Testimony Before the United States House of Representatives 
Committee on Oversight and Government Reform:  
Subcommittee on Government Operations 
Subcommittee on Intergovernmental Affairs 
 
 
 
 
Improper Payments in StateAdministered Programs: Medicaid 
 
Testimony of: 
 
Megan H. Tinker  
Senior Advisor for Legal Review 
Office of Counsel to the  Inspector General 
Office of Inspector General  
Department of Health and Human Services  
 
 
 
 
April 12, 2018 
10:00 a.m. 
2154 Rayburn House Office Building 
   
      Testimony of: 
Megan H. Tinker  
Senior Advisor for Legal Review 
   Office of Inspector General, U.S. Department of Health and Human Services  
 
Good morning, Chairmen Meadows and Palmer, Ranking Members Connolly and Raskin, and 
other distinguished Members of the Subcommittees.  I am Megan Tinker, Senior Advisor for Legal 
Review in the  Office of Inspector General (OIG) of the U.S.  Department of Health and Human Services 
(HHS or the Department).  Thank you for inviting me to discuss improper payments and the need for 
national Medicaid data to  strengthen  the program.    
Created by statute in 1976, OIG is an independent body of auditors, evaluators, and 
investigators, deployed across the Nation, to help assess and protect the integrity of the Departments 
programs enacted by Congress.  We  remain committed to working with our stakeholders to achieve our  
shared goals of protecting beneficiaries and the taxpayerfunded  programs they rely on from fraud, 
waste, and abuse, and promoting efficient and effective program operations.   
Protecting Medicaid from fraud, waste, and abuse  is an urgent priority because  of its impact on 
the health and welfare of  millions of Americans and on Federal and State  spending.  OIG has an 
extensive body of work examining vulnerabilities in Medicaid and  recommending improvements to  
address high improper payments, the  lack of program integrity safeguards, and health and  safety 
concerns.  Key to addressing each of these critical issues is robust, national Medicaid data that are 
complete, accurate, and timely. 
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  1 
 
 
 
  In fiscal year (FY) 2016, Medicaid served more than 69 million enrollees at a cost of $574 billion.  
Medicaid serves more people than any  other Federal health care program and represents onesixth of 
the national health  care economy.  To ensure that Medicaid can  continue to serve our Nations most 
vulnerable populations well into the future, we  must foster sound financial stewardship.  Reducing 
improper payments is a critical element in protecting the financial integrity of Medicaid.  Although not 
all improper  payments are fraud  or even overpayments  all improper payments pose a risk to  the  
financial security of these programs.   
In FY 2016, estimated improper Medicaid payments totaled more than $36 billion.  The Centers 
for Medicare & Medicaid Services (CMS) must do more to ensure States pay  the  right provider, the right  
amount, for the right service, on behalf of the right beneficiary.   My testimony addresses those concepts 
within the framework of OIGs core program integrity principles of prevention, detection, and  
enforcementhighlighting the importance of  highquality Medicaid data for program integrity across all 
three  principles.  
Program Integrity Principles  
Prevent  Know Who You Are Doing Business With   
 
Detect  Identify Fraud, Waste, and Abuse in a Timely Manner  
 
Enforce  Take Appropriate Action to Correct Problems, and Prevent Future Harm  
   
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  2 
 
 
 
   
Prevention: 
 State Medicaid programs do not always effectively screen providers or 
correctly determine beneficiary eligibility.  
 
  The most effective way to  prevent improper payments and fraud in Medicaid is  to keep bad 
actors and ineligible beneficiaries out of the  program  to begin with.  Complete  and reliable data can help 
States do this.  Without it, States may not know with  whom they are doing business.   
States have not fully enacted enhanced  provider screening.   
To ensure  that Medicaid pays the right provider, the program must be  able to identify the  
providers with whom  it is doing business and keep bad actors out of the program.  Preventing bad  actors 
from entering the Medicaid program not only reduces improper payments, but also prevents  the 
potential  for patient harm.    
States are required  to screen providers according to the risk for fraud, waste, and abuse  that 
they pose to Medicaid.  However, States face challenges in meeting requirements to screen highrisk  
providers, including conducting fingerprintbased  criminal background checks and site visits.  Previous 
OIG work found that many  States had yet to  complete fingerprintbased criminal background checks and  
site visits. OIG made recommendations to CMS to assist States with completing these activities.  CMS  
concurred with OIGs recommendations and has provided assistance to States.  However, CMS 
continues to extend the  deadline for completion of fingerprintbased criminal background checks, 
indicating that States are still working on provider enrollment.  OIG has ongoing  work to provide a status 
update on implementation of fingerprintbased criminal background checks.    
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  3 
 
 
 
  It is important that CMS ensure that States timely and fully implement these  critical safeguards, 
as even a single bad actor could defraud Medicaid of millions of dollars and endanger beneficiaries.  For 
example, in  Virginia, two individuals conspired to  defraud a special caregiver program covered under 
Medicaid by submitting timesheets for payment for services that were never  rendered.  This scheme 
took place while one of the individuals was incarcerated.  A State criminal background check  could  have 
revealed that  one of the individuals had  been convicted and might have helped  prevent this fraud 
scheme. 
In another example, in North Carolina, a  mental health facility operator submitted fraudulent 
claims to  Medicaid seeking reimbursement for services that were never provided to beneficiaries with 
developmental disabilities.  The operator submitted at least $2.5 million in fraudulent claims using 
stolen beneficiary information from a  defunct company that he  previously coowned, and received more 
than $2  million in reimbursements from Medicaid.  State site  visits could have revealed that the 
beneficiaries whose identities had been stolen from the defunct company were not actually receiving 
services. 
These cases exemplify why  OIG recommends that CMS should improve provider screening by 
working with States  to implement fingerprintbased criminal background checks and site visits for 
highrisk providers.   
It is important to know with whom Medicaid is doing business, not only to prevent improper 
payments to ineligible providers, but also to protect  beneficiaries.   OIG has raised concerns  about the 
varying standards, and in some cases, minimal vetting, for Medicaid personal care services (PCS) 
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  4 
 
 
 
  providers. This leaves the  Medicaid program vulnerable to financial fraud.  Even more concerning, it 
leaves Medicaid patients vulnerable to abuse and  neglect.  For example, an  elderly woman in Idaho was 
hospitalized to treat malnutrition and dehydration because the caregiver failed  to provide water and  
food.   Suspecting she was a victim of neglect, investigators served a search warrant and  found that she  
had been living in filth despite the  fact that Medicaid was paying a  PCS attendant to care for her 
everyday needs.  OIG continues  to recommend that CMS establish minimum Federal qualifications and 
screening  standards for  all  PCS attendants.  
For provider screening to be truly effective, States need timely, complete, and accurate data to 
efficiently and effectively  identify the providers with whom they are doing business.  To  that end, OIG  
has issued several recommendations to CMS aimed at the development of a central repository or one
stop shop with provider information that all States and Medicare can use.  This  could  reduce data
collection duplication and burdens on States and providers and improve the  completeness and accuracy  
of the data available to Medicaid, the Childrens Health Insurance  Program (CHIP), and Medicare.  The 
Presidents FY 2019 Budget request includes a proposal to consolidate provider enrollment screening for 
Medicare, Medicaid,  and CHIP.   
States are not always correctly determining Medicaid eligibility for beneficiaries.    
Correctly determining beneficiary eligibility is vital to  the  accuracy  of Medicaid payments.  To 
ensure that Medicaid makes payments  on behalf of the right beneficiary, it  is critical to determine 
whether the beneficiary receiving services is actually eligible for Medicaid.   Recent OIG audits of three 
States estimated that more than $1.2 billion in Federal Medicaid  payments have been made on behalf of 
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  5 
 
 
 
  potentially ineligible and ineligible beneficiaries.  Lack of enrollment data systems functionality was a 
key contributor to  these payments. 
OIG recently reviewed whether  certain States were correctly determining eligibility, following 
changes  made by the  Affordable Care Act (ACA) to Medicaid eligibility rules.  ACA allowed States to 
expand Medicaid eligibility for certain lowincome  adults and claim a higher  Federal Medical  Assistance 
Percentage for those who are newly eligible under the expansion.  As a  result  of States incorrectly 
determining beneficiaries eligibility, payments  made on behalf of these beneficiaries could  be incorrect, 
resulting  in the shift of costs from the  State to the Federal Government.  OIG reviews of Medicaid 
eligibility determinations by California, New York, and Kentucky  reveal that  these States did not comply 
with Federal and State requirements to  verify applicants income, citizenship,  identity,  and other 
eligibility criteria.  In total, across these  three  States, OIG estimated that more than $580 million in 
Federal Medicaid payments were made on behalf of 183,579 potentially ineligible beneficiaries, and 
about $655 million in payments  made on behalf of 413,349 ineligible beneficiariesover $1.2 billion in 
total for more than 596,000 beneficiaries.  Both human and system errors contributed to these 
payments, with some  enrollment data systems lacking the ability to (1) deny or terminate ineligible  
beneficiaries; (2) properly  redetermine  eligibility when a beneficiary aged out of an eligibility group; (3)  
maintain records, per Federal requirements, relating to eligibility  determinations and verifications; and 
(4) retrieve and use  information from other Government databases, such as those managed by  the  
Social Security Administration and Department of Homeland Security.    
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  6 
 
 
 
  To ensure  compliance  with Federal and State requirements for  determining Medicaid  
eligibility, we recommended that States ensure that enrollment data systems are able to verify 
eligibility  criteria, develop and implement written policies and  procedures to address vulnerabilities, 
and  undertake redeterminations as  appropriate.   
Detection: Complete  and  reliable national Medicaid data are necessary for effective  program  
oversight  and management and to detect bad actors.  
 
Proper oversight includes the capacity to detect problems in real time.  This can help prevent 
improper payments, protect patients, and reduce timeconsuming  and  expensive pay and chase 
activities.  Detecting problems is a shared responsibility for all actors in the Medicaid program: CMS, 
States, managed care contractors, and providers.  The lack  of national Medicaid data  hampers the  ability  
to quickly detect improper payments, fraud, waste, or quality  concerns, both within States and across 
the Nation.  Unscrupulous  providers committing  fraud or engaging in patient harm do not respect State 
boundaries. 
CMS must ensure the completeness and reliability of data  in the Transformed Medicaid Statistical 
Information System. 
Through the Balanced Budget Act of 1997, Congress mandated that States submit data to 
provide for a national Medicaid dataset.  The Transformed Medicaid Statistical  Information System 
(TMSIS) is a joint effort by CMS and the States  to address previously identified problems with national 
Medicaid claims and eligibility data.  CMSs goals for TMSIS are to improve the completeness, accuracy, 
and timeliness of Medicaid and CHIP data.   
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  7 
 
 
 
    CMS began testing TMSIS with  12 volunteer States starting in  2011 as a means to replace the 
Medicaid Statistical Information System as an enhanced national Medicaid dataset, after which CMS set  
a goal of having all States submit TMSIS data by July 2014.  CMS subsequently extended  that deadline  
several more times. After multiple missed implementation deadlines, technological problems, 
competing  priorities, and other implementation delays, as of last month 49 States and the District of 
Columbia had begun reporting data to TMSIS.    
As CMS and States continue to work toward full implementation, the completeness and 
reliability of TMSIS data must be a top priority.  A quality national Medicaid dataset is essential to 
States and the Federal Governments ability to effectively  and collaboratively administer  and ensure the 
integrity of Medicaid.   Fraud schemes affecting multiple States are  very difficult to detect without 
comprehensive national data. Localized schemes can also be harder to detect without  national data.   
Utilization or spending patterns may  not appear problematic until compared against another States 
experience or national averages.  Recognizing such  schemes in one State can alert other States  to 
indicators of fraudulent or abusive practices that may be occurring in their jurisdiction.  This information 
can lead to referrals to State law enforcement agencies like  the  State Medicaid Fraud Control Units  or 
joint investigations across State  lines.  For example, it is important for CMS  to ensure that the same data 
elements are being consistently reported across States, are uniformly interpreted across all States, and 
that those actually being reported will best inform program management and oversight.  To  accomplish 
this, OIG recommends that CMS establish a deadline for when national TMSIS data will be available 
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  8 
 
 
 
  for multiState program  integrity efforts.  Without a  fixed  deadline, some States and CMS may not 
make the full implementation of TMSIS a management priority.   
CMS Should Ensure That States Report Encounter Data for All Managed Care Entities.  
Managed care encounter data are among the most critical to be included  in TMSIS.   
Approximately 80 percent of all Medicaid beneficiaries receive  part or all of their services through 
managed  care.  State Medicaid agencies contract with managed care entities to deliver health services 
and perform  certain  administrative functions, such as data collection and reporting.  Most importantly,  
managed  care entities  are required  to report medical claims data, known as encounter data, to States 
that then report the data  to CMS via TMSIS.   Encounter data include detailed information about the  
services provided to Medicaid beneficiaries enrolled  in managed care.  Like Medicaid claims  for services 
provided on a feeforservice basis, encounter data are the primary record of services provided to  
Medicaid beneficiaries enrolled in managed care.  The Society of Actuaries calls encounter data the 
single most important analytical tool for health  plans and health programs.  Without accurate and  timely 
data, it is not possible to analyze costs, utilization or trends; evaluate benefits; or determine  the  quality 
of services being provided.    
However, previous work by OIG found that States Medicaid  managed care encounter data were 
incomplete.  Reasons that  States cited for their failure to report complete information included the 
inability  to collect encounter data from some managed care entities and limitations in the States data 
systems. CMS has made progress in addressing this problem, including regulatory requirements, 
guidance, and an ongoing data quality monitoring review of submissions of encounter data through  
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  9 
 
 
 
  TMSIS.  However, more must be done  to ensure that the data  necessary to provider program integrity 
in Medicaid managed  care are complete, accurate, and timely.  As a result, we continue to recommend  
that CMS ensure that States report  encounter data for all managed care entities.     
Enforcement: The lack of quality national Medicaid data hampers  enforcement efforts.  
 
Complete and reliable  data are critical to identifying improper payments  and to Federal and  
State  enforcement efforts to keep fraudulent and harmful providers out of Medicaid and hold bad 
actors accountable.    
National Medicaid data holds the promise of supporting and amplifying enforcement efforts.  
We have seen this potential realized in  Medicare.  For example, in July 2017, OIG and its law 
enforcement partners conducted  the  largest National Health Care Fraud Takedown in  history.   
Sophisticated data analytics were critical.  The end resultcharges against more than 400 defendants  
across 41 Federal districts for their alleged participation in health care fraud schemes involving about 
$1.3 billion in false billingsprotected the programs and sent a strong signal that theft of taxpayer 
funds will not be tolerated.  Notably, 120 defendants, including  doctors, were charged for their roles in  
prescribing and distributing opioids and other dangerous narcotics, and 295 providers were served with 
exclusion notices for conduct related to  opioid diversion and abuse.  A concurrent data brief  
underscored  the magnitude of the problem by identifying concerns about extreme use  and questionable  
prescribing of opioids in  Medicare Part D.  That is the power of data leveraged by skilled auditors, 
investigators, and analyststo protect the program  and bring bad actors to justice.   
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  10 
 
 
 
  Unfortunately, we cannot replicate this type of analysis and enforcement action in Medicaid.  
Despite CMSs progress in implementing  TMSIS, we presently lack national Medicaid data that are 
complete and comparable across States.  Decreased improper payments and savings achieved through 
improved program integrity could provide funding for increased  services and assessments of the value 
of these services to a larger number of beneficiaries.    
Conclusion 
 
OIG continues to  identify effectively  overseeing Medicaid as a top management challenge for 
HHS. Challenges include longstanding program integrity vulnerabilities, such as the limitations  in 
national Medicaid data that make it more difficult to detect and address improper payments and fraud.   
Quality national Medicaid data allow for the  transparency necessary to determine whether Medicaid is 
paying the  right provider,  the right amount, for the  right service, on behalf of the right beneficiary.  Data  
can help accelerate enforcements efforts, reduce costs, improve quality of care, and identify best 
practices.  While CMS and States have made important strides to improve Medicaid data, it remains to 
be seen whether TMSIS will live up to its potential.  Ultimately, TMSIS will be  only as useful as the  data  
it receives. This is why CMS must ensure the completeness and  reliability of TMSIS data and improve 
provider enrollment data to prevent unscrupulous providers from gaining entry to Medicaid.  Such  data  
are essential to the efficiency, effectiveness, and integrity of Medicaid regardless of how it is structured.  
As a modern  OIG, we are  using data and technology in innovative ways to enhance and target  
our oversight efforts. By  leveraging advanced data analytic techniques to detect potential vulnerabilities 
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  11 
 
 
 
  and fraud  trends, we are better  able to target our resources to those areas and individuals most in need  
of oversight. Quality Medicaid data are key to replicating these successes for Medicaid program 
integrity efforts.  While neither CMS nor State  Medicaid agencies presently have the data necessary to 
support a 21st century Medicaid program, we believe this  Committees continued oversight will help 
ensure the highquality data needed for a wellfunctioning Medicaid program.   Thank you for the  
opportunity to testify on this important topic.  
 
 
House Committee  on Oversight and Government Reform, Subcommittee on Government Operations, 
Subcommittee on Intergovernmental Affairs  
April 12, 2018  12