U.S. Department of Justice U.S. Department of Health and Human Services
Office of the Attorney General Office of the Secretary
 
Annual Report of the
   
Departments of Health and
Human Services and Justice
Health Care Fraud and Abuse 
Control Program FY 2020 The Department of Health and Human Services 
and 
The Department of Justice 
Health Care Fraud and Abuse Control Program 
Annual Report for Fiscal Year 2020 
July 2021   
 
 
 
 
  TABLE OF CONTENTS 
I. EXECUTIVE SUMMARY 1 
II. STATUTORY BACKGROUND 3 
III. Program Results and Accomplishments 5 
Monetary Results 5 
Expenditures  7 
Overall Recoveries  8 
Strike Force  8 
Opioid Fraud and Abuse Detection Unit  10 
Health Care Fraud Prevention and Enforcement Action Team  11 
(HEAT) Health Care Fraud Prevention Partnership (HFPP)  12 
COVID-19 Pandemic-Related Enforcement  13 
Highlights of Significant Criminal and Civil Investigations  14 
IV. DEPARTMENT OF HEALTH AND HUMAN SERVICES 31 
Office of Inspector General  31 
Centers for Medicare & Medicaid Services  59 
Administration for Community Living  83 
Office of the General Counsel  87 
Food and Drug Administration Pharmaceutical Fraud Program  91 
V. DEPARTMENT OF JUSTICE 94 
United States Attorneys  94 
Civil Division  96 
Criminal Division  101 
Civil Rights Division  106 
Office of the Inspector General  110 
VI. APPENDIX 111 
Federal Bureau of Investigation  111 
Total Health Care Fraud and Abuse Control Resources  118 
VII. Glossary of Common Terms 119 
GENERAL NOTE 
A ll years are fiscal years unless otherwise 
stated in the text.   
EXECUTIVE SUMMARY 
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established a national 
Health Care Fraud and Abuse Control Program (HCFAC or the Program) under the joint 
direction of the Attorney General and the Secretary of the Department of Health and Human 
Services (HHS),1 acting through the Inspector General, designed to coordinate federal, state, and 
local law enforcement activities with respect to health care fraud and abuse.  In its 24th year of 
operation, the Programs continued success confirms the soundness of a collaborative approach 
to identify and prosecute the most egregious instances of health care fraud, to prevent future 
fraud and abuse, and to protect program beneficiaries. 
During Fiscal Year (FY) 2020, the Federal Government won or negotiated more than $1.8 billion 
in health care fraud judgments and settlements,2 in addition to other health care administrative 
impositions.  Because of these efforts, as well as those of preceding years, almost $3.1 billion 
was returned to the Federal Government or paid to private persons in FY 2020.  Of this $3.1 
billion, the Medicare Trust Funds3 received transfers of approximately $2.1 billion during this 
period, in addition to the $128.2 million in Federal Medicaid money that was similarly 
transferred separately to the Treasury due to these efforts.  
Enforcement Actions 
In FY 2020, the Department of Justice (DOJ) opened 1,148 new criminal health care fraud 
investigations.  Federal prosecutors filed criminal charges in 412 cases involving 679 defendants.  
A total of 440 defendants were convicted of health care fraud related crimes during the year.  
Also, in FY 2020, DOJ opened 1,079 new civil health care fraud investigations and had 1,498 
civil health care fraud matters pending at the end of the fiscal year.  Federal Bureau of 
Investigation (FBI) investigative efforts resulted in over 407 operational disruptions of criminal 
fraud organizations and the dismantlement of the criminal hierarchy of more than 101 health care 
fraud criminal enterprises.  
In FY 2020, investigations conducted by HHSs Office of Inspector General (HHS-OIG) resulted 
in 578 criminal actions against individuals or entities that engaged in crimes related to Medicare 
and Medicaid, and 781 civil actions, which include false claims and unjust-enrichment lawsuits 
filed in federal district court, civil monetary penalties (CMP) settlements, and administrative 
recoveries related to provider self-disclosure matters.  HHS-OIG also excluded 2,148 individuals 
and entities from participation in Medicare, Medicaid, and other federal health care programs.  
Among these were exclusions based on criminal convictions for crimes related to Medicare and 
Medicaid (891) or to other health care programs (316), for patient abuse or neglect (230), and as 
 
1 Hereafter, referred to as the Secretary. 
2 The amount reported as won or negotiated only reflects the federal recoveries and therefore does not reflect state 
Medicaid monies recovered as part of any global federal-state settlements. 
3 The Medicare Trust Funds is the collective term for the Medicare Hospital Insurance (Part A) Trust Fund and the 
Supplemental Medical Insurance (Part B) Trust Fund. 
1 
   
a result of state health care licensure revocations (509).  HHS-OIG also issued numerous audits 
and evaluations with recommendations that, when implemented, would correct program 
vulnerabilities and save Medicare and Medicaid funds. 
Sequestration Impact 
Due to the FY 2020 sequestration of mandatory funding, DOJ, FBI, HHS, and HHS-OIG had 
fewer resources to fight fraud and abuse of Medicare, Medicaid, and other health care programs.4  
A total of $11.0 million was sequestered from the HCFAC program in FY 2020, for a combined 
total of $150.6 million in mandatory funds sequestered in the past eight years.  Including funds 
sequestered from the FBI ($70.0 million in the past eight years), $220.6 million has been 
sequestered from mandatory HCFAC funds since FY 2013. 
   
 
4 Section 3709 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Public Law (P.L.) 116-
136) suspended Medicare sequestration from May 1, 2020 through December 31, 2020; the Consolidated 
Appropriations Act, 2021 (P. L. 116-260) extended this suspension to March 31, 2021; and an extension of the 
Medicare sequester moratorium until December 31, 2021 was signed by President Joe Biden in April 2021. This 
sequester adjustment was meant to provide an economic boost to Medicare providers treating patients during the 
COVID-19 public health emergency (PHE) and has resulted in additional funding for the HCFAC program.  A pro-
rated sequester suspension was applied to resources from which the sequester reduction is taken at the beginning of 
the fiscal year, so the FY 2020 sequester amount reflects the period from May 1, 2020 to September 30, 2020.  The 
FY 2021 sequester amount will reflect the period from October 1, 2020 to December 31, 2021. 
2 
   
STATUTORY BACKGROUND 
The Annual Report of the Attorney General and the Secretary detailing expenditures and 
revenues under the Health Care Fraud and Abuse Control Program for fiscal year 2020 is 
provided as required by Section 1817(k)(5) of the Social Security Act.  
The Social Security Act Section 1128C(a), as established by HIPAA (P.L. 104-191, or the Act), 
created the Health Care Fraud and Abuse Control Program, a far-reaching program to combat 
fraud and abuse in health care, including both public and private health plans.   
As was the case before HIPAA, amounts paid to Medicare in restitution or for compensatory 
damages must be deposited in the Medicare Trust Funds.  The Act requires that an amount 
equaling recoveries from health care investigations  including criminal fines, forfeitures, civil 
settlements and judgments, and administrative penalties  also be deposited in the Trust Funds.   
The Act appropriates monies from the Medicare Hospital Insurance Trust Fund to an expenditure 
account, called the Health Care Fraud and Abuse Control Account (the Account), in amounts that 
the Secretary and Attorney General jointly certify as necessary to finance anti-fraud activities.  
The maximum amounts available for certification are specified in the Act.  Certain portions of 
these sums are to be used only for activities of the HHS-OIG, with respect to the Medicare and 
Medicaid programs.  In FY 2006, the Tax Relief and Health Care Act (TRHCA) (P.L 109-432, 
303) amended the Act so that funds allotted from the Account are available until expended.  
TRHCA also allowed for yearly increases to the Account based on the change in the consumer 
price index for all urban consumers (all items, United States city average) (CPI-U) over the 
previous fiscal year for fiscal years 2007 through 2010.5  In FY 2010, the Patient Protection and 
Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, 
collectively referred to as the Affordable Care Act (P.L. 111-148, ACA) extended permanently 
the yearly increases to the Account based upon the change in the consumer price index for all 
urban consumers, or CPI-U. 
In FY 2020, the Secretary and the Attorney General certified $308.7 million in mandatory 
funding to the Account after accounting for sequester reductions of $11.0 million to the total 
appropriation.  Additionally, Congress appropriated $786.0 million in discretionary funding.  A 
detailed breakdown of the allocation of these funds is set forth later in this report.  HCFAC 
appropriations generally supplement the direct appropriations of HHS that are devoted to health 
care fraud enforcement and have supported almost three-fourths of DOJs health care fraud 
funding and over three-fourths of HHS-OIGs appropriated budget in FY 2020.  (Separately, the 
FBI, which is discussed in the Appendix, received $145.1 million from HIPAA, after accounting 
for $5.2 million in mandatory sequester reductions).  Under the joint direction of the Attorney 
General and the Secretary, the Programs goals are: 
 
5 The CPI-U adjustment in TRHCA did not apply to the Medicare Integrity Program (MIP).  Section 6402 of the 
ACA indexed Medicare Integrity Program funding to inflation starting in FY 2010. 
3 
   
(1) To coordinate federal, state, and local law enforcement efforts relating to health care 
fraud and abuse with respect to health plans; 
(2) To conduct investigations, audits, inspections, and evaluations relating to the delivery of 
and payment for health care in the United States; 
(3) To facilitate enforcement of all applicable remedies for such fraud; and 
(4) To provide education and guidance regarding complying with current health care law. 
Additionally, the Act requires the Attorney General and the Secretary to submit a joint annual 
report to the Congress that identifies both: 
(1) The amounts appropriated to the Trust Funds for the previous fiscal year under various 
categories and the source of such amounts; and 
(2) The amounts appropriated from the Trust Funds for such year for use by the Attorney 
General and the Secretary and the justification for the expenditure of such amounts. 
This annual report fulfills the above statutory requirements.   
Finally, this report fulfills the requirement in the annual discretionary HCFAC appropriation 
(P.L.116-94, Further Consolidated Appropriations Act, 2020) that this report include measures 
of the operational efficiency and impact on fraud, waste, and abuse in the Medicare, Medicaid, 
and CHIP programs for the funds provided by this appropriation. 
   
4 
  PROGRAM RESULTS AND ACCOMPLISHMENTS  
As required by the Act, HHS and DOJ must detail in this Annual Report the amounts deposited 
to the Medicare Trust Funds and the source of such deposits.  In FY 2020, about $3.1 billion was 
deposited with the Department of the Treasury (Treasury) and Centers for Medicare & Medicaid 
Services (CMS), transferred to other federal agencies administering health care programs, or paid 
to private persons during the fiscal year.  Monetary results from these transfers and deposits are 
provided in the table below:  
Monetary Results:  Total Transfers / Deposits by Recipient FY 2020 
Department of the Treasury  Total Transfers / Deposits by 
Recipient FY 2020 
Deposits to the Medicare Trust Fund, as required by HIPAA: 
Gifts and Bequests  $50 
Amount Equal to Criminal Fines  1,542,396 
Civil Monetary Penalties  27,687,424 
Asset Forfeiture  701,421,449 
Penalties and Multiple Damages  836,940,628 
Subtotal  $1,567,591,948 
Centers for Medicare and Medicaid Services  Total Transfers / Deposits by 
Recipient FY 2020
HHS/OIG Audit Disallowances:  RecoveredMedicare  31,668,839 
Restitution/Compensatory Damages*  508,750,907 
Subtotal   $540,419,746 
Total Transferred to the Medicare Trust Funds  $2,108,011,694 
Restitution/Compensatory Damages to Federal Agencies  Total Transfers / Deposits by 
Recipient FY 2020
TRICARE  $89,475,247 
HHS/OIG  27,740,068 
Office of Personnel Management  21,154,377 
Veterans Benefits Administration  15,040,676 
DOJ/Drug Enforcement Administration  1,965,122 
Other Agencies  7,994,444 
Subtotal   $163,369,933 
Centers for Medicare and Medicaid Services  Total Transfers / Deposits by 
Recipient FY 2020
Federal Share of Medicaid  128,190,320 
HHS/OIG Audit Disallowances:  RecoveredMedicaid  280,549,727 
Subtotal  $408,740,047 
Total  $572,109,980 
Relators' Payments**  $395,713,010 
GRAND TOTAL MONETARY RESULTS***  $3,075,834,684 
*Restitution, compensatory damages, and recovered audit disallowances include returns to both the Medicare
Hospital Insurance (Part A) Trust Fund and the Supplemental Medical Insurance (Part B) Trust Fund.
**These are funds awarded to private persons who file suits on behalf of the Federal Government under the qui tam
(whistleblower) provisions of the False Claims Act, 31 U.S.C.  3730(b).
***State funds are also collected on behalf of state Medicaid programs; only the Federal share of Medicaid funds
transferred to CMS are represented here.
5   
The above transfers include certain collections, or amounts equal to certain collections, required 
by HIPAA to be deposited directly into the Medicare Trust Funds.  These amounts include: 
(1) Gifts and bequests made unconditionally to the Trust Funds, for the benefit of the 
Account or any activity financed through the Account; 
(2) Criminal fines recovered in cases involving a federal health care offense, including 
collections under section 24(a) of Title 18, United States Code (relating to health care 
fraud); 
(3) Civil monetary penalties in cases involving a federal health care offense; 
(4) Amounts resulting from the forfeiture of property by reason of a federal health care 
offense, including collections under section 982(a)(7) of Title 18, United States Code; 
and 
(5) Penalties and damages obtained and otherwise creditable to miscellaneous receipts of the 
general fund of the Treasury obtained under sections 3729 through 3733 of Title 31, 
United States Code (known as the False Claims Act, or FCA), in cases involving claims 
related to the provision of health care items and services (other than funds awarded to a 
relator, for restitution, or otherwise authorized by law). 
6 
  Expenditures 
In the 24th year of operation, the Secretary and the Attorney General certified $308.7 million in 
mandatory funding as necessary for the Program, after accounting for mandatory sequester 
reductions of $11.0 million as required by law.  Additionally, Congress appropriated $786.0 
million in discretionary funding.  See allocation by recipient below: 
FY 2020 ALLOCATION OF HCFAC APPROPRIATION 
Mandatory  Discretionary  Funds  Total 
Organization 
Allocation6  Allocation  Sequestered7  Allocation 
Department of Health and 
Human Services 
Office of Inspector General  $233,403,225  $93,000,000  (7,300,773)  $319,102,452 
Office of the General Counsel  7,427,491  0  0  7,427,491 
Administration for Community 
0  18,000,000  0  18,000,000 
Living 
Food and Drug Administration  6,067,333  0  0  6,067,333 
Centers for Medicare & Medicaid 
0  592,000,000  0  592,000,000 
Services 
Assistant Secretary for Planning 
and Evaluation  5,000,000  0  0  5,000,000 
Unallocated Funding  1,396,361  0  (1,396,361)  0 
Subtotal  $253,294,410  $703,000,000  ($8,697,134)  $947,597,276 
Department of Justice  Mandatory Allocation6  Discretionary Allocation  Funds Sequestered7  Total Allocation 
United States Attorneys  $33,878,794  $29,046,805  $0  $62,925,599 
Civil Division8  18,000,000  20,973,369  0  38,973,369 
Criminal Division  9,189,872  19,064,598  0  28,254,470 
Civil Rights Division  2,953,087  5,436,000  0  8,389,087 
Justice Management Division  86,735  0  0  86,735 
Federal Bureau of Investigation  0  7,729,228  0  7,729,228 
Office of the Inspector General  0  750,000  0  750,000 
Unallocated Funding  2,279,502  0  (2,279,502)  0 
Subtotal  $66,387,990  $83,000,000  ($2,279,502)  $147,108,488 
TOTAL  $319,682,400  $786,000,000  ($10,976,636)  $1,094,705,764 
6 As of FY 2007, mandatory funds are available until expended.  Discretionary funds are available for two years. 
7 The sequester amounts reflect the post-sequester suspension because of the CARES Act. 
8 The Elder Justice Initiative, managed by the Civil Division, is included in the Civil Division figures.   
7   
Overall Recoveries 
During the fiscal year, the Federal Government won or negotiated more than $1.8 billion in 
judgments and settlements and attained additional administrative impositions in health care fraud 
cases and proceedings.  Because of these efforts, as well as those of preceding years, almost $3.1 
billion was returned to the Federal Government or private persons.  Of this $3.1 billion, the 
Medicare Trust Funds received transfers of approximately $2.1 billion during this period; 
another $128.2 million in Federal Medicaid money was transferred to the Treasury separately 
due to these efforts.9 
In addition to these enforcement actions, numerous audits, evaluations, and other coordinated 
efforts yielded recoveries of overpaid funds and prompted changes in federal health care 
programs that reduce vulnerability to fraud.   
The return on investment (ROI) for the HCFAC program over the last three years (20182020) is 
$4.30 returned for every $1.00 expended.  Because the annual ROI can vary from year to year 
depending on the number and type of cases that are settled or adjudicated during that year, DOJ 
and HHS use a three-year rolling average ROI for results contained in the report.  Additional 
information on how the ROI is calculated may be found in the Appendix. 
It is important to note that the ROI does not capture the full impact of the results of the Program.  
For example, criminal action, from either a search warrant, an indictment, or an arrest, prevents 
the defendant from continuing to defraud federal health care programs.  Therefore, this ROI 
calculation relies on actual recoveries and collections, and does not represent the effect of 
preventing future fraudulent payments.  Further, the threat of oversight alone can have a sentinel 
impact that prevents future bad actors from defrauding Medicaid, Medicare, and other federal 
health care benefit programs.  
Strike Force   
Health Care Fraud Strike Force Teams (Strike Force) harness data analytics and the combined 
resources of Federal, State, and local law enforcement entities to prosecute complex health care 
fraud matters and cases involving the illegal prescription, distribution, and diversion of opioids.  
The Strike Force is comprised of inter-agency teams made up of investigators and prosecutors 
that focus on the worst offenders in regions with the highest known concentration of fraudulent 
activities.  The Strike Force uses advanced data analysis techniques to identify aberrant billing 
levels in health care fraud hot spotscities with high levels of billing fraudand target 
suspicious billing patterns, as well as emerging schemes and schemes that migrate from one 
community to another.   
 
9 Note that some of the judgments, settlements, and administrative actions that occurred in FY 2020 will result in 
transfers in future years, just as some of the transfers in FY 2020 are attributable to actions from prior years. 
8 
  First established in March 2007, Strike Force teams currently operate in 24 districts across the 
United States, including, but not limited to: Los Angeles, California; Miami and Tampa/Orlando, 
Florida; Chicago, Illinois; Ft. Mitchell, Kentucky; Baton Rouge and New Orleans, Louisiana; 
Detroit, Michigan; Brooklyn, New York; Newark, New Jersey / Philadelphia, Pennsylvania; 
Nashville, Tennessee; and Houston, San Antonio, and Dallas, Texas; along with the National 
Rapid Response Strike Force (NRRSF) located in Washington, D.C.     
In 2020, Acting Assistant Attorney General Brian Rabbitt announced the creation of the NRRSF, 
comprised of dedicated prosecutors who target large-scale and multi-jurisdictional schemes 
occurring across the country.  This new Strike Forces cases have included an alleged $1.4 
billion billing fraud scheme perpetrated through a series of rural hospitals, brought in 
conjunction with the Middle District of Florida; prosecutions of laboratory owners and operators 
for kickback offenses, responsible for alleged losses in the hundreds of millions; and forms of 
fraud exploiting the coronavirus disease 2019 (COVID-19) pandemic.  Activities have also 
expanded to include significant involvement from State Medicaid Fraud Control Units (MFCUs), 
which play a critical role in the many fraud cases involving both Medicare and Medicaid. 
Each Strike Force team brings the investigative and data analytic resources of the FBI and HHS-
OIG and the prosecutorial resources of the Criminal Divisions Fraud Section and the U.S. 
Attorneys Offices (USAOs) to analyze data obtained from a wide variety of sources including 
CMS and bring cases in federal district court.  During FY 2020, Strike Force accomplishments in 
the areas noted above, as well as USAO accomplishments included:10 
 Filing 263 indictments, information, and complaints involving charges against 405
defendants who allegedly billed federal health care programs and private insurers more
than $4.7 billion;
 Obtaining 254 guilty pleas and trying 24 jury trials, with guilty verdicts against 30
defendants; and
 Securing imprisonment for 254 sentenced defendants, with an average of nearly 42
months of incarceration per sentenced defendant.
Since its inception, Strike Force prosecutors filed more than 2,100 cases charging more than 
4,600 defendants who collectively billed federal health care programs and private insurers 
approximately $23.0 billion; more than 3,000 defendants pleaded guilty and over 390 others 
were convicted in jury trials; and more than 2,800 defendants were sentenced to imprisonment 
for an average term of approximately 50 months.   Medicare payment trends demonstrate the 
positive impact of Strike Force enforcement and prevention efforts. 
In September 2020, the Criminal Divisions Health Care Fraud Unit organized and led a historic 
national takedown, in collaboration with USAOs, HHS-OIG, FBI, the Drug Enforcement 
Administration (DEA), and other federal and state partners.  On September 30, 2020, Acting 
10 The summary statistics in this document exclude sealed cases. 
9   
Assistant Attorney General Brian Rabbitt announced this nationwide enforcement action, which 
involved 345 charged defendants across 51 federal districts, including more than 100 doctors, 
nurses, and other licensed medical professionals.  These defendants were collectively charged 
with submitting more than $6.0 billion in allegedly false and fraudulent claims to federal health 
care programs and private insurers, including more than $4.5 billion connected to schemes that 
involved telemedicine fraud, more than $845.0 million connected to substance abuse treatment 
facilities, or sober homes, and more than $806.0 million connected to other health care fraud 
and illegal opioid distribution schemes across the country.  This enforcement initiative included 
cases charged during an unprecedented national health emergency, from April 2020 to 
September 2020, with the majority (nearly two-thirds) being charged or unsealed after Labor 
Day (September 7, 2020). 
In an initial April 2019 Surge, and a second takedown in September 2019, Trial Attorneys in 
the Fraud Section, in conjunction with Assistant United States Attorneys (AUSAs) in more than 
1011 federal districts, charged 73 individuals, including 64 medical professionals, with opioid-
related crimes.  Another 18 defendants were charged in FY 2020, including six medical 
professionals.  As of September 30, 2020, 31 of the Appalachian Regional Opioid Strike Force 
(ARPO) defendants have entered guilty pleas, with more pleas scheduled.  Two additional 
defendants have been convicted at trial, including one two-week trial in West Virginia that took 
place during the pandemic in 2020.12 Sixteen ARPO defendants were sentenced in FY 2020.   
Opioid Fraud and Abuse Detection Unit 
On August 2, 2017, the Attorney General announced the formation of the Opioid Fraud and 
Abuse Detection Unit in the Criminal Division to use data from various health care databases to 
identify medical practitioners who are contributing to the prescription opioid epidemic.  As a part 
of a related effort, the Department created 11 Opioid Fraud and Abuse Detection (OFAD) three-
year-term positions for experienced AUSAs to focus solely on investigating and prosecuting 
offenses with a health-care-fraud nexus related to prescription opioids, including pill mill 
schemes and pharmacies that unlawfully divert or dispense prescription opioids for illegitimate 
purposes.  The AUSAs work with FBI, DEA, HHS, local and state partners to target and 
prosecute doctors, pharmacies, and medical providers who are unlawfully furthering the opioid 
epidemic.   
In June 2020, the Deputy Attorney General favorably assessed the performance of the OFAD 
AUSA program and extended the term positions for an additional two years.  The following 
districts are participating in the program:  Middle District of Florida, Eastern District of 
Michigan, Northern District of Alabama, Eastern District of Tennessee, District of Nevada, 
Eastern District of Kentucky, District of Maryland, Western District of Pennsylvania, Southern 
District of Ohio, Middle District of North Carolina, and Southern District of West Virginia. 
 
11 Two non-ARPO districts also participated in the Surge in 2019, bringing the district total to 12.   
12 A total of three ARPO jury trials have occurred.  Two of the three cases resulted in guilty verdicts; one of the three 
cases resulted in a mistrial due to a hung jury, and the defendants pleaded guilty thereafter; and none of the cases were 
dismissed or resulted in acquittals. 
10 
   
In FY 2020, the OFAD AUSA program handled hundreds of investigations and prosecutions 
involving medical professionals.  Defendants were charged with a range of crimes, including 
health care fraud, drug trafficking, and money laundering.  Some representative efforts include:   
  In the Eastern District of Michigan, the OFAD AUSA indicted a 19-defendant opioid 
distribution conspiracy case that included ten doctors, nurse practitioners, pharmacists, and 
pharmacy techs for prescribing and dispensing more than 1,951,148 dosage units of Schedule 
II controlled substances.  The prescribed oxycodone and oxymorphone, alone, carried a 
conservative street value of more than $41.0 million. 
  The OFAD program in Middle District of Florida convicted multiple staffers of a medical 
clinic, a patient, a pharmacist and a pharmacy tech of conspiracy to commit tax evasion, tax 
evasion, money laundering, unlawful drug distribution, and drug conspiracy involving 
fraudulent opioid prescriptions. 
Health Care Fraud Prevention and Enforcement Action Team (HEAT) 
The Attorney General and the Secretary maintain regular consultation at both senior and staff 
levels to accomplish the goals of the HCFAC Program.  DOJ and HHS-OIG established the 
Health Care Fraud Prevention and Enforcement Action Team (HEAT) in 2009 to build and 
strengthen existing programs combatting Medicare fraud, while investing new resources and 
technology to prevent and detect fraud and abuse.  HEAT expanded the DOJ-HHS Health Care 
Fraud Strike Force program noted above, which targets emerging or migrating fraud schemes, to 
include fraud by criminals masquerading as health care providers or suppliers.  The mission of 
HEAT is: 
  To marshal significant resources across government to prevent waste, fraud and 
abuse in the Medicare and Medicaid programs and crack down on the fraud 
perpetrators who are abusing the system and costing the government billions of dollars. 
  To reduce health care costs and improve the quality of care by ridding the system of 
perpetrators who are preying on Medicare and Medicaid beneficiaries. 
  To target doctors and physicians who prescribe opioids outside the scope of 
legitimate medical practice and often charge Medicare and Medicaid for these visits and 
prescriptions.   
  To highlight best practices by providers and public sector employees who are 
dedicated to ending waste, fraud, and abuse in Medicare. 
  To build upon existing partnerships between DOJ and HHS, such as its Strike Force 
Teams, to reduce fraud and recover taxpayer dollars. 
Since its creation, HEAT has focused on key areas for coordination and improvement.  HEAT 
members are working to identify new enforcement initiatives and areas for increased oversight 
and prevention.  HEAT activities have also expanded to include significant involvement from 
11 
   
MFCUs, which play a critical role in the many fraud cases involving both Medicare and 
Medicaid.  Finally, five MFCUs participated in the National Health Care Fraud Takedown in 
September 2020. 
DOJ and HHS have expanded data-sharing and improved information-sharing procedures in 
order to get critical data and information into the hands of law enforcement to track patterns of 
fraud and abuse and increase efficiency in investigating and prosecuting complex health care 
fraud cases.  This expanded data sharing enables the DOJ and HHS to efficiently identify and 
target the worst actors in the system.  The Departments established a cross-government health 
care fraud data intelligence sharing workgroup to share fraud trends, new initiatives, ideas, and 
success stories to improve awareness across issues relating to health care fraud.  
Both Departments also have developed training programs to prevent honest mistakes and help 
stop potential fraud before it happens.  This includes CMS compliance training for providers, 
HHS-OIG compliance program guidance documents and trainings for providers, ongoing 
meetings at USAOs with the public and private sector, and increased efforts by HHS to educate 
specific groupsincluding elderly and immigrant communitiesto help protect them.  
Moreover, HHS-OIG offers a Compliance Resource Portal on its website, which includes 
special fraud alerts, videos, and other resources directed at various segments of the health care 
industry.  In addition, DOJ conducts, with the support of HHS, a Health Care Fraud training 
program designed to teach the Strike Force concept and case model to prosecutors, law 
enforcement agents, and administrative support teams.   
Health Care Fraud Prevention Partnership (HFPP) 
The HFPP is a voluntary public-private partnership among the Federal Government, state 
agencies, law enforcement, private health insurance plans, employer organizations, and health 
care anti-fraud associations.  The purpose of the partnership is to exchange data and information 
between the partners to help improve capabilities to fight fraud, waste, and abuse in the health 
care industry.  The number of participants has increased to 172 public, private, and state partner 
organizations at the end of FY 2020.  Collectively, these organizations represent more than 218 
million covered lives, equivalent to more than three in four insured Americans.  Forty of the 
current partners are actively submitting claim level data representing more than 104 million 
individuals, or more than one in three insured Americans.   
The HFPP commenced or completed studies using multiple partners data to address fraud, 
waste, and abuse in FY 2020, providing partners with detailed results that can be used for 
corrective actions within their organizations.  The HFPP continued its efforts to foster 
collaboration among partners by hosting in-person information-sharing sessions and an Annual 
Executive Board meeting.  These meetings were used to share fraud schemes and provider alerts, 
provide updates on law enforcement activities, and strategize on how to broaden the HFPPs 
impact in the private and public sectors.  See the HFPP section in the CMS section for more 
information on HFPP activities. 
12 
   
COVID-19 Pandemic-Related Enforcement 
Since the start of the Public Health Emergency (PHE) in March 2020, CMS has examined how 
the PHE  and more specifically, the waivers and flexibilities offered by the Agency  create 
new fraud risks to federal health programs.  CMS has developed a robust fraud risk assessment 
process to identify potential risks and vulnerabilities associated with PHE and potential 
unintended consequences of the waivers and flexibilities.  Fraud, waste, and abuse mitigation 
strategies include data analyses and studies, development of Fraud Prevention System (FPS) and 
National Correct Coding Initiative (NCCI) models and edits, and implementation of new 
policies.  DOJ is working with CMS, HHS-OIG, and other law enforcement agency partners to 
investigate and prosecute frauds from identified risks and related schemes.  Examples include: 
  Performing additional, unnecessary services:  Offering COVID-19 tests to Medicare 
beneficiaries in exchange for personal details, including Medicare information.  
However, the services are unapproved and illegitimate.  In one fraud scheme, some labs 
are targeting retirement communities claiming to offer COVID-19 tests but are drawing 
blood and billing federal health care programs for medically unnecessary services.  
Fraudsters are targeting beneficiaries in a number of ways, including telemarketing calls, 
text messages, social media platforms, and door-to-door visits.  These scammers exploit 
the pandemic to benefit themselves, and beneficiaries face potential harms.  The personal 
information collected can be used to fraudulently bill federal health care programs and 
commit medical identity theft.  If Medicare or Medicaid denies the claim for an 
unapproved test, the beneficiary could be responsible for the cost. 
  Additional unnecessary laboratory testing:  Requiring tests in addition to the COVID-19 
test, such as expensive tests or services that do not test for COVID-19, e.g. medically 
unnecessary and expensive respiratory testing, allergy testing, and genetic testing.  For 
example, providers are billing a COVID-19 test with other far more expensive tests such 
as the Respiratory Pathogen Panel (RPP) and antibiotic resistance tests.  Other potentially 
unnecessary tests being billed along with a COVID-19 test include genetic testing and 
cardiac panels CPT codes.  Providers are also billing respiratory, gastrointestinal, 
genitourinary, and dermatologic pathogen code sets with the not otherwise specified code 
CPT 87798.  
  Health care technology schemes:  False and fraudulent representations about COVID-19 
testing, treatments, or cures that are used to defraud insurance carriers and to perpetrate 
fraud on the financial markets by defrauding investors.  
  Fraudulently obtaining COVID-19 health care relief funds:  Filing false claims and 
applications for federal relief funds, such as those provided under the Coronavirus Aid, 
Relief, and Economic Security (CARES) Acts Provider Relief Fund, the Paycheck 
Protection Program and Health Care Enhancement Act, or the Economic Impact Disaster 
Loan (EIDL) program.  
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Highlights of Significant Criminal and Civil Investigations 
Our respective Departments successfully pursued Strike Force matters, as well as other criminal 
and civil investigations in a wide range of areas.  Cases are organized by type and presented in 
chronological order.  Strike Force cases are denoted by (SF) before the lead sentence.  
Ambulance and Transportation Services  
In June 2020, two owners of an ambulance and transportation services company located in 
Guam, were sentenced to serve 71 and 63 months, respectively, in federal prison in connection 
with their October 2019 guilty pleas to one count of conspiracy to commit health care fraud and 
one count of conspiracy to engage in monetary transactions with the proceeds of specified 
unlawful activity.  They were also ordered to pay $10.8 million in restitution.  According to their 
admissions at the plea hearing, from approximately March 2010 to approximately March 2014, 
the defendants engaged in a conspiracy to defraud Medicare and TRICARE by submitting claims 
for reimbursement for medically unnecessary ambulance services that the company provided to 
patients with end-stage renal disease (ESRD).  The defendants admitted they were aware that 
their company was transporting patients who did not qualify for ambulance transportation under 
applicable Medicare and TRICARE regulations and guidelines.    
Clinics 
(SF) In November 2019, at the conclusion of a two-week trial, the head of multiple New York 
medical clinics was found guilty of money laundering, kickback, and tax charges for his role in a 
vast fraud scheme with losses of approximately $100.0 million in billed claims.  The trial 
evidence showed that the clinic owner and his co-conspirators executed the alleged scheme by 
referring beneficiaries to a variety of medical professionals in exchange for kickbacks.  The 
clinic owner and his co-conspirators then laundered a substantial portion of fraudulent proceeds 
through companies he controlled, including by cashing checks at several New York City check-
cashing businesses.  The clinic owner failed to report that cash income to the IRS.  In August 
2020, the clinic owner was sentenced to 13 years in prison for his part in leading this scheme.   
(SF) In December 2019 and June 2020, defendants responsible for a multi-faceted criminal fraud 
and diversion scheme perpetrated at Abyssinia Love Knot (ALK) of Southfield, Michigan, and 
1st Priority Physical Therapy (1st PRIORITY) of Detroit, Michigan, received 11-year prison 
sentences.  While both clinics advertised that they provided legitimate physical therapy services, 
the clinics served as the largest pill mill operation in the Detroit-metro area from 2009 to 2016.  
The investigation revealed that ALK and 1ST PRIORITY owners worked with Detroit-area 
patient recruiters to bring patients to their physical therapy clinics, charging them between $300 
and $1,000 cash per individual slot to see one of the many physicians they controlled.  
Additionally, the clinic owners charged the patients health insurance (Medicare or private 
insurance) for services that were never provided.  In return for the cash payments and for billing 
the patients insurance, the physicians controlled by the clinic owners wrote medically 
unnecessary prescriptions for oxycodone, Xanax, and other controlled substances, which were 
sold on the street in the metro-Detroit area as well as out-of-state.  From 2013 through 2016, 
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approximately 4.5 million opioid dosage units of various controlled substances were prescribed 
by physicians through ALK.  From 2009 through 2016, ALK and 1ST PRIORITY billed 
approximately $36.0 million dollars to Medicare.  In addition, approximately $5.5 million was 
billed to Blue Cross Blue Shield of Michigan for physical therapy services that were either 
medically unnecessary or never provided.  On December 19, 2019, and on March 10, 2020, each 
of the two lead defendants (the clinic owners) were sentenced to 11 years in prison.   
In January 2020, at the conclusion of a three-month trial, four defendants were found guilty in 
the Eastern District of Tennessee in connection with their roles in the operation of four separate 
pain clinics.  The evidence showed that they the operated the pain clinics as pill mills inviting 
abuse by providers, employees, customers, and drug traffickers with awareness that patients 
travelled long distances to illegally obtain controlled substances and requested prescriptions for 
large quantities of Schedule II Controlled Substances.  A part owner of the clinics was found 
guilty of Racketeering Influenced Corrupt Organization (RICO) conspiracy, a drug conspiracy, 
money laundering, and maintaining drug-involved premises.  Three nurses who worked at the 
clinics were convicted of maintaining a drug-involved premises.  The drug conspiracy involved 
the distribution of over 11 million tablets of oxycodone, oxymorphone, and morphine that 
generated over $21.0 million of clinic revenue, with a street value of $360.0 million.   
Drug Companies 
In June 2020, Novartis Pharmaceuticals Corporation (Novartis), based in East Hanover, New 
Jersey, agreed to pay a total of over $642.0 million to resolve civil FCA allegations in two 
separate settlements.  In the first settlement, Novartis agreed to pay $51.3 million to resolve 
allegations that it illegally used three foundations as conduits to pay the copayments of Medicare 
patients taking the Novartis drugs Gilenya and Afinitor.  In the second settlement, Novartis 
agreed to pay over $591.0 million to resolve claims that it paid kickbacks to doctors in the form 
of sham speaker payments, to induce the doctors to prescribe the Novartis drugs Lotrel, Valturna, 
Starlix, Tekturna, Tekturna HCT, Tekamlo, Diovan, Diovan HCT, Exforge, and Exforge HCT.  
The government also alleged that Novartis sales representatives, on the instruction of their 
managers, selected high-volume prescribers to serve as the paid speakers at so-called speaker 
events to induce the prescribers to write Novartis prescriptions.  The company also made 
extensive factual admissions in the settlement and agreed to strict limitations on any future 
speaker programs, including reductions to the amount it may spend on such programs.  In 
addition to the civil FCA resolution, Novartis also agreed to a civil forfeiture of $38.4 million.  
Separately, as part of the resolution, Novartis entered into a five-year Corporate Integrity 
Agreements (CIA) with HHS-OIG.  In addition to the federal recovery, Novartis agreed to pay 
more than $48.0 million to resolve state Medicaid claims. 
In August 2020, DUSA Pharmaceuticals, Inc. (DUSA), a subsidiary of Sun Pharmaceutical 
Industries, Inc. (Sun Pharma) agreed to pay $20.8 million to resolve civil FCA allegations that 
DUSA caused physicians to submit false claims to Medicare and the Federal Employee Health 
Benefit Program (FEHBP).  The government alleged that between January 2014 and December 
2016, DUSA knowingly promoted an administration process for the drug Levulan Kerastick, a 
prescription topical solution, that contradicted the product instructions approved by the Food and 
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Drug Administration (FDA) and was unsupported by sufficient clinical evidence.  As part of the 
settlement, DUSA and Sun Pharma agreed to enter into a CIA with HHS-OIG. 
In September 2020, Gilead Sciences, Inc. (Gilead), based in Foster City, California, agreed to 
pay $97.0 million to resolve civil FCA allegations that it illegally used a foundation, which 
claims 501(c)(3) status for tax purposes, as a conduit to pay the copays of thousands of Medicare 
patients taking Gileads pulmonary arterial hypertension (PAH) drug, Letairis, because Gilead 
knew that the price it set for Letairis could otherwise pose a barrier to such purchases.  The 
government alleged that from 2007 to 2010, Gilead made payments to the foundation, which, in 
turn, used those funds to pay copays of patients prescribed Letairis.  The government alleged that 
Gilead routinely obtained data from the foundation detailing how much the foundation had spent 
for patients on Letairis; it then used this information to decide how much to pay to the 
foundation to cover the copays of patients taking Letairis but not of patients taking other 
manufacturers PAH drugs.  The government also alleged that, to generate revenue from 
Medicare and induce purchases of Letairis, Gilead referred Medicare patients to the foundation, 
which resulted in claims to Medicare to cover the cost of Letairis. 
Durable Medical Equipment (DME) 
(SF) In October 2019, an owner and operator of two orthotic brace supplier companies in New 
York, New York, pleaded guilty to one count of conspiracy to defraud the United States and to 
pay and receive health care kickbacks.  The charges resulted from a $5.6 million conspiracy in 
which the defendant offered and paid kickbacks and bribes to several purported telemedicine 
companies in exchange for completed doctors orders of medically unnecessary orthotic braces 
for Medicare beneficiaries.  The defendant and her co-conspirators concealed the fraud by 
entering into sham contracts and producing false invoices characterizing the kickbacks and 
bribes as payments for marketing.  The defendant agreed to pay over $3.0 million in restitution 
and to forfeit over $3.0 million in proceeds of her crime. 
(SF) In November 2019, a New Jersey physician and professor at Rutgers New Jersey Medical 
School pleaded guilty to a one-count information alleging he conspired to commit health care 
fraud.  The defendant moonlighted for a purported telemedicine company for which he wrote 
medically unnecessary orders for orthotic braces for Medicare beneficiaries between July 2018 
and April 2019 resulting in a $6.0 million intended loss to Medicare.  The defendant and his co-
conspirators, among other things, created brace orders claiming that he had discussions or 
conversations regarding the benefits of the braces with beneficiaries or had conducted diagnostic 
testing for beneficiaries, however the defendant generally had not spoken to beneficiaries 
regarding the braces and had not conducted diagnostic testing on beneficiaries in connection with 
the ordering of orthotic braces.  The defendant agreed to pay over $3.0 million in restitution and 
to forfeit over $34,000 in proceeds of his crime. 
In December 2019, ResMed Corp., a DME manufacturer based in San Diego, California, agreed 
to pay more than $37.5 million to resolve civil FCA allegations that it paid kickbacks to DME 
suppliers, sleep labs, and other health care providers.  The settlement resolved allegations that 
ResMed provided DME companies with free patient outreach services that enabled these 
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companies to order resupplies for their patients with sleep apnea; provided sleep labs with free 
and below-cost positive airway pressure masks and diagnostic machines, as well as free 
installation of those machines; arranged for, and fully guaranteed the payments due on, interest-
free loans that DME suppliers acquired from third-party financial institutions for the purchase of 
ResMed equipment; and provided non-sleep specialist physicians free home sleep testing 
devices.  In connection with the settlement, ResMed entered into a CIA with HHS-OIG. 
(SF) In January 2020, the owner of several durable medical equipment supplier companies in 
Florida, California, and Georgia, was convicted of charges resulting from his involvement in a 
scheme to defraud Medicare and TRICARE.  According to court documents, from approximately 
November 2015 through March 2019, the owner and his co-defendants paid kickbacks and bribes 
in exchange for signed doctors orders for orthotic braces that were not medically necessary.  
The combined billed amount for both Medicare and TRICARE was $125.1 million and the 
combined paid amount was $70.3 million.  The owner pleaded guilty to conspiracy to commit 
health care fraud and was sentenced to six years and eight months in prison and ordered to pay 
restitution of $70.3 million (which includes $69.6 million to Medicare Part B and $751,406 to 
TRICARE), joint and several with other co-conspirators.  The owner was also ordered to forfeit 
$35.1 million. 
(SF) In July 2020, an owner of a South Florida telemedicine company was convicted of charges 
resulting from a scheme to generate and sell doctors orders that were used to defraud Medicare.  
In connection with his guilty plea, the owner admitted that, from approximately January 2017 
through approximately April 2019, the owner and his co-defendants sold doctors orders for 
medically unnecessary orthotic braces in exchange for kickbacks.  The owner told physicians not 
to speak with patients before prescribing braces, and he knew physicians often did not speak with 
patients at all.  The owner then sold the doctors orders to DME companies, which submitted 
claims to Medicare for the braces.  The owner disguised the illegal kickbacks by entering into 
sham contracts that inaccurately described the services provided by the telemedicine company, 
and by procuring a fraudulent legal opinion letter that falsely described the telemedicine 
companys business model.  Doctors orders sold by the owner were used to fraudulently bill 
Medicare over $39.0 million.  The owner is awaiting sentencing.  As part of his plea, he agreed 
that his Guidelines range is 188-235 months.  The co-owner of the business pleaded guilty in 
November 2019 and was sentenced to 10 years in prison.  
(SF) In September 2020, an operator of three DME supplier companies was convicted of charges 
resulting from his involvement in a scheme to defraud Medicare.  The operator admitted that, 
from approximately April 2015 through approximately April 2019, the operator and his co-
defendants paid kickbacks in exchange for signed doctors orders for orthotic braces that were 
not medically necessary.  To falsely make the sale of doctors orders appear to be for legitimate 
marketing or business process outsourcing services, the operator and his co-conspirators 
executed sham contracts with purported marketing companies from which they purchased 
doctors orders.  The operator also hid the role of his co-conspirators in the DME company by 
lying about who the true owners of the DME companies were.  The operators DME companies 
collectively billed Medicare $23.9 million.  The operator is awaiting sentencing.  As part of his 
plea, the operator has agreed that his Guidelines range is 78-97 months.  
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Electronic Health Records 
In January 2020, Practice Fusion Inc. (Practice Fusion), a health information technology 
developer based in San Francisco, California, agreed to pay $145.0 million to resolve criminal 
and civil liability relating to its electronic health records (EHR) software.  As part of the criminal 
resolution, Practice Fusion executed a deferred prosecution agreement based on its solicitation 
and receipt of kickbacks from a major opioid company in exchange for implementing clinical 
decision support alerts in its EHR software that were designed to increase prescriptions for the 
drug companys products, and agreed to pay over $26.0 million in criminal fines and forfeiture.  
This case marked the first ever kickback action against an EHR developer for receipt of 
remuneration from a pharmaceutical company.  The resolution included extensive factual 
admissions, as well as robust compliance and oversight overhauls.  In separate civil settlements, 
Practice Fusion agreed to pay approximately $113.4 million to the federal government, and up to 
$5.2 million to participating states, to resolve civil FCA allegations that it accepted kickbacks 
from the opioid company and other pharmaceutical companies and also caused its users to 
submit false claims for federal incentive payments by misrepresenting the capabilities of its EHR 
software. 
Genetic Testing/RPP Testing Paired with COVID-19 Testing 
(SF) In February 2020, an owner of a telemedicine company was convicted of charges resulting 
from a scheme to generate and sell doctors orders that were used to defraud Medicare.  The 
owner admitted that from approximately March 2018 through April 2019, the owners co-
conspirators targeted and recruited Medicare beneficiaries to receive the genetic testing through 
telemarketing campaigns.  After the beneficiaries agreed to take the genetic tests, the co-
conspirators paid the owner kickbacks in exchange for doctors orders.  After receiving the 
signed doctors orders, the owners co-conspirators sold the tests and doctors orders to 
laboratories in exchange for illegal kickbacks.  The laboratories billed Medicare more than 
$12,000 per test.  Doctors orders sold by the owner were used to fraudulently bill Medicare for 
more than $6.0 million.  The owner is awaiting sentencing.  
(SF) In September 2020, a broker between telemarketing companies and medical laboratories 
was charged via information on charges resulting from a scheme geared towards submitting 
cancer genetic tests (CGX), as well as COVID-19 and RPP tests that were not eligible for 
reimbursement to Medicare.  The broker admitted that from approximately November 2018 
through March 2020 the broker and her co-conspirators paid kickbacks to telemarketers who 
would obtain completed CGX tests from Medicare beneficiaries.  The broker and her co-
conspirators would also pay kickbacks to a telemedicine company in order to obtain doctors 
orders authorizing the CGX tests.  The broker and her co-conspirators would send the completed 
CGX test and the doctors orders to a medical laboratory that would bill Medicare for the cancer 
genetic test, and then the broker received kickbacks from the laboratory in return.  The 
laboratory broker also conspired with others to convince beneficiaries to agree to submit to 
genetic testing for COVID-19 tests.  The broker was then going to sell the sample to laboratories, 
who would bundle the relatively inexpensive COVID-19 test with the more expensive RPP tests.  
RPP tests do not test for COVID-19.  The Medicare reimbursement for RPP tests was 
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approximately four times higher than COVID-19 tests.  The broker admitted that she caused the 
submission of more than $3.0 million in fraudulent billing to the Medicare program for genetic 
testing.  The recruiter is awaiting sentencing. 
Home Health Providers 
In December 2019, two owners of a network of health care entities in Florida were sentenced to 
prison for their roles in a $38.0 million health care fraud and wire fraud scheme.  According to 
court documents, the owners built a vast empire of fraud, consisting of at least six fraudulent 
home health agencies, three fraudulent therapy staffing companies, and two fraudulent 
pharmacies.  Each of these entities purportedly provided home health services, therapy services, 
and prescription drugs, respectively, to qualified Medicare beneficiaries, though in fact they did 
not.  From May 2010 through September 2016, the owners and their co-conspirators used this 
empire to submit more than $38.0 million in fraudulent claims to Medicare, for which Medicare 
paid $33.0 million.  The owners were sentenced to a total of 23 years and eight months in prison 
and ordered to pay $33.8 million in restitution, joint and several with a co-defendant.  Four 
defendants involved in the scheme were previously sentenced to a combined 12 years and one 
month in prison and ordered to pay $135,245 in restitution. 
(SF) In March 2020, a medical doctor was convicted of charges resulting from a scheme to write 
prescriptions for home health services for Medicare beneficiaries he knew did not actually need 
home health services.  In connection with his guilty plea, the doctor admitted that from October 
2012 through June 2017, he knew the owners of home health agencies located in the Miami, 
Florida area used the prescriptions to submit more than $3.4 million in false and fraudulent 
claims to Medicare for home health services that were not medically necessary. 
In March 2020, after an eight-day trial, a Denver jury convicted an employee of the Department 
of Veterans Affairs (VA) for health care fraud, soliciting and receiving kickbacks, money 
laundering, and public corruption charges in connection with his scheme to defraud the VAs 
Spina Bifida Health Care Benefits Program of approximately $20.0 million over the course of 
one year.  The VA employee was a case management liaison for the VA program that provided 
health care benefits to children of war veterans born with spina bifida as a result of their parents 
service in Korea and Vietnam.  The employee devised a scheme in which he and his friends and 
family members opened sham home health companies that then hired beneficiary family 
members or others who were not medical providers to provide home health services to this 
vulnerable population.  He encouraged his friends and family members to bill for up to 20 hours 
per day of home health services, even though the services were not made by legitimate health 
care providers and, in many cases, were not provided at all.  The employee took payments from 
the home health agencies as bribes and kickbacks for patient referrals he made to the agencies.  
The defendant was sentenced to 192 months imprisonment and ordered to pay nearly $19.0 
million in restitution. 
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Hospice Care 
In November 2019, the Louisiana Department of Health (LDH) agreed to pay $13.5 million to 
resolve civil FCA allegations that LDH submitted false and inflated Medicaid claims for long-
term nursing home and hospice care.  The United States alleged that, in order to receive higher 
Federal share percentage rates for Louisianas Medicaid payments, LDH fraudulently caused its 
healthcare contractor, Molina Medical Solutions, to prepare, submit, and pay claims for nursing 
home and hospice services in December 2010, March 2011, June 2011, and September 2013, 
before providers had submitted any claims for those services to Louisiana.  In connection with 
this resolution, LDH entered into a State Agency Compliance Agreement with HHS-OIG. 
Hospitals and Health Systems 
In October 2019, Jewish Hospital & St. Marys Healthcare, Inc., doing business as Pharmacy 
Plus and Pharmacy Plus Specialty (collectively, Jewish Hospital), of Louisville, Kentucky, 
agreed to pay more than $10.1 million to resolve civil FCA allegations.  The government alleged 
that Jewish Hospital submitted claims to Medicare for prescriptions drugs that did not meet 
Medicare coverage requirements, including the need for a detailed written order establishing 
medical necessity, to confirm that refills were reasonable and necessary, and to document that 
the medications were in fact delivered.  The government also alleged that Jewish Hospital 
provided improper remuneration to Medicare beneficiaries in the form of free blood glucose 
testing supplies and waiver of copayments and deductibles for insulin, in violation of the Anti-
Kickback Statute (AKS). 
In October 2019, several hospitals owned and operated by Sutter Health (Sutter), a California-
based health care services provider, and Sacramento Cardiovascular Surgeons Medical Group 
Inc. (Sac Cardio) agreed to pay the United States a total of approximately $46.0 million to 
resolve civil FCA allegations.  As part of the settlements, one of Sutters hospitals, Sutter 
Memorial Center Sacramento (SMCS), agreed to pay $30.5 million to resolve allegations that, 
from 2012 to 2014, it violated the Stark Law by billing Medicare for services referred by Sac 
Cardio physicians, to whom it paid amounts under compensation arrangements that exceeded the 
fair market value of the services provided.  In addition, Sac Cardio agreed to pay $506,000 to 
resolve allegations that it knowingly submitted duplicative bills to Medicare for services 
performed by physician assistants that it was leasing to SMCS under one of those compensation 
arrangements. Separately, Sutter agreed to pay $15.1 million to resolve other conduct that it 
self-disclosed to the United States, principally concerning additional violations of the Stark Law 
by Sutter hospitals. 
In July 2020, Oklahoma Center for Orthopedic and Multi-Specialty Surgery (OCOM), a 
specialty hospital in Oklahoma City, Oklahoma, its part-owner and management company, USP 
OKC, Inc. and USP OKC Manager, Inc. (collectively USP), Southwest Orthopedic Specialists, 
PLLC (SOS), an Oklahoma City-based physician group, and two SOS physicians, agreed to pay 
a total of $72.3 million to resolve civil FCA allegations of improper relationships between 
OCOM and SOS that resulted in the submission of false claims to the Medicare, Medicaid, and 
TRICARE programs.  The settlement resolved allegations that between 2006 and 2018, OCOM 
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and USP provided improper remuneration to SOS and certain of its physicians in exchange for 
patient referrals to OCOM in the form of: (1) free or below-fair market value office space, 
employees, and supplies, (2) compensation in excess of fair market value for the services 
provided by SOS and certain of its physicians, (3) equity buyback provisions and payments for 
certain SOS physicians that exceeded fair market value, and (4) preferential investment 
opportunities in connection with the provision of anesthesia services at OCOM.  As a result of 
the settlement, USP agreed to pay $60.9 million to the United States, $5.0 million to the State of 
Oklahoma, and $206,000 to the State of Texas; SOS and two of its physicians agreed to pay $5.7 
million to the United States, and $495,619 to the State of Oklahoma.  In connection with the 
settlement, OCOM and SOS each entered into a five-year CIA with HHS-OIG. 
In September 2020, Wheeling Hospital, Inc., an acute care hospital in Wheeling, West Virginia, 
agreed to pay $50.0 million to resolve civil FCA allegations that it knowingly submitted claims 
to Medicare that resulted from violations of the Stark Law and the AntiKickback Statute.  The 
government alleged that, from 2007 to 2020, under the direction and control of its prior 
management, Wheeling Hospital systematically violated the Stark Law and AKS by knowingly 
and willfully paying improper compensation to referring physicians that was based on the 
volume or value of the physicians referrals or was above fair market value. 
Laboratories 
In October 2019, UTC Laboratories Inc. (RenRX), headquartered in New Orleans, Louisiana, 
agreed to pay $41.6 million, and its three principals agreed to pay $1.0 million, to resolve civil 
FCA allegations that they paid kickbacks in exchange for laboratory referrals for pharmaco-
genetic testing and for furnishing and billing for tests that were not medically necessary.  The 
government alleged that between 2013 and 2017, UTC and its principals offered and paid 
remuneration to physicians to induce the ordering of pharmacogenetic tests, purportedly in return 
for their participation in a clinical trial.  The government also alleged that UTC and its principals 
offered and paid remuneration, including sales commissions, to entities and individuals as part of 
the scheme, and furnished and billed Medicare for pharmacogenetic tests that were not medically 
necessary.  As part of the resolution, RenRX also agreed to a 25 year period of exclusion from 
participation in any federal health care program. 
In November 2019, Boston Heart Diagnostics Corporation (Boston Heart), a laboratory in 
Framingham, Massachusetts, agreed to pay $26.7 million to resolve civil FCA allegations 
involving payments for patient referrals in violation of the AKS and the Stark Law.  The 
government alleged that from 2015 through 2017, Boston Heart conspired with others to pay 
doctors kickbacks disguised as investment returns, in return for referrals to Boston Heart and 
small Texas hospitals for laboratory tests performed by Boston Heart and then billed to federal 
health care programs.  The government also alleged that, in order to receive higher reimburse-
ments from federal health care programs, Boston Heart conspired with the Texas hospitals and 
others to submit claims for outpatient laboratory testing for patients who were not hospital 
outpatients.  In addition, the settlement resolved allegations that Boston Heart directly or 
indirectly paid processing and handling fees, waived patient copayments and deductibles, and  
21 
   
provided physician practices with in-office dietitians in exchange for physician referrals for 
laboratory testing. 
In December 2019, six defendants, including one doctor, were convicted of health care fraud in 
Miami for their role in a nation-wide scheme that defrauded TRICARE and Medicare out of 
more than $9.6 million.  In furtherance of the scheme, the defendants, through several corporate 
entities, solicited and misled TRICARE and Medicare beneficiaries into agreeing to order 
medically unnecessary compounded prescription medicines and cancer genetic tests.  Defendants 
falsely claimed that the compound drugs were free and uniquely tailored to the beneficiaries 
individual needs, when in fact they were designed to maximize profit and required mandatory 
copayments.  Defendants also falsely marketed the genetic tests as a tool to predict a 
beneficiarys chances of developing cancer, when in fact the tests are intended to aid doctors in 
treating patients with a pre-existing cancer diagnosis.  Defendants paid doctors to ratify pre-
printed prescriptions for the expensive drugs and genetic tests, and then sold the fraudulent 
prescriptions to pharmacies and labs around the country in exchange for half the profits. In most 
cases the doctors had no existing relationship with, and often never consulted, the beneficiaries.  
The defendants were sentenced to a combined 32 years and six months in prison and were 
ordered to pay $9.6 million in restitution. 
(SF) In January 2020, a laboratory owner in Baton Rouge, Louisiana was convicted for his role 
in a conspiracy to defraud the United States and pay and receive health care kickbacks wherein 
he paid illegal remuneration to marketers for the referral of DNA specimens and attendant 
physicians orders for medically unnecessary genetic testing, cancer screens, which were 
ultimately performed by the laboratory and billed to Medicare.  Through sham contracts and 
invoices, the owner tried to conceal the payment to marketers of up to 50 percent of the 
reimbursements paid by Medicare for medically unnecessary genetic testing.  Between March 
2018 and July 2019, the owner submitted approximately $127.0 million in false and fraudulent 
claims to Medicare for these medically unnecessary genetic tests and paid more than 
approximately $23.0 million in kickbacks and bribes to marketers. 
In April 2020, reference laboratory Logan Laboratories Inc. (Logan Labs) and pain clinic Tampa 
Pain Relief Centers Inc. (Tampa Pain), both located in Tampa, Florida, and two of their former 
executives agreed to pay a total of $41.0 million to resolve civil FCA allegations for billing 
Medicare, Medicaid, TRICARE, and other federal health care programs for medically 
unnecessary Urine Drug Testing (UDT) between January 1, 2010 and December 31, 2017.  The 
settlement resolved allegations by the United States that defendants developed and implemented 
a policy and practice of automatically ordering both presumptive and definitive UDT for all 
patients at every visit, without any physician making an individualized determination that either 
test was medically necessary for the particular patients for whom the tests were ordered.  In 
connection with the settlement, Logan Labs entered into an Integrity Agreement and Tampa Pain 
entered into a CIA with HHS-OIG. 
In April 2020, Genova Diagnostics Inc., a clinical laboratory services company based in 
Asheville, North Carolina, agreed to pay up to approximately $43.0 million to resolve civil FCA 
allegations that it: (1) improperly submitted claims to Medicare, TRICARE, and the federal 
22 
   
employee health program for its IgG allergen, NutrEval, and GI Effects lab test profiles because 
the tests were not medically necessary, (2) engaged in improper billing techniques, and (3) paid 
compensation to three phlebotomy vendors that violated the Stark Law.  Under the settlement, 
Genova agreed to pay approximately $17.0 million through the surrender of claim funds held in 
suspension by Medicare and TRICARE, plus up to an additional $26.0 million if certain financial 
contingencies occur within the next five years.  In addition, as part of the resolution, Genova 
entered into a five-year CIA with HHS-OIG. 
Medical Devices 
In October 2019, hospital entities Sanford Health, Sanford Medical Center, and Sanford Clinic 
(collectively, Sanford), of Sioux Falls, South Dakota, agreed to pay $20.3 million to resolve civil 
FCA allegations that Sanford knowingly submitted false claims to federal health care programs 
resulting from violations of the AKS and medically unnecessary spinal surgeries.  The 
government alleged that Sanford knew that one of its top neurosurgeons was improperly 
receiving kickbacks from his use of implantable devices distributed by his physician-owned 
distributorship, but continued to employ the neurosurgeon, continued to allow him to profit from 
the devices he used in surgeries performed at Sanford, and continued to submit claims to federal 
health care programs for these surgeries, including procedures that were medically unnecessary.  
In connection with this resolution, Sanford entered into a five-year CIA with HHS-OIG. 
Nursing Homes and Facilities 
In October 2019, a health care company located in Nevada entered into a civil FCA settlement 
agreement with the United States.  The company agreed to pay $4.0 million to resolve 
allegations that it filed improperly coded claims for Inpatient Rehabilitation Facility (IRF) 
services provided at one of its locations.  Specifically, the United States alleged that the company 
submitted false claims to Medicare because it had improperly assigned inaccurate and artificially 
low admission Functional Independence Measure scores on Patient Assessment Instrument forms 
(IRF- PAIs) for some of its patients, resulting in the company receiving greater reimbursement 
for its services for those patients than was warranted. 
In February 2020, Guardian Elder Care Holdings Inc., and related companies Guardian LTC 
Management Inc., Guardian Elder Care Management Inc., Guardian Elder Care Management I 
Inc., and Guardian Rehabilitation Services Inc. (Guardian) agreed to pay more than $15.0 million 
to resolve civil FCA allegations that they knowingly overbilled Medicare and the Federal 
Employees Health Benefits Program for medically unnecessary rehabilitation therapy services.  
The United States alleged that between January 2011 and December 2017, Guardian caused 
certain facilities in Pennsylvania, West Virginia, and Ohio to bill for patients at the highest level 
of Medicare reimbursement, when services at that level were not medically necessary and were 
influenced by financial considerations rather than resident needs.  The settlement also resolved 
civil claims relating to conduct voluntarily disclosed by Guardian that it had employed two 
people who were excluded from federal health care programs, causing Guardian to 
inappropriately receive payment for ineligible services.  In connection with the resolution, 
Guardian entered into a chain-wide, five-year CIA with HHS-OIG. 
23 
   
In February 2020, Diversicare Health Services Inc. (Diversicare), based in Brentwood, 
Tennessee, agreed to pay $9.5 million to resolve civil FCA allegations that it submitted false 
claims to Medicare for rehabilitation therapy services provided in its skilled nursing facilities 
that were not reasonable, necessary, or skilled.  The government alleged that from January 2010 
through December 2015, Diversicares corporate policies and practices were designed to place as 
many beneficiaries in the highest level of Medicare reimbursement irrespective of the individual 
clinical needs of the patients.  The settlement also resolved allegations that Diversicare submitted 
forged pre-admission evaluations of patient need for skilled nursing services to TennCare, the 
State of Tennessees Medicaid Program.  As part of the settlement, Diversicare entered into a 
five-year CIA with HHS-OIG. 
Occupational Therapy  
In December 2019, a doctor located in New York was sentenced for his participation in a $30.0 
million scheme to defraud Medicare and the New York State Medicaid Program.  Between 2007 
and 2013, the doctor falsely posed as the owner of three medical clinics, which were actually 
owned by a corrupt businessman, and falsely claimed that he had examined and treated 
thousands of patients whom he had not in fact seen.  The doctor was convicted on charges of 
health care fraud, wire fraud, mail fraud, conspiracy to commit those offenses, and conspiracy to 
make false statements in connection with a Federal health care program and was sentenced to 
four years in prison and ordered to pay $16.3 million in restitution, joint and several.  Nine co-
defendants involved in the scheme were previously sentenced to a combined 26 years and eight 
months in prison. 
Pharmacies 
In November 2019, Fagron Holding USA LLC (Fagron) agreed to pay $22.1 million to resolve 
civil FCA allegations concerning the establishment of false and inflated Average Wholesale 
Prices (AWPs) by its wholly owned subsidiary Freedom Pharmaceuticals Inc. (Freedom) for 
active pharmaceutical ingredients used in compound prescriptions.  The government alleged that 
Freedoms pricing scheme caused pharmacies that purchased Freedoms compound ingredients 
to submit false prescription claims to the Defense Health Agency, which administers the 
TRICARE Program for the Department of Defense and the Department of Labors Office of 
Workers Compensation Programs (federal health care programs).  The settlement also resolved 
allegations that Fagrons wholly owned pharmacy subsidiary, Pharmacy Services Inc. and its 
pharmacy affiliates, submitted fraudulent compound prescription claims to federal health care 
programs, used sham insurance programs to manipulate pricing, paid kickbacks to physicians for 
bogus consulting agreements, and illegally waived copays, as well as allegations against another 
Fagron subsidiary, B&B Pharmaceuticals Inc., for setting an inflated AWP for a compound 
ingredient. 
In December 2019, a doctor, pharmacists, and marketers in a compounding pharmacy scheme 
were sentenced for conspiring to pay and receive health care kickbacks for prescriptions for 
compounded creams billed to TRICARE, Medicare, and private insurance.  Between May and 
November 2014, the pharmacy billed health insurers more than $12.4 million for compounded 
24 
   
cream prescriptions written by the doctor and marketed by the marketing firm.  Even after the 
pharmacy closed and the doctor withdrew from the conspiracy, the marketing firm transferred 
the existing refills from the original doctors prescriptions to a new pharmacy, which filled the 
prescriptions and billed TRICARE.  In all, the marketing firm caused TRICARE to be billed 
more than $50.0 million for compounded creams prescribed to patients that it had recruited.  The 
five co-defendants involved in the scheme were sentenced to a combined five years, six months, 
and two days in prison and ordered to pay $6.4 million in restitution. 
(SF) In February 2020, two owners and operators of a Los Angeles pharmacy were both 
sentenced to 12 years in prison for their roles in a health care fraud scheme where Medicare and 
CIGNA were billed more than $11.8 million in fraudulent claims for prescription drugs.  From 
2012 to 2015, the owners fraudulently billed Medicare and CIGNA for prescription medications 
that their pharmacy never purchased or dispensed to beneficiaries.  In order to hide the fraud, the 
owners obtained fake drug invoices from co-conspirators to make it appear as if the pharmacy 
had purchased the medicines for which it had billed Medicare and CIGNA, when it actually had 
not.  The owners also used these fake invoices to launder the proceeds of the fraud through a co-
conspirator.  The defendants were both ordered to pay restitution of $11.8 million to Medicare 
and one of the defendants was also ordered to pay restitution of $17.1 million to CIGNA. 
(SF) In March 2020, a pharmacist and owner of a compounding pharmacy was convicted of one 
count of conspiracy to pay and receive kickbacks, 11 counts of health care fraud, three counts of 
wire fraud, and one count of conspiracy to commit money laundering as charged in a November 
2018 superseding indictment.  The defendant and his co-conspirator created a scheme to generate 
compounded pain cream prescriptions and bill, primarily, to health care programs for injured 
State and Federal employees, including Department of Labor Office of Workers Compensation 
Programs and Federal Employees Compensation Act.  As part of the scheme, the conspirators 
created a separate entity to receive government program money and launder the proceeds of their 
crimes.  During the course of the conspiracy, the pharmacy billed the Department of Labor 
approximately $21.8 million for compound gels and creams dispensed as a result of illegal 
kickback payments that were not medically necessary.  In June 2020, the Defendant was 
sentenced to 10 years in prison and over $12.0 million in restitution.  The Defendants wife and a 
pharmacy employee also pled guilty as part of the scheme. 
(SF) In June and July 2020, two doctors and two nurses were sentenced for their roles in a 
compounding pharmacy scheme wherein they conspired to commit health care fraud by 
prescribing medically unnecessary compounded medications to Medicare and TRICARE 
beneficiaries as well as members of various private insurance programs in exchange for 
kickbacks and bribes.  Between March 2014 and February 2015, the associated compounding 
pharmacy billed health insurers more than $8.1 million for the dispensation of medically 
unnecessary compounded medications prescribed by the physicians and referred to the 
compounding pharmacy.  In turn, the compounding pharmacy paid the prescribing doctor 
approximately 35 percent of the reimbursements paid by the various insurance companies, 
including Medicare and TRICARE.  The four co-defendants were collectively sentenced to nine 
years imprisonment and ordered to pay $4.8 million in restitution.   
25 
   
(SF) In July 2020, two owners of a compounding pharmacy, a marketer, and a nurse practitioner 
were sentenced for their roles in a compounding pharmacy scheme wherein they conspired to 
commit health care fraud and launder monetary instruments.  The owners created formulas to 
maximize reimbursements paid by health care providers and further paid remuneration to the 
nurse practitioner and marketer in exchange for prescribing and referring prescriptions for high 
adjudicating compounded medications, including medications reimbursed by TRICARE.  
Between April 2013 and January 2016, the compounding pharmacy billed health insurers more 
than $189.0 million for the dispensation of medically unnecessary compounded medications.  
Thereafter, the owners laundered the proceeds of their fraud scheme for the purpose of evading 
taxes through purported offshore accounts.  The owners were sentenced to 14 years and 13 
years imprisonment, respectively, the marketer was sentenced to eight years imprisonment, and 
the nurse practitioner was sentenced to 18 months, and the four co-defendants were ordered to 
pay $189.0 million in restitution.   
In July 2020, the owner of numerous compounding pharmacies pled guilty to defrauding private 
insurers and TRICARE of more than $500 million.  The guilty plea followed an investigation 
into coordinated fraudulent schemes related to prescription-compounded drugs that has resulted 
in more than 40 criminal convictions, significant custodial sentences, and the seizure, forfeiture, 
and restitution of hundreds of millions of dollars.  The defendants sophisticated scheme 
involved multi-level marketers who received kickbacks to recruit straw private and TRICARE 
insurance beneficiaries to sign up to receive unnecessary compounded drugs.  Patients were 
sometimes fraudulently induced to receive the drugs, while others received kickbacks.  The 
recruiters sent pre-filled prescriptions to co-conspirator medical clinics to be signed by doctors 
who were often paid to sign their name.  In most cases, automatically refilling prescriptions 
were written without corresponding doctor visits, medical histories, or contraindicated drug 
checks, resulting in hundreds of thousands of dollars of fraudulent reimbursements.  
Physical Therapy 
In March 2020, Saber Healthcare Group LLC, based in Bedford Heights, Ohio, and related 
entities (collectively, Saber) agreed to pay $10.0 million to resolve civil FCA allegations that 
Saber caused nine of its skilled nursing facilities to submit false claims to Medicare for 
rehabilitation therapy services that were not reasonable, necessary, or skilled by engaging in a 
systematic effort to increase Medicare billings.  The United States alleged that Saber improperly 
established general goals that all patients be provided with the highest level of rehabilitation 
therapy, regardless of the patients individual therapeutic needs, and enforced that expectation by 
pressuring therapists to provide therapy at that level to each patient at those nine facilities.  In 
connection with the settlement, Saber entered into a five-year CIA with HHS-OIG. 
In March 2020, Longwood Management Corporation and 27 affiliated skilled nursing facilities 
(Longwood) located in California agreed to resolve civil FCA allegations that they submitted 
false claims to Medicare for rehabilitation therapy services that were not reasonable or 
necessary.  The United States alleged that Longwood pressured therapists to increase the amount 
of therapy provided to patients to meet pre-planned targets for Medicare revenue, which were 
allegedly set without regard to patients individual therapy needs.  In connection with the 
26 
   
settlement, Longwood entered into a five-year CIA with HHS-OIG. 
Physician and Other Practitioners 
In October 2019, the physician owner of South Georgia Health Group and medical director of 
multiple nursing homes in Valdosta, Georgia, was convicted of defrauding Medicare and 
Georgia Medicaid of more than $6 million.  Over a period of four years, he directed his 
employees, including his co-defendant physician assistant, to bill for and falsify documentation 
for nursing home visits and medical services not provided to the vulnerable and elderly patient 
populations of four nursing homes.  The physician instructed his non-physician employees to 
falsely document that he himself had seen and treated the patients on multiple dates when he was 
not present or even gambling in Las Vegas, and to always bill at the highest complexity levels to 
capture the highest payments from Medicare and Medicaid regardless of what services were 
documented.  He also gave increasingly large billing quotas to his employees, culminating in 
billing for numerous impossible days of more than 24 hours of alleged services in a single day.  
The physician was sentenced to eight years and one month in prison after a jury found him guilty 
on all seven fraud counts after less than two hours of deliberations; his physician assistant 
pleaded guilty and was sentenced to two years in prison.  Both were jointly and severally ordered 
to pay $2.3 million in restitution. 
(SF) In October 2019, a Los Angeles, California doctor was sentenced to 10 years in prison for 
his role in a $33.0 million Medicare fraud scheme in which he and co-conspirators billed 
Medicare for physician clinic, home health, and hospice services, and DME that patients did not 
need or did not receive.  Co-conspirator owners of a home health care company paid kickbacks 
to patient recruiters to recruit Medicare beneficiaries to the physicians clinic, where the 
physician then billed Medicare for office services and tests that patients did not need or did not 
receive.  The physician also referred the Medicare beneficiaries for a variety of services, 
including home health and hospice services, as well as ordered DME, which the patients did not 
need or did not receive.  Based on referrals from the physician, the home health care company 
owned by the co-conspirators also billed Medicare for home health services that were not 
rendered or were not medically necessary.  One of the co-conspirators worked as an office 
manager at the physicians clinic and sold physician referrals to other home health and DM 
agencies.  Together, the physician defendant and his co-conspirators submitted and caused to be 
submitted claims of approximately $33.0 million, of which Medicare paid approximately $22.0 
million. 
In January 2020, a physician and his ex-wife were sentenced for conspiring to defraud Medicare 
and Blue Cross Blue Shield of over $8.0 million as owners and operators of Reliant Family 
Practice in Gainesville, Florida.  Between January 2013 and July 2016, Reliant Family Practice 
submitted fraudulent claims for chemical peels and dermabrasions relating to false diagnoses of 
rosacea and actinic keratosis.  The ex-wife was further convicted of money laundering charges 
for spending the fraudulently obtained proceeds on such things as paying off her home mortgage, 
a swimming pool, obtaining plastic surgery, purchasing commercial property, and funding an 
annuity for herself.  The physician was sentenced to 42 months in prison, and his ex-wife was  
27 
  sentenced to 90 months prison.  The defendants were also jointly ordered to pay $4.5 million in 
restitution. 
Prescription Drugs and Opioids 
In October 2019, a doctor in Virginia was convicted on 861 Federal counts of drug distribution, 
including distribution resulting in death, for operating a pill mill.  Evidence presented at trial 
showed the doctor prescribed controlled substances to every patient in his practice, resulting in 
over 500,000 Schedule II controlled substances being distributed.  The doctor caused West 
Virginia Medicaid to pay $469,220 and Medicare Part D to pay $775,479 in suspected fraudulent 
prescriptions.  The doctor was found guilty of one count of maintaining a place for the purpose 
of illegally distributing controlled substances, one count of possession with the intent to 
distribute controlled substances, and 859 counts of illegally prescribing Schedule II controlled 
substances.  The doctor was sentenced to 40 years in prison.  
In December 2019, a federal jury convicted the president and co-owner of pharmaceutical 
marketing company group CMGRX of paying and receiving illegal kickbacks and conspiring to 
defraud TRICARE of over $70.0 million.  The evidence at trial showed that CMGRX hired 
marketers to recruit more than 2,300 patients, many of whom were on active duty at Fort Hood, 
and incentivized them to obtain costly pain and scar cream prescriptions with their TRICARE 
benefits in exchange for kickbacks of $250 per prescription.  The owners of CMGRX disguised 
these illegal kickbacks by claiming they were payments for participation in a bogus medical 
study and by funneling the money through the Freedom from Pain Foundation, a sham charity 
they funded, directed, and controlled.  CMGRX also paid multiple doctors, who had no prior 
relationship with the patients, to write their prescriptions after brief telephone calls.  The doctors 
sent the signed prescriptions back to CMGRX, so that the company could send the prescriptions 
to partner pharmacies.  In exchange for those prescription referrals, the pharmacies billed 
TRICARE for the drugs and kicked back a percentage of the reimbursement to CMGRX.  In July 
2020, the court sentenced the defendant to 20 years in prison and ordered him to pay $68.0 
million in restitution.  Seven other defendants, including the CEO and co-owner of CMGRX, 
have pled guilty in connection with the scheme.  Five of the defendants are awaiting sentencing. 
In February 2020, a physician was sentenced to 240 months of imprisonment for unlawful drug 
distribution and health care fraud, capping a coordinated parallel prosecution of a major pill mill 
network.  The network led by the physician was responsible for distributing in excess of five 
million dosage units of controlled substances  frequently prescribed in dangerous cocktails  
and were prescribed so prolifically that Medicare identified the physician as the #1 ranked 
physician in the country for certain drug combinations.  To address this public health threat, the 
government initiated a comprehensive parallel criminal-civil investigation to prosecute not only 
the physicians at the core but also those pharmacists who willfully enabled the prolific 
distribution.  These coordinated efforts resulted in five criminal convictions, including both 
physicians and pharmacists, as well as 12 civil judgments or settlements with pharmacies or 
pharmacists-in-charge totaling up to $7.7 million.  Administratively, DEA obtained a series of 
compliance agreements, an immediate suspension, and multiple voluntary surrenders of 
28   
registrations.  Prescriptions for the physicians Cocktail, including oxycodone, Xanax, 
carisoprodol, and Adderall, have dropped more than 50 percent in the targeted communities. 
(SF) In February 2020, a federal jury in Memphis, Tennessee, convicted a psychiatrist on three 
counts of unlawful distribution of a controlled substance.  The charges stemmed from the 
psychiatrists role in prescribing oxycodone without legitimate medical purpose and outside the 
usual course of professional practice.  As trial evidence demonstrated, the psychiatrists conduct 
included trading prescriptions for sexual acts and female companionship.  The psychiatrist was 
sentenced to 48 months in prison. 
In May 2020, Omnicare, Inc., a subsidiary of CVS Health, agreed to pay $15.3 million and adopt 
operational changes to resolve an investigation into violations of the Controlled Substances Act 
related to its handling of opioids and other controlled substances.  Omnicare operates closed 
door pharmacies that provide controlled substances to long-term care facilities (LTCFs).  
Omnicare makes daily deliveries of prescription medications to residents of LTCFs, and it pre-
positions limited stockpiles of controlled substances at LTCFs in emergency kits, which are to 
be dispensed to patients on an emergency basis.  The investigation concluded that Omnicare 
violated the CSA in its handling of emergency prescriptions, its controls over the emergency kits, 
and its processing of written prescriptions that lacked required elements such as the prescribers 
signature or DEA number.  Omnicare failed to control emergency kits by improperly permitting 
LTCFs to remove opioids and other controlled substances from emergency kits days before 
doctors provided a valid prescription. 
(SF) On August 10, 2020, a federal jury in Huntington, West Virginia, convicted a physician on 
17 counts of unlawfully distributing controlled substances.  The physician unlawfully distributed 
controlled substances outside the usual course of professional practice and without a legitimate 
medical purpose, to among other patients, a patient in a parking lot, in hopes of obtaining sexual 
favors; and a patient to whom he prescribed four times the CDC-recommended volume for 
acceptable Morphine Milligram Equivalents.  The physicians Cadillac Escalade was also 
forfeited as part of the trial.  Sentencing is currently set for January 6, 2021. 
Psychiatric and Psychological Testing and Services 
In July 2020, Universal Health Services, Inc., UHS of Delaware, Inc. (together, UHS), and UHS 
facility Turning Point Care Center, LLC (Turning Point) agreed to pay a combined total of 
$122.0 million to resolve civil FCA allegations in two separate settlements.  In the first 
settlement, UHS, headquartered in King of Prussia, Pennsylvania, and which owns and provides 
management and administrative services to inpatient psychiatric hospitals and residential 
psychiatric and behavioral treatment facilities nationwide, agreed to pay the United States and 
participating states a total of $117.0 million to resolve allegations that UHSs hospitals and 
facilities knowingly submitted false claims for payment to the Medicare, Medicaid, TRICARE, 
VA, and FEHBP for inpatient behavioral health services that were not reasonable or medically 
necessary and/or failed to provide adequate and appropriate services for adults and children 
admitted to UHS facilities.  In a separate civil settlement, Turning Point, located in Moultrie, 
Georgia, agreed to pay the United States and the State of Georgia $5.0 million to resolve 
29 
   
allegations that it provided free or discounted transportation services to induce Medicare and 
Medicaid beneficiaries to seek treatment at Turning Points inpatient detoxification and 
rehabilitation program or intensive outpatient program.  In addition, UHS has entered into a five-
year CIA with HHS-OIG. 
Substance Abuse Treatment Centers 
In March 2020, after a six-week trial, the owner and CEO of Serenity Ranch Recovery, a 
substance abuse treatment center in Broward County, Florida, was convicted of health care fraud 
and money laundering offenses.  Between 2016 and 2019, Serenity Ranch Recovery fraudulently 
billed commercial insurance companies more than $36.0 million for addiction treatment services.  
As part of the scheme, Serenity Ranch offered unlawful kickbacks including free housing, vapes, 
manicures, cash, airline tickets, and copayment waivers, to attract patients between the ages of 
18-26 on their parents' insurance plans.  Serenity Ranch billed for addiction treatment services 
not rendered or not medically necessary and caused the ordering of expensive and medically 
unnecessary urine analysis testing three times a week for each patient.  The Clinical Directors 
and Director of Operations pled guilty before trial and were sentenced to between 32 and 120 
months imprisonment, and collectively ordered to pay over $8.0 million in restitution.  
30 
  DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Office of Inspector General
The HHS-OIG mission is to protect the integrity of HHS programs and the health and welfare of 
the people they serve.  As established by the Inspector General Act of 1978, HHS-OIG is an 
independent and objective organization that fights fraud, waste, and abuse and promotes 
efficiency, economy, and effectiveness in HHS programs and operations.  
HHS-OIGs vision is to drive positive change in HHS programs and in the lives of the people 
they serve.  HHS-OIG pursues this vision through independent oversight of HHS programs and 
operations and by providing HHS and Congress with objective, reliable information for use in 
policymaking.  HHS-OIG assesses the Departments performance, administrative operations, and 
financial stewardship.  HHS-OIG also evaluates risks to HHS programs and recommends 
recovery of misspent funds and program improvements.  HHS-OIGs law enforcement 
component investigates fraud and abuse against HHS programs and holds wrongdoers 
accountable for their actions.  In addition to safeguarding federal funds, HHS-OIG takes 
oversight and enforcement action to promote the safety and quality of services delivered by HHS 
programs.   
As the leading oversight agency specializing in health care fraud, HHS-OIG employs a multi-
disciplinary approach and uses data-driven decision-making to produce outcome-focused results.  
HHS-OIG strives to be a flexible and efficient organization that adapts to the needs of the time.  
HHS-OIG deploys resources as optimally as possible to keep pace with the fast-changing nature 
of health care programs and the corresponding changes in fraud, waste, and abuse.  To do so, 
HHS-OIG leverages sophisticated data analysis to identify and target potential fraud schemes 
and areas of program waste and abuse and to provide quality, timely, and actionable data to 
frontline staff, as well as to its Government and, as appropriate, private sector partners.  HHS-
OIG combines data analysis, field intelligence, and state-of-the-art investigative techniques to 
combat fraud and abuse.  HHS-OIG also continues to modernize its infrastructure capacity to 
deliver high quality, timely, actionable data to produce these results.  HHS-OIG is focused on 
developing data-driven key performance indicators and helped achieve results in priority areas 
and measures that further the goals of HHS-OIGs work. 
With respect to HCFAC funds, HHS-OIG focuses on combating Medicare and Medicaid fraud, 
waste, and abuse, including in priority areas, such as protecting beneficiaries from prescription 
drug abuse, including opioid abuse; enhancing program integrity in non-institutional care 
settings, such as home health and hospice; and strengthening Medicaid program integrity, 
including working with state partners to enhance the effectiveness of the MFCUs.  HHS-OIG is 
also strengthening oversight of managed care in the Medicare Advantage (MA), Medicaid 
managed care programs, new value-based models, and technology and cybersecurity.   
31  Responding to the COVID-19 Pandemic 
Continued efforts to respond to COVID-19 remains an unprecedented challenge for HHS and for 
the delivery of health care and human services to the American people.  In response to the 
COVID-19 Emergency Declaration, HHS-OIG immediately coordinated numerous COVID-19 
related investigations in conjunction with FBI, DEA, the Food and Drug Administration (FDA), 
the Federal Emergency Management Agency (FEMA), as well as various state agencies.  
Moreover, HHS-OIG issued the OIG Strategic Plan:  Oversight of COVID-19 Response and 
Recovery.  This plan sets forth the four goals that drive HHS-OIGs strategic planning and 
mission execution with respect to HHSs COVID-19 response and recovery.  These goals are to: 
(1)protect people, (2) protect funds, (3) protect infrastructure, and (4) promote effectiveness of
HHS programsnow and into the future.  Finally, HHS-OIG is using risk assessment and data
analytics to identify, monitor, and target potential fraud, waste, and abuse affecting HHS
programs and beneficiaries and to promote the effectiveness of HHSs COVID-19 response and
recovery programs, including Medicare and Medicaid programs and beneficiaries.
HHS-OIG Priority Outcomes 
With a $1.3 trillion portfolio to oversee, HHS-OIG sets priority outcomes to achieve the greatest 
impact across HHSs diverse programs.  In the FY 2020 Presidents Budget, HHS-OIG 
introduced its key performance indicators that align with HHS-OIGs priority outcomes.  HHS-
OIGs current priority outcome areas were selected based on past and ongoing work, top 
challenges facing HHS as identified annually by HHS-OIG, ability to collect data, and ability to 
influence outcomes.  HHS-OIGs priority outcome areas fall into two broad categories:  
1. Minimize risks to beneficiaries
 Protect beneficiaries from prescription drug abuse
 Ensure health and safety of children served by HHS grants13
2. Safeguard programs from improper payments and fraud
 Promote patient safety and accuracy of payment in home and community settings
 Strengthen Medicaid protections against fraud and abuse
A certain portion of the funds appropriated under HIPAA are, by law, set aside for Medicare and 
Medicaid activities of HHS-OIG.  In FY 2020, the Secretary and the Attorney General jointly 
allotted $205.3 million to HHS-OIG after accounting for a sequester reduction of $7.3 million.  
HHS-OIG was allocated an additional $20.8 million in HCFAC mandatory funds from the 
Secretary.  Additionally, Congress appropriated $93.0 million in discretionary funding for HHS-
OIG HCFAC activities. 
13 HHS-OIGs work in this area is outside the scope of HCFAC work. 
32   
Results 
HHS-OIG delivers financial savings to taxpayers while protecting beneficiaries and safeguarding 
programs from mismanagement and fraud.   
In FY 2020, HHS-OIG investigations resulted in 578 criminal actions against individuals or 
entities that engaged in crimes related to Medicare and Medicaid; and 781 civil actions, which 
include false claims and unjust-enrichment lawsuits filed in federal district court, CMP 
settlements, and administrative recoveries related to provider self-disclosure matters.  In 
addition, during FY 2020, HHS-OIG excluded a total of 2,148 individuals and entities, the 
details of which are below. 
HHS-OIGs investigations, audits, and evaluations frequently reveal vulnerabilities, misspent 
funds, or incentives for questionable or fraudulent practices in agency programs or 
administrative processes.  HHS-OIG makes recommendations to agency managers to address 
these vulnerabilities as required by the Inspector General Act.  In turn, agency managers may 
recommend legislative proposals or other corrective actions that, when enacted or implemented, 
close loopholes and reduce improper payments or conduct.  The savings from these efforts can 
be substantial.  For FY 2020, potential savings from legislative and administrative actions that 
were supported by HHS-OIG recommendations were estimated by third parties, such as the 
Congressional Budget Office or actuaries within HHS, to be $2.4 billion$2.1 billion in 
Medicare savings and $290.0 million in savings to the federal share of Medicaid.  HHS-OIGs 
expected recoveries from its involvement in health care audits and investigations totaled over 
$4.1 billion, which resulted in a ROI of about $12.40 to $1.00.14 
Additional information about savings achieved through such policy and procedural changes may 
be found in the HHS-OIG fall Semiannual Report to Congress, online at https://oig.hhs.gov.    
Enforcement 
HHS-OIG works with its law enforcement partners to conduct criminal and civil investigations 
involving the Medicare and Medicaid programs and participates in the settlement of False 
Claims Act cases, including through the negotiation of CIAs.  HHS-OIG works with the MFCUs 
to address fraud and abuse in the Medicaid program.  In addition to investigating criminal and 
civil matters, HHS-OIG imposes CMPs for a variety of health care related offenses. 
   
 
14 This ROI uses a 3-year average of expected recoveries, fines, penalties, and stolen and misspent funds relating to 
HHS-OIGs health care oversight and is compared with HHS-OIGs annual obligations.  This ROI differs from the 
HCFAC ROI, which uses actual dollars returned to the government.  HHS-OIG expects the ROI to fluctuate over 
time due to factors including the type and size of settlements and identified disallowances, complexity of schemes 
that are the subject of HHS-OIG scrutiny in a given year, and heightened focus on high-value but lower-dollar work 
addressing patient safety and quality of care. 
33 
   
Combatting the Opioid Epidemic 
Fighting the opioid crisis and protecting beneficiaries from prescription drug abuse is among 
HHS-OIGs top priorities.  Opioid-related matters are a substantial portion of HHS-OIGs 
investigations.   
In April 2019, HHS-OIG and its federal and state law enforcement partners led the first ARPO 
Strike Force Takedown.  The takedown resulted in enforcement actions involving 60 charged 
defendants across 11 federal districts, including 31 doctors, seven pharmacists, eight nurse 
practitioners, and seven other licensed medical professionals, for their alleged participation in the 
illegal prescribing and distributing of opioids and other dangerous narcotics and for health care 
fraud schemes.  Since June 2018, HHS-OIG has excluded more than 1,451 providers based on 
conduct related to opioid diversion and abuse. 
Strike Force Operations 
In FY 2020, HHS-OIG continued to staff and support Strike Force operations working in 
conjunction with DOJ Criminal Divisions Fraud Section, local USAOs, the FBI, and state and 
local law enforcement agencies.  HHS-OIG has assigned agents to Strike Forces in Miami and 
Tampa, Florida; Dallas and Houston, Texas; Los Angeles, California; Detroit, Michigan; 
Brooklyn, New York; Baton Rouge and New Orleans, Louisiana; Chicago, Illinois; and Newark, 
New Jersey/Philadelphia, Pennsylvania; along with a Corporate Strike Force in Washington, 
D.C.  HHS-OIG supports Strike Force operations by providing investigative, analytic, and 
forensic resources.   
Among other fraudulent conduct, the Strike Forces have effectively investigated and prosecuted 
individuals and entities that do not provide legitimate health care services but exist solely for the 
purpose of defrauding Medicare and other Government health care programs.  For example, in 
September 2020, the largest national takedown resulted in charges against 345 individuals for 
submitting more than $6.0 billion false and fraudulent claims to federal health care programs and 
private insurers, including more than $4.5 billion connected to telemedicine, more than 
$845.0 million connected to substance abuse treatment facilities, or sober homes, and illegal 
opioid distribution schemes across the country.  The continued support of Strike Force operations 
is a top priority for HHS-OIG.  
Program Exclusions 
One important mechanism for safeguarding program beneficiaries and helping ensure the quality 
of care provided to them is through exclusion of providers and suppliers who have engaged in 
crimes related to Medicare or Medicaid, patient abuse or neglect, financial misconduct, 
controlled substances, or as a result of license revocation.  This list of conduct is not exhaustive 
but identifies the most prevalent causes underlying HHS-OIGs exclusions of individuals or 
entities.  The effect of an HHS-OIG exclusion is that no federal health care program payment 
may be made for any items or services furnished:  (1) by an excluded person or (2) at the medical 
direction or on the prescription of an excluded person.  HHS-OIG completed the deployment of a 
new service for MFCUs to report convictions through a central Web-based portal for exclusion.  
HHS-OIG is also responsible for reinstating providers who apply and have met the requirements 
of their exclusions. 
34 
   
In FY 2020, HHS-OIG excluded a total of 2,148 individuals and entities.  In addition to those 
mentioned in the Program Accomplishments section above, exclusion actions by HHS-OIG 
included: 
  In January 2020, a massage therapist in Texas was excluded for a minimum period of 50 
years based on his conviction for sexual assault.  During a massage therapy session, this 
massage therapist touched the patient inappropriately to include sexually penetrating her 
while providing massage therapy services.  The court sentenced this individual to serve 
18 years of incarceration, and the Texas Department of Licensing and Regulation 
revoked his license as a massage therapist.   
  In July 2020, an osteopathic physician in Virginia was excluded for a minimum period of 
50 years based on his conviction for maintaining a place for the purpose of unlawfully 
distributing controlled substances, distributing Schedule II controlled substances without 
legitimate purpose and beyond the bounds of medical practice, and distributing Schedule 
II controlled substances without a legitimate medical purpose and beyond the bounds of 
medical practice which resulted in death.  The osteopathic physician opened a medical 
office and, from about 2015 to about August 2017, prescribed controlled substances to 
every patient in his practice.  This resulted in the distribution of over 500,000 Schedule II 
controlled substances.  Drugs involved in the scheme included oxymorphone, oxycodone, 
and fentanyl.  Most of the patients would travel hundreds of miles to receive the drugs.  
The osteopathic physician did not accept any insurance but took payment via cash or 
credit card for the prescriptions.  One patient died as a result of this prescribing activity.  
The court sentenced the individual to 480 months of incarceration, and the Virginia 
Board of Medicine suspended his license to practice medicine. 
  In August 2020, the owner of a home health agency in Michigan was excluded for a 
minimum period of 20 years based on his conviction of health care fraud conspiracy.   
From about October 2005 to about March 2013, the individual and his wife controlled 
and operated home health agencies that billed Medicare for services that were not 
medically necessary or were not provided.  In addition, the individual created false 
physical therapy files and claimed that physical therapy services had been provided, 
when in fact, no such services had been provided.  The court sentenced him to serve 32 
months of incarceration and repay approximately $12.1 million in restitution. 
  In August 2020, the owner of a pharmacy in Mississippi was excluded for a minimum 
period of 75 years based on his conviction for conspiracy to commit health care fraud.  
From about December 2014 to about January 2016, this individual participated in a 
scheme to defraud TRICARE by formulating compounded medications that did not fit the 
individualized needs of patients but instead were formulated to obtain maximum 
reimbursement from TRICARE.  In addition, this individual and his co-conspirators 
arranged for their employees to purchase prepaid debit cards to make copayments for 
beneficiaries.  The court ordered this individual to pay approximately $243.5 million in 
restitution and serve 120 months of incarceration.  The Mississippi Board of Pharmacy 
also revoked his license to practice as a pharmacist.  
35 
   
Civil Monetary Penalties 
HHS-OIG has the authority to seek CMPs, assessments, and exclusion under the Civil Monetary 
Penalties Law (CMPL) against an individual or entity based on a wide variety of prohibited 
conduct.  OIG brings cases under the CMPL in order to emphasize HHS-OIG guidance, enhance 
HHS-OIG work such as audits and evaluations, fill enforcement gaps, and level the playing field 
for compliant providers.  HHS-OIG uses these authorities in three common ways:  false claims 
and kickback affirmative enforcement, Emergency Medical Treatment and Labor Act 
(EMTALA) enforcement, and the Self-Disclosure Protocol.  In FY 2020, HHS-OIG concluded 
cases involving more than $31.9 million in CMPs and assessments. 
Affirmative Litigation and Exclusion 
HHS-OIG may seek a CMP or exclusion against individuals or entities that present claims to 
federal health care programs that the individual or entity knows or should know are for items or 
services that were not provided as claimed or were false or fraudulent.  HHS-OIG may also seek 
a CMP or exclusion against individuals or entities who knowingly and willfully violate the AKS 
by:  (1) offering or paying remuneration, directly or indirectly, to induce referrals of federal 
health care program business; or (2) soliciting and receiving remuneration, directly or indirectly, 
in return for referrals of federal health care program business.  In FY 2020, HHS-OIG recovered 
more than $8.2 million in false claims and kickback affirmative enforcement actions.  HHS-OIG 
also excluded 19 individuals and entities from participation in federal health care programs based 
on conduct at issues in these health care fraud cases.   
Affirmative litigation examples include: 
  December 2019, New YorkA doctor and his practice entered into a $191,210 CMPL 
settlement agreement with HHS-OIG.  The settlement agreement resolves allegations that 
the doctor and his practice:  (1) submitted claims for neuromuscular junction testing that 
were not performed; and (2) billed for 13 or more nerve conduction studies (NCS), when 
only 12 or fewer NCS were performed. 
  March 2020, ColoradoTwo doctors and a medical group, entered into a $54,982 CMPL 
settlement agreement with HHS-OIG.  The settlement agreement resolves allegations that 
the medical group solicited and received remuneration from laboratory companies, in the 
form of "process and handling" payments related to the collection of blood.  HHS-OIG 
alleged that doctors and medical group received the remuneration from laboratories in 
exchange for the medical group and medical groups employees referring patients for 
laboratory testing services to laboratories, for which the Medicare program paid. 
  May 2020, TexasA drug manufacturer, entered into a $45,000 CMPL settlement 
agreement with HHS-OIG.  The settlement agreement resolves allegations that the 
manufacturer failed to submit timely certified monthly and quarterly Average 
Manufacturer's Price (AMP) data to the CMS for certain months and quarters in 2015, 
2016, 2017, and 2018.  The Medicaid Drug Rebate Program requires manufacturers to 
enter into and have in effect a national rebate agreement with the Secretary of Health and 
Human Services in order for Medicaid payments to be available for the manufacturer's 
36 
   
covered outpatient drugs.  Companies with such rebate agreements are required to submit 
certain drug pricing information to CMS, including quarterly and monthly AMP data.  
  July 2020, New YorkA federally qualified health center (FQHC), entered into a 
$100,000 CMPL settlement agreement and the first ever compliance agreement between 
HHS-OIG and an HHS grant recipient.  The settlement and compliance agreements 
resolve allegations that the FQHC submitted false specified claims in the form of 
drawdowns from the HHS Payment Management System for Health Resources and 
Services Administration grant funds.  HHS-OIG alleged the drawdowns were not 
supported by adequate documentation, timesheets, and a financial management and 
control system that ensured that HHS grant funds were used solely for authorized 
purposes in accordance with federal law and the terms of the awards.  HHS-OIG also 
alleged that the FQHC falsely represented to HHS that it had in place:  (1) safeguards to 
prohibit employees from using their positions for personal gain; and (2) a financial 
management and control system that ensured that HHS grant funds were used solely for 
authorized purposes in accordance with federal law.   
Patient Dumping 
HHS-OIG may also seek a CMP against any hospital that negligently violates its obligations 
under EMTALA, known as the patient dumping statute, which requires a hospital to stabilize 
and treat, or appropriately transfer if the hospital lacks the specialized capabilities necessary to 
stabilize the person, anyone who presents to the Emergency Department with an emergency 
medical condition.  In FY 2020, HHS-OIG recovered more than $620,000 in cases under the 
EMTALA statute.  Patient dumping examples include: 
  April 2020, GeorgiaDeKalb Medical Center, Inc. (DeKalb) entered into a $260,000 
settlement agreement with HHS-OIG.  Based on HHS-OIGs investigation, the settlement 
agreement resolves allegations that DeKalb violated the EMTALA statute when it failed 
to provide an adequate screening examination and stabilizing treatment for 21 
individuals.  The following is an example of such incidents:  Patient N.R.A., a 25-year-
old female, presented to DeKalbs ED with complaints of acute gastric pain, nausea, and 
vomiting.  The medical records also listed possible pregnancy as her chief complaint.  
N.R.A. had a prior history of peptic ulcer disease and gastric ulcers.  The medical records 
indicated that N.R.A. was seen by a registered nurse and was triaged using an emergency 
severity level index at level four (indicating a non-urgent patient).  The triage nurse 
recorded N.R.A.s vital signs and marked "no" next to nine questions on a non-patient-
specific checklist.  Within six minutes of the nurse starting the triage process, N.R.A. was 
discharged from DeKalbs ED.  HHS-OIG determined that DeKalbs ED was capable of 
providing an appropriate medical screening examination to determine whether the 
patients at issue had an emergency medical condition and providing stabilizing treatments 
in the event patients had such conditions, but HHS-OIG contends that DeKalb failed to 
do so. 
Self-Disclosure  
HHS-OIG maintains the Self-Disclosure Protocol (Protocol) whereby providers may voluntarily 
37 
   
identify, disclose, and resolve instances of potential fraud involving federal health care programs 
for resolution under the CMPL.  The Protocol incentivizes providers to detect and prevent fraud 
internally and to bring potential fraud to HHS-OIGs attention.  Under the Protocol, HHS-OIG 
provides these entities and individuals with speedy resolutions, reduced CMPs, and other 
benefits as compared to affirmative cases brought by HHS-OIG or DOJ for similar conduct.   
HHS-OIG collected $21.9 million under the Protocol in FY 2020.   
Self-disclosure examples include: 
  April 2020, AlaskaAfter it self-disclosed conduct to HHS-OIG, the City and Borough 
of Sitka, formerly doing business as Sitka Community Hospital, a Department of the City 
and Borough of Sitka (Sitka) agreed to pay $4.1 million for allegedly violating the Civil 
Monetary Penalties Law provisions applicable to kickbacks.  HHS-OIG alleged that Sitka 
paid remuneration to providers in the form of:  (1) excessive compensation under ED call 
coverage arrangements; and (2) excessive compensation under advance practice 
providers arrangements. 
Corporate Integrity Agreements and Enforcement 
Many health care providers elect to settle their cases before litigation.  HHS-OIG provides 
information on its website that identifies how it evaluates future risk to federal health care 
programs from providers who settle health care fraud cases (called the Fraud Risk Indicator).   
As part of the settlements, providers often agree to enter into CIAs with HHS-OIG to avoid 
exclusions from Medicare, Medicaid, and other federal health care programs.   
Under a CIA, a provider commits to establishing a program and taking other specified steps to 
ensure future compliance with Medicare and Medicaid rules.  The compliance programs are 
designed, in part, to prevent future fraud.  HHS-OIG monitors providers compliance with these 
agreements.  Providers under a CIA are required to disclose certain Reportable Events which 
may implicate OIGs Civil Monetary Penalties authorities.  HHS-OIG may impose penalties on 
entities that fail to comply with the requirements of their CIAs, as shown.  HHS-OIG collected 
more than $2.5 million in CIA enforcement.  CIA enforcement examples include: 
  June 2020, TennesseeOn June 1, 2020, the Departmental Appeals Board (DAB) upheld 
HHS-OIG's demand that Friendship Home Health, Inc., et al. (Friendship Entities) pay 
$1.3 million in stipulated penalties for breaches of their CIA.  On November 19, 2018, 
HHS-OIG sent the Friendship Entities a demand for $1.3 million in stipulated penalties 
for their failure to repay overpayments identified in their second and third annual reports.  
The Friendship Entities appealed this demand and requested a hearing with a DAB 
Administrative Law Judge (ALJ).  On October 31, 2019, the ALJ upheld HHS-OIG's 
demand.  The Friendship Entities then appealed to the DAB.  In its decision, the DAB 
agreed with the ALJ's conclusions that the CIA's auditing and repayment provisions 
created independent obligations to repay overpayments to Medicare and Medicaid, and 
that each time the Friendship Entities violated those obligations to repay overpayments, it 
created a separate basis for HHS-OIG to demand stipulated penalties.  The DAB also 
38 
  agreed that the Friendship Entities were properly subject to stipulated penalties arising 
from those failures and further held that the CIA authorizes per-day stipulated penalties 
to run concurrently for each failure to make timely repayment. 
Audits and Evaluations 
HHS-OIG promotes the economy, effectiveness, and efficiency of HHS programs through audits 
and evaluations.  HHS-OIG uses a dynamic, data-driven work planning process and makes 
adjustments throughout the year to meet evolving priorities and to anticipate and respond to 
emerging issues with the resources available.  HHS-OIGs work is informed by mandatory 
requirements set forth in laws, regulations, or other directives; requests made or concerns raised 
by Congress, HHS management, or the Office of Management and Budget; or alignment with 
strategic goals, etc.  With respect to Medicare and Medicaid, HHS-OIG assesses relative risks to 
identify the areas most in need of attention and, accordingly, to set priorities for the sequence and 
proportion of resources to be allocated. 
Throughout FY 2020, HHS-OIG issued 178 audit reports and 44 evaluations, resulting in 689 
new recommendations issued to HHS operating divisions.  HHS operating divisions also 
implemented 286 recommendations during FY 2020.   
HHS-OIGs audit and evaluation findings in FY 2020 are listed below and organized by HHS-
OIGs two broad priority outcomes to:  (1) minimize risks to beneficiaries, and (2) safeguard 
programs from improper payments and fraud. 
Minimize Risks to Beneficiaries 
States Continued To Fall Short in Meeting Required Timeframes for Investigating Nursing Home 
Complaints: 2016-2018.  Twenty-one states failed to meet required timeframes for investigating 
the second-most serious nursing home complaints and 10 of these states did not meet the 
threshold for eight consecutive years.  Furthermore, four of the five states that fell short in the 
timely investigation of the most serious nursing home complaints, which require investigating 
within two days, from 2011 through 2015, continued to fall short from 2016 through 2018.  
Generally, HHS-OIG found that the states it communicated with face challenges with receiving a 
high volume of complaints, triaging complaints, and having adequate human resources to 
investigate complaints.  HHS-OIGs findings raise questions about some states ability to address 
serious nursing home complaints and about the effectiveness of the CMSs oversight of states.  
(OEI-01-19-00421) 
CMS Should Pursue Strategies To Increase the Number of At-Risk Beneficiaries Acquiring 
Naloxone Through Medicaid.  CMS and state Medicaid agencies can be encouraged by their 
progress to date in increasing access to naloxonea drug that reverses opioid overdoseswhile 
also continuing to look for ways to further expand naloxone availability under Medicaid.  HHS-
OIGs findings can help CMS pursue strategies to increase the number of at-risk beneficiaries 
acquiring community-use versions of naloxone (i.e., that versions that can be appropriately 
administered in emergency situations by those with minimal to no training) through Medicaid.  
(OEI-BL-18-00360) 
39   
National Background Check Program for Long-Term-Care Providers: Assessment of State 
Programs Concluded in 2019.  States participating in the National Background Check Program 
for long-term care providers had varying degrees of state-level legal requirements and practical 
infrastructure for conducting background checks.  This affected their ability to implement select 
Program requirements and to consistently report quality data.  HHS-OIG's findings can help 
CMS identify ways to strengthen its support of the Program.  (OEI-07-20-00180) 
States Could Do More To Prevent Terminated Providers From Serving Medicaid Beneficiaries.  
Nearly 1,000 terminated providersor 11 percent of all terminated providerswere 
inappropriately enrolled in state Medicaid programs or were associated with at least $50.3 
million in Medicaid payments.  Despite legislative requirements in the 21st Century Cures Act 
designed to strengthen Medicaid program integrity, terminated providers continue to serve 
Medicaid beneficiaries.  Some of these providers were terminated for criminal convictions, 
licensure issues, and provider misconduct, representing a risk to beneficiaries safety and their 
quality of care.  In addition, only eight states managed care contracts all clearly included the 
provisionrequired by the Cures Actthat prohibits terminated providers from participating in 
Medicaid managed care networks.  This vulnerability may allow terminated providers to serve 
Medicaid beneficiaries and reduce states ability to limit these providers participation in 
Medicaid managed care networks.  (OEI-03-19-00070).  
23 States Reported Allowing Unenrolled Providers To Serve Medicaid Beneficiaries.  
HHS-OIG found that 23 states had not enrolled all Medicaid providers.  Of the 27 states that 
reported enrolling all providers, 16 reported lacking enrollment processes or enforcement 
controls to ensure ongoing compliance with federal provider enrollment requirements.  When 
states do not enroll and screen providers, Medicaid beneficiaries are exposed to potentially 
harmful providers.  (OEI-05-19-00060)   
Medicare Part D Beneficiaries at Serious Risk of Opioid Misuse or Overdose: A Closer Look. 
Most Part D beneficiaries at serious risk of opioid misuse or overdose in 2017 received high 
amounts of opioids the following year, while 11 percent had an overdose or adverse effect from 
an opioid in 2017 or 2018, and about 48 percent have been diagnosed with opioid use disorder or 
other conditions related to the misuse of opioids.  Only seven percent of those who were 
diagnosed with opioid use disorder received drugs for medication-assisted treatment (MAT 
drugs) through Part D, possibly because of challenges that beneficiaries have in accessing 
prescribers.  Although opioids can be appropriate under certain circumstances, steps should be 
taken to mitigate the risk of misuse and overdose, especially when beneficiaries receive high 
amounts of opioids for long periods of time.  (OEI-02-19-00130) 
Opioid Use in Medicare Part D Continued To Decline in 2019, but Vigilance Is Needed as 
COVID-19 Raises New Concerns.  Medicare Part D has seen a steady decline in opioid use over 
the past several years and an increased use of drugs for MAT.  About one in four Part D 
beneficiaries received opioids in 2019, a decrease from the prior three years.  At the same time, 
the number of beneficiaries receiving drugs for MAT for opioid use disorder increased to 
209,000 in 2019.  In addition, the number of beneficiaries receiving prescriptions for naloxone 
through Part D has continued to grow.  Nearly 267,000 beneficiaries received high amounts of 
40 
   
opioids in 2019, with almost 34,000 beneficiaries at serious risk of opioid misuse or overdose.  
About 140 prescribers ordered opioids for large numbers beneficiaries at serious risk.  The 
changes in recent years in opioid use and MAT show progress from the efforts of HHS and 
others to address the opioid crisis.  Nonetheless, it is critical to remain vigilant.  The COVID-19 
pandemic poses additional danger for this population.  (OEI-02-20-00320) 
Registered Nurses Did Not Always Visit Medicare Beneficiaries Homes at Least Once Every 14 
Days To Assess the Quality of Care and Services Provided by Hospice Aides.  Registered nurses 
did not always: (1) visit hospice beneficiaries homes at least once every 14 days to assess the 
quality of care and services provided by hospice aides or (2) document the visits in accordance 
with federal requirements.  Of the approximately 189,000 high-risk date-pairs (a date-pair 
consisted of two care visits that were made by a registered nurse to a beneficiarys home and that 
were more than 14 days apart) in our sample, HHS-OIG identified:  (1) an estimated 99,000 
instances in which the registered nurses did not make the required supervisory visits at least once 
every 14 days and (2) an estimated 5,000 instances in which supervisory visits were not 
documented in accordance with federal requirements.  These deficiencies occurred because of 
hospices lack of oversight, scheduling errors, employee turnover, and the registered nurses not 
being aware of the 14-day supervisory visit requirement.  As a result, there was no assurance that 
beneficiaries admitted to those hospices received the appropriate care while in hospice care.  (A-
09-18-03022) 
Some Nursing Homes Reported Staffing Levels in 2018 Raise Concerns; Consumer 
Transparency Could Be Increased.  Nursing homes reported staffing levels often vary on a day-
to-day basis, and seven percent fell below required federal staffing levels on at least 30 total days 
in 2018.  CMSs Star Rating System ranks nursing homes on their average staffing levels each 
quarter; as a result, daily staffing variations are not transparent to consumers.  This review, 
initiated before the COVID-19 pandemic emerged, focuses on staffing data from 2018.  
However, the 2020 pandemic reinforces the importance of adequate staffing for nursing homes, 
as inadequate staffing can make it more difficult for nursing homes to respond to infectious 
disease outbreaks like COVID-19.  (OEI-04-18-00450)   
Medicaid Data Can Be Used To Identify Instances of Potential Child Abuse or Neglect.  HHS-
OIG determined that Medicaid claims data can be used to identify incidents of potential child 
abuse or neglect.  Using that data, HHS-OIG estimated that 29,260 of the 29,534 Medicaid 
beneficiaries in the sampling frame were involved with incidents of potential child abuse or 
neglect that were supported by Medicaid claims data and evidence contained in the medical 
records.  HHS-OIG further estimated that, of the beneficiaries in the population associated with 
incidents of potential child abuse or neglect, 3,928 were involved with incidents that were not 
reported to child protective services.  HHS-OIG determined that most incidents of potential child 
abuse or neglect identified in HHS-OIGs sample occurred in familiar settings by perpetrators 
known to the victims.  CMS did not identify similar incidents of potential child abuse or neglect 
during the audit period or encourage the states to identify the incidents.  (A-01-19-00001) 
New Jersey Did Not Ensure That Incidents of Potential Abuse and Neglect of Medicaid 
Beneficiaries Residing in Nursing Facilities Were Always Properly Reported and Investigated.  
41 
  New Jersey did not ensure that nursing facilities always investigated and reported incidents of 
potential abuse or neglect to the state in accordance with federal and state requirements.  Of the 
103 claims in the sample, 79 claims were not the result of potential abuse or neglect; therefore, 
nursing facilities were not required to report the incident to the state.  Of the remaining 24 
claims, ten claims were the result of potential abuse or neglect that should have been reported to 
the state.  However, five of the ten claims were not properly investigated and reported to the 
state.  For the other 14 claims, nursing facilities did not provide documentation, or their records 
did not contain sufficient documentation for state officials to determine whether the incident 
should have been investigated and reported.  These deficiencies occurred because nursing facility 
staff did not follow requirements for investigating and reporting potential incidents of abuse or 
neglect.  In addition, New Jersey did not have adequate survey procedures for ensuring that 
nursing facilities documented all such incidents.  HHS-OIG estimated that 311 Medicaid hospital 
claims with selected diagnosis codes resulted from incidents of potential abuse or neglect at a 
nursing facility in New Jersey during calendar year 2016.  Of this amount, HHS-OIG estimated 
that 220 claims were the result of potential abuse or neglect that the nursing facilities did not 
investigate and report to the state.  In addition, HHS-OIG estimated that, for 616 claims, the 
associated beneficiary's nursing facility did not have records to sufficiently document the 
circumstances of the beneficiary's injuries or condition that led to the hospital transfer so that 
state officials could determine whether the incident was the result of potential abuse or neglect.   
(A-02-18-01006) 
New Yorks Oversight of Medicaid Managed Care Organizations Did Not Ensure Providers 
Complied With Health and Safety Requirements at 18 of 20 Adult Day Care Facilities Reviewed. 
New Yorks oversight of Medicaid Managed Care Organizations (MCOs) did not ensure that 18 
of the 20 adult day care services providers we audited complied with federal and state health and 
safety requirements.  Specifically, HHS-OIG found 476 instances of noncompliance with 
requirements for staff training, physical environment and safety, emergency preparedness, and 
staff health status.  The instances of noncompliance occurred because the MCOs did not 
adequately monitor their contracted providers to ensure compliance with health and safety 
requirements.  These deficiencies could have significantly impacted the health and safety of 
vulnerable Medicaid beneficiaries.  (A-02-18-01027) 
Pennsylvania Did Not Fully Comply With Federal and State Requirements for Reporting and 
Monitoring Critical Incidents Involving Medicaid Beneficiaries With Developmental Disabilities.  
Pennsylvania did not fully comply with federal Medicaid waiver and state requirements for 
reporting and monitoring incidents involving Medicaid beneficiaries with developmental 
disabilities who resided in community-based settings.  Specifically, Pennsylvania did not:  
(1)ensure that community-based providers reported thousands of 24-hour reportable incidents
within required timeframes, (2) ensure that community-based providers and county and regional
investigators analyzed and investigated all beneficiary deaths, and (3) ensure that community-
based providers referred all suspicious deaths to law enforcement.  Pennsylvania did not have
adequate controls to detect unreported 24-hour reportable incidents and did not have controls in
place to ensure that all beneficiary deaths were investigated and that all suspicious deaths were
referred to law enforcement.  Therefore, Pennsylvania did not fulfill participant safeguard
assurances it gave to CMS to ensure the health, welfare, and safety of the 18,770 Medicaid
42  beneficiaries with developmental disabilities covered by the Medicaid waiver in HHS-OIGs 
audit.  (A-03-17-00202) 
North Carolina Did Not Ensure That Nursing Facilities Always Reported Allegations of 
Potential Abuse and Neglect of Medicaid Beneficiaries and Did Not Always Prioritize 
Allegations Timely.  North Carolina did not ensure that nursing facilities always reported 
potential abuse or neglect of Medicaid beneficiaries transferred from nursing facilities to hospital 
emergency departments.  In addition, it did not always fully comply with federal requirements 
for assigning a priority level to reported allegations of potential abuse and neglect or for 
correctly recording the associated dates.  Finally, North Carolina's complaint and incident report 
program may not have been effective in promoting and protecting the health, safety, and welfare 
of residents, patients, and other clients receiving health care services.  (A-04-17-04063) 
Texas Did Not Fully Comply With Federal and State Requirements for Reporting and 
Monitoring Critical Incidents Involving Medicaid Beneficiaries With Developmental Disabilities 
Texas did not ensure that all beneficiary deaths were reported and reviewed; that all complaints 
not closed within 10 days were tracked; and that all allegations of abuse, neglect, and 
exploitation were entered into the Human Services Enterprise Administration Reporting and 
Tracking (HEART) system.  Texas had a procedure to detect unreported deaths but was not 
following it, did not have a system in place to track complaints not closed within 10 days, and 
did not have procedures to ensure that allegations were entered into the HEART system.  (A-06-
17-04003)
Iowa Did Not Comply With Federal and State Requirements for Major Incidents Involving 
Medicaid Members With Developmental Disabilities.  Iowa did not fully comply with federal and 
state requirements for reporting and monitoring major incidents involving Medicaid members 
with developmental disabilities.  Specifically, Iowa did not ensure that community-based 
providers reported all major incidents to the state; ensure that community-based providers 
documented the resolution of reported major incidents to prevent or diminish the probability of 
future occurrences; review Critical Incident Reports to determine trends, problems, and issues in 
service delivery; ensure that community-based providers reported all member deaths to the state; 
and report all known major incidents to CMS.  Therefore, Iowa did not fulfill participant 
safeguard assurances it gave to CMS to ensure the health, welfare, and safety of the 16,056 
Medicaid beneficiaries with developmental disabilities covered by the Medicaid waiver in HHS-
OIGs audit.  (A-07-18-06081) 
North Carolina Should Improve Its Oversight of Selected Nursing Homes' Compliance With 
Federal Requirements for Life Safety and Emergency Preparedness.  North Carolina did not 
ensure that selected nursing homes that participated in the Medicare or Medicaid programs 
complied with CMS and state requirements for life safety and emergency preparedness.  Of the 
20 nursing homes that HHS-OIG visited, 18 had deficiencies in areas related to life safety or 
emergency preparedness.  The instances of noncompliance occurred because nursing homes had 
inadequate management oversight and high staff turnover.  In addition, North Carolina did not 
have a standard life safety-training program for all nursing home staff and generally performed 
life safety surveys no more frequently than once every eight to 15 months, even at these higher 
43   
risk nursing homes.  (A-04-19-08070) 
Illinois Should Improve Its Oversight of Selected Nursing Homes' Compliance With Federal 
Requirements for Life Safety and Emergency Preparedness.  Illinois did not ensure that selected 
nursing homes in the state that participated in the Medicare or Medicaid programs complied with 
CMS requirements for life safety and emergency preparedness.  During site visits, HHS-OIG 
identified deficiencies in areas related to life safety and emergency preparedness at all 15 nursing 
homes reviewed.  As a result, residents at the 15 nursing homes were at increased risk of injury 
or death during a fire or other emergency.  The identified deficiencies occurred because the 
existing life safety-training program for nursing home management could not educate all Illinois 
nursing home management in a timely manner, and the state did not offer an emergency 
preparedness-training program for nursing home management.  (Currently, CMS requires neither 
of the two training programs.) Further, Illinois performed abbreviated surveys of emergency 
preparedness plans and had insufficient personnel for its workload.  In addition, Illinois did not 
determine whether carbon monoxide alarms were installed in accordance with state law. (A-05-
18-00037) 
Oregon's Oversight Did Not Ensure That Four Coordinated-Care Organizations Complied With 
Selected Medicaid Requirements Related to Access to Care and Quality of Care.  The four 
Coordinated-Care Organizations (CCOs) looked at by HHS-OIG generally complied with federal 
and state requirements related to time and distance standards and timely access standards, as well 
as requirements related to assignment of primary care providers (PCP)s.  However, the CCOs did 
not comply with requirements related to provider credentialing and beneficiary grievances and 
appeals.  Specifically, CCOs: (1) did not ensure that services were provided within the scope of 
license of a provider with a restricted license or report providers with licensing board actions 
against them, (2) did not credential all provider types (e.g., mental health providers), and (3) did 
not perform or document all minimum required credentialing checks.  In addition, CCOs did not 
resolve or review beneficiary grievances appropriately and did not adjudicate appeals in 
compliance with their contracts with Oregon.  CCOs also submitted inaccurate or incomplete 
data on grievances and appeals, which Oregon used for oversight.  These issues occurred 
because: (1) Oregon provided insufficient oversight of, and guidance to, the CCOs and (2) the 
CCOs provided insufficient oversight of, and guidance to, their subcontractors.  Because not all 
providers were appropriately credentialed, there was an increased risk of poor quality of care.  In 
addition, the mishandling of grievances and appeals may have reduced beneficiaries' access to 
care and the quality of care.  (A-09-18-03035) 
Safeguard Programs From Improper Payments and Fraud 
Some Drug Manufacturers Reported Inaccurate Product Data to CMS.  Manufacturers reported 
inaccurate drug product data for 14 percent of the national drug codes HHS-OIG reviewed that 
were associated with Medicare Part B-covered drugs.  (Such drugs are generally those that are 
injected or infused in physicians offices or hospital outpatient settings.)  If manufacturer-
reported product data is incorrect, Medicare may make inaccurate payments for drugs and 
Medicaid may collect inaccurate rebates from manufacturers.  (OEI-03-19-00200) 
44 
  Billions in Estimated Medicare Advantage Payments From Diagnoses Reported Only on Health 
Risk Assessments Raise Concerns.  Billions of estimated MA risk-adjusted payments supported 
solely through health risk assessments (HRAs) raise concerns about the completeness of payment 
data submitted to CMS, the validity of diagnoses on HRAs, and the quality of care coordination 
for beneficiaries.  Diagnoses that MA organizations reported only on HRAsand on no other 
encounter records in 2016resulted in an estimated $2.6 billion in risk adjusted payments for 
2017.  In addition, in-home HRAs generated 80 percent of these estimated payments.  Most in-
home HRAs were conducted by companies that partner with or are hired by MA organizations to 
conduct these assessmentsand therefore are not likely conducted by the beneficiarys own 
primary care provider.  20 MA organizations generated millions in payments from in-home 
HRAs for beneficiaries for whom there was not a single record of any other service being 
provided in 2016.  (OEI-03-17-00471). 
Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns.  
Billions of estimated MA risk-adjusted payments supported solely through chart reviews raise 
potential concerns about the completeness of payment data submitted to CMS, the validity of 
diagnoses on chart reviews, and the quality of care provided to beneficiaries.  Diagnoses that MA 
organizations reported only on chart reviewsand not on any service recordsresulted in an 
estimated $6.7 billion in risk-adjusted payments for 2017.  CMS based an estimated $2.7 billion 
in risk-adjusted payments on chart review diagnoses that MA organizations did not link to a 
specific service provided to the beneficiary.  Although limited to a small number of beneficiaries, 
almost half of MA organizations reviewed had payments from unlinked chart reviews where 
there was not a single record of a service being provided to the beneficiary in all of 2016.  (OEI-
03-17- 00470)
Key Medicare Tools To Safeguard Against Pharmacy Fraud and Inappropriate Billing Do Not 
Apply to Part D.  Part D does not have three key tools to protect against pharmacy fraud that are 
available in other parts of Medicare:  pharmacy enrollment, revocation, and preclusion.  These 
three tools apply to pharmacies only when they bill Parts B or C, not when they bill Part D.  
(OEI-02-15-00440). 
Medicaid Fraud Control Units Fiscal Year 2019 Annual Report.  The annual report highlights 
statistics on the accomplishments of the 52 MFCUs in operation during FY 2019.  HHS-OIG 
found that the number of convictions in FY 2019 (1,527) remained consistent with previous 
years.  Of the 1,111 MFCU fraud convictions, 44 percent involved personal care services 
attendants and agencies.  Fraud cases accounted for 73 percent of the MFCU convictions, while 
27 percent involved patient abuse or neglect.  MFCUs were responsible for 658 civil settlements 
and judgments, 25 percent of which involved pharmaceutical manufacturers.  MFCUs reported 
$1.9 billion in criminal and civil recoveries.  (OEI-09-20-00110) 
Medicare Improperly Paid Acute-Care Hospitals $54.4 Million for Inpatient Claims Subject to 
the Post-Acute-Care Transfer Policy.  Medicare improperly paid acute-care hospitals $54.4 
million for 18,647 claims subject to Medicares post-acute-care transfer policy.  These hospitals 
improperly billed the claims by using incorrect patient discharge status codes.  Specifically, they 
coded these claims as discharges to home or to certain types of health care institutions, such as 
45   
facilities that provide custodial care, rather than as transfers to post-acute care.  Medicare makes 
the full Medicare Severity Diagnosis-Related Group (MS DRG) payment to an acute-care 
hospital that discharges an inpatient to home or certain types of health care institutions.  In 
contrast, Medicare pays an acute-care hospital that transfers a beneficiary to post-acute care a per 
diem rate for each day of the beneficiarys stay in the hospital.  The total overpayment of $54.4 
million represented the difference between the amount of the full MS DRG payments and the 
amount that would have been paid if the per diem rates had been applied.  (A-09-19-03007) 
CMS Made an Estimated $93.6 Million in Incorrect Medicare Electronic Health Record 
Incentive Payments to Acute-Care Hospitals, or Less Than One Percent of $10.8 Billion in Total 
Incentive Payments.  CMS did not always make Medicare EHR incentive payments to acute-care 
hospitals in accordance with federal requirements.  The incorrect net incentive payments 
occurred because:  (1) the Medicare administrative contractors (MACs) did not review the 
supporting documentation for all hospitals to identify errors in the hospitals cost-report numbers 
used to calculate the incentive payments, and (2) CMS did not include labor and delivery 
services in the incentive payment calculations, which resulted in hospitals receiving inflated 
incentive payments.  Based on HHS-OIGs sample results, HHS-OIG estimates that CMS made 
incorrect net incentive payments of $93.6 million, or less than one percent of the $10.8 billion in 
total incentive payments for our audit period.  (A-09-18-03020) 
CMSs Controls Over Assigning Medicare Beneficiary Identifiers and Mailing New Medicare 
Cards Were Generally Effective but Could Be Improved in Some Areas.  CMSs controls were 
generally effective in ensuring that: (1) beneficiaries were properly assigned Medicare 
Beneficiary Identifiers (MBIs), (2) deceased beneficiaries were not mailed new Medicare cards, 
and (3) payments were not made on behalf of deceased beneficiaries.  However, in a small 
percentage of cases, CMSs controls did not prevent multiple MBIs from being assigned to 
beneficiaries or prevent mailing of new Medicare cards to deceased beneficiaries.  In addition, 
CMS made improper payments of $2.3 million on claims for deceased beneficiaries.  HHS-OIG 
found the CMS assigned 2 or more MBIs associated with multiple enrollment records that 
contained the same SSN and date of birth to 22,662 beneficiaries.  In addition, CMS mailed 
58,420 new Medicare cards after the beneficiaries dates of death.  Finally, CMS made improper 
payments for claims with dates of service after the beneficiaries dates of death.  By improving 
its controls, CMS can limit unintended consequences, such as claim processing errors and 
inappropriate release of personally identifiable information.  (A-09-19-03003) 
Hospitals Received Millions in Excessive Outlier Payments Because CMS Limits the 
Reconciliation Process.  From FYs 2011 through 2014, CMS paid 60 hospitals that had received 
$3.5 billion in outlier payments a net of $502.0 million more than the hospitals would have been 
paid if their outlier payments had been reconciled.  (HHS-OIG refers to this net amount as 
excessive outlier payments.)  CMS did not detect or recover these excessive outlier payments 
because the 236 associated cost reports did not meet the 10-percentage-point threshold for 
reconciliation.  The cost reports did not meet CMSs 10-percentage-point threshold because 
when hospitals increased their charges at a rate higher than that of cost increases, this usually 
resulted in only a small percentage-point change in their cost-to-charge ratios.  CMS set the 10-
percentage-point threshold because it believed that the threshold would appropriately capture 
46 
   
those hospitals whose outlier payments would be substantially inaccurate when the hospital uses 
the ratio from the contemporaneous cost-reporting period.  Based on the estimated time and costs 
that we received from seven MACs, we estimate that the administrative burden on the MACs to 
reconcile the 236 cost reports that did not meet the ten-percentage-point threshold would be a 
minimum of $11,800 and a maximum of $425,000 per year.  (A-05-16-00060) 
Inadequate Edits and Oversight Caused Medicare To Overpay More Than $267 Million for 
Hospital Inpatient Claims With Post-Acute-Care Transfers to Home Health Services.  Medicare 
improperly paid most inpatient claims subject to the transfer policy when beneficiaries resumed 
home health services within three days of discharge but the hospitals failed to code the inpatient 
claim as a discharge to home with home health services or when the hospitals applied condition 
codes 42 (home health not related to inpatient stay) or 43 (home health not within three days of 
discharge).  Of the 150 inpatient claims in our sample, Medicare properly paid three; however, it 
improperly paid 147 with $722,288 in overpayments.  Medicare should have paid these inpatient 
claims using a graduated per diem rate rather than the full payment.  Based on HHS-OIGs 
sample results, HHS-OIG estimated that Medicare improperly paid $267.0 million during a two-
year period for hospital services that should have been paid a graduated per diem payment.  (A-
04-18-04067) 
CMS Could Have Saved $192 Million by Targeting Home Health Claims for Review With Visits 
Slightly Above the Threshold That Triggers a Higher Medicare Payment.  Not all payments to 
home health agencies (HHAs) for home health services with five to seven visits in a payment 
episode complied with Medicare requirements.  Of the 120 sampled claims we reviewed, 91 
complied with requirements, and four claims lacked the documentation available to make a 
compliance determination.  However, the remaining 25 claims did not comply with 
requirements.  As a result, Medicare improperly paid HHAs for a portion of the payment episode 
(14 claims) and for the full payment episode (11 claims), totaling $41,613.  These improper 
payments occurred because the MACs did not analyze claim data or perform risk assessments to 
target those claims with visits slightly above the Low Utilization Payment Adjustment threshold 
of four visits for additional review.  On the basis of sample results, HHS-OIG estimated that 
Medicare overpaid HHAs nation-wide $191.8 million for our audit period.  (A-09-18-03031) 
Hospitals Overbilled Medicare $1 Billion by Incorrectly Assigning Severe Malnutrition 
Diagnosis Codes to Inpatient Hospital Claims.  Hospitals correctly billed Medicare for severe 
malnutrition diagnosis codes for 27 of the 200 claims that we reviewed.  However, hospitals did 
not correctly bill Medicare for the remaining 173 claims.  For nine of these claims, the medical 
record documentation supported a secondary diagnosis code other than a severe malnutrition 
diagnosis code, but the error did not change the diagnosis-related group or payment.  For the 
remaining 164 claims, hospitals used severe malnutrition diagnosis codes when they should have 
used codes for other forms of malnutrition or no malnutrition diagnosis code at all, resulting in 
net overpayments of $914,128.  On the basis of sample results, HHS-OIG estimated that 
hospitals received overpayments of $1.0 billion for FYs 2016 and 2017.  (A-03-17-00010) 
Medicare Made $11.7 Million in Overpayments for Nonphysician Outpatient Services Provided 
Shortly Before or During Inpatient Stays.  Medicare made incorrect payments to outpatient 
47 
  providers for 40,984 nonphysician outpatient services provided nation-wide within three days 
before the date of admission, on the date of admission, or during inpatient prospective payment 
system stays (excluding date of discharge) that we reviewed.  These incorrect payments occurred 
because the Common Working File edits were not designed to accurately identify all potentially 
incorrect claims.  As a result, Medicare made $11.7 million in incorrect payments to hospital 
outpatient providers during Calendar Years (CYs) 2016 and 2017.  This includes claims beyond 
the four-year reopening period.  In addition, beneficiaries incurred $2.7 million in coinsurance 
and deductible liabilities related to these incorrect payments.  (A-01-17-00508) 
CMS's Encounter Data Lacks Essential Information That Medicare Advantage Organizations 
Have the Ability to Collect.  Medicare Advantage (MA) encounter data continue to lack National 
Provider Identifiers (NPIs) for providers who order and/or refer durable medical equipment, 
prosthetics, orthotics, and supplies (DMEPOS); clinical laboratory services; imaging services; 
and home health services.  However, almost all MA organizations have data systems that are 
able to receive and store these NPIs when providers submit them.  In addition, a substantial 
portion of MA organizations reported that providers already are submitting the ordering provider 
NPIs on claims or encounter records for DMEPOS, laboratory services, and imaging services.  
Further, a majority of MA organizations require NPIs to be submitted for their other lines of 
business.  Finally, almost half of MA organizations believe that using NPIs for ordering 
providers is critical for combating fraud.  (OEI-03-19-00430) 
New Jersey Improperly Claimed Tens of Millions for Medicaid School-Based Administrative 
Costs Based on Random Moment Sampling That Did Not Meet Federal Requirements.  The 
random moment sampling methodology New Jersey used to claim Medicaid school-based 
administrative costs did not meet federal requirements.  Specifically, it did not comply with 
statistical sampling requirements and was not adequately supported.  Also, the methodology did 
not comply with New Jerseys approved cost allocation plan.  New Jerseys coding of what 
school employees were doing during random moments was mostly incorrect or unsupported.  
HHS-OIG determined that New Jersey claimed $63.8 million in unallowable federal Medicaid 
reimbursement.  (A-02-17-01006) 
New Jersey Did Not Ensure That Its Managed Care Organizations Adequately Assessed and 
Covered Medicaid Beneficiaries' Needs for Long-Term Services and Supports.  New Jersey did 
not ensure that its MCOs complied with certain federal and state requirements for beneficiaries 
enrolled in its Medicaid managed long-term services and supports program.  For 68 of the 100 
monthly capitation payments in our random sample, MCOs did not comply with the 
requirements to adequately assess and cover the associated beneficiaries' needs for long-term 
services and supports.  Specifically, MCOs did not comply with requirements for: (1) providing 
adequate service planning and care management to the beneficiaries, and (2) conducting and 
documenting assessments as well as developing, reviewing, and updating beneficiaries' care 
plans.  These deficiencies occurred because New Jersey did not adequately monitor MCOs for 
compliance with certain federal and state requirements.  MCOs' failure to meet contract 
requirements for adequately assessing and covering beneficiaries' needs for long-term services 
and supports could have resulted in beneficiaries not getting the services that they needed and 
may have put their health and safety at risk.  HHS-OIG estimated that New Jersey made monthly 
48  payments totaling approximately $386.0 million (federal share) to MCOs that did not comply 
with certain federal and state requirements.  (A-02-17-01018) 
More Than One-Third of New Jerseys Federal Medicaid Reimbursement for Providing 
Community-Based Treatment Services Was Unallowable.  New Jersey did not ensure payments 
for Programs of Assertive Community Treatment (PACT) services submitted for federal 
Medicaid reimbursement complied with federal and state requirements.  Specifically, of the 100 
sampled claims, 50 complied with federal and state requirements and 50 did not.  HHS-OIG also 
identified potential quality-of-care issues related to PACT services.  Specifically, PACT team 
psychiatrists associated with 33 of the sample claims did not provide the minimum amount of 
face-to-face psychiatric time required for their caseload.  Also, despite defining the PACT 
program as rehabilitative, New Jersey did not require periodic reauthorizations or reevaluations 
of beneficiaries program eligibility.  The deficiencies occurred because New Jersey did not 
inform PACT providers of all federal and state requirements for providing PACT services and 
did not adequately monitor or have procedures in place to ensure that providers claimed PACT 
services in accordance with these requirements.  Based on HHS-OIGs sample results, HHS-OIG 
estimated that New Jersey improperly claimed at least $14.9 million in federal Medicaid 
reimbursement.  (A-02-17-01020) 
New York Claimed Tens of Millions of Dollars for Opioid Treatment Program Services That Did 
Not Comply With Medicaid Requirements Intended To Ensure the Quality of Care Provided to 
Beneficiaries.  New York claimed federal Medicaid reimbursement for opioid treatment 
programs (OTP) services that did not comply with federal and state requirements.  Of the 150 
claims in HHS-OIGs random sample, 115 claims complied with Medicaid requirements, but 35 
claims did not.  In addition, of the 598 claims in a non-statistical sample, 299 claims were billed 
in error.  Based on HHS-OIGs sample results, HHS-OIG estimated that New York improperly 
claimed at least $39.3 million in federal Medicaid reimbursement for OTP services during our 
audit period.  These improper claims occurred because providers:  (1) failed to maintain or 
provide documentation of OTP services, (2) did not ensure that OTP services were provided in 
accordance with beneficiaries treatment plans, and (3) did not maintain signatures for OTP 
services.  Although New York inspects providers to verify compliance with federal and state 
Medicaid requirements, it did not ensure that its oversight prevented the errors identified by our 
audit.  (A-02-17-01021) 
49  New York Made Unallowable Payments Totaling More Than $10 Million for Managed Care 
Beneficiaries Assigned Multiple Medicaid Identification Numbers.  New York improperly 
claimed federal Medicaid reimbursement for Medicaid beneficiaries who were assigned more 
than one Medicaid identification (ID) number.  Specifically, for 102 of the 103 beneficiary-
matches in HHS-OIGs sample, New York made managed care payments to different managed 
care organizations for the same beneficiary for the same month under different Medicaid ID 
numbers.  These errors occurred because:  (1) New Yorks procedures for identifying whether a 
Medicaid applicant had already been assigned a Medicaid ID number were not always followed, 
(2)system queries were not adequate to ensure that all individuals with existing Medicaid ID
numbers were identified, and (3) staff did not use all available resources to ensure that qualified
applicants were not issued multiple Medicaid ID numbers.  HHS-OIG estimated that New York
improperly claimed $11.5 million in federal Medicaid reimbursement for payments made on
behalf of beneficiaries assigned more than one Medicaid ID number.  HHS-OIG reduced this
estimate to $11.3 million because New York recovered some managed care payments after the
start of our audit.  (A-02-18-01020)
North Carolina Received $30 Million in Excess Federal Funds Related to Improperly Claimed 
Health Home Expenditures.  North Carolina did not claim federal Medicaid reimbursement for 
health home expenditures in accordance with federal and state requirements.  Instead, it 
improperly claimed $124.6 million in Primary Care Case Management (PCCM) expenditures, 
which should have been reimbursed at the regular federal medical assistance percentage (FMAP) 
($81.5 million federal share), as health home expenditures, which were reimbursed at the 
enhanced FMAP ($112.2 million federal share).  North Carolina did not claim any health home 
expenditures before or after the enhanced FMAP period for federal fiscal years 2012 and 2013.  
Of the 2,999 payments associated with 100 beneficiaries in HHS-OIGs stratified random 
sample, none met all of the requirements for payment identified in North Carolina's approved 
state plan amendment for health home services.  North Carolina claimed PCCM expenditures as 
health home expenditures because it did not take certain steps to ensure implementation of the 
health home option and did not implement the internal controls needed to ensure compliance.  As 
a result, North Carolina received $30.7 million in excess federal funds.  (A-04-18-00120) 
The New York State Medicaid Agency Made Capitation Payments to Managed Care 
Organizations After Beneficiaries' Deaths.  HHS-OIG estimated that New York made 
unallowable capitation payments totaling at least $23.3 million ($13.7 million federal share) to 
managed care entities after beneficiaries' deaths during the audit period.  Of the 100 capitation 
payments in HHS-OIGs stratified random sample, New York made 84 unallowable payments 
totaling $269,473 ($143,643 federal share).  In addition, New York adjusted 12 capitation 
payments before our audit.  Based on New York and Social Security Administration data 
available to HHS-OIG, HHS-OIG could not fully confirm that two beneficiaries associated with 
four of the 100 capitation payments were deceased.  The unallowable payments occurred because 
New York did not:  (1) have system edits to identify errors in the automated process that 
terminates beneficiaries' eligibility after dates of death were identified; (2) update the eligibility 
and payment systems with correct dates of death; (3) identify deceased and disenroll 
beneficiaries that had a date of death in one of its death data sources; or (4) use additional 
50   
sources of death information and alternative procedures similar to those that we used in our audit 
to identify, verify, or determine dates of death.  (A-04-19-06223) 
Michigan Made Capitation Payments to Managed Care Entities After Beneficiaries Deaths.           
HHS-OIG estimated that Michigan made unallowable capitation payments totaling at least $39.9 
million ($27.5 million federal share) to managed care entities on behalf of deceased beneficiaries 
during the audit period.  Of the 100 capitation payments in HHS-OIGs stratified random sample, 
Michigan made 99 unallowable payments totaling $117,746 ($79,348 federal share).  The 
unallowable payments occurred because Michigan did not always identify and process Medicaid 
beneficiaries death information.  Although Michigans Medicaid Management Information 
System (MMIS) and eligibility systems interfaced with state and federal death files that identify 
dates of death, Michigan did not always identify those dates of death in its MMIS system, and 
the MMIS system and eligibility system did not share dates of death information with each other.  
Michigan also did not recover payments caused by dates of death not promptly identified in its 
MMIS system.  (A-05-17-00048) 
Texas Did Not Ensure That Its Managed-Care Organizations Complied With Requirements 
Prohibiting Medicaid Payments for Services Related to Provider-Preventable Conditions.  Texas 
did not ensure that its Medicaid MCOs complied with federal and state requirements prohibiting 
payments to providers for inpatient hospital services related to treating certain provider-
preventable conditions (PPCs).  HHS-OIG identified Medicaid claims totaling $29.4 million that 
contained PPCs for five MCOs.  Of this amount, HHS-OIG determined that claims totaling $12.7 
million were in compliance with federal and state regulations regarding nonpayment of PPCs.  
However, claims totaling $16.7 million were not in compliance.  Texas internal controls were 
not adequate to ensure that its MCOs complied with federal and state requirements.  Specifically, 
Texas:  (1) did not have policies and procedures to determine whether its MCOs complied with 
federal and state requirements and provisions of the managed-care contract relating to the 
nonpayment of PPCs and (2) did not ensure that the MCOs payment rates were based only on 
services that were covered in the state plan.  (A-06-16-01001) 
Most of the Non-Newly Eligible Beneficiaries for Whom Colorado Made Medicaid Payments Met 
Federal and State Requirements, but Documentation Supporting That All Eligibility 
Requirements Were Verified Properly Was Not Always in Place.  Most of the Medicaid payments 
that Colorado made during the audit period were on behalf of non-newly eligible beneficiaries 
who met federal and state eligibility requirements.  However, Colorado made Medicaid 
payments on behalf of some non-newly eligible beneficiaries who may not have met federal and 
state eligibility requirements.  Colorado correctly determined eligibility and, therefore, correctly 
claimed federal Medicaid reimbursement, on behalf of 135 of the 140 beneficiaries in HHS-
OIGs statistical sample.  For the remaining five beneficiaries, Colorado had no documentation 
(specifically, that it had performed annual verifications of resources) to support that all eligibility 
requirements were verified properly during redeterminations as required by federal and state 
regulations, and by Colorados state Medicaid plan.  Although Colorado had policies and 
procedures in place, it did not always follow them to ensure that redeterminations were properly 
documented.  HHS-OIG estimated that Colorado made Medicaid payments of at least $46.7 
million ($23.8 million federal share) on behalf of at least 3,603 potentially ineligible 
51 
  beneficiaries.  (A-07-18-02812) 
Iowa Inadequately Monitored Its Medicaid Health Home Providers, Resulting in Tens of 
Millions in Improperly Claimed Reimbursement.  For 62 of the 130 payments, Iowa improperly 
claimed federal Medicaid reimbursement for payments made to health home providers that did 
not comply with federal and state requirements.  Specifically, Iowa's health home providers did 
not document core services, integrated health home outreach services, diagnoses, and enrollment 
with providers.  In addition, Iowa's providers did not maintain documentation to support higher 
payments for intense integrated health home services and did not ensure that beneficiaries had 
full Medicaid benefits.  The improper payments occurred because Iowa did not adequately 
monitor providers for compliance with certain federal and state requirements.  HHS-OIG 
estimated that Iowa improperly claimed at least $37.1 million in Federal Medicaid 
reimbursement for payments made to health home providers.  (A-07-18-04109) 
CMS Could Take Actions To Help States Comply With Federal Requirements Prohibiting 
Medicaid Payments for Inpatient Hospital Services Related to Provider-Preventable Conditions. 
In 2011, CMS issued federal regulations prohibiting federal Medicaid payments for services 
related to provider-preventable conditions (PPCs).  The goal of the regulations is to improve 
quality of care by prohibiting payments for medical errors.  Prior HHS-OIG audits of nine states 
found that none of them fully complied with federal requirements.  This audit found that CMS 
could take actions to: (1) verify that all state plans fully comply with federal requirements 
prohibiting Medicaid payments for inpatient hospital services related to treating PPCs and (2) 
issue clarifying guidance to address specific areas in which states did not comply with those 
requirements.  If CMS does not verify that state plans fully comply with federal requirements 
and provide clear guidance on these requirements, states may continue to struggle to prevent 
unallowable payments for PPCs and may not take measures to improve the quality of inpatient 
hospital services through the prevention of medical errors.  (A-09-18-02004) 
Loophole in Drug Payment Rule Continues to Cost Medicare and Beneficiaries Hundreds of 
Millions of Dollars.  As of December 2019, CMS continued to include noncovered, self-
administered versions when calculating Part B payment amounts for Orencia and Cimzia, the 
same two drugs identified in HHS-OIG's November 2017 report.  Based on HHS-OIGs analysis, 
these were the only two drugs for which noncovered, self-administered versions were used to set 
Part B payment amounts in 2017 or 2018.  Closing the payment loophole for self-administered 
drugs would have saved Medicare and its beneficiaries nearly half a billion dollars on Orencia 
and Cimzia in 2017 and 2018.  Further, HHS-OIG found that physicians almost never 
administered the self-injected versions of Orencia to patients in their offices, and that the 
payment loophole may give physicians substantial incentives to administer Orencia and Cimzia 
instead of other drugs for the same conditions.  (OEI-BL-20-00100) 
Medicare Market Shares of Diabetes Test Strips From April Through June 2019.  Non-mail-
order claims composed 85 percent of the total Medicare market for diabetes test strips (DTS) 
during the time period we reviewed.  The suppliers in HHS-OIGs sample provided 25 types of 
DTS to Medicare beneficiaries via non-mail-order and 21 types of DTS via mail order.  The 
suppliers in our samples provided eight types of DTS to Medicare beneficiaries both via non-
52  mail-order and mail order.  The Medicare Improvements for Patients and Providers Act of 2008 
prohibits CMS from awarding contracts in the National Mail-Order Program to a supplier of 
DTS if the suppliers bid does not cover at least 50 percent, by volume, of all types of DTS 
provided to Medicare beneficiaries.  HHS-OIGs analysis assists CMS in determining whether 
bidding suppliers meet this 50-percent rule.  (OEI-04-19-00481) 
Part D Plans Generally Include Drugs Commonly Used by Dual Eligibles: 2020.  HHS-OIG 
found that overall, the rate at which Part D plan formularies include the drugs commonly used by 
dual eligibles (i.e., individuals who are eligible for both Medicare and Medicaid) is high, with 
some variation.  The 448 unique formularies used by the 4,610 Part D plans include 97 percent 
of the 195 drugs most commonly used by dual eligibles and covered by Part D.  In addition, 75 
percent of the commonly used drugs are included by all Part D plan formularies.  On average, 
formularies applied utilization management tools to 29 percent of the unique drugs we reviewed 
in 2020.  Because some variation exists in formularies inclusion of these drugs and in their 
application of utilization management tools to the drugs, some dual eligibles may need to use 
alternative methods to access the drugs they take.  (OEI-05-20-00190) 
Medicare Lab Test Expenditures Increased in 2018, Despite New Rate Reductions.  Total 
Medicare Part B spending for lab tests increased to $7.6 billion in 2018, despite lower payment 
rates for most laboratory (lab) tests.  The $459.0 million spending increase was driven by: (1) 
increased spending on genetic tests; (2) ending the discount for certain chemistry tests; and (3) 
the move to a single national fee schedule.  Congress mandated that the Office of Inspector 
General monitor Medicare payments for lab tests and the implementation and effect of the new 
payment system for those tests.  This report also provides the fifth annual analysis of the top 25 
lab tests by Medicare spending.  (OEI-09-19-00100) 
Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2018 Average Sales 
Prices.  Based on 2018 data, CMS lowered Medicare Part B reimbursement for 16 drugs, saving 
Medicare and its beneficiaries $4.4 million over one year.  This finding highlights the success of 
OIGs mandated quarterly comparisons of average sales prices (ASPs) with average 
manufacturer prices (AMPs) and implementation of CMSs current price-substitution policy.  If 
OIG finds that the ASP for a drug exceeds the AMP by a certain percentagecurrently, five 
percentthe ASP based payment amount is substituted with a lower calculated rate.  This serves 
as a mechanism for monitoring market prices and limiting potentially excessive payment 
amounts.  (OEI-03-20-00130) 
The Majority of Providers Reviewed Used Medicare Part D Eligibility Verification Transactions 
for Potentially Inappropriate Purposes.  The majority of providers reviewed (25 of 30) used 
Medicare Part D eligibility verification transactions (E1 transactions) for some purpose other 
than to bill for a prescription or determine drug coverage billing order.  On average, 98 percent 
of these 25 providers E1 transactions were not associated with a prescription.  HHS-OIG did not 
contact 10 providers because they were closed, under investigation, or both.  15 providers 
submitted or hired other entities to submit E1 transactions for inappropriate purposes, which 
involved using a beneficiarys protected health information.  After HHS-OIGs audit period, 
53  CMS took additional steps to monitor use of the eligibility verification system and take 
appropriate enforcement action when abuse is identified.  (A-05-17-00020) 
Medicare Allowable Amounts for Certain Orthotic Devices Are Not Comparable With Payments 
Made by Select Non-Medicare Payers.  Medicare allowable amounts for certain orthotic devices 
are not comparable with payments made by select non-Medicare payers.  For CYs 2012 through 
2015, HHS-OIG estimated that Medicare and beneficiaries paid $341.7 million more than select 
non-Medicare payers on 142 Healthcare Common Procedure Coding System (HCPCS) codes 
and $4.2 million less than select non-Medicare payers on 19 HCPCS codes.  Generally, Medicare 
allowable amounts are more than select non-Medicare payer payments because CMS does not 
routinely evaluate pricing trends for orthotic devices or payments made by select non-Medicare 
payers.  Instead, CMS uses statutorily mandated fee schedule payments that have an economic 
update factor applied to them annually.  (A-05-17-00033) 
Medicare Made Hundreds of Thousands of Dollars in Overpayments for Chronic Care 
Management Services.  Physician and outpatient payments made by CMS for chronic care 
management (CCM) services provided during CYs 2015 and 2016 did not always comply with 
federal requirements, resulting in $640,452 in overpayments associated with 20,165 claims.  For 
these 20,165 claims, beneficiaries were overcharged a total of up to $173,495 in cost sharing.  
Further, we identified 37,124 claims totaling $1.2 million in potential overpayments for instances 
in which a CCM service was billed by an outpatient facility, but a corresponding claim was not 
submitted by a physician.  HHS-OIG set aside these potential overpayments for review and 
determination by CMS.  For these 37,124 claims, beneficiaries may have been overcharged a 
total of up to $373,726 in cost sharing.  These errors occurred because CMS did not have 
adequate controls in place, including claim system edits, to identify and prevent overpayments.  
(A-07-17-05101) 
Medicare Improperly Paid Suppliers an Estimated $92.5 Million for Inhalation Drugs.  Not all 
suppliers complied with Medicare requirements when billing for inhalation drugs.  Suppliers 
complied with the requirements for 81 of the 120 sampled claim lines; however, of the remaining 
39 claim lines, 22 suppliers did not comply with documentation requirements.  HHS-OIG found 
the following documentation-related deficiencies:  incomplete, invalid, or missing detailed 
written orders (28 claim lines); incomplete proof of delivery (six claim lines); incomplete refill 
requests (six claim lines); and medical records not provided (one claim line).  (The total exceeds 
39 because two claim lines had two deficiencies.)  Based on sample results, HHS-OIG estimated 
that approximately $92.5 million paid to suppliers for inhalation drugs was unallowable for 
Medicare reimbursement.  Medicare contractor oversight was not sufficient to ensure that 
suppliers complied with documentation requirements.  (A-09-18-03018) 
Medicare Contractors Were Not Consistent in How They Reviewed Extrapolated Overpayments 
in the Provider Appeals Process.  Although MACs and qualified independent contractors (QIC) 
generally reviewed appealed extrapolated overpayments in a manner that conforms with existing 
CMS requirements, CMS did not always provide sufficient guidance and oversight to ensure that 
these reviews were performed in a consistent manner.  The most significant inconsistency we 
identified involved the use of a type of simulation testing that was only performed by a subset of 
54   
contractors.  The test was associated with at least $42.0 million in extrapolated overpayments 
that were overturned in FYs 2017 and 2018.  These extrapolations should not have been 
overturned if CMS did not intend for the contractors to use this procedure.  Conversely, if CMS 
intended that contractors use this procedure, it is possible that other extrapolations should have 
been overturned but were not.  In addition, CMS's ability to provide oversight over the 
extrapolation review process was limited because of data reliability issues in the Medicare 
Appeals System (MAS).  Of the 39 appeals cases HHS-OIG reviewed that were listed in the 
MAS as involving extrapolation, 19 cases did not actually involve statistical sampling.  
Improving the accuracy of the information in the MAS would potentially assist CMS with 
ensuring that extrapolated overpayments are reviewed by the MACs and QICs in a consistent 
manner.  (A-05-18-00024) 
CMS Could Improve Its Processes for Evaluating and Reporting Payment Recovery Savings 
Associated With the Fraud Prevention System.  The FPSs adjusted savings for overpayment 
determinations and law enforcement referrals were approximately 10 percent of the identified 
savings for its second and third implementation years because:  (1) the MACs opportunities to 
collect FPS-identified overpayments were often limited by both the time it took to get referrals 
from the Zone Program Integrity Contractors and Program Safeguard Contractors (Contractors) 
and by unique challenges in attempting to recover overpayments from providers, and (2) CMS 
has not established a standard process for the Program Integrity Contractors to estimate the value 
of law enforcement referrals.  CMSs reported FPS savings and return on investment (ROI) after 
the third implementation year gave stakeholders an incomplete picture of the FPSs value 
because CMS has continued to rely primarily on identified savings for its reporting.  Historically, 
the overwhelming majority of the identified savings from payment recovery administrative 
actions have not been recovered.  Reporting adjusted savings and the corresponding adjusted 
ROI in addition to identified savings would provide a more complete picture of the value of the 
FPS.  (A-01-15-00510) 
CMS Generally Met Requirements for the DMEPOS Competitive Bidding Program Round 1 
Recompete.  HHS-OIG reviewed the process CMS used to conduct the competitive bidding and 
subsequent pricing determinations that are the basis for bid amounts and single-payment amounts 
(SPAs) of the DMEPOS Competitive Bidding Program Round 1 Recompete (the DMEPOS 
Program).  CMS consistently followed its established DMEPOS Program procedures and 
applicable federal requirements for 219 of the 225 winning suppliers associated with the sampled 
SPAs reviewed.  Although the overall effect on Medicare payments to suppliers was relatively 
small, CMS did not consistently follow its established procedures and applicable federal 
requirements for selecting suppliers during the bid process for six of the 225 winning suppliers.  
Additionally, CMS did not monitor suppliers in accordance with established procedures and 
federal requirements for another seven suppliers for the first six months of 2014.  Based on 
HHS-OIGs sample, HHS-OIG estimated that CMS paid suppliers $24,054 more than they would 
have received without any errors, or less than 0.03 percent of the $73.0 million paid under the 
Round 1 Recompete during the first six months of 2014.  (A-05-16-00051) 
55 
   
Medicare-Allowed Charges for Noninvasive Ventilators Are Substantially Higher Than Payment 
Rates of Select Non-Medicare Payers.  For CYs 2016 through 2018, we estimated that Medicare 
and beneficiaries could have saved $86.6 million if Medicare-allowed charges were comparable 
with payment rates of select non-Medicare payers on HCPCS code E0466.  Of this payment 
difference, we estimated that Medicare paid $69.3 million and Medicare beneficiaries paid $17.3 
million.  Generally, Medicare-allowed charges are higher than select non-Medicare payer 
payment rates because CMS does not routinely evaluate pricing trends for noninvasive 
ventilators or payment rates of select non-Medicare payers.  Rather, CMS uses statutorily 
mandated fee schedule payments that have an economic update factor applied to them annually.  
In 2016, CMS was required to adjust certain fee schedule amounts for durable medical 
equipment, prosthetics, orthotics, and supplies using information from the competitive bidding 
program.  But this change did not affect the noninvasive ventilator HCPCS code reviewed for 
this report.  (A-05-20-00008) 
CMS's Monitoring Activities for Ensuring That Medicare Accountable Care Organizations 
Report Complete and Accurate Data on Quality Measures Were Generally Effective, but There 
Were Weaknesses That Could Be Improved.  CMS's monitoring activities were generally 
effective for ensuring that Accountable Care Organizations (ACOs) report complete and accurate 
data on quality measures through claims and administrative data and the CMS web portal.  (For 
example, ACOs report data through the web portal on whether beneficiaries received preventive 
care, such as depression screenings.)  However, we identified weaknesses in CMS's monitoring 
activities that could lead to ACOs reporting incomplete or inaccurate data through the patient 
survey.  Specifically, CMS did not ensure that its contractor:  (1) verified survey vendors' 
correction of identified issues even though the issues were directly related to the collection or 
reporting of data and (2) provided feedback reports in time for survey vendors to include in their 
Quality Assurance Plans (QAPs) all of the changes implemented to address identified issues.  (A 
QAP describes a survey vendor's process for performing the patient survey and complying with 
the CMS Quality Assurance Guidelines.) In addition, CMS did not ensure that its contractor 
reviewed survey instruments (e.g., mail survey packages) translated into other languages.  As a 
result of these weaknesses, ACOs may not report complete and accurate data on quality 
measures, which could affect the ACOs' overall quality performance scores and ultimately the 
shared savings payments.  (A-09-18-03033) 
To address the concerns identified by the OIG, CMS finalized a no cost extension modification 
to the current Statement of Work and the Schedule of Deliverables effective 11/23/2020. The 
OIGs recommendations are reflected in the respective tasks of the modified SOW. CMS is 
continually monitoring the contractors adherence to these requirements. CMS will maintain 
these requirements in all future procurements. 
Incorrect Acute Stroke Diagnosis Codes Submitted by Traditional Medicare Providers Resulted 
in Millions of Dollars in Increased Payments to Medicare Advantage Organizations.  Our 
objective was to determine whether selected acute stroke diagnosis codes submitted by 
physicians under traditional Medicare that CMS later used to make payments to MA 
organizations on behalf of transferred enrollees complied with federal requirements.  We 
reviewed 582 of 8,437 transferred enrollees (that we selected with a stratified random sample) 
56 
   
who received one instance of a high-risk acute stroke diagnosis code during 2014 or 2015.  For 
almost all of the transferred enrollees in our sample, the medical records did not support the 
acute stroke diagnosis codes.  Thus, the Ischemic or Unspecified Stroke Hierarchical Condition 
Categories (HCCs) were not validated.  As a result, we estimated that CMS made inaccurate 
payments of just over $14.4 million to MA organizations.  (A-07-17-01176) 
CMSs Implementation of a 2014 Policy Change Resulted in Improvements in the Reporting of 
Coverage Gap Discounts Under Medicare Part D.  The Coverage Gap Discount Program made 
manufacturer discounts equal to 50 percent of the negotiated price of applicable, covered Part D 
drugs available to Medicare Part D beneficiaries during CYs 2011 through 2018.  Although CMS 
generally ensured that Part D sponsors accurately reported Coverage Gap discounts, we 
identified instances in which sponsors should have reported these discounts but did not.  
Specifically, for CYs 2013 and 2014, we identified $1.1 million in Coverage Gap discounts that 
should have been invoiced to manufacturers but were not because the discounts were not 
reflected in the prescription drug event (PDE) records submitted by sponsors.  These 
discrepancies occurred because CMS did not always have the sponsor information it needed.  For 
that reason, CMS was not always able to accurately, and in a timely manner, identify 
beneficiaries who were in the Coverage Gap.  Effective January 1, 2014, a policy change enabled 
CMS to more easily identify PDEs that should have reflected Coverage Gap discounts.  After 
implementation of the policy change, Employer Group Waiver Plans more accurately reported 
Coverage Gap discounts. (A-07-16-06067) 
New York Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-
Administered Drugs.  New York did not always comply with federal Medicaid requirements for 
invoicing manufacturers for rebates for physician-administered drugs.  Specifically, New York 
did not invoice manufacturers for rebates associated with $3.3 million (federal share) in single-
source and top-20 multiple-source physician-administered drugs.  Although New Yorks policies 
and procedures require the collection of utilization data necessary to invoice for rebates on all 
claims, its internal controls did not always ensure that the data were used to invoice 
manufacturers to secure rebates.  (A-02-18-01011) 
Michigan Did Not Bill Manufacturers for Some Rebates for Drugs Dispensed to Enrollees of 
Medicaid Managed-Care Organizations.  Michigan did not fully comply with federal Medicaid 
requirements for billing manufacturers for rebates for drugs dispensed to MCO enrollees.  
Michigan did not bill for and collect manufacturers rebates that we calculated to be at least 
$31.5 million (federal share).  Michigan did not always bill for and collect manufacturers' rebates 
because Michigan and its contractor did not identify all of the rebate-eligible drugs in the 
utilization data submitted by the MCOs.  (A-05-17-00017)  
Maine Did Not Always Invoice Rebates to Manufacturers for Physician-Administered Drugs.  
Maine did not always comply with federal Medicaid requirements for invoicing manufacturers.  
Maine did not invoice for, and collect from manufacturers, rebates associated with $4.3 million 
(federal share) in physician-administered drugs as required.  Maine could have invoiced 
manufacturers for rebates totaling $10.8 million (federal share) that were associated with 
physician-administered drugs dispensed at non-Critical Access Hospitals.  (A-07-18-06079) 
57 
  Other HHS-OIG Fraud and Abuse Prevention Activities 
Data Analytics 
HCFAC funding supports HHS-OIGs advanced data analytics initiatives to expand our tools, 
models, and customized analytics with artificial intelligence (AI), and cloud computing to:  
(1)proactively monitor and target our oversight of high-risk HHS programs and health care
providers, (2) identify trends, outliers, and potential investigative or audit targets, (3) enhance
decision making, and (4) optimize HHS-OIG processes.  HHS-OIGs team of highly trained data
analysts, data scientists, and statisticians partner with HHS-OIG investigators, auditors,
attorneys, and evaluators to identify HHSs most significant risks and better target fraud, waste,
and abuse.  HHS-OIG applies predictive and geospatial analytics, and leverage dashboards,
machine learning, and AI capabilities including neural networks and text mining to high-value
health care, grants, law enforcement, and operational data to identify and support the prosecution
of sophisticated fraud schemes and potential audit and evaluation findings.
HHS-OIGs ability to use data proactively has become even more important during the COVID-
19 pandemic.  HHS-OIG analytics staff quickly pivoted to monitor COVID-19 testing, treatment, 
and billings other services, such as DME, allergy, genetic, respiratory, and other testing to detect 
patterns of inappropriate bundling of services and billing for services not rendered.  HHS-OIG 
also monitored changes in services delivered through telemedicine to identify inappropriate 
billing schemes.  HHS-OIG analytics supported agency investigative actions that led to criminal 
charges filed in U.S. courts involving at least 67 of the more than 100 doctors, nurses and other 
licensed medical professionals included in the nationwide health care fraud enforcement actions 
announced by DOJ and HHS on September 30, 2020.  Furthermore, HHS-OIGs data analytics 
continue to identify and support cases filed as part of the Appalachian Regional Prescription 
Opioid Strike Force efforts. 
Our data and technical experts are also partnering with HHS-OIG auditors and evaluators to 
provide custom data and analytics support focused on pandemic related work.  To date, OIG 
analytics staff are supporting 27 audits and evaluations launched since the onset of the COVID-
19 pandemic across the Medicare and Medicaid portfolio and dozens of COVID-19 related 
projects and exploratory work.   
Outreach and Guidance 
HHS-OIG strives to cultivate a culture of compliance in the health care industry through various 
educational and outreach efforts. 
Advisory Opinions  
HIPAA established an advisory opinion process through which parties may obtain binding legal 
guidance on the application of the federal AKS and other OIG administrative enforcement 
authorities to existing or proposed health care business transactions.   
During FY 2020, HHS-OIG, in consultation with DOJ, issued six advisory opinions.  A total of 
380 advisory opinions and 21 modifications to advisory opinions have been issued, four opinions 
58  have been terminated, and one opinion has been rescinded during the 24 years of the HCFAC 
program. 
Collaborations with Private Sector Partners  
HHS-OIG regularly engages with public stakeholders to combat fraud.  For example, HHS-OIG 
is an active partner in the HFPP, described in more detail elsewhere in this report, and with the 
National Healthcare Anti-Fraud Association, both of which are publicprivate partnerships that 
address health care fraud by sharing data and information for the purposes of detecting and 
combatting fraud and abuse in health care programs.  HHS-OIG frequently shares information 
about prescription-drug fraud schemes, trends, and other matters related to health care fraud, as 
appropriate.  As a further example, HHS-OIG has collaborated with the DEA to provide anti-
fraud education at numerous Pharmacy Diversion Awareness Conferences held across the United 
States.  The conferences were designed to assist pharmacy personnel with identifying and 
preventing diversion activity.  Since 2013, HHS-OIG has presented at conferences in 50 states 
and Puerto Rico.  
HHS-OIG also engages with stakeholders to seek insight on how to promote compliance, while 
encouraging innovation in the health care industry.  For instance, HHS-OIG published a Request 
for Information seeking to identify ways that it could modify or add safe harbors to the federal 
AKS and exceptions related to the CMP for beneficiary inducements to foster arrangements that 
would promote care coordination and value-based care, while also protecting against harms 
caused by fraud and abuse.15 
HHS-OIG hosted a roundtable with industry compliance professionals to discuss methods for 
measuring the effectiveness of compliance programs.  The ideas discussed at the roundtable were 
compiled into a resource guide for other industry participants to consider when evaluating their 
own compliance programs.  In addition to the compliance roundtable, HHS-OIG regularly 
presents at various health care compliance conferences throughout the country. 
Centers for Medicare & Medicaid Services 
In FY 2020, CMS was appropriated $610.0 million in discretionary funds by Congress to support 
its comprehensive program integrity strategy for Medicare, Medicaid, the Childrens Health 
Insurance Program (CHIP), and the Health Insurance Exchanges.  In FY 2020, Congress required 
HHS to fund the Administration for Community Livings (ACL) Senior Medicare Patrol (SMP) 
Program; therefore, $18.0 million of CMSs $610.0 million in discretionary funding was 
allocated to ACL to support the program.  More information on the SMP Program activities and 
accomplishments are discussed in the ACL section of this report on page 83.  With the HCFAC 
funds, CMS works to ensure that accurate payments are made to legitimate individuals and 
entities for allowable services or supplies provided to eligible beneficiaries of federal health care 
programs. 
15 HHS-OIG, Medicare and State Health Care Programs: Fraud and Abuse; Request for Information Regarding the 
Anti-Kickback Statute and Beneficiary Inducements CMP, 83 Fed. Reg. 43,607 (Aug. 27, 2018). 
59   
CMS also performs many program integrity activities that are beyond the scope of this report 
because they are not funded directly by the HCFAC Account or discretionary HCFAC funding.  
This includes activities such as the Recovery Audit Program and Medicare Secondary Payer.  
CMS program integrity activities are discussed at length in the annual Medicare and Medicaid 
Integrity Programs Report to Congress, which can be found on the CMS website.16  
Address the Full Spectrum of Fraud, Waste, and Abuse 
CMS defines program integrity very simply: pay it right.  Program integrity focuses on paying 
the right amount, to legitimate providers and suppliers, for covered, reasonable and necessary 
services provided to eligible beneficiaries while taking aggressive actions to eliminate fraud, 
waste, and abuse.  Federal health programs are quickly evolving; therefore, CMSs program 
integrity strategy must keep pace to address emerging challenges.  
CMS developed a five-pillar program integrity strategy intended to modernize the agencys 
approach and protect its programs for future generations. In FY 2020, CMSs strategy focused 
on:  
  Stopping Bad Actors.  CMS worked with law enforcement agencies to identify and take 
action on those who defraud federal health programs.  This collaboration allowed CMS to 
maximize efforts to identify, investigate, and pursue providers and suppliers who might 
otherwise endanger program beneficiaries or commit fraud on Federal programs. 
  Preventing Fraud.  CMS continued to focus on moving away from an expensive and 
inefficient pay and chase model to preventing fraud, waste, and abuse on the front end.  
This included making system changes to avoid similar fraudulent activities in the future, 
as well as developing policies, regulations, and processes to prevent vulnerabilities from 
being exploited before claims are paid.  
  Mitigating Emerging Programmatic Risks.  CMS recognized the need to be vigilant in 
monitoring new and emerging areas of risk, and developing methods to address these 
risks.  This includes maintaining flexibility to respond to future data and trends and tailor 
strategies accordingly, and to use new approaches for high vulnerability services.  CMS 
is also exploring ways to identify and reduce program integrity risks related to value-
based payment programs by looking to experts in the health care community for lessons 
learned and best practices. 
 
16 https://www.cms.gov/About-CMS/Components/CPI/CPIReportsGuidance  
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  Reducing Provider Burden.  While CMS strengthened program integrity, the agency is 
also took steps to ensure that these efforts did not create unnecessary time and cost 
burden on providers and suppliers.  Efforts in this area included targeted medical review 
with individualized education to assist rather than punish providers who make good faith 
claim errors. CMS worked to make access to our coverage and payment rules more easily 
accessible to providers and suppliers, as well as streamlined and reduced documentation 
requirements that were duplicative or unnecessary.  CMS also explored ways to 
centralize provider screening and provider monitoring across Medicare and Medicaid. 
  Leveraging New Technology.  CMS looked to leverage new, innovative strategies and 
technologies, perhaps involving artificial intelligence and/or machine learning, to 
modernize and automate our program integrity efforts.  This new technology could allow 
the Medicare program to review compliance on more claims with less burden on 
providers and less cost to taxpayers.  These innovations could be used in both our current 
payment systems, as well as in new payment models. 
This section describes the wide range of program integrity activities funded by the HCFAC 
account that CMS utilizes to comprehensively address fraud, waste, and abuse.  These activities 
include many different approaches to program integrity, such as data analysis, investigations and 
audits, recovery actions, and outreach and education. 
Unified Program Integrity Contractors (UPICs)  
One way CMS investigates instances of suspected fraud, waste, and abuse in Medicare and 
Medicaid is through the activities of the UPICs.  The UPICs develop investigations and take 
actions to prevent inappropriate payments from being made to Medicare providers and suppliers.  
UPICs undertake activities including provider and beneficiary interviews and site visits, 
initiating appropriate administrative actions (e.g., prepayment edits, payment suspensions, 
revocations), and performing program integrity reviews of medical records and documentation.  
While a variety of other contractors also perform medical review, UPIC reviews are uniquely 
focused on fraud detection and investigation.  For example, the UPICs look for possible 
falsification of documents that may be associated with an attempt to defraud the Medicare 
program.  Various UPIC administrative actions result in Medicare savings, including automated 
edit claim denials, non-automated review claim denials, provider revocations and deactivations, 
overpayment recoveries, and law enforcement referrals.   
CMS also contracts with the UPICs to review the actions of Medicaid providers.  The UPICs 
work closely with states to perform numerous functions to detect, prevent, and deter specific 
risks and broader vulnerabilities to the integrity of the Medicaid program, including conducting 
provider investigations and audits, which can result in the identification of overpayments, fraud 
referrals to law enforcement, and other referrals for state administrative action.  Currently, the 
UPICs are carrying out program integrity activities in all five geographic jurisdictions: Midwest, 
Northeast, West, Southeast and Southwest. 
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Fraud Prevention System  
FPS is the predictive analytics technology required under the Small Business Jobs Act of 2010.17  
FPS analyzes fee-for-service (FFS) claims using sophisticated algorithms to target investigative 
resources; generate alerts for suspect claims or providers and suppliers; and provide information 
to facilitate and support investigations of the most egregious, suspect, or aberrant activity.  HHS 
uses the FPS information to prevent and address improper payments using a variety of 
administrative actions, including claim denials, payment suspensions, Medicare billing privilege 
revocations, and law enforcement referrals. 
During FY 2020, the FPS generated alerts that resulted in 1,032 new leads for program integrity 
contractors (PICs) and augmented information for 413 existing PIC leads or investigations.  The 
PICs reported initiating FPS-attributable actions against 599 providers in FY 2020. 
National Correct Coding Initiative  
NCCI consists of edits designed to reduce improper payments in Medicare Part B and Medicaid.  
NCCI Procedure-to-Procedure edits prevent inappropriate payment for billing code pairs that 
should not be reported together by the same provider for the same beneficiary and date of 
service, while NCCI Medically Unlikely Edits prevent payment for an inappropriate quantity of 
the same service rendered by the same provider for the same beneficiary on the same date of 
service.  Estimated savings from Medicare NCCI edits are published in the Annual Report to 
Congress on the Medicare and Medicaid Integrity Programs.18 
Section 1903(r) of the Social Security Act requires states to use NCCI methodologies to process 
applicable Medicaid claims.  CMS provides assistance for state Medicaid agencies to use NCCI 
methodologies in their Medicaid programs.  
Integrated Data Repository and the One Program Integrity (One PI) Portal  
The Integrated Data Repository (IDR) contains Medicare Part A, Part B (including DME), MA 
(encounter), Part D prescription drug events, beneficiary, and provider data.  This robust data 
warehouse supports program integrity analytics, such as the development of FPS models.  CMS 
uses the IDR to provide broader and easier access to data and enhanced data integration while 
strengthening and supporting CMSs analytical capabilities. 
CMS is also working to incorporate state Medicaid data into the IDR through standard 
Transformed Medicaid Statistical Information System (T-MSIS) data formats, while also 
working with states to improve the quality and consistency of the data from each state, described 
more fully below. 
CMS augments the data available in the IDR to provide a comprehensive view of Medicare and 
Medicaid data including claims, beneficiary data, and prescription drug information.  CMS has 
added Shared Systems location data for pre-adjudicated claims, claims submitter, and medical 
review utilization data.   
 
17 Public Law 111-240. 
18 https://www.cms.gov/About-CMS/Components/CPI/CPIReportsGuidance.  
62 
   
CMS uses the One PI web-based portal in conjunction with the IDR to provide access to robust 
business intelligence analytical tools and to facilitate data sharing with program integrity 
contractors and law enforcement.  One PI provides a single access point to the data within the 
IDR as well as tools to conduct data analysis. 
The Command Center and Coordinated Program Integrity Activities  
The CMS Command Center opened in July 2012 and provides an opportunity for Medicare and 
Medicaid policy experts; law enforcement officials from HHS-OIG and the DOJ, including FBI; 
state law enforcement officials; clinicians; and CMS staff and program integrity contractors to 
collaborate in real time before, during, and after the development of fraud leads.  These 
collaborative activities enable CMS to more quickly and efficiently take administrative actions 
such as revocations of Medicare billing privileges and payment suspensions. 
In FY 2018, CMS began a Major Case Coordination (MCC) initiative that includes 
representation from the HHS-OIG, DOJ, and CMS.  This initiative provides an opportunity for 
Medicare and Medicaid policy experts, law enforcement officials, clinicians, and fraud 
investigators to collaborate before, during, and after the development of fraud leads.  This level 
of collaboration has contributed to several successful coordinated law enforcement actions and 
helped CMS to better identify national fraud trends and program vulnerabilities. 
As a result of the MCC, there has been a marked increase in the number and quality of law 
enforcement referrals from CMS.  Since implementation of the MCC, there have been nearly 
2,200 MCC reviews and 1,750 law enforcement referrals.  CMS program integrity activities and 
investigations will continue to contribute to law enforcement investigations, CMS administrative 
actions and CMS initiatives.  In FY 2020, CMS conducted over 1,100 MCC reviews and 800 
referrals to law enforcement partners. 
An example of the ways in which CMS has provided support to the OIG and DOJ throughout 
fiscal year 2020 includes:  
In September 2020, DOJ announced a historic nationwide enforcement action involving 
345 charged defendants across 51 federal districts, including more than 100 doctors, 
nurses and other licensed medical professionals.  The largest amount of alleged fraud loss 
charged in connection with those cases relate to schemes involving telemedicine:  the use 
of telecommunications technology to provide health care services remotely.  In addition 
to the criminal charges announced related to the enforcement action, CMS Center for 
Program Integrity (CPI) separately announced that it has taken a record-breaking number 
of administrative actions related to telemedicine fraud, revoking the Medicare billing 
privileges of 256 additional medical professionals for their involvement in telemedicine 
schemes.  This represents the largest number of adverse administrative actions resulting 
from a single administrative health care fraud investigative initiative. 
Durable Medical Equipment Prosthetics, Orthotics, and Supplies Initiatives 
DME suppliers pose a high risk of fraud to the Medicare program and CMS has undertaken an 
aggressive strategy to address this risk.  In FY 2020, our activities included DME investigations, 
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which included reviews of suppliers and physicians identified as potentially suspicious or high 
risk.  CPI implemented a national investigative strategy and took administrative actions against 
referring providers associated with the DOJs 2019 national DME takedown known as Operation 
Brace Yourself (OBY).19 
Proactively Manage Provider Screening and Enrollment 
Provider enrollment is the gateway to the Medicare and Medicaid programs and is the key to 
preventing ineligible providers and suppliers from entering either program.  CMS is committed 
to maintaining operational excellence in its provider enrollment and screening process.  Through 
provider screening and enrollment, CMS continues to prevent and reduce fraud, waste, and abuse 
in the Medicare and Medicaid programs and ensure that only eligible providers are caring for 
beneficiaries and receiving payment. 
Medicare Provider Screening and Site Visits 
CMS regulations establish three levels of provider and supplier enrollment risk-based screening: 
limited, moderate, and high, and each provider and supplier specialty category is assigned 
to one of these three screening levels.  Providers and suppliers designated in the limited risk 
category undergo verification of licensure and a wide range of database checks to ensure 
compliance with all provider- or supplier-specific requirements.  Providers and suppliers 
designated in the moderate risk category are subject to unannounced site visits in addition to 
all the requirements in the limited screening level providers and suppliers in the high risk 
category are subject to fingerprint-based criminal background checks (FCBCs) in addition to all 
of the requirements in the limited and moderate screening levels.  In FY 2020, CMS denied 
approximately 471 enrollments and revoked 11 enrollments as a result of the FCBCs or a failure 
to respond. 
The Advanced Provider Screening system (APS) automatically screens all current and 
prospective providers and suppliers against a number of data sources, including provider and 
supplier licensing and criminal records to identify and highlight potential program integrity 
issues for proactive investigation by CMS.  In FY 2020, APS resulted in more than 6.5 million 
screenings.  These screenings generated more than 43,000 potential licensure alerts, and more 
than 3,200 criminal alerts for potentially fraudulent providers and suppliers for further review by 
CMS.  APS review resulted in approximately 93 criminal revocations and over 220 licensure 
revocations. 
Site visits are a screening mechanism used to identify providers and suppliers that are not in 
compliance with program requirements and likely to pose a risk to the Medicare program, 
preventing them from enrolling or maintaining enrollment.  CMS-authorized site-visit 
contractors validate that the provider or supplier complies with Medicare enrollment 
requirements during these visits.  In FY 2020, the initiative resulted in 23,562 site visits 
conducted by the National Site Visit Contractor (NSVC), which conducts site visits for most 
 
19 https://www.justice.gov/opa/pr/federal-indictments-and-law-enforcement-actions-one-largest-health-care-fraud-
schemes. 
64 
   
Medicare FFS providers and suppliers, and 23,269 conducted by the National Supplier 
Clearinghouse (NSC), which conducts site visits for Medicare DME suppliers.  This work 
resulted in about 217 revocations due to non-operational site visit determinations for all 
providers and suppliers. 
CMSs provider screening and enrollment initiatives in Medicare have had a significant impact 
on removing ineligible providers and suppliers from the program.  In FY 2020, CMS deactivated 
111,884 enrollments and revoked 2,827 enrollments.  Site visits, revalidation, and other 
initiatives have contributed to the deactivation20 and revocation21 of more than one million 
enrollment records since FY 2012, when CMS started implementing these screening and 
enrollment requirements.  
Provider Enrollment, Chain and Ownership System (PECOS) 
PECOS is the system of record for all Medicare Provider/Supplier enrollment data, which 
includes Part A, Part B, and DME.  It is the Internet-based system that providers and suppliers 
use to enroll, revalidate, or make changes to their enrollment information in the Medicare FFS 
program.  PECOS stores all information furnished by providers and suppliers; tracks all 
enrollment processing and the results of MAC evaluation; and provides feeds to FFS claims 
payment systems, which are used in processing all claims.  Medicare FFS claims processing 
cannot occur without provider/supplier enrollment information from PECOS.  All 
provider/supplier updates and validations, both systematic and those performed manually by 
MACs, are stored and sent by PECOS.  It is integrated with and supports multiple enterprise 
systems and CMS operations for the Merit-Based Incentive Payment System (MIPS), 
demonstrations and model tests, and DMEPOS competitive bidding, providing direct access to 
information on the relationships between individuals and organizations stored in enrollment 
records.  PECOS is a critical part of CMSs program integrity strategy and is used along with the 
APS, as a data source by the FPS and by many other program integrity partners including the 
UPICs, Recovery Audit Program, the HHS-OIG, and state program integrity programs.  
PECOS is the source for vetting CMSs Accountable Care Organization programs and models 
and provides information that is used as a primary factor to determine program and model 
eligibility.  PECOS supports data transparency through interfacing with programs such as: Open 
Payments, Physician Compare, and Nursing Home Compare and also supports CMS data 
management initiatives through Master Data Management (MDM) and IDR. State Medicaid 
programs also rely on data-sharing efforts to support requirements for screening providers and 
suppliers.  CMS is focused on transitioning PECOS to a modernized, enterprise resource that is a 
platform for all provider/supplier enrollments across Medicare, Medicaid, and other CMS 
programs.  This single platform is intended to allow streamlining and consistency in user 
workflows, as well as to standardize interfaces with systems internal and external to CMS.  
 
20 Deactivation means the providers or suppliers billing privileges were stopped but can be restored upon the 
submission of updated information.  See 42 CFR 424.540. 
21 Revocation means the providers or suppliers billing privileges are terminated.  See 42 CFR 424.535. 
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In FY 2020, CMS made significant changes to PECOS to simplify access, improve the usability 
and enhance the security of the system, including the following changes:  
  Added additional features necessary to facilitate the future implementation of Multi-
Factor Authentication; 
  Implemented Opioid Treatment Program supplier type and necessary extract changes 
related to the supplier type; 
  Updated PECOS to support pay.gov web service migration from Open Collection 
Interface Interactive (OCI-I) service to Hosted Collection Pages (HCP); 
  Implemented necessary changes to support provider enrollment using waivers and 
flexibilities during Public Health Emergency(PHE); 
  Implemented the enhancements necessary to ensure all enrollment data that flows to the 
claims system comes directly from PECOS; 
  Continued enhancing and streamlining the process that expedites the enrollment 
processing for users by allowing digital upload of the signature pages; 
  Implemented enhancements to the provider enrollment process to support the 
implementation of the final rule CMS-6058 titled Program Integrity Enhancements to 
the Provider Enrollment Process; and 
  Implemented a Medicare ID Search tool in the provider interface to ease the process of 
finding the Medicare billing numbers to assist the provider community with any 
inquiries. 
Medicaid Screening and Enrollment 
As part of its oversight role in Medicaid, CMS works closely with state Medicaid Agencies 
(SMAs) to provide regulatory guidance, technical assistance, and other support with respect to 
provider screening and enrollment.  SMAs can comply with federally required Medicaid 
screening and enrollment requirements by using CMSs Medicare screening results for dually-
enrolling providers, eliminating the need and burden associated with states re-screening such 
applicants.  States may use Medicare screening data, including site visits, payment of application 
fees, and FCBCs.  For Medicaid-only FFS providers, SMAs must at a minimum follow the same 
risk-based screening procedures as required for Medicares screening and enrollment process. 
During FY 2020, CMS continued to expand its efforts to assist states with meeting Medicaid 
screening and enrollment requirements.  These efforts include enhanced sharing of Medicare 
enrollment and screening data with states, enhancing the data compare service to help states 
identify providers for which the state is able to rely on Medicares screening, providing technical 
assistance to states through site visits, publishing additional guidance in the Medicaid Provider 
Enrollment Compendium (MPEC), continuing monthly Technical Assistance Group (TAG) 
calls, and establishing a TAG call dedicated solely to screening and enrolling Medicaid managed 
care network providers. 
CMS shares the Medicare provider enrollment record via the PECOS administrative interface 
and in bulk data extracts from PECOS.  Additionally, CMS launched the PECOS States page in 
January 2017, and included provider enrollment information such as Medicare enrollment status, 
site visit information, fingerprint results, ownership information, reassignments, Medicare risk 
66 
   
levels, and more.  Since May 2016, CMS has offered the data compare service that more easily 
enables a state to rely on Medicares screening, in lieu of conducting state screening.  Using the 
data compare service, a state provides an extract of its actively enrolled provider population to 
CMS and then CMS returns information to the state indicating for which providers the state is 
able to rely on Medicares screening.  CMS has made enhancements to this service, which 
include tailoring the type of comparison to meet a states specific needs (for example, comparing 
provider ownership information between Medicare and Medicaid).  In FY 2018, CMS launched 
the Data Exchange (DEX) system, which is used to share data among CMS and the separate 
Medicaid programs of every state.  The new system stores all state-submitted terminations as 
well as all Medicare revocations, and HHS-OIG exclusion data, and enhances collaboration, 
improves reporting, and creates transparency through this process.  Lastly, in FY 2020, CMS 
continued the Medicaid screening pilot process, that began with Iowa and Missouri, to screen 
Medicaid providers through its APS system on behalf of states.  CMS believes centralizing this 
process will improve efficiency and coordination across Medicare and Medicaid, reduce state 
and provider burden, and address one of the biggest sources of error as measured by the Payment 
Error Rate Measurement (PERM) program today.  MO and IA are currently evaluating the 
screening results.  In 2020, CMS began expanding the pilot to other states.  Currently, Oklahoma 
and Nevada have agreed to participate in the pilot and CMS continues to reach out to other states 
to gauge their interest.  CMS will continue to evaluate the overall effectiveness of the pilot as we 
move through Phase II, which includes expanding the pilot to additional states and increasing the 
volume of providers being placed in CMS screening system. 
CMS provides ongoing guidance, education, and outreach (state visits and targeted technical 
assistance) to states on federal requirements for Medicaid screening and enrollment 
requirements.  In addition, CMS continues to publish updates to the Medicaid Provider 
Enrollment Compendium (MPEC), which is sub-regulatory guidance designed to assist states in 
applying certain regulatory requirements.  The latest update focused on applying screening and 
enrollment requirements to the Medicaid managed care network provider population. 
Medical Review  
  Accuracy reviews  
CMS uses the Medical Review Accuracy Contractor (MRAC) to conduct medical 
reviews of claim determinations made by the Medicare and Medicare Medical Review 
Contractors (MRCs). MRCs include the MACs, UPICs, and the Supplemental Medical 
Review Contractor (SMRC).  In 2020, the MRAC also assisted with measuring the 
accuracy of medical review conducted by the RACs while a procurement for the RAC 
Validation Contractor (RVC) was underway.  The MRAC helps CMS by measuring the 
accuracy rate for each contractor, to ensure the contractors are consistent in their medical 
review decisions, and feeds information into the Award Fee Component for the MACs to 
determine where policy/issues/medical review inconsistencies may be present.  CMS 
performs a number of accuracy reviews using clinicians; however, the MRAC is able to 
complete more accuracy reviews and provides additional analysis to CMS.  
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  Prior Authorization  
In a final rule, CMS established an initial Master List of certain DMEPOS that are 
frequently subject to unnecessary utilization and established a prior authorization process 
for these items.  CMS announced the first two codes for two types of power wheelchairs 
subject to prior authorization as a condition of payment, which began on March 20, 2017, 
in four states.  Prior authorization for these codes expanded nationally on July 17, 2017.  
In FY 2018, CMS transitioned the Power Mobility Device (PMD) demonstration into the 
national program. 
In FY 2019, CMS selected 12 additional DMEPOS items for required prior authorization: 
nationwide, beginning on July 22, 2019, seven additional PMD codes required prior 
authorization.  Also beginning on this date, five codes for pressure reducing support 
surfaces required prior authorization in California, Indiana, New Jersey, and North 
Carolina.  Prior authorization for these codes expanded nationwide on October 21, 2019.   
In FY 2020, CMS selected six additional DMEPOS items to be subject to prior 
authorization.  Beginning on September 1, 2020, prior authorization of certain lower limb 
prosthetic codes was required in California, Michigan, Pennsylvania, and Texas.  Prior 
authorization for these codes expanded nationwide on December 1, 2020.22  The DME 
MACs review requests for prior authorization for the noted items, communicate decisions 
with suppliers and physicians, and provide ongoing education and customer service. 
In FY 2020, CMS finalized a regulation through the Calendar Year 2020 Medicare 
Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center 
Payment System Final Rule (CMS-1717-FC) establishing a nationwide prior 
authorization process and requirements for certain hospital outpatient services that 
demonstrate significant increases in volume.  Beginning July 1, 2020, CMS required 
prior authorization for the following services: blepharoplasty, botulinum toxin injections, 
panniculectomy, rhinoplasty, and vein ablation.  This process serves as a method for 
controlling unnecessary increases in the volume of these services.  The MACs review 
requests for prior authorization for the noted services, communicate decisions to 
providers, and provide ongoing education and customer service. 
  Comparative Billing Reports  
Comparative Billing Reports (CBRs) are educational tools providers can use to support 
efforts to protect the Medicare Trust Fund.  These reports compare an individual provider 
or suppliers billing and/or prescribing practices for a specific billing code, policy group, 
or service with the billing and/or prescribing practices of that providers or suppliers 
peers in the same state and/or specialty, and national averages.  CBRs inform providers 
about Medicare coding, billing, and coverage guidelines and strategies for implementing 
self-audit processes into their practices, where appropriate.  Currently, CBRs are 
 
22 Prior authorization for these lower limb prosthetic codes was originally scheduled to begin in California, Indiana, 
New Jersey, and North Carolina on May 11, 2020, and nationwide on October 8, 2020; however, CMS temporarily 
delayed implementation due to the COVID-19 public health emergency.  
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available for download by the provider or supplier on a secure electronic portal as well as 
mailed in full via postal mail.  Since 2011, CBRs have been issued on topics such as 
physical therapy, opioids, and orthoses claims.  Typically, CBRs are sent to 
approximately 5,000 outlier providers per topic based on data analysis for a defined 
period of time.  Topics are based on Government Accountability Office (GAO) and OIG 
reports, Comprehensive Error Rate Testing program findings, and agency and contractor 
data analysis.  A CBR does not necessarily indicate improper billing and/or prescribing 
by the provider and only in select instances are providers and suppliers referred for 
additional review or education.   
Continue to Build States Capacity to Protect Medicaid 
CMS assists states in building their internal capacity to conduct program integrity activities for 
Medicaid.  CMS continues to use HCFAC program discretionary funds and other funding 
sources to develop and implement enterprise systems that support Medicaid.  In particular, the 
Medicaid and CHIP Business Information Solution (MACBIS) initiative will improve CMS and 
states ability to gather and analyze data that will support program integrity activities.  MACBIS 
is a CMS enterprise-wide initiative to modernize and transform the information and data 
exchanges with states and other key stakeholders.  The MACBIS initiative is comprised of four 
key areas of improvement to help prevent fraud, waste, and abuse: program data (such as T-
MSIS), operational data, quality data, and business process performance data.  HCFAC funding 
also supports the preparation and dissemination of educational toolkits for states to use to 
enhance awareness of Medicaid fraud, waste, and abuse among providers, beneficiaries, 
managed care organizations, and others.  States participate in and receive support and technical 
assistance and education from CMS through: 
  Medicaid Technical Advisory Groups  
  Voluntary state assistance site visits  
  Webinars 
  Medicaid Integrity Institute (MII) 
  Provider screening and enrollment strategies  
  Onsite focused program integrity reviews  
  Consolidation of provider audits and investigations through the five UPICs 
  Desk reviews of state processes and procedures  
CMS also identifies areas of improvement and works with states to make sure their integrity 
programs are robust. 
Health and Welfare Special Review Teams  
The Health and Welfare Special Review Teams (H&W SRT) project began in late September 
2018.  The purpose of this project is to ensure that state quality monitoring methodologies are 
efficiently and effectively preventing, detecting, and remediating all instances of abuse and/or 
neglect to beneficiaries in home and community-based settings including group homes, and 
assisted living programs.  The H&W SRT is in the process of analyzing all statewide Home and 
Community-Based Services (HCBS) data available for all states to identify states to receive 
onsite or virtual reviews.  As of September 2020, nine onsite reviews were conducted, including 
69 
   
Ohio, Massachusetts, Maryland, Oregon, the District of Columbia, California, Nebraska, West 
Virginia, and Montana.  Due to COVID-19 restrictions, onsite reviews were placed on hold in 
late March of 2020.  In order to continue reviews, the project was modified and the H&W SRT 
developed a virtual review standard operating procedure that is currently being finalized.  The 
H&W SRT is anticipating the first virtual reviews will take place in Maine and Alaska and will 
continue until onsite reviews can be re-instated.  During the last year, the H&W SRT also 
developed three trainings entitled Key Ingredients of an Effective 1915(c) Home and 
Community-Based Services Waiver Program Mortality Review Process, Effective Incident 
Investigations and Management in 1915(c) Home and Community-Based Services Waiver 
Programs, and Health & Welfare Special Reviews Team: Observations and State 
Considerations.  A data tracker tool that will house all of the state findings, including promising 
practices, was developed and is currently being utilized by CMS.  The H&W SRT will continue 
to conduct analyses, onsite and/or virtual visits, and trainings to help CMS identify, prevent, and 
address any systemic problems in the states implementation of, and compliance with, health and 
safety oversight systems within these settings.  
State Audit Compliance and Financial Management Oversight 
The State Audit Compliance and Financial Management Oversight projects began in September 
2020.  The purpose of these projects is to acquire contractor assistance for two separate efforts.  
The first is to perform data analysis, collection, and evaluation, including the use of statistical 
sampling techniques, to review data provided by states related to payments to health care 
providers to determine if Medicaid claims submitted by states for federal financial participation 
(FFP) are allowable under federal guidelines.  As a whole, this work supports the overall 
responsibility of CMS to ensure that all claimed expenditures meet statutory and regulatory 
requirements and are appropriate for the Medicaid program to provide efficient review of 
activities relating to the performance of Financial Management Reviews (FMRs).  The second 
effort will develop, implement, and align measures that improve CMS approach to the annual 
OMB single state agency (SSA) audit and identify opportunities to optimize the compliance 
supplement that guides single state auditors as they review state Medicaid and CHIP programs.  
This project will also improve the analysis of the findings resulting from SSA and HHS OIG 
audits of state Medicaid / CHIP programs to assist CMS in better identifying high risk policy 
areas.   
Medicaid Enterprise System 
State Medicaid agencies develop, implement, operate and maintain information technology 
systems to support their program operations.  The systems generally include eligibility and 
enrollment, managed care payment, encounter data and/or claims processing, pharmacy 
management, etc.  These systems work in concert with one another and must adhere to federal 
regulation23 and guidance, including the Medicaid Information Technology Architecture (MITA) 
framework, several standards and conditions,24 and certification criteria.  Adhering to these 
 
23 Mechanized Claims Processing and Information Retrieval Systems (90/10) Final Rule 
(https://www.federalregister.gov/documents/2015/12/04/2015-30591/medicaid-program-mechanized-claims-
processing-and-information-retrieval-systems-9010) 
24 https://www.medicaid.gov/medicaid/data-and-systems/mita/index.html 
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mandates promotes the consistency of business and technical processes and IT platforms, as well 
as standards across the Medicaid Enterprise.  As noted above, CMS is working closely with 
states to support the delivery of comprehensive digital service products for MACBIS, an 
enterprise-wide initiative to empower states and the federal government to perform monitoring 
and oversight, inspect program integrity, evaluate demonstrations, perform actuarial and quality 
of care analysis, negotiate waivers, and enable the sharing of comprehensive program data with 
states, stakeholders, and the research community. 
CMS provides independent technical assistance to states for IT and policy requirements, 
including monitoring and oversight, in working with state-specific system requirements, IT 
system builds, and associated interfaces for all states and the territories.  Required technical 
artifacts are analyzed and tracked to assess state progress.  Gap analyses are done on a regular 
basis and risk registers are studied to identify opportunities to better ensure project success.  As 
systems enter production operations (aka go-live), they are reviewed in-depth by CMS to 
ensure that the system functions appropriately to implement the policy requirements (e.g., for 
provider enrollment or for eligibility and enrollment, etc.).  Certain state systems also undergo a 
certification review conducted by CMS as an additional step in ensuring proper operation.   
Federal and state governments have invested heavily in the development and operations of 
Medicaid claims processing and information retrieval systems that engage in high volume 
transactions.  In 2016, CMS released an update to the MMIS Certification process in the form of 
MECT 2.0 to ensure a more comprehensive analysis of CMS funded state systems functionality.  
Moving forward, CMS is focused on increasing accountability and state flexibility by creating an 
outcomes-based oversight model for state systems certification.  This approach will focus on 
producing timely and accurate claims payment results, properly screening and enrolling 
providers, member management, and comprehensive data analytics and reporting capabilities 
including timely and accurate submissions of required federal reporting such as T-MSIS.    
Improper Payment Rate Measurement and Increased Accountability in Medicaid and CHIP 
Programs 
The Payment Integrity Information Act of 2019 requires each agency to periodically review 
programs it administers and identify programs that may be susceptible to significant improper 
payments.  For those programs determined to be susceptible, the agency is required to estimate 
the amount of improper payments, submit those estimates to Congress, and report on actions the 
agency is taking to reduce improper payments.  The Medicaid and CHIP programs have been 
identified as being at risk for significant improper payments.  CMS estimates improper payment 
rates in Medicaid and CHIP through the PERM program.  The improper payment rates are based 
on reviews of the FFS, managed care, and eligibility components of Medicaid and CHIP in the 
year under review.  CMS measures Medicaid and CHIP improper payment rates using a 17-state 
rotation so that each state is reviewed once every three years.  States are required to submit 
corrective action plans to CMS to address root causes of errors and deficiencies in an effort to 
reduce improper payments. 
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In the HHS FY 2020 Agency Financial Report (AFR),25 CMS reported the national Medicaid 
improper payment rate based on measurements conducted in FYs 2018, 2019, and 2020.26  The 
FY 2020 national Medicaid improper payment rate was 21.36 percent, representing $86.49 
billion in gross federal improper payments.  The FY 2020 national improper payment rates by 
component are 16.84 percent for Medicaid FFS, 0.06 percent for Medicaid managed care, and 
14.94 percent for Medicaid eligibility.  The FY 2020 national CHIP improper payment rate was 
27.00 percent, representing $4.78 billion in gross federal improper payments.  The national 
improper payment rates by component are 14.15 percent for CHIP FFS, 0.49 percent for CHIP 
managed care, and 23.53 percent for CHIP eligibility. 
The majority of Medicaid and CHIP improper payments are a result of eligibility errors 
discovered through the reintegration of the PERM eligibility component.  A federal contractor27 
conducts the eligibility measurement, allowing for consistent insight into the accuracy of 
Medicaid and CHIP eligibility determinations and increased oversight of identified 
vulnerabilities.  Based on the measurement of the first two cycles of states, eligibility errors are 
mostly due to insufficient documentation to verify eligibility or non-compliance with eligibility 
redetermination requirements.  The majority of the insufficient documentation errors represent 
both situations where: 
  The required verification was not done at all, and 
  There is indication that the eligibility verification was initiated but there was no 
documentation to validate the verification process was completed.  
These insufficient documentation situations are related primarily to income verification. 
The CHIP improper payment rate was also driven by claims where the beneficiary was 
inappropriately deemed eligible for CHIP, but was eligible for Medicaid, mostly related to 
beneficiary income, third party insurance, or household composition/tax filer status.  
Additionally, state non-compliance with provider screening, enrollment, and NPI requirements is 
a major contributor to the Medicaid and CHIP improper payment rates.  
CMS works closely with states to develop state-specific corrective action plans to reduce 
improper payments.  All states are responsible for implementing, monitoring, and evaluating the 
effectiveness of their plans, with assistance and oversight from CMS. 
Additional information on the Medicaid and CHIP improper payments can be found in the FY 
2020 Agency Financial Report28 and CMS websites.29   
 
25 https://www.hhs.gov/about/agencies/asfr/finance/financial-policy-library/agency-financial-reports/index.html  
26 The national eligibility improper payment rate still includes a proxy estimate for the remaining 17 states that have 
not yet been measured since the reintegration of the PERM eligibility component. 
27 Prior to FY 2014, the eligibility component was reviewed and self-reported by the states to CMS for national 
improper payment reporting. 
28 https://www.hhs.gov/about/agencies/asfr/finance/financial-policy-library/agency-financial-reports/index.html 
29 https://www.cms.gov/ImproperPayments 
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Medicaid Beneficiary Eligibility Reviews 
HHS conducted beneficiary eligibility reviews to confirm whether states Medicaid and CHIP 
beneficiary eligibility determinations were appropriate and the Federal match was assessed 
correctly.  In FY 2020, HHS released reports30 for New York, Kentucky, and Louisiana that (1) 
compared previous findings in similar reviews conducted by the HHS-OIG to ensure those 
findings have been appropriately addressed; (2) identified and assessed the impact of any 
changes to Medicaid eligibility policy due to the Affordable Care Act (ACA); and (3) determined 
whether non-expansion enrollment categories were impacted by the expansion enrollment 
process.  HHS conducted a risk-based analysis to select additional states for review in FY 2021. 
Medical Loss Ratio Examinations 
HHS is conducting examinations of Medicaid managed care plans financial reporting in selected 
states, focused on Medical Loss Ratio (MLR) and rate setting.  In June 2020, CMS released its 
first MLR audit report that included a comprehensive examination of Californias 22 Medicaid 
managed care plans MLR reporting for the ACA Medicaid adult expansion population.31  HHS 
conducted a risk-based analysis to select additional states for review in FY 2021. 
Medicaid 1115 Financial Oversight 
Medicaid section 1115 demonstrations are an increasingly important vehicle for state innovation 
in Medicaid program development, expansion and financing.  Forty-seven states and the District 
of Columbia operate at least one 1115 demonstration, and there are 78 active demonstrations 
representing estimated federal outlays of $195 billion in FY 2019.  The Medicaid section 1115 
demonstration portfolio continues to grow in number, federal outlays, and policy importance and 
complexity.  CMS has committed additional staff and reorganized section 1115 demonstration 
work to develop and implement a more robust approach to monitor and oversee these 
demonstrations.   
Related to demonstration fiscal integrity, CMS activities in FY 2020 included the continued 
phase-in of the revised budget neutrality policy represented in the FY 2018 State Medicaid 
Director Letter documenting CMSs approach to various aspects of Medicaid 1115 budget 
neutrality calculations.32  In addition, to strengthen the review of state-submitted quarterly 
budget neutrality performance reports, CMS has developed and implemented a standardized 
budget neutrality reporting tool for states.  This tool will facilitate improved consistency in state 
reporting and CMS tracking of spending under section 1115 demonstrations.  Further, the section 
1115 IT reporting system, Performance Metrics Database and Analytics (PMDA), has been 
updated to support this revised workflow and the documentation of findings from the budget 
neutrality reviews.  Most recently, CMS launched an internal initiative to more thoroughly 
document and train staff on the underlying principles, assumptions and data to be used in the 
formulation of the budget neutrality parameters reflected in the demonstration approval 
documents.  
 
30 The national eligibility improper payment rate still includes a proxy estimate for the remaining 17 states that have 
not yet been measured since the reintegration of the PERM eligibility component. 
31 https://www.cms.gov/About-CMS/Components/CPI/CPIReportsGuidance 
32 https://www.medicaid.gov/sites/default/files/federal-policy-guidance/downloads/smd18009.pdf 
73 
   
Beyond budget neutrality, CMS has also expanded and made more robust its oversight of the 
integrity of demonstration implementations.  This has included the development of standard 
operating procedures and extensive training, as well as further updates and refinements of 
PMDA to strengthen internal controls and development of standardized reports that permit more 
efficient and meaningful review of demonstration performance relative to expectations 
established in the demonstration special terms and conditions.  Relatedly, CMS is providing 
technical assistance to states to assure they understand and implement these more robust 
monitoring standards.   
Home and Community-Based Services Rate Review and Fiscal Integrity Project 
The Rate Review and Fiscal Integrity Project improves the efficiency and effectiveness of rate 
setting oversight and financial reporting for the Programs of All-inclusive Care for the Elderly 
(PACE), and HCBS waiver and state plan programs.  Project tasks include rate methodology 
review and analysis, assessing compliance with statute and regulations, data compilation and 
validation, and education and training for states and CMS staff.  Specifically, this includes: 
  Ensuring that states are in compliance with the HCBS assurances as described in Section 
1915(c) of the Act;  
  Analyzing states fiscal integrity systems; conducting analyses of HCBS personal care 
services requirements and tracking and trending states protections against waste, fraud, 
and abuse;  
  Providing education and training related to financial accountability, rate development, 
and pre and post payment review methods; and  
  Conducting environmental scans of states incident management systems to identify 
methods to detect unnecessary and/or recurrent hospitalizations and methods for 
monitoring the health and safety of Medicaid participants.  
From September 30, 2019 to September 30, 2020, CMS completed 126 reviews of HCBS 
waivers for 37 states and compiled reports with findings pertaining to the waivers fiscal and 
quality components for each.  Findings from fiscal and quality reviews are aggregated in an 
annual report each year, which helps inform technical assistance activities and guide program 
improvements.  20 PACE reviews, spanning 19 states, were also conducted during this period. 
Since 2016, 28 presentations have been completed and made available to state staff via technical 
assistance calls and web posting.  They covered topics such as findings from the CMS survey of 
states incident management systems for HCBS waivers, using electronic visit verification to 
improve HCBS quality monitoring and oversight, preventing unallowable costs in HCBS 
programs, financial accountability of HCBS, rate sufficiency, and HCBS rate development. 
Extend Work in Medicare Parts C and D 
CMS is committed to expanding program integrity activities in capitated, managed care 
programs in Medicare.  For example, CMS has strengthened oversight of Medicare Part C and 
Part D plan sponsors by conducting audits that detect whether plans are delivering the 
appropriate health care services and medications for which they are being paid. 
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National Benefit Integrity (NBI) Medicare Drug Integrity Contractor (NBI MEDIC) and 
Investigations MEDIC (I-MEDIC) 
CMS split its Medicare Parts C and D program integrity initiatives between two contractors: The 
NBI MEDIC33 and I-MEDIC.  The NBI MEDIC has a national focus related to plan oversight 
pertaining to the following Part C and Part D program integrity initiatives:  identification of 
program vulnerabilities, data analysis, health plan audits, outreach/education, and law 
enforcement support, which includes requests for information (RFI).  As a result of the NBI 
MEDICs data analysis projects, including Part D plan sponsor self-audits, HHS recovered $6.5 
million in the first nine months of FY 2020 from Part D sponsors.  The primary purpose of the   
I-MEDIC is to detect, prevent, and proactively deter fraud, waste, and abuse for high risk 
prescribers/pharmacies in Medicare Parts C and D by focusing primarily on complaint intake and 
response, data analysis, investigative activities, referrals to law enforcement partners, and law 
enforcement support which includes RFIs. 
Medicare Parts C and D Marketing Oversight   
Each year CMS analyzes Annual Notice of Change (ANOC) documents and takes compliance 
action against Part C Plans, also known as MAOs, Part D Prescription Drug Plans (PDPs), 
Section 1876 Cost Plans, and Medicare-Medicaid Plans (MMPs) that fail to send timely and 
accurate ANOC documents to Medicare enrollees.  The ANOC provides Medicare enrollees with 
vital information that can affect their ability to make informed choices concerning their Medicare 
health care and prescription drug options.   
In FY 2020, CMS issued one notice of non-compliance (NONC) to one parent organization as 
part of the annual timeliness review.  CMS issued 14 NONCs to 21 parent organizations during 
the accuracy review.  The NONCs were based on substantive inaccuracies (e.g., benefits, cost-
sharing) contained in ANOC or evidence of coverage documents issued to Medicare enrollees.         
Program Audits  
CMS conducts program audits of Parts C and D plan sponsors (including organizations offering 
Medicare-Medicaid Plans) and PACE organizations to evaluate their delivery of health care 
services and medications to beneficiaries.  In order to conduct a comprehensive audit of a 
sponsors operation and maximize CMSs resources, scheduled Parts C and D program audits in 
2020, as well as in prior years, occur at the parent organization level, though PACE audits are 
conducted at the contract level.  
CMS audits all program audit areas for sponsors and PACE organizations unless an area is not 
applicable to the entitys operation, or, CMS is conducting a focused audit.  Each sponsor or 
PACE organization that has deficiencies cited in its audit report is required to correct all of the 
deficiencies and undergo a validation audit or monitoring to ensure the issues have been 
corrected before the audit can be closed. 
 
33 In FY 2020, a new NBI MEDIC contract was awarded and is now known as the Plan Program Integrity MEDIC. 
75 
  In general, program audits give CMS reasonable assurance that sponsors and PACE 
organizations deliver benefits in accordance with the terms of their contracts and plan benefit 
packages.  However, CMS also has the authority to take enforcement actions, up to and including 
termination, if warranted, for findings that involve direct beneficiary harm or the potential to 
result in such harm. 
CMS has greatly increased the level of transparency with respect to audit materials, the 
performance of audits, and the results of those audits, including any enforcement actions that 
may result.  CMS believes that program audits and consequences of possible enforcement actions 
are continuing to drive improvements in the industry and are increasing sponsors compliance 
with core program functions in the Medicare Parts C and D and PACE programs.    
Compliance and Enforcement 
CMS has a number of tools, including the imposition of administrative enforcement actions, to 
encourage program compliance.  These actions include: 
 CMPs;
 Intermediate sanctions (i.e., suspension of marketing, enrollment, payment); and
 CMS initiated contract terminations.
CMS has the authority to take enforcement or contract termination actions against a Part C or 
Part D plan sponsor for program violations, including: 
 Substantially failing to comply with program and/or contract requirements;
 Performance under a contract with CMS in a manner that is inconsistent with the efficient
and effective administration of the Medicare Part C and Part D program requirements;
and
 Failure to substantially meet the applicable conditions of the Medicare Part C and D
program.
Part C Benefits Review Activities 
Each year, CMS requires Part C organizations to submit bids and plan benefit packages detailing 
how their Part C plans will provide coverage to beneficiaries for the following year.  MAOs 
submitted to CMS more than 6,300 Part C plan benefit packages on June 1, 2020 and project to 
cover more than 26.8 million enrollees in contract year 2021.  Bid and plan benefit submissions 
are reviewed to ensure they do not discriminate against beneficiaries and comply with CMS 
regulations.  Plan requirements are established and communicated annually, and the following 
reviews are performed: 
 Low Enrollment PlansEach year, CMS evaluates existing Part C plans that have low
total enrollment to make sure these plans are sustainable over time and protect
beneficiaries from selecting a potentially unsustainable plan.
 Total Beneficiary Cost (TBC)Evaluate increases in beneficiary cost sharing or
decreases in plan benefits from one year to the next.  This evaluation makes sure
76   
beneficiaries receive value in their benefit package selection and protects them from large 
increases in out of pocket costs. 
  Maximum Out of Pocket Costs (MOOP)This review examines the maximum out-of-
pocket costs for enrollees in Part C and protects beneficiaries from very high out of 
pocket medical costs. 
  Service Category Cost-Sharing StandardsEach year, CMS evaluates the cost-sharing 
that plans include in their bids and plan benefit packages to ensure the plans do not 
exceed established limits and are not discriminatory.   
  Actuarial EquivalenceCMS reviews bids to make certain the estimated cost sharing 
presented in the bid is actuarially equivalent to the cost-sharing levels under FFS.  CMS 
currently examines four categories for actuarial equivalence and this review helps guard 
against plans imposing discriminatory cost-sharing on beneficiaries. 
  Supplemental BenefitsThere are several reviews conducted in this area, including a 
review of supplemental benefits that helps make sure that any optional supplemental 
benefits offered are of reasonable value, as well as a review to make certain the benefits 
are offered in a non-discriminatory fashion. 
CMS carefully conducts all of these reviews to ensure that plans make all necessary changes to 
their bids and plan benefit packages.  These reviews are conducted between early June and 
August, and, as necessary, involve communications with Part C organizations to correct issues 
and resubmit their bids and plan benefit packages.  Following bid and plan benefit approval, Part 
C organizations must complete the contracting process with CMS and may market to 
beneficiaries beginning October 1 of each year.  Part C benefits requirements and review 
processes are intended to protect beneficiaries from discrimination and to ensure that Part C 
plans provide value to enrollees. 
Encounter Data Processing System Contract 
In the FY 2009 inpatient prospective payment system (IPPS) final rule, CMS revised regulations 
to require MA organizations to submit encounter data for each item and service provided to MA 
plan enrollees.  Consistent with such regulations, as of January 3, 2012, CMS requires MA 
organizations to submit encounter data for dates of service beginning January 3, 2012.  MA 
organizations are required to submit data for all institutional, professional, and DME services 
provided to MA plan enrollees on or after that date.  CMS established and maintains the 
Encounter Data System (EDS), which to date, has collected over 5.9 billion encounter data 
records (EDRs).  
The encounter data detail each item and service provided to enrollees of MA organizations.  
These records are comparable in format and detail to claims FFS providers submit to the MACs.  
The encounter data collected by the EDS will allow CMS to make more accurate payments 
reflecting the patterns of care and the predicted costs of diseases for MA enrollees.  CMS is also 
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able to use the information to evaluate service utilization, assess quality of care, and assess the 
performance of MA organizations. 
Beginning in CY 2015, CMS began to use encounter data as an additional source of diagnoses to 
risk adjust payments to MAOs.  In CY 2016, CMS continued the transition and calculated risk 
scores using both Risk Adjustment Processing System (RAPS) and encounter data, with RAPS-
based risk scores weighted at 90 percent and encounter data-based risk scores weighted at 10 
percent.  In CY 2019, CMS increased the use of encounter data for calculating risk scores with 
encounter data-based risk scores receiving a weight of 25 percent and RAPS-based risk scores a 
weight of 75 percent.  In CY 2020, CMS continued the transition to using encounter data for risk 
adjustment and increased the weighting of encounter data-based risk scores to 50 percent and 
reduced the weighting of RAPS-based risk scores to 50 percent.  CMS finalized a new blend of 
75 percent encounter data-based risk scores and 25 percent RAPS-based risk scores for 2021.  
CMS anticipates ultimately using encounter data as the sole source of plan-submitted diagnosis 
information.  
Encounter Data Oversight and Integrity Activities 
Since complete and accurate encounter data are integral to risk adjustment payments and other 
uses of encounter data, CMS has developed an encounter data oversight and integrity plan to 
support efforts to ensure the completeness and accuracy of the MA data collected by CMS.  This 
plan aligns with direction provided by the GAO and lays out an incremental approach to assess 
and drive encounter data submission and quality over multiple years.  Major components of the 
plan include: outreach, analysis, monitoring, and compliance of MA organizations encounter 
data submissions. 
Improper Payment Rate Measurement and Increased Accountability in Medicare Advantage 
(Part C) and Medicare Prescription Drug Benefit Programs (Part D) 
Each year, CMS publishes national improper payment rates for Medicare Part C and Part D in 
accordance with the Payment Integrity Information Act of 2019.  
The Part C gross improper payment estimate reported for FY 2020 (based on the 2018 payment 
year data) was 6.78 percent or $16.27 billion.  The Part C methodology estimates improper 
payments resulting from errors in beneficiary risk scores.  The primary component of most 
beneficiary risk scores is based on clinical diagnoses submitted by the plan.  If the diagnoses 
submitted to CMS are not supported by medical records, the risk scores will be inaccurate and 
result in payment errors.  The Part C payment error estimate is based on medical record reviews 
conducted under CMSs annual Part C Improper Payment process, where CMS identifies 
unsupported diagnoses and calculates corrected risk scores.  The Part C Improper Payment 
Measurement calculates the beneficiary-level payment error for the sample and extrapolates the 
sample payment error to the population subject to risk adjustment, resulting in a Part C gross 
payment error amount. 
In an effort to improve the Part C improper payment rate, CMS has implemented the following 
specific corrective actions:  
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  Contract-level Risk Adjustment Data Validation (RADV) audits are CMSs primary 
corrective action to recoup overpayments.  RADV uses medical record review to verify 
the accuracy of enrollee diagnoses submitted by MA organizations for risk adjusted 
payment.  CMS expects payment recovery will have a sentinel effect on risk adjustment 
data quality submitted by plans for payment because contract-level RADV audits 
increase the incentive for MA organizations to submit valid and accurate diagnosis 
information.  Contract-level RADV audits also encourage MA organizations to self-
identify, report, and return overpayments.  In September 2019, CMS launched the 
payment year 2015 RADV audit.  On January 9, 2020, CMS held a contract-level RADV 
training session for the 2015 payment year audit that included an overview of RADV 
enrollee data, guidance on preparing and submitting medical records and demonstration 
of the Central Data Abstraction Tool (CDAT).  Due to the COVID-19 PHE, CMS 
suspended the 2015 audit in March 2020 and resumed it in September 2020.  On 
September 10, 2020, CMS provided a refresher training regarding the payment year 2015 
RADV audit that also included updates on enrollee data and how to access systems to 
submit medical records.  The payment year 2014 RADV audit medical record submission 
phase is complete, and the audit is expected to conclude in FY 2021.  CMS expects to 
start contract-level RADV audits for payment years 2016 and 2017 by fall 2021. 
  Training:  Historically, CMS has conducted fraud, waste, and abuse in-person and 
webinar training sessions for Medicare Parts C and D plans.  In FY 2019, CMS 
conducted two small in-person Medicare Part C & D Fraud, Waste, and Abuse 
Collaboration Missions (October 2018 and March 2019), a large in-person fraud, waste, 
and abuse training (July 2019) and two opioid missions (April 2019 and August 2019) 
three in-person missions (one in October 2017 and two in April 2018) and a large in-
person fraud, waste, and abuse conference in July 2018.  The missions included multi-
disciplinary teams of experts and decision makers from HHS and its partners, enabling 
them to undertake collaborative efforts to protect the Medicare Part C and D programs.   
The Part D gross improper payment estimate reported for FY 2020 (based on the 2018 payment 
year) was 1.15 percent or $927.50 million, which represents payment error related to PDE data.  
For the Part D Improper Payment Measurement, CMS measures the inconsistencies between the 
information reported on PDEs and the supporting documentation submitted by Part D sponsors: 
prescription record hardcopies (or medication order, as appropriate), and detailed claims 
information.  Based on these reviews, each PDE in the audit sample is assigned a gross drug cost 
error.  A representative sample of beneficiaries undergoes a simulation to determine the Part D 
improper payment estimate.   
To improve the Part D error rate, CMS has implemented the following key specific corrective 
actions:   
  Training:  CMS continued national training sessions on payment and data submission 
with detailed instructions as part of the improper payment estimation process for Part D 
sponsors.  CMS also conducted in-person training sessions for Medicare Part C and Part 
D sponsors on program integrity initiatives, investigations, data analysis, and potential 
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fraud schemes.  In FY 2020, CMS conducted two MAOs and Prescription Drug Plan 
fraud, waste, and abuse training webinars in January 2020 and July 2020; a Fraud, Waste, 
and Abuse COVID-19 webinar in April 2020; and two Opioid Education Missions in 
October 2019 and March 2020.  The missions included multi-disciplinary teams of 
experts and decision makers from CMS and its partners and supported collaborative 
efforts to protect the Medicare Part C and D programs.   
  Outreach:  HHS continued formal outreach to plan sponsors for invalid or incomplete 
documentation.  HHS distributed Final Findings Reports to all Part D sponsors 
participating in the PDE review process.  This report provided feedback on their 
submission and validation results against an aggregate of all participating plan sponsors.  
Additional information on the Medicare Part C and D improper payments can be found in the FY 
2020 Agency Financial Report34 and CMS website.35 
Central Data Abstraction Tool 
CMS uses diagnosis information submitted by MA organizations to risk adjust payments to 
plans.  The more diagnosis information a plan submits, typically the higher their payments from 
Medicare.  Each year, CMS conducts RADV audits to measure the accuracy of the plan-
submitted diagnostic information.  As required by statute, CMS uses the results of these audits to 
estimate and recover overpayments for individual MA organizations.  The Central Data 
Abstraction Tool is the main system that CMS uses to support the RADV audits. 
CMS Exchange Program Integrity 
The Federally-facilitated Exchanges (FFEs) and the State-based Exchanges (SBEs) have 
increased their focus on program integrity.  In FY 2020, CMS triaged thousands of consumer 
complaints, worked with health insurance issuers to cancel fraudulent policies, performed data 
analysis and license verifications to identify potentially noncompliant insurance agents and 
brokers, conducted investigations, and referred egregious cases to the HHS-OIG.  CMS also 
reviewed cases of agent and broker misconduct and took administrative actions including 
terminating CMSs agreements with agents and brokers and imposing CMPs on those agents and 
brokers who were found to have engaged in misconduct.  CMS and its program integrity 
contractors continuously analyze plan enrollment and other types of data to identify early 
warning signs of fraud.  CMS hosts meetings with SBEs every other month to share best 
practices for identifying and deterring fraud and coordinate with states Departments of 
Insurance (DOIs) to understand agent and broker licensing requirements and report 
noncompliance.  Lastly, CMS supports ongoing OIG and DOI investigations by fulfilling 
requests for records regarding consumer enrollments and financial assistance, complaints, and 
results of CMS investigations. 
 
34 https://www.hhs.gov/about/agencies/asfr/finance/financial-policy-library/agency-financial-reports/index.html  
35 https://www.cms.gov/ImproperPayments 
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Provide Greater Transparency into Program Integrity Issues within Medicare and 
Medicaid 
CMS is dedicated to providing greater transparency into program integrity issues through 
education, outreach, partnership, strategic communications, and data releases.  CMS is well-
positioned to work with its partners and stakeholders to share best practices and lessons learned 
in program integrity.  Increased transparency and accountability ensure program efficiency and 
effectiveness. 
Outreach and Education 
One of the goals of CMSs provider education and outreach is to reduce the Medicare and 
Medicaid improper payment rates by giving Medicare and Medicaid providers the timely and 
accurate information they need to bill correctly the first time.   
The Medicare FFS claims processing contractors, known as MACs, educate Medicare providers 
and suppliers about Medicare policies and procedures, including local coverage policies, 
significant changes to the Medicare program, and issues identified through review of provider 
inquiries, claim submission errors, medical review data, and Comprehensive Error Rate Testing 
program data.  The MACs use a variety of strategies and communication channels to offer 
Medicare providers and suppliers a broad spectrum of information about the Medicare program. 
CMS continues to work with providers & suppliers, states, and others to protect CMS programs 
from fraud, waste, and abuse schemes.  CMS is focused on safeguarding programs and 
protecting beneficiaries from fraud, waste, and abuse, while also working to minimize 
unnecessary provider burden.  Providing education and training opportunities that are responsive 
to stakeholder needs will continue to protect the financial security of CMS programs by 
reducing improper payments and curtailing emerging fraud schemes.  By offering regular in-
person and virtual events and trainings, as well as clear and concise information online, CMS 
continues to provide needed information that is responsive to the realities of clinical practice. 
In FY 2020, CMS coordinated multiple training events focusing on current Medicare Parts C and 
D fraud schemes, fraud prevention techniques, and anti-fraud, waste, and abuse activities.  These 
sessions integrated group discussions, information-sharing exercises, presentations and panel 
discussions that focused on the latest fraud, waste, and abuse issues.  
Healthcare Fraud Prevention Partnership  
In July 2012, the Secretary of HHS and the U.S. Attorney General announced a groundbreaking 
partnership to fight fraud, waste, and abuse across the health care system.  The HFPP is a 
voluntary, public-private partnership consisting of the Federal Government, state agencies, law 
enforcement, private health insurance plans, and health care anti-fraud associations.  The overall 
mission of the HFPP is to position itself as a leading body for the health care industry to reduce 
fraud, waste, and abuse by:   
  Providing an unparalleled cross-payer data source, representing the full spectrum of the 
health care industry, to enable the performance of sophisticated data analytics and 
information-sharing for the benefit of all partners; 
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  Achieving meaningful participation by partners and establishing strategic collaborations 
with diverse stakeholders; and 
  Leveraging Partnership resources and relationships to generate real-time, comprehensive 
approaches that materially impact efforts to reduce health care fraud, waste, and abuse. 
In FY 2020, the HFPP reached a total membership level of 172 partner organizations, comprised 
of five federal agencies, 32 law enforcement agencies, 13 associations, 80 private payers, and 42 
state and local partners.  
The HFPP uses a diverse variety of approaches to identify vulnerabilities in Partner data.  These 
methods include standard searches to detect anomalies that may implicate the existence of fraud, 
waste, and abuse; scanning of incoming claims information against existing data sets, such as 
lists of deactivated providers; creation of reference files that list providers that may be suspect 
based on known risks; and creation of informational content to support stakeholders in 
addressing vulnerabilities (e.g., white papers).  The HFPP has also expanded its study 
methodology to collect frequently updated data, including, and consistent with all applicable 
privacy requirements, personally identifiable information (PII) and protected health information 
(PHI).  The HFPP is currently using professional and institutional claims and is planning to 
expand to collect pharmacy and dental claims in the future.  
Over 20 billion professional claim lines were submitted by partners through FY 2020 for the 
purpose of conducting cross-payer analyses, and the HFPP has commenced 11 studies during FY 
2020. 
Examples of studies initiated in FY 2020 include the identification of problematic billing in the 
following areas: 
  Ambulance services; 
  Deactivated rendering providers; 
  Radiation oncology; 
  Transitional care management; 
  Mohs micrographic surgery; and 
  Genetic testing. 
The HFPP also continued its efforts to foster collaboration among partners in FY 2020 by 
hosting five information-sharing sessions and an Annual Executive Board meeting.  These 
meetings were used to share fraud schemes and provider alerts, provide updates on law 
enforcement activities, and strategize on how to broaden the HFPPs impact in the private and 
public sectors.   
Open Payments  
Open Payments is a statutorily required-national transparency program designed to provide the 
public with information regarding the financial relationships between applicable manufacturers 
and group purchasing organizations (GPOs), collectively referred to as reporting entities and 
physicians and teaching hospitals.  Open Payments data includes payments and other transfers of 
value (such as gifts, honoraria, consulting fees, research grants, and travel reimbursements) that 
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drug or device companies provide to physicians and teaching hospitals, as well as the ownership 
and investment interests held by physicians or their immediate family members in these 
companies.  
HHS is required to collect and display this information, which is self-reported annually by 
reporting entities, on the public website, where the reported data can be searched, downloaded, 
and evaluated.  
For Program Year 2019, CMS published information regarding over $10 billion in payments and 
ownership and investment interests that were made from applicable manufactures and GPOs to 
physicians and teaching hospitals.  This amount is comprised of approximately 11 million total 
records attributable to 614,910 physicians and 1,196 teaching hospitals.  Payments in the three 
major reporting categories included: 
  $3.6 billion in general (i.e., non-research related) payments; 
  $5.2 billion in research payments; and 
  $1.2 billion of ownership or investment interests held by physicians or their immediate 
family members. 
Since the programs inception, CMS has published 76.3 million records, accounting for $53.1 
billion in payments and ownership and investment interests. 
Administration for Community Living 
The mission of the SMP program is to empower and assist Medicare beneficiaries, their families, 
and caregivers to prevent, detect, and report health care fraud, errors, and abuse through 
outreach, counseling, and education.  In FY 2020, HHS allocated $18.0 million in HCFAC 
appropriations, plus an additional $98,804 in carryover funding from FY 2019 to the 
Administration for Community Living (ACL) to support SMP program infrastructure and 
provide grants to SMPs in 54 states and territories.  
Until FY 2016, ACL received funding from a separate Congressional appropriation (the Older 
Americans Act) to support SMP grants.  However, the Consolidated Appropriations Act of 2016 
required the SMP program to be fully funded by CMS discretionary HCFAC appropriations 
beginning in FY 2016.  This language was modified in FY 2018 to require that the program be 
funded at no less than $17.6 million, still from CMS discretionary HCFAC appropriations.  In   
FY 2020, the Secretary allocated $18.0 million from these appropriations to the SMP program.    
SMP Project Activities and Outcomes 
ACL uses the majority of its HCFAC allocation to fund SMP projects in every state, the District 
of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands.  During FY 2018, ACL held a 
new SMP grant competition and awarded $15.5 million in funding to 54 SMPs nationwide, 
including eight new SMP grantees.  In FY 2020, ACL provided continuation awards to the 54 
grantees totaling $15.6 million.  Each SMP grantee received a standard, base amount of funding 
to support the operation of their project, as well as an additional, variable amount of funding 
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based on the number of Medicare beneficiaries residing in the state and the rural areas of the 
state.  SMP projects use this funding to educate and empower Medicare beneficiaries to prevent, 
detect, and report Medicare fraud, errors, and abuse.   
COVID-19 Fraud Schemes 
Fraud schemes relating to COVID-19 became prevalent beginning in March 2020.  The majority 
of complaints received by the SMP grantees related to COVID treatments, testing, vaccines, and 
cures, followed by COVID-related medical services.  Other schemes reported included those 
related to general COVID-linked medical services or pandemic supplies and equipment.  Most 
reported COVID fraud or schemes occurred via text or telephone, followed by in-person and 
internet attempts.  Though grantees education and outreach activities were limited to virtual 
methods during this period as opposed to typical face-to-face means, SMPs responded quickly to 
COVID-19 fraud attempts.  Throughout this crisis, ACL has carefully recorded and analyzed 
complaint details nationally and prepared sanitized summary reports that are shared regularly 
with the SMP grantees, HHS-OIG, and CMS.  
In addition, ACL, the HHS-OIG, and the SMP National Resource Center worked together on 
national level media campaigns to get the word out on COVID-19 related fraud schemes.  In 
July, ACL and the HHS-OIG collaborated to conduct a Facebook Live event hosted on the OIGs 
Facebook page to highlight coronavirus fraud schemes occurring nationally to warn Medicare 
beneficiaries and their families to be careful.  Similarly, the SMP National Resource Center 
developed and released a consumer fraud alert on this topic, which advised beneficiaries to be 
suspicious of strangers who offer unsolicited COVID-linked items, services, or testing.  It also 
advised beneficiaries to be wary of scare tactics used to pressure them into taking action, and to 
be cautious about sharing their personal information, including their Medicare identification 
number, and warned that this information could be used to fraudulently bill Medicare and 
Medicaid.  
Genetic Testing Fraud Schemes  
Genetic testing fraud continued to be a widespread issue nationally in FY 2020 with company 
representatives approaching seniors and other Medicare beneficiaries to solicit genetic tests at 
senior and community centers, health/senior fairs, other community events, and senior housing 
complexes.  The SMP grantees have received reports of company representatives going door-to-
door in the community and within housing complexes in addition to extensive advertising on 
Facebook and other social media platforms.  ACL and the SMP grantees continued to conduct 
public education and outreach efforts on this topic during this period along with the HHS-OIG.   
Annual SMP OIG Report  
Each year, the HHS-OIG completes an annual performance report on the SMP projects.  In CY 
2019, the SMP projects had a total of 6,875 active team members who conducted 28,146 group 
outreach and education events, reaching an estimated 1.6 million people.  In addition, the 
projects had 320,590 individual interactions with, or on behalf of, a Medicare beneficiary.  For 
2019, the SMP projects reported $2.4 million in expected Medicare recoveries.  Cost avoidance 
totaled $60,971, while savings to beneficiaries and others totaled $20,150.  Almost all of these 
recoveries came from one project that uncovered a fraud scheme that encouraged low-income 
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senior citizens to submit DNA samples for medically unnecessary genetic testing.  Three 
defendants were sentenced and ordered to pay a total of $2.3 million in restitution and 
forfeitures. 
Since SMPs inception, the program has received more than 3.3 million inquiries from Medicare 
beneficiaries about preventing, detecting, and reporting billing errors, potential fraud, or other 
discrepancies.  SMP projects have also educated more than 41.7 million people through group 
presentations and community outreach events.  The primary focus of these sessions is on 
education, prevention, and teaching beneficiaries how to protect themselves and avoid fraud in 
the first place.  This is the true value of the SMP program.  However, the impact of these 
education and prevention activities is extremely difficult to quantify in dollars and cents.  As 
HHS-OIG indicated in their 2020 report on the SMP program:  We note that the projects may 
not be receiving full credit for recoveries, savings, and cost avoidance attributable to their work.  
It is not always possible to track referrals to Medicare contractors or law enforcement from 
beneficiaries who have learned to detect fraud, waste, and abuse from the projects.  In addition, 
the projects are unable to track the potentially substantial savings derived from a sentinel effect 
whereby Medicare beneficiaries scrutiny of their bills reduces fraud and errors.   
Despite the factors that have limited ACLs ability to quantify the value of the SMP program in 
preventing, identifying, and reporting health care fraud, HHS-OIG has documented over $129.2 
million in savings attributable to the SMP program since its inception in 1997.  
SMP Infrastructure and Program Support  
SMP Resource Center 
During FY 2020, ACL competed and selected the Northeast Iowa Area Agency on Aging for a 
new five-year grant to serve as the SMP National Resource Center (the Center).  The Center has 
provided technical assistance, support, and training to the SMP projects since 2003.  The goal of 
the Center is to provide professional expertise and technical support, serve as an accessible and 
responsive central source of information, maximize the effectiveness of the SMP projects in 
health care fraud outreach and education, and ensure a fully consolidated national approach to 
reaching Medicare beneficiaries.  The Center has also been instrumental in supporting ACL 
efforts to forge national visibility for the SMP program.  Highlights of the SMP National 
Resource Centers planned work during the next five-year period include maintaining a new 
national SMP-focused telephone application, producing additional in-depth grantee resources 
and SMP Consumer Alerts as need arises, and acting as a clearinghouse for ACL on complex 
case data and referral information in SMP emerging fraud trends. 
SMP Information and Reporting System 
Since FY 2016, ACL has supported a national SMP information and reporting system (SIRS) to 
support the evolving needs of the SMP projects.  SIRS is expected to last at least 10 years and 
provides SMPs with advanced reporting features and data analytics to help them better manage 
their programs.  In FY 2020, ACL continued to work with SMPs to prioritize and implement 
ongoing system improvements to ensure SIRS continues to meet their needs and best support 
their programs.   
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SMP Customer Satisfaction Survey  
During FY 2020, ACL implemented the third year of the first national survey to ascertain the 
quality and effectiveness of the services provided by the SMP program.  Historically, SMPs have 
only tracked output and outcome measures, such as number of SMP team members, group 
outreach and education events, individual interactions, and savings.  As a result, there is no 
current understanding of the link between the quality of the information received and the 
likelihood to avoid health care fraud, errors, and abuse.  The results from the survey will help 
measure satisfaction among individuals who attend SMP group education sessions and determine 
how the program can be improved to better serve Medicare beneficiaries, their families, and 
caregivers.  
ACLs SMP Customer Satisfaction Survey received original OMB approval in August 2017.  
Survey implementation began in early FY 2018 and continued over a three-year period.  One-
third of the SMP projects were surveyed during each year of the project.   
At the conclusion of the project, the national and state-level survey results are overwhelmingly 
positive.  The average national ratings were as follows (1 = Strongly Disagree; 5 = Strongly 
Agree): 
  4.65 - Respondents were provided with useful information.  
  4.63 - Overall, respondents were satisfied. 
  4.51 - Respondents would contact SHIP/SMP aging for assistance.  
  4.64 - Respondents would recommend SHIP/SMP to others. 
The overall evaluation results were consistent across States and Territories.  There was a strong 
correlation between the usefulness of information respondents received and the beneficiarys 
overall satisfaction with the service provided by the SMP. 
In FY 2020 ACL developed a request for proposals to award a new expanded Beneficiary 
Satisfaction Survey contract.  This new contract will build on the work completed with the 
original activities describe above by continuing to gauge satisfaction with the SMP public 
outreach events and adding a new survey to evaluate beneficiary satisfaction with the one-on-one 
assistance provided by the SMP grantees.  Under this new contract, ACL will receive two 
national SMP reports annually providing satisfaction results for both the one-on-one assistance 
and group outreach activities conducted by the program grantees.      
National Media Training and Materials 
Given the high-profile nature of recent fraud schemes identified by the SMP network, in FY 
2020 ACL funded the development and dissemination of detailed training to assist SMP grantees 
in working with the media.  The virtual training developed provided detailed information and 
tips on using traditional media tools as well as social media to advance program messaging and 
information.  The training also provided a detailed overview for the best ways to communicate 
and work with the wide array of media outlets available across the country.   
ACL also developed two national level promotional videos that provide a clear overview of the 
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SMP program while also highlighting the standard program messaging to protect Medicare 
beneficiaries from fraud.  These videos will be available for ACL and SMP grantees to use as 
appropriate in future media activities, trainings, and outreach.     
Office of the General Counsel 
In FY 2020, HHS allocated the Office of the General Counsel (OGC) $7.4 million in HCFAC 
funding to support OGCs program integrity activities.  Such activities focused on litigation 
aimed at the recovery of program funds and review of CMS programs to strengthen them against 
potential fraud, waste, and abuse.  OGCs HCFAC activities in FY 2020 helped the Government 
establish over $1.3 billion in judgments, settlements, or other types of recoveries, savings, or 
receivables. 
FCA and Qui Tam Actions 
OGC supports DOJs FCA work by interpreting complex Medicare and Medicaid rules and 
policies, which assists DOJ in discerning which allegations involve program violations and helps 
focus Government resources on the matters that are most likely to result in recovery.  In addition, 
OGC provides significant litigation support by assisting DOJ in interviewing and preparing CMS 
personnel who may act as witnesses and in responding to requests for documents and 
information.   
In FY 2020, OGC worked collaboratively with DOJ and OIG on numerous FCA matters 
regarding a variety of issues such as:  physician self-referral, supplier billing of medically 
unnecessary laboratory tests, the submission of inaccurate information about health status of MA 
beneficiaries, failure to report discounted prescription drug prices, misrepresentations under the 
Medicare Electronic Health Records incentive programs, kickbacks and other unlawful 
marketing practices in connection with the marketing of an addictive opioid painkiller, and 
kickbacks related to medically unnecessary stent procedures.  OGC efforts on these and other 
FCA matters in FY 2020 helped the Federal Government recover approximately $1.2 billion.  
Civil Monetary Penalties 
CMS is responsible for administering CMP legislation that is aimed at combatting fraud, waste, 
and abuse.  OGC, in turn, advises CMS on its development and imposition of CMPs.  OGC also 
defends CMS in numerous administrative appeals and judicial litigation related to the imposition 
of CMPs.  The decisions in such cases can immediately impact the quality of care provided to 
affected beneficiaries, save program funds, and set precedents that demonstrate HHS 
commitment to policing this area. 
OGC obtained several favorable outcomes regarding the imposition of CMPs during FY 2020.  
For example, OGC assisted CMS in obtaining a CMP recovery against a skilled nursing facility 
for its failure to timely and accurately administer medication to 46 nursing home residents 
causing harm, including, in some cases, hospitalization of the resident.  OGC has also worked 
with CMS on nursing home enforcement actions involving infection control, including cases 
associated with COVID19.  OGC has advised CMS on numerous actions related to facilities 
responses to the outbreak of infection. 
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Provider/Supplier Suspensions and Enrollment Revocations or Denials 
Payment suspensions, enrollment revocations, deactivations and denials all play a critical role in 
protecting program funds.  These actions help protect the trust funds by ensuring that 
inappropriate providers and suppliers are not given, or do not retain, the ability to submit claims.  
OGC assists with this work by: advising CMS on whether to suspend payment to Medicare 
providers and suppliers; interpreting CMS enrollment regulations; reviewing proposed 
enrollment rules, manual changes, and correspondence related to enrollment issues; and 
providing litigation support and program guidance in defense of suspensions, revocations, and 
denials.  For example, in FY 2020, OGC defended CMS revocations based on the newly 
promulgated 42 C.F.R.  424.535(a)(14), improper prescribing practices.  In one case, OGC 
demonstrated that the revocation was proper because the physician engaged in a pattern or 
practice of prescribing drugs in a manner that failed to meet Medicare requirements, including by 
prescribing fentanyl at dangerously high dosages, and in combination with other prescriptions 
that put patients lives at risk, to 10 patients who did not have the required indication of pain as a 
result of a cancer diagnosis to appropriately receive fentanyl.  
Part C and Part D Compliance 
During FY 2020, OGC provided extensive advice to CMS on a variety of Part C and Part D-
related contract compliance issues, including identifying enforcement options against plan 
sponsors that were noncompliant or violated program rules.  OGC defends CMS imposition of 
CMPs in administrative hearings, and, in conjunction with DOJ, in federal court.  OGC also 
continued its review of compliance-related correspondence that CMS issues to Part D sponsors 
and Part C plans, which include warning letters, imposition of corrective action plan letters, 
intermediate sanctions, CMP notices, and non-renewal or termination notices.   
Regulatory Review and Programmatic Advice 
In FY 2020, OGC advised CMS on a variety of regulatory and program issues aimed at 
combating fraud and preventing the wrongful disbursement of program funds in the first 
instance.  For example: 
  To support CMS response to the presidential emergency declarations and the HHS 
Secretarys declaration of a Public Health Emergency to address the COVID-19 
pandemic, OGC has provided counsel on a wide variety of topics in the context of 
Medicare, Medicaid, and CHIP.  OGC has advised on issues related to section 1135 
waivers, adjustments to permissible sites of care, telehealth rules, Emergency Medical 
Treatment and Labor Act requirements, survey and certification processes, 
provider/supplier enrollment, accelerated and advanced payments, debt recovery 
requirements, adjustments to audits of Medicare Part C and D organizations, improper 
payment measurement processes, Medicaid third party liability/coordination of benefits 
and cost avoidance, and waivers of the Stark Law and other fraud and abuse 
requirements.  OGC has provided exceptionally expeditious responses to support the 
urgent enactment of new statutes and clearance of emergency rules, including three 
interim final rules with comment period.  
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  OGC continues to spend extensive time on various opioid-related issues, primarily related 
to potential CMS monetary recoveries stemming from other parties settlements, 
judgments, and bankruptcy actions. 
  OGC continues to counsel the CMS Quality, Safety, and Oversight Group (QSOG), 
formerly known as the Survey & Certification Group, which provides oversight and 
enforcement of certified institutional providers with program health and safety 
requirements intended to assure basic levels of quality and safety.  OGC advises QSOG 
regarding the development of enforcement policies, authorities regarding various 
enforcement remedies such as CMPs and program termination, rulemaking, reviewing 
interpretive guidance, and administrative litigation issues. 
  OGC reviewed several rules designed to improve Medicare program integrity.  These 
included promulgated final rules that:  made significant revisions to regulations 
governing DMEPOS face-to-face, physician order, and prior authorization requirements; 
established new regulations governing the enrollment of Opioid Treatment Program 
providers; and created a new prior authorization program for certain outpatient hospital 
services.  OGC also reviewed a Medicare Secondary Payer proposed rule and a proposed 
rule that would codify and clarify a number of policies pertaining to Rewards and 
Incentives Programs for Medicare Part C enrollees. 
  OGC continues to counsel the CMS Innovation Center, which is testing innovative 
payment and service delivery models to reduce expenditures and preserve or enhance 
quality of care for Medicare, Medicaid, and CHIP beneficiaries.  OGC advises the 
Innovation Center on topics including model design, identifying and developing 
safeguards against fraud and abuse posed by the novel payment and care delivery 
theories, fraud and abuse waivers, the imposition of corrective action plans, participant 
screening, and recovery of funds for such models.  OGC recently advised the Innovation 
Center on program integrity considerations in a final rule that will implement two new 
models. 
Physician Self-Referral (Stark Law) 
In FY 2020, OGC provided extensive counsel to CMS in its ongoing implementation of the 
Medicare Physician Self-Referral Disclosure Protocol, which was created to enable Medicare 
providers to self-disclose technical violations of the Stark laws physician self-referral 
prohibition.  OGC continued to have a significant role in advising CMS on its Stark reform 
efforts under HHSs Regulatory Sprint to Coordinated Care (Regulatory Sprint), an effort aimed 
at removing existing regulatory obstacles to coordinated care.  OGC has provided extensive 
assistance on CMS October 17, 2019 Notice of Proposed Rulemaking (NPRM) that proposed to 
update and clarify the Stark regulations.  The comment period closed in December 2019, and 
OGC continued to assist CMS with its efforts to draft a final rule, which was published in the last 
quarter of calendar year 2020.  In addition, as discussed above, OGC continued to provide 
guidance to CMS and DOJ in navigating the complexities of the physician self-referral law in 
FCA cases.  These consultations help build stronger cases and focus investigatory efforts, 
leading to successful results for the Government.   
89 
   
Medicare Secondary Payer  
OGCs efforts to recover Medicares conditional payments for which other payers bear primary 
payment responsibility directly support the HCFAC statutory goal of facilitating the enforcement 
of all applicable legal remedies for program fraud and abuse.  As part of this work in FY 2020, 
OGC assisted DOJ in its efforts to protect federal Medicare and Medicaid interests in federal 
opioid lawsuits as HHS continues to find ways to abate the opioid epidemic.   
Denial of Claims and Payments 
CMS and its contractors engaged in various activities and initiatives to detect and prevent 
abusive and fraudulent billing practices.  These measures included provider, supplier, and 
beneficiary education, use of claim sampling techniques, and rigorous scrutiny of claims with 
increased medical review.  In FY 2020, OGC continued to play a major role in advising CMS 
regarding the development and implementation of these types of program integrity measures and 
in defending CMS in litigation brought by providers and suppliers challenging these efforts.   
Bankruptcy Litigation 
OGC protects Medicare funds from waste in bankruptcy cases by asserting CMS recoupment 
rights to collect overpayments, arguing to continue suspension or termination actions against 
debtors, seeking adequate assurances from the bankruptcy court that CMS interests in the 
debtors estate will be protected, arguing for the assumption of Medicare provider agreements as 
executory contracts, and petitioning for administrative costs where appropriate.  OGC also 
handles change of ownership issues related to bankrupt Medicare providers to ensure successor 
financial liability and to protect patient health and safety.  For example, in FY 2020, the United 
States sued the owners of twelve skilled nursing facilities to preserve collateral for $169.0 
million in Government-backed loans.  Once defendants were placed in receivership, OGC 
negotiated Operations Transfer Agreement and sale order provisions to better protect non-party 
CMS rights, including CMS right to assert successor liability.  
State Medicaid Disallowances 
Over the past several years, upon identifying an increasing number of questionable state 
financing schemes designed to maximize federal payments under Medicaid, CMS has taken an 
increased number of Medicaid disallowances.  Correspondingly, OGC continues to see a 
significant increase in its workload regarding proposed disallowances, requested 
reconsiderations, and defense against Medicaid disallowance appeals before the Departmental 
Appeals Board. 
As a result of OGCs advocacy, CMS has prevailed in numerous matters in FY 2020 that have 
upheld millions of dollars in disallowances.  For example, OGC successfully moved to dismiss 
an appeal filed by the Alaska State Medicaid agency against CMS concerning the date of CMS 
certification of the States Medicaid Management Information System. 
In summary, OGCs efforts in FY 2020 directly supported the HCFAC programs goals.  As part 
of its program integrity work, OGC coordinated with CMS, DOJ, and OIG to enforce various 
statutes and regulations applicable to health care fraud and abuse, to the benefit of the Medicare, 
Medicaid, and CHIP programs. 
90 
   
Food and Drug Administration Pharmaceutical Fraud Program 
In FY 2020, over $6 million in HCFAC funding was made available for the FDA 
Pharmaceutical Fraud Program (PFP).  The PFP was instituted to enhance the health care 
fraud-related activities of FDA's Office of Criminal Investigations (OCI) and the Office of the 
General Counsel Food and Drug Division (OGC-FDD).  OCI, with the support of OGC-FDD, 
investigates criminal violations of the Federal Food, Drug, and Cosmetic Act (FDCA), the 
Federal Anti-Tampering Act, and related Federal statutes. 
The PFP is designed to detect, prosecute, and prevent pharmaceutical, biologic, and medical 
device fraud.  The PFP gathers information from sources inside and outside FDA and focuses 
on fraudulent marketing schemes, application fraud, clinical trial fraud, and flagrant 
manufacturing- related violations concerning biologics, drugs, and medical devices.  The goal 
of the program is the early detection and prosecution of such fraudulent conduct, which 
furthers FDAs public health mission by protecting the public from potentially dangerous 
medical products, helping to reduce health care costs, in most cases before they are incurred, 
and deterring future violators.  By initiating investigations of medical product fraud schemes 
earlier in their lifecycle, FDA is able to preclude potential public harm by barring medical 
products, which have not followed the legal FDA approval processes and do not meet FDA 
standards, from making it to market, saving valuable health care dollars from being spent.  
The PFP has identified multiple alleged medical product fraud schemes through various avenues.  
Since the inception of the PFP, OCI has opened a total of 297 criminal HCFAC investigations.  
In FY 2020, OCI, through its PFP, opened 20 criminal investigations, including investigations 
involving drug compounders, clinical trials, and foreign and domestic medical-product 
manufacturers.   
The investigations opened in FY 2020 consist of allegations involving: 
  Application fraud, involving individuals or companies who may have submitted false 
or fraudulent information to FDA in order to obtain an approval or clearance; or who 
did not submit the required information to legally market or test drugs, devices or 
biologics.  Application fraud investigations opened in FY 2020 involve drug 
manufacturers and medical device manufacturers.     
  Questionable manufacturing practices, involving the distribution of foreign-
manufactured active pharmaceutical ingredients (APIs), drug compounding 
pharmacies, and biologic tissue products.   
  Clinical trial fraud, involving possible falsification of study documents and/or 
fraudulent study subject enrollments.  The investigations consist in part of individuals 
suspected of falsifying and/or manipulating clinical trial data or conducting clinical 
trials without FDA oversight.     
91 
   
  Fraudulent marketing schemes, involving the promotion of products through false or 
misleading claims, including for medical indications and stem cell biologic products. 
As noted in previous reports, the types of criminal investigations conducted through the PFP are 
typically complex investigations, such as application fraud and marketing fraud, requiring 
extensive document review.  It is not unusual for these complex fraud investigations to last for 
five years or more from initiation to conclusion.  Yet investigations under the PFP have produced 
numerous prosecutions. 
In December 2019, in the District of Massachusetts, two additional pharmacists of a 
compounding pharmacy were sentenced, in connection with a nationwide fungal meningitis 
outbreak that killed more than 100 patients and caused infections in 793 patients.  The 
pharmacists dispensed drugs in bulk without valid prescriptions and with the intent to defraud 
and mislead state and federal regulators.  One defendant was sentenced to one year of probation 
and the other was sentenced to two years of probation.  This investigation was conducted jointly 
with the FBI; a Health care Fraud Unit of a U.S. Attorneys Office; and other federal law 
enforcement agencies.  In total, fourteen defendants were charged in the case.  
In March 2020, in the Eastern District of Tennessee, five defendants were convicted for health 
care conspiracy, wire fraud, mail fraud, and payment of illegal remuneration, in connection with 
a scheme involving the marketing of sham prescriptions for compounded topical creams and 
medications.  The scheme involved health care provider signatures for exorbitantly priced topical 
creams and medications with some prescriptions issued without seeing a physician or others that 
were not medically necessary.  The five defendants were sentenced in July of 2020.  The first of 
these defendants was sentenced to 24 months of incarceration and ordered to pay a money 
judgement of $100,000.  The second defendant was sentenced to 51 months of incarceration and 
ordered to pay a money judgment of $150,000.  The third defendant was sentenced to 108 
months of incarceration and ordered to pay restitution in the amount of $2.0 million.  The fourth 
defendant was sentenced to 30 months incarceration and ordered to pay a money judgement of 
$135,000.  The fifth defendant was sentenced to 165 months of incarceration and ordered to pay 
restitution in the amount of $2.0 million. 
In April 2020, in the District of New Jersey, a Montvale medical device company agreed as part 
of a deferred prosecution agreement to pay a $40.0 million fine and to forfeit $3.0 million to 
resolve violations of the FDCA, in connection with the distribution of misbranded medical 
devices in interstate commerce.  The company sold endoscopes without revised FDA-cleared 
instructions for cleaning during an 18-month period.  The company also failed to file timely 
reports of two adverse events associated with its endoscopes.   
Furthermore, the FDA believes that various investigations already initiated under the PFP may 
lead to future judicial action that may include criminal prosecution and monetary recoveries.  
These investigations include drug manufacturers and clinical investigators under investigation 
for data integrity and other violations, which possibly pose a risk to the publics health and 
safety. 
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Finally, the FDA continues to train its employees and conduct outreach activities to maximize 
the agencys ability to prevent and detect fraud involving medical products.  In January 2020, 
FDA conducted a one-day in-person training session for criminal investigators in the Los 
Angeles Field Office.  This training covered health care fraud control, clinical trial fraud cases, 
and case studies.  Because of the COIVD-19 pandemic, FDA moved to a virtual training model 
to adapt to the needs of its workforce.  In August 2020, FDA conducted a one-day virtual 
training session for newly hired criminal investigators.  This training covered health care fraud 
and PFP-related topics, including case-related fraud schemes. 
On another occasion in August 2020, FDA criminal investigators participated in a three-day 
virtual training program sponsored by the National Health Care Anti-Fraud Association 
(NHCAA), called Managing and Navigating Complex Investigations.  This training allowed 
FDA criminal investigators to enhance their skills and strategies for managing complex 
investigations, analyzing negotiation techniques, and interpreting data. 
93 
  DEPARTMENT OF JUSTICE 
United States Attorneys 
In FY 2020, the United States Attorneys were allocated $62.9 million in HCFAC funding for 
civil and criminal health care fraud enforcement efforts.  These funds supported attorneys, 
paralegals, auditors, and investigators, as well as litigation expenses for health care fraud 
investigations and cases.  The USAOs play a major role in health care fraud enforcement by 
bringing criminal and affirmative civil cases to recover funds wrongfully taken from the 
Medicare Trust Funds and other taxpayer-funded health care systems through fraud and false 
claims.  
Criminal Prosecutions36 
In FY 2020, the USAOs opened 1,148 new criminal health care fraud investigations and filed 
criminal charges in 412 cases involving 679 defendants.  During that same time period, 440 
defendants were convicted of health care fraud-related crimes.   
Civil Matters and Cases37 
In FY 2020, the USAOs opened 1,079 new civil health care fraud investigations and had 1,498 
civil health care fraud matters pending at the end of the fiscal year. 
The USAOs litigate the full spectrum of health care fraud matters, both independently and in 
partnership with the Civil and Criminal Divisions.  USAOs receive many health care fraud 
referrals directly from investigative agencies and increasingly are developing cases in-house 
through data analytics.  They also receive referrals through the filing of qui tam (or 
whistleblower) complaints.  USAOs coordinate closely both internally, with AUSAs developing 
parallel cases with their civil or criminal colleagues, and with other USAOs, collaborating on 
investigations that sprawl across district borders. 
Qui tam cases and other civil cases either are handled jointly with trial attorneys in the Civil 
Fraud Section, or independently.  USAOs handle most criminal cases independently, but also 
partner with the Departments Criminal Division on Medicare Fraud Strike Forces Teams which 
currently operate in twelve areas across the country.  Each Strike Force team consists of 
dedicated AUSAs and support personnel from the USAO, as well as from the Criminal Division. 
36 FY 2020 numbers are actual data through the end of September 2020. This data includes records classified with 
the primary 03G  Health Care Fraud program code.   
37 FY 2020 numbers are actual data through the end of September 2020.  This data includes those records classified 
with the primary FRHC  Health Care Fraud civil code. 
94  Since 2018, the USAOs for ten federal districts in six states38 have joined the Health Care Fraud 
Unit in the Criminal Divisions Fraud Section (HCF Unit), as well as law enforcement partners at 
the FBI, HHS-OIG and DEA, to form the ARPO Strike Force, a joint law enforcement effort to 
identify and investigate health care fraud schemes in the Appalachian region and surrounding 
areas, and to effectively and efficiently prosecute medical professionals and others involved in 
the illegal prescription and distribution of opioids. 
In addition, USAOs partner with the Civil and Criminal Divisions on major initiatives.  In 
FY 2020, as part of the National Nursing Home Initiative, USAOs have opened numerous civil 
and criminal investigations of nursing homes for gross failure of care.  USAOs also take an 
active part in the nationwide Healthcare Fraud Takedowns. 
Since March 2020. USAOs have been actively pursuing pandemic-related fraud, including using 
civil injunctions to shut down fraudsters hawking phony cures, criminally-prosecuting COVID-
19-related scams, investigating failure of care at nursing facilities impacted by COVID-19, and
investigating False Claims Act matters alleging fraud on Medicare and Medicaid related to the
pandemic or stimulus health care funding.
Examples of successful health care fraud cases are discussed above, but notably include: 
 The Medicine Shoppe/Advantage Pharmacy investigations, in which four Districts
coordinated a large investigation of compounded drug fraud, resulting in 40 convictions
to date;
 A parallel civil and criminal investigation of a pill mill that resulted in five criminal
convictions, including both physicians and pharmacists, as well as 12 civil judgments or
settlements with pharmacies or pharmacists-in-charge;
 The Practice Fusion EHR case, which resulted in a $145.0 million payment to resolve
criminal and civil liability.  The investigation arose from evidence discovered by a
USAO and is the first case involving kickbacks paid by a pharmaceutical manufacturer
to an EHR company; and
 Several large pharmaceutical pricing cases brought under the FCA and AKS based on
allegations of price-fixing and market allocation in the generic pharmaceutical industry.
In addition to funding attorneys, auditors, paralegals and investigators, the Executive Office of 
the U.S. Attorneys (EOUSA) provides critical litigation support for complex health care fraud 
investigations and litigation.  EOUSA supports data analytics consultants and forensic 
investigators, which have been indispensable to the USAOs success in complex cases.  FY 2020 
also saw the roll-out of EOUSAs Healthcare Fraud Nurse Consulting program, which allows 
USAOs to obtain medical record reviews and consulting without the need for individual, district-
38 The USAOs are the Northern District of Alabama, Eastern District of Kentucky, the Western District of 
Kentucky, the Southern District of Ohio, the Eastern District of Tennessee, the Middle District of Tennessee, the 
Western District of Tennessee, the Northern District of West Virginia, the Southern District of West Virginia, and 
the Western District of Virginia. 
95  level contracting.  EOUSA partners with the Civil Division to provide support for other 
initiatives, such as nursing home consultants to assist on the Nursing Home Initiative.  EOUSA 
provides other tools to the field, including the Special Investigation Resource and Intelligence 
System (SIRIS) Resource Center, which gives USAO personnel access to the NHCAAs SIRIS 
database.  In addition to national-level support, EOUSA provides case-specific funding for 
litigation support for extraordinary needs.  In FY 2020, HCFAC money funded more than 150 
such requests from USAOs. 
To ensure a focused and coordinated approach to health care fraud enforcement, each USAO has 
designated criminal and civil health care fraud coordinators.  These coordinators host working 
group and/or task force meetings within their districts, attended by federal investigative agencies, 
state MFCUs, private sector representatives and others.  Coordinators also conducted training 
and outreach to a variety of audiences, including medical and hospital associations, the defense 
and relators bar, and Medicare beneficiaries. 
EOUSA also organizes extensive training for AUSAs, as well as paralegals, investigators, and 
auditors on a wide variety of health care fraud enforcement matters.  Although some training was 
canceled due to the pandemic, EOUSA presented numerous webinars during FY 2020 focusing 
on health care fraud issues.  
Civil Division 
In FY 2020, the Civil Division received approximately $39.0 million in FY 2020 HCFAC 
funding to support the health care fraud activities of the Commercial Litigation Branchs Fraud 
Section and the Consumer Protection Branch.  This amount also included funding to support the 
Department of Justices Elder Justice Initiative.  In FY 2020, the Fraud Section and the USAOs 
won or negotiated more than $1.8 billion in settlements and judgments under the FCA.   
The Commercial Litigation Branchs Fraud Section 
The Civil Divisions Commercial Litigation Branch (Fraud Section) investigates complex health 
care fraud allegations and files suit under the civil FCA to recover money on behalf of defrauded 
federal health care programs including Medicare, Medicaid, TRICARE, the VA, and the FEHBP.  
The Fraud Section works closely with the USAOs and often teams with other law enforcement 
partners to pursue allegations of health care fraud. 
The Fraud Section investigates and resolves matters involving a wide array of health care 
providers and suppliers.  The Fraud Section continues to pursue opioid-related fraud schemes, 
such as the Practice Fusion Inc. (Practice Fusion) matter, which resolved allegations that Practice 
Fusion, a health information technology developer, accepted kickbacks from a major opioid 
company and other pharmaceutical companies in exchange for implementing clinical decision 
support alerts in its EHR software that were designed to increase prescriptions for the drug 
companies products, and caused its users to submit false claims for federal incentive payments 
by misrepresenting the capabilities of its EHR software.  In addition, the Practice Fusion matter 
reflects that complex EHR-related fraud schemes remain a focus of the Fraud Sections work.   
96  The Fraud Section also continues to pursue vigorously pharmaceutical manufacturers who 
engage in illegal practices that contribute to soaring drug pricing.  The Fraud Section has 
resolved a number of cases, including the Novartis and Gilead matters discussed above, alleging 
that pharmaceutical manufacturers are illegally using foundations, which claim 501(c)(3) status 
for tax purposes, as conduits to pay the copays of Medicare patients.  Under these arrangements, 
which violate the AKS, the manufacturers paid money to the foundations to be used specifically 
to pay the copays for Medicare patients, and Medicare is billed for the remaining cost.     
The Fraud Section has pursued other schemes that violate the AKS, which prohibits the willful 
solicitation or payment of remuneration to induce the purchase of a good or service for which 
payment may be made under a federal health care program.  AKS violations are pernicious 
because of their potential to subvert medical decision-making.  For example, the Fraud Section 
resolved allegations that Novartis also paid kickbacks to doctors in the form of sham speaker 
payments, to induce the doctors to prescribe certain Novartis drugs.  Other matters relating to 
AKS violations involved DME (ResMed), hospitals (OCOM and Wheeling Hospital), and 
laboratories (RenRX and Boston Heart). 
As in years past, the Fraud Section also resolved a number of matters in which providers billed 
federal health care programs for medically unnecessary services or services not rendered as 
billed.  Such matters involved allegations that providers, including a psychiatric service provider, 
laboratories, skilled nursing facilities, and hospitals billed for services that the patients did not 
need (such as the UHS, Genova, Sanford, Logan Labs, and Longwood matters discussed earlier).  
In addition, the Fraud Section continues to have a significant focus on other fraud in nursing 
facilities, which provides care to a particularly vulnerable population (such as the Guardian and 
Diversicare matters discussed earlier).   
Further, the Fraud Section has successfully sought to hold individuals responsible for defrauding 
federal health care programs.  Representative of these efforts, a number of corporate settlements 
required individuals, particularly senior executives or owners, to pay a portion of the settlement 
amount (such as the Logan Labs, RenRX, and OCOM matters discussed above).   
Because the Fraud Section receives every FCA complaint filed by whistleblowers (otherwise 
known as relators) across the country, it has a unique vantage point over health care fraud 
trends and developments nationwide and therefore regularly handles some of the most complex 
matters and coordinates national investigations with its law enforcement partners.  Likewise, 
given the diversity of health care fraud cases pursued by the Fraud Section, it frequently provides 
training and guidance on the FCA and health care fraud issues to AUSAs and agents.  The 
Section works closely with the HHS-OIG, including its Office of Counsel, in all settlements of 
health care fraud allegations to ensure that the administrative remedies possessed by HHS are 
appropriately considered and to enable the negotiation of compliance terms that diminish the risk 
that the offending conduct will be repeated.  The Section also collaborates with and counsels 
CMS and HHS-OIG on interagency initiatives and proposed rules and regulations.  
Finally, the Elder Justice Initiative, which is overseen by the Civil Division, coordinates and 
supports law enforcement efforts to combat elder abuse, neglect, and financial exploitation.  The 
97  Initiative helps law enforcement efforts by maintaining an information bank of Elder Justice 
related materials (including briefs, opinions, indictments, plea agreements, subpoena templates); 
funding medical reviewers, auditors, and other consultants to assist DOJ attorneys and AUSAs in 
their nursing home and/or long term care facility cases; hosting quarterly teleconferences with 
DOJ attorneys and AUSAs across the country to discuss issues or developments in connection 
with nursing home and failure of care cases; and coordinating nationwide investigations of 
skilled nursing facilities.  In addition to supporting law enforcement efforts, the Initiative 
continues to fund research projects awarded by the Office of Justice Programs, National Institute 
of Justice, to study the abuse, neglect, and exploitation of elderly individuals and residents of 
residential care facilities.   
In March 2020, the Department launched its National Nursing Home Initiative, which 
coordinates and enhances civil and criminal efforts to pursue nursing homes that provide grossly 
substandard care to their residents and focuses on some of the most problematic nursing homes 
around the country.  The National Nursing Home Initiative is coordinated by the Elder Justice 
Initiative, in conjunction with the USAOs, and reflects the Departments commitment to 
protecting our nations seniors. 
Elder Justice Initiative members represent the Department on Interagency Working Groups such 
as the Elder Justice Coordinating Council.  The Civil Division maintains the Elder Justice 
Website (www.elderjustice.gov), a valuable resource for elder abuse victims and their families, 
state and local prosecutors, elder abuse researchers, as well as practitioners.  On March 30, 
2016, the Department of Justice announced the launch of ten regional Elder Justice Task 
Forces.  These teams bring together federal, state and local prosecutors, law enforcement, and 
agencies that provide services to the elderly, to coordinate and enhance efforts to pursue nursing 
homes that provide grossly substandard care to their residents.  The Elder Justice Task Forces are 
led by representatives from the USAOs, state MFCUs, state and local prosecutors offices, the 
HHS, state Adult Protective Services agencies, Long-Term Care Ombudsman programs, and law 
enforcement.  The ten districts are the Northern District of California, Northern District of 
Georgia, District of Kansas, Western District of Kentucky, Northern District of Iowa, District of 
Maryland, Southern District of Ohio, Eastern District of Pennsylvania, Middle District of 
Tennessee, and the Western District of Washington. 
The Consumer Protection Branch 
The Consumer Protection Branch (CPB or the Branch) enforces consumer protection laws to end 
dangerous practices that harm Americas most vulnerable populations, such as the sick and 
elderly.  The Branch aggressively pursues cases against those who market unsafe 
pharmaceuticals, medical devices, and dietary supplements that endanger the health and safety of 
patients.  The Branch works closely with the FDA, the DEA, and other law enforcement agencies 
to investigate a wide range of health care fraud cases, including those involving opioids and the 
promotion and distribution of unapproved and adulterated drugs and medical devices.  It also 
collaborates with USAOs and the Commercial Litigation Branchs Fraud Section on major health 
care fraud cases.  Under the Departments regulations, the Branch is the primary component 
charged with enforcement of the FDCA in the federal court system. 
98   
The Consumer Protection Branch is advancing a number of Department priorities to combat the 
nations opioid crisis, pursuing wrongdoers throughout the entire opioid distribution chain, 
including pharmaceutical manufacturers, wholesale distributers, pharmacies, and health care 
providers.  The Branch is a leading member of the Departments Prescription Interdiction and 
Litigation (PIL) Task Force established in February 2018 to combat the opioid crisis at every 
level of the distribution system.  The Branch is actively working on numerous criminal and civil 
investigations and litigation related to opioid manufacturers. 
Using a variety of data sets and advanced analytics, the Consumer Protection Branch is advancing 
an effort to take all appropriate action against pharmacies, pharmacists, and health care providers 
fueling the diversion of prescription opioids.  The Branch has brought a number of civil injunctive 
and penalty actions under the CSA to stop dangerous dispensing and prescribing conduct in 
advance of potential criminal prosecutions.  Recent successes include achieving a consent decree 
in the Eastern District of North Carolina with a pharmacy under which the pharmacy and its 
owner paid a $600,000 monetary penalty and are prohibited from ever again distributing 
controlled substances.  The Branch also is advising numerous USAOs on techniques and theories 
for initiating and conducting their own investigations.   
In addition to its opioid enforcement efforts, the CPB prosecutes pharmaceutical and medical 
device manufacturers and their executives when they violate the FDCA in the manufacture and 
marketing of their products  conduct that often puts patient safety at risk.  Not least among these 
are a substantial series of cases brought against companies purporting to provide fraudulent 
treatments for COVID-19.  For example, in July 2020, Branch attorneys obtained judgment 
against the Genesis II Church of Health and Healing, along with two of the non-religious 
entitys four principals who were located in the United States.  The permanent injunction 
prohibits the defendants from distributing Miracle Mineral Solution, an industrial bleach 
product the defendants touted as a cure for COVID-19 and a plethora of other serious diseases.  
As part of the permanent injunction, the district court also ordered refunds to consumers.  In 
another matter, in April 2020, Branch attorneys secured the arrest of a Georgia resident who was 
attempting to defraud the VA out of millions of dollars of upfront payments in exchange for the 
purported sale of non-existent ventilators, face masks, and other personal protective equipment.  
In addition, the Branch, working in conjunction with a number of USAOs, stopped the efforts of a 
company purporting to sell health and safety items such as hand sanitizer and disinfecting wipes, 
but which had no intention of fulfilling the orders for which it was paid, and has obtained 
injunctive relief against numerous entities forcing them to cease the sales of ingestible silver 
products and other false cures for COVID-19. 
In another matter involving misbranded medical products, the Branch obtained a trial verdict 
ordering Innovative BioDefense, Inc., along with its CEO and distributor, to cease distributing 
Zylast hand sanitizer products until the company removes disease-specific claims from product 
labeling or obtains FDA approval.  In the complaint, the United States alleged that the defendants 
distributed Zylast products, in violation of the FDCA, as being effective against infection by 
pathogens such as norovirus, rhinovirus, rotavirus, the flu virus, Methicillin-Resistant 
Staphylococcus Aureus bacteria and Ebola, despite a lack of proof regarding the products safety 
and effectiveness for such uses.  
99 
   
In April 2020, Branch attorneys along with the U.S. Attorneys Office for the District of New 
Jersey achieved a deferred prosecution agreement with Pentax Medical Company.  Pentax was 
charged in a criminal complaint with failing to file timely reports of two hospital infection 
outbreaks associated with its duodenoscope and with shipping four other types of endoscopes for 
18 months without FDA-approved instructions for use.  Under the deferred prosecution 
agreement, Pentax agreed to pay $43.0 million in criminal fines and forfeiture for violating the 
FDCA and, among other actions, to conduct a thorough audit of its current instructions for use for 
endoscopic devices and medical device reporting procedures to determine their compliance with 
FDA requirements and report to the FDA in writing.   
Response to COVID-19 Pandemic  
DOJs Civil Division has undertaken efforts to protect consumers and federal programs from 
fraud schemes arising from the COVID-19 pandemic.  Within days of the coronavirus being 
declared a pandemic, DOJs Consumer Protection Branch began coordinating a multi-agency, 
multi-component data team to review complaints and leads related to coronavirus consumer 
fraud.  That team of investigators, analysts, and attorneys has reviewed tens of thousands of 
consumer complaints and thousands of Suspicious Activity Reports, referring information and 
leads to federal agencies and USAOs.  CPB maintains a deconfliction portal for the entire federal 
government, which has successfully prevented law enforcement from wasting time on competing 
investigations of the same targets.  Along with referring leads, CPB attorneys also work closely 
with AUSAs to advance ongoing civil and criminal enforcement actions. 
CPB attorneys have filed numerous civil injunctive and criminal actions to combat coronavirus 
fraud schemes.  These actions included stopping the sale of a potentially dangerous bleach 
product touted as a COVID-19 treatment, an injunction against purveyors of a so-called ozone 
treatment, a successful action against defendants offering a colloidal silver product, a case 
against a fraudster peddling an herb treatment he claimed would save COVID-19 victims, and 
the prosecution of a scammer who attempted to defraud the Department of Veterans Affairs out 
of hundreds of millions of dollars for nonexistent personal protective equipment (PPE).  
CPB is also working closely with the Criminal Divisions Computer Crimes and Intellectual 
Property Section and the FBI to collect information about websites involved in COVID-related 
fraud, malware, and phishing campaigns.  These efforts have disrupted hundreds of internet 
domains used to exploit the pandemic and cause consumers health-related harms.  CPB also 
continues to support FDA efforts to issue warning letters to firms offering unapproved purported 
COVID-19 treatments to the public, and many recipients of such letters have dropped their 
unlawful campaigns without the need for costly court cases.  
In addition, the Civil Divisions Commercial Litigation Branch (Fraud Section) is investigating 
potential FCA violations in connection with fraudulent schemes arising from the COVID-19 
pandemic that defraud government programs.  This includes investigating whistleblower actions 
filed under the qui tam provisions of the FCA that involve allegations of fraudulent conduct 
related to the pandemic.  In investigating these potential FCA violations, the Fraud Section is 
closely coordinating with HHS-OIG and CMS.  The Fraud Section is also coordinating with non-
100 
  federal entities, including state Attorneys General and state MFCUs, regarding potential 
Medicaid fraud schemes arising from the pandemic. 
Criminal Division 
In FY 2020, the Criminal Division was allocated $28.3 million in HCFAC funding to support 
criminal health care fraud litigation and interagency coordination, which is carried out primarily 
by the Fraud Sections Health Care Fraud Unit and, to a lesser extent, the Organized Crime and 
Gang Section.  
The Fraud Section 
The Fraud Sections Health Care Fraud Unit (HCF Unit) employs criminal prosecutors who 
focus exclusively on investigating and prosecuting health care fraud matters and cases involving 
the illegal prescription, distribution, and diversion of opioids.  In sum, the HCF Units core 
mission is to: (1) protect the public fisc from fraud, waste, and abuse; and (2) detect, limit, and 
deter fraud and illegal prescription, distribution, and diversion offenses resulting in patient harm. 
The HCF Unit also supports the USAO community by providing legal, investigative and data 
analytics support, guidance and training on criminal health care fraud and opioid-related matters. 
Beginning in March 2007, the Fraud Section, working with the local USAO, the FBI, HHS-OIG, 
and state and local law enforcement agencies, launched the Health Care Fraud Strike Force in 
Miami-Dade County, Florida, to investigate and prosecute individuals and entities that do not 
provide legitimate health care services but instead defraud Medicare and other government 
health care programs.  In FY 2019, the HCF Units Strike Force program provided attorney 
staffing, litigation support, and leadership and management to the Health Care Fraud and 
Prescription Opioid Strike Forces operating in 24 federal judicial districts across the United 
States.  The current strike forces include operations in cities including, but not limited to, Miami 
and Tampa/Orlando, Florida; Nashville, Tennessee; Ft. Mitchell, Kentucky; Los Angeles, 
California; Detroit, Michigan; Houston, San Antonio and Dallas, Texas; Brooklyn, New York; 
Baton Rouge and New Orleans, Louisiana; Chicago, Illinois; Newark, New Jersey/Philadelphia, 
Pennsylvania, along with the NRRSF located in Washington, D.C. 
On October 25, 2018, Assistant Attorney General Brian Benczkowski announced the creation of 
ARPO, a joint effort between DOJ, HHS-OIG, FBI, DEA, and local law enforcement partners to 
combat health care fraud and the opioid epidemic in nine federal districts.  Following the ARPO 
Takedown on April 17, 2019, ARPO was expanded to include the Western District of Virginia. 
As of September 30, 2020, ARPO has charged 84 defendants.  These efforts have resulted in 31 
guilty pleas and two trial convictions.  FY 2021 will see a Strike Force expansion to the Rio 
Grande Valley, including parts of the Southern and Western District of Texas, such as San 
Antonio, Texas. 
101  In FY 2020, the HCF Unit achieved the following results: 
 Filed 115 indictments, criminal informations and complaints involving charges against
187 defendants who allegedly collectively billed federal health care programs and private
insurers approximately $3.8 billion;
 Obtained 150 guilty pleas and litigated 15 jury trials, with guilty verdicts against 18
defendants; and
 Securing imprisonment for 98 defendants sentenced, with an average sentence of over 47
months.
Since its inception, Strike Force prosecutors filed more than 2,100 cases charging more than 
4,600 defendants who collectively billed federal health care programs and private insurers 
approximately $23.0 billion, more than 3,000 defendants pleaded guilty and over 390 others 
were convicted in jury trials, and more than 2,800 defendants were sentenced to imprisonment 
for an average term of approximately 50 months.   Medicare payment trends demonstrate the 
positive impact of Strike Force enforcement and prevention efforts.  Each year, the HCF Unit 
coordinates large-scale, law enforcement actions with its partners.  
The nature and scope of health care fraud has evolved rapidly over the past few years with the 
advent of new technologies that have broadened the reach of health care and, consequently, 
health care fraud. As a result, the Fraud Section recently developed and launched the National 
Rapid Response Strike Force: a way to respond quickly to multi-jurisdictional health care fraud 
cases and priorities, without diverting attorneys from district-specific Strike Forces. NRRSF 
prosecutors, who are based in Washington, D.C. (and, where appropriate, based in certain 
existing Strike Force locations), are dedicated exclusively to the immediate and decisive 
response to new and emerging health care fraud trends. Like the other Strike Forces, the NRRSF 
coordinates with USAOs and federal and state law enforcement partners prosecute these 
significant multi-jurisdictional and corporate fraud cases.  Examples of the types of matters 
under this Strike Forces purview include a large-scale rural hospitals billing fraud matter 
indicted in the Middle District of Florida, charges against former NFL players for their alleged 
roles in a nationwide fraud scheme that targeted a plan that provided tax-free reimbursement of 
out-of-pocket medical care expenses that were not covered by insurance, the recent sprawling 
telemedicine cases involving billions of dollars in alleged fraud loss, and prosecutions of those 
seeking to criminally exploit the COVID-19 pandemic through health care fraud and related 
financial fraud schemes.   
In September 2020, the Criminal Division announced the Sober Homes Initiative, the first 
coordinated enforcement action in DOJ history focused on fraud schemes in the substance abuse 
treatment industry.  Led by the HCF Units National Rapid Response, Los Angeles and Miami 
Strike Forces, with the participation of the U.S. Attorneys Offices for the Central District of 
California and the Southern District of Florida, the initiative focuses on schemes intended to 
exploit patients suffering from addiction.  As part of this initiative, more than $845.0 million in 
alleged loss connected to substance abuse treatment facilities was charged during the 2020 
National Health Care Fraud and Opioid Takedown, including a scheme involving a physician in 
South Florida who submitted or caused the submission of more than $746.0 million in alleged 
102  loss to private insurance plans.  This scheme lasted almost a decade and is the largest addiction 
treatment fraud case ever charged by the Department of Justice. 
Since 2019, the HCF Unit has led nationwide efforts to combat telemedicine fraud and ensure 
that needed access to care that is provided by this new technology is not compromised by 
wrongdoers. In September 2020, the telemedicine component of the 2020 National Health Care 
Fraud and Opioid Takedown involved more than 80 defendants and more than $4.0 billion in 
false and fraudulent claims. The focus on telemedicine fraud was an outgrowth of the 2019 
Operation Brace Yourself Takedown, which involved a $1.2 billion telemedicine and DME 
scheme. In these schemes, telemedicine executives allegedly paid doctors and nurse practitioners 
to order unnecessary DME, genetic and other diagnostic testing, and pain medications, either 
without any patient interaction or with only a brief telephonic conversation with patients they 
had never met or seen. Often, patients were lured into the scheme by a telemarketing network 
and the DME, test results, or medications were not provided to the beneficiaries or were 
unnecessary. Proceeds of the fraudulent schemes were allegedly laundered through shell 
corporations and foreign banks. 
The HCF Unit chairs an interagency COVID-19 fraud working group with federal law 
enforcement and public health agencies to identify and combat health care fraud trends emerging 
during the COVID-19 crisis. This has involved coordinating and training other Criminal Division 
and USAO prosecutors and offering support to their investigations and cases, including data 
analytics support. The HCF Unit expects that the COVID-19 working group will continue to 
generate criminal prosecutions in several areas, including COVID-19 test bundling schemes, 
securities fraud cases involving health care technology companies, and Health Resources and 
Services Administration (HRSA) fraud cases.  In conjunction with this effort, the Fraud Section 
and the U.S. Attorneys Office for the Northern District of California charged the president of 
Arrayit Corporation, a publicly traded medical technology company, for his role in causing the 
submission of false and fraudulent claims to Medicare and other insurers as a result of misrep-
resentations regarding the existence and performance of a purported revolutionary finger-stick 
blood test for allergies and COVID-19, and in paying illegal kickbacks to promote such testing. 
On November 17, 2020, The Department of Justice announced the expansion of the Criminal 
Division, Fraud Sections existing Gulf Coast Health Care Fraud Strike Force to include the 
Eastern District of Texas.  In addition to existing resources already allocated in New Orleans and 
Baton Rouge, Louisiana, and Hattiesburg, Mississippi, the Gulf Coast Strike Force will be made 
up of prosecutors and data analysts with the HCF Unit, prosecutors with the U.S. Attorneys 
Offices for the Eastern District of Texas, and special agents with the FBI, HHS-OIG and 
DEA.  The Gulf Coast Strike Force will also work closely with other various federal law 
enforcement agencies.  The Strike Force will focus its efforts on aggressively investigating and 
prosecuting cases involving fraud, waste, and abuse within our federal health care programs, and 
cases involving illegal prescribing and distribution of opioids and other dangerous narcotics. 
Since 2007, the HCF Unit has deployed data analytics combined with investigative intelligence 
to great success.  In 2018, the HCF Unit formed its own in-house data team, which now consists 
of eight analysts with deep experience in Medicare and Medicaid data analysis, as well as 
103  financial analysis, who identify egregious health care fraud and prescription opioid-related 
targets to ensure the HCF Unit and its partners efficiently identify the worst offenders.  The 
concept and structure of the Data Analytics Team is regarded as ground-breaking for the 
Department.  The team uses data to identify billing patterns, suspicious prescribing practices, and 
curious relationships between doctors and patients that signify high-risk targets.  The 
investigations are then prosecuted by HCF Unit prosecutors or referred to USAOs and law 
enforcement partners in a targeting package, which includes data summaries and descriptions 
of why a pattern is suspect, such as submission of claims for dead beneficiaries, beneficiaries 
who live a great distance from the clinic they purportedly regularly attended in person, etc.39   To 
date, the team has completed approximately 1,712 requests for data analysis assistance from 
USAOs.  During this same time, it has also created hundreds of specific district-by-district 
targeting packages to help advance the HCF Units mission.  
The Organized Crime and Gang Section (OCGS) 
The Criminal Divisions Organized Crime and Gang Section (OCGS) supports and conducts 
investigations of health care fraud and abuse targeting private sector health plans sponsored by 
employers and/or unions as well as health care fraud and abuse perpetrated by domestic and 
international organized crime groups.  There are more that 2.3 million such private sector health 
plans which cover some 135 million Americans.  OCGS also works to improve strategic 
coordination in the identification and prosecution of domestic and international organized crime 
groups engaged in sophisticated frauds posing a threat to the health care industry and provides 
legal advice and necessary approvals in the use of the RICO statute to combat health care fraud 
and abuse.  
In FY 2020, five OCGS attorneys conducted health care fraud prosecutions and investigations. 
In Knoxville, Tennessee, two OCGS attorneys working with the USAO for the Eastern District 
of Tennessee conducted a three-month trial ending in February 2020 with convictions of a pain 
clinic co-owner and three nurses for their roles in running pill mills.  The co-owner was found 
guilty of RICO conspiracy, a drug conspiracy, money laundering, and maintaining drug-involved 
premises.  The drug conspiracy involved the operation of four clinics which were basically pill 
mills which distributed over 11 million tablets of oxycodone, oxymorphone, and morphine that 
generated over $21.0 million in clinic revenue, with a corresponding street value of $360.0 
million.  The three nurses were convicted of maintaining drug involved premises.  Sentencing is 
scheduled for FY 2021.  Two part-owners charged with RICO conspiracy remain under 
indictment.  This partnership between OCGS and the Eastern District of Tennessee has resulted 
in the investigation and prosecution of over 140 individuals.  This case was part of the 
Department's Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI High 
Intensity Drug Trafficking Area (HIDTA) programs.  OCDETF is the primary weapon of the 
39 For a medical professional, for example, the targeting package includes: (1) the fraud scheme(s) the individual is 
likely to be operating, (2) the patients and amount of money involved, (3) additional medical professionals and health care 
entities tied to the alleged scheme(s), (4) the location of entities involved in the scheme(s), and (5) areas for follow up by 
the prosecutor/agent team.  
104   
United States against the highest-level drug trafficking organizations operating within the United 
States, importing drugs into the United States, or laundering the proceeds of drug trafficking.  
This case is summarized above in the Highlights of Significant Criminal and Civil Investigations.  
In Washington, D.C., two OCGS attorneys handled the prosecution of a former union official 
and an outside lobbyist for health care fraud conspiracy and health care fraud.  The union official 
allegedly arranged for the lobbyist to be fraudulently placed on the unions health plan even 
though the lobbyist was not a full-time employee of the union and therefore not eligible to 
participate in the health plan.  Thereafter the lobbyist allegedly obtained more than $66,000 in 
medical insurance reimbursements to which she was not entitled.  The union official was severed 
for a trial in January 2020 which resulted in a hung jury.  The defendants have been rejoined for 
trial scheduled in FY 2021.  
Another OCGS attorney was involved in an investigation of health care fraud, embezzlements 
and other criminal abuses involving third party administrators to private sector health plans, 
health plans funded through prevailing wage government contracts, and health plans provided 
through multiple employer welfare arrangements.  
OCGS attorneys routinely provide litigation support and advice to AUSAs and criminal 
investigative agencies in the investigation and prosecution of corruption and abuse of private 
employment-based group health plans covered by the Employee Retirement Income Security Act 
(ERISA) including fraud schemes by corrupt entities that sell unlicensed group health insurance.  
Private sector employment-based group health plans are the leading source of health care 
coverage for individuals not covered by Medicare or Medicaid.  OCGS provides litigation 
support as requested at any stage of the prosecution from indictment through trial and appeal.  
For example, an OCGS attorney provided assistance to the complex investigation and 
prosecution in the Eastern District of Louisiana of individuals and a corporation operating a 
multiple employer welfare arrangement (MEWA) who were indicted on charges of fraud and 
false statements in the marketing and sale of employee group health care coverage causing losses 
which may exceed $48 million.  The scheme involved the fraudulent sale of the health plan to 
employers at low cost with false representations that the plan was funded by a loan arrangement 
that would greatly lower the employers and employees taxable income.  In November 2019, the 
marketing director of the MEWA was indicted.  The operators of the MEWA, an accountant and 
the corporation previously pleaded guilty and await sentencing.  As part of their guilty pleas, the 
defendants agreed to forfeit approximately $6.3 million in assets and pay restitution for the loss.  
OCGS attorneys provide health care fraud and abuse training and legal guidance to AUSAs and 
to criminal investigators and agents of the Department of Labors Employee Benefits Security 
Administration and Office of Inspector General, FBI and IRS.  Such training and guidance cover 
prosecutions involving abuse of private sector employee health plans subject to ERISA and 
health plans sponsored by labor organizations, as well as fraud and abuse committed in 
connection with the operation of MEWAs.  OCGS is also responsible for drafting and reviewing 
criminal legislative proposals affecting employee health benefit plans.  Finally, OCGS provides 
legal guidance to prosecutors and required approvals in the use of the RICO statute in 
prosecutions of racketeering enterprises involved in the distribution of opioids, fentanyl, and 
105 
   
other pharmaceuticals; Medicare and Medicaid frauds; and private sector health care frauds.    
Civil Rights Division 
In FY 2020 the Civil Rights Division was allocated $8.4 million in HCFAC funding to support 
Civil Rights Division litigation activities related to health care fraud and abuse.  The Civil Rights 
Division pursues relief affecting public, residential, and nonresidential health care facilities and 
service systems, and conducts investigations to eliminate abuse and grossly substandard care in 
public, Medicare, and Medicaid funded long-term care facilities.  Consistent with the ADAs 
integration mandate set forth in 28 C.F.R.  35.130(d), and the Supreme Courts ruling in 
Olmstead v. L.C., 527 U.S. 581 (1999), the Division also works to prevent the unnecessary 
segregation of individuals who require health care supports and services.   
The Division plays a critical role in the HCFAC Program.  The Special Litigation Section of the 
Civil Rights Division is the sole DOJ component responsible for enforcing the Civil Rights of 
Institutionalized Persons Act, 42 U.S.C. 1997 (CRIPA).  CRIPA authorizes the investigation of 
conditions of confinement at residential institutions owned or operated by or for state or local 
governments, including facilities for persons with developmental disabilities or mental illness, 
and nursing facilities, and initiation of a civil action for injunctive relief to remedy a pattern or 
practice violation of the Constitution or federal statute.  In addition, both the Special Litigation 
Section and the Disability Rights Section have engaged in interagency coordination with the goal 
of combatting the misuse of Medicaid funding related to the unnecessary segregation of persons 
with disabilities.  
The Disability Rights Section of the Civil Rights Division has primary enforcement authority 
for the Americans with Disabilities Act (ADA).  Title II of the ADA authorizes the 
investigation of allegations of discrimination by public entities against individuals with 
disabilities, including discrimination in the form of unnecessarily segregating persons who 
require health care supports and services.  See Olmstead, 527 U.S. 581.  Title II also authorizes 
the initiation of civil actions to remedy discrimination in violation of the ADA.  In addition to 
violating the civil rights of individuals with disabilities, such unnecessary segregation often 
increases Medicaid costs.  Both the Disability Rights Section and the Special Litigation Section 
enforce the ADAs prohibition on unnecessary segregation.  
The Educational Opportunities Section of the Civil Rights Division also participates in the 
HCFAC Program to address the use of Medicaid funding for youth with disabilities who are 
unnecessarily placed in segregated education settings, including segregated residential 
placements, in violation of the ADA.  The Special Litigation, Educational Opportunities, and 
Disability Rights Sections work collaboratively with the USAOs and with HHS. 
FY 2020 Accomplishments  
Key litigation and enforcement accomplishments in FY 2020 of the Civil Rights Division are: 
  Number of matters in active enforcement:  14; 
  Cumulative estimate of individuals with disabilities affected:  52,990; and 
106 
   
  Number of institutional facilities affected:  2,094. 
Special Litigation Section 
In fiscal year 2020, the Sections enforcement efforts affected more than 1,400 health care 
facilities in seven states, and included post-trial remedial efforts involving the unnecessary 
segregation of people with serious mental illness, the opening of two new investigations, the 
submission of two statements of interest, and monitoring compliance with six agreements 
impacting over 25,000 individuals with disabilities.   
In United States v. Mississippi, 400 F. Supp.3d 546 (S.D. Miss. Sept. 3, 2019), following a 
successful four-week trial on the merits, the Section continues to enforce the rights of thousands 
of individuals with serious mental illness who are unnecessarily institutionalized in Mississippis 
four State Hospitals.  The Section is currently working with the State and a court appointed 
Special Master on a proposed remedial order to address the ADA violations identified in the 
Courts September 2019 judgement following trial.  
In November of 2019, the Section opened an investigation of Glenwood Resource Center, in 
Glenwood, Iowa, and Woodward Resource Center, in Woodward Iowa, under CRIPA and the 
ADA, and is examining whether Iowa engages in a pattern or practice of violating the federal 
rights of Glenwood residents by subjecting them to:  (1) harmful and uncontrolled human subject 
experiments; (2) inadequate medical and nursing care, physical and nutritional management, and 
behavioral health care; (3) needless and harmful restraint practices; and (4) incidents causing 
needless physical injury; and whether Iowa violates the rights of Glenwood and Woodward 
Resource Centers under the ADA by not providing services to those residents in the most 
integrated setting appropriate.   
In April of 2020, the Section opened an investigation into the Holyoke Soldiers Home in 
Holyoke, Massachusetts under CRIPA to examine whether the Soldiers Home engages in a 
pattern or practice of violating the constitutional rights of residents by denying them appropriate 
medical care generally, and during the coronavirus pandemic in particular.  
The Section continued monitoring implementation of settlements in West Virginia, Louisiana, 
New Hampshire, Texas, and Georgia that are helping individuals with intellectual, 
developmental, and mental health disabilities avoid unnecessary institutionalization.   
In its existing ADA consent decree with the Commonwealth of Virginia regarding the delivery of 
community-based services to people with IDD, the Section successfully completed a year-plus 
long negotiation process to define, in precise, measurable terms, the indicators by which the 
Commonwealths compliance with outstanding provisions of the consent decree would be 
measured.   
The Section continued to work toward a resolution of the Divisions investigative conclusion that 
South Dakota fails to serve older adults and people with disabilities in the most integrated setting 
appropriate to their needs.  
107 
   
In its pending litigation with the State of Texas regarding the right to receive community-based 
services for people with intellectual and developmental disabilities (IDD) housed in Texas 
nursing facilities, Steward et al v. Young et al, 5:10-cv-1025, (W.D. Tex. 2010), the Section 
awaits a ruling from a trial completed in FY 2019.  
Disability Rights Section 
In FY 2020, the Disability Rights Section monitored compliance with four settlement 
agreements, under which more than 16,100 people collectively will obtain relief; issued a letter 
of findings in  one investigation ; continued litigation of another case involving unnecessary 
segregation of people with disabilities; and submitted a statement of interest in pending private 
litigation. 
The Section continued to monitor the implementation of its settlement agreement with the State 
of North Carolina, under which the State is providing opportunities to individuals with mental 
illness in adult care homes to transition to less costly, integrated service settings.  As of June 30, 
2020, 3,811 individuals had been diverted or moved from large adult care homes to permanent 
supported housing since the agreement went into effect in 2012.  This total includes 1,963 
individuals who were diverted from adult care homes upon discharge from a state psychiatric 
hospital or upon being considered for admission to an adult care home, and 1,848 individuals 
who moved out of adult care homes into the community.  Of the 3,811 individuals who have 
moved into permanent supported housing, 2,550 (or 67 percent) continue to receive services in 
the community.  In addition, 5,412 individuals were receiving assertive community treatment 
services, and 2,491 individuals in the agreements target population had received supported 
employment services over the course of the agreement. 
The Section also continued to monitor its two settlement agreements with the State of Rhode 
Island, addressing the unnecessary segregation of individuals with disabilities in sheltered 
workshop and facility-based day programs.  Under the agreements, the State will provide 
supported employment placements to roughly 2,600 individuals with IDD by 2024, and roughly 
3,500 individuals will benefit from changes to the States employment and day service systems.  
Thus far, 894 individuals have obtained competitive, integrated employment over the course of 
these agreements. 
The Section, along with the USAO for the Eastern District of New York, continued monitoring a 
second amended settlement agreement with the State of New York and private plaintiffs 
regarding New Yorks mental health service system.  The agreement benefits at least 2,500 
people and remedies discrimination by the State in the administration of its mental health service 
system.  Under the agreement, individuals with serious mental illness who reside in 22 large 
institutional settings known as adult homes in New York City are provided the opportunity to 
receive services in the most integrated setting appropriate to their needs consistent with the ADA 
and Olmstead.  These individuals can choose to live and receive services in the community, 
enabling them to live, work, and participate fully in community life.  To date, more than 900 
former adult home residents have transitioned to and received services in the community, and 
over 2,000 additional adult home residents have expressed interest in doing so.   
108 
  The Section is working with class plaintiffs to monitor a settlement agreement with the State of 
Oregon.  Pursuant to the agreement, the State is decreasing its reliance on segregated 
employment settings and increasing supported employment services to help individuals with 
IDD obtain competitive integrated employment.  The State committed to provide supported 
employment services and related employment services so that by June 30, 2022, 1,115 working-
age individuals receiving sheltered workshop services would newly obtain competitive integrated 
employment.  The State also agreed that by July 1, 2022, it would provide employment services 
to at least 4,900 youths aged 14 to 24, and Individual Plans for Employment to at least half of 
those youths.  The State has reported that as of March 2020, it had reduced the census of 
segregated sheltered workshop settings to 68 and the total number of hours worked in such 
settings to 2,123.  The State has also reported that through the end of June 2020, it had provided 
supported employment services and related employment services so that 1,023 individuals 
receiving sheltered workshop services have newly obtained competitive integrated employment, 
4,199 transition-aged youths have received at least one new employment service, and 3,693 of 
those youths received an Individual Plan for Employment.   
The Section awaits a ruling on the States petition for rehearing filed with the U.S. Court of 
Appeals for the Eleventh Circuit in United States v. Florida.  In 2013, the Section commenced 
litigation against the State of Florida, alleging among other things, that the State administers its 
Medicaid service system for children with significant medical needs in violation of Title II of the 
ADA by unnecessarily segregating them in nursing facilities, when they could, and want to, be 
served at home or in other community-based settings.  On September 20, 2016, U.S. District 
Court for the Southern District of Florida issued an order dismissing the United States claims.  
The United States filed a notice of appeal with the U.S. Court of Appeals for the Eleventh 
Circuit, which on September 17, 2019, issued an opinion reversing the District Courts order of 
dismissal and remanding the case to the District Court.  Thereafter, the State petitioned for 
rehearing.  C.V. v. Dudek, 209 F. Supp. 3d 1279 (S.D. Fla. 2016), reversed and remanded sub 
nomine United States v. Fla., 938 F.3d 1221 (11th Cir. 2019), petition for rehearing filed. 
In February 2020, the Section issued a letter of findings to the State of Maine, after completing 
an investigation of a complaint and concluding that the State was failing to provide the 
complainant with necessary services in the most integrated setting appropriate to his needs, 
placing him at serious risk of unnecessary segregation, and failing to reasonably modify its 
relevant service program to avoid discrimination.   
Educational Opportunities Section 
The Educational Opportunities Section (EOS) has participated in the HCFAC Program for the 
past five years.  The Section has carefully analyzed the legal issues related to unnecessary 
segregation in the context of K-12 schools.  The Section has pending litigation against the State 
of Georgia, alleging that the State is violating Title II of the ADA regarding its use of segregated 
educational services for approximately 5,000 Georgia students with emotional and behavioral 
disabilities. A multi-year stay of that litigation was lifted in May 2020 and discovery is underway 
with the State.  In another matter, the Section has issued multiple requests for information to the 
State of Alabama seeking information about the States practice of placing children from the 
109  foster care system in psychiatric residential treatment facilities based on a need for care spaces, 
and then providing educational services only at segregated on-site schools. 
Office of the Inspector General 
In FY 2020, the Office of the Inspector General (DOJ-OIG) was allocated $750,000 in HCFAC 
funding to address health care fraud as it directly impacts DOJ operations.  DOJ spends over 
$1.0 billion a year to provide health care to inmates of the Federal Bureau of Prisons (BOP) and 
the U.S. Marshals Service; and expends more than $115.0 million a year in annual workers 
compensation payments related to disabled and injured DOJ employees and informants.  The 
DOJ-OIG Investigations Division collaborates with the DOJ-OIG Audit Divisions Office of 
Data Analytics (ODA) to detect and deter fraud, waste and abuse in these contracts and programs.  
The DOJ-OIG ODA collects, cleans, validates, analyzes, and stores healthcare claims data to 
identify anomalous billing and prescription patterns and refers investigative leads to the 
Investigations Division for evaluation of investigative merit.   
In FY 2018 and FY 2019, these efforts resulted in 11 cases for the Investigations Division and a 
Procedural Reform Recommendation (PRR) to BOP, recommending that BOP move toward 
electronic billing for healthcare claims data at all their facilities.  More specifically, the PRR 
identified BOPs incomplete and inadequate healthcare claims data and directly resulted in the 
BOP establishing a claims adjudication contract and a plan to begin collecting electronic claims 
data from all providers.  This contract is expected to be implemented in FY 2021.  Consequently, 
the DOJ-OIG will have more complete data and be able to provide more effective and efficient 
oversight in FY 2021 and FY 2022 and will likely see a steady increase in healthcare related 
audits, inspections, and investigations.  
During FY 2020, the DOJ-OIG joined two healthcare fraud working groups and continued to 
collaborate with other federal agencies that investigate healthcare fraud.  These efforts have 
provided opportunities for the DOJ-OIG to collaborate and share ideas with other organizations.  
Additionally, the DOJ-OIG sought and received additional sets of healthcare claims data directly 
from BOP comprehensive medical service providers.  With each new data set received, the OIG 
built upon its comprehensive BOP healthcare data bank, ensuring the ability to use historical data 
as the foundation for predictive analytics efforts.   
During this period, the DOJ-OIG established and continued to receive U.S. Department of Labor 
workers compensation claims data.  This data was used to identify potentially fraudulent billing 
patterns by providers as well as anomalous prescription drug claims and will also serve as 
historical data as the DOJ-OIG builds its predictive analytics abilities.  The analysis of the 
Departments workers compensation data resulted in the initiation of multiple investigations.  
In FY 2020, the DOJ-OIG initiated four additional investigations related to fraudulent activity in 
DOJ healthcare programs and contracts and facilitated a settlement of $130,000 from a provider 
that overbilled the BOP for psychiatric visits. Since receiving initial funding, the DOJ-OIG has 
opened a total of 24 investigations related to DOJ healthcare-related activities and programs.   
110  APPENDIX 
Federal Bureau of Investigation 
In FY 2020, the FBI was allocated $145.1 million in funding from HIPAA to support the 
facilitation, coordination and accomplishment of the goals of the HCFAC Program.  This yearly 
appropriation was used to support 826 positions (499 Agent, 327 Support).  In addition, the FBI 
received $7.7 million of the DOJ HCFAC funding. 
In FY 2020, the FBI initiated 683 new Health Care Fraud (HCF) investigations and had 2,346 
pending investigations.  Investigative efforts produced 426 criminal HCF convictions and 537 
indictments and prosecutors informations.  In addition, investigative efforts resulted in over 407 
operational disruptions of criminal fraud organizations and the dismantlement of the criminal 
hierarchy of more than 101 HCF criminal enterprises. 
The FBI is the primary investigative agency involved in the fight against HCF that has 
jurisdiction over both federal and private insurance programs.  HCF investigations are 
considered a high priority within the FBIs Complex Financial Crime Program.  Each of the 56 
FBI field offices has personnel assigned specifically to investigate HCF matters.  
The FBI seeks to approach the HCF crime problem in a threat-based and intelligence-driven 
manner.  The approach employs the prioritization of enforcement efforts, at both the national and 
field office levels, to ensure limited resources are focused on the most significant entities 
committing health care fraud and abuse.  As part of the process, the FBI gathers relevant data 
and information to understand the impact of the crime problem and to identify intelligence gaps, 
or areas which require additional research and analysis.  The need and availability of resources to 
support mitigation efforts, including enforcement and intelligence related activities, are also 
factored into the analysis.  The process is constantly on-going and requires collaboration not only 
among FBI components, but also with its public and private partners.  
As part of its collaboration efforts, the FBI maintains investigative and intelligence sharing 
partnerships with government agencies such as other DOJ components, HHS-OIG, state MFCUs, 
and other enforcement and regulatory agencies.  The FBI conducts significant information 
sharing and coordination efforts with private insurance partners, such as the NHCAA, the 
National Insurance Crime Bureau, and private insurance investigative units.  The FBI is also 
actively involved in the HFPP, an effort to exchange facts and information between the public 
and private sectors in order to reduce the prevalence of HCF.  
As a result of the collaboration and review process, the FBI has designated criminal enterprises 
and other crime groups, corporate-level fraud and abuse, and public safety issues  to include the 
rising prescription drug abuse epidemic, as the priority HCF threat areas of focus.  Each field 
office conducts a similar analysis to determine their areas of focus and the actions they will take 
to mitigate the associated threats.   
111  FBI field offices throughout the U.S. address the HCF threat through joint investigative efforts; 
intelligence collection, sharing, and analysis; and the utilization of advanced and sophisticated 
investigative techniques.  FBI field offices participate in HCF Task Forces and/or working 
groups with partners including local USAOs, HHS-OIG, DEA, IRS, FDA, other federal, state, 
and local law enforcement agencies, and private insurance personnel.  Based on information 
sharing and coordination, additional cases are vetted and identified for investigation.  These 
activities seek to identify and pursue investigations against the most egregious offenders 
involved in health care fraud and abuse.  
The FBIs Health Care Fraud Unit (HCFU) oversees program efforts, including providing 
guidance to 56 field offices to mitigate the health care fraud threat.  In support of joint agency 
activities and general threat mitigation efforts, the HCFU developed and supports five national 
initiatives, including the Health Care Fraud Task Force and Working Group Initiative, 
Prescription Drug Initiative, Large Scale Conspiracies Initiative, Major Provider Fraud Initiative, 
and the COVID-19 Anti-Fraud Initiative.  
The Health Care Fraud Task Force and Working Group Initiative was established to encourage 
the formation of Joint Health Care Fraud Task Forces and Working Groups.  Joint Task Forces 
and Working Groups combine Federal, state, and local law enforcement and regulatory resources 
to address Health Care Fraud.  Task forces serve as a force multiplier for FBI efforts by bringing 
the experience, expertise, and resources of our Federal, state, local, and tribal partners to bear to 
mitigate the HCF threat.  Task forces and working groups result in improved sharing of threat-
related intelligence among participating agencies and expand criminal and civil tools for 
participants to use to identify and disrupt criminal activity.  Task force participants and their 
employing agencies will also benefit from increased access to FBI training and equitable sharing 
arrangements.  FBI Field offices are encouraged to partner with DOJ, HHS-OIG, State Attorneys 
General and MFCUs, CMS, and local and state police, where appropriate, when forming TFs and 
WGs. 
At a national level, the FBI participates in a HEAT effort.  As noted on pp. 11-12, the HEAT is 
comprised of top-level law enforcement agents, prosecutors, attorneys, auditors, evaluators, as 
well as staff from DOJ, FBI and HHS, and is dedicated to facilitating joint efforts across 
government to both prevent fraud and enforce current anti-fraud laws around the country.   
The Medicare Fraud Strike Force (Strike Force) teams are a key component of HEAT.  The FBI 
coordinates with the DOJ and HHS-OIG on funding, resource allocation, Strike Force expansion, 
target identification, training, and operations.  The FBI supports DOJ HCF Strike Forces located 
in Florida (Miami, Tampa, Orlando), Los Angeles, Texas (Houston, Dallas, McAllen/Rio 
Grande), the Gulf Coast (New Orleans, Baton Rouge, and Southern Mississippi), Detroit, 
Brooklyn (NYC), Chicago, Newark, Philadelphia, ARPO North (Kentucky, Ohio, Virginia, and 
West Virginia), ARPO South (Tennessee and Northern Alabama), and Washington DC (National 
Rapid Response Strike Force).  In addition to funding agent resources, the FBI funds undercover 
operation expenses, financial and investigative analysis support, offsite TF locations, operational 
travel, and other investigative costs.  The Strike Forces have effectively investigated and 
prosecuted individuals and entities that do not provide legitimate health care services but exist 
112  solely for the purpose of defrauding Medicare and other federal health care programs.  In         
FY 2020, the FBI participated in a DOJ national HCF takedown charging 80 subjects, including 
56 doctors, nurses, and other licensed medical professionals, for their alleged participation in 
HCF schemes involving approximately $1.8 billion in false billings.  The continued support of 
Strike Force operations is a top priority for the FBI.  Additionally, the FBI coordinates and 
shares intelligence with HHS and DOJ components on other prevention and enforcement 
activities, to include efforts associated with the Large Scale Conspiracies, Major Provider Fraud, 
Prescription Drug, and COVID-19 Anti-Fraud Initiatives.  
As part of the DOJ ARPO Strike Force initiative to address the illegal diversion of prescription 
opioids in the Appalachian Region, DOJ provided additional funding to the FBI to support the 
deployment of Special Agents dedicated to identifying and investigating individuals, including 
medical professionals, who divert prescription opioids, and thus contribute to the nations opioid 
epidemic.  The ARPO Strike Force operates in Cincinnati, Louisville, Pittsburgh, Knoxville, 
Memphis, and Birmingham.  In one case led by the ARPO SF in Birmingham, a physician was 
sentenced to 30 years in prison and ordered to forfeit approximately $3.5 million in ill-gotten 
gains, for running a pill mill operation out of his medical clinic and for billing more than $7.8 
million over a two-and-a half year period to Medicare and private health insurers in connection 
with an allergy fraud scheme. 
The Prescription Drug Initiative (PDI) identifies and targets criminal enterprises and other 
groups or individuals engaged in prescription drug schemes and prosecutes improper prescribing 
and dispensing practices of controlled substances.  These schemes are a significant crime 
problem and impact public health and safety.  An example is a case from the Buffalo Field 
Office where a physician was convicted for prescribing opioids outside the normal practice of 
medicine and in violation of the Controlled Substances Act.  Between 2007 and 2014, this 
physicians practice issued more prescriptions for controlled substances annually than any other 
prescriber, or prescribing entity, in New York State, including hospitals.  In a four-year period, 
this physician wrote 70,000 opioid prescriptions which resulted in seven million dosage units and 
six patient deaths as a direct result of his overprescribing of opioids.  The FBI coordinated efforts 
in this case with HHS-OIG and DEA.  The FBI is dedicated to prioritizing prescription drug 
scheme investigations, particularly in at-risk federal judicial districts, with enhanced support 
from the Prescription Drug Initiative.  In FY 2020, the FBI opened 94 new PDI related 
investigations, had 397 pending investigations and obtained 146 indictments and informations, 
127 arrests, 83 convictions, $9.9 million in seizures, and $1.6 million in forfeitures. 
The Large Scale Conspiracies Initiative seeks to identify and target criminal enterprises and 
other groups whose schemes result in significant losses to government health care benefit 
programs and private health insurance plans.  The complex schemes carried out by these groups 
include the sharing and selling of beneficiaries identifying information and multi-tiered 
kickback schemes involving fraudulent referral and billing for medically unnecessary services or 
services never provided.  Intelligence efforts for this initiative include information sharing and 
analysis of billing data with HCF enforcement partners.  Investigative assistance provided to 
field offices as part of the initiative include support for undercover operations, source 
identification and support, and funding of investigative costs.  An example of a case worked 
113   
under this initiative is a nationwide investigation led by the FBI involving over $480 million in 
fraudulent claims for genetic testing, orthotic braces, pain creams, and other items.  In additional, 
some of the subjects conspired to pay kickbacks to medical providers, like physicians and nurse 
practitioners, in exchange for obtaining orders for DME that were then sold to DME providers 
and, ultimately, billed to Medicare.  To date over 15 subjects have been charged including 
physicians, nurse practitioners, operators of telemedicine companies, brokers of patient data, and 
owners of DME companies.  This is a joint investigation with HHS-OIG, DEA, US Secret 
Service, and US Postal Service.  
The Major Provider Fraud Initiative seeks to identify and target corporate-level groups involved 
in fraud and abuse schemes with significant billing to health care benefit programs.  The related 
schemes are frequently complex, challenging to identify, and can involve conduct that is 
nationwide in scope.  Extensive resources and coordination are frequently required due to the 
complexity and scope of the schemes.  Qui tams are a significant intelligence source for these 
types of cases.  These investigations frequently involve pharmaceutical manufacturers, hospital 
corporations, and regional or national medical provider agencies.  In addition to the work 
completed at the field office level, and in response to this substantial threat, the FBI has 
established a centralized support team to provide investigative assistance on these cases 
nationwide.  An example is the FBI-led investigation of Novartis Pharmaceuticals Corp. Novartis 
provided doctors with cash payments, recreational outings, lavish meals, and expensive alcohol 
to induce them to prescribe Novartis cardiovascular and diabetes drugs reimbursed by federal 
healthcare programs.  The case resulted in a $678.0 million settlement of civil investigations for 
violating the FCA and the AKS.   
In FY 2020, the FBI developed the COVID-19 Anti-Fraud Initiative because of the COVID-19 
pandemic.  This initiative seeks to identify and target medical providers engaging in health care-
related fraud linked to COVID-19 treatments such as overbilling, price gouging, billing for 
services not rendered, up-coding services, billing for medically unnecessary services, medical 
identity theft, etc.  An example of these type of cases is an investigation from the Newark Field 
Office into a subject who willfully hoarded designated scarce materials.  Newark worked with 
the USAO and the DOJ Hoarding and Price Gouging Task Force to successfully seize 11.2 
masks.  The subject was given a deferred prosecution agreement and all masks were resold to the 
public at a price established by DOJ. 
The FBI actively provides training and guidance on HCF matters.  The FBI has teamed with the 
DOJ, HHS, and private insurance organizations to provide training in the priority threat areas of 
HCF.  Funded training has included innovative methods of employing advanced investigative 
techniques; basic HCF training for FBI Special Agents and professional staff newly assigned to 
investigate HCF; and sessions on new and current HCF trends and issues.  FBI personnel training 
opportunities included sessions offered by the FBI, other government agencies and the private 
sector.  In FY 2020, more than 500 FBI HCF investigators and analysts received training.  FBI 
personnel also conducted a wide range of training for external audiences, including private 
insurance and regulatory personnel. 
   
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COVID-19 Fraud Schemes: 
The FBI and its law enforcement partners have identified multiple health care fraud schemes by 
bad actors seeking to take advantage of the currently overburdened health care system and the 
publics fear over the COVID-19 pandemic.  These fraud schemes target both government and 
private health insurers as well as private individuals to commit traditional health care fraud 
schemes such as overbilling, upcoding, unbundling of services, and billing for services not 
provided and/or which were not medically necessary.  Some of the more prevalent health care 
fraud-related schemes identified as of April 2020 are as follows: 
  Fraud actors are engaging in schemes to obtain and exploit individuals identity 
information, including their insurance information (PII), and PHI.  The FBI has 
identified fraud schemes involving robo-callers who promote or offer free test kits, 
fake cures or drugs that allegedly offer protection against COVID-19, in exchange for 
PII or cash. 
  Fraudsters are also obtaining information and identifying potentially vulnerable 
targets from social media posts where someone discusses symptoms, health status or 
frustrations over treatment and testing.  Fraudsters use this information to obtain PPI 
and PHI that is later used in fraudulent billing schemes or selling medically 
unnecessary and fake cures or protection from the virus to the unsuspecting and 
vulnerable public. 
  The FBI has identified threat actors perpetrating numerous health care fraud schemes 
through the use of telemedicine platforms.  Compounded medicine schemes, genetic 
testing schemes, and DME-related schemes have all been perpetrated through 
telemedicine.  In light of the current COVID-19 pandemic, providers increasingly are 
moving toward remote visits and health plans accordingly are adjusting their policies 
to expand telemedicine coverage.  While these expansions are necessary, they may 
also open the door to an increase in fraud through telemedicine platforms.  Calls and 
home visits offering telemedicine consultations for COVID-19 are also on the rise, 
with bad actors soliciting insurance information, most notably Medicare ID numbers 
and/or other PPI like driver license information. 
  Health care providers have also been paying kickbacks to marketers (recruiters) in 
exchange for patient referrals, services such as promoting/selling fake COVID-19 test 
kits, supplies and equipment, and for signing/forging prescriptions that are medically 
unnecessary/outside the normal bounds of medical practice. 
  The FBI has also noted scammers creating fake shops, websites, social media 
accounts, and email addresses claiming to sell medical supplies currently in high 
demand and in short supply such as N-95 respirator masks, gloves, and other PPE.  In 
these scams, suppliers solicit money up front, pocketing the money without providing 
the supplies. 
  There has been an uptick in prescribing of hydroxychloroquine, an anti-malaria drug 
being touted as a potential cure for COVID-19.  The FBI is aware some physicians 
are prescribing hydroxychloroquine for themselves and their families without medical 
115 
   
necessity.  This has resulted in short supplies with adverse consequences for those 
who need the drug for lupus, rheumatoid arthritis and other chronic conditions. 
Joint COVID-19 Fraud Mitigation Strategy 
The FBI has taken a number of steps to work across the Department, with HHS-OIG, CMS, and 
other HCF partners to mitigate COVID-19 frauds.  These include: 
  Establishing a HCF Program COVID-19 Anti-Fraud National Initiative to encourage 
addressing it.  The FBI has been actively involved in a weekly coordination/deconfliction 
meetings with DOJ Fraud Section Trial Attorneys, CMS, HHS-OIG, FDA and at least 12 
other federal agencies where emerging threats and new cases were shared with everyone 
involved.  
  Establishing a HCF Virtual Command Center (VCC) to maintain COVID-19-related FBI 
HCF cases, HHS-OIG cases, DCIS cases, and other civil and regulatory matters in order 
to deconflict enforcement activity.  These cases have been briefed during the weekly DOJ 
Fraud Section coordination/deconfliction calls as well as communicated to the respective 
USAOs.  
  Work with CMS and HHS-OIG to conduct Data Analytics critical in identifying HCF, to 
drive the opening of HCF investigations with DOJ and the USAOs. 
  Disseminate a Monthly Rolling Schemes Information Sheet produced by the FBI and 
HHS-OIG and distributed to other Agencies and DOJ to ensure proper awareness of the 
latest intelligence and threat information. 
   
116 
   
Return on Investment Calculation 
  The return on investment (ROI) for the HCFAC program is calculated by dividing the 
total monetary results to the Federal government (not including relator payments) by the 
annual appropriation for the HCFAC Account in a given year (not including portions of 
CMS funding dedicated to the Medicare Integrity Program listed in the table on page 
119).  
  The monetary results include deposits and transfers to the Medicare Part A Trust Fund 
and the Treasury, as well as restitution and compensatory damages to Federal agencies. 
  The HCFAC Account is made up of three funding sources: mandatory funding for HHS 
and DOJ, including HHS-OIG, appropriated through Section 1817(k)(3)(A) of the Social 
Security Act; mandatory funding for FBI activities appropriated through Section 
1817(k)(3)(B) of the Social Security Act; and discretionary funding for the HCFAC 
Account appropriated through the annual Labor-HHS-Education appropriation.  
  FBI mandatory HIPAA funding is included in the HCFAC ROI calculations given the 
important role the FBI plays in achieving the monetary results reflected in the HCFAC 
annual report and because that statute states that the funds are for the same purposes as 
the funds provided for HHS and DOJ under the Social Security Act.  However, FBI 
spending and monetary results are not required to be reported per the statute.  Therefore, 
even though the FBI mandatory HIPAA funding is included in the HCFAC ROI 
calculation, it is not reflected in the table on page seven of this report. 
  Only certain portions of discretionary HCFAC Account funding are included in the ROI 
calculation.  All discretionary HCFAC funding for HHS-OIG and DOJ are included in 
the HCFAC report ROI since they spend their discretionary funding on the same types of 
activities that they support with mandatory funding.  Only the portion of CMS Medicare 
discretionary HCFAC funding that supports law enforcement is included in the HCFAC 
report ROI.  The remainder of CMSs HCFAC Medicare discretionary funding supports 
activities in the Medicare Integrity Program (MIP) that are included in the MIP ROI, 
which calculates the impact of the prevention activities supported by the MIP mandatory 
and discretionary funds is calculated separately from the HCFAC ROI and is reported 
outside of the HCFAC report.  Impacts for both the CMS Medicaid and Medicare 
program integrity funding are included in a separate report.  
   
117 
   
Total Health Care Fraud and Abuse Control Resources 
The table below sets forth HCFAC funding, by agency, for health care fraud and abuse control 
activities in FY 2020, including sequester reductions.  The FBI also receives a stipulated amount 
of HIPAA funding for use in support of the Fraud and Abuse Control Program, which is shown 
below.  Separately, CMS receives additional Mandatory Resources under the Medicare Integrity 
Program (section 1817(k)(4) of the Social Security Act).  The inclusion of the activities 
supported with these funds is not required in this report, and this information is provided for 
informational purposes only.  Since 2009, Congress has also appropriated annual amounts to 
help carry out health care fraud and abuse control activities within DOJ and HHS.  Those 
amounts are set forth as Discretionary Resources in the table below and the results of the efforts 
supported with these funds are contained within this report. 
Mandatory Resources40  Fiscal Year 2020 
Office of Inspector General  $205,326,186 
Health and Human Services Wedge41  39,271,090 
Medicare Integrity Program42  923,527,095 
MIP/Medicare (non-add)  852,486,550 
Medi-Medi (non-add)  71,040,545 
Department of Justice Wedge41  64,108,488 
Federal Bureau of Investigation43  145,129,768 
Subtotal, Mandatory HCFAC  $1,377,362,627 
   
Discretionary Resources  Fiscal Year 2020 
Office of Inspector General  $93,000,000 
CMS Program Integrity  610,000,000 
CMS Program Integrity (non-add)  592,000,000 
Senior Medicare Patrols (ACL non-add)  18,000,000 
Department of Justice  83,000,000 
Subtotal, Discretionary HCFAC  786,000,000 
Grand Total, HCFAC  $2,163,362,627 
 
40 All mandatory resources are post-sequester and reflect Section 3709 of the Coronavirus Aid, Relief, and 
Economic Security Act (CARES Act) (Public Law 116-136) temporary suspension of Medicare sequestration from 
May 1, 2020 until December 31, 2020; the Consolidated Appropriations Act, 2021 (Public Law 116-260), which 
extended this suspension to March 31, 2021; and the extension of the Medicare sequester moratorium until 
December 31, 2021 that was signed by President Joe Biden in April 2021.  This sequester adjustment has resulted in 
additional funding for the HCFAC program.  Funding sequestered reflects sequester suspension from May 1, 2020 
to September 30, 2020. 
41 The HHS and DOJ Wedge funds are divided among multiple agencies within HHS and DOJ.  Page 7 of this report 
includes the allocations of the HHS and DOJ Wedge by agency or activity. 
42 Mandatory Medicare Integrity Program (MIP) and Medicaid Integrity Program fund fraud prevention and 
detection activities within Medicare and Medicaid, and are not part of this report to Congress.  A separate report to 
Congress addresses these activities. 
43 The FBI receives funding annually to conduct anti-fraud activities authorized by HIPAA.  This funding is 
included in the HCFAC ROI calculation for this report. 
118 
  Glossary of Common Terms 
The AccountThe Health Care Fraud and Abuse Control Account 
ACAAffordable Care Act 
AKSAnti-Kickback Statute 
ACLDepartment of Health and Human Services, Administration for Community Living 
AUSAAssistant United States Attorney 
CHIPChildrens Health Insurance Program 
CIACorporate Integrity Agreement 
CMPCivil Monetary Penalty 
CMPLCivil Monetary Penalties Law 
CMSDepartment of Health and Human Services, Centers for Medicare & Medicaid Services   
CPICenter for Program Integrity 
CYCalendar Year 
DEADrug Enforcement Administration 
DMEDurable Medical Equipment 
DOJThe Department of Justice 
FBIFederal Bureau of Investigation 
FCAFalse Claims Act 
FDAFood and Drug Administration 
FFSFee-for-Service 
FYFiscal Year 
HCFACHealth Care Fraud and Abuse Control Program or the Program 
HEATHealth Care Fraud Prevention & Enforcement Action Team 
HFPPHealth care Fraud Prevention Partnership 
119  HHAHome Health Agency 
HHSThe Department of Health and Human Services 
HHS-OIGThe Department of Health and Human Services - Office of Inspector General 
HIHospital Insurance Trust Fund 
HIPAAThe Health Insurance Portability and Accountability Act of 1996, P.L. 104-191 
MA  Medicare Advantage 
MAOMedicare Advantage Organization 
MFCUMedicaid Fraud Control Unit 
MEDICMedicare Drug Integrity Contractors 
OCGSOrganized Crime and Gang Section 
OGCOffice of the General Counsel, Department of Health and Human Services 
PECOSProvider Enrollment, Chain and Ownership System 
PERMPayment Error Rate Measurement 
PFPPharmaceutical Fraud Pilot Program 
The ProgramThe Health Care Fraud and Abuse Control Program 
SecretaryThe Secretary of the Department of Health and Human Services 
SMPSenior Medicare Patrol 
UPICUnified Program Integrity Contractor 
USAOUnited States Attorneys Office 
120