Testimony Before the United States House of Representatives 
Committee on Energy and Commerce: 
Subcommittee on Oversight and Investigations 
 
 
 
 
Medicaid Oversight:   
Existing Problems and Ways to Strengthen the Program 
 
Testimony of: 
 
Ann Maxwell 
Assistant Inspector General  
Office of Evaluation and Inspections 
Office of Inspector General  
Department of Health and Human Services 
 
 
 
 
January 31, 2017 
10:00 a.m. 
Location:  Rayburn House Office Building, Room 2123 
   
      Testimony of: 
Ann Maxwell 
Assistant Inspector General for Evaluation and Inspections 
   Office of Inspector General, U.S. Department of Health and Human Services 
 
Good morning, Chairman Murphy, Ranking Member DeGette, and other distinguished Members 
of the Subcommittee.  I am Ann Maxwell, Assistant Inspector General for Evaluation and Inspections in 
the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS or 
Department).  Thank you for the opportunity to appear before you to discuss existing fraud, waste, and 
abuse in Medicaid and ways to strengthen the program. 
Created by statute in 1976, OIG remains a nonpartisan body of evaluators, auditors and 
investigators, deployed across the nation, to help assess and protect the integrity of Federal health and 
human services programs enacted by Congress.  We remain committed to working with our 
stakeholders to achieve our shared goals of protecting patients and the taxpayer-funded 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 of vulnerable individuals and its fiscal impacts on Federal and State spending.  As of 
September 2016, more than 74 million individuals were enrolled in Medicaid, and total Medicaid 
spending for fiscal year (FY) 2016 was $574 billion.  Thus, achieving this goal is critically important.  OIG 
has consistently identified effective administration and strengthening the program integrity of Medicaid 
as among the top management challenges facing HHS.    
House Committee on Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  1 
 
 
 
  The Office of Inspector Generals Strategy for Medicaid Oversight 
 
OIG advances its core mission of protecting the integrity of HHS programs, including Medicaid, 
and the people they serve by working to prevent and detect fraud, waste, and abuse.  OIG offers 
recommendations to improve program integrity and the efficiency and effectiveness of programs and 
operations.  When misconduct is identified, OIG takes appropriate enforcement action.   
We accomplish this by focusing on the core program integrity principles of prevention, 
detection, and enforcement.  On the basis of our experience overseeing Medicaid and other health and 
human services programs in the Departments $1 trillion portfolio, we know that these programs can 
and should be designed and operated to minimize fraud, waste, and abuse by following these same 
principles.  Programs, and those who are accountable for their success, need effective tools (i) to 
prevent fraud, waste, and abuse from occurring in the first instance  such as effective gatekeeping to 
prevent untrustworthy individuals and entities from accessing Federal funds, risk assessment 
capabilities, and sound management practices; (ii) to detect fraud, waste, and abuse  through access to 
and effective use of high-quality data and sharing of information about potential problems; and (iii) to 
address problems that are detected  such as through enforcement or corrective actions. 
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 Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  2 
 
 
 
  OIG operationalizes our mission by conducting audits, evaluations, and investigations, 
and using data analytics to identify problems or program risks; recommending improvements 
to address problems and prevent their recurrence; holding wrongdoers accountable; and 
providing guidance and tools to help well-intended participants in HHS programs to comply 
with the rules.  OIG has an additional, unique role in Medicaid program integrity.  We 
administer and oversee Federal grants to State Medicaid Fraud Control Units (MFCU) and 
assess each MFCU's performance and compliance with Federal requirements.  MFCUs 
investigate and prosecute Medicaid provider fraud and patient abuse or neglect under State 
law and receive referrals of credible allegations of fraud from State Medicaid agencies.  OIG 
investigators often partner with MFCUs on joint investigations of Medicaid fraud. 
Medicaids Existing Program Integrity Challenges and 
Recommendations for Improvement 
 
For many years, OIG has designated the Medicaid program a Top Management Challenge.   Our 
evaluations, audits, and investigations have consistently found that Medicaid and the patients that rely 
on it are not as protected as they could be from fraudulent institutions, agencies and providers that 
intend to defraud the program, and potentially harm patients.  Beyond OIG, the Centers for Medicare & 
Medicaid Services (CMS), State Medicaid agencies, and managed care contractors have an essential 
responsibility to ensure Medicaid program integrity.   
House Committee on Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  3 
 
 
 
  Today, I would like to focus on recent challenges facing Medicaid and ways we believe States, 
CMS, and providers could address these challenges.  I will frame my testimony by the core program 
integrity principles of prevention, detection, and enforcement.   
Prevention:
  Preventing bad actors from participating in Medicaid is critical, but Medicaid 
programs sometimes fail to do so effectively 
 
States have not fully enacted enhanced provider screening.  The most effective way to prevent fraud is 
to keep bad actors out of the program to begin with.  However, States are not screening high-risk 
providers with all of the tools at their disposal.  We found that in 2015, 4 years after they were 
required to do so, 37 States reported that they were not conducting fingerprint-based criminal 
background checks.  In addition, 11 States were not conducting site visits, which were also required.  
This leaves Medicaid vulnerable to providers who may be ineligible or who may defraud the program 
and harm patients. 
OIG has also raised concerns about 
the varying standards, and in some cases  Personal Care Services Patient Harm 
minimal vetting, for Medicaid personal care  In Illinois, a concerned neighbor found a 
Medicaid beneficiary in an incoherent state.  
services providers.  This leaves the Medicaid 
The beneficiary was ultimately hospitalized 
for multiple days as a result of neglect.  An 
program vulnerable to financial fraud.  Even 
investigation revealed that the beneficiarys 
more concerning, it leaves Medicaid  personal care attendant had not been there 
in over a week, yet the attendant had been 
patients vulnerable to abuse and neglect  submitting claims to the Illinois Home 
Services Program.   
and puts patients and the program at risk 
House Committee on Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  4 
 
 
 
  from individuals who should not be trusted to render care.  OIG and the MFCUs have uncovered a 
disturbingly high number of cases of fraud and abuse by Medicaid personal care services providers.  
While it is important to give patients the flexibility to receive care in their homes, CMS and States must 
to do more to balance this goal with the real risks of harm to patients and potential fraud.  
States also are not collecting and maintaining accurate ownership information about the 
providers they are paying.  For example, when we compared Medicaid and Medicare ownership data for 
the same provider, Medicaid had 63 owners listed and Medicares database had 14 owners listed.  This 
same provider reported to OIG that it had 12 owners (and most of the 12 owners did not match those 
listed with Medicaid or Medicare).  OIG has recommended that CMS work to develop an integrated 
database with provider information that Medicare and all State Medicaid programs could use.  This 
could provide a one-stop shop for Federal and State program officials and for providers  reducing 
burden and duplication in reporting, verifying, and updating information.  This also would provide the 
opportunity for more efficient and effective oversight to ensure that all programs have accurate and 
complete data to support fraud prevention and detection. 
 
Program Integrity Principle:  Know who you are doing business with and refuse business with 
  bad actors. 
  OIG Recommendations:  CMS should improve provider screening by working with States to 
implement fingerprint-based criminal background checks for high-risk providers, conduct site 
 
visits, and maintain accurate provider ownership information. 
 
 
Improper payment rates indicate the need to better protect Medicaid.  Estimated Medicaid improper 
payments totaled $29.1 billion in FY 2015.  To comply with the Improper Payments Elimination and 
House Committee on Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  5 
 
 
 
  Recovery Act of 2010, an agency must report an improper payment error rate that is at or less than the 
target error rate established for the fiscal year.  The Medicaid target improper payment rate for FY 2015 
was 6.7 percent.  HHS did not meet this requirement and had an estimated improper payment rate of 
9.8 percent.   
 
Program Integrity Principle:  Implement effective safeguards and sound management to prevent 
  waste. 
 
OIG Recommendation:  HHS should work to improve payment accuracy.      
 
 
Detection:
  Data is an essential tool for detecting fraud, waste, and abuse; however, national 
Medicaid data has deficiencies that hinder timely and accurate detection, and CMS and States do 
not always use data effectively 
 
Proper oversight includes the capacity to detect problems in real time.  This can help prevent 
inappropriate payments, protect patients, and reduce time-consuming 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.   
CMS does not have complete and accurate data needed to effectively oversee the Medicaid program.  
Without accurate claims data, adequate oversight of the Medicaid program is compromised.  OIG has a 
history of work that points to the incompleteness and inaccuracy of CMSs national Medicaid database, 
the Transformed Medicaid Statistical Information System (T-MSIS).  Without a national dataset, CMS is 
House Committee on Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  6 
 
 
 
  unable to identify nationwide trends and vulnerabilities.  This hampers program integrity efforts 
because fraud does not respect State boundaries.   
 
Program Integrity Principle:  Complete, accurate, and relevant data are essential to program 
integrity. 
 
OIG Recommendations:  CMS should establish a deadline for when national T-MSIS data will be 
 
available for multi-State program integrity efforts, and CMS and States should improve the 
  accuracy of information about which providers are participating in Medicaid managed care. 
   
Inaccurate information about providers in Medicaid managed care plans inhibits fraud detection and 
patient care.  Accurate rosters of providers participating in managed care plans are essential for State 
and Federal oversight to detect potential fraud, waste, and abuse, as well as for patients to obtain 
health care.  However, we found vulnerabilities in managed care organizations data regarding their 
providers.  Specifically, when we asked managed care organizations for a list of their providers, we 
found that 38 percent of them were not participating in the plan at the location listed in the States 
Medicaid provider directory.   
 
Program Integrity Principle:  Complete and accurate information about providers is essential to 
  program integrity. 
  OIG Recommendation:  CMS should work with States to improve the accuracy of plan information 
and assess the number of providers offering care. 
 
 
 
 
States are not ensuring that providers detect and repay overpayments in patient accounts.  States 
must rely on providers to review credit balances in patients accounts to detect overpayments and 
return them to the State.  Medicaid credit balances occur when the reimbursement a provider receives 
House Committee on Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  7 
 
 
 
  for  services  rendered  to  a  Medicaid  beneficiary  exceeds  the  charges  billed.   We  found  providers  
sometimes  failed  to  reconcile  patient  records  with  credit  balances  and  report  and  return  the  associated  
Medicaid  overpayments  to  State  Medicaid  agencies.    
 
Program  Integrity  Principle:   Detection  of  fraud,  waste,  and  abuse  is  a  shared  responsibility.   
 
OIG  Recommendation:   CMS  should  clarify  that  providers  are  expected  to  exercise  reasonable  
  diligence  to  identify,  report,  and  return  overpayments.  
 
CMS  and  States  could  better  use  data  analytics  to  detect  providers  with  questionable  billing  patterns  
that  may  indicate  fraud  or  harm.   OIG  has  a  history  of  work  identifying  providers  who  are  outliers  when  
compared  to  their  peers  either  in  terms  of  the  number  of  patients  or  the  amount  billed.   We  refer  to  
them  as  questionable  billers.  While  there  is  no  clear  evidence  of  fraud  or  abuse,  patterns  in  the  
providers  behavior  suggest  a  strong  suspicion  of  fraud,  waste,  or  abuse.   One  example  of  OIGs  
questionablebilling  work  is  our  evaluation  of  pediatric  dentists  in  California.   We  found  that  335  dental  
providers    representing  8  percent  of  Californias  general  dentists  and  orthodontists    either  billed  for  
an  extremely  large  number  of  services  or  provided  certain  services  to  an  extremely  large  number  of  
children.   These  services  included  pulpotomies    often  referred  to  as  baby  root  canals    and  
extractions.   We  referred  those  providers  to  the  State  and  CMS  for  followup.   CMS  and  States  could  do  
more  to  conduct  similar  analyses  to  OIGs  to  detect  and  followup  on  questionable  billing  that  may  signal  
fraud  or  abuse,  especially  where  there  is  a  risk  of  patient  harm.  
Program  Integrity  Principle:   Use  data  analytics  to  detect  potential  fraud  and  patient  harm  and  
  target  oversight.  
  OIG  Recommendation:   CMS  and  States  should  increase  monitoring  of  dental  providers  to  
address  the  questionable  billing  detected  and  to  safeguard  against  future  fraud.  
House  Committee  on  Energy  and  Commerce  
Subcommittee  on  Oversight  and  Investigations   
Hearing    January  31,  2017   8  
 
 
 
   
Enforcement:
  Federal and State enforcement efforts have yielded billions of dollars in 
recovered funds and held thousands of wrongdoers accountable; however, CMS and States are 
not taking full advantage of their administrative enforcement authorities; and MFCUs lack a key 
authority 
 
OIG works closely with our Federal 
and State partners to investigate and 
Home Health Fraud   
remediate fraud and abuse.  In FY 2016, OIG  In a joint investigation with the District of 
Columbia MFCU, two owners of a home 
investigative actions related to Medicaid 
care agency were sentenced to 10 years in 
prison for health care fraud, money 
resulted in 312 indictments, 348 criminal 
laundering, and other charges stemming 
actions, and 308 civil actions.  These  from a scheme in which they and others 
defrauded the District of Columbia Medicaid 
Medicaid cases, some of which also involved 
program of over $80 million. 
Medicare, resulted in almost $3 billion in   
expected recoveries.  We worked most of these cases jointly with MFCUs.  OIG also excluded 3,635   
providers and entities from Federal health programs in FY 2016. 
State MFCU investigations have a significant impact on Medicaid.  In FY 2015, MFCUs collectively 
obtained 1,889 indictments, 1,553 convictions, and monetary recoveries of nearly $744 million.  They 
also make program recommendations to their State Medicaid agencies on the basis of the vulnerabilities 
they uncover, thus also helping to prevent future fraud.  However, more could be done by expanding a 
key authority for MFCUs to investigate patient abuse.   
House Committee on Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  9 
 
 
 
  State Medicaid Fraud Control Units lack the authority to investigate and prosecute patient abuse or 
neglect in noninstitutional settings.  While MFCUs can investigate and prosecute patient abuse or 
neglect in Medicaid-funded health care facilities and in board-and-care facilities, they do not have 
authority to pursue similar cases that occur in a home- or community-based setting, such as abuse or 
neglect by a personal care services attendant or in a clinicians office.  MFCUs must instead refer any 
such complaints to local law enforcement, which may have less expertise in investigating patient abuse 
and neglect than MFCU staff.  The current limitation on MFCU authority was logical when the program 
was established in 1978, at a time when Medicaid services were typically provided in an institutional 
setting. But the limitation has become outmoded as the delivery and payment for health services has 
increasingly shifted to in-home and community-based settings. 
 
Program Integrity Principle:  Ensure that enforcement bodies have sufficient authority to protect 
  patients and the program. 
  OIG Recommendation:  MFCUs should be granted the authority to investigate and prosecute 
patient abuse or neglect in home- and community-based settings.   
 
 
 
 
Federal and State enforcement efforts are necessary to keep fraudulent and harmful providers 
out of the program and to hold wrong-doers accountable.  OIG has identified areas in which CMS and 
State Medicaid agencies are not taking full advantage of their administrative enforcement authorities. 
Medicaid providers terminated from one State continued participating in other States.  Failure to share 
data on terminated providers across States is inefficient, and worse, it puts programs and patients at 
unnecessary risk of fraud or harm.  CMS established a database meant to assist State Medicaid agencies 
House Committee on Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  10 
 
 
 
  in denying enrollment to providers who have been terminated for cause from Medicare or by another 
State Medicaid agency.  Yet we found that 12 percent of providers who were terminated for cause from 
State Medicaid agencies in 2011 continued to participate in other State Medicaid agencies as of January 
2012, many continued to participate as late as January 2014.  Thanks to the support of your 
Subcommittee, and the Committee at large, beginning in 2018, State Medicaid agencies will be required 
to report to the terminated-provider database so we hope to see improvements in this area. 
States did not always suspend Medicaid payments to providers suspected of fraud.  When program 
officials have credible allegations of fraud, swift response is imperative.  When we reviewed use of 
payment suspensions by several State Medicaid agencies, we found that some did not suspend Medicaid 
payments to all providers with credible allegations of fraud.  For example, of the 81 providers with a 
credible allegation of fraud in Washington, the State Medicaid agency suspended Medicaid payments to 
only 33 of them.  
 
Program Integrity Principle:  All appropriate steps should be taken to protect the program. 
 
OIG Recommendation:  States should suspend Medicaid payments to providers when there are 
credible allegations of fraud.   
 
 
Conclusion:  Strong Program Integrity Will Always Be Critical  
 
OIG has documented significant challenges in protecting Federal and State Medicaid dollars 
from fraud, waste, and abuse, and vulnerable populations from harm.  In response, OIG and its State 
and Federal partners have focused their resources on Medicaid fraud, and OIG has made numerous 
House Committee on Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  11 
 
 
 
  recommendations for strengthening Medicaid program integrity.  Recognizing that Medicaid program 
integrity is a shared responsibility, OIG has made recommendations that offer suggestions for 
improvements to CMS and States, as well as the down-stream managed care entities that are often the 
first line of defense.  
Regardless of the financial arrangements between the Federal and State governments, the 
Medicaid program can and should be designed and operated to minimize fraud, waste, and abuse by 
following core program integrity principles.  Better protection of Medicaid now and in the future 
requires strengthening the ability to prevent fraud, waste, and abuse; detecting it quickly when it does 
occur; and swiftly holding wrongdoers accountable.  It also requires continuous vigilance to keep up 
with changes in the environment and constantly evolving fraud schemes.   
Thank you, again, for inviting OIG to speak with you on strengthening Medicaid program 
integrity.  We appreciate the Subcommittees interest.  Continued emphasis on program integrity will 
help to protect Medicaid patients from patient harm and ensure that taxpayer money is appropriately 
spent.   
We hope that our work and this testimony will assist you in your oversight efforts to protect 
Medicaid patients and all taxpayers from fraud, waste, and abuse. 
House Committee on Energy and Commerce 
Subcommittee on Oversight and Investigations  
Hearing  January 31, 2017  12