ii:i~:j.jj~,:i::.i.;;I. ,.~j. ,j; ,c :  ,i:i ;.5:i:,:j~,:j.::1L;:l,. :::ji),j:i :i.,i ,j::,::i:: ::.l:. ,;::$ :  i$: 3.&. jIi ,.
:...:...,..::,.... .::....:(..,..., .,.,:......:...,.. ....,,.. , 
State Agency 344 
....  . ,.:: :::::,::::$.::)F::::!:.i.:j:;,j::,,::, :.:::/.::::.:::.::.;::::::;:: ..::I; : l:l:::1:.i.::.:..,..: ....5 : .,:,...>, :, ::jj:j:,;;::  .:.:;::: , .::::.;::, . .,; ::j :;::;::,   .:; :;:j:i;y:.:.. .......,: ,:.,:.:: .:.: . y,:llill,.:,:Ij::ljjj:jljljijii::i.):$;jj::il.::. :i.i;j:..;~.::.::: .,:.j ::::,::...>jj::i.:>i..:.::I.:.:~ .::.~:.,:~..::. 
....    
~~~~~z~~~~::1Pi:.:..:..;l:irfi~~,,_-:;~i::~ii~::I:::li l..I:~ii~lli~jij~.j ,l,i:l:::ii::I:.ii:.i::ili:;si!i::i~i,~:i~l:rlii.li!. ~~~ii~~~~~,:~--.~~~~~~~~~~~ 
_.,,_.::: ..;,::,:.::,.::, ,.;::,.: :, +.;:,..;.,..,:,:;;... .;,.:.:,.;..).,   ,, .,:......,.;.::...;; ...:y....,;...;... .  .:........   :.. .... . .. .    ..: ...:. ,.,..:. .. ., 
Other  963 
.... . . . . . .  . .. .. . ..  .,.... . .  . ,: .,,j.::..f.:. : :::.:::... ::..::....::..:..  . :,.::::y.:::::.j.:,::.I.:x.:. .:. .,:,::J:.: :~:,:..::~.:.,.z. )..,: :::.,...::.., :..: :,:,.:.:.::.  .::d:::,,.3j.:,,. j.?:,j...:.j  .\.:. .:~.:>:..:...: i.. :. ,. . :. .~ ..:.  .:. .,.:.~:..A.:3:.:: :..: ...:..:~ ..:: ..:::,.::, ~_:.j: ::::.,:./:.~:...:...,:.:.:A:.~: :..:.:.. ; :. .:...:...:.. :  :,,.:,:..,:..:: :: .  ,::A:.,.:.::.,::.::....:,.jj:,.. j:..:: :  :: :;: ::,:.::.:::i.::::::j...:.:.:..: . :. :. .: : :..:...:,j :j.:;,.:.I,.;.::~(::. , : .~.:.... ~:;. .~.: . .l:x   .:.~..l .:, .  : i;::.::..,::.i,. . ...i.:..  :;.. . :~.:.,:...:  : .:,: ..,. ..: ::. . . y.,.  :/::./..:::. .i::,:i,::,.:,: i,::jlj,i.:..,:
~~~~~~~:-i;ii~l;lii::-:;li,i:~:;~ ~~~~ :.il~~l~i:i:,ic::i:.i:iti:iiil:ii~:i;;::I:.$;Ii$i:gii:ii::-:i:j.:i:i-.j~jj~ j~~~~:;i::i:;.ji:,j.:~~~~:a::i~~;~I$,~: ;~ig~~i;i~;@r:;~igj:li$-~i  ,.
.,..,... ,,..., ,,... , ,...... . ... ,.,...  . . .    
Single State Agency Referrals  as a percentage of total MFCLJ worklo&  24% 
  This is a summary of referral  sources for the 36 MFCU  States used by the 
General  Accounting  Office in their  1987 report. 
2  This is S/URS  and Single State Agency (Other)  referrals  as compared to Total 
referrals. 
A-l  APPENDIX  B 
MFCU  Sources-National  Data 
Fraud  Case Referrals 
CY  1994 
summary
Referral  Source  Total 
.... .  S  ingle State A..  genc...... .. . y .(: ..  ,:,.. (...O:.+..,.t:..:h>.::,:e. :,.r.:,.).::i,);:..:;., :I :j.:i.::Il::.;j.j. :j:.j:;.j. ::A:..:::i...>:.. ., ,j:.,:$.:: :,. :..:... . ;1; :  ::,.z:.:I,:, : :..,, , :.;:,..,:y. .,.;::,,::z.:,,: ;.: ;:,.:::.:), ::,-.;::::,:  .... 2  : .,,.::,: :...:::...:::..  .:..   .:....:j.,  .jj:..  ,.,.2 1.3:; 
Is~~~~~~~~~~~~~~~~~~~~~~,~~~:::i:i~,:ii;:i:iii:iiiiilji:.~::._..::jj,.i$-:::.j,::-:j,gj,::li~!i;:,- iii;3.;:::j;iiii.;li,:~.l..~r:~j~:i,l-li:_~~,:;i;:l:i:,lli.--;iy=p:i1il: ~~~,~~,,
,.j:;. ...,.  . . .. . . . . . .  . . .. .  . . .. . . . . .   .~....,...~....,....~,.,:.,.~.:,..,.~,.,:.,.~..:,...,~: .,...,:. .,...,j .,)..: .... . . . /. . . . . :, :.... . . ..... ..  . ..M.:.::...: ..... : ..... ...     .:  ....v.. 
:,,,S.,, .,t:.a.,.:t.:, e).., ..F,L i,.c.,I:.e:.F.:n...: s .:u:.::rj::e::::::., ::..j:.,:A:~:.;. :+:u :.:::t::.h:..: :::o:..::,..r.:.::i:.:t..:::i:: :e:,.::;:;,,s:.:.:...:;. . : : .: .. ..:.;.; ; . :;:.. \.:.I . :. i.:  i:    ;..:,.\.::.::$::(:..;j.:.::. ,;:::.:,,,;;. :.::,::?..T:. .:..\: .::: ::.::::::::,::.::2:::j::5;:: .:y.::jj:,,:.,.,;: .:l.:.l i,:,i::i:.:.,:...:..:.:..::.:. ,:: : :.:::~,I: .::.,.:   ..::...:  :, ; .,, ,,.::.::::::.:.::.i::::.:,$:,:  ;:j::...  .::>: ::. :..  j;I,::.:  .::..:..;,::j:.i,,...:?.j:.  ,:. .ji.:.: ..?.:,:...,j,::,:.::,:i..1j.j).l0.l:.:6~jj: .j,i.:j:i,.:...
~:~~~~~~~~~~~~~~~:I :ii:;i.i~~~~~:~~~~:~~~~g~.~);:;,~:$~$~$~ ,?,,:&~~I$~$:Y;:j ~;:j ;.lij::~~li~jj,:~j:j;l.ij::y.II:i:lij:l: :l~::lii::i,:j :i:jIi::l~~~~:;~,$ +&
,:.,,.,::::,:.:.  Y::.:::::::::.::...::;:::. ::.~.:.:, .:.:.:: .:..:.::,.  ....:,,,,:,....... , : ..,: .,/..),..:,: ...:, ...:.. ,,........ . .   .   ,.,,.  .  ... ,.,,.....    .  ..  ..:..... .  .  
,::.P;:. .,,:r,.	( ,.o.: ...:s::.:::.(:ye::.;...,:. c.:..,:.u,,.,:..,..:.t::..:.o.:,.:.::..:.r.:. .;, .:.:.:..:. :j:,.:. .: ::.::.:,.:::.::.:.:..,,.:.. .. ::. .: .:.:.::.,::. .  .,.:~::::.,,::,,:, :,:, . ::  ::.:.: .:::::...::::::,:  .:.: ::..:.:c:, :.):::.:...:: ...::  A..:.::.::.>:.::::,:.::: ,..:. .~ ,.:::: ,..;: y:..,.... .   .  ; . :.,., .:,.:,, 1,: ,:: ,:,, ., .,  .,. ,,.,:  :,:..,;. .::,:,:;.::...::.,.0.:: : ;.:..::..:..  ,:.;,::.;... .:..::.:..,. .,.  . .  ... :.,.,  ::::..,  ::,,::.,.::.:..,,.,.:  :.:::,j. ..q:j. ;;  :.:;,.,2,:.,,i,:1:..,j.. :,::j,  ..; 
~:~~~i~~~~~~~~~~l:.:ii::i.iiiiai..ii;.j~;.:l::~ii~:;:~.I.1:::..i~i::i.::~:i:ji..i-i:i:~ii~i,.:~,i,: lj::. ~~::.i::::.,-.:;;g:i:i:lil l,.:iii;ii.il..:i;$;;~ii;;::~:;.1$.:.j:,-:.,;I.:. ;.,j;,:;gfg;::
,.,:.,.:..>,:.., ...,.,:..,.,.>..:.., ...  . ... ,  .... .     :.........,.........  
Provider  88 
.::.,:..:,..., ::...:.. j,.....  :. . ... :  : .:.>.::..  ::::.j:.y:::j\: ::i:; l:: ::,,i..i::.i:.;:.::..:i;.: :  ;.:.::.. .: :. :.;:,.:;.::::::..::::  :.jj  j.::::::.,.. ... ::.::,.,,; :,.:>: ;;:  ,.,j::;:.II/j :.:.i  ::.::: ::I:,..:, g,,;, ...; :..i.~:...:...;A::$ ..j:  .:y:,..::,: :,:),.,j :: .....:.::.,:.:A.;;:: ,.: ::.:..: .....:  .f..,. ;..;:\;.;/;.;.;.j;.:.j$.
~~~~~~~~~~~~~~~~~~~,~:~~j:i:ij$:.jy :; :Iijg-;.:,;<.; ,;;:jyyT, Jg$..~~~~.::!~::.::I;:.:I.,;:; ;;:j -ii:i:::~ii:-:ig:I:;. ii:l:i:i;,; :i;::jj:_;ji:,:i,i;j.l::i.:i: :j:ji:j: ;(i,:l:j:ii j);::;, 
.,  .:.:... 
Private Citizen  1,062 
... . . ..    :  ..,.,..  ...    .::..A....  .  . .,.::: :,j,j;.:i;..;. ...:,:: :j:,j.j. .:: .::..,>:,,:::,.:, .::,. :j:~z.:,.: :,..:  j .;:.::,.:j;:,,y.., j:::::,I.:.::,:::,.. :::...,:.   :.I,;:;;,:., .
~~~~~~~~~~~~ii:  ii:;~~:~.;;;<;j:7:.: ::;:;;I;j-.;fi-i_:~:i.;::lii:::-:il,-I~~IJ~~~:~i~~: ~ i::i:::i:li1i:~-;-:,:,;:- i:iii-i:.~.~,..::~, :.:. :~:,,..~;::::i:~::. .,.:. ,:/. ;;:.i,,:ij;::jl#)~:. j:;c:i:,l::: lji~ji :;l::i~:_:j(~:,
2..::j:.:....:. .  . : .... . . .    ..: 
375
State Agency 
...... . .  . .... . . . . .  . .. ...:..:..::..i...::.;.::..,:.:.:.,,.  . ...  .: . ,. :. .,.. .. .. :.. . ::. ... ,. .  : .,:.j..,:.:....., .::;....:,.:j:. .,:,:::....:..::::...:I,:, :.: ::. .,. :,.::~.:.r...:ij,:,:.:,:::,:.,., I.;,:::,.::l,1:,; ::. ...::. ... ;,:..: ,.,. .:,.:: ~...,...,..,. ).. :,.,:., .,:.. , . ..::   . ,:..... .... ): . ..: .:: : :. .::.. :.:....j .... ... .) .: :. .:. .) .. . . .:...   . .....:)..... ... :. . :: >.. :....:.:,:.. ,. .....: :: ..:. ,.;,,:.. :;.. .:,,:.:: :,::.:: ,,., , .::.j::g:,.~::  ::.>y..,::,,.j;:.:,::.,:I~ .:::.:(:, .:j~; ::,i::,:f::.y,y.:.~:,.:: ;.::::.;::: :;::::I.: :.:: i:::i.:::::.:j:j..j,,::,::i:::::::l..:.:j::..::::j:::~.. :. . ::..,:::.:.:..:.,.:.,.~: .:... :...,: ::,,..~.y: :..:;.,y..: .~1:,/ y.:::..~. ::,:: ::..~.:.+..: :.~: :x .~..::.:,:: ,:.:..~  . :::j:v ::.:.~:.:,I,::..:j:,.:. .:~.:j~, 
~~~~~~s~~~~~~~~~~~~~;;:j:$i g$ii:~~j,~:~:;:~:.:::::::,l  ii~~~~~~ii::lilili:j::1ij,5~ii~l~ii~;~i;~::~~~.~ ~jl~;:i~~~~~~~~~~~~~~:~:~j~::l~:~lj~~:j~~:j::i,;i~i:;5:..:,:;i;:.i:.i.i:i; ;;:iiii:B:
,.:..::.:,:>,..::... :.. . . .. ) . .:>.. .  . . . . ~. . . . . . . :. . . .. . . .,  . .. ..   ...,... .    ...  ..., .:..: :.:... .. . . . . .  ,.,...,... .... .:...
979
:(O.:.t:h..e.)r: .:):::.::::::::::: ::..:... .: .  . :. : :.:..~ . ~.... . . .  . .  .. . . . . . . . .  .A.....:..:.::..:. :.:.:.:.:.:.:.::.:.:.:::.::.I. .:i:::I:::i.::i:::l: i:i::.:,i.,:.\i .i:,,:.:,,,. .l..;.:,i ,~:,::i:,,: : :.il:i.i::,::....  :..:. :..,.:.... :. , . :... :  ,:.:,:.:. .../.j,,..,, .,..,;. ,.,.,.....:..,j,:...:,;......,...,.:.:. . (...: .  :.   .: . , :::i:,. :::,:.: ::.j.:,::~,
~~~~~~~.~~-si!l:III~~~~~~~~~~~~~:_ij;~:i-_-l;ii::i~~~;3:i-:~~~~~~~~~~~~~~~ 
;::.,...:. . :  .:,.:.:,..:,,...:.:.j,:...:..j:,./....,.................,....................... 
24.6% 
Single State Agency Referrals  as a percentage of total  MECU  workloadz2 
  This is a summary of referral  sources for the 45 States which had MFCUs  in 
CY  1995. 
2  This is S/URS and Single State Agency (Other)  referrals  as compared to Total 
referrals. 
B-l  APPENDIX  C 
MFCU  Sources-Sample  States 
Fraud  Case Referrals 
CY  1994 
Referral  Source  MA  MINMTN  UT  VA  WA  Total 
.;::,:::::.c::: .y 
,~.~~~~~~~~~:.~~~,:~~~~~)  ..,:;;;: i.;:;: :;.; i2 ::I.:j.   g$& (:I..!;: ~_:I~~~,:,:;i;~g~g ;:..: i:;;:& i::.:;i.~;:,:,;,$:.&  :.,:.;:&
.. .. .   ,,  .,  ..  .. : .. ..   ..   ..   . 
Single State Agency  (Other)  0  16  0  0  3  5 22  46 
:... :  I.:;:..:::::..?.:,:..:,:,y...,.,..-: ..:. ..,..::.::.;:.:,:.,:;::;.,:::;:;:j:::...$::, ,,,::j ,;. :,......   :.+...,:..,,; Ij,::;. !::::::.,*: ..;.:;: .::,.r,:;.,;,::c,:. ,.I..-::; .  ,::c.,:: j:.:.;::I.. .,I:,:;.j:i;::..:  ..:::,;;:..  1.:
.i:-~~~ii~~~~~~~~~~a~~~:~~~,~~~ :.:..::.:i;:;:&:,;;._I I.;,:;ii:::; ;,i,:1:;,.+o::,i :jq  ,&-jy.:..~.~~$&~.Y !:ijfi:::j3:j::$y:Yi;, j: ;, : is 
State Licensure  Authorities  1  0  0  1  0  0  0  2
j,,:z:;;;iy,;,.;.L ;i;$:.:y: :;::..: . :.-I.S:.:c :F: :ijj::::,.,: .:..:.::.;:- :; ..::,::;;::;.:;:;>;:g;y;  ,;.<;.;::: : ,:i:i::::-,ij::::: :.,.  :.,:,,:. :::j. +:,  ,;.;<,:i :i-.;...:  :...  :;,Ii.:+:qF;i ...;I,:;:,::I_i:.::;:-:~:.::i;:: , ,:: ,., ,,:.....
.T..:.:.. .  :....  .. ... . : .,:. .::y:.. ..:..>,,:. ,.,.,,,,,.,,,.,,  ..++:.::.,.:::.:, :.,. .:..: . ,.:..:, :.,.,:.:   :.:)::
lili:~~~~~~~~~~~~~~~~,~~~  .jjg:j$g :.::I~i::::j;;.i ::::ii:iio:i:li~;:j:$I:fi;.:iy:i.;;;::;[l:.::;  :;~;:.;:::j 1i~:;: j.j, : g&::$ .I..:j.q: g:i;;.,:::li::;l.i(i:i. :j:;::I:: : .;;2
:  ... . . . .  .:..:..: ..,....     ....  .  .,,..  .:. ... . .    .. .. . .    .. .  .. ..  .. ..   :  .. .  .: .. :  .,,,  ..   ..   ,...,., 
Prosecutor 0 0  0  1  0  0  3  4
::. ::?:::,.:::.::...::j.:.::. .: .::::::.,:.;:;.;,. ,:, .!:.::. >:.:.:.. .:..,:j,, I::  ,;::  ..I:...:...:,. .....:iy .,.   ..,.  : 
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Provider  0  0  3  4  4  1  0  12
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Private Citizen  3  219  26  49  13  1  25  336 
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State Agency 0  25  12  52 1  1  5  96 
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Other  13  366  2 8  4  6  4  403
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Single State Agenq  Referrals  as a percentage of total  MFCU  workload?  23.7% 
  This  is a summary  of  referral  sources  for  the  7 sample  States  used in this study. 
2  This is S/URS and Single State Agency (Other)  referrals  as compared to Total 
referrals. 
C-l  APPENDIX  D 

AGENCY  COMMENTS 

D-l  DEPARTMENT  OF HEALTH  &HUMAN  SERVICES  Hc:lth  Care  Financing  Administration 
The  Administrator 
Washlngton,  D.C.  20201 
DATE:  SEP26 I996 
TO: 	 JuneGibbs Brown 
InspectorGeneral 
SUBJECT; 	 Office of InspectorGeneral(OIG) DrafkReportEntitled: %xrveiJl.anceand 
Utilizatio~ReviewSubsysten~~(SNRS)CaseRefkmls to Medicaid Fraud 
Control units (MFCUsx (OEII-07-95-00030) 
We reviewedthe above-referencedreport concerningMedicaid fraud andabuse/neglect 

casesasit pertainsto the SltJRS. The report discussesspecificktors  which contxibnte 

to and work againstsuccessfupl rogramintegrity operations. 

Our detailedcommmts areattachedfor your consideration.Thankyou for the 

review and commenton this report, Pleasecontactusifyou  would like to 

opportunity  to 
discussour commc?nts. 

Attachment 

D-2 
 HCFA should convenea MedicareandMedicaid fraud andabusetaskforceto plan and 
implementimprovementsin f?audunit operations, This would include: 
. 
0  Clarifying goalsandobjectivesfor programintegrie efforts. 
Establishing~guidelinefsor.developjngsuqxcted fraud cases. 
0 
0  Developinga universalprotocol f6r appropriatelyreferxing&and andabuseoases. 
Coordinatingdatasystemsto ensurethat dataarereliable andconsistent all 
Q 	 across 
entitiesin the fraud andabuse@hung network 
Developinga training programdesignedto educateprogramintegrity personnelon 
0 	
procedures,casereferralsandbestpractices. 
We concur. HCFA establishedthe ProgramIntegrity Group(PIG) to addressfi-audand 
abuseissueswithin the MedicaNMedioare programs,The goalsof this groupare 
consistentwith the reportrecommendations.The groups overallresponsibilitiesinclude 
completingandmonitoringthe activities of short andlong termprojects,suchas, 
changingthe conditionsof participationfor home healthagenciesd, evelopinga strategic 
plan with our law enforcemenptartners,clarifying programintegrity languagecontracts, 
and deters&ing how to betterusedatato reducewaste,f%ud, andabase.In adclitiq 
HCFA is working to addressissuescxxnmonto both programs, For example,Medicaid 
SurveillanceandUtilization Review SubsystemsUnits are (or areplannedto be) usersof 
the recently developedFraudInvestigationdatabaseT. he databaseensuresthat 
infonmlion  on casesdevelopedby Medicare carriersis sharedacrossa numberof 
pro@..  andlaw enforoemenot rganizatidns, Inputting fraud castsdevelopedby the 
Medicaid programwould allow tracking both Medicare/Medicaidfraud caseson the same 
system 
D-3 
 Page2 
The OIG suggeststhat thereis a needto deveIopstandardguidelinesfor the dcveropment 
andreferral of fraud cases;howevex,the OIG hasalreadydevelopedsuchguidelines. 
NCFA has providedthesegu.ideIinesfor casedevelopmentandreferral to the carrier 
&aud units andcontractors. We cnconragethe useof theseOIG guidelinesby the states. 
OIG Recommendation 
HCFA shoulddevelopandimplune~~at comprehensiveevaluationsystemfor S#RS case 
identG&i~  developmentandactivities. 
HCFA Resnonse 
We concur. HCFA agreeswith the recommendationto considerdevelopinga 
comprehensiveevaluationsystemfor WRS  caseidenfifkation, developmentandreferral 
activities. However,Medicaids Fraud and Abuseinitiativeis a new one and doesnot 
havethe resourcescmently tc pursuebuilding a comprehensiveevaluationsystem, 
D-4